Western India Shipyard Limited
Board of Directors : Shri. R. S. Nakra Shri. Ashwani Kumar Shri. Ashok R. Chitnis Shri. T. Asokraj (Nominee of ICICI Bank Ltd) Cdr. S. K. Mutreja (Retd) Whole Time Director & Chief Executive Officer Company Secretary : Shri. J. C. F. Sequeira Statutory Auditors : M/s. V. V. Kale & Co, Chartered Accountants Financial Institutions & Banks : ICICI Bank Limited IFCI Limited HDFC Bank Limited Oriental Bank of Commerce Federal Bank Limited Syndicate Bank Regd. Office & Shipyard : P. B. No. 21, Mormugao Harbour, Mormugao, Goa – 403 803 Phone: 0091 832 2520252–57 Fax: 0091 832 2520258. E-mail: [email protected] Website: www.wisl.co.in Registrars : Link Intime India Pvt. Ltd. C – 13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (W), Mumbai – 400 072. Tel: 91 22 25946970 Fax: 91 22 25946969 Email: [email protected]
Contents Page No. 1. Notice of AGM 01 2. Western India Shipyard Limited Milestones 07 3. Directors’ Report 09 4. Report on Corporate Governance 15 5. Certificates 25 6. Management Discussion & Analysis 27 7. Auditors’ Report 30 8. Balance Sheet 34 9. Profit and Loss Account 35 10. Cash Flow Statement 36 11. Schedules 1 to 17 37 12. Balance Sheet Abstract & General Business Profile 52 13. Attendance Slip & Proxy Form 53
1 19th Annual Report 2010-2011
NOTICE The 19th Annual General Meeting of the members of Western India Shipyard Limited will be held at the Registered Office & Shiprepair Yard at P.B. No. 21, Mormugao Harbour, Mormugao, Goa - 403 803, on the Friday, 23rd day of September, 2011 at 11.00 a.m. to transact the following business: ORDINARY BUSINESS:
1. To receive, consider and adopt the audited Profit and Loss Account for the financial year ended 31st March 2011 and the Balance Sheet as at that date together with the Reports of the Directors and Auditors.
2. To appoint a Director in place of Shri Ashwani Kumar, who retires by rotation and being eligible, offers himself for re-appointment.
3. To consider and if thought fit to pass, with or without modification(s), the following resolutions as an Ordinary Resolution:
“RESOLVED that pursuant to Sections 224 and other applicable provisions of the Companies Act 1956, M/s. V. V. Kale & Co, Chartered Accountants from whom the necessary consent letter has been received u/s. 224(1-B) of the said Act, be and is hereby re-appointed as the Statutory Auditors of the Company, to hold office from the conclusion of this meeting until the conclusion of the next Annual General meeting of the Company with statutory audit fees of Rs. 6,00,000/- plus service tax and out of pocket expenses on actual basis in connection with the audit of the Company for the year ended March 31, 2012.”
SPECIAL BUSINESS :
4. To consider and if thought fit to pass, with or without modification(s), the following resolution as an Ordinary Resolution:
“RESOLVED that Shri Ram Swaroop Nakra, who was appointed as an Additional Director of the Company by the Board of Directors of the Company and who holds office upto the date of the ensuing Annual General meeting and who is eligible for appointment as a director, and in respect of whom the Company has received a notice in writing under section 257 of the Companies Act, 1956 proposing his candidature for the office of director, be and is hereby appointed as a Director of the Company liable to retire by rotation.”
5. To consider and if thought fit to pass, with or without modification(s), the following resolution as a Special Resolution:
“RESOLVED that pursuant to Sections 267, 268, 269, 309, 311, Schedule XIII and other applicable provisions of the Companies Act, 1956, and subject to the approval of Central Government, as may be required, the consent of the members in general meeting be and is hereby granted for the increase in the remuneration of Cdr. Subhash Kumar Mutreja (Retd), Whole Time Director & Chief Executive Officer of the Company to an Annual Remuneration of Rs. 63,00,600/- (Cost to Company) or Rs. 5,25,050/- per month, w.e.f. 17.07.2010, payable as under:
2 Western India Shipyard Limited
1. Salary: Rs. 1,80,000/- per month.
2. House Rent Allowance: The Whole Time Director & CEO shall be entitled to perquisites including rent-free furnished accommodation or house rent allowance of 60% of basic salary. He shall also be entitled to Additional HRA/House Upkeep Re-imbursement of Rs. 22,000/- per month (on actuals upto a limit of Rs. 25,000/- p.m.)
3. Ex-gratia: Rs. 22,500/- per month.
4. Cafeteria reimbursement upto a limit of Rs. 1,44,200/- per month (at actuals).
5. Perquisites: (i) Gas, electricity, water, furnishings, medical reimbursements and leave travel concessions for self and family, club fees, medical and personal accident insurance, etc. in accordance with the rules of the Company. The perquisites shall be computed as per the Income Tax Rules as applicable. (ii) The Whole Time Director & CEO shall be entitled to Company’s contribution to Provident Fund upto tax exempt limit, benefits of Gratuity, earned leave and encashment of earned leave at the end of the tenure and long service awards, as per the rules of the Company and these shall not be included in the computation of perquisites. (iii) Car for use on Company’s business, telephone and other communication facilities at residence will not be considered as perquisites. (iv) The total value of the perquisites shall not exceed Rs. 45,650/- per month.
6. The Company shall reimburse to the Whole Time Director & CEO the traveling and entertainment expenses, and other expenses incurred by him for the business of the Company.
7. The Whole Time Director & CEO, so long as he functions as such, shall not be paid any sitting fees for attending meetings of the Board of Directors or committee thereof.
8. The Company shall have right to terminate the agreement with one (1) month’s notice or pay in lieu thereof.
9. In the event of loss or inadequacy of profits in any financial year, the remuneration by way of salary and perquisites payable to the Whole Time Director & CEO shall not exceed the limits fixed under the provisions of the Companies Act, 1956.
Resolved further that pursuant to Section 269 (2) read with Part III of Schedule XIII of the Act, the necessary return be filed with the Registrar of the Companies.”
By the Order of the Board For Western India Shipyard Limited Sd/- J. C. F. Sequeira Date:10.08.2011 V. P. (Corp. Affairs) Place: Mormugao, Goa & Company Secretary
3 19th Annual Report 2010-2011
EXPLANATORY STATEMENT The Explanatory Statement u/s. 173 (2) of the Companies Act, 1956 for item Nos. 4 & 5 of the Notice are as under:
Item No. 4: Appointment of Shri R. S. Nakra as Director Shri. Ram S. Nakra is the Managing Director of ABG Shipyard Limited, the Holding Company. He was appointed as Additional Director of the Company w.e.f. 10th February, 2011. He will retire at the ensuing Annual General Meeting of the Company. Your Company has received a notice from a member under Sec. 257 of the Companies Act, 1956 signifying his intention to propose the appointment of Shri. R. S. Nakra as Director of the Company. Considering his skills as a naval architect & vast experience in the Maritime Industry, your Directors recommend his appointment.
Item No. 5: Increase in the managerial remuneration of Cdr. S. K. Mutreja, Whole Time Director & CEO
The Shareholders of the Company had approved the managerial remuneration of Rs. 3,55,850/- per month plus other perquisites to Cdr. Subhash Kumar Mutreja, Whole Time Director and Chief Executive Officer of the Company for a term of three (3) years. The Ministry of Corporate Affairs, Government of India has approved the payment of remuneration to Cdr. S. K. Mutreja, upto Rs. 42,70,200/- per annum plus usual perks w.e.f.17.07.2010 vide letter dated 28.03.2011.
On the recommendation of the Remuneration & Compensation Committee, the Board has approved the increase in his annual remuneration (CTC) to Rs. 63,00,600/-) per annum, w.e.f. 17.07.2010, at the Board meeting on 09.08.2011, subject to the approval of the shareholders and the Central Government, if necessary, as per the provisions of the Companies Act, 1956.
Cdr. Mutreja is entrusted with the day to day operations and management of the Company under the superintendence & control of the Board. He has over 43 years of experience in the Indian Navy and in the Shipbuilding, Rig repair and Shiprepair Industry in the public and private sectors in India. The General information on the Company is as under:
1. Nature of the Ship Repair Industry: The Ship Repair Industry caters to the Shipping Industry consisting of Indian and foreign vessels such as passenger vessels, cargo and product carriers and tankers, and vessels from the Indian Navy, Coast Guard, Port craft, Dredgers, Offshore Support vessels and Oil Rigs which require periodical dry docking and wet repairs at its dry docking and wet repair facilities at Mormugao Harbour, Goa.
2. Financial Performance: The Company is engaged in the business of shiprepairs since 01.01.1996 at Mormugao Port, Goa, on the west coast of India. Your Company has repaired over 500 vessels of all types and 10 deep water Oil Rigs at its facilities. Your Company earns and saves valuable foreign exchange for the Country details of which appear in the Notes to the Accounts. The financial performances of your Company over last 3 years, is as under:
FY Year Turnover Net Profit/ (loss) (Rs. In crore) (Rs. In crore) 2008-09 75 (21) 2009-10 77 1 2010-11 114 16
4 Western India Shipyard Limited
3. Cdr. S. K. Mutreja (I.N Retd.) was born on 24.09.46 at Muzafargarh (Punjab). He served in the Indian Navy and at the time of leaving service held the post of Commander (I. N.). Cdr. Mutreja joined WISL as Whole Time Director and CEO on 17.07.2007. He is a B.E (Mech) and has undergone extensive courses in ISO 9000 quality systems, Shipyard Management, Production Planning and Control. He is 63 years with more than 42 years of experience in the Indian Navy and 22 years in the public and private sector with Goa Shipyard Limited. His last employment was in ABG Shipyard Limited. His focus is on new business development of the Company. His previous remuneration for FY 2010-11 was Rs. 40.26 lacs for FY.
4. The remuneration of Cdr. Mutreja is comparable to other shipyards in the private and public sector considering the nature, size and business of the Company, his expertise and position in the Company. He has no pecuniary relationship directly or indirectly other than his remuneration. He is not entitled to sitting fees for attending meetings of the Board /Committees.
5. The Company has achieved its highest sales turnover of Rs. 113.66 crore for FY 2010-11 (growth of 48%) and net profit after tax of Rs. 15.34 crore (growth of 1500%) as compared to FY 2009-10.
The Board recommends the special resolution for increase in the managerial remuneration payable to Cdr. S. K. Mutreja, Whole time Director & CEO of the Company as set out in the notice. Except Cdr. S. K. Mutreja, no other Director of the Company is in any way concerned or interested in the said resolution. A copy of the resolutions passed by the Remuneration & Compensation Committee and the Board and other material documents, are open for inspection of the members at the Registered Office of the Company on all working days during working hours upto the date of the meeting. By the Order of the Board For Western India Shipyard Limited Sd/- J. C. F. Sequeira V. P. (Corp. Affairs) Date:10.08.2011 & Company Secretary Place: Mormugao, Goa
Notes: 1. The Explanatory Statement pursuant to section 173(2) of the Companies Act, 1956 in respect of Item 4 & 5 set out in the notice and details of directors proposed to be appointed/re-appointed at the AGM in terms of clause 49 of the Listing Agreement with the Stock Exchanges, is annexed hereto. 2. A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND AND VOTE ON A POLL INSTEAD OF HIMSELF. SUCH A PROXY NEED NOT BE A MEMBER OF THE COMPANY. PROXIES, IN ORDER TO BE VALID AND EFFECTIVE, MUST BE DELIVERED AT THE REGISTERED OFFICE OF THE COMPANY NOT LESS THAN FORTY-EIGHT HOURS BEFORE THE MEETING COMMENCES. 3. Corporate members who intend to attend the meeting, are requested to send a certified true copy of the Board resolution authorizing their representative to attend and vote at the meeting on their behalf. 4. The Register of Members and Share Transfer Books of the Company will remain closed from 15.09.2011 to 23.09.2011 (both days inclusive) to enable the Company’s records to be updated for sending the notices of the AGM to their registered addresses. 5. Members holding shares in physical form are requested to send their change of address, to the Company. 6. Members are requested to note that the Company’s equity shares are under compulsory demat trading subject to the provisions of SEBI Circular No. 21/99 dated 08.07.1999. The members are requested to dematerialize their shares to avoid inconvenience.
5 19th Annual Report 2010-2011
7. Members are requested to avail of the nomination facility under sec. 109A of the Companies Act, 1956. 8. The Company’s Annual Report circulated to the members of the Company will be made available on the Company’s website at www.wisl.co.in. 9. Members holding shares in dematerialized form, are requested to inform their change of address, nomination, bank mandate, PAN number and email details to their respective Depository Participant (DP) and not to the Company. 10. Pursuant to clause 49 of the Listing Agreement with BSE, the information about the directors proposed to be re-appointed at the AGM is given in the annexure to the notice. 11. The Company has implemented the “Green Initiative in Corporate Governance” as per Circular No. 18/2011 dated: 29.4.2011 issued by the Ministry of Corporate Affairs, to permit electronic delivery of notices /documents and annual reports to shareholders. Hence, members holding demat accounts are requested to inform their email addresses to their Depository Participants (DPs). In case of physical holding, e-mail addresses may be sent to the Company. 12. All documents referred to in the Notice and the Explanatory Statement will be available for inspection at the Registered Office of the Company on all working days between 10.00 am to 12.00 pm upto the date of the meeting.
ANNEXURE Details of Directors seeking appointment/re-appointment in the 19th Annual General Meeting pursuant to Clause 49 (G) (I) of the BSE Listing Agreement:
Name of Director Ashwani Kumar Ram Swaroop Nakra
Date of Birth 15.08.1948 07.06.1938
Date of Appt./Re-appt.as 28.05.2010 10.02.2011 Director
Qualification Post Graduate in Political B. Tech (Hons.) I.I.T(Kharagpur) Science from Allahabad University.
Experience & Expertise in 35 years of experience Shri. R. S. Nakra is a naval architect with over Specific functional area with Indian Revenue 45 years of experience in designing & building Service. Retired as Chief large ships and floating craft. He is closely Commissioner of Income associated with the development of Shipbuilding Tax. Industry in India. He is the Managing Director of ABG Shipyard Ltd.
Directorships held in other 2 1 Companies
Committee positions held in 1 - other Companies
No. of Shares held in WISL NIL 10,000
6 Western India Shipyard Limited
WISL Milestones
01.05.1992 Western India Shipyard Limited (WISL) was incorporated as a public limited Company for ship repair, ship building and ship breaking.
30.06.1992 WISL obtained the Certificate for Commencement of Business.
05.03.1993 License agreement for shiprepair and shipbuilding facility signed with Mormugao Port Trust for 25 years.
12.11.1993 WISL obtains Ship Repair Unit registration certificate from D. G. Shipping.
28.08.1995 Company has its IPO of Rs. 70.70 crore.
25.12.1995 WISL is formally inaugurated.
01.01.1996 WISL commences commercial operations with its first dry docking of vessel M. V. Maratha Convoy (3108 DWT).
07.01.1997 WISL is registered as a Factory under the Factories Act, 1948.
05.01.1999 The IRQS grants the Quality Certificate ISO 9002:1994 for Ship Repairs.
30.11.2000 WISL executes its first ONGC Jack Up Oil Rig JURSagarJyoti.
13.04.2002 IRQS upgrades the Quality Certificate ISO 9001:2000 for Ship Repairs.
18.04.2002 BVQI grants the Quality Certificate ISO 9001:2000 for Ship Repairs.
23.06.2006 The High Court of Bombay at Goa sanctions the Scheme of Arrangement with the holders of 846,100 -12% secured redeemable non-convertible debentures and the dues are settled.
29.06.2007 WISL received the order of the High Court of Bombay at Goa sanctioning the Reduction of Equity Share Capital from Rs. 108.54 crore to Rs. 21.71 crore by reduction of face value from Rs. 10/- each to Rs. Rs. 2/- each.
12.09.2007 The Company’s Board approves a Scheme of arrangement and Compromise with the secured lenders with ABG Shipyard Limited as confirming Party.
7 19th Annual Report 2010-2011
01.04.2008 BVQI extends the Quality Certificate ISO 9001: 2000 to ‘Repair, Maintenance, Refurbishment of Ships & Rigs’.
15.01.2010/ The High Court of Bombay at Goa sanctions by order the Scheme of Arrangement and 22.01.2010 Compromise with the secured lenders with ABG Shipyard Limited as confirming Party and same is filed with the ROC at Goa on 28.01.2010 and the dues are settled.
06.05.2010 BVQI upgrades the Quality Certificate ISO 9001:2008 for Repair, Maintenance, Refurbishment of Ships & Rigs.
09.10.2010 The Company receives its largest order from Indian Navy for repair of INS Sujata
31.03.2011 The Company crosses Rs. 100 crore with Sales Turnover of Rs. 111.41 crore and Net Profit after Tax of Rs. 16.46 crore.
29.04.2011 The Company receives its largest Oil Rig repair order (No. 10) namely, Aban III.
17.08.2011 The Company completes its 519th vessel M. V. Maratha Deep.
8 Western India Shipyard Limited
DIRECTORS’ REPORT
Dear Members, Your Directors have great pleasure in presenting their 19th Annual Report on the business and operations of your Company together with the Audited Accounts for the year ended March 31, 2011. 1. Financial highlights
31.03.2011 31.03.2010 Particulars ( ` In Lacs) ( ` In Lacs)
Sales and other Income 11366.07 7651.39 Profit before Interest, Depreciation & Tax 3908.75 1833.47 Less: Interest 1183.97 625.56 Profit before Depreciation & Tax 2724.78 1207.91 Less: Depreciation 1078.45 1069.83 Profit before Tax 1646.34 138.07 Less: Provision for Taxation - - Net Profit after tax 1646.34 138.07 Prior period expenses 111.86 320.03 Extraordinary items (income) - 5160.22 Net Profit for the year 1534.48 4978.26
2. Operations Your Directors are pleased to report that your Company achieved a significant milestone with highest ever Shiprepair revenue of `11,366.07 lacs as against ` 7,651.39 lacs in the previous year, an increase of 48.55%. Your Company made cash profit of ` 3,908.75 lacs for the year an increase of 113.19% as against `1,833.47 lacs of the previous year. The net profit after tax for the year is `1,646.34 lacs, an increase of 1092.40% as compared to `138.07 lacs of the previous year. The net profit after prior period adjustments & extraordinary items is `1534.48 lacs. During the year, your Company became a subsidiary of ABG Shipyard Limited, one of the biggest shipyards in the private sector in India, on acquisition of major shareholding in the Company. As an ABG group company, your Company is assured of continuous ship repair technology, flow of repair orders, marketing & financial support for achieving higher revenue and profitability. Your Company has repaired 39 vessels upto max. 34000 DWT. Your Company is executing two major repair order namely, repair of INS SUJATA of the Indian Navy and ABAN III, a deep water Oil Rig of Aban Lloyd Offshore Ltd. The Company has a healthy order book position of `4081.76 lacs as on 31.03.2011. Your Company has operated in the Shiprepair segment only until its ship building facility commences operations. Your Company has taken a number of significant measures during the year to achieve higher growth and profitability such as preventive maintenance and repair of vital infrastructure like the Floating Dry dock, portal rail cranes and heavy workshop equipment to about 95% operating capacity; capital expenditure for modernization; planning and monitoring of operations; strategic alliances with specialist contractors for Shiprepairs and Rig Repairs. Your Company’s Quality Certificate has been upgraded to ISO 9001:2008 which will enable your Company to attract more foreign Ship Owners. Your Company is the only dedicated shipyard in India for composite industrial shiprepair activities and is well placed geographically on the west coast close to the major shipping lanes and Bombay High which is seeing expansion in Oil Exploration.
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Your Board places on record its sincere thanks to ABG Shipyard Limited for the continuous technical and marketing expertise extended to your Company, including the timely provision of bank guarantees and funding arrangements which have resulted in improved financial performance. 3. Dividend Your Board is unable to recommend any dividend to the shareholders in view of the accumulated losses, to conserve its resources. 4. Outlook in India for developments of Port Sector, Shipping, Ship Building and Shiprepairs The Shipping Industry continues to be the world’s most efficient and cheapest means of transportation. With 7517 km of coastline spread over the east and west coast, Shipping forms one of the important natural resources of India’s trade. The Maritime Agenda 2010-20 was released in January, 2011 by the Union Minister for Shipping. It will have significant long term impact on the Indian Maritime Industry. The Ministry has envisaged an investment of `1,65,000 crore in the Shipping Sector by the year 2020 to increase the share of Indian shipping in the EXIM trade in terms of tonnage under the Indian flag to enable India to increase its share in global Ship building from 1% at present to 5%. The agenda also proposes a total investments in major and non-major ports of about `2,87,000 crores by 2020 with the objectives to bring Indian ports on par with the best international ports in terms of performance and capacity; creation of Port capacity of around 3200 mn. tonnes to handle the expected traffic of about 2500 mn. tonnes by 2020 and to improve employment of Indian seafarers in the global Shipping Industry from 6-7% to about 9% by 2015. The agenda also seeks to promote coastal shipping as an alternate to the road transport under a new Coastal Shipping policy. The Ports act as an interface between ocean transport and land transport. India has 12 major ports viz. Kolkata (including Dock complex at Haldia), Paradip, Vishakapatnam, Chennai, Ennore, Tuticorin, Cochin, New Mangalore, Mormugao, Jawaharlal Nehru at Nhava, Mumbai, and Kandla, and 187 minor ports. The massive investment especially through the PPP route is expected to see higher growth in sea bourn traffic at ports. The new Maritime Agenda will benefit the Country substantially as larger vessels will call at the existing ports plus two new major ports which are proposed to be developed, one each on east and west coasts, and two hub ports one each on the east and west coast at Mumbai (JNPT), Kochi, Chennai and Visakhapatnam. For this purpose, the drafts in major ports to be increased to not less than 14 metres and hub ports to 17 metres to cater to the larger vessels. The agenda also seeks to introduce Ro-Ro Ferry service in Gulf of Kutch, Gulf of Cambay etc. The agenda will also introduce the new Shipbuilding Subsidy Scheme to the Shipbuilding Industry & grant them the Infrastructure Status. There was a global slowdown in the Shipping Industry in 2008 and 2009 which is evident from the movement of the Baltic Dry Index (BDI), a leading indicator of global economic shipping activity showing the daily weighted average of prices for shipping bulk cargo such as iron ore, coal, and grains. The BDI has moved downward from USD 2300 in mid-November, 2010 to USD 1320 in mid-May, 2011. The Global Shiprepair market is estimated to be worth US $ 10 billion to US $ 12 billion, with Singapore’s share of 20%. India has only a share of about US $100 million. There are 35 SRUs registered with the Director General of Shipping, Government of India. Since India is located strategically on the international trade route, the country can offer shiprepair and maintenance services to ships plying along the east and west coast. Currently, shiprepair is primarily undertaken in Dubai dry docks, Singapore, Bahrain and Colombo dockyards. The Shiprepair Industry in India gets business mainly from the Indian Shipping Industry, which has about 50% of ships owned, older than 20 years. (Source: Exim Bank Report on Indian Shipping Industry: A catalyst for growth). Indian shipyards have many advantages over shipyards in developed nations with a large pool of technical workers, with low labour costs as compared to most other countries. Shipyards acts as a catalyst for overall industrial growth due to spin offs to other industries, including steel, engineering equipment, port infrastructure,
10 Western India Shipyard Limited
and the shipping trade. The potential of the Shipbuilding and Shiprepair Industry in employment generation and contribution to GDP is therefore tremendous. The dynamics of India’s economic growth will continue to create increasing demand for new ships, ship-building and shiprepair capacity within the Country which needs to be augmented to cater to this growing demand, with spillover effects on other associated/ ancillary sectors and generation of employment. 5. Directors Shri. Ashwani Kumar retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment. Shri R. S. Nakra will cease to hold office as an Additional Director of the Company at the ensuing AGM but, being eligible, he has offered himself for appointment as a director. The Company seeks the approval of the shareholders at the ensuing AGM for increase in the remuneration of Cdr. S. K. Mutreja, Whole Time Director & Chief Executive Officer of the Company. The Board recommends the resolutions to the members. 6. Directors’ Responsibility Statement As required by sub-sec. 217 (2AA) of the Companies Act, 1956 your Directors state: (a) that in the preparation of the annual accounts for the year ended 31st March 2011, the applicable accounting standards have been followed alongwith proper explanation relating to material departures; (b) that the directors have selected such accounting policies in consultation with the statutory auditors, applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period; (c) that the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding assets of the company, and for preventing and detecting fraud and other irregularities; (d) that the annual accounts have been prepared on a going concern basis. 7. Statutory Disclosures (a) During the year, no employee of the Company was in receipt of remuneration of more than `60 lacs per annum or more than `5 lacs for part of the year. Hence the information as required under sub-sec. (2A) of Sec. 217 of the Companies Act, 1956 & the Companies (Particulars of Employees) Rules, 1975 as amended, has not been furnished. (b) Information relating to the conservation of energy, technology absorption and foreign exchange earnings and outgo required under Section 217 (1) (e) of the Companies Act, 1956, read with the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is given in Annexure ‘A’ to this report. (c) A Cash Flow Statement for the year 2010-11 is attached to the Balance Sheet & audited accounts. (d) Directors’ Responsibility Statement as required by section 217 (2AA) of the Companies Act, 1956 appears at item 6 of this report. 8. Corporate Governance The Corporate Governance report, in terms of Clause 49 of the Listing Agreement with the Stock Exchange, is at Annexure ‘B’. A certificate from the Auditors of the company regarding compliance of conditions of corporate governance is annexed to this report. 9. Auditors M/s. V. V. Kale & Co., Chartered Accountants, the Statutory Auditors of the company hold office upto the conclusion of the ensuing Annual General Meeting. The auditors consent u/s. 224 (1B) of the Companies Act,
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1956 has been received for their re-appointment. The Board recommends the re-appointment and remuneration as set out in the notice. 10. Deposits The Company has not accepted deposits from the public and therefore the provisions of Section 58A of the Companies Act, 1956 are not applicable to the Company. 11. Industrial relations The Company signed a wage settlement with its unionized workmen covering the period from 01.10.2009 to 30.09.2013. The Company introduced a Voluntary Retirement Scheme for its employees for reduction in long term employee cost. Industrial relations at the Company’s shipyard during the year, continued to be cordial. 12. Auditors’ Report Your Directors state that the necessary comments on the Auditors’ Report to the members, have been made in Note 15 & 16 in the Notes to the Accounts and the same is self-explanatory. 13. Corporate Social Responsibility (‘CSR”) The Company believes in Social Responsibility as its operations have an impact on all stakeholder including the local community and society. The Management has prepared a calendar of actions towards this end and encourages its employees at all levels to participate and ensure a positive impact and commitment towards corporate social responsibility. The following CSR Programs were attended by a large number of employees: (a) Factory Safety Committee meetings on 14.06.2010, 27.11.2010 and 12.02.2011 to look into safety issues of the shipyard. (b) Health Camp for employees on 10.12.2010 in association with Wockhardt Hospitals Limited for lifestyle problems like diabetes & BP. (c) Dental Health Camp for employees on 10/12.03.2011 in association with Lions Club of Vasco, Goa. (d) Health Awareness Seminar for employees on Stress Management & Naturopathy on 14.03.2011 in association with VIKALP, a NGO. (e) National Fire Week was held from 14.04.2011 to 20.04.2011 with display of live fire drills with fire-fighting apparatus. (f) Fire Safety manual and Disaster Management Plan to meet emergencies. (g) Meet on World Population day. 14. Acknowledgements Your Directors convey their gratitude to its bankers, business associates and classification societies for their continued support. The directors also thank the Central & State Government and in particular the Ministry of Shipping and the Mormugao Port Trust, for their support at all times.
For & on behalf of the Board of Directors Sd/- Cdr. S. K. Mutreja (Retd.) Place: Mormugao, Goa Whole Time Director Date: 10.08.2011 & Chief Executive Officer
12 Western India Shipyard Limited
ANNEXURE ‘A’ TO THE DIRECTORS’ REPORT: Information pursuant to Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988. A) Conservation of Energy:
(a) Energy conservation measures continued during the year : • Improvement in the Power load Factor from 0.61 to 0.98 for better performance. • Use of environmental friendly green gas fuel for gas cutting operations. • Generating air pressures only when needed by installation of constant pressure systems on compressors, • mainly in blasting and painting facilities. • Minimized idle running of equipment like gensets, pumps, lights and machinery. • Preventive maintenance of cranes and other machinery to attain maximum efficiency and cost savings. • Using mix of welding generators with rectifiers to improve the quality of the welding. • Saving energy by drawing low voltage on the lighting circuit. • Conduct of regular awareness programs among employees. (b) Additional investments and proposals for reduction of consumption of energy: • New Electrical sub-station has been tested and commissioned. (c) Impact of above measures for reduction of energy consumption & consequent impact on the cost of production of goods. • The measures taken have resulted in substantial savings in the cost of operation. B) Technology Absorption 1. Research and Development (R & D) :
Specific areas in which R & D carried out by the Company
• Shiprepair technology has a process of continuous testing and certification of products and processes by in-house QC and accredited Certification Agencies to conform to International Standards. • Continuous development of new processes, methods & procedures for Shiprepair & Rig repair. • Fabrication of tools, typical jigs and fixtures to improve the existing standards for cost effectiveness and faster results. • Development of Coffer Dam technology for repair of FDD/ship side shell without dry docking. • Use of High lift facilities for Oil Rig Repairs. 2. Benefits derived as a result of above R & D • Cost reductions / better utilization of material and energy. • Import substitutions. • System standardization and upgradation. • Improvement in Quality and Customer Service, including Customer Satisfaction. • Minimizing environment pollution.
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• Faster delivery and turnaround time for vessels. • Improved customer presentations. 3. Future Plan of Action. • Improvement of systems and shiprepair /Rig repair methodology. • Introduction of new products and processes for better results. • Improving interaction with Research agencies involved with Shiprepair and Rig repair technology. 4. Expenditure on R & D. The use of fully integrated software covering areas of production and manpower planning, co- ordination, commercial costing, personnel, inventory and Accounts Management using customized software, are a strategic part of the Company’s capital expenditure. Technology Absorption, Adaptation and Innovation :
1. Efforts in brief made towards Technology Absorption, adaptation & innovation : • Use of trained and experienced personnel from technical institutions/ shipbuilding institutions, for keeping them abreast with the changing technologies and methodology of Ship repair and ship building. • Participation in national and international conferences, seminars and exhibition. • Imparting Training to Direct / Indirect / Contractor Staff employed for ship repairs. • Technology absorption through interaction with experts. • Feedback Analysis from customers. 2. Benefits derived as a result of the above efforts Eg. Product improvements, Cost reduction, etc. • Improvement in existing systems, Quality Assurance, Safety and Customer Satisfaction. • Cost reduction in production. 3. Information regarding Technology imported during the last five years.
Technology imported Year of Import Status Nil N.A N.A C) Foreign Exchange Earnings and Outgo: During the year ended 31.03.2011, your Company’s earned foreign exchange of `2071.80 lacs (Previous year `2075.99 lacs). There was no foreign exchange expenditure during the year (Previous year `204.74 lacs). The details of the same are placed in the ‘Notes to the Accounts’.
For & on behalf of the Board of Directors Sd/- Cdr. S. K. Mutreja (Retd.) Place : Mormugao, Goa Whole Time Director Dated : 10.08.2011 & Chief Executive Officer
14 Western India Shipyard Limited
ANNEXURE ‘B’ CORPORATE GOVERNANCE REPORT (As required under Clause 49 of the Listing Agreement with the Bombay Stock Exchange Ltd) 1. Company’s Philosophy on Corporate Governance: The Company, an ABG Group Company, is committed to the principles of good Corporate Governance in line with the provisions of the law and those of the Listing Agreement with the Stock Exchange. It encourages the participation of all stakeholders, namely the secured lenders, the Ship Owners, the Management, employees and the shareholders. The Company’s Philosophy is that change is vital in an economic and competitive environment like shiprepairs with high degree of adaptability to changing standards and productivity norms. Towards this philosophy, your Company has set out its corporate vision and budgets to reach its business goals of Quality, Cost and Timely deliveries. The Company also stresses that its personnel should operate in a manner that is transparent, professional, and efficient using fair business practices, prudent judgments and estimates, with accountability at all levels. This will help the Company to ensure a planned and stable growth that is sustainable in the long term and create value for the stakeholders and the national economy. 2. Board of Directors (a) Size & Composition: The Board of Directors exercise superintendence and control over the management of the Company. The Whole Time Director & Chief Executive Officer of the Company looks after the day to day affairs. The Board comprises of 5 directors of which 4 are Independent and Non-executive directors and one is a nominee director representing ICICI Bank Limited. The composition of the Board is in conformity with the Companies Act, 1956 and clause 49 of the listing agreement. None of the directors are related to one another in terms of sec. 6 of the Companies Act, 1956. Based on the disclosures made by the Directors, the following information has been furnished:
Name of Director Category No. of other No. of other Board Committees Attendance Director ships (other than WISL) on which member/ Chairman. Board AGM Shri. R. S. Nakra I, NE 1 1 3 No Shri. T. Asokraj I, NE - - 2 No Shri. Ashwani Kumar I, NE 1 1 4 Yes (since 28.05.2010) Shri. Askok R. Chitnis I, NE 1 1 4 No (Since 28.05.2010) Cdr. S. K. Mutreja NI, E - - 4 Yes
Note: I - Independent, NE - Non-Executive, E - Executive, NI - Non-Independent. (b) Board meetings: The Board appoints a Chairman for each Board meeting. The information in terms of Annexure -1A to clause 49 of the BSE listing agreement has been placed before the Board for consideration. The important decisions of the Board are communicated to the Management of the Company. The Board held four (4) meetings during the year namely, 28.05.2010, 30.07.2010, 29.10.2010 and 10.02.2011. None of the non- executive Directors had any material pecuniary relationship or transactions with the Company.
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(c) Profile of Directors seeking appointment / re-appointment at the 19th AGM:
Name of Director Shri. Ashwani Kumar Shri. R. S. Nakra Date of Birth 15.08.1948 07.06.1938 Date of Appointment/ 28.05.2010 10.02.2011 Re-appointment as Director Qualification Post Graduate in B. Tech (Hons.) I.I.T(Kharagpur) Political Science from Allahabad University. Experience and Expertise in Specific 35 years of experience Naval Architect with over 45 years functional area with Indian Revenue of experience in designing & Service. Retired as Chief building large vessels. He is closely Commissioner of Income associated with the development of Tax. He is a director of Shipbuilding Industry in India. He ABG Shipyard Ltd. is the Managing Director of ABG Shipyard Ltd Directorships held in other 2 1 Companies Committee positions held in other 1 2 Companies No. of Shares held in WISL NIL 10000 3. Audit Committee The Audit Committee is constituted in line with clause 49 of the Listing Agreement read with sec. 292A of the Companies Act, 1956. The Audit Committee comprised of 3 independent directors. The Committee has a nominee director from ICICI Bank Limited who has wide experience banking, law and finance. The Company Secretary is the Secretary of the Committee. (i) Terms of Reference: The Committee reviews the Company’s financial reporting process and the disclosure of its financial information, recommends the appointment of the internal auditors, re-appointment of statutory auditors and the Chief Financial Officer, fixes audit fees, reviews the quarterly and annual financial statements with primary focus on accounting policies and practices, compliance with accounting standards and legal requirements concerning financial statements, reviews the adequacy and compliance of internal control systems, internal audit functions, reviews the Company’s financial & risk management policies, reviews the reports furnished by the internal auditors and statutory auditors and findings and suitable follow up thereon, findings of internal investigations, reasons for any substantial defaults, compliance with regard to company’s Whistle Blower Policy, etc. (ii) Composition, names of members, meetings and attendance: The Committee appoints the Chairman at each meeting. The Committee held four (4) meetings during the year namely, 28.05.2010, 30.07.2010, 29.10.2010 and 10.02.2011 with the requisite quorum. The minutes have been reviewed by the Board.
Name Position No. of meetings attended Shri. T. Asokraj I, NE 2 Shri. Ashok R. Chitnis I, NE 4 (Since 28.05.2010) Shri. Ashwani Kumar I, NE 4 (since 28.05.2010) Note: I- Independent, NE- Non-Executive, E - Executive, NI - Non-Independent.
16 Western India Shipyard Limited
4. Remuneration & Compensation Committee: (i) Composition, names of members, meetings and attendance : The Committee comprises of 3 independent directors. The Committee reviews and recommends to the Board the terms and conditions of service and the remuneration package payable to the Executive Director & CEO of the Company. The Committee was reconstituted by the Board on 28.05.2010. The Committee held one (1) meeting on 09.08.2011 during the year with the requisite quorum.
Name Position No. of meetings attended Shri. R. S. Nakra I, NE 1 Shri. T. Asokraj I, NE 1 Shri. Ashok R. Chitnis I, NE 1 (Since 28.05.2010) Note: I- Independent, NE- Non-Executive, E-Executive, NI-Non-Independent (ii) Remuneration Policy: The Company pays remuneration to its Whole Time Director & CEO by way of salary, allowances and perquisites as recommended by the Remuneration & Compensation Committee, subject to the approval of the Board, the General Meeting and the Central Government. The appointment is subject to the conditions stipulated in Schedule XIII and other applicable provisions of the Companies Act, 1956. The Company pays sitting fees to non-executive directors for attending each meeting of the Board / Committee. No commission is paid to the Executive Director. (iii) Remuneration of Directors:
Name Sitting Fees (Rs.) Salary (Rs.) Commission Total (Rs.) Terms (Rs) Shri. T. Asokraj 30000 Nil - 30000 Nominee Director Shri. R. S. Nakra 24000 Nil - 24000 NE, I Shri. Ashok R. Chitnis 54000 Nil - 54000 -do- (Since 28.05.2010) Shri. Ashwani Kumar 54000 Nil - 54000 -do- (Since 28.05.2010) Cdr. S. K. Mutreja, Nil 4026000 - 4026000 Contractual Whole Time Director & CEO Note: (a) I - Independent, NE - Non-Executive, E - Executive, NI - Non-Independent. (b) The Ministry of Corporate Affairs, Government of India has approved the payment of remuneration to Cdr. S. K. Mutreja, upto Rs. 42,70,200/- per annum plus usual perks w.e.f.17.07.2010 vide letter dated 28.03.2011. (iv) Details of shares of the Company held by Directors as on 31.03.2011:
Name No. of shares Percentage of shareholding Shri. R. S. Nakra 10000 0.003 Cdr. S. K. Mutreja 6000 0.0002
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5. Share Transfer & Investor Grievance Committee: (i) Composition, names of members, meetings and attendance : The Share Transfer & Investor Grievance Committee held 12 meetings during the year on 03.04.2010, 10.05.2010, 23.06.2010, 23.07.2010, 20.08.2010, 30.9.2010, 09.11.2010, 16.12.2010, 19.01.2011, 16.02.2011, 04.03.2011 and 17.03.2011.
Name Position No. of meetings attended Cdr. S. K. Mutreja (Retd.), Whole Time Director & NI, E 12 CEO Shri. J. C. F. Sequeira, Company Secretary Company 12 Secretary Note: I- Independent, NE- Non-Executive, E-Executive, NI-Non-Independent. (ii) Terms of Reference: The terms of reference of the Share Transfer & Investor Grievance Committee covers the matters specified in clause 49 of the Listing Agreement, namely, the share transfers and transmissions, issue of duplicate share certificates, share allotments, investor grievances like non-receipt of annual reports, dividends, demat requests, physical share certificates, etc. The Committee reviews the performance of the Share Registrars. (iii) Name, Designation and Address of the Compliance Officer: Shri. J. C .F. Sequeira, Vice President (Corp. Affairs) & Company Secretary. Western India Shipyard Limited (Registered Office and Shipyard) Post Box No. 21, Mormugao Harbour, Mormugao, Goa – 403 803. Phone: 0091 832 2520252–57. Fax: 0091 832 2520258. E-mail: [email protected] Website: www.wisl.co.in (iv) Details of Investor Complaints received & resolved during FY ended 31.03.2011:
Type Received Resolved Pending on 31.03.2011 Non-receipt of Annual Reports 9 9 Nil Non-receipt of share Certs. 11 11 Nil Non-receipt of dividends* 5 5 Nil *No dividend has been declared till date. Total 25 25 Nil 6. General Body Meetings (i) Date, time and venue of the last three Annual General Meetings.
Year Date Time Venue Mormugao Harbour, Mormugao, 2007-08 31.10.2008 4.30 p.m. Goa – 403 803 2008-09 26.09.2009 11.00 a.m -do- 2009-10 25.09.2010 11.00 a.m -do-
18 Western India Shipyard Limited
(ii) Special Resolutions passed in General Meetings:
Date of Meeting Subject matter of special resolution 31.10.2008 1. Re- appointment of Cdr. S. K. Mutreja as Whole Time Director and Chief Executive Officer of the company for a period of one year on monthly remuneration of Rs. 2,60,274/- plus other perquisite. 2. Alteration of Authorised Share Capital of Rs. 150 Crores. 3. Preferential allotment of 37,20,500 equity shares of Rs. 2/- each at premium to Specified Undertaking of UTI (SUUTI) under the terms of their sanction for restructuring of liabilities. 26.09.2009 1. Re- appointment of Cdr. S. K. Mutreja as Whole Time Director and Chief Executive Officer of the company for a period of one year on monthly remuneration of Rs. 2,60,274/- plus other perquisite. 25.09.2010 1. Appointment of Shri. Ashwani Kumar as ordinary director. 2. Appointment of Shri. Ashok Chitnis as ordinary director. 3. Re-appointment of M/s. V. V. Kale & Co, as Statutory Auditors to hold office till the conclusion of the next AGM on annual remuneration of Rs. 5 lacs plus out of pocket expenses, pursuant to Sec. 224A of the Companies Act, 1956. 4. Re- appointment of Cdr. S. K. Mutreja as Whole Time Director and Chief Executive Officer of the company for a period of 3 years on monthly remuneration of Rs. 3,55,850/- plus other perquisite. Note: During the Financial Year 2010-11, no resolution was put through postal ballot as the provisions of Sec. 192A of the Companies Act, 1956 did not apply to the same. 7. Disclosures a) Materially significant Related Party transactions: None of the transactions with any of the Related Parties were in conflict with the interest of the Company. The Related Party transactions are disclosed in Schedule 16: Notes to the Accounts at Item no. 7, forming part of this Annual Report. The Related Party transactions are generally with the Holding Company and group Companies. They are based on business and operational requirements and the Group’s need for capital resources to maintain synergy and liquidity. The Related Party transactions are at arms’ length to further the interests of the Group. b) Compliances: The Company has complied with the requirements of the Listing Agreements with the Stock Exchanges including the mandatory requirements mentioned in Annexure IC of clause 49 relating to Corporate Governance, and the SEBI Regulations. No penalties or strictures have been imposed on the Company by any statutory or regulatory authorities for non-compliance on any matter related to capital markets during the last 3 years ended upto 31.03.2011. c) Code of Conduct: The Board of Directors of the Company have laid down a Code of Conduct for all Board members and senior management of the Company. The same has been put on the Company’s website. d) Whistle Blower Policy: The Company has adopted a Whistle Blower Policy and has established the necessary mechanism to enable employees to report unethical behavior if any in line with clause 7 of Annexure 1D of clause 49 on Corporate Governance. No person has been denied access to the Audit Committee. e) Non-mandatory requirements: The Company has implemented the following non-mandatory requirements recommended by clause 49 of the Listing Agreement with the stock exchanges: (i) Constitution of Remuneration Committee. (ii) The Company is moving to a regime of unqualified financial statements. (iii) The Complemented has implemented a Whistle Blower Policy.
19 19th Annual Report 2010-2011
8. Secretarial Audit As a measure of good Corporate Governance, the Company has appointed Ms. Kala Agarwal, Practicing Company Secretary, to carry out the secretarial audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) with the total issued & listed capital. The secretarial audit confirms that the total issued /paid up capital of the Company is in agreement with the total number of shares issued in physical form and in dematerialized mode with National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). 9. Means of Communication The Company’s quarterly, half yearly and annual results are regularly submitted to the stock exchanges where the Company’s shares are listed and displayed on the Company’s web site www.wisl.co.in for the information of investors. The said results are normally published by way of Press notes in the Economic Times, Navhind Times and Herald. The details of press notes, financial results and shareholding patterns also appear in the web site www.corpfiling.co.in maintained jointly by BSE and NSE after discontinuance of the SEBI EDIFAR site. The Ministry of Corporate Affairs has issued a Circular No. 18/2011 dated: 29.4.2011 as part of its Green Initiative in Corporate Governance, permitting the service of notice/documents including Annual Reports to be sent by email to members. Members desiring to avail this facility have to inform their email addresses to the Depository in case of demat holding, and to the Company in case of physical holding. 10. General Shareholders’ Information (i) Annual General Meeting: Date and time : 23.09.2011 at 11.00 a.m. Venue : Registered Office & Shipyard Mormugao Harbour, Goa - 403 803 (ii) Financial Calendar: Financial reporting for the quarter Ending June 30, 2011 : Mid-Aug. 2011 Ending September 30, 2011 : Mid-Nov. 2011 Ending December 31, 2011 : Mid-Feb.2012 Ending March 31, 2012 : Mid-May, 2012 (iii) Book Closure : 15.09.2011 to 23.09.2011 (both days inclusive) (iv) Dividend payment date : Nil
(v) Listing on Stock Exchanges: Name of Stock Exchange The Bombay Stock Exchange Ltd Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai -400001 Delhi Stock Exchange Assn. Ltd DSE House, 3/1, Asaf Ali Road, New Delhi - 110 002 Ahmedabad Stock Exchange Limited, Kamadhenu Complex, Opp.Sahajanand College, Panjara Pole, Ahmedabad - 380 015 The Calcutta Stock Exchange Ltd 7Lyons Range, Kolkata 700001. Madras Stock Exchange Ltd. StockExchange Bldg. P.B. No. 11, Second Line Beach Road, Chennai - 600 001
20 Western India Shipyard Limited
Note: The Company’s Stock Code is WESTE/531217. The Company is listed on the Bombay Stock Exchange Limited being the Principal Stock Exchange. The Company has paid the listing fees of Bombay Stock Exchange Limited for FY 2011-2012. The Company has submitted the applications for de-listing from the Stock Exchanges at Ahmedabad, Delhi, Kolkata and Chennai as the shares are thinly and infrequently traded, pursuant to the special resolution passed by its shareholders. The arrears of listing fees will be paid at the time of delisting. The Company has claimed refund of the security deposit of Rs. 35 lacs with Delhi Stock Exchange (DSE), against its public issue, which is pending. (vi) Share Price Movement and its comparison with BSE Sensex:
WISL SHARES Volume at BSE BSE Sensex Month High Low Apr-10 16.39 13.90 42,08,864 17,558.71 May-10 14.75 11.60 25,26,009 16,944.63 Jun-10 13.80 12.22 25,37,773 17,700.90 Jul-10 14.23 11.49 41,61,989 17,868.29 Aug-10 14.04 11.13 34,12,978 17,971.12 Sep-10 14.31 11.35 64,90,967 20,069.12 Oct-10 18.90 12.68 2,77,43,410 20,032.34 Nov-10 18.00 12.95 69,12,840 19,521.25 Dec-10 14.49 11.75 19,78,193 20,509.09 Jan-11 14.05 10.87 13,31,562 18,327.76 Feb-11 12.30 9.39 15,40,594 17,823.40 Mar-11 11.50 9.91 15,61,904 19,445.22
21 19th Annual Report 2010-2011
(vii) Stock Price Performance:
(viii) Registrars : The Registrar’s address for correspondence is mentioned below: Link Intime India Pvt. Limited, C – 13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (W), Mumbai – 400 072. Phone No. 91-22-25946970. Fax.91-22-25946969 e-mail: [email protected]. (ix) Share Transfer System: The Company’s shares have been notified by SEBI for compulsory trading in dematerialization mode through the depository system. The share transfer requests in physical form are processed by the Company and registered within 30 days from the date of receipt. The demat requests are confirmed to the Depository Participants (DP) within 15 days from the date of receipt. (x) Dematerialization of shares: The Company’s shares have been dematerialized with the following depositories to the extent of 94.91% as on 31.03.2011:
Name of Depositories Paid up value ISIN No. National Securities Depository Ltd (NSDL) Fully paid INE382C01028 th Trade World, 4 Floor, Rs. 2/- Kamala Mills Compound, Senapati Bapat Marg,Lower Parel, Mumbai – 400 013. Central Depository Services (India) Ltd (CDSL) Fully paid INE382C01028 Phiroze JeeJeebhoy Towers, Rs. 2/- 27 – 28th Floors, Dalal Street, Mumbai – 400 023. The Company has paid the Annual Custodial fees to NSDL and CDSL for the year 2011-2012.
22 Western India Shipyard Limited
(xi) Distribution of Shareholding as on 31.03.2011:
Nominal Value of Number of % of share Number of % of shareholding in Rs. Shareholders holders shares held shareholding. 1 - 5000 51356 88.65 20425673 6.93 5001 – 10000 3120 5.39 6184042 2.10 10001 – 20000 1491 2.57 6028456 2.05 20001 – 30000 685 1.18 2646985 0.90 30001 – 40000 203 0.35 2165024 0.73 40001 – 50000 362 0.62 2081201 0.71 50001 – 100000 412 0.71 5230882 1.78 100001 & above 302 0.52 249881827 84.81 Total 57931 100.00 294644090 100.00 Physical mode 26076 45.01 14976621 5.09 Electronic mode 31855 54.99 279667469 94.91 Total 57931 100.00 294644090 100.00 (xii) Outstanding ADRs /GDRs /Warrants or any convertible instruments The Company has not issued any ADRs /GDRs /Warrants or any convertible instruments. (xiii) Shareholding Pattern as on March 31, 2011
Category No. of shares % of shares Promoters’ Holding 177242875 60.15 Mutual Funds / UTI 3720500 1.26 Financial Institutions/Banks 28492236 9.67 Private Corporate Bodies 37470090 12.72 NRIs / OCBs 1376549 0.47 Indian Public 46341840 15.73 Total 294644090 100.00 (xiv) Shareholders with more than 1% shareholding as on March 31, 2011:
Name of the shareholder No. of shares Percentage ABG Shipyard Limited 17,72,42,875 60.15 ICICI Bank Limited 1,14,41,496 3.88 State Bank of India 91,20,000 3.10 Bank of India 66,87,600 2.27 Western India Industries Ltd. 41,56,000 1.41 Administrator of Specified Undertaking of UTI SUUTI 37,20,500 1.26 Western Paques (India) Ltd. 31,83,710 1.08
23 19th Annual Report 2010-2011
(xv) Details of unclaimed shares issued pursuant to Initial Public Offer (IPO) pursuant to clause 5A of the Listing Agreement:
Sl. No. Particulars Cases No. of Shares (a) Aggregate number of shareholders and the outstanding shares 171 75900 lying in the Unclaimed Suspense Account at the beginning of the year namely, 01.04.2010 (b) Number of shareholders who approached the Company for Nil Nil transfer of shares from the Unclaimed Suspense Account during the year; (c) Number of shareholders to whom shares were transferred Nil Nil from the Unclaimed Suspense Account during the year; (d) Aggregate number of shareholders and the outstanding shares 171 75900 lying in the Unclaimed Suspense Account at the end of the year Note: The voting rights on the shares shall remain frozen until the rightful owner claims the shares. As per clause 5A (II) of the Listing Agreement, 3 reminders will be issued for the shares issued in physical form which remain unclaimed. These shares will be transferred into one folio in the name of “Unclaimed Suspense Account” in due course. (xvi) Shipyard Location: Western India Shipyard Limited (Registered Office and Shipyard) Post Box No. 21, Mormugao Harbour, Mormugao, Goa – 403 803. Phone: 0091 832 2520252–57. Fax: 0091 832 2520258. E-mail: [email protected] Website: www.wisl.co.in
24 Western India Shipyard Limited
DECLARATION BY THE WHOLE TIME DIRECTOR & CHIEF EXECUTIVE OFFICER (under clause 49 of the Listing Agreement) To, The Members of Western India Shipyard Limited I, Cdr. S. K. Mutreja (Retd.) Whole Time Director & Chief Executive Officer of Western India Shipyard Limited declare that to the best of my knowledge and belief, all the members of the Board and senior management personnel have affirmed their respective compliances with the applicable Code of Conduct of the Company for the year ended 31.03.2011. For Western India Shipyard Limited Sd/- Mormugao, Goa Cdr. S. K. Mutreja (Retd) Dated: 09.08.2011 Whole Time Director & CEO
CERTIFICATE PURSUANT TO CLAUSE 49 OF THE LISTING AGREEMENT To the Board of Directors, Western India Shipyard Limited We have reviewed the financial statements, read with the cash flow statement of Western India Shipyard Limited for the year ended March 31, 2011 & to the best of our knowledge and belief, we certify that: 1. (a) These statements do not contain any materially untrue statement or omit any material fact or contain statements that may be misleading, (b) These statements present a true and fair view of the Company’s Affairs and are in compliance with existing accounting standards, applicable laws and regulations. 2. There are no transactions entered into by the Company during the year which are fraudulent, illegal or in violation of the Company’s code of conduct. 3. We accept the responsibility for establishing and maintaining internal controls for financial reporting. We have evaluated the effectiveness of internal control systems of the Company pertaining to financial reporting and have disclosed to the Auditors and Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we are aware and steps taken or proposed to be taken for rectifying these deficiencies. 4. We have indicated to the Auditors and the Audit Committee: (a) Significant changes in the internal control over financial reporting during the year. (b) Significant changes in accounting policies made during the year and that the same have been disclosed in the notes to the financial statements; and (c) Instances of significant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system over financial reporting. Yours sincerely, For Western India Shipyard Limited For Western India Shipyard Limited Sd/- Sd/- Dilip Vengurlekar Cdr. S K Mutreja (Retd) Chief Financial Officer Whole Time Director & Chief Executive Officer Place: Mumbai Date: 09.08.2011
25 19th Annual Report 2010-2011
AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE
To, The Members Western India Shipyard Limited We have examined the compliance of conditions of Corporate Governance by Western India Shipyard Limited, for the year ended on March 31, 2011 as stipulated in Clause 49 of Listing Agreement of the said Company with the Stock Exchanges. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementations thereof, adopted by the Company for ensuring compliance with the conditions of corporate governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in clause 49 of the above mentioned Listing Agreement. We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the Management has conducted the affairs of the Company.
For V. V. Kale & Co. Chartered Accountants Sd/- Place: Mumbai Vijay V. Kale Dated: 30.05.2011 Partner
26 Western India Shipyard Limited
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
I. Industry Structure and Developments:
Ship Repair Units (“SRU”) are in the nature of manufacturing units which are heavy engineering and capital intensive. SRUs are covered by the provisions of the Factories Act, 1948 and rules. The manufacturing process involves the manufacture of various ship parts like hull, deck, steel structural items, repair, refurbishment and renovation of parts of the vessel to enhance the life, operating performance, safety and value of the vessel. SRUs are therefore set up in and around the ports. SRUs are dependent on the Shipping and the non-shipping sectors like Dredgers, Indian Navy, Coast Guard Vessels, Offshore Support Vessels, Port craft and ONGC Rigs, for repair business. The Shipping sea bourn traffic, is a global industry whose performance is closely linked to the sea bourn traffic of bulk commodities like iron ore, fertilizer, grain, coal, petroleum products, cement with highly volatile patters of demand and supply, and the world economic growth. The global demand and supply trends and freight rates are likely to changes in the charter periods, terms and conditions. Even though the repair terms are settled in advance with the Ship owners and operators, there are inherent risks in the repair of vessels of old vintage, credit risks of owners and operators and risk of forex fluctuations. These risks lead to delays in redelivery of vessels, disputes in work done and bill settlements and liquidated damages. Your Company has a state of art facility totally dedicated to composite shiprepairs, with a factory manufacturing a wide range of ship parts. The Company has a Floating Dry Dock of 60000 DWT capacity, wet repair jetties, portal rail cranes of 35T and 50T capacity and multi-purpose shops, heavy duty workshops and fabrication centers. As a capital intensive industry, your Company has an annual budget for shiprepair operations, preventive maintenance and capital expenditure for modernization for improvement in productivity and profitability. II. Opportunities and threats During the year, your Company settled the dues of the secured creditors who had opted for the One Time Settlement under the Scheme of Arrangement and Compromise with ABG Shipyard as confirming party. Subsequently, your Company became a subsidiary of ABG Shipyard Limited, who acquired about 60.15% of the Issued & Paid up equity share capital of the Company in October, 2010 under the said scheme. ABG Shipyard Limited is a market leader in the Shipbuilding Industry with orders of about `14,500 crore as on December 31st, 2010. ABG Shipyard Limited and your Company have firm plans to enter into the lucrative market for repair and upgrading defense vessels. As an ABG Group Company, your Company has continuous access to the marketing, technical and financial support of the ABG Group. Your Company has plans for pursuing the following opportunities for higher volumes of growth and profitability:- (a) Repair of defense vessels of the Indian Navy and Coast Guard on most competitive terms, in association with M/s. ABG Shipyard Limited. (b) Repair of Oil Rigs of established Rig Operators like ONGC, Transocean, Nobel Sedco Forex and Aban Offshore Limited, where the Company is a market leader having repaired 10 large Oil Rigs rated for operations at depths of 300 meters. (c) Repair of vessels of established Fleet Owners in the non-shipping sector like DCI, ONGC. Indian Navy and Coast Guard to achieve stable earnings, higher volumes and profitability. (d) Repair of vessels of established fleet owners like SCI, Reliance, PFS Shipping, etc. (e) Manufacture of small vessels at its Ship building-cum-slipway as per the market conditions. (f) Acquisition of 2nd smaller floating dry dock for repair of smaller vessels visiting the Port (g) Construction of pontoons using its existing workshop and infrastructure facilities.
27 19th Annual Report 2010-2011
(h) The Company has a global focus in sourcing vessels, rather than a country or region specific focus, subject to competitive terms and prices. Your Company has concentrated on improving its existing infrastructure to full rated capacity especially the periodical repairs and maintenance of its Floating Dry dock of 20000 TLC or 60000 DWT and material handling equipment like portal rail cranes, EOT cranes, plant and machinery, new power sub-station, etc. The dredging of the dock pit area had been completed earlier for taking larger vessels of the desired capacity and dimensions inside the dry dock. This will help the Company to achieve significant economies in operations with higher repair volumes and profitability. The older and better equipped foreign shipyards like Dubai, Colombo and China, offer betters terms of payment and discounts to clients as compared to the Company. However, your Company’s prices, quality and timely redelivery enables it to achieve a better performance. III. Segment-wise/product-wise performance: The Company has operated in the Shiprepair segment only. The Company undertook and completed large value fabrication jobs successfully for Mazgaon Docks. The Company will focus more on wet repair jobs as its dry dock is fully utilized. The Company will also focus on supply of ship spares to its clients. Rig repairs does not involve the use of its dry dock and wet repair berths. IV. Outlook for Ship repairs in India: The Report of the Sub-group for Shipping, Director General of Shipping, constituted by the Government of India, stated that as on 1.10.2006, the Indian Shipping fleet consisted of 763 ships of 8.39 mn. Gross Tonnage (GT). As per statistics projected by Indian National Ship Owners Association (INSA), 374 vessels of 3.79 mn GT would need to be scrapped over the next five years for crossing 25 years of age and also because these are single hull vessels which require scrapping as per the norms fixed by the International Maritime Organisation (IMO). This would therefore leave only 389 ships (51%) of 4.60 mn GT in India at the beginning of the 11th Plan. The Sub-group for Shipping accordingly proposed 3 targets as under for acquisition of tonnage to meet the deficit & growth for Indian Shipping during the 11th 5-Year Plan 2007-2012: Target GT (mn) No. of vessels Additional GT (mn) Additional investment (Rs. in crore) 10 mn 374 5.4 mn 35000 12 mn 404 6.16 mn 55000 15 mn 609 9.16 mn 80000 Total 1387 20.72 mn 170000 The Committee therefore recommended the retention of existing tonnage and encouragement of shore based infrastructure to make investment in shipping as profitable as other service industries to attract new investors and greater investment in view of the flow of Indian Ships to Singapore and other tax havens and also for removing several taxes which make Indian Shipping non-competitive. (Source: Economic Times dated 18.12.2006). Your Company is very competitive placed due its presence on the West Coast of India close to the major sea bourn traffic lanes, low labor costs, availability of skilled work force and duty free imports for shiprepairs. With the growing requirements of strict environmental norms for pollution control, safety standards and regulations, your Company is expected to have substantial volumes of shiprepair and profitability over the years. Your Company also expects substantial orders for Rig repairs in view of the continuous growth in the Offshore oil exploration and production in the Country. Your Company is well equipped to meet the challenges through excellence in quality, expertise & timely redeliveries and has repaired about 10 Oil Rigs. V. Risks & Concerns: Your Company has a 25 year license agreement for shiprepairs and shipbuilding w.e.f. 05.04.1993 with the Mormugao Port Trust. The Port had issued several operational impediments which were reviewed by the High Powered Committee appointed by the Ministry of Shipping, Government of India and a report has been made.
28 Western India Shipyard Limited
A decision by the Ministry on the HPC Report is awaited. The Company will seek the renewal of the license agreement at the proper time. VI. Internal control systems and their adequacy Your Company has an Internal Audit Department (IAD) headed by an independent Chartered Accountant, reporting to the CEO of the Company. The Company has fixed the terms of reference and put into place internal control systems for its business processes, commensurate with the size and nature of the Company’s operations. The IAD monitors the needs like financial effectiveness of operations, financial reports, statutory compliance, whistle blower mechanism, etc. The Auditor submits the quarterly audit reports on the adequacy of internal controls and suggests improvements for strengthening them. The Audit Committee reviews the internal audit reports on quarterly basis and follow-up actions. The Board reviews the recommendations of the Audit Committee. VII. Financial and Operating performance: Your Company achieved a significant milestone with highest ever Shiprepair revenue of `11,366.07 lacs as against `7,651.39 lacs in the previous year, an increase of 48.55%. Your Company made cash profit of `3,908.75 lacs for the year an increase of 113.19% as against `1,833.47 lacs of the previous year. The net profit after tax for the year is `1,646.34 lacs, an increase of 1092.40% as compared to`138.07 lacs of the previous year. The net profit after prior period adjustments & extraordinary items is `1534.48 lacs. The financing charges was higher at `1183.97 lacs during the year as compared to `625.56 lacs due to repayments of secured loans as per the commitments under the Scheme of Arrangement u/s. 391-394 of the Companies Act, 1956 and the fresh loan arrangements. Personnel expenses increased due to the wage settlement effective from 01.10.2009. During the year, your Company repaired 39 vessels upto max. 34000 DWT. Your Company secured two major repair order namely, repair of INS SUJATA of the Indian Navy and ABAN III, a deep water Oil Rig of Aban Lloyd Offshore Ltd. Your Company has a healthy order book position of `4081.76 lacs as on 31.03.2011 and the repairs are progressing satisfactorily. As an ABG Company, your Company is assured of continuous marketing efforts, repair orders & financial support for achieving a better performance. Your Company has operated in the Shiprepair segment only until its ship building facility-cum-slipway is converted into the graving dock. Your Company has taken a number of significant measures during the year to achieve higher growth and profitability such as preventive maintenance and repair of vital infrastructure like the Floating Dry dock, portal rail cranes and heavy workshop equipment to about 95% operating capacity; capital expenditure for modernization; planning and monitoring of operations; strategic alliances with specialist contractors for shiprepairs; introduction of VRS scheme and wage settlements with its workmen upto Sept. 2013 for industrial peace. Your Company’s Quality Certificate has been upgraded to ISO 9001:2008 which will enable your Company to cater to foreign Ship Owners. VIII. Material developments in human resources / industrial relations front. During the year, your Company signed a wage settlement with its unionized workmen on 30.12.2010 covering the period from 01.10.2009 to 30.09.2013. The Company introduced a Voluntary Retirement Scheme for its employees which will reduce employee cost in the long run. Relations with the Company’s workmen at its shipyard continue to be cordial. CAUTIONARY STATEMENT The statements made in this Management Discussion & Analysis Report relating to the Company’s objectives, projections, expectations, estimates, etc. may constitute “forward looking statements” within the meaning of applicable laws and regulations. Actual results may differ from such expectations. Important factors that influence the Company’s operations such as working capital, raw material availability, prices, Government policy and regulations, taxes, economic developments in India and abroad, market competition, natural calamities and industrial relations.
29 19th Annual Report 2010-2011
AUDITOR’S REPORT The Members of Western India Shipyard Ltd. 1. We have audited the attached Balance Sheet of Western India Shipyard Ltd. as at 31st March, 2011 and Profit & Loss Account for the year ended on that date and the Cash Flow Statement for the year ended on that date, both annexed thereto. These financial statements are the responsibility of the Company’s Management. 2. We conducted our audit in accordance with Auditing Standards generally accepted in India. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our report. 3. As required by the Companies (Auditor’s Report) Amendment Order, 2004 issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, we annex hereto a statement on the matters specified in Paragraphs 4 & 5 of the said Order. 4. Further to our comments in the Annexure referred to in para (1) above, we report that : (a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit. (b) In our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of the books. (c) The Balance Sheet, Profit & Loss Account and Cash Flow Statement dealt with by this report are in agreement with the books of account. (d) In our opinion, the Balance Sheet, Profit & Loss Account and Cash Flow Statement materially comply with the Mandatory Accounting Standards referred to in Sub-section (3C) of Section 211 of the Companies Act, 1956. (e) On the basis of written representation received from the Directors as on 31st March, 2011 and taken on record by the Board of Directors, we report that none of the Directors are disqualified as on 31st March, 2011 from being appointed as Directors in terms of clause (g) of Sub-section (1) of Section 274 of the Companies Act, 1956. (f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the notes to accounts give the information required by the Companies Act, 1956, in the manner so required subject to the comments in paragraph (f) above , give a true and fair view in conformity with the accounting principles generally accepted in India ; i) in the case of the Balance Sheet, of the state of the affairs of Company as at 31st March, 2011. ii) in the case of Profit & Loss Account, of the profit of the Company for the year ended on that date. iii) in the case of the Cash Flow Statement, of the cash flows for the year ended on that date.
For V. V. Kale & Co. Chartered Accountants Firm Regd No- 000897N Sd/- Vijay V. Kale Place : Mumbai Partner Date : May 30,2011 M. No- 80821
30 Western India Shipyard Limited
ANNEXURE TO THE AUDITOR’S REPORT (Referred to in Paragraph (1) of our Report of even date)
1. i) As informed to us, the Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets and it needs to be updated.
ii) As informed to us, all the assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its business. No material discrepancies were noticed on such verification.
iii) As explained to us, no substantial part of the fixed assets have not been disposed off during the year.
2. i) As informed to us, the Management has physically verified the inventory during the year. In our opinion, the frequency of verification is reasonable.
ii) As explained to us, the procedure of physical verification of inventories followed by the Management are reasonable and adequate in relation to the size of the Company and the nature of its business.
iii) On the basis of our examination of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory. The discrepancies noticed on verification between the physical stocks and the book stocks were not material.
3. a. According to the information and explanation provided to us the Company had taken loans from the companies covered in the register maintained under Section 301 of the Companies Act, 1956.
b. In our opinion the rate of interest and other terms and conditions of loans taken by the Company are prima- facie not prejudicial to the interest of the Company.
c. According to the information and explanation given to us, the payment of principal amount and interest are regular wherever applicable..
d. According to the information and explanation given to us, there is no over due amount pending for repayment.
4. According to the information and explanation given to us the Company has not granted any loans to companies/ parties etc. covered under register maintained under Section 301 of the Companies Act, 1956.
5. In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fixed assets and with regard to the sale of goods. During the course of our audit, no major weakness has been noticed in the internal controls.
6. Transactions that need to be entered in the register maintained under Section 301 of the Companies Act, 1956:
a) Based upon the audit procedures applied by us and according to the information and explanations given to us, we are of the opinion that the particulars of contracts or arrangements referred to in Section 301 of the Companies Act, 1956, have been entered in the register required to be maintained under that section.
b) In our opinion and according to the information and explanations given to us, the transactions made in pursuance of such contracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 and exceeding the value of Rs. 500,000/- in respect of any party during the year, have been made at prices which are reasonable, having regard to prevailing market prices at the relevant time.
31 19th Annual Report 2010-2011
7. According to the information and explanations given to us, the Company has not accepted any deposits from the public under the provisions of Sections 58A and 58AA of the Companies Act, 1956 or any other relevant provisions of the Act. 8. In our opinion, the Company has an adequate internal audit system commensurate with the size and nature of its business. 9. As explained to us, the Central Government has not prescribed for the maintenance of cost records under Section 209 (1) (d) of the Companies Act, 1956 in respect of Company’s product and activity. 10. a) According to the records of the Company, the Company has deposited Provident Fund, Employees State Insurance and other undisputed statutory dues with the appropriate authorities. b) According to the information and explanations given to us, no undisputed amounts payable in respect of Income Tax, Wealth Tax, Sales Tax including VAT, Service Tax, Customs duty, Excise duty, cess and other statutory dues were outstanding, as at the last day of financial year for a period of more than six months from the date they became payable. c) Dues against the Company as per Sales Tax and Service Tax assessment are contested by the Company. Details are as under :-
Nature of dues Name of the Statute Financial Amount (Rs.) Forum where year dispute is pending 1. Sales Tax The Goa Sales Tax 1995-96 1,43,821 Commissioner Act 1996-97 41,26,399 (Sales Tax) 1997-98 62,07,881 1998-99 64,99,976 1999-00 8,14,406 2000-01 89,49,596 2001-02 54,11,182 2002-03 2,31,00,478 2003-04 2,11,58,350 2004-05 73,79,288
2. Value Added Tax (VAT) The Goa Value 2005-06 2,20,77,259 VAT Officer Added Tax Act 2006-07 2,15,79,204 3. Service Tax Central Excise and 2001-02 1,88,11,550 Customs, Central Customs Act 2002-03 2,53,09,680 Excise & Service 2003-04 2,69,92,343 Tax Appellate Tribunal 4. Income Tax Demand The Income Tax Act 2005-06 5,67,138 CIT(Appeals) 11. As per records of the Company, the accumulated losses of the Company exceed fifty percent of its net worth. However, the Company has not incurred cash losses during the current financial year. 12. According to the information and explanations given to us and based on the documents and records produced to us, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. 13. As informed to us, the Company had given Rs. 575.63 lacs to certain companies under escrow agreements
32 Western India Shipyard Limited
against which the original share certificates of the face value of Rs.169.39 lacs (Market Value on the Balance Sheet date is Rs. 859.68 lacs) had been deposited with the Company. 14. As informed to us, the Company has not given any guarantee for loans taken by others from Bank or Financial Institutions. 15. As informed to us, the term loans have been applied for the purpose for which they were raised. 16. As per the records, the Company has not made any preferential allotment of shares to parties and companies mentioned in the register maintained under Section 301 of the Companies Act, 1956 during the year. 17. As per the records of the Company, the Company has not raised any money by way of public issues during the year under audit. 18. As per information and explanations given by the Management, no fraud on or by the Company has been noticed or reported during the course of our audit. 19. Other clauses to the said Order are considered to be not applicable to the Company.
For V. V. Kale & Co. Chartered Accountants Firm Regd No- 000897N Sd/- Vijay V. Kale Partner M. No- 80821
Place : Mumbai Date : May 30,2011
33 19th Annual Report 2010-2011
BALANCE SHEET AS AT 31ST MARCH 2011 PARTICULARS SCHEDULE AS AT 31-03-11 AS AT 31-03-10 Amount in Rs. Amount in Rs. SOURCES OF FUNDS 1. SHARE HOLDERS’ FUND (a) Share Capital 1 589,288,180 589,288,180 (b) Reserves & Surplus 2 582,804,559 620,784,518 2. LOAN FUNDS (a) Secured Loans 3 1,512,855,192 1,119,662,123 (b) Unsecured Loan 100,000,000 450,000,000 TOTAL FUNDS EMPLOYED 2,784,947,931 2,779,734,821 APPLICATION OF FUNDS 1. FIXED ASSETS 4 (a) Gross Block 2,166,491,378 2,154,540,674 Less : Depreciation 1,420,252,074 1,312,791,629 Net Block 746,239,304 841,749,045 (b) Capital Work in Progress 57,262,520 2. INVESTMENTS 5 500,000 500,000 3. (I) CURRENT ASSETS, LOANS & ADVANCES 6 (a) Inventories 452,632,006 272,226,307 (b) Sundry Debtors 415,794,416 334,731,051 (c) Cash & Bank Balances 10,579,649 48,124,665 (e) Loans & Advances 521,399,729 469,503,316 Total - (I) 1,400,405,801 1,124,585,339 (II) CURRENT LIABILITIES & PROVISIONS 7 (a) Current Liabilities 443,125,638 376,879,949 (b) Provisions 39,555,213 27,719,441 Total - (II) 482,680,851 404,599,390 Net Current Assets (I) - (II) 917,724,950 719,985,949 4. MISCELLANEOUS EXPENDITURE (To the extent not written off or adjusted) Miscellaneous Expenses 2,495,875 3,326,500 5. PROFIT & LOSS ACCOUNT 8 1,060,725,282 1,214,173,327 TOTAL APPLICATION OF FUNDS 2,784,947,931 2,779,734,821 Significant Accounting Policies 15 Notes to Accounts 16 - The Schedules referred to above form an integral part of the Balance Sheet.
As per our report of even date attached. For & On Behalf Of The Board For V. V. Kale & Co. Sd/- Sd/- Chartered Accountants R. S. Nakra Cdr. Subhash Kumar Mutreja (Retd) Firm Regd. No. 000897N Director Wholetime Director & CEO Sd/- Sd/- Sd/- Vijay V. Kale Dilip Vengurlekar J. C. F. Sequeira Partner Chief Financial Officer VP (Corp Affairs) and M. No.- 080821 Company Secretary Place : Mumbai Dated : May 30, 2011
34 Western India Shipyard Limited
PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH,2011
PARTICULARS SCHEDULE AS AT 31-03-11 AS AT 31-03-10 Amount in Rs. Amount in Rs.
INCOME Sales & Services 9 1,114,102,111 751,573,791 Other Income 10 22,504,923 13,564,837 Total 1,136,607,034 765,138,628 EXPENDITURE Direct Expenses 11 434,152,205 312,215,044 Personnel Expenses 12 135,806,107 99,512,358 Other Expenses 13 175,773,613 170,064,818 Interest 14 118,396,931 62,555,757 Depreciation 107,844,520 106,983,239 Total 971,973,376 751,331,216 Profit / (Loss) before Tax & Adjustments 164,633,658 13,807,411 Provision For Taxation Current Tax-MAT Liabilty 1,958,494 - MAT Credit Entitlement (1,958,494) - Profit / (Loss) before Adjustments 164,633,658 13,807,411 Prior Period Expenses 11,185,613 32,003,089 Interest Waiver on Settlement of Loan - 516,021,967 Profit / (Loss) for the year 153,448,045 497,826,289 Basic Earning per Share 0.52 1.69 Significant Accounting Policies 15 Notes to Accounts 16
The Schedules referred to above form an integral part of the Profit & Loss Account
As per our report of even date attached. For & On Behalf Of The Board For V. V. Kale & Co. Sd/- Sd/- Chartered Accountants R. S. Nakra Cdr. Subhash Kumar Mutreja (Retd) Firm Regd. No. 000897N Director Wholetime Director & CEO Sd/- Sd/- Sd/- Vijay V. Kale Dilip Vengurlekar J. C. F. Sequeira Partner Chief Financial Officer VP (Corp Affairs) and M. No.- 080821 Company Secretary Place : Mumbai Dated : May 30, 2011
35 19th Annual Report 2010-2011
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2011 PARTICULARS AS AT 31-03-11 AS AT 31-03-10 Amount in Rs. Amount in Rs. A. Cash Flow from Operating Activities Net profit for the year before tax and extra ordinary items 164,633,658 13,807,411 Adjustments for : Depreciation 107,844,520 106,983,239 Prior Peroid Expenses (11,185,613) (32,003,089) Interest Income (1,101,994) (884,702) Interest Expense 118,396,931 62,555,757 Loss/(Profit) on Sale of Fixed Assets 639,416 (299,915) W/off of Miscellaneous Expenses 830,625 826,625 Operating profit for the year before working capital changes 380,057,542 150,985,327 Adjustments for : Trade Receivables (81,063,365) 82,777,134 Other Receivables(Loan and Advance) (51,896,414) (314,789,948) Inventories (180,405,699) (106,391,107) Trade and Other Payables 78,081,461 44,404,302 Cash generated from Operations 144,773,525 (143,014,292) Net cash from/ (used) in Operating Activities 144,773,525 (143,014,292) B. Cash Flow from Investing Activities Sale of Fixed Assets 730,000 1,316,766 Purchase of Fixed Assets (13,704,194) (13,408,353) Addition to Capital Work in Progress (57,262,520) - Interest received 1,101,994 884,702 Net cash from/(used) in Investing Activities (69,134,720) (11,206,885) C. Cash Flow from Financing Activities Issue of Equity Shares - 355,100,000 Proceeds / (Repayment) from Secured Loan 355,213,109 (847,570,700) Proceeds / (Repayment) of Unsecured Loan (350,000,000) 231,797,000 Interest Waiver on Long Term Loan - 516,021,967 Interest Expense (118,396,931) (62,555,757) Net cash from/(used) in Financing Activities (113,183,822) 192,792,511 Net Increase/(Decrease) in cash and cash equivalents (37,545,016) 38,571,333 Cash and cash equivalents as at Opening Cash and Balances with Banks 48,124,665 9,553,332 Cash and cash equivalents as at Closing Cash and Balances with Banks 10,579,649 48,124,665 Note :- (1) The above Cash Flow Statement has been prepared by the Company in accordance with the Accounting Standard -3 issued by ICAI and is based on and in agreement with the corresponding Profit and Loss Account and Balance Sheet of the Company. (2) Previous year figures have been regrouped/ rearranged wherever considered necessary. As per our report of even date attached. For & On Behalf Of The Board For V. V. Kale & Co. Sd/- Sd/- Chartered Accountants R. S. Nakra Cdr. Subhash Kumar Mutreja (Retd) Firm Regd. No. 000897N Director Wholetime Director & CEO Sd/- Sd/- Sd/- Vijay V. Kale Dilip Vengurlekar J. C. F. Sequeira Partner Chief Financial Officer VP (Corp Affairs) and M. No.- 080821 Company Secretary Place : Mumbai Dated : May 30, 2011
36 Western India Shipyard Limited
SCHEDULE FORMING PART OF BALANCE SHEET
AS AT 31-03-11 AS AT 31-03-10 Amount in Rs. Amount in Rs. SCHEDULE “1” SHARE CAPITAL Authorised 75,00,00,000 Equity Shares of Rs. 2/- each 1,500,000,000 1,500,000,000 Issued and Subscribed 29,46,44,090 Equity Shares of Rs. 2/- each (Prev. Year - 29,46,44,090 Equity Shares) 589,288,180 589,288,180 Paid Up 29,46,44,090 Equity Shares of Rs. 2/- each (Prev. Year - 29,46,44,090 Equity Shares) 589,288,180 589,288,180 (Out of the above, a) 4,80,500 Equity Shares alloted for consideration other than cash b) 22,65,82,990 Equity Shares alloted on Conversion of Loan ) (17,72,42,875 Equity Shares is held by ABG Shipyard Ltd, Holding Company) TOTAL 589,288,180 589,288,180 SCHEDULE “2” RESERVES & SURPLUS Share Premium Account 38,655,995 38,655,995 Share Forfeiture Account 2,398,300 2,398,300 Debenture Redemption Reserve 4,815,175 4,815,175 Debt Reconstruction Reserve 536,935,089 574,915,048 TOTAL 582,804,559 620,784,518 SCHEDULE “3” SECURED LOANS A. Convertible Zero Coupon Loan (a) ICICI Bank Ltd 420,800,000 414,414,000 (b) Others 756,000 756,000 Total - (A) 421,556,000 415,170,000 B. Term Loans (a) ICICI Bank Ltd. 540,000,000 153,306,041 (b) IFCI Ltd 550,000,000 550,000,000 (c) Others 1,044,000 1,044,000 (d) Interest Accrued & Due 255,192 142,082 Total - (B) 1,091,299,192 704,492,123
Gross Total (A + B) 1,512,855,192 1,119,662,123 Notes : i) Loan from IFCI Ltd is secured by a Corporate Guarantee Facility and pledge Equity Shares of ABG Shipyard Limited and Deed of Hypothecation of parripassu charge on moveable assets of the Company. ii) Loan from ICICI Ltd and others is secured by first parri passu legal mortgage/charge on fixed assets of the Company, hypothecation of moveable assets. iii) Out of the total Secured Loan Account, amount repayble within one year - Rs. 12,26,82,143/-
37 19th Annual Report 2010-2011 As At As 3,478,750 4,890,708 3,356,716 1,834,880 1,017,126 1,161,716 5,814,719
31.03.10 99,797,520
609,618,244 110,778,665 841,749,045 936,340,783
Amount in Rs. NETBLOCK 454,649
As At As 3,478,750 4,784,564 3,275,903 3,018,239
1,502,717 7,321,153
31.03.11 93,522,662 96,860,680
532,019,986 746,239,304 841,749,045
-
1,727,366 1,681,925 4,615,383 7,388,078
UpTo 94,358,103 70,221,978 10,888,044 11,386,658 31.03.11
1,217,984,539 1,420,252,074 1,312,791,629
------
25,394
Back 358,681 384,075
Written Adjust/ 7,563,112
-
80,813
106,144 900,737 676,026 278,311 641,482
DEPRECIATION 6,274,858
the year the ForThe 84,968,164 13,917,985
107,844,520 106,983,239
-
1,621,222 1,601,112 9,987,307 4,298,038 6,746,596
Up To Up 88,083,245 56,303,993 11,108,347 31.03.10
1,133,041,769 1,312,791,629 1,213,371,502
3,478,750 6,511,930 4,957,828 7,633,622
As At As 11,342,693 12,889,375 14,709,231
31.03.11 187,880,765 167,082,658
1,750,004,525 2,166,491,378 2,154,540,674
------
541,490
During 1,212,000 1,753,490 8,579,963
the year the / Adjust. / Deletions
- - - - -
GROSS BLOCK GROSS 338,260 619,312
During the year the 8,556,512 2,042,194 2,147,916 Additions
13,704,194 13,408,353
3,478,750 6,511,930 4,957,828 6,132,918
As At As 11,004,433 12,270,063 12,561,315
01.04.10 187,880,765 167,082,658
1,742,660,013 2,154,540,674 2,149,712,285
TOTAL PARTICULARS 1. LAND-FREEHOLD 1. 2. BUILDING 2. Officea) b) Workshopb) 4. SHIP BUILDING PLATFORM BUILDING SHIP 4. 3. PLANT & MACHINERY PLANT& 3. 5. MOTOR 5. VEHICLE FURNITURE FIXTURE 6. & 7. COMPUTER 7. 8. OFFICEEQUIPMENT 8. Previous Year Previous c) Residential Flats c) Residential SCHEDULE “4” ASSETS FIXED
38 Western India Shipyard Limited
AS AT 31-03-11 AS AT 31-03-10 Amount in Rs. Amount in Rs. SCHEDULE “5” INVESTMENTS (AT COST) Long Term Investments (Unquoted) 5000 Shares in Janata Sahakari Bank Ltd. of Rs.100/- each. 500,000 500,000 Total 500,000 500,000 SCHEDULE “6” CURRENT ASSETS, LOANS & ADVANCES (A) Inventories (As taken , valued & certified by the Management ) (a) Stores & Spares 44,455,475 30,979,199 (b) Jobs in Progress 408,176,531 241,247,108 Total - (A) 452,632,006 272,226,307 (B) Sundry Debtors (Unsecured and considered good) (a) Outstanding for a period exceeding six months 211,167,940 190,839,134 Less: Provision for Doubtful Debts - 20,565,078 211,167,940 170,274,056 (b) Other debts 204,626,477 164,456,995 Total - (B) 415,794,416 334,731,051 (Sundry Debtors include Rs. 4,09,87,441/- due from ABG Shipyard Ltd, Holding Company (C) Cash and Bank Balances (a) Cash in hand 115,296 112,315 (b) Balances with Scheduled Banks (i) In Current Account 1,340,943 35,617,317 (ii) In Deposit Account 9,123,410 12,395,034 Total - (C) 10,579,649 48,124,665 (D) Loans and Advances (Recoverable in cash or kind or for value to be received) (a) Advances (Unsecured and Considered Good) 490,886,930 443,850,247 (b) Advances (Considered Doubtful) 57,562,696 57,562,696 548,449,627 501,412,943 Less : Provision for Doubtful Debts 57,562,696 57,562,696 490,886,930 443,850,247 (c) Advance to staff 717,665 1,248,197 (d) Deposits 4,610,987 6,265,987 (e) Income Tax Deducted at Source 15,470,658 10,475,474 (f) Sales Tax Deducted at Source 4,758,647 3,993,340 (g) Other Current Assets 2,996,347 3,670,071 (h) MAT Credit Entitlment 1,958,494 - Total - (D) 521,399,729 469,503,316
Gross Total - (A+B+C+D) 1,400,405,801 1,124,585,339
39 19th Annual Report 2010-2011
AS AT 31-03-11 AS AT 31-03-10 Amount in Rs. Amount in Rs.
SCHEDULE “7” CURRENT LIABILITIES & PROVISIONS (A) Current Liabilities (i) Sundry Creditors 244,263,818 218,083,520 (ii) Other Liabilities 55,573,918 74,132,657 (iii) Advance from Customer 143,287,901 84,663,773 Total - (A) 443,125,638 376,879,949 (B) Provisions i) Gratuity 25,704,795 18,871,076 ii) Leave Encashment 8,527,576 5,641,794 iii) Wealth Tax 11,342 6,571 iv) Bonus 3,353,006 3,200,000 v) MAT Laibilty 1,958,494 - Total - (B) 39,555,213 27,719,441 Gross Total - (A+B) 482,680,851 404,599,390 SCHEDULE “8” PROFIT & LOSS ACCOUNT Opening Balance 1,214,173,327 1,711,999,617 Add: Loss / (Profit) for the year (153,448,045) (497,826,289) Total 1,060,725,282 1,214,173,327
SCHEDULES FORMING PART OF PROFIT AND LOSS ACCOUNT
Year Year AS AT 31-03-11 AS AT 31-03-10 Amount in Rs. Amount in Rs. SCHEDULE “9” SALES & SERVICES (a) Ship Repair Income 927,971,168 646,961,680 Add : Closing Jobs in Progress 408,176,531 241,247,108 Less : Opening Jobs in Progress 241,247,108 146,432,074 1,094,900,591 741,776,714 (b) Scrap Sales 19,201,520 9,797,077 1,114,102,111 751,573,791
40 Western India Shipyard Limited
AS AT 31-03-11 AS AT 31-03-10 Amount in Rs. Amount in Rs. SCHEDULE “10” OTHER INCOME Interest on Short Term Deposits 1,101,994 884,702 Other Income 21,402,929 12,680,135 Total 22,504,923 13,564,837 SCHEDULE “11” Opening Stock 30,979,199 19,403,126 Add : Purchases 180,159,438 118,398,685 Less : Closing Stock 44,455,475 30,979,199 Consumption 166,683,162 106,822,612 Customs & Clearing Charges 4,462,480 357,154 Power & Fuel 18,341,796 16,680,059 Piloting Expenses 576,000 382,000 Dredging Expenses - 395,938 Hire Charges - Machinery 7,729,703 13,142,492 Discount on Ship Repair 39,888,466 52,858,141 Repair & Maintenance - P&M 24,646,922 23,021,526 Safety Expenses 520,805 423,906 Testing & Survey Charges 1,176,069 917,771 Other Direct Expenses 17,534,730 7,526,237 Sub-Contractor Expenses 152,592,072 89,687,208 Total 434,152,205 312,215,044
SCHEDULE “12” PERSONNEL EXPENSES Salaries & Other Amenities 123,131,455 89,071,539 Contribution to Provident & Other Funds 8,617,952 7,373,542 Staff Welfare 3,961,224 2,994,972 Staff Recruitment & Training 95,476 72,305 Total 135,806,107 99,512,358
41 19th Annual Report 2010-2011
AS AT 31-03-11 AS AT 31-03-10 Amount in Rs. Amount in Rs. SCHEDULE “13” OTHER EXPENSES Advertisement Expenses 539,943 252,733 Agency Commission 19,381,514 13,917,105 Bad Debts 46,804,072 20,565,078 Bank Charges & Commission 1,112,431 980,490 Business Promotion 1,652,912 2,079,428 Preliminary & Misc. Expenditure Written Off 830,625 826,625 Directors Sitting Fees 162,000 216,000 Fees & Dues 1,654,633 2,397,433 Foreign Exchange Fluctuation 5,499,495 620,750 Insurance 3,398,739 3,189,956 Lease Rent 35,108,400 35,108,400 Loan Processing Fees - 5,625,300 Loss on Sale of Fixed Assets 639,416 312,109 Custom Staff Salaries 4,012,210 3,955,644 Miscellaneous Expenses 3,987,974 3,444,395 Office & Establishment Expenses 7,430,729 4,374,505 Auditors’ Remuneration a) Statutory Audit Fees 661,800 551,500 b) Tax Audit & Income Tax Matter 220,600 220,600 c) Company Law Matter 165,450 165,450 d) Internal Audit Fees 95,130 250,415 e) Audit Expenses 318,093 318,865 Printing & Stationary 1,407,153 1,583,892 Professional Charges 4,059,699 12,406,866 Rent 77,000 77,000 Rates & Taxes 2,580,818 581,392 Repair & Maintainance - Yard 16,183,724 8,186,327 Repair & Maintainance - Building 3,282,113 226,475 Repair & Maintainance - Others 540,002 691,043 Service Provider Charges - 35,364,570 Telephone Charges 2,025,665 1,875,940 Travelling & Conveyance 11,929,933 9,691,962 Wealth Tax 11,342 6,571 Total 175,773,613 170,064,818 SCHEDULE “14” INTEREST On Term Loans 116,428,180 61,211,735 On Others 1,968,751 1,344,022 Total 118,396,931 62,555,757
42 Western India Shipyard Limited
SCHEDULE ‘15’ SIGNIFICANT ACCOUNTING POLICIES : 1. Accounting Convention : The accounts are drawn up in accordance with the historical cost convention method as a “Going Concern Concept” and are in accordance with Generally Accepted Accounting Principles and under relevant provisions of the Companies Act, 1956. The Company follows the mercantile system of Accounting and recognises Income and Expenditure on accrual basis except medical reimbursements, leave travel allowances, insurance claims and scrap sale which are on cash basis. The accounting policies have been consistently applied by the Company and are consistent with those used in the previous year. 2. Use of Estimates The preparation of Financial Statements, in conformity with generally accepted accounting principles, requires the management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the results of operations during the reporting period end. Although these estimates are based upon management’s best knowledge of current events and actions, actual results could differ from these estimates 3. Inventories : Stores, Consumables & Spare parts are valued at cost, computed on the basis of Annual Weighted Average Method or Market Value, whichever is lower. Works-in-progress are valued as per Percentage Completion Method. 4. Investments : Investments, being considered long term, are stated at cost. 5. Fixed Assets : Fixed assets are stated at cost less accumulated depreciation. The cost of assets includes : i) Cost of acquisition ii) Expenses incurred on replacement and installation of assets and iii) Incidental cost incurred to bring them into their present location and condition and making them ready to use. 6. Depreciation : i. Depreciation on fixed assets is provided on straight-line method in the manner and at the rates prescribed in Schedule XIV to the Companies Act, 1956. However in case of “Ship Building Platform”, depreciation has been calculated @ 8.33% based on remaining period of lease with Mormugao Port Trust, upto 04.04.2018. ii. Depreciation on additions / deletions is calculated on pro-rata basis from / to the date of such additions / deletions. iii. Depreciation on additions in Floating Dry Dock on account of foreign exchange fluctuations and any major additions is amortised over the remaining useful life of the asset. iv. Assets costing less than Rs. 5,000/- are depreciated at 100% in the year of acquisition. 7. Revenue Recognition : i) Revenue is recognised on proportionate completion method. ii) Sales and Services are stated at net of trade discounts.
43 19th Annual Report 2010-2011
8. Foreign Currency Transaction : i) Foreign currency transactions are recorded at the exchange rate prevailing on the date of transaction. ii) All current assets and current liabilities in foreign currency as on Balance Sheet date are restated at the exchange rate prevailing on that date. Any gain or loss arising out of such conversion is charged to revenue. 9. Provisions and Contingent Liabilities : As per Accounting Standard 29, ‘Provisions, Contingent Liabilities and Contingent Assets’, the Company recognizes provisions only when it has a present obligation as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made. No Provision is recognized for : – A. Any possible obligation that arises from past events and the existence of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Company; or B. Any present obligation that arises from past events but is not recognized because a) It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or b) A reliable estimate of the amount of obligation cannot be made. Such obligations are recorded as Contingent Liabilities. These are assessed periodically and only that part of the obligation for which an outflow of resources embodying economic benefits is probable, is provided for, except in the extremely rare circumstances where no reliable estimate can be made. Contingent Assets are not recognized in the financial statements since this may result in the recognition of income that may never be realized. 10. Retirement Benefits : Short-term Employee benefits: All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, performance incentives, etc., are recognized as an expense at the undiscounted amount in the Profit and Loss Account of the year in which the employee renders the related service. Post Employment Benefits: Defined Contribution Plans: Payments made to a defined contribution plan such as Provident Fund are charged as an expense in the Profit and Loss Account as they fall due. Defined Benefit Plans: Company’s liability towards gratuity to past employees is determined using the projected unit credit method which considers each period of service as giving rise to an additional unit of benefit entitlement and measures each unit separately to build up the final obligation. Past services are recognized on a straight line basis over the average period until the amended benefits become vested. Actuarial gain and losses are recognized immediately in the statement of Profit and Loss Account as income or expense. Obligation is measured at the present value of estimated future cash flows using a discounted rate that is determined by reference to market yields at the Balance Sheet date on Government Securities where the currency and terms of the Government Securities are consistent with the currency and estimate terms of the defined benefit obligations. During the current year end, the accrued liability towards such fund is provided on actuarial basis as on the Balance Sheet date as per revised Accounting Standard AS-15 ‘Employee Benefits’ as issued by the Institute of Chartered Accountants of India.
44 Western India Shipyard Limited
Other Long Term Employee Benefits: Other Long Term Employee Benefits i.e., leave encashment is recognised as an expense in the Profit and Loss Account as and when it accrues. The Company determines the liability as per the actuarial valuation carried out as at the Balance Sheet date.
Actuarial gains and losses in respect of such benefits are charged to the Profit and Loss Account
11. Miscellaneous Expenditure : Miscellaneous expenses are written off over a period of 10 years.
SCHEDULE ‘16’
NOTES TO THE ACCOUNTS
1. Scheme of Arrangement & Compromise During FY 2009-10, the Company has implemented Scheme of Arrangement and Compromise with its secured creditors (“Scheme”) as per the sanction received from the High Court of Bombay, Goa Bench by order dated 15.01.2010. The scheme became effective on filing of the Court order with the Registrar of Companies on 28.01.2010 (“Effective Date”). Accordingly, all secured loans have either been restructured as per Option –I or full & final settlement made as per Option –II. Effect on account of the same has been accounted for in the books of account. Principal waiver has been charged to Capital Reserve Account and waiver of interest has been transferred to Revenue Account.
2. (a) Secured Loan i) Convertible Zero Coupon Loan
In terms of the Scheme, the CZC Loan is interest free. The same to be converted into equity shares of the Company, in accordance with applicable law and pricing regulations, at the option of the lenders commencing from second anniversary of the effective date namely, 28.01.2012 and ending on the day preceding the seventh anniversary of the effective date. To the extent that the loan has not been converted into equity shares, the same shall be convertible compulsorily on the seventh anniversary of the effective date namely, 28.01.2017.
ii) Term Loan
ICICI Bank Ltd: Payable in 28 equal quarterly installments starting from 15.01.2012.
IFCI Loan : Payable in 12 quarterly installments as under :-
a. Rs. 2.75 crs each per quarter commencing from 15th month upto 24th month from the date of disbursement
b. Rs. 4.125 crs each per quarter commencing from 27th month upto 36th month from the date of disbursement
c. Rs. 6.875 crs each per quarter commencing from 39th month upto 48th month from the date of disbursement
(b) Unsecured Loan Unsecured Loan represent interest free loan received from ABG Shipyard Ltd., Holding Company, in terms of the Scheme.
3. i) Balances under the head current liabilities, debtors and loans & advances are subject to confirmation.
45 19th Annual Report 2010-2011
However, in the opinion of the management, realizable value of current assets, loans & advances in the ordinary course of business will not be less than the amount which is stated in the Balance Sheet.
ii) Loans and advances include a sum of Rs. 575.63 lacs (Rs. 575.63lacs) due from certain companies under escrow agreements against which the original share certificates for 84,69,710 equity shares of the face value of Rs. 2/-aggregating to Rs. 169.39 lacs had been deposited as security by such companies for repayment of advances. The market value of these shares as 31.03.2011 is Rs. 859.68 lacs based on the closing price of Rs. 10.15 per equity share of the face value of Rs. 2/- each fully paid up listed on the Bombay Stock Exchange Limited.
iii) The Company deposits amounting to Rs.91.23 lacs (Rs.123.95 lacs) are kept in lien with the Banks towards margin money etc. for Bank Guarantees and Overdrafts.
4. i) The Company has been granted sales tax exemption by the State Government, Directorate of Industries and Mines, Government of Goa vide its letter No. IND/Devi/I M/495/93/3543 dated 19.08.1997 for a period of 12 years w.e.f. 01.01.1996 on ship-repairs. However the Sales Tax Officer has denied the exemption and has levied sale tax at the applicable rates on the sales turnover. The Company has filed appeals before the Commissioner of Commercial Taxes (Appeals), Panjim, against sales tax liability of Rs. 837.91 lacs for the financial years from 1995-96 upto 2004-05. The appeal for 1995-96 has been rejected. The Company has filed a second appeal before the Administrative Tribunal. The appeals are sub-judice.
ii) The Goa Value Added Tax Act, 2005 is applicable to assessees in the State of Goa w.e.f 2005-06. Hence the Company had obtained registration and filed its returns for the quarters ended 30.06.2010 and 30.09.2010. The Company had sought the 75% benefit under the Goa Value Added Tax Deferment–cum-Net Present Value Compulsory Payment Scheme, 2005 to which it is entitled. However, the Asst. Commissioner of Commercial Taxes has denied the benefit of the said scheme and passed assessment order–cum-demand notice for financial years 2005-06, 2006-07 and 2007-08 for a sum of Rs. 515.78 lacs. The Company has filed appeals before the Addl. Commissioner of Commercial Taxes, Goa and the appeals are sub-judice.
5. Employee Benefits: a) Defined Contribution Plans - Provident Fund:
The contribution made by employer and employee, together with interest, are payable at the time of separation from service or retirement, whichever is earlier.
b) Defined Benefit Plans - Gratuity:
The Company makes annual contribution to the Employees’ Group Gratuity-cum-Life Assurance Scheme of Metlife Insurance Co. Ltd., a funded defined benefit plan for qualifying employees. Gratuity is payable to all eligible employees on death or on separation/termination in terms of the provisions of the Payment of Gratuity (Amendment) Act, 1997 or as per the Company’s scheme whichever is more beneficial to the employees.
c) Basis Used to Determine Expected Rate of Return on Assets
The expected return on plan assets of 8% has been considered based on the current investment pattern in Government securities.
d) Amounts Recognized as Expense
i) Defined Contribution Plan
Employer’s Contribution to Provident Fund amounting to Rs. 64,01,083/- has been included in Schedule -11 under Contribution to Provident and Other Funds.
46 Western India Shipyard Limited
ii) Defined Benefit Plan The amounts recognized in the Company’s financial statements as at the year end are as under: Amount (Rs.) Particulars As at 31st As at 31st March, 2011 March, 2010 1 Components of Employer Expenses Current service cost 21,90,800 18,98,553 Interest cost 15,09,686 10,08,674 Expected return on plan assets 3,56,153 1,60,982 Net Actuarial (gain)/loss to be recognized 45,82,500 29,06,082 Total expense recognized in the Statement of Profit & Loss 79,26,833 56,52,422 Account 2 Actual Contribution & Benefit Payments Actual Benefit Payments 12,44,513 5,11,195 Actual Contribution 10,00,000 NIL 3 Net Asset / (Liability) recognized in Balance Sheet Liability at the end of the year 2,57,04,795 1,88,71,076 Fair value of plan assets at the end of the year 16,87,649 17,80,763 Net Liability recognized in the Balance Sheet 2,40,17,146 1,70,90,313 4 Change in Defined Benefit Obligations (DBO) Present Value of DBO at Beginning of Year 1,88,71,076 1,34,48,980 Interest Cost 15,09,686 10,08,674 Current Service Cost 21,90,800 18,98,553 Benefits Paid (12,44,513) (5,11,195) Actuarial (Gain)/ Losses on obligations 43,77,746 30,26,064 Present Value of DBO at the end of Year 2,57,04,795 1,88,71,076 5 Change in Fair Value of Plan Assets during the year Planned assets at beginning of the year 17,80763 20,11,089 Expected return on planned assets 3,56,153 1,60,887 Contributions 10,00,000 NIL Benefit paid (12,44,513) (5,11,195) Actuarial gain/(loss) on plan assets (2,04,754) 1,19,982 Fair value of plan assets at the end of the year 16,87,649 17,80,763 6 Defined benefit plan – Gratuity Assumptions Discount rate 8.10% 8.00% Salary Escalation Rate 7.00% 7.00% Rate of return on plan assets 7.00% 8.00% The estimates of future salary increases, considered in actuarial valuation, take account of inflation, seniority, promotion and other relevant factors, such as supply and demand in the employment market.
47 19th Annual Report 2010-2011
6. i) The Company is having one Segment i.e. Ship Repair Activities. Hence, separate segment reporting as required under Accounting Standard -17 is not applicable during the current year. ii) The Company has taken land and water on license from Mormugao Port Trust (MPT) and license fees amounting to Rs. 416.05 lacs (Previous year Rs. 351.08 lacs) has been debited to profit and loss account. The future minimum payment is as under : 2010-11 2009-10 Not later than one year Rs. 416.05 lacs Rs. 351.08 lacs Later than 1 yr. but less than 5 yrs. Rs. 1913.83 lacs Rs. 1769.44 lacs More than 5 years Rs. 599.11 lacs Rs. 1617.78 lacs iii) Deferred Tax Asset in accordance with the Accounting Standard – 22 “Accounting for Taxes on Income” has not been recognised even after availability of unabsorbed depreciation and carried forward losses under the Income Tax Act as, in the opinion of the management, sufficient future taxable income will not be available for this purpose. 7. Related Party Disclosure :- A. Related Parties Disclosure as per Accounting Standard (AS) – 18:- Holding Company ABG Shipyard Limited ABG International Pvt. Ltd. (Holding company of ABG Shipyard Limited) Subsidiary (Controlling stake) Nil Fellow Subsidiary Companies ABG Shipyard Singapore Pte Ltd. Vipul Shipyard (Partnership Firm) Companies over which Directors/ ABG Shipyard Limited, relatives are able to exercise (Shri. R. S. Nakra/Shri. Ashwani Kumar and Shri. Ashok Chitnis Significant Influence: (common directors) Key Management Personnel Cdr. Subhash Kumar Mutreja, Whole Time Director & Chief Executive Officer.
B. Transactions with Related Parties: (Rs. In lacs) Particulars Holding Co. Subsidiaries/ Fellow Co. over Key Management controlling Subsidiaries which Personnel stake directors/ relatives have control Unsecured Loan Received ABG Shipyard Ltd. 0.00 - - - - (4500.00) Unsecured Loan Repayment ABG Shipyard Ltd. 3500.00 - - - - (0.00)
48 Western India Shipyard Limited
Advances given/repaid ABG Shipyard Ltd. 165.00 - - - - (357.00) ABG International Pvt. 0.00 - - - - Ltd. (3500.00) Advances taken/ refunded ABG Shipyard Ltd. 245.00 - - - - (302.00)
Ship Repair Income ABG Shipyard Ltd. 387.55 - - - - (419.87) Expenses ABG Shipyard Ltd. 0.00 - - - - (Service Charges) (487.40) Remuneration – CDR. - - - - 40.26 (33.37) Subhash Kumar Mutreja Stage Payments received:
ABG Shipyard Ltd. 1272.00 - - - - (against repair of INS (0.00) Sujata)
Notes: Related Parties have been identified by the Management and relied upon by the Auditors. Previous year’s figures are shown in brackets. (Rupees in lacs) 8. i) Managerial remuneration Current Year Previous Year Salary 20.90 18.67 HRA 11.97 9.33 Medical reimbursement 1.29 1.47 Soft furnishing 0.39 0.19 Ex-Gratia 1.91 - PF 2.51 2.24 LTA 1.29 1.47 Gross Total 40.26 33.37
Note:- Whole Time Director & CEO has been re-appointed for a period of three (3) years w.e.f. 17.07.2010 at the AGM held on 25.09.2010. The Company has received the approval letter dated 28.03.2011 from the Ministry of Corporate Affairs, Government of India, for payment of remuneration upto Rs. 42,70,200/- per annum plus usual perks.
49 19th Annual Report 2010-2011
(Rupees in Lacs) i) Travelling and Conveyance include: Current Year Previous Year Directors travelling 0.39 0.99 ii) (a) Other liabilities include, amount due to NIL NIL CEO. (b) Maximum balance due during the year. NIL 2.64
9. Additional information in pursuance to Part II of Schedule VI to the Companies Act, 1956 to the extent applicable is stated as taken, valued and certified by the Management.
a) Capacities : Current Year Previous Year 1. Registered and installed Dry-dock 60,000 DWT 60,000 DWT 2. Wet Repair Jetties 4 (various) 4 (various) 3. Actual production (being Ship Repair Unit) N.A. N. A.
b) Particulars of Closing Stocks : (Rupees in lacs) Items Current Year Previous Year Qty.(MT) Amount Qty.(MT) Amount Steel Plates 247.74 117.75 93.79 45.02 Electrodes Various 36.08 Various 19.71 Others Various 290.72 Various 245.07 Total 444.55 309.80 c) Particulars of imported and indigenous raw material, stores & spares consumed:
(Rupees in lacs) Particulars Current Year Previous Year Amount % Amount % i) Raw Material: Imported : 30.97 3.28 198.95 63.97 Indigenous: 913.02 96.72 112.05 36.03 Total 943.99 100.00 311.00 100.00 ii) Stores & Spares: Imported : 133.67 18.49 49.67 6.56 Indigenous: 589.17 81.51 707.54 93.44 Total 722.84 100.00 757.21 100.00 d) Earnings in Foreign Exchange : Ship repair income received in foreign exchange during the current financial year is Rs. 2071.80 lacs (Rs. 2075.99 lacs).
10. Earning per share is computed on the following:- Particulars Current year Previous year a) Profit/(Loss) for the year (Rs in lacs) 1535.58 4978.26 b) No. of equity shares considered for basic earning per share 294644090 294644090
50 Western India Shipyard Limited
11. CONTINGENT LIABILITIES : i) Guarantees given by Banks: Rs. 398.25 lacs (Rs. 447.20 lacs). ii) Letters of Credit outstanding: Rs. 29.38 Lacs (Rs. 121.52 Lacs). iii) Bonds of Rs. 15.00 lacs (Rs.15.00 lacs) executed in favour of Excise Authorities. iv) Sales tax liability for the financial years from 1995-96 to 2004-05 is Rs. 837.91 lacs. The Company has filed appeal & stay petition against the same. v) Value Added Tax (VAT) liability for the financial years from 2005-06 to 2007-08 is Rs. 515.78 lacs. The Company has filed appeal & stay petition against the same. vi) Service Tax liability for the financial year 2001-02 to 2003-04 is assessed at Rs.712.18 lacs. The Central Excise & Service Tax Appellate Tribunal (CESTAT) has allowed the Company’s appeal on the ground that it does not render port services being a registered factory. The Department has filed an appeal in the High Court of Bombay, Goa Bench at Panaji. The Company has contested the appeal. The appeal has been transferred to the High court of Bombay at Mumbai to be heard alongwith other similar appeals. vii) Legal cases pending against the Company (net of provision) is Rs. 6929.06 lacs (Rs. 3320.15 lacs).
12. There are no Micro, Small and Medium Enterprises, to whom the Company owes dues, which are outstanding for more than 45 days as at the Balance Sheet date. The above information regarding Micro, Small and Medium Enterprises has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors. 13. In view of brought forward business losses and unabsorbed depreciation, income tax on account of Minimum Alternate Tax has been provided on the basis of relevant provisions of the Income Tax Act. 14. The previous years figures have been regrouped, rearranged wherever considered necessary. As per our Report of even date attached.
For and on Behalf of the Board For V. V. Kale & Co. Chartered Accountants Sd/- Sd/- Sd/- Dilip Vengurlekar R.S. Nakra Vijay V. Kale Chief Financial Officer Director Partner Sd/- Sd/- J. C. F. Sequeira Cdr. S. K. Mutreja (Retd) Place : Mumbai V. P. (Corp. Affairs) Whole Time Director & CEO Date : 30th May, 2011 & Company Secretary
51 19th Annual Report 2010-2011
INFORMATION REQUIRED AS PER PART IV OF SCHEDULE VI TO THE COMPANIES ACT,1956 (Balance Sheet Abstract and Company’s General Business Profile)
REGISTRATION DETAILS Registration No. : 2 4 6 4 State Code: 2 4 Balance Sheet Date : 3 1 0 3 1 1 CAPITAL RAISED DURING THE YEAR (AMOUNT IN RS.THOUSAND) Public issue : NIL Bonus Issue : NIL Right issue : NIL Private Placement : NIL POSITION OF MOBILISATION AND DEPLOYMENT OF FUNDS (AMOUNT IN RS. THOUSANDS ) Total liabilities 2 7 8 4 9 4 8 Total assets : 2 7 8 4 9 4 8 SOURCES OF FUNDS Paid-up-Capital 5 8 9 2 8 8 Reserve & Surplus: 5 8 2 8 0 5 Secured Loan 1 5 1 2 8 5 5 Unsecured Loan 1 0 0 0 0 0 APPLICATION OF FUNDS Net Fixed Assets &CWIP 8 0 3 5 0 2 Net Current Assets 9 1 7 7 2 5 Misc. Expenditure 2 4 9 6 Investments 5 0 0 Accumulated Losses 1 0 6 0 7 2 5 PERFORMANCE OF THE COMPANY (AMOUNT IN RS.THOUSANDS) Turn-over 1 1 3 6 6 0 7 Earning per Share 0 . 5 2 Total Expenditure 9 8 3 1 5 9 Dividend Rate N I L Profit/Loss Before Tax 1 5 3 4 4 8 Profit/Loss After Tax 1 5 3 4 4 8 GENERIC NAMES OF PRINCIPAL PRODUCTS /SERVICES OF THE COMPANY Item Code 8 9 0 6 Product Description S H I P R E P A I R
As per our report of even date attached. For & On Behalf Of The Board For V. V. Kale & Co. Sd/- Sd/- Chartered Accountants R. S. Nakra Cdr. Subhash Kumar Mutreja (Retd) Firm Regd. No. 000897N Director Wholetime Director & CEO Sd/- Vijay V. Kale Sd/- Sd/- Partner Dilip Vengurlekar J. C. F. Sequeira M. No.- 080821 Chief Financial Officer VP (Corp Affairs) and Company Secretary
Place : Mumbai Dated : May 30, 2011
52 WESTERN INDIA SHIPYARD LIMITED Regd. Office : P. B. No. 21, Mormugao Harbour Mormugao, Goa - 403803
ADMISSION SLIP (TO BE PRESENTED AT THE ENTRANCE)
I /we hereby record my / our presence at the 19th Annual General Meeting of Western India Shipyard Limited on Friday, 23rd day of September, 2011 at 11.00 a.m. at its Registered Office and Shipyard at P. B. No. 21, Mormugao Harbour, Mormugao, Goa - 403803.
PARTICULARS TO BE FILLED BY MEMBER / PROXY
NAME ______
FOLIO NO. ______
DPID. ______
Client ID ______
NO. OF SHARES HELD ______
______Signature of the person attending
ADMISSION SLIPS WITHOUT THIS INFORMATION WILL NOT BE ACCEPTED.
WESTERN INDIA SHIPYARD LIMITED Regd. Office : P. B. No. 21, Mormugao Harbour Mormugao, Goa - 403803
PROXY FORM
I/We ______of ______being member/members of M/s. Western India Shipyard Limited hereby appoint ______of ______or failing of him______of ______as my/our proxy to vote for me/us and on my/our behalf at the 19th Annual General Meeting to be held on Friday, 23rd day of September, 2011 at 11.00 a.m. or at any adjournment thereof.
Affix Signed this ____ day of ______, 2011 Revenue Stamp
Note : The proxy in order to be effective should be duly stamped, completed and must be deposited at the Registered Office of the Company not less that 48 hours before the time for holding the aforesaid meeting. The proxy need not be a member of the Company.