ABG Shipyard Limited Annual Report 2014-2015
CORPORATE INFORMATION
Board Of Directors Corporate Offi ce
Mr. Rishi Agarwal – Chairman 4th/5th Floor, Bhupati Chambers Mr. Syed Abdi – Managing Director and CEO 13, Mathew Road, Mumbai-400 004 Mr. Dhananjay Datar – Executive Director Phone: 91-22-66563000 Mr. S. Muthuswamy – Executive Director Fax : 91-22-66223050 Mr. Ashwani Kumar – Independent Director Website:www.abgindia.com Mrs. Ranjitha Godbole – Nominee Director E-mail:[email protected] Mr. Sushil Agarwal – Independent Director Mr. Ravi Nevatia – Independent Director 30th Annual General Meeting Day : Thursday Corporate Identifi cation Number (CIN) Date : 30th September, 2015 Time : 12.00 noon L61200GJ1985PLC007730 Venue : At the Registered Offi ce of the Company Auditors Near Magdalla Port, Dumas Road, Surat-395 007, Gujarat M/s. Nisar & Kumar M/s. GMJ & Co. Chartered Accountants Chartered Accountants Contents Page No. A-17, Everest Building, 3rd & 4th Floor, 156- Tardeo Road Vaastu Darshan, “B” Wing, Notice of AGM 02 Mumbai-400 034. Azad Road, Andheri (East) Mumbai – 400 069 Directors’ Report 12
Management Discussion & Analysis 19 Bankers Corporate Governance Report 32 Andhra Bank Indian Overseas Bank Independent Auditors’ Report 48 Bank of Baroda Laxmi Vilas Bank Ltd. Balance Sheet 52 Bank of India Oriental Bank of Commerce Canara Bank Punjab and Sindh Bank Statement of Profi t and Loss 53 Central Bank of India Punjab National Bank Cash Flow Statement 54 Dena Bank SICOM Limited Notes forming part of the Financial State- 55 ments Deutsche Bank The South Indian Bank Ltd. Consolidated Financial Statements 82 Development Credit Bank Ltd. Standard Chartered Bank Unaudited Consolidated Financial Results 114 Export- Import Bank of India State Bank of India Attendance Slip 117 ICICI Bank Limited State Bank of Patiala Proxy Form 119 IDBI Bank Limited State Bank of Travancore IFCI Limited Syndicate Bank Registrar & Share Transfer Agent Indian Bank Yes Bank Limited Link Intime India Private Ltd. C-13, Pannalal Silk Mills Compound Registered Offi ce L.B.S Marg, Bhandup West Near Magdalla Port Mumbai-400 078. Dumas Road, Tele : 91-22-25946970, Fax : 91-22-25946979 Surat-395 007, Gujarat E-mail : [email protected] Tele: 91-261-2725191, Fax: 91-261-3048243 Website:www.abgindia.com E-mail:[email protected]
1 ABG Shipyard Limited Annual Report 2014-2015
NOTICE Notice is hereby given that the 30th Annual General Meeting of the Members of ABG Shipyard Limited will be held on Wednesday, September 30, 2015 at 12.00 noon at the Registered Offi ce of the Companyat near Magdala Port, Dumas Road, Surat-395 007,Gujarat, to transact the following business:
OrdinaryBusiness: 1. To receive,consider and adopt the audited Balance Sheet as at March 31, 2015, the Statement of Profi t and Loss for the year ended on that date and the reports of the Board of Directors and Auditors thereon. 2. To ratify the appointment of Auditors and fi x their remuneration and for the purpose to pass the following resolution as an Ordinary Resolution: “RESOLVED THAT pursuant to the provision of Section 139 and other applicable provisions, if any, of the Companies Act, 2013, and upon recommendations of the Audit Committee, M/s. Nisar & Kumar, Chartered Accountants, (Firm Registration No. 107117W) made by the members at the 29th Annual General Meeting to hold the offi ce from the conclusion of said Annual General Meeting till the conclusion of the 32nd Annual General Meeting of the Company, subject to ratifi cation of their appointment at every Annual General Meeting, be and is hereby ratifi ed at such remuneration plus service tax, out-of-pocket, travelling and living expenses etc. as may be applicable, to be fi xed by the Audit Committee of the Company.” Special Business: 3. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as an Ordinary Resolution:- RESOLVED THAT pursuant to Sec.149, 152 and other applicable provisions if any, of the Companies Act, 2013 and the Rules made thereunder, (including any statutory modifi cation(s) or re-enactment thereof for the time being in force) read with Schedule-IV of the Companies Act, 2013, Mr. Sushil Agarwal (DIN: 07187788), who was appointed as an Additional Director of the Company (Independent & Non-Executive) on the Board as on 18th May 2015, in respect of whom the Company has received a notice in writing from a member under Section 160 of the Companies Act, 2013 signifying his intention to propose Mr. Sushil Agarwal as a candidate for the offi ce of Director of the Company as an Independent Director, who has submitted a declaration that he meets the criteria for independence as provided in Section 149(6) of the Act and who is eligible for appointment, be and is hereby appointed as an Independent Director to hold offi ce for 5 (fi ve) consecutive years for a term up to the conclusion of the 35thAnnual General Meeting of the Company in the calendar year 2020 and he is not liable to retire by rotation. 4. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as an Ordinary Resolution:- RESOLVED THAT pursuant to Sec.149, 152 and other applicable provisions if any, of the Companies Act, 2013 and the Rules made thereunder, (including any statutory modifi cation(s) or re-enactment thereof for the time being in force) read with Schedule- IV of the Companies Act, 2013, Mr. Ravi Nevatia (DIN:07200190), who was appointed as an additional Director of the Company (Independent & Non-Executive) on the Board as on 13th August 2015, in respect of whom the Company has received a notice in writing from a member under Section 160 of the Companies Act, 2013 signifying his intention to propose Mr. Ravi Nevatia as a candidate for the offi ce of Director of the Company as an Independent Director, who has submitted a declaration that he meets the criteria for independence as provided in Section 149(6) of the Act and who is eligible for appointment, be and is hereby appointed as an Independent Director to hold offi ce for 5 (fi ve) consecutive years for a term up to the conclusion of the 35th Annual General Meeting of the Company in the calendar year 2020 and he is not liable to retire by rotation 5. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as a Special Resolution:- “RESOLVED THAT in supersession to the Special Resolution passed by Members of the Company at the 29th Annual General Meeting held on 30th September 2014 and pursuant to the provisions of Section 41, 42, 62 and 71 and other applicable provisions, if any, of the Companies Act, 2013, the provisions of Securities and Exchange Board Of India (Issue Of Capital And Disclosure Requirements) Regulations, 2009 (the “SEBI ICDR Regulations”), the provisions of the Foreign Exchange Management Act, 1999, and rules and regulations made hereunder, including the Foreign Exchange management (Transfer and Issue of Securities by a person Resident outside India) Regulation, 2000, if applicable, the provisions of Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and subject to any other applicable law or laws, rules and regulations (including any amendment thereto or reenactment thereto or reenactment thereof for the time being in force) and subject to enabling provisions in the Memorandum and Articles of Association of the Company and Listing Agreements, entered into by the Company with the Stock Exchanges where the shares of the company are listed and subject to any approval, consent, permission and/or sanction of the members of the Company by way of special resolution, Government of India, Reserve Bank of India, Stock Exchanges, Registrar of Companies, Securities and Exchange Board of India and /or any other competent authorities, institutions or bodies, within or outside India, and subject to such conditions and modifi cations as may be prescribed by any of them while granting such approvals, permissions, consents and sanctions and which may be agreed by the Board of Directors (hereinafter referred to as “Board” which term shall include any committee thereof, whether constituted or to be constituted),approval of the Company is hereby accorded to the Board to create, offer, issue and allot in one or more tranch(es), in the course of domestic and / or international offerings and /or Qualifi ed Institutional Placements (“QIP”), with or without an over allotment/ green shoe issue option, in one or more foreign markets or domestic markets, to domestic institutions, foreign institutions, non-resident Indians, Indian public, companies, corporate bodies, mutual funds,
2 ABG Shipyard Limited Annual Report 2014-2015
banks, insurance companies, pension funds, individuals, qualifi ed institutional buyers or other persons or entities, whether shareholders of the Company or not, through a public issue and/or on a private placement basis and/or qualifi ed institutional placement within the meaning of Chapter VIII of the SEBI ICDR Regulations and /or preferential issue and/or other kind of public issue and /or private placement or through a combination of the foregoing as may be permitted under applicable law from time to time, with or without an overallotment/ green shoe option, equity share, secured or unsecured debentures, bonds or any other securities whether convertible into equity share or not, including, but not limited to, Foreign Currency Convertible Bonds (“FCCBs”), Optionally Convertible Debentures (“OCD”), Bonds with share warranted attached, Global Depositary Receipts (“GDRs”), American Depositary Receipts (“ADRs”) or any other equity related instrument of the Company or a combination of the foregoing including but not limited to a combination of equity shares with bonds and/or any other securities whether convertible into equity shares or not (hereinafter referred to as “securities”) for a value of upto ` 2,000/- crores (Rupees Two Thousand Crores), whether to be listed on any stock exchange inside India or any international stock exchanges outside India, through an offer document and/or prospectus and/or offer letter, and/or offering circular, and/or on public and/or private or preferential basis, whether rupee denominated in foreign currency at such time or times, at such price or prices in such manner and on such terms and conditions including security, rate of interest etc, as may be decided by and deemed appropriate by the board as per applicable law, including the discretion to determine the categories of Investors to whom the offer, issue and allotment shall be made, considering, the prevailing market conditions and other relevant factors wherever necessary in consultation with its advisors, as the board in its absolute discretion may deem fi t and appropriate. RESOLVED FURTHER THAT in addition to all applicable Indian laws, the securities issued in pursuance of this resolution shall also be governed by all applicable laws and regulations of any jurisdiction outside India where they are listed or that may in any other manner apply to such securities or provided in the terms of their issue. RESOLVED FURTHER THAT any securities that are not subscribed in issues mentioned above, may be disposed off by the board in its absolute discretion in such manner, as the board may deem fi t and as permissible by the law. RESOLVED FURTHER THAT in case of a Qualifi ed Institutional Placement pursuant to Chapter VIII of the SEBI ICDR Regulations, the allotment of specifi ed securities shall only be to Qualifi ed Institutional Buyers within the meaning of Chapter VIII and the relevant date for the determination of the price of the equity shares to be issued or issued pursuant to conversion, shall be the date on which the board decides to open the issue of securities or such other time as may be allowed by SEBI ICDR Regulations from time to time and allotment of specifi ed securities shall be completed within twelve months from the date of this resolution. RESOLVED FURTHER THAT in case of an issuance of FCCBs/ADRs/GDRs, the relevant date for the determination of the issue price of the securities offered, shall be determined in accordance with the Issue of Foreign Currency Convertible Bonds and Ordinary shares (through Depository Receipt Mechanism) Scheme, 1993 as may be amended from time to time. RESOLVED FURTHER THAT the issue of Securities shall be subject to the following terms and conditions: (a) The Securities shall be subject to the provisions of Memorandum and Articles of Association of the Company and in accordance with the terms of the issue; and (b) The number and/or price of the Securities shall be appropriately adjusted for corporate actions such as bonus issue, rights issue, stock split, merger, demerger, transfer of undertaking, sale of division or any such capital or corporate restructuring. RESOLVED FURTHER THAT for the purpose of giving effect to the above resolutions, the Board be and is hereby authorized to do all such acts, deeds, matters and things including but not limited to determining the form and manner of the issue, including the class of investors to whom the Securities are to be issued and allotted, number of Securities to be allotted, execution of various transaction documents, creation of mortgage/ charge in accordance with Section 180(1)(a) of the Act, in respect of any Securities as may be required either on pari-passu basis or otherwise, as it may in its absolute discretion deem fi t and to settle all questions, diffi culties or doubts that may arise in regard to the issue, offer or allotment of Securities and utilization of the issue proceeds as it may in its absolute discretion deem fi t without being required to seek any further consent or approval of the members or otherwise to the end and intent that the members shall be deemed to have given their approval thereto expressly by the authority of this resolution. RESOLVED FURTHER THAT the Board be and is hereby authorized to form a committee or delegate all or any of its powers to any Directors (s) or Committee of Directors or other persons authorized by the Board to give effect to the aforesaid resolutions. RESOLVED FURTHER THAT subject to the applicable laws, the Board and/or the Committee authorized by the Board be and is hereby authorized to do such acts, deeds and things as the Boards in its absolute discretion deems necessary or desirable in connection with the issue of the securities, including, without limitation of the following; (a) Decide the date for the opening of the issue of securities (b) Decide the price band for the issue (c) Finalization of the Issue Price (d) Finalization of the allotment of the securities on the basis of the subscriptions received. (e) Finalization of, signing of and arrangement for the submission of the preliminary and fi nal offering circulars/prospectus(es)/ offer document(s), and any amendments and supplements thereto, along with supporting papers needed to be fi led for seeking listing approval with any applicable government and regulatory authorities, institutions or bodies as may be required;
3 ABG Shipyard Limited Annual Report 2014-2015
(f) Deciding the pricing and terms of the securities, and all other related matters, including taking any action on two-way fungibility for conversion of underlying equity shares into FCCBs/ GDRs/ ADRs, as per applicable laws, regulations or guidelines; (g) Appoint, in its absolute discretion, managers (including lead manager), Investment Bankers, Merchant Bankers, underwriters, guarantors, fi nancial and /or legal advisors, depositories, custodians, principal paying/transfer/conversion agents, listing agents, registrars, trustees and all other agencies, whether in India or abroad, entering into or execution of all such agreements/ arrangements/ MoUs/ documents with any such agencies, in connection with the proposed offering of the securities; (h) Approval of the Deposit Agreements(s), the Purchase/Underwriting Agreement(s), the Trust Deed(s), the Indenture(s), the Master/Global GRDs/ADRs/FCCBs/other securities, letters of allotment, listing application, engagement letter(s), memoranda of understanding and any other agreements of documents, as may be necessary in connection with the issue/ offering (including amending, varying or modifying the same, as may be considered desirable or expedient), in accordance with all applicable laws, rules, regulations and guidelines; (i) Settle all questions, diffi culties or doubts that may arise in regards to the issue, offer or allotment of securities and utilization of the proceeds of the issue in such manner and to do all such acts, deeds, matters and things as it may in its absolute discretion deem fi t. RESOLVED FURTHER THAT the Board and/or the Committee authorized by the Board be and is hereby authorized to accept any modifi cations in the proposals as may be required by the authorities involved in such issues but subject to such conditions as the SEBI/GoI/RBI or such other appropriate authorities may impose at the time of their approval and as agreed to by the Board; RESOLVED FURTHER THAT without prejudice to the generality of the foregoing, issue of the securities may be done upon all or any terms or combination of terms in accordance with international practices relating to the payment of interest, additional interest, premium on redemption, prepayment or any other debt service payments and all such terms as are provided customarily in an issue of securities of this nature. RESOLVED FURTHUR THAT The Company may enter into any arrangement with any agency or body authorized by the Company for the issue off depository receipts representing the underlying equity shares issued by the Company with such features and attributes as are prevalent in international capital markets for instruments of this nature and to provide for the tradability of free transferability thereof as per international practices and regulations (including listing on one or more stock exchange(s) inside or outside India) and under the forms and practices prevalent in the international markets.” 6. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as Special Resolution:- “RESOLVED THAT pursuant to the provisions of Sections 197 and 198 read together with Schedule V and the Rules framed thereunder and other applicable provisions, if any, of the Companies Act, 2013 (hereinafter referred to as the “Act”), as amended from time to time and subject to the approval of the monitoring committee of CDR and the Central Government and subject to such conditions and modifi cations as may be prescribed or imposed by the Central Government while granting such approval, the approval of the Members be and is hereby accorded to the payment of the following revised remuneration as Minimum Remuneration to Mr. Syed Abdi, Managing Director in case of no profi ts or inadequacy of profi ts in any fi nancial year,effective from the date of his appointment for remaining tenure of his appointment i.e. upto 8th January 2017:- Mr. Syed Abdi shall be entitled to the following Salary, Perquisites & Allowances and Bonus:
` Per Month ` Per Annum Salary Perquisites & Allowance Bonus 11,10,000 10,24,200 16,65,000 The perquisites and allowances, as aforesaid, shall include accommodation (furnished or otherwise) and / or house rent allowance in lieu thereof, special allowance, medical reimbursement; leave travel concession for self and family including dependents,. The said perquisites and allowances shall be evaluated, wherever applicable, as per the provisions of Income Tax Act, 1961 or any rules there under or any statutory modifi cation(s) or re-enactment thereof; in the absence of any such Rules, perquisites and allowances shall be evaluated at actual cost. However, contribution to Provident Fund, Gratuity payable and encashment of Leave at the end of the tenure, as per the rules of the Company and to the extent not taxable under the Income Tax Law, shall not be included for the purpose of computation of the overall ceiling of remuneration. Further, employee stock options granted / to be granted, from time to time are not to be considered as perquisite and not to be included for the purpose of computation of the overall ceiling of remuneration. “RESOLVED FURTHER THAT the Board of Directors or a Committee thereof of the Board be and is hereby authorized to take such steps as may be necessary for obtaining necessary approvals - statutory, contractual or otherwise, in relation to the above and to settle all matters arising out of and incidental thereto and to sign andexecute deeds, applications, documents and writings that may be required, on behalf of the Company and generally to do all such other acts, deeds, matters and things as may be necessary, proper, expedient or incidental for giving effect to this Resolution.”
By Order of the Board of Directors Date: August 13, 2015 Dheeraj Sharma Place: Mumbai Company Secretary
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NOTES: 1. A Member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself and the proxy need not be a member of the Company. A person can act as proxy on behalf of members not exceeding fi fty (50) and holding in the aggregate not more than ten percent (10%) of the total share capital of the Company. A member holding more than ten percent (10%) of the total share capital of the Company may appoint a single person as proxy and such person shall not act as a proxy for any other person or shareholder The Instrument of proxies in order to be effective should be duly completed,stamped and signed and must be deposited at the Registered Offi ce of the Company not less than 48 hours before the meeting. 2. An Explanatory Statement pursuant to Section 102 of the Companies Act, 2013 relating to the Special Businesses to be transacted at the Annual General Meeting is annexed hereto. 3. The details under clause 49 of the Listing Agreement with the Stock Exchange(s) in respect of the directors seeking appointment/ re-appointment at the AnnualGeneralMeeting are annexed hereto. 4. The Register of Members and Share transfer books of the Company will remain closed from Thursday, 24th September, 2015 to Wednesday, 30th September, 2015 (both days inclusive) in connection with the Annual General Meeting. 5. Members are requested to intimate all changes with respect to their bank details,nomination,power of attorney, change of address,change in name,register/change in email ID setc.to the irrespective depository participant (DP). 6. The Securities and Exchange Board of India (SEBI) has mandated the submission of Permanent Account Number (PAN) by every participant in securities market. Members holding shares in electronic form are, therefore, requested to submit their PAN to their Depository Participants with whom they are maintaining their demat accounts. 7. Members/Proxies are requested to bring their copy of Annual Report and the attendance slip duly fi lled in at the meeting 8. Members desirous of obtaining any information as regards accounts and operations of the Company are requested to write to the Company at least one week before the meeting,so that information required is made available at the meeting. 9. As per Section 205C of the Companies Act,1956,the amount remaining unpaid or unclaimed for a period of seven years from the date of transfer to the Unpaid Dividend Account of the Company shall be transferred to the InvestorEducationand Protection Fund (thefund) set up by the Government of India and nopayments shall be made by the fund,inrespectofanyclaims. Members who have notyeten cashed their dividend warrants for the fi nancial year ended March 31, 2008 and subsequent years are requested to make their claims directly to the Registrar and Share Transfer Agent,without any delay.It may be noted that theunclaimeddividendforthefi nancialyears2007-08to 2010-11 are due for transfer to the IE PF fund as per table given below: Financial Year Due Date for Transfer 2007-08 22nd October, 2015 2008-09 30th October, 2016 2009-10 30th October, 2017 2010-11 27th October, 2018 10. The Ministry of Corporate Affairs (MCA) on 10th May, 2012 notifi ed the IEPF (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012 (IEPF Rules). The objective of the IEPF Rules is to help the shareholders ascertain status of the unclaimed amounts and overcome the problems due to misplacement of intimation thereof by post etc. The Company has uploaded the information in respect of the Unclaimed Dividends in respect of the fi nancial years 2007-08 to 2011-2012, as on the date of 29th Annual General Meeting held on 30th September, 2014, on the website of the IEPF viz. www.iepf.gov.in. Shareholders may kindly check the said information and if any dividend amount is appearing as unpaid against their name, they are requested to lodge their claim, duly supported by relevant document to the Company before expiry of seven years. 11. All statutory registers are open for inspection at the Registered Offi ce of the Company on all working days, from the date hereof upto the conclusion of this meeting between 10.00 a.m. and 5.00 p.m. 12. Corporate Members intending to send their authorized representatives to attend the Annual General Meeting are requested to send a duly certifi ed copy of the Board Resolution authorizing their representatives to attend and vote at the Meeting. 13. Members are requested to address all correspondence, including dividend matters, to the Registrar and Share Transfer Agent, M/s. Link Intime India Private Ltd., C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai – 400 078. 14. Electronic copy of the Annual Report for 2014 -15 is being sent to all the members whose email IDs are registered with the Company/Depository Participants(s) for communication purposes unless any member has requested for a physical copy of the same. For members who have not registered their email address, physical copies of the Annual Report for 2014 - 15 is being sent in the permitted mode.
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15. Electronic copy of the Notice of the 30th Annual General Meeting of the Company inter alia indicating the process and manner of e-voting along with Attendance Slip and Proxy Form is being sent to all the members whose email IDs are registered with the company/Depository Participants(s) for communication purposes unless any member has requested for a physical copy of the same. For members who have not registered their email address, physical copies of the Notice of the 30thAnnual General Meeting of the Company inter alia indicating the process and manner of e-voting along with Attendance Slip and Proxy Form is being sent in the permitted mode. 16. Members may also note that the Notice of the 30th Annual General Meeting and the Annual Report for 2014 – 15 will also be available on the Company’s website www.abgindia.com for download. The physical copies of the aforesaid documents will also be available at the Company’s Registered Offi ce for inspection during normal business hours on working days. Even after registering for e-communication, members are entitled to receive such communication in physical form, upon making a request for the same, by post free of cost. For any communication, the shareholders may also send requests to the Company’s investor email id: [email protected] 17. Pursuant to the provisions of section 108 of the Companies Act, 2013 read with rule 20 of the Companies (Management and Administration) Rules, 2014 and the Clause 35B of the Listing Agreement, the Company is pleased to offer e- voting (Electronic Voting) facility to its members to cast their votes electronically on all resolutions set forth in this Notice convening the 30th Annual General Meeting to be held on Wednesday, September 30, 2015, at 12.00 noon. The Company has engaged the services of Central Depository Services Limited(“CDSL”) as the authorised agency to provide the e-voting facilities. The e-voting facility will be available during the following voting period: Commencement of e-voting From 10.00 a.m. (IST) on 27th September, 2015 End of e-voting 5.00 p.m. (IST) on 29th September, 2015 The instructions for members for voting electronically are as under:- (i) Log on to the e-voting website www.evotingindia.com (ii) Click on “Shareholders” tab. (iii) Now, select the Electronic Voting Sequence Number - “EVSN” along with “COMPANY NAME” i.e. ABG SHIPYARD LIMITED from the drop down menu and click on “SUBMIT” (iv) Now Enter your User ID: − For CDSL: 16 digits benefi ciary ID; − For NSDL: 8 Character DP ID followed by 8 Digits Client ID; − For Members holding shares in Physical Form: Please enter Folio Number registered with the Company and then enter the Captcha Code as displayed on the screen; Then Click on Login. (v) If you are holding shares in Demat form and had logged on to www.evotingindia.com and casted your vote earlier for EVSN of any company, then your existing password is to be used. In case you have forgotten your password then enter the User ID and Captcha Code as displayed on the screen and click on Forgot Password and then enter the details as prompted by the system. (vi) Otherwise, if you are a fi rst time user or if you are holding shares in physical form, please follow the steps given below: a) Please fi ll the following details in the appropriate boxes (this is applicable to members holding shares in demat form or physical form): 1. Primary Level Enter your 10 digit alpha-numeric PAN issued by Income Tax Department. Please enter in CAPITAL LETTERS This must tally with the PAN registered by you with the Company / Depository Participant. Please note that Members who have not registered their PAN with the Company / Depository Participant, will have to use use the fi rst two letters of their name and the last 8 digits of the demat account/folio number in the PAN fi eld. 2. Secondary Level Enter the Date of Birth as recorded in your demat account or in the Company’s records for the said demat account or folio in dd/mm/yyyy format. OR Enter the Bank Account Number as registered by you in your demat account or in the Company’s records in respect of your shares in the said demat account or folio. OR In case neither your Date of Birth nor Bank Account details are recorded in your demat account or in the Company’s records, as aforesaid, then please enter your demat account number (client id) or your folio number in the Bank Account fi eld. b) After entering these details appropriately, click on “SUBMIT” tab. (vii) Members holding shares in physical form will then directly reach the EVSN selection screen. However, members holding shares in demat form will now reach ‘Password Creation’ menu wherein they are required to mandatorily enter their login password in the new password fi eld. Kindly note that this password is to be also used by the demat holders for voting for resolutions of any other company on which they are eligible to vote, provided that company opts for e-voting through CDSL platform. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confi dential.
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(viii) For Members holding shares in physical form, the details can be used only for e-voting on the resolutions contained in this Notice. (ix) Click on the ABG SHIPYARD LIMITED on which you choose to vote. (x) On the voting page, you will see Resolution Description and against the same the option “YES/NO” for voting. Select the option “YES” or “NO” as desired. The option “YES” implies that you assent to the Resolution and option “NO” implies that you dissent to the Resolution. (xi) Click on the “Resolution File Link” if you wish to view the entire Resolution. (xii) After selecting the resolution you have decided to vote on, click on “SUBMIT”. A confi rmation box will be displayed. If you wish to confi rm your vote, click on “OK”, else to change your vote, click on “CANCEL” and accordingly modify your vote. (xiii) Once you “CONFIRM” your vote on the resolution, you will not be allowed to change your vote subsequently. (xiv) You can also take out print of the voting done by you by clicking on “Click here to print” option on the Voting page. (xv) Institutional shareholders (i.e. other than Individuals, HUF, NRI etc.) are required to log on to https://www.evotingindia.co.in and register themselves as Corporates. After receiving the login details they have to link the account(s) which they wish to vote on and then cast their vote. They should upload a scanned copy of the Board Resolution and Power of Attorney (POA) which they have issued in favour of the Custodian, if any, in PDF format in the system for the scrutinizer to verify the same. Please note that: 1. The voting period begins on September 27, 2015 at 10.00 am and ends on September 29, 2015 at 5.00 pm. During this period shareholders’ of the Company, holding shares either in physical form or in dematerialized form, as on the cut-off date which is September 23, 2015, may cast their vote electronically. The voting rights of shareholders shall be in proportion to their shares in the paid up equity share capital of the Company as on this cut-off date. The e-voting module shall be disabled by CDSL for voting after 5.00 pm on September 26, 2015. 2. In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions (“FAQs”) and e-voting manual available at www.evotingindia.co.in under help section or write an email to [email protected]. 3. Ms. Kala Agarwal, Practising Company Secretary (Membership No.F5976) has been appointed as the Scrutinizer to scrutinize the e-voting process in a fair and transparent manner. 4. The Scrutinizer shall within a period of not exceeding 48 hours from the conclusion of the e-voting period, unblock the votes in the presence of at least two witnesses not in employment of the Company and forward his report of the votes cast in favour or against, to the Chairman or to any Director or Offi cer who may be authorized by the Chairman for this purpose. 5. The Results shall be declared on or after the Annual General Meeting (AGM). The Results declared along with the Scrutinizer’s Report shall be placed on the Company’s website www.abgindia.com and on the website of CDSL within two (2) days of passing of the resolutions at the AGM of the Company and communicated to the Stock Exchanges. EXPLANATORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013 Item No. 3 & 4 Pursuant to the provisions of Section 149 of the Companies Act, 2013 (Act), which came into effect from April 1, 2014, every listed public company is required to have at least one-third of the total number of directors as Independent Directors Accordingly, to broad base the existing Board, in line with the compliance required under the Companies Act, 2013 and the Listing Agreement signed with the NSE and BSE, the Company has appointed Mr. Sushil Agarwal and Mr. Ravi Nevatia as an Additional Director (Independent & Non-Executive) on the Board as on 18th May 2015 and 13th August 2015 respectively to hold offi ce till ensuing Annual General Meeting as an Additional Director (Independent & Non-Executive). Section 152 of the Companies Act stipulates for appointment of the Directors in the General Meeting of the Company, accordingly, it is proposed to appoint Mr. Sushil Agarwal and Mr. Ravi Nevatia as Independent Directors, in accordance with the provisions of section 149 of the Act, to hold offi ce for a term of 5 (fi ve) years from the date of this Annual General Meeting of the Company. These Independent Directors are not liable to retire by rotation. Notices have been received from Members proposing candidature of the above Directors for the offi ce of Independent Director of the Company together with the deposit of `1,00,000 each as prescribed under the applicable provisions of the Companies Act 2013. In the opinion of the Board, Mr. Sushil Agarwal and Mr. Ravi Nevatia, fulfi lls the conditions specifi ed in the Companies Act, 2013 and the Rules made thereunder for appointment as Independent Directors of the Company. A copy of the draft Letter of Appointment for Independent Directors, setting out the terms and conditions of their appointment, is available for inspection at the Registered Offi ce of the Company during business hours on any working day. A brief profi le of proposed Independent Directors, including nature of their expertise, is annexed to this notice. None of the Directors or Key Managerial Personnel of the Company and their relatives, other than Independent Directors for their respective appointment, are concerned or interested, fi nancially or otherwise, in the resolutions set out at item nos. 3 to 4. The Board recommends the Ordinary Resolutions as set out at item nos. 3 to 4 for approval of the Members.
7 ABG Shipyard Limited Annual Report 2014-2015
Item no. 5. The Company proposes to raise funds to the tune of `. 2,000/- crores (Rupees Two Thousand Crores), in one or more tranches through a public issues and/or on a private placement basis and/or QIP within the meaning of Chapter VIII of the SEBI ICDR Regulations and/or preferential issue and/or any other kind of public issue and/or private placement as may be permitted under applicable law from time to time. The resolution contained in the business of the Notice is regarding proposal to create, offer, issue and allot equity shares and/or such other Securities as stated in the Special Resolution (the “Securities”) which seeks to empower the Board of Directors (hereinafter referred to as “Board” which include any Committee thereof, whether constituted or to be constituted) to undertake such issue or offer of securities. 1. Object of the issue In order to strengthen the Balance Sheet of the Company by repayment of its debt and for general corporate purposes, the Company proposes to raise long term capital by issue of further securities. 2. Pricing In case of an issue of the Securities to Qualifi ed Institutional Buyers pursuant to Chapter VIII of the SEBI ICDR Regulations, the issue price of Securities shall be at a price, being not less than the price calculated in accordance with Chapter VIII of SEBI ICDR Regulations as may be amended from time to time and the Relevant Date in this regard shall be the date on which the board decides to open the issue of securities or such other time as may be allowed by SEBI ICDR Regulations from time to time. In case of a Qualifi ed Institutional Placement pursuant to Chapter VIII of the SEBI ICDR Regulations, the allotment of securities shall be completed within twelve months from the date of passing of this resolution. In case of issue of ADRs/GDRs the issue price shall be at a price, being not less than the price calculated in accordance with applicable law including the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipts Mechanism) Scheme, 1993, as may be amended from time to time. 3. Terms and Conditions The detailed terms and conditions for the offer will be determined by the Board in consultation with Advisors, Lead Manager/ Book Runners, Underwriters and such other authority or authorities as may be required to be consulted by the Company considering the prevailing market conditions and other relevant factors. The issue/ allotment/ conversion would be subject to the availability of regulatory approvals, if any. The conversion of securities, held by foreign investors, into shares would be subject to the applicable foreign investment limits. The Special Resolution seeks to empower the Board and/or Committee authorized by the Board, to issue Securities in one or more tranche or tranches, at such time / times, and to such person(s) as the Board may in its absolute discretion deem fi t. Section 41, 42, 62 and 71 of the Companies Act, 2013 and the relevant clause of the Listing Agreement with the Stock Exchanges where the Equity Shares of the Company are listed provides, inter alia, that when it is proposed to increase the issued capital of a company by allotment of further shares, such further shares shall be offered to the existing shareholders of such company in the manner laid down in Section 62 unless the shareholders in a general meeting decide otherwise. Since the Special Resolution proposed in the business of the Notice results in the issue of shares of the Company otherwise than to the members of the Company, consent of the shareholders is being sought pursuant to the provisions of Section 41, 42, 62 and 71 and other applicable provisions of the Companies Act, 2013 and the Listing Agreement. The Special Resolution, if passed, will have the effect of allowing the Board and/or the Committee authorized by the Board to issue and allot Securities to the investors who may or may not be the existing shareholders of the Company and the Board and/or the Committee authorized by the Board will have the power to decide the date of opening of the Issue. The Directors or Key Managerial Personnel of the Company and their relatives, may be deemed to be concerned or interested in the above resolution only to the extent of shares held by them in the Company The Board of Directors recommend the special resolution for your approval. Item No. 6 The Members at their Extra Ordinary General Meeting held on 29th March 2014, had approved the appointment of Mr. Syed Abdi as Managing Directors and CEO of the Company on the terms and conditions, including remuneration payable to him subject to the Central Government Approval and the Company accordingly applied to the Central Government for the same which was duly accorded by the Central Government. In view of the performance of Mr. Abdi and his efforts towards the successful implementation of the CDR package and his contribution to strengthen the operations of the yards and overall control over the Company and to retain him for long term to utilize his enormous experience and expertise in the fi eld of restructuring and acquisitions, the Management,in the best interest of the company, has proposed upward revision of remuneration of Mr. Abdi from the date of his appointment, as tabled below and fi x the same as minimum remuneration in case of losses/ inadequate profi t, subject to the approval of the Shareholders, Monitoring Committee of CDR and the Central Government.
8 ABG Shipyard Limited Annual Report 2014-2015
The Nomination and Remuneration committee of the Board has considered the same and approved the revision in the remuneration of Mr. Abdi in its meeting held on 25thJuly, 2015 and the Board of Directors upon recommendation of the Nomination and Remuneration Committee has approved thesame at their Meeting held on 13th August 2015, subject to the approval of Shareholders and the Central Government. Taking into consideration the above and the terms of appointment and remuneration (including minimum remuneration) agreed with Managing Directors, it is proposed to obtain Members approval by way of Special Resolutions, as stated herein above, to the payment of minimum remuneration, where the Company has no profi ts or its profi ts are inadequate, to Mr. Syed Abdi for remaining tenure of his appointment,subject to the approval of the Shareholders, Monitoring Committee of CDR and the Central Government. Your Board of Directors in the interest of the Company have recommended the aforesaid resolutions as set out in this Notice for approval of the Members. None of the Directors or Key Managerial Personnel of the Company and their relatives, other than Mr. Syed Abdi, are concerned or interested, fi nancially or otherwise, in the resolutions set out at item nos. 7. The Board recommends the Special Resolutions as set out at item nos. 6 for approval of the Members. THE STATEMENT CONTAINING ADDITIONAL INFORMATION AS REQUIRED IN SCHEDULE V OF THE COMPANIES ACT, 2013 I. General Information: (1) Nature of industry ABG Shipyard Limited (ABGSL) was incorporated in the year 1985 as Magdalla Shipyard Pvt. Ltd. with the main objective of carrying out shipbuilding and ship repair activities. In a span of more than two decades, ABGSL has achieved the status of one of the largest private sector shipbuilding yard in India having customers across the world. ABGSL’s shipyards are located at Dahej and Surat, in the state of Gujarat. (2) Date or expected date of commencement of commercial production ABGSL was incorporated on March 15, 1985. The Company had since commenced its business. (3) In case of new Companies, expected date of commencement of activities as per project approvedby fi nancial institutions appearing in the prospectus - Not applicable. (4) Financial performance based on given indicators
` in Crores Particulars FY 2014-15 FY 2013-14 FY 2012-13 Gross Revenue 401.67 1665.41 2149.33 Profi t (Loss) for the period (897.70) (199.30) 107.13
(On standalone basis) Due to global economic downturn, the fi nance available to Shipping Industry is dried up. The global crisis has impacted the industry due to fall in commodity demand & prices and subsequent fall in cargo demand. The cancellation of contracts for few ships/vessels resulted in piling up of inventory. This has resulted in paucity of working capital and caused signifi cant increase in the operating cycle, thereby aggravating the liquidity problem & fi nancial problem. Due to the combination of all adverse economic factors, the fi nancial position of the Company has weakened and the Company has been facing problems in delivering the vessels. The Company has made a reference under the Corporate Debt Restructuring system (“CDR”) for restructuring its debts. CDR lenders shown their confi dence in working of the Company and, the CDR Empowered Group has approved a restructuring package in terms of which the existing fi nancial assistance provided by the existing lenders of the Company has been restructured. At present, the Company is working under the CDR Framework and working towards revival of its operations and to come out from the present situation. (5) Foreign investments or collaboration, if any - The Company has not entered into any material foreign collaboration and no direct capital investment has been made in the Company. Small Foreign investors are holding shares of the Company mainly on account of secondary market purchases. II. Information about the appointee: (1) Background details Mr. Syed Waheed Zafar Abdi (57 years) has done DMET (Marine Engineering Research Institute), Chief Engineer (August 1983), from Ministry of Transport, India. Mr. Abdi has 35 years of Management experience in Shipbuilding Industry. Mr. Abdi worked in senior capacities with various Ship building and Shipping Industry in India and abroad. His last assignment was Drydock World – Dubai as an Executive Director.
9 ABG Shipyard Limited Annual Report 2014-2015
(2) Past remuneration (last two years): (in `)
Particulars FY 2014-15 FY 2013-14* Salary 6,00,00 (P.M) 6,00,00 (P.M) Perquisites & Allowance 5,22,917 (P.M) 5,22,917 (P.M) Bonus 9,00,000 (P.A) 9,00,000 (P.A) Remunarations details for F.Y. 2013 - 14 are pertaining to appointment of Mr. Abdi in the Company w.e.f. 9th January 2014. The perquisites and allowances, as aforesaid, shall include accommodation (furnished or otherwise) and / or house rent allowance in lieu thereof, special allowance, medical reimbursement; leave travel concession for self and family including dependents,. The said perquisites and allowances shall be evaluated, wherever applicable, as per the provisions of Income Tax Act, 1961 or any rules there under or any statutory modifi cation(s) or re-enactment thereof; in the absence of any such Rules, perquisites and allowances shall be evaluated at actual cost. However, contribution to Provident Fund, Gratuity payable and encashment of Leave at the end of the tenure, as per the rules of the Company and to the extent not taxable under the Income Tax Law, shall not be included for the purpose of computation of the overall ceiling of remuneration. Further, employee stock options granted / to be granted, from time to time are not to be considered as perquisite and not to be included for the purpose of computation of the overall ceiling of remuneration.Includes leave encashment (3) Recognition or awards - Nil (4) Job profi le and his suitability Mr. Abdi possesses vast experience in Marine and Off shore industry`s Operations and in addition, enrich himself with various functional roles at marine industry particularly: a. Merger and Acquisition b. Restructuring, including Scheme of Arrangement c. Due Diligence d. Dispute Management e. Contracts and Claims Management f. Delay analysis g. Project Management and, h. Bankruptcy management After evaluating the experience possessed by Mr. Abdi in Marine and Off shoreindustry`s Operations as a Senior Management Personal in United Arab Emirates,South East Asia, Singapore and other part of world, the Company has suited the candidature of Mr. Abdi as Managing Director and Chief Executive Offi cer of theCompany. As Managing Director and Chief Executive Offi cer of ABG Shipyard Ltd., Mr. Abdi is responsible to develop a strategic plan to advance the Company`s mission and objective and to promote revenue, profi tability and growth as an Organization and to ensure effi ciency, quality, services and cost effective management of resources by overseeing the company operations. Subject to the supervision of the Board, he is overall responsible to develop and promote the business of the Company to cross border territory and identify acquisition and merger opportunity to expand its reach across the globe. He is also responsible to manage and conduct day to day business and affairs of the Company subject to control, direction and supervision of the Board of Director of the Company. He is responsible for all the assignments and duties, as may be assigned to him incapacity of MD & CEO by the Board from time to time. In view of the performance of Mr. Abdi and his efforts towards the successful implementation of the CDR package and his contribution to strengthen the operations of the yards and overall control over the Company and to retain him for long term to utilize his enormous experience and expertise in the fi eld of restructuring and acquisitions, the Management,in the best interest of the company, has proposed to revise the remuneration of Mr. Abdi from the date of his appointment, and fi x the same as minimum remuneration in case of losses/ inadequate profi t, subject to the approval of the Shareholders and the Central Government. (5) Remuneration proposed Mr. Syed Abdi shall be entitled to the remunerations including Salary, Perquisites, Allowances and Bonus as per the details mentioned in the resolutions. (6) Comparative remuneration profi le with respect to industry, size of the company, profi le of the position and person (in case of expatriates the relevant details wouldbe with respect to the country of his origin). The remuneration of the MD/CEO is commensurate with remuneration of expatriates appointed atCEO/MD levels of similar sized multinationals. The remuneration of the MD/CEO is commensurate withremuneration of Board level positions in similar sized domestic companies, taking into consideration the responsibilities shouldered by them.
10 ABG Shipyard Limited Annual Report 2014-2015
(7) Pecuniary relationship directly or indirectly withthe company, or relationship with the managerialpersonnel, if any. Besides the remuneration paid/payable to Mr. Syed Abdi,he does not have any other pecuniary relationshipwith the Company or with the managerial personnel. III. Other information: (1) Reasons of loss or inadequate profi ts The Performance of the Company has been adversely impacted due to the following reasons: i. The global crisis has impacted the shipping industry severely due to fall in commodity demand & prices and subsequent fall in cargo demand. The fall in freight rates has resulted in fall/cancellation in new ship/vessel orders impacting the company`s business. ii. Further, due to global economic downturn, the fi nances available to ship owners have also dried up. Due to global liquidity crunch and impact on shipping industry, banks have reduced fi nancing to the ship building business. iii. Lower demand of vessels resulted the Dahej Shipyard, which was built primarily for meeting the demand for Rigs and large size bulkers, has very low capacity utilization. iv. Ship Building Subsidy scheme introduced by the Government of India to survive Indian shipbuilding industry has come to an end for orders placed after August 2007, thereafter Govt. has not introduced any support to the industry, which adversely affected to competitive advantage of the Company to Asian Shipyard protected by their Government. (2) Steps taken or proposed to be taken for improvement In order to overcome the adverse fi nancial conditions, the Company made a reference under the corporate debt restructuring system (“CDR”) for restructuring its debts. Pursuant thereto, the CDR Empowered Group at the meeting held on 24th March 2014 approved a restructuring package in terms of which, the existing fi nancial assistance provided by the existing lenders of the Borrower as mentioned in the LOA (the “CDRLenders”) is to be restructured as set out in the letter of approval dated 27th March 2014 issued by the Corporate Debt Restructuring Cell to the Borrower and the CDR Lenders (the “LOA”). In this regard the Company has entered into a Master Restructuring Agreement with the CDR Lenders as on 28th March 2014. At present the Company is working under the CDR Framework and is working towards revival of its operations and to come out from the present situation. The key features of the CDR Package are elaborated at Point No 5 under the Directors’ Report forming part of this Annual Report. (3) Expected increase in productivity and profi ts in measurable terms. With the help of debt restructuring mechanism and positive economy, industry outlook, it is expected that the Company will overcome from negative fi nancial positions. The Government has taken several positive initiatives like “Ease of doing Business”, “Make in India” and changes in defence procurement policy to encourage Indigenization of defence and requirements including offset policy. These initiatives will open up a huge opportunity for Indian Shipbuilding Industry particularly for Private Shipyards. Details of the Directors seeking Appointment/ Re-appointment in the 30th Annual General Meeting
Name of Director Mr. Sushil Agarwal Mr. Ravi V. Nevatia Date of Birth 04/ 05/ 1959 25/ 12/ 1962 Date of Appointment / Re-appointment 18/ 05/ 2015 13/ 08/ 2015 Qualifi cation M.Com, M. Phil and MBA, CMA B.Com, FCA (erstwhile ICWA). Experience and Expertise in Specifi c functional area Wide experience and expertise in 27 years of experience in Statutory & the fi eld of Cost and Management Internal Audit, Tax Audits (Income tax, Accounting. Presently in Independent Service Tax and VAT), Stock Audit & Practice as a Cost and Management Advisory services. Accountant. Directorship held in other Companies NIL Western Indian Shipyard Limited Committee Positions held in other Companies NIL Audit Committee–Western India Shipyard No. of Shares held in ABG Shipyard Limited NIL NIL
11 ABG Shipyard Limited Annual Report 2014-2015
DIRECTORS’ REPORT TO THE MEMBERS, The Board of Directors of your Company are pleased to present the 30th Annual Report together with the Audited Accounts for the fi nancial year ended 31st March, 2015. 1. FINANCIAL PERFORMANCE Financial performance of the Company for Financial Year 2014-15 is summarised below: ( ` in crores)
Particulars 2014-15 2013-14 Sales and Other Income 401.67 1,665.41 Profi t / (Loss) before Interest, Depreciation & Tax (361.82) 370.33 Less: Interest (Net) 724.89 574.72 Profi t / (Loss) before Depreciation & Tax (1086.71) (204.39) Less: Depreciation 99.18 91.78 Profi t / (Loss) before Tax (1185.89) (296.17) Less: Provisions for Taxation (288.19) (96.87) Net Profi t / (Loss) after Tax (897.70) (199.30) * Figures regrouped wherever necessary. 2. FINANCIAL REVIEW: During the fi nancial year ended 31st March 2015, the Company reported revenue from operations of Rs 401.67 Crores and EBDIT of ` (361.82) Crores. Net loss after tax is Rs 897.70 Crores. The increase in fi nance cost and decrease in revenue has severely affected the performance of the Company. 3. DIVIDEND In view of the losses, your Directors do not recommend any dividend for the year under review. 4. SHARE CAPITAL During the year under review your company has allotted total 29,17,768 nos. of Equity Shares of face value of ` 10/- each at the price of ` 275.92/- and total 25,70,93,339 nos. 0.01% Compulsorily Convertible Preference Shares (CCPS) of face value of ` 10/- each at par, to the Corporate Debt Restructuring (CDR) Lender towards conversion of the Funded Interest Term Loan (FITL)/interest on FITL. As on 31st March 2015, total Authorised Capital was ` 17000 Crores divided into 1500 Crores Equity Shares of ` 10/- each and 200 crores CCPS of ` 10/- each. Total Paid Capital of the Company as on 31st March 2015 stood at ` 310,93,29,080/- divided into 5,38,39,569 equity shares of ` 10/- each and 25,70,93,339 CCPS of ` 10/- each. 5. BUSINESS OPERATIONS Shipyards of your Company are located at Surat and Dahej in Gujarat. Your Company is one of the India’s largest private sector shipyards. Your Company is in the Shipbuilding sector building the Specialized and Sophisticated vessels like Interceptor Boats, battle Practice Target, Cadet Training Ship, Self-Loading and Discharging Bulk Cement Carriers, Floating Cranes, Articouple Tugs and Flotilla, Split Barges, Bulk Carriers, Newsprint Carriers, Offshore Supply Vessels, Dynamic Positioning Ships, Anchor Handling Tug Supply Vessels, Multi-purpose Support Vessel, Diving Support Vessels, Pollution Control Vessel etc. for Government of India, leading companies in India and overseas. As of now your Company is working on three Cadet Training Ships for the Indian Navy. The manufacturing processes in the Shipyards are in line with world class standards and the Yards have been certifi ed by DNV for ISO 9001:2008 (for Quality Management Standards), by IRS for ISO 14001:2004 (for Environment Management Systems) and OHSAS 18001:2007 (for Occupational Health & Safety Management Systems). Your Company has recently delivered two Battle Practice Target Vessels to the Indian Navy. However, during the period under review, the Company was not in position to deliver any ship as the operations of the Company have come under strain. Due to global economic downturn, the fi nance available to Industry is dried up. The global crisis has impacted the shipping industry due to fall in commodity demand & prices and subsequent fall in cargo demand. The cancellation of contracts for few ships/vessels resulted in piling up of inventory. This has resulted in paucity of working capital and caused signifi cant increase in the operating cycle, thereby aggravating the liquidity problem & fi nancial problem. Due to the combination of all adverse economic factors, the fi nancial position of the company has weakened and the company has been facing problems in delivering the vessels.
12 ABG Shipyard Limited Annual Report 2014-2015
As you are aware that during the last year, your Company has undertaken a Debt Restructuring Exercise under the CDR mechanism governed by the Corporate Debt Restructuring Scheme issued by Reserve Bank of India dated August 27, 2008 and the Corporate Debt Restructuring Guidelines formulated thereunder in consultation with its senior secured lenders Pursuant thereto, the CDR Empowered Group at the meeting held on 24th March 2014 has approved a restructuring package in terms of which the existing fi nancial assistance provided by the existing lenders of the Borrower as mentioned in the LOA (the “CDR Lenders”) was restructured as set out in the letter of approval dated 27th March 2014 issued by the Corporate Debt Restructuring Cell to the Borrower and the CDR Lenders (the “LOA”) and in this regard the Company has entered into a Master Restructuring Agreement with the CDR Lenders (the “Master Restructuring Agreement”) as on 28th March 2014 as amended / modifi ed from time to time. The salient features of the CDR Package are as follows : a) Cut-off date - 01st August 2013; b) Total Debt rescheduled has funded interest ranging from 1 year 6 months to 3 years 7 months and loan is payable over a period of 10 years. c) Priority Debt sanctioned for meeting the immediate operational and capital requirement of the Company; d) Reduction in the rate of interest to 11% PA. e) Conversion of the FITL and further interest thereon into the Equity Shares/0.01% CCPS of the Company. Presently your company is working under the framework of CDR and working towards revival of its operations and to come out from the present situation. Disbursements of the Priority Debts by the CDR Lenders : The lenders have disbursed total ` 375.91 Crores, upto 31st March 2015, towards the Priority Debts as per the terms of the MRA for meeting the immediate operational and capital requirement of the Company. Issue of the Equity shares and CCPS to the CDR Lenders towards the conversion of the FITL and further interest thereon – Till 31st March 2015, FITL/Interest on FITL amounting to ` 337.60 Crs has been converted into the Equity shares and CCPS of the Company. 6. SUBSIDIARIES At the end of the fi nancial year 2014-15, your Company has three (3) subsidiaries i.e. Western India Shipyard Limited (a BSE listed Company), ABG Shipyard Singapore Pte. Limited (Singapore based Wholly Owned Subsidiary) and ABG FPSO Private Limited. In accordance with the Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India (ICAI) on Consolidated Financial Statements, the Consolidated Financial Statements excluding the consolidation of fi nancials of one subsidiary i.e. Western India Shipyard Limited (WISL) are forming part of this Annual Report. The Consolidated Financial Statements have been prepared in line with the provisions of Clause 32 of the Listing Agreement. The Company has placed the Standalone fi nancials along with the consolidated Financial Statements without consolidation of one subsidiary i.e. Western India Shipyard Limited to the auditors for their report thereon at the Board Meeting of the Company held on 14th August 2015 whereas the Audited Financial Results of the Subsidiary Western India Shipyard Limited were not approved and adopted till the date of Board Meeting of your Company, by the WISL due to unavoidable circumstances at the Yard. Subsequently, WISL has approved and adopted its Financials for FY ended 2014-15 of your Company result due to unpaid at its Board Meeting dated 30th June 2015, therefore, your Company couldn’t consolidate the fi nancials of the WISL and provide the audited Consolidated Financial Statement including the WISL. A report containing the silent features of the Financial performance of the Subsidiaries, in specifi ed Form AOC – 1 is annexed to this report as “Annexure A” able reason therefore. Abridged unaudited consolidated fi nancial statement including the fi nancials of the WISL is attached at the end of this Annual Report. 7. DIRECTORS AND KEY MANAGERIAL PERSONS In terms of the Section 152 and 160 of the Companies Act, 2013 read with Article 190 of the Articles of Association of the Company, Mr. Dhananjay Datar is liable to retire by rotation at the ensuing Annual General Meeting. During the period under review, Mr. Ashok Chitnis – Independent Director of the Company has resigned from the Company w.e.f. 17th February 2015, due to health issues. Further, Export Import Bank of India (EXIM) has nominated Mr. David Rasquinha as Nominee Director on the Board of the Company w.e.f. 30th May, 2014 which was subsequently withdrawn on 17th October, 2014. Further, IDBI Bank Ltd has nominated Mrs. Ranjitha Godbole in place of Mr. Aloke Sengupta on the Board of the Company as on 14th November 2014. The Company has appointed Mr. Hasmukh Daftary - Chief Financial Offi cer on 17th December 2014 who was subsequently appointed as Key Managerial Person in terms of the Section 203 of the Companies Act, 2013 w.e.f. 17th February 2015. Mr. Sunil Agarwal Company Secretary of the Company resigned from the Company w.e.f. 13th February 2015 and the Board appointed
13 ABG Shipyard Limited Annual Report 2014-2015
Mr. Nimesh S. Shah as the Company Secretary in terms of the Section 203 of the Companies Act, 2013, w.e.f. 17th February 2015 who subsequently tendered resignation w.e.f. 29th April, 2015. The Board has appointed Mr. Dheeraj Sharma as the Company Secretary of the Company w.e.f. 1st May 2015 in terms of Section 203 of the Companies Act, 2013. As per section 149 of the Companies Act, 2013 (Act), which came into effect from April 1, 2014, every listed public company is required to have at least one-third of the total number of directors as Independent Directors In line with the compliance of the Section 149 and Listing Agreement, Your Company has appointed Mr. Sushil Agarwal and Mr. Ravi Nevatia as Additional Independent Directors of the Company, on 18th May, 2015 and 13th August, 2015 respectively, who will hold the offi ce till the ensuing Annual General Meeting. The company has received notice from the members proposing the appointment of Mr. Sushil Agarwal and Mr. Ravi Nevatia as the Independent Directors of the Company in terms of the Section 149 read with 152 of the Companies Act, 2013. It is proposed to appoint Mr. Sushil Agarwal and Mr. Ravi Nevatia as Independent Directors, in accordance with the provisions of section 149 of the Act, to hold offi ce as per their tenure of appointment mentioned in the Notice of the Annual General Meeting of the Company. The Company has received declarations from the said Independent Directors of the Company confi rming that they meet the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under the said Clause 49. A brief resume of the Directors being appointed at the ensuing AGM, nature of expertise in specifi c functional areas and names of the Companies in which he holds directorship and/ or membership/ chairmanships of Committees of the respective Boards, shareholding and relationship between Directors inter se as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is given in the notice of Annual General Meeting forming part of this Annual Report. None of these directors is disqualifi ed as per the provisions of Section 164 of the Companies Act, 2013, to be re-appointed as directors of your Company. 8. DIRECTORS’ RESPONSBILITY STATEMENT Your Directors, pursuant to Section 134(3)(c) of the Companies Act, 2013 confi rm that: I. In the preparation of the annual accounts, the applicable accounting standards have been followed. II. The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the profi t or loss of the Company for the year under review. III. The directors have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities. IV. The directors have prepared the annual accounts on a going concern basis. V. The directors had laid down internal fi nancial controls to be followed by the company and that such internal fi nancial controls are adequate and were operating effectively. VI. The directors had devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. 9. NUMBER OF MEETINGS OF THE BOARD There were four meetings of the Board of Directors of your Company during the year. Details of the meetings are elaborated in the Corporate Governance section of this report. 10. DECLARATION OF INDEPENDENCY: All Independent Directors have given declarations that they meet the criteria of independence as laid down under section 149 (6) of the Companies Act, 2013 and clause 49 of the Listing Agreement. 11. SEPARATE INDEPENDENT DIRECTORS’ MEETINGS The Independent Directors meet at least once in a half year, without the presence of Executive Directors or Management representatives. They also have a separate meeting with the Non-Executive Chairman, to discuss issues and concerns, if any. The Independent Directors met twice on 14th August, 2014 and 17th February, 2015 during the Financial Year ended 31st March, 2015. 12. FAMILIARIZATION PROGRAMME FOR INDEPENDENT DIRECTORS The Company proactively keeps its Directors informed of the activities of the Company, its management and operations and provides an overall industry perspective as well as issues being faced by the industry. The details of the same is available on the website of the Company www.abgindia.com
14 ABG Shipyard Limited Annual Report 2014-2015
13. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEE AND THE DIRECTORS In compliance with the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the performance evaluation of the Board was carried out during the year under review. More details on the same are given in the Report on Corporate Governance. 14. POLICY ON DIRECTORS APPOINTMENT AND THEIR REMUNERATION The Board has, on the recommendation of the Nomination and Remuneration Committee, framed policy for selection and appointment of Directors, Senior Management and their Remuneration. More details on the same are given in the Report on Corporate Governance. 15. MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis Report elaborating detailed Industry Review and Outlook for the year under review as stipulated under Clause 49 of the listing agreement is presented in a separate section forming part of this Report as “Annexure B”. 16. AUDITORS Statutory Audit: M/s. Nisar & Kumar, Chartered Accountants, Statutory Auditors of the Company has been appointed at the last AGM till conclusion of the 32nd AGM subject to ratifi cation by the Shareholders at every general meeting. Your Directors propose the ratifi cation of the appointment of the M/s. Nisar & Kumar, Chartered Accountants, Statutory Auditors of the Company from the conclusion of this AGM to conclusion of the 32nd AGM. The auditors have qualifi ed their opinion on non-charging of interest on loans given to certain related and other parties. The management is of the view that considering the relationship of the company with these parties charging of interest is not expedient. Secretarial Audit: Pursuant to provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed Mrs. Kala Agarwal, a fi rm of company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit report, in Form MR-3, is annexed herewith as “Annexure C” The report does not contain any qualifi cation save and except the composition of the Board in accordance with the provisions of the clause 49 of the Listing Agreement and delay / default in fi ling of several forms with the Registrar of Companies till 31st March 2015. In line of the above the Company has appointed two Independent Directors on the Board of the Company and improved the manner and process for fi ling of forms with the Registrar of Companies. 17. ISSUE OF SECURITIES In order to strengthen the Balance Sheet of the Company by repayment of its debt and for general corporate purposes, the Company proposes to raise long term capital by issue of further securities including but not limited to Convertible Bonds, Preference Shares, Equity Shares and other securities whether convertible or not, etc., upto ` 2,000/-Crs (Rupees Two Thousand Crores). Accordingly the enabling resolution mentioned in the Notice of meeting is commended for your approval. 18. EXTRACT OF ANNUAL RETURN: The extract of the annual return as provided under sub-section (3) of section 92 –in prescribed Form MGT-9 is forming part of this report as “Annexure D” 19. DEPOSITS/FIXED DEPOSITS The Company has not accepted deposits by way of invitation to the public and therefore, provisions of Section 73 of the Companies Act, 2013 are not applicable to the Company. 20. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FORIEGN EXCHANGE EARNINGS AND OUTGO Information required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, with respect to conservation of energy, technology absorption and foreign exchange earnings/outgo is included in “Annexure E”. 21. CORPORATE GOVERNANCE ABG consistently emphasises its commitment towards a healthy corporate governance policy and adherence of the same that defi nes and drives organisation performance as per its cherished values and commitments to every stakeholder. A detailed report on compliance of Corporate Governance in terms of Clause 49 of the Listing Agreement is presented in a separate section forming part of this Report as “Annexure F”.
15 ABG Shipyard Limited Annual Report 2014-2015
The Statutory Auditors’ certifi cate on compliance with Corporate Governance by the Company is attached to the report on Corporate Governance. 22. PARTICULARS OF LOAN, GUARANTEE OR INVESTMENT: Particulars of the outstanding loans or guarantees covered under the provisions of Section 186 of the Act as on March 31, 2015 have been elaborated in note no. 37 to the Financial Statements. During the Financial Year 2014-15, the Company has not given any Guarantee/Loan or provided any Security under the provisions of Section 186 of the Companies Act, 2013. 23. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule, 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees’ particulars which is available for inspection by the Members at the Registered Offi ce of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard. 24. PREVENTION OF INSIDER TRADING The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading in securities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company’s shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All the Directors and the designated employees have confi rmed compliance with the Code. 25. INDUSTRIAL RELATIONS Your Company maintained healthy, and cordial industrial relations at all levels at the offi ces and yards of the Company throughout the year. 26. CORPORATE SOCIAL RESPONSIBILITY In compliance with the requirement of the Companies Act, 2013, the Company has constituted a Corporate Social Responsibility (CSR) Committee. A report on CSR Activities of the Company is attached with this Directors’ Report as “Annexure G”. The CSR Policy adopted by the Board of Directors is available on the Company’s website www.abgindia.com. 27. NOMINATION AND REMUNERATION POLICY The Board of Directors of the Company have Nomination and Remuneration Committee in line with the provisions of the Companies Act, 2013 and the Listing Agreement. The Board has placed the Nomination and Remuneration Policy in terms of Section 178 of the Companies Act, 2013. Composition of the Nomination and Remuneration Committee are elaborated in the Corporate Governance Report annexed to this Report. 28. WHISTLE BLOWER POLICY/VIGIL MECHANISM The Company has adopted a Whistle Blower Policy/Vigil Mechanism and has established the necessary vigil mechanism in line with sub clause II - F of clause 49 of the Listing Agreement with the Stock Exchanges as notifi ed by SEBI Circular dated April 17, 2014 and Section 177 (9) of the Companies Act, 2013, for the directors and employees to report concerns about unethical behaviour. No person has been denied access to the Audit Committee. However, no instances of fraud or other irregularities have been observed, which need to be reported to the Board/Audit Committee. 29. RISK MANAGEMENT POLICY The Board of Directors has constituted a Risk Management Committee and has devised a mechanism for risk management. The Risk Management Committee will work towards assessment of the risks in the operation of yards, identifying internal and external risks and implementing risk mitigation steps. The Company has developed a Risk Management Policy which will assist the Board through the Risk Management Committee to supervise the risk management system, process and procedure of the Company. Composition of the Risk Management Committee and Terms of reference thereof is described in the Corporate Governance Report annexed to this Report.
16 ABG Shipyard Limited Annual Report 2014-2015
30. PREVENTION OF SEXUAL HARASSMENT POLICY The Company has devised and implemented a policy on Prevention of Sexual Harassment, in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy. During the year under review, no complaints were received by the Company related to sexual harassment. 31. APPRECIATION Your Directors wish to extend their sincere gratitude to all the Customers, Suppliers, Bankers, Financial Institutions, Trustees, Government Authorities/Offi cials, Business Associates, Shareholders and Debenture Holders of the Company for their continuous guidance and support to the Company and their continued confi dence in the management of the Company. Further, the Company and its Board of Directors wish to express admiration and acknowledge the understanding, support and services of the employees at all levels which have largely contributed to effi cient operations and management of the Company during the year under review and make the Company confi dent to come out from the tough business span of the Company.
Place: Mumbai For and on behalf of the Board th Date: 13 August 2015 Syed Abdi S. Muthuswamy Managing Director & CEO Executive Director
17 ABG Shipyard Limited Annual Report 2014-2015
Annexure - A to Directors’ Report Form AOC-1 (Pursuant to fi rst proviso to sub-section (3) of section 129 read with rule 5 of Companies (Accounts) Rules, 2014) Statement containing salient features of the fi nancial statement of subsidiaries/associate companies/joint ventures Part “A”: Subsidiaries Rs. In Crores
Sl. No. Particulars Details 1 Name of the subsidiary ABG Shipyard ABG FPSO Pvt. Western India Singapore Pte. Ltd. Ltd. Shipyard Ltd 2. Reporting period for the subsidiary concerned, if NA NA NA different from the holding company’s reporting period 3. Reporting currency and Exchange rate as on the Reporting Currency- NA NA last date of the relevant Financial year in the case of USD foreign subsidiaries Exchange rate 1USD = `62.64 4. Share capital 18.82 0.01 58.93 5. Reserves & surplus 240.21 (3.81) (112.18) 6. Total assets 416.90 9.57 190.56 7. Total Liabilities 416.90 9.57 190.56 8. Investments 272.26 - 0.05 9. Turnover - 58.19 28.24 10. Profi t before taxation (0.03) 0.62 (34.78) 11. Provision for taxation 0.80 2.98 (0.12) 12. Profi t after taxation 0.83 (2.36) (34.66) 13. Proposed Dividend NA NA NA 14. % of shareholding 100% 100% 53.14
Part “B”: Associates and Joint Ventures Statement pursuant to Section 129 (3) of the Companies Act, 2013 related to Associate Companies and Joint Ventures
Name of associates/Joint Ventures NA 1. Latest audited Balance Sheet Date NA 2. Shares of Associate/Joint Ventures held by the company on the NA year end No. NA Amount of Investment in Associates/Joint Venture NA Extend of Holding% NA 3. Description of how there is signifi cant infl uence NA 4. Reason why the associate/joint venture is not consolidated NA 5. Net worth attributable to shareholding as per latest audited NA Balance Sheet
6. Profi t/Loss for the year NA i. Considered in Consolidation NA ii. Not Considered in Consolidation NA
18 ABG Shipyard Limited Annual Report 2014-2015
Annexure - B to Directors’ Report MANAGEMENT DISCUSSION AND ANALYSIS REPORT INDUSTRY OVERVIEW AND OUTLOOK Global shipbuilding industry is passing through a very diffi cult phase. Recent reports indicate that world’s top three shipbuilders (Hyundai, Daewoo and Samsung) posted a combined US$ 4.1 Bn. loss in the period of January – June 2015. Mounting losses at vessel makers are the latest example of diffi culties for the Global shipbuilding industry after a glut of vessel and depressed freight rates. There is fi erce competition that has led to unreasonable low prices to win orders Crude oil prices also collapsed 60% from June 2014 to March 2015 damping demand for drilling rigs. India’s Shipbuilding Industry also suffered huge losses during the year for the above factors However, the Government has taken several positive initiatives like “Ease of doing Business”, “Make in India” and changes in defence procurement policy to encourage Indigenization of defence and requirements including offset policy. These initiatives will open up a huge opportunity for Indian Shipbuilding Industry particularly for private shipyards as public sector Shipyards have their order books full for next several years. The shipbuilding industry, has a huge role to play in the economic development of a country. In the Indian context, demand for shipbuilding originates both from the commercial and government sectors It is highly capital and labour intensive in nature and has a huge potential to generate employment. The global shipbuilding industry is worth approximately ` 73.00 tn ($1.3tn) with India accounting less than 1% of it, according to the study titled ‘Shipbuilding Industry in India: An overview’ With about an 8,000 kilometer long coastline there are about 27 shipyards, 12 major ports and 200 ports under states jurisdiction in India. Approximately 90% of the country’s trade by volume and 70% by value are moved through Maritime Transport. There is huge scope for development of the shipping sector. However, the country’s opportunities in the maritime business have not been fully utilized. Liquefi ed Natural Gas market is growing at a compounded annual growth rate (CAGR) of 2.8% from 2013 and will extend up to 2019 when total market value will rise to US$196.4 mn from $161.4 mn in 2012, according to a new report titled “Liquefi ed Natural Gas Market: Global Industry Analysis, size, share, growth, trends and forecast, 2013-19. More over GAIL has received a directive from the ministry to consider building LNG Ships at indigenous yards promoting shipbuilding industry here. In the past two years, three of India’s private yards—ABG Shipyard, Bharati Shipyard and Pipavav Defence and Offshore—had to opt for Corporate Debt Restructuring (CDR) with a consortium of banks as tardy cash fl ows and a lack of new orders strained their ability to repay loans. The following positive pronouncements by Indian leaders auger well for the future of Indian Shipbuilding Industry: “India offers immense potential for the shipbuilding industry,” PM Modi said at the inauguration of General Electric Co.’s multi-modal manufacturing facility at Chakan, Pune, on 14 February 2015. “As part of the ‘Make in India’ initiative, ship-designing capabilities, ship building and ship repair activities will be strengthened,” President Pranab Mukherjee said in his address to the joint session of both Houses of Parliament. “Shipbuilding is a very vast sector. We have young people, skilled manpower who can be easily mobilized. Shipbuilding is also not about technology. Turner, fi tter, welder also are involved in shipbuilding. The poorest of the poor gets employment,” Modi said on 16th August 2014 during the foundation stone ceremony for an SEZ and road connectivity project at the Jawaharlal Nehru Port Trust near Mumbai. “India’s contribution to global shipbuilding has been very low. South Korea, a very small country, smaller than the state of Maharashtra, today alone has a 40% share of global shipbuilding. We want to encourage shipbuilding,” Modi said. Elaborating on his theme of ‘Come, make in India’, which he mentioned during his Independence Day address last year, the Prime Minister said his government will encourage foreign investment in shipbuilding. OPPORTUNITIES & THREATS India has a potential to garner a larger share in the global shipbuilding market. However, the Indian yards are yet to achieve the critical scale to overcome the disadvantages compared to other competing nations. Hence, Government support is essential for India to realize its shipbuilding potential and enjoy the consequent benefi ts to the economy. In order to protect the domestic Ship Building Industry, the Shipping Ministry has initiated discussions with fi nancial institutions to extend low-cost loans to shipbuilders The Ship Building Development Fund will form a key part of a policy being drafted by the Shipping Ministry to promote local shipbuilding. Features of the policy could include granting Special Economic Zone (SEZ) status to Shipyards and declaring it as a strategic sector with attendant fi scal incentives. Indian shipyards are outbid by Chinese and Korean shipyards due to cost differentials arising from lack of support for the industry in India. The key factors which are driving growth in the offshore support vessel market are global oil & gas demand, growing exploration and production activities and increase in the number or offshore platforms. Offshore support vessel is a moderately developing
19 ABG Shipyard Limited Annual Report 2014-2015
market with no other substitutes available currently which makes it backbone of offshore industry. Consequently, the market is expected to have steady growth rate in future. Growing demand of oil & gas and other offshore activities with increasing investment in modernization of infrastructure of oil platform and wells is expected to drive the offshore support vessel market. It is estimated to reach $91,228.8 million by 2018, with a CAGR of 5.7% from 2013 to 2018. The Indian Defence industry is one of the fastest-growing global Defence markets. India’s Defence capital expenditure, which refers to the part of the Defence budget that is spent on the acquisition of all types of military hardware and technology, has grown at a CAGR of 12.25% over the period. The strong growth in the industry is attracting foreign original equipment manufacturers (OEMs) and leading companies from the domestic private sector to enter the market. Shipbuilding is an unusual industry as 65 percent of value addition during building of ships comes from other industries. Also, shipbuilding is a labor intensive industry. As an estimate, about 750 workers working for a year are required to build a 30,000 DWT vessel in India. Low cost of labour, world class engineers, availability of skilled workforce together with robust demand in the domestic market and a growing steel industry are certain factors that build up a strong case for shipbuilding sector in India. The growth of the domestic shipbuilding sector, which today imports about 45 percent of its input requirements, can provide a major trigger for large-scale indigenization of heavy engineering products and ancillaries. Heavy engineering industry is integrated with various core sectors for its demand. The demand is derived primarily from capacity creations in sectors like infrastructure and general manufacturing including process industries. Being an intermediate industry, its demand depends on end-user industries. However, as the end-user industry mix is fairly diverse, it is necessary to generate long-term sustainable growth drivers for heavy engineering segment, in order to expand the manufacturing base and enhance overall manufacturing competitiveness. Shipbuilding industry can play the role of mother industry to heavy engineering, similar to the critical role essayed by auto manufacturing in case of light engineering. In addition, a healthy shipbuilding industry is also likely to attract ship repair business. Ship repair is even more labor intensive and profi table than shipbuilding. India, with its labor advantage and its ideal position on international trade route, is well placed to wrest this business from competitors, once the shipbuilding industry is developed. This can create additional revenue and employment opportunities with marginal increase in investment. Finally, a booming domestic shipbuilding industry would also provide the much needed domestic capability which can be accessed for future needs of the Navy and Coast Guard and help realize the goal of indigenization in defence production. RISK AND CONCERNS The shipbuilding industry is facing a series of challenges after the unprecedented ramp up of capacity in the past ten years. These include: • overcapacity and lower realisation • lower order volumes and utilization changing product mix • fi nancing of new orders • changing ship economics, ship design and regulations • Reduction in crude oil price Financing Costs: Financing costs assume greater signifi cance in shipbuilding due to its special requirements. Major shipbuilding countries have created supportive mechanisms to ease the burden of these costs. Indian shipyards, with no such direct support, face additional costs on account of fi nancing. Bank Guarantees Shipyards are required to provide bank guarantees to protect the ship buyer. These guarantees comprise performance guarantee (for timely delivery), refund guarantee (for stage payments) and post-construction guarantee (towards defects). In China ,the government provides sovereign refund guarantees for certain class of vessels, thus removing any related burden on the shipyard. In Korea , shipyard fi nancing has matured and the evolved mechanisms drive the cost lower. However, in India, there is no support from the Government to reduce the cost as in the case of Korea. Indian shipyards currently pay interest of 13-14% on capital expenditure and working capital loans for purchasing raw materials and other inputs against 4-6% in countries such as China and South Korea. The differential interest cost imposes a signifi cant cost burden on Indian built ships. Indian shipyards are outbid by Chinese and Korean shipyards due to cost differentials arising from the lack of support for the industry in India, said a spokesperson for the Shipyards Association of India. “On the other hand, foreign shipyards benefi t from direct fi scal and non-fi scal support from their respective governments,” he said. “Korea, China and Japan have pursued a mix of fi scal and non-fi scal incentives for encouraging growth and development of their shipbuilding industry. Shipbuilding is a capital intensive industry with a ‘sell fi rst, build later’ model where buyers pay a small percentage of the price of the ship upfront. This requires shipbuilders to invest substantial capital in executing orders Availability of loans at a low cost is a signifi cant support provided by most shipbuilding countries to their yards,”. The nodal responsibility of the entire Shipbuilding and Ship-repair Industry vests with the Ministry of Shipping. The Ministry of
20 ABG Shipyard Limited Annual Report 2014-2015
Shipping encompasses within its fold shipping and port sectors which also include shipbuilding and ship repair, major ports and inland water transport. Thus risks arising from political instability as well as changes in government policy would be a cause of concern. In spite of the deterring factors, India has secured its position among the countries that build its own warships and submarines. The Indian shipbuilding industry has already touched a three fi gure capacity but the room for improvement is still huge as evident from the fact that in spite of our achievements in shipbuilding, we still lag signifi cantly behind the countries with their own shipbuilding industries. INTERNAL CONTROL SYSTEM The Company has in place an adequate system of internal control commensurate with its size and nature of its business and ensures proper safeguarding of assets, maintaining proper accounting records and providing reliable fi nancial statements. The Company has an internal audit system supported by external consultants to help the Company to strengthen the internal audit and risk management functions. The fi nance and accounts functions of the Company are well staffed with qualifi ed and experienced professionals. The Company’s effective control system is supported by an Enterprise Resources Planning (ERP) platform i.e. SAP for its main business processes. The Audit committee and the management have reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same. HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS The Company recognizes the Human Resources as its most important assets and is constantly engaged in enriching the value and developing competencies of Human Resources through various development strategies. The relationship between the management and the employees is very cordial and there are no outstanding industrial disputes. The management also has well laid down HR Policies for its employees. Welfare and health & safety of employees are high priority areas. INTELLECTUAL PROPERTY RIGHTS Innovation is an on-going process in the Company. It is the endeavor of Company to encourage inventions of new products and processes in order to increase IP Assets of the Company. The Company has developed an effective internal system to protect its Intellectual Property Rights. CAUTIONARY STATEMENT The report may contain certain statements that the Company believes are, or may be considered to be “forward looking statements” that describe our objectives, plans or goals. All these forward looking statements are subject to certain risks and uncertainties, including but not limited to, government action, economic development and risks inherent in the Company’s growth strategy and other factors that could cause the actual results to differ materially from those contemplated by the relevant forward looking statements.
21 ABG Shipyard Limited Annual Report 2014-2015
Annexure - C to Directors’ Report SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED ON 31ST March, 2015 [Pursuant to section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]
To, The Members, ABG SHIPYARD LTD. We have conducted the secretarial audit of the compliance of applicable statutory provisions and adherence to good corporate practices by M/s ABG SHIPYARD LTD (hereinafter called “the Company”). Secretarial Audit was conducted in a manner that provided us a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon. Based on our verifi cation of M/s ABG SHIPYARD LTD’s books, papers, minute books, forms and returns are fi led and other records are maintained by the company and also the information provided by the Company, its offi cers, agents and authorized representatives during the conduct of secretarial audit, we hereby report that in our opinion, the Company has, during the audit period covering the fi nancial year ended on 31st March, 2015, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter: We have examined the books, papers, minute books, forms and returns fi led and other records maintained by “the Company” for the fi nancial year ended on 31st March, 2015, according to the provisions of: (i) The Companies Act, 2013 (the Act) and the rules made thereunder: (ii) The Securities Contracts (Regulation) Act, 1956 (‘SCRA) and the rules made thereunder; (iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder; (iv) Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings; (v) The Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (‘SEBI Act’) viz.:- (a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011; (b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations,2015; (c) The Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2009; including Amendments thereof. (d) The Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999; (e) The Securities and Exchange Board of India (Issue and Listing of Debt Securities) Regulations. 2008; (f) The Securities and Exchange Board of India (Registrars to an Issue and Share Transfer Agents) Regulations, 1993 regarding the Companies Act and dealing with client; (g) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009: and (h) The Securities and Exchange Board of India (Buyback of Securities) Regulations, 1998; (vi) Other laws as may be applicable specifi cally to the company as identifi ed by the management, that is to say: (a) Factories Act, 1948 (b) Industrial Disputes Act, 1947 (c) Payment of Wages Act, 1936 (d) The Minimum Wages Act, 1948
22 ABG Shipyard Limited Annual Report 2014-2015
(e) Employees’ State Insurance Act, 1948 (f) The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 (g) The Payment of Bonus Act, 1965 (h) Payment of Gratuity Act, 1972 (i) The Contract Labour (Regulation and Abolition) Act, 1970 (j) The Maternity Benefi t Act, 1961 (k) The Child Labour (Prohibition and Regulation) Act, 1986 (l) The Industrial Employment (Standing Orders) Act, 1946 (m) The Employees’ Compensation Act, 1923 (earlier known as Workmen’s Compensation Act, 1923) (n) Equal Remuneration Act, 1976 (o) The Employment Exchange (Compulsory Notifi cation of Vacancies) Act, 1956 (p) The Environment (Protection) Act. 1986 (q) The Hazardous Wastes (Management, Handling And Transboundary Movement) Rules, 2008 (r) The Water (Prevention & Control of Pollution) Act, 1974, [Read with Water (Prevention & Control of Pollution) Rules, 1975) (s) The Air (Prevention & Control of Pollution) Act, 1981, [Read with the Air (Prevention & Control of Pollution) Rules, 1982 (t) Customs Act, 1962 (u) Gratuity Act, 1972 (v) Gujarat Maritime Board Act-1981 (w) Indian Ports Act 1908 We have also examined compliance with the applicable clauses of the following: (i) Secretarial Standards issued by The Institute of Company Secretaries of India. (ii) The Listing Agreements entered into by the Company with Bombay Stock Exchange (BSE) & National Stock Exchange (NSE). During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above except to the extent as mentioned below: 1. Companies Act, 2013: The company has failed/delayed in fi ling several Forms with registrar of Companies during the period under review. 2. Listing Agreement: i. The Company has not met the criteria to appoint at least one-half of the Board of the Company as Independent Directors as required under Clause 49 (IA) of Listing Agreement during the audit period under review. ii. Mr. Ashok Chitnis, Independent Director of the Company has resigned on 17th February, 2015, however no other Independent Director was appointed in his placeas required under Clause 49 (IID) of the Listing Agreement till 31st March 2015. iii. Due to resignation of Mr. Ashok Chitnis, Independent Director, the Company was not in compliance with the adequate Composition of Audit Committee as well as Nomination and Remuneration Committee as on 31st March 2015. We further report that, the Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non- Executive Directors and Independent Directors The changes in the composition of the Board of Directors that took place during the period under review were carried out in compliance with the provisions of the Act, except our observations mentioned above. Adequate notice is given to all directors to schedule the board meetings, agenda and detailed notes on agenda were sent at least seven days in advance, and a system exists for seeking and obtaining further information and clarifi cations on the agenda items before the meeting and for meaningful participation at the meeting.
23 ABG Shipyard Limited Annual Report 2014-2015
We further report that there are adequate systems and processes in the company commensurate with the size and operations of the company to monitor and ensure compliance with applicable laws, rules, regulations and guidelines. We further report that during the audit period the company has following events / actions having a major bearing on the company’s affairs in pursuance of the above referred laws, rules, regulations, guidelines, standards, etc. referred to above.
1) During the Year under review the Company has allotted total 29,17,768 nos. of Equity shares of face value of ` 10/- each at the price of ` 275.92/- and total 25,70,93,339 nos. 0.01% Compulsorily Convertible Preference Shares (CCPS) of face value of ` 10/- each at par, to the Corporate Debt Restructuring (CDR) Lender towards conversion of the Funded Interest Term Loan (FITL)/ interest on FITL..
Kala Agarwal Place : Mumbai Practising Company Secretary Date : 13th August, 2015 FCS No.: 5976
Note: This report is to be read with our letter of even date which is annexed as ‘Annexure 1’ and forms an integral part of this report.
To, ‘Annexure 1’ The Members, ABG SHIPYARD LTD. Magdala Village off Dumas Road, Surat- 395007, Gujarat. Our report of even date is to be read along with this letter. 1. Maintenance of secretarial record is the responsibility of the management of the company. Our responsibility is to express an opinion on these secretarial records based on our audit. 2. We have followed the audit practices and processes as were appropriate to obtain reasonable assurance about the correctness of the contents of the Secretarial records. The verifi cation was done on test basis to ensure that correct facts are refl ected in secretarial records. We believe that the processes and practices, we followed provide a reasonable basis for our opinion. 3. We have not verifi ed the correctness and appropriateness of fi nancial records and Books of Accounts of the company. 4. Where ever required, we have obtained the Management representation about the compliance of laws, rules and regulations and happening of events etc. 5. The compliance of the provisions of Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. Our examination was limited to the verifi cation of procedures on test basis. 6. The Secretarial Audit report is neither an assurance as to the future viability of the company nor of the effi cacy or effectiveness with which the management has conducted the affairs of the company.
Kala Agarwal Place : Mumbai Practising Company Secretary Date : 13th August, 2015 FCS No.: 5976
24 ABG Shipyard Limited Annual Report 2014-2015
Annexure - D to Directors’ Report FORM NO. MGT 9 EXTRACT OF ANNUAL RETURN As on fi nancial year ended on 31st March 2015. Pursuant to Section 92 (3) of the Companies Act, 2013 and rule 12(1) of the Company (Management & Administration) Rules, 2014.
I. REGISTRATION & OTHER DETAILS: 1 CIN L61200GJ1985PLC007730 2 Registration Date 03/15/1985 3 Name of the Company ABG Shipyard Ltd 4 Category/Sub-category of the Company Public Company 5 Address of the Registered offi ce & contact details Magdala Village, Off Dumas Road, Surat, Gujarat - 395007. Tel. 0261 2725191 6 Whether listed company Listed 7 Name, Address & contact details of the Registrar & Transfer Link Intime India Private Ltd. C-13, Pannalal Silk Mills Agent, if any. Compound, L.B.S. Marg, Bhandup West, Mumbai - 400078
II. PRINCIPAL BUSINESS ACTIVITIES OF THE COMPANY (All the business activities contributing 10 % or more of the total turnover of the company shall be stated) S. No. Name and Description of main products / services NIC Code of the % to total turnover Product/service of the company 1. Building of Ships and Floating structures 3011 100.00%
III. PARTICULARS OF HOLDING, SUBSIDIARY AND ASSOCIATE COMPANIES S. Name and address of the Holding/ “% of “Applicable No. Company CIN/GLN Subsidiary/ shares Section” Associate held” 1 ABG International Private Limited U99999MH1993PTC073745 Holding 57.97% 2(46) Bhupati Chambers,13, Mathew Road, Opera House, Mumbai 400 004.. 2 Western India Shipyard Limited P B No 21, Mormugao Harbour, L35111GA1992PLC002464 Subsidiary 59.21% 2(87)(ii) Mormugao, Goa - 403803 3 ABG Shipyard Singapore Pte. Wholly Owned Ltd. 371, Beach Road, #22-01, NA Subsidiary 100% 2(87)(ii) Keypoint Singapore (199597) 4 ABG FPSO Private Limited 5Th Floor, Bhupati Chambers, U11100MH2012PTC225894 Subsidiary 100% 2(87)(ii) 13 Mathew Road, Mumbai - 400004
25 ABG Shipyard Limited Annual Report 2014-2015
IV. SHARE HOLDING PATTERN (Equity share capital breakup as percentage of total equity) (i) Category-wise Share Holding Category of Shareholders “No. of Shares held at the beginning of the "No. of Shares held at the end of the year % Change year [As on 31-March-2015]" during the [As on 31-March-2014]” year A. Promoters Demat Physical Total % of Demat Physical Total % of Total Total Shares Shares (1) Indian a) Individual/ HUF 375,000 - 375,000 0.74% 375,000 - 375,000 0.70% 0.00% b) Central Govt - - - 0.00% - - - 0.00% 0.00% c) State Govt(s) - - - 0.00% - - - 0.00% 0.00% d) Bodies Corp. 34,212,057 - 34,212,057 67.19% 31,211,040 - 31,211,040 57.97% -8.77% e) Banks / FI - - - 0.00% - - - 0.00% 0.00% f) Any other - - - 0.00% - - - 0.00% 0.00% Sub Total (A) (1) 34,587,057 - 34,587,057 67.92% 31,586,040 - 31,586,040 58.67% -8.68%
(2) Foreign a) NRI Individuals - - - 0.00% - - - 0.00% 0.00% b) Other Individuals - - - 0.00% - - - 0.00% 0.00% c) Bodies Corp. - - - 0.00% - - - 0.00% 0.00% d) Any other - - - 0.00% - - - 0.00% 0.00% Sub Total (A) (2) - - - 0.00% - - - 0.00% 0.00% TOTAL (A) 34,587,057 - 34,587,057 67.92% 31,586,040 - 31,586,040 58.67% -8.68%
B. Public Shareholding 1. Institutions a) Mutual Funds 306 - 306 0.00% 271 - 271 0.00% -11.44% b) Banks / FI 1,161,838 - 1,161,838 2.28% 3,625,237 318,946 3,944,183 7.33% 239.48% c) Central Govt - - - 0.00% - - - 0.00% 0.00% d) State Govt(s) - - - 0.00% - - - 0.00% 0.00% e) Venture Capital Funds - - - 0.00% - - - 0.00% 0.00% f) Insurance Companies 300,000 - 300,000 0.59% 300,000 - 300,000 0.56% 0.00% g) FIIs 2,307,008 - 2,307,008 4.53% 3,443,909 - 3,443,909 6.40% 49.28% h) Foreign Venture Capital - - - 0.00% - - - 0.00% 0.00% Funds i) Others (Foreign Portfolio - - - 0.00% 263,421 - 263,421 0.49% 0.00% Investor (Corporate) Sub-total (B) (1):- 3,769,152 - 3,769,152 7.40% 7,632,838 318,946 7,951,784 14.77% 110.97%
2. Non-Institutions a) Bodies Corp. i) Indian 9,204,118 - 9,204,118 18.08% 10873632 0 10,873,632 20.20% 18.14% ii) Overseas - - - 0.00% 0 0 - 0.00% 0.00% b) Individuals i) Individual shareholders 1,580,993 1,080 1,582,011 3.11% 2131446 1018 2,132,464 3.96% 34.79% holding nominal share capital upto ` 1 lakh ii) Individual shareholders 1,095,627 - 1,095,627 2.15% 314250 0 314,250 0.58% -71.32% holding nominal share capital in excess of Rs 1 lakh c) Others (specify) Non Resident Indians 73,418 - 73,418 0.14% 296786 0 296,786 0.55% 304.24% Overseas Corporate - - - 0.00% - - - 0.00% 0.00% Bodies
26 ABG Shipyard Limited Annual Report 2014-2015
Foreign Nationals - - 0.00% 0.00% 0.00% Clearing Members 597,933 - 597,933 1.17% 677793 0 677,793 1.26% 13.36% Trusts 4,000 - 4,000 0.01% 0 0 - 0.00% -100.00% Offi ce Bearers 8,485 - 8,485 0.02% 6820 0 6,820 0.01% 0.00% Foreign Bodies - D R - - - 0.00% 0 0 - 0.00% 0.00% Sub-Total (B)(2):- 12,564,574 1,080 24.68% 14,300,727 1,018 14,301,745 26.56% 13.82% 12,565,592 Total Public (B) 16,333,726 1,080 32.08% 21,933,565 319,964 22,253,529 41.33% 36.23% 16,334,744 C. Shares held by - - - 0.00% - - - 0.00% 0.00% Custodian for GDRs & ADRs Grand Total (A+B+C) 50,920,783 1,080 50,921,801 100.00% 53,519,605 319,964 53,839,569 100.00% -
(ii) Shareholding of Promoter Sr. Shareholder’s Name Shareholding at the beginning of the Shareholding at the end of the year % change in No. year shareholding No. of % of total % of Shares No. of % of total % of Shares during the Shares Shares Pledged/ Shares Shares Pledged/ year of the encumbered of the encumbered company to total company to total shares shares
1 ABG International Pvt. Ltd 34,212,057 67.19% 62.07% 31,211,040 57.97% 95.57% -8.77% 2 Rishi Agarwal 281,250 0.55% 0% 281,250 0.52% 100% 0.00% 3 Kamlesh Kumar Agarwal 93,750 0.18% 0% 93,750 0.17% 0% 0.00% 34,587,057 67.92% 31,586,040 58.67% -8.68%
(iii) Change in Promoters’ Shareholding (please specify, if there is no change) Sr Particulars Shareholding at the beginning of the Cumulative Shareholding during the No. year year No. of shares % of total shares No. of shares % of total shares ABG INTERNATIONAL PVT. LTD. 1 At the beginning of the year 34,212,057 67.19% 0.00% 2 Changes during the year 3,001,017 5.89% 0.00% 3 At the end of the year 31,211,040 61.29% 31,211,040 57.97% The change in shareholding was due to invocation of pledge by the lenders on various dates. (iv) Shareholding Pattern of top ten Shareholders (Other than Directors, Promoters and Holders of GDRs and ADRs): Sr. For each of the Top 10 shareholders Shareholding at the beginning of the Shareholding at the End of the Year No. year No. of shares % of total shares No. of shares % of total shares NAME 1 Religare Finvest Ltd 5,186,866 10.19% 4,930,872 9.16% 2 DB International (Asia) Ltd - 0.00% 14,50,000 2.69% 3 Nippon Investment and Finance Com- 10,31,816 2.03% 13,71,634 2.55% pany Private Ltd. 4 Orange Mauritius Investments Limited 12,30,000 2.42% 12,30,000 2.28% 5 Syndicate Bank 0 0.00% 10,64,076 1.98% 6 Life Insurance Corporation of India 10,00,000 1.96% 10,00,000 1.86% 7 Bank of Baroda - 0.00% 5,49,800 1.02% 8 Andhra Bank - 0.00% 5,05,053 0.94% 9 Stock Holding Corporation Of India - 0.00% 4,81,625 0.89% Ltd - A/C Nse Derivatives 10 The South Indian Bank Ltd - 0.00% 4,79,893 0.89% 11 BakuleshTrambaklal Shah 8,96,857 1.76% - 0.00% 12 MotilalOswal Securities Ltd 5,02,433 0.99% 10,312 0.02%
27 ABG Shipyard Limited Annual Report 2014-2015
Sr. For each of the Top 10 shareholders Shareholding at the beginning of the Shareholding at the End of the Year No. year No. of shares % of total shares No. of shares % of total shares 13 LKP Finance Limited 50,391 0.10% 4,27,555 0.79% 14 Dimensional Emerging Markets Value Fund 3,20,558 0.63% 91,428 0.17% 15 General Insurance Corporation Of India 3,00,000 0.59% 3,00,000 0.00% 16 Decent Financial Services Pvt Ltd 2,71,500 0.53% 2,65,000 0.49%
The change in the shareholding in the above shareholders was due to buying/selling of shares by the shareholders on various dates
(v) Shareholding of Directors and Key Managerial Personnel: Sr. Shareholding of each Date Reason Shareholding at the beginning of Cumulative Shareholding during No. Directors and each Key the year the year Managerial Personnel No. of shares % of total shares No. of shares % of total shares 1 Mr. Rishi Agarwal At the beginning of the 1/4/2014 281,250 0.55% 281,250 0.52% year Changes during the year - 0.00% - 0.00% At the end of the year 3/31/2015 281,250 0.55% 281,250 0.52%
V. INDEBTEDNESS Indebtedness of the Company including interest outstanding/accrued but not due for payment. (Rs in crores) Particulars Secured Loans Unsecured Loans Deposits Total Indebtedness excluding deposits Indebtedness at the beginning of the fi nancial year i) Principal Amount 4,472.14 885.74 - 5,357.88 ii) Interest due but not paid 40.06 11.14 - 51.20 iii) Interest accrued but not due 4.04 0.79 - 4.83 Total (i+ii+iii) 4,516.24 897.67 - 5,413.91
Change in Indebtedness during the fi nancial year * Addition 1,991.70 323.63 - 2,315.33 * Reduction 664.27 1.31 - 665.58 Net Change 1,327.43 322.32 - 1,649.75
Indebtedness at the end of the fi nancial year i) Principal Amount 5,760.96 1,187.66 - 6,948.62 ii) Interest due but not paid 76.35 32.00 - 108.35 iii) Interest accrued but not due 6.36 0.33 - 6.69 Total (i+ii+iii) 5,843.67 1,219.99 - 7,063.66
28 ABG Shipyard Limited Annual Report 2014-2015
VI. REMUNERATION OF DIRECTORS AND KEY MANAGERIAL PERSONNEL A. Remuneration to Managing Director, Whole-time Directors and/or Manager: Sr.No. Particulars of Remuneration Total Amount (Rs/Lac) Name : Mr. Syed Abdi Mr. Dhananjay Mr. S. Datar Muthuswamy Designation : Managing Executive Executive Director & Director Director CEO Gross salary (a) Salary as per provisions contained in section 134.10 47.29 47.77 229.16 1. 17(1) of the Income-tax Act, 1961 (b) Value of perquisites u/s 17(2) Income-tax Act, 0.39 0.39 0.39 1.17 1961 (c) Profi ts in lieu of salary under section 17(3) -- - - Income- tax Act, 1961 2. Stock Option - - - - 3. Sweat Equity - - - - Commission - - - - 4. - as % of profi t - - - - - others, specify - - - - 5 Others, please specify - - - Total (A) 134.49 47.68 48.16 230.33 Overall Ceiling as per the Act * B. Remuneration to other Directors Sr.No Particulars of Remuneration Total Amount (Rs/Lac) 1 Independent Directors Mr. Ashwani Mr. Ashok Nominee Director Kumar Chitnis Fee for attending board committee 1.10 0.44 0.55 2.09 meetings Commission - - - - Others, please specify - - - - Total (1) - - - - 2 Other Non-Executive Directors - - - - Fee for attending board committee - - - - meetings Commission - - - - Others, please specify - - - - Total (2) - - - - Total (B)=(1+2) - - - 2.09 Total Managerial Remuneration (A+B) 232.42 Overall Ceiling as per the Act *
C. Remuneration to Key Managerial Personnel other than MD/Manager/WTD Sr.No Particulars of Remuneration Total Amount (Rs/Lac) Designation CFO CS 1 Gross salary (a) Salary as per provisions contained in 80.87 20.97 101.84 section 17(1) of the Income-tax Act, 1961 b) Value of perquisites u/s 17(2) Income-tax Act, 1961 0.39 0.39 0.78 (c) Profi ts in lieu of salary under section 17(3) Income- tax - - - Act, 1961 2 Stock Option - - - 3 Sweat Equity - - -
29 ABG Shipyard Limited Annual Report 2014-2015
4 Commission - - - - as % of profi t - - - - others, specify - - - 5 Others, please specify - - - Total 81.26 21.36 102.62
* Since the company is having losses, the company has paid Managerial Remunaration in accordance with the provision of sec- tion 196 and 197 of the companies Act, 2013 read with Schedule V and rules made thereunder. VII. PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES:
Type Section of the Brief Description Details of Penalty Authority [RD / Appeal made, if Companies Act / Punishment/ NCLT/ COURT] any (give Details) Compounding fees imposed A. COMPANY Penalty NIL NIL NIL NIL NIL Punishment NIL NIL NIL NIL NIL Compounding NIL NIL NIL NIL NIL B. DIRECTORS Penalty NIL NIL NIL NIL NIL Punishment NIL NIL NIL NIL NIL Compounding NIL NIL NIL NIL NIL C. OTHER OFFICERS IN DEFAULT Penalty NIL NIL NIL NIL NIL Punishment NIL NIL NIL NIL NIL Compounding NIL NIL NIL NIL NIL
30 ABG Shipyard Limited Annual Report 2014-2015
Annexure - E to Directors’ Report Information relating to the Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) rules, 2014 A. Conservation of energy: (a) Energy conservation measures taken: At Dahej Yard: • 60 Nos. Electronic Chock base 1 x 28 W tube light installed in Staff colony at Bharuch. • 3000 KVAR capacitor panel Maintained to keep power factor 0.998 from 0.975 • Auto cut off for welding machine and energy saver for welding machines. At Surat Yard • Energy Saver System maintained for 200 No’s installation in Welding Machines. • 100 Nos. Electronic Chock base 1 x 28 W tube light is being maintained in Labor Colony At Surat Yard. • 1000 KVAR capacitor panel Maintained for to Keep PF AVG 0.998 to 0.999 • Saving in monthly electricity bill by revising electrical power demand with state electricity board • Auto cut off for welding machine and energy saver for 75 welding machines. • Additional installation of VFD Drive In mobile Air Compressor. • Additional Installation of inverter base Welding machine. • Additional Installation of Auto Welding Unit for co2 welding purpose. (b) Steps taken for utilizing Alternate source of energy during the year: NIL (c) Capital Investment on energy conservation equipments during the year: NIL B. Technology absorption: (i) Efforts, in brief made towards technology absorption, adaption and innovation • Continues Usage of scaffolding –staging system for hull outfi t & painting for faster & safe production • Usage of telescopic manlifter to reduce time. (ii) Benefi ts derived as a result of the above Technology Absorption and R&D • Cost Saving. • Safety. • More Productivity. • Speedy Production. Expenditure on R&D: During the year under review, there was no specifi c expenditure on Research and Development. Your Company usually incurred capital expenditure for setting up as well as up-gradation of technologies used in designing, production, manpower and account management as a part of its business strategy. In case of imported technology (imported during the last 3 years reckoned from beginning of the fi nancial year)
Technology imported NIL Years of import NA Has technology been fully absorbed? NA If not fully absorbed, areas where this not taken place, reasons there- NA fore and future plans of action C. Foreign Exchange Earnings and Outgo
(`in crs) Particulars 2014-15 2013-14 Earnings NIL 596.69 Outgo 88.64 534.12
31 ABG Shipyard Limited Annual Report 2014-2015
Annexure - F to Directors’ Report CORPORATE GOVERNANCE REPORT {In compliance with Clause 49 of the Listing Agreement entered into with the Bombay Stock Exchange Ltd. (BSE) and the National Stock Exchange of India Ltd (NSE)} Good Corporate Governance leads to long-term shareholder value and enhances interests of all stakeholders It brings into focus the fi duciary and trusteeship role of the Board to align and direct the actions of the organization towards creating wealth and shareholder value. The Company, through its Board and Committees, endeavors to strike and deliver the good governing standards for the benefi t of its stakeholders. 1. COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE As a company, which believes in implementing the corporate governance practice that go beyond just meeting of letter of law, ABG has not only adopted practices mandated in the clause 49 of the Listing Agreement, but also incorporated some of the non- mandatory recommendations. The Company advocates transparency in all its business transactions and activities. Management and Employees of the Company stand committed to the core principles of transparency, honesty and integrity. Corporate Governance forms the core of all business endeavors. 2. COMPOSITION OF BOARD AND PARTICULARS OF DIRECTORS (i) Board Composition: Composition of the Board of Directors of your company as at 31st March 2015 was total Six (6) Directors comprising One Non- executive Chairman Mr. Rishi Agarwal, One (1) Managing Director Mr. Syed Abdi, Two (2) executive directors viz. Mr. Dhananjay Datar and Mr. S. Muthuswamy, One Independent Directors viz Mr. Ashwani Kumar and One (1) Nominee Director Mrs. Ranjitha Godbole (Nominated by IDBI Bank Ltd.). During the period under review, Mr. Ashok Chitnis – Independent Director of the Company has resigned from the company w.e.f. 17th February 2015, owing to health issues. Further, IDBI Bank Ltd has nominated Mrs. Ranjitha Godbole on place of Mr. Aloke Sengupta on the Board of the Company as on 14th November 2014. Further, Export Import Bank of India (EXIM) has nominated Mr. David Rasquinha as Nominee Director on the Board of the Company w.e.f. 30th May, 2014 which was subsequently withdrawn on 17th October, 2014. The names and categories of the Directors on the Board, their attendance at Board Meeting during the year and at the last Annual General Meeting, as also the number of Directorships and Committee Memberships held by them in other companies as on 31st March, 2015, are set out below:
Name Category* Number of Directorship, Committee Attendance membership and Chairmanship# Board Last Directorship Committee Committee Meeting AGM Membership Chairman- ship Mr. Rishi Agarwal – Chairman NI-NE 1 No 3 1 - Mr. Syed Abdi – Managing Director and CEO NI-E 4 Yes - 2 - Mr. Dhananjay Datar, Executive Director NI-E 4 No 5 1 1 Mr. S. Muthuswamy – Executive Director NI-E 4 No 3 - - Mr. Ashwani Kumar I-NE 4 Yes 3 3 1 Mr. Ashok R. Chitnis I-NE 2 Yes 1 5 3 (Upto 17th February, 2015) Mr. Aloke Sengupta – Nominee Director I-NE 2 No - - - (Upto 14th November 2014) Mrs. Ranjitha Godbole I-NE 2 No - - - (Since 14th November, 2014) Mr. David Rasquinha I-NE 1 No 1 - - (From 30th May 2014 to 17th October 2014) *(NI – Non-Independent, I – Independent, NE- Non-Executive, E – Executive) # Directorships does not include alternate directorships, directorships of private limited companies and companies incorporated outside the India and Section 8 companies. Chairmanships / Membership of Board Committees include only Audit Committee and Shareholders / Investors Grievance Committee of Indian Public Limited Companies.
32 ABG Shipyard Limited Annual Report 2014-2015
None of the Directors is a Director in more than 15 Companies and Member of more than 10 Committees or Chairman of more than 5 Committees across all the companies in which he is a Director. Necessary disclosures regarding Directorship and Membership in the various Board committee positions occupied by the Directors of the Company as at 31st March, 2015 have been made. (ii) Board Meetings: Board of Directors of the Company met four times during the fi nancial year 2014-15, as per the below details, the gap between two successive Board Meetings was not more than one hundred and twenty days:
1 30th May, 2014 2 14th August, 2014 3 14th November, 2014 4 17th February, 2015* *The meeting was scheduled on 13th February, 2015 which was adjourned to 17th February 2015 for want of quorum. Agenda along with all information as per the Annexure IA of the Clause 49, including statutory information, relevant to the matters to be discussed is always sent to the Directors, well in advance, where it is not practicable to attach any document to agenda, the same is tabled before the meeting with specifi c reference in the agenda. The Board has unfettered and complete access to any information within the Company which includes information specifi ed in Annexure IA to the Clause 49 of the Listing Agreement. The Agenda specifying the matters to be discussed at the Board Meetings and Committee meetings is drafted in consultation with the Chairman of the Company. The Managing Director/Executive Directors/Chief Finance Offi cer briefs the Board at every Meeting on the overall performance of the Company. The Board of the Company reviews all the major decisions of the Company. None of the Non-executive Directors have any material pecuniary relationship or transactions with the Company. Post meeting follow – up mechanism: Important decisions taken at the Board/Committee Meetings are promptly communicated to the concerned departments to act thereon accordingly. (iii) Profi le of Directors seeking appointment / re-appointment in the 30th Annual General Meeting: Detailed profi le is appended in the Notice of Annual General Meeting forming part of the Annual Report. 3. COMMITTEES OF THE BOARD As on 31st March 2015, your Company has seven Committees of Board, namely; Audit Committee, Nomination-cum-Remuneration Committee, Stakeholders Relationship Committee, Finance & Operation Committee , Security Issue Committee, Corporate Social Responsibility (CSR) Committee and Risk Management Committee. A. AUDIT COMMITTEE Audit Committee is constituted in line of the provisions of Clause 49 of the Listing Agreements with the Stock Exchanges read with Section 177 of the Companies Act, 2013. (i) Composition, Details of the Meetings and Attendance Details of the Committee members, number of meetings attended by them are tabled below:
Name of the Director Status No. of Meeting Attended Mr. Ashwani Kumar – Chairman I – NE 4 Mr. Ashok Chitnis* I – NE 2 Mr. Syed Abdi NI – E 4 Mr. Sushil Agarwal* I – NE - (NI – Non-Independent, I – Independent, NE – Non-Executive, E – Executive) *During the Financial Year, Ashok R. Chitnis was ceased to be member of Committee due to his resignation from the Board w.e.f 17th February, 2014. Further, the Board has appointed Mr. Sushil Agarwal – Independent Director of the Company as the Member of the Committee w.e.f. 18th May, 2015 in line with the compliance required under the Companies Act, 2013 and the Listing Agreements. The Board has approved and adopted the revised terms of reference of Audit Committee as per requirement of the Companies Act, 2013 and SEBI Circular dated April 17, 2014 for amendment to Equity Listing Agreement (which is effective from 1st October, 2014) ,at their meeting held on 30th May 2014.
33 ABG Shipyard Limited Annual Report 2014-2015
The Audit Committee meetings are usually held at the Corporate Offi ce of the Company. The Audit Committee invites such of the executives as it consider appropriate (particularly the heads of the Operations), representatives of the Statutory Auditors and Internal Auditors to be present at its meetings. The Company Secretary acts as Secretary of the Audit Committee. During the fi nancial year ended March 31, 2015, Four Audit Committee meetings were held with requisite quorum on the dates tabled below;
1 30th May, 2014 2 14th August, 2014 3 14th November, 2014 4 17th December, 2014 5 17th February, 2015* *The meeting was scheduled on 13th February, 2015 which was adjourned on 17th February 2015 for want of quorum. (ii) Terms of reference of the Audit Committee are broadly as under: Term of Reference of the Audit Committee would be as under: Oversight of the company’s fi nancial reporting process and the disclosure of its fi nancial information to ensure that the fi nancial statement is correct, suffi cient and credible; Recommendation for appointment, remuneration and terms of appointment of auditors of the company; Approval of payment to statutory auditors for any other services rendered by the statutory auditors; Reviewing, with the management, the annual fi nancial statements and auditor’s report thereon before submission to the board for approval, with particular reference to: • Matters required to be included in the Director’s Responsibility Statement, to be included in the Board’s report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013. • Changes, if any, in accounting policies and practices and reasons for the same. • Major accounting entries involving estimates based on the exercise of judgment by management. • Signifi cant adjustments made in the fi nancial statements arising out of audit fi ndings. • Compliance with listing and other legal requirements relating to fi nancial statements. • Disclosure of any Related Party transactions. • Qualifi cations in the audit report. Reviewing, with the management, the quarterly fi nancial statements before submission to the Board for approval; Reviewing, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter; Review and monitor the auditor’s independence and performance, and effectiveness of audit process; Approval or any subsequent modifi cation of transactions of the company with related parties; Valuation of undertakings or assets of the company, wherever it is necessary; Evaluation of internal fi nancial controls and risk management systems; Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffi ng and seniority of the offi cial heading the department, reporting structure coverage and frequency of internal audit; Discussion with internal auditors of any signifi cant fi ndings and follow up there on; Reviewing the fi ndings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board; Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern; To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors;
34 ABG Shipyard Limited Annual Report 2014-2015