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FUTURE GMR INFRA Directors Report 

Dear Shareholders,



The Board of Directors present the 20th Annual Report together with the

audited financial statements of the Company for the Financial Year (FY)

ended March 31,2016.



Financial Results and state of the Company''''s affairs



Your Company, as a holding company, operates in Airports, Energy,

Transportation and Urban Infrastructure business sectors through

various subsidiaries, associates and jointly controlled entities. The

Company has Engineering, Procurement and Construction (EPC) business as

a separate operating division to cater to the requirements of

implementing the projects undertaken by the subsidiaries and others,

including Railway projects.



Analysis of the Company''''s audited consolidated and standalone financial

results are given below:



                                                       (Rs. in Crore) 



Particulars                     Consolidated           Standalone 

                             March 

                             31, 2016   March 

                                        31,2015    March 

                                                   31,2016    March 

                                                              31, 2015



Revenue from operations     13,357.66  11,087.68    799.10      649.74



Revenue share paid /

payable to concessionaire 

grantors                    (2,412.29) (2,064.86)        -           -



Operating and

administrative 

expenditure                 (6,700.73) (6,468.18)  (210.91)    (200.03)



Other Income                   454.27     327.46     15.07       19.48



Finance Costs               (4,057.69) (3,571.86)  (514.88)    (537.29)



Depreciation and 

amortisation expenses       (2,266.16) (1,812.53)   (15.77)     (20.03)



(Loss)/Profit before 

exceptional items, 

tax expenses, minority 

interest and                (1,624.94) (2,502.29)    72.61      (88.13)

share of (loss)/ profit 

of associates 



Exceptional Items:



Profit on sale of  

subsidiaries/jointly 

controlled entities              2.31      34.44         -           -



Loss on impairment of 

assets in subsidiaries        (164.30)   (115.74)        -           -



Reimbursement of 

expenses pertaining 

to earlier years 

received by a subsidiary        51.42          -         -           -



Loss on account of

provision towards claims 

recoverable                         -    (130.99)        -           -



Breakage cost of interest 

rate swap                           -     (91.83)        -           -



Prcyvision for diminution 

in value of investments 

/advances in subsidiaries

/ associates                   (39.22)         - (1,576.93)    (262.40)



(Loss)/Profit before tax 

expenses, minority 

interest and share of

(loss)/ profit              (1,774.73) (2,806.41)(1,504.32)    (350.53)

of associates



Tax expenses                  (224.21)   (152.81)   (14.58)      (2.12)



(Loss)/Profit before

minority interest 

and share of (loss)/ 

profit of associates        (1,998.94) (2,959.22)(1,518.90)    (352.65)



Share of (loss/profit 

from associates                 (5.52)    (12.98)        -           -



Minority interest - 

share of profit/(loss)        (156.54)    238.91         -           -



Net (Loss)/Profit after 

tax, minority interest 

and share of loss from

associates                  (2,161.00) (2,733.29)(1,518.90)    (352.65)



Net (deficit) / surplus 

in the statement of

profit and loss - Balance

as per last                 (4,006.89) (1,183.56)    62.81      429.37

financial statements 



Transfer from debenture 

redemption reserve              34.38      46.25     34.38       46.25



Surplus / (Deficit)

available for appropriation (6,133.51) (3,870.60)(1,421.71)     122.97



Appropriations                 (63.78)   (136.29)   (38.50)      60.16



Net deficit in the 

statement of profit or loss (6,197.29) (4,006.89)(1,460.21)      62.81



Earnings per equity share (Rs.) - Basic and diluted (per equity share

of Rs. 1 each) (3.82) (6.46) (2.68) (0.83)



Consolidated financial results



Improved operating performance in Airport and Energy sectors and

commissioning of GMR Chhattisgarh Energy Limited (GCHEPL) and GMR

Rajahmundry Energy Limited (GREL) power plants resulted in consolidated

revenue increasing from Rs. 11,087.68 Crore in the previous year to Rs.

13,357.66 Crore in the current year. Airport, Energy, Highways, EPC and

other segments contributed Rs. 6,540.58 Crore (48.97%), Rs. 5,522.55

Crore (41.34%), Rs. 761.41 Crore (5.70%), Rs. 179.13 Crore (1.34%) and

Rs.  354.04 Crore (2.65%) respectively to the consolidated revenue from

operations.



Increase in operational cost, finance cost and depreciation charge was

mainly on account of commissioning of GCHEPL and GREL power plants and

operating GMR Vemagiri Power Generation Limited (GVPGL), GMR Warora

Energy Limited (GWEL) and GMR Kamalanga Energy Limited (GKEL) power

plants at higher capacity.



Inspite of the challenging economic conditions and difficult business

environment, your Company was successful in raising additional funds of

Rs. 1,401.83 Crore through rights issue and USD 30.00 Crore through

issuance of Foreign Currency Convertible Bonds ("FCCB"). GCHEPL and

GREL power plants were commissioned during the year.



Standalone financial results



During the year ended March 31, 2016, the revenue from operations of

the Company on standalone basis has increased by 22.99% from Rs. 649.74

Crore to Rs. 799.10 Crore on account of increase in interest income of

the Company.



During the year ended March 31,2016, based on an internal assessment,

the Company has made a provision of Rs. 1,576.93 Crore towards

diminution in value of its investment in GMR Highways Limited (GMRHL),

GMR Renewable Energy Limited (GREED and GMR Energy Limited (GEL),

primarily on account of their accumulated losses and diminution in

value of investments/advances in their subsidiaries. The same has been

disclosed as an exceptional item in the financial statements.



Dividend /Appropriation to Reserves



Your Directors have not recommended any dividend on equity shares for

the FY 2015-16. Preference dividend aggregating to Rs. 50,605 for the

FY 2015-16 at the rate of 0.001% per annum on 1,13,66,704 Compulsorily

Convertible Preference Shares (CCPS) of face value of Rs. 1,000/- each

has been provided in the books.



Reserves



The net movement in the major reserves of the Company on standalone

basis for FY 2015-16 and the previous year are as follows:



                                                      (Rs. in Crore)



Particulars                              March 31,2016   March 31, 2015



General Reserve                                40.62            40.62



Securities Premium Account                  9,971.55         7,658.71



Surplus in Statement of Profit and Loss    (1,460.21)           62.81



Debenture Redemption Reserve                  125.44           121.33



Capital Reserve                               141.75                -



Foreign currency monetary translation 

difference account                             (0.89)               -



                                            8,818.26         7,883.47



Management Discussion and Analysis Report (MDA)



MDA Report for the year under review, as stipulated in Securities and

Exchange Board of India (Listing Obligations and Disclosure

Requirements) Regulations, 2015 (hereinafter referred to as "SEBI

LODR"), is presented in a separate section forming part of the Annual

Report.



The brief overview of the major developments of each of the

Subsidiaries'''' business is presented below. Further, MDA, forming part

of this Report, also brings out review of the business operations of

various subsidiaries and jointly controlled entities.



Airport Sector



Your Company''''s airport business comprises of 3 operating airports viz.,

Delhi and Hyderabad International Airports in India and Mactan Cebu

International Airport in Philippines. These Indian airports are owned

by your Company''''s subsidiary GMR Airports Limited (GAL) while the 40%

stake in GMR Megawide Cebu Airport Corporation (GMCAC) is held through

GMR infrastructure (Singapore) Pte. Limited, also your Company''''s

subsidiary.



Your Company''''s aviation business comprises of GMR Aviation Private

Limited, a 100% subsidiary of the Company which is operating in the

general aviation space.



An overview of these assets during the year is briefly given below:



Delhi International Airport Private Limited (DIAL)



DIAL is a Joint Venture (JV) between GAL (64%), Airports Authority of

India (AAI) (26%) and Fraport AG Frankfurt Airport Services Worldwide

(Fraport) (10%). DIAL has entered into a long-term agreement to

operate, manage and develop the Indira Gandhi International Airport

(IGIA), Delhi. Malaysia Airports (Mauritius) Private Limited originally

owned 10% stake in the Joint Venture which has been purchased by GAL in

May 2015.



Highlights Of FY 2015-16:



DIAL surpassed the 48 million passenger mark in FY 2015-16, witnessing

a growth of 18% in traffic over previous year. Strong growth in

domestic cargo segment propelled DIAL to retain its number one position

in cargo traffic in india with a 4% overall growth in FY 2015-16 over

the previous year. Due to delay in determination of tariff for the

second control period, the tariffs of the first control period have

continued.



The non-aeronautical revenues grew by 19% over last year led by growth

in commercial non-aero sales and Land S Space rentals.



Air Asia India Ltd, Air Canada, Shandong Airlines, Bhutan Airlines and

Air Asia X commenced their operations from IGIA. New destinations like

Domodedvo - Moscow, San Francisco, Toronto and Kunming were added,

which were earlier unserved from Delhi Airport.



Existing solar power plant capacity of 2.14 MW at IGIA increased to

7.84 MW with commissioning of additional 5.70 MW capacity in FY

2015-16. The additional capacity is expected to generate 8.5 million

units of electricity per annum leading to savings of Rs. 3.0 to Rs. 3.5

Crore per annum.



Strong focus on developing organizational culture based on operational

excellence and customer focused initiatives helped DIAL to retain the

world number 1 airport rank in the 25-40 million passengers per annum

(mppa) category by achieving a score of 4.96 on a scale of 5, in 2015.



Key Awards and Accolades received in FY 2015-16:



Number 1 airport as per Airports Council International (ACI) Airport

Service Quality (ASQ) ranking for 2015 in the 25 to 40 mn passenger

category, second year in a row.



ACI Director General''''s Roll of Excellence 2015 for being ranked in top

5 airports in its category in the last five years.



''''Best Airport Staff in India and Central Asia'''' in 2016 SKYTRAX World

Airport Awards for second year in a row.



''''International Safety Award'''' in Distinction Category from British

Safety Council with an overall score of 60 (on 60 Point scale) for the

year 2016.



''''Golden Peacock Award for Sustainability'''' in the Aviation Sector for

2015.



India''''s smartest airport buildings at the Times of India-Honeywel Smart

Building Awards, 2015.



Best Emerging Airport-Asiaat the Asian Freight, Logistics and Supply

Chain (AFLAS) Awards.



CII Business Excellence Star Awards: Leaders in Operations Management S

Leaders in Customer Management 2015.



GMR Hyderabad International Airport Limited (GHIAL)



GHIAL is a JV between GAL (63%), AAI (13%), Government of Telangana

(13%) and MAHB (Mauritius) Private Limited (11%) and has entered into a

long-term agreement to operate, manage and develop the Rajiv Gandhi

international Airport (RGIA), Hyderabad.



Highlights Of FY 2015-16:



GHIAL continued to record strong traffic growth in its 8th year of

operation.  Passenger traffic touched 12.5 million, registering a

growth of 19% year on year (Y-o-Y). Similarly, Cargo also registered

impressive growth to reach 113,000 MT, a growth of 10% Y-o-Y. ATM (Air

Traffic Movement) also had a strong growth of 12% Y-o-Y ending the year

with 106,303. The year also showed remarkable progress towards GHIAL''''s

Mission of being the Gateway of Choice and Preferred Logistics Hub for

South and Central India region, marked by additions to the airline

count on both passenger (1 international and 2 domestic) and cargo (1

domestic) fronts and additional frequencies from the existing airlines.



Towards ensuring a well-rounded and enjoyable experience to its

passengers, the airport enhanced its retail and shopping experience by

modifying the layout to unidirectional flow, which has yielded

additional number of new stores and retail outlets at the passenger

terminal. The Airport charges for GHIAL (User Development Fee (UDF) and

Passenger Service Fee - Facilitation Component (PSF)) were successfully

restored vide the Interim Order from the Hyderabad High Court which has

enhanced the cash flow and the same was implemented with effect from

November 05, 2015. GHIAL also signed an escrow account with Air India

for collection of UDF and PSF, which is a mechanism that has aided

GHIAL in securing the dues and strengthening the cash flows.



To enhance the passenger experience, GHIAL has operationalized an end-

to-end E-Boarding process for domestic passengers, becoming the only

airport in India to implement the same. It has improved the efficiency

at each security check point and has started the journey of Indian

Aviation along the path of "Digital India'''' as envisaged by the Hon.

Prime Minister.



Adding another green milestone to GMR''''s clean energy journey, GHIAL has

commissioned a 5 MW Solar Power Plant for its captive consumption to

meet the airport''''s peak power demand. The airport also completely

refurbished Hajj Terminal which enhanced the passengers'''' and meeters'''' S

greeters'''' facilities. Despite challenges, GHIAL has always maintained

its focus on service quality and passenger delight and this continued

dedication saw the airport win accolades from passengers and industry

associations for its excellence in service delivery with ACI ranking

RGIA among the top 3 in the world for ASQ for the 7th year in a row.



Awards and Accolades received in FY 2015-16:



World''''s Third Best Airport 2015 in ASQ Rating by ACI, in 5-15 mn

passenger category.



Best Regional Airport in India and Central Asia at the Skytrax World

Airport Awards, a web based survey voted directly by passengers.



Emerging Cargo Airport of the Year, Region - India awarded by STAT

Times International Award for the second time in a row.



ACI Asia-Pacific Silver Recognition for Human Resources Excellence.



Cll Award for "Excellent Energy Efficient Unit" for a second time in a

row.



Golden Peacock Environment Management Award for 2015.



Best Landscape - Garden Festival 2016 (sixth time in a row).



Airport Cities



As more and more aviation-oriented businesses are being drawn to

airport cities and transportation corridors radiating from them, a new

urban form is emerging, the Aerotropolis, stretching upto 20 miles (30

kilometers) outward from some airports. This concept, developed by Dr.

John Kasarda, has been adopted by GMR Group at its airports in

Hyderabad and Delhi and GMR Group is working towards developing an

ecosystem around the airports.



Both Delhi and Hyderabad have completed the master plan for their

landside developments and are engaged in the development of physical

infrastructure and discussions with potential tenants.



During the course of the year, DIAL witnessed 3 of its hotel assets

coming on line. Delhi airport has also undertaken works to beautify the

Aerocity area and the work is expected to be completed in 2016.



GMR Megawide Cebu Airport Corporation (GMCAC)



GMCAC, a JV between GMR group (40%) and Megawide Corporation (60%), in

April 2014, entered into a concession agreement with Mactan Cebu

international Airport Authority for development and operation of Mactan

Cebu International Airport (Cebu airport) for a period of 25 years.

GMCAC took operational responsibility of the airport in November 2014

and has now been operating the airport for 20 months.



Highlights Of FY 2015-16:



GMCAC has laid great emphasis on boosting traffic at Cebu airport, both

domestic and international.



In a bid to boost international tourism, GMCAC has been working with

the tourism body of Cebu and Philippines, as well as with travel agents

to boost tourist traffic from China, Japan and Australia. As a result,

GMCAC has seen international traffic grow by 18.5% while the domestic

traffic has also grown at 9.6%. In terms of international connectivity,

GMCAC has also seen 3 new routes being added, viz., Cebu - Dubai, Cebu

- Los Angeles and Cebu- Taipei.



On the operational front, GMCAC has brought about a significant

transformation in the existing terminal facilities by:



a) Introduction of common security checks for passengers boarding

Domestic and International flights. This resulted in doubling of the

capacity of security x-ray lanes.



b) Installed New Flight Information Display Systems.



c) Introduced new check-in systems and increased the number of check-

in counters.



d) Developed a new meeters'''' and greeters'''' area.



e) Introduced enhanced FSB and retail operations including launch of a

completely overhauled Duty Free area.



GMCAC is also steadily working towards development of the new terminal.

To mitigate the delay in handover of land which was under occupation of

Philippines air force, GMCAC has started work on the land parcels made

available to it in June 2015. The structural works for the new terminal

building are underway and we are confident of completing the terminal

within the timelines specified in the concession agreement.



Awards and Accolades received in FY 2015-16:



Asia-Pacific Transport Deal of the Year.



Best Project Finance deal award by Triple A Asia Infrastructure awards.



GMR Male International Airport Private Limited (GMIAL)



GMR Group along with its partner Malaysia Airports are engaged in

arbitration with Government of Maldives (GoM) and Maldives Airport

Company Ltd. (MACL) after the latter repudiated the agreement in

December 2012. In order to expedite the progress of the arbitration,

both GMR Group and GoM have agreed to bifurcate the arbitration in 2

phases; first phase was to focus on questions of liability; while the

second phase was to quantify the amount recoverable. In June 2014, the

tribunal had ruled that the concession agreement was valid and binding

and GoM had illegally terminated the concession agreement and is

therefore liable to GMR/GMIAL for compensation. After subsequent

hearings, the tribunal has ruled in February 2016 that the debt owed by

GMIAL to Axis Bank will form part of the compensation payable by GoM to

GMIAL. The hearing to determine the quantum of damages payable by

Government of Maldives to GMIAL is scheduled in the month of August

2016.



GMR Aviation Private Limited (GAPL)



GAPL operates and owns one of the youngest fleets in the country and

addresses the growing need for charter services. The operations are

managed by professionals with robust processes and systems to ensure

highest levels of efficiency and safety. In order to boost revenues and

rationalize overhead costs, GAPL has entered into a 2 year management

contract with Jet Set Go - a general aviation fleet aggregator. As per

the agreement, Jet Set Go will take responsibility for operations and

marketing of the aircrafts.



Energy Sector



The Energy Sector companies are operating around 4,600 MWsof Coal, Gas,

Liquid fuel and Renewable power plants in India and around 2,200 MWs of

power projects are under various stages of construction and

development, besides a pipeline of other projects. The Energy Sector

has a diversified portfolio of thermal and hydro projects with a mix of

merchant and long term Power Purchase Agreements (PPA).



Following are the major highlights of the Energy Sector:



A.  Operational Assets:



I.  Generation:



1.  GMR Warora Energy Limited (Formerly EMCO Energy Limited) (GWEL) -

600 MW:



The Plant consists of 2 x 300 MW coal fired Units with all associated

auxiliaries and Balance of Plant Systems.



GWEL has a Coal supply Agreement with South Eastern Coalfields Limited

(SECL) for a total Annual Contracted Quantity (ACQ) of 2.6 Million

Tonnes per annum.



Tamil Nadu Generation and Distribution Corporation Limited (TAGENDCO)

PPA was fully operationalized during the year, which was earlier

pending due to non availability of transmission corridor and long-term

open access.



During the year, the Plant has achieved availability of 94.80% and

Gross Plant Load Factor (PLF) of 75.95%.



More than 90% ash utilization was achieved during the year.



Weir construction for water availability by Maharashtra industrial

Development Corporation (MIDC) is under way and expected to be made

ready in FY 2016-17.



2.  GMR Kamalanga Energy Limited (GKEL) - 1,050 MW:



GKEL in which GMR Energy Limited has 86% stake, with IF S IDFC holding

the balance stake, has developed 1,050 MW (3x 350) coal fired power

plant at Kamalanga Village, Odisha.



The plant is supplying power to Haryana through PTC India Limited, to

Odisha through GRIDCO Limited and to Bihar through Bihar State Power

Holding Company Limited.



85% of the capacity is tied-up in long term PPAs.



GKEL has received Letter of Assurances from Mahanadi Coalfields Limited

(MCL) for 1,050 MW, of which 500 MW is for firm linkage and 550 MW is

for tapering linkage.GKEL has signed Fuel Supply Agreement (FSA) for

firm linkage for 500 MW and tapering linkage for 200 MW with MCL and is

getting coal supply accordingly. GKEL has also signed FSA with Eastern

Coalfields Limited (ECL) for 350 MW tapering linkage and coal supply

corresponding to tapering linkage for 204 MW had started earlier.



During this year, Ministry of Coal has allowed continuation / extension

of MoU coal (earlier tapering linkage) to GKEL beyond March 2016 till

June 2016. Further, from December 2015 onwards, supplies from ECL have

been transferred to MCL leadingto a cost savings ofRs. SOCrore per

year.



During this period, GKEL achieved availability of 91.5% and PLF of

67.6%.



GKEL received favourable order from CERC on GRIDCO tariff, on the basis

of which GKEL has raised supplementary bills of Rs. 233.82 Crore to

GRIDCO for the period upto November 2015 and has also raised regular

bills aggregating to Rs. 204.33 Crore for the period from December 2015

to March 2016.



GKEL received favourable order from CERC on Change in Law petition

against Haryana Discoms, with claim of Rs. 115.94 Crore of arrears from

FY 2014 to FY 2016 period.



GKEL successfully completed refinancing of the project debt under

Flexible Structuring Scheme along with the new facility of Rs. 400

Crore against the regulatory receivables. Working capital limit was

also enhanced with sanction ofRs. 745 Crore.



3.  GMR Chhattisgarh Energy Limited (GCHEPL) - 1,370 MW:



GCHEPL, a wholly owned subsidiary of GEL, has developed 1,370 MW (2 x

685 MW) pulverized coal- fired super critical technology based power

project in Raikheda Village, Tilda Block, Raipur District, in the State

of Chhattisgarh. GCHEPL has received all the necessary statutory and

environmental clearances. The project has achieved COD of Unit -1 and

Unit - 2 on June 01, 2015 and March 31, 2016 respectively and started

commercial operation of Unit -1 from November 01,2015. The project

participated in the coal block auction last year, bid and won two coal

blocks, namely Talabira and Ganeshpur.



The Railway track for movement of rake to site has been completed and

siding operations have commenced.  Ganeshpur coal block (located in

Latehar District, Jharkhand and earlier allotted to Tata Steel Limited

and Adhunik Thermal Energy) has a reserve of about 92 MT and is

expected to start its production by FY 18 and reach its peak production

capacity by FY 21.



Talabira coal block (located in Odisha and earlier allotted to

HINDALCO) has a reserve of about 8.5 MT. This is an operating coal

block and GCHEPL started production from August 2015 onwards and GCHEPL

has been receiving coal for its operations.



GCHEPL is actively pursuing to tie-up the entire capacity through

various upcoming medium and long-term power procurement tenders.



4.  GMR Vemagiri Power Generation Limited (GVPGL) - 370 MW:



GVPGL, a wholly owned subsidiary of GEL operates a 370 MW natural

gas-fired combined cycle power plant at Rajahmundry, Andhra Pradesh.

During the FY 2016, the plant commenced operations on roster basis

beginning August 2015, under e-bid RLNG scheme. In line with the

scheme, the plant secured gas corresponding to 30% PLF for period June

2015 to September 2015,50% PLF for the period October 2015 to March

2016 and 30% PLF for the period April 2016 to September 2016. GVPGL

operated at an average PLF of 17.88% during the year.



To benefit from the softened LNG prices world-wide, GVPGL is striving

continuously to import LNG on short term basis to obtain higher PLF.



5.  GMR Rajahmundry Energy Limited (GREL) - 768 MW:



GREL, a wholly owned subsidiary of GEL is engaged in setting up of 768

MW (2 x 384 MW) combined cycle gas based power project.



GREL achieved COD on October 22,2015 and secured gas for operations

through e-bid RLNG scheme at 50% PLF for the period October 2015 to

March 2016 and 30% PLF for the period April 2016 to September 2016. The

plant began commercial operations for the first time starting November

16, 2015 based on the roster decided by AP- Transco. GREL operated at

an average PLF of 20.12% during the year.



To benefit with the softened LNG prices world-wide, GREL is striving

continuously to import LNG on short term basis and looking forward to

tie up power by entering into the PPA opportunities available.



Further, the lenders have invoked Strategic Debt Restructuring (SDR)

for GREL resulting in conversion of outstanding debt amounting to Rs.

1,413.99 Crore (Rs. 1,308.57 Crore of debt and Rs. 105.42 Crore of

Interest accrued thereon) into equity in order to acquire 55%

shareholding in GREL. Post the restructuring, the total outstanding

debt of GREL would be Rs. 2,366 Crore.



6.  Barge mounted Power Plant of GMR Energy Limited (GEL), Kakinada:



GEL operates 220 MW combined cycle barge mounted power plant at

Kakinada, Andhra Pradesh. There was no generation of power by the barge

mounted power plant during the year ended March 31,2016 on account of

non- availability of gas.



Plant is kept under preservation since March 2013.  Preservation

methods were adopted based on Original Equipment Manufacturers'''' (OEM)

procedures.



Efforts are being made to arrange gas from domestic sources and LNG

market.



7.  GMR Power Corporation Limited (GPCL), Chennai:



GPCL, in which GEL holds 51% stake, operates a 200 MW diesel powered

power plant and was selling power to Tamil Nadu Generation and

Distribution Corporation Limited (TAGENDCO). There was no generation of

power during the year and currently the plant is kept under

preservation.



TAGENDCO had extended the PPA from February 15, 2014 to February

14,2015 with fresh tariff and new terms and conditions. GPCL requested

TAGENDCO for extension of PPA from February 15, 2015 and is awaiting

clearance for supplying power.



8.  GMR Gujarat Solar Power Private Limited (GGSPPL), Charanka Village,

Gujarat:



GGSPPL, a wholly owned subsidiary of GEL, operates 25 MW Solar power

project at Charanka village, Patan district, Gujarat. GGSPPL has

entered into 25 year PPA with Gujarat Urja Vikas Nigam Limited for

supply of entire power generation.  GGSPPL has achieved commercial

operation on March 04, 2012 and received certificate of commissioning

from M/s. Gujarat Energy Development Agency ("GEDA"). Indu Projects

Limited has been awarded the contract for operation and maintenance of

the plant for a period of 5 years. Plant has achieved a Gross DC PLF of

19.36% for FY 2015-16 and recorded revenue of Rs. 63.18 Crore for the

FY. Significantly during the year, GGSPPL also received the following

ISO Certifications from DNV GL of Norway (1) ISO 9001:2008 (Quality

Management System), ISO 14001:2004 (Environmental Management System)

and OHSAS 18001:2007 (Occupational Health and Safety Management

System).



9.  GMR Rajam Solar Power Private Limited (GRSPPL), Rajam:



GRSPPL, a wholly owned subsidiary of GEL commissioned a 1 MW Solar

power project in Rajam, Andhra Pradesh in February 2016. The Company

has signed a 25 year PPA with both GMR Institute of Technology (700KW)

and GMR Varalakshmi Care Hospital (300KW) for the sale of power

generated.



II Transmission:



1.  Aravali Transmission Service Company Limited (ATSCL):



ATSCL, a wholly owned subsidiary of GEL, successfully implemented the

project with 96 km line including 400 kV S/C Hindaun-Alwar transmission

line and 2 * 315 MVA 400/220 kV Grid Substation at Alwar and other

associated works in the State of Rajasthan with a total project cost of

Rs. 146.20 Crore. This is the second public private partnership (PPP)

project of its kind in Rajasthan, which is being executed on Build Own

Operate Maintain (BOOM) basis for a concession period of 25 years from

the date of Project Award.



The 400 kV Hindaun-Alwar transmission line was successfully charged on

July 25, 2014. Grid Substation was charged on July 31,2014.



COD was achieved on July 17, 2014 in line with the provisions of

Transmission Service Agreement (TSA).



Rajasthan Electricity Regulatory Commission (RERC) gave an unfavorable

order in case of the Tariff Revision Petition filed before RERC seeking

compensation in terms of either TSA period extension (to compensate

ATSCL on account of delayed grant of transmission license, escalation

in project cost due to change in law and COD consideration) or upfront

loss compensation.



Company has approached Appellate Tribunal for Electricity (APTEL)

seeking relief against the order of RERC.



The asset has performed at more than the target availability of 98%.



2.  Maru Transmission Service Company Limited (MTSCL):



MTSCL, a wholly owned subsidiary of GEL, successfully implemented the

project with 269 km line including 400 kV S/C Bikaner-Deedwana

Transmission Line, 400 kV S/C Ajmer-Deedwana Transmission Line, 220 kV

D/C Sujangarh-Deedwana Transmission Line and 2x315 MVA 400/220 kV Grid

sub-station at Deedwana and other associated works in the State of

Rajasthan with a total project cost of Rs. 251.90 Crore. This is the

first PPP project of its kind in Rajasthan, which is being executed on

BOOM basis for a concession period of 25 years from the date of Project

Award.



COD was declared by Order of the RERC from December 16, 2013.



Arrears have been received from Discoms as per the relief granted by

RERC to pay all unpaid revenue from December 16, 2013.



RERC gave an unfavorable order in case of the Tariff Revision Petition

filed before RERC seeking compensation in terms of either TSA period

extension (to compensate MTSCL on account of delayed grant of

transmission license, escalation in project cost due to change in law)

or upfront loss compensation.



Company has approached APTEL seeking relief against the order of RERC.



The asset has performed at more than the target availability of 98%.



Stake sale in the Transmission projects:



GEL has entered into definitive agreements with Adani Transmission

Limited agreeing to transfer its interest in aforesaid ATSCL and MTSCL.

The transaction shall be concluded subject to fulfillment of necessary

conditions precedent.



B.  Projects:



1.  GMR Bajoli Holi Hydropower Private Limited (GBHHPL) (180 MW):



GBHHPL, a wholly owned subsidiary of GEL, is implementing 180 MW hydro

power plant on the river Ravi at Chamba District, Himachal Pradesh.



GBHHPL achieved financial closure on April 25, 2013 and tied-up the

debt requirement of Rs. 1,380 Crore and the necessary loan agreements

were executed. All clearances required for undertaking construction are

in place and complete land as required for the project is in GBHHPL''''s

possession.



All the contracts for execution of civil works and Electro Mechanical

works were awarded and civil works are going on with the completion of

infrastructure works.



GBHHPL had also executed the Connectivity Agreement with HP Power

Transmission Corporation Limited and Long Term Access Agreement with

Power Grid Corporation of India Limited (PGCIL) for evacuating power

outside Himachal Pradesh.



The construction works of the project are in full swing and River

Diversion work is completed on schedule on October 01, 2015. Overall

progress of 32% has been achieved till end of FY 2015-16.



2.  GMR Upper Karnali Hydro Power Public Limited (GUKPL) - (900 MW):



GUKPL, a subsidiary of GEL, is developing 900 MW Upper Karnali

Hydroelectric project (HEP) located on river Karnali in Dailekh,

Surkhet and Achham Districts of Nepal. During the year under review,

post execution of Project Development Agreement (PDA), several key

activities as per PDA compliance, Technical appraisal of the Project,

Design and tendering works have been completed, despite a series of

Force Majeure events like Earthquake, political upheaval etc. The

Project land has been identified, joint verification for Government and

Forest land has been completed and same is under review by concerned

Ministry before seeking cabinet approval.  Rehabilitation Action Plan

(RAP), as per International Finance Corporation (IFC) Performance

Standards and the Safeguard Policies has been prepared and private land

acquisition process is currently underway. Similarly Environment and

Social Impact Assessment (ESIA) studies as per IFC Performance

Standards have also been prepared and are under finalisation with the

lenders. The detailed technical appraisal by a seven member Panel of

Experts (empanelled with IFC) has been completed and the Panel

submitted its final report. The Hydraulic model studies as per the

Panel''''s advice has also been completed and the technical design of the

Project has been finalised.  Tender engineering has been completed and

the formal tender process is being launched shortly.



For the Transmission Line, detailed survey has been completed and

cadastral mapping is in advanced stage of completion. Post execution of

the PTA between Government of India (Gol) and Government of Nepal (GoN)

and the SAARC energy pact between SAARC nations, Gol is in advanced

stage of finalisation of across border policy.  Gol and GoN have also

agreed to build the cross border



Transmission line (From Lamki in Nepal to Bareilly in UP) on bilateral

route, matching with the commissioning schedule of the Upper Karnali

HEP. Regarding power sale, a MoU has been executed with M/s NTPC Vidyut

Vyapar Nigam Limited (NVVN) for tie-up of the entire saleable capacity

of the Project in India and Bangladesh. NVVN is also nominated by Gol

as the Nodal agency for sale of Power between India, Nepal, Bangladesh

and Bhutan.  Post this MoU, discussions are underway with select buyers

in India and Bangladesh for tie-up of power on long term route. Joint

Development Agreement (JDA) was executed with IFC for both Generation

and Transmission projects on December 22, 2014 and as per the JDA, IFC

proposes to invest as Co-developer for the Projects with 10% equity

under ''''Infra Ventures'''' route and also assume the role of lead lender

and debt arranger. The Project has received Lois in excess of USD 1.1

billion from Multilateral Development Banks (MDBs) across the globe and

post this, the first all lenders site visit / lenders meeting was held

at Kathmandu on April 05, 2016. The lenders are presently engaged in

Project appraisal activities.



3.  GMR (Badrinath) Hydro Power Generation Private Limited (GBHPL) -

Badrinath - (300 MW):



GBHPL, a subsidiary of GEL, is in the process of developing 300 MW

hydroelectric power plant on Alaknanda river in the Chamoli District of

Uttarakhand State. The project has received all major statutory

clearances like Environmental and Techno economic concurrence from

Central Electricity Authority (CEA). The project got registered in The

United Nations Framework Convention on Climate Change (UNFCCC)and it is

eligible for receiving the Clean Development Mechanism (CDM) benefits.



Implementation Agreement has been executed with the Government of

Uttarakhand on May 17, 2013. Financial Closure (FC) process is in the

advanced stage. Project has received term loan sanction from Power

Finance Corporation Limited. However, FC process has been held-up due

to Hon''''ble Supreme Court''''s stay order on 24 Hydro Electric Projects in

Uttarakhand (Order dated May 07, 2014) issued while hearing a civil

appeal in the matters of Alaknanda Hydro Power Company Limited and the

stay order is in effect till date.



4.  Himtal Hydropower Company Private Limited (HHPPL) - (600 MW):



HHPPL, a subsidiary of GEL, is developing 600 MW Upper Marsyangdi-2

Hydroelectric Power Project on the river Marsyangdi in Lamjung and

Manang Districts of Nepal.  During the year under review, significant

progress was made in negotiations / finalisation of the PDA with

Investment Board Nepal (IBN) and the same is in advanced stage. The

land for the entire project has been identified and verified. The final

verified land case has been submitted to GoN. MoU for sale of power

with Government of Bangladesh has been finalised and is awaiting the

execution pending the notification of the cross border policy, which is

currently under formulation by Gol.



For the Transmission Line, Detailed Route Survey and Cadastral Map

Survey is in advanced stage of completion.  JDA was executed with IFC

for transmission line project on December 22, 2014 and JDA with IFC is

already in place for Himtal (the Generation Company). IFC proposes to

invest in the Project as Co-developer with 10% equity under ''''Infra

Ventures'''' route and also act as lead lender and lead arranger for the

Project. Post PTA/SAARC Energy pact execution, Gol and GoN have also

recently agreed to build the cross border Transmission line on

bilateral route, matching with the commissioning schedule of the Upper

Marsyangdi-2 Hydro Electric Project.



5.  GMR Londa Hydropower Private Limited (GLHPPL) - 225 MW:



GMR Energy Limited owns the 100% stake of GLHPPL which is developing a

225 MW project in East Kameng district in Arunachal Pradesh. The

Detailed Project Report ("DPR") has been prepared and has received

techno-economic concurrence from the CEA. The Expert Appraisal

Committee (EAC) of Ministry of Environment, Forest and Climate Change

(MoEF S CC or MoEF) has recommended for Environmental Clearance and

accordingly MoEF S CC had issued in-principle clearance to this

project.  However, formal Environmental Clearance shall be granted by

MoEF S CC after obtaining the Forest- stage-l clearance.  Defence

clearance for setting up the project has been received from Ministry of

Defence, Gol.



C.  Mining Assets:



1.  PT Barasentosa Lestari (PTBSL):



GEL had acquired 100% stake in PTBSL in September 2008 which has coal

mine in South Sumatra Province with more than 650 MT Coal Resources in

-24,385 Hectares and total mineable reserves of about 280 Million

Metric Ton (MMT). Trial coal production and sales have commenced in FY

2015, however the operations were suspended because of the limitations

of transportation of coal due to lower water levels in Musi River. The

coal production is expected to be gradually ramped up from 1 Million

Ton Per Annum (MTPA) to 3 MTPA over a period. The coal is planned to be

exported to India to cater to captive demand of power plants owned by

the Group and also to trade the coal through in-house coal trading arm.



2.  PT Golden Energy Mines Tbk (PT GEMS):



GEL through its overseas subsidiary, GMR Coal Resources Pte.  Ltd., had

acquired 30% stake in PT GEMS, a group company of Sinarmas Group,

Indonesia. PT GEMS, a limited liability company, listed on the

Indonesia Stock Exchange. PT GEMS is carrying out mining operations in

Indonesia through its subsidiaries which own coal mining concessions in

South Kalimantan, Central Kalimantan and Sumatra. PT GEMS is also

involved in coal trading through its subsidiaries. Coal mines owned by

PT GEMS and its subsidiaries have total resources of more than 2.0

billion tons and Joint Ore Reserves Committee (JORC) certified reserves

of more than 620 MT of thermal coal.  GMR Group has a Coal off take

Agreement with PT GEMS which entitles GMR to offtake coal for 25 years.



Transportation Highways



GMR Highways Limited, a wholly owned subsidiary of your Company, is one

of the leading highways developer in India with 9 operating highways

assets (including two projects in which it holds minority interest).

During the FY 2016, we have entered into definitive agreements to

divest our balance 26% stake in Ulunderpet Expressways Private Limited

and our entire stake in GMR OSE Hungund Hospet Highways Private

Limited. The FY 2015-16 has seen a subdued growth in the highways

sector due to various factors such as slowed economic situation,

funding constraints, land acquisition issues etc.  This has resulted in

lower investment from private players in infrastructure in general

including roads and highways sector. For Kishangarh-Udaipur- Ahmedabad

project which had been terminated in December 2012, a dispute notice to

NHAI was served, invoking arbitration to settle the dispute. The

Arbitration Tribunal has been constituted and the matter will be taken

up in hearings scheduled during FY 2016-17.



Urban Infrastructure



The Group is developing a 2,100 acre multi product Special Investment

Region (SIR) at Krishnagiri, near Hosur in Tamil Nadu and 10,000 acre

Port- based multi-product SIR at Kakinada, Andhra Pradesh.



Krishnagiri SIR



GMR Group, with an objective of building world class industrial

infrastructure in India, is setting up a SIR at Hosur, Tamil Nadu just

45 km from Electronic City, Bengaluru. The location provides unique

advantage of multi-modal connectivity with National and State Highways

and a railway line running alongside. Krishnagiri SIR is planned to be

developed as an integrated city spread across 2,100 acres in the

influence area of proposed Chennai- Bangalore Industrial Corridor.

Krishnagiri SIR is being planned to house the following manufacturing

clusters:



Automotive S Ancillary; Defense and Aerospace; Precision Engineering;

Machine tools; Electronics Product Manufacturing.



Designed to encompass a complete ecosystem, Phase 1A of Krishnagiri SIR

spread over 275 acres will contain all that are essential for a large

industrial city center. Krishnagiri SIR has following key offerings to

its esteemed clientele:



Shovel ready developed plot with road, drainage, water supply, Water

Treatment Plants (WTP), Sewage Treatment Plants (STP) and other similar

facilities;



Water - Potable water;



Power -33 kV level dedicated sub-station with a Solar power plant.



The entire infrastructure is being developed and maintained by GMR

Group underscoring its commitment to quality, service and timelines.

The "integrated" design would endeavor to provide first world standard

residential, social and commercial amenities making this zone a truly

"self- contained".



KakinadaSEZ/SIR



GMR Group owns 51% in Kakinada SEZ Private Limited, which is developing

Kakinada SEZ/ SIR in the State of Andhra Pradesh in proximity to the

cities of Vishakapatnam and Kakinada. With an area span of over 10,000

acres, Kakinada SEZ / SIR will be self-contained Port-based Industrial

park with ideally designed core infrastructure, industrial common

infrastructure, business facilitation infrastructure and social

infrastructure across varied dedicated areas such as housing, lifestyle

and high-end expat friendly zone.  Kakinada SEZ / SIR is designed for

balancing the sensitivity to culture and heritage of the region and

also for integration with the native eco-system.



Project Progress:



Pals Plush, a leading toy manufacturing company has already started its

operations in an area of over 1,00,000 sq. ft. of space and has already

recruited over 600 people. It has plans to recruit over 1200 people by

FY 17.



TATA Business Support Services has established a rural BPO and has

already recruited over 30 people and training for the next batch of

people is underway. Anticipated to recruit over 100 people in the near

future.



Received interests from various domestic and international companies to

establish their factories in Kakinada SEZ / SIR and are in various

phases of advanced discussions.



Andhra Pradesh Industrial Infrastructure Corporation Limited (APIIC)

has executed and registered an Agreement for sale with the company for

1563.22 acres of land at Kona Village, Thondangi Mandal for the purpose

of Company''''s Port / Industrial Backup area / Industrial Park.



Secured approvals to draw water up to 11 MGD from various sources for

Industrial use.



Laid down the power cables inside the industrial zone and provided

industrial power supply for existing industries.



Master Plan for Phase 1 development of around 916 acres has been

completed.



Internal black top roads and plots have been developed.



EPC



Pursuant to the strategic decision taken to pursue EPC opportunities

outside GMR Group and consequent to the Group''''s entry into Railway

Projects during FY 2015-16, the Group has started construction of 2

Dedicated



Freight Corridor Corporation (DFCC) projects in the state of Uttar

Pradesh.  Mobilization and design for the projects is substantially

completed and construction is in full swing.



Your Company has also achieved substantial completion of 2 Rail Vikas

Nigam Limited (RVNL) projects in the States of Andhra Pradesh and Uttar

Pradesh that were awarded in FY 2013-14.



Raxa Security Services Limited (Raxa)



Raxa became a subsidiary of the Company during FY 2015-16 consequent to

the Group acquiring 100% stake in Raxa. Raxa is engaged in the business

of providing security manpower and technology services to industrial

and business establishments.



Consolidated Financial Statement



In accordance with the Companies Act, 2013 and Accounting Standard (AS)

- 21 on Consolidated Financial Statement read with AS - 23 on

Accounting for investments in Associates and AS - 27 on Financial

Reporting of Interests in Joint Ventures, the audited consolidated

financial statement is provided in the Annual Report.



Subsidiaries, Joint Ventures and Associate Companies



As on March 31, 2016, the Company had 123 subsidiary companies apart

from 26 joint ventures and 4 associate companies. During the year under

review, companies listed below have become or ceased to be Company''''s

subsidiaries or associate companies. The Policy for determining

material subsidiaries as approved may be accessed on the Company''''s

website at the link:

http://investor.gmrgroup.in/investors/GIL-Policies.html. The complete

list of subsidiary companies, joint ventures and associate companies as

on March 31, 2016 is provided in "Annexure A" to this Report.



Raxa Security Services Limited (Raxa) and Indo Tausch Trading DMCC

(ITTD) became subsidiaries during the FY 2015-16.



Homeland Energy Group Limited (HEGL) ceased to be subsidiary during the

FY 2015-16. GMR Male Retail Private Limited (GMRPL) and GMR Airports

(Malta) Limited (GMRAML) were liquidated during the FY 2015-16 and

accordingly ceased to be subsidiaries.



GMR OSE Hungund Hospet Highways Private Limited (GOSEHHHPL), ceased to

be a subsidiary company and became an associate company during the FY

2015-16.



Report on the highlights of performance of subsidiaries, associates and

joint ventures and their contribution to the overall performance of the

Company has been provided in Form AOC-1.



Directors'''' Responsibility Statement



To the best of their knowledge and belief and according to the

information and explanations obtained by them, your Directors make the

following statements in terms of Section 134(3)(c) of the Companies

Act, 2013:



a) that in the preparation of the annual financial statements for the

year ended March 31, 2016, the applicable accounting standards have

been followed along with proper explanation relating to material

departures, if any;



b) that such accounting policies as mentioned in Note 2.1 of the Notes

to the Financial Statements have been selected and applied consistently

and judgment and estimates have been made that are reasonable and

prudent so as to give a true and fair view of the state of affairs of

the Company as at March 31,2016 and of the loss of the Company for the

year ended on that date;



c) that proper and sufficient care has been taken for the maintenance

of adequate accounting records in accordance with the provisions of the

Companies Act, 2013 for safeguarding the assets of the Company and for

preventing and detecting fraud and other irregularities;



d) that the annual financial statements have been prepared on a going

concern basis;



e) that proper internal financial controls to be followed by the

Company have been laid down and that the financial controls are

adequate and were operating effectively;



f) that proper systems have been devised to ensure compliance with the

provisions of all applicable laws and that such systems were adequate

and operating effectively.



Corporate Governance



The Company continues to follow the Business Excellence Framework,

based on the Malcolm Baldrige Model, for continuous improvement in all

spheres of its activities. Your Company works towards continuous

improvement in governance practices and processes, in compliance with

the statutory requirements.



The Report on Corporate Governance as stipulated under relevant

provisions of SEBI LODR forms part of the Annual Report. The requisite

Certificate from the Practicing Company Secretary confirming compliance

with the conditions of Corporate Governance is attached to this Report.



Business Responsibility Report



As stipulated under Regulation 34(2)(f) of SEBI LODR, the Business

Responsibility Report describing the initiatives taken by the Company

from environmental, social and governance perspective is attached as

part of the Annual Report.



Contracts and arrangements with Related Parties



All contracts / arrangements / transactions entered by the Company

during the FY 2016 with related parties were in the ordinary course of

business and on arm''''s length basis. During the year, the Company had

not entered into any contract / arrangement / transaction with related

parties which could be considered material in accordance with the

policy of the Company on materiality of related party transactions

other than the transaction mentioned below:



Loans extended by the Company to GEL to an extent of Rs. 1,288.26 Crore

during the FY ended March 31,2016.



The Policy on related party transactions as approved by the Board may

be accessed on the Company''''s website at the link:

http://investor.gmrgroup.in/ investors/GIL-Policies.html. Your

Directors draw attention of the members to Note 32 to the standalone

financial statements which sets out related party disclosures.



Corporate Social Responsibility (CSR)



The Corporate Social Responsibility Committee (CSR Committee) has

formulated and recommended to the Board, a Corporate Social

Responsibility Policy (CSR Policy) indicating the activities to be

undertaken by the Company, which was approved by the Board. The CSR

Policy may be accessed on the Company''''s website at the link:

http://investor.gmrgroup.in/ investors/GIL-Policies.html.



The Company has identified three focus areas towards the community

service CSR activities, which are as under:



Education



Health, Hygiene S Sanitation



Empowerment S Livelihoods



The Company, as per the approved policy, may undertake other need based

initiatives in compliance with Schedule VII to the Companies Act, 2013.

During the year, the Company was not required to spend any amount on

CSR as it did not have any profits. Accordingly, it has not spent any

amount on CSR activities. The Annual Report on CSR activities is

annexed as "Annexure B" to this Report.



The activities undertaken by GMR Varalakshmi Foundation (GMRVF),

Corporate Social Responsibility arm of the GMR Group, have been

highlighted in detail in the Management Discussion and Analysis Report.



Risk Management



With business opportunities significantly increasing in the current

business environment, new risks that can impact your Company''''s

businesses, are emerging. For these risks to be managed effectively, it

is imperative to identify and address these risks in order to

accomplish Company''''s objectives.



Your Company''''s Enterprise Risk Management (ERM) framework follows the

current best practices and has been deployed to address the emerging

challenges effectively.



Significant developments during the year under review are as follows:



Risk assessment was carried out in detail at bid stage for the Railway

EPC projects, Philippines airports projects. Independent views on key

business assumptions made for these bids were presented during board

reviews, enabling informed decision-making;



The focus on decentralization of Risk Management function has continued

throughout this year. This decentralization has been effectively

translated into functioning ERM teams in the sectors, coupled with

support from outsourced partners;



Having successfully pilot-implemented the Project Risk Management (PRM)

framework in the previous year, the same has been replicated in the

ongoing Railway EPC projects. The deployment of PRM framework has

enabled effective control over project costs;



The Group has felt the need for a measurable approach to decide the

amount of risks it can take in achieving its business objectives in the

changed business environment over the past year. A draft Risk Appetite

Framework for the Group is under development and review with an

objective to establish thresholds for quantum of risks that the Group

can accept;



The Physical Risk Benchmarking framework developed earlier, is under

implementation at Energy assets.



Updates on ERM activities are shared on a regular basis with Management

Assurance Group (MAG). The ERM Team also presents to the Management and

the Audit Committee of the Board, the risk assessment and minimization

procedures adopted to assess the reliability of the risk management

structure and efficiency of the process.



A detailed note on risks and concerns affecting the businesses of the

Company is provided in MDA.



Risk Management Policy



The Company has in place the Risk Management Policy duly approved by

the Board of Directors.



ERM Philosophy



The GMR Group''''s ERM philosophy is "To integrate the process for

managing risk across GMR Group and throughout its businesses and

lifecycle to enable protection and enhancement of stakeholder value."



ERM aims at balancing the dynamic growth strategy of the Group with

robust institution building processes by ensuring that key decisions

with regard to strategy and institution building are commensurate with

the Group''''s risk appetite.



The Group endorses the following principles as adapted from ISO

31000:2009 (Risk Management - Principles and Guidelines):



ERM Protects and enhances value



ERM is an integral part of all organizational processes and is

applicable across the Group



ERM is an input to decision making



ERM is systematic, structured and timely



ERM is transparent, inclusive and consultative



ERM is dynamic, iterative and responsive to changes



ERM facilitates continual improvement



Internal Financial Controls



The Company has in place adequate internal financial controls with

reference to financial statements. These controls were tested and no

reportable material weaknesses were observed in the operations of the

Company.



Directors and Key Managerial Personnel



In accordance with the provisions of the Companies Act, 2013 and the

Articles of Association of the Company, Mr. G. B. S. Raju, Director of

the Company, retires by rotation at the ensuing Annual General Meeting

of the Company and is eligible for re-appointment. Mr. G. B. S. Raju

has offered himself for re-appointment.



Based on the recommendation of the Nomination and Remuneration

Committee, the Board of Directors of the Company at its Meeting held on

November 13, 2015 appointed Mr. Jayesh Desai as an Additional Director

of the Company with effect from November 13, 2015 to hold office upto

the date of ensuing Annual General Meeting of the Company. The Company

has also received notice in writing pursuant to Section 160 of the

Companies Act, 2013 from a member along with requisite deposit

proposing his candidature as Director of the Company at the ensuing

Annual General Meeting.



Further, the Nomination and Remuneration Committee of the Board of

Directors has also recommended the re-appointment of Mrs. Vissa Siva

Kameswari, Mr. R.S.S.L.N. Bhaskarudu, Mr. N. C. Sarabeswaran, Mr. S.

Sandilya, Mr. S. Rajagopal, and Mr. C. R. Muralidharan as Independent

Directors of the Company for their second term for a period of five

years or upto the conclusion of Twenty Fifth Annual General Meeting

whichever is earlier. Subsequently, Board at its meeting held on August

06, 2016 has recommended the said re-appointment.



Dr. Prakash G. Apte and Mr. V. Santhanaraman have not opted for

re-appointment as Independent Director for their second term.



The Company has received notice in writing under the provisions of

Section 160 of the Companies Act, 2013, from member, along with the

requisite deposit proposing the candidature of each of the said

directors for the office of Independent Directors, who opted for

re-appointment, to be re-appointed as such under the provisions of

Section 149 of the Companies Act, 2013.



The brief resume and details of Directors who are to be appointed / re-

appointed are furnished in the Notice to the Annual General Meeting.



The Company has received declarations from all the Independent

Directors, who opted for re-appointment, confirming that they meet the

criteria of independence as prescribed both under Section 149(6) of the

Companies Act, 2013 and Regulation 16 of SEBI LODR.



During the year under review, Mr. Adi Seshavataram Cherukupalli was

appointed as Company Secretary of the Company with effect from August

13, 2015 in place of Mr. C.P. Sounderarajan.



Annual evaluation of Board performance, Board Committees and individual

directors pursuant to the provisions of the Act and the corporate

governance requirements under SEBI LODR has been carried out. The

performance of the Board and its committees was evaluated based on the

criteria like composition and structure, effectiveness of processes,

information and functioning etc.



The Board and the Nomination and Remuneration Committee reviewed the

performance of the individual directors on the basis of the criteria

such as the contribution of the individual director to the Board and

committee meetings like preparedness on the issues to be discussed,

meaningful and constructive contribution and inputs in meetings, etc.

In addition, the Chairman was also evaluated on the key aspects of his

role. The Company''''s Nomination and Remuneration Policy for Directors,

Key Managerial Personnel and Senior Management is annexed as "Annexure

C" to the Board''''s Report.



Auditors and Auditors'''' Report



Statutory Auditors



M/s. S. R. Batliboi S Associates LLP, Chartered Accountants, Statutory

Auditors of the Company, hold office till the conclusion of the ensuing

Annual General Meeting and are eligible for re-appointment. They have

confirmed their eligibility to the effect that their re-appointment, if

made, would be within the prescribed limits under the Companies Act,

2013 and that they are not disqualified for re-appointment.



Management''''s response on the Statutory Auditors'''' Qualification /

Comments on the Company''''s standalone financial statements



1.  Qualification pertaining to the dispute in GMIAL - On termination

of the contract and on conservative basis, the Group wrote off assets

worth Rs. 202.61 Crore during FY 2012-13, retaining only carry value of

assets equivalent to Project Loan from Axis bank, taking into account

the Direct Agreement entered in to by GoM / MACL with Axis bank.

Tribunal''''s award dated June 18, 2014, declared that the Concession

Agreement was not void ab initio, was valid and binding on the parties

and also declared that the GoM and MACL are jointly and severally

liable to GMIAL for loss caused by repudiation of the contract. Further

on June 17, 2015, the tribunal in its decision in respect of the

preliminary issue, stated that the limit of damages recoverable in the

aforementioned award was intended to apply from the date of concession

agreement has been repudiated and also the limit to recoverable damages

identified in the aforementioned award means all damages recoverable by

GMIAL and not only contractually contemplated damages. In its further

order vide third part final award dated February 23, 2016, the Tribunal

declared that the sums payable by GMIAL to Axis Bank are included in

the sums which would have been payable by GoM / MACL to GMIAL. Based on

the above favourable orders, the Management is confident that it is

entitled for a compensation higher than the value of assets carried in

the financial statements and the claims, if any, from GADLIL and other

service providers for termination of their contracts. Accordingly, no

further adjustments to financial statements is considered necessary.



2.  Qualification pertaining to the investments in GKUAEL - The Company

has already made a provision for diminution in the value of investments

amounting to Rs. 137.47 Crore representing the entire expenses incurred

on this project till date. Further, the project was delayed and

subsequently terminated on account of delay by NHAI in fulfilling

mandatory conditions precedent. Accordingly, Management is confident

that amicable solution will be arrived at for the dispute with NHAI as

well as on account of claims from sub-contractors. As it was not

feasible on the date of adoption of financial statements to assess

final outcome from these disputes and likely impact of the same on the

financial statements, no further provision is made. These settlements

will be taken into account and appropriate adjustments would be made in

financial statements as and when assessment becomes feasible on

settlement of disputes.



3.  Qualification in the report on internal financial controls

regarding assessment of carrying value of investments in GMIAL and

GKUAEL - The Group has a robust system in place to assess the

appropriateness of the carrying value of its investments, including

testing for impairments. Management''''s view on the instant cases are

explained in the paras 1 and 2 above.



Management''''s response on the Statutory Auditors'''' Qualification /

Comments on the Company''''s consolidated financial statements



4.  Qualification pertaining to the capitalization of indirect

expenditure and borrowing costs in GREL - GREL has approached the

Ministry of Corporate Affairs (MCA) seeking clarification / relaxation

on applicability of MCA general circular 35/2014 dated August 27, 2014.

In view of the same, no adjustment has been made to this effect in the

financial statements.



5.  Qualification pertaining to capitalization of Unit 1 on the date of

declaration of commercial operation and also one of its mines in GCHEPL

- Management is of view that the coal mine is integral part of power

plant and Unit-1 is related to that coal mine. The said coal mine had

started operation from the extraction from August 01, 2015, but coal

extracted was not sufficient to run Unit 1. Post ramp-up of coal

production, GCHEPL has started commercial operation from Unit-1 on

November 01, 2015 and has declared COD of Unit 1 along with Mines with

effect from October 31, 2015.



6.  Qualifications pertaining to GMIAL and GKUAEL - Management

responses are provided in paras 1 and 2 respectively.



7.  Qualification in the report on internal financial controls

regarding compliance with the applicable accounting standards in case

of GREL and GCHEPL - The Group has proper systems and review mechanisms

in place to ensure compliance with the accounting standards.

Management''''s view on the instant cases are explained in the paras 4 and

5 above.



8.

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.
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Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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