Consolidated Construction Consortium Ltd Directors Report.

& MANAGEMENT DISCUSSION AND ANALYSIS REPORT

To

The Members

The Directors of the Company present to you the 22nd Annual Report of the Company, together with the Audited Balance Sheet as at 31st March, 2019 and the Statement of Profit and Loss for the year ended on 31st March, 2019.

1. FINANCIAL RESULTS

The Financial Results of the Company for the year under review is summarized below for your perusal and consideration.

Particulars 2018-19 2017-18
NET REVENUE 456.05 469.49
PROFIT BEFORE TAX AND DEPRECIATION (69.68) (71.03)
PROFIT /(LOSS) BEFORE TAX (PBT) (75.99) (78.53)
PROVISION FOR CURRENT TAX -
TAX EXPENSE (0.39) (0.21)
PROFIT AFTER TAXES/(LOSS) (PAT) (75.60) (78.31)

1.1 Financial Performance

The Company has achieved Net sales of Rs.456.05/- Crores for the year ended 31st March, 2019 as compared to Rs.469.49/- Crores in the previous year.

The Company has incurred a Net loss of Rs. 75.99/- Crores as against a loss after taxes of Rs. 75.60/- Crores in the previous year. The losses are attributable to some extent due to high input costs, irregular supply of raw materials, unfavourable market conditions and to a large extent due to high finance cost.

2. DIVIDEND

Your Directors have not recommended any dividend for the financial year 2018-19 in view of the losses incurred and the need to conserve resources of the Company.

3. MANAGEMENT DISCUSSION AND ANALYSIS

CONSTRUCTION INDUSTRY OUTLOOK:

"Construction in India: Key Trends & Opportunities to 2023"

Indias construction industry regained growth momentum in 2018, with output expanding by 8.8% in real terms - up from 1.9% in 2017. This was driven by positive developments in economic conditions, improvement in investor confidence and investments in transport infrastructure, energy and housing projects. In the 2018-2019 budget, the government increased its expenditure towards infrastructure development by 20.9%, going from INR4.9 trillion (US$75.9 billion) in the Financial Year (FY) 2017-2018 to INR6 trillion (US$89.2 billion) in FY2018-2019.

Consequently, the countrys construction industrys output value, measured at constant 2017 US dollar exchange rates, rose from US$464.9 billion in 2017 to US$505.7 billion in 2018. The total construction project pipeline in including all mega projects with a value above US$25 million - stands at INR82.5 trillion (US$1.2 trillion). The pipeline, which includes all projects from pre-planning to execution, is skewed towards early-stage projects, with 60.7% of the pipeline value being in projects in the pre-planning and planning stages as of March 2019.

Indian Construction Industry Outlook

The industrys output value in real terms is expected to rise at a CAGR of 6.44% over the forecast period, compared to 4.31% during the review period (2014-2018). The industry is consequently expected to rise from a value of US$505.7 billion in 2018 to US$690.9 billion in 2023, measured at constant 2017 US dollar exchange rates.

Accounting for 30.6% of the industrys total value in 2018, residential construction was the largest market in the Indian construction industry during the review period. The market is expected to remain the largest market over the forecast period, accounting for 30.1% of the industrys total value in 2023. Energy and utilities construction accounted for 27.1% of the industrys total output in 2018, followed by infrastructure construction with 23.3%, industrial construction with 7.8%, commercial construction with 7.6% and institutional construction with 3.6%. Over the forecast period, the market will be supported by the governments vision to provide houses under the Housing for All by 2022. Under the Pradhan Mantri Awas Yojana (PMAY), the government built 15.3 billion houses during the period of 2014-2018.

Infrastructure construction to pick up

Our Honble Prime Minister has allocated huge sum towards development of infrastructure in the Country through his address to the nation on the day of 73rd Independence day of our Country.

To bring India on par with the Global Benchmark, our modern infrastructure will have to go towards it and anyone can say anything, but the common mans dream is of good arrangements. Good things make him feel good, he is interested in him. And so we have decided that in these times 100 lakh crore rupees modern Infrastructure will be set up, which will also provide employment, new arrangements will also be developed in life which will also fulfill the needs. Whether it is the Sagarmala project, whether the Bharatmala project, whether it is to build modern railway stations or bus stations, or to build airports, whether to build modern hospitals, whether to build world-class educational institutions, all of them in terms of infrastructure We want to move things forward. Now seaport is also needed in the country .

Construction Industry Trends 2019

Construction Industry Trends You Must Know For 2019

• Efficiency-Improving Technology. ...

• Mobile Technology. ...

• Building Information Modeling (BIM) ...

• Construction Management Software. ...

• Modular & Prefabricated Construction. ...

• Green Construction. ...

• Better Safety Equipment. ...

• Investment in Infrastructure.

Investments & Government Initiatives: International payment

International investment

India has a requirement of investment worth Rs 50 trillion (US$ 777.73 billion) in infrastructure by 2022 to have sustainable development in the country. India is witnessing significant interest from international investors in the infrastructure space. Some key investments in the sector are listed below.

• In 2018, infrastructure sector in India witnessed private equity and venture capital investments worth US$ 1.97 billion.

• In June 2018, the Asian Infrastructure Investment Bank (AIIB) has announced US$ 200 million investment into the National Investment & Infrastructure Fund (NIIF).

Construction Development:

Building a sustainable future

The Construction industry in India consists of the Real estate as well as the Urban development segment. The Real estate segment covers residential, office, retail, hotels and leisure parks, among others. While Urban development segment broadly consists of sub-segments such as Water supply, Sanitation, Urban transport, Schools, and Healthcare.

• By 2025, Construction market in India is expected to emerge as the third largest globally

• By 2025, Construction output is expected to grow on average by 7.1% each year

• By 2020, Construction equipment industrys revenue is estimated to reach $ 5 bn

100% FDI under automatic route is permitted in completed projects for operations and management of townships, malls/shopping complexes, and business constructions.

100% FDI is allowed under the automatic route for urban infrastructures such as urban transport, water supply and sewerage and sewage treatment.

Government Initiatives

The Government of India is expected to invest highly in the infrastructure sector, mainly highways, renewable energy and urban transport.

The Government of India is taking every possible initiative to boost the infrastructure sector. Announcements in Union Budget 2019-20:

• The Government of India has given a massive push to the infrastructure sector by allocating Rs 4.56 lakh crore (US$ 63.20 billion) for the sector.

• Communication sector allocated Rs 38,637.46 crore (US$ 5.36 billion) to development of post and telecommunications departments.

• The Indian Railways received allocation under Union Budget 2019-20 at Rs 66.77 billion (US$ 9.25 billion). Out of this allocation, Rs 64.587 billion (US$ 8.95 billion) is capital expenditure.

• Rs 83,015.97 crore (US$11.51 billion) allocated towards road transport and highway.

• Rs 3,899.9 crore (US$ 540.53 billion) to increase capacity of Green Energy Corridor Project along with wind and solar power projects.

• Allocation of Rs 8,350.00 crore (US$ 1.16 billion) to boost telecom infrastructure.

• Water supply to be provided to all households in 500 cities.

• Allocation of Rs 888.00 crore (US$ 110.88 million) for the upgradation of state government medical colleges (PG seats) at the district hospitals and Rs 1,361.00 crore (US$ 188.63 million) for government medical colleges (UG seats) and government health institutions.

Challenges:

1. Skilled Labour Shortage

The construction industry is on a steady rise and remains heavily dependent on manual labour, even with the uptake of construction technology. Many young Indians today do not find construction jobs lucrative and are opting for other careers. Hence there is need to improve training programs and increase construction apprenticeship opportunities.

2. Rising Cost of Raw Materials

Contractors bear the risk of cost changes due to fixed price contracts. The cost of land and raw materials can change rapidly. With rapid change in prices, small construction companies have less leverage, and are greatly affected by cost variations between the time the project commences and when it ends.

3. Slow Invoicing and Payments

Construction businesses often have a problem regulating cash flow. A progress payment schedule can help outline what is expected at different phases of the project and determine when each phase of the project is considered complete. Without regular progress payments there are too many resources tied up in one job, which can significantly affect cash flow.

Future Outlook of the Industry

LOOKING BACK

2018 Construction Starts & Spending Forecast

While 2017 is shaping up to be a great year for construction, we arent going to be seeing they type of year-over-year growth in starts and spending weve had over the past couple of years.

In 2016, total construction spending increased 6.5% from the previous year according to data from the U.S. Census Bureau. In 2014 construction spending was up nearly 11% and in 2015 it increased 10.7%.

The AIAs Consensus Construction Forecast Panel has construction spending on nonresidential buildings increasing 3.8%. Commercial construction spending is expected to see an 8.8% increase for the year while Industrial construction spending is going to see a year-over-year decrease of 6.6%.

Construction spending through the first nine months of 2017 totaled $917.0 billion, a 4.3% increase over the same period in 2016.

Construct Connects construction starts increased 13.2% from 2015 to 2016. Construction starts saw a 13.6% increase in 2015. Construct Connects forecast for construction starts in 2017 is a 7.9% growth over 2016 to $737.8 billion.

LOOKING FORWARD

The construction industry is next in line after agriculture in India which makes for about 11% of India as GDP. Thereby making a significant contribution to Indias economy and provides employment. This is because of the linkages that the sector has with other sectors of the economy. About 250 ancillary economical areas such as cement, steel, brick, timber and building material are dependent on the construction industry. A unit increase in expenditure in the construction sector has a multiplier effect with a capacity to generate income as high as five times.

India is on the move towards a phase of sustained growth in the infrastructure build up. Construction industry regained growth movement in 2018 as well as 2019, with output hovering around 8% which was at 1.9% in 2017. The industry is expected to continue to expand over the period (2019-2023), driven by the governments efforts and large spends on housing, road, ports, water supply, and airport development. The government increased its expenditure towards infrastructure development by 20.9% to INR6.0 trillion (US$89.2 billion) in FY2018-2019 with continued investment in transport infrastructure, energy and residential projects under flagship programs such as Bharatmala scheme, Housing for All 2022, the UDAN (Ude Desh ka Aam Nagrik) scheme and the Aayushman Bharat program. The population growth and urbanization will also drive the need for better infrastructure facilities and road infrastructure developments in the country.

Global Data expects the residential construction market to retain its leading position and account for 30.1% of the industrys total value in 2023. Market expansion over the forecast period is expected to be supported by public and private sector investments in the construction of new residential buildings.

Growth in the institutional construction market will be supported by public and private sector investment in education and healthcare building construction projects.

The total construction project in India – as tracked by GlobalData, and including all mega projects with a value above US$25 million – stands at INR82.5 trillion (US$1.2 trillion).

2019 ENGINEERING AND CONSTRUCTION INDUSTRY OUTLOOK

As we move into the final year of a decade that has seen its share of peaks and valleys, there is no doubt that our industry is an active participant in building the future of the modern world.

Overall growth in 2018 for the Indian engineering and construction industry is projected to be around 5 percent and is likely to accelerate further going into 2019.

1 Mergers and acquisitions are positioned for a strong 2019, following an active year, which to date has seen 344 deals with a total value of more than $20 billion.

2 Driving this activity are the proliferation of mega projects infused with advanced technologies, a focus on smart cities, and the promises of a data-driven world. The engineering and construction industry is facing considerable hurdles—finding and retaining talent, responding to material price volatility due to tariffs and other trade-related headwinds, and absorbing the rapid pace of technology development pervading our personal and business lives. However, there is reason to be optimistic. Digital is transforming the industry itself and helping us imagine, create, and build the spaces, structures, and cities of tomorrow. Engineering, design, and construction firms have a unique opportunity to leave a mark on the smart cities of the future, using advanced technologies to design and build them today. These same technologies hold the promise to help firms achieve operational efficiencies, thereby reducing costs while improving margins. Those firms that embrace the projects of tomorrow and invest in digital transformation are expected to be the winners here.

CCCL

COMPANY SCENARIO

Performance Highlights

In an adverse environment the company has bagged new orders to the tune of Rs. 27991.34/- Lakhs and has successfully executed the projects.

Company began the current financial year with an order book which stood at Rs .80424/- Lakhs. The size and structure of the organisation was geared for catering to take up larger projects but with economic slowdown and lower order booking coupled with slower project execution the asset base and the fixed cost structure which was built up affected the companys profitability.

The lower turnover and operating margins in an environment of high interest costs severely affected the Companys profitability. In addition, non payments of claims adversely affected the Companys liquidity.

Companys revenue growth and profitability was muted in the last few quarters due to order execution-related issues. CCCLs revenue declined in FY 2018-2019 due to slowdown in order execution. Delay due to exogenous factors such as delay in procuring environmental approvals, land acquisition and government decision making have adversely affected performance. Delayed project execution has in turn affected payment from clients and the Companys cash flows.

The year under review has seen enhanced working capital requirements. This has been due to clients delaying payments. Amounts due from clients are up to Rs. 899.26/-crores ( including retention of Rs.94.99/- Crores.) as the recovery has been slow. In certain cases we have initiated legal action for recovering these dues. Dues from clients for completed major projects to the tune of Rs.109.12/- crores has added to liquidity crunch.

The Infrastructure sector is facing strong headwinds, including slowdown in order booking caused by shortfall in investments in the infrastructure sector, increased commodity prices, high interest rate scenario and also due to the introduction of GST. As a consequence of certain unexpected developments which were beyond the control of management, mainly delays in decision making by the Companys major clients and delays in settlement of claims, the expected cash flows have not materialized for the Company. These factors coupled with slowdown in Infrastructure industry has resulted in lower turnover, lower operating margins and high interest costs for the Company which has consequently led the Company to incur net losses.

STEPS TAKEN OR PROPOSED TO BE TAKEN FOR IMPROVEMENT: Company has taken view of all these factors seriously and to overcome the above challenges, has proactively undertaken the following steps directed at improving its operational efficiencies:

Claims Realisation: Persistent efforts are being made by Company to collect dues and claims. The Company has set up a strategic senior management team to recover dues and claims outstanding from Clients. Total outstanding as of 31st March 2019 is Rs.89926.68 lakhs (including retention of Rs.9499.65/- lakhs).Over due outstanding more than 180 days is Rs.22709.23/- Lakhs.

Cost optimization: Over the past 12 months, Company has implemented cost optimization measures such as cutting overheads and rationalization of human resources.

Reduction in Working Capital: Insistence on higher advances from customers and better credit terms with suppliers is being negotiated.

No commingling of funds across projects and strict discipline on this will be implemented using a project passbook scheme.

Monetization of assets: Company is proactively exploring monetization of assets either at the parent level or in its subsidiaries / step down subsidiaries.

Bidding for Jobs: The Company has been careful in bidding for new jobs and is taking jobs only on a selective basis.

CAUTIONARY STATEMENT

It is explicitly states that some of the statements in the Management Discussion and Analysis report are likely to be forward looking and it may so happen that the actual events or results may differ from what the Board of Directors/ Management perceive in terms of the future performance and outlook due to factors having a bearing on them and which are beyond precise perception. Companys operations may be affected with supply and demand situations, input prices and their availability, changes in government regulations and policies, tax laws and other factors such as Industrial relations, fund constraints and macro economic development.

UNLOCKING INVESTMENTS IN SUBSIDIARIES

Particulars of Loans and Advances in the nature of loans as required under Listing Regulations.

(Rs. In Lacs)
Sl.No. Name of the Company Balance as on Maximum outstanding
31.03.2019 31.03.2018 2018-19 2017-18
A. Subsidiaries
Consolidated Interiors Limited 961.71 758.26 961.71 1114.12
Noble Consolidated Glazings Limited 2757.20 2386.82 2789.65 2744.37
CCCL Infrastructure Limited 1189.46 1259.29 1294.97 1259.29
CCCL Power Infrastructure Limited 600.71 600.12 600.71 600.12
CCCL Pearl City Food Port SEZ Limited 181.31 130.20 181.89 130.20
Delhi South Extension Car Park Limited (213.52) (214.07) (214.07) (215.38)

CCCL has made total investments of Rs.22.91Crores in its subsidiaries viz. CCCL Infra (Rs. 22.91 Crores). These investments are yet to yield returns. While the investment decision is sound, the execution of these businesses have faced various bottlenecks in the form of non- availability of working capital, un-favourable market conditions, other macroeconomic issues.

These have stressed the cash flows of the parent company, CCCL presently, we are in advanced discussions with various investors. Going forward, it is proposed to unlock their value by divesting majority equity stake in these companies.

5. SUBSIDIARIES

In accordance with the General Circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. However, the financial information of the subsidiary companies is disclosed in the Annual Report in compliance with the said circular.

(a) Consolidated Interiors Ltd:

The focus has been to complete the jobs on hand and wait for the right opportunities till the market stabilizes. Due to sluggishness in the environment there is not much headway with the progress.

(b) Noble Consolidated Glazings Ltd. (NCGL)

The glazing market being a sub set of the construction industry, the various factors discussed above drastically affected the operations of NCGL. Completion of projects on hand and collection of receivables and optimization of costs had been the priority in 2015-16. With the much awaited economic stability expected in 2019-20 and the resultant market improvement better days are foreseen. The Company has streamlined its operations and expected to perform better in the near future

(c) CCCL Infrastructure Ltd.

The Company shall disinvest CCCL Infrastructure Ltd

(c)(i) CCCL Pearl city Food port SEZ Ltd.

As this is a subsidiary of CCCL Infrastructure Ltd, this Company also shall be disinvested.

(d) Delhi South Extension Car Park Ltd.

The Concession fee paid to Delhi Municipal Corporation has been refunded in view of project cancellation. The company has certain claims against Delhi Municipal Corporation for the cancellation. The same is under consideration by Delhi Municipal Corporation.

(e) CCCL Power Infrastructure Limited

Though the Power sector has seen a fall in the recent years, the Company has strived to perform to its full potential, but due to various factors the Company struggled to perform to the mark. However, electricity demand in the country has increased rapidly and is expected to rise further in the years to come. In order to meet the increasing demand for electricity in the country, massive addition to the installed generating capacity is required. The Government of Indias focus on attaining ‘POWER FOR ALL has accelerated capacity addition in the country. At the same time, the competitive intensity is increasing at both the market and supply sides.

The Company is eyeing a positive trend in future and is optimistic of a revival to this sector.

The Company has streamlined its operations and expected to perform better in the near future.

A Statement Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014 containing salient features of the financial statement of subsidiaries/associate companies/joint ventures in Form AOC-1 is annexed to this report as "Annexure A".

5. OPPORTUNITIES

Measures:

The Government of India is expected to invest highly in the infrastructure sector, mainly highways, renewable energy and urban transport, prior to the general elections in 2019.

The Government of India is taking every possible initiative to boost the infrastructure sector. Some of the steps taken in the recent past are being discussed hereafter.

Announcements in Union Budget 2018-19:

• Massive push to the infrastructure sector by allocating Rs 5.97 lakh crore (US$ 92.22 billion) for the sector.

• Railways received the highest ever budgetary allocation of Rs 1.48 trillion (US$ 22.86 billion).

• Rs 16,000 crore (US$2.47 billion) towards Sahaj Bijli Har Ghar Yojana (Saubhagya) scheme. The scheme aims to achieve universal household electrification in the country.

• Rs 4,200 crore (US$ 648.75 billion) to increase capacity of Green Energy Corridor Project along with other wind and solar power projects.

• Allocation of Rs 10,000 crore (US$ 1.55 billion) to boost telecom infrastructure.

• A new committee to lay down standards for metro rail systems was approved in June 2018.

• Rs 2.05 lakh crore (US$ 31.81 billion) will be invested in the smart cities mission. All 100 cities have been selected as of June 2018.

• Contracts awarded under the Smart Cities Mission would show results by June 2018 as the work is already in full swing, according to Mr Hardeep Singh Puri, Minister of State (Independent Charge) for Housing and Urban Affairs, Government of India.

• The Government of India is working to ensure a good living habitat for the poor in the country and has launched new flagship urban missions like the Pradhan Mantri Awas Yojana (Urban), Atal Mission for Rejuvenation and Urban Transformation (AMRUT), and Swachh Bharat Mission (Urban) under the urban habitat model, according to Mr Hardeep Singh Puri, Minister of State (Independent Charge) for Housing

Road Ahead

Indias national highway network is expected to cover 50,000 kilometres by 2019, with around 20,000 km of works scheduled for completion in the next couple of years, according to the Ministry of Road Transport and Highways.

The Government of India is devising a plan to provide wifi facility to 550,000 villages by March 2019 for an estimated cost of Rs 3,700 crore (US$ 577.88 million), as per the Department of Telecommunications, Government of India.

India and Japan have joined hands for infrastructure development in Indias north-eastern states and are also setting up an India-Japan Coordination Forum for Development of North East to undertake strategic infrastructure projects in the northeast.

Impact:

Better days ahead for road construction firms by way of fresh tenders and road projects.

Incentives for affordable housing can step up supply and rational prices and lower finance cost can improve project viability.

Cement and steel sector should do well if infrastructure does well.

The Governments initiative for concrete roads have gained momentum and therefore the Company has got wide business prospects in the concrete roads sector.

Construction opportunities have almost doubled for this period from the infrastructure projects lined up across various sub- segments of Power, Concrete Roads, Railways, Irrigation & water supply, Ports and Airports. There is a long-term demand for quality infrastructure construction, mainly emanating from housing, transportation and urban development segments that far exceed the supply, even though there has been a substantial increase in the number of contractors and builders, especially in housing and road construction segment.

6. THREAT PERCEPTION

Challenges:

• Despite the prospects, the sector continues to face challenges from land acquisition issues, adverse political and structural changes, shortage of talent, design and constructability issues, and rising material and labor costs. However, the land acquisition and environment related issues are being addressed on war footing basis to ease the constraints.

• Policy bottlenecks, slow clearance of projects and rising inflation have dampened private sector sentiments and have stifled investments in Capital expenditure. A high level committee has been constituted for speedy clearance of stalled projects and monitoring the implementation.

• Working capital cycle has been elongated mainly due to stretched receivables, which has affected the cash flow position of the companies in the sector. Many of the companies have been forced to draw their full limits with the Banking system or restructure the facilities.

• Lengthy dispute resolution mechanism in the sector is yet another major factor affecting the cash flows of the construction companies

• This coupled with rising interest rates have led to a drop in the PAT margin and deterioration of debt coverage ratios of construction companies.

• Shortage of labour also has become a threat as the industry depends majorly on labour for its sustainability.

7. RISK PERCEPTION

The Directors are constantly assessing the business risks pertaining to the performance of the Company. The following are the important risks perceptions:

• Quality Maintenance of the work.

• Adequate availability of Raw Materials

• Removal of Transport Bottlenecks

• Sudden Increase in Prices of Inputs

• Customers Default

• Inadequacy of Finance Arrangement

• Statutory Policies

• Events Due to Unforeseen Circumstances

• Volatility in domestic construction environment.

Your Directors are fully conscious of the various business risks and have taken adequate care to tackle any situation. Strict controls are enforced on all matters for smooth operation of the projects.

8. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has a sound internal control system. All transactions are subject to proper scrutiny. The Management takes immediate corrective action wherever it is being pointed out to help streamline the internal control process. The management shall ensure the effectiveness of the working of such policy.

9. CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements have been prepared on going concern basis in accordance with accounting principles generally accepted in India. Further, the consolidated financial statements have been prepared on historical cost basis except for certain financial assets and financial liabilities and share based payments which are measured at fair values as explained in relevant accounting policies. Fair valuations related to financial assets and financial liabilities are categorized into level 1, level 2 and level 3 based on the degree to which the inputs to the fair value measurements are observable.

The Consolidated Balance sheet, Consolidated Statement of Profit and Loss, Consolidated Statement of Changes in Equity and disclosure requirements with respect to items in the Consolidated Balance Sheet and Consolidated Statement of Profit and Loss are prepared in the format prescribed in Division II–Schedule III to the Companies Act, 2013 and are adequately presented by way of notes forming part of accounts along with the other notes required to be disclosed under the notified Accounting Standards and the Listing Agreement. The Consolidated Cash Flow Statement has been prepared and presented as per the requirements of Indian Accounting Standard (Ind AS) 7 "Statement of Cash Flows".

10. HUMAN RESOURCES

The Management envisions trained and motivated employees as the backbone of the Company. Special attention is given to recruit trained and experienced personnel in business development, finance and accounts. The Management strives to retain and improve employee morale. The Company has total staff strength of about 726 employees.

The Company has streamlined its manpower strength at the Chennai offices including the corporate head office. As a result of manpower rationalization exercise, the monthly payroll has been optimized. The decision for rationalization of labour has enabled the company to curtail fixed manpower costs. However, the core technical expert team is retained to guide the Company to achieve higher and efficient level of performance.

CORPORATE GOVERNANCE

The Directors pay special attention to ensure that the guidelines given for the corporate governance are strictly adhered to. All possible steps are taken to adhere to the requirements set out by SEBI Guidelines on Corporate Governance. The Company is also aligning itself to implement global corporate governance practices. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders expectations. At CCCL, it is imperative that the company affairs are managed in a fair and transparent manner. This is vital to gain and retain the trust of our stakeholders.

A separate report on the Corporate Governance also forms part of the Annual Report. With regard to the Business Responsibility Report, the Company is not covered in the top 500 listed entities, based on the market capitalization at BSE & NSE as on March 31, 2019. Hence there is no requirement for the Company to comply with Regulation 34 of SEBI (LODR) Regulations, 2015.

11. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Board of Directors has constituted a Corporate Social Responsibility Committee (CSR Committee) in compliance with the provisions under the Companies Act, 2013. The committee comprises of Shri..Mohan Srinivasan as Chairman, Shri.S.Sivaramakrishnan, Shri. .VG Janarathanam, Shri.Sujit Mundul and Mr.KaushikRam as its other members.

The said Committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of the CSR Policy and recommending the amount to be spent on CSR activities.

Since the company is making losses for the past six years, CSR spend does not apply to the company for the financial year 2018- 19. Hence submission of a report on CSR activities does not apply.

12. SEXUAL HARASSMENT POLICY

The Company had adopted the prevention of sexual harassment policy and subsequently also formed a committee for the same.

Complaints Received - Nil Complaints Disposed off - Nil

13. DEPOSITORY SYSTEM / E-VOTING MECHANISM:

The Company has entered into a Tripartite Agreement with both the Depositories viz. National Securities Depository Limited (NSDL) and Central Depository Services (I) Ltd (CSDL) along with Registrars M/s Karvy Fintech Pvt. Ltd, for providing electronic connectivity for dematerialization on the Companys shares facilitating the investors to hold the shares in electronic form and trade in those shares. The shares of your Company are being traded now on the Bombay Stock Exchange and National Stock

Exchange under compulsory demat form. Further, in accordance with provisions stipulated under Companies Act, 2013, the facility of e-voting is also made available to all shareholders of the Company. The instructions regarding e-voting is enclosed along with this report. All shareholders are also requested to update their email ids with the Company or our RTA M/s. Karvy Fintech Pvt. Ltd.

15. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Sections 124 and 125 of the Companies Act, 2013, relevant amounts which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from to time to time on due dates, to the Investor Education and Protection Fund. The details of the same are covered under the Corporate Governance Report.

16. AUDITORS

STATUTORY AUDITORS

M/s. Sundar, Srini & Sridhar, Chartered Accountants, Chennai, (FR No. 004201S) Chennai were appointed as Statutory Auditors of the Company by the shareholders at the 20th Annual General Meeting held on September 26, 2017 to hold office up to the conclusion of the 25th Annual General Meeting.

AUDITORS REPORT AND MANAGEMENTS RESPONSE TO AUDITORS OBSERVATIONS

Auditors Observation:

Trade receivables include a sum of Rs. 48,333.56 lakhs which are under arbitration, which according to the Management will be awarded fully in Companys favour on the basis of the contractual tenability, progress of arbitration and legal advice and hence no provision for impairment loss has been considered necessary by the management as disclosed in Note 8(b). However, considering the significant time involved in the arbitration process and delays in the realisation of amounts in the recent years for the claims awarded in favour of the Company we are unable to comment on the carrying value of the above referred claims and the shortfall, if any, on the amount that would be ultimately realized by the Company.

Management response to Auditors observation:

The statutory given a qualified opinion on the Trade receivables under arbitration for Rs.483 crs quoting the time frame involved in the Arbitration proceedings.

The company went into arbitration for those receivables, long back. The total amount claimed under arbitration is around INR1000 crs for all the projects.

This will definitely take time to get the arbitration award as the documents pertaining to the arbitration claims are huge . Moreover the company recognised only INR483Crores as Trade Receivables in the books of Accounts, which is < 50 % of the total Arbitration claims.

The management is sincerely approaching the arbitration proceedings in all respects and confident of getting the award not lesser than the book value.

INTERNAL AUDITOR

The Board has appointed M/s. Gopalaiyer and Subramanian, Chartered Accountants as the Internal Auditor of the Company pursuant to Section 138 of Companies Act, 2013 and Rule No. 13 of The Companies (Accounts of Companies) Rules, 2014 for the financial year 2019-20.

Mr. M. Francis is a qualified Company Secretary having expertise in finance and Accounts. The Internal Audit would ensure that strong internal control mechanism is put in place in the Company as per the recommendations and guidance of Audit Committee.

COST AUDITOR

The Board of Directors had appointed M/s SS & Associates (Firm Registration No 000513) as the Cost Auditors of the Company to audit the cost accounting records of the Company for the financial year 2019-20.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. N. Balachandran, Practising Company Secretary, Chennai to undertake the Secretarial Audit of the Company. The report of the Secretarial Audit Report is annexed herewith as "Annexure B"

MANAGEMENTS RESPONSE TO SECRETARIAL AUDITORS OBSERVATIONS

a. The Securities and Exchange Board of India (Listing Obligation and Disclosure Requirements) Regulations 2016 except there are few instances require compliance.

The trading with the stock exchanges are suspended due to the non payment of penalty to the exchanges for the lapse in Board composition for two quarters. However now the Company has complied with the Regulation and also paid the penalty amount. Both the Exchange is in process of granting the approval for revocation of trading.

b. The Secretarial Standards issued by The Institute of Company Secretaries of India, However, there are few instances which require compliance.

The Company has strived to comply with the secretarial standards issued by ICSI however efforts are taken to streamline the same.

c) Company web site related compliances in general are yet to be regularised and updated in a periodical manner.

As the website revamping is in process, the website compliances are now regularized

d) I further report that the following points requires attention and are beyond my scope

1) Erosion of Net worth

2) Uncertainty on Recovery of Trade Receivables

3) Winding up petition preferred by various corporate bodies against the Company.

4) Loans extended requires compliance under section 186(7) of Companies Act, 2013.

1) The net worth erosion has happened because of the continuous loss made by the Company. However the Company is hopeful of bringing the net worth positive in the coming years with the enhanced business opportunities.

2) The Company on day to day basis is closely following it up with the clients for the trade receivables. The Company is hopeful in recovering major dues in due course of time.

3) At present there is only one winding up petitions filed against the Company to the tune of Rupees. Thirty Five Lakhs The Company has filed counter statement that the petition filed by the petitioner is time barred as per the Limitation Act, 1963

4) The Company has not charged any interest for the loans extended to its subsidiary company as the subsidiary company is striving to revive and it becomes responsibility of the holding company to support the subsidiary companies to the maximum extent possible in its faster revival. Hence given the precarious situation any further interest burden to the Company will lead to greater deterioration of the Company.

e) I Further Report that the company is not regular in depositing the statutory dues / of filing periodical return as relating to and applicable, with the appropriate authorities during the year under audit.

Due to the delay in collection from clients, the Company could not deposit its statutory dues on time. Inspite of the crippled situation the Company strives to comply with the statutory obligations on time. Efforts are being made to comply on time.

f) The Listing Agreements entered into by the Company with National Stock Exchange of India Limited and BSE Ltd . During the period under review, the Company has complied in general with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. except compliances required for few instances.

• The trading with the stock exchanges are suspended due to the non payment of penalty to the exchanges for the lapse in Board composition for two quarters. However now the Company has complied with the Regulation and also paid the penalty amount. Both the Exchange is in process of granting the approval for revocation of trading.

g) There has been a non-compliance in repayment of amount outstanding on Optionally Convertible Debentures and interest thereupon

• The Company is negotiating with Banks for postponement of the said repayment

h) There are overdue payments payable to MSME Enterprises under MICRO Small and Medium Enterprises Development Act 2006

• These are operational overdues and steps have been taken to settle the pending dues periodically.

17. DIRECTORS:

The following changes have occurred in the Board of Directors during the financial year 2018-2019:

17.1 INDUCTIONS/ CHANGE IN DESIGNATION

The Board has appointed Mr. Sujit Mundul (DIN: 03519755) and Ms.Kameswari Subramanian (DIN: 08290521) on December 03, 2018 as an Independent Directors.

17.2 DECLARATION BY INDEPENDENT DIRECTORS

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and as per the SEBI (LODR) Regulations, 2015.

17.3 RESIGNATIONS

The Board accepted and approved the resignation of the following Directors

1. Mr.Ranjit Goswami DIN:(07368429) on January 30, 2019

2. Mr. P. Venkatesh DIN:(00378947) on May 28, 2019

and Mr.PK Aravindan relieved from the Board due to death on 21.02.2019.

The Company and its Board of Directors place their most sincere condolences to loved ones and family of Mr.P.K. Aravindan. The Board places its deep appreciation for the contribution Mr.P.K. Aravindan has made to the Board of Consolidated Construction Consortium Limited throughout his directorship and also for the significant contribution he has made to the management affairs of the Company and for the valuable advises he has made to the Board from time to time.

We are truly grateful for all the valuable time that he has spent for the betterment of the Company.

17.4 RE-APPOINTMENTS

In accordance with the provisions of the Companies Act, 2013 and in terms of the Memorandum & Articles of Association of the Company, At the ensuing 22nd Annual General Meeting, Shri. VG.Janarathanam, whole - time Director of the Company is liable to retire by rotation and being eligible offer himself for re-appointment. The Board recommends his reappointment.

The Companies Act, 2013, provides for the appointment of Independent Directors. Sub section (10) of Section 149 of the Companies Act, 2013 provides that independent directors shall hold office for a term of up to five consecutive years on the board of a company; and shall be eligible for re-appointment on passing a special resolution by the shareholders of the Company.

Accordingly all Independent Directors were appointed by the shareholders at the General Meeting as required under Section 149(10) of the Companies Act 2013. Further, according to sub section (11) of Section 149 of the Companies Act 2013, no Independent Director shall be eligible for appointment for more than two consecutive terms of five years. Sub section (13) states that the provisions of retirement by rotation as defined in Sub section (6) and (7) of Section 152 of the Act shall not apply to such independent directors.

Mr.Jayaram Rangan (DIN:00573850) who was appointed as an Independent Director of the Company by the Members with effect from 01st September, 2014 and whose term of office expires on 31st August, 2019, is reappointed as an Independent Director of the Company not liable to retire by rotation for another term of five consecutive years from 01st September 2019 to 31st August 2024, subject to passing of resolution in this AGM.

17.5 BOARD EVALUATION

Pursuant to the Regulation 17(6) (10) of SEBI (LODR) Regulations, 2015, the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the director being evaluated. The Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees.

17.6 TRAINING OF INDEPENDENT DIRECTORS

Every new Independent Director of the Board attends an orientation program. To familiarize the new inductees with the strategy, operations and functions of our Company, the executive directors/senior managerial personnel make presentations to the inductees about the Companys strategy, operations, product and service offerings, markets, organization structure, finance, human resources, technology, quality, facilities and risk management.

17.7 REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. The Executive Directors have deferred their salaries till revival of the Company and all other remunerations paid to the Directors, Key Managerial Personnel and senior management personnel are as per the remuneration policy of the Company.

17.8 DIRECTORS RESPONSIBILITY STATEMENT:

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors, make the following statement in terms of Section 134 (3) (c) of the Companies Act, 2013:

(a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) 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 at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had 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 directors had prepared the annual accounts on a going concern basis; and

(e) the directors, 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) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

18 CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION

A statement containing the particulars relating to conservation of energy, research and development and technology absorption as required under Section 134 (3) (m) of the Companies Act, 2013 and Rule 8 (3) (A), (3) (B) and 3 (A) (C) of The Companies (Accounts) Rules, 2014 is annexed to this report as "Annexure C"

19 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF COMPANIES ACT, 2013

Details of Loan, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to financial statements.

20 PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 of the Companies Act 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of the employees of the company, is annexed to this report as "Annexure F"

21 DEPOSITS

Your Company has not accepted any deposits from the public during the year under review.

22 MEETINGS

During the year Five Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

23 COMMITTEES

Currently, the Board of Directors of the Company pursuant to the mandatory provisions of Companies Act, 2013 has the following committees namely:

a) Audit Committee

b) Nomination & Remuneration Committee

c) Stakeholders Relationship Committee

d) Corporate Social Responsibility Committee

e) Share Transfer Committee

f) Risk Management committee

g) Internal Complaints Committee

h) Executive Committee

i) Enquiry Committee

A detailed note on the Board and its committees along with the composition of the committees and compliances is provided under the Corporate Governance Report section in this Annual Report.

24 AUDIT COMMITTEE

Currently, the Company has an independent and qualified Audit Committee as per the provisions of Section 177 (8) of the Companies Act, 2013 and Rule 7 of The Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 18 of SEBI (LODR) Regulation, 2015, the following is the current composition of Audit Committee:

Name of the Director Status Category
Mr.Mohan Srinivasan Chairman Non-Executive Independent Director
Mr. Jayaramrangan Member Non-Executive Independent Director
Mr. Sujit Mundul Member Non-Executive Independent Director
Ms. Kameswari Subramanian Member Non-Executive – Independent Director

The Board has accepted all the recommendations provided by the Audit Committee.

25 VIGIL MECHANISM/WHISTLE BLOWER POLICY

The Company has a vigil mechanism/whistle blower Policy to deal with instance of fraud and mismanagement, if any. The details of the vigil mechanism Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

26 PARTICULARS OF CONTRACTS OR ARRAGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT, 2013:

All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with

Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. The Company is in the process of developing a Related Party Transactions Manual, Standard Operating Procedures for purpose of identification and monitoring of such transactions. None of the Directors has any pecuniary relationships or transactions vis--vis the Company. Particulars of Contracts or arrangement with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed Form AOC-2, is appended as Annexure "D" to the Boards Report.

27 ENHANCING SHAREHOLDER VALUE

Your Company believes that its Members are among its most important stakeholders. Accordingly your companys operations are committed to the pursuit of achieving high levels of operating performance and cost competitiveness, consolidating and building for growth, enhancing the productive asset and resource base and nurturing overall corporate reputation. Your company is also committed to creating value for its other stakeholders by ensuring its corporate actions positively impact the socio-economic and environmental dimensions and contribute to sustainable growth and development.

28 EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as "Annexure E".

29 COMPLIANCE OF SECRETARIAL STANDARD

The Company has complied with the Secretarial Standards issued by The Institute of Company Secretaries of India and approved by the Central Government as required under Section 118(10) of the Companies Act, 2013.

30 GREEN INITIATIVES

During fiscal 2014-15, we started a sustainability initiative with the aim of going green and minimizing our impact on the environment. This year, we are publishing only the statutory disclosures in the print version of the Annual Report. Additional information is available on our website, www.ccclindia.com.

Electronic copies of the Annual Report 2018-19 and Notice of the 22nd Annual General Meeting are sent to all the members whose email addresses are registered with the Company/Depository Participant(s). For members who have not registered their email addresses, physical copies of the Annual Report 2019 and the Notice of 22nd Annual General Meeting are sent in the permitted mode. Members requiring physical copies can send a request to the Company.

31 ACKNOWLEDGEMENT

The Board of Directors of the Company wishes to express their deep sense of appreciation and offer their sincere thanks to all the Shareholders of the Company for their unstinted support to the Company.

The Board also wishes to express their sincere thanks to all the esteemed Customers for their support to the Companys business.

The Board would also like to place on record their deep sense of gratitude to the various Central and State Government Departments, Organizations and Agencies for the continued help and co-operation extended by them.

The Board would also like to place their sincere thanks to Mr. Ranjit Goswami (Nominee Director), Mr. P. Venkatesh and Dr.PK. Aravindan the erstwhile Independent Director of the Company for the contribution to the Board during their tenure as Independent Director of the Board.

The Directors also gratefully acknowledge and thank all financial institutions and banks for their timely support in restructuring the Companys debt under the Sustainable Structuring of Stressed Assets (S4A) recently approved by the lenders and failing which the Company would have succumbed to the recession faced by the Construction Industry.

In the end, the Board would like to place on record their deep sense of appreciation to all the executives, officers, employees, staff members, and workers at the various sites.

For and on behalf of the Board of Directors
R. Sarabeswar S. Sivaramakrishnan
Place: Chennai Wholetime Director Managing Director
Date: August 28, 2019 (DIN: 00435318) (DIN: 00431791)