Ladies and Gentlemen
On behalf of the Board of Directors of The Shipping Corporation ofIndia Ltd I welcome you all to the 68th Annual General Meeting of your Company. I ampleased to place before our esteemed shareholders the 68th Annual Report of your Companyfor the financial year 2017-2018. This report describes in detail the working of yourCompany for the financial year ended 31st March 2018. However I would like to summarisesome salient features of your Company's performance during the last financial year.
It gives me immense pleasure and satisfaction to inform you that SCIhas reported a standalone net profit of Rs. 253.75 crores (consolidated net profitRs.306.5 crores) excluding Other Comprehensive Income for the year ended 31st March 2018as against a standalone net profit of Rs.142.28 excluding Other Comprehensive Income forthe year ended 31st March 2017. Your Company being a diversified company has been able toabsorb the losses in certain segments. There has been marginal increase in the operatingrevenues compared to the previous year. It is also interesting to observe the increasingcontribution of liner and dry bulk segments to your company's revenue which has been ableto offset the losses from the tanker segment.
Global Shipping Scenario
While factors such as global GDP and world merchandise growth areaiding gradual recovery in shipping; geo-political and local factors are offering a drag.Most recently the threat of Trade Wars' has become very real. Modern world has beenspectacle to numerous wars and crises such as military wars civil wars proxy wars andmost recently currency wars. Such crises of the modern era have affected the Shippingbusiness quite directly. The looming clouds of uncertainty over the impact of TradeWars' has already started disrupting the recovery process.
In addition to the trade war dynamics other geopolitical events suchas the return of US sanctions on Iran attack on maritime assets near the maritime bordersof Yemen war concerns in Syria currency and debt crisis in Argentina and Turkeyeconomic concerns in Italy and Spain record inflations in Venezuela etc are addingfurther uncertainty to the global trade. Last year was a mixed bag of problems with OPECagreements increasing Crude Oil output from North America bankruptcy of large companiesslowdown in China cyber-attacks on maritime assets etc. This year has been far worse.Protectionism is the word that is looming large over the developed and developingeconomies. The rising world crude oil prices have resulted in an increase in the bunkerprices across the world. This coupled with extremely low charter rates and erratic foreignexchange rates is causing further strain across various segments of shipping. Shipping isfurther gearing up to comply with IMO's Sulphur norms by 2020. The additional costs likelyto be incurred on account of Scrubbers / low Sulphur fuel / New Engine designs have to beweighed in keeping techno-economic feasibility in mind. Therefore extremely trying timescontinue to hover around us.
It is heartening to see that depressed sentiments have been replaced bycautiously optimistic sentiments. During the past couple of quarters certain segments ofshipping such as Liner and Dry Bulk segments have seen some revival and moderate increasein charter rates. Maritime transport is the backbone of globalization and lies at theheart of cross-border transport networks that support supply chains and enableinternational trade. The longer global economic growth remains weak and lacks investmentthe lower future growth potential for shipping.
Tanker segment (Crude as well as Product) are yet to recover from thelows. Charter rates across the segments of the tanker trade are at dismal levels. VLCCrates are at abysmally low levels. In comparison the Container trade has seen someimprovement during the second half of the year which has led to increase in revenues fromyour company's Liner Division. The dry bulk segment has also seen some decent revival andincrease in charter rates. As a result dry bulk segment has also increasingly contributedto the overall revenue of your company. The Offshore market has continued to remain tepidand the revenue from the segment has remained flat.
Acquisitions and Disposals
Over the years your company has successfully retained its position asthe largest and India's most diversified shipping company of the country and has been afrontrunner in terms of growth diversification and replenishment of its tonnage. Duringthe financial year your company has acquired one second-hand Multipurpose Support Vesselsviz. SCI Saraswati' one second-hand Suezmax tanker Desh Abhimaan' and oneVery Large Gas Carrier Nanda Devi'. Your company has also been periodically phasingout economically unviable ships from time to time including the erstwhile oldest vessel inSCI's fleet viz. Harshavardhana'. Your company is also looking to sell and replacemore economically unviable ships in the coming months. With a younger and modern fleetyour company will be fully geared up to take advantage of the better freight marketconditions.
Other Corporate developments
Your Company was awarded the Emergency Towing Vessel contract byDirectorate General of Shipping (DGS) for the period from June 2017 to October 2017 duringthe monsoon period. This contract ensures that the contracted vessel of your company staysin a state of readiness to attend to any distress call of any vessel on the coast of Indiaduring the monsoon. Your company is glad to once again bag this contract and would like toget into a long term arrangement with DGS.
In line with Indian government's policy of promoting coastal shippingand connectivity your company has started a new service between the Indian mainland andAndaman and Nicobar Islands viz. Chennai Port Blair Service. This new service is expectedto facilitate and augment the movement of cargo from ports on the west coast of India toPort Blair via Chennai. This service will immensely benefit the shippers and the tradebetween east and west coasts of India. It is also proposed to expand this service to otherports in the eastern coast of India in the near future.
SCI and Petronet LNG Limited signed a Memorandum of Understanding on1st Feb 2018 to develop potential business opportunities in the field of LNG and otherhydrocarbons around the Indian coast and Inland waterways.
The Shipping Corporation of India Ltd. is committed to sustainabledevelopment and has taken major steps. It is a matter of profound joy and pride for theentire SCI family that our commitment has materialized in the form of the 353.5kwp SolarPhoto Voltaic Power Plant at SCI's Maritime Training Institute (MTI) at Powai. This plantis grid connected with net-metering arrangement. The installation of the plant with allrequisite approvals was completed on 30th November 2016. SCI-MTI became the 1st GreenCampus in Maritime Education Industry in 2017 upon its inauguration. This Roof-top SolarPV Plant which is one of the largest installations in Mumbai not only contributes to thereduction in SCI's carbon footprint but also provides substantial financial savings.SCI-MTI has already increased its solar power generation capacity to 0.5 MW and reducedits electricity bills by approx. 50 60% on a monthly basis. During financial year2017-2018 your company has also undertaken various initiatives under Corporate SocialResponsibility (CSR) broadly in the areas of Swach Bharat Abhiyan & GangaRejuvenation' Promotion of Education Women Empowerment & Gender Equality PreventiveHealth Care Ensuring Environment sustainability employment enhancing vocational skillsfor Divyangjans / PwDs and few others. Your company has signed the Memorandum ofUnderstanding with the Ministry of Shipping for the Financial Year 2018-2019 on 08th May2018 at New Delhi. The evaluation for performance of your company for the financial year2017-2018 is under progress and the Government of India shall come announce the finalratings in a couple of months. We expect to achieve a better rating as compared tofinancial year 2016-2017.
Awards & Accolades bestowed upon your company during FY 2017-18
Coastal Shipping Operator of the Year' at The Gateway Awards2017 Mumbai. Coastal Container Vessel Operator of the Year' at India SeatradeAwards 2017 Kochi. Pride of the Nation' Award at Pride of Seas' 2017Chennai.
The Maritime Education & Training Award' at The MaritimeStandard Awards 2017 Dubai. Training Award' at Lloyds' List South Asia Middle East& Africa Awards (SAMEA) 2017 Dubai. 'First prize Best Corporate Film' at SCOPECorporate Communication Awards 2017 Delhi. Shipping company of the year Indianflag' at Samudra Manthan Awards 2017 Mumbai.
Despite such challenging times your company has been winning awardsboth nationally as well as at international level.
Especially in troubled times it is important to keep the morale of theemployees high and their spirits directed towards better objectives. It is said thatbetter communication within the organisation is a system of incentivisation.
Numerous employee engagement and Smart Manager initiatives have beencommenced at your company. Plethora of activities were conducted to give fillip to theemployee engagement programmes which include Breakfast series a 12 week Yoga programmeWIPS activities Cultural programmes during the Incorporation day and a few others. SCILEAP has been initiated to sensitize employees on MOU targets and challenges faced by SCIand to therefore enthuse employees to put forward their best collective effort towards thegrowth of the company. SCI EMPOWER Chairman's Trophy for young managers has been launchedwith a view to promote managerial excellence among young managers. In addition SCI'sWomen in Public Services team has been actively participating in various events acrossMumbai and have aimed to win the First prize at National Level this year.
I would like to express my gratitude to the Government of India for itssupport to your Company. I wish to thank the Hon'ble Union Minister of Shipping Shri NitinJ. Gadkari for his leadership and for providing consistent support to your company. Iwould also like to thank the Hon'ble Ministers of State for Shipping Shri PonRadhakrishnan and Shri Mansukh L. Mandaviya for their encouragement to your Company. Iwish to also express my gratitude towards Shri Gopal Krishna Secretary (Shipping) for hisguidance to your Company.
My sincere thanks are also due to the other officials of theAdministrative Ministry other Ministries and Departments of the Government of India. Iwould also like to express my gratitude towards Directorate General of Shipping for itssupport and understanding of various problems being faced by the Indian shipping industryand specifically by your Company. I also wish to express my special appreciation towardsall the shareholders stakeholders my colleagues on the Board of Directors and all thefloating and shore employees for their continued support over the years.
Captain Anoop Kumar Sharma
Chairman & Managing Director