BOARD'S REPORT TO, THE MEMBERS OF HINDUSTAN CONSTRUCTION CO. LTD. Your Directors are pleased to present the 90th Annual Report together with the Audited Financial Statements for the year ended March 31, 2016. 3. Dividend As your Company is under CDR, it is necessary to conserve and optimise use of resources to improve the health of the Company. Hence, your Directors have not recommended any dividend for the financial year ended March 31, 2016. 4. Operations The turnover of the Company in the year is Rs. 4,190.90 crore as compared to Rs. 4,301.14 crore in the previous year. The profit before tax is Rs. 133.07 crore (including exceptional item) as compared to Rs. 127.32 crore for the previous year. Your Directors are pleased to inform that during the year under report, the Company has secured the following major contracts: Ramban to Banihal Section of NH 44, Jammu & Kashmir Contract Value: Rs. 1783 crore Integrated Nuclear Recycle Plant, Maharashtra Contract Value: Rs. 942 crore Imphal Kangchup Tamenglong Road, Manipur Contract Value: Rs. 1114 crore Tapovan Vishnugad Hydroelectric Project, Uttarakhand Contract Value: Rs. 634 crore Nikachhu Hydropower Plant, Bhutan Contract Value: Rs. 457 crore Tunnel No. 12, New Railway line Project Jiribam -Tupul, Manipur Contract Value: Rs. 784 crore The total balance value of works on hand as on March 31, 2016 is Rs. 18,123 crore. Decisions are awaited from various clients for tenders submitted by the Company for 13 packages amounting to about Rs. 10,334 crore (HCC share Rs. 9301 crore). Tenders for various packages for 29 projects worth over Rs. 22,214 crore (HCC share Rs. 19,843 crore) are expected to be submitted in the near future. The Company has also submitted prequalification bids for 12 projects worth over Rs. 24,082 crore (HCC share Rs. 22,053 crore) which are under evaluation. Operations of Subsidiaries i) Lavasa Corporation Ltd - Integrated Urban Development and Management Lavasa has kept its rationale of developing a smart city for all and is tailoring partnerships and tie ups with global leaders. Partnerships are well in place and many of these projects are moving towards completion. In the hospitality space, the Accor group is successfully running its operation with the two brands - Mercure Lavasa and the 1500 plenary capacity Lavasa International Convention Centre (LICC). Another brand of the Accor group - Novotel is scheduled for opening in April 2017. Projects with renowned hospitality players like Formule 1, Holiday Inn, Langham and Eaton amongst others are slated to follow in quick succession. As for the existing hospitality projects, Ekaant - The Retreat and Waterfront Shaw Apartment Hotel continue to flourish. Fortune Select Dasve is in its eighth year of successful operations with occupancy at 66%, while Accor's Mercure is in its seventh year of successful operation with occupancy at 56%. In the tourism space, Lakeshore Watersports, Neo Spark Games Arcade and Xthrill Adventure Sports & Academy are also functioning successfully. Lavasa has tied up with former Indian cricketer and chief of the BCCI Selection Committee, Mr. Sandeep Patil for building a Sports complex including a cricket stadium for corporate tournaments. There have been talks to set up sports academies for hockey, football, badminton, etc. at Lavasa. Other tie-ups include advance discussions on building a Hollywood & Bollywood Theme Park in Mugaon. On the retail front, a significant area has already been leased. Restaurants like Smokin Joe's, Venkys Xpress, Subway, Cafe Coffee Day, Baskin Robbins, All American Diner, Granma's Homemade Patisserie, Chor Bizarre, Oriental Eight, Past Times Pub, Tabakh, Pizzavala, Naashta Paani, Paanchi Krunchyand Indulge have commenced operations. Many other non F&B outlets such as Mapro and Charosa Wine Boutique have successfully started operations including Lavasa's first miniplex- Fun Square Digital Cinema. Significant progress was made in the education space. Christel House Lavasa is into its seventh year of operations with 432 students. 2015-16 also saw launch of Phase 2 of Christel House till grade VIII. Corporate entities such as EduSports, Yoga Blessing and Linguaphone showed keen interest to contribute towards Christel House Lavasa School by way of sports programmes, educational and Yoga workshops. Ecole Hoteliere Lavasa started its seventh batch in June 2015-16. The operation of Ecole Hoteliere was taken over by Expat Properties in May 2015. Ecole Hoteliere will start its eighth batch from July 25, 2016. Christ University offering courses like Post Graduate Diploma in Management (PGDM) program with specialization in Finance and Marketing started operations two years ago, with a total of 102 students now in its third batch, with a target of 60 students for the 2016-17 academic program. Knowledge Vistas Limited (KVL) is already running Little Millennium, pre-primary school at Lavasa for last five years. It is also likely to start the K12 School from academic year 2017-18. Abhinav Shiksha Sansthan, New Delhi will start from the academic year 2018-19 across the area of 62,500 sq. ft. Other educational partners like Symbiosis Institute (Pune) are also in the process of launching their programs. Residential sales have been sluggish in tune with the overall market sentiment. Institutional Sales team is on the anvil of closing transactions which would herald the entry of reputed corporations into Lavasa city. One such deal is with 'All that Jazz', a leading retailer who will bring reputed retail brands to make Lavasa an ideal shopping destination. This deal will boost retail businesses at Lavasa and make the promenade area more vibrant. We are in advanced discussions with multiple educational institutes keen to set up residential schools at Lavasa. Sanjeevani Institute intends to bring in Kindergarten to Post Graduate courses. Likewise, vocational training institute from Germany, 'Kosbe' has been approached and they are keen to start courses. Lavasa being a smart city offers students ready on site learning of various subjects like waste management and functioning of water treatment plants. Symbiosis Institute has begun construction of a higher secondary education facility. Lavasa continued its focus on branding and communication activities in 2015-16. Emphasis through the year was on communicating that development work at Lavasa has commenced with right earnest, raise awareness about the planned city and its advantages. Positioning Lavasa city as India's first smart city, building preference and restoring customer confidence in the project were the key goals. The central government initiative to build smart cities across India generated a great deal of excitement among Indian and foreign stakeholders. The growing interest in smart cities augurs well for Lavasa. We played host to a number of government, business and student delegations keen on studying the Lavasa model of development. As a proactive step to reach out to a wider audience, Lavasa was presented as a ready Smart City model at various platforms, the most prominent one being the Smart Cities India Exhibition at Delhi and the 13th Municipalika Smart Cities Exhibition atJaipur. Our spokespeople also participated in various other seminars and discussions on Smart Cities. Lavasa continued with the strategy of creating large events at Lavasa to attract good tourists. A four day festival of adventure, music, dance and entertainment was organized as a lead up to the Republic Day on January 26, 2016. For the first time, a hot air balloon took flight over the Dasve town, Mentalist, Akshay Lakshmanan captivated audiences with his mind reading session and wall painting activity by the students of Christel House were the highlights of the Republic Day weekend festivities. On May 1, 2015, Maharashtra Day was also celebrated with art & culture, music & dance programmes highlighting the rich cultural heritage of Maharashtra, along with a display of historic ancient Maratha arms & weapons livened up the Dasve Promenade. The second edition of Freedom, a festival of music, food and entertainment saw 35,000 tourists enjoying good music, delectable cuisines and great entertainment. Christmas and New Year celebrations started with live musical and dance performance at the Dasve promenade and Fortune Lawns. Renowned artist Sharon Prabhakar along with DJ Rayjack, DJ-Cyborg, DJ Sazz & DJ Shriki entertained the visitors. Focus of the Public Relations campaign in 2015 was on building profile of Lavasa as India's first smart city and promoting the city as an ideal tourist destination. Feature stories in print media and TV channels, automobile magazines, national and international news portals resulted in good visibility for Lavasa. Lavasa was prominently featured as a Smart City in a number of media reports. Trade magazine 'Realty' featured Lavasa as one of India's premier Smart Cities, while Hindustan Times, the Pioneer, Deccan Herald and Indiainfoline carried similar stories. Other trade supplements like Times Property and multiple regional publications also featured Lavasa as a Smart City. CMD's comment was widely circulated to media post launch of AMRUT in Delhi, positioning him as the thought leader on Smart Cities. 'The Property Guide' guide show on leading business news channel ET Now did a report on residential properties at Lavasa and also carried an interview with the CEO. Lavasa as a tourist destination was promoted through stories in relevant travel and lifestyle media and through tie ups with TV channels for shows that were shot at Lavasa. ELLE magazine did a 14 page photo shoot including the cover page at various scenic locations in the city. Lavasa was covered extensively in 'Man Chimb Pavasan' a travel based programme on Saam Marathi channel. A photo-feature on tourist options at Lavasa was also carried by leading news portals like rediff.com and indiatoday.in. Auto-trade media was specifically engaged to promote Lavasa among bikers and adventure enthusiasts. Over 1000 bikers braved the rain and travelled to Lavasa in June to celebrate World Motorcycle Day. This activity garnered coverage in all media including mainline publications, print and online auto media as well as regional publications. Motoring World magazine conducted the jury round of their annual car and bike awards at Lavasa which resulted in a six page story all of them featuring cars and bikes shot at Lavasa. Lavasa viewpoint on the SDO order on restoring tribal lands was prominently reproduced by all print and TV media. Pune media was engaged extensively during the summer season to sensitise them on the water scarcity issue. Meetings with senior editors and the constant engagement with beat reporters in Mumbai and Pune has also helped in creating greater awareness of company's stand on various crucial issues. Special Initiatives and events were highlighted regularly in mainstream and trade media to build preference and recall. Celebrations at Lavasa on Maharashtra Day, Independence Day weekend and initiative like the Dreamcatchers Summer camp were covered by all major publications and online portals. Launch of Jetovator, Segway and news about Lavasa bagging the PATWAAward were widely publicized. Each month, Lavasa looks, feels and acts more like a city. Lavasa city now has a full-fledged operational Farmer's market known as 'Hara Bazar'; a two screen Movie theatre for visitors and residents; it has a fully operating Post office, DTDC - courier service, a Hospital with pharmacy and several new food and beverage establishments open for business. It also has four operating hotels. Four additional hotels will be opening soon which collectively will take the total number of hotel rooms in Lavasa to more than 600. Lavasa has a Petrol Pump, two bank branches along with ATMs, a state-of-art Convention Centre, a Public Safety Centre with Fire Engine & crew, Police outpost to be upgraded to a full-fledged Police station, Tourist Information Center with a 'Hop On -Hop Off' Bus facility; Multilevel Car parking facility, Nature trail, Citizen Contact Center with 24x7 support to citizens through emergency and non-emergency contact numbers, Rental housing for low income groups, simulated Golf Course facilities; Water Sports facility with latest "Jetovator", Adventure Sports facility, a modern Club with gym, Sports and Spa facilities, Public Transport system for citizens, Schools for local population and two operational College campuses. Additional Hotels, Retail shops and Family Entertainment Centre facilities for tourists will be opened shortly. Building the infrastructure right, from the beginning, is a key strategy to ensuring long-term livability. Drinking water at Lavasa is fit for consumption, straight from the tap, without the need for additional filtration. Sewage is treated in a manner that exceeds government requirements and is subsequently reused for irrigation and other non-potable uses. Lavasa's power distribution grid is nearly 99.90% reliable and the young city is already on the cutting edge of urban environmental sustainability initiatives. Over 50 kilometers of well-maintained motorable roads are operational and more are being constructed, Lavasa has already opened parks and play areas to the public. The e-governance portal Lavasa App, and Security Command Centre will play a major role in communicating with citizens and providing services 24x7. A round the clock Lavasa Citizen Contact Centre has been operational since 2009 and envisions making the lives of citizens and visitors easy and convenient. The Lavasa Citizen Contact Centre is a one-stop information source for non emergency and emergency related services. It provides a single window resolution for all customers' needs and visitors' requests; is involved in proactive information distribution, data collection and Property management services; Customer Satisfaction Surveys and Customer handovers and possession. The City Management Services (CMS) Department is equally dynamic in seeking to coordinate services in this rapidly changing setting. It is currently divided into seven specialist divisions including Customer Services, Public Safety & Security, Enterprise Utilities, PublicWorks, Administration & Finance, Community Development and Geographic Information Systems & Management Information Systems. The CMS department will slowly evolve into a new governance entity that will, at some point, be the core of a new replicable governance model. Lavasa aims to create this, so that the goals of the Master Plan can be realized and sustained and the various public - private partnerships can operate in a more consistent and predictable environment. The CMS department meets on a monthly basis with a committee of villagers throughout the project area. The Village Committee is the first of several such citizen advisory groups that will together form a key component of the Lavasa citizen and stakeholder engagement mechanisms. The Company had 10,574 acres of land including 455 acres of land on lease by the end of last financial year i.e. March 31, 2015. This has reduced to 10,515 acres as 59 acres of land in Mugaon was restored to tribals by SDO, Maval during the year. The Environment Management Plan (EMP) continues to be implemented as per our Environment Impact Assessment (EIA) Report submitted to Ministry of Environment, Forests & Climate Change (MoEF & CC), New Delhi. Regular monitoring of environmental aspects such as air & noise quality, water & sediment quality, soil quality, DG stack & noise quality and biodiversity is being carried out by MoEF approved and NABL accredited laboratory as per the conditions mentioned in the Environment Clearance by MoEF & CC. All reports were found to be within the prescribed limit of MPCB. The six-monthly Environmental Compliance Report is being submitted to MoEF since 2012. The 7th compliance report was submitted in June 2015 and the 8th compliance report was submitted in December 2015 to MoEF, its Regional Office at Nagpur and Maharashtra Pollution Control Board (MPCB) at Pune. Yearly Environment Statement, a requirement as per the consent document of Maharashtra Pollution Control Board (MPCB), is being submitted in the month of September every year and the last report was submitted on September 30, 2015. First town Dasve is ready with all basic infrastructure, such as access roads, internal roads, water treatment plant, water distribution network, sewage network, sewage treatment plant, telecom network and services is operational. Till date around 1,200 properties are ready for hand over to customers. Of these, around 972 units have already been handed over to customers. Work on rest of properties - Lake View apartments, Club View apartments, Delfino apartments, Valley View apartments, Brook View apartments, Rental housing, Retail and hostel tower B, Christel House Phase II, Novotel Hotel and Holiday Inn is in progress. Work on infrastructure for the second town of Mugaon has been accelerated. Work on utilities is in progress. Work on 37 buildings at Mugaon has commenced. The improvement to the existing Mugaon-Tamhini Zilla Major District road excluding the stretch crossing through Forest Land is completed. A portion of this road will also form a part of the approach road for the proposed tunnel between Tamhini and Mugaon. Work on the inter village road from Mugaon to Dhamanohol is completed (6 kms). Rehabilitation work on new gaothans has commenced. This rehabilitation will also help augment the construction of the first phase of the apartments in Mugaon. Lavasa has also initiated a number of development and empowerment programs for the local community. Some of the key initiatives include provision of treated drinking water to 18 villages in the project area at 72 locations on a daily basis. Calligraphy workshops, aptitude tests and counseling for students of Zilla Parishad (ZP) schools, creche for labor children; starting the Apollo Lavasa Primary Health Centre at Bhoini and provision of free health check up, medicines and ambulance service to villagers; monthly health and awareness camps for HIV/ AIDS, malaria, nutrition, and water borne diseases. Employment and self employment opportunities to the locals have also been provided. ii) HCC Real Estate Ltd HCC Real Estate Ltd (HREL), a wholly owned subsidiary of your Company is into the business of building residential and office complexes in real estate sector. HRL (Thane) Real Estate Limited Your Company initiated the acquisition of 183 acres of land at Ghodbunder Road, Thane for Integrated Township Development. Till date the Development Agreement and Power of Attorney for 32 acres have been executed in favour of Company. The Company continued its activity of securing its position for land title and other documentation. The Company has filed criminal case against Mr. Atul Sonawala and 8 other Directors of Om Gurukripa Realtors Pvt. Ltd. Police enquiry is in process for the said case. HRL Township Developers Limited No activities were carried out during the year. Your Company continued its search process for joint development opportunities. Nashik Township Developers Limited During the year, the Company sold its land and completed all the land related transactions. Further the Company is looking for joint development opportunities in residential sectors since Nashik city is growing industrially as well as economically. Maan Township Developers Limited The Company has acquired approx. 28 acres of land and the Development Agreement and Power of Attorney have been executed in favour of the Company. The Company in this year has decided to sell the land in piece parcels. MOU has been signed with a Real Estate Company for sale of 5 Acres of land and has executed sale deed for 4 Acres. Powai Real Estate Developers Limited No activities were carried out during the year though the Company continued to look for an opportunity to find ideal land parcels for joint development in residential sectors HCC Realty Limited No activities were carried out during the year. Panchkutir Developers Limited During the year, your Company continued its efforts on the following projects in residential sector: Development of Vikhroli (E) land parcel: Out of the total land holding of around 32 acres by the Panchkutir Developers Ltd. in Vikhroli (E), the survey of tenements on Phase-I of 14.5 acres of land to ascertain the development potential of the free sale component is completed. Out of the 1960 slum residents, consent of about 1400 residents representing more than 70% has already been obtained and the process for forming the society is in progress. Proposal has been submitted to SRAfor Phase-I comprising of 750 tenants of 4 Societies. Slum declaration of Phase-I land was challenged and the same has been dismissed by the Special Slum Tribunal. Subsequently the litigant filed Writ Petition challenging the above said Order of the Slum Tribunal in High Court. High Court interalia asked tribunal for actual verification of slum. But the litigant filed an appeal challenging the above said Order of the Single Judge of High Court before the Divisional Bench. Development of Powai land: MOU-cum-Development Agreement and Power of Attorney were executed by land owner in favor of the SPV, Panchkutir Developers Ltd a subsidiary of HCC for 12 acres of land. Due to non performance by the land owner of the various obligations under the MOU-cum-Development Agreement in spite of repeated reminders, we have been advised by our solicitor to invoke the Arbitration clause forming part of the MOU-cum-Development Agreement. Accordingly, Arbitration proceedings have been initiated and till date evidence of Claimant's witnesses is completed and matter is now fixed for evidence of Respondent. During the pendency of the proceedings, Smt. Nayak, litigant has submitted a proposal to settle the matter by making lump sum payment which was accepted by the Company. Accordingly Consent Terms were executed on November 16, 2015 and the Learned Arbitrator has passed an award on December 15, 2015 in terms thereof. The Company has received full payment by banker's cheque and has executed cancellation Deeds of MOU and lease deed. iii) HCC Infrastructure HCC Infrastructure Company Ltd., a wholly owned subsidiary of your Company, operates its business through its subsidiaries HCC Concessions Ltd. (HCON), HCC Power Ltd., and HCC Operations & Maintenance Ltd (HOML). HCON develops and manages road assets, HOML operates commissioned assets and HCC Power is exploring opportunities in the power sector to leverage HCC's capabilities. HCON has developed 6 NHAI road concessions over the last 9 years. In the past financial year, after the sale of two of its de-risked operational projects i.e. Nirmal BOT Ltd and Dhule PalesnerTollway Ltd, the current portfolio has four National Highway concessions with Rs. 5,000 crore asset base. In line with your Company's plan, the focus over the last fiscal year has been on strong construction management, efficient operations and raising capital. The management team at the Company has been continuously working to achieve quality and timely execution to create value for all its stakeholders with complete focus on financial discipline. The Company continues to provide reliable, safe and world class services to the country's end users. In 2011, the Xander group, a global investment firm, had acquired a 14.5% stake in HCON for Rs. 240 crore. Current Road Portfolio: HCON's current portfolio comprises of four toll based projects: the Delhi Faridabad Elevated Expressway (dfskyway™) on NH2, and three contiguous sections of 250 km in West Bengal on NH34. Of these, Delhi Faridabad Expressway and the first leg of NH34 development i.e. the Baharampore Farakka Highways are operational. These two projects have been operational for five and two years, respectively. In the last financial year, your Company completed the stake sale of two assets. The transaction for Nirmal BOT Ltd, the annuity project in Telengana (erstwhile Andhra Pradesh) was completed in December 2015 and the sale of Dhule Palesner Tollway, the 89 km highway on NH3 connecting Agra and Mumbai, was consummated in October 2015. Farakka Raiganj Highway, the second and largest leg of NH-34 development in West Bengal, achieved significant progress in the last fiscal year. The project is expected to be commissioned in the next few months while final completion is expected by the end of next fiscal year. The last leg of NH34, Raiganj Dalkhola, which has been delayed nearly 6 years due to delays in land acquisition, has seen significant improvement in availability of Right of Way (ROW), and your Company has approached the lenders consortium and NHAI for support in restarting the project. While the NHAI has acknowledged the sizeable cost increase, they remain reluctant on supporting the project with funds including additional grant. In the interest of all stakeholders and being prod by NHAI, the concessionaire has started basic earthworks, but full scale mobilization will depend on appropriate support from NHAI and lenders. Material defaults by NHAI, largely due to delayed handing over of land for all three NH-34 packages have resulted in the Concessionaire's filing of a claim of Rs. 1,528 crore as damages. Of these the Company has started the arbitration proceedings for the Baharampore-Farakka and Farakka-Raiganj projects. After muted growth due to the recent economic slowdown, the traffic growth on Baharampore-Farakka has been strong in the last financial year and NH-34 projects continue to be a substantial source of value creation for your Company. In the last financial year, ~1,600 km of highways were awarded on BOT basis. The Ministry of Road Transport and Highways (MoRTH) and NHAI have introduced a new Hybrid Annuity model for development of road assets on PPP mode. Your Company is evaluating bidding for select Hybrid Annuity projects, potentially in partnership with third parties. Status of Operational Assets: Baharampore Farakka Highway (NH-34) This is the first section of HCON's Rs. 4,300 crore development of NH-34 (West Bengal) from Baharampore to Dalkhola. The project stretch is the arterial connectivity between North and South Bengal providing nearest access to Kolkata and Haldia ports for the north eastern states of India and neighbouring Bangladesh, Bhutan and Nepal. The traffic on NH34 comprises 85-90% commercial traffic, carrying a diversified mix of manufactured goods, sand, quarry stones, building materials, steel, jute, food grains and tea. The concession period for the project is 25 years, including a construction period of 30 months. The project is being implemented with an investment of Rs. 1,424 crore. The project achieved commercial operations in May 2014 for partial length of the highway while land was being acquired for the remaining portion. The total revenue for the last fiscal year was Rs. 112 crore, an increase of 37% over the previous financial year. The operations and maintenance is being managed by HOML. The Company has successfully implemented the 10x tolling for overloaded vehicles since August 2014 as per NHAI circular, to prevent the economic deterioration of the asset and to meet the increased costs due to overloading. The balance land for the Baharampore bypass was handed over in the second quarter of last fiscal. The completion of the project is delayed by 34 months as of March 2016, largely due to material defaults by NHAI in providing land on a timely basis. The Final Completion (FCOD) is expected to be completed after a delay of 56 months due to delayed handover of ROW, tardy design clearances for major bridges and structures, removal of various hindrances, utilities shifting, etc. The Concessionaire has filed Rs. 578 crore worth of claims from the NHAI for the damages suffered due to NHAI defaults. The Concessionaire will submit further claims for increased costs and arbitration proceedings are underway. The Company has filed the Statement of Claim before the arbitration tribunal. The Company has also achieved the sanctions from the lenders consortium for cost overrun in the last fiscal to complete the project in the absence of timely realization of claim from NHAI. Delhi Faridabad Elevated Expressway (NH-2) (dfskyway™) The Delhi Faridabad Elevated Expressway or dfskyway™, awarded in 2008, is a six lane 4.4 km elevated highway connecting Delhi and Haryana at Badarpur, developed by HCON with an investment of nearly Rs. 600 crore. The dfskyway™ reduced travel time by over 40 minutes through an extremely congested corridor that benefits residents and interstate traffic alike. The project has a concession period of 20 years, including construction period of 2 years. In the last fiscal year the Company suffered a material impact due to a Supreme Court order for collecting Environmental Compensation Charge from commercial vehicles entering New Delhi (thereby discouraging their entry into the capital), resulting in a substantial dip of ~40% in commercial vehicles. It is clear that the Apex Court and the Delhi government are working hard to prevent commercial vehicles using Delhi as a thoroughfare (admittedly for good reason to check pollution), but which has unfortunately caused a devastating impact and potential political event by permanently curtailing revenues. The Company is evaluating several options with the lenders including restructuring options as per RBI guidelines and potential termination with NHAI due to Force Majeure event. In order to enhance the revenue on this project and reduce maintenance costs, the Company is also in the process of implementing 10x tolling for overloaded vehicles in accordance with NHAI Fee Rules. The Company has also submitted its proposal for deferment of premium payments to improve liquidity, as well as a comprehensive proposal for advertising along the project highway. The project is a signature project in Delhi having very high visibility and the Company is expecting significant revenues from the latter sources. Status of Assets under Construction: Farakka Raiganj Highway (NH-34) Farakka Raiganj is the middle and largest section of the 250 km development. This section is about 102 km in length and traverses through Farakka barrage, Kalia Chawk Bazaar and Malda city in Malda and North Dinjapur districts of West Bengal. It also passes through various small villages like Sujapur, Gazole, Stalkuri, Itahar and ends before Raiganj town. The concession period is 30 years, including a construction period of 30 months. The project is being implemented with an investment of Rs. 1,720 crore. A substantial stretch of roads and structures of this second and largest leg of NH-34 development has been completed and toll collection is expected to commence by Q1 of financial year 2017. In the last year, almost the entire land has been made available for construction after a substantial delay of ~4 yrs by NHAI. The Provisional Completion (PCOD) is estimated to be achieved 35 months after SFLD (Scheduled Four-laning Date) while Final Completion (FCOD) will be delayed by a total of 44 months due to delayed handover of ROW, tardy design clearances for major bridges and structures, removal of various hindrances, utilities shifting, etc. As of June 30, 2015, the Concessionaire has filed Rs. 681 crore of claims from the NHAI for the damages suffered due to NHAI defaults. The arbitration proceedings are underway and the Company has filed its Statement of Claim and Rejoinder to the Statement of Defense filed by the NHAI. The Concessionaire will submit further claims for increased costs beyond June 30, 2015. The Company has also achieved the sanctions from the lenders consortium for cost overrun in the last fiscal to complete the project in the absence of timely realization of claim from Authority. Raiganj Dalkhola Highway This is the smallest northern section of the NH-34 development which has suffered the worst delay of nearly 6 years due to non-acquisition of land. The project stretch starts at Raiganj (Km 398.000) and terminates at the town of Dalkhola (Km 452.750). The 50 km project stretch traverses through Raiganj and Dalkhola towns in North Dinjapur district of West Bengal. It also passes through various small villages like Soharai, Karandighi, Maheshbathna and ends at the intersection of NH31. The concession period is 30 years which includes a construction period of 30 months. The project cost has increased to Rs. 1,204 crore and progress is contingent on appropriate support from NHAI and Lenders. In the last 1.5 years, a significant portion of land has been made available for construction after a delay of nearly 6 years; Pre-construction activities such as clearing & grubbing and earthwork has started in the interest of all stakeholders. As of June 30, 2014, the Concessionaire has filed Rs. 269 crore worth of claims from the NHAI for the damages suffered due to NHAI defaults. The Concessionaire will submit further claims for increased costs beyond June 30, 2014. Since the realization of claim from the Authority is a lengthy process, the SPV meanwhile had approached its Lenders to assist in funding the large cost overrun and has received sanction from the lead bank for additional funding. Once the financing arrangement is in place with adequate support from NHAI, the Company will start full-fledged construction work with an aim to complete within next 30 months. iv) Steiner AG, Switzerland Steiner AG, one of the leading project developers, total and general contractors (TC/GC) in Switzerland, offers comprehensive services in the fields of new constructions, refurbishment and Real Estate Development. Your Company owns 100% stake in Steiner AG through HCC Mauritius Enterprises Limited and HCC Mauritius Investment Limited, wholly owned subsidiaries. As per IGAAP Accounting Standards, Steiner AG has registered a revenue of CHF 636.8 million (Rs. 4255.3 crore) compared to CHF 853.9 million (Rs. 5604.9 crore) in the previous year with a loss of CHF 0.98 million (Rs. 6.5 crore) compared to a net profit of CHF 1.7 million (Rs. 10.8 crore) in the previous year. While as per Swiss GAAP Accounting Standards, Steiner AG has registered a revenue of CHF 649.7 million (Rs. 4341.8 crore) compared to CHF 854.1 million (Rs. 5605.8 crore) in the previous year with a net profit of CHF 1.9 million (Rs. 12.7 crore) compared to CHF 2.0 million (Rs. 13.1 crore) in the previous year. The Company secured fresh orders worth CHF 850 million (Rs. 5843.6 crore). The order backlog was CHF 1.32 billion (Rs. 9074.8 crore) at the end of the year. In addition to this, the company has secured orders for more than CHF 700 million (Rs. 4812.4 crore), where the contracts are yet to be signed. The closing cash balance of the company was CHF 87.1 million 598.7 crore)as per Swiss GAAP while as per IGAAP closing cash balance was CHF 85.4 million 587.1 crore), reflecting the company's steady financial performance and strong liquidity position. Steiner India Ltd, 100% subsidiary of Steiner AG, had a revenue of Rs. 75.5 crore and loss of Rs. 5.9 crore in FY 2015-16. v) Highbar Technologies Ltd Highbar Technologies Ltd ('Highbar'), a wholly owned subsidiary of your Company, is an Information Technology Company formed by your Company with the vision of providing end-to-end IT solutions to Infrastructure industry. In the financial year 2015-16, which is just the sixth year of operations, Highbar has been able to cross the total number of customers beyond 100. This has been achieved when Highbar's primary customer segment, the infrastructure industry, is dealing with slowdown. Highbar is now providing SAP related services and IT infrastructure services across multiple sectors like Manufacturing, BPO, Agro-Chemicals in addition to Infrastructure, Real Estate, Retail, Telecom, Consumer Products, PEB (Pre-engineered Buildings), Iron & Steel etc. It has developed capabilities to successfully concurrently execute large sized projects. Highbar has already started expanding its reach in government sector by exploring opportunities with dedicated team working on it. This year Highbar's services for Government sector made one of its prominent government customers go paperless. Apart from this, Highbar has been honoured with two prominent industry recognitions. First one is SAP Partner Awards in the category of 'Best Pre-sales Customer Engagements' for effectively engaging customers through appropriate solutions across industries. Second one is 'ChannelWorld Premier 100 awards'. This award was given to the IT players for being agile and adapting rapidly to the changing technology and business landscape. Highbar has been recognised as one of the 100 agile IT players. This is the 2nd time that Highbar has been recognised with Premier 100 awards. Agility is one of Highbar's nine brand drivers. With speed, agility and hunger for success. Highbar Technologies has already created a niche for itself in infrastructure and real estate industry by dominating 'IT for Infrastructure market' with 100 customers in a short span of 6 years. Highbar has grown its IT capabilities and the expertise in various areas including ERP (Enterprise Resource Planning), Business Intelligence and dashboards, cloud offerings through Highbar CloudConnect, Employee Portals, CRM (Customer Relationship Management), DMS (Document Management System), BPC (Business Planning & Consolidation), Treasury Management, FLM (File Lifecycle Management). It has also ventured into new areas like SAP HANA, S/4 HANA, Simple Finance, SAP Fiori, Screen Persona, Mobility Solutions, e-procurement etc. The business has now established and is ready to expand in multiple industries and geographies like India, Middle East, Europe and Africa. Highbar's first customer in Switzerland has already gone live on SAP system and started garnering benefits of SAP. Services provided by Highbar have gone much beyond SAP into process consulting and IT infrastructure support such as data-centre and networking. Solutions like Highbar RapidStart and Highbar RapidStart Analytics are based on templatised approach to ERP and Business Intelligence respectively and are intellectual properties (IP) assets of Highbar. Highbar remains as preferred partner for SAP implementation and re-implementation for the infrastructure industry. Eleven numbers of Highbar's implementations have now become global case studies, published on SAP's website as reference cases. Highbar continues to support your Company's group companies including your Company, HCC Infrastructure, HCC Real Estate, Lavasa and Steiner India across the ITvalue chain. Your Company's SAP Customer Centre of Expertise (CCOE) was certified by SAP this year and benchmarked amongst top 1% out of 2,93,000 SAP customers globally. With a view to be at the forefront of IT, entire SAP systems at your Company viz. ERP, CRM, DMS etc were upgraded to the latest versions, thereby ensuring SAP support for at least the next ten years i.e. till 2025 along with access to new business functionalities which were hitherto not available. The underlying hardware, Operating systems and Database were also upgraded and is now scalable for SAP usage at much higher levels and at better speed. The drive undertaken for last few years to harness IT for bringing about operational efficiency and cost controls continues with the same vigour through further business process automations, process refinements and tighter controls supported by intelligent reporting and alert mechanisms. Highbar, the successful spin-off from your Company's internal IT function, has established a proper scalable organization structure with all the functions in place to facilitate and sustain future growth. It is on the course towards accomplishing its vision of being 'the most preferred end-to-end IT solution provider' for infrastructure industry. 5. Subsidiaries, Joint Ventures and Associate Companies During the year under review, the following changes have taken place with respect to subsidiaries, joint Ventures and Associate Companies: a) HCC Power Ltd (the wholly owned step-down subsidiary company) has incorporated HCC Energy Ltd, a wholly owned subsidiary company on August 11, 2015, making it a subsidiary of your Company from the date of its incorporation. b) Ecomotel Hotel Ltd (Associate Company) has become a subsidiary (step-down subsidiary Company) of your Company w.e.f. July 15, 2015. c) Apollo Lavasa Health Corporation Ltd (step-down subsidiary Company) and Starlit Resort Ltd (step-down subsidiary Company) have become an Associate Company w.e.f. November 16, 2015 and May 14, 2015 respectively. d) HCC Concessions Ltd (the step-down subsidiary company) has transferred its 74% stake in Nirmal BOT Ltd on December 23, 2015; accordingly Nirmal BOT Ltd ceases to be a subsidiary of your Company w.e.f. December 23, 2015. e) HCC Concessions Ltd (the step-down subsidiary company) has transferred its equity stake in Dhule Palesner Tollway Ltd, a joint venture company on 29.10.2015; accordingly HCC ceases to hold any share in the said joint venture Company w.e.f. from 29.10.2015. f) Sirrah Palace Hotels Ltd (step-down subsidiary Company) has ceased to be a subsidiary of your Company w.e.f. November 6, 2015. Subsidiary Companies 1. Western Securities Ltd 2. HCC Aviation Ltd 3. HCC Construction Ltd 4. Highbar Technologies Ltd 5. Highbar Technologies FZ LLC 6. HCC Mauritius Enterprises Limited 7. HCC Mauritius Investment Limited 8. Steiner AG (Formerly known as Karl Steiner AG) 9. Steiner Promotions et Participations SA 10. VM + ST AG 11. Eurohotel SA 12. Steiner (Deutschland) GmbH 13. Steiner Leman SAS 14. SNC Valleiry Route De Bloux 15. Steiner India Ltd 16. HCC Infrastructure Company Ltd 17. HCC Concessions Ltd (Formerly known as HCC Infrastructure Ltd) 18. Badarpur Faridabad Tollway Ltd 19. Baharampore - Farakka Highways Ltd 20. Farakka - Raiganj Highways Ltd 21. Raiganj - Dalkhola Highways Ltd 22. Dhule Palesner Operations & Maintenance Ltd 23. HCC Power Ltd 24. HCC Energy Ltd 25. HCC Operations & Maintenance Ltd 26. Narmada Bridge Tollway Ltd 27. HCC Real Estate Ltd 28. HRL Township Developers Ltd 29. HRL (Thane) Real Estate Ltd 30. Nashik Township Developers Ltd 31. Maan Township Developers Ltd 32. Charosa Wineries Ltd 33. Powai Real Estate Developers Ltd 34. HCC Realty Ltd 35. Pune-Paud Toll Road Company Ltd 36. Panchkutir Developers Ltd 37. Lavasa Corporation Ltd 38. Lavasa Hotel Ltd 39. Lakeshore Watersports Company Ltd 40. Dasve Convention Centre Ltd 41. Dasve Business Hotel Ltd 42. Dasve Hospitality Institutes Ltd 43. Lakeview Clubs Ltd 44. Dasve Retail Ltd 45. Full Spectrum Adventure Ltd 46. Spotless Laundry Services Ltd 47. Lavasa Bamboocrafts Ltd 48. Green Hill Residences Ltd 49. My City Technology Ltd 50. Reasonable Housing Ltd 51. Future City Multiservices SEZ Ltd 52. Rhapsody Commercial Space Ltd 53. Valley View Entertainment Ltd 54. Warasgaon Tourism Ltd 55. Our Home Service Apartments Ltd 56. Warasgaon Power Supply Ltd 57. Sahyadri City Management Ltd 58. Hill City Service Apartments Ltd 59. Kart Racers Ltd 60. Warasgaon Infrastructure Providers Ltd 61. Nature Lovers Retail Ltd 62. Osprey Hospitality Ltd 63. Warasgaon Valley Hotels Ltd 64. Rosebay Hotels Ltd 65. Mugaon Luxury Hotels Ltd 66. Warasgaon Assets Maintenance Ltd 67. Hill View Parking Services Ltd 68. Whistling Thrush Facilities Services Ltd 69. Verzon Hospitality Ltd 70. Ecomotel Hotel Limited Integrated Joint Ventures 1. HCC-L&TPuruliaJointVenture 2. HCCSamsungJointVentureCC-34 3. AlpineSamsungHCCJointVenture 4. AlpineHCCJointVenture 5. NathpaJhakriJointVenture 6. Kumagai -Skanska-HCC Itochu Group 7. ARGE Prime Tower, Zurich Associate Companies 1. Nirmal BOT Limited 2. Warasgoan Lake View Hotels Limited 3. Andromeda Hotels Limited 4. Knowledge Vistas Limited 5. Bona Sera Hotels Limited 6. Apollo Lavasa Health Corporation Ltd 7. Starlit Resort Ltd 8. Evostate AG 9. Projektentwicklungsges, Parking Kunstmuseum AG. 10. MCR Managing Corp. Real Estate AG The details as required under Rule 8 of the Companies (Accounts) Rules, 2014 regarding the performance and financial position of each of the Subsidiaries, Associates and Joint Venture Companies of the Company forms part of the Consolidated Financial Statements of the Company for the financial year ended March 31, 2016. The Company has formulated a Policy for determining material subsidiaries, which is uploaded on the website of the Company i.e. www.hccindia.com and can be accessed at <http://www.hccindia.com/pdf/> HCC_Policy_for_determining_Material_Subsidiaries. pdf 6. Qualified Institutions Placement of Equity Shares (QIP) / Change in Share Capital During the year under review, your Company's Authorised Share Capital has remained unchanged at Rs. 100,00,00,000 (Rupees One hundred crore) comprising 90,00,00,000 Equity Shares of Rs. 1 each and 1,00,00,000 Redeemable Cumulative Preference Shares of Rs. 10 each. On April 10, 2015, your Company has issued and allotted 13,33,32,800 Equity Shares of Rs. 1 each at an issue price of Rs. 30 per Equity Share (including premium of Rs. 29 per equity share) for an amount aggregating Rs. 399,99,84,000 to Qualified Institutional Buyers in accordance with Chapter VIII of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009 and Section 42 of the Companies Act, 2013 and the Rules made thereunder. Post the QIP Issue, the present paid up Equity Share Capital of the Company is Rs. 77,91,58,906 which comprises 77,91,58,906 Equity Shares of Rs. 1 each. 7. Public Deposits Your Company has not accepted any deposits from the public, or its employees during the year under review. 8. Particulars of Loans, Guarantees & Investments Particulars of Loans, Guarantees and Investments made during the year as required under the provisions of Section 186 of the Companies Act, 2013 (Hereinafter "The Act") are given in the notes to the Standalone Financial Statements. Also, pursuant to Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015, particulars of Loans/Advances given to Subsidiaries have been disclosed in the notes to the Standalone Financial Statements. 9. Employee Stock Option Scheme (ESOP) As on March 31, 2016, 16,54,630 stock options are outstanding, in aggregate, for exercise as per the exercise schedule and are exercisable at a price of Rs. 52.03 per stock option. Each option, when exercised, as per the exercise schedule, would entitle the holder to subscribe for one equity share of the Company of face value Rs. 1 each. During the year under review, no options got vested in the employees of the Company. 15,84,700 stock options got lapsed between April 1, 2015 and March 31, 2016. The particulars with regard to the ESOPs as on March 31, 2016 as required to be disclosed pursuant to the provisions of Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014, are set out in Annexure I to this Report. 10. Consolidated Financial Statements In accordance with the Companies Act, 2013, Accounting Standard (AS) - 21 on Consolidated Financial Statements read with AS - 23 on Accounting for Investments in Associates and AS - 27 on Financial Reporting of Interests in Joint Ventures and as prescribed by Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "SEBI Listing Regulations"), the Audited Consolidated Financial Statements are provided in this Annual Report. Pursuant to Section 129(3) of the Companies Act, 2013, a statement containing the salient features of the financial statements of each of the subsidiary and joint venture in the prescribed form AOC-1 is annexed to the Annual Report. Pursuant to Section 136 of the Companies Act, 2013, the financial statements of the subsidiaries are kept for inspection by the shareholders at the Registered Office of the Company. The said financial statements of the subsidiaries are also available on the website of the Company www.hccindia.com under the Investors Section. 11. Corporate Governance The Company is committed to maintain the highest standards of Corporate Governance and adheres to the Corporate Governance requirements as stipulated by Securities and Exchange Board of India(SEBI). The report on Corporate Governance as prescribed in Schedule V (C) of the SEBI Listing Regulations forms an integral part of this Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance alongwith a declaration signed by the Chairman & Managing Director stating that the members of the Board of Directors and Senior Management personnel have affirmed compliance with the respective codes of conduct of the Board of Directors and Senior Management is attached to the report on Corporate Governance. 12. Directors Mr. D. M. Popat, Director of the Company, who was liable to retire by rotation at the 89th Annual General Meeting of the Company held last year had expressed his intention not to seek re-election as a Director of the Company and accordingly had retired from his directorship on July 14, 2015. After a prolonged illness, Mr. Popat passed away on December 23, 2015. The Board of Directors has expressed its deep regret and offered condolences on the sad demise of Mr. Popat. Mr. Popat was a Senior partner at M/s Mulla & Mulla & Craigie Blunt & Caroe, Solicitors & Advocates since 1969 and was one of the most eminent solicitors of the country. He was associated with our Company for a very long time. The Board has also placed on record the invaluable contribution of Late Mr. D. M. Popat to the Board and the Company. The Board of Directors of the Company at its meeting held on May 2, 2016 has appointed Mr. Rajgopal Nogja as the Group Chief Executive Officer (Group CEO) of the Company w.e.f. May 3, 2016 Pursuant to his appointment, Mr. Nogja has stepped down from the Board as Group COO & Whole-time Director w.e.f. May 2, 2016. The Board placed on record its appreciation for the valuable services rendered and contribution made by Mr. Rajgopal Nogja during his tenure as Whole-time Director (prior to his appointment as Group CEO) of the Company. Mr. N. R. Acharyulu was employed with our Company as Chief Business Development Officer and on conclusion of his contract period, the Board of Directors has appointed Mr. N. R. Acharyulu (DIN: 02010249) as an Additional Director on the Board of the Company in the category of Non-Executive Director, who is liable to retire by rotation, with effect from May 2, 2016, in accordance with Section 161 of the Companies Act, 2013 read with Article 88 of the Articles of Association of the Company. The Company has received a Notice under Section 160 of the Companies Act, 2013, from a member signifying an intention to propose Mr. N. R. Acharyulu as a candidate for the office of Director at the forthcoming Annual General Meeting. Brief Profile of the Director seeking appointment has been given in the Explanatory Statement to the Notice of the ensuing Annual General Meeting. The Company has received Form DIR-8 from all Directors pursuant to Section 164(2) and Rule 14(1) of Companies (Appointment and Qualification of Directors) Rules, 2014. The Independent Directors of the Company viz., Mr. Rajas R, Doshi, Mr. Ram P. Gandhi, Mr. Sharad M. Kulkarni, Mr. Anil C. Singhvi and Dr. Omkar Goswami have furnished necessary declarations to the Company under Section 149(7) of the Act, confirming that they meet with the criteria of Independence as prescribed for Independent Directors under Section 149(6) of the Act and Regulation 16(b) of the SEBI Listing Regulations. 13. Key Managerial Personnel Following persons are the Key Managerial Personnel of the Company pursuant to Section 2(51) and Section 203 of the Act, read with the Rules framed thereunder: i) Mr. Ajit Gulabchand, Chairman and Managing Director ii) Mr. Rajgopal Nogja, Group Chief Executive Officer in) Mr. Arun V. Karambelkar, President & CEO - E&C iv) Mr. Praveen Sood, Chief Financial Officer of the Company designated as Group CFO & EVP - HCC Group Office v) During the year under review, Mr. V. P. Kulkarni, resigned as Company Secretary with effect from July 30, 2015 and therefore he was a Key Managerial Personnel till July 30, 2015 The Board placed on record its appreciation for the valuable services rendered and contribution made by Mr. Vithal P. Kulkarni during his long tenure as Company Secretary of the Company. vi) Mr. Sangameshwar Iyer was appointed by the Board of Directors, in place of Mr. V. P. Kulkarni, as the Company Secretary of the Company with effect from July 31, 2015 and thereby is designated as Key Managerial Personnel with effect from the said date. vii) Mr. Rajgopal Nogja was appointed by the Board of Directors of the Company at its meeting held on May 2, 2016, as the Group Chief Executive Officer (Group CEO) of the Company w.e.f. May 3, 2016. Pursuant to his appointment, Mr. Nogja has stepped down from the Board as Group COO & Whole-time Director w.e.f. May 2, 2016. Remuneration and other details of the said Key Managerial Personnel for the financial year ended March 31, 2016 are mentioned in the Extract of the Annual Return which is attached to the Board's Report. 14. Board Committees The Board of Directors of your Company had already constituted various Committees and approved their terms of reference/role in compliance with the provisions of the Companies Act, 2013 and Listing Agreement (applicable uptil November 30, 2015)/ SEBI Listing Regulations (applicable from December 1, 2015) viz. Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and CSR Committee. During the financial year 2014-15, in accordance with the provisions of the erstwhile Clause 49 of the Listing Agreement, the Board had voluntarily constituted the Risk Management Committee All decisions pertaining to the constitution of Committees, appointment of members and fixing of terms of reference / role of the Committees are taken by the Board of Directors. Details of the role and composition of these Committees, including the number of meetings held during the financial year and attendance at meetings, are provided in the Report on Corporate Governance in the Annual Report. 15. Meetings A calendar of Board Meetings, Annual General Meetings and Committee Meetings is prepared and circulated in advance to the Directors of your Company. The Board of Directors of your Company met 4 times during 2015-16. The meetings were held on April 30, 2015, July 30, 2015, October 29, 2015 and January 28, 2016. The maximum time gap between any two consecutive meetings did not exceed one hundred and twenty days. 16. Familiarisation Programme of Independent Directors In compliance with the requirements of SEBI Listing Regulations, the Company has put in place a familiarization program for Independent Directors to familiarize them with their role, rights and responsibility as Directors, the operations of the Company, business overview etc. The details of the familiarization program are explained in the Corporate Governance Report and the same is also available on the website of the Company and can be accessed by web link <http://www.hccindia>. com/pdf/familiarisation_program_for_independent_ directors.pdf 17. Performance Evaluation Pursuant to the provisions of Section 134 (3) (p), 149(8) and Schedule IV of the Companies Act, 2013 and Regulation 17 of the SEBI Listing Regulations, Annual Performance Evaluation of the Directors as well as that of the Audit Committee, Nomination and Remuneration Committee and Stakeholders Relationship Committee has been carried out. The Performance Evaluation of the Independent Directors was carried out by the entire Board and the Performance Evaluation of the Chairman and Non-Independent Directors was carried out by the Independent Directors. 18. Independent Directors Meeting During the year under review, the Independent Directors of the Company met on March 29, 2016, inter-alia, to discuss: i) Evaluation of performance of Non-Independent Directors and the Board of Directors of the Company as a whole. ii) Evaluation of performance of the Chairman of the Company, taking into account the views of Executive and Non-Executive Directors. iii) Evaluation of the quality, content and timelines of flow of information between the Management and the Board that is necessary for the Board to effectively and reasonably perform its duties. 19. Criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management Personnel The Nomination and Remuneration Committee has laid down well-defined criteria for selection of candidates for appointment as Directors, Key Managerial Personnel and Senior Management Personnel in the Nomination and Remuneration Policy recommended by them and approved by the Board of Directors, which is attached to the Board's Report as Annexure II. 20. Remuneration Policy for Directors, Key Managerial Personnel and Senior Management Employees The Nomination and Remuneration Committee has laid down the policy for remuneration of Directors, Key Managerial Personnel and Senior Management Personnel in the Nomination and Remuneration Policy recommended by it and approved by the Board of Directors, which is attached to the Board's Report as Annexure II. 21. CSR Policy The brief outline of the Corporate Social Responsibility (CSR) Policy as recommended by the CSR Committee of the Directors and approved by the Board of Directors of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure IV of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR policy is attached to this Report as Annexure III and is available on the website of the Company i.e. www.hccindia.com 22. Related Party Transactions All related party transactions entered during the year were in the ordinary course of business and on an arm's length basis. The related party transactions attracting compliance under Section 177 of the Companies Act, 2013 and / or erstwhile Clause 49 of the Listing Agreement / Regulation 23 of the SEBI Listing Regulations were placed before the Audit Committee for approval. There are no transactions to be reported in Form AOC-2 in terms of Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014. There were no related party transactions which were placed for prior omnibus approval of the Audit Committee. A statement of all related party transactions entered was presented before the Audit Committee on a quarterly basis, specifying the nature, value and any other related terms and conditions of the transactions. Further the details of the transactions with Related parties are provided in the Company's financial statements in accordance with the Accounting Standards. The Related Party Transactions Policy as approved by the Board of Directors of the Company has been uploaded on the website of the Company at <http://> www.hccindia.com/pdf/HCC_Policy_for_Related_ < Party_Transactions.pdf 23. Directors' Responsibility Statement In accordance with the provisions of Section 134 (5) of the Companies Act, 2013, your Directors confirm that: a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any. b) the selected accounting policies were applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for the year ended on that date. c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. d) the annual accounts have been prepared on a going concern basis. e) the internal financial controls have been laid down to be followed by the Company and such controls are adequate and are generally operated effectively during the year. Internal financial control over carrying cost of investment in subsidiaries and recoverability of dues from subsidiaries, is covered under internal financial control. The management is of the view that diminution in the carrying cost of investment in subsidiaries, if any, is temporary in nature and recoverability of dues from subsidiaries are good. The view of the management is also supported by a third party expert report. However, in view of the uncertainties involved, your Auditors have given a qualified opinion in their report in this regard, without quantifying the impact. Other than this, your Auditors have opined that the Company has in, all material respects, maintained adequate internal financial controls over financial reporting (IFCoFR) and that they were operating effectively. This response by Directors is based on the management note given under Para 29 of this report. f) proper systems to ensure compliance with the provisions of all applicable laws have been devised and such systems are adequate and are operating effectively. 24. Industrial Relations The industrial relations continued to be generally peaceful and cordial during the year. 25. Transfer to Investor Education and Protection Fund (IEPF) Your Company has, during the year under review, transferred a sum of Rs. 11,95,382 to Investor Education and Protection Fund, in compliance with the provisions of Section 125 of the Companies Act, 2013. The said amount represents dividend for the year 2007-08 which remained unclaimed by the members of the Company for a period exceeding 7 years from its due date of payment. 26. Particulars of Employees and other additional information. Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of Companies Act, 2013 and Rule 5 (1) Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 has been appended as Annexure V to this Report. The information as required under Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided upon request by any member of the Company. In terms of Section 136 (1) of the Companies Act, 2013, the Report and the Accounts are being sent to the members excluding the said Annexure. Any member interested in obtaining copy of the same may write to the Company Secretary at the Registered Office of the Company. 27. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo. The information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo as required to be disclosed under the Companies (Accounts) Rules, 2014, is given in Annexure VI forming part of this Report. 28. Statutory Auditors The Members of the Company had, at the 88th Annual General Meeting ("AGM") held on June 20, 2014, approved the appointment of M/s Walker Chandiok & Co. LLP, Chartered Accountants, Mumbai, bearing Firm Registration No. 001076N as the Statutory Auditors of the Company, to hold office from the conclusion of that AGM until the conclusion of the 6th AGM held thereafter (subject to ratification of the appointment by the Members at every AGM held after the above said AGM). Rule 3(7) of Companies (Audit and Auditors) Rules, 2014, states that appointment of the Auditor shall be subject to ratification by the members at every Annual General Meeting till the expiry of the term of the Auditor. At the 89th AGM held on July 14, 2015, the shareholders had ratified the appointment of M/s Walker Chandiok & Co. LLP, Chartered Accountants, Mumbai for the period covering their second year of appointment viz., from the conclusion of the last AGM held on July 14, 2015 until the conclusion of the Annual General Meeting to be held in the financial year 2016-17. The said appointment of M/s Walker Chandiok & Co. LLP, Chartered Accountants, Mumbai covering their third year of appointment viz, from the conclusion of the ensuing AGM in financial year 2016-17 until the conclusion of the next Annual General Meeting to the held in the financial year 2017-18, has to be ratified by Members at the forthcoming AGM and accordingly the said proposal is being placed for members' ratification. As required under Section 139 of the Companies Act, 2013, the Company has obtained a written consent from the Auditors to such continued appointment and also a certificate from them to the effect that their appointment, if ratified, would be in accordance with the conditions prescribed under the Companies Act, 2013 and the Rules made thereunder, as may be applicable. 29. Statutory Auditors' Remarks a. Statutory Auditors Qualification: The Auditors' Report to the Members on the Audited Financial Results of the Company for the financial year ended March 31, 2016 contains the following qualification(s): As stated in Note 32 to the Standalone financial statements, the Company's long term investments as at March 31, 2016 include investments aggregating Rs. 474.37 crore in its subsidiaries, namely, HCC Real Estate Limited and Lavasa Corporation Limited; and the long term loans and advances, non-current assets and other current assets as on that date include dues from such subsidiaries aggregating Rs. 554.17 crore, Rs. 32.51 crore and Rs. 13.35 crore, respectively, being considered good and recoverable by the management. However, these subsidiaries have accumulated operational losses and their net worth is fully/ substantially eroded as at March 31, 2016. Further, such subsidiaries are facing liquidity constraints due to which they may not be able to realize projections made as per their business plans. In the absence of sufficient appropriate evidence, we are unable to comment upon the carrying value of these investments and recoverability of the aforesaid dues and the consequential impact, if any, on the accompanying standalone financial statements. b. Statutory Auditor's Qualification on the Internal Financial Controls relating to the above matter The Auditors' Report to the Members on the Internal Financial Controls over financial reporting (IFCoFR) with respect to the Audited Financial Results of the Company for the financial year ended March 31, 2016 contains the following qualification(s): In our opinion, according to the information and explanations given to us and based on our audit procedures performed, the following material weakness has been identified in the adequacy and operating effectiveness of the Company's internal financial controls over financial reporting as at March 31, 2016: The Company did not have appropriate internal financial controls over financial reporting in respect of its assessment of (a) 'other-than-temporary' diminution in the carrying value of the Company's long-term investments in its subsidiaries and (b) recoverability of long-term loans and advances, non-current assets and other current assets due from such subsidiaries. The inadequate supervisory and review controls over Company's process in respect of its aforesaid assessment in accordance with the accounting principles generally accepted in India could potentially result in a material misstatement in the carrying value of investment in such subsidiaries and the aforesaid dues from such subsidiaries and consequently, also impact the profit after tax. In our opinion, except for the effects of the material weakness described above in the Basis for Qualified Opinion paragraph, the Company has, in all material respects, maintained adequate IFCoFR as at March 31, 2016, based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance note and were operating effectively as at March 31, 2016. We have considered the material weakness identified and reported above in determining the nature, timing, and extent of audit tests applied in our audit of the March 31, 2016 standalone financial statements of the Company, and the material weakness has affected our opinion on the standalone financial statements of the Company and we have issued a qualified opinion on the standalone financial statements. Management Note The Company, as at March 31, 2016, has (i) an investment amounting to Rs. 474.36 crore (31 March 2015: Rs. 474.36 crore), long term loans and advances Rs. 443.96 crore (31 March 2015: Rs. 404.06 crore), other non-current assets Rs. 19.43 crore (31 March 2015: Rs. 25.01 crore) and other current assets Rs. 5.07 crore (31 March 2015: Rs. 3.43 crore) in HCC Real Estate Limited (HREL) which is holding 68.70% share in Lavasa Corporation Limited (LCL) and (ii) an investment amounting to Rs. 0.01 crore (March 31, 2015: Rs. 0.01 crore), long term loans and advances Rs. 110.21 crore (March 31, 2015:Nil), other non-current assets Rs. 13.08 crore (March 31, 2015: Rs. 14.30 crore) and other current assets Rs. 8.28 crore (31 March 2015: Rs. 77.24 crore) in LCL. While such entities have incurred losses during its initial years and consolidated net-worth of all these entities as at March 31, 2016 has been substantially/fully eroded, the underlying project in such entities are in the early stages of development and are expected to achieve adequate profitability on substantial completion and / or have current market value of certain properties which are in excess of the carrying values, hence net-worth of these subsidiaries does not represent its true market value. Therefore, the decline in the value of above investments is considered to be temporary in nature and the loans and advances, non-current assets and other current assets together with the interest thereon are good and recoverable. Based on the above, management believes that the Company's internal financial control in respect of assessment of the carrying value of investment, recoverability of loans and advances, current and non-current assets in subsidiaries were operating effectively and there is no material weakness in such controls and procedures. 30. Secretarial Audit Secretarial Audit for the financial year 2015-16 was conducted by M/s BNP Associates, Company Secretaries in Practice in accordance with the provisions of Section 204 of the Companies Act, 2013. The Secretarial Auditor's Report is attached to this Report as Annexure VII. There are no qualifications or observations or remarks made by the Secretarial Auditor in his Report. 31. Cost Audit In compliance with the provisions of Section 148 of the Companies Act, 2013, the Board of Directors of the Company at its meeting held on July 30, 2015 had appointed M/s Joshi Apte & Associates, Cost Accountants as Cost Auditors of the Company for the financial year 2015-16. 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 financial year 2015-16. 32. Risk Management Pursuant to the requirement of Section 134 (3)(n)of the Companies Act, 2013, the Company has already in place a Risk Management Policy. The Company has a robust Business Risk Management (BRM) framework to identify and evaluate business risks and opportunities. This framework seeks to create transparency, minimise adverse impact on the business objectives and enhance your Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at a Company level. In accordance with the provisions of the erstwhile Clause 49 of the Listing Agreement, during the financial year 2014-15, the Board had voluntarily constituted the Risk Management Committee. 33. Internal Control Systems and their adequacy The Company has Internal Control Systems, commensurate with the size, scale and complexity of its operations. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control systems in the Company, its compliance with operating systems, accounting procedures and policies within the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant observations and corrective actions thereon are presented to the Audit Committee from time to time. 34. Internal Financial Controls and their adequacy The Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. The Company has policies and procedures in place for ensuring proper and efficient conduct of its business, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information. The Company has adopted accounting policies, which are in line with the Accounting Standards and the Companies Act 2013. 35. Vigil Mechanism Policy The Company has a vigil mechanism policy to deal with instances of fraud and mismanagement, if any. The vigil mechanism policy is uploaded on the website of the Company at www.hccindia.com 36. Sexual Harassment HCC has always believed in providing a conducive work environment devoid of discrimination and harassment including sexual harassment. HCC has a well formulated Policy on Prevention & Redress of Sexual Harassment. The objective of the policy is to prohibit, prevent and address issues of sexual harassment at the workplace. This policy has striven to prescribe a code of conduct for the employees and all employees have access to the Policy document and are required to strictly abide by it. The policy covers all employees, irrespective of their nature of employment and also applicable in respect of all allegations of sexual harassment made by an outsider against an employee. During the year 2015-16, one case of Sexual Harassment was reported which was investigated by a committee (including an external member) as defined under the Policy of Prevention & Redress of Sexual Harassment and appropriate action was taken in the said case. 37. Reporting of Frauds: There have been no instances of fraud reported by the Statutory Auditors under Section 143(12) of the Act and Rules framed thereunder either to the Company or to the Central Government. 38. Significant and Material Orders passed by the Regulators/Courts, if any There are no significant or material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of your Company and its future operations. 39. Material changes & commitment if any, affecting financial position of the Company from the end of financial year till the date of the report. There have been no material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the Financial Statements relate and the date of this Report. 40. Extract of Annual Return The details forming part of the extract of Annual Return in prescribed Form MGT 9 is annexed hereto as Annexure VIII and forms the part of this Report. 41. Acknowledgements Your Directors would like to acknowledge and place on record their sincere appreciation to all Stakeholders Clients, Financial Institutions, Banks, Central and State Governments, the Company's valued Investors and all other business partners for their continued co-operation and excellent support received during the year. Your Directors recognize and appreciate the efforts and hard work of all the employees of the Company and their continued contribution to its progress. For and on behalf of Board of Directors, AJIT GULABCHAND Chairman & Managing Director Registered Office: Hincon House, 11th Floor, 247Park, Lai BahadurShastn Marg Vikhroli (West) Mumbai 400 083 Place : Mumbai Date : June 3, 2016 |