Your Directors present the Fifty Fourth Annual Report and the Audited Accounts for theyear ended March 31 2017.
|1. FINANCIAL RESULTS & APPROPRIATIONS: || ||(Rs. in Lakhs) |
| ||2016-17 ||2015-16 |
|Loss before Financial Charges Depreciation Exceptional Item & Tax ||(47.19) ||(383.02) |
|Financial Charges ||(135.49) ||(41.75) |
|Depreciation ||(177.56) ||(456.76) |
|Loss before Exceptional Item & Tax ||(360.24) ||(881.53) |
|Loss on sale of vessel ||- ||(41.65) |
|Loss before Deferred Tax Provision ||(360.24) ||(923.18) |
|Reversal of Provision for Deferred Tax (Net) ||84.16 ||368.82 |
|Loss after Tax but before Other Comprehensive Incom ||(276.08) ||(554.36) |
|Other Comprehensive Income ||31.44 ||(47.17) |
|Total Comprehensive Income for the year ||(244.64) ||(601.53) |
|Brought forward from previous year ||1614.48 ||2216.01 |
|Surplus in Statement of Profit and Loss ||1369.84 ||1614.48 |
In view of the loss the Board of Directors has not recommended any dividend for theyear under review. Further no amount is transferred to Reserves & Surplus.
2. MANAGEMENT DISCUSSION AND ANALYSIS/OPERATIONS REPORT COMPANY'S PERFORMANCE
During the year under review the freight earnings and charter hire receipts amounted toRs. 51.58 Lakhs as against Rs. 467.05 Lakhs during the previous year showing a decrease ofRs. 415.47 Lakhs. The BDI started the year at 429 in April 2016 and ended at 1297 in March2017.
At the end of previous Financial Year the Company acquired a new built river-seacontainer vessel to explore opportunities in Indian coastal trade. In view of thecontinued depressed international container ship market limited success to attract roadand rail cargo and infrastructure hindrances the prospects of coastal shipping have notyet improved. We hope that impetus by Government of India/ Ministry of Shipping to Indiancoastline and Inland waterways transportation for carriage of goods will give a boost tothe Indian coastal shipping.
INDUSTRY REVIEW & FUTURE OUTLOOK
Bulk carrier market conditions remained extremely challenging for most of 2016reflecting the impact of pressure from existing over supply as well as subdued seabornedry bulk trade growth. In February 2016 earnings fell to lowest level since the 1980s andwhile earnings improved somewhat as the year progressed they remained close to typicaloperating costs. The difficult market conditions led to a strong supply side response inthe form of active demolition in the first half of the year which helped to limited fleetexpansion and very limited new building interest. In 2017 so far the bulk carrier markethas shown some improvements with earnings picking up in March and second hand pricesrising amidst continued strong buying interest. The demand picture appears to be improvingand sentiment has become positive. Re-balancing of the fundamentals seems necessary formarket condition to gain sustained traction.
The Government of India/Ministry of Shipping has been looking at rejuvenating theIndian coastline and Inland waterways Transport for carriage of goods and passengers. Thiswas done with twin objectives of ensuring optimum utilization of India's waterways andtaking load off congested Indian roads.
On the coast too Indian flag vessel continued to confront legacy issues. Coastalshipping tried but with limited success to induce more cargo from road and rail on thecoast. The stagnation in coastal shipping is further aggravated by infrastructurebottlenecks and logistics issues.
INTERNAL FINANCIAL CONTROL SYSTEM
The Company has effective systems of internal controls to ensure that the resources ofthe Company are used effectively and efficiently and all assets are safeguarded andprotected against unauthorised use and disposal. These internal controls are periodicallyreviewed by the Audit Committee of the Board of Directors. Based on its evaluation (asdefined in section 177 of Companies Act 2013 and Clause 18 of SEBI Regulations 2015) theAudit Committee of the Company has concluded that as of March 31 2017 the internalfinancial controls are 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 follows the policy of mixture of short period and long period time chartercontracts 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 are generated from internationalbusiness in the US Dollar terms the same creates a natural hedge against foreign exchangeexposures. The Rupee - US Dollar parity is reviewed on regular basis to protect itselffrom currency fluctuation risks.
Counter Party Risks: The time charter contracts are entered into 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.
The statements expressions information given in this Management Discussion andAnalysis Report describing the Company's objectives projections estimates expectationsor predictions may be deemed as forward looking statements'. Actual results mightdiffer substantially or materially from those expressed or implied. Important developmentsthat could affect the Company's operations include demand-supply conditions changes inGovernment global economic scenario etc.
3. LOAN REPAYMENT
During the year the Company did not contract any loans. The total outstanding loan atyear end is NIL.
4. DEFERRED TAX LIABILITY
In terms of the Accounting Standard AS-22 AS-21 of the Companies (Accounting Standards)Rules 2016 there is a reversal of Deferred Tax liabilities amounting to Rs. 84.16 lakhsfor the Financial Year 2016-2017 which is reflected in the Statement of Profit &Loss. The net Deferred Tax Liability of Rs. Nil as at March 31 2017 is reflected in theBalance Sheet.
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 2013the Company has prepared consolidated financial statements of the Company and all itssubsidiaries which form part of the Annual Report. Further a statement containing thesalient features of the financial statement of the subsidiaries in the prescribed formatAOC-1 is appended as Annexure 2. The Company will make available these documents / detailsupon request by any member of the Company. However pursuant to Accounting Standard AS-21of the Companies (Accounting Standards) Rules 2016 Consolidated Financial Statementspresented by the Company include the financial information of its subsidiaries. TheCompany does not have any other joint venture/associate company in which it hassignificant influence. The financial highlights of its wholly owned subsidiary viz.Chowgule Steamships Overseas Limited are as under:
The financial highlights of CSOL's operations are as under:
| ||2016-17 ||2015-16 |
| ||(In US $ million) ||(In US $ million) |
|Income/ (Loss) ||6.742 ||7.210 |
|Gross Profit before depreciation ||(1.445) ||(1.325) |
|Depreciation ||(4.373) ||(5.182) |
|Impairment ||0.080 ||(12.630) |
|Write-off for cancellation of new build order ||(5.184) ||(9.344) |
|Net Loss ||(10.923) ||(28.483) |
The fleet of the Company has been adequately insured against Marine and War Risks.
Prof. Rohini Chowgule and Mr. Nathan R. Chowgule Directors retire by rotation at theensuing Annual General Meeting and are eligible for re-appointment.
Pursuant to the provisions of Section 149 of the Companies Act 2013 the IndependentDirectors are not liable to retire by rotation and they hold office for a term up to fiveconsecutive years on the Board of a company from their appointment.
Pursuant to regulations of the Listing Agreement the background of the Directorsproposed to be appointed / re-appointed at the Annual General Meeting is given in theCorporate Governance Report.
8. INDEPENDENT DIRECTORS
Independent Directors are non-executive directors as defined under Regulation 16(1)(b)of the Listing Regulation read with Section 149(6) of the Companies Act 2013 (theAct').
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 the Independent Directors isin compliance with the Act. All the Independent Directors have confirmed that they meetthe criteria of independence as mentioned under Regulation 16(1) (b) of the ListingRegulation read with Section 149 of the Act.
9. INDUCTION AND TRAINING OF THE BOARD MEMBERS
Directors are issued a detailed appointment letter which inter alia sets out terms ofappointment duties responsibilities etc. of such director. Each independent director ofthe Company on appointment is given such letter of appointment and also briefed by theManaging Director/Executive Director about the nature of business of the Company itsfinances operations etc. The Company Secretary also assists the Independent Directors inunderstanding their statutory duties obligations and responsibilities as a Director/Independent Director of the Company. The appointment letter of independent directors isavailable on the Company's website www.chowgulesteamships.co.ion
In addition to the above familiarisation programme of the Independent Directors formspart of Board process. At the quarterly Board Meetings Independent Directors are updatedon the development in the Company its business environment and Companysperformance.
10. EVALUATION OF PERFORMANCE OF THE BOARD COMMITTEES AND DIRECTORS
In compliance of the provisions of the Companies Act 2013 and the Listing Agreementthe evaluation process for the performance of the Board its committees and individualDirectors for the year under review was carried out. A formal mechanism for evaluation ofthe performance of the Board its Chairman Committees and Directors was adopted. Theprocess was carried out through structured evaluation process covering various parameterssuch as composition of Board and Committees attendance of directors at meetingscontribution at the meetings qualifications experience and competencies performance ofspecific duties independence of judgement etc.
The evaluation of Independent Directors was carried out by the entire Board and that ofChairman and Non Independent Directors was carried out by Independent Directors. TheIndependent Directors expressed satisfaction with the overall functioning of the Boardits various committees and performance of the other Non-executive and Executive Directors.
11. CORPORATE GOVERNANCE
In terms of the listing agreement with the BSE Ltd. the Corporate Governance Report isannexed hereto and forms part of this Report.
12. 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.
13. DIRECTORS' RESPONSIBILITY STATEMENT
The Directors state: "That
In the preparation of annual accounts the applicable accounting standards have beenfollowed along with proper explanation relating to material departures.
The Directors have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe loss of the Company for that period.
The Directors have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.
The Directors have prepared the annual accounts on a "going concern basis".
The Directors have laid down internal financial controls to be followed by the Companyand such internal financial controls are adequate and are operating effectively.
The Directors have devised proper system to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively''.
The shareholders at their Fifty First Annual General Meeting held on July 9 2014approved appointment of M/s S B Billimoria & Co Chartered Accountants as theAuditors of the Company for a term of consecutive three years from conclusion of 51stAnnual General Meeting to conclusion of the 54th Annual General Meeting. Accordingly M/sS B Billimoria & Co Chartered Accountants the Statutory Auditors will retire byrotation at the conclusion of this Annual General Meeting. The Board of Directors basedon the recommendations of the Audit Committee is seeking approval of members at theensuing Annual General Meeting for appointment of M/s CNK & Associates LLP CharteredAccountants as Statutory Auditors of the Company from the conclusion of this AnnualGeneral Meeting till the conclusion of the 59th Annual General Meeting subject toratification by members at every Annual general Meeting if so required by law. TheAuditors being eligible have given their consent for appointment.
V.N. Deodhar Practicing Company Secretaries were appointed to conduct the secretarialaudit of the Company for the financial year 2016-17 as required under Section 204 of theCompanies Act 2013 and Rules made there under. The Secretarial Audit Report for FinancialYear 2016-17 forms part of the Annual Report.
15. THE COMPANIES (Appointment and Remuneration of Managerial Personnel) RULES 2014
There are no employees covered under the above Rules in respect of whom particulars arerequired to be furnished.
16. 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 I).
17. 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.
18. The policy on appointment /remuneration of directors is discussed in CorporateGovernance section annexed to this Report.
19. There have been no significant material orders passed by courts tribunals orregulatory authorities which can have impact on going concern status of the Company andits operations.
20. Loans Investment and Guarantees etc During the year the Company has notadvanced any loans given any guarantees or made any investment in shares.
21. The Company has not accepted /renewed any Fixed Deposits during the year endedMarch 31 2017.
22. Disclosure pursuant to The Companies (appointment and Remuneration ofManagerial Personnel) Rules 2014
a. Details of remuneration of Managerial Personnel & KMP
|Sr. ||Requirements ||Disclosure |
|1 ||Ratio of remuneration of Director to median remuneration of employees for the financial year ||MD & CFO 7X |
|2 ||Percentage increase in remuneration of Managing Director & CFO and Company Secretary ||MD & CFO NIL |
| || ||Company Secretary NIL |
|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 ||In view of the loss suffered for the year ended March 31 2016 there was no increase in remuneration of any of the employees including Managerial Personnel for the financial year ended on March 31 2017. |
|6 ||Key parameters for any variable component of remuneration availed by the Directors. ||Not Applicable as the remuneration of the 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 the Companies (appointmentand Remuneration of Managerial Personnel) Rules 2014
|Sr. ||Employee Name ||Designation ||Educational Qualification ||Age ||Experience in years ||Date of joining ||Gross Previous employment Remuneration in Rs. |
|1 ||M.S. Sawant ||Managing Director & Cfo ||B.Com; CA ICWA LLB ||58 ||31 ||22.09.1986 ||7465733 A.F.Ferguson & Co Chartered Accountants |
|2 ||Suhas Joshi ||Company Secretary ||B. Com; LLB ACS ||51 ||9 ||10.01.2008 ||2093667 Consultancy Services by forming own company |
|3 ||Capt. Suresh Verlekar ||Vice President - Commercial ||B.Sc;Master Mariner MICS EMBA ||49 ||10 ||01.02.2007 ||2547500 Petronet LNG Limited |
23. CEO / CFO CERTIFICATION
The CEO/CFO has issued a certificate pursuant to the provisions of the ListingAgreement certifying that the financial statements do not contain any untrue statement andthese statements represent a true and fair view of the Company's affairs.
24. CORPORATE SOCIAL RESPONSIBILITY
The provisions of corporate social responsibility are not applicable to the Company.
25. EXTRACT OF ANNUAL RETURN
In accordance with Section 134 (3) (a) of the Companies Act 2013 an extract of annualreturn in form MGT 9 is appended as annexure 4.
26. PREVENTION OF INSIDER TRADING CODE
As per SEBI (Prohibition of Insider Trading) Regulation 2015 the Company has adoptedCode of Conduct for Prevention of Insider Trading. All the Directors employees etc. whohave access to unpublished price sensitive information are governed by the code. Duringthe year under review there has been due compliance of the said code.
The Board of Directors expresses its appreciation for the help and co-operationextended by the Ministry of Surface Transport Maharashtra Maritime Board Ministry ofFinance The Directorate General of Shipping Reserve Bank of India and the Company'sBankers and Agents. The Board of Directors also appreciates the loyal services renderedand co-operation extended by the Company's officers and staff both ashore and afloat.
| ||For and on behalf of the Board of Directors |
|Place: Mumbai ||VIJAY V. CHOWGULE |
|Date: May 12 2017 ||Chairman |
TO THE MEMBERS OF
CHOWGULE STEAMSHIPS LIMITED
Declaration by the Managing Director & CFO under Regulation 34 of the ListingAgreement
I Mangesh Sawant Managing Director & CFO of Chowgule Steamships Limited confirmthat all the members of the Board of Directors and senior management personnel haveaffirmed compliance with the Code of Conduct for the year ended March 31 2017.
|Place : Mumbai ||MANGESH SAWANT |
|Date : May 12 2017 ||Managing Director & CFO |