As on: Oct 02, 2023 11:11 AM
Dear Shareholders,
The Board of Directors present the 3rd Annual Report together with the audited financial statements of the Company for the financial year (FY) ended March 31, 2022.
Your Company, GMR Power and Urban Infra Limited ("GPUIL"), is a leading global infrastructure conglomerate with interest in, Energy, Road and Urban Infrastructure business sectors in India.
GPUIL's EPC business is constructing few sections of the prestigious Eastern Dedicated Freight Corridor project of DFCCI (Dedicated Freight Corridor Corporation of India Limited). DFCC Projects are expected to be completed by the end of this Financial Year.
India's Energy Sector is undergoing a paradigm shift with a consequent shift in the opportunity landscape. Existing coal based power plants retain their economic value and possibly will have a value uptick as fresh investments in coal based power plants would be very low ; investments in clean and green energy , storage based solutions would see robust growths and opportunities while with policy incentives in place along with cheap solar power, India is potentially developing as a major hub for green hydrogen production and exports. With EV penetration slated to increase rapidly , e-mobility business opportunities are also emerging ; proposed delicensing of distribution to improve operating and financial performance in distribution sector for which Electricity (Amendment) Bill 2022 has already been tabled in the parliament as also smart metering program which is under implementation also opens up potential new opportunities. The Group is proactively working on initiatives to align its growth strategy with these emerging trends.
GPUIL's energy businesses have an installed capacity of over 3,000 MW capacity, with another 900 Mw of hydro capacity in development, offtake for a major part of which capacity has been tied up with formal execution of documents expected shortly . A couple of other hydro projects are in early development stages. It has a balanced mix in its energy generation portfolio. The group also has coal mines in Indonesia, where it has partnered with a large local player. However, GMR Coal Resources Pte Limited ('GCRPL') which holds 30% stake in PT Golden Energy Mined Tbk ('PT GEMS'), on August 31, 2022 has entered into a definitive agreement to divest its stake subject to the necessary customary approvals.
The transportation and Urban Infrastructure division of the Group has four operating highway assets spanning over 1460 lane kilometers. The Group is also developing multi-focus Special Investment Regions in India.
The Group is also actively working on various initiatives on ESG front. Performance highlights - FY 2021-22
Performance Highlights of your Company on consolidated basis for the FY 2021-22:
• Hon'ble National Company Law Tribunal, Mumbai bench (''the
Tribunal'') vide its order dated December 22, 2021 (formal order received on December 24, 2021) has approved Composite Scheme of Amalgamation and Arrangement for amalgamation of GMR Power Infra Limited (GPIL) with the GMR Infrastructure Limited (GIL) and demerger of Engineering, Procurement and Construction (EPC) business and Urban Infrastructure business of the GIL (including Energy business) into Company ("Scheme" or "Composite scheme of arrangement"). Accordingly, assets and liabilities of the EPC business and Urban Infrastructure business (including Energy business), as approved by the Board of Directors pursuant to the Scheme stand transferred and vested into Company on April 1, 2021, being the appointed date as per the Scheme.
• Traffic at GMR Ambala Chandigarh Expressway ('GACE') was impacted due to farmer's agitation from 12-Oct-2020 until 14- Dec-2021. Toll collection has been resumed on December 15, 2021 since the farmers' agitation called off. The Group declared farmer's agitation as Force Majeure under the Concession Agreement (CA) and has notified NHAI. The Group is entitled to compensation for Force Majeure event by way of extension in concession period and reimbursement of O&M cost. The claim for Force Majeure (upto December 14, 2021) has been filed. The Group has received adhoc payment from NHAI. Balance claim amount is under verification and is expected to be received in due course.
• GMR Chennai Outer Ring Road (GCORR) received an award of INR 3.4 bn plus interest against Government of Tamil Nadu (GOTN) which was challenged by GOTN in Madras High Court which upheld Tribunal Award and dismissed the challenge of GOTN and awarded 9% pa interest on pre-award claim. GOTN has further challenged the judgement before Divisional Bench of Madras High Court which has dismissed the challenge of GOTN. The Group has filed the execution petition in High Court to realize the decretal amount which will be taken up in the Court in due course.
• The Group continue to grow the EPC order book by participating in Railway EPC and PPP Projects & Multi Modal Logistics parks bids through PPP.
• Krishnagiri Special Investment Region - During FY 2021-22, the Group has sold about 294 Ac to Tata Electronics Pvt Ltd (TEPL). The Group has also sold about 215 Ac in Krishnagiri District to TN state govt. agency (SIPCOT) for development of industrial infrastructure in the region. Further, the Group is in discussion with various clients to sell majority of balance lands and evaluating development of a small land parcel.
• Coal assets PT Gems performance - Significant improvement in Indonesian coal prices have resulted in better profitability. Record dividend payment of USD 330 mn for CY21 dividend payment in 2021 was the highest in company's history. GMR Group has
received 30% share of dividend amounting to Rs 842.53 crore.
• Power demand and improved coal supply have resulted mixed operating performance in the Energy business. Warora Power Project achieved PLF of 66% in FY 2021 -22 as against 75% in FY
2020- 21, Kamalanga Power Project achieved PLF of 82% in FY 2021- 22 as against 77% in FY 2020-21.
• With a significant focus on renewable energy, the Group has recently commissioned 180 MW Bajoli Holi Hydro project and achieved COD on March 28, 2022.
• The Group has received certain favourable orders on various ongoing matters in energy, highway and DFCC for compensation for Change in Law and late payment which involve significant value of claims.
Financial results - FY 2021-22
a) Consolidated financial results
The consolidated/ standalone financial statements for the comparative year i.e. ended March 31, 2021, have been prepared by giving effect to the Composite Scheme of Arrangement for demerger of Engineering Procurement and Construction (EPC) business and Urban Infrastructure business (including Energy business) of GMR Infrastructure Limited and subsidiaries ('GIL Group') into GMR Power and Urban Infra Limited ('GPUIL'), also refer note 49 of consolidated financial statements.
The following table sets forth information with respect to the consolidated statement of Profit and loss of the Company for FY 2021-22:
The total income for FY 2021-22 is Rs 4,281.70 crore as against Rs 3,061.34 crore for the FY 2020-21, registering increase of 39.86%, primarily due to the disruption caused by COVID-19 pandemic in previous year.
The revenue from power sector increased by 112.53% from Rs 1,023.40 crore in FY 2020-21 to Rs 2,175.06 crore in FY 2021-22 primarily due to increased operations in coal trading and electrical energy.
The revenue from road segment has increased by 7.06 % from Rs 496.87 Cr in FY 2020-21 to Rs 531.94 crore in FY 2021 -22 mainly due to increase in toll revenue.
EPC revenue increased by 11.74% from Rs 1,055.20 crore in FY 2020-21 to Rs 1,179.05 crore in FY 2021-22.
Income from other sector includes management services income, investment income and operating income of aviation businesses.. During the FY 2020-21 income from other sector has increased from Rs 131.27 to Rs 232.03 crore in FY 2021-22.
Consolidated Revenues do not include the revenues of entities which were assessed as Joint Ventures and Associates under Ind AS, including, GMR Energy Limited (GEL), GMR Kamalanga Energy Limited (GKEL) and GMR Warora Energy Limited (GWEL).
Increase in operating and other administrative expenses mainly due to purchase of traded goods, rent, legal and professional fees, exchange fluctuation. Decrease in finance cost is on account of repayment of borrowings to banks and financial institutions in FY 2021-22.
b) Standalone financial results
The following table sets forth information with respect to the standalone statement of Profit and loss of the Company for FY 2021-22:
During the year ended March 31, 2022, the revenue from EPC segment has increased by 11.74% from Rs 1,055.20 crore (FY 20202021) to Rs 1,179.05 crore (FY 2021-22), which was mainly on account of contribution by the ongoing DFCC (Railways) project. Other operating income mainly includes interest income on inter corporate loans given to group companies. There is no significant movement in other operating income.
Operating and administrative cost increased mainly due to increase in DFCC revenue.
Exceptional items comprises of reversal / creation of provision for impairment in carrying value of Investments and loans / advances / other receivables carried at amortised cost.
There are no material changes and committment, except those already disclosed in this Report, affecting the financial position of the Company which have occured between the end of FY 2021-22 and the date of this Report.
Dividend / Appropriation to Reserves
Your Directors have not recommended any dividend on equity shares for the FY 2021 -22.
Reserves
The net movement in the major reserves of the Company on standalone basis for FY 2021-22 and the previous year (after giving effect to Demerger) is as follows:
COVID-19 Impact
By the end of FY 2021-22, COVID first wave was fully dissipated and the Indian economy was on a quick mend.
However, this recovery was disrupted by the second wave of COVID- 19 which hit India in April 2021. The wave which continued from April to June 2021, was characterized by exponential rise in COVID cases and fatalities, domestic movement restrictions etc.
Impact of second COVID wave though sudden and drastic was shortlived as the new cases began to fall and by July 2021 India seemed to be coming out of the second wave. Since then, active cases have further reduced, vaccination coverage increased and economic indicators surpassed post first wave peaks.
By January 2022, India was at peak of economic recovery post the devastating COVID second wave. All economic indicators indicated to a good economic performance. As a result of COVID related disruptions becoming less stringent, India GDP growth registered at ~8.9% for CY 2021 (IMF estimate), which was the highest among large economies.
However, around new year time / early January 2022, recent Indian recovery was disrupted again by a third COVID wave on account of new COVID variant Omicron. By mid- January 2022, this wave had peaked at >350K daily new cases in India alone. Fortunately, the wave dissipated as quickly as it rose and thus, by mid of March 2022, the cases began to moderate and are now less than few thousand per
day. During the period, restrictions implemented by the government were more rational and less stringent than previous waves and thus economic impact of the third wave was limited.
Given such volatile scenario during the year, GPUIL's various businesses also faced various challenges. Frequent lock-downs/ travel restrictions had an adverse impact on industrial activities resulting in volatile power demand scenario in the country. Further, traffic at our toll roads also kept fluctuating during the year. Our DFCC construction activities were also impacted, though we proactively took corrective measure to limit impact.
It is pertinent to mention here, that while during the year we battled numerous challenges, we continued to operate our businesses efficiently. Further, we continued to focus on the safety and welfare of the employees. As the Government allowed private companies to vaccinate, we were at the forefront to vaccinate our employees and their immediate family members.
Composite Scheme of Amalgamation and Arrangement
The Board of Directors of the Company at its meeting held on August 27, 2020 had approved the Composite Scheme of Amalgamation and Arrangement amongst GMR Power Infra Limited ('GPIL"), GMR Infrastructure Limited ("GIL") and the Company and their respective shareholders under Section 230 to 232 read with Section 66 of the Companies Act, 2013 ("Scheme"). The necessary consent to the Scheme was also received from the shareholders and creditors of the Company. The Scheme inter-alia provides for (i) Merger of GPIL with GIL and (ii) Demerger of EPC Business and Urban Infrastructure Business of GIL into the Company.
The Scheme was sanctioned by Hon'ble National Company Law Tribunal, Mumbai Bench on December 22, 2021 and the same was effective from December 31, 2021. The appointed date of the Scheme was April 1, 2021.
Management Discussion and Analysis Report (MDA)
MDA Report for the year under review, as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "Listing Regulations"), is presented in a separate section forming part of the Annual Report.
The brief overview of the developments of each of the major subsidiaries' business is presented below. Further, MDA, forming part of this Report, also brings out review of the business operations of major subsidiaries and jointly controlled entities.
Energy Sector
Energy Sector companies had operating capacity of around 3,015 MWs of Coal, Gas, Hydro including Renewable power plants in India and around 1,775 MWs of power projects are under various stages of development, besides a pipeline of other projects in FY 2021-22. The Energy Sector has a diversified portfolio of thermal and hydro projects with a mix of merchant and long term Power Purchase Agreements (PPA).
FY 2021- 22 was a dynamic year for the power sector in India. While we faced challenges due to couple of pandemic waves, restrictions imposed by government were moderate compared to 1st wave and ensured that businesses at large did not suffer and people grew accustomed to living in a pandemic hit world. As a result, global as well as Indian economy witnessed an impressive economic recovery resulting in a huge surge in power demand. This recovery, coupled with Russia-Ukraine war, created a gap in the coal supply-demand scenario, thereby resulting in a significant surge in global coal prices. In view of this, Indian government had initially not allowed coal imports resulting in huge shortage of coal in India. However, following rise in summer demand, government has subsequently asked power producers to import coal so as to maintain adequate plant level coal stocks. These measures, along with increase in domestic coal production, have resulted in easing of coal situation in India.
Given above background, our energy assets have also performed well. Following are the major highlights of our Energy Sector assets:
A. Operational Assets:
I. Generation:
1. GMR Warora Energy Limited (GWEL) - 600 MW:
• GWEL, subsidiary of GMR Energy Limited, operates a 600 MW (2x300) coal fired power plant at Warora, Maharashtra.
• Successfully entered into medium term PPA with Gujarat Urja Vikas Nigam Ltd to supply 150 MW power for a period of 23 months, starting from October 2021.
• Currently total of 500 MW i.e. 91.6% capacity power is tied up in Long/medium term PPA's and balance 50 MW untied capacity is sold open market through Indian Energy Exchange (IEX).
• Plant has a Fuel Supply Agreement (FSA) of 2.36 Million Tonnes per annum, 1.3 Million tonnes with South Eastern Coalfields Limited (SECL) and 1.06 Million tonnes with Western Coalfields Limited (WCL) respectively.
• During the year, the Plant has achieved deemed availability of 93.6% and Gross Plant Load Factor (PLF) of 66.2%.
• PPA compliance for Maharashtra State Electricity Distribution Company Ltd. (MSEDCL) is 81.4%, Tamil Nadu Generation and Distribution Corporation (TANGEDCO) is 81.4% and Gujarat Urja Vikash Nigam Limited (GUVNL) is 83.7%.
• 135% Ash Utilization was achieved by tying up with nearby Cement Industries, NHAI for Fly Ash & various Brick Manufacturers for Bottom Ash.
• 100% compliances to all applicable Legal & Statutory requirement was completed.
• Construction of Dedicated freight corridor to result in reduction of lead time of Coal transportation.
• To promote the culture of excellence, organized Business excellence fair "Udbhavah - to rise", a 4-day fair covering various excellence aspects like Safety, 5S, Improvement plan and Breakthrough achievements.
• Eight continuous improvement projects completed by using Six-Sigma methodology resulted in improving efficiency and reliability of machines.
• Plant was awarded with many prestigious awards during the year, some of them are as below:
The Company bagged Safety Council Gold award - Sharva Shresta Suraksha Puraskar award - 2021 from M/s National Safety Council of India.
The Company has achieved 5 Golden stars (95.8% score) rating in safety assessment from M/s National Safety Council of India.
The Company won 'National award for excellence in Energy management by CII' for 4th consecutive year and for 2nd straight year emerged as National Energy Leader.
Won 1st prize in CII "National award for excellence in water management" in within the fence category.
Won CII National award for excellence in Environment best practises 2021 for "Innovative Environmental Project" for successful reclamation of 5.1 hectare land.
• During the Year, the plant has received following Certifications:
Plant has become one of the few to receive Energy saving certificates from Bureau of Energy efficiency - Ministry of Power (GOI). 9957 energy saving certificates were received under PAT cycle -2.
Achieved "Utkristh" rating (>95% score) in 5S assessment carried by M/s National Productivity Council.
To create a conducive work environment for workforce, the Company successfully implemented SA 8000:2014 and is certified by M/s BVCI.
ISO 9001, EnMS, ISMS surveillance audit successfully completed without any nonconformities.
2. GMR Kamalanga Energy Limited (GKEL) - 1.050 MW:
• GKEL, subsidiary of GMR Energy Limited, operates 1,050 MW (3x350) coal fired power plant at Kamalanga Village, Odisha.
• The plant is supplying power to Haryana through PTC India Limited, to Odisha through GRIDCO Limited and to Bihar through Bihar State Power Holding Company Limited.
• 85% of the capacity is tied-up in long term PPAs.
• GKEL has Fuel Supply Agreement (FSA) for 2.14 MTPA firm linkage from Mahanadi Coalfields Limited (MCL). GKEL secured another 1.5 MTPA long-term FSA under SHAKTI linkage.
• GKEL was successful in bidding for SHAKTI B III linkage Round-II - secured 0.36 MTPA.
• GKEL met 100 % compliance for Haryana & GRIDCO PPAs and 84.10% for Bihar PPA.
• GKEL had an average sale of 113 MW during the FY aggregating to 72% of Untied power of 155MW
• During the year, the Plant has achieved deemed availability of 94.39% and Gross Plant Load Factor (PLF) of 81.87%.
• 133.47% Ash Utilization was achieved by tying with NHAI for Fly Ash, Cement Manufacturers & various Brick Manufacturers.
Ranked amongst Top 5 IPP in the Country based on PLF (81.87%).
CII National Award for Environmental Best Practices 2021 as "Most Innovative Project under Resource Conservation" for reduction in Lube Oil Consumption.
Awarded as "Excellent Energy Efficient Unit" during 22nd National Award for Excellence in Energy Management by CII.
Awarded "Pollution Control Excellence Award - 2021" by Odisha State Pollution Control Board, Govt. of Odisha.
"ICC National Occupational Health & Safety Award 2021 in Silver Category" by IIC, Kolkata.
Received "Certificate of Appreciation" for Outstanding Contribution, Dedication and Service in the field of CSR & Community Development initiatives from "Odisha CSR Forum" during "Odisha CSR Meet 2021".
Plant is recertified under "Utkrisht" Category for 5S initiatives by National Productivity Council, for "Integrated Management System" and "Energy Management System" by BVI.
Coal testing Lab at plant is NABL accredited.
3. GMR Bajoli Holi Hydropower Private Limited (GBHHPL)
- 180 MW:
• GBHHPL, a subsidiary of GEL, located on the river Ravi at Chamba District, Himachal Pradesh, has commissioned the 180 MW Bajoli Holi Hydro Electric Plant (HEP) on March 28, 2022.
• GBHHPL has started supplying power under its PPA with Delhi International Airport Limited (DIAL) from own generation of Bajoli Holi Power Plant.
• GBHHPL also entered into a long term power purchase agreement of 25 years for a capacity of 60 MW with UPPCL. Thus, almost 100% capacity is now tied up as per the above mentioned PPAs. Pursuant to commissioning, supply has also been commenced for UPPCL from Bajoli Holi Plant.
• Any surplus power generation is available for sale on merchant basis which is being availed based on market opportunity.
• GBHHPL had also executed the Connectivity Agreement with HP Power Transmission Corporation Limited and Long Term Access Agreement with Power Grid Corporation of India Limited (PGCIL) for evacuating power outside Himachal Pradesh.
• Power Evacuation: Construction of main Transmission line (40 km 440 kV) is in advanced stage of completion. Presently, power from Bajoli Holi Plant is being evacuated through an alternate route.
4. Barge mounted Power Plant of GMR Energy Limited (GEL). Kakinada:
GEL has concluded the sale of its 220 MW Barge Mounted combined cycle power plant at Kakinada, Andhra Pradesh.
5. GMR Vemagiri Power Generation Limited (GVPGL) - 388 MW:
GVPGL, a wholly owned subsidiary of GEL, operates a 388 MW natural gas-fired combined cycle power plant at Rajahmundry, Andhra Pradesh.
• GVPGL did not operate in the last financial year due to scarcity of gas.
• Efforts and discussions with government are on for arriving at possible options to operate the plant -
o Bundled bids wherein Renewable projects participate along with conventional sources to provide Round the Clock (RTC) power. This will help in addressing issue of intermittent Renewable generation and maintaining Grid stability also.
Through relaunching of e-RLNG scheme.
• In addition to above, legal case is being pursued for allowing Deep Water Gas under the existing PPA.
6. GMR Rajahmundry Energy Limited (GREL) - 768 MW:
GREL is a 768 MW (2 x 384 MW) combined cycle gas based power project at Rajahmundry, Andhra Pradesh.
• GREL already executed a resolution plan with the lenders for the outstanding debt of INR 2,353 Crore.
• Efforts are being made to secure gas supply to operationalize the plant.
7. GMR Gujarat Solar Power Limited (GGSPL). Charanka Village. Gujarat:
• GGSPL, a wholly owned subsidiary of GEL, operates a
25 MW Solar power plant at Charanka village, Patan district, Gujarat.
• GGSPL had entered into 25 year PPA with Gujarat Urja Vikas Nigam Limited for the supply of entire power generation.
• GGSPL attained commercial operation on March 4, 2012.
• Param Renewable Energy Pvt. Ltd. (subsidiary of Gensol) has been awarded O&M contract of the Plant for a period of 1 year from April 2022 to March 2023.
• Plant achieved a gross PLF of 15.7 % for FY 2021-22 and recorded net operating revenue (post straight lining) of Rs 34 Crore for FY 2021-22.
8. GMR Rajam Solar Power Private Limited (GRSPPL).
Rajam:
GRSPPL, a wholly owned subsidiary of GEL, operates 1 MW
Solar power plant in Rajam, Andhra Pradesh since January
2016.
• The Company had signed a 25 year PPA with both GMR Institute of Technology (700KW) and GMR Varalakshmi Care Hospital (300KW) for the sale of power generated.
• Param Renewable Energy Pvt. Ltd. (subsidiary of Gensol) has been awarded O&M contract of the Plant for a period of 5 year from July 2021 to June 2026.
• Plant achieved gross PLF of 14.48% for FY22 and recorded net revenue of ' 0.89 Crore for the FY 2021 - 22.
B. Projects:
1. GMR Upper Karnali Hydro Power Public Limited
(GUKPL) - 900 MW:
• GUKPL, a subsidiary of GEL, is developing 900 MW Upper Karnali Hydroelectric Project (HEP) located on river Karnali in Dailekh, Surkhet and Achham Districts of Nepal.
• Post execution of Project Development Agreement (PDA), several key activities have been completed.
• Technical design of the Project has been finalized post detailed technical appraisal by a seven-member Panel of Experts (empaneled with IFC) and Hydraulic model studies. TCE has been appointed as Owner's Engineer.
• The Power Sale Agreement (PSA) for supply of 500 MW of Power from the Upper Karnali HEP in Nepal to BPDB (Bangladesh Power Development Board) has been finalised and the PSA has been initialed. Post vetting and requisite approvals by Government of
Bangladesh, it is planned to be executed in next few months.
• Total land identified for the Project comprises of forest land and private land. As for private land, negotiation has been completed and MoU has been executed with Rehabilitation Action Plan (RAP) committees for acquisition and approx. 10 Ha of private land was acquired till March 2020. Whereas for forest land, Long Term Deed of Agreement (post GoN Cabinet approval) was executed with Department of Forest (DoF). 12.45 Ha of forest land was already acquired for infra works and tree cutting works were completed. GoN has issued Tree cutting approvals for some of the balance CFUGs and as such forest tree cutting is being continued at site. This is expected to further continue.
• Power Evacuation is proposed through 400KV D/C transmission line from Bus bar of project to Bareilly Pooling point of PGCIL in Uttar Pradesh, India. Nepal portion of the transmission line (from project's Bus bar up to Indo-Nepal border) to be developed by Karnali Transmission Company Private Limited (KTCPL), a GMR Group Company and Indian portion up to Bareilly will be developed by GoI.
2. GMR (Badrinath) Hydro Power Generation Private
Limited (GBHPL) - Badrinath - 300 MW:
• GBHPL, a subsidiary of GEL, is in the process of developing a 300 MW hydroelectric power plant on Alaknanda river in the Chamoli District of Uttarakhand. The project received all major statutory clearances like Environmental and Techno Economic concurrence from Central Electricity Authority (CEA).
• Implementation Agreement was executed with the Government of Uttarakhand. However, the project construction is still on hold as per the Order dated May 7, 2014 of the Hon'ble Supreme Court on 24 hydro-electric projects in Uttarakhand which includes this project.
• Expert body of MoEF has recommended Alakhnanda Hydro Electric Project (AKHEP) for implementation along with 4 more projects. MoP/ GoU accepted to adopt the MoEF Expert Body recommendations. Separate petition has been filed by GBHPL before the Hon'ble Supreme Court to expedite decision.
• Upon the vacation of Stay by Supreme Court the following activities shall be initiated.
• Contract awarding process
• Update the project cost and initiate financial closure (FC) process
• Continuous Follow- up/ pursuing with Govt. of Uttarakhand for further development and way forward.
3. GMR Londa Hydropower Private Limited - 225 MW:
• GMR Londa Hydropower, a subsidiary of GGAL, is developing a 225 MW hydropower project in East Kameng district of Arunachal Pradesh. The project has completed the Detailed Project Report ("DPR") and received techno-economic concurrence from the Central Electricity Authority. Further, EIA studies have also been completed.
• Based on revised e-flow norms received in September 2017 and basin study report of MoEF in January 2018, CEA had advised us to undertake revised Power potential studies (PPS). The revised PPS stands approved by CEA (in June 2020) with same capacity of 225 MW and with enhanced design energy benefit of 1028 MUs per annum and annual energy benefit as 1042.79 MUs per annum.
• Continuous Follow- up / pursuing with Govt. of Arunachal Pradesh for further development and way forward.
C. Mining Assets:
PT Golden Energy Mines Tbk (PT GEMS):
Group through its overseas subsidiary, GMR Coal Resources Pte. Limited ("GCRPL"), holds 30% equity stake in PT Golden Energy Mines Tbk (PT GEMS), a group company of Sinarmas Group, Indonesia. PT GEMS, a limited liability company, is listed on the Indonesia Stock Exchange. PT GEMS is carrying out mining operations in Indonesia through its subsidiaries which owns coal mining concessions in South Kalimantan, Central Kalimantan and Sumatra. PT GEMS is also involved in coal trading through its subsidiaries.
Coal mines owned by PT GEMS and its subsidiaries have total resources of approximately 3.0 billion tons and Joint Ore Reserves Committee (JORC) certified reserves of approximately 1 billion MT of thermal coal.
PTGEMS have been consistently increasing its coal volumes and its operations have been robust and consistently profitable. During CY 2021 PTGEMS produced 29.1 MT of coal as compared to 33.5 MT of last year, the decline in the production volumes was mainly on account of the unseasonal rains during the year, which has impacted the production volumes for the year. The sales volumes during CY 2021 were ~ 29.5 Mn tonnes as against the total sales of 34 Mn tonnes during the previous year. In spite of lower sale volumes, the company has achieved historic profit after tax of USD 354 Million as compared to USD 96 Million during CY2020, owing to rise in global coal prices. Average price
per tonne for CY2021 was recorded at ~USD 53.8 as compared to ~USD 31.3 during CY2020.
For the calendar year 2021, GEMS has declared total dividends of USD 330 Million which is highest in the history of GEMS. In addition, during May 2022 GEMS also declared an interim dividend of USD 120 Million for the calendar year 2022. GCRPL on August 31, 2022 has entered into definitive agreement to divest it's 30% equity stake in PT GEMS. The transactions is subject to the customary approval.
Transportation and EPC sector
GPUIL's transportation business consists of roads segment, which is engaged in the development of roads on a BOT / Annuity basis. As on date, the Transportation Business holds a portfolio consisting of four operational roads located in Andhra Pradesh, Telangana, Haryana, Punjab and Tamil Nadu, with a total length of approx. 1460 lane kilometers.
GPUIL's EPC Business is engaged in delivering EPC solutions in the infrastructure sector, with an increasing focus on provision of construction services to the railway sector. Our current portfolio mainly comprises of Dedicated Freight Corridor Projects in the States of Uttar Pradesh, Haryana and Punjab.
Highways:
The GPUIL Highways portfolio consists of a healthy mix of two BOT (Annuity) and two BOT (Toll) projects with a total operating length of 1460 lane kilometers.
During FY2021-22, Hyderabad Vijayawada (HV) traffic increased by 17% over last year and was able to recover from impact of Covid-19 disruptions at a much faster rate than expected. Due to farmer's agitation in Punjab and Haryana, the tolling at Ambala - Chandigarh Project was stopped since October 2020 and only commenced from December 15, 2021 onwards after withdrawal of farmer agitation. As per the Concession agreement, the project is entitled to compensation for the impact due to farmer agitation which is declared as Force Majeure event, by way of extension in concession period, reimbursement of O&M cost, etc.
At the Chennai Outer Ring Road annuity project (CORR), all balance physical works have been completed and Final COD will likely be achieved in H1FY 2022-23.
Further, during the year, we have carried out major maintenance at a 38 Kms stretch of Hyderabad - Vijayawada project and at a 21 Kms stretch of Adloor Gundla Pochanpalli project. This will improve the riding quality of the surface and will provide the users a safe and high quality ride.
Stronger Balance Sheet and Liquidity generation as well as expenditure control by using alternative material and technologies are the key areas on which the Group is focusing, so as to withstand pandemic related and other disruptions and to tap appropriate growth opportunities. During FY 2021-22 significant progress has also
been made in ongoing arbitrations against various Government agencies.
EPC
Pursuant to the strategic decision taken to pursue EPC opportunities beyond Group Companies, Group entered Railway projects vertical during FY 2013-14. Shortly after, Group was awarded EPC contract to construct two Dedicated Freight Corridors under Dedicated Freight Corridor Corporation of India Limited (DFCCIL) from New Bhaupur to Deen Dhayal Upadhyay Junction (Package 201 and 202) in the State of Uttar Pradesh and from Ludhiana -Khurja - Dadri (Package 301 and 302) in the States of Haryana, Uttar Pradesh and Punjab. Significant progress has been achieved on both these project. Company has completed 79% of DFCC package 201, 91% of package 202 and 75% of DFCC package 301, 91% of package 302.
In February'2022 commercial operations of Indian Railways freight trains have commenced between New Rooma- New Sujatpur Railway stations of DFCCIL covering a distance of 132 km.
Urban Infrastructure:
Our Urban Infrastructure Business is engaged in holding and developing land in India as SIRs, which are special economic interest areas. We are currently holding land parcel in the Krishnagiri district of the state of Tamil Nadu in a joint venture with Tamil Nadu Industrial Development Corporation ("TIDCO"). Additionally, our Company, through subsidiaries possesses large land parcels in the Krishnagiri district. The Krishnagiri SIR forms part of the Bangalore-Chennai industrial corridor. Our Company has undertaken the development of SIR in a phased manner and there are a number of initiatives in various stages of planning to monetize the area.
GMR Krishnagiri Special Investment Region (GKSIR).
The Group had about 1975 Ac of lands in Krishnagiri District, Tamil Nadu for developing industrial infrastructure at the beginning of FY 2021 -22. During the FY 2021-22, the Group has sold about 294 Ac to Tata Electronics Pvt Ltd (TEPL). TEPL is establishing a greenfield mobile phone component manufacturing facility with a projected investment of INR 4,500 Crs and with employment potential of 18,000 persons. TEPL has already established its Phase 1 development and on the verge of starting commercial production. The Group has also sold about 215 Ac in Krishnagiri District to TN State Govt. agency (SIPCOT) for development of industrial infrastructure in the region.
The Group is in discussion with various clients to sell majority of balance lands and evaluating development of a small land parcel.
Kakinada SEZ Limited
GMR Group had entered into Securities Sale & Purchase Agreement (SSPA) with Aurobindo Realty & Infrastructure Private Ltd (ARIPL) on September 24, 2020 to divest its entire 51% stake in Kakinada SEZ Ltd (KSEZ) to Aurobindo Realty & Infrastructure Private Ltd (ARIPL).
All the Conditions Precedent for the transaction have been fulfilled and GMR Group has received the consideration. The Company has been handed over to Aurobindo Realty & Infrastructure Private Ltd and the transaction has been closed in August 2021.
Kakinada Gateway Port Limited
As part of the transfer of stake of Kakinada SEZ to ARIPL, 74% of equity stake of Kakinada Gateway Port Ltd-KGPL (Subsidiary of KSEZ) has also been transferred to ARIPL, while balance 26% equity stake of KGPL would be held by GMR SEZ & Port Holdings Ltd (GSPHL), a wholly owned subsidiary of GPUIL for a period of 2 years from Commercial Operations Date, in compliance with Port Concession Agreement.
Government of Andhra Pradesh has approved this change in constitution/ ownership of KGPL vide GO MS No. 3 dated March 10, 2021. Subsequently, Andhra Pradesh Industrial Infrastructure Corporation (APIIC) vide its letter dated May 20, 2021 has also approved the change in constitution / ownership of KGPL. The transaction has been closed in August 2021.
GMR Aviation Private Limited (GAPL)
'GAPL owns and operates one of the best fleet in the country and addresses the growing needs of charter services. In order to boost revenues and rationalize overhead costs, GAPL entered into a management contract with Jet Set Go - a general aviation fleet aggregator, commonly referred to as the "Uber of the Skies". As per the agreement, Jet Set Go has taken responsibility for operations and sourcing of external clients for the use of GAPL aircrafts and the business has shown marked improvement over the past years. All maintenance contracts have also been renegotiated leading to reduction in costs. We are confident that GAPL will continue on the turnaround path.
Consolidated Financial Statements
In accordance with the Companies Act, 2013 and Ind AS 110 - Consolidated Financial Statements read with Ind AS 28 - Investments in Associates and Joint Ventures, the audited consolidated financial statements are provided in the Annual Report.
Holding, Subsidiaries, Associate Companies and Joint Ventures
As on March 31, 2022, the Company had 77 subsidiary companies apart from 25 associate companies and joint ventures. Consequent to Demerger of EPC and Urban Infra business of GIL into the Company as per Scheme, subsidiaries of GIL forming part of the Non-airport business became the subsidiaries of the Company during the year under review.
The complete list of subsidiary companies and associate companies (including joint ventures) as on March 31, 2022 in terms of the Companies Act, 2013 is provided as "Annexure B" to this Report. The companies mentioned in Annexure B have become subsidiaries and associates (including joint ventures) during the year. There is no subsidiary and associate (including joint venture) which ceased during the year under review. Entities, which has become subsidiaries/ associates, post March 31, 2022, are also covered under the aforesaid, "Annexure-B".
Upon cancellation of the paid up share capital held by the GMR Infrastructure Limited ("GIL") as per the Scheme, GIL ceased to be holding Company of the Company. Upon allotment of shares to the shareholders of GIL on January 31, 2022, GMR Enterprises Private Limited became the Holding Company of your Company.
The Policy for determining material subsidiaries may be accessed on the Company's website at the link: https://investor.gmrpui.com/ policies.
Report on the highlights of performance of subsidiaries, associates and joint ventures and their contribution to the overall performance of the Company has been provided in Form AOC-1 as "Annexure- A" to this Report and therefore not reported to avoid duplication.
The financial statements of the subsidiary companies have also been placed on the website of the Company at https:// investor.gmrpui.com/annual-account-of-subsidaries.
Directors' Responsibility Statement
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
a) that in the preparation of the annual financial statements for the year ended March 31, 2022, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b) that such accounting policies as mentioned in Note no. 2 of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the loss of the Company for the year ended on that date;
c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) that the annual financial statements have been prepared on a going concern basis;
e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and are operating effectively;
f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Corporate Governance
The Company continues to follow the Business Excellence framework, based on the Malcolm Baldrige Model, for continuous improvement in all spheres of its activities. Your Company works towards continuous improvement in governance practices and processes, in compliance with the statutory requirements.
The Report on Corporate Governance as stipulated under relevant provisions of SEBI LODR forms part of the Annual Report. The requisite Certificate from the Practicing Company Secretary confirming compliance with the conditions of Corporate Governance is attached to the said Report.
Business Responsibility Report
As stipulated under Regulation 34(2)(f) of SEBI LODR, the Business Responsibility Report describing the initiatives taken by the Company from environmental, social and governance perspective is attached as part of the Annual Report.
Contracts and arrangements with Related Parties
All contracts / arrangements / transactions entered by the Company during the FY 2021-22 with related parties referred in Section 188(1) of the Companies Act, 2013 were in the ordinary course of business and on arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties referred in Section 188(1) of the Companies Act, 2013 which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Since all the related party transactions were in ordinary course of business and at arm's length basis, Form AOC-2 is not applicable.
The Policy on related party transactions as approved by the Board may be accessed on the Company's website at the link: https:// investor.gmrpui.com/policies. Your Directors draw attention of the members to Note no. 32 to the standalone financial statement which sets out related party disclosures.
Corporate Social Responsibility (CSR)
The Corporate Social Responsibility Policy (CSR Policy), of the Company indicating the activities to be undertaken by the Company, may be accessed on the Company's website at the link: https:// investor.gmrpui.com/policies. The details of the CSR Committee are provided in the Corporate Governance Report which forms part of Board's report.
The Company has identified the following focus areas towards the community service / CSR activities, which inter alia includes the following:
• Education
• Health, Hygiene & Sanitation
• Empowerment & Livelihoods
• Community Development
The Company, as per the approved policy, may undertake other need- based initiatives in compliance with Schedule VII to the Companies Act, 2013. For example, in the year 2021-22, the Company through its subsidiaries has taken up many relief measures for the COVID affected individuals and families. During the year, the Company was not required to spend any amount on CSR as it did not have any profits. Accordingly, it has not spent any amount on CSR activities. However, the Company, through its subsidiaries/ associate companies spent an amount of Rs 4.21 Crore during the year on CSR activities. The details of such activities carried out with the support of GMR Varalakshmi Foundation (GMRVF), Corporate Social Responsibility arm of the GMR Group, have been highlighted in Business Responsibility Report. The Annual Report on CSR activities is annexed as "Annexure C" to this Report.
Risk Management
GPUIL's Risk Management practice is based on GMR Group's Enterprise Risk Management (ERM) policy and guidelines. This framework has integrated risk management process in entire value chain of individual businesses and also consolidated at GPUIL level. Core objective of this integration is to enable protection and enhancement of stakeholder value. In the past year, the Company has strengthened its ERM process to fulfill business needs and meet statutory requirements in a changing business environment and evolving risk landscape.
Although geopolitical changes have continued to shape global risk landscape over the past decade, the recent conflict in Ukraine has substantially aggravated the negative impact of geopolitical risks on economies and businesses. GPUIL has taken cognizance of the changing scenario and reviews its policies and objectives to minimize the risks to its businesses.
GPUIL also recognizes the importance of addressing ESG (Environment, Social and Governance) related requirements. These emerging challenges and uncertainties are being taken into account to revamp our approach to risk forecasting and enhance our risk management framework that addresses the challenges in the postpandemic business environment.
Significant developments during the year under review are as follows:
Energy
• In the post-pandemic phase, economic recovery picked pace resulting in a surge in power demand. Coal, which was continuously losing demand owing to its impact on environment, has seen a sharp rise in demand. Coupled with Russia-Ukraine conflict, economic recovery has created a gap in coal demand- supply scenario, which has led to changes in coal import policy. Our power plants have consistently improved in the fields of efficiency, safety and ESG, winning accolades and bagging awards.
• Our coal mining operations in Indonesia have seen steady growth. Owing to global economic recovery and also due to Russia-Ukraine conflict, there has been a sharp increase in pricing for Indonesian Coal. As a consequence, our overseas subsidiary GMR Coal Resources Pte Ltd, has benefited as a shareholder in PT GEMS with higher levels of dividend distribution.
GPUIL's transportation business is engaged in road projects on a BOT/ Annuity Model and railways projects on EPC mode.
• The Transportation Business holds a portfolio consisting of four operational roads located in Andhra Pradesh, Telangana, Haryana, Punjab and Tamil Nadu, with a total length of approximately 1,460 lane kilometers.
• GPUIL's EPC Business is engaged in delivering EPC solutions in the infrastructure sector, with an increasing focus on provision of construction services to the railway sector. Our current portfolio mainly comprises of Dedicated Freight Corridor Projects in the States of Uttar Pradesh, Haryana and Punjab our ongoing EPC project is progressing at consistent pace towards completion.
Stronger Balance Sheet and Liquidity generation as well as expenditure control by using alternative material and technologies are the key areas on which the company is focusing, so as to withstand pandemic related and other disruptions and to tap appropriate growth opportunities. During FY 2021-22 significant progress has also been made in ongoing arbitrations against various Government agencies.
As a consequence of the pandemic and the nation-wide lockdown that ensued, industrial activities had shrunk considerably. Although recovery has been fast, it has not induced a commensurate growth in SIR sector. However, with the overall attractiveness of India as a manufacturing destination improving on account of the PLI scheme and other tax incentives introduced by the Government, the long term prospects for land monetization appear to be brighter.
GPUIL, through its leadership and management takes proactive measures to mitigate risks:
• The senior leadership of the company along with senior stakeholders of businesses worked closely in resolving the above issues at each business / function level and key issues were escalated to the Management Committee of the Company.
• Risk Framework and processes have undergone review and updates to factor in the changes in risk landscape in the postpandemic phase. The management has continued to focus on greater cash flow from operations with greater profitability focus, asset monetisation and collection of receivables. The Company continues to work closely with lenders for debt repayment/ restructuring wherever applicable.
Updates on ERM activities are shared on a regular basis with Management Assurance Group (MAG), the Internal Audit function of the Group.
The Company has in place the Risk Management Policy duly approved by the Board of Directors. A detailed assessment of risks is presented periodically to the Risk Management Committee and the Audit Committee of the Board.
A detailed note on risks and concerns affecting the businesses of the Company is provided in MDA.
Internal Financial Controls
The Company has put in place policies and procedures including the design, implementation, and monitoring of internal controls over its operations to ensure orderly and efficient conduct of its businesses, including adherence to Company's policies & procedures, safeguarding of assets, prevention and detection of fraud, accuracy and completeness of accounting records and timely preparation of reliable financial disclosures under the Companies Act, 2013.
These controls and processes have been embedded and integrated with SAP and / or other allied IT applications, which have been implemented. During the year under review, these controls were reviewed and tested by the Management Assurance Group of the Company. The Statutory Auditors of the Company have also tested the Internal Controls over financial reporting.
There were no reportable material weakness observed in the design or operating effectiveness of the controls except in few areas, where the risk has been identified as low and there is a need to further strengthen the controls. Corrective and preventive actions, as appropriate are taken by the respective functions.
Directors and Key Managerial Personnel
During the year under review, your Company became a listed Company. In terms of the Corporate Governance requirements forming part of the SEBI LODR and to maintain optimum combination of Executive, Non-executive and Independent directors with at least one woman director, the Board composition was restructured during the year.
(i) The Board of Directors have appointed Mr. G.M. Rao, Mr. Srinivas Bommidala, Mr. Grandhi Kiran Kumar, Mr. B.V.N. Rao, Mr. G.
Subba Rao and Mr. Madhva B. Terdal as Additional Directors of the Company w.e.f January 6, 2022 and in terms of section 161 of the Companies Act, 2013 they would hold office upto the ensuing Annual General Meeting ("AGM"). Mr. G.M. Rao was also appointed as Non-executive Chairman of the Board on January 6, 2022.
(ii) The Board of Directors on the recommendation of the Nomination and Remuneration Committee ("NRC") have appointed Mr. Srinivas Bommidala and Mr. G. Subba Rao as Managing Director and Executive Director respectively w.e.f January 31,2022 for a term of three years, subject to the approval of shareholders in the ensuing AGM.
(iii) The Board of Directors on the recommendation of NRC has appointed Dr. Emandi Sankara Rao, Mr. I.V. Srinivasa Rao, Dr. Satyanarayana Beela, Mr. Subodh Kumar Goel, Mr. Suresh Narang and Mrs. Vissa Siva Kameswari, as Additional Directors in the category of Independent Directors considering their integrity, expertise and experience, w.e.f January 31, 2022 to hold office for a term of five years or upto 7th Annual General meeting of the Company, whichever is earlier, subject to approval of shareholders.
(iv) The Board of Directors on the recommendation of NRC appointed Mr. Madhva B. Terdal as Executive Director w.e.f August 8, 2022 for a term of 2 years subject to the approval of shareholders in the ensuing general meeting.
The Board of Directors, based upon the recommendation of the NRC, recommends:
(i) The appointment of Mr. G.M. Rao, Mr. Grandhi Kiran Kumar and Mr. B.V.N, Rao as Directors of the Company;
(ii) The appointment of Mr. Srinivas Bommidala as Director and Managing Director of the Company and Mr. G. Subba Rao & Mr. Madhva B. Terdal as Director and Executive Directors of the Company;
(iii) The appointment of Dr. Emandi Sankara Rao, Mr. I.V. Srinivasa Rao, Dr. Satyanarayana Beela, Mr. Subodh Kumar Goel, Mr. Suresh Narang and Mrs. Vissa Siva Kameswari as Independent Directors, to hold office for a term of five years from the date of their appointment i.e. January 31, 2022 or upto 7th Annual General meeting of the Company, whichever is earlier.
Nomination and Remuneration Committee and the Board of Directors at their respective meetings have assessed their candidature and are of the view that the Independent Directors possess necessary competencies and skills identified by the board of directors for effectively managing its businesses.
During the year under review, Mr. Saurabh Chawla, Mr. Suresh Bagrodia and Mr. M.V. Srinivas ceased to be Directors of the Company.
The Board of Directors place on record their deep sense of gratitude and appreciation for the invaluable services rendered and contributions made by Mr. Saurabh Chawla, Mr. Suresh Bagrodia and Mr. M.V. Srinivas during their tenure as Directors of the Company.
During the year under review, Mr. Suresh Bagrodia was appointed as Chief Financial Officer of the Company by the Board of Directors effective from January 31, 2022.
Mr. Shashank Nagar resigned from the position of the Company Secretary. Mr. Vimal Prakash was appointed as the Company Secretary by the Board of Directors effective from January 31, 2022.
Annual performance evaluation of the Board, its Committees and Individual Directors including Chairman pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements under SEBI LODR have been carried out. The performance of the Board and its committees was evaluated based on the criteria like composition and structure, effectiveness of processes, information and functioning etc.
The Board and the NRC reviewed the performance of the Individual Directors on the basis of criteria such as the contribution of the Individual Director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.
The Company has devised a Nomination and Remuneration Policy ("NRC Policy") which inter alia sets out the guiding principles for identifying and ascertaining the integrity, qualification, expertise and experience of the person for appointment as Director, Key Managerial Personnel (KMP) and Senior Management Personnel. The NRC Policy further sets out guiding principles for the Nomination and Remuneration Committee for determining and recommending to the Board the remuneration of Managerial Personnel, KMP and Senior Management Personnel. There has been no change in NRC Policy after its formulation.
The Company's Nomination and Remuneration Policy for Directors, Key Managerial Personnel and Senior Management is available on the Company website at https://investor.gmrpui.com/policies.
Declaration of independence
The Company has received declarations from all the Independent Directors confirming that they meet the criteria of Independence as prescribed both under Section 149(6) of the Companies Act, 2013 and Regulation 16 of SEBI LODR and there has been no change in the circumstances affecting their status as Independent Directors of the Company. The Company has also received a declaration from all the Independent Directors that they have registered their names in the Independent Directors Data Bank.
Further, the Independent Directors have confirmed that they have complied with the Code for Independent Directors prescribed in Schedule IV to the Act and also complied with the Code of Conduct for directors and senior management personnel, formulated by the Company.
Auditors and Auditors' Report Statutory Auditors
M/s Walker Chandiok & Co. LLP, Registration No. (001076N/N500013), were appointed as Statutory Auditors of the Company for a term of 5 (five) years from the conclusion of the 1st AGM held on October 16, 2020, till the conclusion of the 6th AGM of the Company.
Statutory Auditors' Qualification / Comment on the Company's Standalone financial statements
1. As stated in note 5(2) to the accompanying standalone financial statements, the Company has invested in GMR Generation Assets Limited ('GGAL') and GMR Energy Projects Mauritius Limited ('GEPML'), subsidiaries of the Company, which have further invested in step down subsidiaries and joint ventures. Also, the Company together with GGAL and GEPML has investments in GMR Energy Limited ('GEL'), a joint venture of the Company, amounting to Rs 646.71 crore and has outstanding loan (including accrued interest) amounting to Rs 1,196.32 crore recoverable from GEL as at 31 March 2022. GEL has further invested in GMR Kamalanga Energy Limited ('GKEL'), subsidiary of GEL. The aforementioned investments are carried at their respective fair value in the accompanying standalone financial statements as per Ind AS 109 - 'Financial Instruments'.
As mentioned in note 5(5), the management of the Company has accounted the investment in GKEL based on the valuation performed by an external expert using the discounted future cash flows method which is significantly dependent on the achievement of certain assumptions considered in aforementioned valuation such as settlement of disputes with customers and timely realization of receivables, expansion and optimal utilization of existing capacity, rescheduling/refinancing of existing loans at lower rates amongst other key assumptions and the uncertainty and the final outcome of the litigations with the capital creditors as regards claims against GKEL. Accordingly, owing to the aforementioned uncertainties, we are unable to comment upon adjustments, if any, that may be required to the carrying value of the aforesaid loans and investments, and the consequential impact on the accompanying standalone financial statements for the year ended 31 March 2022.
Management's response to the Statutory Auditors' Qualification / Comment on the Company's Standalone financial statements
Management view is documented in note 5(5) of standalone financial statement of GPUIL for March 31, 2022. As detailed in the notes, the business plans (including expansion and optimal utilization of existing capacity, rescheduling/ refinancing of existing loans at lower rates), valuation assessment by an external expert during the year ended March 31,2022, the management is of the view that the carrying value of the investments in GKEL held by GEL as at March 31, 2022 is appropriate.
Statutory Auditors' Qualification / Comment on the Company's
Standalone financial statement
2. The Company's internal control system towards estimating the fair value of its investment and loans in a joint venture, as more fully explained in note 5(2) to the accompanying standalone financial statements were not operating effectively due to uncertainties in the judgements and assumptions made by the Company in such estimations, which could result in the Company not providing for adjustment, if any that may be required to the carrying value of investments and its consequential impact on the accompanying standalone financial statements.
Management's response to the Statutory Auditors' Qualification / Comment on the Company's standalone financial statement
The Company has a well-defined system in place to access the appropriateness of the carrying value of its investments. The Company engages top tier independent valuation experts to evaluate financial model and assess the fair valuation of its investments. The process followed in conducting these assessments is also reviewed and approved by Management Assurance Group (MAG) who test the appropriateness of valuation models and accuracy of inputs used in model to determine the recoverable value.
Statutory Auditors' Qualification / Comment on the Company's consolidated financial statement
1. As stated in note 7b(12)(i) to the accompanying consolidated financial statements, the Group has an investment amounting to Rs 646.71 crore in GMR Energy Limited ('GEL'), a joint venture company and outstanding loan (including accrued interest) amounting to Rs 1,385.50 crore (net of impairment) recoverable from GEL and its subsidiaries and joint ventures as at 31 March 2022. GEL has further invested in GMR Kamalanga Energy Limited ('GKEL'), subsidiary of GEL.
As mentioned in note 7b(12)(iii), the management of the Holding Company has accounted for the investment in GKEL based on the valuation performed by an external expert using the discounted future cash flows method which is significantly dependent on the achievement of certain assumptions considered in aforementioned valuation such as settlement of disputes with customers and timely realization of receivables, expansion and optimal utilization of existing capacity, rescheduling/refinancing of existing loans at lower rates amongst other key assumptions and the uncertainty and the final outcome of the litigations with the capital creditors as regards claims against GKEL. Accordingly, owing to the aforementioned uncertainties, we are unable to comment upon adjustments, if any, that may be required to the carrying values of the loans, non-current investment and the consequential impact on the accompanying consolidated financial statements.
Considering the erosion of net worth and net liability position of GKEL, we, in the capacity of auditors of GKEL have also given a separate section on material uncertainty related to going concern in the audit report on the standalone financial statements of GKEL for the year ended 31 March 2022.
Management's response to the Statutory Auditors' Qualification / Comment on the Company's consolidated financial statement
Management view is documented in note 7b(12)(iii) of consolidated financial statements of GPUIL for the year ended March 31, 2022. As detailed in the notes, the business plans (including expansion and optimal utilization of existing capacity, rescheduling/ refinancing of existing loans at lower rates), valuation assessment by an external expert during the year ended March 31, 2022, the management is of the view that the carrying value of the investments in GKEL held by GEL as at March 31, 2022 is appropriate.
2. As detailed in note 42(i) to the accompanying consolidated financial statements, GMR Energy Trading Limited ('GETL'), a subsidiary of the Holding Company, has not complied with the CERC (Procedures, terms and conditions for grant of trading license and other related matters) Regulation 2020 as further detailed in the aforementioned note. Pending regularization of such non-compliances, we are unable to ascertain the consequential impact of such non-compliances, if any, on the accompanying consolidated financial statements.
As detailed in Note 42(i) to the accompanying consolidated financial statements, the management is of the opinion that penal consequences for non-compliances are not determinable currently and the effect of which has not been given in the financial statements of GETL. The management is confident that effect, if any, of such non compliances would not be material on the consolidated financial statements of the Group.
3. (a) The Holding Company's internal control system towards estimating the carrying value of investment and loans in a joint venture as more fully explained in note 7(b)(12)(i) to the consolidated financial statements were not operating effectively due to uncertainties in the judgments and assumptions made by the company in such estimations, which could result in the Group not providing for adjustment, if any, that may be required to the carrying values of investments and its consequential impact on the accompanying consolidated financial statements.
(b) With respect to the internal financial controls with reference to financial statements of GMR Energy Trading Limited ('GETL'), a subsidiary of the Holding Company, the internal financial controls towards ensuring compliances with CERC (Procedures, terms and conditions for grant of trading license and other related matters) Regulation 2020, as fully explained in note 42(i) to the consolidated financial statements, were not operating effectively which could result in the Group not providing for adjustments, if any that may be required on the accompanying consolidated financial statements as a result of such non-compliances.
With respect to IFC qualification mentioned in 3 (a) above the Group has a well-defined system in place to assess the appropriateness of the carrying value of its investments, including testing for impairments.
The Group engages top tier independent valuation experts to evaluate financial model and assess the fair valuation of its investments. The process followed in conducting these assessments is also reviewed and approved by Management Assurance Group (MAG) who test the appropriateness of valuation models and accuracy of inputs used in model to determine the recoverable value.
Further, with respect to IFC qualification mentioned in 3 (b) above, the management has effective control in complying with the CERC (Procedures, terms and conditions for grant of trading license and other related matters) Regulation 2020. The management, basis legal opinion received by it, is confident that effect, if any, of such non compliances would not be material on the consolidated financial statements of the Group.
Cost Auditors
Pursuant to the demerger of EPC business of GIL into the Company, your Company with reference to its EPC business is required to maintain the cost records and the said cost records are also required to be audited as prescribed in Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014.
GIL had appointed M/s Rao, Murthy & Associates, as Cost Auditors of the company. Post demerger of EPC division into the Company, as the Cost audit at GIL level was no longer required and accordingly, the Board of Directors of the Company on the recommendation of the Audit Committee appointed M/s Rao, Murthy & Associates, as Cost Auditors of the Company to conduct the audit of the cost records of the Company for the Financial Year ended March 31, 2022.
Your Company is maintaining all the cost records referred above and
M/s Rao, Murthy & Associates, Cost Auditors, have issued a cost Audit report for FY 2021-22 which does not contain any qualification, reservation, or adverse remark.
M/s Rao, Murthy & Associates, Cost Auditors expressed their inability for appointment as Cost auditors for the financial year 2022-23 on account of preoccupation and other engagements. Accordingly, the Board, on the recommendation of the Audit Committee, has appointed M/s JSN & Co., Cost Accountants (Firm Registration No. 000455), as cost auditors for conducting the audit of cost records of the Company for the FY 2022-23 on the remuneration of Rs 1,25,000/- (One Lakh Twenty Five Thousand) plus out of pocket expenses and applicable taxes.
A resolution seeking members' ratification for the remuneration to M/s JSN & Company, Cost Accountants is included in the Notice to the ensuing AGM.
Secretarial Auditor
The Board had appointed M/s. V. Sreedharan & Associates, Company Secretaries in Practice, to conduct Secretarial Audit for the FY 202122. The Secretarial Audit Report of the Company as prescribed under Section 204 of the Companies Act, 2013 read with Regulation 24A of the SEBI LODR, for the FY ended March 31, 2022 is annexed herewith as "Annexure D" to this Report. The Secretarial Audit report does not contain any qualification, reservation or adverse remarks.
Further, the Secretarial Audit reports of material unlisted subsidiaries of the Company incorporated in India, as required under Regulation 24A of the SEBI LODR for the financial year ended March 31, 2022 have been annexed as "Annexure E-1 to E-4".
Pursuant to provisions of the Section 143(12) of the Companies Act, 2013, neither the Statutory Auditors nor Secretarial Auditor nor Cost Auditors have reported any incident of fraud to the Audit Committee or Board during the year under review.
Secretarial Standards
The Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
Disclosures:
CSR Committee
The CSR Committee comprises of Mr. G. Subba Rao as Chairman, Dr. Emandi Sankara Rao and Dr. Satyanarayana Beela as members.
Audit Committee
The Audit Committee comprises of Mrs. Vissa Siva Kameswari as Chairperson, Dr. Satyanarayana Beela, Mr. I.V. Srinivasa Rao and Mr. S.K. Goel as members.
All the recommendations made by the Audit Committee were accepted by the Board during the year.
Further details on the above committees and other committees of the Board are given in the Corporate Governance Report.
Vigil Mechanism
The Company has a Whistle Blower Policy, which provides a platform to disclose information regarding any purported malpractice, fraud, impropriety, abuse or wrongdoing within the Company, confidentially and without fear of reprisal or victimization. Your Company has adopted a whistleblowing process as a channel for receiving and redressing complaints from employees, directors and third parties, as per the provisions of the Companies Act, 2013, SEBI LODR and Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015.
The details of the Whistle Blower Policy is provided in the Corporate Governance Report and also hosted on the website of the Company.
Meetings of the Board
A calendar of Board and Committee Meetings is prepared and circulated in advance to the Directors. During the year, Twelve (12) Board Meetings were held, the details of which are given in the Corporate Governance Report. The intervening gap between two consecutive Board Meetings was within the period prescribed under the Companies Act, 2013 and SEBI LODR.
Particulars of Loans, Guarantees and Investments
A statement regarding Loans/ Guarantees given and Investments covered under the provisions of Section 186 of the Companies Act, 2013 is made in the notes to the Financial Statements.
Conservation of energy, technology absorption and foreign exchange earnings and outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, is provided in "Annexure F" to this report.
Annual Return
Pursuant to Section 134 and Section 92(3) of the Companies Act, 2013, as amended, copy of the draft Annual Return for the financial year 2021-22 has been placed on the Company website at https:// investor.gmrpui.com/annual-reports.
Particulars of Employees and related disclosures
The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including amendments thereto), is attached as "Annexure G" to this Report.
The information required under Rule 5(2) and (3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including amendments thereof), is provided in the Annexure forming part of this Report. In terms of the first proviso to Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the members excluding the aforesaid Annexure. Any member interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company.
Dividend Distribution Policy
The Board has adopted Dividend Distribution Policy in terms of Regulation 43A of the SEBI LODR. The Dividend Distribution Policy is disclosed on the website of the Company at the link: https:// investor.gmrpui.com/policies.
Developments in Human Resources and Organization Development
The Company has robust process of human resources development which is described in detail in Management Discussion and Analysis section under the heading "Developments in Human Resources and Organization Development" at GMR Group.
Changes in Share capital
Upon the effectiveness of scheme of Amalgamation and Arrangement, approved by Hon'ble National Company Law Tribunal, Mumbai Bench vide order dated December 22, 2021, the authorized equity share capital of the Company stood increased to Rs 550,00,00,000 (Rupees Five Hundred and Fifty Crores only) divided into 110,00,00,000 (One Hundred Ten Crore) equity shares of face value of Rs 5 (Rupees Five only) each.
The Board of Directors on January 31, 2022 had allotted 603594528 equity shares of Rs 5/- each pursuant to the Scheme. These shares were listed with BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) on March 23, 2022.
The entire paid up share capital of Rs 1,00,000/- held by GMR Infrastructure Limited prior to effectiveness of the Scheme was cancelled upon effectiveness of the Scheme.
Foreign Currency Convertible Bonds
GMR Infrastructure Limited (GIL), erstwhile Holding Company, on December 10, 2015 had issued and allotted 7.5% Foreign Currency Convertible Bonds aggregating US$ 300,000,000 (FCCBs) due on 2075 to the Kuwait Investment Authority (KIA).
In accordance with the Scheme and the requirements of Section 2(19AA) of the Income Tax Act, 1961, part of liability pertaining to the outstanding FCCBs of GIL attributable to the Demerged Undertaking stood vested and transferred to the Company. Accordingly, the FCCBs aggregating to US$ 275,000,000 (United States Dollar Two Hundred and Seventy Five Million) stoods vested to the Company. The tenure of FCCBs is 60 years from the date of allotment by GIL and FCCBs if converted shall account for 11,12,41,666 equity shares of the Company.
The Company has received in-principle approval from the BSE and NSE for the issuance of shares arising out of conversion of the aforesaid FCCBs. The Company also received the Loan Registration Number as required under the FEMA. Post receipt of all the statutory approvals, the Company has completed the necessary formalities related to vesting and transfer of the FCCBs aggregating US$ 275,000,000 from GIL to the Company in terms of the Scheme.
Debentures
The Company has not issued any debentures and there is no outstanding debentures as on March 31, 2022.
Environment Protection and Sustainability
Since inception, sustainability has remained at the core of our business strategy. Besides economic performance, safe operations, environment conservation and social well-being have always been at the core of our philosophy of sustainable business. The details of initiatives/ activities on environment protection and sustainability are described in Business Responsibility Report forming part of Annual Report.
Change in the nature of business, if any
Pursuant to the Scheme, the EPC and Urban Infrastructure Business of GIL were demerged into the Company and now form part of the business of the Company.
Significant and Material Orders passed by the Regulators
There are no significant and material orders passed by the Regulators or courts or tribunals impacting the going concern status and Company's operations in future.
Deposits
During the year under review, the Company has not accepted any deposit from the public. There are no unclaimed deposits/ unclaimed/ unpaid interest, refunds due to the deposit holders or to be deposited to the Investor Education and Protection Fund as on March 31, 2022.
Compliance by Large Corporates:
Your Company does not fall under the Category of Large Corporates as defined under SEBI vide its Circular SEBI/HO/DDHS/CIR/P/2018/ 144 dated November 26, 2018, as such no disclosure is required in this regard.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Your Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to address complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy.
There were no sexual harassment complaints pending or received during the year ended March 31, 2022.
Proceeding under Insolvency and Bankruptcy Code and One time settlement
During the year under review no proceedings have been initiated against the Company under Insolvency and Bankruptcy Code, 2016 and no proceedings under the Insolvency and Bankruptcy Code, 2016 were pending at the end of the year. Further during the year under review the Company has not made any one time settlement.
Other than the matters disclosed in this Report, there are no other disclosures to be made in terms of the provisions of Companies Act, 2013.
Acknowledgements
Your Directors thank the lenders, banks, financial institutions, business associates, customers, Government of India, State Governments in India, regulatory and statutory authorities, shareholders and the society at large for their valuable support and co-operation. Your Directors also thank the employees of the Company and its subsidiaries for their continued contribution, commitment and dedication.