Directors Report of ABG Shipyard Ltd.
Mar 31, 2016
TO THE MEMBERS,
The Board of Directors of your Company are pleased to present the 31st Annual Report together with the Audited Financial Statements for the financial year ended 31st March 2016.
1. FINANCIAL PERFORMANCE:
Financial performance of the Company for Financial Year 2015-16, on standalone basis is summarized below:
(Rs. in Crores)
|
Particulars |
2015-16 |
2014-15 |
|
Sales and Other Income |
37.76 |
401.67 |
|
Profit/(Loss) before Interest, Depreciation & Tax |
(1866.53) |
(361.82) |
|
Less: Interest (Net) |
801.49 |
724.89 |
|
Profit/(Loss) before Depreciation & Tax |
(2668.02) |
(1086.71) |
|
Less: Depreciation |
81.51 |
99.18 |
|
Profit/(Loss) before Tax |
(2749.53) |
(1185.89) |
|
Exceptional/Extraordinary Items |
974.56 |
- |
|
Less: Provisions for Taxation |
(19.38) |
(288.19) |
|
Net Profit/(Net Loss) after Tax |
(3704.71) |
(897.70) |
* Figures regrouped wherever necessary.
2. FINANCIAL REVIEW
During the financial year ended 31st March 2016, the Company reported revenue from operations of Rs 37.76 Crores and EBDIT of Rs. (1866.53) Crores. Net loss after tax is Rs 3704.71 Crores. Major reasons for increased losses are low level of business activity resulting into low turnover, impairment of inventories and increased interest cost. Exceptional items include foreign exchange losses and reversal of profits on account of cancellation of contract / invocation of bank guarantees. The global economic slowdown has severally impacted the ship building industry. This has led to lower capacity utilization and adversely affected the operations of the Company.
3. DIVIDEND
In view of the losses, your Directors do not recommend any dividend for the year under review.
4. SHARE CAPITAL
During the Year under review, your Company has allotted total 1,91,279 nos. of Equity shares of face value of Rs. 10/- each at a price of Rs. 275.92/- and total 7,65,52,717 nos. 0.01% Compulsorily Convertible Preference Shares (CCPS) of face value of Rs. 10/- each at par, to the Corporate Debt Restructuring Lenders (CDR Lenders) towards conversion of the Funded Interest Term Loan (FITL)/interest on FITL.
As on 31st March 2016, Authorized Capital was Rs. 17,000 Crores divided into 1500 Crores Equity Shares of Rs. 10/- each and 200 crores CCPS of Rs. 10/- each.
Total paid up Capital of the Company as on 31st March 2016 stood at Rs. 387,67,69,040/- divided into 5,40,30,848 equity shares of Rs. 10/- each and 33,36,46,056 CCPS of Rs. 10/- each. Last date for conversion of CCPS was 26th March, 2016, but due to Honorable Delhi High Court order dated 29th September 2015 in case of Stretegic Capital Pvt. Limited & Anr. Vs. Jaroli Viacom Pvt. Ltd. & Ors. restraining the Company from any change of capital structure, the conversion of CCPS could not be effected.
5. BUSINESS OPERATIONS AND OUTLOOK
Your Company has strong footprint in ship building industry not only in India but also worldwide. The Company has State of the Art world class manufacturing facilities at Dahej and Surat in the State of Gujarat. Your Company is one of the India''s largest private sector shipyards and has expertise in building Specialized and Sophisticated vessels like Interceptor Boats, Battle Practice Target, Cadet Training Ship, Self-Loading and Discharging Bulk Cement Carriers, Floating Cranes, Art couple Tugs and Flotilla, Split Barges, Bulk Carriers, Newsprint Carriers, Offshore Supply Vessels, Dynamic Positioning Ships, Anchor Handling Tug Supply Vessels, Multi-purpose Support Vessel, Diving Support Vessels, Pollution Control Vessel etc. for Government of India, leading companies in India and overseas. It has expertise in offshore Rig building also.
The manufacturing processes in the Shipyards are in line with world class standards and the Yards have been certified by DNV for ISO 9001:2008 (for Quality Management Standards), by IRS for ISO 14001:2004 (for Environment Management Systems) and OHSAS 18001:2007 (for Occupational Health & Safety Management Systems).
Your Company has delivered a Pollution Control Vessel to the Indian Coast Guard, however, during the period under review, the Company could not deliver any other ship as its Dahej yard was closed from June, 2015 and Surat yard was partially operational. Progress of construction of vessels was affected due to the factors like unavailability of working capital etc. In Surat yard, ship repair activity is going on at present but with low volume. The Company has undertaken repair of Coast Guard Vessels and other commercial vessels in the period under review.
Due to suspension of operations at Dahej yard and low key operation at Surat, losses have piled up over the period which has resulted into erosion of net worth of the Company. As on 31st March, 2016, net worth of the Company is fully eroded. The Board of Directors in their meeting held on 30.05.2016 has decided that the Company may explore the possibility of filing a reference to the Board for Industrial and Financial Reconstruction (BIFR) under Sick Industrial Companies (Special Provisions) Act, 1985.
Indian Shipbuilding sector is facing crisis due to global downturn in ship building industry since last few years. Most of the shipyards in India are idle due to lack of orders, liquidity problem etc. Concerted efforts are required by all stakeholders like Banks, Govt., and other Industry participants to revive the Industry. Assets of the shipyards are of National importance and can''t be left to remain idle for long time.
To uplift the ship building sector, Govt. of India has also unfolded their hands and taken following measures to revive the ailing ship building industry:
- Infrastructure status has been provided to Shipbuilding Industry. This will make the Industry eligible to avail/restructure long term loans up to 25 years.
- Financial Assistance (Subsidy Scheme) to Shipbuilding Industry to the tune of Rs. 4,000 crores over 10 years.
- Policy for subcontracting from PSUs to Private Shipyards Rs. 50,000 crores.
- Preference to Indian built ships : Right of first refusal for âIndian make Indian Flagâ vessels.
- Setting up of National Infrastructure Investment Fund (NIIF) with a corpus of Rs. 20,000 crores. The idea is to revive commercially viable including stalled Infrastructure projects.
- Indirect Tax Exemptions announced - Excise Duty and Customs Duty.
- Development of Inland Waterways.
A growing Indian economy, favorable Government policies and incentives framework, a long coastline and growing sea borne trade present a huge business opportunity within the Indian Shipbuilding and Ship Repair industry. Ship building industry as well as your Company is poised to come up in near future.
6. Financial Restructuring
As you are aware that during the financial year 2013-14, your Company had undertaken a debt restructuring exercise under the CDR mechanism governed by the Corporate Debt Restructuring Scheme issued by Reserve Bank of India dated August
27, 2008 and the Corporate Debt Restructuring Guidelines formulated there under in consultation with its senior secured lenders. Pursuant thereto, the CDR Empowered Group at the meeting held on 24th March 2014 has approved a restructuring package in terms of which the existing financial assistance provided by the existing lenders of the Borrower as mentioned in the LOA (the âCDR Lendersâ) was restructured as set out in the letter of approval dated 27th March 2014 issued by the Corporate Debt Restructuring Cell to the Borrower and the CDR Lenders (the âLOAâ) and in this regard the Company has entered into a Master Restructuring Agreement with the CDR Lenders (the âMaster Restructuring Agreementâ) as on 28th March 2014 as amended / modified from time to time.
The salient features of the CDR Package are as follows :
a) Cut-off date - 01st August 2013;
b) Total Debt rescheduled has funded interest ranging from 1 year 6 months to 3 years 7 months and loan is payable over a period of 10 years.
c) Priority Debt sanctioned for meeting the immediate operational and capital requirement of the Company;
d) Reduction in the rate of interest to 11% PA.
e) Conversion of the FITL and further interest thereon into the Equity Shares/0.01% CCPS of the Company.
On 23.12.2015, CDR lenders in their meeting invoked Strategic Debt Restructuring (SDR) provisions in the Company. SDR invocation was approved by requisite majority of lenders. As per RBI guidelines, SDR process including both finalization of package and allotment of share was to be concluded within 210 days from the SDR reference date i.e. on or before 20.07.2016. But, it could not be effected due to Hon''ble Delhi High Court order restraining the Company not to alter its capital structure. On 11.07.2016, the Court has issued order permitting the Company to alter its capital structure. The Company is working out to implement the same.
The Company along with CDR lenders exploring the possibility of inducting a strategic investor who will infuse necessary funds in the Company to strengthen the operations of the Company.
The lenders have disbursed total Rs. 550.81 Crores up to 31st March 2016 towards the Priority Debts as per the terms of the MRA for meeting the immediate operational and capital expenditure requirement of the Company.
7. Issue of Equity Shares and 0.01% Compulsorily Convertible Preference Shares (CCPS)
Issue of the Equity shares and CCPS to the CDR Lenders towards the conversion of the FITL and further interest thereon till 31st March 2016, FITL/Interest on FITL amounting to Rs. 419.40 Crores has been converted into the Equity shares and CCPS of the Company.
In order to strengthen the Balance Sheet of the Company by repayment of its debt and for general corporate purposes, the Company proposes to raise capital by issue of further securities including but not limited to Convertible Bonds, Preference Shares, Equity Shares and other securities whether convertible or not, etc., up to Rs. 2,000 Crores (Rupees Two Thousand Crores).
Accordingly the enabling resolution mentioned in the Notice of Annual General Meeting is commended for your approval.
8. MANAGEMENT DISCUSSION AND ANALYSIS
In terms of Regulation 34 of SEBI Listing Regulations, 2015, Management Discussion and Analysis Report elaborating detailed Industry Review, Outlook etc. is presented in a separate section forming part of this Report as âAnnexure Bâ.
9. NUMBER OF MEETINGS OF THE BOARD
The Board of Directors of your Company met four times during the year. Details of the Meetings are elaborated in the Corporate Governance section of this report
10. DECLARATION OF INDEPENDENCY:
All Independent Directors have given declarations that they meet the criteria of independence as laid down under section 149
(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
11. BOARD EVALUATION AND SEPARATE INDEPENDENT DIRECTORS'' MEETINGS
The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual Directors pursuant to the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. A structured questionnaire was prepared after considering the various criteria such as Board functioning, composition, committee culture and their directions and governance. The process evaluation was completed and the Board expressed the satisfaction over the evaluation process.
The Independent Directors meet at least once in a half year, without the presence of Executive Directors or Management representatives. They also have a separate meeting with the Non-Executive Chairman, to discuss issues and concerns, if any.
The Independent Directors met twice during the Financial Year ended 31st March, 2016 on 13th August, 2015 and 11th February, 2016.
12. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company proactively keeps its Directors informed about the activities of the Company, its management and operations and provides an overall industry perspective as well as issues being faced by the industry.
13. SUBSIDIARIES
Your Company has three (3) subsidiaries i.e. Western India Shipyard Limited (a BSE listed Company), ABG Shipyard Singapore Pte. Limited (Singapore based Wholly Owned Subsidiary) and ABG FPSO Private Limited and two Joint Ventures i.e. ABG Business Ventures Pte. Ltd and Varada Seven Pte. Ltd at the end of the financial year 2015-16.
Financial results of Western India Shipyard Limited are not available to prevailing unavoidable circumstances i.e. labour unrest in the yard. There was no access of books of account and other documents, hence, audited accounts could not get ready. Financial results of other subsidiaries and Joint Ventures are not consolidated because of their unavailability. Therefore, statement containing salient features of financial statements of subsidiaries and JVs are not being attached to this report as required under section 129(3) of the Companies Act, 2015.
14. DIRECTORS AND KEY MANAGERIAL PERSONNEL
In terms of the Section 152 and 160 of the Companies Act, 2013 read with Article 190 of the Articles of Association of the Company, Mr. S. Muthuswamy is liable to retire by rotation at the ensuing Annual General Meeting and eligible for reappointment.
During the period under review, Mr. Syed Abdi - Managing Director and CEO of the Company has resigned from the Company w.e.f. 30th April 2016, due to personal reasons.
During the period under review, Mr. Dhananjay Datar, Director liable to retire by rotation, retired from the Directorship of the Company from the date of last Annual General Meeting dt. 30th September, 2015.
A brief resume of the Director being re-appointed at the ensuing AGM, nature of expertise in specific functional areas and names of the Companies in which he holds directorship and/ or membership/ chairmanships of Committees of the respective Boards, shareholding and relationship between Directors inter se as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, is given in the notice of Annual General Meeting forming part of this Annual Report.
None of these Directors is disqualified as per the provisions of Section 164 of the Companies Act, 2013, to be re-appointed as directors of your Company.
Mr. Dheeraj Sharma, Company Secretary has resigned from the Company w.e.f. 20th January, 2016.
15. AUDITORS
M/s. Nisar & Kumar, Chartered Accountants, Statutory Auditors of the Company was appointed at the last AGM till conclusion of the 32nd AGM subject to ratification by the Shareholders at every Annual General Meeting. But, they expressed their unwillingness to be re-appointed as a Statutory Auditors of the Company. Therefore, M/s GMJ & Co., Chartered Accountants has been appointed as a Statutory Auditors of the Company by the Board of Directors at their meeting held on 11th August, 2016. M/s GMJ & Co., Chartered Accountants have consented for their appointment in terms of section 139 of the Companies Act, 2013 and also provided a certificate to the effect that if they are appointed, it would be in accordance with Section 141 of the Companies Act, 2013.
Your Directors propose the appointment of the M/s. GMJ & Co. Chartered Accountants as a Statutory Auditors of the Company from the conclusion of ensuing AGM to conclusion of 36th AGM.
The Auditors have marked Qualifications/ Matter of Emphasis on the financial statements for the FY 2015-16. Explanations of the Management towards the same are as follows:
Independent Auditors Qualifications and Management''s Replies:
1. Carrying value of Plant Assets at Dahej Shipyard: Dahej yard is shut down for last one year, hence the physical verification and study for impairment if any, could not be carried out. The Management believes that the Assets and Assets under construction are of such nature as not to deteriorate or lose its value in such duration. The Management is striving its best to resume production/ completion of capitalization at yard which is likely to happen shortly.
2. Loans, Advances and Receivables from Related Parties: All loans, advances and receivables are either to operating entities or having business plans or possessing corresponding value. Some recoveries have been made during the year and for the balance, Management is taking steps.
3. Subsidy receivable from Government of India: The subsidy has been accounted for, strictly in accordance with the Subsidy Scheme of Government of India and relevant Accounting Standards. Currently, owing to low scale activities at its yards , the Company is not able to complete the ships and deliver them .The Management is confident about recoverability of the subsidy from the Government, once the eligible ships are constructed and delivered.
4. Going Concern: The Company has sizable and marketable inventory, ready/ under construction state of the art fixed assets. With potential business, supportive lending bankers and favorable Government initiatives and policies, the Management is of firm belief that the Company does not cease to be a Going Concern.
Emphasis of Matters:
1. Investment in Subsidiaries: The Management has evaluated the investments in all related entities / subsidiaries, which is strategic and of long term nature. It believes that there is not permanent diminution in values of the investments, so as to warrant for provisioning.
2. 2.1 Impairment of Inventory: The Management has carried out a technical valuation and accounted the impairment. For some ships and Rigs the valuation process shall be taken in due course.
2.2 Rig Work in progress and Advances: This is only for information.
3. Advances to certain suppliers/ contractors: The advances given to suppliers / contractors are for material / services of long gestation period and represent part advance in most of the cases. Once the production activities are normalized and material is required, the Company shall be paying the balance and obtaining the material. The Management has taken special efforts to obtain confirmation / refund in some cases.
4. Non Provision of Managerial Remuneration: The Management is taking legal advice on this matter.
5. Compensation Payable in lieu of Banks'' Sacrifice: This is only for information.
6. Non Availability of some confirmations/ statements from banks / institutions: This is only for information. However the Company has accounted for all the transactions based on the material / evidences available with it.
7. Legal proceedings by some authorities / creditors: Management believes that this is in normal course of business and dealing with the matter legally.
Annexure A to the Independent Auditors Report:
1.& 2 Physical Verification of fixed assets and inventory at Dahej yard: Due to closure of the Dahej yard , the physical verification of fixed assets and inventory could not be carried out this year. The Management believes that the fixed assets and inventory has sound physical safeguard and effective custodial accountability. Advance of Rs. 72.93 lacs as such does not represent any immovable property and it needs to be allocated over existing lands. Efforts are on to obtain documents from the vendor/ agent to account the same appropriately.
3. Pending updating of Register under Section 189 of the Companies Act, 2013: the updating has been done.
4. Non Charging of interest to certain parties: The charging of interest is not expedient, considering the relationship of the Company with these parties.
5. Maintenance of Cost records: The Company has been maintaining appropriate cost records since years consistently; however the Management is engaging Professionals to make the records more compliant.
6. Delays and defaults in depositing Statutory Dues: The delays and defaults are owing to lack of cash flows. As the Company is under Corporate Debt Restructuring, its Cash flows are controlled by monitoring institution of consortium of banks / institutions. However with the available Cash flows, the Management is endeavouring to deposit the dues in small tranches/ installments.
7. Fraud by the Company/ Its Employees: The Management reiterates that there is no fraud committed either by the Company or its employee. Due to non-payments of outstanding to certain creditors the company has received notices alleging fraud, which Company is dealing legally. The DRI has certain issues relating the valuation of certain assessed and cleared imports by the Company and thus have made few employees as parties also. The matter is under adjudication.
Secretarial Audit
Pursuant to provisions of section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company has appointed Mrs. Kala Agarwal, a firm of Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit report is annexed herewith as âAnnexure Câ
The report does not contain any qualification save and except updating of Company''s website as regard of Secretarial compliances and not filing of statutory forms.
The website is not updated due to technical problem. Non availability of requisite staff is the major cause for other non compliances, which are been complied with now.
16. EXTRACT OF ANNUAL RETURN:
The extract of the annual return as provided under sub-section (3) of section 92 of Companies Act, 2013 in the prescribed Form MGT-9 is forming part of this report as âAnnexure Dâ
17. DEPOSITS/FIXED DEPOSITS
The Company has not accepted deposits by way of invitation to the public and therefore, provisions of Section 73 of the Companies Act, 2013 are not applicable to the Company.
18. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FORIEGN EXCHANGE EARNINGS & OUTGO
Information required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, with respect to conservation of energy, technology absorption and foreign exchange earnings/outgo is included in âAnnexure Aâ.
19. CORPORATE GOVERNANCE
The Company consistently emphasizes its commitment towards a healthy corporate governance policy and adherence of the same that defines and drives organization performance as per its cherished values and commitments to every stakeholder.
A detailed report on compliance of Corporate Governance in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, is presented in a separate section forming part of this Report as âAnnexure Eâ.
The Statutory Auditors'' certificate on compliance with Corporate Governance by the Company is attached to the report on Corporate Governance.
20. DIRECTORS'' RESPONSBILITY STATEMENT
In pursuance of section 134(5) of the Companies Act, 2013, the Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, confirm that:
I. In the preparation of the annual accounts, the applicable accounting standards have been followed.
II. The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review.
III. 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 the assets of the Company and for preventing and detecting fraud and other irregularities.
IV. The directors have prepared the annual accounts on a going concern basis.
V. The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
VI. The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively.
21. PARTICULARS OF LOAN, GUARANTEE OR INVESTMENT:
Particulars of the outstanding loans or guarantees covered under the provisions of Section 186 of the Act as on March 31, 2016 have been elaborated in note no. 40 to the Financial Statements.
During the Financial Year 2015-16, the Company has not given any Guarantee/Loan or provided Security under the provisions of Section 186 of the Companies Act, 2013.
22. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees'' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours 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.
23. PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company''s shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code.
24. INDUSTRIAL RELATIONS
Your Company has maintained healthy, cordial and harmonious industrial relations at all levels at the offices and yards of the Company throughout the year.
25. CORPORATE SOCIAL RESPONSIBILITY
In compliance with the requirement of Section 135 of the Companies Act, 2013, the Company has constituted a Corporate Social Responsibility Committee. A report on CSR Activities of the Company is attached with this Directors'' Report as âAnnexure Fâ.
26. NOMINATION AND REMUNERATION POLICY
The Board of Directors of the Company have Nomination and Remuneration Committee in line with the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The Board has placed the Nomination and Remuneration Policy in terms of Section 178 of the Companies Act, 2013.
Composition of the Nomination and Remuneration Committee and Nomination and Remuneration Policy are elaborated in the Corporate Governance Report annexed to this Report.
27. WHISTLE BLOWER POLICY/VIGIL MECHANISM
A Whistle Blower Policy/Vigil Mechanism policy is framed and has established the necessary vigil mechanism in line with SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and Section 177 (9) of the Companies Act, 2013, for the directors and employees to report concerns about unethical behavior. No person has been denied access to the Audit Committee. However, no instances of fraud or other irregularities have been observed, which need to be reported to the Board/ Audit Committee.
28. RISK MANAGEMENT POLICY
The Board of Directors has constituted a Risk Management Committee. The Committee is responsible for reviewing the risk, managing plan and ensuring its effective ness. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.
The Company has developed a Risk Management Policy detailing the risk management system, process and procedure.
Composition of the Risk Management Committee and Terms of reference thereof is described in the Corporate Governance Report annexed to this Report.
29. INTERNAL CONTROL SYSTEM
The details of internal control system and its adequacy are included in Management Discussion and Analysis Report which forms part of this report.
30. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
Particulars of contracts or arrangements with related parties referred to in section 188 of the Companies Act, 2015 are given in the prescribed form AOC-2, refer Annexure G.
31. APPRECIATION
Your Directors wish to extend their sincere gratitude to all the Customers, Suppliers, Bankers, Financial Institutions, Trustees, Government Authorities/Officials, Business Associates, Shareholders and Debenture Holders of the Company for their continuous guidance and support to the Company and their continued confidence in the management of the Company.
Further, the Company and its Board of Directors wish to express admiration and acknowledge the understanding, support and services of the employees at all levels which have largely contributed to efficient operations and management of the Company during the year under review and make the Company confident to come out from the tough business span of the Company.
Place: Mumbai For and on behalf of the Board
Date: 11th August, 2016
Ashwani Kumar S. Muthuswamy
Director Executive Director
Mar 31, 2015
The Board of Directors of your Company are pleased to present the 30th
Annual Report together with the Audited Accounts for the financial
year ended 31st March, 2015.
1. FINANCIAL PERFORMANCE
Financial performance of the Company for Financial Year 2014-15 is
summarised below:
(Rs.in crores)
Particulars 2014-15 2013-14
Sales and Other Income 401.67 1,665.41
Profit / (Loss) before Interest,
Depreciation & Tax (361.82) 370.33
Less: Interest (Net) 724.89 574.72
Profit / (Loss) before Depreciation
& Tax (1086.71) (204.39)
Less: Depreciation 99.18 91.78
Profit / (Loss) before Tax (1185.89) (296.17)
Less: Provisions for Taxation (288.19) (96.87)
Net Profit / (Loss) after Tax (897.70) (199.30)
* Figures regrouped wherever necessary.
2. FINANCIAL REVIEW:
During the financial year ended 31st March 2015, the Company reported
revenue from operations of Rs 401.67 Crores and EBDIT ofRs.(361.82)
Crores. Net loss after tax is Rs 897.70 Crores. The increase in finance
cost and decrease in revenue has severely affected the
performance of the Company.
3. DIVIDEND
In view of the losses, your Directors do not recommend any dividend for
the year under review.
4. SHARE CAPITAL
During the year under review your company has allotted total 29,17,768
nos. of Equity Shares of face value ofRs.10/- each at the price of ?
275.92/- and total 25,70,93,339 nos. 0.01% Compulsorily Convertible
Preference Shares (CCPS) of face value of Rs.10/- each at par, to the
Corporate Debt Restructuring (CDR) Lender towards conversion of the
Funded Interest Term Loan (FITL)/interest on FITL.
As on 31st March 2015, total Authorised Capital was Rs.17000 Crores
divided into 1500 Crores Equity Shares of Rs.10/- each and 200 crores
CCPS ofRs.10/- each.
Total Paid Capital of the Company as on 31st March 2015 stood at?
310,93,29,080/- divided into 5,38,39,569 equity shares ofRs. 10/- each
and 25,70,93,339 CCPS ofRs.10/- each.
5. BUSINESS OPERATIONS
Shipyards of your Company are located at Surat and Dahej in Gujarat.
Your Company is one of the India's largest private sector shipyards.
Your Company is in the Shipbuilding sector building the Specialized and
Sophisticated vessels like Interceptor Boats, battle Practice Target,
Cadet Training Ship, Self-Loading and Discharging Bulk Cement Carriers,
Floating Cranes, Articouple Tugs and Flotilla, Split Barges, Bulk
Carriers, Newsprint Carriers, Offshore Supply Vessels, Dynamic
Positioning Ships, Anchor Handling Tug Supply Vessels, Multi-purpose
Support Vessel, Diving Support Vessels, Pollution Control Vessel etc.
for Government of India, leading companies in India and overseas. As of
now your Company is working on three Cadet Training Ships for the
Indian Navy.
The manufacturing processes in the Shipyards are in line with world
class standards and the Yards have been certified by DNV for ISO
9001:2008 (for Quality Management Standards), by IRS for ISO 14001:2004
(for Environment Management Systems) and OHSAS 18001:2007 (for
Occupational Health & Safety Management Systems).
Your Company has recently delivered two Battle Practice Target Vessels
to the Indian Navy. However, during the period under review, the
Company was not in position to deliver any ship as the operations of
the Company have come under strain. Due to global economic downturn,
the fi nance available to Industry is dried up. The global crisis has
impacted the shipping industry due to fall in commodity demand & prices
and subsequent fall in cargo demand. The cancellation of contracts for
few ships/vessels resulted in piling up of inventory. This has resulted
in paucity of working capital and caused significant increase in the
operating cycle, thereby aggravating the liquidity problem & financial
problem. Due to the combination of all adverse economic factors, the
financial position of the company has weakened and the company has been
facing problems in delivering the vessels.
As you are aware that during the last year, your Company has undertaken
a Debt Restructuring Exercise under the CDR mechanism governed by the
Corporate Debt Restructuring Scheme issued by Reserve Bank of India
dated August 27, 2008 and the Corporate Debt Restructuring Guidelines
formulated there under in consultation with its senior secured lenders
Pursuant thereto, the CDR Empowered Group at the meeting held on 24th
March 2014 has approved a restructuring package in terms of which the
existing financial assistance provided by the existing lenders of the
Borrower as mentioned in the LOA (the "CDR Lenders") was restructured
as set out in the letter of approval dated 27th March 2014 issued by
the Corporate Debt Restructuring Cell to the Borrower and the CDR
Lenders (the "LOA") and in this regard the Company has entered into a
Master Restructuring Agreement with the CDR Lenders (the "Master
Restructuring Agreement") as on 28th March 2014 as amended / modified
from time to time.
The salient features of the CDR Package are as follows :
a) Cut-off date - 01st August 2013;
b) Total Debt rescheduled has funded interest ranging from 1 year 6
months to 3 years 7 months and loan is payable over a period of 10
years.
c) Priority Debt sanctioned for meeting the immediate operational and
capital requirement of the Company;
d) Reduction in the rate of interest to 11% PA.
e) Conversion of the FITL and further interest thereon into the Equity
Shares/0.01% CCPS of the Company.
Presently your company is working under the framework of CDR and
working towards revival of its operations and to come out from the
present situation.
Disbursements of the Priority Debts by the CDR Lenders : The lenders
have disbursed total Rs. 375.91 Crores, up to 31st March 2015, towards the
Priority Debts as per the terms of the MRA for meeting the immediate
operational and capital requirement of the Company.
Issue of the Equity shares and CCPS to the CDR Lenders towards the
conversion of the FITL and further interest thereon  Till 31st March
2015, FITL/Interest on FITL amounting to Rs. 337.60 Crs has been
converted into the Equity shares and CCPS of the Company.
6. SUBSIDIARIES
At the end of the financial year 2014-15, your Company has three (3)
subsidiaries i.e. Western India Shipyard Limited (a BSE listed
Company), ABG Shipyard Singapore Pte. Limited (Singapore based Wholly
Owned Subsidiary) and ABG FPSO Private Limited.
In accordance with the Accounting Standard AS-21 issued by the
Institute of Chartered Accountants of India (ICAI) on Consolidated
Financial Statements, the Consolidated Financial Statements excluding
the consolidation of financials of one subsidiary i.e. Western India
Shipyard Limited (WISL) are forming part of this Annual Report. The
Consolidated Financial Statements have been prepared in line with the
provisions of Clause 32 of the Listing Agreement.
The Company has placed the Standalone financials along with the
consolidated Financial Statements without consolidation of one
subsidiary i.e. Western India Shipyard Limited to the auditors for
their report thereon at the Board Meeting of the Company held on 14th
August 2015 whereas the Audited Financial Results of the Subsidiary
Western India Shipyard Limited were not approved and adopted till the
date of Board Meeting of your Company, by the WISL due to unavoidable
circumstances at the Yard. Subsequently, WISL has approved and adopted
its Financials for FY ended 2014-15 of your Company result due to
unpaid at its Board Meeting dated 30th June 2015, therefore, your
Company couldn't consolidate the financials of the WISL and provide
the audited Consolidated Financial Statement including the WISL.
A report containing the silent features of the Financial performance of
the Subsidiaries, in specified Form AOC Â 1 is annexed to this report
as "Annexure A" able reason therefore.
Abridged unaudited consolidated financial statement including the
financials of the WISL is attached at the end of this Annual Report.
7. DIRECTORS AND KEY MANAGERIAL PERSONS
In terms of the Section 152 and 160 of the Companies Act, 2013 read
with Article 190 of the Articles of Association of the Company, Mr.
Dhananjay Datar is liable to retire by rotation at the ensuing Annual
General Meeting.
During the period under review, Mr. Ashok Chitnis  Independent
Director of the Company has resigned from the Company w.e.f. 17th
February 2015, due to health issues. Further, Export Import Bank of
India (EXIM) has nominated Mr. David Rasquinha as Nominee Director on
the Board of the Company w.e.f. 30th May, 2014 which was subsequently
withdrawn on 17th October, 2014. Further, IDBI Bank Ltd has nominated
Mrs. Ranjitha Godbole in place of Mr. Aloke Sengupta on the Board of
the Company as on 14th November 2014.
The Company has appointed Mr. Hasmukh Daftary - Chief Financial Officer
on 17th December 2014 who was subsequently appointed as Key
Managerial Person in terms of the Section 203 of the Companies Act,
2013 w.e.f. 17th February 2015. Mr. Sunil Agarwal Company Secretary of
the Company resigned from the Company w.e.f. 13th February 2015 and the
Board appointed
Mr. Nimesh S. Shah as the Company Secretary in terms of the Section 203
of the Companies Act, 2013, w.e.f. 17th February 2015 who subsequently
tendered resignation w.e.f. 29th April, 2015. The Board has appointed
Mr. Dheeraj Sharma as the Company Secretary of the Company w.e.f. 1st
May 2015 in terms of Section 203 of the Companies Act, 2013.
As per section 149 of the Companies Act, 2013 (Act), which came into
effect from April 1, 2014, every listed public company is required to
have at least one-third of the total number of directors as Independent
Directors In line with the compliance of the Section 149 and Listing
Agreement, Your Company has appointed Mr. Sushil Agarwal and Mr. Ravi
Nevatia as Additional Independent Directors of the Company, on 18th
May, 2015 and 13th August, 2015 respectively, who will hold the office
till the ensuing Annual General Meeting. The company has received
notice from the members proposing the appointment of Mr. Sushil Agarwal
and Mr. Ravi Nevatia as the Independent Directors of the Company in
terms of the Section 149 read with 152 of the Companies Act, 2013. It
is proposed to appoint Mr. Sushil Agarwal and Mr. Ravi Nevatia as
Independent Directors, in accordance with the provisions of section 149
of the Act, to hold office as per their tenure of appointment
mentioned in the Notice of the Annual General Meeting of the Company.
The Company has received declarations from the said Independent
Directors of the Company confirming that they meet the criteria of
independence as prescribed both under sub-section (6) of Section 149 of
the Companies Act, 2013 and under the said Clause 49.
A brief resume of the Directors being appointed at the ensuing AGM,
nature of expertise in specific functional areas and names of the
Companies in which he holds directorship and/ or membership/
chairmanships of Committees of the respective Boards, shareholding and
relationship between Directors inter se as stipulated under Clause 49
of the Listing Agreement with the Stock Exchanges in India, is given in
the notice of Annual General Meeting forming part of this Annual
Report.
None of these directors is disqualified as per the provisions of
Section 164 of the Companies Act, 2013, to be re-appointed as directors
of your Company.
8. DIRECTORS' RESPONSBILITY STATEMENT
Your Directors, pursuant to Section 134(3)(c) of the Companies Act,
2013 confi rm that:
I. In the preparation of the annual accounts, the applicable
accounting standards have been followed.
II. The directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were 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 or
loss of the Company for the year under review.
III. 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 the assets of the Company and
for preventing and detecting fraud and other irregularities.
IV. The directors have prepared the annual accounts on a going concern
basis.
V. The directors had laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively.
VI. The directors had devised proper system to ensure compliance with
the provisions of all applicable laws and that such system were
adequate and operating effectively.
9. NUMBER OF MEETINGS OF THE BOARD
There were four meetings of the Board of Directors of your Company
during the year. Details of the meetings are elaborated in the
Corporate Governance section of this report.
10. DECLARATION OF INDEPENDENCY:
All Independent Directors have given declarations that they meet the
criteria of independence as laid down under section 149 (6) of the
Companies Act, 2013 and clause 49 of the Listing Agreement.
11. SEPARATE INDEPENDENT DIRECTORS' MEETINGS
The Independent Directors meet at least once in a half year, without
the presence of Executive Directors or Management representatives. They
also have a separate meeting with the Non-Executive Chairman, to
discuss issues and concerns, if any.
The Independent Directors met twice on 14th August, 2014 and 17th
February, 2015 during the Financial Year ended 31st March, 2015.
12. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS
The Company proactively keeps its Directors informed of the activities
of the Company, its management and operations and provides an overall
industry perspective as well as issues being faced by the industry. The
details of the same is available on the website of the Company
www.abgindia.com
13. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEE AND THE
DIRECTORS
In compliance with the provisions of the Companies Act, 2013 and Clause
49 of the Listing Agreement, the performance evaluation of the Board
was carried out during the year under review. More details on the same
are given in the Report on Corporate Governance.
14. POLICY ON DIRECTORS APPOINTMENT AND THEIR REMUNERATION
The Board has, on the recommendation of the Nomination and Remuneration
Committee, framed policy for selection and appointment of Directors,
Senior Management and their Remuneration. More details on the same are
given in the Report on Corporate Governance.
15. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report elaborating detailed Industry
Review and Outlook for the year under review as stipulated under Clause
49 of the listing agreement is presented in a separate section forming
part of this Report as "Annexure B".
16. AUDITORS
Statutory Audit:
M/s. Nisar & Kumar, Chartered Accountants, Statutory Auditors of the
Company has been appointed at the last AGM till conclusion of the 32nd
AGM subject to ratification by the Shareholders at every general
meeting.
Your Directors propose the ratification of the appointment of the M/s.
Nisar & Kumar, Chartered Accountants, Statutory Auditors of the Company
from the conclusion of this AGM to conclusion of the 32nd AGM.
The auditors have qualified their opinion on non-charging of interest
on loans given to certain related and other parties. The management is
of the view that considering the relationship of the company with these
parties charging of interest is not expedient.
Secretarial Audit:
Pursuant to provisions of section 204 of the Companies Act, 2013 and
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 the Company has appointed Mrs. Kala Agarwal, a firm of
company Secretaries in practice to undertake the Secretarial Audit of
the Company. The Secretarial Audit report, in Form MR-3, is annexed
herewith as "Annexure C"
The report does not contain any qualification save and except the
composition of the Board in accordance with the provisions of the
clause 49 of the Listing Agreement and delay / default in filing of
several forms with the Registrar of Companies till 31st March 2015.
In line of the above the Company has appointed two Independent
Directors on the Board of the Company and improved the manner and
process for filing of forms with the Registrar of Companies.
17. ISSUE OF SECURITIES
In order to strengthen the Balance Sheet of the Company by repayment of
its debt and for general corporate purposes, the Company proposes to
raise long term capital by issue of further securities including but
not limited to Convertible Bonds, Preference Shares, Equity Shares and
other securities whether convertible or not, etc., up to Rs. 2,000/-Crs
(Rupees Two Thousand Crores).
Accordingly the enabling resolution mentioned in the Notice of meeting
is commended for your approval.
18. EXTRACT OF ANNUAL RETURN:
The extract of the annual return as provided under sub-section (3) of
section 92 Âin prescribed Form MGT-9 is forming part of this report as
"Annexure D"
19. DEPOSITS/FIXED DEPOSITS
The Company has not accepted deposits by way of invitation to the
public and therefore, provisions of Section 73 of the Companies Act,
2013 are not applicable to the Company.
20. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FORIEGN EXCHANGE
EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Act read with Rule
8(3) of the Companies (Accounts) Rules, 2014, with respect to
conservation of energy, technology absorption and foreign exchange
earnings/outgo is included in "Annexure E".
21. CORPORATE GOVERNANCE
ABG consistently emphasises its commitment towards a healthy corporate
governance policy and adherence of the same that defines and drives
organisation performance as per its cherished values and commitments to
every stakeholder.
A detailed report on compliance of Corporate Governance in terms of
Clause 49 of the Listing Agreement is presented in a separate section
forming part of this Report as "Annexure F".
The Statutory Auditors' certificate on compliance with Corporate
Governance by the Company is attached to the report on Corporate
Governance.
22. PARTICULARS OF LOAN, GUARANTEE OR INVESTMENT:
Particulars of the outstanding loans or guarantees covered under the
provisions of Section 186 of the Act as on March 31, 2015 have been
elaborated in note no. 37 to the Financial Statements.
During the Financial Year 2014-15, the Company has not given any
Guarantee/Loan or provided any Security under the provisions of Section
186 of the Companies Act, 2013.
23. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with Rule, 5 of
the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 in respect of employees of the Company, will be provided
upon request. In terms of Section 136 of the Act, the Report and
Accounts are being sent to the Members and others entitled thereto,
excluding the information on employees' particulars which is available
for inspection by the Members at the Registered Office of the Company
during business hours 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.
24. PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Conduct for Prevention of Insider
Trading with a view to regulate trading in securities by the Directors
and designated employees of the Company. The Code requires
pre-clearance for dealing in the Company's shares and prohibits the
purchase or sale of Company shares by the Directors and the designated
employees while in possession of unpublished price sensitive
information in relation to the Company and during the period when the
Trading Window is closed. The Board is responsible for implementation
of the Code. All the Directors and the designated employees have
confirmed compliance with the Code.
25. INDUSTRIAL RELATIONS
Your Company maintained healthy, and cordial industrial relations at
all levels at the offices and yards of the Company throughout the
year.
26. CORPORATE SOCIAL RESPONSIBILITY
In compliance with the requirement of the Companies Act, 2013, the
Company has constituted a Corporate Social Responsibility (CSR)
Committee. A report on CSR Activities of the Company is attached with
this Directors' Report as "Annexure G". The CSR Policy adopted by the
Board of Directors is available on the Company's website
www.abgindia.com.
27. NOMINATION AND REMUNERATION POLICY
The Board of Directors of the Company have Nomination and Remuneration
Committee in line with the provisions of the Companies Act, 2013 and
the Listing Agreement. The Board has placed the Nomination and
Remuneration Policy in terms of Section 178 of the Companies Act, 2013.
Composition of the Nomination and Remuneration Committee are elaborated
in the Corporate Governance Report annexed to this Report.
28. WHISTLE BLOWER POLICY/VIGIL MECHANISM
The Company has adopted a Whistle Blower Policy/Vigil Mechanism and has
established the necessary vigil mechanism in line with sub clause II -
F of clause 49 of the Listing Agreement with the Stock Exchanges as
notified by SEBI Circular dated April 17, 2014 and Section 177 (9) of
the Companies Act, 2013, for the directors and employees to report
concerns about unethical behaviour. No person has been denied access to
the Audit Committee. However, no instances of fraud or other
irregularities have been observed, which need to be reported to the
Board/Audit Committee.
29. RISK MANAGEMENT POLICY
The Board of Directors has constituted a Risk Management Committee and
has devised a mechanism for risk management. The Risk Management
Committee will work towards assessment of the risks in the operation of
yards, identifying internal and external risks and implementing risk
mitigation steps.
The Company has developed a Risk Management Policy which will assist
the Board through the Risk Management Committee to supervise the risk
management system, process and procedure of the Company.
Composition of the Risk Management Committee and Terms of reference
thereof is described in the Corporate Governance Report annexed to this
Report.
30. PREVENTION OF SEXUAL HARASSMENT POLICY
The Company has devised and implemented a policy on Prevention of
Sexual Harassment, in line with the requirements of the Sexual
Harassment of Women at the Workplace (Prevention, Prohibition and
Redressal) Act, 2013. An Internal Complaints Committee has been set up
to redress complaints received regarding sexual harassment. All
employees (permanent, contractual, temporary, trainees) are covered
under this policy.
During the year under review, no complaints were received by the
Company related to sexual harassment.
31. APPRECIATION
Your Directors wish to extend their sincere gratitude to all the
Customers, Suppliers, Bankers, Financial Institutions, Trustees,
Government Authorities/Officials, Business Associates, Shareholders
and Debenture Holders of the Company for their continuous guidance and
support to the Company and their continued confidence in the
management of the Company.
Further, the Company and its Board of Directors wish to express
admiration and acknowledge the understanding, support and services of
the employees at all levels which have largely contributed to
efficient operations and management of the Company during the year under
review and make the Company confident to come out from the tough
business span of the Company.
Place: Mumbai For and on behalf of the Board
Date: 13th August 2015
Syed Abdi S. Muthuswamy
Managing Director & CEO Executive Director
Mar 31, 2014
DEAR MEMBERS,
The Board of Directors of your Company are pleased to present the
Twenty Ninth Annual Report together with the Audited Accounts for the
financial year ended 31st March, 2014.
1. FINANCIAL PERFORMANCE
Financial performance of the Company for Financial Year 2013-14 is
summarised below:
(Rs. in crores)
Particulars 2013-14 2012-13
Sales and Other Income 1,603.41 2119.35
Profit before Interest, Depreciation & Tax 338.84 565.29
Less: Interest (Net) 543.23 287.88
Profit before Depreciation & Tax (204.39) 277.41
Less: Depreciation 91.78 103.71
Profit before Tax (296.17) 173.70
Less: Provisions for Taxation (96.87) 66.57
Net Profit after Tax (199.30) 107.13
Balance brought forward from previous year 495.05 488.92
Profit available for appropriations 295.75 596.05
Appropriations
Transfer to Debenture Redemption Reserve - 91.00
Transfer to General Reserve - 10.00
Balance carried to Balance Sheet 295.75 495.05
* Figures regrouped wherever necessary.
2. OPERATIONS REVIEW
On a standalone basis, the Company has recorded total revenue of Rs
1,603.41 Crores and EBIDITA of Rs 338.84 Crores as against Rs 2,149.33
Crores and Rs 565.29 Crores respectively in the previous year. Net loss
after tax is Rs 199.30 Crores as compared to net profit after tax of Rs
107.13 Crores in the previous year. The decrease in revenue and increase
in finance cost are reasons affecting the performance of the Company.
3. BUSINESS OPERATIONS
Global shipbuilding industry is impacted very badly due to lack of
demand and economy slow down. This lead to cancellation of bulk carrier
order book with piling up of inventory and Work In Progress in the
Company. This has resulted in paucity of working capital and caused
significant increase in the operating cycle, thereby aggravating the
liquidity position. Due to combination of all the factors mentioned
above, the financial position of the company has weakened.
During the year under review, your Company had taken a decision to
undertake a debt restructuring exercise under the CDR mechanism that is
governed by the Corporate Debt Restructuring Scheme issued by Reserve
Bank of India dated 27th August, 2008 and the Corporate Debt
Restructuring Guidelines formulated thereunder in consultation with its
senior secured lenders. Pursuant thereto, the CDR Empowered Group at
the meeting held on 24th March 2014 has approved a restructuring
package in terms of which the existing financial assistance as
mentioned in the LOA (the "LOA") is restructured as set out in the
letter of approval dated 27th March 2014 issued by the Corporate Debt
Restructuring Cell to the Company and the CDR Lenders (the "CDR
Lenders") and in this regard the Company has entered into a Master
Restructuring Agreement with the CDR Lenders (the "Master Restructuring
Agreement") as on 28th March, 2014 as amended / modified from time to
time.
The salient features of the CDR Package are as follows
a) Cut-off date is 01st August, 2013;
b) Total Debt rescheduled has funded interest ranging from 1 year 6
months to 3 years 7 months and loan is payable over a period of 10
years.
c) Priority loan sanctioned for meeting the immediate operational and
capital requirement of the Company;
d) Reduction in the rate of interest to the Bank rate of the monitoring
Institution plus spread of 1% (one percent) per annum as may be reset
from time to time in accordance with the terms of CDR LOA.
The key features of the CDR Package are elaborated at Note No 4D under
Notes to Financial Statements forming part of this Annual Report.
Shipbuilding facilities of your Company are located at Surat and Dahej
in Gujarat. Since inception, your Company has successfully built and
delivered One Hundred and Sixty One (161) ships, including Specialized
and Sophisticated vessels like Interceptor Boats, Self-Loading and
Discharging Bulk Cement Carriers, Floating Cranes, Articouple Tugs and
Flotilla, Split Barges, Bulk Carriers, Newsprint Carriers, Offshore
Supply Vessels, Dynamic Positioning Ships, Anchor Handling Tug Supply
Vessels, Multi-purpose Support Vessel, Diving Support Vessels,
Pollution Control Vessel etc. for leading companies in India and
overseas. Over 80% of the vessels built have been for foreign customers
in Europe, South East Asia and Middle East. Around 50% of ABG''s Order
Book comprises of orders from repeat customers.
The manufacturing process in the Shipyards are in line with world class
standards and the Yards have been certified by DNV for ISO 9001:2008
(for Quality Management Standards), by IRS for ISO 14001:2004 (for
Environment Management Systems) and OHSAS 18001:2007 (for Occupational
Health & Safety Management Systems).
4. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report for the year under review as
stipulated under Clause 49 of the listing agreement with the Stock
Exchanges in India is presented in a separate section forming part of
this Report as "Annexure C".
The detailed Industry Review and Outlook are elaborated in the
Management Discussion and Analysis Report.
5. AWARDS AND ACCOLADES
* "Highly Commended" Shipyard of the Year Certificate at the
prestigious Lloyd''s List Middle East and Indian Subcontinent Awards
2013
* "Certificate of Excellence - Star Performer Award 2012-13 at the 45th
EEPC India National Awards for Export Excellence 2012-13 in the Product
Group - Miscellaneous Transport Equipment and Parts, Large Enterprise.
* Recognition as Finalist for The Ship Repair/Shipyard Award in the
Seatrade Middle East & Indian Subcontinent Awards 2013
6. DIVIDEND
In view of the above results, your Directors do not recommend any
dividend for the year under review.
7. SUBSIDIARIES
At the end of the financial year 2013-14, your Company has three (3)
subsidiaries i.e. Western India Shipyard Limited (a BSE listed
Company), ABG Shipyard Singapore Pte. Limited (Singapore based Wholly
Owned Subsidiary) and ABG FPSO Private Limited.
In accordance with the General Circular no. 2/2011 dated 8th February,
2011, issued by the Ministry of Corporate Affairs (MCA), Government of
India (GOI), the Balance Sheet, Statement of Profit and Loss and other
documents of the subsidiary companies are not attached with the Balance
Sheet of the Company. The Company undertakes to make available the
copies of annual accounts of the subsidiary companies and related
detailed information to the shareholders of the Company on request.
Further, the annual accounts of the subsidiary Companies will also be
kept at the registered office of the Company and of its subsidiary
Companies for inspection by any member.
In accordance with the Accounting Standard AS-21 issued by The
Institute of Chartered Accountants of India (ICAI) on consolidated
Financial Statements, the consolidated financial statements are forming
part of this Annual Report. The Consolidated Financial Statements have
been prepared in line with the provisions of Clause 32 of the Listing
Agreement entered with the stock exchanges.
8. DIRECTORS
In terms of the Section 152 and 160 of the Companies Act, 2013 read
with Article 190 of the Articles of Association of the Company, Mr.
Rishi Agarwal is liable to retire by rotation at the ensuing Annual
General Meeting and is eligible for re-appointment. Your Directors
recommend the re-appointment of Mr. Rishi Agarwal (DIN 00162615) as
Director. Upon his re-appointment as a director, Mr. Rishi Agrawal
shall continue to hold office as the Non-Executive Chairman of the
Company.
During the year under review, your Company has appointed Mr. S.
Muthuswamy (DIN 01062192) and Mr. Syed Abdi (DIN 06754340) as
Additional Director and designated as Executive Director w.e.f. 13th
November, 2013 and as Managing Director and CEO w.e.f. 9th January,
2014 respectively. In terms of Section 161 of the Companies Act, 2013,
Mr. S. Muthuswamy (DIN 01062192) and Mr. Syed Abdi (DIN 06754340) holds
office only upto the date of the ensuing Annual General Meeting. The
Company has received requisite notice in writing from members proposing
their name for the office of the Director.
During the year Mr. Shahzaad Dalal (DIN 00011375) - Independent
Director, has resigned from the Board due to his relocation abroad
w.e.f. 13th November, 2013 and Major Arun Phatak (DIN 00019062) -
Executive Director of the Company has resigned from the Company w.e.f.
31st December, 2013, due to ill health and old age.
ICICI Bank Ltd. has withdrawn the nomination of Mr. Loknath Mishra (DIN
01030405) from the Board w.e.f. 14th August, 2013 and IDBI Bank Ltd has
nominated Mr. Aloke Sengupta (DIN 00064934) on the Board of the Company
on 14th August, 2013. Further, Export Import Bank of India (EXIM) has
nominated Mr. David Rasquinha (DIN 01172654) on the Board on 30th May,
2014.
As per section 149 of the Companies Act, 2013 (Act), which came into
effect from 1st April, 2014, every listed public company is required to
have at least one-third of the total number of directors as Independent
Directors. These Independent Directors are not liable to retire by
rotation. Accordingly, it is proposed to appoint Mr. Ashok Chitnis (DIN
00793751) and Mr. Ashwani Kumar (DIN 02863328) as Independent
Directors, in accordance with the provisions of section 149 of the Act,
to hold office as per their tenure of appointment mentioned in the
Notice of the Annual General Meeting of the Company.
The Company has received declarations from the said Independent
Directors of the Company confirming that they meet the criteria of
independence as prescribed both under sub-section (6) of Section 149 of
the Companies Act, 2013 and under the said Clause 49. In accordance
with the provisions of Section 149(4) and proviso to Section 152(5) of
the Companies Act, 2013, these Directors are being appointed as
Independent Directors to hold office as per their tenure of appointment
mentioned in the Notice of the forthcoming AGM of the Company.
A brief resume of the Director retiring by rotation at the ensuing AGM,
nature of expertise in specific functional areas and names of the
Companies in which he holds directorship and/ or membership/
chairmanships of Committees of the respective Boards, shareholding and
relationship between Directors inter se as stipulated under Clause 49
of the Listing Agreement with the Stock Exchanges in India, is given in
the notice of Annual General Meeting forming part of this Annual Report
None of these directors is disqualified as per the provisions of
Section 164 of the Companies Act, 2013, to be re-appointed as directors
of your Company.
9. AUDITORS
M/s. Nisar & Kumar, Chartered Accountants, Statutory Auditors of the
Company hold office till the conclusion of the ensuing Annual General
Meeting is proposed to be re-appointed as joint Statutory Auditors of
the Company from the conclusion of ensuing Annual General Meeting till
the conclusion of 32nd Annual General Meeting subject to ratification
by members at every Annnual General Meeting of the Company.
M/s. GMJ and Co. Chartered Accountants is proposed to be appointed as
joint Statutory Auditors of the Company from the conclusion of ensuing
Annual General Meeting till the conclusion of next Annual General
Meeting of the Company.
Joint Statutory Auditors have consented for their re-appointment in
terms of the Section 139 of the Companies Act 2013 and also provided a
Certificate confirming the satisfaction of conditions prescribed under
the Companies (Audit and Auditors) Rules, 2014 and Section 141 of the
Companies Act, 2013.
Your Directors on the recommendation of the Audit Committee propose the
appointment of Statutory Auditors at such remuneration to be decided by
the Board of Directors in consultation with the said Auditors.
10. CAPITAL
During the period under review, the Authorised Capital of the Company
have been increased to Rs. 170,00,00,00,000/- (Rs. Seventeen Thousand
Crores Only) divided into 15,00,00,00,000 (One Thousand Five Hundred
Crore) equity shares of Rs.10/- (Rs. Ten Only) each aggregating to Rs.
150,00,00,00,000/- (Rs. Fifteen Thousand Crores Only) and 200,00,00,000
(Two Hundred Crores) Compulsory Convertible Preference Shares of
Rs.10/- (Rs. Ten Only) each aggregating to Rs. 20,00,00,00,000/- (Rs.
Two Thousand Crores Only).
11. ISSUE OF SECURITIES
In order to strengthen the Balance Sheet of the Company by repayment of
its debt and for general corporate purposes, the Company proposes to
raise long term capital by issue of further securities including but
not limited to Convertible Bonds, Preference Shares, Equity Shares and
other securities whether convertible or not, etc., upto Rs. 1,000/-Crs.
(Rs. One Thousand Crores).
Accordingly the enabling resolution mentioned in the Notice of meeting
is commended for our approval.
12. DEPOSITS
The Company has not accepted deposits by way of invitation to the
public and therefore, provisions of Section 73 of the Companies Act,
2013 are not applicable to the Company.
13. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FORIEGN EXCHANGE
EARNINGS AND OUTGO
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 Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988, as amended, is forming part of this Report as "Annexure A".
14. CORPORATE GOVERNANCE
ABG believes in ethical conduct of business and understands that good
corporate governance is vital to success in business; create long term
shareholder value as also an important component of commitment to the
shareholders, customers and employees.
A detailed report on compliance of Corporate Governance in terms of
Clause 49 of the Listing Agreement is presented in a separate section
forming part of this Report as "Annexure B". The Auditors'' certificate
on compliance with Corporate Governance by the Company is attached to
the report on Corporate Governance.
15. DIRECTORS'' RESPONSIBILITY STATEMENT
As stipulated in Section 217(2AA) of the Companies Act, 1956, your
Directors confirm that:
i. in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. the Directors have 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 at the end of the financial year and of the profit or
loss of the company for that period;
iii. 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 and for
preventing and detecting fraud and other irregularities;
iv. the Directors have prepared the annual accounts on a going concern
basis.
16. STATUTORY INFORMATION
The particulars of employees as required under Section 217 (2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975, and Companies (Particulars of Employees) Amendment Rules,
2011, forms part of this Report. In terms of the 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. Any member
seeking such particulars may write to the Company Secretary at the
Corporate Office of the Company.
17. INDUSTRIAL RELATIONS
Your Company maintained healthy, cordial and harmonious industrial
relations at all levels at the offices and yards of the Company
throughout the year.
18. CORPORATE SOCIAL RELATIONS
In compliance with the requirement of the Companies Act, 2013, the
Company has constituted a Corporate Social Responsibility Committee.
Details on various initiatives in this regard are described in the
Report of Corporate Governance and forms part of this report.
19. APPRECIATION
Your Directors wish to acknowledge the understanding, support and
services of the employees at all levels which have largely contributed
to efficient operations and management of the Company during the year
under review.
Your Directors also take this opportunity to express their deep sense
of gratitude to all the Customers, Suppliers, Bankers, Financial
Institutions, Trustees, Government Authorities/Officials, Business
Associates, Shareholders and Debenture Holders of the Company for their
continuous guidance and support to the Company and their continued
confidence in the management of the Company.
For and on behalf of the Board
Place: Mumbai Syed Abdi Dhananjay Datar
Date : 14th August, 2014 Managing Director Executive Director
& CEO
Mar 31, 2013
TO THE MEMBERS,
The Directors take pleasure in presenting the Twenty Eighth Annual
Report on the business and operations of your Company together with the
Audited Accounts for the financial year ended 31st March 2013.
1. FINANCIAL PERFORMANCE :
Financial performance of the Company for Financial Year 2012-13 is
summarised below:
(Rs.in crores)
Particulars 2012-2013 2011-2012
Sales and Other Income 2149.33 2432.69
Profit before Interest, Depreciation & Tax 565.29 570.29
Less: Interest (Net) 287.88 192.26
Profit before Depreciation & Tax 277.41 378.03
Less: Depreciation 103.71 99.25
Profit before Tax 173.70 278.78
Less: Provisions for Taxation 66.57 98.49
Net Profit after Tax 107.13 180.29
Balance brought forward from previous year 488.92 416.63
Profit available for appropriations 596.05 596.92
Appropriations
Transfer to Debenture Redemption Reserve 91.00 92.00
Transfer to General Reserve 10.00 16.00
Proposed Dividend  Equity shares
Corporate Dividend Tax
Balance carried to Balance Sheet 495.05 488.92
* Figures regrouped wherever necessary.
Your Company has recorded a total revenue of Rs. 2149.33 crores, Net
Profit after tax for the Financial Year stood at Rs. 107.13 crores and
recorded an EBIDITA of Rs. 565.29 Crores, as standalone basis for the
financial year under consideration.
2. BUSINESS OPERATIONS
Your Company is India''s largest Shipbuilding and Ship repair Company in
Private sector with satisfied customer base in India & abroad. The
shipyards of the Company are located at Surat and Dahej in Gujarat.
Since inception, your Shipyard has successfully built and delivered 157
(One Hundred Fifty Seven) ships including Specialized and Sophisticated
vessels like Interceptor Boats, Self-Loading and Discharging Bulk
Cement Carriers, Floating Cranes, Articouple Tugs and Flotilla, Split
Barges, Bulk Carriers, Newsprint Carriers, Offshore Supply Vessels,
Dynamic Positioning Ships, Anchor Handling Tug Supply Vessels,
Multi-purpose Support Vessel, Diving Support Vessels, Pollution Control
Vessel etc. for leading companies in India and overseas. Over 80% of
the vessels built have been for foreign customers in Europe, South East
Asia and Middle East. Around 50% of ABG''s Order Book comprises of
orders from repeat customers.
The difficult external environment has had a direct bearing on your
company''s financial results. There is considerable impact on the
Financials of the Company due to adverse economic conditions.
The manufacturing processes in the Shipyards are in line with world
class standards and the Yards have been certified by DNV for ISO
9001:2008 (for Quality Standards), by IRS for ISO 14001:2004 (for
Environment Management Systems) and OHSAS 18001:2007 ( for Occupational
Health & Safety Management Systems).
ABG Shipyard Ltd has a facility to construct all types of quality
ships, offshore oil rigs and specialized vessel''s needs, by
demonstrating compliance to marine environment protection and
initiatives towards conservation of natural resources.
During the Financial Year 2012-13, your company has bagged a
prestigious repeat order for construction of 1 cadet training ship of Rs.
485 Crs from Indian Navy, Ministry of Defence.
The Government of India had provided for a Shipbuilding Subsidy Scheme,
for both export and domestic orders to all the Indian Shipyards, which
was expired in August, 2007 and The Government had issued modified
guidelines dated 25th March 2009, for liquidation of the liability for
the payment of subsidy for ongoing eligible contracts entered upto 14th
August 2007, by virtue of the same, your company has received an amount
of Rs. 68.62 Crores towards subsidy in the Financial Year 2012-13.
3. MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis Report for the year under review as
stipulated under Clause 49 of the Listing Agreement with the Stock
Exchanges in India is presented in a separate section forming part of
this Report as "Annexure C".
The detailed Industry Review and Outlook are elaborated in the
Management Discussion and Analysis Report.
4. AWARDS AND ACCOLADES
«- "Shipbuilding Company of the Year 2012" by Dun & Bradstreet.
«- All India Trophy for Highest Exporter from the Government of India,
in recognition of outstanding contribution in Engineering Export, for 8
years.
«- "Certificate of MERIT & HONOUR" by Gujarat Safety Council.
«- "Greentech Safety Silver Award - 2012" in Engineering Sector for
outstanding achievements in Safety Management.
«- "Appreciation Letter" by Director Industrial Safety & Health,
Government of Gujarat for Best Work during Major Fire in Indian Oil
Corporation, Hazira.
5. DIVIDEND
The Board has not recommended dividend for the year, considering the
Capital expansion plans along with requirement of working capital funds
and needs of general corporate purposes.
6. SUBSIDIARIES
Your Company has three (3) subsidiaries i.e. Western India Shipyard
Limited (a BSE listed Company), ABG Shipyard Singapore Pte Limited
(Singapore based Wholly Owned Subsidiary) and ABG FPSO Private Limited
at the end of the financial year 2012-13.
In accordance with the General Circular no. 2/2011 dated 8th February,
2011, issued by the Ministry of Corporate Affairs (MCA), Government of
India (GOI), the Balance Sheet, Statement of Profit and Loss and other
documents of the subsidiary companies are not attached with the Balance
Sheet of the Company. Company undertakes to make available the copies
of annual accounts of the subsidiary companies and related detailed
information to the shareholders of the Company on request. Further, the
annual accounts of the subsidiary Companies will also be kept at the
registered office of the Company and of its subsidiary Companies for
inspection by any member.
The consolidated financial statements are forming part of this Annual
Report. As stipulated by Clause 32 of the Listing Agreement with the
Stock Exchanges, the attached Consolidated Financial Statements have
been prepared in accordance with the Accounting Standards issued by The
Institute of Chartered Accountants of India (ICAI).
7. DIRECTORS
In terms of the Section 255 & 256 of the Companies Act, 1956 read with
Article 190 of the Articles of Association of the Company, Mr. Shahzaad
Dalal and Mr. Ashok R. Chitnis are liable to retire by rotation at the
ensuing Annual General Meeting and are eligible for re-appointment.
Your Directors recommend the re-appointment of Mr. Shahzaad Dalal and
Mr. Ashok R. Chitnis as Directors.
Your Board of Directors at their meeting held on May 30, 2013,
re-appointed Major Arun Phatak, as an Executive Director of the
Company, for a further term of 5 years with effect from June 10, 2013
subject to the approval of the members. Your Directors recommend the
re-appointment of Major Arun Phatak as an Executive Director of your
company.
During the period under review Mr. Ram Swaroop Nakra - Managing
Director of the Company has resigned from the company w.e.f. 30th
November 2012, due to ill health and old age.
Mr. Girish Nayak was nominated by ICICI Bank Ltd on the Board of the
Company as on 14th November 2012, subsequently he was replaced by Mr.
Loknath Mishra as on 30th May 2013. Further, ICICI bank has withdrawn
the nomination of Mr. Loknath Mishra from the Board of the Company vide
its letter dated 15th July 2013.
IDBI Bank Ltd has nominated Mr. Alok Sengupta on the Board of the
Company w.e.f. 14th August 2013.
A brief resume of the Director retiring by rotation at the ensuing AGM,
nature of expertise in specific functional areas and names of the
Companies in which he holds directorship and/ or membership/
chairmanships of Committees of the respective Boards, shareholding and
relationship between Directors inter se as stipulated under Clause 49
of the Listing Agreement with the Stock Exchanges in India, is given in
the notice of Annual General Meeting forming part of this Annual
Report.
None of these directors is disqualified as per the provisions of
Section 274 (1) (g) of the Companies Act, 1956, to be re- appointed as
directors of your Company.
8. AUDITORS
M/s. Nisar & Kumar, Chartered Accountants, Statutory Auditors of the
Company hold office till the conclusion of the ensuing Annual General
Meeting and have consented for their re-appointment.
Your Directors recommend their appointment as the Auditors of the
Company for the current year and fix their remuneration.
9. ISSUE OF SECURITIES
Taking into account to expansion plan and positive outlook of the
Company, the Company proposes to raise long term capital by issue of
further securities including but not limited to Convertible Bonds,
Preference Shares, Equity Shares and other securities whether
convertible or not, etc., upto Rs. 1,000/-Crs. (Rupees One Thousand
Crores) to cater its fund requirements for expansion of its activities,
finance, additional working capital requirements and general corporate
purpose.
Accordingly the enabling resolution mentioned in the Notice of meeting
is commended for your approval, which is in supersession of all earlier
resolutions passed in this regard.
10. 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.
11. CORPORATE GOVERNANCE
ABG believes that good governance generates goodwill among business
partners, customers and investors, earns respect from society, brings
about a consistent sustainable growth for the Company and generates
competitive returns for the investors. Your Company, through its Board
and Committees, endeavours to strike and deliver the highest governing
standards for the benefit of its stakeholders.
Your Company not only adheres to the prescribed compliance rules of
Clause 49 of the Listing Agreement but is constantly striving to adopt
growing excellent practices worldwide.
An elaborated report on compliance of Corporate Governance as specified
in Clause 49 of the Listing Agreement is presented in a separate
section forming part of this Report as "Annexure B".
12. DIRECTORS'' RESPONSBILITY STATEMENT
As stipulated in Section 217(2AA) of the Companies Act, 1956, your
Directors confirm that:
i in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. the Directors have 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 at the end of the financial year and of the profit or
loss of the company for that period;
iii. 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 and for
preventing and detecting fraud and other irregularities;
iv. the Directors have prepared the annual accounts on a going concern
basis.
13. STATUTORY INFORMATION
The particulars of employees as required under Section 217 (2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975, and Companies (Particulars of Employees) Amendment Rules,
2011, forms part of this Report. In terms of the 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. Any member
seeking such particulars may write to the Company Secretary at the
Corporate Office of the Company.
14. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FORIEGN EXCHANGE
EARNINGS AND OUTGO
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 Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988, as amended, is forming part of this Report as "Annexure A".
15. INDUSTRIAL RELATIONS
The enthusiasm and determined efforts of employees have enabled the
Company to remain at the leadership position in the Shipbuilding
industry ranked as one of the India''s most admired and valuable
Shipyard. Your Company maintained healthy, cordial and harmonious
industrial relations at all levels.
16. APPRECIATION
Your Directors place on record their deep appreciation to employees at
all levels for their hard work, dedication and commitment and express
their sincere thanks and appreciation to all the employees for their
continued commendable teamwork, exemplary contribution, support and
co-operation to the operations and performance of the company.
The directors would also like to express their sincere appreciation for
assistance and co-operation from the Bankers, Financial Institutions,
Government Authorities, Business Associates and Company''s
Shareholders/Members for their contribution in enhancing the esteem of
the Company.
For and on behalf of the Board
Place: Mumbai Major Arun Phatak Dhananjay Datar
Date: 14th August 2013 Executive Director Whole Time Director
Mar 31, 2012
The Directors are pleased to present the Twenty Seventh Annual Report
on the business and operations of your Company along with the Audited
Accounts for the year ended 31st March 2012.
1. FINANCIAL PERFORMANCE
(Rs. in crores)
Particulars 2011-2012 2010-11
Sales and Other Income 2732.86 2,082.66
Profit before Interest,
Depreciation & Tax 604.92 505.39
Less: Interest (Net) 226.89 162.15
Profit before Depreciation & Tax 378.03 343.24
Less: Depreciation 99.25 63.03
Profit before Tax 278.78 280.21
Less: Provisions for Taxation 98.49 91.41
Net Profit after Tax 180.29 188.80
Balance brought forward
from previous year 416.63 383.58
Profit available for appropriations 596.92 572.38
Appropriations
Transfer to Debenture
Redemption Reserve 92.00 92.00
Transfer to General Reserve 16.00 40.00
Proposed Dividend Equity shares - 20.37
Corporate Dividend Tax - 3.38
Balance carried to Balance Sheet 488.92 416.63
* Figures regrouped wherever necessary.
2. OPERATIONS
Your company has successfully delivered 14 vessels during the financial
year under review which has taken to the total sum to 152 vessels
delivered so far by the Company.
Your Company has posted a turnover of Rs. 2432.86 crores, an increase of
about 16.82% as compared to Rs.2082.66 Crores in the previous Financial
Year. The Company recorded a net profit ofRs. 180.29 Crores, for the
financial year under consideration.
EBIDITA for the Financial Year 2011-12 stood at Rs.604.92 Crores with an
Increase of 19.69% as compared to Rs.505.39 Crores in the previous
Financial Year.
The Government of India had provided for a Shipbuilding Subsidy Scheme,
for both export and domestic orders to all the Indian Shipyards, which
was expired in August, 2007 and The Government had issued modified
guidelines dated 25th March 2009, for liquidation of the liability for
the payment of subsidy for ongoing eligible contracts entered upto 14th
August 2007, by virtue of the same, your company has received an amount
of Rs. 16.08 Crores towards subsidy in the Financial Year 2011 -12.
During the Financial Year 2011-12, your company has bagged a
prestigious order of USD 101.14 Mio from Shipping Corporation of India
(SCI) for construction of 6 Nos. of 63.4 meters Twin Screw Diesel
Engine driven 2000DWT SOT Bollard PuN AHTS Vessels.
3. DIVIDEND
Considering the Capital expansion plans coupled with working capital
requirement and needs of general corporate purposes, the Board believes
that the Company needs to conserve its resources to pursue aforesaid
purposes. In view of the same, the Board has not recommended any
payment of dividend for the year.
4. OUTLOOK
Economic Survey for 2012-13 estimated the Indian GDP at 7.6% for the
financial year2012-2013asagainstagrowthof6.9% for the financial year
2011-2012. The Survey indicates that the Indian Economy is likely to
get back on track from this fiscal year due to changes in interest
rates, greater savings and capital formations.
Currently, majority of the new-build orders at Indian private shipyards
are from foreign ship owners. Also, Indian private shipyards cater
almost entirely to the commercial shipping segment. However, due to the
shipping downturn as well as the global economic scenario, the future
of the shipbuilding industry beyond 2012 seems uncertain. Even though
shipyards globally had managed to run profitably till 2011, they
started taking measures to cut costs in anticipation of a lull in
business then after. In view of the looming crisis, these shipyards are
on a hunt to find other avenues of demand for new ships.
Nearly 70% of new-builds in Indian commercial order book are export
oriented. It reflects the notion that Indian fleet owners prefer
acquiring ships from outside India. During the boom time, Indian
shipyards benefited from spill over of orders from the overbooked
foreign yards. But now, they will have to attract domestic ship owners
as the world demand has slowed down.
There are a total of around 900 vessels under the Indian flag and
almost all of them are Indian owned. The average age of the fleet is 24
years. Within the next 5 years -10 years, a large numberof these ships
will need to be replaced, and it is important that these shipbuilding
orders go to Indian Shipyards.
The Government has been encouraging PPP (Public Private Partnership) in
the ports sector to infuse funds, to induct latest technology and
improved management practices, and above all for addition of capacity,
100% Foreign Direct investment under the automatic route is permitted
for port development projects. 100% income tax exemption is also
available for a period of ten years. The proposed investment during the
next ten years is expected to be Rs. 2.77 lakh cr. out of which Rs.1.09
lakh cr. for Major Ports and Rs. 1.68 lakh cr. for non-major ports. The
budgetary allocation, towards subsidy required for the development of
Shipping Industry,for the year 2012-2013 is Rs.400crore.
Regarding the perspective plan "Maritime Agenda 2020" prepared by the
Shipping Ministry, the Agenda encompasses development of 12 major ports
functioning under the Union Government and also the 176 notified
non-major ports. The objective of the Agenda inter alia includes
creation of port capacity of around 3200 million MT to handle the
expected traffic of about 2500 million MT by 2020. The Government of
India has given top priority to the modernization of ports through
various expansion/upgradation projects for berths, construction of new
berths/terminals, installation of new and modern equipment,
upgradation/replacement through higher capacity of cargo handling
equipment's, mechanization of cargo handling operations, deepening of
channels/berths etc. along with schemes for quicker evacuation of cargo
through road and rail connectivity. Under National Maritime Development
Programme (NMDP), 276 projects have been identified for mechanization
and 69 have been completed.
The Indian Navy could be the saviour of the Indian shipbuilding
industry. In the interest of national security, before private
participation was invited, the naval orders were usually awarded to
domestic public sector shipyards. The Public Sector shipyards were
allowed to make joint ventures with private sector shipyard to cater
the requirements of Indian Navy, which are highly attractive because of
long delivery time allowed, absorption of price increase due to cost
overruns by the Government besides very little chance of an order being
cancelled. However, a private shipyard needs to obtain a license to
build naval ships, for which it needs to satisfy technical
requirements. Amongst very few other shipyards, your Company has
obtained this license and successfully entered into the segment. With
the Government of India's aim to make Indian Navy as "Blue Water Navy"
by 2020 coupled with substantial estimated allocation/expenditure in
this sector, the potential in the shipbuilding sector seems enormous.
The current commercial shipbuilding order book of Indian shipyards
values at Rs. 280 billion till 2012, which translates into approximately
Rs. 70 billion per year. Riding on the assumption that the Indian Navy
will be spending Rs. 950 billion, starting in 2013 up to 2030, the Indian
shipping industry would see an annual spending of Rs. 53 billion per year.
However, the defence segment alone cannot help sustain the current
performance of Indian shipyards. Hence, another alternative needs to be
considered is Shipbuilding for offshore sector.
5. SUBSIDIARIES.
Your Company has three (3) subsidiaries i.e. Western India Shipyard
Limited (a BSE listed Company), ABG Shipyard Singapore Pte Limited and
ABG FPSO Private Limited as at the end of financial year. In view of
the General exemption granted by The Ministry of Corporate Affairs,
under Sec. 212 of the Companies Act, 1956, vide General Circular no.
2/2011 dated 8th February, 2011, from the requirement of attaching the
Balance Sheet, Profit & Loss Account, etc of its subsidiaries to its
accounts, your Company has decided to take the benefit of the said
exemption.
The consolidated financial statement is forming part of this Annual
Report.
Your Company undertakes that the annual accounts of the subsidiary
Companies and the related detailed information will be made available
to the members on request. Further, the annual accounts of the
subsidiary Companies will also be kept at the registered office of the
Company and of its subsidiary Companies for inspection by any member.
6. DIRECTORS
In accordance with Section 255 & 256 of the Companies Act, 1956 read
with Article 190 of the Articles of Association of the Company, Shri.
Ashwani Kumar and Shri. Rishi Agarwal are liable to retire by rotation
at the ensuing Annual General Meeting and are eligible for
re-appointment. Your Directors recommend the re-appointment of Shri.
Ashwani Kumar and Shri. Rishi Agarwal as directors.
None of these directors is disqualified as per the provisions of
Section 274 (1) (g) of the Companies Act, 1956, to be re- appointed as
directors of your Company.
7. AUDITORS
M/s. Nisar & Kumar, Chartered Accountants, Statutory Auditors of the
Company hold office till the conclusion of the ensuing Annual General
Meeting and have consented for their re-appointment.
Your Directors recommend their appointment as the Auditors of the
Company for the current year and fix their remuneration.
8. ISSUE OF SECURITIES
Taking into account the performance and positive outlook of the
Company, the Company proposes to raise long term capital by issue of
further securities including but not limited to Convertible Bonds,
Preference Shares, Equity Shares and other securities whether
convertible or not, etc. upto Rs. 1000/-Crs. (Rupees One Thousand
Crores) to cater its fund requirements for expansion of its activities,
finance, additional working capital requirements and general corporate
purpose.
Accordingly the resolution mentioned in the Notice of meeting is
commended for your approval.
9. 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.
10. CORPORATE GOVERNANCE
Your Company believes in implementing the corporate governance practice
that go beyond just meeting of letter of law. Corporate Governance is
a way of life, rather than a mere legal compliance. It further inspires
and strengthens investor's confidence and commitment to the Company,
Your Company is committed to adhering to good corporate governance
practices to effectively meet its Statutory, Financial and Social
obligations. Your company has not only adopted practices mandated in
the clause 49 of the Listing Agreement, but also incorporated some of
the non-mandatory recommendations to uphold its core valuesof Customer
Focus Community, Performance, Leadership, Innovation and Quality.
A detailed report on compliance of Corporate Governance and
Management's Discussion and Analysis as stipulated in Clause 49 of the
Listing Agreement is enclosed and forms part of this Report.
In line with the applicable provisions, the Company has obtained
requisite Certificate from the Auditors of the Company, which is
annexed and forms part of this Report.
11. DIRECTORS" RESPONSBILITY STATEMENT
As stipulated in Section 217(2AA) of the Companies Act, 1956, your
Directors confirm that:
i in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. the Directors have 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 at the end of the financial year and of the profit or
loss of the company for that period;
iii. 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 and for
preventing and detecting fraud and other irregularities;
iv the Directors have prepared the annual accounts on a going concern
basis.
12. STATUTORY INFORMATION
The particulars of employees as required under Section 217 (2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975, and Companies (Particulars of Employees) Amendment Rules,
2011, are required to be annexed to the Directors' Report. Having
regard to the provisions of Section 219 (1)(b)(iv) of the said 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 particulars may write to the Company
Secretary at the Corporate Office of the Company.
13. ENERGY CONSERVATION.TECHNOLOGY ABSORPTION AND FORIEGN EXCHANGE
EARNINGSAND OUTGO
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 Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988, as amended, is given in the annexure to this Report.
14. INDUSTRIAL RELATIONS
The Industrial relations at the manufacturing facilities of your
Company have been cordial during the year.
Your directors would like to express their sincere thanks and
appreciation to all the employees for their commendable teamwork and
exemplary contribution to the operations and performance of the company
and looks forward to their continued co- operation and support.
15. APPRECIATION
Your Company's Board and employees are inspired by their vision of
sustaining ABG's position as one of the India's most admired and
valuable Shipyard through world-class performance, creating enduring
value for all stakeholders and the Indian Society.
The directors wish to place on record their profound sense of
appreciation to the employees at all levels of the Company for their
dedication and commitment throughout the year.
The directors would also like to express their sincere appreciation for
assistance and co-operation from the Bankers, Financial Institutions,
Government Authorities, Business Associates and Company's
Shareholders/Members for their contribution in enhancing the esteem of
the Company.
For and on behalf of the Board
Place: Mumbai R.S. Nakra Major Arun Phatak Dhananjay Datar
Date : 14th August 2012 Managing
Director Executive Director Whole Time
Director &
Chief Financial
Officer
Mar 31, 2011
TO THE MEMBERS,
The Directors have great pleasure in presenting this Twenty Sixth
Annual Report on the business and operations of your Company with
theAuditedStatementofAccountsfortheyearended31st March 2011.
1. FINANCIAL PERFORMANCE
Particulars ( Rs. incrores )
2010-11 2009-10
Sales and Other Income 2081.04 1822.54
Profit before Interest, Depreciation &Tax 482.71 516.60
Less: Interest (Net) 139.47 150.61
Profit before Depreciation &Tax 343.24 365.99
Less: Depreciation 63.03 38.69
Profit before Tax 280.21 327.30
Less: Provisions for Taxation 91.41 98.38
Net Profit after Tax 188.80 228.92
Balance brought forward from previous year 383.58 323.49
Profit available for appropriations 572.38 552.41
Appropriations
Transfer to Debenture Redemption Reserve 92.00 25.00
Transfer to General Reserve 40.00 120.00
Proposed Dividend Equity shares 20.37 20.37
Corporate Dividend Tax 3.38 3.46
Balance carried to Balance Sheet 416.63 383.58
* Figures regrouped wherever necessary.
2. OPERATIONS
During the financial year under review, your Company has successfully
delivered 16 vessels taking to the total up to 138 vessels delivered so
far by the Company.
Your Company has posted a turnover of Rs.2081.04 crores, an increase of
about 14.18% as compared to Rs. 1822.54 Crores in the previous
Financial Year. The Company recorded a net profit of Rs. 188.80 Crores.
During the year, the construction of Jetty (27 metre wide x 231 metre
long), a Slip dock (40 metre wide and 450 metre long) and a Heavy duty
Ship Transfer system capable of lifting and moving 27,000 MT were
completed and commissioned at Dahej yard.
During the year, your Company has notched another milestone with the
delivery of a 32,000 DWT, Double Hull, Bulk Carrier, first to be built
in India with CSRand PSPC Compliances, to Precious Shipping Public Co.
Ltd, Thailand.
During the year your Company has bagged the first of its kind order
from Indian Navy for the construction of 2 (two) Cadet Training Ships
and a prestigious order for the construction of 2 Jack-up rigs from
Drilling & Offshore Pte Limited, Singapore. With state of the art
infrastructure in place at Dahej and Surat yards, your Company is now
fully geared to build and repair all kinds of ships, rigs and offshore
structures/ platforms for its wide range of customers and defense
sector.
3. DIVIDEND
Considering the profitability for the year under consideration and
thefuture capital requirements of the Company, your Directors
recommended a Dividend of f 4/- per Equity Share of Rs. 107- each (i.e.
40%) for the year ended 31st March 2011 and seek your approval for the
same.
4. OUTLOOK
By virtue of a long coastline of about 7517 km, coupled with 190 major
and non-major ports, India is considered a major maritime nation.
Approximately 90% of the country's trade by volume and 70% by value is
moved through maritime transport. In view of its importance, the Indian
Government has recognised the need to promote the quality of the
shipping and ocean resources, ports, harbours and the new technologies
to be developed in this emerging scenario.
Cargo handled at Indian ports more than quadrupled from 180 million
tonnes in 1993-94 to 850 million tonnes in 2009-10, while the growth in
Indian tonnage has been slow compared to burgeoning merchandise trade
volumes. As much as 40% of Indian ships will need to be replaced over
the next 5 years owing to more than 20 years of age and mandatory IMO
regulations for phasing out single hull tankers. At present domestic
shipping companies rely heavily on foreign yards for acquisition or
repairs.
The current capacity of all shipbuilding yards in India is approx.
5,00,000 DWT. The Indian shipbuilding industry, which had only about
0.1% share of the world shipbuilding in 2002, expanded over 10 fold to
claim 1 % share by 2008.
The Ministry of Shipping had envisaged, under the National Maritime
Development Programme (NMDP), to set up two international size
shipyards, one on the west coast and the other on the east coast.
Recently, it has been decided by the Ministry that since the private
sector has come up with setting up of two international size shipyards
one on the east coast and another on the west coast, the Government may
not pursue the matter regarding setting up of two international size
shipyards and may act only as a facilitator.
The National Manufacturing Competitive Council (NMCC) has emphasised
the need for a shipbuilding policy to enable Indian shipyards to
compete effectively on both domestic and export markets to help build a
strong shipbuilding sector in the country, given its potential for
employment generation and its strategic importance. Towards this
direction, NMCC has recommended that the shipbuilding industry in India
needs to be granted Infrastructure status and be declared as a
strategic sector. In order to achieve the coveted goal of transforming
Indian ports into world class facilities suited to the requirements of
future economy of India, the Government of India has formulated
Maritime Agenda 2010-2020, with a target, inter alia, of achieving a
global shipbuilding market share of 5% by 2020 with strong R&D
facilities and design capabilities forthe commercial shipbuilding.
With the Government of India's decision to open the Defence sector
contracts for private participation and given the size of defence
sector contracts, a new area of opportunity with great potential
togrowhas been created for ship building Companies in private sector.
The Government had earlier announced the Subsidy Scheme, in order to
give boost to the shipbuilding Companies, for both domestic and export
orders. This Subsidy Scheme had expired in August 2007. The momentum
created by the boom conditions and subsidy support has been lost by the
discontinuation of the scheme and recession post 2007 and as a result
the Indian shipyards have been languishing for major orders. In order
to revive the momentum in the shipbuilding sector, the Government has
been reportedly considering reviving the subsidy scheme with some
changes.
5. SUBSIDIARIES
Your Company has two (2) subsidiaries i.e. Western India Shipyard
Limited (a BSE listed Company) and ABG Shipyard Singapore Pte Limited
as at the end of financial year. In view of the General exemption
granted by The Ministry of Corporate Affairs, under Sec. 212 of the
Companies Act, 1956, vide General Circular no. 2/2011 dated 8*
February, 2011, from the requirement of attaching the Balance Sheet,
Profit & Loss Account, etc. of its subsidiaries to its accounts, your
Company has decided to take the benefit of the said exemption.
The consolidated financial statement is forming part of this Annual
Report.
Your Company undertakes that the annual accounts of the subsidiary
Companies and the related detailed information will be made available
to the members on request. Further, the annual accounts of the
subsidiary Companies will also be kept at the registered office of the
Company and of its subsidiary Companies for inspection by any member.
6. SCHEME OF COMPROMISE AND ARRANGEMENT
Pursuant to the order of Hon'ble Bombay High Court at Goa passed in the
matter concerning the Scheme of Compromise and Arrangement between
Western India Shipyard Limited and its Secured Lenders & Shareholders
with your company as a confirming party, your Company has acquired
60.26% shareholding in Western India Shipyard Limited (WISL).
WISL is a BSE listed company located at Goa port, which is on the west
coast of India. It has a modern state-of-the-art floating dry dock that
enables it to repair various types of vessels up to 60,000 DWT.
Acquisition of Western India Shipyard Limited has added rig and ship
repairing expertise to coexisting business.
7. DIRECTORS
In accordance with Section 255 & 256 of the Companies Act, 1956 read
with Article 190 of the Articles of Association of the Company, Shri.
Ashok Chitnis and Major Arun Phatak are liable to retire by rotation at
the ensuing Annual General Meeting and are eligible for re-appointment.
Your Directors recommend the appointment/ re-appointment of Shri. Ashok
Chitins and Major Arun Phatak as directors.
Mr. Nainesh Jaisingh and Mr. SaketAgarwal have resigned as directors of
the Company with effectfrom 29th of July 2011. The Directors record
their appreciation of the valuable services rendered by Mr. Nainesh
Jaisingh and Mr. SaketAgarwal. Further, Mr. Dhananjay Datar, Chief
Financial Officer of the Company has been appointed as Whole-time
Director with effect from 29th July 2011. Considering the vast
experience and skills in finance, management, taxation and industry,
your directors recommend his appointment for your approval. IL&FS
Investment Managers Limited (IL&FS) which had nominated Mr. Shahzaad
Dalai to the Board of Directors of the Company has divested its
investment in the Company. Consequent upon this, IL&FS withdrew its
nominee Directorfrom the Board. However, considering the credentials of
Mr. Shahzaad Dalai in the fields of Finance, Management and Industry,
the Board of Directors had appointed Mr. Shahzaad Dalai as an
Additional Director of the Company, who holds the office of Director up
to the date of the ensuing Annual General Meeting of the Company. Your
Company has received a notice under Section 257 of the Companies Act
1956 from a member signifying his intention to propose the appointment
of Mr. Shahzaad Dalai as a Director of the Company, liable to retire by
rotation. Your Directors recommend his appointment for your approval.
None of these directors is disqualified as per the provisions of
Section 274 (1) (g) of the Companies Act, 1956, to be re-appointed or
appointed as directors of your Company.
The details of the Directors being recommended for appointment/
re-appointment are contained in the accompanying notice of the
forthcoming Annual General Meeting.
8. AUDITORS
M/s. Nisar& Kumar, Chartered Accountants, Statutory Auditors of the
Company hold office till the conclusion of the ensuing Annual General
Meeting and have consented for their re-appointment.
Your Directors recommend their appointment as the Auditors of the
Company for the current year and fix their remuneration.
9. 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.
10. CORPORATE GOVERNANCE
Your Company is committed to adhering to good corporate governance
practices to effectively meet its Statutory, Financial and Social
obligations. We believes that good corporate governance is vital to our
success in business, create long term shareholder value as also an
important component of our commitment to our shareholders, customers
and employees.
A detailed report on compliance of Corporate Governance and
Management's Discussion and Analysis as stipulated in Clause 49 of the
Listing Agreement is enclosed and forms part of this Report, as
Annexure B & C respectively
In line with the applicable provisions, the Company has obtained
requisite Certificate from the Auditors of the Company, which is annexed
and forms part of this Report.
11. DIRECTORS" RESPONSBILITYSTATEMENT
As stipulated in Section 217(2AA) of the Companies Act, 1956, your
Directors confirm that:
i in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. the Directors have 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 at the end of the financial year and of the profit or
loss of the company for that period;
iii. 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 and for
preventing and detecting fraud and other irregularities;
iv. the Directors have prepared the annual accounts on a going concern
basis.
12. STATUTORY INFORMATION
The particulars of employees as required under Section 217 (2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975, and Companies (Particulars of Employees) Amendment Rules,
2011, are required to be annexed to the Directors' Report. Having
regard to the provisions of Section 219 (1)(b)(iv) of the said 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 particulars may write to the Company
Secretary at the Corporate Office of the Company.
13 ENERGY CONSERVATION.TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGSAND OUTGO
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 Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988, as amended, is given in the Annexure -A to this Report.
14. INDUSTRIAL RELATIONS
The Industrial relations at the manufacturing facilities of your
Company have been cordial during the year. Your Directors wish to place
on record the commitment and involvement of the employees at all levels
and looks forward to their continued co- operation and support.
15. APPRECIATION
The directors wish to place on record their deep sense of appreciation
to the employees at all levels of the Company for their dedication and
commitment throughout the year.
The directors would also like to express their appreciation for
assistance and co-operation from the bankers, trustees, financial
institutions, Government Authorities, business associates and Company's
shareholders/members.
For and on behalf of the Board
Place: Mumbai R.S. Nakra Major Arun Phatak
Date :29th July 2011 Managing Director Executive Director
Mar 31, 2010
The Directors have great pleasure in presenting this Twenty Fifth
Annual Report on the business and operations of your Company with
theAuditedStatementofAccountsfortheyearended31st March 2010.
1. FINANCIAL PERFORMANCE
(Rs. in crores)
2009-2010 2008-2009
Sales and Other Income 1,851.79 1,419.47
Profit before Interest, Depreciation & Tax 516.60 338.37
Less: Interest (Net) 150.61 73.95
Profit before Depreciation & Tax 365.99 264.42
Less: Depreciation 38.69 14.48
Profit before Tax 327.30 249.94
Less: Provisions for Taxation 98.38 78.84
Net Profit after Tax 228.92 171.10
Balance brought forward from previous year 323.49 249.30
Profit available for appropriations 552.41 420.40
Appropriations
Transfer to Debenture Redemption Reserve 25.00 -
Transfer to General Reserve 120.00 85.00
Proposed Dividend - Equity shares 20.37 10.18
Corporate Dividend Tax 3.46 1.73
Balance carried to Balance Sheet 383.58 323.49
* Figures regrouped wherever necessary.
2. OPERATIONS
During the year under review, your Company has successfully delivered
14 vessels taking to the total up to 122 vessels delivered so far by
the Company
Your Company has posted a turnover of Rs. 1,851.79 crores, an increase
of about 30.45% as compared to Rs. 1,419.47 Crores in the previous
Financial Year. The Company recorded a net profit of Rs. 228.92 Crores
as against Rs. 171.10 Crores in the corresponding previous financial
year depicting a rise of 33.80%. Your Company could achieve a rise in
overall profitability through a judicious mix of strategies and cost
control measures.
Installation of the Ship transfer system at the Dahej unitwas completed
during the year. The installation of the Ship lift system is in the
advanced stage of completion. Your Company has received all the
necessary approvals for the construction of a 230 metre long jetty and
construction of the same is in an advanced stage.
During the year under consideration, your Company had bagged a
prestigious order for the construction of 3 cement carriers of 20,000
DWT each from M/s. Associated Bulk Carriers Pte Ltd, Singapore a joint
venture company of M/s. Precious Shipping Public Company Limited.
3. DIVIDEND
Considering the profitability for the year under consideration and the
future capital requirements of the Company, your Directors recommended
a Dividend of Rs. 4/- per Equity Share of Rs. 10/- each (i.e. 40%) for
the year ended 31st March 2010 and seek yourapprovalforthesame.
4. OUTLOOK
Shipping continues to remain unchallenged as the worlds most efficient
means of transportation. With a long coastline of about 7517 km, spread
on the western and eastern shelves of the mainland, shipping forms an
important natural resource for countrys trade. Approximately 95% of
the countrys trade by volume and 70% by value is moved through
maritime transport. In view of its importance, the Indian Government
has recognised the need to promote the quality of the shipping and
ocean resources, ports, harbours and the new technologies to be
developed in this emerging scenario.
The Ministry of Shipping has finalised a National Maritime Development
Programme (NMDP) to implement specific programmes/ schemes for the
development of the portsector. The total investment involved for the
projects identified under this programme for the period up to 2014-15
is Rs. 1,00,339 crores. Out of this, Rs. 55,804 crore is for the port
sector and the balance is for shipping and inland water transport
sectors.
NMDP has envisaged setting up of 2 international standard shipyards in
India, one on the west coast and the other on the east coast. For this,
Government has nominated, Ennore port and Mumbai Port Trust to function
as nodal agencies. Expressions of interest received in this regard are
being processed.
Further, the Government has established Indian Maritime University
(IMU) in Chennai in the year 2008 with campuses at Chennai, Kolkata,
Mumbai and Vishakhapatnam. It will promote advanced knowledge by
providing institutional and research facilities in the emerging areas
of marine science & technology, marine environment and other related
fields.
Inland Waterways Authority of India is undertaking projects for making
national waterways 1,2 and 3 (Ganga, Brahmaputra and West Coast canal)
fully functional by providing navigational channel of 3m/2m/1.5m depth
for about 330 days in a year, in various stretches, fixed and floating
terminals at selected locations and aids for day and night navigation
with DGPS connectivity.
The Dry Baltic Index (BDI) which opened the year 2009 with 773 has
reached 3063 in December 2009, showing signs of global recovery.
However, according to market analysts the shipping markets are expected
to remain flat at these levels. The tanker segment of the shipping
market remained subdued due to drastic fall in the demand for petroleum
products in the western countries. The one reason attributed to the
shipping market revival during 2009 is increased Chinese and Indian
demand for Iron ore and coal on the dry side and in the tanker segment,
increase in demand from USA and far East markets from Arabian
Gulfregion.
5. SUBSIDY
The Government of India had provided for a Shipbuilding Subsidy Scheme,
for both export and domestic orders to all the Indian shipyards. The
broad features of the scheme were as follows:
* 30% subsidy was payable for all export orders irrespective of size
and type but limited to seagoing merchant vessels of and over 80 metres
in length for domestic vessels.
* Prices to be determined by the global tender in case of domestic
orders.
* In case of export orders obtained on price negotiation a "Price
Reasonableness Certificate" to be obtained from DG Shipping.
* In case of Public Sector shipyards, subsidy is payable on stage
payments received by the shipyard.
* In case of Private Sector shipyards, subsidy is payable after the
delivery of the vessel.
This Scheme had expired on August 14, 2007. The Government has issued
modified guidelines dated 25th March 2009 for liquidation of the
liability for the payment of subsidy for ongoing eligible shipbuilding
contracts entered by Central Public Sector shipyards up to 14* August
2007 and eligible shipbuilding contracts entered on 25th October 2002
and thereafter by Non-Central Public Sector shipyards and Private
Sector shipyards up to 14th August 2007, to the shipyards who have
applied to DG Shipping for Price Reasonableness Certificate on or
before 14th August 2007. In order to give a boost to the ship building
industry, the Government of India is considering reviving the subsidy
scheme. Your Company has received an amount of Rs 65.49 crores towards
subsidy in the financial year 2009-10.
6. SUBSIDIARIES
Your Company has 2 subsidiaries i.e. Eleventh Land Developers Private
Limited and ABG Shipyard Singapore Pte. Limited as at the end of
financial year. Your Company has sought an exemption under Sec. 212 of
the Companies Act, 1956 from the requirement of attaching the Balance
Sheet, Profit & Loss Account, etc of its subsidiaries to its accounts.
Vide its order dated 13th May, 2010, the Ministry of Corporate Affairs
has exempted from the requirement of Sec. 212 of the Companies Act,
1956 for Eleventh Land Developers Private Limited.
The Balance Sheet, Profit and Loss Account etc. of ABG Shipyard
Singapore Pte. Ltd. and the consolidated financial statement are
forming part of this Annual Report.
Your Company undertakes that the annual accounts of the subsidiary
Companies and the related detailed information will be made available
to the members on request. Further, the annual accounts of the
subsidiary Companies will also be kept at the registered office of the
Company and of its subsidiary for inspection by any member.
7. SCHEME OF COMPROMISE AND ARRANGEMENT
The Honble Bombay High Court at Goa, vide its order dated 15* January
2010 as amended, sanctioned the Scheme of Arrangement and Compromise
between Western India Shipyard Limited (WISL) and its Secured Lenders &
Shareholders with your Company as confirming party. As per the terms of
the Scheme, the secured lenders who have opted for option-1 of the
Scheme have to transfer the shares acquired by them on conversion of
their loans into equity, to ABG Shipyard Limited. ICICI
Bank Limited has converted Rs. 35.51 crore loans into equity and
accordingly, WISL has allotted 17,75,50,000 equity shares of Rs. 21-
each. Transfer of these shares to your Company is yet to take effect as
the Listing & Trading permission is still pending from the Bombay Stock
Exchange Limited
WISL is a BSE listed company located at Goa port, which is on the west
coast of India. It has a modern state-of-the-art floating dry dock that
enables it to repair various types of vessels up to 60,000 DWT The
Western Shipyard acquisition will bring rig and ship repairing
expertise to our existing business.
8. DIRECTORS
Shri. Ashwani Kumar has been appointed as additional directorof the
Company w.e.f. 8th December 2009. Mr. Ashwani Kumar is a retired Chief
Income Tax Commissioner. He would hold the position as additional
director up to the date of ensuing Annual General Meeting of the
Company. Your Company has received a notice from a member under Sec.
257 of the Companies Act, 1956 signifying his intention to propose the
appointment of Mr. Ashwani Kumar as Director of the Company.
Considering the vast experience and skills in finance, management,
taxation and industry, directors of your Company recommend his
appointmentforyourapproval.
In accordance with Section 255 & 256 of the Companies Act, 1956 read
with Article 190 of the Articles of Association of the Company, Shri.
Rishi Agarwal and Shri. Saket Agarwal are liable to retire by rotation
at the ensuing Annual General Meeting and are eligible for
re-appointment.
None of these directors is disqualified as per the provisions of
Section 274 (1) (g) of the Companies Act, 1956, to be appointed/
re-appointed as directors of your Company.
Your Directors recommend the re-appointment of Shri. Rishi Agarwal and
Shri. Saket Agarwal as directors. The details of the Directors being
recommended for re-appointment are contained in the accompanying notice
of the forthcoming Annual General Meeting.
9. AUDITORS
M/s. Nisar & Kumar, Chartered Accountants, Statutory Auditors of the
Company hold office till the conclusion of the ensuing Annual General
Meeting and have consented for their re-appointment.
Your Directors recommend their appointment as the Auditors of the
Company for the current year and fix the irremuneration.
10. 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.
11. CORPORATE GOVERNANCE
A detailed report on compliance of Corporate Governance and
Managements Discussion and Analysis as stipulated in Clause 49 of the
Listing Agreement is enclosed 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.
12. DIRECTORS" RESPONSBILITY STATEMENT
As stipulated in Section 217(2AA) of the Companies Act, 1956 your
Directors confirm that:
i in the preparation of the annual accounts, the applicable accounting
standards have been followed along with proper explanation relating to
material departures;
ii. the Directors have 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 at the end of the financial year and of the profit or
loss of the company for that period;
iii. 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 and for
preventing and detecting fraud and other irregularities;
iv. the Directors have prepared the annual accounts on a going concern
basis.
13. STATUTORY INFORMATION
The particulars of employees as required under Section 217 (2A) of the
Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975 are required to be annexed to
the Directors Report. However, as per the provisions of Section 219
(1)(b)(iv) of the said Act, the annual report excluding the aforesaid
information is being sent to all the members of the Company and others
entitled thereto. Members who are interested in obtaining such
particulars may write to the Company atits Corporate Office.
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 Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules,
1988 is given in the annexure to this Report.
14. INDUSTRIAL RELATIONS
The Industrial relations at the manufacturing facilities of your
Company have been cordial during the year. Your Directors wish to place
on record the commitment and involvement of the employees at all levels
and looks forward to their continued co- operation.
15. APPRECIATION
The directors record their gratitude to the Companys employees at all
levels for their dedication and commitment throughout the year. The
directors would also like to record their thanks to the Companys
shareholders, bankers, Financial institutions and business associates
for their continued support and co-operation.
For and on behalf of the Board
Place: Mumbai R.S.Nakra Major Arun Phatak
Date: 14th August, 2010 Managing Director Executive Director
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