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Directors Report of Reliance Defence and Engineering Ltd.

Mar 31, 2016

Dear Shareowners,

The Directors present the 19th Annual Report and the audited financial statements for the financial year ended March 31, 2016. Financial Results

The financial performance of the Company, on standalone basis, for the year ended March 31, 2016 is summarised below:

Particulars Financial year ended Financial year ended March 31, 2016 March 31, 2015 Rs. in Lakh Rs. in Lakh

Total Income 34,595.49 86,207.91

(Loss) before depreciation (58,931.78) (35,071.74)

Depreciation 21,426.41 19,744.67

(Loss) before taxation (80,358.19) (54,816.41)

Tax expenses (Net) (including deferred tax and tax for earlier years) (27,493.47) (20,702.85)

Profit / (Loss) after taxation (52,864.72) (34,192.33)

Other Comprehensive Income 136.08 (78.77)

Add: Balance of profit / (loss) brought forward from previous year (30,053.08) 4,139.25

Balance carried to Balance Sheet (82,781.12) (30,053.08)

Financial Performance

During the year under review, your Company earned an income of Rs.34,595.49 lakh against Rs.86,207.91 lakh in the previous year. The Company incurred a loss after tax of Rs.52,864.72 Lakh for the year as compared to Rs.34,192.33 lakh in the previous year.

The performance and financial position of the subsidiary companies and associate companies are included in the consolidated financial statement of the Company.

Dividend

The Board of Directors has not recommended any dividend on the equity shares of the Company for the year under review.

Business Operations

The Company has the largest engineering infrastructure in India and is one of the largest in the world. Reliance Defence and Engineering Limited ("RDEL") is the first private sector company in India to obtain the license and contract to build warships. The Company operates India''s largest integrated shipbuilding facility with 662M x 65M Dry dock. The facility houses the only modular shipbuilding facility with a capacity to build fully fabricated and outfitted blocks in India.

Substantial Acquisition of Shares and Takeover of the Company

As reported earlier, Reliance Defence Systems Private Limited ("RDSPL") and Reliance Infrastructure Limited ("RInfra") entered into a Purchase Agreement dated March 4, 2015 (the "Purchase Agreement") with Founder Promoters of the Company and the Company for substantial acquisition of shares and takeover (''Takeover'') of the Company.

The Takeover of the Company by Reliance Group was approved by the Competition Commission of India and the Gujarat Maritime Board. Consequently, Reliance Group had made and completed an open offer in terms of provisions of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. Under the said Open Offer, Reliance Group acquired 13,87,1 2,427 equity shares representing 18.84% equity share capital of the Company. Pursuant to the Purchase agreement, Reliance Group has to acquire 1 3,00,00,000 equity shares in the Company from the Founder Promoters. Out of which, Reliance Group had already acquired 8,13,90,598 equity shares from the Founder Promoters.

Consequently, on completion of the Takeover, Reliance Group acquired the control and management of the Company and became its sole promoter, in place of the Founder Promoters and the name of the Company was changed to Reliance Defence and Engineering Limited with effect from March 3, 2016.

Rights Issue

In order to augment long term resources, the Board of Directors of the Company subject to requisite permissions, sanctions and approvals, has approved Rights Issue of Equity Shares upto an amount of Rs.1,200 crore.

Corporate Debt Restructuring

The Corporate Debt Restructuring (''CDR'') package was approved for the Company by the CDR Lenders. Consequently, in March 201 5, the Company had entered into a Master Restructuring Agreement with the CDR Lenders. Post Takeover of the Company by Reliance Group, the Company proposed to exit the CDR, subject to requisite permissions, sanctions and approvals. The Company is working closely with CDR Lenders to achieve this objective.

Management Discussion and Analysis

The Management Discussion and Analysis for the year under review as stipulated under Regulation 34(2) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, ("Listing Regulation") is presented in a separate section forming part of this Annual Report.

Fixed Deposits

The Company has not accepted deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 (''the Act'') and the Companies (Acceptance of Deposits) Rules, 2014.

Particulars of Investments

Pursuant to Section 186 of the Act, details of the Investments made by the Company are provided in the standalone financial statements (Please refer to Note No. 7 to the standalone financial statements).

Subsidiary and Associate Companies

The financial performance of each of the subsidiaries and associate companies as per the Act is provided in the consolidated financial statements.

The Policy for determining material subsidiary company, as approved, may be accessed on the Company''s website at the link: http://www.reliancedefence.co/corporate_governance.html.

Consolidated Financial Statement

The Audited Consolidated Financial Statement for the financial year ended March 31, 2016, based on the financial statements received from subsidiaries as approved by their respective Board of Directors, have been prepared in accordance with Accounting Standard (AS) - 21 on ''Consolidated Financial Statements'' read with AS-23 on ''Accounting for Investments in Associates'' and AS-27 on ''Financial Reporting of Interests in Joint Ventures'', notified under the Act, read with the Accounting Standards Rules as applicable.

Directors

Pursuant to the Takeover of the Company by Reliance Group, Shri Anil D. Ambani was appointed as Director not liable to retire by rotation and Chairman of the Company with effect from January 18, 2016. Shri Amitabh Jhunjhunwala was appointed as Non-executive Director and Vice Admiral (Retd.) H S Malhi was appointed as Whole-time Director and Chief Executive Officer of the Company for a period of three years with effect from January 18, 2016.

During the year under review, Shri Rahul Sarin, Air Chief Marshal (Retd.) Fali Homi Major, Lt. Gen. (Retd.) Syed Ata Hasnain, Ms. Ryna Karani and Shri Rajendra Chitale, were appointed as Independent Directors for a term of Five years with effect from January 18, 2016 pursuant to the approval of Members of the Company through postal ballot.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under the Act and the Listing Regulations.

Shri Nikhil Gandhi resigned as Chairman of the Board and Shri Bhavesh Gandhi resigned as Vice Chairman and Whole-time Director with effect from January 18, 2016. However, Shri Nikhil Gandhi and Shri Bhavesh Gandhi continue to be Non-executive Directors of the Company. Shri R. M. Premkumar, Shri Samar Mohapatra, Shri Alexander John Joseph, Independent Directors resigned from the office with effect from January 18, 2016.

In terms of the provisions of the Act, Shri Nikhil Gandhi and Shri Bhavesh Gandhi, Directors of the Company, retire by rotation and being eligible offer themselves for re-appointment at the ensuing Annual General Meeting. A brief resume of Shri Nikhil Gandhi and Shri Bhavesh Gandhi, nature of expertise in specific functional areas and names of the listed companies in which they holds directorship and/or membership/chairmanships of Committees of the respective Boards, shareholding and relationship between directors inter se as stipulated under Regulation 36 (3) of the Listing Regulation is given in Corporate Governance Report forming part of this Annual Report.

The details of programme for familiarization of Independent Directors with the Company, nature of the industry in which the Company operates and related matters are put up on the website of the Company at the link http://www.reliancedefence. co/corporate_governance.html

Key Managerial Personnel

During the year under review, Shri Bhavesh Gandhi, Vice- Chairman and Whole-time Director, Shri Rajiv Shukla, Chief Executive Officer and Shri Praveen Mohnot, Chief Financial Officer, Key Managerial Personnel ("KMP") of the Company as per the provisions of Section 203 of the Act resigned from their respective offices as KMP. During the year under review, Shri Madan Pendse was appointed and resigned as KMP.

During the year under review, Vice Admiral (Retd.) H S Malhi, Whole-time Director and Chief Executive Officer, Shri Sridhar Krishnamurthy, Chief Financial Officer have been appointed as Key Managerial Personnel of the Company.

Evaluation of Directors, Board and Committees

The Company has devised a policy for performance evaluation of the individual director, Board and its Committee, which includes criteria for performance evaluation.

Pursuant to the applicable provisions of the Act and Regulation 17(10) and 25 of the Listing Regulations, the Board shall do an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of the committees of the Board. The performance of the Board shall be evaluated based on inputs received from all the Directors after considering criteria such as Board composition and structure, effectiveness of processes and information provided to the Board, etc. A separate meeting of the Independent Directors was also held during the year for the evaluation of the performance of non-independent Directors, performance of the Board as a whole and that of the Chairman.

Policy on appointment and remuneration of Directors, Key Managerial Personnel and senior management employees

The Nomination and Remuneration Committee of the Board has devised a policy for selection, appointment and remuneration of directors and senior management. The Committee has formulated the criteria for determining qualifications, positive attributes and independence of Directors, which has been put up on the Company''s website. The policy on the above is attached hereto as Annexure A.

Directors'' Responsibility Statement

Pursuant to the requirements under Section 134(5) of the Act with respect to Directors'' Responsibility Statement, it is hereby confirmed that:

i. in the preparation of the annual financial statements for the financial year ended March 31, 2016, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

ii. the Directors had selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the loss of the Company for the year ended on that date;

iii. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the Directors had prepared the annual financial statements for the financial year ended March 31, 2016, on a ''going concern'' basis;

v. the Directors had laid down proper internal financial controls to be followed by the Company and such financial controls are adequate and were operating effectively; and

vi. the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Contracts and Arrangements with Related Parties

All contracts/arrangements/transactions entered by the Company during the financial year under review with related parties were on arm''s length basis and in the ordinary course of business. There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, which may have potential conflict with the interest of the Company at large.

All Related Party Transactions were placed before the Audit Committee for approval. Omnibus approval of the Audit Committee was obtained for the transactions which were of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted were reviewed and statements giving details of all related party transactions were placed before the Audit Committee for its approval on a quarterly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website at the link: http://www.reliancedefence.co/corporate_governance. html. None of the Directors has any pecuniary relationships or transactions vis-a-vis the Company.

Material Changes and Commitments if any affecting the financial position of the Company

There was no material change and commitments which materially affect the financial position of the Company occurred between the financial year ended on March 31, 2016 and the date of this Report.

Meetings of the Board

A calendar of Meetings is prepared and circulated in advance to the Directors. During the year, five Board Meetings were held, details of which are given in the Corporate Governance Report.

Audit Committee

The Audit Committee of the Board of Directors of your Company was reconstituted during the year with Shri Rajendra Chitale, Independent Director as Chairman and Vice Admiral (Retd.) H S Malhi, Whole-time Director and Chief Executive Officer, Shri Ajai Vikram Singh and Ms. Ryna Karani, Independent Directors as Members of the Committee.

Auditors and Auditor''s Report

The Members of the Company had appointed M/s. Pathak H. D. & Associates, Chartered Accountants, Mumbai (Firm Registration No. 107783W) as Statutory auditors of the Company for a term of five years commencing from the conclusion of the 18th Annual General Meeting held on September 30, 2015 till the conclusion of the 23 rd Annual General Meeting of the Company and their appointment shall be placed for ratification by Members at every Annual General Meeting during the said term.

The Board recommends ratification of M/s. Pathak H. D. & Associates, as statutory auditors at the ensuing AGM. The observations and comments given by the Auditors in their report read together with notes on financial statement are self explanatory and hence do not call for any further comments under Section 134 of the Act.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company appointed Ms. Amrita D C Nautiyal, Practicing Company Secretary in Practice to undertake the Secretarial Audit of the Company. There is no qualification, reservation or adverse remark made by the Secretarial Auditor in the Secretarial Audit Report. The Audit Report of the Secretarial Auditor is attached hereto as Annexure B.

Extract of Annual Return

Extract of the Annual Return of the Company in form MGT-9 is attached hereto as Annexure C.

Particulars of Employees and related disclosures

In terms of the provisions of Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annexure to the Directors'' Report. However, having regard to the provisions of Section 136 of the Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. The said information is available for inspection at the registered office of the Company on all working days, except Saturdays, between 11.00 a.m. and 1.00 p.m. up to the date of the meeting and any member interested in obtaining the same may write to the Company Secretary. Upon such request, the information shall be furnished.

Disclosures relating to the remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in Annexure D.

Conservation of energy, technology absorption and foreign exchange earnings and outgo

Information in accordance with the provisions of Section 134(3) (m) of the Act, read with Rule 8 of the Companies (Accounts) Rules, 2014 regarding conservation of energy and technology absorption are given in Annexure E and forms part of this Report.

Corporate Governance

The Company has adopted the "Reliance Group-Corporate Governance Policies and Code of Conduct" which has set out the systems, processes and policies conforming to international standards. The report on Corporate Governance as stipulated under Regulation 34(3) of the Listing Regulations is presented in separate section which forms part of this Annual Report.

A certificate from the Auditors of the Company, M/s. Pathak H. D. & Associates, Chartered Accountants, confirming compliance to the conditions of Corporate Governance as stipulated under Regulation 34(3) of the Listing Regulations, is attached to this Report.

Vigil Mechanism / Whistle Blower Policy

In accordance with Section 177 of the Act and Regulation 22 of the Listing Regulations, the Company has formulated a vigil Mechanism to address the genuine concern, if any, of the directors and employees. The details of the same have been stated in the Report on Corporate Governance and the policy can also be accessed on the Company''s website.

Risk Management

The Company has constituted a Risk Management Committee consisting of majority of independent Directors, Whole-time Director and senior managerial personnel. The details of the Committee are set out in the Corporate Governance Report forming part of this Report.

The Company has a robust Business Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risks trend, exposure and potential impact analysis at the Company level as also separately for business segments.

Compliance with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is committed to upholding and maintaining the dignity of women employees and it has in place a policy which provides for protection against sexual harassment of women at work place and for prevention and redressal of such complaints. During the year, no such complaints were received.

Corporate Social Responsibility

The Company has constituted a Corporate Social Responsibility Committee (CSR) in compliance with the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR Committee has formulated a Corporate Social Responsibility Policy (CSR policy) indicating the activities to be undertaken by the Company. The CSR policy may be accessed on the Company''s website at the link: http://www.reliancedefence.co/corporate_governance.html

The Corporate Social Responsibility Committee consists of Shri Rahul Sarin as Chairman, Vice Admiral (Retd.) H S Malhi, Ms Comal Ramachandran Gayathri and Ms Ryna Karani as members.

The disclosures with respect to Corporate Social Responsibility activity are given in Annexure F.

Order, if any, passed by the regulator or courts or tribunals.

No orders have been passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations.

Internal Financial Controls and their adequacy

The Company has in place adequate internal financial controls across the organization. The same is subject to review periodically by the internal audit cell for its effectiveness. During the year, such controls were tested and no reportable material weakness in the design or operation were observed.

Acknowledgements

Your Directors would like to express on record their sincere appreciation for the consistent support and co-operation received from the shareholders, bankers, financial institutions, government authorities, regulatory bodies and other business constituents during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the hard work and commitment of each and every employee of the Company.

For and on behalf of the Board of Directors

Whole-time Director and CEO Director

Mumbai

May 14, 2016


Mar 31, 2015

Dear Members,

The Directors take pleasure in presenting the 18th Annual Report of your Company together with audited financial statements for the year ended March 31, 2015.

1. FINANCIAL RESULTS:

The financial performance of the Company, on standalone basis, for the year ended March 31, 2015 is summarized below:

( Rs. in Crore)

Sr. Particulars 2014-15 2013-14 No.

(a) Total Revenue 862.07 2,319.08

(b) Profit from Operations 92.86 614.75

(c) Depreciation 131.34 161.70

(d) Interest 452.69 465.21

(e) Profit/(Loss)beforeTax (460.10) 27.93

(f) Profit/(Loss)afterTax (369.03) 8.36

2. DIVIDEND:

The Board of Directors has not recommended any dividend on the equity shares of the Company for the year under review.

3. STATE OF COMPANY'S AFFAIRS:

During the year under review, your Company has recorded total revenue of Rs. 862.07 crore as compared to the total revenue of Rs. 2,319.08 crore during the previous financial year. The Company has earned operating profit i.e. Profit before Depreciation, Interest and Tax of Rs. 92.86 crore for the year as against Rs. 614.75 crore for the previous year.

4. MANAGEMENT AND CONTROL OF THE COMPANY:

Pursuant to an Agreement dated March 4, 2015, between the Company and its existing Promoters namely SKIL Infrastructure Limited ('SIL'), SKIL Shipyard Holdings Private Limited ('SSHPL') and Grevek Investments and Finance Private Limited ('GIFPL') (SIL, SSHPL, GIFPL are collectively referred to as the 'Sellers') and Reliance Defence Systems Private Limited ('Reliance Defence') and Reliance Infrastructure Limited ('Reliance Infrastructure') (Reliance Defence and Reliance Infrastructure are hereinafter together referred to as 'the Acquirers'), the Acquirers will purchase equity shares of the Company from the Sellers, constituting 17.66 percent of its paid-up equity share capital and shall acquire the management and sole control of the Company.

In terms of the provisions of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 2011, the Acquirers have announced an open offer to the public shareholders to acquire from them upto 26% equity shares of the Company ('SEBI Open Offer') subject to certain conditions and statutory and other approvals. In this connection, the Acquirers have filed with the SEBI a draft Letter of Offer.

Post completion of the SEBI Open Offer, if the Acquirers hold less than 25.1% equity shares of the Company, in that event, the Sellers will sell such number of equity shares to cover the shortfall of equity shares (i.e. 25.1% shares minus the number of shares held by Reliance Defence post open offer) to the Acquirers, so that as a result of the proposed acquisition, the Acquirers will hold minimum 25.1% shares in the Company.

Post completion of the SEBI Open Offer, the Acquirers will acquire management and sole control of the Company and shall appoint their representatives constituting majority on the Board of the Company. Post completion of the Transaction, the Acquirers will hold minimum 25.10% in your Company and Mr. Anil Ambani, Chairman of Reliance Group will be the Chairman of your Company. The present promoters may continue to hold minority stake and two positions in Board of Directors of the Company. The name of the Company will be changed to Reliance Defence and Engineering Limited.

The above is subject to certain conditions precedent, and statutory and other approvals.

The Competition Commission of India ('CCI') has already approved the said transaction vide its order dated 20th April 2015. The process of soliciting other necessary statutory and other approvals for completion of the said transaction is in progress.

5. CORPORATE DEBT RESTRUCTURING:

Continued downturn in global commercial shipping industry has affected the shipbuilding industry and the Company adversely. Long gestation period of large scale infrastructure created by the Company and non-availability of timely working capital etc. severely impacted the operations of the Company. In order to find a long term solution to the issues emanating from the inevitable long gestation period for the infrastructure industry; the promoters, the management of your Company and bankers of the Company decided to restructure its debts under the Corporate Debt Restructuring ('CDR') Scheme in accordance with the guidelines stipulated by the Reserve Bank of India.

The Corporate Debt Restructuring ('CDR') Cell vide letter dated March 27, 2015 has communicated its approval of the restructuring proposal of your Company.

Pursuant to the aforesaid approval, the CDR Lenders ('Lenders') have extended certain reliefs and concessions to the Company. However, the Lenders have right of recompense and/ or right to reverse the waivers / sacrifice as per the applicable CDR guidelines. The Lenders also have right to convert Future Interest on Term Loan ('FITL') up to Rs. 250 crore into equity shares in the Company at a price as may be determined as per SEBI (Issue of Capital and Disclosure Requirements (ICDR) Regulations, 2009.

The Promoters of the Company were required to bring in Rs. 145 crore into the Company as a condition precedent for the CDR. Accordingly, the Promoters have infused Rs. 157.50 crore in the Company. The Company has executed 'Master Restructuring Agreement' with the Lenders and successfully implemented the CDR package.

Further, the Promoters are required to bring, in the Company, additional amount of Rs. 21 crore within one year from the date of approval of CDR and arrange for Rs. 176.48 crore towards equity margin for balance capex. The Promoters of your Company are committed to the same.

6. SUBSIDIARY COMPANIES:

Details of the subsidiaries of your Company as on March 31, 2015 are as follows:

E Complex Pvt. Ltd. ('ECPL')

ECPL, wholly-owned subsidiary of your Company, is engaged in the business of development and operation of Special Economic Zones (SEZs). ECPL has developed a sector specific SEZ for engineering goods which is spread over two villages comprised in two talukas viz. at Village Rampara II in Taluka Rajula and Village Lunsapur in Taluka Jafarabad, District Amreli, in the State of Gujarat.

Your Company has set up its SEZ unit in the SEZ developed and operated by ECPL.

During the FY 2014-15, ECPL recorded total income of Rs. 125.11 crore (Previous Year Rs. 292.31 crore) and net loss of Rs. 10.53 crore (Previous Year Rs. 5.74 crore).

PDOC Pte. Ltd.

PDOC Pte. Ltd. was incorporated in Singapore as a wholly-owned subsidiary of your Company, to explore business opportunities available for construction of offshore Hydrocarbon EPC assets. PDOC Pte. Ltd has not yet commenced its commercial operations.

During the F.Y. 2014-15, PDOC Pte. Ltd. recorded net loss of SG$ 10,198 (Previous Year SG$ 2,087).

Pipavav Marine and Offshore Limited ('PMOL')

PMOL, wholly-owned subsidiary of your Company has not yet commenced its commercial operations. During the F.Y. 2014-15 PMOL has recorded net loss of Rs. 0.90 Lacs (Previous Year Rs. 0.89 Lacs).

Pipavav Lighter Than Air Systems Private Limited ('PLTA')

PLTA is a wholly-owned subsidiary of your Company. During, the F.Y. 2014-15, PLTA recorded total income of Rs. 0.35 Lacs (Previous Year NIL) and net loss of Rs. 1.18 Lacs (Previous Year Rs. 0.15 Lacs). PLTA has received a prestigious prototype order on nomination basis from Defence Research and Development Organisation ('DRDO') for production of Aerostat, which will be used for strategic purposes. PLTA, after the end of F.Y. 2014-15 has delivered the said Aerostat to DRDO.

Pipavav Engineering and Defence Services Limited ('PEDSL')

During the year, your Company acquired 100% stake in PEDSL, making it a wholly-owned subsidiary of the Company.

During the F.Y. 2014-15, PEDSL recorded total income of Rs. 459-71 Lacs (Previous Year NIL) and net loss of Rs. 6.24 Lacs (Previous Year Rs. 0.11 Lacs).

Pipavav Technologies and Systems Private Limited ('Pipavav Technologies')

During the year, your Company acquired 100% stake in Pipavav Technologies and Systems Private Limited (formerly known as Pipavav Combat Management Systems Private Limited), making it a wholly-owned subsidiary of the Company. Its name was changed from 'Pipavav Combat Management Systems Private Limited' to 'Pipavav Technologies and Systems Private Limited' w. e. f. February 03, 2015. Pipavav Technologies has not yet commenced its commercial operations.

During the F.Y. 2014-15 Pipavav Technologies has recorded net loss of Rs. 0.11 Lacs (Previous Year Rs. 0.06 Lacs).

The policy to determine material subsidiary Company is available on Company's website at URL: http://www.pipavavdoc.com/index.php/investors/listing- compliance.

7. CONSOLIDATED FINANCIAL STATEMENTS:

The Company pursuant to Clause 41 of the Listing Agreement entered into with the Stock Exchanges ('Listing Agreement'); in accordance with the Section 129 (3) of the Companies Act, 2013 ('Act') and Accounting Standard (AS) - 21 on 'Consolidated Financial Statements' read with AS-23 on 'Accounting for Investments in Associates' and other applicable Accounting Standards prepared consolidated financial statements of the Company and all its subsidiaries for the year under review, which form part of the Annual Report. Further, the report on the performance and financial position of each of the subsidiary, associate and joint venture and salient features of the financial statements in the prescribed Form AOC-1 is annexed to this report and marked as "Annexure A".

8. DIRECTORS:

At the 17th Annual General Meeting of the Company Mr. Ajai Vikram Singh, Mr. Alexander John Joseph, Ms. Comal Ramachandran Gayathri, Mr. R. M. Premkumar and Mr. Samar Ballav Mohapatra, were appointed as Independent Directors for a period of 5 years with effect from October 1, 2014.

During the year IDBI Bank nominated Mr. Ajay Sharma as a Director of the Company with effect from October 31, 2014 and Life Insurance Corporation of India ('LIC of India') nominated Ms. Padmaja Bhaskaran as a Director of the Companywith effect from February 13, 2015.

Mr. Ashok Kumar Sahoo, who was nominated by LIC of India resigned from the office of the Director w.e.f. September, 10 2014. Mr. David Rasquinha, who was nominated by EXIM Bank and Mr. Lars Olov Rikard Lindren, Alternate Director resigned from the offices of the Directors w.e.f. September 12, 2014. Mr. Ashok Katra, who was nominated by IDBI Bank resigned from the office of the Director w.e.f. October 27, 2014. Mr. Nils Peter Sandehed, a Director nominated by SAAB Aktiebolag resigned from the office of the Director of the Company w.e.f. November 12, 2014.

The Board places on record appreciation of contribution made by Mr. Ashok Katra, Mr. Ashok Kumar Sahoo, Mr. David Rasquinha, Mr. Lars Olov Rikard Lindren and Mr. Nils Peter Sandehed during their tenure as Directors of the Company.

In terms of provision of Section 152 of the Act Mr. Nikhil Gandhi is liable to retire by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting.

9. KEY MANAGERIAL PERSONNEL:

During the Year under review Mr. Bhavesh Gandhi, Executive Vice-Chairman and Executive Director; Mr. Rajiv Shukla, Chief Executive Officer; Mr. Praveen Mohnot, Chief Financial Officer and Mr. Ajit Dabholkar, Corporate Counsel & Company Secretary were designated as Key Managerial Personnel of the Company as per the provisions of Section 203 of the Act. None of the KMP has resigned during the year under review.

10. MEETINGS OF BOARD AND AUDIT COMMITTEE:

During the year, five Meetings of the Board of Directors of the Company were convened and held. The Audit Committee of the Board of Directors of your Company comprises of Mr. R. M. Premkumar, Mr. Ajai Vikram Singh, Mr. Bhavesh Gandhi and Mr. Samar Ballav Mohpatra. Mr. Premkumar is the Chairman of the Audit Committee. Details relating to Board Meetings, Audit Committee Meetings and declarations of Independent Directors are provided in the Corporate Governance Report attached hereto, which forms part of this Annual Report.

11. EVALUATION OF DIRECTORS, BOARD AND ITS COMMITTEES:

Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board has carried out an Annual performance evaluation of its own performance, of the Directors individually and of the committees of the Board. A seperate meeting of the Independent Directors was held during the year for evaluation of performance of Non-Independent Directors, performance of the Board as a whole and that of the Chairman. Further details, including the manner in which the evaluation has been carried out have been described in the Corporate Governance Report.

12. NOMINATION & REMUNERATION / BOARD DIVERSITY POLICIES:

The Board on the recommendation of the Nomination & Remuneration Committee framed a policy for appointment of Directors, Key Managerial Personnel, Senior Management Personnel and their remuneration. The Board has also on the recommendation of the Nomination & Remuneration Committee adopted Board Diversity Policy as per the provisions of Listing Agreement. Both these polices are annexed to this report and collectively marked as "Annexure B".

13. DIRECTORS' RESPONSIBILITY STATEMENT:

In accordance with provisions of Section 134(3)(c) and Section 134(5) of the Act, it is hereby confirmed that:

a. in the preparation of the annual financial statements for the ear ended March 31, 2015, the applicable accounting standards had been followed along with proper explanation relating to material departures, if any;

b. the Directors had selected such accounting policies and applied them consistently and have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the loss of the Company for the year ended on that date;

c. the Directors had taken proper and sufficient care 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;

d. the annual financial statements have been prepared on a 'going concern' basis;

e. proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and

f. adequate systems to ensure compliance with the provisions of all applicable laws were in place, and operating effectively.

There were no significant or material orders passed by any Regulator or Court or Tribunal which would impact the going concern status of the Company and its future operations.

14. POLICY ON RELATED PARTIES TRANSACTIONS & CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, which may have a potential conflict with the interest of the Company at large. All related party transactions were placed before the Audit Committee for approval.

The policy on related party transactions as approved by the Board is available on the Company's website at URL: http://www.pipavavdoc.com/index.php/investors/listing- compliance.

15. STATUTORY AUDITORS & AUDITORS' REPORT:

M/s. GPS & Associates, Chartered Accountants, Mumbai (Firm Registration No. 121344W), Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting. M/s. GPS & Associates, Chartered Accountants have conveyed their unwillingness to get reappointed at the ensuing Annual General Meeting. The Board of Directors of your Company, on recommendation of the Audit Committee, has proposed to appoint M/s. Pathak H. D. & Associates, Chartered Accountants, Mumbai (Firm Registration No. 107783W) to hold office for a term of five years commencing from the conclusion of the ensuing Annual General Meeting till the conclusion of the 23rd Annual General Meeting of the Company. M/s. Pathak H. D. & Associates have, under Section 139(1) of the Act and the Rules framed thereunder, furnished certificate of their eligibility, Peer Review Certificate and consent for appointment. The members are requested to consider appointment of M/s. Pathak H. D. & Associates, Chartered Accountants, Mumbai as the Statutory Auditors of the Company.

The Notes to Financial Statements read with the Auditors' Report are self-explanatory and therefore, do not call for any further explanations.

16. SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company had appointed Ms. Sandhya Malhotra of M/s. SRM & Co., Company Secretaries to undertake the Secretarial Audit of the Company. There is no qualification or adverse remark in

the Secretarial Audit Report. The Report of the Secretarial

Auditor is annexed herewith as "Annexure C".

17. HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION:

(a) Environment Management:

Your Company is committed to sustainable development and environment protection. Various initiatives such as greenbelt development at project sites, waste management, etc. were undertaken by your Company to promote preservation of clean environment.

(b) Safety Management:

A strong Occupational Health & Safety Management System based on OHSAS-i8ooi:2007, IS0-14001:2004 and ISO-gooi:20o8 is in place to ensure safety of employees, contractors' manpower as well as equipment and machinery at project sites.

Occupational health and safety of employees and contractors' manpower are given utmost importance in the Company. As part of periodic exercise and to keep the safety system agile and updated; extensive trainings on rescue, fire fighting, material handling, etc. were conducted for the employees and contractors' workmen. Multi-level forums such as Workers' Safety & Welfare Committee, Apex Safety Committee, Zonal Safety Council have been formed and meetings of these forums are conducted on monthly basis to ensure active participation of employees and contractors' workers. Regular drills were conducted to check the emergency preparedness. Fire tender and rescue vans are available at the project site in addition to round-the-clock fire and rescue watch performed by a squad of qualified employees to ensure foolproof safety.

(c) Health & Hygiene:

Your Company accords utmost priority to health and hygiene of its employees and contractors' workforce. Necessary trainings are imparted to enhance their awareness towards first-aid and other health related matters. National Safety Week and Fire Service Week are also observed with an objective to give emphasis to health & hygiene.

Your Company has established Occupational Health Centers ('OHCs') at the project sites. The OHCs are well-equipped to provide emergency as well preventive and curative health services to employees, their families and contractor's workmen.

(d) HSEQ Audits:

Team of trained internal auditors regularly conducts Health, Safety, Environment & Quality ('HSEQ') audits with special emphasis on health & hygiene, safety, environment and quality. External audits are carried out by reputed agencies like Det Norske Veritas ('DNV'). During the year, DNV carried out Surveillance Audit of project sites at Pipavav, without any major non-compliance.

18. CORPORATE SOCIAL RESPONSIBILITY ('CSR'):

Your Company conducts its business in a sustainable and socially responsible manner. Your Company is committed to the initiatives for providing drinking water to the villages in the vicinity of the project sites. Your Company lays special emphasis on education and vocational training of youth including females in the local community for their economic empowerment. In order to achieve this objective your Company continues to support six Industrial Training Institutes ('ITIs') in the vicinity of its project sites. During the year under review, due to liquidity constrains, the Company was constrained not to expend 2.00% of average net profits of the Company during the three immediately preceding financial years. Your Company will resume its contribution towards Corporate Social Responsibility projects once its financial position improves. The Corporate Social Responsibly Committee of the Board of Directors comprises of Mr. Bhavesh Gandhi, Executive Vice-Chairman; Mr. Ajai Vikram Singh, Independent Director and Mr. R. M. Premkumar, Independent Director. Mr. Bhavesh Gandhi is the Chairman of the CSR Committee. The CSR policy is available on the Company's website at URL: http://www. pipavavdoc.com/index.php/investors/listing-compliance.

19. INTERNAL FINANCIAL CONTROLS:

The Company has an Internal Financial Control System interalia with reference to the financial statements, commensurate with the size, scale and complexity of its operations. The Audit Committee monitors and evaluates the efficacy and adequacy of internal control system in the Company. Based on the report of the internal auditors / recommendations of the Audit Committee, process owners undertake corrective actions in their respective areas and thereby strengthen the internal controls. Various audit observations and corrective actions thereon are presented to the Audit Committee of the Board. The Company has in place adequate internal finance controls with reference to the financial statements. During the year, no reportable material weakness was observed in the Internal Financial Control System.

20. VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Company in accordance with Section 177 of the Act has formulated a vigil mechanism to deal with alleged instances of mismanagement, if any. The Vigil Mechanism Policy I Whistle blower policy is available on the website of the Company at URL: http://www.pipavavdoc.com/index.php/ investors/listing-compliance.

21. RISK MANAGEMENT:

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of this Report.

The Company has adequate Business Risk Management framework to identify, evaluate business risks and opportunities. The Risk management policy broadly defines the risk at various stages of business and ways to mitigate them. The detailed policy is provided on the website of the Company.

22. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO:

Your Company continues to strive to make its processes energy efficient and takes various measuresfor conservation of energy. The information in terms of Section 134(3)(m) of the Act read with read with Rule 8 of the Companies (Accounts) Rules, 2014, as applicable to the Company, is set out in "Annexure D" and forms part hereof.

23. MANAGEMENT DISCUSSION AND ANALYSIS:

The Management Discussion and Analysis Report for the financial year 2014-15, as stipulated under Clause 49 of the Listing Agreements with the stock exchanges, is provided at "Annexure E" and forms part of this Directors' Report.

24. CORPORATE GOVERNANCE REPORT:

Corporate Governance Report along with the Statutory Auditors' Certificate confirming compliance with the conditions of Corporate Governance as required under Clause 49 of the Listing Agreement is attached herewith and marked as "Annexure F".

25. EXTRACT OF THE ANNUAL RETURN:

An extract of the Annual Return of the Company as of 31st March, 2015 in the prescribed Form MGT-9, pursuant to the provisions of sub-section (3) of Section 92 of the Act is attached herewith and marked as "Annexure G".

26. DEPOSITS:

Your Company has not accepted any deposits from public within the meaning of the provisions of Section 73 of the Act read with Companies (Acceptance of Deposits) Rules, 2014. As such, no amount of principal or interest on public deposits was outstanding as on March 31, 2015.

27. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act are provided in the notes to the Financial Statements.

28. EMPLOYEES REMUNERATION:

Particulars in accordance with Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in an annexure to this report marked as "Annexure H".

In terms of first proviso to Section 136 of the Act, the Annual Report and Financial Statements are being sent to the members of the Company and others entitled thereto excluding the aforesaid information. These particulars will be made available for inspection by the Members at the Registered Office of the Company during 9.00 a.m. to 11.00 a.m. on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard. Upon such request the information will be made available.

29. PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on Prevention, Prohibition & Redressal of Sexual Harassment of Women at Workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention and Redressal) Act, 2013 and the Rules notified there under. The primary objective of the said Policy is to protect the women employees from sexual harassment at the place of work and also provides for punishment in case of false and malicious representations.

During the financial year 2014-15, no complaint was filed by any woman employee with the Company in accordance with Sexual Harassment of Women at Workplace (Prevention and Redressal) Act, 2013.

30. DEMAT SUSPENSE ACCOUNT:

Pursuant to Clause 5A of the Listing Agreement, details of'-, equity shares held in the demat suspense account are as follows:

Particulars No. of No. of Shareholders Shares

Opening Balance as at April 1, 2014 14 3577

Request received for transfer of 0 0 shares from Suspense Account

Shares transferred to Claimants' Demat Accounts during the year 0 0

Closing Balance as at March 31, 2015 14 3577

The voting rights in respect of the shares lying in Demat Suspense Account shall remain frozen till the rightful owners claim the shares.

Further, there are no shares issued in physical mode which remain unclaimed.

31. ACKNOWLEDGEMENTS:

Your Directors wish to place on record their sincere appreciation of the consistent support and co-operation received from the various Departments of Government of India, State Governments, business partners/ associates, financial institutions, bankers, employees, vendors and shareholders. Your Directors also wish to take on record their deep sense of appreciation for the hard work and commitment of each and every employee of the Company.

On behalf of the Board of Directors

Place : Mumbai Nikhil Gandhi Date : August 14, 2015 Chairman




Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting the 16th Annual Report of your Company together with audited financial statements for the year ended March 31, 2013.

1. FINANCIAL RESULTS

The financial performance of the Company, on standalone basis, for the year ended March 31, 2013 is summarized below:

(Rs.in Crore)

2012-13 2011-12

(a) Total Revenue 2,613.03 1,891.47

(b) Profit before Interest, 561.53 436.27

Depreciation and Tax

(c) Less: Depreciation 122.70 105.89

(d) Less: Interest 397.46 257.68

(e) Profit before Tax 41.37 72.70

(f) Less: Provision for Tax 12.65 54.18

(g) Profit after Tax 28.72 18.52

2. DIVIDEND

Considering the expansion and capex plans of the Company, your Directors have not recommended dividend for the year under review.

3. OPERATIONS

During the year under review, your Company has recorded total income of Rs. 2,613.03 Crore, showing an increase of 38.15% as compared to the income of Rs. 1,891.47 Crore during the previous financial year. The Company has earned operating profit i.e. Profit before Depreciation, Interest and Tax of Rs. 561.53 Crore for the year against Rs. 436.27 Crore for the previous year. Your Company earned net profit of Rs. 28.72 Crore, as against net profit of Rs. 18.52 Crore for previous year.

During the year under review, your Company successfully delivered one (1) no. of 74,500 DWT Panamax Bulk Carrier, the largest vessel of its lass built in India, to one of its international customers and two (2) nos. of Offshore Supply Vessels/ Offshore Support Vessels ("OSV") to ONGC.

The detailed information on all business activities of the Company is provided in the Management Discussion and Analysis Report.

4. SHARE CAPITAL

During the year, authorized share capital of your Company was increased to Rs. 1,000 Crore from Rs. 800 Crore, by creation of additional 20,00,00,000 equity shares of Rs. 10/- each.

During the year under review, paid-up share capital of the Company increased to Rs. 7,01,19,83,880/-, consequent to allotment of 1,00,00,000 fully paid-up equity shares to Grevek Investments and Finance Private Limited, one of the promoters of the Company, on exercise of conversion option of equivalent convertible Warrants on payment of 75% balance consideration of Rs. 58.50 Crore.

On May 13, 2013, the Company allotted 1,05,00,000 fully paid-up equity shares to Indian individual investors, on exercise of conversion right attached to equivalent convertible Warrants on payment of 75% balance consideration of Rs. 61.425 Crore. Accordingly, paid-up share capital of the Company increased to Rs. 7,11,69,83,880/-.

On May 27, 2013, the Company allotted 2,45,07,881 fully paid-up equity shares of Rs. 10/- each at a premium of Rs. 72/- per share to SAAB Aktiebolag i.e. SAAB AB (Publ.) ("SAAB"), a Sweden based strategic investor. Accordingly, paid-up share capital of the Company has increased to Rs. 7,36,20,62,690/-.

5. SUBSIDIARY COMPANIES

Details of the subsidiaries of your Company as on March 31, 2013 are as follows:

E Complex Pvt. Ltd. (ECPL)

ECPL, wholly-owned subsidiary of your Company, is engaged in the business of development of Special Economic Zones (SEZs). ECPL has developed a sector specific SEZ for engineering goods/ sector at Village Rampara II, District Amreli, in the State of Gujarat.

During the FY2012-13, ECPL recorded total income of Rs. 14.90 Crore and net profit of Rs. 2.32 Crore.

PDOC Pte. Ltd.

PDOC Pte. Ltd. was incorporated on September 5, 2012 in Singapore as a wholly-owned subsidiary of your Company, to explore business opportunities available for construction of offshore/ onshore oil & gas assets in or around Singapore.

Pipavav Marine and Offshore Limited (PMOL)

During the financial year 2012-13, your Company acquired 100% stake in Pipavav Marine and Offshore Limited (PMOL), making it a wholly-owned subsidiary of the Company. PMOL was incorporated on June 4, 2012 to undertake activities related to engineering, construction, installation of offshore oil & gas exploration and production assets and marine engineering activities. PMOL has not commenced its commercial operations till now. PMOL became wholly-owned subsidiary of your Company w.e.f. February 25, 2013.

General Exemption: In accordance with general exemption granted by the Ministry of Corporate Affairs under Section 212(8) of the Companies Act, 1956 ("the Act") vide General Circular No. 2/ 2011 dated February 8, 2011, the Balance Sheet, Statement of Profit & Loss, Notes to Financial Statements, Directors'' Report and Auditors'' Report of its subsidiary companies are not being attached to this Report.

Consolidated Financial Statements presented by the Company include the financial information of its subsidiary companies. A statement showing key financials of the subsidiary companies forms part of the Annual Report in compliance with the said circular.

Annual Accounts of subsidiary companies of your Company shall be made available upon written request by any Member of the Company. The Annual Accounts of the subsidiary company will be made available at the Company''s website and will also be kept open for inspection during business hours at the Registered Office of the Company and that of its subsidiary.

6. JOINT VENTURE WITH MAZAGON DOCK LIMITED

Your Company formed a 50:50 joint venture with Mazagon Dock Limited, a defence public sector undertaking, to build surface warships for the Indian Navy within globally competitive time lines and price lines.

The joint venture company viz. "Mazagon Dock Pipavav Defence Pvt. Ltd." was incorporated on December 3, 2012 in the State of Maharashtra.

7. CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Clause 41 of the Listing Agreement entered into with the Stock Exchanges ("Listing Agreement"), Consolidated Financial Statements prepared in accordance with ''Accounting Standard 21 on Consolidated Financial Statements'', ''Accounting Standard 23 on ''Accounting for Investment in Associates'' and ''Accounting Standard 27 on Financial Reporting of interest in Joint Ventures'' form integral part of the Annual Report.

8. DIRECTORS

The Board has seven Non-Executive Directors and one Executive Vice-Chairman. In terms of provisions of the Act and the Articles of Association of the Company, Mr. Samar Ballav Mohapatra retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re- appointment. The Board commends re-appointment of Mr. Samar Ballav Mohapatra.

Mr. Bhavesh Gandhi was re-appointed as the Whole- time Director designated as Executive Vice-Chairman of the Company for a period of 5 years from April 1, 2013 to March 31, 2018. The terms and conditions of his re-appointment, including remuneration, are subject to approval of the Members.

Mr. Nils Peter Sandehed, nominated by SAAB, was appointed as an additional Director, by the Board of Directors of the Company with effect from May 27, 2013. Mr. Nils Peter Sandehed will hold office as an additional director till the conclusion of the ensuing Annual General Meeting.

The Company has received a notice in writing from a member pursuant to the provisions of Section 257 of the Companies Act, 1956, signifying intention to propose candidature of Mr. Sandehed for the office of Director whose period of office is liable to retire by rotation.

As required by Clause 49 of the Listing Agreement, details of the directors being recommended for re- appointment are provided in the Notice of ensuing Annual General Meeting.

9. DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with provisions of Section 217(2AA) of the Act, your Directors hereby confirm that:

a) in the preparation of annual accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2013 and of profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) the Directors have prepared the annual accounts on a going concern basis.

10. AUDITORS a AUDITORS'' REPORT

The Notes to Financial Statements read with the Auditors'' Report are self-explanatory and therefore, do not call for any further explanations under Section 217(3) of the Act.

M/s. Chaturvedi & Shah, Chartered Accountants, Statutory Auditors of the Company, are retiring at the conclusion of the ensuing AGM and being eligible, offer themselves for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1 B) of the Act and that they are not disqualified for re- appointment as provided under Section 226 of the Act. Your Board recommends their re-appointment.

11. HEALTH, SAFETY AND

ENVIRONMENTAL PROTECTION

(a) Environment Management

Your Company is totally committed towards sustainable development and environment protection. Various initiatives such as greenbelt development at project sites, waste management etc. were undertaken by your Company to promote preservation of clean environment.

Your Company signed a Memorandum of Understanding (Moll) with the Gujarat Ecological Commission, Government of Gujarat, for carrying out mangrove plantation on Public Private Partnership basis.

(b) Safety Management

A strong Occupational Health & Safety Management System based on OHSAS-18001:2007, I SO-14001:2004 and ISO- 9001:2008 is in place to ensure safety of employees, contractors'' manpower as well as equipment and machinery at project sites.

Occupational health and safety of employees and contractors'' manpower are given utmost importance in the Company.

To keep the safety system agile and updated, extensive trainings on rescue, fire fighting, material handling etc. were conducted for the employees and contractors'' workmen. Multi-level forums such as Workers'' safety & welfare committee, Apex safety committee, Zonal Safety Council have been formed and meetings of these forums are conducted on monthly basis to ensure active participation of employees and contractors'' workers. Regular mock drills & fire drills were conducted to check the emergency preparedness. Fire tender and rescue vans are available at the project site in addition to round-the-clock fire and rescue watch performed by a squad of 60 qualified employees to ensure foolproof safety.

(c) Health & Hygiene

Your Company accords utmost priority to health and hygiene of its employees and contractors'' workforce. Necessary trainings are imparted to enhance their awareness towards first-aid and other health related matters. National Safety Week and Fire Service Week are also celebrated.

Your Company has set-up Occupational Health Centers (OHCs) at the project sites. The OHCs are well-equipped to provide emergency as well preventive and curative health services to employees, their families and contractor''s workmen.

(d) HSEQ Audits

Team of trained internal auditors regularly conducts Health, Safety, Environment & Quality (HSEQ) audits with special emphasis on health & hygiene, safety, environment and quality. External audits are carried out by reputed agencies like Det Norske Veritas (DNV). During the year, DNV carried out Surveillance Audit of project sites at Pipavav, without any major non-compliance.

12. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company conducts its business in a sustainable and socially responsible manner. A snapshot of the Company''s CSR activities with the mission of sustainable community development is as follows:

Health Care

- Your Company organized free Health Check- up & Treatment Camp at neighbouring island village of Syalbet, to create awareness regarding health and sanitation in local community. More than 300 patients were examined and treated by doctors and paramedics and provided with free medicines.

- Your Company provided financial assistance for organization of Blood Donation Camp in Sawarkundla by local Police administration.

- YourCompany financiallycontributed to "Yuvak Pratishthan" for supporting constructive projects for healthcare improvement.

Education

- Your Company lays special emphasis on education and vocational training of local community for their economic empowerment. In order to achieve this objective, your Company continues to support six Industrial Training Institutes (ITIs) within the catchment areas of its operations.

Infrastructure Development

- Your Company participates in several infrastructure development initiatives for improvement of rural infrastructure including construction of training centre, orphanage for destitute girl children etc.

Safe Drinking Water

- Your Company has undertaken various initiatives for providing drinking water to neighbouring villages.

13. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO

Your Company continues to strive to make the project sites as energy efficient as possible and takes various measures for conservation of energy. The information in terms of Section 217(1 )(e) of the Act read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, is set out in Annexure "A" and forms part hereof.

Information required to be furnished in Form A is not applicable to the Company as your Company belongs to ship building, ship repair and oil & gas assets industry.

14. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Management Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement, is provided in Annexure "B" forming part of this Annual Report.

15. CORPORATE GOVERNANCE REPORT

Corporate Governance Report along with the Auditors'' Certificate confirming compliance with the conditions of Corporate Governance as required in Clause 49 of the Listing Agreement is enclosed as Annexure "C" and forms part of this Report.

16. INVESTOR RELATIONS

Your Company continues to provide prompt investor service through quick resolution of investor grievances. Your Company has designated an exclusive e-mail ID viz. company.secretary® pipavavdoc.com, to enable the investors to post their grievance and the Company to monitor its redressal.

The securities of your Company are listed at National Stock Exchange of India Limited and BSE Limited. The Company has paid annual listing fees to these Stock Exchanges for the financial year 2013-14.

The members are requested to refer to general shareholders'' information given in Corporate Governance Report appended to this report.

17. FIXED DEPOSITS

Your Company has not accepted any public deposits within the meaning of the provisions of Section 58A of the Act read with the Companies (Acceptance of Deposits) Rules, 1975. Therefore, no amount of principal or interest on public deposits was outstanding as on March 31, 2013.

18. EMPLOYEES

Information in accordance with Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975 and the Companies (Particulars of Employees) Amendment Rules, 2011, forms part of this Report. However, considering provisions of Section 219(1 )(b)(iv) of the Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining such information may write to the Company Secretary.

19. DEMAT SUSPENSE ACCOUNT

Pursuant to Clause 5A of the Listing Agreement, details of equity shares held in the demat suspense account are as follows:

Opening Balance as at 16 4,127 April 1,2012

Request received for 2 550

transfer of shares from Suspense Account Shares transferred 2 550 to Claimants'' Demat Accounts during the year

Closing Balance as at 14 3,577 March 31, 2013

The voting rights in respect of the shares lying in Demat Suspense Account shall remain frozen till the rightful owners claim the shares.

Further, there are no shares issued in physical mode which remain unclaimed.

20. ACKNOWLEDGEMENTS

Your Directors wish to place on record their sincere appreciation of the consistent support and co- operation received from the various Departments of Government of India, State Governments, business partners/ associates, financial institutions, bankers, employees, vendors and shareholders. Your Directors also wish to take on record their deep sense of appreciation for the hard work and commitment of each and every employee of the Company.

On behalf of the Board of Directors

Place : Mumbai Nikhi''l Gandhi

Date : May 30, 2013 Chairman


Mar 31, 2012

The Directors are pleased to present the 15th Annual Report of your Company together with audited accounts for the financial year 2011-12.

1. Financial Results

Financial Performance of the Company for the year ended March 31, 2012 is summarized below:

(Rs. in Crore)

Particulars 2011-12 2010-11

(a) Income from Operations 1,867.06 859.93

(b) Other Income 24.40 63.56

(c) Total Income 1,891.46 923.49

(d) Profit before Interest,

Depreciation and Tax 436.27 216.03

(e) Less: Depreciation 105.89 48.73

(f) Less: Interest 257.68 119.34

(g) Profit before Tax 72.70 47.96

(h) Less: Provision for Tax 54.18 8.06

(i) Profit after Tax 18.52 39.90

2. Dividend

Considering the expansion and capex plans of the Company, no dividend has been recommended by the Board of Directors.

3. Operations

During the year under review, your Company has recorded total income of Rs. 1,891.46 Crore, showing an increase of 104.82% as compared to the income of Rs. 923.49 Crore during the previous financial year. Your Company earned profit before tax of Rs. 72.70 Crore, as against profit of Rs. 47.96 crore for previous year.

The detailed information on all business activities of the Company is provided in the Management Discussion and Analysis Report.

4. Convertible Warrants

Pursuant to the special resolution passed by the Members of the Company at the 14th Annual General Meeting held on October 5, 2011, your Company has allotted 2,05,00,000 convertible Warrants ("Warrants") on preferential basis to Non- institutional investors and Grevek Investments and Finance Private Limited, one of the promoters of the Company, at a price of Rs. 78/-, for raising funds for furthering opportunities in the Defence segment and for general corporate purposes. Each Warrant is convertible into one fully paid-up equity share of face value of Rs. 10/- each on receipt of balance amount payable on conversion, at any time prior to 18 months from the date of allotment of Warrants.

5. Consolidated Financial Statements

Pursuant to Clause 41 of the Listing Agreement entered into with the Stock Exchanges ("Listing Agreement"), Consolidated Financial Statements prepared in accordance with 'Accounting Standard 21 on Consolidated Financial Statements' and 'Accounting Standard 23 on Accounting for Investment in Associates' form part of the Annual Report.

6. Subsidiaries

Your Company has one wholly-owned subsidiary namely E Complex Private Limited ("ECPL"). This subsidiary is in the business of development of Special Economic Zones (SEZ). ECPL has developed a sector specific SEZ for engineering goods/ sector at Village Rampara II, District Amreli, in the State of Gujarat.

During the financial year 2011-12, ECPL has earned revenue of Rs. 11.93 Crore and posted net profit (after tax) of Rs. 2.90 Crore.

General Exemption: Pursuant to the General Circular No. 2/ 2011 dated February 8, 2011 issued by the Ministry of Corporate Affairs under Section 212(8) of the Companies Act, 1956 ("the Act"), the Balance Sheet, Statement of Profit & Loss , Directors' Report and Auditor's Report of its subsidiary company are not being attached to this Report.

Consolidated Financial Statements presented by the Company include the financial information of its subsidiary company. Key financials of the subsidiary company are also disclosed in the Annual Report in compliance with the said circular.

Further, the Annual Accounts of its subsidiary company will be made available upon written request by any Member of the Company. The Annual Accounts of the subsidiary company will be made available at the Company's website and will also be kept open for inspection at the Registered Office of the Company and that of its subsidiary.

7. Directors

The Board has six non-executive directors and one Executive Vice-Chairman. In accordance with the provisions of the Act and the Articles of Association of the Company, Mr. Ajay Vikram Singh and Mr. S. Venkiteswaran retire by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for re-appointment. The Board commends re-appointment of Mr. Ajay Vikram Singh and Mr. S. Venkiteswaran.

During the year under review, Export-Import Bank of India has appointed Mr. David Rasquinha as its Nominee Director on the Board of Directors of the Company, in place of Mr. R. M. V. Raman w.e.f. April 25, 2011.

The details of the directors being recommended for re-appointment are provided in the Notice of ensuing Annual General Meeting.

8. Directors' Responsibility Statement

Pursuant to Section 217(2AA) of the Act, your Directors hereby confirm that:

a) in the preparation of annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2012 and of profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

d) the Directors have prepared the annual accounts on a 'going concern basis'.

9. Auditors

The Notes to Financial Statements read with the Auditors' Report are self-explanatory and therefore, do not call for any further explanations under Section 217(3) of the Act.

M/s. Chaturvedi & Shah, Chartered Accountants, Statutory Auditors of the Company, are retiring at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re- appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Act and that they are not disqualified for re-appointment as provided under Section 226 of the Act. Your Board recommends their re-appointment.

10. Environmental Protection, Health and Safety

(a) Environment Management

Your Company continues to demonstrate a strong commitment towards Safety, Health and Environment. As a part of the same, various eco-friendly measures have been implemented by your Company.

(b) Safety Management

Your Company has established and maintained an Integrated Management System based on OHSAS-18001:2007, ISO-14001:2004 and ISO- 9001:2008 for Environmental, Occupational Health & Safety and Quality.

Occupational Health and Safety of employees of the Company are embedded as core organizational values of the Company. A well-defined occupational health and safety management system is in place to eliminate or minimize risk to employees as well as contractors' workforce who may be exposed to occupational risks.

To maintain and improve upon the safety system, extensive training is conducted for the employees and contractors' workmen at project sites. Multi-level forums such as Workers' safety & welfare committee, Apex safety committee have been set-up and meetings of these forums are conducted on monthly basis to ensure active participation of employees. Fire tender, rescue vans are available at the project site in addition to round the clock fire and rescue watch performed by a squad of 60 qualified employees to ensure foolproof safety.

(c) Health & Hygiene

Your Company gives prime importance to hygiene monitoring at work place and promotes health-friendly sustainable activities. All employees as well as contractors' workforce undergo regular periodical medical and occupational examinations. Necessary trainings are conducted for workers to make them aware of first-aid and other health related matters. National Safety Week and Fire Service Week Celebration are also celebrated.

The Company has set-up Occupational Health Centers (OHCs) at the project sites. The OHCs are well-equipped to provide emergency as well preventive and curative health services to employees, their families and contractor's workmen. Your Company has also tied up with two specialty hospitals for specialized health care treatment.

(d) HSEQ Audits

Team of trained internal auditors regularly ¦ conducts Health, Safety, Environment & Quality (HSEQ) audits with special emphasis on health & hygiene, safety, environment and quality. External audits are carried out by reputed agencies like Det Norske Veritas (DNV).

11. Corporate Social Responsibility (CSR)

Being a socially responsible corporate citizen, your * Company has been deeply involved in development of villages surrounding facilities of the Company at Pipavav. Your Company's contribution to the neighboring villages is mainly in the areas of health care, education of girl child, livelihood opportunities to local people, improvement of village infrastructure including construction of schools etc.

Your Company places special emphasis on education and vocational training of local community to evolve their lives. Your Company has adopted six Industrial Training Institutes (I.T.I.s) in the vicinity of the Company's facilities and continuously supports these ITIs by providing infrastructure, organizing expert faculty members, development of new curriculum suitable for heavy engineering, fabrication and assembly industry, on the job training, employment opportunities post successful completion of training to students of these institutes including girls.

12. Energy Conservation, Technology Absorption and Foreign Exchange Earnings & Outgo

Your Company strives to make the project sites as energy efficient as possible and continually reviews various schemes for conservation of energy. The information required to be disclosed under Section 217(1)(e) of the Act read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, with regard to conservation of energy, technology absorption and foreign exchange earnings and outgo is set out in Annexure "A" and forms part hereof.

Information required to be furnished in Form A is not applicable to the Company as your Company belongs to ship building, ship repair and oil gas assets industry.

13. Management Discussion and Analysis Report

The Management Discussion and Analysis Report prepared as per Clause 49 of the Listing Agreement, is provided in Annexure "B" forming part of this Annual Report.

14. Corporate Governance Report

Corporate Governance Report along with the Auditors' Certificate confirming compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement is enclosed as Annexure "C" and forms part of this Report.

15. Investor Relations

Your Company continues to provide prompt investor service through quick resolution of investor grievances. Your Company has designated an exclusive e-mail ID viz. company. secretary@ pipavavdoc.com, to enable the investors to post their grievance and the Company to monitor its redressal.

The securities of your Company are listed at National Stock Exchange of India Limited and BSE Limited. The Company has paid annual listing fees to these Stock Exchanges for the financial year 2012-13.

The members are requested to refer to general shareholders' information given in Corporate Governance Report appended to this report.

16. Fixed Deposits

Your Company has not accepted any public deposits within the meaning of the provisions of Section 58A of the Act read with the Companies (Acceptance of Deposits) Rules, 1975. Therefore, no amount on account of principal or interest on public deposits was outstanding as on March 31, 2012.

17. Personnel

A statement containing prescribed details of employees, required to be provided under Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, considering provisions of Section 219(1)(b)(iv) of the Act, the Annual Report excluding the aforesaid statement is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining a copy of this statement may write to the Company Secretary.

18. Demat Suspense Account

Pursuant to Clause 5A of the Listing Agreement, the details of shares in the demat suspense account are as follows:

Particulars No. of No. of Shareholders Shares

Opening Balance as at 17 4,248 April 1, 2011

Request received for 2 561 transfer of shares from Suspense Account

Shares transferred 1 121 to Claimants' Demat Accounts during the year

Closing Balance as at 16 4,127 March 31, 2012

The voting rights in respect of the shares lying in Demat Suspense Account shall remain frozen till the rightful owners claim the shares.

Further, there are no shares issued in physical mode which remain unclaimed.

19. Acknowledgements

Your Directors take this opportunity to express their sincere appreciation for the assistance and co- operation received from the various Departments of Government of India, Government of Gujarat, financial institutions, banks, employees, vendors and shareholders. Your Directors also wish to take on record their deep sense of appreciation for the committed services by each & every employee of the Company.

On behalf of the Board of Directors

Place : Mumbai Nikhil Gandhi

Date : May 30, 2012 Chairman

 
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