AFFLUENCE

DIRECTORS REPORT

Dear Shareholders,

1.         Your Directors have pleasure in presenting the 44th Annual Report of your Company along with the audited financial statements for the year ended 31st March 2016.

Financial Performance

 2.         The Performance of Cochin Shipyard Limited (CSL) continued to be good during the year 2015-16. In spite of the continued global down-turn in shipbuilding industry, the turnover for the year was at Rs. 1995.89 crores as compared to Rs. 1859.51 crores in the year 2014-15. The Profit Before Tax was Rs. 424.08 crores as against Rs. 367.56 crores in the previous year. The net profit was Rs. 275.03 crores as compared to Rs. 235.06 crores for the previous year. This performance is creditable considering the continuing recessionary conditions in the shipping and ship building sector.

Financial Highlights

(Rs. Crs)

Dividend

3.         As per Office Memorandum F.No. 5/212016-Policy dated 27th May 2016 issued by Department of Investment and Public Asset Management (DIPAM), every CPSE have to pay a minimum annual dividend of 30% of PAT or 5% of the net-worth, whichever is higher. Accordingly, your Directors are pleased to recommend a dividend of Rs. 7.65 per share on the 11,32,80,000 fully paid Equity shares of Rs. 10 each. The total outgo for dividend and dividend tax would be approximately Rs.104.29 crores. No unclaimed dividend (previous years) is due to be transferred to the Investor Education and Protection Fund (IEPF).

 Transfer to Reserves

 4.         During the year an amount of Rs. 2.88 Crores was transferred to Debenture Redemption Reserves in terms of Section 71(13) of the Companies Act, 2013. As on 31st March 2016, the Company has Reserves and Surplus amounting to Rs.1618.87 crores which reflects the inherent financial strength of the Company.

 Contribution to Exchequer

 5.         The total contribution made during the year by way of Value Added Tax, Income Tax, Excise Duty, Customs Duty, Service Tax and Dividend Tax was approximately Rs.215.87 Crores.

 Shipbuilding

 6.         The Company achieved a total shipbuilding income of Rs 1623.55 crores during 2015-16 as against Rs 1643.00 crores in 2014-15. During the year 2015-16, the yard delivered one Buoy Tender Vessel to Directorate General of Lighthouses and Lightships (DGLL) and six Fast Patrol Vessels to Indian Coast Guard. CSL also signed shipbuilding contracts for five vessels. A contract for construction of 1 No. Technology Demonstration Vessel for Defence Research and Development Organisation was entered into on 11th August 2015 and contracts with the Andaman and Nicobar Administration was entered into on 21st March 2016 for building of 2 Nos 500 Pax cum 150 Ton Cargo Vessels and 2 Nos 1200 Pax cum 1000 Ton Cargo Vessels.

 LNG Segment

 7.         The LNG Carrier Segment for the domestic market has emerged as a promising future prospect. M/s Gas Authority of India Limited (GAIL) has contracted substantial LNG from USA to be shipped out for the next 20 years. They are in the process of finalising transportation contracts with reputed LNG shipping companies who are to build vessels as per GAlL's specifications. The requirement is for nine ships. As part of the "Make in India" programme of the Honble Prime Minister, the Government of India (GOI) is keen that three of the nine ships should be built in India. CSL has forged a partnership with M/s Samsung Heavy Industries (SHI), Korea, who are the leading builders of LNG carriers, world over. Following a stringent qualification process, the yard has become the first in India to be licensed by M/s GTT, France, to use their patented Mark III Flex Membrane Technology for the LNG Carrier Containment system. CSL has submitted offers to two international consortiums who in turn have taken part in the GAIL tender. The outcome of the tender is awaited.

 Shiprepair

8.         During the year, the Company achieved a total shiprepair income of Rs.367.49 crores as compared to Rs.195.95 crores during the financial year 2014-15. A very well laid out  strategy of taking major defence orders on competitive tender and execution of  MOUs with DCI and LDCL were instrumental in this achievement. The key repair projects undertaken during the year include INS Shardul, INS Aditya, INS Sukanya, and INS Viraat for Indian Navy, Dredgers for DCI and LDCL Vessels for Union Territory of Lakshadweep. 

Shipbuilding Order Book Position

 9.         The Order book position as on 31st March 2016 was as follows:-

 Expansion Projects 

i)             International Shiprepair Facility (ISRF) at Cochin Port Trust

10.       CSL has taken over about 42 acres of land including the existing ship repair facility of Cochin Port Trust for a lease period of 30 years in order to set up an International Ship Repair Facility (ISRF). This would comprise of shiplift, transfer system & allied facilities at a total cost of Rs. 970 crores. Lease deed for the land and water area (Phase-1) was executed on 12th April 2013. Since then, the dry dock & existing facilities in the leased area has been made operational. Repair activities of eleven vessels have been completed during the financial year 2015-16. Project Management Consultant (PMC) appointed by CSL viz. consortium of M/s Inros Lackner SE, Germany & M/s Tata Consulting Engineers Ltd, Mumbai have prepared the Detailed Project Report for the project. Government of India approval for the project has been received on 19 May 2016. Parallely, CSL is in the process of obtaining environmental clearance for the project from the Ministry of Environment, Forests & Climate Change (MoEFCC). All formalities and documentation for obtaining the environmental clearance have been completed. CSL expects to position Kochi as a major ship repair hub with major operations in the present shiprepair dock coupled with increased capacities that would be available when the ISRF is commissioned. 

 ii)            New Dry Dock Project

11.       CSL is in the process of  adding one more dry dock of size 310 x 75/60 x 13 M at a total cost of Rs 1799 crores to enable the yard to build large ships viz. LNG vessels, large container vessels, new generation aircraft carrier etc. Further, this large dry dock would also enable CSL to undertake repairs of vessels like LNG carriers, semi-submersibles, jack up rigs, drill ships etc., within CSL premises. CSL has appointed M/s Haskoning DHV India Private Ltd, Mumbai as Client Consultant and they have prepared draft Detailed Project Report for the project. CSL has carried out Environmental Impact Assessment (EIA) study for the project and is in the process of obtaining environmental clearance from the Ministry of Environment, Forests & Climate Change (MoEFCC). In this respect the public hearing for the project was conducted on 24th June 2016, the proceedings for GOI approval for the project are also in advanced stages.

Proposal for Initial Public Offer

12.       The Cabinet Committee on Economic Affairs (CCEA) at its meeting held on 18th November 2015 approved the Initial Public Offer of CSL (IPO)  consisting of

(a)  Issue of 2,26,56,000 fresh equity shares of the face value of Rs 10 each at a price to be determined through a book building process in order to fund its future growth plans; and

(b)  Sale by Government of India of 10% of its stake in the Company comprising of 1,13,28,000 equity shares of face value of Rs.10 each out of its current shareholding of 11,32,80,000 equity shares at a price to be determined through a book building process.

Industrial Relations  

15.       Industrial Relations climate of the Company continued to remain cordial and co-operative. The legacy of not losing a single man day on account of labour unrest for the last 32 years continued unabated. The year witnessed a significant milestone in the history of Human Relations Management of the Company viz. introduction of Superannuation Pension Scheme for regular workmen and officers & supervisors separately having effect from 01st April 2007 and 01st January 2007 respectively. The Company adheres to the principle of participative and inclusive management wherein all sections of employees are taken into confidence in the process of management decisions particularly related to productivity and efficiency improvement of the Company. 

Human Resource Development

 16.          Short term need based training programmes for all categories of Human Resources were organized to help employees hone their potential. Some of the important in-house training programmes conducted include programme on Contract & Claims Management, Supply Chain Management, Ownership through Enhanced Personal Productivity, Competency Management, Skill Development Programme for Welders and Fitters, Programme on Energy Conservation & Renewable Energy, Advanced Skill Development Programmes on Piping, Electrical System, Programme on Women Health Issues and Wellness, Presidential Directives on Reservation, Art of Living etc.

 17.       Apart from the above, specific training requirements for undertaking the challenging LNG project, for which CSL is presently the only Indian qualified yard, was also addressed.  A 15 member CSL team was imparted training at GTT, France. Apart from the above, a 13 member CSL team attended the training at Samsung Heavy Industries Yard, Korea for 25 days. As part of the training at SHI, CSL team constructed part of a model mockup and worked extensively on the various membrane system construction technologies. During the construction of the mock up chamber at CSL, ABS has conducted a training workshop on various aspects of LNG carrier vessels, Construction & Inspection technologies of LNG Carriers etc. 

18.        During the year, the  Company has also trained 283 ITI trade Apprentices, 55 Engineering Graduates, 90 Diploma holders and 12 Vocational Trainees under the Apprentices Act.   Under the Company scheme, Specialised Training primarily in the technical streams was extended to 496 Trainees.  The company during the year had also inducted 25 Executive Trainees for one year training.  Also the Marine Engineering Training Institute approved by the Director General of Shipping, Govt. of India provided training to 119 Engineering cadets to enable them qualify for Marine Engineering jobs onboard vessels. 

Status on affirmative action to implement Presidential Directives on reservations 

19.       The company has been strictly complying with the Presidential Directives and guidelines issued by the Government of India from time to time regarding reservation for Scheduled Caste (SC)/ Scheduled Tribes (ST)/ Other Backward Classes (OBC) and  Persons with Disabilities (PWD). Reservation percentage is ensured through the maintenance of Post Based Roster System as prescribed by the Government of India.  Pursuant to Government orders, a Special Recruitment Drive was conducted during the year on three occasions for filling up of vacancies reserved for Persons with Disabilities.  Out of 16 vacancies identified, we were able to fill 10 posts during the year. 

Representation of SC/ST employees 

20.       The representation of SC and ST employees in various groups of posts as on 31st March 2016 is given under: 

 Representation of OBC employees 

21.       The representation of OBC employees in various groups of posts as on 31st March 2016 is given under: 

 Representation of Minority employees 

22.       The representation of Minority employees in various groups of posts as on 31st March 2016 is given under: 

 Representation of Persons with Disabilities employees 

23.       The representation of Persons with Disabilities in various groups of posts as on 31st March 2016 is given under: 

 Provision for safeguard of Women

24.       The Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013 and Rules framed thereunder are strictly complied with. An Internal Complaints Committee has been constituted in accordance with the Act chaired by a senior woman executive. The Committee received one complaint during the year 2015-16 and the same was disposed off. An Annual Return for the financial year 2015-16 on cases of sexual harassment was forwarded to the Ministry of Shipping.

Integrated Management System (IMS) 

25.       Cochin Shipyard continued to be an IMS compliant company encompassing ISO 9001:2008 (Quality Management System), ISO 14001: 2004 Environmental Management System and OHSAS 18001: 2007 (Occupational Health and Safety Management System).  

Facility Upgrade and Capital Expenditure 

26.           The total capital expenditure incurred in 2015-16 amounted to Rs. 76.90 crores.  This related to Renewals and Replacements, Modernisation, Expansion and Research and Development Projects.

Implementation of Official Language Policy 

27.       In pursuance of sub rule (4) of rule 10 of the Official Language (Use for the Official Purposes of the Union) Rules, 1976, Govt. of India have notified, in the Gazette of India, that 80% of ministerial staff of the Company have acquired working knowledge / proficiency in Hindi. 

 28.       With a view to ensure successful implementation of Official Language Policy of Govt. of India and to create awareness and positive attitude among employees towards this, CSL organized one-day seminar on "Effective Implementation of Official Language Hindi in Central Government Offices" & "Development of Official Language Hindi through Unicode" for non-Hindi staff of Kochi TOLIC PSUs on 23 February 2016. Eminent faculties delivered their views on the above subjects.

 29.       Cochin Shipyard was awarded with Rajbhasha Shield (Third Prize) for the year 2012-13 under the Rajbhasha Shield Scheme of the Ministry of Shipping for Best Implementation of Official Language. Chairman and Managing Director received the shield and certificate from Hon'ble Minister of Shipping during the meeting of Hindi Salahkar Samiti of Ministry of Shipping held on 06 Jan 2016.

 30.       During the year Cochin Shipyard received the Rajbhasha Rolling Trophy (Second prize) and certificate instituted by Kochi TOLIC (PSUs) for the best implementation of Official Language for the year 2014-15 among the companies having less than 200 employees of Kochi region. 

 31.       Late Shankar Dayal Singh Memorial Award Scheme was introduced in CSL during 2013 as per directions from Ministry of Heavy Industries and Public Enterprises. This year the award was given to Smt. Sreeja S, Junior Commercial Assistant, CSL. Incentive scheme for doing original work in Hindi has been made more attractive with a view to encourage employees to do more work in Hindi.

 32.       As per the instructions from Hindi Salahakar Samiti of Ministry of Shipping, a Debate competition in Hindi was organized by the Company in connection with Hindi fortnight celebrations in which the plus one and plus two students of schools in and around Kochi participated.

 33.       Various competitions in Hindi were organized in connection with Hindi Fortnight Celebrations 2015. As part of implementation of Official Language Policy of Govt. of India, CSL observes first Wednesday of every month as Hindi Day. In order to enable easy understanding by employees, transliteration of 'Aaj ka shabd' in Regional Language is being displayed on the intranet and also on the notice board.   Four Hindi workshops were organised in the year 2015-16 in which a total of 66 employees participated.   Seventh issue of Hindi house journal, 'Sagar Ratna' was released in the month of September 2015.

 Particulars of Employees and Related Disclosures

 34.       In accordance with Ministry of Corporate Affairs notification no. GSR 463(E) dated 5thJune, 2015, Government Companies are exempt from Section 197 of the Companies Act, 2013 and its rules thereof.

 Conservation of Energy, Technology absorption and Foreign Exchange earnings and outgo

 35.       Details are placed at Annexure-1. The companys major initiative in the conservation of energy was in installation of solar panels on the rooftop of various buildings inside CSL premises. The programme was commenced since the financial year 2013-14. Till date 335 KW of generation has been commissioned and the power generated from solar panels amounted to 3.7 lakh units.

 Risk Management

 36.       CSL has adopted a comprehensive Risk Management Policy at the 214th meeting of the Board of Directors held on 16th September 2014. The purpose of this policy is to put in place a comprehensive risk management system consisting of a defined process of risk management and methodology of identification, assessment, response, monitoring and reporting of risks. The policy would provide the management and Board of Directors an assurance that key risks are being properly identified and effectively managed.

 37.       As per the policy, CSL Board at the helm will review the risk management system in CSL. The Board shall discharge its responsibility of risk oversight by ensuring the review at periodical intervals.  Board may also delegate to any other person or committee the task of independently assessing and evaluating the effectiveness of the risk management system. The CSL management comprising of CSL Board Level and Below Board level executives   has been entrusted with the implementation of the risk management process. In this respect Risk Management Committees (RMCs) and Risk Management Steering Committees (RMSCs) have been constituted to implement the policy in CSL. The Audit Committee and the Board of Directors periodically review the risk management process and policy. The last review of the corporate risk was carried out by the 37th Audit Committee Meeting held on 12th May 2015 and by the 219th Board Meeting held on 13th May 2015. The Yards product mix comprising of Defense and Commercial shipbuilding and shiprepair gives the Company a natural hedge against market risk.

 Research and Development (R&D) Activities

 38.       R&D policy of CSL is to enhance the companys pre eminence in Shipbuilding, Ship repair and other chosen fields and products. In house R&D activities have been undertaken during the year 2015-16 in the areas of duplex stainless steel welding as below.

 a)    Capability development of Duplex steel (SS 31803)  welding in  Submerged Arc Welding (SAW) process (automatic) by Development of Welding Procedure specification (WPS)  and qualifying five(5) welders for the process. 

b)    Capability development of Duplex steel (SS31803)  welding in Gas Metal Arc Welding (GMAW)  process by Development of   Welding Procedure Specification (WPS)   and qualifying five(5) welders for the process.

 39.       Duplex stainless steel is extensively used in cargo tanks construction for chemical tankers and capability development of welding this steel will enable yard to venture into chemical tanker construction and fabrication of storage tanks for chemicals.

 Health, Safety & Environment (HSE)

 40.       Health, Safety & Environment (HSE) aspects are of priority in Cochin Shipyard and CSL is committed to creating a safe work environment as well as raising safety awareness among our employees and subcontractors. Safety is clearly a line responsibility and is managed by every manager responsible for each business or function. In the year 2015-16 Cardio Pulmonary Resuscitation (CPR) training was given to employees across departments to make the workplace safer, improve the team members' ability to save a life, and prevent an injury from becoming serious. The Company constantly strives to create and maintain HSE awareness of our employees and subcontractors workmen through various in-house and onsite training programmes.

41.       HSE performance for the last 3 years are tabulated below.

 Industrial Security

 42.       Industrial Security of the Company continued to be normal and without any security breach or incident. All security systems and measures introduced and installed in the Company are in accordance with Port Facility Security Plan under the International Ship and Port Facility Security Code (ISPS Code). Industrial Security Audit was conducted during the year by Intelligence Bureau, Government of India and Joint Survey conducted by the Company and CISF. As per the security arrangements, 24 hrs waterfront patrolling with armed personnel and wireless surveillance (CCTV) system covering all critical locations and installation are in place. Company also has Bio Metric Access Control System for all categories of persons entering the yard. A full fledged visitors facilitation center is in operation for scrutiny and verification of the credentials of the visitors to the Company.  Baggage scanning system has also been installed at the main entry gate of the Company. Apart from this, special systems and measures are being positioned towards total security of the Indigenous Aircraft Carrier (IAC), viz. exclusive entry pass and special surveillance system for IAC, Special waterside security net around IAC etc.  A robust cyber security policy has also been adopted by the Company.

 43.       The physical security of the Company has been entrusted to the Central Industrial Security Force (CISF) contingent headed by an officer of the rank of Assistant Commandant.

 Awards and Recognitions

 44.       During the financial year CSL received following awards:

(a)  India Today Group CSR award for CPSE Miniratna Category for effective implementation of CSR practices.

(b)  TMA-HLL CSR Award 2015 instituted by Trivandrum Management Association.

(c)  KMA Corporate Excellence Award 2015 under two categories (i) CSR Activities undertaken and (ii) In-house Magazine published.

(d)  Bureaucracy Today - CSR Excellence Award for rural development and best performing of Public Sector Enterprises CSR head.

(e)  NIPM Kerala Best Corporate Citizen Award 2015 instituted by the National Institute of Personnel Management, Kerala Chapter.

(f)   Safety award 2015 and NSC Safety award 2015 from Department (Factories & Boilers) Government of Kerala.

(g)  Kerala State Energy Conservation Commendation Certificate 2015 in the category of large scale energy consumers.

 Board of Directors& Key Managerial Personnel

 45.       The Board of CSL comprises of nine directors of whom four are Whole Time Directors, three Non Official Part Time Directors (Independent Directors) and two Official Part Time Directors (Nominees of Government of India and Government of Kerala). Cmde K Subramaniam (DIN: 01957227), CMD, CSL demitted office on 31st December 2015, having completed his tenure of appointment. Capt R S Sundar (DIN: 05115372), Director (Operations) resigned from the Board of Directors of CSL with effect from 31st August 2015. Shri N Raghuram (DIN: 03540241), Dr. S Mohan (DIN: 02187956), and Dr. G.C Gopala Pillai (DIN: 00083936), Non Official Part Time Directors, have demitted their office with effect from 26th November 2015 having completed their tenure of three years from the date of appointment.

 46.       Ministry of Shipping vide letter No.SY-11011/1/2009-CSL dated 11th December 2015 appointed Shri Madhu S Nair (DIN: 07376798) as Chairman & Managing Director in place of Cmde K Subramaniam (DIN: 01957227), with effect from 01st January 2016. Shri Sureshbabu N V (DIN: 07482491) took over charge as Director (Operations) with effect from 26th April 2016 vide Ministry of Shipping letter No SY 11012/2/2010-CSL dated 26th April 2016.

 47.       Ministry of Shipping vide letter No.SS-11012/05/2014-SY.II dated 21st March 2016 appointed Smt. Roopa Shekhar Rai (DIN: 07565156), Shri Radhakrishna Menon (DIN: 07518727), and Adv. Krishnadas E (DIN: 02731340) as Non Official Part Time Directors (Independent Directors).

 48.       Details of changes in Key Managerial Persons during the financial year 2015-16 are given below:

Declaration from Independent Directors on their status

 49.       The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under the Companies Act, 2013.

 Details of Board Meetings held during 2015-16

 50.       Seven Board Meetings were held during the year 2015-16 and the gap between two meetings did not exceed four months. The dates on which the Board Meetings were held are as follows:    

Evaluation of Boards Performance

 51.       Cochin Shipyard is a 100% Government of India owned Public Sector Enterprise under Ministry of Shipping. Presently the Directors of the Company are presidential appointees and their remuneration is fixed in accordance with the DPE guidelines. Accordingly, Article 21(a) of the Articles of Association of CSL states that President will appoint directors and determine their remuneration. Since the board level appointments are made by President of India, the evaluation of performance of such appointees is also done by the GOI. The Ministry of Corporate Affairs vide notification GSR 463(E) dated 05th June 2015 have exempted government companies from applicability of Section 178 (2), (3) and (4) of the Companies Act, 2013.

 Report of the Nomination & Remuneration Committee on Companys Policy on Directors Remuneration

 52.       As brought out in para (51), presently the remuneration of board level appointees are determined in accordance with DPE guidelines. The Ministry of Corporate Affairs vide notification GSR 463(E) dated 05th June 2015 have exempted government companies from applicability of Section 178 (2), (3) and (4) of the Companies Act, 2013.

 Directors Responsibility Statement

 53.       Your Directors state that:

 a)    in the preparation of the annual accounts for the year ended 31st March 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

 b)    the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2016 and of the profit of the Company for the year ended on that date;

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

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

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

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

 Contracts and Arrangements with Related Parties

54.       During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material. Your Directors draw attention of the members to Note 44 to the financial statement which sets out related party disclosures as per Accounting Standard 18.

 Corporate Social Responsibility & Sustainable Development Committee (CSR & SD Committee)

 55.       Presently, the CSR & SD Committee of CSL comprises of Smt. Roopa Shekhar Rai (DIN: 07565156), Non Official Part Time Director as Chairman of the Committee, Shri Radhakrishna Menon (DIN: 07518727), Non Official Part Time Director, Shri Paul Ranjan D (DIN: 06869452), Director (Finance), Shri Sunny Thomas, Director (Technical) (DIN: 06882228), as members. The Corporate Social Responsibility and Sustainability Development Committee (CSR&SD) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The CSR Policy can be accessed on the Companys website at the link: http://www.cochinshipyard.com/links/CSL_CSR_14-15.pdf.

 56.       Cochin Shipyard started CSR activities in the year 2010-11 based on the guidelines issued by the Department of Public Sector Enterprises (DPE) applicable to Government Companies. The Annual Report on CSR activities is annexed herewith marked as Annexure-2. 

57.       By far the most important initiative by CSL under its CSR programme during the year was with respect to Swachh Bharat Abhiyan.  Inspired by the GOI initiatives, the Company requested the WIPS (Women in Public Sector) Cell of CSL to conduct a basic survey among the Government and Government aided schools in Ernakulam educational district so as to identify at least 10 schools on priority which needed support towards constructing toilets for the students. Accordingly, WIPS surveyed about 85 schools and presented its report to the Board Level CSR Committee of CSL wherein 10 schools were identified in Ernakulam District in Kerala for providing required number of toilets and hand-wash facilities for the students therein.  The project was approved by the Board of Directors under CSR Plan for 2015-16. Total outlay for the initiative was Rs. 90 lakhs. CSL Board has also cleared construction of toilets and hand wash facilities at different schools in Kannur District of Kerala at an estimated budget of Rs. 50 lakhs. The construction of these toilets is undertaken by the District Administration. Again, under Swachh Bharat banner, CSL has sponsored one time thorough cleaning of Divisions No: 58 and 59 of Municipal Corporation of Kochi and has agreed to take over a Corporation Park at a residential area nearby CSL for renovation and continued up-keep and maintenance.  CSL also joined hands with Rajagiri Outreach, a renowned NGO outfit of Rajagiri College of Social Sciences in spreading the message of cleanliness among the school and college students and various residents associations in Ernakulam District. They conducted the campaign by March, Cleanliness competitions etc. 

58.       In addition to the above, CSL intends  to adopt a particular island hamlet called Chirayamthuruth at Kadamakudy Gramma Panchayath in Ernakulam District towards total sanitation of the island households by constructing 61 independent house based toilets at an estimated cost of Rs. 50 lakhs.  

59.       Particulars regarding the CSR & SD Committee meetings, terms of reference etc. are provided under the Section Board Committees in the Report on Corporate Governance.

Audit Committee 

60.       The present Audit Committee of CSL is constituted with Shri B Radhakrishna Menon (DIN: 07518727), Non Official Part Time Director as Chairman, Adv Krishnadas E (DIN: 02731340), Non Official Part Time Director and Shri Elias George IAS (DIN: 00204510), Official Part Time Director as members. During the year, all recommendations of the Audit Committee were accepted by the Board of Directors. Particulars regarding the Audit Committee are provided under the Section Board Committees in the Report on Corporate Governance. 

Corporate Governance 

61.       The Company is committed to maintaining the highest standards of corporate governance and has put in place an effective corporate governance system. The Company complies with the guidelines on corporate governance issued by the Department of Public Enterprises and various other guidelines in this regard. The Company submits its quarterly progress reports on corporate governance within 15 days from the close of each quarter to the Ministry of Shipping as recommended by the DPE in this regard. The report on corporate governance forms part of the annual report. 

Internal Financial Controls 

62.       The Company has in place adequate internal financial controls with reference to financial statements. During the year, the Company has engaged M/s Varma & Varma, (Firm Registration No. 004532S) Chartered Accountants for reviewing and installing adequate Internal Financial Controls and to ensure proper and adequate systems for compliance with the provisions of all applicable laws. Such controls were tested and no reportable material weakness in the design or operation were observed. In order to provide for functional autonomy, the Company has a system wherein financial powers of the Board of Directors is delegated to the CMD. These powers are further sub delegated to officers at various levels for smooth and efficient day to day functioning. An independent internal audit mechanism is in place for conducting extensive audit of various operational and financial matters. C&AG conducts proprietary audit. An independent Audit Committee of the Board of Directors also examines internal/ statutory audit observations and provides guidance based on the same. The Audit Committee also looks into the internal control system, Company procedures and internal audit performance and reports to the Board of Directors. The Company has implemented an integrated ERP System (SAP) since July 2014 which is enabling better management control.

Statutory Auditors 

63.       M/s Krishnamoorthy & Krishnamoorthy (Firm Registration No. 001488S), Chartered Accountants, Ernakulam were reappointed as the Statutory Auditors of the Company by the Comptroller & Auditor General of India for the year 2015-16. 

Auditors Report 

64.       M/s Krishnamoorthy & Krishnamoorthy, Statutory Auditors have submitted their report on 14th July, 2016. The Report does not contain any qualification, reservation or adverse remark or disclaimer. 

Comments of C&AG

 65.       The comments of the Comptroller and Auditor General of India under Section 143 (6) (b) of the Companies Act, 2013 are placed at Annexure-3.

Cost Auditors

 66.       The Board has appointed M/s Felix & Co (Firm Registration No. 100416), Cost Accountants, as the cost auditors for conducting the audit of cost records of the Company for the financial year 2015-16.

 Secretarial Auditor

 67.       The Board has appointed Shri P Sivakumar, SVJS & Associates, Practising Company Secretaries, to conduct Secretarial Audit for the financial year 2015-16. The Secretarial Audit Report for the financial year ended March 31, 2016 is annexed herewith marked as Annexure-4 to this Report.

 Extract of Annual Return

 68.       The extract of annual return in Form MGT 9 as per Rule 11 of the Companies (Management & Administration) Rules, 2014 is placed at Annexure-5.

Investor Services

 69.       CSL is a fully owned Government of India enterprise and the shares of the Company are not presently listed in any of the recognized stock exchanges in India. The tax free Bonds issued by the Company in 2013-14 are fully dematerialized with both the depositories, NSDL and CDSL. These bonds are listed on Wholesale Debt Market (WDM) segment of BSE Limited (BSE). M/s. Linkintime India Private Limited, Mumbai are the Registrar & Transfer Agents of the Company in respect of these Bonds.

Vigilance

 70.       Vigilance Department functions advocating transparency, equity and competitiveness in all procurement.  Important CVC guidelines are discussed with Heads of Departments for its strict compliance. Emphasis was given to vigilance sensitization among the Officers and Supervisors for preventive vigilance.

 71.       Vigilance Department has conducted a system study on the settlement of bills of contracts in Ship Building and Ship Repair Division and submitted a comprehensive report to the CVC.  Based on the system study, Director (Finance) has issued an office order to ensure the principle of first come first serve in the settlement of bills of sub contractors.

 72.       The submission of Assets and Liabilities Statement of Officers was made through online and Vigilance has been provided with a link to see the returns filed by the employees for scrutiny. 

73.       Kerala state has secured the rolling trophy for the best vigilance study circle for the year 2015-16.  

74.       All reports to the Central Vigilance Commission are submitted in time and no reference is pending with CVC. 

Vigil Mechanism

 75.       The Whistle Blower Policy of CSL adopted by the Board of Directors at 198th Meeting held on 22nd February 2012 is functioning as Vigil Mechanism of CSL. The Whistle Blower Policy of CSL is available at the link http://www.cochinshipyard.com/links/Whislte_Blower%20policy_CSL.pdf

 Details of frauds reported by Auditors under Section 143

 76.       Nil.

 Particulars of loans, guarantees or investments

 77.       During the year under Report, the Company has not

a)    given any loan to any person or other body corporate;

b)    given any guarantee or provided security in connection with a loan to any other body corporate or person; and

c)    acquired by way of subscription, purchase or otherwise, the securities of any other body corporate, as prescribed under Section 186 of the Companies Act, 2013.

 Material changes and commitments

 78.       No material changes and commitments, affecting the financial position of the Company, have occurred between the end of the financial year of the Company and the date of this Report.

 Details of change in nature of business

 79.       There has been no change in the nature of business of the Company during the year under report.

 Deposits

80.       Your Company has not accepted any deposits from the public under Chapter V of the Companies Act, 2013.

 Significant and Material orders

 81.       No significant and material orders were passed by the regulators or any courts or tribunals impacting the going concern status of the Company and affecting its operations.

 Acknowledgment

 82.       The Board of Directors are extremely thankful for the continued patronage and support extended by the Honble Prime Minister, Hon'ble Minister of Shipping and all officers of the Ministry of Shipping. The Board would also like to express their grateful appreciation for the support and co-operation from various offices of the Government of India, Government of Kerala, various local bodies, the Comptroller & Auditor General of India, Statutory Auditors, Secretarial Auditors, Cost Auditors, Internal Auditors, Suppliers, Sub contractors, Company's Bankers and our valued customers. The Board also places on record its appreciation for the contribution and support extended by all employees of Cochin Shipyard Ltd.

For and on behalf of the Board of Directors

Annexure to Directors Report

For the year ended 31st March 2016

 ANNEXURE -1

1.                  Conservation of Energy

B. Technology Absorption, Adaptation and Innovation

Disclosure of Particulars in respect of Absorption

C.        Foreign Exchange Earnings & Outgo

Rs. In Lakhs

 ANNEXURE -2

REPORT ON CORPORATE SOCIAL RESPONSINILITY

1.     A brief outline of the companys CSR Policy, including overview of projects or programs proposed to be undertaken and reference to the web-link to the CSR Policy and projects or programs.

a)     Cochin Shipyard Limited Corporate Social Responsibility Policy (CSL CSR Policy):

(i)             CSL CSR Policy approved and adopted by the Board of CSL in its 213th Meeting held on 16th September, 2014 is founded on the basic principles of shared and inclusive growth of the community and environment and is a manifestation of companys commitment to the people and planet without sacrificing its economic sustainability. More than a mandatory practice, CSR for CSL is its way of conducting the business. The Policy encompasses the basic tenets of CSR and domain of CSR activities as enshrined in the Companies Act, 2013 and the CSR Rules framed there under with particular reference to the Schedule VII of the Act.

(ii)            Accordingly, CSL CSR Policy contains:

         CSR Vision and Mission;

         Thrust areas of CSR interventions;

         CSR activities;

         CSR Management structure in CSL;

         CSR implementation process or modus operandi;

         CSR budgeting;

         Documentation and reporting.

(iii)           Web-link to the CSR Policy and projects or programs:

http://www.cochinshipyard.com/links/CSL_CSR_14-15.pdf.

b)    Overview of projects or programs proposed to be undertaken (As shown under 5 (a) below)

2.     The Composition of the CSR Committee (Board Level) as on date:

i)       Smt. Roopa Shekhar Rai(DIN:07565156)                Independent Director and Chairman of                                                         the Committee

ii)      Shri Radhakrishna Menon (DIN: 07518727)              Independent Director

iii)     Shri Paul Ranjan    (DIN: 06869452)                                     Director (Finance)

iv)     Shri Sunny Thomas(DIN: 06882228)                                    Director (Technical)

3.     Average net profit of the company for the last three financial years: Rs. 31136 lakhs

4.     Prescribed CSR Expenditure (two per cent of  the amount as in item 3 above):   Rs. 623.00 lakhs

5.     Details of CSR spent during the financial year

a)     Total amount to be spent for the financial year          : Rs.623 Lakhs

b)    Total amount spent                                      : Rs.627.16 Lakhs

c)     Amount unspent, if any                                            : Nil

RESPONSIBILITY STATEMENT

The implementation and monitoring of Corporate Social Responsibility (CSR) policy is in compliance with CSR objective and policy of the Company.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Government Policy on Shipbuilding and Shiprepair :

1.         The Make in India policy of the Government of India and its initiatives were the high points of the Industry outlook during the year.  The Government of Indias stated vision is to increase the share of Indian shipyards in Global Shipbuilding from 0.4% to 2% in the next 5 years. Towards the above objective, a number of initiatives were taken during the year to improve the competitive strength of the Industry.  On 08 April 2016, shipyards were conferred with the infrastructure status vide notification issued by the Department of Economic Affairs, Ministry of Finance.  This would entitle the shipyards to avail cheaper long term capital. GOI has also exempted the excise duty on the raw materials and spares used for ship repair as also for capital goods for ship repair. Various procedures for availing customs and central excise exemption for shipbuilding have been simplified.

2.         The GOI has also approved a shipbuilding financial assistance policy for Indian shipyards to support the industry and boost its growth. Policies have been approved for extending the right of first refusal to the Indian shipyards for government orders for Shipbuilding/shiprepair under certain conditions. The above measures would give a big impetus to the prospects of the Indian Shipbuilding and shiprepair Industry.

Indian Shipbuilding and Shiprepair Industry

Operations

13.       CSLs performance in the previous year on both the shipbuilding and shiprepair front has been commendable. The company could maintain the shipbuilding income at Rs.1623.55 crores, marginally less than the previous years figure of Rs. 1643.00 crores. The yard delivered one Buoy tender vessel to the Directorate General of Lighthouses and Lightships (DGLL) and six FPVs to the Indian Coast Guard during the year.  The yard is also progressing well on the Indigenous Aircraft Carrier (IAC) project.  The shafting work on the ship has been completed. Significant progress on major piping work below fourth deck has been completed, HVAC ducting work and the cabling work is in progress. The work on deck machinery like the anchor capstan and mooring capstan has been completed and setting to work will commence shortly. The part of the accommodation work has also been commenced. However, delays in delivery of certain brought out equipment on the IAC project is a matter of concern which is being addressed with due priority. The hull fabrication facilities have operated at peak levels for the large jacket launch barge which the yard is constructing for NPCC Abudhabi.  

14.       The highlight of the companys operations was the outstanding performance of the Shiprepair department which posted a turnover of Rs. 367.49 crores as compared to Rs. 195.95 crores last year. The companys strategy to have a mix of major defence orders on competitive tender and forging MOUs with DCI and LDCL for their ships contributed to the stellar performance.  

15.       The company is looking into possibilities on high ended/ defence repairs such as submarines/ Aircraft Carriers/ weapon platforms where there could be opportunities if the navy decides to outsource refits. The ship repair revenue from ships of DCI/LDCL etc for which the Company has forged MOU arrangements are also an important component for the Yard.  

Financial Information 

16.       The financial information of the company pertaining to the last decade is given below:

 Proposed/ Declared Dividend 

17.       As per Office Memorandum F.No. 5/2/2016-Policy dated 27th May 2016 issued by Department of Investment and Public Asset Management (DIPAM), every CPSE have to pay a minimum annual dividend of 30% of PAT or 5% of the net-worth, whichever is higher. Accordingly, your Directors are pleased to recommend a dividend of Rs. 7.65 per share on the 11,32,80,000 fully paid Equity shares of Rs. 10 each. The total outgo for dividend and dividend tax would be approximately Rs. 104.29 crores.

Segment wise/ Product wise performance 

18.       The company is engaged in two major activities viz shipbuilding and repair of ships / Offshore Rigs etc. Segment wise analysis has been made on the above basis and amounts allocated on a reasonable basis. The detail of segment wise performance is placed at Annexure-I to this report.

 SWOT

19.       Cochin Shipyard perceives the following to be its Strength, Weakness, Opportunities and Threats 

Strengths: 

a.    Highly trained, motivated and knowledgeable manpower with an average of 15 years of experience at all levels of hierarchy resulting in extremely high quality workmanship.

b.    A well planned and laid out shipyard enabling smooth work flow.

c.    A modern State of the Art Design Centre manned by highly trained, experienced and competent Naval Architects/ Engineers, draftsman etc.

d.    Highly evolved shipbuilding processes and practices permitting modular construction of ships.

e.    A very good product mix compatibility comprising of defence ships, commercial ships, offshore support ships.

f.     Availability of quality sub contractors and good supply chain network.

g.    State of art' facilities especially in terms of craneage, transporters, covered mobile shops, covered marine coating facility, high quality welding equipment, international standard hull fabrication facilities substantial material storage facilities etc.

 h.    The shipyard has the ability to constantly innovate to resolve technical problems.

 Weakness

 a.    Virtually nonexistent indigenous ancillary industries and consequently Non availability of major equipment /raw materials in India.

b.    Infrastructure constraints due to non availability of large sized dock to build and repair ships beyond 1,10,000 DWT and 1,25,000 DWT respectively. (This will be overcome with the proposed new drydock )

 c.    Comparatively higher social and employee overheads and certain restrictive labour practices especially for contracting labour.

  Opportunity

 a.    Projected increase in requirement of ships for the domestic commercial segment, owing to the new GOI policy to encourage Make in India.

b.    Projected demand in the defence sector Indian Navys requirement for a second Aircraft Carrier.

 c.    Indian Navy, Coast Guard and other maritime security agencies have embarked on an ambitious expansion programme which will open new opportunities.

d.    Potential Opportunities in construction of LNG ships based on the GAIL tender for shipping LNG which stipulates  that 3 ships should be built in India. Opportunities also likely for small / coastal LNG vessels.

e.    LNG fuelled vessels, both deep sea and coastal.

f.     Emerging opportunities in the Inland waterways and Coastal shipping sector in India.

 Threat

 a.    Distress pricing policies of competitors. Yards in financial stress have resorted to unviable pricing and delivery commitments. However, it is seen that the record of vessel deliveries of such yards are very poor. This phenomenon has undermined the efficiency of Indian Shipbuilding Industry as a whole.

b.    Adverse reputational impact on the Indian Shipbuilding industry due to under performance by Indian yards.

c.    Rising cost of labour.

 Strategic Plan

 20.       Cochin Shipyard adopted a strategic plan at the 217th Board Meeting held on 22nd Jan 2015 which aims at overcoming the weaknesses and threats and to fully exploit its strengths and emerge as a leading yard in the international arena. Under the plan the following goals set for 2015-16 has been achieved.

 (a)  The company secured orders for one Technology Demonstration vessel from DRDO and four passenger ships for the Andaman and Nicobar islands. The total value of these 5 shipbuilding contracts is about Rs.1650 crores.

(b)  The yard has entered into technology agreements with M/s Samsung Heavy Industries, Korea for the LNG vessels for GAIL. The Yard has successfully completed evaluation by GTT France and have obtained the license from them for constructing LNG vessels with containment tanks using their patented Mark III Flex membrane systems. 

(c)   The Company has received the approval of the Cabinet Committee on Economic Affairs (CCEA) to issue 3,39,84,000 equity shares of Rs 10 each consisting of fresh issue of shares and  sale of shares by the government . This would help in funding the expansion projects conceived to strengthen the Yards capabilities.

21.       The following further action plans are underway to overcome certain weaknesses and to consolidate the Companys strength

      I.        The project for setting up of the International Shiprepair Facility at Cochin Port Trust premises is underway. The new facility would strengthen the Companys position in the segment and would be a major step towards positioning Kochi as a major shiprepair hub. Government clearance subject to final environmental clearance has been accorded. The proceedings for obtaining environmental clearance are at a very advanced stage.

    II.            CSL is planning to construct one more large dry dock of size 310 x 75/60 x 13 M in its existing premises at Kochi to enable the Yard to build large ships viz. LNG vessels, large merchant vessels, new generation aircraft carrier etc. The dock will also enable CSL to undertake repairs of these vessels as also Jack up Rigs, semi submersibles etc. The Public Investment Board (PIB) has granted in principle clearance and approval from the GOI is in advanced stages. The proceedings for obtaining environmental clearance is progressing.

 III.            Identification of suitable alliances for specialist outsourcing. Developing a hub for such specialist marine firms.

 IV.            Strengthening the Design capabilities by setting up a full fledged Basic Design and R&D group.

    V.            Consolidating, strengthening and furthering the skilling and training activities of CSL under a Skill Academy.

 Product Diversification

 22.       CSL has identified construction of large LNG carriers, smaller LNG carriers and LNG fuelled vessels as a major area of product diversification and has forged technology agreements with M/s Samsung Heavy Industries, Korea. Necessary license has been obtained from M/s GTT, France for the membrane containment systems for LNG carriers. CSL is also working towards creating capabilities for small/ coastal LNG carriers.

 Review of Strategic Plan

 23.       The Strategic plan will be reviewed by the top management of CSL every year and the strategies refined, according to the changes in the business environment to achieve the vision of CSL.  A strategic visioning exercise was conducted at IIM Kozhikode with the participation of key personnel of CSL on 11 and 12 July 2016.

 Internal Control

 24.       The Company has promulgated an internal control and internal audit manual. The internal audit function is carried out by an independent firm of Chartered Accountants who carry out an in-depth review of internal control systems in critical areas based on the audit programme approved by the board level audit committee headed by an independent director. A review of the internal control procedures was undertaken by M/s Varma and Varma , Internal Auditors as a separate exercise during the year  .

 Human Resource Development

25.       CSL has a highly skilled and experienced manpower dedicated to achieving excellence in their performance. Towards this, a significant human resource initiative was undertaken to extend training for skill development, motivation, leadership and personality development across different levels of employment.  An exercise at succession planning was initiated during the course of the year. 

 26        The Shipyard places a lot of emphasis on safety. The Shipyard conforms to ISO 18001 -2001 OSHAS certified by DNV-GL. In house safety awareness programme is organized for all new entrants. Regular training programmes are conducted by external and internal agencies which are attended by all employees including executives, supervisors and workmen. Special emphasis is paid to the training of contract personnel and trainees.  This HR initiative has yielded the desired results with accident rates coming down during the year.

 Woman Empowerment

27.       Cochin Shipyard Limited has constituted an Internal Complaints Committee in accordance with the guidelines and norms prescribed by the new enactment namely Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressel) Act, 2013. The Chairperson of the Internal Complaints Committee is a Senior Women Executive of the Company. The Certified Standing Orders applicable to Workmen have also been amended incorporating the new definition of Sexual Harassment as per the Act. The Internal Complaints Committee has been duly empowered to inquire into such complaints in accordance with the procedure laid down in the Certified Standing Orders and Industrial Employment (Standing Orders) Act and rules.

 28.       Maternity leave has been enhanced from 90 days to 180 days.

 Industrial Relations

29.       CSL has an enviable record of harmonious industrial relations. Industrial Relations scenario of the Company remained cordial and peaceful. CSL continues to maintain, the legacy of not losing a single man day on account of labour unrest by the regular employees of CSL. Effective and purposeful interactions are held with the various categories of employees through their representative bodies viz. trade unions and Officers and Supervisors Association. Day to day grievances are addressed at the shop floor to the extent possible or at higher levels in a time bound manner. All categories of employees are generally contented and motivated thanks to the timely and focused industrial relation interventions.

30.       The Company follows a participative management approach while dealing with the industrial labour force. Accordingly, the Company has constituted two levels of participation namely (i) Joint Council consisting of equal number of representatives from workmen and management and (ii) three shop councils at the lower level also consisting of equal number of participation from workmen and management. Apart from this, participation of workers in management is also practiced in the case of PF trust wherein four trustees are elected from the workmen and four nominated by the Management. The central safety councils and shop safety councils which are set up to ensure safe working environment also consist of equal representation of workmen and management. Apart from this, the canteen management committee is also run with equal participation by workmen. At the contractors workmen front, the Company has constituted another safety committee consisting of representatives of the contractors workmen and management. The Occupier of the factory is the chairman of the committee. This approach has instilled a sense of ownership amongst the employees and has worked very effectively in ensuring an extremely harmonious and conducive work environment.

 Technology conservation

 31.       CSL continuously strives for conservation and upgradation of technology to remain competitive in the global shipbuilding market. Towards this the Company has taken the following initiatives.

     i.          Development of in-house basic design for double ended roll on roll off (RO-RO) vessels for the local administration. The vessels which would be used for transportation of trucks and cars would reduce the traffic congestion in the city.

   ii.          Developed digitally, the hull and outfit/design models for Cargo Launch barge and double ended RO-RO vessel.

  iii.          Fluid Flow 3 software used for pipe sizing for the Cargo Launch barge and double ended RO-RO vessel. Piping diagrams were prepared based on the above and Class approval obtained.

  iv.          In-house development of complete production engineering design for a Cargo Launch barge for a foreign client and RO-RO vessel in 3D hull and entire outfit modeling in Tribon.

   v.          In-house 3D hull modeling, machinery and outfit modeling of Ship systems, ventilation, air-conditioning, cabling and structural items and development of structural drawing of Indigenous Aircraft Carrier are in progress, based on the inputs provided by the Indian Navy.

  vi.          In-house 3D modeling of Aviation Facilities like Aircraft Salvage Equipment, Cradles/Racks/Cross Bars for MIG-29K and Light Signaling System (Saturn) for integration of these equipments onboard Indigenous Aircraft Carrier based on the details received from M/s Rosoboronexport Russia.

 vii.          In-house 3D modeling of fire fighting system for Engine room and DA rooms of IAC and preparation of production drawings based on the details received for this system from foreign OEMs.

viii.          In-house 3D modeling of Aviation fuel (AVCAT) system for IAC and integration of the same in the ship  based on the details received for this system from foreign OEMs.

  ix.          In house 3D modeling of Integrated Platform Management System (IPMS), Ship Data Network (SDN) and Integrated Bridge System of IAC.

   x.          In house development of Human Machine Interface (HMI) of IPMS system for control and monitoring of entire IAC with the help of M/s BHEL.

  xi.          In-house 3D modeling of fire fighting system for AVCAT system for IAC and preparation of production drawings based on the details received for this system from foreign OEMs.

 xii.          Design of Rezistor E equipment and Aircraft Control /Aircraft Direction module software for Aviation Facility in IAC with the help of M/s Rosoboronexport Russia.

xiii.          In house development of software for the cable scheduling and nesting in ship with integration to Tribon M3/ 3D software.

xiv.          Development of the structural design for the fabrication of a mock up and construction of mock up for obtaining the license for Mark III from GTT, France. Obtaining the license was a crucial step towards establishing LNG carrier construction capability for the yard.

xv.          In house development and fabrication of special jigs and fixtures for the installation of long shafts of IAC.

xvi.          In house development of basic design and production drawings for spacer pontoons for berthing IAC.

xvii      In house development of basic design and production drawings Conversion of buoyancy pontoon used for undocking of IAC to a spacer pontoon

Corporate Social Responsibility (CSR) and Sustainability

 32.       The CSR initiatives in CSL received much impetus during the year 2015-16, thanks to the more focused and streamlined implementation of CSR Policy and Plan for the year. A dedicated CSR Cell manned by three full time CSR professionals coupled with CSR oriented CSL Board leadership added pace to bring in desired impact and result for the judiciously identified CSR projects of CSL. In all CSL sanctioned 17 major projects (with project cost more than Rs. 10 Lakhs per project) and 13 minor projects (with project cost less than Rs. 10 Lakhs per projects), with total estimated outlay of Rs 627.16 Lakhs.  The projects spread at length and breadth of Kerala covering the most common fields of CSR interventions appearing in Schedule VII of Companies Act, 2013. However, the major focus areas of CSL CSR continued to be health, education, capacity building, sanitation and drinking water for the economically poor and weaker sections of the society including the differently abled ones, senior citizens etc.

33.       Statutory CSR budget approved and allocated by the Board was Rs. 623.00 Lakhs. Taking into the cumulative carried forward CSR unallocated fund since 2010-11 onwards, Rs. 984.11 Lakhs was available for CSR for the year under reckoning. Out of the same approximately Rs. 923.00 Lakhs was allocated and committed for various CSR projects approved during the financial year. During the year, though the Company was mandated to spend the minimum targeted CSR spend of Rs. 623.00 Lakhs, CSL could actually spend Rs. 627.16 Lakhs for the various ongoing and completed CSL CSR projects and related indirect expenses. For more details, please refer the annual report on CSR activities placed at Annexure-2 to Directors Report.

Micro, Small and Medium Enterprises (MSME) as per the Public Procurement Policy 2012

34.       With a view to promote procurement through Micro, Small and Medium Enterprises (MSME) as per the Public Procurement Policy 2012 promulgated by the GOI, the Company has not only attended various vendor development meets organized by the Dept of MSE, GOI within the state of Kerala, but has also organized a vendor development/ Awareness programme on 15th July 2015.

35.       Though the scope of procurement of material/ equipment / spares from MSMEs for shipbuilding and shiprepair projects undertaken by the Company are extremely limited, the Company is making all out efforts to increase the procurement from MSMEs.

Cautionary Statement

36.       Statement in this Management Discussion and Analysis Report describing the objectives, expectations, assumptions or predictions of the Company may be forward looking statements within the meaning of applicable rules and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the operations of the Company include economic conditions affecting demand/supply, price conditions in the domestic and international markets, Government policies and regulations, statutes and other incidental factors.

Annexure-I

 REPORT ON CORPORATE GOVERNANCE

Companys Philosophy on Corporate Governance

1.         Cochin Shipyard recognizes the importance of corporate governance to emerge as a model corporate. The company has adopted policies and procedures which are aimed at effectively discharging its responsibilities to various stakeholders viz shareholders, creditors, customers, employees and society at large. CSL strongly believes that the company can emerge as a strong global leader only by following good & sound corporate governance principles. The company has been rated excellent in corporate governance practices as per the evaluation criteria prescribed by the Department of Public Enterprises consistently for the last several years.

 Board of Directors   

 2.         The Board of Directors of Cochin Shipyard Limited plays a pivotal role in ensuring good Corporate Governance. The composition of the Board as on 31st March 2016 was as follows:-

 * Ministry of Shipping vide letter No.SY-11011/1/2009-CSL dated 11 December 2015 appointed Shri Madhu S Nair as Chairman & Managing Director in place of Cmde K Subramaniam for a period of five years from assumption of charge of the post or till the date of superannuation or until further orders whichever is the earliest. Shri Madhu S Nair took the charge as Chairman & Managing Director with effect from 01st January 2016.

 ** Ministry of Shipping vide letter No.SS-11012/05/2014-SY.II dated 21st March 2016 appointed Smt. Roopa Shekhar Rai, Shri Radhakrishna Menon and Adv. Krishnadas E as Non Official Part Time Directors (Independent Directors).

 3.         Attendance of Directors at Board Meetings, last Annual General Meeting (AGM) and Number of other Directorships and Chairmanships/ Memberships of Committees of each Director in various Companies are as below:

* Ministry of Shipping vide letter No.SY-11011/1/2009-CSL dated 11 December 2015 appointed Shri Madhu S Nair as Chairman & Managing Director in place of Cmde K Subramaniam for a period of five years from assumption of charge of the post or till the date of superannuation or until further orders whichever is the earliest. Shri Madhu S Nair took the charge as Chairman & Managing Director with effect from 01st January 2016.

 # Capt R S Sundar has resigned from the Board of Directors of CSL with effect from 31st August 2015.

 $ Shri N Raghuram, Dr. S Mohan and Dr. G.C Gopala Pillai have demitted their office with effect from 26th November 2015 having completed tenure of three years from the date of appointment.

 @ Ministry of Shipping vide letter No.SS-11012/05/2014-SY.II dated 21st March 2016 appointed Smt. Roopa Shekhar Rai, Shri Radhakrishna Menon and Adv. Krishnadas E as Non Official Part Time Directors (Independent Directors) with effect from 21st March 2016.

 Shri N V Sureshbabu took over charge as Director (Operations) on 26th April 2016.

 Details of Board Meetings held during 2015-16

 4.         Seven Board Meetings were held during the year 2015-16 and the gap between two meetings did not exceed four months. The dates on which the Board Meetings were held are as follows:    

 Availability of information to the members of the Board

 5.         The Board has complete access to any information within the company and to any employee of the company. The Board welcomes the presence of executives in the Board Meetings, who can provide additional insights into the issues being discussed in the meeting. The information normally required to be placed before the Board include the following:

a)    To make calls on shareholders in respect of money unpaid on shares.

b)    To authorize buy-back of securities.

c)    To issue securities including debentures, in India or abroad.

d)    To borrow monies.

e)    To invest funds of the company.

f)     To grant loans or give guarantee or provide security in respect of loans.

g)    To approve financial statement and Boards Report.

h)    To diversify the business of the company.

i)      To approve amalgamation, merger or reconstruction.

j)      To take over a company or acquire a controlling interest or substantial stake in another company.

k)    To appoint or remove key managerial personnel (KMP).

l)      To appoint internal auditor and secretarial Auditor.

m)  General notices of interest of Directors.

n)    Terms of reference of Board Committees.

o)    Minutes of meetings of Audit Committee and other Committees of the Board, as also resolutions passed by circulation.

p)    Annual operating plans of businesses, capital budgets and any updates.

q)    Quarterly results of the company and its operating divisions or business segments.

r)     Declaration of dividend.

s)    Sale of material nature of investments and assets, which is not in normal course of business.

t)     Quarterly details of foreign exchange exposures and the steps taken by the management to limit the risks of adverse exchange rate movement, if material.

u)    Internal Audit findings and External Audit Reports (through the Audit Committee).

v)    Status of business risk exposures, its management and related action plans.

w)   Details of any joint venture or collaboration agreement.

x)    Show cause, demand, prosecution notices and penalty notices which are materially important.

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

z)    All policy matters deliberated and introduced for implementation.

aa) Any material default in financial obligations to and by the company, or substantial non-payment for goods sold by the company.

bb) Any issue which involves possible public or product liability claims of substantial nature, including any judgment or order, which may have passed strictures on the conduct of the company or taken an adverse view regarding another enterprise that can have negative implications on the company.

cc) The information on recruitment and remuneration of senior officers just below the Board level.

dd) Non-compliance of any regulatory, statutory or listing requirements and shareholders service such as non-payment of dividend, delay in share transfer etc.

ee) Significant labour problems and their proposed solutions. Any significant development in Human Resources / Industrial Relations front like implementation of Voluntary Retirement Scheme (VRS), etc.

Board material distributed in advance

 6.         Notice of each Board Meeting and Committee Meeting is sent to all the members not less than seven days in advance. The agenda notes for each Board Meeting/Committee meeting is drafted in consultation with the Chairman and are circulated to the Directors not less than seven days in advance. All material information is incorporated in the agenda papers for facilitating meaningful and focused discussions at the meeting. Where it is not practicable to attach any document to the agenda, the same is tabled at the meeting with specific reference to the subject in the agenda. In special and exceptional circumstances, additional or supplementary item(s) on the agenda are permitted with the consent of all directors present at the meeting.

 Recording Minutes of proceedings at Board and Committee meeting

 7.         The Company Secretary records the minutes of the proceedings of each Board and Committee meetings. Draft minutes are circulated to all the members of the Board / Committee for their comments within fifteen days from the conclusion of the Meeting. The final minutes are entered in the minute book within 30 days from conclusion of the meeting.

 Post Meeting Follow-up Mechanism

 8.         The important decisions taken at the Board / Board Committee meetings are promptly communicated to the departments / divisions concerned. Action taken report on the decisions/minutes of the previous meeting(s) is placed at the immediately succeeding meeting of the Board / Committee.  

 Compliance

9.         The Company Secretary while preparing the Agenda Notes, Minutes etc. of the meeting(s) is responsible for and is required to ensure adherence to all the applicable laws and regulations including the Companies Act, 1956, the Companies Act, 2013 read with the Rules issued thereunder as also the Secretarial Standards issued by the Institute of Company Secretaries of India.

 Board Committees

10.       During the financial year 2015-16, the Board of CSL had four Committees viz. Audit Committee, Nomination & Remuneration Committee, Contracts & CAPEX Committee, Corporate Social Responsibility and Sustainability Development Committee. All the Independent Directors had vacated office with effect from 26th November 2015 after completing their tenure of appointment by Government of India. Subsequently, three Independent Directors were appointed by Government of India on 21st March 2016. Subsequently, all statutory Committees were reconstituted at the 225th Board Meeting held on 07th May 2016.

 Audit Committee

 11.       The Audit Committee of CSL was formed on 21st August 2008 and was reconstituted on 21st September 2012, 13th December 2012 & 30th March 2015. The present committee was constituted at the 225th Board Meeting held on 07th May 2016.

 Terms of reference of Audit Committee

 12.       The following are the terms of reference of the Audit Committee:

(a)  Review of the Companys financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

(b)  Recommending to the Board, the fixation of audit fees.

(c)  Approval of payment to Statutory Auditors for any other services rendered by the Statutory Auditors.

(d)  Review and examination with the management, the annual financial statements before submission to the Board for approval and auditors report thereon.

(e)  Review with the management, the quarterly/half yearly financial statements before submission to the Board for approval.

(f)   Review and monitor auditors independence and performance and effectiveness of audit process.

(g)  Reviewing with the management, performance of Internal Auditors, adequacy of the internal control systems, evaluation of internal financial controls and risk management systems.

(h)  Appointment and removal of Internal Auditors and determining the scope of Internal Audit in consultation with the internal auditors.

(i)    Appointment and removal and fixing of remuneration of Cost Auditor and Secretarial Auditor.

(j)    Review of Internal Audit Report

(k)  Review observations of statutory, internal & government auditors and provide recommendations based on the same.

(l)    To review the follow up action on the audit observations of the C&AG audit.

(m) Valuation of undertakings or assets of the Company, wherever it is necessary.

(n)  Monitoring the end use of funds raised through public offers and related matters.

(o)  Review of the following information:

(i)    Management discussion and analysis of financial condition and results of operation.

(ii)   Statement of significant related party transactions (as defined by the Audit Committee), submitted by management.

(iii)  Approval or any subsequent modifications of transactions of the Company with related parties.

(iv) Inter-corporate loans and investments.

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

 Powers of the Audit Committee: -

 13.       The Committee is entrusted with the following powers:

a)    To investigate any activity within its terms of reference.

b)    To seek information on and from any employee.

c)    To obtain outside legal or other professional advice, subject to the approval of the Board of Directors.

d)    To secure attendance of outsiders with relevant expertise, if it considers necessary.

 14.       The recommendations of the Audit Committee on any matter relating to the financial management, including the audit report, shall be binding on the Board.

 15.       If the Board does not accept the recommendations of the Audit Committee, it shall record the reasons thereof and communicate such reasons to the shareholders. 

Composition of Audit Committee

16        As on date the Audit Committee is constituted with Shri B Radhakrishna Menon, Non Official Part Time Director as Chairman, Adv. Krishnadas E, Non Official Part Time Director, and Shri Elias George IAS, Official Part Time Director as members.

 17.       Audit Committee meetings are also attended by Director (Finance), representatives of Statutory Auditors and Internal Auditors of the Company as invitees. The Internal Audit function has been outsourced to a firm of Chartered Accountants. The Company Secretary acts as the Secretary to the Committee.

Audit Committee meetings held during 2015-16 and attendance:

 18.       The Committee met five times during the year 2015-16 on 20th April 2015, 12th May 2015, 28th July 2015, 25th September 2015, and 13th November 2015. The necessary quorum was present at these meetings. Pending appointment of Independent Directors by Government of India, a Finance Sub Committee was constituted by the Board and a meeting was held on 16th February 2016. The attendance during the meeting was as follows:

Audit Committee

Finance Sub Committee

 Nomination & Remuneration Committee

 19.       The Remuneration Committee of Cochin Shipyard Limited was constituted vide Circular Resolution adopted on 13th December 2008 and was reconstituted on 13th May 2014 and 30th March 2015. By way of Circular Resolution No.02/2015 adopted on 30th March 2015, the Remuneration Committee was reconstituted, the terms of reference were changed in line with the Companies Act, 2013 and was renamed as Nomination & Remuneration Committee.

 Terms of reference

20.       The following are the terms of reference of the Nomination & Remuneration Committee:

a)    To identify persons who may be appointed in senior management in accordance with the criteria laid down, recommend to the Board their appointment and removal.

b)    To recommend to the Board a policy, relating to the remuneration for the key managerial personnel and other employees.

c)    Decide on the annual bonus/ performance pay/ variable pay pool and policy for its distribution across the executives and non unionized supervisors of the company.

d)    Formulation and modification of schemes for providing perks and allowances for officers and non unionized supervisors.

e)    Any new scheme of compensation like medical scheme, pension etc to officers, non unionized supervisors and the employees as the case may be.

 Composition

 21.       As on date, the Committee comprises of Adv. Krishnadas E, Non Official Part Time Director as Chairman, Shri Elias George IAS, Official Part Time Director, Smt. Roopa Shekhar Rai, Non Official Part Time Director, as members.

Nomination & Remuneration Committee meetings held during 2015-16 and attendance:

  22.      One meeting of the Nomination & Remuneration Committee was held during 2015-16 on 25th June 2015. The necessary quorum was present at the meeting. The attendance during the meeting was as follows:

 $ Shri N Raghuram, Dr. S Mohan and Dr. G.C Gopala Pillai have demitted their office with effect from 26th November 2015 having completed tenure of three years from the date of appointment.

 @ Ministry of Shipping vide letter No.SS-11012/05/2014-SY.II dated 21st March 2016 appointed Smt. Roopa Shekhar Rai, Shri Radhakrishna Menon and Adv. Krishnadas E as Non Official Part Time Directors (Independent Directors) with effect from 21st March 2016.  The Nomination & Remuneration Committee was reconstituted at the 225th Board Meeting held on 07th May 2016 by inducting Non Executive Directors.

 Remuneration Policy

 23.       Under Article 21(a) of the Articles of Association of the company, the Directors shall be paid such remuneration as the President of India may from time to time determine. The pay and allowances of Board level executives are paid in accordance with the terms of appointment, Department of Public Enterprises Guidelines on the above subject and other benefits and perquisites in accordance with the rules of CSL. The remuneration of below Board level executives and non-unionized supervisors is as per DPE guidelines and as approved by Administrative Ministry (Ministry of Shipping). The remuneration of worker is as per the long term settlement between the management and recognized trade unions.

 24.       Details of Remuneration paid to the Chairman & Managing Director and the Whole Time Directors are placed at Enclosure I to this report.

 Sitting fees

 25.       The Non Official Part Time Directors are paid sitting fees at the rate of Rs 10,000 for attending each meeting of the Board or Committee thereof. Sitting fees paid to the Non Official Part Time Directors for 2015-16 is as follows:

Contracts & CAPEX Committee    

 26.       The Contracts Committee of the Board was constituted vide circular resolution no 01/2010 adopted on 09th March 2010. The CAPEX Committee of the Board was constituted vide Circular Resolution No. CR 07/ 2012 and adopted at the 203rd Board Meeting held on 13th December 2012. The Company decided to merge Contracts Committee and CAPEX Committee of the Board, and further it was named as Contracts & CAPEX Committee. The Contracts & CAPEX Committee was re-constituted vide Circular Resolution No.01/2014 passed on 05th July 2014 and Circular Resolution No.02/2015 adopted on 30th March 2015. The present committee was constituted by way of Circular Resolution No.02/2015 adopted on 30th March 2015.

 Composition

 27.       As on date, the Committee comprises of Shri Paul Ranjan D, Director (Finance), Shri Sunny Thomas, Director (Technical), as members. The Committee will be reconstituted after appointment of three more independent directors by Government of India.

Terms of reference

 28.       The following are the terms of reference of the Contracts & CAPEX Committee: 

a)    Examine and recommend the annual capital budget.

b)    Quarterly Review and Report to Board on Capital Projects.

c)    Quarterly Review and Report to Board on Shipbuilding Projects.

d)    To advise on various business models adopted in the course of operations such as MOUs, JVs, SPVs, work share arrangement etc.

e)    To review proposals for amendment to contracts during the pendency of shipbuilding projects which has a financial implication above 10% of the contractual value and make suitable recommendations to the Board.

f)     Any other matter that may be referred to it from time to time by CMD, CSL.

 Contracts & CAPEX Committee meetings held during the year and attendance:

29.       Two meetings of the Contracts & CAPEX Committee were held during 2015-16 on 20th April 2015 and 13th November 2015. The necessary quorum was present at these meetings. The attendance during the meetings was as follows:

 # Capt R S Sundar had resigned from the Board of Directors of CSL with effect from 31st August 2015.

 Corporate Social Responsibility & Sustainability Development Committee

 30.       A Subcommittee of the Board was constituted vide resolution no 181/09 at the 181st meeting of the Board held on 05th September 2008 to decide on the matters relating to Corporate Social Responsibility in CPSEs.

 31.       The Sustainability Development Committee, a sub Committee of the Board was constituted at the 197th Board Meeting held on 23rd November 2011. The DPE vide OM No. 3(9)/2010-DPE (MoU) dated 23rd September 2011 has issued detailed guidelines on Sustainable Development in CPSEs.

 32.       Company decided to merge the Corporate Social Responsibility Committee and Sustainability Development Committee to decide the matters relating to CSR activities in line with the guidelines laid down under Schedule VII of the Companies Act 2013. The present Corporate Social Responsibility Committee and Sustainability Development Committee was re-constituted at the 225th Board Meeting held on 07th May 2016.

 Composition

 33.       As on date, the Committee comprises of Smt. Roopa Shekhar Rai, Non Official Part Time Director as Chairman of the Committee, Shri Radhakrishna Menon, Non Official Part Time Director, Shri Paul Ranjan D, Director (Finance), Shri Sunny Thomas, Director (Technical), as members.

 Terms of reference

 34.      The following are the terms of reference of the Corporate Social Responsibility & Sustainability Development Committee:

(i)          Recommend CSR and Sustainability Development policy to the Board.

(ii)         Recommend plan of action and projects to be initiated in the short, medium and long term for CSR and Sustainability development.

(iii)        To recommend the Annual CSR and Sustainability Development Plan and Budget.

(iv)     Periodic review of CSR & Sustainability Development policy, plan and budgets.

CSR & SD Committee meetings held during the year and attendance

 35.       Three CSR & SD Committee Meetings were held during the year 2015-16 on 06th April 2015, 24th June 2015 and 03rd November 2015. The attendance during the meetings was as follows:

 Shri N Raghuram was inducted in to the Committee vide Circular Resolution 03/2015 adopted on 25th June 2015.

 Meetings of Independent Directors

 36. According to Schedule IV to the Companies Act, 2013 a separate meeting of the Independent Directors of the Company was held on 22nd January 2015 which was attended by Shri G C Gopala Pillai, Shri N Raghuram, Dr Seetharaman Mohan and VAdm (Retd) SKK Krishnan 

General Body Meetings

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

 Disclosures

(i)    Related Party Transactions. 

The company has not entered into any transactions within the purview of Section 188 of the Companies Act 2013 and the rules made thereunder.

(ii)   Non-compliance by the company 

There were no penalties/strictures, imposed on the company by any statutory authority on any matter related to any guidelines issued by Government, during the last three years.

(iii)  Whistle Blower Policy  

Cochin Shipyard has adopted a Whistle Blower Policy approved by the Board at its 198th meeting held on 22nd February 2012. Cochin Shipyard is a Government of India undertaking and follows Government guidelines on reporting of any illegal or unethical practices. Employees are given freedom to report to their immediate supervisor/ Chief Vigilance Officer or Chairman and Managing Director, details of any violation of rules, regulations and unethical conduct. The Directors and Senior Management are bound to maintain confidentiality of such reporting and ensure that the whistle blowers are afforded protection against any harassment and not subjected to any discriminatory practices. During the period under report no personnel has been denied access to the Audit Committee.

(iv)     Details of compliance with the requirement of Corporate Governance guidelines. 

In terms of Clause 8.2.1 of the DPE guidelines on Corporate Governance, Certificate regarding Compliance of Corporate governance guidelines from Practicing Company Secretary is placed at Enclosure II to this report.

(v)  Details of Presidential Directives issued by Central Government and their compliance during the year and also in the last three years

The company has complied with all presidential directives issued by Central Government regarding the operation of PSUs.

(vi)     Items of expenditure debited in books of accounts, which are not for the purposes of the business.

NIL

(vii)    Expenses incurred which are personal in nature and incurred for the Board of Directors and Top Management.

NIL

(viii)  The administrative and office expenditure of the company for the year 2015-16 was 2.42 % of the total expenditure as against 1.47 % in 2014-15. Financial expenditure stood at 0.71 % of the total expenditure in 2015-16, against 1.16 % in the previous year.

 Code of Conduct  

38.    The Board has prescribed a code of conduct (Code) for all the Board members and Senior Management of the Company. All Board members and Senior Management personnel have confirmed compliance with the code for the year 2015-16. A declaration signed by the Chairman and Managing Director of the company is given below: 

CEO/CFO Certification

39.       The CEO/CFO certification of the financial statements for the year is appended at Enclosure III to this report. 

Risk Management Process 

40.       CSL reviewed the existing risk management policy and adopted a revised policy encompassing a comprehensive system of Risk Management at its 214th Board Meeting held on 16th September 2014. The salient features of the new risk management policy is as follows 

(i)    Risk Management Vision Statement: Minimize the organizational risks to an acceptable level and adopt risk management practices which would help the company to attain its goals and objectives while at the same time ensuring minimization of risks.

(ii)   Risk Management Policy:

(a)  The Risk Management process is implemented to improve the companys ability to prevent risks and ensure timely detection of risk.

(b)  To identify risks and its mitigation.

(c)  Risk Management process to be standardized.

(d)  Facilitate sharing of risk information. 

41.       The risk management policy intends to put in place an effective risk management framework and an appropriate reporting mechanism. The management of Cochin Shipyard would periodically identify the various risks and assess analyze their impact on the company.  Risk mitigation and management measures would be put in place to effectively manage these risks. The Board may approve changes to the policy from time to time in order to align it with the changes in business environment.  

Risk Management System and Structure

 42.       The Board at the helm will review the risk management system within the CSL. The Board shall discharge its responsibility of risk oversight by ensuring the review at periodical intervals. The Board may also delegate to any other person or committee the task of independently assessing and evaluating the effectiveness of the risk management system. The CSL management comprising of CSL Board Level and below Board level executives will be entrusted with the implementation of the risk management process. In this respect the Risk Management Committees and Risk Management Steering Committees have been constituted to implement the policy in CSL. The last report of the Risk Management Steering Committee was placed before the 41st Audit Committee Meeting held on 11th July 2016 and 226th Board Meeting held on 12th July 2016.

 Share holding pattern

  43.       The company has issued 11,32,80,000 equity shares of Rs.10 each, details of which are as follows:

 Means of Communication 

 44.       The half yearly financial results are posted on the website of the Company after consideration and approval by the Board and also will be published in one English national daily having all India circulation, within 48 hours of its adoption. The Annual Report of the company is posted in the website viz. www.cochinshipyard.com. The website of the company also displays all official news releases.

 Training Board Members

 45.       The Board members of CSL are senior executives who have a very vast, wide and varied experience in the areas of education, industry, defence, management, human resource management and administration. CSL has benefited from their vision and knowledge. Presentations are made to the Board members on the companys performance, business model, corporate plan and future outlook, on their induction in the Board. In addition, at the Board/ Committee/ other meetings, detailed presentations are made by the senior management personnel/ professionals/ consultants on business related issues, risk assessment, risk policy etc. The directors are encouraged to identify and attend specific training programmes to improve their effectiveness.  The Board has also adopted a policy regarding training of Directors.

Financial Performance   The Performance of Cochin Shipyard Limited (CSL) continued to be good during the year 2015-16. In spite of the continued global down-turn in shipbuilding industry, the turnover for the year was at Rs. 1995.89 crores as compared to Rs. 1859.51 crores in the year 2014-15. The Profit Before Tax was Rs. 424.08 crores as against Rs. 367.56 crores in the previous year. The net profit was Rs. 275.03 crores as compared to Rs. 235.06 crores for the previous year. This performance is creditable considering the continuing recessionary conditions in the shipping and ship building sector  

  A. Conservation of Energy : a.    Steps taken or impact on conservation of energy during the year 2015-16     STEPS TAKEN     Installed 250 KW grid connected solar power plant.     Installed occupancy sensor tube light at various building staircases and bathrooms     Electrification of new buildings is carried out with LED lights instead of conventional discharge lamps.     Replaced conventional discharge lamp street lights with LED lights.     Replacement/ new procurement of Air conditioning units are done with energy efficient inverter type ACs.     Leakages in the compressed air distribution system and other industrial gas lines are regularly monitored and rectified.     Switching off Main Air Compressor during lunch break.     Switching off Main power supply to shops, Quays, & Docks momentarily at 12:15Hrs. This trips man coolers, roof extractors (controlled through starters), etc which are not required during the lunch break.     Displayed energy saving stickers & posters, conducted seminar and quiz competition for inculcating awareness among employees for energy conservation aimed at optimum use of electric power.     Power factor is continuously monitored and maintained near unity.     Usage of energy efficient inverter type welding sets instead of conventional welding sets is promoted.        Installation of turbine ventilators at various buildings   IMPACT Energy saving is approx. 7.00 Lakhs units per annum with the implementation of measures specified above.   CSL received Kerala State Energy Conservation Commendation Certificate 2015 in the category of Large Scale Energy Consumers from Power Department, Govt. of Kerala.   b.   Steps taken for utilizing alternate sources of energy   Installed 250 KWp grid connected Solar Power plant at roof top of various building. c.    Capital investment on energy conservation equipments    An amount of approximately Rs. 215 Lakhs has been invested for conservation of energy            

B. Technology Absorption, Adaptation and Innovation: Efforts in brief towards technology absorption, adaptation and innovation               i.         Development of in-house basic design for double ended roll on roll off (RO-RO) vessels for the local administration. The vessels which would be used for transportation of trucks and cars would reduce the traffic congestion in the city.             ii.         Developed digitally, the hull and outfit/design models for Cargo Launch barge and double ended RO-RO vessel           iii.         Fluid Flow 3 software used for pipe sizing for the Cargo Launch barge and double ended RO-RO vessel. Piping diagrams were prepared based on the above and Class approval obtained.           iv.         In-house development of complete production engineering design for a Cargo Launch barge for a foreign client and RO-RO vessel in 3D hull and entire outfit modeling in Tribon.             v.         In-house 3D hull modeling, machinery and outfit modeling of Ship systems, ventilation, air-conditioning, cabling and structural items and development of structural drawing of Indigenous Aircraft Carrier are in progress, based on the inputs provided by the Indian Navy.           vi.         In-house 3D modeling of Aviation Facilities like Aircraft Salvage Equipment, Cradles/Racks/Cross Bars for MIG-29K and Light Signaling System (Saturn) for integration of these equipments onboard Indigenous Aircraft Carrier based on the details received from M/s Rosoboronexport Russia.         vii.         In-house 3D modeling of fire fighting system for Engine room and DA rooms of IAC and preparation of production drawings based on the details received for this system from foreign OEMs.       viii.         In-house 3D modeling of Aviation fuel (AVCAT) system for IAC and integration of the same in the ship based on the details received for this system from foreign OEMs.           ix.         In house 3D modeling of Integrate Platform Management System (IPMS), Ship Data Network (SDN) and Integrated Bridge System of IAC.             x.         In house development of Human Machine Interface (HMI) of IPMS system for control and monitoring of entire IAC with the help of M/s BHEL.           xi.         In-house 3D modeling of Firefighting system for AVCAT system for IAC and preparation of production drawings based on the details received for this system from foreign OEMs.         xii.         Design of Rezistor E equipment and Aircraft Control /Aircraft Direction module software for Aviation Facility in IAC with the help of M/s Rosoboronexport Russia.       xiii.         In house development of software for the cable scheduling and nesting in ship with integration to Tribon M3/ 3D software.     xiv.         Development of the structural design for the fabrication of a mock up and construction of mock up for obtaining the license for Mark III from GTT, France. Obtaining the license was a crucial step towards establishing LNG carrier construction capability for the yard.         xv.         In house development and fabrication of special jigs and fixtures for the installation of long shafts of IAC.       xvi.         In house development of basic design and production drawings for spacer pontoons for berthing IAC.     xvii.         In house development of basic design and production drawings Conversion of buoyancy pontoon used for undocking of IAC to a spacer pontoon   Disclosure of Particulars in respect of Absorption Benefits derived as a result of the above efforts e.g. Product improvement, cost reduction, product development, import substitutions etc.     Improved self reliance, better control and focus on productivity improvement.   Access to high end clientele and enhanced credibility on account of high quality design solutions.   Reduction of cost due to minimized rework, as interface of the systems can be viewed and corrected in 3D modelling on computer.   Considerable improvement in time and cost saving for production of vessels being built at Shipyard.   Yard has developed expertise and skill to produce production-engineering drawings by extracting relevant data from Tribon model.   Carried out modelling of the entire hull, facilitating very short cycle time for drawing issue.   Capability achieved in undertaking multiple projects concurrently.   Considerable improvement in time for estimation of cables and optimal route design for cables.   In case imported technology (imported during the last five years reckoned from the beginning of the financial year) following information may be furnished     Technology imported   Aviation Facilities Complex for Aircraft Carrier Project.   Basic design, material and equipments for firefighting system for Engine room and DA rooms and AVCAT compartments for the Aircraft Carrier Project.   Detailed design, material and equipments for AVCAT system Aircraft Carrier Project.   NAPA software for basic design and Naval architecture calculation for Ships.   Fluid Flow 3 software for pipe flow analysis and sizing.   Technology for cargo containment system for carriage of LNG.     Year of import     (2011-2016) Has the technology been fully absorbed Use of NAPA software (functional) has been fully absorbed. Used for stability checks on various ships and for developing basic design for RO-RO vessel. Hence considered fully absorbed (100%)   90% for Aviation Facilities Complex (AFC) for Aircraft Carrier Project.   Detailed engineering of AVCAT and fire fighting system has been fully absorbed (100%)   Fluid Flow 3 has been used for pipe sizing in cargo launch barge and in the basic design of RO-RO vessel and hence considered fully absorbed (100%)   Cargo containment system for carriage of LNG fully absorbed (100%) and license obtained from GTT France.   If not fully absorbed, areas where this has not taken place, reasons thereof and future plan of action In case of Aviation Facilities Complex, deliverables for AFC are being received in phases and absorption would also follow accordingly.    

  C.        Foreign Exchange Earnings & Outgo: Rs. In Lakhs Income from Foreign Exchange 2015-16 2014-15 From Shipbuilding 11386.78 72.89 From Shiprepair 85.37 48.56 Expenditure in Foreign Exchange     Materials (CIF Value) 45308.01 35914.15 Design & Documentation 9489.90 3201.60 Service Charge & Others 2984.82 3060.05      

Directors Responsibility Statement : Your Directors state that: a)    in the preparation of the annual accounts for the year ended 31st March 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; b)    the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March 2016 and of the profit of the Company for the year ended on that date; c)    the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d)    the Directors have prepared the annual accounts on a going concern basis; e)    the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively