Directors Report of Western India Shipyard Ltd.

Mar 31, 2014

Dear Members,

The Directors present their 22nd Annual Report on the state of affairs of the Company''s business and operations with the Company''s Audited Accounts for the year ended March 31, 2014 as under:



Particulars 31.03.2014 31.03.2013 (Rs.In Lacs) (Rs. In Lacs)

Sales and other Income 4518.61 7853.27 Profit/(Loss) before Interest, Depreciation & Taxes (558.67) 1276.15

Less: Interest (net) 771.75 1249.26

Profit/(Loss) before Depreciation & Tax (1330.42) 26.89

Less: Depreciation 1314.55 1314.64

Profit/(Loss) before Taxes (2644.97) (1287.76)

Provisions for Taxes Tax Adjustments for Earlier Year 32.11 4.36 MAT Credit Entitlement - (6.09)

Profit/(Loss) before Adjustments & Exceptional items (2677.07) (1298.20)

Prior Period Adjustments 13.21 (11.48)

Profit/(Loss) before Exceptional items (2690.28) (1286.72)

Exceptional items - (305.00)

Net Loss for the year (2690.28) (981.71)



Operations

Your Company has a modern composite Shiprepair yard at berth Nos. 1, 2, 3 and 4(part) under a license agreement dated 05.04.1993 for a period of 25 years with the Mormugao Port Trust at Mormugao Harbour, Goa. The Shiprepair facilities consist of a Floating Dry Dock of 60,000 DWT, 4 wet repair berths, portal rail cranes of 35T, 50T & 70T mobile crane, electrical sub-station, heavy duty workshops & fabrication centers. Your Company also repairs Oil Rigs and has a slipway for ship building at its shipyard. Your Company has an ISO 9001:2008 quality certification for repair of ships and rigs.

Your Company has repaired 29 vessels during the year and achieved total revenue of Rs. 4518.61 lacs as against Rs. 7853.27 lacs in the previous year. However, the Company had a net loss of Rs. 2690.28 lacs for the year as against a net loss of Rs. 981.71 lacs in the previous year.

Your Company''s operations were severely affected due to the recession in the global economy in the Financial Year (FY) 2013-14 which was slow and short of expectations. Several European economies experienced severe recession due to sluggish growth fiscal restrictions and high unemployment. Hence a number of shiprepair orders from Indian and foreign clients did not materialize during the year as expected.

In addition to the global economic uncertainties, the Central & State Government and the Apex Court had imposed restrictions on the Mining Industry in Goa which seriously affected the Shipping Industry especially the bulk ore transhippers, cargo vessels and barges calling at the Mormugao Port. Except for a few passenger vessels, the number of vessels calling at the Mormugao Port declined due to recessionary conditions in shipping, poor cargo volumes and high freight rates.

You will be pleased to know that the Apex Court has lifted the restrictions on mining in Goa in April, 2014. However, the mining operations are expected to resume in full swing only after the necessary approvals have been obtained from the Central & State Government. There are no material changes which have occurred between the end of the Financial Year & the date of the Directors'' Report, affecting the financial position of the Company.

Dividend:

In view of losses for the year, no dividend has been recommended for the shareholders.

Auditors and Auditors'' Report;

M/s. V. V. Kale & Co., Chartered Accountants and Independent Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received from the auditor that their re-appointment, if made, would be within the prescribed limits under Section 141 (3)(g) of the Companies Act, 2013 and they are not disqualified for re-appointment.

The Auditors in their Independent Auditors'' Report annexed to the financial statements, have drawn attention to Note No. 36 that the financial statements have been prepared on a going concern basis notwithstanding the fact that the Company''s net worth is completely eroded due to losses primarily due to bad market conditions and economic scenario of the Country for which the Ship Owners have deferred the repair orders. The Company is hopeful of receiving the orders in the coming years and expects an improvement in profits. The Management is also trying to collect its receivables so that current payments can be made. Therefore this will not have any impact as going concern.

Directors:

Shri. Ashok Kumar Agarwal retires by rotation at the ensuing AGM of the Company and is eligible for re-appointment as director in terms of the Articles of Association of the Company read with Sec. 152 of the Companies Act, 2013.

Further, your Company has received notices from the members for the appointment of Shri. Ashwani Kumar and Shri Ashok R. Chitnis as Independent Directors for a term of five years. The Company has received the declarations from them confirming that they meet the criteria of independence, as prescribed both under subsection (6) of Sec. 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement with the Stock Exchanges for appointment as Independent Directors.

Deposits

The Company has not accepted any deposits by way of invitations during the year from the public in terms of Section 58 A/58AA of the Companies Act 1956 and the rules thereunder.

Corporate Governance:

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the requirements set out by SEBI. The Report on Corporate Governance Report and the Management''s Discussion and Analysis Report as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated in the said Clause 49, is attached to the said Report.

Corporate Social Responsibility (CSR):

The Companies Act, 2013 has introduced Sec. 135 relating to Corporate Social Responsibility which will apply when a Company''s net worth is Rs. 500 crore or more or turnover is Rs. 1000 crore or more or its net profit is Rs.5 crore or more during the financial year. However, this does not apply to the Company.

Directors Responsibility Statement:

Pursuant to Sec. 217(2AA) of the Companies Act, 1956, the Directors state that:-

(a) In the preparation of the annual accounts for the year ended March 31, 2014, the applicable accounting standards read with the requirements set out under Schedule VI to the Companies Act, 1956, have been followed along with proper explanation relating to material departures, if any;

(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, 2014 and of the profit and loss 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 Companies Act, 1956 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 of the Company on a ''going concern'' basis.

(e) The directors, in the case of a listed Company, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. For the purposes of this clause, the term "internal financial controls" means the policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of its business, including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting record, and the timely preparation of reliable information;

(f) The directors has devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Industrial Relations:

The Company has received the charter of demands for a new wage settlement from its trade union and the same is under negotiation. The Company enjoyed cordial industrial relations during the year.

Statutory Disclosures:

(a) Particulars required under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 relating to the conservation of energy, technology absorption, foreign exchange earnings and outflow, etc. is at Annexure - 1.

(b) The particulars of the employee of the Company who is in receipt of remuneration of more than Rs. 60 lacs per annum or more than Rs. 5 lacs for part of the year, in terms of Sec. 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is set out in Annexure -2.

Acknowledgements:

Your Directors place on record their sincere appreciation for the assistance and co-operation received from the Ministry of Shipping, Government of Goa, bankers, vendors, classification societies & other stakeholders whose continued support has enabled the Company to maintain the operations despite the severe recessionary conditions. Your Directors place on record their sincere appreciation of the support and patronage received from ABG Shipyard Limited, its holding company, and the contributions made by the employees of the Company. The Company thanks the Mormugao Port Trust for its support and also its investors for reposing faith in the Company.



By Order of the Board For Western India Shipyard Limited

Sd/- Sd/- Ashwani Kumar Cdr.S.K. Mutreja Director(Retd) Director Whole Time Director Dated: 22.05.2014 & Chief Executive Officer Place: Mormugao, Goa.

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Mar 31, 2013

Dear Members,

The Directors have great pleasure in presenting their 21st Annual Report on the business and operations of your Company together with the Audited Accounts for the year ended March 31, 2013.

1. Financial highlights

Particulars 31.03.2013 31.03.2012 (Rs. In Lacs) (Rs. In Lacs)

Sales and other Income (*) 7,853.27 14,185.42

Profit before Depreciation, Tax & Finance Cost 1,276.14 3,133.39

Less: Finance cost 1,249.26 1,113.20

Profit before Depreciation & Tax 26.88 2,020.19

Less: Depreciation 1,314.64 1,046.76

Profit before Tax (1,287.75) 973.43

Less: Provision for Taxation

Provision for MAT 258.66

Tax adjustments for earlier years 4.36

MAT credit entitlement (6.09) 252.00

Net Profit / (Loss) after tax (1,298.20) 966.77

Prior period expenses (11.48) (255.65)

Exceptional items (305.00)

Net Profit / (Loss) for the year (981.72) 1,222.42

2. Operations

The Financial year 2012-13 was a difficult year which saw restrictions by the State & Central Government and the Apex Court on mining operations in Goa. This affected the Iron Ore Mining Industry in Goa which came to a complete halt and affected the transport operations of barges and transhippers. There was also a reduction in vessels seeking shiprepairs at Mormugao due to recession in shipping and outbound cargo. The number of vessels visiting the Port therefore decreased during the year. Despite these constraints, your Company has repaired 12 vessels during the year and achieved a total revenue of Rs. 7853.30 lacs as against Rs. 14,185.42 lacs in the previous year, a decrease of 44.64%. There was a net loss of Rs. 981.73 lacs for the year as against a net profit after tax of Rs. 1222.42 lacs in the previous year. There was also severe recession in the Shipping Industry with fleet owners deferring the shiprepair business.

3. Dividend

Your Board is unable to recommend any dividend to the shareholders in view of the accumulated losses.

4. Future Outlook

The Global Shipbuilding and Ship repair Industry is growing at a compounded annual growth rate (CAGR) of about 24 per cent and is likely to reach Rs. 14 lakh crore by 2015 owing to rising global sea borne trade. Against this, the Indian Shipbuilding and Ship repair industry is growing at a CAGR of about 8 per cent and is likely to reach Rs. 9,200 crore from the current level of just over Rs. 7,310 crore [Source: ASSOCHAM Study Report].

The Central Government has encouraged about 35 registered Shiprepair Units with incentives and concessions like exemptions from customs and central excise duty in view of the huge potential of the Shiprepair Industry which offer shiprepair and maintenance services to Indian and foreign vessels and oil rigs along the east and west coast of India.

The Indian Shipping Industry continues to be the world''s most efficient and cheapest means of transportation along 7517 km of coastline with about 200 ports spread over the east and west coast of India. About 95% of India''s trade by volume and 70% by value are transported by sea. The Baltic Dry Index (BDI) which is a leading indicator of global shipping economic activity shows the nominal rise in the daily weighted average of prices for shipping bulk dry cargo such as iron ore, coal and grain for smaller size vessels namely, Handymax, Supramax & Panamax. During the year, the BDI fell by about 22% to 910 points as on 31.03.2013 showing a recession in the Shipping Industry.

The size of the Indian merchant shipping fleet is about 1164 vessels of 14.95 mn DWT (10.22 mn GT) as of 31.03.2013 [D.G. Shipping first quarterly report 2013] consisting of 806 coastal vessels and 358 overseas vessels of Indian flag. Coastal Trade continues to be one of the main areas of concern in the Shipping Industry. However, the percentage share in coastal traffic is only 8% considering the tonnage /km basis where petroleum, coal and cement form a major part of the cargoes carried by them. Very little container cargo is moved along the coast, though there is huge potential. The reasons for this are high port tariffs, poor berth availability, non-availability of long term finance, high operating costs, poor hinterland connectivity for domestic cargo like physical infrastructure in the form of Container Freight Stations (CFSs), Inland Container Depots (ICDs), Private Freight Terminals (PFTs) and logistic parks with storage, warehousing and transport facilities. Hence Major Ports need to have dedicated berths for coastal vessels and minor ports should encourage greater coastal traffic [Source: Hauer Associates Report prepared for CII]

The Port infrastructure continues to face several challenges such as capacity constraint, lack of hinterland connectivity, inefficiency in operations, procedural delays and labour problems. On the regulatory front, is that of port tariff fixation by Tariff Authority for Major Ports (TAMP), which is not applicable to minor ports. This has forced investors to shift business from Major Ports to minor ports, defeating the very objective of major ports of creating efficient infrastructure through private participation. The major ports need to improve port technology, productivity and quality of services to Port users [Source: Dun & Bradstreet review].

The Mormugao Port Trust (MoPT) has no shipyard yard for repair of ocean going vessels. Therefore the port has entered into a 25 year license agreement with WISL to render shiprepair and shipbuilding in the Port area. WISL supplements the Port earnings by way of annual license fees, hire of port water area and port services like tugs and pilots for vessel movements. The port cargo traffic at the Mormugao Port has been severely affected during the year by an embargo on iron ore exports. The import/export cargo therefore declined by about 21%.

The Maritime Agenda 2010-20

The Maritime Agenda 2010-20 was released by the Ministry of Shipping, in January, 2011. It will have a significant long term impact on the Indian Maritime Industry as it seeks to improve the facilities for the 12 major ports and 187 minor ports in India, especially through massive investment of Rs. 2,87,000 crore through the PPP route to ensure higher growth in sea bourn traffic at ports. The agenda also seeks to increase the drafts in major ports to not less than 14 metres to cater to the larger vessels.

However, the proposal for shipbuilding subsidy and the grant of Infrastructure Industry status to Shipbuilders and Shiprepair units needs to be implemented on priority basis as proposed by the Maritime Agenda. Such subsidy will reduce the high costs of capital goods, raw materials, consumables and spares, alongwith duties and taxes which create a significant price disparity of about 50% in building a ship in India, as compared with China, Korea and Japan. When the subsidy scheme was in force, India was a recognised shipbuilding destination and India''s share of the global shipbuilding industry had expanded rapidly from less than 0.1% in 2002 to 1.3% by 2007. But after 2007, when the subsidy was discontinued, India''s share in new orders has progressively declined to 0.04% in 2011. The Maritime Agenda has set an ambitious target of 5% as India''s share in the global shipbuilding market by 2020. Hence the Central Government needs to announce and implement a firm policy to enable a large number of shipbuilding and shiprepair proposals to be implemented.

The Ministry of Shipping has proposed a measure of relief to the Shipbuilding industry in the Budget 2013 by exempting ships and vessels from excise duty. Consequently, there will be no countervailing duty on imported ships and vessels. The introduction of the "Indian Ports (Consolidated) Act, 2010" in place of the Indian Ports Act, 1908 and the Major Ports Act, 1963, with a view to simplify and streamline ports regulations in India covering 200 major and non-major ports, is another welcome step for the Maritime Industry. The new Act will replace TAMP by the Port Regulatory Authority and corporatize Port Trusts. This is a welcome step for the Trade and Industry. The Central Government has withdrawn the service tax exemption to ship repairers in the ports. As per the Negative List w.e.f. 01.07.2012, exemption is granted only for repair of government vessels like Navy and Coast Guard. The Shipyard Association of India has represented for the restoration of service tax exemption to ship repairers in ports and a favorable decision is awaited.

5. Directors

During the year, Shri. R. S. Nakra resigned from the Board and its Committees. The Board placed on record its sincere appreciation for the services rendered by Shri. Nakra during his tenure on the Board and its committees.

Shri. Ashok Kumar Agarwal joined the Board as additional director in May, 2013. Shri. Ashwani Kumar retires by rotation at the ensuing AGM and, being eligible, offers himself for re-appointment as director.

The term of office of Cdr. S. K. Mutreja (Retd.), Whole Time Director & Chief Executive Officer of the Company, ends on 16.07.2013. He is eligible for re-appointment at the ensuing AGM. They are not disqualified as per the provisions of Section 274 (1) (g) of the Companies Act, 1956. The Board recommends their re-appointment.

6. Directors'' Responsibility Statement

As required by sub-sec. 217 (2AA) of the Companies Act, 1956 your Directors state:

(a) that in the preparation of the annual accounts for the year ended 31st March 2013, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;

(b) that the directors have selected such accounting policies in consultation with the statutory auditors, 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 at the end of the financial year and of the loss of the Company for that period;

(c) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding assets of the company, and for preventing and detecting fraud and other irregularities;

(d) that the annual accounts have been prepared on a going concern basis.

7. Auditors

M/s. V. V. Kale & Co., Chartered Accountants, Statutory Auditors of the Company hold office upto the conclusion of the ensuing Annual General Meeting. The auditors consent u/s. 224 (1B) of the Companies Act, 1956 has been received for their re-appointment. The Board recommends their re-appointment as set out in the notice.

8. Deposits

The Company has not accepted deposits from the public and therefore the provisions of Section 58A of the Companies Act, 1956 are not applicable to the Company.

9. Statutory Disclosures

(a) The information relating to the conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure ''A'' to this report.

(b) The Corporate Governance Report, in terms of Clause 49 of the Listing Agreement with the Stock

Exchange, is given in Annexure ''B''

(c) The Management Discussion and Analysis Report in terms of Clause 49 of the Listing Agreement with the Stock Exchange, is given in Annexure ''C.

(d) The information relating to employees of the Company who are in receipt of remuneration of more than 60 lacs per annum or more than 5 lacs for part of the year, as required under sub-sec. (2A) of Sec. 217 of the Companies Act, 1956 & the Companies (Particulars of Employees) Rules, 1975 as amended, is furnished at Annexure ''D''.

10. Industrial Relations

The Company has signed a wage settlement with the workers'' union covering the period from 01.10.2009 to 30.09.2013. The Company has introduced a Voluntary Retirement Scheme for its employees for rationalization of its workforce. The Company enjoyed cordial industrial relations at its shipyard during the year.

11. Corporate Social Responsibility (''CSR'')

(a) Environmental Protection, Health and Safety:

Your Company has concern for the environment and ensures compliance with all the environment protection and pollution control laws applicable. Your Company also views the health and safety of employees at its shipyard as very important and has issued safety booklets, conducted safety and first aid training programs and ensures supervision at all levels as per the Factories Act, 1948 and rules. Your Company places importance on maintaining hygiene at the work place with regular medical examinations of employees. Your Company has covered its employees under the Company''s mediclaim insurance scheme for cashless treatment at local hospitals.

(b) Your Management has a calendar of actions towards its commitment to Corporate Social Responsibility to encourage its employees at all levels to participate in schemes directed at health and welfare of small local communities. Some of the important CSR Programs implemented during the year are as under:

(i) National Fire Week was held from 14.04.2012 to 20.04.2012 with display of live fire drill & fire-fighting equipment.

(ii) Legal Literacy Day/ International Labour Day was held on 11.05.2012.

(iii) Women''s Health Day was held on 28.05.2012.

(iv) No Tobacco Day was held on 31.05.2012.

(v) World Blood Donors Day was held on 14.06.2012.

(vi) International Day Against Drugs Abuse was held on 26.06.2012.

(vii) World Population Day was held on 11.07.2012.

(viii) Educational Series by Wockhart Hospital was held for ESIC beneficiaries on 24.08.2012.

(ix) World Arthritis Day was held on 12.10.2012.

(x) International Women''s Day was held on 08.02.2013.

(xi) Safety Week was held from 04.03.2013 to 10.03.2013 for firefighting & safety awareness.

12. Acknowledgements:

Your Directors place on record their sincere appreciation for the assistance and co-operation received from the Ministry of Shipping, Mormugao Port Trust, Goa Government, Bankers, vendors, classification societies & other stakeholders whose continued support has enabled the Company to achieve higher goals. Your Directors place on record their sincere appreciation of the support and patronage by ABG Shipyard Limited and the contributions made by the employees of the Company. The Company also thanks the investors for reposing faith in the Company.

By Order of the Board

For Western India Shipyard Limited

Sd/-

J. C. F. Sequeira

Date:24th May, 2013 V. P. (Corp. Affairs)

Place: Mormugao, Goa & Company Secretary

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Mar 31, 2012

Your Directors have great pleasure in presenting their 20th Annual Report on the business and operations of your Company together with the Audited Accounts for the year ended March 31,2012.

1. Financial highlights

Particulars 31.03.2012 31.03.2011 (Rs In Lacs) (Rs In Lacs)

Revenue from operations (*) 8968.66 9471.73

Profit before Finance Cost, Depreciation & Tax 3133.39 3908.76

Less: Finance cost 1113.20 1183.97

Profit before Depreciation & Tax 2020.19 2724.78

Less: Depreciation 1046.76 1078.45

Profit before Tax 973.43 1646.34

Less: Provision for Taxation

Current Tax-MAT Liability 258.66 19.58

MAT Credit entitlement (252.00) (19.58)

Net Profit aftertax 966.77 1646.34

Prior period expenses (255.65) 111.86

Extraordinary items (income) - -

Net Profit for the year 1222.42 1534.48

* These figures have been regrouped/rearranged/reclassified as per the revised Schedule VI of the Companies Act, 1956 issued by the Ministry of Corporate Affairs, Government of India.

2. Operations

Your Directors are pleased to report that your Company achieved a repair revenue of Rs. 8968.66 lacs as against Rs. 9471.73 lacs in the previous year, a decrease of 5.31%. The net profit after tax for the year decreased from Rs. 1534.48 lacs in the previous year to Rs. 1222.42 lacs for the current year (22.33 %). Your Company has repaired 19 vessels including 4 deep water Jack Up Oil Rigs.

Your Company's composite facilities were wholly dedicated during the year to shiprepairs and Rig repairs in view of the large jobs received. Your Board places on record its sincere thanks to ABG Shipyard Limited for the continuous technical, marketing and financial support extended during the year, which has resulted in improved performance.

3. Dividend

Your Board is unable to recommend any dividend to the shareholders in view of the accumulated losses and expansion and modernisation plans.

4. Outlook for developments of Port Sector, Shipping, Ship Building and Shiprepairs

Global Shipping: There was a global slowdown in the Shipping Industry from 2008 to 2012 which is evident from the sliding Baltic Dry Index (BDI), a leading indicator of global economic shipping activity showing the daily weighted average of prices for shipping bulk dry cargo such as iron ore, coal, and grains. The BDI moved downward from USD 1320 in mid-May, 2011 to USD 934 on 30.03.2012.

Global Ship Repair: Currently, shiprepair is primarily undertaken in Dubai dry docks, Singapore, Bahrain and Colombo dockyards. The Global Shiprepair market is estimated to be worth US $ 10 billion to US $ 12 billion, with Singapore's share of 20%. India has only a share of about US $100 million

The Global Shipbuilding and Ship repair Industry is growing at a compounded annual growth rate (CAGR) of about 24 per cent and is likely to reach Rs. 14 lakh crore by 2015 owing to rising global sea borne trade. Against this, the Indian Shipbuilding and Ship repair Industry is growing at a CAGR of about 8 per cent and is likely to reach Rs. 9,200 crore from the current level of just over Rs. 7,310 crore. The overall cargo traffic at major ports in India is growing at a compounded annual growth rate (CAGR) of about 20 percent. The cargo traffic is about 600 mn tonnes in April-March 2012 and is likely to reach 1,230 mn tonnes by 2015 and 3,000 mn tonnes by 2020 (ASSOCHAM Study Report).

The Maritime Agenda 2010-20, was released by the Ministry of Shipping, in January, 2011 which will have a significant long term impact on the Indian Maritime Industry. The Agenda proposes an investment of Rs. 1,65,000 crore in the Shipping Sector by the year 2020 to increase the share of Indian shipping in the EXIM trade in terms of tonnage under the Indian flag to enable India to increase its share in global Ship building from 1 % at present to 5%.

Port sector: The Maritime Agenda inter-alia proposes a total investments in major and non-major ports of about Rs. 2,87,000 crores by 2020 with the objectives of bringing Indian ports on par with the best international ports in terms of performance and capacity; creation of Port capacity of around 3200 mn tonnes to handle the expected traffic of about 2500 mn tonnes by 2020. The agenda also seeks to promote a new Coastal Shipping policy for coastal shipping as an alternate to the road transport. The Agenda also seeks to improve the facilities for the 12 major ports and 187 minor ports in India, especially through massive investment through the PPP route to ensure higher growth in sea bourn traffic at ports. The agenda seeks to increase the drafts in major ports to not less than 14 metres to cater

to the larger vessels; introduction of a new shipbuilding subsidy scheme & grant them the Infrastructure Industry status.

The Indian Shipping Industry continues to be the world's most efficient and cheapest means of transportation along 7517 km of coastline spread over the east and west coast. About 95% of India's trade by volume and 70% by value is transported through by sea routes. Iron ore traffic through Indian ports were severely affected during the year under review, with 28.6% drop in cargo following the Supreme Court ban on iron ore mining in Karnataka on the detection of a number of cases of illegal mining. Traffic through Mormugao Port fell by about 20%. However, this did not affect your Company.

The Indian Shiprepair Industry gets business mainly from the Indian Shipping Industry, which owns about 50% of ships older than 17 years. There are 35SRUs registered with the Director General of Shipping, Government of India offering shiprepair and maintenance services to vessels and oil rigs along the east and west coast. In view of the huge potential of the Shiprepair Industry, the Central Government continues to grant incentives and concessions like exemptions from customs duty, central excise and service tax to the Shiprepair Industry. (Source: Exim Bank Report on Indian Shipping Industry: A catalyst for growth).

5. Directors

Shri. Ashok R. Chitnis retires by rotation at the ensuing AGM and being eligible, offers himself for re- appointment. The Board recommends his re-appointment. During the year, ICICI Bank withdrew its nominee director Shri. T. Asokraj, from the Board. The Board places on record its appreciation for the services rendered by Shri. Asokraj during his tenure on the Board and Committees of the Board.

6. Directors' Responsibility Statement

As required by sub-sec. 217 (2AA) of the Companies Act, 1956 your Directors state:

(a) that in the preparation of the annual accounts for the year ended 31st March 2012, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;

(b) that the directors have selected such accounting policies in consultation with the statutory auditors, 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 at the end of the financial year and of the profit of the Company for that period;

(c) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding assets of the company, and for preventing and detecting fraud and other irregularities;

(d) that the annual accounts have been prepared on a going concern basis.

7. Auditors

M/s. V. V. Kale & Co., Chartered Accountants, the Statutory Auditors of the Company hold office upto the conclusion of the ensuing Annual General Meeting. The auditors consent u/s. 224 (1B) of the Companies Act, 1956 has been received for their re-appointment. The Board recommends the re-appointment and remuneration as set out in the notice.

8. Deposits

The Company has not accepted deposits from the public and therefore the provisions of Section 58A of the Companies Act, 1956 are not applicable to the Company.

9. Statutory Disclosures

(a) The information relating to the conservation of energy, technology absorption and foreign exchange earnings and outgo, as required under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure A to this report.

(b) The Corporate Governance Report, in terms of Clause 49 of the Listing Agreement with the Stock Exchange, is given in Annexure 'B'

(c) The Management Discussion and Analysis Report in terms of Clause 49 of the Listing Agreement with the Stock Exchange, is given in Annexure'C'.

(d) The information relating to employees of the Company who are in receipt of remuneration of more than Rs 60 lacs per annum or more than Rs 5 lacs for part of the year, as required under sub-sec. (2A) of Sec. 217 of the Companies Act, 1956 & the Companies (Particulars of Employees) Rules, 1975 as amended, is furnished at Annexure'D'.

10. Industrial relations

The Company has signed a wage settlement with the workers' union covering the period from 01.10.2009 to 30.09.2013. The Company introduced a Voluntary Retirement Scheme for its employees for rationalization of its workforce and cost control. The Company enjoyed cordial industrial relations at its shipyard during the year.

11. Corporate Social Responsibility ('CSR')

(a) Environmental Protection, Health and Safety

Your Company has concern for the environment and ensures compliance with all the environment protection and pollution control laws applicable. Your Company also views the health and safety of employees at its shipyard as very important and has issued safety booklets, conducted safety training programs and ensures supervision at all levels as per the Factories Act, 1948 and rules made thereunder. First-aid training is also regularly conducted by experienced personnel for its staff. Your Company places importance on maintaining hygiene at the work place with regular medical examinations of employees. Your Company has covered its employees under the Company's mediclaim insurance scheme for cashless treatment at local hospitals.

Your Management has prepared a calendar of actions towards its commitment to Corporate Social Responsibility to encourage its employees at all levels to participate in schemes directed at health and welfare of small local communities.

The following CSR Programs were implemented during the year:

(a) World Population day was held on 14.07.2011.

(b) World Cancer day was held on 04.02.2012.

(c) Pest Control & Eradication program held on 15.03.2012, 18.03.2012 and 13.04.2012.

(d) Safety Audit conducted on Occupational Health, Welfare & Safety.

(e) National Fire Week was held from 14.04.2012 to 20.04.2012 with display of live fire drill & fire-fighting equipment.

(f) Legal Literacy camp for workers was held on 11.05.2012 on labour laws and Consumer Protection Act.

(g) Women's Health day was held on 28.05.2012.

(h) No Tobacco day was observed on 31.05.2012.

12. Acknowledgements

Your Directors place on record their sincere appreciation for the assistance and co-operation received from the Central Government, especially the Ministry of Shipping; Mormugao Port Trust, Government of Goa, bankers, vendors, classification societies & other stakeholders whose continued support has enabled the Company to achieve higher goals. Your Directors appreciate and value the contributions made by the employees of the Company & also thank the investors for reposing faith in the Company.

For & on behalf of the Board of Directors

Sd /-

Cdr. S. K. Mutreja (Retd.)

Place: Mumbai Whole Time Director Date: 25th May, 2012 & Chief Executive Officer

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Mar 31, 2011

Dear Members,

The Directors have great pleasure in presenting their 19th Annual Report on the business and operations of your Company together with the Audited Accounts for the year ended March 31, 2011.

1. Financial highlights

31.03.2011 31.03.2010 Particulars ( Rs. In Lacs) ( Rs. In Lacs)

Sales and other Income 11366.07 7651.39

Profit before Interest, Depreciation & Tax 3908.75 1833.47

Less: Interest 1183.97 625.56

Profit before Depreciation & Tax 2724.78 1207.91

Less: Depreciation 1078.45 1069.83

Profit before Tax 1646.34 138.07

Less: Provision for Taxation

Net Profit after tax 1646.34 138.07

Prior period expenses 111.86 320.03

Extraordinary items (income) - 5160.22

Net Profit for the year 1534.48 4978.26

2. Operations

Your Directors are pleased to report that your Company achieved a significant milestone with highest ever Shiprepair revenue of Rs.11,366.07 lacs as againstRs. 7,651.39 lacs in the previous year, an increase of 48.55%. Your Company made cash profit of Rs. 3,908.75 lacs for the year an increase of 113.19% as against Rs.1,833.47 lacs of the previous year. The net profit after tax for the year is Rs.1,646.34 lacs, an increase of 1092.40% as compared to Rs.138.07 lacs of the previous year. The net profit after prior period adjustments & extraordinary items is Rs.1534.48 lacs.

During the year, your Company became a subsidiary of ABG Shipyard Limited, one of the biggest shipyards in the private sector in India, on acquisition of major shareholding in the Company. As an ABG group company, your Company is assured of continuous ship repair technology, flow of repair orders, marketing & financial support for achieving higher revenue and profitability. Your Company has repaired 39 vessels upto max. 34000 DWT. Your Company is executing two major repair order namely, repair of INS SUJATA of the Indian Navy and ABAN III, a deep water Oil Rig of Aban Lloyd Offshore Ltd. The Company has a healthy order book position of Rs.4081.76 lacs as on 31.03.2011. Your Company has operated in the Shiprepair segment only until its ship building facility commences operations.

Your Company has taken a number of significant measures during the year to achieve higher growth and profitability such as preventive maintenance and repair of vital infrastructure like the Floating Dry dock, portal rail cranes and heavy workshop equipment to about 95% operating capacity; capital expenditure for modernization; planning and monitoring of operations; strategic alliances with specialist contractors for Shiprepairs and Rig Repairs. Your Company's Quality Certificate has been upgraded to ISO 9001:2008 which will enable your Company to attract more foreign Ship Owners. Your Company is the only dedicated shipyard in India for composite industrial shiprepair activities and is well placed geographically on the west coast close to the major shipping lanes and Bombay High which is seeing expansion in Oil Exploration.

Your Board places on record its sincere thanks to ABG Shipyard Limited for the continuous technical and marketing expertise extended to your Company, including the timely provision of bank guarantees and funding arrangements which have resulted in improved financial performance.

3. Dividend

Your Board is unable to recommend any dividend to the shareholders in view of the accumulated losses, to conserve its resources.

4. Outlook in India for developments of Port Sector, Shipping, Ship Building and Shiprepairs The Shipping Industry continues to be the world's most efficient and cheapest means of transportation. With 7517 km of coastline spread over the east and west coast, Shipping forms one of the important natural resources of India's trade.

The Maritime Agenda 2010-20 was released in January, 2011 by the Union Minister for Shipping. It will have significant long term impact on the Indian Maritime Industry. The Ministry has envisaged an investment of Rs.1,65,000 crore in the Shipping Sector by the year 2020 to increase the share of Indian shipping in the EXIM trade in terms of tonnage under the Indian fag to enable India to increase its share in global Ship building from 1% at present to 5%. The agenda also proposes a total investments in major and non-major ports of about Rs.2,87,000 crores by 2020 with the objectives to bring Indian ports on par with the best international ports in terms of performance and capacity; creation of Port capacity of around 3200 mn. tonnes to handle the expected traffic of about 2500 mn. tonnes by 2020 and to improve employment of Indian seafarers in the global Shipping Industry from 6-7% to about 9% by 2015. The agenda also seeks to promote coastal shipping as an alternate to the road transport under a new Coastal Shipping policy.

The Ports act as an interface between ocean transport and land transport. India has 12 major ports viz. Kolkata (including Dock complex at Haldia), Paradip, Vishakapatnam, Chennai, Ennore, Tuticorin, Cochin, New Mangalore, Mormugao, Jawaharlal Nehru at Nhava, Mumbai, and Kandla, and 187 minor ports. The massive investment especially through the PPP route is expected to see higher growth in sea bourn traffic at ports.

The new Maritime Agenda will benefit the Country substantially as larger vessels will call at the existing ports plus two new major ports which are proposed to be developed, one each on east and west coasts, and two hub ports one each on the east and west coast at Mumbai (JNPT), Kochi, Chennai and Visakhapatnam. For this purpose, the drafts in major ports to be increased to not less than 14 metres and hub ports to 17 metres to cater to the larger vessels. The agenda also seeks to introduce Ro-Ro Ferry service in Gulf of Kutch, Gulf of Cambay etc. The agenda will also introduce the new Shipbuilding Subsidy Scheme to the Shipbuilding Industry & grant them the Infrastructure Status.

There was a global slowdown in the Shipping Industry in 2008 and 2009 which is evident from the movement of the Baltic Dry Index (BDI), a leading indicator of global economic shipping activity showing the daily weighted average of prices for shipping bulk cargo such as iron ore, coal, and grains. The BDI has moved downward from USD 2300 in mid-November, 2010 to USD 1320 in mid-May, 2011.

The Global Shiprepair market is estimated to be worth US $ 10 billion to US $ 12 billion, with Singapore's share of 20%. India has only a share of about US $100 million. There are 35 SRUs registered with the Director General of Shipping, Government of India. Since India is located strategically on the international trade route, the country can offer shiprepair and maintenance services to ships plying along the east and west coast. Currently, shiprepair is primarily undertaken in Dubai dry docks, Singapore, Bahrain and Colombo dockyards. The Shiprepair Industry in India gets business mainly from the Indian Shipping Industry, which has about 50% of ships owned, older than 20 years. (Source: Exim Bank Report on Indian Shipping Industry: A catalyst for growth).

Indian shipyards have many advantages over shipyards in developed nations with a large pool of technical workers, with low labour costs as compared to most other countries. Shipyards acts as a catalyst for overall industrial growth due to spin offs to other industries, including steel, engineering equipment, port infrastructure, and the shipping trade. The potential of the Shipbuilding and Shiprepair Industry in employment generation and contribution to GDP is therefore tremendous. The dynamics of India's economic growth will continue to create increasing demand for new ships, ship-building and shiprepair capacity within the Country which needs to be augmented to cater to this growing demand, with spillover effects on other associated/ ancillary sectors and generation of employment.

5. Directors

Shri. Ashwani Kumar retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment. Shri R. S. Nakra will cease to hold office as an Additional Director of the Company at the ensuing AGM but, being eligible, he has offered himself for appointment as a director. The Company seeks the approval of the shareholders at the ensuing AGM for increase in the remuneration of Cdr. S. K. Mutreja, Whole Time Director & Chief Executive Officer of the Company. The Board recommends the resolutions to the members.

6. Directors' Responsibility Statement

As required by sub-sec. 217 (2AA) of the Companies Act, 1956 your Directors state:

(a) that in the preparation of the annual accounts for the year ended 31st March 2011, the applicable accounting standards have been followed alongwith proper explanation relating to material departures;

(b) that the directors have selected such accounting policies in consultation with the statutory auditors, 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 at the end of the financial year and of the profit of the Company for that period;

(c) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding assets of the company, and for preventing and detecting fraud and other irregularities;

(d) that the annual accounts have been prepared on a going concern basis.

7. Statutory Disclosures

(a) During the year, no employee of the Company was in receipt of remuneration of more than Rs.60 lacs per annum or more than Rs.5 lacs for part of the year. Hence the information as required under sub-sec. (2A) of Sec. 217 of the Companies Act, 1956 & the Companies (Particulars of Employees) Rules, 1975 as amended, has not been furnished.

(b) Information relating to the conservation of energy, technology absorption and foreign exchange earnings and outgo required under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure 'A to this report.

(c) A Cash Flow Statement for the year 2010-11 is attached to the Balance Sheet & audited accounts.

(d) Directors' Responsibility Statement as required by section 217 (2AA) of the Companies Act, 1956 appears at item 6 of this report.

8. Corporate Governance

The Corporate Governance report, in terms of Clause 49 of the Listing Agreement with the Stock Exchange, is at Annexure 'B'. A certificate from the Auditors of the company regarding compliance of conditions of corporate governance is annexed to this report.

9. Auditors

M/s. V. V. Kale & Co., Chartered Accountants, the Statutory Auditors of the company hold office upto the conclusion of the ensuing Annual General Meeting. The auditors consent u/s. 224 (1B) of the Companies Act, 1956 has been received for their re-appointment. The Board recommends the re-appointment and remuneration as set out in the notice.

10. Deposits

The Company has not accepted deposits from the public and therefore the provisions of Section 58A of the Companies Act, 1956 are not applicable to the Company.

11. Industrial relations

The Company signed a wage settlement with its unionized workmen covering the period from 01.10.2009 to 30.09.2013. The Company introduced a Voluntary Retirement Scheme for its employees for reduction in long term employee cost. Industrial relations at the Company's shipyard during the year, continued to be cordial.

12. Auditors' Report

Your Directors state that the necessary comments on the Auditors' Report to the members, have been made in Note 15 & 16 in the Notes to the Accounts and the same is self-explanatory.

13. Corporate Social Responsibility ('CSR")

The Company believes in Social Responsibility as its operations have an impact on all stakeholder including the local community and society. The Management has prepared a calendar of actions towards this end and encourages its employees at all levels to participate and ensure a positive impact and commitment towards corporate social responsibility.

The following CSR Programs were attended by a large number of employees:

(a) Factory Safety Committee meetings on 14.06.2010, 27.11.2010 and 12.02.2011 to look into safety issues of the shipyard.

(b) Health Camp for employees on 10.12.2010 in association with Wockhardt Hospitals Limited for lifestyle problems like diabetes & BP.

(c) Dental Health Camp for employees on 10/12.03.2011 in association with Lions Club of Vasco, Goa.

(d) Health Awareness Seminar for employees on Stress Management & Naturopathy on 14.03.2011 in association with VIKALP, a NGO.

(e) National Fire Week was held from 14.04.2011 to 20.04.2011 with display of live fire drills with fire-fighting apparatus.

(f) Fire Safety manual and Disaster Management Plan to meet emergencies.

(g) Meet on World Population day.

14. Acknowledgements

Your Directors convey their gratitude to its bankers, business associates and classification societies for their continued support. The directors also thank the Central & State Government and in particular the Ministry of Shipping and the Mormugao Port Trust, for their support at all times. For & on behalf of the Board of Directors

Sd/-

Cdr. S. K. Mutrea (Retd.)

Place: Mormugao, Goa Whole Time Director

Date: 10.08.2011 & Chief Executive Officer

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Mar 31, 2010

The Directors have great pleasure in presenting their 18th Annual Report on the business and operations of your Company together with the Audited Accounts for the year ended March 31, 2010.

1. FINANCIAL HIGHLIGHTS



Particulars 31.03.2010 31.03.2009

(Rs. In Lacs) (Rs. In Lacs)

Total Income 7651.39 7478.74

Operating Expenses 5817.92 6477.92

Profit /(Loss) before Interest & Depreciation 1833.47 1000.83

Provision for Interest 625.56 2469.38

Profit / (Loss) before Depreciation 1207.91 (1468.56)

Provision for Depreciation 1069.83 1069.01

Provision for Taxation - 9.48

Net Profit / (Loss) before adjustments 138.08 (2547.05)

Prior period & extraordinary adjustments 4840.18 402.81

Net Profit / (Loss) for the year 4978.26 (2144.24)





2. OPERATIONS

During the year under review, your Company recorded a total shiprepair income of Rs. 7651.39 lacs as against Rs. 7478.74 lacs in the previous year, an increase of 2.31%. Your Company made cash profit of Rs. 1207.90 lacs for the year. The net profit for the year after prior period expenses, interest, depreciation and adjustments, is Rs. 4978.26 lacs as compared to loss" of Rs. 2144.24 lacs in the preceding year. The increase in net profit of the Company is mainly due to the reversal of interest of Rs. 5160.22 lacs provided in the earlier years.

Your Board places on record its sincere thanks to ABG Shipyard Limited for the continuous technical and marketing expertise extended to your Company, including the timely provision of funds which resulted in improved operations.

3. DIVIDEND

Your Board is unable to recommend any dividend to the shareholders in view of the accumulated losses.

4. SCHEME OF ARRANGEMENT & COMPROMISE WITH THE SECURED LENDERS

Your Board is pleased to inform that the Honble High Court of Bombay at Goa by order dated 15.01.2010 as amended, sanctioned your Companys Scheme of Arrangement and Compromise with its secured creditors with ABG Shipyard Limited as confirming party ("Scheme"). Your Company obtained a secured corporate loan from IFCI Limited for this purpose and settled the dues of Rs. 55 crore to the secured lenders who had exercised Option - 2 of the scheme. The Company places on record its sincere thanks to the secured lenders for the wholehearted support to the Company at all times.

5. PREFERENTIAL ALLOTMENT

Under the terms of the said Scheme, your Company has issued 17,75,50,000 equity shares of the face value of Rs. 2/- each fully paid up at par aggregating to Rs. 35.51 crore to ICICI Bank Limited on conversion of its secure liabilities under Option -1 of the Scheme. The Company has sought the approval of the Bombay Stock Exchange Limited under the listing agreement for listing and trading.

As ICICI Bank Limited holds more than 51 % of the equity share capital of your Company on 31.03.2010, your Company has become a subsidiary of ICICI Bank Limited in terms of Sec. 4 of the Companies Act, 1956. As per the disclosure received from ICICI Bank Limited under the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations 1997, the bank proposes to sell these shares to ABG Shipyard Limited as per the terms of the said scheme.

6. SHIPREPAIRS

During the year, your Company repaired 38 vessels of which 32 vessels are of Indian flag and 6 vessels are of foreign flag, upto max. 34000 DWT The Company also repaired one foreign Deep Water Jack Up Oil Rig of 300 meters during the year. The foreign exchange earnings are equivalent to Rs. 2075.99 lacs. Your Company continues to receive a steady and continuous flow of repair orders from its established clients and has a healthy order book position.

Your Company operated only in one segment during the year namely, shiprepairs. Its small ship building facility with slipway for shiprepair/building of small vessels, is proposed to be converted into a graving dock in the near future for which limited tenders have been invited.

Your Company has locational advantages on the west coast of India due to its close proximity to international shipping routes, Bombay High Offshore bases, international airport and sea ports. It also has a wide experience in shiprepairs and rig repairs and an international customer base. Your Companys Quality Certificate has been upgraded during the year to ISO 9001:2008.

7. SCENARIO IN INDIA FOR DEVELOPMENTS OF PORT SECTOR, SHIPPING, SHIPBUILDING AND SHIPREPAIRS

The Shiprepair Industry in India is highly regulated by the Central Government through the D. G Shipping with regard to trade, operational safety, etc. The measures taken by the Central Government continues for the sustained growth and development of the Ship Repair Industry to international standards, as under:

- The Central Government Press Note (1995 series) granting various concessions and exemptions for developing Indias Shiprepair capacity continues in view of the huge potentialities of the shiprepair sector.

- The Draft Maritime Policy of the Central Government covers Indias Ports, Shipping and Shipbuilding sectors, highlights the policy initiatives such as dry docking policy to encourage modernization and mechanization for repairs of most of the vessels calling at Indian Ports, dry docks to be given EOU status, 100% FDI in shiprepair and ship building to be encouraged for private sector investment, long term subsidy for constructions of all kinds of vessels (20 -30 years). The new dry docking policy encourages the creation of shiprepair units adjacent to the ports to repair/dry dock large vessels.

The Draft Policy also highlights the proposed Financial and Fiscal initiatives such as taxation of ship building and ship repair units including customs and central excise duty, to be brought on par with

EOU units, ship repair and ship building to be kept out of the ambit of service tax, sales tax and VAT, etc as shipyards compete globally for repairs and new construction. Proposal to grant ship building and ship repair industry infrastructure status, investments to be made eligible for tax exemption for long period (20 years), creation of a separate Funding Agency for ship building & ship repair activities, etc.

- The National Maritime Development Program (NMDP) of the Central Government released in July, 2005 identified 228 projects to be implemented in Indias major ports over the next 10 years involving Rs. 6110 billion. As per NMDP projections, the total cargo traffic at the Indian ports is expected to grow at a CAGR of 13.58% up to FY 2012 with the POL, coal and container traffic growth remaining strong. According to the Planning Commission, the strength of Indias Shipping Fleet will increase upto 15m GRT by the end of 2011-12, with an estimated investment of US$17.7 billion. The Port throughput will increase upto 1008 mn tonnes, growing at a CAGR of 10.96% from 2007-08 to 2011-12.

- The Central Government recognizes that these targets can only be met through private sector participation in developing heavy infrastructure at ports and have framed guidelines for PPP projects, model concession agreements, and provision for upfront tariff fixation by the Tariff Authority for Major Ports (TAMP). The Ministry of Shipping has awarded 7 projects worth over Rs 1,800 crore, to be developed through the public-private partnership (PPP) route. Another 19 projects, estimated to cost around Rs 18,000 crore, are expected to be awarded on similar PPP basis by early 2010. These 26 projects together will expand capacity at the major ports in India by 42 per cent, or 245.97 million tonnes per annum. The Ministry intends to double capacity at major and non-major ports in the country to 1,590 mt by 2012 from the present 795 mt.

Of these projects, 2 are on the west coast namely, new mechanised iron ore handling facilities at berth 14 at New Mangalore port (Rs 277 crore) and development of berth 7 for handling bulk cargo at Mormugao port (Rs 252 crore). Others are on the east coast namely, construction of deep draft iron ore berth (Rs 591 crore) and deep draft coal berth (Rs 479 crore) at Paradip port, mechanization of berth 2 and 8 at Haldia Dock Complex (Rs 150 crore). These projects on completion will enhance capacity at the ports by nearly 42 million tonnes per annum.

The 19 projects which are under bidding include development of 2 mu.Jpurpose cargo berths at Kandla port (Rs 755 crore), development of liquid cargo berth (Rs 55.38 crore) and dry bulk cargo (Rs 114.37 crore) at Vizag. Another 5 projects valued at over Rs 1,200 crore to be awarded to develop facilities at Vizag.

New container terminals are also proposed to be set up to cater to business of container vessels at Jawaharlal Nehru Port (JNPT) (Rs 6,700 crore) and NSICT Terminal (Rs 600 crore), Chennai (Rs 3,686 crore), Ennore (Rs 1,407 crore) and Tuticorin (Rs 268 crore).

These massive Private Sector investments in the Port Sector will lead to higher port traffic, shiprepair volumes and increased earnings for your Company.

8. FUTURE OUTLOOK

Shipping is a global industry and its prospects are closely tied to the level of economic activity in the world. A higher level of economic growth generally leads to higher demand for industrial raw materials, which in turn will boost import and export trade and commerce. The Shipping Industry handles 95% by volume and 70% by value of Indias international trade. However, the shipping market is cyclical in nature and freight rates generally tend to be volatile. The Shipping Industry is also highly capital intensive. As there are a large number of players in this segment, no single company has influence freight prices.

The total World Shipping tonnage, as on 1st January 2007, stood at 1014.55 Mn DWT [Dry Bulk (35%), Wet Bulk (37%), Containerships (12%), General cargo (10%) and others (6%)]. The Indian tonnage, as on 1st October 2007, stood at 15.08 Mn DWT, [Dry Bulk (34%), Wet Bulk (58%), Containerships (1%) and others (7%)].

According to Industry data, for tanker segments such as very large crude carriers (VLCC), mainly used to transport petroleum from the Gulf to global markets, the average spot freight was $34,836 in the March 2010 quarter, nearly double compared with the previous quarter. In other tanker segments like Suezmax, the average spot freight rate showed a sequential jump of nearly 57% in the fourth quarter. For the dry bulk segment of the shipping industry, the Baltic Dry Index averaged 3018 in the March 10 quarter, a year-on-year jump of 93.6%. Thus the Shipping Industry is fast improving. One of the significant developments is that there may be a likelihood of fall in the export of iron ore lumps of low FE grade due to recent curbs by China. This may see a fall in shipping traffic to China. However this will have little bearing on the Business of your Company.

As regards the Ship building Industry, the World Merchant Shipping fleet grew massively from 52,444 vessels of 227,490,000 GRT in 1970 to 78,336 vessels of 423,627,000 GRT in the 1990s (source: Lloyds Register of Shipping). It is the replacement of these 20-30 year vessels by larger and modern vessels that has fueled the massive growth in the Shipbuilding Industry. The International Maritime Organization (IMO) regulations also require 20 year vessels to be gradually phased out and new vessels to be set afloat by 2012. The flow of orders to Shipbuilders is therefore expected to continue and the outlook will be bright. The domestic shipyards currently have an order book of Rs 22,000 crore. In a bid to promote the domestic shipbuilding industry, the government has decided to extend the subsidy scheme to private shipbuilding companies subject to certain conditions. The subsidy claims of over Rs. 5,000 crore due from the Government will be released over the next few years which will be a catalyst to the growth of the Ship Building Industry headed by Companies like ABG Shipyard, Pipavav Shipyard, Bharti Shipyard and Larsen & Toubro, are reported to have large orders on hand against which advances have been received.

The major shipbuilding units have began to mitigate the risks of downtrends in shipbuilding, and shipbuilders in India, Eastern Europe and Russia prefer to equip their shipyards with both shipbuilding as well as shiprepair facilities.

9. DIRECTORS

During the year, Shri. I. D. Agarwal, nominee director of UTI, Shri R. Gopalakrishna and Shri. Vikas Pande, nominee directors of Bank of India resigned from the Board. The Board places on record its appreciation for the services rendered by them during their tenure on the Board and Committees of the Board.

Shri. Ashwani Kumar and Shri. Ashok R. Chitnis have been appointed as Additional Directors on the Board pursuant to sec. 260 of the Companies Act, 1956. They hold office upto the date of theAGM. Being eligible, they have offered themselves for re-appointment. Shri. P. B. Gadgil, retires by rotation at the ensuing AGM in accordance with Sec. 255 and 256 of the Companies Act 1956 and Article 130 of the Articles of Association of the Company. Being eligible, he has offered himself for reappointment. Cdr. S. K. Mutreja (Retd.), has been re-appointed as the Whole Time Director & Chief Executive Officer of the Company at the Board meeting held on 28.05.2010 for a term of office of three years with an increase in remuneration, subject to the approval of the shareholders at the ensuing AGM and the provisions of the Companies Act, 1956. The Board recommends the re-appointments.

10. AUDITORS

M/s. V. V. Kale & Co., Chartered Accountants, are the statutory auditors of the Company and hold office upto the conclusion of the forthcoming Annual General Meeting. Their consent u/s. 224 (1B) of the Companies Act, 1956 and the Peer Review certificate has been received from the auditors for their re- appointment. The Board recommends the re-appointment.

11. DEPOSITS

The Company has not accepted deposits by way of invitation to the public and therefore, provisions of Section 58A of the Companies Act, 1956 are not applicable to the Company.

12. CORPORATE GOVERNANCE

Your Directors inform their firm commitment in maintaining the highest standards of Corporate Governance and implementation of the Corporate Governance Practices prescribed by SEBI and Clause 49 of the Listing Agreement with the Stock Exchanges. A detailed report on compliance of Corporate Governance and Managements Discussion and Analysis as stipulated in Clause 49 of the Listing Agreement is at Annexure C and forms part of this Report. In line with the said provisions, the Company has obtained a Certificate from the Auditors of the Company, which is annexed and forms part of this Report.

13. DIRECTORS RESPONSIBILITY STATEMENT

As stipulated in Section 217 (2AA) of the Companies Act, 1956 the Directors confirm that:

(a) in the preparation of the annual accounts for the year ended 31st March 2010, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) The Directors have selected such accounting policies in consultation with the statutory auditors 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 at the end of the financial year and of the loss of the Company for that period;

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

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

14. STATUTORY INFORMATION

The particulars of employees as required under Sec. 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 is given in Annexure A to this report.

Information relating to the conservation of energy, technology absorption and foreign exchange earnings and outgo required under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given h Annexure B to this report.

15. INDUSTRIAL RELATIONS

The industrial relations at the Companys shipyard and manufacturing facility have been cordial during the year. Your Directors place on record the commitment and involvement of the employees at all levels and looks forward for their continued cooperation.

16. ACKNOWLEDGEMENTS

Your Directors convey their gratitude to its bankers, business associates and classification societies for their continued support. The Directors also thank the Central & State Government and in particular the Ministry of Shipping and the Mormugao Port Trust, for their continued support at all times. The Company also records its grateful thanks to ABG Shipyard Limited for its patronage and support at all levels.



For & on behalf of the Board of Directors

Sd/- Cdr. S. K. Mutreja (Retd.)

Whole Time Director & Chief Executive Officer



Place: Mormugao, Goa Date: 30.07.2010