Gammon India Ltd Directors Report.

To,

The Members of Gammon India Limited,

Your Directors have pleasure in presenting their 99th Annual Report together with the Audited Financial Statements of the Company for the Financial Year ended March 31, 2021, together with the Statutory Auditors Report thereon.

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

Particulars

Standalone

Consolidated

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

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

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

The year under review is a period of 12 (twelve) months commencing from 1st April, 2020 and ending on 31st March, 2021. During the FY under review the Turnover of the Company on a Standalone basis stood at Rs 52.84 crores, as compared to 71.71 crores during the previous F.Y. ended 31st March, 2020. The Company posted a Net Loss after Tax of Rs 716.85 crores during the year ended 31st March, 2021, as against a Net Loss after Tax of Rs 1122.56 crores during the previous FY ended 31st March, 2020.

On a Consolidated basis, the Turnover of Gammon Group during the year under review stood at Rs 54.52 crores as compared to Rs 86.38 crores for the previous F.Y. ended 31st March, 2020. The Group posted a Net Loss after Tax of Rs 794.72 crores during the F.Y. ended 31st March 2021, as against a Net Loss after Tax of Rs 630.79 crores during the previous F.Y. ended 31st March, 2020. Interest and finance costs continue to be high. The turnover/income is from the residual EPC business, post carve out of the operating business. During the year under review the finance cost which includes the interest costs was Rs 605.96 crores. The loss was primarily due to the provisions made for the Companys funded and non-funded exposure of loans and investments, the details of which is provided in note no. 30 of the standalone financial statements.

During the year under review the Companys operation were limited to execution of the ongoing projects. As the company is currently an NPA with the Banks, it is not in a position to bid for new projects. The Company also focused on receiving monies against arbitration awards however the recovery was negligible. The amount was used for operations and to repay part of lenders dues. The Company is actively pursuing arbitration pending in various stages and hopes to receive favourable awards in its favour. The Company continues to focus on recovering its monies and resolving the lenders dues.

The Companys operations have been affected in the last few years by various factors including liquidity crunch, unavailability of resources on timely basis, delays in execution of projects, delays in land acquisition, operational issues etc. The Companys overseas operations are characterized due to weak order booking, paucity of working capital and uncertain business environment Also the Companys current liabilities exceed the current assets. The facilities of the Company with the Secured lenders are presently marked as NPA since June 2017. The liquidity crunch has resulted in several winding up petitions being filed against the Company by various stakeholders for recovery of the debts which the Company has been settling as per the mutually agreed repayment terms. The liquidity crunch is affecting the Companys operation with increasing severity. The Secured lenders have recalled the various facilities, initiated recovery suits in the Debt Recovery Tribunals as well as filing a winding up petition with the National Company Law Tribunal, Mumbai bench under the Insolvency and Bankruptcy code.

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

The Reserve Bank of India had vide its circular no. RBI/2018-19/ 203 DBR.No.BPBC.45/ 21.04.048/2018-19 dated 7th June, 2019 issued directions for Prudential Framework for Resolution of Stressed Assets. These directions were called the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019 and which came into immediate effect i.e. 7th June, 2019

These directions were issued by RBI with a view to providing a framework for early recognition, reporting and time bound resolution of stressed assets. The following compliances were carried out pursuant to the above referred RBI Circular:

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

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

3. Post execution of the ICA the lenders appointed M/s Deloitte Touche Tohmatsu India LLP as Process Advisory (PA) in the resolution process of the Company. Subsequent to the above mentioned appointment the representatives of Deloitte attended one of the Joint Lenders Meeting held on 13th January, 2020, wherein the plans regarding the way forward on the resolution process were presented. Pursuant to the quotes sought by Deloitte from various valuers and legal consultants to carry out the valuation of the Company and estimation on the recoverability of arbitration claims of the Company, the quote received from Duff and Phelps (D&P) was found to be lower as compared to others. IDBI Bank the current lead monitoring institution or the bank, vide an appointment letter dated 27th January, 2020 appointed Duff and Phelps (D&P) on behalf of the consortium of lenders for carrying out valuation of the Company. The scope of work of D&P included the following:

> Fair, realisable and distress value of Gammon House;

> Liquidation value of assets of the Company;

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

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

Everstone Group Proposal

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

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

> Everstone will like to revive GIL as an EPC company.

This arrangement will also ensure INR 50 crores of working capital in the company. The proceeds of the capital raising exercise shall be utilized for the operations of the Company.

OVERSEAS SUBSIDIARIES Group Sofinter, Italy

Established in 1979, Group Sofinter, Italy comprises four principal Companies viz. Sofinter S.p.A., A.C. Boilers S.p.A (formerly AnsaldoCaldaie S.p.A), Europower SpA, ITEA SpA. The Group is engaged in the manufacture/EPC of packaged industrial boilers/utility/ power generation boilers respectively, catering to the oil and gas industry, industrial manufacturing and power utility plants worldwide. The Group has modern manufacturing facilities in Italy, Romania and India and a dedicated R&D facility in Italy.

Sofinter SpA

Sofinter SpA, the holding company of the Group, also has Macchi as the main manufacturing division. Macchi is a world leader and original equipment manufacturer of packaged industrial boilers and Heat Recovery Steam Generators with applications in Oil and Gas refineries, petro chemical plants, industrial manufacturing units and co-generation plants. Till date Macchi has over 1,000 units installed world-wide to its credit 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 and installation of utility power boilers and original equipment manufacturer of HRSGs upto 260 MWe for CCP plants. With 150 years of experience in steam generation and burner technology field, the company has an installed base of over 80,000 MWe and 1,000 units. It also provides rehabilitation, fuel conversion and after-sales services for existing boilers, with a strong foothold in Egypt (ACBE - 98%) and India (Ansaldo Caldaie Boilers, India - 26%). The Advance Combustion Research Centre of the company offers specialized services 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 for refinery, petrochemical and chemical industry, CCPP for power plants, district heating and cooling plants. It is also engaged in operations and maintenance of power and industrial plants.

ITEA S.p.A

Established in 2002, ITEA is the R&D division dedicated to development and patenting of zero-emission Isotherm PWR Flameless Oxy- combustion technology (Isotherm PWR*) to be used in industrial and utility Power Plants. The flameless pressured oxy-combustion technology uses high temperatures, oxygen-enriched air and pressurization in an innovative manner to meet future environmental challenges in energy and waste segments. Industrial waste treatment, municipal solid urban waste and low-grade coal are other applications of the cost-effective clean technology.

ITEA S.p.A is set to commercially roll out this technology in select applications in the coming years.

Group Sofinters Consolidated Financial Statements include the financial statements of Sofinter S.p.A (the parent company) and those of the companies over which it exercises control directly or indirectly, from the date on which control was acquired upto the date on which it ceases.

During the Financial Year ended on 31st December 2020,the group clocked a turnover of Euro 212 million(previous year €227 million)and net loss of Euro 3.3 million against a net profit in the previous year of €3.7 million.

During 2020,the COVID-19 pandemic, on the wane since April 2021 in Italy, had a disruptive effect both on the profitability of the main orders and on the working methods hitherto adopted by the Group. In relation to the major input costs, notably materials and sub- contractors, there is a negative impact as a result of the use of alternative sourcing(alternative vendors as well as alternative freight routes to that originally envisaged).This had a cascading impact on the delivery schedules to the end client resulting in contractual claims from them. While some remedies have fructified in the Groups favour, negotiations are ongoing due to the continuing nature of the pandemic.

In relation to working methods, great emphasis has been placed on employee health and remote working has been largely followed except where inevitable in the offices but even in this case with all due precautions and processes to ensure their safety. Re-starting physical working commenced in a phased manner since April 2021 and is currently at about 75% capacity. The production units worked in shifts with presence of limited number of employees to the detriment of economy and efficiency. The Group has registered a number of COVID-19 cases among its employees but fortunately with no fatalities.

From a commercial standpoint, the volatility in oil prices, leading to negative prices of the barrel for a few days, led to a slowdown in new investments by the major oil companies many of whom also stopped ongoing works and preferred write-offs instead. This has resulted in a slowdown of new orders in general and the Group has faced the same during the year under review and in the first half of 2021.Moreover,in certain geographical areas the Government has postponed or cancelled direct investments in new projects, instead opting for private enterprise participation with the attendant lengthy procedures and complex rules.

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

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

The current Banking facilities for the Group in terms of the Agreement with the Banks valid until the last quarter of 2022 are sufficient in size and form, in line with the business needs of the Group. To further strengthen the capital base and ensure enhanced continuation of the banking facilities beyond this period to scale up the Groups activities, the Group has engaged the services of KPMG Italy and Axia Capital Italy to explore the possibility of equity participation by financial investors including the Italian Government by infusion of fresh equity into the Group within the first quarter of 2022.

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

As pointed out in the previous year with the transfer of the operational assets in all respects having been completed to Bruno Presezzi S.p.A, the Commissioner has started the second phase of disposing the non-core assets of the Company. These primarily comprise of approx 60 acres of land in Legnano, Milan, buildings and some equipments within. However in view of the present market situation for disposal of property in Italy, further compounded continuing pandemic during FY 2020 in Italy, there has been hardly any progress in disposing off the same. Meanwhile creditors in order of ranking and their dues continue to be negotiated by the administrator and will be paid off to the extent of amounts received from the disposal of the assets as and when these materialize.

Campo Puma Oriente S.A.(Puma Oil Block)

The Puma Oil Block is located in Ecuadors Oriente Basin in the Orellana Province east of Quito with an area of 162 square Kims. The Block was part of the second international marginal field bidding round and the contract was signed in March 2008 for a 20 year term with Consorcio 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 contract was production sharing, but in February, 2011, it was changed to a service contract for an 18 year term. The remaining oil recovery after considering production till date from the existing Puma field is approximately 14.3 million barrels, excluding probable and possible reserves.

There are 11 operational wells in the Puma Block. However, as reported in the previous year, all wells have been capped during FY 2020 due to the continuing pandemic delaying much needed interventions including water injections, artificial lift etc. as also additional CAPEX. In the absence of undertaking these procedures due to the stringent conditions for funding under SDR on Gammon there has been no progress in this direction prompting the Ministry of Hydrocarbons, Ecuador to invoke various stringent provisions under the Contract citing breaches. Had these interventions taken place, these wells would have flowed approx 2000 barrels apart from an upward revision in service fees to approx USD 29 per barrel. Our attempts to identify a strategic partner to remedy the situation including complete divestment of the asset is continuing but in the absence of production and compounded by the COVID impact in Ecuador, this is proving to be a significant challenge.

2. Dividend

In view of the losses the Board of Directors do not recommend any dividend on the Equity Shares of the Company for the Financial Year ended March 31, 2021.

3. Reserves

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

4. Finance

During the year under review the Company did not raise any capital from the capital markets either by way of issue of equity shares, ADR/ GDR or any debt by way of Debentures.

The standalone residual CDR Principal debt of Rs 4893.83 crores (amount as on 31st March 2021) (including an amount of Rs 1120.99 crores pertaining to recalled facility of the SPVs) has become a Non Performing Asset with the lenders as on 30th June, 2017.

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

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

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

5. Debentures

As on March 31, 2021 the Company had an outstanding principal balance of NCDs amounting to Rs 2,883,686,298. Also the FITL outstanding on the NCDs was Rs 4,536,063 which makes the total principal outstanding to Rs 2,888,222,361. The said debentures and interest thereon continue to remain unpaid for more than a year. Repayment of debentures is also part of the settlement proposal as mentioned above, subject to the approval of the lenders to the proposal.

6. Public Deposits

The Company has no fixed deposits under Chapter V of the Companies Act, 2013, and did not accept any further deposits during the Financial Year 2020-21.

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

The Company did not pay any amount as dividend since the financial year 2012-13 onwards. Hence there is no pending dividend which is outstanding to be transferred to IEPF authorities pursuant to the provisions of Section 124 of the Companies Act, 2013. However the Company has transferred unclaimed interim dividend for the Financial Year 2011 - 12 which remained unclaimed and unpaid for a period exceeding seven years from its due date aggregating to 1,60,720/- (Rupees One Lakh Sixty Thousand Seven Hundred and Twenty only) to the Investor Education and Protection Fund (IEPF) on 16th November, 2019.

Details of Nodal Officer

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

8. Material Changes and Commitments, if any, affecting the Financial Position of the Company which have occurred between the end of the Financial Year of the Company to which the Financial Statements relate and the date of the Report.

There has been no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the Financial Year of the Company to which 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 on its retained Civil EPC business.

10. Details Of Significant And Material Orders Passed By The Regulators Or Courts Or Tribunals Impacting The Going Concern Status And Companys Operations In Future

The Companys operations have been affected in the last few years by various factors including liquidity crunch, unavailability of resources on timely basis, delays in execution of projects, delays in land acquisition, operational issues etc. The Companys overseas operations are characterized due to weak order booking, paucity of working capital and uncertain business environment. Also the Companys current liabilities exceed the current assets by Rs 7731.64 Crore as at March 31, 2021. The facilities of the Company with the CDR lenders are presently marked as NPA since June 2017. The liquidity crunch has resulted in several winding up petitions being filed against the Company by various stakeholders for recovery of the debts which the Company has been settling as per the mutually agreed repayment terms. The liquidity crunch is affecting the Companys operation with increasing severity. The CDR lenders have recalled the various facilities, initiated recovery suits in the Debt Recovery Tribunals as well as filing a winding up petition with the National Company Law Tribunal, Mumbai bench under the Insolvency and Bankruptcy code

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

The Reserve Bank of India had vide its circular no. RBI/2018-19/ 203 DBR.No.BP.BC.45/ 21.04.048/2018-19 dated 7th June, 2019 issued directions for Prudential Framework for Resolution of Stressed Assets. These directions were called the Reserve Bank of India (Prudential Framework for Resolution of Stressed Assets) Directions 2019 and which came into immediate effect i.e. 7th June, 2019

These directions were issued by RBI with a view to providing a framework for early recognition, reporting and time bound resolution of stressed assets.

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

11. Impact of COVID- 19 Pandemic

The Covid-19 Pandemic has severely disrupted business operations due to lockdown and other emergency measures imposed by the Governments. The operations of the Company were impacted, due to shutdown of Projects and offices following nationwide lockdown. Various proposals for restructuring and arbitration & settlement matters have been delayed on account of the non-availability of the officials and the offices being shut. The COVID -19 Pandemic has compounded the problems due to all the restrictions on the movement of people, opening of offices, and the project work at sites, which was already at its slowest. The impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration and accordingly, the impact may be different from that estimated as at the end of the financial year. The Company will continue to monitor any material changes to future economic conditions. The Management does not expect any further material adjustment beyond the assessments and impairments already made in the financial statements to the assets and liabilities.

12. Directors Responsibility Statement

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

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

ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates 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, 2021 and its loss for the year ended on that date;

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

iv) The Directors have prepared the Annual Accounts for the year ended March 31, 2021 on a going concern basis;

v) The Directors have laid down internal financial controls which are followed by the Company and that such internal financial controls are adequate and are operating effectively;

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

13. Annual Return

The Annual Return as per the provisions of Section 92(3) and Section 134 of the Companies Act, 2013 and Rule 12(1) of the Companies (Management and Administration) Rules, 2014, is available on the Companys website i.e. www.gammonindia. com.

14. Subsidiary / Associates and Joint Venture Companies

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

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

15. Consolidated Financial Statements/Subsidiary Companies

The Company, its Subsidiaries, Associates and Joint Ventures have adopted Ind-AS pursuant to the Ministry of Corporate Affairs notification, notifying the Companies (Indian Accounting Standard) Rules, 2015 under Section 133 of the Companies Act, 2013. Your Company has published Ind AS Financials for the year ended March 31, 2021 along with comparable as on March 31, 2020 on a Standalone and Consolidated basis, which form part of this Annual Report.

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

The said Financial Statements and detailed information of the subsidiary and associate companies shall be made available by the Company to the shareholders on request. These Financial Statements will also be kept open for inspection by any member at the Registered Office of the Company and the subsidiary and associate companies.

Pursuant to Section 136 of the Companies Act, 2013, the Financial Statements of the Company, Consolidated Financial Statements alongwith all relevant documents and separate audited accounts in respect of the subsidiaries and associates are available on the Companys website viz. www.gammonindia.com.

16. Directors/Key Managerial Personnel

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

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

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

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

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

17. Auditors

(A) Statutory Auditors

In compliance with the provisions of Section 139 of the Companies Act, 2013, the shareholders at the 95th AGM held on 21st March, 2018 approved the appointment of M/s Nayan Parikh & Co., Chartered Accountants (Firm Registration No. 107023W) as the Statutory Auditors of the Company in place of the retiring auditors, for a period of 5(Five) years i.e. from the conclusion of the 95th AGM, till the conclusion of the 100th AGM.

Vide Notification dated 7th May, 2018 issued by the Ministry of Corporate Affairs, the requirement of seeking ratification of appointment of statutory auditors by members at each Annual General Meeting has been done away with. Accordingly, no such item has been considered in the Notice of the 99th Annual General Meeting.

(B) Cost Auditor

The Company maintains adequate cost records as required under the provisions of Section 148 of the Companies Act, 2013.

In accordance with the provisions of Section 148 of the Companies Act, 2013 the Board in its meeting held on 14th August, 2020 has appointed Mr. R.S. Raghavan as the Cost Auditor of the Company for the financial year 2020 - 21 on a remuneration of 70,000 excluding out of pocket expenses and tax. In terms of the provisions of Section 148(3) of the Companies Act, 2013 read with Rule 14(a)(ii) of the Companies (Audit and Auditors) Rules, 2014.

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

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

Pursuant to the abovementioned Rules and in order to ensure compliance with the same, the Board of Directors appointed Mr. Pradip Damania, Cost accountant for conducting the Audit of Cost Accounting records maintained by the Company for the Companys Civil Engineering, Procurement and Construction business and to fill up the casual vacancy caused due to the death of Mr. R.S. Raghavan. The audit fees that will be charged by Mr. Damania will be Rs 70000/- per Financial Year.

(C) Secretarial Auditor and Audit Observations and Boards comments thereon;

M/s. Pramod Shah & Associates, Practicing Company Secretaries were appointed as the Secretarial Auditors of the Company, to conduct the Secretarial Audit of the Company for the Financial Year ended 31st March, 2020 pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as amended from time to time. The Secretarial Auditors Report is annexed to this report as "Annexure B".

The auditors have qualified the report with the following observations:

1. As per Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 The listed entity shall submit quarterly and yearly standalone financial results to the stock exchange within forty-five days of end of each quarter, (other than last quarter) along with Limited Review Report or Audit Report as applicable. The Company had delayed the submission of the financial statement For the Quarter ended June 2020 - Published and filed with the Stock Exchanges on 15th September, 2020.

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

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

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

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

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

Boards Explanation: The management has complied with SS-2 and SS-4. Since the Company is under CDR SS-3 which pertains to dividend is not applicable. Further the management strives to comply with SS-1 upto the extent possible.

3. As per Regulation 98 (1) of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015; the listed entity or any other person thereof who contravenes any of the provisions of these regulations, shall, in addition to liability for action in terms of the securities laws, be liable for the following actions by the respective stock exchange(s), in the manner specified in circulars or guidelines issued by the Board: (a) holding of designated securities, as may be applicable, in coordination with depositories. The Companys trading has been suspended due to penal reasons.

Boards Explanation: The Company is endeavoring and continuously striving to publish its periodic results on time. Further the Company has also made representations before the BSE and NSE where the shares of the Company are listed to waive off the penalties levied on the Company post which the application for revocation of suspension will be filed.

4. As per Regulation 14 of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015; the listed entity shall pay all such fees or charges, as applicable, to the recognised stock exchange(s), in the manner specified by the Board on the recognised stock exchange(s). The Company has paid Annual listing fees of Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). However, the website of BSE comprises a remark that the Company has defaulted in payment of the fees.

Boards Explanation: The Company has already paid the listing fees of both the exchanges for the FY 2020-21. However BSE has not updated the same and its website comprises of a remark regarding the default in payment of fees. The Company has written various emails to the concerned department of BSE and raised this matter.

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

Boards explanation: The FLA return for the year ended 31.03.2021 has been filed within the extension provided by the FLA Department of the Reserve Bank of India.

18. Material Unlisted Companies:

Regulation 16 of the SEBI Listing Regulations defines a material subsidiary to mean a subsidiary, whose income or net worth exceeds 10% of the consolidated income or net worth respectively, of the listed entity and its subsidiaries in the immediately preceding accounting year. Accordingly Gammon Power Limited a wholly owned subsidiary of the Company has exceeded the threshold limit and is deemed to be a Material Unlisted Subsidiary Company.

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

The Secretarial Auditors Report is annexed to this report as "Annexure C".

The auditors have qualified the report with the following observations:

1. Section 149, 152 and 161, an additional director shall be regularized at the ensuing General Meeting. However, Mr. Noorani Choodamani was regularized before the meeting as a Director.

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

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

Boards Explanation: The Company gets the document digitally signed and hence not mentioned the date and place of signing.

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

Boards Explanation: The Board has all revised Notices and Minutes in place. However, the above seems to be a clerical lapse.

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

Boards Explanation: The Company had duly appointed a whole time Company Secretary during the financial year under review. However after resignation of the Company Secretary the Company is not able to shortlist a candidate for the same. The Company is in continuous search for a suitable candidate to complywith the provisions of the said regulation.

19. Annual Secretarial Compliance Report:

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

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

Below are the auditors qualifications along with Boards clarification thereon:

Sr. Compliance Requirement No. (Regulations/ Circulars/ Guidelines including specific clause Deviations Observations/ Remarks of the Practising Company Secretary Boards Explanation
1. As per Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 The listed entity shall submit quarterly and yearly standalone financial results to the stock exchange within forty-five days of end of each quarter, (other than last quarter) along with Limited Review Report or Audit Report as applicable. Delay in submission and publishing of Financial Results The Company had delayed the submission of the financial statement for quarter ended March, 2020 and year ended March, 2020. For the Quarter and Half Year ended March 2020 - Published and filed with the Stock Exchanges on 14thAugust, 2020 For the Quarter ended June 2020 - Published and filed with the Stock Exchanges on 15th September, 2020 The state of the Infrastructure sector since the last couple of years is deteriorating, our Company is no exception. To safeguard the interests of the clients and lenders, the Company has hived off part of its business under a Court approved scheme. Pursuant to the same, majority of the operating staff was transferred to the new Company and Gammon continues to operate with skeletal staff. The present financial situation of the Company makes it unable to attract and retain new staff.
Further due to the COVID-19 lockdown, the Company has struggled to meet timelines with its already limited staff and the existing staff being affected by the pandemic. Pursuant to the SEBI Circular No. SEBI/HO/ CFD/CMD1/CIR/P/2020/140 dated July 29, 2020 considering the ongoing lockdown and the Pandemic every listed company can publish its results for the quarter ended June 2020 by 15th September, 2020. The Company has filed its quarterly results by the permissible timelimits.
2. As per FEMA Circular of RBI - A.P (DIR Series) Circular No. 133 dated June 20, 2012 which stipulates all Indian Companies who have received FDI and/ or have made FDI abroad (i.e. overseas investment) in the previous year(s) including the current year, should file the annual return on Foreign Liabilities and Assets (FLA) in the soft form which can be duly filled-in, validated and sent by e-mail to the Reserve Bank by July 15 of every year. The Company has filed annual return on Foreign Liabilities and Assets (FLA) but not within the stipulated time because the Financial Statements of the Company were not ready. Due to delay in approving and publishing of financial results the Company filed its annual return on Foreign Liabilities and Assets (FLA) for the year ended 31st March 2020 after the prescribed time limits.
4. Secretarial Standards (SS - 1, SS - 2, SS - 3 and SS - 4) issued by the Institute of the Company Secretaries of India (ICSI). The Secretarial Standards were complied to the extent possible The management has complied with SS-2 and SS-4. Since the Company is under CDR SS-3 which pertains to dividend is not applicable. Further the management will comply with SS-1 upto the extent possible.
5. As per Regulation 98 (1) of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015; the listed entity or any other person thereof who contravenes any of the provisions of these regulations, shall, in addition to liability for action in terms of the securities laws, beliable for the following actions by the respective stock exchange(s), in the manner specified in circulars or guidelines issued by the Board: (a)holding of designated securities, as may be applicable, in coordination with depositories. The Companys trading has been suspended due to penal reasons. The Company is endeavoring and continuously striving to publish its periodic results on time. Further the Company has also made representations before the BSE and NSE where the shares of the Company are listed to waive off the penalties levied on the Company post which the application for revocation of suspension will be filed.

20. Corporate Governance Report and Management Discussion & Analysis

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

21. Boards Explanation On Statutory Auditors Qualification on Financial Statements

The Boards explanation on the Statutory Auditors qualifications and remarks in their Auditors Report both on the Standalone and Consolidated Financial Statements is annexed to this report as "Annexure E".

Members attention is drawn to "Emphasis of Matter" stated in the Auditors Report dated 28th June, 2021 on the Standalone Financial Statements and in the Auditors Report dated 28th June, 2021 on the Consolidated Financial Statements of the Company for the year ended 31st March, 2021. The Directors would like to state that the said matters are for the attention of members only and have been explained in detail in the relevant notes to accounts as stated therein and hence require no separate clarification.

22. Declaration by Independent Directors

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

23. Nomination and Remuneration Policy

The Nomination and Remuneration Committee of the Company formulated a Nomination and Remuneration Policy in terms of Section 178(3) of the Companies Act, 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 laying down inter-alia, the criteria for appointment and payment of remuneration to Directors, Key Managerial Personnel and Senior Employees of the Company the same was adopted by the Board and is annexed to this Report as "Annexure F".

24. Committees of the Board

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

1. Audit Committee

2. Stakeholders Relationship Committee

3. Nomination and Remuneration Committee

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

25. Familiarization Programme for Independent Directors

The Company has in place a system to familiarize its Independent Directors with the operations of the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. All the Independent Directors were updated about the ongoing events and developments relating to the 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 Company, whenever they so request. In addition presentations are made to the Board and its committees where Independent Directors get an opportunity to interact with members of the senior management. The Independent Directors also have interaction with the Statutory Auditors, Internal Auditors, and External Advisors, if any, appointed by the Company at the meetings.

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

26. Meetings of the Board

During the Financial Year under review, the Board of Directors of your Company met 4 (Four) times, i.e. on 14th August, 2020,15th September, 2020, 12th November, 2020 and 11th February, 2021.

27. Audit Committee

The Audit Committee has been formed in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. During the financial year under review the Audit Committee met 4 (Four) times, i.e. on 14th August, 2020,15th September, 2020, 12th November, 2020 and 11th February, 2021.

The Audit Committee consists of the following members viz., (1) Mr. Anurag Choudhry - Executive Director and CFO, Mr. Soumendra Nath Sanyal and Mr. Ulhas Dharmadhikari - Independent Directors, Mr. Sandeep Sheth - Executive Director and Mr. Kashi Nath Chattejee - Independent Director.

Mr. Sanyal is the Chairman of the Committee.

28. Vigil Mechanism / Whistle Blower Policy

A vigil mechanism as per the provisions of Section 177 of the Act and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 has been established by adoption of "Whistle Blower Policy" for Directors and Employees to report to the management about suspected or actual frauds, unethical behaviour or violation of the Companys code. The Whistle Blower Policy is uploaded on the companys website at www.gammonindia.com under the Investors Section.

29. Particulars of Loans, Guarantees or Investments

Details of loans, guarantees and investments are given in the Notes to the Standalone Financial Statements, forming a part of this Annual Report.

30. Particulars of Contracts/Arrangements with Related Parties

All contracts/arrangements/transactions entered into by the Company during the Financial Year ended 31st March, 2021 with the Related Parties were in the ordinary course of business and at arms length basis. All such Related Party Transactions, if required were placed before the Audit Committee and also the Board for its approval, wherever required. No omnibus approvals were taken during the period under review.

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

The policy on the Related Party Transactions as approved by the Board is hosted on the Companys website i.e. www. gammonindia.com.

During the Financial Year, there were no Related Party Transactions of the Company with its Directors and Key Managerial Personnel or their relatives, its holding, subsidiary or associate companies as prescribed under Section 188 of the Companies Act, 2013 and the SEBI Listing Regulations and which were required to be reported in Form AOC-2 and therefore the Company is not required to report any transaction under the prescribed Form AOC-2 and the same does not form a part of this report.

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

31. Board Evaluation

Pursuant to the provisions of Section 149 of the Companies Act, 2013 read with Schedule IV and Regulation 17 and 25 of the SEBI Listing Regulations, the Independent Directors evaluated the performance of the Non-Independent Director. Independent Directors were also evaluated by Board members on the functioning, participation and contribution made by each Independent Director to the Board and Committee processes. A Report of the evaluation has been forwarded to the Nomination and Remuneration Committee to maintain confidentiality of the Report and to improve the Board dynamics, and enhancing Boards overall performance in the challenging environment.

32. Risk Management Policy

The Company is exposed to inherent uncertainties owing to the sector in which it operates. A key factor in determining a Companys capacity to create sustainable value is the ability and willingness of the Company to take risks and manage them effectively and efficiently. In order to evaluate, identify and mitigate these business risks, the Companys risk management framework embodies the managements approach and the initiatives taken to mitigate business and industry risks and redefining processes to create transparency, and thereby minimize the adverse impact on the business objectives and enhance the Companys competitive advantage. Further details of the same are set out in the MDA which forms a part of this Annual Report.

33. Internal Financial Controls

The Company has devised and implemented internal control systems as are required in its business processes. The internal controls have been designed to provide assurance with regard to recording and providing reliable financial and operational information, complying with the applicable statutes, safeguarding assets, executing transactions with proper authorization and ensuring compliance with corporate policies.

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

34. Particulars of Frauds, if any reported under Sub-Section (12) of Section 143 other than those which are reportable to the Central Government

No frauds have been reported under sub-section (12) of Section 143 of the Companies Act, 2013.

35. Particulars of Employees -

Information required pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 for the year under review is enclosed as "Annexure G" to this Report.

36. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings & Outgo

Pursuant to the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 the information on conservation of energy, technology absorption and foreign exchange earnings and outgo is enclosed as "Annexure H to this report.

37. Prevention of Sexual Harassment of Women at Workplace

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

38. Reasons for suspension of trading of equity shares

The shares of the Company are listed on BSE Limited and the National Stock Exchange of India Limited. The trading of the equity shares are suspended from 23rd February, 2018 onwards due to non-compliance of Regulation 33 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015.

Post the demerger of the two operating businesses in the financial year 2016-17 and 2017-18 most of the employees pertaining to the two business were transferred to the demerged entities and the Company continues with skeletal staff. Also the Company is facing challenging financial times and as a result its difficult to retain/hire employees. This has delayed the preparation and finalization of accounts commencing from the quarter ended June 2017. Further the exchanges had also levied heavy penalties on the Company which considering the financial crises the Company was unable to pay. The Company has made several applications to the Stock Exchanges to consider the matter of the Company as a special case and waive off the penalties so that the Company could apply to resume trading of its shares on the exchanges portal.

Further to inform the members that both the stock exchanges have given the opportunity of personal hearing and appearance before the committee of respective exchanges wherein the Company officials have made their submissions pleading for waiver of penalties levied by the exchanges. The Company is yet to receive any further communication post the above referred personal hearing.

39. Acknowledgement

The Board thanks all its valued customers and various Central and State Governments as well as other Stakeholders connected with the business of the Company including Contractors and Consultants and also Banks, Financial Institutions, Shareholders and Employees of the Company for their continued support and encouragement.

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