Dear Stakeholders,

The Directors present the 24th Annual Report of the Company along with the Audited Financial Statements for the financial year ended March 31, 2018.

Financial results

Following is the summary of consolidated financial results of the Company including its subsidiaries, associate and joint ventures.

(Rs. Lakhs)

Our total income from operations increased by 9.86 % to Rs. 3,86,321 Lakhs from Rs. 3,51,647 Lakhs in the previous year. The Transportation segment contributed an income of Rs. 43,527 Lakhs (11.27 % of total income) compared to Rs. 37, 959 Lakhs in the previous year. Airport Segment contributed an income of Rs. 3,42,393 Lakhs (88.63 % of total income) as compared to Rs. 3,12,127 Lakhs in the previous year. The other segment contributed Rs. 401 Lakhs compared to Rs. 1,561 Lakhs in the previous year. The Airport assets (Mumbai and Bangalore Airports) have contributed to net profit of Rs. 3,976 Lakhs compared to Rs. 19,274 Lakhs in the previous year. Bangalore Airports profit was consolidated only for 3 months.

The net loss after tax, share of profit from associate, share of profit from joint venture and non-controlling interest was Rs. 56,167 Lakhs as against net loss of Rs. 130,228 Lakhs in the previous year. The net loss is mainly attributable to lower generation of power due to shortage of coal at our 540 MW Coal based thermal power plant, lack of fuel availability for 684 MW Gas Based power station, delay in fixation of tariff for our 330 MW Hydroelectric Power Plant and 540 MW coal based thermal power plant. Loss was reduced on account of profit of Rs 73,555 Lakhs on sale of stake in Bangalore Airport.

Dividend

The Board of Directors of your Company has not recommended any dividend for the financial year 2017-18.

Transfer to Reserves

During the current financial year, there are no funds that are required to be transferred to Reserves.

Share Capital

The paid up equity share capital as on March 31, 2018 is Rs. 157.92 Crore. There was no public issue, rights issue, bonus issue or preferential issue etc., during the year. The Company has not issued any shares with differential voting rights, sweat equity shares nor has it granted any stock options during the year under review.

Management Discussion and Analysis

The Management Discussion and Analysis Report highlighting the industry structure and developments, opportunities and threats, future outlook, risks and concerns etc. is furnished separately and forms part of this Annual Report.

Corporate Governance

As in the past, your Company continues to follow best of Corporate Governance policies. As stipulated under the requirements of the Listing Regulations, a report on Corporate Governance is appended for the information of the Members. A Certificate from the Practicing Company Secretary confirming compliance with the conditions of the Corporate Governance is annexed to the Directors Report.

Subsidiaries and Consolidated Financial Statements

As on March 31, 201 8 your Company has 6 direct Subsidiaries, 18 step down Subsidiaries and one Associate Company. There has been no material change in the nature of the business of the Company and its subsidiaries. Details of major subsidiaries of the Company and their business operations during the year under review are covered in the Management Discussion and Analysis Report.

A statement containing salient features of the financial statement of these companies as required to be provided under section 129(3) of the Act, are enclosed herewith in the specified form, as Annexure A. Accordingly, this annual report does not contain the reports and other statements of the subsidiary companies. Any member intends to have a certified copy of the Balance Sheet and other financial statements of these subsidiaries may write to the Company Secretary. These documents are available for inspection during business hours at the registered office of the Company and that of the respective subsidiary companies. The Policy for determining material subsidiaries as approved may be accessed on the Company’s website at the link: https://www.gvk. com/files/investorrelations/investors/corpgovernance/policy_for_determining_material_subsidiaries_gvk_pil.pdf

Disposal of stake in Subsidiaries

During the year under review, your Company had disposed off its entire equity stake in two of its whole owned subsidiaries i.e. GVK Oil & Gas Limited and Goriganga Hydro Power Private Limited, for cash at face value. Further, GVK Energy Ventures Private Limited also ceased to be a step-down subsidiary of your Company. Accordingly, each of these companies were no longer the subsidiaries of your Company from January 1, 2018. Necessary disclosures, in this regard, have been duly made to the concerned regulatory authorities.

Merger of Subsidiaries

Under the Airport vertical business, a proposed scheme of amalgamation pursuant to Sections 230 to 233 and other relevant provisions of the Companies Act, 2013, providing for the merger of GVK Airport Developers Limited with Bangalore Airport & Infrastructure Developers Limited have been approved by their respective board of directors and shareholders. The said scheme of amalgamation is subject to necessary approvals from the lenders and third parties, if any, and also from the concerned statutory authorities i.e. the Regional Director, Ministry of Corporate Affairs. The scheme of amalgamation will, inter alia, enable optimisation of legal entity structure through rationalization of subsidiaries, integration of business operations leading to operational synergies and also result in reduction of the multiplicity of legal and regulatory compliances.

Developments in Airport assets

Mumbai International Airport Private Limited (MIAL), a subsidiary of your Company, was given a Letter of Award (LOA) on October 25, 2017 by the City and Industrial Development Corporation of Maharashtra Limited (CIDCO), the nodal agency of the Government of Maharashtra for implementing a second international airport at Navi Mumbai which is a greenfield project. Navi Mumbai International Airport Private Limited (NMIAL) has been identified as a Special Purpose Vehicle, which is a step down subsidiary of your Company.

NMIAL has signed the Concession Agreement, Shareholders Agreement and State Support Agreement on January 8, 2018 with CIDCO, for implementation of the Navi Mumbai International Airport Project. MIAL, holds 74% while CIDCO holds the balance 26% equity capital of NMIAL. The initial concession period is 30 years from the appointed date which is extendable for a further 10 years. The Board of NMIAL has been broad based with the appointment of Directors representing MIAL and CIDCO apart from the Independent Directors.

Hon’ble Prime Minister Shri Narendra Modi had performed the ground breaking ceremony and unveiled the foundation stone plaque for NMIAL at a glittering public function held at the project site on February 18, 2018. NMIAL has appointed Zaha Hadid Architects, London, one of the world’s best architect firms, for designing the Airport Project of Navi Mumbai Airport. NMIAL has been negotiating with various lenders including State Bank of India and is fully geared up to achieve Financial Closure.

Directors

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with the Articles of Association of the Company and Regulation 36(3) of Listing Regulations, 2015, Krishna R Bhupal, Director of the Company will retire by rotation at this meeting and being eligible, your Board recommends his re- appointment.

Details of the director seeking re-appointment at this meeting have been given separately under the Corporate Governance section of this report.

Key Managerial Personnel

During the year under review, Dr. GVK Reddy had stepped down from the position of Managing Director from November 11, 2017 and will continue as a Non-Executive Chairman. Further, Mr. P V Prasanna Reddy, director has been appointed as Whole-time Director and the Company had notified him as one of the Key Managerial Personnel of the Company w.e.f. November 11, 2017. Apart from the above two changes, there are no other changes amongst the Key Managerial Personnel of the Company.

Declaration by Independent Directors

Each of the Independent Directors have given a declaration to the Company that they meet the criteria of independence as required under section 149(7) of the Companies Act, 2013 and Regulation 25 of the Listing Agreement with the Stock Exchanges.

An exclusive meeting of the Independent Directors of the Company has been held on 14th February, 2018 which was attended by all the Independent Directors. They have reviewed the performance of the non-independent directors and the Board as a whole, performance of chairperson and quality of information to the Board as provided under Schedule IV of the Companies Act, 2013.

Based on the recommendations of the Nomination and Remuneration Committee, the Board of Directors have formulated and adopted a policy on appointment / remuneration of directors including criteria for determining qualifications, positive attributes, independence of the Directors and other matters. This policy also covers the performance evaluation of all directors, Board, Committees and Key Managerial Personnel.

The Company has adopted a program on familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of business and the industry in which the Company operates among other things. The same is put up on the website of the Company at the link https://www.gvk.com/files/investorrelations/investors/corpgovernance/ familiarisation_programme_for_independent_directors.pdf

Evaluation of Board

Board evaluation is in line with the Corporate Governance Guidelines of the Company. Annual Performance Evaluation was conducted for all directors along with the working of the Board and its Committees. This evaluation was led by the Chairman of the Nomination and Remuneration Committee with specific focus on the performance and effective functioning of the Board. The Board evaluation framework has been designed in compliance with the requirements under the Companies Act, 2013 and the Listing Regulations, and in consonance with Guidance Note on Board Evaluation issued by SEBI in January 2017.

The Board evaluation was conducted through questionnaire having qualitative parameters and feedback based on ratings. Evaluation of the Board was based on criteria such as composition and role of the Board, Board communication and relationships, functioning of Board Committees, review of performance and compensation to whole-time director, etc. Evaluation of Directors was based on criteria such as participation and contribution in Board and Committee meetings, representation of shareholder interest and enhancing shareholder value, experience and expertise to provide feedback and guidance to top management on business strategy, governance and risk, understanding of the organization’s strategy, risk and environment, etc.

Evaluation of Committees was based on criteria such as adequate independence of each Committee, frequency of meetings and time allocated for discussions at meetings, functioning of Board Committees and effectiveness of its advice/recommendation to the Board, etc. The outcome of the Board evaluation for financial year 2017-18 was discussed by the Nomination and Remuneration Committee and the Board at their respective meetings held in May, 2018. The Board has received improved ratings on its overall effectiveness, including higher rating on Board communication, relationships and Board Committees. The Board has also noted areas requiring more focus in the future.

Policy on Director’s Appointment and Remuneration

The Nomination and Remuneration Committee has framed a policy for selection and appointment of Directors including determining qualifications and independence of a Director, Key Managerial Personnel, Senior Management Personnel and their remuneration as part of its charter and other matters provided under Section 178(3) of the Companies Act, 2013. The policy covering these requirements is provided at page no. 31 to this Annual Report.

Board Meetings

During the year 2017-18, four Board Meetings were held, the details of which are given in the Corporate Governance Report. Board Committees

All Committees of the Board of Directors are in line with the provisions of the Companies Act, 2013 and the applicable Listing Regulations, 2015

Audit Committee

The Audit Committee comprises of Mr. Ch G Krishna Murthy, Chairman, Mr. S Balasubramanian and Mr. K Balarama Reddi, members, all of whom are Independent Directors. All the recommendations made by the Audit Committee were accepted by the Board.

Directors’ Responsibility Statement

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, and secretarial auditors including Audit of internal financial controls over financial reporting by the Statutory Auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during the financial year 2017-18.

Pursuant to the requirements under Section 134(5) of the Companies Act, 2013, with respect to the Directors’ Responsibilities Statement, it is hereby confirmed that;

i) in the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable Accounting Standards have been followed along with proper explanations relating to material departures;

ii) the directors had 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 March 31, 2018 and of the profit or loss of the Company for the said period;

iii) that the directors had taken proper and sufficient care 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;

iv) the directors had prepared the annual accounts for the financial year ended March 31, 2018 on a “going concern” basis;

v) they have laid down internal financial controls in the Company that are adequate and were operating effectively and

vi) they have devised proper systems to ensure compliance with the provisions of all applicable laws and these are adequate and are operating effectively.

Secretarial Auditors

The Board had appointed Mr. Gandhari Narender of Narender & Associates, a firm of Practicing Company Secretaries, to carry out the Secretarial Audit under the provisions of section 204 of the Companies Act, 2013 and the Rules made thereunder. The report of the Secretarial Auditor in Form MR-3 is enclosed to this report as Annexure B. The Secretarial Auditor Report does not contain any qualification, reservation or adverse remarks.

Statutory Auditors

Price Waterhouse Chartered Accountants LLP(Firm Registration No: 012745N/N500016), were appointed as Statutory Auditors of the Company for a period of five years from the conclusion of the Annual General Meeting held on September 27, 2017. It may be noted that on 10th January 2018, SEBI has issued an order, barring Price Waterhouse for auditing existing or fresh audits of any listed Company for a period two years after finding it guilty in the Satyam Computers scam case while giving a relief to continue the audit of existing companies for the financial year 2017-18. In this regard, Price Waterhouse has appealed to Securities Appellate Tribunal (SAT) seeking a blanket stay against SEBI’s Order. The SAT vide its order dated 19th February, 2018 refused to grant stay on SEBI’s ruling. However, SAT has modified its earlier order passed on 19th January, 2018 on pure technical grounds and allowed Price Waterhouse and its network entities to continue with audit works of their existing clients for the year 2017-18 and also extended this relief till the end of March 2019 or issue of final orders by the division bench of SAT, whichever is earlier. Accordingly, they are eligible to continue to audit the financial statements of the Company for the financial year 2018-19 as well.

Vide notification dated May 7, 2018 issued by the Ministry of Corporate Affairs, the requirement of seeking ratification of appointment of statutory auditors by members at each AGM has been done away with. Accordingly, no such item has been considered in notice of this 24th AGM.

Management’s response on the Statutory Auditors Qualification / Comments

Standalone Financial statements

The Company has investments in and has given loans to GVK Energy Limited, a jointly controlled entity, amounting to Rs. 112,643 Lakhs and has also given financial guarantees (Outstanding balance: Rs. 10,298 lakhs) to the above mentioned jointly controlled entity. Projects under the jointly controlled entity are currently facing uncertainties in relation to availability of fuel (Gas/ coal), de-allocation of coal mines, pending capital costs approval for final tariff determination of power projects due to which these companies are incurring losses and have also defaulted in repayment of loans. Management is in the process of negotiating the terms with lenders for restructuring of loan accounts, one time settlements, and is also negotiating with the regulatory authorities for approval of additional capital costs. Management is confident that it will be able to settle the matters amicably and will be able to achieve final tariff approvals with retrospective effect and will be ultimately able to achieve profitable operations. However pending resolution of the above uncertainties currently the impact of the same is unascertainable.

Consolidated Financial statements

The Company has investments in and has given loans to GVK Energy Limited, a jointly controlled entity, amounting to Rs 36,460 Lakhs and has also given financial guarantees (Outstanding balance: Rs. 10,298 lakhs) to the above mentioned jointly controlled entity. Projects under the jointly controlled entity are currently facing uncertainties in relation to availability of fuel (Gas/ coal), de-allocation of coal mines, pending capital costs approval for final tariff determination of power projects due to which these companies are incurring losses and have also defaulted in repayment of loans. Management is in the process of negotiating the terms with lenders for restructuring of loan accounts, one time settlements, and is also negotiating with the regulatory authorities for approval of additional capital costs. Management is confident that it will be able to settle the matters amicably and will be able to achieve final tariff approvals with retrospective effect and will be ultimately able to achieve profitable operations. However pending resolution of the above uncertainties currently the impact of the same is unascertainable.

Awards and recognitions

Following are some of the awards and recognitions that your Company and its Subsidiaries have received during the year under review.

Certifications, Recognitions and Awards for Mumbai International Airport Private Limited (MIAL)

Awards, Accolades and Accreditation

- GVK CSIA has been awarded ‘Best airport in India/ C Asia’ by Skytrax World Airport Awards 2018.

- GVK CSIA bagged the prestigious Gold - Green Airports recognition 2018 by ACI in the over 35 mppa category, recognizing the outstanding achievements in environmental projects on 6 March, 2018.

- CSIA has won the ‘Gold’ plaque at the ‘ACI Asia-Pacific Green Airport recognition 2018’

- CSIA has been adjudged as the second runner-up in “Breakthrough level kaizen” category at the prestigious CII TPM Kaizen Awards 2018

- CSIA received World’s Best Airport for the Airport Service Quality (ASQ) Awards 2017.

- CSIA received “Best Metro Airport award” and the “Airport offering best facilities for sick, elderly & physically challenged” for 2017-18 by Air Passenger Association of India (APAI).

- GVK CSIA adjudged as the Best Domestic Airport at the “WINGS INDIA AWARDS 2018” for Excellence in the Aviation sector held in Hyderabad on 9 March, 2018.

- GVK CSIA received the INFHRA-FM Excellence Awards 2017-18 under the category of ‘Ecological sustainability’, for the implementation of green initiative, “Green Seal Certified Products & Waterless Urinals Programme” held in Mumbai on 23 February, 201 8.

- GVK MIAL awarded the ‘Cargo Airport of the Year - India’ at STAT Times International Awards for Excellence on 21 February, 2018 in Mumbai.

- GVK MIAL wins “Excellence Award” at 7th Global Economic Summit, in the “Best Logistics Service Provider” category.

- GVK CSIA has won CAPA’s award for excellence in Air Traffic Management productivity in Indian aviation.

- GVK MIAL bags the CII Renovative Kaizen award.

- GVK MIAL has been awarded as the ‘Best Airport Staff’ award in India & Central Asia at the Skytrax Awards 2017.

- GVK MIAL has been in the Top 10 ‘Best Airport Terminals’ at the Skytrax Awards 2017.

- GVK MIAL has been awarded as the ‘Highly Commended Airport for Marketing’ award in Asia Pacific region in the over 20 million passengers’ category.

Particulars of Loans, Guarantees or Investments

Particulars of loans and guarantees given, investments made and securities provided under Section 186 of the Companies Act, 2013 are given under the Notes to the financial statements and forms part of this Annual Report.

Contracts and Arrangements with the Related Parties

All the related party transactions that were entered during the financial year were on an arm’s length basis and were in the ordinary course of business. These transactions are placed before the Audit Committee and the Board for their prior approvals. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on a materiality of related party transactions. The policy on related party transactions is available on our website under the following link https://www.gvk.com/files/investorrelations/ investors/corpgovernance/RelatedPartyTransactionPolicy.pdf

Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 in the prescribed Form AOC-2, is appended as Annexure C to the Board’s report.

Extract of Annual Return

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, extract of the Annual Return as on March 31, 2018 in form MGT-9 is appended as Annexure D to the Board’s report.

Internal Control Systems and their adequacy

The Management continuously reviews the internal control systems and procedures for the efficient conduct of the Company’s business. The Company adheres to the prescribed guidelines with respect to the transactions, financial reporting and ensures that all its assets are safeguarded and protected against losses. The Internal Auditor of the Company conducts the audit on regular basis and the Audit Committee periodically reviews internal audit reports and effectiveness of internal control systems.

Public Deposits

During the year under review, your Company has neither invited nor accepted any fixed deposits from the public.

Vigil Mechanism/Whistle Blower Policy

In terms of section 177(9) & (10) of the Companies Act, 2013 read with Regulation 22 of the Listing Regulation a Vigil Mechanism for Directors and employees to report genuine concerns has been established by the Board along with the whistle blower policy. The Vigil Mechanism and whistle blower policy have been uploaded on the website of the Company. The same can be accessed at the link https://www.gvk.com/files/investorrelations/investors/corpgovernance/GVK_Power_Infrastructure_Limeted.pdf

Under this policy, your Company encourages its employees to report any fraudulent financial or other information to the stakeholders, and any conduct that results in violation of the Company’s code of business conduct, to the management (on an anonymous basis, if employees so desire). Further, your Company has prohibited discrimination, retaliation or harassment of any kind against any employees who, based on the employee’s reasonable belief that such conduct or practice have occurred or are occurring, reports that information or participates in the investigation. The Audit Committee periodically reviews the functioning of this mechanism. No personnel of the Company was denied access to the Audit Committee.

Corporate Social Responsibility

Since, there are no average net profits for the Company during the previous three financial years, there are no specific funds that are required to be set aside and spent by the Company during the year under review. Members can access the CSR Policy on the website of the Company at link https://www.gvk.com/files/investorrelations/investors/corpgovernance/CSR_Policy_final_copy.pdf

Particulars of employees and related disclosures

None of the employees are in receipt of the remuneration which is in excess of the limits as specified in Rules 5(2) and 5(3) of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time.

Disclosures pertaining to remuneration and other details as required under Section 197(12) read with Rule 5(1) of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 are enclosed to this report.

Particulars regarding Conservation of Energy and Research and Development and Technology Absorption

Details of steps taken by your Company to conserve Energy, Research and Development and Technology Absorption have been disclosed as part of the MD&A Report.

Foreign exchange earnings and Outgo:

In accordance with the provisions of Section 134(3)(m) of the Companies Act, 2013, read with the Rule 5 of the Companies (Accounts) Rules, 2014, the information relating to foreign exchange earnings and outgo is provided under Notes to the Balance Sheet and Profit and Loss Account.

Material Changes and Commitments Affecting the Financial Position of the Company

There have been no material changes and commitments, affecting the financial position of the Company which occurred between the end of the financial year to which the financial statements relate and the date of this report.

Details of Significant and Material Orders Passed by the regulators/Courts/Tribunals Impacting the Going Concern Status and the Company’s Operations in Future

There are no significant and material orders passed by the Regulators/Courts/Tribunals which would impact the going concern status of the Company and its future operations.

Information Required under Sexual Harassment of Women at Work place (Prevention, Prohibition & Redressal) Act, 2013

Your Company has a policy and framework for employees to report sexual harassment complaints at workplace and its process ensures complete anonymity and confidentiality of information. During the year under review, there were no complaints filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy is available on the website of the Company at https://www.gvk.com/investorrelations/investors/otherdisclosures.aspx

Acknowledgements

Your Directors take this opportunity to thank every shareholders, suppliers, bankers, business partners/ associates, financial institutions and Central and State Governments for their consistent support and encouragement to the Company. I am sure you will join our Directors in conveying our sincere appreciation to all employees of the Company and its subsidiaries and associates for their hard work and commitment. Their dedication and competence has ensured that the Company continues to be a significant and leading player in the Infrastructure industry.

For and on behalf of the Board of Directors

Place : Hyderabad Dr G V K Reddy

Date : May 23, 2018 Chairman