My dear fellow Shareowners
It gives me great pleasure to share with you highlights of our Company's performanceduring 2016-17.
It is the plan of the Hon'ble Prime Minister Shri Narendra Modiji to transform Indiafrom the world's top weapons buyer into an arms exporter. We all at Reliance Defence arecommitted to make our humble contribution to achieve this significant national objective.India has topped the Stockholm International Peace
Research Institute's list of the largest defence importers for the last seven years.About 70 per cent of India's defence purchases are through imports.
The Company has made significant progress during the year towards improving theoperational performance and is fully geared to capitalize on its growth aspirations bywinning contracts for front-line Naval vessels and vessels of Indian Coast Guard. OurCompany is an integral part of the Reliance Group. The Reliance Group is amongst India'sleading business houses with a 8 million strong shareholder base. We have a strongpresence across wide array of high growth consumer facing businesses of telecomfinancial services power infrastructure and defence. Our Company embodies values andcommitments of the Reliance Group and is able to leverage the brand equity and otherresources of the Reliance Group. We are committed to further and faster growth of theCompany as an important member of the Reliance family.
Today each of us can claim with pride and humility that the Reliance Group touches thelife of one in every five Indians every single day. This proud association defines ourvision and values. It defines who we are what we stand for and what we aspire to achieve.We shall strive to make Reliance Defence and Engineering Limited a world-class defenceCompany benchmarked to international standards of quality operational performanceefficiency and customer orientation to meet the uncompromising standards that our Defenceforces need.
The Company is India's leading private sector defence company with gross non-currentassets as on March 31 2017 of ` 965935 lakh against ` 937898 lakh a year before. Duringthe financial year 2016-17 the Company reported aggregate revenue of about ` 56414 lakhagainst ` 34627 lakh in the previous year an increase of 38.62 per cent and incurred aloss of ` 52343 lakh as compared to loss of ` 52865 lakh in the previous year.
During the year under review our Company signed the Sub-
Concession agreement with Gujarat Maritime Board for a period of 30 years expiring inJune 2046. The Ministry of Defence has carried out a detailed financial and technicalcapabilities study of our Company (also known as Shipyard Assessment).
During the year our Company signed contracts of approximate value of ` 916 crore forconstruction of 14 Fast Patrol Vessels for the Indian Coast Guard. Our Company has alsosubmitted bids for construction of eight Anti Submarine Warfare Shallow Water Crafts (ASWSWC')for the Indian Navy and for four Landing Platform Docks (LPDs) Combined value ofthese two projects is . approximately ` 28000 to 30000 crore.
In a significant development our Company was qualified by U. S. Navy as an approvedcontractor to perform complex repair and alternation services for the U.S. Navy's SeventhFleet vessels operating in the region and signed the Master Ship Repair Agreement (MSRA')with U. S. Navy. Our Company is the first shipyard in India to have received MSRAcertification to undertake servicing and repairing works for the vessels of the U. S. Navy(Seventh Fleet).
Our Company's shipyard at Pipavav Gujarat has integrated state of-the-art productionfacilities. After acquisition of the Company there has been a substantial increase inpace towards delivery of Naval Offshore Patrol Vessels (NOPVs) for the Indian Navy. Thevessels are being constructed in two batches of two to three vessels each to enablesimultaneous deliveries. The two NOPVs in the first batch will be launched in the firsthalf of financial year 2017-18.
Industry and Business Opportunities
Under the "Make in India" mission the defence sector has been opened forprivate sector participation which will help foreign original equipment manufacturers toenter into strategic partnerships with Indian companies and leverage the domestic marketsand also aim at global business opportunities. Besides helping build domesticcapabilities this will bolster exports in the long term. Our Company is uniquely placedto tap these growth opportunities.
Shipyards controlled and / or managed by Defence Public Sector Units (DPSUs')need complementary support from the Private Sector Shipyards to fulfill requirement of theIndian Navy. Apart from the requirements of the Indian Armed forces the defence market inSouth-East Asia will also likely to provide growth opportunities in the coming years.
Currently shipyards owned by Public Sector Undertakings (DPSU') haveorders worth ` 180000 Crores. DPSU's will take several years to deliver the vesselsalready on their order book. The Government considering this fact has decided tooptimally utilize the private sector capacity to augment and complement the DPSU capacity.Strategic Partnership' model provides much awaited framework to achieve thisobjective.
Strategic Partnership' framework / model of DPP-2016 provides a very largeopportunities to the Indian private sector industry. Strategic Partnership model aims torope in leading private players for production of major military platforms in the country.The government is all set to roll out the process for a ` 60000-crore ConventionalDiesel- Electric submarines programme to be built under P-75I project for the Indian Navy.It is set to be the first defence acquisition project to be launched under the ambitiousStrategic Partnership' model.
In addition to these big tickets strategic naval platforms several new projects ofthe Indian Navy including Survey Training Vessels
Seven Next Generation Missile Corvettes Next Generation missile Vessels are alsoexpected in near future.
In the non-defence sector new commercial shipbuilding and the Hydro-carbon Explorationand Production (E&P') assets segment both in India and in South-East Asiaregion present another opportunity to our Company to expand its business. The Governmentof India has approved new Shipbuilding Financial Assistance Policy for Indian shipyards.This will provide them a level playing field vis-a-vis foreign shipyards. Financialassistance at the rate 20 percentage of the "Contract Price" or the "FairPrice" as determined by international valuers whichever is lower will be madeavailable to Indian shipyards. All government departments or agencies are required toprovide Right of First Refusal' to Indian shipyards for procurement or repair ofvessels which are to be utilized for government purposes. This is welcome news for Indianshipyards.
Huge capacity exists in the private sector Indian shipyards for construction of newvessels and for carrying out repairs and refits. This capacity may be utilised by DefencePublic Sector Undertakings (DPSUs') through joint ventures / partnerships to speedup delivery of vessels to the Indian Navy / Coast Guard in order to synergies privateinfrastructure and modern production processes with the technical capabilities of DPSUs.We are in consultation with the Indian Navy Production and Acquisition wing for achievingthis objective.
Our Company has always maintained the highest governance standards and practices byadopting as is the norm for all constituent companies of the Group the "RelianceGroup Corporate Governance Policies and Code of Conduct". These policies andCode prescribe a set of systems processes and principles which conform to the highestinternational standards and are reviewed periodically to ensure their continuingrelevance effectiveness and responsiveness to the needs of investors both local andglobal and all other stakeholders.
We are committed to enhancing scale competitiveness efficiency and productivity ofour businesses benchmarked to global standards of excellence which shall be a disciplineto be pursued at all levels in our Company. Our projects require substantial use ofnatural resources such as land water and minerals. We take adequate care in designing ofour projects in a manner that ensure optimum utilization of natural resources. Theinterests of all stakeholders have always been our prime focus.
Our founder the legendary Padma Vibhushan Shri Dhirubhai H Ambani gave us a simplemantra: to aspire to the highest global standards of quality efficiency operationalperformance and customer care. We remain committed to upholding that vision. Thank youshareowners for your continued support in our pursuit of achieving positivetransformation for our Company.
|Anil Dhirubhai Ambani |