ABG Shipyard

The Directors have great pleasure in presenting this Twenty Third
 Annual Report on the business and operations of your Company with the
 Audited Statement of Accounts for the year ended 31st March 2008.
 
 1.  FINANCIAL PERFORMANCE
 
                                                         (Rs. In Lacs)
                                             2007-2008      2006-2007
 
 Sales and Other Income                      97,424.02      70,961.69
 
 Profit before Interest, Depreciation & Tax  29,582.26      18,343.76
 
 Less: Interest (Net)                         4,246.62         937.46
 
 Profit before Depreciation & Tax            25,335.64      17,406.30
 
 Less: Depreciation                             739.84         592.98
 
 Profit before Tax                           24,595.80      16,813.32
 
 Less: Provisions for Taxation                8,527.62       5,184.26
 
 Net Profit after Tax                        16,068.18      11,629.07
 
 Balance brought forward from previous year  16,553.02      10,217.60
 
 Profit available for appropriations         32,621.20      21,846.66 
 
 Appropriations
 
 Transfer to General Reserve                  6,500.00       4,400.00
 
 Proposed Dividend - Equity shares            1,018.44         763.83
 
 Corporate Dividend Tax                         173.13         129.81
 
 Balance carried to Balance Sheet            24,929.63      16,553.02 
 
 
 * Figures regrouped wherever necessary.
 
 2.  OPERATIONS
 
 During the year under review, your Company has successfully delivered 6
 (Six) vessels taking the total up to 103 vessels  delivered so far by
 the Company. Your Company has posted a turnover of Rs. 974.24 crores,
 an increase of about 37.26% as compared to Rs. 709.77 Crores in the
 previous Financial Year. The Company recorded a net profit of Rs.
 160.68 Crores as against Rs. 116.29 Crores in the corresponding
 previous financial year depicting a rise of 38.17%. Your Company could
 achieve a rise in overall profitability through a judicious mix of
 strategies and cost control measures.
 
 During the year under review, your Company received prestigious orders
 from Precious Shipping Public Company Ltd, Thailand, M/s.
 Bereederungsgesellschaft H Vogemann GmbH & Co. KG, Germany besides
 repeated orders from existing customer Essar Shipping & Logistics,
 Cyprus.
 
 Your Company completed the acquisition (on a partnership basis) of
 Vipul Shipyard situated adjacent to the Companys existing shipyard at
 Surat. The said acquisition augmented the resources of your Company and
 resulted in the consolidation of its shipbuilding capacity at Surat
 facility in the growing segments of offshore, coastal shipping and
 other avenues of shipbuilding.
 
 Your Company has deployed the proceeds raised in the IPO on the
 construction of Dahej Shipyard in Gujarat in terms of prospectus.
 Keeping in view the technological advancement and future requirements,
 your Company wants to enhance its shipbuilding capabilities and add
 other facilities like Rigyard over and above the initially envisaged
 capabilities, which will extend the commencement of commercial
 operations at Dahej.
 
 3.  DIVIDEND
 
 Your Directors recommend a Dividend of 20% (i.e. Rs. 2/- per Equity
 Share of Rs. 10/- each) for the year ended 31st March 2008 and seek
 your approval for the same.
 
 4.  OUTLOOK
 
 The last subsidy scheme has expired on 14th of August 2007. The
 extension of the subsidy scheme is under the consideration of the
 Government of India. According to a report submitted by KPMG to the
 Finance Ministry, if the subsidy scheme is extended, about Rs. 17,000 -
 20,000 crore Investment would flow into the shipbuilding sector.
 
 The vision of Government of Gujarat to develop Marine Shipbuilding
 park with an aim, to make Gujarat the hub of Indian Shipbuilding
 industry in the coming decade and the global shipbuilding destination
 by 2025, would create a very congenial atmosphere in the state for the
 shipbuilding industry. Besides other benefits, the marine shipbuilding
 parks will be accorded the SEZ status and thereby all applicable tax
 concessions/ exemptions will be made applicable to the marine parks.
 
 5.  SUBSIDY
 
 Unlike other industries that are protected by customs and duty
 barriers, the shipbuilding has to compete on a global pricing levels as
 there is no duty imposed by government on import of ships and dredgers.
 Therefore, the Government of India provided subsidy in order to provide
 level playing field. The last subsidy scheme expired on 14th of August
 2007. Considering the necessity and importance of the subsidy, the
 Government is expected to take a decision in the matter of extension of
 the subsidy scheme.
 
 During the year under consideration, your Company has received subsidy
 from the Government of India amounting to Rs.  19.28 crores. By this
 your Company became the first shipbuilding Company in private sector to
 receive subsidy from the Government.
 
 6.  SUBSIDIARY: Crossocean Ship Repair Limited FZE, UAE.
 
 Your Company had acquired Crossocean Ship Repair Ltd. FZE in the year
 2006 with an intention to achieve potential business growth in ship
 repairing sector and cater the UAE market with possibility of future
 expansion. However, the changes in the applicable policies made by the
 Government of that Country made the objectives and the operations of
 the subsidiary unviable. Consequently, the subsidiary could not achieve
 the results as expected since acquisition. Hence, your Company decided
 to disinvest in the subsidiary. The transaction of sale was completed
 in the month of March 2008 resulting in cessation of Crossocean Ship
 Repair Limited FZE, UAE as subsidiary.
 
 7.  ISSUE OF PREFERENTIAL WARRANTS
 
 The Company was authorised by the members at the Extra Ordinary General
 Meeting held on 28th December 2007 to issue warrants not exceeding
 50,00,000 in aggregate to the promoter, entitling the promoter to apply
 for and obtain allotment of one equity share against one warrant.
 Accordingly, the Company issued 40,00,000 convertible preferential
 warrants to its promoter, M/s. ABG International Private Limited on
 15th January 2008 at a price of Rs. 796.66 per warrant.
 
 8.  SCHEME OF COMPROMISE AND ARRANGEMENT WITH WESTERN INDIA SHIPYARD
 LIMITED AND ITS SECURED LENDERS
 
 Your Directors have approved in its meeting dated 12th September 2007,
 the Companys involvement in the proposal for revival and
 rehabilitation of Western India Shipyard Ltd. (WISL) in terms of a
 scheme of compromise and arrangement between WISL and its secured
 lenders. Your Company will participate in the said scheme as a
 confirming party. The said scheme was approved by the Bombay Stock
 Exchange Limited on an application made by WISL and the Scheme is yet
 to be filed in the High Court of Bombay at Panaji, Goa.
 
 Your Directors are confident of successful implementation of the said
 Scheme.
 
 9.  DIRECTORS
 
 In the process of continued efforts to broad base and professionalise
 the Board, your Company has reconstituted its Board of Directors. Shri.
 R.S. Nakra has been promoted as Managing Director of the company for a
 period of 5 years with effect from 10th June 2008. Prior to that he was
 Executive Director (Technical) of the Company. Shri. R.S. Nakra is a
 renowned personality in shipbuilding and shipping industry and has more
 than 45 years of rich experience in the field of shipbuilding and ship
 repairs. He has held senior management positions in the Corporate
 sector and has been associated with various professional committees.
 Shri. Rishi Agarwal, stepped down as Managing Director but will
 continue as Director and will guide your Company as its Chairman.
 
 Major. Arun Phatak, President of your Company and In-charge of business
 development, has been appointed as Additional Director and designated
 as Executive Director, for a period of 5 years with effect from 10th
 June, 2008.
 
 Shri. Kamlesh Kumar Agarwal - Director & the Chairman of the Board of
 Directors of the Company has stepped down from the board.
 
 In accordance with Section 255 & 256 of the Companies Act, 1956 read
 with Article 190 of the Articles of Association of the Company, Shri.
 R.S. Nakra and Shri. Nainesh Jaisingh are liable to retire by rotation
 at the ensuing Annual General Meeting and are eligible for
 re-appointment.
 
 None of these directors is disqualified as per the provisions of
 Section 274 (1) (g) of the Companies Act, 1956, to be re-appointed as
 directors of your Company.
 
 Your Directors recommend the re-appointment of Shri. R.S. Nakra and
 Shri. Nainesh Jaisingh as directors.
 
 10.  AUDITORS
 
 M/s. Nisar & Kumar, Chartered Accountants, Statutory Auditors of the
 Company hold office till the conclusion of the ensuing Annual General
 Meeting and have consented for their re-appointment.
 
 Your Directors recommend their appointment as the Auditors of the
 Company for the current year and fix their remuneration.
 
 11.  DEPOSITS
 
 The Company has not accepted deposits by way of invitation to the
 public and therefore, provisions of Section 58A of the Companies Act,
 1956 are not applicable to the Company.
 
 12.  CORPORATE GOVERNANCE
 
 Your Directors reaffirm their continued commitment to good corporate
 governance practices. Your Company firmly believes in maintaining
 highest standards of Corporate Governance and implements the Corporate
 Governance Practices prescribed by SEBI and Clause 49 of the Listing
 Agreement with the Stock Exchanges. A detailed report on compliance of
 Corporate Governance and Managements Discussion and Analysis as
 stipulated in Clause 49 of the Listing Agreement is enclosed and forms
 part of this Report.
 
 In line with the said provisions, the Company has obtained a
 Certificate from the Auditors of the Company, which is annexed and
 forms part of this Report.
 
 13.  DIRECTORS RESPONSIBILITY STATEMENT
 
 As stipulated in Section 217(2AA) of the Companies Act, 1956 your
 Directors confirm that:
 
 i in the preparation of the annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 ii. the Directors have selected such accounting policies and applied
 them consistently and made judgements and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company at the end of the financial year and of the profit or
 loss of the company for that period;
 
 iii. the Directors have taken proper and sufficient care of the
 maintenance of adequate accounting records in accordance with the
 provisions of this Act for safeguarding assets of the Company and for
 preventing and detecting fraud and other irregularities;
 
 iv.  the Directors have prepared the annual accounts on a going concern
 basis.
 
 14.  STATUTORY INFORMATION
 
 The particulars of employees as required under Section 217 (2A) of the
 Companies Act, 1956 read with the Companies (Particulars of Employees)
 Rules, 1975 are required to be annexed to the Directors Report.
 However, as per the provisions of Section 219 (1)(b)(iv) of the said
 Act, the annual report excluding the aforesaid information is being
 sent to all the members of the Company and others entitled thereto.
 Members who are interested in obtaining such particulars may write to
 the Company at its Corporate Office.
 
 Information relating to the conservation of energy, technology
 absorption and foreign exchange earnings and outgo required under
 Section 217(1) (e) of the Companies Act, 1956 read with Companies
 (Disclosure of Particulars in the Report of Board of Directors) Rules,
 1988 is given as Annexure A to this Report.
 
 15.  INDUSTRIAL RELATIONS
 
 The Industrial relations at the manufacturing facilities of your
 Company have been cordial during the year. Your Directors wish to place
 on record the commitment and involvement of the employees at all levels
 and looks forward to their continued co-operation.
 
 16.  ACKNOWLEDGEMENTS
 
 The Directors convey their gratitude to all the stakeholders including
 the Companys Bankers, Financial institutions and business associates
 for their continued support.
 
 
                                    For and on behalf of the Board
 
                              R. S. Nakra        Major Arun Phatak
 Place: Mumbai               Managing Director  Executive Director
 Date : 10th June 2008