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Great Eastern Shipping Company Ltd.

BSE: 500620 | NSE: GESHIP |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE017A01032 | SECTOR: Shipping

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Annual Report

For Year :
2018 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

The Directors are pleased to present the 70th Annual Report on the business operations and the Financial Statements of your Company for the financial year ended March 31, 2018.

FINANCIAL PERFORMANCE

The financial results of the Company (standalone) for the financial year ended March 31,2018 are presented below:

(Rs. in crores)

2017-18

2016-17

Total Revenue

2399.27

2224.71

Total Expenses

2232.08

1583.32

Profit before tax

167.19

641.39

Less : Tax Expenses

7.00

40.00

Profit for the period

160.19

601.39

Retained Earnings

Balance at the beginning of the year

1405.71

1558.29

Add :

- Profit for the year

160.19

601.39

- Other Comprehensive Income

3.42

(2.14)

Less :

- Transfer to Tonnage tax reserve

15.00

100.00

- Transfer to Debenture redemption reserve

28.75

591.25

- Interim Dividend on Equity Shares

-

54.28

- Final Dividend on Equity Shares (FY - 2016-17)

98.01

-

- Dividend Distribution Tax

14.63

6.30

Balance at the end of the year

1412.93

1405.71

The net worth of the Company as on March 31, 2018 was Rs.5225.42 crores as compared to Rs.5162.02 crores for the previous year.

The financial statements have been prepared in accordance with the Indian Accounting Standards (IndAS) notified under the Companies (Indian Accounting Standards) Rules, 2015.

DIVIDEND

Your Directors recommend a final dividend of Rs.7.20 per share which will result in an outflow of Rs.126.08 crores (inclusive of tax on dividend). This represents a payout ratio of 78.71% (previous year 28.90%). The dividend will be paid after your approval at the ensuing Annual General Meeting.

GREAT EASTERN INSTITUTE OF MARITIME STUDIES (GEIMS)

The Great Eastern Institute of Maritime Studies, Lonavla (GEIMS) has trained 3463 cadets since inception. These cadets, upon passing out, serve on merchant ships as Nautical Officers, Graduate Marine Engineers and Electro-Technical Officers. About 50% of the passed out cadets serve on the Company’s vessels whereas almost 70% of the Officers on the Company’s vessels have been trained at GEIMS. This percentage will increase in the next few years. The first General Purpose Rating (GP Rating) batch of trainees successfully passed at GEIMS in July 2017. After successful completion of their training, 34 trainees are placed on Company’s vessels.

For the first time GEIMS has inducted seven Angolan cadets (including two female cadets) to be trained as Electro-Technical officers.

During the last Annual Comprehensive Inspection Programme (CIP) conducted under the enhanced guidelines of DG Shipping, GEIMS has improved on its earlier score and was once again awarded Grade A1 (Outstanding). This gradation places GEIMS as one of the premier Maritime Training Institutes in the country and confirms the high level of compliance with all Merchant Shipping rules and associated orders, circulars and guidelines issued by DG Shipping from time to time.

To further enhance training at the Institute, GEIMS has installed a full size forecastle of a ship procured from the shipbreaking yard at Alang. This will provide hands-on training to trainees on aspects of seamanship, anchor operations, navigational lights, electrical and hydraulics machinery and ship construction.

Also, a Modern Bridge Simulator, encompassing the current technologies and types and sizes of ships, has been set-up in the campus for practical training of nautical officers. An advanced Electrical and Control Laboratory is being set up for training of Engineering and ElectroTechnical officers at GEIMS.

Forty computer work stations have been included in the Institute library to enable trainees to browse the digital library for technical reference.

Above training facilities have been included in the campus in addition to the already existing “Centers of Excellence” for marine boiler and high voltage simulation and a fully functional marine diesel engine.

To enhance the security within the campus, 29 high resolution CCTV cameras have been mounted at vulnerable locations. Also, as per DG shipping requirement, in order to ensure the required attendance of lectures by all trainees, biometric recording has been initiated at the entrance of each classroom.

CORPORATE SOCIAL RESPONSIBILITY

The Company has always been conscious of its role as a good corporate citizen, and strives to fulfill this role by running its business with utmost care for the environment and all the stakeholders. The Company looks at Corporate Social Responsibility (CSR) activities as significant tool to contribute to the society.

The Board of Directors of the Company has constituted a Committee of Directors, known as the Corporate Social Responsibility Committee, comprising of Mr. Vineet Nayyar (Chairman), Mr. Cyrus Guzder and Mr. Bharat K. Sheth to steer its CSR activities.

Copy of the Corporate Social Responsibility Policy of the Company as recommended by the CSR Committee and approved by the Board is enclosed as ‘Annexure A’. The CSR Policy is also available on the website of the Company : www.greatship.com.

The CSR Policy is implemented by the Company through Great Eastern CSR Foundation, a wholly owned subsidiary of the Company specifically set up for the purpose.

The Annual Report on CSR activities is enclosed herewith as “Annexure B”.

DIRECTORS

Mr. G. Shivakumar shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Necessary resolution for re-appointment of Mr. G. Shivakumar has been included in the Notice convening the ensuing Annual General Meeting.

As per the provisions of the Companies Act, 2013, Independent Directors have been appointed for a period of five years and shall not be liable to retire by rotation. The Independent Directors of your Company have given the certificate of independence to your Company stating that they meet the criteria of independence as mentioned under Section 149(6) of the Companies Act, 2013 and under Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The policies on Director’s appointment and remuneration including criteria for determining qualifications, positive attributes, independence of Directors, and also remuneration for key managerial personnel and other employees are enclosed herewith as Annexure ‘C’ and ‘D’.

During the year, Mr. Bharat K. Sheth, who is also a Non-Executive Chairman of Greatship (India) Ltd. (GIL), a wholly owned subsidiary of the Company, was in receipt of commission of Rs.13,000,000 from GIL.

The details of remuneration as required to be disclosed pursuant to the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed as Annexure ‘E’.

BOARD MEETINGS

During the year, 5 meetings of the Board were held. The details of Board meetings as well as Committee meetings are provided in the Corporate Governance Report.

BOARD EVALUATION

Annual performance evaluation of Board, its committees (namely, Audit, Nomination and Remuneration, Corporate Social Responsibility and Stakeholders’ Relationship Committees) and all the Directors individually has been done in accordance with the Performance Evaluation Framework adopted by the Nomination and Remuneration Committee of the Company. The Performance Evaluation Framework sets out the performance parameters as well as the process for performance evaluation to be followed. During the year, the Performance Evaluation Framework was revised to elaborate the evaluation parameters and process in line with the Guidance Note on Board Evaluation issued by SEBI vide its circular dated January 05, 2017.

In accordance with the new Performance Evaluation Framework, performance evaluation forms were circulated to all the Directors to record their evaluation of the Board, its Committees and Non-executive Directors of the Company. The performance evaluation of the Company and Executive Directors was done on the basis of presentation made by the management.

Pursuant to the provisions of the Companies Act, 2013, a separate meeting of Independent Directors reviewed performance of the Company Board as a whole and Non-Independent Directors (including Chairman) of the Company.

The Board of Directors reviewed the performance of Independent Directors and Committees of the Board. Nomination and Remuneration Committee also reviewed performance of the Company and every Director.

DIRECTORS’ RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134 (3) of the Companies Act, 2013, the Board of Directors hereby state that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b) the directors had 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 financial year and of the profit and loss of the company for that period;

c) the directors had 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;

d) the directors had prepared the annual accounts on a going concern basis; and

e) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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.

CORPORATE GOVERNANCE

Maintaining high standards of Corporate Governance has been fundamental to the business of your Company since its inception. A separate report on Corporate Governance is provided together with a Certificate from the practicing Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under Listing Regulations.

The extract of annual return in Form MGT-9 as required under Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014 is enclosed herewith as Annexure ‘G’.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

With a view to create safe workplace, the Company has formulated and implemented Sexual Harassment (Prevention, Prohibition and Redressal) Policy in accordance with the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. For the purpose of handling and addressing complaints regarding sexual harassment, the Company has constituted Internal Complaint Committee with an external lady representative (who has the requisite experience in this area) as a member of the Committee. To build awareness in this area, the Company also conducts awareness programmes within the organisation.

During the year, no complaints with allegations of sexual harassment were received by the Company.

VIGIL MECHANISM

The Company has established a vigil mechanism (Whistle Blower Policy) for Directors and employees to report genuine concerns. The Whistle Blower Policy provides for adequate safeguards against victimisation of persons who use such mechanism and makes provision for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases.

A copy of the Whistle Blower Policy is available on the website of the Company: www.greatship.com

RELATED PARTY TRANSACTIONS

The Company has formulated policy on dealing with Related Party Transactions, a copy of which is available on the website of the Company: www.greatship.com

The particulars of contracts or arrangements with related parties in Form AOC 2 is annexed herewith as “Annexure F”.

All the related party transactions have been entered into by the Company in the ordinary course of business and on arm’s length basis.

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.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future.

DIVIDEND DISTRIBUTION POLICY

The Dividend Distribution Policy of the Company is enclosed as ‘Annexure H’. The Dividend Distribution Policy is also available on the website of the Company : www.greatship.com.

ENERGY CONSERVATION AND TECHNOLOGY ABSORPTION CONSERVATION OF ENERGY

In order to contribute to and prepare for a low carbon future, your Company has been undertaking various initiatives with regard to enhancing energy efficiency in its business operations.

ENERGY SAVING DEVICES

During the financial year under consideration, following Energy Saving Devices were retrofitted for reducing fuel consumption of main propulsion system:

a) Jag Aparna, Jag Rishi, Jag Prakash, Jag Pushpa, Jag Aanchal and Jag Prerana were retrofitted with Propeller Boss Cap Fins / EcoCap, a device which improves propulsive efficiency. The propeller’s rotational motion forms a strong vortex at the center, which causes overall loss of propulsive efficiency. The finned features of a PBCF-EcoCap break up this vortex, thereby reducing the loss of energy.

Total cost incurred on above six ships: USD 354,293.

b) For a typical Bulk Carrier or Tanker, loss of energy through hull resistance is around 30% and this increases with growth of hull roughness due to bio-fouling. To minimize growth of bio-fouling, the Company has applied superior anti-fouling coatings on Jag Laadki, Jag Prakash, Jag Pushpa and Jag Prerana during their respective dry dockings during the financial year.

The additional cost incurred for application of the superior anti-fouling coatings was USD 669,038.

During the financial year saving of USD 1.77 Mn was achieved in fuel cost from energy saving retrofits and use of superior anti-fouling hull coatings alone. This fuel saving also resulted in reduction of CO2 emission by 15,771 MT

TECHNOLOGY ABSORPTION

Your Company has identified and absorbed several technologies on fleet vessels. These are reflected in paragraphs above.

COMPLIANCE WITH EU MRV (MONITORING, REPORTING, VERIFICATION) REGULATION

With effect from 1st January 2018 all vessels above GT 5000 engaged in carrying cargo to and from and within European Union (EU) ports are mandatorily required to report their fuel consumption, CO2 emission and certain other parameters pertaining to work done during such voyages to European Commission as per their Regulation (EU) 2015/757 (on the monitoring, reporting and verification of carbon dioxide emissions from maritime transport) annually. Your Company has developed ship specific required Monitoring Plans which describes the procedure of collection, quality control, storage and transmission of relevant data and the same have been approved by accredited Verification Body. Data for the first calendar year 2018 duly reviewed by Verification Body will have to be submitted to EC by 30th April 2019.

QUANTIFICATION AND REPORTING OF GREENHOUSE GAS (GHG) EMISSION

Since FY 2015-2016, your Company has started to capture and quantify GHG emission from its business operations in a transparent and standardized manner for the information of stakeholders of the Company on a voluntary basis. The GHG emission quantification and reporting has been done taking into account:

- ISO 14064-1 (2006) “Greenhouse gases - Part 1: Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals, and

- The Greenhouse Gas Protocol - A Corporate Accounting and Reporting Standard (revised edition) published by World Business Council for Sustainable Development and World Resources Institute.

FOREIGN EXCHANGE EARNINGS AND OUTGO

The details of Foreign Exchange Earnings and Outgo are as follows:

AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act, 2013, Deloitte Haskins & Sells LLP were appointed as the Statutory Auditors of your Company to hold office until the conclusion of the Annual General Meeting of the Company to be held in the calendar year 2022.

The Report given by the Auditors on the financial statements of the Company is part of this Report. There has been no qualification, adverse remark or disclaimer given by the Auditors in their Report.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Company appointed M/s. Mehta & Mehta, Company Secretaries to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2018.

The Secretarial Audit Report is annexed herewith as “Annexure I”.

APPRECIATION

Your Directors express their sincere thanks to all customers, charterers, vendors, investors, shareholders, shipping agents, bankers, insurance companies, protection and indemnity clubs, consultants and advisors for their continued support throughout the year. Your Directors also sincerely acknowledge the significant contributions made by all the employees through their dedicated services to the Company. Your Directors look forward to their continued support.

For and on behalf of the Board of Directors

K.M. Sheth

Chairman

(DIN : 00022079)

Mumbai, May 04, 2018

Director’s Report