NBCC (India) Ltd Directors Report.

DEAR SHAREHOLDERS,

Your Directors are pleased to share the achievements and highlights of the Company for the financial year ended March 31, 2019 and to present the 59th Annual Report on the business and operations of NBCC (India) Limited and its Audited Financial Statements with the Auditors Report and Comments on the Accounts by the Comptroller and Auditor General of India as follows:

FINANCIAL HIGHLIGHTS

The financial highlights for the year under review are as follows:

Particulars

FY 2018-19

FY 2017-18

Revenue From Operations Consolidated Standalone Consolidated Standalone
Value of Services 9,806.38 7,141.60 8,393.87 5,871.69
Other Operating Revenues 136.59 103.16 53.21 33.32
Other Income 208.39 187.46 162.54 106.13
Total Income (A) 10,151.36 7,432.22 8,609.62 6,011.14
Expenses
Land Purchased & Material Consumed 19.13 19.01 10.22 8.43
Change in inventories of Real Estate Projects 163.70 206.47 (87.22) (87.23)
Work & Consultancy Expenses 8,848.77 6,208.57 7,487.14 5,117.16
Employees Benefit Expense 326.41 263.13 365.35 309.67
Finance Cost 0.61 0.61 24.92 0.21
Depreciation and Amortization Expenses 4.36 2.64 5.90 2.71
Other Expenses 198.12 152.61 219.27 157.33
Write-offs 21.74 20.72 0.24 0.24
Total Expenses (B) 9,582.84 6,873.76 8,025.82 5,508.52
Profit before Exceptional Items and Tax (A-B) 568.52 558.46 583.80 502.62
Exceptional Items - - (0.14) -
Share of Profit/ (Loss) in Joint Ventures (Net of Tax) 0.38 - 0.58 -
Profit Before Tax (PBT) 568.90 558.46 584.24 502.62
Tax Expense
i) Current Tax 219.71 190.28 221.69 187.59
ii) Deferred Tax (45.10) (17.17) (24.27) (16.06)
iii) Tax w.r.t. earlier years 2.65 1.24 (8.90) (2.51)
Profit After Tax (PAT) 391.64 384.11 395.72 333.60
Earnings per Share (Face value of 1/- per equity share) Basic & Diluted (in ) 2.08 2.13 2.10 1.85

OPERATIONS AND BUSINESS PERFORMANCE

Total income from operations was 7,244.76 crore (standalone) and 9,942.97 crore (consolidated) whereas Profit after Tax was 384.11 crore (standalone) and 391.64 crore (consolidated).

RESERVES

The Company did not transfer any amount to its general reserve during the financial year ended March 31, 2019.

DIVIDEND

Your Directors have recommended a final dividend of 65 paisa per paid-up equity share of face value 1/- each (i.e. @65%) for the financial year 2018-19, subject to the approval of the Members in the ensuing Annual General Meeting.

Dividend has been declared considering the Dividend Distribution Policy of the Company and the dividend payout has been recommended considering the deployment of the Companys internal accruals for growth plans

SHARE CAPITAL

During the financial year 2018-19, one equity share of 2/- each was split into two equity shares of 1/- each and accordingly Companys paid-up equity shares capital is 180 crore divided into 180 crore equity shares of 1/- each as on March 31, 2019.

DISINVESTMENT BY GOVERNMENT OF INDIA

The Government of India has, from time to time, disinvested its stake in the company. During the FY 2018-19, the Government of India divested 6.11% of shares as under:

S.No. Particulars Number of Shares disinvested during FY 2018-19
1 Bharat 22 ETF during June 2018 97,12,594
2 Bharat 22 ETF during December, 2018 5,72,51,352
3 Bharat 22 ETF during February, 2019 1,65,07,062
4 Bharat 22 ETF during March, 2019 2,64,36,855
Total 10,99,07,863

MoU PERFORMANCE

Based on the MoU parameters, performance of NBCC in the FY 2018-19 is given under:

S. No. Particulars Achievements during the FY 2018-19
1 Revenue from Operation 7,244.76
2 Operating Profit 370.99
3 Profit after tax 384.11
4 New Orders Secured 12,427.42

Apart from achieving the target in respect of mandatory parameters, NBCC is expected to achieve overall "Excellent rating considering achievements in optional parameters also.

ISO CERTIFICATION

Your Company is a certified ISO 9001:2015 in Project Management Consultancy.

AWARDS CONFERRED DURING THE YEAR 2018-19

NBCC continued on the path of excellence and innovation, achieving several accolades and awards during the year as follows:

• Global Safety Award 2019 was conferred upon NBCC for constructing the state-of-art Central Information Commission (CIC) office building in Delhi.

• Top Rankers Excellence Award was conferred upon NBCC for Organizational Excellence for its overall performance.

• North India Best Employer Brand Award 2018 was conferred upon NBCC by Employer Branding Institute in Delhi.

• Organisational Excellence Award 2018 was conferred upon NBCC by Project Management Associates (PMA) for innovation, planning, performance excellence and outstanding leadership at various organizational levels.

• Dun & Bradstreet (D& B) PSU Award 2018 was conferred upon NBCC under the category "Contract, Construction & Technical Consultancy Services".

• Dainik Jagran CSR Award 2019 was conferred upon NBCC for working on principles of environment conservation and incorporating green initiative in its projects.

• Achievement Award for Best Construction Project was bestowed upon NBCC for constructing the office building of the Central Information Commission and Dr. Ambedkar International Centre, in New Delhi.

FIXED DEPOSITS

During the FY 2018-19, your Company has not accepted any deposit and no principal or interest was outstanding as on March 31, 2019.

LOAN, GUARANTEES AND INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the Financial Statements forming part of this Annual Report.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

During the FY 2018-19, the Company has taken over HSCC (India) Limited, a Mini Ratna, Category-I Pubic Sector Undertaking. It is a multi-disciplinary organization engaged in rendering comprehensive consultancy services in the field of hospital planning, design, detail engineering, quality control, project management and monitoring as well as procurement, supply, installation and commissioning of medical equipments.

NBCC has its presence in project management and consultancy services in healthcare infrastructure projects including AIIMS, therefore takeover of HSCC would give synergy benefits and having a specialized team of professionals with vast experience of healthcare sector would add more value to the organization. Takeover of HSCC is a systematic business decision with respect to expansion of the Company in health infrastructure sector.

During the FY 2018-19, the Company has incorporated a foreign wholly owned subsidiary Company in Dubai i.e. NBCC DWC-LLC. As on March 31, 2019, the Company has six wholly owned subsidiaries i.e. NBCC Services Limited, NBCC Engineering & Consultancy Limited, NBCC International Limited, NBCC Environment Engineering Limited, HSCC (India) Limited and NBCC DWC-LLC (foreign subsidiary) and two subsidiaries i.e. Hindustan Steelworks Construction Limited and NBCC Gulf LLC, Oman (foreign subsidiary).

NBCC has a Joint Venture with the Government of Rajasthan in the name of the Real Estate Development and Construction Corporation of Rajasthan Ltd, where both the parties hold 50% of the issued share capital.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 a statement containing the salient features of financial statements of the Companys subsidiaries in Form AOC-1 is provided in note No.53 in consolidated financial statement.

Further, pursuant to the provisions of Section 136 of the Companies Act, 2013 the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company at http://www.nbccindia.com.

HUMAN RESOURCE DEVELOPMENT

NBCC takes pride in its highly motivated and competent human resource that has contributed its best to bring the Company to its present heights. Employees are the driving force behind the sustained stellar performance of your Company over all these years of Companys ascendancy. As a commitment towards your Companys core values, employees participation in management was made effective based on mutual respect, trust and a feeling of being a progressive partner in growth and success.

The Company has maintained cordial industrial relations during the year, and continued to provide comprehensive welfare facilities to its employees to take care of their health, efficiency, economic betterment, etc. and to enable them to give their best at the workplace. It has always supported participative culture in the management of the enterprise through a consultative approach with the collectives, establishing a harmonious relationship for industrial peace leading to higher productivity. Employees participation is also ensured through information-sharing with collectives and employees on a regular basis while seeking their support, suggestions and cooperation.

The Company appreciates the role of its human capital in propelling the Company to new heights. The position of recruitment of SC/ST employees, category-wise for the FY 2018-19 is as under:

Group General OBC

SC

ST

Total
(No.) (No.) (No.) % (No.) %
1. Group A 40 27 18 19.56 07 7.6 92
2. Group B 01 - - - - 01
3. Group C 05 9 02 11.76 01 5.88 17
Total 46 36 20 18.18 08 7.27 110

NBCC is compliant of all directives issued by the Government of India with respect to filling vacancies for SC/ST/OBC/ ex-service men.

Further, NBCC has also complied with all government regulations regarding reservation, relaxations, concessions and benefits as provided under rules for Persons with disabilities (Equal Opportunities, Protection of Rights & full participations) Act, 1995.

No. of regular employees /NMR/PRW/WE employees at the close of the year:

S.No. Particulars Numbers
1. No. of regular employees 1,847
2. No. of NMR (Non Master Roll) 0
3. No. of WE/PRW (Work Establishment/Piece Rated Worker) 0

IR scenario during the year: The Industrial Relations scenario in the Company during the year 2018-19 had remained peaceful and conducive, and no man days were lost in strikes etc. Since all the industrial disputes and differences were resolved amicably across the table. There were cordial and a harmonious relationship with all stake holders/Unions/ Association during the year. Structured meetings were held regularly on quarterly basis.

Working Status of Woman Employees in the Company-Category wise:

Sl. No. Category of Posts (Group) Nos. of Woman employees
1. Group A 88
2. Group B 17
3. Group C 28
4. Group D -
Total 133

Details of SC/ST/VH/PH Employees Category-wise:

Sl. No. Category of Posts

Nos. of employees

(Group) Total Employees SCs STs VH HH PH(OPH)
1. Group A 852 152 42 3 2 9
2. Group B 145 23 7 2 - 1
3. Group C 850 138 13 1 3 7
Total 1847 313 62 6 5 17

Manpower Status as on March 31, 2019:

Discipline & Category Wise

Category Engineers (C/E/M/ PHE/EM/ Arch./Sys. Engg./ Plng. etc.) Technical (Other than Engrs.) i.e. DPM/SPE/ PE/ASM/JSE/ JE-I/JE-II/JE- III WI/AWI Finance HRM (OA-I/II/ III/Sectl. RB/ Law/ Board/ CC/P & PI). Marketing Material Mgmt. Operative Level Other Total
BOARD LEVEL 3 - - - - - - - - 3
CVO

-

-

-

-

-

-

-

-

1 1
A 529 15 166 99 23 7 9 - - 848
B 96 23 - 22 1 - 3 - - 145
C(i) 87 0

-

21

-

-

-

-

-

108
(ii) 0 6

-

-

-

-

-

-

-

6
(iii) 0 0 - - - - - 736 - 736
TOTAL 715 44 166 142 24 7 12 736 1 1847

Number of persons employed during the FY 2018-19:

Sl. No. Group No. of persons employed
1. Group A 92
2. Group B 01
3. Group C 17
4. Group D -
Total 110

TRAINING

Human Resource Development is the prime importance for any organization to achieve the organization goal. Keeping in view the present innovative and challenging market, the division has arranged need based in-house training programs / technical workshops to make officials / employees aware of latest trends / techniques and changes taking place in their respective fields and to enhance their knowledge so that they utilize their skill set efficiently to achieve the organizational goal.

Discipline-wise details of Officials / Employees imparted training during 2018-19 is as under:

Sl. No Name of the Program Level of Officers nominated No. of Days No. of Participants
1 Orientation Program (Batch - I) Newly recruited 12 32
2 Orientation Program (Batch - II) Newly recruited 6 33
3 Orientation Program (Batch - III) Newly recruited 6 32
4 Orientation Program (Batch - IV) Newly recruited 6 38
5 Program on Personal finance & money management Sr. ED to OA grade I level 1 23
6 Program on Advance Excel GM TO Jr. Engg. Level 2 28
7 Program on Advance Powerpoint GM TO Jr. Engg. Level 1 16
8 Outbound Training Program at Ranikhet AGM to Jr. Engg. Level 2 19
9 Emotional Intelligence AGM to Jr. Engg. Level 2 23
10 Induction Program for newly joined MT-F Newly recruited 12 7
11 Program on Edward de Bonos Six Thinking Hats Sr. ED to Jr. Engg. Level 1 19
12 Program on Cost Effective Construction Technologies AGM to Jr. Engg. Level 1 15
13 Green Building Construction Technology AGM to Jr. Engg. Level 1 23
14 Green Building Construction Technology AGM to Jr. Engg. Level 1 24
15 Program on POSH AGM to Jr. Engg. Level 0.25 24
16 Managerial Excellence & Leadership Development AGM to Jr. Engg. Level 1.5 20
17 Program on POSH AGM to Jr. Engg. Level 0.5 20
18 Cost Effective Construction Technology AGM to Jr. Engg. Level 1 33
19 Program on Art of Living AGM to Group C Employees 3 60
20 Managerial Excellence & Leadership Development AGM to Jr. Engg. Level 1.5 17
21 Program on POSH AGM to Jr. Engg. Level 0.5 17
22 Green Building & Cost Effective Construction Technology AGM to Jr. Engg. Level 2 26
23 Program on Engineering by Internal Trainers AGM to Jr. Engg. Level 1 22
24 Program on POSH AGM to Jr. Engg. Level 0.25 22
25 Program on Engineering by Internal Trainers/ External AGM to Jr. Engg. Level 1 19
26 Managerial Excellence & Leadership Development AGM to Jr. Engg. Level 1.5 23
27 Program on POSH AGM to Jr. Engg. Level 0.5 23
28 Program on Engineering by Internal Trainers/ External AGM to Jr. Engg. Level 1 18
29 Outbond Training Program at Ranikhet AGM to Jr. Engg. Level 2 17
30 Program on Engineering by Internal Trainers/ External AGM to Jr. Engg. Level 1 16
31 Program on Engineering by Internal Trainers/ External AGM to Jr. Engg. Level 1 15
Total 73.5 724

Training of total 1,866.5 mandays was achieved for Group A & B employees during the FY 2018-19.

INDUSTRIAL RELATIONS

The Company maintained healthy, cordial and harmonious industrial relations at all levels during the financial year. The efforts of employees have enabled the Company to remain at the leadership position in the industry.

SAFEGUARD OF WOMEN AT WORKPLACE

The Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Committee has been set up to redress complaints received regarding sexual harassment. The committee functions in accordance with the model code of conduct developed by National Commission for Woman/ Ministry of Woman and Child Development. The committee spread awareness amongst the employees regarding Zero Tolerance for sexual harassment at work place.

The committee also investigates reported cases of sexual harassment. All employees (permanent, contractual, temporary and trainees) are covered under this policy. The Company has been employing 133 women employees in various cadres at the project and office premises. There was not any case filed during the financial year ended March 31, 2019.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report as required under Regulation 34 read with Schedule V to the SEBI (LODR) Regulations forms part of this Report as Annexure-I.

DIRECTORS RESPONSIBILITY STATEMENT

Your Directors confirm that:

• in the preparation of annual accounts for the financial year ended March 31, 2019, the applicable Indian Accounting Standards, had been followed along with proper explanation to material departures;

• 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;

• the Directors had taken proper and sufficient care 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;

• the Directors had prepared the annual accounts on a going concern basis;

• the Directors had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively and

• the Directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CORPORATE GOVERNANCE REPORT

The Company complies with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and guidelines issued by DPE on Corporate Governance.

The requisite certificate from the Statutory Auditors of the Company, Dhawan & Co., Chartered Accountants, confirming compliance with the conditions of corporate governance as stipulated under the aforesaid SEBI Regulations is attached to Corporate Governance Report. The Corporate Governance Report for the financial year ended March 31, 2019 forms part of this report as Annexure-II.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

During the period under review, your Company had not entered into any material transaction with any of its related parties. The Companys related party transactions are generally with its subsidiaries and associates. All related party transactions were in the ordinary course of business and were negotiated on an arms length basis. The policy on materiality of related party transactions is available on the Companys website, at the link https://nbccindia.com/ webEnglish/policies.

The remuneration paid to Key Managerial Personnel is disclosed in the MGT-9 annexed to Annual Report. The related party contracts referred in section 188 of the Companies Act, 2013 in Form AOC-2 are enclosed as Annexure-III.

QUALITY ASSURANCE/QUALITY CONTROL MANUAL

Quality Assurance (QA) and Quality Control (QC) both are part of Quality Management System where QA focuses on preventing defect and ensures that the approaches, techniques, methods and processes designed for the projects are implemented correctly while QC focuses on identifying a defect and ensures that the approaches, techniques, methods and processes are designed in the project are following correctly.

So, QA/QC becomes very crucial in the field of construction and NBCC (I) Ltd. being Indias biggest organization in the Construction field devoted itself towards QA/QC in the areas of its operations.

NBCC through its technical/quality audit wing conducts the Technical/Quality audit of the selected projects through a well designed and robust checklist as per the QA/QC manual of the organization to ensure the QA/QC is being followed at project sites.

SAFETY

NBCC gives highest priority and importance to safety and health to all the employees who work in its areas of operation. The Company is striving to become a role model in implementing safe practices/measures to ensure the goal of achieving zero harm at its work places and committed itself to meet all the statutory compliance of the Government applicable for the time being in force on safety aspects.

The Safety Management Division tries to ensure the goal of achieving zero harm at work places by:

a) Bringing awareness about the Safety Policy of the Company to all RBGs/SBGs/Units/HODs-HO by issuing the circular and encourage them to implement the same.

b) Proactive approach in assessment and mitigation of risks related to safety and health at work sites by conducting the safety audits at regular intervals of the project sites and by scrutinizing the daily/monthly safety feedback reports of work sites.

c) Prevention of injuries and occupational illness by implementing best practices and by creating awareness and providing training to the workforce including associates, contractors, transport workers and suppliers through the empanelled safety agencies.

d) Strengthening of the safety standards in the organization by celebrating the National Safety Day/Week campaign (recently 48th National Safety Day/Week campaign has been celebrated).

e) Empowering all employees and contractors to stop any unsafe work.

QUALITY MANAGEMENT SYSTEM (QMS)

NBCC is an IS/ISO 9001:2015 certified company which fulfil all the requirement of Quality Management System (QMS). The Organization has established its own Quality Policy and Quality Objective as described below to keep on upholding the standards of IS/ISO 9001:2015.

A) Quality Policy:

1. To keep on uplifting and maintaining the quality standards in providing Project Management Consultancy and execution of projects in order to sustain a high level of customer satisfaction by comprehensively meeting the stated need of the customers and proactively attending to their expectation.

2. To deliver projects in time and within cost with excellent quality and to become a trustworthy project management organization for customers.

3. To make quality an obsession and to carry commitments to comply with the applicable requirements and to continually improve the effectiveness of our quality management system.

B) Quality Objectives:

1. To achieve time norms for completion of project as per schedule at least in 90% projects.

2. To ensure that customer complaints are redressed within 60 days.

3. To conduct structured review by all RBG/ SBG/ Zones at least once in a month to monitor the performance of external provider and progress of the project to achieve the time schedule, quality parameters and safety aspects of the projects.

4. Green Building Initiatives with 90% of green features in the projects.

5. To organise training program related to the services offered by the organization and QMS in 100% cases of request received.

NBCC through its ISO-cell conducts the ISO Audit of all project sites and all RBGs/SBGs/Zones/Units/HOD-HO at an interval of six month and one year through a well developed checklist to ensure that the quality policy and quality objective established by the Company is being followed stringently.

IT DIVISION

With the aim of DIGITAL NBCC, management envisaged the concept of "Paper Less Office" towards creating employees friendly environment. We took initiatives, and implemented various IT activities in our organization to make more efficient, seamless, transparent work environment, and to take a leap towards DIGITAL NBCC. All departments are integrated with ERP / DMS / e-Office for internal process.

IT division is providing following IT services to the corporation on pan India basis:

• ERP- Employee Resource Planning (Web/Window)

• E-office

• DMS- Document Management System

• Vendor Portal

• Video Conference

• Data Center - Virtualization

• SSL - Secured Socket Layer

• Cloud Services

Following is the implementation of IT Plan, ERP and e-Office for the FY 2018-19.

• Employee Resource Planning (ERP) - NBCC has implemented in-house ERP application which is software places its focus on integrating an organization, department and functions (HRM, Finance, Projects, etc.) into a single and integrated computer system that aims to serve all those department needs.

ERP software suites are built to collect and organize data from various levels of an organization and connect business activities across departments. ERP reduces the communication time, effective communication and transparency within and outside the organization.

• E-Office - NIC e-Office has been implemented to make the official communication time bound, easy tracking and faster, which has been procured from National Informatics Centre (NIC). E-Office, an integral part of NIC e-Office suite is a system designed for the government departments, PSUs Automation bodies to enable paperless office by scanning registering and routing the inward correspondences along with creation of file, noting, referencing, corresponding attachment, draft for approvals and finally movement of files as well as receipts.

Adopting e-Office is resulting in number of benefits like bringing the transparency in the system, improved efficiency in working, easy searching and retrieving of files/ data, alerts on urgent files.

DIVIDEND DISTRIBUTION POLICY

As per Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the top 500 listed companies shall formulate a dividend distribution policy. Accordingly, the policy was adopted to set out the parameters and circumstances that will be taken into account by the Board while determining the distribution of dividend to its shareholders and/or retaining profits earned by the Company, The policy is attached as Annexure-IV and is also available on the Companys website, at http://www.nbccindia.com/webEnglish/policies

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE (CSR) AND SUSTAINABILITY DEVELOPMENT

The Company has Corporate Social Responsibility (CSR) committee in compliance with provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014 and the Company has in place a CSR policy in line with Schedule VII of the Companies Act, 2013, which can be accessed on the Companys website, at the link http://www.nbccindia.com/webEnglish/policies.

The Company also has a Sustainability Policy to ensure healthy well-being of its stakeholders and protecting the environment. The policy guidelines are integral to the way the Company conducts its construction as well as other business operations. NBCC is committed to ensure that it meets its business goals without compromising on the aspirations of the present and future generations.

The Report on CSR activities forms part to this Annual Report as Annexure-V.

COMPLIANCE OF DPE GUIDELINES AND POLICIES

The guidelines and policies issued by Department of Public Enterprises from time to time are duly complied with by the Company.

MSME IMPLEMENTATION

The Government of India has notified a Public Procurement Policy pursuant to Micro and Small Enterprises (MSEs) Order, 2012. It always has been endeavour of NBCC to support Micro and Small Enterprises (MSEs) and local suppliers. NBCC has taken a number of steps including the necessary steps to implement the Public Procurement Policy of the Government of India to procure the items specified from MSEs, including SC/STs. Necessary provision is made in all the tenders stating the eligibility of Micro, Small and Medium Enterprises (MSMEs) to participate in the tender. As mandated in the Public Procurement Policy-2012 for MSEs (issued by Ministry of MSME- Govt. of India), the actual procurement from MSMEs during the year was 48.24% i.e. 37.11 lakh out of which procurement from SC/ST vendor was 4.95 lakh i.e. 6.43% of total procurement.

RISK MANAGEMENT

NBCC has a well laid-down risk assessment and management process. A Board level Committee called Risk Management Committee (RMC) has been constituted in compliance with the requirement of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 to define a framework for identification, evaluation and mitigation of risk in the decision making process of the business of NBCC. The RMC is responsible to identify and review the risks and to formulate action plans and strategies to mitigate risks on short term as well as long term basis. The Board had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day to day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board.

Your Company periodically analyzes the risks associated with its operations and takes all the necessary precautionary measures to manage and mitigate the risks.

INTERNAL FINANCIAL CONTROL

The Company has in place adequate internal financial controls with reference to financial reporting in compliance with the provisions of Section 134(5) (e) of the Companies Act, 2013 and such internal financial controls over financial controls were operating effectively. Internal Financial Controls over financial reporting are audited through external auditors on an annual basis.

The controls have been designed to provide assurance with respect of maintenance of proper accounting records, ensuring the orderly and efficient conduct of its business including adherence to the Companys policies, safeguarding of its assets, prevention and detection of frauds and errors and ensuring reliability of financial and operational information. The internal control systems (including Internal Financial Controls over Financial Reporting) are reviewed on an ongoing basis and discussed at Audit Committee meetings. Necessary changes are carried out by the management to align with the changing business requirements.

In addition to the above, the Company has a well-defined delegation of financial powers to its various officers through its sub-delegation of power book. The book is updated on timely basis in line with the needs of the Company as well as to bring further delegation. The Company has in-house Internal Audit and Technical Audit Departments commensurate with its size of operations. The internal audit program, scope of audit and audit plan is approved from the Audit Committee. Internal audit is conducted through external audit firms and reports are deliberated with the management as well as the Audit Committee. The Statutory Auditors and Audit Committee of the Company regularly reviews significant audit findings covering operational, financial and other areas and provides guidance on internal controls.

VIGILANCE ACTIVITIES AND INITIATIVES

The Vigilance function with the NBCC, is an integral part of the Management. It is the nodal section for handling all vigilance matters of the NBCC. It is believed that with best practices, adequate controls and transparency in place, decisions are taken in a professional, efficient and effective manner and same would be consistent, leading to good governance and corporate excellence. The Vigilance Division of Corporation was under the charge of Chief Vigilance Officer (of the rank of Joint Secretary), who was from outside the cadre of NBCC.

NBCC, has observed Vigilance Awareness Week with full enthusiasm from October 29 to November 3, 2018 on the theme "Eradicate Corruption-Build a New India". Among highlights of the week-long event organized by the Company, included release of Vigilance Bulletin titled PARDARSHITA and thought-provoking posters brought out by Vigilance Department of NBCC to spread awareness and provide valuable insights on vigilant practices.

Information of vigilance cases, required pursuant to Office memorandum issued by Ministry of Parliamentary Affairs vide its letter dated F.No.28(1)2016-Leg.I, dated January 24, 2018 is as under:

Particulars Number of Cases Nature of cases
Number of Cases at the beginning of Financial year 2018-19 30 The nature of cases/ complaints are normally tender related, procedural lapses and financial irregularities related matters.
Number of Cases received during the Financial year 2018-19 47
Number of Cases disposed off during the Financial year 2018-19 25
Number of Cases Pending at the end of the Financial year 2018-19 52

After investigation of complaints, where lapses/ irregularities are established, the disciplinary proceedings are initiated against the delinquent employees.

SYSTEMIC IMPROVEMENT

Vigilance Division has been supported by NBCC in introducing effective Vigilance MIS:

• Complaint database is being maintained to effectively monitor their status resulting in reduction in their pendency.

• Database is maintained of all cases pertaining to minor and major penalty proceedings. Status of all cases is regularly updated so as to keep track of the deadlines and actions required to be undertaken.

• Database of all CTE para reports, CBI cases and departmental inquiries is made so as to keep track of all of them.

• Digitization of documents has been started as per CVC directives.

VIGIL MECHANISM/WHISTLE BLOWER POLICY

The NBCC Whistle Blower Policy has been formulated for (i) greater transparency in all aspects of the Companys functioning by formulating a procedure for further enabling employees to bring to the attention of Company incidents of improper activities or violation of the Companys Service (Conduct) Rules and the Code of Business Conduct and Ethics for Board Members and Senior Management and (ii) to provide necessary safe-guards for protection of employees from reprisals of victimization for whistle blowing in good faith. A vigil mechanism for directors and employees to report genuine concern about unethical behavior, actual or suspected fraud or violation to the Companys Code of Conduct has been established which includes the duly adopted Whistle Blower Policy, uploaded on the Companys website at the link http://www.nbccindia.com/webEnglish/policies.

Further, NBCC (India) Ltd. has become a member of Transparency International India, an institution engaged in propagating the concept of the Integrity Pact intended to eradicate corruption in public procurement. NBCC is a firm believer that transparency makes good citizens which never go out of business.

DRIVING SYNERGY - INVESTOR RELATIONS

NBCC is committed to providing timely, accurate and comprehensive information relevant to all aspects of our operations and in compliance with SEBI regulations. The purpose of the Investor Relations Policy is to ensure transparent and fair information dissemination.

The Company recognizes that effective communication with investors assists in development and maintenance of an informed market in the Companys securities and enhances corporate governance by encouraging a culture of transparency in relation to the Companys corporate activities and proposals.

As per the guidelines issued by Department of Investment and Public Asset Management (DIPAM), Ministry of Finance, Government of India, on Investor Relations for Listed Central Public Sector Enterprises, the Company has been participating in various investors conferences in India and overseas as well in order to communicate with stakeholders, to enhance and strengthen its corporate governance and investor relations and to develop a strong bond with stakeholders.

The Company keeps investors and the market fully equipped with the information that may have a material effect on the price or value of the Companys securities by timely disclosure of information through Stock Exchanges. The net impact of the interactions was that it helped fostering visibility of NBCC as a pioneer construction Company in global arena. This also led to stable stock position and promoting credibility of NBCC management in the allied industry.

During FY 2018-19, Companys investor relation team participated in various domestic conferences/group meetings throughout the year. During these meetings/conferences, Company management interacted with various analysts, fund managers and prospective investors and presented success story of Indias infrastructure sector being a part of one of fastest emerging economy of world.

Apart of that investor relations team also organized various one-on-one investor meetings, conferences, site visit, infra tour for various potential investors. For any other update or information, please contact us through Investors@nbccindia.com, we would be very happy to reply within stipulated timeframe.

AUDITORS AND AUDITORS REPORT

STATUTORY AUDITORS

M/s Dhawan & Co., Chartered Accountants, was appointed as Statutory Auditors for the FY 2018-19 by the Comptroller and Auditor General of India. The notes on standalone financial statement referred in the Auditors Report are selfexplanatory and do not call for any further comments. The Auditors Report is attached with financial statements and forms part of this Annual Report.

The Statutory Auditors of the Company have given an un-qualified report on the standalone accounts of the Company for the FY 2018-19. However, Statutory Auditor have placed a qualified Audit Report on Consolidated Financial Statement and the Management has given reply thereon which forms part of this Annual Report.

COST AUDITORS

As prescribed under the Companies (Cost Records and Audit) Rules, 2014, the Cost Accounting records are maintained by the Company. The Board has appointed M/s Ajay Kumar Singh & Co., Cost Accountants, to audit cost records of the Company for the FY 2018-19. The Cost Audit Report for the financial year ended March 31, 2018 had been filed within the prescribed time period under the Companies (Cost Records & Audit) Rules, 2014.

SECRETARIAL AUDITORS

The Board has appointed M/s Agarwal S. & Associates, Practicing Company Secretary, to conduct Secretarial Audit for the FY 2018-19. The Secretarial Audit Report for the financial year ended March 31, 2019 along with management reply is at Annexure-VI.

COMMENTS OF COMPTROLLER AND AUDITOR GENERAL OF INDIA

The Comptroller and Auditor General of India, has given NIL Comments on the Financial Statements of the Company for the year ended March 31, 2019 after conducting supplementary audit under Section 143 (6) (b) read with Section 129 (4) of the Companies Act, 2013. The copy of the same forms part of this Report.

AUDIT COMMITTEE

The Company had constituted Audit Committee with the members viz. Maj. Gen. Tajuddin Moulali Mhaisale, Chairman, Smt. Jhanja Tripathy, Shri Rajendrasinh Rana and Shri Sairam Mocherla as members. The recommendations made by the Audit Committee are accepted by the Board.

NUMBER OF MEETING OF BOARD OF DIRECTORS

Pursuant to the Companies Act, 2013 and the Rules framed there under, 9 (Nine) Board meetings were held in the financial year 2018-19. The details of the meeting are at Corporate Governance Report forming part of this Annual Report.

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTMENTS/CESSATIONS

Appointments/Cessations

During the FY 2018-19, Shri Manoj Kumar, Government Nominee Director ceased on November 20, 2018 and Shri Sanjay Murthy Kondru was appointed as Government Nominee Director on November 20, 2018.

Further, Shri Shiv Das Meena assumed the additional charge of Chairman-cum-Managing Director of NBCC with effect from April 5, 2019 and Shri Rakesh Kumar Arora has assumed the additional charge of Director (Finance) of the Company with effect from June 21, 2019. Further, as per the Office Order issued by the Administrative Ministry (MoHUA), Shri Arora shall hold the additional charge of Director (Finance), NBCC till the appointment of regular incumbent or untill further order, whichever is early.

Dr. Jyoti Kiran Shukla has been appointed as an independent woman Director on the Board NBCC w.e.f. August 1, 2019. Smt. Jhanja Tripathy ceased to be Government Nominee Director on August 5, 2019. Shri Shyam Sunder Dubey has been appointed as Government Nominee Director on August 6, 2019.

The strength of the Board of Directors of NBCC as on March 31, 2019 was eleven (11), comprising three (3) Executive Directors (Functional Directors including CMD) and two (2) Government Nominees and six (6) Independent Directors. The Company had optimum combination of executive and non-executive directors on its Board in compliance with requirement of provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as on March 31, 2019.

DETAILS OF KEY MANAGERIAL PERSONNEL

The following were the Key Managerial Personnel of the Company for the FY 2018-19:

• Shri Anoop Kumar Mittal, Chairman-cum Managing Director (upto March 31, 2019)

• Shri Rajendra Chaudhari, Director (Commercial)

• Shri Neelesh Manherlal Shah, Director (Projects)

• Smt. BK Sokhey, Chief Financial Officer

• Smt. Deepti Gambhir, Company Secretary

PERFORMANCE EVALUATION OF THE DIRECTORS AND THE BOARD

Ministry of Corporate Affairs (MCA), through General Circular dated June 5, 2015, has exempted Government Companies from the provisions of Section 178 (2) of the Companies Act, 2013 which provides about manner of performance evaluation of Board of Directors, Committee of Board of Directors and Director by the Nomination and Remuneration Committee.

The aforesaid circular of MCA further exempted listed Govt. Companies from provisions of Section 134 (3) (p) of the Companies Act, 2013 which requires mentioning the manner of formal evaluation of its own performance by the Board and that of its Committees and Individual Director in Boards Report, if directors are evaluated by the Ministry or Department of the Central Government which is administratively in charge of the company, or, as the case may be, the State Government as per its own evaluation methodology.

Now, MCA, through Notification dated July 5, 2017, has amended Schedule IV to the Companies Act, 2013 with respect to performance evaluation of directors of the Government Companies that in case of matters of performance evaluation are specified by the concerned Ministries or Departments of the Central Government or as the case may be, the State Governments and such requirements are complied with by the Government companies, such provisions of Schedule IV are exempt for the Government Companies.

In this regard, Department of Public Enterprises (DPE) has already laid down a mechanism for performance appraisal of all functional directors. DPE has also initiated evaluation of Independent Directors.

NBCC is a Government Company, appointment/ nomination of all the Directors is being done by the President of India, through the Ministry of Housing and Urban Affairs and performance evaluation of Directors including Independent Directors has been done by the Administrative Ministry being the appointing authority.

DECLARATION BY INDEPENDENT DIRECTOR

The Independent Directors of the Company had made declaration of Independence as required under section 149(6) of the Companies Act, 2013 and the rules made there under.

TRAINING OF DIRECTORS

Your Company undertakes on-boarding training for its directors to initiate them to the organization and its various operations including strategy, operations, organization structure, human resource, technology, risk management etc. They are also updated on all the latest developments in Corporate Governance to gain deeper insights into their roles and responsibilities. Further, the Company also invests in the learning of Board-level executives through seminars and conferences held in association with reputed institutions. The Company has made the arrangement for internal training of Independent Directors. The Companys policy on Directors Training can be assessed on the corporate website at the link http://www.nbccindia.com/webEnglish /policies.

EXTRACT OF ANNUAL RETURN

Extract of the Annual Return in Form MGT 9 as provided under section 92 of the Companies Act, 2013, forms part of the Annual Return as Annexure-VII.

BUSINESS RESPONSIBILITY REPORT

The Business Responsibility Report (BRR) describes the initiatives taken by the Company from social, environmental and governance perspectives. As a socially-responsible organization, NBCC conducts all its business activities in complete respect of the environment and society, and in line with its corporate governance guidelines. Detailed information on the Corporate Social Responsibility (CSR) activities is provided in the Business Responsibility Report as Annexure-VIII.

RESEARCH AND DEVELOPMENT

Research and development in NBCC is focused on innovations in its three business areas - Project Management Consultancy, Engineering Procurement and Construction and Real Estate.

A) Conservation of Energy:

a) Steps undertaken for conservation of energy:

• NBCC has signed a Memorandum of Understanding (MoU) on December 18, 2017 with the Energy and Resources Institute (TERI) for the period of 5 years. Under the MoU, TERI will be providing advice and consultancy to NBCC on identifying solutions for sustainable development and implementation of GRIHA for new projects. TERI will also be assisting NBCC in formulating sustainable development policy and long term sustainable development plan. Further, it will be giving consultancy for conducting environment assessment and energy management in the existing projects among others.

i) Steps taken by the Company for utilizing alternative sources of energy:

• Installation of roof top solar power panels.

ii) Capital investment on energy conservation equipments:

• As most of the projects executed by NBCC are in line with the GRIHA norms, the equipments used are all energy efficient.

• Installation of LED based lighting in all NBCC Buildings.

B) Technology Absorption:-

i) The efforts made towards technology absorption:

• Monthly presentations of new products and innovative technologies of best in class companies are being organized.

ii) The benefits derived like product improvement, cost reduction, product development or import substitution:

• Awareness about the new technologies and products is being imparted to the senior management for utilizing the same in the projects.

iii) In case of imported technology-

• NBCC and Bolix SA, Poland signed MoU on April 17, 2017 to promote external thermal insulation and composite systems. ETICS is a potential game changer for construction of green building with energy efficient and environment friendly solution.

C) Foreign Exchange Earnings and Out-go

The details of foreign exchange earnings and out-go during the period under review are as under:

Foreign Exchange Earning: 13,67,78,640/- Foreign Exchange Outgo: 24,80,118/-

PROGRESSIVE USE OF HINDI

The Company has been implementing the provisions of Governments Official Language Policy. Employees are encouraged to use Hindi in their day to day working. Incentive schemes of Rajbhasha Vibhag, Ministry of Home Affairs such as Hindi Noting Drafting Incentive Scheme; Hindi Dictation Incentive Scheme etc. have been implemented in the Company in which employees are participating. During the year under report, efforts continued in the Company towards progressive use of Hindi. During the financial year 2018-19, quarterly meetings of Official Language Implementation Committee (OLIC) were held regularly to review the progressive use of official language Hindi in the Company.

During the year Hindi workshops were organized to promote the official use of Hindi Unicode, Hindi noting, letter writing etc in which number of participants from Corporate Office, RBG, SBG and Zonal Offices participated. Hindi competition at the end of workshop introduced and prizes were given to encourage the participants.

Hindi Protsahan Maas was observed from September 01 to September 30, 2018 in which various activities were organized and many employees took active part in it. Hindi Diwas was also celebrated in this month. During the year inspections of various offices of NBCC including head office by Committee of Parliament on Official Language have successfully been completed.

NBCC has been honored during Town Official Language Committee meeting on February 25, 2019 in various categories including Best Hindi In-house magazine. Shri Rajendra Chaudhari, Director (Commercial) received the shields. During the year sixth and seventh issue of NBCC House Magazine NIRMAN BHARATI in Hindi also published.

For the FY 2018-19, quarterly Hindi Vyavhar Pratiyogita (Use of Hindi in day to day official work) has been organized in which various participants took part and prizes were given to them. Hindi inspections were conducted by the Rajbhasha Division in the various divisions at corporate office and Regional Business Groups (RBG)/Strategic Business Groups (SBG)

/zonal offices to oversee use of official language Hindi in day to day working. Further, progress of Official Language Implementation was also reviewed in the quarterly General Managers Conference.

RIGHT TO INFORMATION

Right to Information (RTI) Act, 2005 has empowered the Indian citizen to access information from public authorities, resulting in transparency and accountability to the working of the authorities. Company has appropriate mechanism to provide information to citizens under the provisions of Right to Information (RTI) Act, 2005. The status of RTI received during the year is as follows:

Mode of application No. of RTI application received

No. of RTI applications

No. of Pending RTI applications
Rejected Information provided Transferred to other public Authority Returned to Applicant
Hard Copy 174 2 167 2 3 -
Online 174 - 168 2 4 -
Total 348 2 335 4 7 -

SIGNIFICANT AND MATERIAL ORDERS

There have been no material changes and commitment affecting the financial position of the Company which occurred between the end of the financial year of the Company to which financial statements relate and the date of this report.

GENERAL:

Directors hereby state that no disclosure or reporting is required in respect of the following during the year under review:

1. There was no issue of shares under ESOP/ESPS to the employees.

2. There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future

3. Neither the Chairman-cum-Managing Director nor the Whole Time Directors received any remuneration or commission from the subsidiary company.

4. As per provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, every listed company is required to disclose the ratio of the remuneration of each director to the median employees remuneration and details of employees receiving remuneration exceeding limits as prescribed from time to time in the Directors Report.

However, as per notification dated June 5, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of Section 197 of the Companies Act, 2013. Therefore, such particulars have not been included as part of Directors Report.

5. The company is compliant of the Secretarial Standards issued by the ICSI from time to time.

6. Information on number of meetings of the Board held during the year, composition of committees of the Board and their meetings held during the year, establishment of vigil mechanism/ whistle blower policy and web-links for familiarization/ training policy of directors, Policy on Materiality of Related Party Transactions and also on Dealing with Related Party Transactions and Policy for determining Material Subsidiaries have been provided in the Report on Corporate Governance, which forms part of the Directors Report at Annexure-II.

7. Para on development of risk management policy including therein the elements of risks are given in the Annual Report.

8. No disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

I. Issue of equity shares with differential rights as to dividend, voting or otherwise.

II. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

ACKNOWLEDGEMENT

The Directors of your Company acknowledge and appreciate the co-operation received and support received from the Government of India, State Governments, different ministries particularly Administrative Ministry i.e. the Ministry of Housing and Urban Affairs.

The Board also appreciates the contribution of contractors, vendors and consultants in the implementation of various projects of the Company. Your Directors thank all share-owners, business partners and all members of the NBCC Family for their faith, trust and confidence reposed in the Board. We wish to place on record our appreciation for the untiring efforts and contributions made by the employees at all levels to ensure that the company continues to grow and excel.

Sd/-
Shiv Das Meena
Place : New Delhi Chairman-cum-Managing Director
Date : August 8, 2019 (DIN: 01881010)