Annual Report 2018
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MAZAGON DOCK SHIPBUILDERS LIMITED 2017-2018 Annual Report MAZAGON DOCK SHIPBUILDERS LIMITED (Formerly known as Mazagon Dock Limited) Vision MDL shall strive to be a progressive and profitable shipyard building World Class Warships and Submarines using State-of-the-Art Technology. Mission To deliver quality ships in time within budgeted costs and be a World leader in Warship building. Objectives i. To achieve 20% Post Tax return on equity in line with DPE’s guidelines with improved order position and profitability. ii. To progressively reduce overhead expenditure and operational costs. iii. To attain technological leadership in warship and submarines construction through in house R&D activities and partnership with academic institutions. iv. To enhance the productivity level through improved internal processes through benchmarking and innovative practices. v. To take initiatives for growth by undertaking capacity augmentation, technological up-gradation and modernisation of facilities. vi. To upgrade capabilities of employees as per HRM guidelines issued by DPE. vii. To maintain consistent quality and to maintain high degree of Customer Satisfaction. viii. To undertake Corporate Social Responsibility and Sustainability projects as per guidelines. ix. To enhance indigenisation process in line with ‘Make in India’ policy. x. To adhere project time lines to deliver quality ships and submarines in time. Mazagon Dock Shipbuilders Limited (Formerly known as Mazagon Dock Limited) Papers to be Laid on the table of Lok Sabha / Rajya Sabha Authenticated Raksha Rajya Mantri Contents Chairman’s Statement ......................................................................................................................03 Board of Directors .............................................................................................................................08 Ten Years at a Glance ........................................................................................................................11 Notice ...................................................................................................................................................12 Directors’ Report ...............................................................................................................................17 Corporate Governance Report ........................................................................................................39 Corporate Social Responsibility Report ........................................................................................51 Extract of Annual Return ..................................................................................................................58 Management Discussion and Analysis Report.............................................................................65 Standalone Financial Statements Independent Auditors’ Report .........................................................................................................77 Comments of the Comptroller & Auditor General of India .........................................................87 Balance Sheet ....................................................................................................................................88 Statement of Profit & Loss ...............................................................................................................89 Cash Flow Statement ........................................................................................................................90 Statement of Changes in Equity ......................................................................................................92 Significant Accounting Policies .......................................................................................................94 Notes to the Financial Statements .............................................................................................. 104 Consolidated Financial Statements Independent Auditors’ Report ...................................................................................................... 145 Comments of the Comptroller & Auditor General of India ...................................................... 153 Balance Sheet ................................................................................................................................. 154 Statement of Profit & Loss ............................................................................................................ 155 Cash Flow Statement ..................................................................................................................... 156 Statement of Changes in Equity ................................................................................................... 158 Significant Accounting Policies .................................................................................................... 160 Notes to the Financial Statements .............................................................................................. 170 2 Chairman’s Statement Cmde Rakesh Anand, IN (Retd) Chairman & Managing Director Dear Shareholders, enormous potential drawn from our rich legacy and to catapult our capabilities to go beyond the existing I am extremely delighted to extend a warm operational constraints. welcome to all of you on behalf of the Board of Directors of your Company, to the 85th Annual In an effort to augment our expansion plans, the Board General Meeting of the Company. The Directors’ of Directors have approved setting up a greenfield Report and Annual Accounts of the Company for yard in Nhava which would comprise of a ‘state-of- the financial year 2017-18 had been circulated to the-art’ infrastructure. We are also exploring ship you. It is with an immense sense of privilege and repair operations for enhancing our revenues and responsibility that I am announcing the audited profitability. results of this fiscal year through the Annual As a part of Government of India’s disinvestment Report of the Company. plans in state owned entities, the Ministry of Defence FY18 has been a very significant year for your (Department of Defence Production) approved the Company both in respect of financial as well as disinvestment of 10% of the equity shares of the operational performance. Company by an Initial Public Offering of shares at a price to be determined through a book building process. During the year we reinvigorated our strategic intent to be a progressive and profitable shipyard, building Subsequently our Company filed the Draft Documents World Class Warships and Submarines using State- on 28 Mar, 2018 with the Securities and Exchange of-the-Art Technology. Our mission is to unleash our Board of India (SEBI). 3 PERFORMANCE Production of the second frigate of Project-17A commenced on 26 Feb 2018. Third Scorpene Submarine of P-75, “INS Karanj” was MoU targets set with the Ministry of Defence launched by Smt. Reena Lanba, wife of Chief Guest, during the year is rated as “Very Good”. During Admiral Sunil Lanba, PVSM, AVSM, ADC Chief of Naval the year your Company achieved a Profit Before Staff, on 31 Jan 2018. Tax (PBT) of Rs. 696.37 Crore, and the Value of Production (VoP) of Rs. 4399.16 Crore CURRENT PROJECTS During the year your Company had signed an MoU for the financial year 2017-18 with the MoD. The MoU outlines targets and various performance Your Company has developed a second parameters for the Company. The revenue from assembly line for submarines and is geared up operations was targeted at Rs 4,500 Crore. Significant to meet the timelines of present order book as milestones are required to be achieved under Project well as anticipated future orders. 75 (Scorpene submarines) and shipbuilding projects Your Company is successfully putting to use the of 15B (destroyers) and 17A (frigates). infrastructure under Mazdock Modernisation Project I feel it’s a great honour to report that your Company (MMP) comprising of a new Wet Basin, Heavy Duty had performed remarkably well during the last fiscal Goliath Crane, Module Workshop, Cradle Assembly year. In particular, the achievement vis-à-vis the MoU Shop, Store Building and associated ancillary targets set with the Ministry of Defence during the structures, for the purpose of production. year is rated as “Very Good”. During the year your The extended track of Goliath Crane by 50 meters Company achieved a Profit Before Tax (PBT) of Rs. towards sea is facilitating access of Gantry Crane for 696.37 Crore, and the Value of Production (VoP) of Rs. lifting / shifting of heavy components directly from 4399.16 Crore. vessel/ barges. As of 30 June 2018, our Order Book for shipbuilding Your Company has developed a second assembly line and submarines and heavy engineering was Rs. for submarines and is geared up to meet the timelines 514,42.70 Crore comprising of shipbuilding and of present order book as well as anticipated future submarine projects. orders. Work on modernization of the following facilities is at IMPORTANT EVENTS : an advanced stage: i. Modernisation of marine pile jetty at North Yard INS Kalvari, the first submarine of Project 75, ii. New improvised network of piped services was delivered to the Indian Navy on 21 Sep across MDL 2017 and commissioned by Hon’ble Prime Recently, the Company has tendered out the Minister on 14 Dec 2017. requirement for construction of Submarine Launch Keel for the third destroyer of Project-15B was laid Facility to boost its Submarine Construction Capacity.