"During the hard times our company exhibited time-tested operational endurancemeticulously built over the years. Among the infrastructure-construction companies we areindeed uniquely positioned with our execution skills and pragmatic financial risk andproject management capabilities".
Dear Shareholders
FY22 year's performance is yet again a testimonial of our company's ability to remainresilient during difficult times.
This year has been relatively a good year for our Company. I congratulate themanagement and our strong team of employees for tirelessly working for this success.
A Resilient NCC
It's a known fact that macro-economic volatilities make an adverse impact onbusinesses. The outcome of such shocks can at times be detrimental for many yet fewremain resilient during these adverse times as they learn adapt change and emergestronger. To remain strong has its foundation on the quality of corporate governancecapabilities such as strategic agility risk management and focus on quality. At NCC sinceits inception the company has gone through many economic upheavals. Over the years wehave set NCC as a benchmark among construction companies with our unique business modeland operational approach. During the tough years in the past we focused on making NCC'sinternal environment more resilient.
On Performance
Performance in FY22 is an outcome of our key strategies i.e. to remain asset lightstrong execution coupled with our financial discipline. We increased our revenue acrossour key business verticals. Margins during the year were subdued because of highercommodity prices. On a standalone basis our revenue during the year under review isRs.9930 crore as against Rs.7256 crore in FY21. Segment diversity across buildingmining railways electrical water & environment is one of the key differentiators atNCC. Our diversified order book asset is at Rs.39361 crore as of March 31 2022. Thisincludes new orders of Rs.12158 crore received during FY 22. I am happy that weconsiderably reduced our debts during the year.
External environment
We have stepped into FY23 amidst mounting global economic challenges and fiscalmeasures by our country to contain the impact. Retail inflation increased to an eight-yearhigh of 7.79% in April 2022. The RBI's twice hike in repo rate was impending due to theinflation spike and global macroeconomic scenarios.
At NCC since its inception the company has gone through many economic upheavals. Overthe years we have set NCC as a benchmark among construction companies with our uniquebusiness model and operational approach. Performance in FY22 is an outcome of our keystrategies i.e to remain asset light strong execution coupled with our financialdiscipline.
Increased interest rates will certainly make the cost of borrowing increase and impactthe overall feasibility of large infrastructure projects. However with inflationlingering persistently high RBI had little choice. I hope the hike in the repo rate wouldcontain rising commodity prices and ensure sustainable growth in the long term. The costof construction input materials like steel and cement had gone up significantly in thelast six months resulting in construction costs going up substantially. After the reporate hikes announced by RBI I hope going forward commodities prices for items like steeland cement to come down. The government in May 22 had imposed a 15% tax on exports ofseveral key categories of steel in a bid to control the increasing price of the alloy inthe domestic market. There was no duty on steel exports earlier. This initiative hasresulted in the steel prices coming down in early June22.
At NCC the management is keenly watching all the opportunities and challenges forevaluating and exploring opportunities and containing margin risks.
Key Drivers of the Business
> The country's infrastructure development plans are intact despite thesechallenges.
> In recent years there has been a significant clean-up happening in the banking aswell as public infrastructure ecosystems. NPAs have significantly come down since 2018.The Banks are in a position to support the infrastructure sector.
> There is an increase in the FY23 budget allocation for capital expenditure fromRs.6.02 lakh crore in FY22 to Rs.7.5 lakh crore.
> The finance ministry has asked key infrastructure ministries and departments tospeed up the project with a 60% CAPEx expenditure i.e Rs.4.45 Lakh crore target to reachby end of September 2022. The government has put in a monitoring mechanism to check theprogress of the projects.
Dividend
The Board of Directors of NCC Limited at its meeting held on May 11 2022 hasrecommended a Dividend of Rs.2/- (100%) per share on the Equity Share of face value ofRs.2/- each for the Financial Year 2021-22 subject to the approval of the Members at theensuing Annual General body meeting.
Corporate Social Responsibility
We continue to uphold our founding legacy of commitment towards society and channellingresources for holistic social upliftment. During the year our key social interventionswere in the areas of rural housing education healthcare and women and childcare. Duringthe year the company spent an amount of Rs.854 Lakhs towards 20 social projects in thestates of Andhra Pradesh Telangana Maharashtra and Utter Pradesh.
I take this opportunity to thank our employees customers shareholders suppliersbanks and Central and State Government agencies for their continued support.
Yours truly
Hemant M Nerurkar
Chairman.
