59Th AR 2010-11

HINDUSTAN SHIPYARD LIMITED PAPERS TO BE LAID ON THE TABLE OF LOK SABHA/RAJYA SABHA AUTHENTICATED RAKSHA RAJYA MANTRI 1! HINDUSTAN SHIPYARD LIMITED VISION To become a world class Defence Shipyard, to construct Naval Ships and Submarines for the Indian Navy and Coast Guard and to meet the repair requirements of such vessels and other Government Vessels. MISSION To upgrade the Shipyard, acquire advanced technologies in war ships and submarine construction in a phased manner from 2010 to 2025, and take up projects planned by Indian Navy and Indian Coast Guard for meeting its long term needs. 1! CONTENTS • Board of Directors 1 • Chairman’s Address 2 • Notice 5 • Directors’ Report 6 • Auditors’ Report 31 • Comments of the Comptroller and Auditor General of India 36 • Balance Sheet 38 • Profit & Loss Account 39 • Schedules to the Accounts 40 • Notes forming part of Accounts 47 • Balance Sheet Abstract & Company’s General Business Profile 60 • Cash Flow Statement 61 • Social Overhead 62 • Last 10 years at a glance 64 • Ships built 66 Front Page : "Rani Abbaka" 1st IPV of 5 series vessels is ready for delivery. Repairs of INS KUMBHIR and INS SANDHAYAK is under progress. Back Page : "M.V. Good Precedent" 53000 DWT Bulk carrier, 2nd of 6 series vessels delivered to its owners. Hindustan Shipyard Limited HINDUSTAN SHIPYARD LIMITED (A Government of India Undertaking) BOARD OF DIRECTORS RAdm. N. K.MISHRA, NM, IN (Retd.) Chairman & Managing Director (From 01-08-2011) RAdm. K.C. SEKHAR, AVSM, VSM, IN (Retd.) Chairman & Managing Director (Addl. Charge) (From 01 -01-2011 to 31-07-2011) Cmde. NARESH KUMAR, VSM, IN (Retd) Chairman & Managing Director (Upto 31-12-2010) Shri RAKESH MAHAJAN Director (Finance & Commercial) Cmde. K .S .SUBRAMANIAN, NM, IN (Retd.) Director (Shipbuilding) (From 04-06-2011) Capt. P.V.K.MOHAN Independent Director (Upto 05-06-2011) Dr. DEVI SINGH Independent Director (From 18-5-2011) Shri GYANESH KUMAR, IAS Director VAdm. N.N.KUMAR, AVSM, VSM, IN Director PERMANENT SPECIAL INVITEES VAdm. D.S.P.VARMA, PVSM,AVSM,VSM, IN(Retd.) Dr. S.C.PANDEY (From 25.5.2011) Shri.PRAMODE K.MISHRA (Upto 24.05.2011) COMPANY SECRETARY Shri INAITULA BAIG BANKERS AUDITORS 1. Indian Bank M/S. G.R.KUMAR & CO. 2. State Bank of India Chartered Accountants 9, Merry life Apartments, 3. UCO Bank Doctor’s Colony, Pedda Waltair, 4. Syndicate Bank Visakhapatnam – 530 017 5. Canara Bank REGISTERED OFFICE 209 & 209A, Vikram Tower Phone : 011-25737425 16, Rajendra Place Fax : 011-25730029 New Delhi-110 008 HEAD OFFICE & WORKS: Phone : 0891-2577404/2577437/ Gandhigram 9493792132 (PRO) Visakhapatnam – 530 005 Fax : 0891-2577502/356/667 E-mail : [email protected] Web : www.hsl.nic.in 4 59th Annual Report BOARD OF DIRECTORS (As on Date of AGM) RAdm N.K. Mishra, NM, IN (Retd.) Chairman & Managing Director VAdm. N.N. Kumar, Shri Gyanesh Kumar, IAS Dr. Devi Singh AVSM, VSM Director Director Director Shri Rakesh Mahajan Cmde K S Subramanian Director NM, IN (Retd.) (Finance & Commercial) Director (Shipbuilding) 1 1 Hindustan Shipyard Limited CHAIRMAN’S ADDRESS Dear Shareholders, I have the great pleasure in welcoming you to this 59th Annual General Meeting of your Company and share with you some of significant achievements during the year under review. I am happy to report that, the Government has sanctioned Financial Restructuring package of ` 824.90 Crores and the company has successfully implemented the Financial Restructuring package and cleared legacy liabilities. With the implementation of Financial Restructuring package, the legacy liabilities have been taken care of. However, the financial health of the Company continues to be poor with accumulated losses of ` 930.10 Crores and a negative networth of ` 628.11 Crores as on 31st March, 2011. The Directors' Report and Audited Financial statements has already been circulated to you, with your permission, I take them as read. HSL being an old & premier shipyard of the country has been striving towards better productivity and optimum utilization of resources. The total Income of the company during the year is ` 637.87 Crores as compared to ` 651.16 Crores for the previous year. Your company recorded a profit of ` 54.99 Crores as against ` 2.32 Crores of previous year due to accounting of ` 452.68 Crores grant in aid received from Government of India as Financial Restructuring package. The major highlights of the year 2010 -11 are as follows a) The Ministry has sanctioned ` 824.90 Crores as Financial Restructuring package and the same has been implemented successfully. b) The company concluded contracts for an order value approx. ` 798 Crores with Coast Guard, Indian Navy and Kandla Port Trust. However the order value is not sufficient for the Yard to sustain. The company desperately needs to secure high value orders from Indian Navy after its transfer of Administrative control from Ministry of Shipping to Ministry of Defence. 2 2 59th Annual Report c) Some of the noteworthy achievements during the year are as follows i. Two 53 K bulker vessels were delivered to M/s. GML. ii. Six vessels of different categories were launched/floated. iii. Keels were laid for five new vessels. iv. Repair of ONGC Jack up Rig is at advanced stage of completion and targeted to be delivered by the end of Nov 2011. v. Repair of twenty three vessels were undertaken during the year 2010-11 including two warships viz. INS KUMBHIR &INS SANDHAYAK. Your company is committed to create value addition by not only achieving path breaking achievements in shipbuilding & ship repairs but also developing indigenous repair capabilities of Naval Submarines and off shore rigs of the country. The present shipbuilding order book position comprises 24 vessels out of which 14 vessels are at various stages of their construction. The focus of the yard during the next couple of years will be on completion of the orders of M/s. GML & five IPVs for Indian Coast Guard. The other orders would also be attended to with renewed planning & Production norms to keep the workshops & workmen optimally utilised. However I regret to inform that with the present order book most workshops will remain idle in near future unless some high value orders are secured by HSL. Grading Vide Memorandum of Understanding The performance of the company for the year, based on self appraisal is “Good” in terms of the MoU signed with the Ministry of Defence. Corporate Governance Your company constantly endeavors to adopt and maintain the highest standards of ethics in all spheres of its business activities. Your company firmly believes in the fundamental principles of Corporate Governance like honesty, integrity, accountability, transparency and legal/statutory compliances, to protect, promote and safe guard the interests of all stakeholders. It also strives to carry out its business obligation with good corporate values duly discharging its duties for maximum level of transparency in decision making to avoid conflict of interests. It also accords due importance to adherence of adopted corporate values and objectives and discharging social responsibilities as a responsible corporate citizen. Infrastructure Upgradation & Modernization The yard infrastructure is required to be upgraded to increase its capacity and efficiency for construction of sophisticated Defence Vessels in future. This upgradation has been planned to be undertaken in two phases. In first phase the existing infrastructure facilities would be refurbished and or renewed. Budget estimates for the Phase-I modernization is ` 457.36 Crore. In the second phase the yard infrastructure would be augmented so as to make the yard capable of constructing modern warships, submarines and amphibious Vessels etc. Both the proposals are under active consideration at Ministry of Defence. 3 3 Hindustan Shipyard Limited Future Outlook The yard is strategically located on the east coast of the India in the close proximity of Eastern Naval Command. Consequent to transfer of Administrative control of your company to Ministry of Defence, the yard has been identified as one of the Defence shipyards for construction of Warships and Submarines. The present order book is likely to be completed by Aug 2013 and thereafter HSL will concentrate on construction of Defence Vessels. The surplus capacity, if any, available would be utilized for commercial vessels. With above mentioned infrastructure upgradation and capacity improvement the yard will grow as one of the major Defence shipyards of the country. Human Resource Development Considering the large attrition rate of the existing workforce of the company in coming years, your company has started inducting the young workforce to fill up the organizational gaps. Your company has inducted 15 management trainees recently and will continue to induct more in coming years depending upon the requirements. The skill development is one of the high priority areas to hone the skills required for construction of complex warships and submarines. Hence, Your company continues to impart training to new entrants and existing employees as well to increase the productivity. Further, recently your Company has revised the pay scales of the staff and workmen of the company in order to boost their morale which will result in higher productivity. However while approving the wage revision, your company could not arrange the payment of arrears due to staff & workmen as the financial health of the Company did not permit such payments. This is a major issue of the Unions as the wage revision for Officers was undertaken prior to wage revision of staff & workmen and their arrears have been paid. Acknowledgements I would like to conclude by thanking Central and state government authorities, the Ministry of Defence, the Naval and Coast Guard authorities, the Dredging Corporation of India Limited, Shipping Corporation of India Limited, The Oil & Natural Gas Corporation Limited, M/s Goodearth Maritime Limited and the shareholders for the trust they have reposed on us.

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