GMR Infrastructure Ltd Directors Report.

Dear Shareholders,

The Board of Directors present the 22nd Annual Report together with the audited financial statements of the Company for the financial year (FY) ended March 31, 2018.

Your Company, GMR Infrastructure Limited ("GIL"), operates in Airports, Energy, Transportation and Urban Infrastructure business sectors in India and few other countries through various subsidiaries, associates and jointly controlled entities. The Company has an Engineering, Procurement and Construction (EPC) business focusing on execution of projects of Group SPVs and external customers like Railways. The Group has acquired a prominent space in airports sector with more than 27.17% of total countrys passenger traffic being routed through the two airports managed by the Group, in addition to its presence in Philippines with an operating airport and has a noticeable presence in Energy sector, with its operations in thermal, solar sectors and project under development in hydro.

Performance highlights – FY 2017-18

Performance Highlights of your Company on consolidated basis for the FY 2017-18:

Stellar Performance of GMR Hyderabad International Airport Limited

Financial results – FY 2017-18

(GHIAL), Joint Ventures (JVs) of Delhi International Airport Limited (DIAL) contributing significantly to the bottom line. DIAL profit declined on account of implementation of tariff order of Airport Economic Regulatory Authority of India (AERA), however through better operations DIAL could end in positive bottom line;

Goa airport achieved financial closure and commenced construction of airport;

Signed share purchase agreement to increase stake in GHIAL from 63% to 74%;

Energy Sector registers turnaround - GMR Warora Energy Limited achieves net profit of Rs. 193 Crore with positive trend in settlement of regulatory dues;

EBITDA for the year decreased by 32.36% to Rs. 2,185.90 Crore from Rs. 3,231.48 Crore of the previous year;

Setting up an Aerospace & Defence Manufacturing Hub in Krishnagiri SIR on 600 acres of land in JV with Tamil Nadu Industrial Development Corporation (TIDCO);

Improvement in international coal prices resulted in improved realisation;

Bajoli Holi project is in advanced stage of construction with 70% completed by March 2018.

Analysis of the Companys audited Ind AS consolidated and standalone financial results is given below:

a) Consolidated financial results

(Rs. in Crore)

Particulars March 31, 2018 March 31, 2017
Continuing operations
Income
Revenue from operations:
Sales / income from operations (including other operating income) 8,721.21 9,556.82
Other income 553.04 482.28
Total Income 9,274.25 10,039.10
Expenses
Revenue share paid / payable to concessionaire grantors 1,911.50 2,762.93
Operating and other administrative expenditure 4,623.81 3,562.41
Depreciation and amortization expenses 1,028.40 1,018.65
Finance costs 2,316.34 2,128.00
Total expenses 9,880.05 9,471.99
(Loss) / profit before share of (loss) / profit of associate and joint ventures, exceptional items and tax (605.80) 567.11
from continuing operations
Share of (loss) / profit of associates and joint ventures (net of dividend distribution tax) (431.36) (68.40)
(Loss) / profit before exceptional items and tax from continuing operations (1,037.16) 498.71
Exceptional items - (loss) / gains (net) - (385.70)
(Loss) / profit before tax from continuing operations (1,037.16) 113.01
Tax expenses / (credit) 45.49 744.85
(Loss) / profit after tax from continuing operations (1,082.65) (631.84)
EBITDA from continuing Operations (sales / income from operations – Revenue share – Operating and other admin 2,185.90 3,231.48
expenses)
Discontinued operations
(Loss) / profit from discontinued operations before tax expenses (31.96) 283.25
Tax expenses / (credit) (0.02) (1.13)
(Loss) / profit after tax from discontinued operations (31.94) 284.38
(Loss) / profit after tax for the year (1,114.59) (347.46)
Other comprehensive income
Other comprehensive income to be reclassified to profit or loss in subsequent periods:
Exchange differences on translation of foreign operations (Net of taxes) (134.68) 27.54
Net movement on cash flow hedges (Net of taxes) 27.09 (16.84)
Other comprehensive income not to be reclassified to profit or loss in subsequent periods:
Re-measurement gains (losses) on defined benefit plans (Net of taxes) (3.10) (5.29)
Other comprehensive income for the year, net of tax (110.69) 5.41
Total comprehensive income for the year, net of tax (1,225.28) (342.05)
(Loss) / profit for the year attributable to (1,114.59) (347.46)
a) Equity holders of the parent (1,363.86) (564.38)
b) Non-controlling interests 249.27 216.92
Total comprehensive income attributable to (1,225.28) (342.05)
a) Equity holders of the parent (1,482.23) (552.34)
b) Non-controlling interests 256.95 210.29
Earnings per equity share (Rs. ) from continuing operations (2.24) (1.24)
Earnings per equity share (Rs. ) from discontinued operations (0.03) 0.30
Earnings per equity share (Rs. ) from continuing and discontinued operations (2.27) (0.94)

FY 2017-18 saw a mixed performance in both operating and financial parameters of the airport sector and EPC division. Airport sector overall performance declined due to reduction in aero revenue in DIAL on account of implementation of tariff order from AERA, while EPC revenues increased significantly on account of pick up in execution of Dedicated Freight Corridor (DFCC) project. There was very good growth in energy revenues, but highways revenue remained stagnant. Consolidated Revenues do not include the revenues of entities which were assessed as jointly controlled entities / JVs under Ind AS, including, GMR Energy Limited (GEL), GMR Kamalanga Energy Limited (GKEL), GMR Warora Energy Limited (GWEL) and Delhi Duty Free Services Private Limited (DDFS). Airport, Energy, Highways, EPC and other segments contributed Rs. 5418.74 Crore (62.13%), Rs. 1,533.53 Crore (17.58%), Rs. 589.70 Crore (6.76%), Rs. 931.12 Crore (10.68%) and Rs. 248.14 Crore (2.85%) respectively to the consolidated revenue from operations.

Decrease in revenue share paid / payable to concessionaire grantors was on account of lower revenue from DIAL. Increase in subcontracting expenses is mainly on account of EPC works. b) Standalone financial results

(Rs. in Crore)

Particulars March 31, 2018 March 31, 2017
Revenue from operations 1,106.01 1,179.77
Operating and administrative expenditure (811.06) (451.41)
Other Income 52.35 2.65
Finance Costs (821.61) (744.74)
Depreciation and amortisation expenses (19.06) (16.13)
(Loss)/profit before exceptional items and tax expenses (493.37) (29.86)
Exceptional Items:
Provision for diminution in value of investments / advances in subsidiaries / associate (1,437.29) (3,654.16)
(Loss)/profit before tax expenses (1,930.66) (3,684.02)
Tax expenses / (credit) (0.09) (0.09)
(Loss)/profit for the year (1,930.75) (3,684.11)
Net (deficit) / surplus in the statement of profit and loss - Balance as per last financial statements (4,472.77) (786.07)
Transfer from / (to) debenture redemption reserve - (1.76)
Re-measurement gains (losses) on defined benefit plans (Net of taxes) 0.49 (0.83)
Surplus / (Deficit) available for appropriation (6,403.03) (4,472.77)
Appropriations - -
Net deficit in the statement of profit or loss (6,403.03) (4,472.77)
Earnings per equity share (Rs. ) - Basic and diluted (per equity share of Rs. 1 each) (3.21) (6.12)

During the year ended March 31, 2018, the revenue from EPC segment has increased by 87.42% from Rs. 392.77 Crore to Rs. 736.13 Crore, which was mainly on account of contribution by the ongoing DFCC (Railways) project. Other operating income of the company came down to Rs. 369.88 Crore from

Rs. 787.00 Crore on account of reduction in interest income and on account of conversion of loans given to its subsidiaries / joint ventures / associates as they were into equity.

During the year ended March 31, 2018, based on an internal assessment, the Company has made a provision ofRs. 1,437.29 Crore (March 31, 2017: Rs. 3,654.16 Crore) towards diminution in value of its investment in GMR Highways Limited (GHWL), GMR Generation Assets Limited (GGAL) and GMR Aviation Private Limited (GAPL), 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 2017-18.

Reserves

The net movement in the major reserves of the Company on standalone basis for FY 2017-18 and the previous year is as follows: (Rs. in Crore)

Particulars March 31, 2018 March 31, 2017
Equity component of compound
- 133.94
financial instruments
Treasury Shares (101.54) (101.54)
General Reserve 174.56 40.62
Securities Premium Account 10,010.98 10,010.98
Surplus in Statement of Profit and
(6,403.03) (4,472.77)
Loss
Debenture Redemption Reserve 127.20 127.20
Capital Reserve 141.75 141.75
Foreign currency monetary
translation difference account 40.40 33.43
Other comprehensive income - -
3,990.32 5,913.61

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 developments of each of the major subsidiaries business is presented below. Further, MDA, forming part of this Report, also brings out review of the business operations of major subsidiaries and jointly controlled entities.

Airport Sector

Your Companys airport business comprises of 3 operating airports viz., Indira Gandhi International Airport at Delhi and Rajeev Gandhi International Airport at Hyderabad in India and Mactan Cebu International Airport in Philippines and one asset under development viz., Greenfield airport at Mopa, Goa. GMR, along with its Greek partner, was also awarded Provisional Contractor status at Heraklion Airport in Greece and now is in process of completing the documentation. The Indian airports are owned by your Companys subsidiary GMR Airports Limited (GAL) while the 40% stake in GMR Megawide Cebu Airport Corporation (GMCAC) is held through another subsidiary GMR Infrastructure (Singapore) Pte. Limited.

Your Companys aviation business comprises of GAPL, 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 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.

Highlights of FY 2017-18:

DIAL surpassed the 65 million passenger mark in FY 2017-18, witnessing a growth of ~14% in traffic over previous year with double digit growth in domestic & international traffic at 14.5% and 12.2% respectively. Delhi airport consistently crossed the 5 million passenger per month mark during the year while the maximum Air Traffic Movements (ATMs) handled per day reached 1,364. Strong growth in domestic cargo segment propelled DIAL to retain its number one position in cargo traffic in India with a 12.3% overall growth in FY 2017-18 over the previous year. During the financial year of the reporting period, the tariff for the second control period was implemented from July, 2017.

The non-aeronautical revenues continued its double digit growth led by commercial non-aero sales and DIAL was able to ramp up ~80 new outlets in retail and hospitality. DIAL launched its own Airport magazine "DIALogue" during the year.

Strong focus on developing organizational culture based on operational excellence and customer focused initiatives helped DIAL emerge as the best airport in the World among the group of airports which handle 40+ million passengers per annum (mppa) category.

DIAL is also in the process of awarding development rights for the countrys first Terminal Hotel.

Key Awards and Accolades received in FY 2017-18:

Worlds best airport in the 40 million+ pax category for Airport Service Quality (ASQ) as rated by Airports Council International (ACI).

Golden Peacock Award for Corporate Ethics.

Golden Peacock Award for Occupational Health and Safety.

Silver recognition in the ACI Asia Pacific Green Airports Award.

Most Sustainable and Green Airport Award at Wings India.

Network 18 and Honeywell Smart Building award for:

Smartest Building in India

Smartest Large Airport In India

Greenest Building in India

Safest Building in India

Most Productive Building in India

Quality Excellence Award for Best Airport Security and Best Airport

Community Development at the World Quality Congress held in Mumbai.

CII National Lean Award 2017

Winners in Service Sector for "Deployment of Lean Practices across the Organization"

First Runners up in the category "Deployment of Lean at

Suppliers Place"

Winners in six categories at the Public Relations Council of India

Communication Awards.

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 2017-18:

Serving 56 destinations (18 international and 38 domestic) with 17 foreign carriers and 9 domestic carriers, Hyderabad Airport has been among the fastest growing major airports in the country during 2017-18.

During the year, the strong growth momentum continued at Hyderabad Airport, with the annual passenger traffic crossing 18.3 million passengers between April 2017 – March 2018 period. Overall passenger traffic growth has been over 20% year-on-year (Y-o-Y), with domestic traffic increasing by 23% and international by 9% over the prior fiscal year. Cargo tonnage totaled 137,822 tons in fiscal year 2017-18, resulting in a Y-o-Y increase of 11%.

On the International connectivity front, new services/frequencies were added to Washington (Air India), Doha and Sharjah (IndiGo). On the domestic front several new destinations were linked, which include Trivandrum, Nagpur, Calicut, Guwahati, Surat, Patna, Shirdi etc.

FY 2017-18 also saw the airport continue its focus and leadership in the area of passenger experience and service quality, with groundbreaking new initiatives first of its kind Express Security Check for domestic passengers traveling only with hand baggage, deployment of Automated Tray Retrieval System (ATRS) for enhanced throughput at security check lanes and a host of new and improved facilities for Passengers with Reduced Mobility (PRM), senior citizens and women traveling with infants.

Hyderabad Airport was once again ranked as World Number One in ASQ survey by ACI for the calendar year 2017 in 5-15 million passenger category, marking the 9th consecutive year of Global top 3 ranking and second consecutive year of World #1 ranking in the size category.

In October 2017, GHIAL successfully raised USD-350 million bond from overseas investors at a very attractive pricing. With this, GMR Group has adopted alternate source of funding at both the operating airports in a view to rationalize borrowing costs.

On March 23, 2018, Hyderabad Airport successfully completed a decade of operations and on the same day, the foundation stone was laid for expanding the Airports capacity from 12 MPPA to 34MPPA in a phased manner to cater to the rapid growth of passengers travelling via Hyderabad Airport. The expansion works are presently underway and are progressing on schedule.

Awards and Accolades received in FY 2017-18:

CAPA Chairmans Order of Merit for Environment Sustainability.

Golden Peacock Business Excellence Award 2017.

‘Excellent Energy Efficient Unit by CII.

CII ‘5S Excellence Award for 2017.

HMTV Business Excellence Award.

India Travel Award South 2017 for Destination Marketing efforts.

CSR Excellence Award 2017 jointly by Indywood and Government of

Telangana for responsible and sustainable CSR practices.

Smart Air Cargo Port by Maritime Gateway.

‘Cold Chain Team of the Year at Cold Chain Strategy Summit &

Industry Awards 2017.

Recognized among ‘Top 26 Innovative Companies in CII Industrial

Innovation Awards 2017.

‘Active Customer Engagement Award in the inaugural edition of CII

Customer Obsession Awards 2017.

Great Indian Workplace Award for Customer Obsession.

First Prize for its garden maintenance in 3rd Garden Festival of Govt. of Telangana.

ACI Asia Pacific Green Airports Recognition under ‘Gold category.

Retained ACI Airport Carbon Accreditation Level 3+ (Carbon Neutral) status in the year 2017-18.

GMR Megawide Cebu Airport Corporation (GMCAC)

GMCAC, a JV between GMR group (40%) and Megawide Corporation (60%), 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 successfully operating the airport for nearly 42 months.

Highlights of FY 2017-18:

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, Australia, United States and the Middle East. As a result, GMCAC has seen international traffic grow by 24% while the domestic traffic has also grown at 8%. In terms of international connectivity, GMCAC has added some key routes viz., Cebu – Dubai, Cebu – Los Angeles, Cebu- Taipei, Cebu- Xiamen, Cebu- Guangzhou, Cebu – Hangzhou, Cebu – Chengdu, Cebu- Muan and Cebu-Shenzhen.

GMCAC is also steadily working towards successful operations of the new terminal. To mitigate the delay in handover of land which was under occupation of the Philippines Air Force, GMCAC had started work on the land parcels made available to it in June 2015. The structural works for the new terminal building were completed and specialized systems like Baggage handling system, Passenger Boarding bridges, Elevators and escalators had already been installed and Operation trials were completed. GMCAC was able to comply with the timelines specified in the concession agreement despite many challenges and commissioned the new terminal T2 on July 1, 2018.

GMR Goa International Airport Limited (GGIAL)

GGIAL has been granted exclusive right, license and authority to develop, operate and maintain the Mopa airport at Goa for 40 years with extension option for another 20 years. GGIAL has secured Rs.1,330 Crore loan through consortium of banks for development of First Phase of the airport at Mopa. September 4, 2017 has been set as the Appointed Date as per the Concession norms. Government of Goa (GoG) has already provided vacant access and Right of Way (RoW) to GGIAL for more than 99% of the land identified for the project. Megawide Construction Corporation (MCC) of Philippines has been selected as the EPC contractor for the project. The construction and development has commenced and the first phase of airport is expected to be operational by September 2020.

GMR Aviation Private Limited (GAPL)

GAPL owns and operates one of the youngest fleets in the country and addresses the growing need for charter services. In order to boost revenues and rationalize overhead costs, GAPL has entered into a 2 years management contract with Jet Set Go – a general aviation fleet aggregator, commonly referred to as the "Uber of the Skies". As per the agreement, Jet Set Go has taken responsibility for operations and marketing of the aircrafts and the business has shown marked improvement over the past years with 2 aircrafts recording the highest number of hours flown on an annual basis. All maintenance contracts have also been renegotiated leading to a reduction in costs. We are confident that GAPL will continue on the turnaround path.

Energy Sector

The Energy Sector companies are operating around 4,425 MWs of Coal, Gas, Liquid fuel and Renewable power plants in India and around 2,205 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 (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.

During the year, the Plant has achieved availability of 72% and Gross

Plant Load Factor (PLF) of 71%.

Plant achieved lower plant availability and PLF due to severe coal supply shortage across the industry.

We expect the coal supply levels will increase during the year and more coal will be taken through alternative modes like e-auction of coal.

Regulatory orders for Tamil Nadu Generation and Distribution

Corporation Limited (TANGEDCO) Power Purchase Agreement (PPA) for "change in law" was received during the year. GWEL has started billing for Change in Law to TANGEDCO.

Weir for water availability by Maharashtra Industrial Development

Corporation (MIDC) was commissioned during the year.

Plant was awarded with many prestigious awards during the year, some of them are as below:

"National Energy Conservation Award 2017" by Bureau of

Energy Efficiency, Govt. of India & Ministry of Power.

"IMC Ramakrishna Bajaj National Quality Award 2017 " in service category.

"Shrestha Suraksha Puraskar Award 2017" for effective implementation of Occupational Safety and Health management system by Honble Minister of Labour and Employment, Govt. of India.

"National Award for Excellence in Water management" by

Confederation of Indian Industry.

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

GKEL, subsidiary of GMR Energy Limited, 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 Fuel Supply Agreement (FSA) for 2.14 MTPA firm linkage from Mahanadi Coalfields Limited (MCL). GKEL secured another 1.5 MTPA long-term FSA under SHAKTI linkage auction during the year.

CERC issued favorable order in bill dispute petition filed against

Haryana and directed to release overdue claims to GKEL. This will help in easing of cash flows.

During this period, GKEL achieved availability of 75% and PLF of

61%. Lower Availability & PLF was due to discontinuation of tapering linkage of 550 MW in FY 2017, however, now based on the new SHAKTI linkage of 1.5 MTPA availability and PLF will improve significantly.

3. GMR Chhattisgarh Energy Limited (GCEL) – 1,370 MW:

GCEL is a 1,370 MW (2 x 685 MW) pulverized coal- fired super critical technology based plant in Raipur district in the State of Chhattisgarh.

During the year GCEL supplied 500 MW to Gujarat discom (GUVNL) under short-term case 4 bid PPA. We expect the same to be extended during FY 2019 also.

Lenders have invoked Strategic Debt Restructuring (SDR) for GCEL.

As per the SDR scheme, out of the total outstanding debt (including accrued interest) of Rs. 8,800 Crore, debt to the extent of Rs. 2,992 Crore has been converted into equity by which the consortium lenders have 52.4% shareholding and balance 47.6% is held by GMR Group.

A process for divestment of controlling stake in GCEL initiated by the lenders under the RBI Circular dated February 12, 2018 is currently underway.

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.

GVPGL which operated at a PLF of 9% in FY 2017 under E-RLNG scheme, did not operate in the last financial year due to scarcity of gas, lack of government initiatives and no demand from DISCOMs.

Due to unfavorable decision in RLNG matter, other avenues for gas supply in this scenario are being explored continuously.

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

GREL is a 768 MW (2 x 384 MW) combined cycle gas based power project at Rajahmundry, Andhra Pradesh.

Lenders have invoked SDR. As a consequence, outstanding debt of

Rs. 1,413.99 Crore (Rs. 1,308.57 Crore of principal and Rs. 105.42 Crore of interest accrued thereon) was converted into equity amounting to 55% shareholding in GREL. The balance is being held by the GMR Group.

GREL has submitted a resolution plan to the lenders for the outstanding debt of Rs. 2,352.00 Crore which is under active consideration by the lenders.

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

GEL owns the 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, 2018 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.

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

GPCL, a subsidiary of GEL, owns the 200 MW diesel powered power plant and was selling power to TAGENDCO.

Plant had long term PPA with TANGEDCO for 15 years, which was extended for additional period of one year. PPA has since expired. The plant was in preservation mode.

The group has decided to dismantle the plant, which is presently in progress.

8. GMR Gujarat Solar Power Limited (GGSPL), Charanka Village, Gujarat:

GGSPL, a wholly owned subsidiary of GEL, operates 25 MW Solar power project at Charanka village, Patan district, Gujarat. GGSPL has entered into 25 year PPA with Gujarat Urja Vikas Nigam Limited for supply of entire power generation. GGSPL has achieved commercial operation on March 4, 2012 and received certificate of commissioning from M/s. Gujarat Energy Development Agency ("GEDA"). M/s. Solarig Gensol has been awarded O&M contract for the Plant for subsequent period of 5 years. Plant has achieved a Gross DC PLF of 18% for FY 2017-18 and recorded revenue of Rs. 38 Crore for the FY 2017-18. Plant has maintained ISO 9001, 14001, 18001 certifications since June 2015.

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 January 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. M/s Enerpac has been awarded O&M contract for the Plant for a period of 5 years. Plant has achieved PLF of 14% for FY 2017-18 and recorded revenue of Rs. 0.85 Crore for the FY 2017-18.

10 GMR Generation Assets Limited (Formerly GMR Renewable Energy Limited) (GGAL), Kutch:

GGAL, a wholly owned subsidiary of the Company, commissioned a 2.1 MW wind based power plant at Moti Sindhodi Village, Kutch District, Gujarat in July 2011. GGAL has signed a 25 year PPA with Gujarat Urja Vikas Nigam Limited ("GUVNL") with respect to the entire power generated from the Plant. M/s Suzlon has been re-awarded O&M contract for the Plant for subsequent period of 5 years.

11. GMR Power Infra Limited (GPIL), Tamil Nadu:

GPIL, a wholly owned subsidiary of GIL, commissioned a 1.25 MW wind based power plant at Muthayampatty Village, Tirupur District, Tamil Nadu in December 2011. GPIL has signed a 20 year PPA with TANGEDCO with respect to the entire power generated from the Plant. M/s. Suzlon has been re-awarded O&M contract for the Plant for subsequent period of 5 years.

B. Projects:

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

• GBHHPL, a subsidiary of GEL, is implementing 180 MW hydro power plant on the river Ravi at Chamba District, Himachal Pradesh.

GBHHPL has already achieved financial closure and tied-up the debt requirement of Rs. 1,380 Crore.

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 including HRT excavation, Dam

Concreting and Power House Concreting along with E&M works are in full swing. Majority of the underground works like Surge/Pressure Shaft, Tunneling etc. have been completed or are in advanced stage of completion. Overall progress of 70% has been achieved till end of FY 2017-18.

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.

Post execution of Project Development Agreement (PDA), several key activities have been completed. Technical design of the Project has been finalized post detailed technical appraisal by a seven member Panel of Experts (empaneled with IFC) and Hydraulic model studies.

MoU for sale of power to Bangladesh executed in April 2017, in the presence of Honble PM of Bangladesh and Cabinet Minister of Government of India (GoI). PPA negotiations with Bangladesh is in advanced stage.

EPC Bids have been received and first round technical discussions have been completed.

Total land identified for the Project comprises of forest land and private land. As for private land, negotiation has been completed and MoU has been executed with Rehabilitation Action Plan (RAP) committees for acquisition and approx. 6 Ha of private land has been acquired till March 2018. Whereas for forest land, Deed of Agreement for forest land was executed with Department of Forest (DoF), Government of Nepal (GoN) in October 2017 post cabinet approval and tree cutting process initiated. Already acquired 12.45 Ha of forest land for infra works and tree cutting work completed.

Power Evacuation is proposed through 400KV D/C transmission line from Bus bar of project to Bareilly Pooling point of PGCIL in Uttar Pradesh, India. Nepal portion transmission line (from projects Bus bar up to Indo-Nepal border) to be developed by Karnali Transmission Company Pvt. Ltd. (KTCPL), a GMR Group Company and Indian portion up to Bareilly will be developed by GoI. Post execution of the Power Trade Agreement (PTA) between GoI and GoN and the SAARC energy pact between SAARC nations, cross border policy has been notified by GoI on December 5, 2016 and cross border regulations are under formulation by CERC.

3. GMR (Badrinath) Hydro Power Generation Private Limited (GBHPL) - Badrinath - 300 MW:

GBHPL, a subsidiary of GEL, is in the process of developing a 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).

Implementation Agreement has been executed with the Government of Uttarakhand. However, the project construction is under hold on account of stay order dated May 7, 2014 by the Honble Supreme Court on 24 Hydro Electric Projects (HEPs) in Uttarakhand which includes our 300 MW Alaknanda HEP.

4. Himtal Hydropower Company Private Limited (HHCPL) – 600 MW:

HHCPL, a subsidiary of GEL, is developing a 600 MW Upper

Marsyangdi-2 Hydroelectric Power Project on the river Marsyangdi in Lamjung and Manang Districts of Nepal.

Binding term sheet has been executed for 100% stake sale with

Chinese and Nepalese investors on an Enterprise Value basis for which Share Purchase Agreement (SPA) has been signed on May 5, 2018.

The whole transaction is expected to be closed by September 2018.

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

GLHPPL, a subsidiary of GGAL, 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 & CC or MoEF) has recommended for Environmental Clearance and accordingly MoEF & CC had issued in-principle clearance to this project. However, formal Environmental Clearance shall be granted by MoEF & CC after obtaining the Forest- stage-I clearance. Defence clearance for setting up the project has been received from Ministry of Defence, GoI. The forest land diversion proposal is under scrutiny of MoEF & CC.

C. Mining Assets:

1. PT Barasentosa Lestari, (PTBSL):

Group holds 100% stake in PTBSL which has coal mine in South Sumatra Province with more than 393 MT Coal Resources in ~23,300 Hectares and total mineable reserves of about 195 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 by barging and distressed market conditions. A conditional share purchase agreement (CSPA) was signed with PT GEMS on May 12, 2017 for sale of PTBSL. The transaction is subject to the regulatory approvals by both the parties. The parties have obtained all the major approvals and the transaction is expected to be closed by August 2018.

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

Group through its overseas subsidiary, GMR Coal Resources Pte. Limited, holds 30% stake in PT GEMS, a group company of Sinarmas Group, Indonesia. PT GEMS, a limited liability company, is 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 off take coal for 25 years. GEMS earned a record profit after tax of USD 120 million, during 2017. Out of 2017 profits, GEMS has declared the interim dividend of USD75 million in 2017 and the final dividend of USD40 million in 2018 of which GMR share is USD 34.5 million. The Coal Supply Agreement (CSA) with GEMS became operational from November 2017, pursuant to the SGX approval in August 2017.

Transportation Highways

GMR Highways Limited, a subsidiary of your Company, is one of the leading highways developers in India with 7 operating highways including minority stake (36.01%) in GMR OSE Hungud Hospet Highways Private Limited (GOHHHPL). The Group is looking at ways to consolidate its presence in the sector progressively. After divestment of 14.99% stake in GOHHHPL, remaining stake sale of 36.01% is underway and shall be completed post approvals from NHAI and lenders. During FY 2018, the focus was on cash flow improvement and resolving the pending arbitration claims and filing the new ones to contest undue policy factors which have impacted the projects adversely. Sufficient progress was made in this regard.

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 an SIR at Hosur, Tamil Nadu, just 45 kms 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 & Ancillary

Defence 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 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, truly "self- contained".

Project Progress:

The company made good progress in securing the clearances and is aggressively marketing the SIR for client tie-ups. During the year, the group, in a JV with TIDCO, has approached Government to consider GMR Krishnagiri SIR as a defence corridor at Hosur under the nodes recognized by the Government.

Kakinada SEZ/ SIR

GMR Group owns 51% in Kakinada SEZ Limited (KSEZ), which is developing Kakinada SEZ / SIR in the State of Andhra Pradesh in proximity to the cities of Kakinada and Visakhapatnam. With an area spanning over 10,000 acres,

Kakinada SEZ / SIR will be a 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 zones. Kakinada SEZ / SIR is designed for balancing the sensitivity to culture and heritage of the region with the economic development of the region.

Project Progress:

Six companies (Grasim, Standard, OWS, Pals Plush, Nekkanti & Petropath) have evinced interest in establishing their manufacturing units in Kakinada and have signed MoUs with Govt. of Andhra Pradesh stating that they have chosen KSEZs project area for the same. Cumulatively 195 acres of land is envisaged to be used with an investment of over Rs. 3,000 Crore, generating employment opportunities for ~6,000 people.

Nekkanti Sea Foods Limited has signed a lease deed and started construction of its sea food processing factory in an area of 5 acres.

M/s Devi Fisheries signed an agreement for establishing its sea food processing unit in an area of 6 acres.

Kakinada SEZ Limited has been declared as a selected bidder for development of commercial port from the earlier permit to develop a captive port. Received Environmental Clearance Approval from MoEF for Port development. The port will have capacity of 16 MTPA containing 4 berths – 1 coal, 2 general cargo and 1 port craft berth.

Kakinada SEZ project area has been declared as Industrial Area Local

Authority, which will enable focused and seamless approvals for infrastructure & building permits.

The Eastern Power Distribution Company of Andhra Pradesh Limited

(APEPDCL) has constructed a 33/11 KV in-zone sub-station and the same is operational.

A site administrative office building has been constructed and the project personnel are operating out of it.

Developed the necessary infrastructure at site like road network, power lines etc.,

EPC

Pursuant to the strategic decision taken to pursue EPC opportunities outside GMR Group and consequent to the Groups entry into Railway Projects during FY 2014, the Group has started construction of 2 Dedicated Freight Corridor Corporation (DFCC) projects (201 and 202) in the State of Uttar Pradesh and package 301 and 302 in the states of Haryana, Uttar Pradesh and Punjab. The construction work is in full swing and significant progress has been achieved. Further, track laying work also commenced in 201 and 202. The Company also achieved substantial completion of two other smaller Rail Vikas Nigam Limited (RVNL) projects in the States of Andhra Pradesh and Uttar Pradesh that were awarded in FY 2014.

RAXA

Raxa Security Services Ltd., an ISO 9001: 2008 certified company, provides

Integrated Security solution, man guarding solutions and technical security to industrial and business establishments. Raxa was established in July 2005 keeping the above requirements in view, with a mission to provide world class safety and security to Industrial and Business establishments. To enable delivery of quality services, a state-of-art security training academy was established with best in class training and administrative infrastructure on the outskirts of Bangalore. Raxa employs over 5,000 personnel and has operations across 18 states. Raxa bagged some prestigious contracts such as with British School and Tirumala Tirupathi Devasthanam (TTD), Alipiri in FY 2018. It also provided security services to important events held at Pragati Maidan and at Hyderabad.

Consolidated Financial Statement

In accordance with the Companies Act, 2013 and Ind AS 110 - Consolidated Financial Statements read with Ind AS 28 – Investments in Associates and Joint Ventures, the audited consolidated financial statement is provided in the Annual Report.

Holding, Subsidiaries, Associate Companies and Joint Ventures

GMR Enterprises Private Limited remains the holding company of the Company.

As on March 31, 2018, the Company has 118 subsidiary companies apart from 33 joint ventures and associate companies. During the year under review, the entities listed below have become or ceased to be Companys subsidiaries or associate companies/ JVs. The Policy for determining material subsidiaries may be accessed on the Companys website at the link: http://investor.gmrgroup.in/investors/GIL-Policies.html. The complete list of subsidiary companies and associate companies (including joint ventures) as on March 31, 2018 is provided in "Annexure - F" to this Report.

GMR Infrastructure Airports (Mauritius) Limited (GIAML) became subsidiary of the Company during the year under review. However, GIAML was amalgamated into GMR Infrastructure (Mauritius) Limited in the month of March 2018. GMR Hosur EMC Limited was amalgamated into GMR Krishnagiri SIR Limited in the month of July 2017.

The status of Asia Pacific Flight Training Academy Limited was changed to subsidiary from associate whereas the status of GMR Mining and Energy Private Limited was changed to associate from subsidiary during the FY 2017-18 .

During the year under review, East Delhi Waste Processing Company Limited ceased to be associate. Further, during FY 2017-18, PT Kuansing Intis Sejahtera and PT Bungo Bara Makmur became associates of the Company and Shanghai Jingguang Energy Co. Ltd ceased to be associate.

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 as "Annexure A" to this Report.

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, 2018, 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 no. 2 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, 2018 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 are operating effectively;

f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are 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 the said 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 2018 with related parties were in the ordinary course of business and on arms 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. Since all the related party transactions were in ordinary course of business and at arms length basis, Form AOC-2 is not applicable.

The Policy on related party transactions as approved by the Board may be accessed on the Companys website at the link: http://investor.gmrgroup.in/ investors/GIL-Policies.html. Your Directors draw attention of the members to Note no. 33 to the standalone financial statement 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 Companys 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 & Sanitation

Empowerment & 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, directly. However, the Company, through its subsidiaries/ associate companies and group companies, spent an amount of Rs. 31.24 Crore during the year. The details of such activities carried out with the support of GMR Varalakshmi Foundation (GMRVF), Corporate Social Responsibility arm of the GMR Group, have been highlighted in Business Responsibility Report. The Annual Report on CSR activities is annexed as "Annexure B" to this Report.

Risk Management

The GMR Groups Enterprise Risk Management (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."

With significant changes in business environment over the last couple of years, your Companys businesses face emerging risks that require effective risk management framework and dedicated resources to implement the framework.

Your Companys ERM framework follows the current best practices in order to achieve Companys objectives.

Significant developments during the year under review are as follows:

Risk assessment was carried out in detail at bid stage for Bhogapuram International Airport (Andhra Pradesh), Belgrade International Airport (Serbia), Clark International Airport (Philippines), Bijwasan Railway Station Development (New Delhi), Hybrid-Annuity Highway projects (NHAI). The ERM made a comprehensive risk assessment on key business assumptions for the bid for enabling informed decision-making;

ERM also carried out risk analysis for select business operations. The risk management function is also being established at the sectors with expert advice from outsourced partners.

For the ongoing railway projects under DFCC and the new projects,

ERM leads the project risk assessment in coordination with the project teams. The deployment of Project Risk Management (PRM) framework has enabled effective control over project costs.

The Group is working on several fronts to address the financing risks associated with the nature of its business.

The Company is focused on unlocking the value potential of its Airports business. In addition, the management has continued thrust on greater cash flow from operations with greater profitability focus, asset monetisation and collection of regulatory receivables. Taking into account the stress in the banking sector, the Group, where market conditions are favourable, has decided to raise bonds for its financing needs as against depending on loans from the banks. We have successfully done the same at both our Delhi and Hyderabad airport operations. The Company is also working closely with lenders for two of our stressed energy projects which have undergone Strategic Debt Restructuring, to address issues keeping in view the most recent RBI guidelines.

With rapidly changing business environment, the Group feels the need for a measurable approach to decide the amount of risks it can take in achieving its business objectives. 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 Airport and Energy assets.

Updates on ERM activities are shared on a regular basis with Management Assurance Group (MAG), the Internal Audit function of the Group.

The Company has in place the Risk Management Policy duly approved by the Board of Directors.

A detailed note on risks and concerns affecting the businesses of the Company is provided in MDA.

Internal Financial Controls

Internal financial control systems of the Company have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable accounting standards.

The Company has a well-defined and documented delegation of powers (DOP) manual with specified limits for approval of expenditure, both capital and revenue. The Company has a state-of-the-art Shared Services Centre (SSC) which centrally handles payments made by the Company. While compliance with the policies are well integrated with the underlying processes, SSC acts as a second line of defence to ensure adherence to certain laid down policies.

The Company uses an established ERP system to record day to day transactions for accounting and financial reporting. The ERP system is configured to ensure that all transactions are integrated seamlessly with the underlying books of accounts.

The Company periodically conducts physical verification of inventory, fixed assets and cash on hand and matches them with the books of account. Explanations are sought for any variances noticed from the respective functional heads.

The Company has a robust financial closure self-certification mechanism wherein the line managers certify adherence to various accounting policies, accounting hygiene and accuracy of provisions and other estimates. There are adequate policies, authorization matrices governing financial transactions and approvals.

The Company has adopted accounting policies which are in line with the Indian Accounting Standards notified under section 133 of the Companies Act, 2013 read together with the Companies (Indian Accounting Standards) Rules, 2015. These are in accordance with Generally Accepted Accounting Principles in India. Changes in policies, if any, are approved by the Audit Committee in consultation with Statutory Auditors.

The Company in preparing financial statements makes judgements and estimates based on sound policies and uses external agencies to verify/ validate them as and when appropriate. The basis of such judgements and estimates are also audited by Statutory Auditors and reviewed by the Audit Committee.

For each major element in the financial statement, the inherent reporting risks have been identified by the Company. Controls have been put to mitigate these risks. The risks and mitigation controls are revisited periodically. Corporate Integration Group (CIG) function of the Group is actively involved in designing large process changes as well as validating changes to IT systems that have a bearing on the books of account.

During 2017-18, the limited review of Companys quarterly standalone financial statements and the year-end audit of consolidated financial statements were undertaken by its Statutory Auditors. The policies to ensure uniform accounting treatment are prescribed to the subsidiaries of the Company as well. The accounts of the subsidiary and joint venture companies were audited by their respective Statutory Auditors for consolidation.

Directors and Key Managerial Personnel

During the year under review, based on the recommendation of Nomination and Remuneration Committee, the Board of Directors of the Company at its Meeting held on November 14, 2017, appointed Mr. Vikas Deep Gupta as an Additional Director with effect from November 14, 2017 to hold office upto the date of ensuing Annual General Meeting of the Company. Accordingly, the resolution for regularization of appointment of Mr. Vikas Deep Gupta is recommended by the Board to the shareholders and forms part of notice of ensuing AGM.

During the year under review, Mr. T. Venkat Ramana was appointed as Company Secretary of the Company with effect from November 15, 2017 in place of Mr. Adi Seshavataram Cherukupalli.

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Srinivas Bommidala, retire by rotation at the ensuing Annual General Meeting of the Company and being eligible has offered himself for re-appointment.

Pursuant to the SEBI (Listing Obligations and Disclosure Requirement) Amendment Regulations, 2018, a listed entity shall not appoint a person or continue the directorship of any person as a non-executive director who has attained the age of seventy five years unless a special resolution is passed to that effect, in which case the explanatory statement shall indicate the justification for appointing such person. Accordingly, the special resolution(s) for obtaining members approval for continuation of Mr. R.S.S.L.N. Bhaskarudu, Mr. N.C. Sarabeswaran and Mr. S. Rajagopal as independent directors beyond the age of 75 years form part of notice of ensuing AGM.

The brief resume and details of directors to be re-appointed/ regularized are furnished in the Notice to the ensuing Annual General Meeting.

Mr. S Sandilya, Independent Director of the Company was named (during September 2017) in the Ministry of Corporate Affairs (MCA) list of disqualified directors for being a director in a Section 8 Company, Association of Indian Automobile Manufactures (AIAM) and for AIAM not having filed annual returns continuously for three years.

The petitioners had filed a petition in the Honble High Court of Delhi challenging the MCA order which was heard on December 19, 2017. The petitioners chose to withdraw the petition based on the Condonation of Delay Scheme, 2018 ("CODS 2018 or "the Scheme") offered by the Ministry of Corporate Affairs in the interest of speedy resolution of the matter without any consequence and the Honble High Court ordered stay on the disqualification.

Since AIAM had already filed all its overdue documents and had in terms of the Scheme, applied for condonation of delay by filing e-form CODS with MCA, the DIN of Mr. Sandilya had been activated and his disqualification stands withdrawn permanently. Mr. S Sandilya had also resigned from AIAM Board w.e.f. March 16, 2018.

Further, the Registrar of Companies, Delhi & Haryana has confirmed that the disqualification of Mr. S Sandilya has been removed and his name would be removed from the list of disqualified Directors, as and when the same is updated by the MCA.

Annual performance evaluation of the Board, its Committees and individual directors pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements under SEBI LODR have 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 Companys Nomination and Remuneration Policy for Directors, Key Managerial Personnel and Senior Management is annexed as "Annexure C" to the Boards Report.

Declaration of independence

The Company has received declarations from all the Independent Directors 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.

Auditors and Auditors Report

Statutory Auditors

M/s. S. R. Batliboi & Associates LLP, Chartered Accountants were appointed as the Statutory Auditors of the Company to hold office from the conclusion of 21st AGM upto the conclusion of 23rd AGM of the Company subject to ratification of the appointment by the members at 22nd AGM.

At the 21st Annual General Meeting (AGM) of the Company held on September 29, 2017, the members approved appointment of S. R. Batliboi & Associates LLP, Chartered Accountants (Firm Registration No. 101049W) as Statutory Auditors of the Company to hold office for a period from the conclusion of the 21st AGM of the Company till the conclusion of 23rd AGM, subject to ratification of their appointment by members at the 22nd Annual General Meeting. The Ministry of Corporate Affairs, vide its notification dated May

7, 2018, has done away with the requirement of seeking ratification of members for appointment of auditors at every Annual General Meeting. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at the 22nd Annual General Meeting of the Company.

Statutory Auditors Qualification / Comment on the Companys standalone financial statement

1) GMR Generation Assets Limited (‘GGAL) along with its subsidiaries/ joint ventures and associates have been incurring losses. Based on the valuation assessment carried out by an independent expert during the year ended March 31, 2018, there is a diminution in the value of the Companys investment in GGAL as at March 31, 2018 of Rs. 2,830 crore. The Company has not accounted for the aforesaid diminution in the value of investment in the accompanying standalone Ind AS financial results for the quarter and year ended March 31, 2018. In the opinion of the Statutory Auditor, the aforesaid accounting treatment is not in accordance with the relevant accounting standards. Had the management provided for the aforesaid diminution, the loss after tax for the quarter and year ended March 31, 2018 would have been higher by Rs. 2,830 crore with a consequent impact on the reserves as at March 31, 2018.

Managements response to the Statutory Auditors Qualification / Comment on the Companys standalone financial statement

Considering that GCEL and GREL were under Strategic Debt Restructuring with consortium of banks acquiring majority stake, the management of the Group is not in a position to precisely assess the impact of the uncertainties on the carrying costs of various projects, though valuation assessment was done which placed the diminution at Rs. 2,830 Crore. Management is of the view, considering that the lenders of some of these projects are actively pursuing resolution plans to make these projects viable in the near future, the assessed diminution may significantly come down on successful implementation of resolution plans. Further in case of some of the projects, the diminution may not be permanent and significant improvements in the viability of these projects are likely in the near future. Taking in account the above factors, management is of the view that the assessed diminution need not be provided for in the standalone Ind AS financial statements for the year ended March 31, 2018.

Statutory Auditors Qualification / Comment on the Companys standalone financial statement

2) GMR Energy Limited (‘GEL) and GMR Vemagiri Power Generation Limited (‘GVPGL), joint ventures of the Company have ceased operations and have been incurring losses with a consequent erosion of net worth resulting from the unavailability of adequate supply of natural gas. GMR Rajahmundry Energy Limited (‘GREL), a joint venture of the Company have rescheduled the repayment of project loans with the consequent implementation of the Strategic Debt Restructuring Scheme to convert part of the debt outstanding into equity and to undertake flexible structuring of balance debt for improving viability and revival of the project pending linkage of natural gas supply. Continued uncertainty exists as to the availability of adequate supply of natural gas which is necessary to conduct operations in these entities at varying levels of capacity in the future and the appropriateness of the going concern assumption of these entities is dependent on the ability of the aforesaid entities to establish consistent profitable operations as well as raising adequate finance to meet short term and long term obligations and accordingly the statutory auditors are unable to comment on the carrying value of the Companys investment (including advances) in these entities as at March 31, 2018.

Managements response to the Statutory Auditors Qualification / Comment on the Companys standalone financial statement

The Management along with various stakeholders, including Central and State Governments have formulated schemes for efficient utilisation of these facilities, though these efforts have not brought in permanent resolutions to the operations. The management and the Association of Power Producers continue to monitor the macro situation and are evaluating various approaches / alternatives to deal with the situation and the management of the Group is confident that

Government of India (‘GoI") would take further necessary steps / initiatives in this regard to improve the situation regarding availability of natural gas from alternate sources in the foreseeable future. Currently the lenders for GREL are actively pursuing the resolution plan as per the directives of RBI and management is confident that suitable plans would be implemented in the near future which would improve the profitability and consequently the carrying cost of these companies. Taking into account the uncertainties associated with the efforts of various stakeholders, management is not in a position to assess the impact of these measures on the carrying values.

Statutory Auditors Qualification / Comment on the Companys standalone financial statement

3) The Companys internal financial control with regard to assessment of carrying value of investments in certain subsidiaries/ joint ventures as more fully explained in notes 5(4) and 5(7) to the standalone Ind AS financial statements were not operating effectively and could potentially result in the Company not providing for adjustments that may be required to be made to the carrying value of such investments.

Managements response to the Statutory Auditors Qualification / Comment on the Companys standalone financial statement

Qualification in the report on internal financial controls over financial reporting regarding assessment of carrying value of investments in GGAL & GEL – The Group has a robust system in place to assess the appropriateness of the carrying value of its investments, including testing for impairments. Managements view on the instant cases are explained in the paras 1 and 2 above.

Statutory Auditors Qualification / Comment on the Companys consolidated financial statement

1) GMR Chhattisgarh Energy Limited (‘GCEL) and certain other entities, have been incurring losses. Based on the valuation assessment carried out by an independent expert during the year ended March 31, 2018, there exists an impairment as at March 31, 2018 of Rs. 2,250 crore. The Group has not accounted for the aforesaid impairment loss in the accompanying consolidated Ind AS financial results for the quarter and year ended March 31, 2018. In the opinion of statutory auditor, the aforesaid accounting treatment is not in accordance with the relevant accounting standards. Had the management provided for the aforesaid impairment loss, the loss after tax and minority interest for the quarter and year ended March 31, 2018 would have been higher by Rs. 2,250 crore with a consequent impact on the consolidated reserves as at March 31, 2018.

Managements response to the Statutory Auditors Qualification / Comment on the Companys consolidated financial statement

Considering that GCEL and GREL were under Strategic Debt Restructuring with consortium of banks acquiring majority stake, the management of the Group is not in a position to precisely assess the impact of the uncertainties on the carrying costs of various projects, though valuation assessment was done which placed the diminution at Rs. 2,250 crore. The management of the Group, including the lenders who also collectively are the majority shareholders, have initiated a process for ‘change of control of GMR Chhattisgarh Energy Limited (‘GCEL), which entails sale of up to 100% equity stake of GCEL. The process is in an advanced stage and is expected that the process of change in control would be completed by August 2018. Management is of the view, considering that the lenders of some of these projects are actively pursuing resolution plans to make these projects viable in the near future, the assessed diminution, which is based on some critical assumptions made by current management, may significantly come down on successful implementation of resolution plans.

Further in case of some of the projects, the diminution may not be permanent and significant improvements in the viability of these projects are likely in the near future with various policy initiatives of the government taking shape. Taking in account the above factors, management is of the view that the assessed diminution need not be provided for in the consolidated Ind AS financial statements for the year ended March 31, 2018.

Statutory Auditors Qualification / Comment on the Companys consolidated financial statement

2) GMR Energy Limited (‘GEL) and GMR Vemagiri Power Generation Limited (‘GVPGL), joint ventures of the Group have ceased operations and have been incurring losses with a consequent erosion of net worth resulting from the unavailability of adequate supply of natural gas. GMR Rajahmundry Energy Limited (‘GREL), a joint venture of the Group have rescheduled the repayment of project loans with the consequent implementation of the Strategic Debt Restructuring Scheme to convert part of the debt outstanding into equity and to undertake flexible structuring of balance debt for improving viability and revival of the project pending linkage of natural gas supply. Continued uncertainty exists as to the availability of adequate supply of natural gas which is necessary to conduct operations in these entities at varying levels of capacity in the future and the appropriateness of the going concern assumption of these entities is dependent on the ability of the aforesaid entities to establish consistent profitable operations as well as raising adequate finance to meet short term and long term obligations and accordingly the Statutory Auditor are unable to comment on the carrying value of the Groups assets (including advances) in these gas based entities as at March 31, 2018.

Managements response to the Statutory Auditors Qualification / Comment on the Companys consolidated financial statement

The Management of the Group along with various stakeholders, including Central and State Governments have formulated schemes for efficient utilisation of these facilities, though these efforts have not brought in permanent resolutions to the operations. The management of the Group and the Association of Power Producers continue to monitor the macro situation and are evaluating various approaches / alternatives to deal with the situation and the management of the Group is confident that Government of India

(‘GoI") would take further necessary steps / initiatives in this regard to improve the situation regarding availability of natural gas from alternate sources in the foreseeable future. Currently the lenders for GREL are actively pursuing the resolution plan as per the directives of RBI and management is confident that suitable plans would be implemented in the near future which would improve the profitability and consequently the carrying cost of these companies. Taking into account the uncertainties associated with the efforts of various stakeholders, management is of the view that carrying values of these projects do not require any adjustment as of date.

Statutory Auditors Qualification / Comment on the Companys consolidated financial statement

3) The tax authorities of Maldives have disputed certain transactions not considered by the management of GMR Male International

Airport Private Limited (‘GMIAL), a subsidiary of the Company, in the computation of business profit taxes and withholding tax during the period 1st April, 2013 to 31st May, 2017 and during the year ended December 31, 2017 and have issued notice of tax assessments on business profit taxes and withholding tax together with the applicable fines and penalties. The management of the Group is of the view that such disputes from the tax authorities are not tenable and have disclosed the tax exposures as a contingent liability in the accompanying consolidated Ind AS financial statements for the year ended March 31, 2018. In the absence of comprehensive analysis on the above tax exposures, the Statutory Auditor are unable to determine whether any adjustments might be necessary to the accompanying consolidated financial results for the quarter and year ended March 31, 2018. The auditors of GMIAL have qualified their audit report issued for the year ended March 31, 2018 with regard to the aforesaid matter.

Managements response to the Statutory Auditors Qualification / Comment on the Companys consolidated financial statement

GMR Male International Airport Private Limited (‘GMIAL), a subsidiary of the Company entered into an agreement on June 28, 2010 with

Maldives Airports Company Limited (‘MACL) and Ministry of Finance and Treasury (‘MoFT), Republic of Maldives, for the Rehabilitation,

Expansion, Modernization, Operation and Maintenance of Male

International Airport (‘MIA) for a period of 25 years ("the Concession

Agreement"). On November 27, 2012, MACL and MoFT issued notices to GMIAL stating that the Concession Agreement was void ab initio and that neither MoFT nor MACL had authority under the laws of Maldives to enter into the agreement and MACL took over the possession and control of the MIA and GMIAL vacated the airport effective December 8, 2012. The matter was under arbitration. During the year ended March 31, 2017, the arbitration tribunal delivered its final award in favour of GMIAL, pursuant to which GMIAL received USD 27.10 Crore from MACL, in view of which GMIAL has recognised the difference between the claims received and the amount recorded as claims recoverable by GMIAL with regard to the aforesaid takeover. The arbitration award has clearly mentioned that the award is net of any tax applicable and GMIAL is entitled to receive the entire award amount.

During the current year, Maldives Inland Revenue Authority (‘MIRA) has issued tax audit reports and notice of tax assessments on business profit tax computations and the withholding tax computations of GMIAL for the periods 1st April 2013 to 31st May 2017 and for the year ended March 31, 2017. However, management of the Group is of the view that the notice issued by MIRA is not tenable. Accordingly, no adjustments have been made to the accompanying consolidated financial results of the Group for the quarter and the year ended

March 31, 2018. The statutory auditor of the GMIAL have modified their Audit Report in this regard which has been continued by the auditor of the GMR Infrastructure Limited in their audit report on the consolidated financial statements.

Statutory Auditors Qualification / Comment on the Companys consolidated financial statement

4) The Holding Companys internal financial control with regard to assessment of carrying value of investments in certain joint ventures and associates as more fully explained in notes 9(b)(13)(ii), 9(b)(13)(iv) and 9(b)(13)(v) to the consolidated Ind AS financial statements were not operating effectively and could potentially result in the Group not providing for adjustments that may be required to be made to the carrying value of such investments.

Managements response to the Statutory Auditors Qualification / Comment on the Companys consolidated financial statement

Qualification in the report on internal financial controls over financial reporting regarding assessment of carrying value of investments in certain joint ventures and associates – The Group has a robust system in place to assess the appropriateness of the carrying value of its investments, including testing for impairments. Managements view on the instant cases are explained in the paras 1 and 2 above.

Cost Auditors

Pursuant to Section 148 of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, your Company with reference to its EPC business is required to maintain the cost records as specified under sub-section 1 of section 148 of the Companies Act, 2013 and the said cost records are also required to be audited.

Your Company is maintaining all the cost records referred above and M/s. Rao, Murthy & Associates, Cost Auditors, have issued a cost audit report for FY 2017-18 which does not contain any qualification, reservation or adverse remark.

The Board, on the recommendation of the Audit Committee, has appointed M/s. Rao, Murthy & Associates, Cost Accountants, as cost auditors for conducting the audit of cost records of the Company for the FY 2018-19.

Accordingly, a resolution seeking members ratification for the remuneration to M/s. Rao, Murthy & Associates, Cost Accountants is included in the Notice convening the ensuing AGM.

Secretarial Auditor

The Board has appointed M/s. V. Sreedharan & Associates, Company Secretaries, a firm of Company Secretaries in Practice, to conduct Secretarial Audit for the FY 2017-18. The Secretarial Audit Report for the FY ended March 31, 2018 is annexed herewith as "Annexure D" to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Disclosures: CSR Committee

The CSR Committee comprises of Mr. R.S.S.L.N. Bhaskarudu as Chairman, Mr. B.V.N. Rao and Mr. G.B.S. Raju as members

Audit Committee

The Audit Committee comprises of Mr. N.C. Sarabeswaran as Chairman, Mr. S. Rajagopal, Mr. R.S.S.L.N. Bhaskarudu and Mrs. Vissa Siva Kameswari as members.

All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

The Company has a vigil mechanism named Whistle Blower Policy, which provides a platform to disclose information, confidentially and without fear of reprisal or victimization, where there is reason to believe that there has been serious malpractice, fraud, impropriety, abuse or wrong doing within the Company. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also hosted on the website of the Company.

Meetings of the Board

A calendar of Board and Committee Meetings is prepared and circulated in advance to the Directors. During the year, five (5) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between two consecutive board meetings was within the period prescribed under the Companies Act, 2013.

Particulars of Loans, Guarantees and Investments

Details of Loans/ Guarantees given and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is provided in "Annexure E".

Annual Return

Pursuant to Section 134 of the Companies Act, 2013, as amended vide the Companies Act, 2017, the Extract of Annual Return/ Annual Return of the Company shall be placed at the website of the Company at the following link: http://investor.gmrgroup.in/Investors/annual-report.html.

Particulars of Employees and related disclosures

The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including amendments thereto), is attached as "Annexure G" to this Report.

The information required under Rule 5(2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including amendments thereof), is provided in the Annexure forming part of this Report. In terms of the first proviso to Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the members excluding the aforesaid Annexure. Any member interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company. None of the employees listed in the said Annexure, other than the Executive Chairman and Managing Director, is related to any Director of the Company.

Dividend Distribution Policy

The Board has adopted Dividend Distribution Policy in terms of Regulation 43A of the SEBI LODR. The Dividend Distribution Policy is provided as "Annexure H" and is disclosed on the website of the Company at the link: http://investor.gmrgroup.in/Investors/GIL-Policies.html.

Developments in Human Resources and Organization Development

The Company has robust process of human resources development which is described in detail in Management Discussion and Analysis section under the heading "Developments in Human Resources and Organization Development at GMR Group".

Changes in Share capital

There was no change in authorized, issued and paid-up share capital of the Company during the year under review.

Environmental Protection and Sustainability

Since inception, sustainability has remained at the core of our business strategy. Besides economic performance, safe operations, environment conservation and social well-being have always been at the core of our philosophy of sustainable business. The details of initiatives/activities on environmental protection and sustainability are described in Business Responsibility Report forming part of Annual Report.

Events subsequent to the date of financial statements

There are no material changes and commitments affecting financial position of the Company between March 31, 2018 and Boards Report dated August 14, 2018.

Change in the nature of business, if any

There is no change in the nature of business of the Company.

Significant and Material Orders passed by the Regulators

There are no significant and material orders passed by the Regulators or courts or tribunals impacting the going concern status and Companys operations in future.

Deposits

During the year under review, the Company has not accepted any deposit from the public.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Your Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to address complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy.

The following is a summary of sexual harassment complaints received and disposed of during the FY ended March 31, 2018:

Number of complaints received : NIL Number of complaints disposed of : NIL

Acknowledgements

Your Directors thank the lenders, banks, financial institutions, business associates, customers, Government of India, State Governments in India, regulatory and statutory authorities, shareholders and the society at large for their valuable support and co-operation. Your Directors also thank the employees of the Company and its subsidiaries for their continued contribution, commitment and dedication.

For and on behalf of the Board
Sd/-
Place: New Delhi G.M. Rao
Date: August 14, 2018 Chairman