GMR Infrastructure

The Directors have pleasure in presenting the 12th Annual Report
 together with the audited balance sheet and profit and loss account of
 your Company for the year ended March 31, 2008.
 
 Financial results
 
 Your Company and its business verticals are structured in a distinct
 and unique way. Whereas your Company is a holding company for the
 investments made in its subsidiaries, its business operations of
 airports, energy, highways and urban infrastructure are carried through
 different subsidiaries. In this structure, your Company does not have
 independent operating revenues other than dividends from its
 subsidiaries, interest and other treasury income earned on the surplus
 funds. Your Company has partnered with some minority shareholders for
 its various projects, which in the aggregate, is shown as Minority
 Interest in the financial statements. The consolidated results
 summarised below, hence, present the full revenues, expenses and the
 results of the business operations of the Company and its subsidiaries.
 The Company’s standalone financial results for the year are also
 provided in the following pages.
 
 Consolidated financial results (Rs. in crore)
 
 Particulars                               March 31, 2008 March 31, 2007
 
 Gross revenue                                 2,767.66       1,987.05
 
 Fee paid to Airports Authority of India         403.13         271.98
 
 Net revenue                                   2,364.53       1,715.07
 
 Operating and administrative expenditure      1,696.28       1,153.06
 
 EBIDTA                                          668.25         562.01
 
 Interest & finance charges                      168.71         144.14
 
 Depreciation                                    178.51         134.56
 
 Profit before tax                               321.03         283.31
 
 Provisions for taxation (including deferred 
 tax and fringe benefit tax)
                                                  58.38          41.54
 
 Profit after tax                                262.65         241.77
 
 Minority interest                                52.57          67.34
 
 Surplus brought forward from previous year      308.61         117.46
 
 Amount available for appropriation after 
 minority interest                               518.69         291.89
 
 Appropriations                                   (5.01)        (16.72)
 
 Available surplus carried to Balance Sheet      523.70         308.61
 
 Earnings per share (Face value of Rs. 2/- each) 
 - Basic and Diluted                               1.23           1.11
 
 Consolidated gross revenues grew by about 39 per cent from Rs. 1,987.05
 crore to Rs. 2,767.66 crore and net revenues by about 38 per cent from
 Rs.  1,715.07 crore to Rs. 2,364.53 crore. Revenue streams from the
 Airport and Energy operations were the key contributions to this
 growth. EBITDA and PAT have grown respectively by 18.90 per cent and
 8.64 per cent over the previous year.
 
 The consolidated PAT for the year is after considering some exceptional
 items as explained in Management Discussion and Analysis and an
 incremental loss of Rs. 24.00 crore for the year in Vemagiri Power
 Generation Limited (VPGL).  However, the adverse impact of these items
 on PAT has been substantially offset by the returns from treasury
 operations through effective deployment of the proceeds of the
 Qualified Institutional Placements (QIP) of Equity Shares. It is
 gratifying to note that VPGL resumed operations during the last quarter
 of the year, after being idle for about 18 months due to
 non-availability of gas.  The resumption of operations has resulted in
 lower losses from that unit during the last quarter.
 
 During the year, the percentage holding of minority shareholders in GMR
 Tambaram — Tindivanam Expressways Private Limited (GTTEPL) and GMR Tuni
 Anakapalli Expressways Private Limited (GTAEPL), has come down from
 50.99 per cent to 39.23 per cent due to restructuring of their
 shareholding in January 2008.
 
 It also may be noted that the number of shares, for the purpose of
 computation of earnings per share (EPS), has been suitably adjusted
 following the sub-division of equity share of Rs. 10 each to 5 equity
 shares of Rs. 2 each in October 2007. The increase in number of shares
 is due to allotment of 16,52,38,088 equity shares of Rs. 2 each on
 account of allotment of shares to Qualified Institutional Buyers in
 accordance with SEBI (Disclosure and investor protection) Guidelines
 2000 (QIP). These shares were also included, on weighted average basis,
 for the computation of EPS.
 
 Presented below are the standalone financial results of the Company:
 
 Standalone financial results                            (Rs. in crore)
 
 Particulars                               March 31, 2008 March 31, 2007
 
 Gross revenue                                  112.20          34.13
 
 Operating and administrative expenditure        21.16           8.71
 
 EBIDTA                                          91.04          25.42
 
 Interest & finance charges                      25.37          19.95
 
 Depreciation                                     0.13           0.20
 
 Profit before tax                               65.54           5.27
 
 Provisions for taxation (including deferred 
 tax and fringe benefit tax)
                                                  2.84           2.39
 
 Profit after tax                                62.70           2.88
 
 Surplus brought forward from previous year      81.78          60.29
 
 Amount available for appropriation             144.48          63.17 
 Appropriations:
 
 Debenture redemption reserve                   (5.14)         (18.61)
 
 Surplus carried to balance sheet              149.62           81.78
 
 Earnings per share (Rs.)- Basic and Diluted     0.37            0.02
 
 The revenues of your Company on standalone basis have gone up by Rs.
 78.07 crore (229 per cent) from Rs. 34.13 crore to Rs. 112.20 crore
 primarily due to treasury income on surplus funds available with the
 Company out of the proceeds of QIP. The revenues also include a
 dividend of Rs. 0.76 crore on preference shares held by the Company in
 GMR Energy Limited (GEL). The increase in operating and administrative
 expenditure from Rs. 8.71 crore to Rs. 21.16 crore is, inter alia, due
 to the payment of managerial remuneration etc. The increase in interest
 expenditure from Rs. 19.95 crore to Rs. 25.37 crore is on account of
 the loan of Rs. 275 crore availed by the Company from Life Insurance
 Corporation of India (LIC) during the year.
 
 Dividend
 
 Your Company is implementing several new projects through its
 subsidiaries and also actively scanning the global horizon for emerging
 opportunities. In order to conserve the funds to meet the investment
 requirements for such new business opportunities, which we believe will
 enhance the shareholders’ value in the long term, your Directors have
 not recommended any dividend for the financial year 2007-08.
 
 Subsidiary companies
 
 As a purposeful strategy, your Company carries all its business
 operations through several subsidiary and associate companies which are
 formed either directly or as step-down subsidiaries or in certain cases
 by acquistion of a majority stake in existing enterprises.
 
 As on March 31, 2008, your Company has a total of 36 Subsidiary
 Companies and two associate companies.
 
 The total list of subsidiary companies including companies formed after
 March 31, 2008 is provided as annexure ‘C’ to this report.
 
 Review of Operations / Projects of Subsidiary Companies
 
 The business of the Company is broadly segmented into four sectors: (1)
 Airports (2) Energy (3) Highways & Urban Infrastructure (4) Corporate &
 International Business. All these four business verticals are operated
 through various subsidiary / associate companies. While detailed review
 of the operations of each subsidiary’s business is presented in the
 respective company’s Directors’ Report, a brief overview of the major
 developments thereof is presented below. Further, Management Discussion
 and Analysis, forming part of this Report, also brings out a brief
 review of the business operations of various subsidiaries and
 associates.
 
 Airport Sector
 
 Airports business of the Company consists of two airports at Delhi and
 Hyderabad in India and Istanbul in Turkey. Briefly presented below are
 the significant developments in these three assets during the year.
 
 Honoring a major commitment to the nation, the Company has commissioned
 the operations of Rajiv Gandhi International Airport at Hyderabad with
 effect from March 23, 2008. This Airport has been built to global
 standards and completed in a record time of less than 30 months. In a
 short time, the operations of the airport have been stabilised and the
 airport is running very smoothly, setting new benchmarks in the Indian
 Aviation Infrastructure industry.
 
 During the year under review, the Delhi International Airport (P)
 Limited (DIAL) achieved financial closure of the project. The total
 capital expenditure outlay for the first phase till year 2010 is
 estimated at Rs. 8,975 crore. The construction of the third runway and
 the up-gradation work of the domestic and existing international
 terminals is well on schedule to meet the target dates. The
 construction work of the new integrated terminal being built to
 international standards with the state of the art facilities, scheduled
 to be completed by March, 2010 is also progressing on well to meet the
 target date.
 
 The Company made its foray in international business by winning a
 mandate, in consortium with Limak Group, Turkey and Malaysian Airport
 Holding Berhad, for operating and expanding Sabiha Gokcen International
 Airport at Istanbul, Turkey. The consortium has since taken over the
 operations of the project and commenced construction work for
 increasing the capacity of the airport.
 
 Energy Sector
 
 The Energy business of the Company consists of three operating plants
 in India, aggregating to about 808.5 MW and seven coal and hydro assets
 under development in India and Nepal, totalling to 3290 MW. Further,
 the Company, consolidating its international business operations and
 investments, has acquired a stake of 50 per cent in Intergen N.V. which
 operates 8086 MW of installed capacity across four continents and is
 further developing power projects aggregating to 4680 MW. To achieve
 fuel security to set up additional capacities, the Company is also
 looking at investing in and acquisition of coal mines overseas. As part
 of this endeavor, GEL has acquired a 10 per cent equity stake in
 Homeland Mining & Energy SA (Pty) Limited, (HMESA), South Africa, which
 owns three advanced development / pre-development stage coal projects
 and has rights to conduct surveys of eight additional properties in
 South Africa. GEL also has non- obligatory option to acquire up to an
 additional 40 per cent equity interest in HMESA.
 
 The significant developments in various operating and developmental
 assets during the year are stated below:
 
 The 220 MW barge mounted power plant is being shifted to a place near
 Kakinada, Andhra Pradesh, to operate as a merchant plant. The location
 shift has become necessary as the project completed its 7 year power
 purchase agreement with Karnataka power distribution companies.
 
 During the financial year, GMR Power Corporation Private Limited
 (GPCPL) has disinvested 24 per cent stake in GMR Tambaram - Tindivanam
 Expressways Private Limited and GMR Tuni - Anakapalli Expressways
 Private Limited to GVL Investment Private Limited a subsidiary of the
 Company. Consequent to above disinvestment, these companies ceased to
 be the subsidiaries of GPCPL but continue to be subsidiaries of the
 Company. Further GEL has also disinvested 13% stake in these companies.
 
 After being idle for about 15 months due to non- availability of gas,
 Vemagiri Power Generation Limited (VPGL) resumed operations in
 February, 2008 and continued generation till April, 2008.  This
 resumption of operations for a brief period was possible due to the
 temporary diversion of gas that was made available for running the
 plant. The plant is expected to resume operations on sustained basis in
 the second half of the financial year.
 
 The 1050 MW coal fired Kamalanga Project in Orissa has secured its fuel
 sourcing requirements through a coal linkage as well as coal block
 allocation from Ministry of Coal, Government of India (GoI). GKEL has
 been formed as the SPV to implement the project.
 
 The pre-feasibility report for the 1050 MW coal fired power project in
 Chhattisgarh has been approved by the State Government. The State
 Government has committed the allocation of required water and land and
 has also recommended to the Ministry of Coal and Power for the
 allocation of coal linkage.
 
 GUKHPPL entered into an MOU with Government of Nepal for setting up a
 300 MW hydro power project at Upper Karnali on BOOT basis. .
 
 GMR Energy Limited (GEL) acquired 80 per cent stake in Himtal Hydro
 Power Company Private Limited, Nepal, which has rights to develop 250
 MW Hydro Project on Marsyangdi River on BOOT basis.
 
 Based on the detailed project report, the State Government of
 Uttarakhand has consented to increase the capacity of the Badrinath
 Hydro Power Project from 140 MW to 300 MW and has recommended to
 Central Electricity Authority to approve such increase in capacity.
 
 Executed pre implementation agreement with Government of Himachal
 Pradesh for setting up of 180 MW Bajoli Holi Hydro power project on
 BOOT basis.
 
 Highways
 
 The Highways Sector of the Company comprise two operating annuity road
 projects and four road projects currently under construction. Of these
 four projects under construction, one is an annuity project while the
 other three are toll projects. The aggregate length of all these six
 projects is 421 four lane kms. The construction of the said four
 projects is well on schedule and all these projects will be
 commissioned before the concession time- lines during the course of the
 financial year 2008- 09. Due to the steep increase in the input costs,
 the cost of Ambala – Chandigarh project is likely to increase by about
 Rs. 100 crore over the original project cost of Rs. 391 crore.
 
 Urban Infrastructure
 
 Urban Infra is a new business vertical, launched during the year. This
 vertical consists of SEZ and Urban Property businesses. Brief project
 details of this business vertical are given below:
 
 Foraying into SEZ Business, the Company entered into an MOU with Tamil
 Nadu Industrial Development Corporation (TIDCO) for the development of
 a 3,300 acre multi product special economic zone in Krishnagiri
 District of Tamil Nadu and GKSL was formed for the purpose.  The land
 acquisition is in progress and is expected to be completed to a major
 extent by October 2008.
 
 GMR Hyderabad International Airport Limited received approval from
 Board for its two airport SEZs of about 250 acre each. While one
 project will be a multi product SEZ, the other SEZ will be exclusively
 for aviation sector.
 
 The company is envisaging development of properties around airports as
 explained further in Management Discussion & Analysis.
 
 Corporate & International Business
 
 The Corporate Business includes provision of common services, resources
 to all group businesses and Corporate Aviation. Corporate Aviation
 business of the Company consists of chartering corporate jets both to
 the group companies as well as to third parties. The Company’s wholly
 owned subsidiary, GAPL, purchased a Falcon corporate jet during the
 year.  To meet the growing demand in aircraft chartering by corporates,
 it has placed orders for one helicopter and four corporate jets. It is
 also planning to acquire a Falcon corporate jet, currently owned by a
 group company.
 
 International Business division (IBD) headquartered in London conducts
 its operations across the globe scouting for new business opportunities
 in Infrastructure domain. The businesses acquired through IBD viz.
 Sabiha Gokcen International Airport and Intergen N.V have been
 explained under Airport sector and Energy sector respectively. More
 details on the functioning of the IBD are given elsewhere in the Annual
 report.
 
 Human Resources and Institutional Building
 
 The Group set upon a robust process of human resources development and
 institutional building, which is described in detail in Management
 Discussion and Analysis under the heading Developments in human
 resources and organisation development at GMR Group.
 
 Consolidated financial statements
 
 As per Section 212 of the Companies Act, 1956, the Company is required
 to attach the Directors’ Report, balance sheet and profit and loss
 account of its subsidiary companies to its Annual Report.  The Ministry
 of Corporate Affairs, Government of India (GoI), vide its letter(s) no.
 47/63/2008-CL-III dated March 10, 2008 and May 06, 2008, has granted
 exemption to your Company for not attaching the above documents of
 subsidiaries with Annual Report of the Company for the financial year
 2007-08. Accordingly, this Annual Report does not contain the reports
 and other statements of the subsidiary companies. The Company will make
 available the annual audited accounts and related detailed information
 of the subsidiary companies upon request by any member of the Company.
 These documents will also be available for inspection during business
 hours at the registered office of the Company and also at the
 registered offices of the subsidiary companies.
 
 The statement pursuant to above stated approval of GoI, about financial
 information of each subsidiary company, containing details of (a)
 capital, (b) reserves, (c) total assets, (d) total liabilities, (e)
 details of investment (except in case of investment in subsidiaries),
 (f) turnover, (g) profit before taxation, (h) provision for taxation,
 (i) profit after taxation and (j) proposed dividend is annexed to this
 report. However, the financial statements of GHASL, GHMSL, GIUL and
 GONGPL are not consolidated with the Company, since these companies are
 yet to close their books of accounts for the first year. GCCL is a
 guarantee company having no share capital and commercial operations.
 Hence, GCCL is also not considered for consolidation.
 
 As required by Accounting Standard – 21 and Listing Agreement with
 stock exchanges, the audited consolidated financial statements of the
 Company and its subsidiaries are attached.
 
 Changes in share capital
 
 Increase in authorised share capital
 
 In order to meet the requirement of funds to match with its growth and
 business plans, consequent upon the approval of the members at the
 previous Annual General Meeting, the Company had increased authorised
 share capital from Rs. 400 crore to Rs. 750 crore.
 
 During the year under review, your Company has sub-divided its equity
 shares from a face value of Rs. 10 to Rs. 2 to enhance the liquidity of
 the stock and broad base our investor community vide record date fixed
 on October 8, 2007.
 
 Qualified Institutional Placements (QIP)
 
 During the year under review, your Company successfully completed issue
 of 16,52,38,088 equity shares of Rs. 2 each at a price of Rs. 240 per
 equity share, including a premium of Rs. 238 per equity share,
 aggregating Rs. 3,965.71 crore to Qualified Institutional Buyers (QIBs)
 as per Chapter XIII-A of SEBI (DIP) Guidelines, 2000, through the QIP.
 The QIP was opened for subscription to QIBs on December 05, 2007 and
 closed on December 10, 2007.
 
 A total of 49 QIBs had subscribed to 16,52,38,088 equity shares of Rs.
 2 each. The entire money amounting to Rs. 3,965.71 crore was received
 and allotment of shares was completed on December 12, 2007. The BSE and
 the NSE had given trading permission for the equity shares issued to
 QIBs on December 13, 2007.
 
 Due to these corporate actions, the issued, subscribed and paid-up
 equity share capital increased from 33,10,84,000 equity shares of Rs.
 10 each as on March 31, 2007 to 182,06,58,088 equity shares of Rs. 2
 each as on March 31, 2008.
 
 The Company has paid the listing fees payable to the BSE and the NSE
 for the financial year 2008-09.
 
 Directors
 
 Reappointments
 
 Mr. K. Balasubramanian, Mr. K.R. Ramamoorthy, Dr. Prakash G. Apte and
 Mr. R.S.S.L.N. Bhaskarudu, Directors, retiring by rotation and being
 eligible, offer themselves for reappointment.
 
 The Board recommends their reappointment for your approval.
 
 The professional background of the above Directors are given under the
 section “Board of Directors”, in the Corporate Governance Report,
 attached to the Annual Report.
 
 Appointments
 
 Mr. O.B. Raju, was appointed as an Additional Director on the Board
 with effect from October 18, 2007 and holds office till the ensuing
 Annual General Meeting. Notice under Section 257 of the Companies Act,
 1956 has been received from the member of the Company, for his
 appointment.
 
 Resignations
 
 Mr. P.B. Vanchi, resigned as Director from the Board with effect from
 July 30, 2007. The Board places on record, its appreciation for the
 valuable contribution made by Mr. P.B. Vanchi during his tenure as
 Director of the Company.
 
 Directors’ responsibility statement
 
 Pursuant to the requirement under Section 217 (2AA) of the Companies
 Act, 1956, with respect to Directors’ responsibility statement, it is
 hereby confirmed:
 
 1. That in the preparation of the annual accounts for the year ended
 March 31, 2008, the applicable Accounting Standards have been followed
 and proper explanations were provided for material departures, if any.
 
 2.  That the Directors have selected such accounting policies and
 applied them consistently and made judgments and estimates that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company as at the end of the financial year and of
 the profit of the Company for the year.
 
 3.  That the Directors had taken proper and sufficient care for
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956, for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities.
 
 4. That the Directors had prepared the accounts for the financial year
 ended March 31, 2008, on a going concern basis.
 
 Corporate Governance
 
 Your Company has been practicing the principle of good Corporate
 Governance over the years and it is a continuous and ongoing process. A
 detailed report on Corporate Governance practices followed by your
 Company, in terms of Clause 49 (VI) of the Listing agreement with Stock
 Exchanges is provided separately in this Annual Report.
 
 Management Discussion and Analysis (MDA)
 
 The Management Discussion and Analysis, forming part of this report, as
 required under Clause 49(IV) (F) of the Listing Agreement with the
 stock exchanges is attached separately in this Annual Report.
 
 Auditors and Auditors’ Report
 
 M/s. PriceWaterhouse, Chartered Accountants, statutory auditors of the
 Company, retire at the conclusion of the ensuing Annual General Meeting
 of the Company. They have offered themselves for reappointment as
 statutory auditors and have confirmed that their appointment, if made,
 will be within the prescribed limits under Section 224 (1B) of the
 Companies Act, 1956.
 
 The Notes to Accounts forming part of the financial statements are
 self-explanatory and need no further explanation.
 
 There are no qualifications or adverse remarks in the Auditors’ Report
 which require any clarification/explanation.
 
 Corporate Social Responsibility (CSR)
 
 GMR Group is a socially committed organisation and a socially
 responsible corporate citizen. It attaches paramount importance to
 discharge its overall social responsibilities to the community and the
 society at large.
 
 The GMR Group’s social responsibility initiatives are implemented
 through GMR Varalakshmi Foundation (the Foundation), the CSR arm of the
 GMR Group. The Foundation is involved mainly in the areas of education,
 health and hygiene, community-based programmes and empowerment and
 entrepreneurship development. It reaches out with the objective of
 improving the quality of life of the economically deprived people in
 the places where the Group has a presence. The Foundation carries its
 activities currently in Arunachal Pradesh, Bangalore, Chennai,
 Chandigarh, Delhi, Hyderabad, Haliyal, Mangalore, Orissa, Rajahmundry,
 Rajam, and Uttarakhand.
 
 More details on the activities of the Foundation are given elsewhere in
 the Annual Report.
 
 Conservation of energy, technical absorption and Foreign Exchange
 earnings and outgo
 
 The Particulars as required under section 217 (1) (e) of the Companies
 Act, 1956, read with the Companies (Disclosure of particulars in the
 report of Board of Directors) Rules, 1988, are set out in the annexure
 A included in this report.
 
 Particulars of employees
 
 The Particulars as required under Section 217 (2A) of the Companies
 Act, 1956, read with Companies (Particulars of Employees) Rules, 1975,
 are set out in the annexure “B” included in this report.
 
 Fixed Deposits
 
 During the year under review, the Company has not accepted any deposit
 from the public.
 
 Acknowledgments
 
 Your Directors wish to express their grateful appreciation for the
 valuable support and cooperation received from lenders, business
 associates, banks, financial institutions, shareholders, various
 Statutory Authorities and society at large. Your Directors also place
 on record, their appreciation for the contribution and hard work of
 employees of the Company and its subsidiaries at all levels. Their
 commitment, dedication and hard work is fueling your Company’s growth.
 
 
                                  For and on behalf of the Board
 
                                              Sd/-
                                           G. M. Rao
                                        Executive Chairman
 
 Place: Bangalore
 Date : July 10, 2008