(i) Current year deductions includes adjustment for scrapping of assets valued ' 80.22 Lakh (Deemed Cost ' 324.36 Lakh), retirement of assets valued ' 7.66 Lakh (Deemed cost ' 86.76 Lakh). Further it also includes assets valued ' 7.58 Lakh (Deemed Cost ' 28.95 Lakh) retired and sold during the year 2022-23. Scrapping of assets and retirement of assets in FY 2021-22 were ' 27.91 Lakh (Deemed Cost ' 66.08 Lakh) and ' 7.00 Lakh (Deemed Cost ' 35.05 Lakh) respectively.Further, previous year deductions includes assets valued ' 53.68 Lakh (Deemed Cost ' 146.53 Lakh) retired and sold during the year 2021-22.
(ii) Jointly funded assets - Plant & Machinery as at 31 March 2023 of ' 649.76 Lakh (' 875.95 Lakh as at 31 March, 2022) also includes Electrical installation of New Dry Dock valued ' 70.01 Lakh (31 March, 2022: ' 199.03 Lakh).
(iii) Property, plant and equipment as at 31 March 2023 include Modern Hull Shop, a New Dry Dock, Inclined Berth, Paint cell and other miscellaneous facilities which have
been created under modernisation of infrastructure development. These assets have been jointly funded by the Indian Navy to the tune of ' 32,325.77 Lakh (original
cost).
(iv) Assets as at 31 March, 2023 exclusively funded by Navy (original Cost) not included in Property, plant and equipment is ' 801.23 Lakh. (31 March, 2022: ' 801.23 Lakh).
(v) Land of 61, Garden Reach Road,Kolkata is owned by Government of India, Ministry of Defence.
(vi) Building as at 31 March 2023 includes ' 95.96 Lakh (original cost) (31 March, 2022: ' 95.96 Lakh) being one third share of the Company in Delhi Shipyard House. The
building is jointly held by Garden Reach Shipbuilders and Engineers Limited, Mazagon Dock Shipyard Limited and Goa Shipyard Limited.
Terms and rights attached to equity shares
Equity shares have a par value of ' 10/- (31 March, 2022: ' 10/-). They entitle the holder to participate in dividends, and to share in the proceeds of winding up of the Company in proportion to the number of and amounts paid on the shares held.
Every holder of equity shares present at a meeting in person or by proxy, is entitled to one vote, and upon a poll each share is entitled to one vote.
Nature and purpose of other reserves:
Note:
(i) Pursuant to Section 69 of The Companies Act, 2013 the Company has transferred a sum equal to the nominal value of the shares so purchased to the capital redemption reserve account out of free reserves of the Company.
The capital redemption reserve is not in nature of free reserve.
(ii) General reserve is primarily created to comply with the requirements of section 123(1) of the Companies Act, 2013. This is a free reserve and can be utilised for any general purpose like issue of bonus shares, payment of dividend, buy back of shares etc.
Guarantee repairs
Provision is made for estimated warranty claims in respect of ships and other products delivered which are still under warranty at the end of the reporting period. Management estimates the related provision for future warranty claims in respect of delivered ships based on the actuarial report which takes into consideration the historical warranty claim information as well as recent trends that might suggest that past cost information may differ from future claims. The assumptions made in the current period are consistent with those in the prior year. Factors that could impact the estimated claim information include the success of the Company's productivity and quality initiatives.
For provision with respect to other products management estimates the provision based on historical warranty claim information and any recent trends that may suggest future claims could differ from historical amounts.
Provision for Onerous Contract
Company has supplied one FPV ship (Yard 2118) in current financial year towards meeting the contractual obligation with Indian Coast guard in lieu of one ship delivered in the year 2020-21 to Government of Seychelles as per contract with GOS dated 03rd February 2021 by diverting one ship of the FPV Contract entered with Indian Coast Guard. Onerous loss against supply of the ship was booked in the year 2020-21 and the provision has been adjusted against revenue recognised over the period.
In view of delivery of yard 2118 in current financial year, balance unajusted provision of onerous loss of ' 783.32 Lakh (PY : ' 393.68 lakh) has been adjusted in current year.
Further, in current financial year in respect to two contracts for construction and supply of vessels to Guyana and Bangladesh total estimated completion cost is expected to exceed realizable value to the extent of ' 647.56 Lakh out of which ' 368.49 Lakh adjusted in current year against cost incurred till date and accordingly revenue recognised of the above contracts. Balance ' 279.07 Lakh has been shown under Miscellaneous expenses in Note 26.
Movement of onerous loss liability is reflected under "Movement of Provision".
Other Provisions
Other Provisions represent employee related provisions based on the management's assessment.
(a) Contingent Liability on account of Sales Tax amounts to ' 506.83 Lakh (31 March, 2022 ' 506.83 Lakh) towards assessment dues and demand for the year 2007-08. All these amounts have not been acknowledged as debts and accordingly not provided for in the Accounts as all the demands are under different stage of appeal.
(b) Contingent liability on account of income tax amounts to ' 1,633.19 Lakh (31 March, 2022 : ' 1,635.11 Lakh) towards, Arbitrary increase by the Income Tax Authority in taxable income based on Form 26AS for AY 2009-10 - ' 1,624.58 Lakh, and disallowance of 80G rebate -' 8.61 Lakh for AY 2017-18. Disallowance of provision for liquidated damages - ' 1.92 Lakh for AY 2014-15 has been disposed in favour of GRSE, hence the contingent liability of ' 1.92 Lakh is withdrawn. Above disputes have not been acknowledged as debt and accordingly not provided for in the Accounts as all the issues are under first stage of appeal.
(c) Dispute on account of GST amounts to ' 142.17 Lakh (31 March, 2022 NIL) towards demand for excess refund of ITC (Input Tax Credit) by the revenue authorities due to inverted duty structure, for the period Jun 20 to Sept 20 (FY 2020-21). This amount has not been acknowledged as debts and accordingly not provided for in the Accounts as the demand is under first stage of appeal before Addl Commissioner, LTU. Additionaly this will not have any impact on charge to the accounts, since ITC will be recredited if payment is required to be made.
(d) The amounts shown under Contingent Liabilities represent the best possible estimates arrived at on the basis of available information. The uncertainties and timing of the cash flows are dependent on the outcome of the different legal processes which have been invoked by the Company or the claimants as the case may be and therefore cannot be estimated accurately. The Company does not expect any reimbursement in respect of above Contingent Liabilities.
In the opinion of the Management, no provision is considered necessary for the disputes mentioned above on the grounds that there are fair chances of successful outcome of appeals made by Company.
(B) Contingent Assets
(i) AS per settlement agreement dated 23 November, 2022 between CIWTCL, Kolkata and GRSE, an amount of ' 165.64 Lakh have been received from CIWTCL. Out of this, ' 106.59 Lakh received towards reimbursement of recovery done by Central Excise Authority have been adjusted against other receivable and balance of ' 59.10 Lakh towards ground rent accounted as Other Income.
Note 32: Employee benefit obligations (i) Leave obligations
The leave obligations cover the Company's liability for sick and earned leave.
Based on past experience, the Company does not expect all employees to take the full amount of accrued leave or require payment within the next 12 months. Accordingly, leave obligation of Rs. 659.73 Lakh (31 March, 2022 Rs. 588.77 Lakh) is presented as current and remaining amount is presented as non current. The leave obligation is an unfunded plan, the Company makes contributions to scheme maintained by Life Insurance Corporation of India (LIC).
Based on actuarial valuation, a provision is recognised in full for the projected obligation over and above the funds held in scheme.
(ii) Post-employment obligations
(a) Gratuity
The Company provides for gratuity for employees in India as per the Payment of Gratuity Act, 1972. Employees who are in continuous service for a period of 5 years are eligible for gratuity. The amount of gratuity payable on retirement/ termination is the employees last drawn basic salary (including dearness allowance) per month computed proportionately for 15 days salary (reckoning 26 days for a month) multiplied for the number of years of service. The gratuity plan is a funded plan and the Company makes contributions to recognised funds in India.
Based on actuarial valuation, a provision is recognised in full for the projected obligation over and above the funds held in scheme.
(b) Post-retirement medical scheme
The Company operates post-retirement medical benefit scheme. The plan is an unfunded plan. Based on actuarial valuation, a provision is recognised in full for the projected obligation.
Apart from above, post retirement medical benefits to the superannuated employees are defined contribution schemes and premium of ' 1,131.09 Lakh (31 March, 2022: ' 720.31 Lakh) paid to Insurance Company. There are no other obligations to employees other than the contribution payable to the Insurance Company.
(c) Provident fund
The exempt provident fund set up by the Company is a defined benefit plan under IND AS 19 Employee benefits.
Provident Fund for eligible employees is managed by the Company through a trust in line with the Provident Fund and Miscellaneous Provision Act,1952. The plan guarantees interest at the rate notified by the Provident Fund Authorities. The contribution by the employees and employer @12% of basic salary (including Dearness Allowance) together with the interest accumulated thereon are payable to employees at the time of separation from the Company or retirement whichever is earlier. The benefits vests immediately on rendering of the services by the employee. The contribution is charged to Statement of Profit and Loss of the year when the contributions to the respective funds are due in accordance with relevant statute .
Employer's contribution to Provident Fund & Family Pension fund is ' 1,838.00 Lakh for the year 2022-23 (' 1,737.98 Lakh for the year 2021-22).
The minimum interest rate payable by the trust to the beneficiaries every year is notified by the Government. The Company has an obligation to make good the shortfall ,if any, between the return from the investments of the trust (including investment risk fall) and the notified interest rate.
The Company has obtained report on the determination and disclosure of interest rate Guarantee, valuation of Assets & Liabilities as per Ind AS 19 of Employees Benefits relating to Exempt Provident Fund of GRSE for the period ended 31st March 2023.
From FY 2020-21 the Company has changed its Accounting policy regarding classification of Provident Fund contribution from Defined Contribution plan to Defined benefit plan. This change in Accounting policy was applied and observed that the net assets available for the benefits are in excess in comparison to the present value of retirement benefits.
(iii) Defined Contribution Plan:
Superannuation Pension Fund:
The Pension Scheme is administered by a Trust. The Company has transferred an amount of ' 479.19 Lakh for officers and non-unionised supervisiors to LIC towards employer's contribution for the year 2022-23 (' 454.81 Lakh for the year 2021-22).
The pension scheme for unionised employees has been introduced w.e.f. 01 January 2012. An amount of ' 741.24 Lakh (incl. arrear) has been transferred to LIC for the year 2022-23 (' 371.47 Lakh for the year 2021-22 ) towards employer's contribution for operatives and office assistants.
(vii) The major categories of plan assets
The defined benefit plans (except Provident Fund) are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies. Thus, the composition of each major category of plan assets has not been disclosed.
(viii) Risk exposure
Through its defined benefit plans, the Company is exposed to a number of risks, the most significant of which are detailed below: Investment risk:
The defined benefit plans (except Provident Fund) are funded with insurance companies of India. The Company does not have any liberty to manage the funds provided to insurance companies.
The present value of the defined benefit plan liability is calculated using a discount rate determined by reference to the Government of India bonds. If the return on plan asset is below this rate, it will create a plan deficit.
Interest risk:
A decrease in the interest rate on plan assets will increase the plan liability.
Life expectancy:
The present value of the defined benefit plan liability is calculated by reference to the best estimate of the mortality of plan participants both during and at the end of the employment. An increase in the life expectancy of the plan participants will increase the plan liability.
Salary growth risk
The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan liability.
(ix) Defined benefit liability and employer contributions
Expected contributions to post-employment benefit plans for the year ending 31 March, 2024 are ' 1,800 Lakh.
The weighted average duration of the defined benefit obligation (gratuity) is 12 years (31 March, 2022 - 1 1 years) and Post-retirement medical benefits is 40 years (31 March, 2022 - 38 years). The expected maturity analysis of undiscounted gratuity and post-retirement medical benefits are as follows:
The carrying amounts of trade receivables, trade payables and cash and cash equivalents are considered to be the same as their fair values.
The fair values for financial instruments were calculated based on cash flows discounted using Marginal Cost of Funds based Lending Rate (MCLR) of State Bank of India on the reporting date for the same maturity. They are classified as level 3 fair values in the fair value hierarchy due to the inclusion of unobservable inputs including counterparty credit risk.
(A) Credit risk
Credit risk is the risk that counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables) including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments.
(i) Trade receivables and contract assets
Customer credit risk is managed by each business unit subject to the Company's established policy, procedures and control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally carrying no credit terms. Outstanding customer receivables are regularly monitored. Trade receivables are primarily from Navy (owned by Govt. of India), hence the credit risk is considered low. Further, the Company receives advance against orders which also mitigates the credit risk. For ageing of trade receivables please refer note 10(b).
(ii) Financial instruments and deposits
Credit risk from balances with banks and financial institutions is managed by the Company in accordance with the Company's policy. Investment of surplus funds are made in accordance with DPE Guidelines on investment of surplus funds of the Company. The limits are set to minimise the concentration of risks and to mitigate financial loss through counterparty's potential failure to make payments.
The Company's maximum exposure to credit risk for the components of the Balance Sheet at 31 March, 2023 and 31 March, 2022 is the carrying amounts as illustrated in Note 6 (b),Note 10 (a),Note 10 (c) and Note 10 (d).
(B) Liquidity risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the nature of the underlying business, the Company maintains sufficient cash and liquid investments available to meet its obligation.
The Company's liquidity management policy involves projecting cash flows and considering the level of liquid assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory requirements, if any.
Maturities of financial liabilities
The tables below analyse the Company's financial liabilities into relevant maturity groupings based on their contractual maturities for all financial liabilities.
The amounts disclosed in the table are the contractual undiscounted and re-scheduled cash flows. Balances due within 12 months equal their carrying balances as the impact of discounting is not significant.
(C) Market risk
Foreign currency risk
The risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates.
The Company is exposed to foreign currency risk since it imports components from foreign vendors. Also, the Company exports some of it's ships to foreign buyers and is exposed to foreign exchange risk arising from foreign currency transactions. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company's functional currency ('). The outflow on account of imports and payments in foreign currency is mostly reimbursable from the buyers. The risk in case of export is measured through a forecast of highly probable foreign currency cash flows.
An inter-governmental agreement between Russian Federation and Government of India was reached for restructuring of Russian deferred state credit in Ruble in connection with procurement.
As per the said agreement, the outstanding debt in Rouble as on 01.04.1992 was converted to Indian Rupees at the difference in Rupee-Ruble exchange rate between 01.04.1990 and 01.04.1992 and such amount of exchange rate difference was rescheduled by Government of India under a deferred Rupee payment arrangement payable over 45 years till 2037. These rescheduled payments are also reimbursable by Indian Navy. Such amount is accordingly held as Foreign Suppliers Deferred Credit as at 31 March, 2023 and aggregated to ' 945.73 Lakh (Undiscounted amount being ' 1,797.32 Lakh) [31 March, 2022: ' 942.88 Lakh (Undiscounted amount being ' 1,859.47 Lakh)].
Note 41:
(a) The Company follows a general practice of undertaking physical verification of all the fixed assets in a phased manner in a block of three years. In the current year, such physical verification has been done in the GRSE Main Works, Baranagar Unit, GRSE Bhavan. Discrepancies found have been appropriately dealt with in the Accounts.
(b) The 62 acres of land for setting up the Diesel Engine Plant at Ranchi was obtained free of cost from Heavy Engineering Corporation Ltd., Ranchi (HEC) in 1966 as a part of industrialization drive at the behest of MoD, Govt. of India and Govt. of Bihar. GRSE is in uninterrupted possession of the land since then and has created permanent structures thereon (title deed is with HEC, Ranchi). Various assets of the Diesel Engine Plant, Ranchi having book value of ' 1,055.57 Lakh (original value ' 3,207.53 Lakh) as on 31 March, 2023 have been installed / placed on the said premises. Ignoring the right of GRSE in the said land, the then Govt. of Bihar executed a Deed of Conveyance in favour of HEC in February, 1996. Later, HEC vide a letter of 07 August, 1999 raised a claim for a 30 year lease effective from 01.04.1996 of ' 1,488 Lakh as onetime premium and a sum of ' 148.8 Lakh p.a. being 10% of the said premium as annual lease rent which GRSE repudiated. During April, 2013, HEC unilaterally referred the disputes to PMA, DPE, Govt. of India for arbitration and subsequently inter alia prayed before PMA for directing GRSE to enter into lease agreement for totally baseless, frivolous and absurd lease rent and premium with interest for further period and to declare GRSE as "unauthorized occupant" etc. GRSE raised preliminary objection regarding maintainability and sustainability of the alleged reference of HEC and rejection of claim as the same are not sustainable on facts as well as in law. The matter was under adjudication before Smt. Zoya Hadke, Sole Arbitrator, PMA who after hearing both the parties at length, vide Order dated 30.6.2015 held that in absence of any agreement between the parties, the Arbitral Forum lacks jurisdiction to settle the dispute and rejected the reference of HEC. Accordingly, the arbitration matter stood disposed off. No appeal filed by HEC.
GRSE has also filed a Civil Suit (TS 117 of 2014) in March, 2014 before a competent Civil Court at Ranchi, HEC and the Govt. of Jharkhand being the defendants, with prayer for declaration by the Court that GRSE has acquired irrevocable licence coupled with interest in the subject land by setting up Diesel Engine Plant permanently thereon free of cost in accordance with the law of the land and for permanent injunction restraining HEC from interfering with the possession of land by GRSE and running industry thereon. Hearing of the case is in progress.
HEC has filed an Application under the Public Premises (Eviction of Unauthorised Occupants) Act, 1971 before the Estate Officer appointed under the said Act by HEC, for eviction of GRSE alleging as 'unauthorised occupant' from the said land occupied by DEP Unit of GRSE. [Case no. P.P. ACT/REV/201801 dated 28.4.2018]
GRSE has filed a Writ Petition [ being WP (C) No. 3359 of 2018] before the Hon'ble Jharkhand High Court praying for 'declaration' that summary proceeding before the Estate Officer under the Public Premises (Eviction of Unauthorised Occupants ) Act is not maintainable involving intricate and complicated questions of law pertaining to title, right, interest and possession to the land and moreover competent civil court at Ranchi is already adjudicating the matter on the self-same cause of action. The High Court on 14.8.2018 directed HEC to file Opposition and not to evict GRSE from the said land. Meanwhile, upon approach by HEC, process to find out various possibilities to arrive at amicable settlement has been initiated.
In view of the above an amount of ' 5,505.60 Lakh (Previous year ' 5,356.80 Lakh) without interest has been considered as contingent liability not acknowledged as debt.
Note 42:
Letters seeking confirmation of balances in the accounts as at 31 December, 2022 of sundry creditors were sent to vendors. On the basis of replies received from certain vendors, adjustments wherever necessary have been made in the Accounts.
Note 43:
(a) The Company has sent letters seeking confirmations of balances in respect of its Debtors Though no response has been received from the debtors, in the opinion of the Company, the balances have realisable values equal to the amount as stated in the books in the ordinary course of business, unless otherwise stated.
b) The amounts received from customers are mainly received in respect of ship division, customers being Indian Navy and Indian Coast Guards. In respect of other divisions, advance from customers are received mainly from Government Departments.
With introduction of Indian Accounting Standard (Ind AS 116) effective from 01.04.2019, the Company has adopted the same using retrospective transition method. During the current financial year, total addition of Right of Use (RoU) is ' 46.88 Lakh.
The actual lease rentals paid which were hitherto recognised as expense are now accounted as reduction in lease liability.
During the year, Rent and transport charges under other expenses, for the rent paid for lease hold land of ' 60.19 Lakh (FY 2021-22: ' 36.23 Lakh) and vehicle of ' 102.34 Lakh (FY 2021-22: ' 82.12 Lakh) has been adjusted with corresponding lease liability. Finance cost includes unwinding of Interest on lease rent paid of ' 88.80 Lakh (FY 2021-22: ' 62.62 Lakh) and depreciation & amortisation expenses include amortisation of RoU Assets of ' 109.37 Lakh (FY 2021-22: ' 184.45 Lakh).
Note 50:
The company has reviewed and redrafted its accounting policies in respect of Inventories, Revenue Recognition and Provision, Contingent Liabilities and Contingent Assets in the Financial year 2022-23 for further clarity on the above aspects and there is no financial impact for such redrafting.
Note 51:
No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries") with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in other persons or entities identified by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries
Note 52:
a) Liquidated Damages claim of Yard 3020 the last ship of Project P 28 which was accounted in previous year have been settled with amendment of contract, in line with recommendation of IHQ. Remaining withheld amount net of LD claim released on 30.9.22 by the customer.
b) For existing contracts liquidated damages treatment is done as per Ind AS 115 requirement and related Company Policy in this regard. Liquidated Damages is a variable consideration are accounted on the basis of contractual provisions/ management estimation and the net amount of consideration to which company will be entitled is recognised as Revenue.
Figures for the previous year have been regrouped/rearranged wherever necessary to correspond to those of the current year. Amounts and other disclosures for the preceding year are included as an integral part of the current year financial statement and are to be read in relation to the amounts and other disclosures relating to the current year.
Note 55:
The financial statements are authorised for issue by the Board of Directors on 24th May, 2023.
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