FOR THE YEAR ENDED 31ST MARCH 2017
TO THE MEMBERS
Your Directors present their report as under:
1] FINANCIAL RESULTS:
Rs. in Crores
|PARTICULARS ||Year ended March 31 2017 ||Year ended March 31 2016 |
|Income from operations ||98.47 ||158.61 |
|Other Operating Income ||- ||1.18 |
|Other Income ||0.86 ||0.42 |
|Gross Income ||99.33 ||160.21 |
|Expenses for the period ||66.29 ||89.34 |
|Operating Profit for the period ||33.04 ||70.87 |
|Finance cost ||19.65 ||18.26 |
|Profit Before Depreciation ||13.39 ||52.62 |
|Depreciation ||22.59 ||22.39 |
|(Loss) / Profit Before Tax ||(9.20) ||30.22 |
|Provision for Taxation || || |
|Current Tax ||0.20 ||0.20 |
|Tax for earlier (written back)/provision ||0.03 ||0.01 |
|Net (Loss) / Profit After Tax ||(9.43) ||30.01 |
|Add : Balance of Profit brought forward from previous year. ||176.18 ||152.27 |
|Profit available for appropriation. ||166.75 ||182.28 |
|Less : Tonnage Tax Reserves ||- ||6.10 |
|- General Reserves ||- ||- |
|- Proposed Dividend ||- ||- |
|- Tax on Proposed Dividend ||- ||- |
|Balance Carried forward ||166.75 ||176.18 |
2] FINANCIAL HIGHLIGHTS:
Income from Operation (including Other Operating Income) for the year ended 31.03.2017stood at Rs.98.47 crores as against Rs.159.79 crores for the previous year (a reductionof 38%). Other Income for the year stood at Rs.0.86 crores as against Rs.0.42 crores forthe previous year.
The Net Loss for the year ended 31.03.2017 stood at Rs.9.43 crores as against NetProfit Rs.30.01 crores for the previous year. The decrease in the Income from operationsand the subsequent net loss was attributed to the substantial reduction in charter ratesof the vessel owned something that the Company had to accept or else risktermination of the contracts in view of the global recession in the Industry.
The Company's Fixed Asset lender viz State Bank of India has declared the Company'saccount with them as Non Performing Assets (NPA) w.e.f. January 2017 as a result ofCompany's inability to continue repaying debt in view of reduction of charter rates.
During the year under review :
M.V. Mana M.V. Kamet and M.V. Lachung worked on long term contract in westcoast of India.
M.V. Meghna continued to work on a long term contract.
M.V. Mahananda worked on short term contract from August to October 2016.Subsequently the Vessel was then awarded 3 year long term contract w.e.f. November 2016 inthe east coast of India.
M.V. Poorna worked on spot charters in Middle East. Since August 2016 theVessel worked on short term contracts in the west coast of India.
One Vessel which was "in chartered" in 2014 and she continues to workon a long term contract in India.
The Shareholders are aware that the Company had to accept reduced rates lest thevessels would have been off-hired and lay idle. Unfortunately the reduced charter rateswere not enough to service the company's debt after payment of opex and overheads. As aresult in July 2016 the Company approached its Asset based Lender State Bank of India(SBI) to reschedule the loans by incorporating a 3 year moratorium on principal. TheCompany committed to continue paying interest to all its Lenders. However though SBIconfirmed to the Company that its proposal had been approved they laid down certainonerous preconditions which were not acceptable to the Company. Consequently in January2017 as stated above SBI the major term loan lender classified the Company's accountswith them as Non Performing Asset (NPA) and converted the loans into INR which theCompany has not accepted. The Company continued to repay / installments / service interestof Term Loans and Working Capital facilities lenders viz. United Bank of India and StateBank of Travancore. With the merger of SBT with SBI the Company though willing to makepayments as was being done in the past has suspended payments of their facilities as wellsince SBI converted all their facilities (including those as a result of the merger intoINR) and froze the Working Capital facilities.
The Company has informed SBI of its willingness to continue to pay interest at theoriginally sanctioned rates if loans are converted back into USD and therefore continuesto provide interest at original rates.
In view of the losses incurred during the year your Directors regret their inabilityto recommend any Dividend.
5] FUTURE EXPANSION AND OUTLOOK:
In view of the current situation in the Industry the Company is concentrating onrestricting costs maximizing utilization and finding solutions to overcome thedifficulties being faced. There are no future expansion plans for now.
While majority of the Company's Vessels continue to be on contract the futureemployment of these Vessels is uncertain in view of the recession in the E&P Industrywhich has led to a situation of oversupply of Assets.
As of February 2017 the number of Platform Supply Vessels (PSV) (over 2000 DWT) andnumber of Anchor Handling Tugs cum Supply Vessels (AHTSV's) (over 4000 BHP) were estimatedat 1202 and 2134 respectively and Vessels yet to be delivered are 71 PSV's and 148 AHTSV'srespectively. There has been a limited change in the fundamentals of the midsize PSVmarket over the past year as reduced E&Ps spending continues to have a negativeimpact on demand. Therefore it will take some time before we see any improvement in thesector. Even in the AHTSV market rates continue to hover around opex levels and this isexpected to continue for the next couple of years.
6] SUBSIDIARY / WHOLLY OWNED SUBSIDIARY (WOS):
During the year under review there was no Company which became or ceased to besubsidiary / joint venture or associate Company. The Company has two Subsidiaries asdetailed below:
a) Global Offshore Services B.V. - The Netherlands (GOSBV)
Global Offshore Services B.V has gone through a turbulent phase amidst the fallingdemand for Assets in the offshore market.
The revenue from operations for the year was $ 8.69 Mn (PY $ 32.32 Mn.) and the lossrecorded for the year ended 31st March 2017 was -$ 23.28 Mn. (Previous Year loss -$6.7Mn)
The Company had secured term contract with a renowned Oil Exploration Company inEurope for three of its vessels which expired in November-16. Thereafter the Vesselsworked intermittently in the spot market and the same Charterer has now exercised itsoption to employ the three Vessels once again for a further period of between 5 to 8months. Unfortunately charter rates at which the Vessels will continue to work are notsufficient to cover opex interest and service debt repayment.
The Company tried to find out a suitable job for M.V. Shergar which got abruptlyterminated by Petrobras in Brazil. However even though a long term bareboat charter wassecured for the vessel the same was terminated prematurely. After the year under reviewthis Vessel was sold at a loss.
The financial restructuring of M.V. Makalu is now completed and the asset has beentransferred to new SPV-Makalu Shipping B.V.
The Company is also in varying stages of discussion with other lenders for therestructuring of all the remaining Vessels.
However presently 2 of the Company's Vessels are laid up at a Yard in Norway.
With regards to qualification in the Auditors Report of GOSBV on the balanceconfirmation from the creditors we would like to clarify 39% of the outstanding is relatedparty transaction and the confirmation has been obtained. With regards to the balanceportion the Company had sought confirmation from major creditors before the completion ofthe audit.
With regard to comment on verification of physical inventory since the vessels areworking with the charterers in remote locations it is not possible for the auditors tocarry on the physical verification and has to rely on the certificate provided by theManagement.
With respect to Auditors' comment on overdue receivable of INR 1453.52 lacs fromPetrobras Brazil GOSBV has commenced legal proceeding for the recovery of the same. Asindicated in the Auditors' Statement on the basis of expert legal advise received thereis a high chance of the recovery of this amount.
As represented in the Note to the Accounts the Company has successfully carried outthe restructuring of the debt of one of its vessel in GOSBV. The Company is in discussionwith the other lenders for the restructuring of the debt for the remaining vessels.However there is an overdue principal and interest as at 31st March 2017 as depicted inthe said Notes to the Accounts.
b) Garware Offshore International Services Pte. Ltd Singapore (GOISPL)
The Company's wholly owned subsidiary GOISPL based in Singapore achieved an operatingincome of $ 1.9 Mn against the previous year revenue of $ 4.9 Mn. The Company suffered aloss of $ 1.60 Mn (previous year $ 1.71 Mn.).
During the year the long term contract secured by the vessel originally was terminatedand as a result the vessel remained unutilized during a substantial period. The vessel waschartered during the third quarter of the year in the Middle East albeit at a much lowercharter rate. As a result there is a substantial drop in the revenue. But the Company hastaken initiative to reduce the losses by entering into a restructuring agreement with theOwner of the vessel M.V. Everest which entails the reduction of daily charter hirecharges.
With the Vessel being on long term contract and with reduced BBC rates the Companyexpects the cash flow from the operations to improve as compared to the previous yearwhich make the comment by the Auditors' on its dependency on the parent Company redundant.
With regard to the Auditors' comment on verification of physical inventory since thevessels are working with charterers in remote locations it is not possible for theauditors to carry on the physical verification and they have had to rely on thecertificate provided by the Management.
In view of general exemption granted by Ministry of Corporate Affairs vide CircularNo.51/12/2007-CL-III dated 8.2.2011 the annual accounts of subsidiary companies and therelated information required to be enclosed under the provisions of the Companies Act2013 are not enclosed. The Company undertakes that such information shall be madeavailable to the shareholders of the holding and subsidiary companies and shall also bekept for inspection at the Registered Office of the Company. The Company shall furnishhard copy of the same to any shareholder on demand.
7] LISTING FEES TO STOCK EXCHANGES:
The Company has paid Listing Fees for the year 2017-18 to BSE Ltd. and The NationalStock Exchange of India Ltd.
8] FIXED DEPOSITS:
During the year under review no Deposits were accepted under Chapter V of theCompanies Act 2013 and hence the details relating to deposits and details which are notin compliance under Chapter V of the Act are "NOT APPLICABLE".
9] RESPONSIBILITY STATEMENT:
The Directors confirm:
a) That in the preparation of the Annual Accounts the applicable accounting standardshave been followed and that no material departures (save and except as stated in theDirectors' Report) have been made from the same.
b) That they have selected such Accounting Policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the State of Affairs of the Company at the end of the year and the Loss of theCompany for that year ended as on 31.03.2017.
c) That they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with provision of the Companies Act 2013 forsafe-guarding the assets of the Company and for preventing and detecting fraud and otherirregularities.
d) That they have prepared the Annual Accounts on a going concern basis.
e) That they have laid down internal financial controls to be followed and that suchfinancial controls are adequate and were operating effectively.
f) That they have devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
All the Vessels owned and operated by the Company and its subsidiaries have beeninsured for Hull & Machinery War Risks and Protection & Indemnity (P & I)claims.
Mr. Ashok B. Garware's contract as Executive Director of the Company expired on 30thJune 2017. He has expressed his unwillingness to renew the contract on personal grounds.However he continues to be Chairman of the Board of Directors and of the Company. TheBoard places on record his valuable contribution to the progress of the Company.
Mr. Ashok B. Garware retires by rotation and being eligible offers himself forre-appointment. Members are requested to re-elect him.
Pursuant to the recommendation of Nomination & Remuneration Committee and the Boardof Directors and subject to the approval of Secured Creditors Shareholders and all otherrequisite approvals if any the Company has appointed Mr. Niladri Sengupta as AdditionalDirector & Whole-Time Director for a period of 3 years w.e.f. 01st July2017. Mr. Niladri Sengupta has several years experience in the Shipping and Offshoresector. His brief profile is enclosed with the AGM Notice. Members are requested toapprove his appointment as Director & Whole -Time Director.
All the Independent Directors are appointed on 25.09.2014 for a period of 5 years.During the year under review no Directors or KMP have been appointed or resigned.
12] APPOINTMENT OF STATUTORY AUDITORS AND THEIR REPORT:
Messrs. Raman S. Shah & Associates Chartered Accountants were appointed asStatutory Auditors of the Company by the Shareholders at the last Annual General Meetingheld on 30th September 2016 till the conclusion of the ensuing Annual General Meeting.
In compliance with the provisions of Companies Act 2013 the Company shall appoint anAuditor in the Annual General Meeting and such Auditor shall hold office till thesubsequent five Annual General Meetings. A transition period of 3 years w.e.f. 01st April2014 was given to the listed Companies to change the Auditors.
Messrs. Raman S. Shah & Associates Chartered Accountants will retire at theensuing Annual General Meeting and new Auditors need to be appointed at the ensuing AnnualGeneral Meeting for a period of 5 years which can be extended for a further term of 5years. Though the appointment is for 5 years the same needs to be ratified at eachAnnual General Meeting.
After studying profile of some Audit Firms the Board upon the recommendation of theAudit Committee and subject to approval of members has chosen to appoint Messrs. D.Kothary & Co. Chartered Accountants (Firm Registration No. 105335W) from theconclusion of ensuing Annual General Meeting until the conclusion of the 44th AnnualGeneral Meeting of the Company and has received eligibility certificate under Sections139 and 141 of the Companies Act 2013 and the Rules made thereunder. The appointment willbe ratified at each Annual General Meeting.
There are no Qualifications in the Auditors' Report. As regards to "Emphasis ofMatters" stated by the Auditors' in their report the same is clarified in Note No.12 of the Notes to the Accounts.
The downturn in the Oil Industry has adversely affected the Company's financialposition. In order to save costs and sustain operations the reduction in thesalaries/consultancy fees of the shore staff at all levels at rates varying from 5% to35% continues w.e.f June 2016. The Board appreciates support and co-operation of all theemployees/consultants.
The relations with all Employees of the Company both Shore and Floating Staff havebeen cordial. Your Directors wish to express their appreciation of the services renderedby the devoted Employees.
14] DEMATERIALISATION OF SHARES:
The Company's shares continue to be traded in Electronic Form. As per Securities andExchange Board of India (SEBI) requirement 100% of the shares held by the Promoter /Persons Acting in Concert category are in the Electronic Form.
15] EXTRACTS OF THE ANNUAL RETURN :
The Extracts of the Annual Return as prescribed in Form No.MGT 9 is enclosed asAnnexure I.
16] STATEMENT OF DECLARATION GIVEN BY INDEPENDENT DIRECTORS:
The Independent Directors of the Company viz. Mr. S.S. Aggarwal Mr. J.C. Chopra Mr.A.K. Thanavala and Mr. S. Y. Mulani have given a declaration that they meet the criteriaof the independence as provided in Sub-section (6) of Section 149 of the Companies Act2013.
17] NUMBER OF BOARD MEETINGS:
During the year under review four Board Meetings were held as detailed below:
(i) 30th May 2016 (ii) 08th August 2016 (iii)08th November 2016 and (iv) 07th February 2017.
18] BOARD EVALUATION:
Pursuant to the provisions of Section 178 of the Companies Act 2013 and provision ofSEBI (Listing Obligation & Disclosure Requirement) Regulation 2015 a structuredquestionnaire for evaluation was prepared after taking into consideration various aspectsof the Board's functioning its composition culture performance and ability to executespecific duties obligations and its governance and that of its Committees.
The performance evaluation of the Independent Directors was completed. The performanceevaluation of the Executive Chairman and Non-Independent Directors was carried out by allthe Directors. The Board of Directors expressed their satisfaction with the evaluationprocess.
19] FAMILARISATION PROGRAMME FOR DIRECTORS:
At the time of appointment on the Board each Independent Director is issued a formalletter of appointment which inter alia explains the role function duties andresponsibilities expected of him as a Director of the Company. All the Directors have beenprovided with a deep insight into the business of the Company including the working of thesubsidiaries. Vessel-wise details have also been furnished to them. The Directors havealso received a detailed explanation on the Compliances required from him/her under theCompanies Act 2013 SEBI (Listing Obligations of Disclosure Requirements) Regulations2015 and other relevant regulations and affirmation taken with respect to the same.
20] DETAILS OF LOANS GRANTED / INVESTMENTS MADE / GUARANTEES PROVIDED UNDER SECTION 186OF COMPANIES ACT 2013 :
The details of the aforesaid Loans/Investment/Guarantees during the year under reviewis enclosed as Annexure II.
21] PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES:
The required information pursuant to the provisions of Section 188 of the CompaniesAct 2013 is enclosed in Annexure III.
22] AUDIT COMMITTEE :
Pursuant to the Provision of Section 177(8) of the Companies Act 2013 the AuditCommittee consists of following members :
1] Mr. A.K. Thanavala Chairman
2] Mrs. Maneesha Shah
3] Mr. S.S. Aggarwal
4] Mr. J.C. Chopra
There were no instances where the Board had not accepted any recommendation of theAudit Committee.
23] VIGIL MECHANISM :
The Company has formulated a Policy for Vigil Mechanism pursuant to Sections 177(10) ofthe Companies Act 2013 and the same was uploaded on the website of the Company www.globaloffshore.in
24] STATEMENT ON DEVELOPMENT AND IMPLEMENTATION OF RISKS MANAGEMENT POLICY:
Risk Management is a key aspect of the "Corporate Governance Principles and Codeof Conduct" which aims to improve the governance practices across all Companyactivities. Risk management policy and processes will enable the Company to proactivelymanage uncertainty and changes in both internal and external environments in an attempt tocapitalize on opportunities and limit negative impacts.
The risk management policy of the Company identifies evaluates monitors and minimizesidentifiable risks.
25] CORPORATE SOCIAL RESPONSIBILITY (CSR):
During the year under review the Company undertook activities as detailed in AnnexureIV.
26] SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS:
There was no significant and material order passed by Regulators or Courts or Tribunalsimpacting the future operations or the "going concern" status of the Company.
27] INTERNAL FINANCIAL CONTROL:
In the opinion of Board of Directors there is adequate Internal Financial Control withrespect to the preparation and presentation of the Financial statements which form a partof this Annual Report.
28] SECRETARIAL AUDITOR:
The Board has appointed Mr. Rajkumar Tiwari as Secretarial Auditor. His Report isenclosed as Annexure V to the Directors' Report. There is no qualification in theSecretarial Auditors' Report.
29] DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013:
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013. An Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment. All employees (permanent contractualtemporary) are covered under the policy.
The number of sexual harassment complaints received and disposed off during the yearwas Nil.
30] CORPORATE GOVERNANCE:
A separate report on Corporate Governance along with the Auditors' Certificate on itscompliance is given in a separate Annexure.
31] Conservation of energy technology absorption foreign exchange earnings andoutgo. The required details are enclosed as Annexure VI.
32] SUBSIDIARIES JOINT VENTURE OF ASSOCIATE COMPANIES :
During the year under review there were no Companies which became or ceased to be itssubsidiaries joint ventures or associate Company.
33] DETAILS RELATING TO REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL ANDEMPLOYEES:
The information required under Section 197 read with Rule 5 of Companies (Appointmentand Remuneration of Managerial personnel) Rules 2014 in respect of employees of theCompany and Directors is furnished in Annexure VII.
34] DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL APPOINTED OR RESIGNED DURING THEYEAR:
During the year under review there was no change in Directors or Key ManagementPersonnel.
During the year under review Mr. K.S. Dave President Commercial reached age ofsuperannuation and continues to work on Consultancy.
The Board wishes to thank the Office of Directorate General of Shipping MercantileMarine Department Shipping Master IRS State Bank of India State Bank of Travancore(now merged with SBI) and United Bank of India for their continued support andco-operation during the year.
| ||On Behalf of the Board |
|Place : Mumbai ||ASHOK GARWARE |
|Dated : 07.08.2017 ||CHAIRMAN |