GAMMON INDIA LIMITED

in two or three years) of interest rates constituted 36.94% and 30.87%, respectively, of our total
indebtedness.
Although we may decide to engage in interest rate hedging transactions, there can be no assurance that we
will be able to do so on commercially reasonable terms, that our counterparties will perform their
obligations, or that these agreements, if entered into, will adequately protect us against interest rate risk.
Any unexpected unfavorable change in interest rates or availability of credit may materially impact our
financial conditions or results of operations.
Our foreign currency exchange risk arises mainly from a mismatch between the currency of our sales,
purchases and operating expenses. To the extent that our sales, purchases and operating expenses are not
denominated in the same currency, and to the extent that there are timing differences between invoicing,
payment and collections, we will be exposed to foreign currency exchange gains and losses arising from
transactions in currencies other than Indian rupees. As a result, our earnings may be materially adversely
affected. As at March 31, 2007, 2008 and 2009, our un-hedged foreign currency exposure for our
receivables were Rs.1,853.90 million, Rs.611.80 million and Rs.3,683.40 million. During the same period,
our un-hedged foreign currency exposure for our payables were Rs.1,068.90 million, Rs.1,284.40 million
and Rs.10,220.60 million.
Our order book may be subject to unexpected delays, modifications, cancellations or non-payment by our
clients and, therefore, may not necessarily indicate our future earnings.
As of September 30, 2009, the aggregate order book of our Company, on a standalone basis, was
Rs.131,787.14 million. Order book refers to expected future income under signed contracts or contracts,
where binding letters of intent or letters of award have been received. Our book projects represent only
business we consider to be firm, although project cancellations or scope adjustments may occur from time
to time due to either a client‘s or our default, incidents of force majeure or legal impediments. For example,
in some of the contracts in our order book, our clients may be obliged to perform or take certain actions,
such as:
acquiring land;
securing right of way;
supply and approval of designs and drawings;
clearing forests;
supplying owner supplied material;
securing required licenses, authorizations or permits;
making advance payments or opening of letters of credit;
approving supply chain vendors; and
shifting existing utilities.
If a client does not perform such actions in a timely manner, or at all, our projects could be delayed,
modified or cancelled. Projects could also be removed from our order book as a result of financing
difficulties or payment default by a client. Some projects may remain in our order book for an extended
period of time. We cannot guarantee that the income anticipated in our order book will be realized, or, if
realized, will be realized on time or result in profits. Any reduction in the amount of our order book would
reduce the income and profits that we expected to earn, which could adversely affect our results of
operations.
We may encounter problems relating to the operations of our joint ventures.
As a consequence of qualification and client requirements, and to mitigate risks associated with projects, we
enter into various joint ventures with domestic as well as international construction companies as part of our
business. We anticipate that our future projects will continue to be developed and maintained through joint
ventures as we continue to jointly bid for contracts with suitable joint venture partners. The success of these
joint ventures depends significantly on the satisfactory performance by our joint venture partners and
fulfillment of their obligations. Our liability in relation to the projects being executed by our joint ventures
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