To the Members of Essar Shipping Limited
Your Directors are pleased to present the Thirteenth Annual Report and
Audited Financial Statements of the Company for the financial year ended March 31, 2023.
FINANCIAL HIGHLIGHTS:
The Company's financial performance, for the year ended March 31,
2023 is summarized below: -
Rs. in Crore
Particulars |
For the year ended
31-03-2023 |
For the Year ended 31-03-2022 |
For the year ended 31-03-2023 |
For the Year ended 31-03-2022 |
Total Income |
164.59 |
553.18 |
38.86 |
302.09 |
Total Expenditure |
28.46 |
265.36 |
16.52 |
101.18 |
EBITDA |
136.13 |
287.82 |
22.34 |
200.91 |
Less: Interest & Finance charges |
131.57 |
356.47 |
94.65 |
180.22 |
Less: Provision for Depreciation |
41.14 |
105.92 |
0.22 |
45.26 |
Profit / (Loss) before Tax |
(36.58) |
(174.58) |
(72.53) |
(24.57) |
Less: Provision for Tax |
26.46 |
(0.26) |
26.46 |
(0.26) |
Profit / (Loss) for the year before share of
profit of associate |
(10.12) |
(174.84) |
(46.07) |
(24.83) |
Add: Exceptional item |
1,660.33 |
93.81 |
1,738.78 |
(225.15) |
Add: Share of profit of associate |
0.24 |
3.00 |
- |
- |
Add: Other Comprehensive Income/loss |
0.17 |
0.23 |
0.17 |
0.23 |
Profit / (Loss) for the year |
1,650.62 |
(77.80) |
1,692.88 |
(249.75) |
DIVIDEND
In view of accumulated losses from the previous financial years and
with a view to conserve the resources, your Board of Directors have not recommended any
dividend for the year ended 31st March, 2023.
CHANGE IN THE NATURE OF BUSINESS ACTIVITIES:
During the year under review, there was no change in the nature of the
business activities of the Company
Overview of the World Economy & Shipping Industry
The general worsening in the global economic situation and
macroeconomic indicators has caused the international economy to slow down due to Ukraine
war, with apprehensions of an impending recession.
Certainty has been in short supply in the world of shipping in recent
years. Shippers, manufacturers, and carriers have all had to adapt to rapidly changing
circumstances, from the lingeringcargo impacts of COVID to geopolitical conflicts, from
stocking trends to industrial action.
The hard pill to swallow is that 2023 will present its own set of
challenges across every level of the industry. Shippers and carriers alike will need to be
prepared for the implications of shifting capacity levels, an industry-wide shift to a
more sustainable future, and a challenging global economic climate. Indeed, this has
already become a reality in some countries, with organisations such as the World Trade
Organisation and the International Monetary Fund suggesting that certain economies in
western Europe have already entered a mild recession and are further cautioning that the
debilitating effects thereof will inevitably spill over to other underdeveloped economies
and perhaps result in a worldwide recession, akin to what was witnessed in 2009.
Globally, the anticipation is that the recession's severity will
be mild but long-term. Consequently, consumer confidence in developed countries has
already taken a hit, and discretionary spending is being curbed. The withdrawal of
Covid-related fiscal stimulus by most Governments will also add to the recessionary
effect.
The lower demand for goods and products will result in fewer factory
orders and manufacturing activity in China and other manufacturing locations, resulting in
a decline in EXIM volumes thus covering the entire supply chain.
In 2023, Carriers are expected to have surplus capacity and will owners
likely drop rates to attract volumes, benefitting and end consumers.
Sustainability in the Shipping Industry:
As we look forward to an era without fossil fuels and fastrack energy
transition, sustainability becomes the most important factor for assessing any industry.
As a sector contributing significantly industry as a whole is aiming to
reduce its environmental impact and contribute to global efforts to combat climate change.
Key aspects of sustainability in the shipping industry include reducing greenhouse gas
(GHG) emissions, complying with environmental regulations, managing waste and recycling,
protecting biodiversity and marine conservation, practicing corporate social
responsibility (CSR), promoting sustainable supply chain management, and driving
innovation and technology.
The International Maritime Organization (IMO), the principle policy
making body, has set ambitious targets to reduce GHG emissions from shipping, and the
industry is exploring measures such as using cleaner fuels, adopting energy-efficient
technologies, optimizing vessel design and operations, and investing in alternative
propulsion systems.
Compliance with environmental regulations such as the Ballast Water
Management Convention and MARPOL is crucial, and waste management, recycling, and
biodiversity conservation are also important aspects of sustainability. Corporate social
responsibility principles are being incorporated into shipping companies' operations,
and sustainable supply chain management is gaining prominence.
How sustainability is set to transform the industry
The drive towards a more sustainable future in shipping has been
gaining momentum in recent years reflected not only in legislation but also in the carrier
order books. 2023 marks the first year where ships will be required to collect and report
on emissions data, mandated by new IMO (International Maritime Organisation) regulations.
In 2024, this data will then be used to issue ratings to ships, with
poorly performing vessels required to improve or face being idled. This new reporting and
rating framework represents the latest regulatory updates from the IMO. The new frameworks
aim to achieve their overall goal of reducing the carbon intensity of all ships by 40% by
2030, compared to the 2008 baseline. This industry shift is also evident in order books
for new vessels, with more sustainable dual-fuel ships accounting for an increasing
proportion of new orders. Dual fuel engines can operate on both conventional fuel sources
and more sustainable forms of energy such as LNG, preparing carriers for the transition
from traditional fossil fuels.
The CSSC (Chinese State Shipbuilding Corporation) reported that 31.6%
of vessels completed in 2022 were dual-fuel ships. The proportion of dual fuel ship orders
is expected to continue to rise in 2023 and grow exponentially in the future as carriers
look for more sustainable fuel sources.
Biofuels also presents a unique opportunity to the industry for a more
sustainable future. Created from biomass, some biofuels, such as dimethyl Esther, are able
to drop in' and replace existing fuel sources without requiring extensive
modifications to engines.
Therefore they can be considered the most readily available low
emissions fuel option. However, they are substantially more expensive than traditional
sources.
While biofuels may be considered a costly alternative to traditional
fuel sources and will require investment, the onus cannot just lie on carriers to make
adjustments and bear costs. Creating a more sustainable future requires action across the
industry. Not only by carriers, but also by ports, manufacturers, and shippers to support
this investment in a greener future.
The role of digitization in 2023
Along with the drive for capacity management, sustainability and
efficiency from carriers, we are likely to see an increased role for supply chain
technology in 2023.
Disruptions in 2022 highlight the importance of implementing new
technologies into the shipping industry, including:
Monitoring and anticipating disruptions, to help build supply
chain resilience.
Using real-time information to improve forecast accuracy, and
better plan ship utilisation.
Implementing purchase order management to better gauge arrival
times for specific products, and reduce origin dwell times.
Reporting and analysis of scope 3 emissions to ensure compliance
with recognised standards such as the GHG Protocol and ISO 14000.
BUSINESS PERFORMANCE, OPPORTUNITIES AND
OUTLOOK
Freight rates and Maritime trade by Cargo type
According to UNCTAD, the increase in global dry bulk freight rates and
grain prices will increase global consumer food prices by 1.2 per cent. The effects would
be greater in the middle-income economies that import more primary food products than in
the low-income economies that import more processed food. The world can also expect
regular disruption in supply chains which will need to be more resilient and agile.
Freight rates are likely to fluctuate in the face of the ongoing COVID-19, the war in
Ukraine, economic policy uncertainties, geopolitical risks, energy and food security,
energy and sustainability regulations and decarburization. Soaring freight rates will
drive up food and energy. a. Tanker trade:
In 2021, seaborne oil-trading volume remained below pre-pandemic
levels, with a sharp decline in long-haul crude oil exports from the Middle East and the
United States. But at the same time, tanker supply continued to grow, with more vessels
delivered than scrapped, particularly for larger crude carriers. As a result, there has
been a steep fall in freight rates. Between 2020 and 2021, average annual daily tanker
earnings fell from $24,877 to $6,416, the lowest level ever, though they started to rise
towards the end of the year with increases for crude oil. In 2021, supply capacity was
reduced by increased scrapping. The war in Ukraine boosts tanker freight rates. Earnings
remained low into early 2022, but in February 2022 the war in Ukraine led to major spikes
on some routes, and some prices were also pushed up by shifts in oil trade fows. Between
January and
March 2022, the cost of moving crude oil, as tracked by the Baltic
dirty tanker index (BDTI), increased by more than 80 per cent. The war in Ukraine is
having a range of impacts. The economic and other restrictive measures have cut crude oil
flows from the Russian Federation to Europe, to be replaced by oil from the United States
and the Middle East. This has reduced the demand for very large crude carriers (VLCCs) but
increased the demand for the smaller Aframax and Suezmax tankers. At the same time the
Russian Federation has increased crude oil exports from the Black Sea and Baltic Sea ports
to Asia, replacing oil from the United States, Latin America, and the Middle East. This
too has reduced demand for VLCCs and increased the use of smaller vessels. There were also
huge premiums for ship-owners willing to take the risk of transporting Russian oil.
Geopolitical tensions that increased imports to Europe from the United States, the Middle
East and Asia boosted freight rates for oil product tankers. In the near future, freight
rates may continue to increase in the crude oil and product tanker markets. This would
partly be due to a recovery in oil demand and the reshuffling of global oil flows in the
aftermath of the war in Ukraine, but also to a tightening of supply with slow growth of
vessel supply and the removal of old tankers following the entry into force of the
IMO's EEXI and CII regulations. b. Dry cargo trade:
Market changes and congestion push dry bulk freight rates to new
levels. Robust demand and limited supply have driven up dry bulk freight rates. Steady
economic recovery and fiscal stimuli have boosted industrial activity and increased demand
for most dry bulk commodities such as grains, iron ore and coal. But vessel availability
has been constrained by COVID-19 restrictions and port congestion. In 2021, the time spent
in port increased by 2.3 per cent for dry bulk carriers and 2.1 per cent for dry
break-bulk carriers. There was also a 21 per cent decline in the delivery of new vessels.
The average cost to ship raw materials such as grains, coal and iron ore is tracked by the
Baltic Exchange dry index (BDI) which from October 2019 to
October 2021 tripled to a record high of almost 5,000 points
.The surge in freight rates in October coincided with the growth in
coal demand and prices. Ports also became more congested as a result of quarantine
requirements and the ban on the import of Australian coal by the Government of the China
which blocked coal-carrying vessels at China's ports for months. In October 2021, the
Clarksons dry bulk port congestion index increased to 35 per cent.
Towards the end of 2021 bulker freight rates fell steeply
reflecting seasonal variations, and the economic situation in China as well the spread of
COVID-19. From the end of October 2021 to the end of December 2021, the BDI declined by 40
per cent to 2,832 points and in January 2022 fell to 1,760 points, with the downturn
continuing through the early months of 2022. Exports of coal from Indonesia when the
export ban was lifted and demand from Europe increased. Increased dry bulk freight rates
and consumer food prices Grain prices and shipping costs have been on the rise since the
onset of the war in Ukraine. Between February and May 2022, the BDI increased by 60 per
cent. Since then it has declined but in July 2022 was still 13 per cent higher than in
February 2022. According to UNCTAD, the increase in global dry bulk freight rates and
grain prices will increase consumer food prices by 1.2 per cent globally.
Looking ahead the dry bulk freight market will continue to be affected
by the war in Ukraine and the COVID-19 pandemic, especially in China which accounts for
around 35 per cent of global dry bulk cargo demand. Demand will also be affected by a
slower global economic recovery, commodity price fluctuations, and limited feet deliveries
which for 2022 are estimated at only 3.6 per cent. The war in Ukraine could in addition
affect port calls and dry bulk shipping patterns and the use and positioning of vessels.
Moreover, sourcing cargos from further afield increase transport ton-miles, all of which
add to freight rates.
Outlook and policy considerations
The COVID-19 pandemic has increased freight rates due to the surge in
seaborne trade combined with disruptions at ports, and reduced landside transport,
warehouse and storage capacity. This has reduced capacity, tied up ships for longer than
usual and increased delays and surcharges. Shippers and governments are concerned about
rising costs and the increases in blank sailings, port call cancellations, and rising
demurrage and detention charges. They have called for public authorities to monitor and
regulate shipping and carrier behavior, to ensure transparency, fairness and
competitiveness in maritime transport. But the core problems are inefficiency and
disruptions.
Longer-term solutions would be to boost port performance and
productivity, and improve transport infrastructure, landside transport and connectivity,
and storage facilities, while reducing amount Labour shortages, and making supply
chains more robust and resilient.
Policy recommendations
Supply chains Developing countries will need support to
invest in more robust, resilient and sustainable supply chains. Transport and trade
facilitation solutions should accelerate the transition to smart and green trade logistics
and enhance transport infrastructure, including port and hinterland, and logistics
services.
Finance Increased finance and investment and resource mobilization
should be based on a long term vision for resilient and sustainable maritime transport
supply chains.
Mitigating impact on vulnerable countries High shipping
costs hit hardest at import-dependent countries. There is a need for a response mechanism
to mitigate the impact on the most vulnerable countries, including net food importing
countries, SIDS, LLDCs, and LDCs.
Regional solutions High transport costs can be addressed
by feet and shipping services at the regional and subregional levels. This could include
regional maritime indices, and regional freight observatories to collect data and monitor
key performance indicators.
Technical assistance Vulnerable countries will need
technical assistance and support to mitigate the impact of rising prices and to develop
sustainable and resilient transport systems and value chains.
ESSAR SHIPPING OPERATIONS & BUSINESS DEVELOPMENT
Business Operation:
The company is continuously monitoring the market to enter into
purchase of assets and operations thereby. Currently the company owns a Tug that is
employed with for a long term charter of at market rates.
The company is looking at various market segments including the LNG
segment for possible business opportunities. Currently, the new build asset prices across
segments of Bulk Carriers, Tankers, LNG is very high due to increase in steel prices
globally, gap between supply and demand of tonnage, and changes in trade routes to longer
hauls.
MANAGEMENT DISCUSSION AND ANALYSIS OILFIELD BUSINESS
A. GLOBAL INDUSTRY OUTLOOK
Considered to be the biggest sector in the world in terms of dollar
value, the Oil and Gas industry is a global powerhouse employing hundreds of thousands of
workers worldwide as well as generating hundreds of billions of dollars globally each
year. In regions which house the National
Oil Companies (NOC), these Oil and Gas companies are towardsso vital
they often contribute a significant national GDP.
The Oil and Gas industry can be broken down into three key areas:
Upstream;
Midstream; and
Downstream
The largest volumes of products of the Oil and Gas industry are fuel
oil and gasoline (petrol). Petroleum is the primary material for a multitude of chemical
products, including pharmaceuticals, fertilizers, solvents and plastics. Petroleum is
therefore integral to many industries, and is of critical importance to many nations as
the foundation of their industries.
In Oil markets, the depths of the post-2014 downturn seem to be behind
us. Oil prices have recovered from the 2016 annual average WTI price low of $40. It
breached $50 in
2017 and through September 2018 it averaged just shy of $67. This
recovery has been the result of various factors, including sustained success of the
production restraint agreement between OPEC and non-OPEC countries in force since the
beginning of 2017.
[Source: Westwood Global Energy Group: Global Offshore Drilling Rig
Dayrate Forecast 2023-27]
B. RIG MARKET OUTLOOK
Rig Market Conditions have continued to improve in 2023:
Day rates have risen further this year, amidst increasingly limited availability,
following significant demand-side gains across the last 18 months. Moreover, notable
growth in rig deployment is expected moving forward, as units fixed in 2022/early-2023
continue to commence their contracts. Overall, though some concerns remain surrounding the
impacts of macroeconomic headwinds on oil demand and pricing, the rig sector outlook is
positive.
Rig Demand has increased by 6% Y-O-Y: Jack Ups: +5% &
Floaters: +9%, standing at 520 units at start-June (85% utilisation). In 2023 so far,
floater demand has grown by 3% with gains concentrated in the Golden Triangle',
where 66 units are currently active (96% utilisation), up by 5 units (+8%) in the YTD and
standing 27% above start-22 levels. Meanwhile, though global jack-up deployment has
softened slightly this year (-1% in the YTD), demand in the Middle East reached a new
record level at start-June (151 units,
92% utilisation) while activity elsewhere has shown signs of
improvement in recent months.
Global Rig Deployment is likely to Strengthen Further Moving
Forward: Jack-up demand is projected to grow by 6% in the rest of 2023, as units in
the Middle East continue to commence their contracts.
Meanwhile, floater demand is expected to increase by 10% across the
rest of the year, underpinned by significant
Triangle' out to end-2023. In 2024, harsh requirements are likely
to increase considerably, supporting overall rig demand, as development drilling work
commences at recently sanctioned projects in NW Europe, and also driven by rising harsh
Deepwater exploration / appraisal activity in the Orange Basin off West Africa. Overall,
global rig demand is projected to grow by 7% this year, reaching 557 units at end-23 (90%
utilisation), before growing by a further 7% next year, reaching 595 units at end-2024
(93% utilisation, 3pp below start-14).
Rig Supply-Side limitations are likely to Persist:
Active rig supply stood at 611 units at start-June, up by 5 units (1%)
in the ytd, but still 6% below start-20 levels. The pace of supply-side growth has
continued to be limited by challenges in resolving stranded' assets as well as
constraints on reactivation activity, owing to cost inflation and supply chain disruption,
with delivery volumes also limited by issues in securing finance and increasing yard
quotes. As these factors persist, active rig supply growth is expected to remain moderate;
marketable supply is expected to grow by 2% and 3% across 2023 and 2024 respectively,
reaching 641 units at end-24 still 2% below start-20 levels.
Rig Dayrates have continued to improve in 2023 so far:
Rig Rate Index stood at 127 points at end-
May, up by 5% in the ytd, and standing 26% above the 2012-22 average
(though still 25% below start-14).
Leading edge' high-spec jack-up rates have now risen to
$160,000/day, the highest level since early-2015, whilst the average UDW floater dayrate
currently stands at $391,000/day, up by 6% in 2023 so far and 66% above start-22.
[Source: Clarksons Research]
Key Market Indicators |
|
Particulars |
Details |
Jack Up Utilisation (June '23) |
86% |
Jack Up Utilisation (Forecast
End 2023) |
90% |
High Spec Jack Up Day Rate |
US$ 125,000 / day |
[Source: Clarksons Research] |
|
Key Market Indicators |
|
Particulars |
Details |
Floater Utilisation (June '23) |
83% |
Floater Utilisation (Forecast
End 2023) |
90% |
UDW Floater Day Rate Brazil |
US$ 437,500 / day |
[Source: Clarksons Research] |
|
SUPPLY AND DEMAND UTILISATION
Supply, demand and utilisation have been rising across the three rig
segments since 2020/2021, which is expected to continue over the coming years, further
driving day rate increases.
[Source: Westwood Global Energy Group: Global Offshore Drilling Rig
Dayrate Forecast 2023-27]
D. JACKUP DAYRATES: FORECAST
Demand outlook very bright for Jackup segment as NOCs maintain laser
focus on domestic security. As global marketed utilisation continues its upward
trajectory, so too will day rates.
The 350ft> Jackup segment is forecast to see more rises in day rates
over the next half decade too, due to continued emphasis on energy security from NOCs in
areas such as the Middle East, Mexico, India and China. With marketed utilisation of this
segment already at 93.4% more supply will be needed to meet this growing demand. This
could lead to some number of new rig orders in the short-term.
It is expected that there will continue to be more of a
divergence in the low and high end of day rates in the
<349ft Jackup segment over the next few years but this gap will
tighten as this and the 350ft> market sells out, which should lead to rate increases
within this fleet.
[Source: Westwood Global Energy Group: Global Offshore Drilling Rig
Dayrate Forecast 2023-27]
E. SEMISUB DAYRATES: FORECAST
Demand increases in Norway, Australia and the Golden Triangle will
continue to drive further day rate increases, especially for those top tier units.
Standard harsh-environment semi day rates are anticipated to
increase over the coming years, but at a slower pace than the other segments due to an
expected lack of demand from the UK. However, those units traditionally used in the North
Sea have potential to be relocated to other regions where demand and day rates are higher.
That potential supply reduction could ultimately help sustain or even improve day rates in
the UK sector.
Progress will continue to be seen for day rates in the
international benign semi segment, driven mainly by higher demand from the Golden Triangle
and Southeast Asia. The quickly tightening drillship market may also result in further
operators looking to the top-tier, ultra-Deepwater semi market to meet their supply needs.
All of this will result in day rates moving higher over the forecast period.
[Source: Westwood Global Energy Group: Global Offshore Drilling Rig
Dayrate Forecast 2023-27]
F. DAYRATE FORECAST FIGURES: 2023-2027
RigLogix forecasts continued day rate increases across the board over
the next five years, as market activity carry's on ramping up.
[Source: Westwood Global Energy Group: Global Offshore Drilling Rig
Dayrate Forecast 2023-27]
G. ROAD AHEAD
Rapid economic growth is leading to greater outputs, which in turn is
increasing the demand of its core values and nurturesoil for production and
transportation. Crude oil consumption is expected to grow at a CAGR of 5.14% to 500
million tonnes by FY40 from
202.7 million tonnes in FY22. In terms of barrels, India's oil
consumption is forecast to rise from 4.05 MBPD in FY22 to 7.2 MBPD in 2030 and 9.2 MBPD in
2050. Diesel demand in India is expected to double to 163 MT by 2029-30, with diesel and
petrol covering 58% of India's oil demand by
2045. Demand is not likely to simmer down anytime soon, given strong
economic growth and rising urbanisation.
Natural Gas consumption is forecast to increase at a CAGR of 12.2% to
550 MCMPD by 2030 from 174 MCMPD in
2021.
India is planning to double its oil refining capacity to 450-500
million tonnes by 2030.
Energy demand of India is anticipated to grow faster than energy demand
of all major economies globally on the back of continuous robust economic growth.
Moreover, the country's share in global primary energy consumption is projected to
increase to two-fold by 2035.
SUBSIDIARIES & ASSOCIATES
Your Company has three direct subsidiaries and two step-down
subsidiaries. OGD Services Holdings Limited, Mauritius, Energy II Limited, Bermuda and
Essar Shipping DMCC are direct subsidiaries of the Company. OGD Services Limited,
India and Starbit Oilfields Services India Limited, India, are step
down subsidiaries of the Company.
A report on the performance and financial position of each of the
subsidiaries and associates companies as per the Companies Act, 2013 is provided as Annexure
G to this report and hence not repeated here for the sake of brevity. The Policy for
determining material subsidiaries as approved by the Board is available on Company's
website https://www.essar.com/wp-content/
uploads/2020/06/EssarShip_Material_Subsidiary_Policy.pdf
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Companies Act, 2013, SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015
("Listing Regulations") and Indian Accounting Standard
(IND-AS) - 110 on Consolidated Financial Statements read with IND-AS-28 on Accounting for
Investments in Associates, the audited Consolidated Financial Statements are provided in
the Annual Report. The audited Consolidated Financial Statements together with
Auditors' Report thereon form part of the Annual Report.
HUMAN RESOURCE
Your Company believes that employee competence and motivation are
necessary to achieve its business objectives. ESL has undertaken many training initiatives
to enhance technical and managerial competence of the employees. ESL has even undertaken a
series of initiatives to enhance emotional and intellectual engagement of employees. Your
Company has always aspired to build a culture that demonstrates world-class standards in
safety, environment and sustainability. People are Company's most valuable asset and
ESL is committed to provide all their employees, a safe and healthy work environment.
ESL's culture exemplifies creativity and diversity. ESL ensures alignment of business
goals and individual goals to enable their employees to grow on personal as well as
professional front.
1. Times of Essar : A monthly newsletter that not only gives
business and workforce updates but also received contributions from ESL employees, hosts
engagement activities ranging from fun quizzes around Independence Day, IPL, Holi, etc, to
featuring each and every achievement of our employees. The medium is used to showcase the
creative side of our employees and their families.
2. Essar Radio: Used as a key medium to communicate important
updates about the different projects that were going on at different sites. Leaders from
every location including founders took the opportunity to connect with employees,
discussing the strategies about how they aim to overcome the pandemic without hampering or
jeopardising anyone's health, shared their daily routine to motivate the employees to
stay healthy and stress-free.
3. Manpower Optimization: As we believe in working in open mind
culture, we do take care of employee's wellbeing and skill set. As an integral part
of manpower planning, the company effectively places the employees within the other
business entity and assigned them roles equivalent to their skill sets, rather than
closing their employment/contract.
4. Beach cleaning drive: On International Coastal Cleanup Day
dated September 17, 2022, employees of Essar shipping volunteered themselves towards mass
cleanliness and sanitation drive of Swachh Bharat Abhiyan' The aim was to
conduct cleanliness drive with special emphasis on Plastic Free Ocean to commemorate 75
years of
Independence. It was a drive which got awareness among the employees
towards safe & clean beaches In addition to the above mentioned initiatives,
engagement programs like Health webinars, Yoga classes, and online counselling programme
were also conducted. This transformation made it possible to scale learning efforts in a
more cost-effective way and permits greater engagement during the locked in scenarios.
Hence, initiatives like these taken during the year helped employees and their families to
stay motivated and healthy.
The Company has policies on conduct, sexual harassment of women at
workplace, whistle blower, corporate governance, insider trading etc. guiding the human
assets of the Company. For the year under review, there was no instance of the sexual
harassment reported pursuant to the Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013.
DIRECTORATE AND KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company provide entrepreneurial
leadership and plays a crucial role in providing strategic supervision, overseeing the
management performance, and long-term success of the Company while ensuring sustainable
shareholder value. Driven by its guiding principles of Corporate Governance, the
Board's actions endeavor to work in the best interest of the Company.
The Directors hold a fiduciary position, exercises independent
judgment, and plays a vital role in the oversight of the Company's affairs. Our Board
represents a tapestry of complementary skills, attributes, perspectives and includes
individuals with financial experience and a diverse background.
DIRECTORS
During the year under review there were following changes in the Board
of Directors of the Company:
1. Mr. Sunil Modak and Ms. Raji Chandrashekar: -
During the FY 2022-23, Mr. Sunil Modak and Ms. Raji Chandrashekar were
appointed in the Board Meeting held on May 30, 2022. Pursuant to SEBI (LODR) Regulation,
2015 the Company was required to convene a General
Meeting within three months from date of Board Meeting for
regularization of their appointment. However, due to some unavoidable circumstances the
Company was unable to convene its General Meeting within three months from the date of its
appointment. Hence, Mr. Sunil Modak and Ms. Raji Chandrashekar ceased to be the Director
of the Company w.e.f August 31, 2022.
Their appointments were proposed directly for the shareholder's
approval in the Annual Meeting held on September 08, 2022. Therefore, Mr. Sunil Modak and
Ms. Raji Chandrasekhar were appointed as Independent Director on the Board of the Company
by the members of the Company in the 12th Annual General Meeting held on
September 08, 2022.
2. Late. Natesan Srinivasan and Capt. Bhupinder singh: -
In the 12th Annual General Meeting held on September 08,
2022, Capt. Bhupinder singh and Late. Natesan Srinivasan retired on completion of their
tenure from the post of Independent Directors by the members of the Company. The Members
of the Company noted and recorded the appreciation for assistance and guidance provided to
the company by Late. Natesan Srinivasan and Capt. Bhupinder singh during their tenure.
Mr. Natesan Srinivasan passed away on December 16, 2022.
3. Ms. Saraswathy Subramanian and Ms. Raichel Mathew:
In the 12th Annual General Meeting held on September 08,
2022, Ms. Saraswathy Subramanian retired by Rotation from the post of Non Executive
Director (Women Director) and in place of her Ms. Raichel Mathew was appointed as a Non
Executive Director (Women Director) by the members of the Company w.e.f September
08, 2022. The Members noted and recorded the appreciation for assistance and guidance
provided to the company by Ms. Saraswathy Subramanian during her tenure.
As per Regulation 17(1)(c) of SEBI (LODR) Regulations,
2015, Board of top 2000 listed entities w.e.f. April 01, 2020 shall
comprises of at least six Directors, as such, on March 31, 2023, there were six directors
on the Board of Company with Independent Director as Chairman of the Board . The Company
has received declarations from all the
Independent Directors of the Company confirming that they meet with the
criteria of independence as prescribed under sub-Section (6) of Section 149 of the
Companies Act, 2013 and under Regulation 16 (b) (iv) of SEBI (LODR) Regulations, 2015.
Pursuant to Sections 134 and 178 of the Act and the Regulations 17 and
19 of the Listing Regulations, Nomination and Remuneration Committee (NRC') has
set the policy for performance evaluation of Independent Directors, Board, Committees and
other individual directors; separate meeting of Independent Directors; familiarization
programme for Independent Directors, etc. is provided under Corporate Governance Report
annexed with this Report and the relevant policies are also available on the website of
the Company
https://www.essar.com/wp-content/uploads/2022/06/EShipL_Policy_Familirisation-Programme.pdf
Based on the criteria set by NRC, the Board has carried out the annual evaluation of its
own performance, its committees and individual Directors for FY 2022-2023. The
questionnaires on performance evaluation were prepared in line with the Guidance Note on
Board Evaluation date January 5, 2017, issued by SEBI
The performance of the Board and Individual Directors were evaluated by
the Board seeking inputs from all the Directors. The performance of the Committees was
evaluated by the Board taking input from all the Committee members. NRC reviewed the
performance of individual Directors, separate meetings of Independent Directors were also
held to review the performance of Non-Independent Directors and performance of the Board
as the whole. Thereafter, at the board meeting, performance of the Board, its committees
and individual Directors was discussed and deliberated. Further the evaluation of the
Independent Directors was done by the entire board of directors of the Company. Their
evaluation included performance of directors and in these fulfillment regulations and
their independence from the management.
KEY MANAGERIAL PERSONNEL
In terms of section 203 of the Companies Act, 2013, As on March 31,
2023 the Key Managerial Personnel of the Company are Mr. Rajesh Desai, Executive Director,
Mr. Vipin Jain, Chief Financial Officer and Ms. Nisha Barnwal, Company Secretary &
Compliance Officer.
During the year under review, Mr. Ranjit Singh President & Chief
Executive Officer (CEO) retired from the Board and Mr. Ketan Shah, Chief Financial Officer
(CFO) tendered his resignation w.e.f September 30, 2022 due to personal reasons.
Further, in the Board meeting held on September 29, 2022 Mr.
Vipin Jain was appointed as a Chief Financial Officer (CFO) of the
Company.
BOARD MEETINGS
During the year ended March 31, 2023, eight (8) meetings of the Board
were held May 30, 2022, August 10, 2022, September 28, 2022, November 03, 2022, November
12, 2022, December 08, 2022, February 07, 2023, March 30, 2023 .
COMMITTEES OF THE BOARD
Currently the Board has 5 Committees viz. Audit Committee, Nomination
& Remuneration Committee, Stakeholders Relationship Committee, Share Transfer
Committee and Corporate Social Responsibility Committee.
A detailed note on the composition of the Board and its Committees and
other related particulars are provided in the Report of Directors on Corporate Governance
forming part of this Annual Report.
CHANGES IN SHARE CAPITAL
There was no change in the Share Capital during the year under review.
During the year under review, the Company received the request from
M/s. Arcelor Mittal Nippon Steel India Limited and M/s.
Imperial Consultants & Securities Limited for Reclassification from
Promoters category to Non-Promoters category.
Therefore, Company has filed an application with the BSE Limited
("BSE") and National Stock Exchange of India Limited ("NSE") for
Reclassification of M/s. Arcelor Mittal Nippon Steel
India Limited and M/s. Imperial Consultants & Securities Limited
from Promoters category to Non-Promoters category pursuant to SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015.
The Company has received approval for Reclassification of
M/s. Arcelor Mittal Nippon Steel India Limited from Promoters category
to Non-Promoters category on July 06, 2023 from both the Stock Exchanges.
However, the approval is still awaited from BSE and NSE for
Reclassification Limited from Promoters category to Public category.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors state that:
(a) in the preparation of the annual accounts for the year ended March
31, 2023, the applicable accounting standards had been followed and there are no material
departures from the same;
(b) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as at March 31, 2023
and of the loss of the Company for the year ended on that date;
(c) the Directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the provisions of the
Companies Act, 2013 for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern
basis. The auditors have expressed an emphasis of matter on Going Concern in their
Consolidated Audit Report relating to a step down subsidiary.
(e) the Directors, had laid down internal financial controls followed
by the Company and that such internal financial controls are adequate and were operating
effectively as endorsed by Statutory Auditor in their separate report annexed to the
Annual Report
(f) the Directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were adequate and operating
effectively.
RISK MANAGEMENT
Your Company has a Risk Management Policy that outlines the framework
and procedures to assess and mitigate the impact of risks, and to update the Board and the
senior management on a periodical basis on the risk assessed, actions taken for mitigation
and efficacy of mitigation measures. With efficient
Risk Management Framework, your Company managed:
(a) Economic Risks by entering into long term contracts with reputed
global majors in each of its divisions thereby ensuring long term profitability of the
Company and assured cash flows;
(b) Interest Rate Risk by undertaking suitable hedging strategies to
overcome any adverse interest rate risks. It has formulated internal target rates at which
any open interest rate risk can be hedged; (c) Control over the operational matrix of
various vessels to reduce cost and reduce downtime of vessels; and (d) Control over
various OPEX cost of the organization.
As per LODR, Regulation 2015, Risk Management Committee is required to
be constituted by top 1000 Companies based on market capitalisation, since your Company
does not fall in that category, the constitution of Risk Management Committee is not
required for your company. However, Company do believe and had put best efforts to
minimise/mitigate the risk.
INTERNAL CONTROL SYSTEMS AND ITS ADEQUACY
Your Company has a well-established framework of internal operational
and financial controls, including suitable monitoring procedure systems which are adequate
for the nature of its business and the size of its operations. The detailed report is
given in Corporate Governance Report. Based on the performance of the internal financial
control, work performed by internal, statutory and external consultants and reviews of
Management and the Audit Committee, the board is of the opinion that the Company's
internal financial controls were effective and adequate during the FY 2022-2023 for
ensuring the orderly efficient conduct of its business including adherence to the
Company's policies, safeguarding of its assets, the prevention and detection of fraud
and errors, the accuracy and completeness of accounting records an timely preparations of
reliable financial disclosures
CORPORATE GOVERNANCE
The Company has complied with all mandatory provisions of SEBI (LODR)
Regulations 2015, relating to Corporate
Governance. A separate report on Corporate Governance as stipulated
under the SEBI (LODR) Regulations, 2015 forms part of this Report. The requisite
certificates from the Auditors of the Company regarding compliance with the conditions of
corporate governance are attached to the report on Corporate Governance.
VIGIL MECHANISM
The Company is in compliance with Section 177 of the Companies Act,
2013 and Regulation 18 and Regulation 22 of the Listing Regulations established Vigil
Mechanism by adopting the Whistle Blower Policy', for Directors and Employees.
The Whistle Blower Policy provides for adequate safeguards against victimization of
persons who use such mechanism and have provision for direct access to the Chairperson of
the Audit Committee in appropriate cases. A copy of the Whistle Blower Policy is available
on the website of the Company https://www.
essar.com/wp-content/uploads/2018/03/ESL_Whistle_Blower_ Policy.pdf
CORPORATE SOCIAL RESPONSIBILITY
The Corporate Social Responsibility Committee comprises of the
following members:
Sr.No |
Name of Member |
Designation |
1. |
Mr. Sunil Modak* |
Chairman |
2. |
Mr. Rajesh Desai |
Member |
3. |
Ms. Raichel Mathew* |
Member |
*Mr. Sunil Modak and Ms. Raichel Mathew were appointed as member of the
Committee w.e.f September 24, 2022 owing to retirement of Capt. Bhupinder Singh and Ms.
Saraswathy Subramanian.
Since the Company has incurred losses in proceeding three financial
years, it was not required to spend on CSR Activities Further, in terms of provisions of
Section 135 read with The
Companies (Corporate Social Responsibility Policy) Rules, 2014 CSR
Report is annexed to this Report as Annexure-A
EMPLOYEE STOCK OPTION SCHEME
The Company has implemented the "Essar Shipping Employees Stock
Option Scheme-2011" ("Scheme") in accordance with the Securities and
Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme)
Guidelines, 1999 ("the SEBI Guidelines"). The Nomination and Remuneration
Committee of the Board of Directors of the Company administers and monitors the Scheme.
The applicable disclosures as stipulated under the SEBI Guidelines as at March 31, 2023
are provided in the Annexure - B to this Report. The term of scheme of Employee Stock
Option was for a period of seven years which got completed in the year 2018. As the
objective of the trust is attained, process of winding up of the ESOS trust is in process.
AUDITORS
M/s. C N K & Associates LLP, Chartered Accountants Statutory
Auditors (Registration No. 101961 W/W - 100036) were reappointed at 10th AGM of
the Company held on September 30, 2020 to hold the office up to the conclusion of 15th
AGM of the Company to be held in the year 2025.
AUDITORS' REPORT:
Further with regard to the observations made in Annexure A to the
Auditors' Report, the management explanation is as under:
1. As on 31st March 2023, the Company has accumulated losses of
Rs. 6,821.80 crore as against capital and reserves of Rs. 5,218.33 crore. The Company has
also defaulted on several loans and lenders have initiated recovery proceedings as
mentioned in Note No. 28 of the Standalone Financial Statements. The Company has disposed
off most of its assets with a view to pay off its outstanding dues to lenders / vendors.
The value of the security offered in connection with various borrowings as at 31st March
2023 is substantially lower than the amounts outstanding to the lenders. The
Company's current liabilities exceeds its current assets as on 31 March, 2023
The company has monetized its assets in the past and settled most of
lenders in the also. The Company is still in process of settling the remaining lenders and
management is hopeful of the same. The Company also trying to manage deficit between
current assets and liabilities. open 2. The Company has certain significant legal proceedings
including under arbitration for various matters with the Lenders & Customers,
continuing from earlier years
The company is contesting all the open legal matters. During FY 2023,
three number of legal cases were settled / withdrawn.
3. Note No. 9(A) of the Standalone statements relating to
recognition of gain on settlement with one of the banks.
Standby Letter of Credit (SBLC) issued by the Company with the said
bank for Rs.303.37 crore in earlier years to secure a loan availed by a subsidiary, were
invoked in an earlier year. In the preceding year, the Company had settled the loan with
the said bank and paid the dues through monetisation of assets. Pending outstanding bank
guarantee, no due certificate'not been received from the said bank.
The Company does not expect any additional liability to devolve in this regard.
During the year, the Company has accounted for the gain of Rs. 340.80
Crore on One Time Settlement and included the same under Exceptional Items
The Company had done the payment as per the settlement agreement signed
by all the concerned parties and as per the view of the management, only contingent no
liability persists.
4. Note No. 6(C) of the Standalone Financial Statements relating
to recognition of revenue amounting to
Rs. 369.81 crore (including accrued interest up to 31st March 2018) in
the financial year 2017-18 based on compensation granted to the Company in the arbitration
proceedings for breach of contract terms by a charterer of which Rs. 305.81 crore remains
outstanding receivable as on 31st March 2023. The
Company is confident of full recovery of its claims. However, pending
conclusion of the said proceedings, no interest is accrued on the same for the period 1st
April 2018 till 31st March 2023
The Company is pursuing matter legally in the High Court and we will
recognize the balance interest income, if any once the matter gets settled in the court.
During FY 2022
, ESL drew Rs 64 cr against the SAIL arbitration award proceeds from
the Delhi High Court by submitted a bank guarantee from its lenders.
5. Note No.6 (B) and 11 of the Standalone Financial Statements,
relating to netting off of Rs. 331.26 Crore payable to a wholly owned overseas subsidiary
with the amount receivable from the said subsidiary. This is subject to pending
application and approval from the regulatory authorities
The Company have receivables from the subsidiary company and payable to
same subsidiary company, for presentation purpose same has been shown as net-off in
financials due to pending approval from regulatory authorities. Once we will get the
approval for set-off, net amount will be shown as receivables from the subsidiary company.
6. In an earlier year, loan of Rs. 25 Crore taken by the Company
from an Alternate Investment Fund (AIF) was assigned to Environ Energy Corporation India
Private
Limited (EECIPL). The NCLT vide its order dated 19th May, 2021 has
ordered EECIPL to be liquidated in terms of Section 33(2) of IBC Code, 2016. The Company
does not expect any claim from the liquidator and hence, during the year, the Company has
written back Rs. 35.41 Crore (Comprising principal of Rs. 25 Crore and interest of Rs.
10.41 crore) and included the same under Exceptional Items
In an earlier year, loan of Rs. 25 Crore taken by the
Company from an Alternate Investment Fund (AIF) was assigned to another
entity. The entity was referred to CIRP vide order dated March 16, 2020 from NCLT, Mumbai.
The liquidator appointed pursuant to this order, did not raise any claim or demanded funds
from the company The NCLT vide its order dated 19th May, 2021 has ordered the entity to be
liquidated in terms of Section 33(2) of IBC Code, 2016. The Company does not expect any
claim from the liquidator and hence, during the year, the Company has written back the
amount payable to lender along with interest and included the same under Exceptional
Items.
7. Borrowings from various lenders are subject to confirmation/
reconciliation
The company's account was categorized as substandard during FY
2019-2020 and pursuant to RBI Master Circular
DCBR.BPD. (PCB) MC No.12/09.14.000/2015-16 dated July 1, 2015 and
November 01, 2017, the bank does not accrue any interest on such loan it has granted.
Accordingly, no lender's confirmation was sought / received.
8. We draw attention to our observations in paragraph 4 above
whereby, in spite of several factors mentioned therein, the results are prepared on
"Going Concern" basis; in case of a subsidiary, the respective auditors have
pointed out that the concerned financial statements I results have been prepared on going
concern basis, in view of the representation by the management that the Company has a
positive net worth and management has plans to restart the operating activities in the
near future.
The company has commenced providing consultancy services to related
parties in the offshore drilling sector. It will continue to explore opportunities in the
shipping and oilfields sector.
9. Note No. 9 of the Consolidated Financial Results relating to
recognition of revenue amounting to Rs.
369.81 crore (including accrued interest up to 31st March 2018) in the
financial year 2017-18 based on compensation granted to the Holding Company in the
arbitration proceedings for breach of contract terms by a charterer of which Rs. 305.81
crore remains outstanding receivable as on 31st March 2023. As informed to us, the Holding
Company is confident of full recovery of its claim. However, pending conclusion of the
said proceedings, no interest is accrued on the same for the period 1st April2018 till 31st
March 2023.
Explained vide note number 4 above
10. Note No.7 of the Standalone Financial Results relating to
recognition of gain on settlement with one of the banks. Standby Letter of Credit (SBLC)
issued by the
Company with the said bank for Rs.303.37 crore in earlier years to
secure a loan availed by a subsidiary, were invoked in an earlier year. In the preceding
year, the Company had settled the loan with the said bank and paid the dues through
monetisation of assets. Pending certificate' outstandingbankguarantee,nodue has
not been received from the said bank. The Company does not expect any additional
liability to devolve in this regard. During the year, the Company has accounted for the
gain of Rs. 340.80 Crore on One Time Settlement and included the same under Exceptional
Items
Explained vide note number 3 above
11. Attention is drawn to netting off of Rs. 331.26 Crore payable to a
wholly owned overseas subsidiary with the amount receivable from the said subsidiary. This
is subject to pending application and approval from the regulatory authorities
Explained vide note number 5 above
12. In case of the Holding Company and two subsidiaries,
borrowings
from various lenders are subject to confirmation /
In case of the Holding Company and subsidiaries, the account was
categorized as substandard during the bank does not accrue any interest on such loan it
has granted.
Accordingly, no lender's confirmation was sought / received.
13. The Financial Result of one subsidiary (which has been
admitted
to NCLT and undergoing CIRP Process) have not been consolidated.
During the year, one of Indian sub-subsidiary got admitted to Corporate
Insolvency Resolution Process (CIRP) and management of the company took over by Resolution
Professional and hence the said subsidiary not considered for consolidation purpose.
INTERNAL AUDITOR AND THEIR REPORT
The Board has appointed M/s. DMKH & Co, Chartered Accountants, as
Internal Auditor of the Company to conduct
Internal Audit for the financial year 2022-2023. During the year under
review M/s. DMKH & Co, Chartered Accountants, Internal Auditor has submitted their
Report for the said quarters/period to the Audit Committee for its review and necessary
action.
SECRETARIAL AUDIT
The Board has appointed M/s. Martinho Ferrao & Associates,
Practising Company Secretaries, to conduct Secretarial Audit for the financial year
2022-2023. The Company has received no observations in Secretarial Auditors' Report
for FY 2022-2023.
The Secretarial Audit Report for the financial year ended March
31, 2023 is annexed herewith marked as Annexure - C to this Report.
Further for FY 2023-24, the Board of Directors has appointed M/s.
Mayank Arora & Co., Company Secretaries as the Secretarial Auditor of the Company.
SECRETARIAL STANDARDS OF ICSI
The Directors state that proper systems have been devised to ensure
compliance with the applicable laws. Pursuant to the provisions of Section 118 of the Act,
2013 during FY 2023, the Company has adhered with the applicable provisions of the
Secretarial Standards ("SS-1" and "SS-2") relating to Meetings
of the Board of Directors' and General Meetings' issued by the
Institute of Company Secretaries of India ("ICSI") and
notified by MCA.
APPOINTMENT AND REMUNERATION POLICY FOR DIRECTORS AND SENIOR MANAGEMENT
The Board of Directors on recommendation of the Nomination &
RemunerationCommitteehasadoptedapolicyforappointmentof Directors, remuneration of
Directors, Key Managerial Personnel and other employees. The brief details on the above
are provided in Corporate Governance Report and the policy is available on the website of
the Company https://www.essar.com/wp-content/
uploads/2017/10/ESL_Directors_appointment_policy.pdf. The details of remuneration as
required to be disclosed pursuant to the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014 are annexed as Annexure - D to this Report.
PARTICULARS OF EMPLOYEES
In terms of the provisions of Section 197(12) of the Companies
Act, 2013 read with Rules 5(2) and 5(3) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, a
statement showing the names and other particulars of the employees drawing remuneration in
excess of the limits set out in the said rules together with disclosures pertaining to
remuneration and other details as required under Section 197(12) of the Companies Act,
2013 read with
Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014 are provided in the Annexure - E to this Report.
CONTRACTS AND ARRANGEMENTS WITH RELATED
PARTIES
All contracts / arrangements / transactions entered by the
Company during the financial year with related parties were in the
ordinary course of business and on an arm's length basis. The Policy on materiality
of related party transactions and dealing with related party transactions as approved by
the Board may be accessed on the Company's website https://
www.essar.com/wp-content/uploads/2022/06/EShipL_Policy_ Related-Party-Transactions.pdf.
The information on each of the transactions with the related party as per the Companies
Act, 2013 is provided in note 27 of notes forming part of the financial statement and
hence not repeated. The disclosure required pursuant to clause (h) of sub-Section (3) of
Section 134 of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules,
2014 in Form AOC-2 is annexed herewith as Annexure - F to this Report.
WEBLINK OF ANNUAL RETURN
The Annual Return of the Company as on 31st March, 2023 in Form MGT - 7
in accordance with Section 92(3) of the Act read with the Companies (Management and
Administration) Rules, 2014, is available on the website of the Company at https://
www.essar.com/investors/essar-shipping-limited/annual-return-mgt-7/.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Particulars of Loans, Guarantees and Investments covered under the
provisions of Section 186 of the Companies Act, 2013 are given in the notes to the
financial statements.
TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND
PROTECTION FUND
In accordance with the provisions of the Act and IEPF Rules, as amended
from time to time, the Company is required to transfer the following to IEPF:
1. Dividend amount that remains unpaid/unclaimed for a period of seven
(07) years; and
2. Shares on which the dividend has not been paid/claimed for seven
(07) consecutive years or more.
Additionally, pursuant to Rule 3(3) of IEPF Rules, in case of term
deposits of companies, due unpaid or unclaimed interest shall be transferred to the Fund
along with the transfer of the matured amount of such term deposits.
As on date, there are no unpaid and unclaimed amounts to be transferred
to the investor education and protection fund.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
Vide order dated 05.07.2023, NCLT ordered dismissing the application
filed by IL&FS Financial Services Ltd under Section
7 of the Insolvency and Bankruptcy Code, 2016 for initiation of
Corporate Insolvency Resolution Process (CIRP) proceedings.
The petition has also been withdrawn. ILFS which had filed a Summary
Suit in Bombay High Court in light of the Settlement reached between the parties (i.e.
ILFS & ESL) ILFS advocates appeared and stated that they are withdrawing the
Suit. Vide order dated August 10, 2023 Order was passed and the Suit is dismissed as
withdrawn.
The Insolvency Petition was filed by Corporate Creditor of OGD Services
Limited (OGD), a step down Subsidiary of ESL. The Company (OGD) is admitted under the
Corporate Insolvency Resolution Process ("CIRP") by Hon'ble National
Company Law Tribunal ("NCLT"), Mumbai Bench by Order dated February 09, 2023.
The Company has received Notice from Registrar of Companies, Ahmedabad
(herein referred as "ROC") dated April 11, 2023 for Adjudication of penalty
under Section 454 of Companies Act, 2013 under u/s 297 of the Companies Act, 2013.
Further, the Company has paid an amount of Rs. 5,00,000/- to ROC as the penalty was
imposed on the Company and Rs. 1,00,000/- each was paid by Mr. Ranjit Singh and Mr. Rahul
Bhargav who were Directors of the Company.L&T had filed ( the Guarantor) arising out
of certain financial facilities granted to OGD ( the Borrower) Subsequently this debt was
assigned to Phoenix ARC who filed a substitution application in these proceedings. The ARC
, ESL and OGD came to settle the subject debts. Pursuant to payment of the entire
settlement amount the to ESL ARC, as L&T's assignee, issued the No Dues
Certificate and withdrew the aforementioned Petition.
The settlement reached between the Parties i.e. Life Insurance
Corporation (LIC') and ESL consent terms were filed in Bombay High Court and
the court accepted the consent terms filedby the parties and passed the Order and the Suit
was accordingly disposed of.
During the year, the Income Tax Appeallate Tribunal (ITAT) has passed
orders in favour of the company for four assessment year.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING
AND OUTGO Conservation of energy and Technology absorption
Your Company is committed for continual environmental improvement. The
Company has taken several initiatives towards conservation of energy. The Company
initiated the process of monitoring carbon emissions as per IMO GHG Guidelines and also
explored opportunities to improve energy efficiency onboard the ships. Due to the nature
of the business (transportation), fuel and lubricants are necessary to deliver the
services.
Following are few steps taken towards conservation of energy and use of
alternate source of energy:
Ship Energy Efficient Management Plan (SEEMP): In line with current
guidelines that have been established by IMO, this plan has been implemented all across
fleet and monitoring of the data on regular basis prompts to take appropriate corrective
measures on a timely basis. Onboard performance monitoring systems will give a holistic
approach to ship operations with the aim of reducing fuel consumption and emissions while
achieving optimum vessel performance. The Company have already completed energy efficiency
evaluation on our assets and are now in the process of implementing fuel efficiency
measures. These include trim, speed reduction and weather routing. These fuel efficiency
measures will not only reduce energy consumption but also benefit customers through lower
fuel cost, where applicable.
Alternate source of energy: In order to reduce fuel consumption, the
Company's vessels utilize shore power during repair lay-up period and thereby reduce
carbon foot print. Periodical cleaning of ship's hull and propellers apart from
routine dry-docking of floating assets is another step which has been taken towards
conservation of energy with insignificant investment or expenses.
Technology Absorption
The Company has successfully implemented SAP in its financial and
budget management systems. The Company has also now implemented various methods of
automation so as to have greater visibility and control over its assets and further
improve the turnaround time thereby increasing asset utilisation and profitability.
Planned maintenance and purchase management system of all the vessels are now being
integrated with SAP in order to have uniform platform. The Company has implemented a
robust Document Management System thus improving the availability of critical information
in e-mode thereby reducing the use of paper. Ship-staff payroll system has been developed
and implemented successfully.
In-house developed software EIS system has now been upgraded to monitor
all the above energy conservation measures and is now available online. Various energy and
cargo related data are available in e-mode and helps in close monitoring and control of
energy conservation related matters. Due to in-house developed software, your Company has
not only saved on investment towards purchase of third party software but also reduced
dependency on third party service provide.
Foreign Exchange Earnings and Outgo
The details of Foreign Exchange Earnings and Outgo during the year are
as follows: Foreign Exchanged Earned (including loan receipts, sale of ships, freight,
charter hire earnings, interest income, etc.): Rs. 1.87 cr Foreign Exchanged Used
(including cost of acquisition of ships, loan repayments, interest, operating expenses,
etc.): Rs. 1.77 cr
PUBLIC DEPOSITS
During the year under review, your Company neither accepted any
deposits nor there were any amounts outstanding at the beginning of the year which were
classified as Deposits' in terms of Section 73 of the Companies Act, 2013 read
with the Companies (Acceptance of Deposit) Rules, 2014 and hence the requirement for
furnishing of details of deposits which are not in compliance with the Chapter V of the
Companies Act, 2013 is not applicable.
PREVENTION OF SEXUAL HARASSMENT
The Company has zero tolerance for sexual harassment at workplace and
has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at
Workplace in line with the provisions of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder for
prevention and redressal of complaints of sexual harassment at workplace. Disclosures in
relation to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013 have been provided in the Report on Corporate Governance.
LISTING FEES
The listing fees payable for the financial year 2023-2024 is paid to
BSE Limited and National Stock Exchange of India Limited within due date.
APPRECIATION AND ACKNOWLEDGEMENTS
Your Directors express their appreciation of commendable teamwork of
all employees. Your Directors express their thanks to all the offices of the Ministry of
Shipping, Directorate General of Shipping, Ministry of Petroleum and Natural Gas, Indian
Navy, Indian Coast Guard, Mercantile Marine Department, State Government and Central
Government, Classification societies, Oil Companies and Charterers, creditors, Banks and
Financial Institutions for the valuable support, help and co-operation extended by them to
the Company.
Your Directors also thanks its other business associates, including the
Members of the Company for their continued cooperation and support extended towards the
Company.
For and on behalf of the Board
Rajesh Desai |
|
Director |
Suresh Ramamirtham Chairman |
DIN: 08848625 |
DIN: 09299459 |
August 08, 2023 |
|
Mumbai |
|