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Notes to Accounts of ABG Shipyard Ltd.

Mar 31, 2015

I. Corporate Debt Restructuring

As approved by the Corporate Debt Restructuring Cell ("CDR Cell"), the company has restructured its Term and working capital debts due to consortium of banks(CDR lenders) with cut off date 1st August, 2013 . A "Master Restructuring Agreement" (MRA) has been executed between the company and the CDR Lenders and thus the restructured facilities are governed by the provisions specified therein . The Key feature/status of the CDR Proposal are as follows:

1. Repayment of Restructured Term Loans ('RTL') after moratorium of 2 years from cut off date in 32 structured quarterly installments commencing from quarter ending 30th September 2015 to 30th June 2023.

2. Conversion of various irregular/outstanding/devolved financial facilities into Working Capital Term Loan ('WCTL') Repayment of WCTL after moratorium of 3 years 6 months from cut off date in 26 structured quarterly installments commencing from Quarter ending 31st March 2017 to 30th June 2023, subject to mandatory prepayment obligation on realisation of proceeds from certain asset sale and capital infusion.

3. Restructuring of existing fund based and non fund based financial facilities, subject to renewal and reassessment every year. Priority loans shall be sanctioned for meeting the immediate operational and capital requirements of the company. The Priority Debt disbursed by the lenders is Rs. 375.91 crores till 31st March 2015.

4. The interest payable on RTL and WCTL during moratorium period of 2 years and 3 years 6 months respectively from cut off date are also converted to Funded Interest Term Loan (FITL). Out of Total FITL facility amounting to Rs 1,561 crore an an amount aggregating to Rs. 1,000 crore shall be compulsorily converted into equity shares or 0.01% Compulsorily Convertible Preference Shares (CCPS) before 31st March 2016. Pursuant to the scheme of CDR, the Company has allotted total 25,70,93,339 Nos. of 0.01 % Compulsorily Convertible Preference Shares (CCPS) of Face Value Rs.10/- each and 29,17,768 nos. of equity shares of Rs. 10 /-each at a premium of Rs. 265.92 per equity shares to CDR lenders towards conversion of the Funded interest Term Loan (FITL)/Interest on FITL upto 31st March, 2015.

5. The rate of interest of RTL, WCTL, FITL and fund based working capital facilities is base rate 1% for initial two years and thereafter with annual reset option in accordance with MRA.

6. Right of Recompense to CDR Lenders for the relief and sacrifice extended, subject to provisions of CDR Guideliners and MRA, in lieu of which contribution of Rs. 302 crores in the Company is infused by promoters

7. In case of financial facilities availed from the non-CDR Lenders, the terms and conditions shall continue to be governed by the provisions of the existing financing documents.

8. Additional Security for the CDR debt - Personal Guarantee of Promoter , Pledge of Promoter's entire shareholding of ABG Shipyard Limited and Corporate Guarantee of ABG International Pvt Ltd. (Holding company)

9. Due to extreme financial constraints and limited operations , the company has delayed and/or defaulted in the payment of interest as per the CDR Scheme. The defaults are reported in Note no 4C above.

10. The management is of the view that the company is an operative company and will be able to meet its obligations to lenders as well as customers/creditors In view of the same, the management considers the company to be a going concern.

The Company has, in the current year, adopted the percentage completion method as regards the recognition of income from contracts under Income Tax Act, 1961. The company's action is prompted by the introduction of ICDS which will be mandatory from AY 2016-17. Due to early adoption, the percentage revenue till 31st March 2014 (all earlier years) as well as that of current year has been considered by the company in its computation of income. The effect of such recognition prepones the differed tax liability carried in the books of accounts to the current accounting year. Coupled with the effect of absorption of deferred tax Assets due to losses/depreciation of earlier years, the net tax impact results in the tax payable by the company. Due to such treatment, no Deferred Tax Liability is required to be provided or carried forward on account of difference in tax treatment w.r.t percentage completion method viz a viz completed contract method. The net deferred tax liability written back due to the adoption of ICDS is Rs.407.99 crores credited to Profit & Loss Account.

iii) During the year, pursuant to the requirements of Schedule II of the Companies Act, 2013, the Company has, effective 1st April, 2014 reviewed and revised the estimated useful lives of its fi xed assets. Consequent thereto, the depreciation charge for the year is higher by Rs. 36.07 crores. Additional depreciation of Rs. 5.07 crores for the period prior to 1st April, 2014 has been adjusted with opening balance of retained earnings.

iv) No amounts were written off due to reduction of capital / written off on revaluation or were added to assets on revaluation during the previous 5 years.

v) Borrowing cost capitalised Rs. 10.59 crores (P.Y Rs. 185.03 crores). Due to suspension of capitalisation at sites, borrowing cost is capitalised only upto quarter ended June 2014.

vi) On the basis of the report of Chartered Engineers and Government approved Valuers, the Company had revalued the Freehold Land, Factory Building, Other Building and Dry Docks on 30th June, 1994 and again on 30th June 2002 and consequently an amount of Rs.10.90 crores and Rs. 59.99 crores respectively being the differences between the amount of fair market value of the same and depreciated value as per books as on those dates, have been added to the value of Fixed Assets and corresponding credit shown as Revaluation Reserve.

Consequent to the revaluation there is an additional depreciation of Rs.2.20 crores (P. Y Rs. 1.23 crores), which has been withdrawn from Revaluation Reserves and credited to Statement of Profit and Loss.

During the year, Rs. 0.01 crores ( P. Y. 45.81 crores) pertaining to completed assets ready to be put to use has been capitalised along with proportionate expenditure. The capitalisation of proportionate expenditure is based on technical evaluation of the project by an independent valuer.

viii) The company has chosen to avail the option under AS-11 notification issued by Companies (Accounting Standard) Amendment Rules 2011 GSR 913 (E) & 914 (E) dated 29.12.2011 issued by Ministry of Corporate Affairs. The company has exercised the option with respect to foreign currency long term loan availed by it. The company has no other long term monetary Assets / Liabilities.

Due to the exercise of aforesaid option, the impact on Statement of Profit and Loss for the year is a Gain of Rs.9.53 crores (P.Y. Gain Rs.9.49 crores) due to foreign currency exchange loss (net) which has been capitalised with CWIP.

ix) Acquisition through business combinations / Assets reclassified as held for sale - Nil (P.Y. Nil)

The above loans are given for business purposes

c. Loans and advances to Private companies/firm in which directors are directors/members/partner amounts to Rs.340.68 crores (P. Y. Rs. 303.28 crores)

d. The company has given an amount of Rs.1019.99 crores as advance for supply of material and services to related parties out of which Rs.723.07 crores is outstanding for more than 2 years against which neither material nor services have been as yet received by the company. In opinion of the management the amounts are good and fully recoverable. In view of the reduction in activity the material and services could not be called for from the parties

e. The company has given other loans and advances to related parties of Rs.876.60 crores include an amount of Rs 423.14 crores, which is outstanding for a period of more than 2 years In opinion of the management the amounts are good and fully recoverable, even though there may be delays in such amounts to be received.

f. Out of Advance for supply for material and services Rs. 1044.14 crores , Rs. 700 crores are outstanding for period of more than 2 years against which neither material nor services have been as yet received by the company. In opinion of the management the amounts are good and fully recoverable. In view of the reduction in activity, the material and services could not be called for from the parties.

The Company's receivables include subsidy receivable from the Government of India amounting to Rs 499.65 crores. The receipt of the aforesaid subsidy is dependent upon completion of vessels and compliance with other terms and conditions of the Shipbuilding Subsidy Scheme of the Government of India. In view of the current financial constraints, the company is unable to commit on the timely completion of vessels and subsequent recoverability of the above subsidy. However, the management considers it good and recoverable.

1. Capital commitment on contracts remaining to be executed on capital account and not provided for, are estimated at

Rs. in Crores

Particulars 31st March 2015 31st March 2014

Tangible Assets 116.70 91.50

116.70 91.50

2. (a) Contingent liability not provided for Rs. in Crores

Particulars 31st March 2015 31st March 2014

In respect of Performance/ Delivery Guarantees given by banks to the buyers 63.28 59.39

Corporate guarantees to banks in respect of facilities granted to group companies. 1753.01 1,412.38

Other bank guarantees 34.20 37.72

Claims against the company not acknowledged as debts 122.96 2.56

Claims in respect of indirect taxes 28.20 27.93

Claims in respect of direct taxes - 3.24

In respect of Claims against the company not acknowledged as debts, the Company has received claims from certain customers / creditors, wherein such customers/creditors have filled petition for winding up pending clearance of dues for penal interest and charges. The Company is confident of arbitration with such parties and does not recognise the payable over and above the liability already recognised in the books. The liability of the Company is contingent on the outcome of such petitions and the amount is not quantifiable as on 31st March, 2015

(b) Contingencies provided for in accordance with AS 29 Provisions. Contingent Liabilities & Contingent Assets.

Rs. in Crores

Particulars 31st March 2015 31st March 2014

Carrying amount as at the beginning of the year 4.38 3.64

Utilised during the year 4.38 -

Provision during the year. 4.40 0.74

Balance at the end of the year 4.40 4.38

The contingencies provided are in respect of estimated warranties on sold ships.

3. In the opinion of the management, Current Assets , Loans and Advances have value in realisation in the ordinary course of business at least equal to the amount at which they are stated.

4. Exchange fluctuation included in the Statement of Profit and Loss is a loss of Rs.151.97 crores and gain of Rs. 86.54 crores (P.Y.loss Rs. 741.30 crores & gain Rs.192.31 crores). Out of this, a net loss of Rs.46.77 crores (P Y.net loss of Rs. 553.36 crores) is related to material and included in consumption.

5. Disclosure in respect of Operating Leases (Assets taken on lease):

(a) The company has taken commercial / residential premises under cancellable operating leases or leave and licence. These are usually renewable by mutual consent on mutually agreeable terms..

The Gross amount due from customers reflects the net amount for all contracts in progress for which cost incurred plus recognised profit (less recognised losses) exceeds progress billing.

The Gross amount due to customers reflects the net amount for all contracts in progress where progress billing exceeds cost incurred plus recognised profits (less recognised losses).

During the year, advances from customers to the extent of work done amounting to Rs.5150.82 crores .(P.Y.Rs.5100.27 crores) is adjusted against Work in Progress in Note No 14. Advances received in excess of work done and advances pending commencement of work are disclosed in Current Liabilities under Advances from Customers in Note No 9. Advances from customers include amounts received from third parties on behalf of customers

The WIP includes revenue recognized on the contracts with the related parties. Such WIP amounted to Rs. 5669 crores for 46 yards of related parties.

Defined Benefit Plan

The employees' gratuity fund scheme managed by SBI Life Insurance is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in same manner as gratuity.

6. Information on Foreign Currency Exposure:

(a) Outstanding forward exchange contracts/ options entered by the company for the purpose of hedging its foreign currency exposures is Nil (P Y Nil)

(b) Notional value of Interest Rate Swaps to hedge against fluctuation in interest rate is Nil (P.Y Nil)

(c) Currency swap to hedge against fluctuations in exchange rate and interest rate is Nil (P. Y Nil )

(d) Foreign Currency exposure that is not hedged by derivative instruments is as under:

7. Corporate Social Responsibility.

As per Sec 135 of the Companies Act 2013, read with Companies (Corporate Social Responsibility Policy) Rules, 2014 , the Company was required to spend 2% of its average net profit of 3 years during the year for the activity provided in said regulations. Owing to liquidity crisis , the company has not fully spent on CSR as stipulated.

8.The figures for the previous year have been arranged/rearranged/regrouped wherever considered necessary.


Mar 31, 2014

Corporate Debt Restructuring

ABG Shipyard Limited is hereinafter referred to as the ''Borrower'', who has availed various financial facilities from the secured lenders.

At the request of the Borrower, the Corporate Debt Restructuring Proposal (''CDR Proposal'') of the Borrower was referred to Corporate Debt Restructuring Cell ("CDR Cell") by the consortium of senior lenders led by the ICICI Bank. The CDR Proposal as recommended by ICICI Bank Ltd., the lead lender and approved by CDR Empowered Group (''CDR EG'') on 24th March 2014 and communicated vide Provisional Letter of Approval dated 27th March 2014, as amended/modified from time to time. The cut off date for CDR Proposal was 1st August 2013.

The Master Restructuring Agreement (''MRA'') between the Borrower and the CDR Lenders has been executed, by virtue of which the restructured facilities are governed by the provisions specified in the MRA having cut off date of 1st August 2013.

For all the loans restructured under the above Corporate Debt Restructuring Scheme, creation of security is pending at registering authority.

The CDR proposal is partly implemented as at 31st March 2014.

The Key features of the CDR Proposal are as follows:

1 Restructuring of existing fund based and non fund based financial facilities, subject to renewal and reassessment every year.

2 Repayment of Restructured Term Loans (''RTL'') after moratorium of 2 year from cut off date in 32 structured quarterly instalments commencing from Quarter ending 30th September 2015 to 30th June 2023.

3 Conversion of various irregular/outstanding/devolved financial facilities into Working Capital Term Loan (''WCTL'') Repayment of WCTL after moratorium of 3 years 6 months from cut off date in 26 structured quarterly instalments commencing from Quarter ending 31st March 2017 to 30th June 2023, subject to mandatory prepayment obligation on realisation of proceeds from certain asset sale and capital infusion.

4 "The interest payable on RTL and WCTL during moratorium period of 2 years and 3 years 6 months respectively from cut off date also be converted to Funded Interest Term Laon (FITL). Out of Total FITL facility amounting to Rs 1,561 crore an an amount aggregating to Rs. 1,000 crore shall be compulsorily converted into equity shares or 0.01% Compulsorily Convertible Preference Shares (CCPS) befor 31st March 2016.

5 The rate of interest of RTL, WCTL, FITL and fund based working capital facilities shall be 11% for initial two year and thereafter with annual reset option in accordance with MRA.

6 Contribution of Rs. 300 Crore in the Company by promoters in lieu of bank sacrifice in the form of equity shares / CCPS.

7 In case of financial facilities availed from the non-CDR Lenders, the terms and conditions shall continue to be governed by the provisions of the existing financing documents.

FIXED ASSETS

i) Impairment charges of Rs. Nil (P.Y. 0.24 crores)

ii) No amounts were written off due to reduction of capital / written off on revaluation or were added to assets on revaluation during the previous 5 years.

iii) Borrowing cost capitalised ''185.03 cores (P.Y Rs. 176.14 crores)

iv) On the basis of the report of Chartered Engineers and Government approved Valuers, the Company had revalued the Freehold Land, Factory Building, Other Building and Dry Docks on 30th June, 1994 and again on 30th June 2002 and consequently an amount of Rs. 10.90 crores and Rs. 59.99 crores respectively being the differences between the amount of fair market value of the same and depreciated value as per books as on those dates, have been added to the value of Fixed Assets and corresponding credit shown as Revaluation Reserve.

Consequent to the revaluation there is an additional depreciation of Rs. 1.23 crores (P. Y Rs. 1.29 crores), which has been withdrawn from Revaluation Reserves and credited to Statement of Profit and Loss.

v) The company has chosen to avail the option under AS-11 notification issued by Companies (Accounting Standard) Amendment Rules 2011 GSR 913 (E) & 914 (E) dated 29.12.2011 issued by Ministry of Corporate Affairs. The company has exercised the option with respect to foreign currency long term loan availed by it. The company has no other long term monetary Assets / Liabilities.

Due to the exercise of aforesaid option, the impact on Statement of Profit and Loss for the year is a Gain of Rs. 9.49 crores (P.Y. Gain Rs. 6.68 crores) due to foreign currency exchange loss (net) which has been capitalized with CWIP.

vi) Acquisition through business combinations / Assets reclassified as held for sale - Nil (P.Y. Nil)

NON-CURRENT INVESTMENTS

1) Aggregate amount of quoted investments Rs. 34.89 crores (P.Y Rs. 35.40 crores)

Aggregate market value of quoted investments Rs. 27.39 crores (P.Y. Rs. 48.68 crores)

2) Aggregate amount of unquoted investments Rs. 188.81 crores (P.Y. Rs.194.63 crores)

3) 169671177 (P.Y 172223628 ) Equity shares of the subsidiary - Western India Shipyard Ltd. have been pledged with banks in respect of facilities availed by such subsidiary company from the banks.

4) As the investment are in the operating companies, considering the economic scenerio the manangement does not consider diminution in value, if any, to be permanent in nature.

5) During the year the company has retired as partner from partnership firm w.e.f. 1st July 2013. Details of Partners, capital and shares in the firm till dated 1st July 2013 are as under. As on 31st March 2014 balances of partner share are recoverable from firm.

Contingent liability not provided for

Rs. in Crores

Particulars 31st March 31st March 2014 2013

In respect of Performance/ Delivery Guarantees given by banks to the buyers. 59.39 163.20

Corporate guarantees to banks in respect of facilities granted to group companies. 1,412.38 1,305.06

Other bank guarantees 37.72 42.40

Claims against the company not acknowledged as debts 2.56 2.29

Claims in respect of indirect taxes 26.59 10.23

Claims in respect of direct taxes 3.24 -

(b) Contingencies provided for in accordance with AS 29 issued by the Institute of Chartered Accountants of India

Rs. in Crores

Particulars 31st March 31st March 2014 2013

Carrying amount as at the beginning of the year 3.64 2.96

Provision during the year. 0.74 0.88

Unused amount reversed during the year - -

Balance at the end of the year 4.38 3.64

The contingencies provided are in respect of estimated warranties on sold ships.

* In the opinion of the management, Current Assets , Loans and Advances have value in realisation in the ordinary course of business at least equal to the amount at which they are stated.

* Exchange fluctuation included in the Statement of Profit and Loss is a loss of Rs. 741.30 crores and gain of Rs. 192.31 crores (P.Y.loss Rs.170.15 crores gain Rs.123.14 crores).Out of this, a net loss of Rs. 553.36 crores (P Y.net Rs. 42.03 crores) is related to material and included in consumption.

Remittance of dividend in foreign currency

The Company has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by / on behalf of non resident shareholders.

Disclosure in respect of Operating Leases (Assets taken on lease):

(a) The Company has taken commercial / residential premises under cancellable operating leases. The lease agreements are usually renewable by mutual consent on mutually agreeable terms.

(b) The expenses in respect of operating leases are accounted in Other Expenses under Note No 25

Defined Benefit Plan

The employees'' gratuity fund scheme managed by SBI Life Insurance is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in same manner as gratuity.

Notes :

1. Names of the Related Parties have been given in cases where the amount of transaction exceeds 10% of the total related party transactions of the same type

2. Guarantees taken / given comprise of guarantees given to third parties on behalf of the Company / related parties.

3. Managerial Remuneration as detailed in point 7 below exceeds limits prescribed under Schedule XIII of the Companies Act, 1956 and the same is subject to approval from Central Government..

4. Related Parties have been identified by the management and relied upon by the auditors.

5. Previous Year figures are shown in brackets.

Disclosure in respect of Related Party transactions during the year:

1 Revenue from Operations include Varada Marine Pte. Limited Rs. Nil (Previous Year Rs. 76.58 crores), Varada Three Pte. Limited Rs 143.20 crores (Previous Year Rs.152.62 crores)

2 Rent Expenses include Aries Management Services Private Limited Rs. 0.54 crores (Previous Year Rs. 0.46 crores), G.C. Property Private Limited Rs. 0.15 crores (Previous Year Rs. 0.12 crores), Gold Croft Property Private Limited Rs. 0.15 crores (Previous Year Rs. 0.12 crores), Somerset Estate Private Limited Rs. 0.15 crores (Previous Year Rs. 0.12 crores)

3 Hire Charges paid to ABG Infralogistics Limited Rs. Nil (Previous Year Rs. 0.57 crores)

4 Services Received from Western India Shipyard Limited Rs. Nil (Previous Year Rs.95.54 crores), ABG Resources Private Limited Rs. 0.72 crores (Previous Year Rs. 1.20 crores)

5 Interest / Guarantee Commission / Other Income Charged to Varada Marine Pte. Limited (along with its SPVs) Rs. 0.40 crores (Previous Year Rs. 21.99 crores), ABG Engineering & Construction Limited Rs. Nil (Previous Year Rs. 32.00 crores), ABG Business Ventures Pte. Limited Rs. 5.41 crores (Previous Year Rs. 4.90 crores), Varada Seven Pte. Limited Rs. 28.47 crores (Previous Year 15.00 crores) ABG Resources Private Limited Rs. 15.00 crores (Previous Year Rs. Nil), Global Bulk Carriers Pte. Limited Rs. 8.84 crores (Previous Year Rs. Nil)

6 Finance Charges Paid to Western India Shipyard Limited Rs. 5.56 crores (Previous Year Rs Nil), ABG Infralogistics Limited Rs. 2.33 crores (Previous Year Rs. Nil)

7 Payment to Key Management Personnel include to Syed Abdi Rs. 0.30 crores (Previous Year N.A.) Major Arun Phatak Rs. 0.78 crores (Previous Year Rs.0.75 crores ), Shri. Dhananjay Datar Rs. 0.48 crores (Previous Year Rs. 0.64 crores ), Shri. S. Muthuswamy Rs. 0.19 crores (Previous Year N.A.), Shri. R.S. Nakra Rs. Nil (Resigned w.e.f. 1st December, 2012) ( Previous Year Rs. 1.20 crores)

8 Purchase of Fixed Assets include from ABG Cranes Private Limited Rs. 0.53 crores (Previous Year Rs.7.12 crores )

9 Sale of Fixed Assets include to ABG International Private Limited Rs. Nil (Previous Year Rs.12.96 crores ), ABG Infralogistics Limited Rs. *0.00 crores (Previous Year Rs.Nil)

10 Sale of Shares to ABG Mercantile & Investment Services Private Limited Rs. Nil (Previous Year Rs. 0.01 crores )

11 Stage Payment Received include from Varada Marine Pte. Limited (along with its SPVs) Rs.Nil (Previous Year Rs. 165.10 crores ), Global Bulk Carriers Pte. Limited Rs. Nil (Previous Year Rs. 187.61 crores ), Varada Three Pte. Limited Rs. 6.60 crores (Previous Year Rs. 170.54 crores ), Varada Five Pte. Limited Rs. Nil (Previous Year Rs. 170.77 crores ), Varada Four Pte. Limited Rs. 619.28 crores (Previous Year Rs. Nil),Varada Nine Pte. Limited Rs.778.41 crores (Previous Year Rs. Nil),Varada Drilling One Pte. Limited Rs 876.11 crores (Previous Year Rs.Nil),Varada Drilling Two Pte. Limited Rs. 876.11 crores (Previous Year Rs. Nil), Drilling & Offshore Two Pte. Ltd. Rs. 778.05 crores (Previous Year Rs.Nil)

12 Stage Payment Refunded include Varada Marine Pte. Limited (along with its SPVs) Rs. 163.18 crores (Previous Year Rs. Nil), Global Bulk Carriers Pte. Limited Rs. 228.44 crores (Previous Year Rs. Nil ) Varada Five Pte. Limited Rs. 94.90 crores (Previous Year Rs. Nil ), Varada Seven Pte. Limited Rs. Nil (Previous Year Rs. 35.39 crores )

13 Loans and Advances Given / Repaid include ABG International Private Limited Rs. 84.71 crores (Previous Year Rs. 199.66 crores), PFS Shipping (India) Limited Rs. 214.70 crores (Previous Year Rs. 161.00 crores ), ABG Engineering & Construction Limited Rs. 38.58 crores (Previous Year Rs. 250.48 crores ), ABG Resources Private Limited Rs. 198.27 crores (Previous Year Rs. 130.67 crores ), Varada Seven Pte. Limited Rs. Nil (Previous Year Rs. 225.25 crores ).

14 Loans and Advances Taken/ Refunded include ABG International Private Limited Rs. 182.84 crores (Previous Year Rs. 208.58 crores), Western India Shipyard Limited Rs. 20.45 crores (Previous Year Rs. 33.90 crores), ABG Engineering & Construction Limited Rs. 89.34 crores (Previous Year Rs. *0.00 crores), ABG Resources Private Limited Rs. 122.39 crores (Previous Year Rs.0.81 crores)

15 Deposit Refund Received from ABG Resources Private Limited Rs. Nil (Previous Year Rs. 110.00 crores )

16 Guarantees Taken from ABG International Private Limited Rs. 16,176.66 crores (Previous Year Rs. 618.00 crores )

17 Guarantees Given to Varada Ventures Pte. Limited Rs.Nil (Previous Year Rs. 435.12 crores )


Mar 31, 2013

1. (a) Contingent liabilities not provided for

Rs. in crores Particulars 31st March 2013 31st March 2012

In respect of Performance/ Delivery Guarantees given by banks to the buyers 163.20 96.74

Corporate guarantees to banks in respect of facilities granted to group companies 1,305.06 1,038.26

Other bank guarantees 42.40 28.87

Claims against the company not acknowledged as debts 2.29 0.79

Claims in respect of indirect taxes 10.23 2.58

2. In the opinion of the management, Current Assets, Loans and Advances have value in realisation in the ordinary course of business at least equal to the amount at which they are stated.

3. The Company has made Application u/s 245 C of Income Tax Act 1961, before Hon’ble Settlement Commission, Mumbai for the A.Y. 2004-05 to 2010-11. The Application for settlement has been admitted u/s 245 D (1) by Hon’ble Settlement Commission vide order dated 29th March 2012. The company has paid taxes of Rs.7.70 crores and utilised credit u/s 115JAA of the Income Tax Act ,1961 to the extent of Rs. 20.67 crores. The tax expense and utilisation are included in Current Tax for earlier years and MAT credit utilised, respectively.

4. Exchange fluctuation included in the Statement of Profit and Loss is a loss of Rs.170.15 crores and gain of Rs.123.14 crores (P.Y. loss Rs. 202.99 crores - gain Rs.117.87 crores). Out of this, a net loss of Rs.42.03 crores (P Y.net Rs.36.00 crores) is related to material and included in consumption.

5. Disclosure in respect of Operating Leases (Assets taken on lease):

(a) The company has taken commercial / residential premises under cancellable operating leases. The lease agreements are usually renewable by mutual consent on mutually agreeable terms.

(b) The expenses in respect of operating leases are accounted in Other Expenses under Note No 25.

6. The company primarily operates in one business segment only i.e. manufacturing which is the only reportable segment. There is no other segment which satisfies the threshold limit as per Accounting Standard -17, issued by Institute of Chartered Accountants of India.

7. The figures for the previous year have been arranged/rearranged/regrouped wherever considered necessary.


Mar 31, 2012

1. (a) Contingent liabilities not provided for

Rs. in crores Particulars 31st March 2012 31st March 2011 In respect of Performance/ Delivery Guarantees given by banks to the buyers 96.4 58.17 Corporate guarantees to banks in respect of facilities granted to group companies 1,038.26 1,066.95 Other bank guarantees 28.87 32.30 Claims against the company not acknowledged as debts 0.79 0.79

Claims in respect of indirect taxes

2. In the opinion of the management, Current Assets , Loans and Advances have value in realisation in the ordinary course of business at least equal to the amount at which they are stated.

3. The Company has made Application u/s 245 C of Income Tax Act 1961, before Hon'ble Settlement Commission, Mumbai for the AY. 2004-05 to 2010-11. The Application for settlement has been admitted u/s 245 D(1) by Hon'ble Settlement Commission vide order dated 14th February 2012. The company has paid taxes of Rs. 7.70 crores and utilised credit u/s 11 SJAAof the Income Tax Act, 1961 to the extent of Rs. 20.67 crores. The tax expense and utilisation are included in Current Tax for earlier years and MAT credit utilised, respectively. The proceedings are pending before the Hon'ble Commission. The ultimate tax liability of any, is dependent on the outcome of the proceedings and will be quantified only on the completion of the same.

4. Exchange fluctuation included in the Statement of Profit and Loss is a loss of Rs. 202.99 crores and gain of Rs.117.87 crores (P.Y.loss Rs. 100.54 crores , gain Rs. 90.05 crores). Out of this, a net loss of Rs. 36.00 crores (P Y. net Rs. 6.31 crores) is related to material and included in consumption.

5. Disclosure in respect of Operating Leases (Assets taken on lease):

(a) The company has taken commercial / residential premises under cancellable operating leases. The lease agreements are usually renewable by mutual consent on mutually agreeable terms.

(b) The expenses in respect of operating leases are accounted in Other Expenses under Note No 24

The Gross amount due from customers reflects the net amount for all contracts in progress for which cost incurred plus recognised profit (less recognised losses) exceeds progress billing.

The Gross amount due to customers reflects the net amount for all contracts in progress where progress billing exceeds cost incurred plus recognised profits (less recognised losses).

Out of the above, during the year, advances from customers to the extent of work done amounting to Rs. 4245.91 crores .(P.Y. Rs. 3721.19 crores) is included in adjustment against Work in Progress in Note No 13. Advances received in excess of work done and advances pending commencement of work are disclosed in Other Current Liabilities under Advances from Customers in Note No 8.

6. The disclosures required under Revised Accounting Standard 15 'Employee Benefits' notified in the Companies (Accounting Standards) Rules 2006, are given below:

Defined Benefit Plan

The employees' gratuity fund scheme managed by SBI Life Insurance is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in same manner as gratuity.

7. The company primarily operates in one business segment only i.e. manufacturing which is the only reportable segment. There is no other segment which satisfies the threshold limit as per Accounting Standard -17, issued by Institute of Chartered Accountants of India.

(e) The Company has firm commitments in foreign exchange as regards both its payables and receivables. The company has applied the principle of hedge accounting contained in Accounting Standard 30 issued by the Institute of Chartered Accountants of India for its net firm commitment in receivables and payables in foreign exchange. In view of the same, Mark to Market difference (gain) as on 31st March, 2012 of Rs. 7.30 crores (P. Y. Loss Rs.. 6.21 crores) does not have any material impact on the financial statements.

8. Related Parties Disclosure as per Accounting Standard (AS) 18:

A. LIST OF RELATED PARTIES

Holding Company ABG International Private Limited

Subsidiary/ Controlling Stake

Western India Shipyard Limited ABG Shipyard Singapore Pte. Ltd. Vipul Shipyard (Partnership Firm) ABG FPSO Private Limited

Fellow Subsidiary Companies

ABG Cement Limited

PFS Shipping (India) Limited

ABG Cement Holdco Private Limited

(formerly Niyati Mercantile Private Limited)

ABG Solar Project Private Limited (w.e.f. 11th February, 2012)

BABA Gangaram Investment Services Private Limited (w.e.f. 1st

November, 2011)

ABG Energy Limited

ABG Energy (Gujarat) Limited (w.e.f.3istMarch,20i2)

ABG Energy (MP) Limited

Varada Marine Pte. Ltd.(Along with its SPV's)

Companies over which Directors/relatives are able to exercise control or significant Influence

ABG Infralogistics Limited

ABG Power Private Limited

ABG Cranes Private Limited

ABG Foods Private Limited

ABG Acquafarm Private Limited

ABG Glass Private Limited (w.e.f.23rdAugust,20ii)

ABG Engineering & Construction Limited

Tirupati Landmark Private Limited

ABG Mercantile & Investment Services Private Limited

(formerly Abhishek Mercantile Private Limited)

Eleventh Land Developers Private Limited

ABG Resources Private Limited

(formerly Second Land Developers Private Limited)

ABG Motors Limited

ABG Business Ventures Pte.Ltd.

Banal Investments Trading Private Limited

Jarrow Finance & Trading Private Limited

Onaway Industries Limited

Agbros Leasing & Finance Private Limited

Aries Management Services Private Limited (w.e.f.23rdSeptember,20H)

G.C. Property Private Limited (w.e.f.5thAprii,20ii)

Gold Croft Property Private Limited (w.e.f. 5th April, 2011)

Somerset Estate Private Limited (w.e.f.5thAPrii,20ii)

Drilling& Offshore Pte. Ltd.

Global Bulk Carriers Pte. Ltd.

Individuals owning directly or indirectly an interest in the voting powerthat gives them control or significant influence

Shri.Rishi Agarwal

Key Management Personnel

Shri.Ram Swaroop Nakra

Major Arun Phatak

Shri. Dhananjay Laxman Datar (w.e.f. 29th July, 2011)

Notes :

1. Related Parties have been identified by the management and relied upon by the auditors.

2. Previous Years figures are shown in brackets.

3. Names of the Related Parties have been given in cases where the amount of transaction exceeds 10% of the total related party transactions of the same type.

4. Guarantees taken / given comprise of guarantees given to third parties on behalf of the Company / related parties. Disclosure in respect of Related Party transactions during the year:

1 Revenue from Operations include Varada Marine Pte. Limited Rs. 64.81 crores (Previous Year Rs. 139.32 crores), PFS Shipping (India) Limited Rs. Nil (Previous Year Rs. 71.32 crores), Global Bulk Carriers Pte. Limited Rs. 78.48 crores (Previous Year NA)

2 Share of Loss in Partnership Firm include Vipul Shipyard Rs. 0.04 crores (Previous Year Loss Rs. 0.00 * crores)

3 Rent Expenses include Tirupati Landmark Private Limited Rs. 0.08 crores (Previous Year Rs. 0.08 crores), Jarrow Finance & Trading Private Limited Rs. 0.09 crores(Previous YearRs. 0.08 crores), Aries Management Services Private Limited Rs. 0.38 crores(Previous Year NA), ABG Power Private Limited Rs. 0.22 crores (Previous Year Rs. 0.22 crores)

4 Hire Charges paid to ABG Infralogistics Limited Rs. 0.79 crores (Previous Year Rs. Nil)

5 Services Received from Western India Shipyard Limited Rs. Nil (Previous Year Rs. 0.07 crores), ABG Resources Private Limited Rs. 1.20 crores (Previous Year Rs. Nil), ABG Cranes Private Limited Rs. 0.06 crores (Previous Year Rs. 0.14 crores)

6 Payment to Key Management Personnel include to Shri R.S. Nakra Rs. 0.97 crores (Previous Year Rs. 0.96), Major Arun Phatak Rs. 0.63 crores (Previous Year Rs. 0.53 crores), Shri Dhananjay Datar Rs. 0.31 crores (Previous Year N.A.), Shri Rishi Agarwal Rs. Nil (Previous Year Rs.0.62 crores)

7 Purchase of Fixed Assets include from ABG Cement Limited Rs. Nil (Previous Year Rs. 0.14 crores), ABG Infralogistics Limited Rs. 20.48 crores (Previous Year Rs. Nil)

8 Sale of Fixed Assets include to Western India Shipyard Limited Rs. 0.09 crores (Previous Year Rs. Nil), PFS Shipping (India) Limited Rs. Nil (Previous Year Rs. 0.25 crores)

9 Investments include ABG FPSO Private Limited Rs. 0.01 crores (Previous Year N.A.), ABG Shipyard Singapore Pte. Limited Rs. Nil (Previous Year Rs. 191.63 crores)

10 Sale of Shares include Eleventh Land Developers Private Limited Rs. Nil (Previous Year Rs. 91.92 crores)

11 Stage Payment received include from PFS Shipping (India) Limited Rs.82.19 crores (Previous Year Rs. 229.21 crores), Varada Marine Pte. Limited Rs. 73.19 crores (Previous Year Rs. 339.09 crores), Global Bulk Carriers Pte. Limited Rs. 353.21 crores (Previous Year N.A)

12 Loans and Advances Given / Repaid include ABG International Private Limited Rs. 101.21 crores (Previous Year Rs. 12.43 crores), Western India Shipyard Limited Rs. 74.00 crores (Previous Year Rs. 16.13 crores), ABG Cement Holdco Private Limited Rs. 61.56 crores (Previous Year Rs. Nil), ABG Engineering & Construction Private Limited Rs. 161.28 (Previous Year Rs. 122.05crores), ABG Resources Private Limited Rs.35.53 crores (Previous Year Rs.49.73 crores),

13 Loans and Advances Taken / Refunded include ABG International Private Limited Rs. 111.08 crores (Previous Year Rs. 1.89 crores), ABG Shipyard Singapore Pte. Limited Rs. Nil (Previous Year Rs. 176.44 crores), Western India Shipyard Limited Rs. 47.09 crores(Previous Year Rs. 35.50 crores), ABG Cement Holdco Private Limited Rs. 61.56 crores-(Previous Year Rs. 0.00 * crores),ABG Resources Private Limited Rs.16.26 crores-(Previous Year Rs. 40.11 crores).

14 Deposits given to ABG Resources Private Limited Rs.40.00 crores (Previous Year Rs.30.00 crores)

15 Guarantees Taken from ABG International Private Limited Rs.435.00 crores (Previous Year Rs. Nil)

16 Guarantees Given to ABG Shipyard Singapore Pte. Limited Rs. 408.96 crores (Previous Year Rs. Nil), ABG Business Ventures Pte. Limited Rs. Nil (Previous Year Rs.445.95 crores)

* Amount less than Rs. 0.01 crore

9. The figures for the previous year have been arranged/rearranged/regrouped wherever considered necessary.


Mar 31, 2011

1. Contracts remaining to be executed on capital account and not provided for, are estimated at Rs. 177.70 crores (P.Y Rs. 239.37 crores).

2. (a) Contingent liability not provided for:

Rs. in crores

Particulars 31st March 2011 31st March 2010

In respect of Performance/ Delivery Guarantees given by banks to the buyers 58.17 77.79

Corporate guarantees to banks in respect of facilities granted to Group 1066.95 993.81 companies

Other bank guarantees 32.30 11.18

Claims against the company not acknowledged as debts 0.79 0.34

Claims in respect of indirect taxes. 2.58 -

3. In the opinion of the management, Current Assets, Loans and Advances have value in realisation in the ordinary course of business at least equal to the amount at which they are stated.

4. On the basis of the report of Chartered Engineers and Government approved Valuers, the Company had revalued the Freehold Land, Factory Building, Other Building and Dry Docks on 30th June, 1994 and again on 30th June 2002 and consequently an amount of Rs. 10.90 crores and Rs. 59.99 crores respectively being the differences between the amount of fair market value of the same and depreciated value as per books as on those dates, have been added to the value of Fixed Assets and corresponding credit shown as Revaluation Reserve.

Consequent to the revaluation there is an additional depreciation of Rs. 1.44 crores (Previous year Rs. 1.52 crores), which has been withdrawn from Revaluation Reserves and credited to Profit and Loss account.

5. The company has chosen to avail the option underAS-11 notification issued by Companies (Accounting Standard) Amendment Rules 2009 GSR225 (E) dated 31.03.2009 issued by Ministry of Corporate Affairs.

The company has exercised the option with respect to long term monetary liabilities viz Foreign currency term loan availed by it. The company has no other long term monetary Assets / Liabilities.

Due to the exercise of aforesaid option, the impact on Profit & Loss Account for the year is (loss) Rs. 2.56 crores (P.Y. loss Rs. 17.65 crores) which has been credited/capitalized to CWIP.

6. Exchange fluctuation included in the Profit and Loss account - loss Rs. 100.54 crores and gain of Rs.. 90.05 crores (P.Y. loss Rs. 10.60 & gain 2.25 crores) out of which loss (net) Rs. 6.31 crores is related to material included in consumption. (P Y. loss (net) Rs. 10.60 crores). Forward cover loss included in Profit and Loss account Rs. 2.88 crores. (P. Ygain Rs. 23.77 crores).

7. The company has availed exemption vide Notification No S.O 301 (E) dated 08th February, 2011 issued by the Ministry of Corporate Affairs exempting Export Oriented companies whose export is more than 20% of the total turnover from disclosure of paragraphs 3(i)(a) and 3(ii)(a) of Part-I I of Schedule VI of the Companies Act 1956.

iv) Remittance of dividend in foreign currency:

The company has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by / on behalf of non resident shareholders. The particular of dividend declared and paid to non resident shareholders during the yearare as under

8. Disclosure in respect of Operating Leases (Assets taken on lease):

(a) The company has taken commercial / residential premises under cancellable operating leases. The lease agreements are usually renewable by mutual consent on mutually agreeable terms.

(b) The expenses in respect of operating leases are accounted in General, Administration & Selling Expenses under Schedule-16.

9. The disclosures required under Revised Accounting Standard 15 'Employee Benefits' notified in the Companies (Accounting Standards) Rules 2006, are given below:

Defined Contribution Plan

Defined Benefit Plan

The employees' gratuity fund scheme managed by SBI Life Insurance is a defined benefit plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation for leave encashment is recognized in same manner as gratuity.

10. Disclosure in accordance with 'AS -7 Accounting for Construction Contracts' issued by the Institute of chartered Accountants of India:

The Gross amount due to customers reflects the net amount for all contracts in progress where progress billing exceeds cost incurred plus recognised profits (less recognised losses).

During the year, advances from customers to the extent of work done amounting to Rs. 3721.18 crores is adjusted against Work in Progress in Schedule 7. Advances received in excess of work done and advances pending commencement of work are disclosed in Current Liabilities under Advances from Customers in Schedule 11.

During the year, Rs. 341.02 crores ( P. Y. 79.87 crores) pertaining to completed assets ready to be put to use has been capitalized along with proportionate expenditure. The capitalization of proportionate expenditure is based on technical evaluation of the project by an independent valuer.

Out of total deletion to CWIP, Ships amounting to Rs. 72.58 crores is transferred from CWIP to inventory due to availability of customer against the same.

11. The company primarily operates in one business segment only i.e. manufacturing which is the only reportable segment. There is no other segment which satisfies the threshold limit as per Accounting Standard -17, issued by Institute of Chartered Accountants of India.

12. The Company has firm commitments in foreign exchange as regards both its payables and receivables. The company has applied the principle of Hedge Accounting contained in Accounting Standard 30 for its net firm commitment in receivable and payables in foreign exchange. In view of the same, Mark to Market difference as on 31st March 2011 of Rs. 6.21 crore (P. Y 20.08 crore) on payables does not have any material impact on the financial statement, as the receivables are higher than the payables.

13. The figures for the previous year have been arranged/rearranged/regrouped wherever considered necessary.


Mar 31, 2010

1. Contracts remaining to be executed on capital account and not provided for, are estimated at Rs. 239.37 crores (P.Y - Rs. 231.45crores).

2. (a) Contingent liability not provided for: Rs. in crores

Particulars 31st March 2010 31st March 2009

In respect of Performance/ Delivery Guarantees given by banks to the buyers 77.79 97.37

Corporate guarantees to banks in respect of facilities granted to Group 993.81 - Companies

Other bank guarantees to Government Authorities 11.18 6.30

Claims against the company not acknowledged as debts 0.34 0.36

3. In terms of the approval of the shareholders of the Company and as per the applicable statutory provisions including Securities and Exchange Board of India (Disclosure and Investor Protection) Guidelines 2000, the Company, on 15th January, 2008 has allotted 40,00,000 warrants on preferential basis to the Holding Company entitling it to apply for equivalent number of fully paid up equity shares of Rs. 10/- each of the Company, at a price of Rs. 796.66 per equity share and received 10% on allotment. As per the terms of issue, the warrant holder had a right to apply for conversion into equity shares within 18 months from the date of allotment of the warrants on payment of the balance consideration. The aforesaid warrants have lapsed and amount of 10% i.e. Rs.31.87 crores paid by the holding company is forfeited and transferred to Warrant Forfeiture Account.

4. In the opinion of the management, Current Assets, Loans and Advances have value in realisation in the ordinary course of business at least equal to the amount at which they are stated.

5. On the basis of the report of Chartered Engineers and Government approved Valuers, the Company had revalued the Freehold Land, Factory Building, Other Building and Dry Docks on 30th June, 1994 and again on 30th June 2002 and consequently an amount of Rs.10.90 crores and Rs. 59.99 crores respectively being the differences between the amount of fair market value of the same and depreciated value as per books as on those dates, have been added to the value of Fixed Assets and corresponding credit shown as Revaluation Reserve.

Consequent to the revaluation there is an additional depreciation of Rs. 1.52 crores (Previous year Rs. 1.62 crores), which has been withdrawn from Revaluation Reserves and credited to Profit and Loss account.

6. The company has chosen to avail the option under AS-11 notification issued by Companies (Accounting Standard) Amendment Rules 2009 GSR 225 (E) dated 31.03.2009 issued by Ministry of Corporate Affairs.

The company has exercised the option with respect to long term monetary liabilities viz Foreign currency term loan availed by it. The company has no other long term monetary Assets / Liabilities.

Due to the exercise of aforesaid option, the impact on Profit & Loss Account for the year is (loss) Rs. 17.65 crores.(PY. gain Rs.22.38 crores) which has been credited/capitalized to CWIP

7. Exchange fluctuation- included in the Profit and Loss account -loss Rs. 10.60 crores and gain of Rs. 2.25 crores (P.Y. Loss Rs. 36.19 crores) out of which Rs. 10.60 crores is loss related to material included in consumption .(P Y. 32.72 crores).

8. Steel and components such as Engines, Anchors etc. required in ship building comprise of a large number of dissimilar items which are impracticable to aggregate and accordingly quantitative information in respect thereof has not been furnished.

9. Disclosure in respect of Operating Leases (Assets taken on lease):

(a) The company has taken commercial / residential premises under cancelable operating leases. The lease agreements are usually renewable by mutual consent on mutually agreeable terms.

(b) The expenses in respect of operating leases are accounted in General, Administration & Selling Expenses under Schedule-17.

10. The Company has firm commitments in foreign exchange as regards both its payables and receivables. The company has applied the principle of Hedge Accounting contained in Accounting Standard 30 for its net firm commitment in receivable and payables in foreign exchange. In view of the same, Mark to Market difference as on 31st March 2010 of Rs. 20.08 Crores (P. Y 81.00 Crores) on payables does not have any material impact on the financial statement, as the receivables are higher than the payables.

11. The figures for the previous year have been arranged/rearranged/ regrouped wherever considered necessary.

 
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