GAMMON INDIA LIMITED

Compliance with, and changes in, safety, health and environmental and labor laws and regulations may
adversely affect our business, financial condition and results of operations.
Some of our project operations are subject to environmental laws and regulations including the
Environmental Protection Act 1986, the Air (Prevention and Control of Pollution) Act 1981, the Water
(Prevention and Control of Pollution) Act 1974 and other regulations promulgated by the Ministry of
Environment and the Pollution Control Boards (PCBs) of the relevant states. We are also required to
comply with labor laws, such as Workmen Compensation Act, Contract Labor (Regulation and Abolition)
Act, and other related regulations. In addition, some of our operations are subject to risks involving personal
injury, loss of life, environmental damage and severe damage to property.
We believe environmental and labor regulation of industrial activities in India will become more stringent
in the future. The scope and extent of new environmental and labor regulations, including their effect on our
operations, cannot be predicted with certainty. The costs and management time required to comply with
these requirements could be significant. The measures we implement in order to comply with these new
laws and regulations may not be deemed sufficient by governmental authorities and our compliance costs
may significantly exceed our estimates. If we fail to meet environmental and labor requirements, we may
also be subject to administrative, civil and criminal proceedings by governmental authorities, as well as
civil proceedings by environmental groups and other individuals, which could result in substantial fines and
penalties against us as well as orders that could limit or halt our operations.
There can be no assurance that we will not become involved in future litigation or other proceedings or be
held responsible in any such future litigation or proceedings relating to safety, health and environmental and
labor matters in the future, the costs of which could be material. Clean-up and remedial costs, as well as
damages, other liabilities and related litigation, could adversely affect our business, financial condition and
results of operations.
Changes in technology may render our current technologies obsolete or require us to make substantial
capital investments.
Although we attempt to maintain the latest international technology standards, the technology requirements
for businesses in the industries that we operate are subject to continuing change and development. Some of
our existing technologies and processes may become obsolete, performing less efficiently compared to
newer and better technologies and processes in the future. The cost of upgrading or implementing new
technologies, upgrading our existing equipment or expanding our capacity could be significant and could
adversely affect our results of operations.
SEBI has in past prohibited us from accessing the capital markets, directly or indirectly.
SEBI had by its order dated December 21, 2006, prohibited the Company, our chairman and managing
Director and three other companies from accessing the capital markets, directly or indirectly for a period of
one year from the date of the order. Further, in terms of the order, the Company, and two others companies
are also prohibited from divesting, transferring, selling or alienating in any way their shareholding in GIPL
for a period of three years from March 27, 2008.
Further, the restriction on our Company in relation to divestment, transfer or sale of its entire shareholding
in GIPL until March 26, 2011 may restrict our ability to raise financing through a pledge or sale of this
shareholding.
We may not maintain historical dividends in the future.
While we have paid dividends in the past, there can be no assurance as to whether we will pay dividends in
the future and, if so, the level of such future dividends. Our declaration, payment and amount of any future
dividends is subject to the discretion of the Board, and will depend upon, among other factors, our earnings,
financial position, cash requirements and availability of profits, as well as the provisions of relevant laws in
India from time to time.
We have a number of contingent liabilities and our profitability could be adversely affected if any of
these contingent liabilities materializes.
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