Management Discussion and Analysis Report

Overview

NBCC, a Navratna Schedule 'A' Company under the administrative control of Ministry of Urban Development was set up in 1960. NBCC is a most promising and rapidly growing India Public Sector Enterprise serving the nation from the last 55 years with marked brsence in Project Management Consul tancy (PM C), Engineering Procurement and Construction (EPC) and Real Estate.

BUSINESS OPERATIONS

Project Management Consultancy (PMC) In PMC business your company is ISO 9001:2008 certified from the Bureau of Indian Standards. NBCC provides management and consultancy services for wide range of civil construction projects which includes residential and commercial projects, hospitals, educational institutions, border fencing, roads, solid waste management projects etc all over India.

NBCC's major clients include various ministries like Ministry of Urban Development, Corporate Affairs, Information & Broadcasting, Home Affairs, External Affairs, Rural Development, Commerce & Industry, Defense, Finance etc.

Besides NBCC has also signed MOUs with AIR India; NAWADCO; IITs, NITs CPWD etc.

To strengthen the business prospects, NBCC has signed MOU with DDA for various projects one of which is execution of East Delhi Hub at Karkardoma, New Delhi based on Transit Oriented Development( TOD) norms and smart city principles. The project will see one signature tower, tallest in Delhi with platinum rating Green building incorporating various features like smart buildings, smart IT and communication, smart environment and smart energy, solid waste management, re-cycling of water, sewage treatment plant, energy efficient buildings with less carbon emission, zero waste, solar panels etc.

The Government' s vision of executing 100 smart cities is in process and NBCC is already in discussion with technology expert to enter this field and take prominent lead as an extended arm of Ministry of Urban Development.

Engineering Procurement and Construction (EPC)

In EPC Segment NBCC being notified Public Works Organization has a additional advantage to procure large infrastructure work as Government Departments, PSUs, autonomous bodies can award works to NBCC on nomination basis. Further br-qualification and financial entry barriers for high value projects would give NBCC an edge over the other competitors bidding in such projects.

NBCC is taking up more and more work in remote and difficult areas to encash business opportunities with assured profit. A major work is being taken up in remote Arunachal Pradesh for development of roads in dense jungle area for 185 km valuing approximately Rs 1400 crore.

Further to promote technical collaboration for mutual benefit by sharing experience and expertise in planning, design, construction, operation, maintenance, management, financing of infrastructure projects and to tap consultancy service market in foreign countries, NBCC has signed MOUs with various foreign parties like: M/s Al Naba Services LLC, Sultanate of Oman; M/s Construction Industry Development Board Holdings Sdn. Bhd., Malaysia; M/s Form Yapi Malzemeleri Insaat Samayi Ticaret Ltd, Turkey etc.

Real Estate

NBCC is into the Real Estate business since 1988 and has many Real Estate projects to its credit both residential and commercial at various locations across the country which includes Kolkata, Delhi, Lucknow, Cochi, Cuttack, Vadodara, Ghaziabad, Faridabad etc. NBCC has land bank of around 132 acres and is likely to generate sizable business and steady income over a longer period of time.

Redevelopment of General Pool Resi den ti al Accommodation (GPRA) is another area where NBCC has recorded its expertise by successfully completed New Moti Bagh project. The other Kidwai Nagar project is in progress and re development of three government colonies at Kasturba Nagar, Tyagraj Nagar and Netaji Nagar in New Delhi are likely to be awarded to NBCC being the major implementing agency of GOI.

There is plenty of land available with many public sector companies lying idle and prone to encroachment we have identified such corporations and have approached the Ministry of Heavy Industries to allocate such surplus land for development to generate revenue and for gainful utilization.

SUBSIDIARIES AND JOINT VENTURES

To further expand the activities and explore core areas to mark the brsence of the company NBCC has formed a wholly owned subsidiary company in the name and style of "NBCC Services Ltd." to provide post construction maintenance services to clients.

NBCC is also in process to set-up a Joint Venture Company with Government of Rajasthan to undertake the re-development and infrastructure projects in the state of Rajasthan which is likely to come into operation this year.

OUTLOOK

Your Company has executed an MOU with the Ministry of Urban development for the year 2015-16 stating the following vision and mission –

Vision

Your Company has acquired a reputation for class quality projects in PMC and civil infrastructure However its vision is to be world class construction business company attaining global standards of sustainability, quality, customer relations and responsiveness.

Mission

A leading company with high brand equity in construction business, offering sustainable, innovative, cost-effective construction products and service contributing to national wealth, upholding responsibility for the environment and promoting well being of all stakeholders including employees, customers, shareholders and society.

FINANCIAL PERFORMANCE

Strengthened by robust operational performance and sound fundamentals NBCC has posted imbrssive corporate results during the financial year 2014-15. The total income from operations (consolidated) increased by 14.84% i.e. to Rs 4674.14 cr against Rs 4070.10 cr brvious year and Profit after Tax increased by 8.09% i.e. Rs 278.28 cr against Rs 257.45 Cr last year. Company has recommended a dividend of 55% for the FY 2014-15.

The performance of the Company has been rated "Excellent" by the Department of Public Enterprises( DPE) for the FY 2013-14 & for the FY 2014-15 , NBCC is likely to be slated "Excellent".

FACTORS AFFECTING THE PERFORMANCE.

Performance of the Company depends upon the availabilty of land from the government, and State Governments as there are few opportunity to participate in land parcels auctioned by State Bodies. Intense competition with the entry of non-sectoral Companies in PMC sector affects the order book of the Company. Further actual results of the Company also depends on future economic development in the Country.

STRENGTHS

NBCC being a notified public works organization covered under revised rule of 126(2) of GFR has un upper hand to get work from Govt. Department / autonomous bodies / PSUs on nomination basis.

NBCC's performance in diverse areas viz. PMC in power, water supply, health, sewage, environment, real estate and infrastructure reflects the potential and capabilities of NBCC.

Its PAN India brsence and experience of working abroad in countries like Middle East, Turkey, Nepal, Maldives, Mauritius etc. strengthen its diverse order book and is advantageous over the competitors.

OPPORTUNITIES

Present Government's priority on housing for all by 2022, creation of 100 smart cities and development of infrastructure projects will certainly boost the Indian economy and this will offer further prospects of increase in the Company's order book and incremental opportunity to NBCC. NBCC has entered into global arena like GCC countries with overseas partners / agencies and has great expectation of business opportunity in those countries.

The Company, based on Government's infrastructure emphasis, and housing for all, is striving to enlarge its operation in real estate development and attracting large value projects. It is hoped that there is also a scope for development of affordable housing and commercial in the very near future.

RISK MANAGEMENT

The Company has a Risk Management Policy through which it identities and assesses new risks and review existing risks. Based on the probability and impact of the risk factor, requisite action plan and controls are planned In fact, the policy plays a crucial role in ensuring that vulnerabilities are kept in check. To measure and monitor the effectiveness and efficiency proper strategic planning and proactive efforts are made to mitigate the affect of risks Risk's root causes, control and action plan are brpared and updated regularly.

INTERNAL CONTROL SYSTEM

Keeping in view the size and nature of business the company has formulated adequate and suitable internal control system to ensure covering all financial and operating functions. The documented internal control procedure ensures competent, advantageous and protection to the vital resources and proper accounting control including due compliances with statues, procedures and protocol. The system ensures reliability of financial & operational information. The system involves well structured work instruction and procedure to ensure proper authorization, maintenance of records and reporting all transactions. There is continuous efforts to align all its processes and control to improve compliance at all levels. Regular meetings of the Audit Committees are held to evaluate the internal control system and processes.

HUMAN RESOURCES

Human Resources play a very important role in business of the company. NBCC treats human resources development as an important growth driver of its business. HR department of NBCC has adopted the policy of integration, governance and strengthened its impact on the day to day functioning of NBCC. It has a dedicated team which has a mission and vision to achieve the goals laid down for it. The Company has adopted Fast Track Promotion Policy to accelerate the growth of high performers. To motivate and encourage employees to work in remote and difficult situations, it provides financial incentive and other privileges to encourage employees to get acquainted with the latest technology and skill, regular in-house and outdoor training programs are arranged. For maximum utilization of manpower and to see no Man days are lost, the Company is maintaining harmonious industrial relations. Personal policies and welfare schemes are continuously aligned with the Company's goals and objectives.

CAUTIONARY STATEMENT

All the statement and claims in the report regarding the projection, estimates, expectation may be forward looking based on the belief of the management of your Corporation However results may vary due to various factor, like the change in the general economic and business conditions, inflation, change in government policy and regulations and other statues and incidental factor. The Company, therefore cannot be held responsible in any way for such statement and it undertakes no obligation to publically update these to reflect subsequent events and consequences.