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Ircon International

BSE: 541956|NSE: IRCON|ISIN: INE962Y01013|SECTOR: Engineering - Heavy
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Directors Report Year End : Mar '18    Mar 10

DISTINGUISHED SHAREHOLDERS

The Directors of your Company have pleasure in presenting their 42nd Report on the affairs of the Company for the financial year 2017-18.

1. FINANCIAL PERFORMANCE / HIGHLIGHTS

A. Financial Performance:

During the financial year 2017-18, your Company achieved a total operating income of Rs.3,896.39 crore, registering 28.84% increase over previous year’s operating income of Rs.3,024.23 crore (re-grouped). The operating turnover from international segment increased by Rs.274.18 crore i.e. from 326.95 crore to Rs.601.13 crore and the domestic segment reports increase in operating turnover of Rs.627.41 crore i.e. from Rs.2,667.85 crore to Rs.3,295.26 crore.

The profit before tax (PBT) has increased to Rs.533.31 crore as compared to Rs.531.54 crore (including exceptional items of Rs.73.69 crore) in the last year. The PBT has increased mainly due to increase in total turnover from that in the previous year. The profit after tax has increased to Rs.390.86 crore over the previous year of Rs.368.85 crore.

The earnings per share for the year 2017-18 have increased to Rs.40.01 as compared to Rs.37.27 in the previous year. The increase has been on account of increase in profit after tax and buy-back of shares done during the year.

On a consolidated basis, your Company has recorded a turnover of Rs.4,212.40 crore during the financial year ended 31st March 2018 and achieved consolidated Net Profit of Rs.411.62 crore for the said financial year.

B. Financial Performance Indicators:

Some important indicators of financial performance of the Company for the year 2017-18 vis-a-vis 201617 are given below:

(Rs.in crore)

Sl. No.

Particulars

2017-18

2016-17

Increase / (Decrease) [in %]

1.

Total income/ turnover

4,123

3,254

26.70

2.

Total Operating income/turnover

3,896

3,024

28.84

3.

Operating income from Foreign Projects

601

327

83.83

4.

Operating income from Indian Projects

3,295

2,668

23.52

5.

Profit before tax

533

532

0.33

6.

Profit after tax

391

369

5.97

7.

Net worth

3,752

3,828

(1.99)

8.

Dividend

192.40

192.40*

--

*Includes final dividend of Rs. 97.25 crore for the year 2016-17 which was paid in the year 2017-18 after approval by AGM as per IndAS.

C. Foreign Exchange Earnings and Outgo:

The Company has earned a foreign exchange of Rs.450 crore during 2017-18 as compared to Rs.265 crore earned during 2016-17. The foreign exchange outgo stood at Rs.386 crore during 2017-18 as compared to Rs.241 crore during 2016-17. Thus, the net foreign exchange earnings have increased by 167% i.e. from Rs.24 crore in 2016-17 to Rs.64 crore in 2017-18 due to increase in operating turnover from foreign projects.

D. Dividend:

The Board of Directors (BoD) had declared an interim dividend of Rs. 95.15 crore (approx.) i.e. 101.16% on the paid-up share capital of Rs. 94.05 crore in March 2018. The said interim dividend was paid to all the shareholders in March 2018.

The BoD has recommended final dividend (over and above the interim dividend) of Rs. 97.25 crore (approx.) i.e. 103% on the paid-up share capital of Rs. 94.05 crore.

With this, the total dividend for the year 2017-18 would sum up to Rs. 192.40 crore (approx.) i.e. 204% of paid-up share capital which works out to 49.22% of the post-tax profits for 2017-18 and 5.13% of net worth as on 31st March 2018. After approval and payment of the proposed dividend, the cumulative dividend to shareholders up to 2017-18 will stand at Rs.1,492.31 crore.

The dividend will be paid to the shareholders whose name appears in the Register of Members as on 31st August 2018.

E. Appropriations / Tax Provisions / Reserves:

1. Appropriations / Tax Provisions: (Rs. in crore)

Sl.No.

Particulars

2017-18

2016-17

1

Interim Dividend (including additional interim dividend) declared and paid

95.15

95.15

2

Proposed Dividend

97.25*

97.25

3

Dividend Distribution Tax on Interim Dividend

19.37

19.37

4

Tax on proposed Dividend

19.99*

19.80

TOTAL

231.76

231.57

*Proposed Dividend Distribution Tax on proposed dividend of Rs.97.25 (to be declared at the AGM) amounting to Rs.19.99 crore.

2. Capital Redemption Reserve:

During the year, your Company has transferred Rs.4.93 crore to capital redemption reserve account for buyback of equity shares [detailed in para F (2) below], which is equal to nominal amount of equity shares so bought back and extinguished during 2017-2018.

F. Increase in Share capital:

1. Authorised Share Capital:

During the year, the authorized share capital has been increased from Rs.100 crore to Rs.400 crore in terms of approval by the shareholders at the Extra-ordinary General Meeting held on 22nd May 2017. This increase was already approved, vide letter dated 3rd November 2016, by the President of India (through administrative ministry).

2. Paid-up Share capital after Buy-Back of equity shares:

The Inter Ministerial Group (IMG), Department of Investment and Public Asset Management (DIPAM) at its meeting held on 7th June 2017 on the basis of examination of financial accounts of Ircon for the financial year 2016-17 and on financial criteria specified in “Guidelines on capital Re-structuring of CPSEs” issued by DIPAM on 25th May 2016, suggested Ircon to consider buy-back of shares to the tune of 5% of aggregate paid-up equity and free reserves of the Company as on 31st March 2017. Accordingly, with the approval of the Board of Directors a proposal for buyback by the Company of its fully paid-up equity shares of Rs.10/- each not exceeding 49,41,818 fully paid-up Equity Shares was sent to the existing shareholders at a price of Rs.386.72/- per Equity Share payable in cash on a proportionate basis upto 5% of the net worth (comprising paid-up share capital plus free reserves) i.e. Rs.3,822.27 crore as per the audited financial results of the Company for the year ended on 31st March 2017.

Thus, based on the acceptance of the offer by the Ministry of Railways (on behalf of the President of India), your Company had bought back 49,28,426 fully paid-up equity shares of Rs.10/- each utilizing Rs.234.57 crore (which includes tax of Rs.43.98 crore). Accordingly, the paid-up share capital of the Company stood reduced from Rs.98.98 crore to Rs.94.05 crore w.e.f. 26th December 2017.

3. Listing of Shares:

After the announcement of the listing of shares of Ircon in the budget for the 2017-18 by the Government of India, DIPAM, Ministry of Finance has appointed Legal Advisors, Book Running Lead Managers (BRLM) and Registrars to the Issue for disinvestment of paid-up equity share capital of the Company through Initial Public Offering (IPO) of shares by the Promoters (i.e. Government of India).

Accordingly, for the proposed initial public offering of equity shares of Ircon, M/s. Crawford Bayley & Co. along with their International consortium partner M/s. Hogan Lovells are Legal Advisors; IDBI Capital Markets & Securities Limited, SBI Capital Markets Limited, and Axis Capital Limited are BRLM; and M/s Karvy Computer Karvy Computershare Private Limited is providing services of Registrar.

Your Company has filed Draft Red Herring Prospectus (DRHP) with SEBI on 27th March 2018. Subsequently, BSE and NSE have granted its in-principle approval of the Company’s listing application and SEBI observations have been received on 12th July 2018. Subsequently, the Board of Directors at its meeting held on 31st August 2018 have approved the Red Herring Prospectus (RHP) of the Company.

4. Dematerialization of Shares:

The details of dematerialization of shares is provided in the extract of Annual Report placed as Appendix-G in Para IV (Share holding Pattern).

2. ORDER BOOK

The Company secured works worth Rs.6,106 crore during the year 2017-18. The work load as on 31st March 2018 stood at Rs.22,407 crore (approx.) as compared to Rs.18,878 (approx.) crore as on 31st March 2017. The work load as on 30th June 2018 is Rs.26,469 crore (approx.).

3. OPERATIONAL PERFORMANCE

A. Completed Foreign Projects:

Your Company has commissioned two projects in Bangladesh during the financial year 2017-18.

Bangladesh

1. The project for construction of 2nd Bhairab Railway Bridge with Approach Rail Lines (Lot-A) -- being undertaken through unincorporated JV between your Company and AFCONS viz. IRCON-AFCONS JV for Bangladesh Railway, at a revised value of Rs.265 crore (Ircon’s share), has been completed in March 2017. The trial run of engine was carried out on 10th April 2017.

The bridge was inaugurated jointly by Hon’ble Prime Minister of India Mr. Narendra Modi and Hon’ble former Prime Minister of the People Republic of Bangladesh Seikh Hasina Wazed by Video Conferencing on 9th November 2017.

2. Design, Supply, Installation, Testing, and Commissioning of Computer based Interlocking Colour Light Signalling System on turnkey basis at 11 stations between Ishurdi-Darsana section of Bangladesh for Bangladesh Railway, at a value of Rs.60 crore has been completed in September 2017.

B. On-going Foreign projects:

Your Company is executing the following three projects in foreign countries:

Bangladesh

1. Construction of Embankment, Track, all civil works, major & minor bridges (Except Rupsha) & culverts and implementation of EMP against Package WD1 under the project Construction of Khulna-Mongla Port Rail Line for Bangladesh Railway, at a value of Rs.911 crore (USD 147.80 million). The physical progress up to March 2018 is 14%. The work was commenced in March 2016 and is scheduled to be completed in February 2020.

The project is progressing slowly due to late handing over of encumbrance free land and issuance of drawings for alignment (L-section and X-section), bridges and buildings by the Engineer/Bangladesh Railway.

Algeria

2. Installation of double track line (93 kms) in Algeria awarded by ANESRIF, Ministry of Transport, Government of Algeria, initially awarded at a value of Algerian Dinar Cr. 1,628 (Rs.1,003 crore converted) involving construction of second line and upgradation of existing line, with diversion of 10 Kms from Ouedsly to Yellel in Alger-Oran section of Algerian Railways. The value of contract including additional works for realization of double line has been revised to Algerian Dinar Cr. 3,073 (Rs. 1,784 crore converted). The project was awarded in 2008 and is likely to be completed in December 2019. The reasons for delay are significant increase in scope of works, delay in payments due to non-allocation of funds to the project, excessive delay in approval of amendments, delay in approval of drawings and removal of obstructions, delay in resolving the discrepancy in mode of payments etc.

The work of 67 kms new track has been handed over to the client inspite of the cash flow problems which are hampering progress particularly structural works awarded to sub-contractors. Work on the existing line has also started in the first stretch of 13 kms, 6 out of 7 station buildings are ready to be handed over and the bridge work has picked up with assurance of timely payments. With the improvement in international oil prices the client has assured uninterrupted payments which will improve the progress of works and likely completion by December 2019.

South Africa

3. Procurement of Plant Design, Supply and Installation of Overhead Track Equipments, Traction Sub-stations, Auxiliary Power Supplies Substations, Bulk Power Supplies Switching Stations and Signalling Systems for Majuba Rail Project, South Africa, for Eskom Holdings SOC Limited, at a value of Rs. 308 crore (Rand 663 million, Rand 1 = 5.212). The work has been secured in November 2015. During the operation of contract, Foreign Currency issue arose which has been resolved. The physical work have been completed in March 2019 and commissioning work are in progress.

C. Likely Foreign projects:

Concerted efforts are being made to secure contracts in Bangladesh, Thailand, Nepal, Turkey, Ghana, Sri Lanka, and Malaysia.

D. Project Completed in India:

During the financial year 2017-2018, following three projects got completed:

1. One RoB on State owned Road (other than NHs) in Bihar through its funds on 1st Km at Manpur by-pass in Gaya District, Bihar for Road Construction Department, Government of Bihar at a value of Rs.60 Crore.

2. Carrying out topographical and Geotechnical survey; Preparation of Master Plan, Planning, Designing and Construction of Boundary Wall and allied Preparatory works, for the National Institute of Technology, Mizoram at a value of Rs.140 crore.

3. Construction of New Indoor Sports Complex at Gholsapur (Behala) on Sealdah Division, for Eastern Railway at a value of Rs.58 crore.

E. New Projects in India:

During 2017-18, your Company secured following projects in India of total value Rs.6,106 crore:

1. Katni Grade Seperator / By pass line (21.50 Km) Project, for West Central Railway at an estimated cost of Rs.582.13 crore.

2. Railway electrification work for Katni-Singrauli, for West Central Railway at an estimated cost of Rs.258.33 crore.

3. Mathura-Kasganj-Kalyanpur Railway Electrification Project with Signalling, for North Eastern Railway at an estimated cost of Rs.401 crore

4. Visakhapatnam (Diesel Loco shed) - Augmentation of shed for homing 100 HHP locomotives, for East Coast Railway, at an estimated cost of Rs.61.75 crore.

5. Re-development of Safdarjung Railway Station, for RLDA and Ministry of Railways at an estimated cost of Rs.261.72 crore.

6. Construction of Corridor-III of East-West Corridor between Gevra Road to Pendra Road approximately 135 km, feasibility study of East-West Corridor between Gevra Road to Pendra Road in the State of Chhattisgarh, for Chhattisgarh East-West Railway Limited (CEWRL) at an revised estimated project cost of Rs.3,272.98 crore as per approved Detailed Project Report (DPR).

7. Construction of Corridor-I of East Corridor between Kharsia to Dharamjaygarh and Spur Line in the State of Chhattisgarh, for Chhattisgarh East Railway Limited (CERL) at an estimated project cost of Rs.537.27.

8. Survey, Feasibility study, Detailed Design and Construction of various identified Rail Coal Connectivity Project(s), for Mahanadi Coal Railway Limited (MCRL), at an estimated project cost of Rs.35.20 crore.

9. Akhaura - Agartala Rail Link project, for North Frontier Railway, at an estimated project cost of Rs. 574 crore as per approved DPR, out of which Rs.28.69 crore has been considered for the year’s order book.

10.Railway Tracks (In-plant) Package (Package No. 50) for 3.0 MTPA Integrated Steel Plant at Nagarnar, for NMDC Limited at a value of Rs. 52.95 crore.

11. Further works in Katra-Qazigund section including Dharam-Qazigund section, Km 73.00 to 91.00, for Northern Railway at an estimated cost of Rs.613.72 crore.

G. Your Company has entered into a Memorandum of Understanding on 26th March 2018 with the Rail Land Development Authority (RLDA) for transfer of lease hold rights to Ircon for commercial development on the land parcel admeasuring 4.3 (four point three) Hectare at Bandra East, Mumbai, Maharashtra, against the payment of Upfront Lease Premium. In consideration of its roles and responsibilities, Ircon shall be entitled to receive from RLDA, an amount equivalent to a total of 3% (three percent) of the Upfront Lease Premium. In order to pay upfront lease premium equivalent to guidance price as approved by RLDA, GST, Stamp Duty and Registration Charges a tripartite a loan agreement has been signed amongst Ircon, RLDA and Indian Railway Finance Corporation Limited (IRFC) on 28th March 2018. RLDA has agreed to pay to Ircon such amounts as maybe required by Ircon to meet their debt servicing obligations as and when due under this Agreement. Further the Ministry of Railways also has agreed to provide corresponding amounts to RLDA.

H. On-going major Projects in India:

A list of major on-going projects in India is given at Appendix - A.

I. New Projects secured after the close of the year:

After the close of the year 2017-18, your Company secured following projects in India:

1. Construction of New BG Electrified Rail line between Dharamjaigarh to Korba (Urga) of Chhattisgarh East Railway Limited (CERL-II), at an estimated project cost Rs.260 crore as per approved DPR.

2. Construction of Corridor-III of East West Corridor between Gevra Road to Pendra Road in the State of Chhattisgarh for CEWRL for additional value of Rs. 260 crore on account of revised contract value.

3. Survey, Feasibility study, Detailed Design and Construction of various identified Rail Coal Connectivity Project(s), for Jharkhand Central Railway Limited (JCRL), at an estimated project cost Rs. 1,139 crore as per approved DPR.

4. Survey, Feasibility study, Detailed Design and Construction of various identified Rail Coal Connectivity Project(s), for Mahanadi Coal Railway Limited (MCRL), at an estimated project cost of Rs. 1,079 crore.

5. Execution of rail connectivity projects identified by Bastar Railway Private Limited (BRPL), at an estimated project cost of Rs. 1,513 crore.

6. Construction of Eight Lane Vadodara Kim Expressway from Km 323.00 to Km 355.00 (Sanpa to Padra Section of Vadodara Mumbai Expressway) in the State of Gujarat under NHDP Phase-VI on Hybrid Annuity Mode (Phase IA-Package II), for Ircon Vadodara Kim Expressway Limited (IrconVKEL) at a value Rs.1,865 crore.

4. SUBSIDIARY COMPANIES, JOINT VENTURE COMPANIES, AND ASSOCIATE COMPANIES

A brief background on the subsidiaries (including the newly formed wholly-owned subsidiary --Ircon Vadodara Kim Expressway Limited incorporated on 16th May 2018) and joint ventures companies of Ircon along with their financials and performance is given at Appendix - B.

5. CONSOLIDATED FINANCIAL STATEMENTS

In accordance with the provisions of Section 129(3) of the Companies Act, 2013, your Company has prepared its Consolidated Financial Statements [as per line by line method] with its four subsidiaries viz. IrconISL, IrconPBTL, IrconSGTL, and IrconDHHL; and [as per equity method] with seven joint venture companies viz. IRSDC, ISTPL, CERL, CEWRL, MCRL, JCRL, and BRPL. The accounts of un-incorporated joint ventures have been included in the standalone financial statements for the financial year 2017-18.

The Board of Directors of your Company has, at its meeting held on 3rd August 2018, approved the Financial Statements for 2017-18 (Standalone and Consolidated).

Your Company would make available audited financial statements (standalone and consolidated) of Ircon and accounts / financial statements of its subsidiaries (IrconISL, IrconPBTL, IrconSGTL and Ircon DHHL) at its website (www.ircon.org).

A statement containing the salient features of the financial statements of four subsidiaries and seven joint venture companies in Form AOC-1 is attached with the Financial Statements.

6. COMPLIANCES

A. Presidential Directive:

During the year, one presidential directive was received from Railway Board vide letter dated 24th November 2017, for implementation of pay revision of Board level and below Board level executives and non-unionised supervisors of Ircon w.e.f. 1st January 2017. The same was implemented during the year.

B. Official language:

The Company is undertaking various novel and encouraging initiatives for pervasive use of Hindi in the office. Some of them are:

a) Pledge by all employees to work in Hindi completely on every last Monday of the month.

b) Rajbhasha Sanghosthi is being conducted on quarterly basis in Corporate Office.

c) Birthday wishes to employees, a thought and a word contributed by different departments on rotational basis, poem by renowned poets etc. are being displayed in Hindi at the reception.

In addition, regular quarterly meetings of Official Language Implementation Committee and workshops for effective use of the unicode system and official language are being conducted. Employees are being encouraged through various incentive schemes for the implementation of the Annual Programme of the Official Language Department. Bilingual facility has been introduced for computer systems and mobile phones used by officials of the Company. Officers and staff are being encouraged through various incentive schemes for implementation of the annual program of the Official Language Department. Bilingual formats have been made available at Ircon’s internal website for use by the employees.

C. Right to Information Act, 2005:

As per the requirements of the RTI Act, necessary updated information including the names of Appellate Authority, Central Public Information Officer, Assistant

Public Information Officer and State Level Public Information Officers and are posted on Ircon’s website. Queries received have been replied within the stipulated time. The queries mostly related to service matters/recruitments, finance, contract, and projects. The details of RTI cases have been forwarded to the Ministry of Railways for publication on Central Information Commission (CIC) website on quarterly as well as annual basis.

During the year 2017-18, 185 applications and 30 first appeals were received and at the beginning of the year 10 applications and 3 first appeals were under process. Out of this, 185 applications (including 3 appeals at the beginning of the year) were processed / disposed off. As on 31st March 2018, 10 applications were under process for disposal within the allowable time limit.

D. Compliance of MSME Guidelines for implementation of Purchase Preference Policy:

Your Company has in place a comprehensive Purchase Preference Policy since June 2012 which is in line with the Public Procurement Policy for Micro and Small Enterprises (MSEs) Order, 2012 notified by the Ministry of Micro, Small and Medium Enterprises (MSME) under section 11 of Micro, Small and Medium Enterprises Development Act, 2006. The e-procurement portal of Ircon i.e. www.tenderwizard.com/IRCON provides for facilitation of registration of MSEs firms registered with any statutory bodies specified by Ministry of MSME, and participation in e-tender by availing the benefits of exemption from payment of cost of tender fee and Earnest Money.

Your Company has requested Ministry of MSME (through Ministry of Railways) in terms of letter dated 21st September 2017 for exemption from achieving mandatory target of 20% for the financial year 2016-17. The same was approved by the Ministry of MSME on 1st March 2018.

The achievement of procurement from MSEs in compliance to Public Procurement Policy during the financial year 2017-18 is placed below:

Sl.No.

Particulars

2017-18

1.

Total annual procurement (in Rs. Crore)

263.11

2.

Target %age of annual procurement (20%) (in Rs. Crore)

52.62

3.

Total value of goods and services procured from MSEs (including MSEs owned by SC/ST entrepreneurs) (in Rs. Crore)

35.34

4.

Total value of goods and services procured from only MSEs owned by SC/ST entrepreneurs

-

5.

% age of procurement from MSEs (including MSEs owned by SC/ST entrepreneurs) out of total procurement

13.43%

6.

% age of procurement from only MSEs owned by SC/ST entrepreneurs out of total procurement

-

During the year 2017-18, your Company has conducted six (06) Vendor Development Programmes for MSEs.

7. BOARD OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND DECLARATION OF INDEPENDENCE BY THE INDEPENDENT DIRECTORS

Your Company’s Board is duly constituted and is in compliance with the requirements of the Companies Act, 2013 and DPE Guidelines on Corporate Governance, 2010.

The following Directors & KMP were appointed during the year 2017-18:

1

Dr. C.B. Venkataraman Part-time (Non-Official) Director [DIN:03179171]

w.e.f. 28.09.2017

2

Mr. Narinder Singh Raina Part-time (Non-Official) Director [DIN:07968391]

w.e.f. 17.10.2017

3.

Mr. Ved Pal Part-time (Official) Director [DIN:07902760]

w.e.f. 22.11.2017

4.

Mr. Ashok Kumar Ganju Part-time (Non-Official) Director [DIN:07014589]

w.e.f. 08.03.2018

5.

Ms. Iti Matta Company Secretary, Compliance Officer & KMP

w.e.f. 01.11.2017

6.

Ms. Ritu Arora Company Secretary, Compliance Officer & KMP

w.e.f. 04.01.2018

The details of the aforesaid four directors appointed during the year 2017-18 and noting / approval of their appointment at the ensuing Annual General Meeting (AGM) are contained in the accompanying Notice convening the ensuing AGM of the Company.

The following Directors & KMP ceased to hold office during the year 2017-18:

1

Mr. S.C. Jain Part-time (Official) Director [DIN:07564584]

w.e.f. 17.11.2017 due to change in nomination by the Ministry of Railways.

2

Mr. Hitesh Khanna Director Works [DIN 02789681]

w.e.f. 28.03.2018 due to pre-mature termination of tenure by the Ministry of Railways on his own request.

3.

Ms. Sumita Sharma Company Secretary & KMP

w.e.f. 27.10.2017 resigned from the post of Company Secretary

4.

Ms. Iti Matta Company Secretary, Compliance Officer & KMP

w.e.f. 04.01.2018 relinquished charge of the post of Company Secretary

During the year, all the independent directors of the Company have declared that they meet the criteria of Independence in terms of section 149(6) of the Companies Act, 2013.

The following Directors ceased to hold office after the close of the year:

1

Mr. Sanjay Kumar Singh

w.e.f. 02.07.2018 due to

Part-time (Non-Official)

termination of tenure by

Director [DIN: 00003695]

the Ministry of Railways

8. MEETINGS OF THE BOARD OF DIRECTORS AND AUDIT COMMITTEE

During April 2017 to March 2018, ten meetings of the Board of Directors and thirteen meetings of the Audit Committee were held.

The details of meetings of the Board of Directors, Audit Committee, and other Board level committees are given at para 3 of the Corporate Governance Report.

9. INTERNAL CONTROL SYSTEM AND RISK MANAGEMENT

Details of the internal control system and risk management are provided in the Management Discussion and Analysis Report.

10. WHISTLE BLOWER POLICY / VIGIL MECHANISM

During the year, the Company has approved a revised Whistle Blower Policy under which there is a vigil mechanism in place for the Employees and Directors of the Company to report to the Management, concerns about unethical behavior, actual or suspected fraud, or violation of the Company’s code of conduct.

11. PERSONNEL DEVELOPMENT

Cordial and harmonious industrial relations prevailed in the Company during the year. The total manpower strength as on 31st March 2018 stood at 1,622, which included 1,179 regular employees, 49 deputationists, and 394 employees on contract (including service contract). 832 employees of the Company were technically and professionally qualified. The total number of women employees was 63. There were a total of 205 scheduled caste / scheduled tribe employees as on 31st March 2018.

During the year, the strength of total new employed personnel stood at 329, which included 104 regular employees, 14 deputationists, and 211 employees on contract (including service contract). Out of these new recruits, 112 employees are technically and professionally qualified, 6 are women employees, and 19 scheduled caste / scheduled tribe employees.

Your Company has been continuously taking steps for building capacity of its human resource through training in functional and general management areas, contract & arbitration, leadership, information technology, as well as soft skills. External faculty is arranged wherever required and officials are nominated for workshops, seminars, etc. with reputed institutes. During the year 2017-18, a total 912 man-days training was imparted to officials of Ircon through workshops, seminars, conferences, in-house trainings and training in external institutes, etc.

Your Company has various schemes for staff welfare like educational scholarships, one-time educational grant for admission to professional degrees and diploma courses, educational awards to meritorious children of employees, educational assistance to the wards of deceased employees, assistance for marriage of daughters and dependent sisters of group ‘C’ and ‘D’ employees, etc. facility of homeopathy and allopathy treatment at Corporate office. Other facilities like immediate financial assistance and guidance are being provided to employees and their family members in case of any medical exigency, lumpsum ex-gratia payment to family members in case of death of serving employee.

Your Company aims to provide congenial and safe working atmosphere to women employees. The Company has a complaints committee for prevention of sexual harassment at work place. Further, provision pertaining to prohibition of sexual harassment has also been incorporated in Ircon Conduct, Disciplinary, and Appeal Rules. No complaints relating to sexual harassment has been received by the Company during the year. On International Women’s day, the company organized a workshop exclusively for women employees by Delhi Police, at the Corporate office of the Company.

The 42nd Annual Day of the Company was celebrated on 28th April 2018 with traditional fervor and gaiety. On this occasion, exemplary work done by employees in Indian as well as foreign projects and select projects were appreciated and rewarded. Educational awards to meritorious children of the employees were also given on this occasion.

12. QUALITY, ENVIRONMENT, AND HEALTH & SAFETY MANAGEMENT

Quality Management System (QMS) has been successfully sustained and continually improved since 1996 when the Company as a whole was first certified for ISO-9002-1994 by TUV SUD Private Limited. Your Company has continued the certification and sustained the system as per latest revised code ISO 9001:2015 (by periodical re-certification audit after expiry of every three years). Latest re-certification audit has been conducted in March 2017, whereby the Company has been re-certified by TUV-SUD for a period of another three years i.e. up to June 2020

The Company has developed the mobile phone / web based video library, for Personal Safety & safety in construction in 2D format. This mobile / internet based application has been released in English and Hindi and is available on Ircon’s internal website.

During the year, the Company has started an initiative to share technical knowledge and technical papers based on IS/IRC/IRS/ASTM Standards, Standard Construction practices and experiences. The topics were, CAR and PII & PLI Policies; Railway Doubling projects - Work Procedure; Working Adjacent to Railway Track - Safety Guidelines; Comparison between IS: 383- 1970 versus IS: 383 - 2016; The Slings - Vital And Weak Links in Lifting & Hoisting Operations; Bolt and Nuts - Engineering Aspects; High Strength Concrete - Concrete with Mineral Additives.

Your Company established an Environment Management System (EMS), and was certified for ISO 14001:2004 in October 2011. The latest re-certification audit for ISO 14001-2015 has been conducted in March 2017 whereby the Company has been re-certified for another three years i.e. up to May 2020.

During the year, QMS was updated in the month of June 2017 and EMS in the month of May 2017, quite before the last updation date of September 2018, which is an improvement over the past practices in the Company.

The Company nominates Environment officers at major Indian projects to monitor EMS at their respective projects who complies with the environmental laws and monitor air quality. This is an ongoing process until completion of the project. Environmental checklists have been developed and maintained by all projects. In addition, the Company has a fully operational environmental lab in Jammu for study of impact on environment by the construction activities.

Environmental friendly equipment such as solar panels have been installed and are being installed at various offices / projects. Waste water is recycled at Corporate Office through Sewage Treatment Plant (STP), and the same is used for horticulture work. STPs are also being constructed at Noida, Gurgaon, and MFC buildings. LED lights, sensor lights and sensor taps are being used in Corporate Office to conserve electricity and water. Various environment friendly steps like use of fly ash brick instead of clay brick, rain water harvesting arrangements, sensor controlled Cromium Plate (CP) fittings, use of latest version of fecade glass (glass in building) to make the building sustainable etc. are being taken up across various offices / projects of the Company. Monitoring of water usage and waste water, ambient air quality and noise quality is also being carried out at various construction sites. The Company is emphasizing on providing clean environment by initiating indoor air quality monitoring in the Corporate Office building. Tree plantation is also undertaken by corporate office and project offices.

Your Company has also been certified for Occupational Health & Safety Management System (OHSAS - BS 18001:2007) in December 2012 by TUV SUD South Asia. The re-certification audit was conducted in October 2015, whereby the Company had been re-certified for another three years i.e. up to December 2018.

Corporate Quality Council and Project Quality Council meetings were conducted quarterly at Corporate Office and projects respectively to review the implementation of QMS, EMS, and OHSAS. The Quality objectives were measured and reviewed both at the Corporate and at the Project levels. Internal Quality Audit as well as Quality Assurance Audit were conducted in projects and corporate office. Reports of these audits not only contained details of non-conformities encountered during the audit but also the salient features, progress, positive points, if any, etc.

13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, AND UPGRADATION

On energy conservation front, your Company has completed work of Design, Supply, Installation, Testing and Commissioning of grid connected solar power plant of 2MW capacity with all the electrical and associated equipment including civil works at Rail Coach Factory, Rae Bareli (U.P.), at a value of Rs. 15.60 crore. The plant is fully operational, and meets about 21% of electrical energy requirement for the factory. The Company has procured 1 MW additional Solar Power Plant at Rail Coach Factory, Rae Bareli in addition to earlier installed 2 MW Solar Power Plant.

Additional 10 KW Roof Top Grid Connected Solar Power Plant has been made operational as a step to conserve energy. This Solar Power Plant is in addition to existing capacity of 80 KW, and has been implemented after energy audit contributing to environment through usage of Green Energy.

Further, additional capacitor banks have been installed at Corporate Office building to improve power factor which would further reduce the Electrical Energy consumption.

Technology absorption and upgradation

Supervisory Control and Data Acquisition System (SCADA) for energy management have been made operational at Rail Coach Factory, Rae Bareli. Further, the Company has constructed all sub-station buildings in DMRC with latest energy efficient and environmental friendly guidelines which includes LED lights, Rain Water harvesting.

For the first time in Indian Railways, Overhead Equipment (OHE) design for Railway Electrification Project is being carried out by using Drone camera for picking the coordinates through Differential Global Positioning System (DGPS). The OHE layout plans are then prepared with the help of Autocad. Ircon has also planned for use of Drone Camera for Katni Singrauli Doubling project.

During the year, development of Circular OHE foundation in situ and Precast was done in Mathura -Kasganj - Kalyanpur Section for Railway Electrification Project.

Your Company has supplied and commissioned 66 KV High Voltage Cable first time developed indigenously for Delhi Metro Rail Corporation (DMRC) Project. Ircon has also imported 25 KV Gas Insulated Switchgear (GIS) for Vinod Nagar Traction Sub-station of DMRC. The use of GIS reduces the requirement of space for sub-stations.

Uncommon technique of launching of girder by cantilever method was used at 2nd Bhairab Bridge in Bangladesh by utilizing the benefit of river water. The barge of 250 tonne capacity was used to mount the road crane as well as the members of the truss. The whole barge was brought parallel to the working span and members were erected by the road crane when the barge was properly anchored. With this process of cantilever launching time cycle was reduced from 45 days to 30 days for erection of truss bridge of 102.4 meter in length. This also economized the cost by saving the extra material to be welded on the bottom chord.

Further, New Austria Tunnelling Method (NATM) is proposed to be adopted for construction of tunnels in Sivok-Rangpo project. This method is very useful in complex diversified geological condition where forecasting of the rock mass is difficult due to rapidly changing geology.

14. RESEARCH & DEVELOPMENT (R&D)

Your Company does not undertake any pure research project but takes the help of consultants and firms to innovate and to develop methods and techniques to execute projects in a cost effective manner, with requisite quality, to enhance the technological competence and efficiency.

During the year, the Company has used drone technology for development of OHE layout plan of the value Rs. 55.10 lakhs for 339 RKMs.

15. INFORMATION TECHNOLOGY AND DEVELOPMENT OF ERP

With an objective to enable IT facility in all domain, efforts were directed to enable IT in all domain.

The Company has established SAP ECC 6.0 based Finance-Controlling module to incorporate additional functionalities like fixed asset accounting for calculation of depreciation as per Indian Income Tax Act, Bank Reconciliation System, FOREX reporting in Functional currency, local currency and reporting currency, Implementation of IndAS functionality (age analysis and discounting of Financial Asset and liability), reports for quarterly and annual financial statements as per schedule III of the Companies Act, 2013. A new tool from SAP called Business Objects (SAP BO) has been introduced to automate the financial reporting of the organisation. This reporting tool takes the real-time data from SAP ECC and prepares the publishable reports namely Balance Sheet, Statement of Profit & Loss, Statement of changes in equity, Cash Flow etc. on demand basis. This automation has led to drastic reduction in the time and effort required to prepare and finalize the books at the end of the quarter / year. The Company has implemented e-Recruitment system on SAAS model with functionalities like on-line submission of application with payment gateway, generation of admit card and communication through SMS / e-mail with the applicants, conducting on-line written test, instant publication of results etc. Video conferencing system is used for conducting review meetings with Project Heads, training, promotion interviews etc. SAP servers are hosted on cloud to ensure high availability security and flexibility for capacity augmentation.

During the year online Annual Performance Appraisal System and Leave application CL/RH system has been developed and launched. The official website of the Company has been revamped to provided well planned information architecture, mobile compatibility, fast access, browser consistency and effective, easy navigation. Enhancement of SAP ERP FI-CO module has been done for improved transparency and financial control and maintaining books of accounts fixed assets, MIS, P&L for all projects. Visitor Management System has been upgraded to ensure proper maintenance of visitor details and visitors convenience at corporate office. Besides this, two mobile apps for CSR and Recruitment related information has been launched and available on google play store. Three more mobile applications are under development. The Company has upgraded its Network Infrastructure at Corporate Office to ensure state of art setup for digital transactions and projects connectivity. Keeping in view the need for Information and Cybersecurity, the Company has nominated Chief Information Security Officer (CISO).

To reduce paper usage and transparent working, use of IT has been enhanced in all the functional domains.

16. VIGILANCE ACTIVITIES

Vigilance Department plays an advisory role to the top management in matters pertaining to vigilance. It is headed by a full time Chief Vigilance Officer (CVO) appointed by the Appointments Committee of the Cabinet (ACC) in consultation with Central Vigilance Commission (CVC).

The Vigilance Department ensures implementation of laid down guidelines / procedures through preventive checks of tenders and contracts, execution of works, and other functions as well as carries out investigations into complaints. During the year, five preventive inspections were carried out on high value tenders floated from Corporate Office. Complaints raised against officials, procedures etc. by various authorities (like CVC, Railway Board Vigilance), and received from other sources were investigated to their logical conclusion. A total of 21 complaints were received from 1st April 2017 till June 2018. Out of these 21 complaints, 1 complaint was forwarded by CVC for investigation & report and 11 complaints were disposed off (including CVC referred complaint). The nature of these complaints includes irregularities during tendering, execution of contract, anonymous and pseudo anonymous one and quality related issues. Based on the outcome thereon, circulars on system improvements were issued in different spheres of working related to tenders, contracts, finance, etc. and also project management to avoid recurrence of irregularities / procedural errors and to plug loopholes. In addition, steps were taken for closure of paras raised by the Chief Technical Examiner’s Organisation (CTEO) and advice of CVC on disciplinary matters pertaining to delinquent employees. Scrutiny of immovable property returns of employees; creating awareness on rules/ procedures/ common irregularities in execution through workshops/ trainings, debate, competitions, etc. have been the prime activities of the Department.

As a step towards ‘leveraging technology’ for better transparency, submission of online Immovable Property Returns by the officers was started in 201213 and the process is running successfully; online Vigilance Clearance started w.e.f. 1st April 2014 in the organization through intranet portal www.irconnet.com; vigilance section / portal on website www.ircon.org with a facility for online receipt of complaints is in place since December 2012; e-procurement has already been started w.e.f. 1st July 2013 in the organization in a comprehensive manner for achieving transparency for all value of the work.

Vigilance department strives to achieve its objective of promoting an impartial, fearless, and transparent environment in functioning of the organisation by ensuring implementation of laid down procedure / guidelines as framed and taking steps to prevent unethical practices.

Your Company has implemented integrity pact as recommended by CVC, a move aimed at maintaining complete transparency, integrity and accountability in all its major procurement and contracts.

17. AWARDS

Your Company had received following awards during the year 2017-18:

1. Dun & Bradstreet Infra Awards 2017, in the category of “Construction & Infrastructure Development (Railways)”. The award was presented by Mr. Nitin Gadkari, Hon’ble Minister of Road Transport & Highways, Shipping and Water Resources, River Development and Ganga Rejuvenation and received by Mr. S.K. Chaudhary Chairman & Managing Director, Ircon at a function held in Mumbai on 2nd November 2017.

2. Governance Now 5th PSU Awards 2017 in the Financial category (Consistent Growth). The award was presented by Ms. Krishna Raj, Hon’ble Union Minister of State of Agriculture & Farmers Welfare, India and received by Mr. Yogesh Kumar Misra, Chief General Manager (Business Development), Ircon at a function held in New Delhi on 27th February 2018.

3. Dainik Bhaskar India Pride Awards 2017-18 in the category of “Central PSU: Miniratna-Category-I”. The award was presented by Mr. Shivraj Singh Chouhan, Hon’ble Chief Minister of Madhya Pradesh and Mr. Dharmendra Pradhan, Hon’ble Minister for Petroleum & Natural Gas and Minister of Skill Development & Entrepreneurship and received by Mr. S.K. Chaudhary Chairman & Managing Director, Ircon at a function held in New Delhi on 28th March 2018.

4. CIDC Partners in progress Trophy 2018 from Construction Industry Development Council (CIDC) for achieving targets of “Mission Skilling India” under various CIDC initiatives. The award was presented at a function held in New Delhi on 7th March 2018.

Your Company had received the following awards after the close of the year 2017-18:

1. Institute of Economic Studies Excellence Award to Ircon and Udyog Rattan Award to CMD, Ircon. Both these awards were presented by Mr. B.P. Singh, former Governor of Sikkim and Mr. Shekhar Dutt, former Governor of Chhattisgarh and received by Mr. S.K. Chaudhary Chairman & Managing Director, Ircon at a function held in New Delhi on 14th April 2018.

18. OTHER DISCLOSURES

A. Particulars of Loans, Guarantees or Investments:

The details of investments made, loans granted, and guarantees extended by your Company in terms of section 186 of the Companies Act, 2013 during the year 2017-18 forms part of the notes to the financial statements [note no. 40(c)] provided in the Annual Report.

B. Disclosure on remuneration of directors and employees:

As per provisions of section 197 of the Companies Act, 2013 read with the Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the company is required to disclose the details of the remuneration of the Directors etc. in the Directors’ Report. However as per Notification No. GSR 463(E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government Companies are exempted from complying with provisions of section 197 of the Companies Act, 2013. Ircon being a government company, such particulars are not included as part of Directors’ Report.

C. Compliance with Secretarial Standards on Board, General Meeting and Dividend:

During the year, the Company is generally in compliance with the Secretarial Standards on Meetings of the Board of Directors (SS-1), General Meetings (SS-2), and Dividend (SS-3) issued by the Institute of Company Secretaries of India, except as otherwise stated in the Secretarial Audit Report.

D. Deposits:

Your Company did not accept any deposits from public during the year.

E. Significant material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future:

No order has passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.

F. Material changes and commitments affecting the financial position between end of the financial year and the date of report:

No material changes and commitments affecting the financial position of the Company during the financial year 2017-18.

G. Change in the nature of business:

There was no change in the nature of business of the Company during the financial year 2017-18.

H. Qualification, reservation or adverse remarks in the Auditor’s Reports, Secretarial Auditor Report

The Management Response on qualification contained in the Auditors’ Report 2017-18 (Standalone and Consolidated) is placed as Appendix-I.

The Management Response on the qualification in the Secretarial Auditor Report 2017-18 is placed below:

“The minutes of the 18th Nomination and Remuneration Committee (NRC) meeting dated 21-12-2017 entered in the minutes book 27-02-2018 and noted at the 19th NRC meeting dated 7-3-2018 and 242nd Board of Directors (BoD) meeting dated 7-3-2018.

The minutes of the 19th Nomination and Remuneration Committee meeting dated 7-3-2018 and adjourned 19th NRC meeting dated 8-3-2017 have been entered in the minutes book on 21-06-2018 and noted at the 21st NRC meeting held on 21-08-2018 and 244th BoD meeting held on 3-8-2018.”

19. INTEGRAL REPORTS

The following reports / documents along with relevant annexures form an integral part of this report, and have been placed as Appendices numbered herein.

1. ”Report on CSR and Sustainability Activities” provides a brief outline of the company’s CSR and Sustainability policy, the composition of CSR & Sustainability Committee, average net profit of the Company for the last three financial years, prescribed CSR expenditure, and details of CSR spent on the activities / projects undertaken during the financial year etc. [Appendix - C].

2. The “Management Discussion and Analysis Report” provides an overview of the affairs of the Company, its legal status and autonomy, business environment, vision and mission, sectoral and segment-wise operational performance, strengths, opportunities, constraints, strategy and risks and concerns, as well as human resource and internal control systems [Appendix - D].

3. The “Corporate Governance Report” highlights the philosophy of Corporate Governance and Key Values of the Company, composition of Board of Directors and its Committees, their details including profile of directors who joined the Board during 2017-18, attendance and remuneration of directors etc., other relevant disclosures, CMD / DF Certification, and general information for shareholders, etc. [Appendix-E]. It is supplemented by following compliance certificates:

1. Certificate signed by the Chairman & Managing Director affirming receipt of compliance with the Code of Conduct and Key Values from all Board members and Senior Management personnel during the year 2017-18 (placed at Annexure - E1);

2. Certificate from Chairman & Managing Director and Director Finance with respect to the truth and fairness of the Financial Statements, due compliances, and financial reporting (placed at Annexure - E2); and

3. Certificate of compliance of Corporate Governance provisions signed by a practising company secretary (placed at Annexure - E3).

4. The Secretarial Audit Report from the secretarial auditor is at Appendix - F. The Management Response on the qualification contained in the Secretarial audit Report 2017-18 is placed at para 18H above.

5. The “Extract of Annual Return” in Form MGT-9, pursuant to section 134(3)(a) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, placed at Appendix - G.

6. The “Disclosure of Related Party Transactions” in Form AOC-2, pursuant to Section 134(3) (h) of the Companies Act, 2013 and Rule 8 (2) of the Companies (Accounts) Rules, 2014, is at Appendix - H.

7. The Management Response on qualification contained in the Auditors’ Report 2017-18 (Standalone and Consolidated) is placed as Appendix - I.

20. DIRECTORS’ RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

i. that in the preparation of the financial statements, the applicable accounting standards had been followed except as otherwise stated in the annual financial statements and there has been no material departure;

ii. that such accounting policies were selected and applied consistently and such judgments and estimates were made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company for the financial year ended on 31st March 2018 and of the profit of the Company for the financial year 2017-18;

iii. that 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;

iv. that the financial statements have been prepared on a going concern basis; and

v. that proper systems had been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively.

21. AUDITORS

A. Statutory and Branch Auditors:

The Auditors of the Company appointed by the Comptroller & Auditor General of India for 2017-18 are:-

Statutory Auditors:

K.G. Somani & Co. For Company as a whole

Branch Auditors for projects in India:

Gupta Gupta & Associates, All projects at Jammu & Srinagar Kashmir Region

KDS & Co., Mumbai All projects under Mumbai Region

K S Bothra & Co., Kolkata All projects under Eastern Region

Jindal & Co., New Delhi All projects under Northern Region

B. Gupta & Co., Patna All projects under Patna Region

Branch Auditors for projects Abroad:

Kerbal Athmane, Algeria Algeria

Middel & Partners South Africa, South Africa

Jaysinghe & Co., Chartered Sri Lanka Accountants, Sri Lanka

Kumpulan Naga & Co., Malaysia Malaysia

Toha Khan Zaman & Co., Bangladesh Bangladesh

B. Cost Auditor:

The Board of Directors have appointed M/s. Chandra Wadhwa & Co., Cost Accountants, as Cost Auditor of your Company for the financial year 2017-18 for conducting the audit of cost records maintained by the Company as per the applicable Rules / Guidance Note, etc.

C. Secretarial Auditor:

The Board of Directors have appointed M/s. Vishal Agarwal & Associates, Practising Company Secretary as Secretarial Auditor for conducting Secretarial Audit of your Company for the financial year 2017-18.

D. Internal Auditors:

The Board of Directors have appointed following Internal Auditors for 2017-18:

Internal Auditors for Indian Projects

Baweja & Kaul, Jammu J&K Region

J. Singh & Associates, Mumbai Mumbai Region

A. R. & Co., New Delhi Northern Region

Gupta Sachdeva & Co., Patna Patna Region

SBA Associates, Kolkata Eastern Region

Raj K. Sri & Co., New Delhi Corporate Office Region

Internal Auditors for Foreign Projects

The Internal Audit for projects abroad viz. Bangladesh, Algeria, and South Africa was undertaken in-house by the officials of the Company for the financial year 2017-18.

ACKNOWLEDGEMENT

We record our appreciation and thanks to the Ministry of Railways, Ministry of External Affairs, DIPAM and other Ministries; various banks, Reserve Bank of India, EXIM Bank; Export Credit and Guarantee Corporation; Embassies; Protector of Immigration; Passport Authority; Doordarshan; and our esteemed clients both in India and abroad for their continued interest in and support to the Company.

We place on record our sincere appreciation for all the employees of the Company at all levels for their untiring efforts, dedication, and sincerity of purpose in improving the performance and profitability of the Company.

For and on behalf of the Board of Directors

Sd/-

(S.K. Chaudhary)

Date: 31st August 2018 Chairman & Managing Director

Place: New Delhi (DIN: 00515672)

Source : Dion Global Solutions Limited
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