Your Directors have pleasure in presenting the Thirtieth Annual Report of the Companyand the Audited Accounts for the financial year ended 31st March 2017.
1. SIGNIFICANT EVENTS-ACQUISITION OF SHIP
Your Company has acquired a bulk carrier on 29th March 2017 at Panama USA.The vessel was built in 2011 at Jiangmen Nanyang Ship Engineering Company Ltd. Chinahaving Gross Tonnage of 20969 MT and Net Tonnage of 11803 MT. The vessel was flaggedwith Marshall Island which was converted to Indian Flag after acquisition and renamed as"SEAMEC GALLANT".
The cost of ship is US $ 9.25 million. Post acquisition the vessel has secured a threeyear. Charter commencing on 3rd April 2017.
Functionally the new acquisition is a diversification from Company's traditional lineof business. Considering the slow down in existing line of business the Management hastaken a conscious decision on this diversification which is aimed at mitigating the riskto a great extent. The acquisition has been made from the Company's internal accumulatedresources and resulted utilization of Tonnage Tax Reserve created under the regulatoryprovision to continue under Tonnage Tax Regime.
2. FINANCIAL HIGHLIGHTS
| || ||(Figures in Rs. Million) |
| ||Current Year ended 31.03.2017 ||Previous Year ended 31.03.2016 |
|Net Sales/Income from Operations ||2076 ||3279 |
|Other Income ||176 ||230 |
|Total Expenditure || || |
|a. Consumables & Spares ||330 ||575 |
|b. Staff Costs (including offshore staff) ||632 ||799 |
|c. Other Expenditure ||2253 ||1543 |
|Earnings before Interest Depreciation & Tax ||(963) ||592 |
|Interest Expenses ||12 ||3 |
|Depreciation ||480 ||474 |
|Profit/(Loss) before Tax ||(1455) ||115 |
|Tax Expenses for the year ||41 ||57 |
|Profit /(Loss) after Taxation ||(1496) ||58 |
|Add: Balance brought forward from previous year ||2902 ||2892 |
|Surplus available for appropriation ||1406 ||2950 |
|Ind AS Adjustment ||- ||(50) |
|OCI ||- ||(1) |
|Transfer to Tonnage Tax Reserve ||- ||- |
|Retained profit carried forward ||1406 ||2902 |
The global economic outlook continues to be in a state of uncertainty. The economies ofAsia South East Asia and Middle East are struggling to push the momentum of growth. Thechanges in political front in Europe and US are expected to rebalance the sectoraleconomy. Continued low price of crude oil has influenced the decision of the oil majorstightening capex a ramification in global growth and global finance market.
India's economy witnessed a gained steam during first half of the year. The positiveimpulse however was absent during the second half. This was due to some bold economicmeasures undertaken by Government but the effect was expected to be transient. The majorpolicy reforms viz GST Banking Insolvency Code relaxed FDI rate and focus on SpeedyInfrastructure in a great way will move forward Indian Economy resulting in a GDP Growthof about 8%. To this extent the performance of Indian Economy is creditably compared tomost developed global market showing macro economic stability. However no significantimpact on the Company's line of business is expected.
Your Company continues to focus on engagement of your vessels under the stressedbusiness environment.
During the year under review the Company's total revenue was Rs.2252 million againstRs.3509 million in last year. The reduction in overall revenue was primarily due to underemployment of sizable section of your fleets during monsoon in India which extended topost monsoon period also. Additionally a sharp fall in Charter rate remained as a crucialfactor and at the same time the opportunities in Middle East South East Asia etc. wereconspicuous by their absence Income from operations was Rs.2076 million as against Rs.3279million in the previous year showing a significant drop of 37%. In addition there was adecline in other income from Rs.230 million to Rs.176 million primarily due to reductionin cash surplus complemented by reduction in interest rate.
Against a profit of Rs.59 million of previous year your Company suffered a loss ofRs.1496 million during year under review. The primary reason attributed to the above losswas provision made for doubtful debts against the receivables from major debtors includingSwiber to the extent of Rs.1385 million.
On a consolidated basis total revenue was Rs.2265 million compared to Rs.3521 millionof previous year. The consolidated loss arrived at Rs.1503 million for the year ended 31stMarch 2017 compared to profit earned Rs.97 million of previous year.
Cash Balance at the beginning of financial year was Rs.1030 million. The balance at theend of the year was Rs.404 million a decrease of 61% over last year. This was due toutilization of funds in purchase of Ship during the year under review.
SEGMENT WISE PROFIT BEFORE FINANCE COST INTEREST INCOME AND TAX
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-G ofIncome 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 dueto absence of profit no Tonnage Tax Reserve was created u/s 115V of Income Tax Act 1961.
3. OPERATIONS OFFSHORE
Two of Company's vessels are under long term charter with ONGC. The remaining threevessels were under deployed due to non-facilitation of Contracts. Out of the 970 days ofdeployment domestic operations registered 770 days and overseas operation was for 200days only.
In view of absence in profit the Board of Directors decided not to recommend Dividend.
5. DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review Mr. Jagdish Persad Suri Nominee Director ceased to beDirector of the Company with effect from May 18 2016 upon withdrawal of his nomination byHAL Offshore Limited the Promoter of the Company.
Captain C.J. Rodricks resigned as Managing Director of the Company with effect fromclose of business hours on 31st March 2017.
Your Directors place on record its appreciation of the valuable services rendered byMr. Jagdish Prasad Suri and Captain C.J. Rodricks during their tenure as Director andManaging Director of the Company respectively.
Mr. Mahesh Prasad Mehrotra DIN: 00016768 was appointed as Additional Director(Independent) on 8th December 2016.
The Members' approval for appointment of Mr. Mahesh Prasad Mehrotra as IndependentDirector for a period of 5 years is being sought in the ensuing Annual General Meeting ofthe Company.
The Independent Directors have submitted their disclosures to the Board that theyfulfill all the requirements as stipulated in Section 149(6) of the Companies Act 2013 soas to qualify themselves to be appointed as Independent Directors under the provisions ofthe Companies Act 2013 and the relevant rules thereunder.
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mr. Sanjeev Agrawal Director of the Company retires byrotation at the ensuing Annual General Meeting and is eligible for re-appointment.
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. Captain C. J. Rodricks*-Managing Director
2. Virendra Kumar Gupta-President & Chief Financial Officer
3. S. N. Mohanty-President-Corporate Affairs Legal & Company Secretary * Till 31stMarch 2017
Remuneration and other details of Key Managerial Personnel for the year ended 31stMarch 2017 are stated in the extract of the Annual Return.
6. EXTRACT OF ANNUAL RETURN
The details forming part of the extract of the Annual Return in Form MGT 9 is annexedherewith as "Annexure A"
7. AUDITORS AND AUDIT REPORT
As per the provisions of Section 139 of the Companies Act 2013 the term of office ofM/s. S R B C & C O LLP Chartered Accountants the Statutory Auditors of the Companywill conclude from the close of the forthcoming Annual General Meeting of the Company.
The Board of Directors places on record its appreciation for the services rendered byM/s. S R B C & C O LLP Chartered Accountants as the Statutory Auditors of the Company.
On the recommendation of the Audit Committee subject to the approval of the membersthe Board of Directors have decided to recommend Messers T R Chadha & Co.LLP-Chartered Accountants to be appointed as the Auditors of the Company for the nextfive years.
As required under the provisions of Section 139(1) of the Act the Company has receivedwritten consent from M/s T R Chadha & Co. LLP-Chartered Accountants informing thattheir appointment if made would be in accordance with the provisions of the Act readwith Rule 4 (2) of the Companies (Audit and Auditors) Rules 2014 and that they satisfythe criteria provided in Section 141 of the Act.
Members attention is drawn to a resolution proposing the appointment of M/s T R Chadha& Co. LLP-Chartered Accountants as Statutory Auditors of the Company which is includedin item no. 3 of the Notice convening the Annual General Meeting.
The observations in the Auditors' Report by M/s. S R B C & C O LLP CharteredAccountants have been dealt with in the relevant Notes to Accounts which areself-explanatory.
8. AUDIT COMMITTEE
The Composition of Audit Committee was changed from time to time.
The present composition of Audit Committee consists of the following members:
Mr. Mahesh Prasad Mehrotra*
Mr. Amarjit Singh Soni Mr. Surinder Singh Kohli Ms. Seema Modi
*Appointed as Chairman of the Committee in Board Meeting held on 8thDecember 2016
The above composition of the Audit Committee interalia consists of IndependentDirectors viz. Messers Mahesh Prasad Mehrotra Amarjit Singh Soni Surinder Singh Kohliand Seema Modi who forms the majority.
The Company has established a vigil mechanism to oversee through the committee thegenuine concerns expressed by the employees and other Directors. The Company has alsoprovided adequate safeguards against victimization of employees and Directors who expresstheir concerns. The Company has also provided direct access to the Chairman of the AuditCommittee on reporting issues concerning the interests of co-employees and the Company.
More details of the Audit Committee are stated under Corporate Governance Report.
9. STAKEHOLDERS RELATIONSHIP COMMITTEE
The Stakeholders Relationship Committee has been re-constituted with the followingDirectors as its Members:
a. Ms. Seema Modi
b. Mr. Sanjeev Agrawal
10. 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 ResponsibilityPolicy which was approved by Board on 11th August 2014. The Policy is availableon Company's Website www.seamec.in .
The terms of reference of Committee number and dates of meetings held attendance ofDirectors are given separately in the Corporate Governance Report.
The Company has commenced implementation of Policy and areas of activities have beenmade pursuant to provisions of Companies Act 2013. Annual Report of CSR Committee in theprescribed format is attached and forms a part of this report. (Annexure B)
11. NOMINATION AND REMUNERATION COMMITTEE
Pursuant to the provisions of Section 178 of the Companies Act 2013 read withCompanies (Meetings of Board and its Powers) Rules 2014 framed there under every listedcompany and prescribed class of companies shall constitute a Nomination and RemunerationCommittee (NRC) of the Board consisting of 3 or more non-executive directors out of whichnot less than ^ shall be independent director.
The present composition of NRC is in compliance with the above regulations andcomprises of the following members:
Mr. Surinder Singh Kohli Mr. Amarjit Singh Soni Ms. Seema Modi
The above composition of the Nomination and Remuneration Committee interalia consistsof independent Directors who forms the majority.
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 to theBoard of Independent Directors Key Managerial Personnel and other employees. TheNomination and Remuneration Policy is also available on Company's website www.seamec.in(web-link: http://seamec.in/attachments/Nomination%20and%20 Remuneration%20Policy.pdf) andthe said policy is annexed hereto and marked as Annexure I.
12. PUBLIC DEPOSITS
During the year under review the Company has not accepted any deposits under theCompanies Act 2013.
13. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans guarantees and investments have been disclosed in thefinancial statements.
14. SECRETARIAL AUDIT:
Pursuant to the provisions of Section 204 of the Companies Act 2013 and rules madethere under M/s Satyajit Mishra & Co Company Secretaries in Whole-time practice (FCSno. 5759 C P No. 4997) was appointed to conduct Secretarial Audit for the year ended 31stMarch 2017. M/s Satyajit Mishra & Co Practicing Company Secretaries has submittedReport on the Secretarial Audit which is attached as "Annexure C" and forms apart of this report. There are no Qualifications or observations or remarks made by theSecretarial Auditor in the Report.
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.
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)Regulations 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 Compliance Committees which covers various aspectsof the Board's functioning such as adequacy of the composition of the Board and itsCommittees Board Culture execution and performance of specific duties obligations andgovernance.
The performance evaluation of the Independent Directors was carried out by the entireBoard.
The performance evaluation of the Chairman and the Non Independent Directors wascarried out by the Independent Directors who also reviewed the performance of theSecretarial Department. The Directors expressed their satisfaction with the evaluationprocess.
17. FAMILIARISATION PROGRAMME TO INDEPENDENT DIRECTORS
The familiarisation programme aims to provide Independent Directors with the businessand operating scenario the socio economic 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 familiarised with the programme conducted by the Company.The same is available in Company's Websitehttp://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 policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website and details of the Related Party Transactions are annexed hereto andmarked as (Annexure D).
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) Regulations 2015. CorporateGovernance Report as well as the Corporate Governance compliance certificate issued bySecretarial Auditors are set out in separate Annexures to this report marked as (AnnexureF). Management Discussion Analysis Report forms a part of Directors Report and marked as(Annexure G).
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. Wholly OWNED SUBSIDIARY
SEAMEC INTERNATIONAL FZE Dubai UAE is the Wholly Owned Subsidiary (WOS) of yourCompany which at present is not a material subsidiary. As per the regulatory provisionthe consolidated financial statement of your Company and its wholly owned subsidiary forthe financial Year ended on 31st March 2017 duly audited by Statutory Auditorsis attached to the annual report of the Company. The Annual Accounts of the Wholly OwnedSubsidiary and the related detailed information shall be made available to theshareholders on request at any point of time. During the year under review your whollyowned subsidiary did not have any operational activities.
23. HUMAN RESOURCES
Your Company believes that competence and commitment of the people are the principaldriver of competitive advantage that enable the enterprise to create and deliver value.
The working climate of your Company continues to remain harmonious with focus onimproving Productivity Quality and Safety.
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.
The continuous training courses give employees the opportunity to improve their skillleading to consistent improvements in learning and development and adhering to SEAMECvalue. Health and Safety of the employees and our associates we work with remains ourparamount importance. Your Company ensures that operations are carried out as per thesafety guidelines and procedures in place which are regularly updated. Employees areregularly made aware of hazards/risks associated with their jobs and appropriate trainingis imparted to them to improve their skills. Periodic safety audit are undertaken toconfirm the proper functioning of system and procedures.
24. 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 controls system of the Company are monitored and evaluated by Auditors andreviewed by Management and Audit Committee of the Board of Directors. Auditor'sobservations in confirmation to policy in force has also been received.
25. 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 issued compliance of specific requirements in early February 2013related to conditions of employment hours of work and rest accommodation recreationfacilities food and catering health medical care welfare and social security.
Your Company has implemented the requirement as per MLC 2006 and has receivedcertification from the flag administration for its vessels.
26. POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORK PLACE
Pursuant to the provisions of Sexual Harassment of women at work place (ProsecutionProhibition 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 received during thefinancial year under report.
27. 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"Annexure E" and is attached to this report.
28. 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 as also identify business opportunities.
The objectives and scope of the Risk Management Committee broadly comprises:
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 actionsand ownership as per pre-defined cycles.
Defining framework for identification assessment monitoring mitigation andreporting of risk.
Risk identification assessment and mitigation measures are reported to Boardperiodically.
29. 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 H.
30. 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 the applicable accounting standards have beenfollowed along with proper explanations relating to material departure.
b. 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 and fairview of the state of affairs of the Company at the end of financial year and the Profitand Loss of the Company for that period.
c. Directors had 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. Directors had prepared the annual accounts on a going concern basis.
e. Directors to have proper internal financial controls were in place and that thefinancial controls were adequate and were operating effectively.
f. Directors had devised proper system to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating efficiently.
31. 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 www.seamec.in
Further the Company has also formed
(i) Policy for preservation of Documents
(ii) Archival policy for disclosures hosted 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 efforts for makingsatisfactory performance possible.
Your Directors thank the valued shareholders customers suppliers Banks Registrarand Share Transfer Agent for their continuous support to the company.
| ||For and on behalf of the Board of Directors |
|Place: Mumbai ||Sanjeev Agrawal |
|Date: May 30 2017 ||Chairman |
Information under Section 134 (3)(m) of the Companies Act 2013 read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 and forming part of the Directors' Report for theperiod ending 31st March 2017.
A. TECHNOLOGY ABSORPTION
The Company's activities being in the service sector in oilfield operations arecurrently confined only to rendering services offshore and do not necessitate expenditureon R & D. However the standards of the particular industry regarding foreigntechnology absorption have been achieved indigenously to a great extent.
B. FOREIGN EXCHANGE EARNINGS & EXPENDITURE
During the period under review the Company's foreign exchange earnings were equivalentto Rs.1848.36 million and foreign exchange outgo was equivalent to Rs.808.01 million.(This is on accrual basis.)