Gammon Infrastructure Projects

A.  BACKGROUND
 
 The Company is an infrastructure deveiopment company formed primarily
 to develop, invest in and manage various initiatives in the
 infrastructure sector. It is presently engaged in the development of
 various infrastructure projects in sectors like transportation, energy
 and urban infrastructure through several special purpose vehicles
 (SPVs). It is also engaged in carrying out operation and maintenance
 (O&M) activities for the transportation sector projects.
 
 B.  OTHER NOTES 
 
 1.  Investments
 
 (a) The Company had during the period January 2005 to March 2006
 entered into an agreement with Gammon India Limited (GIL) by which it
 had acquired the beneficial, controlling interest and voting rights in
 respect of 12,905,000 equity shares each (representing 44.5% of the
 beneficial, controlling interest and voting rights each) of Rajahmundry
 Expressway Limited (REL) and Andhra Expressway Limited (AEL) in
 consideration of payment of deposit of Rs. 163,618,800 and Rs.
 164,761,200 respectively. Of these shares GIL had acquired the
 beneficial, controlling interest and voting rights in 1,812,500 shares
 each of AEL and REL from Punj Lloyd Limited (PLL).  By virtue of this
 agreement and the equity share holding in these companies, AEL and REL
 have become subsidiaries of the Company.
 
 The amount of Rs. 328,380,000 paid to GIL has been shown under
 Investments. In respect of these shares where the beneficial,
 controlling interest and voting rights have transferred to the Company,
 the shares continue to be held in the name of GIL and PLL as per the
 records of the respective companies.
 
 (b) The Company had on August 31, 2007 entered into two separate
 agreements with GIL by which it acquired the beneficial, controlling
 interest and voting rights in respect of 9,596,923 equity shares of
 Gorakhpur Infrastructure Company Limited (GICL) and 6,284,146 equity
 shares of Kosi Bridge Infrastructure Company Limited (KBICL) (each
 representing 26.01% of the beneficial, controlling interest and voting
 rights in GICL and KBICL) in consideration of payment of deposit for
 acquisition of these shares of Rs. 158,810,690. By virtue of these
 agreements and the equity share holding in these companies, GICL and
 KBICL have become subsidiaries of the Company. In respect of these
 shares where the beneficial, controlling interest and voting rights
 have transferred to the Company, the shares continue to be the held in
 the name of GIL as per the records of the respective companies.
 
 (c) The Company had on August 31, 2007 entered into an agreement with
 GIL for acquisition of beneficial, controlling interest and voting
 rights in respect of equity shares of Indira Container Terminal Private
 Ltd (ICTPL). Under this agreement when ICTPL shares are allotted to
 GIL, the Company would deposit to GIL, equivalent to GILs subscription
 amount for the respective shares to acquire the above mentioned
 beneficial, controlling interest and voting rights. As a consequence of
 this agreement the Companys beneficial, controlling interest and
 voting rights in ICTPL aggregate to 50% of ICTPL.
 
 2.  Initial Public Offer
 
 The Company has during the year made an Initial Public Offer of
 16,550,000 equity shares of Rs. 10/- each at a premium of Rs. 157 per
 share. The equity shares pursuant to the offer were allotted on March
 27, 2008. An amount of Rs. 247,208,285 and Rs. 138,968,512 is due from
 Retail and HNI category of Shareholders as at March 31, 2008 towards
 Equity Capital and Security Premium to whom equity shares were allotted
 in the Initial Public Offer. The total share issue expenses of Rs.
 171,136,715 has been charged to the Security Premium account All the
 funds collected are lying in escrow account as at March 31, 2008.
 
 3.  Segment Reporting
 
 The Companys operations constitutes a single business and geographical
 segment of Infrastructure Development as per AS-17.
 
 4.  Related Party Disclosure
 
 (a) Relationships:
 
 Entity where control exists:
 
 Gammon India Limited - Holding Company
 Subsidiaries:
 
 1.  Andhra Expressway Limited
 
 2.  Cochin Bridge Infrastructure Company Limited
 
 3.  Gammon Projects Developers Limited
 
 4.  Gorakhpur Infrastructure Company Limited
 
 5.  Gammon Logistics Limited (previously known as Gammon Road
 Developers Limited)
 
 6.  Haryana Biomass Power Limited
 
 7.  Kosi Bridge Infrastructure Company Limited
 
 8.  Marine Project Services Limited
 
 9.  Mumbai Nasik Expressway Limited
 
 10.  Rajahmundry Expressway Limited
 
 11.  Sikkim Hydro Power Ventures Limited
 
 12.  Tidong Hydro Power Limited
 
 (b) Associates and Joint Ventures:
 
 1.  Associated Transrail Structures Limited
 
 2.  ATSL Infrastructure Projects Limited
 
 3.  Eversun Sparkle Maritime Services Pvt. Limited
 
 4.  Gammon L & T Infra MRTS Limited
 
 5.  Indira Container Terminal Private Limited
 
 6.  Modern Toll Roads Limited
 
 7.  Punjab Biomass Power Limited
 
 8.  SEZ Adityapur Limited
 
 9.  Vizag Seaport Private Limited
 
 (c) Key Management Personnel:
 
 1.  Abhijit Rajan
 
 2.  Parvez Umrigar
 
 (d) Details of related parties transactions for the period ended on
 March 31, 2008 — Please refer to the Annexure - 1
 
 5.  Amounts due to Micro, Small and Medium Enterprises
 
 As per the information available with the Company, there are no Micro,
 Small and Medium Enterprises, as defined in the Micro, Small, Medium
 Enterprises Development Act, 2006, to whom the Company owes dues on
 account of principal amount together with interest and accordingly no
 additional disclosures have been made.
 
 The above information regarding Micro, Small and Medium Enterprises
 have been determined to the extent such parties have been identified on
 the basis of information available with the Company. This has been
 relied by the Auditors.
 
 6.  Quantitative information
 
 Since the principal business of the Company is Infrastructure
 Development and carrying out operations and maintenance activities,
 quantitative details as required by Part II, para ii, 4(c), 4(d) of
 Schedule VI of the Companies Act, 1956, are not required to be
 furnished.
 
 7.  Current Assets, Loans and Advances
 
 In the opinion of the Board of Directors, Current Assets, Loans and
 Advances have a value on realization in the ordinary course of business
 at least equal to the amount at which they are stated in the Balance
 Sheet.
 
 8.  Capital commitments
 
 The total capital commitments of the Company as on March 31, 2008 are
 Rs. 2,736,900,000 (inclusive of share of capital commitment in joint
 ventures). Total capital commitment as on March 31, 2007, was Rs.
 1,394,519,960. The capital commitments is in respect of projects where
 the concession agreements have been signed and does not include
 projects where the Company holds a Letter of Intent.
 
 9.  Employees Stock Options Scheme (ESOP)
 
 The Company has instituted an ESOP Scheme during the year which was
 approved by the shareholders vide their resolution dated May 4, 2007.
 The Board of Directors of the Company has granted 1,640,000 stock
 options to its employees pursuant
 
 10.  Remuneration to auditors
 
 The remuneration to the auditors does not include Rs. 5,623,004 being
 the fees related to the work carried out for the Initial Public Offer
 that the Company has done which is debited as part of Share Issue
 expenses to the Security Premium Account.
 
 11.  Derivative Instruments and Unhedged Foreign Currency Exposure
 
 There are no derivative instruments outstanding as at March 31, 2008.
 There is unhedged foreign currency exposure of US$ 212,027 (Rs.
 8,485,359) of liability outstanding as at March 31, 2008 which is
 included in Sundry Creditors for share issue expenses under the
 Schedule for Current Liabilities.
 
 12.  Prior period comparatives
 
 The previous period figures are however regrouped/reclassified to
 facilitate limited comparability.