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NCC Ltd Directors Report

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NCC Ltd Share Price directors Report

To the Members,

Your Directors take pleasure in presenting the 33rd Annual Report together with the Audited Statement of Accounts for the Financial Year ended March 31, 2023.

Standalone Financial Results

( in crores)

Particulars 2022-23 2021-22
Revenue from Operations 13351.32 9930.03
Other Income 152.25 108.21
Total Income 13503.57 10038.24
Profit before Interest, Depreciation, Exceptional Items and Tax (PBIDT) 1494.77 1104.32
Less: Finance Costs 510.00 459.60
Profit before Depreciation, Exceptional Items and Tax 984.77 644.72
Less: Depreciation and Amortisation Expenses 199.81 182.34
Profit before exceptional item & tax 784.96 462.38
Exceptional items (Net) 145.64
Profit before tax 784.96 608.02
Provision for Tax (Including earlier Year Taxation) 215.75 117.90
Profit after Tax 569.21 490.12
Other comprehensive income / (loss) for the year (4.56) (2.82)
Total comprehensive income for the year 564.65 487.30
Retained earnings- Opening Balance 1669.75 1478.42
Add: Profit for the Year 569.21 490.12
Less: Transferred to General Reserve 350.00 250.00
Less: Dividend paid during the year 125.57 48.79
Retained earnings - Closing Balance 1763.39 1669.75
Paid up Capital 125.57 121.97

Operational performance Standalone

Your Board takes pleasure in reporting that the Revenue from Operations of the Company for the Financial Year ended 31st March 2023 amounted to 13,351.32 crores as against 9930.03crores in F.Y 2021-22 and earned a Profit before Interest, Depreciation, Exceptional Items and Tax (PBIDT) of 1494.77 crores for the F.Y 2022-23 as against 1104.32 crores in the previous year. After deducting financial charges of 510 crores, providing a sum of 199.81 crores towards depreciation and 215.75 crores for income tax, the operations of the Company resulted in a net profit of 569.21 crores for the F.Y 2022-23 as against 490.12 crores in F.Y 2021-22.

Consolidated

During the year under review, the Revenue from Operations of the Company on a consolidated basis amounted to 15,553.41 crores as against 11,137.96 crores in the previous fiscal. Your Company has earned a PBIDT of 1 6 0 6 . 5 8 crores for the F.Y 2022-23 as against 1094.52 crores in the previous Financial Year. The operations resulted in a net profit attributable to the shareholders of the Company of 609.20 crores as against 482.41 crores in the previous financial year.

During the year, the Company, on consolidated basis, bagged new orders valued around 25,895 crores (including change in scope of work) and after deducting the Orders executed, the Order Book of the company as on March 31, 2023 stood at 50,244 crores.

You will be happy to note that the Company has exhibited robust financial performance during the fiscal year under review.

Dividend

Your Board takes pleasure in recommending payment of Dividend of 2.20/- (110%) per Equity Share of 2/- each as against 2/- per Equity Share in the previous year for the consideration and approval of the members of the Company at the forthcoming Annual General Meeting.

The dividend recommended is in accordance with the Companys Dividend Distribution Policy. The Dividend Distribution Policy of the Company is available on the Companys website and can be accessed at https://www.ncclimited.com/policies&codes.html

Transfer to Reserves

Out of the amount of 2113.39 crores available for appropriation your Board approved transfer of 350 crores to the Reserves and the remaining amount of 1763.39 crores in the retained earnings.

Management Discussion and Analysis

Business overview and outlook and the state of the affairs of the Company and the Industry in which it operates, is discussed in detail in the section relating to Management Discussion & Analysis which forms part of this Report.

Change in nature of business

There has been no change in the nature of business carried on by the Company during the year under review.

Material Changes and Commitments affecting the financial position of the Company

There are no Material Changes and Commitments affecting the financial position of the Company which occurred between the end of the financial year to which the financial statements relate and the date of this Report.

Conversion of Warrants issued to Promoters to into Equity Shares

Pursuant to the provisions of the Companies Act, 2013, SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 (SEBI ICDR Regulations) and the approval accorded by the members of the Company, the Company had issued 1,80,00,000 Convertible Warrants on Preferential basis to the Promoters / Promoter Group Shareholders of the Company at a price of 59/- per warrant (including premium of 57/- per warrant) as per the applicable SEBI ICDR Regulations and upon receipt of the consideration amounting to 26.55 crores (towards 25% of the issue price) the Company had allotted partly paid warrants to the allottees on 12th February 2021. As per terms of the preferential issue these warrants were converted into equity shares of the Company upon receipt of the balance 75% amounting to 79.65 Crore from the allottees. The Equity Shares allotted consequent to the conversion of the Warrants are listed and traded on NSE & BSE.

Share Capital

During the financial year under review, the Issued & Paid-up Capital of the Company increased from 121.97 crores to 125.57 crores consequent to the allotment of equity shares to the Promoters. There has been no change in the Authorised Share Capital of the Company.

Particulars of Contracts or Arrangements with Related Parties

All related party transactions entered during the financial year were in the ordinary course of the business of the Company and were on an arms length basis. There were no materially significant related party transactions entered by the Company during the year with the Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the Company.

The policy on Related Party Transactions as approved by the Audit Committee and the Board of Directors is hosted on the website of the Company and the link for the same is: https://ncclimited.com/policies&codes.html

Directors responsibility statement

Pursuant to the provisions of Section 134(5) of the Companies Act, 2013, your Directors to the best of their knowledge and ability confirm as under:

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

(b) We 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 as of 31st March 2023 and of the profit of the Company for the financial year ended 31st March 2023;

(c) We have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the said Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) The annual accounts have been prepared on a going concern basis;

(e) The Company 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

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

Subsidiary / Joint Venture Companies:

The Company has 24 subsidiaries (including step-down subsidiaries) as on 31st March 2023. As per the provisions of Section 129 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, a separate statement containing the salient features of the financial statements of the Subsidiary Companies / Associate Companies/ Joint Venture Companies is prepared in Form AOC-1 and is attached to the Financial Statements of the Company.

In accordance with the provisions of the Companies Act, 2013 and the Rules framed thereunder, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are being made available on the website of the Company and are not attached with the Financial Statements of the Company. The Company will make available the Financial Statements of the subsidiary companies and the related information to any member of the Company who may be interested in obtaining the same. In compliance with Section 134 of the Companies Act, 2013 read with the rules framed thereunder and the provisions of the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015, as amended from time to time the Financial Statements for the F.Y 2022-23 have been prepared in compliance with the applicable Indian Accounting Standards.

Consolidated financial statements

In compliance with Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and in compliance with the provisions of Section 129(3) and other applicable provisions of the Companies Act, 2013 and the Indian Accounting Standards Ind-AS 110 and other applicable Accounting Standards, your Directors have pleasure in attaching the consolidated financial statements for the financial year ended March 31, 2023, which forms part of the Annual Report.

Disclosures: Deposits

During the year, the Company has not accepted any public deposits.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

A. Conservation of energy

The Companys core activity is civil construction which is not power intensive. The Company is making every effort to conserve the usage of power wherever possible.

B. R&D and technology absorption: Not applicable

C. Foreign exchange earnings and outgo during the F.Y 2022-23

i. Foreign exchange earnings: 1.77 crores.

ii. Foreign exchange outgo:

a. Towards travel: 0.46 crores

b. Towards import of capital goods & material supplies: 87.04 crores During the year under review no significant and material orders were passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations in future.

Particulars of loans, guarantees or investments under Section 186;

Details of Loans, Guarantees, Investments under the provisions of Section 186 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014 as of 31st March 2023 form part of the Notes to the financial statements provided in this Annual Report.

Directors:

In pursuance of Section 152 of the Companies Act, 2013 and the rules framed there under, Sri A S N Raju (DIN 00017416), Whole-time Director and Sri A G K Raju (DIN 00019100), Executive Director are liable to retire by rotation, at the ensuing Annual General Meeting and being eligible have offered themselves for reappointment.

The Independent Directors have submitted the requisite declaration of independence, pursuant to Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as provided in sub-section (6) of Section 149 of the Companies Act, 2013 read with sub rule (1) and (2) of Rule 6 of Companies (Appointment and Qualification of Directors) Rules, 2014 as amended.

Key Managerial Personnel

As on 31st March 2023 Sri A A V Ranga Raju, Managing Director, Sri A G K Raju, Executive Director, Sri A S N Raju, Sri J V Ranga Raju and Sri A V N Raju, Wholetime Directors, Sri K Krishna Rao, EVP (F&A) and CFO and Sri M V Srinivasa Murthy, Company Secretary & Sr. EVP (Legal) continued as the Key Managerial Personnel of the Company in accordance with the provisions of Section 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

Policy on Directors Appointment and Remuneration and other details

The Companys policy on Directors appointment and remuneration and other matters pursuant to Section 178(3) of the Companies Act, 2013 is hosted on the Companys website and the web link thereto is: https://ncclimited.com/ policies&codes.html The requisite information pursuant to Section 178(4) of the Act is given in the Corporate Governance Report which forms part of the Annual Report.

Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees, the Individual Directors, the Chairman of the Company, etc pursuant to the provisions of the Companies Act, 2013 read with the Rules framed thereunder and SEBI (LODR) Regulations, 2015.

The performance of the Board was evaluated by the Board after seeking inputs from all the Directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information, and functioning etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee Members on the basis of criteria such as the composition of committees, effectiveness of committee meetings etc.

In a separate meeting of Independent Directors, performance of the Directors, the Board as a whole, and the Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.

The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as the contribution of the individual director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

Meetings of Board of Directors

The Board Calendar is prepared and circulated in advance to the Directors. During the Financial Year under review the Board has met 6 times i.e., on April 28, 2022, May 11, 2022, August 9, 2022, September 27, 2022, November 08, 2022, and February 8, 2023. The details with respect to the Board and Committee meetings and attendance there at as required under the Secretarial Standard-1 issued by the Institute of Company Secretaries of India have been provided in the Corporate Governance Report forming part of this Annual Report.

Familiarization Programme

The details of the familiarization programme formulated for Independent Directors is hosted on the Companys website and the web link thereto is https://ncclimited.com/independent-directors.html.

Audit Committee

The Company has in place an Audit Committee in terms of the requirements of the Companies Act, 2013 read with the Rules made thereunder and Regulation 18 of the SEBI (LODR) Regulations, 2015. The details relating to the Audit Committee are given in the section relating to Corporate Governance forming part of the Annual Report.

Whistle Blower Policy/ Vigil Mechanism

Pursuant to Section 177 of the Companies Act, 2013 and the Rules framed there under and pursuant to the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the Company has established a mechanism through which all the stakeholders can report the suspected frauds and genuine grievances to the appropriate authority. The Whistle Blower Policy which has been approved by the Board of Directors of the Company has been hosted on the website of the Company https://ncclimited.com/policies&codes.html. During the year under review the Company has not received any complaint(s) under the said policy.

Risk Management

The Company has established Enterprise Risk Management process to manage risks with the objective of maximizing shareholders value.

The Board of Directors of the Company has formed a Risk Management Committee to implement and monitor the risk management Policy of the Company. The development and implementation of the risk management policy has been covered in the Management Discussion and Analysis, which forms part of this report.

Internal Financial Controls and their adequacy

The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information.

Compliance with Secretarial Standards

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

Annual Return

Pursuant to Section 92 (3) of the Companies Act, 2013 a copy of the annual return for the financial year ended 31st March 2023 has been placed on the website of the Company at https://ncclimited.com/AGM_EGM_Info.html.

Statutory Auditors and their report

M/s. S R Batliboi & Associates LLP Chartered Accountants (Firm Registration No.101049W/ E300004), who were appointed as Statutory Auditors of the Company for a term of five years from the conclusion of the 32nd Annual General Meeting till the conclusion of the 37th Annual General Meeting conducted the Statutory Audit for the F.Y 2022-23. The Independent Auditors Report(s) to the Members of the Company in respect of the Standalone and the Consolidated Financial Statements for the Financial Year ended March 31, 2023, form part of this Annual Report and do not contain any qualification(s) or adverse observations.

Secretarial Audit Report

As per the provisions of Section 204(1) of the Companies Act, 2013 and the Rules framed there under, the Company has appointed M/s. BS & Company Company Secretaries LLP, Practicing Company Secretaries to conduct Secretarial Audit of the records and documents of the Company for the Financial Year 2022-23. The Secretarial Audit Report for the Financial Year ended 31st March 2023 in Form MR-3 is annexed hereto and forms part of this Report - Annexure - I. The Secretarial Auditors Report to the Members of the Company for the Financial Year ended March 31, 2023, does not contain any qualification(s) or adverse observations.

Cost Audit

In compliance with the provisions of Section 148 of the Companies Act, 2013 and the Rules framed thereunder and based on the recommendation of the Audit Committee, the Board of Directors of the Company at its meeting held on May 11, 2022, had appointed M/s. Vajralingam & Co., Cost Accountants (Firm Registration No.101059) as the Cost Auditors of the Company for the F.Y 2022-23 to conduct audit of the cost accounts and records maintained by the Company to the extent applicable. In terms of the provisions of Section 148(3) of the Companies Act, 2013 read with Rule 14(a)(ii) of the Companies (Audit and Auditors) Rules, 2014, the remuneration of the Cost Auditors has to be ratified by the members. Accordingly, necessary resolution is proposed at the ensuing AGM for ratification of the remuneration payable to the Cost Auditors for FY-2022-23.

Corporate Governance

Pursuant to the provisions of Chapter IV read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Corporate Governance has been incorporated in the Annual Report for the information of the members of the Company. A certificate from the Secretarial Auditors of the Company regarding compliance with the conditions of Corporate Governance as stipulated under the said Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 also forms part of this Annual Report.

Business Responsibility and Sustainability Report

As stipulated under Regulation 34 of the SEBI (LODR) Regulations, 2015, Business Responsibility and Sustainability Report is attached hereto and forms part of the Annual Report.

Investor Education and Protection Fund (IEPF)

Pursuant to the applicable provisions of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the Rules), all unpaid or unclaimed dividend are required to be transferred by the Company to the IEPF established by the Government of India, after the completion of seven years. Further, according to the said Rules, the shares on which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. In compliance with the aforesaid provisions the Company has transferred the unclaimed dividends and corresponding shares to IEPF. The details of the unclaimed dividend during the last seven years and also the details of the unclaimed shares transferred to IEPF are given in the Report on Corporate Governance forming part of the Annual Report.

Details of any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016)

During the year, no corporate insolvency resolution process was initiated under the Insolvency and Bankruptcy Code, 2016, by the Company, before National Company Law Tribunal. The Consortium formed amongst Maytas Infra Ltd and NCC Ltd was awarded the Road Project between Pondicherry and Tindivanam by National Highways Authority of India (NHAI) in the year 2005 on Build, Operate and Transfer (BOT) basis. The said Consortium had formed Pondicherry Tindivanam Tollway Pvt. Limited (PTTL), a Special Purpose Vehicle for execution of the said Road Project. The Company had along with other Promoters of Pondicherry Tindivanam Tollway Pvt. Limited (PTTL), among others executed the Amended and Restated Promoters Undertaking (Undertaking) dated 25th June 2008 in relation to the Financial Assistance extended by the Consortium of Banks to the said PTTL. The execution of the road project was completed by PTTL in December, 2011, but on account of breach of the contract on the part of National Highways Authority of India (NHAI), PTTL had sought termination of the Concession Agreement entered into with NHAI and referred the contractual disputes and raised claims against NHAI, which were initially referred to arbitration and thereafter to the Conciliation Committee of Independent Experts (CCIE) set up by NHAI. While the disputes are sub-judice before the CCIE, Axis Bank being Lead Lenders to PTTL filed an Application u/s 7 of the IBC against the Company and illegally claimed an amount of 84.04 Crores alleged to be due to them under the said Undertaking and which application is pending for admission by the NCLT, Hyderabad. As no amount is due by the Company to the said Axis Bank under the said Undertaking, the Company has filed an application under section 65 of the IBC Code for dismissal of the frivolous application filed by Axis Bank and the same is subjudice before the Honble NCLT. As on the date of this report, three applications u/s 9 of the IBC Code filed by the vendors are pending before the NCLT, Hyderabad. The Company has contested the aforesaid applications as no amount is due to them.

Reporting of Frauds

There have been no instances of fraud reported by the Auditors of the Company under Section 143(12) of the Companies Act, 2013 and the Rules framed there under either to the Company or to the Central Government.

Corporate Social Responsibility

The brief outline of the Corporate Social Responsibility (CSR) Policy of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure-II of this Report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended. The CSR Policy is available on the website of the Company https://ncclimited.com/policies&codes.html. As per the provisions of the Companies Act, 2013 and the Rules framed thereunder during the F.Y 2022-23 the Company was required to spend an amount of 7 . 8 0 Crore towards CSR activities. During the F.Y 2022-23, the Company had spent the entire amount towards various CSR activities undertaken during the F.Y 2022-23 as per details given in the said Annexure-II. Particulars of Employees

Details in respect of the remuneration paid to the employees as required under Section 197 (12) of the Companies Act, 2013, read with Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time forms part of this report. The Annual Report and accounts are being sent to the shareholders excluding the aforesaid exhibits. Shareholders interested in obtaining this information may access the same from the Companys website. The ratio of the remuneration of each Director to the median employees remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is given in Annexure–III and forms part of this Report.

Protection of Women at Workplace

The Company has formulated a policy on Prevention of Sexual Harassment of Women at Workplace in accordance with The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company has an Internal Complaints Committee for providing a redressal mechanism pertaining to sexual harassment of women employees at workplace. During the financial year ended 31st March 2023, the Company has not received any complaints pertaining to Sexual Harassment.

Acknowledgements

Your Directors place on record their sincere appreciation and thanks for the valuable cooperation and support received from the employees of the Company at all levels, Companys Bankers, Central and State Government Authorities, Associates, JV Partners, Clients, Consultants, Sub-contractors, Suppliers and Members of the Company and look forward for the same in equal measure in the coming years.

For and on behalf of the Board

Hemant M Nerurkar
Place: Hyderabad Chairman
Date: May 26, 2023 (DIN: 0265887)

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