western india shipyard ltd share price Directors report

Dear Members,

Your Directors present their 23rd Annual Report on the State of Affairs of the Company’s business operations with the Audited Accounts for the year ended March 31, 2015 as under:

Particulars	31.03.2015	31.03.2014
	(Rs. In Lacs)	(Rs. In Lacs)
Sales and other Income	3409.63	4518.61
Profit /(Loss) before Finance cost, Depreciation & Taxes	(1975.99)	(558.69)
Less: Finance cost (net)	644.64	771.75
Profit/(Loss) before Depreciation & Tax	(2030.49)	(1330.42)
Less: Depreciation	1225.76	1314.55
Profit/(Loss) before Taxes	(3370.06)	(2644.97)
Provisions for Taxes:
Tax Adjustments for Earlier Year	(11.58)	32.11
Profit/(Loss) before Adjustments	(3358.48	(2677.07)
Prior Period Adjustments	107.98	13.21
Net Loss for the year	(3466.47)	(2690.28)

Company Operations

During the year, your Company has repaired 15 vessels and achieved total revenue of Rs. 3409.63 lacs as against Rs. 4518.61 lacs in the previous year Your Company incurred a net loss of Rs. 3466.46 lacs for the year as against a net loss of Rs. 2690.28 lacs in the previous year. Your Company faced severe recession during FY 2014-15 and a number of shiprepair orders from Indian and foreign clients did not materialize as expected due to the global economic uncertainties in the shipping and shiprepair markets where repairs have been postponed by the Ship Owners/Operators/Charterers. Your Company’s operations were also affected by the severe restrictions on mining in Goa by the Supreme Court and the Central/State Government which affected the Shipping and Shiprepair Industry especially the bulk ore transhippers, cargo vessels and barges using the Mormugao Port. Though mining has been permitted subject to quantitative restrictions, the mining operations have not resumed due to delays in the environmental and other approvals from the Central/State Government. The mining Industry is expected to resume during FY 2015-16. Your Company is seeking significant opportunities for Oil Rig repairs and modifications as there is growing thrust towards oil exploration and production. The Company has a rich experience over the years and has repaired over 585 vessels and 13 Oil rigs since its inception. Your Company is also seeking to secure additional business from the defence sector for ship repairs in consortium with ABG Shipyard Ltd, its holding company. No material changes and commitments have occurred after the close of the year till the date of this Report, which affect the financial position of the Company.

Dividend:

In view of the loss for the year, no dividend has been recommended for the shareholders.

Management’s Discussion and Analysis Report:

Management’s Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange, forms an integral part of this Annual Report.

Corporate Governance Report:

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the requirements set out by SEBI. The Corporate Governance Report as stipulated under Clause 49 of the Listing Agreement forms an integral part of this Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance as stipulated in Clause 49, is attached to this Report.

Directors and Key Management Personnel:

Shri. Ashok Kumar Agarwal retires by rotation at the ensuing AGM of the Company and is eligible for re-appointment as director in terms of the Articles of Association of the Company and provisions of the Companies Act, 2013. Shri. Ravi Vimal Nevatia and Smt. Rajani Podar joined the Board as additional directors in June, 2015. Your Company has received notices from the members for their appointment as Independent Directors for a term of five years. The Company has received the declarations from the Independent Directors confirming that they meet the criteria of independence for appointment as prescribed under Sec. 149 (6) of the Companies Act, 2013 and Clause 49 of the BSE Listing Agreement. Cdr. S. K. Mutreja (Retd.), resigned from service as Whole Time Director & CEO w.e.f. 21.11.2014. Shri. Ashok R. Chitnis resigned from the Board w.e.f. 30.06.2015. The Board places on record its sincere appreciation of their valuable services during their tenure on the Board and Committees.

Board Evalutation

Pusuant to the provisions of the Companies Act, 2013 and clause 49 of the Listing Agreement, a structured questionnaire was prepaid after considering the various creatirea such as board functioning, composition, committies culture and their directions and governence. The performance evaluation was completed and the Board expressed satisfaction over the evaluation process.

Directors Responsibility Statement:

Your Directors state that:

(a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

(b) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2015 and of the profit of the Company for the year ended on that date;

(c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts on a ‘going concern’ basis;

(e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

(f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Auditors:

M/s. V. V. Kale & Co., Chartered Accountants, hold office as Statutory Auditors till the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a certificate from the Auditors to the effect that if they are re-appointed, it would be in accordance with Section 141 of the Companies Act, 2013. The Board recommends their re-appointment at this AGM.

The Statutory Auditors in their Audit Report annexed to the financial statements, have placed emphasis on the following points which is explained as under:

(a) Note No. 29 (h) to the financial statements describe the "uncertainty relating to the outcome of the lawsuits filed against the Company." As per the Management, the lawsuits are sub-judice before the Adjudicating Authorities. The provisions, if any, will be made on the basis of the orders/settlements with the parties.

(b) Note No. 36 to the financial statements state that "the financial statements are prepared on a going concern basis notwithstanding the fact that its net worth is completely eroded. The said basis is inter-alia dependent on the Company’s ability to infuse funds for meeting its obligations for payment of debt and generation of more business." As per the Management, the Company’s business has been affected due to temporary factors like recession in the Shiprepair and Shipbuilding Industry, mining restrictions by the Central & State Governments & Apex Court, delayed receipts from trade debtors, low operating volumes, etc. The Company expects the flow of repair orders to continue over the years and an improvement in profits. The Management is trying to collect its receivables so that current payments can be made which will not have any impact as a going concern.

Disclosures:

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo:

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under the Act, is at Annexure - 1.

Particulars of Employees;

A statement showing the names and particulars of the employees drawing remuneration of more than Rs. 60 lacs per annum or more than Rs. 5 lacs for part of the year, in terms of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is at Annexure -2.

Meetings of the Board:

Four (4) meetings of the Board of Directors were held during the year on 22.05.14, 11.08.14, 11.11.14 and 11.02.15.

Audit Committee:

The Audit Committee comprises of two Independent Directors, namely Shri. Ashwani Kumar and Shri. Ravi Vimal Nevatia as members, and Shri. Ashok A. Agarwal a non-independent and non-executive director. All the recommendations made by the Audit Committee have been accepted by the Board.

Vigil Mechanism:

The Vigil Mechanism of the Company, includes a Whistle blower policy in terms of the Listing Agreement, and is reviewed by senior executives of the Company. Further, protected disclosures can be made by a whistle blower through an e-mail, or a letter to the Chairman of the Audit Committee. The Policy on Vigil mechanism / Whistle blower policy can be accessed on the Company’s website: http://www.wisl.co.in.

Risk Management Policy:

The Board has approved a Risk Management Policy which has a clearly defined risk management framework covering all the risks that the Company faces such as business, market, financial, legal, regulatory, credit, liquidity, security, property and other risks have been identified and assessed. There is an adequate risk management system in place capable of monitoring, managing and reporting on the principal risks and uncertainties that can impact its business and initiating risk mitigation measures. The Company’s management systems, organizational structures, processes, standards, code of conduct and behavior together form the Risk Management System (RMS). The Company has adequate internal control measures and processes.

Internal Financial Controls:

The Board has adopted the policies and procedures for ensuring the efficient conduct of the Company’s business, including adherence to the company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.

Corporate Social Responsibility (CSR):

The Companies Act, 2013 has introduced Sec. 135 relating to Corporate Social Responsibility by Companies having a net worth of Rs. 500 crore or more or turnover of Rs. 1000 crore or more or net profit of Rs. 5 crore or more during the financial year. However, this does not apply to your Company.

Particulars of contracts or arrangements made with related parties:

Particulars of contracts or arrangements with related parties referred to in Sec. 188 of the Companies Act, 2013 in the prescribed Form AOC-2 is enclosed (Annexure - 3)

Board Policies:

The following policies of the Company are attached herewith:

(a) Policy for selection of Directors and determining Directors Independence (Annexure -4)

(b) Remuneration Policy for Directors, Key Managerial Personnel & other employees (Annexure -5).

Extract of Annual Return:

In accordance with Sec. 134(3)(a) of the Companies Act, 2013 an extract of the Annual Return in the prescribed format is at Annexure – 6.

Secretarial Audit Report

The Secretarial Audit Report of Ms. Kala Agarwal, Practising Company Secreatary for the Financial Year 2014-15 is at Annexure 7.

The Board noted the observations and emphasis regarding non-filing of various forms and other non-complainces during FY. 2014-15. The Board noted the assurance of the Management that the forms will be filed and Complainces will be made during FY. 2015 -16 as per the Companies Act, 2013.

Industrial Relations:

The Company has enjoyed cordial industrial relations during the year.

General

The Company is a subsidiary of ABG Shipyard Limited. However, it does not have any subsidiaries. Your directors state that there were no transactions relating to fixed deposits during the year under review and hence no disclosure or reporting is required in respect of the same. Further there was no issue of shares to the investors and employees, during the year under review. Your Directors state that no significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future. Further no cases have been filed during the year under review pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013.

Acknowledgements:

Your Directors place on record their sincere appreciation for the assistance and co-operation received from the Ministry of Shipping, Government of Goa, bankers, vendors, classification societies, clients and members whose continued support has enabled the Company to maintain the operations despite the severe recessionary conditions. Your Directors place on record their sincere appreciation of the support and patronage received from ABG Shipyard Limited, its holding company, and the contributions made by the employees of the Company at all levels. The Company also thanks the Mormugao Port Trust for its support to the Company.

	By Order of the Board
	For Western India Shipyard Limited
	Sd/-	Sd/-
Dated:11th August, 2015	Ashwani Kumar	A. K. Agarwal
Place: Mumbai.	Director	Director

ANNEXURE ‘1’ TO THE DIRECTORS’ REPORT:

Information pursuant to Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988.

(A) Conservation of Energy:

(a) Energy conservation measures taken:

The Company has been laying continuous emphasis on the conservation of energy and has taken several measures including regular monitoring of consumption, reduction of transmission losses and improved maintenance of systems. Some of the significant measures implemented are:

• Reduction of contract demand from 3000 KVA to 1500 KVA.

Improved efficiency with average power load factor of 0.99.

• Installation of solar power lamps in the shipyard to save power &improve illumination at night.

• Using MIG welding machines/process and energy savers /inverters in place of rectifiers to reduce power consumption and improve welding quality.

• Reduction of transmission leakage in air compressors resulting in constant pressure during blasting & painting operations.

• Implemented CNC cutting machine, beveling machines, Co2 gas welding machines & use of ceramic backing strips in welding process, to reduce power/gas consumption.

• Minimizing idle running of equipment like gensets, pumps, ac/s, lights & machinery.

(b) Additional investments and proposals for reduction of consumption of energy:

• Replacing power factor controls by automatic power factor control panels

• Increase in number of solar power lamps in the shipyard.

• Installation of energy efficient Variable Frequency drive (VFD) on air compressors, and pumps to reduce energy consumption.

(c) Impact of above measures for reduction of energy consumption & consequent impact on the cost of production of goods:

The energy conservation measures have resulted in significant energy savings during the year.

(B) Technology Absorption

1. Research and Development (R & D) :

Specific areas in which R & D carried out by the Company:

• Manufacture of one ‘Jack up barge’ for PMC Projects Pvt. Ltd involving the preparation of layout plans, general arrangements, piping and valves, machinery placement, fabrication of hull and other structures like jack houses with jack up legs & locking systems, electrical lines, crew accommodation, LSA & FFA, etc.

• Fabrication of jigs & fixtures for faster shiprepairs to improve quality and delivery time.

• Development of indigenous Coffer Dam technology for repair of ship side steel plates without dry docking.

• High lift platforms introduced for safe working at heights for Rigs repairs.

• Development of used grit extractor.

2. Benefits derived as a result of above R & D:

• Manufacturing process developed in-house has been commercialized by the Company.

• Cost reductions through better utilization of material and energy.

• Import substitutions.

• Improvement in Quality and Customer Satisfaction.

• Faster re-delivery of vessels.

• Reduction of environment pollution.

• Improvement in system standardization, process and productivity.

3. Future Plan of Action

• Improvement in the process of planning, procurement and production systems in shiprepair /Rig repair methodology.

• Introduction of new products, machinery and processes for better results.

• Improving interaction with Class Surveyors involved with Shiprepair and Rig repairs.

4. Expenditure on R & D

The Company is examining various proposals for SAP integrated software covering areas of planning & procurement, manpower, commercial invoicing & inventory control, for improving MIS.

Technology Absorption, Adaptation and Innovation :

1. Efforts in brief made towards Technology Absorption, adaptation & innovation :

• Use of trained and experienced personnel from technical institutions/ shipbuilding institutions, for keeping them abreast with the changing technologies and methodology of Ship repair and ship building.

• Imparting Training to Direct / Indirect / Contractors for ship repairs.

• Active interaction with Classification Societies for shiprepairs.

• In house repairs of valves and material handling equipment like cranes, etc.

2. Benefits derived as a result of the above efforts Eg. Product improvements, Cost reduction, etc.

• Cost reduction in operations.

• Quality Assurance, Customer satisfaction and improved safety.

3. Information regarding Technology imported during the last five years.

Technology imported	Year of Import	Status
Nil	N.A	N.A

(C) Foreign Exchange Earnings and Outgo:

Your Company had foreign exchange earnings equivalent to Rs. Nil lacs during the year ended 31.03.2015 (Previous year Rs. 220.37 lacs). The foreign exchange expenditure during the year was equivalent to

Rs. 624.28lacs (Previous year: Rs. 21.26 lacs).

	By Order of the Board
	For Western India Shipyard Limited
	Sd/-	Sd/-
Dated:11th August, 2015	Ashwani Kumar	A. K. Agarwal
Place: Mumbai.	Director	Director

Annexure ‘2’ to the Directors’ Report

Information of employees as required under Sec. 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended:

Sl	Name of Employee	Designation & Nature of duties	Age	Gross Remuneration	Qualifiation	Experience in no. of years	Last Employment	Date of Employment
				(Rs. )
1.	Cdr. S. K. Mutreja (Retd)	Whole Time Director & CEO	68	3673000/-	B. E (Mech.)	46	ABG Shipyard Ltd.	17.07.2007 (Contractual)

Note: The Whole Time Director & CEO worked for part of the year and looked after the day to day affairs of the company. He resigned from service on 21.11.2014. His gross remuneration comprises of salary, allowances, company’s contribution to provident fund & perquisites at actual. The Company has applied for review to the Ministry of Corporate Affairs as his remuneration has not been approved by the said Ministry.He is not a relative of any director or manager of the company. He holds 8500 equity shares (0.0002% of the issued and paid up share capital) in the Company.