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SEAMEC Ltd.

BSE: 526807 Sector: Infrastructure
NSE: SEAMECLTD ISIN Code: INE497B01018
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OPEN 152.10
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VOLUME 1181
52-Week high 194.00
52-Week low 77.10
P/E
Mkt Cap.(Rs cr) 395
Buy Price 0.00
Buy Qty 0.00
Sell Price 155.35
Sell Qty 1.00
OPEN 152.10
CLOSE 153.80
VOLUME 1181
52-Week high 194.00
52-Week low 77.10
P/E
Mkt Cap.(Rs cr) 395
Buy Price 0.00
Buy Qty 0.00
Sell Price 155.35
Sell Qty 1.00

SEAMEC Ltd. (SEAMECLTD) - Director Report

Company director report

To

The Members

Your Directors have pleasure in presenting the Twenty Ninth Annual Report of theCompany and the Audited Accounts for the financial year ended 31st March 2016.

1. SIGNIFICANT EVENT

BUY BACK OF SHARES – CHANGE IN PAID UP EQUITY SHARE CAPITAL

The Board of Directors of the Company in its meeting held on 27th May 2015approved buy back of equity shares of the Company not exceeding 25% of the equity sharecapital of the Company of face value of Rs. 10/- each at a price of Rs. 125/- per equityshare through ‘Tender Offer’ route as prescribed under the Securities andExchange Board of India (Buy Back of Securities) Regulations 1998 on a proportionatebasis subject to the approval of Shareholders by way of special resolutions through PostalBallot and other regulatory compliances required under law including provisions of theCompanies Act 2013. After obtaining the necessary approval from the shareholders and uponcompliance of all regulatory requirements the Company commenced buy back offer from 2ndNovember 2015 for buy back of 8475000 equity shares of Rs. 10 each fully paid up at aprice of Rs. 125/- per share from the Company’s shareholders. The buyback concludedon 27th November 2015.

Consequent upon completion of Buy Back of equity shares changes in paid up equityshare capital of the Company stands as under:

Particulars No of Equity Shares Amount (Rs.)
Issued and paid up equity share capital before Buy Back 33900000 339000000
Issued and paid up equity share capital after Buy Back 25425000 254250000

Change in promoters holding from 25425000 shares (75%) to 18527475 shares(72.87%)

2. FINANCIAL HIGHLIGHTS

(Figures in Rs. Million)
Current Year Period ended 31.03.2016 Previous Year Period ended 31.03.2015
Net Sales/Income from Operations 3279 3497
Other Income 210 361
Total Expenditure
a. Consumables & Spares 575 385
b. Staff Costs (including offshore staff) 797 846
c. Other Expenditure 1551 1658
Earnings before Depreciation & Tax 566 969
Interest Expenses 3 1
Depreciation 471 368
Profit / (Loss) before Tax 92 600
Tax Expenses for the year 53 60
Profit /(Loss) after Taxation 39 540
Add: Balance brought forward from previous year 2860 2447
Surplus available for appropriation 2899 2987
Dividend for FY@ Rs. 1.00 (including DDT) - 41
Transfer to Tonnage Tax Reserve - 86
Retained profit carried forward 2899 2860

There has been no respite from the global economic downturn. Your Company’s lineof business reeled under heavy stress. The scope for deployment of your Company’svessels dropped significantly in Middle East South East Asia and other parts of theWorld hitherto being remained as a potential source.

In comparison the Indian Economy has certainly performed creditably compared to mostdeveloped market of the globe showing a positive year of Macro Economic Stability. Theeconomy has made progress but yet to show proportionate impact on your Company’sline of business.

India however remained as the destination for engagement of your vessels underlimited opportunities.

Your Company focused on active engagement of your vessels in projects a change inbusiness approach. This has resulted engagement of your vessels post monsoon during theyear under review.

During the year under review the Company’s total revenue was Rs. 3489 millionagainst Rs. 3858 million in last year. The reduction in overall revenue was primarily dueto under employment of sizable section of your fleets during monsoon in India and at thesame time absence of opportunities in Middle East South East Asia etc. Income fromoperations was Rs. 3279 million as against Rs. 3497 million in the previous yearshowing a drop of 6%. In addition there was a decline in other income from Rs. 361million to Rs. 210 million primarily due to buy back of shares causing reduction of cashsurplus.

On a consolidated basis total revenue was Rs. 3501 million compared to Rs. 4542million of previous year. The consolidated profit arrived at Rs. 88 million for the yearended 31st March 2016 compared to Rs. 1280 million of previous year.

Cash Balance at the beginning of financial year was Rs. 2002 million. The balance atthe end of the year was Rs. 876 million a decrease of 56% over last year.

YEARWISE REVENUE

SEGMENT WISE PROFIT BEFORE FINANCE COST INTEREST INCOME AND TAX

From the Assessment year 2005-06 (relevant accounting year 2004-05) your Company hascome under Tonnage Tax regime available for shipping Companies under chapter XII – Gof Income Tax Act 1961. Tonnage Tax scheme available initially upto 31.03.2015 has beenextended for a further period of 10 years till AY 2024-25. For the year under review dueto absence of profit no Tonnage Tax Reserve was created u/s 115V of Income Tax Act 1961.

3. OPERATIONS OFFSHORE

One of Company’s vessels is under long term charter with Oil & Natural GasCorporation Ltd. (ONGC). The Company’s strategy of involvement in projects haveensured two other vessels engagement on a continuous basis on different projects in Indiafor ONGC post monsoon. Balance vessels were non utilised due to non-facilitation ofContracts. Out of the 1068 days of deployment domestic operations registered 880 days andoverseas operation was for 188 days only.

4. DIVIDEND

In view of drop in profit the Board of Directors decided to retain the surplus forfuture growth and decided not to recommend Dividend.

5. DIRECTORS AND KEY MANAGERIAL PERSONNEL

Your Company is a subsidiary of HAL Offshore Limited.

During the year under review Mr. Manu Chadha Independent Director of the Company hadresigned from the Board on 17th August 2015. Mr. Jagdish Persad Suri NomineeDirector of the Company resigned from the Board on 18th May 2016. YourDirectors place on record its appreciation of the valuable services rendered by MessersManu Chadha and Jagdish Persad Suri during their tenure as Directors of the Company.

The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013 soas to qualify themselves to be appointed as Independent Directors under the provisions ofthe Companies Act 2013 and the relevant rules.

In accordance to the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Sanjeev Agrawal Director of the Company retires byrotation at the ensuing Annual General Meeting and is eligible for reappointment.

The brief details of all members of Board are annexed to this report. The followingpersons are the Key Managerial Personnel of the Company.

1. Captain C. J. Rodricks – Managing Director

2. Virendra Kumar Gupta – President & Chief Financial Officer

3. S. N. Mohanty – President (Corporate Affairs Operations & CompanySecretary)

Remuneration and other details of Key Managerial Personnel for the year ended 31stMarch 2016 are stated in the extract of the Annual Return. Annexure ‘A’ and inAnnexure - ‘I’.

6. EXTRACT OF ANNUAL RETURN

The details forming part of the extract of the Annual Return in Form MGT 9 is annexedherewith as "Annexure A"

7. AUDITORS AND AUDIT REPORT

M/s. S R B C & C O LLP Chartered Accountants the Statutory Auditors of theCompany will hold office until the conclusion of the ensuing Annual General Meeting andare eligible for re-appointment as per section 139 of the Companies Act 2013 (Act).

As required under the provisions of Section 139(1) of the Act the Company has receivedwritten consent from M/s S R B C & CO LLP Chartered Accountants informing that theirappointment if made would be in accordance with the provisions of the Act read withRule 4 (2) of the Companies (Audit and Auditors) Rules 2014 and that they satisfy thecriteria provided in Section 141 of the Act.

The observations in the Auditors’ Report have been dealt with in the relevantNotes to Accounts which are self-explanatory. The auditors in the report to the membershave given qualified opinion. The qualified opinion and the management response in respectto the above are as below:

Qualified Opinion of Auditors

Trade receivables includes Rs. 174.78 million (net of provisions for doubtful debts ofRs. 52.26 million) receivable from a Charterer. As explained in note 30(b) through theaccounts this amount is withheld by the Charterer unable a settlement involving theCompany is reached in this regard. Since the amount is subject to settlement andconsequential adjustment if any Auditors are unable to comment on the recoverability ofthe same including consequential adjustment that may be required to be made to thisfinancial results

Management Response

In the past the Company had chartered the vessel together with certain services forwhich an amount of Rs. 2238.38 lacs was receivable from the Charterer. While on Charterdamage allegedly resulted to a subsea property of a third Party and such damage wassought to be attributed to the Company and Charterer withheld payment. The Company hasinitiated legal action against the Charterer and is also in discussions with it and otherparties involved to reach a settlement. On the basis of information available with theCompany management believes that the provision of Rs. 522.63 lacs made against thereceivable of Rs. 2238.38 lacs is adequate. Refer note 6 to the financial result for thequarter and year ended March 31 2016 and note 30(b) to the annual financial statements.

8. AUDIT COMMITTEE

The Composition of Audit Committee was changed from time to time.

The present composition of Audit Committee consists of the following members: Mr.Amarjit Singh Soni Mr. Surinder Singh Kohli Ms. Seema Modi

The above composition of the Audit Committee interalia consists of Messers AmarjitSingh Soni Surinder Singh Kohli and Ms. Seema Modi Independent Directors.

The Company has established a vigil mechanism to over see through the committee thegenuine concerns expressed by the employees and other Directors. The Company has alsoprovided adequate safeguards against victimization of employees and Directors who expresstheir concerns. The Company has also provided direct access to the Chairman of the AuditCommittee on reporting issues concerning the interests of co-employees and the Company.

More details of the Audit Committee are stated under Corporate Governance Report.

9. STAKEHOLDERS RELATIONSHIP COMMITTEE

The reconstituted Committee comprises of the following Directors as its Members: a. Ms.Seema Modi b. Captain C. J. Rodricks

10. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Company has constituted a Corporate Social Responsibility Committee (CSR) pursuantto the provisions of the Companies Act 2013. The Committee framed CorporateResponsibility Policy which was approved by Board on 11th August 2014. ThePolicy is available on Company’s Website www.seamec.in.

The Company has commenced implementation of Policy and areas of activities have beenmade pursuant to provisions of Companies Act 2013. Annual Report of CSR Committee in theprescribed format is attached and forms a part of this report. (Annexure B)

11. NOMINATION AND REMUNERATION COMMITTEE

Pursuant to the provisions of Section 178 of the Companies Act 2013 read withCompanies (Meetings of Board and its Powers) Rules 2014 framed thereunder every listedcompany and prescribed class of companies shall constitute a Nomination and RemunerationCommittee (NRC) of the Board consisting of 3 or more non–executive directors out ofwhich not less than shall be independent director.

The present composition of NRC is in compliance with the above regulations andcomprises of the following members: Mr. Surinder Singh Kohli Mr. Amarjit Singh Soni Ms.Seema Modi

The above composition of the Nomination and Remuneration Committee interalia consistsof Messers Surinder Singh Kohli Amarjit Singh Soni and Ms. Seema Modi all IndependentDirectors.

The Nomination and Remuneration Committee have formulated a policy as prescribed underthe Act which interalia includes criteria for determining qualification positiveattributes and independence of a director and recommended to the Board for adoption of thePolicy. The Policy also covers recommendation to the Board on the remuneration to theBoard of Independent Directors Key Managerial Personnel and other employees. TheNomination and Remuneration Policy is also available in Company’s websitewww.seamec.in (weblink: www.seamec.in/attachments/Nomination %20and%20Remuneration%20Policy.pdf) and the said policy is annexed hereto and marked as AnnexureJ.

12. PUBLIC DEPOSITS:

During the year under review the Company has not accepted any deposits under theCompanies Act 2013.

13. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS:

The particulars of loans guarantees and investments have been disclosed in thefinancial statements.

14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS/TRIBUNALS.

The Company filed a suit against an overseas debtor before esteemed Abu Dhabi court ofFirst Instance which was dismissed during the year under review. The Company hashowever under the process a suitable alternate re-course for realisation of debt.

15. SECRETARIAL AUDIT:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethereunder M/s Satyajit Mishra & Co Company Secretaries in Whole-time practice (FCSno. 5759 C P No. 4997) was appointed to conduct Secretarial Audit for the year ended 31stMarch 2016. M/s Satyajit Mishra & Co Practicing Company Secretaries has submittedReport on the Secretarial Audit which is attached as "Annexure C" andforms a part of this report. There are no Qualifications or observations or remarks madeby the Secretarial Auditor in the Report.

16. COMPANY’S POLICY RELATING TO DIRECTORS APPOINTMENT PAYMENT OF REMUNERATIONAND DISCHARGE OF THEIR DUTIES

The Company has a Policy relating to appointment of Directors payment of Managerialremuneration Directors’ qualifications positive attributes independence ofDirectors and other related matters as provided under Section 178(3) of the Companies Act2013 and under Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

17. PERFORMANCE EVALUATION

Pursuant to the provisions of the Companies Act 2013 and Regulation 17(10) ofSecurities of Exchange Board of India (Listing Obligations & Disclosure Requirements)Regulation 2015 the Board has carried out the annual performance evaluation of its ownperformance the Directors individually as well as the evaluation of the working of itsAudit Nomination and Remuneration and Compliance Committees which covers various aspectsof the Board’s functioning such as adequacy of the composition of the Board and itsCommittees Board Culture execution and performance of specific duties obligations andgovernance.

The performance evaluation of the Independent Directors was carried out by the entireBoard.

The performance evaluation of the Chairman and the Non Independent Directors wascarried out by the Independent Directors who also reviewed the performance of theSecretarial Department. The Directors expressed their satisfaction with the evaluationprocess.

18. FAMILIARISATION PROGRAMME TO INDEPENDENT DIRECTORS

The familiarization programme aims to provide Independent Directors with the businessand operating scenario the socio economic environment in which the Company operatesbusiness model operational and financial performance of the Company Market dynamics andchanges so as to enable them to take appropriate decision in a timely manner. Thefamiliarization programme also seeks to update the Directors on the rolesresponsibilities rights and duties under the provision of law and other statues. All theIndependent Directors have been familiarized with the programme conducted by the Company.

19. RELATED PARTY TRANSACTIONS

Your Company has formulated a policy on Related Party Transactions which is availableon Company’s Website www.seamec.in. One related party transaction that wasentered into earlier also continued during the financial year.

The said transaction was on an arm’s length basis and was in the ordinary courseof business.

All Related Party Transactions are placed before the Audit Committee and Board forapproval (Annexure D). The Company has also formulated a policy on "MaterialSubsidiaries" and the said policy is available in Company’s Websitewww.seamec.in weblink:www.seamec.in/attachments/Material%20Subsidiary%20Policy.pdf).

The policy on Related Party Transactions as approved by the Board is uploaded on theCompany’s website.

20. CORPORATE GOVERNANCE

The Company believes that Corporate Governance is a way of business life rather thanlegal compulsion.

Your Directors re-affirm their commitment to the Corporate Governance standardsprescribed by Securities and Exchange Board of India (SEBI) codified as Regulation 27(2)of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 withStock Exchanges. Corporate Governance Report as well as Corporate Governance compliancecertificate by Secretarial Auditors is set out in separate Annexures to this report markedas (Annexure F). Management Discussion Analysis Report forms a part of DirectorsReport and marked as (Annexure G).

21. BUSINESS RESPONSIBILITY REPORTING

As required under Regulation 34 of Securities of Exchange Board of India (ListingObligations & Disclosure Requirements) Regulations 2015 with the Stock Exchanges aseparate section on Business Responsibility Reporting annexed as (Annexure H) whichforms an integral part of this Report.

22. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW

The Company had 6 Board meetings during the financial year under review. The details ofthe Board meetings and the attendance of the Directors are provided in the CorporateGovernance Report.

23. INVESTOR SERVICES

As the members are aware your company’s shares are tradeable compulsorily inelectronic form with effect from 24th August 2000 and your company hasestablished connectivity with both the depositories viz. National Securities DepositoryLtd. (NSDL) and Central Depository Services (India) Ltd. (CDSL). In view of the numerousadvantages offered by the Depository system members are requested to avail of thefacility of de-materialization of Company’s shares on either of the Depositories asaforesaid.

24. WHOLLY OWNED SUBSIDIARY

SEAMEC INTERNATIONAL FZE Dubai UAE is the Wholly Owned Subsidiary (WOS) of yourCompany which at present is not a material subsidiary. As per the regulatory provisionthe consolidated financial statement of your Company and its wholly owned subsidiary forthe financial Year ended on 31st March 2016 duly audited by Statutory Auditorsis attached to the annual report of the Company. The Annual Accounts of the WOS and therelated detailed information shall be made available to the shareholders on request at anypoint of time. During the year under review your wholly owned subsidiary did not have anyoperational activities.

25. HUMAN RESOURCES

The Company takes pride in the Commitment Competence and dedication shown by itsemployees in all areas of business both in onshore and offshore.

The Company has a structured induction process and management development programs toupgrade the skill of its personnel.

The Company is committed to nurturing enhancing and retaining talent through enhancingmotivation and morale of its employees.

The continuous training courses give employees the opportunity to improve their skillleading to consistent improvements in learning and development and adhering to SEAMECvalue. Health and Safety of the employees and our associates we work with remains ourparamount importance. Your Company ensures that operations are carried out as per thesafety guidelines and procedures in place which are regularly updated. Employees areregularly made aware of hazards/risks associated with their jobs and appropriate trainingis imparted to them to improve their skills. Periodic safety audit are undertaken toconfirm the proper functioning of system and procedures.

26. INTERNAL FINANCIAL CONTROLS

The Company has an internal controls system commensurate with size scale andcomplexity of its operations. In order to enhance controls and governance standards theCompany has adopted Standard Operating Procedures which ensures robust internal financialcontrols exist in relation to operations financial reporting and compliance.

The Company has also conducted audit of Internal financial controls as required underRegulatory requirement.

In addition the internal audit functions monitors and evaluates the efficiency andadequacy of the internal Control System in the Company its compliance with operatingsystems accounting procedures and policies. Periodical reports on the same are alsopresented to the Audit Committee.

Conscious efforts are in place on a continuous basis to ensure that all its assets aresafeguarded and protected against loss from unauthorized use and disposal and that alltransactions are authorized recorded and financial statements show a true and fairpicture of the state of affairs of the Company. Compliance is in place as regards tostatutory and regulatory requirements.

The internal controls system of the Company are monitored and evaluated by Auditorsreviewed by Management and Audit Committee of the Board of Directors. Auditor’sobservations in confirmation to policy in force has also been received.

27. MARITIME LABOUR CONVENTION (MLC) 2006

Maritime Labour Convention (MLC) 2006 adopted by International Labour Organizationestablishing minimum requirements for almost all aspects of working and living conditionson board ships has entered into force from 20th August 2013. Government ofIndia issued compliance of specific requirements in early February 2013 related toconditions of employment hours of work and rest accommodation recreation facilitiesfood and catering health medical care welfare and social security.

Your Company has implemented the requirement as per MLC 2006 and has receivedcertification from the flag administration for its vessels.

28. POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORK PLACE

Pursuant to provisions of Sexual Harassment of women at work place (ProsecutionProhibition and Redressal) Act 2013 and rules made thereunder Company has adopted apolicy which has come into force with effect from 13th February 2015. Nocomplaints of Sexual Harassment of women at work place has been received during thefinancial year under report.

29. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDEXPENDITURE

The information pertaining to conservation of energy technology absorption ForeignExchange earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished in "AnnexureE" and is attached to this report.

30. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OFTHE COMPANY

Pursuant to the requirement of Regulation 21 of the Securities and Exchange Board ofIndia (Listing Obligations & Disclosure Requirements) Regulations 2015 the Companyhas constituted a Risk Management Committee. Business Risk Evaluation and Management is anongoing process within the Organization. The Company has an adequate risk managementframework to identify monitor and minimize risk as also identify business opportunities.

The objectives and scope of the Risk Management Committee broadly comprises:

• Oversight of risk management performed by the executive management;

• Reviewing the Risk Management Policy and Framework in line with Local legalrequirements and SEBI guidelines;

• Reviewing risks and evaluate treatment including initiating mitigation actionsand ownership as per a pre-defined cycles;

• Defining framework for identification assessment monitoring mitigation andreporting of risk. Risk identification assessment and mitigation measures are reported toBoard periodically.

31. PARTICULARS OF EMPLOYEES

The particulars required under Section 197 read with Rule 5 of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are also furnished inthe Annexure I.

32. DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to Section 134 (3) (c) of the Companies Act 2013 your Directors state that:a. In the preparation of Annual Accounts the applicable accounting standards have beenfollowed along with proper explanations relating to material departure. b. Directors haveselected such accounting policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of financial year and the Profit and Loss of theCompany for that period. c. Directors had taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities. d. Directors had prepared the annual accounts ona going concern basis. e. Directors have laid down internal financial controls and thatthe financial controls were adequate and were operating effectively. f. Directors haddevised proper system to ensure compliance with the provisions of all applicable laws andthat such systems were adequate and operating efficiently.

33. OTHER POLICIES UNDER SEBI (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS)REGULATIONS 2015

In accordance with the provisions of Regulations 30 of the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Company has formed policy fordetermination of materiality for disclosures of events or information. The same has beenhosted on the website of the Company at the www.seamec.in Further the Company has alsoformed (i) Policy for Preservation of Documents (ii) Archival Policy for disclosureshosted in the website.

34. APPRECIATION

Your Company has been able to operate efficiently because of the professionalismcreativity integrity and continuous improvement in all functions and areas as well asefficient utilization of Companys’ resources for sustainable growth. The Directorshereby wish to place on record their appreciation of the efficient and loyal servicesrendered by each and every employee with whole hearted effort for making satisfactoryperformance possible.

Your Directors thank the valued shareholders customers suppliers Banks Registrarand Share Transfer Agent for their continuous support to the company.

For and on behalf of the Board of Directors
Place: Mumbai Sanjeev Agrawal
Date: May 19 2016 Chairman