NBCC auditor flags board and committee composition breaches

NBCC (India) Limited’s auditor said NBCC’s board, audit committee and nomination and remuneration committee did not meet prescribed composition requirements during the quarter and six months ended September 30, 2026. The board gap included the requisite number of independent directors and an independent woman director under the Securities and Exchange Board of India listing rules.

What did the auditor report about NBCC’s board?

The auditor reported that NBCC’s board did not comprise the requisite number of independent directors, including an independent woman director, as required under Regulation 17 of the Securities and Exchange Board of India, or SEBI, Listing Obligations and Disclosure Requirements Regulations, 2015. The observation applied to both the quarter and six months ended September 30, 2026.

The filing does not name the directors concerned or quantify the numerical shortfall. It identifies a board-composition exception under the listing regulations, rather than alleging a misstatement in NBCC’s September 2026 financial results. The auditor included the observation in its standalone review report dated November 5, 2026.

The same point was repeated in the consolidated review report for the six months ended September 30, 2026. The auditor said its conclusion was not modified in respect of the board-composition matter, meaning the issue did not alter its limited-review conclusion on the reported standalone or consolidated financial statements.

Which NBCC committees did not meet prescribed rules?

NBCC’s audit committee and nomination and remuneration committee were not compliant with prescribed composition provisions during the quarter and six months ended September 30, 2026. The auditor cited Sections 177 and 178 of the Companies Act, 2013, along with Regulations 18 and 19 of the SEBI listing regulations.

The disclosure does not say whether either committee’s non-compliance arose from a vacancy, a shortfall in independent members, or another membership condition. It does establish that the committee exceptions covered the entire six-month reporting period to September 30, rather than only the November 5, 2026 board meeting that approved the unaudited results.

NBCC’s audit committee reviewed, and its board approved, the standalone and consolidated results on November 5, 2026. The auditor nevertheless recorded the composition exceptions for the period ending September 30, while giving an unmodified limited-review conclusion on the financial disclosures required under SEBI Regulation 33.

How did NBCC’s reported financial performance compare?

NBCC reported standalone revenue from operations of Rs 4,712.66 crore for the six months ended September 30, 2026, compared with Rs 3,754.02 crore in the corresponding six months of 2025. Standalone net profit rose to Rs 375.89 crore from Rs 286.63 crore, while profit before tax increased to Rs 494.07 crore from Rs 364.44 crore.

Project Management Consultancy, or PMC, remained NBCC’s largest operating segment. PMC revenue was Rs 4,603.40 crore in the six months ended September 30, 2026, against Rs 3,610.93 crore a year earlier. Real estate revenue increased to Rs 75.68 crore from Rs 30.78 crore, while Engineering, Procurement and Construction, or EPC, revenue fell to Rs 11.45 crore from Rs 110.10 crore.

The financial improvement accompanied, but does not resolve, the governance findings. NBCC also declared a second interim dividend of Rs 0.25 per equity share of face value Rs 1 on November 5, 2026, and fixed November 11, 2026 as the record date. The filing does not state that the auditor’s governance observation affected the dividend decision.

What governance steps is HSCC taking?

HSCC, NBCC’s wholly owned subsidiary, was in the process of appointing the requisite number of directors to comply with Section 149(1)(a) of the Companies Act, 2013, which requires a minimum of three directors. The disclosure appears in the consolidated auditor’s report for the period ended September 30, 2026.

HSCC was also in the process of constituting its audit committee under clause 4 of the Department of Public Enterprises guidelines. In addition, it was working to appoint the requisite number of independent directors to its board, audit committee and remuneration committee under clauses 3.1.4, 4.1.1 and 5.1 of those guidelines.

The HSCC matters sit alongside separate accounting observations in the auditor’s emphasis of matters. Completed projects that had been handed to ministries or clients but were not financially closed carried assets and liabilities of Rs 103.07 crore at September 30, 2026, compared with Rs 65.70 crore at March 31, 2026. Fixed deposits and matching liabilities pending refund after project closures were Rs 158.26 crore, against Rs 156.19 crore at March 31, 2026.

NBCC has proposed merging HSCC into NBCC under Sections 230 to 232 of the Companies Act. The Department of Investment and Public Asset Management gave its no-objection on July 9, 2026, NBCC’s board approved the scheme on July 14, 2026, and the Ministry of Corporate Affairs issued a first-motion order on October 9, 2026. The proposed scheme remains subject to the approvals, directions and filings stated in the disclosure.

Conclusion

The auditor identified governance composition exceptions at NBCC’s board, audit committee and nomination and remuneration committee through September 30, 2026, alongside parallel director and committee-formation work at HSCC. These observations did not modify the auditor’s limited-review conclusion, while NBCC reported standalone net profit of Rs 375.89 crore and revenue from operations of Rs 4,712.66 crore for the six-month period.

The next disclosed issues to watch are HSCC’s process to appoint directors and constitute required committees, and the proposed merger of HSCC into NBCC. The merger has reached a first-motion order dated October 9, 2026, but remains conditional on competent-authority, governmental, statutory and regulatory approvals, directions and filings.