1. Shares reserved for issue under option and contracts /Commitments

Share Warrants :

The company has allotted 26,47,313 Convertible Warrant on 4th January, 2016 by way of a preferential allotment to the Edelweiss Finance & Investments Ltd carrying the right to subscribe to one Equity shares of Rs. 10/- each at a price of Rs. 22/- including premium of Rs. 12/- Per equity shares in terms of board resolution dated 7th January, 2016. Edelweiss Finance & Investments Ltd is having the option to exercise the right for conversion of these warrants not later than 18 months from the date of allotment.

2. During the period of five years immediately preceding the date as at the balance sheet date, there are no shares issued without payment being received in cash, issued as bonus shares and shares bought back by the Company.

3. Term Loan from Bank (Other than DBS term Loan) and Term Loan taken over by EARC ;

The Company has taken loans from the Consortium Banks with State Bank of India (SBI) as lead bankers. These loans were restructured under the Corporate Debt Restructuring Scheme (CDR Scheme) approved on 25th June 2012. As part of CDR Scheme, the Company had allotted 26,926,175 Compulsory Convertible Debentures (CCD) carrying coupon rate of 1% p.a to the 18 secured lenders. The company, during the tenure of CDR scheme has not adhered to the repayment and other terms of CDR scheme and accordingly the CDR scheme was revoked by the Lenders as on 21th August, 2014. The company is in continuous default in repayment of its Banks loans, CCD, debentures , interest and other dues thereon from date of revocation of CDR scheme till the balance sheet date.

Upon revocation of CDR Scheme, out of 23 bank Lenders, 18 bank Lenders have assigned their outstanding loans including interest and other dues along with respective rights and securities to Edelweiss Assets Reconstruction Company Limited (EARC). Further 2 lenders have sent recall notice for recovery of outstanding dues from the Company and balance 3 lenders have classified the said outstanding loans including interest and other dues as Non Performing Assets (NPA). Considering the continuing default in repayment of these loans and revokation of CDR Scheme by the Lenders, all the outstanding loans have become payable on demand and accordingly have been classified as "Current Maturities of long term loan” under the head "Current Liabilities".

Upon referral to CDR Scheme, the Company has executed the Indenture of Mortgage deed dated 28th June, 2013 for mortgage of securities in favour of "SBICAP Trustee Company Limited' in its capacity as "Security Trustee" for the benefit of all secured parties of the Scheme. Details of securities offered to security trustee for outstanding loan, CCD including interest and other dues are as follows:

4. Residential flats of Managing Directors ;

5. All the Shares of the Company held by the Promoters of the Company ;

6. 24% of unencumbered shares of GOL Offshore Limited held by the promoter / Group Company ;

7. Shares and Corporate Guarantees of Subsidiary Companies : Dhanashree Properties Pvt Ltd, Natural Power Ventures Pvt Ltd and Nirupam Energy Projects Pvt Ltd ;

8. Shares of Bharati Infratech Pvt Ltd, Bharati Maritime Services Pvt Ltd and Harsha Infrastructure Pvt Ltd held in Bharati Shipyard Ltd ;

9. Personal Guarantees of the Promoters and ;

10. Corporate Guarantees of Pinky Shipyard Pvt Ltd, Bharati Infratech Pvt Ltd, Bharati Maritime Services Pvt Ltd, Harsha Infrastructure Pvt Ltd and Bharati Shipping & Dredging Co. Pvt Ltd.

11. Unsecured Loan and advances from Related Parties are repayable over the period of 2 to 3 years.

12. Disclosure of default in repayment of Bank Loans, Financial Institution, Debentures , interest and other dues:

13. The company is in continuous default in repayment of its Bank loans, CCD , interest and other dues thereon from date of revocation of CDR scheme till the balance sheet date. Upon revocation of CDR scheme, in absence of requisite information from EARC and other banks covered under CDR scheme with respect to terms of repayment, the specific information in respect of period of delays of default in repayment of Loan and interest cannot be ascertained and hence said information is not given.

Out of the total subscription amount received against allotment of share warrants, 67,64,576 and 1,18,46,602 convertible warrants were converted into equity shares of Rs. 10/- each at a price of Rs. 79.12/- per share including premium of Rs. 69.12/- per share on 31st December, 2012 and 25th September, 2013 respectively and Rs 4,194.31 Lakhs remains un appropriated in Share Application Money pending allotment as on the last appointed date for exercise of the option.

Post expiry of last appointed date for exercise of option and revocation of CDR scheme, the Company is in process of obtaining expert opinion for legal position and accounting treatment in this matter with respect to un appropriated amount lying with the company upon expiry of time limit to exercise option by the promoters. Pending legal opinion, the Company has disclosed the said amount received from the Promoter Companies of Rs 4,194.31 Lakhs (Previous year Rs 4,194.31 Lakhs) under current liabilities in the financial statement under the account head “ Money Received against share warrants" for the year ended 31st March 2016. Further to that, the Company is also evaluating option of allotment of shares to Promoter Companies against such un appropriated amount of share warrant application money and is in the process of obtaining requisite permission from appropriate authorities.

14. As per the approval of the shareholders by postal ballot vide resolution no 6 dated 18th September, 2012, the Company had allotted on preferential basis 26,926,175 Compulsory Convertible Debentures (CCD) to the signatories of CDR. The above Compulsory convertible debentures are convertible into one equity share of Rs. 10/- each on preferential basis pursuant to Section 81(1A) of the Companies Act, 1956, at a conversion price of Rs. 79.12/- including premium of Rs. 69.12/- per equity share of the company, the pricing of which is arrived in accordance with the SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations.

Post expiry of 18 months from the date of allotment of CCD and revocation of CDR Scheme, the Company has not converted CCD into Equity shares till date. As on the Balance Sheet date, the Company has disclosed CCD of Rs 21,302.84 Lakhs (Previous year Rs 21,302.84 Lakhs) under current liabilities in the financial statement under the account head “ Current Maturities of Long Term Debts" for the year ended 31st March 2016.

15. Deferred Tax Assets created during current financial year:

The company has recognized deferred tax asset (net) of Rs. 1,01,135.63 Lakhs ( P.Y. Rs 29,998.14 Lakhs) on carried forward accumulated losses (including unabsorbed depreciation), interest expenses (including Funded Interest Term Loan (FITL)), Disallowances of Expenses and Retirement Benefits. The Company is confident of financial restructuring and reviving the operations to achieve optimum utilization of its infrastructure. Accordingly, keeping in view the ongoing developments, there would be sufficient future taxable profits against which the accumulated losses would be set off and hence Deferred tax asset (net) has been created by the Company.

16. Subsidy Receivable from Government of India under Shipbuilding Subsidy scheme:

The Government of India had announced Shipbuilding Subsidy Scheme for private and public shipyards in India in 2002 for all eligible shipbuilding orders entered into between Nov-2002 till Aug-2007. The Subsidy was provided at the rate of 30% of the contract value subject to fulfillment of various conditions. In case of private shipyards, disbursement of the subsidy amount was provided post delivery of the vessel and subject to fulfillment of other conditions of the scheme. According to the subsidy scheme and based on accounting principles, the company has credited subsidy on vessels under construction in respect of which substantial work has been carried out on the vessel. The Company had recognized for subsidy of Rs. 66,059.92 Lakhs under Ship Building Subsidy Scheme in earlier years and has already received Rs. 1,267.15 Lakhs from Government of India upto 1st April 2015 and the balance subsidy receivable from Government of India Rs. 64,792.77 Lakhs as on 1st April 2015. The Company has been complying with the terms of the said scheme and has already received part of the Subsidy on vessels delivered by the Company. Further, in respect of vessels delivered, the Government of India has retained a part of the subsidy amount to be released at a future date subject to certain compliances. The company is of the opinion that on completion of the various vessels under construction, the Government of India will release the subsidy amount as well as the retention amounts upon completion of compliances.

Recently Government of India has announced the revised Financial Assistance Policy for Indian Shipbuilders and as per the policy, financial assistance in the form of subsidy is revised to 20% of lower of “Contract Price" or “Fair Price" for each vessel built by the shipyards. Company has recomputed its claim for subsidy receivable based on revised ship building policy for Indian ship builders and has written off subsidy receivable amounting to Rs. 22,554.66 Lakhs. The said write off in subsidy receivable of Rs. 22,554.66 Lakhs is disclosed under the head "Exceptional Item" in financial statements for the year ended 31st March, 2016 and balance outstanding subsidy receivable from Government of India amounting to Rs. 42,238.11 Lakhs is disclosed under Trade receivable in financial Statement as at 31st March, 2016.

Further, as detailed in note no. 33 of the statement, the Company is confident of financial restructuring and reviving the operations and completing the vessels under construction in respect of which the aforementioned Subsidy is receivable and according the management is of the opinion that Subsidy amount is fully recoverable.

17. Explanatory note on Financial Restructuring:

The Company has incurred Net Loss of Rs. 1,89,799.01 Lakhs after considering exceptional items of Rs. 2,12,145.75 Lakhs during the year ended 31st March, 2016. As of this date, the Company's total liabilities exceed its total assets by Rs. 2,96,677.35 Lakhs and its net-worth has been fully eroded. As on 31st March, 2016, 22 winding up petitions are filed by various creditors against the Company including LIC of India, one of the secured creditors out of which settlements terms are signed by the Company for 7 creditors. Further the Company has made reference to BIFR for restructuring of the Company and the same has been registered with BIFR. The reference registered with BIFR was last heard on 6th May, 2016.

The Company is also implementing various long-term measures to improve its cash flow and revival of the operations and simultaneously exploring multiple options for funding of its partly completed projects. During the year, ECL finance Limited has released financial assistance to the Company to complete its one of the nearing completion project as well as for other operational need. Company with the help of Lead lender EARC is in process of drafting long term restructuring package to be submitted with BIFR to revive the business, keeping interest of all stakeholders of the Company and viability of the project. This restructuring package will help the Company to bring current debt at sustainable level so that the Company will be able to service its secured and unsecured creditors. EARC is also proposing to come up with various stage wise restructuring plans for debts to curtail the financial burden of the business cash flows in addition to business operation and management strategy. Upon revival, the Company will be able to make optimum utilization of its green field facilities, renegotiate its contracts and complete the under construction vessels to generate future cash flows. The Company believes that these measures will not only generate cash flows for revival but will also result in future orders and consequently sustainable cash flows.

Further, during the year, the Government of India has also announced various measures to promote ship building in India including Financial Assistance for next 10 years, 100% FDI in Shipbuilding, infrastructure Status, etc. and also directed the Defence Public Sector Unit (DPSU) engaged in Ship building exclusively for Indian Navy, to outsource activities to private shipyards. The Government of India also announced Indian Naval Indigenization Plan (INIP) which aims at indigenizing many of the components that are currently imported. This will give a huge opportunity to Indian Shipyards to collaborate with partners abroad for manufacturing these components in India for the Defence requirement. With these measures, the shipbuilding activity in India is likely to grow manifold in the near future.

In view of the foregoing, the Company's financial statements have been prepared on a going concern basis whereby the realization of assets and discharge of liabilities are expected to occur in the normal course of business.

18. The Company had given loans and advances of Rs. 91,048.18 Lakhs to its subsidiaries for investment in GOL Offshore Ltd (GOL). The net receivable from GOL on account of trade and other receivables is Rs. 3,523.41 Lakhs. GOL has been incurring cash losses and its cash flows are under stress. Further there are continuing defaults in repayment of loans including invocation of some of the corporate guarantees and in some cases recovery proceedings have been initiated. GOL is making all efforts for early settlement of dues by taking various corrective initiatives and continuous negotiation with bankers for restructuring of its debts in next couple of years. Being investment in GOL is strategic and long term in nature and loans and advances given and trade and other receivables are fully recoverable and hence no provisioning for the same is considered necessary.

19 The Company had given loans and advances of Rs. 8,497.86 Lakhs to its subsidiary for investment in Tebma Shipyard Limited(TSL). The net receivable from TSL on account trade and other receivables is Rs. 86.22 Lakhs. TSL has been incurring cash losses and its net worth is fully eroded and its cash flows are under stress. TSL is also undergoing Corporate Debt Restructuring. Knowing the above scenario and based on the valuation report of TSL by Independent Valuer with respect to its Business Valuation, Company has made provision for non recoverability of loans and advances from its subsidiary and non recoverability of trade and other receivables from TSL of Rs. 3,498.23 Lakhs and Rs. 86.22 Lakhs respectively and the same is disclosed under the head "Exceptional Item” in financial statements for the year ended 31st March, 2016.

20. The Company had made investments of Rs. 22.50 Lakhs and given loans and advances aggregating to Rs. 3,162.36 Lakhs in/to Bengal Shipyard Limited (Bengal). Bengal is yet to start its business operations and is in process of acquisition of lands and construction of assets. Bengal has been incurring cash losses and its net worth is getting eroded and its cash flows are under stress. Considering the present operational status of Bengal and huge delay, additional cost and uncertainty involved in commencement of business operations, Company neither foresee any benefit accruing nor repayment of advances by Bengal in near future. Accordingly Company has made provision for diminution in value of investment of Rs 22.50 Lakhs and Provision for non recoverability of advances of Rs. 3,162.36 Lakhs from Bengal and the same is disclosed under the head "Exceptional Item" in financial statements for the year ended 31st March, 2016.

21. Non - Availability of balance confirmation from banks and EARC and provision for interest and other dues:

The Company has requested all lenders/banks/ Edelweiss Asset Reconstruction Company (EARC) for the balance confirmations. However, due to non service of interest, installments and other dues, some of the lenders/banks have not provided balance confirmations as on 31st March, 2016 and the accounts are finalized based on latest available bank/loan statements. Interest and other dues have not been provided on outstanding secured loans and other debt facility if any (funded as well as non funded) assigned to EARC in absence of information in respect of interest and other charges in assignment agreements of EARC with Banks. Similarly company has not provided for interest and other dues on secured loans for which company has received any recall notice, in respect of which interest has not been charged in the statement by banks and NPA accounts for which it has not received any statement from banks or in respect of which interest has not been charged in the statement by banks. In respect of other bank loans, interest and other dues have been accounted for as per statements received from lenders.

22. Non - Availability of certain Margin Deposit confirmation:

The company is in the co ordination with banks for obtaining confirmation/ account statements as at year end with respect to Margin deposits with banks. However, due to non service of interest and installment due, some of the banks have not provided balance confirmations as on 31st March 2016. Being, carrying amount of the margin deposit is fully recoverable and the difference, if any, upon reconciliation with bank confirmations would not have any material impact on financial statements. Further, due to unavailability of the confirmations, the Company has accounted for the interest income on the Margin Money Deposits with Banks based on external evidences to the extent available.

23. Internal control System:

The Company is in the process of strengthening its policies, procedure and controls in order to facilate timely recording of the expenses and provide proper evidences regarding accounting for direct and indirect taxes including other statutory compliances. Delay if any, in accounting for the expenses or other transactions or statutory compliances does not have any material impact on the financial statement for the year ended 31st March, 2016.

24. Reconciliation of accounts:

Company is in the process of reconciliation of accounts at reasonable intervals and obtaining balance confirmation as at year end with respect to its Trade Receivables, Loan and Advances, Trade Payables and Other Liabilities. The carrying amount of Trade receivables, Loans and Advances, Trade Payable and Other Liabilities are approximately of the value as stated, if realized/ paid in the ordinary course of business.

25. Ministry of corporate affairs vide notification dated 29th August, 2014 has amended schedule II to the Companies Act, 2013 requiring mandatory componentization of assets for financial statements in respect of financial year commencing on or after 1st April, 2015. The company is in process of technical evaluation of componentization of fixed assets and useful life thereof and identifying significant part of assets qualifying for component accounting.

26. Company has initiated the process of appointment of Internal Auditor as required under provisions of Section 138 of the Companies Act, 2013

27. Bank Guarantee Invocation by Customers on cancellation of vessels contracts:

The Company is constructing various vessels ordered from international as well as domestic customers including Government of India-Ministry of Defense. The company has issued refund bank guarantees to customers against various advance stage payments received by the Company. Several of these customers had cancelled the ship building contracts entered into with the Company and invoked the Bank Guarantees and Banks have made payment aggregating to Rs. 1,71,290.70 Lakhs on account of bank guarantee invoked by the customers, along with Interest of Rs. 40,457.62 Lakhs and foreign exchange variation of Rs. 32,977.47 Lakhs upto 31st March, 2016. Based on the prudent accounting norms, during the year ended 31st March, 2016, company had given effect for the above payments made by the Banks to the customers against invoked bank guarantees in books of accounts. Interest cost and exchange variation relating to invoked bank guarantees amounting to Rs. 40,457.62 Lakhs and Rs. 32,977.47 Lakhs respectively has been charged to profit and loss account and disclosed under the head "Exceptional Item” in financial statements for the year ended 31st March, 2016.

However, the Company continues to believe that the payments under the invoked bank guarantees made by the banks are without following due process of law and even in cases where in the legal proceedings were pending before various jurisdictional tribunals / courts. Accordingly, the Company will continue with a suit before the Hon'ble City Civil Court Mumbai against such banks, which is pending for disposal.

28. In absence of terms of assignment/ term sheet with respect to secured loans assigned to EARC by lenders, secured loans including bank guarantee & other debt facility if any (funded as well as non funded) assigned to EARC by lenders over a period of time, being payable on demand have been classified as current liabilities in Statement of Assets and Liabilities. All NPA Accounts, being payable on demand, have been classified as current liabilities in Statement of Assets and Liabilities. Compulsory Convertible Debentures issued as a part of CDR scheme is classified as Current liabilities in Statement of Assets and Liabilities upon subsequent revocation of CDR scheme by CDR EG vide its letter dated 21st August, 2014. Other loans have been classified as Current or Non Current in Statement of Assets and Liabilities, based on the classification criteria as prescribed in general instructions to schedule III of the Act.

29. The company has allotted 26,47,313 Convertible Warrant by way of a preferential allotment to the Edelweiss Finance & Investments Ltd carrying the right to subscribe to one Equity shares of Rs. 10/each at a price of Rs. 22/- including premium of Rs. 12/- Per equity shares in terms of board resolution dated 7th January, 2016, in-principle approvals received from Bombay Stock Exchange Ltd (BSE) and National Stock Exchange Ltd (NSE) on 21st December, 2015 and 24th December, 2015 respectively and on receipt of the requisite share warrant application money amounting to Rs 145.60 Lakhs on 4th January 2016. Edelweiss Finance & Investments Ltd is having the option to exercise the right for conversion of these warrants not later than 18 months from the date of allotment. The Company has disclosed the said amount of Rs 145.60 Lakhs under Shareholder's Funds in the financial statement under the account head “ Money Received against share warrants" for the year ended 31st March 2016. The proceeds from the issues of Share Warrant have been utilized for the general administrative expenses and repayment of past dues.

30. Writing off excess value of Work in Progress ("WIP) amounting to Rs 64,174.54 Lakhs ( P.Y. Rs 54,177.02 Lakhs), based on the valuation report of an Independent Chartered Engineers. The written off in value of WIP is on account of Price Variation, Provision for Liquidation damages and redoing/replacement cost and other factors.

31. Sale of Wind Turbines having total Capacity of 5MV (Windmill Business) as a part of restructuring process, resulting in net gain of Rs 481.54 Lakhs in F.Y. 2014-2015.

32. On reconciliation of balance of secured loans transferred by 18 lenders to Edelweiss Assets Reconstruction Company (EARC) with the balance appearing in books of accounts, the differential interest / other charges amount on such reconciliation is charged as expenses amounting to Rs 29,170.46 Lakhs (P.Y. Rs Nil).

33. Impairment of Capital work in progress (CWIP) amounting to Rs 6,397.39 Lakhs (P.Y. Rs Nil), based on the valuation report of Independent Chartered Engineers. The Impairment of CWIP is on account of restorative repairs, constraint in use of incomplete structure, replacement/ removal of Steel and other part of structures.

34. Retirement benefits:

The required disclosure under the Revised Accounting Standard 15 is given below:

During the year, Company has recognized the following amounts in the Financial statements :

35. Defined Contribution Plan:

The company has recognized the following amounts as an expense and included under the head "employee benefit expense "

36. Defined Benefit Plans: i) Gratuity (Funded):

The Employee's Gratuity Fund Scheme managed by SBI Life Insurance is a Defined Benefit plan. The present value of obligation is determined based on actuarial valuation using projected unit credit method.

37. Segment Reporting

The Company has disclosed business segment as the primary segment. The Company was collectively organized into following business segments namely:

38. Ship Manufacturing

39. Windmill Operation (up to 31st July, 2014)

Segments have been indentified and reported taking into account the nature of the product and services, the organizational structure and internal financial reporting system.

Segment revenue, results, Assets and Liabilities include the respective amounts identifiable to each of the segments and amount allocated on reasonable basis.

Since the business of Windmill operation is not significant, all asset, liabilities and expenses other than specifically related to Windmill Power, are allocated to Ship Manufacturing Business.

40. Related party disclosure

Related Party disclosure as required by Accounting Standard - 18 as notified under section 133 of Companies Act 2013 is as follows:

41. Earnings per share

Basic Earnings per share are calculated by dividing the Net Profit for the year attributable to Equity Shareholders by the weighted average number of Equity shares outstanding during the year.

For the purpose of calculating Diluted Earnings per share, the weighted average numbers of shares outstanding are adjusted for the effects of all dilutive potential equity shares from the exercise of options on un-issued share capital.

42. Disclosure as required by AS 27 " Financial Reporting of Interests in Joint Ventures"

The Company is holding 45.01% shareholding in Bengal Shipyard Limited (Bengal) as Joint Venture (JV) partner. The Company had also given loans and advances aggregating to Rs. 3,162.35 lakhs as on 31st March, 2016. Bengal is yet to start its business operations and is in process of acquisition of land and construction of assets. Till 31st March 2015 Bengal has already spent Rs. 5,785/- lakh as preoperative expenditure. To continue with this JV project, the Company is required to invest additional funds on continuous basis till the time project gets completed and start commercial activity. However, considering the progress of this JV project and the Company's current financial position, the Company cannot put additional funds in this project, which is not going to provide returns, in near future.

Considering the above referred matter and operational issues between JV partners, Financial Statements as on 31st March 2016 of Bengal are made not available to the Company and hence, the company is unable to provide the required disclosure as prescribed under AS 27 " Financial Reporting of Interest in Joint Venture" for the year ended 31st March, 2016.

The Company's interest in this Joint Venture is reported as Long Term Investment and stated at cost. The Company's share of each Asset, Liability, Income and Expenses, etc. related to its interest in this Joint Venture are based on unaudited standalone financial statement duly certified by management as of 31st March 2015 is as follows:

43. The figures for the previous year have been arranged/rearranged/regrouped wherever considered necessary, to conform to this year's classification.