Mar 31, 2014
Dear Members,
The Directors have pleasure in presenting the Forty-second Annual
Report together with the audited statements of account of the Company
for the 18 months period ended 31st March, 2014.
(Figures in millions of Rupees)
18 months 18 months
period ended period ended
31.03.2014 30.09.2012
PROFIT/LOSS BEFORE TAX (4,890.77) 377.27
Less: Provision for Taxation
Current Tax - 17.50
Short/(Excess) provision of
Income-Tax for
prior years written back 8.59 (23.88)
PROFIT/LOSS AFTER TAX (4,899.96) 383.65
Add: Surplus brought forward from 1,239.40 942.92
previous year
Amount available for appropriation (3,659.96) 1326.57
In view of losses incurred by the Company, your Directors are unable to
recommend any Dividend for Financial year under review
Freight and charter hire income for the 18 months period ended 31st
March, 2014 was Rs.1753.15 million compared to Rs. 4655.02 million for
the 18 months period ended 30th September, 2012. Profit before tax was
Rs.(4890.77) million for the 18 months period ended 31st March, 2014 as
against Rs. 377.27 million during the 18 months period ended 30th
September, 2012. Net profit after tax was Rs. 4899.36 million for the
18 months period ended 31st March, 2014 as against Rs.383.65 million
during the 18 months period ended 30th September, 2012.
With a view to realign businesses and increase focus on individual
growth strategies of each business, the Company together with other
companies has proposed to rearrange its businesses by segregating its
traditional Shipping Business, Ship Management (technical and
commercial management) & Shipping Investment Business (presently
confined to holding investment in group companies) into separate
entities through a Composite Scheme of Arrangement and Amalgamation
("the Scheme") under the provisions of the Companies Act, 1956 to
primarily pursue their individual growth strategies, thereby resulting
in enhancement of business prospects and shareholder's value. The
company has received approval of Hon'ble Bombay High Court for the said
Scheme.
During the period under review, the company invested in the following
wholly owned subsidiary companies:
Varun Global Private Limited and acquired 400,000 equity shares of Re.1
each. The existing subsidiary companies namely Varun Resources Pvt Ltd
and Varun Global Pvt Ltd, were converted into public limited companies
during the period under review.
Further, during the period under review your Company had invested in
redeemable preference shares of Varun Asia Pte. Ltd., Singapore and
Varun Cyprus Ltd, Cyprus. The details of investment made are mentioned
in the attached financial statements.
Effect of 'Global Crisis' to Shipping industry
Due to the global recession in shipping industry there was a downturn
in the shipping business of your Company. This has led to lower
capacity utilization and has adversely affected the operations of the
Company. A combination of these factors has affected the liquidity of
the Company and thereby facing problems in servicing the debt in timely
manner. Further to this, the vessels are due for drydocking as it is
mandatory requirement to drydock the vessels every two and half years.
And hence are non operational till past more than a year resulting to a
steep fall in the total operating income. Despite the loss of revenues,
the Company was incurring fixed operating costs, including settlement
of unpaid crew wages and seafarers repatriation. These fixed operating
expenses in the form of employee cost, bunker cost and other fixed
costs resulted to severe liquidity crisis to the Company and increase
in the outstaying debts. Therefore in order for the Company to survive
it was imperative to find the solution to service these huge debts.
Further, the survival of the Company and resulting companies as result
of the proposed demerger and merger, is very crucial as the
shareholders of the Company will be receiving the shares of the
resulting companies in exchange of their existing shareholding in the
Company. If the Company is not revived then the shareholding value of
the current shareholders of the Company will be completely eroded.
Therefore, with a view to revive the shipping business of the Company
and the resulting Company namely Varun Resources Limited (VRL) and to
enable VRL to survive, the Promoters (being the Yudhishthir D Khatau
group) and the management together with our bankers (led by the State
Bank of India) have decided to restructure the debts under the
"Framework for Revitalising Distressed Assets in the Economy -
Guidelines on Joint Lenders' Forum (JLF) and Corrective Action Plan
(CAP)" issued by the Reserve Bank of India is vide its circular dated
February 26, 2014, bearing number RBI/2013-14/503DBOD.BP.BC.No.97/
21.04.132/2013-14, (hereinafter referred to as the "JLF Mechanism").
The various Joint Lenders Meetings held since 11.04.2014 based on the
guidelines and RBI circulars on "Early Recognition of Financial
Distress, Prompt, steps for Resolution and Fair Recovery for Lenders"
under which the Reserve Bank of India has formulated the JLF Mechanism.
The Joint Lenders Forum had decided to restructure the existing loan
facilities and to provide incremental funding to the Company for
revival of the business. The Bankers had appointed PwC, an independent
agency to do Technical Evaluation Study to examine the viability of the
business. Based on their viability report, forensic report and the
subsequent clearance from Independent Evaluation Committee, it will be
agreed by the joint lenders to restructure the account under JLF
mechanism.
(i) Social Responsibility:
As a socially responsible corporate citizen, the company continues to
support a wide spectrum of community initiatives through NGOs as well
as programmes for health, education and environment.
As required under Section 217(2AA) of the Companies Act, 1956, your
Directors confirm to the best of their knowledge and belief that:
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed;
ii) the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company at the end of the financial year and of the profit or
loss of the company for that period;
iii) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of the
company and for preventing and detecting fraud and other irregularities;
and
iv) the Directors have prepared the annual accounts on a going concern
basis.
As required by the Listing Agreement with Stock Exchanges on which
shares of the company are listed, a Report on Corporate Governance of
the Company regarding compliance with Corporate Governance is attached
to this report.
During the period Dr. A.K.Bhattacharya, Mr. C.M. Maniar and Mr.
Khurshed M Thanawalla resigned from the directorship of the Company.
After the last Annual General Meeting, Ms. Armin Pardiwala was
appointed as additional director. In terms of the provisions of the
Companies Act she holds office until the date of the ensuing Annual
General Meeting. Her appointment as ordinary Director of the Company is
placed before the Members for consideration. The Board recommends the
resolution for adoption by the members
Mr.Praveen Singh retires by rotation and being eligible, offer himself
for re- appointment. Separate resolution is being proposed for his
re-appointments.
You are requested to appoint Auditors of the company and fix their
remuneration. The retiring Auditors Messrs. Sorab S. Engineer & Co.
being eligible, offer themselves for re-appointment.
As required by Section 217(2A) of the Companies Act, 1956, read with
Companies (Particulars of Employees) Rules, 1975, as amended, the names
and other particulars of the employees are set out in the Annexure to
the Directors' Report. However, as per the provisions of Section
219(1)(b)(iv) of the Companies Act, 1956, the Report and the Accounts
are being sent to all shareholders of the company excluding the
aforesaid information. Any shareholder interested in obtaining such
particulars may write to the Secretarial Department at the registered
office of the Company.
Your Directors express their thanks to all the officers of the Ministry
of Shipping, Directorate General of Shipping, Ministry of Petroleum and
Natural Gas, Indian Navy, Indian Coast Guard, Mercantile Marine
Department, Class, oil companies and charterers for the valuable help
and co-operation extended by them to the Company. Your Directors also
thank the banks for their continued support to the Company. Your
Directors also thank the shareholders of the Company for their
sustained confidence reposed in the Company and its management. Last
but not the least, your Directors express their deep appreciation for
the sincere and hard work put in by the floating as well as the shore
based officers and staff of the Company.
On behalf of the Board of Directors
YUDHISHTHIR D. KHATAU
Chairman and Managing Director
Mumbai, 30th May 2014
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting the Fortieth Annual Report
together with the audited statements of account of the Company for the
year ended 31st March, 2011.
(Figures in millions of Rupees)
Current Year Previous Year
ended ended
31.03.2011 31.03.2010
PROFIT BEFORE TAX 168.22 538.86
Less: Provision for Taxation
Current Tax 33.52 413.58
Excess provision of Income-Tax for
prior years written back (12.78)
Fringe Benefit Tax - (0.25)
PROFIT AFTER TAX 147.48 125.53
Add : Surplus brought forward from
previous year 934.92 949.33
Amount available for appropriation 1082.40 1,074.86
Your Directors have recommended payment of dividend of Rs.0.80 per
equity share for the year ended 31 st March, 2011, which will absorb
Rs.120.01 million. Additional amount of Rs.19.47 million will be
absorbed towards dividend tax. After the above appropriations, your
Directors propose to carry forward a balance of Rs.942.92 million in
the Profit and Loss Account.
Freight and charter hire income was Rs.4,914.27 million compared to Rs.
6,662.23 million for the year ended 31st March, 2010. Profit before tax
was Rs.168.22 million for the year ended 31st March, 2011 as against
Rs. 538.86 million during the preceding year. Net profit after tax was
Rs.147.48 million for the year ended 31st March, 2011 as against
Rs.125.53 million during the preceding year.
In order to reduce the incidence of tax, the Company has decided to opt
out of tonnage tax system with effect from assessment year 2011-2012
(corresponding financial year 2010-2011) and be assessed under normal
income tax.
During the financial year under review, the Company set up and invested
in the following joint venture companies in Singapore and Cyprus :
i) Varun Asia Pte. Ltd. in Singapore and acquired 19,600 shares
aggregating USD 19,600, which forms 49 per cent of the paid up capital
of the joint venture company.
ii) Ocean Race Shipping Company Limited in Cyprus and acquired 490
shares aggregating Euro 490, which forms 49 per cent of the paid up
capital of the joint venture company.
iii) Varun Cyprus Limited in Cyprus and acquired 490 shares aggregating
USD 490, which forms 49 per cent of the paid up capital of the joint
venture company.
iv) Sea Fidelity Shipping Company Limited in Cyprus and acquired 490
shares aggregating Euro 490, which forms 49 per cent of the paid up
capital of the joint venture company.
In addition to the above, in April, 2011 the Company also promoted and
established a new Company in India, namely Varun Gas Infrastructure
Limited. The Company will be initially acquiring 999,994 equity shares
of Rs.10 each aggregating Rs.9,999,940, which forms 100 per cent of the
paid up capital of the newly formed company thereby making it Company's
subsidiary.
During the financial year ended 31st March, 2011 Company sold Maharshi
Shubhatreya to its associate company Tarun Shipping and Industries
Limited and has thereafter taken the said vessel on bareboat charter.
During the financial year ended 31st March, 2011 the Company sold two
of its crude oil tankers, namely Amba Bhakti and Amba Bhavanee to its
joint venture company, namely Varun Asia Pte. Ltd., Singapore, on
bareboat charter cum demise basis. During the financial year ended 31st
March, 2011 the company sold two of its AHTS vessels, namely Subhiksha
and Sudaksha on bareboat charter cum demise basis to its joint venture
company, namely Varun Cyprus Limited, Cyprus.
The Company presently owns and/or operates a well diversified fleet of
21 vessels. The LPG carrier fleet presently owned by the company is the
largest in India in terms of both fleet size and cargo carrying
capacity
In November, 2010 the Company received "The Safety at Sea Award" at the
Lloyd's List Middle East & Indian Sub-continent Awards-2010 ceremony,
held at Dubai.
In September, 2010 Mr. Yudhishthir D. Khatau, Vice Chairman & Managing
Director received "Young Entrepreneur of the Year" award at the All
India Maritime and Logistics Awards 2010 ceremony, held at Mumbai.
In October, 2010 Mr. Arun Mehta, Chairman & Managing Director received
"Lifetime Achievement Award" at the Lloyds' List Asia Awards- 2010
ceremony, held at Singapore.
(i) Social Responsibility:
As a socially responsible corporate citizen, the company continues to
support a wide spectrum of community initiatives through NGOs as well
as programmes for health, education and environment.
Total foreign exchange earned and saved including deemed earnings of
the company for the year ended 31st March, 2011 was Rs. 4,858.77
million and the foreign exchange used was Rs. 6,211.70 million.
As required under Section 217(2AA) of the Companies Act, 1956, your
Directors confirm to the best of their knowledge and belief that:
i) in the preparation of the annual accounts, the applicable accounting
standards have been followed;
ii) the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the company at the end of the financial year and of the profit or
loss of the company for that period;
iii) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 for safeguarding the assets of
the company and for preventing and detecting fraud and other
irregularities; and
iv) the Directors have prepared the annual accounts on a going concern
basis.
As required by the Listing Agreement with Stock Exchanges on which
shares of the company are listed, a Report on Corporate Governance
together with the certificate from the Auditors of the Company
regarding compliance with Corporate Governance is attached to this
report.
Mr.Charles Cayzer resigned as a Director of the Company with effect
from 27th August, 2010. The Board places on record its deep
appreciation of the advice and guidance given by Mr. Cayzer during his
tenure as a Director of the Company.
Mr.C.M. Maniar and Dr. A. K. Bhattacharya retire by rotation and being
eligible, offer themselves for re- appointment. Separate resolutions
are being proposed for their respective re-appointments.
You are requested to appoint Auditors of the company and fix their
remuneration. The retiring Auditors Messrs. Sorab S. Engineer & Co.
being eligible, offer themselves for re-appointment.
The Company had sought approval of Central Government for waiver of
excess remuneration paid to Mr.Arun Mehta and Mr.Yudhishthir D. Khatau
as approved by the shareholders for the financial year ended 31 st
March, 201 0 as mentioned in the previous year's Directors' Report,
which approval has since been received.
As required by Section 21 7(2A) of the Companies Act, 1 956, read with
Companies (Particulars of Employees) Rules, 1 975, as amended, the
names and other particulars of the employees are set out in the
Annexure to the Directors' Report. However, as per the provisions of
Section 21 9(1 )(b)(iv) of the Companies Act, 1 956, the Report and the
Accounts are being sent to all shareholders of the company excluding
the aforesaid information. Any shareholder interested in obtaining such
particulars may write to the Vice President - Corporate Affairs,
Secretarial & Legal and Company Secretary at the registered office of
the Company.
Your Directors express their thanks to all the officers of the Ministry
of Shipping, Directorate General of Shipping, Ministry of Petroleum and
Natural Gas, oil companies and charterers for the valuable help and
co-operation extended by them to the company. Your Directors also thank
the banks for their continued support to the company. Your Directors
also thank the shareholders of the Company for their sustained
confidence reposed in the company and its management. Last but not the
least, your Directors express their deep appreciation for the sincere
and hard work put in by the floating as well as the shore based
officers and staff of the Company.
On behalf of the Board of Directors
ARUN MEHTA
Chairman and Managing Director
Mumbai, May 26, 2011
Mar 31, 2010
The Directors have pleasure in presenting the Thirty-ninth Annual
Report together with the audited statements of account of the Company
for the year ended 31 st March, 2010.
(Figures in millions of Rupees)
Current Year Previous Year
ended ended
31.03.2010 31.03.2009
PROFIT BEFORE TAX 538.86 1,271.15
Less: Provision for Taxation
Current Tax 413.58 34.60
Fringe Benefit Tax (0.25) 8.50
PROFIT AFTER TAX 125.53 1,228.05
Less: Transferred to Tonnage Tax Reserve
under Section 11 5VT - 200.00
of the Income-tax Act, 1961
Add : Surplus brought forward from
previous year 949.33 921.63
Amount available for appropriation 1,074.86 1,949.68
Your Directors have recommended payment of dividend of Rs. 0.80 per
equity share for the year ended 31st March, 2010, which will absorb
Rs.1 20.01 million. Additional amount of Rs. 1 9.93 million will be
absorbed towards dividend tax. After the above appropriations, your
Directors propose to carry forward a balance of Rs. 934.92 million in
the Profit and Loss Account.
Freight and charter hire income was Rs. 6,662.23 million compared to
Rs. 9,146.59 million for the year ended 31 st March, 2009. Profit
before tax was Rs. 538.86 million for the year ended 31st March, 201 0
as against Rs. 1,271 .1 5 million during the preceding year. Net profit
after tax was Rs. 125.53 million for the year ended 31st March, 2010 as
against Rs.1,228.05 million during the preceding year.
During the financial year under review, the Company subscribed to and
was allotted additional 6,376,750 ordinary shares of S$ 1 each of VSC
International Pte Ltd, Singapore (VSCI) when it was a wholly owned
subsidiary of the Company.
VSCI, the erstwhile wholly owned subsidiary of the Company has become
an associate in March, 2010 consequent upon the sale of 51 per cent of
the paid-up share capital held in it by the Company. The Company
continues to hold 49 per cent of the paid-up share capital of VSCI.
During the financial year ended 31st March, 2010, Company acquired one
newly built, large modern and sophisticated Anchor Handling Towing and
Supply CAHTS) vessel, Suchandra in April, 2009.
During the financial year ended 31st March, 2010, Company sold five of
its vessels, namely, Maharshi Shivatreya, Maharshi Labhatreya, Maharshi
Dattatreya, Maharshi Bhavatreya and Maharshi Devatreya to
the associate Company, out of which three vessels have been taken back
on Bareboat Charter (BBC) and/ or Bareboat Charter cum Demise (BBCD)
basis. The Company also phased out its 1976 built gas carrier, namely,
Maharshi Vasishth during the financial year under review.
The Company presently owns and/or operates a well diversified fleet of
20 vessels. The LPG carrier fleet presently owned by the Company is the
largest in India in terms of both fleet size and cargo carrying
capacity of 187,978 dwt (248,638 cbm) and forms approximately 78 per
cent of total LPG tonnage under Indian flag. The Company has
transported approximately 63 per cent of all LPG cargoes imported into
the country by public sector undertakings marketing LPG in India during
the year ended 31 st March, 2010.
In October, 2009 the Company received "The Tanker Operator Award" at
the Seatrade Middle East & Indian Subcontinent. Awards 2009 ceremony
held at Dubai.
In October, 2009 the Company received "Training and Crewing Award" at
the 1 1 th Lloyds List Asia Awards 2009 ceremony held at Singapore.
In November, 2009 tho Company received "The Energy Award" at the Llyods
List Middle East & Indian Subcontinent Awards-2009 ceremony held at
Dubai.
In June, 2009, Mr. Yudhishthir D. Khatau, Vice Chairman & Managing
Director was elected as "President Designate" of the Baltic and
International Maritime Council (BIMCO).
In March, 2010 Mr. Yudhishthir D. Khatau, Vice Chairman & Managing
Director received "Young Entrepreneur of the Year" award at the
Shipping, Marine & Ports 201 O Leadership & Excellence Awards ceremony
held at Mumbai.
Your Directors express their thanks to all the officers of the Ministry
of Shipping, Directorate General of Shipping, Ministry of Petroleum and
Natural Gas and oil companies for the valuable help and co-operation
extended by them to the Company. Your Directors also thank the banks
for their continued support to the Company. Your Directors also thank
the shareholders of the Company for their sustained confidence reposed
in the Company and its management. Last but not the least, your
Directors express their deep appreciation for the sincere and hard work
put in by the floating as well as the shore based officers and staff of
the Company.
On behalf of the Board of Directors
ARUN MEHTA
Chairman and Managing Director
Mumbai, May 21, 2010
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