r) Provision, contingent liabilities and contingent assets:
A provision is recognised if as a result of a past event the
Company has a present legal or constructive obligation
that can be estimated reliably, and it is probable that
an outflow of economic benefits will be required to
settle the obligation Contingent Liabilities are not
recognised but are disclosed in the notes. Contingent
Assets are not recognised but disclosed in the Financial
Statements when economic inflow is probable.
12 Inventories (Contd....)
Note:
(i) Inventory costing 7 873 lakhs (Previous year: 7 11,219 lakhs) is held with other vendors.
(ii) Inventory costing 7 71 Lakhs (Previous year: 7 70 Lakhs) is held at customer’s store.
(iii) As on 31st March, 2025, Inventory held on behalf of Navy is 7 3,027 lakhs (Previous year - 7 4,403 lakhs) which is
excluded from above inventory.
midl nas avaiiea casn credit facility (sanction limit or 3500 Lakhs) from consortium DanKs (sbi, icici, union Bank or inaia,
Bank of Baroda and Axis Bank) at the interest rate 9%, 8.80%, 9.35%, 8.85%, & 9.35% per annum respectively. MDL has also
availed Cash Credit facility from HDFC Bank for which interest rate will De mutually agreed from time to time. Credit facility is
secured Dy hypothecation of current assets including inventory and receivables of the Company.
Terms of Repayment: Running account repayable on demand subject to annual review/ renewal.
Cash credit facility availed as on 31.03.2025 is Nil.
37.1 Letters seeking confirmation of balances in the accounts of sundry creditors were sent to vendors. But confirmation
letters from all vendors are not received. On the basis of replies received from certain vendors, adjustments wherever
necessary have been made in the accounts. Consequent adjustments thereof, if any, will be given effect to in the books
of account in the year of completion of the reconciliation process.
37.2 Balances due to / from Indian Navy (Debtors) included in current assets / current liabilities/advances are subject to
reconciliation and confirmation. Consequent adjustments thereof,if any, will be given effect to in the books of account
in the year of completion of the reconciliation process.
38 Normal Operating Cycle
The classification of current and non-current balances of assets and liabilities are made in accordance with the normal
operating cycle defined as follows -
The Normal Operating Cycle in respect of different business activities is defined as under-
a) In case of Ship / Submarine Building and Ship / Submarine repair and refit activities, normal operating cycle is
considered as the time period from the effective date of the Contract / Letter of Intent (LOI) to the date of expiry
of guarantee period.
b) In case of other business activities, normal operating cycle will be the time period from the effective date of the
contract/order to the date of expiry of guarantee period.
Note 39 - Employee Benefits as per Ind AS 19 (Contd..)
39.2 Actuarial valuation of liability towards Gratuity
Defined Benefit Plans Gratuity - as per actuarial valuation
The Ind AS-19 Employee Benefits stipulates that the rate used to discount post-employment benefit obligation (both
funded & non-funded) shall be determined by reference to market yields at the end of reporting period on Government
Bonds. The currency and term of the Government Bonds shall be consistent with the currency and estimated term of
the post-employment benefit obligation.
In the computation of gratuity liability, Projected Unit Credit Method is used. ^ in lakhs
Defined Benefit Plan Provident Fund as per actuarial valuation
In accordance with Indian law, all eligible employees of the Company in India are entitled to receive benefits under the
Provident Fund plan in which both the employee and employer (at a determined rate) contribute monthly to a Trust set
up by the Company to manage the investments and distribute the amounts entitled to employees. This plan is a defined
benefit plan as the Company is obligated to provide its members a rate of return which should, at the minimum, meet
the interest rate declared by Government administered provident fund. The contributions made by Company and the
shortfall of interest, if any are recognised as an expense in the statement of profit and loss under employee benefit
expenses. In accordance with an actuarial valuation of provident fund liabilities on the basis of guidance issued by
Actuarial Society of India and based on the assumptions as mentioned below, there is no deficiency in the Guaranteed
interest cost as the present value of the expected future earnings of the fund is greater than the expected amount to
be credited to the individual members based on the expected guaranteed rate of interest of Government administered
provident fund.
43 Russian (USSR) deferred State Credit
An intergovernmental agreement between Russian Federation and Government of India was reached for reconstructing
of Russian Deferred State Credit in Rouble in connection with procurement of equipment for certain ships built and
delivered by the Company to India Navy in earlier years. The deferred payment liability (non-interest bearing) of 4 16,320
Lakhs, payable over 45 years from 1992-93, in equal annual installments of P 214 Lakhs was converted from Rouble to
units of Special Drawings Rights (SDR) and stated in Rupees. The amount payable within a year of 4 474 Lakhs (Previous
year - 4 474 Lakhs). The balance loan amount has been reinstated at the present rate of SDR as on 31st March 2025.
These payments are reimbursable by Indian Navy. Accordingly, 4 5,880 Lakhs (amortised costs of 4 2,259 Lakhs) held at
foreign supplier deferred credit as on 31.03.2025
44 Pursuant to notification S.O. 2437(E) dated 4th September, 2015, following information on the exemption granted
under section 129 of the Companies Act, 2013 has not been disclosed in the financial statements.
i) Goods purchased under broad heads
ii) Value of import on CIF basis
iii) Expenditure on foreign currency
iv) Total value of imported raw material
v) Earning in foreign currency
45 Related Party Disclosure
As MDL is a Government entity under the control of Ministry of Defence (MoD), the Company has availed exemption
from detailed disclosures required under Ind AS 24 wrt related party transactions with Government and Government
related entities
i) Key Managerial Personnel
a) Functional Directors & Company Secretary ^ in lakhs
as per statement ui profit ariu Loss Account.
**Shri. Sanjeev Singhal holds Additional Charge of Chairman and Managing Director from 01.02.2023 to 28.02.2025
***Shri. Biju George holds Additional Charge of Chairman and Managing Director from 01.03.2025 to 20.04.2025
Besides the remuneration indicated above, the Chairman and Managing Director and four Functional Directors are allowed to
use Company’s Car for private purposes upto 1000 kms per month, for which charges were collected at the rates prescribed
by Government of India.
Loans or Advances in the nature of loans are granted to promoters, directors, KMPs and the related parties (as defined under
Companies, Act, 2013) either severally or jointly with any other person are Nil (Previous Year: Nil)
ii) Other Related Parties
Apart from transaction reported above, the company has transactions with other government related entities which
includes but not limited to the following;
a) Ministry of Defence H in lakhs
48 Fair Value Measurement (Contd..)
Fair Value Hierarchy
This section explains the judgements and estimates made in determining the fair values of the financial instruments that are
(a) recognised and measured at fair value
(b) measured at amortised cost and for which fair values are disclosed in the financial statements.
To provide an indication about the reliability of input used in determining fair value, the company has classified the financial
instruments in three levels prescribed under the Ind AS.
Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the
measurement date.
Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly or indirectly.
Level 3 inputs are unobservable inputs for the asset or liability.
a) Credit Risk
Credit Risk is the risk that counterparty will not meet its obligations under a financial instrument or customer
contract, leading to a financial loss. The Company is exposed to credit risk from its operating activities ( primarily
trade receivables) including deposits with banks and financial institutions, foreign exchange transactions and other
financial instruments.
i) Trade Receivables and contract asset
Customer credit risk is managed by each business unit subject to the Company’s established policy, procedures and
control relating to customer credit risk management. Trade receivables are non-interest bearing and are generally
carrying no credit terms. Outstanding customer receivables are regularly monitored. Trade receivables are primarily
from Navy (being department of Govt. of India), hence the credit risk is considered low. Further the Company
receives advance against orders which also mitigates the credit risk.
ii) Financial Instruments and cash deposits
Credit risk from balances with banks and financial institutions is managed by the Management in accordance with
the company’s investment policy. Investment of surplus funds are made only in accordance with the Department
of Public Enterprises(DPE) guidelines on investemtnt of surplus funds, with the approved banks and within credit
limits assigned to each bank. The limits applicable to single bank and public / private sectors as per the DPE
guidelines minimise the concentration of risks and therefore mitigate financial loss through counterparty’s potential
failure to repay the principal and interest.
49 Financial risk management (Contd..)
b) Liquidity Risk
Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial
liabilities that are settled by delivering cash or another financial asset.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities and the availability
of funding through an adequate amount of committed credit facilities to meet obligations when due. Due to the
nature of the underlying business, the Company maintains sufficient cash and liquid investments available to meet
its obligation.
The Company’s liquidity management policy involves projecting cash flows and considering the level of liquid
assets necessary to meet these, monitoring balance sheet liquidity ratios against internal and external regulatory
requirements, if any.
c) Market Risk
i) Foreign currency risk and sensitivity
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 is exposed to foreign currency risk since it imports components from foriegn vendors. Foreign
exchange risk arises from future commercial transactions and recognised assets and liabilities denominated in a
currency that is not the company’s functional currency (?). In most of the Contracts, the gains / losses from forex
exchange fluctuations are passed on / borne by the customer of the Company. Therefore, the foreign exchange
risk and sensitivity of the Company is Nil.
ii) Foreign Currency Risk Exposure
The company’s exposure to foreign currency risk at the end of the reporting period expressed in INR (foreign
currency amount multiplied by closing rate), are as follows:
? in inl^hc:
50 Capital management
For the purpose of the Company’s capital management, capital includes issued equity capital, share premium and all
other equity reserves attributable to the equity holders of the Company. The primary objectives of the Company’s capital
management are to
- maximise the shareholder value while providing stable capital structure that facilitate considered risk taking and
pursuit of business growth
- safeguard the company’s ability to continue as a going concern, so that they can continue to provide returns for
shareholders and benefits for other stakeholders
- maintain an optimal capital structure to reduce the cost of capital.
The Company manages its capital structure and makes adjustments in light of changes in economic conditions and
business opportunities. To maintain or adjust the capital structure, the Company may adjust the dividend payment to
shareholders, return capital to shareholders or issue new shares.
51 Expenditure on Corporate Social Responsibilities (CSR) Activities
The various heads under which the CSR expenditure was incurred during the period is detailed as follows:
52 No funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources
or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities (“Intermediaries”)
with the understanding, whether recorded in writing or otherwise, that the Intermediary shall lend or invest in party
identified by or on behalf of the Company (Ultimate Beneficiaries). The Company has not received any fund from any
party(s) (Funding Party) with the understanding that the Company shall whether, directly or indirectly lend or invest in
other persons or entities identified by or on behalf of the Company (“Ultimate Beneficiaries”) or provide any guarantee,
security or the like on behalf of the Ultimate Beneficiaries.
53 In FY 2016-17, the provision of 7 16,838 Lakhs was created for Liquidated Damages (LD) for fifth submarine and the
same was adjusted in retained earnings in the Reinstated Financials prepared from 01/04/2015. In FY 2024-25, the
company received confirmation from customer regarding levy of LD of 7 2,605 Lakhs for delay of fifth submarine against
provision of 7 16,838 Lakhs. In view of , considering the finalisation of LD during the year company has accounted for
7 2,605 Lakhs as Liquidated Damages (LD) for fifth submarine and adjusted the debtors to that extent . Further, the
provision created in earlier year is now reversed and shown as other operating income as per company’s accounting
policy.
54 Borrowings from Banks or Financial Institutions on the basis of security of current assets is disclosed as under
7 in lakhs
60 The company has incurred an expenditure of 7 3,572 Lakhs, in accordance with the approval granted by the Board at
its meeting held on 26.07.2023, towards the development of concept and design for tendering/acquiring of a future
contract. Since the contract has not yet been finalised, no revenue has been recognised during the year and the entire
amount has been charged to Statement of Profit & Loss.
61 The project cost as estimated on 31.03.2025 for certain ongoing projects is likely to exceed the contractual revenue from
these contracts, therefore difference between Estimated project cost and Contractual revenue needs to be provided as
expected loss on onerous contracts. The expected loss arising from such contracts is required to be recognized in the
current financial statements. The total estimated loss is proportionately adjusted through revenue, based on Percentage
completion Method as on 31st March, 2025 and the balance loss, is recognised by creating a provision for expected loss
on onerous contracts. The total estimated loss is 7 53,217 Lakhs, of which 7 1,079 Lakhs is adjusted through revenue,
and provision is made for balance loss of 7 52,138 Lakhs.
62 In certain cases/yards, project related inventory has remained non-moving for several years post project completion.
Accordingly, a provision has been made for inventory pertaining to completed projects/yards to ensure accurate
valuation. An additional provision amounting to 7 7,918 Lakhs has been accounted for in the books (Previous Year:
7 114 Lakhs). This provision will be reversed, if the inventory items are subsequently put to productive use.
63 The Board has approved the settlement of the arbitration award issued by the Permanent Machinery of Arbitration
(PMA), Department of Public Enterprises (DPE), Government of India (GOI) in the arbitration case of Mazagon Dock
Shipbuilders Limited (MDL) v/s Dredging Corporation of India (DCIL), which was decided in favor of MDL. MDL has
accepted the settlement proposal of DCIL and signed the settlement agreement. The settlement amount has been
finalized at 7 1,516 Lakhs against the provision for doubtful debts of 7 2,751 Lakhs (including interest). Consequently,
the balance outstanding of 7 1,235 Lakhs has been charged as bad debts, to Statement of Profit & Loss. The recovery
of 7 303 Lakhs is shown as reversal of provision and balance provision is carried forward as balance recovery is pending
from DCIL.
64 Subsequent to the reporting date 31.03.2025, the Government of India (being Promoter of MDL) approved and initiated
on 03.04.2025 an Offer for Sale (OFS) of 1,14,10,366 Equity Shares of the company, (representing 2.83 % of the total
paid up equity share capital of the Company) from 4th April, 2025 till 07th April, 2025 with an option to further sell
up to 80,67,600 Equity Shares (representing 2 % of total paid up equity share capital) and additionally, up to 50,000
Equity Shares of the Company were offered to the eligible employees of the Company, in accordance with the SEBI OFS
Guidelines.
Promoter has sold 1,45,63,465 Equity Shares representing 3.61% of the equity share capital of the Company, subsequent
to reporting date.
As the OFS pertains to a sale of existing equity shares held by the promoters and does not involve issuance of new shares or
any proceeds to the company. Hence, there is no impact on financial statements of the company as at 31st March, 2025.
In accordance with IND AS 10 - Events after the Reporting Period, this event is considered a non-adjusting event.
65 In the preparation of these Ind AS Financial Statements, figures for the previous year have been regrouped / reclassified,
wherever considered necessary to conform to current year presentation.
As per our report of even date For and on behalf of the Board of Directors
Sd/-
C. R. Sagdeo & Co. Capt. Jagmohan (Retd.)
Chartered Accountants Chairman and Managing Director
Firm Registration No. 108959W DIN - 08630668
Sd/- Sd/-
CA Sachin V. Luthra Ruchir Agrawal
Partner Director (Finance)
Membership No. 109127 DIN - 10166533
Sd/-
29th May, 2025 Madhavi Kulkarni
Place - Mumbai Company Secretary
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