1. Chairman's Speech

2. Notice

3. Directors' Report

4. Comments of C & AG

5. Report on Corporate Governance

6. Auditors' Report

7. Annual Accounts

6

8

9

21

23

30

33

Cmde K Subramaniam, NM(Retd) - Director (Operations) &Officiating Chairman andManaging Director

Shri V Radhakrishnan - Director (Technical)

Shri Ravikumar Roddam - Director (Finance)

Shri Rajeev Gupta - Joint Secretary (Shipping)

Shri V P Joy, IAS - Secretary, Transport Department,Government of Kerala

Dr Prabhakaran Paleri - Non Official Part-time Director

Shri M A Pathan - Non Official Part-time Director

Shri B Sridhar - Non Official Part-time Director

Shri N Kumar - Non Official Part-time Director

Dr S Narasimha Rao - Non Official Part-time Director

Shri M Damodaran, IAS (Retd) - Non Official Part-time Director

Shri Cherian George - Executive Director (Materials & Quality Control)

Shri P Aboobacker - Executive Director (Ship Repair & Small Ship Division)

Shri Jose Mathew - Chief General Manager (Ship building)

Shri Baby Thomas - General Manager (Design)

Shri Joseph John - General Manager (Planning)

Shri C Ramachandran Pillai - General Manager (Materials)

Shri P Vinaya Kumar - General Manager (Small Ship Division &

Future Projects & Training Institute )

Shri George Thomas Roy - General Manager (Technical)

Shri Joe Joe Peter - General Manager (Ship Repair)

Smt V Kala

Cochin Shipyard LimitedXXXIX/6080, Administrative BuildingPerumanoorKochi – 682 015

State Bank of TravancoreState Bank of IndiaSyndicate BankIDBI BankUnion Bank of India

M/s Menon & AyyarChartered Accountants, Ernakulam.

Cmde Kartik Subramaniam joined CochinShipyard Limited (CSL) as Director (Operations) on 02 August2007. He has been Officiating Chairman & Managing Directorfrom 06 May 2010. A Marine Engineer by training, he served theIndian Navy for three decades before joining Cochin Shipyard.He has served on various ships viz missile vessels, destroyers andtankers. He has also served in various afloat billets at NavalHeadquarters, Command Headquarters and at Naval Dockyardsat Visakhapatnam and Mumbai. He has been trained inshiprepair techniques at St.Petersburg, Russia. He also holds aMasters Degree in Defence Studies and brings with him vastexperience in Defence projects.

Cmde K SubramaniamDirector (Operations) &Officiating Chairman and Managing Director

Shri V Radhakrishnan assumed the charge ofDirector (Technical) of Cochin Shipyard w.e.f 31 December2009. He joined CSL as a Naval Architecture Trainee in 1976. Heoccupied the position of Executive Director (HRD & Technical)before his appointment as Director (Technical) of the Company.A graduate in BSc (Engg) (Mechanical) and B Tech (NavalArchitecture), Shri Radhakrishnan has served Cochin Shipyardfor 34 years. He has headed various crucial departments of thecompany and also handled various core sectors includingShipbuilding, Design, Shiprepair, Technical etc.

Shri V RadhakrishnanDirector (Technical)

Shri Ravikumar Roddam joined Cochin ShipyardLtd. as the Director (Finance) on 03 May 2010. A qualifiedChartered Accountant and Associate Member of the Instituteof Chartered Accountants of India, Shri Roddam has to hiscredit a number of academic awards including a first rank &gold medal in B Com, 9th rank in CA Final etc. With a wide rangeof exposure in the Financial Management in a cross section ofindustries, Shri Roddam has three decades of experience invarious fields like project finance, working capital finance,rehabilitation through BIFR, implementation of IT Softwares,MIS, taxation, debt restructuring etc. He was the Vice Presidentof ISMT, Pune before joining Cochin Shipyard.Shri Ravikumar Roddam

Director(Finance)

Shri Rajeev Gupta is presently Joint Secretary(Shipping), Ministry of Shipping, New Delhi. He was appointedas the Official Part-time Director on the Board of CSL,representing the Government of India on 05 June 2007. He isalso the Chairman of the Corporate Social ResponsibilityCommittee of the Board of CSL. He joined Indian Railways in1980, after an apprenticeship of four years. He is a graduate inboth Mechanical and Electrical Engineering. He serves on theBoard of Shipping Corporation of India Ltd and its JointVenture Companies, as also in the Boards of Inland WaterwaysAuthority of India, Kolkata Port Trust and Indian MaritimeUniversity. He also heads TRANSCHART, the Chartering Wingof the Government. In his present assignment, he also deals withMaritime Legislation and Administration, Treaties andAgreements like IMO & ILO and International MaritimeAgreements. During his career with the Railways, he hadextensive exposure to Information Technology, EnterprisePlanning, Railway Operations, Rolling Stock Maintenance andHuman Resource Management, among other subjects. He hasheld several field and corporate assignments in the IndianRailways for over 27 years.

Shri Rajeev GuptaJoint Secretary (Shipping)Ministry of Shipping, Govt. of India

Shri V P Joy, IAS was appointed as the officialPart- time Director on the Board of Directors, representing theState Government of Kerala, on 30 April 2010. He is presentlythe Secretary to the Transport, Labour & RehabilitationDepartments, Government of Kerala. He is an IAS Officerfrom the Kerala Cadre and holds an Engineering Degree inElectronics & Communication with a first rank in the University.He also holds a M.Phil degree from Indian Institute of PublicAdministration, New Delhi and MBA from Birmingham, UK.He has served in various senior positions with the Governmentof Kerala.

3

Shri B Sridhar is a Non Official Part-time Directorin the Board of Cochin Shipyard Limited since July 2008. He isalso the Chairman of the Contracts Committee of the Board ofCSL. He is the Director of Bengal Tiger Line (India) PrivateLimited. Shri B Sridhar is a very prominent driving force in theIndian Maritime Industry. He was the chairman of the workinggroup on Ports of Confederation of Indian Industry (SouthernRegion) and is an active member of the Confederation of IndianIndustry (CII) Institute of Logistics. His areas of specializationinclude logistics and shipping.

Shri B SridharDirectorBengal Tiger Line (India) Pvt Ltd.

Dr. Prabhakaran Paleri is a Non Official Part-timeDirector in our Board since May 2008. He has served the IndianCoast Guard, Customs Marine Organization and the IndianNavy in various capacities for nearly four decades. Besides a basicdegree in Engineering, he holds a Masters Degree in BusinessAdministration and Interdisciplinary Doctorate in BusinessManagement and strategic studies from the University ofMadras, Master’s degree in National Security Strategy from theNational Defence University, Washington D.C and a fellowshipin Shipping Management. He has various strategic publicationsincluding books to his credit. Presently he is the Head, School ofManagement Studies as Professor and Advisor and ChiefAdvisor to the Technology Business Incubator, at the NationalInstitute of Technology, Calicut.

Dr. Prabhakaran PaleriFormer Director General, Indian Coast Guard

Shri M A Pathan, former Chairman Indian OilCorporation and former Group Resident Director of TataGroup, is a Non Official Part -time Director in CSL Board sinceJuly 2008. He is also the Chairman of the RemunerationCommittee of the Board of CSL. He is presently the NonExecutive Chairman of Tata Petrodyne Limited & IOTEngineering & Projects Ltd and is a Strategic Advisor for IOTInfrastructure & Energy Services Limited. Shri Pathan is ahighly recognized Management expert. He is also associatedwith a number of other Associations/ Companies in variouscapacities of Advisor, Member and Director. Shri Pathan hasbeen an important driving force of the Indian Petroleum Policy.He is presently a Chief Mentor of Tata Teleservices Limited,Non Official Part Time Director in Bharat Heavy ElectricalsLimited (BHEL), Member of Governing Council of PetroleumFederation of India (Petro Fed) & Energy Think Tank. He is alsothe President of an NGO ‘Society for Preservation of HealthyEnvironment & Ecology and the Heritage of Agra’(SPHEEHA).

Shri M A PathanFormer Chairman, Indian Oil Corporation

4

Dr S Narasimha Rao is a Non Official Part-timeDirector in CSL Board, since July 2008. He is a retired professorfrom IIT, Madras and is a Director in Dredging Corporation ofIndia, Advisor, Government of Andhra Pradesh (HGCL) andAdvisor, Karaikal Port. He has served various renownedscientific organizations like Indian Institute of Technology andIndian Institute of Science for over four decades in variouscapacities. His field of interest and research is MarineGeotechnical Engineering, Seabed soil characteristics understatic and dynamic loads, Foundations for coastal and offshorestructures etc. He is widely travelled and has a number ofpublications to his credit in the field of Marine GeotechnicalEngineering and Ocean Mining and Dredging.Dr S Narasimha Rao

Ex-Professor, IIT, Madras

Shri M Damodaran, IAS (Retd)Ex. Chairman, SEBI

Shri N Kumar is a Non Official Part-time Directorsince July 2008. He is also the Chairman of CSL AuditCommittee. Shri N Kumar is the Vice-Chairman of The SanmarGroup, a well-known industrial group in India that has interestsin Chemicals, Engineering and Shipping. He is a Graduate inElectronics and Communication Engineering. He is theHonorary Consul General of Greece in Chennai.

Shri N Kumar is an active spokesperson ofindustry and trade and was the President of Confederation ofIndian Industry (CII), a leading industrial body. He alsoparticipates in various other apex bodies. He is also on the Boardof various public companies. He carries with him vastexperience in the sphere of Technology, Management andFinance.

Shri N KumarVice Chairman, The Sanmar Group

5

Shri Meleveetil Damodaran was appointed as aNon official Part-time Director of the company on 23 June2010. Widely acclaimed for his achievements in innovativerestructuring of the Industrial Development Bank of India,turning around of UTI, and building up SEBI as an effectivecapital market regulator, during his tenure as Chairman of theseorganisations, he has won several awards for Leadership,Governance, and Public Service. Shri Damodaran was alsoelected Chairman of the 80 member Emerging MarketsCommittee of the International Organisation of SecuritiesCommissions (IOSCO).

His areas of expertise include Financial Management,Securities Markets, Corporate Governance, PublicAdministration and Leadership. He is presently an independentconsultant and corporate advisor, coach and mentor.

6

I am happy to welcome you to the thirty-eighth

Annual General Meeting of Cochin Shipyard Limited.

2. We commenced the year in a somewhat solemn

note. The global maritime industry had gone through an

unprecedented downturn since late 2008 with adverse

effects on all sectors of the industry. The shipbuilding sector,

too, passed through very challenging times with plummeting

prices, cancellation of new building orders, difficulties in

arranging finances by owners and resulting fall in

newbuilding enquiries. In the Shiprepair sector also, a

general slowdown was witnessed with a fall in demand.

Cochin Shipyard, to some extent bore the brunt of this

global phenomenon with deliveries getting rescheduled. The

yard has also to grapple with a drop in new enquiries.

However the right product mix and strategic shift to

domestic and defence constructions has helped the yard to

sustain its performance levels.

3. At the end of the year, the yard had 17 commercial

ships on its order book for international clients as also for

the Shipping Corporation of India. The prestigious

Indigenous Aircraft Carrier (IAC) project is also progressing

satisfactorily with launching scheduled by end 2011. CSL

continued to achieve good financial performance in 2009-10

with the net profit growing by almost 40% from Rs.160

Crores in 2008-09 to Rs 223 Crores in 2009-10. In the last

five years , the net profit has grown 12 times from Rs 18

Crores in 2005-06 to Rs 223 Crores in 2009-10. The

networth during the five year period has grown from Rs 285

Crores to Rs.700 Crores. The financial results have enabled

the company to propose a dividend of Re 1 per equity share

on the 11,32,80,000 fully paid equity shares of Rs 10 each

and Rs 70 per 7,91,420 preference shares of Rs 1000 each

for the year 2009-10.

4. CSL’s strategy is to maintain a diversified product

mix consisting of defence and commercial orders in future

too. This would result in the yard having a balanced order

book thus mitigating risks to a large extent. In keeping with

the yard’s policy to be responsive to the market, the shipyard

is now aggressively pursuing defence and Coast Guard

orders. Accordingly, arrangements have been put in place for

sourcing design and specifications for various Naval/ Coast

Guard ships and the company has participated in a number

of tenders floated by the Navy and Coast Guard. We are

hopeful that we would be able to leverage our strength and

secure atleast a few of these in the coming year. In this

regard, I must place on record the invaluable support,

guidance and advice received from the members of the

Board of Directors of the company which helped the yard

to put in place design arrangements in time.

5. During the year, Cochin Shipyard implemented the

Integrated Management System (IMS) consisting of ISO

9001 Quality Management System, ISO 14001

environmental standards, and Occupational Health and

Safety Standard (OHSAS) 18001. In its endeavour to

emerge as a good corporate citizen, the yard has also put in

place a Corporate Social Responsibility policy. Here again

various members of the Board of Directors of the company

7

made immense contribution by way of invaluable advice and

guidance. The shipyard continued to maintain harmonious

industrial relations throughout the year. During the year, the

yard implemented the long-term wage revision for the

workmen. The Marine Engineering Training Institute of

CSL had a stellar performance this year too. The Institute

was rated “ Outstanding” by CARE for the past several years.

6. The company continued to comply with good

corporate governance practices as stipulated by the various

statutes and the guidelines issued by the Department of

Public Enterprises. The total strength of the Board of

Directors as on date is 11 out of which six are Independent

Directors. The yard has constituted an Audit Committee

consisting of three independent directors to review financial

results , internal control measures, audit recommendations

etc. A Remuneration Committee chaired by an independent

director recommends on the pay policy of the company and

amount to be distributed as annual performance related

payment. Besides, the yard also has constituted a Contracts

Committee chaired by an independent director to

recommend on various contract terms, delegation of

powers, purchase procedures etc. A Corporate Social

Responsibility (CSR) Committee has been constituted to

provide fillip to the CSR initiatives of the company. The

shipyard is committed to fulfill its obligations as a good

corporate citizen.

7. It is indeed heartening that despite the prevailing

difficult market situations, CSL has been able to continue its

record breaking performance of the past few years in 2009-

10 also. CSL’s vision is to emerge as an internationally

competitive shipyard and to construct world class merchant

& Naval Ships, Offshore Vessels and Structures and to

become a market leader in shiprepair, including conversions

and upgradations. Towards this end the yard has developed

a perspective plan which includes expansion plans,

proposed projects, future products etc . The ambitious plans

aim to enlarge CSL’s presence on the maritime map of the

world .

8. Finally, I would be failing in my duty if I didn’t

make a special mention of the encouragement and

unflinching support of the Ministry of Shipping,

Government of India, Government of Kerala and our

Board of Directors in all our endeavours. It was their

encouragement and help that has seen the yard achieve the

present levels of growth.

Jai Hind

Cmde K Subramaniam

Notice is hereby given that the Thirty-eighth Annual General Meeting of the Members of Cochin Shipyard Limited willbe held on Thursday, 09 September 2010 at 1000 hrs at the Registered Office of the Company viz. the AdministrativeBuilding, Cochin Shipyard Premises, Perumanoor, Kochi - 682015, to transact the following businesses:

1. To consider and adopt the audited Balance Sheet as at March 2010, the Profit and Loss Account for the yearended on that date and the Reports of the Board of Directors and Auditors thereon.

2. To declare a dividend on equity shares for the Financial Year ended 31 March 2010.

3. To declare a dividend on 7% Non Cumulative Preference Shares

By order of the Board of Directors

Sd/-Place: Kochi V KalaDate: 18 August 2010 Company Secretary

Ordinary Business

Note: A member entitled to attend and vote at the Annual General Meeting (the Meeting) is entitled to appoint aproxy to attend and vote on a poll instead of himself and the proxy need not be a member of the Company. Theinstrument appointing the proxy should, however, be deposited at the Registered Office of the Company notless than forty-eight hours before the commencement of the Meeting.

31

for the Financial Year ended 31 March 2010.

8

Dear Shareholders,

Operating Environment and Business Review

Financial Performance

1. Your Directors are pleased to present the 38 Annual

Report of your company along with the audited accounts

for the year ended March 2010.

2. The global economic meltdown witnessed towards the

end 2008 continued to affect the world shipping and

shipbuilding market through 2009 also. However, the

market sentiments started showing signs of cautious

optimism towards the last quarter of 2009-10.

3. Cochin Shipyard’s strategy to combat the grim market

scenario was to diversify into defence products and to lay

more focus on the domestic market. The strategy paid off

with the yard executing contracts for new building of four

ships with M/s Shipping Corporation of India. Another

contract for constructing Fast Patrol Vessels for Coast

Guard is in an advanced stage of conclusion.

4. Despite global economic crisis, Cochin Shipyard

continued to perform well in the year 2009-10. The gross

income for the year was Rs 1334 Crores as compared to

Rs 1360 rores for the previous year. The Profit Before

Tax for the year improved by 34 % and stood at Rs 331.25

rores as against Rs 247.63 rores in the previous year.

The Net Profit for the year 2009-10 was Rs 223 Crores

reflecting an increase of 39 % as compared to Rs 160

rores for the previous year 2008-09. Inspite of a

marginal drop in turnover , the company could achieve a

quantum jump in PBT and PAT in 2009-10.

th

31

C

C C

C

Dividend

5. Your Directors are pleased to recommend a dividend of

Re 1 per Equity Share on the 11,32,80,000 fully paid

Equity Shares of Rs 10 each and Rs 70 per 7,91,420

Preference Shares of Rs 1000 each for the year 2009-10.

The total outgo for dividend and dividend tax would be

approximately Rs.20 Crores.

SlNo

Particulars 2009-10 2008-09

1 Gross Income 1333.38 1360.05

2 Profit before interest,D nd tax 364.68 276.42

3 Interest 18.19 18.99

4 Depreciation & Write off 15.24 9.80

5 Profit before tax 331.25 247.63

6 Provision for tax (Net) 108.20 87.56

7 Net Profit 223.04 160.07

epreciation a

Financial Highlights(Rs Crores)

‘05

- ‘06

0

40

60

80

100

120

140

160

180

200

220

240

‘06

- ‘07

‘07

- ‘08

‘08

- ‘09

‘09

- ‘10

20 18

58

94

160

223

Profit After Tax (Rs Crs)

‘05

- ‘06

0

‘06

- ‘07

‘07

- ‘08

‘08

- ‘09

‘09

- ‘10

100

285

429

566

680

Increasing Networth (Rs Crs)

200

300

400

500

600

700

800

323

9

Vessels under repair in Repair Dock10

Transfer to General Reserves

Contribution to Exchequer

Shipbuilding

6. An amount equivalent to 2.5 % of the net profits hasbeen transferred to General Reserves of the Company.This reflects the inherent financial strength of thecompany.

7. Continued profitability of the company has resulted inan increase in Net Worth from Rs 566 Crores in the year2008-09 to Rs 680 Crores for the year 2009-10.

8. The total contribution made by the company to thenational exchequer by way of Value Added Tax, IncomeTax, Fringe Benefit Tax, Excise Duty, Customs Duty andService Tax was Rs 148.32 Crores.

2009-10,

9. The company could achieve a total shipbuildingincome of Rs 1012 Crores during the year 2009 -10as against Rs 986 rores during the year 2008-09.During the year the company delivered fiveoffshore support ships to various internationalowners located at Norway, Germany and USA. Theprestigious Indigenous Aircraft Carrier (IAC) projectis also proceeding on schedule with the companycompleting a large portion of hull block fabricationand erection in the building dock during 2009-10.

C

10. Order book position as on 31 March 2010 was asfollows:

Rolls Royce UT 755 LN Platform Supply Vessels 6

Aker AH03-Mk II Anchor Handling Tug Supply Vessels 2

Anchor Handling Tug Supply Vessels (AHO3 Type) 2

Aker PSV 09 CDPlatform Supply Vessel 4

RRM UT 755 CD Type Platform Supply Vessel 2

Indigenous Aircraft Carrier (IAC) 1

Total 17

Vessel Type Nos

Shipbuilding order book position

Shiprepair

11. Major shiprepair projects undertaken by CSL during theyear 2009-10 include normal refit of INS ‘Viraat’,extended short refit to INS ‘Tarangini’, conversionto RV ‘Sindhu Sankalp’, medium refit of INS‘Nireekshak’, repairs to GTV ‘Samudra Sarvekshak’and short refit of INS ‘Jyoti’.

12. The total ship repair turnover during the year wasRs. 236.36 Crores as compared to Rs. 270 Crores for theprevious year.

Facility Upgrade & Capital Expenditure13. The total plan expenditure incurred in 2009-10

amounted to Rs.78.07 Crores. An amount ofRs. 35.06 Crores has been incurred for Renewals andReplacements and Rs. 24.21 Crores for the SmallShip Division Project. Additionally an amount of Rs.18.80 Crores was spent for Indigenous AircraftCarrier infrastructure facilities .

Execution of Protocol Document for delivery ofPlatform Supply Vessels

0

05 - 06 06 - 07 07 - 08 08 - 09 09 - 10

200

400

600

800

1000

1200

Shipbuilding Income (Rs Crs)

‘05 - ‘060

‘06 - ‘07

‘07 - ‘08

‘08 - ‘09

‘09 - ‘10

50

151

252270

236

Shiprepair Income (Rs Crs)

100

150

200

250

300

241

11

222

478

582

9861012

Effective Manpower

14. The total manpower of the Company as on 31 March

2010 was 1907 consisting of 270 officers, 185

supervisors and 1452 workers.

15. The Human Resource complement of CSL as on

31 March 2010 was as follows:

Implementation of Official Language Policy

16. In pursuance of sub rule (4) of rule 10 of the OfficialLanguage (used for the official purpose of theUnion) Rules, 1976, Govt of India have notified CSL,in the Gazette of India as having acquired workingknowledge/ proficiency in Hindi by more than 80 %of ministerial staff of the Company.

17. CSL was awarded with the Rajbhasha Shield andcommendation letter for best performance in Hindiin offices under Department of Shipping for the year2008-09. CMD received the shield and certificatefrom Shri Mukul Roy, Hon’ble Minister of State forShipping at a function held in Transport Bhavan,New Delhi on 08 December 2009.

18. Five employees were awarded with cash prizes underthe incentive scheme for doing original work inHindi.

19. CSL continued the display of the day to day events ofthe Company regarding Shipbuilding and Shiprepair,retirement etc. in Hindi through electronic media.

20. CMD released the first issue of Hindi House journal,‘Sagar Ratna’.

21. As required under the provisions of Section 217(2A)of the Companies Act, 1956 read with theCompanies (Particulars of Employees) Rules, 1975as amended, the names and other particulars of theemployees are set out at to this report.

22. Conservation of energy, technology absorption andforeign exchange earnings/ outgo as required undersection 217(1)(e) of the Companies (Amendment)Act 1988 are furnished at

23. The comments of The Comptroller and AuditorGeneral of India under section 619(4) of theCompanies Act is at

24. Annual action plan on vigilance and anti corruptionmeasures were prepared and implemented. Emphasiswas given to vigilance sensitization programmes andefforts taken for preventive vigilance.

25. The main focus of R&D initiatives of CSL duringthe year was in the area of clean design, especially forOffshore/Platform Supply Vessels which has verygood prospects and would help the companyincrease its market share in future. In the area ofwelding, Cochin Shipyard expects to derive futurebenefits in the form of achieving high qualitywelding in the fabrication of special steel for theAircraft Carrier Project for the Indian Navy. CSLentered into an MOU with Naval Materials ResearchLaboratory, Ambernath for collaborative work inwelding technology.

26. CSL continues to give prime importance to Health& Safety of employees and contractors workmen.Conservation of environment is our motto. CSL hasimplemented Integrated Management System (IMS)for compliance with multiple standards in the fieldof Quality, Occupational Health & Safety andEnvironment. IMS consists of standards ISO9001:2008(Quality Management System), OHSAS18001:2007 (Occupational Health and SafetyManagement System) and ISO 14001:2004 (Environ-mental Management System). Cochin Shipyard is thefirst and only shipyard in the country to haveobtained the IMS certification.

Annexure A

Annexure B.

Annexure C.

Statement of Employees Particulars

Vigilance

Research and Development Activities

Safety

12

Officers

27. Towards improvement of safety management system,CSL has accomplished the following:

(a) 100% usage of Personal Protective Equipment(PPE) by all working at site.

(b) Conducting safety audits based on checklists atfrequent intervals.

(c) Safety plan formulated for the construction ofIndigenous Air Craft Carrier (IAC) project.

(d) New Incident Reporting and Investigation System.

28. Cochin Shipyard is an ISPS code compliant facilityunder the International Ships Port Facility Security(IAPS) code. Based on the requirement of the code,the company has implemented all measures,equipment, systems & devices. Accordingly, modernsystems and equipment like Biometric Access ControlSystem, Wireless Electronic Surveillance System(CCTV), 24 hours waterfront boat patrolling by armedmen etc. are continued to be operative in the Company.Cochin Shipyard has also set up a Security Committeewhich includes representatives from IntelligenceBureau, Kerala Police etc. The Security committeemeets periodically to review the security threats andsteps taken to combat the same. CISF contingent of108 personnel headed by a Deputy Commandant isentrusted with the overall security of the Shipyard.

29. Industrial relations scenario in the Company continuedto be cordial, productive and proactive. Companycontinued its track record of last 26 years of not loosinga single man day on account of labour unrest . TheTripartite Long Term Settlement for revision of wagesand other service conditions of the workmen of thecompany effective from 01 April 2007 to 31 March2017 was signed during the year. Pay revision of officersof the company in line with the DPE guidelines wasalso duly effected during the year.

30. The year went by brought many laurels to the companyin various fields. CSL secured the MKK NairProductivity Award constituted by Kerala StateProductivity Council for the third year consecutively inrecognition of the company’s productivity andefficiency in all round management.

31. In the field of safety, Cochin Shipyard has won the thirdprize for safety in the engineering industry category

Industrial Security

Industrial Relations

Awards and Recognitions

from Factories and Boilers Department, Govt ofKerala. Cochin Shipyard also secured second prize inbest safety film from Factories & Boilers Department,Govt of Kerala.

32. The Company is committed to integrate its businessinterest with that of the interest of its stake holdersviz. Govt of India, Govt of Kerala, its employees andthe community at large. Towards this, and in line withthe guidelines issued by the Govt of India, CochinShipyard has decided to implement various CSRinitiatives. In order to have a more focused approachand implementation of CSR initiatives, Company hasconstituted a Board Level CSR Committee consistingof 3 directors and a below Board Level Committeeconsisting of 4 senior Executives and Director(Technical) as its head. Company has also agreed toincorporate weightage for performance evaluation ofthe company under the head Corporate SocialResponsibility for the year 2010-11. Cochin ShipyardLimited reiterates its commitment and earnestness toreach out to the community through capacity buildingvide socio-economic and environmental developmentprojects.

33. The Board of Directors of Cochin Shipyard consistsof three Whole time Directors, two Official Part-timeDirectors and six Non-Official Part-time Directors.Shri Ajoy Chaudhuri, who was appointed as a Part-time Official Director on 28 September 2007, vacateddirectorship on 30 November 2009 consequent toretirement from Kerala Government Service. Shri NM Paramesh who was appointed as the Director(Finance) on 25 November 2005 relinquished hischarge due to superannuation on 30 April 2010.Cmde M Jitendran who was appointed as theChairman and Managing Director of CSL on 03 May2005 for a period of five years from the date ofassumption of charge on 07 May 2005, relinquishedhis charge on 06 May 2010 on the expiry of the fiveyear contract tenure. On his relinquishment, Cmde KSubramaniam, Director (Operations) has taken overas the Officiating Chairman and Managing Director.Shri V Radhakrishnan was appointed as Director(Technical) w.e.f 31 December 2009. Shri RavikumarRoddam was appointed as the Director (Finance) onw.e.f 03 May 2010. Shri V P Joy, IAS, Secretary,Transport Department, Govt of Kerala wasappointed as the Part-time Official Director on 30April 2010. Shri M Damodaran, Retd. IAS andEx-Chairman, SEBI was appointed as Non officialPart-time director on the Board on 23 June 2010.

Corporate Social Responsibility (CSR) Initiatives

Board of Directors

13

(a) In the preparation of the annual accounts, theapplicable accounting standards have beenfollowed and that no material departures are madefrom them.

(b) We have selected such accounting policies andapplied them consistently and made judgementsand estimates that are reasonable and prudent so asto give true and fair view of the state of affairs ofthe company at the end of the financial year and ofthe profit of the company for the period.

(c) We have taken proper and sufficient care for themaintenance of adequate accounting records inaccordance with the provisions of the CompaniesAct, 1956 for safeguarding the assets of thecompany and for preventing and detecting fraudand other irregularities; and

(d) The annual accounts have been prepared on thegoing concern basis.

35. The company is committed to maintain the higheststandards of Corporate Governance and has put in placean effective Corporate Governance System.

36. The report on Corporate Governance forms part of theAnnual Report.

37. Cochin Shipyard has a proper and adequate system ofinternal controls. This ensures that all assets aresafeguarded and protected against loss fromunauthorized use or disposition and those transactionsare authorized, recorded and reported correctly. Thecompany also has an Audit Committee, comprising ofthree Non Official Part-time Directors, who interactwith the Statutory Auditors, Internal Auditors andAuditees in dealing with matters within its terms ofreference. The Committee mainly deals with theaccounting matters, financial reporting and internalcontrols. During the year under review, the Committeemet four times.

38. During the year there was no recommendation of theAudit Committee which was not accepted by the Board.Hence there is no requirement for the disclosure of thesame in this report.

Corporate Governance

Internal Control Systems

Audit Committee RecommendationsFor and on behalf of the Board

Sd/-Cmde K Subramaniam

Director (Operations ) &Officiating Chairman & Managing Director

14

Directors’ Responsibility Statement

34. Pursuant to Section 217(2AA) of the Companies Act1956, Directors, based on the representations receivedfrom the operating management, confirm that:

Risk Management Process

Redemption of Preference Shares

Auditors

Auditors’ Report

Acknowledgement

39. Cochin Shipyard Limited has adopted a comprehensivesystem of Risk Management. It ensures that all risks aretimely defined and mitigated in accordance with the wellstructured risk management process. The AuditCommittee reviews periodically the risk managementprocess.

40. The company at its Extraordinary General Meeting heldon 17 March 2009 and Class Meeting of 7% NonCumulative Preference Shareholders held on the samedate, had extended the date of redemption of 11,91,4207% Non Cumulative Preference Shares of Rs 1000 eachamounting to Rs 119.1420 Crores so as to redeem thesame from April 2010 onwards in six annual instalmentsor anytime before the IPO of the company, whichever is

earlier. Accordingly, the Board of Directors at the 184Meeting held on 05 June 2009 decided to redeem twoinstalments of Preference Share Capital amounting toRs 40 crores from the free reserves of the company.Accordingly, Rs 40 Crores was paid to Government ofIndia in September 2009 towards redemption ofpreference shares.

41.M/s Menon & Ayyar, Chartered Accountants,Ernakulam were appointed as statutory auditors of thecompany for the year 2009-10.

42. The Comments of Statutory Auditors and company’sreply is placed at

43. The Board of Directors are extremely thankful for thecontinued patronage extended by the Hon’ble Ministerof Shipping and all officers of the Ministry. The Boardwould also like to express their grateful appreciation forthe support and co-operation received from variousoffices of the Government of India, Government ofKerala and local bodies, the Comptroller and AuditorGeneral of India, Statutory Auditors, Vendors, Subcontractors, Company’s Bankers and our valuedcustomers. The Board also places on record itsappreciation for the contribution and support extendedby the employees at all levels.

th

Annexure D.

Kochi18 August 2010

Em

plo

yee

Cm

de

M

Cm

de

KD

irec

tor

Shri

NM

(Rel

inquis

hed

char

ged

ue

tosu

per

annuat

ion

on

30A

pri

l

Des

ign

atio

nQ

ual

ific

atio

nE

xper

ien

ceA

geJo

inin

gD

ate

Rem

un

erat

ion

Nat

ure

of

Nat

ure

of

Pre

vio

us

Nam

e(Y

ears

)R

ecei

ved

(Rs.

)E

mp

loym

ent

Duti

esE

mp

loym

ent

Jite

nd

ran

C&

MD

BE

(Mec

h)

3559

Join

edo

n06

4092

852.

03C

on

trac

tual

Ove

rall

Co

mm

od

ore

-(R

elin

quis

hed

Ho

ns,

DII

TM

ay20

02as

con

tro

l an

dIn

dia

nN

avy

char

gew

.e.f

(Nav

alC

on

str)

,D

irec

tor

man

agem

ent

06M

ay20

10M

SC(N

aval

(Op

erat

ion

s).

of

the

on

com

ple

tio

nC

on

str)

Ass

um

edco

mp

any

of

five

year

char

geo

fco

ntr

act

per

iod

)C

&M

Do

n07

May

2005

Sub

ram

ania

mB

E(M

ech

)33

5502

Aug

2007

2975

850.

22C

on

trac

tual

Ove

rall

Co

mm

od

ore

-(O

per

atio

ns)

MSC

con

tro

l of

the

Ind

ian

Nav

yP

rese

ntl

yO

ffct

gD

efen

ceo

per

atio

nal

C&

MD

Studie

sfu

nct

ion

so

fth

eco

mp

any.

Par

ames

hD

irec

tor

FC

A33

6005

Dec

2005

2863

751.

00C

on

trac

tual

Ove

rall

Ad

dit

ion

alco

ntr

ol o

fth

eG

ener

alfi

nan

cial

Man

ager

,fu

nct

ion

sB

har

ato

fth

eE

lect

ron

ics

2010

)C

om

pan

yL

td.

(Fin

ance

)

An

nex

ure

ASt

atem

ent

ofE

mp

loye

esP

arti

cula

rsas

req

uir

edu

nd

erth

ep

rovi

sion

sof

Sect

ion

217

(2A

)of

the

Com

pan

ies

Act

1956

read

wit

hC

omp

anie

s(P

arti

cula

rsof

Em

plo

yees

)R

ule

s19

75, a

sam

end

ed.

15

1. Conservation of Energya. Steps taken for conservation of

energy during the year 2009-10

Annexure B

Information required under Companies(Disclosure of particulars in the Report of Board of Directors) Rules 1988

For the year ended 31 March 2010

�

�

�

�

�

�

�

�

�

�

�

�

�

�

�

Leakages in the compressed air distribution system and otherindustrial gas lines are regularly monitored and rectified.

Renewal of damaged pipes in phased manner.

Portable Compressors were installed at various load centers toprovide compressed air at desired pressure, thereby eliminatingpressure loss in lines and optimizing the usage of main aircompressors, which are major energy consumers.

Procurement and installation of energy efficient (star rated)water coolers and A/C units as replacement of damaged ones.

Installation of 10 Nos. high mast lighting system using newgeneration luminaries with specialized optics for improvinggeneral yard lighting, especially from heightened level securityscenario. These are provided with dual timer control forswitching of 40% lamps after peak working hours from energyconservation angle coupled with optimizing the usage of streetlighting.

Provided safety relays at the primary side of welding sets forcontrolling the switching ON of the sets thereby eliminatingthe no load losses and ensuring safety of operating personnel.

Rain water harvesting for industrial purposes thereby reducingthe use of metered water and operation of water pumps.

Limiting the long travel operation and also making use ofpallets for handling group materials and thereby optimisingenergy consumption for cranes.

Optimizing use of lights/fans/ A/C units.

Switching off power supply to the areas where there is noemergency requirement during lunch interval.

Power factor is continuously monitored & maintained near tounity pf.

Optimised loading of DGs.

Displayed energy saving stickers. Conducted seminars and quizcompetitions for inculcating awareness among employees forenergy conservation aimed at optimum use of electric power.

Modified the cooling water circulating system of Main AirCompressors.

Replaced old reciprocating water cooled main air compressorwith new centrifugal air compressor.

16

b. Additional investments & proposals, if any, beingimplemented for reduction of consumption ofenergy and consequent impact on the cost ofproduction of goods.

�

�

�

Replacement of 2 Nos. old oil cooled powertransformers with new dry type transformers therebythe no load losses can be reduced and also theefficiency can be improved.

Providing turbine ventilators in local substations andshops in the yard.

Installation of energy meters for individual offices formonitoring and control of usage of electrical energy.

c. Impact of measures at (a) and (b) above for reduction ofconsumption of energy.

Energy consumption has been brought down throughmeasures at (a) above. The measures at (b) are underimplementation.

d. Particulars with respect to conservation ofenergy.

�

�

Innovative methods of energy conservation measuresare being identified and action is on for implementingthe same.

Guidelines issued from GOI from time to time havebeen complied with.

17

Form ADisclosure of particulars in respect of Conservation of Energy

SL No Power & Fuel

1.

(a) Purchase units (KWH) 21275000 23095000

Total Amount(Rs) 92146017* 86808529

Per Unit Rate*

Rs

Cost per unit Rs 4.34 Rs 3.76

(b) Own generation including hired generator sets

(i) Through Diesel Generation

Units (KWH) 879277 1064841

Unit per ltr of diesel 2.34 2.95

Cost per unit 14.97 13.22

(ii) Through steam turbine /generator

Units Nil Nil

Units per ltr of fuel, oil/gas — —

Cost per unit — —

2.

Quantity (tonnes)

Total cost

Average rate

3.

Quantity (K1) Nil Nil

Total Amount Nil Nil

Average rate NA NA

4.

Quantity Nil Nil

5. NA NA

Consumption 2008 09 2009-10

Rs. 2.90 per unit & Rs. 2.90 per unit &

Rs 260 per KVA 260 per KVA

Nil Nil

Nil Nil

NA NA

Electricity

Coal

Furnace Oil

Others/Internal Generation

Consumption per unit of production

* Cost of electricity purchase in 2008-09 had gone up due to the variable tariff rate adopted by Electricity Department for a part of the year.

18

In-house R&D initiatives undertaken in the areas of weldingand design.

A. Research and Development

1. Specific areas in which R&D carried out by thecompany

2. Benefit derived as a result of R&D

Rs. 2 Crores (approx).

In the area of design, Cochin Shipyard is developing cleandesign especially for offshore/ Platform Supply Vessels,which has very bright prospects and would help thecompany increase its market share in future.

In the area of welding, Cochin Shipyard expects to derivebenefits in the form of achieving high quality welding in thefabrication of special steel for the Aircraft Carrier Project ofIndian Navy.

More R&D activities are being undertaken in these areas.CSL entered into an MOU with Naval Materials ResearchLaboratory, Ambernath for collaborative work in weldingtechnology.

B. Technology Absorption, Adaptation and Innovation

(i) The yard has developed complete design of 1500 KWtug, 2400 KW tug and 3300 KW tug in house.

(ii) Developed the hull model for Platform Supply Vessels.

(iii) In house development of complete productionengineering design of above tugs and Platform SupplyVessels in 3D hull and outfit modelling in Tribon.

(iv) In house 3D hull modelling, machinery and outfitmodelling of piping systems, ventilation, airconditioning, cabling and structural items anddevelopment of structural drawing of Aircraft Carrier,based on the inputs from Navy.

(v) Propulsion System Integration for the Aircraft CarrierProject.

(vi) Aviation Facilities Complex for Aircraft Carrier.

(i) Efforts in brief towards technology absorption,adaptation and innovation

(ii) Benefits derived as a result of the above efforts eg.product improvement, cost reduction, productdevelopment, import substitutions etc

(i) Reduction of cost due to least rework as interface of thesystems can be viewed and ascertained in 3D modellingmethod.

(ii) Considerable improvement in time and cost saving forsister vessels being built at Shipyard.

(iii) Yard developed expertise and skill to produceproduction-engineering drawings by extracting relevantdata from Tribon model.

(iv) Avoided import of designs for tugs.

(v) Carried out modelling of the entire hull, facilitating veryshort cycle time for drawing issue.

(vi) Capability achieved in undertaking multiple projectsconcurrently.

3. Future Plan of Action

4. Expenditure on R&D

FORM BDisclosure of Particulars in respect of Absorption

19

(iii) In case imported technology (imported during the lastfive years reckoned from the beginning of the financialyear) following information may be furnished.

a) Technology imported. (i) Tribon M3 shipbuilding software.

(ii) Trailer Suction Hopper dredger design technology.

(iii) 30,000 DWT bulk carrier designs.

(iv) Propulsion System Integration analysis for AircraftCarrier Project.

(v) Aviation Facilities Complex for Aircraft Carrier Project.

b) Year of import 2002-2008

(i) 100% of Tribon M3 software has been fully absorbed.

(ii) 50% Hopper Suction dredger design technology hasbeen absorbed.

(iii) 100% for the bulk carrier project has been absorbed

(iv) 50% for the PSI analysis for Aircraft Carrier Project.

(v) 10% for Aviation Facilities Complex (AFC) for AircraftCarrier Project.

c) Has the technology been fully absorbed

d) If not fully absorbed, areas where this has nottaken place, reasons thereof and future plan ofaction

(i) With respect to c (ii), dredger equipment and systemdesign technology was not envisaged in thecollaboration package.

(ii) The deliverables under PSI studies are being received inphases.

(iii) The deliverables for AFC are being received in phases.

Income from Foreign Exchange

Expenditure in Foreign Exchange

2009-10 2008-09

From Shiprepair Nil 2833.95

From Shipbuilding 66763.51 58337.56

Materials (CIF Value) 30535.36 47452.45

Design and Documentation 50.32 762.96

Service charges and others 6939.34 19448.39

C. Foreign Exchange Earnings and Outgo (Rs. in Lakhs)

FORM BDisclosure of Particulars in respect of Absorption

20

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA UNDERSECTION 619 (4) OF THE COMPANIES ACT, 1956 ON THE ACCOUNTS OF COCHIN SHIPYARD

LIMITED, KOCHI FOR THE YEAR ENDED 31 MARCH 2010

21

Annexure C

The preparation of financial statements of Cochin Shipyard Limited, Kochi for the year ended 31 March 2010 in

accordance with the financial reporting framework prescribed under the Companies Act, 1956 is the responsibility of the

management of the company. The Statutory Auditor appointed by the Comptroller and Auditor General of India under Section

619(2) of the Companies Act, 1956 is responsible for expressing opinion on these financial statements under Section 277 of the

Companies Act, 1956 based on the independent audit in accordance with the auditing and assurance standards prescribed by their

professional body, the Institute of Chartered Accountants of India. This is stated to have been done by them vide their Audit

Report dated July 21, 2010.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under section

619(3)(b) of the Companies Act, 1956 of the financial statements of Cochin Shipyard Limited, Kochi for the year ended 31

March 2010. This supplementary audit has been carried out independently without access to the working papers of the Statutory

Auditor and is limited primarily to inquiries of the statutory auditors and the company personnel and a selective examination of

some of the accounting records. On the basis of my audit, nothing significant has come to my knowledge which would give rise to

any comment upon or supplement to Statutory Auditor’s under section 619(4) of the Companies Act, 1956.

For and on the behalf of theComptroller and Auditor General of India

Sd/-(K. SRINIVASAN)

PRINCIPAL DIRECTOR OF COMMERCIAL AUDIT ANDEX-OFFICIO MEMBER AUDIT BOARD, CHENNAI

Place: ChennaiDate: September 2, 2010

Company’s reply to the Comments of the Statutory Auditors

Para in AuditorsReport

Statutory Auditor's Comments Company's Reply

Accounting of liabilities towards unsettled andincomplete subcontract work, at the end of theyear, on an estimated basis.

Major part of the liability has been provided onthe basis of actuals worked out onsubsequent settlement of the work orders. Thebalance liability has been provided on the basisof technical assessment by the concernedexecuting officer as per the work order.However efforts are being made to accountsuch liability as much as possible on the basis ofactual settlement of the bills against the workorders.

Effect of using estimates for arriving at thetotal contract cost for the purpose ofrecognition of income from ship buildingcontracts under percentage completionmethod, recognition of anticipated loss onshipbuilding contracts and for recognition ofincome from ship repair activities underproportionate completion method andreduction from invoice value for arriving atship repair turnover and the consequentimpact if any, on the profitability and currentassets as on the Balance Sheet date is notascertainable.

Estimates have been prepared on a realisticassessment of the total cost of constructionand proportionate income based on technicalassessment of work progress. This procedure isbeing followed consistently in accordance withAccounting Standard 7 on ConstructionContract and Accounting Standard 9 onRevenue Recognition.

(vi) a

(vi) b

22

Annexure D

Board of Directors

1. The Board of Cochin Shipyard Limited plays apivotal role in ensuring good Corporate Governance.Under Article 21 (a) of the Articles of Association ofthe Company, the Chairman of the Board and theGovernment representatives on the Board ofDirectors shall be appointed by the President of Indiaand the other members of the Board shall beappointed by the President of India in consultationwith the Chairman. The Board comprises of elevendirectors, of which three are wholetime directors, twoare Official Part-time Directors and six are Non-Official Directors. Non-OfficialDirectors bring an external and wider perspective inBoard deliberations and decisions.

Part-time Part-time

Category Name of Directors

Cmde K Subramaniam

Shri V Radhakrishnan

Shri Ravikumar Roddam

Non-Official Part-time

Shri N KumarDr. S Narasimha RaoShri M Damodaran, IAS (Retd.)

(Director - Operations & OfficiatingChairman and Managing

(Director- Technical)

(Director-Finance)

Director)

Joint Secretary (Shipping)

Ministry of Shipping, Govt of India.

Secretary, Transport Department,Government of Kerala

Whole Time Directors

Shri Rajeev Gupta,Official Part-timeDirectors

Shri V P Joy, IAS

Dr. Prabhakaran PaleriDirectors Shri M A Pathan

Shri B Sridhar

Availability of information to the Members of theBoard

2. The Board has complete access to any informationwithin the Company, and to any employee of theCompany. The Board welcomes the presence ofexecutives in the board meetings, who can provideadditional insights into the items being discussed in themeeting. The information required to be placedbefore the Board includes:

(i) General notices of interest of Directors.

(ii) Terms of reference of Board Committees.

(iii) Minutes of meetings of Audit Committee and otherCommittees of the Board, as also resolutions passedby circulation.

(iv) Annual operating plans of businesses, capitalbudgets and any updates.

(v) Quarterly results of the Company.

(vi) Dividend declaration.

(vii) Sale of material nature, of investments & assets,which is not in normal course of business.

(viii) Half yearly details of foreign exchange exposuresand the steps taken by management to limit the risksof adverse exchange rate movement, if material.

(ix) Internal Audit findings and External Audit reports(through the Audit Committee).

(x) Status of business risk exposures, its managementand related action plans.

(xi) Details of any joint venture or collaborationagreement.

(xii) Show cause, demand, prosecution notices andpenalty notices which are materially important.

(xiii) Fatal or serious accidents, dangerous occurrences,any material effluent or pollution problems.

(xiv) All policy matters will be deliberated and introducedfor implementation.

(xv) Any material default in financial obligations to andby the Company, or substantial non payment forgoods sold by the Company.

(xvi) Any issue, which involves possible public orproduct liability claims of substantial nature,including any judgment or order, which may havepassed strictures on the conduct of the Companyor taken an adverse view regarding anotherenterprise that can have negative implications on theCompany.

(xvii)Significant labour problems and their proposedsolutions. Any significant development in HumanResources/Industrial Relations front likeimplementation of Voluntary Retirement Schemeetc

3. The Agenda Notes for each board meeting is drafted inconsultation with the Chairman and are circulated to theDirectors in advance in the defined agenda format. Allmaterial information is incorporated in the agendapapers for facilitating meaningful and focuseddiscussions at the meeting. Where it is not practicable toattach any document to the agenda, the same is tabledbefore the meeting with specific reference to the subjectin the agenda. In special and exceptional circumstances,additional or supplementary item(s) on the agenda arepermitted.

4. The Company Secretary records the minutes of theproceedings of each Board and Committee meeting.Draft minutes are circulated to all the members of theBoard/Committee for their comments. The finalminutes are entered in the Minutes Book within 30 daysfrom conclusion of the meeting.

Board Material distributed in advance

Recording Minutes of proceedings at Board andCommittee meetings

23

Post Meeting Follow-up Mechanism

Compliance

5. The important decisions taken at the Board / BoardCommittee meetings are communicated to thedepartments / divisions concerned promptly. Actiontaken report on the decisions/minutes of the previousmeeting(s) is placed at the immediately succeedingmeeting of the Board / Committee for noting by theBoard / Committee.

6. The Company Secretary while preparing the Agenda,Notes on Agenda, Minutes etc. of the meeting(s), isresponsible for and is required to ensure adherence to allthe applicable laws and regulations including theCompanies Act, 1956 read with the Rules issued

1 05 June 2009 11 11

2 07 August 2009 10 10

3 18 November 2009 10 8

4 13 March 2010 10 8

Sl.No Date Board No. of DirectorsStrength present

Attendance of Directors at Board Meetings, last Annual General Meeting (AGM) and number of other Directorships andChairmanships / Memberships of Committees of each Director in various companies:

Name of the Attendance of No of other OtherDirector Meeting during 2009-10 Directorship(s)* Board Committees

Board Last AGM Chairman Member Chairman MemberMeetings

Cmde M Jitendran(Relinquished charge ofCMD on 06 May 2010) 4 Yes - - - -

Shri N M ParameshRelinquished charge ofD(F) on 30 April 2010 4 - - - -

Cmde K Subramaniam 4 - - - -

Shri V Radhakrishnan 1 - - - -

Shri Ravikumar Roddam(Assumed charge asD(F) on 03 May 2010) Nil Nil - - - -

Shri Rajeev Gupta,JS(Shipping) 3 Yes - 3 - -

Shri Ajoy Chaudhuri(Ceased to be a Directorw.e.f 30 November 2009

retiring fromGovernment service) 1 No - - - -

Shri A K Jain(Resigned from theBoard of Directors w.e.f08 June 2009) 1 No - - - -

Shri V P Joy, Secretary,Transport Dept, Govt.o

Nil Nil 2

Dr. Prabhakaran Paleri 4 No - - - -

Shri M A Pathan 4 2 5 - 2

Shri B Sridhar 3 No - - - -

Shri N Kumar 3 - 6 4 5

Dr. S Narasimha Rao 4 - 2 - -

Shri M Damodaran, IAS,

Retd ( Appointed on23 June 2010) Nil Nil -

Yes

Yes

Yes

on

f Kerala

- - -

No

No

No

8 1 5

(Appointed asPart-timeOfficial

Director on 30 April 2010)

thereunder and the Secretarial Standards recommendedby the Institute of Company Secretaries of India.

7. Four Board Meetings were held during the year 2009-10and the gap between two meetings did not exceed fourmonths. The dates on which the Board Meetings wereheld were as follows:

24

* The Directorships held by Directors as mentioned above,do not include Alternate Directorships and Directorships ofForeign Companies, Section 25 Companies and PrivateLimited Companies which are not Government Companies.

**Memberships/ Chairmanships of only the AuditCommittees and Shareholders’/Investors’ GrievanceCommittees of all Public Limited Companies andGovernment Companies have been considered.

8. Currently, the Board has four committees viz. AuditCommittee, Remuneration Committee, ContractsCommittee and Corporate Social ResponsibilityCommittee.

9. The present Audit Committee was formed on 21August 2008 by a resolution adopted by Circulation and thesame was confirmed in the subsequent Board Meeting heldon 05 September 2008. This committee was subsequentlyr e c o n s t i t u t e d o n r e s i g n a t i o n o f S h r iA K Jain in June 2008. Dr Prabhakaran Paleri was inducted asa member of the committee vide Circular Resolution No.CR/02/09 adopted by circulation on 08 July 2009 and takenon record at the 185 Board Meeting held on 07 August2009.

10. The following are the terms of of the AuditCommittee:

(i) Review of the company’s financial reportingprocess and the disclosure of its financialinformation to ensure that the financial statementis correct, sufficient and credible.

(ii) Recommending to the Board the fixation of auditfees.

(iii) Approval of payment to statutory auditors for anyother services rendered by them.

(iv) Reviewing with the Management, the annualfinancial statements before submission to theBoard for approval.

(v) Reviewing with the Management, the quarterlyfinancial statements before submission to theBoard for approval.

(vi) Reviewing with the Management, performance ofInternal Auditors and adequacy of the internalcontrol systems.

(vii) Appointment and removal of internal auditorsand determining the scope of internal audit inconsultation with the auditors.

(viii)Review of Internal Audit Report.

(ix) Review observations of auditors and providerecommendations based on the same.

(x) To review the follow up action on the audit

th

reference

Board Committees

Terms of Reference: -

Audit Committee

observations of the C&AG audit.

(xi) Review of the following information:

(a) Management discussion and analysis of financialcondition and results of operation.

(b) Statement of significant related party transactions(as defined by the audit committee) submitted byManagement.

(xii) Any other matter that may be referred to thecommittee by the Board from time to time.

11. The committee is entrusted with the followingpowers:

(i) To investigate any activity within its terms ofreference.

(ii) To seek information on and from any employee.

(iii) To obtain outside legal or other professionaladvice, subject to the approval of the Board ofDirectors.

(iv) To secure, attendance of outsiders with relevantexpertise, if it considers necessary.

(v) The recommendations of the Audit Committeeon any matter relating to the financialmanagement, including the Audit Report, shall bebinding on the Board.

(vi) I f t h e B o a r d d o e s n o t a c c e p t t h erecommendations of the Audit Committee, it shallrecord the reasons therefor and communicate suchreasons to the shareholders.

12. The committee consists of only Non Official Part-timeDirectors. The committee currently comprises of threemembers namely Shri N Kumar as Chairman of theCommittee and Dr. Prabhakaran Paleri and Shri BSridhar as members of the committee.

13. The Committee met four times during the year 2009-10on 16 May 2009, 04 June 2009, 07 August 2009 and 18November 2009. The necessary quorum was present atthese meetings.

Powers of the Audit Committee: -

Composition of the Audit Committee:-

Audit Committee meetings held during theyear and attendance:

25

Name of Members Number of Number ofMeetings Held Meetings Attended

Shri N Kumar 4 4

Shri B Sridhar 4 4

Shri A K Jain(Resigned w.e.f08 June 2009) 4 2

Dr. Prabhakaran Paleri(Inducted intothe committee w.e.f08 July 2009) 4 2

14. In addition to the above, the Audit CommitteeMeetings are attended by Director (Finance),representatives of the Statutory Auditors and InternalAuditors of the Company as invitees. The internal auditfunction has been outsourced to a firm of CharteredAccountants. The Company Secretary acts as theSecretary of the committee.

15. The terms of reference of Remuneration Committee isto decide the annual bonus/ variable pool and policyfor its distribution across the executives and Non -Unionized Supervisors of the Company and toformulate a proposal for perks and allowances forofficers and supervisors in line with DPE OM No2(70)/08-DPE(WC) dated 26 November 2008.

16. The Remuneration Committee consists of Shri M APathan, Dr. Prabhakaran Paleri, Non Official Part-timeDirectors and Shri Ravikumar Roddam, Director(Finance). Shri M A Pathan is the Chairman of theCommittee. Shri N M Paramesh, former (DirectorFinance) was a member of the committee till hissuperannuation on 30 April 2010.

17. Three Meetings of Remuneration Committee wereheld during the year 2009-10 on 07 August 2009,11 March 2010 and 13 March 2010. The necessaryquorum was present at these meetings.

Remuneration CommitteeTerms of Reference

Composition of Remuneration Committee

Meeting and Attendance of each Member at theRemuneration committee meetings held during the year:

Sl. Name of Number of Number ofNo Members Meetings held Meetings attended

1 Shri M A Pathan 3 2

2 Dr PrabhakaranPaleri 3 2

3 Shri N M Paramesh 3 3

Remuneration Policy18. Under Article 21(a) of the Articles of Association of the

company, the Directors shall be paid such remunerationas the President of India may from time to timedetermine. The pay and allowances of Board and belowBoard level executives are paid in accordance with theterms of appointment, Department of PublicEnterprises Guidelines on the above subject and otherbenefits and perquisites in accordance with the rules ofCSL.

Sl.No

Name of the Director Amount ( Rs Lakhs)

1 Cmde M Jitendran* 40.93

2 Shri N M Paramesh 28.64

3 Cmde K Subramaniam 29.76

4 Shri V Radhakrishnan(Assumed charge w.e.f31 December 2009)

6.93

Remuneration paid to the Chairman & Managing Directorand the Whole time directors:

Sitting Fees paid to Independent Directors

Sl.No Name Sitting Fees(Rs)

1 Shri A K Jain 15,000

2 Dr Prabhakaran

3 Shri M A Pathan 40,000

4 Shri N Kumar 45,000

5 Shri B Sridhar 45,000

6 Dr S Narasimha

Paleri 50,000

Rao 25,000

Terms of Reference

21. The terms of reference of the Contracts Committee isas follows:

(i) To appraise, study and recommend on the variousMOUs referred to the committee.

(ii) To recommend to the Board proposals involvingrenegotiation of Shipbuilding contracts with shipowners as and when carried out.

Contracts Committee20. The Contracts Committee of the Board was constituted

vide Circular Resolution No. 01/2010 adopted on 09March 2010 consisting of Shri B Sridhar, Shri N Kumar,Dr S Narasimha Rao, Non Official Part-time Directors,Cmde K Subramaniam, Director (Operations), ShriV Radhakrishnan, Director (Technical) and ShriN M Paramesh, Director (Finance) as members. Onsuperannuation of Shri N M Paramesh, Shri RavikumarRoddam, was inducted into the committee.

26

* Government of India appointed Cmde M Jitendran as Chairman andManaging Director on 03 May 2005 for a period of five years from the dateof assumption of charge on 07 May 2005. Subsequently CmdeM Jitendran has relinquished his charge on 06 May 2010 on the conclusionof the contractual period.

19.The Non Official Part-time Directors are paid sitting feeat the rate of Rs.10000/- w.e.f 10 March 2010 forattending each meeting of the Board and/ or Committeethereof. Prior to 10 March 2010 sitting fees was paid toNon Official Part-time directors at the rate of Rs 5,000for attending the board and sub committee meetings.

(iii) To consider and approve proposals forConsultancy Contracts above Rs 5 Crores uptoRs 10 Crores.

(iv) To consider and approve proposals to waiveliquidated damages beyond Rs 5 Crores andupto Rs 20 Crores.

(v) To advise, ratify or approve as the case may beall contracts valued above Rs 10 Crores whichare not specifically covered by purchaseprocedures/ delegation of powers.

(vi) To approve write off of losses above Rs 2Lakhs and upto Rs 25 Lakhs in the case wheresuch losses are not due to theft, fraud ornegligence and to consider and approve writeoff of losses due to theft, fraud or negligenceabove Rs 50,000 and upto Rs 25 Lakhs.

(vii)Approval of any amendments to contractsalready executed by CSL with Ship Owners,Suppliers, Sub Contractors etc where thecontract value is above Rs 10 Crores.

(viii)Approval of amendments, modifications topurchase procedure of CSL.

(ix) Any other matter that may be referred fromtime to time by C&MD, CSL.

Contracts Committee meeting held during the year andits attendance

Shri B Sridhar 1 1

Shri N Kumar 1 1

Dr S Narasimha Rao 1 -

Shri N M Paramesh(Till 30 April 2010) 1 1

Cmde K Subramaniam 1 1

Shri V Radhakrishnan 1 1

Shri Ravikumar Roddam( Inducted on17 July 2010) 1 -

Name of Members Number of Number ofMeetings held Meetings attended

Corporate Social Responsibility Committee22. A sub committee of the Board was constituted vide

Resolution No. 181/9 at the 181 Board Meeting held on 05September 2008 to decide on the matters relating toCorporate Social Responsibility such as adoption ofenvironmentally friendly procedures, contribution to socialcauses, measures for improving the image of the companyetc. The sub committee consists of Shri Rajeev Gupta, JointSecretary(Shipping), Shri M A Pathan, Non OfficialPart-time Director, and Shri Ravikumar Roddam, Director(Finance) as members.

st

2008-09 07 August 2009 1100 Hrs 39/6080, AdministrativeBuilding, Perumanoor,Kochi-682 015

2007-08 05 September 2008 1600 Hrs 39/6080, AdministrativeBuilding, Perumanoor,Kochi-682 015 29(e), 29(h) and 30(b) of Articles

of Association of the company.

2006-07 11 September 2007 1600 Hrs 39/6080, AdministrativeBuilding, Perumanoor,Kochi-682 015 Company.

Nil

-Inserting a new Article 28A-Amendment of Articles 29(b),

Amendment of Article 30(b) ofArticles of Association of the

Year Date Time Venue Special Resolutions passed

Code of Conduct

The Board has prescribed a Code of Conduct (“Code”) for all Board members and senior management of theCompany. All Board members and senior management personnel have confirmed compliance with the Code for the year2009-10. A declaration signed by the Chairman & Managing Director of the Company is given below:

I hereby confirm that the Company has obtained from all the members of the Board and senior managementpersonnel, affirmation that they have complied with the Code of Conduct for Directors and senior management personnel inrespect of the financial year 2009-10.

Sd/-

Cmde K SubramaniamDirector(Operations) &

Officiating Chairman & Managing Director

General Body Meetings

23. The date, time and venue of the last three Annual General Meetings are as follows :

27

24. The CEO/ CFO certification of the financial statements for the year is appended at the end of the report.

25. Cochin Shipyard Limited has adopted a comprehensive system of Risk Management. Each identified risk has been

designated a specified Risk Owner who will be responsible for the following:

(i) To prepare a detailed risk control measure.

(ii) To ensure that the systems and procedures are in place for controlling/avoiding probable risk/threat.

(iii) To report any increase in the threat owing to changes in business/operational environment.

(iv) To report any hurdle/difficulties internal or otherwise in implementing the risk control measures.

26. The above ensures that all the Risks are timely defined and mitigated in accordance with the well-structured risk

management process. The Audit Committee reviews periodically the risk management process.

A.

The details of the transactions with related parties or others are being placed before the Audit Committee from

time to time. During the year under review, the Company has not entered into any transaction of a material nature with

its directors or the management, their relatives, etc., that may have any potential conflict with the interest of the

Company.

B.

The Company has complied with the requirements of all applicable laws relating to company. No penalties or

strictures have been imposed on the Company by any statutory authorities relating to the above.

C.

During the year, no material transaction has been entered into by the Company with the senior management

personnel where they had or were deemed to have any personal interest that may have a potential conflict with the

interest of the Company.

27. Out of the total 11,32,80,000 equity shares issued, 11,32,79,700 shares held by the President of India, 100 shares held

by Cmde K Subramaniam, Director (Operations) and Officiating Chairman and Managing Director of CSL , 100

Shares by Shri Ravikumar Roddam, Director (Finance) and balance 100 shares held by Shri Rajeev Gupta, JS(S)

Ministry of Shipping, Government of India. The company has issued 11,91,420 7% Non Cumulative Preference

Shares of Rs. 1000 each in the name of President of India. Pursuant to the resolutions adopted at the Extraordinary

General Meeting of Shareholder and Class meeting of the 7% Non Cumulative Preference Shareholder held on 17

March 2010, 4,00,000 nos 7% non cumulative preference shares of Rs 1000 each amounting to Rs 40 crores was

redeemed in September 2009. The present preference share capital is Rs 79,14,20,000.

Risk Management Process

Disclosures

Shareholding Pattern

Related Party Transactions

Compliances by the Company

Material transactions with senior managerial personnel

CEO/ CFO Certification

28

To the Board of Directorsof Cochin Shipyard Limited

Dear Sirs,

Sub: CEO/CFO Certificate

1. We have reviewed Financial Statements including Cash Flow statement of Cochin Shipyard Limited for the year ended31 March 2010 and that to the best of our knowledge and belief, we state that:

i) These statements do not contain any materially untrue statement or omit any material fact or contain statements thatmight be misleading;

ii) These statements present a true and fair view of the Company’s affairs and are in compliance with currentAccounting Standards, applicable laws and regulations.

2. There are, to the best of our knowledge and belief, no transactions entered into by the Company during the year which arefraudulent, illegal or violation of the Company’s code of conduct as per the Conduct Discipline and Appeal Rules.

3. We accept responsibility for establishing and maintaining internal control for financial reporting. We have evaluated theeffectiveness of the internal control systems of the Company pertaining to financial reporting and have disclosed to theAuditors and the Audit Committee, deficiencies in the design or operation of such internal controls, if any, of which we areaware and the steps we have taken or proposed to be taken for rectifying these deficiencies.

4. We have indicated to the Auditors and the Audit Committee:

i) Significant changes in internal control, if any, over financial reporting during the year;

ii) Significant changes in accounting policies made during the year and the same have been disclosed in the notes to thefinancial statements; and

iii) Instances of significant fraud of which we have become aware and the involvement therein, if any, of themanagement or an employee having a significant role in the company’s internal control system over financialreporting.

Sd/-

Ravikumar RoddamDirector (Finance)

Kochi, 18 August 2010

Sd/-Cmde K Subramaniam

Director (Operations) &Officiating Chairman & Managing Director

29

The Members ofM/s. Cochin Shipyard LimitedKochi

1. We have audited the attached Balance Sheet of

, as at 31 March, 2010, the Profitand Loss Account and also the cash flow statementfor the year ended on that date, both annexedthereto. These financial statements are theresponsibility of the company’s management. Ourresponsibility is to express an opinion on thesefinancial statements based on our audit.

2. We conducted our audit in accordance with theauditing standards generally accepted in India.Those standards require that we plan and performthe audit to obtain reasonable assurance aboutwhether the financial statements are free of materialmisstatement.

An audit includes examining, on a test basis,evidence supporting the amounts and disclosures inthe financial statements. An audit also includesassessing the accounting principles used andsignificant estimates made by the management, aswell as evaluating the overall financial statementpresentation. We believe that our audit provides areasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report)Order 2003 as amended by the Companies(Auditor’s Report) Order 2004 issued by the CentralGovernment of India in terms of sub section (4A)of Section 227 of the Companies Act, 1956, weenclose in the Annexure a statement on the mattersspecified in paragraphs 4 and 5 of the said order.

4. Further to our comments on the Annexure referredto above and Para 4 above, we report that:

i) We have obtained all the information andexplanations, which to the best of our knowledgeand belief were necessary for the purpose of ouraudit.

ii) In our opinion, proper books of account as requiredby law have been kept by the Company so far asappears from our examination of those books;

iii)The Balance Sheet, Profit and Loss Account andCash Flow Statement dealt with by this report are inagreement with books of account;

iv)In our opinion, the Balance Sheet, Profit and Loss

M/s. COCHIN SHIPYARD LIMITED,KOCHI-682 015 st

Account and Cash Flow Statement dealt within thisreport comply with Accounting Standards referred to insub-section (3C) of Section 211 of the Companies Act,1956;

v) Vide Notification No. GSR 829(E) dated 21 day ofOctober, 2003 of the Ministry of Finance, Governmentof India, it has been notified that Clause (g) of sub-clause (1) of section 274 of the Companies Act, 1956 isnot applicable to a Government Company.

vi)In our opinion and to the best of our information andaccording to the explanations given to us, the saidfinancial statements read together with the AccountingPolicies and Notes on accounts thereon, give theinformation required by the Companies Act, 1956 in themanner so required and subject to:

a) Accounting of liabilities towards unsettled andincomplete subcontract work, at the end of the year,on an estimated basis.

b) Effect of using estimates for arriving at, the totalcontract cost for the purpose of recognition ofincome from ship building contracts underpercentage completion method, recognition ofanticipated loss on ship building contracts and forrecognition of income from ship repair activitiesunder proportionate completion method andreduction from invoice value for arriving at ship repairturnover and the consequent impact, if any, on theprofitability and current assets as on the Balance Sheetdate is not ascertainable.

give a true and fair view in conformity withaccounting principles generally accepted in India.

a) in the case of the Balance Sheet, of the state ofaffairs of the company as on 31 March, 2010;

b) in the case of the Profit and Loss Account, of theprofit of the company for the year ended on that dateand

c) in the case of the Cash Flow Statement, of the cashflows for the year ended on that date.

For MENON & AYYARChartered Accountants

Firm Registration No. 002058S

Sd/-MOHANAN KUTTICKAT

PartnerMembership No. 015842

st

st

Partner

MENON & AYYARCHARTERED ACCOUNTANTS

ERNAKULAM21 July 2010

30

(i) (a) The Company has maintained proper recordsshowing full particulars including quantitativedetails and situation of fixed assets.

(b) All the assets have been physically verified by theManagement during the year and there is a regularprogramme of physical verification, which in ouropinion, is reasonable having regard to the size ofthe company and the nature of its assets. Nomaterial discrepancies between the books recordsand the physical inventory has been noticed onsuch verification.

(c) No substantial part of fixed assets has beendisposed of during the year.

(ii) (a) Physical verification of inventory has beenconducted on a selective basis at reasonableintervals by the management,

(b) The procedures of physical verification ofinventory followed by the management arereasonable and adequate in relation to the size ofthe company and the nature of its business.

(c) The Company is maintaining proper records ofinventory. Discrepancies noticed on such physicalverification between physical stock and the bookrecords have been properly dealt with in the booksof account.

(iii) (a) The Company has not granted any loans, securedor unsecured to Companies, firms or other partiescovered in the register maintained under Section301 of the Companies Act, 1956.

(b) The company has not taken any loans, secured orunsecured from companies, firms or other partiescovered in the register maintained under Section301 of the Companies Act, 1956.

(iv) In our opinion and according to the informationand explanations given to us, there are adequateinternal control procedures commensurate withthe size of the company and the nature of itsbusiness with regard to purchases of inventory,

ANNEXURE TO AUDITORS REPORT

Annexure referred to in paragraph 3 of our report of even date on the accountsof for the year ended 31 March, 2010M/s. Cochin Shipyard Ltd. st

fixed assets and for the sale of goods and services.During the course of our audit, we have notobserved any continuing failure to correct majorweaknesses in internal controls.

(v) According to the information and explanationsgiven to us, there are no contracts or arrangementsreferred to in section 301 of the Companies Act,1956 that need be entered in the register requiredto be maintained under that section. Accordinglycommenting on transaction made in pursuance ofsuch contract or arrangements does not arise.

(vi) According to the information and explanationsgiven to us, the company has not accepteddeposits from the public and hence the directivesissued by Reserve Bank of India and theprovisions of Section 58A, 58AA or any otherrelevant provisions of the Companies Act, 1956and therefore the provisions of sub-clause (vi) arenot applicable to the Company.

(vii) In our opinion the Company has an internal auditsystem which commensurate with its size andnature of business.

(viii) As explained to us, the Central Government hasnot prescribed the maintenance of cost recordsunder Section 209 (1)(d) of the Companies Act,1956 for the products and services of thecompany.

(ix) (a) According to the information and explanationgiven to us and the records of the Companyexamined by us, in our opinion, the company isregular in depositing with appropriate authorities,undisputed statutory dues including ProvidentFund, Employees State Insurance, Income Tax,Sales Tax, Wealth Tax, Service Tax, Customs duty,Excise duty, Cess and other material statutorydues as applicable with the appropriateauthorities. There are no arrears of undisputedstatutory dues outstanding, at the last day of thefinancial year, for a period of more than sixmonths from the date they became payable.

31

(b) According to the information and explanations given to us details of dues of Income Tax, Sales Tax, Wealth Tax,Customs Duty, Excise Duty and Cess which have not been deposited on account of any dispute are detailed below :

SlNo. statute Liability (Rs. In lakhs) the amount relates dispute is pending

1 Income Tax

18.87

362.66 1999-00, 2002-03 Income Tax& 2003-04 Appellate Tribunal

1647.47 2004-05 Commissioner(Central Excise)

Name of Nature of Amount Period to which Forum where the

Income Tax 63.28 2000-01 Case remanded byAct, 1961 ITAT pending

before AssessingOfficer

2004-05 Commissioner ofIncome Tax(Appeals)

2 Kerala Value Penalty 2546.82 2008-09 DeputyAdded Tax Act, Commissioner2005 (Appeals)

3 Finance Act, Service Tax 322.90 2003-04, Customs, Excise1994 2004-05, 2005-06, and Service Tax

2006-07 & 2007-08 Appellate Tribunal

(x) The company has no accumulated losses as on31.03.2010 and it has not incurred cash lossesduring the financial year ended on that date and inthe immediately preceding financial year.

(xi) In our opinion and according to information andexplanation given to us, the company has notdefaulted in the repayment of dues to any financialinstitution, bank or debenture holders as at thebalance sheet date.

(xii) The company has not granted any loans andadvances on the basis of security by way of pledgeof shares, debentures and other securities.

(xiii) The company is not a chit fund or a nidhi, mutualbenefit fund/society, therefore the provisions ofclause 4(xiii) of the Companies (Auditor’s Report)Order, 2003 are not applicable to the company.

(xiv) The company is not dealing in or trading inshares, securities, debentures, and otherinvestments. Accordingly, the provisions of theclause 4(xiv) of the Companies (Auditors Report)Order, 2003 are not applicable to the company.

(xv) According to the information and explanationsgiven to us, the Company has not given anyguarantee for loans taken by others from thebank/financial institution.

For MENON & AYYARChartered Accountants

Firm Registration No. 002058S

Sd/-MOHANAN KUTTICKAT

PartnerMembership No. 015842

(xvi) According to the information and explanationsgiven to us, the Company has not availed any TermLoan during the year other than Short Term Loansraised for working capital requirement.

(xvii) According to the information and explanationsgiven to us, we report that no funds raised onshort-term basis have been used for long-terminvestment.

(xviii) The company has not made any preferentialallotment of shares during the year.

(xix) The company has not issued any debentures duringthe year.

(xx) The company has not raised any money by publicissue during the year.

(xxi) According to the information and explanationsgiven to us, no fraud on or by the company has beennoticed or reported during the year under audit.

ERNAKULAM21 July 2010

32

(a) Share Capital(b) Reserves and Surplus

(a) Secured Loans(b) Unsecured Loans

(i) Gross BlockLess : DepreciationNet Block

(ii) Capital Work In Progress

(a) Inventories(b) Sundry Debtors(c) Cash & Bank Balances(d) Other Current Assets(e) Loans & Advances

I

1. SHARE HOLDER'S FUNDS:

2. LOAN FUNDS:

TOTAL 68296.19 22380.50

II

1. FIXED ASSETS :

2. INVESTMENTS :3. DEFERRED TAX ASSET4. CURRENT ASSETS,LOANS

AND ADVANCES:

213229.01 232627.86

1 19242.20 23242.20

2 49053.99 (10967.29)

3 - 8736.60

3 - 1368.99

4 34968.47 27038.94

15993.47 14874.89

18975.00 12164.05

5 4873.63 4458.1723848.63 16622.22

6 319.26 9.185271.47 7519.47

7 33928.45 42812.83

8 74426.77 47930.82

9 75026.16 90161.81

10 6082.02 5772.25

11 23765.61 45950.15

Schedule As at As at31st March 2010 31st March 2009

SOURCES OF FUNDS

APPLICATION OF FUNDS

(Rs in Lakhs)

…contd..

33

(a) Current Liabilities 12 143507.29 183880.15(b) Provisions 12 30864.89 50518.08

174372.18 234398.23

Net Current Assets 38856.83 (1770.37)

Significant Accounting Policies and Notes on accounts 23

LESS:5. CURRENT LIABILITIES AND PROVISIONS :

TOTAL 68296.19 22380.50

Schedule As at31st March 2010 31st March 2009

As at

(…contd..)

(Rs in Lakhs)

34

Schedule 1 to 23 form part of Accounts

For and on behalf of Board of Directors

Company Secretary Director (Finance) Chairman and Managing Director(Officiating)

Kochi, dated the 21 July 2010

As per our report of even date

Chartered Accountants(Firm Reg. No.002058S)

( Partner)( Membership No 15842)Kochi, dated the 21 July 2010

V KALA RAVIKUMAR RODDAM CMDE K SUBRAMANIAM

Menon & Ayyar

MOHANAN KUTTICKAT

st

st

Works and services 13 124850.06 125621.05Training services 332.54 291.71Other income 14 8155.80 8100.33Accretion/(Decretion) to work-in-progress 15 (689.21) 2321.71

TOTAL 132649.19 136334.80

Materials and components consumed 46727.58 38721.35Stores consumed 965.48 2011.72Subcontract and Other direct expenses 16 15763.31 19394.16Indirect taxes on sales and services 254.78 744.39Salaries, wages, exgratia and other benefits 17 15416.76 14854.93Power, Fuel & Water 18 1614.14 1690.36Other expenditure 19 9986.20 25873.11Interest on loans 1819.21 1898.64Depreciation and other items written off 20 1524.45 979.98Provision for anticipated losses and 21 7148.76 5558.70Expenditure

101220.67 111727.34

Add /(Less)Adjustments relating to prior years 22 1696.35 155.82

31428.52 24607.46

For the year For the yearSchedule ended ended

31st March 2010 31st March 2009

INCOME

EXPENDITURE

PROFIT FOR THE YEAR

PROFIT BEFORE TAX CARRIED 33124.87 24763.28FORWARD

…contd.

(Rs in Lakhs)

35

Current tax (Net of excess provision relating to 8572.80 12182.95

Deferred tax Expenditure/(Income) 2248.00 (3463.00)

Fringe Benefit tax - 36.31

Appropriations

Proposed Dividend on Equity shares 1132.80 1,132.80Proposed Dividend on Preference shares 553.99 833.99Corporate Dividend Tax 286.67 334.26

1973.46 2301.05Transfer to General Reserve 557.60 400.18

Basic and diluted Earnings per share Rs 19.69 Rs 14.13Face value per Equity share Rs 10 Rs 10Significant Accounting Policies and Notes on Accounts 23

Schedules 1 to 23 form part of Accounts

For and on behalf of Board of Directors

Company Secretary Director (Finance) Chairman and(Officiating)

Kochi, dated the 21 July 2010

As per our report of even date

Chartered Accountants(Firm Reg. No.002058S)

( Partner)( Membership No 15842)Kochi, dated the

PROFIT BEFORE TAX BROUGHT FORWARD 33124.87 24763.28

Less: Provision for:

PROFIT AFTER TAX 22304.07 16007.02

Less:

Profit after appropriation 19773.01 13305.79Surplus as per last Balance Sheet 33006.39 19700.60Transfer to Capital Redemption Reserve 4000.00 0.00

Surplus in Profit and Loss account afterappropriation carried to Balance Sheet 48779.40 33006.39

V KALA RAVIKUMAR RODDAM CMDE K SUBRAMANIAM

For Menon & Ayyar

MOHANAN KUTTICKAT

previous years)

Managing Director

21 July 2010

st

st

Schedule ended year ended2009

For the year For the31st March 2010 31st March

(…contd..)

(Rs in Lakhs)

36

AUTHORISED CAPITAL13,00,00,000 Equity Shares of Rs 10 each 13000.00 13000.00

12,00,000 7% Non-cumulative Preference Shares of 12000.00 12000.00Rs 1000/- each.

ISSUED, SUBSCRIBED AND PAID UP

11,32,80,000 Equity Shares of Rs 10 each (Previousyear 11,32,80,000 shares of Rs10 each) fully paid up 11328.00 11328.00(Of the above 54,99,500 Shareshave been issued as fullypaid up without payment being received in cash towardsconsideration of net assets taken over from Govt of India)

791420(Previous year 11,91,420 ) 7% Non-cumulativePreference Shares of Rs 1000 each fully paid up. 7914.20 11914.20(Due for redemption progressively from 30th Sep 2010 )(The above shares have been issued as fully paid-up by conversionof loans from Govt of India as part of capital restructuring which wereoriginally due for redemption on 26th April 05 and were reissuedwith retrospective effect)

General Reserve account 957.78 400.18

Capital Redemption reserveTransferred from Profit & Loss Account 4000.00 0.00

Capital Reserve 263.56 263.56

Hedge reserve:Unrealised gain/(loss) on accountof hedging derivatives (refer note no 6 of schedule 23B) (4946.75) (44637.42)

Surplus - Profit and Loss account 48779.40 33006.39

SECURED LOANSFrom Banks - 8736.60(Short term loan secured by hypothecation of current assets.

UNSECURED LOANSFrom Government of India - 1368.99

1368.99

TOTAL 25000.00 25000.00

TOTAL 19242.20 23242.20

TOTAL 49053.99 (10967.29)

TOTAL - 8,736.60

-

As at As at31st March 2010 31st March 2009

1. SHARE CAPITAL

2. RESERVES AND SURPLUS

3. LOAN FUNDS

(Rs in Lakhs)

37

4.F

IXE

DA

SSE

TS

GR

OSS

BL

OC

KA

TC

OST

DE

PR

EC

IAT

ION

NE

TB

LO

CK

PA

RT

ICU

LA

RS

2703

8.94

8046

.01

116.

4834

968.

4714

874.

8912

21.2

2(1

02.6

4)15

993.

4718

975.

0012

164.

04

Ad

dit

ion

s/D

isp

osa

l/A

sat

adju

stm

ents

adju

stm

ents

As

atA

sat

Fo

rth

eA

dju

stm

ent/

As

atA

sat

As

at1s

tA

pri

lduri

ng

the

duri

ng

the

31st

Mar

ch1s

tA

pri

lye

arw

ith

dra

wal

31st

Mar

ch31

stM

arch

31st

Mar

ch20

09ye

arye

ar20

1020

0920

1020

1020

09

A. T

angi

ble

asse

ts

Lan

d(F

reeh

old

)45

0.38

--

450.

38-

--

-45

0.38

450.

38

Build

ings

&R

oad

5294

.29

4422

.40

-97

16.6

920

25.4

822

6.17

-22

51.6

574

65.0

432

68.8

1

Do

cks

&Q

uay

s56

33.3

8-

-56

33.3

849

92.4

990

.98

-50

83.4

754

9.91

640.

89R

ailw

aysi

din

gs22

.09

--

22.0

920

.99

0.00

-20

.99

1.10

1.10

Pla

nt

&M

ach

iner

y13

069.

1922

56.2

878

.09

1524

7.38

6317

.10

572.

06(7

2.20

)68

16.9

684

30.4

267

52.0

9

Ele

ctri

cal I

nst

alla

tio

n66

3.95

934.

28-

1598

.23

589.

5992

.02

-68

1.61

916.

6274

.37

Dra

inag

e&

wat

ersu

pp

ly10

1.09

32.3

6-

133.

4571

.34

1.35

-72

.69

60.7

629

.75

Ves

sels

158.

85-

-15

8.85

88.2

310

.86

-99

.09

59.7

670

.61

Fix

ture

s&

Fit

tin

gs20

5.31

202.

124.

9440

2.49

122.

0341

.29

(4.7

6)15

8.56

243.

9383

.27

Equip

men

t61

3.33

89.3

79.

8669

2.84

337.

9856

.91

(6.9

8)38

7.91

304.

9327

5.34

Veh

icle

s55

1.61

93.4

323

.59

621.

4519

9.36

54.9

8(1

8.69

)23

5.65

385.

8035

2.25

Bo

oks

13.2

0-

-13

.20

13.2

0-

-13

.20

0.00

0.00

2677

6.67

8030

.24

116.

4834

690.

4314

777.

8011

46.6

2(1

02.6

4)15

821.

7818

868.

6511

998.

87

B. I

nta

ngi

ble

Ass

ets

Soft

war

e26

2.27

15.7

7-

278.

0497

.09

74.6

0-

171.

6910

6.35

165.

17

262.

2715

.77

0.00

278.

0497

.09

74.6

00.

0017

1.69

106.

3516

5.17

To

tal

Pre

vio

us

year

2334

6.91

3780

.48

88.4

527

038.

9414

130.

8781

8.75

(74.

72)

1487

4.89

1216

4.04

9216

.04

No

te:

1.L

and

incl

ud

esth

eva

lue

of

(a)

lan

dal

lott

edo

nle

ase

bas

isto

(i)

Bh

arat

iya

Vid

yaB

hav

an(0

.690

45h

ecta

re)

and

(ii)

M/

sIn

dia

nO

ilC

orp

ora

tio

n(0

.620

hec

tare

)(1

.54

acre

s)fo

rla

yin

gp

ipel

ine

and

(b)

lan

dh

eld

by

Ker

ala

Stat

eE

lect

rici

tyB

oar

d(0

.47

hec

tare

)an

d(c

)la

nd

leas

edto

M/

sC

och

inA

irP

rod

uct

s0.

30h

ecta

res,

Bab

yE

ngg

Pvt

Ltd

0.40

68h

ecta

res

and

BE

SLIn

fra

Pro

ject

s0.

4068

hec

tare

s

2.V

alue

of

lan

din

clud

esva

lue

of

build

ings

acquir

edal

on

gw

ith

the

lan

dfo

rw

hic

hd

epre

ciat

ion

has

no

tb

een

pro

vid

edas

the

valu

eis

no

tse

par

atel

yav

aila

ble

and

mo

sto

fth

ese

build

ings

are

likel

yto

be

dem

olis

hed

for

putt

ing

up

faci

litie

sfo

rth

efa

cto

ry.

3.T

itle

dee

ds

of

par

to

fla

nd

(38

.533

hec

tare

s)h

ave

no

tye

tb

een

rece

ived

fro

mG

ovt

of

Ker

ala/

GC

DA

.

4.D

epre

ciat

ion

fro

md

ate

of

com

mis

sio

nin

g/

com

ple

tio

no

f12

0T

Gro

vecr

ane

(Rs

38.3

8la

khs)

,66

KV

Sub

stat

ion

(48.

81la

khs)

and

Hyg

ien

ece

ntr

e(R

s4.

23la

khs)

cap

ital

ised

duri

ng

curr

ent

year

, has

bee

nch

arge

dto

curr

ent

year

dep

reci

atio

n.

(Rs

inla

khs

)

38

Buildings and Civil Work-in-progress 170.54 2812.85

Plant and Machinery 2000.43 49.38

Construction material in stock 4.79 17.20

Goods pending inspection and in transit 2651.72 1122.24

Advances -unsecured considered good 46.15 456.50

UNQUOTED AT COST (NON TRADE)

Investment in Mutual Fund 300.08 0.00

Investment in Cochin Waste to Energy Pvt. Ltd. 10.00 0.00100,000 equity shares of Rs. 10 each fully paid up.

Investment in Cochin Shipyard Employees'Consumer Co-operative Society - 2180 `B' class 2.18 2.18shares of Rs 100 each fully paid-up.

Investment in Kerala Enviro Infrastructure Limited - 7.00 7.00

70,000 equity shares of Rs 10 each fully paid up.

TOTAL 4873.63 4458.17

TOTAL 319.26 9.18

As at As at31st March 2010 31st March 2009

5. CAPITAL WORK-IN-PROGRESS AT COST

6. INVESTMENTS AT COST

(Rs in Lakhs)

39

7. INVENTORIES (AS TAKEN, VALUED AND CERTIFIED BYTHE MANAGEMENT)

8. SUNDRY DEBTORS - UNSECURED

9. CASH AND BANK BALANCES

Raw materials and bought out components at cost 17376.67:Provision for obsolescence, non-usability anddeterioration in inventory. 265.51 17111.16 15300.89

Stores and spares at cost (excluding maintenance spares) 887.58

:Provision for obsolescence, non-usability anddeterioration in inventory. 20.45 867.13 1464.33

Maintenance spares at cost 40.65:Provision for obsolescence, non-usability anddeterioration in inventory. 26.26 14.39 36.84

Stock of scrap at net realisable value 51.95 78.85

Goods pending inspection and in transit at cost 8187.91 16041.58

Loose tools (at cost/as revalued) 515.29 431.93

Work-in-progress at cost 2886.79 3576.00

Work-in-progress at realisable value 7074.00

Less: Advance and progress payments received 2780.17 4293.83 5882.41

Over six months: 1981.91 238.63

Considered good

Considered doubtful 2394.13 1906.74

Considered good 72444.86 47692.19

76820.90 49837.56

Less:Provision for doubtful debts 2394.13 1906.74

Cash, cheques and stamps in hand 218.73 2.08

Balances with Scheduled banks

(i) In current accounts: 36482.84 55861.98(ii) In deposit accounts: 38324.59 28128.91

Remittances in transit 0.00 6168.84

Less

Less

Less

TOTAL 33928.45 42812.83

TOTAL 74426.77 47930.82

TOTAL 75026.16 90161.81

Others

As at As at31st March 2010 31st March 2009

40

(Rs in Lakhs)

As at As at31st March 2010 31st March 2009

10. OTHER CURRENT ASSETS

11. LOANS AND ADVANCES

Interest accrued on:

(I) Deposits 441.20 2150.74(ii) Advances to employees and others 43.16 32.39

Shipbuilding subsidy receivable 5346.21 3287.67

Others (including claims receivable) 251.45 301.45

Advances recoverable in cash or in kind orfor value to be received:

Secured 8801.74 12145.71

Unsecured:

Considered good: 1389.22 2387.74Considered doubtful: 1.61 2.97

1390.83 2390.71

Less: Provision for doubtful advances 1.61 2.97

1389.22 2387.74

Advance tax 12814.66 22962.73

Balances with Customs, Port Trust, Excise etc 408.60 405.25

Deposit with financial institutions 0.00 7717.59

Other Deposits 351.39 331.13

TOTAL 6082.02 5772.25

TOTAL 23765.61 45950.15

41

(Rs in Lakhs)

(Rs in Lakhs)

12. CURRENT LIABILITIES AND PROVISIONS

A. CURRENT LIABILITIES

TOTAL

B. PROVISIONS

13. INCOME FROM WORKS AND SERVICES

Sundry creditors 13057.94 18873.62

Advance for Indegenous Aircraft carrier infrastructure 21346.37Less: Assets/expenses on infrastructure 12101.08Less: WIP/Advance to contractors for infrastructure 4494.76 4750.53 5563.64

Advance for Indegenous Aircraft carrier - Production 75957.69Add: Advance adjusted by Indian Navy for Materials 58020.31Less: Stock of Material in hand and issued for job 37515.97Less: Advance for purchase of Materials 36910.89Less: Expenditure recoverable from Indian Navy 12037.75 47513.39 59844.37

Advances for shipbuilding 63731.81 48361.89

Advances for ship repairs & others 347.19 2780.69

Other Liabilities 9613.82 2583.56

Forward Contract Account 4492.61 44637.54

Shipbuilding subsidy received in advance 0.00 1234.84

Provision for taxation 10053.64 25078.25

Provision for encashable leave salary 2520.49 1625.99

Provision for employee benefits 553.38 4678.87

Provision for anticipated losses on ship construction 4651.09 5547.06

Provision for taxes and duties (Other than income tax) 597.42 1343.27

Provision for proposed dividend 1686.79 1,966.79

Provision for corporate dividend tax 286.67 334.26

Provision for loss on derivatives 2640.36 6800.00

Other provisions 7875.05 3143.59

Ship Building 89600.52 85988.47

Subsidy on ships/small crafts 11612.37 12624.14

Ship Repairs 23635.72 27006.10

Engineering works 1.45 2.34

143507.29 183880.15

TOTAL 30864.89 50518.08

TOTAL 124850.06 125621.05

As at As at31st March 2010 31st March 2009

42

14. OTHER INCOME

15. ACCRETION/(DECRETION) TO WORK-IN-PROGRESS

16. SUBCONTRACT AND DIRECT EXPENSES

17. SALARIES, WAGES, BONUS/EX-GRATIAAND OTHER BENEFITS TO EMPLOYEES

Income from scrap and stores 609.95 448.97

Income from sale of stores 34.47 118.66

Income from Laboratory services 26.98 30.52

Rent received 94.03 81.25

Hire charges received 30.52 13.03

Dividend Income 299.16 0.70

Interest on deposits 3165.22 6409.34

Interest from others 36.71 43.05

Excess provision written back 2000.75 625.24

Miscellaneous Income 1858.01 329.57

(Other than those which are recognised as income onpercentage/proportionate completion method)

Work-in-progress at cost :

At the end of the year 2886.79 3576.00

Less: At the beginning of the year at cost 3576.00 1254.30

Accretion/(Decretion) to work-in-progress

Sub contract and Off loaded jobs 11771.06 13539.81

Hull Insurance 89.43 25.21

Brokerage and Commission 923.15 1078.96

Other Direct expenses 2979.67 4750.18

Salaries, wages, bonus/exgratia and allowances 11520.21 12103.27

Contribution to Provident Fund and Family Pension Fund ** 798.98 672.17

Contribution to Group Gratuity Trust 2225.04 1448.23

Welfare expenses 872.53 631.26

** Includes PF inspection & administrationcharges Rs 9.64 lakhs (previous year Rs7.99 lakhs)

TOTAL 8155.80 8100.33

(689.21) 2321.70

TOTAL 15763.31 19394.16

TOTAL 15416.76 14854.93

As at As at31st March 2010 31st March 2009

43

(Rs in Lakhs)

As at31st March 2010

As at31st March 2009

18. POWER, FUEL AND WATER

19. OTHER EXPENDITURE

Power 862.61 884.32

Fuel 638.31 714.50

Water 113.22 91.54

Repairs and Maintenance:

Buildings and Roads 410.05 555.82

Plant and Machinery (including maintenancespares Rs 87.09 lakhs - previous year Rs 165.32 lakhs) 337.34 723.51

Others (including spares Rs 8.19 lakhs-previous year Rs 10.44 lakhs) 694.27 560.16

Maintenance dredging 524.01 1219.17

Transport and stores handling 180.30 101.33

Travelling and conveyance expenses 309.00 296.48

Printing and stationery 64.76 45.92

Postage, telephone and telex 49.98 50.78

Advertisement and publicity 59.55 72.47

Lease rent 7.88 17.82

Hire charges 72.31 57.02

Rates and taxes other than tax on income 10.30 8.76

Insurance 109.17 70.82

Security expenses 458.63 351.51

Auditors Remuneration -for audit 2.21 2.21

-for other services 0.28 0.58

Liquidated damages 1526.36 2500.72

Training 142.18 121.74

Legal expenses 31.83 20.18

Bank charges 89.91 136.44

Loss on derivative contracts (net) 6567.39 11575.08

Expenditure on exchange variation (1883.11) 7270.70

Miscellaneous expenses 221.60 113.88

TOTAL 1614.14 1690.36

TOTAL 9986.20 25873.11

44

(Rs in Lakhs)

As at31st March 2010

As at31st March 2009

Depreciation on fixed assets 1221.22 818.76

Loss on revaluation of tools in use estimated at 198.95 147.5630% of book value

Loss on sale and write off of fixed assets 9.92 13.66

Write off of stores and spares 94.36 0.00

For doubtful advances/debts 987.69 1798.26

For liquidated damages and other anticipated 5492.54 661.64loss/expenditure

For non moving and loss in inventory 297.08 12.52

For loss on derivatives 0.00 3086.28

For Employee Benefits 371.45

Leave encashment provision withdrawn 0.00 157.36

Claims for excess duty paid 0.00 11.68

Vendor Adjustment 9.34 0.00

Provision for tax withdrawn 782.32 0.00

Provision for FE fluctuation on forward contract 984.96 0.00reversed

(A) 1776.62 169.04

EXPENSES/DEBITS

Materials & consumables 1.98 0.00

Un recovered BG commission refund 0.00 13.23

Balance input Tax credit on PSVs 68.79 0.00

Vendor Adjustment 9.50 0.00

(B) 80.27 13.23

NET INCOME / (EXPENSES) (A)-(B) 1696.35 155.82

TOTAL 1524.45 979.98

TOTAL 7148.76 5558.70

20. DEPRECIATION AND OTHER LOSSES WRITTEN OFF

21. PROVISION FOR ANTICIPATED LOSSES AND

EXPENDITURE

22. ADJUSTMENTS RELATING TO PRIOR YEARS

INCOME / CREDITS

45

(Rs in Lakhs)

23. A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of preparation of financial statements

2 Use of estimates

3. Fixed Assets

4. Intangible Asset

5. Impairment of Assets

6. Depreciation

7. Revenue Recognition

.

a) :Contracts for the construction of ships and small crafts

Accounts are maintained on accrual basis under thehistorical cost convention and in accordance withAccounting Standards issued by the Institute of CharteredAccountants of India as well as provisions of the CompaniesAct, 1956 and these have been consistently followed.

In the preparation of financial statements, the managementmakes estimates and assumptions in conformity with theGenerally Accepted Accounting Practices in India. Suchestimates and assumptions are made on reasonable andprudent basis taking into account all available information.However actual results could differ from these estimates andassumptions and such differences are recognized in theperiod in which results are ascertained.

Fixed Assets are stated at cost less accumulated depreciation.

Costs incurred on Design Development which are notdirectly chargeable on a product are capitalized as ‘IntangibleAsset’ and amortised on a straight-line basis over a period offive years.

Cost of software which is not an integral part of the relatedhardware acquired for internal use is capitalised as IntangibleAsset and amortised on a straight-line basis over a period ofthree years.

The company assesses the impairment of assets withreference to each cash generating unit, at each Balance Sheetdate. If events or changes in circumstances based on internaland external factors indicate that the carrying value may notbe recoverable in full, the loss on account of impairment,which is the difference between the carrying amount and therecoverable amount, is accounted for accordingly.

Depreciation on fixed assets is provided on straight-linemethod as per the provisions of the Companies Act 1956. Inthe case of assets with a value of Rs 5000 or less, 100%depreciation is provided. Where rate of depreciation is100%, depreciation is provided for the full year in which theasset is ready for use.

The income from ship building, including ship buildingsubsidy, is recognized on percentage completion method, inproportion to the cost incurred for the work performed upto the reporting date bear to the estimated total contract cost,considering the physical progress or financial progress,

whichever is lower. Where current estimates of totalcontract costs and revenue indicate a loss, provision is madefor the entire loss, irrespective of the amount of work done.

Contract income is recognized on the basis of the stage ofcompletion. Income from contract activities rendered foroutsourcing and material procurement are recognized basedon the stage when the activities are performed/materialsreceived.

Income from repair of ships/offshore structures isrecognized based on Proportionate Completion methodwhen proportionate performance of each ship repairactivity exceeds 75%. The proportionate performance ismeasured by technical evaluation of the percentage ofphysical completion of each job. Revenue is recognized inproportion to the cost incurred to the estimated cost ofcompletion after taking into consideration all possiblecontingencies with reference to the realizable value of workdone. In the case of ship repair contracts completed andinvoices settled during the year, income recognised is net ofreductions due to price variation admitted. In the case ofunsettled invoices, the income is recognized net ofestimated amount of reductions. Differences, if any, onsettlement are adjusted against income in the year ofsettlement.

Dividend income is recognized when the company’s right toreceive is established.

(a) Raw materials, components, stores and spares arevalued at weighted average cost method or net realisablevalue whichever is lower. Provision for obsolescence/non-usability / deterioration is determined on the basis oftechnical assessment made by the management. Goods intransit and goods pending inspection are valued at cost.

Work-in-progress of ships/offshore structures underrepair, which have not reached 75% stage of physicalcompletion and general engineering jobs are valued at cost.Work-in-progress of ships where physical construction hasnot started is also valued at cost.

(c) Loose tools in stock are valued at cost and tools in use arerevalued after providing for loss on revaluation estimated at30 % of book value.

(d) Stock of scrap is valued at net realizable value afteradjusting customs duty if any payable on the scrap.

Advance / progress payments received from customers inrespect of repair works are shown as deduction from theamount of work-in-progress in respect of income

b) C .

c) :

d) :

(b) Work-in-progress:

onstruction of Defence Vessel

Contracts for repair of ships/Offshore structures

Others

8. Inventories

9. Advance/progress payments received.

46

recognized under proportionate completion method. In thecase of shipbuilding, the advance payment received isadjusted only when the ship is invoiced.

a) Liability in respect of defined benefit funds (exceptProvident Fund) is provided on the basis of actuarialvaluation as on the date of Balance Sheet. The method ofactuarial valuation adopted is the Projected Unit Creditmethod.

b) Liability for payment of gratuity is determined by actuarialvaluation as per AS15 (Revised) and funded to EmployeesGroup Gratuity Trust as per Rules.

c) Defined contribution to Employees PF & EmployeesPension Scheme 1995 are made on a monthly basis as perrespective statutes.

d) Liability in respect of leave entitlement is made onactuarial valuation basis at the year end and provided for asper AS 15(Revised)

10 Retirement benefits of employees..

11.Provision for Guarantee claims

12. Liquidated damages and interest on advances

13. Borrowing cost.

14. Prior Period adjustments and Extra Ordinary Items

15. Foreign Currency Transactions

Provision towards guarantee claims in respect of ships/smallcrafts delivered is provided/maintained based on technicalestimation.

No income has been recognized on account of (a) intereston advances given and (b) liquidated damages, where thelevies depend on decisions regarding Force Majeurecondition of contract. These are accounted for oncompletion of contracts and/or when final decisions aretaken.

Borrowing costs that are attr ibutable to theacquisition/construction or production of qualifying assetsare capitalized as part of cost of such assets.

Prior period adjustments and extraordinary items havingmaterial impact (over Rupees one Lakh) on the financialaffairs of the Company are disclosed.

a. Foreign Currency Transactions:

Foreign exchange transactions are recorded adopting theexchange rate prevailing on the dates of respectivetransactions. Monetary assets and liabilities denominated inforeign currencies existing as on the balance sheet date aretranslated at the exchange rate prevailing as at the balancesheet date. The exchange difference arising from thesettlement of transactions during the period and effect oftranslations of assets and liabilities at the balance sheet dateare recognized in the Profit and Loss account.

b. Derivative instruments and hedge accounting:

The company uses foreign currency derivative contracts tohedge its risks associated with foreign currency fluctuationsrelating to certain firm commitments and highly probableforecasted transactions. The company designates these ascash flow hedges applying the recognition and measurementprinciples set out in the Accounting Standard 30 – FinancialInstruments: Recognition and Measurement.

The use of foreign currency derivative contracts is governedby the company’s policies approved by the Board ofDirectors which provide written principles on the use ofsuch financial derivatives consistent with the company’s riskmanagement strategy. The company does not use derivativefinancial instruments for speculative purposes.

Foreign currency derivative instruments are initiallymeasured at fair value and are re-measured at subsequentreporting dates. Changes in the fair value of these derivativesthat are designated as effective cash flow hedges arerecognized in Hedging Reserve Account underShareholders’ Funds and the ineffective portion isrecognized in the profit and loss account. Changes in the fairvalue of derivative financial instruments that do not qualifyfor hedge accounting are recognized in the profit and lossaccount as they arise.

Hedge accounting is discontinued when the hedgeinstrument expires or is sold, terminated, or exercised, or nolonger qualifies for hedge accounting. If a hedgedtransaction is no longer expected to occur, the netcumulative gain or loss recognized in reserves is transferredto the Profit and Loss Account.

In determining earnings per share, the Company considersthe net profit after tax and includes the post-tax effect of anyextraordinary items. The number of shares used incomputing the basic earnings per share is the weightedaverage number of shares outstanding during the period.

Current Tax is determined as the amount of tax payable inrespect of taxable income for the period. Deferred Taxliability or assets is recognized at subsequently enacted taxrates, subject to the consideration of prudence, on timingdifference, being the difference between the taxable incomeand accounting income that originate in one period and arecapable of reversal in one or more subsequent periods.

1. Subsidy of Rs 11612.37 lakhs (previous year Rs 12624.14lakhs) on shipbuilding includes subsidy amounting to Rs.8510.60 lakhs (previous year Rs. 7000.07 lakhs) recognizedproportionately against incomplete vessels. Shipbuildingincome of Rs 89600.53 lakhs (previous year Rs 85988.48lakhs) includes revenue relating to small crafts recognized

16.Earnings Per Share

17. Taxes on Income

23. B. NOTES ON ACCOUNTS

47

under percentage completion method amounting toRs.54119.42 lakhs (previous year Rs 33247.08 lakhs) againstincomplete vessels. Ship repair income includes incomerecognised under proportionate completion methodamounting to Rs. 7074 lakhs (previous year Rs 9490 lakhs)

2. Income from ship repair is net of actual/anticipatedreductions amounting to Rs.1321.07 lakhs (previous year Rs2614.15 lakhs).

3. Income from scrap and stores is net of import duty paidon sale of bonded scrap and stores amounting to Rs.42.74lakhs (previous year Rs. 86.53 lakhs).

4. Interest on Deposit includes Rs.9.61 lakhs (previous yearRs. 10.69 lakhs) being interest on fixed deposits (with Bank)of Rs.138.57lakhs (previous year Rs 128.95 lakhs) furnishedas Earnest Money Deposit/Security Deposit.

5.Other deposits include fixed deposit with bank ofRs.138.57 lakhs (including interest) (previous year Rs.128.95lakhs) made in the joint name with Chennai Port Trusttowards performance guarantee.

Notionalamount ofContracts

Forward Contracts 128025.90 (3964.70) 133759.51 (25462.60)

Option Contracts 7724.53 (982.05) 92273.42 (19174.82)

Fair Value Notional Fair ValueGain/ (Loss) amount of Gain/ (Loss)

contracts

Total 135750.43 (4946.75) 226032.93 (44637.42)

Particulars 31 Mar 10 31 Mar 09

(Rs. Lakhs)

6.(i) The company enters into foreign exchange derivativecontracts to offset the foreign currency risks arising fromthe amounts denominated in currencies other than IndianRupee. The counter party to the company’s foreign currencyforward contracts is generally a bank.

The company has designated all the outstanding ForwardExchange Contracts as cash Flow Hedges. The changes infair value of effective Forward Exchange contracts arerecognized directly in a Reserve account designated asHedging Reserve Account and the ineffective portion isrecognized immediately in the Profit and Loss Account.

(ii)The company has the following outstanding derivativecontracts, which have been designated as Cash Flow Hedges,as on 31 Mar 10:

Balance at the beginning of the year (44637.42) -

(Gains)/losses transferred to income statement onrecognition of forecasted hedge transaction 27802.19 -

Changes in the fair value of effective portion ofoutstanding cash flow derivatives 12342.62 (44637.42)

Net derivative gain/(losses) related to adiscounted cash flow hedge - -

(Gains)/losses transferred to profit and lossaccount on recognition of financial asset (454.14)

Balance at the end of the year (4946.75) (44637.42)

Year ended 31 Mar 10 Year ended 31 Mar 09

(iii) The movement in Hedge reserve during the year ended 31 Mar 10 forderivatives designated as cash Flow Hedges is as follows:

(Rs. Lakhs)

48

(iv) In addition to the above cash flow hedges, the companyhas outstanding foreign exchange derivative contracts offirm commitment or highly probable forecast transactionsand contracts without underlying transactions aggregating toRs.73923.65 (Previous year Rs 42415.35 lakhs ), the fair valuedetermination of these contracts as on 31.03.10 results in aloss of Rs 2640.36 lakhs(Previous year Rs 6800.00 lakhs).Although these contracts are effective hedges from aneconomic perspective, they do not qualify for hedgeaccounting as per AS 30 and accordingly these are consideredas ineffective hedges and changes in fair value recorded inthe profit and loss account.

7. Based on the decisions taken by the share holders in theirmeeting held on 17/03/2009, the fully paid equity shares ofRs 1000 each of the company has been sub divided into fullypaid equity shares of Rs 10 each. The physical re issue of subdivided shares is pending for the return of original sharecertificates by the share holders.

8. The interest on customs duty due at the time of debondingmaterial/scrap is accounted in the year of debonding.

9. Maintenance spares included in the inventory representspares of general nature and are not related to a particularasset.

10. Sundry Debtors include debts amounting to Rs.68614.09 lakhs (previous years Rs 36651.57 lakhs) accountedon account of income recognized under proportionatecompletion method pertaining to incomplete vessels againstwhich stage payments received amounting to Rs.55232.08lakhs (previous year Rs 33599.78 lakhs) for completed stagesis shown as advance under current liabilities.

11. An amount of Rs 3625 lakhs has been provided ascontingencies in the accounts, to cover possible losses thecompany may have to suffer, in the eventuality of possiblecancellation of ship building contracts of ship numbers BY77 & BY 78, as the vessels are getting delayed beyond theextended period given by ship owners.

12. Liquidated damages on capital works amounting to Rs213.29 lakhs has not been taken credit pending finalsettlement with contractors.

13. There are no dues to Micro and Small Enterprises as on31.03.2010 which are overdue and required to be disclosed asper MSMED Act 2006. This information has beendetermined to the extent such parties have been identified onthe basis of information available with the company.

14. Capital reserve represents restoration charges receivedfrom M/s Indian Oil Corporation for laying pipelinethrough the company’s land.

15. The dispute between M/s Apeejay Shipping Ltd(formerly Surendra Overseas Ltd) and the company, in thematter of Ship 005 was referred for arbitration by theHon’ble Supreme Court of India. The arbitration award(July 2009) was in favour of the Company under which thecompany is to receive Rs 2803.64 lakhs from M/s ApeejayShipping Ltd. The company has filed a petition before SubCourt, Ernakulam for passing a decree and the matter ispending. No credit has been taken in the books of accounts,pending final decree of the Court.

16. Govt of India, Dept of Public Enterprises, has issued anOffice Memorandum No.2(81)/08-DPE(WC)-GL-XVI/2009 dated 02 Jul 2009, wherein it was directed tocreate a corpus in order to take care of medical and otheremergency needs of retired employees of CPSEs. In linewith the above, the Board of Directors of the company hasapproved a scheme for the medical benefits of its retiredemployees and forwarded the scheme to the AdministrativeMinistry for approval. Subject to the approval of theMinistry, the company has provided an amount of Rs 371.45lakhs in the accounts.

17. Employee benefits as per Accounting standard 15(Revised) ‘Employee Benefits’ for the below mentioneddefined benefits schemes has been provided in the accounts.

Gratuity

Earned leave/sick leave entitlement

In respect of Leave Travel Concession relating to the blockp e r i o d 2 0 1 0 - 2 0 1 3 , t h e u n a v a i l e d p o r t i o namounting to Rs 181.93 lakhs has been provided in fullconsidering the eligibility of the employees in this behalf.

�

�

Actuarial valuation of leave entitlement and gratuity have been done with the following assumptions.

Discount rate 8.00% 8.00% 7.30% 7.30%

Salary escalation rate 3.70% 3.70% 3.20% 3.20%

Expected rate of returnon plan assets

- 9.00% NA 8.43%

2009-10 2008-09

Particulars Leave Entitlement(Unfunded)31/03/2010 31/03/2009 31/03/2009

Gratuity(Funded) Leave Entitlement Gratuity(Unfunded) (Funded)

31/03/2010

(Rs. Lakhs)

49

Change in defined benefitobligation

Present value of obligation 1539.54 5156.19 2177.70 3754.63as at The beginning of the year

Interest cost 104.12 361.60 165.72 287.06

Current service cost 73.93 182.05 124.03 181.68

Benefits paid (226.41) (796.56) (212.34) (332.85)

Past service cost 0.00 0.00 0.00 1382.93

Actuarial (gain)/ loss onobligations 802.89 2185.36 (715.57) (117.26)

Present value of obligation as at 2294.07 7088.64 1539.54 5156.19The end of the year

2009-10 2008-09

Leave Entitlement Gratuity(Funded) Leave Entitlement Gratuity(Unfunded) (Unfunded) (Funded)31/03/2010 31/03/2010 31/03/2009 31/03/2009

(Rs. Lakhs)

Change in the fair value of Leave Gratuity Leave GratuityPlan Assets Entitlement (Funded) Entitlement (Funded)

31/03/2010 31/03/2010 31/03/2009 31/03/2009

Fair value of Plan assets as at NA 3714.30 NA 3361.80The beginning of the year

Expected return on Plan assets NA 354.98 NA 308.65

Actuarial gain/(loss) NA 153.45 NA (16.13)

Contributions: 226.41 1789.79 212.34 392.82

Benefits paid (226.41) (796.56) (212.34) (332.85)

Fair value of Plan assets as atThe end of the year NA 5215.96 NA 3714.29

2009-10 2008-09

(Rs. Lakhs)

Expenses recognized in the Leave Gratuity Leave Gratuitystatement of Profit and Loss a/c Entitlement (Funded) Entitlement (Funded)

31/03/2010 31/03/2010 31/03/2009 31/03/2009

Current service cost 73.93 182.05 124.03 181.68

Interest cost 104.12 361.60 165.72 287.06

Expected return on plan assets - (354.98) - (308.65)

Net actuarial (gain) / Loss 802.90 2031.90 (715.57) (101.13)recognized in the year

Past service cost - - - 1382.93

Expenses recognized in 980.95* 2220.57 (425.82) 1441.89statement of profit and loss

2009-10 2008-09

(Rs. Lakhs)

50

Details

Amount adjusted by Indian Navy for Materials

Other expenditure adjusted by Indian Navy

Total Expenditure adjusted by NAVY (a+b)

Expenditure yet to be adjusted by NAVY

Balance of funds (Cost Plus)

Balance of funds (Phase I) 17380.89 7556.38

v Total Balance (c + d)

2009-10 200 8

Total Advance

Total Expenditure (II + III)

47513.39 59844.37

0-9

139928.00 125890.39

109795.50 73602.40

58020.31 27293.35

23330.89 19128.68

81351.20 46422.03

28444.30 27180.37

30132.50 52287.99

i

(a)

(b)

ii

iiiv

(c)

(d)

(Rs. Lakhs)

(iii) Advance received from Indian Navy after 01.04.2005 towards cost plus activities of IAC project has been deposited in aseparate bank account. As per the contract, the amount held in this account belongs to Navy and the interest thereon accrues tothe Navy. An amount of Rs 3754.68 lakhs has been credited by the bank as interest during the current year. Apart from this anamount of Rs 1325.26 lakhs towards interest on advance drawn by the company before opening the flexi deposit account hasbeen credited to the Navy’s account and the company has charged off this amount as interest in the current year.

(iv) An amount of Rs 69600 lakhs (Previous year Rs 40600 lakhs) has been received as advance against stage I ,II,III and IVpayments under the fixed price part Phase I contract. Against this Rs 52219.11lakhs (including income recognized duringprevious years Rs 33043.62 lakhs) has been adjusted being income recognized under fixed price contract.

(v) During the year Rs 3136.30 lakhs (previous year-Rs. 3836.38 lakhs) has been recognized as income from cost plus activities ofIAC contract. Since as per the contract, the ownership of the materials procured for IAC vest with the Indian Navy,materials/stores consumption shown in the Profit and Loss account and Inventory in the Balance Sheet do not include the costrelating to materials/stores purchased by the Company in its own name on behalf of the Navy, as per the details below:

*This includes Rs 86.44 lakhs recognized during last year which has been adjusted in the Profit & Loss account of the current year.

Gratuity expenses includes Rs 4.47 lakhs (Previous year Rs 6.34 lakhs), being amount paid towards insurance premium (Riskcare).

18.(i) The company had signed Phase I contract with Indian Navy for the construction of Indigenous Aircraft Carrier (P-71).The contract has two parts (a) Cost Plus contract (b) Fixed price contract. All materials are procured under the Cost Plus part ofthe contract. The fixed price part of phase I of the contract amounting to Rs 1160 crs represents the price towards yard effortsfor the construction of the ship upto launching of the vessel. This contract has been treated as a works contract and all accountingincluding income recognition has been treated accordingly. The company had sought clarification u/s 94 of KVAT Act toascertain the incidence of KVAT on the IAC contract and the Office of the Commissioner of Commercial Tax has clarified that itis a ‘sale contract’, which is being contested by the company.

The company has taken up the issue with Indian Navy to get exemption from all tax levies. Pending decisions on the above, thecompany continues to treat this as a ‘Works Contract’ in the books of account. Efforts are being taken by the owners to get taxexemption for the whole project. No liability on taxes has been provided in the accounts as, as per the contract all taxes arereimburseable to the company by the owner at actuals.

(ii) An amount of Rs. 139928.00 lakhs has been accounted as advance towards the cost plus part of the contract. This amountincludes Rs 12901.43 lakhs being interest credited on advances and Rs 216.94 lakhs being sale proceeds of 1146.73 MT steel scrap,net of 5 % handling charges. Out of the fund received for cost plus part of the contract, the company had spent Rs 109795.50lakhs till date. Against this, Rs 81351.20 lakhs has been adjusted by Indian Navy and the balance amount of Rs 28444.30 lakhs ispending for adjustment. Details are as follows:

51

2009-10 2008-09

7963.19 2941.86

29552.78 20485.39

25832.54 15464.06

11683.43 7963.19

Opening stock - Steel 6905.21 2861.90

- Bought out components 1057.98 79.96

- Total

Purchases (till date) - Steel 24732.33 18638.67

- Bought out components 4820.45 1846.72

- Total

Issued (till date) - Steel 22719.71 14595.36

- Bought out components 3112.83 868.70

- Total

Closing stock - Steel 8917.83 6905.21

- Bought out components 2765.60 1057.98

- Total

(Rs lakhs)Materials/Consumables

(vi) An amount of Rs 21346.37 lakhs has been received from Indian Navy towards augmentation of infrastructure facilities forthe construction of Indigenous Air craft carrier (IAC) project .Out of the fund received for infrastructure facilities, the companyhad spent Rs 16595.84 lakhs (previous year 15782.73 lakhs) till date. Of this amount, Rs 13563.04 lakhs (previous year Rs10665.82 lakhs) has been adjusted by Indian Navy and the balance amount of Rs 3032.80 lakhs (previous year Rs 5116.91 lakhs) ispending for adjustment by Indian Navy.

(vii) Details of infrastructure expenditure incurred so far under different heads of Customer Financed Assets owned by Navy areas follows:

a) Cost of infrastructure facilities which have been met out of funds from Navy and adjusted by Indian Navy, till date.

Details

CNC Plasma Cutting Machine 473.09 473.09

WOT Office Accommodation 32.09 32.08

HY Self Elevating 150T Transporter 258.07 258.07

50 T EOT cranes –2 Nos 155.24 155.24

Plate Bending Roller ( Part) 1677.34 1677.34

Computerisation (Part) 473.68 274.78

300 T Portal Gantry Crane ( Part ) 4256.51 4240.82

Modernisation of Design Dept I 3.33 3.33

66 K V Sub station consultancy(FEDO) 507.07 8.30

Flux/ Electrode drying oven 9.69 9.69

Extn of 3 T Gantry crane track to IAC Bay 4.03 4.03

40 T/65 M LLTT Crane (Pt) 2921.09 1345.91

60 T/55 M LLTT Crane (Pt) 2791.81 2183.14

Total

2009-10 2008-09

13563.04 10665.82

(Rs lakhs)

52

b) Cost of infrastructure facilities met out of funds from Navy pending adjustment by Indian Navy.

(Rs.lakhs)

Details

Buildings and civil structures 1394.14 1197.68

Data Processing equipment 145.33 344.23

Plant and Machinery 1465.61 2243.08

Capital work-in-progress 27.72 1331.92

Total

Since the ownership vests with Navy, the above assets are not included under Fixed assets.

2009-10 2008-09

3032.80 5116.91

a) Maintenance and upkeep charges due at the rate of 5% of the infrastructure equipment cost, amounting to Rs 962 lakhs upto31 Mar 2010, as recommended by the Contracts Negotiation Committee of Indian Navy, has not been taken credit for,pending approval by appropriate authorities.

19. The Income Tax assessments of the company are completed upto the AY 2006-07. However, the Income Tax assessment forthe Assessment Year 1999-2000 was reopened for disallowing claim of set off of carry forward depreciation allowance againstincome from other sources which was confirmed by CIT(A). The appeal filed by the company against the order of CIT(A)before the ITAT is pending. The ITAT has on similar issues of earlier years disposed off the appeals in favour of the company.As such no effect has been made in the accounts.

20. (i)The sales tax assessments under KGST Act for the assessment years 2000-01 to 2004-05 are pending with the CommercialTax Department. Regarding assessments under KVAT Act, the assessment will be deemed to be complete if no notices arereceived by the assessee within 30 days of filing of Returns. The company has been filing its KVAT returns as per Rules and so farhas not received any notice rejecting the returns filed.

(ii) The Intelligence Officer, Commercial Taxes department has issued notice on CSL demanding Rs 2546.82 lakhs towardspenalty for non payment of KVAT of Rs 1273.41 lakhs due on the export of five Platform Supply Vessels (viz BY 061-064)delivered to foreign buyers in 2008-09 on the pretext that the export effected by CSL is not an export sale as invisaged in the CSTAct, but a local sale exigible to KVAT @ 4.04%.Since the order of the Intelligence officer was illegal, arbitrary and not justifiable,company has filed appeal before DC(A) against the order of the Intelligence Officer. Simultaneously Company has filed a writpetition before the Hon’ble High Court of Kerala for stay on collection of tax. Hon’ble High Court has granted absolute stayagainst the order of the Intelligence Officer for collection of the demand till disposal of appeal by DC (A).Pending decision in theappeal filed by the company, the penalty demand of Rs 2546.82 lakhs has been shown as contingent liability.

21. Disclosure as required by Accounting Standard 7– Accounting for construction contracts – for contracts in progress as at theend of the year.

2009-10 2008-09

(a) Contract revenue recognized in the period 62630.02 47761.56

(b) Contract cost incurred and recognized profits(less recognized losses) upto the reporting period 79001.74 54722.33

(c ) Advance received from customers/Govt 61088.07 44142.66

(d) Gross amount due to customers 19173.02 7303.98

(e) Gross amount due from customers 37086.70 17883.65

(Rs Lakhs)

(f) Method of revenue recognition – Percentage completion method

(g) Method used to determine the stage of completion- Stage of completion is measured in the proportion of expenses incurredtill the end of the year to the estimated total cost of completion of the project or percentage of physical completion whichever isless.

53

22. Related party disclosure (AS-18)

Cmde M Jitendran Chairman and Managing Director Remuneration 40.93

Shri N.M. Paramesh Director (Finance) Remuneration 28.64

Shri V Radhakrishnan Director (Technical) Remuneration 6.93

Name of the transacting related Relationship between the parties Name of transaction Volume of transactionParty Rs in lakhs)

Cmde Subramaniam K Director (Operations) Remuneration 29.76

(

23. Accounting for taxes on Income AS.22 – The break-up of Deferred Tax Assets and Liabilities as on 31.03.2010 as against31.03.2009 is detailed below, which results in decrease in Net Deferred Tax Asset. Consequent to this the amount debited toProfit & Loss account is Rs 2248.00 lakhs.

Deferred tax(Asset)/liabilityas at 1.04.2009 2009-10 as at 31.03.2010

:Depreciation 438.23

Provision for liabilities

Provision for obsolete inventory

VRS compensation not amortised

Provision for loss

Provision for doubtful debts

Provision for taxes and duties

Provision for expenditure

Provision for contingencies

(1809.77)

Current year Deferred taxCharge/(credit) (asset)/Liability

2958.27 (706.24)

235.42 (131.71)

0.61 (0.61)

1616.42 (71.44)

656.40 138.87

435.14 (308.48)

3076.64 (1966.46)

197.08 1236.30

Deferred tax liability1656.51 2094.74

Deferred tax asset :

TOTAL 9175.98 7366.21

Deferred tax (Net) (7519.47) (2248.00) 7366.21

Total deferred tax Asset (7519.47) (2248.00) (5271.47)

2252.03

103.7

0.00

1544.98

795.27

126.66

1110.18

1433.38

The company expects sufficient future profits for absorbing the Deferred Tax Asset as at the end of the year.

54

EXTERNAL SALES 101212.90 23635.72 5324.57 130173.19

INTEREST 3165.22 3165.22

ACCRETION/(DECRETION)TO WIP 825.63 (1514.84) (689.21)

TOTAL REVENUE 102038.53 22120.88 8489.79 132649.20

SEGMENT RESULT 32589.92 2937.96 (2403.00) 33124.87

TAX (NET) 10820.80

22304.07

SEGMENT ASSETS 124822.43 13263.32 104582.62 242668.37

SEGMENT LIABILITIES 131487.13 3925.54 107255.70 242668.37

CAPITAL EXPENDITURE 6948.13 151.47 946.41 8046.01

DEPRECIATION 742.77 213.52 264.93 1221.22

NON-CASH EXPENDITUREOTHER THAN DEPRECIATION

SHIPBUILDING SHIP REPAIR UNALLOCATED TOTAL

SEGMENT REVENUE

NET PROFIT

OTHER INFORMATION

25.Earnings per Equity Share has been computed as under:

Net Profit after tax (Rs Lakhs) 22304.07 16007.02

No of Equity Shares (Nos) 113280000 113280000

EPS (in Rs.) 19.69 14.13

2009-10 2008-09

26 Stage payments due on contracts butnot received during the year.

27 Advances include:

(a) Due by directors:Maximum amount due at any timeduring the year

28 (a) Estimated amount of contractsremaining to be executed oncapital account and not provided for: 95.46 1359.33

2009-10 2008-09

- -

- -

29. In the case of contracts/sub-contracts, wherever final bills are not submitted by the contractors for the work done as at theclose of the year, liability is estimated and provided for based on the work done.

30. Balances of sundry debtors, loans and advances, deposits, claims and sundry creditors are subject to confirmation.

31. Figures in brackets denotes minus figures.

32. Previous year’s figures have been regrouped and reclassified wherever necessary to confirm with current year’ s presentations.

24. Segment Reporting: The Company is engaged in two major activities, viz, Shipbuilding and Repair of ships / offshorestructures. Segment wise analysis has been made on the above basis and amounts allocated on a reasonable basis.

55

23. C. INFORMATION PURSUANT TO THE PROVISIONS OF PARAGRAPH 3 & 4 OF PART II OFSCHEDULE VI TO THE COMPANIES ACT, 1956.

1. Details of capacity and production 2009-10 2008-09

a) Licensed capacity

B) Installed capacity(as certified by the Management)

c) Actual production:

Vessels under construction (Inc IAC)

Vessels delivered

Shipbuilding (DWT)

No of ships repaired

IAC Project – (Fabrication Tonnes)

15 14

5 4

121035 122097

45 46

4037 6190

Two ships of 75000 DWT of shipbuilding and one millionGRT of ship repair per annum on reaching full production.

175000 DWT of shipbuilding and one million GRT of shiprepair per annum as per industrial licence No CIL 108(88) dt27 May 1988 granted by the Department of IndustrialDevelopment.

th

2. Value of raw materials consumed *

2009-10 2008-09

46727.58 38721.34

Unit Qty Value Qty Value )

Steel

Pipe

Paint

Bought out components

*See note no 18(v) of schedule 24B

(Rs lakhs) (Rs lakhs

m.t 9456.89 5078.11 10202.89 4224.73

mtr 76450.69 653.92 52666.36 525.60

ltrs 260343.09 745.68 187839.68 503.32

40249.87 33467.69

56

3. Value of imports on CIF basis

2009-10 2008-09

30535.36 47452.45

(Rs lakhs)

Raw materials 25177.50 41915.13

Spares, components and consumables 3509.00 4139.65

Capital goods 1848.86 1397.67

4. Value of imported/indigenous raw materials, spares and bought out componentsconsumed and percentage thereof:

2009-10 2008-09

6477.71 100.00 5253.65 100.00

40249.87 100.00 33467.69 100.00

95.27 100.00 175.77 100.00

Value Value% %

5489.00 84.74 4687.99 89.23Indigenous 988.71 15.26 565.66 10.77

36734.86 91.27 29741.12 88.87

3515.01 8.73 3726.57

6.90 7.24 94.05 53.51

88.37 92.76 81.72

(Rs lakhs) (Rs lakhs)

Raw Materials

Imported

Bought out components

Imported

Indigenous 11.13

Spares

Imported

Indigenous 46.49

2009-10 2008-09Rs lakhs

Salaries and Allowances

Employers contribution to Provident fund

Employers contribution to Gratuity

Value of perquisites 4.54 12.60

95.84 59.37

4.20 3.56

1.68 0.87

5. Managerial remuneration to Chairman and Managing Director and Directors

57

6. Expenditure in foreign currency (on payment basis) other than those in item 3 above.

2009-10 2008-09Rs lakhs

Payments to foreign consultants

Commissioning and installation charges

Brokerage & commission

Advance payments to suppliers

Design & documentation charges

Others 37.64 628.86

704.80 812.43

143.39 57.34

798.07 894.99

5255.44 17054.77

50.32 762.96

7. Earnings in foreign exchange (on due basis)

2009-10 2008-09Rs lakhs

Income from shipbuilding 66763.51 58337.56

Income from ship repair NIL 2833.95

58

Des

crip

tio

nC

arry

ing

Addit

ion

alA

mo

un

tsU

nuse

dA

mo

un

tat

Bri

efD

escr

ipti

on

Indic

atio

ns

of

Am

oun

tam

oun

tat

the

pro

visi

on

suse

dduri

ng

amo

un

tth

een

do

fo

fth

en

ature

un

cert

ain

ties

exp

ecte

db

egin

nin

go

fm

ade

duri

ng

the

year

reve

rsed

the

year

and

ob

ligat

ion

abo

ut

the

reim

burs

-T

he

year

the

year

outf

low

emen

t,if

any.

AC

ON

TIN

GE

NT

LIA

BIL

ITY

Au

thor

ity

(Rs

inL

akhs

)

1M

/s

Ap

eeja

ySh

ipp

ing

Ltd

2G

reat

erC

och

inD

evel

opm

ent

3L

ette

rsof

cred

it

4R

&D

Ces

s

5C

ust

oms

du

ties

,D

emu

rrag

es&

Sale

sT

ax

6P

enal

tyle

vied

by

KV

AT

auth

orit

ies

onex

por

tof

ship

s

2402

.00

0.00

0.00

2402

.00

0.00

No

teN

o15

1009

1.26

5612

.74

2317

.91

0.00

1338

6.09

Rep

rese

nts

LC

by

the

com

pan

yin

vari

ous

ban

ksfo

rp

rocu

rem

ent

of

mat

eria

ls/as

sets

534.

0134

.92

0.00

0.00

568.

93T

his

rep

rese

nts

R&

Dce

ssun

der

R&

Dce

ssA

cto

f19

89.

Ap

plic

abili

tyo

fth

ece

ssis

dis

pute

d.

49.4

014

765.

000.

000.

0014

814.

40R

epre

sen

tscu

sto

ms

duty

for

mat

eria

lsun

der

bo

nd

and

on

inci

ner

ato

rin

stal

led

atSR

.Als

oin

cludes

Rs

11.2

4la

csb

ein

gsa

les

tax

on

cran

esu

pp

lied

by

M/s

Tat

aman

n

exp

ort

edduri

ng

2008

-09

353.

8846

.12

0.00

-40

0.00

Addit

ion

alcl

aim

Th

em

atte

ris

rais

edby

GC

DA

un

der

for

the

lan

dac

quir

edn

ego

tiat

ion

.fo

rth

eco

mp

any

isdis

pute

d.

No

liab

ility

op

ened

No

liab

ility

exp

ecte

d

0.00

2546

.82

0.00

0.00

2546

.82

Pen

alty

imp

ose

dby

the

CSL

file

dap

pea

ldep

to

fco

mm

erci

alta

xes

bef

ore

DC

(A)

on

the

Turn

ove

ro

fsh

ips

and

ob

tain

edSt

ayfo

rco

llect

ion

un

der

the

pre

text

that

the

of

the

dem

and

ship

sex

po

rted

by

CSL

tofr

om

the

Ho

n'b

lefo

reig

now

ner

sis

no

tan

Hig

hC

ourt

, till

exp

ort

sale

and

are

hen

cedis

po

salo

fth

esu

bje

ctto

tax

un

der

CST

app

ealb

yD

C(A

).A

ctT

he

app

eal i

sp

endin

g.

23.D

.ST

AT

US

OF

MA

JOR

CO

NT

ING

EN

TL

IAB

ILIT

IES

AN

DP

RO

VIS

ION

SA

SO

N31

-03-

2010

AS

RE

QU

IRE

DU

ND

ER

AS

29-

AC

CO

UN

TIN

GF

OR

PR

OV

ISIO

NS,

CO

NT

ING

EN

TL

IAB

ILIT

IES

AN

DC

ON

TIN

GE

NT

ASS

ET

S

59

7In

com

eT

ax

8Se

rvic

eT

ax

BP

RO

VIS

ION

S

1Sa

les

Tax

Lia

bili

ty

2P

rovi

sion

for

Dou

btf

ulD

ebts

3P

rovi

sion

for

Tax

es&

Du

ties

4P

rovi

sion

for

Gu

aran

tee

Rep

airs

5P

rovi

sion

for

liqu

idat

ed

0.00

444.

810.

000.

0044

4.81

Rel

atin

gto

Ass

tY

ears

1999

-00,

200-

01,2

002-

03,

2003

-04

&20

04-0

5d

ue

tova

rio

us

dis

allo

wan

ces

by

the

Ass

essi

ng

Off

icer

.

0.00

1647

.47

0.00

0.00

1647

.47

Show

Cau

sen

oti

ceo

nSe

rvic

eT

axo

nIA

C(P

71)

(Des

ign

con

sult

ancy

)R

eply

toSh

ow

cause

No

tice

file

d.

0.00

322.

900.

000.

0032

2.90

Serv

ice

tax

on

bro

kera

ge&

com

mis

sio

n.

CE

STA

Tp

end

ing

260.

0521

6.12

0.00

152.

9932

3.18

Th

eam

oun

to

uts

tan

din

gat

the

end

of

the

year

rep

rese

nts

pro

visi

on

mad

eas

follo

ws:

AY

1996

-97

49.0

3Sh

ip00

9(A

Y99

-00)

58.0

3A

Y20

09-1

021

6.12

To

tal

323.

18

1906

.73

987.

6959

.75

440.

5523

94.1

2R

epre

sen

tsp

rovi

sio

nfo

rb

adan

dd

oub

tful d

ebts

mad

eag

ain

stam

oun

tlo

ng

due

fro

mth

ecu

sto

mer

s

1003

.55

86.2

940

9.96

405.

6427

4.24

Rep

rese

nts

pro

visi

on

tow

ard

sSe

rvic

eta

xan

dcu

sto

ms

duty

.

1187

.78

490.

720.

0027

3.00

1405

.50

Th

isre

pre

sen

tsp

rovi

sio

nm

ade

tow

ard

sgu

aran

tee

rep

airs

inre

spec

to

fsh

ips/

Tugs

Built

and

del

iver

edby

the

com

pan

yan

dsh

ips

rep

aire

d.

Hea

rin

gp

end

ing

Ap

pea

l bef

ore

No

furt

her

liab

ility

isex

pec

ted

.

Th

eir

reco

vera

ble

amo

un

tif

any

wo

uld

be

wri

tten

off

on

the

bas

iso

fdis

cuss

ion

s

Th

isw

ould

be

acco

un

ted

asan

dw

hen

incu

rred

.

58.7

318

39.0

40.

000.

0018

97.7

7T

his

rela

tes

top

rovi

sio

nA

ny

exce

ss/

sho

rtfo

rL

iquid

ated

Dam

ages

pro

vid

edw

ould

asp

erco

ntr

act

term

sb

ead

just

edo

np

rovi

ded

for

ship

build

ing/

fin

alse

ttle

men

tsh

ipre

pai

rco

ntr

acts

.A

tth

eti

me

of

sett

lem

ent

the

com

pan

ym

ayb

eab

leto

sett

leth

esa

me

for

reduce

dam

oun

tsb

ased

on

the

con

dit

ion

sw

hic

hle

dto

del

aysu

chas

forc

em

ajeu

re,e

tc.

dam

ages

60

6P

rovi

sion

for

En

cash

men

tof

Lea

veSa

lary

7P

rovi

sion

for

Los

son

Ship

bu

ildin

g

8P

rovi

sion

for

FB

T

9P

rovi

sion

for

loss

ond

eriv

ativ

es

10P

rovi

sion

for

arre

ars

ofE

lect

rici

tych

arge

s

11P

rovi

sion

for

Con

tin

gen

cies

12P

rovi

sion

for

emp

loye

e

13P

rovi

sion

for

obso

lese

nce

,n

onu

sab

ility

, det

erio

rati

onof

inve

nto

ry

1625

.98

980.

9586

.44

0.00

2520

.49

Pro

visi

on

mad

efo

rlia

bili

tyto

war

ds

En

cash

able

Ear

ned

Lea

veas

on

31-0

3-10

5547

.06

0.00

0.00

895.

9746

51.0

9T

his

isto

war

ds

pro

visi

on

for

futu

relo

sso

nsh

ipb

uild

ing

asre

quir

edby

AS-

7

79.6

60.

0079

.66

0.00

0.00

Pro

visi

on

for

Fri

nge

Ben

efit

tax

wit

hdra

wn

249.

316.

160.

000.

0025

5.47

Arr

ears

of

elec

tric

ity

661.

643,

653.

490.

000.

0043

15.1

3E

xpec

ted

liab

ility

con

tin

gen

tup

on

trib

un

aldec

isio

no

nth

eap

licab

ility

of

Serv

ice

Tax

on

ME

TI

and

exp

ecte

dlia

bili

tyo

nca

nce

llati

on

of

SBco

ntr

acts

for

BY

077

&B

Y07

8.

det

erio

rati

on

of

inve

nto

ry

Will

be

pai

das

per

com

pan

yru

les

Exp

ecte

dfu

ture

loss

has

bee

np

rovi

ded

6,80

0.00

0.00

0.00

4159

.64

2640

.36

Pro

visi

on

for

po

ssib

lelo

sso

nder

ivat

ives

Un

cert

ain

Un

der

litig

atio

nch

arge

sto

KSE

B

Un

der

litig

atio

n

4,67

8.87

371.

454,

496.

940.

0055

3.38

Pro

visi

on

crea

ted

for

emp

loye

eb

enef

its

468.

2729

7.08

453.

130.

0031

2.22

Pro

visi

on

crea

ted

for

ob

sole

sen

ce,

no

nusa

bili

ty,

ben

efit

s

61

1. Registration Details

2. Capital raised during the year

3. Position of Mobilization and deployment of funds

Registration Number 2414 of 1972State Code 09Balance Sheet date 31 Mar 2010

Public issue NilRights issue NilBonus issue NilPrivate Placement Nil

Total Liabilities 68296.19Total Assets 68296.19

Sources of funds

Paid up Capital 19242.20Reserves & Surplus 49053.99Secured Loans 0.00Unsecured Loans 0.00

Application of funds

Net Fixed Assets 23848.63Investments 319.26Deferred tax asset 5271.47Net Current Assets 38856.83

68296.19

68296.19

(Rs. Lakhs)

BALANCE SHEET ABSTRACT AND COMPANY'S GENERAL BUSINESS PROFILE

23.E. ADDITIONAL INFORMATION AS REQUIRED UNDERPART IV OF SCHEDULE VI OF COMPANIES ACT, 1956.

62

4. Performance of the Company

5. Generic Names of principal products,services of the Company

(Rs. Lakhs

Total Turnover/Income 132649.19Total Expenditure 99524.32Profit before Tax 33124.87Profit after Tax 22304.07Earnings per Share (in rupees) 19.69Dividend Rate –

Item Code No. (ITC Code) Product description

890110 01 Ships

890120 00 Tankers

890400 00 Tugs

979000 00 Ship repair &General Engg.

Schedule 1 to 23 form part of Accounts

For and on behalf of Board of Directors

Sd/- Sd/- Sd/-

Company Secretary Director (Finance) Chairman and Managing Director(Officiating)

Kochi, dated the 21 July 2010

As per our report of even dateForChartered Accountants(Firm Reg. No.002058S)

( Partner)( Membership No 15842)Kochi, dated the 21 July 2010

V KALA RAVIKUMAR RODDAM CMDE K SUBRAMANIAM

Menon & Ayyar

MOHANAN KUTTICKAT

st

st

63

Net profit before tax

Adjustments for :

Depreciation & amortisation 1221.22 818.76

Interest paid 1819.21 1898.64Interest received (3201.93) (6452.39)

Loss /(profit)on sale of fixed assets 9.30 13.66

Loss on derivative contracts 6567.39 11575.08Exchange difference from FE transactions (1883.11) 7270.70Hedge reserve account 39690.67 (44637.42)

Dividend income (299.16) (0.70)

Operating cash flow before working capital changes 77048.46 (4750.39)

Adjustments for working capital changes:

Inventories 8884.38 (22249.53)

Trade and other receivables (23622.45) (31104.45)

Trade and other payables (48941.69) 59208.72

Cash generated from operation 13368.70 1104.35

Tax paid 12313.73 11283.68

Net cash generated from Operating Activities (A)

Purchase of assets (8046.01) (3780.48)

Capital work-in-progress (415.46) (2712.80)

Sale/withdrawal of fixed assets 4.54 0.07Interest received 3201.93 6452.39

Investments (310.08) 0.00Dividend income 299.16 0.70

Net cash from investing operation (B)

A. Cash flow from operating activites

33124.87 24763.28

1054.97 (10179.33)

B. Cashflow from investing activities

(5265.92) (40.12)

For the year For the yearended ended

31st March 2010 31st March 2009

(Rs lakhs)

64

C. Cashflow from financing activities

(18642.29) (13376.82)

D. Net Increase in Cash & Cash Equivalent(A)+(B)+(C) (22853.24) (23596.27)

(22853.24) (23596.27)

Redemption of Preference Shares (4000.00) 0.00

Loss on cancellation of derivative contracts (6567.39) (11575.08)

Loss on Exchange difference from FE transactions 1883.11 (7270.70)

Proceeds from borrowings 0.00 8736.60

Repayment of loans (10105.59) (1369.00)

Dividend paid 1966.79 0.00

Interest paid (1819.21) (1898.64)

Net cash from financing activities (C)

Cash and cash equivalent at the beginning of the year 97879.40 121475.67

Cash and cash equivalent at the end of the year 75026.16 97879.40

Net cash increase/(decrease)

For the year For the yearended ended

31st March 2010 31st March 2009

For and on behalf of Board of Directors

Sd/- Sd/- Sd/-

Company Secretary Director (Finance) Chairman and Managing Director(Officiating)

Kochi, dated the 21 July 2010

As per our report of even date

ForChartered Accountants(Firm Reg. No.002058S)

Sd/-

( Partner)( Membership No 15842)Kochi, dated the 21 July 2010

V KALA RAVIKUMAR RODDAM CMDE K SUBRAMANIAM

Menon & Ayyar

MOHANAN KUTTICKAT

st

st

65

2009-10 2008-09

TOTAL 930.94 666.18

1. Township expenses (Net including depreciation) 58.41 34.95

2. Medical expenses 334.14 221.23

3. Canteen subsidy 156.92 148.98

4. Leave Travel Concession 163.59 50.68

5. Liveries & Uniforms 37.16 36.41

6. Workmens Compensation 9.1 2.82

7. Death Benevolent Fund 0.93 0.96

8. Interest Subsidy to employee 77.74 81.93

9. Group personal accident insurance 3.67 1.83

10.Other Welfare expenses 89.28 86.39

DETAILS OF MAINTENANCE ON TOWNSHIP AND OTHER SOCIAL OVERHEADS

2009-10 2008-09 2007-08

1. Advertisement 26.28 42.43 46.46

2. Publicity 20.54 18.10 9.03

3. Entertainment 8.97 10.82 11.41

4. Guest house expenses 4.38 14.71 11.08

STATEMENT SHOWING EXPENDITURE ON PUBLIC RELATIONS AND PUBLICITY

(Rs.in lakhs)

66

2009-10 2008-09

63230

63230

(Rs.in lakhs)

Funds from Internal Generation:

Profit for the year 22304 16007

Depreciation 1221 819

Loss/(Profit) on sale/write off of fixed Assets 9 13

Sale of Fixed Assets 5 1

Increase in borrowed funds 0 7368

Change in Hedge Reserve 39691 (44637)

(20430)

Fixed Assets 8046 3780

Increase/ (Decrease) in reserve for Deferred Tax Asset (2247) 3463

Increase in Investment 310 -

Decrease in borrowed Funds 10106 -

Capital Work in Progress 415 2713

Dividend & Tax 1973 2301

Redemption of Preference Shares 4000 -

Increase/(Decrease) in Working Capital 40627 (32688)

(20430)

A. SOURCES OF FUNDS

B. APPLICATION OF FUNDS

STATEMENT OF CHANGES IN FINANCIAL POSITION

67

2009-10 2008-09

A.

(19399) 41042

(60026) 73730

40627 (32688)

Cash & Bank Balance (15136) (29814)

Inventory (8884) 22250

Sundry Debtors 26496 26010

Loans, Advances & Other current assets (21875) 22596

Sundry Creditors (5816) (481)

Advance from Shipowners & others (208) 8715

Provisions (19653) 20407

Other liabilities (34350) 45089

Current Assets: Increase / (Decrease)

B. Current Liabilities: Increase / (Decrease)

Increase/(Decrease) in Working Capital

(Rs.in lakhs)

STATEMENT SHOWING CHANGES IN WORKING CAPITAL

68