To the Members,
The Directors have pleasure in presenting the 61st Annual Report on
the working of your Company for the financial year ended 31st March
2011.
Accounting Year
The year under report covers a period of 12 months ended on 31st March
2011. Financial Performance
The Comparative position of the working results for the year ended
vis-à-vis earlier year is as under:
(Rs. Crores)
2010-2011 2009 -2010
Gross Earnings 4020 3896
Gross Profit (before
interest, depreciation,
items relating to earlier
years, exceptional
items & tax) 1156 849
Less: Interest 64 53
Depreciation 465 529 380 433
Profit before items relating
to earlier years, exceptional
items & tax 627 416
Prior year''s adjustments 30 (6)
Excess Provision / sundry credit
balances written back 0 66
Profit before Exceptional
items & tax 657 476
Exceptional items -
Provision for Indian Taxation (89) (99)
Net Profit 568 377
Appropriations
The working results of your Company for the year 2010-2011 after
considering prior period adjustments show a profit of Rs. 567.35 crores.
An amount of Rs. 114 crores has been transferred to Tonnage Tax Reserve
u/s 115VT of Income Tax Act. After adding a sum of Rs. 516.63 crores
(being balance profit and loss account brought forward from the
previous year), the amount available for disposal works out to Rs.
969.98 crores. Your Directors propose to make the following
appropriations from this amount:
1. Capital Reserve Rs. 17.59 crores
2. General Reserve Rs. 57.00 crores
3. Staff Welfare Fund Rs. 1.00 crore
4. Corporate Social Responsibility
Reserve Rs. 5.67 crores
Total Rs. 81.26 crores
Dividend
The Board of Directors, in addition to the interim dividend @ 30%
already paid for the year 2010-11, now recommends payment of final
dividend @ 25% for the year 2010-11 absorbing a sum of Rs. 116.45
crores. In addition, dividend tax of Rs.18.89 crores will be payable by
the Company. After the proposed appropriations, the sum available is
Rs. 590.43 crores which is being carried forward to next year''s
accounts.
Fleet Position during the Year :
During the year under report, nine vessels aggregating 520,259 dwt.
tonnage were disposed of whereas four new building crude oil tankers and
eight new building product tankers aggregating to 1,109,145 dwt. were
delivered. Thus, the overall fleet position, which was 76 ships at the
beginning of the year, closed at 79 ships at the end of the year as
shown in the following table:
FLEET PROFILE DURING THE YEAR
Particulars As on 1.4.2010 Additions Deletions As on 31.3.2011
No. Dwt. No. Dwt. No. Dwt. No. Dwt.
1. (a)
Crude Oil
Tanker 26 35,76,271 4 458,942 6 402,916 24 36,32,297
(b) Product
Tankers 10 4,23,172 8 650,203 2 90,893 16 9,82,483
(c) Chemical
Tankers 3 99,174 - - - - 3 99,174
(d) Gas
Carriers 2 35,202 - - - - 2 35,202
2. Bulk
Carriers 18 781,777 - - 1 26,450 17 755,327
3. Liner
Ships 5 202,413 - - - - 5 202,413
4. Offshore
Supply Vsls. 10 17,904 - - - - 10 17,904
5. Passenger-
Cum-
Cargo Vessels 2 5,303 - - - - 2 5,303
Total 76 51,41,216 12 1,109145 9 520,259 79 57,30,103
NEWBUILDING VESSELS DELIVERED DURING THE YEAR
Vessel Name Type Yard Built Dwt.
m.t. Desh Mahima Crude oil
Tanker Hyundai Heavy Industries
(HHI), S.Korea 114,686
m.t. Desh Garima Crude oil
Tanker HHI, S.Korea 114,790
m.t. Desh
Suraksha Crude oil
Tanker HHI, S.Korea 114,783
m.t. Desh Samman Crude oil
Tanker HHI, S.Korea 114,683
m.t. Swarna
Sindhu Product
Tanker STX Shipyard, S.Korea 73,368
m.t. Swarna Ganga Product
Tanker STX Shipyard, S.Korea 73,368
m.t. Swarna
Brahmaputra Product
Tanker STX Shipyard, S.Korea 73,606
m.t. Swarna
Godavari Product
Tanker STX Shipyard, S.Korea 73,368
m.t. Swarna
Krishna Product
Tanker STX Shipyard, S.Korea 73,368
m.t. Swarna
Kaveri Product
Tanker STX Shipyard, S.Korea 73,368
m.t. Swarna
Jayanti Product
Tanker HHI, S.Korea 104,895
m.t. Swarna Kamal Product
Tanker HHI, S.Korea 104,862
VESSELS DISPOSED OF DURING THE YEAR
Vessel Name Type Year Built Dwt.
m.v. Lok Rajeshwari Bulk Carrier 1988 26,450
m.t. Lance Naik Karam
Singh, PVC Crude Oil Tanker 1984 67,153
m.t. Lt. Rama Raghoba
Rane, PVC Crude Oil Tanker 1984 67,153
m.t. Subedar Joginder
Singh, PVC Crude Oil Tanker 1984 67,137
m.t. Major Saitan Singh,
PVC Crude Oil Tanker 1985 67,185
m.t. Havildar Abdul
Hamid, PVC Crude Oil Tanker 1985 67,164
m.t. Col. Ardeshir
Burzorji Tarapore, PVC Crude Oil Tanker 1985 67,124
m.t. Major Hoshiar
Singh, PVC Product Tanker 1985 45,420
m.t. Lance Naik Albert
Ekka, PVC Product Tanker 1985 45,473
VESSELS ON ORDER AT THE END OF THE YEAR
Type No. Shipyard Total Dwt.
VLCC 2 Jiangsu Rongsheng Heavy
Industries Co. Ltd. China 6,34,000
Handymax Bulk Carriers 6 STX (Dalian) Shipbuilding
Co. Ltd. China 3,44,400
Kamsarmax Bulk Carriers 4 Jiangsu Eastern Heavy
Industry Co. Ltd. China 3,28,000
Panamax Bulk Carriers 4 STX (Dalian) Shipbuilding
Co. Ltd. China 3,22,620
6,500 TEU Cellular
Container vessels 3 STX (Dalian) Shipbuilding Co.
Ltd. China 2,56,800
Anchor Handling,
Towing & Supply
Vessels (AHTSVs) (80T BP) 4 Bharati Shipyard Ltd. India 8,000
Anchor Handling,
Towing & Supply vessels
(AHTSVs) (120 T BP) 2 Cochin Shipyard Ltd. India 3,940
Anchor Handling,
Towing & Supply vessels
(AHTSVs) (120 T BP) 2 Cochin Shipyard Ltd. India 3,940
Platform Supply Vessels
(UT 755 Design) 2 Cochin Shipyard Ltd. India 6,120
TOTAL VESSELS ON ORDER 29 19,07,820
Implementation of Official Language Policy
Your Company put in all-out efforts to promote and popularize the use
of Official Language Hindi in its day-to-day official work and ensured
compliance of the provisions of the Official Language Act, 1963 and the
Official Language Rules, 1976 during the year under report. On the
occasion of Golden Jubilee Year celebration, you company organized an
all-India level conference Sagar Manthan at its Maritime Training
Institute, Mumbai, which was attended to by over 120 participants from
various PSUs and Government Offices across the country.
In addition to this, your Company also acquired corporate license
(unlimited users) of bilingual software viz. APS Saral, to increase the
use of Hindi on computers, and made almost all PCs Unicode Hindi font
enabled. As far as Hindi training is concerned, SCI is determined to
impart bilingual software training to its employees regularly at its
Maritime Training Institute so as to achieve the set targets in the
Annual Programme issued by the Central Government. SCI''s website is
also available in Hindi and English bilingually.
During the year under report, your Company organized quarterly meetings
of its Departmental Official Language Implementation Committee wherein
a review on overall progress of Hindi in its offices was made and
thereafter appropriate follow up actions were taken. Besides this, a
number of Hindi promotional activities, competitions and programmes
like Hindi Kavi Sammelan were also organized.
Particulars of Employees
Information as per Section 217(2A) of the Companies Act, 1956 read with
the Companies (Particulars of Employees) Rules 1975 and Companies
(Particulars of Employees) Amendment Rules, 1988, forms part of this
report. Any shareholder interested in obtaining a copy of this
information may write to the Company Secretary at the Registered Office
of the Company.
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules 1988
In terms of the Notification No. GSR 1029 dated 31.12.1988, your
Company is required to furnish information under Clause (e) of
Sub-section (1) of Section 217 of the Companies Act, 1956. The
information to be furnished in Form A is not applicable to the shipping
industry. Your Company, being a shipping company, has no particulars to
furnish in Form B as regards technology absorption. The foreign
exchange earnings and outgo during the year under report were as under:
Foreign exchange earned and saved including deemed earned and saved Rs.
3736.53 crores.
Foreign exchange used including deemed used Rs. 3103.94 crores.
Expenses on Entertainment, Foreign Tours, etc.
During the year under report your Company spentRs. 61 lakhs on
entertainment, Rs. 269 lakhs on publicity & advertisements and Rs. 371
lakhs on foreign tours of Company''s executives.
Board of Directors
Shri A.K. Mago, A.D. Fernando, U. Sundararajan, J.N.L. Srivastava, B.H.
Dholakia and Keshav Saran ceased to be Directors w.e.f. 28.07.2010
consequent to the cessation of their tenure as non-official part-time
Directors. Shri U.C. Grover and Capt. K.S. Nair ceased to be Directors
on the Board consequent to their superannuation on 31.08.2010 and
31.12.2010, respectively. The Board places on record its appreciation
for the valuable services rendered by them.
In terms of the nominations received from the Ministry of Shipping,
eight non-official part time(independent) Directors have been appointed
/ reappointed on the Board of Directors. S/Shri Nasser Munjee, Sushil
Tripathi and U. Sundararajan have been reappointed and S/Shri Arun
Ramanathan, Arun Kumar Verma, Prof. Sushil Khanna and Rear Admiral
(Retd.) T.S. Ganeshan have been appointed on the Board w.e.f
11.08.2010.
The Board has also appointed Shri S.K. Roongta as non-official part
time Director w.e.f. 13.12.2007 on his nomination by the Ministry of
Shipping Road Transport & Highways. Shri Arun Kumar Gupta and Capt.
Sunil Thapar have been appointed as Director (Technical & Offshore
Services) and Director (Bulk Carriers & Tankers) by the President of
India w.e.f. 24.10.2010 and 11.01.2011, respectively. They hold office
up to the date of the forthcoming Annual General Meeting and being
eligible, offer themselves for appointment Shri B.K. Mandal, Shri J.N.
Das, Shri Nasser Munjee and Shri S.C. Tripathi are retiring by
rotation at the forthcoming Annual General Meeting and, being eligible,
offer themselves for appointment.
Auditors Report
The Auditors Report is attached to the Report. The Statutory Auditors
had, in respect to the Audited Accounts for the year ended 31.03.2011,
drawn the attention of the members on issues mainly arising out of
switching over to integrated ERP System which are mentioned below.
1) The Auditors observed that various errors and omissions were made by
the Company during the process of migration / uploading of data post
migration in the new accounting software ERP-SAP in respect of
accounting of the income and expenses, assets and liabilities for which
necessary rectification were carried out by the Company.
2) They further observed that, there remain certain items where the
company is unable to make appropriate adjustment and the effects of
errors and adjustments, if any, as might have been determined to be
necessary in the data migrated / uploaded in the accounting software
post migration.
3) It has been further pointed out by them that the Company has:
i) Not accounted the income and expenditure in respect of unfinished
voyages as per accounting policy No. 2 (c) having no impact on the
profit for the year.
ii) Not accounted the foreign currency transactions at the rates as
stipulated in Accounting Policy No. 8 (a) for the months of January
2011 and February 2011 instead, the same have been accounted at the
exchange rates applicable for the month of March 2011.
4) The statutory Auditors observed some weakness in design of internal
control in respect of migration of the data / uploading of the data in
the process of implementation of ERP-SAP. They however concluded that
as at the balance sheet data, the material errors and omission
affecting the results as observed during the course of their audit were
rectified by the company.
5) The Statutory Auditors further pointed out that post implementation
of the ERP-SAP, the internal auditor expressed inability to cover many
areas and report thereon including accounting of income and expenses on
finished and unfinished voyages, etc.
The replies of the Management to the Auditors'' observations are given
below.
1) Post migration to SAP, errors coming to our notice have been
attended to and necessary adjustments are carried out.
2) The Management has brought out in Schedule 25, Notes on Accounts,
such cases where adjustments have not been possible due to issues
arising on migration and uploading of data in the new system. The
Management has also brought out therein that these have no material
impact on the results of the Corporation.
3) (i) As per accounting policy no. 2 (c) of the company, for all
unfinished voyages, amount received on account of freight earning and
other charges in respect of such voyages are carried forward as
Unfinished Voyage Earnings. Direct operating expenses incurred for
such voyages including hire charges and freight for vessels
chartered-in are carried forward as Unfinished Voyage Expenses except
in case of time charter. As far as unfinished voyages are concerned the
booking of both income and expenditure is done by SCI consistently on
receipt / disbursement basis. It is in line with the accounting policy
2 (c) of the company.
(ii) As per accounting policy 8(a), All foreign currency transactions
are recorded at the exchange rate of the last Friday of the preceding
month published in Financial Times, London.
There were no transactions from 1st February to 27th February either in
the legacy or in the new system as it was a Blackout period prior to
data migration to SAP.
The comparative rates for some of the major currencies for February
2011 and March 2011 are as below:
Currency February 2011 March 2011 % difference
Euro 62.632 62.311 (-) 0.005%
USD 45.615 45.325 (-) 0.006%
SGD 35.670 35.591 (-) 0.002%
UKP 72.705 72.846 ( ) 0.002%
Since the exchange rate difference for the month of February 2011 and
March 2011 are insignificant, there is no material impact. Moreover,
before migration, revaluation run was carried out in legacy system for
January, 2011.
4) During data migration, even though a matched trial balance was
uploaded but certain deficiencies were subsequently observed by the
company in respect of line item wise migrations indicating details like
foreign currency component, dates of invoices and debit notes, etc.
Care has been taken to rectify such deficiencies as and when observed.
The new system went live on 28.02.2011. The time available before the
Annual Closing was not sufficient for the Internal Auditors; at
present, the Internal auditors are carrying out the audit.
Corporate Governance
Pursuant to Clause 49 of the Listing Agreement, Report on Corporate
Governance is attached to this Report.
Directors'' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement, it is
hereby confirmed:
That in the preparation of the accounts for the financial year ended
31st March 2011, the applicable accounting standards have been followed
along with proper explanation relating to material departures;
That the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that were
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 the year under review;
That 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;
That the Directors have prepared the accounts for the financial year
ended 31st March, 2011 on a going concern basis.
Acknowledgements
Your Directors take this opportunity to express their gratitude and
thanks to Shri G.K. Vasan, Hon''ble Minister for Shipping, and Shri
Mukul Roy, Hon''ble Minister of State in the Ministry of Shipping, and
look forward to their support and guidance in managing the affairs of
the Company.
Your Directors also extend a hearty welcome to Shri K. Mohandaas,
Secretary to the Government of India, Department of Shipping, Ministry
of Shipping, and look forward to his support and guidance.
Your Directors also wish to express their thanks to the officials in
the Ministry of Shipping, for the unstinted support given by them in
various matters concerning the Company. Your Directors would also like
to convey their thanks to other Ministries, Trade Organizations,
Shippers'' Councils, who have played a vital role in the continued
success of your Company.
The Directors thank the shareholders and valued customers for the
continued patronage extended by them to your Company.
Last but not the least, your Directors wish to record their deep
appreciation for the dedicated and loyal service of your Company''s
employees, both afloat and ashore, without whose co-operation and
efforts the achievements made by your Company would not have been
possible.
For and on behalf of the Board of Directors
Place : Mumbai S. Hajara
Dated : 13th August, 2011 Chairman & Managing Director
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