NBCC (India) Ltd Management Discussions.


The Indian economy has emerged as the fastest growing economies in the world, with IMF Economic Outlook estimates pointing to an annual GDP growth rate of 7.4% in 2018, driven by rising private consumption and the fading transitory impact of policy reforms such as demonetisation and the implementation of the national goods and services tax (GST).

Continued implementation of structural reforms is likely to raise productivity and incentivize private investment; further, sustained growth will depend upon rural rejuvenation and rising global growth.

Sustainability growth would also depend on ironing out the teething troubles in GST and implementation of key reforms such as the Real Estate (Regulation and Development) Act, 2016, or RERA, which would increase compliance and further consolidate the real estate sector.

The affordable housing segment in the country is also witnessing unprecedented action from both the government and private sector.

We expect further gain in momentum in fiscal 2019 with higher budget allocations and increasing attention of private players.

While business cycles were affected due to the regulatory changes, India is well on its path of growth buoyed with new standards of delivery, accountability and transparency.

In the fiscal year 2019, Indian economy is poised to grow to around 7.8%, provided macroeconomic factors remain favourable. Private consumption is also likely to gain attraction as the economy catches up after demonetization. The Union Budgets focus on growth simulation through infrastructure development, focus on affordable housing, and Make in India are expected to start showing positive results in the current year.


Real Estate and Construction

The India construction sector, currently valued at 8.56 trillion rupees, is the countrys second-largest economic segment after agriculture, poised to become the largest employer by 2022, employing more than 7.5 crore people, and contributing 15% to the GDP by 2030.

Infrastructure development has been fuelling Indias economic growth over the past decade or so. Increasing population, rapid industrialisation and urbanisation, rising middle-class income, and the rise of nuclear families are driving the demand for consistent investment in infrastructure development.

A major push from the government on building smart cities, industrial and dedicated freight corridors, high speed rail corridors, greenfield airports, major ports, and port-based SEZs has already helped construction companies improve their order books.

Policy initiatives such as the Real Estate Regulatory Act, 2016 (RERA), Goods and Services Tax (GST), Benami Transaction Prohibition (Amendment) Act, 2016, and the Real Estate Investment Trusts (REITs) regulations are further helping to debottleneck the sector. The central government has also indicated its intentions to amend the recently enacted new land acquisition law to facilitate the process of land acquisition and make it less costly for developers.

To boost affordable housing for all, the government has also conferred infrastructure status to the segment and announced various tax incentives with the aim to attract prominent real estate developers to realign their products to compete in this category.

The renewed focus on infrastructure development bodes well for your Company, which is amongst the frontrunners in the country to provide turnkey Project Management Consultancy (PMC) for infrastructure development and real estate projects. Backed by state-of-the-art technology, project management expertise, and exemplary track record in past projects in India and overseas, we are well-positioned to play a leadership role in giving shape to these visionary initiatives, within the regulatory framework and with complete respect for the socio-economic environment of the project sites.

EPC Industry

The Engineering, Procurement and Construction (EPC) market in India has witnessed a dramatic transition over the last decade in terms of increasing project size, scale and market maturity. Driven by the galloping Indian economy, EPC today boasts an impressive portfolio of multi-million dollar projects being undertaken by both private and the EPC model. The EPC sector is expected to grow on the back of:

• Governments plan to launch the National Infrastructure Investment Fund (NIIF) with an initial corpus of at least INR 40,000 crore;

• Approval by the Ministry of Urban Development to invest INR 19,170 crore for improving basic urban infrastructure in 474 cities in 18 states and Union Territories (UTs) under Atal Mission for Urban Rejuvenation and Transformation (AMRUT); and

• The notification by Reserve Bank of India (RBI) to allow 100 per cent foreign direct investment (FDI) under automatic route in the construction development sector

Your Company, NBCC has an expertise to offer turnkey solutions right from ‘concept to commissioning across all the business segments. Our experience in providing EPC services in the construction of airports, stadiums, hotels, institutional spaces, IT parks, office buildings, elite residential buildings, high-rise structures, and mass housing, is likely to hold us in good stead, going forward.


A major push from the government on the roads, railways, and urban infrastructure segments has helped construction companies improve their order book position. Some of the key opportunities to drive growth are:

Smart cities: About 48,000 crore rupees have been earmarked to transform the urban landscape by developing 100 smart cities across the country.

Social housing development: In a bid to rehabilitate the slums and ensure better quality homes, the governments flagship program, Housing for all, has set a target to construct 20 million social housing units across the country by 2022.

Urban development: The AMRUT program seeks to promote comprehensive urban development and support economic growth in 500 towns and cities in the country.

Focus on renewable energy: To reduce the countrys reliance on energy imports, the government is developing its renewable energy infrastructure, with target to generate 175GW of electricity through renewable sources by 2022.

Holistic infrastructure development: The Union Budget has earmarked funds for the development of national highways, state highways and expressways; high-speed rail corridors; dedicated freight corridors and freight terminals; greenfield airports; ultra-mega power plants; high-voltage transmission lines; piped-gas distribution networks; greenfield major ports; Mass Rapid Transport System; and water supply and waste treatment systems.

Policy reforms: By giving infrastructure status to the affordable housing sector, the government has opened a floodgate of opportunity for private sector participation, enabling developers to access easy loans from banks to fund their projects.

These are very exciting times for your Company and we are geared to capitalize on this new market of opportunities by strengthening our core competencies.

Improving operational efficiency: Through better contract and project management, we are focussed on lowering costs while maintaining quality and effectively managing project complexity.

Unlocking business value: To create shareholder value, your Company constantly upgrades its portfolio, divesting from non-core business to improve cash liquidity.

Going digital: Your Company is taking the digital route to exploring and fulfilling opportunities both at home and overseas. Various digitalization initiatives are underway to aid project monitoring and harnessing the powers of digital assets.

Pursuing sustainable development: As the green agenda takes centre stage globally, we are on track to increase our green footprints. Your Company incorporates ‘Green Building features, using processes and materials that are environmentally-responsible and resource-efficient, with majority of our projects conforming to GRIHA Certification.


While the current government has set the ball rolling with several announcements to reform the sector and boost investor sentiments, some challenges remain to be addressed to sustain the growth trajectory.

• The increasing backlog of infrastructure projects, mounting losses due to delays and cost overruns could slow momentum.

• Factors such as delays in land acquisition and environmental clearances, capacity constraints, weak project management, and dependency on human labour need immediate attention.

• In real estate and construction, financing, changes in government regulations, foreign direct investments, approval processes, environment clearances and legal hassles & proceedings affect the execution project, and lead to significant cost overrun.

• In the EPC business, delay in projects execution, stall of projects due to non-payment by developers, steep cost escalation in inputs affect the execution of projects, resulting in significant cost overrun.

Your Company has fortified its business operations and functions to withstand risks and deliver value in the face of all adversities by providing the best services to its customers, at a sustainable cost and in a responsible manner.

Demand risk: To counter any fall in demand for any real estate project, we have diversified our product portfolio to include Integrated Townships, Group Housing Commercial Complexes, IT Parks and third-party contracts; and have also expanded our presence across the country.

Cost risk: Rising input cost of materials could lead to higher cost of projects, and in turn, a decline in revenue. To offset the cost risk, your Company is investing in skill upgradation of its workforce; and build long-term relationship with vendors across the supply chain.

Project execution risk: To offset the risk of any unplanned delay in the execution of projects, we have dedicated teams for monitoring project progress. We also outsource execution to meet the deadlines without any compromise to quality.

Human resource risk: Your Company understands and values the role of its human capital in successfully executing a project. We have in place a strong human resource policy to acquire and retain talent.


The real estate and construction sector is poised for further growth with the government planning to mobilise 68 trillion rupees investment plan over the next five years. Your Company is buoyant to capture the momentum, driven by the positive factors, some of which are furnished below:

• Housing for All coupled with the Governments credit- linked subsidy schemes and a rising middle class, which will drive demand for affordable houses

• Budget allocation for various AIIMS, IITs and other national institutions

• Increased budget allocation for development of national highways, state highways and expressways, dedicated freight corridors etc.

• Estimated urban infrastructure investment of 44.2 trillion rupees

• Identification of 99 Smart Cities, having an outlay of 2.17 trillion rupees

NBCC is well-placed to consolidate its presence in the infrastructure sector. Your Company has already acquired Hindustan Steel Works Construction (HSCL) and is further set to acquire other small PSUs to become a construction behemoth, providing end-to-end services complete project management consultancy and construction services under one roof.

Your Company is also working on developing four or five land parcels owned by sick PSUs as part of its plans to monetize non-core assets. Work on two of the parcels to develop townships, middle-income homes or affordable housing projects is likely to commence by the end of the year.

NBCC is the only public sector enterprise in realty space which redevelops properties for the government. We have recently received orders for the construction of around 15,000 bunkers in Jammu and Kashmir, the development of a large piece of land owned by the Maharashtra government in Mumbais Wadala area, and the redevelopment of the Manora MLA Hostel in Nariman Point in Mumbai.

This apart, NBCC is also exploring options to help realtors under financial or other stress to complete their projects, and deliver on time, homes to the buyers. Your Company also intends to enter into collaboration/joint venture as a co-developer/implementing agency for project management consultancy, project branding, sales, marketing on the licensed land owned by the private firms or government agencies.

NBCC has shown consistent growth over the past five years with rising Revenue from Operations and Net Profit more than doubling during this period. Thanks to our progressive Human Resource policies and initiatives, during the same period, the productivity per employee also grew, making your Company a much leaner and an efficient organisation. The growth in operating margin during this period is also testament to our capabilities.

For the current financial year, your Company is targeting much higher annual turnover over the previous year.

You will be happy to note that your Company is poised for steady growth in the coming years on the back of an economy on the growth trajectory, regulatory and policy reforms, improving business climate, healthy order book, wide customer network, strong organizational setup, digitized work culture, requisite resources and a skilled workforce.


As a responsible Navratna Company, NBCC is alive to the fact that its role goes much beyond just creating material wealth. Committed to the welfare of the nation and an integral player in the nation-building arena, your Company is committed to creating financial wealth for its shareholders; skill capital for its talent pool; and environmental wealth to sustain life for the coming generations. In this section, we describe how we fared in enriching the fabric of the nation, adding to its coffers not just profits but long-term benefits to sustain responsible growth.


Strengthened by robust operational performance and sound fundamentals, NBCC has posted impressive corporate results during the financial year 2017-18.

(Rs. in Crores)

Particular Consolidated Standalone
2017-18 2016-17 2017-18 2016-17
Total Revenue 7095.91 7575.25 6011.14 6367.96
Total Expenses 6549.29 7053.97 5508.52 5880.31
PBT 547.20 454.47 502.62 487.65
PAT 372.14 325.49 333.60 351.09

Your Company paid interim dividend of 55 paisa (i.e. @ 27.5%) per paid-up share capital of 2/- rupees (Pre-Split) for the FY 2017-18. Further, it recommended final dividend of 56 Paisa per equity share of 1/- rupee each (Post Split) (i.e. @ 56%) for the FY 2017-18 subject to the approval of the shareholders in the ensuing annual general meeting of the Company.

The performance of the Company is likely to be slated "Excellent" by the Department of Public Enterprises (DPE) for the FY 2017-18.

Segment-wise performance:

Segment wise performance of the Company is as under:

(Rs. in Crores)

Particular Consolidated Standalone
Year Ended on Year Ended on
31.03.2018 31.03.2017 31.03.2018 31.03.2017
(Audited) (Audited) (Audited) (Audited)
1. Segment Revenue
(a) PMC 6084.69 6396.61 5339.32 5491.74
(b) Real Estate 25.23 185.34 25.23 185.34
(c) EPC 780.44 766.34 507.14 534.09
Total 6890.35 7348.29 5871.69 6211.17
Less: Inter Segment Revenue - - - -
Net sales/Income From Operations 6890.35 7348.29 5871.69 6211.17
2. Segment Results
Profit before tax
(a) PMC 590.65 466.85 581.17 469.72
(b) Real Estate -2.21 51.23 -2.57 51.15
(c) EPC 55.60 8.79 43.16 60.71
(d) Unallocated -96.84 -72.40 -119.14 -93.93
Total Profit Before Tax 547.20 454.47 502.62 487.65

Investment in Subsidiaries and Associates

At the end of the financial year March 31, 2018, NBCC has the following subsidiaries and Joint Venture Companies:

NBCC Services Limited Wholly Owned Subsidiary
NBCC Engineering & Consultancy Ltd. Wholly Owned Subsidiary
NBCC International Limited Wholly Owned Subsidiary
NBCC Environment Engineering Limited Wholly Owned Subsidiary
Hindustan Steelworks Construction Limited Subsidiary
NBCC Gulf LLC Foreign subsidiary
Real Estate Development & Construction Corporation of Rajasthan Ltd. Joint Venture

Overseas Operations

Your Company began its overseas journey in the year 1977, executing turnkey projects in countries such as Libya, Iraq, Yemen, Nepal, Maldives, Mauritius, Turkey, Botswana. We are now set to expand our presence in Africa with a project worth around 2000 crore rupees to construct nine Mahatma Gandhi Convention Centres (MGCC), one each in countries such as Niger, Uganda, Malawi, Zambia, Liberia, Gambia, Burkina Faso, Togo and Gabon.


Environmental sustainability in your Company centres around: Waste water management, carbon mitigation, waste management and protecting bio-diversity. As a part of our deep commitment to ecological sustainability, we have been involved with multiple environment related programs both, within our business ecosystem as well as in the civic and social sectors outside. In an ongoing green initiative, we have conducted plantation drives across all our project sites across the country and have planted thousands and thousands of trees at its projects sites.

In pursuit of sustainable development, your Company incorporates Green Building features, using processes and materials that are environmentally-responsible and resource-efficient, right from planning to design, construction, operation, maintenance, renovation, and demolition. A majority of the prominent buildings executed by us conform to GRIHA Certification.

Going forward, we will continue to walk the path of harmonious development, leveraging innovative business strategies to create ethical wealth for our shareholders and sustainable livelihood opportunities for our people, while leaving a positive environmental footprint.


Human resource development efforts of your Company are aligned with industry best practices. We understand that a positive workplace is, and will always remain, the foundation on which a company can realize its goals and achieve competitive advantage. Strengthening our human capital is, therefore, core to our operations.

Your Company runs multiple initiatives to help employees grow in their careers. Progressive policies such as a mentoring and skill development programmes for junior employees, and special leadership development programs for senior employees, have gone toward making the workplace more employee-friendly. Periodic leadership reviews also help us maintain a healthy career progression.

Your Company is an equal opportunity employer, embracing diversity in race, religion, marital status, gender, age, ethnic origin, and physical ability; and providing its diverse workforce with a stimulating environment to aid both their personal and professional development.

As on March 31, 2018, 1945 employees worked with the company and its subsidiaries, across the country.


The financial statements of the Company have been prepared in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014.


With an aim to promote transparency in its operations and provide a level playing field to all its stakeholders, including vendors and employees NBCC has taken initiatives several initiatives, more notably the introduction of the Vendor Grievance and Online, and Online Annual Property Return Portals. In tune with the demands of the time, your Company has also adopted digital technology, to reduce paperwork and streamline operations.


Statements made in the Management Discussion and Analysis Report describing the Companys objective, projections, estimates, expectations may be forward looking statements within the meaning of applicable laws and regulations, based on beliefs of the management of the Company. Such statements reflect the Companys current views with respect to the future events and are subject to risks and uncertainties. Many factors could cause the actual result to be materially different from those projected in this report, including among others, changes in the general economic and business conditions affecting the segment in which the Company operates, changes in business strategy, changes in interest rates, inflation, deflation, foreign exchange rates, competition in the industry, changes in Governmental regulations, tax laws and other Statutes & other incidental factors. The Company does not undertake any obligation to publicly update any forward looking statements, whether as a result of new information, future events or otherwise.