It gives me immense pleasure to present to you the 44th Annual Report of your Company.I am proud to say that IRCON is on a steady Growth path and continues to perform abovethe industry average in India. Since 1985 we have actively worked towards becoming adiversified infrastructure player both in terms of sectoral and geographical coverage. Wehave progressively diversified into providing an entire gamut of construction activitiesand infrastructure services. We are a strong footed that has achieved significantmilestones in executing challenging projects across the world. So far we have deliveredover 128 projects in 25 countries across the globe and over 390 projects in India. As perthe 2020 edition of the USA's Engineering New Record (ENR) IRCON is the only Indian PSUto make it to the list of top 250 international contractors.
OUR OPERATIONAL PERFORMANCE AND ACHIEVEMENTS
During FY2020 the Railway sector contributed 80.98% to our total revenue. Our primaryfocus and strengths have consistently remained deeply rooted in the railway sector.However we are also concentrating on building our highways business and this year itsshare in the total revenue has increased to approximately 18.32% as compared to 12.56% ofthe last year's share and share of electrical building and other works in total revenueis approx. 0.70%. IRCON's order book as on March 31 2020 stood at Rs.30713 crore withRs.26064 crore value of work of Railways sector both on competitive and on nominationbasis. In the domestic market we have completed several projects in areas of Railwaytracking Highways Bridges and Flyovers Electricals Signalling and Telecom tunnelsand lining and railway electrification amongst others. We continue to actively participatein new projects in foreign countries including our ongoing project in BangladeshAlgeria Sri Lanka Nepal & Myanmar. By continuing to diversify our business andgeographical focus we strive to secure a broader range of projects to maximise businessvolume and profit margins. During FY2020 we have won an International Railway contractworth approximately Rs.637.22 crore under LOC Scheme of EXIM Bank from Sri Lanka Railwaysunder the Ministry of Transport & Civil Aviation Government of Sri Lanka. Thecontract is to upgrade the Northern Railway line of 128 Km and associated work fromMaho-Omanthai in Sri Lanka. Our team is also making concerted efforts to secure projectcontracts in Thailand Turkey Ghana Mozambique Rwanda UAE Malaysia Oman and Guinea.In addition to this we are gradually moving from individual projects to collaboratedprojects in partnership by forming joint ventures with local companies. We believe thatthis strategy will enable us to generate revenue and profits on a sustained basis.
OUR PERFORMANCE IN FY2020
During FY2020 we recorded a total income of Rs.5442 crore which is the highest everas against Rs.4680 crore in the previous financial year. Our turnover for the year stoodat Rs.5202 crore as against Rs.4415 crore in FY2019 marking an increase of 18%. Around95.60% of our total income has been recorded from our operational activities. Out of thetotal income 8.75% (Rs.476 crore) has been achieved through international projects.
On a consolidated basis we have recorded total income of Rs.5540 crore during theFY2020 as against Rs.4990 crore in the previous financial year and achieved aconsolidated Net Profit of Rs.485 crore for the said fiscal as against Rs.450 crore in theprevious financial year. For FY2020 the Board has recommended a final dividend ofRs.2.06/- per equity share on the face value of Rs.2/- each amounting to Rs.96.87 croreout of the profit for the financial year. With this the total dividend for FY2020 wouldbe aggregated to Rs.223.38 crore (approx.) (i.e.237.50% on the paid-up equity sharecapital of Rs.94.05 crore) which includes Interim Dividend of Rs.126.50 crore. The totaldividend works out to 45.60% of the post-tax profits and 5.37% of net worth as on March31 2020.
Furthermore I would like to mention that the Statutory Auditors have not given anyqualification or remarks in the Auditors' Report (except for few suggestions) and theComptroller & Auditor General of India (C&AG) is yet to give their comments forthe FY2020.
SUBSIDIARY AND JOINT VENTURE COMPANIES
As on March 31 2020 IRCON has five wholly-owned subsidiary companies out of whichfour are Special Purpose Vehicles (SPVs) created for execution of projects of NHAI. IRCONalso has 50% shareholding in two joint venture (JV) companies and 26% shareholding in fiveJV companies incorporated mainly for coal connectivity projects in the States ofChhattisgarh Jharkhand and Odisha. The details of all subsidiaries and joint venturecompanies are provided in the Directors' Report.
The rating of the Company under the Memorandum of Understanding for the year 2018-19signed with the Ministry of Railways has been Excellent' as was in the year 2017-18.The Company expects to achieve Excellent' rating for the year 2019-20 also. I amconfident that with the sustained efforts of IRCONIANS we will achieve the enhancedperformance targets. Apart from these recognitions your Company's has been conferredvarious awards during the FY2020 which have been detailed in the Directors' Report.
RESPONSIVE AND RESPONSIBLE
FY2020 witnessed the onset of COVID-19 an unprecedented global pandemic that is posingsevere challenge to the world's strongest economies. The human tragedy has costed manylives and has brought about massive headwinds for several businesses across the globe. Asa response to the pandemic we have taken necessary measures towards minimising thenegative impact of the challenges on our business. Though the long-term directionalpriorities of our organisation remain firm in light of COVID-19 and its expected impacton the operating environment our key priorities include closely monitoring the supplychain conserving cash and controlling fixed costs. However we will continue to exploreand invest in significant growth areas.
Furthermore as a company that deeply considers its impact on society we have takenvarious initiatives towards enabling financial medical and community support in the fightagainst the pandemic. We have extended financial support of Rs.20.50 crores towards thePrime Minister's Citizen Assistance and Relief in emergency Situation Fund (PM CARESFund). Apart from this we continue to make significant efforts towards the developmentand upliftment of the underprivileged sections of society. We do this through our CSRactivities that are directed towards improving the quality of life of the underprivilegedpopulation of India.
The Company is implementing the tenets of Corporate Governance in letter and spirit.Your company accords highest importance to transparency accountability and equity in allfacets of its operations. Your Company is adhering to the provisions contained in the SEBI(Listing Obligation and Disclosure Requirement) Regulations 2015 Companies Act 2013 andDPE Corporate Governance Guidelines 2010 and other applicable regulatory requirements. Acertificate on Compliance of conditions of Corporate Governance under the SEBI Regulationand DPE Guidelines on Corporate Governance forms part of the Directors' Report.
TOWARDS A PEOPLE CENTRIC ORGANISATION
We recognise our employees as our most valued assets. Therefore we take consistentstrides towards their development and well-being. We are committed to creating andmaintaining an ideal work culture for an engaged and capable workforce. We have strongvalues pioneering practices and collaborative work culture through joint consultationamongst the management. We believe in regularly expanding our workforce with new talentedpeople who can drive innovation and development in our organisation. The total strength ofour human resources as of March 31 2020 stood at 1369. The total number of newly employedpersonnel is 64.
Additionally we emphasise the development and career progression of our employees. Ourpeople management team regularly organises training programs that are directed towardsimprovement and productivity. Through all these efforts we aim to make IRCON anorganisation that is people-centric and people-driven.
With emphasis on transparency and as a step towards a paperless office e-office systemfrom National Informatics Centre (NIC) i.e. Ministry of Electronics & InformationTechnology Government of India has been implemented for online movement and approvals offiles and note sheets and has replaced the physical file system. In order to improve uponefficiency and bringing transparency in the procurement process in the organisation thee-procurement platform has been moved to GePNIC which is developed by NIC. The Company iscurrently in the process of implementation of SAP S/4 HANA covering end-to-end businessprocesses of the organisation.
Going forward we aim to continue and sustain our market leadership position byleveraging our strengths and opportunities. We are confident that with the support of ourexperienced management team and skilled workforce we can successfully deliverhigh-quality projects across Indian and foreign markets. We endeavour to continue ourstrategy of diversifying across industry segments and increase orders from foreigncountries. Our goal is to further enhance our healthy profit margins and comfortableliquidity position which will also contribute to enhancing our operational performance.Furthermore we intend to maintain a robust ESG (Environmental Social and Governance)culture and adopt global best practices in all our processes and systems. IRCON hasentered into an MOU with National Investment and Infrastructure Fund Limited (NIIFL) tocollaborate for equity participation in existing and future projects of IRCON. Also anMOU has been signed with NIIFL and AYANA Renewable Power Private Limited (AYANA) toexplore and collaborate on opportunities in the solar energy sector. The Company has alsosigned MOU with Larsen and Toubro Limited (L&T) to collaborate and jointly executemutually beneficial business opportunities in sectors such as ports harbours bridgestunnels metro rails in India and abroad. IRCON has also collaborated with BEML Limitedfor undertaking railway projects including supplying and maintaining the rolling stockmanufactured by BEML in countries where BEML and IRCON have business interest andpresence.
The Ministry of Railways has decided to invite PSU companies for significant railwayprojects which offers further opportunities to embark on high-quality government projects.Further the Company is exploring additional infrastructure development opportunities insync with the priority projects of the Government such as Smart City Mission and MetroRail. It is also pursuing opportunities in the highway projects in Indian statesconnecting habitations with rural roads through Pradhan Mantri Gram Sadak Yojana (PMGSY)re-development of railway stations. Additionally the Company has been entering intovarious strategic Memorandum of Understanding (MOU) to explore new business opportunities.
On the International front IRCON is aggressively pursuing infrastructure projects incountries such as Bangladesh and Sri Lanka. The Company will also be participating in theAfrican countries for railway and highway projects. IRCON has also signed an MoU with RZDInternational which is a state-owned Russian Railways Company to explore opportunitiesfor joint development of railways and other infrastructure projects in Asia Africa andLatin America. In order to pursue potential opportunities in railway highway and buildingprojects in Malaysia the MOU had been signed with M/s Apex Communication BerhadMalaysia.
Finally I would like to convey my sincere gratitude to all Board Members ourstakeholders for their constant support and trust in IRCON. Also I am humbled by theefforts of several frontline warriors such as doctors healthcare workers municipalofficials army and police amongst other people in the essential services. I am alsothankful for the whole-hearted support received from the Government of India otherMinistries and Departments of Government of India Financial Institutions BanksComptroller & Auditor General of India(C&AG) Statutory Auditors Cost Auditorsand Secretarial Auditors. I also sincerely place my appreciation for the good work doneby all the employees at all levels of the Company for their commitment and hard work thathas helped in delivering another successful year for the Company.
|Best Regards |
|S. K. Chaudhary |
|Chairman and Managing Director & CEO |
|Date: 31.08.2020 |
|Place: New Delhi |