To,

The Members of Gammon India Limited

The Directors have pleasure in presenting their 94^th Annual Report together with the Audited Financial Statements of the Company for the 18 months period ended 31^st March, 2016.

1. REVIEW OF FINANCIAL & OPERATIONAL PERFORMANCE (Rs. in Crore)

The year under review is an eighteen (18) months period commencing from 1^st October, 2014 and ending on 31^st March, 2016.

During the period under review the Turnover of the Company on a standalone basis stood at Rs. 6,077 Crores, as compared to Rs. 2,909 crores during the previous 9 month period ended 30^th September, 2014. The Company posted a Net Profit after Tax of Rs. 14.64 Crores during the period ended 31^st March, 2016, as against a Net profit after Tax of Rs. 67.80 Crores during the previous period ended 30^th September, 2014.

On a Consolidated basis, the Turnover of Gammon Group during the period under review stood at Rs. 7,949 Crores as compared to Rs. 3,763 Crores for the previous 9 month period ended 30^th September, 2014. The Group posted a Net Loss after Tax of Rs. 502.51 Crores during the period ended 31^st March, 2016, as against a Net Loss after Tax of Rs. 775.32 Crores during the previous 9 month period ended 30^th September, 2014.

The overall slowdown in the construction industry over the past few years has greatly impacted the Company's performance. The construction industry in India continues to be plagued by inadequate capital, slow and delayed projects, sticky receivables, lack of proper dispute resolution mechanism, slow moving or stalled projects, bureaucratic delays in awarding projects, delays in land acquisition, higher working capital cycles, highly leveraged balance sheets, policy indecisiveness of the previous government which has adversely affected the construction industry. Almost all the companies in the construction industry have been affected by the slow-down.

The Company has been continuously growing in the past, but due to elongated recessionary pressures after the slowdown in global and Indian economy post FY 2008, the Company has been experiencing reduction in revenues and negative growth in Net Profit. However inspite of the slow down the Company has posted a Net Profit of Rs. 14.64 Crores during the financial year (18 months) ended 31^st March, 2016.

The major reasons for the inadequate profits are primarily delay in receiving payments from clients in respect of completed jobs thereby resulting in liquidity crisis leading to increased debt and subsequently higher interest costs which have eroded the profits, delays in project execution primarily due to delay in getting approvals from various authorities and non availability of timely finances, slowdown in the construction industry and aggressive bidding resulting in reduced order booking, increase in outstanding receivables due to non settlement of legitimate claims for works completed, decline in revenues and operating margins, delayed and sticky receivables, delays in land acquisition, approval of design etc. by client, scarcity in availability of labour & materials and other operational issues. The working capital cycle of the Company was also stretched due to non-achievement of milestones and elongated recovery of receivables. Also expansion in the overseas operations in the previous years and slowdown in the European economies largely increased the interest burden on the Company.

The Company has been focusing on realizing long pending receivables, arbitration awards and retention moneys. The Company has been successful in recovering certain arbitration claims. The Company is also concentrating on efficient completion and execution of existing projects and has also successfully completed several stalled projects. The receivables from these completed projects are expected to be received in the current financial year. The Company has also been optimizing working capital and establishment costs and is concentrating on faster project execution and priorities have been set with improved systems. The Company is also focusing on reinforcing job selection filters and procedures to ensure positive cash flows and generate quality EBIDTA margins with higher bottom line contribution. Moreover, some prolonged job-related issues are being addressed with speed to close them at the earliest. The Company continues to negotiate with vendors for settlement, improved commercial terms and better credit facility and is in process of arranging additional working capital finance to improve short term liquidity position. The Company is evaluating and exploring various courses of action for raising funds for its operations, including options for strategic restructuring.

The Company has undertaken several measures for re-structuring the Company's businesses with a view to attract strategic investors, reduce debt levels, derisk the businesses to make them more sustainable and ensure its growth in the interests of all stakeholders. The Company is also taking efforts for disposing of its non-core assets to ensure liquidity in the system.

The Company has outstanding arbitration claims of more than Rs. 5,000 Crores as on 31^st March, 2016 and is focusing on recovering these claims. The Company also hopes to recover retention moneys currently outstanding with the clients. Recovery of these long outstanding claims and receivables will ease liquidity pressure.

Also with the various restructuring exercises presently being undertaken by the Company, the operations will be streamlined. As specified above the Company's performance has been greatly affected by external factors. The Company hopes that the various initiatives taken by the present government in reviving the infrastructure and construction sector will give a boost to the Company's efforts in improving its performance. In our efforts to re-structure the business and its operations the Company's lenders have been extending their support. The order book of the Company as on 31^st March, 2016 was Rs. 11,000 Crores.

STRATEGIC DEBT RESTRUCTURING ("SDR")

During the FY 2012 and FY 2013, the Company's financial performance suffered on account of slowdown in the economy, delay in award of new projects and project execution delays. The working capital cycle of the Company was also stretched due to non-achievement of milestones and elongated recovery of receivables. Further the Company had also invested in overseas subsidiaries and non-core assets by way of loans and advances or equity. The subdued market conditions could not yield the desired returns on overseas investments and the interest cost on acquisitions added to the Company's financial stress . As a consequence the Company faced difficulties in meeting its obligations to the lenders and referred itself under the aegis of Corporate Debt Restructuring ("CDR") Cell for restructuring of its debt in March, 2013. The final CDR package was approved at the CDR EG meeting held on June 24, 2013. The Master Restructuring Agreement pursuant to the package was signed on September 24, 2013.

However the mounting interest costs and the liquidity crunch continued due to industry wide issues viz;

- Bottlenecks on new infrastructure projects, postponement of investments and new projects in the industrial sector (as Indian manufacturing experienced a slowdown) contributed significantly to this lack of growth.

- Policy paralysis, delayed clearances and poor financial health of infrastructure companies have impacted investments in key infrastructure sectors like roads and power.

- Major construction players are experiencing liquidity crunch because of longer recovery timeframes from their customers and tightening funding norms being employed by institutional financiers.

- Increasing labour costs, commodity prices and aggressive tendering have put pressure on company margins over the past 2-3 years.

- Delays in completion of projects due to delay in approvals, issues relating to land acquisition and changes in project scope.

- Delays in claims settlement/payment across different Government employers has resulted into severe liquidity issues for the EPC Companies.

The Company's project execution was severely impacted thereby resulting in the risk of devolvement of bank guarantees by clients, further deepening the liquidity crisis. Also monetization of assets as envisaged under the CDR package is slow. Due to the severe cash crunch and inability of the existing promoters to infuse additional funds the Lenders invoked Strategic Debt Restructuring ("SDR") in the Company pursuant to RBI Circular dated 8^th June, 2015, with reference date as 17^th November, 2015. On the invocation of SDR, the lenders converted part of their outstanding loan and interest aggregating to Rs. 277.12 Crores into 233,072,637 equity shares in the Company acquiring 63.07% of the total equity capital. The Company was the first to implement SDR successfully.

CORPORATE RESTRUCTURING

The severe liquidity stress exposed the Company to further delays in project execution and delays in meeting repayment obligations. A critical part of the earlier CDR scheme was monetization of various real estate / non-core assets so as to realize amounts totaling to Rs. 2000 Crores over a period of time. However, due to the slowdown in the economy both in India and overseas the Company could not monetize these assets. The Core Civil Engineering, Procurement and Construction (EPC) business and the Transmission & Distributions ('T&D') business of the Company were being severely impacted due to the additional debt burden. Further the Company also faced difficulties in attracting strategic investors to invest in the Company.

With a view to improve the overall functioning of the Company and to ensure investment by strategic investors in core businesses to ensure their sustenance and growth, it was decided to restructure the businesses by carving out the transmission and distribution business and the Civil EPC Business together with all the assets and liabilities including the CDR Debt pertaining to each of these businesses into separate entities. The carve out will ensure the right sizing of debt in the core EPC and T&D entities allowing creation of maximum value for the existing stakeholders.

The rationale and objective of the restructuring inter-alia includes:

i. To create sector focused companies;

ii. To enable investments by strategic investor;

iii. De-risk businesses from each other;

iv. Deleverage balance sheet of the company;

v. Maintain the PQs including profitability and net worth criteria for bidding in new projects;

vi. Fulfill its debt servicing obligation as per the CDR repayment schedule;

vii. Expedite sale of non-core assets in a phased and more focused manner.

A. CARVE OUT OF THE TRANSMISSION AND DISTRIBUTION BUSINESS

The Board of Directors in its meeting held on 27^th October, 2015 approved the first phase of transfer of the transmission and distribution business viz. fixed assets pertaining to conductor manufacturing facility at Silvassa and tower fabrication facility (excluding tower testing station) situated at Deoli, Wardha together with the current assets and contracts of the T&D manufacturing division along with proportionate debt aggregating to Rs. 3580 crores )("Identified Business") to its then wholly owned subsidiary Transrail Lighting Limited ("TLL"). Accordingly a Business Transfer Agreement was entered into between the Company and Transrail Lighting Limited on 27^th October, 2015 for transfer of the Identified Business by way of a slump sale on a "Going Concern Basis" which was further amended on 12^th February, 2016 , for a consideration of Rs. 4,37,25,000 which was discharged by TLL by issue of 2,75,000/- optionally fully convertible debentures of Rs. 159/- each. The effective date of the Business Transfer is 1^st January, 2016.

Further an Investment cum Shareholders Agreement as duly approved by the Board on 27^th October, 2015 was executed with Ajanma Holdings Pvt Limited (" formerly Bilav Software Private Limited") ("Investor") pursuant to which the Investor acquired 75% of the Company's stake in TLL for a consideration of Rs. 2,32,50,000/- and for investing balance of Rs. 47.70 Crores by the Investor in TLL, wherein the transmission and distribution business is transferred. The Slump sale and the Investment by the Investor was approved by the Lenders and also by the shareholders vide a postal ballot on 18^th December, 2015.

The Board also approved a Scheme of Arrangement between the Company ("Transferor") and TLL ("Transferee") and their respective Shareholders and Creditors for transfer of the Transmission and Distribution undertaking of the Company essentially comprising of the engineering, procurement and construction business of the Company in the power transmission and distribution sector, the tower testing facility located at Deoli, manufacturing facilities located at Baroda and Nagpur together with all the pre-qualifications, properties, assets, liabilities, debts, duties and obligations of the T&D Undertaking with appointed date as 1^st January, 2016 or such other date as may be approved by the High Court. On approval of the Scheme of Arrangement between Gammon India Limited ("GIL") and Transrail Lighting Limited ("TLL"), TLL will issue 7,25,000 equity shares of Rs. 10 each to GIL against the fair value of the T&D Undertaking. The said Scheme is subject to all necessary approvals.

Post the carve out of the transmission and distribution business into TLL as aforementioned, Gammon will continue to hold 25% of the total equity of TLL.

B. CARVE OUT OF CIVIL EPC BUSINESS

The Board in its meeting held on 21^st July, 2016 has approved the carve out of the Civil EPC business to its wholly owned subsidiary "Gammon Engineers and Contractors Private Limited" ("Gammon Engineers") in two phases i.e a part of the Civil EPC Business of the Company essentially comprising of the Civil Engineering, Procurement and Construction ("EPC") business carried on by the Company in roads, hydro-power, nuclear power, tunnels, bridges, etc including without limitation the execution capabilities in relation to the Civil EPC Business pertaining to "Identified Contracts" (including all contracts, agreements, licenses, engagements, financial instruments, commitments, other contractual arrangements and warranties there under including obligations under contracts which are surviving, relating exclusively to or in connection or forming a part of the Civil EPC Business and which are getting sub-contracted under the slump sale and which will be transferred under a proposed Scheme of Arrangement, (but excluding the Retained EPC Business)("Identified Business") along with all the assets and properties, whether tangible or intangible, rights, titles, interests, privileges, licenses and all liabilities, debts, obligations of all nature related to the Identified Business by way of a slump sale on a going concern basis with effect from 1^st July, 2016.

Accordingly a Business Transfer Agreement was executed on 21^st July, 2016 between the Company and Gammon Engineers and Contractors Private Limited. The consideration for transfer of the Civil EPC Undertaking is Rs. 8,05,00,000 (Rupees Eight Crores Five Lakhs only) which will be discharged by Gammon Engineers by issue of 23,00,000 equity shares at a price of Rs. 35/- per share.

The Board in its meeting held on 21^st July, 2016 also approved investment by GP Group of Thailand ("Investor") into the Company's Civil EPC Business wherein GP Group will invest in Gammon Engineers and Contractors Private Limited where the EPC Business is proposed to be transferred. Accordingly an Investment cum Shareholders Agreement was executed between the Company, Investor and Gammon Engineers on 21^st July, 2016 pursuant to which G P Group will invest Rs. 150 Crores into Gammon Engineers in different tranches.

The Board in its meeting held on 21^st July, 2016 also approved a Scheme of Arrangement between the Company ("Transferor Company") and Gammon Engineers and Contractors Private Limited ("Transferee Company") for transfer and vesting of the balance of the Company's Civil EPC Undertaking (as defined in the Scheme) viz. Civil Engineering, Procurement and Construction business carried on by the Company in roads, hydro-power, nuclear power, tunnels, bridges, etc. as a going concern, which shall include all the pre-qualifications, properties, rights and powers and all debts, liabilities, duties and obligations comprised in/and pertaining to the Civil EPC business (as defined in the Scheme) into Gammon Engineers against issue and allotment of equity shares by Gammon Engineers to GIL. The appointed date of the Scheme is 1^st July, 2016 or such other date as may be approved by the High Court. On approval of the Scheme by the Court, Gammon Engineers will issue 1,18,85,714 fully paid up equity shares of Rs. 10 each to GIL against the fair value of the Civil EPC Undertaking.

The EPC Carve out through slump sale and the Scheme of Arrangement is subject to the approval of the members, lenders ,the Court and all other approvals.

Post the restructuring, the Company will continue to hold 25% equity in Gammon Engineers and Contractors Private Limited.

GIL will continue to execute the Civil EPC projects it has retained and will monetize its non-core assets comprising of receivables, loans and advances, real estate, investments in subsidiaries and claims .The Company is looking to develop the sizeable land bank as also monetize its various assets and investments to repay its balance debts while exploring various business opportunities in the infrastructure sector. The Company expects that post carve out, the businesses will be viable and have potential for growth. Further almost 80% of the Lenders exposure in the Company will be transferred to the new entities post the carve out, thereby ensuring stability of the Company.

INFRASTRUCTURE DEVELOPMENT BUSINESS

Gammon Infrastructure Projects Limited (GIPL), the Company's subsidiary is a pan India BOT infrastructure project development company and is engaged in development of infrastructure projects in core sectors such as Roads, Ports, and Power through a multi-segment footprint, significant geographical spread, vast repository of industry experience and technical expertise. GIPL also provide services in other areas of project development such as operations & maintenance and project advisory services.

GIPL posted a total income of Rs. 137,509.79 Lacs on a consolidated basis (Rs. 40,847.77 Lacs on a standalone basis) for the 18 month period ended 31^st March, 2016. It posted a Net Loss of Rs. 1,693.72 lacs on a consolidated basis (Net Profit of Rs. 5,815.38 lacs on a standalone basis) as on 31^st March, 2016.

GIPL Projects Commissioned and Under Operation

- Vizag Seaport Private Limited (VSPL)

- Rajahmundry Godavari Bridge Limited (RGBL)

- Pravara Renewable Energy Limited (PREL)

Projects Under Construction

- Patna Highway Projects Limited (PHPL)

- Indira ContainerTerminal Private Limited (ICTPL)

- 66 MW Rangit II Hydro Electric Project (SHPVL)

- Vijayawada Gundugolanu Road Project Private Limited (VGRPPL)

Projects Under Development

- Sidhi Singrauli Road Project Limited (SSRPL)

- Youngthang PowerVentures Limited (YPVL)

- Tidong Hydro Power Limited (THPL)

incremental at 5% p.a.

#The project SPV has commenced tolling on the 4 lanes &4to6 laning works are under progress.

DIVESTMENT BY GIPL

GIPL signed a Share Purchase Agreement on 27^th August, 2015 for divestment of nine project companies (6 road projects and 3 power projects) to a consortium comprising funds managed by Brookfield Asset Management and its affiliates ("Brookfield") and Core Infrastructure India Fund Pte Ltd ("CIIF") (collectively the "Consortium") under the name BIF India Holdings Pte Ltd. ("BIF").

Key terms of the divestment transaction are as follows:

a. The consideration towards equity comprises of cash consideration of approx. Rs. 192 Crore and a waiver of advances to GIPL of Rs. 285 Crore;

b. Repayment of inter corporate deposits of approx. Rs. 371 Crore given by GIPL to the divested Project SPVs;

c. Aggregate cash inflows into GIPL on account of divestment would be approx. Rs. 563 Crore subject to closing adjustments;

d. Additional cash inflow of up to Rs. 100 Crore may be realized by GIPL upon crystallization of certain milestones in future;

e. Outstanding liabilities to the tune of Rs. 87 Crore will stand reduced and 75% of past contingent receivable may also be received by GIPL when realized.

The divestment transaction was segregated in two tranches of which the first tranche comprising six project companies out of the total nine project companies has been successfully completed with BIF India Holdings PTE. Ltd. on 29.02.2016. The second tranche of the divestment transaction is yet to be concluded subject to certain condition precedents being fulfilled. Of the six Companies which BIF acquired, five were operational and one was under development. Post the transaction the consolidated debt of GIPL stands reduced from Rs. 3,947 Crore to Rs. 2,229 Crore which is expected to improve the gearing at a consolidated level and make GIPL net cash surplus.

The Board of GIPL on 27^th August, 2016 resolved to divest by way of sale, transfer or disposal of part of the equity shareholding held by GIPL in Vizag Seaport Private Limited (VSPL), subsidiary of the Company, to the extent of 50% of Paid up Equity Share Capital of VSPL, to Lastin Infrastructure Projects Limited ('Buyer'), being Affiliate of Lastin Holdings Limited for an aggregate consideration of Rs. 62.50 Crores and upon such other terms and conditions, if any, mutually agreed to by and between GIPL and the said Buyer whereby GIPL would continue to hold balance 24% equity shareholding in VSPL. However, the deal is yet to be consummated.

OVERSEAS SUBSIDIARIES

GROUP SOFINTER

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 up to the date on which it ceases. The eighteen (18) month period up to 31^st March, 2016 was characterized by a significant upswing in the economic performance of the Group over the previous period largely on account of a significantly higher backlog in AC Boilers S.p.A with signing of three large contracts in Egypt viz South Helwan, Shabab and West Damietta for over Euro 500 Million. Additionally negotiations with the Unions were successfully concluded due to which the manufacturing costs especially in Gioia del colle were reduced. Also global procurement processes were fully implemented leading to cost saving in overall procurement. Consequently, Group Revenues improved to Euro 538 Million during this period vs Euro 127 Million recorded in the 9 months of the previous year. The EBIT was however negative at Euro 20.20 Million vs Negative Euro 20.39 Million in the previous 9 months. This is however due to an extraordinary write off of Euro 21.46 Million in the last quarter of 2014 and otherwise would have significantly been positive during this period.

At the end of March, 2016, the order backlog of the Group was approx. Euro 550 Million which is a backlog of one and half years. In addition, the Group consolidated upon its new operating model with integration of some of the business functions with the aim to exploit synergies, bring in flexibility within the organization to deal with fluctuating volumes and improve cost competitiveness, given the constantly changing market dynamics. The model also featured a time bound relocation of production activities to the low cost countries including the Group's facilities in Romania and other such low cost but quality conscious countries by gradually reducing the production plant near Rome. The impact of all these initiatives have started in 2015 and will be fully realized by 2018.

The Macchi Division engaged in the manufacture of industrial boilers mainly for the oil, gas and petrochemical industry has consolidated its presence as envisaged in the previous year in the shale gas producing countries led by the United States while also growing in its traditional markets. During the 18 month period 31^st March, 2016, the Macchi Order intake remained at 250 Million. The sluggish demand for Macchi equipment was largely on account of low crude prices which ultimately impacted the Capex in oil & gas segment which is one of the largest end users of the same.

AC Boilers S.p.A. engaged in EPC of utility power plants had robust order booking during the period especially from the Egypt Market. This helped the Company to clock significantly improved economic results. To overcome fluctuating order bookings and its consequential impact, the Company continued to consolidate on the streamlining measures undertaken by it since 2014 leading to lower per hour costs. The pipeline orders are in excess of Euro 1.5 Billion and it is expected that during 2016 this would translate into new orders of about Euro 250 Million.

Itea S.p.A. the R&D company engaged in flameless pressurized oxycombustion technology had, as reported last year, consolidated its technology leadership position in applications using industrial waste, municipal solid waste and low grade coal and is set to roll these out commercially in the coming year.

Europower S.p.A. which is engaged in the EPC of waste-to-energy plants and their operation and maintenance has successfully ventured outside its traditional market in Italy to neighboring countries in the region. The company continues to improve its revenues and profitability and has an order book of approximately Euro 56 Million.

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

The Commissioner in charge of selling the operating business of the Company and thereafter the non-core assets has entered into an Agreement to transfer the operating business to Bruno Presezzi S.p.A in August, 2015, through a bidding process. Consequent upon the disposal, the new owner has returned all the live Bank Guarantees posted by the Company against the Corporate Guarantee of Gammon and taken over the operational projects in Congo. The projects in Nicaragua did not get transferred under the procedure resulting in the devolvement of Euro 17.8 Million Bank guarantees posted by the Company against the Corporate Guarantee of Gammon. With this transfer complete and operational in all respects the Commissioner has obtained the second phase of disposing off the non-core assets of the Company. These comprise primarily appx 60 acres of land in Leganano, Milan and some equipments. Considering the quantum of these assets and the present market situation for disposal of property in Italy no time frame for the sale of the same is fixed. As and when these are sold the proceeds thereof shall be utilized to pay the creditors in order of ranking and the amount, if any remaining after this payment shall be disbursed to the shareholders.

No financial statements of the Company for the year ending December, 2015, are prepared. However a statement of Assets and Liabilities prepared in mid 2015 prior to disposal of the operating business was received from the Commissioner in terms of the procedure. No further updates to this document are available as on the date of this Report.

Campo Puma Oriente S.A.

The 11 operational wells during the eighteen months period ended 31^st March, 2016 were producing an average of 750 barrels of oil per day at a per barrel service fee of $21.50 approx. It was programmed to increase the flow above 2000 barrels during 2014/2015 with timely interventions and enhanced recovery techniques including water injection, acid stimulation artificial lift etc. which entailed capex from both partners as also an upward revision in service fee to approximately $29 per barrel. However, due to the stringent conditions imposed under the CDR on Gammon, the entire work program has been put on hold. Meanwhile, the well pressures continued to decline and the average monthly production in the first quarter of 2016 is 700 barrels. We are in the process of identifying a strategic partner to remedy the situation apart from pursuing complete divestment of the asset.

SAE POWERLINES, ITALY

SAE Power lines Milan Italy, an international recognized brand in the T&D market founded in 1926, has progressed positively in the restructuring path during the period. We believe that SAE could be seen again as a further point of strength for your Company with its Engineering and Project Management capabilities, its presence in the T&D market particularly in Africa and, last but not least, its remarkable heritage. SAE is currently executing Transmission line projects in Mozambique, Tanzania, Ghana, Togo and Benin. Current order backlog of SAE is approximately Rs. 300 Cores.

2. DIVIDEND

Though the Company has earned profits during the period ended 31^st March, 2016, since it is under a Corporate Debt Restructuring ("CDR") the Directors have not recommended any dividend as it is necessary to conserve resources for meeting payment obligations to lenders .

3. RESERVES

No amount was transferred to the reserves for the period ended 31^st March, 2016.

4. FINANCE

During the period 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 Company continued to get financial assistance and support from its CDR lenders within the overall facilities sanctioned under the CDR package to meet the working capital requirements.

Further pursuant to a Novation Agreement dated 26^th February, 2016 executed with the lenders, debts aggregating to Rs. 3580 Crores (Rs. 230 Crores Fund Based and Rs. 3350 Crores of non fund based) are transferred to the Company's associate, Transrail Lighting Limited ("TLL") as part of the slump sale vide a Business Transfer Agreement ("BTA") dated 27^th October, 2015 read with First Amendment to BTA dated 12^th February, 2016 entered into between the Company and TLL for transfer of part of the Transmission and Distribution undertaking of the Company effective from 1^st January, 2016. The CDR Debts of the Company stand reduced to the extent of the debts transferred as part of the aforementioned slump sale.

The Joint Lenders comprising of the CDR lenders and DBS Bank Limited, invoked Strategic Debt Restructuring ("SDR") pursuant to RBI circular dated 8^th June, 2015 with reference date as 17^th November, 2015. Pursuant to the invocation of SDR, 16 lenders converted part of their outstanding loan and interest aggregating to Rs. 277.12 Crores into 233,072,637 equity shares of the face value of Rs. 2/- each at a price of Rs. 11.89 per equity share (including premium of Rs. 9.89 per equity share) to acquire 63.07 % of the total equity capital of the Company.

Pursuant to the above allotment the paid up capital of the Company is Rs. 737,694,610 divided into 368,847,305 equity shares of Rs. 2/- each.

5. DEBENTURES

The Company in its Extra-Ordinary General Meeting held on 26^th May, 2015 had approved the issue of 100 Unsecured Zero Coupon Compulsory Convertible Debentures (Zero Coupon "CCDs") of face value of Rs. 10,000,000/- (Rupees one crore) each aggregating to Rs. 100 crores to the Promoter, Promoter group and Affiliate of promoter on private placement basis against the "promoter contribution" of Rs. 100 crores made by them in the Company's CDR package. The Zero Coupon CCDs were convertible into 395,256 equity shares of Rs. 2/- each at a price of Rs. 25.30 (including Rs. 23.30/- premium). However no allotment has been made to the promoters since BSE has not granted its in principle approval for issue and has directed the Company to change the "Relevant Date" with reference to the determination of price of the zero coupon CCD's.

During the period under review Non Convertible Debentures ("NCD"S) held by the lenders aggregating to Rs. 10.57 Crores have been novated/ transferred as part of the CDR debt pursuant to the Novation Agreement dated 26^th February, 2016 entered into between the Company, the lenders and Transrail Lighting Limited, such debt being notated as part of the slump sale of part of the Transmission and Distribution Undertaking.

6. PUBLIC DEPOSITS

The Company did not invite or accept deposits from public during the year under review.

7. TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND

During the 18 (eighteen) months period ended 31^st March, 2016, the Company has transferred unclaimed dividend for the financial year 2007 - 08 amounting to Rs. 228,685/- to the Investor Education and Protection Fund (IEPF) in compliance of Section 125 of the Companies Act, 2013, which was due and payable and remained unclaimed and unpaid for a period exceeding seven years from its due date.

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

As mentioned above, the Board of Directors in its meeting held on 21^st July, 2016 approved the carve out of the Civil Engineering and Procurement ("EPC") Undertaking of the Company essentially comprising of the Civil Engineering, Procurement and Construction business carried on by the Company in roads, hydro-power, nuclear power, tunnels, bridges, etc. together with all the prequalification’s, properties, assets, liabilities, debts, duties and obligations of the Civil EPC Undertaking to its wholly owned subsidiary Gammon Engineers and Contractors Private Limited through a combination of "Slump Sale" and a Scheme of Arrangement. Details of the same have been given under the heading "Strategic Debt Restructuring and Corporate Restructuring" above.

Turnover of the EPC Division to be carved out and as percentage to the Total Turnover as on 31^st March, 2016:

9. CHANGE IN NATURE OF BUSINESS

Post completion of restructuring of business as mentioned above, the Company, will continue to carry on execution of it's retained

Civil EPC projects, bidding for newer projects, monetizing it's investments and real estate assets.

10.DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

There are no significant and material orders passed by the regulators or courts or Tribunals which will impact the going concern status and company's operations in future.

11.DIRECTORS' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134 (5) of the Companies Act, 2013 ("hereinafter referred to as the "Act"), your

Directors confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) the selected accounting policies were applied consistently and judgments and estimates were 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 31^st March, 2016 and of the Profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken for 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 frauds and other irregularities;

d) the annual accounts have been prepared on a going concern basis;

e) t he internal financial controls have been laid down to be followed by the Company and such controls are adequate and are operating effectively;

f) proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems are adequate and are operating effectively.

12.EXTRACT OF ANNUAL RETURN

The extract of Annual Return as per Section 92(3) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 is annexed to the report as Annexure "A" in Form MGT-9.

13.SUBSIDIARY / ASSOCIATES AND JOINT VENTURE COMPANIES

During the period under review the following changes have taken place with respect to the Company's subsidiaries;

1 . Transrail Lighting Limited - Ceased to be a subsidiary of the Company effective from 26^th February, 2016 pursuant to sale of 75% of its holding to Ajanma Holdings Private Limited (formerly "Bilav Software Private Limited") in terms of a Shareholders cum Investment Agreement dated 27^th October, 2015.

2. The following subsidiaries (SPVs of Gammon Infrastructure Projects Ltd [GIPL]- subsidiary of the Company) ceased to be subsidiaries effective from 29^th February, 2016, pursuant to divestment by GIPL through sale of its shareholding in these SPV's to BIF Holdings Pte. Ltd:

3. The following SPV's of Gammon Infrastructure Projects Ltd [GIPL, a subsidiary of the Company] have ceased to be subsidiaries of the Company effective from 31^st March, 2016:

4. Gammon Engineers and Contractors Private Limited ("Formerly Nikias Metals Private Limited ") has become a step down wholly owned subsidiary on 11^th July, 2016.

The Company has 57 subsidiaries including step-down subsidiaries, 5 Associates and 4 Joint venture companies as on 31^st March, 2016.

Report on the financial performance of each of the subsidiaries, joint ventures and associate companies is included in the consolidated financial statements of your Company in prescribed Form AOC-1 and is also set out in Annexure "B" to this Report.

14 CONSOLIDATED FINANCIAL STATEMENTS

As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Consolidated Financial Statements of the Company and its subsidiaries form part of the Annual Report. Pursuant to Section 129 (3) of the Act, a Statement containing the salient features of the financial statements of the subsidiary companies is attached to the said financial statements in Form AOC-

1. The said financial statements and detailed information of the subsidiary 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 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 are available on the Company's website.

15.DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Abhijit Rajan - Chairman and Managing Director, whose term of office expired on 16^th May, 2016 was re-appointed as the Chairman and Managing Director of the Company for a period of 3 (three) years effective from 17^th May, 2016 by the Board of Directors of the Company on the recommendation of the Nomination and Remuneration Committee in their respective meetings held on 13^th May, 2016, subject to the approval of the Central Government and all other necessary approvals.

Pursuant to the provisions of Section 203 of the Companies Act, 2013, the following personnel of the Company are designated as "Key Managerial Personnel"

Pursuant to Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr.Ajit Desai - Executive Director and Chief Executive Officer retires by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

16.AUDITORS

(A) STATUTORY AUDITORS

The members had at the 92^nd Annual General Meeting (AGM) held on 30^th June, 2014, approved the appointment of:

(a) M/s. Natvarlal Vepari & Co., Chartered Accountants, Firm Registration No. 106971W, Statutory Auditors of the Company to hold office for a period of 3 (three) years from the conclusion of the 92^nd AGM until the conclusion of the AGM to be held for the financial year 2016-17.

(b) M/s. Vinod Modi & Associates, Chartered Accountants, Firm Registration No. 111515W and M/s. M. G. Shah & Associates, Chartered Accountants, Firm Registration No. 112561W, as the Joint Branch Auditors of 'Gammon India Limited - Transmission & Distribution Business to hold office from the conclusion of that AGM until the conclusion of the AGM to be held for the financial year 2018-19.

Pursuant to Rule 3(7) of the Companies (Audit and Auditors) Rules, 2014, the aforesaid appointments need to be ratified by the members at the forthcoming Annual General Meeting.

Accordingly, (i) the appointment of M/s. Natvarlal Vepari & Co., Chartered Accountants, (Firm Registration No. 106971W) as the Statutory Auditors of the Company to hold office from the conclusion of this meeting until the conclusion of the Annual General Meeting to be held for the financial year 2016-17 and (ii) the appointment of M/s. Vinod Modi & Associates, Chartered Accountants, Firm Registration No. 111515W and M/s. M. G. Shah & Associates, Chartered Accountants, Firm Registration no. 112561W, as the Joint Branch Auditors of 'Gammon India Limited -Transmission & Distribution Business, to hold office from the conclusion of this meeting until the conclusion of the Annual General Meeting to be held for the financial year 2018-19 repectively, are sought to be ratified by members at the forthcoming Annual Genral Meeting.

As required under Section 139 of the Companies Act, 2013, certificates have been received from (i) M/s. Natvarlal Vepari & Co., Chartered Accountants, Statutory Auditors (ii) M/s. Vinod Modi & Associates, Chartered Accountants and (iii) M/s. M. G. Shah & Associates, Chartered Accountants, to the effect that their respective appointments, if made, will be within the prescribed limits under Section 141 of the Companies Act, 2013.

(B) COST AUDITOR

In accordance with the provisions of Section 148 of the Companies Act, 2013, the Board of Directors of the Company in its meeting held in December,2014 has appointed Mr. R. Srinivasaraghavan and Co. as the Cost Auditor for auditing the cost accounting records of (a) Civil Engineering, Procurement and Construction business (b) Transmission and Distribution business of the Company for the 18 months period ended 31^st March, 2016 on a remuneration of Rs. 2.25 lakhs.

Mr. R. Srinivasaraghavan was also appointed as the Cost Auditor for auditing the Company's cost audit records of the aforementioned business for the Financial Year 2016-17, by the Board in its meeting held on 20^st July, 2016 on a remuneration of Rs. 2.5 lakhs.

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,the remuneration of the Cost Auditor for the aforementioned periods is sought to be ratified by the members at the ensuing 94^th Annual General Meeting.

(C) SECRETARIAL AUDITOR & OBSERVATIONS

M/s Pramod Shah & Associates, Practicing Company Secretaries were appointed as Secretarial Auditors to conduct the Secretarial Audit of the Company for the 18 months period ended 31^st March, 2016 in accordance with the provisions of Section 204 of the Companies Act, 2013. The Secretarial Auditors Report is annexed as Annexure "C" to this report.

The Secretarial Audit Report confirms that the Company has generally complied with the provisions of the Act, Rules, Regulations and Guidelines applicable to it and does not contain any adverse remark or observation.

17.REPORT ON CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS

A Report on Corporate Governance and Management Discussion and Analysis for the period ended 31^st March, 2016, together with certificate from Mr. V. V Chakradeo & Co., Practising Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.

18.BOARDS' EXPLANATION ON AUDITORS QUALIFICATION ON FINANCIAL STATEMENTS

The Board's explanation on the Statutory Auditor's qualifications in their Auditors Report both on the Standalone and Consolidated Financial Statements is annexed to this report as Annexure “D”.

Members attention is drawn to "Emphasis of Matter" stated in the Auditor's Report dated 17^th June, 2016 on the Standalone Financial Statements and in the Audit Report dated 20^th July, 2016 on the Consolidated Financial Statements for the 18 (Eighteen) months period ended 31^st March, 2016. 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.

19.DECLARATION BY THE INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of Independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013. The Declarations received from all the Independent Directors were taken on record by the Board of Directors.

20.NOMINATION AND REMUNERATION POLICY FOR THE DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

The Nomination and Remuneration Committee of the Company formulated a Nomination and Remuneration Policy in terms of Section 178 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 . In line with this ,the Board adopted the Nomination and Remuneration Policy which is annexed in Annexure - "E".

21.COMMITTEES OF DIRECTORS

The Board has appointed mandatory and 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

4. Corporate Social Responsibility Committee

5. Securities Allotment Committee

6. Review Committee of Independent Directors

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

22.FAMILIARIZATION PROGRAM FOR THE 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. No new independent director was appointed during the period.

All the Independent Directors are updated about the ongoing events and developments relating to the Company from time to time either through presentations at board or committee meetings or through in-house journals.

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.

Several sessions and programs were conducted for the Independent Directors where the senior management team of the Company updated the Directors on the industry scenario, project updates and systems and processes within the Company. Details of the familiarization programmes are available on the Company's website on www.gammonindia.com under the Investor Section.

23.NUMBER OF MEETINGS OF THE BOARD

During the 18 (eighteen) months period ended 31^st March, 2016, sixteen (16) Board meetings were held on 5^th December, 2014, 18^th December, 2014, 11^th February, 2015, 13^th February, 2015, 27^th April,2015, 14^th May, 2015, 25^th June, 2015, 14^th August, 2015, 27^th August, 2015, 27^th October, 2015, 17^th November, 2015, 17^th December, 2015, 18^th December, 2015*, 12^th February, 2016, 23^rd March, 2016 and 31^st March, 2016.

*Adjourned meeting

24.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. The Audit Committee as on 31^st March, 2016 comprised of four Independent Directors viz (1) Mr. Chandrahas C.Dayal (Chairman) (2) Ms. Urvashi Saxena (3) Mr. Naval Choudhary and (4) Mr. Atul Kumar Shukla.

Details of the composition of the Audit Committee, number of meetings held and all relevant details have been given in the Corporate Governance Report which forms part of the Annual Report.

25. VIGIL MECHANISM

A Vigil Mechanism as per the provisions of Section 177 (9) of the Companies Act, 2013 and Regulation 22 of the 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 Company's code. The Whistle Blower Policy is uploaded on the company's website at www.gammonindia.com under the Investors Section.

26.PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The particulars of loans, investments and guarantees is provided in Notes to Standalone Financial Statements.

27.PARTICULARS OF CONTRACT/ARRANGEMENT WITH RELATED PARTIES

All contracts/arrangements/transactions entered by the Company during the period 1^st October, 2014 up to the date of this report with related parties were in the ordinary course of business and on arm's length basis. All related party transactions are placed before the Audit Committee for its approval and duly approved by the Board. No omnibus approvals were taken during the period under review . Further all continuing related party transactions as defined under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have been duly approved by the shareholders.

Information on transactions with related parties pursuant to Section 134 (3)(h) of the Act read together Rule 8(2) of the Companies (Accounts) Rules ,2014 are given in Annexure "F" in Form AOC -2 and the same forms part of this Report.

28. BOARD AND INDIVIDUAL DIRECTORS PERFORMANCE EVALUATION

As per Section 149 of the Companies Act, 2013 read with Schedule IV and Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 201 5, the Independent Directors at their meetings evaluated the performance of the Non-independent Directors, the Chairman and Managing Director ("CMD") with inputs from the Non-executive Directors and of the entire Board.

A performance evaluation of each of the Independent Directors was carried out by the Board members wherein the feedback of each member was sought separately. The Board members were asked to give their feedback on the functioning, participation, contribution made by each Independent Director to the Board and Committee processes, the degree of each Independent Director's involvement in Board and Committee decision making , communication and other attributes of each of the Independent Directors.

Post the meeting of the Independent Directors and the Boards’ evaluation of Independent Directors, the feedback received from all Directors was communicated to the Nomination and Remuneration Committee, to the CMD and to each of the Board members for improving the Board dynamics, strengthening the Board and enhancing Board's overall performance in the challenging environment.

29.CORPORATE SOCIAL RESPONSIBILTY

The Company's Corporate Social Responsibility (CSR) Policy as formulated by the Corporate Social Responsibility Committee and approved by the Board is annexed to this Report as Annexure "G" and is also available on the website of the Company viz; www. gammonindia.com.

The Company has not spent any amount on CSR activities during the period 1^st October, 2014 to 31^st March, 2016 since the average net profits of the Company for immediately preceding three years stood negative. Annual Report as per the Companies (Corporate Social Responsibility Policy) Rules is annexed as Annexure "H".

30.RISK MANAGEMENT POLICY

The Company has structured a Risk Management policy in terms of the SEBI (Listing Obligations and disclosure Requirements), Regulations, 2015. The risk framework covers the management's approach and initiatives taken to mitigate a host of business and industry risks by identifying such risks and redefining processes, decision making authorities, authorization levels, risk and control documentation etc. and reviewing these periodically and details of the same are set out in the MDA which forms part of the Annual Report.

31.INTERNAL FINANCIAL CONTROLS

Your Company believes that sound internal controls and systems are related to the principle of good governance and should be exercised within a framework of proper checks and balances. Accordingly, your Company has devised and implemented such internal control systems as are required in its business processes. The Company remains committed to ensuring an effective internal control environment that provides assurance on the operations and safeguarding of its assets. 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.

Internal Audit is that function which monitors the Company's internal control environment. Conventional and strong internal audit processes, both at the corporate and project level ensure concurrent review of the adequacy and effectiveness of internal controls across the Company and the compliance status with laid down systems, policies and procedures. In the ERP environment of the Company, authentication of IT security and rights to operate and view and periodically addressed by the internal audit team and observations are submitted to the management on a case to case basis.

The Internal Audit department is made up of professionally qualified accountants, management graduates & engineers, located at its corporate office and elsewhere in the country, who regularly review the planning and conduct of internal audits of major construction and transmission line sites, In addition to the in-house team, a firm of Chartered Accountants has been appointed to carry out internal audits of various functional areas at the Head Office.

During the year, the internal controls across the Company's business processes were reviewed for adequacy and robustness and documentation was updated as and where required, after discussion with relevant process owners. The mitigation of procedural risks was also reviewed and a document in this behalf was tabled before the Audit Committee and the Board and duly made available to the Company's statutory auditors.

Your Company's Internal Audit function has a documented process which is in conformity with ISO quality standards. In addition to the traditional "post-audit", i.e. a review of historical transactions, your company has also introduced in its Internal Audit methodology a concept of "pre-audit", where a separate Centralized Certification Unit has been established to verify & certify all liabilities that are generated at the site level.

The Audit Committee consists of Independent Directors and is headed by experienced professional. The Committee meets periodically to inter-alia review the Internal Auditor's Reports and their observations and makes recommendations for adequacy, effectiveness of Internal Controls and required remedial action, if any, to the Board of Directors for its implementation.

32.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.

33.PARTICULARS OF EMPLOYEES

The information required pursuant to Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure "I" to this Report.

34.CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

Pursuant to the provisions of Section 1 34(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 "J" to this report.

35.SEXUAL HARASSMENT

During the period under review, there were no cases filed pursuant to Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

36.ACKNOWLEDGEMENTS

The Board thanks all its valued customers and various Government, Semi-Government and Local Authorities, Suppliers and other Business Associates. Your Directors appreciate continued support from Banks and Financial Institutions and look forward to their co-operation in the future. Your Directors place on record their appreciation of the dedicated efforts put in by the employees at all levels and wish to thank the Shareholders and all other stakeholders for their unstinted support and co-operation.

For and on behalf of the

Board of Directors

Abhijit Rajan

Chairman & Managing Director

Place : Mumbai

Dated : 21^st July, 2016