Your Directors present the Fifty Seventh Annual Report and the Audited Accounts for theyear ended 31st March 2020.
1. FINANCIAL RESULTS
| || || || ||(Rs. in Lakhs) |
| || |
| ||As on 31st March 2020 ||As on 31st March 2019 ||As on 31st March 2020 ||As on 31st March 2019 |
|Profit / (Loss) before financial charges depreciation exceptional item & tax ||769.66 ||(82.53) ||1640.02 ||(3271.33) |
|Financial charges ||(190.73) ||(72.93) ||(3073.63) ||(2695.94) |
|Depreciation ||(72.63) ||(131.21) ||(2237.39) ||(3202.89) |
|Loss before exceptional item & tax impairment ||506.30 ||(286.67) ||(3671.00) ||(9170.16) |
|Impairment ||- ||- ||(2909.76) ||- |
|Profit / (Loss) before deferred tax provision ||506.30 ||(286.67) ||(6580.76) ||(9170.16) |
|(Provision)/Reversal of provision for deferred tax (net) ||(150.53) ||93.28 ||(150.53) ||93.28 |
|Profit / (Loss) after tax ||355.77 ||(193.39) ||(6731.29) ||(9076.88) |
|Other comprehensive income ||1.53 ||(37.77) ||(865.09) ||300.46 |
|Total comprehensive income ||357.30 ||(231.16 ) ||(7596.38) ||(8776.42) |
|Brought forward from previous year ||779.44 ||1010.60 ||(13421.67) ||(4645.25) |
|Surplus / (Deficit) in statement of profit and loss ||1136.74 ||779.44 ||(21018.05) ||(13421.67) |
2. MANAGEMENT DISCUSSION & ANALYSIS/OPERATIONS REPORT COMPANY'S PERFORMANCE
The spread of COVID-19 has severely impacted businesses around the globe includingIndia. There has been severe disruption to regular business operations due to lock-downsdisruptions in transportation supply chain travel bans quarantines social distancingand other emergency measures. Shipping industry was struggling since last couple of yearsand suffered more as compared to other industries due to this COVID 19 pandemic.Consequent to the Government advisories issued for controlling the spread of COVID 19 theoperations of Company were suspended from 23rd March 2020. The Company resumedthe operations partially since 4th May 2020 in line with the regular lockdownrelaxation measures issued by Ministry of Home Affairs. As a result of lockdown therevenue for the month of March 2020 has been impacted to some extent. During quarter ended31st March 2020 the group estimate loss revenue i.e. upto 17% of targetedrevenue.
The company's financial assets comprise of its exposure in its wholly owned subsidiary(WOS) as on 31st March 2020 amounting to Rs.12115.67 lakhs consisting ofinvestment in equity and convertible redeemable preference shares of Rs.9549.59 lakhs andloan provided of Rs.2566.07 Lakhs (against a net worth of Rs.11849.07 lakhs). The WOShas incurred a loss during the year of Rs.7085.05 lakhs and the networth of the WOS as on31.3.2020 is negative. The Management of the WOS on the basis of future operationalplans is confident of restructuring the operations to recoup the losses and arrangingrequisite financing as has been done in the past years also. Further the market value ofthe assets held by the Company would sufficiently cover shortfall if any. Hence theaccounts have been prepared on a going concern basis.
INTERNAL FINANCIAL CONTROL SYSTEM
The Company has effective systems of internal controls which are periodically reviewedby the Audit Committee of the Board of Directors. Based on its evaluation (as defined insection 177 of Companies Act 2013 and Clause 18 of SEBI Regulations 2015) our auditcommittee has concluded that as of 31st March 2020 our internal financialcontrols were adequate and operating effectively.
The Indian economy and many developed countries continue to make effort for speedyeconomic recovery. As part of overall strategy however the Governments in variouscountries continue to give priority for development of overall infrastructure. This bodeswell for overall trade.
The industrial relations during the year were very cordial and there were no industrialdisputes.
THREATS RISKS & CONCERNS
Freight Risks: The Hire income is subject to freight rate risks and therefore theCompany at group level follows the policy of mixture of short period and long periodtime charter contracts with first class charters to mitigate volatility in freight rates.
Interest Rate Risk: With a view to avoid uncertainty in the interest rate thenecessary forward cover is taken at regular intervals.
Forex Risk: As major portion of the Group's revenues is generated from internationalbusiness in the US Dollar terms the same creates a natural hedge against foreign exchangeexposures. The Company reviews Rupee - US Dollar parity on regular basis to protect itselffrom currency fluctuation risks.
At the Company standalone level the Company is engaged in coastal trade where incomeas well as expenses mostly is in rupee term. As such there is very limited forex risk forthe Company.
Counter Party Risks: The Company engages into charter contracts with the reputedcharters to avoid the risks to the freight earnings.
Government Policies: The Company regularly reviews the changes in the applicablegovernment policies affecting operations of the Company.
Human Resources: There is a scarcity of floating staff. In view of outsourcing of crewmanagement the Company gets the benefit of having efficient and cost effective floatingstaff from the Ship Manager's pool.
Considering the liquidity and the cash flow position of the Company the Board ofDirectors did not recommend any dividend for the financial year under review.
The Board of Directors have decided to retain the entire amount of profits for the FY2019-20 in the Profit and Loss Account and hence has not transferred any amount to thereserves.
5. SHARE CAPITAL
The paid-up equity share capital of the Company as on 31st March 2020 wasRs.3630.84 lakhs comprising of 36308425 shares of Rs.10/- each. During the year underreview there has been no change in the capital structure of the Company.
The Company has five overseas subsidiaries including one wholly owned subsidiary andfour step-down subsidiaries. The Board of Directors of the Company reviewed the affairs ofsubsidiaries of the Company.
In accordance with Section 129(3) of the Companies Act 2013 the Company has preparedconsolidated financial statements of the Company and all its subsidiaries which form partof the Annual Report. Further a statement containing the salient features of thefinancial statement of the subsidiaries in the prescribed format AOC-1 as Annexure 1.
The Company will make available these documents/details upon request by any member ofthe Company. However pursuant to Accounting Standard AS-21 of the Companies (AccountingStandards) Rules 2016 Consolidated Financial Statements presented by the Company includethe financial information of its subsidiaries. The Company does not have any other jointventure/associate company in which it has significant influence.
The fleet of the Company has been adequately insured against Marine and War Risks.
8. DIRECTORS AND KEY MANAGERIAL PERSONNNEL
Mr. Aditya Chowgule Managing Director and Mr. Darshan Karekar Company Secretary havebeen designated as Key Managerial Personnel in accordance with provisions of Section 203of the Companies Act 2013. During the year there were change in Key Managerial Personnel.
Mr. Mangesh Sawant Managing Director and CFO and Mr. Suhas Joshi Company Secretary ofthe Company has resigned on 31st July 2019 and 19th August 2019respectively.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of Independence prescribed under section 149(6) ofthe Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations (hereinafter to be referred as "SEBI Listing Regulations"). Therehas been no change in the circumstances affecting their status as independent directors ofthe Company.
Mr. Sanjiv N. Shah and Mr. Farokh Guzder were re-appointed for the second term of 5years as an independent Directors and . and Mr. Ravindra Kulkarni was re-appointed as anindependent Director for the term period of one year at the Fifty Sixth Annual GeneralMeeting (AGM) held on 26th July 2019
Ms. Padma Chowgule was appointed as an Additional Director and designated as Chairmanof the Company at the board meeting held on 26th July 2019. Mr. AdityaChowgule was appointed Additional Director at the board meeting held on 26thJuly 2019. Further his appointment was ratified as a Managing Director and ChiefFinancial Officer (CFO) at the board meeting held on 22nd October 2019 subjectto the approval of shareholders. A resolution seeking shareholders' approval for hisappointment forms a part of the Notice.
The Company has devised a Policy for performance evaluation of the Board Committeesand other individual Directors (including Independent directors) which includes criteriafor performance evaluation of Non-Executive Directors and Executive Directors. Theevaluation process inter-alia considers attendance of the Directors at the Board and theCommittee meetings effective participation domain knowledge compliance with code ofconduct vision and strategy etc.
During the year under review the non-executive directors of the Company had nopecuniary relationship or transactions with the Company other than sitting feescommission and reimbursement of expenses incurred by them for the purpose of attendingmeetings of the Board/Committee of the Company.
9. CORPORATE GOVERNANCE
In terms of the listing agreement with the BSE Ltd. the Corporate Governance Report isannexed hereto and forms a part of this Report.
10. CODE OF CONDUCT
The Board of Directors has laid down a Code of Conduct for all the Board Members andSenior Management of the Company. The said Code has been hosted on the website of theCompany. All the Board Members and Senior Management have affirmed compliance to the Code.
11. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and the Listing Regulations theBoard has carried out an annual performance evaluation of its own performance thedirectors individually as well as the evaluation of the working of its Audit Nomination& Remuneration and other Committees.
a) Observations of board evaluation carried out for the year - There were noobservations in the Board Evaluation carried for the year
b) Previous year's observations and actions taken - There were no observations of theBoard for the last financial year
c) Proposed actions based on current year observations - Not applicable
The manner in which the evaluation has been carried out has been given in the CorporateGovernance Report.
12. REMUNERATION POLICY
The Board has on recommendation of the Nomination & Remuneration Committee frameda policy for selection and appointment of Directors Senior Management and theirremuneration. The details of Remuneration Policy are stated in the Corporate GovernanceReport.
During the year 4 Board Meetings and 4 Audit Committee Meetings were convened and held.The details of the same are given in the Corporate Governance Report which is part of thisreport. The intervening gap between the Meetings was within the period prescribed underthe Act.
14. AUDIT COMMITTEE
The composition of the Audit Committee is in line with the provisions of Section 177 ofthe Act read with Regulation 18 of SEBI Listing Regulations. The Chairman of the AuditCommittee is an Independent Director. The details of the composition of the AuditCommittee are given in the Corporate Governance Report which is part of this report.During the year all the recommendation of the Audit Committee were accepted by the Board.
15. STAKEHOLDERS RELATIONSHIP COMMITTEE
The composition of the Stakeholders Relationship Committee (SRC) is in line with theSection 178 of the Act read with Regulation 20 of SEBI Listing Regulations.
16. NOMINATION AND REMUNERATION COMMITTEE
The composition of the Nomination and Remuneration Committee (NRC) is in line with theSection 178 of the Act read with Regulation 19 of SEBI Listing Regulations. The details ofmeetings and their attendance are included in the Corporate Governance Report.
17. CORPORATE SOCIAL RESPONSIBILITY
As the Company does not fulfill criteria laid down in Section 135 of the Companies Act2013 the provisions of Corporate Social Responsibility are not applicable to the Company.
18. EXTRACT OF ANNUAL RETURN
In accordance with Section 134 (3) (a) of the Companies Act 2013 an extract of annualreturn in form is available on the Company's website www.chowgulesteamhsips.co.inthe 'Investor Information' section.
19. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act the Board of Directors to the best of itsknowledge and ability hereby state and confirm that:
a) in the preparation of annual accounts the applicable accounting standards have beenfollowed and that no material departures have been made from the same.
b) appropriate accounting policies have been selected and applied consistently andjudgments and estimates have been made that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31st March2020 and the profit of the Company for that period.
c) proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities.
d) the annual accounts have been prepared on a 'going concern' basis.
e) proper internal financial controls were in place and that the financial controlswere adequate and were operating effectively.
f) that systems to ensure compliance with the provisions of all applicable laws were inplace and were adequate and operating effectively.
The shareholders at their Fifty Fourth Annual General Meeting held on July 21 2017approved appointment of M/s CNK & Associates LLP Chartered Accountants (FirmRegistration No. 101961W) for a term of consecutive five years from conclusion of 55thAnnual General Meeting to conclusion of the 59th Annual General Meeting. TheAuditors being eligible have given their consent for appointment.
The notes on financial statement referred to in Auditors Report are self-explanatoryand do not call for any further comments. The Auditors report does not contain anyqualification reservation or adverse comment.
M/S V.N. Deodhar & CO. Company Secretaries were appointed to conduct thesecretarial audit of the Company for the financial year 2019-20 as required under Section204 of the Companies Act 2013 and the Rules made thereunder.
The Secretarial Audit Report for financial year 2019-20 forms part of the AnnualReport.
21. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION
There have been no material changes and commitments which have occurred between the endof financial year and the date of this report which can have impact on financial positionof the Company.
22. LOANS INVESTMENT AND GUARANTEES ETC
During the year the Company has given a loan of about US $ 1.144 million to itssubsidiary company viz. Chowgule Steamships Overseas Limited which is outstanding.
23. THE COMPANIES (ACCOUNTS) RULES 2014
In accordance with the requirements of Rule 8 (A) of the Companies (Accounts) Rules2014 a statement annexed hereto gives the particulars as required under the said rulesand forms part of this Report (Annexure 2)
24. STATEMENT OF PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL
The information required under section 197 of the Act read with Rule 5(1)(i) of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofemployees of the Company and Directors is enclosed as 'Annexure - 3" to this report.
25. The Company has formulated a policy on materiality of Related PartyTransactions for dealing with such transactions in line with the requirements of ListingRegulations. The policy on Related Party Transactions is available on the Company'swebsite viz. chowgulesteamships.co.in. Particulars of Contract or arrangement withrelated parties as referred to in Section 188 of the Companies Act 2013 in the format AOC2 is enclosed as Annexure 4.
26. The Risk Management Policy of the Company evaluates various risks surroundingthe business of the Company and its subsidiaries and seeks to review and upgrade its riskmanagement process. The Board of Directors formulates strategies and takes necessary steps
Directors place on record their appreciation for the continuing support andco-operation from the customers vendors dealers distributors resellers bankersshareholders State Industries Electricity and other Government departments.
The Directors also take this opportunity to thank the employees for their dedicatedservice throughout the year in mitigating these risks.
| ||For Chowgule Steamships Limited |
|Place: Mumbai ||Padma Chowgule |
|15th June 2020 ||Chairman |