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Mazagon Dock Shipbuilders Ltd.

BSE: 543237 Sector: Others
NSE: MAZDOCK ISIN Code: INE249Z01012
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VOLUME 386168
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P/E 14.56
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Mazagon Dock Shipbuilders Ltd. (MAZDOCK) - Director Report

Company director report

Dear Members

Your Directors have the pleasure to present the 88th Annual Report together with theaudited financial statements of the Company for the year ended 31 Mar 2021 and reports ofthe Statutory Auditors' and the Auditor General of India thereon.

Important Events:

a) Keel laying of 3rd Ship under Project P-17A by VAdm. S R Sarma and Shri V L KanthaRao on 10 Sep 2020.

b) The Equity shares of MDL have been listed on Bombay Stock Exchange (BSE) andNational Stock Exchange (NSE) on 12 Oct 2020.

c) The Fifth Scorpene class Submarine ‘Vagir' of Project P-75 was launched by lateSmt. Vijaya Shripad Naik wife of Shri Shripad Yesso Naik Honorable Rajya Raksha Mantrion 12 Nov 2020.

d) Third Scorpene Submarine of Project P-75 ‘Karanj' was delivered to Indian Navyon 15 Feb 2021 and commissioned on 10 Mar 2021 by Ex Naval Chief Admiral V.S.ShekhawatPVSM AVSMVrC.

e) Basin Trials of the 1st Ship of P-15B Destroyer was completed on 17 Dec 2020 and seatrials commenced on 11 Mar 2021.

f) Sea Trials of Fourth Scorpene class Submarine under Project P-75 commenced on 04 Nov2020.

1. Financial Review

1.1 Financial Results and Performance Highlights:

Particulars 2020-21 2019-20
Revenue from operations 4047.82 4904.84
Profit before Tax
(Before Exceptional Items) 756.06 770.43
Profit for the year 479.57 408.48
Gross Block 1140.39 1101.17
Net Block 806.85 836.35
Working Capital 1301.47 1612.05
Net Worth 2919.06 2581.20
Finance Cost 8.36 9.26

During the year under review the Company achieved the Revenue from Operations of Rs.4047.82 crore as compared to the previous year Rs. 4904.84 crore. The Profit before taxand exceptional items is Rs. 756.06 crore for 2020-21as against Rs. 770.43 crore in theprevious year.

Income Distribution for the year 2020-21 as against previous year is summarised asunder:-

% %
INCOME DISTRIBUTION
2020-21 2019-20
Cost of materials consumed 52.93 51.23
Employee benefit expenses 14.04 14.21
Finance costs 0.18 0.17
Depreciation and amortization 1.28 1.25
expenses
Sub-Contracting charges 8.54 13.54
Power & Fuel 0.24 0.30
Expenses related to Projects 3.62 2.06
Other Expenses 2.46 2.52
Provisions 0.43 0.70
Exceptional Items 2.71 0.22
Tax Expense 3.23 6.36
Other Comprehensive Income -0.29 0.31
Total Comprehensive Income 10.61 7.12
Total 100 100

1.2 Consolidated Financial Statement:

The audited standalone and consolidated financial statements for financial year 2020-21duly approved by the Board shall be laid before the Annual General Meeting forapproval of the Members of the Company.

The consolidated financial statements of the Company and its associate Company GoaShipyard Ltd (GSL) prepared pursuant to provisions of section129(3) of the Companies Act2013 and applicable accounting standards together with the Auditors' Report forms part ofthis Report.

In accordance to Section 129(3)(1) of the Companies Act 2013 read with Rule 5 of theCompanies (Accounts) Rules 2014 a statement containing salient features of the financialstatement of the associate Company is attached to the financial statements in Form AOC-1(Appendix 1).

1.3 Capital Structure:

The Authorised Equity Share Capital of the Company as on 31 Mar 2021 stood at Rs.323.72 crore comprising of 323720000 (Thirty-two crore thirty seven lakh twenty thousand)Equity shares of Rs. 10 each.

The Paid-up Equity Share Capital as on 31 Mar 2021 is Rs.201.69 crore comprising of201690000 (Twenty crore sixteen lakh ninety thousand) shares of Rs. 10 each in view ofthe Buy-back of 22410000 Equity Share of Rs 10/- each during the previous year. Duringthe year under review there was no increase in the Authorised or Paid up Share Capital.

1.4 Disinvestment and Listing on Stock Exchanges:

Government of India disinvested its shareholding in Mazagon Dock Shipbuilders Ltd (MDL)by way of an Offer for Sale of Equity Shares by the President of India acting through theDepartment of Defence Production Ministry of Defence and Government of India (DIPAM)through an Initial Public Offer to the extent of_30599017 number of equity sharesrepresenting 15.17 % of its paid equity shares including 345517 equity shares reservedfor eligible employees.

30599017 Equity Shares of face value of Rs. 10/- each were available under theOffer at the higher end of the Price Band (i.e. Rs.145/- per Equity Share).

The Offer opened for subscription on Tuesday 29 Sep 2020 and closed on Thursday 01Oct 2020 at a price band of Rs. 135/- to Rs. 145/- the Offer was subscribed approx.154.180 times.

The Equity shares of MDL have been listed on Bombay Stock Exchange(BSE) and NationalStock Exchange (NSE) on 12 Oct 2020.

1.5 Dividend:

The Interim dividend of Rs. 5.41 per equity share (54.10%) amounting to Rs. 109.11crore was paid in the year 2020-21 in accordance with the provisions of the Income TaxAct 1961 as approved by the Board of Directors in their meeting held on 12 Feb 2021. TheBoard of Directors recommended a Final Dividend of Rs. 36.91 crore which is 18.30% of thepaid up share capital. The total Dividend declared for F.Y. 2020-21 is Rs.146.02 crorewhich is 72.40 % of the paid up share capital including the interim dividend amounting toRs. 109.11 crore.

1.6 Contribution to Central Exchequer:

Your Company's contribution during 2020- 21 to the Central Exchequer by way of incometax GST IGST on imports and custom duty was Rs. 722.69 crore.

1.7 Public Deposits:

The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of thebalance sheet.

1.8 Loans Guarantees or Investments:

Your Company has not given any loans guarantees or made any investments undersection186 of the Companies Act 2013.

2. Review of Operations:

Your Company recorded a Revenue of Rs. 4047.82 crore for 2020-21 as against Rs. 4904.84crore of the previous year.

At present MDL is handling two Shipbuilding projects for Indian Navy comprising offour ships of P15B & four ships of P17A each. Besides MDL is also handlingconstruction of six Scorpene class Submarines for the Indian Navy out of which threeSubmarines have already been delivered.

a) Project P15B:

P15B ships are potent combatants which are contemporary and state of the art platforms.First and Second ships of P15B series were launched on 20 Apr 2015 and 17 Sep 2016. Thirdship's keel was laid on 19 May 2017 and was launched on 20 April 2019. Production offourth Ship commenced on 19 Jul 2018 and its keel was laid on 07 Nov 2019.

PMT-15B was to suggest an alternate plan so that Yard meets the contractual timelineswith available infrastructure resources and constructs the ship by ‘Mega blockoutsourcing methodology' with maximum pre-launch outfitting. Accordingly PMT-P15B came upwith a solution of fabricating and erecting unit/blocks in-house at MDL as well as throughoutsourcing at contractor's premises simultaneously. This erected hull structure atcontractor's premises will be transported to MDL and then integrated with other blocksthat will be built at MDL thereby further facilitating launching of ship. In line with theabove methodology MDL has placed order on M/s SSPL Bharuch for mega block outsourcingfor last two P 15B ships.".

Post announcement of lockdown by the state/central government the yard was operatingwith limited workforce where project personnel were called on special duty to performessential project activities. Following activities were undertaken after announcement oflockdown:

• Manning of the ship 24 X 7;

• Preservation / keep alive for all equipment installed onboard the ship;

• Monsoon protection related all major activities;

• Completion of project activities pertaining to_ account closure of FY 2019-20.

Your Company had reached its optimum utilization of marine infrastructure and tofurther increase production MDL has augmented new method of mega block outsourcing whereunits/blocks are being constructed simultaneously at two different geographical locationsand brought to MDL and joined together.

b) Project P17A:

Production of first ship had commenced on 16 Feb 2017 and keel was laid on 28 Dec 2017.The first ship was Launched on 28 Sep 2019. Production of second and third ships werecommenced on 27 Feb 2018 and 31 Jan 2019. Keel of second and third ship was laid on 07 May2019 and 10 Sep 2020. The infrastructure of the yard has been modernised for realizing‘Integrated Construction Methodology' in line with global best practices for warshipbuilding".

c) Project P 75:

The P75 Scorpene Submarines under construction are state-of-the art conventionalsubmarines in collaboration with Naval Group (NG) France. First Scorpene Submarine of P75‘INS Kalvari' was delivered by MDL to Indian Navy on 21 Sep 2017 which wascommissioned into Indian Navy on 14 Dec 2017. Second Scorpene Submarine of P75 ‘INSKhanderi' was delivered by MDL to Indian Navy on 19 Sep 2019 which was commissioned intoIndian Navy on 28 Sep 2019. Third Scorpene Submarine of P75 ‘INS Karanj' wasdelivered by MDL to Indian Navy on 15 Feb 2021 which was commissioned into Indian Navy on10 Mar 2021. Fourth submarine ‘INS Vela' and fifth submarine ‘Vagir' werelaunched on 06 May 2019 and 12 Nov 2020 respectively and are undergoing trials.Boot-together of sixth submarine was completed in Jan 2021 and presently engineeringoutfitting of the submarine is in progress.

d) MRLC:

Medium Refit Life Certification(MRLC) of IN Submarine is currently at advanced stage ofoutfitting. Boot together has been successfully completed and major equipment have beenembarked.

2.1 Capital Projects and their progress

a) Your Company has undertaken construction of a new state-of-art Security Complex atthe main entrance at an estimated cost of Rs. 29.10 Cr. This G+Two storey building will beequipped with latest security equipment gadgets access control etc. This Complex will bethe centralised hub for key MDL departments such as Security PRO

Safety Fire Estate and HSE for effective coordination. The project is expected to becompleted by Mar 2022.

b) Your Company has undertaken the work of Submarine Launch Facility to facilitate loadout/launch of fully constructed submarine from the Submarine Assembly Workshop at AlcockYard at an estimated cost of Rs. 174.84 Cr. The project is expected to be completed by Dec2021.

c) Your Company is committed towards upgradation / modernisation of existing facilitiesfrom time to time. The company has decided to replace existing 12 nos. vintage LL cranesby new cranes in a phased manner. In first phase replacement of 03 LL cranes at South Yardhas been initiated. Company has also initiated the work of replacement of old Caisson Gateof East Yard Dry dock by new Caisson gate.

On completion of these projects productivity and safety at work will improve.

2.2 Mazdock Modernisation Project:

Your Company has successfully put in to use its infrastructure under MazdockModernisation Project (MMP) comprising of a new Wet Basin Heavy Duty Goliath CraneModule Workshop Cradle Assembly Shop Store Building and associated ancillary structures.

Submarine Section Assembly (SSA) workshop an eco-friendly green concept building hasalready been completed and put into use.

a) Other infrastructure projects:

Your Company is committed towards up-liftment of under privileged sections of societyand towards this a skill development hub is being created with an Apprentice TrainingSchool (ATS) along with residential accommodation for security staff and associateddevelopment work at Gavhan village Navi Mumbai at an estimated cost of Rs. 150.00 Cr.

Your Company is committed towards fire safety of the Yard and towards this the companyhas initiated the work of installation of the state-of-the-art Fire Fighting System ofAnik Chembur yard which will enable to protect the valuable material stored at AnikChembur Yard at an estimated cost of Rs. 15.50 Cr. Company has also replaced pipedservices of Mumbai Yard towards fire safety.

Recently Your Company has commissioned a new Canteen facility with a seating capacityof 500 workers a major infrastructure addition undertaken in the current year.

The progress of all the ongoing projects has been severely impacted due to theprolonged pandemic situation worldwide. However all efforts are being made to completethese projects on priority.

2.3 Performance against MOUs:

During the year your Company had signed Memorandum of Understanding (MoU) withMinistry of Defence Government of India MoD for the financial year 2020-21. The MoUoutlines targets and various performance parameters for the Company. The revenue fromoperations was targeted at Rs. 4977 crore. Significant milestones were required to beachieved under Project 75 (Scorpene class submarines) and shipbuilding projects of 15B and17A.

In spite of practically losing out the entire first Quarter to Covid 19 lock down andsubsequent local restrictions continuing till end of Oct 2020 the performance of yourCompany for the last fiscal year has been praiseworthy. The achievement vis--vis the MoUtargets set with the Ministry of Defence during the year is rated as "Very Good"(Provisional). During the year your Company achieved a Profit Before Tax (PBT) beforeexceptional items of Rs. 756.06 crore and the Revenue from Operation of Rs. 4047.82 crore.

2.4 Research & Development

The R&D policy of the Company was approved by the Board in June 2013 and acommittee was formed to drive the implementation of the R&D policy in accordance withthe guidelines issued (September 2011) by the DPE on R&D. The R&D team is headedby Director (Shipbuilding) and General Manager (Design) is one of the members in the team.MDL is recognised as ‘In-house R&D unit' by Department of Scientific andIndustrial Research (DSIR) Ministry of Science and Technology from 30 Jan 2017.

Your Company has executed and completed trials for three major R&D projectsthrough Industry-Academia participation with IIT Madras Chennai through their incubatedstart-ups belonging to the Tamil Nadu Corridor. Your Company has ventured into the area ofArtificial Intelligence (AI) also through these projects. The product developed throughthe first Project AI enabled weld inspection tool with computerized radiography toreplace manual radiography (RT) has been launched during the Defexpo 2020 at Lucknow. Thesecond project fruitfully concluded by developing an AI enabled robotic weld inspectiontool employing phased array technique and this can replace computerized radiography inconsultation with the Indian Navy. The product was at display during Defexpo 2020. An AIenabled Remotely Operated Vehicle (ROV) is the third project which was also displayedduring DEFEXPO 2020. This AI ROV can detect and classify underwater images thus makingthe inspections quick and safe.

The in-house projects as well as projects in collaboration with academic institutionsof repute like Welding Research Institute Trichy IISc Bangalore and NID are all aimed atsolving the unique issues faced by the Yard during the detailed design and integration ofcomplex systems into a front line Naval platform. The specialists' groups functioningunder GM(Design)_contributes consistently in the areas of structural analysis ergonomics& HFE noise & vibration Control RCS management propulsion system integrationmaterials and HVAC.

MDL has validated an innovative shaft alignment procedure wherein the propeller shaftline assembly is completed in the Dry Dock itself leading to significant cost saving tothe Yard and reduction in the build period of the vessel.

In addition to the above MDL has developed the state-of-the-art Basic Design of Navalvessels incorporating advanced and optimized equipment machineries weapon andarrangement etc.

MDL has initiated implementation of Product Data Management/Product lifecycleManagement(PDM/PLM) for the under construction P17A ships.

Your Company has spent approximately 1.7% of the revenue expenditures as expendituretowards R&D during the FY 2020-21. The various projects undertaken underR&D are elaborated in Appendix ‘F'.

2.5 Quality Concepts

1) 5S (Work Place Management System)

Your Company is committed to conduct 5S internal audits for sustenance of 5S in the 22Workshops/Stores/Offices where 5S was implemented.

5S internal audits are carried out on quarterly basis by the internal auditors trainedby your Company. In addition to above Certification 1st Surveillance and 2ndSurveillance audits are conducted in a span of one year by external agency to assess theeffectiveness of 5S implemented in these 22 workshops/offices/stores.

2) Quality Circles

The Quality Circle teams are solving 03 nos. work related problems in a year and arepresenting their case studies at Chapter National and International Conventions andwinning Top Most Awards for the Company. The awards won by the QC teams in the year2020-2021 are as under:

• 18 Quality Circle teams from MDL presented their case studies in ChapterConvention on Quality Concepts (CCQC-2020) held virtually in Sept 2020 and all the 18 QCteams won Gold (highest) Award.

• 11 QC teams from MDL participated in National Convention on Quality Concepts(NCQC – 2020) held virtually in Dec-2020 out of which 10 QC teams won Par Excellence(highest) Award and 01 QC team won Excellent Award.

• 02 Quality Circle Teams from MDL participated in International Convention onQuality Control Circles (ICQCC – 2020) Dhaka Bangladesh held virtually in Dec 2020.01 QC team won Platinum (highest) Award and 01 QC team won Gold Award.

2.6 Quality Management System

Shipbuilding Section

YourCompanyiscommittedtoimplementQualityManagement Systems (QMS) as per ISO 9001:2015standard. 58 Lead Auditors and 74 Internal Auditors were trained for carrying out theInternal Audits for sustenance of QMS in Shipbuilding Division. The Renewal Audit (Remote)of Shipbuilding Division was carried out on 25th and 26th Mar 2021 by M/s IRQS audit team.The NCs reported was "NIL" and the ‘Certificate of Approval' has beenrecommended by M/s IRQS audit team to Shipbuilding Division as per the ISO 9001:2015Standard.

Benchmarking

MDL has a long Legacy of producing about 800 ships of various types. Over the yearQuality inspection procedure has evolved to suit the latest construction methodology forShips & Submarine.

Presently the 3 tier Quality Management System comprising of self-Inspection by theProduction Quality Team constituted from the best qualified executives/ operatives/ stafffollowed by inspection from QA department and finally by the customer representative(WOT/THIRD PARTY) leaves no scope for any error post completion of any process. Thenon-conformity management with 3 level monitoring and advising does not allow any anomalyto remain un-attended/un-resolved.

SQC section is involved in various inspection & trial activities right from rawmaterial stage such as steel plates & profiles inspection skid inspections unit drysurvey & its dimensional inspections pressure testing of tanks/ compartments/ systemsand inspections pertaining to outfitting blasting painting insulation HVAC BalancingCitadel Habitability for warships along with electrical inspection for merchant ship asper required standard & design detail.

P17A Ships are being built for the very first time as per "Integrated Construction(IC)" methodology which differ in the very concept of warship building by way ofadoption of the modern technology where the blocks are pre-outfitted at differentlocations before joining to reduce the build period of warships.

Other Achievements/Facts

a) Coordination for PDM/PLM:

Quality Management and product Lifecycle Management (PLM) are both proven disciplinesthat help companies improve quality and product profitability.

All activities for P17A will be managed through PLM which offers potential cost savingsand simplicity of a single system. It will create opportunity to consolidate and integrateinformation. And perhaps more importantly it will provide the quality assurancecompliance and customer satisfaction. All basic QIP (42 nos.) & one project QAP hasbeen converted into PDM/PLM format with their relevant context parameter.

Total amount of old data migration is very big (lakhs of scanned inspection reports).In order to avoid a major migration problem all data were divided in several logicalgroups that can be processed serially and progressively.

b) Speeding of HVAC inspection Process:

SQC section modified the Inspection process of HVAC balancing which leads to lessrejections and reworks occurred at Harbor acceptance trial (HATS) of the first of P15 Bdestroyers and helped MDL to clear the 88% HVAC balancing inspection in the first attemptwithin stipulated time. For the first time 128 out of 144 of HVAC systems were cleared inMDL basin before the start of sea trials. This has tremendously helped the ship trial teamin an efficient sea sortie of the ship.

c) Anti- corrosion procedure for steel plates/profile:

The steel plates and profiles are susceptible to rusting or corrosion in openenvironment. To avoid this they are blasted with abrasives and painted with one coat ofprimer to avoid corrosion or rusting. Blasted surface is to be tested for presence of millscales by performing the copper sulphate test.

The mill scale is a flaky bluish grey surface layer of usually 0.1 mm thickness formedon the outer surface of plates sheets profile while being produced by rolling mills.Mill scale will cause accelerated corrosion of steel. These scales become nuisance whenthe steel is to be processed and any paint applied over it is a futile exercise aspresence of mill scales on the steel surface accelerates the corrosion of the underlyingsteel which is more severe. All mill scales must be removed from steel surface by abrasiveblasting and must be checked.

A proper working procedure is derived to establish the composition of requirednormalized solution by mixing of copper sulphate pentahydrate crystal H2SO4 &distilled water with the required proportion. Copper sulphate test will determine anypresence of mill scale on the surface by using oxidation reduction chemical reaction withthe free iron particles present. Copper sulphate solution is prepared and applied on thesteel surface. The chemical reaction causes deposition of copper on the surface whichindicates that the surface is free from the mill scales.

d) MEGA BLOCK & IC Inspection:

Inspection carried out for Integrated construction/ Block Inspection of project P-15Band P17A including Hull and Engineering improves in several level of build plan. Morecomplex & lengthy activities like seats sea tubes piping systems take more time onberth than compared to the shop level. Material space manpower & time all can besaved if many of such work is carried out parallel right from the unit level. In IC buildplan activities were carried out with a block level projection in decentralized way indifferent location i.e. M/s SSPL Bharuch & M/s CCPL Goa Nhava yard. We also tookproactive measure for inspection activities during covid -19 by deputing some dedicatedQuality team which helped in reduction in nonconformities and reworks considerably.

e) AI Enabled Inventions

MDL in partnership with IIT Madras Chennai(IITM) has designed and developed twoArtificial Intelligence enabled product.

A. AI enabled Computerized radiography

B. AI enabled advance phase array ultrasonic testing(APAUT).

These products are developing for improved quality assurance of weld with less timeless labour consumption & higher efficiency. Both the product are more safer than theconventional methods in many ways. With data migration they will become more smart and canaltogether replace Y (gamma) rays. Brief introduction of both the product is given below:

A. Artificial Intelligence (AI) enabled weld inspection with computerized radiography:

In Computerized radiography when imaging plates (IP) are exposed to X-rays the energyof the incoming radiation is stored in a special phosphor layer. A specialized machineknown as a scanner is then used to read out the latent image from the plate by stimulatingit with a very finely focused laser beam. When stimulated the plates emit blue light withintensity proportional to the amount of radiation received during the exposure. The lightis then detected by a highly sensitive analog device known as a photomultiplier (PMT) andconverted to a digital signal using an analog-to-digital converter (ADC). The generateddigital X-ray image can then be viewed on a computer monitor and evaluated.

B. Artificial Intelligence (AI) enabled Robotic Weld Inspection using advanced phasedarray technique:

Phased Array Ultrasound Technology along with Advanced Full Matrix Capture (FMC) /TotalFocusing Method (TFM) shall be implemented for this project.

The simulation assisted AI tools involved will include automated defect recognitionfeatures from the data sets obtained for improving the robustness and reliability ofinspection. Also the Ultrasound Testing can be performed along with the welding and hencewill significantly improve productivity. The use of robotics will enable the inspection tobe performed on difficult areas of ship hull more reliably and reduce time of inspectionby avoiding the need for scaffoldings. An ultrasonic phased-array probe is composed ofmultiple elements usually between 32 and 128 each of which can act as a singleultrasonic transducer.

Submarine Section

1. Second Surveillance Audit for Submarine Division as per QMS ISO 9001:2015 wasconducted and successfully completed with ‘NIL' (Non-conformity) by IR Class on 27& 28 Aug 2020 with the scope of "Design Development Construction Refit Test& Trials of Submarines.

2. M/s IR Class certified that Submarine Division of Mazagon Dock Shipbuilders Ltd wasfound conforming to the requirements of standard ISO 9001:2015 and had awarded the"Certificate of Approval" on 30 May 2018 with expiry date 29 May 2021 as per ISO9001:2015 QMS Standard

Other Achievements/Facts

a. Diving to Maximum Operating Depth (MOD) in a single sortie:

i. The diving of P75 submarines to maximum operating depth were done in two or more seasorties until SM3. Dive to Half MOD used to be done in one sea sortie and the submarinehave to return back to harbour for analysis of the strain gauge readings (A1 trialresults) and further defect rectification. Dive to MOD were undertaken in the next seasortie post defect rectification and strain gauge measurement analysis.

ii. MDL analysed the feasibility of combining the half MOD and MOD in one sea sortie.With a thorough study it was realised that dive to half MOD and MOD can easily becombined in one sea sortie with better readiness of the vital systems and positioning ofcompetent team onboard.

iii. Finally MDL achieved this goal and dive to MOD of SM4 was achieved in one seasortie successfully. This has resulted in early opening of the Safe Operating Envelope(SOE) for further trials thereby saving of time and cost to a great extent.

b. Setting up of in-house Fluid Testing Laboratory:

i. The Submarine Division have setup an in-house Fluid Testing Laboratory in AlcockYard for testing the cleanliness pH and water content of hydraulic oil (FHARI 7311) usedin P75 submarine.

ii. Initially due to lack of facility oil samples were sent to CETEC laboratoryFrance through Naval Group which used to take approx. 30-45 days to get test resultsresulting in production delay and loss of 45 days especially when a sample failed in thefirst attempt.

iii. MDL has set up its own facility by procuring an advanced version of Leica opticalmicroscope DM4M and constructing an ISO Class-5 clean room apart from training andqualification of the operator. This has resulted in immediate testing of oil samplescollected from boat and result is known within 2-4 hrs. thereby avoiding consequentialproject delay.

iv. All test procedures for determination of Particulate Contamination pH Chloridecontent Water content etc. were developed based on Indian and International Standards.

c. Self-Reliance on Acoustic Measurements:

MDL has acquired self-reliance in acoustic measurement and its analysis for variousequipment which used to be performed by the collaborator in the beginning.

2.7 Information Technology

Your Company has completed the following activities during the year under review:SAP implementation

• MDL Intranet Portal database migrated to SAP-HANA database in Jan 2021.

• Digital Signature has been implemented in SAP FLM (File lifecycle Management)system in Aug 2020.

• Development of SAP Fiori applications are under progress.

Latest know how on IT

• MDL implemented Work from Home (WFH) during the Lockdown period for businesscontinuity in Jul 2020.

MoD guidelines on Safety measures adopted / safety measures followed

• MoD guidelines relating to Information Security are complied with.

Your Company has achieved the following during the year under review:

• Implemented Video Conferencing system in Board & Conference Room in Mar2021.

• Primary Data center revamped in Mar 2021.

2.8 Procurement from MSMEs

Your Company is complying with Public Procurement Policy for Micro and SmallEnterprises (MSEs) Order 2012. Accordingly out of the total annual procurement 25 %procurement is to be made from MSEs. During the FY 2020- 21 your Company has achieved26.40% procurement from MSEs.

During the FY 2020-21 your Company had conducted two vendor development programs outof which one was exclusively for MSEs. Your Company had also arranged supplier meet(Buyer-Seller) during the year. To further enhance the vendor base your Company hadparticipated in three online national level programs conducted by MSME-DevelopmentInstitute (DI) across India.

2.9 Marketing initiatives

During the financial Year 2020-21 MDL participated in Aero India 2021 and oneinternational exhibition IDEX UAE for marketing and business promotions. The exhibitionsimmensely helped in showcasing MDL's capabilities and technical strength in warshipbuilding and submarine construction. The exhibitions were successful in projecting theimage and capabilities of India in the defence production sector in general andwarship/submarine building capabilities in particular. MDL had signed MoUs and obtainedvarious leads for potential future projects. MDL have signed four (04) MoUs during theAero India 2021. MDL have coordinated as well as participated in various Internationalwebinars wherein Indian shipbuilding capacities and capabilities were showcased. Thesewebinars were arranged with the involvement of Defence & Naval Attache's of Variouscountries.

During the FY 2020-21 your Company had conducted one online Vendor Development Programexclusively for MSEs owned by SC/ST. Your Company had also arranged supplier meet(Buyer-Seller) during the year. To further enhance the vendor base your Company hadparticipated in three online national level programs conducted by MSME-DevelopmentInstitute (DI) across India. During the meets MDL displayed posters and backdrops onrequirement of our indigenisation items and also issued booklet on MDL's indigenizationprogramme. Your Company's efforts were noted and appreciated by the local/indigenousmaterial suppliers.

2.10 Health Safety & Environment Management System

MDL has been conferred with "Certificate of Registration" for its integratedHealth Safety & Environment Management System (HSEMS) in compliance with ISO14001:2015 and OHSAS 18001:2007 w.e.f. Apr 2019. The Certificate is issued by M/s KBSCertification a firm accredited by Joint Accreditation System of Australia and NewZealand (JAS-ANZ) a member of the International Accreditation Forum (IAF).

MDL having qualified the above standards has joined the exclusive club of companiescommitted to sustainable development by continual improvement in performance towardsHealth Safety & Environment in their operations/ processes. This qualificationfortifies MDL's credibility in all its functioning and future business prospects.

The standard OHSAS 18001:2007 will cease to exist beyond Sept 2021. Hence MDL iscurrently in process of transition of its HSEMS system from OHSAS 18001:2007 to ISO45001:2018. The transition activity will be completed prior to Sept 2021.

3. Human Resource Development

Your Company has been putting emphasis on the_ overall growth &_development ofHuman Resources and_is committed to continue its relentless efforts in updating thecompetencies of its executives through exposure to various_ Learning &_Developmentinitiatives by Institutes of National Importance and through_ sponsoring functional basedSeminar /_ Conferences_ /_ workshops._ Besides in order to ensure smooth supply ofskillsets_ for Company's requirement_ and shipbuilding industry various training programsviz. trainings of Trade Apprentices under_the_Apprentices Act 1961 BOAT Apprentices andMarine Engineering students under the aegis of DG Shipping_ at the Company's runApprentice Training School have_regularly_been_organized.

During the FY 2020-21 a ‘Strategic Conclave for Board Level Executives" wasorganized wherein CMD Functional Directors & CVO participated. Orientation Programfor Director of listed companies was organized by National Institutes for SecuritiesMarket for CMD & Board Level Executives after MDL being listed on BSE and NSE.

Due to the Covid 19 Pandemic majority of the training programmes were conducted inonline mode during 2020-21. Training on proposed Labour Codes was conducted by ManagementDevelopment Institute (MDI) Mursidabad where in 06 Executives actively participated.Training related to Health and safety was also organized on the topic Hazardous AreaClassification in online mode and 26 Executives had participated in the program.

In order to ensure safety and dignity of women employees MDL had conducted asensitization program on "Prevention of Sexual Harassment of Women atWorkplace". A total of 60 Employees had participated in it.

Other regular training programs on various topics like Lead

& Internal auditors Cyber Security awareness Contract Management Costing &Bidding for High Value project Commercial Procedure in MDL were organized by MDL eitherin Online mode or In-House keeping in view the social distancing norms and COVID-19protocols.

Flagship programs of Government of India such as IPR was conducted for 225 Employeeswith the aim to spread awareness on Intellectual Property Rights (IPR) and to create anIPR driven Innovation Culture. MDL has also received a training module on "PreventiveVigilance" from CVC with a target of 300 employees to be trained in the given module.MDL has achieved the target by the end of March 2021.

MDL has imparted training on Public Procurement through GeM in order to spreadawareness on procurement through Government e-market place(GeM) and help in ease of doingbusiness.

As part of encouraging higher education 6 (Six) executives have been sent to DIATPune for M. Tech courses for the academic year 2019-2021. MDL has sent 01 Executive toNWC Goa for pursuing training on Technical Management Course.

Some important events like Safety Week and Vigilance Awareness Week were alsocelebrated via video mode and quiz competition in order to spread awareness amongstExecutives & Non-Executives.

A total of 36 trainings were conducted in the FY 2020-21 through online and offlinemode. A total of 1092 Employees were benefited.

3.1 Welfare Activities

Your Company values its human resources the most. To keep their moral high apart fromstatutory welfare measures your Company extends several other welfare activities.

i) Life Insurance Coverage:

Your Company has arranged various Group Savings Linked Insurance Schemes which providefinancial assistance in case of untimely death (accidental/illness) of an employee whileon duty. Besides Group Personal Accident Insurance Scheme has also been in place whichprovides 24 hours' coverage for compensation in the event of an accident of an employeeresulting in death or permanent / partial disability.

ii) Medical Scheme:

All the serving employees including their dependent family members are covered underthe Medical scheme. Hospitalization claims of around Rs. 30.64 Crore were disbursedtowards treatment to the employees and their dependent family members during the FY2020-21.

iii) Other Welfare Activities:

Your Company also provides number of welfare measures viz. Onsite Dispensary andOccupational Health Centre Hospitalization Wellness Centre Onsite Gym & ClubUniform Monsoon Gears thoroughly Subsidized Canteen Facility Scholarship to UnemployedWards of Employees etc.

iv) Post Retirement Medical Scheme (PRMS):

In order to provide medical facilities to the retired employees and their spouses MDLhas Post-Retirement Medical Scheme in place. The same is being regulated through GroupMediclaim policy taken from an Insurance Company.

3.1.1 Executives' Superannuation (Pension) Scheme:

Your Company has introduced a defined contributory superannuation pension benefitScheme to the executives w.e.f. 01 Jan 2007. The Company contributes 7% of basic pay + DAtowards the corpus of the pension scheme for each eligible executive of the Company w.e.f.01 Jan 2007. MDL has also introduced similar scheme for non-executives and Companycontributes 5% of basic pay + DA towards the corpus of the pension scheme for eacheligible non-executive of the Company w.e.f. 01 Apr 2012.

3.2 Manpower and Reservation of Posts for SCs/STs:

The Company has been following Presidential Directives of the Government with regard toreservation of posts for SCs/STs in recruitments.

Total manpower strength as on 31 March 2021 is at 5969 (including functional directors)out of which the number of persons on temporary rolls was 2282. Of the total strength 101are Ex-servicemen 826 are of Schedule Caste and 439 are of Scheduled Tribes. Thepercentage of Scheduled Caste and Scheduled Tribes in respect of Employees was at 13.84%and 7.35% respectively.

Number of persons on temporary rolls as on 31 March 2021 is 2282 out of which 334belong to Scheduled Caste and 200 belong to the Scheduled Tribes category.

Details of the statement showing position regarding representation of Schedule Castesand Schedule Tribes in various categories of post on 01 Jan 2020 and 01 Jan 2021 isannexed at Appendix ‘A'

3.3 Employment of Women:

As per the recommendation No.51 Para (ii)(a) of the National Commission for Women(NCW) in its Annual Report for the year 1995-96 the employment position of Women as on 31Mar 2021 is given below as directed by the Ministry of Defence vide their letter Nos.39(6)/99/D(B&C) dated 27 Aug 1999.

I. Executives

Grade No. of Employees Women Percentage
0 1 0 0
I 21 3 14.29
II 156 15 9.62
III 107 12 11.21
IV 341 18 5.28
V 202 6 2.97
VI 105 10 9.52
VII 43 5 11.63
VIII 18 - 0
IX 5 - 0
CVO on 1 - 0
deputation
Functional 3 - 0
Directors
CMD 1 - 0
Total 1004 69 6.87

II. Non-Executives (Operative)

Grade No. of Employees Women Percentage
WG-0 0 0 0
WG-1 21 0 0
WG-2 215 0 0
WG-3 13 0 0
WG-4 153 0 0
WG-5 2191 52 2.32
WG-6 812 18 2.17
WG-7 339 9 2.59
WG-8 347 0 0
WG-9 164 0 0
WG-10 36 0 0
WG-3A 8 0 0
WG-4A 133 0 0
Total 4432 79 1.78

III. Non-Executives (Staff)

Grade No. of Employees Women Percentage
SI-00 0 0 0
SI-01 0 0 0
SI-02 2 0 0
SI-03 1 0 0
SI-04 0 0 0
SI-05 223 27 12.11
SI-06 53 8 15.09
SI-07 22 4 18.18
SI-08 31 1 3.23
SI-09 28 2 7.14
SI-10 62 9 14.52
SI-3A 3 0 0
SI-4A 29 0 0
Total 454 51 11.23

3.4 Persons with Disabilities (PWD) As On 31 Mar 2021:

The total number of physically challenged employees as on 31 Mar 2021 was 110 and itspercentage to total employees works out to 1.84%.

HI LD VI Total
Group-A 8 13 8 29
Group-B 0 0 0 0
Group-C 9 67 5 81
Total 17 80 13 110

HI- Hearing Impaired LD-Locomotive Disability VI-Visually Impaired.

3.5 Industrial Relations

Industrial relation scenario during this period was cordial and harmonious. There wereno man-hours lost on account of Industrial conflict. In the absence of a recognized Unionefforts were made to resolve issues of mutual concern through deliberations with theUnions on the Bargaining Council and other unions.

The Meetings with the Unions on Bargaining Council are being held on regular basis andissues of mutual concerns like safety precautions issues relating to Covid19 pandemicRecruitment of Fixed Term employees etc. are settled through bilateral negotiationprocess.

The various issues raised by the Unions on Bargaining Council regarding Covid19pandemic Attendance/Leave Management/ Rotational deployment of manpower has been resolvedand Industrial Relations & Labour situation at MDL Mumbai in general is normal andpeaceful.

3.6 Reservation of Posts

Your company has been observing all the Government directives and instructions issuedfrom time to time on reservation of posts for SCs / STs / OBCs. All the rosters of SC / ST/ OBC / PWD are maintained which is inspected by the respective Liaison Officer from timeto time and perused by the SC/ST Unions also. Detailed statistics regarding the totalnumber of employees number of women employees recruitment made during the calendar year2020 and the representation of SCs / STs / Ex-servicemen as on 01 Jan 2021 are given atAppendices A B & C to this Report.

3.7 Grievance Redressal Committees for SCs/STs:

Weaker sections of the society are given adequate protection in the form of just andequitable treatment at the hands of employer. To ensure the same a separate"Grievance Redressal Cell" has been constituted for SC / ST employees. Aquarterly meeting of representatives of SC/ST is held with Director (CP&P) whereingrievances related to SC/ST are discussed and resolved.

4. Indigenization & Make in India

MDL having set-up a dedicated ‘Department of Indigenization' in Nov 2015 toprovide focused impetus to the Hon'ble Prime

Minister's "Make-in-India" initiative has been successfully able to partnerwith the Indian industry to undertake indigenization/ import substitution of variousequipment/items which have been imported.

As on date MDL has been able to successfully indigenize some of the criticalequipment/items required for warships and submarines. The major items indigenized tilldate include

Main Batteries Battery Loading Trolley Air-Conditioning Plants Sacrificial ZincAnode flanges Non-HLES Electrode & filler Wire Self-Adhesive E-Glass Fibre ClothNBR O-Ring Annealed Copper Gasket for Scorpene Submarines and Sonar Dome SICADS BridgeWindow Glass MCT-Glands Remote Controlled Valves Helo Landing Grid Honeycomb FiltersPressure Reducing Station NBC Filters High Temperature Gaskets Flame/Control/SmokeDampers for HVAC System Chladon Gas for MFFS for Ships.

The procurement of the above indigenized items from the Indian industry would result insubstantial savings in foreign exchange to the exchequer.

Further indigenization of Magazine Fire Fighting System RSS Screen for ships andRefrigeration Plants Polychropene Rubber Bands Shock Mount Soda Lime GRP Panel StaticFrequency Converter etc. for submarines are presently in progress.

5. Awards and Recognitions:

S. No Awarding Authority Awards For
1 Indian Chamber of Commerce MDL was conferred 10th PSE Excellence Award for being the Runner up in Corporate Social Responsibility under Miniratna I II & others category. The award was presented on 12 th October 2020.
2 Bangladesh Society for Total Quality Management Two Quality Control Circle teams "Prerna" from EY-Pipe Shop and "Bhaskar" from P&A Shop (SY) participated virtually in the International Convention on Quality Control Circles (ICQCC-20) held at Dhaka Bangladesh from 01 to 03 Dec 2020. ‘Prerna' QCC team won Platinum (highest) award and ‘Bhaskar' QCC team won Gold award.
3 M/s Quality Circle Forum of India (QCFI) Hyderabad 11 MDL Quality Circle teams participated virtually at National Convention on Quality Concepts (NCQC-2020) held in Dec – 2020. 10 QC teams won Par Excellence (highest) award and 01 QC team won Excellent award.
4 M/s Quality Circle Forum of India (QCFI) Mumbai_Chapter 18 MDL Quality Circle teams participated virtually at Chapter Convention on Quality Concepts (CCQC-20) in Sep 2020. All 18 QC teams won GOLD (highest) Award.
5 Mumbai PSU TOLIC. MDL was awarded 2nd Prize for Rajbhasha Patrika ‘Jal Tarang' and 3rd Prize for Rajbhasha Implementation on 12 July 2020 by Mumbai PSU TOLIC.

6. Official Language Implementation

Your Company has been adhering to the directives issued by the Govt. of India from timeto time for extensive use of Hindi for official purposes. MDL has been following all thedirectives issued by Rajbhasha Vibhag Gruh Mantralaya Government of India from time totime for progressive use of Hindi for official purposes. MDL's efforts towards progressiveuse of Official Language are detailed below:

a. Quarterly Departmental Official Language Implementation Committee meetings arechaired by the Chairman & Managing Director and Sub-Committees under the chairmanshipof the respective Directors. Departmental O/L Implementation Committee Meeting for JuneSept. and Dec. 2020 quarters were not organized due to COVID-19 Pandemic.

b. All the Formats / Manuals of MDL are bilingual.

c. 06 Digital Boards have been installed at conspicuous places displaying ‘AajkaShabd' and ‘Aaj Ka Suvichaar' to develop the Hindi among the employees.

d. Many cash prizes are given on writing and Typing Hindi letters.

e. Three prizes of Rs.3000/- Rs.2000/- and Rs.1000/- for writing Articles forJaltarang Rajbhasha Patrika.

f. Employees have been given prize on passing ‘Praveen' ‘Pragya' and‘Parangat' examinations respectively Rs. 8000/- Rs. 10000/- and Rs. 12000/-

g. Unicode is installed on all the PCs. All the executives and staff have been trainedto type Hindi on Computer.

h. MDL awarded 2nd Prize for Rajbhasha Patrika ‘Jal Tarang' and 3rd Prize forRajbhasha Implementation on 12 July 2020 by Mumbai PSU TOLIC.

i. ‘Hindi Diwas' was celebrated on 14th Sep '20 and "Hindi Pakhwada"having 06 competitions was celebrated from 07 September to 18 September 2020.

j. Hindi Correspondence and Hindi Notings are about 96% and 95% respectively.

7. Vigilance Activities

Vigilance is an integral Managerial function. Vigilance department takes appropriateaction to carry out preventive participative and punitive vigilance in Mazagon DockShipbuilders Limited (MDL). It promotes transparancy Integrity fairnessaccountability in various activities including all commercial procurement functionsrecruitment outsourcing activities etc. Vigilance department suggests systemicimprovements based on the investigation of the complaints/spotchecks/CTE type examinationand also ensures that integrity is maintained in all functions of the organization.

1. CTE Type Examination:

As a part of Preventive Vigilance CTE type intensive examination ofPurchase/Subcontracts/Outsourcing orders are taken to verify compliance to prescribedprocedures and statutory norms/regulations. During the period 01 April 2020 to 31 March2021 05 such CTE type examinations have been carried out by Vigilance department.

2. Complaints:

Duringtheperiod01April2020to31March2021Vigilance department received 21 complaints.Investigation of 21 complaints were pending from 2019-20. Investigation has been completedfor 34 complaints including 1 Public Interest Disclosure and Protection of InformersResolution (PIDPIR) complaint and is in progress for the remaining 8 complaints as on 31March 2021.

3. Spot check/Surprise Checks:

Surprise/Spot checks are also being conducted by Vigilance department. During theperiod 01 April 2020 to

31 March 2021 03 nos surprise/spot checks have been conducted andsuggestions/corrective measures were recommended for systemic improvements.

4. Disciplinary Proceedings:

The pending Disciplinary proceedings against delinquent executives are being closelymonitored by Vigilance Department. As on 31 March 2021 2 Disciplinary Proceedings arepending.

5. Vigilance Clearances:

Timely vigilance clearances were issued for personnel/ officials proceeding on foreigntours and official duty abroad compulsory retirment (FR 56J) separation(resignation/retirement) DPC(Promotion) Board Level PESB Recruitment and attendinginterview/forwarding application.

6. Scrutiny of Annual Property Returns(APRs) of executives:

During the period of 1 April 2020 to 31 March 2021 245 APRs of MDL Executives werescrutinized by Vigilance department.

7. Preventive Vigilance:

Seven (07) Systemic improvements in the area of procurement and five (05) systemicimprovements in other administrative functions of the organisation were suggested tomanagement as an initiative for Preventive Vigilance and the same were accepted andpromulgated by management. 7 nos SIs related to Procurement/ Administrative functions areawaiting Approval by Management.

8. Vigilance Awareness Week Activities:

(i) Vigilance Awareness Week-2020 (VAW 2020) was observed in MDL from 27 October to 02November 2020. CMD MDL inaugurated VAW-2020 by garlanding the portrait of SardarVallabhbhai Patel and then administered the Integrity Pledge to Directors EDs GMs andSenior Executives. Vigilance Department's in-house journal ‘SUCHARITA' Vol. XXIIIwas e-released by CMD on the occasion. The objective of ‘SUCHARITA' is to enhance theawareness of its readers on Integrity Transparency and Accountability by stimulating thethoughts of readers.

(ii) The following activities were carried out as a part of observance of VigilanceAwareness Week 2020.

(a) Slogan Poster & Essay competitions on Vigilance related topics in HindiMarathi & English language were conducted among MDL employees and their family membersto enhance Vigilance Awareness.

(b) Online quiz conducted on MDL intranet portal during Vigilance Awareness week 2020among the MDL Employees.

(c) In-house sensitization programme to MDL Executives on topic "PreventiveVigilance Measures on Procurement" was conducted on 25 Sep 2020 by MDL Vigilanceteam.

(d) Motivational Talk on Integrity was delivered by MDL Vigilance team to the ATSstudents & Integrity Pledge was administered on 29 Sep 2020 at Apprentice TrainingSchool (ATS) MDL.

(e) PPT presentation "Overview on Vigilance" was given by CVO to MDL SeniorManagement Directors/CMD on 20 Oct 2020.

(f) Training Session on the topic "Procurement on GeM" was conducted to MDLExecutives by Eminent Speaker Shri Kamalakant Meena IRSS on 22 Oct 2020.

(g) Sensitising program for CISF MDL unit was conducted by MDL Vigilance Executives on03 Oct 2020.

(h) MDL Vigilance team has conducted a Virtual Training Programme to GOA ShipyardExecutives on the topic "Preventive Vigilance & Commercial Procedures" on 30Oct 2020.

(i) An interactive session between CVO and MDL executives was organised on 05 Nov 2020where various case studies depicting nature of irregularities were also discussed.

(j) MDL Vigilance team has conducted a Programme to RCF Executives on the topic"Vigilance Aspects in Commercial Procedures" at RCF Chembur on 06 Nov 2020.

(k) A "Vendors / Suppliers Meet" was conducted through virtual mode on 10 Nov2020. CVO Senior Executives and other executives of the commercial departments of theorganisation besides a host of vendors /suppliers in which various issues raised byvendors/suppliers were discussed. CVO addressed the Vendors/ suppliers during the meet.

(l) Certificates/Prize awards were given away to the winners of various competitionsorganised for MDL employees and their family members during VAW 2020 on 09 Mar 2021.

9. 2-Days Training module on Preventive Vigilance as part of Induction/Mid-CareerTraining:

As per CVC guidelines to all CPSE's 2-Days training module has been effectivelyimplemented for MDL Executives at the Induction/Mid-Career level. Training has beenimparted to a total of 105 executives in 4 such batches in co-ordination with MDC.

8. Governance & Sustainability

8.1 Corporate Governance

In terms of Regulation 34 read with Schedule V of SEBI (LODR) Regulations and the DPEGuidelines a report on Corporate Governance for the year ended 31 March 2021 has beenprepared and annexed to this Report. The Company's Secretarial Auditor has issued acertificate on Corporate Governance and is appended to the Corporate Governance Report atAppendix ‘D'.

8.2 Implementation of RTI Act 2005

Under the Right to Information (RTI) Act 2005 to facilitate provision of informationto the citizens requesting for the same your Company has evolved necessary structure bydesignating officers as Assistant Public Information Officer Public Information Officerand Appellate Authority for the purpose of implementation of the Right to Information Actin the Company._ During the year the Company received_ 78_ applications and 04_ Firstappeals._ The information / replies sought for were duly furnished. Quarterly and AnnualReturn for the year to be submitted online to Central Information Commission (CIC) hadbeen duly filed and uploaded in RTI - MIS updation system.

8.3 Meetings of the Board

During the financial year ended on 31 Mar 2021 eight meetings of the Board ofDirectors of the Company were held. These were on 22 Apr 2020 15 July 2020 27 Aug2020 11 Sep 2020 19 Sep 2020 05 Oct 2020 12 Nov 2020 and 12 Feb 2021.

8.4 Company's Policy on Directors Appointment and Remuneration

AccordingtotheMinistryofCorporateAffairsGovernment of India's Notification No F No.1/2/2014-CL.V dated 5th June 2015 your Company as a Government Company is not requiredto frame a Policy on Directors' appointment and remuneration including criteria fordetermining qualifications evaluation etc. under section 134(3)( e ) of the CompaniesAct.

The appointment tenure and remuneration of Directors (Functional Directors includingthe CMD) are determined by Government of India through Public Enterprises Selection Board(PESB) indicating the terms and conditions of appointment including the period ofappointment the scale of pay and other entitlements as your Company is a CentralGovernment Public Sector Enterprise.

The Ministry of Defence appoints the Government Nominee Directors and they are notentitled to any remuneration or sitting fees.

The non-executive Independent Directors are appointed by the Government of India andthey are entitled to sitting fees for attending the Board/Committee meetings as prescribedby the Board in adherence with the statutory rules and regulations.

8.5 Board Evaluation

Pursuant to the Ministry of Corporate Affairs Government of India's Notification No FNo. 1/2/2014-CL.V dated 5th June 2015 the statement indicating the manner in which formalannual evaluation has been made by the Board of its own performance and that of itscommittees and individual directors is not required for your Company as the performanceof directors is evaluated by the Administrative Ministry.

8.6 Changes in the Board

The following changes took place in the directorship of the Company during the yearunder review:-

Shri Sanjay Jaju AS (DP) was appointed as the Government Nominee Director w.e.f. 24Nov 2020 pursuant to appointment letter from Department of Defence Production Ministry ofDefence dated 24Nov 2020.

Shri V. L Kantha Rao ex-AS (DP) was appointed as the Government Nominee Directorw.e.f. 16 Mar 2020 pursuant to appointment letter from Department of Defence ProductionMinistry of Defence dated 16 Mar 2020. He ceased to be a Director w.e.f 24 Nov 2020. TheBoard placed on record its appreciation for the valuable support contribution andguidance provided by Shri V. L. Kantha Rao during his tenure.

RAdm. Anil Kumar Saxena IN(Retd) was appointed as the Director (Shipbuilding) w.e.f.21 Mar 2018 pursuant to appointment letter from Department of Defence Production Ministryof Defence dated 31 Jan 2018. He superannuated on 31 Jan 2021 the Board placed on recordits appreciation for the valuable support contribution and guidance provided by RAdm.Anil Kumar Saxena during his tenure

Shri. Devi Prasad Pande was appointed as Independent Director (Part Time Non- Official)pursuant to appointment letter dated 13 Sep 2017 ceased to be a Director w.e.f12 Sep 2020.The Board placed on record its appreciation for the valuable support contribution andguidance provided by Shri. Devi Prasad Pande during his tenure.

Prof. Kamaiah Bandi was appointed as Independent Director (Part Time Non- Official)pursuant to appointment letter dated 13 Sep 2017 ceased to be a Director w.e.f 09Oct 2020. The Board placed on record its appreciation for the valuable supportcontribution and guidance provided by Prof. Kamaiah Bandi during his tenure

Dr. M. J. Jeevannavar was appointed as Independent Director (Part Time Non- Official)pursuant to appointment letter dated 09 Mar 2018 ceased to be a Director w.e.f 08 Mar2021. The Board placed on record its appreciation for the valuable support contributionand guidance provided by Dr. M J Jeevannavar during his tenure

8.7 Constitution of Audit Committee

The Board has constituted Audit Committee pursuant to the provisions of Section 177 ofthe Companies Act 2013 and the Rules made thereunder. The Committee acts in accordancewith the terms of reference as approved by the Board. The composition and other detailsare disclosed in the Corporate Governance Report.

All recommendations made by the Audit Committee were accepted by the Board.

8.8 Declaration Given by the Independent Directors

All Independent Directors of your Company have given declaration of Independence asspecified under section 149(6) of the Companies Act 2013 during their tenure.

8.9 Corporate Social Responsibility

The Company is committed to all its stakeholders to conduct business in aneconomically socially and environmentally sustainable manner as part of its CSR &Sustainability policy.

Your Company is committed to undertake various programs for integrating social andbusiness goals in a sustainable manner through inclusive growth so as to make a positiveimpact for the society at large. Your Company has adopted Corporate Social Responsibility&

Sustainability Policy in compliance with Section 135 of the Companies Act 2013 andRules framed there under.

The CSR Budget of your company for the FY 2020-21 was Rs.14.54 crore (2% of averageprofit of the previous three financial years as per section 198 of Companies Act –2013). In addition a sum of Rs.5.34 crore were carried forward from the last financialyear. Out of this your Company has spent Rs.18.34 crores towards CSR activities during FY2020-21. A sum of Rs.1.54 crore remains unspent as several projects/programs due to delayin the execution of some projects by the implementing agencies mainly owing to theCovid-19 pandemic.

Your Company has executed 100 projects as part of its CSR initiatives mainly in sectorsof Education Health & Sanitation Skill Development and Village Development.Substantial contributions were also made by your Company to support the nation's fightagainst the Covid-19 pandemic mainly in the aspirational district of Nandurbar andGovernment hospitals in Mumbai. The executed projects are in line with schedule VII of theCompanies Act. The details of the major projects executed in FY 2020-21 are as under: -

a) Education Sector: In line with guidelines from DPE on Aspirational DistrictTransformation Program (ADTP) your Company has provided support to Govt. Ashram Schoolfor tribal students at Talai in Dhadgaon block of Nandurbar by upgrading the schoolfacilities. Your Company has also upgraded the facilities at Rukmabai Balika Ashram inNandurbar which is an aspirational district in Maharashtra.

MDL has continued its support for Tribal Girls' Residential School at Kharade GramPanchayat Shahapur. With MDL's support the school has been successfully running for thepast six years and thereby providing quality school education to girl students of Kathkaricommunity of Shahapur block Thane. "MDL Super 10" project has stepped into its3rd successful year and this year also 5 students from Shahapur area have been supportedto get quality education at Bhonsala Military School Nagpur.

Your Company has also continued to support children of Ambedkar Nagar slum in ColabaMumbai by encouraging them to attend school regularly using football as a motivatingtool.

b) Village Development: Your Company has continued its support for Kharade GramPanchayat under Model Village Development project and several new initiatives were takenin this year including beautification of four Anganwadis health awareness on COVID 19 andvillage awareness program on panchayat administration and enhancing Mushroom productionunits. MDL has developed pedagogy park cum open gym in the village schools to promotehealthy lifestyle.

Model Village Project Kharade Gram Panchayat Thane District

c) Health & Sanitation: Your Company has continued to transform 100 Anganwadis intoModel Anganwadis in the aspirational district of Nandurbar. MDL has successfully funded 3ICUs for Trauma Care Hospital in Vellore provided support for establishment ofcross-disability Early Identification & Intervention Centre at Ali Yavar Jung NationalInstitute of Speech & Hearing Disabilities (Divyangjan) in Bandra (Mumbai). MDL hasalso funded procurement of modern physiotherapy equipment at the Paraplegic RehabilitationCentre Khadki Pune.

Opening Ceremony of MDL Sponsored Units of Cross Disability Early Identification cumIntervention Centre & Preparatory School on 23.07.2021 Chief Guest Smt JaishreePrasad

MDL has continued its project of supporting and counseling more than 39000 cancerpatients at nine Regional Cancer Centres in 5 different States/ UTs. Further MDLcontinued its support for mentally challenged children and adults at Children's Home inMankhurd and additionally supported Bal Kalyan Nagari for the benefit of children who arevictims of natural calamity social apathy and death of parents. MDL is also supportinginfrastructure upgradation and indoor treatment of persons living with HIV at Kolhapur.

In line with the Swachh Bharat Mission of Government of India your company hascontinued the clean-ship of peripheral areas around MDL. Further MDL has supported forconstruction of toilet blocks in Nhava Gram Panchayat and Dafodils School Karjat togetherwith new toilet block at Bus Depot in Alibagh Raigad District of Maharashtra.

d) Skill Development:Your Company has successfully completed its flagship project i.e.construction of state-of-the-art Vocational Training Centre (VTC) at Anandvan (Chandrapur)for skill training of PWD youths. MDL is also supporting training of apprentices throughthe in-house Apprentice Training School (ATS).

Your company has also imparted vocational training to 100 youths as Machine Operator inPlastics Processing and Injection Moulding trade in Aurangabad and Chandrapur throughCentral Institute of Plastics Engineering & Technology. The project not only providestraining to youths but also ensures their placement in reputed organizations.

Besides this MDL has also supported skill training of 16 visually impaired youths inbody massage and therapist trade in Nandurbar District through Gramin Shramik Pratisthan.

e) COVID Management: Keeping MDL's commitment to support the nation's fight against theCovid-19 pandemic your company has supplied one Refrigerated Truck of capacity 36 cumetre for COVID-19 vaccination programme costing Rs. 32.05 lakh and the same was handedover to Government Medical Store Depot Mumbai.

MDL has also supported District Administration (Nandurbar) for medical equipment'smedicines etc. amounting to Rs. 440 Lakhs. Besides this MDL has supported GovernmentHospitals in and around Mumbai for medical equipment medicines amounting to Rs. 260 Lakhsand supplied dry ration and cooked food for the needy amounting to Rs. 100 Lakhs.

Handing over of refrigerated truck to Government Medical Store Depot Mumbai ColdChain Equipment for Covid-19 vaccination programme

f) Sports Development: MDL has supported the Wheelchair Basketball Association ofMaharashtra for development of Maharashtra Women and Men Wheelchair Basketball Team. Withthis support the Maharashtra men's and women's teams of Wheelchair Basketball couldparticipate in the International Wheelchair Basketball Championship ParalympicsQualifiers national tournaments and represent India. This project has empowered disabledplayers through basketball.

The CSR committee certifies that the implementation and monitoring of the CSR projectsbeing executed are in accordance with the CSR objectives and policy of the Company. TheAnnual Report on CSR contains the requisite details as specified in the Companies Act2013 and is placed at Appendix ‘E'.

8.10 Environment and Pollution Control:

Your Company has taken various initiatives towards sustainable development and energyconservation in the year under report. In alignment with the Government of India's policyto increase the quantum of renewable energy and to reduce energy consumption variousprojects were undertaken by your company. The Installation of Solar Power Plant changingof conventional lights into LED lights procurement of energy efficient welding machinesetc. are some of the areas where your Company had focused.

i) MDL is committed to reduce the consumption of energy generated by fossil fuel and toincrease the generation of renewable energy to the maximum possible extent. MDL hasalready installed 1.85 MWp solar power plant. Annual energy generation from 1.85 MWp SPVpower plants is approximately 24 Lakh units per year which is 12% of total consumption.

ii) Procurement of 12489 Nos. 110V LED bulbs LED office lights and LED flood lightsin MDL. Total 80042 units will be saved annually.

Information required under Section 134(3)(m) of the Companies Act 2013 pertaining toConservation of Energy Technology Absorption is given in Appendix ‘F' to thisReport.

8.11 Swachh Bharat Initiatives

Your Company adhering to the Prime Minister's Swachh Baharat Abhiyaan has been ableto make positive impact in creating mass awareness movement in and around MDL and bringabout lasting behavior change in the society through participation of employees at alllevels as well as the people from the surrounding area.

Health Awareness Talk on ‘Importance of cleanliness in daily life to preventspread of Covid-19' held on 14.12.2020

In line with the Swachh Bharat Mission of Government of India Your Company in thepandemic situation of Covid-19 has created awareness to control the spread of Corona Virusthrough Cleanliness Social Distancing and Use of Mask.

As a part of the Abhiyan your company has observed Swachhata Pakhwada. The Abhiyaanwas undertaken at three levels i) within the Shipyard ii) adjacent areas and iii) ruralareas.

a) Activities Within MDL Premises: -

Your Company has created awareness about cleanliness in pandemic situation amongstemployees to control the spread of Corona Virus through Cleanliness Social Distancing andUse of Mask. The same was done by displaying posters signage boards standees etc.During Swachhata Pakhwada awareness was created by "Swachhta Doots" indifferent workshops and Offices of MDL with emphasis on ‘Wearing Mask MaintainingPhysical Distancing and Maintaining Hand Hygiene'. Further regular sanitization activityis being carried out at Workshops Offices Executive Mess & Industrial Canteens.Removal of e-waste heavy debris repairs of drainage lines continue to be a regularactivity. Your company has appointed Facility Management

Services for bringing professionalism in the cleanliness of the yard.

b) Activities outside MDL Premises: -

Your Company keeping its commitment to keep the surrounding area clean engaged anagency for carrying out daily cleaning of 4.5km roads surrounding MDL. Your Company alsocreated awareness to stop spread of Covid – 19 Virus in surrounding community byrunning mobile van. Shramdan by all employees led by CMD and Directors is carried out atregular intervals. MDL has also supplied garbage bins to Nhava Gram Panchayat so as ensurethat Waste management is carried out in an effective manner by the gram panchayat.

c) Activities in Rural/ Other Areas:

In line with the Swachh Bharat Abhiyaan of -Government of India Your Companyhas also undertaken construction of toilet block at Alibaug Bus Station and same wouldbenefit the common passengers at the Bus Station. MDL is also constructing a school toiletat Karjat block of Raigad district. Further MDL has handed-over cleaning equipment toGovernment Paraplegic Rehabilitation Centre at Khadki Pune.

8.12 Particulars of Employees and Related Disclosures

In accordance with Ministry of Corporate Affairs notification no. GSR 463(E) dated 05June 2015 Government Companies are exempt from Section 197 of the Companies Act 2013 andrules thereof.

8.13 Extract of Annual Return

In terms of the Companies Act 2013 as amended the Annual Return is available onhttps://mazagondock.in/ Annual Return.

8.14 Directors' Responsibility Statement

As required under Section 134(3) (c) and 134(5) of the Companies Act 2013 theDirectors' Responsibility Statement is given as under that:-

(a) In the preparation of the Annual Accounts for financial year ended 31 March 2021the applicable accounting standards had been followed along with proper explanationrelating to material departures;

(b) The Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year i.e. 31March 2021 and of the Profit and Loss of the Company for the year ending on 31 March 2021;

(c) The Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 as amendedfrom time to time for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;

(d) The Directors had prepared the Annual Accounts for the financial year ended on 31March 2021 on a going concern basis;

(e) The Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively and

(f) The Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

8.15 Statutory Auditors and their Report

The Comptroller and Auditor General of India under Companies Act 2013 appointed M/s.JCR & Co. Chartered Accountants Mumbai as the Statutory Auditors of the Company forthe year 2020-21. The Auditors have certified the Accounts and their Report is placed as apart of Annual Report.

The notes on the financial statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments. During the year under reviewno fraud has been reported by the Auditors under section 143(12) of the Companies Act2013 read with Rule 13 of the Companies (Audit and Auditors) Amendment Rules 2015.

8.16 Comments of the Comptroller & Auditor General of India

The Comments of the Comptroller and Auditor General of India under Section 143 of theCompanies Act 2013 are placed in this report after the report of the Statutory Auditors onstandalone and consolidated financial statements.

8.17 Cost Auditors

M/s. ABK & Associates. Mumbai. were appointed as Cost Auditors for conductingcost Audit of the Company under section 148 of the Companies Act 2013 for the year2020-21 and accordingly such accounts and records are made and maintained.

8.18 Secretarial Audit

M/s Ragini Chokshi & Co. Practicing Company Secretaries Mumbai were appointed toconduct Secretarial Audit of the Company for the financial year 2020-2021 pursuant toprovisions of Section 204 of the Companies Act 2013 and

Regulation 24A of the SEBI(LODR) Regulations 2015. The Report of the Secretarial Auditin Form MR-3 is annexed to the Directors' Report as Appendix 3 and forms part of thisreport. The Report does not contain qualification reservation or adverse remark exceptthat the Company did not have the minimum number of Independent Directors on the Board anddid not have Woman Director on the Board of the Company as stipulated under the SEBI(LODR) Regulations 2015.

In this regard your Company being a Government Company under the AdministrativeControl of the Ministry of Defence Department of Defence Production the power to appointDirectors (including Independent Directors) and finalizing the terms and conditions ofappointment vest with the Government of India. The matter regarding appointment ofrequired number of Independent Directors/Woman Director have been taken up with theadministrative Ministry from time to time and the Government is seized of the Matter.

8.19 Adequacy of Internal Financial Controls with Reference to The Financial Statements

The Company has an Internal Audit Department which monitors compliances of Company'sprocedures and policies with well defined annual audit program and significant auditobservations are reported to the Audit Committee of Board of Directors. The Internal Auditfunction is headed at the level of Addl. General Manager who is reporting directly to theChairman & Managing Director.

The implementation of SAP/ERP system has helped to strengthen the Internal ControlSystems with its in built checks and balances at various level of operations and it hasset up disaster recovery site at distant locations.

The system of Internal Control comprises well defined organisation structurespre-identified authority level and procedure issued by management covering all vital andimportant areas of activities which includes Purchase stock verification InventoryConsumption Fixed Assets Cash & Bank Management & Treasury Payroll HR RiskManagement Statutory Compliance and all other activities involved in financialstatement closing process.

Internal audit of specific areas of the Company's operations has been outsourced toChartered Accountant firm. In addition to outsourced audit activities other auditactivities are carried out by in-house Internal Audit department. Audit reports given byInternal Auditors were reviewed by Audit Committee and necessary directives were issued.The Company had initiated suitable actions on the said directives.

9. Management Discussion &Analysis Report

As per Regulations 34(2) (e) of the SEBI (LODR) Regulations the Management Discussionand Analysis Report (MDAR) is attached to this Report as Appendix ‘G'.

10. Business Responsibility Report (BRR)

The Listing Regulations mandates the inclusion of the BRR as part of the Annual Reportfor the top 1000 listed entities based on market capitalization. In compliance with theListing Regulations we have integrated BRR disclosures into our Annual Report as Appendix‘6'.

11. Future Outlook

Your Company has envisaged following measures of future outlook.

i. Infrastructure

a) MDL has long been looking for a Graving Dry Dock (GDD) capable to undertakeconstructions /repairs of various naval platforms.

i. To meet the above requirement MDL has already been exploring option to developGreenfield shipyard at MDL owned land at Nhava Yard over an area of 40 acres which wouldbe based around a ship lift and wet basin/dry dock. This facility would also aim forconstruction of commercial ships.

ii. MDL is currently undertaking capital expenditure by way of construction of asubmarine launch facility for the newly built Submarine Assembly Workshop. This wouldenable creation of capacity and launching of two independent lines of submarines

ii. Project 75 (I):

MDL has been shortlisted as one of the Strategic Partners (SP) for future submarineproject P 75(I). RFP from MoD has been issued on 20 July 2021. MDL has also expressedinterest to MoD to participate in the construction of strategic Submarine project.

iii. MRLC of SSK submarines

Construction of two new SSK class submarines modernization & refit of four SSKclass submarines present construction of Scorpene class submarines and Medium Refit Lifewith Certification of IN Submarine has forged MDL's position as the only Indian Shipyardwith capabilities to build & provide Life Cycle Support for conventional submarines.

Medium Refit with Life Certification (MRLC) of one SSK class Submarine is currently inprogress. There is a likelihood of IN placing refit order for balance SSK class submarineson MDL post completion of refit of the SSK class Submarine at MDL currently underprogress. MDL is fully poised to render life cycle support for Submarines of Indian andForeign navies.

iv. Parallel lines for Submarine Construction

MDL has augmented necessary infrastructure for submarine construction through amodernisation project. Presently high level of skill has been developed in MDL forsubmarine construction and at the same time local vendors have been developed for complexand high quality fabrication jobs. The skilled workforce of MDL and vendors are ready totake on new challenges in submarine construction. Post infrastructure augmentation MDLsubmarine building capacity has been enhanced substantially to cater for two parallelsubmarine construction lines.

v. Construction of Non-Conventional Submarines

With sound knowledge in various aspects of submarine construction & trials and withaugmentation of submarine construction facilities MDL is ready to take on construction ofnon-conventional submarines as per requirements of Indian Navy.

vi. Diversification.

MDL is also looking to diversify in the field of underwater equipment and platformmarine equipment and other platforms heavy engineering equipment offshore platform etc.For this a dedicated team has been formed in the submarine division to give boost to thediversification programme and utilize the available spare capacity.

a) Domestic RFPs:

MDL has participated in domestic RFPs (CTS FPV ACV) for the Indian Navy and CoastGuard. MDL expects positive responses against these RFPs.

b) Focus on repair:

In order to diversify the revenue streams MDL intend to increase ship repairactivities in the future as such activities are for a shorter period of time and result inthe early booking of revenues. MDL has successfully bagged Ship repair orders of threeships from Indian Coast Guard. This will help augment revenues increase client base andreduce single client dependency for future orders.

vii. Exports: a. Your Company has a rich legacy of building close to 800 shipssince inception a broad spectrum of exports carried out in the past comprising of morethan 250 vessels the impeccable quality of the products delivered that has beeninternationally acclaimed are all being leveraged in a concerted manner for exports. MDL'sexport portfolio covers a wide gamut of products comprising of new builds for civilian andmilitary end-use repairs of commercial vessels and refits of war vessels. Customizedservice portfolios wherein MDL can pitch-in as a Know-How Provider for specific needs ofdeveloping nations are also in the offer. The last export order was delivered in 2014 andnow intends to revamp their presence in the export market. Highly competitive marketschanging technology stringent quality criteria increased expectations of the customerand low pricing of the products from North–East Asian countries are the realities.

b. Your Company intends to revamp its presence in the export market. MDL has been indialogue with various Indian Embassies/High Commissions abroad to expand its productoutreach to prospective customers. MDL is participating aggressively in the global tendersissued by various countries and are in dialogue with foreign navies to fulfil theirrequirements. The commercial shipbuilding sector world-wide is passing through a down turnand MDL is deeply aware of the situation. Nevertheless the defence needs in theinternational market continues to rise. MDL has certain unique strengths and skill setsthat have been painstakingly developed in the past eight decades and are adapted in thecomplex activities of weapon integration sensors for high tech defence platforms. Thisgives a cutting edge for MDL against their competitors and MDL is all set to cash-in thisscenario. MDL has also appointed management representatives for canvasing MDL's richlegacy in construction of Naval and Non-Naval vessels and promoting MDL's products in theglobal market. The management representative will also facilitate expansion and growth ofMDL business in near future.

c. In addition to constructing vessels MDL is also ready to provide the services likedesign of warships and commercial ships transfer of technology and imparting training inconstruction of large warships auxiliary boats and ferries handholding to the Customer'sShipyard for construction and first line repairs of Warships and auxiliary vessels andTraining the technical teams from customer's side in the field of Setting to work ofsystems and Ship trials. MDL also has facilities & capacity for fabrication ofPressure hull subsections. Export of Pressure Hull sections to any other countrymanufacturing / procuring Scorpene class Submarines is being explored. Your Company alsointends to undertake infrastructure development and become part of global supply chain forproducts.

d. Your company is exploring the possibility of converting the requirements ofgovernment agencies of target countries to projects under LoC. Efforts are on for pursuingexports with various countries following both the G2G route wherein the GoI have openedLines of Credit with funding typically extended by EXIM bank as well as the B2B route withsovereign guarantee of the recipient nation.

e. Your Company's strategic positioning on the west coast of the country providesproximity to the main sea routes crisscrossing the Arabian Sea and Indian Ocean withaccessibility to Europe and Middle East.

Tie-ups with other small shipyards in the country are in place. MDL has aligned itselfwith the new thrust on Defence exports. In this regard an international marketing team isfunctioning under Director (Shipbuilding). A road map for exports has been drawn-uptarget countries have been identified and agents have been appointed in some of theterritories where export potential exist.

Acknowledgements

Your Directors wish to place on record their gratitude and sincere appreciation for theassistance co-operation and guidance received by the Company from various Ministries ofthe Government of India especially the Ministry of Defence Department of DefenceProduction the Indian Navy Greater Mumbai Municipal Corporation Mumbai Port TrustPrincipal Controller of Defence Accounts (Navy) the Departments of Customs Income TaxExcise Service Tax and Sales Tax.

Your Directors express their gratitude to the clients who have extended patronage tothe Company. Your Directors also place on record their appreciation for the assistanceextended by the Company's Bankers Viz. State Bank of India and Canara Bank the valuableadvice rendered and co-operation extended by the Statutory Auditors M/s. JCR &Co.Mumbai and the officers of the Principal Director of Commercial Audit and Ex-OfficioMember of the Audit Board Bengaluru. Your Directors also appreciate and acknowledge thedevoted efforts put in by the Company's employees at all levels.

For and on behalf of the Board
VAdm. Narayan Prasad AVSM NM IN (Retd)
Chairman & Managing Director
DIN: 08644492
Place: Mumbai
Date: 10 August 2021

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