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Gammon India Ltd.

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

Gammon India Ltd. (GAMMONIND) - Director Report

Company director report


The Members of Gammon India Limited

Your Directors have pleasure in presenting their 96th Annual Report together with theAudited Financial Statements of the Company for the Financial Year ended March 31 2018together with the Statutory Auditors Report thereon.

1. Review of Financial and Operational Performance:

( in crores)

Stand alone


For the Financial Year ended March 31 2018 For the Financial year ended March 31 2017 For the Financial Year ended March 31 2018 For the Financial year ended March 31 2017
Profit before Other Income Depreciation and Interest (1538.59) (1419.34) (1128.22) (292.70)
Other Income 112.42 308.17 329.66 121.20
Depreciation 11.77 32.65 46.39 90.44
Interest 575.91 518.90 782.81 874.97
Profit/(Loss) before Tax (2013.85) (1662.72) (1627.76) (1136.91)
Provision for Taxation (32.55) (2.80) (6.31) 16.87
Profit/(Loss) after Tax (1981.30) (1659.92) (1621.45) (1153.78)
Transferred to Minority Interest - - (47.60) (67.32)
Profit/(Loss) for the year (1981.30) (1659.92) (1573.85) (1086.46)
Profit brought forward from the previous year (1351.62) 315.41 (3248.59) (2158.85)
Available for Appropriation (3332.92) (1344.51) (4822.44) (3245.31)
On Divestment of Subsidiary - - (0.33) -
Dividend (Proposed) Equity Shares - - - -
Tax on Dividend - - - -
Other Adjustments 0.20 (7.11) 2.37 (3.28)
Balance carried to Balance Sheet (3332.71) (1351.62) (4820.41) (3248.59)

• The Financial Statements for the year ended 31st March 2018 have been restatedin 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 period of 12 (twelve) months commencing from 1st April 2017and ending on 31st March 2018.

During the year under review the Turnover of the Company on a Standalone basis stood at' 233.43 crores as compared to ' 712.02 crores during the previous F.Y. ended 31st March2017. The Company posted a Net Loss after Tax of ' 1981.30 crores during the period ended31st March 2018 as against a Net Loss after Tax of ' 1659.92 crores during the previousFY ended 31st March 2017.

On a Consolidated basis the Turnover of Gammon Group during the period under reviewstood at ' 645.41 crores as compared to ' 1483.92 crores for the previous F.Y. ended 31stMarch 2017. The Group posted a Net Loss after Tax of ' 1621.45 crores during the F.Yended 31st March 2018 as against a Net Loss after Tax of ' 1153.77 crores during theprevious F.Y ended 31st March 2017. The income generated during the year is from theresidual EPC. Interest and finance costs continue to be high.

During the year under review the process of demerger of the two operating businesseswas completed. The Transmission and Distribution business was demerged through a Scheme ofArrangement to Transrail Lighting Limited ("TLL") (duly approved by the NationalCompany Law Tribunal on 30th March 2017) and TLL discharged the consideration byallotting 725000 equity shares to the Company. A part of the Civil EPC business wasdemerged to Gammon Engineers and Contractors Private Limited ("GECPL") (dulyapproved by the National Company Law Tribunal on 22nd March 2017) and GECPL dischargedthe consideration by allotting 11885714 equity shares to the Company. The Companythereafter pledged its shareholding in each of the two demerged entities to the CDRlenders as security for repayment of its dues. The Company has also been successful inrecovering certain arbitration claims aggregating to ' 392.83 crores as on 31st March2019.

The Company has been making every effort in settling the outstanding CDR dues. As partof the carve out of the transmission and distribution business and part of the Civil EPCbusiness in the previous years there was a reduction in the CDR lenders exposure by '10362 crores including funded and non-funded exposures.

After the carve out of businesses the total exposure of the lenders in the Company is '4263 crores (Fund based - ' 3872 crores (excluding interest) and Non-Fund Based - ' 391crores).

An Investor has evinced interest in acquiring major stake in the Company and the draftproposal from the Investor also includes a debt resolution plan. The broad terms of theproposal are

• Gammon India would be revived as a construction company primarily in the EPCbusiness.

• The investor will invest ' 50 crore as primary investment into Gammon for aminimum of 60% stake and management control

• Claims in EPC Projects will remain in the Company

• Total Debt to be assumed of ' 500 Crore

• The assumed debt would be restructured with a new maturity and repayment profilehaving an IRR of 8%

• Gammon House will be developed and sold by entering into a development agreementwith leading developers. As per the estimates provided by the developers funds to thetune of ' 630 crores are estimated to be available for the lenders.

• The aforementioned proposal is subject to further negotiations between theCompany its lenders and the Investor.

The said proposal has been forwarded to the lenders and is awaiting their acceptance.


As part of further restructuring the Board in its meeting held on 11th April 2017approved carve out of the retained Civil EPC business viz. Civil EPC business carried onby the Company in cooling towers chimneys industrial and residential buildings tunnelsdams etc. in relation to the execution capabilities pertaining to identified contractsalong with all assets properties rights and all debts liabilities etc to its whollyowned subsidiary Gammon Transmission Limited ("GTL") in two phases viz. througha slump sale and part transfer through a Scheme of Arrangement between the Company and GTLand its respective shareholders and creditors.

The Shareholders approved the slump sale on 15th May 2017 for transfer of the retainedresidual EPC undertaking for a cash consideration of ' 10 lakhs. The Company also executedanother Business Transfer Agreement for transfer of two identified civil EPC projectsalong with all assets properties rights obligations to GTL for a consideration of '60000000/- (Rupees Six crores) to be discharged by GTL by way of issue of 6000000(Sixty Lakhs) equity shares of ' 10 each to the Company. On approval of the Scheme ofArrangement between the Company and GTL by the National Company Law Tribunal GTL willissue 740000 (Seven lakhs forty thousand ) fully paid up equity shares of face value of' 10/- each to GIL towards transfer of the retained Civil EPC Undertaking. The said Schemehas also received approval from the stock exchanges viz. BSE Limited and the NationalStock Exchange of India Limited vide its letters dated 27th June 2018 and 25th June2018. The said Scheme is filed with the Hon'ble National Company Law Tribunal MumbaiBench for directions for summoning meeting of shareholders and creditors. The hearing ofthe same is awaited.

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 ' 50000000/- (Rupees Five crores only). The Board has also acceptedthe proposal from Transrail Lighting Limited and Ajanma Holdings Private Limited("Investors") for investment of '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 demerger ofthe retained Civil EPC business to GTL and the proposed investment by Investor in GTL asproposed is subject to the approval of Lenders shareholders and all other regulatoryauthorities.


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. Based onthe valuation carried out by an independent valuer there is a diminution in the equityvalue of Sofinter group as compared to the total exposure of the Company. The managementis of the view that this diminution in the equity value of Sofinter group is of temporaryin nature considering the Sofinter Group's strong order book position. Considering thecombined exposure in GIBV & GHML the reduction in Equity value as per the recentvaluation report is ' 125 crores. However on the prudent basis Company has provided ' 350crores during the year against its exposure to GIBV.

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 December 2017 the group clocked a turnover ofEuro194 million EBITDA of Euro13.7 million and Profit after tax ofEuro2.2million.Turnover reduction is solely attributed to the continuing problem ofadequate bonding and credit lines due to the delay in finalizing a long term agreementwith the Italian banks for the Group. However better execution and control over costshelped the Sofinter Group post a higher EBITDA over the previous financial year and anafter tax profit as against an after tax loss in the previous financial year. The currentStandstill Agreement with the Banks. The reason for the Banks not willing to finalize along term Agreement is due to the insistence by them on a capital increase within Sofintergroup in order to enhance its Net worth to support the levels of funding sought by theGroup. Consequently the Shareholders have irrevocably mandated the Board to search for apartner once the long term agreement with the Banks is signed in order to move forward onthis matter.

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 decline in order intake due partly to delays bycustomers notably in U.S.A in placing orders as well as the lack of bonding lines.

A.C. Boilers S.p.A has lower order bookings as well due to the banking situation.

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 December 2017 is approximately€410million.

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. Astatement of assets and liabilities prepared by the Commissioner in December 2017 isavailable in terms of the procedure. No further updates to this document or AuditedFinancial Statements are available on the date of this report. The Company has on aprudent basis provided ' 171.76 crores against its exposure in FTM as on 31st March 2018.

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 250 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.

The Company has already made a provision of ' 130 crores in March 2017 against itsexposure based on internal estimates of the realisable value and further provision of '100 crores is made during March 2018.

2. Dividend

In view of the losses the Board of Directors do not recommend any dividend on theEquity Shares of the Company for the Financial Year ended March 31 2018.

3. Reserves

No amount was transferred to Reserves for the Financial Year ended March 31 2018.

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 10th May 2017 fornovating CDR debts aggregating to ' 6505.42 crores (Fund and Non-Fund based) to GECPL aspart of the carve out of the Civil EPC Undertaking.

The Company executed Novation Agreements on 26th February 2016 and 10th May 2017 fornovating CDR debts aggregating to ' 3855.20 crores (Fund and Non-Fund based) to TLLpursuant to the transfer of the Transmission and Distribution business.

The Company also availed a non fund based facility of ' 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 ' 4263 crores has become a Non Performing Asset with thelenders as on 30th June 2017. During the year under review the Company has repaid partdues of Canara Bank aggregating to ' 286 crores (including interest) through the sale ofland owned by one of its subsidiary.

5. Debentures

As on March 31 2018 the Company had an outstanding principal balance of NCD'samounting to ' 2893389796. Also the FITL outstanding on the NCD's was ' 4536063 whichmakes the total principal outstanding to ' 2897925859. This amount is postnovation/transfer of NCD's to Transrail Lighting Limited ("TLL") and GammonEngineers and Contractors Private Limited ("GECPL") as part of the carve out ofthe Transmission and Distribution business into TLL and Civil EPC Undertaking into GECPLrespectively. However some NCD holders have yet to approve the novation. The saiddebentures and interest thereon continue to remain unpaid for more than a year. Repaymentof debentures is also part of the settlement proposal as mentioned above subject to theapproval of the lenders to the proposal.

6. Public Deposits

The Company has no fixed deposits under Chapter V of the Companies Act 2013 and didnot accept any further deposits during the Financial Year 2017-18.

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 interim dividend for the Financial Year 2010 - 11 which remained unclaimed andunpaid for a period exceeding seven years from its due date aggregating to ' 241168/-(Rupees Two Lakh Forty One Thousand One Hundred and Sixty Eight only) to the InvestorEducation and Protection Fund (IEPF) on 21st October 2017. The Company has alsotransferred unclaimed Final Dividend for the financial year 2009-10 amounting to '368722/- (Rupees Three Lakh Sixty Eight Thousand Seven Hundred and Twenty Two only) tothe IEPF Fund on 23rd November 2017. The Company has also transferred unclaimed andunpaid Dividend outstanding for seven or more years for the Financial Year 2010-11amounting to ' 256212/- (Rupees Two Lakh Fifty Six Thousand Two Hundred and Twelve) tothe IEPF Fund on 16th November 2018.

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

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

9. Change in Nature of Business

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

10. Details Of Significant And Material Orders Passed By The Regulators Or Courts OrTribunals Impacting The Going Concern Status And Company's Operations In Future

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

11. Directors' Responsibility Statement

Pursuant to Section 134 (5) of the Companies Act 2013 ("the Act") we herebystate that:

i) in the preparation of the Annual Accounts the applicable Accounting Standards havebeen followed along with proper explanation relating to material departures if any;

ii) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2018 and its loss for theyear ended on that date;

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

iv) The Directors have prepared the Annual Accounts for the year ended March 31 2018on a going concern basis;

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

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

12. Annual Return

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

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 pledged itsentire shareholding of 25% in each of the two demerged entities viz: Transrail LightingLimited (TLL) and Gammon Engineers and Contractors Private Limited (GECPL) which waspledged to its CDR lenders. The lenders invoked the pledge in each of the two entities. Ason 31st March 2019 the CDR lenders invoked pledge of Company's holdings of 23.08%(13190833) in Gammon Engineers and Contractors Private Limited and 23.08% holding(969526) in Transrail Lighting Limited. Balance Shares with the Company in GECPL1094881 shares and in TLL 80474 shares. Lenders dues are reduced by ' 90.91 Crore.

The Company had 25 subsidiaries including step-down subsidiaries 4 Associates and 5Joint venture companies as on 31st March 2018.

Gammon Infrastructure projects Limited ("GIPL") ceased to be the Company'ssubsidiary effective from 8th August 2017 post divestment by the Company of its stake inGIPL held through two of its wholly owned subsidiaries Gammon Power Limited and GactelTurnkey Projects Limited. Pursuant to this all the subsidiaries and SPV's of GIPL haveceased to be the subsidiaries of the Company. However the Company continues to hold as ondate 38.54% of the equity stake in GIPL through its wholly owned subsidiary Gammon PowerLimited.

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 A" to this Report.

Preeti Townships Private Limited (the Company's step down subsidiary) has ceased to bethe Company's step down subsidiary pursuant to sale of its stake by Gammon Realty Limited(the Company's subsidiary). Further S.A.E. Powerlines Italy wholly owned subsidiary ofthe Company in Italy has filed an application for insolvency.

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 2018 along withcomparable as on March 31 2017 on a Standalone and Consolidated basis which form part ofthis Annual Report.

As required under the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the Consolidated Financial Statements of the Company 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

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

1. Mr. Digambar Bagde-Non Executive and Non-Independent Director resigned from theCompany's Board on 11th May 2017.

2. Mr. Chandrahas Dayal resigned as the Non-Executive and Independent Director of theCompany w.e.f. 29th September 2017.

3. Mr. Ajit B. Desai ceased to be an Executive Director of the Company effective from17th December 2017 by virtue of expiry of his term and did not offer himself forre-appointment. However he was appointed as a Chief Executive Officer (CEO) and a KeyManagerial Person for a period of one year w.e.f. 18th December 2017. His term wasrenewed for a further period of 2 years w.e.f. 18th December 2018.

4. Mr. Chayan Bhattacharjee was appointed as Non-Executive Non-Independent Director ofthe Company for a period of three years w.e.f. 6th February 2018. Mr. Bhattacharjeehowever resigned from the Company's Board w.e.f. 3rd August 2018.

5. The term of Mr. Rajul Bhansali - Executive Director - International Operationsexpired on 29th March 2018 and he did not seek re-appointment.

6. Mr. Anurag Choudhry was appointed as the Executive Director on 20th August 2018subject to the shareholders approval to hold office as such for a period of 3 years and heresigned from the Board on 18th February 2019. The Board however seeks ratification ofthe remuneration paid to him during the above tenure.

7. Mr. Naval Choudhary Mrs. Urvashi Saxena and Mr. Atul Kumar Shukla have ceased to beIndependent Directors of the Company effective from 31st March 2019 by virtue of expiryof their term of office as Independent Directors of the Company.

8. Mr. Soumendra Nath Sanyal an Independent Director has been appointed as anAdditional Director effective from 1st April 2019 and holds office until the AnnualGeneral Meeting. The Board recommends his appointment as an Independent Director for aterm of 5 (Five) years effective from 1st April 2019.

9. Mr. Ulhas Dharmadhikari an Independent Director has been appointed as an AdditionalDirector effective from 17th April 2019 and holds office until the Annual GeneralMeeting. The Board recommends his appointment as an Independent Director for a term of 5(Five) years effective from 17th April 2019.

10. Mr. Sugato Ghosh has been appointed as a "Nominee Director" dulyappointed by Axis Trustee being the Debenture trustess to hold office as such effectivefrom 7th February 2019.

11. Mr. Abhijit Rajan is liable to retire by rotation at the 96th Annual GeneralMeeting. However as he suffers from disqualification under Section 164(2) of the Act hehas not offered himself for re-appointment. Hence Mr. Rajan shall hold office only untilthe date of the 96th AGM.

12. Mr. Anurag Choudhry has been appointed as a Chief Financial Officer and Ms. NikiShingade as the Company Secretary of the Company w.e.f. 30th April 2019.

As on the date of this Report except for Mr. Abhijit Rajan none of the existingdirectors suffer disqualification under the provisions of Section 164(2) of the CompaniesAct 2013. Accordingly all the Directors have given a declaration to that effect.

16. Auditors

(A) Statutory Auditors

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

Vide Notification dated 7th May 2018 issued by the Ministry of Corporate Affairs therequirement of seeking ratification of appointment of statutory auditors by members ateach Annual General Meeting has been done away with. Accordingly no such item has beenconsidered in the Notice of the 96th Annual General Meeting.

(B) Cost Auditor

In accordance with the provisions of Section 148 of the Companies Act 2013 the Boardin its meeting held on 20th September 2017 appointed Mr. R. Srinivasarghavan as the CostAuditor of the Company for the Financial Year ended 31st March 2018 at a remuneration of' 100000/- (Rupees One Lakh only). The said payment was ratified by the members of theCompany at the 95th Annual General Meeting held on 21st March 2018. The Cost Auditorshave submitted their Cost Audit Report for the financial year ended 31st March 2018 whichwas taken on record by the Board and also filed with the Ministry of Corporate Affairs.

In accordance with the provisions of Section 148 of the Companies Act 2013 the Boardin its meeting held on 30th April 2019 has re-appointed Mr. R. Srinivasarghavan as theCost Auditor of the Company for the financial year 2018-19 on a remuneration of ' 100000excluding out of pocket expenses and tax. In terms of the provisions of Section 148(3) ofthe Companies Act 2013 read with Rule 14(a)(ii) of the Companies (Audit and Auditors)Rules 2014 the remuneration of the Cost Auditor for the aforementioned Financial Year2018-19 is sought to be ratified by the members at the ensuing 96th Annual GeneralMeeting.

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

M/s. Pramod Shah & Associates Practicing Company Secretaries were appointed as theSecretarial Auditors of the Company to conduct the Secretarial Audit of the Company forthe Financial Year ended 31st March 2018 pursuant to the provisions of Section 204 of theCompanies Act 2013 read with the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended from time to time. The Secretarial Auditor's Report isannexed to this report as "Annexure B".

The auditors have qualified the report with the following observations:

1. As per Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 the listed entity shall submit quarterly and yearly standalone financialresults to the stock exchange within forty five days of end of each quarter (other thanlast quarter) along with Limited Review Report or Audit Report as applicable. The companyhas not submitted the financial statement for quarter ended September 2017 December2017 March 2018 and year ended March 2018. However the Management has informed us thatthey are in the process of uploading the same.

Board's explanation: The quarterly results for the quarters ended September 2017December 2017 and March 2017 were subsequently approved by the Board in its meeting heldon 28th November 2018.

With the carve outs of two operating businesses and the transfer of employees engagedtherein to the demerged entities the Company is working with skeletal staff which delayedthe preparation and audit of financial results for the quarter commencing from September2017 onwards. This delayed the preparation of financial statements.

2. As per the provisions of Section 96(1) of the Companies Act 2013 the Company wasrequired to conduct its 95th Annual General Meeting (AGM) on or before 30th September2017. The Company had applied for extension of AGM with the Registrar of Companies (ROC)to conduct their AGM on or before 30th December 2017. The approval for the same wasgranted on 26th August 2017. However the Company was unable to conduct its AGM by 30thDecember 2017 because their Financial Statements were not ready. The Company conductedits AGM on 21st March 2018.

Board's explanation: Due to difficult times being faced including tight liquidityconditions and delayed results the company was not able to convene its AGM within theprescribed time limits.

3. As per the provisions of Section 203 of the Companies Act 2013 and the rules madethereunder the Company was required to appoint following Whole-Time Key ManagerialPersonnel:

i) Managing Director or Chief Executive Officer or Manager and in their absence aWhole-Time Director;

ii) Company Secretary; and

iii) Chief Financial Officer.

As per Section 203 the Company has appointed Chief Executive Officer but has notappointed a Whole Time Company Secretary and Chief Financial Officer for the FinancialYear ended 31st March 2018. However the Management has informed us that they are in theprocess of appointing a Whole Time Company Secretary and Chief Financial Officer;

Board's explanation: Mr. Anurag Choudhry has been appointed as a Chief FinancialOfficer and Ms. Niki Shingade as the Company Secretary of the Company w.e.f. 30th April2019.

4. As per FEMA Circular of RBI pertaining to Overseas Direct Investments (ODI) datedApril 13 2016 which provides for Submission of Annual Performance Report (APR). TheCompany has not filed Annual Performance Report ('APR') within the stipulated time.However the Management has informed that they are in the process of filing the same.

Board's Explanation: The Company has filed the Annual Performance Reports as per FEMACircular of RBI pertaining to Overseas Direct Investments dated 13th April 2016. Thestatus of filing the APR's for the financial year ended 31st March 2017 which has beenfiled on several dates in respect of several overseas subsidiary companies is as below:

Name of the Company Date of filing APR
1. ATSL Holdings B.V. Netherlands 29th March 2017
2. Gammon Holdings B.V. Netherlands 15th March 2018
3. Gammon International B.V. 19th March 2018
4. Gammon International FZE Dubai 13th December 2017
5. P Van Eerd Beheersmaatschappij B.V. 27th March 2018

17. Corporate Governance Report and Management Discussion & Analysis

A Report on Corporate Governance and Management Discussion and Analysis for the periodended 31st March 2018 together with certificate from M/s. V. V. Chakradeo and Co.Practising Company Secretary regarding compliance of conditions of Corporate Governance asstipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 forms part of the Annual Report.

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

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

Members attention is drawn to "Emphasis of Matter" stated in the Auditor'sReport dated 19th February 2019 on the Revised Standalone Financial Statements and in theAuditor's Report dated 19th February 2019 on the Consolidated Financial Statements of theCompany for the year ended 31st March 2018. The Directors would like to state that thesaid matters are for the attention of members only and have been explained in detail inthe relevant notes to accounts as stated therein and hence require no separateclarification.

19. Declaration by Independent Directors

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

20. Nomination and Remuneration Policy

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

21. Committees of the Board

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

1. Audit Committee

2. Stakeholders Relationship Committee

3. Nomination and Remuneration Committee

4. Corporate Social Responsibility Committee

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

22. Familiarization Programme for Independent Directors

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

23. Meetings of the Board

During the Financial Year under review the Board of Directors of your Company met 8(eight) times i.e. on 11th April 2017 5th May 2017 29th August 2017 20th September2017 20th November 2017 29th December 2017 6th February 2018 and 6th March 2018.

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 7 (seven) times i.e. on 11th April 2017 5th May 2017 29th August 2017 20thSeptember 2017 20th November 2017 6th February 2018 6th March 2018.

Mr. Chandrahas Dayal ceased to be the Chairman of the Audit Committee due to hisresignation from the Company's Board effective from on 29th September 2017. Mr. NavalChoudhary was appointed as the Audit Committee Chairman vide a resolution passed by theAudit Committee at its meeting held on 20th November 2017.

Post cessation of Mr. Naval Choudhary Mrs. Urvashi Saxena and Mr. Atul Kumar Shukla asIndependent Directors w.e.f. 31st March 2019 Mr. Jaysingh Ashar - Executive DirectorMr. Soumendra Nath Sanyal and Mr. Ulhas Dharmadhikari - Independent Directors wereappointed as members of the said Committee vide a circular resolution dated 24th April2019.

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

Employees to report to the management about suspected or actual frauds unethicalbehaviour or violation of the Company's code. The Whistle Blower Policy is uploaded on thecompany's website 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 2018 with the Related Parties were in the ordinary courseof business and at arm's length basis. All such Related Party Transactions were placedbefore the Audit Committee and also the Board for its approval wherever required. Noomnibus approvals were taken during the period under review.

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

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

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

None of the Directors/ KMPs or their relatives has any pecuniary relationships ortransactions vis-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 Regulations the Independent Directorsevaluated the performance of the Non-Independent Director. Independent Directors were alsoevaluated by Board members on the functioning participation and contribution made by eachIndependent Director to the Board and Committee processes. A Report of the evaluation hasbeen forwarded to the Chairman and the Nomination and Remuneration Committee to maintainconfidentiality of the Report and to improve the Board dynamics and enhancing Board'soverall 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 E' and is also available on the website of the Company .

The Company has not spent any amount on CSR activities during the Financial Year ended31st March 2018 since the average net profits of the Company for the immediatelypreceding three Financial Years stood negative.

The Annual Report on CSR activities as per the Companies (Corporate SocialResponsibility Policy) Rules is annexed to this Report as "Annexure F'.

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 internal controls have been designed to provide assurance withregard to recording and providing reliable financial and operational informationcomplying with the applicable statutes safeguarding assets executing transactions withproper authorization and ensuring compliance with corporate policies.

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

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 G" 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 H' tothis report.

35. Prevention of Sexual Harassment of Women at Workplace

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

36. Reasons For Delay in AGM:

The Company filed application to seek extension of time from the Registrar ofCompanies Mumbai seeking three months extension commencing from 1st October 2018 to 30thDecember 2018 for convening and holding the 96th Annual General Meeting of the Companywhich was approved by the ROC permitting the Company to hold the AGM on or before 30thDecember 2018. However despite this the Company could not convene the AGM due todifficult times being faced including tight liquidity conditions.

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

Date: 30th April 2019