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HINDUSTAN SHIPYARD LIMITED

PAPERS TO BE LAID ON THE TABLE OF LOK SABHA/RAJYA SABHA

AUTHENTICATED

RAKSHA RAJYA MANTRI

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Board of Directors . . . . 01

Chairmans Address . . . . 02

Notice . . . . 05

Directors Report . . . . 07

Corporate Governance Report . . . . 18

Management Discussion & Analysis Report . . . . 28

Auditors Report . . . . 39

Comments of the C & AG of India . . . . 44

Balance Sheet . . . . 46

Profit & Loss Accounts . . . . 47

Notes to the Accounts . . . . 48

Notes forming part of Accounts . . . . 58

Cash Flow Statement . . . . 71

Social Overheads . . . . 72

Last 10 years at a glance . . . . 74

Ships built . . . . 76

Contents

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OUR VISION

To be a National Leader in

Ship & Submarine building and Repairs

OUR MISSION

To imbibe the latest in

Ship / Submarine building andrepair technology and serve

the defence, maritime and

oil sectors through all round

excellence in quality, delivery

and durability

1 !

1 !

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BOARD OF DIRECTORS(As on date of AGM)

RAdm N K MishraNM, IN (Retd.)

Chairman & Managing Director

Shri Ashok KK MeenaIAS

VAdm A V SubhedarAVSM, VSM

Shri Skand R TayalIFS (Retd.)

Independent Director

Shri Samirendra ChatterjeeIAS (Retd.)

Independent Director

Cmde KS SubramanianNM, IN (Retd.)

Director (Shipbuilding)

Cmde Ashok BhalVSM, IN (Retd.)

Director (Strategic Projects)

BANKERS

Indian Bank

State Bank of India

UCO Bank

Syndicate Bank

Andhra Bank Canara Bank

Shri V R S Naga Sarma

Chief Financial Officer &General Manager (Finance)

Registered Office :

Gandhigram Post Office,Gandhigram, Visakhapatnam - 530005

PERMANENT SPECIAL INVITEES

VAdm K R NairAVSM, VSM

Chief of Materiel, Indian Navy

VAdm A G ThapliyalAVSM & Bar

DG, Indian Coast Guard

Shri Rajnish KumarAddl. FA & JS (RK), MOD

RAdm Anil Kumar SaxenaNM

DGND, Indian Navy

Dr V Bhujanga RaoDS, CCR & D, DRDO

Shri Inaitula BaigCompany Secretary

Corporate Identity Number (CIN)U74899AP1952GOI076711

STATUTORY AUDITORS

M/s B V Rao & Co.Chartered Accountants, Visakhapatnam

COST AUDITORS

CMA U Prakash

Cost Accountant, Visakhapatnam

INTERNAL AUDITORS

M/s Ambica & IshaChartered Accountants, Visakhapatnam

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CHAIRMANS STATEMENT IN 62ndAGM

Dear Shareholders,

1. I have the great pleasure in welcoming you to this 62ndAnnual

General Meeting of your company and share some of significant

achievements during the year under review. The Directors Report, &

Audited Financial Statements have already been circulated to you,

with your permission, I take them as read.

2. Before I move to performance of our company, I would like to

highlight the some of the issues of Global Shipbuilding vis-a-vis Indian

Shipbuilding Industry.

World Shipbuilding Industry

3. Global Shipbuilding Industry continues to be dominated by China, Korea and Japan. In the interim, othercountries such as Vietnam, Brazil and Philippines and Turkey have made impressive inroads. The global recession,

that severely hit the Industry in beginning 2009, is now showing signs of improvement. By end of 2014, it is hoped

that the Industry will recover and this heralds good fortunes for HSL.

Shipbuilding Industry in India

4. India has an extensive coastline of more than 7,515 km and has a pool of trained man-power that best suits

shipbuilding Industry. However, Indian shipbuilding industry has not been able to capitalize its strengths and remains

far behind in the international stage.

5. As per an analysis conducted by ASSOCHAM, Indian Shipbuilding & Ship Repair Industry is likely to witness

opportunities worth Rs 25,000 Cr in coming years as over 41% of Indian ships have crossed 20 years of operations.

India has a total of 1,122 ships in its fleet and 41 per cent of this fall in the age group of 20 years and more.Considering that the average life of a shipping vessel is about 26 years, most of the existing vessels need to be

replaced. An average cost of constructing a large vessel is about $100 million. Therefore, the size of this opportunity

would be $3.3 billion.

6. Commercial ship construction at Indian shipyards is dwindling and all private shipyards are now looking for

share in the Defense Shipbuilding which is commercially very attractive. There is also a trend to encourage

participation of private yards in defence shipbuilding. This will throw major challenges to HSL in the coming years.

7. Now I move ahead to the major highlights of your Company and its performance during the period under

review.

Major Highlights

8. The Major highlights of the year 2013-14 are as under

(a) Despite severe financial crisis, the yard has delivered five vessels during the year under review.

(b) Some of the noteworthy achievements are as follows

(i) Delivery of Second of 05 nos Inshore Patrol Vessels for Indian Coast Guard.

(ii) Delivery of M V Good Day, fourth of 05 nos (53000 DWT) Bulk Carriers to M/s GML, Chennai

(iii) Launching & Delivery of 03 nos. 50 Ton Bollard Pull Tugs to Indian Navy

(iv) Repair of 20 Vessels of different types for Indian Navy, DCI, ONGC and VPT etc..

(v) The refit of INS Sindhukirti and Project VC 11184 has been put back on track.

Chairman's Statement

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Performance

9. The total income of the company during the year is Rs 519.07 Cr as compared to Rs 562.50 Cr of last year.

Your company has recorded a loss of Rs 46.21 Cr during the said financial year. The losses in the Financial Year

2013-14 are mainly attributable to lean Order Book, reduction in turnover, increase in Pay & Benefits and provisiontowards liquidated damages. Consequently, the accumulated losses are increased to Rs 1117.37 Cr as on 31 Mar

2014.

10. As reported last year, your companys financial position continues to be poor and a cause of concern. It has

not been possible to obtain loans from Banks due to the yards poor financial parameters. Notwithstanding above,

the yard has put all efforts to continue production from its internal accruals and funds drawn from RRMI. In order to

ease out the situation, the company has drawn Rs 110 Cr (approx) from the Refurbishment & Replacement of

Machineries & Infrastructure (RRMI) funds for completion of IPVs, Tugs and Sindukirthi submarine etc. The same

would be replenished from the receivables of the said projects. This has been done with the approval of the Board.

Present State of the Yard

11. Our yard is equipped with huge docks, large slipways and adequate carnage. We have a water front of 1000 Mwith alongside depth of 10 M all year round. These facilities are conducive to build large ocean going vessels and far

outweigh facilities at other DPSU yards. Keeping this in mind, and that the yard is co-located with large Naval

Establishments, the yard was brought under administrative control of Ministry of Defence in 2010 to undertake

construction of strategic vessels. Pending said transfer, the yard was directed not to take any orders of commercial

ships, presumably to keep the assets at HSL ready for building strategic vessels.

12. Things have changed since the transfer to MoD. Construction of strategic assets has been shelved. The yard is

languishing with orders of only 12 small tugs. Although, some big projects have been nominated, these are with

riders which make them economically unattractive and even these have been inordinately delayed. In the interim,

Defence Procurement Policy has been amended which promotes competition with private shipyards. Accordingly,

HSL is being denied orders on nomination and made to compete with economically sound private yards. In contrast,

other DPSU yards continue to enjoy orders on nomination.

13. It is a myth that HSL is inefficient. This has created such negativity that HSL was not even given RFP for ASW

Crafts and also not nominated for Fleet Support Ships. However, despite serious financial constraints the present

management have been able to put EKM refit and P-11184 back on track. All naval refits during last three years

have been completed on time and few of them which were required for operational commitments have been

delivered before time. In the last FY, the yard delivered 05 new ships, largest amongst all yards(including DPSU

yards) in the country. As regards performance, the net loss of the yard in last three years have been diminishing

year on year (2011-12 Rs 86 Cr, 2012-13 Rs 55 Cr & Rs 2013-14 Rs 46 Cr)

14. With your permission, now I would like to move ahead with some other aspects of the company.

Grading vide Memorandum of Understanding

15. 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

16. Your Company constantly endeavors to adopt and maintain highest standards of ethics in all spheres of its

business activities. The company firmly believes that its business role is based on adherence to fundamental principles

of Corporate Governance like honesty, integrity, accountability, adequate disclosures, legal & statutory compliances,

and to protect, promote and safeguard interests of all stakeholders. It also strives to carry out its business obligations

with good corporate values duly discharging its duties for maximum level of transparency in decision making to

avoid conflicts of interests. It also accords due importance to adherence to the adopted corporate values and

objectives and discharging social responsibilities as a responsible corporate citizen. A detailed report on CorporateGovernance forms part of the Directors Report.


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Financial Restructuring

17. As reported in our earlier reports, the Govt. of India has already sanctioned two Financial Restructuring

Packages to the yard. One in 1997 and another in 2011. Both the Financial Restructuring packages failed to turn

around the yard as both packages did not address the issue of Negative Net worth, Working Capital and Order BookImprovement. The restructuring packages have addressed only to clear of the legacy liabilities and did not fetch any

financial support towards working capital.

18. This issue has been brought to the notice of Ministry of Defence and in order to turn around the yard, a Fresh

Financial Restructuring proposal to turn net-worth positive and provide working capital has been forwarded to the

Ministry. Presently, the proposal of the yard is under consideration at Ministry.

Future Outlook

19. Our strategic location, well laid out facilities, expertise and experience of our personnel and a conducive

market are indicative of a bright future for the yard. However, the current financial constraints need to be tackled

to remain alive. High value orders such as LPDs and SOVs are on the horizon and thus will increase our Order book

from Rs. 1500 Cr now to at least Rs.12,000 Cr in next two years. The aging workforce would retire in next 2-3 years

and will open avenues for induction of new workforce. We have already inducted around 60 Management Trainees

in last two years and they would be trained to tackle the new orders. Overall the future is bright but the present

dark clouds of financial constraints needs immediate attention.

Human Resource Development

20. Attrition of Permanent workforce is an emerging concern of the yard. In order to tide over the issue and

considering the financial position of the yard, inductions in critical areas are being done through direct recruitment.

Recently, the yard has recruited 31 Management Trainees besides lateral induction.

21. Your company continues to impart training to the new entrants and existing employees as well to increase

the productivity. Your company believes that Human Resource of the company is a valuable asset and put its bestefforts to nurture it through proper training & motivation.

Acknowledgements

22. 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 Good Earth 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 & Auditor General of India,

the Principal Director of Commercial Audit and Ex-Officio Member, the Statutory Auditors, Internal Auditors for the

valuable suggestions and co-operation. I also acknowledge with gratitude the continual assistance and guidance

received from Indian Navy and Coast Guard. Last but not the least I appreciate the vital role and hard work put in by

all employees of the company to achieve its Goal and Board of Directors who have supported the company tosustain in the tough times.

Jai Hind.

Visakhapatnam (N K Mishra)

23 Sep 2014 Rear Admiral , IN (Retd.)



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Notes :

1. A member entitled to attend and vote at the Annual General Meeting (the Meeting) is entitled to appoint

a Proxy to attend and vote instead of himself and a proxy need not be a member of the Company. The

instrument appointing proxy should, however, be deposited at the Registered Office of the Company not lessthan 48 hours before the commencement of the meeting.

2. A Statement pursuant to Section 102 (1) of the Companies Act 2013, relating to the special Business to be

transacted at the Meeting is annexed hereto.

3. Relevant documents referred to in the accompanying Notice and the Statement are open for inspection by

the Members at the Registered Office of the Company on all working days, during business hours up to the

date of the meeting.

4. The comments of the comptroller and Auditor General of India under section 619(4) of the Companies Act,

1956 on the Accounts of the Company have not been received so far. These are expected to be received

shortly and will be placed before the Meeting.To

All the Shareholders,

Directors & Chairman of the Audit Committee.

Permanent Special Invitees

Statutory Auditors,

STATEMENT PURSUANT TO SECTION 102 (1) OF

THE COMPANIES ACT, 2013 (the Act)

Item No. (c)

The Board has approved the appointment of CMA Prakash Uppalapati, Practicing Cost & Management Accountant as

Cost Auditor to conduct the audit of the cost records of the Company for the financial year ending 31 Mar 15 at an

audit fee of Rs.50,000/- plus taxes.

In accordance with the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors)

Rules, 2014, the remuneration payable to the Cost Auditors has to be ratified by the shareholders of the Company.

Accordingly, consent of the Members is sought for passing an Ordinary Resolution as set out at item No. (c) of the

Notice for ratification of the remuneration payable to the Cost Auditors for the financial year ending 31 Mar 2015.

None of the Directors / Key Managerial Personnel of the Company / their relatives are, in any way concerned or interested,

financially or otherwise, in the resolution set out at Item No.(c) of the Notice.

The Board recommends the Ordinary Resolution set out at Item No. (c) of the Notice for approval by the shareholders.

By Order of the Board

Hindustan Shipyard Limited

(InaitulaBaig)

Company Secretary

Date: 11 Jul 2014

Place: New Delhi

Notice

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DIRECTORS REPORT FOR THE YEAR 2013-14

The Shareholders,

Hindustan Shipyard Limited

Gentlemen,

1. Your Directors are pleased to present the 62ndAnnual Report on the working of the Company for the financial

year 2013-14. The audited Profit & Loss account for the financial year 2013-14, Balance Sheet, as on 31 Mar 14,

together with report of the auditors of the Company and comments of Comptroller & Auditor General of India on

the Auditors report under Section 619 (4) of the Companies Act, 1956 are appended to this report.

Capital Structure

2. As on 31 Mar 14, the authorised share capital and paid up equity share capital of the Company are at Rs

304.00 Cr and Rs 301.99 Cr respectively.

Performance Highlights

2. Financial Parameters. During the year 2013-14, your Company has recorded a loss of Rs 46.21 Cr. The statedloss is due to reduction in Ship Repair turnover. With this, the accumulated losses as on 31 Mar 14 has increased to

Rs 1117.37 Cr as compared to Rs 1071.16 Cr reported last year. The negative net worth of the Company has increased

from Rs 769.17 Cr to Rs 815. 38 Cr

3. Value of Production.During the financial Year 2013-14, your Company achieved a value of production of

Rs 453.39Cr.

4. MOU Rating. The performance of the Company during the year 2013-14 is expected to be rated as Good in

accordance with the MOU parameters signed with the Government.

Division-Wise Performance

Shipbuilding5. The Shipbuilding Division of your Company has achieved a Value of Production of Rs. 239.14 Cr for 2013-14 as

against Rs.194.66 Cr in the previous year. The yard has set a target turnover of Rs 375 Cr for the current Financial

Year 2014-15

6. Delivery. During the Financial year 2013-14, the yard has delivered 05 Vessels which include one bulk carrier,

one IPV and three 50 T BP Tugs. This is the largest delivery amongst all private and DPSU yards in the country. This

is a record for the yard and considered a significant achievement as this has been achieved despite severe financial

crunch.

Directors Report

DHIRAJ, SAHAS & HIMMAT, 3 No 50 T BP Tugs delivered to Indian Navy

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Directors Report

7. The following are the major events during the year 2013-14 :

Sl Events Date Description Owner

(a) Floating / 02 Aug 13 Dhiraj, Second of 03 Nos. 50 T Bollard Pull Tug Indian Navy

Launching 02 Aug 13 Sahas, Third of 03 Nos. 50 T Bollard Pull Tug Indian Navy

13 Jan 14 Himat, First of 03 Nos. 50 T Bollard Pull Tug Indian Navy

(b) Delivery 08 May 13 ICGS Rani Avantibai, second of 05 Nos. Inshore ICGPatrol Vessel

29 Jul 13 MV Good Day, fourth of 05 nos. (53000 DWT) M/s GMLBulk Carriers

24 Dec 13 Dhiraj, Second of 03 Nos. 50 T Bollard Pull Tug Indian Navy24 Dec 13 Sahas, Third of 03 Nos. 50 T Bollard Pull Tug Indian Navy

31 Mar 14 Himmat, First of 03 Nos. 50 T Bollard Pull Tug Indian Navy

8 Order Book Position. The present order book of the yard comprise 24 Vessels, which are under various

stages of construction. As on 31 Mar 14, the value of Shipbuilding orders is worth Rs 1558.91 Cr. The details of the

order book are as under:

Sl Yard Nos Type of the Vessel Owner No of Balance

Vessels Contract

Value(In Rs Cr)

(a) 11140 53,000 DWT Diamond series GML, Chennai 1 36.88Bulk Carriers

(b) 11156 58 Inshore Patrol Vessels Indian Coast Guard 3 12.15

(c) 11165 72 Inshore Patrol Vessels Indian Coast Guard 8 551.12

(d) 11173 74 50 T Bollard pull Tugs Kandla Port Trust 2 54.37

(e) 11175 77 25 T Bollard Pull Tugs Indian Navy 3 110.24

(f) 11178 83 10T Bollard Pull Tugs Indian Navy 6 122.13

(g) 11184 VC 11184 Indian Navy 1 672.02

Total 24 1558.91

Visit of VAdm B.K. Verma, AVSM, COS, ENC on 31stJanuary 2014ICGS Rani Avantibai, second of 05 Nos. Inshore Patrol Vessel

delivered to Indian Coast Guard

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Directors Report

9. Production/ Physical Performance. Shipbuilding production in DWT and capacity utilisation achieved during

the year 2013-14 as compared to previous year are as under:

(a) The Installed capacity of the yard is 3.5 Pioneer Class vessels, each of 21500 DWT. Hence, the annual

capacity of the yard works out to 75,250 DWT.

(b) As against this, the yard has achieved a capacity utilisation of 38,694 DWT which is 51.42 % of installed

capacity. The capacity utilisation for the last year was 49,458 DWT which translates to 65.73% capacity

utilisation. The reduction of the capacities utilisation is primarily attributed to Low Order Book and poor

financial health to support procurements of materials and payment to service providers.

(c) The man-hours consumed for each DWT in the current year is recorded as 44.68 manhrs against 46

man-hours recorded last year.

Ship Repairs

10. During the year, Ship Repair Division has undertaken repairs of 20 vessels of different types for Indian Navy,

DCI, SCI, ONGC & VPT etc. The Value of Production of Ship Repair Division during the year is Rs 68.70 Cr as againstRs 152.98 Cr recorded last year. The decrease is due to overall recession in the maritime sector resulting in reduction

in high value Ship Repair orders. The yard has set a target turnover of Rs 150 Cr for the current Financial

Year 2014-15.

Submarine Repairs

11. During the year 2013-14, the Value of Production in respect of submarine repairs was Rs 145.56 Cr as against

Rs 134.79 Cr of the last year. The target Value of Production for Financial Year 2014-15 is Rs 125 Cr. The initial value

of the Contract was Rs 629.01 Cr, subsequently the Cost has been revised to Rs 990.52 Cr to cater for requirements

of additional material, documentation, infrastructure, Growth of Work, Taxes, Exchange Rate Variation and renewal

of main line cables. The Contractual DP of the project expired on 28 Feb 2014. Statement of Case for extension of

DP upto 31 Mar 2015 and additional sanction of Rs 80 Cr has been submitted to Indian Navy on 07 Feb 2014. The

hull repairs of the submarine have been completed and installation of Engineering, Electrical & Weapon equipment

and piping systems are in progress. The cumulative completion of work as on 31 Mar 14 is 85%.

Description In Rs. Cr

Ship Building Ship Repairs Retrofit Unallocated Total

VoP 239.13 68.70 145.56 0.00 453.39

Other Income 11.21 48.40 2.21 3.85 65.67

Total Income 250.34 117.10 147.77 3.85 519.06

Expenditure 246.24 21.20 87.42 0.00 354.86

Profit/(Loss) before Depreciation,

Interest and Income Tax (PBDIT) (87.56) 73.86 30.33 (46.06) (29.43)

Depreciation 5.59 0.40 1.54 0.00 7.53

Interest & Finance Charges 2.70 5.80 0.02 0.73 9.25

Net Profit / (Loss) (95.85) 67.66 28.77 (46.79) (46.21)

Operating Results

12. The summarised financial results of the Company for the year 2013-14 are as under: -

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Directors Report

Contribution to National Exchequer

13. The contribution of your Company by way of Income tax, service tax, customs duty, excise duty and VAT to

the national exchequer is Rs 26.49 Cr during the year 2013-14.

Future Outlook

14. Backed by a blend of expertise and experience of serving the domestic shipping needs, HSL is now poised to

take up the challenges of the global market in a big way. With a major thrust towards diversification, the technological

capabilities of the yard are channeled to cater to the growing needs of Defence sector. HSL, under administrative

control of MoD, has already been earmarked to undertake construction of various war vessels including IPVs, LPDs

and submarines. Collaboration with specialists in the relevant field is on the anvil. Technology up-gradation is planned

in the critical areas. The Ministry has also pledged to place high value orders. Despite competition from new yards

that are coming up, the future of the yard is bright and with Defence orders, the yard can reach new heights.

Modernisation

15. The present infrastructure of yard is outdated and almost outlived its life. Accordingly, there is an urgent need

to refurbish and also renew plant and machinery to meet the future challenges. The management has planned to

modernise the yard in two phases as under :

(a) Phase-I. Rs 457.36 Cr has been sanctioned by Govt. of India for Refurbishment & Replacement of Machinery

& Infrastructure (RRMI) under LPD Project. The amount was received on 23 Dec 11. As on date orders worth

Rs 41.43 Cr have been placed, out of which procurement/ work for an amount of Rs 13.07 Cr is completed.

Items Procured and works completed are Fire Tender, Fabrication of Building Dock Gate, Casting and repairs

of RCC keel blocks and installation of CCTV surveillance system etc. Tenders valued Rs 127.79 Cr is under

progress which includes Level luffing cranes at DDSR and new Panel Blasting & Painting Bay.

(b) Phase-II. The second phase of modernisation involves augmentation of infrastructure to enable constructionof sophisticated warships and strategic vessels for Indian Navy and Coast Guard. This would be funded through

Projects such as SOVs and P 75(I).

Design

16. During the year 2013-14, the design department has undertaken the following activities:

(a) Basic designs for 10 T Bollard Pull Tugs

(b) Detailed design of 50 T Bollard Pull Tugs for Kandla Port Trust and 25 T Bollard Pull Tugs for Indian Navy

have been completed successfully.

(c) During the period under review design capabilities of the yard have been augmented substantially tomeet the growing demand of Defence Ship buildings. The new softwares procured are as under.

(i) 40 Nos Aveva Marine CAD/CAM licenses.

(ii) Existing 25 Nos standalone AUTOCAD licenses increased to 35 nos networked AUTOCAD 2014

licences.

(d) Requisite training has also been imparted.

(e) Installation of Access Control System in DDO

(f) Design ToT contract for 08 IPVs Project for Indian Coast Guard has been signed with M/s Garden Reach

Shipbuilders and Engineers Limited.

(g) The Design office is now engaged with Validation of drawings submitted by M/s Vik Sandwik, Chennaifor project VC 11184.

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Directors Report

Quality Assurance

17. During 23-24 Dec 13, Surveillance Audit for ISO 9001:2008 Quality Management System was undertaken by

IRQS, Mumbai and the ISO certificate validity was extended upto Sep 2014. In order to improve the quality

consciousness, an in-house lead auditor training course was conducted by IRQS, Mumbai during 13-17 May 14.

18. The Department of Defence Production, MoD had

declared Financial Year 2013-14 as Year of Quality. In

this regard following activities were conducted during the

year 2013-14.

(a) 03 Seminars with involvement of local PSUs

and 14 workshops on various topics by

eminent personalities from IRS, DNV, ABS etc.

(b) Quality meetings with Indian Navy & Indian

Coast Guard(c) 07 Competitions on Quality Awareness

(d) Display of banners at important locations.

(e) Distribution of handouts of ISO 9001:2008

quality policy of organisation

(f) Institution of awards for best workshops and work centres

19. The Concluding session of Year of Quality 2013-14 was conducted on 30 Apr 2014. The Chief Guest of the

event was Shri C Sri Rama Murthy, Chief Operating Officer from IRS, Mumbai. The function was well attended and

prizes were distributed to winners of competitions conducted during 2013-14.

Safety

20. The management is committed to an accident free and safe working environment. During the year, Plant

Safety inspections were undertaken by safety personnel. Unsafe practices have been identified and remedial measures

have been indicated. During the period under review, regular Central Safety Committee meetings involving members,

co-opted members, other invitees, committee members and office bearers were conducted. Safety banners, posters,

caution boards are displayed in order to create safety awareness among employees.

21. Safety training programmes were organised for workmen and supervisors and employees of contract workers.

22. 43rd National Safety Day was observed on 04 Mar

14. The Chairman & Managing Director administered the

safety pledge to all personnel of the yard. Safety

competitions were conducted during the Safety Week and

Prizes were distributed to winners. Employees of the yard

were deputed to participate in safety competitions

conducted by the Andhra Pradesh Chapter of National

Safety Council, Hyderabad and Shri S K Durga Prasad did

HSL proud bagging First prize in Telugu Essay Writing and

Telugu Poem contest.

National Safety Day on 4th

March 2014

Presentation on Quality by Sri Amith Bhatnagar,

Principal Surveyor, IRS on the eve of Year of Quality 2013-14

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Directors Report

23. Fire Service Week was observed during 14 - 20 Apr 13 to create fire safety awareness. Lecture-cum-

Demonstration was organised by Fire Service Department. The function was well attended by all personnel of the

yard.

Information Technology

24. Following IT initiatives were undertaken during the year.

(a) Employee self-service applications have been developed in-house and available on HSL intranet portal

to provide information on Individual Provident Fund Balance, Nominee details etc.

(b) The Servers have been upgraded to improve the performance of ERP application and the storage space

of intra-mail communications have been enhanced.

(c) Unified Storage Solution has been implemented to provide secured, encrypted central enterprise storage

space for data sharing requirements of LAN users across the yard.

Environmental Aspects

25. Your Company continues to be environment friendly

and has fulfilled all the statutory requirements of central

and state pollution control boards. The Company is

committed to meet all the stipulated standards to maintain

and protect the environment.

Industrial Relations

26. During the year 2013-14, the Industrial Relation of

the Company remained peaceful and harmonious.

Welfare Activities

27. Your Companys concern for the welfare of the employees continues to be paramount and during the year

various welfare measures were implemented. Hindustan Shipyard Recreation (HSR) club assisted by the Company

to undertake various recreation activities for the employees. The Company has renovated and refurbished Crche

facility provided for the Children of Lady employees. HSR Club organised 67 th Independence Day and 65thRepublic

Day celebrations on 15 Aug 2013 and 26 Jan 2014 respectively at Colony Parade Ground. Cultural Programes werealso organised by the HSR Club on these occasions.

Plantation of Sapling by Sri Ashok K.K. Meena, JS (NS), MOD

Fire Week Celebrations on 14 20 April 2014

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Directors Report

Training

28. A large number of ITI Apprentices were trained on designated trades. During the year 2013-14, 229 Trade

Apprentices have successfully completed their training and were awarded National Apprenticeship Certificates by

Govt of India, Ministry of Labour and Employment, NCVT, RDAT, Hyderabad. Presently 212 Trade Apprentices are

undergoing apprenticeship training under the Apprentices Act.

29. Training was also imparted to Graduate Engineers and Diploma Holders. 20 Engineering Graduates, 04

Technician (Diploma) Apprentices were trained under the Apprentices Act and awarded Certificate of Proficiencies

by Govt. of India, Ministry of Human Resource Development, Board of Apprenticeship Training (SR), Chennai.

30. The yard also provided on job training and extended facilities for project work to 1114 students of various

Engineering Colleges, Management Institutions and marine Institutions.

Gender Budgeting

31. In pursuance of the directives of the Government of India, a Gender Budgeting Cell has been constituted

with four women Officers to act as a Nodal Agency for all gender responsive budgeting initiatives and to ensure

effective implementation of general development programme for women employees like training, advancement of

skills, provision of welfare amenities at work place etc. There are presently 92 women employees in the yard.

Medical Benefits

32. Your Company runs two dispensaries. The dispensary in the yard works from 07 AM to 10 PM and the other

at residential colony works round the clock to cater for the needs of employees and their dependents. Two ambulancesare available at yard dispensary round the clock. Outpatient medical facilities are extended through a panel of

doctors. Medical facilities are being extended to the employees through referral hospitals and full medical expenses

are being borne by the company in case of hospitalisation due to accidents that occur while on duty. Under referral

system, there are five hospitals which are used for in-patient treatment. The Company bears medical expenses

which are directly paid to the concerned hospitals. Majority of employees and their dependents are covered under

the Medical Reimbursement Scheme for hospitalisation. During the year, an amount of Rs 4.72 Cr was expended

towards medical treatment of employees and their dependents. For crane operators and drivers, annual Eye Check

up by Ophthalmologist from Government Hospital, were arranged. Medical checkups to all Staff and Workmen of

the Company who have crossed more than 50 years of age are taken up under occupational health service. All

retired employees both self and spouse are issued Medical cards to get concessional rates in clinical /lab charges,

without any additional financial burden for the yard.

Celebration of Independence Day

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Directors Report

Reservation of Posts for SCs/STs

33. Your Company has complied with all Govt. directives

with regard to reservation of posts for SC/ST.

Representation of SC/ST employees in various categoriesof posts, recruitments made & numbers filled by members

of SCs/STs during the calendar year 2013 and

representation of Ex-Servicemen & Women employees are

placed at annexure 3, 4 & 5 respectively.

Reservation for Physically Handicapped

34. Reservation for physically handicapped in all groups

viz A, B, C and D posts are being complied as per the

directives of Govt. of India. Present percentage of

physically handicapped employees is 3.01% as against

required 3%.

Official Language Implementation

35. Official Language Implementation Committee

meetings and Hindi Workshops were held regularly. Under

Hindi Teaching Scheme, training classes for Hindi Learning

& Typing were conducted for the employees. During the

year, 80 employees participated in Hindi workshops. To

ensure, compliance of Official language policy of Govt. of

India and to encourage use of Hindi, an inter-departmental

monthly incentive scheme is being followed. The Annual

Report, MOU and other documents of the company arebeing issued bilingually. To encourage the employees to

read Hindi books, a separate Hindi Library has been set

up. Presently the library has 350 books.

36. Hindi Fortnight was observed during 01-14 Sep 2013. On this occasion, various competitions were organised

and cash awards were presented to winners.

Implementation of Right to Information Act, 2005

37. As per directives of the Govt of India, the RTI Act 2005 is being complied, for which required infrastructure

has been put in place. An RTI portal in the website of the Company is being maintained. Periodical reports on the

progress of implementation of the Act are being submitted to statutory authorities/ Government.38. All necessary information as per the provisions of RTI Act 2005 are being furnished to information seekers

regularly. During the year 2013-14, your Company received 103 applications (directly and through MoD) and all of

them have been replied.

Corporate Social Responsibility

39. The yard continues to show its commitment towards CSR even though it is not required to allocate dedicated

funds towards CSR being a loss making organization. As a part of it, the Board of Directors has constituted a Board

level sub-Committee on CSR and Sustainability and formulated a CSR & Sustainability Policy and Plan for the year

2013-14. The Chairman of the Committee is Shri Samirendra Chatterjee, IAS (Retd.), Non-official Part time Director.

40. A Senior Management Committee on CSR & Sustainability has also been constituted to monitor theimplementation of the CSR Plan for the year 2013-14. The Senior Management Committee is chaired by an officer

Hindi Day Celebrations

123rdBirth Anniversary Celebrations of Dr. B.R. Ambedkar

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Directors Report

in General Manger Cadre with HODs/ Senior Officers from concerned Departments of the yard as its members. The

Committee overseen and implemented the CSR Plan for the year 2013-14.

41. The company has identified some of the need based CSR initiatives for the betterment of the local people and

society with minimum financial commitment. Towards this, an amount of Rs 1,05,000/- was spent during the year2013-14. The following activities have been undertaken for the betterment of all stakeholders, local people and the

society at large as a part of CSR initiative of the Company:

CSR Activities

(a) World Ozone Day on 16 Sep 2013. A rally was conducted to create public awareness of the dangers of

Ozone depletion and the need to reduce use of CFCs, Carbon emissions etc by over two hundred school and

college students and staff from the educational institutions functioning in HSL township, Members of HSL

Rover Scouts and Scout band.

(b) International Coastal Cleanup Day on 21 Sep 13. 150 (Approx) enthusiastic school and college students

and Staff from educational institutions functioning in the HSL township in Gandhigram, members of the

Rovers Scouts, members of CSR Senior Management Committee of the Company participated to clean up thesea shore along Varun Beach.

(c) Mega Medical Camps. On 20 Oct 13 & 30 Mar 14 two Mega Medical camps were organised for the

betterment of the weaker sections of society. Renowned Doctors of various specializations rendered their

valuable support for the cause and free medicines were distributed to needy patients. Around 1000 people of

weaker section benefitted from the camp.

(d) World Environment Protection Day. On 26

Nov 13, World Environment Protection Day was

observed. Essay writing, quiz, slogan and debate

competitions were conducted and prizes were

distributed to winners. A street play titled VrikshoRakshati Rakshitaha was also staged at Main Gate,

which drew huge crouds and appreciated by one

and all. In addition members of school children,

teachers and Rover Scouts took out a rally to stress

upon the importance of environment protection.

(e) Blood Donation Camp.On 30 Nov 13, a Blood

Donation camp was organised in association with

Lions Club of Visakhapatnam. A record number of

254 employees of HSL donated blood. Senior Officers and members of the CSR Committee, Doctors and

Paramedical Staff including representatives of the Unions/Associations participated in the event.

(f) National Energy Conservation Day.On 14 Dec 2013, as a part of Energy Conservation day, the yard

organised a short play titled Meere Aalochinchandi in residential colony to create awareness among colony

residents regarding energy conservation.

(g) National Road Safety Week (11-17 Jan 14). On 17 Jan 2014, as a part of National Road Safety Week,

the yard organised Sticking of Black Sticker on the head light of vehicles to dissuade driving with high beam

at Scindhia Junction. Around 1500 vehicles (two wheelers/ four wheelers) were stickered by employees of

HSL and H.S. Rover Scouts with the help of local police.

(h) Arrive Alive campaign for Road Safety. 400 (Approx) students along with Lecturers & Teachers of

Hindustan Shipyard Junior College, HS Degree College, Gandhigram Vidya Nililayam and other educational

institutions participated in a rally on Traffic Safety Awareness organised by the yard.

Playlet on World Environment Protection Day on 26thNovember 2013

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Directors Report

(i) Environment Protection. Saplings were planted in the yard by Chairman of CSR & Sustainability

Committee, Directors and many Senior Officers towards environment protection.

(j) Free Internship Training to Students. Free internship training was imparted to 52 students of

various colleges and educational institutions under CSR activity during the year 2013-14. Also, twophysically handicapped students were exempted from payment of fee towards Project and research

work at HSL under CSR initiatives during the year 2013-14.

(k) Augmentation of Libraries of Colleges run by

Gandhigram Education Society. HSL has taken

necessary steps to augment the libraries of the

colleges run by Gandhigram Education Society to

provide quality education to the students of

economically backward and weaker sections of the

society. Shri Samirendra Chatterjee, Chairman of theCSR Committee handed over books worth

Rs.30, 000/- to the Principals of Junior and Degree

Colleges in the Colony.

Sustainability: Your Company has organised Training

Programs/ Workshops/ Seminars for Executives, Staff &

Workmen, Year of Quality and taken Energy Saving

Measures as part of its sustainability activities.

42. Apart from the above, the company also bears the expenditures towards electricity and water charges of the

six educational institutions functioning under Gandhigram Education Society (GES). The expenditure on this account

was Rs 71089/- during the year 2013-14.Corporate Governance Report

43. A report on Corporate Governance & compliance certificate is placed at Annexure-1.

Management Discussion and Analysis

44. A report on Management Discussion and Analysis is placed at Annexure-2.

Activities of Vigilance Department

45. Vigilance department in HSL is functioning under the guidance of Central Vigilance Commission and constant

vigil on various activities of HSL is being looked after by the department. Preventive Vigilance was the focus during

the period under review. The main thrust has been given to transparency in procurement through acceleration of e-procurement and vendor development. Vigilance Awareness Week was observed from 28 Oct 13 to 02 Nov 13 to

emphasise the importance of enhanced probity and spread awareness against Corruption. As a part of Vigilance

Awareness Week, vigilance oath was administered and banners were displayed to create awareness. On 30 Oct

2013, a seminar was conducted on Promoting Good Governance-positive contribution of vigilance. Workshops

on the subject Disciplinary proceedings & Tendering Procedures were organised on 29 May 13, 20 Jun 13, 31 Jul

13 and 27 Sep 13 respectively through eminent speakers. During the year, rotation of employees in sensitive posts

has been done based on departmental exigencies, feasibility and work requirement.

Conservation of Energy

46. Information required under the Companies (Amendment) Act 1988 pertaining to Conservation of Energy,

Technology absorption and Foreign earnings and outgo is placed at Annexure-6.

Shri Samirendra Chatterjee, Chairman of the CSR Committee

handed over books to the Principals of Junior and Degree Colleges

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Directors Report

Particulars of Employees

47. During the year 2013-14, no employee of HSL drew remuneration in excess of Rs 60 Lakhs per annum, (ie Rs

5 Lakhs per month). Hence, the information required under Section 217(2A) of the Companies Act 1956, read with

the Companies (Particular of Employees) Amendment Rules 2011, be treated as NIL.

Statutory Auditors

48. M/s B V Rao & Co., Visakhapatnam had been appointed as Statutory Auditors of the Company for the financial

year 2013-14 by the Comptroller & Auditor General of India. The fees payable to Statutory Auditors for the year

2013-14 was Rs 1,60,000/- exclusive of Service tax and other pocket expenses.

The reply of the management to the observations of C&AG is placed at Annexure 7.

Directors Responsibility Statement

49. Pursuant to the requirement under section 217(2AA) of the Companies Act 1956 with respect to the Directors

Responsibility Statement, following is hereby confirmed:-

(a) That in preparation of the annual accounts, the applicable accounting standards had been followedalong with proper explanation relating to material departures.

(b) That the Directors had selected such accounting policies and applied them consistently and made

judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of

affairs of the Company as on 31 Mar 14 and the loss of the Company for the financial year ended 31 Mar 14.

(c) That the Directors had taken proper & sufficient care for maintenance of adequate accounting records

in safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(d) That the Directors had prepared the annual accounts on a going concern basis.

Acknowledgements

50. The Board of Directors acknowledge with gratitude, the valuable guidance & support received from theDepartment of Defence Production, Ministry of Defence and Department of Public Enterprise. Your Directors are

particularly thankful to the valued customers i.e. Indian Navy and Coast Guard, Dredging Corporation of India, Oil &

Natural Gas Corporation Limited, Visakhapatnam Port Trust, Kandla Port Trust, Shipping Corporation of India etc.

Your Directors also express their gratitude to Controller of Defence Accounts (Navy), Government of Andhra Pradesh,

Departments of Customs, Income Tax, Excise, Service Tax & Sales Tax for their kind support. The Directors also

acknowledge their gratitude to the clients and all Classification Societies, who have ensured quality and adhered to

the standards. Your Directors also place on record their appreciation for the assistance extended by the Companys

bankers Indian Bank and valuable advice rendered and co-operation extended by the Statutory Auditors i.e.,

M/s B V Rao & Co., Internal Auditors i.e., M/s. Ambika-Isha & Co. and the Officers & Staff of the Offices of the

Principal Director of Commercial Audit & Ex-Officio Member Audit Board, Bangalore and their Headquarters. Your

Directors also wish to place on record its deep appreciation for the valuable contribution of the employees at

various levels for their hard work, dedication and commitment and look forward to their continued involvement

and spirited team effort towards achieving the future goals.

FOR AND ON BEHALF OF

THE BOARD OF DIRECTORS

(NK Mishra)

New Delhi Rear Admiral IN (Retd.)11 July 2014 Chairman & Managing Director

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Annexure 1

REPORT ON CORPORATE GOVERNANCE

As per the Guidelines issued by the Department of Public Enterprises, Government of India, a Reporton compliance of the provisions on Corporate Governance is enumerated in succeeding paragraphs.

2. Philosophy on Corporate Governance: Hindustan Shipyard Limited constantly endeavours to adopt and

maintain highest standards of ethics in all spheres of its business activities. The company firmly believes that its

business role is based on adherence to fundamental principles of Corporate Governance like honesty, integrity,

accountability, adequate disclosures, legal & statutory compliances, and to protect, promote and safeguard interests

of all stakeholders. It also strives to carryout its business obligations with good corporate values duly discharging its

duties for maximum level of transparency in decision making to avoid conflicts of interests. It also accords due

importance to adherence the adopted corporate values and objectives and discharging social responsibilities as a

responsible corporate citizen.

Board of Directors

3. Composition of the Board:The Board of Directors during the Financial Year 13-14 comprised 09 Members

viz. 04 Whole time Directors (Including the Chairman and Managing Director), 02 Part time Government Directors

and 03 Part time Non Officials Directors (Independent Directors).

4. The details of the members of the Board during the Financial Year ended on 31 Mar 14 are as under:


Name of the Directors Period Category of Directorship No. of Other

Directorship

RAdm N K Mishra, NM 01 Apr 13 to Chairman &Managing Director Nil31 Mar 14

Shri Rakesh Mahajan, 01 Apr 13 to Whole time Director Nil

10 Oct 13

Cmde K S Subramanian 01 Apr 13 to Whole time Director Nil

31 Mar 14

Cmde K L N Prasad 01 Apr 13 to Whole time Director Nil

31 Mar 14

Cmde Ashok Bhal, VSM 01 Apr 13 to Whole time Director Nil

31 Mar 14

VAdm K R Nair, AVSM,VSM 01 Apr 13 to Part-time Govt. Director 1

31 Mar 14

Shri Ashok K K Meena, IAS 01 Apr 13 to Part-time Govt. Director 2

31 Mar 14

Dr Devi Singh 01 Apr 13 to Part-time Non official Director 5

31 Mar 14 (Independent)

Shri Skand R Tayal, IFS 01 Apr 13 to Part-time Non official Director 1


Shri Samirendra Chatterjee, IAS 05 Apr 13 to Part-time Non official Director 0


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5. As on date of this report, Vice Admiral AV Subedhar, AVSM, VSM has been appointed as Non official Part time

Director w.e.f 18 Jun 2014 in the place of Vice Admiral K R Nair, AVSM, VSM vide Govt. of India letter 2(12)/2007-

D(SY) dated 23 Jun 2014.

Profiles of new Director

6. Vice Admiral A V Subhedar, AVSM, VSM.Vice Admiral AV Subhedar has commissioned in Indian Navy in

August 1977. He is a post graduate in Marine Engineering from Pune University. During his career, spanning over

Three and half decades, Admiral held important assignments, both Afloat and Ashore. He has served on five frontline

warships including a Tenure as Fleet Engineer Officer, Western Fleet in 1998. His important ashore appointments

include Director Naval Training and Ship Production at Naval Headquarters, Director Machinery Trials and Acceptance

Authority (Mumbai), Warship Production Superintendent (Mumbai), General Manager (Refit) Naval Dockyard

Visakhapatnam, Chief Staff Officer(Technical), Eastern Naval Command, Visakhapatnam and Admiral Superintendent,

Naval Dockyard, Mumbai. As Director General Naval Projects, Mumbai, he was responsible for planning and execution

of major technical and marine infrastructure for the Navy on West Coast. For his Meritorious service of exceptionally

high order in Indian Navy, he has been awarded as V ishisht Seva Medal in 2009 and Ati Vishisht Seva Medal in 2011

by the President of India.

7. The Board of Directors of HSL as on the date of this report is as under:

Name of the Directors Category of Directorship No. of Other

Directorship

R Adm Nikunj Kishore Mishra, NM, IN (Retd) Chairman & Managing Director Nil

Cmde K.S Subramanian, NM, IN, (Retd) Whole time Director Nil

Cmde Ashok Bhal, VSM, IN (Retd) Whole time Director Nil

V Adm A V Subhedar, AVSM, VSM, IN Part-time Govt. Director 1

Shri Ashok K K Meena, IAS Part-time Govt. Director 2

Shri Skand R Tayal, IFS (Retd) Part-time Non official Director 1

(Independent)

Shri Samirendra Chatterjee, IAS (Retd) Part-time Non official Director Nil

(Independent)

8. During the year and upto the date of this report the following Directors has left the board due to

superannuation / completion of tenures of their appointment:

(a) Vice Admiral K R Nair, AVSM, VSM has completed his tenure as Part time Official Director on 18 Jun2014. Vice Admiral A V Subhedar, AVSM, VSM has been appointed as Part time official Director in lieu.

(b) Shri Rakesh Mahajan, Director (Finance & Commercial) has relinquished his office of Director (Finance

& Commercial) on 10 Oct 2013 on acceptance of his resignation by the Competent Authority at Ministry

of Defence.

(c) Dr Devi Singh, has completed his tenure as Part time official Director on 17 May 2014.

(d) Cmde (Retd.) K L N Prasad, Director (Corporate Planning & Personnel) expired on 20 Jun 2014. Thus the

post of Director (Corporate Planning & Personnel) has fallen vacant.

9. The Board of Directors wishes to place on record the appreciation of the services rendered by the outgoingDirectors. The Board also deeply regret on the sad and sudden demise of Cmde (Retd.) K L N Prasad.

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10. Dr Devi Singh has completed his tenure on 17 May 2014 and thus one post of Independent Director post has

fallen vacant since 18 May 2014. Therefore, as on the date of the report, there is one vacancy of Independent

Director needs to be filled by the Govt. of India.

11. Permanent Special Invitees on the Board :During the Year, the following Permanent Special Invitees continuedon the Board:

(a) Shri Rajnish Kumar, Addl FA & JS (RK), MOD

(b) Rear Admiral Anil Kumar Saxena, NM

(c) Dr V Bhujanga Rao, DS, CCR&D, (NS& IC), DRDO

12. In addition, during the Financial year 2013-14 and upto the date of this report, the Govt. of India appointed

the following Permanent Special Invitees on the Board:

(a) Vice Admiral Anurag G Thapliyal, AVSM & Bar, Director General, Indian Coast Guard

(b) Vice Admiral K R Nair, AVSM, VSM, Chief of Materiel, Indian Navy

13. Board Meetings.The Board meets at regular intervals during which the company affairs are discussed and

decisions are taken. During the financial year ended 31 Mar 2014, Seven Board Meetings were held on 17 May

2013, 27 Jun 2013, 23 Jul 2013, 12 Sep 2013, 30 Sep 2013, 02 Dec 2013 and 26 Feb 2014.

14. Directors Attendance.Details of Directors attendance at the Board Meetings and Annual General Meeting

are given below.

Name of the Directors No. of Meetings

Held during the Attended Attendancetenure of Directors at last AGM

Radm N K Mishra, NM (Retd) 7 7 Yes

Shri Rakesh Mahajan 5 5 Yes

Cmde K S Subramanian, NM (Retd) 7 6 Yes

Cmde K L N Prasad (Retd) 7 6 Yes

Cmde Ashok Bhal, VSM, (Retd) 7 7 Yes

Shri Ashok K K Meena, IAS 7 6 -

VAdm K R Nair, AVSM, VSM 7 5 -

Dr Devi Singh 7 6 Yes

Shri Skand R Tayal, IFS 7 5 -

Shri Samirendra Chatterjee 7 6 -

15. Board Procedure. Board Meetings are held at least once in every quarter, and more often if considered

necessary, focusing on business requirements. Every Board meeting is convened through proper and appropriate

advance notice to the Board Members after obtaining approval from Chairman & Managing Director. Detailed

agenda, management reports, other relevant documents are generally circulated well in advance to the members

of the Board in order to have meaningful, informed and focused decisions at the meeting. To address specific urgent

needs, Board meetings are also called at short notice and sometimes considering business exigencies, Resolutionsare also passed through circulation which is confirmed by the Board members in its very next meeting.

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16. In general, agenda papers are prepared by the concerned officials, concurred by the Functional Directors and

put up for approval of Chairman & Managing Director. Duly approved Board notes and agenda papers are circulated

among the Board members by the Company Secretary.

17. The Board and its members have complete access to all informations of the company. The Board is also freeto recommend inclusion of any matter in agenda for discussion. If necessary, senior management is also called to

provide additional inputs to the items being discussed by the Board / committee.

18. Audit Committee. The Audit Committee of the Board comprises three members viz. Two Part time non

official Directors and One Part time Official Director. The Audit Committee is being chaired by a Non official part

time Director. The following were the Audit Committee Members during the Financial Year 2013-14.

(a) Dr. Devi Singh Chairman

(Part Time Non official director)

(b) Shri Skand R Tayal Member

(Part Time Non official director)

(c) Shri Ashok K K Meena, IAS Member

(Part Time Official director)

19. The terms of reference of the audit committee are as specified in Sec 292A of the Companies Act, 1956 and

the guidelines issued by the Department of Public Enterprises. The primary function of the committee is to assist

the Board of Directors to fulfill its responsibilities through review of financial reports, internal control systems for

finance, accounting and legal compliance by the management and Board.

20. The Audit Committee reviews Internal Audit Reports, meets Statutory Auditors and Internal Auditors and

discusses their findings, suggestions and other related matters and reviews the half yearly and annual financialstatements before their submissions to the Board.

21. The Chairman of the Committee apprises the Board regarding observations of the Audit Committee during

the Board meeting. The minutes of the Audit Committee meetings are placed before the Board.

22. During the financial year 2013-14, four meetings of the Audit Committee were held on 23 Jul 2013, 12 Sep

2013, 02 Dec 2013, and 26 Feb 2014.

23. The attendance of the members of the Audit Committee during the financial year 2013-14 is given below

Name of the member No of meeting

Held during the tenure AttendedDr Devi Singh 4 4

Shri Skand R Tayal, IFS (Retd.) 4 4

Shri Ashok K K Meena, IAS 4 4

24. Procurement Sub Committee:In order to obviate procedural delays in connection with procurement of high

value equipment, a Sub-committee of the Board with vested financial power was constituted in the 366 thBoard

meeting held on 21 Feb 2012 with the following Members

(a) RAdm N K Mishra , NM (Retd) Chairman


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(b) Dr Devi Singh Member

Part time Non official Director

(c) Shri Rakesh Mahajan Member

Director (Finance & Commercial)

(d) Concerned Functional Director Member

25. In view of the resignation of Director (Finance & Commercial), the Procurement Sub Committee was

reconstituted in 380thMeeting of the Board of Directors held on 26 Feb 2013 with the following members

(a) Rear Admiral N K Mishra, NM (Retd.) Chairman


(b) Shri Samirendra Chatterjee Member

Part time non official Director

(c) Concerned Functional Director Member

26. The terms of reference of the committee include powers to approve proposals for procurement of order for

required assets/capital expenditure items, materials, equipment, tools, stores & spares, imports, approvals of works,

sub-contracts, and facility hire valued above Rs 5 Cr and up to the value of Rs 20 Cr in each case for sanctioned

projects except nomination cases. However, the financial powers of Procurement Sub Committee to approve the

proposals were revised for procurement of materials and equipments value above Rs 25 Cr upto Rs 50 Cr for the

Project VC 11184 only.

27. During the Financial year 2013-14, one meeting of the Procurement Sub-Committee was held on 30 Sep 13

where all members were present.

28. Project Review Sub Committee.In order to review

important Govt. Sanctioned Projects and executed by the

Company, a Project Review Sub Committee (PRSC) of the

Board of Director was constituted in the 372ndMeeting of

Board of Director held on 14 Feb 13. The PRSC comprise

following Directors as members:

(a) Shri Skand R Tayal, IFS (Retd.) Chairman


(b) Shri Rakesh Mahajan MemberDirector (Finance & Commercial)

(c) Concerned Functional Director Member

29. The terms of reference of the Committee are as follows:

(a) Detailed Review of technical and financial progress achieved with reference to the milestones fixed

and scope and specifications prescribed.

(b) Review adherence to contractual provisions and approved procurement policy of the company in

important cases of procurement.

(c) To identify deficiencies in the extant procedures and to make suggestions for improvement.

Visit of Ambassador (Retd) Skand R. Tayal, Independent Director

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30. In view of the resignation of Director (Finance & Commercial), the Project Review Sub Committee was

reconstituted in 380thMeeting of the Board of Directors with the following members

(a) Shri Skand R Tayal, IFS (Retd.) Chairman


(b) Cmde K S Subramanian, NM (Retd.) Member


(c) Cmde K L N Prasad, (Retd.) Member

Director (Corporate Planning & Personnel)

(d) Cmde Ashok Bhal, VSM (Retd.) Member

Director (Strategic Project)

31. During the Financial year 2013-14, three meetings of the Project Review Sub-Committee were held on 10 Apr

2013, 23 Jul 2013 and 26 Feb 2014.

32. The attendance of the members of the Project Review Sub-Committee during the financial year 2013-14 is

given below:

Name of the member No of meeting

Held during the tenure Attended

Shri Skand R Tayal, IFS (Retd.) 3 3

Shri Rakesh Mahajan 2 2

Cmde K S Subramanian, NM (Retd.) 3 3

Cmde K L N Prasad, (Retd.) 3 2

Cmde Ashok Bhal, VSM (Retd) 3 3

33. Human Resource Committee.In order to address HR related issues that require the attention of the Board,

the Board in its 379thMeeting 02 Dec 2013 constituted the Human Resource Committee. The HR Committee comprise

following Directors as members:

(a) Shri Samirendra Chatterjee Chairman


(b) Cmde K S Subramanian, NM Member


(c) Cmde K L N Prasad Member

Director (Corporate Planning & Personnel)34. The terms of reference of the Committee are as follows:

(a) To review and recommend the proposals towards revision in payment of allowances/benefits to the

employees.

(b) To examine the proposals related to other HR related issues like promotion policy of the company,

welfare measures for employees, IR issues etc. and give its recommendations.

(c) To review and monitor the execution of HR Plan in alignment with companys objective and future

business expansions and recommend the same to the Board for approval

35. During the Financial year 2013-14, one meeting of the HR Committee was held on 25 Jan 2014 where all

members were present.

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41. Remuneration of Whole-time Directors.The remuneration of Whole Time directors is fixed by the Government

as the Company is a Government Company within the meaning of Sec 2 (45) of Companies Act, 2013.

42. Remuneration to Part Time Directors.Part time Official Directors are not eligible for sitting fees attended by

them. The part time Non-Official (Independent) Directors are paid sitting fees as per the provisions of the Companies

Act, 2013 for each meeting of the Board /Committees (s) of the Board and reimbursed actual expenditure to attend

the meeting of the Board/Board Committee (s).

43. Code of Business Conduct and Ethics.As per guidelines issued by Department of Public Enterprises, the

company has formulated Code of Business Conduct and Ethics for Board Members and Senior Management for

better corporate governance and fair/ transparent practices. A copy of the same has been circulated to all concerned

and also available on the website of the Company. The Board members and senior management personnel, to

whom the said code is applicable, have affirmed compliance of the same for the year ended 31 Mar 14.

44. General Meetings.The details of the last three Annual General Meetings and Extra Ordinary General Meetings

of the company are given below:

Year Date Time Location

2010-11 16.09.2011 11.00 A.M Shipyard House, New Delhi

2011-12 21.09.2012 11.00 A.M HSL Board Room, Visakhapatnam

2012-13 30.09.2013 10.00 A.M HSL Board Room, Visakhapatnam

Extraordinary

General Meeting 27.05.2014 11.00 A.M HSL Board Room, Visakhapatnam

45. Whistle Blower Policy.The Company has its Whistle

Blower Policy and the same has been displayed on the

Website of the Company.

46. Risk Management Policy.The company has framed

a Risk Management Policy and the same has been

approved by the Board. As on the date, the policy is under

implementation.

47. Disclosures.During the year 2013 -14, the company

has not entered into any transactions with any Directors

that may have potential conflict with the interest of the

company at large. The members of the Board, apart from

receiving Directors remuneration (wherever applicable),

do not have any material or pecuniary relationship or transaction with the company which in judgment of the Board

may affect independence of judgment of the directors.

48. During the last three years, there has been no instance of non-compliance by the company on any matter

related to Companies Act, 1956 or any Industrial Laws.


62ndAnnual General Meeting on 23 Sep 2014

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49. The guidelines issued by the Department of Public Enterprises, Govt of India have been complied with.

50. The company has not incurred any expenditure which is not for the purpose of Business of the Company, nor

has the Company incurred any expenditure which is person in nature for the Board of Directors and top management.

x

DECLARATION

As provided under the guidelines on Corporate Governance for CPSEs 2010 issued by the Department of Public

Enterprise, Government of India, it is hereby declared that all Board members and Senior Management personnel

have affirmed compliance with the code of conduct for Directors and Senior Management personnel of Hindustan

Shipyard Limited for the year ended 31 Mar 2014.

For Hindustan Shipyard Limited

Place: New Delhi (N K Mishra)

Date: 11 Jul 2014 Rear Admiral, IN (Retd.)


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Annexure 2

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry Structure and Developments1. The Indian shipbuilding industry consists of public and private sector yards. India has around 32 shipbuilding

yards operating in public & private sectors. in recent years, the industry has witnessed entry of new shipbuilders

from the private sector. With liberalisation policy of the Government and promulgation of Defence Procurement

Policy-2013 (DPP 2013), these shipbuilders have become serious competitors to Defence Public Sector yards.

2. With opening of Defence market to Private Sector, your Company is facing stiff competition. To meet this

competition, an intensive modernisation programme has been planned. On successful completion of the said

modernisation programme, your Company will be able to meet the future challenges and remain competitive. The

major customers of your Company, ie Indian Navy & Coast Guard, have announced ambitious expansion plans and

your Company is putting its best efforts to secure lucrative orders from these customers. This would help the yard

to turn around & become profit making.

SWOT Analysis

3. In the changing environment, your Company has identified following strengths, weaknesses, opportunities

and threats:-

(a) Strengths

Largest Shipyard on East Coast of India.

Only Shipyad on East Coast with submarine repair capability

Large covered building dock for un-interrupted work.

Strategically located with water depth of about 10 meters

Capable to build all kinds of vessels up to 80,000 DWT

850m of wharfage with more than adequate cranage

Large Dry dock and wet basin with exclusive workshops for ship repairs

Cranage to handle blocks/ loads upto 300 tons

Three low bed transporters up to 200 tons capacity

(b) Weaknesses

Aging work force with low productivity

Old plant and machinery with frequent breakdowns

Acute cash/ working capital constraints

Difficulty to retain good contractors & vendors view irregular payments

Weak supply chain management

Lack of high value orders

High overheads due to increased wages

Low teeth to tail ratio

(c) Opportunities

Increased requirements of ships to meet coastal security/ Defence needs

Large scope for repairs due to increased maritime/ offshore fleet & platforms

National need to Create second line Submarine Construction

Navys requirement for Strategic Vessels to meet Defence needs.

Need for large special ships to collect Intelligence information Medium Repair/ Mid Life update of Submarines

Management Discussion & Analysis

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(d) Threats

Loss of expertise due superannuation.

Poaching by sister PSUs & upcoming yards

Loss of business due new yards on East Coast Uneven playing field compared to Private Yards

Volitile Exchange Rate Variation

Unfavourable judgements for legal cases

Nonpayment of statutory dues to employees leading to legal tangles and IR climate.

Changing International Maritime Laws

Infrastructure Modernisation

4. As reported last year, the Refurbishment & Replacement of Machineries and Infrastructure is under progress

with financial support from Govt. of India under LPD Project. In this regard Rs 457.36 Cr has been sanctioned by

Govt. of India for the said purpose. The present status of activities pertaining to RRMI activities till date is as follows:-

(a) As on date orders worth Rs 41.43 Cr have been placed, out of which procurement/ work for an amount

of Rs 13.07 Cr is completed. Items Procured and works completed includes Fire Tender, Fabrication of Building

Dock Gate, Casting and repairs of RCC keel blocks and installation of CCTV surveillance system etc.

(b) Tenders valued Rs 127.79 Cr is under progress which includes Level luffing cranes at DDSR and new

Panel Blasting & Painting Bay

Segment-wise or Product-wise Performance

5. Your Company has three major revenue segments i.e. Shipbuilding, Ship Repairs & Submarine Retrofit. The

Value of Production during the Financial Year 2013-14 from these segments was Rs.453.40 Crs.

6. Segment wise performance during the FY 2013-14 were as under:-

(a) Shipbuilding. Your Company has delivered 05 Vessels which include one 53,000 DWT Bulk carrier ofM/s GML, Chennai, one IPV and three 50 T BP Tugs. This is the largest delivery amongst all private and DPSU

yards during the year 2013-14. The Shipbuilding Division of your Company has recorded a VOP of Rs 239.14

Cr during the said period.

(b) Ship Repairs. Your Company has undertaken Repairs of 20 Vessels of Indian Navy, DCI, SCI, ONGC and

VPT etc. Ship Repair segment of your Company has always been considered as profitable and is being given

utmost thrust as it carries higher margin comparative to shipbuilding segment. It is unfortunate that Indian

Navy has delayed committed refits of two vessels due to operational reasons. Thus the repair dock could not

be used to its desired potential and also the turnover of repair division was adversely afftected. The Ship

Repair Division recorded a VOP of Rs 68.70 Cr during the year 2013-14.

(c) Retrofit.Submarine Retrofit Division of your Company concentrates on refit of Submarines. Presently

INS Sindhukirti, an EKM Class Submarine is under Medium Refit-cum-Upgradation. The VOP of this Division

during the Financial Year 2013-14 was Rs 145.56 Cr. This is a presitigeous refit and has been inordinately

delayed to various reasons. However, during the year 2013-14, the refit has made noticeable progress and

the project has been put back on track.

Future Outlook

7. Our strategic location, expertise experience of our personnel and a conducive market are indicative of a

bright future for the yard. However, the current financial constraints need to be tackled to remain alive. High value

orders such as LPDs and SOVs are on the horizon and thus will increase our Order book from Rs. 1500 Cr now to at

least Rs.12,000 Cr in next two years. The aging workforce would retire in next 2-3 years and will open avenues for

induction of new workforce. We have already inducted around 60 Management Trainees and they would be trained

to tackle the new orders. Overall the future is bright but the present dark clouds of financial constraints needsimmediate attention.

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Risks & Concerns

8. Presently the major concern of the Company is shortage of funds and low order book. The ongoing projects

were all taken in distress and all these are loss making. Due to inadequate Working Capital, ongoing projects are

being adversely affected as the yard unable to make timely payments to contractors, service providers and suppliers.Other areas of concerns include negative networth, aged workforce, high attrition of permanent workforce due

superannuation, old and aged plant & machineries etc. This in all lead to slippage of contract schedules, increase in

the cost and imposition of Liquidated Damages. Due to new procurement policies of the Government for defence

equipment, the company is at risk of loosing business to private players.

9. Acute shortage of funds (working capital) is affecting the yard adversely. Due to irregular payments, reliable

suppliers and contractors are slowly losing their interest. The salaries and wages of the employees are barely met by

drawing the funds from other projects leading to delay in projects. Further, though the present order book comprises

24 vessels of various categories. 22 of them are small which are not suited to a yard designed for large ships. The

present order book is Rs 1559 Cr which is far below break even orderbook of Rs 5,000 Cr. Further, the Ship Repair

business of the Company which has always been profitable, has been drastically reduced due to down turn in the

maritime sector. Even the Ship Repair orders placed on nomination by Indian Navy has been delayed by almost ayear which had adverse effect on the Ship Repair business.

10. Another area of concern is that the high value orders i.e. LPDs, SOV and Project 75 (I) which have been

nominate have been delayed. Hence, these orders will not be of any immediate help.

Financial Restructuring

11. As reported in our earlier reports, the Govt. of India has already sanctioned two Financial Restructuring

Package to the yard. One in 1997 and another in 2011. Both the Financial Restructuirng packages failed to turn

around the yard as both packages did not address the issue of Negetive Networth, Working Capital and Order Book

Imporvement. The restructuring packages have addressed only to clear of the legacy liabilities and did not fetch any

financial support towards working capital. As a result, the ongoing projects have been delayed leading to impositionof LD and also low turnover. Year on year the yard has been recoding losses and presently the financial health is

precarious and the yard is unable to pay statutory dues like salaries, wages, PF, Gratuity etc. Employees of the yard

have even filed cases before Regional Labour Commissioner to release their terminal benefit at the earliest which

has now become a cause of concern. The situation has been temporaily brought under control through a temporay

loan of Rs 46 Cr, from funds allocated for repair of infrasrucrure, to pay gratuity liabilities.Further, with the above

temporary measure, the yard has been able to progress the ongoing projects.

12. These issues have been brought to the notice of Ministry of Defence and in order to turn around the yard, a

Fresh Financial Restructuring proposal has been forwarded to the Ministry. Presently, the proposal of the yard is

under consideration at Ministry.

Internal Control System and their Adequacy

13. Your Company has a robust system of Internal Controls to achieve effective and efficient operations, reliability

of financial reports and compliance to applicable laws and regulations. The system comprises clear defined

organisatonal structure, pre-identified authority levels and procedures issued by the management covering all vital

and important areas of activities. viz. Purchase, Material Control, Works, Finance & Accounts, Personnel etc.

14. For the year 2013-14, your Company has outsourced internal audit to M/s Ambica & Isha, Chartered

Accountants, Visakhapatnam which is a Chartered Accoutant firm of repute.

15. The Internal Control Systems are reviewed regularly by the Audit Committee. The adequacy of Internal Control

procedures is also reviewed by the Statutory Auditors in their Audit Report. Your Company, being owned by

Government, is subject to Government Audit also.

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Financial Performance of the Company

16. The Financial performance of your Company during the year as compared to the last year are as under.

In Rs Cr

Details As on 31 Mar 14 As on 31 Mar 13

Total Income 519.06 562.50

Profit / (Loss) Before Depreciation, Interest & Tax (29.43) (29.52)

Profit / (Loss) Before Tax (46.21) (55.17)

Profit / (Loss) after Tax (46.21) (55.17)

Cumulative Profits / (Losses) (1117.37) (1071.26)

17. The reasons for losses in the Financial Year 2013-14 have been analysed and points to operational performance

of the Company. The reduction in total income, increase in pay and allowances and provision for LD have all

contributed to losses shown in the profit and loss statements. Consequently, the contribution has also reduced andinadequate to meet the fixed expenses of the yard.

18. The present order book comprise 24 vessels of Rs 1569 Cr against a breakeven orderbook of Rs 5,000 Cr,

Accordingly, the compny has posted losses.

Development in Human Resource

19. The company places paramount importance on its human resourse. Regular training and skill improvement

programmes have been undertaken to ensure that the employees are full trained to handle state of art technology.

Awareness training on occupational health safety, environment & fire fighting were also conducted during the year.

20. There has been no induction at lower levels and accordingly the middle management is almost non existent.

This has been addressed and 34 Management Trainees and other Senior Officers in the ranks of DGM/AGM/GMhave been inducted during the year.

21. During the Year, 229 Trade Apprentices have been successfully trained at our Apprentice Training School.

These personnel have been awarded National Apprenticeship Certificates iisued by Govt. of India, Ministry of Labour

and Employment, NCVT, RDAT, Hyderabad.

Industrial Relations

22. The industrial relations were cordial and harmonious during the year 2013-14.

Environment Aspects

23. Your Company continues to be environment friendly and has fulfilled all the statutory requirements of central

and state pollution control boards. The Company is committed to meet all the stipulated standards for maintaining

and protecting the environment.

Corporate Social Responsibility

24. Being Loss making, it is not mandatory to allocate dedicated funds towards CSR. However your yard remains

committed to CSR. As a part of it, the Board of Directors has constituted a Board level sub-Committee to oversee

and guide CSR activities. A CSR & Sustainability Policy and Plan for the year 2013-14 has been evolved. In addition,

a Senior Management Committee on CSR & Sustainability has also been constituted to monitor the implementation

of the CSR Plan for the year 2013-14.

25. The company has identified some of the need based CSR initiatives for the betterment of the local people and

society with limited financial commitment. Towards this, an amount of Rs 1,05,000/- was spent during the year

2013-14. The activities undertaken during the year 2013-14 has been detailed in the Diectors Report.

****

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Annexure - 3

A

nnexure-3

POSITIONREGARDING

REPRESENTATIONOFSCHEDULEDCASTEANDSCHEDULEDTRIBEINVARIOUS

CA

TEGORIESOFPOSTSASO

N1stJ

AN2013AND1STJA

N,2014

ClassificationofPost/Services

Ason1st January2013

Ason1stJ

anuary2014

Total

Sche

duled

Scheduled

Total

Scheduled

Scheduled

Strength

Ca

stes

Tribes

St

rength

Castes

Tribes

PERMANENT:

GROUPA

126

31

13

113

28

13

GROUPB

256

51

28

234

47

24

GROUPC

1498

2

07

59

1234

176

60

GROUPD(ExcludingSafaiwala)

263

48

9

238

42

8

GROUPDSafaiwala

57

57

-

51

51

-

TEMPORARY:

GROUPA

-

-

-

-

-

-

GROUPB

-

-

-

-

-

-

GROUPC

-

-

-

-

-

-


-

-

-

-

-

-

GROUPDSafaiwala

-

-

-

-

-

-

GROUPD(underApprenticesAct,1961)

147

31

11

83

28

6

FIXEDTERM

CONTRACT:

GROUPA

-

-

-

-

-

-

GROUPB

33

5

1

31

4

1

GROUPC

29

5

2

25

5

2

GROUPD(IncludingSafaiwala)

644

1

48

28

676

157

26

GROUPD(Safaiwala)

12

5

-

10

4

-

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Annexure - 4

A

nnexure-4

PARTICULARSOFRECRU

ITMENTMADEDURINGTHECALENDARYEAR2013ANDTHENUMBERFILLED

BY

MEMBERSOFSCs/STs

ClassificationofPosts/Se

rvices

Total

ScheduledCastes

Sche

duledTribes

Reasonf

or

Numberof

shortfalland

Postsfilled

Posts

Posts

Posts

Posts

stepstak

en

duringthe

Reserved

Filled

Reserve

d

Filled

toimpro

ve

year

thePosition

PERMANENT:

GROUPA

3

-

-

-

-

-

GROUPB

18

2

3

1

1

-

GROUPC

-

-

-

-

-

-


2

-

1

-

-

-

GROUPDSafaiwala

-

-

-

-

-

-

GROUPD(underApprenticesAct,1961)

268

43

55

18

16

Candidatesnot

available

FIXEDTERM

CONTRACT:

GROUPA

-

-

62ndar_2013-14

Documents