Your Directors have pleasure in presenting the Thirty Second Annual Report of theCompany and the Audited Accounts for the financial year ended 31st March 2019.
1. FINANCIAL HIGHLIGHTS
Despite setbacks faced earlier there is a positive room for expectations in 2019.Going by the hypothesis of presumption the industry is expected to come back to itsformer glory.
With the demand for oil and gas there is a need to explore and produce from new oiland gas reservoirs as the existing reservoirs have started to mature or have depleted.
The increasing demand for oil and natural gases will drive the growth of E&Pactivities in deeper water and ultra deeper locations as well as shallow waters. This willdrive the global offshore drilling market which will ultimately result in utilization ofresources and assets of offshore industry.
In India ONGC has remained as a major player with a robust plan in explorationproduction activity and development of existing fields to meet energy security. Thusopportunities cropped up for service providers like your Companys' line of business withgreat assurance for deployment of vessels. But there were competitions resulting reductionin value of project contract which ultimately impacted reduction in Charter rate.
Your Company continues to focus on engagement of your vessels under the availablebusiness opportunities.
During the year under review on standalone basis the Company's total revenue wasर. 3304 million against र. 2124 million in last year. The increase of revenue isattributed due to increase in overall deployment days of some of Company's vessel incomparison to previous year and revenue earned from the Barge Contract. This has beenachieved despite one of the Company's vessels went for statutory drydock and the vesselunderwent modifications which resulted in decrease in revenue and deployment days. Inaddition the bulk carrier had breakdown for an approx. period of 59 days due to technicalsnag total unutilised being 65 days.
Income from operations was 3038 million as against र. 1936 million in the previousyear showing an increase of 57%. Similarly there is an increase in other income fromर. 188 million to र. 266 million primarily due to cash surplus complemented byreduction in interest rate and provisions written back due to recovery of outstanding fromone of the debtors.
Against a profit of र. 3 million of previous year your Company earned a profit ofर. 767 million during year under review. On a consolidated basis total revenue wasर. 3434 million compared to र. 2134 million of previous year. Your Companyearned a profit after tax of र. 819 million against a profit of र. 10 million inthe previous year. During the year under review Companys' cash profit was र. 1311million.
Cash & Bank Balance at the beginning of financial year was र. 422 million. Thebalance at the end of the year was र. 487 million an increase of about 15% over lastyear.
The Company's struggle for recovery of outstanding for about र. 1135 million fromSWIBER in the ONGC project continues. The utility vessel "REVELATION" owned bythe Company was scrapped during the year under review.
The Company has bagged ONGC tender for deployment of Barge for two working seasonswhich is being executed in consortium with KREUZ SUBSEA PTE LTS effective from November03 2018.
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 theCompany has transferred an amount of र. 128 million to Tonnage Tax Reserve createdu/s 115V of Income Tax Act 1961.
Two of Company's vessels are under long term charter with ONGC during the year underreview. One of them was in statutory drydock for about 89 days. One of the Company'svessels secured one year contract with ONGC for the IMR job. After completion of requiredmodifications to meet contractual requirements she was deployed with ONGC in December2018. The bulk carrier "SEAMEC GALLANT" had experienced an unfortunate technicalsnag in mid sea in Mexico in end of August 2018 resulting off-hire for about 59 days.Out of 1520 days of deployment including Barge domestic operations registered 1220 daysand overseas operations of 300 days.
3. DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review Messers Mahesh Prasad Mehrotra and Amarjit Singh SoniIndependent Directors resigned from the Board of Directors of the Company with effect fromMarch 12 2019 and March 31 2019 respectively.
Your Directors place on record its appreciation of the valuable services rendered byMessers Mahesh Prasad Mehrotra and Amarjit Singh Soni during their tenure as Directors ofthe Company.
Mr. Surinder Singh Kohli was appointed as Independent Director of the Company for aperiod of 5 consecutive years from 11th August 2014 and his term of office asIndependent Director will cease on 10th August 2019. Mr. Kohli byQualification BSc (Mechanical Engineer) Diploma in Industrial Finance CAIIB He wasformer Chairman and Managing Director of Punjab & Sind Bank Punjab National Bank andIndian Infrastructure Finance Company Limited. Mr. Kohli has a credential of highlysuccessful professional. The Board of Directors on the recommendation of Nomination &Remuneration Committee have recommended the re-appointment of Mr. Kohli as an IndependentDirector for a further period of 5 consecutive years from 11th August 2019 asthe Board felt that Mr. Kohli's further continuation would be of great benefit to theCompany.
Mr. Kohli fulfills all criteria specified in Companies Act 2013 and rules thereon andalso all requirements of SEBI Listing Regulations making him eligible to be appointed asIndependent Director of the Company. Mr. Kohli does not hold any shares in your Company.Additional information about Mr. Kohli his directorship and Committee membership in otherCompanies has been stated in the explanatory statement to the special resolution seekinghis re-appointment in the Notice of the ensuing Annual General Meeting.
Mr. Deepak Shetty IRS (Retd.) (DIN: 07089315) has been inducted into the Board ofDirectors of the Company on 15th May 2019 as an Additional Director to holdthe office of Independent Director.
Mr. Deepak Shetty aged about 62 years is a 1980 batch of Officer of Indian RevenueService (Customs & Central Excise) Cadre. Mr. Shetty rose to the highest echelons ofin the Cadre to the rank of Secretary to the Government of India.
Mr. Shetty's illustrious career over 36 years has been in various fields viz; CivilAviation and Textile Industry Customs Central Excise and Service Tax Indirect Taxadministrations Administrative reform personal and finance Management and MerchantShipping.
Mr. Shetty also held coveted post as Director General of Shipping and Secretary toGovernment of India Mumbai.
In course of his civil service career he had exposure and experience relating to UnitedNations (UN) World Trade Organisations (WTO) World Customs Organisation (WCO)International Maritime Organisation (IMO) International Labour Organisation (ILD) andother allied Global entities of the UN System. In addition Mr. Shetty during his civilservice career had extensively dealt with various trade bodies at the InternationalRegional National levels such as International Chamber of Shipping BIMCO InternationalGroup of P&I Clubs FICCI ASSOCHAM CII INSA.
Presently Mr. Shetty is on the Board of following Companies:
1. Shreyas Shipping and Logistics Limited
2. Flemingo Travel Retail Limited
3. Container Corporation of India Limited
The consent from Mr. Shetty along with other relevant disclosures and declarationsrequired under Companies Act 2013 and rules thereunder read with SEBI (Listing Obligationsand Disclosure Requirements) Regulation 2015 to act as an Independent Director of theCompany has been received.
The Company is expected to be immensely benefited on the induction of Mr. Shetty on theBoard of Directors of the Company.
Based on the recommendation of Nomination and Remuneration Committee the Board ofDirectors recommend to shareholders for approval in the ensuing Annual General Meetingthe appointment of Messers Surinder Singh Kohli and Deepak Shetty as Independent Directorsof the Company for a period of 5 consecutive years.
The terms and conditions of appointment of Messers Surinder Singh Kohli and DeepakShetty has been posted on the company's website at www.seamec.in.
The Independent Directors have confirmed and declared to the Board that they fulfillall the requirements as stipulated in Section 149(6) of the Companies Act 2013 so as toqualify themselves to be appointed as Independent Directors under the provisions of theCompanies Act 2013 and the relevant rules thereunder. Board is also of the opinion thatthe Independent Directors fulfill all the conditions specified in Companies Act 2013making them eligible to act as Independent Directors. In accordance with the provisions ofthe Companies Act 2013 and the Articles of Association of the Company Messers NaveenMohta Whole Time Director and Subrat Das Director of the Company retires by rotation atthe ensuing Annual General Meeting and are eligible for re-appointment.
Independent Directors of the Company had a separate meeting on 27th March2019 to conduct an evaluation on the performance of individual directors the Board andits committees and assess the quality quantity and timelines of flow of information fromthe Company Management to the Directors.
Board also conducted a similar exercise and evaluation for Independent Directors.
The results were satisfying. The knowledge experience and advice shared by IndependentDirectors from time to time have ensured governance and good conduct risk mitigation andstrategic business decision for the growth of the Company. The Board evaluation concludedthat the Board continues to operate effectively encourage healthy and open debate and iswell supported by timely information flow.
The brief details of all members of Board are annexed to this report.
The following persons are the Key Managerial Personnel of the Company.
1. Mr. Naveen Mohta Whole Time Director
2. Mr. Virendra Kumar Gupta President & Chief Financial Officer
3. Mr. S. N. Mohanty President Corporate Affairs Legal & CompanySecretary
Remuneration and other details of Key Managerial Personnel for the year ended 31stMarch 2019 are stated in the extract of the Annual Return. Placed on the website of theCompany at www.seamec.in
4. RECONSTITUTION OF COMMITTEES:
With the change in composition of the Board various committees of your Board have beenreconstituted. The reconstituted Committees are as under:
9. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
The Company has constituted a Corporate Social Responsibility Committee pursuant to theprovisions of the Companies Act 2013. The Committee framed Corporate SocialResponsibility Policy which was approved by Board on 11th August 2014. ThePolicy is available on Company's Website at www.seamec.in.
The Company has commenced implementation of Policy and areas of activities have beenpursued pursuant to provisions of the Companies Act 2013. Annual Report on CSR activitiesin the prescribed format and salient features of the policy is attached and forms part ofthis report. (Annexure A).
10. NOMINATION AND REMUNERATION COMMITTEE
The composition of Nomination and Remuneration Committee (NRC) is in compliance withthe provisions of Section 178 of the Companies Act 2013 read with Companies (Meetings ofBoard and its Powers) Rules 2014 and comprises of Independent Directors meeting theregulatory requirements.
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 commissionto the Board of Directors Key Managerial Personnel and senior management personnel. TheNomination and Remuneration Policy is also available on Company's website www.seamec.in(web-link: http://seamec.in/attachments/Nomination%20 and%20Remuneration%20Policy.pdf)
11. PUBLIC DEPOSITS
During the year under review the Company has not accepted any deposits under theCompanies Act 2013.
12. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
13. SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethere under read with Regulation 24(a) of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 M/s Satyajit Mishra & Co Company Secretaries inWhole-time Practice (FCS no. 5759 C P No. 4997) was appointed to conduct SecretarialAudit for the year ended 31st March 2019. M/s Satyajit Mishra & CoPracticing Company Secretaries has submitted Report on the Secretarial Audit along withSecretarial Compliance Report attached as "Annexure B" and "AnnexureC" respectively and forms part of Director's Report. Your Directors state thatthe applicable secretarial standards pursuant to section 118 of the Companies Act 2013 asprescribed by the Institute of Company Secretaries of India have been complied for thefinancial year 2018-19.
14. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURTS/TRIBUNALS
The Companys' appeal against Commissioner of Customs order dated 28th March2013 imposing fine penalty confiscation of vessels amounting to र. 115 Crore plusinterest was disposed off by Hon'ble Customs Excise & Service Tax Appellate Tribunal(CESTAT) vide order dated 6th December 2017. The order allowed appeal in part.Being aggrieved the Company had filed an application for Rectification of Mistake (ROM)before the designated Bench of CESTAT. CESTAT vide order dated 27th February2018 has allowed the rectification remanded the matter and set aside the duty penaltiesand confiscation of vessels. The customs authorities preferred an appeal before Hon'bleHigh Court of Mumbai. The appeal has been admitted to be heard on merit without grantingstay.
15. COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT PAYMENT OF REMUNERATION ANDDISCHARGE OF THEIR DUTIES
The Company has a Policy relating to appointment of Directors payment of Managerialremuneration Directors' qualifications positive attributes independence of Directorsand other related matters as provided under Section 178(3) of the Companies Act 2013 andunder the provisions of Listing Regulations. All such policies have been hosted on theCompany's website at www.seamec.in for the information of the stakeholders.
16. 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 other Committees of the Board which covers variousaspects of the Board's functioning such as adequacy of the composition of the Board andits Committees Board Culture execution and performance of specific dutiesresponsibilities obligations and governance.
The performance evaluation of the Directors was carried out by the entire Board.
17. FAMILIARISATION PROGRAMME TO INDEPENDENT DIRECTORS
The familiarization programme aims to provide Independent Directors with the businessand operating scenario the socioeconomic 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 their 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.The same is available on Company's Website at www.seamec.in (http://seamec.in/attachments/FAMILIARISATION-ID.pdf)
18. RELATED PARTY TRANSACTIONS
Your company has formulated a policy on Related Party Transactions which is availableon Company's Website www.seamec.in.
All Related Party Transactions are placed before the Audit Committee and Board forapproval. The Company has also formulated a policy on "Material Subsidiaries"and the said policy is available in Company's Website www.seamec.in(weblink:www.seamec.in/attachments/Material%20Subsidiary%20Policy.pdf).
The particulars as required under the Companies Act 2013 has been provided in AnnexureD (Form No. AOC-2) to this Report.
19. 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) Regulation 2015. CorporateGovernance Report as well as the Corporate Governance compliance certificate issued by theSecretarial Auditors and Management Discussion and Analysis Report form part of DirectorsReport and are annexed separately.
20. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW
The Company had 4 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.
21. 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.
22. DEMERGER OF EPC & VESSEL DIVISION OF HAL OFFSHORE LIMITED WITH SEAMEC LIMITED
The Company after compliance of regulatory formalities filed an application before theHon'ble National Company Law Tribunal (NCLT) for approval of scheme of demerger of EPC andvessel division of HAL Offshore Limited with your Company. However the Board of Directorsof the Company subsequently reviewed the status of aforesaid demerger and felt that theintended synergies on which demerger was planned has been diluted significantly and inthis context it would not be prudent to process the demerger in the interest of Seamec andits minority shareholders.
Accordingly an application was made to Hon'ble NCLT which vide order dated 7thFebruary 2019 considered Company's application for withdrawal. The scheme of demerger asproposed earlier now stands cancelled and withdrawn.
23. WHOLLY OWNED SUBSIDIARY
SEAMEC INTERNATIONAL FZE Dubai UAE is a Wholly Owned Subsidiary (WOS) of yourCompany. As per the regulatory provision the consolidated financial statement of yourCompany for the financial year ended on 31st March 2019 duly audited byStatutory Auditors is attached and forms part of the financial statement. The AnnualAccounts of the Wholly Owned Subsidiary and the related detailed information shall be madeavailable to the shareholders on request at any point of time. During the year underreview your wholly owned subsidiary purchased a bulk carrier named "GOOD HOPE"which was partially financed by Bank of Baroda Sharjah amounting to USD 7.2 million. YourCompany has provided Corporate Guarantee to Bank of Baroda Sharjah as security for theloan. The vessel on acquisition was secured under Bareboat Charter for a period of 7years.
A statement containing salient features of the subsidiary in the prescribed format of(Form AOC-1) is annexed and marked as "Annexure E".
24. HUMAN RESOURCES
Your Company continues to be assured by competence and commitment of the people.
The working climate of your Company continues to remain harmonious with focus onimproving Productivity Quality and Safety. Health and Safety of the employees and ourassociates we work with remains as our paramount importance. Your Company ensures thatoperations are carried out as per the safety guidelines and procedures in place which areregularly updated. The Company has 44 employees as on March 31 2019.
Efforts are continuously made to strengthen organizational culture in order to attractand retain best talent in the Industry. The Board appreciates the commitment and supportof the employees and look forward to their continued support.
25. 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 that robust internalfinancial controls exist in relation to operations financial reporting and compliance.
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 control systems of the Company are monitored and evaluated by Auditors andreviewed by Management and Audit Committee of the Board of Directors.
26. 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 come into force from 20 August 2013.
Government of India had ratified and adopted provisions of MLC in 18thOctober 2015.
Your Company has implemented the requirement as per MLC 2006 and has receivedcertification from the flag administration for its vessels.
27. POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORK PLACE
Pursuant to the provisions of Sexual Harassment of Women at Work place (PreventionProhibition and Redressal) Act 2013 and rules made there under your Company has adopteda policy which has come into force with effect from 13th February 2015.
No complaints of Sexual Harassment of women at work place has been reported or receivedduring the year under review.
28. 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 "AnnexureF" and is attached to this report.
29. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OFTHE COMPANY
Pursuant to the requirement of Regulation 21 of the Securities Exchange Board of India(Listing Obligations & Disclosure Requirements) Regulations 2015 the Company hasconstituted a Risk Management Committee. Business Risk Evaluation and Management is anongoing process within the Organization. The Company has a robust risk managementframework to identify monitor and minimize risk and also identify business opportunities.
The objectives and scope of the Risk Management Committee broadly comprises of:
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 actions andownership as per a pre-defined cycles.
Defining framework for identification assessment monitoring mitigation and reportingof risk.
Risk identification assessment and mitigation measures are reported to Boardperiodically.
30. MATERIAL CHANGES AND COMMITMENTS
There has been no material change and commitment affecting the financial performanceof the company which occurred between the end of the financial year of the company towhich the financial statements relate and the date of this Report.
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 G.
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 for the financial year ended 31stMarch 2019. The applicable accounting standards have been followed along with properexplanations relating to material departure. b. They have selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of financial year and the Profit and Loss of the Company for thatperiod. c. They 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. d. They have prepared the annual accounts for the financial year ended 31stMarch 2019 on a going concern basis. e. They have laid down proper internal financialcontrols to be followed by the Company and that such financial controls were adequate andwere operating effectively. f. They have devised proper system to ensure compliance withthe provisions of all applicable laws and that such systems were adequate and operatingefficiently.
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 and (ii) Archival policy for disclosureshosted in the website.
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 and profitable growth.
The Directors hereby wish to place on record their appreciation of the efficient andloyal services rendered by each and every employee with whole hearted effort for makingsatisfactory performance possible.
Your Directors thank the valued shareholders customers suppliers Banks Registrarand Share Transfer Agent and Government Authorities for their continuous support to theCompany.