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GMR Infrastructure Ltd.

BSE: 532754 Sector: Engineering
NSE: GMRINFRA ISIN Code: INE776C01039
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OPEN 38.45
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VOLUME 3988587
52-Week high 46.10
52-Week low 22.50
P/E
Mkt Cap.(Rs cr) 24,928
Buy Price 0.00
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GMR Infrastructure Ltd. (GMRINFRA) - Chairman Speech

Company chairman speech

DEAR FELLOW STAKEHOLDER

It gives me great pleasure to welcome you all to the 25th Annual General Meeting of theCompany.

Over the past year we have witnessed a pandemic crisis of the kind not seen ingenerations. My heart goes out to everyone who has suffered the loss of loved ones. Yourcompany has also faced extreme challenges during the period due to the pandemic with over2350 GMR employees testing positive for Covid-19 and 23 succumbing to it in the line ofduty. Faced with the unprecedented Covid situation the Group focused efforts inaddressing the challenges and has managed to limit its impact. Your company has looked atBusiness Continuity in the context of sustaining business operations at each of the assetsand projects especially the Airports maintaining safe operating conditions and managingthe financial sustainability with respect to business resilience and crisis management.Your company has been at the forefront in facilitating government efforts to providerelief during the pandemic and took lead in working with government authorities andvarious stakeholders in reopening of Airports. GMR Airports at Delhi and Hyderabad emergedas the nodal points for Government of India’s logistic efforts to distributeessential material such as medicines concentrators oxygen etc. across India. Some ofthe key initiatives taken by your company includes:

Worked with Ministry of Civil Aviation (MoCA) and respective state governments toformulate the SOP for reopening of Airports supported Government of India (GoI)initiative to bring back stranded Indians through Vande Bharat flights and facilitatedinternational travel under bubble arrangement.

Pioneered the usage of sanitization mats for shoe cleaning contactless check-in &bag tag contactless water dispenser and contactless commerce to ensure passenger safetywithin airport.

Employed leading sanitisation and hygiene measures including frequent deep cleaning ofterminal and high touch point areas frequent terminal air changes passenger screeningand social distancing protocols in line with National Guidelines through floor / seatmarkings frequent sanitisation of baggage trolleys / trays etc.

Implemented operational changes to enable safe flying including DIAL consolidating itsoperations to Terminal 3 to effectively manage reduced traffic while providing superiorpassenger experience. Transitioned to "Gate by Airlines" from "All GatesAll Airlines" implemented modified layouts for Queue management created SecurityHold Infrastructure for maintaining passenger processing time isolation rooms forevacuation of Asymptotic passengers plexi glass partition for safety of staff etc.

Launched the Air Suvidha Portal in collaboration with MoCA for self-reporting andgetting exemption from Institutional Quarantine for all international arrival passengerscoming to India ensured adequate availability of hotel rooms in Aerocity for quarantineestablished RT-PCR lab within Airports to ensure safe passage of passengers andVaccination centres in collaboration with leading healthcare providers to facilitatevaccination efforts of the Government

Delhi and Hyderabad Airports became the key nodes for distribution of pharmaceuticaland essential supplies across India. Under Life Udaan initiative of GoI Delhi Airportemerged as main hub handling medical supplies - Delhi Airport in 7 days created andhanded over 38000 Sqft of dedicated facility for medical supplies to Government tosupport its initiative For sustainable Airport operations and availability of manpowerAirport FMS teams worked 24*7 to cater to employee’s needs related to but not limitedto COVID testing providing medicines tie-up with local hospitals for ICU beds and roomsprocurement of oxygen concentrators for delivering to staff travel supporthospitalization extending WFH (Work from Home) facility etc. Your airports have takenPassenger Safety as a top priority and implemented various safety measures and practiceswith the help of technology to ensure uncompromised safety levels for both passengers andstaff. Not confining to the steps already undertaken your company has also prepared forthe expected 3rd wave of the pandemic. Your company has provided free vaccination for itsemployees with 773 of them receiving at least one dose and remaining to be vaccinatedonce they are eligible. To facilitate safe Airport environment vaccination centres havebeen established for enabling vaccination of all aviation stakeholders. Your company hasestablished requisite support infrastructure including a 100-bed hospital facility atDelhi Airport in collaboration with Medanta a leading multi-speciality hospital to meetany eventuality due to the third wave of the pandemic. I am sure these steps taken byyour company will not only help to restore flyer confidence but will also create a safeaviation ecosystem facilitating faster recovery of air traffic. Your Power plantsHighways and Construction projects also ensured seamless operations with adequate safetymeasures for the employees during the pandemic. Operating procedures were adopted forsanitisation hygiene measures and social distancing as per the Government protocols.Employees and their families were given support with COVID testing facilities medicineshospitals for ICU beds or rooms and vaccinations. Dedicated camps have been setup forlabour working at our DFCC project where they are provided food medical assistance andvaccination for all. In addition we have setup a 250 lpm Pressure Swing Adsorption (PSA)plant for generating medical-grade oxygen at the Railway hospital in Kanpur. Whilefocusing on such operational aspects focus has also continued to ensure financialstability of the Group. Teams have been focused on cash conservation and cost reductionthrough various interventions to control capital and operating expenditure stakeholdermanagement and constructive engagement with various Government agencies through industrybodies. Your company also took steps to conserve liquidity and make optimum utilization ofRBI’s monetary policy initiatives like ECLGS scheme moratorium on principal andinterest payment etc.

MACRO ECONOMY

The year was marked by COVID-19 ravaging throughout the world and bringing the globaleconomy toastand still. Countermeasures such as movement restrictions and lockdowns takenacross the world to contain the spread resulted in fall in business confidence and theGlobal GDP contracting by 3.33. The Indian economy contracted by 7.33 which was thelargest fall in GDP in many decades. The Aviation sector was particularly affected withgovernments across the world imposing travel restrictions and people hesitating to flyresulting in a significant fall in air traffic. India’s air traffic was adverselyaffected due to stringent lockdown during 1st wave. With easing of movement restrictionsIndia witnessed continued improvement in air traffic with domestic traffic recoveringsignificantly to ~703 of pre-COVID levels by end-FY’20-21. Since mid-March 2021India experienced a devastating 2nd COVID wave which resulted in a spike in cases andfatalities and also resulted in a significant drop in air traffic. It also underlined theurgent need for vaccination – The impact studies have clearly shown that thevaccination has led to dramatic reduction in fatalities in case of Covid positivepatients. As per IATA (International Air Transport Association) estimates 2019 levelglobal air traffic is expected to return only by 2024. Large countries such as India areexpected to recover faster on account of a strong domestic market and pick up invaccination rates. For India it is expected that the domestic monthly traffic to recoverfully to pre-covid levels within this financial year and International monthly traffic bythe next financial year.

COVID-19 pandemic has also led an immense impact of how we do business and lead ourlives. Though it brought about immense challenges it also brought out the best in usincluding the changes that it has done for our betterment.

Resilience of Economy - The resilience of Indian economy was tested by the impact ofthe pandemic. With GoI unlocking the Indian economy it bounced back within 6 months andin Q3 FY’21 there was economic growth. Despite the second wave and its harsh impactIndian economy is expected to grow around 8.5-103 in FY’22. We are already seeingreopening of businesses and green shoots of growth. Power production is reaching pre covidlevel and we are witnessing fast recovery in domestic air passengers due to revengetravel.

Digital Transformation - COVID-19 pandemic has led to Digital Transformation ofbusinesses. The Indian IT sector has been seized of the opportunity and big 4 of Indian ITsector have led out plans to create new opportunities in the segment

Financial Inclusion – The sector has transformed with retail investors investingin stocks and IPOs. The Indian stock market has almost doubled in last 16 months from itslows seen in Mar’20. Insurance products especially health insurance has increased andexpected to continue to grow in the coming years

Technology based Businesses: Despite its geographic size and variation in developmentlevel Indians have adapted to the change and adopted Technology which has come to play acritical role in all facets of life right from virtual classrooms (Ed-tech) to digitalpayment and Fintech coming of age. Small online transactions have become ubiquitous andstart-ups have embraced Agri-tech to create solutions and be able to monetise theopportunities offered by the sector.

Your company has also adapted to the changing scenario and is at the forefront oftechnological innovations like pioneering the E-Boarding solution in Indian Airports. I amhappy to share with you that the HOI App launched at our airports has become the go-toplatform for ordering retail F&B or to seek information at Airport Terminals and thesocial media outreach has been highest and most accessed means of communication byPassengers. The Government of India led by our Honourable Prime Minister Shri NarendraModi has also made significant efforts to ensure vaccination for all by December 2021. Thepace of vaccination has reached 40 lakh daily doses with ~47 crore doses alreadyadministered by July 31st. The Government together with RBI also took several fiscal andmonetary interventions which are expected to cushion the negative impact of the pandemic.RBI reduced interest rates significantly and ensured liquidity in the market thusreducing the cost of capital for Corporates and helping in raising additional capital. Aspart of fiscal interventions Government has focused on Infrastructure Development. Keyelements of the intervention include

Identification of opportunities through the National Infrastructure Pipeline acrosssectors such as Roads Airports Railways Metro Projects Setting up of an InfrastructureDevelopment Financial Institution to enhance availability of long-term funding availablefor both greenfield and brownfield assets Sectoral policy changes in Aviation Power andRailways to encourage long term private investment. Parliament cleared the AERA(Amendment) Bill 2021 allowing GoI to group airports and notifying as a major airportwhich will facilitate next round of privatization of 13 AAI airports.

Facilitate resolution of stressed infrastructure assets through setting up of ARC andAMC Privatization Roadmap and ‘National Monetization Pipeline’ for assetrecycling.

A thrust to manufacturing sector with the Production Linked Incentive Scheme (PLI) andsupport to Small and Medium Enterprises for a sustainable development and growth of theeconomy.

The Taxation Laws (Amendment) Bill 2021 to amend the Income-tax Act 1961 and theFinance Act 2012 relating to tax demands raised on transactions involving the indirecttransfer of Indian assets before May 28 2012. The withdrawal of the retrospectiveamendment is a welcome step and would reignite the choice of India as a favourableinvestment destination.

The implementation of these policies has been able to result in a significant tailwindfor business environment in the country and attract highest ever FDI of USD 82 Billioninto the country during FY21 103 higher than previous year. During the year your companyhas taken a number of steps to strengthen itself and is well poised to capitalise on thesupportive framework and infrastructure development focus of the government.

BUSINESS UPDATE

You may recall in my message last year; I had mentioned that your company has madesignificant progress in unlocking value from the airport business through its successfulstrategic partnership with Groupe ADP. Groupe ADP is a Global Airport Operator and a majorplayer in the Airports space and the partnership with Groupe ADP enhances the inherentstrength of the airport portfolio. Despite the tough prevailing Covid situation both thepartners – Groupe ADP & GMR Group concluded the 2nd phase of the full 493 stakesale in GMR Airports Limited (GAL). This demonstrated the faith that Groupe ADP has placedon the business portfolio growth prospects and capabilities of your company. Post theclosure of the deal GMR Infrastructure Ltd (GIL) continues to have management control ofthe airport business with Groupe ADP having board representation at GMR Airports Ltd (GAL)and its key subsidiaries. The strategic partnership is built on two-way exchange ofexpertise personnel knowledge and market access. Your company has recently concluded anIndustrial Partnership Agreement with Groupe ADP to cooperate based on a shared vision forthe global airport sector. I strongly believe that passengers and other stakeholders willbenefit immensely from the evolved best practices thereby setting newer industry-definingbenchmarks.

The next major step in unlocking value for your company is its vertical demerger intothe Airport Vertical (GIL) and the Power Transportation and Urban Infrastructure Vertical(GPUIL). This move will enable both Airport & Non-Airport businesses to chart outtheir respective growth plan independently; through respective strategic partnerships andattract dedicated pools of investor capital - both from private & public markets. Thescheme of arrangement has been filed and approvals from respective stock exchanges andSEBI has been received in December 2020. The application with NCLT has been filed and yourcompany is working towards completing the process within this financial year.

AIRPORTS

The vision of the Airport business as a platform has been further strengthened with thepartnership with Groupe ADP. With the combined expertise in planning designingconstructing operating maintaining and managing airports along with airport services andairport land development across the world your company is well positioned to not onlydrive a unique passenger experience but also drive operational excellence through sharedbest practices and processes. Global growth is expected in the key geographies of Southand Southeast Asia and your company is well positioned to leverage its experience andcapabilities to expand its portfolio in this region. As you are aware your company’sairport business comprises of four operating airports viz. Indira Gandhi InternationalAirport at Delhi Rajiv Gandhi International Airport at Hyderabad Bidar Airport atKarnataka in India and Mactan Cebu International Airport in Philippines. Further twoassets are under construction viz. Greenfield Airports at Mopa Goa and CreteInternational Airport in Greece. Your company has also signed the concession agreement fora greenfield Bhogapuram International Airport in Andhra Pradesh in June 2020 anddevelopment works are currently in progress. GMR Airport’s business is conceptualizedas a platform with airport concessions being the core and a range of adjacent businessesbuilt around the same. The rich experience over the past decade of operating in diversemarkets world has given a unique understanding of business drivers and its variousbusiness adjacencies. Your company has identified five key strategic business segments forGMR Airports - Duty-Free Cargo Carpark Service business and EPC / PMC business. As partof strategy it is planned to leverage not only the existing airports but also to expandinto these segments in external airports. In line with this strategy your company has wonthe concession for the Duty-Free business at Kannur Airport in Kerala. The operationsbegan in FY’20-21 and marked the first duty free concession operated outside the GMRnetwork. Despite the constraints during COVID-19; your company continued investment anddeveloping new revenue streams and your Airport EPC division has recently won contracts todevelop build to suit logistic facilities at Hyderabad Airport. I am also happy to sharethat during the year your company has taken a giant leap in terms of aircraft maintenanceand service by adopting new innovative technology in form of an Inflatable Hangar therebyhaving the only MRO in Asia to have such a facility. Built and commissioned in less than ayear it will provide a cost-effective additional Aircraft Maintenance Bay sufficient tohandle 15 to 20 smaller base maintenance checks or 4 to 5 end of lease checks per year.

The COVID-19 pandemic has had a considerable impact on Mactan-Cebu InternationalAirport Philippines (MCIA) with annual traffic dropping significantly to 2.7 Mn in CY2020 which is 223 of CY 2019 traffic. Scheduled domestic services resumed in June withMCIA witnessing ~33 of the monthly pre-covid traffic levels which has gradually increasedto ~ 83 in March 2021 given travel restrictions in the country. Your company workedclosely with key stakeholders to ensure safe and smooth travel for passengers.

For Crete airport project (Greece) post signing of concession agreement on February 62020 the design and construction activities of the project has commenced. Given the hightourist traffic this airport has significant potential for passenger traffic. Developmentand investigation studies are nearing completion. All the works are being carried out withstrict adherence to CoVID-19 protocols and other safety measures. The Airport Company hasalso received ISO 9001 certification in this year. Overall EPC construction is progressingwell. The project is debt-free and funded by the state grant. I am happy to share thatyour company has received significant portion of land and the entire state grant of Euro180 million as envisaged under the concession agreement. While traffic in India and GMRairports was hit significantly on account of the pandemic I do believe that there is asilver lining to all the dark clouds. The intrinsic potential for aviation in Indiacontinues to be strong. Government of India continues to progress in the privatization ofAir India and domestic airlines continue their focus on expanding their fleets andconnectivity. Further both Government and Industry including Airports Airlines andvarious Agencies have worked closely together in developing Processes and StandardOperating Procedures (SOPs) to ensure Air Travel is the safest mode for travel which hashad a significant impact in terms of passenger confidence in Air Travel. Given thelong-term nature of the Airport concessions I am even more confident of strong growthpost pandemic. The relatively stronger recovery after the first wave as compared to manygeographies has demonstrated the intrinsic resilience of the Indian market. Even duringthis difficult period some positive trends emerged.

Passenger Traffic: There was enhanced domestic air connections for your airportsdespite operating at lower capacity and traffic levels. A higher number of first-timeflyers were observed during the year which bodes well for enhancing penetration into theIndia market post recovery. With higher passenger preference to travel directly betweenorigin and destination the direct international connectivity would expand when fullcommercial international operations are allowed strengthening the strategy of positioningyour airports as hubs and boost long haul traffic. Further post the 2nd Wave recovery inJune 2021 there has been significant increase in leisure / vacation travel despite thecrippling impact of the 2nd wave in the prior month. The traffic of Goa witnessed verystrong recovery in the winter period of 2020-21 with domestic tourists driving a largepart of the traffic. The phenomenon of pent-up demand and "revenge travel" maydrive a faster recovery of hospitality and air traffic in the coming months.

Cargo: Cargo operations continued to be strong throughout FY’20-21 despite thepandemic. Your airports became the hubs for distributing pharmaceuticals and otheressentials throughout India. The constraints of lower belly capacity from passengerairlines on account of lower traffic was made up with dedicated freighters flying to manydestinations. This could potentially be sustained even post pandemic recovery.

Non-Aero: Though non-aero spends in absolute terms had an impact due to the pandemicAverage Transaction Values and Spend per Passenger increased during the period which ispositive for the post pandemic period with traffic returning to normal level. Even postthe second wave your airports have seen significantly higher retail spends by domesticpassengers on select weekends in keeping with the trend of "revenge travel". Iam optimistic that this may drive a faster recovery for non-aero revenue also.

Airport Land Development: It is an important value driver for the airport business andI am happy to share key developments at Delhi and Hyderabad Airports. At Delhi animportant milestone was achieved when DIAL in March 2021 received approval from DelhiUrban Arts Commission for the Aerocity Commercial Project. This will allow your company toprogress on the transaction executed earlier with Bharti Realty. Airport Land Developmentat Hyderabad Airport started the year with completion of a landmark 65 Acre deal with ESRfor formation of a 70:30 JV for development of a Warehousing and Industrial Park atHyderabad Airport. Subsequently this JV has already made strong progress in monetizing alarge part of this land with agreement to lease 1 Mn sq ft or over 603 of totalwarehousing space to a leading Ecommerce player. During the pandemic year a number ofmilestones were achieved to monetise the potential of Hyderabad land and develop thesocial infrastructure piece in the Hyderabad Airport City ecosystem. Besides the activediscussion with an Operator to set a multispecialty Hospital; some of the key developmentsincludes:

Leasing of approx. 50000 sq ft in Aero Tower-2 out of 2.2 lakhs square feet ofleasable area.

Successful closure of transaction with a leading chain of schools for 15 acres landparcel

The warehousing facility of Amazon in Hyderabad Airport has been further expanded toinclude a new unit of over 2 lakh sq ft vindicating the potential of Hyderabad Airportland development Built-to-suit facilities are being developed by your company fordifferent tenants besides offering land leases at Hyderabad Airport. In addition todelivering built to facility for Amazon during FY21; the facilities for Safran Skyrootand Multisorb are on track and I am sure your company will be able to handover to thembefore schedule within the current financial year.

Land leases given to different tenants like Cyient and Citron Pharma who are in laststages of completing their own facilities enabling the growth of Hyderabad Airport astrue Aerotropolis.

Development of new asset classes like co-living wherein your company has recentlysigned up with Boston Living to enter the co-living space.

Business Services: The group has over the years acquired considerable experience andexpertise in the field of airport operations and maintenance by operating world classairports at Delhi Hyderabad and Cebu. It was therefore but natural for your company toleverage on the same for offering various airport related services even beyond GMRairports under the aegis of the GMR Services Business that has been formed for thispurpose. The Services Business is mandated to offer these services as well as variousother end to end airport related services both within and beyond GMR Group. Formation ofthe Services Business marks a new beginning both for your company and the aviation sectora beginning that will bring considerable focus on outsourcing of services leading toimproved efficiency and economies especially in comprehensive airport operations andmaintenance. This also gives me the confidence that this growth initiative would lead tosubstantial value addition for the group.

Airport Development and Construction: GMR Group has set benchmarks for development ofworld class Airport infrastructure. Your company developed the GMR brand as name to reckonfor Airport construction not only in India but also Philippines where it successfullyconstructed and handed over Clarke Airport ahead of schedule and completed Terminal 2 ofCEBU Airport. Your company is currently investing ~INR 20000 Cr. to expand the existingAirports and develop new Airports.

DIAL is undergoing expansion of its airside infrastructure and terminal capacity asper the approved Master Development Plan to 100 Mn passengers annually. Substantialprogress has been made on several fronts despite some major Covid related challenges andmigration of labour and the entire Phase 3A expansion is now planned to be completed byJune’23. Further India’s first General Aviation Terminal that can cater to 150private movements daily and handle over 50 passengers every hour was commissioned inFY’20-21 at Delhi Airport.

GHIAL has already commissioned 4 rapid exit taxiways completed the rehabilitationworks of the Main Runway in Q1 FY’21-22 as part of its capital expansion works GHIALis well underway to complete its expansion to a capacity of 35 Mn passengers annually bySeptember 2022.

At Goa Airport construction and development works has resumed at site in Feb’20post the reaffirmation of environmental clearance to the Project by Hon’ble SupremeCourt of India. Significant progress has been achieved in construction of the airport andthe connecting expressway being developed by the state government is also progressing welland is expected to get completed by August 2022 together with the airport commissioning.

At Bhogapuram International Airport development works including earthworks are inprogress post signing the concession agreement for the greenfield in June 2020.

Regulatory Scenario in India has stabilized significantly and there is consistency andclarity on most issues being provided by AERA. In recent developments AERA has issuedtariff order for the 3rd control period on December 30 2020 allowing DIAL to continuewith BAC+103 tariff for the balance period of 3rd control period plus compensatory tariffin lieu of Fuel Throughput Charges. For the Hyderabad Airport AERA issued a consultationpaper on 2nd July’2021 for third control period (FY’22–FY’26) and thefinal tariff order is expected by September 2021.

Cash conservation and Liquidity management across assets was a one of the key areas offocus during the review period. Several initiatives were taken to reduce costs andconserve cash. Your company has taken the opportunity to review the traffic requirementsairport expansion project progress status and with the objective of optimizing cash flowshas deferred certain phases of the expansion programs. Further to meet the anticipatedfunding needs of the expansion project and to repay the US$ 289 million bond maturing inFY’21-22 DIAL raised an amount of US$ 450 million in the form of overseas Greenbonds. Your company was able to raise these Green Bonds on account of the intrinsicsustainability focus of the company. To meet the entire funding requirements of theexpansion project GHIAL raised 5-year bonds amounting to US$ 300 Mn. In addition toraising the primary funding of Rs. 1000 Crores from Groupe ADP at GMR AirportsLimited your company was also able to refinancing the debt at GMR Airports complete thefinancial closure of the revised project cost at the Goa Airport and further agree to adebt restructuring with lenders at Mactan-Cebu Airport saving ~USD 120mn in cash flowover the next 3 years.

Our airports continued to receive accolades and recognition for the good work done byour teams these include the following:

Delhi International Airport was once again recognized as the Best Airport for servicequality in the region by ACI Best Airport in Central Asia by Skytrax for secondconsecutive year won ACI World’s ‘Voice of Customer’ recognitionregion’s first Level 4+ (Transition) accredited airport and Second Airport Globallyunder ACI’s Airport Carbon Accreditation program. This is a result of our focus onoperational excellence customer experience and sustainability backed by strongorganizational culture which has helped Delhi Airport to sustain its leadership positionin Airport Service Quality.

Hyderabad Airport bagged ACI ASQ best airport by size and region in Asia-Pacific regionand 15-25 million passenger category ACI Green Airports Recognition 2021 -Gold for theAir Quality Management and awarded Level 3+ Neutrality status under ACI’s AirportCarbon Accreditation program

ENERGY

In the Energy sector your Company demonstrated resilience during one of the mostchallenging and volatile periods being faced by whole country due to ongoing COVIDpandemic. Our focus has been on stabilizing our existing assets improving theirprofitability and achieving operational excellence. GMR Warora Energy Limited (GWEL) hasachieved normative availability for all its PPAs with linkage materialization @ 813 forFY’20-21. For the first time since commercial operations GMR Kamalanga EnergyLimited (GKEL) operated at a Plant Load Factor (PLF) of more than 1003 continuously for 8days. With enhanced fuel security under SHAKTI B III GKEL was able to get 1003 linkagecoal and clocked annual PLF of 773 in FY’20-21. Our focus continued to be on theliquidation of regulatory receivables during FY 2020-21 and we have succeeded to asignificant level despite Covid related challenges at APTEL & CERC.

On the hydro projects front efforts put in by GMR Upper Karnali Hydropower Ltd(GUKHPL) have borne fruit with Bangladesh Power Development Board issuing a Letter ofAward for 500 MW PPA. Battling water ingress tough geography adverse weather conditionsand COVID related restrictions during the year our project team at GMR Bajoli Holi HydroPower Limited (GBHHPL) has managed to tunnel through the tough terrain. With more than 953of the Project being completed we are expecting to commission the plant during H2 ofFY’21-22. The achilles heel of the power sector in India is the operational andfinancial performance of discoms barring a few private ones which are performing well andreflect that significant improvements are indeed possible. With adequate power generationcapacity and transmission network in place it is the distribution sector which would seea lot of focus as with a turnaround in this power sector can be nursed back to health.The Government and related agencies have taken concrete steps to address the issues inthis sector which include:

Revamped distribution reforms scheme with an outlay of more than Rs. 3 lakhcrore to focus on reduction of technical and commercial losses by way of smart meteringFeeder segregation and other infrastructure works

The Government has already tabled Electricity Amendment Bill to delicense powerdistribution to introduce competition and private sector play

Merit based economic dispatch of power plants is being piloted to reduce variable costof power and thereby bring down losses.

I believe that India is at a cusp of an energy transformation and is marching towardsambition of 450 GW of installed green capacity by 2030. There is also a large headroom forincrease in power consumption with the current per capita consumption of in India muchlower than the global average. This would mean a major transformation of power sectorwith significant opportunities opening of power distribution renewable power spaceincluding distributed generation intelligent energy solution and services.

Your Company has built significant expertise and domain knowledge in the Power sectorover the past years and is exploring new opportunities in the emerging scenario. Withanticipated changes in the Market and Regulatory environment GMR Group is focused onidentifying attractive opportunities that we can target. Areas being explored includePower Distribution Renewable Energy and other Asset Light Digital opportunities.International Natural Resource assets Given the global upswing in commodity cycle thecoal business has been performing exceptionally well in the recent past. PTGEMS have beenconsistently increasing its coal volumes and its operations have been robust andconsistently profitable. During CY-2020 PTGEMS has sold 34 million tons which translatedto a PAT of USD 96 million for the year and company has announced cumulative dividends ofUSD 253 million with your company receiving USD 76 Mn as dividend since start of 2020till date.

TRANSPORT & URBAN INFRASTRUCTURE

The key highlights for FY’20-21 for the Transportation and Urban Infrastructurevertical (T&UI) vertical of your Company included the following. The Highway tollprojects were affected due to the ongoing Covid 19 pandemic and farmer’s agitation inPunjab. The toll has been suspended in Ambala – Chandigarh toll road from October2020 onwards. We are engaged with the Government in efforts to resume tolling. NHAI hasalso released a policy for compensation to BOT (Toll) concessionaires to which we haveapplied to. On the positive side implementation of Fastag has improved collectionefficiency at our toll projects. During the year we have also converted all streetlightsin Ambala–Chandigarh project to LED. It is worthy to note that Hyderabad –Vijayawada project secured Green Highway award from MoRTH during FY’20-21.

The Highway sector continues to be one of the most dynamic sectors in the country.During FY’20-21 NHAI awarded record number of projects in Hybrid Annuity Model (HAM)mode and significant number of projects are expected in HAM BOT and EPC duringFY’21-22. Your company is always in lookout for adding new highways PPP projects thatfit into the overall strategy of the Group to the existing portfolio. On highways frontconcerned authority have passed a significant order accepting our submission on Change inLaw for Hyderabad-Vijaywada highways project. Your company is currently in process ofdiscussing future steps On the EPC front your company has completed more than 703 of DFCCproject - New Bhavpur to Deen Dhayal Upadhyay Junction (201 and 202) in the State of Uttar

Pradesh and 653 of DFCC project - Ludhiana - Khurja – Dadri (package 301 and 302)in the States of Haryana Uttar Pradesh and Punjab. In package 201 we have completed 175Track kms of track linking and in package 202 we have completed 290 Track kms of tracklinking.

Your Company is exploring new projects in DFCC in PPP / EPC mode that are expected tocome up during FY’21-22 and beyond. Your Company has invested in two sets of fullymechanized track laying equipment and other heavy construction equipment that can lay upto 1.5 Kms of track linking every day and can be used in future projects as well. Apartfrom construction of railway lines Government has opened up station development andrunning of passenger trains in PPP mode. Your Company will explore those opportunitiesthat correspond to its overall Group strategy.

At the GMR Krishnagiri Special Investment Region (GKSIR) your Company has soldapproximately 211 Acres in Phase 1 to an Indian MNC. Further your company has enteredinto a binding term sheet for another approximately 300 acres which shall be concludedshortly. Your company is targeting clients from Japan Korea and other countries and isalso focusing on domestic companies. Currently your company is taking up developmentactivities on the balance land parcels in phased manner. Government of India has announcedseveral business-friendly policies like - Production Linked Incentive (PLI) Scheme formore than 10 key sectors with a financial outlay of Rs. 1.45 lakh Crores and toimprove attractiveness of manufacturing sector in India. In addition Government of TamilNadu has announced a new Industrial Policy which provides flexible mechanisms for newindustrial units to avail fiscal benefits with special focus for sunrise sectors. Theseinitiatives are expected to stimulate further demand for land for manufacturing andrelated projects at GKSIR.

As you are aware the GMR Group held 513 in Kakinada SEZ Ltd (KSEZ) and had announcedthe divesting of its entire 513 stake in KSEZ to Aurobindo Realty & InfrastructurePrivate Ltd (ARIPL). Further as part of the proposed transfer of stake of KSEZ to ARIPL743 of equity stake of Kakinada Gateway Port Ltd (KGPL) a subsidiary of KSEZ would betransferred to ARIPL. Total consideration for the sale of equity stake as well as thesub-debt in KSEZ is Rs. 2719 crore. Out of the total consideration the firsttranche of Rs. 1692 crore has been received and the balance Rs. 1027 crorewould be received in the next 2-3 years which is contingent upon certain agreedmilestones. The divestment proceeds will be primarily used to reduce the indebtedness ofthe Group.

ENVIRONMENTAL SOCIAL AND GOVERNANCE (ESG)

Sustainability and Corporate Social Responsibility (CSR) have been at the core of theGMR Group ethos since inception. We have taken great pride in all the assets we havedeveloped as National Assets of the highest quality and we have always ensured that weadopt highest levels of environmental standards at all our projects. Further ourfoundation has been doing path breaking work on the CSR front on healthcare educationsanitation and livelihoods for more than 29 years now.

Your Company has allocated substantial resources to increase adherence to environmentalstandards and pollution control measures and enhance Environment Health Safety levels. Inthis regard I am proud to share a few awards won during the past year which is strongtestimony to our credentials on the sustainability front:

DIAL became Asia Pacific’s first Level 4+ (Transition) accredited airport andSecond Airport Globally under ACI’s Airport Carbon Accreditation program. AirportCarbon Accreditation Program of Airport Council International (ACI) aims to encourage andenable airports and its stakeholders to implement best practices in Greenhouse Gas (GHG)management and achieve emissions reduction. Delhi Airport has taken various proactiveinitiatives towards environment management and sustainability.

As part of this approach Delhi Airport has also introduced technological solutionssuch as adoption of Electric vehicles and Taxibots which has resulted in reduction ofsignificant amount of aviation turbine fuel consumption by Aircrafts for ground movement.

DIAL has achieved absolute emission reduction by 473 and specific GHG emission by 773over baseline year 2010. DIAL was able to issue a landmark Green-bond for US$ 450 Mn inMarch 2021 by leveraging the excellent work it has been doing on the sustainability front.

DIAL has invested in Bajoli Holi Power Project to meet its energy needs from renewablesources.

GHIAL won ACI Green Airports Recognition 2021 -Gold for the Air Quality Management andwas also awarded Level 3+ Neutrality status under ACI’s Airport Carbon Accreditationprogram.

In line with its vision to maximize usage of clean energy GHIAL has also commissionedits second 5 MW solar power plant. GHIAL has also created water reservoirs within theAirport premises to conserve rainwater. The water is cleaned and supplied for consumptionat the Airport. Current facilities can meet the requirements for more than 4 months in ayear.

GWEL won the prestigious award "National Energy Conservation award-2020" fromthe Ministry of Power Government of India for second time. Also a First in India GWELWater management system is certified for ISO 46001:2019 by M/s BVCI.

GKEL won National Award for "Excellence in Energy Management" by CII and"Environment Excellence Award – 2020" in Large Industry Category by ICC.

Hyderabad – Vijayawada project secured Green Highway award from MoRTH duringFY’20-21.

Your Company has also continued its tradition of caring for the communities andstakeholders as part of its Corporate Social Responsibility program through GMRVaralakshmi Foundation (GMRVF) an associate of your Company. The Foundation is currentlyworking across all the asset locations of our businesses including in Nepal. Being a yearof pandemic the Foundation stepped up its efforts to reach out to the communities tooffer best possible support especially to vulnerable sections of the society. During thelockdown Foundation supported over 1 lakh people with cooked food and over 6000 familiesand several orphan homes were supported with dry ration. ‘Hands for Humanity‘program was conducted in collaboration with 92.7 Big FM and Delhi Police at Delhi underwhich ration kits were provided to 1050 families. We launched "UMEED KI PAHIYE"program to support families who lost their earning member due to COVID-19 pandemic. Allthe educational institutions under GMRVF performed exceedingly well during the last year.There are over 10000 students in these institutions. GMRIT (GMR Institute of Technology)has taken several initiatives to promote research which has resulted in faculty memberspublishing more than 400 research publications. To enable students to take up the coursesrelated to the 21st century skills GMRIT signed MoUs with reputed foreign universitiesand introduced industry driven elective courses. Approx. 550 students from GMRIT gotplaced this year with various companies including MNCs. GMRVF partnered with over 200government schools with the objective of improving the quality of education reaching outto about 35000 students across India. Two of the GMRVF supported students from Rajam gotselected for Community College Initiative Program of US Government and completed theircourse in the community colleges in US. Thirty-Eight students from supported schools gotselected for National Means-cum-Merit Scholarship with coaching and guidance from GMRVF.Mobile Medical Units and Medical clinics offered healthcare services to the needy peopleespecially during the lockdown period. Tele-health services and virtual health camps wereorganized. Awareness on Covid and other health issues was provided through online tools.Nutrition centres run by Foundation provided nutrition supplements to pregnant andlactating women at their doorsteps. Contributing to the Skill India Mission of theGovernment GMRVF continued to set benchmarks in the area of skilling. A new VocationalTraining Centre was inaugurated at Hubbali Karnataka in November 2020 by Shri PralhadJoshi Hon’ble Minister for Coal Mines and Parliamentary Affairs. Most of thevocational training centres run by GMRVF adopted quickly to the Covid situation andoffered trainings in Blended learning model during the lockdown. The Foundation focused onlivelihood restoration for Covid affected people. About 1000 families were supported forvarious livelihood activities such as micro-enterprises poultry Floriculture vegetablecultivation livestock farming etc.

GMR Varalakshmi CARE Hospital was setup in April 2011 in collaboration with the CAREgroup of Hospitals at Rajam. This is a Multispecialty Hospital in Rajam Srikakulamdistrict under GMR Varalakshmi Foundation. It was started as a 135-bed hospital andgradually upgraded to 200 beds. During the covid pandemic the hospital provided servicesfor the communities in the vicinity.

Rapid Antigen testing services: Hospital is approved by ICMR and 4000+ tests wereconducted Tele consultation to the covid patients and counselling to post covid patients.

Covid Vaccination centre as per the guidelines from the district authorities andnearly 2500 people vaccinated. Over the years your company has built a robust Governanceframework starting right from the top with a well-structured Family Governance model. Inaddition to focus on financial and operational performance we are equally committed tomaintaining strong corporate governance practices and ethical behaviour across everybusiness in the GMR Group. Our reputation as an ethical and trustworthy Company is ourmost important asset. We believe that consistently focusing on good governance andapplying the highest ethical practices in all our activities enables us to uphold thetrust of our stakeholders. Our companies are built around the Group’s seven Valuesand Beliefs which are the embodiment of every aspect of what we do. These are HumilityEntrepreneurship Delivering the promise Learning & Inner excellence Respect forindividual Teamwork & Relationships and Social Responsibility.

To ensure transparency in transactions across all Group companies and subsidiaries weconduct regular and structured assessments by the internal audit teams review through anexternal agency and due diligence by the Audit Committee and the eminent members of ourBoard of Directors.

LOOKING AHEAD

Looking ahead for FY’21-22 we expect business environment to remain challenginggiven the ongoing impact of the COVID-19 pandemic. However given the various initiativestaken by the GMR Group to ensure liquidity business continuity and operationalefficiency we are confident to comfortably ride through these difficult times and comeout stronger than ever. From a longer-term perspective your Group will continue to investin technology and work towards further strengthening and expanding our footprint in theAirport business and identify areas for profitable growth in the Power and Transportationportfolio. Digitalization & Innovation Along with the focus on Business your Companyrecognises the need for innovation in all aspects of business and customer engagement andbelieves that in the current context companies need to innovate or they will perish. Wehave been driving several initiatives to enhance business prospects in terms of superiorcustomer experiences revenue enhancement and cost reduction opportunities as well asagile and efficient internal processes. We are strengthening and digitalizing the coreprocesses of the group across Finance Procurement Planning Reporting and HumanResources and expanding the scope of our Shared Services Centre with the objective ofimproving speed and agility of services delivery within the group and improving ouroverall cost structure and competitiveness of the group. Major part of this transformationis planned to be completed within FY’21-22. With the onset of COVID pandemic safetyof the passengers travelling through our airports became of paramount importance. Duringthis period our airports underwent an accelerated digital transformation and introducedseveral technology innovations / solutions addressed towards enhancing passenger safety.We have also introduced an Artificial Intelligence enable App "HOI" at ourairports which is aimed at helping passengers on multiple fronts in their journey throughthe airport besides contactless ordering of F&B retail products and carrying outpayments. Delhi Airport developed and deployed the Air Suvidha Portal which facilitatedthe process for all International Passengers coming to India to share relevant informationincluding their Testing and Vaccination details as required. This information formed thebasis for the pre-clearance given to passengers to facilitate their entry into the countryand reduce passenger waiting times at airports. Your company is shifting focus frombuilding assets towards offering wholistic services to our customers by leveragingdigitalisation. As a step in this direction we launched GMR Innovex a new platform forInnovation. GMR Innovex will facilitate start-ups with various kinds of assistance andallow them to build and test their products/services at GMR Innovex across a very largelandscape of businesses like Airports MRO Cargo Logistics Infrastructure etc. The GMRInnovation Hub will be working on a multitude of technologies including Video AnalyticsMachine-Vision Blockchain Drone-Tech Smart Tagging Contactless Technology RPA EVAR/VR IoT and others.

As I conclude I would like to take this opportunity to express my gratitude towardsour customers suppliers and other stakeholders for their confidence and trust in the GMRGroup during such difficult times. I also thank the leadership team of GMR Group forproviding guidance and navigating the organization during the pandemic. Last but not theleast my sincere appreciation is for all our employees whose dedication hard worksacrifice and continued contribution in such challenging times enabled the Group toovercome every obstacle. As a token of appreciation and gratitude to service fromemployees GMR Group strived to provide support to the families of employees deceased dueto Covid through monthly living allowances Children Education Assistance and MedicalInsurance Coverage.

I look forward to your continued support and encouragement in taking your Company togreater and newer heights in the future.

Stay Safe Stay Healthy

Thank You

G M Rao

Chairman GMR Group

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