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Swan Energy Ltd.

BSE: 503310 Sector: Industrials
BSE 00:00 | 07 Aug 147.00 -0.85






NSE 00:00 | 07 Aug 146.65 -2.05






OPEN 147.85
VOLUME 61518
52-Week high 158.30
52-Week low 97.00
P/E 864.71
Mkt Cap.(Rs cr) 3,591
Buy Price 144.00
Buy Qty 1.00
Sell Price 148.00
Sell Qty 1.00
OPEN 147.85
CLOSE 147.85
VOLUME 61518
52-Week high 158.30
52-Week low 97.00
P/E 864.71
Mkt Cap.(Rs cr) 3,591
Buy Price 144.00
Buy Qty 1.00
Sell Price 148.00
Sell Qty 1.00

Swan Energy Ltd. (SWANENERGY) - Director Report

Company director report

1) Your Directors are pleased to present the One Hundred Tenth (110th) Annual Reporttogether with the Audited Financial Statements (Standalone & Consolidated) for theyear ended 31st March 2018.

2) Financial Results

For the year ended on 31.3.2018 For the year ended on 31.3.2017
(Rs. in Lakhs) (Rs. in Lakhs)
Profit before interest & depreciation 11979.79 2466.47
Less: Interest 2301.58 1549.32
Depreciation 536.66 541.86
Profit before Tax 9141.55 375.29
Less: Provision for Taxation 1866.94 207.39
Net Profit for the year 7274.61 167.90
Add: Amount of Profit & Loss Account brought forward 12641.40 12606.61
Amount available for Appropriation 19916.01 12774.51
Less: Appropriations:
Transfer to General Reserve - -
Dividend on Equity shares paid (including tax)* 220.48 133.11
Balance of Profit & Loss Account transferred to Balance sheet 19695.53 12641.40

* Pursuant to applicable provisions of Indian Accounting Standards the dividend amountmentioned in the columns for 2017 and 2018 represents the dividend amount paid (includingtax) for the financial years 2016 and 2017 respectively.

On standalone basis revenue from operations for the financial year 2017-18 was '31636.18 lakhs as compared to ' 33080.73 lakhs in the previous year. Earning beforeinterest tax depreciation and amortization (EBITDA) for the year was ' 11979.79 lakhsas compared to ' 2466.47 lakhs in the previous year. Profit after Tax (PAT) for the yearwas ' 7274.61 lakhs as compared to ' 167.90 lakhs in the previous year.

On consolidation basis revenue from operations for the financial year 2017-18 was '34669.17 lakhs as compared to ' 35058.62 lakhs in the previous year. Earning beforeinterest tax depreciation and amortization (EBITDA) for the year was ' 14525.51 lakhsas compared to ' 4616.35 lakhs in the previous year. Profit after Tax (PAT) for the yearwas ' 5469.21 lakhs as compared to ' 60.92 lakhs in the previous year.

3) Review of Operations LNG Port Project:

Swan Energy Limited through a special purpose vehicle company Swan LNG Private Ltd.(“SLPL') is developing India's first Floating Storage and Regasification Unit (FSRU)based greenfield LNG Port project of 10 MMTPA. The Project comprises of development of LNGPort facilities utilizing a Floating Storage and Regasification Unit (“FSRU”)along with Floating Storage Unit (“FSU”) for LNG receipt storageregasification and send-out with an initial regasification capacity of 5 MMTPA of LNGoff the Jafrabad coast in Amreli district in Gujarat (“the Project”)

The project is first of its kind all weather greenfield port facility for LNG Importwith an estimated cost of INR 4000 Crores. The Project development includes constructionof LNG Terminals Tug Berth Breakwater Capital Dredging and Onshore Port Infrastructure.

LNG Terminal No. 1 willbe initially operated with a five (5.0) MMTPA along withnew-built FSRU and a Floating Storage Unit (“FSU"). Both FSRU and FSU will be onLong Term Bareboat Charter lease basis and connected by ship-to-ship transfer equipment.

Project development work has been started in year 2012 and during the year manymilestones as listed below have been achieved towards development and implementationofthe LNG Port Project.

i- SLPL has executed Shareholders Agreement (SHA) on 17th October 2017 with thefollowing promoters for equity participation of SLPL. Post execution all promoters havecontributed initial contribution towards equity share capital.

The shareholding pattern of the SLPL post execution of the above agreement and receiptof the initial contribution is as under.

i- Swan Energy Limited (SEL) 63%
ii- Gujarat Maritime Board (GMB) 15%
iii- Gujarat State Petronet Limited (GSPL) 11%
iv- FSRU Venture India One Private Limited (FVIOPL) an affiliate of Mitsui OSK Lines (MOL) Japan 11%

FVIOPL an affiliate company of MOL will also be the Technical Partner for theimplementation of the LNG Port Project.

MOL will be supporting the Project by leveraging its technical expertise by finalizingspecifications of the FSRU vessel and supervising FSRU construction. MOL will also arrangefor FSU required for the Project under a long term FSU Bare Boat Charter basis and willalso provide O&M services for both the FSRU and the FSU.

MOL is a leading marine transportation company headquartered in Tokyo Japan and ownsand operates one of the world's largest merchant fleet. MOL group owns and operates 847vessels. The current LNG feet of MOL includes 91 LNG carriers which includes 74 availableand 17 are under construction vessels. MOL in consortium with Shipping Corporation ofIndia (SCI) owns and operates a LNG vessel for Petronet LNG Limited.

ii- SLPL has executed Concession Agreement (CA) with Gujarat Maritime Board (GMB) andGovernment of Gujarat (GoG) for developing FSRU based LNG Port Project on 18th October2017. With execution of this agreement SLPL gets exclusive right and authority todevelop finance design construct operate maintain and provide Port services to theusers. The term of the CA is for thirty (30) years from the date of Commencement ofOperations further extendable for a period of twenty (20)years on mutually agreed termsand conditions.

iii- SLPL as a Charterer has executed Bare Boat Charter agreement (BBC)with TriumphOffshore Private Limited (TOPL) to charter Floating Storage and Regasification Unit(FSRU) to your company on a long term lease for a period of 20 years.

TOPL 100% subsidiary of SEL was incorporated as a special purpose vehicle (SPV) topurchase FSRU for the LNG Port Project. TOPL has executed a Ship Building Contract for theconstruction of one (1) FSRU of 180000 Cubic Meter (CBM) storage capacity with M/sHyundai heavy Industries Company Limited South Korea (HHICL).

iv- SLPL has executed Contract Agreement worth ' 459 Crore for EngineeringProcurement Construction and Commissioning (EPCC) of the LNG Terminal TopsideInfrastructure for its 5 million metric tonnes per annum (5MMTPA) FSRU based LNG PortProject with M/s Black & Veatch Private Limited (BVPl).

BVPL is a subsidiary of USA company ‘Black & Veatch' (BV) a global leader inengineering procurement and construction (EPC) services for energy water andtelecommunications since 1915 having presence across the globe with over 100 officesworldwide with decades of proven performance on more than 3000 assignments in 40countries.

v- SLPL along with TOPL has executed following agreements with its Project TechnicalPartner Mitsui OSK Lines Tokyo Japan (MOL) and its 100% subsidiary M/s Regas VentureIndia One Private Limited (RVIOPL) for India's first LNG dedicated FSRU Port Project atJafrabad Gujarat. MOL is a well established& experienced shipping companyspecialized in the Operation of LNG carriers (LNG) Floating Storage Units (FSU) andFloating Storage & Re-gasification Units (FSRU)).

a) Pre order Technical Support Agreement for FSRU between TOPL and MOL.

b) Supervision Agreement for FSRU Construction between SLPL TOPL and MOL.

c) FSRU Operations & Maintenance (O&M) Agreement between SLPL and RVIOPL.

d) FSU Bareboat Charter Agreement by and between SLPL and MOL.

e) FSU Operations & Maintenance (O&M) Agreement between SLPL and RVIOPL.

vi- In December 2016 SLPL had executed an EPC contract for Marine and Dredging worksworth ' 2115 crore with National Marine & Infrastructure India Private Limited(NMIIPL) for carrying out the construction of LNG terminal at Jafrabad Gujarat to becompleted within 3 years. NMIIPL had started the construction works.

However during the month of February 2018 NMIIPL terminated the Contract aftercompleting 85% of the Dredging leaving the Jetty and Breakwater Works. Thereafter in themonth of April 2018 SLPL has awarded Letter of Award (LOA) to M/s AFCONS InfrastructureLimited (AFL) for all Jetty related EPC works at a contract price of ' 315 Crores. AFL hasalready commenced the work at site. SLPL is in the process of awarding balance works ofBreakwater and left over Dredging.

At this point of time cost and time over runs are not expected and the Project islikely to be completed during the 1st Quarter of 2020 and ready for commercial operationfrom April 2020.

vii- Currently SEL is in the process of financial closure for the LNG Port Project ofSLPL and ship financing of TOPL and have approached lenders for getting the necessaryfunding for the above. The response received from the lenders has been positive.


Kurla Project:

Occupation Certificate (OC) for the 4thTower at Kurla project (commercial complex) hasbeen received and the Tower has been handed over to the buyer i.e. Equinox.

Sale of Land:

During the year the Company has sold its land at Goa admeasuring about 100 acres fora consideration of ' 115 Crores and handed over to the buyer in the month of April 2018.

Subsidiary Companies:

A- The status of the properties owned by one of the 100% subsidiary company CardinalEnergy & Infrastructure Pvt Ltd (CEIPL) is as under:

i- Sai Tech Park Bangalore - It is a developed commercial property located at the ITpark of Whitefield Bangalore. It comprises 2.96 lakhs sq.ft & three buildings allbeen entirely leased out to Harman Connected Services Corporation India Private Limited(Erstwhile Symphony Teleca Corporation India Private Limited) an MNC. The annual rent of' 15.47 Crores is used for payment of LRD loan from PNB Housing.

ii- Technoya Park Hyderabad - During the year the development of this commercialproperty located at Gachibowli area of Hyderabad was completed. Thereafter 50% of theproperty was sold to another builder and the remaining 50% property comprising 2.92 lakhssq.ft was leased out to Mahataa Information India Private Limited (Indian subsidiary ofGoogle). The annual rent of ' 14.00 Crores is used for payment of LRD loan from HDFC.

iii- BTM Banglore - It is a land admeasuring 0.75 acre. The company intends todevelop it as a residential property.

iv- Apart from the above another residential project consisting of 2 basement + GF +20 Floors containing 113 flats in Yeshwantpur area of Bengaluru is being developed byCEIPL under Joint Development Agreement (JDA). Commencement Certificate (CC) for theconstruction has been received and the Plinth Area work (2 basements + Ground Floor) iscomplete. The top line sale in the Project will be around Rs. 300 Crores. The Project islikely to be completed by 2020.

B- Another 100% subsidiary company Pegasus Ventures Private Limited (PVPL) has landbanks at Bangalore Mangalore Mysore and Chennai. The Company is exploring variousoptions to develop these properties.


During the current financial year the Process House of the Company at Ahmedabad hasposted profit before tax of ' 1037.72 lakhs (Previous year ' 1107.87 lakhs).

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 subsidiary TOPL whichshall expire on delivery of the FSRU Vessel to the TOPL.

5) Dividend & Reserve

Your company needs to conserve its resources for its various upcoming projectsincluding FSRU Project. Yet as a investor friendly measure your Directors haverecommended payment of dividend @ '0.10 per Equity Share (10%) on 244257000 EquityShares of ' 1/- each for the year ended 31st March 2018 subject to approval of themembers. The amount of dividend and the tax thereon will be ' 24425700/- and '4973073/- (tax rate being @ 20.36%) respectively.

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.

7) Finance

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 2018 was ' 2442.57 lakhs.

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 auditorsconfirming compliance of the conditions of the Corporate Governance is annexed to thisreport - 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.

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') readwith Rule 8 of the Companies (Accounts) Rules 2014 is annexed to this Report - AnnexureD.

8.5 Corporate Social Responsibility (CSR) Policy:

The Report on CSR is annexed to this Report - Annexure - E.

8.6 Particulars of Employees:

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 11 (Eleven) 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) ofthe Act the Directors confirm that:

(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 2018 and ofthe profit of the Company for that period;

(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the company and for preventing and 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 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 with instances of fraud andmismanagement which is posted on the website of the Company.

iii- Risk Management Policy

The Company has a structured Risk Management policy. The Risk Management process isdesigned to safeguard the organization from various risks through adequate and timelyactions. It is designed to anticipate evaluate and mitigate risks in order to minimizeits impact on the business. The potential risks are integrated with the management processsuch that they receive the necessary consideration during decision making.

8.11 Particulars of loans Guarantees or investments by Company:

Details required to be disclosed pursuant to the provisions of Section 186 of the Actare disclosed in the notes to Financial Statements.

8.12 Related Party Transactions:

All transactions entered with Related Parties for the year under review were on arm'slength basis and in the ordinary course of business. There are no materially significantrelated party transactions during the year which may have potential conflict with theinterest ofthe company at large. The details of the transactions with the related partiesare disclosed 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 ofthe 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.

8.15 Directors:

At the ensuing Annual General Meeting Mr. Navinbhai Dave retires by rotation andbeing eligible offers himself for re-appointment.

8.16 Performance evaluation of the Board:

Pursuant to the Section 134 of the Act and SEBI (LODR) Regulations 2015 the Board hascarried out an annual performance evaluation of its own performance the Directorsindividually as well as the evaluation of the working of all the Committees of the Board.

8.17 Prevention of Sexual Harassment of Women at workplace:

The Company has a constituted 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 reportablematerial weaknesses in the design or operation were observed.

9) Auditors:

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 212017 for a term of five consecutive years. As per the provisions of Section139 of the Companies Act 2013 the appointment of Auditors was required to be ratified atevery Annual General Meeting. However in view of amendment in the Companies Act 2013the appointment of statutory auditors is no longer required to be ratified at every AGMand hence no resolution is proposed in the Notice convening AGM.

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 2019 at a remuneration of ' 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 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 2018 and their report is annexed to this Report - Annexure - F.

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.

12) Appreciation:

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.

For and on behalf of the Board of Directors
Navinbhai C. Dave
Mumbai 30th May 2018 Chairman