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Global Offshore Services Ltd.

BSE: 501848 | NSE: GLOBOFFS | Series: NA | ISIN: INE446C01013 | SECTOR: Shipping

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Global Offshore Services is not traded on NSE in the last 30 days

Annual Report

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

Director’s Report

DIRECTORS’ REPORT

FOR THE YEAR ENDED 31st MARCH, 2018

TO,

THE MEMBERS,

The Directors present their report as under:

1] FINANCIAL RESULTS:

Rs. in Crores

PARTICULARS

Year ended

Year ended

March 31, 2018

March 31, 2017

Income from operations

76.26

98.49

Other Income

1.69

0.86

Gross Income

77.95

99.35

Expenses for the period

64.13

66.23

Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA).

13.82

33.12

Finance cost

21.24

19.67

Depreciation

23.69

22.59

(Loss) / Profit Before Tax

(31.11)

(9.14)

Exceptional Items

(120.50)

13.69

(Loss) / Profit Before Tax

(151.61)

4.55

Provision for Taxation

Current Tax

-

0.20

Tax for earlier (written back)/provision

-

0.03

Net (Loss) / Profit After Tax

(151.61)

4.32

Add : Balance of Profit brought forward from previous year.

143.14

138.82

Profit available for appropriation.

-

143.14

Less : Tonnage Tax Reserves

-

-

- General Reserves

-

-

- Proposed Dividend

-

-

- Tax on Proposed Dividend

-

-

Balance Carried forward

(8.47)

143.14

2] FINANCIAL HIGHLIGHTS:

In view of the applicability of Indian Accounting Standard (IND AS) to the Company, the Annual Accounts have been prepared in accordance with the requirements of the said Accounting Standard. The impact of the IND AS is stated in the Notes to the Accounts.

Income from Operation (including Other Operating Income) for the year ended 31.03.2018 stood at Rs.76.26 crores, as against Rs.98.49 crores for the previous year (a reduction of 23%) mainly as a result of reduced charter rates and reduced utilization for some of the Vessels. Other Income for the year stood at Rs.1.69 crores as against Rs.0.86 crores for the previous year.

The Net Loss for the year ended 31.03.2018 stood at Rs.151.61 crores as against Net Profit Rs.4.32 crores for the previous year. However, the loss prior to Exceptional items stood at Rs.31.11 crores as against a loss of Rs. 9.14 crores for the previous year. This Loss was mainly as a result of the fact that while Income fell drastically by 23%, costs did not drop correspondingly. Exceptional items amounted to Rs.120.50 crores consisting of various provisions for investment / loans / advances as also impairment of assets.

3] OPERATIONS:

During the year under review :

- M.V. Mana and M.V. Lachung continued to work on long term contract in the West Coast of India at lower rates than originally contracted.

- M.V. Meghna & M.V. Mahananda continued to work in India on long term contracts.

- M.V. Poorna worked on short term contracts and in the spot market for most of the year. She commenced a long term contract in January 2018 on the West Coast of India.

- M.V. Kamet completed a long term contract in July 2017. Thereafter she worked on short term contract in India. She presently continues to work on a short term contract in the West Coast of India.

The Shareholders are aware that in January 2017, State Bank of India (SBI) - the major term lender - classified the Company''s account as a Non Performing Asset (NPA), and converted all the loans outstanding (originally disbursed in US $) into Indian Rupees (INR), something which has not been accepted by the Company.

The Company informed SBI, that the steps taken by them places a huge financial burden on the Company, which under the circumstances, would prove fatal for the Company.

The account of the Company with SBI migrated” to the Stressed Asset Branch. The Company has submitted a proposal for the restructuring of its Loans, the outcome of which is awaited.

Additionally, with the merger of State Bank of Travancore (SBT) into SBI the loans granted and facilities provided by the erstwhile SBT were frozen” by SBI, even though the Company was up to date in servicing Principal and Interest payments with SBT.

With regard to United Bank of India, the Company continues to enjoy Working Capital facilities and has repaid all Term / Corporate Loans as on date.

With regard to the unsecured loan availed from Axis Bank Limited, the same remain to be repaid.

4] DIVIDEND:

In view of the losses incurred for the year 2017-18, your Directors regret their inability to recommend any Dividend.

5] FUTURE EXPANSION AND OUTLOOK:

The current circumstances in the Offshore market is conflicting and confusing to say the least. On the one hand, there have been signs of firmer demand in some areas and even signs of slight improvements in the day rates as a result of the increase in oil prices. Yet at the same time, despite these positive signs, the scale of the supply side challenge means that it seems likely that the sector could still take a significant amount of time to entirely rebalance and rate improvement could see setbacks once levels which justify the reactivation of laid up tonnage and delivery of new builds are reached. It is certainly the case that the level of supply excess may be curbed by scrapping-in-place”. However, this is likely to be more moderate than would be required to fully solve the sector''s supply side problems. Early signs of improvement are there, but this may be a long drawn process. Unfortunately, while utilisation levels in India are quite high, rates in the Indian sub-continent have remained abysmally” low as a result of older tonnage competing with younger Vessels.

At present, the Company has no plans to expand its operations by acquiring any further Assets.

6] SUBSIDIARY / WHOLLY OWNED SUBSIDIARY (WOS):

During the year under review there was no Company which became or ceased to be subsidiary / joint venture or associate Company. The Company has two Subsidiaries as detailed below:

a) Global Offshore Services B.V. - The Netherlands (GOSBV)

Global Offshore Services B.V has gone through a turbulent phase amidst the falling demand for Assets in the offshore market.

The revenue from operations for the year was USD 7.43 Mn (PY USD 8.69 Mn.) and the loss recorded for the year ended 31st March, 2018 was USD 33.84 Mn. (Previous Year loss USD 23.76 Mn).

During the year, three of GOSBV''s Vessels viz. M.V. Makalu, M.V. Ben Nevis and M.V. Olympus spent most of their time between the North Sea Spot market and on term contract in Bulgaria. After the year under review, M.V. Ben Nevis secured a term contract for a period of 95 days w.e.f. 19th April. M.V. Olympus is on term contract since April 2018 as well, till early September & M.V. Makalu is in the spot market.

With the rise in oil prices, there is some momentum in oil exploration activities in the North Sea market. The year on year demand in 4000 DWT PSV category has increased by 15%. Charter rates in the spot market have also increased in North Sea, now covering opex and overheads and contributing partly towards debt servicing.

The Company''s discussion with Lenders for a restructuring continues. However, some Lenders patience is wearing thin” and may decide to sell the Vessels and cut their losses” once and for all.

b) Garware Offshore International Services Pte. Ltd - Singapore (GOISPL)

The Company''s wholly owned subsidiary GOISPL based in Singapore achieved an operating income of USD 1.79 Mn against the previous year revenue of USD 1.90 Mn. The Company suffered a loss of USD 2.00 Mn (previous year USD 1.60 Mn).

The Vessel, M.V. Everest on Bareboat to GOISPL continues to work with a JV of Total in Libya, the charter rate on the Vessel is less than break even”. As a result the Company informed Owners of the Vessel that they are unable to continue paying Bareboat Charter at the current rate. The Charterers have decided to extend the contract by two months till August 2018, and have requested for a further extension till December, 2018. However, based on the outcome of discussions with Owner, a decision on accepting the extension will be taken, as even in this case, the financier''s patience wearing thin” and are considering taking delivery of the Vessel from the Company.

With respect to the qualification made by the Auditors on the Stores and Spares / Inventories on - board the Vessel, the same pertains to the inability of the Auditor to physically inspect the same since the said Vessel is on term contract in Libya where the visit of the Auditors'' would not have been possible. Additionally a visit by the Auditor to the Vessel would lead to a substantial loss of revenue as the Vessel would have had to be off hired”. In any case the said inventory list has been certified by the Master of the Vessel and confirmed by the Technical Managers. The said Certificate, confirming existence of these inventories has been submitted to the Auditors.

With respect to the qualification made by the Auditors on the erosion of net worth (negative Rs.2,351.09 Lakhs), and the doubt on the company''s ability to continue as a going concern, the Board clarified that since discussions with the Owners of the Vessel for a restructuring were on (as on date of Audit) and since the Vessel continues on contract, the Board does not believe that the continuity of a Company is significantly hampered. However, since there is a probability that Owners may request for the Vessel to be returned, the Company, as a matter of prudence, has decided to provide for impairment of all investments -debt and equity - made into the subsidiary.

With respect to the Auditors qualification on non-provision of interest to the tune of Rs.99.06 Lakhs, the Directors are of the opinion that this said interest has been overprovided in the previous year and should not be accrued during the financial year. Additionally, the Management has informed Owners that they will not be able to pay the aforesaid interest.

In view of general exemption granted by Ministry of Corporate Affairs vide Circular No.51/12/2007-CL-III dated 8.2.2011, the annual accounts of subsidiary companies and the related information required to be enclosed under the provisions of the Companies Act, 2013 are not enclosed.

The Company undertakes that such information shall be made available to the shareholders of the holding and subsidiary companies and shall also be kept for inspection at the Registered Office of the Company. The Company shall furnish hard copy of the same to any shareholder on demand.

7] LISTING FEES TO STOCK EXCHANGES:

The Company has paid the Listing Fees for the year 2018-19 to Bombay Stock Exchange Ltd. and The National Stock Exchange of India Ltd.

8] FIXED DEPOSITS:

During the year under review, no Deposits were accepted under Chapter V of the Companies Act, 2013 and hence the details relating to deposits and details which are not in compliance under Chapter V of the Act are NOT APPLICABLE”.

9] RESPONSIBILITY STATEMENT:

The Directors confirm:

a) That in the preparation of the Annual Accounts, the applicable accounting standards have been followed and that no material departures (save and except as stated in the Directors'' Report) have been made from the same.

b) That they 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 the end of the year and the Loss of the Company for that year ended as on 31.03.2018.

c) That they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with provision of the Companies Act, 2013, for safe-guarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d) That they have prepared the Annual Accounts on a going concern basis.

e) That they have laid down internal financial controls to be followed and that such financial controls are adequate and were operating effectively.

f) That they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

10] INSURANCE:

As on 31st March, 2018, all the Vessels owned and operated by the Company and its subsidiaries have been insured for Hull & Machinery, War Risks and Protection & Indemnity (P & I) claims.

11] DIRECTORATE:

Mr. Ashok B. Garware - Chairman and Mr. S. S. Aggarwal - Independent Director, expired on 15th April, 2018 and 17th April, 2018 respectively. The Board places on record deep appreciation for their valuable contribution to the progress of the Company.

The Board has decided not to fill the vacancies created by the demise of these Directors.

Mr. Aditya A. Garware was appointed as Chairman of the Board of Directors w.e.f. 30.05.2018 in place of Mr. Ashok B. Garware.

Mr. Aditya A. Garware retires by rotation and being eligible offers himself for re-appointment. Members are requested to re-elect him as a Director.

Mr. A.K. Thanavala, Mr. J.C. Chopra and Mr. S. Y. Mulani were appointed as Independent Directors for a period of 5 years up to 31st March, 2019. They, being eligible for re-appointment as Independent Directors, are proposed to be re-appointed for a further period of 5 years (2nd term) till 31st March, 2024. Further, in view of amendment made to SEBI (Listing Obligation and Disclosure Requirements) Regulation 2015, any Director above the age of 75 years can be appointed or continue as a Director only by a Special Resolution passed by the members. Mr. A.K. Thanavala and Mr. J.C. Chopra being over 75 years of age, can continue as a Director w.e.f. 01st April, 2019 only with a Special Resolution passed by the Shareholders. The members are requested to reappoint them.

12] AUDITORS:

The Shareholders of the Company appointed Messrs. D. Kothary & Co. as Statutory Auditors of the Company for a period of 5 years from the conclusion of 39th Annual General Meeting held on 28th September, 2017 till the conclusion of 44th Annual General Meeting.

There are no Qualifications in the Auditors'' Report. However, the Auditors have enumerated Emphasis of Matter” for the attention of the Shareholders. The Board of Directors hereby clarify that upon the Company''s account with State Bank of India (SBI) being treated as an Non Performing Asset (NPA), SBI had converted the Company''s loans into INR. The Company has not accepted the switch over of the loans into Rupees and is continuing to provide interest as per the original terms. Similarly, the current maturities are determined with respect to the original terms. The Company is in dialogue with the Bank for a possible restructuring.

As regards observations of the Auditors in the Annexure A to the Auditors Report, the Board of Directors clarify as follows :

1] Clause ii(a) of the Annexure A to the Auditors Report regarding verification of the physical inventory.

The Board clarifies that Management representatives on the Vessels has carried out the physical verification of the inventories and the same have been confirmed by them. The Auditors relied on the report of Management since it was impractical for them to carry out them to carry out the physical verification as this would also have led to the Vessels losing charter hire for the time taken for physical verification.

2] Clause No.vii(c) regarding pendency of the following income tax dues for the years 2010-11, 2011-12, 2012-13 :

Sr.

No.

Name of the Statue

Nature of Dues

Amount (in Rs.)

Period to which the amount relates

Forum where dispute is pending

1.

Income Tax Act, 1961

Income Tax

2691230

FY 2010-11

IAT, Mumbai

2.

Income Tax Act, 1961

Income Tax

9090138

FY 2011-12

IAT, Mumbai

3.

Income Tax Act, 1961

Income Tax

273390

FY 2012-13

CIT Appeals

The Board clarifies that Income Tax Department has already recovered disputed demand of Rs.26,91,230/- for the F.Y. 201011 and Rs.2,73,390/- for F.Y. 2012-13, against Income Tax Refund Order issued to the Company for F.Y. 2015-16. However, the appeals for all the aforesaid matters are pending for hearing before appropriate Appellate authorities.

13] PERSONNEL:

In order to retain talent, the salary / fee reduction enforced earlier was reinstated fully in the case of middle Management and partly in the case of Senior Employees / Consultants.

The relations with all Employees of the Company, both On-Shore and Floating Staff have been cordial. Your Directors wish to express their appreciation of the services rendered by the devoted Employees.

14] DEMATERIALISATION OF SHARES:

The Company''s shares continue to be traded in Electronic Form. As per Securities and Exchange Board of India (SEBI) requirement, 100% of the shares held by the Promoter / Persons Acting in Concert category are in the Electronic Form.

15] EXTRACTS OF ANNUAL RETURN :

The Extracts of the Annual Return as prescribed in Form No.MGT 9 is enclosed herewith as Annexure I.

16] STATEMENT OF DECLARATION GIVEN BY INDEPENDENT DIRECTORS:

The Independent Directors of the Company viz. Mr. A.K. Thanavala, Mr. J.C. Chopra, and Mr. S. Y. Mulani have given a declaration that they meet the criteria of independence as provided in Sub-section (6) of Section 149 of the Companies Act, 2013.

17] NUMBER OF BOARD MEETINGS:

During the year under review, five Board Meetings were held as detailed below:

(i) 30th May, 2017, (ii) 16th June, 2017, (iii) 07th August, 2017 (iv) 14th November, 2017 and (v) 12th February, 2018.

18] BOARD EVALUATION:

Pursuant to the provisions of Section 178 of the Companies Act, 2013 and Clause 49 of the Listing Agreement, a structured questionnaire for evaluation was prepared, after taking into consideration various aspects of the Board''s functioning, its composition, culture, performance, and ability to execute specific duties, obligations and its governance, and that of its Committees.

The performance evaluation of the Independent Directors was completed. The performance evaluation of the Executive Chairman and Non-Independent Directors was carried out by the Independent Directors. The Board of Directors expressed their satisfaction with the outcome of the evaluation process.

19] FAMILARISATION PROGRAMME FOR DIRECTORS:

At the time of appointment on the Board, each Independent Director is issued a formal letter of appointment, which inter alia explains the role, function, duties and responsibilities expected of him as a Director of the Company. All the Directors have been provided with a deep insight into the business of the Company including the working of the subsidiaries. Vessel-wise details have also been furnished to them. The Directors have also received a detailed explanation on the Compliances required from him/her under the Companies Act, 2013, SEBI (Listing Obligations of Disclosure Requirements) Regulations, 2015 and other relevant regulations and affirmation taken with respect to the same._,1-5.

20] DETAILS OF LOANS GRANTED / INVESTMENTS MADE / GUARANTEES PROVIDED UNDER SECTION 186 OF COMPANIES ACT, 2013 :

The details of the aforesaid Loans/Investment/Guarantees, during the year under review is enclosed as Annexure II.

21] PARTICULARS OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES:

The required information pursuant to the provisions of Section 188 of the Companies Act, 2013 is enclosed in Annexure III.

22] STATEMENT ON DEVELOPMENT AND IMPLEMENTATION OF RISKS MANAGEMENT POLICY:

Risk Management is a key aspect of the Corporate Governance Principles and Code of Conduct” which aims to improve the governance practices across all Company activities. Risk management policy and processes will enable the Company to proactively manage uncertainty and changes in both internal and external environments in an attempt to capitalize on opportunities and limit negative impacts.

The risk management policy of the Company identifies, evaluates, monitors and minimizes identifiable risks.

23] CORPORATE SOCIAL RESPONSIBILITY (CSR):

During the year under review, the Company did not undertake any CSR activity. Kindly refer to Annexure IV.

24] SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS:

There was no significant and material order passed by Regulators or Courts or Tribunals impacting the future operations or the going concern” status of the Company.

25] INTERNAL FINANCIAL CONTROL:

In the opinion of Board of Directors, there is adequate Internal Financial Control with respect to the preparation and presentation of the Financial statements which form a part of this Annual Report.

26] SECRETARIAL AUDITOR:

The Board has appointed Mr. Rajkumar Tiwari as Secretarial Auditor. His Report is enclosed as Annexure V to the Directors'' Report. There is no qualification in the Secretarial Auditors'' Report.

27] DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary) are covered under the policy.

The number of sexual harassment complaints received and disposed of during the year was Nil.

28] CORPORATE GOVERNANCE:

A separate report on Corporate Governance along with the Auditors'' Certificate on its compliance is given in a separate Annexure.

29] CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

The required details are enclosed as Annexure VI.

30] SUBSIDIARIES, JOINT VENTURE OF ASSOCIATE COMPANIES :

During the year under review, there were no Companies which became or ceased to be its subsidiaries, joint ventures or associate Company.

31] DETAILS RELATING TO REMUNERATION OF DIRECTORS, KEY MANAGERIAL PERSONNEL AND EMPLOYEES:

The information required under Section 197 read with Rule 5 of Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014 in respect of employees of the Company and Directors is furnished in Annexure - VII.

32] DETAILS OF DIRECTORS OR KEY MANAGERIAL PERSONNEL APPOINTED OR RESIGNED DURING THE YEAR:

During the year under review there was no change in Directors or Key Management Personnel.

Mr. A. B. Garware - Chairman and Mr. S.S. Aggarwal - Independent Director passed away after the year under review (in April 2018) and these vacancies have not been filled.

ACKNOWLEDGEMENT:

The Board wishes to thank the Office of Directorate General of Shipping, Mercantile Marine Department, Shipping Master, IRS, State Bank of India, and United Bank of India and Axis Bank Limited, for their continued support and co-operation during the year.

By Order of the Board

Date : 31st July, 2018 ADITYA A. GARWARE

Place : Mumbai CHAIRMAN

Director’s Report