GMR Infrastructure Limited | G^R

DeOr FeUhow StOkMM,, It gives me great pleasure to we l come you a l l t o the 21st

Annua l General Meet ing o f the Company.

This past year has been an impor tan t one f r o m the perspective o f our journey o f "Bui lding an Inst i tut ion in perpetuity", and we have emerged stronger at the end o f it. It is my bel ief tha t we have made a signif icant progress in resolut ion o f many challenges, and in part icular our cont inued focus on debt reduction. We have dur ing this period, worked very closely and with f u l l sincerity wi th a l l stakeholders including our lenders and investors t o work ou t resolut ions which are balanced and acceptable t o all.

While the g loba l economy is improving, wi th g loba l GDP growth projected t o pick up f r o m 3.1% in 2016 t o around 3.5% in Financial Year (FY) 2017-18, it remains susceptible to geo-po l i t i ca l and other macroeconomic risks. Potent ia l rise in protect ionism may also be a cause for concern and could impact the g loba l economy. We believe Central Bank actions in major economies may impact g loba l financial markets, currency flows, currency strength and interest rates.

Meanwhile, India is expected to become the wor ld 's fifth largest economy in 2017, surpassing UK and France. The Indian economy has the potent ia l to become the wor ld 's third largest economy by the next decade, and one o f the two largest economies by mid-century . The Internat ional Monetary Fund has described the Indian economy as the "br ight spot" in the g loba l landscape. As such, the Indian economy has been doing relatively we l l compared to others notwi thstanding several short t e r m events tha t increased uncertainty in the business envi ronment . The Government has taken a number o f s t ruc tura l re forms which are expected t o have long t e r m sustainable impact on the economy, including demonet iza t ion and the move towards a digital economy, the in t roduct ion o f the Insolvency and Bankruptcy Code and the imp lementa t ion o f GST. The focus on fiscal discipline and the concerted a t t e m p t to reduce subsidies th rough a gradual reduct ion and bet ter target ing through bank transfers are also likely

t o have a sustainable impact on the economy. However, whi le RBI has brought down interest rates signif icantly in line wi th inf lat ion, the transmission o f the same has not been e f fec ted and industry cont inues t o st ruggle wi th the high cost o f debt relative to in ternat ional peers.

A key chal lenge facing the economy is the delay in p ick-up o f private investment , a long wi th the stressed asset situation. The RBI has brought s t rong focus and m o m e n t u m on the resolut ion o f these issues in the past year, but the process may st i l l take t ime. While the Government has a t t e m p t e d to step in wi th publ ic spending on infrastructure, in part icular Highways and Railways, to fill this gap, it w i l l st i l l need to faci l i tate private sector inves tment for the economy to achieve its t rue potential .

Global sovereign and pension funds are also keenly t rack ing the Indian market, and a number o f investments have been announced in the past few years. Given the long t e r m nature o f these investments, this fund ing is part icularly o f interest t o Infrastructure players. However, the appet i te o f such Investors is more suited for operat ing infrastructure assets, and less for assets which are under deve lopment . With the constrained capacity o f many Indian private developers on account o f stressed assets, and l imi ted internat ional strategic or financial interest in financing the early stage deve lopmen t o f assets, the country needs t o introspect on the changes in the f ramework required to faci l i tate fresh investment in infrastructure creation, which is crit ical for India at this juncture. The single biggest chal lenge tha t needs to be addressed in this regard is the stabil ity and consistency o f policy f ramework over the life o f a project, which can al low developers, investors and lenders to generate predictable cash flow streams.

From an env i ronment perspective, the other key factor impact ing a l l industries is digital ization and techno logy disruptions. We are already seeing the impact o f some o f these changes in sectors across the world, as also in India. These changes are already impact ing job creation and business models, and are only expected t o accelerate over the med ium term. This also throws up a number o f business opportuni t ies. The fac t tha t India

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GMR Infrastructure Limited | G ^ R

has emerged as the fou r th largest s ta r t -up hub in the wor ld and is a t t ract ing significant g loba l venture capital funding, is very positive in this context .

As I have already ment ioned, FY 2016-17, has been a mi lestone year for the GMR Group, and we have made progress on various fronts.

With domest ic air t ra f f ic growing at a fast pace, we have emerged as the fou r th largest private airport operator in the wor ld (by traff ic). We have done so whi le ensuring that our Airports cont inue t o domina te service rankings across the globe. Your Company won the prestigious BOT bid for Goa's second airport and has also successful ly partnered with a Greek firm to win the bid t o build a new airport at Crete, which is the mos t visited tour ist dest inat ion in Greece. I a m also happy to report tha t we were vindicated on our stance on the w rong fu l cancel lat ion o f concession agreement for Male Airport by the Government o f Maldives and were able to not only obtain a compensat ion award f r o m the Internat ional Arbi t rat ion Tribunal, but were also able to receive the compensat ion. We cont inue t o bui ld strength in our Airports Business as a p l a t f o rm across India and other parts o f the wor ld.

We have also made good progress wi th our por t fo l io in the Energy sector, despite the ongoing stressful condit ions due t o unfavorable business envi ronment , regulatory chal lenges and legacy issues plaguing the sector. Notwi thstanding such adverse industry envi ronment , GMR Group announced a strategic partnership with Malaysian util it ies major Tenaga, who invested US$ 300 m n in GMR Energy Limited, demonst ra t ing our inherent c o m m i t m e n t to bui ld a sustainable business.

The Thermal Power sector, including both gas and coal based plants, have been struggl ing with a variety o f challenges. We have worked closely with a l l stakeholders in an a t t e m p t t o address the issues, but chal lenges remain as the demand for power languishes, whi le renewable energy growth has been incentivized. We engaged closely with our lenders and were able to restructure deb t th rough the Strategic Debt Restructuring (SDR) mechanism for t w o o f our power plants i.e., Rajahmundry and Chhattisgarh Power Plants, whereby the banks have conver ted part o f their

deb t into equity and now hold a contro l l ing majori ty in these companies. We cont inue to dialogue with a l l stakeholders to address some o f the issues which impact these plants, t o enable a resolut ion o f these issues. During this period, as part o f our strategy for deb t reduct ion, we also sold our transmission assets t o a strategic investor and entered into a share purchase agreement to divest 100% o f our shareholding in PT Barasentosa Lestari (PTBSL) to PT Golden Energy Mines (PTGEMS).

We have cont inued t o exit some o f our earlier investments in the Highways sector to create addi t ional l iquidity for the Group. In the Railways segment , we are execut ing works on the DFCC corridor projects which wi l l provide us insights into this new domain.

We have also made good progress in the deve lopment o f the Special Investment Region in Kakinada where we have entered into an MoU with a consort ium o f Hindustan Petro leum Corporation Ltd. (HPCL) and Gas Author i ty o f India Ltd. (GAIL). The consort ium plans to set up a Cracker and Petrochemical complex over a 2,000-acre area which could bring significant investment to the region. With the Government 's strong focus on 'Make in India', and India emerging as the fastest growing market in the world, initial interest for industrial land is now visible, and we are positive about the opportuni ty t o monet ize land in our industrial regions.

As such, we are opt imist ic about the ou t look for FY 2017-18 on the basis o f an upt ick in pent up consumer demand post demonet izat ion, healthy monsoon projections, imp lementa t ion o f GST and increased public expendi ture. Further, support ive oi l prices, benign interest rate env i ronment and cont inued e f fo r ts t o make banking sector stronger should help the economy grow at a faster rate in FY 2017-18.

While we cont inue t o remain upbeat on the m o m e n t u m generated by the domest ic economy, at the same t ime we recognize there could be some risks f r o m g loba l factors due to geo-po l i t i ca l issues in various parts o f the wor ld, rising t rend o f protect ionism, potent ia l impact on g loba l currency flows, etc. tha t may in termi t ten t ly slow down the pace o f g loba l t rade expansion, which in tu rn may have an impact on the Indian economy also.

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GMR Infrastructure Limited | G^R

As I have indicated, whi le the Company has made significant progress in te rms o f debt reduction, we believe tha t we need t o cont inue to focus on resolut ion o f some o f the outs tand ing issues in the short t o med ium term. As we come to the end o f our consol idat ion phase, we have also begun preparing for the fu ture. We are bui ld ing on our strengths on the Airport business t o address emerg ing opportuni t ies in that area. Our strategy for the Energy sector is being bui l t jo in t ly with our strategic partner in the sector, Tenaga. In addit ion, we cont inue t o evaluate a range o f other oppor tuni t ies for growth.

GMR-ites are our most valuable assets. The Assessment Year 2016-17 has been remarkable f r o m the perspective o f our people processes. There were several initiatives taken t o restart, revive, repair and recover, tak ing on new things like the fo rmat ion o f Group Corporate Services Integrat ion Council, establ ishment o f HR Strategic Advisory Council, init iation o f several HR audits and preparing for transit ion towards Digital HR and FMS in the cloud. The HR t e a m has also taken up Group-wide Talent Review process t o create a robust succession plan and st rong leadership pipeline for our impending business expansion. A l l our employees were covered by Hay Group re-grading exercise and the organization was made flatter with 4 less levels for greater organizat ional agility.

This was also an impor tan t year f r o m the perspect ive o f cu l ture enhancement . GMR Values & Beliefs were reviewed af ter 15 years and the Value icons were made more contemporary. Inner Excellence was brought in, to ensure the men ta l and spir i tual wel lbe ing o f our employees in an increasingly stressful wor ld. Employee Engagement Survey 'Pulse' was resumed t o hear the voice o f our fe l low col leagues and make GMR a more vibrant place t o work in.

I believe a l l these measures wi l l establish a digital p la t fo rm for e n d - t o - e n d HR and FMS, address areas for improvemen t arising ou t o f audits & assessments, provide oppor tun i ty to young leaders to take up higher responsibility, increase ex terna l or ientat ion for learning and GMR employer brand enhancement .

Large scale initiatives are also being taken to increase digi tal awareness o f employees for fu tu re readiness, as we are in the process t o digitize the entire employee l ifecycle, i.e., f r o m Hire to Retire.

We have also cont inued on our e f fo r ts on f rugal i ty and the Anushista initiative we began in FY 2015-16. I a m happy to report tha t our e f fo r ts have started del ivering results. We wi l l bui ld on this m o m e n t u m t o create a more cost conscious cu l ture necessary to compe te ef fect ive ly in the emerg ing env i ronment .

Furthermore, as you are aware, we have comp le ted transit ion o f our Corporate of f ice t o Delhi dur ing this period, and I want t o take this oppor tun i ty t o thank a l l our employees who have moved and worked self lessly dur ing this d i f f i cu l t period and helped us make this transit ion smooth and successful whi le cont inuing t o deliver excel lence in per formance.

A key focus area for the Group has been Excellence in a l l tha t we do. As part o f the Mission o f Nat ion Building we have taken on ourselves, we t ry and ensure tha t we keep a s t rong focus on excel lence, not only in the construct ion o f high qual i ty assets but also in their cont inuing operations. We have achieved signif icant recognit ion for operat ing excel lence across our areas o f operat ion. As part o f this quest for excellence, we also have a s t rong focus on sustainabil ity and the env i ronment . We have made great strides on this f ront , and our Airports, in particular, have emerged as leaders in this area.

Your Company has cont inued its t radi t ion o f caring for the communi t ies and stakeholders as part o f its Corporate Social Responsibility p rogramme through GMR Varalakshmi Foundat ion (GMRVF), CSR arm o f the GMR Group. The Foundat ion is current ly work ing across 27 locations in India and suppor t ing 2 locations in Nepal.

A l l t he educat ional inst i tut ions under GMRVF have pe r fo rmed exceedingly we l l dur ing the last year. There are over 10,000 students in these institut ions. GMRIT (GMR Inst i tute o f Technology) cont inues t o earn good ranking a m o n g engineering col leges in the

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GMR Infrastructure Limited | G ^ R

country including being a m o n g the t op 65 engineering col leges in the country and t op five private engineering col leges in Andhra Pradesh. GMRIT puts considerable emphasis on research and has received fund ing f r o m the University Grants Commission and the Depar tment o f Science and Technology. The schools run by GMRVF has shown except ional per fo rmance both in academics as we l l as extra-curr icu lar activities. GMRVF partnered with around 350 gove rnmen t schools towards improving the qual i ty o f education, reaching ou t t o over 38,000 s tudents across India. GMRVF provides an oppor tun i ty for under-pr iv i leged mer i tor ious chi ldren to access qual i ty educat ion in reputed schools through 'Gif ted Children Scheme' and suppor ted 175 chi ldren through this. GMR CARE Hospital served about 75,000 people f r o m under-served areas wi th high qual i ty care. GMRVF's 7 Mobi le Medical Units provided f ree medical care to over 10,000 elder ly month ly .

GMRVF helped the Group companies and several JVs to f u l f i l their CSR obl igat ions th rough grass root deve lopmen t initiatives around the GMR businesses. Three new vocat ional training centres were inaugurated this year, enabl ing GMRVF to cont r ibute more to the nat ional mission o f Skil l ing India th rough training around 6,000 unemployed you th in the year in its twe lve vocat ional t raining centers. GMRVF's twen t y -five public to i lets in vi l lages and s lums served over 35,000 commun i t y members. GMRVF also suppor ted close t o 300 famil ies in the construct ion o f Individual Sanitary Lavatories dur ing the year. GMRVF worked with over 300 Self Help Groups with a membersh ip o f over 3,500 w o m e n across India. Similarly, close t o 3,500 farmers received various l ivel ihood related support . GMRVF init iated CSR activities in Goa, Hosur and areas around its Dedicated Freight Corridor.

It wou ld be notewor thy tha t a l l our above ef for ts , init iated many years ago are very much in t une with the current policy initiatives o f the Government o f India like the "Swachh Bharat Abhiyan", "Make in India", "Ski l l India" etc.

GMRVF has received many accolades in recent years as recognit ion for achievements in educat ion, health care, commun i t y service, Skil l India, Swachh Bharat, Empower ing women, etc. Those in 2016-17 include:

• Golden Globe Tigers award 2017 for Excellence & Leadership in CSR in the category o f 'Best CSR Practices'.

• Golden Peacock Award for Corporate Social Responsibility 2016.

• EPC Wor ld Media Award for Outstanding Contr ibut ion t o CSR 2016.

• Viswakarma Award for Social Impact and Deve lopment 2016 f r o m Construct ion Industry Deve lopment Council.

• Nav Bharat, popular Hindi Newspaper f r o m Maharashtra honored GMRVF wi th CSR Leadership Award in the category o f Best CSR Practices for W o m e n Empowerment .

• "Excel lence in Social Welfare Initiatives for Women Empowermen t (Smt. Jamunadevi Tibrewala Award)" Award f r o m Federation o f Telangana and AP Chambers o f Commerce.

• CSR Health Impact Award 2017 for the Nutr i t ion Center initiative o f GMRVF.

Finally, I wou ld like t o thank you for the unst inted suppor t and unwavering conf idence in the Company. I look forward t o your cont inued and valuable suppor t in tak ing the Company to greater and newer heights in the fu ture.

Thank You

G M Rao Executive Chairman, GMR Group

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