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Garden Reach Shipbuilders & Engineers Ltd.

BSE: 542011 | NSE: GRSE |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE382Z01011 | SECTOR: Engineering - Heavy

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Annual Report

For Year :
2018

Director’s Report

Dear Members,

1. The Directors have great pleasure in presenting the Annual Report of your Company for the financial year 2017-18 together with the Audited Financial Statements for the year ended 31 March 2018.

PERFORMANCEHIGHLIGHTS

2. Profit: The Directors are delighted to inform that the Company recorded Profit Before Tax of Rs. 127.75 crore during FY 2017-18, registering a growth of 535%. The Net Profit of Rs. 86.80 crore reflects an impressive growth of 657% on the figures reported during last year.

3. Turnover / Value of Production: The Company''s marked improvement in its profitability is reflected in the substantial growth in turnover of around 45% over previous financial year

4. MoU Rating: Your Company has been rated Good” as per MoU Rating for FY 2016-17 by the Department of Public Enterprises. Further, on the basis of actual achievements vis-a-vis parameters laid down in the MoU signed with the Government for the year 2017-18, the Company expects ‘Excellent’ Rating for its performance during 2017-18.

5. Ship Division Activity: Your Company has delivered four (04) ships to the Indian Navy during the financial year 201718

AWARDS# RECOGNITIONS

6. Your Company has received the following major awards and recognitions during theyear under review:

(a) ''Raksha Mantri''s Awards’ for Excellence in respect of OFB and DPSUs for the years 2014-15 & 2015-16 for ‘In-house Design Efforts for Offshore Patrol Vessel for Mauritius - CGS Barracuda''.

(b) Rajbhasha Kirti Puraskar'' – 2nd Prize awarded for the year 2016-17 for Excellence in Implementation of Official Language in the Company in “C Region. This is the Highest Award of the Government of India for Excellence in Implementation of Official Language and your Company is now the proud winner for five years in a row.

(c) PSE Excellence Award - 2016'' by Indian Chamber of Commerce for the year 2016 are as follows:

(i) Winner ICC PSE Excellence Award in the category ''Company of the Year''.

(ii) Winner ICC PSE Excellence Award in the category Corporate Governance''.

(iii) Runner-Up; ICC PSE Excellence Award in the category ''Contribution of Women in PSEs1.

(iv) Runner-Up: ICC PSE Excellence Award in the category ''Human Resource Management Excellence''.

(v) Runner-Up: ICC PSE Excellence Award In the category ‘CSR & Sustainability'',

(d) ''GOLD Award'' was conferred at the International Convention on Quality Control Circle-2017 (ICQCC-2017) held at Pasay City, Philippines for outstanding performance on ‘Quality Control'' activities.

(e) ‘SCOPE Corporate Communication Excellence Award - 2017'' awarded to the Company in the following two categories:

(i) Best Corporate Communication Campaign / Program (External)

(ii) Brand Building through Inclusive Growth Initiatives.

(f) ''Governance Now 5'' PSU Award for 2016-17'' in three (03) categories, namely, Adoption of Technological Innovations, HR Excellence and Nation Building for the financial year 2016-17.

(g) ''WIPS Activities Award 2018'' in recognition of the commendable performances with regard to issues related to Women in Public Sector.

(h) ‘ET Bengal Corporate Award on Best CSR Idea -2018'' awarded by The Economic Times Group in recognition to the innovative ideas on CSR activities.

OPERTAT1NG RESULTS

7. The summarized operating results for the financial years 2017-18 and 2016-17 are given below:

(Rs. in crore)

Particulars

2017-18

2016-17

Value of Production

1342.38

927.08

Total Revenue from Operation

1346.52

929.32

Profit Before Depreciation, Interest and Tax

164.40

55.89

finance Cost

2.79

3.04

Finance Cost due to

discounting

4.90

6.08

(Rs. in crore)

Particulars

2017-18

2016-17

Depreciation

28.26

26.65

Profit Before Tax

127.75

20.12

Provision for Tax

40.95

8.65

Profit After Tax

86.80

11.47

Other Comprehensive Income (Net of Tax)

7.55

0.23

Total Comprehensive income

94.35

11.69

8. The financial position of your Company as on 31 Mar 2018 and 31 Mar 2017 is shown below:

(Rs. in crore)

Particular

As on 31 Mar 18

As on 31 Mar 17

Capital Employed

939.89

mm

Gross Block

472.33

412,63

Net Block

389.17

358,34

Working Capital

550.72

523.20

Net Worth

1015.93

1083,15

Value Added

419.23

318,58

Ratios: (%)

Profit before interest and tax: Capital Employed (%}

14.41

2.98

Profit after tax: Net Worth (%)

8.54

1.06

VALUEOF PRODUCTION

9, During the financial year under review, your Company achieved Value of Production (''VoP'') of Rs.1342.38 crore as against Rs.927.Q8 crore during the previous year, which is an increase of 45% over previous year.

10, The comparative VoP for the three Divisions are as follows:

(Rs. in crore)

Year

Ship

Division

Engineering

Division

Engine

Division

Total

2017-18

1267,92

68.90

5.56

1342.38

2016-17

337.56

85.80

3.72

927.08

PROFIT BEFORE TAX

11. Your Company earned Profit Before Tax of Rs.127,75 crore as against Rs.20.12 crore in the previous year, signifying an increase by 535%,

NETWORTH

12, During the year under review, your Company reported Net Worth of Rs.1015.93 crore as at 31 Mar 18 against Rs.1083.15 crore as reported at 31 Mar 17.

VALUEADOITION

13. The Value Added during the financial year under review was Rs.419.22 crore as against Rs.318.58 crore during the previous year. The Value Added per Employee was Rs.18.94 lakh as compared to Rs.13.27 lakh during the previous year,

APPROPRIATIONS&DIV1DEND

14, Considering the financial performance of your Company in the year 2017-18, the Directors are pleased to recommend the following appropriations from the disposable surplus:

(Rs. in crore)

Profit After Tax

86,60

Less:

Transfer to Genera! Reserve

-

Dividend on the Paid-up Capital

50,80

Dividend Tax

10,44

Balance retained in Statement of Profit & loss

25.56

CONTRIBUTION TO EXCHEQUER

15. Your Company has made a contribution of Rs.167.81 crore to the National Exchequer during the financial year 2017-18 as detailed below:

(Rs. in crore)

(a)

Income Tax. Wealth Tax & Dividend Tax

45.64

(b)

Customs Duty

0.30

(c)

Excise Duty

0.02

(d)

Sales Tax / GST

119.39

(e)

Service Tax

2.46

TOTAL

167.81

Note; The above figures are inclusive of Education Cess, but exclusive of the Excise Duty & Taxes included in the purchase price of the inputs.

CAPITAL STRUCTURE

16. The Authorized Equity Share Capital of your Company as on 31 Mar 18 was Rs.125 crore. During the year under review, your Company has sub-divided its shares from Rs.100/- per share to Rs.10/- per share at its Annual General Meeting held on 25 Aug 2017. Further, the Board of Directors at its meeting held on 06 Dec 2017 approved the Buyback of 92,88,000 equity shares of Rs. 10/- per share at a Buyback price of Rs.83.58/- per share amounting to Rs.77,62,72,500/-. The Buyback of shares was completed on 02 Jan 2018, During the FY 2017-18, the Government of India did not make any fresh investments in the Share Capital of your Company. Consequent to the aforementioned activities, the Paid-up Equity Share Capital as on 31 Mar 2018 stood at Rs. 114.55 crore.

LOANSFROMTHEGOVERNMENT

17. Your Company neither had any outstanding loan from the Government of India at the beginning of the year nor did it take any fresh loan during the current year.

CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES

18. During the year under review, your Company did not enter into any contract / arrangement /transaction with Related Parties in pursuance of Section 188 of the Companies Act, 2013 and the rules framed thereunder,

EXPENDITURE ON ENTERTAINMENT AND FOREIGN TRAVEL

19. Expenditure on business promotion abroad during the year was Rs.39.43 lakh (approx.). An amount of Rs.58.41 lakh (approx.) was spent on foreign travel by your Company''s executives for export promotion and for business visits.

FOREIG N EXCHANG E EARNINGS & OUTGO

20. The income and expenditure in foreign currency for FY 2017-18 is Nil and Rs.1090,45 lakh, respectively.

PERFORMANCE OFSKIP DIVISION

Deliveries of Ships

21. The following four(04) ships were delivered during the financial year 2017-18:

SI.

No.

Ship

Yard

Delivery

1

INS TARASA (4 FO-WJFAC)

2112

15 Jun 17

2

L-52 (2 Landing Craft Utility)

2093

20 Jul 17

3

INS KILTAN (3''ASWC)

3019

14 Oct 17

4

L-53 (3 Landing Craft Utility)

2094

09 Jan 18

22. The 3rd Ship of Anti-Submarine Warfare Corvette (ASW Corvette) class, ’INS Kiltan1 was commissioned by Smt. Ninnala Sitharaman, Hon''ble Raksha Mantri at Visakhapatnam on 16 Oct 17.

23. The 2nd Landing Craft Utility (LCU) MK-IV class ship, ''L-52'' was commissioned and inducted into the Andaman & Nicobar Command’s fleet by Lt. Governor, Andaman & Nicobar Islands, Prof. Jagdish Mukhi on 21Aug 17.

24.The 3rd LCU MK-IV class ship. ‘L-531 was commissioned at Port Blair by Vice Admiral B K Verma, AVSM, ADC, Flag Officer Commander-in-Chief, Andaman & Nicobar Command on 25 April 18,

25. The 4th Follow-on Water Jet Fast Attack Craft class (FO-WJFAC), ''INS Tarasa1, was commissioned by VAdm Girish Luthra, PVSM, AVSM, VSM, ADC Flag Officer Commanding in Chief, Western Naval Command at Mumbai on 26 Sep 17.

Launching of ships

26. The following two (02) ships were launched during the FY 2017-18:

Keel Laying

SI.

No

Ship

Yard

Date

1

PRIYADARSHANI (1'' FPV)

2113

30 Dec 17

2

ANNIE 0ESAMT (2* FPV)

2114

31 War 18

27. The first & second ships of the Fast Patrol Vessel (FPV) class were launched by Smt. Kadambari Saxena, W/o Rear Admiral V K Saxena, IN (Retd), Chairman & Managing Director, GRSE and by Smt. Bibha Krishna, W/o Lt. Gen Abhay Krishna, PVSM, UYSM, AVSM, SM, VSM, GOC-ln-C, HQ Eastern Command on 30 Dec 2017 &31 Mar 2018, respectively.

Keel Laying

28. Kee! of the following five (05) FPVs have been laid during in this financial year;

SI.

No.

Ship

Yard

Date

1

1st FPV

2113

15 May 17

2

2nd FPV

2114

11 Aug 17

3

3rd FPV

2115

30 Oct 17

4

4thFPV

2116

30 Oct 17

5

5th FPV

2117

20 Feb 18

Start Production

29. Start Production of Yard 3022” the first Frigate of the P-17A Project was commenced ahead of schedule which was another credible achievement during the FY 2017-18.

Major Projects in Progress

SI.

No.

Ship

Yard

Status

1

L-54 (4: LCU)

2095

All trials completed and the ship is being readied for delivery,

2

1-55 j? LCU)

2096

Trials of auxiliary machinery & systems in progress. Ship is being readied for BUCST.

3

L-56 (6;il LCU)

2097

Ship in advanced stages of outfitting

ENGINEERING DIVISION

30. The Value of Production achieved by the Engineering Division during the financial year 2017-18 amounted to Rs.68.89 crore.

Portable Steel Bridge Unit

31. The Vaiueof Production achieved by the Bailey Bridge Unit during the financial year 2017-18 amounted to Rs.68 crore (consisting of sixty-seven (67) Bridges with combined 4305 MT) as against Rs.79 crore (consisting of seventy-four (74) Bridges with combined 4848 MT) during the previous year 2016-17.

32, This drop in VoP is mainly because of reduced receipt of Supply Orders due to increase in competition. Suppliers of Bailey type Bridges registered with CQA (EE) is now around sixteen (16) Nos. as against five (05) Nos. two years back. Further, value of orders received during 2017-18 was about Rs.60crore.

33. During 2017-18, your Company exported about ten (10) Bailey Bridges to Bhutan & Myanmar which includes 8 Nos. to Myanmar Army through MEA (i.e. F.Q.R. to Moreh, Manipur, India).

34, During 2017-18, your Company has undertaken its Maiden Delivery of Portable Steel Bridge from DEP, Ranchi Unit to M/s. Reniya Enterprises, Itanagar. Additional Production line was created here and production started during July 2016 which resulted In the first delivery of the Portable Steef Bridge from there.

35, To meet the latest requirements of prospective customers, the following R&D initiatives were taken:

(a) Indigenous development of Cable Gripper used in Suspension Bridges,

(b) Development of Double Lane Bridge using 7 ft. Panel.

(c) Development of Portable Pedestrian Bridge (i.e. Assault Bridge) using Carbon Fiber Reinforced Polymer Composites to meet the requirements of !HQ(Army).

36. During 2017-18, Quality Management System of both Bailey Bridge Unit & DEP Unit were re-certified to ISO 9001-2008.

Deck Machinery and Naval Pump Unit

37. The Taratala Unit of your Company is engaged in manufacturing and supply of various Deck Machinery equipment comprising of Anchor Capstan, Anchor Windlass, Mooring Capstan, Dock Capstan, Electric & Electro-hydraulic Boat Davits, Survey Motor Boat Davits, Hydrographic Davits, Oceanographic Winch, General Purpose Davits, Ammunition Davit / Rocket Launcher Davit, Raii-less helo traversing system, Aft Anchor cum General Purpose Winches for beaching operations & various types of Naval Pumps consisting of marine fresh water and sea water pumps of different discharge and capacity based on application.

38. During FY 2017-18, a total of fifteen (15) Nos. of different Deck Machinery equipment have been supplied to various new construction yards as well as operational ships of Indian Navy and Indian Coast Guards and a total of twenty-one (21) Nos. of pumps have been supplied for ships of Indian Navy. The indigenized electro-hydraulic davits have been successfully Installed and commissioned on-board two Indian Naval ships. A new state-of-the-art pump test bed with PLC system has been installed and commissioned in Taratala Unit for trials of pumps with different discharge and heads.

ENGINEDIVISION (RANCHI)

39. During the year under review, your Company completed W6 routines of 06 Nos. MTU 16\/4000M90 engines of ICGS Aruna Asaf Ali & ICGS Subhadra Kumart Chauhan including onboard trial. Further, your Company completed assembly and test bed trial / FAT of twelve (12) Nos. SKD MTU16V4000M90 engines for FPV ships of Indian Coast Guard under construction at your Company,

NEW OROERS

Ship Division

40. Your Company is expected to receive the following new shipbuilding orders:

(a) Your Company has emerged as LI bidder for construction of Survey Vessel (Large) @ Rs.518.96 crore per ship, The contract is expected to be signed by end 2018.

(b) Your Company had submitted Bids for AntiSubmarine Warfare - Shallow Water Crafts (ASW-SWC) for Indian Navy in the year 2014. The tender was for awarding contract for certain number of ships to LI bidder and the same number of ships to L2 bidder at LI quote. Price Bids were opened on 28 Sep 2017 in which your Company has emerged as L2 bidder vis-a-vis Cochin Shipyard Limited (CSL) emerging as the LI bidder. As per RFP, L2 has to match LI contract price as finalised at Commercial Negotiation Committee and is required to accept the order for the second lot of ships at LI bid price.

Your Company has officially given its willingness, submitting firm and final offer, matching LI Price and Terms & Conditions, The case is under process for CCS approvals. The contract (amounting to Rs.674.29 crore per ship) is expected to be signed by end 2018.

Engineering Division

41. During the year under review, the Bailey Bridge Unit bagged two (02) orders against competitive bidding viz. thirteen (13) Nos. Bailey Bridges from DGBR amounting to Rs.5,25 crore and thirty-four (34) Bailey Bridges from (HQ (Army) amounting to Rs.24 crore.

42. During Jan 2018, our design team extended their expertise (i.e. design verification and review) to IHQ (Army) In construction of five (05) Nos. Foot Over bridges for Mumbai Railways towards disaster management. Subsequently, your Company bagged order for supply of these bridges to IHQ (Army) amounting to Rs. 2.54crore,

43. MoU Agreement with M/s. Bihar Rajya Pul Nirman Nigam Ltd. (''BRPNNL'') on 21 Nov 2017 for supply of seven (07) Nos, of Bailey Bridges. Under this agreement, all civil related works will be carried-out by BRPNNL and bridge supply & erection will be by your Company.

Engine Division

44. Your Company received purchase orders for supply of twenty-eight (28) Nos, 1MW DG set for P-17A project at a total value of Rs.225.82 crores.

MAKE IN INDIA INITIATIVES

45. Your Company has implemented the Make in India and Indigenisation Policy whereby indigenous vendors are encouraged to quote with maximum indigenisation content through Licensed production with collaboration, Licensed production with Transfer of Technology (ToT), Co-production, Assembling. Design and Manufacture in India with ToT. Your Company has developed in-house capabilities to design & build most modern warships in the country. Of these ships, the ASW Corvettes and LCUs have high indigenous content of over 90%, which is a major step towards achieving self-reliance in state-of-the-art warship design and construction.

46. Your Company has taken various indigenisation initiatives towards the Government''s Policy on ''Make in India''. Some of the initiatives are as follows:

(a) The Memorandum of Understanding (MoU) regarding development of engines for marine applications was signed between your Company and M/s. Cooper Corporation Private Limited on 16 Oct 2017. The scope of collaboration is to manufacture Diesel Engines for marine Diesel Genset (DG) application for Navy and Coast Guard vessels of the Range 50-500 KW with an aim towards self-reliance and to promote ''Make in India'' initiative,

(b) Your Company has taken up the challenging indigenisation initiative and successfully completed Assembly, Test and Factory Acceptance Trials (FAT) of eighteen (18) Nos. MTU Diesel Engines from Semi-Knocked Down (SKD) condition to Completely Built Unit (CBU) at your Company’s Diesel Engine Plant (DEP) at Ranchi,

(c) The major indigenisation target of Deck Machinery & Pump Dept, set for FY 2018-19 is ''Indigenisation of Russian Origin Pump with Capacity of 100 TPH at 80 M Head Fire Main Pump for Indian Naval Ships''.

(d) Manufacture of Cable Gripper for suspension bridges,

EXPORT INITIATIVES

47. Your Company participates in global tenders abiding by all Government Policies & Guidelines to build up healthy order book position. Your Company has a full-fledged Marketing Department for securing orders. The Shipyard is pursuing export initiatives of its warships / vessels with Governments of Guyana, Philippines, Bangladesh, UAE etc. In addition, your Company is also aggressively marketing its Portable Steel Bridges with neighbouring countries like Bhutan, Myanmar, Nepal etc.

48. The following are the various export initiatives taken by the Company during the FY 2017-18:

(a) The Memorandum of Understanding (MoU) for promulgation of export business and cooperation on mutual interests was signed between your Company and M/s, Construction Development Corporation Ltd (CDCL), a state owned company under Druk Holdings and investments [DHI], Royal Government of Bhutan, Your Company and CDCL mutually agreed to share their experience and expertise to develop products to meet changing requirements of prospective customers in Bhutan,

(b) Your Company bagged an order worth Rs.4.65 crore (excluding applicable taxes) for supply and transportation of components of GRSE make Portable Steel Bridges to Myanmar (Army).

(c) Your Company bagged an export order worth Rs.70.67 lakh from M/s. Green Ventures Pvt. Ltd., Kathmandu, Nepal, for supply of GRSE manufactured pre fabricated Portable Steel Bridge.

(d) Your Company is to submit its response to an RFP promulgated by the Transport & Harbour Department, Guyana, for Design and Construction of one (01) No. Ferry. Your Company has forwarded the proposed Technical Specifications as well as a sample internationally practiced Draft Contract document to suit the construction and delivery requirements of the Ferry Craft.

(e) Our portable bridges confirm to Global AASHTO (American Association of State Highway Transportation Officials) Standards and are supplied in hot dip galvanized condition.

FUTUREOUTLOOK

49. Your Company''s major future plans for steady business growth and stability is contained in succeeding paragraphs,

50. Your Company has planned to deliver 09 warships in the next 02 years of 2018-19 and 2019-20. Your Company has set a visionary target for Value of Production (VoP) increasing the same from Rs.it342.38 crore in 2017-18 to Rs.4,500 crore over the period of next 05 years (2023-24). In order to achieve this VoP target and make the entire ship construction process time and cost effective, your Company has worked out a strategy in consultation with M/s. Fincantieri, Italy to implement Integrated Construction Technology in Project 17-A and future warship projects of existing domestic customers {Indian Navy / Coast Guard) and overseas customers.

51. After creating world class modern infrastructure facilities, your Company has now embarked upon new measures to enhance the shipbuilding capacity, modernise & upgrade the machines / tools in the workshops, upgrade the design / planning tools, softwares etc. In order to ensure optimization of capacity utilization, your Company is endeavouring to obtain further orders from the Indian Navy and Indian Coast Guard as well as a overseas clients. Your Company is pursuing with Indian Navy and Ministry of Defence for nominating the shipyard for construction of New Generation Corvettes, early award of contracts for construction of Survey Vessel (Large) & AntiSubmarine Warfare Shallow Water Craft (ASW-SWC).

52. Your Company has taken up challenging Research and Development targets with regard to shipbuilding activities during 2018-19 and three major R&D targets are slated during the given year. These include Basic Design of Survey Vessel Large (SVL), Design Development of Floating Border Outpost (FBoP) and Hull form Development for ASW-SWC.

53. Your Company has also planned to upgrade and expand its business of Pre fabricated Steel Bridges, Deck Machinery Products and Engines, The Bailey Bridge Unit is actively and on continuous basis upgrading its Design and R&D capabilities in order to meet the changing market requirements, The new R&D Initiatives in the given business segment include Indigenous Development of Cable Gripper as a substitute to Trewhella Grabs, Design & Development of Double Lane Bridge and Design & Development of Assault Bridges. Further, Deck Machinery Unit has drawn plans to improve upon the existing product lines to meet customer requirements and also to develop the business segment of Marine Pumps with higher degree of indigenisation of Russian made Pumps. Leveraging on the modernisation at Diesel Engine Plant at Ranchi, your Company has devised a business strategy not only to ensure timely delivery of 28 Nos. 1 MW Diesel Alternator for Project P17-A but also grow in capacity and product lines by signing new agreement with M/s. Cooper Corporation of India, Pune for developing & producing engines of lower power ratings (50-500 kw).

54. Your Company has identified a few countries to explore & pursue export potential of building warships. The Company has signed MoU with M/s. Elbeit Systems, Israel, for manufacturing of Unmanned Surface Vessels (USVs) under make in India initiatives, These USVs will be multirole, smaller & Indian Coast Guard. Your Company has also signed a MoU with M/s. CDCL, Bhutan, for supply of Bridges & related parts to that country where good market exists as per the estimates given by M/s, CDCL.

IMPETUSTO MICRO, SMALL AND MEDIUM ENTERPRISES

55. Your Company has been providing increased thrust on enhancing procurement from Micro, Small and Medium Enterprises (MSMEs) and has implemented the Public Procurement Policy for SMEs issued by the Ministry of MSMEs. Your Company extends technical guidance and requisite support to these industries wherever required. Your Company is regularly conducting MSME Vendor Development programmes in association with CII and MSME Ministry, Govt, of West Bengal, Our quality control personnel visit these industries to assist and ensure that the quality of the products meet the requisite standards.

55. During the financial year 2017-18, your Company procured items worth Rs.102.25 crore from the SMEs, which is 25.84% (approx.) of the total annual procurement value (considering exclusions as applicable for SMEs), List of items reserved for SMEs procurement is available on your Company''s website at:http://www.grse.in/mse_notice_website.pdf.

MANPOWER

57. The total Manpower strength under permanent roll of the Company as on 31 Mar 18 was 2214 including 482 Officers, In addition, 04 tradesmen are on roll engaged as journeyman. During the previous year ended 31 Dec 17, a total of 2254 employees were borne in the roll of the Company including 02 employees as journeyman. Statements showing the representation of SC/ST/Women etc. as on 31 Dec 17 as well as the total recruitment made during the period from Jan to Dec 17 are given at Appendix - A & B,

58. Your Company has no employee covered under Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules. 2014.

STATUTORY AUDITORS

59. The Comptroller & Auditor General of India have, under Section 139(5) of the Companies Act, 2013, appointed M/s, G P Agrawal & Co,, Chartered Accountants, Kolkata, as the Statutory Auditors of your Company and M/s. Sinha & Ghelani, Chartered Accountants, as Branch Auditors for the Diesef Engine Plant, Ranchi, for the year 2017-18.

60. The Comments of the C&AG u/s. 143(6) of the Companies Act, 2013, on the Financial Statements of the Company for financial year 2017-18 will be appended on receipt,

COST AUDITORS

61. Pursuant to Section 148 of the Companies Act, 2013 and the Companies (Cost Record and Audit) Rules, 2014, the Board of Directors of your Company has appointed M/s. Chatterjee & Co., Cost Accountants, Kolkata, as the Cost Auditors of your Company for the financial year 2017-18 to conduct audit of cost records maintained by your Company.

SECRETARIAL AUDITOR

62. Pursuant to Section 204 of the Companies Actr 2013, your Board appointed Mls, Vinod Kothari & Co., Practicing Company Secretaries, to conduct Secretarial Audit of the Company for the FY 201718, The Secretarial Audit Report of M/s, Vinod Kothari & Co. is placed at Appendix - C to this Report.

CORPORATE GOVERNANCE

63. Your Company is committed to maintain the highest standards of corporate governance in all spheres of business activity carried out by your Company and continues to lay strong emphasis on transparency, accountability and integrity. Your Company has implemented the Guidelines on Corporate Governance for CPSEs issued by Department of Public Enterprises (DPE) vide OM No. 18(8)/2005-GM dated 14 May 2010, both in letter and spirit, The Report on Corporate Governance along with Compliance Certificate from a Practicing Company Secretary, as required under the said Guidelines has been placed at Appendix-D to this Report.

MANAGEMENTDISCUSSION & ANALYSIS REPORT

64. The Management Discussion & Analysis Report as required under the DPE Guidelines on Corporate Governance for CPSEs is placed at Appendix E” to this Report.

DISINVESTMENTANDINITIALPUBLICOFFER

65. The Cabinet Committee on Economic Affairs, on 12 Apr 2017, has approved disinvestment of the Company''s shares through IPO and its subsequent listing.

66. Pursuant to the proposed IPO, your Company was converted to a Public Limited Company vide Shareholders'' resolution at the 101 Annual General Meeting of your Company held on 25 Aug 2017, Pursuant to the conversion, Ministry of Corporate Affairs, Government of India, issued a new ''Certificate of Incorporation1 dated on 17 Nov 2017, giving effect to the conversion of your Company from Private Limited to Public Limited under section 18 of the Companies Act, 2013.

67. The Draft Red Herring Prospectus (DRHP) of your Company was filed with SEBI on 26 Mar 2018,

BOARD OF DIRECTORS

68. The following four (04) Directors ceased to be Members of the Board of your Company during the period under review:

(a) Cmde RatnakarGhosh, IN (Retd.) Director (Shipbuilding)

(b) Shri Swapan Kumar Mukherjee Part-Time Non-Official (Independent) Director

(c) Cmde M.Jitendran, IN (Retd,) Part-Time Non-Official (independent) Director

(d) Shri Ajay Bhattacharya Part-Time Non-Official (Independent) Director

69. The Board of Directors of your Company placed on record its deep appreciation for the valuable contributions made by the outgoing Directors during the tenure of their association with your Company.

70. The Board welcomed the appointment of the following five (05) new Directors during the financial year 2017-18:

(a) Shri Bharat Bhushan, FCA

Part-Time Non-Official (Independent) Director

(b)Smt. Kanwaljit Deol, IPS (Retd,)

Part-Time Non-Official (Independent) Director

(c) Cmde Sanjeev Nayyar, IN (Retd.)

Director (Shipbuilding)

(d) Dr. Ajai Bhandari, IAS (Retd.)

Port-Time Non-Official (Independent) Director

(e) RAdm Inder Paul Singh Ball, AVSM, VSM, IN (Retd.)

Part-Time Non-Official (Independent) Director

71. Your Company has received declarations from all the Independent Directors of your Company confirming that they meet the criteria of independence as prescribed under both, the Companies Act, 2013 and the Guidelines on Corporate Governance for CPSEs issued bythe Department of Public Enterprises.

MEETINGS OF THE BOARD

72. Six (06) meetings of the Board of Directors were held during the year under review. For further details, please refer to the Report on Corporate Governance placed at Appendix -“D” to this Report.

DISCLOSURES

CSR & Sustainability Committee

73. The CSR & Sustainability Committee of the Board of Directors comprises of Smt. Kanwaljit Deol, Independent Director, as Chairman, Director (Shipbuilding) and Director (Personnel) as Members. For further details, please refer to the Report on Corporate Governance placed at Appendix - “D” to this Report,

Audit Committee

74. The Audit Committee of the Board of Directors comprise of following Directors;

1

Shri 8harat Bhushan

Chairman

Part-Time Non Official (Independent) Director

2

Smt. Kanwaljit Deol

Member

3

RAdm Inder Paul Singh Bali, IN (Retired)

Member

4

Cmde Sanjeev Nayyar, IN (Retired)

Member

Director (Shipbuilding)

For further details, please refer Report on Corporate Governance placed at Appendix-D to this Report. It is further stated that all the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

75. As a part of its vigil mechanism, your Company has adopted a Whistle Blower Policy to provide appropriate avenues to the employees of your Company to report to the management, instances of unethical behaviour, actual or suspected fraud or violation of your Company''s Code of Conduct. As per the Whistle Blower Policy, a whistle blower can send written communications to the Chairman & Managing Director of your Company (or any person to whom he has delegated his power), Alternatively, he may send such Protected Disclosure directly to the Chairman, Audit Committee. Once a Protected Disclosure is received, a Screening Committee comprising the Chairman & Managing Director of your Company, a Functional Director as nominated by C&MD and the Chairman, Audit Committee, will be constituted to investigate into the matter. All employees are encouraged to use this whistle blowing mechanism and voice their concerns to the Management. Further, all employees have been given access to the Chairman, Audit Committee. The Whistle Blower Policy can be accessed on your Company''s website at the following link: http://grse.in/pdf/investors/Whistle%20Blower%20 Policy, pdf.

EXTRACT 0 F AN NUAL RETU RN

76. The extract of Annual Return of your Company for the FY 2017-18 in Form MGT-9, as required under Section 92(3) and Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as Appendix-“F to this Report.

DIRECTORS''RESPONSIBILITY STATEMENT

77. Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, your Directors hereby confirm that:

(a) In the preparation of the annual accounts for the year ended 31 March, 2018, the applicable accounting standards read with requirements set out under Schedule III to the Companies Act, 2013, had been followed and there are no material departures from the same;

(b) The Directors had 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 your Company as at 31 March, 2018 and of the profit of your Company for the year ended on that date;

(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

(d) The Directors had prepared the annual accounts on a ''going concern'' basis; and

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

RISKMANAGEMENT AND INTERNAL FINANCIALCONTROLS

78. Your Company has developed a risk management framework to strategize, monitor, identify, assess and mitigate risks that may potentially impact your Company''s performance. As part of this framework, your Company has adopted a comprehensive Risk Management Policy in line with the DPE Guidelines on Corporate Governance for CPSEs. The Policy aims towards 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 provides the management and Board an assurance that key risks are being properly identified and effectively managed. Under the Policy, a Functional Director level Committee called Risk Management Steering Committee (RMSC) has been constituted, This Committee is assisted by the various Risk Management Committees (RMCs) formed under the respective functional heads (CGMs, GM, HoDs) which evaluates the risks identified in their respective areas of operation,

79. To ensure regulatory and statutory compliance as well to provide corporate governance, the Company has adequate internal systems and processes in place for smooth and efficient conduct of business. The Company has SAP-ERP as the IT backbone, with commensurate built-in controls, checks and balances at various levels of operations. The system of Internal Control comprises well defined organization structures, pre-identified authority level and procedure issued by management covering alt vital and important areas of activities. The Company has an Internal Audit Department, which monitors compliances of Company’s procedures, and policies with well-defined annual audit program and significant audit observations are reported to the Audit Committee of Board of Directors, C&AG also conducts propriety audits. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of your Company''s internal control environment and monitors the implementation of audit recommendations,

CONSERVATION OF ENERGY

80. (a) Steps taken towards better Conservation of Energy

As a part of commitment of your Company towards energy conservation for reducing the impact of atmospheric climate change, continuation of various measures as implemented by your Company in FY 2017-18 are listed in the succeeding paragraphs. All these actions have facilitated in reducing consumption of electrical energy (i.e, conventional energy) as well as reduction in greenhouse gas emission:

(i) The average power factor of the Shipyard is maintained at 99.10. Performance is being constantly monitored to maintain the optimum power factor and consumption of power to reduce demand and emission of GHG indirectly. To ensure step less control of system power factor thyristorised automatic power factor correction system is introduced in sub-stations.

(ii) To operate at optimum energy efficient manner, the Shipyard conducts energy audit at ail its units every year to optimize consumption of fuel i.e, coal, electricity, petroleum etc. and implement the recommendations of the said audit,

(iii) Other energy conservation measures like introduction of battery operated material handling equipment to reduce noise and air pollution as also oil conservation have been taken in the Shipyard.

(iv) Energy efficient induction luminaires and sensor based LED light are now being introduced for illumination of new offices and departments; existing conventional fittings are also being replaced by said energy efficient luminaires, This had effectively reduced power consumption cost from 23499.84 Kwh to 5179.20 Kwh annually at Main Works for FY 2017-18.

(v) Solar powered street lighting system is being used to cut down energy consumption resulting a recurring saving of energy cost of the yard. Your Company has taken such energy conservation initiatives in local schools as a CSR and sustainability activity.

(vi) Through various energy efficient initiatives undertaken, your Company is being able to bring down the electricity consumption by 20% in FY 2017-18 and thereby reducing the energy bill value by 20% (amounting to Rs.10 lakh) than that of previous financial year This has resulted in reduction of environmental impact through green-house gas emission by 609 Tons of CO; equivalent.

(vii) Consistent effort to minimize distribution loss in compressed air and water supply system has been undertaken as part of conservation of energy,

(viii) Use of Bureau of Energy Efficiency accredited star rated window AC, ceiling fan, blower / man cooler and geyser. In AC plants, solid state control system, energy efficient compressors are introduced.

(ix) Using battery operated material handling equipment is also a part of the energy conservation initiative. Calibration of measuring instrument were also done from NABL accredited Lab to Measure Miscellaneous parameter to monitor Energy Loss,

(x) Replacement of bulbs in office spaces in all unit in FY 2017-18 has saved 15% from earlier consumption.

(xl) Replacement of 480 KVAR APFC panel reduced demand 53.61 KVA i.e. Rs.11,793,74 monthly and Rs.1,41,524.88 annually with effect of P.F 0,99 at Main Works.

(xii) Replacement of aged HT/LT cables as per BIS standard and CT/PT breakdown time have been minimised and to achieve good voltage level as a protection of devices and their life,

(xiii) Efforts are continuing to minimize distribution loss in compressed air and water supply system. Your Company proposes to bring all the air compressors, pumps and utility vehicles under AMC for maintaining and repairing which would increase the efficiency of all the compressors and pollution can be further reduced due to periodical maintenance.

(b) Steps taken by your Company for utilising alternate sources of energy

Solar energy

(i) Being committed to promote green energy under sustainable development on long term basis for reducing the impact of atmospheric climate change, your Company has already embarked upon rooftop solar power plant since 2014-15.

(ii) So far, your Company has installed total 600kWp rooftop Solar Power Plant at Main Works Unit. In FY 2017-18, total generation of power from the above 600kWp rooftop Solar Power plants was 6.94 lakh unit (KWH) out of which 0.7 lakh unit (KWH) was injected to CESC Grid. This enabled your Company to reduce consumption of conventional electrical energy and also saving in electricity bill amounting to the tune of Rs.55 lakh. Further, this facilitates reduction in emission of greenhouse gas by about 650 ton.

Utilising Bio-Gas

(iii) Bio-Gas Plant of 150 kg/day capacity for recycling / conversion of food & kitchen waste (from the canteens) has been installed at Main Works Unit from which Bio-Gas will be generated amounting to 17 to 20 cubic meter per day (equivalent 8 to 10 kg LPG/day) at full feed. Generated Bio-Gas will be utilised for cooking purposes in the canteen and enable saving of Rs.2 lakh annually,

Other Initiatives

(iv) By changing of translucent ! transparent corrugated roof sheets in the main machinery workshops by Yard Modernisation Department, the natural sunlight enters from 0500 Hrs. to 1700 Hrs. inside Engineering complex and other shops. Hence usage of considerable no. of overhead flood lights fitted on roof has been considerably reduced during daytime thus saving in electricity.

(c) Capital investment on energy conservation equipment

Capital investment made by the Company for installing the 100KwP grid interactive solar power plant and Bio-gas Plant during theyear under review is Rs.46 lakh and Rs.15 lakh (approx.), respectively.

TECHNOLOGY ABSORPTION

81. Your Company has a robust Research & Development Plan. In the Central Design Office (CDO) a dedicated multi-disciplinary team is continuously working towards developing various concept designs for vessels that can cater to the future requirement of Indian Navy, Generic design platforms are also being developed which can cater to requirements of auxiliary vessels like survey and research, pollution control etc., front-line warships like frigates, corvettes and vessels required for inland and coastal security. The total Research & Development expenditure during the year 2017-18 was Rs.8.75 crore.

82. While working with the domestic and foreign vendors on various projects, your Company has developed In-house competency in contemporary and emerging technology avenues like fem analysis of Composite Material in HYPERWORKS. Your Company is the 1’ Defence shipyard in India that has developed in-house design and analysis capabilities in composite material and has built the first warship with Composite superstructure. Central Design office has developed considerable understanding on Hydrodynamic optimization using Computational Fluid Dynamics (CFD) during execution of various collaborative projects with IIT Kharagpur. Similar capacity is being developed to become self-sufficient in developing RCS optimized Hull form, Global strength & vibration assessment using FEM etc.

ISO CERTIFICATIONS

83. The three (03) ISO Certifications for your Company pertaining to Integrated Management System, namely, ISO 14001:2004 (Environment Management System). BS OHSAS 18001:2007 (Occupational Health & Safety Assessment Standard) and EN ISO 50001:2011 (Energy Management System) were revalidated for a period of three (03) years (upto Year 2020) on successful completion of ''Audit and Certification Procedures’ by the world renowned certification body TUV NORD, Germany.

ERP&IT

84. The highlights of the year under review in the area of ERP& IT are as follows:

(a) Amplification of SAP Production Modules has been restructured and capturing information at different stages of production process to obtain real-time monitoring of Project Progress, Cost involved, Alert, Tracking and cost estimation for new projects with advance MIS Dashboard.

(b) Huge number of Paper Documents have been digitized and stored at Central Location for ease of information availability towards Paperless Office, Your Company has implemented SAP for core processes and Microsoft Share Point as Document Management System for all non-core processes since 2011 to achieve Paper Less Secured Access Operations, Your Company has targeted to achieve 100% by 2019.

(c) All Contract Labours are under Biometric Access Control for Regular IN/OUT with centralized validation of Gate Pass.

(d) Your Company has gone for major companywide CCTV implementation.

(e) Virtual Reality Lab has been implemented for 3-D Simulation and nearto Digital Manufacturing.

(f) Your Company has successfully converted Finance module to GST compliant.

(g) Bill Tracking System has been implemented for ease of Bill Monitoring by all stake holders with automated email alerts,

(h) Modules being developed for app-based online / mobile Transport Monitoring and Tracking System.

(i) Your Company’s Cyber Security has been certified by Cert-ln empanelled auditor.

(j) Your Company is in process to implement PDM-PLM for P-17A Project to collaborate with MDL and DND.

e-PROCUREMENT

85, e-Procurement is the key component of Mission Mode Project” under National e-Governance Plan, It has several advantages such as cost saving, saving in time, safety, security, speed and above all, transparency in achieving efficiency in procurement. The following milestones were achieved during the year under review:

(a) Value of materials procured through e-mode has been Rs. 1,180.55 crore. The Materials Department of your Company achieved 99.16% of its total procurement through e-procurement mode.

(b) Wider participation of vendors in e-procurement has been achieved. Number of Vendors registered with your Company''s e-procurement system rose from 1990 to 2080 during 2017-18, an increase of nearly 4.52%.

(c) 760 Nos. of tenders have been floated through e-procurement mode during the financial year 2017-18.

(d) Approximately 200 Nos. of vendors obtained on-line training on e-procurement procedure during the year.

QUALITY ASSURANCE

86. QA department has taken proactive steps in formulating Quality Assurance Plans (QAP), Quality Inspection Procedures (QIP) and Quality Control Reports (OCRs) for Integrated Construction of P-17A project by taking all stakeholders like production and WOT on-board. This procedure empowers production to take higher autonomy and responsibility for quality. Inspections are being progressed as per the newly formulated processes satisfactorily. Your Company continues to maintain its ISO 9001:2015 in Ship Building, Ship Repair and Ship Design rating. Additionally, RBD has also been upgraded to ISO 9001:2015.

VENDOR DEVELOPMENT

87. in addition to infrastructure and technological growth, the key to successful shipbuilding is having a robust Vendor Base. Your Company has taken-up Vendor Development as a thrust area in recent years and has increased its Vendor Base from 1746 in 2014-15 to 2057 in 2017-18. As part of Government initiatives to encourage Public Private Partnership through outsourcing, your Company has planned a strategy of identifying and developing competent vendors and private shipyards who will adopt the Modular & Integrated Construction technology, The Shipyard will also be tapping the idle capacities of the private shipyards for undertaking part of the construction of these ships.

88. The Micro & Small Enterprises (MSE) Vendors registered with your Company increased from 319 Nos. (as on 31 Mar 2013) to 632 Nos. (as on 31 Mar 2018). Your Company has set a challenging target to increase the vendor base for Micro & Small category vendors by 5% during FY 2018-19.

89. Your Company has analysed complete production activities, identified core and strategic operations and undertaken comprehensive mapping of activities to be outsourced. Accordingly vendor development initiatives like organizing Vendor Meet, participation in Vendor Fairs, Melas, programs, seminars, conferences, conclaves organized by CIIT FICCI. MSME-OI, BCCI, NS1C, FOSME, other Defence Shipyards, State / Central Governments, Industry Defence Linkage, etc, has been undertaken to induct technically competent and financially capable vendors from across the country for outsourced jobs, Long term association, joint ventures, strategic partnership etc. with interested business associates are being explored. The net outsourcing content of the Shipyard has been recorded as 58% confirming achievement of fairly high indigenization levels in warship construction projects executed by the Shipyard in FY 2017-13.

90. Your Shipyard participated in “National Vendor Development Program for Micro & Small Enterprise organized by Cll at New Delhi on 05 July 2017 and “State Level Vendor Development Programme organised by FOSMI at Kolkata on 15 Sep 2017 to explore more technically competent SMEs and avail their services for your Company''s ongoing / future projects fulfilling the Make in India concept of the Government of India,

91. During the year under review, your Company participated in several National & State Level Vendor Development Programs initiated by Ministry of MSME and program organized by MSME-DI, NSIC. in search of technically capable & interested SMEs to avail their expertise in your Company''s business growth and to fulfill the Make in India initiative of the Government of India.

92. The Shipyard organized a special Vendor Development Programme exclusively for MSME SC/ST entrepreneurs on 28 Nov 2017. The executives from MSME Development Institute, Kolkata, attended the said event represented by large number of business houses from different fields, giving positive responses.

QUALITY CIRCLE ACTIVITIES

Quality Circle

93. The concept of Quality Circle is being implemented in various departments of your Company by the IE&P Department. This year 8 (Eight) Quality Circle Teams from the Company had participated in Chapter Convention on Quality Circles 2017 organized by QCFI, Kolkata Chapter, All the eight teams were Ranked GOLD Category.

94. National Convention on Quality Concepts 2017 organized by QCFI Head Quarter was held at Raipur, Madhya Pradesh where 4 (four) Quality Circle teams from your Company participated. Performances of two teams were judged in PAR EXCELLENCE Category and two teams were judged in EXCELLENT Category.

95. ICQCC - 2017 was held at Manila, Philippines, where two QC team from your Company had participated and was judged in the Gold Category.

“5-S” Activities of your Company

96. The drive for improving housekeeping at your Company has been undertaken by the IE&P Department under the initiative of workplace Management applying “5-S''r principles. The three best shops / departments in each area of Production, Production Support and Service Group considering all the units including DEP, Ranchi were awarded the Prizes based on their performance during 2017 on GRSE Day. During 2017, the 5-S Audit was also conducted by IE&P Department, the result published with observations and the actions identified for improvement.

TPM Activities

97. As far as maintenance of machines and other facilities are concerned, the calculation and monitoring of machine availability vis-a-vis the quality of work performed by them is very important. TPM Initiative has been implemented by IE&P Department in three targe shops viz. Ship Building Shop, Plate Preparation Shop and Modem Hull Shop at the Main Unit of the Organization. The TPM concept is initiated at structural shop of FOJ Unit, the efforts are being made to spread this concept across your Company.

SAFETY AT WORK

98. The Shipyard thrives to ensure safe working environment to achieve the objective of zero accident, In order to achieve the same, systematic approach to safety management has been adopted through close monitoring of implementation of safety norms and procedures at work place.

99. In order to upgrade the safety awareness amongst the employees, 47 National Safety Day /Week has been celebrated in all units of your Company during 4-10 Mar 2018 through administering National Safety Council''s Health & Safety Pledge and displaying of Safety Banners at strategic locations of various Units.

100. During the year F,Y. 2017-18, the Shipyard has achieved a Safety Frequency Rate (industrial injuries index) 4,14 as against the last year''s Safety Frequency Rate of 5.98, indicating a marked improvement in the area of Safety Culture of shipyard.

101. For better monitoring and controlling of safety activities, Unit Level Safety Committees have been constituted under the control of the respective Unit Occupier.

HUMAN RESOURCES ADMINISTRATION

Industrial Relations

102. Industrial Relations during the period under review across all the units were more or less peaceful barring few incidents by the operative category of employees on various issues, led by the recognised Union such as ''one day tool down strike'' without any notice, staging of dharna on two occasions against the issue of disinvestment of your Company and other employee related issues.

Major HR Initiatives

Training &Skill Development Initiatives

(a) Capacity Building Initiatives: Your Company has undertaken various initiatives in updating the competencies of its human resources through exposure to various Learning & Development programs organized by premier institutes in India and abroad. The major capacity building initiatives in FY 2017-18 are given below:

(i) Advanced Technical Training Programmes: In FY 2017-18, 17 executives of your Company were sent abroad for advanced training on topics like Integrated Construction, Main Engine, CPP Shafting, Dry Docking and Electronic Control Systems for the P17A project, The Know How Provider (KHP) appointed for P17A project has also conducted On Site Training (OST) modules on PDM-PLM implementation. Weight Management and Ergonomics & HFE during 2017-18, The training was conducted at Company premises where 46 participants from your Company have participated.

(ii) Leadership Development Programme: In order to develop a strong leadership in the company, a 6 days Leadership Development Programme was organized at IIM Calcutta in November 2017 for 30 senior officers of the Company, The course content was customized to address the behavioural competency gaps identified through the Assessment Centers.

(iii) Apart from the above, employees has been nominated to various technical, functional and behavioural programme conducted in-house and through external agencies. This exposure has facilitated in developing their knowledge, skill and attitude.

(iv) Apprenticeship Training under Apprentices Act:

Your Company has increased the intake of Apprentices by 15% over and above the statutory requirement of 2.5% of total manpower strength. Apart from the technical training, personality development and employability skills training was also imparted to the apprentices. Your Company has been declared as Best Establishment in Eastern Region” in the 98 Regional Skill Competition of Apprentices held in October 2017. In FY2017-18, five (05) GRSE apprentices have excelled by securing 1 and 2 positions in Regional and National level Workskills Competitions.

(b) Benchmarking and knowledge sharing in HR among DPSUs YourCompany took the initiative to develop a common HR platform / forum of DPSUs with a view to share the best HR practices as also discuss topical HR issues relevant to DPSUs. Your Company hosted the inaugural meet at Kolkata on 08-09 Mar 2018, Executives from various DPSUs viz, HAL. BEL, MDL, BDL. MlDHANi, HSL and GRSE participated in the Meet.

(c) Culture Building Initiatives

(i) HR Newsletter: Your Company''s HR Department has taken an endeavour to publish HR Newsletter on a fortnightly basis since Sep 2017 towards dissemination of various information, knowledge and better understanding of happenings inside and outside the organization. With the tagline - ''Realizing Business Strategy through People''. the Newsletter aims to create an informed and empowered Human Capital and building a positive wok culture, thereby contributing to the growth and excellence of your Company.

(ii) Sports: With an objective to inculcate team spirit and involvement among employees and in order to improve work-life balance, your Company conducted the Annual Sports Event 2018 from 12 Feb 2018 to03 Mar 2018 with total of 9 events, viz. Cricket, Badminton, Volleyball, Table Tennis, Chess, Carom, 50 meters race, 100 meters race and musical chair. The annual sports event 2018 witnessed huge participation and created immense enthusiasm not only among participants but also among other employees.

(iii) Swachh Bharat Pakhwada: As a part of Swachh Bharat Mission, Swachhta Pakhwada 2017 was celebrated in your Company from 01 - 15 Dec 2017. Your Company has conducted various activities during the fortnight such as training to employees on cleanliness and hygiene, organizing mini marathon to spread awareness on cleanliness and hygiene, painting and essay competition for employees'' families on topics of cleanliness, tree plantation etc. The aforesaid activities during the Swachh Bharat Pakhwada has created awareness amongst the employees, their family members and the local community regarding the importance of cleanliness and hygiene in their homes as well as in their work life.

Persons with Disabilities (PwD)

103. The Company extended all the relaxations/ concessions to the employees with disabilities as per the Government directives, During the year 2017-18, the Company has recruited 04PwDs,

Empowerment of Women

104. The Women representation is 4.8% of the total strength in the Company. GRSE WIPS Chapter regularly interacts with Eastern Region WIPS Chapter and Company nominates women employees to participate in different workshops conducted by the WIPS wing of various CPSUs in and around Kolkata.

CORPORATE SOCIAL RESPONSIBILITY

105, Corporate Social Responsibility (CSR) is an integral part of your Company''s corporate philosophy and your Company is committed to grow its business in a socially responsible way, Towards this end, your Company has adopted a comprehensive CSR Policy that defines the framework for your Company''s Social Initiatives Programme. The Policy identifies the focus areas of your Company''s CSR and Sustainability activities to benefit the marginalized sections of the local community through different projects that enhance income through creation of sustainable livelihood opportunities and improving the quality of life. Your Company places thrust on the areas of health care, education & skill development and community development under CSR and conservation of natural resources and energy efficient initiatives under Sustainability initiatives. Your Company would also undertake other need based initiatives in compliance with Schedule VII to the Companies Act, 2013. All social interventions are identified keeping in mind the needs and requirements of the community beneficiaries for whom these interventions are intended to be implemented.

106. Your Company''s Policy on Corporate Social Responsibility can be accessed on its website link at http://grse.in/pdf/investors/GRSE%20Policy%20on%20Corporate%20Social%20Responsibility%20and %20Sustainability.pdf. The Annual Report on your Company''s CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Appendix - C to this Report.

OFFICIAL LANGUAGE

Official Language Implementation Committee

107. Official Language implementation has improved considerably during the period under review. Quarterly meetings of Official Language Implementation Committee were held under the chairmanship of Chairman & Managing Director, to review the progress made by various Units and Departments,

Rajbhasha Awards

108. (a) In recognision of the excellence in Implementation of Official Language in the Company, your Company bagged two prestigious awards detailed below:

(i) 2nd Prize in the National Award ''Rajbhasha Kirti Puraskar'' for the year 2016-17 from the Honorable President of India, which is being awarded to the Company for the fifth time in a row.

(ii) Rajbhasha Shield for the year 2016-17 by Town Official Language Implementation Committee which was presented by the Honorable Governor of West Bengal,

(b) Company''s Hindi Magazine “Rajbhasha Jagriti was conferred with the 1st prize by Town Official Language Implementation Committee presented by Honorable Governor of West Bengal.

(c) DGM (OL), GRSE, received appreciation letters by Honorable Governor of West Bengal for her contributions in editing the Rajbhasha Jagriti Magazine and for Excellence in Implementation of Official Language in the Company.

Efforts to Promote Use of Official Language

109. In order to promote use of Official Language in the Company, the following activities had been undertaken:

(a) Celebration of Hindi Day / Month

(b) Publication of 15th edition of Hindi Magazine, RajbhashaJagriti1;

(c) Hindi Computer Workshops

(d) In-House Hindi Training

(e) Implementation of various incentive schemes

(f) Books for Hindi Library

(g) Hindi competition in schools

(h) Annual Meet of Nodal Officers

(i) Induction Programme for newly joined employees.

Preparation of your Company''s Shipyard Glossary

110. Five Day Meeting was organised with the help of Commission for Scientific and Technical Terminology for preparation of Shipyard Glossary in your Company. On completion, the same will be used on Defence Shipbuilding.

Inspection by First Sub-Committee of Committee of Parliament on Official Language

111. Inspection regarding Implementation of Official Langage in your Company was held on 27 Oct 2017 by First Sub-Committee of Committee of Parliament on Official Language. The Committee appreciated the progress made by your Company to implement Official Language. However, they have also suggested few things for further improvement.

PUBLICITY* PUBLIC RELATIONS

112. As a measure towards Brand Building, Publicity and Public Relations, your Company has participated & organised the following major events:

(a) Participated in the LAAD - 2017 (Latin American Aerospace & Defence Industry Exhibition) held at Rio, Brazil from 04-07 Apr 2017.

(b) Participated in the IMDEX - 2017 (International Maritime Defence Industry Exhibition) held at Changi Exhibition Centre, Singapore from 16 -18 May 2017.

(c) Participated in the DSEl - 2017 (Defence & Security Equipment International Exhibition) held at London, United Kingdom from 12 -15 Sep 2017.

(d) Participated in the 3 days'' CSR Fair organised by Department of Public Enterprises at Pragati Maidan, New Delhi from 04-06 May 2017.

(e) Participated in ‘The Indian National Exhibition-Cum-Fair 2017'' on the theme ’Science & Technology for National Development & Make in India'' organised by Bengal Human Resource Development Foundation at Kolkata from 17 - 20 Aug 2017.

(f) Participated in the ''21'' National Defence Exhibition'' on the theme India progressing towards a great Nation1 organised by Central Calcutta Science & Culture Organisation for Youth at Kolkata from 24- 27 Aug 2017.

(g) Participated in the ''Biz Bridge - 2017'' Exhibition and Conference on ''B2B session1 organised by Cl I, Kolkata from 15-18 Nov 2017.

(h) Participated in the ''National Level Vendor Development Programme cum Industrial Exhibition'' organised by MSME Development Institute, Kolkata under Ministry of MSME, Gol at MSME - Dl Campus, Kolkata from 22 - 24 Nov 2017, The theme of the exhibition was Marketing Support to the MSEs of the country”

(i) Organised the State Level Vendor Development Program for MSEs Entrepreneurs of SC/ST Category on 28 Nov 2017. Representatives of thirty (30) business houses attended the event and evinced keen interest in pursuing business opportunities in your Company.

(j) Participated in the ''13:’ Jatiya Sanhati Utsab - O - Bharat Mela - 2017'' Exhibition held at Kolkata from 14-18 Dec 2017.

(k) Participated at ''Vendor Development Meet1 at Kalaivanar Arangam, Chennai Tamil Nadu from 18 - 19 Jan 2018. This exhibition was jointly organised by Ministry of Defence (Defence Production) DPSUs and OFB,

(I) Participated in the ''Defence Indigenisation Expo'' jointly organised by Coimbatore District Small Industries Association (COD1SSIA) and Ministry of Defence (MoD) at Coimbatore, Tamil Nadu from 05-06 Mar2018.

IMPLEMENTATION OF RTI ACT

113. Implementation of RTI matters is being complied in line with the Right to Information Act, 2005. During the year 2017-18, a total of 63 RTI requests were received, while the opening balance from previous year was 8 RTE Applications. A total of 68 RTI applications were replied to during the year, and remaining 3 RTI Applications were taken as carry forward for the year 2018-19. In case of RT! appeals, 13 appeals were received during 2017-18 and 4 appeal was as opening balance from previous year. A total of 13 RTI appeals were decided and replied to, while 4 RTI appeals were carried forward for the year 2018-19. The Quarterly Returns have been uploaded on the CIC''s website with in due date by the CPlO and Assistant CPIO, Also, the quarterly returns in the DOPT website are being uploaded as per schedule.

PUBLIC GRIEVANCES

114. Prompt acknowledgement is issued upon receipt of Public Grievances and the matter is resolved by thorough examination of facts of the case with due diligence. During the year under review, a total of 16 Public Grievances were received and 17 were resolved, {1 public grievance was carried forward from previous year 2016-17). As all the pending grievances were resolved during 2017-18, there was no grievance to be carried forward for the year 2018-19 for its resolution, Details of the Grievance Committee have been uploaded on the Company''s website with the provision of a link to the PG Portal to enable the citizen to file grievances online.

VIGILANCE ACTIVITIES

115. The main thrust of the Vigilance Department is to ensure transparency, fairness & probity in all spheres of activities of the Company. Towards this end, focus of the department was on both, predictive & preventive vigilance during the year. Many spheres of activities were taken up and various processes were carefully observed, analysed and scrutinised to ensure that the systems of checks & balances are working as per the required parameters and there are no leakages and loopholes in the system. In many cases, the officers were counselled and advised to improve their behaviour and manner of carrying out various official activities instead of going for harsher punitive measures. Apart from the above, the following activities were also carried out by the Vigilance Department during the year:

(a) Investigations were conducted regarding complaints received from various sources and appropriate actions were taken.

(b) As a preventive measure, regular & surprise inspections and verification of files were carried out. Annual Property Returns filed by the officers were scrutinized. Vigilance status of officers was assessed at various stages. Identified Sensitive Posts in the Company & action initiated is In a phase manner for rotation of officers. The implementation of actionable points is being monitored through quarterly reports and submitted to MoD informing the status of action taken.

(c) Structured meetings with C&MD were held at regular interval to appraise the status of vigilance cases.

(d) Agreed List was also drawn up with the CBI and close liaison was maintained withtheCBI,

(e) Suggestions for system improvements have been made to the management and the same are being followed up to ensure that they are implemented,

(f) Induction Training Programme was carried out for newly joined officers in line with Vigilance Manual,

(g) Company observed Vigilance Awareness Week during 30 Oct - 04 Nov 2017. Sri A. K. Bhatacharya, IAS (Retd.) / Ex- Independent Director and Sri S. K. Sadangi (IRRS), CVO, Kolkata Port Trust., presented their valuable comments in the seminar organised on 31 Oct and 02 Nov 2017, respectively.

(h) GRSE observed Vigilance Awareness Week during 30 Oct to 04 Nov 2017 in relevance to the theme both within the organization and outreach activities for citizens / public. The activities within the organization include display of Banners and Display of Anti-Corruption themes in various Units and departments, taking of Integrity Pledge by employees, distribution of pamphlets on preventive vigilance activities, conducting workshops and sensitizing programmes for employees and other stake holders on policies / procedures of the organization and preventive vigilance measures. Outreach activities for public / citizen include display of banners at prominent places. E-integrity pledge was administered with a view to participating in fight against corruption. Competitions were held among the employees and School & College students to spread the message on corruption & its ill effects. Bulk e-mail was sent to vendors with the message to participate in the fight against corruption by taking e-Pledge inCVC website.

(j) Took active part in the Vigilance Study Circle, Kolkata Chapter.

(j) Vigilance Manual 2''! edition has been prepared & published, Vigilance Manual 2018 (as observed during Inter organization MOD Audit) was approved by CMD and circulated among employees.

(k) Inter Organization Auditing was taken up as per MOD guidelines.

116. The overall objective of vigilance activities has been to encourage transparency in the organization. The other activities of Vigilance Department are to ensure the existence of a corruption-free environment and also to ascertain that the various guidelines of the CVC, MOD and DPE etc. are complied with, The role of the CVO is to guide the management to achieve the various objectives laid down in the above mentioned lines.

PRESIDENTIAL DIRECTIVE

117. A Presidential Directive has been received from the Department of Defence Production, Ministry of Defence, Government of India, vide Order No. 11(110)/2017/GRSE/D(NS) dated 09 Jan 2018 under the provisions contained under Article No. 318 of the Articles of Association of the Company for implementation of pay scales, fitment formula, DA Guidelines, ceilings on perquisites etc, for Board Level and below Board Level executives and non-unionised supervisors in accordance with DPE circulars dated 03 Aug 2017 and 07 Aug 2017, The revised pay scales for executives and non-unionised supervisors have been implemented.

GENERAL

118. Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

(a) Detailed reasons for any voluntary revision of financial statement or Board''s Report in the relevant financial year in which the revision is made.

(b) Details relating to deposits covered under Chapter V of the Companies Act. 2013.

(c) Issue of equity shares with differential rights as to dividend, voting or otherwise.

(d) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and future operations of your Company.

DISCLOSURE UNDERTHESEXUALHARASSMENTOF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013

119. In pursuance of Section 4 of ’The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013'', the Internal Complaints Committee operating in the Company has been reconstituted on 18 Aug 17 with an external independent member who is a person familiar with the issues relating to sexual harassment,

120. In accordance with section 21 of ''The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013’ and rules framed thereunder, the following details are submitted for the calendar year 2017:

(a) Number of complaints received during the year: Two (02)

(b) Number of complaints disposed-off during the year: Two (02)

(c) Number of complaints pending for more than ninety days: Nil

(d) Number of workshops or awareness programme against sexual harassment carried out: Two (02)

(e) Nature of action taken by the employer: One complaint was disposed-off through conciliation. Enquiry was held for the other complaint and based on the enquiry report submitted by the Internal Committee, punishment was awarded in accordance with the applicable service rules.

ACKNOWLEDGEMENTS

121, Your Directors express their deep appreciation and place on record their gratitude to the Department of Defence Production and other Departments in the Ministry of Defence for their continued support, assistance and guidance. The Directors also express their sincere thanks to the Ministry of Surface Transport, Govt, of India as also to the Governments of West Bengal, Jharkhand and various other States, for their continued cooperation and valuable support, Your Directors are particularly grateful to the Indian Navy and Coast Guard Headquarters, Ministry of Home Affairs, Ordnance Factory Board, Kolkata Port Trust, Public Works Departments of various State Governments, Police Department of West Bengal & Kolkata and other valued customers as well as business associates for the confidence reposed by them in your Company. We will fail in our duty if we do not acknowledge the cooperation and positive approach of the Warships Production Superintendent and his dedicated team under whose watchful eyes our ships are being built Also, we thank all classification societies, in particular, IRS & ABS, who have ensured quality and adherence to the required standards.

122. The Directors acknowledge with thanks the valuable advice rendered by, and co-operation received from the Comptroller and Auditor General of India, the Principal Director of Commercial Audit, Ex-offico Member of the Audit Board, Bengaluru, Principal Controller of Defence Accounts (Navy), Mumbai, Controller of Defence Accounts (Navy), Kolkata, Registrar of Companies, Company Law Board and the Department of Public Enterprises.

123. The Directors wish to place on record their appreciation to its Statutory, Cost, Secretarial and Internal Auditors, Company Bankers, Trade Unions and all Officers and Employees at various levels of the organisation for their hard work, dedication and commitment, The enthusiasm and unstinted efforts of the employees have enabled your Company to remain at the forefront of the industry despite increased competition from several existing and new players,

For and on behalf of the

Board of Directors

(V K Saxena)

Kolkata, Rear Admiral, IN (Retd.)

Dated: 22nd June, 2018 Chairman & Managing Director

Director’s Report