Annual Report 2019-20 Contents Chairman’s Letter .................................... 4 Company Information ............................. 11 Management Discussion & Analysis ...... 12 Corporate Governance ............................ 21 Board’s Report ........................................ 41 Business Responsibility Report .............. 70 Standalone Auditors’ Report ................... 76 Standalone Financial Statements ............ 90 Consolidated Auditors’ Report ............... 163 Consolidated Financial Statements ........ 176 Notice ...................................................... 288 Highlights 2019-20 • Turnover: `3643.64 crore in FY20 vs. `4603.49 crore in FY19 • EBITDA margin (excluding Other Income) was 12.7% in FY20 vs. 12.8% in FY19 • Net Loss of `168.7 crore compared to Loss of `1925.6 crore in FY19 • Infusions of liquidity in FY20: `348 crore arbitration award collections • Senior lenders approved carve out ~`2,800 crore of Debt along with pool of Awards/Claims, to address Company’s asset-liability mismatch • Supreme Court struck down Section 87 of Arbitration and Conciliation (Amendment) Act, 1996, on Nov 27, 2019, freeing HCC to execute awards of `1,584 crore • CCEA amendment circular dt. Nov 20, 2019 to help accelerate realization of arbitral awards; Govt. agencies to take the opinion of Law Officer before challenging arbitral awards and requiring a refund of BGs given for interest component (~`850 crore in HCC’s case) • Conciliations of Awards/Claims of ~Rs.5,000 crore underway with NHAI • Robust free cash flow generation by BOT assets with Baharampore Farakka Highways Ltd. and Farakka Raiganj Highways Ltd. growing their turnover to `144.7 crore and `167.1 crore in FY20 • Steiner AG reported a net profit of CHF 28.04 million (`202 crore) on back of robust operational performance 1 Completed projects DMRC - Netaji Subhash Place to JHARKHAND Shalimar Bagh Projects in progress Chandil Dam DMRC - Vishwa Vidyalaya to ISBT New projects Grand Trunk Road Improvement Flyover linking existing Munirka Project BOT projects flyover to Army RR Hospital KARNATAKA GOA ANDHRA PRADESH Bangalore Metro Reach 5, Goa Barge Berth at Marmugoa Package 3 Cavern for Crude Oil Storage, Vishakhapatnam GUJARAT Cavern for Crude Oil Storage, Padur Godavari Barrage at Rajahmundry Kachchh Branch Canal Yettinahole Project Godavari Railway Bridge Kakrapar Atomic Power Project KERALA Polavaram - Right Main Canal Kalol Mehsana Gas Pipeline Brahmapuram Diesel Power Plant Tata Memorial Centre, Hospital Mehsana to Palanpur Highway Dam across Idamalayar Vizag Monolith, West Wall Saurashtra Branch Canal Protection Lower Periyar Hydro Power Swarnim Gujarat Kutch Water Grid Project ARUNACHAL PRADESH Sebarigiri Dam HARYANA Pare Hydro Power Project Wellington Bridge, Cochin Hathnikund Barrage ASSAM LADAKH Panipat Chimney Bogibeel Rail-cum-Road Bridge Chutak Hydro Power Project HIMACHAL PRADESH Brahmaputra Bridge Nimoo Bazgo Hydro Power Chamera Hydro Power Project, NH-37 - Numaligarh to Jorhat Project Stage I Highway Chamera Hydro Power Project, MADHYA PRADESH NH-54 - Maibang to Nirmbanglo Stage III Highway Bistan Lift Irrigation Scheme Kashang Hydro Power Project BIHAR Road Bridge over River Indravati Nathpa Jhakri Hydro Power Ganga Bridge at Mokameh Project Satpura Thermal Power Station Munger Rail-cum-Road Bridge Sainj Hydro Power Project Tons Hydro Power Project Muzaffarpur Thermal Power Plant Sawra Kuddu HRT MAHARASHTRA Sone Barrage JAMMU & KASHMIR Bandra-Worli Sea Link Sone Bridge Access Road Tunnel to Sawalkote BARC - Integrated Nuclear Hydro Power Project Recycle Plant, Tarapur CHATTISGARH AnjiKhad Cable Stayed bridge Bhama Askhed Pipeline Bhilai Steel Plant Tunnel T13 Bhandup Pipeline DELHI Kishanganga Hydro Power Project Bhandup Water Treatment Delhi Faridabad Elevated Complex Expressway Mughal Road Bhorghat Tunnel DMRC - Airport Metro Express Pir Panjal Tunnel Line Pune Metro Ramban Banihal Highway DMRC - Dwarka to Najafgarh DGNP Dry-Dock and Wharves DMRC - Janakpuri West to Palam Salal Hydro Power Project Factory Civil Works for Premier Station T 49 Tunnel - Dharam-Qazigund Automobiles Limited DMRC - Janakpuri West to RK Ghatkopar High Level Water Ashram Corridor Uri-II Hydro Power Project Tunnel 2 Koyna Hydro Power Project Stage Rail Coach Factory at Kapurthala Naini Cable Stayed Bridge I to IV RAJASTHAN Narora Atomic Power Project Middle Vaitarna Water Pipeline East-West Corridor Project NH - 28 - Lucknow Muzaffarpur Mumbai Coastal Road – Pkg II Highway Parwan Dam & Tunnel Mumbai Metro Line 3: UGC-02 Rihand Dam Rajasthan Atomic Power Project, Mumbai Metro One Units 1 & 2 Sai Aqueduct Mumbai-Pune Expressway Rajasthan Atomic Power Project, Sharda and Ghogra Barrages Units 3 & 4 NH-3 MP/Maharashtra Border - Varanasi Bridge Dhule Highway Rajasthan Atomic Power Project, Units 5 & 6 Yamuna Hydro Power Project NH-4 - Satara Kolhapur Highway Rajasthan Atomic Power Project, UTTARAKHAND Nhava Sheva WTP Works, Raigadh Units 7 & 8 Tapovan Vishnugad Hydro Power TAMIL NADU Residential Buildings, Project Anushaktinagar Chennai Bypass Dhauliganga Hydro Power Project Trombay Chimney Works Ennore Port Tehri Pumped Storage Project Vaitarna Dam Fast Reactor Fuel Cycle Facility, Vishnugad Pipalkoti Hydro Power Kalpakkam Water Supply Tunnel from Project Bhandup to Charkop, Mumbai Residential Buildings, Anupuram WEST BENGAL Water Tunnel between E Moses Kadamparai Pumped Storage Road and Ruparel College, Elevated Road from Park Circus to Project Mumbai E.M. Bypass, Kolkata Kudankulam Nuclear Power Water Tunnel between Sewri and Farakka Barrage Futka Project, Units 1 & 2 Golden Quadrilateral Road Project Water Tunnel from Maroshi to Lower Mettur Hydro Power - Kolaghat to Kharagpur Ruparel College, Mumbai Project Haldia Docks Project MANIPUR Navamalai Irrigation Tunnel Kalyani Bridge Imphal Kangchup Tamenglong Tirupur Water Supply Project Road Upper Nirar Irrigation Tunnel Kolkata Metro Parallel safety tunnel of T-12 TELANGANA Mahananda Barrage Railway Tunnel No.1 between NH-34 - Bahrampore - Farakka Jiribam and Tupul JCR Devadula Lift Irrigation Scheme Phase I Highway Railway Tunnel No. 3 between Jiribam and Tupul JCR Devadula Lift Irrigation NH-34 - Farakka - Raiganj Highway Scheme Phase II Railway Tunnel No. 10 between Purulia Pumped Storage Project Jiribam and Tupul JCR Devadula Lift Irrigation Scheme Phase III Teesta Barrage Railway Tunnel No. 12 between North-South Corridor NHDP Phase Jiribam and Tupul Teesta Low Dam - Stage IV II Package AP-8 Railway Tunnel No. 12 between BHUTAN Tupul and Imphal Pranahita Chevella Lift Irrigation Scheme ORISSA Dagachhu Hydro Power Project Rajiv Dummugudem Lift Irrigation Aditya Aluminium Project Scheme Kurichhu Hydro Power Project Ramagundam Thermal Power Dam at Upper Kolab Nikachhu Hydro Power Project Project Punatsangchhu Hydro Power Naraj Barrage, New Cuttack UTTAR PRADESH Project Paradip Port Road Allahabad Bypass Tala Hydro Power Project PUNJAB Gomti Aqueduct BANGLADESH 140 m High Chimney at Ropar Maneri Bhali Hydroelectric Power Rooppur Nuclear Power Project 3 CHAIRMAN’S LETTER Dear Shareholder, liquidity, resulting in stretched balance sheets of almost all construction companies. The world is in pain. So is our country. There is death, disease, natural disasters, and economic strife on all continents. The New order inflow with higher infrastructure spending by virus COVID19 has caused widespread havoc to the health of Government will be a key driver for the economy, whilst our people, stretched our health care services beyond limits, absorbing large swaths of unemployment, especially migrant and dealt a severe blow to businesses and livelihoods. The labour. The importance of physical infrastructure for the necessary lockdowns and dislocation of the supply chains nation’s growth and prosperity is well documented. For across the country and the world have debilitated us. And instance, infrastructure investment has the highest GDP there seems to be no end in sight. multiplier factor (2.0x) and our industry is among the largest employment generators impacting 7 crore households. In The impact of COVID19 has been debilitating on the Indian view of this, the support from Government is essential in economy in particular, which was already decelerating prior to the form of both liquidity and reforms so new infrastructure the lockdowns, which have been among the most stringent projects are bankable by financial institutions. in the world. India’s GDP growth has declined for five consecutive quarters and touched 3.1% in the fourth quarter Over a period, the Government has been focusing on of FY20 - the lowest since 2004. The business disruptions and reforms and laws to improve the regulatory framework. The uncertainty created by the pandemic has further magnified government has bought about important amendments in the the risks to India’s economic outlook. Arbitration Act and announced initiatives through the Cabinet Committee of Economic Affairs (CCEA) to address the legacy Historically, cyclical downturns are not new to engineering payment issues. Though these changes have given some and construction companies but the speed and strength with relief to the Industry, the regulatory framework needs to be which COVID19 struck can only be compared to the Spanish improved further to reduce the risk aversion of Banks and flu which occurred in 1918, over 100 years ago. The lockdown financiers so that the huge infrastructure financing gap may imposed to battle the spread of COVID19 had a material effect be bridged. on