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2 ABG Shipyard Limited Annual Report CORPORATE INFORMATION Corporate Identification Number (CIN) L61200GJ1985PLC Board Of Directors Mr. Rishi Agarwal Chairman Mr. Syed Abdi Managing Director and CEO (since 9 th January, 2014) Mr. Dhananjay Datar Executive Director Mr. S. Muthuswamy Executive Director (since 13 th November, 2013) Mr. Ashok R. Chitnis Independent Director Mr. Ashwani Kumar Independent Director Mr. Aloke Sengupta Nominee Director (since 14 th August, 2013) Mr. David Resquinha Nominee Director (since 30 th May, 2014) Auditors M/s. Nisar& Kumar, Chartered Accountants A-17, Everest Building,156- Tardeo Road Mumbai Bankers Andhra Bank Bank of Baroda Bank of India Canara Bank Central Bank of India Dena Bank Indian Overseas Bank Laxmi Vilas Bank Ltd. Oriental Bank of Commerce Punjab and Sindh Bank Punjab National Bank SICOM Limited 29 th Annual General Meeting Day : Tuesday Date : 30 th September,2014 Time : noon Venue : At the Registered Offi ce of the Company Contents Near Magdalla Port, Dumas Road, Surat , Gujarat Page No. Notice of AGM 2 Directors Report 15 Corporate Governance Report 22 Management Discussion & Analysis 38 Auditors Report 41 Balance Sheet 46 Statement of Profi t and Loss 47 Cash Flow Statement 48 Notes forming part of the Financial Statements Statement pursuant to Section 212 of the Companies Act, 1956 Consolidated Financial Statements 75 Proxy Form & Attendance Slip 103 Registered Office Near Magdalla Port Dumas Road, Surat , Gujarat Tele: , Fax: Website: shipyard@abgindia.com Deutsche Bank Development Credit Bank Ltd. Export- Import Bank of India ICICI Bank Limited IDBI Bank Limited IFCI Limited Indian Bank The South Indian Bank Ltd. Standard Chartered Bank State Bank of India State Bank of Patiala State Bank of Travancore Syndicate Bank Yes Bank Limited Corporate Office 4 th /5 th Floor, Bhupati Chambers,13, Mathew Road, Mumbai Tele: Fax : , Registrar & Share Transfer Agent Link Intime India Private Ltd. C-13, Pannalal Silk Mills Compound L.B.S Marg, Bhandup West Mumbai Tele : , Fax : rnt.helpdesk@linkintime.co.in 1

3 ABG Shipyard Limited Annual Report NOTICE Notice is hereby given that the 29 th Annual General Meeting of the Members of ABG Shipyard Limited will be held on Tuesday the 30 th of September, 2014 at noon at the Registered Office of the Company at Near Magdalla Port, Dumas Road, Surat , to transact the following business:- Ordinary Business: 1. To receive, consider and adopt the audited Balance Sheet as at March 31, 2014, the Statement of Profi t and Loss for the year ended on that date and the reports of the Board of Directors and Auditors thereon. 2. To appoint a Director in place of Mr. Rishi Agarwal (DIN ), who retires by rotation and being eligible, offers himself for re-appointment. 3. To appoint Auditors and fi x their remuneration and for the purpose to pass the following resolution as an Ordinary Resolution : RESOLVED THAT pursuant to the provision of Section 139 and other applicable provisions, if any, of the Companies Act, 2013, and upon recommendations of the Audit Committee, M/s. Nisar & Kumar, Chartered Accountants, (Firm Registration No W) be and is hereby re-appointed as Joint Statutory Auditors of the Company to hold offi ce from the conclusion of 29 th Annual General Meeting till the conclusion of 32 nd Annual General Meeeting of the Company subject to ratifi cation by members at every Annual General Meeting held after this Annual General Meeting on such remuneration to be decided by the Board of Directors in consultation with the said Auditors. Special Business: 4. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as an Ordinary Resolution: RESOLVED THAT pursuant to the provision of Section 139 and other applicable provisions, if any, of the Companies Act, 2013, and upon recommendations of the Audit Committee,M/s. GMJ & Co., Chartered Accountants, (Firm Registration No W) be and is hereby appointed as Joint Statutory Auditors of the Company in addition to the existing Statutory Auditors M/s. Nisar & Kumar, Chartered Accountants, (Firm Registration No W), Mumbai of the Company to hold offi ce from the conclusion of 29 th Annual General Meeting till the conclusion of the next Annual General Meeting of the Company on such remuneration to be decided by the Board of Directors in consultation with the said Auditors. 5. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as a Special Resolution: RESOLVED THAT In supersession to the Special Resolution passed by Members of the Company at the 28 th Annual General Meeting held on 27 th September, 2013 and pursuant to the provisions of the Companies Act, 2013, (to the extent notifi ed) and the Companies Act, 1956 (to the extent valid), the provisions of Securities and Exchange Board Of India (Issue Of Capital And Disclosure Requirements) Regulations, 2009 (the SEBI ICDR Regulations ), the provisions of the Foreign Exchange Management Act, 1999, and rules and regulations made hereunder, including the Foreign Exchange management (Transfer and Issue of Securities by a person Resident outside India) Regulation, 2000, if applicable, the provisions of Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism) Scheme, 1993 and subject to any other applicable law or laws, rules and regulations (including any amendment thereto or re-enactment thereto or reenactment thereof for the time being in force) and subject to enabling provisions in the Memorandum and Articles of Association of the Company and Listing Agreements, entered into by the Company with the Stock Exchanges where the shares of the company are listed and subject to any approval, consent, permission and/or sanction of the members of the Company by way of special resolution, Government of India, Reserve Bank of India, Stock Exchanges, Registrar of Companies, Securities and Exchange Board of India and /or any other competent authorities, institutions or bodies, within or outside India, and subject to such conditions and modifi cations as may be prescribed by any of them while granting such approvals, permissions, consents and sanctions and which may be agreed by the Board of Directors (hereinafter referred to as Board which term shall include any committee thereof, whether constituted or to be constituted), approval of the Company is hereby accorded to the Board to create, offer, issue and allot in one or more tranch(es), in the course of domestic and / or international offerings and /or Qualified Institutional Placements ( QIP ), with or without an over allotment/ green shoe issue option, in one or more foreign markets or domestic markets, to domestic institutions, foreign institutions, non-resident Indians, Indian public, companies, corporate bodies, mutual funds, banks, insurance companies, pension funds, individuals, qualifi ed institutional buyers or other persons or entities, whether shareholders of the Company or not, through a public issue and/or on a private placement basis and/or qualifi ed institutional placement within the meaning of Chapter VIII of the SEBI ICDR Regulations and /or preferential issue and/or other kind of public issue and /or private placement or through a combination of the foregoing as may be permitted under applicable law from time to time, with or without an over allotment/ green shoe option, equity share, secured or unsecured debentures, bonds or any other securities whether convertible into equity share or not, including, but not limited to, Foreign Currency Convertible Bonds ( FCCBs ), Optionally Convertible Debentures ( OCD ), Bonds with share warranted attached, Global Depositary Receipts ( GDRs ), American Depositary Receipts ( ADRs ) or any other equity related instrument of the Company or a combination of the foregoing including but not limited to a combination of equity shares with bonds and/or any other securities whether convertible into equity shares 2

4 ABG Shipyard Limited Annual Report or not (hereinafter referred to as securities ) for a value of upto ` 1,000/- crores (` One Thousand Crores), whether to be listed on any stock exchange inside India or any international stock exchanges outside India, through an offer document and/or prospectus and/or offer letter, and/or offering circular, and/or on public and/or private or preferential basis, whether rupee denominated in foreign currency at such time or times, at such price or prices in such manner and on such terms and conditions including security, rate of interest etc, as may be decided by and deemed appropriate by the board as per applicable law, including the discretion to determine the categories of Investors to whom the offer, issue and allotment shall be made, considering, the prevailing market conditions and other relevant factors wherever necessary in consultation with its advisors, as the board in its absolute discretion may deem fi t and appropriate. RESOLVED FURTHER THAT in addition to all applicable Indian laws, the securities issued in pursuance of this resolution shall also be governed by all applicable laws and regulations of any jurisdiction outside India where they are listed or that may in any other manner apply to such securities or provided in the terms of their issue. RESOLVED FURTHER THAT any securities that are not subscribed in issues mentioned above, may be disposed off by the board in its absolute discretion in such manner, as the board may deem fi t and as permissible by the law. RESOLVED FURTHER THAT in case of a Qualifi ed Institutional Placement pursuant to Chapter VIII of the SEBI ICDR Regulations, the allotment of specifi ed securities shall only be to Qualifi ed Institutional Buyers within the meaning of Chapter VIII and the relevant date for the determination of the price of the equity shares to be issued or issued pursuant to conversion, shall be the date on which the board decides to open the issue of securities or such other time as may be allowed by SEBI ICDR Regulations from time to time and allotment of specifi ed securities shall be completed within twelve months from the date of this resolution. RESOLVED FURTHER THAT in case of an issuance of FCCBs/ADRs/GDRs, the relevant date for the determination of the issue price of the securities offered, shall be determined in accordance with the Issue of Foreign Currency Convertible Bonds and Ordinary shares (through Depository Receipt Mechanism) Scheme, 1993 as may be amended from time to time. RESOLVED FURTHER THAT the issue of Securities shall be subject to the following terms and conditions: (a) (b) The Securities shall be subject to the provisions of Memorandum and Articles of Association of the Company and in accordance with the terms of the issue; and The number and/or price of the Securities shall be appropriately adjusted for corporate actions such as bonus issue, rights issue, stock split, merger, demerger, transfer of undertaking, sale of division or any such capital or corporate restructuring. RESOLVED FURTHER THAT for the purpose of giving effect to the above resolutions, the Board be and is hereby authorized to do all such acts, deeds, matters and things including but not limited to determining the form and manner of the issue, including the class of investors to whom the Securities are to be issued and allotted, number of Securities to be allotted, execution of various transaction documents, creation of mortgage/ charge in accordance with Section 180(1)(a) of the Act, in respect of any Securities as may be required either on pari-passu basis or otherwise, as it may in its absolute discretion deem fi t and to settle all questions, diffi culties or doubts that may arise in regard to the issue, offer or allotment of Securities and utilization of the issue proceeds as it may in its absolute discretion deem fi t without being required to seek any further consent or approval of the members or otherwise to the end and intent that the members shall be deemed to have given their approval thereto expressly by the authority of this resolution. RESOLVED FURTHER THAT the Board be and is hereby authorized to form a committee or delegate all or any of its powers to any Directors (s) or Committee of Directors or other persons authorized by the Board to give effect to the aforesaid resolutions RESOLVED FURTHER THAT subject to the applicable laws, the Board and/or the Committee authorized by the Board be and is hereby authorized to do such acts, deeds and things as the Boards in its absolute discretion deems necessary or desirable in connection with the issue of the securities, including, without limitation of the following; (a) (b) (c) (d) (e) (f) (g) Decide the date for the opening of the issue of securities; Decide the price band for the issue; Finalization of the Issue Price; Finalization of the allotment of the securities on the basis of the subscriptions received; Finalization of, signing of and arrangement for the submission of the preliminary and fi nal offering circulars/prospectus(es)/ offer document(s), and any amendments and supplements thereto, along with supporting papers needed to be fi led for seeking listing approval with any applicable government and regulatory authorities, institutions or bodies as may be required; Deciding the pricing and terms of the securities, and all other related matters, including taking any action on two-way fungibility for conversion of underlying equity shares into FCCBs/ GDRs/ ADRs, as per applicable laws, regulations or guidelines; Appoint, in its absolute discretion, managers (including lead manager), Investment Bankers, Merchant Bankers, underwriters, guarantors, fi nancial and /or legal advisors, depositories, custodians, principal paying/transfer/conversion agents, listing agents, registrars, trustees and all other agencies, whether in India or abroad, entering into or execution of all such agreements/ arrangements/ MoUs/ documents with any such agencies, in connection with the proposed offering of the securities; 3

5 ABG Shipyard Limited Annual Report (h) (i) Approval of the Deposit Agreements(s), the Purchase/Underwriting Agreement(s), the Trust Deed(s), the Indenture(s), the Master/Global GRDs/ADRs/FCCBs/other securities, letters of allotment, listing application, engagement letter(s), memoranda of understanding and any other agreements of documents, as may be necessary in connection with the issue/offering (including amending, varying or modifying the same, as may be considered desirable or expedient), in accordance with all applicable laws, rules, regulations and guidelines; Settle all questions, diffi culties or doubts that may arise in regards to the issue, offer or allotment of securities and utilization of the proceeds of the issue in such manner and to do all such acts, deeds, matters and things as it may in its absolute discretion deem fi t. RESOLVED FURTHER THAT the Board and/or the Committee authorized by the Board be and is hereby authorized to accept any modifi cations in the proposals as may be required by the authorities involved in such issues but subject to such conditions as the SEBI/GoI/RBI or such other appropriate authorities may impose at the time of their approval and as agreed to by the Board; RESOLVED FURTHER THAT without prejudice to the generality of the foregoing, issue of the securities may be done upon all or any terms or combination of terms in accordance with international practices relating to the payment of interest, additional interest, premium on redemption, prepayment or any other debt service payments and all such terms as are provided customarily in an issue of securities of this nature. RESOLVED FURTHUR THAT The Company may enter into any arrangement with any agency or body authorized by the Company for the issue off depository receipts representing the underlying equity shares issued by the Company with such features and attributes as are prevalent in international capital markets for instruments of this nature and to provide for the tradability of free transferability thereof as per international practices and regulations (including listing on one or more stock exchange(s) inside or outside India) and under the forms and practices prevalent in the international markets. 6. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as an Ordinary Resolution: RESOLVED THAT pursuant to provisions of Section 149, 152 and other applicable provisions if any, of the Companies Act, 2013 and the Rules made thereunder, (including any statutory modifi cation(s) or re-enactment thereof for the time being in force) read with Schedule-IV of the Companies Act, 2013, Mr. Ashwani Kumar (DIN: ), Non-Executive Director of the Company, who has submitted a declaration that he meets the criteria for independence as provided in Section 149(6) of the Act and who is eligible for appointment, be and is hereby appointed as an Independent Director to hold offi ce for 5 (fi ve) consecutive years for a term up to the conclusion of the 34 th Annual General Meeting of the Company in the calendar year 2019 and he is not liable to retire by rotation. 7. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as an Ordinary Resolution: RESOLVED THAT pursuant to provisions of Section 149, 152 and other applicable provisions if any, of the Companies Act, 2013 and the Rules made thereunder, (including any statutory modifi cation(s) or re-enactment thereof for the time being in force) read with Schedule-IV of the Companies Act, 2013, Mr. Ashok R. Chitnis (DIN: ), Non-Executive Director of the Company, who has submitted a declaration that he meets the criteria for independence as provided in Section 149(6) of the Act and who is eligible for appointment, be and is hereby appointed as an Independent Director to hold offi ce for 5 (fi ve) consecutive years for a term up to the conclusion of the 34 th Annual General Meeting of the Company in the calendar year 2019 and he is not liable to retire by rotation. 8. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as an Ordinary Resolution: RESOLVED THAT Mr. S. Muthuswamy (DIN: ), who was appointed as an additional Director of the Company,and who in terms of provisions of Section 161 of the Companies Act, 2013 and the Rules made thereunder (including any statutory modifi cation(s) or re-enactment thereof for the time being in force), hold offi ce up to the date of this Annual General Meeting, in respect of whom the Company has received a notice in writing from a member under Section 160 of the Companies Act, 2013 signifying his intention to propose Mr. S. Muthuswamy as a candidate for the offi ce of Director of the Company, be and is hereby appointed as a Director of the Company, whose period of offi ce shall be liable to determination by retirement of director by rotation. 9. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as an Ordinary Resolution: RESOLVED THAT Mr. Syed Abdi, (DIN: ), who was appointed as an additional Director of the Company,and who in terms of provisions of Section 161 of the Companies Act, 2013 and the Rules made thereunder (including any statutory modifi cation(s) or re-enactment thereof for the time being in force), hold offi ce up to the date of this Annual General Meeting, in respect of whom the Company has received a notice in writing from a member under Section 160 of the Companies Act, 2013 signifying his intention to propose Mr. Syed Abdi as a candidate for the offi ce of Director of the Company, be and is hereby appointed as a Director of the Company, whose period of offi ce shall be liable to determination by retirement of director by rotation. 10. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as Special Resolution: RESOLVED THAT pursuant to the provisions of Sections 197 and 198 read together with Schedule V and the Rules framed thereunder and other applicable provisions, if any, of the Companies Act, 2013 (hereinafter referred to as the Act ), (including any statutory modifi cation(s) or re-enactment thereof for the time being in force) and subject to the approval of the Central Government and subject to such conditions and modifi cations as may be prescribed or imposed by the Central 4

6 ABG Shipyard Limited Annual Report Government while granting such approval, the approval of the Members be and is hereby accorded to the payment of the following remuneration as Minimum Remuneration to Mr. Dhananjay Datar, Executive Director (DIN: ) in case of no profi ts or inadequacy of profi ts in any fi nancial year commencing from April 1, 2014 for remaining tenure of his appointment i.e. Up to 28 th July, 2016:- Mr. Dhananjay Datar shall be entitled to the following Salary, Perquisites & Allowances and Bonus: ` Per Month ` Per Annum Salary Perquisites & Allowance Bonus 1,95,000 1,79,325 2,92,500 The perquisites and allowances, as aforesaid, shall include accommodation (furnished or otherwise) and / or house rent allowance in lieu thereof, Special Allowance, medical reimbursement; leave travel concession for self and family including dependents. The said perquisites and allowances shall be evaluated, wherever applicable, as per the provisions of Income Tax Act, 1961 or any rules there under or any statutory modifi cation(s) or re-enactment thereof; in the absence of any such Rules, perquisites and allowances shall be evaluated at actual cost. However, contribution to Provident Fund, Gratuity payable and encashment of Leave at the end of the tenure, as per the rules of the Company and to the extent not taxable under the Income Tax Law, shall not be included for the purpose of computation of the overall ceiling of remuneration. Further, employee stock options granted / to be granted, from time to time are not to be considered as perquisite and not to be included for the purpose of computation of the overall ceiling of remuneration. RESOLVED FURTHER THAT pursuant to the provisions of Section 197 and the Rules framed thereunder, read together with Schedule V and other applicable provisions, if any of the said Act, and subject to the approval of the Central Government, the Members do hereby ratify and confi rm the remuneration paid under the provisions of Sections 198, 309 read together with Schedule XIII of the Companies Act, 1956 amounting upto ` 41,86,500/- (Rupess Forty One Lacs Eighty Six thousand Five Hundred only) to the Executive Director for the Financial Year ended March 31, 2014 and waive the recovery of the above mentioned sum from him, being the remuneration agreed to be paid to him, as per the terms approved by the Members. RESOLVED FURTHER THAT the Board of Directors or a Committee thereof of the Board be and is hereby authorized to take such steps as may be necessary for obtaining necessary approvals - statutory, contractual or otherwise, in relation to the above and to settle all matters arising out of and incidental thereto and to sign and execute deeds, applications, documents and writings that may be required, on behalf of the Company and generally to do all such other acts, deeds, matters and things as may be necessary, proper, expedient or incidental for giving effect to this Resolution. 11. To consider and, if thought fi t, to pass with or without modifi cation(s), the following resolution as Special Resolution: RESOLVED THAT pursuant to the provisions of Sections 197 and 198 read together with Schedule V and the Rules framed thereunder and other applicable provisions, if any, of the Companies Act, 2013 (hereinafter referred to as the Act ), (including any statutory modifi cation(s) or re-enactment thereof for the time being in force) and subject to the approval of the Central Government and subject to such conditions and modifi cations as may be prescribed or imposed by the Central Government while granting such approval, the approval of the Members be and is hereby accorded to the payment of the following remunerations as Minimum Remuneration to Mr. S. Muthuswamy, Executive Director in case of no profi ts or inadequacy of profi ts in any fi nancial year commencing from April 1, 2014 for remaining tenure of his appointment i.e. Up to 12 th November 2016:- Mr. S. Muthuswamy shall be entitled to the following Salary, Perquisites, Allowances and Bonus: ` Per Month ` Per Annum Salary Perquisites & Allowance Bonus 2,00,000 1,73,150 3,00,000 The perquisites and allowances, as aforesaid, shall include accommodation (furnished or otherwise) and / or house rent allowance in lieu thereof, Special Allowance, medical reimbursement; leave travel concession for self and family including dependents. The said perquisites and allowances shall be evaluated, wherever applicable, as per the provisions of Income Tax Act, 1961 or any rules there under or any statutory modifi cation(s) or re-enactment thereof; in the absence of any such Rules, perquisites and allowances shall be evaluated at actual cost. However, contribution to Provident Fund, Gratuity payable and encashment of Leave at the end of the tenure, as per the rules of the Company and to the extent not taxable under the Income Tax Law, shall not be included for the purpose of computation of the overall ceiling of remuneration. Further, employee stock options granted / to be granted, from time to time are not to be considered as perquisite and not to be included for the purpose of computation of the overall ceiling of remuneration. The Board may increase/revise remuneration not exceeding 40% on present remuneration during the tenor of such appointment, in such manner as may be deem fi t by the Board in the best interests of the Company and as may be permissible by law. RESOLVED FURTHER that pursuant to the provisions of Section 197 and the Rules framed thereunder, read together with Schedule V and other applicable provisions, if any of the said Act, and subject to the approval of the Central Government, the 5

7 ABG Shipyard Limited Annual Report Members do hereby ratify and confi rm the remuneration paid under the provisions of Sections 198, 309 read together with Schedule XIII of the Companies Act, 1956 amounting upto 15,95,740 (Rupess Fifteen Lacs Ninety Five Thousands Seven Hundred Forty only) to the Executive Director for the period commencing from November 13, 2013 and ended on March 31, 2014 and waive the recovery of the above mentioned sum from him, being the remuneration agreed to be paid to him, as per the terms approved by the Members. RESOLVED FURTHER THAT the Board of Directors or a Committee thereof of the Board be and is hereby authorized to take such steps as may be necessary for obtaining necessary approvals - statutory, contractual or otherwise, in relation to the above and to settle all matters arising out of and incidental thereto and to sign and execute deeds, applications, documents and writings that may be required, on behalf of the Company and generally to do all such other acts, deeds, matters and things as may be necessary, proper, expedient or incidental for giving effect to this Resolution. By Order of the Board of Directors Place: Mumbai Sunil Agarwal Date: 14 th August, Company Secretary NOTES: 1. A Member entitled to attend and vote is entitled to appoint a proxy to attend and vote instead of himself and the proxy need not be a member of the Company. A person can act as proxy on behalf of members not exceeding fi fty (50) and holding in the aggregate not more than ten percent (10%) of the total share capital of the Company. A member holding more than ten percent (10%) of the total share capital of the Company may appoint a single person as proxy and such person shall not act as a proxy for any other person or shareholder. The Instrument of proxies in order to be effective should be duly completed, stamped and signed and must be deposited at the Registered Offi ce of the Company not less than 48 hours before the meeting. 2. An Explanatory Statement pursuant to Section 102 of the Companies Act, 2013 relating to the Special Businesses to be transacted at the Annual General Meeting is annexed hereto. 3. The details under clause 49 of the Listing Agreement with the Stock Exchange(s) in respect of the directors seeking appointment/ re-appointment at the Annual General Meeting are annexed hereto. 4. The Register of Members and Share transfer books of the Company will remain closed from Tuesday, 23 rd September, 2014 to Tuesday 30 th September, 2014 (both days inclusive) in connection with the Annual General Meeting. 5. Members are requested to intimate all changes with respect to their bank details, nomination, power of attorney, change of address, change in name, register/change in IDs etc. to their respective depository participant (DP). 6. The Securities and Exchange Board of India (SEBI) has mandated the submission of Permanent Account Number (PAN) by every participant in securities market. Members holding shares in electronic form are, therefore, requested to submit their PAN to their Depository Participants with whom they are maintaining their demat accounts. 7. Members/Proxies are requested to bring their copy of Annual Report and the attendance slip, duly fi lled in at the meeting. 8. Members desirous of obtaining any information as regards accounts and operations of the Company are requested to write to the Company at least one week before the meeting, so that information required is made available at the meeting. 9. As per Section 205C of the Companies Act, 1956, the amount remaining unpaid or unclaimed for a period of seven years from the date of transfer to the Unpaid Dividend Account of the Company shall be transferred to the Investor Education and Protection Fund (the fund) set up by the Government of India and no payments shall be made by the fund, in respect of any claims. Members who have not yet encashed their dividend warrants for the financial year ended March 31, 2007 and subsequent years are requested to make their claims directly to the Registrar and Share Transfer Agent, without any delay. It may be noted that the unclaimed dividend for the fi nancial years to are due for transfer to the IE PF fund as per table given below: Financial Year Due Date for Transfer th October, nd October, th October, th October, th October, The Ministry of Corporate Affairs (MCA) on 10 th May, 2012 notifi ed the IEPF (Uploading of information regarding unpaid and unclaimed amounts lying with companies) Rules, 2012 (IEPF Rules). The objective of the IEPF Rules is to help the 6

8 ABG Shipyard Limited Annual Report shareholders ascertain status of the unclaimed amounts and overcome the problems due to misplacement of intimation thereof by post etc. The Company has uploaded the information in respect of the Unclaimed Dividends in respect of the fi nancial years to , as on the date of 28 th Annual General Meeting held on 27 th September, 2013, on the website of the IEPF viz. Shareholders may kindly check the said information and if any dividend amount is appearing as unpaid against their name, they are requested to lodge their claim, duly supported by relevant document to the company before expiry of seven years. 11. All statutory registers are open for inspection at the Registered Offi ce of the Company on all working days, from the date hereof upto the conclusion of this meeting between a.m. and 5.00 p.m. 12. Corporate Members intending to send their authorized representatives to attend the Annual General Meeting are requested to send a duly certifi ed copy of the Board Resolution authorizing their representatives to attend and vote at the Meeting. 13. Members are requested to address all correspondence, including dividend matters, to the Registrar and Share Transfer Agent, M/s. Link Intime India Private Ltd., C-13, Pannalal Silk Mills Compound, L.B.S. Marg, Bhandup (West), Mumbai Members may also note that the Notice of the 29 th Annual General Meeting and the Annual Report for will also be available on the Company s website for download. The physical copies of the aforesaid documents will also be available at the Company s Registered Offi ce for inspection during normal business hours on working days. Even after registering for e-communication, members are entitled to receive such communication in physical form, upon making a request for the same, by post free of cost. For any communication, the shareholders may also send requests to the Company s investor id: seclegal@abgindia.com 15. Pursuant to the provisions of section 108 of the Companies Act, 2013 read with rule 20 of the Companies (Management and Administration) Rules, 2014 and the Clause 35B of the Listing Agreement, the Company is pleased to provide e- voting (Electronic Voting) facility to its members to cast their votes electronically on all resolutions set forth in this Notice convening the 29 th Annual General Meeting to be held on Tuesday, 30 th September, 2014, at noon. The Company has engaged the services of Central Depository Services Limited ( CDSL ) as the authorised agency to provide the e-voting facilities. The e-voting facility will be available during the following voting period: Commencement of e-voting From a.m. (IST) on 24 th September, 2014 End of e-voting 5.00 p.m. (IST) on 26 th September, 2014 The instructions for members for voting electronically are as under:- (i) (ii) Log on to the e-voting website Click on Shareholders tab. (iii) Now, select the Electronic Voting Sequence Number - EVSN along with COMPANY NAME i.e. ABG SHIPYARD LIMITED from the drop down menu and click on SUBMIT. (iv) (v) (vi) Now Enter your User ID: For CDSL: 16 digits benefi ciary ID; For NSDL: 8 Character DP ID followed by 8 Digits Client ID; For Members holding shares in Physical Form: Please enter Folio Number registered with the Company and then enter the Captcha Code as displayed on the screen; Then Click on Login. If you are holding shares in Demat form and had logged on to and casted your vote earlier for EVSN of any company, then your existing password is to be used. In case you have forgotten your password then enter the User ID and Captcha Code as displayed on the screen and click on Forgot Password and then enter the details as prompted by the system. Otherwise, if you are a fi rst time user or if you are holding shares in physical form, please follow the steps given below: a) Please fi ll the following details in the appropriate boxes (this is applicable to members holding shares in demat form or physical form): 1. Primary Level Enter your 10 digit alpha-numeric PAN issued by Income Tax Department. Please enter in CAPITAL LETTE` This must tally with the PAN registered by you with the Company / Depository Participant. Please note that Members who have not registered their PAN with the Company / Depository Participant, will have to use use the fi rst two letters of their name and the last 8 digits of the demat account/folio number in the PAN fi eld. 2. Secondary Level Enter the Date of Birth as recorded in your demat account or in the Company s records for the said demat account or folio in dd/mm/yyyy format. OR Enter the Bank Account Number as registered by you in your demat account or in the Company s records in respect of your shares in the said demat account or folio. OR In case neither your Date of Birth nor Bank Account details are recorded in your demat account or in the Company s records, as aforesaid, then please enter your demat account number (client id) or your folio number in the Bank Account fi eld. b) After entering these details appropriately, click on SUBMIT tab. (vii) Members holding shares in physical form will then directly reach the EVSN selection screen. However, members holding shares in demat form will now reach Password Creation menu wherein they are required to mandatorily enter their login 7

9 ABG Shipyard Limited Annual Report password in the new password fi eld. Kindly note that this password is to be also used by the demat holders for voting for resolutions of any other company on which they are eligible to vote, provided that company opts for e-voting through CDSL platform. It is strongly recommended not to share your password with any other person and take utmost care to keep your password confi dential. (viii) For Members holding shares in physical form, the details can be used only for e-voting on the resolutions contained in this Notice. (ix) (x) (xi) Click on the ABG SHIPYARD LIMITED on which you choose to vote. On the voting page, you will see Resolution Description and against the same the option YES/NO for voting. Select the option YES or NO as desired. The option YES implies that you assent to the Resolution and option NO implies that you dissent to the Resolution. Click on the Resolution File Link if you wish to view the entire Resolution. (xii) After selecting the resolution you have decided to vote on, click on SUBMIT. A confi rmation box will be displayed. If you wish to confi rm your vote, click on OK, else to change your vote, click on CANCEL and accordingly modify your vote. (xiii) Once you CONFIRM your vote on the resolution, you will not be allowed to change your vote subsequently. (xiv) You can also take out print of the voting done by you by clicking on Click here to print option on the Voting page. (xv) Institutional shareholders (i.e. other than Individuals, HUF, NRI etc.) are required to log on to and register themselves as Corporates. After receiving the login details they have to link the account(s) which they wish to vote on and then cast their vote. They should upload a scanned copy of the Board Resolution and Power of Attorney (POA) which they have issued in favour of the Custodian, if any, in PDF format in the system for the scrutinizer to verify the same. Please note that: 1. The voting period begins on September 24, 2014 at am and ends on September 26, 2014 at 5.00 pm. During this period shareholders of the Company, holding shares either in physical form or in dematerialized form, as on the cut-off date which is September 22, 2014, may cast their vote electronically. The voting rights of shareholders shall be in proportion to their shares in the paid up equity share capital of the Company as on this cut-off date. The e-voting module shall be disabled by CDSL for voting after 5.00 pm on September 26, In case you have any queries or issues regarding e-voting, you may refer the Frequently Asked Questions ( FAQs ) and e-voting manual available at under help section or write an to helpdesk.evoting@cdslindia.com. 3. Ms. Kala Agarwal, Practising Company Secretary (Membership No. F5976) has been appointed as the Scrutinizer to scrutinize the e-voting process in a fair and transparent manner. 4. The Scrutinizer shall within a period of not exceeding three (3) working days from the conclusion of the e-voting period, unblock the votes in the presence of at least two witnesses not in employment of the Company and forward her report of the votes cast in favour or against, to the Chairman or to any Director or Offi cer who may be authorized by the Chairman for this purpose. 5. The Results shall be declared on or after the Annual General Meeting (AGM). The Results declared along with the Scrutinizer s Report shall be placed on the Company s website and on the website of CDSL within two (2) days of passing of the resolutions at the AGM of the Company and communicated to the Stock Exchanges. EXPLANTORY STATEMENT PURSUANT TO SECTION 102 OF THE COMPANIES ACT, 2013 Item 4 Upon advice of the lenders of the company, your Board of Directors proposes to appoint M/s. GMJ & Co.,Chartered Accountants, (Firm Registration No W) as Joint Statutory Auditors of the Company to hold offi ce from the conclusion of 29 th annual General Meeting till the conclusion of next Annual General Meeting of the Company. The Company has received the Consent from M/s. GMJ & Co.,Chartered Accountants, along with certifi cate certifying that their appointment, if made would be within the compliance of the conditions as specifi ed under Section 139 of the Companies Act, 2013 as applicable. Existing Statutory Auditor M/s. Nisar & Kumar, Chartered Accountants, (Firm Registration No W), have conveyed their consent for the same. Your Board of Directors recommend passing of the resolution as set out at item no. 4 of the notice. None of the Directors, key managerial personnel of the Company, and any relatives of such director, key managerial personnel are in any way concerned or interested in this Resolution except to the extent of their shareholding in the Company, If any. Item no. 5 The Company proposes to raise funds to the tune of ` 1,000/- crores (Rupees One Thousand Crores), in one or more tranches through a public issues and/or on a private placement basis and/or QIP within the meaning of Chapter VIII of the SEBI ICDR Regulations and/or preferential issue and/or any other kind of public issue and/or private placement as may be permitted under applicable law from time to time. The resolution contained in the business of the Notice is regarding proposal to create, offer, issue and allot equity shares and/or such other Securities as stated in the Special Resolution (the Securities ) which seeks to empower the Board of Directors (hereinafter referred to as Board which include any Committee thereof, whether constituted or to be constituted) to undertake such issue or offer of securities. 8

10 ABG Shipyard Limited Annual Report Object of the issue In order to strengthen the Balance Sheet of the Company by repayment of its debt and for general corporate purposes, the Company proposes to raise long term capital by issue of further securities. 2. Pricing In case of an issue of the Securities to Qualified Institutional Buyers pursuant to Chapter VIII of the SEBI ICDR Regulations, the issue price of Securities shall be at a price, being not less than the price calculated in accordance with Chapter VIII of SEBI ICDR Regulations as may be amended from time to time and the Relevant Date in this regard shall be the date on which the board decides to open the issue of securities or such other time as may be allowed by SEBI ICDR Regulations from time to time. In case of a Qualifi ed Institutional Placement pursuant to Chapter VIII of the SEBI ICDR Regulations, the allotment of securities shall be completed within twelve months from the date of passing of this resolution. In case of issue of ADRs/GDRs the issue price shall be at a price, being not less than the price calculated in accordance with applicable law including the Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipts Mechanism) Scheme, 1993, as may be amended from time to time. 3. Terms and Conditions The detailed terms and conditions for the offer will be determined by the Board in consultation with Advisors, Lead Manager/ Book Runners, Underwriters and such other authority or authorities as may be required to be consulted by the Company considering the prevailing market conditions and other relevant factors. The issue/ allotment/ conversion would be subject to the availability of regulatory approvals, if any. The conversion of securities, held by foreign investors, into shares would be subject to the applicable foreign investment limits. The Special Resolution seeks to empower the Board and/or Committee authorized by the Board, to issue Securities in one or more tranche or tranches, at such time / times, and to such person(s) as the Board may in its absolute discretion deem fi t. Provisions of the Companies Act, 2013 and the relevant clause of the Listing Agreement with the Stock Exchanges where the Equity Shares of the Company are listed provides, inter alia, that when it is proposed to increase the issued capital of a company by allotment of further shares, such further shares shall be offered to the existing shareholders of such company in the manner laid down in Section 62 unless the shareholders in a general meeting decide otherwise. Since the Special Resolution proposed in the business of the Notice results in the issue of shares of the Company otherwise than to the members of the Company, consent of the shareholders is being sought pursuant to the provisions of the Companies Act, 2013 and the Listing Agreement. The Special Resolution, if passed, will have the effect of allowing the Board and/or the Committee authorized by the Board to issue and allot Securities to the investors who may or may not be the existing shareholders of the Company and the Board and/or the Committee authorized by the Board will have the power to decide the date of opening of the Issue. The Directors or Key Managerial Personnel of the Company and their relatives, may be deemed to be concerned or interested in the above resolution only to the extent of shares held by them in the Company The Board of Directors recommend the special resolution for your approval. Item No. 6 & 7 Mr. Ashwani Kumar (Din: ) and Mr. Ashok R Chitnis (Din: ) are directors of the Company whose period of offi ce was liable to retirement by rotation. In terms of Section 149 and any other applicable provisions of the Companies Act, 2013, Mr. Ashwani Kumar and Mr. Ashok R. Chitnis being eligible, offer themselves for appointment as Independent Directors on the Board of the Company. The Company has received the declaration of independence from the aforesaid directors in accordance with the provisions of the Companies Act, In line with the requirements of the Companies Act, 2013, it is therefore proposed to appoint Mr. Ashwani Kumar and Mr. Ashok R. Chitnis as Independent Directors on the Board of the Company for a term upto fi ve consecutive years, commencing from 30 th September, 2014 pursuant to the provisions of the Companies Act, A brief profi le of proposed Independent Directors, including nature of their expertise, is annexed to this notice. Notices have been received from Members proposing candidature of the above Directors for the offi ce of Independent Director of the Company together with the deposit of `1/- Lac each as prescribed under the applicable provisions of the Companies Act In the opinion of the Board, Mr. Ashwani Kumar and Mr. Ashok R. Chitnis, fulfi l the conditions specifi ed in the Companies Act, 2013 and the Rules made thereunder for appointment as Independent Directors of the Company. A copy of the draft Letter of Appointment for Independent Directors, setting out the terms and conditions of their appointment, is available for inspection at the Registered Offi ce of the Company during business hours on any working day and is also available on the website of the Company. None of the Directors or Key Managerial Personnel of the Company and their relatives, other than Independent Directors for their respective appointment, are concerned or interested, fi nancially or otherwise, in the resolutions set out at item nos. 6 to 7. The Board recommends the Ordinary Resolutions as set out at item nos. 6 to 7 for approval of the Members. 9

11 ABG Shipyard Limited Annual Report Item No. 8 & 9 At the Meeting of the Board of Directors of the Company, held on 13 th November, 2013, Mr. S. Muthuswamy (DIN ) was appointed as an Additional Director and designated as Executive Directors of the Company and holds the offi ce as an additional director upto the date of the ensuing Annual General Meeting in terms of Section 161 of the Companies Act, 2013 ( the Act ). Further, the Board of Directors of the Company vide its circular resolution dated 21 st January, 2014 appointed Mr. Syed Abdi (DIN ) as an Additional Director and designated as Managing Director and CEO of the Company and entitled to hold the offi ce as an additional director upto the date of the ensuing Annual General Meeting in terms of Section 161 of the Companies Act, 2013 ( the Act ). Mr. S. Muthuswamy and Mr. Syed Abdi are not disqualifi ed from being appointed as Director in terms of section 164(2) of the Act Notices have been received from Members proposing candidature of the above Directors for the offi ce of Director of the Company together with the deposit of `1/- lac each as prescribed under the applicable provisions of the Companies Act A brief profi le of proposed Directors, including nature of their expertise, is annexed to this notice. None of the Directors or Key Managerial Personnel of the Company and their relatives, other than Directors for their respective appointment, are concerned or interested, fi nancially or otherwise, in the resolutions set out at item nos. 8 to 9. The Board recommends the Ordinary Resolutions as set out at item nos. 8 to 9 for approval of the Members. Item No. 10 &11 The Members at their Annual General Meeting held on 27 th September, 2011 had by way of Ordinary Resolution approved the appointment of Mr. Dhananjay Datar (DIN )as Executive Director of the Company for a period of 5 years with effect from July 28, 2011 on terms and conditions, including remuneration payable to him. Further, The Members at their Extra Ordinary General Meeting held on 29 th March, 2014 had by way of Special Resolution approved the appointment of Mr. S. Muthuswamy as Executive Director for a period of 3 years commencing from 13 th November, 2013 on terms and conditions, including remuneration payable to the Executive Director. In case of no profi ts or inadequacy of profi ts in any Financial Year, the terms of appointment of Executive Directors also provide for payment of said remuneration as Minimum Remuneration during the currency of their respective tenures as per details mentioned in the Resolutions. In respect of Financial Year , the Ministry of Corporate Affairs ( MCA ) have vide General Circular No.08/2014 dated April 4, 2014 clarifi ed that the provisions pertaining to maintenance of books of accounts, preparation, adoption and fi ling of fi nancial statements and other documents required to be attached to the Annual Report shall be governed by the relevant provisions, schedules, rules of the Companies Act, Pursuant to the provisions of Sections 198 and 309 read together with Schedule XIII ( Schedule XIII ) of the Companies Act, 1956, in case of no profi ts or inadequacy of profi ts calculated under Section 349 and 350 of the Companies Act, 1956, the Company may pay remuneration by way of salary, dearness allowance, perquisites and any other allowances (excluding commission) upto the ceiling limits as specifi ed in Schedule XIII subject to Members approval by way of Special Resolution and compliance of disclosure requirements and other conditions as stated therein. Any sums paid without compliance of conditions stated therein, become refundable to the Company and until such sums become refundable, are held in trust for the Company, unless the Company waives recovery of the said amount by way of a Special Resolution passed by the Members and such waiver is approved by the Central Government. The payment of managerial remuneration for the said fi nancial year is in accordance with the Companies Act, 1956 and the various MCA circulars in force at that time. Pursuant to the provisions of Section 197 read together with Schedule V of the Act, in respect of the payment of managerial remuneration in case of no profi ts or inadequacy of profi ts as calculated under Section 198 of the Act, the Company may pay such remuneration upto the ceiling limits as specifi ed in Schedule V in compliance of terms as mentioned in the said schedule and the Members approval by way of a special resolution has been obtained for payment of remuneration for a period not exceeding 3 years. In case of non compliance of any terms of said schedule and / or any remuneration paid/to be paid to the Executive Directors in excess of the prescribed limits,the same shall be subject to the approval of the Central Government. Taking into consideration the above and the terms of appointment and remuneration (including minimum remuneration) agreed with Executive Directors, it is proposed to obtain Members approval by way of Special Resolutions, as stated herein above, to the payment of minimum remuneration, where the Company has no profi ts or its profi ts are inadequate, to Mr Dhananjay Datar and Mr S. Muthuswamy for remaining tenure of their appointment and the waiver of the recovery of remuneration paid/payable by the Company upto March 31, The Nomination and Remuneration Committee of the Board and the Board have on 14 th,august 2014, respectively accorded their approvals to the above and in the interest of the Company have recommended the aforesaid resolutions as set out in this Notice for approval of the Members. Except the Directors concerned, None of the Directors, Key Managerial Personnel of the Company and their respective relatives is in any way concerned or interested, in Resolution at Item Nos. 10 and 11 of the Notice respectively. 10

12 ABG Shipyard Limited Annual Report THE STATEMENT CONTAINING ADDITIONAL INFORMATION AS REQUIRED IN SCHEDULE V OF THE ACT. I. General Information: (1) Nature of industry: ABG Shipyard Limited (ABGSL) was incorporated in the year 1985 as Magdalla Shipyard Pvt. Ltd. with the main objective of carrying out shipbuilding and ship repair activities. In a span of more than two decades, ABGSL has achieved the status of one of the largest private sector shipbuilding yard in India having customers across the world. ABGSL s shipyards are located at Dahej and Surat, in the state of Gujarat. (2) Date or expected date of commencement of commercial production ABGSL was incorporated on March 15, The Company had since commenced its business. (3) In case of new companies, expected date of commencement of activities as per project approved by fi nancial institutions appearing in the prospectus. Not applicable. (4) Financial performance based on given indicators ` in Crores II. Particulars FY FY FY Gross Revenue Profi t (Loss) after tax for the period (199.30) (On standalone basis) Global shipbuilding industry is impacted very badly due to lack of demand and economy slow down. This resulted in cancellation of bulk carrier order book in piling up of inventory and Work In Progress in the Company. This has also resulted in paucity of working capital and caused signifi cant increase in the operating cycle, thereby aggravating the liquidity position. Due to combination of all the factors mentioned above, the fi nancial position of the company has weakened. (5) Foreign investments or collaborators, if any. The Company has not entered into any material foreign collaboration and no direct capital investment has been made in the Company. Small Foreign investors are holding shares of the Company mainly on account of secondary market purchases. Information about the appointee: (1) Background details Mr. Dhananjay Datar is a member of the Institute of Chartered Accountant of India. He has over 25 years of rich experience in decisive leadership, strategic planning, fi nancial management, operations and corporate fi nance in sectors such as chemicals, textiles, pharmaceuticals, telecom, steel and ship building. He has worked with various prestigious companies viz. Man Industries (India) Limited, Telecil Group Mauritius & South Affrica, Shri Dinesh Mills Limited, Beta Nepthol Limited. His last assignment was with Man Industries (India) Limited as Vice President- Corporate Affairs and Finance Mr. S. Muthuswamy is a Master of Commerce and MBA with vast experience in corporate world for over 35 years. He is associated with the Company since 1995 and occupying various senior positions in the Organisation before his said appointment. (2) Past remuneration (last two years): (`in lakhs) Particulars Mr. Dhananjay Datar Mr. S. Muthuswamy* FY FY FY FY Salary Perquisites & Allowance Bonus * w.e.f. 13 th November, 2013 The perquisites and allowances, as aforesaid, shall include accommodation (furnished or otherwise) and / or house rent allowance in lieu thereof, Special Allowance, medical reimbursement; leave travel concession for self and family including dependents,. The said perquisites and allowances shall be evaluated, wherever applicable, as per the provisions of Income Tax Act, 1961 or any rules there under or any statutory modifi cation(s) or re-enactment thereof; in the absence of any such Rules, perquisites and allowances shall be evaluated at actual cost. However, contribution to Provident Fund, Gratuity payable and encashment of Leave at the end of the tenure, as per the rules of the Company and to the extent not taxable under the Income Tax Law, shall not be included for the purpose of computation of the overall ceiling of remuneration. Further, employee stock options granted / to be granted, from time to time are not to be considered as perquisite and not to be included for the purpose of computation of the overall ceiling of remuneration. Includes leave encashment\ 3) Recognition or awards: Under the leadership and guidance of the Executive Directors, the Company was awarded by Certifi cate of the Highly Commended Shipyard of the Year, at the prestigious Lloyd s List Middle East and Indian Subcontinent Awards

13 ABG Shipyard Limited Annual Report III. (4) Job profi le and his suitability Taking into consideration their above said qualifi cations and varied experience, the Board has bestowed the above responsibilities to Mr. Dhananjay Datar and Mr. S. Muthuswamy. (5) Remuneration proposed Mr. Dhananjay Datar and Mr. S. Muthuswamy shall be entitled to the remunerations including Salary, Perquisites, Allowances and Bonus as per the details mentioned in the resolutions. (6) Comparative remuneration profi le with respect to industry, size of the company, profi le of the position and person (in case of expatriates the relevant details would be with respect to the country of his origin). The remuneration of the Executive Directors were commensurate with remuneration of expatriates appointed at CEO/ ED levels of similar sized multinationals. The remuneration of the EDs is commensurate with remuneration of Board level positions in similar sized domestic companies, taking into consideration the responsibilities shouldered by them. (7) Pecuniary relationship directly or indirectly with the company, or relationship with the managerial personnel, if any Besides the remuneration paid/payable to Mr. Dhannajay Datar / Mr. S. Muthuswamy, they do not have any other pecuniary relationship with the Company or with the managerial personnel. Other information: (1) Reasons of loss or inadequate profi ts: The Performance of the Company has been adversely impacted due to the following reasons 1) The global crisis has impacted the shipping industry severely due to fall in commodity demand & prices and subsequent fall in cargo demand. The fall in freight rates has resulted in fall/cancellation in new ship/vessel orders impacting the company`s business; 2) Further, due to global economic downturn, the fi nances available to ship owners have also dried up. Due to global liquidity crunch and impact on shipping industry, banks have reduced fi nancing to the ship building business, which results in to higher borrowing cost; 3) Lower demand of vessels resulted the Dahej Shipyard, which was built primarily for meeting the demand for Rigs and large size bulkers, has very low capacity utilization; 4) Ship Building Subsidy scheme introduced by the Government of India to survive Indian shipbuilding industry has come to an end for orders placed before August 2007, thereafter Govt. has not introduced any support to the industry, which adversely affected to competitive advantage of the Company to Asian Shipyard protected by their Government. (2) Steps taken or proposed to be taken for improvement: During the year under review, your Company had taken a decision to undertake a debt restructuring exercise under the CDR mechanism that is governed by the Corporate Debt Restructuring Scheme issued by Reserve Bank of India dated 27 th August, 2008 and the Corporate Debt Restructuring Guidelines formulated thereunder in consultation with its senior secured lenders. Pursuant thereto, the CDR Empowered Group at the meeting held on 24 th March 2014 has approved a restructuring package in terms of which the existing fi nancial assistance as mentioned in the LOA (the LOA ) is restructured as set out in the letter of approval dated 27 th March 2014 issued by the Corporate Debt Restructuring Cell to the Company and the CDR Lenders (the CDR Lenders ) and in this regard the Company has entered into a Master Restructuring Agreement with the CDR Lenders (the Master Restructuring Agreement ) as on 28 th March, 2014 as amended / modifi ed from time to time. The key features of the CDR Package are elaborated at Note No 4D under Notes to Financial Statements forming part of this Annual Report. (3) Expected increase in productivity and profi ts in measurable terms. With the help of debt restructuring mechanism and positive economy and industry outlook, it is expected that the Company will overcome from such fi nancial positions.. Details of the Directors seeking Appointment/ Re-appointment in the 29 th Annual General Meeting Name of Director Mr. Rishi Agarwal Mr. Ashwani Kumar Mr. Ashok Chitnis Mr. Syed Abdi Mr. S. Muthuswamy Mr. Dhananjay Datar Date of Birth 03/09/ /08/ /02/ /01/ /03/ /12/1962 Date of Appointment / Reappointment 27/09/ /09/ /09/ /01/ /11/ /07/

14 ABG Shipyard Limited Annual Report Qualification Experience a n d E x p e r t i s e in Specific f u n c t i o n a l area MBA (Finance) from Purdue University, USA. Mr. Rishi A g a r w a l has over 28 years of rich experience in Shipbuilding, S h i p R e p a i r i n g and Shipping Industry. Post Graduate in Political Science from Allahabad University Mr. Ashwani Kumar Joined Indian Revenue Service in the year November 1973, During the tenure, worked in various c a p a c i t i e s and at various places like, Kolkata, Jaipur, Bhopal, Jodhpur, Mumbai and retired as Chief Commissioner of Income Tax from Chennai in the year August, Mr. Chitnis is a Marine Engineer and holds a certifi cate from the Marine Engineering College of the Directorate of Marine Engineering Training as well as a First Class Competency Certifi cate (Steam and Motor) from the Ministry of Transport, Government Mr. Ashok Chitnis has over Forty years of experience in the maritime sector. He is a Fellow of the Institute of Marine Engineers (India) from its inception in 1980 and has served a full two year term as the President of the Institute. He has worked with the Scindia Steam Navigation Company Ltd., and has held the position of Chief Engineer for three years during his tenure. Thereafter, he joined the Indian Register of Shipping (IRS) as a fi eld surveyor in He was in charge of the IRS Mumbai fi eld offi ce for over four years. He was Chief Surveyor, IRS for over 9 years until his superannuation in As Chief Surveyor, he was in charge of the Indian Register Quality Systems. He is a qualifi ed and experienced lead auditor for QMS Audits with respect to ISO 9000 standards and has conducted a large number of audits at companies in various industrial sectors. DMET (Marine Engineering Research Institute), Chief Engineer (August 1983), from Ministry of transport, India. Mr. Syed Abdi has 35 years of Management experience in Shipbuilding Industry. Mr. Syed Abdi worked in senior capacities with various Ship building and Shipping Industry in India and abroad. His last assignment was Drydock World Dubai as an Executive Director of the Company. Master of Commerce (M COM) and Masters of Business Administration (MBA) Mr. S. Muthuswamy has vast experience in corporate world for over 35 years. He is associated with the Company and ABG Group since 1995 in various capacities and was designated as Vice President (Finance) of the Company at the time of said appointment. He is a Chartered A c c o u n t a n t, qualifi ed in year 1989 and Fellow Member of Institute of C h a r t e r e d Accountants of India & Commerce Graduate from University of Indor. He has over 25 years of rich experience in decisive l e a d e r s h i p, s t r a t e g i c planning, fi nancial m a n a g e m e n t, operations and corporate fi nance in sectors such as chemicals, t e x t i l e s, pharmaceuticals, telecom, steel and ship building. He has worked with various p r e s t i g i o u s companies viz. Man Industries (India) Limited, Telecil Group Mauritius & South Affrica, Shri Dinesh Mills Limited, Beta Nepthol Limited. His last assignment was with Man Industries (India) Limited as Vice P r e s i d e n t - Corporate Affairs and Finance 13

15 ABG Shipyard Limited Annual Report Directorship held in other Companies Committee P o s i t i o n s held in other Companies No. of Shares held in ABG S h i p y a r d Limited ABG International Private Ltd. ABG Cement Ltd. ABG Energy ( G u j a r a t ) Ltd. Indian Register of Shipping. Western Indian Shipyard Limited J Kumar Infraprojects Limited Western India Shipyard Ltd. Audit Committee Western Indian Shipyard Limited NIL ABG Capital ABG Cement Limited Ltd. ABG International Onaway Indus- Private tries Ltd. Ltd. ABG Energy Himachal Oblique Trading Private Ltd. Pradesh Ltd. Jarrow Finance ABG Energy & Trad- (Gujarat) Ltd. ing Private Ltd. ABG Energy Banal Investment (MP) Ltd. & Trading Essar Cement Private Ltd. ABG Foods Private Ltd. ABG Acquafarm Ltd. ABG Anchor Marine (India) Private Ltd Private Man Industries Ltd.. (India) Ltd. G.C. Property Ltd. ABG Motors Ltd. Somerset Estate Private Ltd. Eleventh Land D e v e l o p e r s Private Ltd. Tirupati Landmark Private Ltd. Gold Croft Property Private Ltd. ABG Resources Private Ltd. ABG Enterprises & Trading Private Ltd. NIL NIL NIL ABG Cement Ltd. Audit Committee Remuneration Committee NIL NIL NIL NIL NIL 14

16 ABG Shipyard Limited Annual Report TO THE MEMBERS, DIRECTORS REPORT The Board of Directors of your Company are pleased to present the Twenty Ninth Annual Report together with the Audited Accounts for the fi nancial year ended 31 st March, FINANCIAL PERFORMANCE Financial performance of the Company for Financial Year is summarised below: ( ` in crores) Particulars Sales and Other Income 1, Profi t before Interest, Depreciation & Tax Less: Interest (Net) Profi t before Depreciation & Tax (204.39) Less: Depreciation Profi t before Tax (296.17) Less: Provisions for Taxation (96.87) Net Profi t after Tax (199.30) Balance brought forward from previous year Profi t available for appropriations Appropriations Transfer to Debenture Redemption Reserve Transfer to General Reserve Balance carried to Balance Sheet * Figures regrouped wherever necessary. 2. OPERATIONS REVIEW On a standalone basis, the Company has recorded total revenue of Rs 1, Crores and EBIDITA of Rs Crores as against Rs 2, Crores and Rs Crores respectively in the previous year. Net loss after tax is Rs Crores as compared to net profi t after tax of Rs Crores in the previous year. The decrease in revenue and increase in fi nance cost are reasons affecting the performance of the Company. 3. BUSINESS OPERATIONS Global shipbuilding industry is impacted very badly due to lack of demand and economy slow down. This lead to cancellation of bulk carrier order book with piling up of inventory and Work In Progress in the Company. This has resulted in paucity of working capital and caused signifi cant increase in the operating cycle, thereby aggravating the liquidity position. Due to combination of all the factors mentioned above, the fi nancial position of the company has weakened. During the year under review, your Company had taken a decision to undertake a debt restructuring exercise under the CDR mechanism that is governed by the Corporate Debt Restructuring Scheme issued by Reserve Bank of India dated 27 th August, 2008 and the Corporate Debt Restructuring Guidelines formulated thereunder in consultation with its senior secured lenders. Pursuant thereto, the CDR Empowered Group at the meeting held on 24 th March 2014 has approved a restructuring package in terms of which the existing fi nancial assistance as mentioned in the LOA (the LOA ) is restructured as set out in the letter of approval dated 27 th March 2014 issued by the Corporate Debt Restructuring Cell to the Company and the CDR Lenders (the CDR Lenders ) and in this regard the Company has entered into a Master Restructuring Agreement with the CDR Lenders (the Master Restructuring Agreement ) as on 28 th March, 2014 as amended / modifi ed from time to time. The salient features of the CDR Package are as follows a) Cut-off date is 01 st August, 2013; b) Total Debt rescheduled has funded interest ranging from 1 year 6 months to 3 years 7 months and loan is payable over a period of 10 years. c) Priority loan sanctioned for meeting the immediate operational and capital requirement of the Company; 15

17 ABG Shipyard Limited Annual Report d) Reduction in the rate of interest to the Bank rate of the Monitering Institution plus spread of 1% (one percent) per annum as may be reset from time to time in accordance with the terms of CDR LOA. The key features of the CDR Package are elaborated at Note No 4D under Notes to Financial Statements forming part of this Annual Report. Shipbuilding facilities of your Company are located at Surat and Dahej in Gujarat. Since inception, your Company has successfully built and delivered One Hundred and Sixty One (161) ships, including Specialized and Sophisticated vessels like Interceptor Boats, Self-Loading and Discharging Bulk Cement Carriers, Floating Cranes, Articouple Tugs and Flotilla, Split Barges, Bulk Carriers, Newsprint Carriers, Offshore Supply Vessels, Dynamic Positioning Ships, Anchor Handling Tug Supply Vessels, Multi-purpose Support Vessel, Diving Support Vessels, Pollution Control Vessel etc. for leading companies in India and overseas. Over 80% of the vessels built have been for foreign customers in Europe, South East Asia and Middle East. Around 50% of ABG s Order Book comprises of orders from repeat customers. The manufacturing process in the Shipyards are in line with world class standards and the Yards have been certifi ed by DNV for ISO 9001:2008 (for Quality Management Standards), by IRS for ISO 14001:2004 (for Environment Management Systems) and OHSAS 18001:2007 (for Occupational Health & Safety Management Systems). 4. MANAGEMENT DISCUSSION AND ANALYSIS Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the listing agreement with the Stock Exchanges in India is presented in a separate section forming part of this Report as Annexure C. The detailed Industry Review and Outlook are elaborated in the Management Discussion and Analysis Report. 5. AWARDS AND ACCOLADES Highly Commended Shipyard of the Year Certifi cate at the prestigious Lloyd s List Middle East and Indian Subcontinent Awards 2013 Certifi cate of Excellence Star Performer Award at the 45 th EEPC India National Awards for Export Excellence in the Product Group - Miscellaneous Transport Equipment and Parts, Large Enterprise. Recognition as Finalist for The Ship Repair/Shipyard Award in the Seatrade Middle East & Indian Subcontinent Awards DIVIDEND In view of the above results, your Directors do not recommend any dividend for the year under review. 7. SUBSIDIARIES At the end of the fi nancial year , your Company has three (3) subsidiaries i.e. Western India Shipyard Limited (a BSE listed Company), ABG Shipyard Singapore Pte. Limited (Singapore based Wholly Owned Subsidiary) and ABG FPSO Private Limited. In accordance with the General Circular no. 2/2011 dated 8 th February, 2011, issued by the Ministry of Corporate Affairs (MCA), Government of India (GOI), the Balance Sheet, Statement of Profi t and Loss and other documents of the subsidiary companies are not attached with the Balance Sheet of the Company. The Company undertakes to make available the copies of annual accounts of the subsidiary companies and related detailed information to the shareholders of the Company on request. Further, the annual accounts of the subsidiary Companies will also be kept at the registered offi ce of the Company and of its subsidiary Companies for inspection by any member. In accordance with the Accounting Standard AS-21 issued by The Institute of Chartered Accountants of India (ICAI) on consolidated Financial Statements, the consolidated fi nancial statements are forming part of this Annual Report. The Consolidated Financial Statements have been prepared in line with the provisions of Clause 32 of the Listing Agreement entered with the stock exchanges. 8. DIRECTORS In terms of the Section 152 and 160 of the Companies Act, 2013 read with Article 190 of the Articles of Association of the Company, Mr. Rishi Agarwal is liable to retire by rotation at the ensuing Annual General Meeting and is eligible for 16

18 ABG Shipyard Limited Annual Report re-appointment. Your Directors recommend the re-appointment of Mr. Rishi Agarwal (DIN ) as Director. Upon his re-appointment as a director, Mr. Rishi Agrawal shall continue to hold offi ce as the Non-Executive Chairman of the Company. During the year under review, your Company has appointed Mr. S. Muthuswamy (DIN ) and Mr. Syed Abdi (DIN ) as Additional Director and designated as Executive Director w.e.f. 13 th November, 2013 and as Managing Director and CEO w.e.f. 9 th January, 2014 respectively. In terms of Section 161 of the Companies Act, 2013, Mr. S. Muthuswamy (DIN ) and Mr. Syed Abdi (DIN ) holds offi ce only upto the date of the ensuing Annual General Meeting. The Company has received requisite notice in writing from members proposing their name for the offi ce of the Director. During the year Mr. Shahzaad Dalal (DIN ) Independent Director, has resigned from the Board due to his relocation abroad w.e.f. 13 th November, 2013 and Major Arun Phatak (DIN ) Executive Director of the Company has resigned from the Company w.e.f. 31 st December, 2013, due to ill health and old age. ICICI Bank Ltd. has withdrawn the nomination of Mr. Loknath Mishra (DIN ) from the Board w.e.f. 14 th August, 2013 and IDBI Bank Ltd has nominated Mr. Aloke Sengupta (DIN ) on the Board of the Company on 14 th August, Further, Export Import Bank of India (EXIM) has nominated Mr. David Rasquinha (DIN ) on the Board on 30 th May, As per section 149 of the Companies Act, 2013 (Act), which came into effect from 1 st April, 2014, every listed public company is required to have at least one-third of the total number of directors as Independent Directors. These Independent Directors are not liable to retire by rotation. Accordingly, it is proposed to appoint Mr. Ashok Chitnis (DIN ) and Mr. Ashwani Kumar (DIN ) as Independent Directors, in accordance with the provisions of section 149 of the Act, to hold offi ce as per their tenure of appointment mentioned in the Notice of the Annual General Meeting of the Company. The Company has received declarations from the said Independent Directors of the Company confi rming that they meet the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under the said Clause 49. In accordance with the provisions of Section 149(4) and proviso to Section 152(5) of the Companies Act, 2013, these Directors are being appointed as Independent Directors to hold offi ce as per their tenure of appointment mentioned in the Notice of the forthcoming AGM of the Company. A brief resume of the Director retiring by rotation at the ensuing AGM, nature of expertise in specifi c functional areas and names of the Companies in which he holds directorship and/ or membership/ chairmanships of Committees of the respective Boards, shareholding and relationship between Directors inter se as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is given in the notice of Annual General Meeting forming part of this Annual Report None of these directors is disqualifi ed as per the provisions of Section 164 of the Companies Act, 2013, to be re-appointed as directors of your Company. 9. AUDITORS M/s. Nisar & Kumar, Chartered Accountants, Statutory Auditors of the Company hold offi ce till the conclusion of the ensuing Annual General Meeting is proposed to be re-appointed as joint Statutory Auditors of the Company from the conclusion of ensuing Annual General Meeting till the conclusion of 32 nd Annual General Meeting subject to ratifi cation by members at every Annnual General Meeting of the Company. M/s. GMJ and Co. Chartered Accountants is proposed to be appointed as joint Statutory Auditors of the Company from the conclusion of ensuing Annual General Meeting till the conclusion of next Annual General Meeting of the Company. Joint Statutory Auditors have consented for their re-appointment in terms of the Section 139 of the Companies Act 2013 and also provided a Certifi cate confi rming the satisfaction of conditions prescribed under the Companies (Audit and Auditors) Rules, 2014 and Section 141 of the Companies Act, Your Directors on the recommendation of the Audit Committee propose the appointment of Statutory Auditors at such remuneration to be decided by the Board of Directors in consultation with the said Auditors. 10. CAPITAL During the period under review, the Authorised Capital of the Company have been increased to ` 170,00,00,00,000/- (` Seventeen Thousand Crores Only) divided into 15,00,00,00,000 (One Thousand Five Hundred Crore) equity shares of `10/- (` Ten Only) each aggregating to ` 150,00,00,00,000/- (` Fifteen Thousand Crores Only) and 200,00,00,000 (Two Hundred Crores) Compulsory Convertible Preference Shares of `10/- (` Ten Only) each aggregating to ` 20,00,00,00,000/- (` Two Thousand Crores Only). 17

19 ABG Shipyard Limited Annual Report ISSUE OF SECURITIES In order to strengthen the Balance Sheet of the Company by repayment of its debt and for general corporate purposes, the Company proposes to raise long term capital by issue of further securities including but not limited to Convertible Bonds, Preference Shares, Equity Shares and other securities whether convertible or not, etc., upto ` 1,000/-Crs. (` One Thousand Crores). Accordingly the enabling resolution mentioned in the Notice of meeting is commended for our approval. 12. DEPOSITS The Company has not accepted deposits by way of invitation to the public and therefore, provisions of Section 73 of the Companies Act, 2013 are not applicable to the Company. 13. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FORIEGN EXCHANGE EARNINGS AND OUTGO Information relating to the conservation of energy, technology absorption and foreign exchange earnings and outgo required under Section 217(1) (e) of the Companies Act, 1956 read with Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988, as amended, is forming part of this Report as Annexure A. 14. CORPORATE GOVERNANCE ABG believes in ethical conduct of business and understands that good corporate governance is vital to success in business; create long term shareholder value as also an important component of commitment to the shareholders, customers and employees. A detailed report on compliance of Corporate Governance in terms of Clause 49 of the Listing Agreement is presented in a separate section forming part of this Report as Annexure B. The Auditors certifi cate on compliance with Corporate Governance by the Company is attached to the report on Corporate Governance. 15. DIRECTORS RESPONSBILITY STATEMENT As stipulated in Section 217(2AA) of the Companies Act, 1956, your Directors confi rm that: i. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; ii. iii. iv. 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 at the end of the fi nancial year and of the profi t or loss of the company for that period; the Directors have taken proper and suffi cient care of the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding assets of the Company and for preventing and detecting fraud and other irregularities; the Directors have prepared the annual accounts on a going concern basis. 16. STATUTORY INFORMATION The particulars of employees as required under Section 217 (2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, and Companies (Particulars of Employees) Amendment Rules, 2011, forms part of this Report. In terms of the provisions of Section 219 (1)(b)(iv) of the Act, the annual report excluding the aforesaid information is being sent to all the members of the Company. Any member seeking such particulars may write to the Company Secretary at the Corporate Offi ce of the Company. 17. INDUSTRIAL RELATIONS Your Company maintained healthy, cordial and harmonious industrial relations at all levels at the offi ces and yards of the Company throughout the year. 18. CORPORATE SOCIAL RELATIONS In compliance with the requirement of the Companies Act, 2013, the Company has constituted a Corporate Social Responsibility Committee. Details on various initiatives in this regard are described in the Report of Corporate Governance and forms part of this report. 19. APPRECIATION Your Directors wish to acknowledge the understanding, support and services of the employees at all levels which have largely contributed to effi cient operations and management of the Company during the year under review. 18

20 ABG Shipyard Limited Annual Report Your Directors also take this opportunity to express their deep sense of gratitude to all the Customers, Suppliers, Bankers, Financial Institutions, Trustees, Government Authorities/Offi cials, Business Associates, Shareholders and Debenture Holders of the Company for their continuous guidance and support to the Company and their continued confi dence in the management of the Company. For and on behalf of the Board Place: Mumbai Syed Abdi Dhananjay Datar Date: 14 th August, 2014 Managing Director & CEO Executive Director 19

21 ABG Shipyard Limited Annual Report Annexure - A INFORMATION PURSUANT TO THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, A. Conservation of energy: (a) (b) (c) Energy conservation measures taken: At Dahej Yard: 120 Nos. Electronic Chock base 1 x 28 W tube light installed in Staff colony at Bharuch 3000 KVAR capacitor panel Maintained to keep power factor from 0.97 Installed 02 Nos. Elevator VFD based in staff colony At Surat Yard Energy Saver System maintained for 400 No s installation in Welding Machines. 200 Nos. Electronic Chock base 1 x 28 W tube light is being maintained in Labor Colony At Surat Yard KVAR capacitor panel Maintained for to Keep PF AVG to ` 3.0 Lac saving done in monthly electricity bill by revising electrical power demand with state electricity board (DGVCL). Additional investments and proposals, if any, being implemented for reduction of consumption of energy; At Dahej Yard: Auto cut off for welding machine and energy saver for welding machines. Installation of Electronic Choke based 1x28 watts tube light fi ttings. At Surat Yard: Auto cut off for welding machine and energy saver for 75 welding machines. Additional installation of VFD Drive In mobile Air Compressor. Additional Installation of inverter based Welding machine. Additional Installation of Auto Welding Unit for Co2 welding purpose. Impact of the measures at (a) and (b) above for reduction of energy consumption and consequent impact on the cost of production of goods. At Dahej Yard: 20% power saving on welding machine 15% power saving on lighting for staff colony At Surat Yard 20% power saving on welding machine 25% power saving on lighting for worker colony. 18% power saving on Crane operation 20% (` 3.0 Lac Per month) saving done in monthly electricity bill by revising electrical power demand with state electricity board (DGVCL). B. Technology absorption: Research & Development (R&D) a) Specific areas in which R&D carried out by the Company At Dahej Yard: Ship repair facility up to 2000 DWT vessel through the slipway developed and implemented. 500 m³/ hour capacity portable cleaning system developed for slipway cleaning. At Surat Yard 50 Nos. Co2 welding machine being continuously used in hull erection purpose with ceramic backing strips in place of arc welding for improving welding quality & more productivity. 20

22 ABG Shipyard Limited Annual Report Nos. Auto welder unit being continuously used with Co2 welding machine at ABG-II. At ABG-I Liquid Oxygen storage tank installed and distribution of Oxygen Gas for cutting purposes through pipeline installed at new users 300 points located at different places which was earlier supplied in 6 M 2 cylinders in huge quantity of cylinders. Distribution of potable water for employees at ABG I is now arranged through underground pipeline in whole yard area and labour colony. This water was earlier brought from some distant places through tankers now we have taken connection from GWSSB (Gujarat Water Supply Sewage Board) who supplies potable water at Govt. Rates. (b) (c) Benefits derived as a result of the above R&D Cost Saving. Safety. More Productivity. Speedy Production. Future plan of action Basic and detail engineering of cadet training ship for India Navy. Development of painting system for Mega blocks. Procurement and installation of energy saving device on electrical Equipments. Modifi cations on old panel line to have common welding wire to reduce inventory levels. Installation of panel transfer system between two panel lines to improve productivity levels. Expenditure on R&D: Your Company incurred capital expenditure for setting up as well as up-gradation of technologies used in designing, production, manpower and account management as a part of its business strategy. Technology absorption, adoption and innovation (a) (b) Efforts, in brief made towards technology absorption, adaption and innovation Continuous Usage of scaffolding staging system for hull outfi t & painting for faster & safe production Usage of telescopic manlifter to reduce time. Benefits derived as a result of the above efforts, e.g. product improvement, cost reduction, product development, import substitution, etc. The aforesaid mentioned technology gives faster output & safe working environment at heighted locations. In case of imported technology (imported during the last 5 years reckoned from beginning of the financial year Technology imported Years of import Has technology been fully absorbed? If not fully absorbed, areas where this not taken place, reasons therefore and future plans of action NIL NA NA NA C. Foreign Exchange Earnings and Outgo (` in crs.) Earnings Outgo

23 ABG Shipyard Limited Annual Report Annexure B CORPORATE GOVERNANCE REPORT {In compliance with Clause 49 of the Listing Agreement entered into with the Bombay Stock Exchange Ltd. (BSE) and the National Stock Exchange of India Ltd (NSE)} Corporate Governance is the combination of voluntary practices and compliance with laws and regulations leading to effective control and management of the organisation. Good Corporate Governance leads to long-term shareholder value and enhances interests of all stakeholders. It brings into focus the fi duciary and trusteeship role of the Board to align and direct the actions of the organisation towards creating wealth and shareholder value. ABG is committed to uphold its core values of Customer Focus, Community, Performance, Leadership, Innovation and Quality. The Company, through its Board and Committees, endeavors to strike and deliver the good governing standards for the benefi t of its stakeholders. ABG not only adheres to the prescribed compliance rules of Clause 49 of the Listing Agreement but is constantly striving to adopt growing excellent practices worldwide. 1. COMPANY S PHILOSOPHY ON CORPORATE GOVERNANCE ABG s corporate vision is to ensure a sustainable business that thrives to maintain the market leadership position and positively enhances the value of its stakeholders. To achieve this, your Company has undertaken systematic and planned efforts considering core values and business ethics of corporate environment. Your Company consistently emphasises its commitment towards creation, monitoring and continuous updation of a healthy corporate governance network that will defi ne and drive organisation performance as per its cherished values and commitments to every stakeholder. The Company through its Board of Directors, Senior Management and Employees, is committed to adhering to good corporate governance practices to effectively meet its Statutory, Financial and Social requirements. 2. COMPOSITION OF BOARD AND PARTICULARS OF DIRECTORS (i) Composition of the Board The Board of Directors of your company as at 31 st March 2014 comprises of Seven (7) Directors which includes One (1) Non-executive Chairman Mr. Rishi Agarwal, One (1) Managing Director Mr. Syed Abdi, Two (2) executive directors viz. Mr. Dhananjay Datar and Mr. S. Muthuswamy, Two (2) Independent Directors viz. Mr. Ashok R. Chitnis and Mr. Ashwani Kumar and One (1) Nominee Director Mr. Aloke Sengupta (Nominated by IDBI Bank Ltd.). Non-Executive Chairman, Mr. Rishi Agarwal heads the Board, Mr. Syed Abdi Managing Director & CEO, Mr. Dhananjay Datar and Mr. S. Muthuswamy, Executive Directors are managing the day-to-day affairs of the Company subject to the superintendence, Instructions and control of the Board of Directors. During the period under review, your Company has appointed Mr. S. Muthuswamy as Executive Director w.e.f. 13 th November, 2013 and Mr. Syed Abdi Managing Director and CEO w.e.f. 9 th January Also during the year Mr. Shahzaad Dalal Independent Director has resigned from the Company due to his relocation abroad w.e.f. 13 th November, 2013 and Major Arun Phatak Executive Director of the Company has resigned from the company w.e.f. 31 st December, 2013, due to ill health and old age. Further, ICICI Bank Ltd has withdrawn its nomination of Mr. Loknath Mishra vide its letter dated 15 th July 2013 whereas IDBI Bank Ltd has nominated Mr. Aloke Sengupta on the Board of the Company as on 14 th August The details of the Directors on the Board, their attendance at Board Meeting during the year and at the last Annual General Meeting, number of Directorships and Committee Memberships of the directors in other companies as on 31 st March, 2014, are set out below. 22

24 ABG Shipyard Limited Annual Report Name Category* Attendance Board Meeting Number of Directorship, Committee membership and Chairmanship # Last AGM Directorship Committee Membership Committee Chairmanship Mr. Rishi Agarwal Chairman NI-NE 1 No Mr. Dhananjay Datar, Executive Director NI-E 4 No Mr. Ashok R. Chitnis I-NE 3 Yes Mr. Ashwani Kumar I-NE 3 Yes Mr. Aloke Sengupta Nominee Director (since 14 th August, 2013 Mr. S. Muthuswamy Executive Director (since 13 th November, 2013) Mr. Syed Abdi Managing Director and CEO (since 9 th January, 2014) Mr. Shahzaad Dalal (upto 13 th November, 2013) Mr. Loknath Mishra (upto 15 th July, 2013) Major Arun Phatak Executive Director (upto 31 st December, 2013) *(NI Non-Independent, I Independent, NE- Non-Executive, E Executive) I-NE 1 NA - - NI-E 2 NA NI-E 1 NA I-NE - No I-NE - No NI-E 3 Yes # Directorships does not include alternate directorships, directorships of private limited companies and companies incorporated outside India and Section 25 companies. Chairmanships / Membership of Board Committees include only Audit Committee and Shareholders / Investors Grievance Committee of Indian Public Limited Companies. None of the Directors is a Director in more than 15 Companies and Member of more than 10 Committees or Chairman of more than 5 Committees across all the companies in which he is a Director. Necessary disclosures regarding Directorship and Membership in the various Board committee positions occupied by the Directors of the Company as at 31 st March, 2014 have been made. (ii) Board Meetings held and details thereof During the fi nancial year , Board of Directors met four times as per the details mentioned below, the gap between two successive Board Meetings was not more than one hundred and twenty days th May, th August, th November, th February, 2014 Agenda along with all information as per the Annexure IA of the Clause 49, including statutory information, relevant to the matters to be discussed is always sent to the Directors, well in advance, Where it is not practicable to attach any document to agenda, the same is tabled before the meeting with specifi c reference in the agenda. The Agenda specifying the matters to be discussed at the Board Meetings and Committee meetings is drafted in consultation with the Chairman of the Company. The Managing Director/Executive Directors/Chief Finance Offi cer briefs the Board at every Meeting on the overall performance of the Company. The Board of the Company reviews all the major decisions of the Company. None of the Non-executive Directors have any material pecuniary relationship or transactions with the Company. Post meeting follow up mechanism: Important decisions taken at the Board/Committee Meetings are promptly communicated to the concerned departments to act thereon accordingly. (iii) Profile of Directors seeking appointment / re-appointment in the 29 th Annual General Meeting: Detailed profi le is appended in the Notice of Annual General Meeting forming part of the Annual Report. 23

25 ABG Shipyard Limited Annual Report COMMITTEES OF THE BOARD As on 31 st March 2014, your Company has four Committees of the Board, namely; Audit Committee, Nomination-cum- Remuneration Committee, Share Transfer and Investors Grievance Committee and Finance & Operation Committee. A. AUDIT COMMITTEE Audit Committee is constituted in compliance of the provisions of Clause 49 of the Listing Agreements with the Stock Exchanges read with Section 292A of the erstwhile Companies Act, 1956 and Section 177 of the Companies Act, 2013 (i) Terms of reference Oversight of the company s fi nancial reporting process and the disclosure of its fi nancial information to ensure that the fi nancial statement is correct, suffi cient and credible; Recommendation for appointment, remuneration and terms of appointment of auditors of the company; Approval of payment to statutory auditors for any other services rendered by the statutory auditors; Reviewing, with the management, the annual fi nancial statements and auditor s report thereon before submission to the board for approval, with particular reference to: Matters required to be included in the Director s Responsibility Statement, to be included in the Board s report in terms of clause (c) of sub-section 3 of section 134 of the Companies Act, 2013 Changes, if any, in accounting policies and practices and reasons for the same. Major accounting entries involving estimates based on the exercise of judgment by management. Signifi cant adjustments made in the fi nancial statements arising out of audit fi ndings. Compliance with listing and other legal requirements relating to fi nancial statements. Disclosure of any related party transactions. Qualifi cations in the draft audit report. Reviewing, with the management, the quarterly fi nancial statements before submission to the board for approval; Reviewing with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document / prospectus / notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter; Review and monitor the auditor s independence and performance, and effectiveness of audit process; Approval or any subsequent modifi cation of transactions of the company with related parties; Scrutiny of inter-corporate loans and investments; Valuation of undertakings or assets of the company, wherever it is necessary; Evaluation of internal fi nancial controls and risk management systems; Reviewing, with the management, performance of statutory and internal auditors, adequacy of the internal control systems; Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffi ng and seniority of the offi cial heading the department, reporting structure coverage and frequency of internal audit; Discussion with internal auditors of any signifi cant fi ndings and follow up there on; Reviewing the fi ndings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board; Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern; To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non-payment of declared dividends) and creditors; To review the functioning of the Whistle Blower mechanism/vigil Mechanism and appoint Whistle Offi cer; Approval of appointment of CFO (i.e., the whole-time Finance Director or any other person heading the 24

26 ABG Shipyard Limited Annual Report fi nance function or discharging that function) after assessing the qualifi cations, experience and background, etc. of the candidate; Carrying out any other function as mentioned in the terms of reference of the Audit Committee. (ii) Composition, Name of Members, Details of the Meetings and Attendance Details of the Committee members, number of meetings attended by them are tabled below: Name of the Director Status No. of Meeting Attended Mr. Ashwani Kumar Chairman I NE 3 Mr. Ashok R. Chitnis I NE 3 Major Arun Phatak* NI E 3 Mr. Syed Abdi* NI E 1 (NI Non-Independent, I Independent, NE Non-Executive, E Executive) *During the Financial Year, Major Arun Phatak was ceased to be member of Committee due to his resignation from the Board w.e.f 31 st December, 2013 and Mr. Syed Abdi was appointed as a member of the Committee at the meeting of Board held on 14 th February, The Board has approved and adopted the revised terms of reference of Audit Committee as per requirement of the Companies Act, 2013 and SEBI Circular dated 17 th April, 2014 for amendment to Equity Listing Agreement (which is effective from 1 st October, 2014),at their meeting held on 30 th May, The Audit Committee meetings are usually held at the Corporate Offi ce of the Company. The Audit Committee invites such of the executives as it consider appropriate (particularly the heads of the Operations), representatives of the Statutory Auditors and Internal Auditors to be present at its meetings. The Company Secretary acts as Secretary of the Audit Committee. Four Audit Committee meetings were held during the fi nancial year ended 31 st March, 2014, with requisite quorum on the dates tabled below; 1 30 th May, th August, th November, th February, 2014 B. NOMINATION AND REMUNERATION COMMITTEE # (i) Composition, name of members, meetings and attendance Details of the Committee members as on 31 st March 2014 are tabled below # : Name of the Director Mr. Ashok R. Chitnis Mr. Ashwani Kumar Mr. S. Muthuswamy Status I NE I NE NI E * The Board of Directors have appointed Mr. Ashwani Kumar Independent Director, as a member of the Committee at their meeting held on 30 th May, 2013 and Mr, S. Muthuswamy was appointed as a member of Committee by the Board at their meeting held on 13 th November, 2013 in place of Mr. Shahzaad Dalal, who has resigned from the Board w.e.f. 13 th November, #The Board of Directors at their meeting held on 30 th May, 2014 has changed Nomenclature of the Committee from the Nomination cum Remuneration Committee to Nomination and Remuneration Committee, in compliance of the Section 178 of the Companies Act, 2013 and SEBI Circular dated 17 th April, 2014 for amendment to Equity Listing Agreement (which is effective from 1 st October, 2014),and has appointed Mr. Rishi Agarwal Non Executive Director of the Company in place of Mr. S. Muthuswamy. Compensation Committee of the Board was merged into the Nomination cum Remuneration Committee w.e.f. 30 th May

27 ABG Shipyard Limited Annual Report (ii) The Nomination and Remuneration Committee met three times during the fi nancial year , as on the dates tabled below: 1 30 th May, th November, th January, 2014 Terms of Reference: Formulation of the criteria for determining qualifi cations, positive attributes and independence of a director and recommend to the Board a policy, relating to the remuneration of the directors, key managerial personnel and other employees; Formulation of criteria for evaluation of Independent Directors and the Board; Devising a policy on Board diversity; Identifying persons who are qualifi ed to become directors and who may be appointed in senior management in accordance with the criteria laid down, and recommend to the Board their appointment and removal. Recommend to the board sitting fees payable to the Directors for attending Board and Audit Committee Meeting. *The Board has approved and adopted the revised terms of reference of Nomination and Remuneration Committee as per section 178 of the Companies Act, 2013 and SEBI Circular dated 17 th April, 2014 for amendment to Equity Listing Agreement (which is effective from 1 st October, 2014) at their meeting held on 30 th May (iii) Remuneration Policy The Company pays remuneration by way of salary, perquisites and allowances to its Managing Director/Executive Directors. Annual increments, if any, are decided by the Committee within the salary scale approved by the members and within the limits stipulated by the applicable laws. The Company pays Sitting Fee per meeting to its Independent Directors for attending meetings of the Board and Audit Committee. Other than the above and as shareholders, Non-Executive Directors have no other pecuniary relationships or transactions with the Company. (iv) Details of Remuneration paid for the year Name of the Director Sitting Fees Salaries & Perquisites Commission Stock Option Mr. Rishi Agarwal Mr. Dhananjay Datar ` 41,86,500/ Mr. Shahzaad Dalal Mr. Ashok Chitnis ` 66,000/ Major Arun Phatak ` 45,88,200/ Mr. Ashwani Kumar ` 77,000/ Mr. Girish Nayak Mr. Loknath Mishra 4 ` 11,000/ Mr. Alok Sengupta 5 ` 11,000/ Mr. S. Muthuswamy ` 15,95,740/ Mr. Syed Abdi ` 27,55,645/ Upto 13 th November, 2013, 2 Since 31 st December, 2013, 3 upto 30 th May, 2013, 4 Upto 14 th August, Since 14 th August, 2013, 6 Since 13 th November, 2014, 7 Since 9 th January, In view of the losses incurred by the Company for the year ended 31 st March, 2014, the remuneration payable to Managing Director and Executive Directors is subject to the approval of the Central Government under the provisions of the Companies Act,

28 ABG Shipyard Limited Annual Report (v) Details of Shares/ convertible instruments of the Company held by the Directors as on 31 st March 2014, are as below: Name No. of Shares % of Share capital Mr. Rishi Agarwal 2,81, C. SHARE TRANSFER AND INVESTORS GRIEVANCE # (i) (ii) Composition The Composition of the Share Transfer and Investors Grievance as on 31 st March 2014, is given below: Name of the Members Mr. Ashwani Kumar - Chairman Mr. S. Muthuswamy Mr. Syed Abdi (NI Non-Independent, I Independent, NE Non-Executive, E Executive) Status I NE NI - E NI - E * The Board of Directors has appointed Mr. Ashwani Kumar Independent Director, as a member of the Committee at their meeting held on 30 th May, Mr. Shahzaad Dalal ceased to be a member of the Committee due to his resignation from the Board w.e.f. 13 th November, 2013 and Mr. S. Muthuswamy was appointed as a member of the Committee by the Board of Directors at their meeting held on 13 th November, The Board of Directors has appointed Mr. Syed Abdi in place of Mr. Rishi Agarwal at their meeting held on 14 th February, #The Committee has been renamed as Stakeholder Relationship Committee, w.e.f. 30 th May, The Committee has not met during the fi nancial year The Committee has Authorized Compliance Offi cer of the Company to look after the Investor Grievances and Share transfer requests Terms of reference The terms of reference of the Share Transfer and investors Grievance cover the matters specifi ed under Clause 49 of the Listing Agreement and Section 178 of the Companies Act, The Share Transfer and Investors Grievance committee looks into the redressal of complaints of investors such as transfer or credit of shares to demat accounts, non-receipt of shares or refund order / dividend / notices / annual reports, etc., and also issue of duplicate certifi cates and review all other matters connected with securities The Committee oversees the performance of the Registrar and Share Transfer Agent. As on 31 st March 2014, no instruments of share transfer were pending. (iii) Name, designation and address of the Compliance officer Mr. Sunil Agarwal Company Secretary & Senior Manager (Legal) ABG Shipyard Limited 4 th Floor, Bhupati Chambers 13 Mathew Road, Mumbai Tel: Fax: sunil.agarwal@abgindia.com (iv) Details of Investors complaints Investors complaints received directly or through SEBI and Stock Exchanges during 1 st April, 2013 to 31st March, 2014 and the status of said complaints as on 31st March, 2014 are given below: Received from Received and Resolved during the FY Pending as at 31 st March 2014 Investors 08 Nil Through SEBI 00 Nil Through Stock Exchanges 00 Nil Total 08 NIL 27

29 ABG Shipyard Limited Annual Report D. FINANCE AND OPERATION COMMITTEE The Board of Directors, at their meeting held on 14 th August, 2013, constituted a Finance and Operation Committee, comprising 3 (three) members of the Board for the operational convenience and effi ciency and defi ned their term of reference in the said meeting. As on 31 st March, 2014, composition of committee was as follows: Name of the Members Mr. Dhananjay Datar Mr. S. Muthuswamy Mr. Ashwani Kumar Status NI - E NI - E I NE The Committee invites Chief Finance Offi cer and such of the executives as it consider appropriate (particularly the heads of the Finance and Operations) to be present at its meetings. *The Board of Directors at their meeting held on 30 th May, 2014 has appointed Mr. Syed Abdi as member in the Finance and Operation Committee. E. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE (CSR COMMITTEE) The Board of Directors at their meeting held on 30 th May 2014 constituted CSR Committee in line with the provisions of Section 135 of the Companies Act, Constitution of the said Committee is as under: Name of the Members Mr. Syed Abdi- Chairman Mr. Ashwani Kumar Mr. S. Muthuswamy Status NI/E I/NE I/NE Terms of Reference of the CSR Committee are as under: 1) To formulate and recommend to the Board a Corporate Social Responsibility Policy in line with the activities mentioned in Schedule VII of the Companies Act, 2013; 2) To recommend the amount of expenditure to be incurred in furtherance of its Corporate Social Responsibility Policy as well as its mission and vision; 3) To institute a transparent monitoring mechanism for the implementation of the Policy from time to time and 4) To institute an appropriate communications policies to effectively build and protect the Group s reputation both internally and externally. 4. GENERAL BODY MEETINGS (i) Annual General Meetings Details of last three Annual General Meetings of the Company are table be;ow: Details Date & Time Venue Special Resolutions Passed 26 th AGM th AGM th AGM noon noon noon Registered Offi ce of the Company at Near Magdalla Port, Dumas Road, Surat Nil Issue of Securities for a value of upto ` 1000Crs. by way of a domestic / international offering/ Qualifi ed Institutional Placement under chapter VIII of SEBI (ICDR) Regulations and pursuant to Section 81 (1A) of the Companies Act, Issue of Securities for a value of upto ` 1000Crs. by way of a domestic / international offering/ Qualifi ed Institutional Placement under chapter VIII of SEBI (ICDR) Regulations and pursuant to Section 81 (1A) of the Companies Act,

30 ABG Shipyard Limited Annual Report (ii) Extra-ordinary General Meetings Details of the Extra-ordinary General Meeting of the Company held during last three years are as follows. Details Date & Time Venue Special Resolutions Passed Extra Ordinary General Meeting (EGM) noon Registered Offi ce of the Company at Near Magdalla Port, Dumas Road, Surat Amendment to the Articles of association of the Company For Increase in Authorised Capital to ` 17000,00,00,000/- 2. Authority to Board of Directors for borrowings upto ` 20,000/- crs. - u/s 180 (1) (c) of the Companies Act, Authority to Board of Directors for creation of charges on the movable and immovable assets of the Company as security upto the extent of ` 20,000/- crs. - u/s 180 (1) (a) of the Companies Act, Approval of appointment of Mr. Syed Waheed Zafar Abdi as Managing Director and Chief Executive Director. 5. Approval of appointment of Mr. S. Muthuswamy as Executive Director. The Company has not passed any Resolutions through Postal Ballot during the fi nancial year DISCLOSURES AND OTHER INFORMATION: (i) (ii) Materially Significant Related Party Transactions There are no transactions of materially signifi cant nature that have been entered into by the Company with the Promoters, Directors, their relatives and the Management and in any company in which they are interested, that may have potential confl ict with the interest of the company. Transactions with related parties are disclosed in Note No. 38 under Notes to Financial Statements. Compliance The Company has complied with the requirements of the Listing Agreements with the Stock Exchanges as well as the Regulations and Guidelines prescribed by the Securities and Exchange Board of India. There were no penalties or strictures imposed on the Company by any such statutory authorities for non compliance on any matter related to capital markets, during the last three years. (iii) Code of Conduct The Board of Directors of the Company, in line with the sub clause II E of the Clause 49 of the Listing Agreement, has laid down a Code of Conduct for all Board members and senior management personnel of the Company. The code of conduct is available on the website of the Company i.e. The declaration signed by Managing Director to this effect is as below: To, The Shareholders of ABG Shipyard Ltd., Sub: Compliance with Code of Conduct. I hereby declare that all the Board Members and Senior Management personnel have affi rmed compliance with the code of conduct as adopted by the Board of Directors. Place: Mumbai Date:14 th August, 2014 For ABG Shipyard Limited Syed Abdi Managing Director & CEO (iv) Prohibition of Insider Trading The Company has framed its Insider Trading Regulation wherein rules for the preservation of price sensitive information, pre-clearance of trade, monitoring and implementation are framed. This code is applicable to all Directors and to such employees of the company who are incidental to have access to unpublished price sensitive information (UPSI) relating to the Company. Transaction for dealing in the prescribed time requires prior approval from the Company. (v) Whistle blower policy/vigil Mechanism - The Company has adopted a Whistle Blower Policy/Vigil Machanism and has established the necessary vigil mechanism in line with sub clause II - F of clause 49 of the Listing Agreement with the Stock Exchanges as notifi ed by SEBI Circular dated April 17, 2014 and Section 177 (9) of the Companies Act, 2013, for employees to report concerns about unethical behavior. No person has been denied access to the Audit Committee. However, no instances of fraud or other irregularities have been observed, which need to be reported to the Board/Audit Committee. 29

31 ABG Shipyard Limited Annual Report The Company has implemented following Non-Mandatory Requirements as prescribed by Annexure XIII of the Listing Agreement: (i) (ii) The Board A non-executive Chairman is maintaining Chairman s offi ce at the company s expenses. Separate posts of Chairman and CEO The company has appointed separate persons to the post of Chairman and Managing Director/CEO. (iii) Reporting of Internal Auditor 6. SECRETARIAL AUDIT The Internal auditor may report directly to the Audit Committee. As a measure of good corporate governance practice, the Board of Director of the company appointed Mrs. Kala Agarwal, practicing Company Secretary, to carry out a secretarial audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The Secretarial audit confi rms that the company has complied with all the applicable provisions of the Companies Act, 1956, Depository Act, 1996, Listing Agreements with the Stock Exchanges, Securities Contracts (Regulation) Act, 1956 and all the regulations of the SEBI as applicable to the Company and also confi rms that the total issued / paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL. 7. MEANS OF COMMUNICATION The quarterly, half yearly, yearly fi nancial Results of the company and Notices of Board Meetings and General Meetings etc. are published normally in The Free Press Journal, Gujarat Mitra, Navshakti etc. The quarterly results, half yearly results, Annual results and Shareholding Pattern are also displayed on the Company s website at which is updated at regular intervals. The quarterly results, half yearly results, Annual results and Shareholding Pattern are forwarded to Stock Exchanges from time to time, where the Company s shares are listed. In addition to the above, the Company also regularly provides information to the stock exchanges as per the requirements of the Listing Agreement and updates the same on the Company s website periodically to include information on new developments and business opportunities of the Company. 8. GENERAL SHAREHOLDERS INFORMATION (i) Annual General Meeting: Day, Date & time : Tuesday the 30 th September, 2014 at noon Venue: At the Registered Offi ce of the Company at: Near Magdalla Port, Dumas Road, Surat (ii) Financial Calendar : Financial year 1 st April to 31 st March I st Quarter Results On or before 14 th of August II nd Quarter Results On or before 14 th of November III rd Quarter Results On or before 14 th of February IV th Quarter Results On or before 30 th of May (iii) Book Closure : 23 rd September, 2014 to 30 th September, 2014 (both days inclusive) (iv) Listing at Stock Exchanges: Name & Address of Stock Exchange Stock Code Code on Screen The Bombay Stock Exchange Limited (BSE) Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai Phone : ABGSHIP National Stock Exchange of India Limited (NSE) Exchange Plaza, Bandra Kurla Complex, Bandra (East), Mumbai Phone : ABGSHIP ABGSHIP Series EQ The Company has paid annual listing fees to the above Stock Exchanges for the fi nancial year

32 ABG Shipyard Limited Annual Report (v) Market Price Data A. Bombay Stock Exchange (BSE) Month ABG High (Rs.) ABG Low (`) Sensex High Sensex Low Apr , , May , , Jun , , Jul , , Aug , , Sep , , Oct , , Nov , , Dec , , Jan , , Feb , , Mar , , Share price on BSE during the Year ABG High Low Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 ABG VS. SENSEX during the year ABG SENSEX Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar

33 ABG Shipyard Limited Annual Report B. National Stock Exchange (NSE) Month NSE High (`) NSE Low (`) NIFTY High NIFTY Low Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Share price on BSE during the Year ABG High Low Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14 ABG VS. NIFTY during the year NIFTY ABG Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar

34 ABG Shipyard Limited Annual Report (vi) Registrar and Share Transfer Agent Shareholders may address all correspondences to the Registrar and Share Transfer Agents of the Company at the following Address: Link Intime India Private Ltd. C-13, Pannalal Silk Mills Compound L.B.S. Marg, Bhandup West, Mumbai Tele: Fax : rnt.helpdesk@linkintime.co.in (vii) Share Transfer System 99.99% of the Equity shares of the Company are in electronic form. Transfer of these shares is done through the depositories without involvement of the company. As regards transfer of shares in physical form the transfer document can be lodged with the Registrar & Share Transfer Agent at address mentioned in above point no. (vii) Transfer of Shares in physical form is normally processed by the Registrar and Share Transfer Agent and approved by Share Transfer and Investors Grievance & Finance Committee of the Board which meets at regular intervals. (viii) Dematerialization of Shares As of 31 st March 2014, equity shares representing 99.99% of the paid up equity capital of the company are in dematerialized form with the following depositories: Description ISIN No. Depositories Fully Paid INE067H01016 National Securities Depository Ltd (NSDL) Trade World, A Wing, 4 th fl oor, Kamala Mills Compound, Lower Parel, Mumbai Fully Paid INE067H01016 Central Depository Services (India) Ltd. (CDSL) Phiroze Jeejeebhoy Towers, 17 th Floor, Dalal Street, Fort, Mumbai During the year the Company has not received any application for dematerialization / rematerialization of shares by shareholder. The Company has paid annual custodian charges for both NSDL and CDSL for the fi nancial year (ix) Distribution of shareholding (Shares) as on 31 st March, 2014 Range Shareholding No. of Shareholders % of Shareholders Number of Shares % of Shareholding of Shares & above Total (x) Shareholding pattern as on 31 st March, 2014 Category of Shareholder (A) Shareholding of Promoter and Promoter Group Number of shares Percentage of shareholding (a) Individuals/ Hindu Undivided Family (b) Bodies Corporate (B) Total Shareholding of Promoter and Promoter Group Public shareholding 33

35 ABG Shipyard Limited Annual Report B1 Institutions (a) Mutual Funds/ UTI (b) Financial Institutions / Banks (c) Insurance Companies (d) Foreign Institutional Investors B2 Sub-Total (B)(1) Non-institutions (a) Bodies Corporate (b) Individuals i Individual shareholders holding nominal share capital up to ` 1 lakh ii Individual shareholders holding nominal share capital in excess of ` 1 lakh (c) Any Other (specify) (c-i) Clearing Member (c-ii) NRI (c-iii) Offi ce bearers (c-iv) Trust Sub-Total (B)(2) (B) Total Public Shareholding (B) = (B)(1)+(B)(2) TOTAL (A)+(B) (xi) Shareholders holding more than 1% of the share capital as on 31 st March, 2014 Sr. No. Name No. of Shares % of share held 1 ABG International Private Limited Religare Finvest Ltd Orange Mauritius Investments Limited Nippon Investment And Finance Company Private Ltd Life Insurance Corporation Of India Bakulesh Shah TOTAL Shareholding pattern of ABGSL as on 31st March, 2014 Promoter % Individuals/others % Clearing Members % Bodies Corporate % FII % Insurance Companies % Mutual Fund/UTI 306 0% FI/Banks % (xii) Details of unclaimed shares as on financial year ended 31 st March, 2014 issued pursuant to Initial Public Offer (IPO) are as follows (Pursuant to clause 5A of the Listing Agreement) - Sr. No. Particulars Cases No. of Shares (A) Aggregate Number of Shareholders and the outstanding Shares in the suspense account lying at the beginning of the year i.e

36 ABG Shipyard Limited Annual Report (B) (C) (D) Number of Shareholders who approached for transfer of Shares from suspense account during to Number of Shareholders to whom Shares were transferred from suspense account during to Aggregate Number of Shareholders and the outstanding Shares in the suspense account at the end of the year i.e. 31 st March, 2014 NIL NIL NIL NIL The Voting Rights on the above mentioned shares in column (D) shall remain frozen till the rightful owner claims the shares. (xiii) Unclaimed / Unpaid Dividend Pursuant to section 205A and 205C of the Companies Act, 1956 and other applicable provisions, if any, of the Companies Act, 1956 the amount remaining unclaimed/unpaid for a period of seven years from the date of transfer of dividend to the Unpaid Dividend Account of the Company shall be transferred to the Investor Education and Protection Fund (IEPF) established by the Central Government. No claim shall lie against the Company or IEPF, in respect of dividend amounts that have been transferred to IEPF. Members who have not yet en-cashed their dividend warrant(s) are requested to make their claim without any delay to the Company s Registrar and Transfer Agents, i.e. Link Intime India Private Limited. The following table gives information relating to outstanding dividend accounts and the last dates for making claims and by which they need to be transferred: Period of the Dividend Percentage of Dividend Last date for making claim Due Date of Transfer to IEPF th October, th October, th October, nd October, th October, th October, th October, th October, th October, th October, NIL NA NA NIL NA NA NIL NA NA (xiv) Unclaimed/Unpaid Dividend amount transferred to IEPF The Unclaimed/unpaid dividend money amounting to ` 39,662/- was due for transfer to IEPF on 17 th September, Your company has transferred the unpaid dividend amount to the IEPF accordingly. (xv) Outstanding GDRs/ ADRs/ Warrants or any convertible instruments (xvi) The Company has no outstanding GDRs/ ADRs/ Warrants or any convertible instruments. Shipyards Location Surat Shipyard Near Magdalla Port Dumas Road Surat , Gujarat (xvii) Address for Correspondence Legal & Secretarial Department 4 th Floor, Bhupati Chamber, 13, Mathew Road, Mumbai Tele: Fax: seclegal@abgindia.com Dahej Shipyard Village Jageshwar Near Dahej, Tal Vagra Dist. Bharuch, Gujarat For and on behalf of the Board Place: Mumbai Syed Abdi Dhananjay Datar Date : 14 th August, 2014 Managing Director & CEO Executive Director 35

37 ABG Shipyard Limited Annual Report CEO/EXECUTIVE DIRECTORS CERTIFICATION ISSUED IN PURSUANCE OF CLAUSE 49 OF THE LISTING AGREEMENT. To, The Board of Directors, ABG Shipyard Limited. Sub: CEO/Executive Directors Certification We hereby certify that we have reviewed the fi nancial statements and the cash fl ow statement of ABG Shipyard Limited for the year ended 31st March, 2014 and that to the best of our knowledge and belief, we state that; 1. (a) these statements do not contain any materially untrue statement or omit any material fact or contain statements that may be misleading, (b) these statements present a true and fair view of the company s affairs and are in compliance with existing accounting 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 are fraudulent, illegal or in violation of the Company s code of conduct. 3. We accept the responsibility for establishing and maintaining internal controls for fi nancial reporting. We have evaluated the effectiveness of internal control systems of the Company pertaining to fi nancial reporting and have disclosed to the Auditors and Audit Committee, defi ciencies in the design or operation of such internal controls, if any, of which we are aware and steps taken or proposed to be taken for rectifying these defi ciencies. 4. We have indicated to the Auditors and the Audit Committee; (a) (b) (c) signifi cant changes in the internal control over fi nancial reporting during the year. signifi cant changes in accounting policies made during the year and that the same have been disclosed in the notes to the fi nancial statements; and instances of signifi cant fraud of which we have become aware and the involvement therein, if any, of the management or an employee having a signifi cant role in the Company s internal control system over fi nancial reporting. Yours sincerely, Place: Mumbai Syed Abdi Dhananjay Datar Date : 14 th August, 2014 Managing Director & CEO Executive Director 36

38 ABG Shipyard Limited Annual Report AUDITOR S CERTIFICATE ON CORPORATE GOVERNANCE To The Members, ABG Shipyard Limited. We have examined the compliance of Corporate Governance by ABG Shipyard Limited for the year ended on 31 st March 2014, as stipulated in Clause 49 of the Listing Agreement of the said Company with the Stock Exchanges. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination has been limited to a review of the procedures and implementations thereof adopted by the Company for ensuring compliance with the conditions of the Corporate Governance as stipulated in the said Clause. It is neither an audit nor an expression of opinion on the fi nancial statement of the Company. In our opinion and to the best of our information and according to the explanations given to us, and based on the representations made by the Directors and the Management, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in Clause 49 of the above mentioned Listing Agreement. We state that such compliance is neither an assurance as to the future viability of the Company, nor of the effi ciency with which the Management has conducted the affairs of the Company. For Nisar & Kumar Chartered Accountants F. R. No W M. N. Ahmed Place: Mumbai (Partner) Date: 30 th May, 2014 M. No

39 ABG Shipyard Limited Annual Report MARKET TRENDS & ECONOMY Annexure-C MANAGEMENT DISCUSSION ANALYSIS REPORT The global economic conditions continued to remain suboptimal during fi nancial year According to the IMF s World Economic Outlook published in the month of April 2014, the world output grew at a moderate 3.0 per cent in 2013 compared to 3.2 per cent in the year The Indian economy registered a GDP growth of 4.9% in FY 14 against 4.5% in FY 13. Key issues that weighed down growth in the Indian economy were nagging infl ation and a weakening currency. Both these issues forced the central bank to keep monetary policy tight and interest rates high throughout the year, resulting in high input costs as well as high costs of fi nance all through the year. The Indian rupee plummeted to a low of in the month of August 2013, driven by alarming current account defi cit. As per initial sign, the global recovery continues but at an uneven pace, and that downside risks remain. For the global economy, IMF has forecast GDP growth to 3.4 per cent for 2014 The International Monetary Fund (IMF) has maintained its 5.4 per cent economic growth projection for Indian economy for the ongoing fi scal , as per its latest World Economic Outlook survey update. However, long term prospects for the Indian economy; continue to remain bright, given the favorable demographics and the directional commitment towards liberalization. Outlook for the current fi scal with infl ation now well within tolerance level, appears better than the previous year. Additionally, softening of global commodity prices should help to reduce the imported infl ation in domestic economy. INDUSTRY OVERVIEW AND OUTLOOK The global Shipbuilding industry is worth approximately ` tn ($1.3tn) with India accounting only 1% of it, according to the study titled Shipbuilding Industry in India: An overview. A Compounded Annual Growth Rate (CAGR) of about 24% is seen in the worldwide Shipbuilding and Ship-repairing industry, which is likely to reach ` 140tn ($2.6tn) by 2015 due to increase in global sea borne trade, according to the study found by Industrial body, Associate Chambers of Commerce (ASSOCHOM). According to study done by Shipyards Association of India, while Shipbuilding in countries like China, South Korea and Japan continue to account for more than 80% of the global shipbuilding market. The Chinese Government continues to give subsidies to the industry due to which the country enjoys over 35% of the global share. The Chinese Shipyards continue building ships which fl ood the market, depressing it further. The Indian Shipbuilding and Ship-repair Industry is likely to reach ` 9,200 crore by year 2015, growing at a Compounded Annual Growth Rate (CAGR) of about 8 per cent according to a study done by ASSOCHAM. Still Indian Shipbuilding industry accounts for less than 1 percent of global market share. Globally the commercial vessel categories which have primarily contributed to growth at various yards are cargo and offshore vessels. Global fl eet comprises of around 80,000 vessels (excluding tugs and other smaller vessels). Among these vessels the top fi ve vessels categories by number are tankers, Offshore, Bulkers, Containers and Passenger vessels. These categories comprise around 57% of the worlds global fl eet. The types of vessels ordered at Indian Yards include primarily Offshore and bulk vessels Around 1,000 vessels have been built by Indian shipyards. Among these vessels the top vessels categories by number are offshore, general cargo and bulk vessels. On an average India produces around 20 ships in a year while developed shipbuilding markets make ships a year. Almost 90% of equipment for manufacturing ships is sourced from overseas. With about an 8,000 kilometer long coastline there are about 27 shipyards, 12 major ports and 200 ports under states jurisdiction in India. Approximately 90% of the country`s trade by volume and 70% by value are moved thr ough Maritime Transport. There is huge scope for development of the shipping sector. However, the country s opportunities in the maritime business have not been fully utilized. The Government has a key role to improve the effi ciency and productivity of domestic shipbuilding companies to enable them to compete with their overseas counterparts. The Indian Government has been very supportive in the past which gave a signifi cant fi llip/ impetus to the industry. Although the Government had extended the Shipbuilding Subsidy Scheme from 2002 to 2007, which caused a temporary boom in the industry, however, the subsequent discontinuation of the scheme along with recession, had some negative impact on the industry. OPPORTUNITIES & THREATS Union budget has provided a slight relief to domestic Shipbuilding industry by removing excise duty burden of 6% to the 38

40 ABG Shipyard Limited Annual Report industry. For the domestic shipbuilders, the move could help in bringing some cost advantage as the cost of production of vessels in the country had risen since the past few years which led to a fall in the order book. However, removing 6.1% (approx.) countervailing duty on imported ship by union budget will keep adverse impact on domestic shipbuilding industry. In order to protect the domestic Shipbuilding Industry, the Shipping Ministry has initiated discussions with fi nancial institutions to extend low-cost loans to Shipbuilders. The Shipbuilding Development Fund will form a key part of a policy being drafted by the Shipping Ministry to promote local Shipbuilding. Features of the policy could include granting Special Economic Zone (SEZ) status to Shipyards and declaring it as a strategic sector with attendant fi scal incentives. Indian shipyards are outbid by Chinese and Korean shipyards due to cost differentials arising from lack of support for the industry in India. The key factors which are driving growth in the offshore support vessel market are global oil & gas demand, growing exploration and production activities and increase in the number or offshore platforms. Offshore support vessel is a moderately developing market with no other substitutes available currently which makes it backbone of offshore industry. Consequently, the market is expected to continue the steady growth rate in future. Growing demand of oil & gas and other offshore activities with increasing investment in modernization of infrastructure of oil platform and wells is expected to drive the offshore support vessel market. It is estimated to reach $91,228.8 million by 2018, with a CAGR of 5.7% from 2013 to The Indian defence industry is one of the fastest-growing global defence markets. India s defence capital expenditure, which refers to the part of the defence budget that is spent on the acquisition of all types of military hardware and technology, has grown at a CAGR of 12.25% over the period. In 2010, India was allocated US$13.1 billion for defense capital expenditure in the budget. Defense expenditure is expected to record a CAGR of 13.08% to reach an annual expenditure of US$67.8 billion by This is primarily due to the country s ageing naval hardware and technology which is in need of replacing, and demands for defence against domestic insurgencies and hostility from neighboring countries. NMCC/ National Security Advisory recognizes strategic Importance of Industry- Indian Built share of Indian Flag should be around 35-40% from national security perspective currently a minsicule~7% The strong growth in the industry is attracting foreign original equipment manufacturers (OEMs) and leading companies from the domestic private sector to enter the market. Liquefi ed Natural Gas market is growing at a compounded annual growth rate (CAGR) of 2.8% from 2013 and will extend up to 2019 when total market value will rise to US$196.4 mn from $161.4 mn in 2012, according to a new report titled Liquefi ed Naturla Gas Market: Global Industry Analysis, size, share, growth, trends and forecast, More over GAIL has received a directive from the ministry to consider building LNG Ships at indigenous yards promoting Shipbuilding industry here. Low cost of labour, world class engineers, availability of skilled workforce together with robust demand in the domestic market and a growing steel industry are certain factors that build up a strong case for Shipbuilding sector in India. The high input costs and rising costs of raw materials and freight together with other duties being imposed resulted to a huge price differential of about 50% in building a ship in India and other countries. RISK AND CONCERNS The nodal responsibility of the entire Shipbuilding and Ship-repair Industry vests with the Ministry of Shipping. The Ministry of Shipping encompasses within its fold shipping and port sectors which also include shipbuilding and ship repair, major ports and inland water transport. Thus risks arising from political instability as well as changes in government policy would be a cause of concern. In spite of the deterring factors, India has secured its position among the countries that build its own warships and submarines. The Indian shipbuilding industry has already touched a three fi gure capacity but the room for improvement is still huge as evident from the fact that in spite of our achievements in shipbuilding, we still lag signifi cantly behind the countries with their own shipbuilding industries. INTERNAL CONTROL SYSTEM The Company has in place an adequate systems of internal control commensurate with its size and nature of its business and ensure proper safeguarding of assets, maintaining proper accounting records and providing reliable fi nancial statements. The Company has an in-house team in internal audit department supported by external consultant advice to help the Company to strengthen the internal audit and risk management functions. The fi nance and accounts functions of the Company are well staffed with qualifi ed and experienced members. The Company s effective control system is supported by an Enterprise Resources Planning (ERP) platform i.e. SAP for its main business processes. The Audit committee and the management have reviewed the adequacy of the internal control systems and suitable steps are taken to improve the same. 39

41 ABG Shipyard Limited Annual Report HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS In this era of globalisation, the industrial scenario is changing frequently, forcing the organization to develop its human resources and enable them to adapt to contemporary technological advancements to achieve the goals of the Organisation. Your Company believes that through its strong set of values and cohesive work-culture, the employees will be able to achieve their potential not only on the professional level, but also in their personal lives. The Company recognizes the Human Resources as its most important assets and is constantly engaged in enriching the value and developing competencies of Human Resources through various development strategies. The Board of Directors and the Management wish to place on record their appreciation of the efforts put in by all employees at all levels. INTELLECTUAL PROPERTY RIGHTS Invention is an on-going process in the Company. It is the endeavor of Company to encourage inventions of new products and processes in order to increase IP Assets of the Company. The Company has developed an effective internal system to protect its Intellectual Property Rights. CAUTIONARY STATEMENT The report may contain certain statements that the Company believes are, or may be considered to be forward looking statements that describe our objectives, plans or goals. All these forward looking statements are subject to certain risks and uncertainties, including but not limited to, government action, economic development and risks inherent in the Company s growth strategy and other factors that could cause the actual results to differ materially from those contemplated by the relevant forward looking statements. 40

42 ABG Shipyard Limited Annual Report Independent Auditor s Report to the members of ABG SHIPYARD LIMITED Report on the Financial Statements We have audited the accompanying fi nancial statements of ABG Shipyard Limited ( the Company ), which comprise the Balance Sheet as at March 31, 2014, the Statement of Profi t and Loss and the Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information. Management s Responsibility for the Financial Statements Management is responsible for the preparation of these fi nancial statements that give a true and fair view of the fi nancial position, fi nancial performance and cash fl ows of the Company in accordance with the Accounting Standards referred to in sub section (3C) of section 211 of the Companies Act, 1956 ( the Act ) which shall continue to apply in respect of section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 issued by the Ministry of Corporate Affairs. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these fi nancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the fi nancial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company s preparation and fair presentation to the fi nancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the fi nancial statements. Emphasis of matter Without qualifying our report we draw attention to: Note no. 4D wherein as explained Corporate Debt Restructuring (CDR) scheme has been approved by the Corporate Debt Restructuring Empowered Group (CDR EG) on March 24, 2014 and applicable with effect from August 1, The CDR proposal has been partly implemented as on March 31, The outstanding liabilities of the Company have been substantially restructured under the aegis of CDR Scheme, which extends till June Foot note no. 3 of note no. 38 whereby managerial remuneration paid by the Company exceeds the limits prescribed under Schedule XIII of the Companies Act, 1956 and the same is subject to approval from Central Government. The Company is yet to apply to the Central Government for seeking such approval. Opinion In our opinion and to the best of our knowledge and according to the information and explanations given to us, information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India: (i) in the case of the Balance Sheet, of the state of affairs of the Company as at March 31, 2014; (ii) (iii) in the case of the Statement of Profi t and Loss, of the loss of the Company for the year ended on that date; and in the case of the Cash Flow Statement, of the cash fl ows of the Company for the year ended on that date. Report on Other Legal and Regulatory Requirements 1. As required by the Companies (Auditor s Report) Order, 2003 ( the Order ) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Act, we give in the Annexure a statement on the matters specifi ed in paragraphs 4 and 5 of the Order. 2. As required by section 227(3) of the Act, we report that: a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit; 41

43 ABG Shipyard Limited Annual Report b. in our opinion, proper books of account as required by law have been kept by the Company so far as appears from our examination of those books; c. the Balance Sheet, Statement of Profi t and Loss and Cash Flow Statement dealt with by this report are in agreement with the books of account; d. in our opinion, the Balance Sheet, Statement of Profi t and Loss and Cash Flow Statement dealt with by this report comply with the Accounting Standards referred to in sub-section (3C) of section 211 of the Act which shall continue to apply in respect of section 133 of the Companies Act, 2013 in terms of General Circular 15/2013 dated September 13, 2013 issued by the Ministry of Corporate Affairs. e. on the basis of written representations received from the directors, as on March 31, 2014, and taken on record by the Board of Directors, we report that none of the Directors is disqualifi ed as on March 31, 2014, from being appointed as a director in terms of clause (g) of sub- section (1) of section 274 of the Act. For Nisar & Kumar Chartered Accountants F. R. No W M. N. Ahmed Place: Mumbai (Partner) Date: 30 th May, 2014 M. No

44 ABG Shipyard Limited Annual Report Annexure to Independent Auditor s Report (Referred to in paragraph 8 under the heading of Report on Other Legal and Regulatory Requirements of our report of even date) As required by the Companies (Auditor s Report) Order, 2003 (as amended) ( the Order )issued by the Central Government of India in terms of Section 227 (4A) of the Companies Act, 1956, on the matters specifi ed in paragraphs 4 and 5 of the said Order, we further report that: i.) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fi xed assets; (b) (c) The fi xed assets have been physically verifi ed in a phased manner by the management during the year as per the program of verifi cation which, in our opinion, is reasonable having regard to the size of the Company and nature of its assets. As informed to us, no material discrepancies were noticed between book records and physical verifi cation; During the year, the Company has not disposed off any substantial part of fi xed assets, which would affect the going concern of the Company. ii.) (a) The inventory has been physically verifi ed during the year by the management. In our opinion, the frequency of verifi cation is reasonable; (b) (c) The procedures of physical verifi cation of inventories followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business; On the basis of the records of inventory, we are of the opinion that the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verifi cation. iii.) (a) As informed, during the year under audit the Company has granted interest free unsecured loan to two Companies covered under section 301 of the Companies Act, The year-end balance of loan granted to such companies was ` crores. Maximum balance outstanding during the year was ` crores. (b) (c) (d) (e) (f) As the loan is interest free, and there is no stipulation of repayment date prima facie the terms and conditions are prejudicial to the interest of the Company. As there is no stipulation as to repayment date of principal amount, hence clause 4(iii)(c) and (d) of the Order does not apply. As informed, during the year under audit the Company has taken interest free unsecured loan from two Companies covered under section 301 of the Companies Act, The year-end balance of loan taken from such companies was ` crores. Maximum balance outstanding during the year was ` crores In our opinion the terms and conditions of such loans are not prima facie pre judicial to the interest of the Company. As there is no stipulation as to repayment date of principal amount, hence clause 4(iii)(g) of the Order does not apply. iv.) v.) In our opinion and according to the information and explanations given to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory, fi xed assets and with regard to the sale of goods and services. During the course of our audit, we have not observed any continuing failure to correct major weakness in internal control. (a) Based on the audit procedures applied by us and according to the information and explanations provided by the management, we are of the opinion that the contracts or arrangements that need to be entered into the register maintained under section 301, of the Companies Act, 1956 have been so entered. (b) The price at which such contract or arrangement is entered is reasonable compared to prevailing market price. vi.) The Company has not accepted any deposit from the public during the year. vii.) In our opinion, the Company has an internal audit system commensurate with the size and nature of its business. viii.) We have broadly reviewed the cost records maintained by the Company pursuant to the Companies (Cost Accounting Records) Rules, 2011 prescribed by the Central Government under section 209(1)(d) of the Companies Act, 1956 and are of the opinion that prima facie, the prescribed cost records have been maintained. We have, however, not made a detailed examination of the cost records with a view to determine whether these are accurate or complete. 43

45 ABG Shipyard Limited Annual Report ix.) (a) According to the records of the Company, the Company has been generally late during the fi nancial year in depositing with appropriate authorities undisputed statutory dues including Provident Fund, Income-tax, Tax Deducted at Source, Sales-tax, Wealth-tax, Service tax, Profession Tax, Custom duty, Excise duty, Cess and other statutory dues applicable to it. The following undisputed statutory dues are outstanding for a period of more than six months as on March 31, 2014, from the date they became payable: Name of the Statute Nature of Dues Financial Year Amount in ` Crores The Income Tax Act, 1961 Income Tax (incl. interest) & The Income Tax Act, 1961 Tax Deducted at Source & Employees Provident Fund and Miscellaneous Provisions Act, 1952 Provident Fund & Profession Tax Act, 1975 Profession Tax & (b) According to information and explanation given to us, the following dues have not been deposited by the Company on account of disputes: Name of the Statute Nature of Dues Financial Year Amount in ` Crores Forum where dispute is pending The Finance Act, 1994 Service Tax to Appellate Tribunal The Customs Act, 1962 Custom Duty Appellate Tribunal The Income Tax Act, 1961 Income Tax to Commissioner of Income Tax (Appeal) x.) xi.) The Company does not have accumulated losses at the end of the fi nancial year. The Company has incurred cash loss during the fi nancial year covered by our audit. The Company has not incurred cash loss during the immediately preceding fi nancial year. Instances of delay between 1 to 567 days were noticed in repayment of principal and interest to banks, fi nancial institutions and debenture holders during the year amounting to ` 1, crores and ` crores respectively. During the year Company has undergone a debt restructuring process for its outstanding debts, the same being approved by the Corporate Debt Restructuring Empowered Group (CDR EG) on March 24, 2014 and applicable with effect from August 1, The CDR proposal has been partly implemented as on March 31, Accordingly the defaults mentioned exclude the defaults incurred by the Company after the cut-off date of August 1, 2013 upto March 31, xii.) Based on our examination of documents and records, the Company has not granted any loans and advances on the basis of security by way of pledge of shares, debentures and other securities. xiii.) The Company is not a chit fund/ nidhi/ mutual benefi t fund/ society, to which the provisions of special statute relating to chit fund are applicable. Accordingly, paragraph 4 (xiii) of the Order is not applicable to the Company. xiv.) The Company is not engaged in dealing or trading in shares, securities, debentures and other investments. Accordingly, the provisions of clause 4(xiv) of the Order are not applicable to the Company. xv.) According to the information and explanations given to us, the Company has given guarantees of ` 2, crores for credit facilities taken by body corporates from banks and fi nancial institutions, the terms and conditions whereof in our opinion are not prima facie prejudicial to the interest of the Company. xvi.) In our opinion and according to the information and explanations given to us, on the overall basis, term loans have been applied for the purposes for which they were obtained. xvii.) According to the information and explanations given to us and based on an overall examination of the fi nancial statements of the Company, in our opinion, funds raised on short term basis have not been used for long-term purpose. 44

46 ABG Shipyard Limited Annual Report xviii.) According to the information and explanations given to us, the Company has not made preferential allotment of shares to parties and companies covered in the register maintained under section 301 of the Companies Act, Accordingly, the provisions of paragraph 4(xviii) of the Order are not applicable to the Company. xix.) According to the information and explanations given to us and on the basis of records made available, we report that security has been created in respect of debentures issued. xx.) The Company has not raised any money by public issues during the year. Accordingly, paragraph 4(xx) of the Order is not applicable. xxi.) Based upon the information and explanations given by the management and audit procedures performed, we report that no fraud on or by the Company has been noticed or reported during the course of our audit. For Nisar & Kumar Chartered Accountants F. R. No W M. N. Ahmed (Partner) M. No Place: Mumbai Date: 30 th May,

47 ABG Shipyard Limited Annual Report BALANCE SHEET AS AT MARCH 31, 2014 I AS AT AS AT Note ` in Crores ` in Crores EQUITY AND LIABILITIES 1. Share Holders Funds a. Share capital b. Reserves & surplus 3 1, , , , Non-current Liabilities a. Long-term borrowings 4 2, b. Deferred tax liabilities (Net) c. Long-term provisions , , Current Liabilities a. Short-term borrowings 7 1, , b. Trade payables , c. Other current liabilities 9 4, , d. Short-term provisions , , , , II ASSETS 1. Non-current Assets a. Fixed assets 11 (i) Tangible assets , (ii) Intangible assets (iii) Capital work-in-progress 1, , , , b. Non-current investments c. Long-term loans and advances , , Current Assets a. Inventories 14 4, , b. Trade receivables c. Cash and bank balance d. Short-term loans and advances 17 3, , e. Other current assets , , , , Signifi cant Accounting Policies & Notes to Financial Statements 1-40 As per our report of even date For NISAR & KUMAR For and on behalf of the Board, Chartered Accountants F. R. No W M. N. Ahmed Syed Abdi Dhananjay Datar Partner Managing Director Executive Director M. No Mumbai, S. Muthuswamy Sunil Agarwal Dated : 30th May, 2014 Executive Director Company Secretary 46

48 ABG Shipyard Limited Annual Report STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31st MARCH, 2014 INCOME Year ended Year ended Note ` in Crores ` in Crores Revenue from operations 19 1, , Other income Total Revenue 1, , EXPENSES Consumption of raw materials & components 21 1, , Purchase of traded goods Changes in inventories of work-in-progress 22 (287.84) (118.98) Employee benefi ts expense Finance costs Depreciation & amortisation expense Other expenses Total Expenses 1, , Profit / (Loss) before exceptional and extraordinary items and tax (224.04) Exceptional / Extraordinary items Profit / (Loss) before tax (296.17) Tax Expense Current tax for the year Current tax for earlier years MAT credit (entitlement)/reduced (34.75) Deferred tax (98.74) Profit / (Loss) after tax (199.30) Earning per share in Rupees of face value of `10 /- each Basic (39.14) Diluted (39.14) Signifi cant Accounting Policies & Notes to Financial Statements 1-40 As per our report of even date For NISAR & KUMAR For and on behalf of the Board, Chartered Accountants F. R. No W M. N. Ahmed Syed Abdi Dhananjay Datar Partner Managing Director Executive Director M. No Mumbai, S. Muthuswamy Sunil Agarwal Dated : 30th May, 2014 Executive Director Company Secretary 47

49 ABG Shipyard Limited Annual Report CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2014 Year ended Year ended ` in Crores ` in Crores A. Cash Flow From Operating Activities : Net Profi t (Loss) before taxation and after exceptional item (296.17) Adjustments for Depreciation Provision for Impairment Provision for Contingencies Provision for doubtful receivables Finance charges Including exceptional items being fi nance charges Interest income (31.49) (21.73) Effect of exchange rate change (21.63) (49.12) Loss / (Profi t) on Sale of Assets (net) (8.25) Loss / (Profi t) from Partnership fi rm Loss / (Profi t) on Sale of Investments 0.05 (0.03) Operating Profit before working capital changes Adjustments for : Inventories (658.55) (1,554.48) Trade Receivables (76.13) 4.86 Loans and Advances* and other current assets (1,035.06) (666.61) Trade Payables and other current liabilities / provisions** (574.17) Stage Payments from Customers (net) 1, , Cash generated from Operations (230.20) (44.84) Direct Taxes Paid (2.28) (28.52) Cash Used in Operating activities (232.48) (73.36) B. Cash Flow From Investing Activities: Purchase of Fixed Assets including Capital Work in Progress and capital advances (248.70) (214.79) Sale of Fixed assets Purchase of Investments - (0.01) Proceeds from Sale of Current Investments Proceeds from Sale / Redemption of Non Current Investments Loans / deposits given (net) (136.75) (228.16) Interest income Inter Corporate Deposits - (2.00) Cash Used In Investing Activities (330.64) (379.99) C. Cash Flow From Financing Activities: Proceeds from Long Term Borrowings 2, Repayments of Long Term Borrowings (588.74) (152.07) Short Term Borrowings (net) (492.97) Finance charges paid (644.84) (385.93) Cash Generated from Financing Activities Net (decrease) / Increase in cash and cash equivalents (A + B + C) (337.96) Opening Balance of Cash & Cash Equivalents Closing Balance of Cash & Cash Equivalents Effect of Exchange rate changes # 0.00 (0.01) Closing Balance of Cash & Cash Equivalents as restated * Includes current and non current ** Includes short term and long term # Amount less than ` 0.01 crore Notes : 1. Cash fl ow statement has been prepared under the indirect method as set out in Accounting Standard -3 issued by the Institute of Chartered Accountants of India. 2. Figures for previous year where ever necessary have been regrouped to conform to those of current year. As per our report of even date For NISAR & KUMAR For and on behalf of the Board, Chartered Accountants F. R. No W M. N. Ahmed Syed Abdi Dhananjay Datar Partner Managing Director Executive Director M. No Mumbai, S. Muthuswamy Sunil Agarwal Dated : 30th May, 2014 Executive Director Company Secretary 48

50 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, SIGNIFICANT ACCOUNTING POLICIES i). ii). Basis of Accounting The fi nancial statements are prepared under the Historical Cost Conventions on the basis of Going Concern and as per applicable Indian Accounting Standards notifi ed under section 211 (3C) of The Companies Act, Use of estimates The preparation of fi nancial statements requires the management of the company to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of fi nancial statements and the reported amount of revenues and expenses during the reporting period. Difference, if any, between the actual results and estimates is recognised in the year in which the results are known / materialized. iii). Revenue Revenue is recognized in accounts in accordance with Accounting Standard-7 Accounting for Construction Contracts issued by Institute of Chartered Accountants of India. The method of recognition is on percentage completion basis. Revenue is recognised under Percentage Completion Method on the basis of proportion that contract costs incurred for work performed up to the reporting date bears to the estimated total contract costs. Revenue from ship repair is recognised on the basis of job completion. iv). Fixed Assets v). Tangible Assets: Fixed Assets are recorded at Cost. Cost is purchase cost and in the case of Freehold Land, includes development cost incurred, together with all incidental costs of acquisition, borrowing costs and other related internal costs and is netted of for Cenvat and Value Added Tax. Profi t/loss on disposal of fi xed assets is recognised in the Statement of Profi t and Loss. Intangible Assets: Intangible assets are recognized and accounted at cost in accordance with Accounting Standard-26 Intangible Assets issued by Institute of Chartered Accountants of India. Capital Work In Progress All expenditure, relating to development of land, buildings, dry docks and plant & machinery etc. are accumulated and shown as capital work-in-progress till the completion of such activities. Capital advances are presented under loans and advances vi). Investments Long Term investments are stated at cost. Cost includes incidental expenses of acquisition. Decline in value of investment other than of temporary nature is recognised in Statement of Profi t and Loss. vii). Borrowing costs Borrowing Costs attributable to the acquisition and construction of the Qualifying Assets, which take substantial period of time to get ready for their intended use, are capitalized as part of the cost of respective assets up to the date when such assets are ready for their intended use. Other Borrowing costs are charged to the Profi t and Loss account. viii). Depreciation and Amortisation a) Freehold land is not depreciated. Leasehold land is amortised equally over the period of lease. b) Dry Docks (included in Plant & Machinery) and Dry Docks Civil Works (included in Factory Building) and Jetty are depreciated on Straight Line Method in accordance with Accounting Standard - 6 Depreciation Accounting of the Institute of Chartered Accountants of India at the rates prescribed in Schedule XIV to the Companies Act, c) Other assets are depreciated on Written Down Value Method at the rates prescribed in Schedule XIV to the Companies Act, d) Depreciation on additions / deletions to Fixed Assets made during the year is provided on pro-rata basis from or up to date of such additions / deletions as the case may be. e) Depreciation on amounts added on revaluation is recouped from Revaluation Reserve f) Intangible assets are stated at cost less accumulated amortisation and are amortised over a period of fi ve years. ix). Impairment of Assets An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. The Company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired and if such indication exists, the carrying value of such asset is reduced to its recoverable amount and a provision is made for such impairment loss in the profi t and loss account. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount 49

51 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 x). Employees Benefits Provident Fund: Provident Fund contributions are made as per a defi ned contribution scheme and the contribution of company is charged to Profi t and Loss account of the year when become due. The Company has no other obligation other than to contribute and deposit the contribution to respective authorities. Short term employee benefi ts are recognized as an expense at the undiscounted amount in the Statement of Profi t and Loss of the year in which the related service is rendered. Long term employee benefi ts are recognized as an expense in the Statement of Profi t and Loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of long term benefi ts are charged to the Profi t and Loss account. xi). Valuation of Inventory Inventories of spares, consumables, components are valued at lower of cost and net realizable value. Cost represents purchase cost and other incidental costs, if any. Cost of inventories is computed on Weighted Average/ FIFO basis. Finished goods are valued at lower of cost and net realisable value. xii). Work in Progress and Cost Allocation Each construction contract is considered as a cost center and all costs directly identifi able to the Contract are charged on actual basis. Indirect miscellaneous costs are also allocated to the various contracts using appropriate overhead recovery method. Contract work-in-progress is valued at cost, including therein profi t or loss arrived at in accordance of Accounting Standard -7 Accounting for Construction Contracts xiii). Foreign Currency Transactions Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of the transactions. Monetary assets and liabilities are translated at the year end using closing rate if remain unsettled at the year end. Non monetary foreign currency items are carried at cost. The resulting gain or loss on account of exchange difference either on settlement or on translation is recognised in the Statement of Profi t and Loss. The Company has w.e.f. 07th December,2006 chosen to apply notifi cation issued by Companies (Accounting Standard) Amendment Rules 2011 GSR 913 (E) & 914 (E) dated as regards monetary long term assets and liabilities. Consequently, the resulting gain or loss on account of exchange difference on settlement or on translation is so far as they relate to depreciable assets is added or deducted from the cost of the asset. xiv). Derivative Accounting The Institute of Chartered Accountants of India has, in 2008, issued an announcement on Accounting for Derivatives inter alia requiring provision for losses on all derivative contracts outstanding at the balance sheet date by marking them to market keeping in view the principle of prudence, other than for forward contracts to which Accounting Standard (AS) 11- The Effect of Change in Foreign Exchange Rates is applicable. The Company has entered into Forward Contracts to hedge a fi rm commitment or a highly probable forecast transaction to which AS-11 is not applicable and hence, the Company has applied aforesaid announcement. xv). Government Subsidy Government subsidy related to shipbuilding contracts are recognized on compliance with the relevant conditions and is recognized in the Statement of Profi t and Loss and presented under Revenue from Operations. xvi). Operating Leases Leases where the lessor effectively retains substantially all the risks and benefi ts of ownership of the leased assets are classifi ed as operating leases. Operating lease payments / receipts are recognized as an expense / income in the Statement of Profi t and Loss on a straight-line basis over the lease term. xvii). Provisions for Current and Deferred Tax Provision for Current Tax is made on the basis of taxable income under the provision of the Income Tax Act, Deferred Tax resulting from timing differences between book and taxable profi t is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future. In accordance with the guidance note issued by Institute of Chartered Accountants of India, the Company recognises MAT Credit as an asset only to the extent,the probability exists that the Company will become liable to pay normal Income Tax during the specifi ed period as per provision of the Income Tax Act, xviii). Provisions, Contingent Liabilities and Contingent Assets A provision is made based on reliable estimate when it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle an obligation. Contingent liabilities, if material, are disclosed in notes forming part of fi nancial statements. Contingent Assets are not recognized/ disclosed. 50

52 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, SHARE CAPITAL Authorised Capital AS AT AS AT ` in Crores ` in Crores (P.Y ) Equity Shares of `10/- each 17, Issued Subscribed and Paid up No of shares Reconciliation: Equity Shares of `10/- each fully paid up. As per last Balance Sheet Issued during the year As at the end of the year a) During the year the company has increased its authorised capital vide shareholder resolution in Extra Ordinary General Meeting held on 29th March Registration of the same with the Registering authority is pending. b) The Company has only one class of shares referred to as Equity Shares having par value of Rs 10/-. Each holder of equity share(s) is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion of the number of equity shares held by the shareholders. c) None of the above shares are reserved for issue under options and contract / commitments for sale of shares or disinvestment. d) (P.Y ) Equity Shares of `10/- each are held by the holding company ABG International Pvt. Ltd, as per dematerialised holding statement and includes shares pending for registration equity shares are pledged with lenders e) Shares alloted, as fully paid up, pursuant to contract(s) without payment being effected in cash / bonus shares /bought back / forfeited/ calls unpaid in the previous 5 years - NIL f) Shareholders holding above 5% Equity Shares with voting rights in the company. Sr No Name of the shareholder No of equity % No of equity % shares held shares held 1 ABG International Private Ltd. *34,212, ,648, Religare Finvest Ltd. 5,186, ,197, * Includes shares pending registration. 3. RESERVES AND SURPLUS (i) Capital Reserve Opening balance Added / Utilised / Transferred during the year - - Closing balance (ii) (iii) Securities Premium Account Opening balance Added / Utilised / Transferred during the year - - Closing balance Debenture Redemption Reserve Opening balance Added / Utilised / Transferred during the year Less:Transferred to General Reserve during the year Closing balance

53 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 AS AT AS AT ` in Crores ` in Crores (iv) (v) (vi) Revaluation Reserve Opening balance Less: Utilised to set off against depreciation Closing balance General Reserve Opening balance Add: Transferred from Surplus in Statement of Profi t and Loss Add: Transferred from Debenture Redemption Reserve Closing balance Surplus in Statement of Profi t and Loss Opening balance Add: Profi t / (Loss) for the year (199.30) Less: Transferred to Debenture Redemption Reserve Transferred to General Reserve Closing balance , , A. LONG TERM BORROWINGS (a) Debentures Secured (b) (c) Term Loans From Banks Secured 2, Unsecured From Others Secured Vehicle loans From Banks Secured From Others Secured (d) Loan from related parties [Refer Note 38] ,

54 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, B (i) Details of Debentures issued by the Company Particulars Security Terms of repayment As at As at a) 12.30% 1000 Non Convertible Redeemable Debentures (NCD) of `100000/- each issued to Life Insurance Corporation of India (LIC) b) 11.40% 2000 Non Convertible Redeemable Debentures (NCD) of `100000/- each issued to Secured - First pari passu charge on the company s immovable and movable fi xed assets of Dahej Plant. Payable in 13 quarterly instalments commencing quarter ending 30th Nov, 2013 upto 30th Nov, During the year the debenture terms had undergone restructuring and accordingly current and non current amount have been classifi ed. ` In Crores Non Current Current Non Current Current ICICI Bank Ltd. Secured - Residual charge on Closed during the year Tata Capital Ltd. the company s immovable and movable fi xed assets of Dahej plant Closed during the year B (ii) Details of Terms of repayment for other long term borrowings and security provided in respect of the secured other long-term borrowings Particulars Security Terms of repayment As at As at A) Term Loans from Banks Loan under Corporate Debt Restructuring (CDR) 1) Foreign Currency Loan Foreign Currency Loans 2) Rupee Term Loan Rupee Term Loans Secured - First pari passu charge over the Pooled Assets : All moveable (both fi xed and current assets) & immoveable assets of the Company excluding assets exclusively charged to respective lenders. Secured - First pari passu charge over the Pooled Assets : All moveable (both fi xed and current assets) & immoveable assets of the Company excluding assets exclusively charged to respective lenders. As per CDR Scheme dated 27th March 2014 the maximum repayment term is upto quarter ending 30th June Refer note 4 D As per CDR Scheme dated 27th March 2014 the maximum repayment term is upto quarter ending 30th June Refer note 4 D ` In Crores Non Current Current Non Current Current , Rupee Term Loan Rupee Term Loan 3) Rupee Term Loan where scheme implementation is pending NON CDR Rupee Term Loan - Consortium Rupee Term Loan Rupee Term Loan Foreign Curency Loan Foreign Curency Loan Rupee Term Loan Residual Charge over Pooled Assets. Secured - First Pari Passu Charge over all moveable assets (including current assets) pertaining to Drilling Offshore Pte Ltd (DOPL) Rigs. Secured - First pari-passu charge on the company s movable & immovable fi xed assets of Dahej plant, present and future. Secured - First pari-passu charge on the company s movable & immovable fi xed assets of Dahej plant, present and future. Secured - First pari-passu charge on movable and immovable fi xed assets of the Dahej Shipyard land at Dahej. Corporate Guarantee of holding company. Secured - First pari passu charge over the Pooled Assets : All moveable (both fi xed and current assets) & immoveable assets of the Company excluding assets exclusively charged to respective lenders. Secured - First pari-passu charge on the assets of third party. Corporate guarantee of third party. Pledge of shares of the third party and non disposal undertaking on unpledged shares in the share capital of third parties. As per CDR Scheme dated 27th March 2014 the maximum repayment term is upto quarter ending 30th June Refer note 4 D As per CDR Scheme dated 27th March 2014 the maximum repayment term is upto quarter ending 30th June Refer note 4 D Payable in quarterly installments upto March 2015 Payable in quarterly installments upto June 2017 Payable in quarterly installments upto March 2016 Payable in half yearly instalments upto Sep 2016 Payable in quarterly instalments upto April 2015 Payable in quarterly instalments upto Dec

55 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 Rupee Term Loan Secured - First charge on the Payable in quarterly instalments upto assets of third party Subservient charge on all immoveable and moveable fi xed assets of the Dahej yard and personal and corporate guarantee of third party. March 2018 Rupee Term Loan Secured - Subservient charge on Payable in monthly installments upto current and fi xed assets of the company at Dahej Yard. Oct 2013 Rupee Term Loan Secured - Second charge by way Payable in quarterly installments upto of hypothecation of entire movable fi xed assets of Dahej Shipyard and Rigyard of the company. Dec Rupee Term Loan Unsecured Payable in quarterly instalments upto Oct, 2015 B) From Others 2, CDR Rupee Term Loan Secured - First pari passu charge As per CDR Scheme dated 27th over the Pooled Assets : All moveable (both fi xed and current assets) & immoveable assets of the Company excluding assets exclusively charged to respective lenders. March 2014 the maximum repayment term is upto quarter ending 30th June Refer note 4 D NON CDR Rupee Term Loan Secured - First pari passu charge on the movable and immovable fi xed assets at Dahej Plant. Exclusive charge on immovable property at Dahej of the company. Interim security by way of fi rst charge on immovoble assets of third party. Corporate Guarantee of holding company ABG International Pvt. Ltd. Payable in 6 quarterly instalments commencing 30th Jan, 2014 and ending 30th April, 2015 C) Vehicle loans From banks Secured- Hypothecation of the individual assets fi nanced. Payable in monthly instalments upto May, From others Secured- Hypothecation of the individual assets fi nanced. Payable in monthly instalments upto April, D) From related parties Holding Company ( Promoter s Contribution ) Unsecured - Subordinated to CDR facilities Payable only after full repayment of Restructured Facilities of the CDR Lenders , C The Company has defaulted in repayment of loans and interest in respect of the following Particulars As at ` In Crores As at Period in days As at ` In Crore As at Period in days Debentures issued to LIC Principal Interest Foreign Currency Loans Princiipal Interest Rupee Term Loan Princiipal Interest

56 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, D. Corporate Debt Restructuring ABG Shipyard Limited is hereinafter referred to as the Borrower, who has availed various fi nancial facilities from the secured lenders. At the request of the Borrower, the Corporate Debt Restructuring Proposal ( CDR Proposal ) of the Borrower was referred to Corporate Debt Restructuring Cell ( CDR Cell ) by the consortium of senior lenders led by the ICICI Bank. The CDR Proposal as recommended by ICICI Bank Ltd., the lead lender and approved by CDR Empowered Group ( CDR EG ) on 24th March 2014 and communicated vide Provisional Letter of Approval dated 27th March 2014, as amended/modifi ed from time to time. The cut off date for CDR Proposal was 1st August The Master Restructuring Agreement ( MRA ) between the Borrower and the CDR Lenders has been executed, by virtue of which the restructured facilities are governed by the provisions specifi ed in the MRA having cut off date of 1st August For all the loans restructured under the above Corporate Debt Restructuring Scheme, creation of security is pending at registering authority. The CDR proposal is partly implemented as at 31st March The Key features of the CDR Proposal are as follows: 1 Restructuring of existing fund based and non fund based fi nancial facilities, subject to renewal and reassessment every year. 2 Repayment of Restructured Term Loans ( RTL ) after moratorium of 2 year from cut off date in 32 structured quarterly instalments commencing from Quarter ending 30th September 2015 to 30th June Conversion of various irregular/outstanding/devolved fi nancial facilities into Working Capital Term Loan ( WCTL ) Repayment of WCTL after moratorium of 3 years 6 months from cut off date in 26 structured quarterly instalments commencing from Quarter ending 31st March 2017 to 30th June 2023, subject to mandatory prepayment obligation on realisation of proceeds from certain asset sale and capital infusion. 4 The interest payable on RTL and WCTL during moratorium period of 2 years and 3 years 6 months respectively from cut off date also be converted to Funded Interest Term Laon (FITL). Out of Total FITL facility amounting to Rs 1,561 crore an an amount aggregating to Rs. 1,000 crore shall be compulsorily converted into equity shares or 0.01% Compulsorily Convertible Preference Shares (CCPS) befor 31st March The rate of interest of RTL, WCTL, FITL and fund based working capital facilities shall be 11% for initial two year and thereafter with annual reset option in accordance with MRA. 6 Contribution of Rs. 300 Crore in the Company by promoters in lieu of bank sacrifi ce in the form of equity shares / CCPS. 7 In case of fi nancial facilities availed from the non-cdr Lenders, the terms and conditions shall continue to be governed by the provisions of the existing fi nancing documents. 8 Additional Security for the CDR debt - Personal Gurantee of Promoter Mr. Rishi Agarwal, Pledge of Promoter s entire shareholding of ABG shipyard Limited and Corporate Gurantee of ABG International Pvt Ltd. (Holding company) 5. DEFERRED TAXES Tax effect of items constituting deferred tax Liabilities AS AT AS AT ` in Crores ` in Crores On account of profi t on Projects under completion Tax effect of items constituting deferred tax assets On account of gratuity liability and leave encashment liability On account of expenses allowable on delivery of ships On account of unabsorbed depreciation and losses (net) On account of disallowances

57 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, LONG TERM PROVISIONS AS AT AS AT ` in Crores ` in Crores Provision for Gratuity Provision for Leave Encashment A - SHORT TERM BORROWINGS Security From Banks: a) Short term loans Rupee Short Term Loan Secured- Charge on immovable property at Dahej Corporate Guarantee of third party. Rupee Short Term Loan Secured-Subservient charge on the current assets and movable fi xed assets Dahej Shipyard & Rigyard. Rupee Short Term Loan Secured-Subservient charge on the current assets of the company, present and future. Rupee Short Term Loan Unsecured b) Export Packing Credit Secured - First pari passu charge over the Pooled Assets c) Cash Credit : All movable (both fi xed and current assets) & immovable , assets of the Company excluding assets exclusively d) Others - payable on charged to respective lenders demand e) Others - payable on demand Unsecured From Others: Inter Corporate Deposits Unsecured B. The Company has defaulted in repayment of loans and interest in respect of the following Particulars As at ` in Crores As at Period of default in days 1, , As at ` in Crores As at Period of default in days Loans from banks Principal Interest Others - payable on demand Principal Interest Inter Corporate Deposits Principal Interest

58 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, TRADE PAYABLES AS AT AS AT ` in Crores ` in Crores (i) Sundry Creditors for Goods & Expenses [Refer Note 38] (ii) Acceptances - banks The Company has no amounts due to suppliers under MSMED as at 31st March, 2014 (P. Y. Nil). The information relates to such vendors identifi ed as micro,small and medium enterprises as per information available with the Company. (i) Principal amount remaining unpaid to any supplier as at the end of the accounting - - period (ii) Interest due thereon remaining unpaid to any supplier as at the end of the accounting - - period (iii) The amount of interest paid along with the amounts of the payment made to the supplier - - beyond the appointed day (iv) The amount of interest due and payable for the period - - (v) The amount of interest accrued and remaining unpaid at the end of the accounting period - - (vi) The amount of further interest due and payable even in the succeeding year, until such date when the interest dues as above are actually paid 9. OTHER CURRENT LIABILITIES - - (i) Current Maturities of long-term debt - [Refer note 4B] a. Non Convertible Redeemable Debentures (NCD) b. Term Loans - from Banks c. Vehicle loans From banks From others (ii) Payables on purchase of fi xed assets - Acceptances - banks Others (iii) Interest accrued & due on borrowings (iv) Interest accrued but not due on borrowings (v) Advance from customers 3, , (vi) Other Advances including Related Parties [Refer Note 38] (vii) Unclaimed Dividends * (viii) Other Payables - Statutory remittances Trade / security deposits received Reimbursable Expenses * To be transfered to Investor and Protection Fund, when due 4, , SHORT TERM PROVISIONS Provision for employee benefi ts: Gratuity Leave Encashment Income Tax (Net of prepaid taxes) Contingencies

59 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, FIXED ASSETS PARTICULARS Gross Block At cost / Valuation DEPRECIATION/ AMORTISATION/ IMPAIRMENT NET BLOCK AS AT ADDITIONS DURING THE YEAR DELETIONS/ ADJUSTMENTS DURING THE YEAR AS AT AS AT ADDITIONS DURING THE YEAR DELETIONS/ ADJUSTMENTS DURING THE YEAR AS AT AS AT AS AT TANGIBLE ASSETS LAND FREE HOLD LAND * LEASE HOLD LAND FACTORY BUILDING BUILDING PLANT AND MACHINERY OFFICE EQUIPMENT FURNITURE & FIXTURES VEHICLES COMPUTERS , , , INTANGIBLE ASSETS SOFTWARE T O T A L 1, , , Previous year 1, , , Capital work in progress 1, **1, , * Stamp duty and Registration Charges ** Refer note 11 (vii ) below i) Certain part of the land is yet to be registered in the name of the Company. ii) iii) iv) ` in crores ` in crores Depreciation, Amortisation & Impairment relating to continuing operations: Depreciation, Amortisation & Impairment for the year on tangible assets Depreciation, Amortisation & Impairment for the year on intangible assets Less: Utilised from revaluation reserve Depreciation & Amortisation on discontinuing operations - - Depreciation, Amortisation & Impairment relating to continuing operations Impairment charges of `Nil (P.Y crores) No amounts were written off due to reduction of capital / written off on revaluation or were added to assets on revaluation during the previous 5 years. v) Borrowing cost capitalised ` cores (P.Y ` crores) vi) On the basis of the report of Chartered Engineers and Government approved Valuers, the Company had revalued the Freehold Land, Factory Building, Other Building and Dry Docks on 30th June, 1994 and again on 30th June 2002 and consequently an amount of `10.90 crores and ` crores respectively being the differences between the amount of fair market value of the same and depreciated value as per books as on those dates, have been added to the value of Fixed Assets and corresponding credit shown as Revaluation Reserve. Consequent to the revaluation there is an additional depreciation of ` 1.23 crores (P. Y ` 1.29 crores), which has been withdrawn from Revaluation Reserves and credited to Statement of Profi t and Loss. 58

60 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 vii) Details of Capital work in progress (CWIP) : Particulars 31st March st March 2013 ` In crores ` In crores Ship and Rig Yard Land, Building and Site development Plant & Machinery : * Main Plant & Machinery Cranes Jetty Others Sub Total 1, , Preoperative expenses (Pending Allocation) : Rent Travelling & Conveyance Finance Charges Personnel Expenses Communication Expenses Professional & Technical Fees Depreciation Other Site Expenses Sub Total Total 2, , Less: Capitalised during the year Less: Transferred Grand Total 1, , * Includes Goods In Transit - Nil (P.Y. ` crores) As a consequence of Settlement Commission Order dated 18th April 2013, an amount of ` crores has been debited to ABG Resources Pvt Ltd, a related party, the impact of which is as under - - Deletion in building ` crores Corresponding effect of depreciation of ` 5.72 crores has been adjusted from depreciation for the year. - Deduction in CWIP ` crores During the year, `45.81 crores ( P. Y crores) pertaining to completed assets ready to be put to use has been capitalized along with proportionate expenditure. The capitalization of proportionate expenditure is based on technical evaluation of the project by an independent valuer. viii) The company has chosen to avail the option under AS-11 notifi cation issued by Companies (Accounting Standard) Amendment Rules 2011 GSR 913 (E) & 914 (E) dated issued by Ministry of Corporate Affairs. The company has exercised the option with respect to foreign currency long term loan availed by it. The company has no other long term monetary Assets / Liabilities. Due to the exercise of aforesaid option, the impact on Statement of Profi t and Loss for the year is a Gain of `9.49 crores (P.Y. Gain ` 6.68 crores) due to foreign currency exchange loss (net) which has been capitalized with CWIP. ix) Acquisition through business combinations / Assets reclassifi ed as held for sale - Nil (P.Y. Nil) 59

61 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 AS AT AS AT ` in Crores ` in Crores 12. NON-CURRENT INVESTMENTS Non Trade - At cost Quoted In Equity Shares In subsidiary (P. Y ) Equity Shares in Western India Shipyard Ltd. of ` 2/- each fully paid up Unquoted In Equity Shares In subsidiary (P.Y.10000) Equity Shares in ABG Shipyard Singapore Pte. Ltd. of SGD /- each fully paid up (P.Y ) Equity Shares in ABG FPSO Pvt Ltd of ` 10/- each fully paid up In Others: (P.Y ) Equity Shares in ABG Business Ventures Pte. Ltd., Singapore of SGD 1/- each fully paid up 1000 (P.Y. 1000) Equity Shares in Varada Seven Pte. Ltd. of USD 1/- each fully paid up In Preference Shares In subsidiaries : (P.Y ) 1% Preference Shares in ABG Shipyard Singapore Pte. Ltd.of USD 1/- each fully paid up In Partnership Firm Capital in partnership fi rm Vipul Shipyard ) Aggregate amount of quoted investments ` crores (P.Y `35.40 crores) Aggregate market value of quoted investments `27.39 crores (P.Y. ` crores) 2) Aggregate amount of unquoted investments ` crores (P.Y. ` crores) 3) (P.Y ) Equity shares of the subsidiary - Western India Shipyard Ltd. have been pledged with banks in respect of facilities availed by such subsidiary company from the banks. 4) As the investment are in the operating companies, considering the economic scenerio the manangement does not consider diminution in value, if any, to be permanent in nature. 5) During the year the company has retired as partner from partnership fi rm w.e.f. 1st July Details of Partners, capital and shares in the fi rm till dated 1st July 2013 are as under. As on 31st March 2014 balances of partner share are recoverable from fi rm. Details of Investment in partnership firm Vipul Shipyard, Surat 01/07/ /.3/2013 Capital Account Current Account Total Capital of Vipul Shipyard Partners details Share in profi ts/ losses ABG Shipyard Ltd % Onaway Industries Ltd 1.00% Mr. Damador Prasad Gupta 0.60% Others 0.40% 60

62 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, LONG-TERM LOANS AND ADVANCES (Unsecured, considered good) AS AT AS AT ` in Crores ` in Crores Capital Advances Security Deposits [Refer Note 38] Due from Government authorities MAT Credit Entitlement Added during the year Less: Utlised / Reduced Note: MAT credit utilised / reduced is a consequence of Settlement Commission Order pertaining to earlier years. Service tax credit - receivable - deferred Loans and advances to related parties [Refer Note 38] INVENTORIES (As taken, valued & certifi ed by management) Raw Material and Components In stock In transit , Work in Progress On Percentage completion basis 8, (Contract costs & recognised profi t) Less: Progress Money from Customers 5, , , Finished goods , , Finished goods represents completed ship where invoicing and protocol of acceptance is pending 15. TRADE RECEIVABLES (Unsecured, considered good) Outstanding for more than six months from due date of payment [Refer Note 38] Others [Refer Note 38] Less: Provision for doubtful receivables CASH AND BANK BALANCE Cash in hand Balances with Banks: i) In Current Accounts ii) In EEFC Accounts iii) In Fixed Deposits iv) In Earmarked Accounts Unclaimed dividend accounts Out of the above : All fi xed deposits with banks are held as security against short term borrowing including fi xed deposit with maturities of more than twelve months ` 0.26 Crores (Previous Year - Nil)

63 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, SHORT-TERM LOANS AND ADVANCES (Unsecured, Considered good) AS AT AS AT ` in Crores ` in Crores Loans and Advances to related parties: [Refer note 38] Current Account in Partnership Firm Advance for supplies / services 1, Loans to Subsidiary Other loans and advances Others: 1, , Advance to suppliers 1, Prepaid Expenses Employee Advances Inter Corporate Deposits Other advances Balance with Government Authorities Service Tax Refundable / Credit Vat credit Income Tax Details of Loans and Advances in the nature of loan to subsidiaries , , , , Sr No Name of the shareholder As at As at Amount outstanding Maximum amount outstanding during the year Amount outstanding Maximum amount outstanding during the year 1 Western India Shipyard Ltd ABG FPSO Pvt Ltd ABG Shipyard Singapore Pte. Ltd * * Amount less than ` 0.01 crore. 18. OTHER CURRENT ASSETS (Unsecured, Considered good) Subsidy Interest accrued Fixed Deposits with Bank Inter Corporate Deposits Insurance Claims Receivable Others [Refer Note 38] Receivables on sale of fi xed assets Others

64 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, REVENUE FROM OPERATIONS Year ended Year ended ` in Crores ` in Crores Manufacturing Ships 1, , Rigs Trading Services - Ship Repair Other operating Revenue Subsidy Excise and duty refunds , , OTHER INCOME Interest on: Fixed deposits with banks Inter corporate deposit Others Net Profi t/( loss) on sale of non current Investments Other Non operating Income : Insurance Claims Sundry balances written back Miscellaneous Receipts A. CONSUMPTION OF RAW MATERIALS & COMPONENTS Steel Other Items , , B. PURCHASE OF TRADED GOODS Steel CHANGES IN INVENTORIES - WORK IN PROGRESS (Included in work in progress on percentage completion basis) Opening Work In Progress Adjustments (Net) Closing Work In Progress Decrease in Work in progress (287.84) (118.98) Note: Adjustments (Net) include adjustment due to transfer of opening work in progress of cancelled contracts and adjustment due to steel credit as per Settlement Commission Order dated 14th February EMPLOYEE BENEFITS EXPENSE Salaries Wages and other benefi ts Contribution to Provident Fund Staff Welfare Expenses

65 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, FINANCE COST Year ended Year ended ` in Crores ` in Crores Interest Expense on borrowings Other Interest Guarantee Commission (net) Difference in Exchange on foreign currency transaction / translation (net) (4.37) 4.98 Other Borrowing Costs OTHER EXPENSES Consumption of stores Contractors Charges Power and Water Repairs & Maintenance - Plant & Machinery Buildings Others Other Manufacturing Expenses Inspection and Survey Expenses Offi ce Expenses Rent Rates & Taxes Insurance Printing & Stationery Postage Telephone & Telex Travelling & Conveyance Professional Charges Payment to Auditors Donations & Charities Prior Years Expenses Selling & Distribution Forward Cover Loss/ (Gain) (net) Loss from Partnership Firm Loss/ (Profi t) on Sale of Assets (net) (8.25) Loss on Sale of Non Current Investments Loss on cancelled contracts Provision for Doubtful Debtors Miscellaneous Expenses

66 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, Capital commitment on contracts remaining to be executed on capital account and not provided for, are estimated at ` in Crores Particulars 31st March st March 2013 Tangible Assets (a) Contingent liability not provided for ` in Crores Particulars 31st March st March 2013 In respect of Performance/ Delivery Guarantees given by banks to the buyers Corporate guarantees to banks in respect of facilities granted to group companies. 1, , Other bank guarantees Claims against the company not acknowledged as debts Claims in respect of indirect taxes Claims in respect of direct taxes (b) Contingencies provided for in accordance with AS 29 issued by the Institute of Chartered Accountants of India ` in Crores Particulars 31st March st March 2013 Carrying amount as at the beginning of the year Provision during the year Unused amount reversed during the year - - Balance at the end of the year The contingencies provided are in respect of estimated warranties on sold ships. 28. In the opinion of the management, Current Assets, Loans and Advances have value in realisation in the ordinary course of business at least equal to the amount at which they are stated. 29. Exchange fl uctuation included in the Statement of Profi t and Loss is a loss of ` crores and gain of ` crores (P.Y.loss ` crores gain ` crores).out of this, a net loss of ` crores (P Y.net `42.03 crores) is related to material and included in consumption. 30 i) Value of goods imported on C.I.F. basis (including goods in transit) : ` in Crores Particulars 31st March st March 2013 a) Capital Goods b) Raw Materials Steel c) Components and Others , ii) Consumption of Steel and Components during the year: Particulars 31st March st March 2013 ` In Crores % ` In Crores % a) Imported b) Indigenous Components & Spare Parts : a) Imported b) Indigenous

67 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 iii) Earnings/ expenditure in foreign exchange (on accrual basis): ` in Crores iv) Particulars 31st March st March 2013 Earnings: Export Sales on FOB basis Other Income Expenditure: Legal & Professional Fee Selling & Distribution Interest & Other Charges Travelling and Other Matters Remittance of dividend in foreign currency The Company has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittances, if any, in foreign currencies on account of dividends have been made by / on behalf of non resident shareholders. 31. Auditors Remuneration: (excluding service tax ) ` in Crores Particulars 31st March st March 2013 Audit Fee (Including consolidation) Tax / Transfer Pricing audit fees and taxation matters Certifi cation and other Professional Services Disclosure in respect of Operating Leases (Assets taken on lease): (a) The Company has taken commercial / residential premises under cancellable operating leases. The lease agreements are usually renewable by mutual consent on mutually agreeable terms. (b) The expenses in respect of operating leases are accounted in Other Expenses under Note No Disclosure in accordance with AS -7 Accounting for Construction Contracts issued by the Institute of Chartered Accountants of India: ` in Crores Particulars 31st March st March 2013 a. Contract revenue recognized as revenue in the year 1, , b. Contract cost incurred and recognized profi ts 8, , c. Advances received from above customers 6, , d. Gross amount due from customers for contract work 3, , e. Gross amount due to customers for contract work The Gross amount due from customers refl ects the net amount for all contracts in progress for which cost incurred plus recognised profi t (less recognised losses) exceeds progress billing. The Gross amount due to customers refl ects the net amount for all contracts in progress where progress billing exceeds cost incurred plus recognised profi ts (less recognised losses). During the year, advances from customers to the extent of work done amounting to Rs crores.(p.y.rs crores) is adjusted against Work in Progress in Note No 14. Advances received in excess of work done and advances pending commencement of work are disclosed in Current Liabilities under Advances from Customers in Note No 9. 66

68 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, The disclosures required under Revised Accounting Standard 15 Employee Benefi ts notifi ed in the Companies (Accounting Standards) Rules 2006, are given below Defined Contribution Plan Contribution to Defi ned Contribution Plan, recognized are charged off for the year are as under: ` in Crores Particular 31st March st March 2013 Employer s Contribution to Provident Fund Employer s Contribution to Pension Scheme Defined Benefit Plan The employees gratuity fund scheme managed by SBI Life Insurance is a defi ned benefi t plan. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefi t entitlement and measures each unit separately to build up the fi nal obligation. The obligation for leave encashment is recognized in same manner as gratuity. ` in Crores Particular Gratuity (Funded) Leave Encashment (Unfunded) 31st March st March st March st March 2013 a. Reconciliation of opening and closing balances of Defined Benefit obligation Defi ned Benefi t obligation at the beginning of the year Current Service Cost Interest Cost Actuarial (gain) / loss (1.59) (0.58) (1.33) (0.67) Benefi ts paid (0.02) (0.21) (0.87) (1.16) Defi ned Benefi t obligation at the year end b. Reconciliation of opening and closing balances of fair value of plan assets Fair value of plan assets at beginning of the year Expected return on plan assets * Actuarial gain/(loss) *(0.00) (0.01) - - Employer contribution Benefi ts Paid (0.02) (0.21) - - Fair value of plan assets at the year end c. Reconciliation of fair value of assets and obligations Fair value of plan assets as at Year End Present value of obligation as at Year end Amount recognised in Balance Sheet d. Expenses recognised during the year Current Service Cost Interest Cost Expected return on plan assets *(0.00) (0.02) - - Actuarial (gain) / loss (1.59) (0.56) (1.33) (0.67) Net Cost (0.42) 0.76 (0.29) 0.77 e. Investment Details % Invested SBI Group Gratuity (Cash Accumulation) Policy f. Actuarial Assumptions (Ultimate) (Ultimate) Mortality Table (L.I.C) Discount rate (per annum) 8.00% 8.00% 8.00% 8.00% Expected rate of return on plan assets (per annum) 8.00% 8.00% N.A N.A Rate of escalation in salary (per annum) 5.00% 5.00% 5.00% 5.00% *Amount less than Rs crore 67

69 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 The estimates of rate of escalation in salary considered in actuarial valuation, take into account infl ation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certifi ed by the actuary and relied upon by auditors. 35. Calculation of Earning per share (EPS) Particular 31st March st March 2013 Net profi t as per Statement of Profi t & Loss (` In crores) (199.30) Weighted Avarage number of Equity shares of ` 10/- each fully paid up 50,921,801 50,921,801 Earning per Equity Share of ` 10/- each fully paid up. (Rupees) (39.14) (Basic & Diluted) 36. The Company primarily operates in one business segment only i.e. manufacturing which is the only reportable segment. There is no other segment which satisfi es the threshold limit as per Accounting Standard -17, issued by Institute of Chartered Accountants of India. Secondary segment (Geographical Segments): ` in Crores Particular Domestic Overseas Total 31st March st March st March st March st March st March 2013 Revenue [as per AS 7 (revised)] , , , , Exceptional item of Rs crores represents commision on stage paymant refund / performance guarantee predebited by banks 38. Related Parties Disclosure as per Accounting Standard (AS) 18: A. LIST OF RELATED PARTIES Holding company ABG International Private Limited Subsidiaries / Controlling stake Fellow subsidiary companies Companies over which directors / relatives are able to exercise control or signifi cant infl uence Western India Shipyard Limited ABG Shipyard Singapore Pte. Limited Vipul Shipyard ( Partnership Firm) (upto 30th June 2013) ABG FPSO Private Limited ABG Cement Limited PFS Shipping (India) Limited ABG Cement Holdco Private Limited ABG Solar Project Private Limited BABA Gangaram Investment Services Private Limited ABG Energy Limited ABG Energy (Gujarat) Limited ABG Energy (MP) Limited Varada Marine Pte. Limited (Along with its SPV s) PFS Offshore Pte. Limited. Vardha one Pte. Limited ABG Infralogistics Limited ABG Power Private Limited ABG Cranes Private Limited ABG Foods Private Limited ABG Acquafarm Private Limited ABG Glass Private Limited ABG Engineering & Construction Limited Tirupati Landmark Private Limited Tirupati Management & Investment Services Private Limited (Formerly ABG Mercantile & Investment Services Private Limited ) Eleventh Land Developers Private Limited ABG Resources Private Limited (Formerly Second Land Developers Private Limited) ABG Motors Limited Banal Investment & Trading Private Limited Jarrow Finance & Trading Private Limited Onaway Industries Limited Agbros Leasing & Finance Private Limited Aries Management Services Private Limited 68

70 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 G.C. Property Private Limited Individuals owning directly or indirectly an interest in the voting power that gives them control or significant influence Gold Croft Property Private Limited Somerset Estate Private Limited ABG Enterprises & Trading Private Limited (Formerly Nibodh Trading Private Limited ABG Energy Himachal Pradesh Limited Vipul Shipyard ( Partnership Firm) (w.e.f 1st July 2013) ABG Business Ventures Pte. Limited Drilling & Offshore Pte. Limited Drilling & Offshore One Pte. Limited Drilling & Offshore Two Pte. Limited Global Bulk Carriers Pte. Limited Varada Ventures Pte. Limited Varada Drilling One Pte. Limited Varada Drilling Two Pte. Limited Varada Two Pte. Limited Varada Three Pte. Limited Varada Four Pte. Limited Varada Five Pte. Limited Varada Six Pte. Limited Varada Seven Pte. Limited Varada Nine Pte. Limited Varada Ten Pte. Limited Varada Eleven Pte. Limited Varada Twelve Pte. Limited Shri. Rishi Agarwal Key management personnel Shri. Syed Abdi (w.e.f. 9th January 2014 ) Shri. Dhananjay Laxman Datar Major Arun Phatak (upto 31st December 2013) Shri. S.Muthuswamy (w.e.f. 13th November 2013 ) 69

71 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 Sr. no. Nature of Transactions Holding company Subsidiaries/ Controlling stake Fellow subsidiary companies Co over which directors / relatives are able to exercise signi ficant influence 31st March 2014 Individuals owning directly or indirectly an interest in the voting power that gives them control or significant influence Key manage ment personnel ` in Crores 1 Revenue from Operations Total (5.40) (0.42) (87.77) (152.62) - - (246.21) 2 Rent Expenses (0.00) - (1.20) - - (1.20) 3 Hire Charges (0.57) - - (0.57) 4 Services Received Interest/ Guarantee Commission/ Other Income Charged - (95.54) - (1.20) - - (96.74) (21.99) (51.90) - - (73.89) 6 Finance Charges Paid (0.00) - (0.00) - - (0.00) 7 Payment to Key Management Personnel (2.59) (2.59) 8 Purchase of Fixed Assets (7.12) - - (7.12) 9 Sale of Fixed Assets * (12.96) - - (0.00) - - (12.96) 10 Sale of Shares (0.01) - - (0.01) 11 Stage Payment Received , , (207.49) (635.02) - - (842.51) 12 Stage Payment Refunded Loans and Advances Given / Repaid 14 Loans and Advances Taken / Refunded - - (60.51) (35.39) - - (95.90) , (199.66) (60.78) (162.31) (628.23) (0.12) - (1,051.10) (208.58) (33.90) (1.44) (15.43) (0.36) - (259.72) 15 Deposit Refund Received (110.00) - - (110.00) 16 Guarantees Taken 2 16, , (618.00) (618.00) 17 Guarantees Given (25.00) (435.12) - - (460.12) 70

72 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 ` in Crores Sr. no. Nature of Transactions Holding company Controlling stake Fellow subsidiary companies Co over which directors / relatives are able to exercise signi ficant influence Individuals owning directly or indirectly an interest in the voting power that gives them control or significant influence Key manage ment personnel Total 31st March 2014 Outstanding Balances as on 31st March 2014 Receivables (0.67) (3.37) (45.66) (14.15) - - (63.85) Payables * (31.67) *(0.00) (10.55) (0.26) - (42.48) Advance from Customers , ( ) ( ) - - (3,054.63) Loans and Advances , Given - (26.18) (208.52) (993.33) - - (1,228.03) Loans and Advances Taken (0.00) (0.00) (0.00) (0.00) - - (0.00) Deposits Given (123.00) - - (123.00) Guarantees Taken (1,053.00) (1,053.00) Guarantees Given , , , (88.60) (1,046.02) (979.02) - - (2,113.64) * Amount less than Rs crore Notes : 1. Names of the Related Parties have been given in cases where the amount of transaction exceeds 10% of the total related party transactions of the same type 2. Guarantees taken / given comprise of guarantees given to third parties on behalf of the Company / related parties. 3. Managerial Remuneration as detailed in point 7 below exceeds limits prescribed under Schedule XIII of the Companies Act, 1956 and the same is subject to approval from Central Government.. 4. Related Parties have been identifi ed by the management and relied upon by the auditors. 5. Previous Year fi gures are shown in brackets. 71

73 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 Disclosure in respect of Related Party transactions during the year: 1 Revenue from Operations include Varada Marine Pte. Limited Rs. Nil (Previous Year Rs crores), Varada Three Pte. Limited Rs crores (Previous Year Rs crores) 2 Rent Expenses include Aries Management Services Private Limited Rs crores (Previous Year Rs crores), G.C. Property Private Limited Rs crores (Previous Year Rs crores), Gold Croft Property Private Limited Rs crores (Previous Year Rs crores), Somerset Estate Private Limited Rs crores (Previous Year Rs crores) 3 Hire Charges paid to ABG Infralogistics Limited Rs. Nil (Previous Year Rs crores) 4 Services Received from Western India Shipyard Limited Rs. Nil (Previous Year Rs crores ), ABG Resources Private Limited Rs crores (Previous Year Rs crores) 5 Interest / Guarantee Commission / Other Income Charged to Varada Marine Pte. Limited (along with its SPVs) Rs crores (Previous Year Rs crores ), ABG Engineering & Construction Limited Rs. Nil (Previous Year Rs crores), ABG Business Ventures Pte. Limited Rs crores (Previous Year Rs crores), Varada Seven Pte. Limited Rs crores (Previous Year crores ) ABG Resources Private Limited Rs crores (Previous Year Rs. Nil), Global Bulk Carriers Pte. Limited Rs crores (Previous Year Rs. Nil) 6 Finance Charges Paid to Western India Shipyard Limited Rs crores (Previous Year Rs Nil ), ABG Infralogistics Limited Rs crores (Previous Year Rs. Nil) 7 Payment to Key Management Personnel include to Syed Abdi Rs crores (Previous Year N.A.) Major Arun Phatak Rs crores (Previous Year Rs.0.75 crores ), Shri. Dhananjay Datar Rs crores (Previous Year Rs crores ), Shri. S. Muthuswamy Rs crores (Previous Year N.A.), Shri. R.S. Nakra Rs. Nil (Resigned w.e.f. 1st December, 2012) ( Previous Year Rs crores) 8 Purchase of Fixed Assets include from ABG Cranes Private Limited Rs crores (Previous Year Rs.7.12 crores ) 9 Sale of Fixed Assets include to ABG International Private Limited Rs. Nil (Previous Year Rs crores ), ABG Infralogistics Limited Rs. *0.00 crores (Previous Year Rs.Nil) 10 Sale of Shares to ABG Mercantile & Investment Services Private Limited Rs. Nil (Previous Year Rs crores ) 11 Stage Payment Received include from Varada Marine Pte. Limited (along with its SPVs) Rs.Nil (Previous Year Rs crores ), Global Bulk Carriers Pte. Limited Rs. Nil (Previous Year Rs crores ), Varada Three Pte. Limited Rs crores (Previous Year Rs crores ), Varada Five Pte. Limited Rs. Nil (Previous Year Rs crores ), Varada Four Pte. Limited Rs crores (Previous Year Rs. Nil),Varada Nine Pte. Limited Rs crores (Previous Year Rs. Nil),Varada Drilling One Pte. Limited Rs crores (Previous Year Rs.Nil),Varada Drilling Two Pte. Limited Rs crores (Previous Year Rs. Nil), Drilling & Offshore Two Pte. Ltd. Rs crores (Previous Year Rs.Nil) 12 Stage Payment Refunded include Varada Marine Pte. Limited (along with its SPVs) Rs crores (Previous Year Rs. Nil), Global Bulk Carriers Pte. Limited Rs crores (Previous Year Rs. Nil ) Varada Five Pte. Limited Rs crores (Previous Year Rs. Nil ),Varada Seven Pte. Limited Rs. Nil (Previous Year Rs crores ) 13 Loans and Advances Given / Repaid include ABG International Private Limited Rs crores (Previous Year Rs crores ), PFS Shipping (India) Limited Rs crores (Previous Year Rs crores ), ABG Engineering & Construction Limited Rs crores (Previous Year Rs crores ), ABG Resources Private Limited Rs crores (Previous Year Rs crores ), Varada Seven Pte. Limited Rs. Nil (Previous Year Rs crores ). 14 Loans and Advances Taken/ Refunded include ABG International Private Limited Rs crores (Previous Year Rs crores ), Western India Shipyard Limited Rs crores (Previous Year Rs crores ), ABG Engineering & Construction Limited Rs crores (Previous Year Rs. *0.00 crores ), ABG Resources Private Limited Rs crores (Previous Year Rs.0.81 crores ) 72

74 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, Deposit Refund Received from ABG Resources Private Limited Rs. Nil (Previous Year Rs crores ) 16 Guarantees Taken from ABG International Private Limited Rs. 16, crores (Previous Year Rs crores ) 17 Guarantees Given to Varada Ventures Pte. Limited Rs.Nil (Previous Year Rs crores ) 39. Information on Foreign Currency Exposure: (a) Outstanding forward exchange contracts/ options entered by the company for the purpose of hedging its foreign currency exposures is Nil (P Y Nil) In view of the same Mark to market difference as on 31st March, 2014 is Nil. (P.Y loss Rs.3.36 crores) (b) Notional value of Interest Rate Swaps to hedge against fl uctuation in interest rate is Nil (P.Y USD 0.80 crores) (c) Currency swap to hedge against fl uctuations in exchange rate and interest rate is Nil (P. Y Nil ) (d) Foreign Currency exposure that is not hedged by derivative instruments is as under: Currency Payable Receivable 31st March st March st March st March 2013 AUD *0.00 * EURO USD NOK JPY GBP AED *0.00 v SGD * Amount less than ` 0.01 crore 40. The fi gures for the previous year have been arranged/rearranged/regrouped wherever considered necessary. As per our report of even date For NISAR & KUMAR For and on behalf of the Board, Chartered Accountants F. R. No W M. N. Ahmed Syed Abdi Dhananjay Datar Partner Managing Director Executive Director M. No Mumbai, S. Muthuswamy Sunil Agarwal Dated : 30th May, 2014 Executive Director Company Secretary 73

75 ABG Shipyard Limited Annual Report STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANY S.N. Particulars / Name of subsidiary Western India Shipyard Ltd. ABG Shipyard Singapore Pte. Ltd. ABG FPSO Pvt. Ltd. 1 The fi nancial year of the subsidiary ended on 31st March, st March, st March, Date from which it became subsidiary company 14th October, th February, th January, Number of shares in the subsidiary company held by ABG Shipyard Ltd. ason 31st March 2014 Equity Shares of the face value of ` 2/- each fully paid up of the face value of Singapore Dollar 1/-each fully paid up of the face value of ` 10/- each fully paid up Preference Shares of USD 1 each fully paid up. 4 Extent of holding by ABG Shipyard Ltd % 100% 100% 5 The net aggregate amount of subsidiary company s profi t /(loss) so far as it concerns to member of holding company 5.1 Not dealt with the holding company 's accounts : `in crores `in crores `in crores For the fi nancial year ended 31st March 2014 (26.90) (0.46) (0.32) For the previous years since they became subsidiary (1.13) 5.2 Dealt with the holding company s accounts : For the fi nancial year ended 31st March 2014 NIL NIL NIL For the previous years since they became subsidiary NA NIL NIL 6 Change in interest of ABG Shipyard Ltd. in the NA NA NA subsidiary between the end of fi nancial year of subsidiary company and end of ABG Shipyard Ltd. 7 Material change between the end of fi nancial year of NA NIL NIL subsidiary and end of ABG Shipyard Ltd. in respect of the following : ABG Shipyard Ltd. in respect of the following : Fixed Assets NIL NIL NIL Investments NIL NIL NIL Money lent by the subsidiary company NIL NIL NIL Money borrowed by the subsidiary company (other than current liabilities) NIL NIL NIL STATEMENT PURSUANT TO EXEMPTION RECEIVED UNDER SECTION 212(8) OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANY S.N. Name of subsidiary Western India Shipyard Ltd. ABG Shipyard Singapore Pte. Ltd. ABG FPSO Pvt. Ltd. a. Capital b. Reserves (72.29) (1.45) c. Total Assets d. Total Liabilities e. Details of Investments Shares in Janata Sahakari Bank Ltd. of 0.05 `100/- each (P.Y ) Units in Emerging Markets Diversifi ed Fund of Standard Chartered Trust (Cayman) Limited of Face Value USD 100 per unit. f. Turnover g. Profi t before Taxation (26.58) (0.07) (0.32) h. Provision Taxation Nil i. Profi t after Taxation (26.90) (0.46) (0.32) j. Proposed Dividend Nil Nil Nil 74

76 ABG Shipyard Limited Annual Report Independent Auditor s Report to the Board of Directors of ABG Shipyard Limited on the Consolidated Financial Statements of ABG Shipyard Limited We have audited the accompanying consolidated fi nancial statements of ABG Shipyard Limited ( the Company ) and its subsidiaries (collectively referred to as the Group ), which comprise the Consolidated Balance Sheet as at March 31, 2014, the Consolidated Statement of Profi t and Loss and the Consolidated Cash Flow Statement for the year then ended, and a summary of signifi cant accounting policies and other explanatory information. Management s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation of these consolidated fi nancial statements that give a true and fair view of the consolidated fi nancial position, consolidated fi nancial performance and consolidated cash fl ows of the Group in accordance with accounting principles generally accepted in India. This responsibility includes the design, implementation and maintenance of internal control relevant to the preparation and presentation of the consolidated fi nancial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these consolidated fi nancial statements based on our audit. We conducted our audit in accordance with the Standards on Auditing issued by the Institute of Chartered Accountants of India. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated fi nancial statements are free from material misstatements. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated fi nancial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the consolidated fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Group s preparation and fair presentation to the consolidated fi nancial statements in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of the accounting estimates made by the management, as well as evaluating the overall presentation of the consolidated fi nancial statements. We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion. Opinion In our opinion and to the best of our information and according to the explanations given to us, the consolidated fi nancial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India a) in the case of the consolidated Balance Sheet, of the state of affairs of the Group as at March 31, 2014; b) in the case of the consolidated Statement of Profi t and Loss, of the loss of the Group for the year ended on that date; and c) in the case of the consolidated Cash Flow Statement, of the cash fl ows of the Group for the year ended on that date. Emphasis of Matter 1. Note no. 4D wherein as explained Corporate Debt Restructuring (CDR) scheme has been approved by the Corporate Debt Restructuring Empowered Group (CDR EG) on March 24, 2014 and applicable with effect from August 1, The CDR proposal has been partly implemented as on March 31, 2014.The outstanding liabilities of the Company have been substantially restructured under the aegis of CDR Scheme, which extends till June Footnote no. 3 of note no. 36 whereby managerial remuneration paid by the Company exceeds the limits prescribed under Schedule XIII of the Companies Act, 1956 and the same is subject to approval from Central Government. The Company is yet to apply to the Central Government for seeking such approval Our opinion is not qualifi ed in respect of the above matter. 2. We draw a specifi c attention to the subsidiary s auditor s comment wherein he has drawn attention to Note no 36 of the fi nancial statements stating that regarding the fi nancial statements prepared on going concern basis notwithstanding the fact that its net worth is completely eroded. The appropriateness of the said basis is inter-alia dependent on the company s ability to infuse requisite funds for meeting its obligations for payment of debt and generate more business. Our opinion is qualifi ed in respect of the above matter. Our opinion is qualifi ed in respect of the above matter. Other Matters 1. We did not audit the fi nancial statements of a subsidiary, whose fi nancial statements refl ect total assets of Rs crores as at March 31, 2014, total revenue of Rs crores for the year ended on that date and net cash infl ow amounting to Rs for the year ended on that date, as considered in the consolidated fi nancial statements. These fi nancial statements have been audited by another auditor whose report has been furnished to us and our opinion in so far as it relates to the amounts included in respect of the subsidiary is based solely on the report of another auditor. 2. We have relied on the unaudited fi nancial statements of a foreign subsidiary, whose fi nancial statements refl ect total assets of Rs crores as at March 31, 2014, total revenue of Rs crores for the year ended on that date and net cash infl ow amounting to Rs crores for the year ended on that date, as considered in the consolidated fi nancial statements. The unaudited fi nancial statements as approved by the Board of Directors of the subsidiary has been furnished to us by the management and our report in so far as it relates to the amount included in respect of the subsidiary is based solely on such approved unaudited fi nancial statements. Our opinion is not qualifi ed in respect of the above matters For Nisar & Kumar Chartered Accountants F. R. No W Place: Mumbai Date: 30 th May, 2014 ` M. N. Ahmed (Partner) M. No

77 ABG Shipyard Limited Annual Report CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2014 I AS AT AS AT Note ` in Crores ` in Crores EQUITY AND LIABILITIES 1. Share Holders Funds a. Share capital b. Reserves & surplus 3 1, , , , Minority Interest Non-current Liabilities a. Long-term borrowings 4 2, , b. Deferred tax liabilities (Net) c. Long-term provisions , , Current Liabilities a. Short-term borrowings 7 2, , b. Trade payables , c. Other current liabilities 9 4, , d. Short-term provisions , , , , II ASSETS 1. Non-current Assets a. Fixed assets 11 (i) Tangible assets , (ii) Intangible assets (ii) Capital work-in-progress 1, , , , b. Non-current investments c. Long-term loans and advances d. Other non current assets , , Current Assets a. Current Investments b. Inventories 16 4, , c. Trade receivables d. Cash and bank balance e. Short-term loans and advances 19 3, , f. Other current assets , , , , Signifi cant Accounting Policies & Notes to Financial Statements 1-38 As per our report of even date For NISAR & KUMAR For and on behalf of the Board, Chartered Accountants F. R. No W M. N. Ahmed Syed Abdi Dhananjay Datar Partner Managing Director Executive Director M. No Mumbai, S. Muthuswamy Sunil Agarwal Dated : 30th May, 2014 Executive Director Company Secretary 76

78 ABG Shipyard Limited Annual Report CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31st MARCH, 2014 INCOME Year ended Year ended Note ` in Crores ` in Crores Revenue from operations 21 1, , Other income Total Revenue 1, , EXPENSES Consumption of raw materials & components 23 1, , Purchase of traded goods Changes in inventories of work-in-progress 24 (287.84) (118.97) Employee benefi ts expense Finance costs Depreciation & amortisation expense Other expenses Total Expenses 1, , Profit / (Loss) before exceptional and extraordinary items and tax (251.42) Exceptional / Extraordinary items (3.05) Profit / (Loss) before tax (323.55) Tax Expense Current tax for the year Current tax for earlier years MAT credit (entitlement)/reduced (34.75) Deferred tax (98.74) Profit after Tax (before adjustment for Minority Interest) (227.40) Less: Minority Interest (5.40) (3.93) Earning per share in Rupees of face value of `10 /- each (222.00) Basic (43.60) Diluted (43.60) Signifi cant Accounting Policies & Notes to Financial Statements 1-38 As per our report of even date For NISAR & KUMAR For and on behalf of the Board, Chartered Accountants F. R. No W M. N. Ahmed Syed Abdi Dhananjay Datar Partner Managing Director Executive Director M. No Mumbai, S. Muthuswamy Sunil Agarwal Dated : 30th May, 2014 Executive Director Company Secretary 77

79 ABG Shipyard Limited Annual Report CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2014 Year ended Year ended ` in Crores ` in Crores A. Cash Flow From Operating Activities : Net Profi t (Loss) before taxation and after exceptional item (323.55) Adjustments for Depreciation Provision for Impairment Provision for Contingencies Goodwill written off Provision for doubtful receivables Finance charges including exceptional items being fi nance charges Interest income (25.97) (22.13) Effect of exchange rate change (21.53) (49.10) Loss / (Profi t) on Sale of Assets (net) (8.25) Loss / (Profi t) on Sale of Investments Operating Profit before working capital changes Adjustments for : Inventories (665.49) (1,465.33) Trade Receivables (64.92) 5.43 Loans and Advances* and other current assets (1,042.45) (699.61) Trade Payables and other current liabilities / provisions** (548.80) Stage Payments from Customers (net) 1, , Cash generated from Operations (213.92) (27.85) Direct Taxes Paid (2.68) (28.12) Cash Used in Operating activities (216.60) (55.97) B. Cash Flow From Investing Activities: Purchase of Fixed Assets including Capital Work in Progress and capital advances (252.58) (189.41) Sale of Fixed assets Purchase of Investments - (0.01) Proceeds from Sale of Current Investments Proceeds from Sale / Redemption of Non Current Investments Loans / deposits given (net) (454.26) Interest income Inter Corporate Deposits - (2.00) Cash Used In Investing Activities (88.60) (584.06) C. Cash Flow From Financing Activities: Proceeds from Long Term Borrowings 2, Repayments of Long Term Borrowings (844.24) (187.32) Short Term Borrowings (net) (486.97) Finance charges paid including exceptional items (652.57) (397.52) Contribution towards Capital in Partnership fi rm (net) - # 0.00 Cash Generated from Financing Activities D. Effect of Exchange difference on translation of foreign currency 0.01 (0.83) Net (decrease) / Increase in cash and cash equivalents (A + B + C + D) (339.30) Opening Balance of Cash & Cash Equivalents Adjustment due to ceased subsidiary (0.06) 0.76 Closing Balance of Cash & Cash Equivalents Effect of Exchange rate changes # 0.00 (0.01) Closing Balance of Cash & Cash Equivalents as restated * Includes current and non current ** Includes short term and long term # Amount less than ` 0.01 crore Notes : 1. Cash fl ow statement has been prepared under the indirect method as set out in Accounting Standard -3 issued by the Institute of Chartered Accountants of India. 2. Figures for previous year where ever necessary have been regrouped to conform to those of current year. As per our report of even date For NISAR & KUMAR For and on behalf of the Board, Chartered Accountants F. R. No W M. N. Ahmed Syed Abdi Dhananjay Datar Partner Managing Director Executive Director M. No Mumbai, S. Muthuswamy Sunil Agarwal Dated : 30th May, 2014 Executive Director Company Secretary 78

80 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, SIGNIFICANT ACCOUNTING POLICIES i). Basis of Consolidation The consolidated fi nancial statements of ABG Shipyard Ltd. ( The Company ), its subsidiaries Western India Shipyard Ltd. (WISL), ABG Shipyard Singapore Pte. Ltd and ABG FPSO Pvt. Ltd. together referred to as The Group have been prepared on the following basis. i) The consolidated fi nancial statements are prepared under the Historical Cost Conventions on the basis of Going Concern and as per applicable Indian Accounting Standards notifi ed under section 211 (3C) of The Companies Act, ii) In accordance with Accounting Standard (AS) 21 Consolidated Financial Statements, the statements of ABG Shipyard Limited, Western India Shipyard Limited, ABG Shipyard Singapore Pte. Ltd.and ABG FPSO Pvt. Ltd. have been combined line by line by adding items of Balance Sheet and Statement of Profi t and Loss. The effect of Intra Group transactions, balances and unrealised profi ts have been eliminated. iii) Enterprise(s) where control is temporary are not considered for consolidation as per AS 21. iv) The difference between the cost of investment in the subsidiary over the net asset value at the time of acquisition of shares has been recognised in the fi nancial statements as Goodwill or Capital Reserve, as the case may be. v) Minority Interest in the net assets of consolidated subsidiaries consist of the amount of equity attributable to the minority shareholders/partners at the dates on which investments are made by the Company in the subsidiaries and further movements in their share in the equity, subsequent to dates of investments. vi) vii) Details of Subsidiaries Sr No Name of the shareholder Country of Incorporation 79 Date since Subsidiary Type of Entity Percentage ownership Interest 1 ABG Shipyard Singapore Pte. Ltd. Singapore Company 100% 2 Western India Shipyard Ltd. India Company 59.21% 3 ABG FPSO Pvt. Ltd. India Company 100% 4 Vipul Shipyard India Ceased w.e.f Partnership Firm N.A. The consolidated results for the year ended 31st March 2014 are not comparable with the previous year as Vipul Shipyard has ceased to be subsidiary of the company w.e.f and has not been included in the consolidated fi nancial statements. 2 Other Significant Accounting Policies i). ii). Use of estimates The preparation of fi nancial statements requires the management of the company to make estimates and assumptions that affect the reported amount of assets and liabilities on the date of fi nancial statements and the reported amount of revenues and expenses during the reporting period. Difference, if any, between the actual results and estimates is recognised in the year in which the results are known / materialized. Revenue Revenue is recognized in accounts in accordance with Accounting Standard-7 Accounting for Construction Contracts issued by Institute of Chartered Accountants of India. The method of recognition is on percentage completion basis. Revenue is recognised under Percentage Completion Method on the basis of proportion that contract costs incurred for work performed up to the reporting date bears to the estimated total contract costs. Revenue from ship repair is recognised on the basis of job completion. iii). Fixed Assets Tangible Assets: Fixed Assets are recorded at Cost. Cost is purchase cost and in the case of Freehold Land, includes development cost incurred, together with all incidental costs of acquisition, borrowing costs and other related internal costs and is netted of for Cenvat and Value Added Tax. Profi t/loss on disposal of fi xed assets is recognised in the Statement of Profi t and Loss. Intangible Assets: Intangible assets are recognized and accounted at cost in accordance with Accounting Standard-26 Intangible Assets issued by Institute of Chartered Accountants of India.

81 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 iv). Capital Work In Progress v). All expenditure, relating to development of land, buildings, dry docks and plant & machinery etc. are accumulated and shown as capital work-in-progress till the completion of such activities. Capital advances are presented under loans and advances. Investments Long Term investments are stated at cost. Cost includes incidental expenses of acquisition. Decline in value of investment other than of temporary nature is recognised in Statement of Profi t and Loss. vi). Borrowing costs Borrowing Costs attributable to the acquisition and construction of the Qualifying Assets, which take substantial period of time to get ready for their intended use, are capitalized as part of the cost of respective assets up to the date when such assets are ready for their intended use. Other Borrowing costs are charged to the Profi t and Loss account. vii) Depreciation and Amortisation a) Freehold land is not depreciated. Leasehold land is amortised equally over the period of lease. b) Dry Docks (included in Plant & Machinery) and Dry Docks Civil Works (included in Factory Building) and Jetty are depreciated on Straight Line Method in accordance with Accounting Standard - 6 Depreciation Accounting of the Institute of Chartered Accountants of India at the rates prescribed in Schedule XIV to the Companies Act, c) Other assets are depreciated on Written Down Value Method at the rates prescribed in Schedule XIV to the Companies Act, d) Depreciation on additions / deletions to Fixed Assets made during the year is provided on pro-rata basis from or up to date of such additions / deletions as the case may be. e) Depreciation on amounts added on revaluation is recouped from Revaluation Reserve. f) Intangible assets are stated at cost less accumulated amortisation and are amortised over a period of fi ve years. g) In the case of WISL, Depreciation on fi xed assets is provided on straight-line method at the rates prescribed in Schedule XIV to the Companies Act, However in case of Ship Building Platform, depreciation has been 8.33% based on remaining period of lease with Mormugao Port Trust. Depreciation on additions in Floating Dry Dock on account of foreign exchange fl uctuations and any major additions is amortised over the remaining useful life of the asset. viii). Impairment of Assets An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. The company assesses at each Balance Sheet date whether there is any indication that any asset may be impaired and if such indication exists, the carrying value of such asset is reduced to its recoverable amount and a provision is made for such impairment loss in the profi t and loss account. The impairment loss recognized in prior accounting period is reversed if there has been a change in the estimate of recoverable amount ix). Employees Benefits Provident Fund: Provident Fund contributions are made as per a defi ned contribution scheme and the contribution of company is charged to Profi t and Loss account of the year when become due. The company has no other obligation other than to contribute and deposit the contribution to respective authorities. Short term employee benefi ts are recognized as an expense at the undiscounted amount in the Statement of Profi t and Loss of the year in which the related service is rendered. Long term employee benefi ts are recognized as an expense in the Statement of Profi t and Loss for the year in which the employee has rendered services. The expense is recognized at the present value of the amount payable determined using actuarial valuation techniques. Actuarial gains and losses in respect of long term benefi ts are charged to the Profi t and Loss account. x) Valuation of Inventory Inventories of spares, consumables, components are valued at lower of cost and net realizable value. Cost represents purchase cost and other incidental costs, if any. Cost of inventories is computed on Weighted Average/ FIFO basis. Finished goods are valued at lower of cost and net realisable value. xi) Work in Progress and Cost Allocation Each construction contract is considered as a cost center and all costs directly identifi able to the Contract are charged on actual basis. Indirect miscellaneous costs are also allocated to the various contracts using appropriate 80

82 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 overhead recovery method. Contract work-in-progress is valued at cost, including therein profi t or loss arrived at in accordance of Accounting Standard -7 Accounting for Construction Contracts xii). Foreign Currency Transactions Transactions in Foreign Currencies are recorded at the exchange rate prevailing on the date of the transactions. Monetary assets and liabilities are translated at the year end using closing rate if remain unsettled at the year end. Non monetary foreign currency items are carried at cost. The resulting gain or loss on account of exchange difference either on settlement or on translation is recognised in the Statement of Profi t and Loss. The Company has w.e.f. 07th December,2006 chosen to apply notifi cation issued by Companies (Accounting Standard) Amendment Rules 2011 GSR 913 (E) & 914 (E) dated as regards monetary long term assets and liabilities. Consequently, the resulting gain or loss on account of exchange difference on settlement or on translation is so far as they relate to depreciable assets is added or deducted from the cost of the asset. xiii). Derivative Accounting The Institute of Chartered Accountants of India has, in 2008, issued an announcement on Accounting for Derivatives inter alia requiring provision for losses on all derivative contracts outstanding at the balance sheet date by marking them to market keeping in view the principle of prudence, other than for forward contracts to which Accounting Standard (AS) 11- The Effect of Change in Foreign Exchange Rates is applicable. The Company has entered into Forward Contracts to hedge a fi rm commitment or a highly probable forecast transaction to which AS- 11 is not applicable and hence, the Company has applied aforesaid announcement. xiv). Government Subsidy Government subsidy related to shipbuilding contracts are recognized on compliance with the relevant conditions and is recognized in the Statement of Profi t and Loss and presented under Revenue from Operations. xv). Operating Leases Leases where the lessor effectively retains substantially all the risks and benefi ts of ownership of the leased assets are classifi ed as operating leases. Operating lease payments / receipts are recognized as an expense / income in the Statement of Profi t and Loss on a straight-line basis over the lease term. xvi). Provisions for Current and Deferred Tax Provision for Current Tax is made on the basis of taxable income under the provision of the Income Tax Act, Deferred Tax resulting from timing differences between book and taxable profi t is accounted for using the tax rates and laws that have been enacted or substantively enacted as on the balance sheet date. The deferred tax asset is recognised and carried forward only to the extent that there is a reasonable certainty that the asset will be realised in future. In accordance with the guidance note issued by Institute of Chartered Accountants of India, the Company recognises MAT Credit as an asset only to the extent,the probability exists that the Company will become liable to pay normal Income Tax during the specifi ed period as per provision of the Income Tax Act, xvii). Provisions, Contingent Liabilities and Contingent Assets A provision is made based on reliable estimate when it is probable that an outfl ow of resources embodying economic benefi ts will be required to settle an obligation. Contingent liabilities, if material, are disclosed in notes forming part of fi nancial statements. Contingent Assets are not recognized/ disclosed. 81

83 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, SHARE CAPITAL Authorised Capital AS AT AS AT ` in Crores ` in Crores (P.Y ) Equity Shares of `10/- each 17, Issued Subscribed and Paid up No of shares Reconciliation: Equity Shares of `10/- each fully paid up. As per last Balance Sheet Issued during the year - - As at the end of the year a) During the year the company has increased its authorised capital vide shareholder resolution in Extra Ordinary General Meeting held on 29th March Registration of the same with the Registering authority is pending. b) The Company has only one class of shares referred to as Equity Shares having par value of Rs 10/-. Each holder of equity share(s) is entitled to one vote per share. In the event of liquidation of the company, the holders of equity shares will be entitled to receive the remaining assets of the company after distribution of all preferential amounts. The distribution will be in proportion of the number of equity shares held by the shareholders. c) None of the above shares are reserved for issue under options and contract / commitments for sale of shares or disinvestment. d) (P.Y ) Equity Shares of `10/- each are held by the holding company ABG International Pvt. Ltd, as per dematerialised holding statement and includes shares pending for registration equity shares are pledged with the lenders. e) Shares alloted, as fully paid up, pursuant to contract(s) without payment being effected in cash / bonus shares /bought back / forfeited/ calls unpaid in the previous 5 years - NIL f) Shareholders holding above 5% Equity Shares with voting rights in the company. Sr No Name of the shareholder No of equity % No of equity % shares held shares held 1 ABG International Private Ltd. *34,212, ,648, Religare Finvest Ltd. 5,186, ,197, * Includes shares pending registration. 3. RESERVES AND SURPLUS (i) Capital Reserve Opening balance Added / Utilised / Transferred during the year - - Closing balance (ii) (iii) Securities Premium Account Opening balance Added / Utilised / Transferred during the year - - Closing balance Debenture Redemption Reserve Opening balance Added / Utilised / Transferred during the year Less:Transferred to General Reserve during the year Closing balance

84 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 AS AT AS AT ` in Crores ` in Crores (iv) Capital Redemption Reserve Opening balance Add: Transferred from Surplus in Statement of Profi t and Loss Closing balance (v) Revaluation Reserve Opening balance Less: Utilised to set off against depreciation Closing balance (vi) General Reserve Opening balance Add: Transferred from Surplus in Statement of Profi t and Loss Add: Transferred from Debenture Redemption Reserve Closing balance (vii) Surplus in Statement of Profi t and Loss Opening balance Add: Profi t/(loss) for the year (222.00) Less: Transferred to Debenture Redemption Reserve Transferred to Capital Redemption Reserve Transferred to General Reserve Closing balance (viii) Foreign Currency Translation Reserve Opening balance Added during the year Closing balance , , A. LONG TERM BORROWINGS (a) Debentures Secured (b) (c) Term Loans From Banks Secured 2, Unsecured From Others Secured Unsecured Vehicle loans From Banks Secured From Others Secured * (d) Loan from related parties [Refer note 36] Unsecured (e) Convertible zero Coupon Loan (CZC) Secured * Amount less than ` 0.01 crores 2, ,

85 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, B (i) Details of Debentures issued by the Company Particulars Security Terms of repayment As at As at a) 12.30% 1000 Non Convertible Redeemable Debentures (NCD) of `100000/- each issued to Life Insurance Corporation of India (LIC) b) 11.40% 2000 Non Convertible Redeemable Debentures (NCD) of `100000/- each issued to Secured - First pari passu charge on the companys immovable and movable fi xed assets of Dahej Plant. Payable in 13 quarterly instalments commencing quarter ending 30th Nov, 2013 upto 30th Nov, During the year the debenture terms had undergone restructuring and accordingly current and non current amount have been represented. ` In Crores Non Current Current Non Current Current ICICI Bank Ltd. Secured - Residual charge on Closed during the year Tata Capital Ltd. the company s immovable and movable fi xed assets of Dahej plant Closed during the year B (ii) Details of Terms of repayment for other long term borrowings and security provided in respect of the secured other long-term borrowings Particulars Security Terms of repayment As at As at A) Term loans from Banks Loans under Corporate Debt Restructuring (CDR) 1) Foreign Currency Loan Foreign Currency Loans 2) Rupee Term Loan Rupee Term Loan - Consortium Rupee Term Loan Rupee Term Loan 3) Rupee Term Loan where scheme implementation is pending Rupee Term Loan - Consortium Rupee Term Loan Rupee Term Loan NON CDR Secured - First pari passu charge over the Pooled Assets : All moveable (both fi xed and current assets) & immoveable assets of the Company excluding assets exclusively charged to respective lenders. Secured - First pari passu charge over the Pooled Assets : All moveable (both fi xed and current assets) & immoveable assets of the Company excluding assets exclusively charged to respective lenders. Residual Charge over Pooled Assets. Secured - First Pari Passu Charge over all moveable assets (including current assets) pertaining to Drilling Offshore Pte Ltd (DOPL) Rigs. Secured - First pari-passu charge on the company s movable & immovable fi xed assets of Dahej plant, present and future. Secured - First pari-passu charge on the company s movable & immovable fi xed assets of Dahej plant, present and future. Secured - First pari-passu charge on movable and immovable fi xed assets of the Dahej Shipyard land at Dahej. Corporate Guarantee of holding company. Foreign Curency Loan Secured - First pari passu charge over the Pooled Assets : All Foreign Curency Loan moveable (both fi xed and current assets) & immoveable assets of the Company excluding assets exclusively charged to respective lenders. Rupee Term Loan Secured - First pari-passu charge on the assets of third party. Corporate guarantee of third party. Pledge of shares of the third party and non disposal undertaking on unpledged shares in the share capital of third parties. As per CDR Scheme dated 27th March 2014 the maximum repayment term is upto quarter ending 30th June Refer note 4 D As per CDR Scheme dated 27th March 2014 the maximum repayment term is upto quarter ending 30th June Refer note 4 D As per CDR Scheme dated 27th March 2014 the maximum repayment term is upto quarter ending 30th June Refer note 4 D As per CDR Scheme dated 27th March 2014 the maximum repayment term is upto quarter ending 30th June Refer note 4 D Payable in quarterly installments upto March 2015 Payable in quarterly installments upto June 2017 Payable in quarterly installments upto March 2016 Payable in half yearly instalments upto Sep 2016 Payable in quarterly instalments upto April 2015 Payable in quarterly instalments upto Dec 2017 ` In Crores Non Current Current Non Current Current ,

86 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 Rupee Term Loan Rupee Term Loan Rupee Term Loan Secured - First charge on the assets of third party Subservient charge on all immoveable and moveable fi xed assets of the Dahej yard and personal and corporate guarantee of third party. Secured - Subservient charge on current and fi xed assets of the company at Dahej Yard. Secured - Second charge by way of hypothecation of entire movable fi xed assets of Dahej Shipyard and Rigyard of the company. Payable in quarterly instalments upto March 2018 till March 2018 Payable in monthly installments upto Oct 2013 Payable in quarterly installments upto Dec Rupee Term Loan Unsecured Payable in quarterly instalments upto Oct, 2015 Rupee Term Loan Rupee Term Loan Rupee Term Loan Secured - First parri passu legal mortgage/charge on fi xed assets of the WISL, hypothecation of movable assets. Secured - First parri passu legal mortgage/charge on fi xed assets of WISL, hypothecation of movable assets. Secured - First parri passu legal mortgage/charge on fi xed assets of WISL, hypothecation of movable assets. Payable in quarterly installments upto Sep, Payable in quarterly installments upto Sep, Payable in quarterly installments upto Sep, B) From Others 2, CDR Rupee Term Loan NON CDR Rupee Term Loan Rupee Term Loan from fi nancial institution Secured - First pari passu charge over the Pooled Assets : All moveable (both fi xed and current assets) & immoveable assets of the Company excluding assets exclusively charged to respective lenders. Secured - First pari passu charge on the movable and immovable fi xed assets at Dahej Plant. Exclusive charge on immovable property at Dahej of the company. Interim security by way of fi rst charge on immovoble assets of third party. Corporate Guarantee of holding company ABG International Pvt. Ltd. Secured - Corporate Guarantee Facility and pledged Equity shares of WISL held by the company and Deed of hypothecation of parripassu charge on immovable and movable assets of WISL, both present and future. As per CDR Scheme dated 27th March 2014 the maximum repayment term is upto quarter ending 30th June Refer note 4 D Payable in 6 quarterly instalments commencing 30th Jan, 2014 and ending 30th April, 2015 Payable in quarterly installments upto March Rupee Term Loan C) Vehicle loans Secured - First parri passu legal mortgage/charge on fi xed assets of WISL, hypothecation of movable assets. Payable in quarterly installments upto Sep, From banks From others Secured- Hypothecation of the individual assets fi nanced. Secured- Hypothecation of the individual assets fi nanced. Payable in monthly installments Payable in monthly installments * D) From related parties [Refer note 36] Holding Company ( Promoter s Contribution ) Unsecured Payable only after full repayment of Restructured Facilities of the CDR Lenders Rupee Term Loan Unsecured , , B (iii) Details of Terms of repayment for Convertible Zero Coupon Loan and security provided ` In Crores Name of bank Terms of repayment As at As at Convertible Zero Coupon Loan (CZC) The CZC Loan is interest free convertible into Equity Shares of Western India Shipyard Ltd at the option of the lenders commencing from and ending on the day compulsorily convertible on or before Non Current Current Non Current Current

87 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, C The Group has defaulted in repayment of loans and interest in respect of the following Particulars As at ` In Crores As at Period in days As at ` In Crore As at Period in days Debentures issued to LIC Princiipal Interest Foreign Currency Loans Princiipal Interest Rupee Term Loan Princiipal Interest D. Corporate Debt Restructuring ABG Shipyard Limited is hereinafter referred to as the Borrower, who has availed various fi nancial facilities from the secured lenders. At the request of the Borrower, the Corporate Debt Restructuring Proposal ( CDR Proposal ) of the Borrower was referred to Corporate Debt Restructuring Cell ( CDR Cell ) by the consortium of senior lenders led by the ICICI Bank. The CDR Proposal as recommended by ICICI Bank Ltd., the lead lender and approved by CDR Empowered Group ( CDR EG ) on 24th March 2014 and communicated vide Provisional Letter of Approval dated 27th March 2014, as amended/modifi ed from time to time. The cut off date for CDR Proposal was 1st August The Master Restructuring Agreement ( MRA ) between the Borrower and the CDR Lenders has been executed, by virtue of which the restructured facilities are governed by the provisions specifi ed in the MRA having cut off date of 1st August For all the loans restructured under the above Corporate Debt Restructuring Scheme, creation of security is pending at registering authority. The CDR proposal is partly implemented as at 31st March The Key features of the CDR Proposal are as follows: 1 Restructuring of existing fund based and non fund based fi nancial facilities, subject to renewal and reassessment every year. 2 Repayment of Restructured Term Loans ( RTL ) after moratorium of 2 year from cut off date in 32 structured quarterly instalments commencing from Quarter ending 30th September 2015 to 30th June Conversion of various irregular/outstanding/devolved fi nancial facilities into Working Capital Term Loan ( WCTL ) Repayment of WCTL after moratorium of 3 years 6 months from cut off date in 26 structured quarterly instalments commencing from Quarter ending 31st March 2017 to 30th June 2023, subject to mandatory prepayment obligation on realisation of proceeds from certain asset sale and capital infusion. 4 The interest payable on RTL and WCTL during moratorium period of 2 years and 3 years 6 months respectively from cut off date also be converted to Funded Interest Term Laon (FITL). Out of Total FITL facility amounting to Rs 1,561 crore an an amount aggregating to Rs. 1,000 crore shall be compulsorily converted into equity shares or 0.01% Compulsorily Convertible Preference Shares (CCPS) befor 31st March The rate of interest of RTL, WCTL, FITL and fund based working capital facilities shall be 11% for initial two year and thereafter with annual reset option in accordance with MRA. 6 Contribution of Rs. 300 Crore in the Company by promoters in lieu of bank sacrifi ce in the form of equity shares / CCPS. 7 In case of fi nancial facilities availed from the non-cdr Lenders, the terms and conditions shall continue to be governed by the provisions of the existing fi nancing documents. 8 Additional Security for the CDR debt - Personal Gurantee of Promoter Mr. Rishi Agarwal, Pledge of Promoter s entire shareholding of ABG shipyard Limited and Corporate Gurantee of ABG International Pvt Ltd. (Holding company) 86

88 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, DEFERRED TAXES Tax effect of items constituting deferred tax Liabilities On account of profi t on Projects under completion Tax effect of items constituting deferred tax assets On account of gratuity liability and leave encashment liability On account of expenses allowable on delivery of ships On account of unabsorbed depreciation and losses (net) On account of disallowances LONG TERM PROVISIONS Provision for Gratuity Provision for Leave Encashment A - SHORT TERM BORROWINGS Security From Banks: a) Short term loans Rupee Short Term Loan Secured- Charge on immovable property at Dahej yard Corporate Guarantee of third party. AS AT AS AT ` in Crores ` in Crores Rupee Short Term Loan Secured-Subservient charge on the current assets and movable fi xed assets Dahej Shipyard & Rigyard. Rupee Short Term Loan Secured-Subservient charge on the current assets of the company, present and future. Rupee Short Term Loan Unsecured b) Export Packing Credit Secured - First pari passu charge over the Pooled Assets :All moveable (both fi xed and current assets) & immoveableassets of the Company excluding assets exclusively charged to respective lenders. c) Cash Credit Secured - First pari passu charge over the Pooled Assets : All moveable (both fi xed and current assets) & immoveable assets of the Company excluding assets exclusively charged to respective lenders. Secured - Floating charge on Current Assets of WISL including but not limited to Stock of raw materials, Work In Progress Consumables, Stocks, Spares, Book Debts Bills wherever situated, documents both present and future and Corporate Guarantee of the Company for `33.60 crores. Secured - Exclusive fi rst charge by way of hypothecation of entire raw material, stock in process, fi nished goods and stores and other material and book debts of Vipul Shipyard Secured - First pari passu charge on specifi c assets of third party ,

89 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 d) Others - payable on demand Secured - First pari passu charge over the Pooled Assets : All moveable (both fi xed and current assets) & immoveable assets of the Company excluding assets exclusively charged to respective lenders. Unsecured From Others: a) Inter Corporate Deposits Unsecured b) Others Unsecured 1.09 *0.00 2, , * Amount less than ` 0.01 crores 7 B. The Company has defaulted in repayment of loans and interest in respect of the following Particulars As at ` In Crores Loans from banks As at Period of default in days AS AT AS AT ` in Crores ` in Crores As at ` In Crores As at Period of default in days Principal Interest Others - payable on demand Principal Interest Inter Corporate Deposits Principal Interest

90 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, TRADE PAYABLES AS AT AS AT ` in Crores ` in Crores (i) Sundry Creditors for Goods & Expenses [Refer Note 36] (ii) Acceptances - banks , The Company has no amounts due to suppliers under MSMED as at 31st March, 2014 (P. Y. Nil). The information relates to such vendors identifi ed as micro,small and medium enterprises as per information available with the Company. (i) Principal amount remaining unpaid to any supplier as at the end of the accounting - - period (ii) Interest due thereon remaining unpaid to any supplier as at the end of the accounting - - period (iii) The amount of interest paid along with the amounts of the payment made to the supplier - - beyond the appointed day (iv) The amount of interest due and payable for the period - - (v) The amount of interest accrued and remaining unpaid at the end of the accounting period - - (vi) The amount of further interest due and payable even in the succeeding year, until such date when the interest dues as above are actually paid 9. OTHER CURRENT LIABILITIES - - (i) Current Maturities of long-term debt - [Refer note 4B] a. Non Convertible Redeemable Debentures (NCD) b. Term Loans From banks From others c. Vehicle loans From banks From others (ii) Payables on purchase of fi xed assets - Acceptances - banks Others (iii) Interest accrued & due on borrowings (iv) Interest accrued but not due on borrowings (v) Advance from customers 3, (vi) Other Advances including Related Parties [Refer Note 36] (vii) Unclaimed Dividends * (viii) Other Payables - Statutory remittances Trade / security deposits received Others * To be transfered to Investor and Protection Fund, when due 4, , SHORT TERM PROVISIONS Provision for employee benefi ts: Gratuity Leave Encashment Income Tax (Net of prepaid taxes) Wealth Tax *0.00 *0.00 Contingencies * Amount less than Rs crore 89

91 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, FIXED ASSETS PARTICULARS Gross Block At cost / Valuation DEPRECIATION/ AMORTISATION/ IMPAIRMENT NET BLOCK TANGIBLE ASSETS LAND AS AT ADDITIONS DURING THE YEAR DELETIONS/ ADJUSTMENTS/ ELIMINATION DURING THE YEAR AS AT AS AT ADDITIONS DURING THE YEAR DELETIONS/ ADJUSTMENTS/ ELIMINATION DURING THE YEAR AS AT AS AT AS AT FREE HOLD LAND LEASE HOLD LAND FACTORY BUILDING BUILDING PLANT AND MACHINERY OFFICE EQUIPMENT FURNITURE & FIXTURES VEHICLES COMPUTERS , , , INTANGIBLE ASSETS SOFTWARE GOODWILL ON CONSOLIDATION T O T A L 1, , , Previous year 1, , , Capital work in progress (CWIP) 1 Stamp duty and Registration Charges 1, , i) Depreciation method and rates are different between parent and subsidiaries. No alignment of depreciation rates between parent and subsidiaries have been done in these fi nancial statements. ii) iii) Certain part of the land is yet to be registered in the name of the Company ` in crores ` in crores Depreciation, Amortisation & Impairment relating to continuing operations: Depreciation, Amortisation & Impairment for the year on tangible assets Depreciation, Amortisation & Impairment for the year on intangible assets Less: Utilised from revaluation reserve Depreciation & Amortisation on discontinuing operations - - Depreciation, Amortisation & Impairment relating to continuing operations Depreciation method and rates are different between parent and subsidiary. No alignment of depreciation rates between parent and subsidiary have been done in these fi nancial statements. iv) Eliminaton represents effect of ceased subsidiary Vipul Shipyard v) Impairment charges of `Nil. (P. Y `0.24 crores) ie on Offi ce Equipment Nil (P.Y `0.14 crores) and on Software -Nil (P.Y `0.10 crores) has been included in Depreciation, Amortisation & Impairment expense in the Statement of Profi t and Loss vi) vii) viii) No amounts were written off due to reduction of capital / written off on revaluation or were added to assets on revaluation during the previous 5 years. Borrowing cost of the company capitalised ` crores (P.Y ` crores) is included in Fixed assets and CWIP. In the case of WISL borrowing cost is included in CWIP. On the basis of the report of Chartered Engineers and Government approved Valuers, the Company had revalued the Freehold Land, Factory Building, Other Building and Dry Docks on 30th June, 1994 and again on 30th June 2002 and consequently an amount of `10.90 crores and ` crores respectively being the differences between the amount of fair market value of the same and depreciated value as per books as on those dates, have been added to the value of Fixed Assets and corresponding credit shown as Revaluation Reserve. Consequent to the revaluation there is an additional depreciation of `1.23 crores (P. Y ` 1.29 crores), which has been withdrawn from Revaluation Reserves and credited to Statement of Profi t and Loss. 90

92 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 ix) The company has chosen to avail the option under AS-11 notifi cation issued by Companies (Accounting Standard) Amendment Rules 2011 GSR 913 (E) & 914 (E) dated issued by Ministry of Corporate Affairs. The company has exercised the option with respect to foreign currency long term loan availed by it. The company has no other long term monetary Assets / Liabilities. Due to the exercise of aforesaid option, the impact on Statement of Profi t and Loss for the year is a Gain of `9.49 crores (P.Y. Gain `.6.68 crores) due to foreign currency exchange loss (net) which has been capitalized with CWIP. x) As a consequence of Settlement Commission Order dated 18th April 2013, an amount of ` crores has been debited to ABG Resources Pvt Ltd, a related party, the impact of which is as under - xi) - Deletion in building ` crores. Corresponding effect of depreciation of ` 5.72 crores has been adjusted from depreciation for the year. - Deduction in CWIP ` crores Acquisition through business combinations / Assets reclassifi ed as held for sale - Nil (P.Y. Nil) AS AT AS AT ` in Crores ` in Crores 12. NON-CURRENT INVESTMENTS Non Trade - At cost Unquoted In Equity Shares In Others: (P.Y ) Equity Shares in ABG Business Ventures Pte. Ltd., Singapore of SGD 1/- each fully paid up 1000 (P.Y. 1000) Equity Shares in Varada Seven Pte. Ltd. of USD 1/- each fully paid up 5000 (PY: 5000) Equity Shares in Janata Sahakari Bank Ltd.of Rs. 100/ each. fully paid up LONG-TERM LOANS AND ADVANCES (Unsecured, considered good) Capital Advances Security Deposits Due from Government authorities MAT Credit Entitlement Added during the year Less: Utlised / Reduced Note: MAT credit utilised / reduced is a consequence of Settlement Commission Order pertaining to earlier years. Service tax credit - receivable - deferred Loans and advances to related parties [Refer Note 36] Other loans and advances (Unsecured, considered good)

93 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 AS AT AS AT ` in Crores ` in Crores 14. OTHER NON CURRENT ASSETS Long Term Trade Receivables i) Unsecured, considered good ii) Doubtful Less: Provision for Doubtful Debt - - Sales Tax Deducted at Source Other Non Current Assets CURRENT INVESTMENT In Units of Mutual Fund (P.Y ) Units in Emerging Markets Diversifi ed Fund of Standard Chartered Trust (Cayman) Limited of Face Value USD 100 per unit INVENTORIES (As taken, valued & certifi ed by management) Raw Material and Components In stock In transit , Work in Progress On Percentage completion basis 9, , (Contract costs & recognised profi t) Less: Progress Money from Customers 5, , , , Finished goods , , Finished goods represents completed ship where invoicing and protocol of acceptance is pending 17. TRADE RECEIVABLES (Unsecured, considered good) Outstanding for more than six months from due date of payment Others Less: Provision for doubtful receivables CASH AND BANK BALANCE Cash in hand Balances with Banks: i) In Current Accounts ii) In EEFC Accounts iii) In Fixed Deposits iv) In Earmarked Accounts Unclaimed dividend accounts

94 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, SHORT-TERM LOANS AND ADVANCES (Unsecured, Considered good) AS AT AS AT ` in Crores ` in Crores Loans and Advances to related parties: [Refer note 36] Advance for supplies / services 1, Other loans and advances , , Others: Advance to suppliers 1, Prepaid Expenses Employee Advances Inter Corporate Deposits Other Loan and advances Balance with Government Authorities Service Tax Refundable / Credit Vat credit Income Tax Other Advance: Considered good Considered doubtful , , OTHER CURRENT ASSETS (Unsecured, Considered good) Subsidy Interest accrued Fixed Deposits with Bank Inter Corporate Deposits Insurance Claims Receivable Income Tax Deducted at Source Deferred Revenue Expenditure Others [Refer Note 36] Receivables on sale of fi xed assets Others

95 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, REVENUE FROM OPERATIONS Year ended Year ended ` in Crores ` in Crores Manufacturing Ships 1, , Rigs Trading Services - Ship Repair Charter Hire Other operating Revenue Subsidy Scrap Sales Excise and duty refunds , , OTHER INCOME Interest on: Fixed deposits with banks Inter corporate deposit Others Net Profi t/( loss) on sale of current Investments - *0.00 Net Profi t/( loss) on sale of non current Investments Profi t on Sale of Assets (net) Other Non operating Income : Insurance Claims Sundry balances written back Miscellaneous Receipts Difference in Exchange Prior year adjustments * Amount less than Rs.0.01 crore A.CONSUMPTION OF RAW MATERIALS & COMPONENTS Steel Other Items , , B. PURCHASE OF TRADED GOODS Steel CHANGES IN INVENTORIES - WORK IN PROGRESS (Included in work in progress on percentage completion basis) Opening Work In Progress Adjustments (Net) Closing Work In Progress Decrease in Work in progress (287.84) (118.97) Note: Adjustments (Net) include adjustment due to transfer of opening work in progress of cancelled contracts and adjustment due to steel credit as per Settlement Commission Order dated 14th February

96 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 Year ended Year ended ` in Crores ` in Crores 25. EMPLOYEE BENEFITS EXPENSE Salaries Wages and other benefi ts Contribution to Provident Fund Staff Welfare Expenses FINANCE COST Interest Expense on borrowings Other Interest Guarantee Commission (net) Difference in Exchange on foreign currency transaction / translation (net) (4.06) 4.98 Other Borrowing Costs OTHER EXPENSES Consumption of stores Contractors Charges Power and Water Repairs & Maintenance - Plant & Machinery Buildings Others Other Manufacturing Expenses Inspection and Survey Expenses Offi ce Expenses Charter Hire Out Rent Rates & Taxes Insurance Printing & Stationery Postage Telephone & Telex Travelling & Conveyance Professional Charges Payment to Auditors Donations & Charities Prior Years Expenses 0.13 (0.00) Selling & Distribution Forward Cover Loss/ (Gain) (net) Profi t on Sale of Assets (net) Loss on Sale of Non Current Investments Loss on Sale of Current Investment Loss on cancelled contracts Provision for Doubtful Debtors Dredging Expenses Discount on ship repair Bad Debts 5.37 Goodwill written off Miscellaneous Expenses * Amount less than ` 0.01 crores 95

97 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, (a) Contingent liability not provided for ` in Crores Particulars 31st March st March 2013 In respect of Performance/ Delivery Guarantees given by banks to the buyers Corporate guarantees to banks in respect of facilities granted to group companies. 1, , Other bank guarantees Claims against the company not acknowledged as debts Claims in respect of indirect taxes Claims in respect of direct taxes (b) Contingencies provided for in accordance with AS 29 issued by the Institute of Chartered Accountants of India ` in Crores Particulars 31st March st March 2013 Carrying amount as at the beginning of the year Provision during the year Unused amount reversed during the year - - Balance at the end of the year The contingencies provided are in respect of estimated warranties on sold ships. 29. In the opinion of the management, Current Assets, Loans and Advances have value in realisation in the ordinary course of business at least equal to the amount at which they are stated. 30. Disclosure in respect of Operating Leases (Assets taken on lease): (a) The ABG Shipyard Limited has taken commercial / residential premises under cancellable operating leases. The lease agreements are usually renewable by mutual consent on mutually agreeable terms. WISL has taken land and water on license from Murmugao Port Trust (MPT), Goa. The future minimum payment is as under : ` in Crores Particulars 31st March st March 2013 Not later than one year Later than 1 year but less than 5 years (b) The expenses in respect of operating leases are accounted in Other Expenses under Note No Disclosure in accordance with AS -7 Accounting for Construction Contracts issued by the Institute of Chartered Accountants of India: ` in Crores Particulars 31st March st March 2013 a. Contract revenue recognized as revenue in the year 1, , b. Contract cost incurred and recognized profi ts 8, , c. Advances received from above customers 6, , d. Gross amount due from customers for contract work 3, , e. Gross amount due to customers for contract work The Gross amount due from customers refl ects the net amount for all contracts in progress for which cost incurred plus recognised profi t (less recognised losses) exceeds progress billing. The Gross amount due to customers refl ects the net amount for all contracts in progress where progress billing exceeds cost incurred plus recognised profi ts (less recognised losses). During the year, advances from customers to the extent of work done amounting to Rs crores (P.Y.Rs crores) is adjusted against Work in Progress in Note No 16. Advances received in excess of work done and advances pending commencement of work are disclosed in Current Liabilities under Advances from Customers in Note No 9. 96

98 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, The disclosures required under Revised Accounting Standard 15 Employee Benefi ts notifi ed in the Companies (Accounting Standards) Rules 2006, are given below Defi ned Contribution Plan Contribution to Defi ned Contribution Plan, recognized are charged off for the year are as under: ` in Crores Particular 31st March st March 2013 Employer s Contribution to Provident Fund Employer s Contribution to Pension Scheme Defi ned Benefi t Plan The employees gratuity fund scheme managed by SBI Life Insurance is a defi ned benefi t plan. The subsidiary WISL makes annual contribution to the Employees Group Gratuity-cum-Life assurance scheme of PNB Metlife Insurance Co. Pvt. Ltd. The present value of obligation is determined based on actuarial valuation using the Projected Unit Credit Method, which recognises each period of service as giving rise to additional unit of employee benefi t entitlement and measures each unit separately to build up the fi nal obligation. The obligation for leave encashment is recognized in same manner as gratuity. ` in Crores Particular Gratuity (Funded) Leave Encashment (Unfunded) 31st March st March st March st March 2013 a. Reconciliation of opening and closing balances of Defined Benefit obligation Defi ned Benefi t obligation at the beginning of the year Current Service Cost Interest Cost Actuarial (gain) / loss (2.02) (0.37) (1.58) (0.70) Benefi ts paid (0.09) (0.23) (0.87) (1.22) Defi ned Benefi t obligation at the year end b. Reconciliation of opening and closing balances of fair value of plan assets Fair value of plan assets at beginning of the year Expected return on plan assets Actuarial gain/(loss) (0.01) (0.01) - - Employer contribution Benefi ts Paid (0.09) (0.23) - - Fair value of plan assets at the year end Actual return on plan assets * c. Reconciliation of fair value of assets and obligations Fair value of plan assets as at year end Present value of obligation as at year end Amount recognised in Balance Sheet d. Expenses recognised during the year Current Service Cost Interest Cost Expected return on plan assets (0.01) (0.03) - - Actuarial (gain) / loss (2.02) (0.35) (1.58) (0.70) Net Cost (0.31) 1.50 (0.38) 0.94 % invested e. Investment Details SBI Group Gratuity (Cash Accumulation) Policy f. Actuarial Assumptions (Ultimate) (Ultimate) Mortality Table (L.I.C) ABG Shipyard Ltd Discount rate (per annum) 8.00% 8.00% % Expected rate of return on plan assets (per annum) 8.00% 8.00% N.A N.A Rate of escalation in salary (per annum) 5.00% 5.00% % Western India Shipyard Ltd Discount rate (per annum) 9.10% 8.00% 9.10% 9.10% Expected rate of return on plan assets (per annum) 8.50% 9.25% Unfunded Unfunded Rate of escalation in salary (per annum) 7.00% 7.00% 7.00% 7.00% * Amount less than Rs crore 97

99 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 The estimates of rate of escalation in salary considered in actuarial valuation, take into account infl ation, seniority, promotion and other relevant factors including supply and demand in the employment market. The above information is certifi ed by the actuary and relied upon by auditors. 33. Calculation of Earning per share (EPS) Particular 31st March st March 2013 Net profi t as per Statement of Profi t & Loss (` In crores) (222.00) Weighted Avarage number of Equity shares of ` 10/- each fully paid up Earning per Equity Share of ` 10/- each fully paid up (Rupees). (43.60) (Basic & Diluted) 34. The group primarily operates in one business segment only i.e. manufacturing which is the only reportable segment. The subsidiary, WISL and ABG FPSO Pvt. Ltd. is carrying out ship repairing and ship chartering activities respectively. However, revenue does not satisfy the threshold limit as far as Group is concerned, as Accounting Standard - 17, issued by Institute of Chartered Accountants of India, hence separate disclosure of business segment by activity is not given. Secondary segment (Geographical Segments): ` in Crores Particular Domestic Overseas Total 31st March st March st March st March st March st March 2013 Revenue , , , , Exceptional item of ` crores /- represents commission on stage payment refund / performance guarantees predebited by banks. 36. Related Parties Disclosure as per Accounting Standard (AS) 18: A. LIST OF RELATED PARTIES Holding company ABG International Private Limited Controlling stake Vipul Shipyard ( Partnership Firm) (upto 30th June 2013) Fellow subsidiary companies ABG Cement Limited PFS Shipping (India) Limited ABG Cement Holdco Private Limited ABG Solar Project Private Limited BABA Gangaram Investment Services Private Limited ABG Energy Limited ABG Energy (Gujarat) Limited ABG Energy (MP) Limited Varada Marine Pte. Limited (Along with its SPV s) PFS Offshore Pte. Ltd. Varada One Pte. Limited 98

100 ABG Shipyard Limited Annual Report NOTES FORMING PART OF FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 Companies over which directors / relatives are able to exercise control or signifi cant infl uence ABG Infralogistics Limited ABG Power Private Limited ABG Cranes Private Limited ABG Foods Private Limited ABG Acquafarm Private Limited ABG Glass Private Limited ABG Engineering & Construction Limited Tirupati Management & Investment Services Private Limited (Formerly ABG Mercantile & Investment Services Private Limited) Eleventh Land Developers Private Limited ABG Resources Private Limited (Formerly Second Land Developers Private Limited) ABG Motors Limited Banal Investment & Trading Private Limited Jarrow Finance & Trading Private Limited Onaway Industries Limited Agbros Leasing & Finance Private Limited Aries Management Services Private Limited G.C. Property Private Limited Gold Croft Property Private Limited Somerset Estate Private Limited ABG Enterprises & Trading Private Limited (Formerly Nibodh Trading Private Limited) ABG Energy Himachal Pradesh Limited Vipul Shipyard ( Partnership Firm) (w.e.f 1st July 2013) ABG Business Ventures Pte. Limited Drilling & Offshore Pte. Limited Drilling & Offshore One Pte. Limited Drilling & Offshore Two Pte. Limited Global Bulk Carriers Pte. Limited Varada Ventures Pte. Limited Varada Drilling One Pte. Limited Varada Drilling Two Pte. Limited Varada Two Pte. Limited Varada Three Pte. Limited Varada Four Pte. Limited Varada Five Pte. Limited Varada Six Pte. Limited Varada Seven Pte. Limited Varada Nine Pte. Limited Varada Ten Pte. Limited Varada Eleven Pte. Limited Varada Twelve Pte. Limited Individuals owning directly or indirectly an interest in the voting power that gives them control or significant influence Shri. Rishi Agarwal Key management personnel Shri. Syed Abdi (w.e.f. 9th January 2014 ) Shri. Dhananjay Laxman Datar Major Arun Phatak (upto 31st December 2013) Shri. S.Muthuswamy (w.e.f. 13th November 2013 ) Cdr. Subhash Kumar Mutreja 99

101 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 Sr. no. Nature of Transactions Holding company Subsidiaries Controlling stake Fellow subsidiary companies Co over which directors / relatives are able to exercise signi ficant influence Individuals owning directly or indirectly an interest in the voting power that gives them control or significant influence Key manage ment personnel ` in Crores 31st March Revenue from Operations Total (5.40) (95.07) (152.62) - - (253.09) 2 Rent Expenses (1.09) - - (1.09) 3 Hire Charges (0.57) - - (0.57) 4 Services Received Interest/ Guarantee Commission/ Other Income Charged - (0.00) (1.80) - - (1.80) (21.99) (51.90) - - (73.89) 6 Finance Charges Paid (0.00) - - (0.00) 7 Payment to Key Management Personnel (3.22) (3.22) 8 Purchase of Fixed Assets (7.12) - - (7.12) 9 Sale of Fixed Assets * (12.96) - (0.00) - - (12.96) 10 Sale of Shares (0.01) - - (0.01) 11 Stage Payment Received , , (207.49) (635.02) - - (842.51) 12 Stage Payment Refunded Loans and Advances Given / Repaid 14 Loans and Advances Taken / Refunded - - (60.51) (35.39) - - (95.90) , (199.66) (389.14) (630.75) (0.12) - (1,219.67) (208.59) (1.44) (248.41) (0.36) - (458.80) 15 Deposit Refund Received (110.00) - - (110.00) 16 Guarantees Taken 2 16, , (618.00) (618.00) 17 Guarantees Given Capital Received From Partner - - (25.00) (435.12) - - (460.12) (0.01) (0.01) 100

102 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, 2014 ` in Crores Sr. no. Nature of Transactions Holding company Controlling stake Fellow subsidiary companies Co over which directors / relatives are able to exercise signi ficant influence Individuals owning directly or indirectly an interest in the voting power that gives them control or significant influence Key manage ment personnel Total 31st March 2013 Outstanding Balances as on 31st March 2014 Receivables (0.67) (70.18) (14.15) - - (85.00) Payables (0.00) *(0.00) (10.55) (0.26) - (10.81) Advance from Customers - - 1, , , Loans and Advances Given Loans and Advances Taken - - (1,152.61) (1,902.02) - - (3,054.63) , , (14.15) (435.34) (992.12) - - (1,441.61) (0.00) (0.00) (234.42) - - (234.42) Deposits Given (123.00) - - (123.00) Guarantees Taken 2 17, , (1,053.00) (1,053.00) Guarantees Given , , , (88.60) (1,046.02) (979.02) - - (2,113.64) * Amount less than Rs crore Notes : 1. Names of the Related Parties have been given in cases where the amount of transaction exceeds 10% of the total related party transactions of the same type. 2. Guarantees taken / given comprise of guarantees given to third parties on behalf of the Company / related parties. 3. Managerial Remuneration as detailed in point 7 below exceeds limits prescribed under Schedule XIII of the Companies Act, 1956 and the same is subject to approval from Central Government. 4. Related Parties have been identifi ed by the management and relied upon by the auditors. 5. Previous Year fi gures are shown in brackets. Disclosure in respect of Related Party transactions during the year: 1 Revenue from Operations include Varada Marine Pte. Limited Rs. Nil (Previous Year Rs crores), Varada Three Pte. Limited Rs crores (Previous Year Rs crores) 2 Rent Expenses include Aries Management Services Private Limited Rs crores (Previous Year Rs crores), G.C. Property Private Limited Rs crores (Previous Year Rs crores), Gold Croft Property Private Limited Rs crores (Previous Year Rs crores), Somerset Estate Private Limited Rs crores (Previous Year Rs crores) 3 Hire Charges paid to ABG Infralogistics Limited Rs. Nil (Previous Year Rs crores) 4 Services Received from PFS Shipping (India) Limited Rs crores (Previous Year Rs. Nil) ABG Resources Private Limited Rs crores (Previous Year Rs crores). 101

103 ABG Shipyard Limited Annual Report NOTES FORMING PART OF CONSOLIDATED FINANCIAL STATEMENTS AS AT 31st MARCH, Interest/ Guarantee Commission/ Other Income Charged to Varada Marine Pte. Limited (along with its SPVs) Rs crores (Previous Year Rs crores ), ABG Engineering & Construction Limited Rs. Nil (Previous Year Rs crores), ABG Business Ventures Pte. Limited Rs crores (Previous Year Rs crores), Varada Seven Pte. Limited Rs crores (Previous Year crores ) ABG Resources Private Limited Rs crores (Previous Year Rs. Nil), Global Bulk Carriers Pte. Limited Rs crores (Previous Year Rs. Nil) 6 Finance Charges Paid to ABG Infralogistics Limited Rs crores (Previous Year Rs. Nil) ABG Cranes Private Limited 0.86 crore (Previous year Rs. Nil) 7 Payment to Key Management Personnel include to Syed Abdi Rs crores (Previous Year N.A.) Major Arun Phatak Rs crores (Previous Year Rs.0.75 crores ), Shri. Dhananjay Datar Rs crores (Previous Year Rs crores ), Shri. S. Muthuswamy Rs crores (Previous Year N.A.), Shri. R.S. Nakra Rs. Nil (Resigned w.e.f. 1st December, 2012) ( Previous Year Rs crores), Cdr.Subhash Kumar Mutreja Rs crores (Previous Year Rs crores) 8 Purchase of Fixed Assets include from ABG Cranes Private Limited Rs crores (Previous Year Rs.7.12 crores ) 9 Sale of Fixed Assets include to ABG International Private Limited Rs. Nil (Previous Year Rs crores ), ABG Infralogistics Limited Rs. *0.00 crores (Previous Year Rs.Nil) 10 Sale of Shares to ABG Mercantile & Investment Services Private Limited Rs. Nil (Previous Year Rs crores ) 11 Stage Payment Received include from Varada Marine Pte. Limited (along with its SPVs) Rs.Nil (Previous Year Rs crores ),Global Bulk Carriers Pte. Limited Rs. Nil (Previous Year Rs crores ),Varada Three Pte. Limited Rs crores (Previous Year Rs crores ), Varada Five Pte. Limited Rs. Nil (Previous Year Rs crores ), Varada Four Pte. Limited Rs crores (Previous Year Rs. Nil),Varada Nine Pte. Limited Rs crores (Previous Year Rs. Nil),Varada Drilling One Pte. Limited Rs crores (Previous Year Rs.Nil),Varada Drilling Two Pte. Limited Rs crores (Previous Year Rs. Nil), Drilling & Offshore Two Pte. Ltd. Rs crores (Previous Year Rs.Nil) 12 Stage Payment Refunded include Varada Marine Pte. Limited (along with its SPVs) Rs crores (Previous Year Rs. Nil), Global Bulk Carriers Pte. Limited Rs crores (Previous Year Rs. Nil ) Varada Five Pte. Limited Rs crores (Previous Year Rs. Nil ),Varada Seven Pte. Limited Rs. Nil (Previous Year Rs crores ) 13 Loans and Advances Given/ Repaid include ABG International Private Limited Rs crores (Previous Year Rs crores ), PFS Shipping (India) Limited Rs crores (Previous Year Rs crores ), ABG Engineering & Construction Limited Rs crores (Previous Year Rs crores ), ABG Resources Private Limited Rs crores (Previous Year Rs crores ), Varada Seven Pte. Limited Rs. Nil (Previous Year Rs crores ), PFS Offshore Pte. Limited Rs crores (Previous Year Rs crores ). 14 Loans and Advances Taken/ Refunded include ABG International Private Limited Rs crores (Previous Year Rs crores ), ABG Engineering & Construction Limited Rs crores (Previous Year Rs. *0.00 crores ), ABG Resources Private Limited Rs crores (Previous Year Rs.0.81 crores ), Varada Seven Pte. Limited Rs. Nil (Previous Year Rs crores) 15 Deposit Refund Received from ABG Resources Private Limited Rs. Nil (Previous Year Rs crores ) 16 Guarantees Taken from ABG International Private Limited Rs. 16, crores (Previous Year Rs crores ) 17 Guarantees Given to Varada Ventures Pte. Limited Rs.Nil (Previous Year Rs crores ) 18 Capital Received from Partner includes ABG Resources Private Limited Rs. Nil (Previous Year Rs crores) * Amount less than Rs crore 37. Outstanding forward exchange contracts/ options entered by the company for the purpose of hedging its foreign currency exposures is Nil (P Y Nil). In view of the same, Mark to Market difference as on 31st March, 2014 is Rs Nil (P. Y. loss Rs.3.36 crores) 38. The fi gures for the previous year have been arranged/rearranged/regrouped wherever considered necessary. As per our report of even date For NISAR & KUMAR For and on behalf of the Board, Chartered Accountants F. R. No W M. N. Ahmed Syed Abdi Dhananjay Datar Partner Managing Director Executive Director M. No Mumbai, S. Muthuswamy Sunil Agarwal Dated : 30th May, 2014 Executive Director Company Secretary 102

104 ABG Shipyard Limited Annual Report ABG SHIPYARD LIMITED Registered Offi ce: Near Magdalla Port, Dumas Road, Surat , Gujarat Corp. Offi ce: 4th Floor, Bhupati Chambers, 13, Mathew Road, Mumbai , Tel Fax.: Website: - CIN: L61200GJ1985PLC ATTENDANCE SLIP I hereby record my presence at the Annual General Meeting to be held on Tuesday the 30 th day of September, 2014 at the Registered Offi ce of the Company at Near Magdalla Port, Dumas Road, Surat at 12 Noon. Full name of the Shareholder (in Block Letters) Ledger Folio number/ Client ID and DP ID No. No. of Equity Shares held Signature of the Shareholder or Proxy attending PROXY FORM Form No. MGT-11 [Pursuant to section 105(6) of the Companies Act, 2013 and rule 19(3) of the Companies (Management and Administration) Rules, 2014] CIN: L61200GJ1985PLC Name of the Company: ABG SHIPYARD LIMITED Registered Offi ce: Near Magdalla Port, Dumas Road, Surat , Gujarat Corp. Offi ce: 4 th Floor, Bhupati Chambers, 13, Mathew Road, Mumbai Name of the member (s) Registered address : : ID : Folio No/ Client ID/DP ID : I/We, being the Member(s) of shares of Patel Integrated Logistics Limited hereby appoint, 1. Name : ID : Address : Signature : or failing her/him; 2. Name : ID : Address : Signature : or failing her/him; 3. Name : ID : Address : Signature : P.T.O. 103

105 ABG Shipyard Limited Annual Report as my/our proxy to attend and vote (on a poll) for me/us and on my/our behalf at the 29 th Annual General Meeting of the Company, to be held on Tuesday, 30 th September, 2014 at Noon. at the Registered Offi ce of the Company and at any adjournment thereof in respect of such resolutions as are indicated below: Item No. Resolution 1. Adoption of the Audited Financial Statements, Report of the Board of Directors and Auditors thereon, for the fi nancial year ended on 31 st March, Re-appointment of Mr. Rishi Agarwal, who retires by rotation, as the Director of the Company. 3. Re-Appointment of M/s. Nisar & Kumar as joint statutory auditors of the Company, for a period of three years (subject to ratifi cation of their appointment at every AGM) and to fi x their remuneration. 4. Appointment of M/s. GMJ & Co., Chartered Accountants, as joint statutory auditors of the Company, till the conclusion of the next Annual General Meeting and to fi x their remuneration. 5. Special Resolution for issue of securities for a value of upto ` 1,000/- crores (` One Thousand Crores). 6. Appointment of Mr. Ashwani Kumar, as an Independent Director. 7. Appointment of Mr. Ashok R. Chitnis, as an Independent Director. 8. Appointment of Mr. S. Muthuswamy, as a Director. 9. Appointment of Mr. Syed Abdi, as a Director. 10. Approval of Remuneration of Mr. Dhananjay Datar. 11. Approval of Remuneration of Mr. S. Muthuswamy. Signed this day of 2014 Affi x 1 ` Revenue Stamp Signature of Proxy holder(s) Signature of shareholder Notes: 1. This form of proxy in order to be effective should be duly completed and deposited at the Registered Offi ce of the Company, not less than 48 hours before the commencement of the Meeting. 104

106