Board's Report Your Directors are pleased to present the 68th Annual Report on the business operations and the Financial Statements of your Company for the financial year ended March 31, 2016. DIVIDEND ON EQUITY SHARES During the year, your Directors declared and paid two interim dividends of Rs. 6 per share and Rs. 7.50 per share respectively. The aggregate outflow on account of the equity dividend for the year was Rs. 243.95 crores (inclusive of tax on dividend). This represents a payout ratio of 40% (previous year 61.25%). The Board does not recommend any final dividend for the year under review. Management Discussion and Analysis COMPANY PERFORMANCE In Financial Year (FY) 15-16, the Company recorded a total income of Rs. 2295.30 crores (Previous year Rs. 2012.69 crores) and earned a PBIDT of Rs. 1,153.13 crores (previous year Rs. 840.93 crores). TANKER BUSINESS MARKET TREND AND ANALYSIS The strong earnings for crude tankers in FY 2016 were, principally due to the following factors: ¦ All oil producing nations upped their production levels and then continued their record high production even as oil prices fell. ¦ The surplus in crude availability translated directly into higher volumes shipped around the world, as refinery margins soared, demand spiked at lower prices, refinery maintenance was postponed and plants ran at historically high rates across the board. v The lower oil prices spurred large scale stock-building (Commercial and Strategic). • The crude fleet growth was modest in FY 2016 coming in at about 2.8 %. •The earnings were also helped by the drop in the price of bunkers in tandem with oil prices from more than $300/tonne at the start of FY2016 to less than $ 200/tonne by the end of FY 2016. •Similar to the crude tankers, the product tankers undoubtedly benefitted from the fall in oil prices. The chief factors for healthy product tanker earnings in FY 2016 were: • The sector continued to benefit due to the general trend of refining centres shifting from oil consuming countries to oil producing countries as refineries that recently opened up in Middle East propelled tonne mile higher. • Falling feedstock prices led to record high global refinery runs, which produced large amounts of products in refining centres all around the globe. • Strong cash flows from refining margins delayed some seasonal maintenance and even postponed permanent closures of refineries in Europe thus pushing more products onto the market. Arguably, the strength of earnings for product tankers was less pronounced as compared to crude tankers as net fleet growth was high at about 7 % but charter rates were at their highest levels since 2008. Overall, the world tanker fleet grew by about 4 % to 511 Mn dwt by the end of the financial year. COMPANY PERFORMANCE The tanker business accounted for around 90% of the Company's operating revenues and 92% of the operating profits. In FY16, crude tankers, inclusive of 'spot' and 'period', earned an average TCY of $ 31,913 /day (previous year $21,650/day). Product carriers, inclusive of 'spot' and 'period', earned an average TCY of $ 20,155 /day (previous year $16,050/day). TANKER FLEET CHANGES As of 31st March 2016, the tanker fleet of your Company stood at 22 tankers aggregating 1.81 Mn dwt, with an average age of 11.96 years as against 21 tankers aggregating 1.76 Mn dwt with an average age of 10.99 years as on 31st March 2015. During the year, your Company took delivery of: - 2005 built MR tanker, 'Jag Padma' in Q4 FY16. OUTLOOK FOR THE TANKER MARKET Currently, it seems that none of the oil producing nations are willing to cut their oil output inspite of the low oil prices. This position, along with potential increase of about 1 Mn barrels per day in supply from Iran as a result of end of the sanctions regime means that we are likely to see oil prices remaining soft during the year. As a result, we may see the following scenario in Cal Year (Cal) 2016. • Sustained weakness in oil prices may keep on increasing global crude trade. • Continued high refinery runs on the back of high margins • Continued Commercial and Strategic stockpiling although at a lower pace than 2015 As a result, the crude tanker demand appears to be positively placed going into Cal 2016, although, with higher fleet growth, the average earnings are likely to be lower in comparison with Cal 2015. The FY16 earnings for product tankers came in high in large part thanks to the summer spike on MRs and LR1s due to the large spike in gasoline consumption in the United States. With the low gasoline prices, US driving season is expected to be strong again this year meaning that Europe will once again be required to fill the deficit of gasoline in the Atlantic, thus boosting earnings for the product tankers. Any unexpected refinery outages in the Americas can also have a large potential impact going forward. These factors are likely to keep earnings for the product tankers healthy though they may be lower than in FY16. The global tanker order book stands at about 90 Mn dwt or 18.7 % of the fleet at the end of March 2016. The freight rates in FY 2016 were notable for their extrême weakness notching up several lows during the year and leading to a perilous financial situation for many owners. Arguably, the most visible reason was a decline in China's coal consumption with imports down by 20% over the year resulting in reduced demand of over 50 Mn metric tonnes. As the second most widely traded dry bulk commodity after iron ore, this had an adverse effect on the shipping market. The iron ore imports into China barely grew by 3% year on year with increasing number of shipments arriving from Australia which is a short haul route, instead of Brazil. The situation was exacerbated by the steady increase in the size of the global fleet whose growth was partly checked by the healthy amount of scrapping witnessed during the year. This support from the supply side however did not provide succour to the market as this moderate supply added to the existing oversupplied fleet. The world dry bulk fleet grew by 2 % to 784 Mn dwt by the end of the financial year. COMPANY PERFORMANCE The dry bulk fleet contributed around 10% of the Company's operating revenues but just 8% of the operating profits. In FY16, around 17% of the bulk carrier earnings were derived from the period market. In FY16, the average TCY for dry bulk vessels, inclusive of 'spot' and 'period', was approximately $ 6,638/day as compared to $ 9,860/ day in the previous year. DRY BULK FLEET CHANGES As of 31st March 2016, the dry bulk fleet of your Company stood at 9 vessels aggregating 0.59 Mn dwt, with an average age of 6.48 years as compared to 8 vessels aggregating 0.511 Mn dwt with an average age of 6.875 years on 31st March 2015. During the year, your Company took delivery of: - 2015 built Kamsarmax Bulk Carrier 'Jag Arnav' in Q1 FY16. - 2015 built Kamsarmax Bulk Carrier 'Jag Aakash' in Q2 FY16. During the year, your Company sold & delivered: - 2015 built Kamsarmax Bulk Carrier 'Jag Aakash' in Q2 FY16. OUTLOOK FOR THE DRY BULK MARKET The dry bulk market is expected to remain weak and there currently are no market factors which are a cause for optimism in the near term. The market sentiment is eroded by deepening concerns for demand and the looming orderbook. Whilst there might be some intermittent rise in the market, overall we expect the dry bulk market to remain within a narrow band of earnings for 2016. The global dry bulk orderbook stands at about 112 Mn dwt or 14.3 % of the fleet at the end of March 2016. ASSET VALUES Tankers: The values have softened between 5% to 8% on year-on-year basis. Dry Bulk: The year has witnessed a sharp drop in asset prices again with vessels losing about 40% of their value. RISKS AND CONCERNS Your Company has carried out a detailed exercise to identify the various risks faced by the Company, and has put in place mitigation, control and monitoring plans for each of the risks. Risk owners have been identified for each risk, and these risk owners will be responsible for controlling the respective risks. The efficacy of these processes will be monitored on a regular basis by Risk Committees for the different areas, and further reviewed by the Risk Management Committee consisting of the Compliance Officer and the three Whole-time Directors. Economic risk: Shipping is a global business whose performance is closely linked to the state of the global economy. Therefore, the earnings of your Company could be impacted negatively if the global economic situation does not improve over the longer term. Volatility: Over and above the economic risks the shipping industry is impacted by numerous short term and regional factors, like political fallouts, weather changes, etc. This results in great amount of volatility in the freight market, which in turn impacts your Company's earnings. Your Company has attempted to hedge some of the above risk by entering into time charters for part of its fleet. Your Company also believes that one of the main elements of risk management in shipping is the cost of the asset, and will endeavour to time acquisitions and sales in such away as to reduce risk on the portfolio. Shipboard personnel: Indian officers continue to be in great demand all over the world. Given the unfavorable tax status conferred on a seafarer sailing on Indian-flagged vessels, it is becoming increasingly difficult for your Company to source officers capable of meeting the modern day challenges of worldwide trading. This is more relevant for tanker personnel and may become a hindrance to growth. OPEC action: If the OPEC decides to cut output, this drop in demand combined with inventories and increased new building deliveries, could negatively impact the demand for tankers. Chinese economy: As we have seen in the recent past, China has been the main driving factor of the shipping demand. The Chinese economy is currently experiencing headwinds in growth. This is affecting its dry bulk imports and keeping a lid on world trade growth in dry bulk. This along with increased new building deliveries especially in the dry bulk sector could prolong the negative impact on shipping. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY Your Company has instituted internal financial control systems which are adequate for the nature of its business and the size of its operations. The policies and procedures adopted by the Company ensure the orderly and efficient conduct of its business, including adherence to Company's policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information. The systems include a range of activities such as approvals, authorizations, verifications, reconciliations, review of operating and financial performance, security of assets, segregation of duties, preventive and detective controls. The systems have been well documented and communicated. They are also tested from time to time through internal as well as external audits. The internal audit is carried out by a firm of external Chartered Accountants and covers all departments. In the beginning of the year, the scope of the internal audit exercise including the key business processes and selected risk areas to be audited are finalised in consultation with the Audit Committee. All significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee comprises of Mr. Cyrus Guzder (Chairman), Mr. Berjis Desai, Mr. Farrokh Kavarana and Mrs. Rita Bhagwati. CONSOLIDATED FINANCIAL STATEMENTS The Consolidated Financial Statements have been prepared by your Company in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 2013 to the extent applicable. The audited Consolidated Financial Statements together with Auditors' Report thereon form part of the Annual Report. The group recorded a consolidated net profit of Rs. 1039.40 crores for the year under review as compared to Rs. 748.24 crores for the previous year. The net worth of the group as on March 31, 2016 was Rs. 8283.90 crores as compared to Rs. 7430.62 crores for the previous year. SUBSIDIARIES The statement containing the salient features of the financial statements of the Company's subsidiaries for the year ended March 31, 2016 has been attached along with the financial statements of the Company. The report on performance of the subsidiaries is as follows: Greatship (India) Limited, Mumbai Greatship (India) Limited (GIL), wholly owned subsidiary (WOS) of your Company and one of India's largest offshore oilfield services providers, has completed its 10th year of operations. GIL recorded a profit after tax of Rs. 508.44 crores on a consolidated basis for the year ended March 31, 2016 as compared to Rs. 516.94 crores for the year ended March 31, 2015. The consolidated net worth of GIL for financial year 2016 was Rs. 4,550.57 crores as compared to Rs. 3958.66 crores for financial year 2015. During the year under review, GIL sold one 2009 built 80-T Anchor Handling Tug cum Supply Vessel (AHTSV), 'Greatship Akhila'. There was no addition to the fleet during the year under review. GIL, alongwith its subsidiaries, currently owns and operates twenty one vessels and four jack up drilling rigs. The operating fleet of twenty one vessels comprises of five Platform Supply Vessels (PSVs), eight AHTSVs, two Multipurpose Platform Supply & Support Vessels (MPSSVs) and six ROV (Remotely Operated Vehicle) Support Vessels (ROVSVs). GIL has the following wholly owned subsidiaries: a) Greatship Global Holdings Ltd. (GGHL), Mauritius GGHL is the holding company of Greatship Global Energy Services Pte. Ltd. (GGES), Singapore and Greatship Global Offshore Services Pte. Ltd. (GGOS), Singapore. i) Greatship Global Energy Services Pte. Ltd., Singapore GGES currently owns four Jack-up rigs which have been bareboat chartered to GIL. The company's profit after tax for the current financial year amounted to USD 42.51 Mn as against the profit of USD 36.27 Mn in the previous year. ii) Greatship Global Offshore Services Pte. Ltd., Singapore GGOS owns and operates four offshore support vessels which include one Anchor Handling Tug cum Supply Vessel (AHTSV), two Multipurpose Platform Supply and Support Vessels (MPSSVs) and one ROV Support Vessel (ROVSV). The company incurred a loss of USD 6 Mn for the current financial year as against the profit of USD 18.75 Mn in the previous year. GGOS is the holding company of GGOS Labuan Ltd., Malaysia. iii) GGOS Labuan Ltd. (GLL), Malaysia GLL was incorporated in June 2014 as a wholly owned subsidiary of GGOS to pursue business opportunities in the Malaysian market. However, it has not commenced any operations as yet. b) Greatship (UK) Limited (GUK), United Kingdom During the year under review, GUK continued to operate the two ROV Support Vessels (ROVSVs) inchartered from GIL. The Company's profit after tax for the current financial year amounted to USD 1.55 Mn as against the profit of USD 1.22 Mn in the previous year. c) Greatship Oilfield Services Ltd. (GOSL), India During the year under review, GIL incorporated GOSL as a wholly owned subsidiary in Mumbai on July 9, 2015. GOSL has been registered as a Micro, Small & Medium enterprise. However, it did not carry out any operations during the year. The Greatship (Singapore) Pte. Ltd., Singapore The Greatship (Singapore) Pte. Ltd. is a wholly owned subsidiary of your Company. The Greatship (Singapore) Pte. Ltd. does shipping agency business for the ships owned by your Company. During the year ended March 31, 2016 there were 92 ship calls at Singapore. The company's profit after tax for the current financial year amounted to S$ 0.20 Mn as against the profit of S$ 0.15 Mn in the previous year. The Great Eastern Shipping Co. London Ltd., U.K. The Great Eastern Shipping Co. London Ltd. is a wholly owned subsidiary of your Company. It did not carry out any operations during year ended March 31, 2016. The company's loss for the current financial year amounted to USD 1.11 Mn as against the loss of USD 0.04 Mn in the previous year. The company is in the process of voluntary striking off of its name from the Register of Companies, UK. The Great Eastern Chartering LLC (FZC), U.A.E. The Great Eastern Chartering LLC (FZC) is a wholly owned subsidiary of your Company. Chartering of ships is the main activity of this company. Currently, the company has one in-chartered Suezmax tanker on 3 years charter with option to extend the charter by up to 2 additional years. Since April 03, 2015 the vessel has been chartered to The Great Eastern Shipping Co. Ltd. on back to back terms. During the financial year 2015-16, the company made a profit of USD 1.65 Mn as compared to a loss of USD 2.24 Mn for the previous year. The Great Eastern Chartering (Singapore) Pte. Ltd., Singapore The Great Eastern Chartering (Singapore) Pte. Ltd. is a wholly owned subsidiary of The Great Eastern Chartering LLC (FZC), U.A.E. Due to depressed market conditions, FFA trading has been considerably reduced and only one new FFA trade has been concluded during the year. During the financial year 2015-16, the company made a loss of USD 0.10 Mn as compared to a loss of USD 1.21 Mn for the previous year. Great Eastern CSR Foundation, India Great Eastern CSR Foundation (Foundation) is a wholly owned subsidiary of your Company which handles the CSR activities of your Company and its subsidiaries. The Foundation has received a total contribution of Rs. 7.19 crores during the year from the Company and Greatship (India) Limited. The Foundation has spent Rs. 6.75 crores on CSR activities. Details of CSR activities carried out by Great Eastern CSR Foundation are set out in the annual report on CSR activities which forms part of this Board's Report. DEBT FUND RAISING During the year, fresh debt of Rs. 261.08 crores was raised. In addition, a loan of USD 29.4 Mn was refinanced to bring down the interest cost. The gross debt:equity ratio as on March 31, 2016 was 0.55:1 (0.69:1 including effect of currency swaps on rupee debt) and the debt:equity ratio net of cash and cash equivalents was 0.00 (0.14:1 including effect of currency swaps). QUALITY, SAFETY, TRAINING, HEALTH & ENVIRONMENT Maintaining high levels of safety on board our assets has been the message that has been spread across the fleet by means of safety campaigns and while meeting with ship's personnel. The message has also been spread during all visits of senior management to the fleet during the year. Continuing with the focus of maintaining assets, the Company carried out additional inspections of the vessels. The follow up of the issues noticed during these inspections have not only improved the quality of the assets, but also reduced the unplanned down time of the fleet. Further, the Company has been audited by 5 oil majors during the year. The Company has also converted the Safety Management System documentation to electronic form. Increased awareness of floating staff to safety related issues has resulted in reduction in Lost Time due to Injury (LTI) to 0.89 per million exposure hours (from 2.45 in FY15) and Total Recordable case Frequency (TRCF) to 4.19 per million exposure hours (from 5.17 in FY 2015). Your Company's Key Performance Indicator targets are 2.0 and 4.8 respectively. The emphasis of continuous training of shipboard personnel has been the key focus this year with "On Board Training" on 20 of the fleet's vessels and soft skill training on leadership and a newly introduced module on behaviour based safety has been imparted to senior officers of the vessels. The computer based Learning Management System (LMS) has been made fully operational where the ship's staff can refresh and enhance their sector specific knowledge while on their leave. The training is open to all sailing officers of the Company. The LMS is also used to assess competency of newly joining officers and those seeking promotion to higher level of responsibility. IT INITIATIVES In the era of digital transformation across the country, your Company is also strategically moving towards that goal. The following are a few of the major initiatives in this financial year, in that direction: ¦ Direct Digital Transformation Initiatives With an objective of moving towards digital transformation of the organization, the Company has commenced digitizing the huge set of printed documents for previous years as well as on current ongoing ones. In the same line of digital transformation, the Company has introduced approval system driven workflow in place of paper approval in some places, which will eventually be implemented across the organization. g Improved Connectivity between Ship and Shore The Company has implemented Internet Connectivity in all its ships now. As a result, all the data transfer from ship to shore is now real time, which helps the management team to act much faster and more effectively. The Company has Voice over Internet Protocol (VoIP) in place and it is now in the process of implementing new route to connect from a mobile phone at the shore to ship's phone, through VoIP connection. That will bring a huge difference in terms of using instant connection from shore to ship on an anytime anywhere basis. • Mobile Apps As a part of digital transformation movement, your Company has implemented quite a good number of mobile apps in different functional areas. This has enabled both the senior and junior management to track the data on a real time basis. • Cyber Security Initiative In today's digital environment, cyber security is a big concern for any organization. The Company already had basic security in place earlier, but this year the Company has taken many steps to strengthen its cyber security area, including a periodical security audit conducted by external agencies. The Company has also conducted different vulnerability tests by external agencies to ascertain the level of its IT security. Based on their recommendation and guidance, the Company has introduced IT security policies for the organization and is also in the process of implementing more stringent measures. HUMAN RESOURCES The Company recognizes that sustainable business success can be achieved only through focus on its employees and by building a performance culture where employees are encouraged, engaged and empowered to deliver the highest output. A set of interventions were initiated to build an inclusive and vibrant workplace. Considerable energy and efforts were invested in Learning and Development to build a lean, agile and competent workforce. Shore and sailing staff were exposed to multiple soft skills programs. Learning planet, the e-learning platform was put to optimal use to provide virtual learning. A business simulation module - Poseidon's venture was developed to provide a realistic business training to employees. An employee town hall was held in December 2015 which enabled close interaction between senior management and employees. An offsite seminar with the Top 4 ranks of the sailing staff helped alignment with the Company's long term direction and expectations from employees. The Company utilized the Coffman Index to measure employee engagement which stood at 3.73 on a 5 point scale. Overall employee satisfaction was 4.00, while the pride of being associated with GE Shipping was 4.58. For the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Total number of permanent shore staff: 180, attrition 4% Total number of permanent floating staff: 513 GREAT EASTERN INSTITUTE OF MARITIME STUDIES (GEIMS) The Great Eastern Institute of Maritime Studies has completed 10 years of operation and has trained 2,630 cadets on the nautical, engineering and electrical side. During the tenth year, 10 pre-sea batches comprising 3 batches of nautical cadets, 4 batches of engine cadets and 3 batches of electrical cadets with a total of 397 cadets were trained. Presently, about 60% of officers of Company's vessels are from the Institute and this percentage will continue to increase. During the year, solar water heating units have been installed in one hostel block on trial basis which is operating successfully. Faculty is being encouraged to attend various professional development programs for enhancing their knowledge and career growth. There is a constant updating of the existing learning modules by the faculty in various areas like Marine Environmental Awareness, Material Welding etc. Cadets are motivated to participate in presentations made at various institutes where they have won a number of prizes. CORPORATE SOCIAL RESPONSIBILITY The Corporate Social Responsibility Committee comprises of Mr. Vineet Nayyar (Chairman), Mr. Cyrus Guzder and Mr. Bharat K. Sheth. 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 Annual Report on CSR activities is enclosed herewith as "Annexure B". Mr. Bharat K. Sheth was re-appointed as 'Deputy Chairman & Managing Director' of the Company for a period of 5 years with effect from April 01, 2015. Mr. Ravi K. Sheth ceased to be the Executive Director of the Company with effect from April 01, 2015. However, he continues to be the Non-Executive Director of the Company. Dr. Rajiv Lall resigned from the Board of Directors of the Company with effect from May 08, 2015 in view of his inability to devote the amount of time that was needed for the Company as he was preoccupied in the process of starting the banking operations of IDFC Bank. Your Directors place on record their appreciation for the valuable guidance and support extended by Dr. Raiv Lall during his tenure as an Independent Director. Mr. Tapas Icot 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. Tapas Icot has been included in the Notice convening the ensuing Annual General Meeting. The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and under Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements), 2015. 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. APPOINTMENT AND REMUNERATION POLICY FOR DIRECTORS AND SENIOR MANAGEMENT The Nomination & Remuneration Committee has framed a policy for appointment of Directors. The Nomination & Remuneration Committee has also framed policies for remuneration of Directors, Key Managerial Personnel and other employees, which have been adopted by the Board. The aforesaid policies are enclosed herewith as Annexure 'C' and 'D' The details of remuneration as required to be disclosed pursuant the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed as Annexure 'E' BOARD EVALUATION Annual performance evaluation of Board, its committees (namely, Audit, Nomination & 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 & 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. 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 & 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 Your Company has complied with all the mandatory provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, relating to Corporate Governance. A separate section on Corporate Governance forms part of the Board's Report and the certificate from practicing Company Secretary confirming the compliance of conditions on Corporate Governance is included in the Annual Report. 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 make 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. However, following transactions, though entered into in the ordinary course of business, may not strictly be treated on arm's length basis: • Extension of charter of suezmax vessel, 'MV Erviken' taken from a wholly owned subsidiary of the Company The Company had taken on charter a suezmax vessel 'MV Erviken' from The Great Eastern Chartering LLC (FZC) (GE Sharjah), a wholly owned subsidiary of the Company, with effect from April 03, 2015 for a period of 9 months (with option to extend upto 730 days). The Company runs a fleet of 4 suezmaxes similar to the aforesaid vessel. The Company was of the view that if the vessel runs as a part of its fleet, it may fetch better returns as compared to The Great Eastern Chartering LLC (FZC) running a single vessel. The Company has taken the vessel on charter at the same rate and on the same terms on which GE Sharjah had taken the vessel on charter from its owners. During the year, the Board had approved extension of the charter of the vessel for a period upto and including June 30, 2019. However, as the market conditions were not expected to be favourable, the Company has decided to redeliver the vessel to GE Sharjah on completion of the firm charter period which expires on 1st July 2017 (+/- 1 month). • Transfer of 'Served From India Scheme' scrips, which enables the holder to import certain items without payment of duty in cash, upto Rs. 1 crore to Greatship (India) Limited, a wholly owned subsidiary of the Company. The Company has transferred 'Served From India Scheme' scrips (SFIS scrips) of Rs. 1 crore issued by Directorate General of Foreign Trade (DGFT) under the 'Served From India Scheme' of the Foreign Trade Policy to Greatship (India) Limited (GIL), wholly owned subsidiary of the Company. The Company currently holds certain SFIS scrips which are valid till September 2016. The Company may not be able to utilize the SFIS scrips fully. In such case, they may lapse. On the other hand, GIL requires the same for its business purposes. Therefore, SFIS scrips of Rs. 1 crore were transferred to GIL for no consideration. EXTRACT OF ANNUAL RETURN The extract of the Annual Return in Form MGT 9 is enclosed herewith as "Annexure G" 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. ENERGY CONSERVATION, 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: • Jag Lok, Jag Lakshita, Jag Lateef, Jag Aditi and Jag Aarati were retrofitted with Mewis Ducts, a device which improves the flow of water on to propeller and thus its efficiency. These devices are designed as per hull and propeller characteristics of individual ships. Model tests are carried out to confirm energy savings that may be achieved in loaded as well as ballast conditions over various speeds. Only on completion of satisfactory tests, full scale Mewis Ducts are fabricated at manufacturers' works, transported and fitted to vessels during dry docking. Total cost incurred on above five ships: USD 1,532,870. • For a typical Bulk Carrier or Oil 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, Company has applied superior anti-fouling coatings on all five ships and Jag Arya during their respective dry dockings during the financial year. The additional cost incurred for preparation of hull surface and application of the superior anti-fouling coatings was USD 895,000. During the financial year saving of USD 1.4 million 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 13,900 MT. Sensor Based Performance Monitoring System During the year, your Company completed a pilot project of evaluating benefits of sensor based performance monitoring system, a new technology being applied on board ships, for fuel efficiency. The pilot ships were Jag Lok, Jag Lalit, Jag Aditi and Jag Aarati. The Performance Monitoring System is an IT based system installed on board ship continuously gathering information through sensors of all relevant parameters i.e. fuel consumption rate, main engine power output, wind speed, trim etc. Thus it provides on board continuous overall ship status information through on-line processing of a complete set of relevant parameters. Availability of a prompt and continuous display of actual ship status allows shipboard staff to be constantly aware of real time vessel fuel efficiency performance and thus enables them to instantly evaluate the impact of any action they might take for improvement (such as trim variation, course deviation, engine speed etc.). The same data is transmitted to shore office through satellite communication for analysis with a view to enhance fuel efficiency and thus reduce greenhouse gas emission. The Performance Monitoring System hardware and software had been procured during FY 2014-2015 from Iceland based MARORKA ehf., a pioneer and market leader in this area of technology. The project has added value to your Company's experience in monitoring vessel performance using latest technology. The system provides the ability to see real time energy consumption data on board ships and ashore and has proven to be very useful in decision making for fuel saving. Initiatives of Vessel Performance Management Cell (VPM Cell) VPM Cell in co-ordination with IT Department has developed and is in the process of developing several computer based tools for monitoring fuel efficiency performance of vessels with beneficial results viz. Vessel Performance Dashboard, Cargo Discharge Parameter Monitoring, etc. Reduction of Green House Gas Emission from Ships Carbon footprint of ships is measured in terms of Energy Efficiency Operational Indicator (EEOI) as per Guideline of International Maritime Organization MEPC.1/Circ.684. Your Company has in-house developed software for capturing the relevant data from individual ships and displaying the same in various report formats in a dashboard for analysis. It shows CO2 emission per tonne-mile of cargo moved by individual ships and fleet as whole over any selected given period of time. This is used to carry out trend analysis of CO2 emission from individual ships as well as fleet as a whole. Technology absorption Your Company has identified and absorbed several technologies on fleet vessels. These are reflected in paragraphs above. Quantification and reporting of Green House Gas (GHG) emission Your Company has decided from this year onwards to capture and quantify GHG emission from its business operation 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 édition) published by World Business Council for Sustainable Development and World Resources Institute. The organisational boundary for emission quantification includes vessels owned and managed by the Company on voyage and time charter, i.e. 31 vessels of 2.41 million deadweight tonnes and the Company's Head Office at Mumbai and Training Academy at Lonavala. The above quantification and Company's internal protocols, processes and controls related to the collection and collation of GHG emission data is being independently verified by DNV-GL. Contribution in the work of Marine Environment Protection Committee of International Maritime Organization Marine Environment Protection Committee of IMO is currently developing new regulations and reviewing existing regulations for reduction of CO2 emission from ships. Your Company, as a stakeholder, has been providing feedback to this work through Government of India for development of pragmatic regulations for benefit of the environment and society. AUDITORS Pursuant to the provisions of Section 139 of the Companies Act, 2013, M/s. Kalyaniwalla & Mistry 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 2017. As per the said provision, the appointment of auditors is required to be ratified at every Annual General Meeting. Necessary resolution for ratification of their appointment has been included in the Notice convening the ensuing Annual General Meeting. 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, 2016. The Secretarial Audit Report is annexed herewith as "Annexure H" 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 Mumbai, May 05, 2016 |