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Directors Report of Reliance Naval and Engineering Ltd.

Mar 31, 2018

Dear Shareowners,

The Directors present the 21st Annual Report and the audited financial statements for the financial year ended March 31, 2018.

Financial Results

The financial performance of the Company, on standalone basis, for the financial year ended March 31, 2018 is summarised below:

(Rs. in lakh)

Particulars

Financial year ended March 31, 2018

Financial year ended March 31, 2017

Total Income

41,384.25

56,414.44

Profit / (Loss) before taxation

(1,16,853.21)

(70,622.72)

Tax expenses (Net) (including deferred tax and tax for earlier years)

21,245.47

18,280.15

Profit / (Loss) after taxation

(95,607.74)

(52,342.57)

Other Comprehensive Income

28.24

(70.32)

Total Comprehensive Income for the year

(95,579.50)

(52,412.89)

Add: Balance of profit/(loss) brought forward

43,427.32

95,840.21

Securities Premium on issue of shares

683.50

0

Balance carried to Balance Sheet

(51,468.68)

43427.32

Financial Performance

During the financial year under review, your Company earned an income of Rs.41,384.25 lakh against Rs.56,414.44 lakh in the previous year. The Company incurred a loss after tax of Rs.95,607.74 lakh for the year as compared to Rs.52,342.57 lakh in the previous year.

The performance and financial position of the subsidiary companies and associate company are included in the consolidated financial statement of the Company and presented in the management Discussion and Analysis forming part of this Annual Report.

Capital Structure

During the year under review, the Company has allotted by way of preferential issue, 13,84,994 Equity Shares having face value of Rs.10 each (‘Equity Shares’), at a price of Rs.59.35 (including a premium of Rs.49.35) per Equity Share aggregating Rs.8,21,99,393.90 (Rupees Eight Crore Twenty One Lakh Ninety Nine Thousand Three Hundred Ninety Three and paise Ninety only) and 4,22,45,764 - 0.10% Compulsorily Redeemable Preference Shares of Rs.10 each (‘CRPS’) at par, aggregating Rs.42,24,57,640 (Rupees Forty Two Crore Twenty Four Lakh Fifty Seven Thousand Six Hundred and Forty only) to Housing Development Finance Corporation Limited (‘HDFC’) against conversion of equivalent amount of outstanding debt.

Dividend

During the year under review, the Board of Directors has not recommended dividend on the equity shares of the Company.

The Company’s Dividend Distribution Policy forms part of this Annual Report.

Business Operations

The Company is primarily engaged into defence and commercial shipbuilding, ship repair and offshore engineering activities and operates the largest dry dock in India. Our Company’s shipyard at Pipavav, Gujarat, has integrated state of-the-art production facilities.

During the year under review, for the first time in India, two Naval Offshore Patrol Vessels (‘NOPVs’) have been launched simultaneously. The Company has delivered a 75,000 DWT Panamax vessel and successfully completed refit of two naval ships. The Company is focusing on the unexecuted order book. In respect of a partly fulfilled order for delivery of Offshore Support Vessels, the customer had failed to take the delivery of one completed vessel and has subsequently in May 2018, has invoked performance and other bank guarantees aggregating Rs.498 crores approximately. The Company has challenged the said action including the invocation of guarantees in a writ petition, which is pending before Hon’ble Bombay High Court.

During the year, our Company has submitted revised commercial bid for four Landing Platform Docks (‘LPDs’), which would be approximately of Rs.20,000 crore.

Debt Refinancing

As on March 31, 2018 the Company had outstanding fund based borrowings of Rs.8,185 crore. Due to long gestation period of large scale infrastructure created by our Company, non-availability of working capital on time coupled with dearth in new orders the operations of our Company were severely impacted during the year. The Company’s business is significantly dependent on defence contracts and, in absence of finalisation of any such contracts; the earnings of the Company were insufficient to service the debt. As a matter of fact, it further increased its financial stress.

Immediately after taking management control of the Company, Reliance Group proposed to the Lenders various proposal for refinancing its debts pursuant to applicable RBI Guidelines with the objective to re-structure/refinance the debt and make the operations of the Company viable. These refinancing schemes could not be implemented in absence of approval of 1 00% of the lenders. Thereafter RBI issued a revised framework for Resolution of Stressed Assets vide its circular no. DBR.NO.BP. BC.1 01/21.04.048/201 7-1 8 dated February 12, 2018, which made all the existing applicable guidelines for debt restructuring/refinancing redundant.

This mandated Company and lenders to revise the Resolution Plan of the outstanding debts of the Company. The Company has submitted the Resolution Plan in compliance with the said RBI circular, which is under Lenders’ Consideration.

During the year, IFCI Limited (IFCI) has issued a recall notice and subsequently applied for insolvency petition under the Insolvency and Bankruptcy Code, 2016, due to continued default in repayment of principal and interest against the loan availed by Reliance Marine Offshore Limited (RMOL) (a wholly owned subsidiary of the Company), as the principal borrower and also against the Company, as Corporate Guarantor. In response to recall notice, RMOL and the Company has requested the IFCI to liquidate the securities available which, as per IFCI, is sufficient to meet the obligations of RMOL.

Management Discussion and Analysis

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

Non-Convertible Debentures

During the year under review, your company has issued 2,42,31,000 Secured, Redeemable, Unlisted, Non-Convertible Debentures (NCD’s) at an issue price of Rs.100 per NCD, aggregating to Rs.242.31 crores which are outstanding as on date. These NCDs are unlisted and issued as per Right to Recompense granted to CDR lenders for compensating for various concessions / rebates guaranteed by the Company in terms of Master Restructuring Agreement dated March 20, 2015.

Deposit

During the year the Company has neither accepted nor renewed any deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013 (‘the Act’) and the Companies (Acceptance of Deposits) Rules, 2014. There are no unclaimed deposits, unclaimed / unpaid interest, refunds due to the deposit holders or to be deposited to the Investor Education and Protection Fund as on March 31, 2018.

Particulars of Loans, Guarantees or Investments

Pursuant to Section 186 of the Companies Act, 2013 (‘the Act’), details of the Investments made by the Company are provided in the standalone financial statement under Note no. 3.

Subsidiary Companies, Associate and Joint Venture

As on March 31, 2018, the Company is having 6 subsidiaries under its fold and 1 Associate Company.

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

During the year, the Company has decided to terminate the joint venture with Mazagon Dock Limited (‘MDL’) and consequently closure of Mazagon Dock Pipavav Defence Private Limited, a Joint Venture company between the Company and MDL.

The Company’s Policy for determining material subsidiaries, as approved by the Board, may be accessed on the Company’s website at the link: http://www.rnaval.co.in/web/rnaval/ corporate-governance.

Financial Statement- Application of Indian Accounting Standards (Ind AS) Rules, 2015

The Ministry of Corporate Affairs (MCA) vide its Notification No. G.S.R. 111(E) dated February 16, 2015, has made the application of the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS Rules).

The audited financial statement of the Company are drawn up, both on standalone and consolidated basis, for the financial year ended March 31, 2018, are in accordance with the requirements of the Ind AS Rules.

Consolidated Financial Statement

The Audited Consolidated Financial Statement for the financial year ended March 31, 2018, based on the financial statement received from subsidiaries, associate and joint venture Companies, as approved by their respective Board of Directors, have been prepared in accordance with Indian Accounting Standard (Ind AS) 110 on ‘Consolidated Financial Statements’ and Ind AS 28 on ‘Accounting for Investments in Associates and Joint Ventures’ notified under the Act, read with the Accounting Standards Rules as applicable.

Directors

During the year under review, Vice Admiral (Retd.) H S Malhi, superannuated from the Company and as such relinquished the office of Whole-time Director and CEO with effect from April 11, 2017. The Board of Directors of the Company at its meeting held on April 11, 2017, appointed Cmde (Retd.) Kartik Subramaniam as an Additional Director and has elevated him to the position of Whole-time Director and CEO of the Company, for a period of three years with effect from April 11, 2017.

IDBI Bank has substituted Shri Rajeev Kumar as their nominee Director in place of Shri Ajoy Nath Jha w.e.f. September 8, 2017.

Pursuant to the provisions of Section 161 of the Companies Act, 2013, during the year under review, on September 29, 201 7, both Shri Rana Ranjit Rai and Shri K. Ravikumar were appointed as Additional Directors in their capacity of Independent Directors.

Shri Ajai Vikram Singh and Shri Rajendra Chitale have resigned as Directors of the Company, both w.e.f September 29, 201 7. Further, Air Chief Marshal (Retd.) Fali Homi Major has resigned as Director of the Company w.e.f. January 30, 2018.

During the year under review, Shri R. N. Bhardwaj has been appointed as Additional Director in the capacity of Independent Directors of the Company w.e.f. January 30, 2018.

Pursuant to provisions of section 167(1)(b) of the Act, Shri Nikhil Gandhi ceased to be Director on the Board of the Company with effect from February 11, 2018. Shri Rajesh K Dhingra was nominated as an Additional Non-Executive Director with effect from February 20, 2018, on the Board by the promoters of the Company.

Further, Life Insurance Cooperation (‘LIC’) of India has substituted Shri Raj Kumar as their nominee Director in place of Ms Padmaja Bhaskaran w.e.f. March 15, 2018. Shri Bhavesh Gandhi has resigned as Directors of the Company, w.e.f. March 24, 2018.

During the financial year, Cmde (Retd.) Kartik Subramaniam, superannuated from the Company and as such relinquished the office of Whole-time Director and CEO with effect from March 31, 2018. The Board of Directors of the Company at its meeting held on March 15, 2018, appointed Shri Debashis Bir as an Additional Director and has elevated him to the position of Whole-time Director of the Company, for a period of two years with effect from April 1, 2018. The appointment and the remuneration payable to Shri Debashis Bir during the tenure of appointment are subject to the approval of the members at the ensuing AGM and consequent approval of Central Government. Lt. Gen. Syed Ata Hasnain (Retd.), Shri Rajesh Dhingra and Shri Rahul Sarin have resigned as Directors of the Company w.e.f. August 10, 2018.

Shri Anil D. Ambani has resigned as Director of the Company w.e.f. August 25, 2018.

Shri Rana Ranjit Rai, Shri K Ravikumar and Shri Raj Narain Bhardwaj have been appointed as additional Directors pursuant to the provisions of Section 161 of the Act and shall hold office till the conclusion of ensuing Annual General Meeting of the Company. Subject to approval of the members at the ensuing AGM, Shri Rana Ranjit Rai, Shri K Ravikumar and Shri R. N. Bhardwaj have been appointed as Independent Directors, for a period of five consecutive years effective from the respective date of appointment, not being liable to retire by rotation.

The Company has received notices in writing from a member under Section 160 of the Act, proposing the candidatures of Shri Rana Ranjit Rai, Shri K. Ravikumar, Shri Debashis Bir and Shri R. N. Bhardwaj, for the office of Director of the Company. The Nomination and Remuneration Committee of the Board, has recommended appointment of all the above mentioned Directors. The Board also recommends their appointment.

The Board places on record its appreciation for valuable contribution made by Vice Admiral (Retd.) H S Malhi, Cmde. (Retd.) Kartik Subramaniam, Shri Ajoy Nath Jha, Ms. Padmaja Bhaskaran, Shri Ajai Vikram Singh, Shri Rajendra Chitale, Air Chief Marshal (Retd.) Fali Homi Major, Shri Nikhil Gandhi, Shri Bhavesh Gandhi, Lt. Gen. Syed Ata Hasnain (Retd.), Shri Rajesh Dhingra, Shri Rahul Sarin and Shri Anil D. Ambani during their tenure as Directors of the Company.

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

The details of programme for familiarization of Independent Directors with the Company, nature of the industry in which the Company operates and related matters are uploaded on the website of the Company at the link http://www.rnaval.co.in/ web/rnaval/corporate-governance.

In terms of the provisions of the Companies Act, 2013, Shri Sateesh Seth, Non-Executive Director of the Company, retires by rotation and being eligible, offers himself for re-appointment at the ensuing AGM. A brief resume of Shri Sateesh Seth, along with requisite details, as stipulated under Regulation 36(3) of the Listing Regulations, is given in the section on Corporate Governance Report forming part of this Annual Report.

Key Managerial Personnel

During the financial year, Shri Nikhil Jain has been appointed as the Chief Financial Officer (‘CFO’) of the Company and termed as Key Managerial Personnel (‘KMP’) by the Board w.e.f. August 2, 2017 in place of Shri Madan Pendse, who resigned as CFO with effect from August 01, 2017.

Cmde. (Retd.) Kartik Subramaniam was appointed as Wholetime Director and Chief Executive Officer (‘CEO’) and termed as KMP with effect from April 11, 2017, in place of Vice Admiral (Retd.) H S Malhi, who ceased to be Whole-time Director and CEO, due to superannuation from the service of the Company with effect from April 11, 2018.

Shri Debashis Bir has been appointed as Whole-time Director and CEO and termed as KMP with effect from April 1, 2018, in place of Cmde. (Retd.) Kartik Subramaniam, who ceased to be Whole-time Director and CEO, due to superannuation from the service of the Company with effect from March 31, 2018.

Shri Paresh Rathod has been appointed as Company Secretary and termed as KMP with effect from April 1, 2018 in place of Shri Ajit Dabholkar, who has resigned as Corporate Counsel and Company Secretary of the Company from the closure of business hours on March 31, 2018.

The Board places on record its appreciation for valuable contribution made by Shri Madan Pendse, Vice Admiral (Retd.) H S Malhi, Cmde. (Retd.) Kartik Subramaniam and Shri Ajit Dabholkar during their tenure as KMP’s of the Company.

Evaluation of Directors, Board and Committees

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

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

The Nomination and Remuneration Committee has also reviewed the performance of the individual directors based on their knowledge, level of preparation and effective participation in meetings, understanding of their roles as directors, etc.

Policy on appointment and remuneration for Directors, Key Managerial Personnel and Senior Management Employees

The Nomination and Remuneration Committee of the Board has devised a policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management Employees. The Committee has formulated the criteria for determining qualifications, positive attributes and independence of a Director, which has been put up on the Company’s website http://www.rnaval.co.in/web/rnaval/corporate-governance and also is attached as Annexure - A.

Directors’ Responsibility Statement

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

i. In the preparation of the annual financial statements for the financial year ended March 31, 2018, the applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any;

ii. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the loss of the Company for the year ended on that date;

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

iv. The Directors had prepared the annual financial statements for the financial year ended March 31, 2018, on a ‘going concern’ basis;

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

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

Contracts and Arrangements with Related Parties

All contracts / arrangements / transactions entered into/by the Company during the financial year under review with related parties were on an arm’s length basis and in the ordinary course of business.

There were no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, which may have a potential conflict with the interest of the Company at large.

During the year, the Company had not entered in to any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of Company on materiality of related party transactions.

All Related Party Transactions were placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee was obtained for the transactions which were of a repetitive nature. The transactions entered into pursuant to the omnibus approval so granted were reviewed and statements giving details of all related party transactions were placed before the Audit Committee and the Board of Directors on a quarterly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website at the link: http://www.rnaval.co.in/web/rnaval/corporate-governance. Your Directors draw attention of the members to Note No. 39 to the Standalone Financial Statements which sets out Related Party Disclosures pursuant to Ind AS.

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

There were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year and the date of their report.

Meetings of the Board

A calendar of Meetings is prepared and circulated in advance to the Directors. During the financial year, six Board Meetings were held, details of which are given in the Corporate Governance Report, forming part of this Annual Report.

Audit Committee

Audit Committee has been re-constituted by the Board of Directors at their Meeting held on April 10, 2017 and vide Circular Resolution dated September 29, 2017. As on March 31, 2018, the committee consists of Independent Directors namely Shri K. Ravikumar as Chairman, Shri Rana Ranjit Rai and Ms Ryna Karani and Non-Independent Director, Cmde. Kartik Sumbramaniam (Retd.), as members. During the year, all the recommendations made by the Audit Committee were accepted by the Board.

During the year, Vice Admiral (Retd.) H S Malhi ceased to be members of the committee with effect from April 11, 2017 being the date of his resignation. Subsequently, Cmde (Retd.) Kartik Subramaniam was appointed as a member of the Committee with effect from April 11, 2017.

Shri Ajai Vikram Singh and Shri Rajendra Chitale, both ceased to be members of the committee with effect from September 29, 2017, being the date of their resignation. Subsequently, Shri K. Ravikumar and Shri Rana Ranjit Rai, Independent Directors were inducted as members of the Committee with effect from September 29, 2017.

Cmde (Retd.) Kartik Subramaniam has ceased to be member of the committee with effect from the closure of business hours on March 31, 2018 due to his superannuation from the Company. The Board has appointed Shri Debashis Bir as a member of the Committee with effect from April 1, 2018.

Auditors and Auditor’s Report

M/s. Pathak H.D. & Associates, Chartered Accountants were appointed as Auditors of the Company for a term of 5 (five) consecutive years, at the Annual General Meeting of the Company held on September 30, 2015. The Company has received confirmation from M/s. Pathak H.D. & Associates, Chartered Accountants that they are not disqualified from continuing as Auditors of the Company.

The observations and comments given by the Auditors in their report read together with notes on financial statements are self-explanatory and hence do not call for any further comments under Section 134 of the Act.

Secretarial Standards

During the year under review, the Company has complied with the applicable Secretarial Standards issued by The Institute of Companies Secretaries of India.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors has appointed M/s. Ashita Kaul & Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company. There is no qualification, reservation or adverse remark made by the Secretarial Auditor in the Secretarial Audit Report. The Audit Report of the Secretarial Auditors for the financial year ended March 31, 2018 is attached as Annexure - B.

Extract of Annual Return

Extract of the Annual Return of the Company in form MGT-9 is attached as Annexure - C and may be accessed on the Company’s website at the link: http://www.rnaval.co.in/web/ rnaval/corporate-governance

Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annexure, which forms part of this Report.

Disclosures relating to the remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are also forms part of this Report.

However, having regard to the provisions of first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to all the members of the Company and others entitled thereto. The said information is available for inspection at the registered office of the Company on all working days, except Saturdays between 11:00 A.M. and 1:00 P.M. up to the date of the Meeting. Any member interested in obtaining the same may write to the Company Secretary and the same will be furnished on request.

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

The particulars as required to be disclosed in terms of Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 are given in Annexure- D forming part of this Report.

Corporate Governance

The Company has adopted ‘Reliance Group- Corporate Governance Policies and Code of Conduct’ which sets out the systems, processes and policies confirming to the international standards. The report on Corporate Governance as stipulated under Regulation 34(3) read with para C of Schedule V of the Listing Regulations is presented in a separate section forming part of this Annual Report.

A certificate from the auditors of the Company, M/s. Pathak H. D. & Associates, Chartered Accountants, conforming compliance to the conditions of Corporate Governance as stipulated under Para E of Schedule V of the Listing Regulations, is enclosed to this Report.

a) The disclosures required under Schedule V of the Act as applicable to Shri Debashis Bir as a Whole-time Director and Chief Executive Officer are given below:

(i) Remuneration comprises of salary, allowances and other perquisites - Rs.71.50 Lakhs per annum and Performance Linked Incentives of Rs.3.90 Lakhs.

(ii) Details of fixed component and performance linked incentives along with the performance criteria -Annual increment / performance linked incentive, as may be decided by the Board of Directors pursuant to recommendation of the Nomination and Remuneration Committee based on his performance and the performance of the Company and as per the Company Policy.

(iii) Service, contracts, notice period, severance fees -Notice Period- three months, Severance fees- Nil.

(iv) Stock option details, if any, and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable -Not Applicable.

b) The disclosures required under Schedule V of the Act as applicable to Cmde (Retd.) Kartik Subramaniam as a Whole-time Director and CEO are given below:

(i) Remuneration comprises of salary, allowances and other perquisites - Rs.77.84 Lakhs per annum.

(ii) Details of fixed component and performance linked incentives along with the performance criteria -Annual increment / performance linked incentive, as may be decided by the Board of Directors pursuant to recommendation of the Nomination and Remuneration Committee based on his performance and the performance of the Company and as per the Company Policy.

(iii) Service, contracts, notice period, severance fees -Notice Period- three months, Severance fees- Nil.

(iv) Stock option details, if any, and whether the same has been issued at a discount as well as the period over which accrued and over which exercisable -Not Applicable.

Whistle Blower Policy (Vigil Mechanism)

In accordance with Section 177 of the Act and Listing Regulations, the Company has formulated a Vigil Mechanism, which also incorporated Whistle Blower Policy of the Company to address the genuine concerns, if any, of the directors and employees. The details of the same have been stated in the Report on Corporate Governance and the policy can also be accessed on the Company’s website at the link: http://www. rnaval.co.in/web/rnaval/corporate-governance

Risk Management

The Company continues to have a Risk Management Committee consisting of majority of independent directors, however, the mandatory provisions of listing regulations are not applicable to the Company. The details of the Committee and its terms of reference, etc. are set out in the Corporate Governance Report forming part of this Report.

The Company has a robust Business Risk Management (BRM) framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhances Company’s competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risk trend, exposure and potential impact analysis at a Company level as also separately for business segment. The risks are assessed for each project and mitigation measures are initiated both at the project as well as the corporate level. More details on Risk Management indicating development and implementation of Risk Management policy including identification of elements of risk and their mitigation are covered in Management Discussion and Analysis section, which forms part of this Report.

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

The Company is committed to uphold and maintain the dignity of women employees and it has in place a policy which provides for protection against sexual harassment of women at work place and for prevention and redressal of such complaints. During the year under review, no such complaints were received. The Company has also constituted an Internal Compliance Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Corporate Social Responsibility

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

As on March 31, 2018, the CSR Committee of the Board consists of Shri Rahul Sarin as Chairman, Ms. C R Gayathri, Ms. Ryna Karani and Cmde (Retd.) Kartik Subramaniam, Directors as members.

During the year, Vice Admiral (Retd.) H S Malhi ceased to be member of the committee with effect from the closure of business hours on April 11, 2017 due to his superannuation from the Company. Subsequently, Cmde (Retd.) Kartik Subramaniam was appointed as a member of the Committee with effect from April 11, 2017.

Cmde. (Retd.) Kartik Subramaniam ceased to be member of the committee with effect from the closure of business hours on March 31, 2018 due to his superannuation from the Company. The Board has appointed Shri Debashis Bir as a member of the Committee with effect from April 1, 2018. Shri Rahul Sarin ceased to be member of the committee w.e.f. August 10, 2018.

The disclosure with respect to Corporate Social Responsibility activities forming part of this report is given as Annexure - E.

Order, if any, passed by the Regulators or Courts or Tribunals

No orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status and the Company’s operations.

Internal Financial Controls and their adequacy

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

Business Responsibility Report

Business Responsibility Report for the year under review as stipulated under Listing Regulations is presented in a separate section forming part of this Annual Report.

Acknowledgement

Your Directors would like to express their sincere appreciation for the co-operation and assistance received from shareholders, Debenture holders, debenture trustee, bankers, financial institutions, regulatory bodies and other business constituents during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff, resulting in the successful performance of the Company during the year.

For and on behalf of the Board of Directors

Whole-time Director and CEO Director

Place : Mumbai

Date : August 27, 2018


Mar 31, 2017

Dear Shareowners,

The Directors present the 20th Annual Report and the audited financial statements for the financial year ended March 31, 2017.

Financial Results

The financial performance of the Company, on standalone basis, for the year ended March 31, 2017 is summarised below:

(Rs. in lakh)

Particulars

Financial year ended March 31, 2017

Financial year ended March 31, 2016

Total Income

56,414.44

34,627.48

Profit / (Loss) before taxation

(70,622.72)

(80,358.19)

Tax expenses (Net) (including deferred tax and tax for earlier years)

(18,280.15)

(27,493.47)

Profit / (Loss) after taxation

(52,342.57)

(52,864.72)

Other Comprehensive Income

(70.32)

136.68

Add: Balance of profit/(loss) brought forward

(82,533.93)

(29,805.89)

Balance carried to Balance Sheet

(1,34,946.82)

(82,533.93)

Financial Performance and Business Operations

During the financial year under review, your Company earned an income of Rs.56,414.44 lakh against Rs.34,627.48 lakh in the previous year. The Company incurred a loss after tax of Rs.52,342.57 lakh for the year as compared to Rs.52,864.72 lakh in the previous year.

During the year under review, the Authorised Capital of the Company of Rs.15,000 Crore has been re-classified into 1100 crore Equity Shares of Rs.10/- each and 400 crore Preference Shares of Rs.10/- fully paid-up.

During the year under review, our Company signed the SubConcession Agreement with Gujarat Maritime Board for a period of 30 years expiring in June 2046. The Ministry of Defence has carried out a detailed financial and technical capabilities study of our Company (also known as Shipyard Assessment).

During the year, our Company signed contracts of approximate value of Rs.916 crore for construction of 14 Fast Patrol Vessels for the Indian Coast Guard. Our Company has also submitted bids for construction of eight Anti Submarine Warfare Shallow Water Crafts (‘ASWSWC’) for the Indian Navy and for four Landing Platform Docks (‘LPDs’). Combined value of these two projects is approximately Rs.28,000 to 30,000 crore.

In a significant development our Company was qualified by U.S. Navy as an approved contractor to perform complex repair and alternation services for the U.S. Navy’s seventh fleet vessels operating in the region and signed the Master Ship Repair Agreement (‘MSRA’) with U.S. Navy. Our Company is the first shipyard in India to have received MSRA certification to undertake servicing and repairing works for the vessels of the U.S. Navy (Seventh fleet).

Our Company’s shipyard at Pipavav, Gujarat, has integrated state of-the-art production facilities. During the year under review, there has been a substantial increase in pace towards delivery of Naval Offshore Patrol Vessels (‘NOPVs’) for the Indian Navy. The vessels are being constructed in two batches of two and three vessels each to maximize utilization of our large dry dock and enable quicker deliveries. The two NOPVs in the first batch will be launched in the first half of financial year 2017-18.

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

Dividend

During the year under review, the Board of Directors has not recommended dividend on the equity shares of the Company.

Debt Refinancing

Due to long gestation period of large scale infrastructure created by our Company and non-availability of timely working capital, etc. severely impacted the operations of our Company, Our Company had availed various secured credit facilities from the banks and financial institutions (the “Lenders”). As on March 31, 2017, our Company’s outstanding borrowings were Rs.875,319.38 lakh. The erstwhile promoters and the management of the Company had requested the Lenders to restructure the outstanding debts of our Company under the Corporate Debt Restructuring Scheme (“CDR Scheme”) in accordance with the guidelines stipulated by the Reserve Bank of India. However, your Company, post acquisition by Reliance Group proposed a Refinancing Scheme to CDR Lenders and Non-CDR Lenders with the objective of refinancing the outstanding loans provided by Lenders and exit the CDR Scheme. The Company is in the process of completing the formalities of issuing various securities as per the Refinancing Scheme. The Company will issue Equity Shares, 0.10% Compulsorily Redeemable Preference Shares and Secured, Unlisted, Non-Convertible Debentures to the lenders as part of refinancing Scheme.

Management Discussion and Analysis

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

Deposits

The Company has not accepted any deposits from the public which comes within the purview of Section 73 of the Companies Act, 2013 (hereinafter referred to as ‘the Act’) read with the Companies (Acceptance of Deposits) Rules, 2014.

Particulars of Investments

Pursuant to Section 186 of the Act, details of the Investments made by the Company are provided in the standalone financial statements under Note no. 3 & 7.

Subsidiary and Associate Companies

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

The Company’s Policy for determining material subsidiaries may also be accessed on the Company’s website at the link: http:// www.reliancedefence.co/corporate_governance.html.

Consolidated Financial Statement

The Audited Consolidated Financial Statement for the financial year ended March 31, 2017, based on the financial statements received from subsidiary and associate Companies, as approved by their respective Board of Directors, have been prepared in accordance with Indian Accounting Standard (Ind AS) 110 on ‘Consolidated Financial Statements’ and Ind AS 28 on ‘Accounting for Investments in Associates and Joint Ventures’ notified under the Act, read with the Accounting Standards Rules as applicable.

Directors

During the year under review, Shri S Seth was nominated as an Additional Non-Executive Director with effect from September 12, 2016, on the Company’s Board by the promoters of the Company in place of Shri Amitabh Jhunjhunwala, Non Executive Director. Shri S. Seth will hold office upto the conclusion of the ensuing Annual General Meeting (‘AGM’).

IDBI Bank Limited (‘‘The Bank’’) nominated Shri Ajoy Nath Jha with effect from November 28, 201 6 on the Board of the Company in place of Shri Ajay Sharma.

Vice Admiral H S Malhi, Whole-time Director superannuated from the Company and as such relinquished the office of Wholetime Director with effect from April 11, 2017. The Board of Directors of the Company at its meeting held on April 11, 2017, appointed Cmde (Retd) Kartik Subramaniam as an Additional Director and has elevated him to the position of Whole-time Director of the Company, for a period of three years with effect from April 11, 2017. The appointment and the remuneration payable to Cmde (Retd) Kartik Subramaniam during the tenure of appointment are subject to the approval of the members at the ensuing AGM.

The Company has received a notice in writing from a member along with the requisite deposit under Section 160 of the Act, proposing the candidature of Shri S Seth and Cmde (Retd) Kartik Subramaniam for the office of Director of the Company. The Nomination and Remuneration Committee of the Board, has also recommended the appointment of Shri S Seth and Cmde (Retd) Kartik Subramaniam, as Directors.

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

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

In accordance with the provisions of the Act, Shri Nikhil Gandhi, Non-Executive Director retires by rotation and being eligible, has offered himself for re-appointment at the ensuing Annual General Meeting,

The Board places on record its appriciation of valuable contribution made by Shri Amitabh Jhunjhunwala and Vice Admiral (Retd) H. S. Malhi during their tenure as a Director of the Company,

Particulars of Directors proposed to be appointed

Pursuant to the Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), a brief resume of Shri S. Seth, Cmde (Retd) Kartik Subaramaniam and Shri Nikhil Gandhi, who are proposed to be appointed at the ensuing AGM as above, along with the information regarding the nature of their expertise in specific functional areas and names of the companies in which they hold directorship and / or membership / chairmanship of Committees of the respective Boards, shareholding of Directors and relationship between Directors, inter se, is given in the section on Corporate Governance Report forming part of this Annual Report.

Key Managerial Personnel

Shri Madan Pendse was appointed as the Chief Financial Officer of the Company and designated as the Key Managerial Personnel (KMP) by the Board with effect from October 17, 2016.

Cmde (Retd) Kartik Subramaniam has joined the Company as Chief Executive Officer and Key Managerial Personnel with effect from April 1, 2017.

Shri Sridhar Krishnamurthy, Chief Financial Officer and Vice Admiral (Retd.) H S Malhi, Whole-time Director and CEO have ceased to be Key Managerial Personnel (“KMP”) of the Company with effect from October 15, 2016 and April 1, 2017 respectively.

Evaluation of Directors, Board and Committees

The Board has devised a policy for performance evaluation of its individual directors, the Board and the Committees, which includes criteria for performance evaluation.

Pursuant to the provisions of Section 178(2) the Act read with rules made thereunder and Regulation 17(10) of the Listing Regulations, the Board has carried out an annual evaluation of its own performance, the directors individually as well as the evaluation of the working of the Committees of the Board. The Board performance was evaluated based on inputs received from all the Directors after considering criteria such as Board composition and structure, effectiveness of processes, and information provided to the Board, etc.

The evaluation process inter-alia considers attendance of Directors at Board and Committee meetings, effective participation, domain knowledge, compliance with code of conduct, vision and strategy, benchmark established by global peers etc.

The Board carried out annual performance evaluation of the Board, Board Committees and Individual Directors, internally. The performance of each committee was evaluated by the Board based on report on evaluation received from respective Board Committees.

A separate meeting of the Independent Directors was also held during the year for evaluation of the performance of non independent directors, performance of the Board as a whole and that of the Chairman.

The Nomination and Remuneration Committee has also reviewed the performance of the individual directors based on their knowledge, level of preparation and effective participation in Meetings, understanding of their roles as directors, etc.

Policy on appointment and remuneration for Directors, Key Managerial Personnel and Senior Management Employees

The Nomination and Remuneration Committee of the Board has devised a policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and Senior Management Employees The Committee has formulated the criteria for determining qualifications, positive attributes and independence of a Director, which has been put up on the Company’s website, The policy on the above is attached as Annexure-A.

Directors’ Responsibility Statement

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

i. In the preparation of the annual financial statements for the financial year ended March 31, 2017, the applicable Accounting Standards had been followed along with proper explanation relating to material departures, if any;

ii. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the loss of the Company for the year ended on that date;

iii. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. The Directors had prepared the annual financial statements for the financial year ended March 31, 2017, on a ‘going concern’ basis;

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

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

Contracts and Arrangements with Related Parties

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

During the year, the Company had not entered in to any contract/ arrangement/transaction with related parties which could be considered material in accordance with the policy of Company on materiality of related party transaction.

All Related Party Transactions were placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee was obtained for the transactions which were of a repetitive nature. The transactions entered into pursuant to the omnibus approval so granted were reviewed and statements giving details of all related party transactions were placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website at the link: http://www.reliancedefence.co/corporate_governance. Your Directors draw attention of the members to Note No. 16 to the Standalone Abridged Financial Statements which sets out Related Party Disclosures pursuant to Ind AS.

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

There were no material changes and commitments affecting the financial position of the Company

Meetings of the Board

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

Audit Committee

The Audit Committee of Board consisted of Independent Directors namely Shri Rajendra P. Chitale, Chairman, Ms Ryna Karani, Shri Ajai Vikram Singh and Non-Independent Director, Vice Admiral (Retd.) H S Malhi as members. During the year, all the recommendations made by the Audit Committee were accepted by the Board.

Vice Admiral (Retd) H S Malhi has ceased to be member of the committee with effect from April 11, 2017 being the date on which he superannuated from the Company. Cmde (Retd) Kartik Subramaniam, Whole Time Director and CEO was appointed as a member of the Committee with effect from April 11, 2017.

Auditors and Auditor’s Report

At the 18th Annual General Meeting of the Company held on September 30, 201 5 the Members of the Company had appointed M/s. Pathak H. D. & Associates, Chartered Accountants as Auditors to hold office until the conclusion of the 23 rd Annual General Meeting of the Company. Pursuant to Section 139 of the Companies Act 2013, the appointment of M/s. Pathak H.D. & Associates, Chartered Accountants as auditors of the Company is being placed for ratification of members at ensuing AGM of the Company

The Company has also received letter from M/s. Pathak H.D. & Associates, Chartered Accountants, to ratify their appointment and the appointment, if ratified, is within the prescribed limits under Section 141(3) of the Act and that they are not disqualified from appointment as Statutory Auditors of the Company

Your Directors have therefore recommended ratification of the appointment of M/s. Pathak H.D. & Associates, Chartered Accountants as Statutory Auditors of the Company

The observations and comments given by the Auditors in their report read together with notes on financial statements are self explanatory and hence do not call for any further comments under Section 134 of the Act.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed M/s. Ashita Kaul & Associates, Practicing Company Secretaries, to undertake the Secretarial Audit of the Company. There is no qualification, reservation or adverse remark made in their Secretarial Audit Report.

The Secretarial Audit Report for the financial year ended March 31, 2017 is attached as Annexure - B.

Extract of Annual Return

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

Particulars of Employees and related disclosures

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

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

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

The particulars as required to be disclosed in terms of Section 1 34(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 are given in Annexure - E forming part of this Report.

Corporate Governance

The Company has adopted ‘Reliance Group - Corporate Governance Policies and Code of Conduct’ which sets out the systems, processes and policies confirming to the international standards. The report on Corporate Governance as stipulated under Regulation 34(3) read with para C of Schedule V of the Listing Regulations is presented in a separate section forming part of this Annual Report.

A certificate from the Auditors of the Company, M/s. Pathak H.D. & Associates, Chartered Accountants, conforming compliance to the conditions of Corporate Governance as stipulated under Para E of Schedule V to the Listing Regulations is enclosed to this Report.

Vigil Mechanism / Whistle Blower Policy

In accordance with Section 177 of the Act and Listing Regulations, the Company has formulated a Vigil Mechanism, which also incorporated Whistle Blower Policy of the Company to address the genuine concerns, if any, of the directors and employees. The details of the same have been stated in the Report on Corporate Governance and the policy can also be accessed on the Company’s website at the link: http://www, reliancedefence.co/corporate_governance.html.

Risk Management

The Company continues to has a Risk Management Committee consisting of majority of independent directors, however, the mandatory provisions of listing regulations are not applicable to the Company. The details of the Committee and its terms of reference, etc. are set out in the Corporate Governance Report forming part of this Report.

The Company has a robust Business Risk Management (BRM) framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhances Company’s competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The framework has different risk models which help in identifying risk trand, exposure and potential impact analysis at a Company level as also separately for business segment. The risks are assessed for each project and mitigation measures are initiated both at the project as well as the corporate level.

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

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

Corporate Social Responsibility

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

The CSR Committee of the Board consisted of Shri Rahul Sarin as Chairman, Ms C R Gayathri, Ms. Ryna Karani and Vice Admiral (Retd) H S Malhi, Directors as members as on March 31, 2017. Vice Admiral (Retd) H S Malhi has ceased to be member of the committee with effect from April 11, 2017 on his superannuation from the Company. The Board has appointed Cmde (Retd) Kartik Subramaniam as a member of the Committee with effect from April 11, 2017. The disclosures with respect to Corporate Social Responsibility activities are given as Annexure - F,

Order, if any, passed by the Regulators or Courts or Tribunals.

No orders have been passed by the Regulators or Courts or Tribunals impacting the going concern status and the Company’s operations.

Internal Financial Controls and their adequacy

The Company has in place adequate internal financial controls with reference to financial statements across the organization. The same are subject to review periodically by the internal auditors and by the Audit Committee for its effectiveness. During the year, such controls were tested and no reportable material weaknesses in the design or operations were observed.

Business Responsibility Report

Business Responsibility Report for the year under review as stipulated under Listing Regulations is presented in the separate section forming part of this Annual Report.

Acknowledgements

Your Directors would like to express their sincere appreciation for the co-operation and assistance received from shareholders, bankers, financial institutions, regulatory bodies and other business constituents during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers and staff resulting in the successful performance of the Company during the year,

For and on behalf of the Board of Directors

Director Whole-time Director

Place: Mumbai

Date : April 11, 2017


Mar 31, 2016

Dear Shareowners,

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

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

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

Total Income 34,595.49 86,207.91

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

Depreciation 21,426.41 19,744.67

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

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

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

Other Comprehensive Income 136.08 (78.77)

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

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

Financial Performance

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

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

Dividend

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

Business Operations

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

Substantial Acquisition of Shares and Takeover of the Company

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

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

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

Rights Issue

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

Corporate Debt Restructuring

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

Management Discussion and Analysis

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

Fixed Deposits

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

Particulars of Investments

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

Subsidiary and Associate Companies

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

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

Consolidated Financial Statement

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

Directors

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

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

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

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

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

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

Key Managerial Personnel

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

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

Evaluation of Directors, Board and Committees

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

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

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

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

Directors'' Responsibility Statement

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

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

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

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

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

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

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

Contracts and Arrangements with Related Parties

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

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

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

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

Meetings of the Board

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

Audit Committee

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

Auditors and Auditor''s Report

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

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

Secretarial Audit

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

Extract of Annual Return

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

Particulars of Employees and related disclosures

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

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

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

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

Corporate Governance

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

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

Vigil Mechanism / Whistle Blower Policy

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

Risk Management

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

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

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

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

Corporate Social Responsibility

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

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

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

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

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

Internal Financial Controls and their adequacy

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

Acknowledgements

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

For and on behalf of the Board of Directors

Whole-time Director and CEO Director

Mumbai

May 14, 2016


Mar 31, 2015

Dear Members,

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

1. FINANCIAL RESULTS:

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

( Rs. in Crore)

Sr. Particulars 2014-15 2013-14 No.

(a) Total Revenue 862.07 2,319.08

(b) Profit from Operations 92.86 614.75

(c) Depreciation 131.34 161.70

(d) Interest 452.69 465.21

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

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

2. DIVIDEND:

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

3. STATE OF COMPANY'S AFFAIRS:

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

4. MANAGEMENT AND CONTROL OF THE COMPANY:

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

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

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

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

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

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

5. CORPORATE DEBT RESTRUCTURING:

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

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

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

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

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

6. SUBSIDIARY COMPANIES:

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

E Complex Pvt. Ltd. ('ECPL')

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

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

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

PDOC Pte. Ltd.

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

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

Pipavav Marine and Offshore Limited ('PMOL')

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

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

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

Pipavav Engineering and Defence Services Limited ('PEDSL')

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

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

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

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

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

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

7. CONSOLIDATED FINANCIAL STATEMENTS:

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

8. DIRECTORS:

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

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

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

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

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

9. KEY MANAGERIAL PERSONNEL:

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

10. MEETINGS OF BOARD AND AUDIT COMMITTEE:

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

11. EVALUATION OF DIRECTORS, BOARD AND ITS COMMITTEES:

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

12. NOMINATION & REMUNERATION / BOARD DIVERSITY POLICIES:

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

13. DIRECTORS' RESPONSIBILITY STATEMENT:

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

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

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

c. the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

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

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

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

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

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

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

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

15. STATUTORY AUDITORS & AUDITORS' REPORT:

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

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

16. SECRETARIAL AUDIT:

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

the Secretarial Audit Report. The Report of the Secretarial

Auditor is annexed herewith as "Annexure C".

17. HEALTH, SAFETY AND ENVIRONMENTAL PROTECTION:

(a) Environment Management:

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

(b) Safety Management:

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

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

(c) Health & Hygiene:

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

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

(d) HSEQ Audits:

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

18. CORPORATE SOCIAL RESPONSIBILITY ('CSR'):

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

19. INTERNAL FINANCIAL CONTROLS:

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

20. VIGIL MECHANISM / WHISTLE BLOWER POLICY:

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

21. RISK MANAGEMENT:

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

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

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

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

23. MANAGEMENT DISCUSSION AND ANALYSIS:

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

24. CORPORATE GOVERNANCE REPORT:

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

25. EXTRACT OF THE ANNUAL RETURN:

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

26. DEPOSITS:

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

27. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

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

28. EMPLOYEES REMUNERATION:

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

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

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

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

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

30. DEMAT SUSPENSE ACCOUNT:

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

Particulars No. of No. of Shareholders Shares

Opening Balance as at April 1, 2014 14 3577

Request received for transfer of 0 0 shares from Suspense Account

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

Closing Balance as at March 31, 2015 14 3577

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

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

31. ACKNOWLEDGEMENTS:

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

On behalf of the Board of Directors

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


Mar 31, 2013

Dear Members,

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

1. FINANCIAL RESULTS

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

(Rs.in Crore)

2012-13 2011-12

(a) Total Revenue 2,613.03 1,891.47

(b) Profit before Interest, 561.53 436.27

Depreciation and Tax

(c) Less: Depreciation 122.70 105.89

(d) Less: Interest 397.46 257.68

(e) Profit before Tax 41.37 72.70

(f) Less: Provision for Tax 12.65 54.18

(g) Profit after Tax 28.72 18.52

2. DIVIDEND

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

3. OPERATIONS

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

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

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

4. SHARE CAPITAL

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

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

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

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

5. SUBSIDIARY COMPANIES

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

E Complex Pvt. Ltd. (ECPL)

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

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

PDOC Pte. Ltd.

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

Pipavav Marine and Offshore Limited (PMOL)

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

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

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

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

6. JOINT VENTURE WITH MAZAGON DOCK LIMITED

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

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

7. CONSOLIDATED FINANCIAL STATEMENTS

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

8. DIRECTORS

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

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

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

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

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

9. DIRECTORS'' RESPONSIBILITY STATEMENT

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

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

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

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

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

10. AUDITORS a AUDITORS'' REPORT

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

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

11. HEALTH, SAFETY AND

ENVIRONMENTAL PROTECTION

(a) Environment Management

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

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

(b) Safety Management

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

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

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

(c) Health & Hygiene

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

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

(d) HSEQ Audits

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

12. CORPORATE SOCIAL RESPONSIBILITY (CSR)

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

Health Care

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

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

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

Education

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

Infrastructure Development

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

Safe Drinking Water

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

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

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

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

14. MANAGEMENT DISCUSSION AND ANALYSIS REPORT

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

15. CORPORATE GOVERNANCE REPORT

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

16. INVESTOR RELATIONS

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

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

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

17. FIXED DEPOSITS

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

18. EMPLOYEES

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

19. DEMAT SUSPENSE ACCOUNT

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

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

Request received for 2 550

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

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

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

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

20. ACKNOWLEDGEMENTS

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

On behalf of the Board of Directors

Place : Mumbai Nikhi''l Gandhi

Date : May 30, 2013 Chairman


Mar 31, 2012

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

1. Financial Results

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

(Rs. in Crore)

Particulars 2011-12 2010-11

(a) Income from Operations 1,867.06 859.93

(b) Other Income 24.40 63.56

(c) Total Income 1,891.46 923.49

(d) Profit before Interest,

Depreciation and Tax 436.27 216.03

(e) Less: Depreciation 105.89 48.73

(f) Less: Interest 257.68 119.34

(g) Profit before Tax 72.70 47.96

(h) Less: Provision for Tax 54.18 8.06

(i) Profit after Tax 18.52 39.90

2. Dividend

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

3. Operations

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

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

4. Convertible Warrants

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

5. Consolidated Financial Statements

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

6. Subsidiaries

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

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

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

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

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

7. Directors

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

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

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

8. Directors' Responsibility Statement

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

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

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

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

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

9. Auditors

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

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

10. Environmental Protection, Health and Safety

(a) Environment Management

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

(b) Safety Management

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

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

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

(c) Health & Hygiene

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

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

(d) HSEQ Audits

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

11. Corporate Social Responsibility (CSR)

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

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

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

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

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

13. Management Discussion and Analysis Report

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

14. Corporate Governance Report

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

15. Investor Relations

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

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

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

16. Fixed Deposits

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

17. Personnel

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

18. Demat Suspense Account

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

Particulars No. of No. of Shareholders Shares

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

Request received for 2 561 transfer of shares from Suspense Account

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

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

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

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

19. Acknowledgements

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

On behalf of the Board of Directors

Place : Mumbai Nikhil Gandhi

Date : May 30, 2012 Chairman


Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting the 14th Annual Report on business and operations of the Company together with audited accounts for the financial year ended March 31, 2011.

1. Financial Performance

(Rs. in crore)

Particulars 2010-11 2009-10

(a) Income from Operations 859.93 629.38

(b) Other Income 63.36 67.51

(c) Total Income 923.29 696.89

(d) Profit/ (Loss) before Interest, Depreciation and Tax 215.90 60.88

(e) Depreciation 48.73 36.55

(f) Interest 119.01 72.99

(g) Profit before Tax 48.16 (48.66)

(h) Less: Provision for Taxation 8.39 0.16

(i) Profit/ (Loss) after Tax 39.77 (48.82)

2. Dividend

Considering the future growth and investment plans of the Company, no dividend has been recommended by the Board of Directors.

3. Operations

During the year under review, your Company has recorded total income of Rs. 923.29 crore, showing an increase of 32.49% as compared to the income of Rs. 696.89 crore during the previous financial year. Your Company earned profit before tax of Rs. 48.16 crore, as against loss of Rs. 48.66 crore for previous year.

During the year the Company completed construction of its two new built 74,500 DWT Panamax Vessels.

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

4. Convertible Warrants

Pursuant to the special resolution passed by the Members of the Company at the Extraordinary General Meeting held on September 7, 2010, your Company has issued 2,52,21,612 convertible Warrants on preferential basis to SKIL Infrastructure Limited, promoters of the Company, at a price of Rs. 99.10, for raising funds to meet the capex requirement of the Company and for general corporate purposes. Each warrant is convertible into one fully paid-up equity share of face value of Rs.10/- each, at any time prior to 18 months from the date of allotment of warrants.

5. Subsidiaries

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

During the financial year 2010-11, ECPL has earned revenue of Rs. 11.97 crore and posted net profit (after tax) of Rs. 3.96 crore.

General Exemption: The Ministry of Corporate Affairs has granted general exemption vide its General Circular No. 2/ 2011 dated February 8, 2011 under Section 212(8) of the Companies Act, 1956 ("the Act") to companies from not attaching the accounts and related documents of subsidiaries in their Annual Report, subject to fulfillment of certain conditions prescribed therein. The Company has complied with all the conditions mentioned in the said circular. Accordingly, the Balance Sheet, Profit & Loss Account, Directors' Report and Auditor's Report of its subsidiary company have not been attached to this Report.

Pursuant to Accounting Standard 21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the financial information of its subsidiary company. A statement of key financials of the subsidiary company is also included in this Annual Report.

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

6. Environmental Protection, Health and Safety

(a) Environment Management

Your Company believes in sustainable development of the society in which it operates. Accordingly, it has taken various initiatives and implemented eco-friendly programmes such as Distribution of Solar Panel Lights in nearby villages for conservation of energy and for solid waste management etc. Your Company has signed a Memorandum of Understanding with Gujarat State Rural Development Department to support its solid waste management project called "Nirmal Gram Programme" for village Rampara-II. Your Company has organized Cleanliness Drive at Siyalbet Island (in the vicinity of the Company's Project site) with the association of nearby schools' students.

(b) Safety Management

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

At your Company's project sites, Occupational Health and Safety of employees are of utmost importance. A well- defined occupational health and safety management system is in place to ensure the safety of employees as well as contractors' workforce.

To maintain and improve upon the safety system, extensive training is conducted for the employees and contractors' workforce by internal and external faculties. Training facility has been provided at the site and a safety booklet has been published for use by employees.

(c) Health & Hygiene

Your Company gives prime importance to hygiene monitoring at work place. Health check-up of employees is done through periodical medical examinations. Necessary trainings are conducted for workers to make them aware of first-aid and other health related matters.

Dedicated registered medical practitioners and para-medical staff at the Company's project sites provides round the clock Health Services to employees, their families and contractor workforce. Your Company has also tied up with a Hospital for running medical centre at the site.

(d) HSEQ Audits

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

7. Corporate Social Responsibility (CSR)

Being a socially responsible corporate citizen, your Company is actively involved in development of areas in the vicinity of the project site of the Company at Pipavav. A snapshot of the Company's CSR activities with the mission of sustainable community development is given below:

Health Care

- Your Company organized free General Health Check-up Camp at Village Rampara, to create awareness regarding health and sanitation in local community. More than 125 patients were examined and treated by doctors and paramedics.

- More than 300 students from nearby villages were attended by doctors for general check-up.

- Your Company sponsored free Health Check-up & Treatment Camp at Village Rajula in association with a charitable trust. More than 2100 patients were treated by the doctors. 550 patients were operated in nearby hospitals.

- Your Company provided financial assistance for construction of charitable Medical Centre.

- Your Company contributed to "Dr. M. L. Dhawale Memorial Trust" to support a charitable Homeopathic Rural-Adivasi Hospital.

Empowerment of Local female community

- Your Company has adopted three Industrial Training Institutes (I.TI.s) respectively situate at Rajula, Mahuva and Sawarkundla, Dist. Amreli, Gujarat, in the vicinity of the Company's facilities. Your Company has provided training opportunity to ex-students of these institutes including female students. As on date, we have provided employment opportunities to in all 33 female employees including 20 ex-ITI female students. This initiative of the Company has been well received by the local authorities and communities.

- Your Company encourages the education of the girl child. The Company has contributed to "Kanya Kelavani Nidhi", of Government of Gujarat for providing quality education to girl children.

Infrastructure Development

- Your Company participates in several infrastructure development projects, including construction of Girls' hostel, solar panel lights for households in nearby villages, etc.

Safe Drinking Water

- Your Company has undertaken 'Safe Drinking Water Project' with the help of Gram Panchayat of Siyalbet Island, for solving water problems of neighbouring villages, development of infrastructure for supply of safe drinking water and has installed Water Purifiers.

8. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo

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

Information required to be furnished in Form A is not applicable to the Company as your Company belongs to ship building industry.

9. Management Discussion and Analysis Report

The Management Discussion and Analysis Report is prepared in accordance with the requirements of Clause 49 of the Listing Agreement entered into with the Stock Exchanges, is given in Annexure - "B" and forms part of this Annual Report.

10. Corporate Governance Report

Corporate Governance Report along with the Auditors' Certificate confirming compliance with the conditions of Corporate Governance is enclosed as Annexure –"C", forming part of this Report.

11. Investor Relations

Your Company continues to provide prompt investor service through quick resolution of investor grievances. Your Company has designated an exclusive e-mail ID viz. [email protected], to enable the investors to post their grievance and the Company to monitor its redressal.

The securities of your Company are listed at National Stock Exchange of India Limited and Bombay Stock Exchange Limited. The Company has paid annual listing fees to these Stock Exchanges for the financial year 2011-12.

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

12. Fixed Deposits

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

13. Personnel

A statement containing prescribed details of employees, required to be provided under Section 217(2A) of the Act read with the Companies (Particulars of Employees) Rules, 1975, forms part of this Report. However, in terms of provisions of Section 219(1)(b)(iv) of the Act, the Report and Accounts are being sent to all the shareholders excluding the aforesaid statement. Any shareholder interested in obtaining a copy of this statement may write to the Company Secretary for the same at the Corporate Office of the Company.

14. Directors

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

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

15. Auditors

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

M/s. Chaturvedi & Shah, Chartered Accountants, Statutory Auditors of the Company, are retiring at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Certificate from the Auditors has been received to the effect that their re-appointment, if made, would be within the limits prescribed under Section 224(1B) of the Act. Your Board recommends their re-appointment.

The Auditors has submitted the Peer Review certificate dated January 6, 2010 issued to them by the Institute of Chartered Accountants of India (ICAI).

16. Directors' Responsibility Statement

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

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

b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2011 and of profit of the Company for that year;

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

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

17. Consolidated Financial Statements

Consolidated Financial Statements pursuant to Clause 41 of the Listing Agreement entered into with the Stock Exchanges and prepared in accordance with 'Accounting Standard 21 – Consolidated Financial Statements' form part of the Accounts and are attached for your reference.

18. Demat Suspense Account

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

Particulars No. of No. of Shares

Shareholders

Opening Balance as at April 1, 2010 44 9,076

Request received for transfer of shares from Suspense Account 27 4,828

Shares transferred to Claimants' Demat Accounts during the year 27 4,828

Closing Balance as at March 31, 2011 17 4,248

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

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

19. Acknowledgements

Your Directors take this opportunity to place on record their sincere appreciation for the assistance and co-operation received from the various Departments of Government of India, Government of Gujarat, Financial Institutions, Commercial Banks, employees, vendors and other stakeholders and all others whose continued support has enabled the Company to achieve its goals. Your Directors appreciate and value the contributions made by each & every employee of the Company. Your Directors are also thankful to its investors for reposing faith in the Company.

On behalf of the Board of Directors

Nikhil Gandhi

Place : Mumbai Chairman

Date : May 28, 2011


Mar 31, 2010

The Directors are pleased to present this Thirteenth Directors Report together with the audited Annual Accounts of your Company for the financial year ended March 31, 2010.

Financial Results

The financials for the year under review with comparative figures for the previous year are given below :

(Rs. in Lacs)

Particulars For the year ended For the year ended

March 31, 2010 March 31, 2009

Income 69,688.92 6,177.80

Proft/(Loss) before Taxation (4,866.22) 959.38

Less : Provision for Taxation 15.83 467.00

Proft/(Loss) after Taxation (4,882.05) 492.38

Previous Year Loss Adjustment (207.35) (50.01)

Balance of Proft/(Loss) carried to the Balance Sheet (5,064.57) 24.83

Dividend

Considering that the financial year 2009-10 was the first year of commercial operations and taking into account the financial results, it is recommended that no dividend be paid on the Equity Shares for the year under review.

Initial Public Offering (IPO)

Your Company made an Initial Public Offering of Equity Shares (“the Issue”) aggregating Rs.498.67 Crores.

Consequent to the allotment of 8,54,50,225 Shares in the IPO, the paid-up capital of your Company has increased to Rs.665.80 Crores divided into 66,57,98,388 Equity Shares of Rs.10 each.

Your Companys equity shares were listed on National Stock Exchange of India Limited and Bombay Stock Exchange Limited on October 9, 2009. The Board takes this opportunity to thank the investors for their overwhelming response to the Issue and the confdence reposed by them in the Company.

Share Capital/Debentures

SKIL Infrastructure Ltd., Promoters of the Company, and SKIL Shipyard Holdings Pvt. Ltd., a Promoter Group Company (“SKIL Group”), purchased 12,93,60,538 Equity Shares representing 19.43% of the paid-up share capital of the Company from Punj Lloyd Ltd. SKIL Group pursuant to SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 made an open offer to the public shareholders of the Company to acquire upto 13,31,59,678 equity shares of the Company. On successful completion of the open offer Punj Lloyd Ltd. would cease to be the Co-Promoter of the Company.

On May 19, 2010, your Company issued for cash, 2,54,00,000, 10% Fully, Compulsorily and Mandatorily Convertible Unsecured Debentures (“CCD”) to Valiant Mauritius Partners FDI Limited @ Rs.70/- per Debenture, each CCD convertible into one fully paid Equity Share in the Company to fnance potential acquisitions in the offshore segment. The management is evaluating various opportunities in this regard. The present debt equity ratio of 0.66:1 gives the Company necessary leveraging capability to fund such acquisition by a judicious mix of debt and equity, as and when required.

Depository System

Your Companys Equity Shares are available for dematerialisation through National Securities Depository Limited and Central Depository Services (India) Limited. As on March 31, 2010, 97.37% of the Equity Shares of the Company were held in demat form.

Management Discussion and Analysis

The Industry in which the Company operates can be broadly sub-classified in four segments viz. (A) Defence Shipbuilding (B) Offshore Oil and Gas Assets Construction (C) Commercial Shipbuilding and Repairs and (D) Heavy Engineering.

A. Defence Shipbuilding

Based on available reports, the Indian Navy has huge acquisition plans. It would need more than 100 ships of different types including submarines in the next two decades. The Indian Coast Guard would also need about 160 ships over next seven years. To meet these requirements, there is a need to create technologically advanced additional capacity in the country which opens up tremendous opportunities to private sector shipyards. To fill this large mismatch between the Defence requirements and the available capacities, the Government of India is encouraging the participation of private sector shipyards, directly and through Public Private Partnership.

There are high value defence acquisition programmes. Your Company will remain in the forefront to participate in such defence programmes, given the size, the scale and modern infrastructure it has created especially to cater to strategic defence requirements.

Your Company has been declared as the successful bidder for construction of five Offshore Patrol Vessels for Indian Navy with order value of approx. Rs.2,900 C r.

B. Offshore Oil and Gas Assets Construction

India has gained a strong foothold in the niche offshore construction segment. Crude oil prices across the world have faced huge fluctuations post global recession and are presently hovering around US$ 70-75 per barrel. As parts of the global economy recover from the recession, growth is expected to be predominately driven by the ever rising demand from Asias growing economies, including India and China. Both Indian and Chinese oil companies, seek to establish themselves within the global hydrocarbon market by investing in Explorations and Production of oil and gas (E&P) activities.

The Government of India is encouraging a greater number of foreign companies to enter E&P. Despite significant challenges, India will become a key oil and gas player over the coming decade. With Indias present energy growth projected to increase at a rate of 8% CAGR per year till 2032, US$150 billion investment will be required in this sector. In India, two-thirds of sedimentary basins remain unexplored. The Krishna-Godavari basin, in the Bay of Bengal covers more than 24,000 sq km offshore Oil and Gas field in water depths upto 2,000 mtrs.

With oil and gas demand expected to significantly outstrip supply in the years ahead, the National Oil Companies, are working to ensure greater domestic production of oil and gas. The increased E&P spending has and will continue to led to increased activity in the offshore oil and gas assets construction, installation and support industry. As India indigenously meets just about 30% of its energy requirements and the balance is imported, huge infrastructure investment is required for setting up new platforms and for replacement of the ageing assets.

As the proven oil and gas reserves are likely to meet the global energy requirements only till 2030, there will be increased E&P activities. This is expected to drive the demand for Offshore oil and gas assets / structures of both, floating and fixed type.

C. Commercial Shipbuilding and Repairs

The commercial shipbuilding industry is closely linked to the shipping industry. About 90% by volume and 70% by value of international trade is moved by the sea-routes. The demand for new commercial ships has declined over last two years primarily due to the global economic recession resulting in depressed freight market. The global commercial shipbuilding industry has begun a slow recovery. The continuation of the current recovery will depend upon the performance of the freight markets.

India is a large peninsula with a coastline of about 7,500 kms. The nation therefore requires a vibrant and strong commercial shipbuilding industry for economic as well as strategic reasons. Despite a long coastline, good potential and availability of favourable sites for shipbuilding, the Countrys share in the overall shipbuilding tonnage in the world is a mere 1.12% approximately. India is destined to be a major trading nation of the world and therefore, shipping, ship building and management of ports assume great importance in the scheme of development planning. The tidal shift in shipbuilding activities from Europe to Asia has opened up huge opportunities for Indian shipyards. With factors like availability of low-cost labour, progressive regulatory regime, proximity to key trade centres of the shipping world viz. Dubai and Singapore, large pool of qualified naval engineers, naval architects, high quality standards going in Indias favour, Indias share in the global shipbuilding market is set to change. Indian growth story offers its own opportunities. In 2010, INSA

(Indian National Ship-owners Association) has estimated that the domestic ship-owners are likely to invest about US$ 4 billion for acquisition of new vessels over the next 4 years to renew their fleets, which includes publicly announced acquisition plans of Shipping Corporation of India amounting to US$ 2 billion. Some recent initiatives on the policy front are also encouraging. The Ministry of Shipping is considering granting first right of refusal for moving import cargo of state owned companies to Indian built ships. In 2009 the Government had approved a disbursal of about Rs.5,100 Cr as shipbuilding subsidy to domestic shipyards for orders secured till August 15, 2007. The subsidy will be disbursed, in the case of private shipyards, when the shipyard concerned delivers the ships to its customers. The SAI has urged the Government of India to continue the shipbuilding subsidy scheme beyond August 15, 2007 and the same is currently under consideration.

Given the anticipated growth in this sector, your Company will be targeting in the near future the ship/rig repair market as well.

Ship Repairs is also a labour intensive industry. We can leverage Indias inherent labour-cost, and trained workforce advantage. Vessel conversion is a high potential segment within overall ship repair market. The Indian ship repair market has tremendous potential valued at Rs.2,790 Cr per year including estimated earnings of Rs.1,400 Cr from repairs of foreign ships visiting India.

Ship Repair business has potential of generating consistent and stable revenue over the years.

Your Company is working towards being a one-stop solution provider catering to various requirements of its customers in the marine field.

D. Heavy Engineering

Heavy Engineering sector offers huge potential and your Company is gearing itself to cater to this segment. The Company is exploring to extend its product range to include high value added products by using its engineering infrastructure. In this connection, your Company is engaged in discussion with some reputed players for strategic tie-ups.

Outlook

Your Company has a strong order book and the management believe that the focus on the defence and offshore segments will help your Company to grow its order book substantially in the near future. Your Company is set to deliver its first ship this year.

Risks, Concerns and Threats

Industry Risks: The Company is exposed to normal industry risk factors like competition, economic cycle, credit, forex and liquidity risks. The Company manages these risks by maintaining conservative financial profile and by following prudent business and risk management practices.

Oil Prices: Oil prices indirectly affect the business of your company. A rise in oil prices leads to enhancement in oil exploration activities and also pushes demand for offshore supply vessels, tankers, offshore infrastructures. Substantial decline in the oil prices may adversely affect our business.

Freight Rates: Demand for commercial ships is related to freight rates which are cyclical in nature.

Termination: Termination of any substantial shipbuilding contract for any reason whatsoever either by the Company or its customer could adversely impact our operations and financial results.

In addition to the above mentioned risks and

concerns the management perceives following threats which are inclusive and not exhaustive:

- Price fluctuation, import embargo of raw material like steel and other critical equipments.

- Trade embargo with any jurisdiction in which any of the customer of the Company is situated.

Organising for Growth

Your Company engaged reputed consultants, Bain & Co., to carry out an organisational development initiative aimed at building the organisation for growth. Based on the comprehensive exercise carried out and interactions with all key managers of the Company, new organisation structure with roles and responsibilities defined for various levels was implemented. Cross functional processes have been identified and implemented.

Award

Your Company won Essar-CNBC TV 18 Infrastructure Excellence Award 2010.

Certifcates

Your Company, during the year under review, has received ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 certificates from Det Norske Veritas.

This achievement reinforces the Companys quality drive.

Corporate Governance

Your Company is committed to maintain the highest standard of Corporate Governance. To comply with the provisions of Clause 49 of the Listing Agreement with the Stock Exchanges relating to Corporate Governance, the Report on Corporate Governance is included in the Annual Report. The Auditors have certified the Companys compliance of the requirements of corporate governance and the same is annexed to the Report on Corporate Governance.

Your Company also has in place a Whistle Blower Policy and a Code of Conduct for Directors and Senior Management. All Board members and designated senior management personnel have affirmed compliance with the Code of Conduct. A declaration signed by the Executive Vice-Chairman to this effect is enclosed in this Report.

Your Company also follows well-established and detailed risk assessment and minimisation procedures.

Insider Trading

In compliance with the SEBI regulation on prevention of insider trading, your Company has instituted a comprehensive code which lays down guidelines and advises the Directors and employees of the Company on procedures to be followed and disclosures to be made, while dealing in securities of the Company.

Security

Your Company engaged international security consultants Olive Group to carry out a comprehensive security risk assessment. A Security Assessment Report, submitted by Olive Group, forms the fulcrum of security initiatives being taken by your Company to further enhance the quality and effectiveness of overall security.

Human Resources

The management and the talent pool of your Company is being continuously strengthened by attracting the best talent available in domestic and international markets that can cater to the exacting demands of customers. Your Company has a strong management team comprising of experienced leaders who have managed similar facilities in India and abroad.

Industrial relations during the year under review were cordial and harmonious in the Company.

Particulars of Employees

A Statement containing prescribed details of the employees, as required to be provided pursuant to the provisions of Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, forms part of this 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 at the Corporate Office.

Health and Safety

At Pipavav Shipyard, Occupational Health and Safety of employees are of prime importance. The OHSAS 18001:2007 certificate issued to your Company confirms the world class standard in the field of Occupational Health, Safety and Environment practised by the Company.

Internal Control Systems and their Adequacy

The Company has an adequate system of internal control, supported by a modest Enterprise Resource Planning (ERP) platform for its main business processes, to safeguard and protect from loss, unauthorised use or disposition of its assets. All transactions are properly authorised, recorded and reported to the Management. The Company has independent Internal Auditors appointed to review various critical areas of operations. The Audit Reports are reviewed periodically by the management and the Audit Committee of the Board and appropriate measures are taken to improve the processes.

Corporate Social Responsibility (CSR)

As a part of the social obligation towards the society, your Company has initiated various developmental activities in the surrounding villages in the vicinity of the project site of the Company with the mission of:

"Being a socially responsible corporate entity with thrust on improving quality of school level education especially girl child education, health care and sustainable community development”

Your Company has also initiated the following activities with the objective of accomplishing its CSR mission:

Education

The Company has constructed a Girls hostel at Village Rampara-II, supported development/ improvement of Vrindavan High School at Village Rampara, renovated a primary school at Rampara Village, provided Computers to the schools of surrounding villages and initiated a Project with the objective of providing quality education and holistic development of the students at school level including development of soft skills.

I. T. I. Training

Your Company has adopted two Industrial Training Institutes (I.T.I.s) situated at Rajula and Mahua, in the vicinity of the Companys Shipyard and has provided training opportunities to 13 lady ex- students of these Institutes out of which 8 ladies have been retained as employees of the Company. This initiative of the Company is well received by the local communities.

Drinking Water Management

Your Company has provided a water supply line at Village Rampara-II, rendered financial support for water supply scheme of village Bherai, felicitated the villages for safe drinking water drive, renovated dams, farm ponds etc. in collaboration of DRDA, Amreli.

Environment

Environment protection at Pipavav Shipyard is of utmost important and to achieve this, regular monitoring of air, water and noise pollution levels is carried out. With plantation of more than 14,000 trees of various types which can survive in marine climate, the shipyard is destined to be lush green. Mangrove plantation has been done to enrich the environment.

Foreign Exchange Earnings and Outgo

During the year under review, the Company imported Raw Materials, Components and Stores and Spares on CIF basis of Rs.6,857.08 Lacs (Previous year Rs.22,011.70 Lacs). Similarly, the Company imported on CIF basis Capital Goods worth Rs.860.67 Lacs (Previous year Rs.23,298.31 Lacs).

Energy Conservation and Technology Absorption

The particulars relating to energy conservation and technology absorption, as required to be disclosed under Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are given in the Annexure to this Report.

Investor Relations

Investor relations have been cordial during the year. As a part of compliance, your Company has constituted a Shareholders and Investors Grievances Committee to redress issues relating to the investors, the details of which are provided in the Report of Corporate Governance forming part of this Annual Report.

Your Company has designated an exclusive email ID [email protected] which would enable the investors to post their grievances and the Company to monitor its redressal. Any member having any grievance can post the same to the said email address for quick redressal of the grievances, if any.

Public Deposits

Your Company has not accepted any public deposits within the meaning of the provisions of Section 58A of the Companies Act, 1956 read with the Companies (Acceptance of Deposits) Rules, 1975, and as such no amount on account of principal or interest on public deposits is outstanding on the date of the Balance Sheet.

Subsidiary Company

The Consolidated Financial Statements presented by the Company include financial results of the subsidiary, E Complex Private Limited.

Audit Committee

The Audit Committee of the Board comprises of Mr. R.M. Premkumar (Chairman of the Audit Committee), M r. Bhavesh Gandhi, Executive Director, M r. R. M. V. Raman, Nominee Director, Mr. S. Venkiteswaran and M r. Samar Ballav Mohapatra, Independent Directors. The Audit Committee has reviewed the Annual Accounts for the year ended March 31, 2010 enclosed with this Report.

Auditors

Messrs. Chaturvedi & Shah, Chartered Accountants, Statutory Auditors of the Company, will be retiring at the ensuing Annual General Meeting and are eligible for re-appointment. Messrs. Chaturvedi & Shah have communicated their willingness to accept the office of Statutory Auditors from the conclusion of the ensuing Annual General Meeting

till the next Annual General Meeting, if re- appointed. The Company has also received a certificate from them to the effect that their re- appointment, if made, would be within the limits specifed in Section 224(1B) of the Companies Act, 1956 and that they are not disqualifed for re- appointment within the meaning of Section 226 of the said Act. The Audit Committee in its Meeting held on May 28, 2010 has recommended the re- appointment of Messrs. Chaturvedi & Shah as statutory auditors of the Company.

The Notes forming part of the Accounts are self- explanatory and, therefore, do not call for any further explanation under Section 217(3) of the Companies Act, 1956.

Directors

Since the last Annual General Meeting, M r. Atul Punj, Co-Chairman of the Company, Mr. V. K. Kaushik, Mr. Mahesh Gandhi and M r. Sunil Chawla resigned from the office of Director of the Company. Mr. Luv Chhabra and Mr. Michael Pinto joined and resigned from the Board. The Directors wish to place on record their warm appreciation and gratitude for the valuable services rendered by the said Directors during their tenure of office.

In accordance with the requirements of the Companies Act, 1956 and the Articles of Association of the Company, Mr. S. Venkiteswaran retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board commends M r. S. Venkiteswarans re- appointment.

Demat Suspense Account

Pursuant to the Initial Public Offer of Equity Shares, the Company had, in respect of certain shares allotted therein, in view of mismatch in particulars of those allottees, parked such shares in a Demat

Suspense Account, as required in terms of Clause 5A of the Listing Agreement entered into by the Company with the Stock Exchanges. The details of shares in the said Suspense Account are as follows:



No. of No. of Particulars Investors Shares

On Allotment i.e. as 615 2,16,865 on October 1, 2010

Requests received 576 2,08,339 by the Company for transfer of shares from the Suspense Account Shares transferred 571 2,07,789 by the Company to claimants demat accounts during the year Status as on March 44 9,076 31, 2010



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

Directors Responsibility Statement

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors, on the basis of information and explanations provided by the executive management and certification by the Chief Financial Officer to the Audit Committee/Board of Directors, confirm that:

(i) in the preparation of the Annual Accounts for the financial year ended March 31, 2010, 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 judgments/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 under review;

(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) the Directors have prepared the Annual Accounts for the financial year ended March 31, 2010 on a going concern basis.

Acknowledgements

The Board of Directors takes this opportunity to express its appreciation for the co-operation and assistance received from various agencies of the Central Government and the Government of Gujarat and thanks the customers, employees, bankers and suppliers of the Company for their continued support. The Directors would also like to express their gratitude to the institutional investors and other shareholders for their trust and support.





On behalf of the Board of Directors,

Nikhil Gandhi Chairman

Place : Mumbai Date : May 28, 2010

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