Goa Shipyard Limited Unlisted Shares

Annual Report Summary

Goa Shipyard Limited (GSL) Annual Report Summary 2020-21

Chairman's Message & Operational Performance: The Chairman welcomes shareholders to the 55th Annual General Meeting, conducted via video conferencing due to the ongoing COVID-19 pandemic. GSL demonstrated resilience, overcoming pandemic-related disruptions to achieve positive financial results. The company maintained on-time deliveries of shipbuilding projects, including the delivery of two Offshore Patrol Vessels (CGOPV) to the Indian Coast Guard with over 70% indigenous content. Construction of two advanced P1135.6 Frigates for the Indian Navy is underway, with keel laying completed and design/procurement progressing. GSL secured an order for twelve specialized boats for high-altitude operations for the Indian Army and another for two Pollution Control Vessels (PCVs) for the Indian Coast Guard.

Ship Repairs, General Engineering, and Financial Performance: The refit division expanded by executing multiple refits, completing 17 vessels during FY 2020-21, including naval, coast guard, fishery survey, and commercial vessels. A River Passenger Ferry and associated jetty were built for U.P. Contracts are in progress for LPG Cylinder Carrier Vessels for Lakshadweep and Bollard Pull Tugs for Assam. A contract for a Damage Control Simulator (DCS) Facility at Port Blair has been secured. Net worth reached ₹1,098 Cr. Gross Revenue stood at ₹979 Cr compared to ₹1,072 Cr in the previous year. Value of Production ('VoP') was ₹827 Cr versus ₹903 Cr in FY 2019-20. Profit Before Tax was ₹172 Cr (previous year ₹265 Cr), and Profit After Tax was ₹128 Cr (previous year ₹198 Cr). The halt in construction in the first quarter impacted revenue and profit. The financial impact of COVID-19 for FY 2020-21 was assessed at ₹27.75 Cr. The order book as of 31 Mar 2021 stood at ₹14,120 Cr, primarily consisting of OPVs and Frigates for the Indian Coast Guard and Navy. A ₹559 Cr contract for two PCVs was recently secured.

Dividend, Exchequer Contribution, MOU Rating, and Export Initiatives: The Board recommends a final dividend of Re 1.00 per equity share, adding to the Interim Dividend, totaling ₹4.75 per equity share and a total outgo of Rs 55.29 Cr. The Company contributed Rs 101.17 Cr to the Exchequer via taxes. The company anticipates achieving an "Excellent" rating for FY 2019-20 and "Very Good" for FY 2020-21 based on MoU performance parameters with MoD. GSL seeks to increase global presence through exports, targeting Southeast Asia, the Middle East, Africa, and Latin America, formulating strategies and appointing foreign marketing representatives.

Future Outlook, AatmaNirbhar Bharat, and Infrastructure Modernization: The Indian defence industry offers growth opportunities. The government targets US$ 25 billion in defence production by 2025. The 2021-22 defence capital outlay was increased by 18.75%. GSL is responding to defence acquisition programs, submitting offers for New Generation OPVs, Fast Patrol Vessels, and Cadet Training Ships. The Company is bidding for refit RFPs and liaising with the commercial shipping industry and emerged as successful bidder for the refit of three Coast Guard vessels and one Naval ship. The future outlook appears bright given a healthy order book and expected orders. The Government encourages domestic manufacturing under the 'AatmaNirbhar Bharat Abhiyan', exemplified by the 101 defence items under import embargo and Defence Acquisition Procedure (DAP) 2020. GSL is aligning with this vision, increasing indigenization in shipbuilding technology and developing ship designs/platforms included under import embargo. A major infrastructure modernization plan at GSL has been completed in substantial part. Works on Phase 1, 2, & 3A were completed, and Phase 3B and 4 are in an advanced stage.

Research & Development, Government Programs, and Corporate Social Responsibility: GSL aims to be at the forefront of cutting-edge technology, recognized as an In-house R&D unit by the Government of India. It has optimally utilized in-house capabilities for design programs, including the CGOPV project. The process of customizing the design of P1135.6 Frigate Project for indigenized equipment has commenced. The company ventured into AI systems to build a vibrant AI ecosystem with intelligent machines enabling high level cognitive processes in the shipbuilding products and processes. It also implements various government programs such as procurement from MSEs and the 'Swachh Bharat Campaign'. The company has achieved "Excellent" grading in corporate governance and is contributing to the social development of the Goan community through CSR activities aligned with national priority of tackling the COVID-19 pandemic.

Human Resources & Relations, Road Ahead, and Appreciation: The company recognizes the contribution of human resources and provides a conducive learning environment, emphasizing safety and health of its employees, and maintains harmonious industrial relations. Rapid upgradation in shipbuilding technologies and Government initiatives for indigenisation drive demand in technologically advanced vessels and defence market. The Yard is gearing up to build new age competencies and adopt newer and improved business processes to enlarge its product offerings.

Directors' Report: The Board presents the 55th Annual Report for 2020-21. GSL recorded sustained performance despite COVID-19-related disruptions. It achieved Value of Production of Rs 827 Cr and Profit After Tax of Rs 128 Cr. The 2nd & 3rd CGOPV vessels were delivered to the Indian Coast Guard, with over 70% indigenous content. The company diversified into shipbuilding opening new business lines and opportunities and is executing the contract for the P1135.6 Frigates for the Indian Navy. During the year, the refit of 17 ships was completed. The Company has been declared the lowest bidder for two Pollution Control Vessels for the Indian Coast Guard and has obtained the prestigious order for design and construction of specialized boats for the Indian Army.

Financial Results (Directors' Report): Revenue from Operations achieved Rs 979 Cr but the dip was mainly on account of lockdown and restrictions on production activities due to COVID-19 pandemic. The Profit Before Tax ('PBT') in FY 2020-21 was Rs 172 Cr Adjustment of exceptional items of expenditure of Rs 27.75 Cr incurred by the Company towards salary and depreciation during the lockdown period severely impacted the PBT.

Covid Impact and Response (Directors' Report): In compliance to the lockdown order of the Central/State Government, the Yard had suspended ship production, ship repair and other construction activities. Essential services were operating with restricted manpower. Work from Home was enabled for employees. During the year, the pandemic imposed several challenges to the Yard which resulted in slowdown of production activities and operational performance. The Yard was able to successfully deliver two vessels and launch two other vessels of CGOPV series. The Company contributed Rs 50.00 lakh to Goa State COVID-19 Relief Account.

Additional Highlights:

• The Company expects to achieve 'Excellent' rating for FY 2019-20 and 'Very Good' rating for FY 2020-21 in terms of actual achievements vis-à-vis parameters laid down in the MoU signed with MoD.
• The Board declared and paid Interim Dividend for FY 2020-21 @ Rs 3.75 per equity share of Rs 5.00 each, being 75% of the Paid-up Share Capital of Rs 58.20 Cr.
• After reviewing the profits for the year and financial position of the Company, the Board of Directors is pleased to recommend final dividend for FY 2020-21 @ Re 1.00 per equity share of Rs 5.00 each i.e. 20% of the Paid-up Share Capital.
• The Paid-up Share Capital of the Company as on 31 Mar 2021 was Rs 58.20 Cr.
• Other Equity representing Reserves and P&L Account balance stood at Rs 1,040.48 Cr as at the end of the year prior to declaration of final dividend of Rs 11.64 Cr as proposed.
• As on 31 Mar 2021, the net value of works to be executed in respect of orders received by the Company for Ship Construction, Ship Repair/Refit work and General Engineering Services amounted to Rs 14,120 Cr (approx)
• The Company has adopted the 'Make in India' initiatives launched by the Government of India and successfully implemented the "Make in India and Indigenisation" policies promulgated by the Government from time to time.
• The Company has adopted Integrity Pact for procurement transactions/contracts above Rs 2.00 Cr.
• Vice Admiral Ashok Vishwanath Subhedar (Retd.) is the Independent External Monitor (IEM) for monitoring implementation of Integrity Pact in the Company.
• The Company contributed a total amount of Rs 50.00 lakh to FITT-IIT, Delhi towards Innovation for Defence Excellence and also contributed towards Armed Forces Flag Day Fund.
• The total manpower strength as on 31 Mar 2021 is 1,389 including 238 executives, 159 supervisors and 866 workmen.
• The Company bagged the following awards during FY 2020-21: 19th Annual Greentech Safety Award 2020, 9th Annual Greentech HR Award 2020, 12th Construction Industry Development Council ('CIDC') Vishwakarma Awards, 2021
• The Company celebrated International Women's Day with great zeal and enthusiasm by undertaking notable activities to embark the spirit of womanhood.
• The Company observes Quami Ekta Week/Communal Harmony week, 'Rashtriya Ekta Diwas', and the 'Constitution Day' .
• The Company has a Whistle Blower Policy to deal with instance of fraud and mismanagement, if any.
• The Company has complied with the Secretarial Standards 1 & 2 relating to 'Meetings of the Board of Directors' and 'General Meetings', respectively issued by the Institute of Company Secretaries of India.
• Government Company engaged in producing defence equipment are exempted to furnish the information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014.
• As on 31 Mar 2021, 6,08,00,764 equity shares of the Company representing 52.23% of the issued, subscribed and paid-up equity share capital of the Company has been dematerialized.
• Smt Nazli Jafri Shayin, Joint Secretary, Department of Defence, MoD has been appointed as Government Nominee Director on the Company's Board
• The Auditors' Report on the Financial Statements of the Company for FY 2020-21 is appended to this Report. There are no audit qualifications or adverse remarks on the Company's Financial Statements. The comments of the C&AG under Section 143(6) of the Companies Act, 2013, on the Financial Statements of the Company for FY 2020-21 are placed next to the Statutory Auditors' Report.