59Th AR 2010-11

HINDUSTAN SHIPYARD LIMITED PAPERS TO BE LAID ON THE TABLE OF LOK SABHA/RAJYA SABHA AUTHENTICATED RAKSHA RAJYA MANTRI <ul style="display: flex;"><li style="flex:1">1</li><li style="flex:1">!</li></ul>HINDUSTAN SHIPYARD LIMITED VISION To become a world class Defence Shipyard, to construct Naval Ships and Submarines for the Indian Navy and Coast Guard and to meet the repair requirements of such vessels and other Government Vessels. MISSION To upgrade the Shipyard, acquire advanced technologies in war ships and submarine construction in a phased manner from 2010 to 2025, and take up projects planned by Indian Navy and Indian Coast Guard for meeting its long term needs. <ul style="display: flex;"><li style="flex:1">1</li><li style="flex:1">!</li></ul>CONTENTS ••••••••••••••• Board of Directors Chairman’s Address Notice 125 Directors’ Report Auditors’ Report 6 31 36 38 39 40 47 60 61 62 64 66 Comments of the Comptroller and Auditor General of India Balance Sheet Profit & Loss Account Schedules to the Accounts Notes forming part of Accounts Balance Sheet Abstract & Company’s General Business Profile Cash Flow Statement Social Overhead Last 10 years at a glance Ships built Front Page Back Page : "Rani Abbaka" 1st IPV of 5 series vessels is ready for delivery. Repairs of INS KUMBHIR and INS SANDHAYAK is under progress. : "M.V. Good Precedent" 53000 DWT Bulk carrier, 2nd of 6 series vessels delivered to its owners. Hindustan Shipyard Limited HINDUSTAN SHIPYARD LIMITED (A Government of India Undertaking) BOARD OF DIRECTORS <ul style="display: flex;"><li style="flex:1">RAdm. N. K.MISHRA, NM, IN (Retd.) </li><li style="flex:1">Chairman & Managing Director (From 01-08-2011) </li></ul><ul style="display: flex;"><li style="flex:1">RAdm. K.C. SEKHAR, AVSM, VSM, IN (Retd.) </li><li style="flex:1">Chairman & Managing Director (Addl. Charge) </li></ul>(From 01 -01-2011 to 31-07-2011) Cmde. NARESH KUMAR, VSM, IN (Retd) Shri RAKESH MAHAJAN Chairman & Managing Director Director (Finance & Commercial) Director (Shipbuilding) Independent Director Independent Director Director (Upto 31-12-2010) Cmde. K .S .SUBRAMANIAN, NM, IN (Retd.) Capt. P.V.K.MOHAN (From 04-06-2011) (Upto 05-06-2011) <ul style="display: flex;"><li style="flex:1">(From 18-5-2011) </li><li style="flex:1">Dr. DEVI SINGH </li></ul>Shri GYANESH KUMAR, IAS <ul style="display: flex;"><li style="flex:1">VAdm. N.N.KUMAR, AVSM, VSM, IN </li><li style="flex:1">Director </li></ul>PERMANENT SPECIAL INVITEES VAdm. D.S.P.VARMA, PVSM,AVSM,VSM, IN(Retd.) Dr. S.C.PANDEY (From 25.5.2011) Shri.PRAMODE K.MISHRA (Upto 24.05.2011) COMPANY SECRETARY Shri INAITULA BAIG <ul style="display: flex;"><li style="flex:1">BANKERS </li><li style="flex:1">AUDITORS </li></ul>1. Indian Bank 2. State Bank of India 3. UCO Bank M/S. G.R.KUMAR & CO. Chartered Accountants 9, Merry life Apartments, Doctor’s Colony, Pedda Waltair, <ul style="display: flex;"><li style="flex:1">Visakhapatnam – 530 017 </li><li style="flex:1">4. Syndicate Bank </li></ul>5. Canara Bank REGISTERED OFFICE 209 & 209A, Vikram Tower 16, Rajendra Place New Delhi-110 008 Phone : 011-25737425 <ul style="display: flex;"><li style="flex:1">Fax </li><li style="flex:1">: 011-25730029 </li></ul>HEAD OFFICE & WORKS: Gandhigram Visakhapatnam – 530 005 Phone : 0891-2577404/2577437/ 9493792132 (PRO) Fax E-mail : <a href="mailto:[email protected]" target="_blank">[email protected] </a>Web : <a href="/goto?url=http://www.hsl.nic.in" target="_blank">www.hsl.nic.in </a> : 0891-2577502/356/667 459th Annual Report BOARD OF DIRECTORS (As on Date of AGM) RAdm N.K. Mishra, NM, IN (Retd.) Chairman & Managing Director Shri Gyanesh Kumar, IAS Director Dr. Devi Singh Director VAdm. N.N. Kumar, AVSM, VSM Director Shri Rakesh Mahajan Director (Finance & Commercial) Cmde K S Subramanian NM, IN (Retd.) Director (Shipbuilding) 11Hindustan Shipyard Limited CHAIRMAN’S ADDRESS Dear Shareholders, I have the great pleasure in welcoming you to this 59th Annual General Meeting of your Company and share with you some of significant achievements during the year under review. I am happy to report that, the Government has sanctioned Financial Restructuring package of ` 824.90 Crores and the company has successfully implemented the Financial Restructuring package and cleared legacy liabilities. With the implementation of Financial Restructuring package, the legacy liabilities have been taken care of. However, the financial health of the Company continues to be poor with accumulated losses of ` 930.10 Crores and a negative networth of ` 628.11 Crores as on 31st March, 2011. The Directors' Report and Audited Financial statements has already been circulated to you, with your permission, I take them as read. HSL being an old & premier shipyard of the country has been striving towards better productivity and optimum utilization of resources. The total Income of the company during the year is ` 637.87 Crores as compared to ` 651.16 Crores for the previous year. Your company recorded a profit of ` 54.99 Crores as against ` 2.32 Crores of previous year due to accounting of ` 452.68 Crores grant in aid received from Government of India as Financial Restructuring package. The major highlights of the year 2010 -11 are as follows <ul style="display: flex;"><li style="flex:1">a) </li><li style="flex:1">The Ministry has sanctioned ` 824.90 Crores as Financial Restructuring package and the same has been </li></ul>implemented successfully. <ul style="display: flex;"><li style="flex:1">b) </li><li style="flex:1">The company concluded contracts for an order value approx. ` 798 Crores with Coast Guard, Indian Navy and </li></ul>Kandla Port Trust. However the order value is not sufficient for the Yard to sustain. The company desperately needs to secure high value orders from Indian Navy after its transfer of Administrative control from Ministry of Shipping to Ministry of Defence. 2259th Annual Report <ul style="display: flex;"><li style="flex:1">c) </li><li style="flex:1">Some of the noteworthy achievements during the year are as follows </li></ul><ul style="display: flex;"><li style="flex:1">i. </li><li style="flex:1">Two 53 K bulker vessels were delivered to M/s. GML. </li></ul>Six vessels of different categories were launched/floated. Keels were laid for five new vessels. ii. iii. <ul style="display: flex;"><li style="flex:1">iv. </li><li style="flex:1">Repair of ONGC Jack up Rig is at advanced stage of completion and targeted to be delivered by the end </li></ul>of Nov 2011. <ul style="display: flex;"><li style="flex:1">v. </li><li style="flex:1">Repair of twenty three vessels were undertaken during the year 2010-11 including two warships viz. </li></ul>INS KUMBHIR &INS SANDHAYAK. Your company is committed to create value addition by not only achieving path breaking achievements in shipbuilding & ship repairs but also developing indigenous repair capabilities of Naval Submarines and off shore rigs of the country. The present shipbuilding order book position comprises 24 vessels out of which 14 vessels are at various stages of their construction. The focus of the yard during the next couple of years will be on completion of the orders of M/s. GML & five IPVs for Indian Coast Guard. The other orders would also be attended to with renewed planning & Production norms to keep the workshops & workmen optimally utilised. However I regret to inform that with the present order book most workshops will remain idle in near future unless some high value orders are secured by HSL. Grading Vide Memorandum of Understanding The performance of the company for the year, based on self appraisal is “Good” in terms of the MoU signed with the Ministry of Defence. Corporate Governance Your company constantly endeavors to adopt and maintain the highest standards of ethics in all spheres of its business activities. Your company firmly believes in the fundamental principles of Corporate Governance like honesty, integrity, accountability, transparency and legal/statutory compliances, to protect, promote and safe guard the interests of all stakeholders. It also strives to carry out its business obligation with good corporate values duly discharging its duties for maximum level of transparency in decision making to avoid conflict of interests. It also accords due importance to adherence of adopted corporate values and objectives and discharging social responsibilities as a responsible corporate citizen. Infrastructure Upgradation & Modernization The yard infrastructure is required to be upgraded to increase its capacity and efficiency for construction of sophisticated Defence Vessels in future. This upgradation has been planned to be undertaken in two phases. In first phase the existing infrastructure facilities would be refurbished and or renewed. Budget estimates for the Phase-I modernization is ` 457.36 Crore. In the second phase the yard infrastructure would be augmented so as to make the yard capable of constructing modern warships, submarines and amphibious Vessels etc. Both the proposals are under active consideration at Ministry of Defence. 33Hindustan Shipyard Limited Future Outlook The yard is strategically located on the east coast of the India in the close proximity of Eastern Naval Command. Consequent to transfer of Administrative control of your company to Ministry of Defence, the yard has been identified as one of the Defence shipyards for construction of Warships and Submarines. The present order book is likely to be completed by Aug 2013 and thereafter HSL will concentrate on construction of Defence Vessels. The surplus capacity, if any, available would be utilized for commercial vessels. With above mentioned infrastructure upgradation and capacity improvement the yard will grow as one of the major Defence shipyards of the country. Human Resource Development Considering the large attrition rate of the existing workforce of the company in coming years, your company has started inducting the young workforce to fill up the organizational gaps. Your company has inducted 15 management trainees recently and will continue to induct more in coming years depending upon the requirements. The skill development is one of the high priority areas to hone the skills required for construction of complex warships and submarines. Hence, Your company continues to impart training to new entrants and existing employees as well to increase the productivity. Further, recently your Company has revised the pay scales of the staff and workmen of the company in order to boost their morale which will result in higher productivity. However while approving the wage revision, your company could not arrange the payment of arrears due to staff & workmen as the financial health of the Company did not permit such payments. This is a major issue of the Unions as the wage revision for Officers was undertaken prior to wage revision of staff & workmen and their arrears have been paid. Acknowledgements I would like to conclude by thanking Central and state government authorities, the Ministry of Defence, the Naval and Coast Guard authorities, the Dredging Corporation of India Limited, Shipping Corporation of India Limited, The Oil & Natural Gas Corporation Limited, M/s Goodearth Maritime Limited and the shareholders for the trust they have reposed on us. I would like to place on record our thanks to the Comptroller and Auditor General of India, the Principal Director of Commercial Audit and Ex-Officio Member, the Statutory Auditors, Internal Auditors for their valuable suggestions and co-operation. I also acknowledge with gratitude the continual assistance and guidance received from the Indian Navy and Coast Guard. Last but not the least, I appreciate the vital role and hard work put in by all the employees of the company to achieve its goal and Board of Directors and the Ministry of Defence who have supported and guided the company for the turnaround. Thanking you all once again. Sd/- (N K Mishra) Rear Admiral, IN (Retd.) Chairman & Managing Director New Delhi 16 Sep 2011 4459th Annual Report HINDUSTAN SHIPYARD LIMITED (A Government of India Undertaking) NOTICE OF 59th ANNUAL GENERAL MEETING Notice is hereby given that the 59th Annual General Meeting of the Shareholders of Hindustan Shipyard Ltd., will be held on Friday, the 16th September, 2011 at 11.30 AM at A1/314, Shipyard House, Safdarjung Enclave, New Delhi – 110 029 to transact the following business: ORDINARY BUSINESS <ul style="display: flex;"><li style="flex:1">1) </li><li style="flex:1">Adoption of Annual Accounts of the Company for the year 2010-11 </li></ul>To receive, consider and adopt the Balance Sheet as at 31st March,2011 and the Profit & Loss Account for the year ended 31st March, 2011 and the Reports of the Directors and Auditors thereon. <ul style="display: flex;"><li style="flex:1">2) </li><li style="flex:1">To fix the remuneration of the Auditors to be appointed by the Comptroller & Auditor General of India for the </li></ul>Financial Year 2011-12. By order of the Board Hindustan Shipyard Limited Sd/- New Delhi Dated the 23rd August,2011 (Inaitula Baig) Company Secretary <ul style="display: flex;"><li style="flex:1">NOTES: </li><li style="flex:1">(a) A member entitled to attend and vote is entitled to appoint a Proxy to attend and vote instead </li></ul>of himself and a proxy need not be a member of the Company. (b) The instrument appointing the Proxy, if any, should, in order to be effective, be deposited at the Registered Office of the Company not less than 48 hours before the time of holding the meeting. To All the Shareholders, Statutory Auditors, Directors & Chairman of the Audit Committee. Permanent Special Invitees 55Hindustan Shipyard Limited DIRECTORS’ REPORT FOR THE YEAR 2010-11 The Shareholders, Hindustan Shipyard Limited. Gentlemen, Your Directors are pleased to present the 59th Annual Report on the working of the company for the Financial Year 2010-11. The Audited Profit & Loss account for the financial year 2010-11 and the Balance Sheet, as on 31 Mar 2011 together with the Report of the Auditors of the company and the comments of the Comptroller & Auditor General of India on the Auditor's Report under section 619 (4) of the Companies Act, 1956 are appended to this report. <ul style="display: flex;"><li style="flex:1">1. </li><li style="flex:1">CAPITAL STURCTURE </li></ul>The authorized equity share capital of the company as on 31 Mar 2011 stood at ` 304.00 Crores against which the paid up Equity Share Capital as on 31 Mar 2011 is ` 301.99 Crores <ul style="display: flex;"><li style="flex:1">2. </li><li style="flex:1">FINANCIAL RESTRUCTURING </li></ul>The Ministry has sanctioned ` 824.90 Crores towards financial restructuring package as mentioned below: <ul style="display: flex;"><li style="flex:1">i) </li><li style="flex:1">An amount of ` 452.68 Crores (Rupees Four Hundred Fifty Two Crores and Sixty Eight lakhs) has been </li></ul>given as grants in aid for clearance of old outstanding liabilities towards Banks, employee arrears, tax arrears and other liabilities. <ul style="display: flex;"><li style="flex:1">ii) </li><li style="flex:1">The existing Government loan with interest and Government guarantee fee against loan from SBI </li></ul>amounting to ` 372.22 Crores (Rupees Three hundred Seventy Two Crores and Twenty Two lakhs) has been converted as loan in perpetuity without interest. <ul style="display: flex;"><li style="flex:1">3. </li><li style="flex:1">PERFORMANCE HIGHLIGHTS </li></ul>3.1 Financial Parameters The Directors are pleased to inform that the company has recorded a Profit Before Tax (PBT) of ` 165.18 Crores during the year 2010-11. This increase in PBT is due to accounting of grant-in-aid of ` 452.68 Crores as income which has been received from Government of India towards Financial Restructuring. 3.2 Value of Production The company achieved a value of production of ` 603.84 Crores during the FY 2010-11. 3.3 MOU Rating In terms of the parameters finally arrived at the Memorandum of Understanding signed with Government for the year 2010-11, performance of the company is expected to be rated as “Good”. <ul style="display: flex;"><li style="flex:1">4. </li><li style="flex:1">DIVISION-WISE PERFORMANCE </li></ul><ul style="display: flex;"><li style="flex:1">SHIPBUILDNG </li><li style="flex:1">4.1. </li></ul>The Shipbuilding Division of your Company achieved a Value of Production of ` 243.19 Crores for 2010-11 as against ` 243.08 Crores of the previous year. 6659th Annual Report Delivery of "Good Precedent" 53000 DWT Bulker to GML, Chennai Floating of VC 11138 “M.V Good Trade” 4.1.1. MAIN EVENTS Following are the major events recorded by the Shipbuilding Division during the year 2010-11: Sl.No. 1. <ul style="display: flex;"><li style="flex:1">Events </li><li style="flex:1">Date </li><li style="flex:1">Description of Vessel </li><li style="flex:1">Owner </li></ul>Fresh contracts concluded 27 Aug 2010 23 Mar 2011 <ul style="display: flex;"><li style="flex:1">3 No 50 T BP Tugs </li><li style="flex:1">Indian Navy </li></ul><ul style="display: flex;"><li style="flex:1">Coast Guard </li><li style="flex:1">8 No. Inshore Patrol Vessels </li></ul><ul style="display: flex;"><li style="flex:1">24 Mar 2011 </li><li style="flex:1">2 No. 50-T BP Tugs </li><li style="flex:1">Kandla Port Trust </li></ul><ul style="display: flex;"><li style="flex:1">GML, Chennai </li><li style="flex:1">2. </li></ul>3. <ul style="display: flex;"><li style="flex:1">Delivery </li><li style="flex:1">12 Apr 2010 </li></ul>05 Feb 2011 03 May 2010 15 May 2010 14 Jul 2010 First (of 6 No) 53000 DWT Bulker Second (of 6 No) 53000 DWT Bulker Floating of Second (of 6 No) 53,000 DWT Bulker Launching of Third (of 5 No) Inshore Patrol Vessel Launching of First (of 2 No) 50T BP Tug Launching of Second (of 2 No) 50T BP Tug Launching of Fourth (of 5 No) Inshore Patrol Vessel Floating of Third (of 6 No) 53,000 DWT Bulker First (of 3 No) 50-Ton BP Tug GML, Chennai <ul style="display: flex;"><li style="flex:1">Floating / Launching </li><li style="flex:1">GML, Chennai </li></ul>Coast Guard Visakhapatnam Port Trust (VPT) Visakhapatnam Port Trust (VPT) Coast Guard 04 Nov 2010 06 Nov 2010 31 Mar 2011 27 Dec 2010 27 Dec 2010 30 Dec 2010 30 Dec 2010 05 Mar 2011 GML, Chennai <ul style="display: flex;"><li style="flex:1">4. </li><li style="flex:1">Keel Laying </li><li style="flex:1">Indian Navy </li></ul><ul style="display: flex;"><li style="flex:1">Second (of 3 No) 50-Ton BP Tug </li><li style="flex:1">Indian Navy </li></ul>Fourth (of 6 No) 53,000 DWT Bulker. Fifth (of 6 No) 53,000 DWT Bulker Third ( of 3 No) 50-TBP Tug GML, Chennai GML, Chennai Indian Navy Launching of the 5th IPV VC11158-”RANI RASHMONI” by Smt. Ila Sharma, Wife of Sri S.P.Sharma, Inspector General, Commandant of the Coast Guard (East) in the august presence of Shri M.M.Pallam Raju, Hon’ble Raksha Rajya Mantri, Govt. of India 77Hindustan Shipyard Limited 4.1.2. Order Book Position as on 31 May 2011 HSL is presently having an order book of 24 Vessels of which, 14 Vessels are under various stages of construction. The value of the above Shipbuilding orders is ` 1108.21 Crores. The details of Order Book Position is as follows: Sl. No 1<ul style="display: flex;"><li style="flex:1">Yard No. </li><li style="flex:1">Type of the Vessel </li><li style="flex:1">No. of </li></ul>Vessels (Qty.) <ul style="display: flex;"><li style="flex:1">Owner </li><li style="flex:1">Balance </li></ul>Contract Value Contractual Delivery Date Anticipated Delivery <ul style="display: flex;"><li style="flex:1">Date </li><li style="flex:1">(</li></ul>`In Cr) <ul style="display: flex;"><li style="flex:1">11138 to 11141 </li><li style="flex:1">53,000 DWT </li></ul>Diamond <ul style="display: flex;"><li style="flex:1">4</li><li style="flex:1">GML, Chennai </li><li style="flex:1">237.29 </li><li style="flex:1">Jul 2009 – </li></ul>Jan 2011 Sep 2011 – Aug 2013 series Bulk Carriers 23456 11154 to 11158 11160 & 11161 11162 to11164 11165 to 11172 11173 to 11174 Inshore Patrol Vessels 50-Ton Bollard Pull Tugs 50-T Bollard Pull Tugs Inshore Patrol Vessels 50 –T Bollard pull Tugs Total <ul style="display: flex;"><li style="flex:1">5</li><li style="flex:1">Indian </li></ul>Coast Guard 34.07 39.13 Mar 2008 – Mar 2009 Aug 2011 – Jul 2012 <ul style="display: flex;"><li style="flex:1">2</li><li style="flex:1">Visakhapatnam </li></ul>Port Trust Mar 2011 – Jul 2011 Aug 2011 – Oct 2011 <ul style="display: flex;"><li style="flex:1">3</li><li style="flex:1">Indian Navy </li><li style="flex:1">155.40 </li></ul>551.12 91.20 Oct 2012 – Jun 2013 Oct 2012 – Jun 2013 <ul style="display: flex;"><li style="flex:1">8</li><li style="flex:1">Indian </li></ul>Coast Guard Aug 2013 – May 2015 Aug 2013 – May 2015 <ul style="display: flex;"><li style="flex:1">2</li><li style="flex:1">Kandla </li></ul>Port Trust Mar 2013 – Jun 2013 Mar 2013 – Jun 2013 <ul style="display: flex;"><li style="flex:1">24 </li><li style="flex:1">1108.21 </li></ul>Keel Laying for VC11163, the 2nd B.P.Tug. of 3 no. series by Shri M.Prasad, Sr. Engineer (QC), retiring on 31 Dec 2010 on his superannuation Keel Laying for VC11162 the 1st. B.P. Tug of 3 no. series by Capt. G.Rajsekhar Rao, Warship Production Superintendent of WOT(V) 4.1.3. Production & Physical Performance The Shipbuilding production in DWT and capacity utilization achieved during the year 2010-11 are presented below. The figures for same parameters for previous year are also shown for comparison. Sl. No. 1<ul style="display: flex;"><li style="flex:1">Description </li><li style="flex:1">Unit </li></ul>DWT 2010-11 75,250 2009-10 <ul style="display: flex;"><li style="flex:1">75,250 </li><li style="flex:1">Installed capacity (at 3.5 Standard Pioneer Ships </li></ul>per annum)

59Th AR 2010-11

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