Dockyard Leasehold Proposal - DOC

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					      GARDEN REACH SHIPBUILDERS & ENGINEERS
                     LIMITED
                    ANNUAL REPORT – 2008-09



                               CONTENTS




1.     Notice
2.     Chairman‟s Statement
3.     Report of the Board of Directors
4.     Auditors‟ Report
5.     Comments of the CAG of India
6.     Balance Sheet
7.     Profit & Loss Account
8.     Schedules to Balance Sheet and Profit & Loss Account
9.     Explanatory Notes
10.    Segment Reporting
11.    Cash Flow Statement
12.    Significant Accounting Policies
         GARDEN REACH SHIPBUILDERS & ENGINEERS LTD.

              NOTICE FOR ANNUAL GENERAL MEETING

         NOTICE is hereby given that the 93rd Annual General Meeting of the
Shareholders of Garden Reach Shipbuilders & Engineers Ltd. will be held
at the ITC Hotel – The Sonar Kolkata, JBS, Haldane Avenue, Opp, Science
City, Kolkata - 700046 at 1330 hours on Monday, the 24 Aug 09 to transact
the following business :

ORDINARY BUSINESS:
       (a)    To receive, consider and adopt the Directors' Report and the
       Audited Accounts for the year ended 31 March 2009 along with the
       Auditors' Report thereon.

       (b)    To declare Dividend.

       (c)   To fix the remuneration of Auditors to be appointed by the
       Comptroller & Auditor General of India for the financial year 2009-
       10.

SPECIAL BUSINESS :
       (d)    To consider and, if thought fit, to adopt with or without
       modification, the following Resolutions as Special Resolutions :

              (i)    “RESOLVED         THAT     the    existing Article
              Nos.137A(b)(ii) and 137A(b)(iv) be deleted and the
              remaining Articles be re-numbered accordingly :

              (ii)    „RESOLVED FURTHER THAT the following new
              Article be inserted as Article No. 137B(vii) in the Articles of
              Association of the Company”.:

                     “Article No.137B(vii):

                     Notwithstanding anything contained elsewhere in
                     these Articles, the Board of Directors shall exercise
                     all such powers as may be enhanced, authorized or
                     delegated by the Government to MoU signing PSUs
                     or Mini Ratna Companies from time to time”.

                                                                 By
                                                       Order of the
                                                       Board
                          Garden Reach Shipbuilders & Engineers Limited

                                                      (Sandeep Mahapatra)
                                                        Company Secretary
Registered Office :
43/46, Garden Reach Road,
Kolkata 700 024.
Dated : 27 July 09.
Contd….2
                                -2-

Notes :

      1.      A member entitled to attend and vote at the meeting is
      entitled to appoint a proxy to attend and vote instead of himself
      and the proxy need not be a member of the Company. The
      proxies to be effective should be deposited at the Registered
      Office of the Company not less than 48 hours before the
      commencement of the meeting.

      2.     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.

      3.     An Explanatory Statement pursuant to Section 173(2) of the
      Companies Act, 1956 relating to the Special Business to be
      transacted at the Meeting is annexed hereto.




                                <<< *** >>>
       EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2)
                      OF THE COMPANIES ACT, 1956
Item No (d)
Resolution (i) & (ii)

1.     Amendments to Article No. 137 of the Article of Association were
approved at the 91st Annual General Meeting of the Members of the
Company held on 21 Aug 07 to enable the Company to exercise the
enhanced powers applicable to Category – I Mini Ratna Company in terms
of Government of India, Ministry of Defence Letter No. 21(1)/2006/D(SY)
dated 05 Sep 06.

2.        In terms of guidelines contained in DPE OM No. 11/36/97-Fin
dated 09 Oct 97 and No 18(24)/2003-GM-GL-65 dated 05 Aug 05, Mini
Ratna                    Companies have been empowered with enhanced
delegated powers. However following Articles in the Articles of Association
of the Company (text reproduced below) are not in line with such enhanced
delegation of powers:

          (i)   Article No. 137A(b)(ii) -
                “Approval of the Company’s five years and annual
                plans of development and the Company’s Capital
                Budgets”

         (ii)   Article No. 137A(b)(iv) –
                “Approval of the agreements involving foreign
                collaboration proposed to be entered into by the
                Company”.

            Accordingly, as advised by MoD, vide letter No.
1(5)/2008/GSL/D(SY) dated 04 Dec 08, it is proposed to delete the above
Articles in the Articles of Association of the Company. It is also proposed to
incorporate the following new Article, to be numbered as Article No.
137B(vii) as an enabling provision for meeting requirements which may
occur in future:

         “Article 137B(vii):

         Notwithstanding anything contained elsewhere in these
         Articles, the Board of Directors shall exercise all such
         powers as may be enhanced, authorized or delegated by the
         Government to MoU signing PSUs or Mini Ratna Companies
         from time to time”.

3.         None of the Directors of the Company is personally concerned or
interested in the said Resolution.

4.        The Board of Directors of the Company has approved these
Resolutions at their 285 Meeting held on 03 Jul 09 and has recommend
the same to be placed for Shareholders‟ approval.
                                                   By Order of the Board
                                                   (Sandeep Mahapatra)
                                                     Company Secretary
Registered Office :
43/46, Garden Reach Road,
Kolkata 700 024.
Dated : 27 July 09.

                        CHAIRMAN’S STATEMENT
                       Ladies & Gentlemen,


1.    On behalf of the Board of Directors, I have immense pleasure in
welcoming you to this 93rd Annual General Meeting of the Company
and share with you some of the Company‟s significant achievements
during the year under review.     Besides recording the highest ever
Value of Production, the Company‟s Net Worth has also gone up
compared to 2007-08, which is the highest achieved during the last
ten years.   For the first time, the Company delivered seven ships in
one year, i.e during the year 2008-09. These accomplishments were
possible due to the guidance and unstinted support of the
Government of India, especially the Department of Defence
Production and I am grateful to them. The active role of the members
of the Board of Directors, the dedicated efforts put in by the Officers,
Supervisors and Workers of the Company as well as the trust
extended by our valued customers, i.e. the Indian Navy, Coast Guard
and the Ministry of Home Affairs have contributed immensely in
meeting our targets.


2. The highlights of the year 2008-09 are as follows:


(a)     INS “Airavat”, the last of the series of Landing Ship Tank
(Large) Project of     three ships, was    commissioned by Admiral
Sureesh Mehta, PVSM, AVSM ADC, the Chief of Naval Staff on 19
May 09 at Visakhaptnam. The Ship was earlier delivered to IN on 30
Mar 09


(b)     INS “Car Nicobar” and INS “Chetlat”, the first two ships of the
series of ten Water Jet Fast Attack Craft (FAC) Project, designed by
the Company, were delivered to the Indian Navy on 09 Jan 2009.
These vessels were subsequently commissioned at Chennai on 16
Feb 2009 by Shri Surjit Singh Barnala, His Excellency, the Governor
of Tamil Nadu.


(c)    MV „Lapathy‟ & MV „North Bay‟~ 65 Passenger-cum-Vehicle
Ferries delivered to the Andaman & Nicobar Administration on 21 Jul
2008, were commissioned the same day.            MV „Afra Bay‟ & MV
„Karmatang‟~ 100 Passenger-cum-Vehicle Ferries, delivered to the
Andaman & Nicobar Administration on 20 Jan 2009, were also
commissioned on 27 Jan 2009.       All    the    four    ferries   were
commissioned by His Excellency, Lt. General (Retd) Bhopinder
Singh, PVSM, AVSM, the Lt. Governor of the A&N Islands.


(d)    The Ministry of Home Affairs placed an order on the Company
for the construction and supply of 78 Nos (30 Nos 5 T and 48 Nos 12
T) FRP Fast Interceptor Boats (FIBs) valued at Rs 134.70 Crore for
coastal patrolling and surveillance of the Eastern Coast of India. Six
5T FIBs and Three 12T FIBs were handed over to Andhra Pradesh,
Tamil Nadu, Orissa and West Bengal Police Authorities by 30 June
09 after successful trials and training of Police personnel.


(e)    On 27 Mar 09, the Directorate General of Coast Guard placed
order on the Company for construction & supply of eight nos Inshore
Patrol Vessels (IPV) for coastal patrolling and surveillance, valued at
Rs.532.78 crore..


Raksha Mantri’s Award


       3.     I am also happy to share with you that the Company
       received Raksha Mantri‟s Award of Excellence for the year
       2006-07 for innovation in the category of “Import Substitution”
       for development of Common Helicopter Traversing System
       (CHTS), developed by the Deck Machinery Department and
       “Design & Manufacture” of Double Lane Bridge with increased
         carriage way and capacity to withstand the vehicular load up
         to “IRC Class 70R”       developed by the Bailey Bridge
         Department of the Engineering Division.




COMPANY’S PERFORMANCE:

Value of Production & Sales - (VOP Up by 17.3% as compared to
previous year)


4.       During the financial year under review, the Company achieved
the highest ever     Value   of   Production   of Rs.672.69 Crore as
against Rs.573.47 Crore during the previous year. The Sales for the
year amounted to Rs. 740.62 Crore as against Rs.556.65 Crore
during the previous year.


Profit


5.         The    Company     recorded   a     Profit   Before Tax   of
Rs.88.98 Crore as against Rs. 110.40 Crore in the previous year.
This marginal reduction takes into account provisions made for
payment of special increments to the employees and Wage Revision
in respect of all categories of employees due and effective from 01
Jan 07. The Net Profit amounted to Rs.51.65 Crore as compared to
Rs.74.47 Crore in the previous year.



Net Worth - (Increase by 4.7% as compared to previous year)
6.     The year under review witnessed a leap forward with the
Company‟s Net Worth going up to Rs.506.85 Crore from Rs. 484.12
Crore in 2007-08.


Dividend


7.          For the year 2008-09, the        Directors are pleased to
recommend a dividend amounting to Rs.24.77 Crore approx.
calculated @ 20% on the Company‟s            paid up equity capital of
Rs.123.84 Crore as on 31 Mar 09.




Grading vide Memorandum of Understanding


       8.     The performance of the Company for the year 2007-08
       was rated as ”Very Good” in terms of the Memorandum of
       Understanding (MOU) signed with the Govt. of India. For this
       year 2008-09, it is expected to be adjudged as ”Excellent”.


Corporate Governance


9.     It is the constant endeavour of the Company to adopt and
maintain the highest standards of ethics in all spheres of business
activities. The Company‟s philosophy of Corporate Governance is
based on the principles of honesty, integrity, accountability, adequate
disclosures and legal / statutory compliances, to protect, promote and
safeguard the interests of all its stakeholders.


Performance of Ship Division :
10.    During the financial year 2008-09, the value of Production of
Ship Division of the Company has increased to Rs. 617.44 Crore
from Rs. 519.42 Crore in the previous year.          Major milestones
achieved by the Division during the period of review are as follows:-
         Activity                 Ship
                   Date
         Keel Laying              Three nos. WJFASs (Yards 2061-63)
                   29 Jul 08


         Launching                Two nos. WJFACs (Yards 2059-60)
                   16 Jul 08
                                  Three nos. WJFACs (Yards 2061-63)
                   27 Mar 09
                               ( These three ships were launched simultaneously for
the first time )



         Delivery                 Two nos. 65 PAX Vessels (Yards 2067-
68)      21 Jul 08
                                  Two nos. WJFACs (Yards 2057-58)
                   09 Jan 09
                                  Two nos. 100 PAX Vessels (Yards 2069-
         70)       20 Jan 09
                                  One no. LST(L) (Yard-3016)
                   30 Mar 09


The company also undertook repair / refit work amounting to Rs 7.50
Crore (VOP) during the year.


12.      Raja Bagan Dockyard is being utilised for construction of
WJFACs and also for ASW Corvette blocks fabrication. During the
year under review five WJFACs have been launched from RBD with
higher percentage of pre-outfitting. Dry dock of RBD is being used
for Post-CST dry docking of WJFACs.


Future Outlook


13.      Your Company is fully committed to building quality ships for
the Indian Navy and Coast Guard. Consistent with the acquisition of
the additional facilities, the Company is endeavoring to obtain further
orders for Naval and Coast Guard Ships for optimization of capacity
utilization. Along with limited induction of fresh blood for revamping
the aging manpower base, the company has already embarked upon
an all-out effort for modernization, on all fronts, viz layout of plant /
machinery / dock & berth facilities, technology up-gradation in
planning software, design tools etc, to achieve higher productivity in
the coming years. At the same time, the Shipyard has taken the
initiative for further development of the outsourcing base with proper
quality assurance for hull fabrication, plumbing, cabling,
hull outfit etc, to strengthen the Company efforts for customer
satisfaction




Yard Modernisation


14.    Foundation stone for modernization project, at an estimated cost of
Rs.530 crore, was laid by Hon’ble Raksha Utpadan Rajya Mantri, Rao Iderjit
Singh on 19 Feb 09.        Construction activity has commenced for
modernization of shipbuilding facility. Fabrication and assembly of
250 T Goliath Crane is in progress.        Tendering         action    for
superstructure of module hall, blasing & paint cell, portable shelter
etc. is also       in progress. The Modernisation is expected to be
completed in 2011.


15     An amount of Rs. 20 Crore has been allocated for repair/
refurbishment of two dry docks and East slipway and construction of
two Jetties in Raja Bagan Dock yard. RBD has a large waterfront and
after repair/ refurbishment of facilities, it can be fully exploited for
construction of smaller vessels and boats including post-launch
outfitting work.


Engineering Division
16       The Bailey Bridge    Department exported 2 x 320 ft Bailey
Suspension Bridge worth Rs.3.62 Crore to Punatsagchhu Hydro
Electric    Project at Bhutan. This export sales is the highest ever
made by the Company, thus meeting the export target set for the
year under review.         38 nos. Bailey Bridges (BB) were also
despatched during the year to various customers in the country. To
reduce production cost of BB and to be more economical, production
facilities of Belur Unit have been shifted to 61 Park and the Taratalla
Unit.


17       The Division achieved remarkable milestones by way of
successful completion of overhauling, including supply of spares for
imported Helicopter Traversing System of INS Ganga in record time.
Pump Department of the Division has successfully indigenised 12
Nos. Russian origin pumps for Indian Naval Vessels.

Engine Division


18.      The Value of Production achieved by the Engine Division
during the year under review amounted          to Rs 7.91     Crore as
compared to Rs. 11.89 Crore during the previous year.


Conservation of Energy


19.     The Company continues its drive to conserve the energy. The
Company has conducted and completed Energy Audit in all the Units
of the Shipyard in Kolkata.

Technology Absorption, Adoption and Innovation


20       The Company continues its efforts in the field of development
of design of war ships as also development of its engineering
products. The core strength of the Company lies in its own in-house
design capability. Recently the Company has given an impetus to
Research and Development (R & D) activity in indigenous
shipbuilding by successfully designing Water Jet Fast Attack Crafts
for the Indian Navy. In recognition of its design efforts, the Company
was awarded the Hon‟ble Raksha Mantri Excellence Award for
“Design & Construction of Offshore Patrol Vessels”.

21     In the area of Ship Design, the Company has made major
contribution to the design of Four Nos. ASW Corvettes being built for
the Indian Navy. This is the first time IN has enlisted the design
contribution in a warship from an Indian Shipbuilder. Eight Nos.
Inshore Patrol Vessels for the Coast Guard are fully designed by the
Company‟s in-house Design Department after intensive efforts

22     To reduce the build period of ship construction, the Company
is gearing up for implementation of            “Modular /        Integrated
Construction” concept. By this process around 60 - 80% of outfitting
activities would be completed at the pre-launch stage itself with the
resultant reduction in the overall build period.




23.    The launching and trial of 120 ft. Double Lane Bridge
manufactured on a patented design was successfully completed in
July 2008. The Company was also conferred the Raksha Mantri‟s
Award of Excellence in the “Innovation” Category, with a Cash Award
of Rs.1.00 Lac for the development of Double Lane Bridge. All out
efforts are being made to market these bridges to various
Government and private organizations.


ERP System


24.    SAP ECC 6.0 solution has already been implemented for the
Ship Division of the Company.          Inclusion of Human Resource,
Finance and other Divisions, namely Engineering and Diesel Engine
Plant are being progressed in Phase II.        With the appointment of
the Consultant, the consultancy work is in progress.        It    includes
installation and implementation of SAP ECC 6.0 to all            functional
areas for Network augmentation, e-Security with mail messaging,
workflow solution and implementation of mechanical system like
Smart Card for recording attendance and labour booking of jobs.


25.   Design, Planning and Material      Departments have already
been integrated with production Units at Main and FOJ Units through
LAN / WAN (leased with       ISDN back up).    Design and Planning
Offices have also established links with IHQ – MoD (N) / DND &
DSP    organizations in New Delhi through dedicated leased line
including Video Conference facility.


e-Procurement


26.   e-Procurement is the key component of mission mode project
under national e-governance plan. It has several advantages such as
cost saving, saving in time, safety, security, speed and, above all,
transparency in achieving efficiency in procurement.




27.   The Company has resorted to Enterprise Procurement System
(EPS) under facility management services to implement the pilot
project of e-Procurement and has successfully increased e-
Procurement activity from Rs.10 Lac during 2007-08 to Rs.70 Lac
during the year under review.


e-Auction


28.   In order to leverage the technology resources in delivering
speed, efficiency, transparency and higher market value, the
Company has switched over to e-Auction platform for transaction of
its disposal activities. A three year agreement with M/s. MSTC has
been entered into.


      Quality Circle Activities
      29.      The Company continue to enhance its Quality Circle
      activities. Due importance is given to          Quality Circle
      Techniques and Philosophy to enrich the QC teams for gainful
      utilization of human resources by self development and mutual
      development of its grass root level employees. Grass root
      level workforce of the Company of various shop / department
      are participating through group activities for identification of
      problems, their solution and its implementation in order to
      increase production and to improve quality of work, to ensure
      better work environment and neat and clean work place, to
      increase safety, morale and to reduce wastages. Today QC
      activities of the Company have been spread over to 209 QC
      teams in various shops / dept covering 41% of the present
      work force.




Industrial Relations :


30.   Industrial Relations during the year 2008 – 09 across all
Units continued to be peaceful and harmonious.

Celebration of GRSE Day



31.   The GRSE Day (125th Anniversary) was celebrated in a
befitting manner on 25 Apr 09. GRSE Exemplary Awards – 2008 for
individual achievements and group activities were conferred on
employees in recognition of their outstanding performance. Eight
employees were conferred “GRSE Shri”, 49 CMD‟s Commendation
and 73 CMD‟s letter of Appreciation. Group Awards were presented
to 8 QC Teams for their case study presentation and 8 Group Awards
were presented to winners of Work Place Management (5-S)
competition.
Corporate Social Responsibility



32.    The Company attaches a great deal of importance to its social
responsibilities towards the society. Keeping in mind the social fabric
of the local community, the Company had adopted multi- dimensional
approach to fulfill its social responsibilities.


Implementation of RTI Act


       33.     Implementation of RTI is being progressed in line with
       the government directives. Requests received were replied
       and Annual Return for the year has been uploaded in RTI MIS
       Updation System developed by NIC.




Acknowledgements


       34.     I would like to conclude by thanking the Central and
       State Government Authorities, Naval and Coast Guard
       Authorities, and the Shareholders for the trust they have
       reposed in us. I would like to place on record our thanks to the
       Comptroller & Auditor General of India, the Principal Director
       of Commercial Audit, the Statutory Auditors and the Controller
       of Defence Accounts (Navy) for their 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 the employees of the Company to
       achieve its goal and the Board of Directors who have
       supported and guided the Company.
      Thanking you all,


      Kolkata,                        Rear Admiral K.C. Sekhar, IN
      (Retd)
Dated, 24th August, 2009                 Chairman & Managing
Director




                  DIRECTORS       REPORT – 2008 - 09

                               To
The Members,

Garden Reach Shipbuilders & Engineers Limited

1. Your Directors have great pleasure in presenting the 93rd Annual
Report on the working of the Company for the financial year 2008 -
09.

2. The audited Profit & Loss Account for the financial year 2008-09
and the Balance Sheet, as on 31 Mar 09, together with the Report of
the Auditors of the Company, and the comments of the Comptroller &
Auditor General of India on the Auditors‟ Report under Section
619(4) of the Companies Act, 1956, are appended to this Report.

SIGNIFICANT ACHIEVEMENTS DURING THE YEAR

3.     INS “Airavat” (Landing Ship Tank – Large), the last of the
series of LST-L Project of three ships, was delivered to the Indian
Navy on 30 Mar 09. The ship was subsequently commissioned by
Admiral Suresh Mehta, PVSM, AVSM ADC, the Chief of Naval Staff
on 19 May 09 at Vissakhaptnam.
4.     INS “Car Nicobar” & INS “Chetlat”, the first two ships of the
series of ten Water Jet Fast Attack Craft (FAC) Project, designed by
the Company, were delivered to the Indian Navy on 09 Jan 2009.
These vessels were subsequently commissioned at Chennai on 16
Feb 2009 by Shri Surjit Singh Barnala, His Excellency, the Governor
of Tamil Nadu.

5.     MV „Lapathy‟ & MV „North Bay‟~ 65 Passenger-cum-Vehicle
Ferries delivered by GRSE to the Andaman & Nicobar Administration
on 21 Jul 2008, were commissioned the same day.

6.    MV „Afra Bay‟ & MV „Karmatang‟~ 100 Passenger-cum-
Vehicle Ferries, delivered by GRSE to the Andaman & Nicobar
Administration on 20 Jan 2009, were commissioned on 27 Jan 2009.

7.     All the four ferries, delivered on two occasions, were
commissioned by His Excellency, Lt. General (Retd) Bhopinder
Singh, PVSM, AVSM, the Lt. Governor of the A&N Islands. These
passenger-cum-vehicle ferries were inducted into the fleet of the
Directorate of Shipping Services, A&N Admin, to improve inter-creek
ferry services in the Phoenix Bay-Chatham-Bambooflat Route and
the Andaman Trunk Road.

8.     The Ministry of Home Affairs placed an order on the Company
for the construction and supply of 78 Nos (30 Nos 5 T and 48 Nos 12
T) FRP Fast Interceptor Boats (FIBs) valued at Rs 134.70 Crore for
coastal patrolling and surveillance of the eastern coast of India by
the Coastal Police of the States. Six 5T FIBs and Three 12T FIBs
have been handed over to Andhra Pradesh, Tamil Nadu, Orissa and
West Bengal Police Authorities by 30 June 09 after successful trials.

9.    The Directorate General of Coast Guard placed order on the
Company on 27 Mar 09 valued at Rs 532.78 Crore for construction &
supply of eight nos Inshore Patrol Vessels (IPV) for coastal patrolling
and surveillance.

Raksha Mantri’s Award

      10.    The Company received Raksha Mantri‟s Award of
      Excellence for the year (2006-07) for innovation in the
      category of “Import Substitution” for development of Common
      Helicopter Traversing System (CHTS), developed by the Deck
      Machinery Department and “Design & Manufacture” of Double
      Lane Bridge with increased carriage way and capacity to
      withstand the vehicular load up to “IRC Class 70R” developed
      by the Bailey Bridge Department of the Engineering Division.

OPERTATING RESULTS -             PERFORMANCE HIGHLIGHTS :
Value of Production & Sales - (VOP Up by 17.3% as compared to
previous year)

11.    During the financial year 2008-09, the Company achieved the
highest ever Value of Production of Rs.672.69 Crore as against
Rs.573.47 Crore during the previous year. The Sales for the year
amounted to Rs. 740.62 Crore as against Rs.556.65 Crore during
the previous year.

         Year           04-05       05-06    06-07    07-08     08-09
         VOP           470.28      662.18   641.66   573.47    672.69
         (Rs.   In
         Crore)
         Sales         881.41      985.99   713.74   556.65    740.62
         (Rs.in
         Crore)

12.      The comparative VOP for three main Divisions is as follows :
                                                        (Rs. In Crore)
                Year               Ship     Engineering     Engine       Others
                                Division       Division    Division

              2008-09            617.44          46.27         7.91        1.07
              2007-08            519.42          40.34        11.89        1.82




VALUE ADDITION



13.    The Value Added during the financial year under review was
Rs 233.53 Crore as against Rs 280.75 Crore during the previous
year. The Value Added per Employee was Rs 4.90 lakh as compared
to Rs.5.65 lakh during the previous year.

Profit

14.    The Company recorded a Profit Before Tax of Rs.88.98
Crore as against Rs. 110.40 Crore in the previous year. This takes
into account provisions made for payment of special increments to
the employees and Wage Revision in respect of all categories of
employees due and effective from 01 Jan 07. The Net Profit
amounted to Rs.51.65 Crore as compared to Rs.74.47 Crore in the
previous year.



Net Worth - (Increase by 4.7% as compared to previous year)
15.    The year under review witnessed a leap forward with the
Company‟s Net Worth going up to Rs.506.85 Crore from Rs. 484.12
Crore in 2007-08.

Dividend

16.     Considering the financial performance of the Company in the
year 2008-09, the Directors are pleased to recommend a dividend
of 20% on the Company‟s paid up equity capital of Rs.123.84 Crore
as on 31 Mar 09. The dividend amounting to Rs24.77 Crore approx.
will be paid after approval in the Annual General Meeting.




CONTRIBUTION TO EXCHEQUER

17.    Your Company's contribution to the national exchequer during
the financial   year 2008 - 09 amounted to Rs.88.05 Crore as
detailed below:

                                                    (Rs In Crore)
            (a) Income Tax & FBT etc.                        37.81
            (b) Customs Duty                                  5.39
            (c) Excise Duty                                   3.20
            (d) Sales Tax                                    41.20
            (e) Service Tax                                   0.45
           TOTAL                                             88.05

Note : The above figures are inclusive of Education Cess, but
exclusive of the Excise Duty & Taxes included in the purchase prices
of the inputs and Tax on distributed profit.

Capital Structure

18.   The Authorised Capital of the Company as on 31 Mar 09 was
Rs 125 Crore. During the year under review, the Government of India
did not make any fresh investment in the Share Capital of the
Company.      The Paid-up Capital as on 31 Mar 09, therefore,
remained at Rs 123.84 Crore.


Loans from the Government

19.    Company neither had any outstanding loan to the Government
at the beginning of the year nor did it take any fresh loan during the
year under review.
ICD to Hindustan Cables Ltd.

20.    An amount of Rs. 457.75 Lac (Rs. 200 Lac as Principal and
Rs. 257.75 Lac as interest) was outstanding as on 31 March 02 from
M/s. Hindustan Cables Ltd. (HCL), which is a sick PSU. As the case
was registered by BIFR, full provision was made in the Accounts of
2003-04. As per directive of BRPSE, the revival scheme prepared by
HCL consultants was put up before Dept of Heavy Industries (DHI),
BRPSE & BIFR. DHI made advertisement inviting expression of
interest from interested PSUs for joint venture formation. In response,
certain PSUs have shown interest on HCL‟s Hyderabad & Naini Unit.
However, no modalities have yet been decided. HCL has confirmed
that GRSE‟s dues will be taken care of in the Restructuring Scheme.

Grading vide Memorandum of Understanding

      21.    The performance of the Company for the year 2007-08
      had been rated as ”Very Good” in terms of the Memorandum
      of Understanding (MOU) signed with the Govt. of India. The
      rating for the year 2008-09 is under evaluation. As per the
      internal assessment, the performance of the Company is
      expected to be adjudged as ”Excellent”.

Auditors

22.   The Comptroller & Auditor General of India, under Section
619(2) of the Companies Act, 1956, appointed M/s. Sen & Ray,
Chartered Accountants, Kolkata, as the Statutory Auditors for the
Company and M/s. Bhagaria & Associates, Chartered Accountants,
Ranchi as Branch Auditors for the Diesel Engine Plant, Ranchi, for
the year 2008-09.

Corporate Governance

23.   A Report on Corporate Governance is given in Annexure-I
forming part of this Report together with Compliance Certificate
thereon.

Board of Directors

24.     The Board acknowledges the valuable services rendered by
the following Directors, who ceased to be members on the Board of
the Company :

           VAdm Dilip Deshpande, AVSM, VSM, IN
           Controller of Warship Production & Acquisition

           Shri Vinod Kumar
           Director (Shipbuilding)

           Shri Ranjan Chakraborty
        Director (Finance)

        Dr. N.R Banerjea
        Part time Non Official Independent Director

        Shri Binay Bhusan Chakrabarti
        Part time Non Official Independent Director

        Shri Ashoke K Dutta
        Part time Non Official Independent Director

25.    The Board places on record its deep appreciation for the
valuable contributions made by the outgoing Directors during
the tenure of their association with the Company.

26.    The Board welcomed the appointment of the following new
Directors :

       VAdm Ganesh Mahadevan, AVSM, VSM, IN
       Controller of Warship Production & Acquisition

       Shri Kallol Kumar Rai
       Director (Finance)

      Capt.K.J.H. Christie
      Director (Shipbuilding)

Directors' Responsibility Statement

27.   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 the preparation of the annual accounts, the
      applicable accounting standards have been followed along
      with proper explanation relating to material departures.

      (b)    That the Directors have 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 at
      31 Mar 09 and the profit of the Company for the year ended 31
      Mar 09.

   (c) That the Directors have taken proper and sufficient care for
   the 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 have prepared the annual accounts
   on a going concern basis.

Performance of Ship Division :

28.    During the financial year 2008-09, the value of Production of
Ship Division of the Company has increased to Rs. 617.44 Crore
from Rs. 519.42 Crore in the previous year. The Division has
nurtured and developed additional vendors for fabrication/ erection of
ASW Corvette blocks, and as a result, monthly Steel throughput has
increased to 580 Eq Ton from 470 Eq Ton in Apr 08. Various steps
including procurement of tools/ equipment have been taken to
improve Production rate and monthly progress of Yard 3017 has
increased to 1.3% from 0.5% in Apr 08. Similarly, monthly progress
of Yard 3018 has also increased to 1.1% from 0.5%. During the
financial year the company has delivered three ships to the Indian
Navy and two each 50 men and 100 men passenger Vessels to A &
N Administration. Five Ships have been launched from RBD during
the year under review. The Division has achieved a remarkable
milestone by launching three Ships simultaneously for the first time.

29.     The constraints of delay in receipt of indigenously developed
equipment coupled with failure/ inadequate support from OEM
continued to affect the ongoing LST(L) and WJFAC projects. Non-
availability of KoPT dock for post-CST dry docking of last LST(L)
marginally affected the delivery schedule of the Ship. However, the
Shipyard made all out efforts to overcome these constraints and
delivered the Ship with minimum D448 liabilities compared to the first
two ships of the class. The Ship also had better improved habitability
and better aesthetics compared to the earlier two LST(L) which were
well appreciated by the Customer. Failure of Gear Boxes supplied by
M/s KPCL caused a major setback to the WJFAC project. Despite the
failure and consequent repeated Sea trials, the shipyard delivered
first two WJFACs (Yard 2057 and 2058) to the Navy on 09 Jan 09
with delay of only two months. As regards FIB project for MHA, there
has been a delay of two months in Start production due to non-
availability of mould and outfit items from OEM. However, six nos. 5T
and three nos. 12T boats have already been delivered to Coastal
Police in AP, TN, Orissa and West Bengal. All necessary steps have
been taken to ramp up production and all out efforts are being made
to advance delivery of 5T boats from the contractual date and deliver
12T boats within the contractual date.



30.   Major milestones achieved by the Division during the period of
review are as follows:-
      Activity           Ship
             Date
       Keel Laying          Three nos. WJFASs (Yards 2061-63)
             29 Jul 08

       Launching            Two nos. WJFACs (Yards 2059-60)
            16 Jul 08
                            Three nos. WJFACs (Yards 2061-63)
              27 Mar 08

       Delivery             Two nos. 65 PAX Vessels (Yards 2067-
       68)   21 Jul 08
                            Two nos. WJFACs (Yards 2057-58)
              09 Jan 09
                            Two nos. 100 PAX Vessels (Yards 2069-
       70)    20 Jan 09
                            One no. LST(L) (Yard-3016)
              30 Mar 09


31.    During the year under review, the company undertook repair /
refit work amounting to Rs 7.50 Crore (VOP) as against Rs 9.56
Crore in the previous year. Re-engining of INS Abhay is expected to
be completed by Oct 09 after receipt of Gear Boxes from the
overseas manufacturer by end Aug 09. Order for major refit of an
OPV from a neighboring country has been received.

32.   The Order Book position      of the Shipbuilding Division
amounted to more than Rs 7000 Crore excluding Base & Depot
Spares (Rs 778.19 Crore) and Ship Repair (Rs 7.50 Crore) as on 31
Mar 09.

33.   Raja Bagan Dockyard, which was acquired from M/s CIWTC
in 2006 is being utilised for construction of WJFACs and also for
ASW Corvette blocks fabrication. During the period of review five
WJFACs have been launched from RBD with higher percentage of
pre-outfitting, 58% as compared to 45% in earlier ships. Dry dock of
RBD is also being used for Post-CST dry docking of WJFACs.

Future Outlook

34.      Your Company is fully committed to building quality ships for
the Indian Navy and Coast Guard. With the take-over of the nearby
Rajabagan Dockyard of M/s CIWTC, Kolkata in the recent past, the
company has become the biggest Defence Shipyard in India with
substantial growth potential. Consistent with the acquisition of the
additional facilities, the Company is endeavoring to obtain further
orders for Naval and Coast Guard Ships for optimization of capacity
utilization. Along with limited induction of fresh blood for revamping
the aging manpower base, the company has already embarked upon
an all-out effort for modernization, on all fronts, viz layout of plant /
machinery / dock & berth facilities, technology up-gradation in
planning software, design tools etc, to achieve higher productivity in
the coming years. At the same time, the Shipyard has taken the
initiative for further development of the outsourcing base with proper
quality assurance for hull fabrication, plumbing, cabling,
hull outfit etc, to strengthen the Company efforts for customer
satisfaction The Company has submitted offer for five NOPVs, five
LCAs, thirty six IBs, two Hovercrafts and seven 250 men ferry Crafts.
The Company has also been nominated for construction of eight
LCUs for Navy and one OPV for a foreign country.

Yard Modernisation

35.   Foundation stone for modernization project was laid by
Hon‟ble Raksha Utpadan Rajya Mantri, Rao Iderjit Singh on 19 Feb
09.

36.   Construction activity has commenced for modernization of
shipbuilding facility, primarily comprising of a new Dry Dock of size
29M x 180M, an inclined Berth of size 23M x 180M and Module Hall.
Fabrication and assembly of 250 T Goliath Crane is in progress.
Estimated cost of modernization project is Rs.530 Crore approx.


37     Tendering action for balance modernization activities /
packages comprising of superstructure of module hall, blasing &
paint cell, portable shelter etc. is in progress. The Modernisation is
expected to be completed in 2011.

38     The Principal Contract Package (covering Civil, Electrical,
Piping and allied works), constituting bulk of the modernisation work
has been awarded to M/s. ITD Cementation India Limited based on
a global competitive tender.

39An amount of Rs. 20 Crore has been allocated for repair/
refurbishment of two dry docks and East slipway and construction of
two Jetties in Raja Bagan Dock yard. RBD has a large waterfront and
after repair/ refurbishment of facilities it can be fully exploited for
construction of smaller vessels and boats including post-launch
outfitting work.

Engineering Division

40     The Value of Production achieved by the Engineering Division
during the year under review amounted to Rs.46.27 Crore as
compared to Rs 40.34 Crore during the previous year. Sales
registered for the year were Rs 44.51 Crore as against Rs. 39.39
Crore last year.

41     The Bailey Bridge Department exported 2 x 320 ft Bailey
Suspension Bridge worth Rs.3.62 Crore to Punatsagchhu Hydro
Electric Project at Bhutan. This export sales is the highest ever
made by the Company, thus meeting the export target set for the
year under review 38 nos. Bailey Bridges (BB) were despatched
during the year to various customers in the country. To reduce
production cost of BB and to be more economical, production
facilities of Belur Unit have been shifted to 61 Park and the Taratalla
Unit.

42     The Engineering Division secured orders worth Rs.42.10
Crore during the year under review, the important among them being
the order for 13 Nos. of Bailey Bridge components from DGBR worth
Rs.33 Crore.

43     The Division achieved remarkable milestones by way of
successful completion of overhauling, including supply of spares for
imported Helicopter Traversing System of INS Ganga in record time.
Pump Department of the Division has successfully indigenised 12
Nos. Russian origin pumps for Indian Naval Vessels. Out of them the
Navy has issued PAC Certificate to the Company for 8 types of
pumps, which have been inducted for actual use. Against tenders
issued by Eastern Naval Command, Vizag for procurement of 122
nos. Pumps worth Rs.10 Crore. orders worth Rs.5 Crore (approx)
have been received . Orders for remaining of pump amounting to
Rs. 5 Crore are in advanced stage of finalization. Work for the Water
Pumping Project at Fort William Kolkata on Hooghly River is
progressing well.



Engine Division

44.   The Value of Production achieved by the Engine Division
during the year under review amounted to Rs 7.91 Crore as
compared to Rs. 11.89 Crore during the previous year.

45      During the year, an order for W6 routines of INS Tarasa
engines amounting to Rs. 10 Crore was secured. Apart from this the
installation and commissioning of main engines and controls of Yard
Nos. 2057 – 58 and on INS Abhay were successfully executed.
Orders for spares of GV engines worth Rs.1.0 Crore and B&D spares
for WJFAC worth Rs.2.95 Crore were also executed during the year.

Conservation of Energy

46      The Company continues its drive to conserve the energy. As a
measure to conserve energy, the Company has conducted and
completed Energy Audit in all the Units of the Shipyard in Kolkata.
The contractual maximum demand of the Shipyard has been updated
to an optimal level resulting in refund of security deposit amounting to
Rs.56 Lac. Additionally savings @ Rs.200/- per KVA per month for
all the Shipyard Units in Kolkata has been achieved which amounts
to Rs.4.63 Lac per month. Power factor of the system is consistently
maintained at optimum level. Measures like installation of Electronic
Ballasts, extensive use of CFL and EF T5 lamps, maximum use of
translucent sheets in Shop floors to combine day light with artificial
lights for absolute utilization of natural light, arrest of loss in
distribution system of compressed air and water etc. have been
adopted as a part of conservation of energy. The cost of energy
input during the year under review was 0.89% of the total value of
production as against 1.23 % that of last year.




Technology Absorption, Adoption and Innovation

47      The Company continues its efforts in the field of development
of design of war ships as also development of its engineering
products. The core strength of the Company lies in its own in-house
design capability. Recently the Company has given an impetus to
Research and Development (R & D) activity in indigenous
shipbuilding by successfully designing Water Jet Fast Attack Crafts
for the Indian Navy. In recognition of its design efforts, the Company
was awarded the Hon‟ble Raksha Mantri Excellence Award for
“Design & Construction of Offshore Patrol Vessels”.
48     In the area of Ship Design, the Company has made major
contribution to the design of Four Nos. ASW Corvettes being built for
the Indian Navy. This is the first time IN has enlisted the design
contribution in a warship from an Indian Shipbuilder. Eight Nos.
Inshore Patrol Vessels for the Coast Guard are fully designed by the
Company‟s in-house Design Department after intensive efforts
49      To reduce the build period of ship construction, the Company
is gearing up for implementation of            “Modular /     Integrated
Construction” concept. By this process around 60 - 80% of outfitting
activities would be completed at the pre-launch stage itself with the
resultant reduction in the overall build period. Integration of activities
in the Design, Planning, Production and Materials Departments are
also being strengthened.

51.    The launching and trial of 120 ft. Double Lane Bridge
manufactured on a patented design was successfully completed in
July 2008. The Company was also conferred the Raksha Mantri‟s
Award of Excellence in the “Innovation” Category, with a Cash Award
of Rs.1.00 Lac for the development of Double Lane Bridge. All out
efforts are being made to market these bridges to various
Government and private organizations.

ERP System

51.   SAP ECC 6.0 solution has already been implemented for the
Ship Division of the Company. Inclusion of Human Resource,
Finance and other Divisions, namely Engineering and Diesel Engine
Plant are being progressed in Phase II. For the ERP Phase II,
Consultant has been appointed and consultancy work is in progress.
ERP Phase II work includes installation and implementation of SAP
ECC 6.0 to all functional areas for Network augmentation, e-
Security with mail messaging, workflow solution and implementation
of mechanical system like Smart Card for recording attendance and
labour booking of jobs.

52.    Design, Planning and Material Departments have already
been integrated with production Units at Main and FOJ Units through
LAN / WAN (leased with ISDN back up). Design and Planning
Offices have also established links with IHQ – MoD (N) / DND &
DSP organizations in New Delhi through dedicated leased line
including Video Conference facility.

Foreign Exchange Earnings & outgo

53.   The information in respect of Foreign Exchange Earnings and
Outgo is contained in Schedule – 23.

Import Substitution / Indigenisation

54.    The Company continues to encourage indigenous
manufacturers for production and supply of critical items required for
ship construction and manufacture of engineering products.

55.    The     Company      has    developed    a    Common
Helicopter Traversing System ( 110 R ) for the Indian Naval
Ships for handling both ALH and Sea King Helicopters. This
will result in a cost saving of above 50% of imported cost of
Helicopter Traversing equipment presently in use by Indian
Navy. For this achievement the Company was conferred the
Raksha Mantri’s Award of Excellence (with a Cash Award of
Rs.1.00 Lac) on 07 Nov 2008. Further “rail less” version of
Helicopter Traversing System (HTS) (for handling all types of
Helicopters) is under consideration in collaboration with M/s.
Mactagart Scott, U.K.

56.    The Company has successfully indigenized ten types of
Centrifugal Pumps of Russian origin for IN Ships / Submarines. In
addition development of five more types of Russian Pumps is in
various stages of indigenisation. Order for a large number of such
pumps has already been received from the Navy. More orders are in
the pipeline.

e-Procurement

57.   e-Procurement is the key component of mission mode project
under national e-governance plan. It has several advantages such as
cost saving, saving in time, safety, security, speed and, above all,
transparency in achieving efficiency in procurement.

58.   The Company has resorted to Enterprise Procurement System
(EPS) under facility management services to implement the pilot
project of e-Procurement and has successfully increased e-
Procurement activity from Rs.10 Lac during 2007-08 to Rs.70 Lac
during the year under review. These were 75 vendors who have
obtained digital signature certificates as on 31 May 09, which is a
pre-requisite to access the e-tender site.

e-Auction

59.     In order to leverage the technology resources in delivering
speed, efficiency, transparency and higher market value, the
Company has switched over to e-Auction platform for transaction of
its disposal activities. A three year agreement with M/s. MSTC has
been entered into. MS Scrap worth Rs.13 Lac was disposed of during
the year under review.

QUALITY ASSURANCE
Composite Vendor Policy

60.   The Composite Vendor Policy has been put in GRSE Website
to ensure transparency in selection of vendors. The policy is being
updated regularly. The last revision was carried out on 12 Dec 08.

Development of Vendors for Outsourced Jobs

61.     The policy of outsourcing labour intensive activities has been
implemented by the Company. Vendor development for outsourcing
is a continuous process and in progress at the Shipyard. In house
manpower is being deployed for more critical and important tasks in
an efficient manner.

      Quality Circle Activities

      62.      The Company continue to enhance its Quality Circle
      activities. Due importance is given to          Quality Circle
      Techniques and Philosophy to enrich the QC teams for gainful
      utilization of human resources by self development and mutual
      development of its grass root level employees. Grass root
      level workforce of the Company of various shop / department
      are participating through group activities for identification of
      problems, their solution and its implementation in order to
      increase production and to improve quality of work, to ensure
      better work environment and neat and clean work place, to
      increase safety, morale and to reduce wastages. Today QC
      activities of the Company have been spread over to 209 QC
      teams in various shops / dept covering 41% of the present
      work force.

      63.    The performance of various QC teams of GRSE in
      various competitions (viz. Chapter Convention and National
      Convention) organized by Quality Circle Forum of India is
      indicated in the table below : :
 Level      of    No. of          Performance grade achieved by QC Teams
 convention/       QC           Par      Excellent Distinguished    Meritorious
 presentation     Teams      Excellence
                  partici-
                  pated
 CCQC
 (Chapter            8            1            6              1           -
 Convention)
 NCQC
 (National           3            -            2              1           -
 convention)

Safety at Work

64.    The Bengali version of the first edition of GRSE Safety Manual
has been distributed amongst the employees. National Safety
Week was observed in all the Units of the Shipyard from 04 to 10
March 09 when safety banners were displayed. Various safety
competitions were conducted and prizes awarded. Safety Shield and
trophies were awarded to the best performing Units for adherence to
safety norms and procedures. Fire and Safety Training programmes
were conducted periodically in all the Units for all categories of
employees including sub-contractor‟s personnel as an awareness
programme for safety norms and procedures.


HUMAN RESOURCE & ADMINISTRATION

65.   Industrial Relations :

        (a)   Industrial Relations during the year 2008 – 09 across all
Units continued to be peaceful and harmonious. No incident
affecting industrial relations of the Company was reported during
the period under review.
       (b)     Wage revision of all unionized employees has fallen
due w.e.f. 01 Jan 07. Pursuant to the policy for the 7th round of
wage negotiation and        subsequent notification in regard to
periodicity of wage settlement by DPE to         effect validity period
less than 10 years but not less than 5 years, the Board of
       Directors of the Company has approved the proposal of the
management for wage revision to be valid for five years for which
the company has sought concurrence from the Administrative
Ministry. Meanwhile, the management has started negotiation with
recognized unions of Operatives and Office       Assistant category of
employees.
      ( c)   The tenure of Memorandum of Settlement related to
      Medical Scheme pertaining to operative category of
      employees will expire in July 09. The recognized union has
      demanded certain revisions in the Medical Scheme and
      benefits. The Management has commenced discussion for
      revision / modification of the     existing Medical Scheme
      and given certain proposal for settlement so that      revised
      Medical Scheme can be put into operation on expiry of current
      settlement to maintain continuity.
Pay Revision of Executives & Non-Unionised Supervisors
66.    Pay revision in respect of below Board Level Executives and
Non-unionised Supervisors is due w.e.f 01 Jan 07. Board has
already approved revision of pay and allowances for Executives &
Non-unionised Supervisors as recommended by DPE vide OM dated
26 Nov 08 and subsequent OM dated 02 Apr 09. Presidential
Directive in respect of implementation of revised pay and allowances
has also been received for implementation. The revised Pay Scales
and allowances are being implemented shortly.
Manpower
67.    The total manpower strength under permanent category in the
Company as on 31 Mar 09 was 4434 including 470 officers. A total of
334 employees including eleven officers are working in the Company
under contractual service. However as on 31 Dec 2008, a total of
4818 employees were borne in the roll of the Company including 318
employees on contractual service. Statements showing the
representation of SC / ST etc. as on 31 Dec 08 as well as the total
recruitment made during the period Jan to Dec are given at
Appendices “A” & “B”.

Particulars of Employees

68.   The Company has no employee covered under Section
217(2A) of the Companies Act, 1956 and the Rules framed
thereunder.

Welfare Activities :

59.   Celebration of GRSE Day – The GRSE Day (125th

Anniversary) was celebrated in a befitting manner on 25 Apr 09.

GRSE Exemplary Awards – 2008 for individual achievements and

group activities were conferred on employees in recognition of their

outstanding performance. Eight employees were conferred “GRSE

Shri”, 49 CMD‟s Commendation and 73 CMD‟s letter of Appreciation.

Group Awards were presented to 8 QC Teams for their case study

presentation and 8 Group Awards were presented to winners of Work

Place Management (5-S) competition.
70.    Merit Awards - The Company has instituted a Merit Award
Scheme to felicitate and encourage employee‟s children for their
outstanding academic performance. Merit Certificates and Cash
Awards are given every year to employee‟s children in recognition of
their academic performance. 53 children were conferred the award
on 25 Apr 09 during celebration of GRSE Day.


CORPORATE SOCIAL RESPONSIBILITY




71.     The Company attaches a great deal of importance to its social
responsibilities towards the local community in participation and the
society at large. Keeping in mind the social fabric of the local
community, the Company had adopted multi- dimensional approach
to fulfill its social responsibilities. Activities undertaken during the
year under review          are      briefly enumerated in succeeding
paragraphs.

Community Development

72.     Keeping in mind the social fabric of the local community the
Company had undertaken many activities to fulfill its social
responsibilities. Activities undertaken during the last year are briefly
enumerated below :



       (a)     Community Development

              (i)   The Company repaired sailboat “India” for Sea
              Explorers Institution, which will benefit the maritime
              students in training, research and sea exploration.

               (ii)   The Company has made substantial contribution
              towards setting up of the Garden Reach Computer
              Centre “Kiran” in ccollaboration with Kolkata Police and
              M/s. Brainware. The Centre was inaugurated by our
              CMD on 14 Feb 09 in presence of Commissioner of
              Police, Kolkata , MD of M/s. Brainware, the local MLA
              and other renowned social activists. The initiative will
              go a long way in upgrading the skill of underprivileged
              youth in the locality and assist them in their future
              career prospects.

              (iii) Donations – The Company has partnered various
              social welfare organizations and NGO‟s like
              Soumyaloke Biswaseva Niketan, Kanchi Sankara
             Medical Center, Ramakrishna Mission, Purulia and
             Malda for upliftment to the weak and needy by
             extending financial assistance.

             (iv)     A Blood Donation Camp was organized on 21
             Jan 09 at the Medicare Center. About 110 employees
             participated in the Camp.

CSR for Sustainable Development

73.     The Company has selected 44 villages spanning 3 Gram
Panchayat in Murshidabad District for undertaking sustainable
development in village infrastructure. Actions have been initiated in
the following areas :

      (a) Augmentation of drinking water by installing one tube well
      in each village.

      (b) Enhancement in vocational training and health care by
      sponsoring midwifery training for two local women from each
      village and provide them with basic obstetric & surgical kits.

      (c)   Construction of three Multipurpose Community Halls &
      Children‟s Parks.

74.    Most of the above projects have been completed. one
Multipurpose Community Hall & Children‟s Park was inaugurated by
Shri Pranab Mukherjee, the Hon‟ble Minister of External Affairs, on
14 Dec 08. The second Hall is under construction.




                      Employee Initiatives
75.   To improve awareness of employees on lifestyle related
diseases and assist them in leading a healthy life, health awareness
programmes were held regularly in various units of the Company.

76.    Painting competition is held annually for the employee‟s
children to encourage them in their pursuit for fine arts.

Training & Development

77.   The Company‟s Training Programme is designed for skill /
knowledge up-gradation and career development commensurate with
organisation‟s requirement and growth for all categories of
employees. During the year 2008-09, the Corporate HR Department
conducted various programmes which include workshops, seminars,
and regular programmes of medium duration and thematic short
programmes. Emphasis was given on technical training for the
Operatives in identified thrust areas by experts in various disciplines
to upgrade their existing skill and knowledge domain .Regular
programmes of medium duration which were conducted during this
period on General Management, Functional skill, contemporary
topics relevant to Ship Building Industry, Non Destructive Training,
Welding Technology, Nano Technology, Total Quality Management,
Material Management, Human Resource Development, Software
Skill Development, ERP, e-Procurement etc. General Management
programme were also conducted at regular intervals on the topics
like Communication, Leadership, Time Management, Team Building
and Conflict Resolution, Personnel Effectiveness, Office
Management, Right to Information Act, Production and productivity
enhancement technique etc. Trade Certification of the operatives
under the Modular Employable Skill (MES) scheme, Ministry of
Labour, Government of India has also been introduced. Besides,
employees were nominated to attend various seminar, workshop,
conferences etc. on relevant subjects organized by reputed
professional institutions.

Progressive Use of Hindi

78.   During the year under review, efforts were intensified to
promote, encourage and implement use of Hindi in the Official work
on a substained basis. Meetings of Official Language Implementation
Committee are being held regularly wherein various initiatives are
decided. Hindi Workshops and a Computer Workshop were
conducted in the various Units. Out of the eight Units, seven Units
have been notified in the Gazette of India under Rule 10 (4) of OL
Rule, as more than 80% employees in these Units are having
working knowledge of Hindi.

79.    Various incentive schemes i.e. Inter-Unit Rajbhasha Shield,
Inter-Department Competition / schemes to encourage Hindi Noting,
Drafting and correspondence, Incentive Scheme for doing original
work in Hindi, Incentive scheme to encourage Hindi writing etc have
been introduced, to ensure continuous progress in the use of Hindi.
Apart from this, to facilitate the employees a reference booklet
“Rajbhasha Sahayika” prepared by Hindi Cell has been distributed
among the employees.

80.   Hindi Fortnight was observed from 01 to 14 Sep 08. Various
competitions were conducted and winners were given Cash Awards
by CMD on the occasion of Hindi Day on 15 Sep 08. The third edition
of Company‟s Hindi Magazine „Rajbhasha Jagriti‟ was released on
the occasion. For the last six years company is being awarded
“Rajbhasha Shield” by Town Official Language Implementation
Committee (PSU), Kolkata. The second edition of Company‟s Hindi
Magazine „Rajbhasha Jagriti‟ was awarded third Prize by TOLIC
(PSU), Kolkata. Company‟s website is available in bilingual form.

Publicity & Public Relations
81.     As a part of it‟s business promotion and image building during
the year under review, the Company had participated in two
International Exhibitions, viz. Defence Services Asia, Malaysia and
Africa Aero Space & Defence, South Africa. The Company also
participated in the five Exhibitions held in India which include IITF
and DEFEXPO at New Delhi and IITF at Kolkata. Special emphasis
was laid on wide media coverage to highlight the role of the
Company in defence preparedness of the country. The Company has
also extended support to a number of social organizations for
upliftment of art, culture, rural education and eradication of social
evils.

Expenditure on Entertainment & Foreign Travel
82. Expenditure on business promotion and entertainment during
the year were Rs. 49.45 Lac and Rs. 2.55 lac respectively. An
amount of Rs 55.72 lac was spent on foreign travel by the
Company‟s Executives for export promotion and for business visits.
Implementation of RTI Act

       83.    Implementation of RTI is being progressed in line with
       the government directives promulgated from time to time.
       During the year a total of thirteen requests were received and
       replied. Annual Return for the year has been uploaded in RTI
       MIS Updation System developed by NIC.


VIGILANCE ACTIVITIES

84.     The primary role of the Vigilance Department has been to
achieve a corruption free organization by ensuring compliance of
different orders / guidelines issued from time to time by
CVC/CTE/DPE. To achieve that while giving wide publicity of these
orders / guidelines, different files pertaining to procurement / disposal
of different items, various contracts, recruitment of personnel have
been scrutinized to ascertain adherence to the promulgated
guidelines.

85.    As per the directive received from CVC, the period 03 – 07
Nov 08 was observed as Vigilance Awareness Week. All the
employees of the Company undertook the pledge on 03 Nov 08 as
per the CVC‟s instructions.

86.    Employees were also made aware of the Whistle Blower’s
Resolution through CVO‟s circulars to shop-in-charge / HoD of the
different department and by displaying different banners at prominent
places in the Shipyard.

87.   A workshop on Vigilance Awareness was held on 04 Nov 08
where Shri Anil Palta, IPS, DIG, CBI-ACB Eastern Zone, Kolkata was
the guest – speaker, who spoke at length on the role of CBI in
combating corruption of different types and also on the different set
up of CBI for dealing with corruption, fraud, economic offence etc.

      PRESIDENTIAL DIRECTIVE

      88.    A Presidential Directive has been received from the
      Department of Defence Production, Ministry of Defence,
      Government of India, vide Order No. 2(3)/2009/GRSE/D(SY)
      dated 27 Apr 09, under the provisions contained in Article No.
      189 of the Articles of Association of the Company, for the
      implementation of pay scales, fitment formula, D.A. guidelines
      and ceiling on perquisites etc. for Board level and below Board
      level executives in accordance with the Department of Public
      Enterprises O.M. No.2(70)/08/DPE(WC) dated the 26 Nov 08
      and O.M. No.2(70)/08/DPE(WC)-GL-VII/09 dated 02 Apr 09.
      The revised pay scales for executives and non-unionised
      Supervisors are being implemented shortly.


Acknowledgements

89.    Your Directors express their deep appreciation and place on
record their gratitude to the Department of Defence Production and
other Departments in the Ministry of Defence for their continued
assistance and guidance. The Directors also express their sincere
thanks to the Ministry of Surface Transport, Govt. of India as also the
Governments of West Bengal, Jharkhand and various other States,
for their continued co-operation and valuable support. Your Directors
are particularly grateful to the Naval and Coast Guard Headquarters,
Naval Physical & Oceanographic Laboratory, Ordnance Factory
Board, Kolkata Port Trust, Public Works Departments of various
State Governments, Oil & Natural Gas Corporation Ltd., National
Thermal Power Corporation Ltd. and other valued customers as well
as business associates for the confidence reposed by them in the
Company.

      90.    The Directors acknowledge with thanks the valuable
      advice rendered by, and co-operation received from the
      Principal Director, Commercial Audit as also the Officers of
      the Comptroller & Auditor General of India, Controller of
      Defence Accounts (Navy), Registrar of Companies, Company
      Law Board and the Department of Public Enterprises.

      91.    The Directors wish to place on record their appreciation
      to employees at all levels for their hard work, dedication and
      commitment. The enthusiasm and unstinted efforts of the
      employees have enabled the Company to remain at the
      forefront of the industry despite increased competition from
      several existing and new players.
                          For and on behalf of the
                               Board of Directors


            Sd/-

       Kolkata,      Rear Admiral K.C. Sekhar, IN
       (Retd)
Dated,23 July 2009   Chairman & Managing
Director
                                                                                          APPENDIX – A

              STATEMENT SHOWING REPRESENTATION OF
   SC/ST, EX-SERVICEMEN, PHYSICALLY CHALLENGED AND WOMEN
                           EMPLOYEES

  AS ON 31.12.2008 UNDER PREMANENT & CONTRACT CATEGORIES


Group/Category          Total SCs STs      Ex-     Physically Women
                    Strength          Servicemen Challenged Employees
Group “A”                479   57 10            54          2      23
Group “B”                 16    2   1            7          1       -
Group “C”               3530 603 197            58        27       50
Group “D”                711 166  47           115        20      102
(Excluding
Safaiwalas)
Group “D”                  82     74        -                     -              2                  -
(Safaiwalas)
Total                     4818 902 255                      234                 52             175


                                                                                             APPENDIX – B

    DETAILS OF RECRUITMENT MADE DURING 2008 UNDER PERMANENT &
         CONTRACT CATEGORIES, AND MANAGEMENT TRAINEES

Group/           Total      Total      Reservation made               Recruitment     made    during       the
Category        Vacan-    Recruit-      during the Year                               Year
                  cies      ment
               Released    made        SC   ST      Ex-   Physi       SC   ST      Ex-     Physi-       Women
                                                    ser   cally                   ser-      cally       Employe
                                                    vic   Chall                 vice-      Chal-             es
                                                     e-     en-                 men       lenge
                                                    me     ged                                 d
                                                      n
Group “A”            35          35    6    2         7      -         6    2         7        -              4
Group “B”             2           2     1   --        1      -         1    -         1        -              -
Group “C”            88          88    21   6         1      3        21    6         1        3              -
Group “D”            80          80    21   5         2      4        21    5         2        4             11
(Excluding
Safai-
walas)
Group “D”             -           -     -       -     -       -        -    -         -         -                -
(Safai-
walas)
TOTAL               205         205    49   13      11       7        49   13        11        7             15

                                 <<< ** >>>

                   Annexure I to the Directors‟ Report
            REPORT ON CORPORATE GOVERNANCE
                   (For the Year 2008-09)


1.     As per the guidelines issued by the Department of Public
Enterprises, Government of India, a Report on compliance of the
provisions on Corporate Governance is given below:

Philosophy of the Company on Corporate Governance
2.     It is the constant endeavour of the Company to adopt and
maintain the highest standards of ethics in all spheres of business
activities. The Company‟s philosophy of Corporate Governance is
based on the principles of honesty, integrity, accountability, adequate
disclosures and legal / statutory compliances, to protect, promote and
safeguard the interests of all its stakeholders. It strives for maximum
level of transparency in decision making and shall avoid conflicts of
interest. It also accords importance to adherence of adopted
corporate values and objectives and discharging social
responsibilities as a responsible corporate citizen.

3.      In keeping with its professional approach, the Company is
implementing the precepts of Corporate Governance in letter and
spirit.

4. The Company‟s activities are monitored by several external
agencies like Statutory Auditors, Comptroller & Auditor General of
India, the Central Vigilance Commission, Ministry of Defence,
Department of Defence Production etc.

Board of Directors

                           Composition
5. The composition of the Board of Directors of the Company had
been re-structured by the Government of India with nine members :
four Whole Time Directors, including the Chairman & Managing
Director, two Part Time Government Directors and three Part
Time Non-official Independent Directors. The details of the
members of the Board during the year ended 31 Mar 09 are given
below :
Name of the           Period               No. of other No. of Committee position held in
Directors                                  Directorship other Companies
                                                               Chairman          Member
       Whole Time Directors
RAdm                       01.04.08 to               -                -              -
T.S.Ganeshan,IN             30.04.08
(Retd)
Chairman & Mg.
Director
RAdm K.C Sekhar,           02.07.08 to               -                -              -
IN (Retd)                   31.03.09
Chairman & Mg.
Director
       Shri Ranjan         01.04.08 to               -                -              -
       Chakraborty          31.03.09
       Director
       (Finance)
       Shri Vinod          01.04.08 to               -                -              -
       Kumar                07.11.08
       Director
       (Shipbuilding)
       Cmde H.K            01.04.08 to               -                -              -
       Verma, IN            31.03.09
       (Retd)
       Director
       (Personnel)
       Part time Government Directors
       VAdm Dilip          01.04.08 to           -                -              -
       Deshpande,          03.02.2009
       AVSM, VSM,
       IN
       Shri Gyanesh        01.04.08 to           2                -             3
       Kumar               31.03.09
       VAdm                04.02.09 to           -                -              -
       Ganesh              31.03.09
       Mahadevan,
       AVSM, VSM,
       IN

Part time Independent Directors
       Dr. N R             01.04.08 to           3                -              -
       Banerjea            31.03.09
       Shri Ashoke         01.04.08 to           6                              4
       K Dutta             31.03.09
       Shri B B            01.04.08 to           1                -              -
       Chakrabarti         31.03.09


      6.     Brief Resume of the Directors appointed during the
      year, nature of their functional areas etc. are furnished below :
      RAdm K.C.Sekhar, AVSM, VSM, (Retd.)

RAdm K.C.Sekhar was born on 31 Oct, 1951. After passing
out from National Defence Academy, Pune, in December
1970, RAdm K C Sekhar was commissioned in the Indian
Navy on July 1972. After graduating from Naval College of
Engineering at INS Shivaji, Lonavla, he did post Graduation in
Marine Engineering from Indian Institute of Armament
Technology, Pune, in December 1979.

During his long span of career of over 36 years in the Indian
Navy, RAdm K.C.Sekhar held a number of important
appointments, both at sea and ashore. He spent more than six
years at sea mainly carrying out the duties of Engineering
Officer on board Corvettes and Destroyers. His important sea
appointments included ex-INS Mysore (Cruiser), Trishul
(Frigate), Anjadip (Anti-Submarine Corvette), Ranjit and
Rajput (both Destroyers). He also had the rare distinction of
commissioning Indian Naval Ship “Eksila” at Visakhapatnam,
which is the premier Gas Turbine Overhauling Extablishment
of the Indian Navy. Other notable appointments held by him
include Training Captain of Cadet Training (10+2 Tech
Scheme) at INS Shivaji, Officer-in-Charge of Centre for
Marine Engineering Technology at INS Shivaji catering for
imparting professional and engineering skills to the officers
and sailors of the Engineering Branch and Deputy General
Manager In-charge of Quality Assurances at Naval Dockyard
(Mumbai). On being promoted to the rank of Commodore, he
was appointed as Chief Staff Officer (Technical) of
Headquarters Eastern Naval Command, responsible for all
technical issues related to ships, submarines and
establishments and as an advisor to the FOC-in-C, Eastern
Naval Command. He also held the appointment of Deputy
Director General of Naval Project, Visakhapatnam for more
than a year wherein he was involved in planning and creation
of important infrastructure projects for the Navy and for the
Research and Development Organisation.

On promotion to the rank of Rear Admiral, he had a long
tenure at Naval Headquarters as Assistant Chief of Material
(Dockyard & Refit) where he was responsible for planning,
coordination and modernization of ships and sub-marines,
setting up of infrastructure in naval dockyards/repair yards and
formulation of maintenance policies as well as, nomination
and selection of marine engineering equipments. In the year
2007, he took over rein of the Naval Dockyard Mumbai, an
industrial establishment responsible for repair, modernization
and refits of ships and submarines and with a large civilian
workforce of more than 8,500 personnel.

Rear Admiral Sekhar was awarded Vishista Seva Medal on
Jan 1993 for undertaking major overhaul and modernization of
Main Reductors of Rajput class ships for the first time in India
and Ati Vishista Seva Medal on Jan 2009 for exemplary
service.

RAdm K.C.Sekhar was appointed as Chairman and Managing
Director of the Company by the Ministry of Defence,
Department of Defence Production and assumed charge from
02 July 08.




      VAdm Ganesh Mahadevan, AVSM, VSM, IN

VAdm Ganesh Mahadevan was born on 18 Apr 1952. He
joined the Indian Navy as a Cadet (38 NDA) and was
commissioned on 1 Jan 1972. He did his Basic Engineering
Course at INS Shivaji and advanced Electrical course at INS
Valsura. He is an alumnus of the National Defence College
(42 NDC).

He has had an extensive exposure to wide variety of
technically challenging assignments and has had the
opportunity to interact with a wide cross section of
professionals from technical and industrial background during
the past three decades while in the Navy. He has made
immense contribution towards development of weapon
systems including sonar and missiles in India.

VAdm Ganedh Mahadevan served five tenures in Naval
Dockyards / Command Headquarters at different points of time
in the capacity of Assistant Manager (Design), Manager
(Weapons), General Manager (Technical), Chief Staff Officer
(Technical) and Admiral Superintendent, Visakhapatnam
Dockyard. During these appointments, the officer
demonstrated his professional, administrative and man
management skills in abundance.

VAdm Ganesh Mahadevan has had four tenures of
appointments at Naval Headquarters and served in Directorate
of Weapon Engineering (DWE), Directorate of Electrical
Engineering (DEE) and Directorate of Information Technology
(DIT). While in the appointment as Assistance Chief of
Material (Information Technology & Systems), he was involved
in various weapons and IT projects of national interest.

He has also been at the helm of affairs as Commanding
Officer INS Kalinga, Admiral Superintendent, Visakhapatnam
Dockyard and Director General Naval Project, Visakhapatnam.
Presently as Controller of Warship Production and Acquisition,
      he is involved in shaping policy regarding warship design and
      construction in the country.

      VAdm Ganesh Mahadevan was appointed as Part time
      Government Director of the Company by the Ministry of
      Defence, Department of Defence Production on 4 Feb 09.

      7.      The number of Directorship and Committee positions
      indicated above are as notified by the Directors and it is
      confirmed that no Director has been a member of more than
      Ten Committees or acted as Chairman of more than five
      Committees across all Companies in which he is a Director.

      Directors’ Attendance

      8.   Details of Directors‟ attendance at the Board Meetings
      and Annual General Meeting are given below :

Name of the Directors              Board Meetings            Attendance at the
                                 No. of        No. of           last Annual
                              Meetings held   Meetings       General Meeting
                                 during       attended
                               respective
                               Tenure of
                                Directors
Whole Time Directors
       RAdm T.S.                       1             1                 Not
       Ganeshan, IN (Retd)                                          Applicable
       Chairman &
       Managing. Director
       RAdm K.C.Sekhar,                6             6               Attended
       IN (Retd)
       Chairman &
       Managing. Director
       Shri Ranjan                     7             7                 -do-
       Chakraborty,
       Director (Finance)
       Shri Vinod Kumar                4             4                 -do-
       Director
       (Shipbuilding)
       Cmde H.K Verma, IN              7             7                 -do-
       (Retd.|
       Director (Personnel)

       Part Time Government Directors
       VAdm Dilip                     6             4                  Not
       Deshpande                                                    Attended
       Shri Gyanesh Kumar             7             4                  -do-
       VAdm Ganesh                    1             1                  Not
       Mahadevan                                                    Applicable

       Part Time Independent Directors
       Dr. N R Banerjea                7                 6           Attended
       Shri Ashoke K Dutta             7                 6              -do-
       Shri B B Chakrabarti            7                 6              -do-
9. During the year 2008-09, 7 (seven) Board Meetings were
held on 22 Apr 08, 08 July 08,, 29 Aug 08, 10 Oct 08, 24 Nov
08, 16 Jan 09 and 06 Mar 09. The maximum interval between
any two Board Meetings was 76 days.

Board Procedure

10.     Board meetings are held at least once in every quarter,
and more often if considered necessary, focusing on
formulation of       policies, strategies, exercising control,
delegation of powers, reviewing performance of the Company,
approving contracts for high value items, half yearly/periodical
results, annual accounts, annual operating plan and budgets
and for considering statutorily required matters. The Company
believes that a carefully planned agenda note is pivotal for
effective Board Meetings. The agenda notes are backed by
comprehensive background information to enable the Board to
take decisions. Agenda Notes are generally circulated well in
advance to the members of the Board. The Board Members,
in consultation with the Chairman, may bring up any important
issue for the consideration of the Board. As and when
required, Senior Executives of the Company are also invited to
attend Board Meetings and provide clarifications. The Part
Time Directors play an important role in the deliberations at
the Board Meetings and bring to the Company their wide
experience in the fields of technology, finance, marketing,
public policy and operations.

Remuneration of Whole Time Directors

11. The remuneration of the Whole Time Directors is fixed by
the Government as the Company is a “Government Company”
within the meaning of Sec. 617 of the Companies Act, 1956.

Remuneration of Part Time Directors

12.     Part Time Government Directors are not eligible for
Sitting Fees for the meetings attended by them. The Part
Time Independent Directors are paid Sitting Fees as per the
provisions of the Companies Act, 1956 for attending each
meeting of the Board / Committee(s) of the Board and
reimbursed actual expenditure for attending the meeting of
Board / Board Committee(s).

Code of Business Conduct and Ethics for Board Members
and Senior Management

13. As per guidelines issued by the 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 posted at Company‟s website. 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 09.

Audit Committee

14. The Audit Committee of the Board was formed on 04
April 2001 and re-constituted from time to time. The Audit
Committee was re-constituted consisting of the following
members of the Board with effect from 20 Feb 08, to fall in line
with the guidelines issued by the Department of Public
Enterprises, Government of India :

              Shri           B.B.                     Chakrabarti
Chairman
              Part Time Independent Director

              Shri Gyanesh Kumar                         Member
              Part Time Government Director

              Shri Ashok Kumar Dutta                     Member
              Part Time Independent Director

15.    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 in fulfilling its oversight responsibilities by reviewing
the financial reports; the Company‟s systems of internal
controls regarding finance, accounting and legal compliance
that management and the Board have established; and the
Company‟s auditing,          accounting and financial reporting
process generally.

16.    The Audit Committee reviews reports of the Internal
Auditors, meets Statutory Auditors and discusses their
findings, suggestions and other related matters and reviews
major accounting policies followed by the Company. The
Audit Committee reviews the half yearly and annual financial
statements before their submission to the Board.

17.    The Chairman of the Audit Committee apprises the
Board about the observations of the Audit Committee during
the Board Meetings. The Minutes of the Audit Committee
Meetings are placed before the Board in their subsequent
meetings and taken note of.

18. During the financial year 2008-09, four meetings of the
Audit Committee were held on 10 June 08, 29 Aug 08, 24
Nov,08 and 06 Mar, 09.
19.    The attendance of the members of the Audit Committee
during the financial year 2008-09 is given below :

      Name of          the          Meeting              No. of
      Directors                   held during           Meetings
                                  respective            attended
                                   Tenure of
                                   Directors
      Shri B B                         4                   4
      Chakrabarti
      Shri Gyanesh                     4                   1
      Kumar
      Shri Ashoke K                    4                   4
      Dutta

Procurement Committee

20. The Procurement Committee of the Board constituted for
approving for procurement of high value items met on 08 July
08. The meeting was attended by all the members of the
Committee. The Minutes of the meeting of the Committee are
placed before the Board at its subsequent meeting held on 29
Aug 08 and taken note of.

Annual General Meetings

21.   The details of the last three Annual General Meetings of
the Company are given below :
  Year          Date         Time                         Venue
 2005-            14         1230               “The Park” Hotel,
    06           Aug           hrs                       Kolkata
                  06
 2006-            21          1245 Registered Office of the
    07           Aug            hrs
                  07                Company at

                                     43/46, Garden Reach Road.

                                     Kolkata- 700 024



 2007-           29           1400 ITC, Hotel- The Sonar
    08          Aug             hrs
                 08                 Kolkata, Kolkata



Disclosures

22     During the year 2008-09, the Company has not entered
into any transactions with the 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
pecuniary relationship or transaction with the Company which,
in the judgement of the Board, may affect independence of
judgement of the Directors.

23.    During the last three years, there has been no instance
of non-compliance by the Company on any matters related to
Companies Act, 1956 or any Industrial Law. However, during
the year 2008-09, based on CESTAT‟s Order on the
Company‟s Appeal, minor penalty amounting to Rs.25,000/-
was levied by the Central Excise Authorities for violation of
Central Excise Rules, in respect of transactions relating to the
years 2000-01 and 2001-02 .

24.    Regarding “whistle blower” mechanism, the guidelines
issued by the Government of India have been complied with.
The mechanism, inter alia, contains a provision enabling any
Personnel to approach the Chairman of the Audit Committee
in exceptional cases.

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

26.    A Presidential Directive was issued by the Department
of Defence Production, Ministry of Defence, Government of
India, vide Order No. 2(3)/2009/GRSE/D(SY) dated 27 Apr 09,
under the provisions contained in Article No. 189 of the
Articles of Association of the Company, for the implementation
of pay scales, fitment formula, D.A. guidelines and ceiling on
perquisites etc. for Board level and below Board level
executive in accordance with the Department of Public
Enterprises O.M. No.2(70)/08/DPE(WC) dated the 26 Nov 08
and O.M. No.2(70)/08/DPE(WC)-GL-VII/09 dated 02 Apr 09.
The revised payscales for executives and non-unionised
Supervisors are being implemented shortly.

27.     The Company has not incurred any expenditure which
is not for the purpose of the Company‟s business, nor has the
Company incurred any expenditure which are personal in
nature for the Board of Directors and top management.

28     Details of Administrative and Office expenses as a
percentage of total expenses vis-à-vis financial expenses are
furnished below :


(Rs. In Crore)
       Sl.        Particulars              2008-         2007-
                                              09            08
(a)        Total Expenditure              298.24        293.24
           (Other than materials)
(b)        Administrative &                 8.01           6.74
                 Office Expenses
      (c)        Percentage of (b) on           2.069          2.30
                 (a)

      General

      29      The Whole Time Directors of the Company, including
      the Chairman & Managing Director are appointed by the
      Government of India and are being paid remuneration as per
      the terms of their appointment. The Company, therefore, has
      not constituted any Remuneration Committee to decide the
      policy for the Directors‟ remuneration.

      30     The Company has a Website (www.grse.nic.in) which
      provides information on GRSE management, products,
      financial information under Ten Years at a Glance, Annual
      Reports and Audited Accounts, Vendor registration
      procedure, details of tenders, payment status of suppliers‟
      bills etc. The performance of the Company, including
      unaudited / provisional financial results are communicated to
      the Administrative Ministry every month. The results are not
      published in any newspaper.

31     The Company continuously strives to ensure unqualified
financial statements. During the last nine years (1999-2000 to 2007-
2008) there have been no audit qualifications. The Company has
also received “Nil” comments from the CAG during these years.

      32     Need based Training Programmes are formulated from
      time to time. .
                     AUDITORS’ REPORT TO THE MEMBERS OF
               M/S GARDEN REACH SHIPBUILDERS & ENGINEERS LTD.

         We have audited the attached Balance Sheet of M/s Garden Reach
                                          st
Shipbuilders & Engineers Limited as at 31 March 2009, the Profit & Loss Account
and the Cash Flow Statement for the year ended on that date, annexed thereto, in
which accounts of Diesel Engine Plant, Ranchi audited by the Branch Auditors,
M/s. Bhageria & Associates, Chartered Accountants, have been incorporated
which has not been visited by us. These financial statements are the responsibility
of the Company Management. Our responsibility is to express an opinion on these
financial statements based on our audit.

        We conducted our audit in accordance with auditing standards generally
accepted in India. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall financial statements
presentation. We believe that our audit provides a reasonable basis of our opinion.

1.      We report that:

1.1.    We have obtained all the information and explanations which to the best of
        our knowledge and belief were necessary for the purpose of our audit.

1.2.    In our opinion, proper books of account as required by law, have been kept
        by the Company, so far as it appears from our examination of the books.

1.3.    The Balance Sheet and Profit and Loss Account and Cash Flow Statement
        dealt with by this report are in agreement with the books of account. The
        Balance Sheet and the Profit and Loss Account and Cash Flow Statement
        have been prepared in compliance with the applicable Accounting
        Standards referred to in Section 211(3C) of the Companies Act, 1956.

1.4.    The report on the accounts of Diesel Engine Plant, Ranchi audited by the
        Branch Auditors has been forwarded to us and the same has been dealt
        with in preparing our audit report.

1.5.    As per Companies (Disqualification of Directors under section 274(1)(g) of
        the Companies Act,1956) Rules, 2003 the provision of section 274(1)(g) is
        not applicable to Government Company vide Notification No. GSR 829(E)
        dated 21/10/2003.

1.6.    In our opinion and to the best of our information and according to the
        explanations given to us, the said accounts read together with significant
        accounting policies and explanatory notes thereon give the information
        required by the Companies Act, 1956, in the manner so required and give
        a true and fair view in conformity with the accounting principles generally
        accepted in India :

        i)         In the case of the Balance Sheet, of the state of affairs of the
                                    st
                   Company as at 31 March,2009;

        ii)        In the case of the Profit & Loss Account, of the Profit of the
                   Company for the year ended on that date; and


        iii)       In the case of the Cash Flow Statement, of the cash flows for the
                   year ended on that date.
                                            2

2.1    As required by the Companies (Auditor‟s Report) Order, 2003 as amended
       by the Companies (Auditor‟s Report) Amendment Order 2004 issued by
       the Deptt. Of Company Affairs in terms of Section 227(4A) of the
       Companies Act,1956 and on the basis of such checks as we considered
       appropriate and according to the information and explanations given to us,
       we further report that :

       a) The Company has maintained proper records showing full particulars
       including quantitative details and situation of its fixed assets.

       b)     As explained to us, major items of fixed assets have been physically
       verified by the management in a phased periodical manner, which in our
       opinion, is reasonable, having regard to the size of the company and
       nature of its assets. As explained to us no material discrepancies were
       noticed on such physical verification.

       c)        In our opinion, the company has not disposed of a substantial part
       of its fixed assets during the year and the going concern status is not
       affected.

2.2.   a) The inventories have been physically verified by the management at
       reasonable intervals during the year, except stocks lying with sub-
       contractors and customers for which reliance has been placed on the
       certificates issued by them. In our opinion, the frequency of verification is
       reasonable.

       b) In our opinion and according to the information and explanations
       given to us the procedures followed by the management for physical
       verification of stocks are reasonable and adequate in relation to the size of
       the Company and the nature of it‟s business.

       c) The Company is maintaining proper records and situation of inventory.
       The discrepancies noticed on physical verification of stocks as compared
       to Book Records were not material and have been properly dealt with in
       the Books of Accounts.

2.3.   The Company has not granted or taken any loans, secured or unsecured
       to/from Companies, firms or other parties covered in the register
       maintained under Section 301 of the Companies Act, 1956. We have been
       informed that there are no Companies under the same Management as
       defined under Section 370(1B) of the Companies Act,1956.

2.4.   In our opinion and according to the information and explanations given to
       us, the Company has adequate internal control system commensurate with
       the size of the Company and nature of its business, for the purchase of
       inventory, fixed assets and also for the sale of goods and services. During
       the course of our audit, we have not observed any continuing failure to
       correct major weaknesses in internal control system.

2.5.   In our opinion and according to the information and explanations given to
       us, there was no transaction that needed to be entered into Register
       maintained under Sec.301 of the Companies Act,1956.

2.6.   The Company has not accepted any deposits from the public within the
       meaning of Sec. 58 & 58A of the Companies Act, 1956 and the rules
       framed there under.
                                          3
2.7.    In our opinion and according to information and explanations given to us,
        the present internal audit system is adequate

2.8.    The Central Government has prescribed maintenance of cost records
        under Section 209(1)(d) of the Companies Act,1956 in respect of Power
        Driven Pumps and Diesel Engines. Based on the Branch Auditor‟s Report
        of Ranchi Branch, we state that adequate cost accounts and records were
        made and maintained as required under the law in force.

2.9.    According to the records of the Company, undisputed statutory dues
        including Provident Fund, Employees‟ State Insurance, Sales Tax, Wealth
        Tax, Service Tax, Customs duty, Excise duty, Cess and any other statutory
        dues have been generally regularly deposited with the appropriate
        authorities. According to the information and explanations given to us, no
        undisputed amount payable in respect of aforesaid dues were outstanding
        as at March 31,2009 for a period of more than six months from the date of
        becoming payable.

        The disputed statutory dues not deposited have been disclosed in
        Explanatory Notes to the Accounts number 1.6, 1.7 & 1.8.

2.10.   The Company does not have any accumulated losses at the end of the
        financial year and has not incurred cash losses during this financial year
        nor during the preceding financial year.

2.11.   The Company has not taken any loan from any bank or financial institution
        nor has the Company issued any debentures.

2.12.   The Company has not granted any loans or advances on the basis of
        security by way of pledge of shares, debentures or other securities.

2.13.   The provisions of any special statute applicable to chit fund are not
        applicable to the Company.

2.14.   The Company does not deal or trade in shares, securities, debentures or
        other investments.

2.15.   The Company has not taken any term loans.

2.16.   The Company has neither raised any short term nor long term funds.

2.17.   The Company has not made any preferential allotment of shares to parties
        and companies covered in the Registered maintained under Section 301 of
        the Companies Act,1956.

2.18.   The Company has not issued any debentures.

2.19.   The Company has not raised any money through public issue.

2.20.   During the course of our examination of the Books and Records of the
        Company and according to the information and explanations given to us,
        no material fraud on or by the company has been noticed or reported
        during the year.

Dated :08/07/2009                                 For SEN & RAY
                    Chartered Accountants
Place   : Kolkata
                                    S. K.
Dasgupta
                               Partner
                          Membership No. 5103
                                BALANCE SHEET AS AT 31ST MARCH 2009

                                                                      (Rs. in Lakh
 OF FUNDS :                     Schedules                    As At
                                                         31-3-2009

olders' Fund-
 e Capital                         1                     12384.00
erves & Surplus                    2                     38691.93
                                                         51075.93

und
 red Loans                         3                          0.00
 ign Suppliers
 red Credit                        4                      2178.60
                                                          2178.60
 d Tax -
                                   5                      1449.07
                                                         54703.60

TION OF FUNDS :


Assets-                            6
 s Block                                                 25811.61
 : Depreciation                                          10667.67
Block                                                    15143.94
 : Provision for Asset
er Reconciliation                                             0.00
 tal Work-in Progress/Advance                             5200.46
                                                         20344.40

ments                              7                          0.44

 Fixed Assets                      6                       169.78

 d Tax - Assets                    7A                     2039.33


 ent Assets,Loans & Advances-
ntories                            8.1                   83857.85
dry Debtors                        8.2                    9701.63
 rred Debtors                        8.3                                             10.48
est & Other Receivables              8.4                                           1895.13
 & Bank Balances                     8.5                                          75476.52
ns & Advances                         9                                           83684.49
                                                                                 254626.10



rrent Liabilities & Provisions
 urrent
                                     10                                          206365.13
rovisions                            10                                           16112.29
                                                                                 222477.42


RENT ASSETS                                                                       32148.68


cellaneous Expenditure               11                                               0.97
 the extent not written off
 adjusted)

                                                                                  54703.60


    Schedules, Accounting Policies & Explanatory Notes form part of Accounts


                                                               Company Secretary


  Director (Finance)                                                                           Chairman & Managing Director


                                                     As per our report of even date attached


                                                                  S.K.Dasgupta
                                                                     Partner
                                                               For and on behalf of
                                                                   Sen & Ray
uly, 2009
SCHEDULE - 9
                                            (Rs. in
                                            Lakhs)
LOANS & ADVANCES :                  As At                 As At
                                    31-3-
(Unsecured Considered Good unless    2009             31-3-2008
otherwise stated)
Loans to Other                       0.12                  0.12
Short term Deposits (including doubtful Rs 200
lakhs                                                   200.00                 200.00
Previous year : Rs. 200 lakhs)

Foreign Exchange Fluctuation Suspense                  2178.60                2256.43
Advance recoverable in Cash or in Kind
or for value to be received (including doubtful
Rs 12.42 lakhs . Previous year : 12.42 lakhs)         67290.68               43312.67
Income Tax                                             7214.35                9674.04
Income Tax Deducted at source                          6813.02                5205.89
Fringe Benefit Tax                                      183.34                 192.08
Deposit with Customs, Port Trust &
Other Government Authorities                             16.80                   9.94
                                                      83896.91               60851.17
Less : Provision for Doubtful Advances                  212.42                 212.42
                                                      83684.49               60638.75
SCHEDULE - 10
                                                                  (Rs. in
                                                                  Lakhs)
CURRENT LIABILITIES & PROVISION :                        As At                  As At
                                                         31-3-
                                                          2009              31-3-2008
Current Liabilities
Sundry Creditors                                       33220.74              17331.57
Advance Received from Customers & Others *            147278.06             155809.85
Output VAT Payable                                         0.00
Deposit from Contractors & Others                        681.07                807.68
Other Liabilities (Net of Sales Tax debits             25185.26              26660.75
Rs.4928.85 Lakhs (Previous year Rs.3395.19
Lakhs)


                                                      206365.13             200609.85
Provisions
Income Tax                                             12839.32               14349.60
Sales Tax                                                182.69                 182.69
Fringe Benefit Tax                                       186.40                 194.91
Wealth Tax                                                 6.15                   6.24
Proposed dividend                                       2476.80                1476.17
Tax on distributed profit                                420.93                 250.88
                                                      16112.29               16460.49
* Includes Rs.26629.17 lakhs ( Previous year
Rs.28004.29 lakhs ) received from customers as
per contractual payment stages for shibuilding
pertaining to LOI / Order received after 31.03.03 .
|::



SCHEDULE -11
                                                                    As At                    As At
                                                                    31-3-
MISCELLANEOUS EXPENDITURE :                                          2009                31-3-2008
(To the extent not written off or adjusted)
Deferred/Development Expenditure
Opening Balance                                          6.79                 54.30
Add : Addition during the year                           0.00                  0.00
                                                         6.79                 54.30
Less : Transferred to Prior Period Adjustment            0.00                 41.69
Less : Charged off to Profit & Loss Account              5.82                  5.82
                                                         0.97                  6.79

                                                                (Rs. in
SCHEDULE -12                                                    Lakhs)
                                                      For the               For the
                                                         year                  year
CONSUMPTION OF RAW MATERIALS &                         ended                 ended
                                                        31-3-
COMPONENTS (INCLUDING STORES & SPARES)                  2009              31-3-2008



Opening Stock - Others                               27722.44             20383.90
Less : VAT Credit Available on Opening Stock             0.00
             - B & D Spares                            542.11                  0.00

Add : Purchase - Others                              33618.97             30644.27
                                 -B&D
                               Spares                12777.57               2495.10
                                                     74661.09             53523.27
Less : Closing Stock- Others                         35462.88             27722.44
                                    - B & D Spares     461.26                542.11
Less : Material transferred to MDL
Consumpions - Others                                 25878.53             23305.73
                               -B&D
                              Spares                 12858.42              1952.99

                                                                (Rs. in
SCHEDULE -13                                                    Lakhs)

                                                      For the               For the
                                                        year                  year
SUB-CONTRACT & OTHER DIRECT EXPENSES
:
                                                       ended                 ended
                                                        31-3-
                                                        2009              31-3-2008

Contractors' services                                 6261.59              4835.21
Bought-in-items                                         46.04                37.68
Direct Insurance                                         0.00                 0.00
Excise Duty                                              3.46                 3.88
                                                      6311.09              4876.77

                                                                (Rs. in
SCHEDULE -14                                                    Lakhs)
                                                      For the                       For the
                                                         year                          year
EMPLOYEES' REMUNERATION & BENEFITS :                   ended                         ended
                                                        31-3-
                                                        2009                     31-3-2008

Wages & Bonus - Direct Operative                     7657.75                       6772.34
Salaries, Wages & Bonus                              8303.13                       7637.84
Contribution to Provident Fund
& Family Pension Scheme                              1109.90                        826.83
Contribution to E.S.I.                                 12.73                         29.50
Pension                                                21.43                         21.84
Gratuity                                             1447.94                        365.13
Workmen & Staff Welfare Expenses                     1961.64                       1776.25
Voluntary Retirement Scheme                             0.00                          0.00
Directors' Remuneration (Notes Below)                  34.12                         30.69
                                                    20548.64                      17460.42
Notes :
1.   Directors' Remuneration **
     Salary                                               22.01                      22.01
     Contribution to P.F.                                  2.63                       2.49
     Other Perquisites                                     9.48                       6.19
                                                          34.12                      30.69


2. ** Excluding perquisites for the use
     of car provided to Chairman-Cum-
     Managing Director and three Functional
     Directors upto 1000 Kms on payment of
     Rs. 520 p.m.




                                                                  (Rs. in
SCHEDULE -15                                                      Lakhs)

                                                For the                        For the
                                                   year                           year
REPAIRS & MAINTENANCE :                          ended                          ended
                                              31-3-2009                     31-3-2008

Repairs to Buildings                            462.07                         400.66
Repairs to Plant & Machineries                  919.85                         763.67
Other Repairs                                   725.46                         582.58
                                               2107.38                        1746.91
|::

                                                            (Rs. in
SCHEDULE -16                                                Lakhs)

                                                  For the                For the
                                                     year                   year
OTHER EXPENSES :                                   ended                  ended
                                                31-3-2009             31-3-2008
                                            `
Rent                                              130.85                  96.67
Rates & Taxes                                      90.84                  77.47
Insurance                                          44.04                  38.05
Commission on Sales                               115.05                 102.00
Bad Debts                                           0.00                   0.00
Hire Charges of transport                          69.11                  53.50
Stores Clearing & Despatch Expenses                50.25                  44.98
Liquidated Damages                                465.16                3392.92
Guarantee Period Liability                        804.53                 571.21
Miscellaneous Expenses
(Details in the Schedule 16A)                     902.79                1161.14
                                                 2672.62                5537.94

                                                            (Rs. in
SCHEDULE -16A                                               Lakhs)

                                                  For the                For the
                                                     year                   year
DETAILS OF MISCELLANEOUS EXPENSES :                ended                  ended
                                                31-3-2009             31-3-2008


Bank charges & Commission                           44.91                 33.82
Travelling Expenses                               161.91                 167.96
Advertisment & publicity                          367.86                 275.48
Printing & stationary                               12.10                 11.63
Postage stamps & Telegrams                          11.10                 13.75
Telephone, Telex & Fax                              69.96                 71.89
Loss in Exchange Rate Fluctuations                   2.62                  3.38
Loss on sale of Fixed Asset                          0.15                  0.00
Legal Expenses                                      15.30                 60.62
Entertainment Expenses                               2.55                  3.21
Auditors' Remuneration :
      (a) Audit Fee                                  1.09                  1.06
      (c) In other capacities (Tax Audit)            0.34                  0.34
P.F. Audit Fee                                       0.12                  0.12
P.F. Adminstration Charges                          15.62                 12.41
Gratuity Fund Audit Fee                              0.06                  0.06
Misc. Expenses - R & D                              29.04                184.02
Other Misc. Expenses           168.07                 321.39
                               902.79                1161.14


                                         (Rs. in
SCHEDULE -17                             Lakhs)

                               For the                For the
                                  year                   year
PROVISION :                     ended                  ended
                             31-3-2009             31-3-2008

Doubtful Loans & Advances         0.00                  0.13
Bad & Doubtful Debts             45.96                  7.66
                                 45.96                  7.79


                                         (Rs. in
SCHEDULE -18                             Lakhs)

                               For the                For the
                                  year                   year
INTEREST :                      ended                  ended
                             31-3-2009             31-3-2008

Bank Borrowings                  17.51                  0.05
Others                            0.21                  5.26
                                 17.72                  5.31


                                         (Rs. in
SCHEDULE -19                             Lakhs)

                               For the                For the
                                  year                   year
PRIOR PERIOD ADJUSTMENTS :      ended                  ended
                             31-3-2009             31-3-2008

A.   Expenses :

     Other Expenses              28.68                138.28
     Purchase                     0.00                141.48
     Depreciation                 6.94                   5.93
                                 35.62                285.69


B.   Income
      Sales                       0.05                   0.00
      Miscellaneous Income      478.19                   2.36
      Depreciation                2.33                   0.00
              Repairs                                                        0.00                      0.00
                                                                          480.57                       2.36
              Net Debit (+)/Credit (-)                                   -444.95                     283.33




                                                                                    (Rs. in Lakhs)
SCHEDULE -20
                                                                       For the                         For the
                                                                          year                            year
                                                                        ended                           ended
SALES :(Including Excise Duty)                                       31-3-2009                       31-3-2008
Sale *                                                                 60113.27                      55483.13
Sale of B & D Spares                                                   13841.49                           0.00
Sale of Scrap                                                          106.85                           182.10
Sale of Stores                                                           0.00                             0.00
                                                                     74061.61                        55665.23
* Includes Rs 2011.27 lakh (Previous year Rs 4815.07 lakhs) for
ship constructed under cost plus contract (Indian Navy)




SCHEDULE -21                                                                        (Rs. in Lakhs)

                                                                       For the                         For the
ACCRETION (+) TO/DECRETION (-) IN                                         year                            year
                                                                        ended                           ended

                                                                     31-3-2009                       31-3-2008
Work-in-Progress / Finished Goods
         Closing Balance                                  45073.89                    51866.54
         less Opening Balance                             51866.54                    50184.40         1682.14
         add VAT Credit Available on Opening
WIP                                                           0.00    -6792.65
                                                                          0.00                            0.00
                                                                      -6792.65                         1682.14
|::




SCHEDULE -22                                                                        (Rs. in Lakhs)
OTHER REVENUES
:
                                                                        For the                        For the
                                                                           year                           year
                                                                         ended                          ended
                                                                      31-3-2009                      31-3-2008
Profit on sale of Fixed
Assets                                                                       0.00                         1.22
Profit on sale of Retired Assets                                           167.23                         0.00
Interest on Loans,Advances,Investments & Deposits                      8218.54                       10196.97
Liability/Provision written
back                                                                   1513.02                         132.26
Rent                                                                         8.44                         9.02
L.D. Recovered                                                             378.76                         5.88
Provision for Bad Debts no longer required                                   8.04                        16.82
Gain in Exchange Rate Fluctuations                                          10.22                         0.00
Insurance Claim                                                             29.85                        49.67
Miscellaneous
Receipts*                                                                  379.26                      156.03
 *(Includes interest on IT refund Rs 6.65 lakhs (prev year Rs.15.32
lakh)

                                                                      10713.36                       10567.87
Less : Interest Liability to Customer                                   1354.00                        2626.00
                                                                        9359.36                        7941.87
* Includes LD refunded by customer Rs NIL (Previous year Rs.29.91 lakhs)
DULE -

IONAL
MATION
ified by Management)

    Goods                                                           2008-2009                                2007-2008
                                                   Quantity                       Value                  Quantity    Val
                                                                (Rs in Lakhs)                                      (Rs in
RNOVER :

  Ship Division :
  (a)
ilding                                    7 No**     55193.98                         1 No**           47621.64
  (b)
pair                                         *              92.64                          *             629.96
                                                                                55286.62                          48251.

    General Engineering Division :
                                          16 Nos
    (a) Deepwell Turbine Pump              ***              20.49                     264 Nos             68.66
    (b)
                                             *         4430.17                             *            3870.55
                                                                                 4450.66                            3939.
   Diesel Engine Division :
   (a)
ergen/MTU                                 11 Nos        268.62                        16 Nos            1064.72
        Engines Spares etc.
   (b) General
 ring                                        *              26.47                          *             103.91

)
    (c)   R.V. Diesel Engines &              *              80.90                          *              24.14

                                                        375.99                                          1192.77
                                                                                60113.27                          53383.
    Sale of Scrap :                                     106.85                                           182.10
         TOTAL
         :                                             **                       60220.12                   **     53565.

wing to varigated nature quantitative data not given in full.
cludes additional revenue in respect of cost-plus contracts of Indian Navy completed in earler years
s. 2011.27 Lakhs (Previous year Rs.4815.07 Lakhs)
cludes 3 nos.
ump

DULE -23    (Contd.)
 MATION REQUIRED FOR                              2008-2009                           2007-2008
 FACTURING COMPANY                         Quantity         Value                        Quantity
                                                                                (Rs in
                                                                                Lakhs)
nsumption of Raw Material & Components :

     Iron
                                              6796 Ton      2732.47                          4783 Ton

teel                                            24 Ton        31.31                            33 Ton

re                                          152631   Nos                                   153719   Nos
                                                                      5 Ton       238.18
     Pipe & Pipe
                                              8514 Mtrs      200.51                          8701 Mtrs
     Electrode & Non-Ferrous items              27 Ton        66.71                            28 Ton
     Components & Equipments

ents &                                        2520 Sets                                      2397 Sets

nents                                         8522 Nos      8624.82                          8471 Nos
   Components-
                                              2405 Nos                                       2237 Nos
                                                                      26 Mtr.      23.29
       -Electrical &
                                            135256 Nos                                     127901 Nos
                                                                118428 Mtrs      5259.88                1141
    -
Items                                        44477 Nos       306.97                         43030 Nos
    -
Bridge                                      428476 Nos      2406.00                        252841 Nos
    -
.T.U./
      Bergen
                                                15 Sets     5424.13                            14 Sets
     Miscellaneous


                                                             301.62
                                                                                25615.88 *

 1.
                                           40.15%                                          30.43%
d                                                          10284.81
 2.
                                           59.85%                                          69.57%
ous                                                        15331.07
                                                               100.00%          25615.88 *           100.00
ncludes :
  a)
e/Surplus                                                              NIL
  b) Cost of Direct Sale of Stores                                     NIL
and prior to adjustment of
                            262.65 lakh (Previous year Rs 192.79 lakh) on account of Non-moving items.




DULE -23          (Contd.)

    Goods                                                                                 2008-2009
                                                                                            Value
                                                                                            (Rs in
                                                                                            Lakhs)

 lue of Import on C.I.F Basis
 .
aterials                                                             165.39
 . Components & Spare Parts                                        18735.53
 .
Goods                                                                   665.94
                                                                                              19566.86
yment in Foreign Currency
.
ow                                                                 --
. Consultation / Service Fees                                           283.89

.    Interest on foreign suppliers credit                          --
.    Deferred payment to foreign suppliers                            77.83
.    Other Payments (for materials etc.)                           21184.57
                                                                                              21546.29
rning in Foreign Exchange
                                                                                                    -
Export                                                                                   -

d
                                                                   --
                                                                                                    -
Others                                                                                   -
                                                                                                    0.
                                                                                         00
HEDULE - 23
.)

                                         2008-2009                                   2007-2008
                             Licensed     Installed    Actual             Licensed    Installed      Actual
 GOODS              Unit   Capacity     Capacity    Production   Unit   Capacity   Capacity     Production

ion Statistics
al Licenses
roller              No                    **          --         No                    **           --
well Turbine Pump
                    No      720          720          16     #   No      720          720          265
mersible Pump
 Repair              *       --          1200                     *       --         1200
hipbuilding          *      3200        3230 $      2662          *      3200       3230 $        2101
                                ***                                         +2689               ***                             +1820
eneral Engineering           *            1800               2500          652              *           1800         2500      671
                            ***                                           +2480            ***                                +2665
l Engine-
/Medium/Slow

H.P. to 20000 H.P.)
                            No |                             2              --             No |                        2       --
Bergen/MTU                  No |           168               36            11              No |          168           36      10
                            No |                             48             --             No |                        48      --
 Machinery :
nch (Marine &
                             No             50               50             1              No            50            50      --
Electric Anchor
                             No             20               20            11              No            20            20      5
Electric Capstan             No             12               12             6              No            12            12      6
ydraulic Steering
                            No             15                15             --             No            15            15      --
oat Davits for Ships        Sets           40                40             6              Sets          40            40      18
eyors                       Tons          2600               **             -              Tons         2600           **       -


tion Statistics- Letter of Intent
 lant Equipment             Tons          1000               1000           --             Tons         1000         1000      --

ons for Fabrication
o seperate installed capacity created
abrication for other

ludes 3 no. Navy


                         $ Steel throughput capacity reassessed by NPC and approved in 262nd meeting of the Board of
                         Directors




1. Opening and Closing Work-in-Progress and Finished Goods of Goods Produced

    Activity                        Opening W I P                                                     Closing W I P
                        Value in Lakh Rs.          Quantity                 Value in Lakh Rs.                 Quantity
                        2008-      2007-     2008-     2007-                2008-      2007-            2008-       2007-
                        2009        2008     2009       2008                2009        2008             2009       2008

  Ship Repair            409.05        82.88     5 orders     6 orders       829.03     409.05        6 orders    5 orders
   Ship Building       46484.27     45219.26     20 ships     16 ships     36567.13   46484.27        12 ships    20 ships
   FRP Boats              --           --            --           --        2113.13      --           78 nos          --
  Deepwell Turbine/
  Pump                    95.01       112.55     30 nos       44 nos          95.63      95.01        32 nos      30 nos
  Bailey Bridge         1076.31      1096.35     1 orders     4 orders      1150.34    1076.31        2 orders    1 orders
  Deck Machinery
  Equipment              102.77         35.50    18 orders    21 orders      204.64     102.77        24 orders   18 orders

V/BERGEN/MTU/
Engines                  116.15       120.07       5 nos         5 nos      531.01       116.15              5 nos          5 nos
Others                  3582.98      3517.79           --            --    3582.98      3582.98                  --             --
          TOTAL        51866.54     50184.40                              45073.89     51866.54

Finished Goods             --            --            --            --      --           --                     --             --
(included above)




          SCHEDULE - 23                 (Contd.)

          I.                              BALANCE SHEET ABSTRACT AND
                                        COMPANY'S GENERAL BUSINESS PROFILE

          I.     Registration Details
                  Registration No.                              007891    State Code                 ...              21
                  Balance Sheet Date                        31.03.2009




          II.    Capital Raised during the year
                 (Amount in Rs. thousands)
                  Public Issue     ...                             NIL    Right Issue                  ...            NIL
                                                                          Private Placement
                  Bonus Issue           ...                        NIL    ...                                         NIL




          III.  Position of mobilisation and deployment of funds
              (Amount in Rs. thousands)
               Total Liabilities       ...        27718102       Total Assets                  ...            27718102
               (includes Owners Fund
          Rs.       5107593        Thousands)

                 Source of Funds :
                  Paid up Capital                             1238400     Reserves & Surplus                   3869193
      Secured Loans                                NIL    Unsecured Loans       217860

      Application of Funds :
      Net Fixed Assets                      1514394       Investment                 44
      Net Current Assets                    3214868       Misc. Expenditure          97
      Accumulated losses                     NIL




IV.    Performance of Company
      (Amount in Rs. thousands)
       Turnover                             7406161       Total Expenses        6726177
       Profit before Tax                     889814       Profit after Tax       516480
                                                         (Exclusive of Tax on
                                                          Distributed Profit)
      Earning per share in Rs.                41.71       Dividend Rate %       20.00%
      Diluted Earning per share in
Rs.                                           41.71




SCHEDULE - 23           (Contd.)


V.    Generic Names of Three Principal Products/Services of Company
      (As per monetary terms)

      (a)   Item Code No.             ....                89060000
             (ITC Code)
             Product Description     ....                 SHIP CONSTRUCTION

      (b)   Item Code No.             ....                97900000
             (ITC Code)
             Product Description     ....                 SHIP REPAIRS & GENERAL ENGINEERING

      (c)   Item Code No.             ....                84080000
             (ITC Code)
             Product Description     ....                 DIESEL ENGINES




                                                         S.Mahapatra
                                                    Company Secretary
  K. K. Rai          Rear Admiral K.C.Sekhar, IN (Retd.)
Director (Finance)     Chairman & Managing Director
                                                                                                        Annexure B
N REACH SHIPBUILDERS & ENGINEERS
                                                                               RS IN LAKH




                                                             FOR THE                              FOR THE
                  CASH FLOW
                  STATEMENT                                YEAR ENDED                           YEAR ENDED
                                                            31-03-2010                           31-03-2009

LOW FROM OPERATING
TIES                                              (A)

   Net profit before taxation                                        6656.00                                8898.14
nt :
   Depreciation                                            850.00                             762.08
   Retirement Loss                                           0.00                              18.77
   Provision for Asset under
   Reconciliation                                            0.00                               17.51
   Interest expense                                         24.00                               17.51
   Misc. expenditure written off                             0.97                                5.82
   Profit/Loss on sale,of Fixed
   Assets (-/+)                                              0.00                                0.15
   Gain / Loss in exchange rate [-/+]                        0.00                               -7.60
   Prior period Adjuatment -Fixed Asst purchase              0.00                                0.00
   Prov for Interest                                         0.00                                0.21
   Interest Income                                       -4994.00   -4119.03                 -8218.54       -7421.60




  Fund from operation before working capital
  changes                                                            2536.97                                1476.54

  Working Capital Changes

  Decrease in relevant Current                                  -
  Asset                                                  24702.00                           -25073.44

  Decrease in relevant Current                                  -
  Liability                                              25054.00     352.00                 -5753.16      -19320.28

  Cash generated from operation                                      2888.97                               -17843.74

  Tax paid (Incometax Act & Wealth Tax) - NET                        2892.85                                 3550.63
                                                                       -3.88                               -21394.37
LOW FROM INVESTING
TIES                                              ( B)

  Addition to Fixed Asset and                                              -
  Capital WIP                                                       12918.00                                -3896.63
  Sale of Fixed Asset                                                   0.00                                  169.60
                                                                           -
                                                                    12918.00                                -3727.03
  Development expense                                                                                           0.00
  Interest received on short term
  investment                                                                       5331.96                                        9844.31

                                                                                  -7586.04                                        6117.28

LOW FROM FINANCING
TIES                                                      (C)


  Interest expenses                                                                 -24.00                                         -17.51
  Dividend and CDT                                                                -2898.00                                       -1727.05
                                                                                  -2922.00                                       -1744.56

  Assets procured for and on behalf of Indian
  Navy                                             (D)                                0.00                                       -1621.67
  Fund from Indian Navy for Asset procurement for and on behalf of
vy (E)                                                                                0.00                                              0.00
                                                                                         -
A) + (B) + ( C ) +( D )+ (E)        =                                             10511.92              0.00                    -18643.32

                                                                                                                                                      34.0
                                                                                         -
ase /decrease inCash and Cash Equivalents (+/-)                                   10511.92              0.00                    -18643.32              26

                                                                                                               (Contd.)



                                                                                                               Annexure B (Contd.)
EN REACH SHIPBUILDERS & ENGINEERS
                                                                                             RS IN LAKH




                                                                       FOR
                                                                       THE                                                    FOR THE
                   CASH FLOW                                          YEAR                                                        YEAR
                   STATEMENT                                         ENDED                                                      ENDED
                                                                      31-03-
                                                                       2010                                                   31-03-2009


                                                                                                                                               7.60
he Cash Flow Statements :

  Cash and Cash Equivalents

                                            31.03.1        31.03.0                                                  31.03.0
                                        0             9                diff                  31.03.09          8                 diff
  Cash on hand and Balances with
  Bank                                        64957       75476.52                                75476.52         94108.86
  Short term investment                      200.00         200.00                                  200.00           200.00
  Less Provision                            -200.00        -200.00                                 -200.00          -200.00
  Gain / Loss in exchange rate [-/+]           0.00           -7.6                                    -7.6             3.38

  Cash and Cash Equivalents                  64957        75468.92            -                   75468.92         94112.24     -18643.32
                     10511.92




                                                      1223.20



                                                     3400.00




                                                     2639.65
                       S.Mahapatra
                     Company Secretary



                                      Rear Admiral
                                     K.C.Sekhar,IN
K . K. Rai                               (Retd)
Director (Finance)                   Chairman & Managing Director
SIGNIFICANT ACCOUNTING POLICIES



 I.    BASIS OF ACCOUNTING:

        i)     The financial statements are prepared under the historical
                cost convention on accrual basis of accounting, in
                accordance with the generally accepted accounting
                principles accounting standards issued by the Institute of
                Chartered Accountants of India, as applicable and the
                relevant provisions of the Companies Act, 1956.

        ii)    In preparing the financial statements in conformity with
                accounting principles generally accepted in India,
                Management is required to make estimates and assumptions
                that affect the reported amounts of assets and liabilities and
                the disclosure of contingent liabilities as at the date of
                financial statements and the accounts of revenue and
                expenses during the reported period. Actual result could
                differ from those estimates. Any revision to such estimates
                is recognised in the period the same is determind.

 II.   FIXED ASSETS :

        i)       Fixed Assets procured by the Company are shown at Cost.
                 Capital Works executed internally are valued at prime cost plus
                 appropriate overheads. No charges for supervision are levied on
                 civil capital projects.

                 Cost means cost of acquisition inclusive of inward freight, duties
                 and taxes and incidental expenses related to acquisition. In
                 respect of major projects involving construction, related pre-
                 operational expenses form part of the value of assets
                 capitalised. Expenses capitalised also include applicable
                 borrowing costs.

        ii)      Software cost is capitalized where it is expected to provide
                 future enduring economic benefits. Capitalization costs include
                 license fees and costs of implementation/system integration
                 services. The costs are capitalised in the year in which the
                 relevant software is implemented for use.

        iii)     Retirement of Assets: Unserviceable fixed assets are valued at the
                 net realisable value. In case the net realisable value is not available,
                 the same is considered at 5% of original cost as scrap value.




III.   DEPRECIATION :
A.           Depreciation on Fixed Assets

      (i)           Depreciation on Fixed Assets, not being assets mentioned in
                    (ii) & (iii) below, is charged on straight-line method based on
                    Schedule XIV of the Companies Act, 1956 as amended from
                    time to time.

      (ii)          Depreciation on software, computer hardware & accessories–

                    a)      For assets acquired up to 31 Mar 01 depreciation is
                            charged on straight-line method @ 16.21%.

                    b)      In respect of assets acquired after 31 Mar 01,
                            depreciation is charged on straight-line method @
                            19% so as to write off 95 % of the original cost on the
                            expiry of 5 years.

      (iii)         Depreciation on second hand assets –

                    Depreciation on second hand assets is charged on straight-
                    line method to write off 95% of the cost on the basis of
                    estimated life of asset.


             In respect of the additions made during the year, depreciation is
             charged on pro-rata basis from the month of capitalization


B.           Leasehold properties

             Leasehold properties are amortized evenly over the period of the
lease.




IV.           IMPAIRMENT OF ASSETS:


      On the basis of annual assessment impairment loss, if any, is provided. Impairment loss
      is the shortfall of the recoverable amount vis-à-vis the carrying amount. The
      recoverable amount is determined for defined Cash Generating Units (CGU).



V.           VALUE OF INVENTORIES:

              i)         (a) Raw materials, stores and spares :
                            Valued at weighted average rates.

                         (b) Inplant items :
                            Valued at standard cost.

              ii)        Equipment for specific projects :
                         Valued at cost.

              iii)       Stores in transit and non-stock items :
        Valued at cost.

        Note:

          (a)    Cost comprises expenditure incurred in the normal
                 course of business in bringing such inventories to
                 its location. Cost includes taxes and duties and is
                 net of credit under CENVAT and VAT, where
                 applicable.
          (b)    Inplant items are valued at standard cost for
                 convenience taking into account normal level of
                 activity and regularly reviewed.

 iv)      Obsolete, slow-moving and defective inventories are
          identified at the time of physical verification and where
          necessary provision is made for such inventories. Stores
          not moving for 4 years and more are valued at 50% on
          review.

 v)       Scrap :
          Valued at estimated realisable value.

 vi)      Inter-transfer items (Pending final transfer) :
          At cost, limited to transfer price.

 vii)     Work-in-progress :
          Valuation of work-in-progress is done on the following
        basis and the term cost
          includes all overheads.

          Note : Accounting Standard AS-7 (revised) issued by ICAI
          is applicable for all contracts for which LOI/Orders were
          received after 31.03.2003.




A.      Fixed Price Naval Contracts & Turnkey Project :

        Contracts where profit is anticipated :

        At cost till actual expenditure incurred is up to 50% of the
        estimated total cost of completion, thereafter estimated profit
        is reckoned to the extent of 60% on pro-rata basis, with
        reference to the expenditure incurred vis-à-vis the estimated
        total cost of completion.


B.      Cost plus Naval Contract :
              80% of the profit accrued up to end of the year is reckoned.
              For this purpose accrued profit is limited to the ceiling, if
              any, laid down in the contract.

  C.          Ship repair, General Engineering and other work at cost or
              realisable value whichever is lower.


  D.          Contracts where loss is anticipated :

              Where current estimates of total contract costs and revenues
              indicate a loss, provision is made for the entire loss,
              irrespective of the amount of work done, by reducing the
              value of work-in-progress.

  E.          In case of long-term contracts, revision(s) in estimated
              completion costs, and resulting effect on valuation of work-in
              progress are carried out as and when facts of such revision
              become known.


VI.          REVENUE RECOGNITION :

  Revenue is recognized and accounted for if there is no significant
  uncertainty in collection of the amount of consideration.

  (A) S A L E S :

      i)        Sale values are ascertained in accordance with contractual
                provisions including escalation, as ascertained.

      ii)       Sales against contracts are reckoned in the accounts of the
                year in which the deliveries are made to the customers.


      iii)      In case of turnkey project :

            (a) If part delivery and payment is provided in the contract,
                  sales on part delivery are accounted for.

            (b) In case of an indivisible contract, or specific items thereof,
                sales are considered on completion and handing over of the
                project.

      iv)       In other activities sales are reckoned on part delivery
                against an order when it is billable as per terms stipulated
                therein, otherwise at the time of complete delivery is
                effected.

      v)        Additional revenue in respect of contracts completed in
                earlier years, is accounted for as sales for the year in which
                such revenue materialises.
           vi)       Credit notes/deductions accepted are treated as reduction of
                     sales for the year in which they are issued/accepted.

           vii)      Where the contract prices are not finalised or certifications
                     are held up (in repair work) sales are provisionally
                     accounted.

           viii)     Sales include Excise Duty and Service Tax, where
                     applicable, and exclude Sales Tax, Works Contract Tax.


       (B) I N T E R E S T I N C O M E :

                   Interest Income from investment is accounted for on accrual
                   basis in time proportion inclusive of related tax deducted at
                   source.


    VII.      GRANTS/SUBSIDY :

            (i) Capital Grants / Subsidies

                   Capital grants/Subsidies relating to specific assets are
                   reduced from the gross value of the assets and capital grants
                   for project capital subsidy are credited to Capital Reserve and
                   retained till the requisite conditions are fulfilled.

            (ii) Revenue Grants / Subsidies

               Revenue Grants are credited to Profit & Loss A/c or deducted
from the related expenses.

    VIII.     BORROWING COST

       Borrowing costs are capitalized as part of qualifying assets. Other
       borrowing costs are considered as revenue expenditure.

    IX.       INSURANCE CLAIMS :

       Amounts due against insurance claims are accounted for on accrual
       basis; in respect of claims not finally settled by the underwriter,
       credits are reckoned, based on the company’s estimate of the
       realisable value.

    X. TAXES ON INCOME :

       Current tax is determined as the amount of tax payable in respect of
       taxable income for the period and provided for as per the tax rates
      and laws that have been enacted or substantively enacted as on the
      Balance Sheet date.

      Deferred tax is recognized on timing difference between taxable
      income and accounting income subject to consideration of prudence
      and provided for. Deferred tax assets on unabsorbed depreciation
      and carrying-forward of losses are not recognized unless there is
      virtual certainty that there will be sufficient future taxable income
      available to realize such assets.


   XI.        RETIREMENT BENEFITS:

      (i)      Provident Fund and Pension :

               Contributions to secure retiral benefits in respect of Provident
               Funds and Pension based on applicable rules/statutes are
               made on regular monthly basis and charged to revenue.
               Provident Fund is administered through duly constituted and
               approved independent Trust.

      (ii)     Gratuity:

               Gratuity Fund is administered through duly constituted
               independent Trust and yearly contributions on acturial
               valuation as determined by LIC are charged to revenue. Any
               additional provision as may be required, is provided for on
               the basis of acturial valuation.

      (iii)     Leave Liability:

               Liability towards Earn Leave in respect of all employees is
               provided based on actuarial valuation as per the terms of
               employment.

      (iv)     Voluntary Retirement Scheme:

              Actual disbursement made under Voluntary Retirement
Scheme is charged to revenue.


   XII.       VARIATION IN FOREIGN EXCHANGE RATES :

      (1) In respect of loans and deferred liabilities, rupee value of foreign
          exchange liabilities are updated (except where forward cover
          exists), based on the exchange rates prevailing on the date of the
          balance sheet or the latest notified exchange rates wherever
          applicable. If the liabilities are against procurement of capital
          assets, the difference due to exchange variations is included in
          the cost of the respective capital assets. If the liabilities are
          against revenue expenditure, the difference due to exchange
          variations is accumulated separately and out of it, the amount
                proportionate to the liabilities discharged during the year is
                written off/written back to revenue during the year.


         (2) Transactions in foreign currencies (except those in (1) above) (to
             the extent not covered by forward contracts) are accounted for at
             the rates of exchange in force at the time of transaction was
             effected. Current assets and current liabilities denominated in
             foreign currencies are translated at the rates of exchange ruling
             on Balance Sheet date. Gain/Loss arising out of fluctuations in
             exchange rate is accounted for in the Profit and Loss Account.

XIII.           LICENCE FEE:

            Licence Fee for manufacturing right for a specified period is
            amortised over the said specified period.

   XIV.                  RESEARCH AND DEVELOPMENT :

            Capital expenditure on Research and Development is included in
            fixed assets and revenue expenditure on R&D is charged as
            expenditure in the year in which it is incurred.

   XV.      MISCELLANEOUS :

           i)      Loose Tools and Tackles :

                   (a)     Loose Tools and Tackles are charged to revenue, on
                           issue from stores, if the cost of the individual items
                           does not exceed Rs.5000/-.
                   (b)     Cost of such tools & tackles individually costing over
                           Rs.5000/- is written off evenly over a period of five
                           years commencing from the year of purchase.

           ii)     Materials with contractors :

                   Materials, if any, held by the contractors for processing are
                   treated as part of work-in-progress.



           iii) Liquidated Damages :

                   Provision for liquidated damages is made in the accounts
                   separately as per the contractual provision/proportionate
                   liability basis keeping in view the delay caused by the factors
                   beyond the control of the Company.

           iv)     Guarantee repair :

                   Provision for liability made on the basis of estimation.
           iv)    Values of free supply items are not booked to job/work-in-
                  progress except in the cases permitted by the contracts.
                  However, value added thereon is taken to value of
                  Production and in Sales.

           vi)   Advance from customers :

                 Advances from customers are after adjusting dues, if any
                 under sales accounts, and include advances received against
                 placement of order and stage payments.

XVI.        CLAIMS :

         Claims against the company are assessed on the basis of evaluation
         of facts and legal aspects of the matter involved. Where such
         assessment indicate probable obligation, adequate provision is made
         otherwise claims against the company are disclosed as claims not
         acknowledged as debts.

XVII.       SEGMENT REPORTING:

         Segments are identified having regard to the dominant source and
         nature of risk and returns and the internal organization and
         management structure. Inter-segment revenue are accounted for on
         the basis of transfer price acceptable to the final customer. Assets
         pertaining to Corporate Office or not specific to segment activities
         are separately indicated.

XVIII.      PROPOSED DIVIDEND:

         Dividends (including income tax thereon) are provided as proposed
         by the Directors in the Books of Accounts pending approval at the
         Annual General Meeting.


                               S.Mahapatra
                             Company Secretary


   K.K.Rai                       Rear Admiral K.C.Sekhar, IN (Retd.)
Director (Finance)               Chairman & Managing Director


                             S.K.DASGUPTA
                                   Partner
                             For and on behalf of

Kolkata,         SEN & RAY
    July, 2009                                Chartered Accountants

				
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