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Dolphin Offshore Enterprises (I) Ltd.

BSE: 522261 | NSE: DOLPHINOFF | Series: NA | ISIN: INE920A01011 | SECTOR: Oil Drilling And Exploration

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Director’s Report

Dear Members,

The Directors have great pleasure in presenting their Thirty Ninth Annual Report together with the audited financial statements for the year ended March 31, 2018.

1.0 AUDITED FINANCIAL STATEMENTS:

1.1 Summarised Audited Financial Results -

Rs. in crs

Particulars

Consolidated for year ended March 31,

Standalone for year ended March 31,

2018

2017

2018

2017

Total Income

168.53

228.62

55.56

62.95

Profit before depreciation, exceptional item and taxes

(7.76)

(41.43)

(16.19)

(10.19)

Deducting depreciation

35.88

42.41

3.20

6.43

Profit before exceptional item

(43.64)

12.76

(19.39)

(16.62)

Exceptional item

-

24.49

-

24.49

Profit before tax

(7.71)

11.72

(19.39)

(41.11)

Deducting taxes

0.92

0.60

(2.21)

(1.97)

Profit after tax

(8.63)

(11.12)

(17.17)

(39.13)

Balance carried forward :

-

450.54

78.70

95.426

1.2 Dividend

In view of loss for the year ended March 31, 2018, the Board has decided not to recommend any dividend for the financial year 2017-2018 for the declaration by the shareholders at the ensuing Annual General Meeting.

1.3 State of Company’s Affairs / Review of Operations

During the year, the Company continued to show a lacklustre performance, the turnover was down to Rs. 55.56 Crs from Rs. 62.95 crs that is reported in the previous year. The Loss before exceptional items and Tax was increased from Rs. 16.62 crs. to Rs. 19.39 crs.

1.4 Consolidated Financial Statements

The audited Consolidated Financial Statement comprising of the Company and its subsidiaries and a joint venture form part of this Report. The Auditors’ Report on the Consolidated Financial Statement is also attached. The Consolidated

Financial Statement have been prepared in accordance with the Indian Accounting Standards prescribed by the Companies Act, 2013 in this regard and the provisions of the Listing Agreement(s) entered into with the Stock Exchanges.

A report on the performance and financial position of each of the subsidiaries and joint venture companies as per the Act is provided in Form AOC-1 attached to financial statements.

1.5 Matters Arising Out of the Auditors’ Report

The Auditors’ have made the following observations under Emphasis of Matters and qualifications in their Report.

Standalone Financial Statements

Note No: 41(a) to the Statement regarding trade receivable and accrued income aggregating to Rs. 13,17.77 lakhs receivable from a party which has been declared sick;

The Management is in discussions with the Management of the Creditor and expects to reach a settlement soon.

a) Note No: 41(b) to the Statement regarding advances recoverable amounting to Rs. 213.18 lakhs which is outstanding for a long period of time, payment for which are not forthcoming.

The Company had paid Rs. 213.18 lakhs as an advance to a vendor for paying excise duty under protest. As per the arrangement, once the vendor receives the excise duty refund, it will pass on the same to the Company as the contract will qualify under the benefits of deemed Export.

b) Note No: 41(f) to the Statement, regarding trade receivable which includes Rs. 25,20.49 lakhs; (31st March, 2017 - Rs. 25,12.94 lakhs) due from a charter hire contract. The said Hirer had disputed the claim and had raised counter claim for damages of Rs. 15,83.03 lakhs against the Company.

The Company is in discussion with the said Hirer for the recovery of the dues.

c) Note No: 41(e): The balance amount of Rs. 103,59.19 lakhs being the expenditure incurred for executing additional work in terms of a EPC contract.

The Company is in discussion with the customer for finalisation of the claim.

CARO, 2016

- Clause (vii) (a) on payment of statutory dues:-

There have been delays in payments of statutory dues due to the adverse financial position of the Company.

- Clause (vii)(b) on disputed liabilities under Income Tax etc. remaining unpaid:-

These liabilities are pending before appropriate authorities.

Consolidated Financial Statements

a) Note No. 41(g): Regarding the inability of auditors of subsidiary company to obtain sufficient appropriate audit evidence with respect to Trade and other receivables amounting to Rs. 2,23,52.73 lakhs.

Management Comments:

i) Rs. 7,33.39 lakhs due from a customer: A winding up petition was filed against the customer before the Mumbai High Court. Subsequently, the consent terms was also filed before Mumbai High Court with an agreement to pay in instalments.

ii) Rs. 2,10,21.49 lakhs due from a customer: The Company has commenced legal action including arbitration against the customer and Guarantor before LMAA, London and Courts in Mexico.

iii) Rs. 4,26.82 lakhs due from a customer: An Insolvency petition was filed against the customer. Subsequently, the Company has entered into an agreement with customer on the repayment.

iv) Rs. 1,71.03 lakhs due from a customer: Arbitration has been commenced against the customer to recover the outstanding amount.

All other matters stated under the Emphasis of Matters in the Report of the Auditors including CARO, 2016 are self-explanatory; hence no further explanation has been provided.

2.0 ISO 9002 CERTIFICATION:

ISO 9001:2015 Certificate issued by the American Bureau of Shipping [ABS] for the following services:

a) Diving & underwater services, marine logistics, ship & rig repair service.

b) Survey, Design engineering, Project management, Procurement, Fabrication, Modification, Construction, Installation and commissioning of offshore oil & gas platforms, pipelines and structures.

The Board would like to acknowledge the efforts and dedication of all employees in implementing and maintaining the high quality standards that the Company has set for itself.

3.0 DIRECTORS AND KEY MANAGERIAL PERSONNEL:

In accordance with the Articles of Association of the Company and the provisions of the Companies Act, 2013, Mr. Satpal Singh, Managing Director of the Company retires by rotation, and being eligible, seeks re-appointment.

Mr. Kiran Vaidya has been appointed as an Additional Director on April 25, 2018 and he will be seeking the shareholders’ approval at the ensuing Annual General Meeting for appointment as an Independent Director for 5 years w.e.f April 25, 2018. Mrs. Vasantha S Bharucha resigned from the Board of Directors of the Company w.e.f. November 26, 2017. The Board expresses its appreciation for her matured advice given during her tenure in the Board.

In terms of the provision of Regulation 17(1 A) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulation, 2018, which shall come into force from April 1, 2019 the Non-Executive Directors who have attained the age of Seventy-Five (75) years cannot be be appointed or continued as a Director unless a Special resolution is passed by the shareholders approving such appointment or continuation. Currently, three directors namely Rear Admiral Kirpal Singh, Mrs. Manjit Kirpal Singh and Dr. F. C. Kohli are aged over Seventy-Five years and they are seeking shareholders approval at the Annual General Meeting for the continuation.

Your Directors recommend the re-appointment, appointment and continuation of appointment of the above directors.

Mr. Satpal Singh, Managing Director & CEO; Mr. Navpreet Singh, Joint Managing Director & CFO and Mr. V Surendran, Vice President (Corp and Legal) and Company Secretary are the Key Managerial Personnel (KMP) as per the provisions of the Companies Act, 2013.

4.0 NUMBER OF MEETINGS OF THE BOARD

The Board meets at regular intervals to discuss and decide on Company / business policy and strategy apart from other businesses. The Board / Committee Meetings are pre-scheduled and advance notice is given to directors/ committee members to facilitate them to plan their schedule and to ensure meaningful participation in the meetings. However, in case of a special and urgent business need, the Board’s approval is taken by passing resolutions through circulation, as permitted by law, which are noted at the subsequent Board meeting and made part of the minutes of such meeting.

The notice and Agenda of Board/Committee meeting is given well in advance to all the Directors. Usually, meetings of the Board are held in Mumbai. The Agenda for the Board and Committee meetings includes detailed notes on the items to be discussed at the meeting to enable the Directors to take an informed decision.

The Board met five times in financial year 2017-18 viz., on May 17, 2017, September 11, 2017, December 11, 2017, February 14, 2018 and March 19, 2018. The gap between any two meetings did not exceed 120 days.

5.0 COMMITTEES OF THE BOARD

During the year under review, in accordance with the Companies Act, 2013, the Board re-constituted some of its Committees. There are currently 9 Committees of the Board, as follows:

i. Audit Committee

ii. Managing Committee

iii. Share Transfer Committee

iv. Stakeholders’ Relationship Committee

v. Nomination and Remuneration Committee

vi. Sexual Harassement Committee

vii. Committee for affixing Common Seal

viii. Committee for Banking Operation

ix. Corporate Social Responsibility Committee

Details of all the Committees along with their charters, composition and meetings held during the year, are provided in the “Report on Corporate Governance”, a part of this Annual Report.

6.0 BOARD INDEPENDENCE

The terms of the definition of ‘Independence’ of Directors is derived from Regulation of the SEBI (Listing and Obligations Disclosure Requirement) Regulations, 2015 with Stock Exchanges and Section 149(6) of the Companies Act, 2013. Based on the confirmation / disclosures received from the Directors and on evaluation of the relationships disclosed, the following Non-Executive Directors are Independent in terms of aforesaid Regulation Section 149(6) of the Companies Act, 2013 :-

a) Mr. Sabyasachi Hajara

b) Dr. F. C. Kohli

c) Mr. Kiran Vaidya

7.0 COMPANY’S POLICY ON DIRECTORS’ APPOINTMENT AND REMUNERATION

The Policy of the Company on Directors’ appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under sub-section (3) of section 178, is appended under Annexure-I to this Report.

8.0 AUDITORS:

Pursuant to the provisions of Section 139 of the Act read with Companies (Audit and Auditors) Rules, 2014 as amended from time to time, M/s. Sharp & Tannan, Chartered Accountants (Firms Registration No. 109982W), were appointed as Statutory Auditors from the conclusion of 38th Annual General Meeting (AGM) held on September 22, 2017 till the conclusion of 43rd AGM of the Company in 2022.

9.0 FIXED DEPOSITS:

The Company has not invited or accepted Fixed Deposits from the public within the meaning of Section 73 of the Companies Act, 2013. As at March 31, 2018, there are no deposits that are due to have been repaid, nor any interest due, which have not been paid.

10.0 SUBSIDIARY COMPANIES:

As on March 31, 2018 the Company has 3 subsidiaries including 2 wholly owned subsidiaries (one Indian subsidiary and one foreign subsidiary). There has been no change in the number of subsidiaries or in the nature of business of these subsidiaries, during the period under review. In accordance with Section 129(3) of the Companies Act, 2013, the Company has prepared consolidated financial statement of the Company and all its subsidiary companies which is forming part of the Annual Report. A statement containing salient features of the financial statements of the subsidiary companies is also included in the Annual Report.

In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the Company, www.dolphinoffshore. com. Further, as per fourth proviso of the said section, audited annual accounts of each of the subsidiary companies have also been placed on the website of the Company, www.dolphinoffshore.com. Shareholders interested in obtaining a copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary at the Registered Office of the Company.

11.0 PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The Company has provided loans and guarantees and made investments pursuant to Section 186 of the Companies Act, 2013, details of which are mentioned in the Annexure II.

12.0 PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1)

All Related Party Transactions have been placed before the Audit Committee as also the Board for their approval. The policy on Related Party Transactions as approved by the Board is available on the Company’s website.

The particulars of contracts or arrangements with related parties referred to in Section 188(1), as prescribed in Form AOC-2 of the rules prescribed under Chapter IX relating to Accounts of Companies under the Companies Act, 2013, is appended as Annexure III.

13.0 MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There have been no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

14.0 RISK MANAGEMENT POLICY AND INTERNAL ADEQUACY

The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Audit Committee and the Board of Directors of the Company. The above Policy has been uploaded on the website of the Company www.dolphinoffshore.com.

The Company’s internal control systems with reference to the Financial Statements are adequate and commensurate with the nature of its business and the size and complexity of its operations. These are routinely tested and certified by Statutory Auditors as well as Internal Auditors & Transactional Auditors. Significant audit observations and follow up actions thereon are reported to the Audit Committee.

15.0 ENVIRONMENT, HEALTH AND SAFETY (EHS)

The Company values its employees and is committed to protecting their health, safety and well-being. It therefore continues to develop and improve its arrangement for managing environment, health and safety issues. The managements vision is to see that the risks to employees’ health and safety arising from work activities are effectively controlled, thereby contributing to the overall economic and social well-being of the community.

The Company’s Management takes its responsibilities for managing its environment, health & safety systems, policies and practices very seriously by implementing various Rules and Regulations laid down under Factories Act, 1948, the Environment (Protection) Act, 1986 and all other applicable Acts.

16.0 CORPORATE SOCIAL RESPONSIBILITY

As required under Section 135 of the Companies Act, 2013, the Board of Directors of the Company has constituted a Corporate Social Responsibility (CSR) Committee. The details about the development of CSR Policy as per annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been appended as Annexure IV to this Report.

Since the Company does not have net profit for the last three Financial Years, the Company is not mandatorily required to contribute towards Corporate Social Responsibility activities. Accordingly, the provision of the sub-section (5) of the Section 135 of the Act will not be applicable to the Company.

17.0 PARTICULARS OF EMPLOYEES

Your Directors acknowledge the selfless untiring efforts, whole-hearted support and co-operation of the employees at all levels. Our industrial relations continue to be cordial.

The total number of permanent employees of the Company as on 31st March, 2018, was 166 (as on March 31, 2017 was 148).

18.0 VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has established a vigil mechanism for Directors and employees to report their genuine concerns, details of which have been given in the Corporate Governance Report annexed to this Report.

19.0 ANNUAL EVALUATION BY THE BOARD

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees, and individual directors pursuant to the provisions of the Act, SEBI listing regulations and the guidance note on board evaluation issued by the Securities and Exchange Board of India. The performance of the Board and Board Committees was evaluated by the Board after seeking inputs from all the directors on the basis of criteria such as the Board/ Committee composition and structure, effectiveness of Board/Committee processes, information and functioning etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, the Chairman of the Company and the Board as a whole was evaluated, taking into account the views of Executive Directors and Non-Executive Directors.

20.0 FINANCIAL YEAR

Section 2(41) of the Companies Act, 2013 has defined “financial year” as the period ending March 31 for all Companies and Bodies Corporate.

21.0 CEO & CFO CERTIFICATION

Certificate from Mr. Satpal Singh, Managing Director & Chief Executive Officer and Mr. Navpreet Singh, Joint Managing Director & Chief Financial Officer, pursuant to provisions of Regulation 17 of SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015, for the year under review was placed before the Board of Directors of the Company at its meeting held on May 24, 2018.

A copy of the certificate on the financial statements for the financial year ended March 31, 2018 is annexed along with this Report.

22.0 SECRETARIAL AUDIT REPORT

The Board of Directors of the Company has appointed Mr. Prashant Mehta, Practicing Company Secretary; to conduct the Secretarial Audit and his Report on Company’s Secretarial Audit is appended to this Report as Annexure V.

23.0 PARTICULARS OF REMUNERATION

The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees’ particulars which is available for inspection by the Members at the Registered Office of the Company between 10 a.m. to 12 noon on any working day of the Company up to the date of the ensuing Annual General Meeting.

The other details in terms of sub-section 12 of Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are forming part of this report as Annexure VI.

24.0 DIRECTORS’ RESPONSIBILITY STATEMENT:

Your Directors hereby confirm that;

i. In the preparation of the annual accounts for financial year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures.

ii. 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 at March 31, 2018 and of the profit /loss of the Company for the year ended on that date.

iii. The Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv. The Directors have prepared the annual accounts for financial year ended March 31, 2018 on a going concern basis.

v. The Directors have laid down internal financial controls to be followed by the bank and that such internal financial controls are adequate and were operating effectively.

vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that systems were adequate and operating effectively.

25.0 STATUTORY DISCLOSURES

The disclosures to be made under sub-section (3)(m) of Section 134 of the Companies Act, 2013 read with Rule 8 (3) of the Companies(Accounts) Rules, 2014 are explained below:

Conservation of energy, technology absorption and foreign exchange earnings and outgo.

The particulars regarding foreign exchange earnings and outgo do not appear as separate items in the notes to the Accounts as these figures are not material in nature due to the poor performance of the Company. The Company is having only small workshops and engaged in short duration contract type jobs, therefore, the particulars relating to conservation of energy and technology absorption stipulated in the Companies Accounts Rules, 2014 are not much relevant to Company as it did not execute any major contracts during the year under review. However, to the extent possible, the Company is using energy efficient equipments and lights for the conservation of energy.

Policy on Prevention of Sexual Harassment at Workplace

The Company has in place a Prevention of Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the workplace (Prevention, Prohibition & Redressal) Act, 2013, A Committee has been set up to redress complaints received regarding sexual harassment.

All employees (Permanent, contractual, temporary, trainees) are covered under this policy. No case has been filed under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 for the year under review.

26.0 EXTRACT OF ANNUAL RETURN

Pursuant to Sub-section (3) of Section 134 and subsection (3) of Section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 2018 forms part of this report as Annexure VII.

Transfer to Reserves

The Company has made no transfers to reserves during the Financial Year 2017-2018.

27.0 CORPORATE GOVERNANCE REPORT:

The Company is committed to maintaining the highest standards of Corporate Governance and adhering to the Corporate Governance requirements as set out by Securities and Exchange Board of India.

A separate section on Corporate Governance and a certificate from the Auditors confirming compliance with the Corporate Governance requirements as stipulated in Agreement entered with the Stock Exchanges, form part of this Annual Report.

The Chief Executive Officer’s declaration regarding compliance with the Code of Business Conduct and Ethics forms part of the Report on Corporate Governance.

28.0 ACKNOWLEDGEMENTS:

Your Directors wish to place on record the whole hearted co-operation which the Company has received from its Clients, Bankers, Financial institutions, and the Central and State Government authorities, shareholders, suppliers, employees and others during the year.

For DOLPHIN OFFSHORE ENTERPRISES (INDIA) LIMITED

SABYASACHI HAJARA

CHAIRMAN

Mumbai May 24, 2018

Director’s Report