1) Your Directors are pleased to present the One Hundred Twelfth (112th) AnnualReport together with the Audited Financial Statements (Standalone & Consolidated) forthe year ended 31st March 2020.
2) Financial Results
| || |
| ||For the year ended on 31.3.2020 ||For the year ended on 31.3.2019 ||For the year ended on 31.3.2020 ||For the year ended on 31.3.2019 |
| ||(Rs. in lacs) ||(Rs. in lacs) ||(Rs. in lacs) ||(Rs. in lacs) |
|Profit before interest & depreciation ||2056.34 ||5933.50 ||6060.47 ||9716.84 |
|Less: interest ||1132.72 ||1843.58 ||5032.97 ||5400.44 |
|: Depreciation ||537.48 ||534.98 ||1452.43 ||1407.85 |
|Profit before Tax ||386.14 ||3554.94 ||(424.93) ||2908.55 |
|Less: Provision for Taxation ||(27.06) ||3320.91 ||58.38 ||3506.88 |
|Net Profit for the year ||413.20 ||234.03 ||(483.31) ||(598.33) |
|Attributable to shareholders of the company ||- ||- ||(584.53) ||(530.93) |
|Non-Controlling interest ||- ||- ||101.22 ||(67.39) |
|Add: Amount of Profit & Loss ||19635.57 ||19695.53 ||15883.11 ||16708.03 |
|Account brought forward || || || || |
|Opening balance of new subsidiaries ||- ||- ||(5.71) ||- |
|Amount available for Appropriation ||20048.77 ||19929.56 ||15292.87 ||16177.10 |
|Less: Appropriations: || || || || |
|Transfer to General Reserve ||- ||- ||- ||- |
|Dividend on Equity shares paid (including tax) * ||294.48 ||293.99 ||294.47 ||293.99 |
|Balance of Profit & Loss Account transferred to Balance sheet ||19754.29 ||19635.57 ||14998.40 ||15883.11 |
* Pursuant to applicable provisions of indian Accounting Standards the dividend amountmentioned in the columns for 2019 and 2020 represents the dividend amount paid (includingtax) for the financial years 2018 and 2019 respectively.
On standalone basis revenue from operations for the financial year 2019-20 was Rs.30684.03 lacs as compared to Rs. 85972.73 lacs in the previous year. Earning beforeinterest tax depreciation and amortization (EBiTDA) for the year was Rs. 2056.34 lacs ascompared to Rs. 5933.50 lacs in the previous year. Profit after Tax (PAT) for the year wasRs. 413.20 lacs as compared to Rs. 234.03 lacs in the previous year.
On consolidation basis revenue from operations for the financial year 2019-20 was Rs.34081.58 lacs as compared to Rs. 89161.98 lacs in the previous year. Earning beforeinterest tax depreciation and amortization (EBiTDA) for the year was Rs. 6060.47 lacsas compared to Rs. 9716.84 lacs in the previous year. Profitafter Tax (PAT) for the yearwas Rs. (483.31) lacs as compared to Rs. (598.33) lacs in the previous year.
3) Review of Operations A- LNG port project:
a- project development and implementation:
Your company is setting up India's first Greenfield LNG Port Terminal with the totalcapacity of 10 MMTPA in Jafrabad Port area in the Amreli district of Gujarat through itstwo subsidiary companies namely Swan LNG Pvt Ltd (SLPL) and Triumph Offshore Pvt Ltd(TOPL). The progress of the project is summarized under:
The first phase of 5 MMTPA capacity with Floating Storage and Regasification Unit("FSRU") and a storage unit ("FSU") both being connected byship-to-ship transfer equipment is under floating implementation. The Project comprisesof development of LNG Port facilities utilizing a FSRU for LNG receipt storageregasification and send-out with a regasification capacity of 5 MMTPA of LNG.
The Project was awarded on the basis of international competitive bidding under theSwiss Challenge' route and is being developed on PPP basis under the ConcessionAgreement executed between SLPL Gujarat Maritime Board ("GMB") and Governmentof Gujarat ("GoG"). Your company is the Lead Promoter of SLPL and hold 63%equity stake in SLPL. As per the Shareholders Agreement (SHA) Government of Gujaratentities holds 26% stake (15% by GMB and 11% by Gujarat State Petronet Ltd.) and 11% isheld by FSRU Venture india One Pvt. Ltd. (FViOPL) the indian subsidiary company of MitsuiOSK Lines (MOL) Japan. MOL the technical partner for the project.
The Project shall be operated on tolling business model and out of 5 MMTPA capacitythe Company has already executed regasification agreements aggregating to 4.5 MMTPA for aperiod of 20 years with GSPCL (1.5 MMTPA) and BPCL iOCL and ONGC (1 MMTPA each). The"Use or Pay" nature of these regasification agreement from highly credit worthyCentral & State Govt PSU's and Concession
Agreement with GMB & GoG for 30 years (extendable to further 20 years) makes thefuture of the project very robust. Moreover all the necessary approvals and EPC Contractsrequired for project implementation are in place and the construction is progressing well.
All the shareholders i.e. SEL GMB GSPL and FViOPL have contributed their share ofequity as per the SHA agreement. The paid-up share capital of SLPL as on date is Rs.9173015880/- comprising Rs. 7873015880/- as equity share capital and Rs.1300000000/- as preference share capital.
The Company was incorporated as a special purpose vehicle (SPV) for the purpose ofacquiring and owning a new built Floating storage & Regasification Unit (FSRU) to bedeployed for LNG port terminal project being implemented by SLPL. TOPL has alreadyexecuted a shipbuilding contract for the construction of one (1) 180000 CBM LNG FSRUwith M/s Hyundai Heavy industries Company Limited South Korea (HHi). The FSRUconstruction is being done at HHi's shipyard in Ulsan South Korea under the supervisionof Mitsui OSK Lines Japan (MOL). The gas trials for the FSRU were completed in May 2020and delivery of the FSRU is expected in the third quarter of 2020. During the year TOPLissued equity shares on a preferential basis to Swan Energy Limited for Rs. 2728400000and to indian Farmers Fertiliser Cooperative (iFFCO) for Rs. 2621500000/-. Post issueiFFCO holds 49% and SEL holds 51% of the total equity of TOPL. The paid-up share capitalof the TOPL as on date is Rs. 5350000000/-. iFFCO is one of india's biggestcooperative society which is wholly owned by indian Cooperatives. iFFCO was founded in1967 and has an amalgamation of over 36000 Indian Cooperatives with diversified businessinterests ranging from General insurance to Rural Telecom apart from core business ofmanufacturing and selling fertilisers. TOPL as an Owner of the FSRU has entered into aBAREBOAT CHARTER AGREEMENT' with SLPL to charter the FSRU to SLPL on a long termlease for a period of 20 years.
Your company has issued a Corporate Guarantee (CG) amounting to US Dollars Two hundredand twenty four million and four hundred thousand only (US$ 224400000) in favour of M/sHyundai heavy industries Company Limited South Korea (HHiCL) on behalf of TOPL whichshall expire on delivery of the FSRU Vessel to the TOPL.
b- Total cost and Financial closure: On account of lockdown consequent to outbreakof Covid-19 pandemic and as per the revised appraisal of the banks the total cost of theProject under SLPL and TOPL has been estimated to be Rs. 4089.66 crores and Rs. 2449.17crores respectively.
On the financial closure the Company has achieved complete debt tie-up under SLPL andTOPL with State Bank of india (SBi) being lead banker for total debt of Rs. 3152 Croreand Rs. 1803 Crore respectively. With execution of the facility and other documents andcompletion of balance formalities the term loan disbursement is expected on or before Aug2020.
c- Status of the project:
On Project implementation works Company has achieved an overall approximately average50% progress on the construction of Port Project. Delivery of FSRU as mentioned above isexpected to be received in the third quarter of 2020. The revised scheduled commercialdate of operation (SCOD) of the Project being 31st March 2022 feasibility of giving FSRUon lease for a short period is being worked out.
B- REAL ESTATE Subsidiary Companies:
Your company own few properties through its wholly owned subsidiaries (WOS). The statusof the same is summarized as under:
I- Cardinal Energy & Infrastructure pvt Ltd (CEIpL100% wOS):
i- Sai Tech park Bangalore - comprising 2.96 lac sq. ft located at the IT parkof Whitefield
Bangalore. Leased out to Harman Connected Services (Samsung Group) at an annual rent ofRs. 16.94 Crores.
ii- Technova park hyderabad - comprising 2.92 lac sq. ft located at Gachibowliarea of Hyderabad. Leased out to an indian subsidiary of Google at an annual rent of Rs.14.95 Crores.
iii- BTM Bengaluru A land admeasuring 0.75 acre to be developed as aresidential property.
iv- yeswantpur area Bengaluru - A residential project of 22 story tower having3 wings is under construction under Joint Development Agreement (JDA) with the ChigateriFamily (land owners).
Construction has been completed up to 17th floor of one and a half wings. Totalsaleable area will be 3.22 lakh Sq ft and our share will be 1.91 lakh Sq ft i.e. 60% oftotal saleable area. Decent return is expected once Project gets completed in September2021
II- pegasus Ventures private Limited (pVpL 100% wOS);
Land parcels at Bengaluru Mangalore Mysore and Chennai to be developed in due courseof time.
During the current financial year the Process House of the Company at Ahmedabad hasposted profit before tax of Rs. 1068.09 lacs (Previous year Rs. 496.11 lacs).
4) Material changes and commitments:
The company has issued a Corporate Guarantee (CG) amounting to US Dollars Two hundredand twenty four million and four hundred thousand only (US$ 224400000) in favour of M/sHyundai heavy industries Company Limited South Korea (HHiCL) on behalf of its subsidiaryTOPL which shall expire on delivery of the FSRU Vessel to the TOPL.
5) dividend & Reserve
Your Company needs to conserve its resources mainly for its LNG Terminal / FSRUProject. Further Profit before Tax (PBT) for the year is substantially down as comparedto the year 2018-19. Yet as an investor friendly measure your Directors have recommendedpayment of dividend @ Rs. 0.10 per Equity Share (10%) on 244257000 Equity Shares of Rs.1/- each for the year ended 31st March 2020 subject to approval of the shareholders atthe ensuing 112th AGM.
The company has not transferred any amount to the General Reserve during the year.
6) Fixed deposits
The Company has not accepted any fixed deposits from public during the year underreview.
Your Company has been regular in meeting its obligation towards payment ofPrincipal/interest to the Banks and other institutions.
During the year under review the Company has neither issued shares with differentialvoting rights nor has granted stock options/sweat equity. The paid-up Equity share capitalas on 31st March 2020 was Rs. 2442.57 lacs.
8) Statutory disclosures:
8.1 Management Discussion and Analysis:
As required under Regulation 34(2)(e) of the SEBi (LODR) Regulations 2015 aManagement Discussion and Analysis is annexed to this Report Annexure A.
8.2 Corporate Governance
As required under Regulation 17(7) of the SEBi (LODR) Regulations 2015 a report onthe Corporate
Governance' together with a certificate of statutory the Corporate Governance isannexed to this report Annexure B.
Further in compliance of Regulation 17(5) of the SEBi (LODR) Regulations 2015 yourCompany has adopted a Code of Conduct and Ethics' for its Directors and SeniorExecutives.
8.3 Extract of Annual Return:
An extract of the Annual Return in Form MGT 9 is annexed to this Report -Annexure C and the same is placed on the website of the Company www.swan.co.in
8.4 Conservation of energy technology absorption and foreign exchange earnings andoutgo: information under Section 134 (3) (m) of the Companies Act 2013 (the Act')read with Rule 8 of the Companies (Accounts) Rules 2014 is annexed to this Report -Annexure D.
8.5 Corporate Social Responsibility (CSR) Policy:
The Report on CSR is annexed to this Report - Annexure - E. 8.6 Particulars ofEmployees:
Pursuant to provisions of Section 136 (1) of the Act and as advised the statementcontaining particulars of employees under Section 197 (12) of Act read with Rule 5 ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 will beavailable for inspection at the registered office of the Company and will be madeavailable to the shareholders on request.
8.7 Number of Board Meetings and composition of Audit Committee:
During the year under review 6 (Six) Board Meetings were convened and held. Therequired details are given in the Corporate Governance Report forming part of this report.
8.8 Directors Responsibility Statement:
Pursuant to Section 134 (3) (c) of the Act the Directors confirm
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed;
(b) appropriate accounting policies have been selected and applied consistently.Judgments and estimates that are reasonable and prudent have been made so as to give atrue and fair view of the state of affairs of the company as on 31st March 2020 and ofthe profit of the Company for that period;
(c) proper and sufficient care has been taken for the maintenance of in accordance withthe provisions of the Act for safeguarding the assets of the company and for preventingand detecting fraud and other irregularities;
(d) the Annual accounts have been prepared on a going concern basis;
(e) internal financial controls have been laid down and followed by the company andthat such controls are adequate and are operating effectively;
(f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
8.9 Statement on declaration given by independent Directors:
The independent Directors of the Company have submitted their Declaration ofindependence as required under the provisions of Section 149(7) of the Act stating thatthey meet the criteria of independence as provided in section 149(6) of the Act.
8.10 Disclosure regarding Company's policies under the Companies Act 2013:
i- Remuneration and Nomination Policy
The Board of Directors has framed a policy which lays down criteria forselection/appointment and framework in relation to remuneration of Directors KeyManagerial Personnel (KMPs) and Senior Management of the Company.
ii- Whistle Blower Policy The Company has a Whistle Blower policy to deal withinstances of fraud and mismanagement which is posted on the website of the Company.
iii- Risk Management Policy The Company has a structured Risk Management policy. TheRisk Management process is designed to safeguard the organization from various risksthrough adequate and timely actions. it is designed to anticipate evaluate and mitigaterisks in order to minimize its impact on the business. The potential risks are integratedwith the management process such that they receive the necessary consideration duringdecision making.
iv- Dividend Distribution Policy (DDP) The Report on DDP is annexed to this Report -Annexure F and is available on website of the company. www.swan.co.in v- BusinessResponsibility Report (BRR) The Report on BRR is annexed to this Report - Annexure G and is available on website of the company. www.swan.co.in
8.11 Particulars of loans Guarantees or investments by Company: Details required to bedisclosed pursuant to the provisions of Section 186 of the Act are disclosed in the notesto Financial Statements.
8.12 Related Party Transactions:
All transactions entered with Related Parties for the year under review were in theordinary course of business and do not have any potential conflict with the interest ofthe company at large. The details of the transactions with the related parties aredisclosed in the notes to Financial Statements.
8.13 Subsidiary Company:
A statement in Form AOC 1 pursuant to Section 129(3) of the Act relating tosubsidiary companies is attached to the Accounts. The financial statements and relateddocuments of the Subsidiary companies shall be kept open for inspection at the registeredoffice of the Company.
8.14 Significant and material orders passed by the Regulators or courts:
There were no significant and material orders passed by the Regulators or Courts orTribunals during the year under review which would impact the going concern status of theCompany and its future operations.
At the ensuing Annual General Meeting Mr. Nikhil V. Merchant (DiN:00614790) retiresby rotation and being eligible offers himself for re-appointment. 8.16 Performanceevaluation of the Board: Pursuant to the Section 134 of the Act and SEBi (LODR)Regulations 2015 the Board has carried out an annual performance evaluation of its ownperformance the Directors individually as well as the evaluation of the working of allthe Committees of the Board. 8.17 Prevention of Sexual Harassment of Women at workplace:The Company has constituted a Committee in compliance of the provisions of "SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013".However no case was reported to the Committee during the year under review.
8.18 internal Financial Controls:
Your Company has in place adequate internal financial controls with reference tofinancial statements.
During the year such controls were tested and no reportable material weaknesses in thedesign or operation were observed.
9.1 Statutory Audit
M/s N. N. Jambusaria & Co. Chartered Accountants Mumbai (Registration No.104030W) were appointed as Statutory auditors of the Company at the 109th AGM held onSeptember 21 2017 for a term of five consecutive years. in accordance with the CompaniesAmendment Act 2017 enforced on 07th May
2018 by Ministry of Corporate Affairs the appointment of Statutory Auditors is notrequired to be ratified at every Annual General Meeting.
9.2 Cost Audit
Pursuant to the recommendation of the Audit Committee the Board has appointed M/s V.H. Shah & Co. Cost Accountants (Registration No. 100257) as the Cost Auditor for thefinancial year ended 31st March 2021 at a remuneration of Rs. 75000/- (Rupees SeventyFive thousand only) plus applicable taxes who have given consent and eligibilitycertificate to act as a Cost Auditors of your Company. The remuneration payable isrequired to be ratified at the ensuing 112th AGM.
9.3 Secretarial Audit
The Board has appointed M/s Jignesh M. Pandya & Co. (CP No. 7318) a practicingCompany Secretary to undertake the Secretarial Audit of the Company for the year ended31st March 2020 and their report is annexed to this Report - Annexure H.
10 Auditors' Report:
Report of the auditors read with the notes to the financial statements isself-explanatory and need no elaboration.
11 Industrial relations:
The relationship with all the concerned continued to remain harmonious and cordialthroughout the year under review.
The Directors place on record their appreciation for support and timely assistance fromFinancial institutions Banks Government Authorities and above all its Shareholders whohave extended their valuable support to the Company.
The Directors also wish to appreciate sincere and dedicated efforts and services by allthe employees/ staff.