To the Members
Your Directors take pleasure in presenting the 11th Annual Report andAudited Accounts of the Company for the financial year ended March 31 2016.
(Rs. in lacs)
|Particulars ||Standalone ||Consolidated |
| ||2015-16 ||2014-15 ||2015-16 ||2014-15 |
|Total Income ||97265 ||109851 ||96268 ||126835 |
|Expenses ||72731 ||70854 ||74876 ||81188 |
|Profit before Interest Depreciation ||24534 ||38997 ||21392 ||45647 |
|Exceptional Items & Tax || || || || |
|Less: Depreciation ||13684 ||16504 ||18592 ||22411 |
|Less: Interest & Finance cost ||22993 ||24140 ||39109 ||39212 |
|Profit/ (Loss) before Exceptional ||(12143) ||(1647) ||(36309) ||(15976) |
|Items & Tax || || || || |
|Less: Exceptional Items ||72263 ||- ||34646 ||- |
|Profit/ (Loss) before Tax ||(84406) ||(1647) ||(70955) ||(15976) |
|(Less)/ Add: Tax Expenses || || || || |
|i. Current tax ||390 ||(432) ||370 ||(1037) |
|ii. Deferred tax ||459 ||800 ||1232 ||(71) |
|iii. Prior year tax ||- ||- ||11 ||(2) |
|Loss after Tax before Minority ||(83557) ||(1279) ||(69342) ||(17086) |
|Interest || || || || |
|Minority Interest ||- ||- ||- ||680 |
|Loss after Tax ||(83557) ||(1279) ||(69342) ||(17766) |
|Less: Transfer to Tonnage Tax ||750 ||250 ||752 ||252 |
|Reserve || || || || |
|Add: Surplus brought forward from previous year ||49602 ||51131 ||(7542) ||10476 |
|Amount available for appropriation ||(34705) ||49602 ||(77636) ||(7542) |
|Appropriations: || || || || |
|Transfer to General Reserve ||- ||- ||- ||- |
|Balance Carried Forward ||(34705) ||49602 ||(77636) ||(7542) |
During the financial year 2015-16 the Company on a standalone basis registered atotal income of Rs. 97265 lacs (Previous Year Rs. 109851 lacs) and Profit beforeInterest Depreciation Exceptional Items & Tax of Rs. 24534 lacs as against Rs.38997 lacs during the previous year.
MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY OCCURREDBETWEEN MARCH 31 2016 AND DATE OF THIS REPORT
Strategic Debt Restructuring ("SDR")
The Lead Bankers of the Joint Lenders Forum had invoked the SDR and decided theReference Date as January 27 2016. Pursuant to special resolution passed by theShareholders of the Company by Postal Ballot on June 20 2016 and in accordance withapplicable provisions of the Companies Act 2013 (hereinafter referred to "theAct") guidelines specified by the Reserve Bank of India on Strategic DebtRestructuring scheme ("SDR") and the SEBI (Issue of Capital and DisclosureRequirements) Regulations 2009 the Board of Directors allotted 40987704 equity sharesof face value of Rs. 10/- (Rupees Ten only) each at an issue price of Rs. 43.81/- pershare to the consortium of banks and financial institutions as per SDR. Post-allotmentthe paid-up share capital of the Company stands increased to Rs. 782277650/- consistingof 78227765 number of equity shares of Rs. 10/- each.
The oil industry with its history of booms and busts has been in its deepest downturnsince the 1990s if not earlier. Earnings are down for companies that made record profitsin recent years leading them to decommission more than two-thirds of their rigs andsharply cut investment in exploration and production (E&P).
To correlate our business perspective marine logistic services business is directlyproportional to offshore drilling activity by E&P operators and since offshoredrilling is experiencing a steep downturn the implications are on the same line formarine logistic services business. The primary cause is the plunging price of a barrel ofoil which at one point fell more than 70 percent compared with June 2014 levels. Priceshave recovered a few times over the last year and lately Brent crude crossed $50-a-barrelthreshold for the first time in nearly seven months. But prices are still below whatproducers need to drill profitable wells.
But over the long term demand for fuels is recovering in some countries and that couldhelp in the recovery of crude prices in the next year or two. Hence a gradual uptick isexpected in the business scenario for Offshore drilling marine logistics & alliedoilfield services in the next two years as oil prices stabilize in the range of USD 60-70per barrel. As such the business environment has been quite challenging for past coupleof years the drop in oil price has further aggravated the situation. Nevertheless yourCompany has been able to manage its operations efficiently with existing resources. YourCompany has ensured that most of the vessels remain available for employment in good seaworthy conditions.
Malaviya Seven the Platform Support Vessel ("PSV") continues to remain inspot market in North Sea at much reduced rates and lesser job opportunities.
Malaviya Nine the Anchor Handling Tug Supply Vessel ("AHTSV") continues tobe employed with Petrobras Brazil. The contract which commenced in July 2012 is for 4years with the extension option of another 4 years with reduction in charter hire w.e.f.July 19 2015.
Malaviya Ten AHTSV completed her 3 years contract in August 2015. Subsequentlyvessel was mobilized for anchor handling towing and supply duties to East Coast of Indiafor 5 years contract with Oil and Natural Gas Corporation Limited ("ONGC") thatcommenced in September 2015.
Malaviya Sixteen PSV completed her 3 years contract in January 2016 for ONGC (as endclient) from Vision Projects Technologies Pvt. Ltd. that commenced in January 2013 forsupply duties on the East Coast of India.
PSV Malaviya Eighteen continues to be employed with ONGC for 3 years contract forsupply duties on the West Coast of India that commenced in February 2015.
PSV Malaviya Twenty continues to remain in spot market in North Sea at much reducedrates and lesser job opportunities.
Malaviya Twenty Three the Fire Fighting Supply Vessel ("FFSV") continuesthe operation for ONGC with 3 years contract that commenced in September 2013 carryingout fire fighting safety standby riser deck inspection and emergency support duties inWest Coast of India.
FFSVs Malaviya Twenty Five and Malaviya Twenty Seven which were employed for operationsby Eastern Naval Command Visakhapatnam through Shipping Corporation of India completedtheir 4 years contracts (with extensions) on March 18 2016 and March 25 2016respectively.
Malaviya Twenty Eight AHTSV continues the operation for ONGC with 3 years contractthat commenced in June 2013 for anchor handling towing and supply duties on the EastCoast of India.
PSV Malaviya Twenty Nine completed its contract with Petrobras on September 16 2015which commenced in May 2012.
PSV Malaviya Thirty continues the operation for ONGC with 3 years contract thatcommenced in May 2013 for supply duties on the West Coast of India.
Malaviya Thirty Six the Multipurpose Support Vessel (MSV) continues its operation forONGC under the 5 years term contract which commenced in September 2014 for underwatermaintenance of platforms & SPMs fire fighting safety standby and emergency supportduties in West Coast of India.
Jack-Up Drilling Rig Kedarnath completed her 5 years contract with ONGC in December2015 on West Coast of India.
Floater Drilling Rig Badrinath hired by Deep Water Services (India) Ltd. the whollyowned subsidiary of the Company completed her 3 years contract with ONGC on the WestCoast of India in May 2015 and has received Letter of Award from ONGC on March 1 2016 forfirm contract period of 3 years. Rig is to be mobilized on or before October 15 2016 inWest Coast for contract commencement.
Construction Barge Gal Installer completed her 6 months contract on May 28 2015 withSupreme Hydro Engineering Pvt. Ltd. (end client BGEPIL) that commenced its operation inWest coast of India in November 2014.
Construction Barge Gal Constructor Accommodation Vessel Malaviya Thirty Three WorkBoat Malaviya Three Anchor Handling Tugs Sangita & Bharati S Offshore Supply VesselsMalaviya One & Malaviya Two were utilized in-house by Engineering Services departmentfor the BPA-BPB project of ONGC.
Remaining 11 Harbour Tugs of the Company remained effectively utilized throughout theyear in various ports across the coast of India.
In view of the losses incurred during the financial year 2015-16 your Directors havedecided not to recommend any dividend on the equity shares for the said year.
During the year the Securities and Exchange Board of India ("SEBI") notifiedthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafterreferred to as "the Listing Regulations") and the same were effective December1 2015. The Listing Regulations aim to consolidate and streamline the provisions of theerstwhile listing agreement for different segments of capital markets to ensure betterenforceability. In terms of the Listing Regulations all listed entities were required toenter into a new listing agreement with the stock exchanges. In compliance with therequirements new listing agreement was executed with the BSE Limited and the NationalStock Exchange of India Limited in February 2016.
During the financial year under consideration DWS Offshore Drilling Limited and DWSOffshore Services Limited were incorporated as wholly-owned subsidiaries of Deep WaterServices (India) Limited a wholly-owned subsidiary of the Company. Accordingly these twocompanies became step-down subsidiaries of the Company.
As required under Section 129(3) of the Act read with Rule 5 of the Companies(Accounts) Rules 2014 a statement containing the salient features of the financialstatements of the subsidiaries in the prescribed form AOC-1 is annexed to the FinancialStatements.
In accordance with Section 136 of the Act the separate accounts of the subsidiarycompanies will be available on the website of the Company and the Members desirous ofobtaining the accounts of the Companys subsidiaries may obtain the same uponrequest.
The Policy for determining Material Subsidiaries adopted by your Board in conformitywith the Listing Regulations can be accessed on the Companys website athttp://goloffshore.com/investors_statpol.php.
Highlights of operational and financial performance of direct subsidiaries are givenbelow.
Deep Water Services (India) Limited ("DWS India")
Rig Badrinath continued to work with Oil and Natural Gas Corporation Limited (ONGC) onthree year contract which commenced in April 2012. During the year under review Rig hassuccessfully completed one well in Mumbai High. Rig was dehired on May 8 2015. ThereafterONGC issued Letter of Award (LOA) for Charter Hire of Badrinath for a firm period of 3years commencing from October 15 2016.
During the year under consideration DWS India earned a total income of Rs. 2353.52lacs (previous year: Rs. 14353.12 lacs) with Loss of Rs. 1628.43 lacs (previous year:Profit Rs. 1151.07 lacs).
KEI-RSOS Maritime Limited ("KRML")
During financial year 2015-16 KRML has been able to maintain its pace of business inspite of various challenges faced by the industry and successfully completed the Operationand Maintenance of SPM Contract with Bharat Petroleum Corporation Limited (BPCL) Kochi.
During the reporting year KRML was awarded a mega project by Mangalore Refinery andPetrochemicals Limited for providing services of Operation Maintenance Inspection &Security of SPM facility for period of five years. During financial year 2015-16 KRMLmanaged to clinch both long term and short term contracts from esteemed customers customerlike Cairn India Limited for its SPM terminal operation at Ravva Oil Field contract fromCoastal Marine Construction & Engineering Limited for SPM operations at Mangalore andshort term contract from Essar Offshore Subsea Limited for providing Transportationservices at Mumbai. Benefits of all these contracts will be reflected in the financials ofcoming years.
During the financial year 2015-16 KRML earned a total revenue of Rs. 3843.44 lacs(previous year: Rs. 4561.09 lacs). The Company suffered a loss after tax of Rs. 3853.84lacs (previous year: Rs. 1878.37 lacs). The loss was mainly on account of idling of someof the vessels due to overdue repairs and dry docking which could not be undertaken due topaucity of funds.
GOL Salvage Services Limited ("GOSSL")
During the financial year 2015-16 GOSSL entered an agreement with Cairn India Limitedfor chartering of Tug "Josh" for its SPM at Ravva Field for a period of 18months.
During the year under consideration not many salvage jobs came on the horizon. GOSSLdid bid for the ones that were available but were not successful due to commercialreasons and/ or technical specifications of the job being not suitable for the vessels.
GOSSL disposed off Tug "Noor" with a profit of Rs. 25.62 lacs. GOSSL earnedtotal revenue of Rs. 124.75 lacs (previous year: Rs. 111.68 lacs). The Company earnedprofit after tax of Rs. 8.94 lacs (previous year: Loss of Rs. 122.85 lacs).
GOL Ship Repairs Limited ("GOSRL")
During the financial year 2015-16 GOSRL carried out major repair jobs of variousnature such as Engine overhaul Aqua master overhaul Tail End Shaft repairs and othermechanical repairs. GOSRL carried out 74 jobs as compared to 44 jobs done in previousyear. Out of total repairs attended 51 jobs were carried out in Mumbai and rest 23 jobswere carried out outside Mumbai.
During the year under consideration GOSRL achieved landmark of major main engineoverhauls of three vessels pertaining to the Company and handled two in-house dry dockingjobs.
During financial year 2015-16 GOSRL earned total revenue of Rs. 209.75 lacs (previousyear Rs. 489.00 lacs) and loss after tax of Rs. 14.30 lacs (previous year profit: Rs.54.78 lacs).
FOREIGN DIRECT SUBSIDIARIES
Great Offshore (International) Limited Cayman Islands ("GOIL")
During financial year 2015-16 GOIL earned an income of USD 1687711 and suffered aloss of USD 25657696 as against the income of USD 2031584 and a loss of USD 2127503in the previous year. During the year under consideration the Company has not carried outany operations. The loss is on account of Impairment and interest.
GOL Offshore Fujairah L.L.C. FZE ("GOL Fujairah")
During financial year 2015-16 GOL Fujairah incurred a loss of USD 52531218 asagainst loss of USD 18978357 in the previous year. The Company has not carried out anyoperations during the year under consideration. The loss is mainly on account ofImpairment and Finance cost.
CONSOLIDATED FINANCIAL STATEMENTS
In compliance of the provisions of Section 129(3) of the Act the ConsolidatedFinancial Statements of the Company and its subsidiaries for the financial year 2015-16prepared in accordance with Accounting Standard-21 read with Accounting Standard-23 formpart of this Annual Report.
During the year under review your Company has not accepted any deposits from thePublic.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE ACT
During the Financial Year 2015-16 no loans were granted no investments were made andno guarantees were given by the Company in connection with loan granted to any bodycorporate as envisaged under Section 186 of the Act.
EXTRACT OF ANNUAL RETURN
As prescribed in Section 92(3) of the Act read with Rule 12 of the Companies(Management and Administration) Rules 2014 an extract of the Annual Return in Form MGT-9is annexed with this report as Annexure I.
SECRETARIAL AUDIT REPORT
M/s. Makarand M. Joshi and Co. Practicing Company Secretaries carried out theSecretarial Audit for financial year 2015-16 under Section 204 of the Act. The SecretarialAudit Report in prescribed Form MR-3 is annexed to this report as Annexure II.The Secretarial Auditor has made an observation in their report that the Company did nothave the Policy for Preservation of Documents during financial year ended on March 312016. In this connection the Board of Directors would like to state that the ArchivalPolicy on Preservation of documents was adopted by the Board of Directors with effect fromSeptember 2 2016.
MANAGEMENT DISCUSSION AND ANALYSIS
Management Discussion and Analysis as required by the Listing Regulations is attachedhereto as Annexure III and forms an integral part of this Annual Report.
CORPORATE GOVERNANCE REPORT
A report on Corporate Governance along with a certificate from the Auditors of theCompany confirming compliance with the conditions of Corporate Governance as stipulatedunder the Listing Regulations is attached as Annexure IV and forms part ofthis Annual Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Company as on the date of this Report has seven Directors out of these five areIndependent Directors and two are Non-Independent Directors.
1. Independent Directors
Dr. Percy Adi Doctor was appointed as an Additional Independent Director of the Companywith effect from May 28 2015 who was confirmed as a Director at the Annual GeneralMeeting ("AGM") held on September 23 2015.
All Independent directors have furnished declarations that they meet the criteria ofIndependence as laid down under Section 149(6) of the Act.
2. Retirement by Rotation
Mr. Vijay Kumar retires by rotation at the ensuing AGM and being eligible has offeredhimself for reappointment as the Director of the Company.
3. Meetings of the Board and Committees thereof
The details of the meetings of the Board of Directors and the Committees thereof areincluded in the Corporate Governance Report which forms part of this Annual Report.
4. Performance Evaluation
The Board has carried out the evaluation of its own performance its committees andindividual directors during the financial year 2015-16.
The Board of Directors evaluated its performance and the performance of its committeeson the basis of criteria relating to Board functioning such as optimum composition of theBoard & its committees; experience & competencies of the Directors; correctnessand completeness of the information submitted; attendance of Board members and Management;freedom of participation and expression of views including recording of dissent if any;effectiveness of Board processes and recording of decisions in the minutes.
A structured exercise was carried out to evaluate the performance of Directors on theparameters of ethics and values knowledge and proficiency diligence behavioural traitsand personal development. Each of these parameters was further sub-divided in to fivesub-parameters. Every Director was evaluated on these parameters individually by each ofhis fellow Directors.
5. Policy on Appointment and Remuneration
The Nomination and Remuneration Committee of the Board formulated Nomination andRemuneration Policy which inter alia prescribes criteria for determining remuneration ofthe Directors Key Managerial Personnel and other employees of the Company and criteriafor determining qualifications positive attributes and independence of the Directors. ThePolicy was recommended by the Committee to the Board of Directors and approved by theBoard. The Policy is available on the website of the Company www.goloffshore.com and thelink for the same is provided below: http://goloffshore.com/investors_statpol.php
6. Key Managerial Personnel (KMP)
The Board of Directors at its meeting held on November 6 2015 appointed Mr. PrakashChandra Kapoor Chairman as the Chief Executive Officer of the Company w.e.f. October 302015. Mr. Kailash Gupta was appointed as the Chief Financial Officer w.e.f. May 1 2015.
Mr. Navin Joshi ceased to be the Company Secretary and Chief Compliance Officer of theCompany w.e.f. April 29 2016. The Board at its meeting held on May 30 2016 appointedMrs. Varika Rastogi as the Company Secretary and Chief Compliance Officer of the Companyw.e.f. May 16 2016.
COMMITTEES OF THE BOARD
Your Company has duly constituted the Committees required under the Act read withapplicable Rules made there under and the Listing Regulations.
The Company has an Audit Committee with the constitution powers and role as areprescribed under Section 177 of the Act and Regulation 18 of the Listing Regulations. TheConstitution of the Audit Committee and its powers & role are mentioned in the Reporton Corporate Governance which is a part of this Annual Report.
The other statutory committees of the Board are given below: i) StakeholdersRelationship Committee ii) Nomination and Remuneration Committee iii) Corporate SocialResponsibility Committee
Details with regard to composition powers role meetings held and attendance ofmembers at such meetings of the relevant Committee are provided in the Report on CorporateGovernance which forms part of this Annual Report.
Directors Responsibility Statement
In compliance of Section 134(5) of the Act your Directors confirm that:
(a) in preparation of the annual accounts for the financial year ended March 31 2016the applicable accounting standards have been followed and there is no material departurefrom the same;
(b) they have selected accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the losssuffered by the Company for the said year;
(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) they have laid down internal financial controls which are followed by the Companyand such internal financial controls are adequate and operating effectively; and
(f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
PARTICULARS OF EMPLOYEES
Pursuant to the provisions of Section 197 of the Act read with Rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 particulars ofemployees are required to be provided in the Directors Report. However havingregard to the provisions of Section 136 of the Act the Annual Report excluding theaforesaid particulars is being sent to all the members of the Company and others entitledthereto. Any member interested in obtaining these particulars will be provided with thesame upon receipt of a written request delivered at the Registered Office of the Company.
CORPORATE SOCIAL RESPONSIBILITY ("CSR")
In accordance with Section 135 of the Act the Board of Directors of the Company hasconstituted a CSR committee of the Board composition of which is as follows:
Mr. Prakash Chandra Kapoor Chairman of the Committee Mr. Vijay Kumar Member Mr. Vinesh Davda Member
CSR Committee has framed the policy on Corporate Social Responsibility (CSR) which isavailable on the Companys website the link for the same is provided below:
Due to liquidity mismatch the Company is not upto date on its obligations relating tothe repayment of loans to the banks certain statutory and contractual dues etc. This wasone of the reasons due to which the Board of Directors has been compelled not to declareany dividend to shareholders for the two previous years. In the light of these facts andalso in light of the loss suffered by the Company during the financial year 2015-16 theBoard of Directors after due deliberation have decided that the Company cannotcontribute to the CSR activity and thus no amount has been spent on the CSR activities.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
The Companys main business activity is to provide Offshore Oilfield Services.Since the Company is not engaged in any manufacturing or production activity informationpertaining to energy conservation and technology absorption is not applicable to theCompany.
The details of foreign exchange earnings and outgo are as under:
|Particulars ||FY 2015-16 ||FY 2014-15 |
| ||(Rs. in lacs) ||(Rs. in lacs) |
|Foreign Exchange earned (on account of freight charter hire earnings) ||64464 ||82712 |
|Foreign Exchange used including operating expenses capital repayment down payments for acquisition of vessels and interest payment ||37379 ||47684 |
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All Related Party Transactions that were entered in to by the Company during thefinancial year 2015-16 were at arms length and in the ordinary course of businessaccordingly the disclosure pursuant to Section 134(3)(h) read with Rule 8(2) of theCompanies (Accounts) Rules 2014 in Form AOC-2 is not applicable. There were nomaterially significant related party transactions entered in to by the Company with anyRelated Parties which may have a potential conflict with the interest of the Company atlarge.
The Policy on Related Party transaction as approved by the Board is uploaded on thewebsite of the Company www.goloffshore.com and the link for the same is provided below:
The details of related parties transactions as required under Accounting Standard-18are set out in the notes to the Financial Statements.
INTERNAL FINANCIAL CONTROLS
Your Company has an established Internal Financial Control System with policies andprocedures for operations accounting and financial reporting and compliances. Aneffective Internal Audit function adds the element of completeness to the system ofInternal Control. The Internal Auditors are an independent firm who present their findingsand reports to the Audit Committee. During the year under review effectiveness ofinternal financial controls was evaluated. Internal financial controls with reference tothe Financial Statements are adequate in all material respects and commensurate with thesize and nature of business of the Company.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
The Company has established a vigil mechanism to enable the Directors and Employees toreport their genuine concerns in the manner prescribed. The Whistle Blower policy in thisregard is posted on the website of the Company www.goloffshore.com and the link for thesame is provided below:
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has put in place an "Anti Sexual Harassment Policy". InternalComplaints Committee (ICC) has been set up to redress complaints regarding sexualharassment. All employees (permanent contractual temporary trainees) are covered underthis policy. During the financial year 2015-16 there were no complaints of sexualharassment received and/ or disposed off by the Committee.
Pursuant to the provisions of Section 139 of the Act read with relevant rules of theCompanies (Audit and Auditors) Rules 2014 M/s. Varma & Varma Chartered Accountants(Registration No. 004532S) and M/s. Motilal & Associates Chartered Accountants(Registration No. 106584W) were appointed as Joint Statutory Auditors of the Company atthe AGM held on August 14 2014. The Statutory Auditors hold office for a period of threeyears i.e. until the conclusion of the AGM to be held in the year 2017. As per theprovisions of the Section 139 the appointment of the Statutory Auditors needs to beratified by the members at every AGM. Accordingly a resolution for the ratification ofthe appointment of Statutory Auditors has been incorporated in the Notice convening theensuing AGM for the approval of members. Both the auditors have confirmed that theconsents given by them at the time of their appointment and the certificates issued bythem at that time to the effect that their appointment if made will be in accordancewith the conditions prescribed under Rule 4 of the Companies (Audit and Auditors) Rules2014 are still valid and in effect.
The Auditors have qualified their report on the annual accounts of the Company for theyear ended March 31 2016. The qualification is with respect to the non-provision in theFinancial Statements for the diminution in the value of investments trade receivables andamount of loans & advances made/ given by the Company to its wholly-owned subsidiaryKEI-RSOS Maritime Ltd. ("KRML"). In this regard the Board of Directors wouldlike to state that the said investment is strategic and long term in nature with a longterm outlook. The management is confident of turning around KRML and as such in theopinion of the management no provision is considered necessary for diminution if any inthe value of investments receivables and loans & advances made/ granted by theCompany in/ to KRML.
The Qualified Audit Report Review Committee (QARC) of the SEBI passed an order advisingthe Company to restate the accounts for certain earlier years with respect toqualification mentioned above. The Company preferred an appeal to the Securities AppellateTribunal (SAT) against the order of QARC. The SAT has quashed the order of QARC and setaside with liberty to the SEBI to pass fresh orders on merit. Thereafter the SEBI haschanged the procedure in this regard and consequently pending cases relating torestatement of accounts stands closed.
The Auditors have made observation in their report in the Emphasis of Matter regardingcontinuing default in repayment of loans to lenders corporate guarantees invoked/recovery and winding up petitions initiated by the lenders the going concern concept andbasis for making provisions against investments in & loans to subsidiaries andprovision for impairment of fixed assets. The Directors would like to state here that theexplanations provided in this regard in Note nos. 34 36 38 and 39 to the standalonefinancial statements are self-explanatory and hence the observation does not require anyfurther clarification.
As required under Section 138 of the Act and Rule 13 of the Companies (Accounts) Rules2014 the Internal Audit function is carried out by M/s. Ashok Kapadia & AssociatesChartered Accountants. The Internal Auditors present their report to the Audit Committee.The scope functioning periodicity and methodology for conducting the internal audit hasbeen formulated in consultation with the Audit Committee and the Board of Directors.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the year under review there were no significant and material orders passed bythe regulators courts or tribunals which would impact the going concern status andoperations of the Company in future.
RISK MANAGEMENT FRAMEWORK
The Company has in place an Enterprise Risk Management framework commensurate with thesize of its operations. This includes a well documented Enterprise Risk Management Policyand procedures for assessing risks. The risk identification and assessment process iscomprehensive dynamic and pro-active. As per the policy the functional heads prepare aquarterly report giving the risks perceived in their functions and the response plan todeal with and mitigate the risks. The report post audit and verification is presented tothe Board of Directors of the Company. The Company has constituted Risk ManagementCommittee.
Your Directors acknowledge and place on record their sincere appreciation towards theguidance and continued support received from the Government of India and its variousagencies including Ministry of Petroleum and Natural Gas Ministry of ShippingDirectorate General of Shipping Mercantile Marine Department Directorate General ofHydrocarbons Directorate General of Civil Aviation Port Trusts and Port authoritiesIndian Navy International Salvage Union Ministry of Finance Reserve Bank of IndiaSecurities and Exchange Board of India Ministry of Corporate Affairs Registrar ofCompanies the Stock Exchanges and the Depositories.
Your Directors also recognize and appreciate the efforts and hard work put in by allthe employees and value the continued support received from all stakeholders andcounterparties charterers shareholders business associates and partners consultantsand advisors agents insurance companies and protection and indemnity clubs surveyorslawyers and solicitors banks and financial institutions.
For and on behalf of the Board
Prakash Chandra Kapoor
Date: September 2 2016 Place: Mumbai