REVISED NOTICE FOR THE 40th ANNUAL GENERAL MEETING

REVISED NOTICE IS HEREBY GIVEN THAT the fortieth (40th) Annual General Meeting of Ircon International Limited (Ircon) will be held in the 2nd Floor, Meeting Hall, Ministry of Railways, Railway Board, New Delhi-110001, on Wednesday, the 28th September 2016 at 1700 hours to transact the following business:-

Ordinary Business:

(1) To receive and adopt the Directors Report and the Financial Statements (Stand-alone and Consolidated) for the year ended on 31st March 2016 along with the Auditors Report thereon, and pass, with or without modification(s), the following ordinary resolution:

RESOLVED THAT the Financial Statements (including the Consolidated Financial Statements of Ircon and its subsidiaries/ associates/ joint ventures) for the year ended on 31st March 2016 comprising Balance Sheet as at 31st March 2016, the Statement of Profit & Loss for the year ended 31st March 2016, and Cash Flow Statement for the year ended 31st March 2016, along with Notes thereto, and the Auditors Reports thereon, as well as the Directors Report along with its Appendices including the Report on Corporate Social Responsibility and Sustainability Activities, Management Discussion and Analysis Report, Corporate Governance Report, Secretarial Audit Report, Extract of Annual Return in Form MGT-9, Disclosure of particulars of Related Party Transactions in Form AOC 2, and the statement of salient features of financial statements of subsidiaries/ joint ventures/ associate in Form AOC 1, etc. as laid before the meeting, be and are hereby approved and adopted.

(2) To declare dividend for 2015-16, over and above the interim dividend already declared by the Board of Directors and paid in March 2016, and pass, with or without modification(s), the following ordinary resolution:

RESOLVED THAT dividend @ Rs. 45 per share of Rs. 10/- each (450% on the paid-up share capital of Rs. 19.796 crores), as recommended by the Board of Directors for the year ended 31st March 2016, be and is hereby declared in favour of the shareholders whose names appear on the Register of Members as on the date of the Annual General Meeting, which is over and above the interim dividend declared by the Board of Directors @ Rs. 40/- per share of Rs. 10/- each (400% of the paid-up share capital) and paid to all the members in March 2016.

(3) To consider and if thought fit, to pass with or without modification(s), the following ordinary resolution in respect of Remuneration of Statutory Auditors of the Company for 2016-17:

RESOLVED THAT the Board of Directors of Ircon be and is hereby authorized to fix, based on a recommendation to be made by the Audit Committee, the remuneration including out of pocket expenses of the Statutory Auditors of the Company as may be appointed by the Comptroller & Auditor General of India, for audit of financial statements of both domestic and foreign projects of the Company for the financial year 2016-17, as well as to fix the auditors expenses for their visits to foreign projects for the purpose of audit.

Special Business:

(4) To note appointment of Mr. S. K. Singh as Independent Director, Ircon, w.e.f. 5th April 2016 and if thought fit, to pass with or without modification(s), the following ordinary resolution:

RESOLVED THAT in terms of the Railway Board letter no. 2014/PL/44/04 dated 1st April 2016 pursuant to Article 49 of the Articles of Association of the Company, the appointment of Mr. S. K. Singh (DIN : 00003695), practising chartered accountant, as Independent [Part-time (Non- Official)] Director of Ircon w.e.f. 5th April 2016, for a period of three years or untill further orders whichever is earlier, be and is hereby noted.

(5) To note appointment of Mr. Avineesh Matta as Independent Director, Ircon, w.e.f. 8th April 2016 and if thought fit, to pass with or without modification(s), the following ordinary resolution:

RESOLVED THAT in terms of the Railway Board letter no. 2014/PL/44/04 dated 1st April 2016 pursuant to Article 49 of the Articles of Association of the Company, the appointment of Mr. Avineesh Matta (DIN : 00011749), practising chartered accountant, as Independent [Part-time (Non- Official)] Director of Ircon w.e.f. 8th April 2016, for a period of three years or untill further orders whichever is earlier, be and is hereby noted.

(6) To note appointment of Prof. (Ms.) Vasudha V. Kamat as Independent Director, Ircon, w.e.f. 22nd April 2016 and if thought fit, to pass with or without modification(s), the following ordinary resolution:

RESOLVED THAT in terms of the Railway Board letter no. 2014/PL/44/04 dated 1st April 2016 pursuant to Article 49 of the Articles of Association of the Company, the appointment of Prof. (Ms.) Vasudha V. Kamat (DIN : 07500096), Vice Chancellor (Retd.) of SNDT Womens University, as Independent [Part-time (Non- Official)] Director of Ircon w.e.f. 22nd April 2016, for a period of three years or untill further orders whichever is earlier, be and is hereby noted.

(7) To note appointment of Mr. M. K. Singh as Director Finance, Ircon, w.e.f. 1st May 2016 and if thought fit, to pass with or without modification(s), the following ordinary resolution:

RESOLVED THAT in terms of the Railway Board letter no. 2015/E(O)II/40/10 dated 26th April 2016 pursuant to Article 49 of the Articles of Association of the Company, the appointment of Mr. M. K. Singh (DIN : 06607392) as Director Finance of Ircon w.e.f. 1st May 2016, for a period of five years from the date of assumption of charge of the post or till the date of his superannuation or untill further orders whichever is the earliest, on the terms and conditions specified in said Railway Boards letter, be and is hereby noted.

(8) To approve remuneration of Cost Auditor of the Company for 2016-17 and, if thought fit, to pass, with or without modification(s), the following ordinary resolution:

RESOLVED THAT pursuant to the provisions of section 148 (3) read with applicable rules of the Companies (Audit and Auditors) Rules, 2014, and other applicable provision, if any (including any statutory modification(s) or re-enactment thereof, for the time being in force), a remuneration of Rs. 1,70,000/- (Rupees one lakh seventy thousand only) plus service tax and out of pocket expenses, be and is hereby approved to be paid to M/s. Chandra Wadhwa & Co., Cost Accountants, appointed by the Board of Directors (based on the recommendations of the Audit Committee) as Cost Auditor of the Company for the financial year 2016-17 for audit of cost records maintained by the Company.

(9) To approve capitalisation of free reserves for issue bonus shares in the ratio of 1:4 to the members (shareholders) of the Company and, if thought fit, pass, with or without modification(s), the following as an Ordinary Resolution in accordance with Article 72A of the Articles of Association:

RESOLVED THAT approval be and is hereby accorded for capitalisation of free reserves to issue bonus shares in the ratio of 1:4, that is, four bonus (equity) shares of Rs. 10/- each for every one equity share of Rs. 10/- each held by the members whose names appear in the Register of Members as on the date of the Annual General Meeting, in accordance with the requirements of the applicable laws.

RESOLVED FURTHER THAT the said bonus shares shall rank pari-passu in all respects with the existing equity shares of the Company.

(10) To amend Memorandum of Association so as to increase Authorized Share Capital.

To amend the Memorandum of Association of the Company involving substitution of Clause V and, if thought fit, to pass, with or without modification(s), the following as a special resolution:

RESOLVED THAT in terms of the provisions of the Companies Act, 2013, and the relevant rules thereunder, read with Article 25 of the Articles of Association, approval be and is hereby granted to increase the authorized share capital of the Company from Rs.100 crore to Rs. 400 crore and consequently, to substitute the existing Clause V of the Memorandum of Association of the Company by the Clause given below, subject to the approval of the President of India:

V. The authorized share capital of the Company is Rs. 400,00,00,000 (Rupees four hundred crore only) divided into 40,00,00,000 (forty crore) equity shares of Rs. 10/- (Rupees ten only) each.

(11) To amend Article of Association so as to increase Authorized Share Capital.

To amend the Articles of Association of the Company involving substitution of Article 5 and, if thought fit, to pass, with or without modification(s), the following as a special resolution:

RESOLVED THAT in terms of the provisions of the Companies Act, 2013, and the relevant rules thereunder, read with Article 25 of the Articles of Association, approval be and is hereby granted to substitute the existing Article 5 of the Articles of Association of the Company by the Article given below, subject to the approval of the President of India:

Article 5

Authorised Share Capital The authorised share capital of the Company shall be Rs. 400,00,00,000 (Rupees four hundred crore only) divided into 40,00,00,000 (forty crore) equity shares of Rs. 10/- (Rupees ten only) each.

BY ORDER OF THE BOARD OF DIRECTORS

Sd/-

Place : New Delhi (Sumita Sharma)

Date : 28/09/2016 Company Secretary

NOTE:

1. A MEMBER OF THE COMPANY ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY IN WRITING DULY SIGNED BY HIM/HER TO ATTEND AND VOTE INSTEAD OF HIMSELF/ HERSELF AND A PROXY NEED NOT BE A MEMBER. Form of Proxy is enclosed.

2. As per the provisions of the Companies Act, 2013, a person can act as proxy on behalf of members not exceeding fifty and holding in the aggregate not more than 10% of the total share capital of the Company. A member holding more than 10% of the total share capital of the Company may appoint a single person as proxy and such person shall not act as a proxy for any other person or member.

3. During the period beginning 24 hours before the time fixed for the commencement of the meeting and ending with the conclusion of the meeting, a member would be entitled to inspect the proxies lodged at any time during the business hours of the Company provided that not less than 3 days of notice in writing of the intention to inspect is given to the Company.

4. Voting to be by show of hands in the first instance. Every member present in person shall have only one vote on a show of hands. Only when a poll is demanded under section 109, every such member shall have one vote for every share held by him/her.

5. Five members (shareholders) of the Company personally present throughout the meeting is the Quorum.

6. A brief in respect of ordinary business items 1 to 3 are attached as Annexure 1.

7. Explanatory statement pursuant to section 102 of the Companies Act, 2013, in respect of special business items 4 to 11 are attached as Annexure 2.

8. The record date shall be the date of Annual General Meeting i.e. 28th September 2016.

9. A form of Attendance slip is attached as Annexure 3.

10. Route map including prominent landmark for easy location of the venue of the meeting is attached as Annexure 4.

11. Relevant documents referred to in the accompanying notice are open for inspection by the Members at the registered office of the Company on all working days during business hours up to the date of Annual General Meeting.

12. Members are requested to bring their copies of Annual Report, Notice, and Attendance slip duly completed and signed at the meeting.

To: 1. All Shareholders of the Company.

2. All Directors of the Company.

3. M/s. V. K. Dhingra & Co., Chartered Accountants (Statutory Auditor).

4. M/s. Vishal Agarwal & Associates, Company Secretaries (Secretarial Auditor).

5. M/s. Chandra Wadhwa, Cost Accountants (Cost Auditor).

Annexure 1

A brief on Ordinary Business items:

Item No. 1 To receive and adopt the Directors Report and Financial (stand-alone and consolidated) for the year ended on 31st March 2016 along with the Auditors Report thereon.

The Board of Directors at its meeting held on 2nd September 2016 had:

a) Approved the Stand-alone and Consolidated Financial Statements along with Notes thereto and Form AOC-1, as per the Companies Act, 2013.

b) Approved the Directors Report along with its Appendices viz. Report on Corporate Social Responsibility & Sustainability Activities, Management Discussion and Analysis Report, Corporate Governance Report, Secretarial Audit Report, Extract of Annual Return in form MGT-9, and Disclosure of particulars of related party transactions in Form AOC-2.

c) Noted the Auditors Report on the Financial Statements (Stand-alone and Consolidated) dated 2nd September 2016 and approved the management replies to the comments of the Auditors Report.

The financial statements along with above said reports are to be adopted by the shareholders.

Item No. 2 To declare dividend for 2015-16.

The Board of Directors at its meeting held on 19th February 2016 had declared interim dividend for the year 2015-16 pursuant to its discretionary power under Article 67A of the Articles of Association @ Rs. 40 per share of Rs. 10/- each (400% of the paid-up share capital of Rs.19.796 crore) amounting to Rs. 79.18 crore approx. which has been paid to the shareholders of the Company in March 2016.

Now, the Board of Directors has recommended (over and above the interim dividend) a dividend @ Rs. 45 per share of Rs. 10/- each (450% of the paid-up share capital of Rs. 19.796 crore) for the year 2015-16 for consideration by the members. The Company has recorded a profit before tax of Rs. 567 crore and a profit after tax of Rs. 379 crore during 2015-16.

The dividend to be declared at the Annual General Meeting would amount to Rs. 89.08 crore approx. taking the total dividend for 2015-16 to Rs. 168.26 crore approx. which works out to 44.36% approx. of post-tax profit.

This is in accordance with DPE-OM dated 20th June 2016 which provides that every CPSEs should pay a minimum annual dividend of 30% of PAT or 30% of net-worth, whichever is higher, and Railway Boards letter dated 29th April 2016 directing that total dividend for the financial year 2015-16 shall be paid at the rate of 40% of PAT (inclusive of interim dividend).

As per Article 67 of the Articles of Association, the Company in general meeting may declare a dividend to be paid to the members according to their rights and interests in the profits but no dividend shall exceed the amount recommended by the Board of Directors.

Item No. 3 To consider Remuneration of Auditors of the Company for 2016-17.

a) The remuneration of the auditors of a company shall be fixed by the Company in general meeting or in such manner as the Company in general meeting may determine [section 142 (1) of the Companies Act, 2013].

b) The auditors of a government company shall be appointed by the Comptroller & Auditor General of India (C&AG) [section 139 (5) of the Companies Act, 2013].

c) The Audit Committee has to recommend to the Board of Directors for fixation of audit fee, and also approval for payment to statutory auditors for any other services that may be required of them [section 177 of the Companies Act, 2013; Chapter 4 of the DPE Corporate Governance Guidelines, 2010; and sl. no. 1 of the Board approved terms of reference for Audit Committee].

Thus, on a harmonious application of the aforesaid legal provisions, every year the general meeting has been authorizing the Board of Directors to fix, based on a recommendation made by the Audit Committee, the remuneration including out of pocket expenses of the auditors as well as the auditors expenses for their visits to foreign projects for the purpose of audit. Therefore, a resolution is being proposed for authorizing the Board of Directors for fixing remuneration and permissible expenses of auditors for the financial year 2016-17.

The total audit fee including out of pocket expenses, expenditure on foreign visit(s), as well as fee for audit of accounts of foreign projects during the last two years, after recommendation of Audit Committee and approval of Board of Directors, based on the criteria advised by the Audit Committee for fixing the fee of auditors, namely turnover (volume of work load), inflation, market scenario, etc. and as disclosed in the Financial Statement for 2015-16 is as under:

2014-15 - Rs. 0.42 crore

2015-16 - Rs. 0.53 crore

None of the Directors and Key Managerial Personnel of the Company are in any way concerned or interested, in any of the resolutions of ordinary business items.

Annexure 2

EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013 -- SPECIAL BUSINESS ITEMS

Item No. 4, 5 and 6 To note appointment of Mr. S. K. Singh, Mr. Avineesh Matta, Prof. (Ms.) Vasudha V. Kamat as Independent Directors, Ircon.

Mr. S. K. Singh, Mr. Avineesh Matta, Prof. (Ms.) Vasudha V. Kamat have joined the Board of Ircon as Independent [Part-time (Non-Official)] Directors on the Board of Ircon w.e.f. 5th April 2016, 8th April 2016, and 22nd April 2016 respectively, for a period of three years or untill further orders whichever is earlier, in terms of Railway Board letter no. 2014/PL/44/04 dated 1st April 2016.

Section 152(2) of the Companies Act, 2013, provides that save as otherwise expressly provided, all the directors will be appointed in general meeting. Since all the directors in Ircon [whole-time, part-time (official/ non-official)] are appointed by the President of India through Administrative Ministry i.e. Ministry of Railways, in terms of Articles of Association of Ircon for a fixed tenure, it is not possible to appoint directors at a general meeting. Therefore, the appointments made by the Ministry during the year are being put up for noting by the shareholders.

Further, section 152(13) of the Companies Act, 2013, provides that section 152(6 and 7) in respect of retirement of directors by rotation are not applicable on independent directors.

None of the Directors and Key Managerial Personnel of the Company are in any way concerned or interested, in the resolutions, except Mr. S. K. Singh, Mr. Avineesh Matta, Prof. (Ms.) Vasudha V. Kamat Independent [Part-time (Non-Official)] Directors, Ircon .

Item No. 7 To note appointment of Mr. M. K. Singh as Director Finance, Ircon.

Mr. M. K. Singh has joined the Board of Ircon as Director Finance w.e.f. 1st May 2016, for a period of five years from the date of assumption of charge of the post or till the date of his superannuation or untill further orders whichever is the earliest, in terms of Railway Board letter no. 2015/E(O)II/40/10 dated 26th April 2016.

Section 152(2) of the Companies Act, 2013, provides that save as otherwise expressly provided, all the directors will be appointed in general meeting.

Since all the directors in Ircon [whole-time, part-time (official/ non-official)] are appointed by the President of India through Administrative Ministry i.e. Ministry of Railways, in terms of Articles of Association of Ircon for a fixed tenure, it is not possible to appoint directors at a general meeting. Therefore, the appointments made by the Ministry during the year are being put up for noting by the shareholders.

Further, section 152(6) read with section 160 provides that not less than 2/3rd of the total number of directors shall be persons whose period of office is liable to determination by retirement of directors by rotation. Out of the aforesaid 2/3rd directors, 1/3rd are liable to retire at Annual General Meeting (AGM). A director who retires as aforesaid, is eligible for re-appointment.

However, it is practically not possible to give effect to the above said provisions due to the fact that appointment of directors is done by the Government. To overcome this practical difficulty, the Company has already requested the Ministry to advice as to the directors who can be made liable to retire by rotation at the ensuing AGM, and would be eligible for re-appointment.

Since these provisions are exempt for government companies in which the entire paid-up share capital is held by the Central/ State Government, therefore, the Company has also requested Ministry of Railways to take up the matter with the Ministry of Corporate Affairs so as to exempt all government companies from retiring its directors by rotation.

None of the Directors and Key Managerial Personnel of the Company are in any way concerned or interested, in the resolution, except Mr. M. K. Singh, Director Finance, Ircon .

Item No. 8 To approve remuneration of Cost Auditor of the Company for 2016-17.

In terms of rule 3(B)(10) read with rule 6 of the Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors at its meeting held on 23rd June 2016, based on the recommendation of the Audit Committee, had appointed M/s. Chandra Wadhwa & Co., Cost Accountants, as Cost Auditors of the Company for the financial year 2016-17 to conduct the audit of cost records maintained by the Company relating to its Roads and other infrastructure projects corresponding to Para No (I) (a) specified in Schedule VI of the Companies Act, 2013 at a remuneration of Rs.1,70,000/- plus service tax and out of pocket expenses for conducting the audit.

Further, in term of section 148(3) of the Companies Act, 2013, read with rule 14 of Companies (Audit and Auditors) Rules, 2014, remuneration to be payable to the said Cost Auditor approved by the Board of Directors, based on the recommendation of the Audit Committee, is placed for ratification by the shareholders.

The same remuneration was paid to Cost Auditor for the financial years 2014-15 and 2015-16 after shareholders ratification at annual general meeting.

None of the Directors and Key Managerial Personnel of the Company are in any way concerned or interested, in this resolution.

Item No. 9 To issue Bonus Shares.

Keeping in view the provisions of DPE-OM dated 20th June 2016 [which requires that every CPSE shall issue bonus shares if their defined reserves and surplus (i.e. aggregate of free reserves, share premium account and capital redemption reserve account) is equal to or more than 10 times of its paid-up equity share capital] and comfortable position of defined reserves and surplus of the Company, which was to the tune of Rs. 3510.46 crore as on 31st March 2016, the Board of Directors at its meeting held on 2nd September 2016 decided to issue bonus shares, with shareholders approval, in the ratio of 1:4, that is, four bonus (equity) shares for every one equity share held by the existing shareholders (as on the date of Annual General Meeting) carrying the same rights and privileges as the existing equity shares.

Article 72A of the Articles of Association of Ircon permits the Company to capitalize its profits/ reserves in a general meeting. Hence, shareholders approval is sought for capitalization of profits so as to issue the proposed bonus shares in the ratio of 1:4, which would raise the paid-up share capital of the Company from Rs. 19.796 crore to Rs. 98.98 crore. This is within the authorized share capital of Rs. 100 crore. There will be no change in the shareholding pattern after the Bonus Issue.

Railway Board vide letter dated 13th April 2016 has already communicated Presidents approval for increase in paid-up share capital of Ircon up to a maximum of Rs. 100 crore.

Shareholding before and after issue of bonus shares is:

After approval of shareholders for the purpose of capitalization of profits/ reserves and issue of bonus shares, the shares would be issued in accordance with the applicable laws.

None of the Directors and Key Managerial Personnel of the Company are in any way concerned or interested, in the resolutions.

Item Nos. 10 and 11 Amendment in Memorandum and Articles of Association.

The present proposal is to enhance the authorized share capital of the Company from Rs.100 crore to Rs. 400 crore, and consequently, to alter the Memorandum and Articles of Association of the Company containing the capital clause.

The existing subscribed and paid-up share capital of Rs. 19.796 crores is being held by the President of India and his ten nominees [i.e. 99.729% shares], Indian Railway Finance Corporation Limited [i.e. 0.247% shares], and Bank of India [i.e. 0.024% shares].

A separate agenda for issue of bonus shares (in the ratio of 1:4) to the existing shareholders of Ircon is already placed in this notice. After bonus issue of shares, the subscribed and paid-up share capital of Ircon would stand at Rs. 98.98 crore. This would practically exhaust the entire present authorised share capital of Rs. 100 crore thereby leading very little scope for issue of further shares by the Company.

The Company is a consistent profit making PSU, and has reserve & surplus to the tune of Rs.3,510.46 crore as on 31st March 2016.

Keeping in view the DIPAM Guidelines and surplus available with the Company and the future growth projections, there is a need to broaden the capital base of the Company. Therefore, it is proposed to increase the authorised share capital from Rs. 100 crore to Rs. 400 crore.

Changes in Memorandum and Articles of Association:

Since the capital clause mentioning the authorized share capital of the Company is an integral part of Memorandum of Association of the Company [Clause V], as well as is specified in the Articles of Association of the Company [Article 5]. Therefore, both these documents would also undergo change.

a) The existing and proposed (highlighted in bold font) Clause V of the Memorandum of Association is juxtaposed below for ready reference:

b) The existing and proposed (highlighted in bold font) Article 5 of the Articles of Association is juxtaposed below for ready reference:

None of the Directors and Key Managerial Personnel of the Company are in any way concerned or interested, in any of the resolutions.

Annexure 3

IRCON INTERNATIONAL LIMITED

C-4, District Centre, Saket, New Delhi - 110017

CIN: U45203DL1976GOI008171

ATTENDANCE SLIP

I certify that I am a member/ proxy for the member of the Company.

I hereby record my presence at the 40th Annual General Meeting of the Company held on Wednesday, the 28th September 2016 at 1700 hours at 2nd Floor, Meeting Hall, Ministry of Railways, Railway Board, New Delhi-110001.

___________________________

Members / Proxys Signature

Note:

Please fill and sign this attendance slip and hand it over at the entrance of the meeting.

DIRECTORS REPORT

DISTINGUISHED SHAREHOLDERS

The Directors of your Company have pleasure in presenting their 40th Report on the affairs of the Company for the financial year 2015-16.

PERFORMANCE HIGHLIGHTS

During the financial year 2015-16, your Company achieved a total operating income of Rs. 2403 crore and profit before tax of Rs. 567 crore as compared to operating income of Rs. 2950 crore and profit before tax of Rs. 844 crore achieved during the previous financial year.

The decline of about 18.54% in operating income is mainly on account of completion of mega foreign projects in Sri Lanka. Delay in starting major projects in India due to land acquisition and statutory clearances led to lower contribution to operating income by Indian projects. Since foreign projects have high profit margins, theoverall profit before tax has registered a decline of 32.82%.

FINANCIAL HIGHLIGHTS

Some important indicators of financial performance of the Company for the year 2015-16 vis-?is 2014-15 are given below:

A. Financial Performance Indicators:

(Rs. in crore)

B. Foreign Exchange Earnings and Outgo

The Company has earned a foreign exchange of Rs. 480 crore during 2015-16 as compared to Rs. 842 crore earned during 2014-15. The foreign exchange outgo stood at Rs. 360 crore during 2015-16 as compared to Rs. 424 crore during 2014-15. Thus, the net foreign exchange earnings have decreased by 71.29% from Rs. 418 crore in 2014-15 to Rs. 120 crore in 2015-16 due to completion of foreign projects as stated above.

C. Dividend

The Board of Directors (BoD) had declared in February 2016 an interim dividend of Rs. 79.184 crore (approx.) @ Rs. 40/- per share i.e. 400% on the paid-up share capital of Rs. 19.796 crore, which was paid to the shareholders in March 2016. The BoD has recommended further dividend (over and above the interim dividend) @ Rs. 45 per share i.e. 450% on the paid-up share capital for declaration by the shareholders, which would amount to Rs. 89.08 crore approximately. With this, the total dividend for the year 2015-16 would amount to Rs. 168.26 crore @ Rs. 85 for every Rs. 10 share (i.e. 850% of paid-up share capital) which works out to 44.36% of the post-tax profits of Rs. 379.27 crore. After approval and payment of the proposed dividend, the cumulative dividend to shareholders up to 2015-16 will stand at Rs. 1107.51 crore.

D. Appropriations/ Tax Provisions/ Reserves

(Rs. in crore)

ORDER BOOK

The Company secured works worth Rs. 7461 crore during the year 2015-16. The work load as on 31st March 2016 stood at Rs. 17569 crore as compared to Rs. 13293 crore as on 31st March 2015. The present work load as on 31st August 2016 is Rs. 17910 crore.

OPERATIONAL PERFORMANCE

A. Foreign Projects Completed:

Your Company completed following projects during 2015-16:

Malaysia

1. After continuous operation for 22 years, the contract for leasing and maintenance of meter gauge diesel electric locomotives on Malaysian Railway System (KTMB) was successfully completed on 31st December 2015. The last extension of this contract was given by KTMB for 2 years, which was valid upto 31st December 2015 at an annual value of USD 6.988 million and total contract value for these two years was USD 13.976 million.

Sri Lanka

2. Your Company had completed five projects in the last three years in the northern province of Sri Lanka viz. (i) Track work for restoration of Medawachchiya to Madhu Road Railway line completed in the year 2012-13 (ii) Design, supply, installation, testing and commissioning of signalling and telecommunication system for Railway Line from Anuradhapura to Kankensanthurai and from Medawachchiya to Talaimannar Pier, (iii) Re-construction of Railway Line from Omanthat to Pallai both completed in the year 2013-14, (iv) Re-construction of railway line from Pallai to Kankesanthurai, and (v) Re-construction of Railway Line from Madhu Road to Talai Mannar both completed in the year 2014-15. Due to change in contract escalations and modifications in the scope of the contract values of these projects, your Company has signed revised contract agreement for variations in the project in the northern province of Sri Lanka, at a value of Rs. 158 crore. These variations and modifications in scope of work have also been completed during the year 2015-16.

B. New / On-going Foreign projects:

Your Company is executing the following six major projects in foreign countries three out of these six projects are in Bangladesh and one each in Algeria, Bhutan, and South Africa.

Bangladesh

1. Construction of 2nd Bhairab Railway Bridge with Approach Rail Lines (Lot-A) -- being undertaken through unincorporated JV between your Company and AFCONS viz. IRCON-AFCONS JV, at a value of Rs. 226 crore (Ircons share). Physical work has started in December 2013. The project is likely to be completed in March 2017.

2. Design, Supply, Installation, Testing, and Commissioning of Computer based Interlocking Colour Light Signalling System on turnkey basis at 11 stations between Ishurdi-Darsana section of Bangladesh, at a value of Rs. 60 crore. Physical work has commenced in June 2014. The work is scheduled to be completed in September 2017.

3. Construction of Embankment, Track, all civil works, major & minor bridges (Except Rupsha) & culverts and implementation of EMP against Package WD1 under the project Construction of Khulna-Mongla Port Rail Line for Bangladesh Railway, at a value of Rs. 971 crore (USD 147.80 million). The work was commenced in March 2016 and is scheduled to be completed in September 2019.

Algeria

4. Installation of a double track line (93 km) in Algeria awarded by ANESRIF, Ministry of Transport, Government of Algeria, at a value of Rs. 1103 crore (USD 230 million) involving construction of second line and upgradation of existing line from Oued Sly to Yellel in Algier Oran section of Algerian Railways. The value of contract including additional works for realization of double line has been revised to Rs. 1882 crore. Though the work was awarded in 2008, but it was suspended by the client and restarted in May 2010.

The modalities of payment to the local sub-contractor were not spelled in the amendment and were being negotiated with the client, which hampered the cash flow and project progress. Eventually, the mode of payment to the local sub-contractors and revision of the prices were negotiated by a high level committee in July 2016 paving the way for smooth progress of the project.

Bhutan

5. Turnkey project for dismantling of existing 66/33/11 KV sub-station and Design, Engineering, Construction, Supply, Erection, Testing and Commissioning of New 2?20 MVA, 66/33 KV sub-station including all associated works at Paro in Bhutan by Bhutan Power Corporation Limited, at a value of Rs. 23 crore. The work has been secured in May 2015 and is scheduled to be completed in November 2016.

South Africa

6. Procurement of Plant Design, Supply and Installation of Overhead Track Equipments, Traction Substations, Auxiliary Power Supplies Substation, Bulk Power Supplies Switching Stations and Signalling Systems for the Majuba Rail Project, South Africa, for Eskom Holdings SOC Limited, at a value of Rs. 346 crore (Rand 663 million). The work has been secured in November 2015 and is scheduled to be completed in September 2017.

C. Likely Foreign projects:

Concerted efforts are being made to secure contracts in Malaysia, Bangladesh, Sri Lanka and Iran.

D. Projects Completed in India:

During the year 2015-16, following two projects got completed in India:

1. Construction of steel super-structure and other ancillary work of rail bridge across river Ganga at Patna, for East Central Railway, at a value of Rs. 1570 crore, which was dedicated to the nation by Honble Prime Minister of India on 12th March 2016.

2. Contract CT-4 DMRC Ballastless track from Badarpur to Faridabad; broad gauge corridor from Jahangirpuri to Badli along with tracks in Depots at Ajronda and Badli of Delhi MRTS Project of Phase-III, for DMRC, at a value of Rs. 62.60 crore.

E. New Projects in India:

During 2015-16, your Company secured following major projects in India:

1. Design and Construction of Civil, Building and Track Works of Vaitarna-Sachin Section of Dedicated Freight Corridor Project, CTP-12, for Dedicated Freight Corridor Corporation of India Limited (DFCCIL), at a value of Rs. 2116 crore.

2. Execution of Civil & Railway Allied works in connection with Construction of Private Railway Siding for proposed 3.0 MTPA Integrated Steel Plant at Nagarnar Near Jagdalpur, Chhattisgarh (Package-I), for NMDC Limited, at a value of Rs. 283 crore.

3. Execution of Civil, Signalling & Telecommunication, Mechanical and Structural works in connection with Construction of Railway siding for the proposed 3.0 MTPA Integrated Steel Plant at Nagarnar, Chhattisgarh (Package-II), for NMDC Limited, at a value of Rs. 79 crore.

4. Construction of New Howrah Divisional Railway Office Building, for Eastern Railway, at a value of Rs. 33 crore.

5. DPR & Detailed Engineering, Project Management and Construction of Railway Siding connecting MGR system of Dulanga mine-Darlipali STPP with Mahanadi Coal Limiteds Siding for Darlipali Super Thermal Power project, Stage-I (2?800 MV), for NTPC Limited, at a value of Rs. 11 crore.

F. Projects Secured in India after the close of the year 2015-16:

1. Construction of Corridor-III of East-West Corridor between Gevra Road to Pendra Road via Dipka, Katghora, Pasan approximately 135 km, subsequent to preparation and submission of Detailed Project Report, Land Acquisition and feasibility study of East-West Corridor between Gevra Road to Pendra Road in the State of Chhattisgarh, for Chhattisgarh East-West Railway Limited (CEWRL).

2. Katni-Singrauli Doubling Project, for West Central Railway.

3. Doubling between RDUM-TAL-RJO (Rampur Dumra Tal Rajendrapul) Project, for East Central Railway. The agreement has been signed on 24th June 2016.

4. Kiul-Gaya Doubling Project, for East Central Railway. The agreement has been signed on 24th June 2016.

5. Hajipur-Bachwara Doubling Project, for East Central Railway. The agreement has been signed on 30th May 2016.

6. Survey, Feasibility study, Detailed Design and Construction of various identified Rail Connectivity Project(s) for Jharkhand Central Railway Limited (JCRL).

7. Survey, Feasibility study, Detailed Design and Construction of various identified Rail Coal Connectivity Project(s), for Mahanadi Coal Railway Limited (MCRL).

8. Construction of New Block Station, Staff Quarters and associated P-Way, OHE and S&T works in connection with construction of Railway siding for the proposed 3.0 MTPA Integrated Steel Plant at Nagarnar, Chhattisgarh State (Package No.- IV), for NMDC Limited.

G. On-going major Projects in India:

A list of major on-going projects in India is given at Appendix A.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

A brief background on the subsidiaries, joint ventures and associate companies of Ircon along with their financials and performance is given at Appendix B. Details of equity investments, loans given, and guarantees extended under section 186 of the Companies Act, 2013, to the subsidiaries, joint ventures, and associate companies are given at para E (3) under the heading 'Compliances':

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with the provisions of Section 129(3) of the Companies Act, 2013, your Company has prepared its Consolidated Financial Statements with its four subsidiaries viz. IrconISL, IRSDC, IrconPBTL, and IrconSGTL; six joint venture companies viz. ISTPL, CERL, CEWRL, MCRL, JCRL and CCFB; and five un-incorporated joint ventures viz. RICON, IMCC, MTG, IRCON-SPSCPL, and IRCON-AFCONS. The Board of Directors of your Company has, at its meeting held on 2nd September 2016, approved the Financial Statements for 2015-16 (Standalone and Consolidated).

All the above said subsidiaries, joint venture companies, and un-incorporated joint ventures in India have financial year ending on 31st March except CCFB (joint venture company in foreign country) which is having a financial year ending on 31st December.

Your Company would make available audited financial statements (standalone and consolidated) and accounts / financial statements of its subsidiaries (IrconISL, IRSDC, IrconPBTL, and IrconSGTL), joint venture companies in India (ISTPL, CERL, CEWRL, MCRL, and JCRL), and un-incorporated joint ventures (RICON, IMCC, MTG, and IRCON-AFCONS) at its website (www.ircon.org). Your Company would also make available financial statements certified by Management with respect to CCFB and IRCON-SPSCPL UJV.

Further, the above said accounts / financial statements of these subsidiaries and joint ventures would also be made available upon request by any shareholder of the Company.

A statement containing the salient features of the financial statements of these subsidiaries and joint ventures in Form AOC-1 is attached with the Financial Statements.

COMPLIANCES:

A. Presidential Directive:

The presidential directive received after the close of the year, vide Railway Board letter dated 29th April 2016, regarding final dividend for 2015-16 and dividend for 2016-17 is being implemented.

B. Official language:

Regular quarterly meetings of Official Language Implementation Committee and workshops for effective use of the unicode system and official language are being conducted. Bilingual facility has been introduced for computer systems and mobile phones used by officials of the Company. Officers and staff are being encouraged through various incentive schemes for implementation of the annual program of the Official Language Department. Bilingual formats have been made available at Ircons internal website for use by the employees.

C. Right to Information Act, 2005:

As per the requirements of the RTI Act, necessary updated information including the names of Appellate Authority, Central Public Information Officer, State Level Public Information Officer and Assistant Public Information Officer are posted on Ircon's website. Queries received are replied within the stipulated time. The queries are usually in the nature of service matters, related to finance, contract, and projects. The details of RTI cases have been forwarded to the Ministry of Railways for publication on the website of Central Information Commission (CIC) website on quarterly as well as annual basis.

During the year, out of 153 queries 150 applications (inclusive of 1st appeal) were processed / disposed off.

D. Compliance of MSME Guidelines for implementation of Purchase Preference Policy:

Your Company has evolved and implemented a comprehensive Purchase Preference Policy in June 2012 in line with the Public Procurement Policy notified by the Ministry of Micro, Small and Medium Enterprises (MSME) under section 11 of Micro, Small and Medim Enterprises Development Act, 2006. The e-procurement portal of Ircon i.e. www.tenderwizard.com/IRCON provides for facilitation of registration of MSME firms registered with any statutory bodies specified by Ministry of MSME, and participation in e-tender by availing the benefits of exemption from payment of cost of tender fee and Earnest Money.

The achievement vis-?is target of procurement from MSME (20% including a sub-target of 4% from MSMEs owned by SC/ST entrepreneurs) as per the above said policy during the year 2015-16 is tabulated below:

* Reasons being lack of participation by MSEs owned by SC/ST entrepreneurs

All out efforts are made and some items were procured out of 358 items listed to be essentially procured from SSI / MSE.

E. Companies Act, 2013:

1. Particulars of employees

In terms of the Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, no employee has drawn remuneration of Rs. 60 lakhs or more or Rs. 5 lakh or more per month during the year 2015-16, except Chairman and Managing Director and Ex-Director Finance who have drawn salary of Rs. 64.26 lakh (approx.) and Rs. 69.31 lakh (approx.) respectively, details of which are given in para 4.1 of the Corporate Governance Report.

2. Deposits

Your Company did not accept any deposits from public during the year.

3. Particulars of investments, loans, and guarantees and securities under section 186 of the Companies Act, 2013

Investments made, loans granted, and guarantees extended by your Company in terms of section 186 of the Companies Act, 2013, up to 31st March 2016, are as under:

NOTES:

(a) Equity investment in Joint Venture Companies (JVC)

1. The Board of Directors of Ircon had approved formation of JVC viz. Bastar Railway Private Limited (BRPL) during 2015-16. However, the JVC was incorporated on 5th May 2016. The details have been disclosed under the heading 'Bastar Railway Private Limited' [under Para B (10) of Appendix B]

(b) Loan to Subsidiaries:

2. Loan extended for meeting capital expenditure on construction of multi-functional complexes (MFC). After part repayment, the outstanding loan as on 31st March 2016 is Rs. 27.50 crore.

3. Loan extended for execution of Bikaner Phalodi Highway project in the State of Rajasthan.

4. Loan extended for execution of Shivpuri-Guna Highway project in the State of Madhya Pradesh.

(c) Loan to JVC:

5. Loan has been extended for construction of Rail line project from Kharsia to Dharamjaigarh in the State of Chhattisgarh, corresponding to Ircons stake of 26% in the JVC.

6. Loan has been extended for payment of land compensation, consultancy fee, etc. before financial close by CEWRL pending decision on debt-equity structure and other aspects, corresponding to Ircons stake of 26% in the JVC

(d) Loan to Un-incorporated Joint Venture (UJV):

7. Loan has been extended for working capital requirement in connection with construction of 2nd Bhairab Railway Bridge project in Bangladesh. Loan reimbursed on 8th August 2015 and outstanding as on 31st March 2016 is NIL.

(e) Guarantee:

8. Your Company has extended following financial assistance to its wholly owned subsidiary (WOS) companies and unincorporated joint ventures (UJV):

i) Allocation of Rs. 150 crore (revolving) of Ircon's non-funded credit limits sanctioned by any Bank (which has sanctioned credit limits to Ircon) to be utilized by the three WOS viz. IrconISL, IrconPBTL, and IrconSGTL for facilitating issue of bank guarantees(s) by the Banker in favour of their client as may be required by them to carry on their business.

ii) Allocation of Rs. 90 crore (revolving) of Ircon's non-funded credit limits sanctioned by State Bank of India to be utilized by UJV viz. IRCON-AFCONS JV for facilitating issue of bank guarantees(s) by the Banker in favour of their client as may be required by them to carry on their business.

9. Details have been disclosed under the heading 'Ircon-Soma Tollway Private Limited' [under Para B (5) of Appendix B] and also disclosed in note nos. 12 and 29 forming part of the Standalone Financial Statements.

(f) Bonds:

10. The BoD had been according (since 2013-14) approval every year in July for further investment, up to Rs. 150 crore in bonds of public sector undertakings, to be utilized on or before 31st July of next year. The cumulative details of investment are disclosed in note no. 12 forming part of the Standalone Financial Statements.

(g) Equity Investment and loan in CCFB:

11. Details have been disclosed under the heading 'CCFB' (under Para C (11) of Appendix - B) and also disclosed in note no. 20 and 33 forming part of the Standalone Financial Statements and shown as amount recoverable from government of Mozambique.

After the close of the financial year, your Company has committed / made further following investments and loan to its subsidiaries and proposed joint ventures companies against the commitments, up to 30th June 2016:

4. Related Party Transactions

The related party transactions entered during the year has been in the ordinary course of business and on arm's length basis. Details of Transactions entered with related parties in Form AOC-2 in terms of the Companies Act, 2013, is placed as Appendix H.

5. Significant and material orders passed by the Regulators/ Courts/ Tribunals impacting the going concern status and Company's operations in future

No order has passed by the Regulators or Courts or Tribunals impacting the going concern status of the Company and its operations in future.

6. Internal Control System and Risk Management

Details of the internal control system and risk management are provided in the Management Discussion and Analysis Report.

PERSONNEL DEVELOPMENT

Cordial and harmonious industrial relations prevailed in the Company during the year. The total manpower strength as on 31st March 2016 stood at 1499, which included 1238 regular employee, 81 deputationists, and 180 employees on contract (including service contract). 978 employees of the Company were technically and professionally qualified. The total number of women employees was 71. There were a total of 241 scheduled caste / scheduled tribe employees as on 31st March 2016.

Your Company has been continuously taking steps for building capacity of its human resource through training in functional and general management areas, information technology, as well as soft skills. External faculty is arranged wherever required and officials are nominated for workshops, seminars, etc. with reputed institutes. During the year 2015-16, a total 1275 man-days training was imparted to officials of Ircon through workshops, seminars, conferences, in-house trainings and training in external institutes, etc.

Your Company has various schemes for staff welfare like educational scholarships, one time educational grant for admission to professional degrees and diploma courses, educational awards, etc. to meritorious children of employees etc., educational assistance to the wards of deceased employees, assistance for marriage of daughters and dependent sisters of group C and D employees, etc. A new category of award was introduced for meritorious wards of Ircon employees who secured gold medal in professional courses. Apart from facility of homeopathy treatment at Corporate Office, other facilities like immediate financial assistance and guidance are being provided to employees and their family members in case of any medical exigency, lumpsum ex-gratia payment to family members in case of death of serving employee. Gym facilities are also available in Corporate Office and Rae Bareli Project office.

Your Company aims to provide congenial and safe working atmosphere to women employees. The Company has a complaints committee for prevention of sexual harassment at work place. Further, provision pertaining to prohibition of sexual harassment has also been incorporated in Ircon Conduct, Disciplinary, and Appeal Rules. No complaints relating to sexual harassment has been received by the Company during the year. The Company arranged two workshops exclusively for women employees covering self-defence and health awareness during the year. Workshop of self-defence was conducted by Delhi Police and health awareness topic on oncology and dietary counseling was covered by senior Doctors from Max Super Speciality Hospital. Three inter-project Quiz programmes were conducted for the employees of Ircon. Winning team and the runners up were awarded cash prize and certificate of commendation.

The 40th Annual Day was celebrated on 28th April 2016 with traditional fervor and gaiety. On this occasion, exemplary work done by employees in Indian as well as foreign projects and select projects was appreciated and rewarded. Educational awards to meritorious children of the employees were also given on this occasion.

QUALITY, ENVIRONMENT, AND HEALTH & SAFETY MANAGEMENT

Quality Management System (QMS) has been successfully sustained and continually improved since 1996 when the Company as a whole was first certified for ISO-9002-1994 by TUV Suddeutschland Private Limited (TUV). Your Company continued the certification and sustained the system as per latest revised code ISO 9001:2008 (by periodical recertification audit after expiry of three years). Latest re-certification audit has been conducted in May 2014, whereby the Company has been re-certified by TUV for a period of another three years i.e. up to September 2017.

During the year, Quality Management Department has added to its knowledge sharing efforts by disseminating information on construction of bridges, bridge foundation and superstructure (Pre-stressed concrete) etc. It has also prepared Guidelines on Foot over Bridges (FOB) fabrication and Railway steel bridges.

Your Company established an Environment Management System (EMS), and was certified for ISO 14001:2004 in October 2011. The latest re-certification audit has been conducted in June 2014 whereby the Company has been re-certified for another three years i.e. up to October 2017.

The Company nominates Environment officers at all Indian projects to monitor EMS at their respective projects who complies with the environmental laws and monitor air quality. This is an ongoing process until completion of the project. Environmental checklists have been developed and maintained by all projects. In addition, the Company has a fully operational environmental lab in Jammu for study of impacts on environment by the construction activities.

Environmental friendly equipment such as solar heater/ solar lights are being installed at various offices / projects. Waste water is recycled through Sewage Treatment Plant (STP), and the same is used for horticulture work. Monitoring of water and waste water, ambient air quality and noise quality is also being carried out at various construction sites. The Company is emphasizing on providing clean environment by initiating indoor air quality monitoring in the Corporate Office building. Tree plantation is also undertaken by corporate office and project offices.

Your Company has also been certified for Occupational Health & Safety Management System (OHSAS BS 18001:2007) in December 2012 by TUV SUD South Asia. The latest re-certification audit has been conducted in October 2015 whereby the Company has been re-certified for another three years i.e. up to December 2018.

Corporate Quality Council and Project Quality Council meetings were conducted quarterly at Corporate Office and projects respectively to review the implementation of QMS, EMS, and OHSAS. The Quality objectives were measured and reviewed both at the Corporate and at the Project levels. Internal Quality Audit as well as Quality Assurance Audit were conducted in projects and corporate office. Reports of these audits not only contained details of non-conformities encountered during the audit but also the salient features, progress, positive points, if any, etc.

In addition, in-house trainings were imparted to 189 employees by a team of internal auditors of Quality management department at Indian Project sites on the topic Awareness Programme on QMS, EMS, OHSAS and Ircons Manuals (CPM, CQM, and PPM).

CONSERVATION OF ENERGY AND TECHNOLOGY ABSOPTION

On energy conservation front, your Company has completed work of Design, Supply, Installation, Testing and Commissioning of grid connected solar power plant of 2MW capacity with all the electrical and associated equipment including civil works at Rail Coach Factory, Rae Bareli (U.P.), at a value of Rs. 15.60 crore. The plant is fully operational, and meets about 21% of electrical energy requirement for the factory.

As a measure to conserve energy, energy audit was carried out for the Corporate Office and recommendations of the same are being implemented.

Technology absorption has been undertaken through execution of Geographical Information System (GIS) based Overhead Equipment (OHE) Design for Railway Electrification work in the projects in the State of J&K.

Further, New Austria Tunnelling Method (NATM) is proposed to be adopted for construction of tunnels in SivokRangpo project. This method is very useful in complex diversified geological condition where forecasting of the rock mass is difficult due to rapidly changing geology.

RESEARCH & DEVELOPMENT (R&D)

Your Company does not undertake any pure research project but takes the help of consultants and firms to innovate and to develop methods and techniques to execute projects in a cost effective manner, with requisite quality, to enhance the technological competence and efficiency.

TECHNOLOGY UPGRADATION AND ABSORPTION

Your Company has an Engineering Control and Audit Cell to constantly upgrade technology and construction techniques, and to look into the aspects of appropriate designing and value engineering. The cell reviews the design and drawings for various projects and provides engineering solution, including standardization of design data to help in marketing efforts and conceptualisation of new projects with technical back up in alignment design, geo-technical analysis, etc. The Company is using modern technology and state of the art equipments in execution of infrastructure projects.

During the year, the Company prepared Modular design for Girders steel / PSC for ROB / RUB for various spans, design of various systems (fire safety, fire fighting, ventilation and security) for Railway Tunnels of various lengths, and Paper on innovative systems (eg. Modular shuttering / pre-cast elements etc.) for expeditious construction of high rise buildings

INFORMATION TECHNOLOGY AND DEVELOPMENT OF ERP

SAP ECC 6.0 based Finance-Controlling and HCM module had been successfully implemented and rolled-out on all project offices and corporate office. Updated and current data related to finance and human resources domain can be accessed from anywhere by employees of the Company.

During the year, emphasis was to align Information Technology with business goals of the Company. In this direction, web based applications had been developed and deployed to increase productivity, accuracy for data collection and sharing. Data collected with these applications are being used for preparation of MIS report. The Company is preparing detailed plan for leveraging of information technology within all functional domains such as e-governance initiatives and implementation of ERP solution for project execution and monitoring related domains.

To reduce paper usage and transparent working, use of IT has been enhanced in all the functional domains. The Intranet and Internet sites of the Company have been improved to publish office orders, circulars, and notifications.

VIGILANCE ACTIVITIES

Vigilance Department plays an advisory role to the top management in matters pertaining to vigilance. It is headed by a full time Chief Vigilance Officer (CVO) appointed by the Appointments Committee of the Cabinet (ACC) in consultation with Central Vigilance Commission (CVC). The tenure of the previous CVO ended on 5th June 2015, and pending appointment of a new CVO, the functions were being discharged by one of the Executive Director of the Company. Mr. Satish Tandon, joined as CVO of the Company on 20th January 2016.

The Vigilance Department ensures implementation of laid down guidelines / procedures through preventive checks of tenders and contracts, execution of works, and other functions as well as carries out investigations into complaints. During the year, eight inspections were carried out on various projects / units. Complaints received from various authorities (like CVC, Railway Board, Vigilance), and other sources were investigated to their logical conclusion. Based on the outcome of investigation, circulars on improvements in the areas of tenders, contracts, finance, project management, etc. were issued to avoid recurrence of irregularities / procedural errors and to plug loopholes in system. Steps were also taken for closure of paras raised by the CTEO. Scrutiny of immovable property returns of employees; creating awareness on rules/procedures/ common irregularities in execution through workshops/trainings, debate competitions, etc. have been the prime activities of the Department.

As a step towards leveraging technology for better transparency, your Company has enabled online submission of Immovable Property Returns by officers; online Disciplinary and Vigilance Clearance through intranet portal of the Company; online complaint on Vigilance section/ portal at Ircon's website etc.; In addition, e-procurement has also been implemented in the Company in a comprehensive manner for achieving greater transparency.

Vigilance department strives to achieve its objective of promoting an impartial, fearless, and transparent environment in functioning of the organisation by taking steps to prevent unethical practices.

INTEGRITY PACT

The CVC has recommended adoption of Integrity Pact in respect of major procurements in the Government Organisations. Your Company has signed a Memorandum of Understanding with Transparency International India (TII) on 22nd April 2014 for adoption and implementation of Integrity Pact.

Accordingly, Integrity Pact has been implemented for tenders / contract for works and supply valuing of Rs. 5 crore and above on all Indian Projects. The Company has appointed one Independent External Monitor (IEM) to monitor the activities in consultation with CVC.

AWARDS

Your Company has received following awards during the year 2015-16:

1. India Pride Awards 2014-15 instituted by Dainik Bhaskar for 'Excellence in Public Sector Undertaking Central in Infrastructure Development'. The award was presented by Mr. Arun Jaitley, Honble Union Minister for Finance and Corporate Affairs, to Mr. Mohan Tiwari, Chairman & Managing Director, Ircon, at a function held in New Delhi on 4th June 2015.

2. Dun and Bradstreet Top PSUs Awards 2015, in the category of 'Contract & Construction sector'. The award was received by Mr. Mohan Tiwari, Chairman & Managing Director, Ircon, at a function held in New Delhi on 23rd July 2015.

3. Dun and Bradstreet Infra Awards 2015, for two categories viz. Top Infrastructure Company under the category of Construction and Infrastructure Development (Railways) and Best Construction project for Rail cum Road Bridge on river Ganga at Patna. Both the awards were presented by Mr. Piyush Goyal, Honble Minister of State with Independent Charge for Power, Coal and New & Renewable Energy to Mr. Mohan Tiwari, Chairman & Managing Director, Ircon, at a function held in New Delhi on 28th October 2015.

4. CIDC Vishwakarma Award 2016 from Construction Industry Development Council (CIDC) in the category of best construction project for Rail-cum-Road Bridge across River Ganga, Patna. The award was received by officials of Ircon [viz. Mr. Mohan Tiwari, Chairman & Managing Director; Mr. Hitesh Khanna, Director Works; and Mr. Anil Jain, Executive Director (Works)] at a function held in New Delhi on 7th March 2016.

5. India Pride Awards 2015-16 instituted by Dainik Bhaskar for 'Excellence CSR / Environment Protection and Conservation'. The award was presented by Mr. Venkaiah Naidu, Honble Union Minister for Urban Development to Mr. Mohan Tiwari, Chairman & Managing Director, Ircon, at a function held in New Delhi on 4th April 2016.

INTEGRAL REPORTS

Report on CSR and Sustainability Activities, Management Discussion and Analysis Report, Corporate Governance Report, Secretarial Auditor Report, Extract of Annual Return in Form MGT-9, Details of transactions entered with related parties in Form AOC-2, and "Management replies to qualification contained in the Auditors' Report on Stand-alone and Consolidated Financial Statements", with relevant annexures form an integral part of this Directors Report, and have been placed as Appendix C, D, E, F, G, H, I and J respectively.

Report on CSR and Sustainability Activities provides a brief outline of the companys CSR and Sustainability policy, the composition of CSR & Sustainability Committee, average net profit of the Company for the last three financial years, prescribed CSR expenditure, and details of CSR spent on the activities / projects undertaken during the financial year etc. [Appendix C].

The Management Discussion and Analysis Report provides an overview of the affairs of the Company, its legal status and autonomy, business environment, vision and mission, sectoral and segment-wise operational performance, strengths, opportunities, constraints, strategy and risks and concerns, as well as human resource and internal control systems [Appendix D].

The Corporate Governance Report highlights the philosophy of Corporate Governance and Key Values of the Company, composition of Board of Directors and its Committees, their details including profile of directors who joined the Board during 2015-16 and thereafter, attendance and remuneration of directors etc., other relevant disclosures, CMD / DF Certification, and general information for shareholders, etc. [Appendix E]. It is supplemented by following compliance certificates:

1. Certificate signed by the Chairman & Managing Director affirming receipt of compliance with the Code of Conduct and Key Values from all Board members and Senior Management personnel during the year 2015-16 (placed at Annexure E1);

2. Certificate from Chairman & Managing Director and Director Finance with respect to the truth and fairness of the Financial Statements, due compliances, and financial reporting (placed at Annexure E2); and

3. Certificate of compliance of Corporate Governance provisions signed by a practising company secretary (placed at Annexure E3).

Pursuant to the provision of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Vishal Agarwal & Associates, Practising Company Secretary, to undertake the Secretarial Audit of the Company for the year 2015-16. The Secretarial Audit Report from the auditor is placed at Appendix F.

The Secretarial Auditor as well as the practising company secretary who has given the corporate governance compliance certificate had observed that the Company had not appointed adequate number of Independent directors and Woman director on the Board. Your Directors state that your Company being a government company, the appointment of all the directors on the Board is made by the Government of India (through Administrative Ministry i.e. Ministry of Railways). Accordingly, Ministry of Railways had been requested to appoint requisite number of Independent Directors and Woman Director on the Board of Ircon. Further, Ministry of Railways has appointed three independent directors (including woman director) in April 2016.

Pursuant to section 134(3)(a) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the Extract of Annual Return in Form MGT-9 is at Appendix G.

The Disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013 and Rule 8 (2) of the Companies (Accounts) Rules, 2014 in Form AOC-2 is at Appendix H.

The replies of the Management on the comments given by way of Emphasis of Matter / qualifications contained in the Auditors' Report on stand-alone as well as consolidated financial statements are at Appendices I and J respectively.

DIRECTORS RESPONSIBILITY STATEMENT

The Board of Directors of the Company confirms:

i. that in the preparation of the financial statements, the applicable accounting standards had been followed except as otherwise stated in the annual financial statements and there has been no material departure;

ii. that such accounting policies were selected and applied consistently and such judgments and estimates were made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company for the financial year ended on 31st March 2016 and of the profit of the Company for the financial year 2015-16;

iii. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv. that the financial statements have been prepared on a going concern basis; and

v. that proper systems had been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively.

BOARD OF DIRECTORS

During April 2015 to March 2016, nine meetings of the Board of Directors were held with one meeting in the quarter ended June 2015, three meetings each in the quarter ended on September 2015 and December 2015, and two meetings in the quarter ended on March 2016.

The details of the meetings are furnished in the Corporate Governance Report under heading Board Procedure [Para 5].

1. As on 31st March 2016, the strength of Board of Directors was six comprising four whole-time directors and two government nominated directors. The details are as follows:

2. After the close of the year 2015-16:

(a) the following Directors have joined the Board of your Company:

* All the three Independent Directors of the Company have declared, at the first board meeting held after their appointment, that they meet the criteria of Independence in terms of Section 149(6) of the Companies Act, 2013.

(b) the following Directors ceased to hold office:

AUDITORS

A. Statutory and Branch Auditors

The Auditors of the Company appointed by the Comptroller & Auditor General of India for 2015-16 are:-

Statutory Auditors:

Branch Auditors for projects in India:

Branch Auditors for projects Abroad:

B. Cost Auditor

The Board of Directors have appointed M/s. Chandra Wadhwa & Co., Cost Accountants, as Cost Auditor of your Company for the financial year 2015-16 for conducting the audit of cost records maintained by the Company as per the applicable Rules / Guidance Note, etc.

C. Secretarial Auditor

The Board of Directors have appointed M/s. Vishal Agarwal & Associates, Practising Company Secretary, to conduct Secretarial Audit of your Company for the financial year 2015-16.

D. Internal Auditors

The Board of Directors have appointed following Internal Auditors for 2015-16:

Auditors for Indian Projects:

Apart this, two officials of Ircon were nominated to conduct the internal audit (one each) of the audit circles of J&K and Southern Region for the 1st half of the financial year 2015-16, in terms of the decision of the Board of Directors.

Auditors for Projects Abroad:

ACKNOWLEDGEMENT

We record our appreciation and thanks to the Ministry of Railways, Ministry of External Affairs and other Ministries; various banks, Reserve Bank of India, EXIM Bank; Export Credit and Guarantee Corporation; Embassies; Protector of Immigration; Passport Authority; Doordarshan; and our esteemed clients both in India and abroad for their continued interest in and support to the Company.

We place on record our sincere appreciation for all the employees of the Company at all levels for their untiring efforts, dedication, and sincerity of purpose in improving the performance and profitability of the Company.

For and on behalf of the Board of Directors

Sd/-

(Mohan Tiwari)

Chairman & Managing Director

(DIN: 00191363)

Place : New Delhi

Date : 2nd September 2016

Appendix A

ON-GOING MAJOR PROJECTS IN INDIA

(in Rs. crore)

For and on behalf of the Board of Directors

Sd/-

(Mohan Tiwari)

Chairman & Managing Director

(DIN: 00191363)

Place : New Delhi

Date : 2nd September 2016

Appendix B

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

A. Subsidiary Companies:

1. Ircon Infrastructure & Services Limited (IrconISL)

IrconISL, a wholly owned subsidiary of Ircon, was incorporated on 30th September 2009 and obtained a Certificate of Commencement of Business on 10th November 2009. The main object of IrconISL is to undertake infrastructure projects including planning, designing, development, improvement etc. in the field of construction of Multi Functional Complexes (MFCs), etc., to provide facilities and amenities to users of Indian Railway System, and to carry on the business of hire purchasing, leasing of all kinds of moveable and immoveable properties, to provide consultancy for all kinds of engineering projects including providing maintenance, support, and all kinds of services including social welfare measures, etc.

During the year 2015-16, IrconISL executed consultancy project of Ministry of External Affairs (MEA) for preparation of feasibility report and Detailed Project Report (DPR) for Bridge Project in Myanmar, and secured two other consultancy projects, viz. (a) Project Management Consultancy for construction of Bridges along with Approach Road Projects in Myanmar and (b) preparation of DPR for road project in Rakhine state.

IrconISL has also provided Project Management Consultancy for construction of toilet blocks in govt. schools (4825 toilets) under Swachh Bharat Abhiyan for PSUs like Power Grid Corporation of India Limited, Power Finance Corporation Limited, Indian Renewable Energy Development Agency Limited, and South Eastern Coalfields Limited. Out of 24 MFCs undertaken by IrconISL, 20 MFCs have been sub-leased to operators. IrconISL is also undertaking work of Supply of Manpower for Sri Lanka and Malaysia projects of Ircon.

Financials of IrconISL:

The authorized, subscribed, and paid-up share capital of IrconISL is Rs. 65 crore, as on 31st March 2016. Shares corresponding to additional share capital of Rs. 25 crore subscribed by Ircon on 31st March 2015, have been allotted in May 2015.

During the year, IrconISL had achieved an operating income of Rs. 74.05 crore, and earned profit before tax of Rs. 22.61 crore and profit after tax of Rs. 14.22 crore.

2. Indian Railway Stations Development Corporation Limited (IRSDC)

IRSDC, a subsidiary company of Ircon and JV Company with Rail Land Development Authority (RLDA), was incorporated on 12th April 2012 and obtained a Certificate of Commencement of Business on 9th May 2012. The main objects of IRSDC is to develop / re-develop the existing / new railway station(s) which will consist of upgrading the level of passenger amenities by new constructions/ renovations including re-development of the station buildings, platform surfaces, circulating area, etc., to better standards so as to serve the need of the passengers in India, and commercial development of land/ air space. The equity participation of Ircon and RLDA in IRSDC is in the ratio of 51:49 respectively.

IRSDC has been entrusted with development of 8 stations located at Chandigarh, Habibganj (Bhopal), Shivaji Nagar (Pune), Bijwasan (New Delhi), Anand Vihar (Delhi), Surat and Gandhinagar (Gujarat), and SAS Nagar (Mohali) Punjab for development/re-development. The status of re-development of railway station by IRSDC is as follows:

(i) Chandigarh Railway Station - re-development plan is under revision for reducing the scope due to drastic reduction in permitted commercial development by local administration;

(ii) Habibganj Railway Station - contract for re-development of this station has been awarded, wherein the station will be modernized through commercial development of land and maintained through retail and advertising revenues;

(iii) Shivajinagar Railway Station - development is under approval by Pune Municipal Corporation;

(iv) Bijwasan and Anand Vihar Railway Station - bidding process is in advanced stage;

(v) Surat Railway Station - planned to be re-developed as a Multi Modal Transportation Hub through a Joint Venture Company and pooling of land by the Central, State, and Local Government;

(vi) Gandhinagar Railway Station - planned to be re-developed on Viability Gap Funding Model by combining the operation and maintenance of the nearby Mahatma Mandir complex owned by State Government;

(vii) SAS Nagar Mohali Railway Station - found to be unviable and has been proposed for de-entrustment.

Financials of IRSDC

The authorised share capital of IRSDC is Rs. 100 crore. Its subscribed and paid-up share capital is Rs. 40 crore as on 31st March 2016.

During the year, IRSDC earned a profit before tax and profit after tax of Rs. 2.44 crore and Rs. 1.15 crore, respectively, mainly on account of interest income.

3. Ircon PB Tollway Limited (IrconPBTL)

IrconPBTL, a wholly owned subsidiary of Ircon, was incorporated as a Special Purpose Vehicle on 30th September 2014, and has obtained approval for commencement of business on 14th November 2014. The main object of IrconPBTL is to carry on the business of widening and strengthening of the existing Bikaner & Phalodi Section to four lane from 4.200 km to 55.250 km and Two Lane with paved shoulder from 55.250 km to 163.500 km of NH-15 on Build, Operate, and Transfer (BOT) (Toll) basis in the State of Rajasthan, in accordance with the terms of the Concession Agreement signed with National Highways Authority of India (NHAI) on 7th November 2014.

In terms of the concession agreement, IrconPBTL has attained financial close on 30th April 2015 i.e. the date of execution and signing of the loan agreement with Ircon for a value of Rs. 352 crore. Other conditions set forth in the Concession Agreement as conditions precedent to declaration of Appointed Date viz. signing of Substitution Agreement (between NHAI, IrconPBTL, and Ircon) and Escrow Agreement (between IrconPBTL, Ircon, Indian Overseas Bank, and NHAI) were executed on 16th July 2015 and 10th August 2015 respectively.

NHAI had declared 14th October 2015 as the appointed date for commencement of construction, with construction period of 910 days, for which Ircon has been appointed as EPC contractor. The Commercial Date of Operations would be notified after completion of construction (scheduled in April 2018) and issue of completion certificate by NHAI for operationalization of toll plaza and levy of toll fees.

Financials of IrconPBTL:

The authorised share capital of IrconPBTL is Rs. 175 crore. Its subscribed and paid-up share capital is Rs. 90 crore as on 31st March 2016.

IrconPBTL is in construction phase and yet to achieve any operating turnover. During the year, IrconPBTL earned a profit before tax of Rs. 5.61 crore and profit after tax of Rs. 3.73 crore, respectively, mainly on account of interest income.

4. Ircon Shivpuri Guna Tollway Limited (IrconSGTL)

During the year 2015-16, your Company has formed another wholly-owned subsidiary company by the name 'Ircon Shivpuri Guna Tollway Limited' (IrconSGTL) on 12th May 2015, pursuant to conditions of award of Shivpuri-Guna Project in the State of Madhya Pradesh by NHAI. IrconSGTL has obtained approval for commencement of business from the Registrar of Companies on 27th May 2015.

The main objects of IrconSGTL is to carry on the business of four laning of Shivpuri-Guna section of NH-3 from 236.00 km to 332.1 km on Build, Operate, and Transfer (BOT) (Toll) basis on Design, Build, Finance, Operate and Transfer 'DBFOT' pattern under NHDP Phase-IV in the State of Madhya Pradesh and other ancillary works relating thereto, in accordance with the terms of the Concession Agreement, signed with the NHAI on 15th June 2015.

In terms of the concession agreement, IrconSGTL has attained financial close on 23rd November 2015 i.e. date of execution and signing of the loan agreement with Ircon for a value of Rs. 722.11 crore. Other conditions set forth in the Concession Agreement as Conditions Precedent to Declaration of Appointed Date viz. signing of Escrow Agreement (between IrconSGTL, Ircon, Indian Overseas Bank, and NHAI) and Substitution Agreement (between NHAI, IrconSGTL, and Ircon) were completed on 4th December 2015.

NHAI has thereby declared 25th January 2016 as the appointed date for commencement of construction, with construction period of 910 days, for which Ircon has been appointed as EPC contractor. The Commercial Date of Operations would be notified after completion of construction (scheduled in July 2018) and issue of completion certificate by NHAI for operationalization of toll plaza and levy of toll fees.

Financials of IrconSGTL:

The authorised share capital of IrconSGTL is Rs. 150 crore. Its subscribed and paid-up share capital is Rs. 33 crore as on 31st March 2016. Shares corresponding to additional share capital of Rs. 37 crore subscribed by Ircon on 31st March 2016, have been allotted in May 2016.

IrconSGTL is in construction phase and yet to achieve any operating turnover. During the year, IrconSGTL incurred a loss of Rs. 76.61 lakh on account of pre-operating expenses.

B. Joint Venture Companies (JVCs) -- In India:

5. Ircon-Soma Tollway Private Limited (ISTPL)

A joint venture company called 'Ircon-Soma Tollway Private Limited' (ISTPL) was incorporated on 19th April 2005, with 50% equity participation by both Ircon and Soma Enterprise Limited (a construction company in private sector), for executing a BOT project for four laning of Pimpalgaon-Dhule section of NH-3 from km 380 to km 265 in Maharashtra for NHAI.

The BOT project for four laning of Pimpalgaon-Dhule section got completed in 2010-11 and accordingly, ISTPL is earning toll on the entire stretch of 118.158 km.

Financials of ISTPL:

The authorized share capital of ISTPL is Rs. 130 crore and its subscribed and paid-up share capital is Rs. 127.74 crore as on 31st March 2016.

During the year, ISTPL has achieved operating turnover of Rs. 157.23 crore as compared to Rs. 155.34 crore achieved during the previous year, and earned profit after tax of Rs. 5.91 crore against loss of Rs. 15.67 crore incurred during the previous year.

Your Company had entered into a tripartite pledge agreement with ISTPL and PNB to pledge 30% of its shareholding in ISTPL, in favour of Punjab National Bank (PNB); a non-disposal undertaking with respect to 21% of its shareholding; and to make good 50% of any shortfall in dues, if any, to PNB in the event of the termination of the Concession Agreement. The said pledge agreement and non-disposal undertaking had been, executed as 50% equity partner in ISTPL, in connection with a loan of Rs. 521.53 crore availed by ISTPL in 2011-12. The outstanding balance of this loan as on 31st March 2016 is Rs. 227.16 crore. The details regarding this loan and related undertakings have also been disclosed in Note no. 12 forming part of the Standalone Financial Statements.

6. Chhattisgarh East Railway Limited (CERL)

A joint venture company called 'Chhattisgarh East Railway Limited' (CERL) was incorporated on 12th March 2013, with equity participation by South Eastern Coalfields Limited, Ircon, and Chhattisgarh State Industrial Development Corporation Limited (nominee of Government of Chhattisgarh) in the ratio of 64:26:10 respectively, for development of coal connectivity corridor i.e. East Corridor (length 180 Km) in the State of Chhattisgarh. CERL had obtained Certificate for Commencement of Business on 7th May 2013.

CERL has signed concession agreement on 12th June 2015 with Ministry of Railways, for Chhattisgarh East Railway Corridor - Phase I in the State of Chhattisgarh (Total 104.157 km). Phase I of the project is being implemented for Build, Own, Operate, and Transfer (BOOT) model for PPP projects.

Financials of CERL:

The authorized share capital of CERL is Rs. 400 crore and its subscribed and paid-up share capital is Rs. 139.055 crore as on 31st March 2016. CERL is yet to start commercial operations.

7. Chhattisgarh East-West Railway Limited (CEWRL)

A joint venture company called 'Chhattisgarh East-West Railway Limited' (CEWRL) was incorporated on 25th March 2013, with equity participation by South Eastern Coalfields Limited, Ircon, and Chhattisgarh State Industrial Development Corporation Limited (nominee of Government of Chhattisgarh) in the ratio of 64:26:10 respectively, for development of coal connectivity corridor i.e. East-West Corridor (length 122 Km) in the State of Chhattisgarh. CEWRL had obtained the Certificate for Commencement of Business on 7th May 2013.

Detailed Project Report (DPR) has been approved by the South Eastern Central Railway during July 2015. Land acquisition proceedings are in process.

Financials of CEWRL:

The authorized share capital of CEWRL is Rs. 5 crore and its subscribed and paid-up share capital is Rs. 4.055 crore as on 31st March 2016. CEWRL is yet to start commercial operations.

8. Mahanadi Coal Railway Limited (MCRL)

During the year 2015-16, a joint venture company called 'Mahanadi Coal Railway Limited' (MCRL) was incorporated on 31st August 2015, with equity participation by Mahanadi Coalfields Limited, Ircon, and Odisha Industrial Infrastructure Development Corporation (nominee of Govt. of Odisha) in the ratio of 64:26:10 respectively, with the main object to build, construct, operate, and maintain identified rail corridor projects that are critical for evacuation of coal from mines in the State of Odisha.

MCRL has signed project execution agreement with Ircon on 19th April 2016. Angul-Balram-Jharpada new rail corridor has been identified by the Company for implementation. Feasibility and Detailed Project Report is under preparation.

Financials of MCRL:

The authorized, subscribed, and paid-up share capital of MCRL is Rs. 5 lakhs as on 31st March 2016.

9. Jharkhand Central Railway Limited (JCRL)

During the year 2015-16, a joint venture company called Jharkhand Central Railway Limited (JCRL) was incorporated on 31st August 2015, with equity participation by Central Coalfields Limited, Ircon, and Govt. of Jharkhand in the ratio of 64:26:10 respectively, with the main object to build, construct, operate, and maintain identified rail corridor projects that are critical for evacuation of coal from mines, in the State of Jharkhand.

JCRL has signed project execution agreement with Ircon on 28th March 2016. Shivpur-Kathautia new rail line project has been identified by the Company for implementation. Feasibility and Detailed Project Report (DPR) are under preparation.

Financials of JCRL:

As on 31st March 2016, the authorized share capital of JCRL is Rs. 5 crore.

10. Bastar Railway Private Limited (BRPL)

After the close of the year 2015-16, a joint venture company called Bastar Railway Private Limited (BRPL) was incorporated on 5th May 2016, with equity participation by NMDC Limited, Ircon, Steel Authority of India Limited and Chhattisgarh Mineral Development Corporation (nominee of Government of Chhattisgarh) in the ratio of 43:26:21:10 respectively, with the main object to build, construct, operate and maintain Rowghat to Jagdalpur (via Narayanpur, Kondagaon) new railway line, in the State of Chhattisgarh. The authorized share capital of BRPL is Rs. 5 crore.

Shareholders Agreement for BRPL has been signed on 20th January 2016. As per the Articles of Association of the Company, Ircon is the implementation agency for the project and it has already received advance of Rs. 9.78 crore from co-promoters viz. NMDC and SAIL. Feasibility and Detailed Project Report (DPR) are under preparation.

C. Joint Venture Companies (JVCs) Outside India:

11. Companhia Dos Caminhos De Ferro Da Beira (CCFB)

A joint venture company Companhia Dos Caminhos De Ferro Da Beira (CCFB) was incorporated in Mozambique during 2004 to execute Beira Rail Concession Project. Your Company has 25% equity stake in CCFB along with RITES having 26% and CFM, a railway undertaking of Mozambique, having 49% equity stake. Your Companys equity stake of 25% in CCFB is represented by USD 1.25 million (Rs 5.53 crore). Further, CCFB had been granted loan of USD 5.083 million (Rs. 22.48 crore), Conditional shareholders loan 15.042 million (Rs. 66.53 crore), and Shareholders loan of USD 1.947 million (Rs. 12.83 crore)], all totaling to an amount of USD 22.171 million.

Although the project was complete, the Government of Mozambique has terminated the concession in November 2011 and taken over the project in December 2011. CCFB had initiated arbitration proceedings against Government of Mozambique under ICC Rules and filed request for Arbitration with International Court of Arbitration in May 2013.

Subsequently, a settlement agreement was signed with Government of Mozambique on 21st October 2015. As per the settlement agreement, Ircon will get in installments an amount of USD 40.31 Million (including USD 4 Million against IRCONs claims as a contractor). First installment of USD 17.93 Million (equivalent to INR 121.71 crore) for Ircons share has been received in January 2016. Balance four installments of USD 5.595 Million each are due on 18th October 2016, 18th October 2017, 18th October 2018 and 18th October 2019. Government of Mozambique have opened the confirmed Letter of Credit against balance due payment after 31st March 2016 (Confirmation received on 31st May 2016). The aforesaid payments are towards equity contribution by the company, shareholder loans, interest accrued up to the date of settlement agreement, dues towards management and other services/charges. In addition to this, reimbursement of arbitration expenses will be made subject to actual as per agreement within overall ceiling of USD 5 million to strategic shareholders i.e. RITES Limited and Ircon International Limited.

In view of receipt of upfront payment and establishment of Letter of Credit after reporting date, dues towards fees, loans, interest, etc. have now become certain to be realized. Accordingly, Interest on shareholder loans up to the date of settlement agreement, unrecognized fee and exchange variation as per AS-11 have been recognized during the year and Provision for doubtful loans amounting to Rs. 25.65 crores and Provision for impairment of Equity amounting to Rs. 5.53 crores made in earlier years have been written back during the year. The entire balance amount of shareholders loan (after receipt of upfront payment) {USD 12.435 Mn (equivalent to INR 81.97 Crore)} has been transferred from loan account to amount recoverable from Govt. of Mozambique. Company will also transfer its shareholding in CCFB to Government of Mozambique or their nominated agency. Accordingly, investment in equity is still shown as a part of investment in CCFB in the companys financial statements

D. Unincorporated Joint Ventures (UJVs) For projects in operation:

12. IRCON-SPSCPL

This unincorporated joint venture with S.P. Singla Constructions Private Limited (SPSCPL), having participating interest of 50:50 by Ircon and SPSCPL respectively, is for design and construction of 592 m long cable stayed major permanent bridge over river Ravi in the State of Jammu & Kashmir. The project was awarded to the UJV on 27th August 2010 at a value of Rs. 145.43 crore.

The work got completed in December 2015.

Financials:

During the year, this UJV has achieved operating turnover of Rs. 39.05 crore (Ircons share Rs. 19.52 crore) and incurred loss of Rs. 1.04 crore.

13. IRCON-AFCONS JV

This unincorporated joint venture with Afcons Infrastructure Limited (Afcons), having participating interest of 53:47 by Ircon and Afcons respectively, is for Construction of 2nd Bhairab Railway Bridges with approach Rail Lines in Bangladesh. The agreement for the project was signed on 10th September 2013 at a value of BD Taka 567.17 crore.

The overall progress of the project is 73.51% as on 31st March 2016, and the work is likely to be completed in March 2017.

Financials:

During the year, this UJV has achieved operating turnover of Rs. 157.80 crore (Ircons share Rs. 83.50 crore) and profit before tax of Rs. 16.23 crore.

E. Unincorporated Joint Ventures (UJVs) For completed projects:

14. RICON

This unincorporated joint venture with Rites Limited (RITES) was for securing and executing contracts awarded by CCFB. The participating interest of RITES and Ircon in this UJV is 51% and 49% respectively.

The work assigned to the UJV was completed in 2011. However, the UJV had not been wound up on account of pending settlement with CCFB.

Financials:

During the year, RICON has achieved profit before tax of Rs. 0.73 crore (Ircons share Rs. 0.36 crore).

15. International Metro Civil Contractor (IMCC)

This unincorporated joint venture with four other companies viz. Dyckerhoff & Widmann Aktiengesellschaft (DYWIDAG) in Germany, Larsen & Toubro Limited (L&T), Samsung Corporation (Samsung), Ircon, and Shimizu Corporation (Shimizu), Japan, was entered in 2001 for securing and executing construction of Delhi Metro Corridor-Mass Rapid Transport System Phase I Tunnel Project Package MC1B project of Delhi Metro Rail Corporation (DMRC). The participating interest of DYWIDAG, L&T, Samsung, Ircon, and Shimizu is 29%, 26%, 26%, 9.5%, and 9.5% respectively. The project was completed in 2005, however, on account of pending matters with tax authorities and other commercial issues, the UJV has not been wound up.

Financials:

During the year, IMCC has achieved profit before tax of Rs. 0.20 crore (Ircons share Rs. 0.02 crore).

16. Metro Tunnelling Group (MTG)

This unincorporated joint venture with four other companies DYWIDAG International GmbH (DYWIDAG) in Germany, Larsen & Toubro Limited (L&T), Samsung Corporation (Samsung), Ircon, and Shimizu Corporation (Shimizu), Japan, was entered in 2006 for securing and executing Design and Construction of Tunnel by shield TBM and Stations by Cut & Cover on Central Secretariat Qutub Minar Corridor of Phase-II of Delhi MRTS Project Packages BC 16 and Package BC 18 of DMRC. The participating interest in DYWIDAG, L&T, Samsung, Ircon, and Shimizu is 29%, 26%, 26%, 9.5%, and 9.5% respectively. The project was completed in 2010, however, the UJV is yet to be wound up on account of pending matters with tax authorities.

Financials:

During the year, MTG has achieved profit before tax of Rs. 4.03 crore which mainly consists of interest income (Ircons share Rs. 0.38 crore).

For and on behalf of the Board of Directors

Sd/-

(Mohan Tiwari)

Chairman & Managing Director

(DIN: 00191363)

Place : New Delhi

Date : 2nd September 2016

Appendix C

REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SUSTAINABILITY ACTIVITIES

1. A brief outline of the Companys CSR Policy, including overview of projects or programs undertaken and its web-link:

Your Company is committed to its stakeholders to conduct its business in an economically, socially, and environmentally sustainable manner, that is transparent and ethical.

The Company is having a policy on CSR and Sustainability since 2011. The said CSR and Sustainability Policy has been revised in April 2014 and January 2015 with the approval of the Board of Directors in line with the requirements of the Companies Act, 2013, and DPE Guidelines, 2014, on the subject.

The object of the CSR and Sustainability Policy is to focus on activities having social, economic and environmental impact, rather than mere output or outcomes.

The policy also provides for selection of CSR projects generally in the vicinity project sites to provide an opportunity to connect with the people, environment and other stakeholders, who are affected by construction activities. The stakeholders directly impacted by business operations of the Company can rightfully claim for attention before others. Proximity to project site enables easier mobilization of resources required for execution of CSR projects, and also offers an advantage of checking regular progress in implementation of planned activities.

During financial year 2015-16, IRCON has undertaken CSR and Sustainability activities in the field of health, education, skill development, rural infrastructure development, environment (solar energy), sanitation and cleanliness, and socio-economic development. In addition, the Company has taken up a special drive to help differently abled persons by providing various kinds of aids and assistive devices. 384 persons with physical disabilities in Jammu region in the State of Jammu & Kashmir have benefitted by such aids and assistive devices distributed in the medical camp held at Jammu.

The Company has continued its commitment to contribute to the objective of national movement like Clean India (Swachh Bharat) and Clean Ganga, and has contributed an amount of Rs. 1.93 crore to Swachh Bharat Kosh and Rs. 1.27 crore to Clean Ganga Fund.

The CSR and Sustainability Policy of the Company, the projects / activities approved by the Board of Directors and executed during 2015-16 along with activities being undertaken during 2016-17, is available at the web-link --http://www.ircon.org/content.aspx?Title=178.

2. Composition of CSR Committee:

Presently your Company has a Board level Committee for monitoring the CSR and Sustainability activities / projects as well as a Nodal officer and his team to assist the Committee.

a) CSR and Sustainability Committee has been constituted in terms of the Companies Act, 2013, and DPE CSR and Sustainability Guidelines, 2014.

A brief background on the constitution of Committee during the year 2015-16, its mandate, along with details of meetings held during 2015-16 are given in para 7.4 of the Corporate Governance Report. Presently, the Committee is headed by Prof. (Ms.) Vasudha V. Kamat, Independent Director; with Mr. Avineesh Matta, Independent Director; Mr. Deepak Sabhlok, Director (Projects); and Mr. Anjum Pervez, Part-time (Official) Director; as its members.

b) Mr. A. K. Goyal, Executive Director (Projects), Nodal Officer and his team assists the Committee in selection and approval of the CSR and Sustainability activities / projects; facilitates coordination of CSR and Sustainability initiatives; and submits the progress report of implementation of the activities to the CSR and Sustainability Committee.

3. The average net profit of the Company from Indian projects in the last three financial years is Rs. 301.48 crore.

4. The CSR Budget for the financial year 2015-16 has been Rs. 6.03 crore which is 2% of the average net profit of the Company from Indian projects in the last three financial years.

5. During the year 2015-16, the Company has spent Rs. 6.15 crore on CSR activities. Thus, the unspent amount for the year 2015-16 is NIL and there is no carry forward to the next financial year 2016-17. In addition, there was no carry forward from previous year i.e. 2014-15.

Details of the projects undertaken during the year are as under:

(Amount in Rs. Lacs)

6. The BoD, at its meeting held on 2nd September 2016, had approved CSR Budget, for the financial year 2016-17, of Rs. 6.83 crore which is 2% of the average net profit from Indian projects in the last three financial years.

7. The CSR and Sustainability Committee confirms that the implementation and monitoring of the CSR and Sustainability policy is in compliance with the CSR objectives and policy of the Company.

For and on behalf of the Board of Directors

Sd/- Sd/- Sd/-

(Deepak Sabhlok) (Prof. Vasudha V. Kamat) (Mohan Tiwari)

Director Projects & Independent Director Chairman & Managing Director

Member, CSR and & Chairperson, CSR and (DIN 00191363)

Sustainability Committee Sustainability Committee

(DIN 03056457) (DIN 07500096)

Place : New Delhi

Date : 2nd September 2016

Appendix D

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

AN OVERVIEW

The Company has a long standing reputation as a sectoral leader in Transportation Infrastructure amongst the public sector construction companies in the Country with specialization in execution of Railway Projects on turnkey basis or otherwise. After commencing business as a railway construction company it diversified progressively since 1985 to roads, buildings, electrical sub-station and distribution, airport construction, commercial complexes, as well as to metro works. It has been one of the few construction companies in the public sector to have earned substantial foreign exchange for the Country and paid dividend without fail every year to the Government.

The Company has executed many landmark construction projects in the last 40 years both in India and abroad. In India, in particular, it has also been undertaking projects even in difficult terrains and disturbed regions. The Company has so far completed more than 119 projects in more than 22 countries across the globe, and 376 projects in India.

The Company is an ISO certified Company for Quality, Environment, and Occupational Health and Safety Management Systems, a Schedule A public sector company, and a Mini Ratna Category I.

LEGAL STATUS AND AUTONOMY

The Company, a legal entity separate from the Government, is legally, functionally, and financially autonomous, operates under the corporate laws as an independent commercial enterprise, does not receive any budgetary or financial support from the Government, nor is it a dependent agency of the Government. However, the Government of India through the Ministry of Railways and the Department of Public Enterprises under the Ministry of Heavy Industries and Public Enterprises, monitors its performance through a system of Memorandum of Understanding (MOU) as regards targets to be achieved every year as part of accountability to the Parliament in respect of all government companies. Government can issue and does issue guidelines to regulate and bring about some uniform pattern in the functioning of the Company as a public sector company. However, no Government department has any supervisory authority to exercise control over the Company which is managed and run under the superintendence, control, and direction of its Board of Directors as per the Companies Act.

BUSINESS ENVIRONMENT

The Indian Economy grew at 7.6 per cent in the financial year 2015-16 thus making it the fastest growing major economies in the world. The growth rate has been achieved despite global macroeconomics chartering a rough and uncertain terrain. To continue this momentum or to achieve and sustain higher economic growth, impetus to infrastructure is indispensable which the Government is undertaking through various initiatives. Some of these initiatives which may present business opportunities to your Company are given below:

Railways:

The key focus areas for Indian Railways presently are commissioning of track and broad gauge lines, railway electrification, dedicated freight corridor (DFC) with three new freight corridors expected to come up viz. North-South connecting Delhi to Chennai, East-West connecting Kharagpur to Mumbai and East Coast connecting Kharagpur to Vijaywada; north-eastern rail connectivity, port connectivity, loco factories and metro works, redevelopment of railway stations etc. A sizeable investment is expected on these activities.

Signalling & Telecommunication Projects are also included in the composite turnkey railway projects.

The preferred mode of project execution presently seems to be PPP, Joint Ventures, and Engineering Procurement and Consultancy (EPC) etc. To enable the States to decide priorities for development of backward regions in the spirit of cooperative federalism, the cabinet has allowed creation of joint ventures with State Government for undertaking rail based projects. These partnerships are expected to cover about 5300 km length at a value of Rs. 92,714 crore approximately as per the budget document. Indian Railways is moving towards undertaking projects valuing above Rs. 300 crore through EPC mode only.

Roads:

The Government is proposing an umbrella scheme viz. Bharatmala programme at an estimated cost of Rs. 2,67,200 crore to be completed by 2022. The programme covers, Development of State Roads along Coastal areas / Border areas, including connectivity of non-major ports, about 7000 km at a value of Rs. 80,250 crore; Backward Areas, Religious, Tourist Places Connectivity programme, about 7000 km at a value of Rs. 85,250 crore; Setu Bharatam Pariyojana for construction of about 1500 major bridges and 200 ROBs / RUBs at a value of Rs. 30,000 crore; District Head Quarter Connectivity Scheme for development of about 9000 km newly declared National Highways at a value of Rs. 60,000 crore

In addition, the already continuing projects under PMGSY would have an allocation of Rs. 19000 crore during 2016-17. Further, Special Accelerated Road Development Programme for North-Eastern region (SARDP-NE) proposes improvement of 2933 km of National Highway and 1166 km of State roads and road and highways package for Arunanchal Pradesh involving development of about 2319 km of road length (2205 Km of National Highways and 114 Km State Roads)

Electrical Projects:

In addition to railways electrification works and work for railway sidings etc., other works in the offing are strengthening sub-transmission and distribution network in urban areas under the Integrated Power Development Scheme (IPDS) at a value of Rs. 5134 crore; Rural Electrification works under 'Deendayal Upadhyaya Gram Jyoti Yojana' (DDUGJY) Scheme at a value of Rs. 43,033 crore and Rajiv Gandhi Grameen Vidyutikaran Yojana (RGGVY) Scheme at a value of Rs. 39,275 crore.

In International arena opportunities exist in countries like Oman, Bangladesh, Bhutan, Sri Lanka and Iran.

Present Project Profile:

Your Company is executing construction of railway line in J&K, Sivok-Rangpo, Jayanagar (India) to Bijalpura (Nepal), Jogbani to Biratnagar, etc.; setting of new rail coach factory at Rae Bareli; setting up of three electric loco sheds at Bondamunda, Daund and Mughalsarai; Road over Bridges in Jharkhand under Pradhan Mantri Gram Sadak Yojna (PMGSY); Design and Construction of Civil, Building and Track Works of Vaitarna-Sachin section of DFC project; Construction of Railway Siding at Nagarnar, in Chhattisgarh and for Darlipali Super Thermal Power project; electrical works under RAPDRP-Part B Project in the State of Jammu & Kashmir and Uttar Pradesh; Design, Supply, Installation etc. of receiving-cum-traction and auxiliary main sub-station; Metro works for Delhi and Kochi metro, etc.

Additionally, the Company is a stakeholder in five Special Purpose Vehicle (SPV) companies to undertake rail connectivity projects for coal movement, viz. three in the State of Chhattisgarh i.e. Chhattisgarh East Railway Limited, Chhattisgarh East-West Railway Limited and Bastar Railway Private Limited; and one each in the State of Odisha and Jharkhand i.e. Mahanadi Coal Railway Limited and Jharkhand Central Railway Limited respectively.

The Company has also formed two wholly-owned subsidiary companies for execution of road projects of NHAI viz. Ircon PB Tollway Limited [for widening and strengthening of the existing Bikaner - Phalodi section of NH-15 on BOT (Toll) basis in the State of Rajasthan] and Ircon Shivpuri Guna Tollway Limited [for four laning of Shivpuri-Guna section of NH-3 on BOT (Toll) basis on DBFOT pattern under NHDP Phase-IV in the State of Madhya Pradesh].

Your Company is having active presence in Sri Lanka, Malaysia, Bangladesh, Algeria, Bhutan, and South Africa.

OUTLOOK

The Vision and Mission of the Company are as follows:

A. Vision

To be recognised nationally and internationally as a construction organisation comparable with the best in the field covering the entire spectrum of construction activities and services in the infrastructure sector.

B. Mission

i) To effectively position the Company so as to meet the construction needs of infrastructure development of the changing economic scene in India and abroad.

ii) To earn global recognition by providing high quality products and services in time and in conformity with the best engineering practices.

FINANCIAL PERFORMANCE

The total income of the Company during 2015-16 stood at Rs. 2703 crore as compared to Rs. 3122 crore registered in 2014-15. About 89% of the total income i.e. Rs. 2403 crore, has arisen from operations, out of which about 18% i.e. Rs. 434 crore has been contributed by foreign projects. Operating income from foreign projects has decreased by 50.51% over the previous year. The main reason being completion of foreign projects in Sri Lanka. There had been a corresponding decrease of 32.82% in Profit before tax from Rs. 844 crore in 2014-15 to Rs. 567 crore in 2015-16. Profit after Tax has also decreased by 34.54% from Rs. 579 crore in 2014-15 to Rs. 379 crore in 2015-16. Net Worth has increased by 5.25% during the year, whereas earnings per share have decreased by 34.54% from Rs. 292.68 in 2014-15 to Rs. 191.59 in 2015-16.

Although turnover of the Company is showing declining trend, the Company has secured new projects whereby the order book stands increased to Rs. 17569 crore approx. Consequently, the Company is hopeful to reverse the trend and achieve turnover as per objectives.

The details of interim dividend paid and dividend proposed for consideration and declaration by the shareholders, over and above the interim dividend, at the forthcoming AGM is given in Para C under the heading Financial Highlights in Directors Report.

OPERATIONAL PERFORMANCE

A. Sectoral Performance:

Railways continued to be the primary sector of interest contributing highest to the operating income, though its portion has reduced. Highways and Electrical have been the other two important sectors contributing 9.88% and 8.27% respectively to total operating income during 2015-16. A sector-wise comparative position for the last three years is given below:

(Amount in Rs. crore)

B. Segment-wise Performance:

Contribution of foreign projects to total income has decreased from 50% in 2013-14 to 15% in 2015-16. A comparative position for the last three years is given below:

(Amount in Rs. crore)

STRENGTHS

The Company has rich experience of timely execution of a large number of international projects, especially in developing countries. Its key strengths continue to be impressive financials (reflected in the consistent profitability and healthy balance sheet of the Company), established credentials, and competent manpower. The Company has a track record of quality performance in time to the satisfaction of customers. The Company has gained valuable experience in executing turnkey projects for DBFOT projects. On account of opportunities in the offing in the areas of EPC and DBFOT, an integrated team of railway and highways, design and execution engineers and business development managers have been mobilized to work on such opportunities.

Some of the large infrastructure companies are unable to mobilize additional resources to fund infrastructure projects owing to debt etc. However, Ircon can leverage its financial resources to secure DBFOT projects both in Highway and Railway sector. This may enable the Company to be most competitive on these projects.

OPPORTUNITIES

A number of macro level and sectoral initiatives undertaken to improve economic growth coupled with revival of interest in the development of infrastructure sector in the last few years in India as well as Abroad, particularly in Railway sector, has opened up several opportunities for securing more business. The Companys effort to leverage its financial resources to get recurring business has resulted in securing coal connectivity projects in the State of Chhattisgarh, Odisha, and Jharkhand. Efforts to develop maximum number of other related and remunerative projects in these States and other States may bring more business in the coming years

The Company has experience in undertaking ROB projects for Railway entities and State Governments. Ircon has also delivered large number siding projects for other PSUs and clients.

During the year, the Company secured one Railway contract through open competitive bid under Indian Lines of Credit in Bangladesh and is making efforts to secure further projects in the said country. The commitment of Government of India for new lines of credit amounting to USD 10 billion for Africa, would afford opportunities of securing works in countries like Ghana, Kenya, Ethiopia etc.

CONSTRAINTS

Although every organization has to work within a certain legal framework, the Company as a public sector company faces more constraints (not applicable to private sector companies) which puts it at a disadvantage in a competitive market. The structural changes in the construction industry in the last few years whereby all construction and financial risks are being transferred to the Contractors from the employers poses fresh challenge to the Company. These higher risks are willingly taken up by private sector companies to capture a sizeable portion of the market.

Ircon being a domain player in the railway infrastructure segment, has been able to secure a fair share of railway business for the Company in the past. However, entry of a large number of players in the highways sector has made it difficult for the Company to compete in Item Rate Contracts. Further, with the Employer(s) diluting the qualification requirement, a sizeable number of contractor are diversifying in Railway segment thereby increasing the competition for Ircon.

STRATEGY

The Company is focused towards strategic business development to sustain and improve its order book position by giving a thrust to its areas of core competence and international business. Core competence of the Company namely, Railways, Highways, Electric sub-stations, S&T, and Railway Electrification, is being further consolidated.

There is need to relook at Ircons strategy in bidding for contracts in the infrastructure sector in view of the challenges being posed by the above constraints. The revised strategy should take into account the Companys strength in terms of its credentials to execute mega projects and financial resources and its weaknesses on account of being a government entity limiting its ability to take risk, to secure projects in a higher competitive environment.

The Company also needs to increase its efforts in Metro Railway to bag contracts through strategic tie ups with local companies in the Indian market and International companies in the foreign markets.

RISKS AND CONCERNS

A. Project Risk Management:

The Company has a Risk Management Committee of Whole-time Directors and a Rapid Action Group at General Manager / Executive Director (below board) level to ensure its implementation. Risk Management Policy, Risk Management Processes, and MIS reports formats including MIS reports on Risk Management have been evolved in accordance with the Framework. Reports from Rapid Action Group for managing and mitigating risks are submitted through the Risk Management Committee to the Audit Committee for review.

In India, a major concern in execution of projects is non-availability of encumbrance free land, and delayed approval of drawings and estimate due to which there is a risk of time and cost overruns which are seldom compensated by the client.

B. Treasury Risk Management

Your company was assigned a CARE AAA rating by Credit Analysis & Research Limited (CARE) for long-term non-fund based credit facilities and an A1+ rating for short-term non-fund based credit facilities in 2008-09 based on BASEL II norms of the Reserve Bank of India. These rating have been re-affirmed in an annual surveillance review by CARE in January 2016.

Ircon conducts its business in various countries and, therefore, has to deal in foreign currencies. Execution of projects abroad necessitates investing some funds in foreign banks in order to take care of any exigency arising on account of temporary cash flow mismatch. However, dealing in foreign currencies involves foreign exchange risk and the exchange rate may change unfavorably before the currency is exchanged. In order to minimize or eliminate foreign exchange risk, these exchange rate fluctuations are monitored constantly and surplus funds are exchanged / repatriated to India at the appropriate time, and in accordance with the laws. Efforts are made to provide a natural hedge by matching foreign currency inflows and outflows from various foreign projects. Investment guidelines for foreign projects have been formulated to ensure placement of funds with foreign banks in a fair and transparent manner.

INTERNAL CONTROL SYSTEM

The Company has adequate internal control mechanism and an Internal Audit System commensurate with its size and nature of business. A comprehensive internal audit manual, encompassing the detailed scope of Internal Audit covering various areas from tendering to statutory compliances had been issued to internal auditors to make the internal control system more effective and project specific. Projects are closely monitored through online/offline reporting formats and the key performance indices are monitored by the Management on monthly basis.

The Company has in place an organizational chart and a system of delegation of powers. This coupled with robust internal MIS systems, ensures appropriate information flow to facilitate effective monitoring. Adherence to these processes is monitored through internal audits. The frequency of the Internal Audit, which varies from quarterly to half-yearly, is linked with the turnover and percentage of completion of the each project.

The Company has an internal audit system that requires the Internal Auditors to comment on the existence of adequate internal control systems and compliance therewith in addition to the opinion on existence of proper risk assessment and mitigation mechanism. The Internal Auditors are experienced chartered accountant firms which are selected through a transparent selection process, and upon appointment directly report to the Management. This ensures Internal Auditors independence. Reports of the Internal Auditors are reviewed, compliances are ensured, and synopses of Audit Reports along with compliance are put up by Internal Audit Department for consideration by the Audit Committee.

The internal control and audit system are being reviewed periodically by the Management as well as the Audit Committee, followed up by corrective action, whenever necessary as a part of continuous improvement. A structured Fraud Prevention, Detection, and Control Policy (FPDC Policy) along with a Whistle Blower Policy duly approved by the Board of Directors is in place with facility to make e-complaints in confidence.

HUMAN RESOURCE

The Company aims to achieve the right size and right mix of human resource/ employees for the organization. Since your Company is a project based company, there are fluctuations in the manpower requirements which are being taken care by recruiting employees on deputation, contract, and service contract. Recruitment strategies have been re-engineered to tune them with the overall strategy of the Company to keep cost of supervision and establishment at optimum level. Training programmes are designed so as to enhance both technical and managerial skills of employees.

The Company offers the post superannuation benefits of Contributory Provident Fund, Gratuity, and Post retirement Indoor Medical benefits through a Medical Trust to all its employees. During the year, Defined Contribution Pension Scheme, based on the recommendation of 2nd Pay Revision Committee, was approved w.e.f. 1st April 2009 consequent upon approval of Group Gratuity Trust Fund by the Commissioner of Income Tax in terms of its order dated 31st August 2015.

The manpower strength as on 31st March 2016 was 1499 employees. The attrition rate during 2015-16 was 1.67%, with 25 employees leaving the organization.

With an aim to build competency based framework for managing human resources, training programmes are being designed to align the skills of organisations human resources with that of the companys present and future needs. Under succession planning policy of the Company, steps are being taken to identify a potential pool of likely leaders to take up critical roles in future. To groom this pool of potential leaders, organization aims to train them with regard to future job requirements by involving them in cross-functional activities and through mentorship and stretch assignments.

For and on behalf of the Board of Directors

Sd/-

(Mohan Tiwari)

Chairman & Managing Director

(DIN: 00191363)

Place : New Delhi

Date : 2nd September 2016

Appendix E

CORPORATE GOVERNANCE REPORT

1. Companys Philosophy on Corporate Governance & Key Values

1.1 The Code of Corporate Governance of the Company is To Be Professional, Profitable, Transparent, and Accountable with excellence in every sphere of activity of the Company.

1.2 The Key Values of the Company formally adopted by the Board of Directors are:

a) Constructive approach

b) Working as a team

c) Excellence in performance

d) Probity in work and dealings

e) Being responsible and accountable

2. Board of Directors

2.1 Composition of Board of Directors:

After the close of the financial year 2015-16, Ministry of Railways (Administrative Ministry) has appointed three independent directors on the Board of Ircon in April 2016. Further, one government nominee director superannuated on 30th June 2016. Accordingly, the present strength of the Board of Directors of Ircon is eight comprising four whole-time directors (Chairman & Managing Director, Director Finance, Director Projects, and Director Works), one government nominated [part-time (official)] director, and three independent directors (including one woman director).

2.2 BOARD OF DIRECTORS AND THEIR MEMBERSHIPS OF BOD / COMMITTEES

(As on the date of this report)

DIRECTORS WHO CEASED TO HOLD OFFICE

(During 2015-16 and thereafter till the date of this report)

Notes:

a) The number of Directorships is within the maximum limit of 10 public companies (within the overall maximum limit of 20 Companies) in accordance with the Companies Act, 2013.

b) The Committees covered under the last two columns are Audit Committee, Nomination and Remuneration Committee, Independent Directors Committee, CSR & Sustainability Committee, and Committee for Issue of Renewed / Duplicate Share Certificates.

c) The number of committee memberships of directors is within the maximum limit of ten including the permitted limit of five chairmanships under the DPE Corporate Governance Guidelines, 2010 (DPE CG Guidelines). Only Audit Committee has been counted for the said limit.

d) The term whole-time director used in this report refers to functional / executive directors.

e) The term part-time director used in this report refers to non-executive directors.

f) The term official indicates part-time Government nominated directors who hold office in the Government.

g) The term non-official/ independent indicates part-time directors who hold no office in the Government and are independent.

h) Apart from the remuneration to directors as per the terms and conditions of their appointment and entitled sitting fee to part-time (non-official) directors, as detailed in para 4 of this Report, none of the directors has any material or pecuniary relationship with the Company which can affect their independence of judgment.

i) Mr. S. K. Singh, Independent Director, is director on the Board of:

j) Mr. Avineesh Matta, Independent Director, is director on the Board of:

k) Full name of companies referred:

3. Disclosures about Directors

As per the disclosures made by the directors in terms of section 184 of the Companies Act, 2013, read with Companies (Meetings of Board and its Powers) Rules, 2014, no relationship exists between directors inter-se. Two nominee directors (part-time official) who are officials from the Ministry of Railways, and thus related to the promoter.

Since appointment of all the directors including part-time directors is done by the Government in the name of the President of India, it has not been possible to have an item in the notice of AGM for appointment of directors as per section 152 of the Companies Act, 2013, which require determining not less than 2/3rd of the directors as persons whose period of office is liable to determination by retirement of directors by rotation at a general meeting. Further, Government appoints (not the Company) the part-time directors including independent directors with a fixed tenure due to which there is no scope for actually retiring any director by rotation every year and in the process it has not been possible to apply section 152 of the Companies Act, 2013.

The performance evaluation of functional directors as well as the Company is done through Memorandum of Understanding entered with Ministry of Railways and submitted to Department of Public Enterprises through the Administrative Ministry.

3.1 Brief Resume of Directors who joined the Company

No new director joined the Company during the year 2015-16. However, after the close of the year, following four directors have joined the Board of Ircon:

a) Mr. Sanjay Kumar Singh (S. K. Singh) (DIN 00003695), Practising Chartered Accountant, has joined the Board of Ircon as Independent [Part-time (Non-Official)] Director w.e.f. 5th April 2016 in terms of Presidential Order dated 1st April 2016 issued by the Ministry of Railways.

Born on 3rd November 1964, Mr. Singhs qualifications are B.Com (Hons.) and fellow member of the Institute of Chartered Accountants of India (ICAI).

He has 30 years of rich experience in finance, taxation, and business operation. He had worked for more than 26 years with Ambuja-Neotia Group (erstwhile owner & promoter of Ambuja Cements Limited). Before starting his own practice four years ago in 2012, he was holding the post of President (Corporate Affairs) in the said Ambuja Group.

Mr. Singh is also a council member of National Youth Development Fund under the aegis of Ministry of Youth Affairs and Sports and examiner in ICAI for last more than 20 years.

b) Mr. Avineesh Matta (DIN 00011749), Practising Chartered Accountant, has joined the Board of Ircon as Independent [Part-time (Non-Official)] Director w.e.f. 8th April 2016 in terms of Presidential Order dated 1st April 2016 issued by the Ministry of Railways.

Born on 28th April 1959, Mr. Mattas qualifications are B.Com (Hons.), LLB, Advanced Diploma in Management, Certificate in Environmental Economics, Certificate in Business Valuation, Diploma in Information Systems Audit, and fellow member of the Institute of Chartered Accountants of India (ICAI).

He has over 33 years of rich experience in finance, audit, taxation, etc. His professional exposure to multifarious industries and service segments has provided him extensive business knowledge and understanding of strategic and policy issues and processes. He has been giving consultation on merger & amalgamation, foreign exchange issues, due diligence, project financing, feasibility studies, investment banking, credit ratings, corporate restructuring, strategic & legal consulting, valuation of business & assets in addition to consultancy on Engineering-Procurement-Construction, Operate-Maintain-Transfer, Built-Operate-Transfer, and similar projects in road transport and highway sector.

He has been associated with monitoring, review, and evaluation of internationally aided projects in social sector and urban support programs. He has also been associated with various committees of ICAI, along with being an active member of various non-governmental organisation working in the field of health, education and skill development. He carries deep interest in business ethics and governance.

c) Prof. (Ms.) Vasudha Vasant Kamat (DIN 07500096), has joined the Board of Ircon as Independent [Part-time (Non-Official)] Director w.e.f. 22nd April 2016 in terms of Presidential Order dated 1st April 2016 issued by the Ministry of Railways.

Born on 26th June 1952, Ms. Kamats qualifications are B.Sc (Chemistry), B.Ed., M.Ed., M.A. (Sociology), and Ph.D. (Education).

Prof. Kamat started her career as teacher in 1971. Prior to joining SNDT Womens University in 1983, she was lecturer for 4 years in College of Education. She held various posts in her career span of 29 years with SNDT University. At the time of her retirement from SNDT University in 2016, she has been holding the post of Vice-Chancellor for the last 5 years. She also had a brief tenure as Joint Director at CIET, NCERT from 2007 to 2011.

She has over 45 years of rich experience in the field of school education, higher education, teacher education, womens education, open and distance education. During her tenure at SNDT University, she introduced various new ideas/ procedures like online admissions, Choice Based Credit System at master level, new strategies for evaluation, use of Information & Communication Technology (ICT) in teaching-learning Process, Faculty Development Programmes, Development of ICT infrastructure such as virtual classrooms, computer labs for students, training labs for teachers as well as Language labs on campuses.

A strong advocate of internationalization of higher education, she has linkages with various foreign universities in Canada, Mauritius, Malaysia, etc. She also has close association with Open Universities and National Institute of Open School.

As a social activist, she has been working for Society for Rural Reconstruction and Education (Narayan Ashram) since 1992. She is recipient of Best Teacher Award from Maharashtra State Government (2005-06), Fulbright Senior Research Fellowship (2005-06), and Rotary International Fellowship (2004-05).

d) Mr. M. K. Singh (DIN 06607392), has joined the Board of Ircon as Director Finance w.e.f. 1st May 2016 in terms of Presidential Order dated 26th April 2016 issued by the Ministry of Railways.

Born on 25th September 1961, Mr. Singhs qualifications are B.A. (Hons.), M.A. (Mathematics), M.Phil (Mathematics), and Post Graduate Diploma in Financial Management from IGNOU. He is an Indian Railway Accounts Service (IRAS) Officer of 1990 batch. Prior to joining Indian Railways, he worked as lecturer for 5 years in the University of Delhi.

He joined Indian Railways in 1991 and worked in various capacities for 25 years. He has gained rich experience in various branches of Railway Accounts and Finance including exposure of working in multi-departmental set up of Indian Railways. As Director Finance (Accounts) & Director Finance (PPP), Railway Board, he has worked in the area of financial scrutiny and appraisal of PPP projects in Indian Railways, compilation and preparation of accounts of Indian Railways, dealing with statutory audit (C&AG), etc. Further, he played a pivotal role in implementing a pan-railway online accounting package system and other Relational Database Management System (RDBMS) packages of Accounting and Finance in zonal headquarters and divisions in the railway system along with being a member of the team computerizing the Railway Finance and Accounts in two major divisions.

Prior to joining Ircon as Director Finance, he was working as General Manager/ Finance in Rail Vikas Nigam Limited (on deputation) for about 4 years where he was responsible for commercial accounting, financing along with handling financial matters of construction issues of rail infrastructure pertaining to SPVs, tender finalisation under quality and cost based selection (QCBS) and other systems, and handling ERP project, etc.

He has undergone trainings on Public Private Partnership mode of project finance from IIM Ahmadabad, freight business marketing course from Railway Staff College, Management Development program in Canada from Rottman School of Management, University of Toronto, Canada. He had also received various awards like Minister of Railways Award (in 1998), General Manager Award (2004), Efficiency Shield to Finance Department of Bhopal division (2007-08) during his tenure.

4. Remuneration of Directors

Being a government company, the whole-time directors are appointed by the President of India through the Ministry of Railways and draw remuneration as per Industrial Dearness Allowance (IDA) pay scales pre-determined by the Government and as per the terms and conditions of their appointment issued by the Government.

The part-time official director nominated on the Board do not draw any remuneration from the Company for their role as director but draw their remuneration under Central Dearness Allowance (CDA) pay scales from the Government as government officials.

The Shareholders, at their 31st Annual General Meeting held on 26th September 2007, had authorized the Board of Directors to fix remuneration payable to part-time (non official)/ independent directors by way of sitting fees within the ceiling prescribed by Rule 10-B of the Companies (Central Governments) General Rules and Forms. Accordingly, the Board of Directors, at its 215th meeting held on 28th January 2015, fixed the sitting fee for independent directors at Rs. 12,000/- for every meeting of the Board of Directors and any Committee(s) thereof.

4.1 Disclosure on Remuneration package of Whole-time Directors during 2015-16:

(in Rs.)

^ Including employers contribution towards pension amounting to Rs. 911696/-.

* All Directors were on the Board of the Company throughout 2015-16.

** Mr. Mohan Tiwari, born on 1st October 1956, qualified as B.E. Civil (Hons.), M.Tech (Structures) and PGDIM, joined Ircon on 25th June 1998 on deputation from Ministry of Railways and got absorbed in 2002 as General Manager. He was Director (Projects) from 8th August 2003 to 31st January 2009. He assumed tenure post as Managing Director on 1st February 2009, based on Presidential appointment conveyed through Ministry of Railways, for a period of 5 years or up to the age of superannuation, whichever is earlier. He had been re-designated by the Ministry of Railways as Chairman & Managing Director w.e.f. 5th March 2013. His tenure of appointment has been extended beyond 31st January 2014 till 30th September 2016, i.e. the date of his superannuation, vide order dated 15th May 2014 by Ministry of Railways. He has over 37 years of experience in infrastructure sector.

*** Mr. K.K. Garg, born on 15th April 1956 qualified as B.Com and a fellow member of the Institute of Chartered Accountants of India, joined Ircon on 3rd November 2009 as Director Finance. His tenure of appointment has been extended beyond 3rd November 2014 till 30th April 2016, i.e. the date of his superannuation, vide order dated 22nd June 2016 by Ministry of Railways. Before joining Ircon, he was Director Finance of Satluj Jal Vidyut Nigam Limited (now called SJVN Limited) for about 2 years and six months. He has over 36 years of rich experience in various fields of finance viz. corporate taxation, corporate MIS and budgetary control, commercial due-diligence, etc.

4.2 Details of payments made to Independent Directors / Part-time (Non-official) Directors during 2015-16:

Not applicable, as there was no independent director on the Board of Ircon during 2015-16.

5. BOARD PROCEDURE

5.1 BoD Charter:

a) The Company has in place a BoD approved Formal Board Charter with Corporate Governance objectives & approach and Role & Responsibility of BoD (including Whole-time Directors, Independent Directors, Government Directors), and Management (Senior Management) since 2012 .

b) This BoD Charter sets out essentially the composition & structure and role & responsibilities of the Board of Directors of the Company keeping the Corporate Governance objectives and approach in perspective.

c) To facilitate the part-time directors to discharge their responsibilities, independent office room at the registered office of the Company has been earmarked for them.

5.2 BoD Meetings and Attendance during 2015-16:

a) The Board of Directors met 9 times during the financial year 2015-16 on:

30th April 2015, 28th July 2015, 14th August 2015, 27th August 2015, 16th October 2015, 5th November 2015 (adjourned and held on 6th November 2015), 24th November 2015, 19th February 2016, and 28th March 2016.

b) Leave of absence was granted in terms of section 167(1)(b) of the Companies Act, 2013.

c) Details of attendance of the Directors and Company Secretary during 2015-16:

Ms. Sumita Sharma, Company Secretary attended eight out of the nine Board meetings held during the year 2015-16.

6. Code of Conduct for Board Members and Senior Management of the Company and Key Values for entire organization

The Company has in place a Code of Conduct for Board Members and for Senior Management (i.e. Directors, Chief Vigilance Officer, Additional General Managers and above, and Project / Functional Heads) and also Key Values for the Company as a whole. Both the Code of Conduct and Key Values came into effect from 1st April 2005, and have been posted on the website of the Company.

The declaration signed by Chairman & Managing Director affirming receipt of compliance with the Code of Conduct and Key Values from Board of Directors and Members of Senior Management team during 2015-16 is placed as Annexure E1.

7. COMMITTEES OF BOD

7.1 Audit Committee:

7.1.1 Terms of Reference:

The Board has approved terms of reference for Audit Committee, in April 2014, in line with the Companies Act, 2013; DPE CG Guidelines, 2010; and the then clause 49 of the Listing Agreement. The core areas in the said terms of reference for Audit Committee inter-alia includes the following:

a) Recommending remuneration of statutory auditors including payment of fees for any other services rendered by the auditors except the services covered under section 144 of the Companies Act, 2013.

b) Review and monitor the auditors independence and performance, and effectiveness of audit process.

c) Approval or any subsequent modification of transactions of the company with related parties and to review the statement of related party transactions submitted by management.

d) Scrutiny of inter-corporate loans and investments.

e) Evaluation of internal financial controls and risk management systems.

f) Oversight of the Companys financial reporting process and the disclosure of its financial information to ensure that the financial statements are correct, sufficient, and credible.

g) Reviewing, with the management, the annual financial statements and Auditors report thereon before submission to the Board for approval, with particular reference to:

i) Matters required to be included in the Directors Responsibility Statement to be included in the Board report in terms of clause (c) of section 134(3) of the Companies Act, 2013;

ii) Changes, if any, in accounting policies and practices and reasons for the same;

iii) Major accounting entries involving estimates based on the exercise of judgment by management;

iv) Significant adjustments made in the financial statements arising out of audit findings;

v) Compliance with legal requirements relating to financial statements;

vi) Disclosure of any related party transactions; and

vii) Qualifications in the draft audit report.

h) Reviewing, with the management, the quarterly financial statements and Auditors report thereon before submission to the Board for approval.

i) Discussion with the auditors -- both internal and statutory auditors to address significant issues and areas of concern.

j) Reviewing with the Management, the performance of statutory and internal auditors, adequacy of internal control systems and functions including the structure and working of internal audit department, and internal audit reports.

k) Considering such other item/ matters as may be decided by the Board / Audit Committee.

The Audit Committee had reviewed the matters as per the said Terms of Reference including the financial reporting process, the Financial Statements for 2015-16, the declaration of due compliance by Chairman & Managing Director and Director Finance, internal control systems, etc. before recommending the Financial Statements for 2015-16 for approval by the Board of Directors. The Audit Committee had also reviewed the consolidated financial statements of Ircon and its subsidiary / joint venture companies.

7.1.2 Composition and Attendance:

The Audit Committee of the Board, consisting of four part-time non-official (independent) Directors of the Company, was originally set up on 28th April 2000 with the approval of Board of Directors pursuant to the then Clause 49 of the Listing Agreement and as per the conditions for a Mini Ratna public sector company.

This has been reconstituted as and when there has been a change in independent directors. Consequent upon the appointment of independent directors on the Board of Ircon after the close of the year, the Audit Committee was re-constituted in April 2016, as under:

The Audit Committee met 9 times during the financial year 2015-16 on:

30th April 2015, 27th July 2015, 14th August 2015, 29th September 2015, 16th October 2015, 5th November 2015, 24th November 2015, 19th February 2016, and 28th March 2016. The attendance details of meetings held during 2015-16 are:

Ms. Sumita Sharma, Company Secretary, is the Secretary of this Committee and attended all the meetings held during 2015-16.

7.2 Shareholders' / Investors' Grievance Committee

Board of Directors of Ircon, at its meeting held on 28th July 2015, had dissolved the Shareholders' / Investors' Grievance Committee in view of the provisions contained in section 178 of the Companies Act, 2013 (which provides that a Company consisting more than 1000 share holders / debentures holders/ any other security holders at any time during a financial year should constitute this Committee). After dissolution of the said Committee, the power to consider and resolve grievance of security holders of the Company now vests with the Board of Directors.

No Committee meeting was held during the year 2015-16 before the dissolution of the said Committee.

7.3 Nomination and Remuneration Committee

Board of Directors of Ircon, at its meeting held on 28th July 2015 renamed its existing Remuneration Committee as Nomination and Remuneration Committee and widened its terms of reference so as to include areas specified by section 178 of the Companies Act, 2013, along with existing terms of reference under DPE OM dated 26th November 2008. In brief, the scope / terms of reference of Nomination and Remuneration Committee are:

1. To continue with the existing scope of deciding the annual bonus/ variable pay pool and policy for its distribution across executives and non-unionized supervisors within the limits prescribed in the DPE OM dated 26th November 2008.

2. To review the policies for selection and removal of persons in senior management (one level below the Director) and other employees as per DPE and other Government Guidelines, and recommend the same for approval to the Board.

3. Any other work as may be included by Companies Act or DPE Guidelines from time to time.

This has been reconstituted as and when there has been a change in directors. Consequent upon the appointment of independent directors on the Board of Ircon after the close of the year, the Nomination and Remuneration Committee was re-constituted in April 2016, as under:

The Committee met on 19th February 2016 during 2015-16. The attendance details of said meeting are:

Ms. Sumita Sharma, Company Secretary, is the Secretary of this Committee and attended the meeting held during 2015-16.

7.4 CSR and Sustainability Committee

Board of Directors of Ircon, at its meeting held in November 2014 renamed its existing CSR Committee as CSR and Sustainability Committee and widened its terms of reference so as to include areas as specified by section 135 of the Companies Act, 2013, and DPE Guidelines on CSR and Sustainability, 2014. In brief, the scope of the said Committee is to oversee the implementation of CSR and Sustainability Policy of the Company and to assist the BoD to formulate suitable policies and strategies to take the CSR and Sustainability agenda of the Company forward in the desired direction.

The Committee has been reconstituted as and when there has been a change in directors. Consequent upon the appointment of independent directors on the Board of Ircon after the close of the year, the CSR and Sustainability Committee was last re-constituted in April 2016, as under:

The Committee met 4 times during the financial year 2015-16 on: 27th July 2015, 14th August 2015, 5th November 2015, and 19th February 2016. The attendance details for 2015-16 are:

Ms. Sumita Sharma, Company Secretary, is the Secretary of this Committee and has attended all the meetings held during 2015-16.

7.5 Independent Directors Committee

The Board of Directors, at its meeting held in October 2013 had constituted Independent Directors Committee (known as ID Committee) in terms of DPE-OM dated 28th December 2012 on Role & responsibilities of Non-official Directors, which provides that non-official directors of the Company shall hold one meeting in a year, without the attendance of functional and government directors and members of management to assess the quality, quantity, and timeliness of flow of information between the Company, management, and the Board, that is necessary for the Board to effectively and reasonably perform the duties. Further, similar provision is also mentioned in para VII of Schedule IV of the Companies Act, 2013.

After completion of tenure of two independent directors in September 2014, Ministry of Railways had nominated three independent directors (including one woman director) in April 2016. Thereafter, the ID Committee was re-constituted in September 2016 with all the three independent directors.

No meeting of the ID Committee could be held due to non-appointment of independent directors during 2015-16.

7.6 Committee for Issue of Renewed/ Duplicate Share Certificates.

Board of Directors of Ircon, at its meeting held in January 2015 has constituted a Committee for Issue of Renewed/ Duplicate Share Certificates in terms of the Companies Act, 2013 read with Companies (Share Capital and Debentures) Rules, 2014, for issue of duplicate shares in replacement of those which are lost or destroyed, mutilated, torn or old, decrepit, worn out, or where the pages on the reverse for recording transfer have been utilized.

The Committee was last re-constituted in June 2016 as under:

Ms. Sumita Sharma, Company Secretary, is the Secretary of this Committee. No meeting of the Committee was required to be held during 2015-16.

8. Compliance of provisions relating to subsidiary (ies)

Presently, Ircon has following four subsidiaries:

a) Ircon Infrastructure & Services Limited (IrconISL) is a 100% subsidiary company of Ircon.

b) Indian Railway Stations Development Corporation Limited (IRSDC) is a subsidiary of Ircon and also a joint venture between Ircon and Rail Land Development Authority (RLDA) in which Ircon has 51% equity.

c) Ircon PB Tollway Limited (IrconPBTL) is a 100% subsidiary company of Ircon.

d) Ircon Shivpuri Guna Tollway Limited (IrconSGTL) is a 100% subsidiary company of Ircon (incorporated on 12th May 2015).

None of the aforesaid subsidiary companies are listed.

Turnover / Net Worth of IrconISL, IRSDC, IrconPBTL, and IrconSGTL did not exceed 20% of the turnover or net worth of Ircon (holding company) during 2015-16. Therefore, none of the above said subsidiary companies are 'material subsidiary' under the Listing Agreement or a 'subsidiary' as per the DPE CG Guidelines.

9. General Body Meetings

9.1 The details of last three Annual General Meetings are as under:

9.2 Special Resolution(s):

a) No special resolution was passed in the Annual General Meeting (AGM) for the year 2012-13.

b) One special resolution was passed in the AGM (for the year 2013-14) held on 25th September 2014 for amendment in borrowing powers of the Company.

c) Two special resolutions were passed in the AGM (for the year 2014-15) held on 22nd December 2015 for amendment in Memorandum and Articles of Association of the Company so as to increase the authorized share capital of the Company.

d) No special resolution is proposed to be conducted through Postal Ballot in the ensuing AGM of Ircon.

10. Disclosures

10.1 During the year, there was no transaction of material nature with the directors or their relative that had potential conflict with the interest of the Company.

10.2 The Company has followed the Accounting Standards issued by the Institute of Chartered Accountants of India in the preparation of Financial Statements.

10.3 During 2015-16, there are no items of expenditure debited in books of accounts, other than for the business purposes of the Company. Also, no expenses have been incurred by the Company which are personal in nature for the Directors and Top Management except for the remuneration paid to Directors, which is as per Government approved pay and perks (Details given in para 4 of this report and also disclosed in Note no. 40 forming part of the Stand-alone Financial Statements).

10.4 Administrative and office expenses as a percentage of total expenses vis-a-vis financial expenses are given below:

10.5 The Company periodically informs the Board about the risks associated with its projects in risky areas and foreign exchange management. Details pertaining to risk management have been given in Management Discussion and Analysis Report under the heading Risks and Concerns.

10.6 The Company has in place a BoD approved Fraud Prevention, Detection, and Control Policy so as to provide a system for detection and prevention of fraud, reporting of any fraud that is detected or suspected and fair dealing of matters pertaining to fraud.

10.7 The Company has in place a BoD approved Whistle Blower Policy under which there is a mechanism for employees to report to the Management, concerns about unethical behaviour, actual or suspected fraud, or violation of the Company's Code of conduct. The Policy also provides for adequate safeguards against victimization of employees who avail the mechanism. It provides for direct access to the Chairman of the Audit Committee in exceptional cases.

Both these Policies are available on Ircons website.

10.8 Question of denying access to any of the personnel to Audit Committee has not arisen so far.

10.9 The Company made no public issue of shares nor issued any prospectus or letter of offer during 2015-16.

10.10 There has been no instance of non-compliance of any statutory regulation or government guidelines nor there has been any penalties or strictures imposed on the Company on any matter related to the capital market and guidelines issued by Government.

10.11 The transactions with related party are in the ordinary course of business on arms length basis and the disclosure of the same has been made as per requirement of Companies Act, 2013 (i.e. Form AOC-2) and relevant Accounting Standard (in notes to Financial Statement of the Company).

10.12 DPE has awarded 'Excellent' grading to Ircon for compliance of DPE Corporate Governance Guidelines during 2014-15.

10.13 Ircon has secured, based on self-evaluation, an annual score of '90.05' out of 100 which falls under 'Excellent' grade for compliance of DPE Corporate Governance Guidelines for the year 2015-16.

10.14 The Company informs/ reports to the Board about the compliances of laws in the areas -- Company and Related Laws; Tax Laws; Labour & Employee Welfare Laws; RTI; Contract Laws; Environmental Laws; and also compliance of various laws as applicable to projects (Indian and Foreign); etc. every six months.

11. CEO / CFO Certification

The Chairman & Managing Director (CEO) and Director Finance (CFO) have certified in writing with respect to the truth and fairness of the financial statements, due compliances, and financial reporting which was placed before the Audit Committee and the Board of Directors (placed as Annexure E2 to this Report).

12. General Information for shareholders

12.1 Means of communication

a) Apart from the annual report, etc., being sent to the shareholders before the Annual General Meeting, periodical reports on the progress of projects of the Company including financial performance vis-a-vis the targets are being sent to the Administrative Ministry, Government of India.

b) The Annual Report including the audited financial statements for the year 2015-16 of Ircon and its subsidiaries would be available on the website of the Company.

c) The following have also been displayed on the Companys website:

i) Shareholding pattern of the Company.

ii) Important corporate governance policies like Fraud Prevention and Detection Policy; and Whistle Blower Policy along with confidential e-mail-ids of nodal officers/ CMD/ Chairman Audit Committee.

iii) CSR and Sustainability Policy; Sustainability Report; CSR Activities for last six years; etc.

iv) Code of Conduct for Board Members and Senior Management and Key Values of the Company.

d) E - mail ID of the compliance officer exclusively for the purpose of registering complaints by investors has been displayed on the website under the head Investor Corner.

12.2 Annual General Meeting of the Current Year

Date : 28th September 2016

Day : Wednesday

Time : 1700 Hours

Venue : Board Room of the Companys Registered Office -

C-4, District Centre, Saket, New Delhi 110 017

12.3 Record Date for payment of Dividend

Dividend would be paid for the year 2015-16 to all such shareholders whose name appear in the Register of Members as on the date of Annual General Meeting i.e. 28th September 2016, the record date.

12.4 Distribution of Shareholding (As on the date of this report)

Transfer of shares is normally technical in nature, from one Government nominee shareholder to another consequent upon change of officials, as the Government holds 99.729% of the shares. To effect this transfer, Company Secretary is the authorized officer, and no transfer is pending.

12.5 Plant Locations/ Operating Units

The Company does not have plant locations, but is widespread with operating units/ offices in fifteen different States of the Country and in six foreign countries. A list of the operating units/ offices is available on the website of the Company.

12.6 Address for correspondence with the Registered Office

(Regarding Corporate Governance matters covered under this report)

Company Secretary,

Ircon International Limited,

C-4, District Centre, Saket, New Delhi - 110 017

Telephone: 91-11-26530456;

Fax: 91-11-26522000 / 26854000

E-Mail: cosecy@ircon.org; Website : www.ircon.org

13. Training of Board Members

13.1 The Company has a Board approved Training Policy for Board Members. According to the Policy, the Company has a practice of imparting introductory training to new Board Members. They are also given documents about the Company which includes Memorandum and Articles of Association; Brochure; Annual Report; unaudited financial results; Corporate Plan, MoU targets and achievements; Board approved policies; DPE Guidelines on Corporate Governance and CSR & Sustainability; Terms of reference of all Committees of Board; Provisions on duties, responsibilities, disqualification, etc. of Directors under Companies Act, 2013, and DPE Guidelines; etc.

13.2 The Board members, based on their requirement attended various seminars, conferences, training programs from time to time. During 2015-16, Ircon's Directors were nominated/had attended training programs organized by Institute of Permanent Way Engineers, Fore school of Management, etc.

14. Compliance on Corporate Governance

This Report duly complies with the legal requirements in respect of data that should be disclosed in a Corporate Governance Report for the year 2015-16.

Certificate obtained from a Practising Company Secretary regarding compliance of the conditions of Corporate Governance is placed as Annexure E3 to this Report.

For and on behalf of the Board of Directors

Sd/-

(Mohan Tiwari)

Chairman and Managing Director

(DIN : 00191363)

Place : New Delhi

Date : 2nd September 2016

Annexure E1

DECLARATION BY CHAIRMAN & MANAGING DIRECTOR REGARDING COMPLIANCE WITH THE CODE OF CONDUCT BY BOD MEMBERS AND SENIOR MANAGEMENT DURING THE FINANCIAL YEAR 2015-16.

I, Mohan Tiwari, Chairman & Managing Director, Ircon International Limited, do hereby declare that all the members of the Board of Directors and the Senior Management Team of the Company have affirmed their compliance of the Code of Conduct and Key Values of the Company during 2015-16.

Sd/-

(Mohan Tiwari)

Chairman & Managing Director

(DIN : 00191363)

Place : New Delhi

Date : 25th May 2016

Annexure E2

CHAIRMAN & MANAGING DIRECTOR AND FINANCE HEAD CERTIFICATION

We have reviewed the Financial Statements [i.e. the Balance Sheet, Statement of Profit & Loss and Notes thereto] and the Cash Flow Statement for the financial year 2015-16 and to the best of our knowledge and belief:

(i) These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

(ii) These statements together present a true and fair view of the Companys affairs and are in compliance with existing accounting standards, applicable laws and regulations;

(iii) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal, or violative of the Companys code of conduct;

(iv) We accept responsibility for establishing and maintaining internal controls for financial reporting and that we have evaluated the effectiveness of the internal control systems of the Company pertaining to financial reporting. We have disclosed to the auditors and the Audit Committee deficiencies in the design or operation of such internal controls of which we are aware and the steps we have taken or propose to take to rectify these deficiencies;

(v) We have indicated to Auditors and the Audit Committee changes in Accounting Policies during the year, and that the same have been disclosed in the Notes to the Financial Statements; and

(vi) There was no instance of fraud of which we are aware nor there has been involvement of the Management or an employee having a significant role in the Companys internal control system over financial reporting.

Sd/- Sd/-

(M. K. Singh) (Mohan Tiwari)

Director Finance Chairman and Managing Director

(DIN: 06607392) (DIN: 00191363)

Place: New Delhi

Date: 1st September 2016

Annexure-E3

CERTIFICATE on COMPLIANCE WITH THE CONDITIONS of CORPORATE GOVERNANCE

UNDER CORPORATE GOVERNANCE GUIDELINES of DPE

To

THE MEMBERS OF

IRCON INTERNATIONAL LIMITED

NEW DELHI

In respect of the compliance of the conditions of Corporate Governance for the year ended 31st March, 2016, by IRCON INTERNATIONAL LIMITED, a Government Company under section 2(45) of the Companies Act, 2013, as required by the Guidelines on Corporate Governance issued by the Department of Public Enterprises (DPE):

We have studied the Corporate Governance Report of the said Company as approved by its Board of Directors. We have also examined the relevant records and documents maintained by the Company and furnished to us for our review in this regard.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to a review of procedures and implementation thereof adopted by the Company for ensuring the compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinion on the financial statement of the Company.

We state that there has been no investor grievance during the year against the Company as per the records maintained by the Company.

We further comment that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.

In our opinion and to the best of our information and on the basis of our review and according to the information and explanations given to us, we certify that the Company has complied with the mandatory requirements of Corporate Governance in all material respects, in conformity with the requirements of the Guidelines on Corporate Governance issued by the Department of Public Enterprises (DPE) in respect of corporate governance norms for a mini-ratna Public Sector Company, except appointment of requisite number of Independent Directors / a Woman Director (during the year under review) on the Board of the Company, which we understand is done by the Government. Further, the Government has appointed requisite number of Independent Directors (including a Woman Director) in April, 2016.

FOR M. BANGIA & ASSOCIATES

COMPANY SECRETARIES

MANOJ BANGIA

Place: NEW DELHI Proprietor

Dated: 02/09/2016 CP NO.3655

Annexure E4

ADDENDUM TO CORPORATE GOVERNANCE REPORT

The changes in the Corporate Governance Report under Para 12 General Information for shareholders consequential to the change in the venue of the Annual General Meeting are given below:

Existing Para:

12.2 Annual General Meeting of the Current Year

..

Venue : Board Room of the Companys Registered Office -

C-4, District Centre, Saket, New Delhi 110 017

Modified Para:

12.2 Annual General Meeting of the Current Year

.

Venue : 2nd Floor, Meeting Hall, Ministry of Railways,

Railway Board, New Delhi 110 001

For and on behalf of the Board of Directors

Sd/-

(Mohan Tiwari)

Chairman and Managing Director

(DIN : 00191363)

Place : New Delhi

Date : 28th September 2016

Appendix F

Form No. MR-3

Secretarial Audit Report

(For the Financial year ended on 31st March 2016)

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,

The Members

IRCON INTERNATIONAL LIMITED

CIN: U45203DL1976GOI008171

Plot No. C-4, District Centre, Saket

New Delhi-110017

We have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by IRCON INTERNATIONAL LIMITED (hereinafter called The Company). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/ statutory compliances and expressing our opinion thereon.

Based on our verification of the Company books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of secretarial audit, we do hereby report that in our opinion, the Company has, during the audit period covering the financial year ended on 31st March 2016, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

We have examined the books, papers, minute books, forms and returns filed and other records maintained by IRCON INTERNATIONAL LIMITED (The Company) for the period ended on March 2016 according to the provisions of:

(i) The Companies Act, 2013 (the Act) and the Rules made thereunder;

(ii) The Securities Contract (Regulation) Act, 1956 (SCRA) and the rules made thereunder;

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;

(iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment and Overseas Direct Investment and External Commercial Borrowings.

(v) The following Regulations and Guidelines prescribed under the Securities Exchange Board of India, Act, 1992, (SEBI Act):-

(a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011;

(b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992;

(c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009;

(d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999 /Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (effective 28th October 2014);

(e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations, 2008;

(f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client;

(g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009; and

(h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998.

(vi) Following laws and rules made thereunder have been identified as specifically applicable to the company by the Management:

(a) Department of Public Enterprises Guidelines are issued by Ministry of Heavy Industries and public Enterprises dated 14th May 2010.

(b) Income Tax Act, 1961

(c) Wealth Tax Act, 1957

(d) Service Tax Law

(e) VAT/Central Sales Tax Act/WCT

(f) The Customs Act, 1962

(g) Central Excise Act, 1944

(h) Air Prevention and Control of Pollution Act, 1981

(i) Environment Protection Act, 1986

(j) Water Prevention & Control of Pollution Act, 1974

(k) Information Technology Act, 2000 and the rules made thereunder

(l) Indian Stamp Act, 1999

(m) Right to Information Act, 2005

(n) Negotiable Instrument Act 1881

(o) Other Labour Laws and rules made thereunder:

Apprentice Act, 1961

Child Labour Act, 1986

Contract Labour (Regulation and Abolition) Act, 1970

Workmen Compensation Act, 1923

Employees Provident Fund and Miscellaneous Provisions Act, 1952

Construction Workers (Regulation of Employment and condition of Service) Act, 1996

Equal Remuneration Act, 1976

Factory Act, 1948

Electricity Act, 2003

Maternity Benefits Act, 1961

Minimum Wages Act, 1948

Employee State Insurance Act, 1948

Payment of Wages Act, 1936

Payment of Gratuity Act, 1972

Payment of Bonus Act, 1965

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

Commercial Shops and Establishment Act

We have also examined compliance with applicable clauses of the following:

(i) The Secretarial Standards issued by the Institute of Company Secretaries of India.

We further report that no observation in respect of compliances by the Company with the following is required:

(ii) The Listing Agreement entered into by the Company with the stock exchange(s) as the company is not listed with any stock exchange;

We further report that during the period under review the company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards etc. mentioned above without any material non-compliances and subject to the following observations:

1.      The Acts, Rules, Regulations, Agreements and Guidelines mention in clause(s) (ii), and (v) above do not require any observation as the company is an unlisted entity and hence these are not applicable.

2.      The Acts, Rules and Regulations mention in clause (iii) and (iv) above does not require any observation as no such event has occurred during the period under consideration.

3.      In respect of other laws specifically applicable to the company mentioned in clause (vi) above we observed that there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with all applicable laws, rules, regulations and guidelines.

We further report that:

The Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors except appointment of Independent Directors and Woman Director. It is understood that appointment is being done by the Government.

Further, the Government has appointed requisite number of independent directors (including a woman director) in April 2016.

The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act.

Adequate notice is given to all directors to schedule the Board Meetings, agenda and detailed notes on agenda were sent at least seven days in advance except for the shorter notice where requisite compliance has been made, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

Majority decision is carried through while the dissenting members views are captured and recorded as part of the minutes.

The Company has obtained all necessary approvals under the various provisions of the Act; and the Directors have complied with the disclosure requirements in respect of their eligibility of appointment, their being independent and compliance with the Code of Business Conduct & Ethics for Directors and Management Personnel;

For Vishal Agarwal & Associates

Company Secretaries

Place: New Delhi (CS Vishal Agarwal)

Date: 02/09/2016 FCS No.: 7242

C P No. : 7710

This report is to be read with our letter of even date which is annexed as Annexure- A and forms an integral part of this report

Annexure-A

To,

The Members

IRCON INTERNATIONAL LIMITED

CIN: U45203DL1976GOI008171

Plot No. C-4, District Centre, Saket

New Delhi-110017

Our report of even date is to be read along with this letter.

1.      Maintenance of secretarial record is the responsibility of the management of the company. Our responsibility is to express an opinion on these secretarial records based on our audit.

2.      We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. We believe that the processes and practices we followed provide a reasonable basis for our opinion.

3.      We have relied on report of Statutory Auditors, Tax auditors and Cost Auditors for compliances of the applicable Financial Laws including Direct and Indirect Tax Laws, Accounting Standards, the correctness and appropriateness of Financial Records, Cost Records and Books of Accounts of the company since the same have been subject to review by respective Auditors and other designated professionals.

4.      Wherever required, we have obtained the Management representation about the compliance of laws, rules, regulations and happening of events etc.

5.      The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verification of procedures on test basis.

6.      The Secretarial Audit report is neither an assurance as to the future viability of the company nor of the efficacy or effectiveness with which the management has conducted the affairs of the company.

For Vishal Agarwal & Associates

Company Secretaries

Place: New Delhi (CS Vishal Agarwal)

Date:02/09/2016 FCS No.: 7242

C P No. : 7710

Appendix - G

FORM NO. MGT 9

EXTRACT OF ANNUAL RETURN

[As on 31.03.2016]

[Pursuant to Section 92 (3) of the Companies Act, 2013, and Rule 12(1) of the Company (Management and Administration) Rules, 2014]

II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY

All the business activities contributing 10% or more of the total turnover of the company are:

III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES

[No. of Companies for which information is being filled - 15 Companies]

IV. SHARE HOLDING PATTERN:

(Equity Share Capital Breakup as percentage of Total Equity)

i) Category-wise Share Holding

Note:

1. Shares of the Company are not dematerialized as 99.729% shares are held in the names of President of India and his ten nominees.

2. 1,97,38,400 equity shares of Rs. 10/- each are held in the name of President of India, and 400 shares of Rs. 10/- each are held by each of the ten nominees (who are Government Officials) of the President of India.

ii) Shareholding of Promoters

* List of shareholdings by President of India and his nominees, as on 31st March 2016, are attached as Annexure G1.

iii) Change in Promoters Shareholding (please specify, if there is no change)

iv) Shareholding Pattern of top ten Shareholders (other than Directors, Promoters and Holders of GDRs and ADRs):

v) Shareholding of Directors and Key Managerial Personnel (KMP):

Note:

3. All the shares of Ircon are held by Central Government in the name of the President of India and his 10 nominees (99.729%), Indian Railway Finance Corporation Limited (0.247%), and Bank of India (0.024%).

V. INDEBTEDNESS

Indebtedness of the Company including interest outstanding/ accrued but not due for payment:

VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL

A. Remuneration to Managing Director, Whole-time Directors, and / or Manager:

(Amount in Rs.)

B. Remuneration to other directors:

(Amount in Rs.)

C. Remuneration to Key Managerial Personnel other than MD/ Manager/ WTD

(Amount in Rs.)

* CMD, Ircon, is deemed to be CEO of the Company; and DF, Ircon, is declared as CFO of the Company and their remuneration is mentioned in Sl. No. VI (A) above.

** Including employer contribution towards pension amounting to Rs. 105096/-.

Note:

4. Section 197 of the Companies Act, 2013, is exempt for government companies in terms of notification dated 5th June 2015 of the Ministry of Corporate Affairs.

VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:

Annexure - G1

List of Shareholding by President of India and his ten nominees

(As on 31st March 2016)

Name of the Company: IRCON INTERNATIONAL LIMITED

* 400 shares each are held by Presidents 10 (ten) nominees who are Government officials from the Ministry of Railways.

 Appendix - H

FORM NO. AOC-2

[Pursuant to Section 134 (3)(h) of the Companies Act, 2013, read with Rule 8(2) of the Companies (Accounts) Rules, 2014]

Form for Disclosure of particulars of contracts / arrangements entered into by the Company with related parties referred to in section 188 (1) of the Companies Act, 2013, including certain arms-length transactions under third proviso thereto for the financial year 2015-16.

1      Details of contracts or arrangements or transactions not at arm's length basis:         NIL                  

2      Details of material contracts or arrangements or transactions at arm's length basis:                         

Note:                                                                                                                                                    

1.     Apart from above said transactions, other transactions, etc. entered with related parties are as follows:

(i)    The Company has also deputed its employees to wholly owned subsidiary company (viz. IrconSGTL), joint venture companies [viz. MCRL, JCRL, CERL, and CEWRL]. Deputation of employees is on actual cost (CTC) basis.

(ii)    Miscellaneous expenses such as advertisement cost, travelling cost, etc. incurred on behalf of subsidiaries [viz. IrconPBTL and IrconSGTL] and joint venture companies [viz. MCRL, JCRL, CERL, CEWRL, and ISTPL] are reimbursed on actual basis.

2.     Further, an MoU dated 9th May 2015 has been signed between Ircon, NMDC, SAIL, Government of Chhattisgarh for development of Rowghat to Jagdalpur rail line in the State of Chhattisgarh through special purpose vehicle (SPV). As per the said MoU, Ircon would prepare feasibility report and detailed project report (DPR) . After the formation of proposed JVC, Ircon would have a role of Project Management and implementation Agency. The SPV 'Bastar Railway Private Limited' has been incorporated on 5th May 2016. However, Project Execution Agreement is yet to be entered. Further, an advance amounting to Rs. 9.78 crore has been received from other co-promoters [i.e. NMDC - Rs.  6.5 crore and SAIL - Rs.  3.28 crore].

3.     All the above said transactions have been approved by the Audit Committee of Ircon.

4.     Details of shareholding of JV companies are given at Appendix - B of Directors Report.                  

                                                                          For and on behalf of the Board of Directors

                                                                                                                    Sd/-       

                                                                                                           (Mohan Tiwari)

           Date    :   2nd September 2016                                Chairman & Managing Director

           Place   :   New Delhi                                                              (DIN : 00191363)

Appendix I

ANNEXURE TO DIRECTORS REPORT

(Replies to Comments in Auditors Report on Standalone Financial Statements)

Auditors Report

(under Emphasis of Matter):

Annexure B to Auditors Report

(under Internal Financial Controls over Financial Reporting):

For and on behalf of the Board of Directors

Sd/-

(Mohan Tiwari)

Chairman and Managing Director

(DIN : 00191363)

Place : New Delhi

Date : 2nd September 2016

Appendix J

ANNEXURE TO DIRECTORS REPORT

(Replies to Comments in Auditors Report on Consolidated Financial Statements)

Auditors Report

(under Emphasis of Matter):

Annexure B to Auditors Report

(under Internal Financial Controls over Financial Reporting):

For and on behalf of the Board of Directors

Sd/-

(Mohan Tiwari)

Chairman and Managing Director

(DIN : 00191363)

Place : New Delhi

Date : 2nd September 2016

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) OF THE COMPANIES ACT, 2013 ON THE FINANCIAL STATEMENTS OF IRCON INTERNATIONAL LIMITED FOR THE YEAR ENDED 31 MARCH 2016.

The preparation of financial statements of IRCON INTERNATIONAL LTD. for the year ended 31 March 2016 in accordance with the financial reporting framework prescribed under the Companies Act, 2013 is the responsibility of the management of the company. The Statutory Auditors appointed by the Comptroller and Auditor General of India under Section 139 (5) of the Act are responsible for expressing opinion on the financial statements under Section 143 of the Act based on independent audit in accordance with the standards on auditing prescribed under section 143(10) of the Act. This is stated to have been done by them vide their Audit Report dated 02 September 2016.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under section 143(6)(a) of the Act of the financial statements of IRCON INTERNATIONAL LTD. for the year ended 31 March 2016. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutory auditors and company personnel and a selective examination of some of the accounting records. On the basis of my audit nothing significant has come to my knowledge which would give rise to any comment upon or supplement to statutory auditors report.

For and on the behalf of the

Comptroller & Auditor General of India

Sd/-

(Meenakshi Mishra)

Director General of Audit

Railway Commercial, New Delhi

Place: New Delhi

Dated: 27th September,2016

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDER SECTION 143(6)(b) READ WITH SECTION 129(4) OF THE COMPANIES ACT, 2013 ON THE CONSOLIDATED FINANCIAL STATEMENTS OF IRCON INTERNATIONAL LIMITED FOR THE YEAR ENDED 31 MARCH 2016.

The preparation of consolidated financial statements of IRCON INTERNATIONAL LTD. for the year ended 31 March 2016 in accordance with the financial reporting framework prescribed under the Companies Act, 2013 is the responsibility of the management of the company. The Statutory Auditors appointed by the Comptroller and Auditor General of India under Section 139 (5) read with section 129(4) of the Act are responsible for expressing opinion on the financial statements under Section 143 read with section 129(4) of the Act based on independent audit in accordance with the standards on auditing prescribed under section 143(10) of the Act. This is stated to have been done by them vide their Audit Report dated 02 September 2016.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under section 143(6)(a) read with section 129(4) of the Act of the consolidated financial statements of IRCON INTERNATIONAL LTD. for the year ended 31 March 2016. We conducted a supplementary audit of the financial statements of two subsidiaries namely Ircon PB Tollway Limited and Ircon Shivpuri Guna Tollway Limited, but did not conduct supplementary audit of the financial statements of Subsidiaries and Jointly Controlled Entities (as per Annexure) for the year ended on that date. Further, section 139(5) and 143 (6)(b) of the Act are not applicable to Companhia Dos Caminhos De Ferro De Beira, SA being private entity incorporated in Foreign country under the respective laws, for appointment of their Statutory Auditor nor for conduct of supplementary audit. Accordingly, C&AG has neither appointed the Statutory Auditors nor conducted the supplementary audit of this company. This supplementary audit has been carried out independently without access to the working papers of the statutory auditors and is limited primarily to inquiries of the statutory auditors and company personnel and a selective examination of some of the accounting records.

On the basis of my audit nothing significant has come to my knowledge which would give rise to any comment upon or supplement to Statutory Auditors Report.

For and on the behalf of the

Comptroller & Auditor General of India

Sd/-

(Meenakshi Mishra)

Director General of Audit

Railway Commercial, New Delhi

Place: New Delhi

Dated: 27th September,2016

ANNEXURE

List of subsidiaries and Joint Ventures of IRCON INTERNATIONAL LIMITED, New Delhi for which supplementary audit was not conducted under section 143 (6)(a) read with section 129(4) of the Companies Act, 2013 for the year 2015-16

Subsidiaries:

1. Ircon Infrastructure and Services Limited (IISL)

2. Indian Railway Station Development Corporation Limited (IRSDC)

Joint Ventures

1. RICON

2. Ircon-Soma Tollway Private Limited (ISTPL).

3. International Metro Civil Contractor (IMCC).

4. Metro Tunnelling Group (MTG).

5. Ircon-SPSCL.

6. Ircon-Afcons JV.

7. Chattisgarh East Railway Limited (CERL).

8. Chattisgarh East-West Railway Limited (CEWRL).

9. Mahanadi Coal Rail Ltd. (MCR).

10. Jharkhand Central Railway Ltd. (JCR).

Sd/-

Audit Officer

PERFORMANCE HIGHLIGHTS During the financial year 2015-16, your Company achieved a total operating income of Rs. 2403 crore and profit before tax of Rs. 567  crore as compared to operating income of Rs. 2950 crore and profit before tax of Rs. 844 crore achieved during the previous financial year.   The decline of about 18.54% in operating income is mainly on account of completion of mega foreign projects in Sri Lanka. Delay in starting major projects in India due to land acquisition and statutory clearances led to lower contribution to operating income by Indian projects. Since foreign projects have high profit margins, theoverall profit before tax has registered a decline of 32.82%. OPERATIONAL PERFORMANCE A.           Foreign Projects Completed: Your Company completed following projects during 2015-16:   Malaysia 1.            After continuous operation for 22 years, the contract for leasing and maintenance of meter gauge diesel electric locomotives on Malaysian Railway System (KTMB) was successfully completed on 31st December 2015. The last extension of this contract was given by KTMB for 2 years, which was valid upto 31st December 2015 at an annual value of USD 6.988 million and total contract value for these two years was USD 13.976 million.   Sri Lanka 2.            Your Company had completed five projects in the last three years in the northern province of Sri Lanka viz. (i) Track work for restoration of Medawachchiya to Madhu Road Railway line – completed in the year 2012-13 (ii) Design, supply, installation, testing and commissioning of signalling and telecommunication system for Railway Line from Anuradhapura to Kankensanthurai and from Medawachchiya to Talaimannar Pier, (iii) Re-construction of Railway Line from Omanthat to Pallai – both completed in the year 2013-14, (iv) Re-construction of railway line from Pallai to Kankesanthurai, and (v) Re-construction of Railway Line from Madhu Road to Talai Mannar – both completed in the year 2014-15. Due to change in contract escalations and modifications in the scope of the contract values of these projects, your Company has signed revised contract agreement for variations in the project in the northern province of Sri Lanka, at a value of Rs. 158 crore. These variations and modifications in scope of work have also been completed during the year 2015-16.   B.           New / On-going Foreign projects: Your Company is executing the following six major projects in foreign countries – three out of these six projects are in Bangladesh and one each in Algeria, Bhutan, and South Africa.   Bangladesh 1.            Construction of 2nd Bhairab Railway Bridge with Approach Rail Lines (Lot-A) -- being undertaken through unincorporated JV between your Company and AFCONS viz. IRCON-AFCONS JV, at a value of Rs. 226 crore (Ircon’s share). Physical work has started in December 2013. The project is likely to be completed in March 2017. 2.            Design, Supply, Installation, Testing, and Commissioning of Computer based Interlocking Colour Light Signalling System on turnkey basis at 11 stations between Ishurdi-Darsana section of Bangladesh, at a value of Rs. 60 crore. Physical work has commenced in June 2014. The work is scheduled to be completed in September 2017. 3.            Construction of Embankment, Track, all civil works, major & minor bridges (Except Rupsha) & culverts and implementation of EMP against Package WD1 under the project Construction of Khulna-Mongla Port Rail Line for Bangladesh Railway, at a value of Rs. 971 crore (USD 147.80 million). The work was commenced in March 2016 and is scheduled to be completed in September 2019.   Algeria 4.            Installation of a double track line (93 km) in Algeria awarded by ANESRIF, Ministry of Transport, Government of Algeria, at a value of Rs. 1103 crore (USD 230 million) involving construction of second line and upgradation of existing line from Oued Sly to Yellel in Algier – Oran section of Algerian Railways. The value of contract including additional works for realization of double line has been revised to Rs. 1882 crore. Though the work was awarded in 2008, but it was suspended by the client and restarted in May 2010.   The modalities of payment to the local sub-contractor were not spelled in the amendment and were being negotiated with the client, which hampered the cash flow and project progress. Eventually, the mode of payment to the local sub-contractors and revision of the prices were negotiated by a high level committee in July 2016 paving the way for smooth progress of the project.   Bhutan 5.            Turnkey project for dismantling of existing 66/33/11 KV sub-station and Design, Engineering, Construction, Supply, Erection, Testing and Commissioning of New 2x20 MVA, 66/33 KV sub-station including all associated works at Paro in Bhutan by Bhutan Power Corporation Limited, at a value of Rs. 23 crore. The work has been secured in May 2015 and is scheduled to be completed in November 2016.   South Africa 6.            Procurement of Plant Design, Supply and Installation of Overhead Track Equipments, Traction Substations, Auxiliary Power Supplies Substation, Bulk Power Supplies Switching Stations and Signalling Systems for the Majuba Rail Project, South Africa, for Eskom Holdings SOC Limited, at a value of  Rs. 346 crore (Rand 663 million). The work has been secured in November 2015 and is scheduled to be completed in September 2017.   C.           Likely Foreign projects: Concerted efforts are being made to secure contracts in Malaysia, Bangladesh, Sri Lanka and Iran.   D.           Projects Completed in India: During the year 2015-16, following two projects got completed in India: 1.                Construction of steel super-structure and other ancillary work of rail bridge across river Ganga at Patna, for East Central Railway, at a value of Rs. 1570 crore, which was dedicated to the nation by Hon’ble Prime Minister of India on 12th March 2016. 2.                Contract CT-4 – DMRC – Ballastless track from Badarpur to Faridabad; broad gauge corridor from Jahangirpuri to Badli along with tracks in Depots at Ajronda and Badli of Delhi MRTS Project of Phase-III, for DMRC, at a value of Rs. 62.60 crore.   E.                New Projects in India:                During 2015-16, your Company secured following major projects in India:           1.                Design and Construction of Civil, Building and Track Works of Vaitarna-Sachin Section of Dedicated Freight Corridor Project, CTP-12, for Dedicated Freight Corridor Corporation of India Limited (DFCCIL), at a value of Rs. 2116 crore. 2.                Execution of Civil & Railway Allied works in connection with Construction of Private Railway Siding for proposed 3.0 MTPA Integrated Steel Plant at Nagarnar Near Jagdalpur, Chhattisgarh (Package-I), for NMDC Limited, at a value of Rs. 283 crore. 3.                Execution of Civil, Signalling & Telecommunication, Mechanical and Structural works in connection with Construction of Railway siding for the proposed 3.0 MTPA Integrated Steel Plant at Nagarnar, Chhattisgarh (Package-II), for NMDC Limited, at a value of Rs. 79 crore. 4.                Construction of New Howrah Divisional Railway Office Building, for Eastern Railway, at a value of Rs. 33 crore. 5.                DPR & Detailed Engineering, Project Management and Construction of Railway Siding connecting MGR system of Dulanga mine-Darlipali STPP with Mahanadi Coal Limited’s Siding for Darlipali Super Thermal Power project, Stage-I (2x800 MV), for NTPC Limited, at a value of Rs. 11 crore.   F.            Projects Secured in India after the close of the year 2015-16: 1.                Construction of Corridor-III of East-West Corridor between Gevra Road to Pendra Road via Dipka, Katghora, Pasan approximately 135 km, subsequent to preparation and submission of Detailed Project Report, Land Acquisition and feasibility study of East-West Corridor between Gevra Road to Pendra Road in the State of Chhattisgarh, for Chhattisgarh East-West Railway Limited (CEWRL). 2.                Katni-Singrauli Doubling Project, for West Central Railway. 3.                Doubling between RDUM-TAL-RJO (Rampur Dumra Tal Rajendrapul) Project, for East Central Railway. The agreement has been signed on 24th June 2016. 4.                Kiul-Gaya Doubling Project, for East Central Railway. The agreement has been signed on 24th June 2016. 5.                Hajipur-Bachwara Doubling Project, for East Central Railway. The agreement has been signed on 30th May 2016. 6.                Survey, Feasibility study, Detailed Design and Construction of various identified Rail Connectivity Project(s) for Jharkhand Central Railway Limited (JCRL). 7.                Survey, Feasibility study, Detailed Design and Construction of various identified Rail Coal Connectivity Project(s), for Mahanadi Coal Railway Limited (MCRL). 8.                Construction of New Block Station, Staff Quarters and associated P-Way, OHE and S&T works in connection with construction of Railway siding for the proposed 3.0 MTPA Integrated Steel Plant at Nagarnar, Chhattisgarh State (Package No.- IV), for NMDC Limited.   G.           On-going major Projects in India: A list of major on-going projects in India is given at Appendix – A. Appendix – A ON-GOING MAJOR PROJECTS IN INDIA   (in Rs. crore) Sl. No. Name of the Project Project/ Revised Value 1. Katra-Qazigund section including Dharam-Qazigund section, Km 33.09 to 39.00 and Km 61.00 to 91.00, including additional works, for Northern Railway.   9521 2. Setting up of new Rail Coach Factory at Rae Bareli, including additional works, for Ministry of Railways.   2338 3. Construction of Corridor-I of East Corridor between Kharsia to Dharamjaygarh and Spur Line in the State of Chhattisgarh, for Chhattisgarh East Railway Limited.   1424 4. Sivok-Rangpo New Rail Line Project, for North Frontier Railway.   1339 5. Construction of Road Over Bridges (RoBs) in Bihar (Phase – I & II) and Rajasthan, for Ministry of Railways and Government of Bihar and Rajasthan or its various department/ local bodies respectively.   1235 (Bihar), 507 (Rajasthan) 6. Implementation of PMGSY in Bihar State   1012 7. RAPDRP – Part B Project under Jammu province (Cluster – I, Jammu left), (Cluster-II, Jammu Right), and (Cluster IV, Akhnoor, Rajouri, Poonch, Udhampur, Doda, Kishtwar & Bhaderwah), for J&K Power Development Department.   682 8. Widening and Strengthening of existing Bikaner-Phalodi section to Four-lane from Km. 4.200 to Km. 55.250 and Two-Lane with paved shoulder from Km. 55.250 to Km. 163.500 of NH-15 on BOT (Toll) basis in the State of Rajasthan, for Ircon PB Tollway Limited.   646 9. Four-laning of Shivpuri to Guna from Km 236.00 to Km 332.100 (Package-I) in the State of Madhya Pradesh to be executed on BOT (Toll) on DBFOT pattern under NHDP Phase-IV), for Ircon Shivpuri Guna Tollway Limited.   642 10. Construction / upgradation of Rural roads and bridges in 5 districts of Jharkhand – PMGSY Project, for Ministry of Rural Development, Government of India and State Government of Jharkhand.   525 11. Construction of rail link between Jayanagar (India) – Bijalpura (Nepal) (Gauge conversion) with extension up to Bardibas on India-Nepal Border, for East Central Railway.   447 12. Construction of Rail Link between Jogbani (Bihar) India to Biratnagar (Nepal), for North Frontier Railway.   354 13. The work of system improvement, strengthening and augmentation of distribution system to bring down AT&C losses and improve quality of consumer supply of Meerut town of Uttar Pradesh, to be carried out under RAPDRP Part-B scheme on turnkey basis including supply of material, for PVVNL.   329 14. Design, supply, installation, testing & commissioning of receiving-cum-traction and auxiliary main sub-station including high voltage cabling from grid sub-station and augmentation works for existing receiving sub-station under CE-6, Lot-1, for DMRC, for Delhi MRTS project, Phase-III.   234 15. Setting up of three electric loco sheds to home 200 three phase Locos at Bondamunda (for South Eastern Railway), Daund (for Central Railway), and Mughalsarai (for Northern Railway).   234 16. Development of circulating area at Santragachi and essential passenger amenities and road connectivity to Kona Expressway, for South Eastern Railway.    210 17. Development of coaching terminal at Shalimar by provision of essential passenger amenities, for South Eastern Railway.     205 18. Contract CT-1-A – Supply, Installation, Testing and Commissioning of Ballastless Track of Standard Gauge, Part-1 Corridor of sections of Mukundpur – Lajpat Nagar (excluding) Line-7 in elevated and underground sections along with ballasted / ballastless tracks in Mukundpur Depot for Delhi MRTS Project of Phase-III), for DMRC.   199 19. Contract KT-4: Design, Supply, Installation, Testing and Commissioning of Ballastless Track of Standard Gauge in elevated section of Aluva to Petta corridor and Contract KT-5R1-supply, installation, testing, and commissioning of standard gauge track work in Muttom Depot of Kochi Metro Rail Limited, for DMRC.   178  

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION On energy conservation front, your Company has completed work of Design, Supply, Installation, Testing and Commissioning of grid connected solar power plant of 2MW capacity with all the electrical and associated equipment including civil works at Rail Coach Factory, Rae Bareli (U.P.), at a value of Rs. 15.60 crore. The plant is fully operational, and meets about 21% of electrical energy requirement for the factory.   As a measure to conserve energy, energy audit was carried out for the Corporate Office and recommendations of the same are being implemented.   Technology absorption has been undertaken through execution of Geographical Information System (GIS) based Overhead Equipment (OHE) Design for Railway Electrification work in the projects in the State of J&K.  Further, New Austria Tunnelling Method (NATM) is proposed to be adopted for construction of tunnels in Sivok–Rangpo project. This method is very useful in complex diversified geological condition where forecasting of the rock mass is difficult due to rapidly changing geology.

CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION On energy conservation front, your Company has completed work of Design, Supply, Installation, Testing and Commissioning of grid connected solar power plant of 2MW capacity with all the electrical and associated equipment including civil works at Rail Coach Factory, Rae Bareli (U.P.), at a value of Rs. 15.60 crore. The plant is fully operational, and meets about 21% of electrical energy requirement for the factory.   As a measure to conserve energy, energy audit was carried out for the Corporate Office and recommendations of the same are being implemented.   Technology absorption has been undertaken through execution of Geographical Information System (GIS) based Overhead Equipment (OHE) Design for Railway Electrification work in the projects in the State of J&K.  Further, New Austria Tunnelling Method (NATM) is proposed to be adopted for construction of tunnels in Sivok–Rangpo project. This method is very useful in complex diversified geological condition where forecasting of the rock mass is difficult due to rapidly changing geology.

B.           Foreign Exchange Earnings and Outgo The Company has earned a foreign exchange of Rs. 480 crore during 2015-16 as compared to Rs. 842 crore earned during 2014-15. The foreign exchange outgo stood at Rs. 360 crore during 2015-16 as compared to Rs. 424 crore during 2014-15. Thus, the net foreign exchange earnings have decreased by 71.29% from Rs. 418 crore in 2014-15 to Rs. 120 crore in 2015-16 due to completion of foreign projects as stated above.

DIRECTORS’ RESPONSIBILITY STATEMENT   The Board of Directors of the Company confirms: i.                  that in the preparation of the financial statements, the applicable accounting standards had been followed except as otherwise stated in the annual financial statements and there has been no material departure; ii.                 that such accounting policies were selected and applied consistently and such judgments and estimates were made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company for the financial year ended on 31st March 2016 and of the profit of the Company for the financial year 2015-16; iii.                that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; iv.               that the financial statements have been prepared on a going concern basis; and v.                that proper systems had been devised to ensure compliances with the provisions of all applicable laws and that such systems were adequate and operating effectively.