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Chowgule Steamships Ltd.

BSE: 501833 Sector: Infrastructure
NSE: CHOWGULSTM ISIN Code: INE490A01015
BSE 00:00 | 22 Mar 8.20 0.21
(2.63%)
OPEN

7.61

HIGH

8.20

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NSE 05:30 | 01 Jan Chowgule Steamships Ltd
OPEN 7.61
PREVIOUS CLOSE 7.99
VOLUME 6045
52-Week high 15.71
52-Week low 6.62
P/E
Mkt Cap.(Rs cr) 30
Buy Price 7.75
Buy Qty 1000.00
Sell Price 8.19
Sell Qty 4950.00
OPEN 7.61
CLOSE 7.99
VOLUME 6045
52-Week high 15.71
52-Week low 6.62
P/E
Mkt Cap.(Rs cr) 30
Buy Price 7.75
Buy Qty 1000.00
Sell Price 8.19
Sell Qty 4950.00

Chowgule Steamships Ltd. (CHOWGULSTM) - Director Report

Company director report

To

The Shareholders

Your Directors present the Fifty Fifth Annual Report and the AuditedAccounts for the year ended March 31 2018.

1. FINANCIAL RESULTS & APPROPRIATIONS:

(` in Lakhs)

2017-18

2016-17

Loss before financial charges depreciation exceptional item & tax

(76.67)

(47.19)

Financial charges

(149.09)

(135.49)

Depreciation

(161.69)

(177.56)

Loss before exceptional item & tax

(387.45)

(360.24)

Impairment

(262.05)

-

Loss before deferred tax provision

(649.50)

(360.24)

Reversal of provision for deferred tax (net)

246.73

84.16

Loss after tax

(402.77)

(276.08)

Other comprehensive income

43.53

31.44

Total comprehensive income

(359.24)

(244.64)

Brought forward from previous year

1369.84

1614.48

Surplus in statement of profit and loss

1010.60

1369.84

In view of the loss the Board of Directors has not recommended anydividend for the year under review. Further no amount is transferred to Reserves &Surplus.

2. MANAGEMENT DISCUSSION AND ANALYSIS/OPERATIONS REPORTCOMPANY'S PERFORMANCE

During the year under review the freight earnings and charter hirereceipts amounted to ` 12.26 Lakhs as against Rs. 51.58 Lakhs during the previous yearshowing a decrease of ` 39.32 Lakhs. The BDI which started the year at 1282 in April 2017scaled down to 1055 by March 2018. The dry bulk freight markets which showed glimpsesrecovery by the end of third quarter has once again slipped by the year end.

In the coastal trade also the Company had not been able to get anymeaningful business opportunities.

INDUSTRY REVIEW & FUTURE OUTLOOK

Bulk Carrier market Outlook

Overall the bulk carrier market has shown clear improvements sinceearly 2016 and while the recovery may not follow a smooth trajectory further gradualimprovements in bulk carrier market conditions are expected over the next few years. Thelimited order book suggests that fleet expansion will remain fairly muted with deliveriesprojected to slow further in both 2018 and 2019.

Meanwhile demand side trends appear to remain positive with growth of3% in dry bulk trade expected in 2018 (and 4% in terms of tone-miles) although risks tothe outlook remain

The Handysize Market

Market conditions in the Handysize sector also improved in 2017 withHandysize trip earnings averaging $8766/day up 54% compared to the 2016 average.Earnings improved further into early 2018. Growth in minor bulk trade picked up in 2017 to2% with Handysize fleet growth remaining below 2% for the sixth consecutive year. Focuson the environmental regulatory timetable continues to accelerate ahead of the 2020 globalsulphur cap. Uptake of scrubbers and LNG as a fuel is picking up but most owners arestill taking a ‘wait and see' approach on both ‘timing and technology'. Soxemissions limits came into force at the start of 2018 at ports within proposed ChineseECAs whilst uncertainly remains over how the industry will meet carbon emission targets.Digital technology continues to develop and is expected to have an increasing influence.

At a broad level shipyard capacity environmental regulation demandtrends and finance availability remain key issues to monitor.

While risks remain sentiment has generally become more positive andbuilding blocks for further improvement seem to be in place as we move into the next phaseof the cycle.

INTERNAL FINANCIAL CONTROL SYSTEM

The Company has effective systems of internal controls which areperiodically reviewed by the Audit Committee of the Board of Directors. Based on itsevaluation (as defined in section 177 of Companies Act 2013 and Clause 18 of SEBIRegulations 2015) our audit committee has concluded that as of March 31 2018 ourinternal financial controls were adequate and operating effectively.

GOVERNMENT POLICIES

The Indian economy and many developed countries continue to make effortfor speedy economic recovery. As part of overall strategy however the Governments invarious countries continue to give priority for development of overall infrastructure.This bodes well for overall trade.

INDUSTRIAL RELATIONS

The industrial relations during the year were very cordial and therewere no industrial disputes. THREATS RISKS & CONCERNS

Freight Risks: The Hire income is subject to freight rate risks andtherefore the Company at group level follows the policy of mixture of short period andlong period time charter contracts with first class charters to mitigate volatility infreight rates.

Interest Rate Risk: With a view to avoid uncertainty in the interestrate the necessary forward cover is taken at regular intervals. Forex Risk: As majorportion of the Group's revenues is generated from international business in the US Dollarterms the same creates a natural hedge against foreign exchange exposures. The Companyreviews Rupee - US Dollar parity on regular basis to protect itself from currencyfluctuation risks.

At the Company stand alone level the Company is engaged in coastaltrade where income as well as expenses mostly is in rupee term. As such there is verylimited forex risk for the Company.

Counter Party Risks: The Company engages into charter contracts withthe reputed charters to avoid the risks to the freight earnings. Government Policies: TheCompany regularly reviews the changes in the applicable government policies affectingoperations of the Company.

Human Resources: There is a scarcity of floating staff. In view ofoutsourcing of crew management the Company gets the benefit of having efficient and costeffective floating staff from the Ship Manager's pool.

CAUTIONARY STATEMENT

The statements expressions information given in this ManagementDiscussion and Analysis Report describing the Company's objectives projectionsestimates expectations or predictions may be deemed as ‘forward looking statements'.Actual results might differ substantially or materially from those expressed or implied.Important developments that could affect the Company's operations include demand-supplyconditions changes in Government global economic scenario etc.

3. LOAN REPAYMENT

During the year the Company did not contract any loans. The totaloutstanding loan at year end NIL.

4. DEFERRED TAX LIABILITY

In terms of the Accounting Standard IND AS 12 of the Companies (IndianAccounting Standards) (Amendment) Rules 2016 there is a reversal of Deferred Taxliabilities amounting to ` 246.73 lakhs for the Financial Year 2017-2018 which isreflected in the Statement of Profit & Loss. The net Deferred Tax Asset of ` 241.45Lakhs as at March 31 2018 is reflected in the Balance Sheet.

5. SUBSIDIARIES

The Company has five overseas subsidiaries including one wholly ownedsubsidiary and four step-down subsidiaries. The Board of Directors of the Company reviewedthe affairs of subsidiaries of the Company. In accordance with Section 129(3) of theCompanies Act 2013 the Company has prepared consolidated financial statements of theCompany and all its subsidiaries which form part of the Annual Report. Further astatement containing the salient features of the financial statement of the subsidiariesin the prescribed format AOC-1 is appended as Annexure 2. The Company will make availablethese documents / details upon request by any member of the Company. However pursuant toAccounting Standard AS-21 of the Companies (Accounting Standards) Rules 2016 ConsolidatedFinancial Statements presented by the Company include the financial information of itssubsidiaries. The

Company does not have any other joint venture/associate company inwhich it has significant influence. The financial highlights of its wholly ownedsubsidiary viz. Chowgule Steamships Overseas Limited are as under: The financialhighlights of CSOL's operations are as under:

2017-18

2016-17

(In US $ million)

(In US $ million)

Income

10.201

6.742

Gross Profit/(Loss) before depreciation

0.985

(1.445)

Depreciation

(4.378)

(4.373)

Reversal of Impairment

4.637

0.080

Write-off for cancellation of new build order

-

(5.184)

Net Profit/(Loss)

1.244

(10.923)

6. INSURANCE

The fleet of the Company has been adequately insured against Marine andWar Risks.

7. DIRECTORS

Mr. Vijay V. Chowgule and Mr. Jaywant Y. Chowgule Directors retire byrotation at the ensuing Annual General Meeting and are eligible for re-appointment.

Pursuant to the provisions of Section 149 of the Companies Act 2013the Independent Directors are not liable to retire by rotation and they shall hold officefor a term up to five consecutive years on the Board of a company from the date of theirappointment. The Board of Directors on the recommendations of the Nomination andRemuneration Committee has re-appointed Mr. Mangesh Sawant as Managing Director & CFOfor a period of 3 years with effect from April 1 2018 subject to approval ofShareholders. Pursuant to the Listing Regulations the background of the Directorsproposed to be appointed / re-appointed at the Annual General Meeting is given in theCorporate Governance Report.

Prof. Rohini Chowgule is a sister of Mr. Vijay Chowgule Chairman ofthe Company.

8. INDEPENDENT DIRECTORS

Independent Directors are non-executive directors as defined underRegulation 16(1)(b) of the SEBI Listing Regulations read with Section 149(6) of the Act.Pursuant to the requirements of Section 149 of the Companies act 2013 the Boardappointed all Independent Directors as Independent Directors for a period of five yearsand approval of the shareholders was obtained for the said appointment at the 51st Annualgeneral Meeting held on July 9 2014. The maximum tenure of Independent Directors is incompliance with the Act. All the Independent Directors have confirmed that they meet thecriteria of independence as mentioned under Regulation 16(1)(b) of the SEBI ListingRegulations read with Section 149 of the Act.

9. INDUCTION AND TRAINING OF THE BOARD MEMBERS

Directors are issued a detailed appointment letter which inter aliasets out terms of appointment duties responsibilities etc. of such director. Eachindependent director of the Company on appointment is given such letter of appointment andalso briefed by the Managing Director/Executive Director about the nature of business ofthe Company its finances operations etc. The Company Secretary also assists theIndependent Director in understanding their statutory duties obligations andresponsibilities as a Director/ Independent Director of the Company. The appointmentletter of independent directors is available on the Company's websitewww.chowgulesteamships.co.ion

10. EVALUATION OF PERFORMANCE OF THE BOARD COMMITTEES AND DIRECTORS

In compliance of the provisions of the Companies Act 2013 and theListing Regulations the evaluation of the performance of the Board for the year underreview was carried out. A formal mechanism for evaluation of the performance of the Boardits Chairman Committees and Directors was adopted. The process was carried out throughstructured evaluation process covering various important attributes such as composition ofBoard and Committees attendance of directors at meetings contribution at the meetingsqualifications experience and competencies performance of specific duties etc.

The evaluation of Independent Directors for the year under review wascarried out by the entire Board and that of Chairman and Non-Independent Directors wascarried out by Independent Directors.

11. CORPORATE GOVERNANCE

In terms of the listing regulations with the BSE Ltd. the CorporateGovernance Report is annexed hereto and forms a part of this Report.

12. CODE OF CONDUCT

The Board of Directors has laid down a Code of Conduct for all theBoard Members and Senior Management of the Company. The said Code has been hosted on thewebsite of the Company. All the Board Members and Senior Management have affirmedcompliance to the Code.

13. DIRECTORS' RESPONSIBILITY STATEMENT

The Directors state: "That

In the preparation of annual accounts the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures.

The Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for that period.

The Directors have taken proper and sufficient care for the maintenanceof adequate accounting records in accordance with the provisions of the Companies Act2013 for safeguarding the assets of the Company and for preventing and detecting fraudand other irregularities.

The Directors have prepared the annual accounts on a "goingconcern basis".

The Directors have laid down internal financial controls to be followedby the Company and such internal financial controls are adequate and are operatingeffectively.

The Directors have devised proper system to ensure compliance with theprovisions of all applicable laws and that such systems are adequate and operatingeffectively.

14. AUDITORS

Statutory Auditors

The shareholders at their Fifty Fourth Annual General Meeting held onJuly 21 2017 approved appointment of M/s CNK & Associates LLP Chartered Accountants(Firm No. 101961W) as Statutory Auditors of the Company for a period of five years fromthe conclusion of Fifty Fourth Annual General Meeting till the conclusion of the 59thAnnual General Meeting. The Auditors have confirmed that they are not disqualified fromcontinuing as Auditors of the Company.

The notes on financial statements referred to in the Auditors Reportare self explanatory and do not call for any further comments. The Auditors Report doesnot contain any qualification reservation or adverse remark.

Secretarial Auditors

V.N. Deodhar Practicing Company Secretaries were appointed to conductthe secretarial audit of the Company for the financial year 2017-18 as required underSection 204 of the Companies Act 2013 and Rules made there under. The Secretarial AuditReport for Financial Year 2017-18 forms part of the Annual Report.

15. THE COMPANIES (Appointment and Remuneration of ManagerialPersonnel) RULES 2014

There are no employees covered under the above Rules in respect of whomparticulars are required to be furnished.

16. THE COMPANIES (Accounts) RULES 2014

In accordance with the requirements of Rule 8 (A) of the Companies(Accounts) Rules 2014 a statement annexed hereto gives the particulars as required underthe said rules and forms part of this Report (Annexure I).

17. Material Changes and Commitments affecting Financial Position

There have been no material changes and commitments which have occurredbetween the end of financial year and the date of this report which can have impact onfinancial position of the Company.

18. The policy on appointment /remuneration of directors isdiscussed in Corporate Governance section annexed to this Report.

19. There have been no significant material orders passed bycourts tribunals or regulatory authorities which can have impact on going concern statusof the Company and its operations.

20. Loans Investment and Guarantees etc – During the year theCompany has not advanced any loans given any guarantees or made any investment in shares.

21. The Company has not accepted /renewed any Fixed Deposits duringthe year ended March 31 2018.

22. Disclosure pursuant to The Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 a. Details of remuneration of Managerial Personnel& KMP

Requirements Disclosure
1 Ratio of remuneration of Director to median remuneration of employees for the financial year MD & CFO – 6X
2 Percentage increase in remuneration of Managing Director & CFO and Company Secretary MD & CFO –NIL
Company Secretary –3.72%
3 Percentage increase in median remuneration of employees in the financial year NIL
4 Number of permanent employees 7 employees
5 Average percentile increase in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof The increase in remuneration of the employees excluding Managerial Personnel for the financial year ended on March 31 2018 was about 3%. There was no increase in Managerial Remuneration hence no comparison of percentile increase in remuneration of employees other than managerial personnel and managerial personnel can be provided.
6 Key parameters for any variable component of remuneration availed by the Directors NIL. The remuneration of directors does not have variable pay component.
7 Remuneration as per Policy The Remuneration paid to Directors/ senior management personnel was as per the Remuneration policy of the Company.

b. Details of remuneration of Employee pursuant to Rule 5 of theCompanies (appointment and Remuneration of Managerial Personnel) Rules 2014

Employee Name Designation Educational Qualification

Age

Experience in years

Date of joining

Gross Remuneration

Previous employment
1 M.S. Sawant Managing Director & CFO B.Com; CA ICWA LLB

59

32

22.09.1986

7469066

A.F.Ferguson & Co Chartered Accountants
2 Suhas Joshi Company Secretary B. Com; LLB ACS

52

10

10.01.2008

2317750

Consultancy Services by forming own company
3 Capt. Suresh Verlekar Vice President - Commercial B.Sc;Master Mariner MICS EMBA

50

11

01.02.2007

2530417

Petronet LNG Limited

23. CEO / CFO Certification

The CEO/CFO has issued a certificate pursuant to the provisions of theListing Regulations certifying that the financial statements do not contain any untruestatement and these statements represent a true and fair view of the Company's affairs.Corporate Social Responsibility The provisions of corporate social responsibility are notapplicable to the Company.

24. Extract of Annual Return

Extract of Annual Return is Annexed herewith and marked as Annexure 4.

25. GENERAL

The Board of Directors expresses its appreciation for the help andco-operation extended by the Ministry of Surface Transport Maharashtra Maritime BoardMinistry of Finance The Directorate General of Shipping Reserve Bank of India and theCompany's Bankers and Agents. The Board of Directors also appreciates the loyal servicesrendered and co-operation extended by the Company's officers and staff both ashore andafloat.

VIJAY V. CHOWGULE

Chairman

Place: Mumbai Date: May 9 2018

TO THE MEMBERS OF

CHOWGULE STEAMSHIPS LIMITED

Declaration by the Managing Director & CFO under Regulation 34 ofthe Listing Regulations

I Mangesh Sawant Managing Director & CFO of Chowgule SteamshipsLimited confirm that all the members of the Board of Directors and senior managementpersonnel have affirmed compliance with the Code of Conduct for the year ended March 312018.

MANGESH SAWANT

Managing Director & CFO

Place : Mumbai Date : May 9 2018