HINDUSTAN CONSTRUCTION COMPANY LIMITED
ANNUAL REPORT 2011-2012
DIRECTOR`S REPORT
To,
The Members of
Hindustan Construction Co. Ltd.
1. Report
Your Directors are pleased to present the 86th Annual Report together with
the Audited Accounts for the year ended March 31, 2012.
2. Financial Highlights
Particulars Year ended Year ended
March 31, 2012 March 31, 2011
Rs. crore Rs. crore
Turnover 4002.75 4143.97
Profit before Interest,
Depreciation, Exceptional 439.80 540.89
Items and Tax
Less: Interest 543.16 329.04
Depreciation 162.10 152.69
Exceptional Items 166.32 871.58 - 481.73
Add: Other Income 122.83 43.91
Add/Less: Exchange
Gain/(Loss) (9.53) 8.60
Profit/(Loss)
before Tax (318.48) 111.67
Less: Deferred Tax
Charge/(Credit) (96.23) 40.67
Profit/(Loss) after Tax (222.25) 71.00
Add: Balance brought
forward from last year 347.83 319.62
Transfer from Debenture
Redemption Reserve 16.67 4.16
Amount available for
Appropriation 142.25 394.78
Less: Appropriations
Dividend - 24.26
Tax on Dividend - 3.94
Debenture Redemption
Reserve 16.25 8.75
Transfer to General
Reserve - 16.25 10.00 46.95
Balance carried to
Balance Sheet 126.00 347.83
3. Dividend
In view of the losses incurred by the Company, your Directors have not
recommended any dividend for the financial year ended March 31, 2012.
4. Operations
The turnover of the Company at Rs. 4003 crore has shown a decrease of 3.4%
as compared to Rs. 4144 crore for the previous year. The loss before tax
is Rs. 318.5 crore (including exceptional item of Rs. 166.32 crore) as
compared to a profit of Rs. 111.7 crore for the previous year.
The lower turnover and operating margins in an environment of high interest
costs has put severe pressure on the Company`s profitability. Non payments
of awarded claims in arbitrations added to the liquidity problem and debt
servicing ability and increased interest costs further. The Company
approached lender Bankers with a refinancing proposal for bilateral
refinancing of the loans with larger tenure. However consensus among
Bankers could not be reached. Consequently, the Company approached the
leading bankers and they have referred their total debt to the Company of
around Rs. 3300 crore to the Corporate Debt Restructuring (CDR) Cell. The
CDR Empowered Group has formally admitted the proposal for restructuring on
March 29, 2012 by a super majority of lenders. Under the regulatory frame
work of the Reserve Bank of India (RBI), the CDR forum caters to an
official platform for both the creditors and borrowers to amicably and
collectively evolve policies for working out debt restructuring plans. The
broad contours of this restructuring exercise involves restructuring of
debt in terms of payback period, deferring certain interests on term loans,
concessional rate of interest and provision of further need based working
capital and loans for capex. This debt restructuring will provide the
Company with breathing space to work on improving operational margins and
securing a larger order book to improve turnover in future years. Apart
from focusing on cost cutting measures and cost effective execution, the
Company will also focus on sale of non-core assets to improve its balance
sheet position.
Your Directors are pleased to inform that during the year under review, the
Company has secured the following major contracts.
* Limbdi Branch Canal Project, Gujarat
Contract Value: Rs. 299 crore
* Tehri Pumped Storage Project, Uttarakhand
Contract Value: Rs. 1843 crore
* Superstructure of Bogibeel Rail-cum-Road Bridge, Assam
Contract Value: Rs. 987 crore
* Swarnim Gujarat Saurashtra-Kutch Water Grid Programme. Package NC 31,
Gujarat
Contract Value: Rs. 289 crore
* Single Line Tunnel No. 10 between Jiribam and Tupul, Manipur
Contract Value: Rs. 162 crore
The total balance value of works on hand as on March 31, 2012 is Rs.
15,336 crore.
Decisions are awaited from various clients for tenders submitted by the
Company (directly or in JV) for 15 projects amounting to about Rs. 7,745
crore. Tenders for various packages for 32 projects worth about Rs. 27,485
crore are expected to be submitted in the near future. The Company has also
submitted prequalification bids for 12 projects worth over Rs. 7,588
crore, which are currently under evaluation. The Company is confident of
securing a sizeable share of these new projects.
Operations of Subsidiaries
(i) Lavasa Corporation Ltd. - Integrated Urban Development & Management
a) Operations
Lavasa is a planned hill city being developed by Lavasa Corporation Ltd., a
subsidiary Company. Located in the western region of India, the city is an
hour drive from Pune and three hours drive from Mumbai. It is one fifth the
size of Greater Mumbai Municipal limits. The master plan of Lavasa is
developed by internationally renowned design consultant HOK, USA. The
master plan, recipient of many international awards, is based on the
principles of New Urbanism that brings together all the components
essential to daily life in a more organized manner. Lavasa has many
pioneering initiatives to its credit - technology leadership, e-Governance,
city developed using Geographical Information System (GIS), etc. Lavasa is
planned for a permanent population of around 3 lakh residents and a tourist
inflow that is envisaged at 20 lakh per annum. It aims to provide a perfect
work-life balance with an unique combination of technology and
infrastructure advancements. The city will have a 365 day economy with a
host of non polluting industries being the main economic driver which
includes R&D and training centres, IT and biotech industry, KPOs and those
related to art, fashion and animation.
In terms of awards and accolades, the thought leadership platform Lavasa
Future Cities won the Silver Medal at the Olive Crown Awards for creative
excellence in `Green` communication. This award recognizes pioneering work
in communicating sustainability and has been instituted by the Indian
chapter of the International Advertising Association (IAA) with Knowledge
Partner TERI (The Energy Resource Institute). The Limca Book of Records
also acknowledged the Lavasa Women`s Drive 2011 (and 2010) as `India`s
Biggest All-Women Car Drive`.
On the hospitality front, the hospitality units which are already
operational are: Lavasa International Convention Centre managed by ACCOR,
Mercure Lavasa, Fortune Select Dasve, Ekaant - The Retreat, Dasvino Town
and Country Club and Waterfront Shaw Serviced Apartments. Other than this,
Radisson, ITC Luxury Collection, Choice Hotel, J. Vohra Hospitality,
Novotel by Accor, Pullamn by Accor, Hilton, Ramada, Oakwood, Two Langham
properties, Holiday Inn, Days Inn Hotel are already tied up and many more
are to follow in quick succession giving Lavasa a new hotel property every
6 months.
An equal amount of progress has been made in the education space. `Christel
House School, Lavasa` entered into its second year of operations with 209
students. After the success of the first year, in the year 2011-12, the
phase - II of `Christel House Lavasa` was launched. `Ecole Hoteliere
Lavasa` started its third batch and received academic certification from
Ecole hoteliere de Lausanne to conduct the Masters Programmes and for
offering and conducting degrees from IGNOU. Next on the agenda this year,
is Lavasa Musoorie International School powered by Educomp.Other than this,
Ryan International for performing arts, Birla Edutech (by Yash Birla) IB
school, Gems International IB school, Management Institute by Bodhi
Education, Euro Kids with a primary and pre-primary school, The Institute
of International Business Relations Germany, NSHM Knowledge Campus of
Kolkata, Symbiosis-Pune and Christ University-Bangalore are also tied up
for setting up their campuses.
Professional and Executive Education has also taken off in Lavasa in a big
way with Car Design Workshop by Chris Bangle (Scuola Politecnica di Design)
the world renowned school of design and communication based in Milan,
Security Awareness Workshop by Max Security (Israeli Security experts) and
Massachusetts Institute of Technology who have conducted their pilot
program based on Airport and Airline Systems, Planning and Management. This
has prepared a platform for them to conduct similar programmes at Lavasa in
the future.
On the retail front, American Diner, Granma`s Bakery, Brewberry`s Cafe
Memories, Baskin & Robbins Kiosk, Tabakh, Oriental Octopus, Amul Dairy,
Chor Bizarre, Subway, Hungry hippo, Krazy Koala Kiosk, Twisted Turkey
Kiosk, Fruity bat, Pizzavala, Natural Ice Cream, Bizarre Baracuda, Design &
Build Store - Home Town are already operational.
Positive sales trend continued throughout the year, with the Company giving
possession to 150+ residential units in Dasve. Residential sales of the
first town Dasve have almost been completed. There have also been many
enquiries for further residential units in Lavasa. Sales for the second
town Mugaon was launched on the occasion of Gudi Padwa in March 2012.
Almost 75% of the inventory has been sold out within just a fortnight of
the launch. It is also heartening to know that there has been less than 1%
cancellation requests from customers inspite of the Ministry of Environment
and Forest (MoEF) status quo. The current database of enquiries for the
purchase of apartments and villas exceeded almost eighty thousand which
indicates a healthy demand.
Institutional sales and commercial tie ups have also made progress with a
number of MoUs being signed. Land sale has been made to State Bank of India
who plan to set up a retail bank and a training centre cum guest house at
Dasve. Development of an integrated Corporate Training Centre with a
residential component at Mugaon is also being planned by a consortium led
by the Giria Investment Corporation, Bengaluru. The Art of Living centre is
also slated to open at Mugaon. Sales are also fast picking up in our
commercial office spaces ventures - 247 Business Square and 247 Business
Avenue at Lavasa. These are just initial steps towards a 365 day - 247
economy that Lavasa is planning to accomplish. In the next year, the target
is for many such industries including IT&ITES, Biotechnology, Knowledge
Parks, R&D centres and Corporate Training centres to enable permanent
residents to move in.
On the tourism front, X-Thrill adventure academy, Water Sports, Noes park
(games Arcade), Nature trail, Train on wheels, Kids play Area, movies,
parks & gardens are already operational. Other than this, Space theme park
(edutainment), Tennis Australia, Manchester City Football Club are also
already tied up.
Lavasa is also tying up with I Dream to create all Lavasa tourism plan
including a Historical theme park. This project is being spearheaded by Mr.
Shirpal Morakhia, businessman who created Sharekhan. Lavasa is also tying
up with Engage Plus, a New Zealand Company, for adventure sports
activities, to give adventure experience at Dasve and nearby areas.
Events continued to be a key focal point and the year saw a multitude of
events that increased the salience of the brand and helped engage with the
consumer on-ground. The fourth edition of the signature brand event Lavasa
Women`s Drive was held on February 26, 2012. The event which captures
multiple aspects - fun, adventure and spirit of the Indian woman combined
with her passion for social causes was flagged off from Mumbai and Pune.
This year, Lavasa Women`s Drive also launched the `Women in the Driving
Seat` awards where women achievers who had made an impact and created a
benchmark were applauded in various fields. These included Vidya Balan
(Cinema), Dr. Swati Piramal (Corporate), Dr. Firuza Parekh (Healthcare),
Ekta Kapoor (Television), Tina Tahiliani (Fashion), Shaheen Mistry
(Education), Abha Narain Lambah (Community Development), Neela Satyanarayan
(Administration) and Devieka Bhojwani (Cancer Awareness).
Lavasa was the destination partner for the Pantaloons Femina Miss India
(PFMI) pageant for the fourth year in succession. Residential sales of the
second town at Mugaon was launched in the presence of the PFMI finalists.
On this occassion, handover of possession of the residences built at the
first town Dasve to the 100th and 101st apartment owner has also been
accomplished.
Lavasa has collaborated with technology leaders like Wipro Limited and
Cisco Systems to plan, implement and manage Information and Communication
Technology (ICT) services across Lavasa Hill City. The strategic
partnership is intended to focus on providing integrated and effective
solutions for enhancing technology leadership within the hill city. The
Company founded as a result of this venture is named as `My City Technology
Limited`. This venture is currently deploying a futuristic telecom network
infrastructure to offer its residents and visitors a life changing
technology experience.
Lavasa now has a new post office, police station, a public safety centre,
citizen call centre, a hospital managed by Apollo, banks (Union Bank of
India, State Bank of India), a petrol station, pharmacy, STP, WTP, rental
housing, an arcade and transit system. In the months ahead it will open
grocery and additional retail shops.
The city`s drinking water is fit for consumption straight from the tap
without the need for filtration; its sewerage is treated to almost drinking
water standards before being reused for irrigation and other non-potable
purposes; its power distribution grid is nearly 99% reliable and the young
city is already on the cutting edge of urban environmental sustainability
initiatives. The Company plans to
have its e-Governance portal and a citizen call centre to maintain its
focus on the needs of residents and visitors, and it has already opened
parks and play areas to the public.
Lavasa continued its focus on branding and communication activities through
2011-12.
Importantly,Lavasa was granted Environmental Clearance by the Ministry of
Environment & Forests (MoEF) for the first phase of 2000 hectares (Ha) in
November 2011. A large scale PR exercise across media, i.e., print, TV and
online was undertaken welcoming the news. Social Media and the Lavasa
website disseminate related information and for addressing queries as a
part of the exercise. Media engagement and relationship building exercise
continued throughout the pre-clearance to post-clearance period. A new
brand campaign At Work" was released in 2012. This was to reassure the
general public at large that developmental work has begun at Lavasa.
Lavasa City Guide - a one - stop source on all information on Lavasa and a
new 3D walkthrough film - `Mugaon - A Virtual Tour` was created. A new
property `Lavasa Holidays`, to promote tourism at Lavasa was launched. An
engagement program called Brand Conversations was conceptualized which will
comprise of informal conversations with the employees across the various
departments on how brand principles should be applied to day-today
functioning.
Digital and social media was being extensively used for information
dissemination and creating conversations on a number of platforms on the
web including travel, tourism and urban management portals. These
engagement initiatives saw an increase in the fan base of the Lavasa
Community page on Facebook to almost 90,000 fans.
b) Status update on Environment Clearance from Ministry of Environment and
Forests (MoEF)
On November 25, 2010, Ministry of Environment & Forests ("MoEF"),
Government of India issued show cause notice under Section 5 of the
Environment Protection Act, 1986 to Lavasa Corporation Limited ("LCL")
alleging violations of the Environmental Impact Assessment notifications of
1994 as amended in 2004 and superseded in 2006 ("EIA Notifications"). The
said notice directed LCL to show cause within 15 days of the receipt of the
said notice as to why the alleged unauthorized structures at Lavasa site be
not removed in entirety and pending the decision on show cause notice by
MoEF, it directed LCL to maintain status-quo ante for construction and/or
development.
LCL has filed Writ Petition No. 9448 of 2010 against the impugned show
cause notice in the Bombay High Court seeking inter alia, quashing of the
said show cause notice and stay on status quo pending the decision on the
Writ Petition. On December 7, 2010, the Counsel for MoEF made a statement
in the Bombay High Court that the words "status quo ante" in the MoEF`s
show cause notice dated November 25, 2010 may be read as "status quo", as
the word "ante" is a mistake. Further, vide its order dated December 22,
2010, the Hon`ble Court while admitting the Writ Petition directed MoEF and
Central and/or State level Environment Impact Assessment Authority to visit
LCL`s project at Lavasa and inspect it thoroughly for at least three days
to undertake the survey / inspection and pass an order by January 10, 2011.
In the same order dated December 22, 2010, the Hon`ble High Court clubbed
together 4 public interest litigations filed against LCL (`other PILs`)
inter alia in respect of lease of land by Maharashtra Krishna Valley
Development Corporation to LCL, alleged violations by LCL of the
Maharashtra Agricultural Lands (Ceiling on Holdings) Act, 1961 and the
Environment (Protection) Act, 1986.
The members of MoEF committee along with officials of Government of
Maharashtra visited Lavasa site on 5th, 6th and 7th of January, 2011.
Vide its order dated January 17, 2011, MoEF observed that LCL is in
violation of EIA Notifications and the construction activity undertaken
thereon is unauthorized, in violation of the above notifications and is
environmentally damaging. However, taking into account the submissions made
by LCL, employment generated, investments already made and third party
rights already accrued, MoEF stated that it is prepared to consider the
project on merits with terms and conditions.
On January 24, 2011, LCL filed another Writ Petition being No. 811 of 2011
in Bombay High Court challenging the aforesaid impugned order dated January
17, 2011 passed by MoEF
On January 27, 2011, Writ Petition no. 811 of 2011 and Writ Petition no.
9448 of 2010 along with other PILs were listed in Hon`ble High Court.
However, the Hon`ble High Court, upon LCL`s plea was pleased to adjourn the
matters for 45 days in view of the ongoing discussions with MoEF on
amicable settlement and posted all LCL connected matters on March 10, 2011.
LCL on February 7, 2011 submitted a "without prejudice" application to MoEF
for Environment Clearance (EC) and submitted various documents to MoEF,
from time to time, for its consideration.
LCL attended & presented at the 97th & 98th meeting of the Expert Appraisal
Committee (`EAC`) on CRZ, Infrastructure & Miscellaneous Projects and New
Construction and Industrial Estates Projects scheduled on 14th & 15th
February, 2011 & 3th & 4th March, 2011 respectively at New Delhi and
submitted various supporting documents and also made oral representation.
The minutes of the 98th meeting of EAC held on 3rd & 4th March, 2011 at New
Delhi inter alia state that, the EAC recommends that in view of the
investments made by the third parties, infrastructure already created in
the Dasve village and taking note of the reported hardships highlighted
repeatedly by LCL of the construction workers, pending construction work of
257 residential buildings, which are above plinth level, may be allowed
subject to certain conditions such as (i) no hill cutting, digging,
excavation, etc, (ii) the above constructions shall only be limited to the
area for which permission was granted by the Collector, Pune, (iii) a high
level Verification and Monitoring Committee shall be constituted, (iv)
commitment from LCL to earmark necessary / adequate funds as per report to
be submitted shortly regarding the quantum of penalty/ recompense and
creation of Environmental Restoration Fund and (v) other conditions as
stipulated by MoEF / other State agencies of State Government shall also be
complied with.
In view of the above stipulations, the Committee recommended to MoEF to
permit LCL to complete 257 units subject to the acceptance of the five
conditions listed above and also subject to submission of information /
documents as per the above observations.
Further EAC also stated that consideration of the proposal would depend on
submission of the requisite information as detailed above.
On March 30, 2011, LCL filed an application to withdraw the Writ Petition
no. 811 of 2011 and Writ Petition no. 9448 of 2010 with a liberty to file a
fresh one as and when need arises. On hearing all the parties including PIL
litigants, the Hon`ble High Court suggested that in order to take care of
the apprehensions of the PIL litigants, LCL`s counsel and MoEF counsel
should make a statement that status quo order dated January 17, 2011 passed
by MoEF should continue to operate till show cause notice is decided by
MoEF. LCL was of the view that its writ petitions should not be withdrawn
with such an adverse order and hence decided not to withdraw its writ
petitions and matter was then adjourned to June 15, 2011.
On April 6, 2011 LCL attended the 99th meeting of EAC and made presentation
before members of EAC and replied to the queries raised by the EAC in
relation to the vacation of status quo on the construction work in area
admeasuring 681.27 hectares, pending consideration of its 1st phase
Environment Clearance (EC) of 2000 Hectares. As per the Minutes of the 99th
Meeting of EAC, EAC decided that proposal of the Company for 681.27
hectares be deferred and be considered along with the whole proposal of
2000 hectares.
LCL vide its letter dated April 30, 2011 submitted para wise reply to the
points raised by the EAC in its 99th Meeting & requested to grant EC to
681.27 Hectares.
On April 12, 2011, LCL as per the directions of the EAC, submitted revised
Environment Impact Assessment report and baseline data / maps etc. The
100th meeting of the EAC took place on May 12, 2011. LCL made presentation
in relation to the queries raised in the previous meeting with respect to
the application for EC for 1st Phase (2000 hectares). On May 21, 2011, LCL
submitted para wise reply to the points raised in the EAC`s 100th meeting
dated May 12, 2011. On May 31, 2011 the senior officials of LCL along with
consultants attended the 101st meeting of EAC and made presentation in
relation to the queries raised in the previous meeting. As per the Minutes
of the 101st meeting the EAC recommended the proposal for Environment
Clearance for the 1st Phase (2000 hectares) with the conditions mentioned
therein. On June 10, 2011 MoEF directed to the Government of Maharashtra to
initiate necessary legal action under Environment (Protection), Act 1986
against LCL.
On June 15, 2011 LCL`s Writ Petition No. 811 of 2011 and Writ Petition No.
9448 of 2010, were listed on board in the Bombay High Court. The MoEF filed
an Affidavit in the Company`s Writ Petitions stating that ministry has
accepted the recommendations of EAC subject to preconditions. The learned
Additional Solicitor General appearing for MoEF stated that the MoEF will
be passing an order within a reasonable time. The matter was then adjourned
to July 12, 2011. On June 27, 2011 MoEF, Government of India addressed a
letter to LCL thereby enclosing the Minutes of the 101st Meeting held on
May 31, 2011 and also informed the five pre-conditions. It further
requested LCL to submit all the documents as per the pre-conditions. The
five pre-conditions, reproduced verbatim, are:-i) The constructions /
development carried out till now are in violation of Environment
(Protection), Act 1986. The violation has to be dealt as per OM No. No.J-
11013/41/2006-IA. II (I) dated November 16, 2010. As per 4(ii) of the above
OM, LCL shall submit a written commitment within 90 days, in the form of a
formal resolution from Board of Directors of the Company for consideration
of its environment related policy / plan of action to the Ministry to
ensure that violation of the Environment (Protection), Act etc. shall not
be repeated.
ii) The scale and intensity of development of the hill town shall be as per
Hill Station Regulations and shall be revised based on developable /
buildable area. A clear demarcation of "no development / construction zone
/ area" shall be identified comprising of (a) all water bodies (b) forest
lands / forest like lands and (c) areas steeper than 1:3. The developable /
buildable areas shall be verified through State Government/Director Town
Planning and the calculation of FSI shall be made accordingly. No
development shall be taken up in areas steeper than or equal to 1:3.
iii) The FSI calculation shall be worked out separately based on the land
uses and shall not be averaged for the calculation of FSI.
iv) At least 5 % of the total cost of the project shall be earmarked
towards the Corporate Social Responsibility (CSR) and item-wise details
alongwith time bound action plan shall be prepared and submitted to the
Ministry`s Regional Office at Bhopal. Implementation of such program shall
be ensured accordingly in a time bound manner.
v) LCL shall submit an undertaking / commitment to earmark necessary /
adequate funds as per report to be submitted shortly regarding the quantum
of penalty / re-compense and creation of Environment Restoration Fund.
On July 12, 2011 LCL sent an e-mail and a letter to the Director, MoEF,
requesting for hearing on the pre-conditions mentioned in the letter dated
June 27, 2011 as the same were unreasonable.
On July 27, 2011 LCL vide its letter submitted to MoEF its case in respect
of the pre-conditions and also requested that the case of LCL may be
processed further for appropriate decision without waiting for the date of
hearing which was scheduled for August 5, 2011.
Further, on August 5, 2011 the officials of LCL appeared before the panel
and made written submission along with the Board Resolution in respect of
the pre-conditions as stated in MoEF`s letter dated June 27, 2011. Thus,
LCL complied with the pre-conditions as stated by MoEF.
Considering the delay by MoEF in issuing EC, LCL filed another Writ
Petition on August 30, 2011 in the Hon`ble Bombay High Court seeking
directions interalia that (a) it be declared that LCL has been granted /
deemed to have been granted environmental clearance for Phase I of the
project or in the alternative (b) the Hon`ble Court be pleased to issue a
writ of mandamus or a writ in the nature of mandamus or any other
appropriate writ, order or direction commanding the MoEF, to grant
environmental clearance to Phase I.
On September 5, 2011 LCL`s Writ Petitions along with other PIL`s were
listed on board. The counsel for MoEF submitted that they will pass final
order by September 23, 2011.
On September 23, 2011 all related matters were listed on board. After
hearing the parties, Hon`ble High Court granted three weeks time as prayed
for by the Ld Additional Solicitor General appearing for MoEF for passing
the final order. The Hon`ble High Court made clear that this three weeks
time is granted by way of a last chance for passing final order. The
matters were adjourned to October 18, 2011.
On October 13, 2011, MoEF passed an order thereby communicating that "As
the pre-conditions on the credible action on violation of EIA Notification
2006 has not been complied with, the Ministry is unable to issue the EC to
the 1st phase of Hill City project (2000 hectares) of Lavasa. The final
decision on the EC cannot be taken till all the pre-conditions are met
including credible action by the State Government of Maharashtra and
subject to final orders of the Hon`ble High Court of Bombay as the matter
is sub-judice".
On October 20, 2011 all LCL matters were listed on board of Hon`ble Bombay
High Court. LCL`s Counsel also pointed out that time and again the MoEF has
sought for adjournments but failed to pass the final order and the inaction
on the part of MoEF in not passing final order would virtually amount to
misleading the Court. The Ld. Special Counsel for the State made statement
that the State Government will initiate necessary action in accordance with
the law, against LCL within two weeks. Thereafter MoEF Counsel made a
statement that MoEF will pass final order within one week thereafter. In
view of the statements made by the respective counsels for State Government
and MoEF, the Hon`ble court gave three weeks time to MoEF to pass final
order as prayed for and observed that this three weeks time shall not be
extended in any circumstances. The matters were adjourned to November 16,
2011.
On November 4, 2011, Maharashtra Pollution Control Board (MPCB) filed a
criminal complaint against LCL & 14 Others before the Chief Judicial
Magistrate, Pune under Section 15 and 16 of the Environment Protection Act,
1986 (EP Act) for alleged violations of the EP Act read with EIA
Notification 2006.
On November 9, 2011, MoEF passed an order and pursuant to the same accorded
Environment Clearance to the 1st phase of the LCL project subject to
certain conditions as mentioned therein.
On November 16, 2011 all LCL matters were listed on board. MoEF filed its
affidavit in reply to LCL Writ Petition no. 7276 of 2011. Matters were
adjourned to December 12, 2011.
On November 17, 2011 LCL submitted certain documents to The Deputy Director
(I.A), in compliance of Condition No. ii Part A - Specific Conditions,
Construction Phase.
On November 24, 2011 the Chief Judicial Magistrate, Pune passed an order of
issuance of process in the Criminal matter and the matter was then
adjourned to January 30, 2012.
On December 6, 2011 LCL vide its without prejudice letter addressed to The
Advisor, I A Division of MoEF, requested for exclusion of the K T Ravindran
committee report from the EC order dated November 9, 2011 and also
requested for a hearing. On December 7, 2011 LCL vide its without prejudice
letter addressed to The Advisor, I A Division of MoEF, informed that there
are certain discrepancies and contradictions in the EC dated November 9,
2011 and requested for reconsidering the pre-condition no (iv) and also
requested to withdraw the same. LCL also addressed a letter to The Advisor,
I A Division of MoEF, and requested to furnish papers i.e. Terms of
Reference (TOR) of Prof K T Ravindran Committee, interim report dated March
7, 2011 presented by expert committee to MoEF, notings made by each of the
members of the K T Ravindran committee, etc.
On December 9, 2011 LCL filed Appeal being no. 36 of 2011, u/s 16(h) of the
National Green Tribunal Act against The Union of India, MoEF & Anr, before
the National Green Tribunal (NGT) at Delhi, for challenging part of the EC
order dated November 9, 2011 more particularly about the Prof. K T
Ravindran Committee Report and the conditions imposed by it.
On December 12, 2011 all LCL matters alongwith other connected matters were
listed on board before Hon`ble Bombay High Court. The matters were
adjourned to January 31, 2012.
On January 10, 2012 LCLs Appeal No. 36 of 2011 filed before NGT was on
board and the Tribunal was pleased to pass order "Notice before Admission"
and the matter was adjourned to February 17, 2012.
On January 30, 2012 Criminal Complaint filed by MPCB was on board of Chief
Judicial Magistrate, Pune and the same was adjourned to March 17, 2012.
On January 31, 2012 all LCL matters along with other connected matters were
listed on board before Hon`ble Bombay High Court, Division Bench of Justice
Bobde & Justice Dhanuka. The Bench recsued to hear the LCL matters.
On February 6, 2012 one of the villager Shri Dyneshwar Shegde filed Appeal
(being No. 9 of 2012) before Hon`ble National Green Tribunal challenging
the EC order dated November 9, 2011 passed by MoEF in favour of LCL.
On February 17, 2012 NGT Appeal filed by LCL was listed on board of Hon`ble
Tribunal at Pune and the same was adjourned to April 16, 2012.
On February 21, 2012 all LCL matters along with other connected matters
(except PIL (L) 90 of 2010 & WP 2737 of 2011) were listed on board before
Hon`ble Bombay High Court Division Bench of Justice Khanvilkar & Justice N
Jamdar. The Bench recsued to hear LCL matters as Justice Jamdar had
appeared for MoEF.
On February 22, 2012 Shri Dyneshwar Shegde`s Appeal was on board before
Hon`ble NGT, Delhi. LCL intervened in the matter & opposed the application
for condonation of delay filed by the Appellant. The matter was adjourned
to March 20, 2012.
On March 17, 2012 Criminal Complaint filed by MPCB was on board before
Chief Judicial Magistrate, Pune and the same was adjourned to April 20,
2012.
On March 20, 2012 Shri Dyneshwar Shegde`s Appeal was on board before
Hon`ble NGT, Delhi. LCL filed its affidavit in reply opposing the
application for condonation of delay filed by the Appellant. The matter was
adjourned to April 12, 2012.
On April 12, 2012 Shri Dyneshwar Shegde`s Appeal was on board before
Hon`ble NGT New Delhi. Submissions were made by the parties on the
application for condonation of delay in which the parties apprised the NGT
on the facts of the appeal. Advocate for Dyneshwar Shedge prayed for time
to file rejoinder. The Hon`ble NGT directed him to file rejoinder before
April 18, 2012. The matter was adjourned to April 24, 2012.
On April 16, 2012 NGT Appeal filed by LCL was listed on board of Hon`ble
NGT at New Delhi. The Hon`ble NGT directed MoEF and MPCB to file their
affidavits before July 2, 2012. The matter was adjourned to July 19, 2012.
On April 20, 2012 Criminal Complaint filed by MPCB was on board before
Chief Judicial Magistrate, Pune and the same was adjourned to May 14, 2012.
On April 24, 2012 Dyneshwar Shegde`s Appeal was on board before Hon`ble
NGT, New Delhi. The Advocate for Appellant filed rejoinder. Arguments by
all the parties got concluded. The Hon`ble NGT has reserved the Order. No
further date is fixed.
ii) HCC Real Estate Ltd.
HCC Real Estate Ltd (HREL), a wholly owned subsidiary of your Company, has
inherent skills and resources to develop and deliver high-value real-estate
projects that helps in building sustained communities across India. The
focus is to develop `state-of-the-art` projects which would provide world
class quality, engineering and technology and create a unique value
proposition for the customers.
Project Management Services
With successful and timely completion of 247Park, the Project Management
department of the Company was entrusted with the responsibility of
providing Project Management Consultancy (PMC) for various projects for our
associate companies such as Charosa Wineries Ltd., Panchkutir Developers
Ltd. The scope of the work included project management, health-safety and
environment management.
After completing these projects, the project management team is hopeful of
getting some projects from external clients. In the present trying
circumstances, income from the project management consultancy business is
expected to add to the revenue of the Company by utilizing the technical
skills available within the Company.
Projects under execution
1. 247 Park Phase II
The Company has initiated the regulatory process for obtaining the approval
for development of commercial office building with approx. 400,000 sq ft of
saleable area and approx. 800,000 sq ft total construction area. The
project is based on the "Public-Parking Policy" finalised by Municipal
Corporation of Greater Mumbai (MCGM) for which the Company has submitted
the application. The Company has received preliminary approvals from Jt.
Commissioner-Traffic for 520 car parks on the basis of extensive traffic
surveys conducted by traffic consultants. Subsequently the architects,
structural engineers and traffic consultants have prepared the reports for
submission to the Parking committee constituted by MCGM which has approved
location and detailed building drawings of the scheme afte extensive
reviews. The Company has also commenced work on acquiring various other
NOC`s including from Fire Department of MCGM.
During the year, the project team has conducted prequalification exercise
for the civil and other contractors for the construction The Company
envisages completion of the construction of the project by 2014. The
marketing and sales department of the Company has submitted Request for
Proposals (RFP) for built-to-suit (BTS) commercial office space requirement
and the Company is hopeful of receiving good response riding on the success
of 247Park Phase I.
2. Urban Renewal (Slum Re-development Project), Powai
MOU-cum-Development Agreement and Power of Attorney were executed by land
owner in favour 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 inspite 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 we have
obtained interim orders.
3. Urban Renewal (Slum Re-development Project), Vikhroli (E)
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. Out of the proposal
submitted to Slum Redevelopment Authority (SRA) for Phase-I of about 2000
slums, Annexure II has been displayed for 750 tenants of 4 Societies & for
the balance the work is in progress. Slum declaration of Phase-I land is
challenged which has been set aside by the Special Slum Tribunal.
Subsequently the litigant filed Writ Petition challenging the above said
Order of the Slum Tribunal in High court. Hearings from both the sides are
completed and the judgment is awaited.
4. Integrated Township Development, Thane
HRL (Thane) Real Estate Ltd. a subsidiary of HREL initiated the acquisition
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 the Company. The Company continued its activity of
securing its position for land title and other documentation.
5. Integrated Township Development ,Pune near Hinjewadi IT Park (Phase 1)
Maan Township Developers Ltd, a subsidiary of HREL has acquired approx. 28
acres of land and the Development Agreement and Power of Attorney have been
executed in favour of Company. The Company continued its activity of
securing its position for land title and other documentation.
6. Integrated Township Development Land, Wadiwarhe, Nashik
Nashik Township Developers Ltd a subsidiary of HREL has acquired 62 acres
of land for which Development Agreement and Power of Attorney have been
executed in favour of Company. The Company is exploring sale option as well
as various development options with education service providers in view of
improved connectivity to the region.
7. Water Front City at Dholera ,Gujarat
HCC signed MOU with Government of Gujarat for setting up of proposed Water
Front City covering 4000 acres and Renewable Energy Park covering 1500
acres at Dholera SIR with total proposed investment of Rs. 52,000 crore.
The Company finalised the "Vision Statement" for development of "Water
Front
City" after discussion and meetings with Gujarat Government Officials and
Ministers. The Company is exploring joint development opportunities with
Samsung C & T Corporation and other reputed developers. Concept Development
Report on proposed City has been submitted to Gujarat Infrastructure
Development Board (GIDB). Proposal of allotment of 1900 acres of land in
Bavliyari Village has been received from Govt. of Gujarat. Letter
requesting land in Zone 1 (TP1) & Zone 2 (TP2) closer to Ahmedabad &
payment terms has been sent to Dholera Special Investment Regional
Development Authority (DSIRDA). The discussion on the subject is in
progress.
8. Charosa Wineries Limited, Dindori, Nashik
Till date purchase of total 211 acres of land has been completed. Purchase
of another 27 acres of land is in progress as on date. Total land area
under cultivation is 81 acres. During the year, the Company signed a PMC
agreement with the Project Management Team of HREL for providing project
management, health-safety and environment management. Construction of
Winery Building is at an advanced stage. The Company has received approval
to procure land under Section 63-1A of Bombay Tenancy and Agricultural
Lands Act (BTAL) for Wine Tourism Project. The Company has also been
accredited under "Mahabhraman" scheme of Maharashtra Tourism Development
Corporation (MTDC) to operate tour packages within the state of
Maharashtra. Further the Company has obtained registration from MTDC as a
service provider for tourism.
Internationally renowned Master Planners and Architects, HOK have done
master planning for setting up wine tourism project consisting of tourist
resorts, cellar-doors, wine bars, restaurant, theme park, adventure sports,
amphitheater, Wine spa etc. Harvesting and crushing of nearly 200 MT grapes
has been completed during the year. During the year Company fully repaid
the loan taken from the bankers.
(iii) HCC Infrastructure
HCC Infrastructure Company Ltd, a wholly owned subsidiary of your Company,
has in its Rs. 5,500 crore portfolio, six National Highways Authority of
India (NHAI) road concessions.
The Company, through its subsidiaries HCC Concessions and HCC Power, has a
development focus primarily in the roads, water and power sectors. Your
Company follows a disciplined investment strategy that maximizes
shareholder value by generating stable and rapidly growing streams of cash
flow over concession periods ranging from 15 to 30 years. Besides obtaining
a construction edge provided by HCC`s E&C division, HCC Infrastructure has
developed a strong management team whose expertise extends from concept
innovation and evaluation of risk & return, to construction management and
operations. Along with a focus on quality and timely execution, the Company
is committed to provide reliable, safe and world class operations and
maintenance services to the country`s end users.
Fund Raising Initiative:
Your directors are pleased to inform you that in September 2011, HCC
Infrastructure Co. Ltd, wholly owned subsidiary Company raised Rs. 240
crore by diluting 14.5% equity stake in HCC Concessions to the Xander Group
at an equity valuation of Rs. 1,650 crore. This equity placement was
completed during challenging market conditions and showcases both the
quality of the HCC Infrastructure`s portfolio and the conviction in their
management team. The Xander Group Inc. is a global investment firm focused
on the infrastructure, hospitality, retail and real estate sectors. Since
2005, the firm has committed over US$1.8 billion of equity capital to the
Indian market across five dedicated India funds. Your Company remains
committed to capital raising at attractive valuations to meet its equity
requirements for future growth.
Current Road Portfolio:
Your directors are pleased to inform you that during the course of the
year, the Company successfully achieved the provisional completion of Dhule
Palesner Highway project and started toll collection on February 11, 2012,
four months ahead of schedule. This is the third such consecutive early
completion, showcasing our project management and construction expertise.
Toll collection is significantly ahead of estimates and is expected to grow
strongly.
The three highway projects in West Bengal (NH34) are under construction and
traffic growth on the road over the past two years has significantly
exceeded expectations.
During the year, HCC Concessions submitted 9 NHAI bids and 28 Request for
Qualification
(RFQs). HCC Concessions partnered with VINCI Concessions for certain large
bids to diversify risk and increase competitiveness. While your Company was
unsuccessful in procuring a new project this year, it maintained its
investment discipline while observing that several competitors were
aggressively obtaining projects at detrimental or unsustainable values. The
Company will continue to bid for NHAI projects in the next financial year,
where approx. 8,000 km of roads is expected to be awarded. Your Company is
also evaluating state road opportunities.
Status of Operational Assets:
Dhule Palesner Highway Project (NH3)
The project started user fee collection in February 2012, four months ahead
of schedule. In FY09, NHAI awarded the development of four lane highway
from Km 168.500 to Km 265.000 on the Maharashtra/MP border to the
consortium led by HCC Concessions on BOT (toll) basis.
The project road (89 km) starts at Dhule in Maharashtra and ends at
Palesner on the border of Maharashtra and MP on National Highway 3. The
project is being operated by an in-house operations and maintenance team.
The concession period is 18 years, including a construction period of 30
months. The highway is being developed in partnership with Sadbhav
Engineering Ltd and John Laing Investments Ltd (UK) with an investment of
Rs. 1,420 crore.
Delhi Faridabad Elevated Expressway (NH2) (dfskywayT)
The dfskywayT started user fee collection in November 2010. This project
was also completed ahead of schedule. The project road is a 4.4 km elevated
highway connecting Delhi and Faridabad, Haryana and serves inter-state and
local traffic. With immediate connectivity for Faridabad to the heart of
Delhi due to dfskywayT, one expects much higher growth for Faridabad, which
has recently been cited as the 8th fastest developing city by The City
Mayors Foundation, UK.
The project has remaining concession period of approximately 17 years. HCC
was awarded a 20-year concession in 2008 to design, construct and operate
this asset by the NHAI.
Nirmal (NBL) Annuity (NH7)
The SPV has received timely annuity payments over the last year and the
operations and maintenance are being managed efficiently by our in house
team.
The project stretch extends from the Maharashtra-Andhra Pradesh Border to
Armur in Andhra Pradesh, which forms a part of the Nagpur-Hyderabad section
of NH7. This is the sole Annuity project in our portfolio. This 33 km
project was completed about 100 days ahead of scheduled completion. The
remaining concession period for the project is 15.5 years. The project was
developed by HCC with an investment of Rs. 315 crore.
Status of Assets under Development:
West Bengal (NH34) Highway Project
This highway project includes three contiguous sections (256 km) on
National Highway 34, starting from Baharampore and ending at Dalkhola. The
construction of this highway project is underway and your Company has
achieved considerable progress over the last year. Though NHAI has found
the land acquisition process along the project stretch challenging and
final completion is likely to be delayed by a few months due to this, we
expect that the project would start tolling by originally scheduled
completion date (on 75% completion). The project is being solely developed
by HCC with an investment of Rs. 3,232 crore.
Baharampore Farakka Highway
This section, awarded in FY10, is a 103 km stretch originating at
Baharampore and terminating at Farakka. The concession period is 25 years,
including a construction period of 30 months. The project is being
implemented with an investment of Rs. 1,169 crore. Farakka Raiganj
Highway.
This is a 103 km stretch originating at Farakka and terminating at Raiganj.
The concession period is 30 years, including a construction period of 30
months. The project is being implemented with an investment of Rs. 1,378
crore.
Raiganj Dalkhola Highway
This is a 50 km stretch starting at Raiganj and terminating at the town of
Dalkhola. The concession period is 30 years and includes a construction
period of 30 months. The project is being implemented with an investment of
Rs. 684 crore.
(iv) Steiner AG, Switzerland
Your Company holds through its wholly owned HCC Mauritius Enterprises Ltd.
a controlling equity stake of 66% in Steiner AG (formerly Karl Steiner AG).
Steiner AG is a leading general contracting Company in Switzerland,
specialized in turnkey development of new buildings and refurbishments, and
offers services in all facets of real estate development and construction.
Steiner AG had a consolidated revenue of Rs.3996.2 crore and a consolidated
profit before tax of Rs. 20.8 crore in the period from April 1, 2011 to
March 31, 2012.
After three years of construction, Steiner AG completed the Prime Tower,
Switzerland`s highest building (126 meters high), in collaboration with a
partner. With 36 floors, usable surface of 40,000 sqm and space for 2,000
work places, the Prime Tower is a landmark for the whole region.
In the business year 2011-12 Steiner AG signed many important contracts,
which include the project Neue Schanzenpost/PostParc in Berne, a total
services contract of around CHF 160 million with Swiss Post as client, a
general contract for the project Mehr als Wohnen in Zurich, consisting of
13 apartment buildings and a range of office spaces and business premises,
for a total volume of around CHF 145 million and a total services contract
for project Lindbergh in Zurich, a large-scale building for mixed use with
Credit Suisse as investor with a total volume of around CHF 100 million.
At year end, the order backlog of Steiner AG was CHF 1512 million compared
to CHF 1018 million as of March 31, 2011. Steiner AG has also secured
projects worth CHF 135 million which are yet to be signed.
By the end of July 2011, Steiner AG relocated into its new headquarters,
which is located in Andreaspark Business Centre in Zurich and was developed
and realized by Steiner AG. Steiner AG also changed its corporate name from
"Karl Steiner AG (Karl Steiner SA) (Karl Steiner Ltd)" to "Steiner AG
(Steiner SA) (Steiner Ltd)". The new name became official with the
relocation of Steiner AG to its new headquarters.
To help achieve your Company`s goal of extending its footprint in India`s
growing residential and commercial construction market, Steiner AG
incorporated a wholly owned subsidiary in Mumbai under the name of Steiner
India Limited. The new entity will undertake construction of real estate
projects in India.
The board of directors of Steiner AG comprises five members. Your Company
is represented by three nominees: Mr. Ajit Gulabchand, who also acts as
Chairman, Mr. K.G. Tendulkar and Mr. Anil Singhvi.
v) Highbar Technologies Ltd
Highbar Technologies Ltd, 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.
Highbar Technologies` core team comprises of IT and Infrastructure
professionals who have amalgamated the legacy of domain knowledge in the
infrastructure business with Information technology. Highbar focuses on IT
implementation initiatives from business transformation perspective rather
than technology implementation perspective.
This year, Gartner- one of the world`s most renowned IT research agency,
has published case study on managing successful IT spin-off with Highbar as
an example. After a long time they could locate a successful spin-off worth
writing case study on it. Industry experts have recognised it as Asia`s 1st
IT Company for Infrastructure industry` and have shown faith in its
capabilities as against big established IT players.
In the last financial year, Highbar Technologies was able to serve 10 new
customers, taking the total tally of its customers to 50. Long list of
reference customers and high quantum of repeat business indicates maturity
of Highbar`s delivery capabilities.
In order to serve Infrastructure industry in Middle East more effectively,
Highbar Technologies Ltd, has incorporated a subsidiary in Dubai, named
`Highbar Technologies FZ-LLC` which is now fully operational and has bagged
customers in Middle East.
IT adoption in Infrastructure industry has gathered pace. Highbar sees the
business going places and will expand beyond India and Middle East. This
year the Company has developed a very strong strategic alliance with SAP
who considers Highbar as a preferred partner for infrastructure industry.
The Company launched new solutions - Highbar RapidStart and Highbar
CloudConnect-which provide preconfigured SAP ERP solutions on-premise and
on-cloud respectively. These solutions are based on the templatised
approach and are Intellectual Property (IP) assets for Highbar
Technologies. Highbar Technologies has strategically entered into a tie-up
with SAP to launch Highbar CloudConnect, which offers 1st of its kind SAP
ERP solution for infrastructure, real estate and ready mix concrete
industry on pay-per-user-per-month basis. This has provided SMEs a level
playing field by getting access to world-class IT solutions and industry
best practices in an investment friendly model. The cloud based offerings
have helped Highbar Technologies to penetrate the industry further to next
level by reaching to the masses.
Highbar also successfully implemented first comprehensive SAP CRM
implementation for Indian construction industry which won SAP ACE Award.
Highbar continues to compete consistently with the big names in IT
industry. It has created niche for itself in the market with a firmly
established grounds. It has started contributing to the industry to grow
`IT for infrastructure market`.
Highbar Technologies has established a proper scalable organization
structure with all the functions in place to facilitate and sustain future
growth.
Highbar Technologies is on the course towards accomplishing its vision of
being `the most preferred end to end IT solution provider` for
infrastructure industry.
5. Subsidiary Companies
At the beginning of the year, the Company had 67 Subsidiary Companies.
During the year under review, the following changes have taken place.
a) HCC Infrastructure Co. Ltd (the wholly owned subsidiary Company) has
promoted the following wholly owned subsidiary Company, making it a
subsidiary of your Company from the date of its incorporation.
Name of the Company Date of Incorporation
Dhule Palesner Operations & 18.05.2011
Maintenance Limited
HCC Power Limited 03.06.2011
b) Steiner AG (a subsidiary Company) has promoted the following wholly
owned subsidiary Company, making it a subsidiary of your Company from the
date of its incorporation.
Name of the Company Date of Incorporation
Steiner India Limited 17.08.2011
(c) Lavasa Corporation Limited (a subsidiary Company) has promoted the
following companies making them subsidiaries of your Company from the day
of their incorporation.
Name of the Company Date of Incorporation
Warasgaon Assets 24.06.2011
Maintenance Limited
Hill View Parking Services 24.06.2011
Limited
In terms of the General Circular No. 2/2011 dated February 8, 2011 read
together with General Circular No. 3/2011 dated February 21, 2011, issued
by the Government of India - Ministry of Corporate Affairs under Section
212(8) of the Companies Act, 1956, granting general exemption to companies
from attaching financial statements of subsidiaries, subject to fulfillment
of conditions stated in the circular, copies of the Balance Sheet, Profit
and Loss Account, Report of the Board of Directors and Auditors Report of
the subsidiary companies for the year/period ended December 31, 2011/March
31, 2012 are not attached to the Balance Sheet of the Company as the
Company has/shall fulfill the following conditions:
(i) The Board of Directors of the Company has vide resolution dated April
27, 2012 consented for not attaching the balance sheet(s) of the concerned
subsidiary(ies);
(ii) The Company has presented in its Annual Report, the consolidated
financial statements of holding Company and all of its subsidiaries duly
audited by its statutory auditors;
(iii) The Consolidated financial statement has been prepared in strict
compliance with applicable Accounting Standards and where applicable,
Listing Agreement as prescribed by the Securities and Exchange Board of
India;
(iv) The Company has disclosed in the consolidated balance sheet the
following formation in aggregate for each subsidiary including subsidiaries
of subsidiaries:- (a) Capital (b)reserves (c) total assets (d) total
liabilities (e) details of investment (except in case of investment in
subsidiaries) (f) turnover (g) profit before taxation (h) provision for
taxation (i) profit after taxation (j) proposed dividend, as applicable;
(v) The annual accounts and other related detailed information of the
following subsidiaries shall be made available to shareholders of the
holding Company and subsidiary companies seeking such information at any
point of time :
1. Hincon Technoconsult Ltd
2. Western Securities Ltd
3. Pune-Paud Toll Road Company Ltd
4. Nirmal BOT Ltd
5. Panchkutir Developers Ltd
6. HCC Concessions Ltd (Formerly known as HCC Infrastructure Ltd)
7. HCC Infrastructure Company Ltd
8. HCC Aviation Ltd
9. Badarpur Faridabad Tollway Ltd
10. Baharampore - Farakka Highways Ltd
11. Farakka - Raiganj Highways Ltd
12. Raiganj - Dalkhola Highways Ltd
13. Dhule Palesner Operations & Maintenance Ltd
14. HCC Power Ltd
15. HCC Construction Ltd
16. Highbar Technologies Ltd
16. Highbar Technologies FZ LLC
17. HCC Mauritius Enterprises Ltd
18. Klemanor Investments Ltd
19. Steiner AG (Formerly known as Karl Steiner AG)
20. Steiner Promotions et Participations SA
21. VM + ST AG
22. Eurohotel SA
23. Steiner (Germany) GmbH
24. Steiner Leman SAS
25. SNC Valleiry Route De Bloux
26. Steiner India Ltd
27. HCC Singapore Enterprises Pte. Ltd
28. HCC Real Estate Ltd
29. HRL Township Developers Ltd
30. HRL (Thane) Real Estate Ltd
31. Nashik Township Developers Ltd
32. Maan Township Developers Ltd
33. Charosa Wineries Ltd
34. Powai Real Estate Developers Ltd
35. HCC Realty Ltd
36. Lavasa Corporation Ltd
37. Lavasa Hotel Ltd
38. Apollo Lavasa Health Corporation Ltd
39. Lakeshore Watersports Company Ltd
40. Dasve Convention Centre Ltd
41. Dasve Business Hotel Ltd
42. Dasve Hospitality Institutes Ltd
44. Lakeview Clubs Ltd
45. Dasve Retail Ltd
46. Full Spectrum Adventure Ltd
47. Spotless Laundry Services Ltd
48. Lavasa Bamboocrafts Ltd
49. Green Hill Residences Ltd
50. My City Technology Ltd
51. Reasonable Housing Ltd
52. Future City Multiservices SEZ Ltd (Formerly known as Minfur Interior
Technologies Ltd)
53. Rhapsody Commercial Space Ltd
54. Valley View Entertainment Ltd
55. Andromeda Hotels Ltd
56. Sirrah Palace Hotels Ltd
57. Warasgaon Tourism Ltd
58. Our Home Service Apartments Ltd
59. Warasgaon Power Supply Ltd
60. Sahyadri City Management Ltd
61. Hill City Service Apartments Ltd
62. Kart Racers Ltd
63. Warasgaon Infrastructure Providers Ltd
64. Nature Lovers Retail Ltd
65. Osprey Hospitality Ltd
66. Starlit Resort Ltd
67. Warasgaon Valley Hotels Ltd
68. Rosebay Hotels Ltd
69. Mugaon Luxury Hotels Ltd
70. Warasgaon Assets Maintenance Ltd
71. Hill View Parking Services Ltd
72. Whistling Thrush Facilities Services Ltd
(vi) Further, the annual accounts of the subsidiary companies shall also be
kept for inspection by any shareholder at the head office/registered office
of the Company and of the subsidiary companies concerned and the Company
shall furnish a hard copy of the details of accounts of subsidiaries to any
shareholder on demand;
(vii) The holding as well as subsidiary companies in question shall
regularly file such data to the various regulatory and Government
authorities as may be required by them;
(viii) The Company has given Indian rupee equivalent of the figures given
in foreign currency appearing in the accounts of the subsidiary companies
along with the exchange rate as on closing day of the financial year;
6. Share Capital
Increase in Paid up Share Capital - Issue of Equity Shares on exercise of
Employee Stock Options
During the year under review, upon exercise of Stock Options by the
eligible employees under the Employee Stock Option Scheme, the Company has
allotted 77,500 Equity Shares of Rs. 1 each at an exercise price of Rs.
21.70 per Equity Share.
Consequent to the allotment of Equity Shares upon exercise of stock
options, the Paid up Share Capital of the Company has increased from
60,65,32,920 Equity Shares of Rs. 1 each aggregating Rs. 60,65,32,920
(Rupees Sixty Crore Sixty Five Lakhs Thirty Two Thousand Nine Hundred
Twenty Only) to 60,66,10,420 Equity Shares of Rs. 1 each aggregating Rs.
60,66,10,420 (Rupees Sixty Crore Sixty Six Lakhs Ten Thousand Four Hundred
Twenty Only).
7. Public Deposits and Loans/Advances
Your Company has not accepted any deposits from the public, or its
employees during the year under review.
Pursuant to Clause 32 of the Listing Agreement, the particulars of
loans/advances given to subsidiaries have been disclosed in the Annual
Accounts of the Company.
8 Employee Stock Option Scheme (ESOP)
As on March 31, 2012, 64,62,960 stock options are outstanding (comprising
vested and unvested, after adjustment for lapsed and exercised options), 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, 15,46,950 options got vested to the employees
of the Company and in aggregate, 48,64,730 options stands vested with the
employees as on March 31, 2012. Further during the year, 77,500 options,
were exercised by the optionees at an exercise price of Rs. 21.70 and
accordingly the Company has allotted 77,500 Equity Shares, in aggregate, of
face value Rs. 1 each to the respective employees.
The particulars with regard to the Employee Stock Options as on March 31,
2012 as required to be disclosed pursuant to the provisions of Clause 12 of
SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines 1999, as amended, are set out in Annexure I to this Report.
9. Status of GDSs
During the financial year 2005-06, the Company had issued Global Depository
Shares (GDSs) and the underlying shares against each of the GDSs were
issued in the name of the Depository, Citi Bank N.A.
As on March 31, 2012, 1,20,720 GDSs have remained outstanding which forms
part of the existing paid up capital of the Company.
10. Consolidated Financial Statements
The Consolidated Financial Statements of the Company prepared in accordance
with applicable Accounting Standards forms a part of this Annual Report.
11. Corporate Governance
As per Clause 49 of the Listing Agreement with the Stock Exchanges, a
separate Chapter on Corporate Governance practices followed by the Company
together with a Certificate from the Company`s Auditors confirming
compliance forms part of this Report.
12. Directors
In accordance with Article 135 and Article 186A of the Articles of
Association, on October 21, 2011, the Board of Directors appointed Dr. Ila
Patnaik as an Additional Director of the Company.
The Company has received a Notice under Section 257 of the Companies Act,
1956 from a member signifying his intention to propose Dr. Ila Patnaik as a
candidate for the office of Director at the forthcoming Annual General
Meeting.
As per the provisions of the Companies Act, 1956 read with Article 152 of
the Articles of Association of the Company, Prof. Fred Moavenzadeh, Mr.
Rajas R. Doshi and Mr. D. M. Popat are the Directors of the Company who
retire by rotation and being eligible, offer themselves for re-appointment.
The Company has received Form DD-A from all these Directors as required
under the Companies (Disqualification of Directors under Section 274 (1)
(g) of the Companies Act, 1956) Rules, 2003.
A brief profile of all these Directors containing details of their
qualifications, expertise, other directorships, committee memberships etc.
has been given in the Report on the Corporate Governance as well as in the
Notice of the ensuing Annual General Meeting of the Company.
13. Directors` Responsibility Statement
In accordance with the provisions of Section 217(2AA) of the Companies Act,
1956, your Directors confirm that:
a) in the preparation of the annual accounts, the applicable accounting
standards have been followed and there has been no material departure;
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, 2012 and of the loss 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,1956 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.
14. Industrial Relations
The industrial relations continued to be generally peaceful and cordial.
15. Transfer to Investor Education and Protection Fund (IEPF)
The Company has, during the year under review, transferred a sum of Rs.
7,03,275 to Investor Education and Protection Fund, in compliance with the
provisions of Section 205C of the Companies Act, 1956. The said amount
represents dividend for the year 2003-04 which remained unclaimed by the
shareholders of the Company for a period exceeding 7 years from its due
date of payment.
16. Particulars of Employees and other additional information.
The information required under Section 217(2A) of the Companies Act, 1956
and the Rules made there under is given in the Annexure to this Report and
forms part of the Report. However, in terms of Section 219(1)(b)(iv) of the
Companies Act, 1956, the Report and Accounts are being sent to the
shareholders excluding the aforesaid Annexure. Any Shareholder interested
in obtaining copy of the same may write to the Company Secretary at the
Registered Office of the Company.
17. 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 (Disclosure of Particulars in the Report of
the Board of Directors) Rules 1988, is given in Annexure II forming part of
this Report.
18. Auditors
M/s K. S. Aiyar & Co., Chartered Accountants, Mumbai, Auditors of the
Company, bearing ICAI Registration No. 100186W retire at the ensuing Annual
General Meeting and are eligible for re-appointment.
As required under the provisions of section 224(1B) of the Companies Act,
1956, the Company has obtained a written certificate from the Auditors to
the effect that their re-appointment, if made, would be in conformity with
the limits specified in the said section.
19. Auditors` Report
The Auditors` Report to the shareholders on the Accounts of the Company for
the financial year ended March 31, 2012 does not contain any qualification.
20. 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,
247 Park, Lal Bahadur Shastri
Marg Vikhroli (West)
Mumbai 400 083
Place: Mumbai
Date : April 27, 2012
Annexure I to the Directors` Report:
Disclosure pursuant to the provisions of Securities and Exchange Board of
India, (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 ("SEBI Guidelines") as at March 31, 2012:
No. Particulars Details
a) Options granted 93,05,100 Options
b) Pricing Formula For Options in force
No. of Options Exercise Price
64,62,960 52.03
Pricing formula for remaining Options:
The closing market price on the Stock
Exchange, which recorded the highest
trading volume in the Company`s share
prior to the date of the Meeting of
ESOP Compensation Committee in which
Options were granted.
c) Options vested 48,64,730
d) Options exercised 1,04,360
e) Total No. of shares arising as
a result of exercise of Options 1,04,360
f) Options lapsed 18,32,740
g) Variation of terms of Options In accordance with the approval of the
Board of Directors of the Company, the
ESOP Compensation Committee had during
FY 2009-10 re-priced 41,31,600 Options
granted by the Company at Rs.104.05 per
Stock Option (Earlier Rs.132.50 per
Stock Option)
h) Money realized by exercise
of Options Rs.34,36,133
j) Total No. of Options in force 64,62,960
j) Diluted Earnings Per Share Diluted EPS before and after
(EPS) pursuant to issue of extraordinary items Rs. (3.62)
shares on exercise of Options
calculated in accordance with
AS 20
k) The difference between the The difference between the employee
employee compensation cost compensation cost computed using the
computed using the intrinsic intrinsic value of stock options and the
value of stock options and employee compensation cost that shall
the employee compensation have been recognized if the Company had
cost that shall have been used the fair value of the options is
recognized if the Company Rs.96,82,044.
had used the fair value of
the options.
l) Impact of Difference on Net Had fair value method been adopted for
Profits and EPS of the Company expensing the ESOP compensation:
(a) Loss after tax would have been
higher by Rs.0.97 crore.
(b) Basic EPS before and after
extraordinary items would have decreased
from Rs.(3.66) per share to Rs.(3.68)
per share
(c) Diluted EPS before and after
extraordinary items would have decreased
from Rs.(3.62) per share to Rs.(3.64)
per share
m) Method used to estimate the Forward start Options together with
fair value Black Scholes option pricing method
n) Weighted Average inputs used
in the valuation model
* Risk Free Interest Rate 6.416%
* Expected Life during vesting 2 years
period
* Expected Volatility 60%
* Expected Dividends per share Rs.0.70
* Price of underlying shares
at grant date
- For Options granted on
April 25, 2008 Rs.104.05
- For Options granted on
October 23, 2008 Rs.43.40
o) Weighted Average Exercise
Price of Options
- For Options granted on
April 25, 2008 Rs.104.05
- For Options granted on
October 23, 2008 Rs.43.40
p) Weighted Average Fair value
of Options whose exercise price
equals to the market price of
the shares on the date of the
grant.
- For Options granted on April
25, 2008 Rs.36.80
- For Options granted on
October 23, 2008 Rs.15.82
q) Total Fair Value of options
whose exercise price Rs.126,539,915
equals to the market price of
the shares on the date No options are granted at prices higher
of the grant. or lower than market prices.
Employee wise details of Options granted and in force:
Directors & Senior Managerial Personnel Number of Options
Name Designation granted and in
force
1. Mr. Y.H. Malegam Director 68,600
2. Mr. Rajas R. Doshi Director 68,600
3. Mr. D. M. Popat Director 68,600
4. Mr. Ram P Gandhi Director 68,600
5. Prof. Fred Moavenzadeh Director 68,600
6. Mr. Sharad M. Kulkarni Director 48,600
7. Mr. Nirmal P Bhogilal Director 68,600
8. Mr. Anil Singhvi Director 54,880
9. Mr. Arun V. Karambelkar* President &
Whole-time Director 5,49,000
10. Mr. Rajgopal Nogja Group President -
Development Companies 3,43,200
11. Mr. Praveen Sood* Group Chief Financial Officer- 5,49,000
Executive Vice President -
HCC Group Office
12. Mr. Aditya Jain Group Executive Vice President-
Human Resources 4,00,600
13. Mr. Pervez Alam* Chief Commercial Officer 6,86,400
14. Mr. N.R. Acharyulu* Chief Operating Officer -
HCC E&C 6,86,400
15. Mr. S.K. Dharmadhikari Executive Vice President -
BD & CS 3,08,880
16. Mr. D.M. Kudtarkar* Chief Technology Officer 6,86,400
17. Mr. V.P Kulkarni Company Secretary 2,74,400
18. Mr. K.R. Visvanath* Vice President - Nuclear,
Thermal, Special Projects 4,57,400
& Water
19. Mr. Satish Pendse President - Highbar Technologies 2,74,400
20. Mr. Jimmy Mogal Vice President -Corporate 2,74,400
Communications
21. Mr. S.W. Gaitonde* Vice President 4,57,400
Total No. of Options Outstanding 64,62,960
Identified employees who were granted Options, during any one year, equal
to or exceeding 1% of the issued capital of the Company at the time of
grant: Nil
* Employees who had been granted Options amounting to 5% or more of the
total Options granted.
For and on behalf of the Board of Directors
AJIT GULABCHAND
Chairman & Managing Director
Registered Office:
Hincon House, 11th Floor,
247, Park, Lal Bahadur Shastri Marg
Vikhroli (West) Mumbai-400 083
Place: Mumbai
Dated: April 27, 2012
Annexure II to the Directors` Report:
Information as per section 217(1)(e) of the Companies Act, 1956 read with
the Companies (Disclosure of particulars in the Report of the Board of
Directors) Rules, 1988 for the financial year ended March 31, 2012.
I. Conservation of Energy
a) Energy Conservation Measures Taken:
* Your Company is continuing with energy saving measures initiated earlier
like usage of Load Sharing System in D.G. plants, APFC (Automatic Power
Factor Controller) panels for GRID Power, FCMA (Flux Compensated Magnetic
Amplifier) Starter for Crusher Motors, Variable Frequency Drive (VFD)
Starting System for Ventilation Fans & EOT / Gantry Cranes.
* Use of Solar Water Heating System at Nimoo Bazgo Project which reduces
the power requirement.
* Hot Water Generators have been procured and are being installed at
Kishanganga for supplying hot water to Camp. It uses the Waste Heat in the
Jacket Water of Diesel Generator Sets.
b) Additional investment and proposals, if any being implemented for
reduction in consumption of Energy:
Introduction of Lighting Energy Saver (About 10 %) in Power circuit at
Project sites Locations like Camp, Office, Yard & Area Lighting etc.
Reuse of recycled water for Crushing Plant operation. This avoids pumping
of water from the source located at a distance.
c) Impact of measures at (a) and (b) above for reduction of Energy
consumption and consequent impact on the production of goods:
Energy conservation measures continue to reduce the production cost per
unit with reference to energy consumption.
Reuse of recycled water for Crushing Plant operation reduces the production
cost in addition to conservation of water resource.
d) Total energy consumption and energy consumption per unit as per form A
of Annexure to the rules of Industries specified in the schedule thereto:
Not Applicable
II. Technology Absorption
Efforts made in technology absorption as per Form-B of the Annexure to the
Rules.
1. Research and Development (R&D)
Applied research and development mostly aims at cost optimization, but in a
highly competitive market, strategically building sustainable and holistic
competitiveness requires much more than cost optimization. Moreover the
complex nature and changing stipulations of recent contracts are demanding
a fresh paradigm shift at the way contracts are being executed. The
objective of the R&D efforts is to specifically assist and promote all
those activities which help projects to be executed with enhanced
efficiency and improved level of quality. While collaborating internally
with the construction sites and externally with various suppliers,
manufacturers, organizations and academia, the research and development
projects are aimed at faster penetration in to multiple sites and building
a sustainable knowledge and skill base.
A sampling of few of R&D efforts is presented below:
i. Alternative pavement designs for enhanced life and reduced maintenance.
This includes designs with
a. Polymer stabilized pavement foundation with increased strength
b. Cementitious stabilizers in expansive soils
c. Geocells to reduce pavement thickness and make it sustainable
d. Anti-rutting agents used in bitumen layers
ii. Use of statistical methods for improving and optimizing concrete and
shotcrete mix proportioning
iii. Use of cloth fabric to improve the finishibility of concrete
iv. Use of self consolidating concrete
v. Optimizing labor cost through process improvement
vi. Pavement embankment slope reduction using geogrids
vii. Improvement in project planning and management for project
acceleration
viii. Changes in the placement methods of dam concrete
Training is an important part of the developmental efforts and R&D`s
invests attempts at expanding it beyond organizational boundaries. Efforts
are persistently invested in brining the skill levels of construction
engineers and designers. Last year, for example, in an effort to introduce
new design concept for tunnel waterproofing, R&D in collaboration with BASF
construction chemicals organized a one day designers` workshop for HCC`s
designers, including external design firms whom HCC engages on a routine
basis.
The academic dialogue continually takes place to facilitate the flow of
fresh knowledge and explore avenues of getting involved with happening
research on educational campuses. With regard to the international efforts,
your Company has signed up for a membership under the industry liaison
program (ILP) with the Massachusetts Institute of Technology (MIT), USA.
This agreement is helping your Company foresee some of the emerging areas
of construction and engineering technology including materials, energy,
etc.
The Company has spent Rs. 0.12 crore towards Research and Development.
2. Technology Absorption, Adaptation & Innovation
a) Efforts made towards technology absorption, adaptation and innovation
during the year 2011-12 are:
* For Kishanganga Hydroelectric project, proposal for adopting double
shield type of Tunnel boring machine has been mobilized at site. This
machine has advantages of overcoming adverse geological challenges and
continuous segment erection.
* For Kishanganga Hydroelectric project, proposal for adoption of Concrete
face rockfill dam [CFRD] has been finalized which has got cost advantages
over conventional concrete dams. For the foundation, plastic cut off wall
is being adopted.
* For Nimoo Bazgo Hydroelectric project, concreting was done in extremely
cold temperatures by providing thermal blanket to concrete surface for
overcoming temperature drop effect. For concrete, special admixtures were
used to achieve the desired setting within the allowable time in the
extreme cold temperatures.
* For Nimoo Bazgo & Chutak Hydroelectric project, aviation turbine fuel was
used as an additive in fuel for equipments working in high altitude.
* For Vizag and Padur Underground Cavern excavation in rock, bulk
underground liquid explosives were used for blasting which resulted in
reduction in time cycle and better yield. By adopting this technique and
modifications in sequence of excavation, record hard rock excavation of
1,00,000 cum/month was achieved. The analysis and design of Rock Caverns
was done by three dimensional modeling of entire rock medium with the
Caverns and rock supports designed using UnWedge analysis using software
code UNWEDGE.
* For Narmada Canal Package 25 Project, Pipeline design was optimized using
specialist software SAP 2.0 developed by IISc, Bangalore, which is
internationally acclaimed. This enabled us to design the system in-house
for transient loads and procure the surge control tools / products from.
The system has been approved by GWIL.
* For Katch Branch canal II as the project site is located in the
seismically most active zone, viz. zone V, the canal embankments run upto
heights as high as 9m. As a matter of abundant precaution and also to
arrive at the most optimum design, specialist services of IIT Bombay were
requisitioned. IIT used some of the most advanced softwares, viz. SLOPE/W,
SEEP/W and FLAC for the dynamic analysis of these embankments. This ensured
optimization apart from accuracy in the analysis. It is being well received
by SSNNL,
* For Dagachu Hydroelectric project, in order to speed up construction,
raise boring machine for excavation of pilot hole for surge shaft and for
excavation of full cross section of pressure shaft has been mobilized. In
order to accelerate tunneling progress, use of ITC tunnel loader in
combination with reversible dumper has been adopted for tunnel
construction.
* For Dagachu Hydroelectric project, the design and drawings were carried
out by using following softwares in association with our consultants M/S
SNC lavalin India for optimizing the design for various project
components:> Swedge-Used for design of open excavations and slope stability
of tunnel portals.
> Phase-2-Finite Element Model based software used for design of
underground tunnels and Power house Cavern. Helped to optimize the rock
support requirements.
> GeoSlope-Used for design of unstable area through which Head Race Channel
of the project.
* For Tehri Pumped storage project in association with M/S EDF France, our
design consultants have carried out the project design and drawings using
the following softwares for achieving optimization of the various
underground structures:> Flac 3D-The software is being used for the
analysis of the support requirements for the Underground Power House.
> Minedw-A 3 D hydraulic model of the Tehri PSP area is being built using
this model.
* For Sainj Hydroelectric project in association with M/S AF Colenco,
Switzerland, our design consultants have carried out the project design and
drawings using following softwares for achieving optimization of various
structures.
> FENAS & REMI ( Refraction Micro Tremor) software is being adopted for the
design of the Barrage.
* Double Shield Tunnel Boring Machine (TBM) is being used at Veligonda
project for excavating large diameter very long water tunnel, with
continuous conveyor for mucking and simultaneous installation of precast
segmental lining.
* New Austrian Tunneling Method (NATM) is being used at Pir Panjal tunnels
in Jammu and Kashmir using Tunnel Version excavators and Road Headers.
* For NH34 pavement construction project, chemical and bio-based soil
stabilization methods are considered. This will also include use of soil
stabilizing machineries for improved quality control.
* For some stretches of NH34 pavement, alternative pavement designs using
international standards and codes are being proposed.
* A proposal for installing min-hydro power plants to generate power to
cater to the needs of site establishments is under consideration.
* Automation of equipments foundation designs for different foundation
conditions by integration of Excel and AutoCAD
b) Benefits derived as a result of the above efforts:
Reduction in cycle time of construction of different components and thereby
increasing of productivity. Eco friendly design and construction
implementation and energy conservation.
The utilisation of above various softwares in design of structures has
resulted in the optimisation of design component of the structures and
resulted into reduction of construction costs.
Development of Human Resource in use of advanced technology with modern
equipment and technology.
c) Technology Year of Has technology
Imported Import been fully absorbed
Use of Geo textile 2007 Absorbed
bags replacing boulder
crate pitching for Teesta
Diversion scheme
Use of Fly ash for 2008 Absorbed
embankment and RE wall
backfilling
Orica Emulsion base 2008 Absorbed
explosive & Powerdet long
delay detonators
Roller Compacted 2008 Under Implementation
Concrete Technology at
Teesta Project
Wassara drilling 2008 Absorbed
Equipment (unique
Method of drilling
by using water power)
Cold weather 2008 Absorbed
Concreting system and
Protection works when
Atmospheric temperature
is below 5 C
Construction of cable 2009 Absorbed
stayed bridge using
Cantilever gantry
Construction of surge 2010 Under
shaft using raise boring Implementation
machine
Construction of tunnel 2009 Under
using NATM Implementation
Method
Construction of tunnel 2011 Under
using double shield Implementation
Tunnel boring machine
Technology for 2011 Under
construction of Implementation
concrete faced
rockfill dam
Construction of 2011 Under
dry dock by using Implementation
precast cum floating
caissons.
Innovation
Your Company has created a innovation Forum and dedicated Innovation Portal
for collecting and working on new ideas generated within the organization.
New ideas related to ongoing projects as well as ideas related to energy
saving, water saving and reduction in environmental damages are collected
from all the employees either through portal or by direct interaction by
highly motivated approach. The collected ideas are shortlisted and
evaluated by Structured Evaluation Process. Specific tasks are implemented
at the project sites. Experiences gained from one project are then
selectively applied to other project sites.
Some of the innovation ideas and focus areas for this year are as follows:
i. Replacement of natural sand with air classified crushed and
ii. Improving adverse geological / subsoil condition. The geological /
subsoil condition been improved by adopting innovative alternative method
like stone columns, chemical grouting, steel liner support etc.
iii. Reduction in natural resources by environmentally sustainable (Green
Technology) materials/ technologies; e.g. Use of EROSION CONTROL
COIR BLANKETS replacing stone pitching.
III. Foreign Exchange earnings and outgo:
(a) Activities relating to exports, initiative taken to increase exports,
development of new export market development of new export market for
production services and export plans:
Visits are being made by technical and marketing personnel to develop new
export markets from time to time.
(b) Total Foreign Exchange used and earned:
The information on Foreign Exchange earnings and outgo is contained in Note
no. 38 forming part of the accounts.
For and on behalf of the Board of Directors
AJIT GULABCHAND
Chairman & Managing Director
Registered Office:
Hincon House, 11th Floor,
247 Park, Lal Bahadur
Shastri Marg Vikhroli (West)
Mumbai-400 083
Place: Mumbai
Dated: April 27, 2012
Management Discussion and Analysis
Hindustan Construction Company (`HCC` or `the Company`) has been one of the
pioneering companies in executing large scale infrastructure related
construction projects in India. It has undertaken some of the largest and
most technically challenging projects that have been part of the progress
of India`s overall physical infrastructure. By investing in state of the
art equipments, adopting world class operational processes which has lead
to an immaculate execution and by maintaining the highest standards of
health & safety, HCC has established itself as an industry leader. HCC
continues to promote responsible infrastructure development and its
evolution has been intrinsically linked to the progress of infrastructure
development, in the country.
The infrastructure development story in India has been plagued with issues
of implementation. As a result, the pace of growth has simply been much
slower than the needs of an economy intending to maintain a sustained
growth rate of close to 9%. And in 2011-12, there has been a considerable
slowdown in development in the infrastructure sector.
Clearly, there is sufficient latent demand for large scale infrastructure
development across different sectors ranging from power to transportation
to urban infrastructure.
Infrastructure and Construction - the long term opportunity
The Planning Commission`s XIth Five-Year Plan (20072012) had already
identified that inadequate infrastructure was a major constraint on the
country`s rapid growth. The Plan had, therefore, emphasized the need for
massive expansion in investment in infrastructure based on a combination of
public and private investment, the latter through various forms of public-
private partnerships (PPP). In the last few years, substantial progress has
been made in this respect. The total investment in infrastructure, which
includes roads, railways, ports, airports, electricity, telecommunications,
oil gas pipelines and irrigation, is estimated to have increased from 5.7%
of GDP in 2007 to around 8.0% by 2012.
The approach paper to the XIIth Five-Year Plan (20122017) highlights that
the thrust on accelerating the pace of investment in infrastructure must
continue as this is critical for sustaining and bolstering growth. Public
investment in infrastructure will have to bear a large part of the
infrastructure needs in backward and remote areas to improve connectivity
and expand the much needed public services. Since resource constraints will
continue to limit public investment in infrastructure in other areas, PPP-
based development needs to be encouraged wherever feasible. It is necessary
to review the factors which may be constraining private investment, and
take steps to rectify them. PPP, with appropriate regulation and concern
for equity, should also be encouraged in the social sectors, such as health
and education. Several State Governments are already taking steps in this
direction.
Considering the critical need of developing infrastructure in the country,
construction activities are crucial for creating physical infrastructure in
the country. Construction, on an average, accounts for more than half of
the investment required for setting up critical infrastructure facilities
like power projects, ports, railways, roads, bridges. Table 1 gives the
estimates of average construction intensity of different infrastructure
projects.
Table 1: Construction components for various infrastructure projects
Construction
Intensity%
Building 76
Mineral Plant 18
Roads 63
Medium Industry 20
Bridges 65
Transmission 22
Urban Infrastructure 66
Dams 75
Power 38
Maintenance 81
Railways 78
Source: Planning Commission of India
The cumulative investment in infrastructure in the Twelfth Five-Year Plan
(2012-2017) is targeted at around $1 trillion. Nearly half of this
investment will be channelized into construction projects. Therefore, there
is considerable long term business scope for players in the infrastructure
related large scale construction business. Being an industry leader, HCC is
always geared to make the most of this opportunity. However, while there
are always a lot of promises, in the last few years one has observed a wide
gap between economic need and on ground implementation in the
infrastructure industry. Consequently, HCC has had to reformulate its
business plans to deal with challenging ground realities - a business
environment where an increasing number of players are competing for a much
fewer number of projects than what economic realities warrant.
Business Environment - the short term slowdown
The resilience shown by the Indian economy in 200910 and 2010-11 finally
gave way and there has been a significant slowdown in economic activities
during 2011-12. Chart A shows that after two consecutive years of 8.4%
growth, India`s GDP growth slipped to 6.9% in 2011-12. In line with this
drop in real GDP, construction growth also reduced to 4.8% in 2011-12.
Unfortunately, the economic slowdown has been in an inflationary
environment, where the Reserve Bank of India (RBI) has maintained tight
monetary policy leading to high domestic interest rates. Chart B shows that
the reverse repo rate, which benchmarks the commercial bank`s lending rates
increased from 5.75% in April 2011 to 7.5% in March 2012. A year back in
April 2010 it was only 3.5%. This environment of slowing growth, high
inflation and high interest rates was a complete dampener for investor
confidence and new capital formation took a further hit.
Typically, infrastructure projects have high gestation lags and require
long term financing. The Indian financial system is still evolving in terms
of availability of such long term financing instruments. And, the global
economic slowdown has created high levels of uncertainty, which has been a
dampener for capital flows into India, especially for long term projects
like the ones in the infrastructure sector. Consequently, infrastructure
projects in India are also facing issues on the financing front.
In addition, several projects that have had financial closure are facing
implementation problems stemming from issues related to land acquisition,
social tensions, environmental problems and administrative delays. Clearly,
the pace of infrastructure development in India is not in sync with the
requirements of a growing economy of its size.
Take the case of two important sectors in the infrastructure space - power
and roads. Implementation remains woefully short of planned targets.
* For Power, the eleventh five year plan (2007-2012) had talked of creation
of 78,700 MWs of new power generation capacity - of which 59,693 MW (75.8%)
was thermal power, 15,627 (19.9%) was hydro power and 3,380 MW (4.3%) was
nuclear power. By the end of the planning period i.e. March 31, 2012,
around 55,000 MWs of total new generation capacity has been put up. This is
around 70% of what was planned. In addition, many projects that are under
implementation have slowed down due to issues regarding coal linkages and
tariff structures.
* For Roads, the marquee projects of the National Highway Authority of
India (NHAI) continues to be well behind schedule. Of the 12,109 kms of
four-laning as part of NHDP Phase 3, around 19.5% is yet to be contracted
out, while 52% is under implementation. For the 14,799 kms NHDP Phase 4,
contracts are yet to be awarded for 83% of the stretch, while 17% is under
implementation. Similarly, 45% of the 6,500 kms NHDP Phase 5, 100% of the
1,000 kms NHDP Phase 6 and 94% of the 700 kms NHDP Phase 7 are yet to be
awarded. In addition to the fact that large parts of these planned
developments have not yet been contracted out, there are several
implementation issues with many of the projects that have been contracted
out on BOT basis. The primary problem stems from issues related with land
acquisition.
Performance Highlights
In this backdrop, HCC had entered 2011-12 with a lower order book. While it
focused on effective execution, the size and structure of the organisation
was geared for catering to a much larger infrastructure related
construction market. So, the asset base and the fixed cost structure were
not in line with the stagnant order book. Consequently, while the turnover
remained at 2010-11 levels, the Company generated losses. The financial
highlights of HCC`s performance on a stand-alone basis in 2011-12 are:
* Order Book is at Rs. 15336 crore in 2011-12
* Revenue from operations is at Rs. 4003 crore in 2011-12 v/s Rs. 4144
crore in 2010-11
* EBITDA (before profits from JV, Exceptional item and other income) is at
Rs. 443 crore in 2011-12 v/s Rs. 543.4 crore in 2010-11.
The lower turnover and operating margins in an environment of high interest
costs put severe pressure on the Company`s profitability. In addition,
further litigation and non payments of awarded claims in arbitration
adversely affected the Company`s liquidity and debt servicing ability.
Recognising this as a problem which cannot be sorted out independently or
in a short time frame, HCC approached its bankers with a proposal for
bilateral refinancing of the loans with larger tenure. However, there was
no consensus amongst the bankers on this proposal. Consequently, the
Company approached its leading bankers and they referred their total term
debt of around Rs. 3300 crore to the Corporate Debt Restructuring (CDR)
cell. The CDR Empowered Group formally admitted the case for restructuring
on March 29, 2012 by a super majority of lenders . Under the regulatory
frame work of the RBI, the CDR forum caters as an official platform for
both the creditors and borrowers to amicably and collectively evolve
policies for working out debt restructuring plans. The broad contours of
this restructuring exercise involves re-structuring of debt in terms of
payback period, deferring certain interests on term loans, concessional
rate of interest and provision of further need based working capital and
loans for capacity expansion. This debt restructuring will provide HCC with
breathing space to work on improving operational margins over a period. The
Company is also raising own funds by liquidating some of the non-core
assets. It is expected that the restructured debt, certain amount of own
funds, tightened cost management and increase in turnover will enable the
Company to weather the situation in the medium term.
HCC - Internal Reorientation
In a difficult business environment, HCC has utilised 2011-12 to
recalibrate its business. This has been done on several fronts.
First, given the immense potential that the infrastructure sector has in
India, HCC had created complete teams for separate verticals that service
sectors within the engineering and construction business including EPC,
transportation, power, water and industrial. The market potential was large
enough to make each one of these verticals self sustaining businesses.
However in 201112 there were several unresolved issues in terms of
implementation and a lot to be desired on effective mechanisms of private
public partnerships, regulatory environment in the country and macro
economic variables. Consequently, it was felt that there is still some time
before India`s infrastructure industry translates into a large market on
the ground that could sustain each of the Company`s verticals as
independent businesses. With this understanding, HCC undertook a major
organisational restructuring exercise and replaced the verticals structure
with a function based organisation system.
Second, the Company has been facing a two pronged challenge in business
development - on one hand, the Company was forced to bid for projects at
very low margins; while on the other hand, it was regularly losing out on
contracts with bids which were not competitive.
Considerable effort has been spent on revamping the business development
function to overcome this dichotomy. Lot of emphasis has been laid on
researching the market to identify projects that are most suitable for a
Company like HCC to pursue.
In addition to this the business development function has been divided into
lines within the infrastructure space where specific thrust is being given
to improve on customer relations. In a related development, the estimation
and the business development departments have been integrated to operate as
a cohesive unit. Through this organisation structure a robust review
mechanism has been put in place that focuses on ensuring profitable growth
for the Company.
Third, it was observed that HCC had several claims arising out of disputes
with customers. Many of these claims are recoverable and HCC is well
positioned to win legal battles to fructify the claims. In the last few
years, however, this was not considered a core function. On the other hand,
in today`s business environment effective claims management can release
significant amount of cash for the Company. Having identified claims
management as an important and core function, the Company has put in place
a team headed by a highly experienced professional who has served at HCC
for over 3 decades. This team works on getting claims settled up to the
arbitration stage. Most of these claims move from arbitration to the courts
for a full fledged legal process. The Company has supported the claims
realisation initiative by establishing a legal team under the secretarial
and legal department. This team is actively working on closure of all
claims cases that have moved from arbitration to a court challenge. Claims
management alone has the potential of raising significant amounts of cash
for the Company.
Fourth, the Company has rationalised its work force. This exercise has been
mainly carried out at the corporate office. This work force rationalisation
has resulted in the Company operating in a leaner structure.
Business Portfolio
With a focus on adding value across different elements of the
infrastructure delivery chain, HCC has evolved from a pure contractor to a
construction major in India. Today, HCC`s portfolio comprises different
businesses that have different markets, require different skill sets and
operate under varying risk return profiles. All the different components of
the Company`s business are integrated through HCC`s world class processes
and value system. The portfolio includes the following diverse yet related
businesses.
* Engineering and Construction: This is the Company`s core business, which
focuses on transportation, power, water supply and industrial construction
projects. The business has been extended to complete engineering,
procurement and construction (EPC) services and in a focused manner the EPC
part of the business is being strengthened.
* Total Services Contractor: In the last financial year, the Company
acquired Steiner AG (formerly Karl Steiner AG), a leading Total Services
Contractor in Switzerland, which offers its services in Europe and India in
all facets of real estate development and construction.
* Infrastructure: This is a move up the infrastructure value chain where
HCC develops projects right from planning and conceptualisation to
execution and has ownership rights on the assets created. Returns are
generated from utilisation of the assets and the creation of asset value.
Here, the Company is initially focusing on private public partnerships.
* Real Estate: The real estate business develops commercial & residential
property and is focused to develop state-of-the-art projects. It is also
involved in development of slum rehabilitation projects.
* Integrated Urban Development and Management:
The focus area of this business has been the development of complete
integrated townships. Today, HCC is actively pursuing the creation of
India`s planned hill city in the private sector called Lavasa.
In addition to these businesses, the Company has also extended its internal
Informational technology (IT) function to form a separate Company - Highbar
Technologies - that is involved in assisting in improved IT utilisation in
the construction industry.
Engineering and Construction Business
The Company`s order backlog as on March 31, 2012 was Rs. 15,336 crore. The
order backlog is well distributed across various sectors including power,
transport, water and industrial.
During 2011-12, on the operational front, HCC continued with its concerted
efforts at executing projects with lower capital base to improve return on
capital. In order to promote this, the Company intensified its initiatives
on partnering vendors and increasingly subcontract out non-core activities
to them with a view to reduce own capital investment, in different projects
and thereby release critical working capital.
The developments on the projects front across different sectors in 2011-12
are given in the following sections.
Power
HCC is a leader in the construction of hydro and nuclear power projects. In
the recent past, the Company had made a foray into the thermal power
segment.
Hydro Power
The Company is involved in the construction of fifteen hydroelectric
projects (HEP) for central and state PSUs and private developers. In 2011-
12, the Company completed Chutak HEP for NHPC Ltd in Kargil, Jammu &
Kashmir. The project has now been commissioned by NHPC. Chutak HEP won the
Construction India Development Council (CIDC) Vishwakarma award 2012 for
the best project.
Two other projects Chamera and Uri for NHPC Ltd are at an advanced stage of
completion.
At the 3 x 110 MW Kishanganga HEP, which is HCC`s largest hydro power
project worth Rs. 2,725 crore, tunnel boring by a sophisticated tunnel
boring machine is making steady progress.
Two other projects under implementation in Bhutan - 114 MW Dagachhu Hydro
Power Plant and the 1,200 MW Punatsangchhu I HEP are progressing well. Work
on the Sainj HEP, secured in 2010-11 has also commenced.
In 2011-12, the Company secured the contract for Tehri Pumped Storage
project along with Alstom Hydro France as a consortium partner. The
contract is worth Rs. 1,843 crore and the Company`s share in the joint
venture would be Rs. 701 crores with a contract period of 54 months.
Nuclear Power
The Company completed civil works of Kudankulam Nuclear Power Project last
year. This project also won the CIDC Vishwakarma award 2012 for the best
project.
The Company secured a Rs. 888 crore contract for civil works of Rajasthan
Atomic Power Project (RAPP) Units 7 & 8 in 2010 - 2011. Work is under
progress on the foundation rafts of the nuclear building and other
structures. A major pour measuring 5,757 cubic metres of concrete for the
nuclear building raft foundation, which is the largest pour at a nuclear
project in India, was successfully completed.
Thermal Power
Contract for Muzaffarpur Thermal Power Project was secured in 2010 -2011
from Kanti Bijlee Utpadan Nigam Limited, a joint venture between NTPC Ltd
and Bihar State Electricity Board (BSEB). The project is fully mobilized
and works involving civil and structural erection are progressing at a
steady pace.
Transportation
The Company has executed several national highway projects across the
country since the launch of the National Highways Development Programme
(NHDP). In 2011-12, the Company completed four contiguous packages
aggregating 156 kms of the East West Corridor Lucknow Muzaffarpur highway
Project in Uttar Pradesh.
HCC is executing three packages aggregating 256 km of the National Highway
NH-34 on Build Operate Transfer (BOT) basis. The project is fully mobilised
and work is progressing in full swing.
Substructure and superstructure works are underway on the Kolkata elevated
corridor project, which is a 4.23 km long flyover from Park Circus to EM
Bypass.
In 2011-12, the Company secured two contracts from North East Frontier
Railway. The first contract worth Rs. 987 crores is for Bogibeel Rail cum
road-bridge over the Brahmaputra River in Assam. The project will be
executed in joint venture with DSD Bruckenbau GMBH Germany and VNR
Infrastructures Ltd, Hyderabad, India. The second contract is for
construction of 3.3 km long single line BG railway tunnel for New Railway
Line Project Jiribam-Tupul (Imphal). The project will be executed in joint
venture with Coastal Projects Ltd, Hyderabad, India. The Company is already
executing two more packages Tunnel 1 & 12 for the same project.
Water Supply and Irrigation
HCC is associated with seven water supply and irrigation projects in Andhra
Pradesh. Largest among them is the JCR Devedula Godavari Lift Irrigation
Scheme where the Company is involved in all the three phases under
implementation. This is the second largest such water scheme in the world
and it will cater to the irrigation and drinking water requirement across
6.47 lakh acres of land. The first phase of the project has been
successfully commissioned, while construction of the second phase is
nearing completion. In the third phase, HCC is involved in two packages for
three rows of 38 km pipelines and a 55 km long tunnel.
The Company is engaged in two water supply contracts in Mumbai. One of the
contracts - Middle Vaitarna Water Supply Project - involving laying a 15.7
km steel pipeline was commissioned in March 2012. The other contract
envisages construction of a 12 km long tunnel about 65 m below ground
level. One section of the tunnel is complete including the concrete lining.
In the second section, tunnel boring is complete and other works are
progressing well.
In 2011-12, the Company secured an EPC contract under Swarnim Gujarat
Saurashtra-Kutch Water Grid Programme - Package NC 31, from Gujarat Water
Infrastructure Ltd worth Rs. 289 crore. A similar project package NC-25
for the same client was commissioned in March 2012.
Industrial
The Company has been awarded several packages aggregating over Rs. 850
crore for Aditya Aluminium Plant at Sambalpur, Orissa by Hindalco
Industries Ltd. Out of these packages, one package of Potshell fabrication
was successfully completed in 2011-12.
The Company is executing two underground crude oil storage caverns for
Indian Strategic Petroleum Reserves Ltd. One is at Vishakhapatnam (Vizag),
Andhra Pradesh and the other at Padur, Karnataka. The Vizag cavern is at an
advanced stage of completion while work at the Padur Cavern is progressing
well.
Marine Works
Work on the Rs. 609 crore contract for reconstruction of the dry dock and
wharves in Mumbai for Director General Naval Project is progressing well.
Infrastructure Business
Since its inception in 2008, HCC Infrastructure has grown its
infrastructure development portfolio to Rs. 5,500 crore of assets under
management. These projects developed through Public Private Partnership
(PPP) or BOT (Build-Operate-Transfer) mode include six National Highways
Authority of India (NHAI) road concessions, of which three are operational.
HCC Infrastructure follows a disciplined investment strategy that maximizes
shareholder value by generating stable and rapidly growing streams of cash
flow over concession periods ranging from 15 to 30 years. The Company,
through its subsidiaries HCC Concessions and HCC Power, has a development
focus primarily in the roads, water and power sectors. This is partially
due to the parent Company`s core construction competence in these areas,
having executed large projects of national importance across the Indian
sub-continent. Besides procuring a construction edge from HCC`s E&C
division, HCC Infrastructure has developed a strong management team whose
expertise extends from concept innovation and evaluation of risk & return,
to construction management and operations. Besides focus on quality and
timely execution, the Company is equally committed to providing reliable,
safe and world class operations and maintenance services to the country`s
end users.
Equity Fund Raising Initiative
In September 2011, HCC Infrastructure raised Rs. 240 crore by diluting
14.5% equity stake in HCC Concessions to The Xander Group at an equity
valuation of Rs. 1,650 crore. This pure equity placement, which is devoid
of any structured return, and which was completed during challenging market
conditions, showcases both the quality of the HCC Infrastructure`s
portfolio and the conviction in management team. The Xander Group Inc. is a
global investment firm focused on infrastructure, hospitality, retail and
real estate sectors. Since 2005, the firm has committed over US$1.8 billion
of equity capital to the Indian market across five dedicated India funds.
Xander is an ideal partner for HCC Infrastructure as they have similar
traditions with a focus on the long term.
Operational Assets
Dhule Palesner (DPTL) Highway Project (NH3)
The project road achieved provisional completion and toll collection began
in February 2012, four months ahead of its contractual completion date.
This is the third consecutive project that HCC Infrastructure has completed
significantly ahead of schedule.
This road project (89 km) which is part of National Highway (NH3) is
commonly referred to as the Mumbai-Agra Road. Other stretches of the NH3
are also under development and additional traffic growth is expected once
most of the corridor is four-laned. DPTL is a primary conduit for
transportation of passengers and freight traffic between major towns in
Maharashtra and the state of Madhya Pradesh & Uttar Pradesh and largely
serves industrial traffic.
The project is being operated by an in-house operations and maintenance
(O&M) team. The concession period is 18 years, including a construction
period of 30 months. The highway is being developed in partnership with
Sadbhav Engineering Ltd and John Laing Investments Ltd (UK) with an
investment of Rs. 1,420 crore.
Delhi Faridabad Elevated Expressway (NH2) (dfskyway TM)
The dfskyway TM, commissioned in November 2010, was also completed ahead of
schedule with an investment of Rs. 572 crore. The project road is a 4.4 km
elevated highway connecting Badarpur in Delhi and Faridabad in Haryana. The
dfskywayT contributes significantly to Delhi`s rapidly expanding
infrastructure by reducing travel time by over 40 minutes that benefits
residents and inter-state traffic alike. It is one of Delhi`s major radial
roads and caters to very high traffic volume of approximately 100,000
vehicles per day. Designed, engineered and constructed entirely by HCC,
this elevated structure boasts 20 exits, 10 underpasses and is the first of
its kind spaghetti structure in India. The dfskywayT has won many accolades
for efficient design and execution, including the Best Project Award by the
Construction Industry Development Council (CIDC) 2011 and the
Infrastructure Excellence Award 2011 by CNBC TV18.
The National Capital Region has witnessed approximately 20% traffic growth
during the past decade for satellite cities such as Gurgaon and Noida. In
the past, the growth of Faridabad was slower due to poor connectivity with
the heart of Delhi. With immediate connectivity due to dfskywayT, one
expects much higher growth for Faridabad, which has recently been cited as
the 8th fastest developing city by The City Mayors Foundation, UK. HCC
Infrastructure was awarded a 20-year concession in 2008 to design,
construct and operate this asset by the NHAI.
Nirmal (NBL) Annuity (NH7)
The sole annuity project in the portfolio is the road from Kadtal to Armur
in Andhra Pradesh, which forms a part of the Nagpur - Hyderabad section of
NH7. This 33 km development was the first investment by the Company and was
completed 100 days ahead of scheduled completion. The concession period for
the project is 20 years, including a construction period of 24 months. The
project was developed with an investment of Rs. 315 crore.
Assets under Development
West Bengal (NH34) Highway Project
This eagerly awaited project being developed by HCC Concessions Ltd on a
Design, Finance, Build, Operate and Transfer (DFBOT) basis, is among the
largest PPP projects in West Bengal (WB). The project road is the major
North-South artery (NH34) which originates at the capital and port city of
Kolkata, and ends at Dalkhola in the state of WB, covering a total distance
of 443.5 km. It is the spine of the transport system in the region and
provides nearest access to ports (Kolkata and Haldia) for the north eastern
states of India and neighbouring Bhutan and Nepal. The development of this
stretch will improve connectivity to the East-West Corridor, which has
already been four-laned. West Bengal is strategically located to play a
pivotal and catalystic role in promoting economic cooperation in the sub
region (Bangladesh, Bhutan, North Eastern states and West Bengal) which is
home to half a billion people.
The concession lengths for the three different segments totalling 256 km
range from 25 to 30 years, including a construction period of 30 months and
an investment of over Rs. 3,200 crore. The highway development, divided
into three contiguous sections covers Baharampore and Farakka (103 km),
Farakka and Raiganj (103 km) & Raiganj
and Dalkhola (50 km).
West Bengal NSDP grew at a CAGR of 7.4% in the last five years (FY05-09).
It is the fourth most populous state in the country and is the sixth
largest contributor to India`s GDP. The traffic on NH34 comprises of 90%
commercial traffic, carrying a diversified mix of manufacturing goods,
building materials, steel, jute, food grains and tea. The development of
this road will give a significant boost to commerce and trade in West
Bengal and will help in promoting economic cooperation in south-east Asia
sub region (comprising Bangladesh, Nepal, Bhutan, Eastern India and North
Eastern States).
Execution of the project is well underway and has achieved nearly 25%
completion. Further, traffic on the road over the past two years has
significantly exceeded expectations.
New Business Opportunities
HCC Infrastructure will continue to evaluate new opportunities, largely in
the areas of HCC`s core construction competence. The Company is currently
focussing on a number of PPP opportunities in the Power and Water sectors.
Power
While 2011-12 witnessed the highest capacity addition of 19,459 MW in a
single year, there has been a slowdown in new investments in the thermal
power segment, which is the dominant segment within the power sector in
India. Much of the slowdown is due to issues related to coal linkages. On a
positive note there has been acceleration in investments in other forms of
power, namely Hydro, Solar and Wind. The Hydro sector has gained momentum
in states like J&K, Uttarakhand, Meghalaya, Mizoram, and Maharashtra coming
up with allotment of hydro power projects through competitive bidding. More
than 500 MW of Solar projects have been allotted under various schemes,
with around 300 MW of solar projects already commissioned during 2011-12.
Further, more than 3,000 MW of wind capacity has been added in 2011-12,
which is around 5% of total capacity addition in India during the year. The
demand supply gap in the power sector is still immense. As per the estimate
of Central Electricity Authority, the energy deficit was 10.3% and the peak
deficit was 12.9% in 2011-12. The sector is likely to grow at a pace of 7-
8% to sustain the growth of Indian economy.
HCC Infrastructure`s power team has a wealth of development experience to
address the Company`s entry into the power generation business, where the
focus is largely on the Hydro and Renewable Energy sectors. The team, duly
supported by best in class advisors, consultants and partners, is
evaluating several opportunities in Hydro, Solar and Wind energy. In its
endeavour to develop power projects, HCC Infrastructure benefits from the
extensive experience and technical expertise of its parent Company HCC in
executing large and complex infrastructure projects with world class
quality and cost competitiveness.
Water
HCC Infrastructure is also currently evaluating opportunities in the field
of Water Transmission and Treatment. The increase in urban population is
expected to put strain on the basic infrastructure, with water being a
critical requirement both for cooking and sanitation. Urban populations are
expected to grow 40% by 2021 - we envisage this sector to grow at a
significant pace in the near future and are preparing to provide quality
infrastructure development and services through world-class facilities.
Integrated Urban Development and Management - Lavasa
The focus at Lavasa has always been to establish itself as a distinct hill
city, offering world-class facilities with its own unique features, where
one could live, learn, work and play in harmony with nature. As free
India`s planned hill city, it offers a wide range of residential and
commercial facilities, tie-ups with premier, national and international
educational institutions, an extensive range of tourist activities, family
entertainment opportunities and several business avenues across a range of
industries.
While operational progress was on track, construction operations were
stalled between November 25, 2010 till November 9, 2011, as the Ministry of
Environment and Forests (MoEF) had issued `stop-work` notice to the Company
for alleged violation of Environment Impact Assessment Notification of 1994
as amended in 2004 and that of 2006. The Company had filed a writ petition
in the Hon`ble Bombay High Court and challenged the show-cause notice cum
stop work order and the Company`s writ petition was admitted. However,
while writ petition was pending, in order to save time and to safeguard the
interests of the customers and the project at large, HCC also approached
the MoEF for grant of Environment Clearance (EC) to its project. The Expert
Appraisal Committee (EAC) of MoEF after perusing the documents submitted by
the Company, appraised the Company`s project and recommended grant of the
EC to the 1st phase of Company`s project comprising 2000 ha. Consequently,
MoEF accorded EC to the 1st phase of Company`s project on November 9, 2011.
Thereafter the work is in progress at the site.
The project stoppage, however, was a dampener to the progress of the
project. And, one full year of no work due to environmental issues has
considerably delayed the project. Consequently, the balance sheet of Lavasa
was under pressure. A consortium of banks who have lent most of the
Company`s Rs. 850 crore debt have in principle agreed to a debt
restructuring exercise and an application has been made by the bankers to
RBI through use of its special dispensation seeking not to classify Lavasa
as a substandard asset.
2011-12 saw several developments at Lavasa.
In the hospitality space, Accor Hospitality launched two of its brands
including the Mercure Lavasa and the 1500 plenary capacity Lavasa
International Convention Centre. Novotel and Pullman, also Accor brands are
in the process of being built, while Hilton, Comfort Inn, Days Inn,
Oakwood, Jukaso, Langham Place and Eaton, amongst others, are slated to
follow in quick succession.
On the retail front, a significant area has already been leased.
Restaurants like American Diner, Granma`s Homemade Patisserie, Brewberrys -
The Coffee Bar, Chor Bizzare, Subway and Oriental Octopus, Past Times Pub,
Tabakh, Pizzavala, Hungry Hippo and Fruity Bat have commenced operations.
State Bank of India and Union Bank of India have already started their
operations in Lavasa.
On the education front, 2011-12 witnessed the second successful year for
Christel House Lavasa with a total of 209 students. After the success of
the first year, in the year 2011-12, the phase - II of `Christel House
Lavasa` was launched. Ecole Hoteliere Lavasa started its third batch and
academic certification from Ecole Hoteliere Lausanne has now been received
to conduct Masters programmes and from IGNOU to conduct and award degrees.
Next in the pipeline for opening is Mussoorie International Lavasa, powered
by Educomp and EuroKids and Birla Edutech with primary and pre-primary
schools. Professional and executive education took off at Lavasa in a big
way with Massachusetts Institute of Technology (MIT) having conducted their
first programme on Airport and Airline Systems, Planning and Management.
My City Technology, a Company promoted by Lavasa, Cisco and Wipro to
develop IT infrastructure, also began its operations.
There was continuous stress on creating awareness through marketing
initiatives, primarily by exposing the city to a wider audience through
events. A television series called `Urban Longings` was aired to highlight
the need for planned new cities. This was supplemented by a series of
articles by personalities like Dr. APJ Abdul Kalam, who shared their ideas
of a `future city`. Events like `Literature Live` and Lavasa Mifta Awards
brought the city closer to arts and culture.
On the tourism front, Lavasa has tied up with I-Dream to create an all
Lavasa tourism plan including a historical theme park. Lavasa is also in
the process of forging an alliance with EngagePlus - a New Zealand Company
for adventure sports activities to offer adventure experience at Dasve and
nearby areas.
Lavasa continued its focus on branding and communication activities through
2011-12.
Importantly, as stated earlier, Lavasa was granted Environmental Clearance
by MoEF for the first phase of 2000 Hectares (Ha) in November 2011. A large
scale PR exercise across various media channels - print, TV and online -
was undertaken welcoming the news. Social Media and the Lavasa website were
used to disseminate related information and to address any related queries.
Media engagement and relationship building exercise continued throughout
the pre-clearance to post-clearance period. A new brand campaign `At Work"
was released in 2012. This was to reassure the general public at large that
developmental work has begun at Lavasa.
Positive sales trend continued through the year, with the Company giving
possession to over 150 residential units in Dasve. Residential sales of the
first town Dasve have almost been completed. There have also been many
enquiries for further residential units in Lavasa. Sales for the second
town Mugaon was launched on the occasion of Gudi Padwa in March 2012.
Almost 75% of the inventory has been sold out within just a fortnight of
the launch. It is also heartening to know that there have been less than 1%
cancellation requests from customers in spite of the MoEF status quo. The
current database of enquiries for the purchase of apartments and villas
exceeded almost eighty thousand, which indicates a healthy demand.
Institutional sales and commercial tie ups have also made progress with a
number of MoUs being signed. Land sale has been made to State Bank of India
which is planning to set up a retail bank and a training centre cum guest
house at Dasve. Development of an integrated Corporate Training Centre with
a residential component at Mugaon is also being planned by a consortium led
by the Giria Investment Corporation, Bengaluru. The Art of Living centre is
also slated to open at Mugaon. Sales are also fast picking up in our
commercial office spaces ventures - 247 Business Square and 247 Business
Avenue at Lavasa. These are just initial steps towards a 365 day - 247 city
that Lavasa is working towards. In the next year, the target is for many
such industries including IT and ITES, Biotechnology, Knowledge Parks, R&D
centres and Corporate Training centres to enable permanent residents to
move in.
Real Estate
HCC Real Estate Ltd (HREL), a wholly owned subsidiary of your Company, has
inherent skills and resources to develop and deliver high value real estate
projects that helps in building sustained communities across India. The
focus is to develop `state-of-the-art` projects which would provide world
class quality, engineering and technology and create a unique value
proposition for the customers.
247Park II at Vikhroli (West): The Company has initiated the process of
obtaining approvals for development of commercial office building adjacent
to 247Park I which is expected to have commercial office premises of
approx. 400,000 sq ft of saleable area under "Public-Parking Policy"
finalised by Municipal Corporation of Greater Mumbai (MCGM). The Company
has received preliminary approvals from Jt. Commissioner-Traffic for
parking of 520 cars. The Company envisages the completion of the
construction of the project by 2014. The marketing and sales department of
the Company has submitted Request for Proposals (RFP) for built-to-suit
(BTS) commercial space requirement and the Company is hopeful of receiving
good response riding on the sucess of 247Park Phase I.
Development of Vikhroli (E) land parcel: HCC owns a land parcel at Hariyali
village, Vikhroli (E), which was declared a slum under the Slum
Rehabilitation Act of 1973. HCC Real Estate is proposing to develop this
land parcel through Panchkutir Developers Ltd., a wholly owned subsidiary
of HCC. Consent has been received from more than 70% of slum dwellers for
development of this land, and the necessary documentation has been filed
with the statutory authorities seeking an approval for development on this
land parcel.
Charosa Wineries Limited: Your Company`s step down subsidiary Charosa
Wineries Limited has till date purchased about 211 acres of land. Purchase
of another 27 acres of land is in progress as on date. Total land area
under cultivation is 81acres. During the year, the Company signed a PMC
agreement with the Project Management Team of HREL for providing project
management, health-safety and environment management. Construction of
Winery Building is at an advanced stage.The Company has been accredited
under "Mahabhraman" scheme of Maharashtra Tourism Development Corporation
(MTDC) to operate tour packages within the state of Maharashtra. Further,
the Company has obtained registration from MTDC as a service provider for
tourism.
Internationally renowned Master Planners and Architects, HOK have done
master planning for setting up wine tourism project consisting of tourist
resorts, cellar-doors, wine bars, restaurant, theme park, adventure sports,
amphitheater, Wine spa etc. Harvesting and crushing of nearly 200 MT grapes
has been completed during the year & the Company expects to launch the wine
in the market during financial year 2012-13. During the year, Company fully
repaid the loan taken from the bankers.
Steiner AG (formerly Karl Steiner AG), Switzerland Steiner AG is a leading
general contracting Company in Switzerland, specialized in turnkey
development of new buildings and refurbishments, and offers services in all
facets of real estate development and construction. Through its wholly
owned subsidiary HCC Mauritius Enterprises Limited, HCC owns a majority
stake of 66% in Steiner AG.
In June 2011, Steiner AG moved into its new headquarters located in the
Andreaspark Business Centre in Zurich, which were developed and realized by
Steiner AG itself. On this occasion, the Company`s corporate name was
changed from "Karl Steiner AG (Karl Steiner SA) (Karl Steiner Ltd)" to
"Steiner AG (Steiner SA) (Steiner Ltd)".
Following through on HCC`s aim of accessing Steiner AG`s rich experience of
constructing world-class integrated buildings, Steiner AG initiated
international operations by
incorporating a wholly owned subsidiary, Steiner India Ltd, in August 2011.
It has its registered office in Mumbai and pursues the main objective of
undertaking construction of real estate projects in India.
Steiner AG generated a revenue of CHF 728 million (12 month period)
compared to CHF 597 million in the 11 month period in the last business
year. The profit before tax amounted to CHF 4.0 million in FY 2011-12.
In the business year 2011-12 Steiner AG signed many important contracts,
which include the project NeueSchanzenpost/PostParc in Berne, a total
services contract of around CHF 160 million with Swiss Post as client,a
general contract for the project MehralsWohnen in Zurich, consisting of 13
apartment buildings and a range of office spaces and business premises, for
a total volume of around CHF 145 million and a total services contract for
project Lindbergh in Zurich, a large-scale building for mixed use with
Credit Suisse as investor with a total volume of around CHF 100 million.
At year end, the order backlog of Steiner AG was CHF 1,512 million compared
to CHF 1,018 million as of March 31, 2011. Steiner AG has also secured
projects worth CHF 135 million which are yet to be signed.
Highbar Technologies
To leverage the expertise developed in providing in-house IT services and
cater to the IT needs of the construction industry, on April 1, 2010, HCC
hived off its IT department into a separate Company called Highbar
Technologies. The core team comprises IT and infrastructure professionals
who have amalgamated the legacy of domain knowledge in the infrastructure
business with information technology. Highbar focuses on IT implementation
initiatives from a business transformation perspective rather than
technology implementation perspective.
In its very second year of operations, Highbar was able to compete against
well-established industry players to serve 10 new customers. With this, the
total customer base increased to 50. A long list of reference customers and
high quantum of repeat business indicates maturity of Highbar`s delivery
capabilities.
In order to serve the infrastructure industry in Middle East more
effectively, Highbar Technologies Ltd, has incorporated a subsidiary in
Dubai, named `Highbar Technologies FZ-LLC` which is now fully operational
and has bagged customers in Middle East.
Highbar Technologies has developed a very strong strategic alliance with
SAP who considers Highbar as a preferred partner for infrastructure
industry. Gartner, the world`s leading IT research and advisory Company,
has published case study on managing successful IT spin-off with Highbar as
an example. After a long time they could locate a successful spin-off worth
writing a case study on.
Highbar continues to compete consistently with more established players in
the IT industry. It has already created a niche for itself in the market
and is a leading player that is helping grow the `IT for infrastructure
market`.
Highbar Technologies has strategically entered into a tie-up with SAP to
launch Highbar CloudConnect, which offers 1st of its kind SAP ERP solution
for infrastructure, real estate and ready mix concrete industry on pay-per-
user-per-month basis. This has provided SMEs a level playing field by
getting access to world-class IT solutions and industry best practices in
an investment friendly model. The cloud based offerings have helped Highbar
Technologies to penetrate the industry further to next level by reaching to
the masses.
With industry knowledge, Highbar has developed infrastructure industry
templates based on the best practices of infrastructure industry. These
provide the customers access to best practice level of business process
enabled by IT. This also reduces mindshare and timeshare of the customer,
while reducing the implementation time and TCO. The Company has developed
Highbar RapidStart and Highbar CloudConnect solutions based on the
templatised approach which are Intellectual Property (IP) assets for
Highbar Technologies.
Highbar continues to support HCC in its IT usage. SAP ERP is already
institutionalized in HCC`s Engineering and Construction division as well as
in group companies and subsidiaries including HCC Infrastructure, HCC Real
Estate and Lavasa Corporation. All the IT applications are supported at the
back end by a rugged and scalable IT infrastructure comprising state-of-
the-art wide area network and a well connected data centre. The Web based
Vendor portal built on SAP Platform also continues to be used effectively
by suppliers, sub-contractors, transporters and service providers to
collaborate and transact with HCC on a daily basis. To bring about
operational efficiency and cost control, the SAP ERP system was further
enhanced by building up a host of business process controls, automations
and system based pre-alerts and MIS reporting. The budgeting system for
project sites was further enhanced to bring about simplicity in preparation
and ease of review. SAP Business Objects was implemented in 2011 and
management dashboards covering organizational level key financial metrics
have been implemented.
In January 2011, SAP CRM was implemented with a view to achieve a better
hit ratio, increased market share and better profit margins. Over the last
year the usage of the system has stabilized and the desired benefits have
started to fructify. HCC`s SAP CRM implementation was the first for Indian
Construction Industry and the effective implementation and usage, helped
HCC win the SAP ACE award for 2011.
Highbar Technologies is on the course towards achieving its vision of being
considered `the most preferred end to end IT solution provider` for the
infrastructure industry.
Pillars of Support
The operations of the different divisions are supported by Management
Systems, Intellectual Property Rights, Branding and Human Resource.
Management Systems
HCC`s business operations extend to remote project sites spread across
different states. Creating, developing and establishing best-in class
processes and systems across these sites are fundamental to ensure the
Company`s competitive strength.
HCC has adopted an integrated approach towards Quality, Environment, Health
and Safety and has incorporated these in business practices. The objective
of an Integrated Management System (IMS) is to inculcate a culture of
continuous improvement that will enhance quality of the products and
maintain the highest standards of environment protection and safety of the
project team and workforce to maximize customer satisfaction.
This adheres to the stringent standards stipulated by ISO 9001 : 2008 for
Quality; ISO 14001 : 2004 for Environment; and BS OHSAS 18001 : 2007 for
Occupational Health and Safety.
On the safety front, HCC focuses on creating a culture that continuously
reduces the frequency of incidents to achieve the goal of `Zero Reportable
Injuries`. The Company is also committed to reducing the impact on
environment during execution or construction of projects by continuously
monitoring the environment.
HCC has a good safety performance record in nine projects, which have
achieved more than 3 million safe man-hours and five projects which have
achieved 2 million safe man-hours without any reportable accident until
March 2012.
To achieve these objectives, engineers at various functional levels are
trained by professional agencies to ensure proper operation of processes
and implementations of systems. These trained engineers then act as
internal auditors to conduct regular bi-annual internal IMS audits based on
a detailed schedule.
There were several IMS-related developments in 201112. Between November 21,
2011 and December 23, 2011, M/s TUV NORD, the certifying agency, conducted
a surveillance audit for ISO 14001: 2004, BS OHSAS 18001: 2007 and ISO
9001: 2008 to verify the status of compliance to the requirements of these
standards. The objective and effectiveness of Integrated Management System
has been verified during this audit course. Five project sites of the
Company and most of the functions at corporate office were subjected to
these audits. The auditors recommended continuation of certification for
ISO 14001: 2004, BS OHSAS 18001: 2007 and ISO 9001: 2008 valid up to March
2014.
Intellectual Property Rights
HCC continued to pursue its initiative on creation and protection of
Intellectual Property (IP) during 2011-12.
Patents
HCC is awaiting registration on the following invention applications
submitted to the patenting authority under the Patents Act, 1970 in India.
These inventions are under examination by the Patent Office:
* Pipe joint leak-testing device.
* A system for automatic accounting of fluids in a vessel, container or
tank.
* New capping system for testing concrete and rock cores.
* System and method for online monitoring of fuel consumption in
automobiles.
* System and method for detecting trespassing below a parked vehicle.
* Geotextile Sand Container Mattresses (GSCM) lining for temporary river
bed diversion channels.
Trade Marks
During the year under review, the Company filed applications for
registration of trade marks/obtained registration as per details below:
* In June 2011, in respect of wholly owned subsidiary, Highbar Technologies
Limited, obtained registration for the trade mark "Highbar" from the
Registrar of Trade Marks, Mumbai.
* In July 2011, filed a multi class trade mark application for registration
of mark `HCC Innovention ` before the Trade Marks Office, Mumbai.
* In January 2012, in respect of wholly owned subsidiary, Highbar
Technologies Limited, filed three trade mark applications including a
multi-class application for registration of marks `Highbar Rapidstart` and
`Highbar Cloudconnect` before the Trade Marks Office, Mumbai.
Copyrights
* In October 2011, in respect of wholly owned subsidiary, Highbar
Technologies Limited, filed two copyright registration applications for
protection of `Highbar` labels (artistic work) at the Copyright Office, New
Delhi.
Branding at HCC
HCC continued to build its brand presence and communicate its core
competence. Among the major milestones achieved during the financial year
were the completion of the 12 Km long Marol-Maroshi water supply tunnel in
Mumbai as well as the 21 Km Pir Panjal Tunnel packages in Jammu & Kashmir -
which includes India`s longest tunnel poised to bring broad gauge rail
connectivity to Srinagar. A structured communication programme resulted in
good visibility for HCC in national media, creating a connect with India`s
critical infrastructure projects thus enhancing perception of the HCC brand
centred around its core philosophy of `Responsible Infrastructure`.
As India transforms the road travel experience for motorists and goods with
the development of several arterial national highways, HCC`s contribution
to building more than 3,100 lane kms of the national highway programme is
increasingly visible. Its brand presence penetrated further into interior
towns when the four lane Dhule-Palesnar Tollway on NH-3, developed by HCC
Concessions Ltd in a joint venture, was opened to motorists a full four
months ahead of schedule. Branding along the entire 89 Km route was
specially created to guide and facilitate traffic for a safer and smoother
journey. A similar exercise was conducted along the Lucknow-Muzaffarpur
Highway on NH28 linking Lucknow and Gorakhpur and is also underway along
the 276 km long NH-34 redevelopment project in West Bengal.
The visit of the Prime Minister of Bhutan, Mr. Jigme Y. Thinley,
accompanied by other dignitaries from the Government of Bhutan to the
Punatsangchhu Hydel project drew attention to HCC`s continuing and key role
in building hydel power capacities for the region.
HCC`s website underwent a comprehensive overhaul for enhanced access to
updates, news and information. HCC`s brand communication programme
continues to be refined with the appointment and induction of project Brand
Champions aimed at strengthening their key role in dissemination of brand
values amongst all Company staff.
Internally, key accomplishments across HCC in the areas of project
milestones, R&D and innovation were communicated through the employee
magazine HCC News and several other electronic newsletters.
Human Resources (HR)
During the year 2011-12, the focus of the organisation was on
consolidation, improvement and reorganisation to meet the prevailing
challenges.
Within HR, the first step towards this was the realignment of the
organisation structure along the functional line to reinforce enhanced
focus and accountability in various areas of business including business
acquisition, business implementation and technology. Teams were regrouped
and put in place for working along the lines of the revised organisation
structure.
There were also significant initiatives in reducing costs. There has been
manpower right sizing at the sites as well as the corporate office. In
addition, concerted effort was put in place for reducing administrative
costs right across the organisation.
While there was an emphasis on the cost side, talent acquisition
initiatives were also carried out to fill up specific senior positions,
which were functional necessities arising out of the new business
orientation.
Initiatives undertaken earlier to improve the human resources effectiveness
through automation of HR systems and processes continued. An online
Employee Portal has been developed in expediting various HR processes as a
self service model. Implementation of the manpower deployment tool has
started delivering results in effectively managing the human resources
inventory and the vacancies.
Financial Review
Table 1 gives the Abridged Profit and Loss Account for HCC, as a standalone
Company, while Table 2 lists the key financial ratios.
Table 1: Abridged Profit and Loss account of HCC (Rs. crore)
2011-12 2010-11
Revenue
Income from operations 4,002.8 4,144.0
Less: Income from JVs 11.3 50.8
Net income from operations (a) 3,991.5 4,093.2
Profit/(Loss) on integrated JVs (b) (3.2) (2.5)
Total (a) + (b) 3,988.2 4,090.7
Expenditure
Construction expenses 2,965.7 2,890.2
Staff costs 439.2 467.6
Other expenditure 143.5 192.0
Interest 543.2 329.0
Depreciation 162.1 152.7
Total 4,253.7 4,031.5
PBDIT (Including Profit/Loss on
integrated JV)
PBT (including profit/loss on (265.5) 59.2
integrated JV)
Exceptional items (166.3) -
Other income 122.8 43.9
Exchange Gain/(Loss) (9.5) 8.6
PBT (including other income, Exceptional
items and profit/loss on (318.5) 111.7
integrated JVs)
Deferred Tax Charge/(Credit) (96.2) 40.7
PAT (222.3) 71.0
Table 2: Key Financial Ratios
PBDIT/Net Income 11.0% 13.2%
PBT/Net Income -8.0% 2.7%
PAT/Net Income -5.6% 1.7%
ROCE 4.0% 9.3%
Basic EPS (Rs.) (3.66) 1.17
Internal controls and their adequacy
HCC has an adequate system of internal control to ensure that the resources
of the Company are used efficiently and effectively, all assets are
safeguarded and protected against loss from unauthorized use or disposition
and the transactions are authorised, recorded and reported correctly,
financial and other data are reliable for preparing financial information
and other data and for maintaining accountability of assets. The internal
control is supplemented by extensive programme of internal audits, review
by management, documented policies, guidelines and procedures.
Cautionary Statement
Statements in this Management Discussion and Analysis describing the
Company`s objectives, projections, estimates and expectations may be
`forward looking statements` within the meaning of applicable laws and
regulations. Actual results might differ substantially or materially from
those expressed or implied. Important developments that could affect the
Company`s operations include a downtrend in the infrastructure sector,
significant changes in political and economic environment in India,
exchange rate fluctuations, tax laws, litigation, labour relations and
interest costs.
Corporate Social Responsibility (CSR):
Responsible Infrastructure
Since its inception, HCC has a long-standing commitment to developing
responsible infrastructure. The Company remains steadfast on its objective
of pursuing holistic growth with responsibility towards the people and the
environment. As a pioneer and trend-setter in the construction industry in
India, HCC is aware of the responsibilities that accompany its leadership
status. The Company has a slew of social initiatives that complements its
world class operational processes and systems to provide for responsible
infrastructure development.
Sustainable Practices
HCC`s businesses practices ensure minimal environmental impact through
appropriate water, air and waste management. This helps in optimisation of
resources and the quantification of such practices is disclosed through the
annual sustainability report that uses the GRI framework of reporting. Each
project site has a trained sustainability champion for effective
communication.
In 2011-12 too, HCC`s Sustainability Reports have been accredited by the
Global Reporting Initiative (GRI) with Application Level Check A+.
HCC is an organizational stakeholder of the Global Reporting Initiative
(GRI) and a member of the GRI`s Working group on construction and real
estate sector (CRESS) tasked with developing sector specific sustainability
reporting guidance. The Company is also a member of UN Global Compact
(UNGC), TERI - World Business Council on Sustainable Development and
signatory to various UNGC initiatives including "Caring for Climate" and
"The CEO Water Mandate"
Education
HCC regularly trains engineers and other personnel for its in-house
requirements. Walchand College of Engineering (WCE), one of the oldest
engineering colleges in India, started by the Walchand family is mentored
by Mr. Ajit Gulabchand, Chairman & Managing Director of HCC, who serves as
the Chairman of the College Board. This prestigious academic institution
received autonomy in 2007, and in May 2011, the first batch of B.Tech
students graduated. In all, 468 engineers passed out of WCE in the academic
year 2010-11, including 20 medalists.
HIV/AIDS
Recognizing the serious impact that HIV/AIDS has amongst migrant workers
and in turn on the enterprise, HCC has formulated the HIV/AIDS Workplace
Policy and adopted a Workplace Intervention Programme (WPI) that focuses on
prevention programmes and zero tolerance of stigma and discrimination at
the workplace. The WPI focuses on enhancing awareness and education about
HIV/AIDS, creating a supportive and safe environment for workers and
preventing discrimination. In this endeavor, the Company is partnered by
the International Labour Organisation (ILO), the Avert Society (USAID
Programme) and the Clinton Global Initiative. The programme aims to sustain
optimal workplace productivity by conducting prevention, education and
awareness training. The WPI model is based on three tier system viz.
Training of Trainers, Creating trained Peer Educators and Sensitization of
Management (Officers), so that their support to the programme percolates
down to all beneficiaries.
World AIDS Day on 1st December was observed across the Company to show
solidarity and commitment to work towards the prevention of the epidemic.
Activities organized across project sites include screening of informative
movies, street plays, distribution of literature, blood donation camps and
various competitions.
At the end of 2011-12, a total of 46,398 officers and workers have been
covered through the WPI program. We have created a pool of 301 Master
Trainers and Peer Educators across our project sites. The total number of
man-hours spent on the WPI program is now 143,674 hours. Creation of a
trained Master Trainer and Peer Educator pool has helped us fulfill our
employee sensitization and training in-house without the need of an outside
consultant.
During 2011-12, there were some new alliances established to further extend
the initiative focusing on HIV/ AIDS among women and children. This
included HCC and the Times Foundation, in association with the Municipal
Corporation of Greater Mumbai (MCGM), launching a health initiative titled
Project `Sahyog`. The aim of the project was to complement the Government`s
efforts to increase the demand among the urban slums for accessing
affordable health care services provided by the BMC health department. The
programme was to sensitize workers to mother and child health and
prevention of parent-to-child HIV transmission (PPTCT). 500 frontline
workers were trained through customized module and communication material
reaching to 5 lakh population of the `L` and `M` wards of Mumbai.
Water
HCC recognizes the correlation of business sustainability with water
resource management and is committed to monitor and conserve the amount of
water used across its construction project sites.
HCC, the first Indian Company to endorse United Nations Global Compact`s
"The CEO Water Mandate" and an Industry partner of the World Economic Forum
(WEF), makes it a point to embed the principles of water resources
management in all its activities. As a responsible corporate steward, HCC
has always been motivating other companies, to join this initiative by
presenting best practices of water stewardship at HCC in various local,
regional, national, and international conferences and symposia. Such moves
are crucial in bringing about inclusive development for the nation, in
general, and in developing sustainable infrastructure, in particular.
To effectively implement the CEO Water Mandate, a team of water experts and
practitioners based at HCC`s Head Office in Mumbai, communicate with the
project sites through a nodal officer ("Water Champion") stationed at each
site. Over the years of implementing the CEO Water Mandate at the project
sites, HCC has been able to optimize consumption of water leading to
enhancement of HCC`s ability to conserve precious freshwater. It also helps
minimize carbon footprint for resourcing and pumping freshwater to the
construction site. There have been a number of water interventions taken at
projects sites of HCC spread over India and abroad.
Rain water harvesting, for example, has been in practice in India and
elsewhere from times immemorial. However, the concept of harnessing this
technique to harvest rainwater collected through specifically designed
storm water drains alongside an infrastructure project like Badarpur
elevated highway is unique and exemplary. This innovative application of
rainwater harvesting technique has the potential to recognize the
significance of ground water recharge of rainwater from paved surfaces and
demonstrates a way to offset the impact of ever increasing paved surfaces
being built in the process of infrastructure development, in general, and
Roads, highways, and Elevated Highways, in particular.
Similarly, in case of Vizag Cavern Project (VCP), installation of
sedimentation tank(s) for solids removal at construction site was one of
the regulatory compliance to be adhered to. However, producing water from a
specifically designed effluent treatment plant for process consumption was
a unique HCC initiative. Adoption of Desalination Plant at the DGNP site in
Mumbai is yet another innovative initiative under the aegis of UN Water
Mandate. In this case, water is being sourced from the Arabian sea, treated
through the desalination plant and the treated water is being used for
HCC`s process consumption.
Cumulatively, across all HCC`s projects sites in this FY 2011-2012,
approximately 285 million litres of fresh water have been conserved.
With these activities and continual engagement with work streams and
programmes of United Nations (UN), Global Reporting Initiative (GRI), World
Economic Forum (WEF), The Energy and Resources Institute (TERI); HCC has
been translating its experiences into advocacy.
Disaster Management
HCC`s vision is "to build on the core strengths and existing capacity of
the organization i.e. Engineering, Project Management Capabilities and
availability of relevant resources & be well equipped to handle emergencies
through trained engineers & workers, heavy equipments and communication
hardware needed for disaster response, evacuation and reconstruction."
The Company actively participates in various disaster relief initiatives
and engages in many National and International level partnerships to
support disaster management.
HCC, one of the founding members of Disaster Resource Partnership (DRP)
Global, is leading the DRN National Network in India. DRP is a model,
created by WEF, for coordinated private sector partnership in response to
natural disasters. DRN India is one of the three national networks under
DRP, other two being Mexico and Indonesia Network. Our Chairman & Managing
Director, Mr. Ajit Gulabchand is one of the steering board members of DRP
Global and chairs the DRN India Network.
The DRN India, established in 2002, is a consortium of engineering and
construction (E&C) companies operating in India, that seeks to apply the
core skills and assets within the Company, to disaster response. DRN India
mainly focuses on: [1] capacity building trainings-First Responder Training
and Engineering in Emergencies to respond to emergency situations [2]
support for disaster relief operations.
Under DRN India, HCC has supported many rescue and relief operations in the
past ten years at National and International levels like Tsunami (2004),
J&K Earthquakes (2005), Mumbai Floods (2005), Bangladesh Cyclone(2007), Leh
Flash Floods (2010),Sikkim Earthquake (2011) etc.
Some highlights of 2011-12
* First Responder Training, a basic training given to all employees on life
saving skills, till medical help is provided.
* Engineering in Emergencies Training is an advanced level residential
training given to a subset of HCC engineers to qualify them for emergency
relief and rehabilitation work.
At the end of the year 2010-11, a total of 11500 employees trained In first
responder training contributing 46000 man hours and 66 engineers trained in
engineering in emergencies training contributing 3696 man hours.
* HCC team lead by EE trained engineers supported relief and rehabilitation
during Leh Flash Floods 2010, West Bengal Train Accident 2011and Sikkim
earthquake 2011.
* Several companies including L&T, Essar, Shapoorji & Pallonji, Afcons,
Halcrow, CH2MHILL, Arup, and Hirco have joined hands to take the DRN India
Network forward.
* HCC has joined United Nation`s International Strategy for Disaster
Reduction(UNISDR)`s new division, Disaster Risk Reduction Private Sector
Partnership (DRR-PSP) to engage the private sector in future
Disaster Risk Reduction (DRR) initiatives. Our CMD, Mr. Ajit Gulabchand is
a member of Private Sector Advisory Group along with 14 more CEO`s from
leading global companies.
Community Development Initiatives
HCC has a long tradition of contributing to and investing in communities in
and around its project sites. Under the broad umbrella of community
development, several initiatives have made a lasting impact on the
economic, environmental and social conditions of local people.
Community Development Activities
* Donation of computers and other equipment to schools
* Tree plantation
* Construction of composting facilities
* Construction of roads, sanitation facilities and temples
* Provision of electricity
* Construction of irrigation and drinking water systems
* Provision of employment
* Sponsorship of vocational training programs
Other than this, the project sites also undertake specific community
development initiatives based on HCC`s CSR mandates in Education, Water,
Disaster Management and HIV/AIDS awareness.
Corporate Partnership Kihim, Maharashtra
HCC has partnered with Kihim Gram Panchayat over the past three years
promoting effective Solid Waste Management, among other environmental and
developmental issues. Last year, in response to the lack of garbage
collection facility in the village, we handed over a scientific garbage
collection van to the village Sarpanch. The van was purchased on the basis
of a public private partnership between HCC and the village Gram Panchayat.
A beach cleaning drive organized by HCC at Kihim which was a major
community activity. The main objective of this program was to clean the
beach through community participation and engage students and the youth.
HCC has also donated computers to local schools with the aim of educating
the students on various aspects of health and environment through the
medium of information technology.
Gulabchand Foundation
The Gulabchand Foundation primarily focuses on carrying out various health
care and educational initiatives for the advancement of underprivileged
rural and urban sections of the society. It is a non profit making Company
duly registered in the year 2003 under Section 25 of the Companies Act,
1956, under the leadership of Mr Ajit Gulabchand, Chairman & Managing
Director of Hindustan Construction Company Ltd (HCC). In the past year, GF
has supported, amongst other causes, Cochlear Implant (CI) surgery for
children. This is a surgical procedure to implant a digital device within
the ear to treat profound deafness; this surgery being most effective in
children. GF provides financial support to persons for this surgery based
on several factors like the recommendation of doctor, age of the patient,
financial status of the parents, parent`s commitment etc established
through home visit, interview with parents etc. In 2011-12, more than Rs.
10 Lakhs was donated for two CI surgeries on three year old girls.
During the year under review, GF has also donated approx. Rs. 2.49 crore
towards educational activities like providing support to students below
poverty line by donating IXth and Xth std. text books to three schools in
Pune and for providing scholarship to needy bright students. In its aim to
strengthen support to educational institutions, GF has contributed towards
the building of infrastructure at Christel school in LAVASA and for
development of international curriculum for engineering students at
Walchand College of Engineering, Sangli which would enable students to be
creative and aspire for an innovative thinking in the field of construction
and thereby set a new trend while serving the industry at large. Other than
health and educational support, GF has also extended its help for the cause
of `Save Animals` by sponsoring an education and awareness event. |