I am delighted to share with you the 46th Annual Report of your Companyfor FY 2021-22 which has been yet another year of impressive performance. It is a matterof great pride that your Company has displayed a good overall performance despite thepandemic led adverse market scenario faced at the beginning of the year. On a standalonebasis your Company has clocked an all-time high total turnover of `7181 Crore (previousyear `5200.31 Crore) registering an increase of 38.09%; also on a consolidated basistotal turnover registered a record increase of 37.76% in the history of IRCON and stood at`7585.71 Crore (previous year ` 5506.45 Crore).
It is noteworthy to mention that your Company which startedexclusively as a railway construction Company has acquired expertise across diversifiedinfrastructure sectors over the past 46 years and has built its reputation globally. TheCompany has to its credit 128 completed projects in 25 countries across the globe and398 projects in India.
CONTRACTS SECURED IN INDIA AND ABROAD
Despite the adverse impact of COVID-19 pandemic across the constructionindustry worldwide and the consequent weakening of global economic prospects during theFY 2021-22 your Company has been successful in securing one foreign project forconstruction of Road from Paletwa (Myanmar) to Zorinpuri (Mizoram) under Kaladan MultiModal Transit Transport Project (KMMTTP) on EPC Mode in Myanmar valuing `1780 Crore.
Your Company has also secured new domestic works of approx. `14400Crore during FY 2021-22 through competitive bidding. With the new orders secured both indomestic and international segment the order book as on March 31 2022 stood at `43758Crore (approx.) as compared to `34689 Crore (approx.) in the previous financial year. Themajor new works secured by your company are in varied sectors viz. railwayelectrification highway project metro track works workshops airports and renewableenergy. Your company has also secured Civil and Track works packages in the prestigiousHigh Speed Railway Project being implemented for the first time in India. In the backdropof change in the policy of Ministry of Railways eliminating award of contracts onnomination basis the range and value of new business secured by the company iscommendable and value of the order book as on June 30 2022 stood at `42066 Crore(approx.).
Your Company has more than 50 projects in its portfolio including 5international projects in Bangladesh Algeria Sri Lanka Nepal & Myanmar. We continueto actively participate in new projects across industry segments in the domestic front tocapture healthy profit margins. The Company has forayed into the renewable power sector toestablish a 500 MW solar power plant through a joint venture. With its endeavour toenhance its portfolio in international market the Company is aggressively pursuingforeign projects funded through Line of Credit / other project export funding arrangementsof EXIM Bank of India and projects funded through Multilateral funding agencies.
FINANCIAL PERFORMANCE Financial Highlights:
Apart from recording the highest ever total turnover we have alsorecorded highest ever operating turnover of `6910 Crore in FY 2021-22 as against `4956Crore in the previous financial year registering an increase of 39.43%. Profit Before Tax(PBT) for FY2021-22 stood at `610 Crore thereby showing an increase of 6.27% as comparedto `574 Crore in the previous financial year. Profit After Tax (PAT) stood at `544 Crorein FY2021-22 registering a growth of 34.32% as against `405 Crore in the previousfinancial year. The Net Worth of your company has increased by 4.88% to `4621 Crore in FY2021-22 as against `4406 Crore in FY 2020-21.
During FY 2021-22 the Railway sector contributed around 92% to ourtotal revenue. Our primary focus has consistently remained deeply rooted in the Railwaysector which is our core strength. We have also increased our share of Highway businessand this year its share in the total revenue is approximately 7.19% and share ofElectrical Building and other works in total revenue is approx. 0.37%.
On a consolidated basis the impressive financial performance of theCompany is evident from a quantum jump of 37.94% in the operating turnover during FY2021-22 which touched `7380 Crore (previous year `5350 Crore). We have achieved aconsolidated Net Profit of `592 Crore for FY 2021-22 as against `391 Crore in the previousyear.
Furthermore I would like to mention that the Statutory Auditors havenot given any qualification or remarks in the Auditors' Report and the Comptroller& Auditor General of India (C&AG) has given Nil' comments for the FY2021-22.
Financial results for the quarter ended 30.06.2022:
It gives me pleasure to announce that the turnover and profitabilityfor Q1FY23 (Standalone) have improved substantially in comparison with Q1FY22. The totalturnover for this quarter has increased by 77.34% to `1956.95 Crore from `1103.49 Crore;the operating turnover stood at `1897.20 Crore showing an increase of 80.15% against`1053.10 Crore; and the Profit After Tax (PAT) has increased by 45.37% to `123.13 Crorefrom `84.70 Crore.
In addition to three interim dividends of 92.50% on the paid-up sharecapital (of `188.10 Crore) of the Company amounting to `174 Crore (approx.) your companyhas proposed a final dividend of 32.50% of the paid-up share capital amounting to `61.13Crore. With this the total dividend pay-out for FY 2021-22 would stand at 125% on thepaid-up equity share capital aggregating to `235.13 Crore (approx.) which is 43.20% ofthe post-tax profits of FY 2021-22 and 5.09% of net worth of the Company as on March 312022.
After declaration and payment of the proposed final dividend thecumulative dividend paid to shareholders up to FY 2021-22 would stand at `2374.47 Crore(approx.).
During the FY 2021-22 the paid-up share capital doubled to `188.10Crore by issue of new fully paid bonus shares in the ratio of 1:1 in May 2021. As on March31 2022 the shareholding of the Promoter i.e. President of India stood at 73.18% of thepaid-up equity share capital. Your Company is in compliance of the Minimum PublicShareholding (MPS) requirement in terms of the Securities Contracts (Regulation) Rules1957.
INCORPORATION OF NEW IRCON GROUP COMPANIES
It is noteworthy to mention that the IRCON Group is progressivelyexpanding with five new subsidiary companies formed during the FY 2021-22. The newcompanies include four wholly-owned subsidiary companies incorporated for execution ofroad / highway projects of National Highways Authority of India on Hybrid Annuity Mode(HAM) basis of which two projects are located in the State of Maharashtra one in Punjaband one in Uttarakhand. In addition one subsidiary with 76% stake of IRCON has beenincorporated in the renewable energy sector for setting up of 500 MW Grid Connected SolarPV Power project of Indian Renewable Energy Development Agency Limited (IREDA). As of nowIRCON Group comprises of eleven subsidiary companies and seven joint venture companiesthe details of which are provided in the Directors' Report.
cumulative investment of `1421.68 Crore as on March 31 2022.
In the progressive path towards reducing financial investment of IRCONin its subsidiary companies and improving liquidity position of IRCON during the FY2021-22 the existing loan of IRCON of `589.50 Crore in IrconVKEL and of `501 Crore inIrconSGTL have been repaid by these wholly-owned subsidiary companies to IRCON afteravailing of term loan facility from scheduled banks for which IRCON has providedCorporate Guarantee. The other details of investments made loans granted and guaranteesextended by IRCON to its subsidiary and joint venture companies during the FY 2021-22forms part of the notes to the standalone financial statements provided in the AnnualReport.
RATINGS & COMMENDATIONS
In terms of Memorandum of Understanding (MoU) signed with the Ministryof Railways Government of India your company has been rated as Excellent' forthe year 2019-20 & 2020-21. The Company expects to achieve Very Good'rating for the year 2021-22.
Based on the financials of FY 2021 as per USA's Engineering NewsRecord (ENR) IRCON is the only Indian PSU to make it to the list of top 250 InternationalContractors (Ranked 229th); as per the Business Standard BS 1000 Annual Magazine releasedin March 2022 IRCON has been ranked 190th by total revenue and ranked 11th in terms ofsector performance under the Construction and Infrastructure' Sector; and atthe 254th position in the list of Fortune India 500.
Keeping up the trend of winning awards year after year during the FY2021-22 IRCON has won Governance Now 8th PSU Award' in two categories viz. CSRCommitment and CSR Leadership Award; National Awards for Excellence in PSU' inthree categories viz. Innovation Social Media Outreach Increasing the Geo-StrategicReach and Exemplary Leader; and Greentech Foundation Safety Award' forconstruction safety.
We are fully aware that sound principles of corporate governance areessential for long term development & sustainability and we are operating within theambit of these principles. In realization of its commitment to responsible business wefollow the highest standards of ethical business operations and best practices by adoptinga robust Corporate Governance Policy and Code of Conduct. Your Company is adhering to theprovisions contained in the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 Companies Act 2013 and DPE Corporate Governance Guidelines 2010 andother applicable regulatory requirements.
A certificate on Compliance of conditions of Corporate Governance underthe SEBI Regulation and DPE Guidelines on Corporate Governance forms part of theDirectors' Report. Your Company has secured 'Excellent' rating for FY 2021-22 on aself-evaluation basis in compliance with Corporate Guidelines of DPE.
ENVIRONMENTAL SOCIAL AND GOVERNANCE (ESG)
At IRCON our Environmental Social and Governance (ESG) framework isintegrated across our business operations. Our ESG efforts are reflected in our policiesand principles that govern our organization's operations. We consistently strive tomake a positive impact on communities in which we operate. We have taken comprehensiveinitiatives in the areas of health education economic welfare and environmentprotection. Our ESG management is a thoughtful framework that includes critical factorssuch as transparent governance system investing in our employees and nurturing diverseworkplace delivering high-value projects to our customers and empowering the communitiesin which we operate.
Our business strategies aim to achieve consistent sustainable andresponsible growth. In realisation of our commitment to responsible business we follow thehighest standards of ethical business operations and best practices by adopting a robustCorporate Governance Policy and Code of Conduct.
We consistently strive to make positive impact on the communities inwhich we operate. As a corporate citizen we have spent `10.52 Crore towards CorporateSocial Responsibility (CSR) activities during FY 2021-22 as against the allocated budgetof `10.50 Crore. Focussing on the Annual Theme Health & Nutrition and COVIDrelated activities' as announced by the DPE and to give preference to theAspirational districts under CSR the CSR & Sustainability activities of the Companycomprised of installation of one oxygen Generating Plant at Samastipur Railway Hospital toenhance the capacity to face the present COVID-19 crisis; rain water harvesting system atDelhi Area; eye screening camp limb distribution education and skill developmentprograms and other initiatives in the field of sports healthcare rural developmentconservation of environment and facilitating differently abled persons. We have alsocontributed `1.14 Crore to Prime Minister's Citizen Assistance and Relief inemergency Situation Fund (PM CARES Fund).
HUMAN RESOURCE THE BIGGEST ASSET
Growing with the belief that the employees hold the key to success ofan organization the Company's policies have been designed in a way to adopt thelatest methods to constantly upgrade the knowledge ability skills and productivity ofthe employees. The employees are encouraged to engage as partners with emphasis on theircareer progression well-being and development to create a healthy and harmoniousenvironment within the organization.
The Company believes that retention of well-trained competent andcommitted employees and also expanding our workforce who can usher in new ideasstrategies and processes will ultimately help in improving the efficiency of the Company.The total strength of our human resources as of March 31 2022 stood at 1278 with 181newly employed personnel.
EMPOWERMENT THROUGH INFORMATION TECHNOLOGY
In the process of improving the levels of transparency and efficiencythrough technology advancement your Company is adopting latest upgradation of S4-HANAsystem to cover end-to-end business processes. During the year Employee Self ServicePortal Finance and HCM modules are under rollout for entire organization and five pilotlocations are under go live for full functionalities. The other initiatives of the Companyin the direction of paperless office includes e-office system from National InformaticsCentre (NIC) for approval and movement of official documents within the organizationGovernment eProcurement system of NIC-GePNIC offering full transparency in publicprocurement and dedicated Video Conferencing facility on CISCO VC and Google Meet fromofficial e-mail ID which enabled seamless meetings for review of the projects meetingsof the Board its Committees and also General meetings.
In future IRCON's business growth will be principally focussed onits core business i.e. the Railway and Highways in domestic as well as internationalsector with focus on strategic alliances to pursue potential opportunities in railwayshighways building projects ports harbours bridges tunnels and metro rails.
There are various economic and industry initiatives undertaken by theGovernment to enhance economic growth coupled with the revival of interest in thedevelopment of the infrastructure sector. In Union Budget 2022-23 the government hasgiven a massive push to the infrastructure sector by allocating `10 lakh Crore (US$ 130.57billion) to enhance the infrastructure sector. The government expanded the NationalInfrastructure Pipeline (NIP)' to 9335 projects. As a part of Atmanirbhar Bharat2000 km of network will be brought under Kavach the indigenous world-class technologyfor safety and capacity augmentation in 2022-23.
In 2022-23 the national highway network will be increased by 25000kms with a funding outlay of `20000 Crore (US$ 2.61 billion). These initiatives ofGovernment will be helpful in laying blueprint for expansion of opportunities and orderbook of your Company.
We shall be systematically targeting to improve our business share inthe domestic market by improving our participation in core business sectors like RailwaysHighways Tunnels Bridges etc. These include construction of Eastern Dedicated FreightCorridor on Hybrid DBFOT Mode EPC Tenders for tunnels bridges and EPC Contracts forvarious Zonal Railways PMC Works for Indian Railway projects projects of High-SpeedRail NCRTC NHAI and other such entities. Your Company has its presence in many statesin India and intends to further expand its domestic operations across the nation as partof its business growth model.
We also aim to aggressively increase our international business shareby venturing into new geographies and new business sectors to capture better profitmargins accorded by these projects as compared to domestic projects.
I am incredibly thankful to all the predecessors and present BoardMembers our Shareholders and all other Stakeholders for their cooperation and trust inIRCON. On behalf of the Board of Directors I take this opportunity to record ourgratitude and appreciation for the untiring efforts of all the past and present employeesof the Company. The Company is grateful for the valuable support received from theGovernment of India particularly the Ministry of Railways and the other Ministries andDepartments of Government of India Banks Comptroller & Auditor General of India(C&AG) Statutory Auditors Cost Auditors Internal Auditors and Secretarial Auditors.Above all I am extremely thankful to our esteemed clients both in India and abroad fortheir continued trust and confidence in IRCON.
I am confident that IRCON will further consolidate its position andpresence by keeping itself abreast of and tuned to the ever-changing global scenario.
(Yogesh Kumar Misra)
Chairman & Managing Director and CEO