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NOTICE

NOTICE is hereby given that the THIRTY SEVENTH Annual General Meeting of the Members of BHARATI SHIPYARD LIMITED will be held at M.C.Ghia Hall,4th Floor, Bhogilal Hargovindas Building,18/20.K.Dubash Marg, Kala Ghoda, Mumbai -400001 on Tuesday, the 30th September 2014 at 4.00pm to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Standalone Audited Financial Statements of the Company for the year ended March 31, 2014 and report of the Board of Directors and Auditors’ thereon and to consider and adopt the Consolidated Audited Financial Statements of the Company for the year ended March 31, 2014.

2. To appoint a Director in place of Shri. P. C. Kapoor who retires by rotation and being eligible offer himself for re-appointment.

3. To appoint Auditor and to fix his remuneration and in this regard to consider and if thought fit, to pass, with or without modification(s), the following Resolution as an Ordinary Resolution.

“RESOLVED THAT pursuant to the provisions of Section 139, 142 and other applicable provisions, if any, of the Companies Act, 2013 (the Act) and the Companies (Audit and Auditors) Rules, 2014, Messrs M/s. M V Damania & Co., Chartered Accountants, (FRN:102079W) be and is hereby appointed as new Statutory Auditor of the Company in place of retiring Auditor M/s. DPH & Co., to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting, on such remuneration as may be mutually decided by the Board of Directors / Audit Committee of the Company and the Statutory Auditors.”

SPECIAL BUSINESS:

4. To appoint Shri V. Chandrasekaran (DIN : 01262266) as an Independent Director and in this regard to consider and, if thought fit, to pass with or without modification(s) the following resolution as an Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 149,152 and all other applicable provisions of the Companies Act, 2013, read with Schedule IV thereto of the Companies Act, 2013 if any ,Companies(Appointment and Qualification of Directors)Rules 2014(including any statutory modification(s) or re-enactment thereof for the time being in force ) and provisions of clause 49 of the listing agreement, Shri V. Chandrasekaran (DIN : 01262266) , who was appointed as an Additional Director pursuant to the provision of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company and who holds office up to the date of this Annual General Meeting and in respect of whom the Company has received a notice in writing under section 160 of the Companies Act, 2013 from a member proposing his candidature for the office of the Director, be and is hereby appointed as an Independent Director of the Company, not liable to retire by rotation and to hold office for 5 (five) consecutive years.

5. To appoint Shri A.R. Murlidharan (DIN: 00337753) as an Independent Director and in this regard to consider if thought fit, to pass with or without modification(s) the following resolution as Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 149,152 and all other applicable provisions of the Companies Act, 2013, read with Schedule IV thereto of the Companies Act, 2013 if any ,Companies(Appointment and Qualification of Directors)Rules 2014(including any statutory modification(s) or re-enactment thereof for the time being in force ) and provisions of clause 49 of the listing agreement, Shri A.R. Murlidharan (DIN : 00337753) , who was appointed as an Additional Director pursuant to the provision of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company and who holds office up to the date of this Annual General Meeting and in respect of whom the Company has received a notice in writing under section 160 of the Companies Act, 2013 from a member proposing his candidature for the office of the Director, be and is hereby appointed as an Independent Director of the Company, not liable to retire by rotation and to hold office for 5 (five) consecutive years.

6. To appoint Shri Ramachandran Jayaseelan (DIN: 06780185) as a Director for the Company in charge of all the yards as Occupier and in this regard to consider if thought fit, to pass with or without modification(s) the following resolution as Ordinary Resolution:

“RESOLVED THAT pursuant to the provisions of Section 149,152 and all other applicable provisions of the Companies Act, 2013, read with Schedule IV thereto of the Companies Act, 2013 if any ,Companies(Appointment and Qualification of Directors)Rules 2014(including any statutory modification(s) or re-enactment thereof for the time being in force ) and provisions of clause 49 of the listing agreement, Shri Ramachandran Jayaseelan (DIN: 06780185) , who was appointed as an Additional Director pursuant to the provision of Section 161(1) of the Companies Act, 2013 and the Articles of Association of the Company and who holds office up to the date of this Annual General Meeting and in respect of whom the Company has received a notice in writing under section 160 of the Companies Act, 2013 from a member proposing

Bharati Shipyard Limited

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NOTICE... (CONTD.)

his candidature for the office of the Director, be and is hereby appointed as a Director for the Company in charge of all the yards as Occupier of the Company and not liable to retire by rotation and to hold office for 5 (five) consecutive years.

By the Order of the Board of the Directors For BHARATI SHIPYARD LIMITED Sd/- (Managing Director)Place: MumbaiDate: September 08, 2014

NOTES:1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE Annual General Meeting (The “Meeting”) is entitled to

appoint a proxy to attend and vote on a poll. Instead of himself/herself and the Proxy so appointed need not be a member of the company. The instrument in order to be effective, the instrument appointing the proxy, should be duly stamped, completed, signed and deposited at the registered office of the company not less then 48 hours before the commencement of the meeting.

2. An explanatory statement as required under Section 102 of the Companies Act, 2013 annexed to the Notice in respect of item no. 4, 5 & 6 of the Notice.

3. The Register of Members and the Share Transfer Books of the Company will remain closed from 23rd September, 2014 to 30th September, 2014 (both days inclusive).

4. Members are requested to intimate to the Company/ its Registrar, changes, if any, in their registered addresses, at an early date and to quote folio numbers in all their correspondence.

5. Information pursuant to Clause 49 of the Listing Agreement for re-appointment of Directors.

Name of the Director Shri P.C. Kapoor

Age 69 years

Qualification B.Tech (Hons.) from IIT Kharagpur

Expertise in specific functional areas

He possesses an experience of over 47 years of Ship Design, Ship Construction and its Management. Ship Design, Ship Construction and its Management. He was earlier associated with Mazgaon Dock Ltd. for over five years in the design and construction of various ships. In 1976, along with others, he jointly promoted Bharati Shipyard Ltd. He has experience of serving the company for over three decades and mainly looks after development and operations. His emphasis on quality and adhering to international manufacturing standards ensured that both the shipyards at Ratnagiri and Ghodbunder were set up and developed as per internationally accepted standards. He is a member of Confederation of Indian Industry (CII), Engineering Export Promotion Council (EEPC), All India Management Association (AIMA), Indian Economic Development and Research Association and an active committee member of the Institute of Naval Architects (India).

Directorship in other Indian Companies as on 31.03.14 (excluding foreign, private and section 8 companies)

GOL Offshore Limited - Chairman and Executive DirectorBengal Shipyard LimitedOceanic Shipyard LimitedPinky Shipyard Private Limited*Natural Power Ventures Private Limited*Dhanashree Properties Private Limited*Nirupam Energy Projects Private Limited*Advitiya Urja Private Limited*Vishudh Urja Private Limited*Nishita Mercantile Private Limited*Premila Mercantile Private Limited*Mutual Industries Limited

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Committee Membership GOL Offshore Limited. Remuneration Committee

Mutual Industries Limited.Audit Committee

Share Holding 57,23,508 Equity Shares of Rs.10 each

* Subsidiary of a Public Company

Name of the Director Shri V. Chandrasekaran

Age 66 years

Qualification B.E (Mech), MFM


He is a Mechanical Engineer and MFM from Jamnalal Bajaj Institute,. He has wide experience in finance and banking. His experience would be helpful to help the company in turning around operations of the company and implementation of the financial restructuring.


NIL

Committee Membership NIL

Share Holding NIL

Name of the Director Shri A.R. Murlidharan

Age 59 years

Qualification B.Com, LL.B, CAIIB


He is a Commerce graduate from Mumbai University, LL.B, and CAIIB; He has wide and varied experience in finance and banking. He also held General Manager post with SIDBI (Small Industrial Development Bank. His experience would be helpful to the company in financial management and corporate debt restructuring.

Directorship in other Indian Companies as on 31.03.14 (ex-cluding foreign, private and sec-tion 8 companies)

NIL


Share Holding NIL

Name of the Director Shri R. Jayaseelan

Age 60 years

Qualification B.Com


He is a Commerce graduate from Mumbai University. He has wide and varied experience in finance and banking. He worked with various government departments, his experience would be helpful to the company in liaising with various authorities


Pinky Shipyard Private Limited*


Share Holding NIL

* Subsidiary of a Public Company

NOTICE... (CONTD.)


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6. Members are requested to bring their Client ID and DP ID Numbers for easy identification of attendance at the meeting. Members are also requested to claim their unclaimed dividend for the year 2006-07 on wards else if remained unclaimed for 7 (seven) years, the same will be transferred to the credit of Investors’ Education and Protection Fund under the provisions of Section 124 (5) of the Companies Act 2013 and the same cannot be reclaimed.

7. Members are requested to bring the copies of Annual Report at the time of attending Annual General Meeting. Please note that no copies of Annual Reports will be made available to the members at the time of meeting.

8. Members are requested to send their queries, if any, on the accounts, to the Compliance Officer at least 15 days before the Annual General Meeting to enable the Company to be ready with the replies at the AGM. Please note that no queries will be replied if received/raised after the above said time limits.

9. Members are requested to register their Email ID with Registrar & Transfer Agent (R&TA), M/s. Link Intime India Pvt. Ltd., C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (W), Mumbai – 400 078.

10. All documents referred to in the above Notice are open for inspection at the Registered Office of the Company during office hours.

By the Order of the Board of the Directors For BHARATI SHIPYARD LIMITED Sd/- (Managing Director)REGISTERED OFFICE302, Wakefield House, 3rd Floor, Sprott Road, Ballard Estate, Mumbai - 400 001.

Place: MumbaiDate: September 08, 2014

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Explanatory Statement Pursuant to section 102 of the Companies ActItem No. 4, 5 & 6

The Company had, pursuant to the provisions of Clause 49 of the Listing Agreements entered with the Stock Exchanges, appointed Shri. V. Chandrasekaran, Shri. A.R. Radhakrishnan and Shri. R. Jayaseelan as independent directors at various times, in compliance with the requirements of the clause.

Pursuant to the provisions of section 149 of the Act, which came into effect from April 1, 2014, every listed public company is required to have at least one-third of the total number of directors as independent directors, who are not liable to retire by rotation. The Nominations Committee has recommended the appointment of these directors as Independent directors from September 30th, 2014 to September 29, 2019.

Shri. V. Chandrasekaran, Shri. A.R. Murlidharan and Shri. R. Jayaseelan, non-executive directors of the Company, has given a declaration to the Board that they meet the criteria of independence as provided under section 149(6) of the Act. In the opinion of the Board, each of these directors fulfills the conditions specified in the Act and the Rules framed there under for appointment as Independent director and they are independent of the management.

In the opinion of the Board Shri. V. Chandrasekaran, Shri. A.R. Murlidharan and Shri. R. Jayaseelan fulfill the conditions of appointment as independent directors, as prescribed in the Companies Act, 2013 and the Listing Agreement and possess the requisite skills, experience and knowledge.

In compliance with the provisions of section 149 read with Schedule IV of the Act, the appointment of these directors as Independent directors is now being placed before the Members for their approval.

The terms and conditions of appointment of the above directors shall be open for inspection by the members at the Registered Office of the Company during 11.00 am to 1.00 pm on all working days.

The Board commends the Resolution at Item No. 4 , 5 & 6 for approval by the Members.

Except Shri. V. Chandrasekaran, Shri. A.R. Murlidharan and Shri. R. Jayaseelan, none of the Directors or Key Managerial Personnel (KMP) or relatives of directors/KMP is concerned or interested in the Resolution at Item No. 4, 5 & 6 of the accompanying Notice.

By the Order of the Board of the Directors For BHARATI SHIPYARD LIMITED Sd/- (Managing Director)REGISTERED OFFICE302, Wakefield House, 3rd Floor, Sprott Road, Ballard Estate, Mumbai - 400 001.

Place: MumbaiDate: September 08, 2014


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DIRECTOR’S REPORT

TO THE MEMBERS OF BHARATI SHIPYARD LIMITED

Your Directors have pleasure in presenting the 37th Annual Report, together with the Audited Financial Statements of the Company for the year ended March 31, 2014.

1. FINANCIAL RESULTS: The working of your Company for the year under review resulted in

(Rs. in lakhs)

ParticularsFinancial Year

2013-14 2012-13

Total Income 20,300.92 51,319.32

Profit before Finance Cost, Depreciation & Tax (46,459.96) (4,577.85)

Less : Finance Cost 51,184.26 44,713.25

Less : Depreciation 4,939.92 4,684.43

Profit before Tax (102,584.14) (53,975.53)

Less : Tax (18,310.71) (4,748.17)

Profit / (Loss) after Tax (84,273.43) (49,227.34)

Surplus brought forward 2,961.32 52,188.66

Amount available for appropriation (81,312.11) 2,961.32

APPROPRIATIONS -- --

Transfer to Debenture Redemption Reserve -- --

Transfer to General Reserve -- --

Dividend including Dividend Tax -- --

Shortfall in provision of Dividend and Dividend Tax for Last Year --

Surplus carried forward (81,312.11) 2,961.32

Total Appropriations (81,312.11) 2,961.32

2. CAPITAL: During the year under review Authorised Share Capital of the Company is Rs. 9,900.00 Lakhs consisting of 99,000,000

Equity Shares of face value of Rs. 10/- each. The Issued, Subscribed & Paid up Share Capital of the Company has increased from 38,452,340 shares to 50,298,942 shares of face value of Rs 10/- each fully paid up. During the year Company has issued 11,846,602 equity shares at Rs 79.12/- (face value Rs 10/-each) fully paid up on conversion of convertible 11,846,602 warrants issued to Promoter group vide resolution dated 18th September, 2012 passed through postal ballot.

3. DIVIDEND: In view of inadequate profits the directors do not recommend Dividend for the year under review.

4. OPERATING RESULTS AND PROFITS: During the year under review, your Company has successfully delivered 2 vessels during the year. Your Company has

posted turnover of Rs. 17,856.46 Lakhs (including revenue of Rs. 1,170.36 lakhs from Windmill operations), as compared to Rs. 49,091.92 Lakhs (including revenue of Rs. 1,152.90 lakhs from Windmill operations) in the previous financial year. The Company’s Profit /(Loss) before Interest, Depreciation and Tax stands at Rs (46,459.96) lakhs compared to Rs. (4,577.85) lakhs in previous year. The Company has incurred Net Loss after tax for the year of Rs. (84,273.43) lakhs as compared to Net Loss after tax of Rs. (49,227.34) lakhs in the previous year.

5. FINANCE: As at the end of financial year, your Company has total Secured Long-term facilities of Rs. 397,198.31 Lakhs (Including

Debentures and Term Loans). The Company has total Short term facilities of Rs.128,294.60 Lakhs (including Secured borrowings of Rs. 121,193.06 lakhs and unsecured loans of Rs. 7,101.54 Lakhs).

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DIRECTOR’S REPORT... (CONTD.)

6. WIND POWER PROJECT: Your Company has put up a Wind Farm, consisting of 14 Wind Energy Generators with a total capacity of 15 MW at

Village Brahmanvel, Taluka Sakri, District Dhule, Maharashtra. The project has generated revenue of Rs. 1,170.36 Lakhs during the year under report. It has become mandatory for the Company to appoint a Cost Auditor w-e-f 1st April, 2011 for Wind Power division. Hence the company has appointed to appoint Mr. S.C. Mawalankar as the Cost Auditor for the above Project for F.Y.2013-14. Further, the Company has entered into Business Transfer Agreement on 18th March 2014 to sale the Wind Power Project as a part of implementation of CDR-Scheme.

7. SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE: During the year under report, the following companies are:

• SUBSIDIARIES a) Advitiya Urja Pvt. Ltd. b) Dhanshree Properties Pvt. Ltd. c) Natural Power Ventures Pvt. Ltd. d) Nirupam Energy Projects Pvt. Ltd. e) Nishita Mercantile Pvt. Ltd. f) Pinky Shipyard Ltd. g) Premila Mercantile Pvt. Ltd. h) Vishudh Urja Pvt. Ltd. i) Tebma Shipyard Limited

• TEBMA SHIPYARD LIMITED OPEN OFFER: Your company as acting in concert with its subsidiary company namely Nirupam Energy Projects Pvt. Ltd. acquired

shares of M/s Tebma Shipyard Limited through open offer. The total acquisition is 21,56,198 equity shares i.e. 2.79% (Aggregating to 53.79% of Tebma Shipyard Ltd’s capital). During current financial year Tebma Shipyard Limited has achieved turnover of Rs.29,219.20 lakhs and net loss of Rs 6,669.33 lakhs (as compared to turnover of |Rs. 37,105.48 lakhs and net profit of Rs.39.80 lakhs during previous year).

• JOINT VENTURE Bengal Shipyard Limited a Joint Venture with the Company and Apeejay Shipping Limited has reported a loss of Rs.

17.24 Lakhs for the year under consideration and accumulated profit of Rs.4.041 Lakhs up to 31.03.2014. Further a Sum of Rs.3,162.34 Lakhs remitted towards advances.

• ASSOCIATE Company holds 49.73% in GOL offshore limited resulting to which it is classified as an Associate to the Company.

The financial of the subsidiaries, joint venture entities and associates of the Company have been considered in the consolidated Financial Statements of the Company and form part of this Annual report as required by the applicable Accounting Standards issued by the Institute of Chartered Accountants of India.

However, the Company has availed general exemption, given by Central Government vide circular no 2/2011 dated February 08, 2011 from attaching the Annual Audited Accounts of the Subsidiary companies with its Annual Report. Accordingly the said documents have not been attached with the Balance sheet of the Company.

However, the Annual Accounts of the subsidiary companies and related detailed information will be made available to the members of the Company and its subsidiary companies seeking such information at any point of time. The Annual Accounts of the subsidiary companies will be kept open for inspection by any investor at the Registered Office of the Company.

8. DIRECTORS: The Company, at the date of the report, has Five directors. Out of these two are independent directors, one acting as

occupier and two are Executive Directors. Pursuant to the provisions of section 149 of the Companies Act, 2013, the independent directors are now not liable to retire by rotation. However, Section 152 of the Companies Act, 2013 also prescribes that 2/3rd of the total number of directors (excluding the independent directors) shall be liable to retire by rotation and out of these at least 1/3rd shall retire at every Annual General Meeting.

In compliance of the provisions of the said section 152 of the Companies Act, 2013, Company’s Executive Directors are now liable to retire by rotation as the Directors. By an agreement between the Executive Directors it has been decided that Shri P C Kapoor will retire by rotation as the Director at the ensuing Annual General Meeting. Shri P C Kapoor, being eligible, has offered himself for re–appointment as the Director of the Company.


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Shri Ramachandran Jayaseelan was appointed as an Additional Director pursuant to the provision of Section 161 of the Companies Act, 2013, holds office till the ensuing Annual General Meeting. Resolution proposing the appointment of Shri Ramchandran Jayseelan to be appointed as a Director for the Company in charge of all the yards as Occupier of the Company has been included in notice of the ensuing Annual General Meeting, for the approval of shareholders.

Shri V. Chandrasekaran and Shri A.R. Murlidharan were appointed as an Additional Directors pursuant to the provision of Section 161 of the Companies Act, 2013, holds office till the ensuing Annual General Meeting. Resolutions proposing the appointment of Shri V. Chandrasekaran and Shri A.R. Murlidharan to be appointed as a Independent Directors for the Company have been included in notice of the ensuing Annual General Meeting, for the approval of shareholders.

Shri B. L. Patwardhan (State Bank of India nominee) ceased to be the Director w.e.f. June 01 , 2013, upon resignation. The Board of Directors place on record their sincere appreciation for the contribution of Shri B. L. Patwardhan during his tenure as the Director of the Company.

Shri R. P. Singh (State Bank of India nominee) ceased to be the Director w.e.f. July 09, 2014, upon resignation. The Board of Directors place on record their sincere appreciation for the contribution of Shri R. P. Singh during his tenure as the Director of the Company.

Shri V. P. Kamath ceased to be the Director w.e.f. September 01, 2014, upon resignation. The Board of Directors place on record their sincere appreciation for the contribution of Shri V. P. Kamath during his tenure as the Director of the Company.

9. CORPORATE GOVERNANCE REPORT & MANAGEMENT DISCUSSION AND ANALYSIS: Corporate Governance Report and Management Discussion and Analysis Report forms an integral part of this Report and

are set out as separate Annexure to this Report. The Certificate of the Independent Practicing Chartered Accountant, certifying Corporate Governance Report in compliance with the conditions of Corporate Governance as stipulated in clause 49 of the Listing Agreement is annexed with the Corporate Governance Report.

10. CORPORATE DEBT RESTRUCTURING SCHEME The Company, Bharati Shipyard Limited has been in business and dealing with Public Sector Banks for 39 years without

any major default in meeting its obligations. However, recently the company is facing liquidity crunch and has been unable to meet its obligations due to the following main reasons

i. The recession in Europe has led to a chain of events that have been unfavorable to the Company mainly due to the reason that a majority of its customers (about 70%) are European.

ii. The recession has made the respective Bankers relook into their lending policies to our customers. This is especially in view of the new stringent capital adequacy norms set by the European Union.

iii. These factors have had a direct adverse impact on the borrowing capabilities of our customers thereby deferring/delaying our stage payments.

iv. Additionally, ours is a capital intensive industry with enormous amount of funds required towards development of ship building yards.

v. In the recent past, the Company has undertaken construction of two Greenfield yards, viz Dabhol and Mangalore. Both these yards are partially operational and yet their contribution to the Company’s revenue is significant. The Jack up Drilling Rig is being constructed at Dabhol while various orders of large offshore vessels awarded to the shipyard are being executed at Mangalore.

vi. Upon optimum utilization of both these Greenfield yards, in the coming year, both these yards would not just compensate its costs, but also make earnings much higher than its costs incurred.

vii. There is a temporary mismatch between the amount spent by the Company for the Greenfield yards and the receipt of return from them. This has acted as a catalyst to the persisting problem of global recession.

viii. The rise of the domestic interest rates has also adversely impacted the net profits of the Company.

Due to the said reasons, the case of the Company has been referred to the CDR Cell on 16th December, 2011 (being “the reference date”). The Company has appointed SBI Capital Markets Ltd. and IDBI Capital Market Services Ltd. as its Financial Advisors for the CDR process.

The Master Restructuring Agreement being the fundamental legal document for the process of implementation of the scheme was executed in September, 2012. Some of the salient features of the scheme were as follows:

a) Granting a moratorium period of 18 months from the cut-off Date of 1st October, 2011. b) Rescheduling the repayment schedule of the term debt and extending it over a period of 10 years from the cut off

date. c) Funding of interest accruing on term debt during such moratorium period.


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d) Conversion of 10% of the outstanding term debt into 1% Compulsorily Convertible Debentures. e) Concessional Interest rates on all the loan facilities. f) Conversion of certain devolved Letters of Credit and Bank Guarantees into Working Capital Term Loan repayable in

installments. g) Granting of a two new loan facilities for facilitating the Company in completion of its Yard and Vessel Construction

activity. h) Promoters to infuse into the Company 15% of the amount sacrificed by the Banks and 25% of the new loan facilities

as margin money in the form of equity. The process of the restructuring was initiated by referring the case to the CDR Cell in Dec’11 and was envisaged to be

completed in form and in substance by March’12. Since the time schedule as envisaged could not be adhered to, a need was felt to suitably modify the scheme to make up for the loss of time which had in turn delayed the Company’s process of revival and resulted into loss of revenues and profits.

Accordingly, the revised agreement was formally adopted in February, 2013. Some of the salient features of the review were as follows:

i) Granting a moratorium period till June’12 for facilities other than term debt. j) Funding of interest accruing on certain facilities other than term debt till June’12. k) Immediate release of funds to the Company via new loan facilities as envisaged in the original scheme. l) Besides the same, to extend fresh fund based Working Capital to the Company by carving out a limited amount of

its unutilised Non Fund Based Limits of Bank Guarantees and Letters of Credit.

Till the time of finalising the accounts, the revised scheme has yet to be completely implemented in substance. The significance of such an action for finalisation of accounts has been discussed in Note no. 30 of Notes to Financial Statments.

11. HUMAN RESOURCES: During the year 2013-14, the focus of the organisation was on consolidation, improvement and reorganisation to meet

the prevailing challenges. There were significant initiatives in reducing the costs. There has been Manpower optimisation in all the yards and corporate offices. In addition concerned effort was put in place for reducing administrative costs right across the organisation.

While there was an emphasis on the cost side, talent acquisition initiatives were also carried out to fill up specific positions, which were functional necessities arising out of the business development.

12. RESEARCH AND DEVELOPMENT: The Company is in continuous process of Research and development through in-house design team sources in the area

of design and fabrication. In design we have upgraded our skills and are successfully building two LNG Propelled vessels with intrinsically safe engine room for the first time with the assistance of Rolls Royce and our own design team. We have also designed vessels with “CLEAN” notation and highest level of dynamic positioning.

13. AUDIT REPORT: The Auditors have qualified their report (Standalone and Consolidated) on the annual accounts of the Company for the

year ended March 31, 2014 stating that i. The Management has not written off the Work in Progress in the accounts for the year ending March 31, 2014

considering the report of the Independent Chartered Engineer. (Refer to Note no.31 to the standalone accounts and Note no. 34 to the consolidated accounts for detailed clarification)

ii. The Company has created deferred tax asset on its Accumulated Losses (including unabsorbed depreciation) and on the unpaid interest (including Funded Interest Term Loans), considering the huge accumulated losses and the present scenario of the Company’s business, there is no certainty that the company would have sufficient future taxable income to justify the creation of Deferred Tax Asset. (Refer to Note no.32 to the standalone accounts and Note no. 35 to the consolidated accounts for detailed clarification)

iii. The Company has not made any provision in its financial statements in respect of bank guarantees invoked, interest paid by the bank to the Customers on such invoked bank guarantees and foreign exchange variation on such bank guarantee payments. (Refer to Note no.33 to the standalone accounts and Note no. 36 to the consolidated accounts for detailed clarification)

iv. The company’s receivables include Subsidy receivable from the Government of India. The receipt of the aforesaid Subsidy is dependent upon completion of vessels and compliance with other terms and conditions of the Shipbuilding Subsidy Scheme of the Government of India. In view of the uncertainty involved as mentioned above, auditors qualified their audit report. (Refer to Note no.34 to the standalone accounts and Note no. 37 to the consolidated accounts for detailed clarification)

The Auditors have also made an observation in their report (Standalone and Consolidated) regarding the going concern assumption, in the section on emphasis of the matter. Note no. 30 to the standalone accounts and Note no. 33 to the consolidated accounts, in this regard, for detailed clarification.



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14. AUDITORS: M/s. DPH & Company, Chartered Accountants- Statutory Auditor, has requested the board, due to their professionally

pre occupancy, not to be re-appointed as the Auditor of the company. Hence, pursuant to the provisions of section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, the Board of Directors, upon the recommendation of the Audit Committee, recommend the appointment of M V Damania & Co,Chartered Accountants, as statutory auditors of the Company at the 37th Annual General Meeting and to hold office from conclusion of the said Meeting till conclusion of the next Annual General Meeting.

M V Damania & Co,Chartered Accountants has given consent for the appointment and also issued certificate to the effect that their appointment, if made, will be in accordance with the conditions prescribed under rule 4 of the Companies (Audit and Auditors) Rules, 2014.

15. PUBLIC DEPOSITS: The Company, during the year under review, has not accepted nor renewed any deposits from public.

16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: Particulars regarding conservation of Energy, Technology Absorption etc. as required under Section 217 (1) (e) of the

Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 are disclosed in Annexure - A.

Foreign Exchange Earnings & Outgo: The Information on foreign exchange earnings and outgo are disclosed in Annexure – A.

17. PARTICULARS OF EMPLOYEES: Pursuant to the provisions of section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of

Employees) Rules, 1975, as amended, particulars of employees are required to be provided as an annexure to the Directors’ Report. However, having regard to the provisions of section 219(1) (b) (iv) of the Companies Act, 1956, the Annual Report, excluding the aforesaid particulars, is being sent to all the members of the Company and others entitled thereto. Any member interested in obtaining these particulars will be provided with the same upon receipt of a written request delivered at the Registered Office of the Company.

18. DIRECTORS’ RESPONSIBILITY STATEMENT: Pursuant to Section 217(2AA) of the Companies Act, 1956, in relation to financial statements for the year 2013-14, the

Board of Directors reports that: • In thepreparationof the annual accounts, the applicable accounting standardshavebeen followedalongwith

proper explanation relating to material departures; • Accountingpolicieshavebeenselectedandappliedconsistentlyandthatthejudgmentsandestimatesmadeare

reasonable and prudent so as to give a true and fair view of the state of the affairs of the Company as at the end of the financial year and of the loss of the Company for the year ended March 31, 2014 ;

• Properandsufficientcarehasbeentakenforthemaintenanceofadequateaccountingrecordsinaccordancewiththe provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

• Theannualaccountshavebeenpreparedonagoingconcernbasis. 19. ACKNOWLEDGEMENT: Your Directors place on record their sincere appreciation for the continued support from shareholders, customers,

suppliers, banks & financial institutions and other business associates. A particular note of thanks to all employees of your Company, without whose contribution, your Company could not have achieved the year’s performance.

For and on behalf of the Board

Date: September 08, 2014 Place: Mumbai (Managing Director)

12

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956RELATING TO SUBSIDIARY COMPANY

Nam

e of

the

Subs

idia

ryFi

nanc

ial

Year

of

the

Sub-

sidia

ry

ende

d on

Shar

es h

eld

in th

e su

bsid

iary

dire

ctly

or

thro

ugh

its s

ubsid

iary

as

on 3

1,

Mar

ch 2

014

Net

Agg

rega

te a

mou

nt o

f Pro

fit

/ (lo

ss)o

f the

sub

sidai

ry fo

r the

fin

anci

al y

ear o

f the

sub

sidia

ry s

o fa

r as

they

con

cern

the

mem

bers

of

the

com

pany

Net

Agg

rega

te a

mou

nt o

f Pro

fit /

(loss

) of t

he s

ubsid

airy

for p

revi

ous

finan

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yea

rs o

f the

sub

sidia

ry

since

it b

ecam

e a

subs

idia

ry s

o fa

r as

they

con

cern

the

mem

bers

of

the

com

pany

Num

ber a

nd F

ace

Valu

e of

Sha

reEx

tent

of

Hol

ding

(%

)

Dea

lt w

ith

in th

e ac

coun

ts o

f th

e C

ompa

ny

for

the

year

en

ded

Mar

ch

31, 2

014

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th

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f th

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nded

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arch

31,

201

4

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acco

unts

of t

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Com

pany

for

the

year

end

ed

Mar

ch 3

1, 2

013

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lt w

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the

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of

the

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pany

fo

r the

yea

r en

ded

Mar

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31, 2

013

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inky

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t. Lt

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f ` 1

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ach

fully

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8

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dviti

ya U

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0.00

7.22

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119.

30

Nil

4. N

atur

al P

ower

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-tu

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Pvt.

Ltd.

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8.29

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ch

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00 E

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of

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00(0

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(17.

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9


13

Financial Information of Subsidiaries for the year Ended March 31, 2014

(Rs.

In L

acs)

Part

icul

ars

Adv

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U

rja

Pvt.

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Dha

n-sh

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ky

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yard

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(598

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(204

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ets

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ents

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n su

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l Inc

ome

- 10

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4 -

- 72

5.51

-

30,3

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0 -

Prof

it/(L

oss)

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ore

Tax

(0.1

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351.

14

(0.3

8)(0

.11)

(113

.67)

(0.1

1)(6

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(0.1

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Prov

ision

for T

axat

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- 3.

23

3.85

--

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afte

r Tax

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Prop

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clud

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eon)

- -

--

--

--

-

14

ANNEXURE “A”

Annexure “A”

A. Conservation of Energy:

I. We have under taken up gradation of Electrical systems to improve Power Factor to 0.99 resulting into reduction in consumption of electricity.

II. We have extended energy saving systems for welding sets to additional machines.

III. We have installed Solar panels for the water heating at the accommodation at yards.

B. Technology Absorption:

I. On the construction side we have introduced line production system that avoids unnecessary transportation time and hastens the productivity. To support this system we have introduced Computer Numeric Control machines for profile cutting of plates and pipes and Nobolder automatic welding machines.

II. We are now engaged in building a Mobile Offshore Drilling Unit capable of operating in 350 feet of water. This Rig can be elevated to a height of 418Feet and has an advanced electric rack and pinion system of jack up as well as derrick skidding system. It has a cantilever cover of 70 feet beyond the transom and drill floor movement of 30 feet side to side.

III. Also, we have introduced Self Propelled Moduler Transport System by which we can transport large structures weighing as much as 2500 tonnes. We have also introduced, in our yards, the pneumatically controlled Skidding System by which we can skid and load out structures as heavy as 7000 tonnes.

C. Foreign Exchange Spent And Earned:Rs. in Lakhs

Particulars For the

year ended March 31, 2014

For the year ended

March 31, 2013

a) Value of Direct Import calculated on CIF Basis:

i. Raw Materials (incl Components, spare parts) 16,307.00 13,164.33

ii. Capital Goods - 282.79

b) Earnings in Foreign Exchange on account of export of Goods: (FOB Vaue) 17,971.17 125,383.67

c) Expenditure in Foreign Currency:

i. Design and Consultancy 23.89 1,340.16

ii. Legal & Professional fees 206.96 1,461.79

iii. Interest 587.42 904.69

iv. Others 559.71 408.89


15

The Board of Directors of the Company lays great emphasis on the broad principles of Corporate Governance. Given below is the report on Corporate Governance.

1. Company’s philosophy on code of Governance BHARATI SHIPYARD LIMITED believes that good Corporate Governance is essential to achieve long term corporate

goals and to enhance stakeholders’ value. In this pursuit, your Company is committed to maximise the value of its stakeholders by adopting the principles of good Corporate Governance in line with the provisions of law and in particular those stipulated in the Listing Agreement with the Stock Exchanges. Its objective and that of its management and employees is to operate in a way so as to create value that can be sustained over the long term for consumers, shareholders, employees, business partners and the national economy in general. It encourages wide participation from all stakeholders.

2. Board of Directors: The Board composition is in conformity with the provisions of the Companies Act, 2013 and clause 49 of the listing

agreement. The strength of the Board as on 31st March, 2014 is 5 Directors comprising of 2 Promoter Directors, 1 Executive Director and 2 Independent Non Executive Directors.

a) Board Procedure: During the year under report the Board met 6 times on the following dates:

May 30 2013, August 14 2013, September 24 2013, November 12 2013, December 26 2013,February 14 2014 the members of the Board have been provided with the requisite information mentioned in the listing agreement well before the Board meetings and the same were dealt with appropriately.

All the Directors who are on various committees are within the permissible limits of the listing agreement. The Directors have intimated from time to time about their membership in the various committees in other Companies. The composition of Board of Directors, number of Board Meetings held and attended by the Directors, number of chairmanship / membership in other Board Committees are given in following table:

None of the Directors have pecuniary or business relationship with the Company except to the extent as disclosed in Notes to accounts. No Director of the Company is either member in more than ten committees and/or Chairman of more than five committees across all Companies in which he is Director.

Name of Director Category

No. of Board Meeting Attended

Attendance of last AGM

No. of Direc-torship in other

Companies*

No. of Chairmanship/ Membership in other

Board Committee

Chairman Member

Shri P. C. Kapoor DIN 00786682

Executive-Managing Director

7 Yes 12 - 2

Shri Vijay Kumar DIN 00726561

Executive-Managing Director

5 Yes 12 - -

Shri B. L. Patwardhan 1 DIN 00147084

Independent Non Executive Director (SBI Nominee)

1 N.A. 2 - -

Shri V. P. Kamath 2 DIN 00025862

Independent Non Executive Director

6 Yes 13 3 5

Shri R. P. Singh 3 DIN 06383172

Independent Non Executive Director (SBI Nominee)

4 Yes 1 - -

Shri R. Jayaseelan 4

DIN 06780185Non-Executive Director

- N.A. 1 - -

* Excludes Directorships in private companies, Associations, Section 25 Companies, Foreign Companies and Alternate directorships but including Additional directorships.

ANNEXURE “B” Corporate Governance Report

16

# In accordance with Clause 49 of the Listing Agreement with the Stock Exchanges, membership/chairmanship of only the Audit Committee, Shareholders’/Investors Grievance Committee and the Remuneration Committee of the Public Limited Companies has been considered.

1 Shri B. L. Patwardhan ceased to be the Director w.e.f. June 01, 2013, upon resignation. 2Shri V. P. Kamath ceased to be the Director w.e.f. September 01, 2014, upon resignation. 3Shri R. P. Singh was appointed as Additional Director w.e.f June 01, 2013 and ceased to be director w.e.f. July 09, 2014,

upon resignation. 4 Shri R. Jayseelan was appointed as the Additional Director w.e.f. February 12, 2014.

b) Directors seeking Appointment/ Re-appointment at the Forthcoming Annual General Meeting (pursuant to Clause 49 IV (G)(i) of the Listing Agreement): Shri P. C. Kapoor

c) Code of conduct for Directors and Senior Management: The Code of conduct as applicable to the Directors and the members of the senior management had been approved

by the Board and it is being duly abided by all of them. The Annual Report of the Company contains declaration to this effect from the Managing Directors.

3. Committees of the Board:

a) Audit Committee The Company has an Audit Committee at the Board level with powers and role that are in accordance with clause 49 of

the listing agreement. The Committee acts as a link between the management, the Statutory Auditor and the Board of Directors and oversees the financial reporting process.

The Audit Committee presently comprises of 1 Executive Director and 2 Non Executive Independent Directors. The members of the Committee are well versed in finance matters, accounts, Company law and general business practices.

The functions of the Audit Committee are as per Company Law and Listing Agreement with the Stock Exchanges. These include the review of accounting and financial policies and procedures, review of financial reporting system, internal control system and procedures and ensuring compliance of statutory requirements.

The Audit Committee reviews the financial statements with the Statutory Auditors and the Management with reference to the accounting policies and practices before recommending the same to the Board for its approval.

The Committee met 4 times during the year under report on May 30, 2013, August 14, 2013, November 12, 2013, February 14, 2014.The time gap between the two meetings was not more than 4 months.

Composition of Audit Committee and details of the meeting attended:

Sr. No.

Name of the Audit Committee Member

Category Designation of the Committee

No. of Meetings Held

No. of Meeting attended

1. V. P. Kamath Non Executive-Independent

Chairman 4 4

2. P. C. Kapoor Executive Member 4 3

3. B. L. Patwardhan1 Non Executive-Independent

Member 4 1

4. R. P. Singh2 Non Executive-Independent

Member 4 3

1Shri B.L. Patwardhan (State Bank of India Nominee) ceased to be member of Audit Committee upon his resignation as Director w.e.f June 01, 2013

2Shri R. P. Singh (State Bank of India Nominee) was appointed as member of Audit Committee w.e.f June 01, 2013

The terms of reference of the Audit Committee include: • Toreviewfinancialstatementsandpre-publicationannouncementsbeforesubmissiontotheBoard. • Todiscussandreviewreportoftheexternalauditorsandensurethecomplianceoftheinternalcontrolsystem. • ToapprisetheBoardontheimpactofaccountingpolicies,accountingstandardsandapplicablelawsandregulations.

ANNEXURE “B”... (CONTD.)


17

• ToholddiscussionswithStatutoryAuditorsonthescopeandcontentoftheaudit. • Toreviewrelatedpartytransactions. • Appointmentofstatutoryauditorandfixingtheirremuneration.

b) Remuneration Committee: The powers of Remuneration Committee are exercised by the Board. The remuneration of the Executive Directors is

decided by the Board of Directors. The Company pays remuneration by way of salary, perquisites and allowances (fixed component) and/or commission (variable component) to its Executive Directors.

The remuneration by way of commission and sitting fees to the Non–Executive Directors is also decided by the Board of Directors. The Non–Executive Directors are paid sitting fees for attending meetings of the Board or its Committees. The Company also reimburses travelling and accommodation expenses to out–station Directors for attending Board / Committee meetings.

Details of remuneration, sitting fees, etc. paid to Directors are given in following table

Name of Director Status Remuneration Paid to Directors

Independent / Non Independent

Salary(Rs)

Commission(Rs)

Contribution to PF (Rs)

Total(Rs)

Sitting Fees(Rs)

Shri P. C. Kapoor Executive – Managing Director

- - - - -

Shri Vijay Kumar Executive – Managing Director

- - - - -

Shri B. L. Patwardhan Non Executive - Independent

- - - - 40,000

Shri V. P. Kamath Non Executive - Independent

- - - - 1,80,000

Shri R. P. Singh Non Executive - Independent

- - - - 1,40,000

c) Investors’ / Shareholders Grievance Committee: i. As stated herein above the powers to approve share transfers have been exercised by the Managing Directors. The

Managing Directors and Compliance Officer in co-ordination with the Registrars are attending to all the grievances of investors.

ii. During the year under review 19 complaints were received from the shareholders and all of them were replied / resolved to the satisfaction of the shareholders. There are no complaints / queries pending for reply as on March 31, 2014.

4. General Body Meetings: The details of the Annual General Meeting held during the last 3 years are as under:

Financial Year Date of AGM Time Venue Special Resolution(s)

2010-2011(34th AGM)

23.09.2011 11:30 a.m.

“Rangaswar Hall”, Y. B. Chavan Pratishthan, Gen J. Bhosle Marg, Nariman Point, Mumbai-400 021

Issue of Preferential warrants to PromotersAppointment of person to hold Place of profit u/s 314 and 314 (1B).

2011-2012(35th AGM)

26.09.2012 11:30 a.m. No special resolution has been passed

2012-2013(36thAGM)

24.09.2013 11:30 a.m. The re-appointment of Mr. P. C. Kapoor and Mr. Vijay Kumar as Managing Director of the company along with the terms and conditions and payment of remuneration to them.

Resolution passed through postal ballotNo Resolution was passed through Postal ballot during financial year 2013-14


18

5. Disclosures: a) Disclosure regarding materially significant related party transactions during the year : There were no other related party transactions of material nature with the Promoters, Directors, the management

or their subsidiaries or relatives during the year that may have potential conflict with the interest of the Company at large. However, attention is drawn to Note no. 41 of Notes to Financial Statements.

b) Disclosure of non-compliance by the Company: The Company has not submitted the Financial Results for the Quarter and Year ended March 31, 2014 within the

stipulated date, May 30, 2014. Pursuant to which the Company has received the letter dated June 02, 2014 from NSE and BSE for Non-compliance to Clause 41 of the Listing Agreement for the Quarter and Year ended March 31, 2014.

The Board affirms that no person has been denied access to the Management during the year. The Company has complied with mandatory provisions of corporate governance and is in the process of adopting the non-mandatory provisions of corporate governance.

c) Whistle Blower Policy and affirmation that no personnel has been denied access to the audit committee: The Company has not adopted Whistle Blower Policy. However, the Company has not denied access to any

personnel to approach the Audit Committee on any issues. d) Details of compliance with mandatory requirements and adoption of the non-mandatory requirements of

Clause 49: The Company has complied with the mandatory requirements of Clause 49 of the Listing Agreement of the Stock

Exchanges. 6. Means of Communication: a) Half-yearly report sent to each Household of shareholders: No. b) Quarterly Results: These are published in one English daily newpaper Free Press Journal circulating in the

country & one Marathi newspaper Navshakti published from Mumbai. c) Any Web site, where displayed: www.bharatishipyard.com. d) Whether it also displays official news releases and presentations made to Institutional Investors/Analysts: No. e) Whether Management Discussion and Analysis is a part of annual report: Yes.7. General Shareholder Information: a) Annual General Meeting:

Day, Date and Time : Tuesday,30th September, 2014 at 4.00 P.M

Venue : M.C.Ghai Hall, 4th Floor, Bhogilal Hargovindas Building, 18/20, K.Dubash Marg, Kala Ghoda, Mumbai-400001

b) Financial Calendar for 2014 – 15 (Tentative) Financial Year : April 1, 2014 to March 31, 2015 Results for the quarter ending June 30, 2014 : Before 15th of October-2014 Results for quarter ending September 30, 2014 : Before 15th of November-2014 Results for quarter ending December 31, 2014 : Before 15th of February -2015 Results for year ending March 31, 2014 : Before 30th of May-2015 Annual General Meeting : Before 30th September, 2015 c) Date of Book Closure Book Closure dates are from September 23rd 2014 to September 30th, 2014. (Both days inclusive). d) Dividend Payment date: Not applicable e) Details of Stock Exchange :

Listing on Stock Exchanges : The Bombay Stock Exchange Ltd. (BSE), Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai -400 001.National Stock Exchange of India Ltd. (NSE), Exchange Plaza, Bandra – Kurla Complex, Bandra (E), Mumbai – 400 051.

ISIN No. : INE 673G01013

Stock Code / Symbol BSE : 532609NSE : BHARTISHIP



19

f) Market Price Data :The monthly high and low quotations and volume of shares traded at the NSE /BSE during the financial year, 2013-2014 are given below:

Month &Year

NSE BSE

High Price Low Price No. of Shares High Price Low Price No. of Shares

Apr-13 49.85 35 690833 49.8 35 21,82,038

May-13 50.9 36.5 722211 50.95 36.65 20,42,005

Jun-13 40.9 31.9 348737 41 32 11,92,141

Jul-13 37.5 22.8 817603 37.45 23.05 21,43,238

Aug-13 25.5 20.5 237452 25.6 20.6 8,16,286

Sep-13 36 21.1 1574193 36 21.2 57,61,804

Oct-13 34.15 25.7 588484 34.2 25.6 16,43,314

Nov-13 29.8 25.65 134626 30 26.05 3,58,783

Dec-13 31 26.1 147321 30.9 25.55 4,10,252

Jan-14 33.2 25.75 152946 33.3 26 3,75,214

Feb-14 27.2 22.8 72643 27.6 23.2 1,94,318

Mar-14 25.95 23 131350 25.55 23 3,38,500

g) Performance in comparison to BSE Sensex and NSE Nifty: NSE- ---- Bharati - ----

BSE- ---- Bharati - ----


20


h) Registrar and Transfer Agents: Link Intime India Private Ltd Address: C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (W), Mumbai-400 078 Telephone no: 022-25963838/5946970 Fax: 022-25946969 Email : [email protected]

i) Share Transfer System: Applications for transfer of shares held in physical form are received at the office of the Registrars and Share Transfer

Agents of the Company. All valid transfers are processed and affected within 10 days from the date of receipt. Shares under objection are returned to sender in two weeks.

In case of shares held in the dematerialised form are electronically traded by Depository Participants and the Registrars and Share Transfer Agents of the Company periodically receive from the Depository Participants the beneficiary holdings so as to enable them to update their records and to send all corporate communications, dividend warrants etc.

Physical shares received for transfer are required to be dematerialised first before their transfer.

j) Distribution of Shareholding Share Holding Pattern as on 31st March, 2014 is given below:

Category No. of Shares Held

Percentage of Shareholding

1 Promoters

Indian Promoters 3,29,37,973 65.48

Foreign Promoters - -

2 Persons acting in Concert - -

Sub-Total - (i) 3,29,37,973 65.48

B Non-Promoters Holding

3 Institutional Investors

a) Mutual Funds and UTI - -

b) Banks, Financial Institutions, Insurance Companies (Central / State Gov. Institutions / Non-government Institutions)

33,25,026 6.61

c) Foreign Institutional Investors 8,000 0.02

Sub-Total – (ii) 33,33,026 6.63

4 Others

a) Private Corporate Bodies 20,35,896 4.05

b) Indian Public 1,11,45,735 22.16

c) NRIs / OCBs 6,09,027 1.21

d) Any other (Clearing Members, Trusts) 2,37,285 0.47

Sub-Total - (iii) 1,40,27,943 27.89

Grand Total ( i + ii + iii ) 5,02,98,942 100


21

Distribution of Share holding as on 31st March, 2014 is given below:

Nominal Value of Share Holding

No. of Shareholders % of the total Shareholders

Share AmountRs.

PERCENTAGE OFTOTAL

1 To 5000 34,436 88.8281 39859410.00 10.3659

5001 To 10000 2321 5.9871 18480020.00 4.8060

10001 To 20000 1072 2.7652 16254350.00 4.2271

20001 To 30000 347 0.8951 8837970.00 2.2984

30001 To 40000 155 0.3998 5491370.00 1.4281

40001 To 50000 119 0.3070 5557210.00 1.4452

50001 To 100000 191 0.4927 13399120.00 3.4846

100001 to Above 126 0.3250 276643950.00 71.9446

TOTAL 38767 100.0000 3,84,52,340 100.0000

k) Dematerialisation of Equity Shares : As on 31st March 2014, 3,84,51,588 equity shares representing 76.45 % shares are held in dematerialised form and the

balance 1,18,47,354 equity shares representing 23.55 % shares are in physical form. Further, we would like to submit that the Company is in process of dematerialising of 1,18,47,354 shares as on 31.03.2014.

l) Outstanding GDRs/ADRs/Warrants or any other Convertible instruments: No GDRs/ADRs were outstanding as on 31.03.2014. Further the Company has allotted 32,000,000 Convertible Share

Warrants out of which 13,388,822 are outstanding as on March 31, 2014.

m) Plants Location (Manufacturing Units) : • BhoirSandCompound,Ghodbunder,Dist:Thane. • MiryaBunder,Dist:Ratnagiri. • Usgaon(Dabhol),Dist:Ratnagiri. • ZorintoSancoale,Goa. • KudroliBengare,Tal:MangaloreDist:DakshinaKannada. • Timberpond,Howrah,Kolkatta.

n) Address for Correspondence by Shareholders / Investors: Company’s Registered Office Registrar & Share Transfer Agent Bharati Shipyard Limited, Link Intime India Private Ltd., 302, Wakefield House, Sprott Road, C-13, Pannalal Silk Mills Compound, Ballard Estate, Mumbai – 400 001 L.B.S. Marg, Bhandup (W), Mumbai – 400 078.

8. Compliance of non-mandatory requirements as set out in Annexure 3 to Clause 49 of the Listing Agreement:

a) Chairman of the Board: The Managing Directors are acting as Chairman of the meeting hence the requirement pertaining to reimbursement of expenses to a non-executive Chairman does not arise. No specific tenure has been specified for the Independent Directors. However, Independent Directors are liable to retire by rotation and seek re-appointment by the members.

b) Remuneration Committee: The powers of Remuneration Committee are exercised by the Board.

c) Shareholders’ rights: As the Company’s half yearly financial results are published in English and Marathi newspapers having a wide circulation, the same need not be sent to shareholders individually. However, the Company furnishes the quarterly and half yearly results on receipt of a request from the shareholders.

d) Audit Qualification: The Auditors for the year ended March 31, 2014 has qualified their Report (Standalone and Consolidated). Further the Auditors have also made an observation in the Report (Standalone and Consolidated) regarding the going concern assumption.

e) Training to Board Members: No training has been provided to the Board Members as on date of this report. The Directors interact with management in a very free and open manner on information that may be required by them for orientation with the business of the Company.


22

f) Mechanism for evaluating Non-executive Board Members: The Company is working on the mechanism and the same will be adopted in due course.

g) Whistle Blower Policy: The Company has adopted the code of conduct for Directors and Senior Management. The Board has considered and deliberated on the whistle blower policy of the Company. The same will be implemented shortly.

9. Compliance: A certificate has been obtained from the practicing Chartered Accountant regarding compliance of corporate governance

and attached to this report.

For and on behalf of Board

September 08, 2014 P C Kapoor Vijay KumarMumbai Managing Director Managing Director



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ANNEXURE “C” MANAGEMENT DISCUSSION AND ANALYSIS

1. Industry Structure, Development and Product Wise Performance The Shipbuilding is a vast and complex industry comprising of various diversified segments, the major ones being

offshore including Rigs, cargo vessels, containers, cruise liners, defence, passenger vessels etc. Recently, a new segment has evolved due to growing environmental regulations, being the LNG propelled vessels which basically use the unconventional source of LNG as a fuel. The important segments are outlined herein below:

The Domestic shipbuilding industry is centered around twenty five shipyards; of which nineteen are private sector shipyards. Our country’s shipyards have a strong order book having booked for nearly next 45 months. The top 8 shipyards form ninety percent plus of the Indian shipbuilding order book. The average age of the Indian fleet is twenty four years and within the next 8-10 years, a large number of these ships should come for replacement.

i. Offshore Segment The demand for offshore vessels is positively correlated with the quantum of Offshore E&P activities. Lately, significant oil

discoveries on land are becoming less common. Therefore, global exploration trend is trending towards offshore oil fields and away from onshore fields. The growing demand for oil coupled with the increasing focus on offshore reserves and age related policies for the vessels outlined by the Hirers for safety and efficiency has acted as a key factor for demand of new-build offshore vessels. With ageing fleets globally, replacement demand for AHTS and PSV is likely to remain robust. With environment protection regulations becoming increasingly stringent, vessels over 20 years old generally considered obsolete. Between 2003 and 2008 the industry ordered over $800 billion of new ships. 50% of the orders were placed in 2007/8 when prices were at a peak. In India itself, the shipbuilding and repair market is poised to pick up momentum with the increasing penetration of Indian shipbuilding companies in the offshore vessels (OSVs) segment. Indian companies have established strong credentials in the building and repair of OSV, resulting in a spike in orders for such vessels from the Indian industry. The limited capacities related to OSVs in leading shipbuilding nations such as Japan and South Korea are resulting in diversion of orders to India, driving up the fortunes of the Indian shipbuilding and repair market.

Company’s Strategy The Company has always been one of the leading private sector shipbuilding Company in India catering mainly to

offshore segment. It has always strived towards a diversified client base globally. Presently, the order book of the Company is dominated by offshore segment. It has always strived towards and succeeded in providing to its Client excellent quality vessels, the operations of which have earned lucrative profits to the Customers. It has taken up the challenge of being one of the first few to construct the high end complex vessels types like MSVs and PSVs. Its passion for the business and the consistent focus on quality improvisation has been one of its USPs and has attracted repeated orders.

ii. Rigs Offshore oil production contribution is estimated to grow to 37% (2018) from 35% (2010), driven by contribution from

deepwater driving demand for jack up rigs and offshore supply vessels. Of the existing jack-up rigs, more than half are over 20 years old. In the past two years, more than twenty rigs have been scrapped which are as many as were scrapped/converted in the past one and a half decade. Higher E&P activity, scrapping of old rigs and comparatively lower supply is expected to drive the demand for jack-up rigs. The scrapping of old units will happen because they are too expensive to reactivate, too expensive to maintain, or simply too old and out-dated to be employed by the oil companies.

Company’s Strategy The Company has delivered India’s first Self Propelled Cantilevered Independent leg, Jack up drill Rig in the current

fiscal year. There are only 9 Rig manufacturers in the world which have the technical know-how and potential of manufacturing such types of rigs. The Company is the 10th in the World and the 1st in India. On the other hand, the global demand of the rigs is gradually rising on account of replacement needs of a majority of existing rigs which are crossing the age of 20 years. The Company’s next step would be to foray into the drill ship market.

iii. LNG-Propelled Vessels The concept of using LNG as a fuel for ships has been gaining popularity not only in Europe but also in Asia and

USA. The focus is being shifted to unconventional sources of energy like LNG which are yet to be explored fully and which are emitting less of the sulphur oxide, a pollutant said to cause acid rain. LNG propelled vessels are especially required throughout the “Emission Control Areas” (ECAs) in North-West Europe. Vessel emissions in ECAs will have to be reduced further on January 1st 2015, forcing ship owners to limit their sulphur emissions drastically. Under rules from the International Maritime Organization, these emissions are required to be reduced to 0.5 percent by 2020 globally from 4.5 percent presently. In particular compared to conventional heavy fuel oil, LNG offers close to 100 per cent reduction of emissions in sulphur and particulate matter, an 80-85 per cent reduction of nitrogen oxides (NOx) and 20-25 per cent less CO2 emissions.

24

ANNEXURE “C”... (CONTD.)

Company’s Strategy Bharati Shipyard has already made a foray into this market and is one of the world’s first ship manufacturers to do

so. It has entered into a contract for construction and sale of 2 LNG propelled vessels to a Company based in Norway. Norway has taken the lead developing “LNG as fuel” concept for shipping. It has already taken a leading position in the use of LNG as a fuel, such as on ferries and supply ships.

iv. Defence The Indian Navy’s share of the total defence expenditure is on the rise and has reached a significant budgeted 18%

in FY14. With the Ministry of Defence’s emphasis on indigenization, Public sector shipyards are facing severe capacity constraints, enabling private shipyards an opportunity to participate in the defence segment via JVs.

Company’s Strategy: The Company intends to make the most out of this opportunity. The capital requirements of the Navy are too large

to be catered alone by the public sector shipyards. The focus is shifting towards actively involving even the private shipyards which have the necessary manpower and state-of-the-art infrastructure in place and more importantly, the desire to explore the untapped sector of Defence. As said earlier, following the basic portfolio management principles, the Company has been diversifying its client base. During the current fiscal year, the Company has bagged a prestigious order from the Highly Esteemed Organization which is India’s DRDO. Further, it has also bagged order for 6 new vessels for the Indian Navy itself. It is confident that successful execution of these orders will help the Company live up to the expectations attached to it and help in acquiring further orders even in the future.

2. Outlook Global shipbuilding industry has been going through a downturn since 2009. The downturn has been more severe in the

commercial shipbuilding industry where fixed asset investments and growth in global trade drives demand.

Strength in selective segments such as LNG and offshore should, however, continue to support order flows. Sustained recovery may take little longer.

Offshore orders accounted for 2/3rds of global investment in the shipbuilding sector in the first nine months of this year driven by relatively high oil prices and daily rental rate for rigs.

Further, In December 2011, the Company has been referred to CDR cell for Debt restructuring. The Scheme has been formally implemented in the current fiscal year. One of the benefits of the same can be witnessed in the form of overall reduced Finance costs. The Company has been making its best endeavours to revive out of this temporary adverse phase. During the year, it has successfully bagged orders from the Indian Navy and the DRDO as mentioned above. These orders will help to build strong relationship with above customers by timely delivery of vessels with company’s excellence in shipbuilding. Further, during the year the main focus of the Company has been on completing orders on hand and on capturing new local as well as global orders. Speedy completion and delivery of existing orders will help company to cope up with a liquidity mismatch and focus on capturing new orders will give company future outlook to excel in shipbuilding. The Company is committed to deliver quality products by meeting global standards in terms of capabilities, technology and size. The Company is also equipped with modern technology and heavy engineering facilities to undertake projects like Rig and LNG vessels. The Company is a proud owner of its Dabhol Yard and Mangalore Yard with state-of-the-art facilities including floating dry dock. With this infrastructure and experience, the Company has an edge over existing players in the industry. The Company is expecting its order book to grow on account of defence demand, future demand for offshore Vessels/Rig and Ship repairs activity.

3. Opportunities The global downturn in the Shipping and Shipbuilding industry and the recession in Europe has made all the Shipyards

relook and improvise the business strategies and operational methods making them more cost effective and innovative. They are exploring the market for untapped client base as well as resources. The positive results of such actions will be an add-on incentive once the market has revived.

i. Growing requirements of the market: With the global offshore activities inclined towards exploration in deeper waters, the demand is rising for

technologically new and improvised Rigs and Offshore Support Vessels capable of undertaking such activities.

Government Initiatives and Policies: The Government has set a target of 5% for the nation’s share in the international market from the present 1%.It has been

supportive about the concept of strengthening the shipping and shipbuilding industry and there are discussions of a


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Comprehensive policy for the industry, which would extend beyond the existing concept of New Subsidy Scheme. The Shipyards of the country possess the calibre. Such kind of support will have far reaching benefits. Besides, with certain regulations being outlined by the International Maritime Organization and other such organizations with regards to anti-pollution norms and other features of the vessels being regulated, there is a demand or rather need for technologically advanced vessels meeting the stipulated standards.

4. Risks and concerns. i. Risk related to the Shipbuilding Industry: As a ship building company having a global customer base, we are subject to the industry’s business cycles, the

timing, duration and volatility of which are difficult to predict. The shipbuilding industry has historically been cyclical. Our revenues from vessel construction depend upon the level of capital expenditures by Exploration and Production (E&P) players. These capital expenditures depend upon a range of competitive and market factors, including:

• thecurrentandanticipatedmarketdemandforoil; • productioncosts; • changesinvesselinventorylevels; • generaleconomicconditions;and • accesstocapital. Reductions or delays in capital expenditure by our customers in the E&P sector could have a material adverse effect

on our business, financial condition and results of operations.

ii. Subsidy Support: The Government of India had come up with subsidy scheme for Indian Shipbuilding Industry for all orders received

before August 2007 subject to certain conditions. Subsidies are provided as relief from all taxes paid by the Indian shipbuilders as they face a cost disadvantage vis- a- vis other shipbuilding nations. Now as above scheme has already reached its sunset point all Indian Shipbuilding players are poised against highly competitive Global Market. If a new subsidy is not introduced, it will be very difficult for Indian Shipbuilding Industry to survive in Global Shipbuilding Market. The introduction of new subsidy scheme is under active consideration of Government of India.

iii. Input Prices: The Indian shipbuilders are at a disadvantage to their competitors when it comes to the prices of the inputs. Till

FY’12 it has been observed that the price steel (of one of the major input), has gone up. However, in CY’12 the global prices of steel declined by 15%.

iv. Vulnerability due to certain concentrations: The Company relies on outside vendors to supply the components and subassemblies used for vessel construction,

each of which is obtained from a sole supplier or a limited number of suppliers. This involves several risks, including a potential inability to obtain an adequate supply of required components and reduced control over pricing and timely delivery of these equipments and components.

v. Foreign Exchange Risk: The Company has been export oriented since long and the contracts entered into by the Company with its

Customers are also in foreign currencies. Similarly, a significant costs and expenses of the Company are in foreign currency. Fluctuations in exchange rates may affect company’s earnings and outgo. However, the mix of revenues and expenses both in foreign currencies provide a natural hedge to the Company to the extent the same are proportionate.

vi. Under-developed ancillary industries: The shipbuilding sector in China and South Korea has received government fiscal and policy support, enabling

them to develop scale as well as a cluster of ancillaries. These advantages of scale are not available to Indian shipbuilding industry, which imports most of its input materials and is therefore unable to leverage advantages offered by bulk purchases and Just in Time supplies. As a result there are significant cost disadvantages on account of import dependence.

vii. Stagnant orders inflows: Due to global economic downturn the shipbuilding industry as whole has been affected by lesser number of

incremental orders. This could also affect the growth prospects of the company. However, Indian shipbuilding has an edge because of increase in Defence orders.


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5. Internal control systems and their adequacy The company has designed its internal control system specially and specifically to ensure reasonable assurance so as

to provide reliable financial and operational information. The Internal Control System ensures the safeguarding of the assets from unauthorized use or losses, applicable statues, corporate policies, and also ensuring that the transactions are executed with proper authorization. The company takes special care to place adequate internal control procedures commensurate with its nature of operations and size.

6. Financial Overview i. Turnover During the year, turnover has reduced to Rs. 17,856.46 Lakhs in comparison to the previous year of Rs.49, 091.92

lakhs. The decrease in the top line is attributable to inadequate working capital to support the essential level of operation.

ii. Subsidy Till the previous fiscal year, the Company has booked the entire subsidy income that it is eligible to receive. Hence,

during the year under consideration, the company has booked NIL subsidy income .Further, the company has received subsidy of Rs. 4,830.81 lakhs from Government of India (Ministry of Shipping) during the year.

iii. Expenditure

a. Raw Material Consumed The Raw Material consumed has decreased from Rs 29,148.04 lakhs to Rs. 16,599.16 lakhs in line with the decrease

in turnover. The raw material cost represented 92.96% of turnover for the year under consideration as compared to last year. Raw Material cost as a percentage of sales have increased due to change in the types of vessels under construction during the year.

b. Manufacturing and Other Expenses The Manufacturing and Other expenses have reduced from Rs.16,386.52 lakhs at the end of previous year to

Rs. 11,482.66 lakhs at the end of current year. The manufacturing and other expenses represented 64.31% of Turnover for the year. The manufacturing and other expenses mainly consists of Design & Consultancy Fees, Equipment Hire Charges, Launching/Survey/Testing Charges, Clearing & Forwarding Expense, Transportation Charges, Commission & Brokerage etc.

c. Employee Cost Employee Cost has reduced to Rs. 9,551.76 lakhs in the current year in comparison to Rs. 10,362.61 lakhs during

the last year. This decrease is mainly due to decrease in turnover and slow down on level of activity at various yards due to financial crisis. The employee cost represented 53.49% of turnover for the year as compared to 21.12% last year.

d. Bank & Finance Charges Bank & Finance Charges have increased to Rs. 51,184.26 lakhs in the current year, from Rs. 44,713.25 lakhs in

previous year. The Bank and Finance Charges comprise of interest on various term loans, Working Capital Facilities, Bank Guarantee Charges and L/C Charges as well as financial impact of foreign currency transactions & translation. Increase in Interest cost was on account of interest rates charged by the Banks pursuant to implementation of the Corporate Debt Restructuring.

e. Depreciation Depreciation has increased from Rs. 4,684.43 lakhs in last year to Rs. 4,939.92 lakhs in current year. The increase

in depreciation is mainly due to increased utilisation and commissioning of Plant & Machinery of Greenfield yards in the year under consideration.

iv. EBIDTA The EBIDTA stands at a negative Rs. 46,459.96 lakhs compared to Rs. 4,557.85 lakhs in previous year.

v. Profits/losses The net loss for the year is Rs. 84,273.43 lakhs as compared to Rs. 49,227.34 lakhs in the previous year. PAT has

dipped on a y-o-y basis due to reduction in level of operation during the current period.



27

vi. Long Term and Short Term Borrowings: Total Long Term and Short Term Borrowings have increased by Rs. 15,078.81Lakhs mainly due to additional facilities

availed in the form of conversion of Non Fund Based facilities into Fund Based facilities and conversion of Interest payable into a Funded Interest Term Loan facility pursuant to the Corporate Debt Restructuring.

vii. Fixed Assets and Capital Work in Progress Total Net Fixed Assets and Capital work in Progress have decreased from Rs.114,999.63 lakhs to 153,723.21 lakhs.

The decrease in the Fixed Assets and Capital Work in Progress in the Current Year is mainly due to write-off of Capital Work in Progress which is reflected in Exceptional Items in Statement of Profit and Loss.

viii. Long Term Loans & Advances Long Term Loans & advances have decreased from Rs. 104,058.56 lakhs as on 31st March 2013 to Rs.103,732.92

lakhs for the year under consideration. For the year under report, these comprise of advances given to subsidiaries/associates, advances given for subcontracts and advances given to suppliers.

ix. Inventories As on 31st March 2014, the company has inventories of Rs. 424,186.9 Lakhs in comparison to Rs. 435,348.82 lakhs

as on 31st March, 2013. The decrease in inventory is mainly due to the completion and sale of vessels which is reflected in turnover of the Company.

x. Trade Receivables Trade receivables of the Company have decreased by Rs. 5,004.07 lakhs (from Rs. 80,644.72 lakhs to

Rs. 75,640.65 lakhs) during the year mainly due to receipt of subsidy from the Government of India (Ministry of Shipping).

7. Material developments in Human Resources / Industrial Relations front, including number of people employed The Company has laid down HR Policies for its employees. The association between the management and employees

is very convivial. The Company believes in Good health, safety and welfare of its employees. The Company has been implementing various HR initiatives to enhance the effectiveness of its employees.

CAUTIONARY STATEMENT Statements in the Management Discussions and Analysis describing the Company’s objectives, projections, estimates,

expectations may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Company’s operations include among others, economic conditions affecting demand/supply and price conditions in domestic and overseas markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and incidental factors.


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CEO/CFO CERTIFICATION

To,The Board of Directors,BHARATI SHIPYARD LIMITED We hereby certify that for the financial year ending 31st March, 2014 on the basis of the review of the financial statements

and the cash flow statement and to the best of our knowledge and belief that:-

1. These statements do not contain any materially untrue statement or omit any material fact or contain statement that might be misleading;

2. These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards, applicable laws and regulations.

3. There are, to the best of our knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violative of the Company’s code of conduct.

4. We accept responsibility for establishing and maintaining internal controls and that we have evaluated the effectiveness of the internal control systems of the Company and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any of which we are aware and the steps we have taken or propose to take to rectify these deficiencies.

5. We further certify that:

a. There have been no significant changes in internal control during the year;

b. There have been no significant changes in accounting policies during the year.

c. There have been no instances of significant fraud of which we are become aware and the involvement therein, if any, of the management or an employee having a significant role in the Company’s internal control system.

FOR BHARATI SHIPYARD LIMITED FOR BHARATI SHIPYARD LIMITED

(Vijay Kumar) (P.C.Kapoor) Managing Director Managing Director

Date: September 08, 2014Place: Mumbai.


29

CORPORATE GOVERNANCE CERTIFICATE UNDER CLAUSE 49 OF LISTING AGREEMENT

TO THE MEMBERS OFBHARATI SHIPYARD LIMITED

We have examined the compliance of conditions of Corporate Governance by Bharati Shipyard Limited, for the year ended on 31st March 2014, as stipulated in clause 49 of the Listing Agreement of the said Company with the stock exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the management. Our examination was carried out in accordance with the Guidance Note on Certification of Corporate Governance issued by the Institute of Chartered Accountants of India and limited to a review of the procedures and implementation thereof, adopted by the Company, for ensuring the compliance of the conditions of Corporate Governance (as stipulated in clause 49 of the Listing Agreement). It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that:- The Company has complied with the conditions of Corporate Governance as stipulated in clause 49 of the Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectiveness with which the management has conducted the affairs of the Company.

For M. A. Ansari & AssociatesChartered Accountants

CA Adil AnsariMembership No.141236FRN No. 135322W

Date: September 08, 2014Place: Mumbai

30

INDEPENDENT AUDITOR’S REPORT

INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OFBHARATI SHIPYARD LIMITED

REPORT ON FINANCIAL STATEMENTSWe have audited the accompanying financial statements of BHARATI SHIPYARD LIMITED (“the Company”), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

MANAGEMENT RESPONSIBILITY FOR THE FINANCIAL STATEMENTSThe Company’s Management is responsible for the preparation of these financial statements that give a true and fair view of the financial position, financial performance and the cash flows of the Company in accordance with the Accounting Standards notified under the Companies Act, 1956 (“the Act”) read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013 and in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITORS’ RESPONSIBILITYOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

BASIS FOR QUALIFIED OPINIONAttention is invited to detailed Note no. 31 of the financial statements, regarding Work in Progress carried in the financial statements of the Company at Rs. 3,63,049 lakhs. As per the practice regularly followed by the Company, valuation of Work in Progress was carried out as on March 31, 2014 by an Independent Chartered Engineer. As determined by the Independent Chartered Engineer in the Valuation Report obtained by the Company, the WIP as on Balance Sheet date was valued at Rs. 3,26,442 lakhs which is lower by Rs. 36,607 lakhs compared to the book value of WIP of Rs. 3,63,049 lakhs due to reworking and replacement costs, obsolescence of material, delay in procurements leading to delay in construction and consequential increase in costs, liquidation damages due to delay in construction and other such expenditure. The Management has not written off the said excess Work in Progress of Rs. 36,607 lakhs in the accounts for the year ending March 31, 2014. In our opinion, considering the report of the Independent Chartered Engineer, the Company ought to have written off vessels under constructions to the extent of Rs. 36,607 lakhs in its Statement of Profit and Loss for the year ended March 31, 2014. Had the same been accounted for, the net loss for the year ended March 31, 2014 would have been higher by Rs. 36,607 lakhs and the accumulated losses as at that date would have been higher by the same amount. Our audit opinion on the financial statements for the year ended March 31, 2014 is qualified in respect of the above matter.

Attention is invited to detailed note 32 of the financial statements , regarding Deferred Tax Asset created by the Company. The Company has created deferred tax asset of Rs. 33,097 lakhs on its Accumulated Losses (including unabsorbed depreciation) and on the unpaid interest (including Funded Interest Term Loans). The principles of Accounting Standard- 22 notified in this regard clearly states that deferred tax assets should be recognised and carried forward only to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In our opinion, considering the huge accumulated losses and the present scenario of the Company’s business, there is no certainty that the company would have sufficient future taxable income to justify the creation of Deferred Tax Asset. Had the Deferred tax asset not been created, the net loss for the year ended March 31, 2014 would have been higher by Rs. 33,097 lakhs and the accumulated losses as at that date would have been higher by the same amount. Our audit opinion on the financial statements for the year ended March 31, 2014 is qualified in respect of the above matter.

Attention is invited to detailed note 33 of the financial statements, regarding refund bank guarantees invoked by Customers


31

of Rs. 73,041 lakhs and paid by the bank, interest of Rs. 22,846 lakhs paid by the bank to the Customers on such invoked refund bank guarantees, foreign exchange variation of Rs. 28,737 lakhs on such refund bank guarantee payments and further interest of Rs. 7,467 lakhs charged by bank on such refund bank guarantee payments. The Company has not made any provision in its financial statements in respect of any of the above. The Company has filed a suit before the Hon’ble City Civil Court, Mumbai against the lending banks for payment of such invoked refund bank guarantees. In view of the pending litigation and the uncertainty of outcome of such pending litigation, we are unable to quantify and comment upon the liability that may devolve on the Company on account of such invoked bank guarantees. Our audit opinion on the financial statements for the year ended March 31, 2014 is qualified in respect of the above matter.

Attention is invited to detailed note 34 of the financial statements, regarding company’s receivables include Subsidy receivable from the Government of India amounting to Rs. 66,060 lakhs. The receipt of the aforesaid Subsidy is dependent upon completion of vessels and compliance with other terms and conditions of the Shipbuilding Subsidy Scheme of the Government of India. In view of the uncertainty involved as mentioned above, we are unable to comment on the recoverability or otherwise of the aforementioned Subsidy receivable amounting to Rs. 66,060 lakhs. Therefore, the impact of the same on the Losses for the year ending March 31, 2014 cannot be ascertained. Our audit opinion on the financial statements for the year ended March 31, 2014 is qualified in respect of the above matter.

QUALIFIED OPINIONIn our opinion and to the best of our information and according to the explanations given to us, except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, the aforesaid financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :(a) In the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014;(b) In the case of the Statement of Profit and Loss, of the loss of the Company for the year ended on that date; and(c) In the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

EMPHASIS OF MATTERWe draw attention to Note 30 of the financial statements which indicates that the Company is undergoing the process of Financial Restructuring We also refer to our qualifications in Basis for Qualified Opinion paragraph herein above. The appropriateness of assumption of going concern of the Company is dependent upon the successful financial restructuring including raising of requisite finance for its revival and consequent utilisation of the infrastructure to generate cash flows in future to meet its obligations.Our opinion is not qualified in respect of this matter.

REPORT ON LEGAL AND REGULATORY REQUIREMENTS1. As required by the Companies (Auditor’s Report) Order, 2003 (“the Order”) issued by the Central Government of India

in terms of Section 227(4A) of the Act, we give in the Annexure a statement on the matters specified in paragraphs 4 and 5 of the Order.

2. As required by Section 227(3) of the Act, we report that: a) 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. b) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, 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 those books.

c) The Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.

d) Except for the effects of the matter described in the Basis for Qualified Opinion paragraph above, in our opinion, the Balance Sheet, the Statement of Profit and Loss, and the Cash Flow Statement comply with the Accounting Standards notified under the Companies Act, 1956 read with the General Circular 15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs in respect of section 133 of the Companies Act, 2013;

e) On the basis of the written representations received from the directors as on March 31, 2014, taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2014, from being appointed as a director in terms of Section 274(1)(g) of the Act.

For DPH & Co. Chartered Accountants Firm Registration No. 128862W

CA. Apeksha Gada Partner Membership No. 139282 Place: Mumbai Date: September 08, 2014

INDEPENDENT AUDITOR’S REPORT...(CONTD.)

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ANNEXURE TO THE AUDITORS’ REPORT

(Referred to in Paragraph 1 under “Report on Other Legal and Regulatory Requirements” section of our report of even date)(i) In respect of its Fixed Assets: (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of

fixed assets. (b) According to information furnished to us, physical verification of a major portion of fixed assets as at March 31,

2014 was conducted by the management during the year. In our opinion, the frequency of verification is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such physical verification.

(c) No substantial part of fixed assets has been disposed off during the year which will affect the going concern principle.(ii) In respect of its Inventories: (a) Physical verification of inventories has been conducted at reasonable intervals by the management. (b) In our opinion and according to the information and explanations given to us, the procedures of physical verification

of inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) In our opinion and according to the information and explanation given to us, the Company is maintaining proper records of inventory and during the course of our audit no material discrepancies were noticed on physical verification of inventories.

(iii) In respect of loans, secured or unsecured, granted by the Company to companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act 1956, according to the information and explanations given to us:

(a) The Company has not granted loans during the year. At the year-end, the outstanding balances of such loans granted aggregated Rs. 103,283.77 Lakhs (number of parties 14) and the maximum amount involved during the year was Rs. 103,283.77 Lakhs (number of parties 14).

(b) In our opinion and according to the information and explanation given to us, the above loans are Interest free and conditions on which loans have been given to the company are not, prima facie, prejudicial to the interest of the Company.

(c) There is no stipulation for repayment of principal and interest on the above loans and hence, the question of repayment being irregular does not arise.

(d) There is no stipulation for repayment of principal and interest on the above loans and hence, the question of overdue principal and interest amount does not arise.

In respect of loans, secured or unsecured, taken by the Company from companies, firms or other parties covered in the Register maintained under Section 301 of the Companies Act, 1956, according to the information and explanations given to us:

(e) The Company has taken loans aggregating Rs. 7,029.77 Lakhs from 1 party during the year. At the year-end, the outstanding balances of such loans taken aggregated Rs. 40.15 Lakhs (number of parties 3) and the maximum amount involved during the year was Rs. 7069.92 Lakhs (number of parties 4).

(f) In our opinion and according to the information and explanation given to us, above loans are interest free and terms and conditions on which loans have been given to the company are not, prima facie, prejudicial to the interest of the Company.

(g) There is no stipulation for repayment of principal and interest on the above loans and hence, the question of repayment being irregular does not arise.

(iv) In our opinion and according to the information and explanations given to us, there is an adequate internal control system, commensurate with the size of the Company and the nature of its business, for the purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in such internal controls.

(v) (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the particulars of the contracts or arrangements that need to be entered into the register maintained under section 301 of the Act, have been so entered.

(b) In our opinion and according to the information and explanation given to us, the transactions made in pursuance of contracts or arrangements entered in the contracts maintained under Section 301 of the Act exceeding the value of rupees five lakhs in respect of any party during the year have been made at prices which are reasonable having regard to prevailing market prices at that time.


33

(vi) In our opinion and according to the information and explanations given to us, the Company has not accepted any deposit from public as defined under section 58A and 58AA of the Act and the rules framed there under.

(vii) In our opinion, the company has an in-house internal audit system commensurate with its size and nature of its business.(viii)We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting

Records) Rules, 2011 prescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie the prescribed cost records have been made and maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether they are accurate or complete.

(ix) (a) According to the information and explanation given to us and according to the books and records produced and examined by us, the Company has been irregular in depositing with the appropriate authorities undisputed statutory dues including Provident Fund, Employee’s State Insurance, Sales Tax, Service Tax, Income Tax, Wealth Tax, Custom Duty, Excise Duty. However, according to the information and explanations given to us, the dues in respect of income tax, Wealth Tax, Professional Tax, ESIC, Service Tax that have not been deposited with the appropriate authorities within a period of 6 months from the date they became payable are given below:

Nature of the Statute Nature of the dues

Financial Year to which the matter Pertains

Amount Rs. (in Lakhs)

The Income Tax Act, 1961 Income Tax 2008-2009 928.07The Income Tax Act, 1961 Income Tax 2010-2011 1319.07The Wealth Tax Act, 1957 Wealth Tax 2003-2004 0.15The Income Tax Act, 1961 TCS 2013-2014 0.48The Income Tax Act, 1961 TDS 2011-2012 2.69The Income Tax Act, 1961 TDS 2012-2013 5.56The Income Tax Act, 1961 TDS 2013-2014 126.81Professional Tax Act, 1975 Professional Tax 2013-2014 5.93ESIC Act, 1948 ESIC 2013-2014 2.34The Finance Act, 2004 and Service Tax Rules Service Tax 2008-2009 to 2011-2012 292.11The Finance Act, 2004 and Service Tax Rules Service Tax 2012-2013 106.07The Finance Act, 2004 and Service Tax Rules Service Tax 2013-2014 21.90The Customs Act, 1962 Custom Duty 2010-2011 104.30The Customs Act, 1962 Custom Duty 2009-2010 115.01

(b) According to the information and explanation given to us, the dues in respect of income tax, service tax, excise duty, custom duty that have not been deposited with the appropriate authorities on account of dispute and the forum where the disputes are pending are given below.

Nature of the Statute Nature of the dues

Financial Year to which the matter Pertains

Amount Rs. (in Lakhs)

Forum where dispute is pending

The Income Tax Act, 1961 Income Tax 2003-2004 0.15 Appeal pending before CIT(A)





The Finance Act, 2004 and Service Tax Rules

Service Tax 2008-2009 to 2012-13 2871.00 Dy. Commissioner

The Customs Act, 1962 Custom Duty 2008-2009 39.36 Director General of Central Excise Intelligence

The Customs Act, 1962 Custom Duty 2011-2012 4978.56 Commissioner of Customs

The Central Excise Act, 1944

Excise Duty 2011-2012 1354.04 Commissioner of Central Excise (LTU)

ANNEXURE TO THE AUDITORS’ REPORT... (CONTD.)

34

(x) The accumulated losses of the Company at the end of the financial year are not less than fifty percent of its net worth and the Company has incurred cash losses during the financial year covered by our audit and in the immediately preceding financial year.

(xi) According to the records produced, the company had overdrawn cash credit, overdue principal and overdue interest. In the absence of the status of the Corporate Debt Restructuring and declaration of bank accounts as Non Performing Assets by various banks, we are unable to comment on the defaults in repayment of dues to financial institutions, banks and debenture holders.

(xii) According to the information and explanation given to us, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities.

(xiii) In our opinion, considering the nature of the business carried on during the year, the Company is not a chit fund or nidhi /mutual benefit fund /society. In view of the above, the said clause (xiii) of the order is not applicable to the Company.

(xiv) In our opinion and according to the information and explanations given to us, the Company is not a dealer or trader in securities. It has only invested in shares of subsidiaries, joint venture, for which proper records have been maintained and timely entries have been made therein. The said investments are held in company’s name.

(xv) In our opinion and according to the information and explanation given to us, the Company has not given any corporate guarantee for loan taken by others from financial institution during the year.

(xvi) In our opinion and according to the information and explanations given to us, the term loans have been applied for the purpose for which they were raised, except for loan amounting to Rs 2,350/- lakhs which was applied for other purpose.

(xvii) According to the information and explanation given to us and on the overall examination of the balance sheet of the company, we report that no funds raised on short term basis have been used for long term investments.

(xviii) During the year the Company has made preferential allotment of 1,18,46,602 Equity shares of Rs. 10/- each at premium of Rs. 69.12/- to the promoter group of the Company in accordance with the terms of Corporate Debt Restructuring agreed with its Lenders. The valuation of these shares was done as per SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations which in our opinion is not prejudicial to the interest of the company.

(xix) According to information and explanations given to us, the company has not issued any debentures during the year. (xx) As informed to us, the Company has not raised any money by public issues during the year.(xxi) In our opinion and according to information and explanations given to us, no material fraud on or by the Company has

been noticed or reported during the year.


CA. Apeksha Gada PartnerMembership No. 139282Place: Mumbai Date: September 08, 2014

ANNEXURE TO THE AUDITORS’ REPORT... (CONTD.)


35

BALANCE SHEET AS AT MARCH 31, 2014

(Rs. in lakhs)

Particulars Note No As at March 31, 2014

As at March 31, 2013

A. EQUITY AND LIABILITIES(1) Shareholders’ Funds (a) Share Capital (b) Reserves and Surplus (c) Money received against share warrants(2) Share application money pending allotment(3) Compulsory Convertible Debentures(4) Non-Current Liabilities (a) Long-term borrowings (b) Deferred tax liabilities (Net) (c) Other long term liabilities (d) Long term provisions(5) Current Liabilities (a) Short-term borrowings (b) Trade payables (c) Other current liabilities (d) Short-term provisions

34

5 6 78910

5,029.89 (25,249.12)

4,194.31 -

20,303.00

288,233.37 - -

255.76

128,294.60 20,733.66

322,254.44 4,313.44

3,845.23 50,898.01

5,401.57 -

21,303.00

334,328.83 - -

367.53

97,848.11 13,764.76

269,594.17 11,375.07

TOTAL 768,363.36 808,726.28

B. ASSETS(1) Non-Current Assets (a) Fixed assets (i) Tangible assets (ii) Intangible assets (iii) Capital work-in-progress (iv) Intangible assets under development (b) Non-current investments (c) Deferred tax assets (net) (d) Long term loans and advances (e) Other non-current assets(2) Current Assets (a) Current investments (b) Inventories (c) Trade receivables (d) Cash and cash equivalents (e) Short-term loans and advances (f) Other current assets

11

121314

151617181920

90,959.58 22.25

24,017.80 -

174.76 16,280.81

103,732.92 -

0.12 424,186.90

75,640.65 9,955.82

18,363.46 5,028.29

100,467.88 34.85

53,220.47 -

174.76 4,753.36

104,058.56 -

0.12 435,348.82

80,644.72 10,644.57 19,378.16

-

TOTAL 768,363.36 808,726.28 See accompanying notes forming part of the financial statements

In terms of our Report attached For M/s. DPH & Co. For and on behalf of the Board Chartered Accountants Firm Reg. No. 128862W

CA. Apeksha Gada P. C. Kapoor Vijay Kumar [Partner] [Managing Director] [Managing Director] Membership No. 139282 Place: MumbaiDate : September 08, 2014.

36

STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2014



(Rs. in lakhs)

Particulars Note No For the year

endedMarch 31, 2014

For the year ended

March 31, 2013

I. Revenue from operations 21 18,714.83 50,529.48

II. Other income 22 1,586.09 789.84

III. Total Revenue (I +II) 20,300.92 51,319.32

IV. Expenses:

(a) Cost of materials consumed 23 16,599.16 29,148.04

(b) Purchases of stock-in-trade (traded goods) - -

(c) Changes in inventories of finished goods, work-in-progress and stock-in-trade

- -

(d) Employee benefits expense 24 9,551.76 10,362.61

(e) Finance costs 25 51,184.26 44,713.25

(f) Depreciation and amortisation expense 11 4,939.92 4,684.43

(g) Other expenses 26 11,482.66 16,386.52

Total Expenses 93,757.76 105,294.85

V. Profit / (Loss) before exceptional and extraordinary items and tax (III - IV)

(73,456.84) (53,975.53)

VI. Exceptional Items 35 29,127.30 -

VII. Profit / (Loss) before extraordinary items and tax (V - VI) (102,584.14) (53,975.53)

VIII. Extraordinary Items - -

IX. Profit / (Loss) before tax (VII - VIII) (102,584.14) (53,975.53)

X. Tax expense / (benefit):

(a) Current tax - -

(b) Short / (Excess) provision for tax relating to prior years 2,524.11 75.55

(c) Deferred tax (20,834.82) (4,823.72)

XI. Profit/(Loss) for the period (IX-X) (84,273.43) (49,227.34)

XII. Earnings per equity share:

(1) Basic (Face Value Rs.10/- per share) (189.15) (149.01)

(2) Diluted (Face Value Rs.10/- per share) (189.15) (149.01)

See accompanying notes forming part of the financial statements


37


CA. Apeksha Gada P. C. Kapoor Vijay Kumar [Partner] [Managing Director] [Managing Director] Membership No. 139282 Place: Mumbai Date : September 08, 2014.

CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2013

Particulars For the year ended March 31, 2014 For the year ended March 31, 2013

A. Cash flow from Operating Activities:Net Profit / (Loss) before taxationNon-cash adjustment to reconcile profit before tax to net

Depreciation/amortisation Loss/(profit) on sale of fixed assets Unrealised foreign exchange loss Exceptional ItemsNet gain/Loss on sale of current investmentsInterest expense (Finance Cost)Interest incomeDividend income

Operating (Loss) before working capital changes Movements in working capital:

Increase/(decrease) in trade payables Increase / (decrease) in long-term provisionsIncrease / (decrease) in short-term provisionsIncrease/(decrease) in other current liabilitiesDecrease/(increase) in trade receivablesDecrease/(increase) in inventories Decrease / (increase) in long-term loans and advancesDecrease / (increase) in short-term loans and advances Decrease/(increase) in other current assets

Cash generated from /(used in) operations Direct taxes paid (net of refunds) Net cash flow from /(used in) operating activities (A)

(1,02,584.14)

4,939.92 -

1,521.14 29,127.30

- 48,782.42

(878.46)(0.03)

(19,091.85)

6,968.90 (111.77)(127.93)

51,660.27 5,004.08

11,161.92 325.65

1,015.26 (5,028.29)51,776.24

(151.00)51,625.24

(53,975.53)

4,684.43 4.42

543.90

1.00 40,691.38

(699.31)(31.35)

(8,781.06)

(13,380.73) 36.90 53.23 1,57,557.19 4,038.72 (2,15,171.31) 14,594.84 24,802.27

- (36,249.94) (300.11)

(36,550.05)B. Cash flow from Investing Activities:

Purchase / Sale of fixed assets, including intangible assets, CWIP and Capital AdvancesProceeds from sale of fixed assetsProceeds from sale/maturity of current investments Interest received Dividends received

Net cash flow from/(used in) investing activities (B)

4,594.30

- -

878.46 0.03

5,472.79

(2,732.50)

13.86 463.22 699.31 31.35

(1,524.76)C. Cash flow from Financing Activities

Proceeds from issuance of Share CapitalProceeds / Conversion of Share WarrantsProceeds from issuance of Compulsory Convertible DebenturesProceeds / (Repayment) from long-term borrowings Proceeds / (Repayment) from short-term borrowings Interest paid (Finance Cost)

Net cash flow from/(used in) in financing activities (C)

9,373.03 (1,207.26)

- (46,095.46)

30,446.49 (48,782.42)

(56,265.62)

5,352.13 5,401.57 21,303.00

66,326.68 (20,435.05) (40,691.38)

37,256.95 Net increase/(decrease) in cash and cash equivalents (A+B+C) Effect of exchange differences on cash & cash equivalents held in foreign currency

832.41 (1,521.14)

(817.85) (543.90)

Cash and cash equivalents at the beginning of the yearCash and cash eqivalents at the end of the year

10,644.57 9,955.82

12,006.32 10,644.57

Components of cash and cash equivalentsCash on hand Balances with banksIn current accountsIn deposit accountsSecurity against borrowingsUnpaid dividend accountsOthers

11.69

4,544.36 0.71

5,378.81 20.25

-

59.04

2,111.88 0.65 8,452.01 20.75 0.24

Total cash and cash equivalents 9,955.82 10,644.57

38

1 Corporate information:

Bharati Shipyard Limited is a listed public company incorporated in June 26, 1976. The company is primarily engaged in manufacturing of ocean going vessels.

2.1 Significant accounting policies:

a. Basis of Preparation of financial statements:

The financial statements are prepared under the historical cost convention on accrual basis of accounting, in accordance with the Generally Accepted Accounting Principles (Indian GAAP), on a going concern basis and in line with Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the Companies Act, 1956, as applicable.

b. Use of Estimates:

The preparation of financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions that affect the balances of assets and liabilities and disclosures relating to the contingent liabilities as at the date of the financial statements and reported amount of income and expenses during the year. The management believes that the estimates used in the preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known or materialise.

c. Fixed Assets

i. Tangible Assets:

Tangible Assets are stated at cost less accumulated depreciation and impairment losses, if any. The cost includes its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenses, incurred to bring the tangible assets to its present location and condition.

ii. Intangible Assets:

Intangible Assets are stated at cost less accumulated ammortisation and impairment losses, if any. The cost includes its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenses, incurred to bring the asset to its working condition for the intended use.

iii. Assets held for Sale:

Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately under the head Other Current Assets.

d. Capital Work-in-Progress:

Capital Work-in-Progress includes the cost of tangible assets that are not yet ready for their intended use at the balance sheet date and are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

e. Depreciation and Amortisation:

i. Depreciation on tangible assets has been provided on Straight – Line Method at the rates and in the manner prescribed in schedule XIV of the Companies Act, 1956.

ii. Depreciation on revalued amount has been charged to Revaluation Reserve.

iii. Depreciation on additions /deletions is calculated on pro-rata basis from /to the date of such additions / deletions

iv. Assets costing less than Rs.5,000/- are fully depreciated in the year of acquisition.

f. Impairment of Assets:

The carrying value of assets / cash generating units at each balance sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2014


39

based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

g. Investments:

Long-term investments are stated at cost less provision for other than temporary diminution in value of such investments. Current investments are stated at the lower of cost and fair value, determined by category of Investments.

h. Inventories:

i. Raw materials are valued at cost or market price whichever is lower. Cost is taken on FIFO basis.

ii. Stock in process is valued at amount of work done as percentage of contract value duly certified by Chartered Engineer.

i Employee Benefits

i. Short term benefits:

All employee benefits payable wholly within twelve months of rendering the service are classified as short-term employee benefits. Benefits such as salaries and wages, compensated absences etc. and the expected cost of ex-gratia are recognised in the period in which the employee renders the related service.

ii. Post employment benefits

Defined contribution plans:

The Company makes specified monthly contributions towards employee provident fund. The Company’s contribution paid/ payable under the schemes is recognised as an expense in the Statement of Profit and Loss during the period in which the employee renders the related service.

Defined benefit plans:

The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligation in respect of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets deducted.

“The present value of any obligation under such defined benefit plan is determined based on actuarial valuation using the Project Unit Completion Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.”

When the calculation results in a benefit to the Company, the recognised asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.

Actuarial gains and losses are recognised immediately in the Statement of Profit and Loss.

iii. Compensated Absences:

The company has a scheme for compensated absences for employees, the liability for which is determined on the basis of an independent actuarial valuation, carried out at the balance sheet date.

j Revenue Recognition:

i. Revenue is recognised in accounts in accordance with ‘AS-7 Accounting for Construction Contracts’ issued by the ICAI on percentage completion basis by applying percentage of work completed to the total contract value duly certified.

ii. Revenue from ship repair is recognised on the basis of job completion.

iii. Export turnover include exchange rate difference arising on realisation.

NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2014... (CONTD.)

40

iv. Dividend income on investment is accounted for in the year in which the right to receive the payment is established.

v. Interest income is recognised on the time proportion basis.

k Government Subsidy:

Government Subsidy is recognised in the Statement of Profit and Loss in accordance with the related scheme and in the period in which it is accrued. The scheme drawn up in this regard by the Ministry of Shipping, India specifies that the subsidy due on vessels constructed by Private Shipyards such as the Company itself would be payable only upon completion and delivery of eligible vessels as defined by the scheme. However, since the Company follows accrual concept of accounting, the subsidy recognised in Statement of Profit and Loss also comprises of vessels under construction.

l. Borrowing Costs:

Borrowing Costs attributable to the acquisition and construction of the Qualifying Assets, which takes substantial period of time to get ready for its intended use, are capitalized as part of the cost of respective assets up to the date when such asset is ready for its intended use. Other borrowing costs are charged to the Statement of Profit and Loss.

m. Provision for Taxation

Current Tax:

Provision for current income-tax is made on the basis of estimated taxable income for the year, and where the income is assessed by the tax authorities on the basis of such assessed income.

Deferred Tax:

Deferred tax during the year for timing difference is accounted using tax rates that have been enacted; the net difference arising thereon is debited / credited to Statement of Profit and Loss. In case of net difference giving rise to a deferred tax asset, the same is recognised on the assumption that the Company would be earning profits in the future.

n. Foreign Currency transactions:

Income and expense in foreign currencies are converted at exchange rates prevailing on the date of the transaction. Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date.

o. Provision Contingent Liabilities and Contingent Assets:

i. The Company recognises a provision when there is a present obligation as a result of a past event that probably requires an outflow of resources and a reliable estimate can be made of the amount of the obligation.

ii. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may, but probably will not, require an outflow of resources.

iii. Where there is a possible or a present obligation that the likelihood of outflow of resources is remote, no provision or disclosure is made.

iv. Contingent assets are neither recognised nor disclosed in the financial statements.

p. Operating Leases:

Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as operating leases. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with respective lease agreements.

q. Earnings Per Share:

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) attributable to the shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.



41

r. Segment Reporing

The Company identifies the primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on cost.

Segment revenue, Segment expenses, Segment assets and Segment liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under “unallocated revenue / expenses / assets / liabilities.”


42

3. Share Capital (Rs. in lakhs)

Particulars As at March 31, 2014 As at March 31, 2013

Authorised Capital:

99,000,000 (March 31, 2013 : 99,000,000) Equity Shares of Rs. 10/- each

9,900.00 9,900.00

Issued, Subscribed & Paid up Capital:

50,298,942 (March 31, 2013: 38,452,340) equity shares of Rs.10/- each fully paid up

5,029.89 3,845.23

Total 5,029.89 3,845.23

3.1 Additional Information

a) Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting period:


No. of shares Rs. in lakhs No. of shares Rs. in lakhs

Shares outstanding at the beginning of the year 38,452,340 3,845.23 31,687,764 3,168.78

Shares issued during the year 11,846,602 1,184.66 6,764,576 676.46

Shares bought back during the year - - - -

Shares outstanding at the end of the year 50,298,942 5,029.89 38,452,340 3,845.23

The company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The company declares and pays dividends in Indian Rupees. The dividend, if recommended by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

b) Shareholders holding more than 5% shares in the Company (Equity Shares of Rs. 10 each)

Name of the Shareholder As at March 31, 2014 As at March 31, 2013

No. of Shares held

% of Holding

No. of Shares held

% of Holding

Mr. Vijay Kumar 5,724,556 11.38% 5,724,556 14.89%

Mr. P. C. Kapoor 5,723,508 11.38% 5,723,508 14.88%

Bharati Infratech Projects Private Limited 16,097,360 32.00% 4,250,758 11.05%

Bharati Shipping & Dredging Company Private Limited

2,878,731 5.72% 2,878,731 7.49%

Life Insurance Corporation of India 2,633,216 5.24% 2,633,216 6.85%

4 Reserves And Surplus (Rs. in lakhs)


a. Securities Premium

Opening Balance 39,409.47 34,733.79

Add : Premium on shares issued during the current year 8,188.37 4,675.67

Closing Balance 47,597.84 39,409.47

b. Debenture Redemption Reserve





43


c. Revaluation Reserve

Opening Balance 266.69 328.75

Less : Utilised for set off against depreciation 62.06 62.06

Closing Balance 204.63 266.69

d. General Reserve



e. Surplus / (Deficit) in Statement of Profit and Loss


Add : (Loss) for the current year (84,273.43) (49,227.34)

Closing Balance (81,312.11) 2,961.32

Total (25,249.12) 50,898.01

5. Long-Term Borrowings (Rs. in lakhs)


Non-Current Current Non-Current Current

Secured

a) Debentures (Refer Note - 1) 2,000.00 7,000.00 9,000.00 -

b) Term Loan

i. From Banks (Refer Note - 2.1) 277,775.88 98,471.83 325,288.68 70,107.76

ii. From Others ((Refer Note - 2.2) 8,417.34 3,493.11 - 8,129.40

Unsecured

(a) Loans and advances from related parties 40.15 - 40.15 -

Total 288,233.37 108,964.94 334,328.83 78,237.16

Details of Long Term Borrowings

Particulars Rate of Interest Security Terms of Repayment

1. Debentures

Secured, Redeemable, Non-Convertible Debentures:

a. Life Insurance Corporation of India(700 Debentures of Rs. 10,00,000/- each)

12.45% Secured by first pari passu charge on fixed assets movable & immovable assets including Land & Buildings both present and future.

Repayable in 5 structured yearly installments commencing from December 2013 till December 2018.

b. General Insurance Corporation of India(200 Debentures of Rs. 10,00,000/- each)

10.00% Secured by first pari passu charge on certain fixed assets of the company.

Repayable in 5 structured yearly installments commencing from June 2013 till June 2018.

44



2. Term Loans

2.1. from Banks:

a. FITL - 1 5.00% 1. All Movable & Immovable assets of all the locations of the Company.

2. Residential flats of Managing Directors.

3. All the Shares of the Company held by the Promoters of the Company.

4. 24% of unencumbered shares of GOL Offshore Limited held by the promoter / Group Company.

5. Shares and Corporate Guarantees of Dhanashree Properties Pvt Ltd, Natural Power Ventures Pvt Ltd and Nirupam Energy Projects Pvt Ltd.

6. Shares of Bharati Infratech Pvt Ltd, Bharati Maritime Services Pvt Ltd and Harsha Infrastructure Pvt Ltd held in Bharati Shipyard Ltd.

7. Personal Guarantees of the Promoters.

8. Corporate Guarantees of Pinky Shipyard Pvt Ltd, Bharati Infratech Pvt Ltd, Bharati Maritime Services Pvt Ltd, Harsha Infrastructure Pvt Ltd and Bharati Shipping & Dredging Co. Pvt Ltd.

Repayable in 2 years in 8 equal quarterly installments starting from June 2013 to June 2015.

b. FITL - 2 5.00% Repayable in 12 structured quarterly installments starting from June 2013 to March 2016.

c. FITL - 3 16.50% Repayable in 11 structured quarterly installments starting from September 2013 to March 2016.

d. FITL - 4 16.50% Repayable in 11 structured quarterly installments starting from September 2013 to March 2016.

e. CAPEX Loans 11.00% Repayable in 7 years in 28 structured quarterly installments commencing from quarter ending June 2014 to March 2021.

f. Priority Loan 11.00% Repayable in 6 years in 24 structured quarterly installment commencing from quarter ending June 2013 till March 2019.

g. Term Loans 11.00% Repayable in 34 structured quarterly installments commencing from quarter ending June 2013 to March 2022.

h. WCTL - 1 8.00% To be repayable in 24 structured quarterly installments starting from June 2013 to March 2019.

i. WCTL - 2 8.00% To be repayable in 6 structured quarterly installments starting from June 2013 to March 2015.

j. WCTL - 3 8.00% Repayable in 3 years in 12 structured quarterly installments starting from June 2013 to March 2016.

k. WCTL - 4 8.00% Bullet repayment in September 2013.

l. DBS Bank LIBOR plus 200 basis

points

Pari Passu charge on fixed assets at the Dabhol yard.

Repayment in 4 equal half yearly installments each commencing from quarter ending March 2013.


45



2.2. From Others

a. SICOM Limited 11.75% Secured by Subservient charge on all the movable and current assets, both present and future, of the company in a form and manner acceptable to SICOM. Irrevocable Personal Guarantee of Promoter Directors.

Repayable in single installment at the end of 3 years from the date of disbursement.

b. Others Others represents loans which have been taken over by Asset Recontruction Cell (ARC). The security and repayment schedule remains same as of the original lenders.

- In absence of the status of CDR, the period and amount of continuing default is not ascertained.

6. Long-term Provisions (Rs. in lakhs)


(a) Provision for employee benefits

(i) Provision for compensated absences (Unfunded) 69.86 232.00

(ii) Provision for gratuity (net) 185.90 135.53

Total 255.76 367.53

7. Short Term Borrowings (Rs. in lakhs)


Secured

(a) Loans repayable on demand

(i) From Banks (Refer Note : 7.1) 119,473.89 83,716.80

(ii) From Others (Refer Note : 7.2) 1,719.17 -

Unsecured

(a) Other loans and advances

(i) Others (Refer Note : 7.3) 7,101.54 14,131.31

Total 128,294.60 97,848.11


7.1 Loans repayable on demand from Banks are secured by entire movable and immovable fixed assets & current assets (present and future) of the company.

7.2 Others represents loans which have been taken over by Asset Recontruction Cell (ARC). The security and repayment schedule remains same as of the original lenders.

7.3 Unsecured loans from others are repayable in single installment at the end of the year

46


8. Trade Payables (Rs. in lakhs)


Trade Payables

(i) Others 20,723.80 13,764.76

(ii) Micro, Small and Medium Enterprises 9.86 -

(Refer Note : 8.1)

Total 20,733.66 13,764.76

8.1 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006:

(Rs. in lakhs)


(i) Principal amount remaining unpaid to any supplier as at the end of the accounting year

6.53 -

(ii) Interest due thereon remaining unpaid to any supplier as at the end of the accounting year

3.33 -

(iii) The amount of interest paid along with the amounts of the payment made to the supplier beyond the appointed day

- -

(iv) The amount of interest due and payable for the year - -

(v) The amount of interest accrued and remaining unpaid at the end of the accounting year

3.33 -

(vi) The amount of further interest due and payable even in the succeeding year, until such date when the interest dues as above are actually paid

- -

Note : Dues to Micro and Small Enterprises have been determined to the extent such parties have been identified on the basis of information collected by the Management. This has been relied upon by the auditors.

9. Other Current Liabilities (Rs. in lakhs)


(a) Current maturities of long-term debt (Refer Note : 5. Long-Term Borrowings )

108,964.94 78,237.16

(b) Interest accrued and due on borrowings 24,941.97 1,816.42

(c) Income received in advance (Unearned Revenue) 184,593.77 186,346.50

(d) Unpaid / Unclaimed dividends* 20.19 21.47

(e) Other payables

(i) Statutory remittances (Contributions to PF and ESIC, Withholding Taxes, Excise Duty, VAT, Service Tax, etc.)

1,411.65 685.95

(ii) Trade / security deposits received 183.21 449.02

(iii) Other# 2,138.71 2,037.67

Total 322,254.44 269,594.17

* There are no amounts due to be credited to Investor Education and Protection Fund.

# Other mainly includes outstanding salaries & wages and provision for expenses.


47


10 Short-Term Provisions (Rs. in lakhs)



(i) Provision for compensated absences (Unfunded) 15.42 -


(b) Provision - Others

(i) Provision for tax (net of advance tax) 4,019.66 11,332.02

(ii) Provision for other contingencies 219.30 -

Total 4,313.44 11,375.07

48


Not

e 11

: Fix

ed A

sset

s(R

s. In

lakh

s)

Desc

riptio

n

Gros

s Blo

ckAc

cum

ulat

ed D

epre

ciatio

nNe

t Blo

ckAs

at

April

1,

2013

Addi

tions

Disp

osal

s/Ad

just-

men

ts#

As a

t M

arch

31,

20

14

As a

t Ap

ril 1

, 20

13

For t

he

year

Adju

st-m

ents*

On

dis -

posa

ls#

As a

t M

arch

31,

20

14

As a

t Ap

ril 1

, 20

13

As a

t M

arch

31,

20

14A

Tang

ible

Ass

ets

Own

Ass

ets

Free

hold

Land

14,8

66.5

1 9.

49

-

14,8

76.0

0

-

- -

-

-

14

,866

.51

14,8

76.0

0 Bu

ildin

gs7,

483.

48

6.59

- 7,

490.

07

659.

43

245.

59

4.36

- 90

9.38

6,

824.

05

6,58

0.69

Pl

ant a

nd Eq

uipm

ent

79,0

21.0

7 2.

35

-

79,0

23.4

3 10

,542

.48

3,73

8.29

(4

18.4

9)

- 13

,862

.28

68,4

78.6

0 65

,161

.15

Dred

ger

184.

13

-

- 18

4.13

10

1.28

18

.41

-

- 11

9.69

82

.85

64.4

4 Tw

o Lin

e Ha

ndlin

g Boa

t1,

294.

91

-

- 1,

294.

91

187.

74

90.6

4 -

-

278.

39

1,10

7.16

1,

016.

52

Furn

iture

and

Fixtu

res

2,82

8.98

3.

34

-

2,83

2.32

66

6.34

17

8.81

-

-

845.

14

2,16

2.64

1,

987.

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cles

1,32

2.66

9.

06

-

1,33

1.72

49

8.53

12

1.76

-

-

620.

29

824.

13

711.

43

Offi

ce e

quip

men

t50

3.89

0.

93

-

504.

82

137.

83

31.3

4

-

-

169.

17

366.

07

335.

65

Com

pute

rs48

0.02

0.

08

-

480.

09

331.

90

64.3

0

-

-

396.

20

148.

11

83.9

0 W

ind

Mill

8,67

7.70

-

(8,6

77.7

0)-

3,21

2.56

43

6.84

-

(3,6

49.4

1)-

5,46

5.13

- T

OTA

L (A)

11

6,66

3.35

31

.83

(8,6

77.7

0)10

8,01

7.48

16

,338

.09

4,92

5.98

(4

14.1

3) (3

,649

.41)

17,2

00.5

4 10

0,32

5.25

90

,816

.95

BTa

ngib

le A

sset

sLe

ased

Ass

ets

Leas

ehol

d La

nd14

4.02

-

- 14

4.02

1.

39

-

-

-

1.39

14

2.63

14

2.63

T

OTA

L (B)

14

4.02

-

- 14

4.02

1.

39

-

-

-

1.39

14

2.63

14

2.63

To

tal o

f Tan

gibl

e As

sets

(A+

B)11

6,80

7.37

31

.83

(8,6

77.7

0)10

8,16

1.50

16

,339

.49

4,92

5.98

(4

14.1

3) (3

,649

.41)

17,2

01.9

3 10

0,46

7.88

90

,959

.58

TOTA

L (Pr

evio

us Ye

ar)

91,0

02.0

5 25

,808

.50

(3.1

8)11

6,80

7.37

11

,611

.66

4,67

1.10

62

.06

(5.3

3)16

,339

.49

79,3

90.3

9 1,

00,4

67.8

8 C

Inta

ngib

le A

sset

sCo

mpu

ter s

oftw

are

95.9

0 1.

33

- 97

.23

61.0

5 13

.94

-

- 74

.98

34.8

5 22

.25

TO

TAL (

C)

95.9

0 1.

33

- 97

.23

61.0

5 13

.94

-

- 74

.98

34.8

5 22

.25

TOTA

L (Pr

evio

us Ye

ar)

88.3

3 7.

57

- 95

.90

47.7

1 13

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-

- 61

.05

40.6

1 34

.85

TOTA

L (A+

B+C)

116,

903.

27

33.1

7 (8

,677

.70)

108,

258.

74

16,4

00.5

3 4,

939.

92

(414

.13)

(3,6

49.4

1)17

,276

.91

100,

502.

73

90,9

81.8

3 TO

TAL (

Prev

ious

Year

)91

,090

.37

25,8

16.0

7(3

.18)

116,

903.

2711

,659

.37

4,68

4.43

(62.

06)

(5.3

3)16

,400

.53

79,4

31.0

010

0,50

2.74

DCa

pita

l wor

k-in

-pro

gres

s24

,017

.80

(Pre

vious

Year

)53

,220

.47

# In

clude

s Ass

et h

eld

for S

ale

which

is cl

assif

ied

unde

r the

hea

d O

ther

Cur

rent

Ass

ets

* Ad

justm

ent i

s on

acco

unt o

f Prio

r Per

iod

adju

stmen

t and

am

ount

with

draw

n fro

m R

eval

uatio

n Re

serv

e.


49


12. Non-Current Investments (Rs. in lakhs)


Other Investments (Refer Note 12.1)

(a) Investment in equity instruments 174.66 174.66

(b) Investments in government or trust securities 0.10 0.10

Total 174.76 174.76

12.1 Details of Other Investments (Rs. in lakhs)


(1) Investment in equity instrument (Unquoted; fully paid)

(a) Investment in equity instruments of Subsidiaries

(i) Shares of Advitya Urja Private Limited 1.00 1.00

10,000 (31.03.2013 : 10,000) Shares of Rs. 10 each fully paid up

(ii) Shares of Dhanshree Properties Private Limited 1.00 1.00


(iii) Shares of Natural Power Ventures Private Limited 1.00 1.00


(iv) Shares of Nirupam Energy Projects Private Limited 1.00 1.00


(v) Shares of Nishita Mercantile Private Limited 1.00 1.00


(vi) Shares of Pinky Shipyard Private Limited 145.16 145.16


(vii) Shares of Premila Mercantile Private Limited 1.00 1.00


(viii) Shares of Vishudh Urja Private Limited 1.00 1.00


(b) Investment in equity instruments of Joint Venture

(i) Shares of Bengal Shipyard Limited 22.50 22.50


(2) Investments in government or trust securities

(i) National Saving Certificate 0.10 0.10

Total 174.76 174.76

Particulars Rs. in lakhs Rs. in lakhs

Aggregate amount of quoted investments - -

Market Value of quoted investments - -

Aggregate amount of unquoted investments 174.76 174.76

50


13. Deferred tax assets (Net) (Rs. in lakhs)

Particulars As at 31 March 2014 As at 31 March 2013

Deferred tax assets 47,031.49 13,934.44

Deferred tax liability (30,750.68) (9,181.08)

Total 16,280.81 4,753.36

14. Long-term loans and advances (Rs. in lakhs)


(Unsecured and considered good)

(a) Capital Advances 10.92 10.92

(b) Security Deposits 732.52 763.87

(c) Loans and advances to related parties (Refer Note: 41) 102,989.48 103,283.77

Total 103,732.92 104,058.56

15. Current Investments (Rs. in lakhs)


a. Other Current Investments

(Carried at lower of cost and quoted / fair value)

(i) Investment in Equity instruments (Refer Note : 15.1) 0.12 0.12

Total 0.12 0.12

15.1 Details of current investments (Rs. in lakhs)

Particulars

Subsidiary / Associate / JV /

Controlled special purpose Entity / Others



(a) Investment in Equity instruments (Quoted)

(i) Shares of ICICI Bank Limited Others 0.12 0.12

150 (31.03.2013 : 150) Shares of Rs. 10 each fully paid

Particulars Rs. In lakhs Rs. In lakhs

Aggregate amount of quoted investments 0.12 0.12

Market Value of quoted investments 1.87 1.57

Aggregate amount of unquoted investments - -

16. Inventories (Rs. in lakhs)


(a) Raw materials and Components 56,614.84 60,417.06

Goods-in-Transit 4,523.13 5,658.73

(b) Work-in-progress 363,048.93 366,745.53

(c) Stock-in-trade - 2,527.50

Total 424,186.90 435,348.82


51


17. Trade receivables (Rs. in lakhs)



Outstanding for a period exceeding six months 75,203.18 71,369.39

Others 437.47 9,275.33

Total 75,640.65 80,644.72

18. Cash and cash equivalents (Rs. in lakhs)


(a) Cash on hand 11.69 59.04

(b) Balances with banks

(i) In current accounts 4,544.36 2,111.88

(ii) In deposit accounts 0.71 0.65

(iii) Security against borrowings 5,378.81 8,452.01

(Iv) Earmarked Balances

-Unpaid dividend accounts 20.25 20.75

-Others - 0.24

Total 9,955.82 10,644.57

19. Short term loans and advances (Rs. in lakhs)



(a) Security deposits 1,100.50 1,100.50

(b) Loans and advances to employees 146.15 209.56

(c) Prepaid expenses 868.38 1,123.81

(d) Balances with government authorities

(i) VAT credit receivable 1,948.95 2,527.09

(ii) Service Tax credit receivable 96.24 -

(iii) TDS credit receivable 0.56 -

(e) Others

(i) Advances to Suppliers 14,067.52 14,282.02

(ii) Others 135.16 135.16

Total 18,363.46 19,378.16

20. Other current assets (Rs. in lakhs)


(a) Others

(i) Fixed assets held for Sale 5,028.29 -

Total 5,028.29 -

52


21. Revenue from operations (Rs. in lakhs)

Particulars For the year ended March 31, 2014

For the year ended March 31, 2013

(a) Sale of products

(i) Manufactured goods - Ships 17,939.84 1,27,057.67

(ii) Increase / (decrease) in WIP (1,253.74) (79,118.65)

(iii) Windmill Income 1,170.36 1,152.90

(b) Other Operating Revenue

(i) Sale of scrap 224.13 1,405.41

(ii) Custom Duty Refund - 32.15

(iii) Others -

- Hire charges 0.27 -

- Repair works 633.96 -

Total 18,714.83 50,529.48

22. Other income (Rs. in lakhs)



(a) Interest Income comprises:

(i) Interest from banks on :

Deposits 840.52 691.94

(ii) Other interest 37.94 7.38

(b) Dividend Income :

(i) from current investments

Others 0.03 31.35

(c) Other non-operating income comprises:

(i) Liabilities / provisions written back 17.07 -

(ii) Miscellaneous income* 690.53 59.17

Total 1,586.09 789.84

* Miscellaneous income mainly includes insurance claims received.

23. Cost of materials consumed (Rs. in lakhs)



Opening stock 60,417.06 71,391.94

Add: Purchases 17,320.07 18,173.16

77,737.13 89,565.10

Less: Closing stock 61,137.97 60,417.06

Total 16,599.16 29,148.04

Refer Note : 45


53


24. Employee benefits expense (Rs. in lakhs)



(a) Salaries and wages 9,098.74 9,533.17

(b) Contributions to provident and other funds 178.20 402.61

(c) Gratuity Fund Contribution 66.37 59.96

(d) Staff welfare expenses 208.45 366.87

Total 9,551.76 10,362.61

25. Finance costs (Rs. in lakhs)



(a) Interest expense on :

(i) Borrowings 48,910.23 38,382.68

(ii) Trade payables 34.05 -

(iii) Others 8.11 2.49

(b) Other borrowing costs

(i) Bank Guarantee Commission 1,193.59 2,171.48

(ii) Others 157.58 678.63

(c) Net loss on foreign currency transactions and translation 880.70 3,477.97

Total 51,184.26 44,713.25

26. Other expenses (Rs. in lakhs)



Payments to Auditors (Refer Note : 27) 41.87 45.00

Balance Written Off 20.57 623.24

Car Hiring Expenses 123.97 241.53

Clearing & Forwarding 290.70 1,322.49

Design Consultancy-Foreign 3,220.59 1,105.43

Design Consultancy-Local 401.23 1,185.74

Electricity Charges 345.73 489.21

Equipment Hiring Charges 1,565.98 2,366.62

Insurance 287.29 464.72

Interest On Delayed Payment Of Service Tax 209.03 2.48

Launching & Delivery Charges 136.69 324.61

Legal & Professional Charges 968.91 1,996.96

Office Maintenance 166.09 306.20

Power & Fuel 5.53 0.84

54


26. Other expenses .. (Contd.) (Rs. in lakhs)



Prior Period Expenses 988.44 1,870.70

Rates and Taxes 121.90 239.88

Rent 635.09 1,153.98

Repairs to Buildings 32.39 26.65

Repairs to Machinery 68.27 67.70

Repairs - Others 765.18 1,000.10

Transportation Charges 52.23 193.27

Travelling Expenses 218.27 382.99

Miscellaneous Expenses 816.71 976.18

Total 11,482.66 16,386.52

27. Payments to auditors comprises : (Rs. in lakhs)



Fees as Statutory Auditors 2.81 2.81

Taxation Matters 39.06 42.00

Other services - 0.19

Total 41.87 45.00

28. Contingent liabilities and commitments not provided in respect of: (Rs. in lakhs)


a. Contingent Liability:

(i) Tax/Duties that may arise in respect of which appeal is pending:

Income Tax 1,615.97 -

Service Tax 2,871.00 -

Custom Duty 5,017.92 62.61

Excise 1,354.04 -

(ii) Letter of Credit outstanding 7.20 4,904.06

Bank Guarantees

-Performance Guarantee 2,835.13 3,976.28

-Advance Guarantee 50,909.07 129,278.05

-Others 11,747.47 25,184.80

b. Commitments - -

Total 76,357.80 163,405.80


55

29. Convertible share warrants and debentures:

As per the approval of the shareholders by postal ballot vide resolution 5 dated September 18, 2012, the company has alloted preferential issue of 32,000,000 warrants to Promoter Group, carrying right to subscribe to one equity share of Rs. 10/- each, pursuant to Section 81(1A) of the Companies Act, 1956, at a conversion price of Rs. 79.12/- including premium of Rs. 69.12/- per equity share of the Company, arrived at in accordance with the SEBI Guidelines. The details of proposed allottees are as follows:

Name of the proposed allottees Category of the proposed

Allottees

Maximum no. of warrants

proposed to be issued & allotted

Bharati Infratech Projects Private Limited Promoter Group 22,000,000

Bharati Maritime Services Private Limited Promoter Group 5,500,000

Harsha Infrastructure Private Limited Promoter Group 4,500,000

Total 32,000,000

29.1 Of the above following are alloted and subscribed and fully paid:

Name of the proposed allotteesCategory of

the proposed Allottees

No. of warrants issued & fully

paid



Harsha Infrastructure Private Limited Promoter Group 327,940

Total 18,611,178

Of the above, 6,764,576 convertible warrants were converted into equity shares of Rs. 10/- each at a price of Rs. 79.12/- per share including premium of Rs. 69.12/- per share on 31.12.2012. Further, 11,846,602 convertible warrants were converted into equity shares of Rs. 10/- each at a price of Rs. 79.12/- per share including premium of Rs. 69.12/- per share on 25.09.2013

29.2 As per the approval of the shareholders by postal ballot vide resolution 6 dated 18th September, 2012, the Company has allotted preferential issue of 26,926,175 Compulsory Convertible Debentures to the signatories of CDR. The above Compulsory Convertible Debentures are convertible into one one equity share of Rs. 10/- each on preferential basis pursuant to section 81(1A) of the Companies Act, 1956 at a conversion price of Rs. 79.12/- including premium of Rs. 69.12/- per equity share of the company, the pricing of which is arrived in accordance with SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations.

30. Note on Financial Restructuring:

The Company has incurred Net Loss of Rs. 84,273 lakhs after considering one time exceptional items of Rs. 29,127 lakhs during the year ended March 31, 2014. The Company is implementing various long-term measures to improve its cash flow and revival of the operations of the Company. The Company is exploring multiple options of financial restructuring and is in discussions with lenders and other institutions to raise finance for revival of its operations. Upon revival, the Company will be able to make optimum utilisation of its green field facilities, renegotiate its contracts and complete the under construction vessels to generate future cash flows. The Company believes that these measures will not only generate cash flows for revival but will also result in future orders and consequently sustainable cash flows.The promoters also continue to be committed to providing the required operational and financial support to Company in the foreseeable future. During the year, the Promoters have converted 1,18,46,602 warrants into equity shares of the Company thereby infusing additional equity of Rs. 7,030 lakhs into the Company. In view of the foregoing, the Company's financial statements have been prepared on a going concern basis whereby the realization of assets and discharge of liabilities are expected to occur in the normal course of business.


56

31. Explanatory Statement on WIP:The valuation of the vessels under construction is carried out by the management on quarterly basis to evaluate the stage of completion of vessels in order to ascertain the carrying value of Work in Progress (WIP). During the year, the company has made efforts to revive its operations but progress of construction of the vessels was affected due to factors such as unavailability of working capital finance resulting into labour issues, non availability of required materials, reduced production levels at various yards, etc. The management had appointed an Independent Chartered Engineer to carry out valuation of the vessels at the year end. As per the report submitted by the Independent Chartered Engineer, the WIP as on Balance Sheet date was valued at Rs. 326,442 lakhs which is lower by Rs. 36,607 lakhs compared to the book value of WIP of Rs. 363,049 lakhs. The Independent Chartered Engineer arrived at such reduced valuation of the WIP on account of reworking and replacement costs, obsolescence of material, delay in procurements leading to delay in construction and consequential increase in costs, liquidation damages due to delay in construction and other such expenditure. The Management of the Company believes that the value of WIP as reflected in the financial statements is fair and reasonable considering the improving market conditions. The management is of the opinion that considering the stabilising business situations and the revival of the global economy resulting into higher requirement for vessels, the reduction in the value of the WIP is only temporary in nature. The Management is confident that upon completion of the vessels under construction, the above mentioned assumption of the Independent Chartered Engineer of perceived reduction in revenue and increased cost would be recovered on account of increased market price of the vessels. Furthermore, the management is constantly reviewing the market conditions and has also consulted some of the International Offshore Ship-Brokers to ascertain the demand for the vessels under construction by the company in the future. Based on the same, the Management is of the opinion that the under construction vessels will be sold at price higher than their carrying value. In view of the same, the Company is of the firm belief that the carrying value of WIP of the vessels under consideration is not required to be reduced due to the temporary reduction in its valuation. This statement should be considered as explanation to the qualification made by auditors in their audit report for the year ending March 31, 2014 for the above matter.

32. Explanatory note on Deferred Tax Assets created during current financial year:During the year, the company has incurred losses on account of high operational and financial costs and a reduction in production and consequently turnover of the company. This has resulted into carried forward losses (including accumulated depreciation) of Rs. 75,026 lakhs as on balance sheet date. As per prudence accounting policy and considering ongoing developments, the company has created deferred tax asset on the above accumulated losses of Rs. 23,183 lakhs in the current financial year. Further, company has also created deferred tax asset of Rs. 23,848 lakhs on outstanding Funded Interest Term Loan, Interest, Gratuity and Leave encashment. Accordingly, total deferred tax asset as on March 31, 2014 stands at Rs. 47,031 lakhs. The Management of the Company is confident of financial restructuring and reviving the operations to achieve optimum utilization of its infrastructure. Accordingly, the Management believes that there would be sufficient future taxable profits against which the accumulated losses would be set off and keeping in view the same, the above deferred tax asset has been created by the Company. This statement should be considered as explanation to the qualification made by auditors in their audit report for the year ending March 31, 2014 for the above matter.

33. Explanatory note on Bank Guarantee Invocation by Customers on cancellation of vessel contracts:

The Company is currently constructing various vessels ordered from international customers as well as domestic customers including Government of India-Ministry of Defence. As per the international trade practice, the company has issued the refund bank guarantees to customers against various advance stage payments received by the Company. Further, several of these international customers had cancelled the ship building contracts entered into with the Company and demanded money from the banks under the refund bank guarantees issued by them. The Company believed these cancellations to be in violation of the terms of agreement entered into with these Customers. Accordingly, the Company had referred the matter for arbitration as provided into these Contracts. As per the terms of the refund bank guarantees, in the event of pending arbitration or other legal proceedings, the banks are not required to make payments under the said guarantees till the outcome of legal proceedings is finalised. During the current financial year, the banks have made payments aggregating to Rs. 73,041 lakhs on account of such refund bank guarantees invoked by the Customers along with Interest of Rs. 22,846 lakhs and foreign exchange variation of Rs.28,737 lakhs. Further, the banks have also charged interest of Rs. 7,467 lakhs on the aforementioned payments made in respect of such invoked bank guarantees considering the said payments as overdraft facility to the Company. The Company is of the opinion that the payments under the refund bank guarantees are made by the banks without following due process of law. Further, the Company has filed a suit before Hon’ble City Civil Court, Mumbai against such banks which is pending for disposal. Pending the legal proceedings in the above matter, the company has not given effect to the above payments made by the banks to the Customers under the refund bank guarantees. The company continues to reflect advances received from customers under the said Contracts, even in cases wherein the payments have been made by banks under the refund bank guarantees. These amounts are shown by the Company as Current Liability in the Balance Sheet under the head “Other Current liabilities : (c) Income received in advance”. This statement should be considered as explanation to the qualification made by auditors in their audit report for the year ending March 31, 2014 for the above matter.



57


34. Explanatory note on Subsidy Receivable from Government of India under Shipbuilding Subsidy scheme:

The Government of India had announced Shipbuilding Subsidy Scheme for private and public shipyards in India in 2002 for all eligible shipbuilding orders entered into between Nov-2002 till Aug-2007. The Subsidy was provided at the rate of 30% of the contract value subject to fulfilment of various conditions. In case of private shipyards, disbursement of the subsidy amount was provided post delivery of the vessel and subject to fulfilment of other conditions of the scheme. According to the subsidy scheme and based on accounting principles, the company has credited subsidy on vessels under construction in respect of which substantial work has been carried out on the vessel. As on March 31, 2014 total subsidy booked by the company is Rs. 84,178 lakhs against which the company has already received amount of Rs.18,114 lakhs from Government of India and balance Rs. 66,060 lakhs is shown as trade receivables. The Company has been complying with the terms of the said scheme and has already received part of the Subsidy on vessels delivered by the Company. However, as explained in Note no. 31 above, the company has not been able to complete and deliver vessels under construction. Due to delay in delivery of existing vessels eligible for subsidy, the company has not received a large portion of the subsidy booked. Further, in respect of vessels delivered, the Government of India has retained a part of the subsidy amount to be released at a future date subject to certain compliances. The company is of the opinion that on completion of the various vessels under construction, the Government of India will release the subsidy amount as well as the retention amounts upon completion of compliances. Further, as detailed in Note no. 30 of the statement, the Company is confident of financial restructuring and reviving the operations and completing the vessels under construction in respect of which the aforementioned Subsidy is receivable. Consequently, the Company is of the opinion that it would receive the Subsidy amount reflected in the accounts. This statement should be considered as explanation to the qualification made by auditors in their audit report for the year ending March 31, 2014 for the above matter.

35. Exceptional ItemsCapital Work in Progress:

Exceptional items represents write off of Capital Work in Progress amounting to Rs. 29,127 lakhs due to impairment of assets. As per the originally approved CDR scheme in June 2012, the company was allowed a further capex of ~ Rs. 19,600 lakhs to be incurred over two financial years out of which lenders had sanctioned priority term loan of ~ Rs.15,500 lakhs. This capex was mainly for capacity augmentation of Greenfield yards (Dabhol and Mangalore) which is critical for completion of existing order book within the projected timelines and to cater to the future order book as well. Further, this capex was also required to improve efficiency and productivity of yards so that the company can achieve optimum utilisation of under construction facilities. However, this capex is not incurred due to various reasons including non-release of funds by the lenders. This has resulted into incomplete construction of various infrastructure facilities exposed to corrosive environment and their unavailability for production of existing order book. After taking into consideration totality of facts, and various other events occurred during the current year, the company had decided to carry out valuation of all manufacturing facilities at various yards. The Independent Valuer has carried out detailed valuation of the facilities at all yards. Based on the valuation report, which is carried out in line with principles of Accounting Standard-28 (Impairment of Assets) book value of the various facilities of the company are higher by Rs. 29,127 lakhs as compared to recoverable amount of the assets as per valuation report. Accordingly, the company has written off an amount of Rs. 29,127 lakhs pertaining to under construction facilities reflected under the head Capital Work in Progress.

36. Balances of trade receivables, trade payables and loans and advances are subject to confirmation.

37. In the opinion of the Management, Current Assets and Loans and Advances have the value at which they are stated in the Balance Sheet if realised in the ordinary course of business. The provision for all known liabilities is adequate and not in excess of the amount reasonably necessary. The same is considering the fact that in case of various debts owed to various Banks, there are certain differences of opinion between the Company and the Banks w.r.t certain technical clauses of the restructuring scheme which are in turn giving rise to differences between the amount of debt and interest as charged by the Bank and as calculated/estimated by the Company. The Company is in a continuous process of reconciliation of such amounts and for finalising the accounts, it has recorded the amounts as worked out by the Banks. Further, the State Bank of India has not made the payment of taxes to the tune of Rs. 100 lakhs which were transferred from TRA Account and same has not been confirmed. The State Bank of India has also reversed an amount of Rs. 40 lakhs in Cash Credit Account and accordingly there are no CCD due to State Bank of India.

58


38. Retirement benefits:

The required disclosure under the Revised Accounting Standard 15 is given below:Brief description: The type of Defined Benefit plans is as follows :a) Gratuity:The Employee’s Gratuity Fund Scheme managed by SBI Life Insurance is a Defined Benefit plan. The present value obligation is determined based on actuarial valuation using projected unit credit method.

Defined Benefit Plans:

(i) Principal Actuarial assumptions at the Balance Sheet Date

Actuarial Assumptions for the year Gratuity (Funded)



(a) Discount Rate (p.a.) 8% 8%

(b) Rate of Return on Plan Assets (Para 107-109AS-15) 8% 8%

(c) Salary Escalation Rate (Para 83-91 AS-15) 6% 6%

(d) Mortality IAL Modified Ultimate (2006 - 08)

(e) Attrition rate 2% 2%

(ii) Change in Benefit Obligation (Rs. in lakhs)




Liability at the beginning of the year 495.73 501.53

Interest Cost 36.43 36.33

Current Service Cost 61.58 62.67

Benefits Paid (80.79) (94.57)

Acturial gain/(loss) on obligations (6.28) (10.23)

Liability at the end of the year 506.67 495.73

(iii) Fair value of Plan Assets: (Rs. in lakhs)




Fair Value of Plan Assets at the beginning of the year 317.15 332.91

Expected Return on Plan Assets 28.54 -

Employer's Contribution - 50.00

Benefit's Paid (80.79) (94.57)

Actuarial gain/(loss) on Plan Assets (3.20) 28.81

Fair Value of Plan Assets at the end of the year 261.70 317.15


59


(iv) Actual Return on Plan Assets: (Rs. in lakhs)




Expected Return On Plan Assets 28.54 -


Actual Return on Plan Assets 25.34 28.81

(v) Actual Recognised in Balance Sheet: (Rs. in lakhs)




Liability at the end of the year - 495.73

Fair value of the Plan Assets at the end of the year 261.70 317.15

Amount recognised in the Balance Sheet 261.70 (178.58)

(vi) Expenses Recognised in the Statement of Profit & Loss: (Rs. in lakhs)

Actuarial Assumptions for the year

Gratuity (Funded)

For the year ended

March 31, 2014

For the year ended

March 31, 2013



Expected Return on Plan Assets (28.54) -

Curtailment Cost 107.62 -

Net Actuarial Gain/(loss) to be recognised (110.71) (39.05)

Expenses Recognised in Statement of Profit and Loss 66.37 59.96

b. Compensated Absences: The company has a scheme for compensated absences for employees, the liability from current year is determined on the basis of an independent actuarial valuation, carried out at the balance sheet date.


Actuarial Assumptions for the year Compensated Absences As at March 31, 2014

(a) Discount Rate (p.a.) 8%

(b) Rate of Return on Plan Assets (Para 107-109AS-15) 8%

( c) Salary Escalation Rate (Para 83-91 AS-15) 6%

(d) Mortality IALM 2006-08 Ultimate

(e) Attrition rate 2%

60




Liability at the beginning of the year 232.00

Interest Cost 17.34

Current Service Cost 36.18

Benefits Paid (30.38)

Acturial gain/(loss) on obligations (169.85)

Liability at the end of the year 85.28

(iii) Fair value of Plan Assets: (Not Applicable as the scheme is not funded)


Fair Value of Plan Assets at the beginning of the year -

Expected Return on Plan Assets -

Employer's Contribution -

Benefits Paid -

Actuarial gain/(loss) on Plan Assets -

Fair Value of Plan Assets at the end of the year -

(iv) Actual Return on Plan Assets: (Not Applicable as the scheme is not funded)




Actual Return on Plan Assets -




Fair value of the Plan Assets at the end of the year -

Amount recognised in the Balance Sheet (85.28)


61



Actuarial Assumptions for the year Compensated Absences for the year ended March 31, 2014


Interest Cost 17.34


Curtailment Cost -

Net Actuarial Gain/(loss) to be recognised (169.85)

Expenses Recognised in Statement of Profit and Loss (116.33)

39. Disclosure in accordance with ‘AS- 7 Accounting for Construction Contracts’ issued by the Institute of Chartered Accountants of India :

(Rs. in lakhs)

Particulars Current Year Previous Year

Contract revenue recognised as revenue for the year 17,935.44 47,939.01

Advances received from above customers 184,562.64 186,325.58

Gross amount due from customers for contract work 152,121.30 164,630.35

Gross amount due to customers for contract work 26,230.14 14,133.62

The gross due from customers reflects the net amount for all contracts in progress for which cost incurred plus recognised profit(Less recognised Losses) exceeds progress billing.

The gross due to customers reflects the net amount for all contracts in progress where progress billing exceeds cost incurred plus recognised profit (Less recognised Losses).

40. Segment Reporting The Company has disclosed business segment as the primary segment. The Company is collectively organised into

following business segments namely: a. Ship Manufacturing b. Windmill Power. Segments have been identified and reported taking into account the nature of the product and services, the organisational

structure and internal financial reporting system. Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and

amount allocated on a reasonable basis. Since the business of Wind Mill is not significant, all assets, liabilities and expenses other than specifically related to

Wind Mill Power, are allocated to Ship Manufacturing Business. Hence, there are no un-allocable assets, liabilities and expenses.

62


1. Primary Segments (Rs. in lakhs)

Particulars

As at March 31, 2014 As at March 31, 2013

ShipManufactur-

ing

Windmill Power Total

ShipManufactur-

ing

Windmill Power Total

REVENUE

Turnover 17,544.47 1,170.36 18,714.83 49,376.58 1,152.90 50,529.48

Unallocable Income - - 1,586.09 789.84 - 789.84

RESULT

Segment Results Before Exceptional Items, Interest and Tax

(22,718.19) 445.61 (22,272.58 ) (9,589.48) 327.20 (9,262.28)

Less : Interest (Finance Cost) 51,184.26 - 51,184.26 44,713.25 - 44,713.25

Less : Exceptional Items 29,127.30 - 29,127.30 - - -

Profit / (Loss) before Tax 103,029.75 445.61 1,02,584.14 54,302.73 327.20 53,975.53

Less : Tax Expenses 18,310.71 - 18,310.71 4,748.17 - 4,748.17

Net Profit / Loss after Tax 84,719.04 445.61 84,273.43 49,554.55 327.20 49,227.34

OTHER INFORMATION

Segment Assets 761,841.63 6,521.73 768,363.36 802,819.58 5,906.71 808,726.28

Segment Liabilities 757,351.54 212.00 757,563.54 727,278.48 75.51 727,353.98

Depreciation 4,503.07 436.84 4,939.92 4,226.25 458.18 4,684.43

2. Secondary Segment (Geographical Segment) (Rs. in lakhs)

ParticularsAs at March 31, 2014 As at March 31, 2013

Domestic Overseas Total Domestic Overseas Total

REVENUE

Ship Manufacturing 8,877.38 7,808.73 16,686.11 19,414.01 28,525.01 47,939.02

Windmill Power 1,170.36 - 1,170.36 1,152.90 - 1,152.90

Other Operating Income 858.36 - 858.36 1,437.56 - 1,437.56

Total 10,906.10 7,808.73 18,714.83 22,004.47 28,525.01 50,529.48

Segment Assets 768,363.36 - 768,363.36 808,726.28 - 808,726.28

41 Related party disclosure

The Company has entered into the following related party transactions. Such parties and transactions have been identified as per Accounting Standard - 18 “Related Party Disclosure” issued by the Institute of Chartered Accountants of India. Related Parties are identified by the management and relied upon by the auditor.


63

41.1 List of related parties and relationships, where control exists:

a. Subsidiary CompaniesAdvitiya Urja Private Limited Dhanshree Properties Private Limited Natural Power Venturers Pvt. Ltd Nirupam Energy Projects Pvt. Ltd. Nishita Mercantile Pvt. Ltd. Pinky Shipyard Private Limited Premila Mercantile Pvt. Ltd. Vishudh Urja Pvt. Ltd.

b. Subsidiary of Subsidiary Company - Tebma Shipyard Limited

c. Joint VentureBengal Shipyard Limited

d. Associated Companies / Concerns - GOL Offshore Limited

e. Key Management Personnel (KMP)Name of the PersonMr. P. C. KapoorMr. Vijay Kumar

Managing DirectorManaging Director

f. Relatives of Key Management PersonnelName of the PersonRelative of Mr. P. C. KapoorMrs. Madhu KapoorMrs. Radhika Mehra

WifeDaughter

Relative of Mr. Vijay KumarMrs. Ashraf G. KumarMrs. Sukriti V. Kumar

WifeDaughter

g. Enterprises influenced by Key Management Personnel and their relativesName of the EntityBharati Infratech Projects Pvt. Ltd.Bharati Marine Construction & Engineering Pvt LtdBharati Maritime Services Pvt.Ltd.Bharati Shipping & Dredging Co Private LimitedHarsha Infrastructure Pvt LtdPortside Shipping Pvt LtdSeasplice Shipping Pvt LtdSharven Multitrade P. Ltd.Shipace Shipping Private LimitedSwati Silk Mills Pvt. Ltd.Usha Silk Mills Pvt. Ltd.Vayuraj Energy Projects Pvt. Ltd.Vayutatva Energy Projects Pvt. Ltd.


64

41.2 Summary of Transactions with Related Parties (Rs. in lakhs)

Sr. Particulars

Enterprises where Control Exists

Joint Venture

Key Mana-gerial

Person-nel

Associates

Relatives of Key Mana-gerial

Personnel

Total

Subsidi-ary

Com-pany

Sub-Sub-sidiary

Company

Enterprises Owned and

Controlled by KMP & their

Relatives I] Transactions during the year1 LD Charges - - - - - - - -

- - - - - 71.93 71.93 2 Preferential Allotment of

Equity Shares - -

--

1,184.66676.46

- -

- -

- -

- 1,184.66 676.46

3 Premium on Preferential Allotment of Equity Shares

- - 8,188.374,675.67

- - - - 8,188.374,675.67

4 Receipt of Share Application Money

- - 8,165.77 - - - - 8,165.77

- - 4,195.70 - - - - 4,195.70 5 Labour Charges Received - 0.62 - - - - - 0.62

- - - - - - - - 6 Labour Charges Paid 522.68 - - - - - - 522.68

587.27 - - - - - - 587.27 7 Sales - 0.12 - - - - - 0.12

- - - - - 4,122.19 - 4,122.19 8 Loans and Advances - - 17.69 - - - - 17.69

116.61 - 55.06 - - - - 171.67 9 Receipt of Loans and

Advances -

31.60- 17.69

57.00294.29 - - - 311.98

88.6010 Loans Received - - 7,029.77 - - - - 7,029.77

- - 8.44 - - - - 8.44 11 Loans Repaid - - 7,029.77 - - - - 7,029.77

- - - - - - - - 12 Repairs Job - - - - - 628.34 - 628.34

- - - - - - - - 13 Director's Remuneration - - - - - - - -

- - - - 48.00 - - 48.00 14 Equipment Hire Charges - - - - - - - -

- - - - - 685.29 - 685.29 15 Reimbursement of Expenses - - - - - 10.45 - 10.45

- - - - - - - - 16 Refund of Customer Advance - - - - - - - -

- - - - - 1,01,590.18 - 1,01,590.18 17 Refund of temporary Cus-

tomer Advance - - - - - -

2,221.69 - -

2,221.69



65

Sr. Particulars

Enterprises where Control Exists

Joint Venture

Key Mana-gerial

Person-nel

Associates


Personnel

Total

Subsidiary Company

Sub-Sub-sidiary

Company

Enterpris-es Owned and Con-

trolled by KMP & their

Relatives II] Outstanding Balances as on March 31, 20141 Loans and Advance 99,726.62 - 100.51 3,162.35 - - - 1,02,989.48

99,726.62 - 100.51 3,456.64 - - - 1,03,283.77 2 Income Received in Advance - - - - - 19,337.03 - 19,337.03

- - - - - 19,337.03 - 19,337.03 3 Money received against

Share Warrants - - 4,194.31 - - - - 4,194.31

- - 5,401.57 - - - - 5,401.57 4 Unsecured Loans - - 40.15 - - - - 40.15

- - 40.15 - - - - 40.15 5 Trade Receivables - 67.19 - - - 2,866.48 - 2,933.67

- 241.29 - - - - - 241.29 6 Trade Payables 444.28 - - - - - - 444.28

- - - - - 87.73 - 87.73 7 Investments 152.16 - - 22.50 - - - 174.66

152.16 - - 22.50 - - - 174.66 8 Advance to Supplier - - - - - - - -

48.98 - - - - - - 48.98 Note : Figures in Bold and Italics relates to Previous Year

41.3 Disclosures of Material Related Party Transactions during the year:

1 LD Charges (Rs. in lakhs)

Particulars For the year

ended March 31, 2014

For the year ended March 31,

2013

GOL Offshore Limited - 71.93

Total - 71.93


66

2 Preferential Allotment of Equity Shares (Rs. in lakhs)




2013

Bharati Infratech Projects Private Limited 1,184.66 425.08

Harsha Infrastructure Private Limited - 32.79

Bharati Maritime Services Private Limited - 218.59

Total 1,184.66 676.46

3 Premium on Preferential Allotment of Equity Shares (Rs. in lakhs)




2013

Bharati Infratech Projects Private Limited 8,188.37 2,938.12


Bharati Maritime Services Private Limited - 1,510.88

Total 8,188.37 4,675.67

4 Receipt of Share Application Money (Rs. in lakhs)




2013


Bharati Maritime Services Private Limited 77.00 1,400.00

Bengal Shipyard Limited 294.29 -

Harsha Infrastructure Private Limited - 1,094.70

Total 8,460.06 4,195.70

5 Labour Charges Received (Rs. in lakhs)




2013

Tebma Shipyards Limited 0.62

Total 0.62 -

6 Labour Charges Paid (Rs. in lakhs)




2013

Pinky Shipyard Limited 522.68 587.27

Total 522.68 587.27


67

7 Sales (Rs. in lakhs)




2013

Tebma Shipyards Limited 0.12

GOL Offshore Limited - 4,122.19

Total 0.12 4,122.19

8 Loans and Advances (Rs. in lakhs)

Particulars As at March 31, 2014


Nirupam Energy Projects Private Limited - 116.61

Bharati Shipping and Dredging Company Private Limited - 0.02

Bharati Infratech Projects Private Limited - 0.11

Swati Silk Mills Private Limited - 0.01

Usha Silk Mills Private Limited - 0.01

Vayutatva Energy Projects Private Limited - 0.02


Bharati Marine Construction & Engineering Private Limited 17.69 -

Total 17.69 171.67

9 Receipt of Loans and Advances (Rs. in lakhs)




2013

Dhanshree Properties Private Limited - 10.00

Nirupam Energy Projects Private Limited - 21.60

Sharven Multitrade Private Limited - 2.00



Total 17.69 88.60

10 Loans Received (Rs. in lakhs)




2013

Bharati Infratech Projects Private Limited 7,029.77 -


Bharati Marine Construction & Engineering Private Limited - 1.44


Total 7,029.77 36.96

68

11 Loans Repaid (Rs. in lakhs)




2013


Total 7,029.77 -

12 Director's Remuneration (Rs. in lakhs)




2013

P. C. Kapoor - 24.00

Vijay Kumar - 24.00

Total - 48.00

13 Repairs Job (Rs. in lakhs)




2013

GOL Offshore Limited 628.34 -

Total 628.34 -

14 Equipment Hire Charges (Rs. in lakhs)




2013


Total - 685.29

15 Reimbursement of Expenses (Rs. in lakhs)




2013

Gol Offshore Limited 10.45 -

Total 10.45 -

16 Refund of Customer Advance (Rs. in lakhs)




2013

GOL Offshore Limited - 1,01,590.18

Total - 1,01,590.18


69

17 Refund of temporary Customer Advance (Rs. in lakhs)




2013


Total - 2,221.69

41.4 Disclosure required by Clause 32 of the Listing Agreement:

(a) Loans and Advances in the nature of loans to subsidiaries: (Rs. in lakhs)

Name of Subsidiary Company


Maximum Outstanding During the

Year



Year

Advitiya Urja Private Limited 170.60 170.60 170.60 170.60

Dhanshree Properties Private Limited 20,676.78 20,676.78 20,676.78 20,676.78

Natural Power Ventures Private Limited 70,371.40 70,371.40 70,371.40 70,371.40

Nirupam Energy Projects Private Limited 8,497.85 8,497.85 8,497.85 8,497.85

Nishita Mercantile Private Limited 5.35 5.35 5.35 5.35

Premila Mercantile Private Limited 0.07 0.07 0.07 0.07

Vishudh Urja Private Limited 4.57 4.57 4.57 4.57

Total 99,726.62 99,726.62

(b) Loans and Advances in the nature of loans to firms/companies in which directors are interested: (Rs. in lakhs)

Name of Enterprises in which directors are interested



Year



Year

Bengal Shipyard Limited 3,162.35 3,456.64 3,456.64 3,456.64

Bharati Infratech Projects Private Limited 0.32 0.32 0.32 0.32

Sharven Multitrade Private Limited 19.53 19.53 19.53 19.53

Swati Silk Mills Private Limited 34.70 34.70 34.70 34.70

Usha Silk Mills Private Limited 6.61 6.61 6.61 6.61

Vayuraj Energy Projects Private Limited 16.58 16.58 16.58 16.58

Vayutatva Energy Projects Private Limited 22.77 22.77 22.77 22.77

Total 3,262.86 3,557.15

Note : In case of the above Loans & Advances, there is no repayment schedule and no interest charged.

70

(c) Investments by the loanee in the shares of parent company and subsidiary company, when the company has made a loan or advance in the nature of loan:

Investing Company No. Shares in Parent Company

% of Holding in Parent Company

Bharati Infratech Projects Private Limited 16,097,360 32.00%

42. Earnings per share

Basic Earnings per share are calculated by dividing the Net Profit for the year attributable to Equity Shareholders by the weighted average number of Equity shares outstanding during the year.

For the purpose of calculating Diluted Earnings per share, the weighted average numbers of shares outstanding are adjust-ed for the effects of all dilutive potential equity shares from the exercise of options on un-issued share capital.

Particulars Current Year Previous Year

Net Profit after tax Rs. in lakhs (84,273.43) (49,227.35)

Weighted Average No. of Ordinary Shares for Basic EPS Nos. 445,54,151 330,36,175

The Face Value per Ordinary Share Rs. 10.00 10.00

EPS (Basic) Rs. (189.15) (149.01)

Weighted Average No. of Ordinary Shares for Diluted EPS (same as Basic EPS as there are no dilutive potential Equity Shares)

Nos. 445,54,151 330,36,175

EPS (Diluted) Rs. (189.15) (149.01)

43. Earnings in Foreign Exchange: (Rs. in lakhs)

Particulars For the


For the year ended

March 31, 2013

FOB Value of Exports 17,971.17 125,383.67

Total 17,971.17 125,383.67

44. CIF VALUE OF IMPORTS (Rs. in lakhs)

Particulars For the


For the year ended

March 31, 2013

Raw Materials (including Components and Spare parts) 16,307.00 13,164.33

Capital Goods - 282.79

Total 16,307.00 13,447.12


71

45. Ratio and value of indigenous and imported raw material steel adn components and spares part consumed

Particulars For the year ended

March 2014 For the year ended

March 2013

(Rs. in Lakhs) % (Rs. in Lakhs) %

Raw Materials (Steel)

i. Imported 77.67 0.48 38.03 0.13

ii. Indigenous 2,424.25 14.60 3,279.93 11.25

Components and Spare Parts

i. Imported 8,539.13 51.44 18,508.21 63.50

ii. Indigenous 5,558.11 33.48 7,321.87 25.12

Total 16,599.16 100.00 29,148.04 100.00

46. Expenditure in foreign currency (Rs. in lakhs)

ParticularsFor the year

endedMarch 31, 2014

For the year ended

March 31, 2013

Professional & Consultancy Fees 206.96 1,461.79

Interest 587.42 904.69

Design and Consultancy 23.89 1,340.16

Others 559.71 408.89

Total 1,377.98 4,115.53

47 Accounting for interest in joint venturei Income on investment in Jointly Controlled Entities is recognised when the right to receive the same is established.ii Investment in such Joint Venture is carried at cost after providing for any permanent diminution in value.

47.1 Interests in Joint Venture The Company has an equity stake of 45.01% (Current and Previous Year), as Venturer, in Bengal Shipyard Limited which is an Indian incorporated jointly controlled entity.

The Company’s interest in this Joint Venture is reported as Long Term Investment and stated at cost. However, the Company’s share of each Asset, Liability, Income & Expenses, etc. related to its interest in this Joint Venture is as follows:

(Rs. in lakhs)

Particulars As at 31 March 2014

As at 31 March 2013

EQUITY AND LIABILITIES

1) Shareholders' Funds

(a) Reserves And Surplus 1.98 9.75

2) Non-Current Liabilities

(a) Other Long-term Liabilities 4,122.92 2,325.92

(b) Long-Term Provisions 3.00 2.92

3) Current Liabilities

(a) Other Current Liabilities 49.84 1.00

(b) Short-Term Provisions 2.11 4.58

72

Particulars As at 31 March 2014

As at 31 March 2013

ASSETS

1) Non-Current Assets

(a) Fixed Assets

(i) Tangible Assets 3.68 4.31

(ii) Intangible Assets 0.06 0.08

(iii) Capital Work-In-Progress 376.45 337.47

(b) Non Current Investments 3.15 3.15

(c) Long-Term Loans And Advances 3,815.20 2,017.24

(d) Other Non-Current Assets 1.58 1.58

2) Current Assets

(a) Current Investments - -

(b) Cash & Cash Equivalents 2.03 2.28

(c) Short-Term Loans & Advances 0.21 0.57

INCOME:

Other Income - 0.13

EXPENSES:

Other expenses 7.76 7.82

Profit / (Loss) Before Tax (7.76) (7.69)

Less: Tax expense -

Profit / (Loss) After Tax (7.76) (7.69)

Contingent Liability - -

48 Discontinuing Operation: i. The company has entered into Business Transfer Aggreement (BTA) on 18th March, 2014 for sale of its Windmill

Power Business situated at Brahmanvel site in Dhule District, Mahrashtra on an ‘As is where is basis’ for an aggregate consideration of Rs. 5,517 lakhs.

ii. Windmill Power Business is reported as business segment as per AS 17. iii. Amounts of revenue and expense in respect of the ordinary activities attributable to the discontinuing operation

during the current financial reporting period are Rs. 1,170.36 lakhs and Rs. 724.75 lakhs. iv. Carrying amount Rs. 5,028.29 lakhs of total assets to be disposed. v. Amount of Profit attributable to discontinuing operation is Rs. 445.61 lakhs.49 Details on derivative instruments and unhedged foreign currency exposures:

The Company has been export oriented since long and the contracts entered into by the Company with its Customers are also in foreign currencies. Similarly, a significant costs and expenses of the Company are in foreign currency. Fluctuations in exchange rates may affect company’s earnings and outgo. However, the mix of revenues and expenses both in foreign currencies provide a natural hedge to the Company to the extent the same are proportionate.


73

50 Disclosure for Operating Leases under Accounting Standard 19 - “Leases”: Details of leasing arrangements

The Company has entered into agreements for taking on lease various vessels and office premises under operating lease arrangements. The leases are non-cancellable and are ranging for a period of 11 months to 5 years and may be renewed for a further period based on mutual agreement between the parties. The lease agreements provide for an increase in the lease payments by 0 to 2 % every year.

(Rs. in lakhs)




2013

Future minimum lease payments

not later than one year 1,719.68 1,688.59

later than one year and not later than five years 2,978.54 4,698.22

later than five years - -

Total 4,698.22 6,386.81

- Lease payments recognised in the Statement of Profit and Loss 1,421.28 1,254.86

51 The figures for the previous year have been arranged/rearranged/regrouped wherever considered necessary, to conform to this year’s classification.

For and on behalf of the Board P. C. Kapoor Vijay Kumar [Managing Director] [Managing Director]

74

Consolidated FinancialStatements

For the Year Ended31st March, 2014


75

INDEPENDENT AUDITOR’S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS

TO THE BOARD OF DIRECTORS OFBHARATI SHIPYARD LIMITED

REPORT ON CONSOLIDATED FINANCIAL STATEMENTSWe have audited the accompanying consolidated financial statements of BHARATI SHIPYARD LIMITED ( the “Company”), its subsidiaries and jointly controlled entities (the Company, its subsidiaries and jointly controlled entities constitute “the Group”), which comprise the Consolidated Balance Sheet as at 31st March, 2014, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.

MANAGEMENT RESPONSIBILITY FOR THE CONSOLIDATED FINANCIAL STATEMENTSThe Company’s Management is responsible for the preparation of these consolidated financial statements that give a true and fair view of the consolidated financial position, consolidated financial performance and consolidated cash flows of the Group in accordance with the accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.

AUDITORS’ RESPONSIBILITY Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation and presentation of the consolidated financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

BASIS FOR QUALIFIED OPINIONAttention is invited to detailed note 34 of the consolidated financial statements, regarding Work in Progress carried in the consolidated financial statements of the Company. As per the practice regularly followed by the Company, valuation of Work in Progress was carried out as on March 31, 2014 by an Independent Chartered Engineer. As determined by the Independent Chartered Engineer in the Valuation Report obtained by the Company, the WIP as on Balance Sheet date was was lower by Rs. 36,607 lakhs compared to the book value of WIP due to reworking and replacement costs, obsolescence of material, delay in procurements leading to delay in construction and consequential increase in costs, liquidation damages due to delay in construction and other such expenditure. The Management has not written off the said excess Work in Progress of Rs. 36,607 lakhs in the accounts for the year ending March 31, 2014. In our opinion, considering the report of the Independent Chartered Engineer, the Company ought to have written off vessels under constructions to the extent of Rs. 36,607 lakhs in its Consolidated Statement of Profit & Loss for the year ended March 31, 2014. Had the same been accounted for, the net loss for the year ended March 31, 2014 would have been higher by Rs. 36,607 lakhs and the accumulated losses as at that date would have been higher by the same amount. Our audit opinion on the consolidated financial statements for the year ended March 31, 2014 is qualified in respect of the above matter.

Attention is invited to detailed note 35 of the consolidated financial statements , regarding Deferred Tax Asset created by the Company. The Company has created deferred tax asset of Rs. 33,097 lakhs on its Accumulated Losses (including unabsorbed depreciation) and on the unpaid interest (including Funded Interest Term Loans). The principles of Accounting Standard- 22 notified in this regard clearly states that deferred tax assets should be recognised and carried forward only to the extent that there is a virtual certainty that sufficient future taxable income will be available against which such deferred tax assets can be realised. In our opinion, considering the huge accumulated losses and the present scenario of the Company’s business, there is no certainty that the company would have sufficient future taxable income to justify the creation of Deferred Tax Asset. Had the Deferred tax asset not been created, the net loss for the year ended March 31, 2014 would have been higher by Rs. 33,097 lakhs and the accumulated losses as at that date would have been higher by the same amount. Our audit opinion on the consolidated financial statements for the year ended March 31, 2014 is qualified in respect of the above matter.

76

INDEPENDENT AUDITOR’S REPORT ON CONSOLIDATED FINANCIAL STATEMENTS... CONTD)

Attention is invited to detailed note 36 of the consolidated financial statements, regarding refund bank guarantees invoked by Customers of Rs. 73,041 lakhs and paid by the bank, interest of Rs. 22,846 lakhs paid by the bank to the Customers on such invoked refund bank guarantees, foreign exchange variation of Rs. 28,737 lakhs on such refund bank guarantee payments and further interest of Rs. 7,467 lakhs charged by bank on such refund bank guarantee payments. The Company has not made any provision in its financial statements in respect of any of the above. The Company has filed a suit before the Hon’ble City Civil Court, Mumbai against the lending banks for payment of such invoked refund bank guarantees. In view of the pending litigation and the uncertainty of outcome of such pending litigation, we are unable to quantify and comment upon the liability that may devolve on the Company on account of such invoked bank guarantees. Our audit opinion on the consolidated financial statements for the year ended March 31, 2014 is qualified in respect of the above matter.

Attention is invited to detailed note 37 of the consolidated financial statements, regarding company’s receivables include Subsidy receivable from the Government of India amounting to Rs. 66,060 lakhs. The receipt of the aforesaid Subsidy is dependent upon completion of vessels and compliance with other terms and conditions of the Shipbuilding Subsidy Scheme of the Government of India. In view of the uncertainty involved as mentioned above, we are unable to comment on the recoverability or otherwise of the aforementioned Subsidy receivable amounting to Rs. 66,060 lakhs. Therefore, the impact of the same on the Losses for the year ending March 31, 2014 cannot be ascertained. Our audit opinion on the consolidated financial statements for the year ended March 31, 2014 is qualified in respect of the above matter.

QUALIFIED OPINIONIn our opinion and to the best of our information and according to the explanations given to us, except for the possible effects of the matters described in the Basis for Qualified Opinion paragraph above, and based on the consideration of the reports of the other auditors on the financial statements / financial information of the subsidiaries, jointly controlled entities and associates referred to below in the Other Matter paragraph, the aforesaid consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:(a) in the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2014;(b) in the case of the Consolidated Statement of Profit and Loss, of the loss of the Group for the year ended on that date;

and(c) in the case of the Consolidated Cash Flow Statement, of the cash flows of the Group for the year ended on that date.

EMPHASIS OF MATTERWe draw attention to Note 33 of the financial statements which indicates that the Company is undergoing the process of Financial Restructuring We also refer to our qualifications in Basis for Qualified Opinion paragraph herein above. The appropriateness of assumption of going concern of the Company is dependent upon the successful financial restructuring including raising of requisite finance for its revival and consequent utilisation of the infrastructure to generate cash flows in future to meet its obligations.

Our opinion is not qualified in respect of this matter.

OTHER MATTERWe did not audit the financial statements / financial information of certain subsidiaries and certain jointly controlled entities, whose financial statements / financial information reflect total assets (net) of Rs.78,929.83 lakhs as at 31st March, 2014, total revenues of Rs.31,135.46 lakhs and net cash flows amounting to Rs.(2,782.93) lakhs for the year ended on that date, as considered in the consolidated financial statements. The consolidated financial statements also include the Group’s share of loss of Rs. 3,363.23 lakhs for the year ended 31st March, 2014, as considered in the consolidated financial statements, in respect of associates, and Rs. 7.76 lakhs, in respect of Joint Ventures, whose financial statements / financial information have not been audited by us. These financial statements / financial information have been audited by other auditors whose reports have been furnished to us by the Management and our opinion, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries, jointly controlled entities, Joint Ventures and associates, is based solely on the reports of the other auditors.

Our opinion is not qualified in respect of this matter.


CA. Apeksha Gada Partner Membership No. 139282 Place: Mumbai Date: September 08, 2014


77

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2014

(Rs. in lakhs)

Particulars Note No As at March 31, 2014


A. EQUITY AND LIABILITIES

(1) Shareholders' Funds(a) Share Capital(b) Reserves and Surplus(c) Money received against share warrants(2) Share application money pending allotment(3) Compulsory Convertible Debentures(4) Minority Interest(5) Non-Current Liabilities(a) Long-term borrowings(b) Deferred tax liabilities (Net)(c) Other Long-term liabilities(d) Long-term provisions(6) Current Liabilities(a) Short-term borrowings(b) Trade payables(c) Other current liabilities(d) Short-term provisions

34 5 67 891011

5,029.89

(27,711.28) 4,194.31 1,915.00 20,303.00 5,933.55

304,627.23 -

20,275.64 258.76

141,732.08 22,161.57 351,973.48 4,968.28

3,845.23

55,461.41 5,401.57 1,915.00 21,303.00 9,094.95

353,665.98 -

18,003.64 370.45

111,826.28 16,647.20

313,069.82 11,936.23

TOTAL 855,661.51 922,540.76

B. ASSETS

(1) Non-Current Assets(a) Fixed assets (i) Tangible assets (ii) Intangible assets (iii) Capital work-in-progress (iv) Intangible assets under development(b) Goodwill on consolidation(c) Non-current investments(d) Deferred tax assets (net)(e) Long-term loans and advances(f) Other non-current assets(2) Current assets(a) Current investments(b) Inventories(c) Trade receivables(d) Cash and cash equivalents(e) Short-term loans and advances(f) Other current assets

12

13141516

171819202122

106,450.23 2,879.76 24,385.39 -

11,899.71 91,972.13 16,158.94 9,630.47 9,536.78

0.12 431,206.03 77,571.90 19,016.82 22,031.57 32,921.65

116,363.64 3,193.42 53,616.91 -

11,899.71 95,335.37 4,678.89 8,592.61 9,536.78

0.12 447,035.66 126,396.32 22,496.08 22,930.02 465.23

TOTAL 855,661.51 922,540.76

See accompanying notes forming part of the consolidated financial statementsIn terms of our Report attached For M/s. DPH & Co. For and on behalf of the Board Chartered Accountants Firm Reg. No. 128862W


78

CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2014



(Rs. in lakhs)

Particulars Note No For the year


For the year ended

March 31, 2013

I. Revenue from operationsII. Other income

2324

47,933.41 2,923.16

87,626.67 2,716.57

III. Total Revenue (I +II) 50,856.57 90,343.23

IV. Expenses:

(a) Cost of materials consumed(b) Purchases of stock-in-trade (traded goods)(c) Changes in inventories of finished goods, work-in-progress and stock-in-trade(d) Employee benefits expense(e) Finance costs(f) Depreciation and amortisation expense(g) Other expenses

25

26

27281229

40,916.12-

205.82

13,908.50 54,384.30

7,211.93 14,455.42

53,970.45-

24.38

15,551.08 48,672.51

7,144.82 20,753.82

Total Expenses 1,31,082.08 1,46,117.06

V. Profit / (Loss) before exceptional and extraordinary items and tax (III - IV)

(80,225.52) (55,773.83)

VI. Exceptional ItemsVII. Profit / (Loss) before extraordinary items and tax (V - VI)VIII. Extraordinary Items

38 29,127.30 (1,09,352.82)

-

(1,680.66) (54,093.17)

-

IX. Profit / (Loss) before tax (VII - VIII) (1,09,352.82) (54,093.17)

X. Tax expense / (benefit):(a) Current tax(b) Short / (Excess) provision for tax relating to prior years(c) Deferred tax(d) Share of joint ventures - jointly controlled entitiesXI. Profit / (Loss) after tax, before minority interest (IX-X)Add: Share of loss transfer to minority interest

7.08

2,524.70 (20,787.43)

(91,097.16)

(3,161.40)

4.51

94.80 (5,054.32)

(49,138.16)

52.98

Profit / (Loss) for the year (87,935.76) (49,191.14)

XII. Earnings per equity share:(1) Basic (face value Rs. 10/- per share)(2) Diluted (face value Rs. 10/- per share)

(206.06)(206.06)

(148.90)(148.90)

See accompanying notes forming part of the consolidated financial statements


79

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2014

Particulars For the year ended March 31, 2014 For the year ended March 31, 2013

A. Cash flow from Operating Activities:

Net Profit / (Loss) before taxationNon-cash adjustment to reconcile profit before tax to net

Depreciation/amortisation Loss/(profit) on sale of fixed assets Unrealized foreign exchange loss Exceptional ItemsInterest expense (Finance Cost)Interest incomeDividend income

Operating (Loss) before working capital changes Movements in working capital:

Increase/(decrease) in trade payables Increase / (decrease) in long-term provisionsIncrease / (decrease) in short-term provisionsIncrease/(decrease) in other current liabilitiesIncrease/ (decrease) in other long-term liabilitiesDecrease/(increase) in trade receivablesDecrease/(increase) in inventories Decrease / (increase) in long-term loans and advancesDecrease / (increase) in short-term loans and advances Decrease/(increase) in other current assetsDecrease / (increase) in other non-current assets

Cash generated from /(used in) operations Direct taxes paid (net of refunds) Net cash flow from /(used in) operating activities (A)

(1,09,352.82)

7,211.93 2.16

1,521.14 29,127.30 51,982.46 (1,796.25)

(0.31)(21,304.38)

5,514.37 (111.69)

(41.92)37,903.67

2,272.00 48,824.42 15,829.62 (1,600.00)

899.01 (32,456.42)

- 55,728.68

411.14

56,139.83

(54,093.17)

7,144.81 7.98

543.90 (1,680.66)44,711.30 (2,271.05)

(31.48)(5,668.37)

(12,706.45)

37.62 561.02

1,57,647.18 1,658.27

(40,700.40)(2,13,070.26)

12,502.91 22,256.87

996.56 47,267.39

(29,217.66)(529.02)

(29,746.68)

B. Cash flow from Investing Activities:

Purchase / Sale of fixed assets, including intang ible assets, CWIP and Capital AdvancesProceeds from sale of fixed assetsProceeds from sale/maturity of Non Current Investments Proceeds from sale/maturity of current investments Interest received Dividends received

Net cash flow from/(used in) investing activities (B)

3,043.90

11.24

1,796.25

0.31

4,851.69

(2,831.76)

15.92 461.18 464.90

2,271.05 31.48

412.76

C. Cash flow from Financing Activities

Proceeds from issuance of Share CapitalProceeds / Conversion of Share WarrantsProceeds from issuance of Compulsory Convertible DebenturesProceeds / (Repayment) from long-term borrowings Proceeds / (Repayment) from short-term borrowings Interest paid (Finance Cost)

Net cash flow from/(used in) in financing activities (C)

9,373.03 (1,207.26)

- (49,038.75)

29,905.80 (51,982.46)

(62,949.65)

5,352.13 5,401.57

21,303.00 55,991.81

(22,026.43)(44,711.30)

21,310.78

Net increase/(decrease) in cash and cash equivalents (A + B + C) Effect of exchange differences on cash & cash equivalents held in foreign currency

(1,958.13) (1,521.14)

(8,023.14) (543.90)

Cash and cash equivalents at the beginning of the yearCash and cash eqivalents at the end of the year

22,496.08 19,016.82

31,063.13 22,496.08

Components of cash and cash equivalentsCash on hand Balances with banksIn current accountsIn deposit accountsIn deposit accounts with more than 12 months maturitySecurity against borrowingsUnpaid dividend accountsOthers

44.83

13,560.61 12.30

5,378.82 20.25

-

90.79

3,865.16 11.40

870.89 17,635.01

22.59 0.24

Total cash and cash equivalents 19,016.82 22,496.08


CA. Apeksha Gada P. C. Kapoor Vijay Kumar [Partner] [Managing Director] [Managing Director] Membership No. 139282 Place: Mumbai Date : September 08, 2014.

80

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2014

1 Corporate information: Bharati Shipyard Limited is a listed public company incorporated in June 26, 1976. The company is primarily engaged

in manufacturing of ocean going vessels.

2 Basis of consolidation and significant accounting policies: The significant accounting policies have been predominantly presented below in the order of the Accounting Standards

notified under the Companies (Accounting Standards) Rules, 2006 (as amended).

2.1 Basis of accounting and preparation of consolidated financial statements The consolidated financial statements are prepared under the historical cost convention on accrual basis of accounting,

in accordance with the Generally Accepted Accounting Principles (Indian GAAP), on a going concern basis and in line with Accounting Standards notified under Section 211(3C) of the Companies Act, 1956 (which continue to be applicable in respect of Section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs) and the relevant provisions of the Companies Act, 1956, as applicable. The accounting policies adopted in the preparation of the consolidated financial statements are consistent with those followed in the previous year.

2.2 Principles of Consolidation The consolidated financial statements relate to Bharati Shipyard Limited (the ‘company’), its subsidiary companies and

Joint Venture. The consolidated financial statements have been prepared on the following basis: i The financial statements of the Company and its Subsidiary companies and Joint Venture have been combined

on a line-by-line basis by adding together like items of assets, liabilities, income and expenses. The intra-group balances and intra-group transactions and unrealised profits or losses have been fully eliminated.

ii Interest in a jointly controlled entity is reported using proportionate consolidation. iii The excess of cost to the Company of its investments in the subsidiary company over its share of equity of the

subsidiary company, at the dates on which the investments in the subsidiary company are made, is recognised as ‘goodwill’ on consolidation, being an asset in the Consolidated Financial Statements.

iv Minority interest in the net profit of subsidiary for the year is identified and adjusted against the income of the group in order to arrive at the net income attributable to the company’s shareholders.

v Minority interest in the net assets of subsidiary consists of the amount of equity attributable to the minority shareholders at the dates on which investments are made by the Company in the subsidiary company.

Following entities have been considered in the preparation of the consolidated financial statements:

Name of the Entity Country of Incorporation

Nature of Relationship

Ownership Interest

Advitya Urja Private Limited India Subsidiary 100%

Dhanshree Properties Private Limited India Subsidiary 100%

Natural Power Ventures Private Limited India Subsidiary 100%

Nirupam Energy Projects Private Limited India Subsidiary 100%

Nishita Mercantile Private Limited India Subsidiary 100%

Pinky Shipyard Private Limited India Subsidiary 51%

Premila Mercantile Private Limited India Subsidiary 100%

Vishudh Urja Private Limited India Subsidiary 100%

Tebma Shipyard Limited India Subsidiary 53.79%

GOL Offshore Limited India Associate 49.73%

Bengal Shipyard Limited India Joint Venture 45.01%

2.3 Use of Estimates: The preparation of consolidated financial statements in conformity with Indian GAAP requires the Management to make

estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. Examples of such estimates are provision for income taxes and accrued income. The Management believes that the estimates used in preparation of the consolidated financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.


81

2.4 Fixed Assets i. Tangible Assets: Tangible Assets are stated at cost less accumulated depreciation and impairment losses, if any. The cost includes

its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenses, incurred to bring the tangible assets to its present location and condition.

ii. Intangible Assets: Intangible Assets are stated at cost less accumulated ammortisation and impairment losses, if any. The cost includes

its purchase price net of any trade discounts and rebates, any import duties and other taxes (other than those subsequently recoverable from the tax authorities), any directly attributable expenses, incurred to bring the asset to its working condition for the intended use.

iii. Assets held for Sale: Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net

realisable value and are disclosed separately under the head Other Current Assets.

2.5 Capital Work-in-progress: Capital work-in-progress includes the cost of tangible assets that are not yet ready for their intended use at the balance

sheet date and are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

2.6 Depreciation and Amortisation: a Depreciation on Tangible Assets has been provided on Straight – Line Method at the rates and in the manner

prescribed in schedule XIV of the Companies Act, 1956. b Depreciation on revalued amount has been charged to Revaluation Reserve. c Depreciation on additions /deletions is calculated on pro-rata basis from /to the date of such additions / deletions. d Assets costing less than Rs.5,000/- are fully depreciated in the year of acquisition.

2.7 Impairment of Assets: The carrying value of assets / cash generating units at each balance sheet date are reviewed for impairment. If any

indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in Consolidated Statement of Profit and Loss, except in case of revalued assets.

2.8 Investments: Long-term investments are stated at cost less provision for other than temporary diminution in value. Current investments

are stated at the lower of cost and fair value, determined by category of Investments.

2.9 Inventories: a Raw materials are valued at cost or market price whichever is lower. Cost is taken on FIFO basis. b Stock in process is valued at amount of work done as percentage of contract value duly certified by Chartered

Engineer.

2.10 Employee Benefits

a Short term benefits: All employee benefits payable wholly within twelve months of rendering the service are classified as short-term

employee benefits. Benefits such as salaries and wages, compensated absences etc. and the expected cost of ex-gratia are recognised in the period in which the employee renders the related service.

b Post employment benefits i Defined contribution plans: The Company makes specified monthly contributions towards employee provident fund. The Company’s

contribution paid/ payable under the schemes is recognised as an expense in the Consolidated Statement of Profit and Loss during the period in which the employee renders the related service.

ii Defined benefit plans: The Company’s gratuity benefit scheme is a defined benefit plan. The Company’s net obligation in respect

of the gratuity benefit scheme is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods; that benefit is discounted to determine its present value, and the fair value of any plan assets deducted.

NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2014...(CONTD.)

82

“The present value of any obligation under such defined benefit plan is determined based on actuarial valuation using the Project Unit Completion Method, which recognises each period of service as giving rise to additional unit of employee benefit entitlement and measures each unit separately to build up the final obligation. The obligation is measured at the present value of the estimated future cash flows. The discount rates used for determining the present value of the obligation under defined benefit plan, are based on the market yields on Government securities as at the balance sheet date.”

When the calculation results in a benefit to the Company, the recognised asset is limited to the net total of any unrecognised actuarial losses and past service costs and the present value of any future refunds from the plan or reductions in future contributions to the plan.

Actuarial gains and losses are recognised immediately in the consolidated Statement of Profit and Loss. iii Compensated Absences: The company has a scheme for compensated absences for employees, the liability for which is determined on

the basis of an independent actuarial valuation, carried out at the balance sheet date.

2.11 Revenue Recognition: a Revenue is recognised in accounts in accordance with ‘AS-7 Accounting for Construction Contracts’ issued by the

ICAI on percentage completion basis by applying percentage of work completed to the total contract value duly certified.

b Revenue from ship repair is recognised on the basis of job completion. c Export turnover include exchange rate difference arising on realisation. d Dividend income on investment is accounted for in the year in which the right to receive the payment is

established. e Interest income is recognised on the time proportion basis.

2.12 Government Subsidy: Government Subsidy is recognised in the consolidated Statement of Profit and Loss in accordance with the related

scheme and in the period in which it is accrued. The scheme drawn up in this regard by the Ministry of Shipping, India specifies that the subsidy due on vessels constructed by Private Shipyards such as the Company itself would be payable only upon completion and delivery of eligible vessels as defined by the scheme. However, since the Company follows accrual concept of accounting, the subsidy recognised in Statement of Profit and Loss also comprises of vessels under construction.

2.13 Borrowing Costs: Borrowing Costs attributable to the acquisition and construction of the Qualifying Assets, which takes substantial period

of time to get ready for its intended use, are capitalized as part of the cost of respective assets up to the date when such asset is ready for its intended use. Other borrowing costs are charged to the Consolidated Statement of Profit and Loss.

2.14 Provision for Taxation Current Tax: Provision for current income-tax is made on the basis of estimated taxable income for the year, and where the income

is assessed by the tax authorities on the basis of such assessed income.

Deferred Tax: Deferred tax during the year for timing difference is accounted using tax rates that have been enacted; the net difference

arising thereon is debited / credited to Statement of Profit and Loss. In case of net difference giving rise to a deferred tax asset, the same is recognised on the assumption that the Company would be earning profits in the future.

2.15 Foreign Currency transactions: Income and expense in foreign currencies are converted at exchange rates prevailing on the date of the transaction.

Foreign currency monetary assets and liabilities are translated at the exchange rate prevailing on the balance sheet date.

2.16 Provision Contingent Liabilities and Contingent Assets: i. The Company recognises a provision when there is a present obligation as a result of a past event that probably

requires an outflow of resources and a reliable estimate can be made of the amount of the obligation. ii. A disclosure for a contingent liability is made when there is a possible obligation or a present obligation that may,

but probably will not, require an outflow of resources. iii. Where there is a possible or a present obligation that the likelihood of outflow of resources is remote, no provision

or disclosure is made. iv. Contingent assets are neither recognised nor disclosed in the consolidated financial statements.



83

2.17 Operating Leases: Lease of assets under which all the risk and rewards of ownership are effectively retained by the lessor are classified as

operating leases. Lease payments under operating leases are recognised as expenses on accrual basis in accordance with respective lease agreements.

2.18 Earnings Per Share: Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary

items, if any) attributable to the shareholders for the year by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income (net of any attributable taxes) relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares.

2.19 Segment Reporting: The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal

organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit / loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on cost.

Segment revenue, Segment expenses, Segment assets and Segment liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under “unallocated revenue / expenses / assets / liabilities.”


84


(Rs. in lakhs)

3. Share Capital



Authorised Capital:

99,000,000 (March 31, 2013 : 99,000,000) equity shares of Rs. 10/- each 9,900.00 9,900.00

Issued, Subscribed & Paid up Capital:

50,298,942 (March 31, 2013: 38,452,340) equity shares of Rs.10/- each fully paid up

5,029.89 3,845.23

Total 5,029.89 3,845.23

3.1 Additional Informationa) Reconciliation of the number of shares and amount outstanding at the beginning and at the end of the reporting period:


No. of shares

Rs. in lakhs

No. of shares

Rs. in lakhs

Shares outstanding at the beginning of the year 38,452,340 3,845.23 31,687,764 3,168.78

Shares Issued during the year 11,846,602 1,184.66 6,764,576 676.46

Shares bought back during the year - - - -

Shares outstanding at the end of the year 50,298,942 5,029.89 38,452,340 3,845.23

The company has one class of equity shares having a par value of Rs. 10 per share. Each shareholder is eligible for one vote per share held. The company declares and pays dividends in Indian Rupees. The dividend, if recommended by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

b) Shareholders holding more than 5% shares in the Company (Equity Shares of Rs. 10 each)

Name of the Shareholder As at March 31, 2014 As at March 31, 2013

No. of Shares held

% of Holding

No. of Shares held

% of Holding

Mr. Vijay Kumar 5,724,556 11.38% 5,724,556 14.89%

Mr. P. C. Kapoor 5,723,508 11.38% 5,723,508 14.88%

Bharati Infratech Projects Private Limited 16,097,360 32.00% 4,250,758 11.05%

Bharati Shipping & Dredging Company Private Limited 2,878,731 5.72% 2,878,731 7.49%

Life Insurance Corporation of India 2,633,216 5.24% 2,633,216 6.85%

4. Reserves and Surplus (Rs. in lakhs)



a. Securities Premium


Add : Premium on shares issued during the current year 8,188.37 4,675.67


b. Debenture Redemption Reserve




85




c. Revaluation Reserve

Opening Balance 266.69 328.75

Less : Utilised for set off against depreciation 62.06 62.06

Closing Balance 204.63 266.69

d. General Reserve



e. Surplus / (Deficit) in Consolidated Statement of Profit and Loss

Opening Balance (984.63) 48,206.52


Closing Balance (88,920.40) (984.63)

f. Share of Profit and Reserve From Associate




Total (27,711.28) 55,461.41

5. Long-term borrowings (Rs. in lakhs)


Non-Current

Current Non-Current

Current

Secured

a) Debentures (Refer Note - 1) 2,000.00 7,000.00 9,000.00 -

b) Term Loan

i. From Banks (Refer Note - 2.1) 294,169.74 101,443.93 344,625.83 73,834.06

ii. From Others ((Refer Note - 2.2) 8,417.34 3,493.11 - 8,129.40

Unsecured

(a) Loans and advances from related parties 40.15 - 40.15 -

Total 304,627.23 111,937.04 353,665.98 81,963.46


Details of Long Term Borrowings


1. Debentures

Secured, Redeemable, Non-Convertible Debentures:

a. Life Insurance Corporation of India (700 Debentures of Rs. 10,00,000/- each)

12.45% Secured by first pari passu charge on fixed assets movable & immovable assets including Land & Buildings both present and future.

Repayable in 5 structured yearly installments commencing from December 2013 till December 2018.

86


b. General Insurance Corporation of India(200 Debentures of Rs. 10,00,000/- each)

10.00% Secured by first pari passu charge on certain fixed assets of the company.

Repayable in 5 structured yearly installments commencing from June 2013 till June 2018.

2. Term Loans

2.1. from Banks:

a. FITL - 1 5.00% 1. All Movable & Immovable assets of all the locations of the Company.2. Residential flats of Managing Directors.

3. All the Shares of the Company held by the Promoters of the Company.

4. 24% of unencumbered shares of GOL Offshore Limited held by the promoter / Group Company.

5. Shares and Corporate Guarantees of Dhanashree Properties Pvt Ltd, Natural Power Ventures Pvt Ltd and Nirupam Energy Projects Pvt Ltd.

6. Shares of Bharati Infratech Pvt Ltd, Bharati Maritime Services Pvt Ltd and Harsha Infrastructure Pvt Ltd held in Bharati Shipyard Ltd.

7. Personal Guarantees of the Promoters.

8. Corporate Guarantees of Pinky Shipyard Pvt Ltd, Bharati Infratech Pvt Ltd, Bharati Maritime Services Pvt Ltd, Harsha Infrastructure Pvt Ltd and Bharati Shipping & Dredging Co. Pvt Ltd.

9. a. Paripassu charge on all fixed assets and current assets of the company, b. Corporate Guarantee and personal guarantee of Promoter and 51% shares of the promoters.

Repayable in 2 years in 8 equal quarterly installments starting from June 2013 to June 2015.

b. FITL - 2 5.00% Repayable in 12 structured quarterly installments starting from June 2013 to March 2016.

c. FITL - 3 16.50% Repayable in 11 structured quarterly installments starting from September 2013 to March 2016.

d. FITL - 4 16.50% Repayable in 11 structured quarterly installments starting from September 2013 to March 2016.

e. CAPEX Loans 11.00% Repayable in 7 years in 28 structured quarterly installments commencing from quarter ending June 2014 to March 2021.

f. Priority Loan 11.00% Repayable in 6 years in 24 structured quarterly installment commencing from quarter ending June 2013 till March 2019.

g. Term Loans 11.00% Repayable in 34 structured quarterly installments commencing from quarter ending June 2013 to March 2022.

h. WCTL - 1 8.00% To be repayable in 24 structured quarterly installments starting from June 2013 to March 2019.

i. WCTL - 2 8.00% To be repayable in 6 structured quarterly installments starting from June 2013 to March 2015.

j. WCTL - 3 8.00% Repayable in 3 years in 12 structured quarterly installments starting from June 2013 to March 2016.

k. WCTL - 4 8.00% Bullet repayment in September 2013.

l. DBS Bank LIBOR plus 200 basis points

Pari Passu charge on fixed assets at the Dabhol yard.

Repayment in 4 equal half yearly installments each commencing from quarter ending March 2013.


87



2.2. From Others

a. SICOM Limited 11.75% Secured by Subservient charge on all the movable and current assets, both present and future, of the company in a form and manner acceptable to SICOM. Irrevocable Personal Guarantee of Promoter Directors.

Repayable in single installment at the end of 3 years from the date of disbursement.

b. Others Others represents loans which have been taken over by Asset Reconstruction Cell (ARC). The security and repayment schedule remains same as of the original lenders.


6 Other long-term liabilities (Rs. in lakhs)



(a) Others

(i) Advances from customers 16,152.72 15,677.72

(ii) Others 4,122.92 2,325.92

Total 20,275.64 18,003.64

7 Long-term provisions (Rs. in lakhs)




(i) Provision for compensated absences (Unfunded) 69.86 232.00


Total 258.76 370.45

8 Short-term borrowings (Rs. in lakhs)



Secured

(a) Loans repayable on demand

(i) From Banks (Refer Note : 8.1) 132,911.37 97,694.97

(ii) From Others (Refer Note : 8.2) 1,719.17 -

Unsecured

(a) Other loans and advances

(i) Others (Refer Note : 8.3) 7,101.54 14,131.31

Total 141,732.08 111,826.28


88


8.1 Loans repayable on demand from Banks are secured by entire movable and immovable fixed assets & current assets (present and future) of the company.

8.2 Loans repayable on demand from Others represents loans which have been taken over by Asset Reconstruction Cell (ARC). The security and repayment schedule remains same as of the original lenders.

8.3 Unsecured loans from others are repayable in single installment at the end of one year.

9 Trade payables (Rs. in lakhs)



Trade Payables

(i) Others 22,151.71 16,647.20

(ii) Micro, Small and Medium Enterprises 9.86 -

(Refer Note : 9.1)

Total 22,161.57 16,647.20

9.1 Disclosures required under Section 22 of the Micro, Small and Medium Enterprises Development Act, 2006:

(Rs. in lakhs)



(i) Principal amount remaining unpaid to any supplier as at the end of the accounting year

6.53 -

(ii) Interest due thereon remaining unpaid to any supplier as at the end of the accounting year

3.33 -

(iii) The amount of interest paid along with the amounts of the payment made to the supplier beyond the appointed day

- -

(iv) The amount of interest due and payable for the year - -

(v) The amount of interest accrued and remaining unpaid at the end of the accounting year

3.33 -

(vi) The amount of further interest due and payable even in the succeeding year, until such date when the interest dues as above are actually paid

- -

Note : Dues to Micro and Small Enterprises have been determined to the extent such parties have been iden-tified on the basis of information collected by the Management. This has been relied upon by the auditors.


89


10 Other current liabilities (Rs. in lakhs)



(a) Current maturities of long-term debt(Refer Note : 5. Long-Term Borrowings )

111,937.04 81,963.46

(b) Interest accrued but not due on borrowings 96.09 208.40

(c) Interest accrued and due on borrowings 24,941.97 2,011.56

(d) Income received in advance (Unearned Revenue) 184,593.77 186,346.50

(e) Unpaid / Unclaimed dividends* 20.19 23.31

(f) Other payables

(i) Statutory remittances (Contributions to PF and ESIC, Withholding Taxes, Excise Duty, VAT, Service Tax, etc.)

1,417.07 691.77

(ii) Payables on purchase of fixed assets 48.66 -

(ii) Trade / security deposits received 183.21 449.02

(iv) Advances from customers 25,047.95 37,516.05

(v) Other# 3,687.53 3,859.75

Total 351,973.48 313,069.82

* There are no amounts due to be credited to Investor Education and Protection Fund.

# Others mainly includes outstanding salaries & wages and provision for expenses.

11 Short-term provisions (Rs. in lakhs)




(i) Provision for bonus 2.64 2.72

(ii) Provision for compensated absences 52.36 25.74

(iii) Provision for gratuity (net) 71.62 58.58

(iv) Provision for other employee benefits 80.89 58.82

(b) Provision - Others

(i) Provision for tax (net of advance tax) 4,027.26 11,335.06

(ii) Provision for warranty 512.82 454.40

(iii) Provision for other contingencies 219.30 -

(iv) Provision - others 1.40 0.91

Total 4,968.28 11,936.23

90


Not

e 12

: Fix

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sset

s

(Rs.

in la

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91


13 Non-current investments (Rs. in lakhs)



Trade Investments

(a) Investment in equity instruments (Refer Note : 43) 91,970.61 95,333.85

Other Investments

(a) Investment in equity instruments 1.42 1.42

(b) Investments in government or trust securities 0.10 0.10

Total 91,972.13 95,335.37

14 Deferred tax asset (net): (Rs. in lakhs)



Deferred tax assets 47,310.78 14,213.74

Deferred tax liability (31,151.84) (9,534.85)

Total 16,158.94 4,678.89

15 Long-term loans and advances (Rs. in lakhs)




(a) Capital Advances 1,848.65 10.92

(b) Security Deposits 767.37 797.10

(c) Loans and advances to related parties 5,649.26 3,983.31

(d) Advance income tax (net of provisions) 727.40 1,278.93

(e) Balances with government authorities

(i) CENVAT credit receivable 5.41 8.21

(ii) VAT credit receivable 160.72 160.76

(iii) Service Tax credit receivable 95.09 53.69

(f) Other loans and advances 376.57 2,299.69

Total 9,630.47 8,592.61

16 Other non-current assets (Rs. in lakhs)




(a) Long-term trade receivables 9,535.20 9,535.20

(b) Unamortised expenditure

(i) Preliminary Expenses 1.58 1.58

Total 9,536.78 9,536.78

92


17 Current investments (Rs. in lakhs)



a. Other Current Investments

(Carried at lower of cost and quoted / fair value)

(i) Investment in Equity instruments 0.12 0.12

Total 0.12 0.12

18 Inventories (Rs. in lakhs)



(a) Raw materials and Components 62,842.21 71,277.39

Goods-in-Transit 4,523.13 6,555.41

(b) Work-in-progress 3,64,198.22 3,66,827.07

(c) Stock-in-trade 149.85 2,883.17

Less : Provision for Cancelled Order inventory (507.38) (507.38)

Total 4,31,206.03 4,47,035.66

19 Trade receivables (Rs. in lakhs)




Outstanding for a period exceeding six months 75,150.15 1,15,883.05

Others 2,421.75 10,513.27

Total 77,571.90 1,26,396.32

20 Cash and cash equivalents (Rs. in lakhs)



(a) Cash on hand 44.83 90.79

(b) Balances with banks

(i) In current accounts 13,560.61 3,865.16

(ii) In deposit accounts 12.30 11.40

(iii) In deposit accounts with more than 12 months maturity - 870.89

(iv) Security against borrowings 5,378.82 17,635.01

(v) Earmarked Balances

-Unpaid dividend accounts 20.25 22.59

-Others - 0.24

Total 19,016.82 22,496.08


93


21 Short-term loans and advances (Rs. in lakhs)



(Unsecured and considered good) (a) Security deposits (b) Loans and advances to related parties (c) Loans and advances to employees (d) Prepaid expenses (e) Balances with government authorities

(i) VAT credit receivable (ii) Service Tax credit receivable (iii) TDS credit receivable

(f) Others (i) Advances to Suppliers (ii) Others

1,100.50 2,952.28 146.22 868.52

1,948.95 96.24 0.56

14,783.14 135.16

1,100.50 2,278.69 209.63 1,124.30

2,527.09 - -

15,554.64 135.17

Total 22,031.57 22,930.02

22 Other current assets (Rs. in lakhs)



(a) Unbilled revenue 21,977.93 -

(b) Accruals

(i) Interest accrued on deposits 188.55 388.27

(c) Others

(i) Asset held for Sale 5,028.29 -

(ii) Others 5,726.88 76.96

Total 32,921.65 465.23

23 Revenue from operations (Rs. in lakhs)

Particulars For the

year ended 31 March, 2014

For the year ended

31 March, 2013

(a) Sale of products

(i) Manufactured goods - Ships 46,230.29 1,63,913.55

(ii) Increase / (decrease) in WIP (1,253.74) (79,118.65)

(iii) Windmill Income 1,170.36 1,152.90

(b) Other Operating Revenue

(i) Sale of scrap 224.13 1,405.42

(ii) Custom Duty Refund - 32.15

(iii) Others 241.30

- Hire charges 0.27 -

- Repair works 633.34 -

- Subsidy income 928.76 241.30

Total 47,933.41 87,626.67

94


24 Other income (Rs. in lakhs)

Particulars For the


For the year ended

31 March, 2013

(a) Interest Income comprises:

(i) Interest from banks on :

Deposits 1,536.37 2,120.84

(ii) Interest on loans and advances 221.93 142.84

(iii) Other interest 37.94 7.38

(b) Net gain on sale of :

(i) Current investments 0.28 0.25

(c) Dividend Income :

(i) From current investments

Others 0.03 31.48

(d) Other non-operating income comprises:

(i) Profit on sale of fixed assets 2.16 -

(ii) Liabilities / provisions written back 22.37 10.28

(iii) Miscellaneous income* 1,102.08 403.50

Total 2,923.16 2,716.57

* Miscellaneous income mainly includes insurance claims received.

25 Cost of materials consumed (Rs. in lakhs)

Particulars For the


For the year ended

31 March, 2013

Opening stock 71,277.39 85,268.13

Add: Purchases 37,004.07 39,979.71

1,08,281.46 1,25,247.84

Less: Closing stock 67,365.34 71,277.39

Total 40,916.12 53,970.45

26 Changes in inventories of finished goods, work-in-progress and stock-in-trade (Rs. in lakhs)

Particulars For the


For the year ended

31 March, 2013

Inventories at the end of the year:

Stock-in-trade 149.85 355.67

Inventories at the beginning of the year:

Stock-in-trade 355.67 380.05

Total 205.82 24.38


95


27 Employee benefits expense (Rs. in lakhs)

Particulars For the


For the year ended

31 March, 2013

(a) Salaries and wages 13,197.92 14,516.44

(b) Contributions to provident and other funds 302.43 521.47

(c) Gratuity Fund Contribution 66.37 59.96

(d) Staff welfare expenses 341.78 453.21

Total 13,908.50 15,551.08

28 Finance costs (Rs. in lakhs)

Particulars For the


For the year ended

31 March, 2013

(a) Interest expense on :

(i) Borrowings 51,663.67 42,121.70

(ii) Trade payables 34.05 -

(iii) Others

-Delayed / deferred payment of income tax - 0.01

-Others 9.63 2.49

(b) Other borrowing costs

(i) Commission on bank guarantee and letter of credit 1,534.28 2,318.46

(ii) Others 261.97 812.54

(c) Net loss on foreign currency transactions and translation 880.70 3,417.31

Total 54,384.30 48,672.51

29 Other expenses (Rs. in lakhs)

Particulars For the


For the year ended

31 March, 2013

Payments to Auditors (Refer Note : 30) 48.95 52.10

Balance Written Off 20.57 623.99

Car Hiring Expenses 123.97 241.53

Clearing & Forwarding 290.70 1,322.49

Commission on Sales 147.70 853.42

Design Consultancy-Foreign 3,220.59 1,105.43

Design Consultancy-Local 404.53 1,187.08

Electricity Charges 353.15 496.54

Equipment Hiring Charges 1,565.98 2,366.62

Insurance 586.67 705.59

Interest On Delayed Payment Of Service Tax 209.03 2.48

Launching & Delivery Charges 136.69 324.61

96


29 Other expenses (contd.) (Rs. in lakhs)

Particulars For the


For the year ended

31 March, 2013

Legal & Professional Charges 1,062.74 2,088.25

Net loss on foreign currency translation and transaction 1,023.44 -

Office Maintenance 166.09 306.21

Power & Fuel 280.17 512.72

Prior Period Expenses 988.44 1,870.70

Rates and Taxes 310.77 357.48

Rent 796.47 1,347.79

Repairs to Buildings 44.47 102.00

Repairs to Machinery 150.67 84.46

Repairs - Others 803.05 1,054.11

Transportation Charges 52.23 193.27

Travelling Expenses 221.57 382.99

Yard Maintenance expenses 502.68 231.78

Miscellaneous Expenses 944.10 2,940.18

Total 14,455.42 20,753.82

30 Payments to the auditors comprises : (Rs. in lakhs)

Particulars For the


For the year ended

31 March, 2013

Fees as Statutory Auditors 9.39 9.39

Taxation matters 39.55 42.51

Other Service - 0.19

Reimbursement of expenses 0.01 0.01

Total 48.95 52.10

31 Contingent liabilities and commitments not provided in respect of: (Rs. in lakhs)



a. Contingent Liability:

i. Tax/Duties that may arise in respect of which appeal is pending 15,595.51 1,328.93

ii. Letter of Credit outstanding 251.91 6,211.27

iii. Liabilities arising out of unexecuted Contract (Net of Advances) - 7.20

iv. Bank Guarantees (Incl. Performance Guarantee, Advance Guarantee and others)

1,000,358.98 702,133.21

v. Arrears of Dividend 3,250.00 3,250.00

b. Commitments - -

Total 1,019,456.40 712,930.61


97


32 Convertible share warrants and debenture:

As per the approval of the shareholders by postal ballot vide resolution 5 dated September 18, 2012, the company has allotted preferential issue of 32,000,000 warrants to Promoter Group, carrying right to subscribe to one equity share of Rs. 10/- each, pursuant to Section 81(1A) of the Companies Act, 1956, at a conversion price of Rs. 79.12/- including premium of Rs. 69.12/- per equity share of the Company, arrived at in accordance with the SEBI Guidelines. The details of proposed allottees are as follows:

Name of the proposed allottees Category of theproposed Allottees

Maximum no. of warrants proposed to be issued & allotted



Harsha Infrastructure Private Limited Promoter Group 4,500,000

Total 32,000,000

32.1 Of the above following are allotted and subscribed and fully paid:

Name of the proposed allottees Category of theproposed Allottees

No. of warrants issued & fully paid



Harsha Infrastructure Private Limited Promoter Group 327,940

Total 1,8611,178

Of the above, 6,764,576 convertible warrants were converted into equity shares of Rs. 10/- each at a price of Rs. 79.12/- per share including premium of Rs. 69.12/- per share on 31.12.2012. Further, 11,846,602 convertible warrants were converted into equity shares of Rs. 10/- each at a price of Rs. 79.12/- per share including premium of Rs. 69.12/- per share on 25.09.2013.

32.2 As per the approval of the shareholders by postal ballot vide resolution 6 dated 18th September, 2012, the Company has allotted preferential issue of 26,926,175 Compulsory Convertible Debentures to the signatories of CDR. The above Compulsory Convertible Debentures are convertible into one equity share of Rs. 10/- each on prefrential basis pursuant to Section 81(1A) of the Companies Act, 1956, at a conversion price of Rs. 79.12/- including premium of Rs. 69.12/- per equity share of the company, the pricing of which is arrived in accordance with the SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations.

33 Financial Restructuring: The Company has incurred Net Loss of Rs. 87,936 lakhs after considering one time exceptional items of Rs. 29,127 lakhs during the year ended March 31, 2014. The Company is implementing various long-term measures to improve its cash flow and revival of the operations of the Company. The Company is exploring multiple options of financial restructuring and is in discussions with lenders and other institutions to raise finance for revival of its operations. Upon revival, the Company will be able to make optimum utilisation of its green field facilities, renegotiate its contracts and complete the under construction vessels to generate future cash flows. The Company believes that these measures will not only generate cash flows for revival but will also result in future orders and consequently sustainable cash flows. The promoters also continue to be committed to providing the required operational and financial support to Company in the foreseeable future. During the year, the Promoters have converted 1,18,46,602 warrants into equity shares of the Company thereby infusing additional equity of Rs. 7,030 lakhs into the Company. In view of the foregoing, the Company’s consolidated financial statements have been prepared on a going concern basis whereby the realisation of assets and discharge of liabilities are expected to occur in the normal course of business.

98


34 Explanatory Note on Work in Progress: The valuation of the vessels under construction is carried out by the management on quarterly basis to evaluate the stage of completion of vessels in order to ascertain the carrying value of Work in Progress (WIP). During the year, the company has made efforts to revive its operations but progress of construction of the vessels was affected due to factors such as unavailability of working capital finance resulting into labour issues, non availability of required materials, reduced production levels at various yards, etc. The management had appointed an Independent Chartered Engineer to carry out valuation of the vessels at the year end. As per the report submitted by the Chartered Engineer, the WIP as on Balance Sheet date was lower by Rs. 36,607 lakhs compared to the book value of WIP. The Independent Valuer arrived at such reduced valuation of the WIP on account of reworking and replacement costs, obsolescence of material, delay in procurements leading to delay in construction and consequential increase in costs, liquidation damages due to delay in construction and other such expenditure. The Management of the Company believes that the value of WIP as reflected in the consolidated financial statements is fair and reasonable considering the improving market conditions. The management is of the opinion that considering the stabilising business situations and the revival of the global economy resulting into higher requirement for vessels, the reduction in the value of the WIP is only temporary in nature. The Management is confident that upon completion of the vessels under construction, the above mentioned assumption of the Independent Valuer of perceived reduction in revenue and increased cost would be recovered on account of increased market price of the vessels. Furthermore, the management is constantly reviewing the market conditions and has also consulted some of the International Offshore Ship-Brokers to ascertain the demand for the vessels under construction by the company in the future. Based on the same, the Management is of the opinion that the under construction vessels will be sold at price higher than their carrying value. In view of the same, the Company is of the firm belief that the carrying value of WIP of the vessels under consideration is not required to be reduced due to the temporary reduction in its valuation. This statement should be considered as explanation to the qualification made by auditors in their consolidated audit report for the year ending March 31, 2014 for the above matter.

35 Explanatory note on Deferred Tax Assets created during current financial year:

During the year, the company has incurred losses on account of high operational and financial costs and a reduction in production and consequently turnover of the company. This has resulted into carried forward losses (including accumulated depreciation) of Rs. 75,026 lakhs as on balance sheet date. As per prudence accounting policy and considering ongoing developments, the company has created deferred tax asset on the above accumulated losses of Rs. 23,183 lakhs in the current financial year. Total deferred tax asset as on March 31, 2014 stands at Rs. 47,311 lakhs. The Management of the Company is confident of financial restructuring and reviving the operations to achieve optimum utilization of its infrastructure. Accordingly, the Management believes that there would be sufficient future taxable profits against which the accumulated losses would be set off and keeping in view the same, the above deferred tax asset has been created by the Company. This statement should be considered as explanation to the qualification made by auditors in their consolidated audit report for the year ending March 31, 2014 for the above matter.

36 Explanatory note on Bank Guarantee Invocation by Customers on cancellation of vessel contracts: The Company is currently constructing various vessels ordered from international customers as well as domestic customers including Government of India-Ministry of Defence. As per the international trade practice, the company has issued the refund bank guarantees to customers against various advance stage payments received by the Company. Further, several of these international customers had cancelled the ship building contracts entered into with the Company and demanded money from the banks under the refund bank guarantees issued by them. The Company believed these cancellations to be in violation of the terms of agreement entered into with these Customers. Accordingly, the Company had referred the matter for arbitration as provided into these Contracts. As per the terms of the refund bank guarantees, in the event of pending arbitration or other legal proceedings, the banks are not required to make payments under the said guarantees till the outcome of legal proceedings is finalised. During the current financial year, the banks have made payments aggregating to Rs. 73,041 lakhs on account of such refund bank guarantees invoked by the Customers along with Interest of Rs. 22,846 lakhs and foreign exchange variation of Rs.28,737 lakhs. Further, the banks have also charged interest of Rs. 7,467 lakhs on the aforementioned payments made in respect of such invoked bank guarantees considering the said payments


99


as overdraft facility to the Company. The Company is of the opinion that the payments under the refund bank guarantees are made by the banks without following due process of law. Further, the Company has filed a suit before Hon’ble City Civil Court, Mumbai against such banks which is pending for disposal. Pending the legal proceedings in the above matter, the company has not given effect to the above payments made by the banks to the Customers under the refund bank guarantees. The company continues to reflect advances received from customers under the said Contracts, even in cases wherein the payments have been made by banks under the refund bank guarantees. These amounts are shown by the Company as Current Liability in the consolidated Balance Sheet under the head “Other Current liabilities : (c) Income received in advance”. This statement should be considered as explanation to the qualification made by auditors in their consolidated audit report for the year ending March 31, 2014 for the above matter.

37 Explanatory note on Subsidy Receivable from Government of India under Shipbuilding Subsidy scheme :

The Government of India had announced Shipbuilding Subsidy Scheme for private and public shipyards in India in 2002 for all eligible shipbuilding orders entered into between Nov-2002 till Aug-2007. The Subsidy was provided at the rate of 30% of the contract value subject to fulfilment of various conditions. In case of private shipyards, disbursement of the subsidy amount was provided post delivery of the vessel and subject to fulfilment of other conditions of the scheme. According to the subsidy scheme and based on accounting principles, the company has credited subsidy on vessels under construction in respect of which substantial work has been carried out on the vessel. As on March 31, 2014 total subsidy booked by the company is Rs. 84,178 lakhs against which the company has already received amount of Rs.18,114 lakhs from Government of India and balance Rs. 66,060 lakhs is shown as trade receivables. The Company has been complying with the terms of the said scheme and has already received part of the Subsidy on vessels delivered by the Company. However, as explained in note no. 34 above, the company has not been able to complete and deliver vessels under construction. Due to delay in delivery of existing vessels eligible for subsidy, the company has not received a large portion of the subsidy booked. Further, in respect of vessels delivered, the Government of India has retained a part of the subsidy amount to be released at a future date subject to certain compliances. The company is of the opinion that on completion of the various vessels under construction, the Government of India will release the subsidy amount as well as the retention amounts upon completion of compliances. Further, as detailed in note no. 33 of the statement, the Company is confident of financial restructuring and reviving the operations and completing the vessels under construction in respect of which the aforementioned Subsidy is receivable. Consequently, the Company is of the opinion that it would receive the Subsidy amount reflected in the accounts. This statement should be considered as explanation to the qualification made by auditors in their consolidated audit report for the year ending March 31, 2014 for the above matter.

38 Exceptional Items Capital Work in Progress : Exceptional items represents write off of Capital Work in Progress amounting to Rs. 29,127 lakhs due to impairment of assets. As per the originally approved CDR scheme in June 2012, the company was allowed a further capex of ~ Rs. 19,600 lakhs to be incurred over two financial years out of which lenders had sanctioned priority term loan of ~ Rs.15,500 lakhs. This capex was mainly for capacity augmentation of Greenfield yards (Dabhol and Mangalore) which is critical for completion of existing order book within the projected timelines and to cater to the future order book as well. Further, this capex was also required to improve efficiency and productivity of yards so that the company can achieve optimum utilisation of under construction facilities. However, this capex is not incurred due to various reasons including non-release of funds by the lenders. This has resulted into incomplete construction of various infrastructure facilities exposed to corrosive environment and their unavailability for production of existing order book. After taking into consideration totality of facts, and various other events occurred during the current year, the company had decided to carry out valuation of all manufacturing facilities at various yards. The Independent Valuer has carried out detailed valuation of the facilities at all yards. Based on the valuation report, which is carried out in line with principles of Accounting Standard-28 (Impairment of Assets) book value of the various facilities of the company are higher by Rs. 29,127 lakhs as compared to recoverable amount of the assets as per valuation report. Accordingly, the company has written off an amount of Rs. 29,127 lakhs pertaining to under construction facilities reflected under the head Capital Work in Progress.

100


39 Balances of Trade Receivables, Trade Payables and Loans and Advances are subject to confirmation.

40 In the opinion of the Management, Current Assets and Loans and Advances have the value at which they are stated in the Balance Sheet if realised in the ordinary course of business. The provision for all known liabilities is adequate and not in excess of the amount reasonably necessary. The same is considering the fact that in case of various debts owed to various Banks, there are certain differences of opinion between the Company and the Banks w.r.t certain technical clauses of the restructuring scheme which are in turn giving rise to differences between the amount of debt and interest as charged by the Bank and as calculated/estimated by the Company. The Company is in a continuous process of reconciliation of such amounts and for finalising the accounts, it has recorded the amounts as worked out by the Banks. Further, the State Bank of India has not made the payment of taxes to the tune of Rs. 100 lakhs which were transferred from TRA Account and same has not been confirmed. The State Bank of India has also reversed an amount of Rs. 40 lakhs in Cash Credit Account and accordingly there are no CCD due to State Bank of India.

41 Retirement benefits:

The required disclosure under the Revised Accounting Standard 15 is given below:

Brief description: The type of Defined Benefit plans is as follows.

a) Gratuity:The Employee’s Gratuity Fund Scheme managed by SBI Life Insurance is a Defined Benefit plan. The present value obligation is determined based on actuarial valuation using projected unit credit method.

In case of Tebma Shipyard Limited, the funds available with LIC is more than Actuarial Valuation as on March 31, 2014, which is an asset for the company. This asset is not being recognised as the management feels it is prudent not to do so.

Defined Benefit Plans:





(a) Discount Rate (p.a.) 8% - 9.15% 8%

(b) Rate of Return on Plan Assets (Para 107-109AS-15) 8% 8%

(c) Salary Escalation Rate (Para 83-91 AS-15) 6% - 7% 6%

(d) Mortality IAL Modified Ultimate (2006 - 08)

(e) Attrition rate 2% - 5% 2%





Liability at the beginning of the year 668.92 658.48



Benefits Paid (94.64) (103.91)

Actuarial gain/(loss) on obligations (10.66) (14.73)



101


(iii) Fair value of Plan Assets: (Rs. in lakhs)




Fair Value of Plan Assets at the beginning of the year 479.38 471.85

Expected Return on Plan Assets 42.23 13.81

Employer's Contribution 22.13 50.00

Benefit's Paid (93.20) (75.75)


Fair Value of Plan Assets at the end of the year 447.34 479.38

(iv) Actual Return on Plan Assets: (Rs. in lakhs)




Expected Return on Plan Assets 42.23 -


Actual Return on Plan Assets 39.03 19.47






Fair value of the Plan Assets at the end of the year 437.21 479.38

Amount recognised in the Balance Sheet 246.71 (179.20)







Expected Return on Plan Assets (42.23) (13.81)

Curtailment Cost 107.62 -

Net Actuarial Gain/(loss) to be recognised (115.09) (43.55)

Expenses Recognised in Consolidated Statement of Profit and Loss Account

80.74 71.73

102




(a) Discount Rate (p.a.) 8%-9%

(b) Rate of Return on Plan Assets (Para 107-109AS-15) 8%

(c) Salary Escalation Rate (Para 83-91 AS-15) 6%-7%

(d) Mortality IALM 2006-08 Ultimate

(e) Attrition rate 2%-5%



Liability at the beginning of the year 232.00

Interest Cost 17.34


Benefits Paid (30.38)

Actuarial gain/(loss) on obligations (165.28)


(iii) Fair value of Plan Assets: (Not Applicable as the scheme is not funded)

(Rs. in lakhs)


Fair Value of Plan Assets at the beginning of the year -


Employer's Contribution -

Benefit's Paid -


Fair Value of Plan Assets at the end of the year -

(iv) Actual Return on Plan Assets: (Not Applicable as the scheme is not funded)

(Rs. in lakhs)


Expected Return On Plan Assets -


Actual Return on Plan Assets -


103





Fair value of the Plan Assets at the end of the year -

Amount recognised in the Balance Sheet (90.54)




Interest Cost 17.34


Curtailment Cost -

Net Actuarial Gain/(loss) to be recognised (165.28)

Expenses Recognised in Consolidated Statement of Profit and Loss Account

(111.08)

42 Segment Reporting The Company has disclosed business segment as the primary segment. The Company is collectively organised into following business segments namely: a. Ship Manufacturing b. Windmill Power. Segments have been identified and reported taking into account the nature of the product and services, the organisational structure and internal financial reporting system.Segment Revenue, Results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amount allocated on a reasonable basis. Since the business of Wind Mill Power is not significant, all assets, liabilities and expenses other than specifically related to Wind Mill Power, are allocated to Ship Manufacturing Business. Hence, there are no un-allocable assets, liabilities and expenses.

1. Primary Segments (Rs. in lakhs)

Particulars


ShipManufactur-

ing

Windmill Power

Total ShipManufactur-

ing

Windmill Power

Total

REVENUE

Turnover 46,763.05 1,170.36 47,933.41 86,473.77 1,152.90 87,626.67

Unallocable Income - 2,923.16 - 2,716.57

RESULT

Segment Results Before Excep-tional Items, Interest and Tax

(26,286.81) 445.61 (25,841.21) (7,428.52) 327.20 (7,101.32)

Less : Interest (Finance Cost) 54,384.30 - 54,384.30 48,672.51 - 48,672.51

Less : Exceptional Items 29,127.30 - 29,127.30 (1,680.66) - 1,680.66

Profit / (Loss) before Tax (1,09,798.42) 445.61 (1,09,352.82) (54,420.37) 327.20 (54,093.17)

Less : Tax Expenses (18,255.66) - (18,255.65) - (4,955.01)

Net Profit / Loss after Tax (91,542.76) 445.61 (91,097.16) (54,420.37) 327.20 (49,138.16)

104

(Rs. in lakhs)

Particulars


ShipManufactur-

ing

Windmill Power

Total ShipManufactur-

ing

Windmill Power

Total

OTHER INFORMATION

Segment Assets 8,49,139.78 6,521.73 8,55,661.51 9,16,634.05 5,906.71 9,22,540.76

Segment Liabilities 8,39,263.30 212.00 8,39,475.30 8,19,537.38 75.51 8,19,612.89

Depreciation 6,775.08 436.84 7,211.93 6,686.64 458.18 7,144.82

2. Secondary Segments (Geographical Segments): (Rs. in lakhs)

ParticularsAs at March 31, 2014 As at March 31, 2013

Domestic Overseas Total Domestic Overseas Total

REVENUE

Ship Manufacturing 20,549.14 24,427.41 44,976.54 31,942.83 52,852.07 84,794.90

Windmill Power 1,170.36 - 1,170.36 1,152.90 - 1,152.90

Other Operating Income 1,786.50 1,786.50 1,678.87 1,678.87

Total 23,506.00 24,427.41 47,933.41 34,774.60 52,852.07 87,626.67

Segment Assets 8,55,661.51 - 8,55,661.51 9,22,540.76 - 9,22,540.76

43 Investment in Associates:

The particulars of the investment in the Associates as per equity method of accounting under AS 23 is as under:

Particulars GOL Offshore Limited



Ownership Interest 49.73% 49.73%

Opening Value of Investment 95,330.70 97,090.02

Less: Share of Post Acquisition Loss (3,363.24) (1,296.46)

Less: Dividend Received - (462.86)

Carrying Amount of Investments 91,967.46 95,330.70

44 Related party disclosure: The Company has entered into the following related party transactions. Such parties and transactions have

been identified as per Accounting Standard - 18 “Related Party Disclosure” issued by the Institute of Chartered Accountants of India. Related Parties are identified by the management and relied upon by the auditor.

44.1 List of related parties and relationships, where control exists: a. Subsidiary Companies

Advitiya Urja Private Limited Dhanshree Properties Private Limited Natural Power Venturers Pvt. Ltd Nirupam Energy Projects Pvt. Ltd. Nishita Mercantile Pvt. Ltd. Pinky Shipyard Private Limited Premila Mercantile Pvt. Ltd. Vishudh Urja Pvt. Ltd.


105

b. Subsidiary of Subsidiary Company - Tebma Shipyard Limited c. Joint Venture Bengal Shipyard Limited d. Associated Companies / Concerns - GOL Offshore Limited e. Key Management Personnel (KMP) Name of the Person Mr. P. C. Kapoor Mr. Vijay Kumar Mr. P. K. Balasubramanian Mr. N. Ramanathan Mr. E. O. Mendes Mr. Madan Nevrekar f. Relatives of Key Management Personnel Name of the Person Relative of Mr. P. C. Kapoor Mrs. Madhu Kapoor Wife Mrs. Radhika Mehra Daughter Relative of Mr. Vijay Kumar Mrs. Ashraf G. Kumar Wife Mrs. Sukriti V. Kumar Daughter g. Enterprises influenced by Key Management Personnel and their relatives

Name of the Entity Bharati Infratech Projects Pvt. Ltd. Bharati Marine Construction & Engineering Pvt Ltd Bharati Maritime Services Pvt.Ltd. Bharati Shipping & Dredging Co Private Limited Harsha Infrastructure Pvt Ltd Portside Shipping Pvt Ltd Seasplice Shipping Pvt Ltd Sharven Multitrade P. Ltd. Shipace Shipping Private Limited Swati Silk Mills Pvt. Ltd. Usha Silk Mills Pvt. Ltd. Vayuraj Energy Projects Pvt. Ltd. Vayutatva Energy Projects Pvt. Ltd. Chami Vadhyar Memorial Trust

106

44.2 Summary of Transactions with Related Parties (Rs. in lakhs)

Sr. Particulars

Enterprises Owned and

Controlled by KMP & their

Relatives

Joint Venture

Key Mana-gerial

Personnel

Associates


Personnel

Total

I] Transactions during the year1 LD Charges - - - - - -

- - - 71.93 71.93 2 Preferential Allotment of Equity Shares 1,184.66

676.46 - -

- -

- -

- 1,184.66 676.46


8,188.374,675.67

- - - - 8,188.374,675.67

4 Receipt of Share Application Money 8,165.77 - - - - 8,165.77 4,195.70 - - - - 4,195.70

5 Sales - - - - - - - - - 4,122.19 - 4,122.19

6 Loans and Advances 55.18 - - 477.00 - 532.18 55.06 - - 700.00 - 755.06

7 Receipt of Loans and Advances 17.69 57.00

294.29 - 37.49 -

- 349.4757.00

8 Loans Received 7,029.77 - - - - 7,029.77 8.44 - - 28.52 - 36.96

9 Loans Repaid 7,029.77 - - - - 7,029.77 - - - - - -

10 Repairs Job - - - 628.34 - 628.34 - - - - - -

11 Director's Remuneration - - 177.82 - - 177.82 - - 177.24 - - 177.24

12 Equipment Hire Charges - - - - - - - - - 685.29 - 685.29

13 Reimbursement of Expenses - - - 10.45 - 10.45 - - - - - -

14 Refund of Customer Advance - - - - - - - - - 1,01,590.18 - 1,01,590.18

15 Refund of temporary Customer Advance

- - - - 2,221.69

- - 2,221.69

16 Training Expenses - - - - - - 8.34 8.34

17 Professional Fees - - - - - - 0.36 0.36

18 Interest Received - - - 221.93 - 221.93 128.24 128.24


107

Sr. Particulars

Enterprises Owned and Con-trolled by KMP &

their Relatives

Joint Venture

Key Managerial Personnel

Associates

Relatives of Key

Managerial Personnel

Total

II] Outstanding Balances as on March 31, 20141 Loans and Advance 138.00 3,162.35 - 3412.74 - 6,713.08

100.51 3,456.64 - 740.51 - 4.297.662 Income Received in Advance - - - 19,337.03 - 19,337.03

- - - 19,337.03 - 19,337.03 3 Money received against Share

Warrants 4,194.31 - - - - 4,194.31

5,401.57 - - - - 5,401.57 4 Unsecured Loans 40.15 - - - - 40.15

40.15 - - - - 40.15 5 Trade Receivables - - - 2,866.48 - 2,933.67

- - - - - 241.29 6 Trade Payables - - - - - 444.28

- - - 87.73 - 87.73 7 Investments - 22.50 - - - 22.50

- 22.50 - - - 22.50 Note : Figures in Bold and Italics relates to Previous Year

44 Disclosures of Material Related Party Transactions during the year:

1 LD Charges (Rs. in Lakhs)




2013


Total - 71.93

2 Preferential Allotment of Equity Shares




2013

Bharati Infratech Projects Private Limited 1,184.66 425.08



Total 1,184.66 676.46

108





2013



Bharati Maritime Services Private Limited - 1,510.88

Total 8,188.37 4,675.67

4 Receipt of Share Application Money




2013


Bharati Maritime Services Private Limited 77.00 1,400.00

Bengal Shipyard Limited 294.29 -

Harsha Infrastructure Private Limited - 1,094.70

Total 8,460.06 4,195.70

7 Sales




2013


Total - 4,122.19

8 Loans and Advances



Bharati Infratech Projects Private Limited - 0.11


Bharati Maritime Services Private Limited 37.49 54.89


GOL Offshore Limited 477.00 700.00

Swati Silk Mills Private Limited - 0.01

Usha Silk Mills Private Limited - 0.01

Vayutatva Energy Projects Private Limited - 0.02

Total 532.18 755.06


109

9 Receipt of Loans and Advances




2013

Sharven Multitrade Private Limited - 2.00

Bharati Maritime Services Private Limited 37.49 55.00


Total 55.18 57.00

10 Loans Received




2013


Bharati Marine Construction & Engineering Private Limited - 1.44



Total 7,029.77 36.96

11 Loans Repaid




2013


Total 7,029.77 -

12 Director's Remuneration




2013

P. C. Kapoor - 24.00

P. K. Balasubramanian 90.67 66.99

N. Ramanathan 87.15 62.25

Vijay Kumar - 24.00

Total 177.82 177.24

110

13 Repairs Job




2013

GOL Offshore Limited 628.34 -

Total 628.34 -

14 Equipment Hire Charges




2013


Total - 685.29

15 Reimbursement of Expenses




2013

Gol Offshore Limited 10.45 -

Total 10.45 -

16 Refund of Customer Advance




2013


Total - 101,590.18

17 Refund of temporary Customer Advance




2013


Total - 2,221.69

18 Interest Received




2013

GOL Offshore Limited 221.93 128.24

Total 221.93 128.24


111

45 Earnings per share

“Basic Earnings per share are calculated by dividing the Net Profit for the year attributable to Equity Shareholders by the weighted average number of Equity shares outstanding during the year.

“ For the purpose of calculating Diluted Earnings per share, the weighted average numbers of shares outstanding are adjusted for the effects of all dilutive potential equity shares from the exercise of options on un-issued share capital.

Particular Current Year Previous Year

Net Profit after tax Rs. In Lakhs (87,935.76) (49,191.14)

Weighted Average No. of Ordinary Shares for Basic EPS Nos. 44,554,151 33,036,175

The Face Value per Ordinary Share Rs. 10.00 10.00

EPS (Basic) Rs. (206.06) (148.90)

Weighted Average No. of Ordinary Shares for Diluted EPS (same as Basic EPS as there are no dilutive potential Equity Shares)

Nos. 44,554,151 33,036,175

EPS (Diluted) Rs. (206.06) (148.90)

46 Discontinuing Operation: i. The company has entered into Business Transfer Agreement (BTA) on March 18, 2014 for sale of its Windmill

Power Business situated at Brahmanvel site in Dhule District, Maharashtra on an ‘As is where is basis’ for an aggregating consideration of Rs. 5,517 lakhs.

ii. Windmill Power Business is reported as business segment as per AS 17. iii. Amounts of revenue and expense in respect of the ordinary activities attributable to the discontinuing operation

during the current financial reporting period are Rs. 1,170.36 lakhs and Rs. 724.75 lakhs iv. Carrying amount Rs. 5,028.29 lakhs of total assets to be disposed. v. Amount of Profit attributable to discontinuing operation is Rs. 445.61 lakhs.

47. Details on derivative instruments and unhedged foreign currency exposures: The Company has been export oriented since long and the contracts entered into by the Company with its Customers

are also in foreign currencies. Similarly, a significant costs and expenses of the Company are in foreign currency. Fluctuations in exchange rates may affect company’s earnings and outgo. However, the mix of revenues and expenses both in foreign currencies provide a natural hedge to the Company to the extent the same are proportionate.

48 Disclosure for Operating Leases under Accounting Standard 19 - “Leases”: Details of leasing arrangements The Company has entered into agreements for taking on lease various vessels and office premises under operating

lease arrangements. The leases are non-cancellable and are ranging for a period of 11 months to 5 years and may be renewed for a further period based on mutual agreement of the parties. The lease agreements provide for an increase in the lease payments by 0 to 2 % every year.

ParticularsFor the year


For the year ended

March 31, 2013

Future minimum lease payments

not later than one year 1,719.68 1,688.59

later than one year and not later than five years 2,978.54 4,698.22

later than five years - -

Total 4,698.22 6,386.81

- Lease payments recognised in the Statement of Profit and Loss 1,421.28 1,254.86

112

49 The figures for the previous year have been arranged/rearranged/regrouped wherever considered necessary, to conform to this year’s classification.

For and on behalf of the Board P. C. Kapoor Vijay Kumar [Managing Director] [Managing Director]


113

Bharati Shipyard Limited(CIN: L61100MH1976PLC019092)

Regd. Office: 302, Wakefield House, Sprott Road, Ballard Estate, Mumbai – 400 001Tel: + 91-22-30289200/201| Fax: + 91-22-30289222 | Email: [email protected]

Website: www.bharatishipyard.com

BALLOT FORM (In lieu of E-voting at the AGM)

1. Name and Registered address of the sole/ first named shareholder (in block letters) :

2. Name of the joint holder(s) if any :

3. Registered folio No. / DP ID No.* & Client ID No.* (* Applicable to investors holding shares in dematerialized form)

4. Number of equity share(s) held :

5. I/We hereby exercise my/our vote(s) in respect of the following resolutions to be passed at the 37th Annual General

Meeting of the Company to be held on Tuesday, September 30, 2014 for the business stated in the Notice dated 5th September, 2014 by sending my/our assent or dissent to the said resolutions by placing the tick (4) mark at the appropriate box below.

Sr. No. Brief description of the Resolution No. of Equity

share(s)

I / We assent to the resolu-

tion (FOR)

I / We dissent to the resolu-

tion (AGAINST)

1. Adoption of audited Balance Sheet as at March 31, 2014, the Profit and Loss Account for the year ended on that date and the Report of the Directors and Auditors thereon.

2. Appointment of Mr. P. C. Kapoor, as a Director of the Company who is retiring by rotation.

3. Appointment of M/s. M.V. Damania & Co., Chartered Accountants as Statutory Auditor in place the retiring Auditors, M/s. DPH & Co., Chartered Accountants.

4. Appointment of Mr. V. Chandrasekaran as an Indepen-dent Director of the Company.

5. Appointment of Mr. A.R. Muralidharan as an Indepen-dent Director of the Company.

6. Appointment of Mr. R. Jayaseelan as a Director in charge of all the yards as Occupier of the Company.

Place :Date:

(Signature of the shareholder)

Note: Last date of receipt of Ballot Form by the Scrutinizer: September 23, 2014 before 06.00 p.m. Please read the instructions printed overleaf before exercising your vote.

114

Instructions:

1 A member desiring to exercise vote by physical ballot may complete this ballot form and send it to the Scrutinizer in the attached self-addressed envelope bearing the address of the Scrutinizer. Postage will be borne and paid by the Company. However, envelopes containing ballot form, if sent by courier at the expenses of the registered member will also be accepted.

2 This form should be completed and signed by the member. In case of joint holding, this form should be completed and signed (as per the specimen signature(s) registered with the Company) by the first named member and in his absence, by the next named member. Unsigned ballot form will be rejected.

3 The vote may be accorded by recording the assent in column ‘FOR’ or dissent in column ‘AGAINST’ by placing a tick (4) mark in the appropriate column.

4 Duly completed ballot form(s) should reach the scrutinizer not later than 06.00 p.m. on September 23, 2014. Ballot form(s) received after this date will be strictly treated as if the reply from the member has not been received.

5 In case of shares held by companies, trust, societies etc. the duly completed ballot from should be accompanied by a certified true copy of Board Resolution/ Authority.

6 Members are requested not to send any other paper along with the ballot form in the enclosed postage pre-paid self addressed envelope.

7. Voting rights shall be reckoned on the paid up value of shares registered in the name of the members as on 5th September, 2014.

8. The Scrutinizer’s decision on the validity of the ballot form shall be final.

9. The Company is also offering e-voting facility as an alternate, for all the members to enable them to cast their vote electronically instead of dispatching physical ballot form. The detailed procedure is enumerated in the Notes of the AGM Notice.

If a member has opted for e-voting, then he/she should not vote by physical ballot also and vice-versa. However, in case members cast their vote both via physical ballot and e-voting through electronic mode, vote through e-voting shall prevail and voting done by physical ballot shall be treated as invalid.

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