Cochin Shipyard Ltd

Dear Shareholders,

It is with profound delight that I extend a warm welcome to each one of you on behalf of the Board of Directors to the 51st Annual General Meeting of your Company, Cochin Shipyard Limited (CSL).

Allow me to share with you the highlights of the Company's performance and accomplishments during the fiscal year 2022-23, as well as our future endeavours.

Financial performance

The fiscal year 2022-23 presented certain financial and operational challenges for Cochin Shipyard Limited. Our results fell short of our initial expectations. Specifically, the revenue from operations for the year amounted to Rs2330.46 Crores, compared to Rs3190.00 Crores in the prior fiscal year. The profit before tax stood at Rs448.51 Crores, down from Rs794.39 Crores in the preceding year.

The net profit for the year was Rs334.49 Crores, a decrease from Rs586.57 Crores in the previous year. Despite this, we achieved PAT Margins of 14%, while the Earnings Per Share (EPS) stood at Rs25.43. Moreover, we achieved an EBIDTA of Rs533.40 Crores with a fairly decent EBITDA margin of 23%.

Our interactions during the conference calls on May 31,2023, provided insight into the specific factors affecting our financial performance, and a comprehensive presentation on this matter can be found on the Company's website in the investor section. I have full confidence in CSL's resilience and anticipate a robust recovery in FY24, considering the strong order visibility and the execution of various orders in hand.

Operational performance

The Company delivered the first indigenously built Aircraft Carrier to the Indian Navy on July 28, 2022 and the vessel was commissioned by the Hon'ble Prime Minister of India Shri Narendra Modi on September 02, 2022, which is a significant milestone not only for the Company but also for the entire nation. The construction of IAC is considered as the most ambitious warship project of the country as it is unprecedented in terms of size and complexity in comparison to any ship built in India till date, setting a new benchmark in Indian shipbuilding. Other noteworthy vessel deliveries during the year include two Autonomous Electric Barges, viz., "Marit" & "Theres", for Norway based ASKO Maritime AS, one 500 Pax Vessel viz., "Nalanda" for Andaman and Nicobar

Administration, three Floating Border Out-Post (FBOPs) Vessels built for Ministry of Home Affairs and seven

Hybrid Electric Catamaran Hull Vessels for Kochi Metro Rail Limited.

Orders received during the year

CSL's prowess in securing substantial shipbuilding orders remained evident during the year. Despite intense competition, we secured orders for two Commissioning Service Operation Vessels (CSOV) from Pelagic Group, Cyprus; six Next Generation Missile Vessels (NGMV) from Ministry of Defence and two Zero Emission Feeder Container Vessels, from companies based in Norway which are part of the SAMSKIP Group, headquartered in Netherlands. These achievements underscore our strengths in the Indian defence shipbuilding sector as also our credibility in the Global shipbuilding sector.

Major expansion projects

CSL is executing two large expansion projects costing Rs2,769 Crores viz., International Ship Repair Facility (ISRF) costing Rs970 Crores and new dry dock costing Rs1,799 Crores.

The new dry dock project is at an advanced stage of execution. Majority of the works viz., Ground improvement works, cofferdam works, dock wall sheet pile installation works, caisson gate unit fabrication, 3 out of 4 underground Substations, 280 Meter of dock floor (at a depth of 13m), 65% Civil Works of underground pump house (from depth of 21m), 98% RCC piling works, 40% crane track works, 50% caisson gate erection works, grand assembly area works etc. have been completed. Further, the fabrication of components of 600T gantry crane, a critical machinery for the dry dock, have been completed in South Korea. Delivery of crane components to the site is targeted by October 2023. Overall, the project is progressing well and it is expected to complete the construction by December 2023 and thereafter full commissioning of the project by mid of 2024.

The ISRF project had run into difficulties due to the financial problems faced by the turnkey contracting company, forcing us to terminate the contract. The physical progress of construction works reported till contract termination was 78%. As a result, the remaining of the job was divided into three independent tender packages. The works have been resumed with new contractors, the dredging works have since been completed and civil, mechanical and electrical works are progressing well. All the shiplift components have already been received at site and the 130m X 25m shiplift platform is under sea transit from Vietnam. We expect to complete commissioning of the ship lift and the first two workstations by December 2023, put the facility into initial stages of operation, and thereafter complete and commission the balance facilities by mid-next year.

Wholly owned subsidiaries

Hooghly Cochin Shipyard Limited:

During the financial year 2022-23 the setting up of new state-of-the-art ship building and repair facility at Nazirgunge was completed and on August 16,

2022, the Facility was dedicated to the nation by Shri Sarbananda Sonowal, the Hon'ble Minister of Ports, Shipping & Waterways. The Facility has been set up in an area of 15.76 acres on the banks of river Hooghly at a cost of Rs175.20 Crores with an intention to position HCSL as a premier shipbuilding/ repair yard in the east coast of India for inland and coastal vessels. The facility stands as a testament to our commitment to excellence in shipbuilding on the east coast. HCSL bagged its first shipbuilding order for design and construction of a Multi-purpose cargo Vessel (2200T) for JAK Maritime & Logistics India Private Limited. The construction of the vessel is in progress. HCSL is also in advanced stages of completion of the caisson gate for Kolkata Port and is gearing up for construction of six Battery Electric Passenger Ferries for IWAI.

Udupi Cochin Shipyard Limited:

The performance of Udupi Cochin Shipyard Limited (UCSL) has been excellent during the year 2022-23. UCSL bagged various key orders including two 70T Bollard Pull Tugs for Polestar Maritime Limited, Mumbai and has also achieved significant operational milestones viz., steel cutting and keel laying of two 62T Bollard Pull Tugs contracted for Ocean Sparkle Limited, steel cutting of two 70T Bollard Pull Tugs contracted for Polestar Maritime Limited etc. The Company has also completed delivery of various vessels including a couple of ship repair projects to the satisfaction of the customers. During the financial year 2022-23, UCSL reported a total income of Rs47.81 crores as against Rs10.08 crores for the previous year 2021-22. UCSL's strong operational performance resulted in reducing its loss by 33% to Rs8.67 crores as against Rs12.94 crores for the previous year 2021-22. I am also glad to note that UCSL has recently bagged an order from M/s. Wilson Group, Norway, for construction of six New Generation Diesel Electric 3800 DWT General Cargo Vessels with an option for additional eight vessels. This significant breakthrough contracts from a reputed ship owner, in the promising European shortsea vessel segment is expected to open possibilities for more such contracts and will act as a major confidence booster for UCSL.

Corporate Governance

The Company continued to comply with good corporate governance practices. The Company complies with the applicable regulations of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, and also the Guidelines on Corporate Governance issued by the Department of Public Enterprises. The Company also submits its quarterly progress reports on corporate governance within 15 days from the close of each quarter

to the Ministry of Ports, Shipping and Waterways (MoPSW) as recommended by the DPE in this regard. The Report on Corporate Governance forms part of the Directors' Report.

Upgradation to 'Schedule A' status

I am delighted to share that the Company has been upgraded from 'Schedule B' to 'Schedule A' CPSE by the Government of India. The upgradation to 'Schedule A' was notified by the MoPSW on July 31, 2023. The upgradation is a recognition of CSL's impressive financial performance, operational excellence, and its substantial contributions to national security. This upgrade highlights our dedication to maintaining the highest standards of efficiency and underscores our pivotal role in safeguarding the nation's interests. Importantly, the upgrade to 'Schedule A' will empower CSL to operate with a broader senior management bandwidth, a necessity for effectively overseeing its seven units located across the country. We take great pride in this achievement, which serves as a testament to the hard work of our entire team and the unwavering support of our stakeholders.

Nurturing human resources

CSL believe in fostering an empowered workforce. It encourages us to adopt people-centric policies that are geared to ensure employee welfare. We also offer various training and development programmes that empower our people to upgrade their skillsets and facilitate continuous learning.

At the heart of our people orientation strategy lies four cultural competencies - Teaming, Execution Excellence, Constraint Breaking and Continuous Learning. Our leadership development programmes, including YOCDP, SCDP for newly inducted young officers and supervisors enables us to maintain

a steady pipeline of future leaders.

We also realise the value of external trainings from prestigious institutions such as Indian Institute of Management, Indian Institute of Technology,

Indian Institute of Corporate Affairs, Confederation of Indian Industry, Department of Public Enterprise etc. and encourage our people to enrol in various trainings to widen their knowledge and expertise. We take pride in creating an inclusive working environment for our people, allowing people from diverse backgrounds to flourish in their professional capacities.

Industrial relations

The industrial relations atmosphere remained cordial throughout the year, and the registered trade unions demonstrated their commitment to the Company's increased productivity and sustainable growth. Employees' and their dependents' welfare and wellbeing were also adequately taken care of through various voluntary initiatives.

A scheme named 'Sayam Prabha' benefitting our ex-employees who have retired before 2007, with a good financial gift on their 75th birthday and thereafter at their birthday every 5th year, has evoked very warm response from the society.

Embracing sustainability

Today, eco-consciousness is prerequisite for building a sustainable business. To fulfil this endeavour, we continue to undertake efforts that minimise our environmental footprint. With the ongoing construction of zero-emission vessels, we have made significant contributions to sustainable maritime environment. The Company is also making itself future ready to meet the sustainable shipbuilding demands and has also bagged various orders for building green vessels.

I am happy to inform that CSL is constructing the first fully indigenous

Zero Emission 100 pax Hydrogen Fuel

Cell Passenger Catamaran Vessel in collaboration with Indian Partners. The catamaran vessel will be deployed at Varanasi after test and trial at Kochi. The project is expected to be completed by September 2023. Based on the success and experience of this Project, further scaling up at the national level is being contemplated with active advice and consultation with the MoPSW.

We have also undertaken concerted efforts to ensure energy efficiency.

To accomplish this objective, we have replaced conventional high-pressure mercury vapour lights with energy- efficient LED lights at LLTT/Gantry Cranes. It has resulted in annual energy savings equivalent to 49,713 units, worth around Rs3.23 lakhs. Additionally, the use of LED lights for new projects, constructions and office buildings, along with the use of energy-efficient ceiling fans and VRF air conditioning systems, has led to annual energy savings of 1,60,606 units, valued at Rs10.44 lakhs.

We have also reduced our dependence on non-renewable energy by successfully generating 18.34 lakhs units of renewable energy in FY 2023 through the 1622 kWp solar power plant installed at our premises.

Giving back to society

We realise the importance of making a meaningful difference to lives and communities as a whole. It drives us to adopt extensive Corporate Social Responsibility (CSR) initiatives focused on enhancing the quality of life. During the year under review, we have incurred CSR spends of Rs17.25 Crores and undertaken 122 projects encompassing health and nutrition, sports, education, rural development, women empowerment, and environmental conservation. From our home state of

Kerala to regions spanning the north eastern states, our CSR initiatives contribute to a more equitable and sustainable future.

Emphasis on workplace safety

CSL maintained its Integrated Management System (IMS) under the ISO 9001:2015 Quality Management System, ISO 14001:2015 Environmental Management System and ISO 45001:2018 Health and Safety Management System standards. These measures serve as a foundation for our steadfast commitment to safety and quality. The Company have received the Safety Award from the Factories & Boilers Department, Government of Kerala, as well as distinctions from the National Safety Council - Kerala Chapter, in recognition of our efforts for maintaining the highest standards of safety at the workplace. These accolades recognise our continuous efforts to abide by globally accredited HSE standards.

Looking ahead

As we look ahead, we remain poised to open up promising opportunities.

CSL has created a good position stemming from competence, capability, capacity and confidence in the defence shipbuilding and ship repair space. The emphasis of the Government on the coastal shipping/ inland waterways space as also in developing ship repair clusters in the country, all augurs well for the Company. In the global segments, your Company with a track record of having exported about 50 Nos. high quality ships is today perceived to be a trust worthy and technologically competent partner by the industry at large. This aspect along with changes in the geopolitical order and the global requirements led by the International Maritime Organization (IMO) for shipping

to transition into a sustainable mode in a time-bound manner is providing your Company with a strategic sweet spot to tap into the 'Green Shipping' opportunities. With a strong order book, ensuing pipeline of major defence projects, enhanced interest coming in from European segment, our emerging innovative initiatives in the maritime space, various Memorandum of Understandings for ship repair, we are optimistic about our near term and long term future. Our subsidiaries are also coming on their own with confidence.

Closing remarks

I would like to extend my profound gratitude to all those who have invested their time and energy in shaping the growth trajectory of this esteemed organisation. I am also thankful to our team for their constant dedication to achieve shared goals and overcome challenges in the operating environment.

The strong commitment of the board and the constant support of the Ministry of Ports, Shipping and Waterways, Ministry of Defence, other offices of Government of India, the Governments of Kerala, West Bengal, Maharashtra, Karnataka, and the Andaman and Nicobar Administration have greatly helped us to accomplish various targets and milestones.

To our shareholders, investors, and customers, your faith in our business has been instrumental in our continued growth, and I remain sincerely grateful to you.