DIRECTORS' REPORT TO THE MEMBERS, Your Directors take pleasure in presenting the 26th Annual Report together with the Audited Financial Statements for the Financial Year ended March 31, 2016. A. Standalone You will be glad to note that despite the difficult phase through which the Indian Construction Industry is passing your Company posted a turnover of Rs. 83251.55 million for the year ended 31st March, 2016 as against Rs. 82969.43 million in FY-2014-15. Gross Profit increased from Rs. 8444.21 million in FY-2014-15 to Rs. 9338.66 million in FY- 2015-16. After deducting financial charges of Rs. 5075.97 million, providing a sum of Rs. 1099.59 million towards depreciation, exceptional items of Rs. 203.23 million and Rs. 731.41 million for income tax, the operations resulted in a net profit of Rs. 2228.46 million as against Rs. 1117.92 million in FY-2014-15. B. Consolidated During the year under review, your Company achieved a consolidated turnover of Rs. 95834.79 million as against Rs. 95128.90 million in the previous fiscal. Your Company has earned a consolidated gross profit of Rs. 11800.17 million before interest and depreciation as against Rs. 11263.99 million in the previous year. After deducting financial charges of Rs. 6690.42 million, providing for depreciation of Rs. 3031.27 million, exceptional items of Rs. 401.72 million and provision for tax of Rs. 773.23 million, the operations resulted in a net profit of Rs. 903.53 million as against Rs. 614.81 million in the previous year. During the year the Company, on consolidated basis, bagged new orders valued around Rs. 73990 million and executed projects worth Rs. 90670 million. The Order Book position as on March 31, 2016 stood at Rs. 176550 million. Proposed Dividend Keeping in view the tight liquidity situation the Construction and Infrastructure Industry is passing through and the need to conserve and optimize the use of resources, your Board recommends Dividend of Rs. 0.60 per Equity Share of Rs. 2/- each (30%) for the consideration and approval of the members of the Company at the forthcoming Annual General Meeting. This is fifty percent increase on the expanded capital compared to previous year's dividend of 20% despite difficult market conditions. Your Board is optimistic that the company will further improve its performance in the years to come. Further information on the Business Overview and Outlook and the state of the affairs of the Company and the Industry in which it operates, is discussed in detail in the Management Discussion & Analysis. There is no change in the nature of business carried on by the Company during the year under review. Material Changes and Commitments affecting the financial position of the Company There are 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. Particulars of Contracts or Arrangements with Related Parties All related party transactions that were entered during the financial year were in the ordinary course of the business of the Company and were on arm's length basis. There were no materially significant related party transactions entered by the Company during the year with the Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the Company. The policy on Related Party Transactions as approved by the Audit Committee and the Board of Directors is hosted on the website of the Company and the link for the same is (<http://> ncclimited.com/ Policies.html). Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arm's length basis, the requirement of furnishing the requisite details in Form AOC-2 is not applicable to the Company. Awards & Accolades You will be happy to note that during the year under review the Company has received the following awards: a) National Award for "Excellence in Cost Management" for the year 2015 - from the Institute of Cost Accountants of India. b) Viswakarma Award 2016 - from the Construction Industry Development Council (CIDC) New Delhi in the following categories 1. Best Professionally Managed Construction Company. 2. Industry Doyen - Sri A A V Ranga Raju, Managing Director, NCC Limited 3. Best Managed Construction Site - ESIC - Medical & Hospital Project, Gulbarga, Karnataka c) Dr AVS RAJU, Founder Chairman was honoured with the 'Bulandh Bharath' Award for his exemplary contributions towards nation building by the Builders Association of India. Directors' responsibility statement Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, your Directors to the best of their knowledge and ability confirm as under: (a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) We have 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 at the end of the financial year and of the profit of the Company for that period; (c) We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) The annual accounts have been prepared on a going concern basis; and (e) The Company had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. (f) We have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively Subsidiary Companies The Company has 51 subsidiaries (including step down subsidiaries) as of 31st March, 2016. There was no material change in the nature of the business carried on by the subsidiaries. As per the provisions of Section 129 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the subsidiary Companies/ Associate Companies/Joint Ventures is prepared in Form AOC-1 and is attached to the Financial Statements of the Company. In accordance with the provisions of the Companies Act, 2013, the Audited Financial Statements of the subsidiary companies are being made available on the website of the Company and are not attached with the Annual Accounts of the Company. The Company will make available the Annual Accounts of the subsidiary companies and the related information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection by any member at the Registered office of the Company and that of the respective subsidiary companies. Consolidated financial statements In compliance with Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and in compliance with the provisions of Section 129(3) and other applicable provisions of the Companies Act, 2013 and the Accounting Standards AS-21 and AS-27 on consolidated financial statements, read with the Accounting Standard AS-23 on Accounting for Investments in Associates, your Directors have pleasure in attaching the consolidated financial statements for the financial year ended March 31, 2016, which forms part of the Annual Report. Disclosures : Deposits During the year, the Company has not accepted any public deposits. Conservation of energy, technology absorption and foreign exchange earnings and outgo A. Conservation of energy The Company's core activity is civil construction which is not power intensive. The Company is making every effort to conserve the usage of power. B. R&D and technology absorption: Not applicable C. Foreign exchange earnings and outgo Foreign exchange earnings - Nil Foreign exchange outgo i. Towards travel Rs. 2.67 million ii. Towards import of capital goods & material supplies Rs. 1125.91 million iii. Others Rs. 28.46 million D. No significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future. Particulars of loans, guarantees or investments under Section 186; In compliance with the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014, the details of Loans, Guarantees, Investments given / made during the Financial Year ended 31st March, 2016 are given in Annexure - Particulars of Directors In pursuance of Section 152 of the Companies Act, 2013 and the rules framed there under, Sri Utpal Sheth, Director and Sri A V N Raju, Whole-time Director are liable to retire by rotation, at the ensuing Annual General Meeting and being eligible have offered themselves for reappointment. Sri S Ravi and Dr. A.S. Durga Prasad were appointed as Additional Directors(Independent) on 10th November, 2015 and 24th May, 2016 respectively and their appointments are proposed to be regularized at the forthcoming Annual General Meeting. During the year under review Sri T N Manoharan, Chairman of the Board and Independent Director has resigned from the Board consequent to his appointment as the Non-Executive Chairman of CANARA Bank. Your Board places on record the valuable contribution made by Sri T N Manoharan during his tenure as a Director of the Company. Other than as stated above, there has been no other change in the Board or the Key Managerial Personnel during the year under review. The Independent Directors have submitted the declaration of independence, pursuant to Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section(6) of Section 149 of the Companies Act, 2013. Meetings of Board of Directors During the Financial Year under review, the Board has met six times i.e. May 14, 2015, May 28, 2015, July 30, 2015, August 24, 2015, November 10, 2015 and February 11, 2016. The details of the familiarisation programme conducted for Independent Directors are hosted on the Company's website and the web link thereto is <http://ncclimited.com/corporate_> governance.html Constitution and Composition of Audit Committee The Company has constituted the Audit Committee under the Chairmanship of Sri R V Shastri an Independent Director and Sri P Abraham, Sri Hemant M Nerurkar, Independent Directors and Sri Amit Dixit Non-executive Director as Members of the Committee. During the year under review Sri. T N Manohraran ceased to be a member of the Committee following his resignation from the Board of the Company. Whistle Blower Policy/Vigil Mechanism Pursuant to Section 177 of the Companies Act, 2013 and the Rules framed there under and pursuant to the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company has established a mechanism through which all the stakeholders can report the suspected frauds and genuine grievances to the appropriate authority. The Whistle Blower Policy which has been approved by the Board of Directors of the Company has been hosted on the website of the Company (<http://ncclimited>. com/Policies.html). During the year under review the Company has not received any complaint(s) under the policy. Risk Management The Company has established Enterprise Risk Management process to manage risks with the objective of maximizing shareholders value. Internal Financial Controls and their adequacy The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. Extract of Annual Return The extract of the Annual Return of the Company in Form MGT-9 for the Financial Year ended 31st March, 2016 is given in Annexure -2 and forms part of the Directors Report. Joint Statutory Auditors and their report The Joint Statutory Auditors of the Company viz., M/s. M Bhaskara Rao & Co., Chartered Accountants, (Firm's Registration No.000459S) and M/s. Deloitte Haskins and Sells, Chartered Accountants (Firm's Registration No.008072S) were re-appointed for a term of two years i.e till the end of 27th Annual General Meeting to be held in F.Y 2016-2017 subject to ratification of their appointment for the F.Y 2016-17 by the members at the ensuing Annual General Meeting. M/s. M Bhaskara Rao & Co., Chartered Accountants, and M/s. Deloitte Haskins and Sells, Chartered Accountants have confirmed their eligibility and willingness to continue as Joint Statutory Auditors for the FY-2016-2017 subject to their appointment is ratified by the members at the forthcoming AGM. Your Board of Directors have recommended for ratification the appointment of the said Joint Statutory Auditors as indicated above to the members for their approval at the forth coming Annual General Meeting of the Company based on the recommendation of the Audit Committee. The Independent Auditors' Report to the Members of the Company on the Financial Statements for the Financial Year ended March 31, 2016 forms part of the Annual Report and does not contain any qualification(s) or adverse observations. Secretarial Audit Report As per the provisions of Section 204(1) of the Companies Act, 2013, the Company has appointed M/s. BS & Company, Company Secretaries LLP, to conduct Secretarial Audit of the records and documents of the Company for the Financial Year 2015-16. The Secretarial Audit Report for the Financial Year ended 31st March, 2016 in Form No MR-3 is annexed to the Directors Report - Annexure - 3 and forms part of this Report. The Secretarial Auditors' Report to the Members of the Company for the Financial Year ended March 31, 2016 does not contain any qualification(s) or adverse observations Cost Audit In compliance with the provisions of Section 148 of the Companies Act, 2013, the Board of Directors of the Company at its meeting held on July 30, 2015 had appointed M/s. Vajralingam & Co., Cost Accountants (Firm Registration No.101059) as Cost Auditors of the Company for the FY 2015-16. In terms of the provisions of Section 148(3) of the Companies Act, 2013 read with Rule 14(a)(ii) of the Companies (Audit and Auditors) Rules, 2014, the remuneration of the Cost Auditors has to be ratified by the members. Accordingly, necessary resolution is proposed at the ensuing AGM for ratification of the remuneration payable to the Cost Auditors for FY 2015-16. Corporate Governance Pursuant to the provisions of Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance has been incorporated in the Annual Report for the information of the shareholders. A certificate from the Statutory Auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated under the said Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 also forms part of this Report. Corporate Social Responsibility The brief outline of the Corporate Social Responsibility (CSR)Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure - 4 of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.The policy is available on the website of the Company. (<http://ncclimited.com/Policies.html>) Particulars of Employees Details in respect of remuneration paid to employees as required under Section 197 (12) of the Companies Act, 2013, read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended forms part of this report. In terms of Section 136 of the Companies Act, 2013 the same is open for inspection at the Registered Office of the Company. Copies of this statement may be obtained by the members by writing to the Company Secretary at the Registered Office of the Company. The ratio of the remuneration of each Director to the median employee's remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are enclosed in Annexure - 5 and forms part of this Report. Evaluation of performance of the Board, Members of the Board and the Committees of the Board of Directors. The Nomination and Remuneration Committee has laid down criteria for performance evaluation of Directors, Chairperson, Board Level Committees and the Board as a whole and also the evaluation process for the same. The statement indicating the manner in which formal annual evaluation of the Directors, the Board and the Board level Committees are given in the report on Corporate Governance, which forms part of this Annual Report. Policy on Sexual Harassment The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the financial year ended 31st March, 2016, the Company has not received any complaints pertaining to Sexual Harassment. Acknowledgements Your Directors place on record their sincere appreciation and thanks for the valuable cooperation and support received from the employees of the Company at all levels, Company's Bankers, Financial Institutions, Central and State Government Authorities, Associates, JV partners, clients, consultants, sub-contractors, suppliers and Members of the Company and look forward for the same in equal measure in the coming years. For and on behalf of the Board Hemant M Nerurkar Chairman (DIN No. 00265887) Place: Hyderabad Date: 24th May, 2016 |