3.9 Provisions , Contingent Liabilities and Contingent

assets

a) Provisions

A provision is recognized if, as a result of a past event, the Company has a present legal obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

Provisions (excluding retirement benefits and compensated leave) are not discounted to its present value and are determined by the best estimate of the outflow of economic benefits required to settle the obligation at the reporting date. These are reviewed at each reporting date adjusted to reflect the current best estimates.

Warranty obligations included in this type of provisions are not treated as a separate performance obligation, unless the customer has the option of contracting the warranty separately, therefore they are recognized in accordance with Ind AS 37. These provisions are classified as current liabilities since they relate to the operating construction projects cycle, in line with Ind AS 1.

Provision towards guarantee claims in respect of ships delivered wherever provided/ maintained is based on technical estimation. For the ships delivered, guarantee claims are covered by way of insurance policies covering the guarantee period on case-to-case basis, wherever required.

Provisions for anticipated losses are recognized when it becomes apparent that the total costs expected to fulfil a contract exceed expected contract revenues. For the purpose of determining, where appropriate, the amount of the provision, budgeted contract revenue will include the forecast revenue that is considered probable, in line with Ind AS 37 as well as incremental costs. General costs are not directly attributable to a contract and are therefore excluded

from the Budgeted cost unless they are explicitly passed on to the counterparty in accordance with the contract, in line with paragraph 68 of Ind AS 37.

b) Contingent Liabilities and Contingent Assets

In the normal course of business, contingent liabilities may arise from litigations and other claims against the Company. Where the potential liabilities have a low probability of crystallizing or are very difficult to quantify reliably, the Company treats them as contingent liabilities. Such liabilities are disclosed in the notes but are not provided for in the financial statements. Although there can be no assurance regarding the final outcome of the legal proceedings, Company does not expect them to have a materially adverse impact on the financial position or profitability. The Company does not recognize a contingent liability but discloses its existence in the financial statements.

A contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity. The Company does not recognize a contingent asset but discloses its existence in the financial statements where an inflow of economic benefits is probable.

3.10 Revenue Recognition

a) Revenue from Operations

Revenue from contracts with customers are measured based on the consideration specified in a contract with a customer (ie., transaction price, which is the fair value of consideration received or receivable)

At the first instance, revenue recognition process involves identifying the relevant contracts and technical evaluation of the performance obligations, contained therein.

A single performance obligation is identified in shipbuilding and/or ship repair segments for each vessel, due to the high degree of integration and customization of the various goods and services forming a combined output that is transferred to the customer over time.

The company choses the appropriate method of measuring the progress of the completion at the contract inception for recognizing revenue over time,

and are applied consistently to similar performance obligations under the respective segments and/or activities carried out thereon.

Recognition of Revenue for a performance obligation satisfied over time is made only if the company can reasonably measure its progress towards complete satisfaction of the performance obligation.

The performance obligations for the shipbuilding and Ship repair activities carried out by the company are satisfied over time rather than at a point in time since the Company's performance does not create an asset with an alternative use to the Company ie contractual restrictions and practical limitations to readily direct that asset for another use (Even in some cases it will be able to do so, it can only be done after significant changes and at significant cost) and it has an enforceable right to payment for performance completed to date.

Revenue is recognized when the company satisfies performance obligations by transferring promised goods and services to the customer over a period of time using output method based on measurement of physical performance completed to date in respect of contracts with customers for ship building and ship repair other than Indigenous Aircraft Carrier (IAC).

In respect of contract with Indian Navy for construction of Indigenous Aircraft Carrier, which is partly 'fixed price basis' and partly 'cost plus basis', the revenue.

• From fixed price portion is recognized using

output method .

• By way of mark up from cost plus part of the contract for procuring and supply of materials and design outsourcing is recognized when performance obligations as per the terms of the contract are fulfilled upon making payments to the suppliers.

• The cost of materials, value of design outsourcing and other expenses incurred for the vessel which are recoverable separately from Navy are charged off to the statement of Profit and Loss when materials are consumed/ activities are performed/expenses are incurred and are simultaneously grossed up with the value of work done and recognized as revenue.

In the case of ship repair contracts involving continuous multiple years maintenance support/ recurring and routine services, the company opted for time-elapsed output method, i.e, measuring the progress based on time elapsed to reporting date, which is representative of the satisfaction of performance obligation subject to entitlement of consideration in exchange of goods and/or services.

Based on the technical assessment considering the latest available information to the company, measuring the progress towards complete satisfaction of a performance obligation in the method adopted will be revised/updated on an ongoing basis.

During the initial stages of a contract, where the company may not be able to reasonably measure the outcome of a performance obligation and the company expects to recover the costs incurred in satisfying the performance obligation, revenue will be recognized only to the extent of the costs incurred until such time that it can reasonably measure the outcome of the performance obligation.

Contract modifications are accounted when additions, deletions or changes are approved either to the contract scope or contract price. The accounting for modifications of contracts involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the stand alone selling price. Where the goods or services added are not distinct, adjustment to revenue is made on a cumulative catch up basis. Where the goods or services added are distinct, and such additional goods or services are priced at standalone selling prices, the contract modification is accounted for as a separate contract; whereas if the modification is not priced at standalone selling price, the same is accounted as a termination of the existing contract and creation of a new contract.

The Company generally does not recognize any revenue from additional work until it has been approved by the customer. When the scope of work has been approved but the impact on revenue is yet to be valued, the "variable consideration" requirement (as explained below) will apply. This entails recognizing revenue in an amount that is unlikely to be reversed.

in which the Company recognizes as expenses, the related costs for which the grants are intended to compensate. Where the Grant relates to an asset value, it is recognized as deferred income, and amortized over the expected useful life of the asset. Other grants are recognized in the statement of Profit & Loss concurrent to the expenses to which such grants relate/ are intended to cover.

Ship Building Financial Assistance (SBFA) is

recognized over a period of time in proportion to the expenses / cost incurred and classified under "other operating revenue".

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognized in statement of profit & loss in the period in which they become receivable.

c) Other income

i) Liquidated damages and interest on advances

No income is recognized on (a) interest on advances given and (b) liquidated damages, where the levies depend on decisions regarding force majeure condition of contract. These are accounted for on completion of contracts and / or when final decisions are taken.

In the case of contracts entered into for execution of capital works having long gestation period, where the extant commercial terms of the contract provides for provision of extending interest bearing mobilisation advance to the service provider for mobilising various resources for timely execution, mobilisation advances are paid and interest is accounted on accrual basis.

ii) Accounting for insurance claims

(i) Warranty/Builder Risk claims

In the case of guarantee defects covered under warranty insurance policies or claims under Insurance Policies taken for ship building and ship repair works, the insurance claims lodged are recognized in the financial statements in the year in which the survey is completed and the probable amount of settlement is intimated by the insurance Company.

(ii) Other Insurance Policies

In the case of other Insurance Policies like Asset Insurance, Transit Insurance, Marine Insurance, Cash Insurance etc., the claims are recognized in the the financial statements on settlement of the claims by way of receipt of the amount from the Insurance Company.

In the case of Medical insurance, claims are recognized on due basis, based on the claims submitted with the insurance company.

Other items of income are accounted as and when the right to receive such income arises and it is probable that the economic benefits will flow to the company and the amount of income can be measured reliably.

3.11 Employee benefits

Employee benefits consist of salaries and wages, contribution to provident fund, superannuation fund, gratuity fund, towards medical assistance, which are short term in nature and contribution towards compensated absences, which is long term in nature.

Post-employment benefit plans

i) Defined Contribution plans

Defined contribution to Employees Pension scheme for eligible employees is made to National Pension Scheme (NPS) and are charged as expense as they fall due. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made.

The Company makes contributions to the Cochin Shipyard Employees Mutual Public Welfare Trust and Employees Medical Assistance Trusts, which are charged as expense, as and when they fall due. Such benefits are classified as Defined Contribution Schemes as the Company does not carry any further obligations, apart from the contributions made.

ii) Defined benefit plans

Gratuity

The Company provides for gratuity, a defined benefit retirement plan covering eligible employees. The fund is managed by the trustees of the Cochin Shipyard Ltd Group Gratuity Trust .The liability or

asset recognized in the balance sheet in respect of its defined benefit plan is the present value of the defined benefit obligation at the end of the reporting period less the fair value of plan assets. The defined benefit obligation is calculated periodically by actuaries using the projected unit credit method.

The present value of the said obligation is determined by discounting the estimated future cash outflows, using market yields of government bonds that have terms approximating the terms of the related liability.

The interest income / (expense) are calculated by applying the discount rate to the net defined benefit liability or asset. The net interest income / (expense) on the net defined benefit liability or asset is recognised in the Statement of Profit and loss.

Remeasurement gains and losses arising from experience adjustments and changes in actuarial assumptions are recognised in the period in which they occur, directly in other comprehensive income. They are included in retained earnings in the Statement of Changes in Equity and in the Balance Sheet.

Changes in the present value of the defined benefit obligation resulting from plan amendments or curtailments are recognised immediately in Statement of profit and loss as past service cost.

Provident Fund and Pension Scheme

The Company also makes contribution towards provident fund. The provident fund is administered by the Trustees of the Cochin Shipyard Limited Employees Contributory Provident Fund Trust. The rules of the Company's provident fund administered by the Trust, require that if the Board of Trustees are unable to pay interest at the rate declared by the Government under para 60 of the Employees' Provident Fund Scheme, 1952, then the deficiency shall be made good by the Company. The deficiency, if any assessed by the Company based on actuarial valuation will be provided for in the accounts.

Other employee benefits Compensated absences

The Company has a policy on compensated absence which are both accumulating and non-accumulating in nature. The expected cost of accumulating compensated absence is determined by Actuarial valuation performed by an independent actuary at

each Balance Sheet date using projected unit credit method on the additional amount expected to be paid/availed as a result of unused entitlement that has accumulated at the Balance Sheet date. Expense on non-accumulating compensated absence is recognised in the period in which the absences occur.

3.12 Taxes on Income

a) Income tax

Income tax expense comprises current tax expense and the net change in the deferred tax asset or liability during the year.

Current and deferred taxes are recognized in Statement of Profit and Loss, except when they relate to items that are recognized in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognized in other comprehensive income or directly in equity, respectively.

The Company has determined that interest and penalties related to income taxes, including uncertain tax treatments, do not meet the definition of income taxes, and therefore accounted for them under Ind AS 37 Provisions, Contingent Liabilities and Contingent Assets.

b) Current tax

Current tax is measured at the amount of tax expected to be payable or receivable on the taxable income or loss for the year and any adjustment to the tax payable or receivable in respect of previous years as determined in accordance with the provisions of the Income Tax Act, 1961. The amount of current tax payable or receivable is the best estimate of the tax amount expected to be paid or received that reflects uncertainty related to income taxes, if any. It is measured using the tax rates enacted or substantively enacted at the reporting date.

Current tax assets and current tax liabilities are offset, when there is a legally enforceable right to set off the recognized amounts and there is an intention to settle the asset and the liability on a net basis.

c) Deferred tax

Deferred tax is recognized using the Balance Sheet approach. Deferred tax assets and liabilities are recognised for deductible and taxable temporary differences arising between the tax base of assets and

liabilities and their carrying amount, except when the deferred tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither accounting nor taxable profit or loss at the time of the transaction.

Deferred tax assets are recognised only to the extent that it is probable that either future taxable profits or reversal of deferred tax liabilities will be available, against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised.

The carrying amount of a deferred tax asset shall be reviewed at the end of each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognized deferred tax assets are reassessed at each reporting date and are recognized to the extent that it has become probable that future taxable profits will allow the deferred tax assets to be recovered.

Deferred tax relating to items recognized outside profit or loss is recognized outside profit or loss (either in other comprehensive income or in equity).

Deferred tax assets and liabilities are measured using the tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled.

Deferred tax assets and liabilities are set off when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority.

3.13 Operating Segments

Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker, in deciding how to allocate resources and assessing performance. The Company's chief operating decision maker is the Chairman & Managing Director.

The Company has identified business segments (industry practice) as reportable segments. The business segments comprise: 1) Ship Building and 2) Ship Repair.

Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment. Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on a reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities".

3.14 Recent Pronouncements

Ministry of Corporate Affairs ("MCA") notifies new standards or amendments to the existing standards under Companies (Indian Accounting Standards) Rules as issued from time to time. For the year ended March 31, 2024, MCA has not notified any new standards or amendments to the existing standards applicable to the Company.

a) Freehold Land includes the value of (a) land allotted on lease basis to (i) Bharatiya Vidya Bhavan (0.69045 hectare) (ii) M/s Indian Oil Corporation Ltd (0.620 hectare) for laying pipeline (iii) land leased to M/s Kochin Air Products (0.30

hectare) and (b) land leased to Kerala State Electricity Board (0.47 hectare).

b) Value of land includes value of buildings acquired along with the land for which depreciation has not been provided as the value is not separately available and most of these buildings are likely to be demolished for putting up facilities for the factory.

c) Freehold land includes landed properties of the Company

admeasuring 197.12 ares (487.00 cents) made up of 34.30 ares in Sy No. 713/11, 23.57 ares in Sy No. 713/12, 59.12

ares in Sy No. 713/13, 50.18 ares in Sy No. 714/06, 10.12

ares in Sy No. 714/2, 8.90 ares in Sy No. 714/4 and 10.93

ares in Sy No. 714/5 of land all are lying contiguously in

Elamkulam village, Kanayannur taluk, Ernakulam Dist, Kerala provided as security for issue of Tax free bonds.

d) The company has bearer plants in its premises and other sites which generates nominal income .Cost of such bearer plants cannot be reliably measured and hence these plants were not capitalized.

e) Title deeds of all immovable properties(ie freehold land) are held in the name of the Company.

f) In the case of following properties where the Company is the lessee, lease agreements are duly executed in favour of the lessee with the following exceptions:

1. The Company has taken 8.12 HA of land (re-measured as 8.1164HA) and 15 HA of water body on lease from Cochin Port Authority ( CoPA) on 12 April 2013 (1st phase) .CSL has also taken 8.134 HA of additional land area on lease from CoPA on 16 Nov 2017 (2nd phase).Two lease agreements (ie 1st phase allotment of land/waterbody and 2nd phase allotment of land)

were entered between CSL & CoPA and both lease deeds have not been registered.

2. The company has executed concessionaire agreements with the Mumbai Port Trust(MBPT) and Syama Prasad Mukherjee Port (SMPT) to Upgrade,Operate and Manage Ship Repair facility at Hughes Dry Dock and specified berths at Indira Dock of MbPT and two dry docks and Berth No.6 of Netaji Subash Dock of KoPT respectively.

The project site at MbPT is taken on license for 29 years. The license agreement is yet to be registered, as a request submitted for waiver of the stamp duty to the Government of Maharashtra is under consideration.

The project site at Syama Prasad Mukherjee Port is taken on license for 30 years .As license agreement does not attract stamp duty and registration charges in West Bengal , Concession Agreement with SMPT has not been registered .

g) The Right to use of land and ship repair facility represents the upfront fee paid to Cochin Port Trust towards setting up of International Ship Repair Facility (ISRF) project, to be amortised over the period of lease which was further extended based on the date of obtaining of Environmental Clearance. As all environmental clearances for ISRF are obtained as on January 09, 2018, the lease period of 30 years effectively starts from this date.

h) As at 31 March 2024, plant and equipment with a carrying amount of H465.55 lakhs were temporarily idle, but the company plans to operate the assets in FY 2024-25.

i) The Gross carrying value of assets of H12938.36 Lakhs have been fully depreciated, but still are in use.

j) Plant & Equipments includes capital expenditure on Research & development relating to equipments for welding technology amounting to H25.95 lakhs.

Capital Reserve: Capital reserve includes H263.56 lakhs being restoration charges received from Ms Indian Oil Corporation Ltd for laying pipe line through the Company's land.

Capital Redemption Reserve: Capital Redemption Reserve of H12353.76 lakhs includes H11914.20 lakhs being reserves created on redemption of preference shares and H439.56 lakhs being a sum equal to the nominal value of the shares bought back, which will be utilised for the purpose defined under the Companies Act 2013.

Securities Premium: Premium on tax free bonds is amortised on straight line basis over the period of bonds. The company had completed the Initial Public Offer (IPO) during 2017-18 and had allotted 22656000 equity shares of H10 each at premium ( H93929.76 lakhs). Expenses incurred net of deferred tax adjustment towards such allotment of shares amounting H777.93 lakhs has been debited in Securities Premium in accordance with the requirements of Indian Accounting Standard (Ind AS) 32- Financial Instruments.

Debenture Redemption Reserve: The Company was hitherto creating Debenture Redemption Reserve at 25% of the value of bonds issued by the company over the maturity period of such debentures in accordance with Section 71(4) of the Companies Act, 2013 read with Rule 18(7) of the Companies (Share Capital and Debentures) Rules, 2014 and as per SEBI (Issue and Listing of Debt Securities) Regulations, 2008. As per the amendment made to the Companies (Share Capital and Debentures) Rules, 2014 notified vide Notification No. G.S.R. 574(E) by the Ministry of Corporate Affairs, the company is not required to create Debenture Redemption Reserves in respect of the bonds issued by it. However, the Debenture Redemption Reserve already created up to 30.09.2019, H1668.44 Lakhs, was retained in the books till the time of redemption of the Tax Free Infrastructure Bond Series 2013-14 (Tranche I) on 2nd December 2023. After this, entire balance was transferred to retained earnings.

General Reserve: General reserve is primarily created to comply with the requirements of section 123(1) of the Companies Act, 2013. This is a free reserve and can be utilised for any general purpose like issue of bonus shares, payment of dividend, buy back of shares etc. The Company created a General reserve in earlier years pursuant to the provisions of the Companies Act,1956 where in certain percentage of profits were required to be transferred to General reserve before declaring dividends. As per the Companies Act 2013, the requirements to transfer profits to General reserve is not mandatory.

Cash flow Hedge Reserve: Cash flow hedge reserve represents the effective portion of change in the fair value of designated hedging instruments recognised in the Other Comprehensive Income. (Refer Note No. 47)

Interim dividend: During the year, the Company paid interim dividends of H8 per equity share of face value of H10 (Pre sub-division) and H3.5 per equity share of face value of H5 (Post sub- division), as recommended at the board meetings held on Nov 7, 2023 and Jan 30, 2024 respectively.

Proposed dividend: The Board of Directors of the Company have recommended a final dividend of H2.25 per equity share of face value of H5 for the financial year ended March 31, 2024 at the Board meeting held on May 24, 2024. This is subject to approval/ regularisation by the share holders in the Annual General meeting.

*R&D and New initiatives includes the following:

• National Centre of Excellence for Green Port & Shipping (NCoEGPS) is a major initiative by the Ministry of Ports, Shipping and Waterways (MoPSW) towards providing greener solutions. The Energy and Resources Institute (TERI) is the knowledge and implementation partner for this project. The centre aims to develop a regulatory framework and alternate technology adoption road map for Green Shipping to foster carbon neutrality and circular economy (CE) in shipping sector in India. MoPSW , Deendayal Port Authority Kandal, Paradip Port Authority Paradip, V O Chidambaranar Port authority Thoothukudi & Cochin Shipyard Ltd have partnered to develop NCoEGPS by providing funding support for infrastructure development and supporting research and capacity-building activities/initiatives for 5 years. During FY 22-23, CSL has paid H475.00 lakhs to TERI which has been reported as R&D expenses .

• USHUS is a start-up support program of CSL in association with Indian Institute of Management Kozhikode (IIM K) & Indian Institutes of Technology Madras (IIT) to augment the Government of India's initiatives to encourage and develop an ecosystem in India to support Maritime Start-ups. As part of this program maritime start-ups will receive seed funds from CSL as grants/ investments. IIMK LIVE & IIT Madras will review and recommend the proposals received under this scheme for investment by CSL. Fee for their services amounts to H7.00 lakhs(Previous Year - H18.50 lakhs). H90 Lakhs has been disbursed to five start ups identified by IIM K under seed funding scheme during the F.Y 2023-24.

• M/s Boston Consulting group was entrusted with preparation of detailed report for Setting up of Ship repair cluster (Mumbai & Kochi) in India in line with MoPSW's Maritime India Vision-2030 for an amount of H686.00 lakhs out of which H343.00 lakhs has been charged to Profit and loss account during current year. M/s Boston Consulting group is also entrusted for preparation of detailed report for Setting up of Ship repair business in Vadinar, Gujrat in India for an amount of H137.00 lakhs.

C. Details of transaction price allocated to unsatisfied/ partially satisfied performance obligations:

Aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of the end of the reporting period amounts to H15,50,362.12 lakhs (excluding Cost Plus Part of IAC contract).The amount of transaction price relating to unsatisfied performance obligation that are part of a contract that has an original expected duration of one year or less has not been included in the above disclosure as permitted under Ind AS 115. Further the estimate of the transaction price as above would not include any estimated amounts of variable consideration that are constrained. Management expects that 25.21 % of transaction price allocated to unsatisfied/ partially satisfied contracts as of 31.03.2024, as stated above, will be recognised as revenue during FY 2024-25 and the remaining thereafter.

During the year ended March 31,2024 the Company recognised revenue of H1,17,991.94 lakhs arising from opening Contract Liability as of April 01,2023.

54. FINANCIAL INSTRUMENTS

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consist of the following three levels:

Level I inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

Level II inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

Level III inputs are unobservable inputs for the asset or liability.

The following table summarises financial assets and liabilities measured at fair value on a recurring basis and financial assets that are not measured at fair value on a recurring basis

55. Financial Risk Management Policy

Financial Risk Management Objective and Policies:

The Company's principal financial liabilities, other than derivatives, comprise of loans and borrowings, trade and other payables and advances from customers. The Company's principal financial assets include Investment, loans and advances, trade and other receivables and cash and bank balances that derive directly from its operations. The Company is exposed to market risk, credit risk and liquidity risk. The Company's senior management oversees the management of these risks. The Board provides written principles for overall risk management as well as policies covering specific areas such as foreign exchange risk, interest rate risk, credit risk, the use of derivative financial instruments and non-derivative financial instruments, and the investment of excess liquidity. The Company does not enter into or trade financial instruments, including derivatives for speculative purposes.

Market Risk

Market risk is the risk that the fair value of future cash flows of financial assets will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, foreign currency risk and other price risk, being mainly commodity price risk. Financial Assets affected by market risk include loans and advances, deposits and derivative financial instruments.

A. Interest rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Company's exposure to the risk of changes in market interest rates is minimal since the exposure relates primarily to the Company's long-term debt obligations of redeemable non-convertible bonds with fixed interest rates as disclosed in Notes 23 and 28. With the current profile of fixed rate borrowing, the company is not sensitive to interest rate fluctuations.

B. Foreign Currency Risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Company's exposure to the risk of changes in foreign exchange rates relates primarily to the Company's operating activities (when revenue or expense is denominated in a foreign currency).

Foreign currency risk of the company is managed through a properly documented risk management policy approved by the board. The Board of directors also reviews the foreign currency exposure of the Company on quarterly basis. The company manages the net foreign currency risk mainly by entering into forward contracts with the bank as the counter party. The disclosures of outstanding forward contract as on reporting date is given in Note 47.

The Company is affected by the price volatility of certain commodities. Its operating activities require the purchase of steel, major machineries, equipments etc. The Company primarily purchases its raw materials in the open market from third parties. The Company is therefore subject to fluctuations in prices for the purchase of steel, being the primary raw material inputs. The Company aims to sell the finished products based on firm contract which is negotiated after due consideration of the expected raw material prices. Therefore, the Company plans its purchases closely to optimise the price. Further since the products are of a specific nature which does not entail competition and is heterogeneous in nature due to its specification, the company's exposure to commodity risk is minimal.

The following table details the Company's sensitivity to a 5% movement in the input price of steel. The sensitivity analysis includes only 5% change in commodity prices for quantity consumed during the year, with all other variables held constant.

The risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. Liquidity risk may arise from an inability to sell a financial asset quickly at a rate close to its fair value.

The Company requires funds both for short term operational needs as well as for long term capital expenditure growth projects. The Company generates sufficient cash flow for operations, which together with the available cash and cash equivalents provides liquidity in the short-term and long- term and manages the liquidity risk by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities as depicted below.

Credit Risk

Credit risk is the risk that a counter party will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities (primarily trade receivables and advances to suppliers) and from its exposure to other financial assets, including deposits with banks and financial institutions, derivative instruments, and other financial instruments. The company has adopted a policy of only dealing with counterparties that have sufficiently high credit rating in order to manage the credit risk. Trade receivables mainly comprise of government entities and the cash and cash equivalents and derivative instruments are maintained with banks and recognised financial institutions with high credit rating.

For trade receivables, as a practical expedient the company computes credit loss allowance based on a provision matrix which considers historically observed default rates over expected life of trade receivables, adjusted for forward looking estimates. The movement in expected credit loss allowance is disclosed in Note 15.

The Company's maximum exposure to the credit risk for the components of Balance Sheet as 31st March 2024 and 31st March 2023 is the carrying amounts mentioned in Note no 15 and as stated in Note 53, around 93.05%(approx) of company's turnover and 94.12% (approx.) of trade receivables and customer advance is with respect to Government and Govt. regulated entities. The maximum exposure relating to financial derivative instruments and financial guarantees is disclosed in Note 47 and Note 48 respectively.

58. Capital Management

The company's objective when managing capital are to safeguard their ability to continue as a going concern so that they can continue to provide returns for shareholders and maintain an optimal capital structure to reduce the cost of capital.

For the purpose of capital management, capital includes issued equity capital and all other equity reserves attributable to the equity holders of the parent. The company is not subject to any externally imposed capital requirements.

To maintain or adjust the capital structure, the company may adjust the dividend payment to shareholders, return on capital to shareholders or issue new shares. The company monitors capital using a gearing ratio, which is net debt divided by total equity. The Company includes within net debt, interest bearing loans and borrowings (including bonds).

59. The Company have used the ERP, SAP S/4HANA as the accounting software for maintaining its books of account, which have a feature of Security audit log and recording audit trail (edit log) facility throughout the year for all relevant transactions recorded in the respective softwares except for the instances mentioned below.

i. The feature of recording audit trail (edit log) facility were enabled for identified database tables to log data changes for the accounting software used for maintaining the books of account. However, any direct data change to SAP database tables are not being carried out.

ii. Security audit log was enabled in the ERP from 2022 onwards.The feature of recording audit trail (edit log) facility of the accounting software was enabled on March, 2024.

Further no instance of audit trail feature being tampererd with was noted in respect of the accounting software.

60. Consumption of imported goods/services for the year amounts to H78495.68 lakhs (H74122.85 lakhs in previous year)

61. No proceedings have been initiated or pending against the company for holding any benami property under the Benami Transactions (Prohibition) Act, 1988 (45 of 1988) and rules made thereunder,

62. The Company has no borrowings from banks or financial institutions on the basis of security of current assets. The company has been sanctioned aggregate Non -Fund based limits in excess of H5 Crores by the multiple banks, which are availed as and when required . It has also been sanctioned aggregate fund based limits in excess of H5 Crores by multiple banks which has not been availed by the company . The company is not required to file any quarterly returns or statements with the banks .

63. The company is not declared wilful defaulter by any bank or financial Institution or other lender,

64. The company has no transactions with the companies struck off under section 248 of Companies Act, 2013 or section 560 of Companies Act, 1956.

65. The Company has entered agreement with Andaman & Nicobar Administration on a long term license basis for a period of 30 years from November 2019 onwards for developing, designing, constructing, modernising, operating, maintaining and managing the existing shiprepair facility which is named as CSL-AN Ship Repair Unit (CANSRU).

66. There are no charges or satisfaction yet to be registered with ROC beyond the statutory period.

67. No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries. No funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.

The Company has not received any fund from any person(s) or entity(ies), including foreign entities (Funding Party) with the understanding (whether recorded in writing or otherwise) that the company shall (i) directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party (Ultimate Beneficiaries) or (ii) provide any guarantee, security or the like to or on behalf of the Ultimate Beneficiaries.

68. The company did not trade or invest in Crypto Currency or virtual currency during the financial year. Hence disclosures relating to it are not applicable.

69. I n the case of contracts/ sub-contracts, wherever final bills are not submitted by the contractors for the work done as at the close of the year, liability is estimated and provided based on the work done.

70 .The Company has made adequate provision towards material foreseeable losses wherever required, in respect of long term contracts. The Company do not have any long term derivative contracts for which there were any material foreseeable losses.

71. Figures in brackets denote negative figures.

72. Previous year figures have been regrouped and reclassified wherever necessary to conform to the current year presentation.

As per our report attached

For M/s Anand & Ponnappan For and on behalf of Board of Directors

Chartered Accountants

(Firm Registration No. 000111S) SYAMKAMAL N BEJOY BHASKER

Company Secretary Director (Technical)

Membership Number - A25337 DIN - 08103825

Y BANUTEJA JOSE V J MADHU S NAIR

Partner Director (Finance) & Chief Financial Officer Chairman and Managing Director

(Membership Number 250129) DIN - 08444440 DIN - 07376798

Kochi, dated May 24, 2024 Kochi, dated May 24, 2024