McNally Bharat Engineering Company Ltd Directors Report.

Your Directors have pleasure in presenting the Fifty Sixth Annual Report together with audited statement of accounts for the year ended March 31, 2019.


The key highlights of the operations for the financial year 2018-19 over the previous year (based on standalone only in all cases) are as follow:

Total Income increased from Rs. 1,59,218.63 lakh to Rs. 1,76,410.21 lakh and earnings before Finance Cost, Depreciation & Amortization and Tax decreased from Rs. (4,240) lakh to Rs. (8,837) lakh.


The Financial performance of the Company for the year ended March 31, 2019 is summarized below:

(Rs. in Lakhs)

Standalone for the year ended March 31st

2019 2018
Revenue from operations and other income 176,410 159,219
Profit before Finance Cost, Depreciation & Amortisation and Tax (8,837) (4,240)
Less: Finance Cost 36,704 50,236
Earnings before Depreciation & Amortisation and Tax (45,541) (54,476)
Less: Depreciation & Amortisation 1,059 1,462
Profit Before Tax (46,600) (55,938)
Total Tax Expenses - (13,393)
Profit for the year (46,600) (42,545)
Other Comprehensive Income (105) (101)
Total Comprehensive Income of the year (45,705) (42,646)
Retained earnings amount brought forward from previous year (123,467) (80,821)
Transfer to / from General Reserve Nil Nil
Balance of Total Retained Earnings at the end of the year (169,172) (123,467)


The Financial year 2018-19 has been very challenging for your company. Non availability of working capital and increased interest burden have adversely impacted the profitability of the company. However, your company under the guidance of Mr. Srinivash Singh is committed to its vision to create long term stakeholder value.

The company is in discussion with the Lenders for implementing Debt Resolution outside IBC as per RBI guidelines and is making efforts, for raising funds for working capital, reducing cost and improving operational efficiency.

The Lenders have started the process of Debt Resolution and appointed various agencies in this regard. The resolution process is expeditiously moving forward and the management is quite hopeful that the Lenders will complete the Resolution Process in the current financial year within the ambit of the RBI guidelines.

Your Board has received confirmation from its senior managerial staffs that they had no personal interest in any material, financial and commercial transactions of the Company.


No change has taken place in the nature of business of the Company during the year under review.


The following major projects are under execution of your Company:

• Substation package SS01 for extension of 765 v Ranchi and 400kv Subhas gram substation for PGCIL

• BOP Package for 2 x 600 MW STPP of M/s SCCL

• R&R colony at Khinda, Odisha for M/s NLC

• 132 KV GIS Substation at Panagarh of M/s WBSETCL

• Coal Handling Plant for 1x500 MW TPS at Vindyachal of NTPC

• Coal Handling Plant for 3x250 MW TPS at Bongaigaon of NTPC

• Civil Works of Ware House at Uluberia for M/s ESR

• Ash Handling Plant for 2x660 MW at Mouda (Stage II) of NTPC

• Ash Handling Plant for 3x800 MW at Kudgi of NTPC

• Ash Handling Plant for 2x250 MW at Bhavnagar of M/s BECL

• Firefighting works at Uluberia for M/s ESR

• Dry Fly Ash conveying system at Farakka of NTPC

• CW & Make up Water Package for 2x600 MW at Nabinagar of NPGC

• Nabinagar - Water Pretreatment Plant

• By-Product Plant at Bhilai for BSP, SAIL

• 8MTPA capacity CHP at Manoharpur, Odisha for OCPL

• De-bottlenecking of Plant at Zawar of HZL

• 2MTPA Lead-Zinc beneficiation Plant at Zawar for HZL

• Balaria-Mochia Surface Crushing Plant at Zawar of HZL

• 2MTPA Paste Fill Plant at RA Mines for HZL

• 2MTPA Paste Fill Plant at SK Mines for HZL

• Construction of Entry Exit Structures & Other Civil Work at Kochi for DMRC


• Al Hadeetha Resources

- Engineering job at Washihi Mozzaza Copper concentrator Project

• Hindustan Zinc Limited

- Retaining wall construction, development of related infra and execution of electrical works at Zawar Mines


In absence of profit for the current financial year (2018-19), the Board of Directors of your Company considered it prudent not to recommend any dividend on Equity Shares for the year. Further, in view of the accumulated losses, no dividend will be rewarded to the Non-Convertible Preference shareholders, though they are entitled to receive dividend at a fixed rate of 11.50% on the Non-Convertible Redeemable Preference Shares of Rs. 100/- each.

The register of members and share transfer books will remain closed from September 20, 2019 to September 26, 2019 (both days inclusive).


During the year ended March 31, 2019, the Subscribed and Paid-up Equity Share Capital of the Company has been increased to 17,21,51,757 equity shares having a face value of Rs. 10/- each upon conversion of Compulsorily Convertible Preference Shares (CCPS) as per their terms of allotment. During the year, the company allotted 95,15,151 and 45,92,000 equity shares to the holders of CCPS (on conversion of same number of CCPS) belonging to Promoter and Public category respectively.


The following changes have occurred in the Board of Directors during the year:

Resignation / Cessation:

- Mr. Amritanshu Khaitan (DIN -00213413) who was a Non-executive Promoter Director, resigned from the Board of Directors w.e.f. December 17, 2018.

- Mr. P. S. Bhattacharya (DIN -00329479) who was a Non-executive Independent Director, resigned from the Board of Directors w.e.f. February 20, 2019.

- Mr. Virendra Kumar Verma (DIN -00766426) who was a Non-executive Independent Director, resigned, due to his old age, from the Board of Directors w.e.f. April 01, 2019.

Your Directors take this opportunity to place on record their appreciation and gratitude for the valuable contributions made by the above-mentioned directors during their association with the Company.

Appointment / Reappointment:

In accordance with the provisions of the Articles of Association of the Company read with Section 152 of the Act, Mr. Aditya Khaitan (DIN - 00023788) will retire by rotation at the forthcoming Annual General Meeting and being eligible, offers himself for re-appointment.

In compliance with Regulation 36(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (Listing Regulations) read with the Secretarial Standard on General Meetings (SS-2) issued by the Institute of Company Secretaries of India, the particulars of Mr. Aditya Khaitan (DIN -00023788) form part of the Notice convening the 56th Annual General Meeting of the Company.


The following changes have occurred in the Key Managerial Personnel during the year:


Mr. Manoj Kumar Digga, was appointed by the Board of Directors as the Chief Financial Officer (CFO) of the Company w.e.f. July 14, 2018.

Mr. Digga holds, by qualification, memberships of the Institute of Chartered Accountants of India, the Institute of Company Secretaries of India and the Institute of Cost and Works Accountants of India. He possesses more than 26 years of experience in the fields of Accounts, Finance and Secretarial functions. Immediately before joining the Company, he was associated with Visa Steel Limited as CFO and leading the finance and accounts of the group for 23 years.

As on March 31, 2019, the Company had three Key Managerial Personnel, being Mr. Srinivash Singh, Managing Director, Mr. Manoj Kumar Digga, Chief Financial Officer and Mr. Indranil Mitra, Company Secretary and Compliance Officer of the Company.

However, Mr. Indranil Mitra resigned from the position of Company Secretary and Compliance Officer of the Company w.e.f. July 10, 2019 and the Board of Directors having accepted his resignation; appointed Mr. Rahul Banerjee, a member of the Institute of Company Secretary of India (ICSI), (Membership No. 32796) as the Company Secretary and Compliance Officer of the Company w.e.f. August 14, 2019.


The Board met six times during the year on April 16, 2018, May 29, 2018, August 14, 2018, August 29, 2018, November 14, 2018 and February 13, 2019. The intervening gap between any two Board Meetings was within the period prescribed by the Companies Act, 2013 (the Act) read with the Listing Regulations.


The evaluation of the Board, its Committees and of individual Directors for the financial year 2018-19 was undertaken in compliance with the provisions of Section 134(3)(p) and Schedule IV of the Act.

The Board was of the view that the performance of the Board of Directors as a whole was adequate and it fulfilled the parameters stipulated in the Evaluation Framework in its pro-growth activity and facing challenging operational and economic adversities during the year. The Board also ensured that the Committees functioned adequately and independently in terms of the requirements of the Act and the Listing Regulations, and at the same time supported as well as coordinated with the Board to help in its decision making. The individual Directors performance was also evaluated and the Board was of the view that the Directors fulfilled their applicable responsibilities and duties as laid down by the Act and the Listing Regulations and at the same time contributed with their valuable knowledge, experience and expertise for the functioning of the Company and counter at the adverse challenges faced by the Company during the year.

Evaluation was also carried out by the Independent Directors of the non-independent Directors and the Board as a whole and the Chairman of the Company, considering the views of executive and non-executive Directors. The performance of all the Directors and Chairman was found to be extremely satisfactory in the present scenario.


The Independent Directors have submitted their disclosures to the Board that they meet the criteria of independence as stipulated in Section 149(6) of the Act.


The Board acknowledges the responsibility for ensuring compliance with the provisions of Section 134(3)(c) read with Section 134(5) of the Act for the year ended 31st March, 2019, and states that:

1) in the preparation of annual accounts, the applicable accounting standards have been followed. There are no material departures from prescribed accounting standards;

2) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year 2018-19 and of profit/loss of the Company for that period;

3) 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;

4) the Directors have prepared the annual accounts on a going concern basis;

5) 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; and

6) 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.


The particulars of loans, guarantee or investment made under Section 186 of the Act are furnished in the Notes to the Financial Statements for the year ended March 31, 2019.


Related Party Transactions entered into, during the year under review, were on arms length basis and in the ordinary course of business for the operational and administrative benefits of the Company. There were no contracts/arrangements/ transactions, with related parties which could be considered as material and which may have a potential conflict with the interest of the Company at large. Accordingly, no Contracts/arrangements/transactions are being reported in Form AOC-2.

The Company has formulated a Related Party Transaction Policy and the same is disclosed on the website of the Company and can be accessed at:


During the financial year ended March 31, 2019, your Company has not accepted any deposits from the public.


No significant and material orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operation in the future.


No material changes and commitments affecting the financial position of the Company occurred between the financial year-end i.e. March 31, 2019 and the date of this report.


Financial statements (i.e. Balance Sheet, Profit & Loss Statement and Cash-Flow Statement, together with notes) are prepared through the process which has automated as well as manual controls to ensure accuracy of recording all transactions which have taken place during any accounting period, and the resultant financial position at period end. All data pertaining to payroll, purchases, manufacturing, project cost and other financial activities are recorded through ERP systems operating in various sites as well as head office. All data/ transactions entered in systems are checked by various functional personnel on the basis of supporting documents & records, then the accounting entries are checked by accounts personnel, and finally those are validated by managerial personnel.

At periodic intervals, the accounting data are compiled and financial statements are prepared. While preparing the financial statements, it is ensured that all transactions pertaining to the accounting period are recorded. Fixed assets, all significant items of stores and monetary assets are physically verified. Balance confirmations are obtained for all significant items of trade receivables and advances.

After preparation of the financial statements, all items appearing in the statements are analyzed in order to ensure overall reasonableness.

The Company has adopted policies and procedures including Internal Audit system for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, safeguarding of its assets, prevention and detection of fraud and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.

However, the Statutory Auditors of the Company has identified weaknesses with respect to establishing internal control framework relating to appropriateness of carrying amount of deferred tax, impairment of trade receivable and financial assets, recognition of gain on fair valuation of financial liabilities and payment of excess managerial remuneration. The auditors have considered these weaknesses as material weaknesses in the Companys internal financial control. The Company is taking corrective measures in respect of all the above matters.


The Company has adopted and implemented a Risk Management Policy after identifying various risks which the Company encounters with during the course of its business none of which in the opinion of the Board of Directors may threaten the very existence of the Company itself. The Audit Committee and the Board of Directors of your Company regularly monitor the Risk Management process including risk identification, impact assessment, effective implementation of the mitigation plans and risk reporting.


The Audit Committee of the Board as on 31st March, 2019 consisted of Mr. V. K. Verma, Mr. A. K. Barman, Ms. Arundhuti Dhar and Mr. Srinivash Singh. Mr. V. K. Verma, a Non-Executive Independent Director, was the Chairman of the Audit Committee.

However, after the end of the Financial Year 2018 - 19, Mr. Virendra Kumar Verma, due to his old age, resigned from the directorship of the Company w.e.f. April 01, 2019 and hence Board of Directors nominated Mr. Asim Kumar Barman as the Chairman of the Audit Committee by passing a resolution by circulation on May 23, 2019.


Pursuant to the provisions of Section 178(10) of the Act, the Company has established a vigil mechanism/whistle blower policy and oversees through the Audit Committee, the genuine concerns expressed by the employees and other Directors. The Company has also made provisions for adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of the employees and the Company. The vigil mechanism/whistle blower policy of the Company has been uploaded on the website of the Company and can be accessed at: assets/pdf/investor/policy/vigil-policy.pdf.


Your Company has the following subsidiaries as on March 31, 2019:

• McNally Sayaji Engineering Limited (MSEL)

• McNally Bharat Equipments Limited (MBEL)

• MBE Mineral Technologies Pte Limited

• MBE Minerals Zambia Limited

• Vedica Sanjeevani Projects Private Limited (ceased to be subsidiary w.e.f. August 29, 2018)

• McNally Sayaji Engineering Limited has the following subsidiary:

• MBE Coal & Mineral Technology India Private Limited

During the year under review, the Board of Directors of your Company reviewed the affairs of material subsidiaries. In accordance with Section 129(3) of the Act, your Company has prepared, in addition to the Standalone Financial Statements of the Company, consolidated financial statements of the Company and all its subsidiaries, which form part of the Annual Report. Further, the report on the performance and financial position of each of the subsidiary, associate and joint venture and salient features of the financial statements in the prescribed Form AOC-1 is annexed to the financial statements of the Company.

Information pursuant to Rule 8(1) of the Companies (Accounts) Rules, 2014 regarding financial highlights of performance of subsidiaries, associates and joint venture companies and their contribution to the overall performance of the Company during the period under report is given herein-below :-

Turnover Income
SI. No. Subsidiary Companies Business Activities (Rs.) (Rs.)
1. McNally Sayaji Engineering Limited Manufacturer of crushing, screening, grinding, material handling and mineral processing equipment. 25,996 (3,776.38)
2. McNally Bharat Equipments Limited - - (0.74)
3. MBE Mineral Technologies Pte Limited Investment holding and provision of management and related support services. - (58,23,399)#
4. MBE Minerals Zambia Limited - - (1,250)*
5. Vedica Sanjeevani Projects Private Limited! Construction business. - -

# Figures in US $ not in INR lakhs.

* Figures in ZMK not in INR lakhs.

+ Ceased to be subsidiary w.e.f. August 29, 2018

Further, in accordance with Section 136 of the Act, the audited financial statements, including the consolidated financial statements and related information of the Company and audited financial statements of each of the subsidiary will be available on the website of the Company i.e. , in a downloadable format. These documents will also be available for inspection during business hours at the registered office of the Company. Shareholders desirous of obtaining the report and accounts of your Companys subsidiaries may obtain the same upon request.


M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, (Firm Registration No. 117366W/W-100018), was appointed as the Statutory Auditors of your Company in the fifty-fourth Annual General Meeting (AGM) of the Company held on September 20, 2017 for a period of five consecutive years from the conclusion of the said AGM until the conclusion of the fifty-ninth AGM.

Further, M/s. V. Singhi & Associates, Chartered Accountants, Kolkata, (ICAI Firm Registration No. 311017E), was appointed as the Joint Statutory Auditors of the Company in its fifty-fifth AGM held on September 26, 2018 to hold office for a period of three consecutive years from the conclusion of fifty-fifth AGM till the conclusion of the fifty-eighth AGM.

However, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, submitted their resignation on July 18, 2019 with immediate effect and the Board of Directors by way of resolution passed by circulation on July 19, 2019 noted the same and took on record that the other Joint Statutory Auditor, M/s. V. Singhi & Associates, Chartered Accountants, henceforth to continue as the sole statutory auditors of the Company till the completion of their term.


The Board has duly examined the Statutory Auditors Report to the accounts and the Boards clarifications regarding the qualified opinions of the Statutory Auditors on the Standalone Financial Statements of the Company are given in Annexure -A to this report.


M/s A. Bhattacharya & Associates, Cost Auditors had been appointed as Cost Auditors for conducting the audit of cost records of the Company for the Financial Year 2018-19.


Adequate insurance has been taken for the assets of the Company including various ongoing projects, plant and machineries deployed by contractors or the Company, motor vehicles etc. Insurance policies have also been taken by the Company to safeguard various project sites from loss on account of burglary. Further, insurance for Directors and Officers Liability has also been taken by the Company.


The information required pursuant to the provisions of Rule 8(3) of the Companies (Accounts) Rules, 2014, in relation to Energy Conservation, Technology Absorption and Foreign Exchange Earning and Outgo is given in Annexure - B to this report.


In terms of Regulation 34(2)(e) of the Listing Regulations, a Management Discussion and Analysis Report is attached as Annexure - C forming part of this Report.


In terms of requirements of Regulation 34(3) of the Listing Regulations read with Schedule V to the Regulations, a Report on Corporate Governance together with the Auditors Certificate regarding compliances of conditions of Corporate Governance are attached as Annexure - D, forming part of this Report.


In compliance with Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company has established a Corporate Social Responsibility (CSR) Committee of its Board of Directors.

ACSR Policy has been formulated by the CSR Committee and the same is available on the website of the Company at: http:// The policy encompasses the Companys philosophy for delineating its responsibility as a corporate citizen and lays down the guidelines and mechanism for undertaking socially useful programmes for welfare & sustainable development of the community at large.

The Annual Report on CSR activities containing inter alia, the brief outline of the CSR policy, the CSR initiatives taken, the expenditure on CSR activities, as well as the composition of the CSR Committee forms a part of this Report as Annexure - E.


The Nomination and Remuneration Committee of the Board of Directors of the Company as on March 31, 2019 comprised of Mr. Asim Kr. Barman, a Non-Executive Independent Director as its Chairman and Mr. V. K. Verma and Mrs. Arundhuti Dhar, Non-Executive Independent Directors as its Members.

The Companys Policy relating to appointment of Directors, payment of managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Act read with Clause 19 of the Listing Regulations is attached to this report as Annexure - F.


The extract of Annual Return pursuant to the provisions of Section 92 of the Act, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is attached to this Report as Annexure - G.


The Company has in place proper systems to ensure compliance with the provisions of the applicable Secretarial Standards, issued by The Institute of Company Secretaries of India. The Company is constantly upgrading its compliance management and monitoring system to adhere to all the necessary Secretarial Standards on a continuous basis.


In terms of the requirements of Section 204 of the Act, the Secretarial Audit of the Company for the year ended March 31, 2019, was conducted by M/s. A. K. Labh & Co., Company Secretaries. The Secretarial Auditors Report is attached to this Report as Annexure - H and forms part of the Directors Report. Boards clarifications regarding the qualified opinions of the Secretarial Auditor are also addressed in the said annexure after the Secretarial Audit Report.


Pursuant to Section 197(12) of the Act, read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014,

- the ratio of the remuneration of each Director to the median employees remuneration and other particulars and

- details of employees of the Company who were in receipt of remuneration of Rs. 102 Lakhs or more if employed throughout the financial year or a monthly remuneration of Rs. 8.5 Lakhs or more if employed for part of the financial year are attached to this Report as Annexure - I.


McNally Bharat Engineering Company Limited, is an Occupational Health & Safety Assessment Series (BS OHSAS 18001: 2007) certified Company with a brief scope ofProject Management, Design, Manufacturing, Supply, Construction, Erection & Commissioning of Industrial and Infrastructure Development Projects on Turnkey Basis and Construction of Industrial and Infrastructure Development Projects.

McNally Bharat Engineering Company Limited is committed for Occupational Health &Safety Policy of the organisation and capable of meeting the requirement as per national or international OH&S standards. In line with the said OH&S requirement organisation has OH&S Management System manual, periodic audit, training, inspection to ensure OH&S compliance at all our project sites. Daily OH&S Message via email to all users of the company gives regular updates in OH&S requirements in work area. In common sharing in-house intranet webpage (MBE Bridge) all OH&S procedures, checklists, certificate copies and training models are available for employees to access.

McNally Bharat Engineering Company Limited always strive for achieving Zero Fatality Goal and to bring it into reality set target to reduce Total Reportable Incident Rate (ie; TRIR) which was 0.76 (in 2012) comes down to 0.19 (in 2018). This low incident rate shows a sustainable improvement in Occupational Health & Safety Management System compare to other EPC firms in India.

There are many satisfied customers, who issued Merit Certificate or Certificate of Appreciation for our excellent safety performance at their project sites (like, BPCL, NTPC, PDCL, TPL, HMEL etc.). in addition to that, our organisation has maintained LTI (Loss Time Injury) free records in many prestigious project sites, few of them are Hindustan Zinc Ltd, DMRC, DGMAP, CPCL, Adani Power etc.

This year McNally Bharat Engineering Company Limited Won 5 Star rating on Safety Management System Audit - 201819 in HMEL-Bhatinda (O&M) site for best safety performance. Our organisation achieved many national (National Safety Awards in NTPC Bongaigaon, ACC Jamul, TPL-Kalinganagar, S K Mines etc.) and international (RoSPA Awards in IISCO Burnpur, RSP-Rourkela, BOP Satpura etc.) for best safety performance in project sites in the past.


The Company has in place a policy in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. During the year under review, no complaint has been received regarding sexual harassment of women at workplace.


Certain statements in the Directors Report describing the Companys operations, objectives, projections and expectations regarding future performance may constitute forward looking statements with the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied, depending on the economic conditions, Government policies and other incidental factors and developments.


The Directors place on record their sincere appreciation for significant contribution made by the employees through their dedication, hard work, active involvement and devoted services rendered. The Directors would also like to thank all the stakeholders, investors including Bankers and other business associates, who have extended their valuable support and encouragement.

This has, understandably, been critical for the Companys success. The Directors look forward to their continued support and understanding in the years to come.

For and on behalf of the Board of Directors
Place: Kolkata Aditya Khaitan
Date: August 14, 2019 Chairman