hindustan construction company ltd share price Directors report

To,

The Members of Hindustan Construction Company Ltd.

1. Report

Your Directors are pleased to present the 96^th Annual Report together with the Audited Financial Statements for the year ended March 31, 2022.

2. Financial Highlights ( As per IND AS)

	Year ended 31 March 2022			Year ended 31 March 2021
Income from Operations	_	4,666.28	_	2,589.74
Profit before Interest, Depreciation, Exceptional Items,	_	788.92	_	299.62
Other Income and Tax
Less: Finance Costs	948.80	_	829.89	_
Depreciation	93.64	_	91.06	_
Exceptional Item	-	(1,042.44)	274.03	(1,194.98)
Add: Other Income	_	80.24	_	52.64
Profit /(Loss) before Tax	_	(173.28)	_	(842.72)
Less: Tax Expense	_	(20.18)	_	(276.27)
Profit/(Loss) after Tax	_	(153.10)	_	(566.45)
Add: Other Comprehensive Income / Loss	_	7.86	_	6.89
Total Comprehensive income carried to Other Equity	_	(145.24)	_	(559.56)

3. Dividend

In view of the losses incurred by the Company, your Directors have not recommended any dividend for the financial year ended March 31, 2022.

4. Strategic Development

HCC has undertaken several initiatives to strengthen its balance sheet and streamline operations for accelerated project execution that is reflected in the performance for FY 2021-22. Some of these initiatives are explained below:

NHAI Conciliations & Realisation of BOT Asset Sale

In FY 2020-21, the Company had initiated a conciliation process with NHAI to generate liquidity in the face of prolonged litigations and their associated costs. The Company successfully completed five conciliations within its PPP/BOT arm, HCC Concessions (HCON), and one conciliation in HCC, thereby receiving a total sum of 1,849 crore. In September 2020, the Company completed the sale of its largest BOT asset, Farakka Raiganj Highways Ltd. to Cube Highways and Infrastructure V Pte. Ltd. (Cube) for an enterprise value of 1508 crore, generating substantial liquidity for the group.

In February 2022, HCON executed a binding term sheet to sell its Baharampore-Farakka Highways Limited asset to Cube, at an enterprise value of 1,279 crore. Furthermore, HCON will be entitled to a material revenue share for the life of the concession. The transaction is subject to closing adjustments, customary due diligence and approvals, including from the NHAI and the lenders.

Strategic Developments at HCC Infrastructure

In August 2021, an exit was provided to the Xander Group, which held a 14.5% stake in HCC Concessions since 2011. Thereafter, 100% of the economic interest of HCON vested with the Company. In addition, HCC Infrastructure group of companies became debt free after closing all loans with Yes Bank Ltd. in September 2021.

In the month of November 2021, scheme of merger of HCC Concessions Ltd, HCC Power Ltd, Dhule Palesnar Operation & Maintenance Ltd and HCC Power Ltd with HCC Infrastructure Company Ltd U/s 230 to 232 of the Companies Act, 2013 has been filed with NCLT in order to reorganize the legal entities in the group structure to ensure optimized corporate holding structure and reduction in the multiplicity of legal and regulatory compliances at optimized cost.

Debt Resolution Plan

The carve-out of a material portion of HCC?s debt along with commensurate award assets to an SPV results in a long-awaited solution to the asset-liability mismatch faced by HCC on account of delayed realization of its arbitration awards visa-vis Government Agencies. The Company has received final board approvals from all its lenders and achieved a closure of all documentation. Delays in approvals from Lenders and the impact of COVID19 had led to an inordinate delay in plan execution, with expected completion in Q2 FY 2022-23. The focus of HCC is now squarely on growth as it expects to secure new orders with full access to its working capital and bonding limits.

Under this debt resolution plan, HCC will transfer up to 4,000 crore worth of liability to subsidiary Prolific Resolution Pvt Ltd. (SPV). It will also transfer the economic interest in arbitration awards and claims of up to 9,200 crore to the SPV. The Board approved the plan on 27 May 2021 subject to necessary approvals.

This SPV will have an external investor controlling atleast 51% and HCC holding balance shares. The SPV debt being significantly over-collateralised is expected to be fully serviced from its own receivables. The underlying arbitration awards carry interest, which will appropriately meet the SPV lenders? liabilities that also accrue interest. The return on investment to the identified investor entity will be capped and HCC will extend its corporate guarantee to lenders of SPV, which have back ended repayment schedule starting FY 2026-27. On repayment of the SPV liability, it is expected that the surplus awards and claims will flow back to the benefit of HCC, which is expected to be material in value.

The Plan also entails divestment of identified non-core assets in HCC and conciliation/ realization of identified Awards and Claims (remaining in HCC after carve out) to the tune of 1,549 crore, which will be utilized for operations and growth.

Execution of Arbitration Awards

Consequent to the amendments to the Arbitration & Conciliation Act, 1996 (as amended in 2015), together with the Supreme Court of India setting aside Section 87 of the Arbitration and Conciliation Act, there would henceforth not be any automatic stay on the execution of Arbitration Awards. Earlier, a stay was granted at the mere filing of a challenge to an Award and would sometimes continue for years until the Court had time to hear the matter. Today, due to HCC?s efforts in the Supreme Court, all Awards may be executed, resulting in the deposit/collection of monies.

Furthermore, due to various pro-business policy frameworks by Govt, we expect Arbitration Awards? realization to be swifter, leading to more efficient dispute resolution in the long run.

To avoid litigations, the GOI in the Union Budget has proposed a conciliation mechanism for resolving disputes in the construction industry. Para 135 of Budget provides as under: 135. To have ease of doing business for those who deal with Government or CPSE?s and carry out Contracts, I propose to set up a Conciliation

Mechanism and mandate its use for quick resolution of Contractual disputes. This will instil confidence in private sector investors and contractors.

This mechanism is likely to spur private investment in the infrastructure sector, which is considerably problematic due to the mechanical challenging of awards and long delays in dispute resolution. The above mechanism-specific mandate to the CPSEs will go a long way in helping the Contractors and the Govt agencies to ensure the infrastructure projects are completed with minimum delays as the disputes would be settled and the money would be available during the performance of the Contracts.

5. COVID-19-Impact on Business operations

During the year, project performance was affected due to various restrictions imposed by Government authorities due to the 2^nd wave of COVID-19 and the new variant Omicron. Remobilizing the required manpower at Projects and streamlining the supply chain management remained challenging. Despite the above challenges, projects have made additional efforts to remobilize the required workmen and strengthen the supply chain management with improved vendor management. Though clients have agreed to sanction the extension of time as per Government guidelines, most clients are yet to sanction payment for compensation for the lockdown period and the 2^nd wave of COVID-19.

6. Share Capital of the Company

The present paid-up Equity Share Capital of the Company is 1,51,30,28,244/- comprising of 1,51,30,28,244 Equity Shares having face value of 1/- each.

7. Operations

The turnover of the Company during financial year 2021-22 is 4,666.28 crore as compared to 2,589.74 crore during financial year 2020-21.

During the year under review, the Company has secured three contracts aggregating 3,100 crore (The Company?s Share 1,558 crore) in joint venture.

The total balance value of works on hand as on March 31, 2022 is 15,967 crore.

Operations of Subsidiaries:

i) HCC Infrastructure Company Limited

HCC Infrastructure Company Limited is a wholly owned subsidiary of HCC Limited. HCC Infrastructure Company Limited has 100% economic interest in HCC Concessions Limited (HCON).

HCON has developed a premium portfolio of ~7,000 crore of road assets under India?s National Highway Development Program on DBFOT (Design, Build, Finance, Operate and Transfer) basis. Baharampore-

Farakka Highways Ltd (BFHL) completed an additional stretch of 14.35 km and consequently its toll rates were enhanced by ~20% from May 14, 2021 onwards. Despite the impact of COVID19 in FY 2021-22 and certain restrictions imposed by the State Government, the traffic grew ~12% with the average daily collection being 35.3 lakh.

During FY 2021-22, Raiganj-Dalkhola Highways Ltd (RDHL), a 100% subsidiary of HCON, received 2 arbitration awards accumulating to ~873 crore in respect of termination payment and delay cost claims. NHAI has challenged the Termination payment Award under Section 34 of the Arbitration & Conciliation Act in Delhi High Court.

In August 2021, an exit was provided to the Xander Group, which held a 14.5% stake in HCC Concessions since 2011. Thereafter, HCC Infrastructure has 100% economic interest in HCON.

In September 2021, HCC Infrastructure group of companies closed all its loans with Yes Bank Ltd thereby ensuring HCC Infrastructure Group is debt free.

In the month of November 2021, scheme of merger of HCC Concessions Ltd, HCC Power Ltd, Dhule Palesnar Operation & Maintenance Ltd and HCC Power Ltd with HCC Infrastructure Company Ltd U/s 230 to 232 of the Companies Act 2013 has been filed with NCLT in order to reorganize the legal entities in the group structure to ensure optimized corporate holding structure and reduction in the multiplicity of legal and regulatory compliances at optimized cost.

In February 2022, HCON executed a binding term sheet in respect of 100% stake sale of BFHL to Cube Highways and Infrastructure V Pte. Ltd, at an enterprise value of 1,279 crore, reflecting an equity valuation of 600 crore. In addition to the equity value, 200 crore of earnout is payable in May 2024 contingent on achieving revenue thresholds. Furthermore, HCON will be entitled to a material revenue share for the life of the concession. The transaction is subject to closing adjustments, customary due diligence and approvals, including from the NHAI and the lenders.

During FY 2021-22, HCON began process of rebuilding its BOT portfolio with a focus on new project development.

ii) Steiner AG, Switzerland

Steiner AG, HCC?s wholly-owned subsidiary, is a leading Swiss real estate service provider with a focus on project developmen and construction.

The business is primarily divided into four offerings.

First, the primary business of the Company is real estate development, including long-standing brownfield projects and redevelopment projects. The focus is on developing projects that will have a market in the future.

Second, Steiner is involved in General and Total

Contracting, where it provides complete turnkey building services from design to construction in French-speaking Switzerland.

Third, Steiner is evolving a model of developing

financial vehicles that will fund real estate development and is working on partnerships with funds.

Fourth, Steiner established the new business field

"Steiner Digital" for digital collaboration platforms serving properties? entire life cycles.

Some of the major projects being executed by Steiner AG are:

Construction of Glasi-quarter, a new urban district in B?lach with 500-plus apartments, a residential and care centre, a hotel and over 20,000 m? of light-industrial and service-sector units, worth approx. CHF 350 million (2,825.55 crore).

Osiris project in Echallens, a new eco-district worth approx. CHF 115 million (928.4 crore), involving the construction of 15 buildings with a total of 410 apartments.

Manegg Mitte development in Zurich worth approx. CHF 140 million (1,130.22 crore), comprising two residential buildings with 151 owner-occupied apartments and a third new-build with 101 cooperative apartments and light-industrial units.

Gupfengarten residential development in

Niederweningen, worth CHF 50.5 million (407.69 crore), including the construction of 36 single-family houses and three multi-family blocks with a total of 21 apartments for owner occupancy.

Steiner AG reported revenues of CHF 754 million ( 6,083 crore) in the financial year 2021-22 as compared to CHF 705 million (5,411 crore) in the previous year and a profit of CHF 39 million (315 crore) as compared to a net profit of CHF 3.7 million ( 28 crore) in the previous year. The Company secured fresh orders worth CHF 549 million (4,431 crore). The order book stood at CHF 996 million (8,044 crore) at the end of the financial year.

The World Health Organization officially declared the spread of COVID19 as a pandemic as of March 12, 2020. The effects of the various lockdowns, construction site closures, illness-related absences of skilled site workers and bottlenecks at its suppliers have also impacted the Steiner Group in FY 2021-22.

Throughout the COVID19 pandemic, the Company?s top priority was to ensure the health and safety of its employees and partners. Steiner has therefore been swift in deploying strict hygiene and safety measures for all its construction sites as well as its office spaces.

Steiner?s subsidiary Steiner India has achieved strong initial traction in India, having successfully completed design-build / turnkey GC/TC key high rise residential, hospitality and industrial projects in Mumbai, NCR and Kolkata.

8. Subsidiaries and Associate Companies

During the year, pursuant to the Securities Purchase Agreement entered between Xander Investment Holding XXVI Limited (‘Xander?) and the Company along with certain group entities, Xander?s shareholding (14.55%) in HCC Concessions Limited (‘HCON?), subsidiary of the Company, has been bought back by HCON. Consequent to the buy back, effective 20 August 2021, HCON (including its subsidiaries i.e. Narmada Bridge Tollways Limited, Badarpur Faridabad Tollways Limited, Baharampore-Farakka Highways Limited, Raiganj-Dalkhola Highways Limited) has ceased to be joint ventures and became subsidiaries of the Company.

Also, Projektentwicklungsges. Parking Kunstmuseum AG was liquidated in December 2021 and consequently has ceased to be an Associate of the Company.

The details as required under Rule 8 of the Companies (Accounts) Rules, 2014 regarding the performance and financial position of the Subsidiaries, Associates and Joint Ventures of the Company are provided in Form AOC-1, which form part of the Consolidated Financial Statements of the Company for the financial year ended March 31, 2022.

The Company?s Policy for determining material subsidiaries was revised by the Board on May 12, 2022 and the revised Policy is available on the Company?s website and can be accessed by weblink https://hccindia.com/uploads/ Investors/Policy%20for%20Determining%20Material%20 Subsidiaries.pdf.

Pursuant to initiation of the Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016 (‘IBC?) against Lavasa Corporation Limited (LCL), effective 30 August 2018, the Holding Company has lost control / significant influence over LCL and its subsidiaries, associates and joint ventures. Accordingly, the above entities cease to be subsidiaries, associates and joint ventures of the Holding Company effective 30 August 2018.

9. Public Deposits

Your Company has not accepted any deposit falling under Chapter V of the Companies Act, 2013 during the year under review. There were no such deposits outstanding at the beginning and end of the financial year 2021-22.

10. Particulars of Loans, Guarantees or Investments

Particulars of Loans, Guarantees and Investments made during the year as required under the provisions of Section 186 of the Companies Act, 2013 (the Act) are given in the notes to the Financial Statements forming part of Annual Report.

Also, pursuant to Paragraph A (2) of Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the SEBI Listing Regulations), particulars of Loans/Advances given to subsidiaries have been disclosed in the notes to the Financial Statements.

11. Employee Stock Option Scheme (ESOP)

As on March 31, 2022, 3,47,450 stock options were available for grant to the eligible employees. Each option, when exercised, would entitle the holder to subscribe for one equity share of the Company of face value 1 each.

The particulars with regard to Options as on March 31, 2022, as required to be disclosed pursuant to the provisions of Companies (Share Capital and Debentures) Rules, 2014 read with the applicable SEBI Regulations, are set out at Annexure I to this Report.

BNP & Associates, Secretarial Auditors of the Company, have certified that the Company?s ESOP Scheme has been implemented in accordance with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 and the Resolution passed by the Members for the Scheme.

12. Consolidated Financial Statements

In accordance with the Act and implementation requirements of Indian Accounting Standards (‘IND-AS?) on accounting and disclosure requirements and as prescribed by the SEBI Listing Regulations, the Audited Consolidated Financial Statements are provided in this Annual Report.

Pursuant to Section 129(3) of the Act, a statement containing the salient features of the Financial Statements of the Subsidiaries, Associates and Joint ventures of the Company in the prescribed form AOC-1 is annexed to this Annual Report.

Pursuant to Section 136 of the Act, the Financial

Statements of the subsidiaries are available on the website of the Company i.e., www.hccindia.com under the Investors Section.

13. Corporate Governance

The Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements as stipulated by the Securities and Exchange Board of India (the SEBI).

The report on Corporate Governance as prescribed in the SEBI Listing Regulations forms an integral part of this Annual Report. The requisite certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance along with a declaration signed by CEO of the Company stating that the Members of the Board of Directors and Senior Management have affirmed the compliance with code of conduct of the Board of Directors and Senior Management, is attached to the report on Corporate Governance.

14. Directors

Mr. N. R. Acharyulu, Non-Executive Non-Independent Director, who was appointed as an Independent Director with effect from June 23, 2021, by the Board of Directors, was regularized as an Independent Director in the Annual General Meeting held on September 23, 2021, for a term of 3 consecutive years, up to the conclusion of the 98^th Annual General Meeting of the Company, not liable to retire by rotation.

Mr. Arun Karambelkar, who was appointed as an Additional Director of the Company in the category of Non-Executive Non-Independent Director with effect from June 23, 2021, by the Board of Directors in terms of terms of Section 161(1) of the Act read with Article 88 of the Articles of Association of the Company, was regularized as a Non-Executive Non-Independent Director in the Annual General Meeting held on September 23, 2021, liable to retire by rotation.

Mr. Anil Singhvi, Independent Director of the Company has resigned from the Directorship of the Company with effect from December 23, 2021. The Board places on record its appreciation for the exemplary services rendered by him and contribution made by him during his tenure as an Independent Director of the Company.

The existing tenure of Mr. Santosh Janakiram and Mr. Mahendra Singh Mehta as Independent Directors is expiring on September 29, 2022 i.e. date of the 96^th AGM and they, being eligible, have offered themselves for re-appointment. Based on the performance evaluation carried out by the Board and after reviewing the declaration submitted by them and pursuant to the recommendation of the Nomination & Remuneration Committee, the Board recommends their re-appointment for a second term of 5 consecutive years i.e. from the conclusion of the 96^th AGM to be held in the calendar year 2022 till the conclusion of the 101^st AGM to be held in the calendar year 2027.

Based on the recommendation of the Nomination and Remuneration Committee, the Board at its Meeting held on March 23, 2022, has re-appointed Mr. Arjun Dhawan as a Whole-time Director of the Company, for a period of 5 years w.e.f. April 01, 2022 subject to Members? approval. Board has also appointed him as Vice Chairman of the Board with effect from March 23, 2022.

As per the provisions of Section152 of the Companies Act, 2013, Mr. Arun Karambelkar, Non-Executive and Non-

Independent Director of the Company, is due to retire by rotation at the ensuring 96^th Annual General Meeting and, being eligible, has offered himself for re-appointment. The Board, based on the recommendation of the Nomination and Remuneration Committee, at its Meeting held on May 12, 2022, has recommended his re-appointment as a Non-Executive and Non- Independent Director of the Company, liable to retire by rotation.

Brief profiles of the Directors seeking re-appointment have been given as an annexure to the Notice of the 96^th AGM.

The Independent Directors of the Company viz. Mr. Santosh Janakiram, Mr. Mahendra Singh Mehta, Dr. Mita Dixit and Mr. N. R. Acharyulu have furnished the declarations to the Company confirming that they meet the criteria of Independence as prescribed under Section 149 of the Act and Regulation 16 (1)(b) read with Regulation 25(8) of the SEBI Listing Regulations and the Board has taken on record the said declarations after undertaking due assessment of the veracity of the same.

The Company has also received Form DIR-8 from all the Directors pursuant to Section 164(2) and Rule 14(1) of Companies (Appointment and Qualification of Directors) Rules, 2014.

15. Key Managerial Personnel

As on March 31, 2022. the following persons were the Key Managerial Personnel (KMP) of the Company pursuant to Section 2(51) and Section 203 of the Act read with the Rules framed thereunder:

i. Mr. Ajit Gulabchand, Chairman & Managing Director.

ii. Mr. Arjun Dhawan, Vice Chairman and Whole-time Director.

iii. Mr. Jaspreet Singh Bhullar, Chief Executive Officer (w.e.f. March 23, 2022).

iv. Mr. Rahul P. Rao, Chief Financial Officer (w.e.f. August 12, 2021).

v. Mr. Vithal P. Kulkarni, Executive Vice President & Company Secretary.

Mr. Arjun Dhawan has ceased to be Group CEO (KMP) consequent upon appointment as the Vice Chairman of the Board with effect from March 23, 2022.

Mr. U V Phani Kumar has resigned from the position of CEO- HCC(E&C) with effect from March 23, 2022.

Mr. Vithal P. Kulkarni has resigned from the position of Executive Vice President & Company Secretary with effect from May 12, 2022.

Mr. Nitesh Kumar Jha has been appointed as the Company Secretary and Compliance Officer of the Company with effect from May 12, 2022.

16. Board Committees

The Board had constituted / re-constituted various Committees in compliance with the provisions of the Act and the SEBI Listing Regulations viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Risk Managment Committee.

As the Company has fallen under top 1000 listed companies based on the market capitalization as on March 31, 2021, the Board, in its Meeting held on June 23, 2021, has reconstituted the existing Risk Management Committee to comply with the provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (second amendment) Regulations, 2021.

Consequent upon resignation of Mr. Anil Singhvi,

Independent Director of the Company, Mr. N. R. Acharyulu was appointed as a Member of the Nomination and Remuneration Committee in his place with effect from February 03, 2022.

The Board has constituted a Committee for Resolution Plan for implementation of the Debt Resolution Plan of the Company.

All decisions pertaining to the constitution of Committees, appointment of Members and fixing of terms of reference/ role of the Committees are taken by the Board.

The details of the role and composition of these Committees, including the number of Meetings held during the financial year and attendance at these Meetings are provided in the Corporate Governance Section of the Annual Report.

17. Meetings

A calendar of Board meetings, Annual General Meeting and Committee Meetings is prepared and circulated in advance to the Directors of your Company. The Board of Directors of your Company met 6 times during the financial year 2021-22. The Meetings were held on May 21, 2021, June 23, 2021, August 12, 2021, November 11, 2021, February 03, 2022, and March 23, 2022.The maximum time gap between any two consecutive Meetings did not exceed one hundred and twenty days.

18. Familiarization Program of Independent Directors

In compliance with the requirements of the SEBI Listing Regulations, the Company has put in place a familiarization program for Independent Directors to familiarize them with their role, rights and responsibility as Directors, the operations of the Company, business overview etc. The details of the familiarization program are explained in the Corporate Governance Report and the same is also available on the website of the Company and can be accessed by weblink https://hccindia.com/ uploads/Investors/Policy%20for%20Familiarisation%20 Program%20for%20Independent%20Directors.pdf.

19. A statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the Independent Directors appointed during the year

The Company has received declaration from the Independent Directors that they meet the criteria of independence as prescribed under Section 149(6) of the Act. In the opinion of the Board, they fulfill the condition for appointment/re-appointment as Independent Directors on the Board and possess the attributes of integrity, expertise and experience as required to be disclosed under Rule 8(5) (iiia) of the Companies (Accounts) Rules, 2014.

20. Independent Directors? Meeting

In terms of Schedule IV of the Act and Regulation 25 of the SEBI Listing Regulations, Independent Directors of the Company are required to hold at least one meeting in a financial year without the attendance of Non-Independent Directors and members of management.

During the year under review, Independent Directors met separately on March 28, 2022, inter-alia, for

Evaluation of performance of Non-Independent

Directors and the Board of Directors of the Company as a whole.

Evaluation of performance of the Chairman of the

Company, taking into views of Executive and Non-Executive Directors; and

Evaluation of the quality, content, and timelines of

flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

21. Performance Evaluation

Pursuant to the applicable provisions of the Act and the SEBI Listing Regulations, the Board has carried out an Annual Evaluation of its own performance, performance of the Directors and the working of its Committees based on the evaluation criteria defined by Nomination and Remuneration Committee for performance evaluation process of the Board, its Committees and Directors.

The Board?s functioning was evaluated on various aspects, including, inter-alia, the structure of the Board, Meetings of the Board, functions of the Board, degree of fulfilment of key responsibilities, establishment, and delineation of responsibilities to various Committees and effectiveness of Board processes, information and functioning.

The Committees of the Board were assessed on the degree of fulfilment of key responsibilities, adequacy of Committee composition and effectiveness of Meetings. The Directors were evaluated on aspects such as attendance, contribution at Board/ Committee Meetings and guidance/support to the management outside Board/ Committee Meetings.

As mentioned earlier, the performance assessment of Non-Independent Directors, Board as a whole and the Chairman were evaluated in a separate meeting of Independent Directors. The same was also discussed in the Board Meeting. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

22. Criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management Personnel

The Nomination and Remuneration Committee has laid down a well-defined criterion, in the Nomination, Remuneration and Evaluation Policy, for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management Personnel.

The said Policy is available on the Company?s website and can be accessed by weblink https://hccindia.com/uploads/ Investors/Nomination-and-Remuneration-Policy.pdf.

23. Remuneration Policy for Directors, Key Managerial Personnel and Senior Management Employees

The Nomination and Remuneration Committee has laid down the framework for remuneration of Directors, Key Managerial Personnel and Senior Management Personnel in the Nomination and Remuneration Policy recommended by it and approved by the Board of Directors. The Policy, inter-alia, defines Key Managerial Personnel and Senior Management Personnel of the Company and prescribes the role of the Nomination and Remuneration Committee. The Policy lays down the criteria for identification, appointment and retirement of Directors and Senior Management. The Policy broadly lays down the framework in relation to remuneration of Directors, Key Managerial Personnel and Senior Management Personnel. The Policy also provides for the criteria for determining qualifications, positive attributes and independence of Director and lays down the framework on Board diversity.

The said Policy is available on the Company?s website and can be accessed by weblink https://hccindia.com/uploads/ Investors/Nomination-and-Remuneration-Policy.pdf.

24. Corporate Social Responsibility Policy

A brief outline of the revised Corporate Social Responsibility (CSR) Policy as recommended by the CSR Committee and approved by the Board of Directors of the Company in its Meeting held on June 23, 2021, and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure II of this Report in the prescribed format.

The said Policy is available on the Company?s website and can be accessed by weblink https://hccindia.com/uploads/ Investors/Corporate_Social_Responsibility_Policy.pdf.

25. Related Party Transactions

The related party transactions attracting the compliance under the Companies Act, 2013 and/or the SEBI Listing

Regulations were placed before the Audit Committee and/ or Board for necessary review/approval.

The related party transactions attracting the compliance under Section 188 of the Act and/or the SEBI Listing Regulations were placed before the Audit and Board for necessary approval/review.

The routine related party transactions were placed before the Audit Committee for its omnibus approval. A statement of all related party transactions entered was presented before the Audit Committee on a quarterly basis, specifying the nature, value and any other related terms and conditions of the transactions.

Transactions to be reported in Form AOC-2 in terms of Section 134 of the Act read with Companies (Accounts) Rules, 2014, including the details of the transactions with related parties are provided in the Company?s financial statements in accordance with the Indian Accounting Standards.

The Related Party Transactions Policy was amended on May 12, 2022 in line with the requirements of Regulation 23 of the SEBI Listing Regulations.

The said Policy is available on the Company website and can be accessed by weblink https://hccindia.com/uploads/ Investors/Policy_for_Related_Party_Transactions.pdf.

26. Business Responsibility Statement

As per the SEBI Listing Regulations, a Business Responsibility Report, covering the performance of the Company on the nine principles as per National Voluntary Guidelines (NVGs) is forming part of this Annual Report as

Annexure VII.

27. Directors? Responsibility Statement

In accordance with the provisions of Section 134 of the Act, your Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any.

(b) the selected accounting policies were applied consistently, and the Directors 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 as at March 31, 2022 and of the loss of the Company for the year ended on that date;

(c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the 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.

(e) the internal financial controls have been laid down to be followed by the Company and such controls are adequate and are generally operated effectively during the year.

(f) proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems are adequate and are operating effectively.

Your Auditors have opined that the Company has in, all material respects, maintained adequate internal financial controls over financial reporting and that they were operating effectively.

28. Industrial Relations

The industrial relations continued to be generally peaceful and cordial during the year under review.

29. Transfer of Unclaimed Dividend and Equity Shares to Investor Education and Protection Fund (IEPF)

Pursuant to the applicable provisions of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IEPF Rules"), all unpaid or unclaimed dividends are required to be transferred by the Company to IEPF, after the completion of seven years. Further, according to the IEPF Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to IEPF. During the year under review, there were no unclaimed dividend or equity shares due to be transferred to the IEPFA pursuant to IEPF Rules.

30. Particulars of Employees and other additional information

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to the Report as Annexure-III. In terms of proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the Members, excluding statement containing particulars of top 10 employees and the employees drawing remuneration in excess of limits prescribed under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The said Statement is also open for inspection. Any member interested in obtaining a copy of the same may write to the Company Secretary.

31. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

The information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required to be disclosed under the Companies (Accounts) Rules, 2014 is given in Annexure IV forming part of this Annual Report.

32. Secretarial Standards

The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and General Meetings.

33. Statutory Auditors

The Members of the Company had at the 93^rd Annual General Meeting ("AGM") held on September 26, 2019, approved the re-appointment of M/s Walker Chandiok & Co. LLP, Chartered Accountants, Mumbai, bearing ICAI Registration No. 001076N, for second term of 5 consecutive years, as the Statutory Auditors of the Company, to hold office from the conclusion of that AGM until the conclusion of the 6^th AGM to be held in the year 2024. As required under Section 139 of the Act, the Company has obtained certificate from them to the effect that their continued appointment, would be in accordance with the conditions prescribed under the Act and the Rules made thereunder, as may be applicable.

34. Board?s Comment on Auditors? Qualifications

The explanations on the qualifications/observations/matter of emphsis given by the Statutory Auditos in their Audit Reports have been provided in the respective Notes to the Standalone and Consolidated Financial Statements.

35. Secretarial Audit

Secretarial Audit for the financial year 2021-22 was conducted by M/s. BNP & Associates, Company

Secretaries in Practice in accordance with the provisions of Section 204 of the Act. The Secretarial Auditor?s Report is attached to this Report at Annexure V.

The Secretarial Auditor?s observations are self-explanatory.

36. Cost Audit

The Company is maintaining the accounts and cost records as specified by the Central Government under sub-section (1) of Section 148 of the Act and Rules made thereunder.

In compliance with the provisions of Section 148 of the Act, the Board of Directors of the Company had, at its Meeting held on August 12, 2021, appointed M/s. Joshi Apte & Associates, Cost Accountants as Cost Auditors of the Company for the financial year 2021-22.

In terms of the provisions of Section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, the remuneration of the Cost Auditors is required to be ratified by the Members. Accordingly, necessary resolution is proposed at the 96^th Annual General Meeting for ratification of the remuneration payable to the Cost Auditors for financial year 2021-22.

37. Risk Management

As the Company has fallen under top 1000 listed companies based on the market capitalization as on

March 31, 2021, the Board, in its Meeting held on June 23, 2021 has reconstituted the existing Risk Management Committee to comply with the provisions of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (second amendment) Regulations, 2021. The terms of reference of the Risk Management Committee have been revised in accordance with Schedule II of the SEBI Listing Regulations.

The Company has established a well-documented and robust risk management framework under the provisions of the Act. Under this framework, risks are identified across all business processes of the Company on a continuous basis.

Once identified, these risks are managed systematically by categorizing them into Enterprise Level Risk & Project evel Risk. These risks are further broken down into various subcategories of risks such as operational, financial, contractual, order book, project cost & time overrun etc. and proper documentation is maintained in the form of activity log registers, mitigation reports; and monitored by respective functional heads. Review of these risk and documentation is undertaken by Risk Management Committee regularly at agreed intervals.

38. Internal Control Systems and their adequacy

The Company has an adequate system of internal control to ensure that the resources are used efficiently and effectively so that:

assets are safeguarded and protected against loss from unauthorized use or disposition.

all significant transactions are authorised, recorded and reported correctly.

financial and other data are reliable for preparing

financial information.

other data are appropriate for maintaining accountability of assets.

The internal control is supplemented by an extensive internal audits programme, review by management, documented policies, guidelines and procedures.

39. 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 and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. The Company has adopted accounting policies, which are in line with the Accounting Standards and the Act.

40. Whistle Blower Policy/Vigil Mechanism Policy

The Company has adopted a Whistle Blower Policy to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company?s Code of Conduct or Ethics Policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and provides for direct access to the Chairman of the Audit Committee. It is affirmed that no person of the Company has been denied access to the Audit Committee.

The said Policy is available on the Company website and can be accessed by weblink https://hccindia.com/uploads/ Investors/Vigil_Mechanism_Policy.pdf.

41. Sexual Harassment

The Company has always believed in providing a conducive work environment devoid of discrimination and harassment including sexual harassment. The Company has a well formulated Policy on Prevention and Redress of Sexual Harassment. The objective of the Policy is to prohibit, prevent and address issues of sexual harassment at the workplace. This Policy has striven to prescribe a code of conduct for the employees and all employees have access to the Policy document and are required to strictly abide by it. The Policy covers all employees, irrespective of their nature of employment and is also applicable in respect of all allegations of sexual harassment made by an outsider against an employee.

The Company has duly constituted an Internal Complaints Committee in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder. During the year 2021-22, no case of Sexual Harassment was reported.

42. Reporting of Frauds

There was no instance of fraud during the year under review, which required the Statutory Auditors to report under Section 143(12) of the Act and the Rules made thereunder.

43. Significant and material Orders passed by the Regulators/Courts, if any

There are no significant or material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of your Company and its future operations.

44. Material changes & commitment if any, affecting financial position of the Company from the end of financial year till the date of the report

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year to which the Financial Statements relate and the date of this Report.

45. Annual Return

The Company has uploaded Annual Return on the website of the Company i.e., www.hccindia.com.

46. Green Initiatives

In line with the Green Initiatives, the Notice of 96^th Annual General Meeting of the Company is being sent to all Members whose email addresses are registered with the Company/Depository Participant(s). Members who have not registered their e-mail addresses, are requested to register their e-mail IDs with Company?s Registrar and Share Transfer Agents, TSR Consultants Private Limited at C-101, 1^st Floor, 247, Park, L.B.S. Marg, Vikhroli (West), Mumbai – 400083.

47. Dividend Distribution Policy

Dividend Distribution Policy of the Company (‘the Policy"), approved by the Board on February 2, 2017, endeavors for fairness, consistency and sustainability while distributing profits to the Members and same is attached to this Report as Annexure VI.

48. Acknowledgement

Your Directors would like to acknowledge and place on record their sincere appreciation to all Stakeholders, Clients, Financial Institutions, Banks, Central and State Governments, the Company?s valued Investors and all other Business Partners, for their continued co-operation and support received during the year.

Your Directors recognize and appreciate the efforts and hard work of all the employees of the Company and their continued contribution to promote its development.

	For and on behalf of Board of Directors
	Ajit Gulabchand
	Chairman & Managing Director
Registered Office:
Hincon House, Lal Bahadur Shastri Marg,
Vikhroli (West), Mumbai 400 083
Place: Mumbai
Date: May 12, 2022