DIRECTORS’ REPORT The Members Your Directors have pleasure in presenting the Twenty-Eighth Annual Report of the Company and the Audited Accounts for the financial year ended 31st March, 2015. 1. SIGNIFICANT EVENTS - DISINVESTMENT OF SHARES BY CO-FLEXIP STENA OFFHSORE (MAURITIUS) LIMITED As reported earlier, HAL Offshore Limited (HAL) had acquired first tranche of 1,72,89,000 shares representing 51% shares on 3rd June, 2014 pursuant to compliance of terms of Share Purchase Agreement dated 22nd April 2014 entered into between Coflexip Stena Offshore (Mauritius ) Limited, the wholly owned subsidiary of Technip SA France and HAL. Effective from 3rd June, 2014, HAL became the promoter of the Company and acquired Management Control. In compliance with regulatory requirement under SEBI (Acquisition of Shares and Takeover), 2011, HAL made an open offer and acquired further 24% of Shares in the Company and increased its holding to 2,54,25,000 shares representing 75% of the Share capital of the Company. B. ACQUISITION OF VESSEL REVELATION Your Company has acquired a utility / supply vessel by name "REVELATION" under BELIZE Flag. The Vessel was taken over on 19th March, 2015 at SINGAPORE. The cost of the vessel is US $ 2.6 million. The Vessel was built in Sodemborg Skibsvaret, A/s, Denmark having GT 2311 MT, Net Tonnage 693 MT. After taking over, the Vessel was committed for a bareboat Charter in Malaysia Offshore for a period of 90 days, with option for extension The global economic slowdown that started a few years ago increased the complexity and volatility in the environment. The adverse impact continues to be felt. The financial year 2014-15 remained to be yet another challenging year for the Shipping Industry, including your Company's line of business. However, in the face of overall subdued market conditions, your company has performed very well and achieved commendable bottom line. These results were achieved despite one vessel dry docking and one vessel under modification, which had a double impact of loss of revenue as well as increase of expenses. Your Company's vessel deployments were in India and in some parts across globe viz, Middle East, South East Asia and Egypt. Your Company's focus on optimum deployment days of vessel, achieved greatly due to consistent performance of vessel over the years which was well recognised by the clients. During the year under review, the Company's total revenue was Rs. 3858 million as against Rs. 4234 million in the previous year. The revenue growth was lower due to loss of deployment days in dry dock and modification of vessels and also sale of vessel Alliance by Company's Wholly Owned Subsidiary resulting in premature termination of bare boat charter. The overall reduction in Charter rate was also a factor due to subdued market conditions. Income from operations was Rs. 3497 million as against Rs.4079 million in the previous year, reflecting drop of about 14%. Despite no significant increase in turnover, the Company's profit zoomed to Rs. 540 million against last year's profit of Rs. 10 million. The fundamental reason attributed to increase in profit was due to Capitalisation of dry dock expenses of Rs. 162 million on account of adoption of component accounting policy and sale of assets of Rs. 100 million against Rs. 450 million expensed out in the corresponding period of last year on account of dry docking cost. This apart, there has been a notable comparative increase in other income. Revenue from operations from domestic sector was Rs. 2191 million and from overseas sector was Rs. 1306 million. On a consolidated basis, total revenue was Rs. 4542 million compared to Rs. 4207 million of previous year. The consolidated profit arrived at Rs. 1280 million for the year ended 31st March, 2015 compared to Rs. 20 million of previous year. Cash Balance at the beginning of financial year was Rs. 1004 million. The balance at the end of the year was Rs. 2002 million, an increase of 99% over last year. From the Assessment year 2005-06 (relevant accounting yeDr 2004-05), your Company has come under Tonnage tax regime available for shipping Companies under chapter XII - G of Income Tax Act, 1961. Tonnage Tax scheme available initially upto 31.03.2015 has been extended for afurtherperiodof10 yearstil l AY 2024-25. Forthe year under review, Tonnage Tax Reserve amounting to Rs. 86 million created u/s 115V of Income Tax Act, 1961. 3. OPERATIONS OFFSHORE One of Company's vessels has undergone modification and following modification, she commenced deployment for a long term charter of five years in Indian waters. Other vessels had established a good deployment status. Out of the total 1102 days of deployment, domestic operations registered 611 days and overseas operation was for 491 days. The Vessel owned by SEAMEC INTERNATIONAL FZE, taken under Bareboat Charter, was deployed in Egypt on a charter. The said vessel was sold in October, 2014, following which bare boat Charter was terminated. 4. DIVIDEND In view of the profitability during the year, the Board of Directors are pleased to recommend a dividend of Rs. 1.00 per share (i.e. 10%) on 33,900,000 equity shares, aggregating to Rs. 41 million including Corporate Dividend tax of Rs. 7 million subject to the approval of the members of the company. 5. DIRECTORS AND KEY MANAGERIAL PERSONNEL Your Company is a subsidiary of HAL Offshore Limited. During the year under review, Mr. Shardul Thacker and Ms. Bhavna Doshi, Independent Directors of the Company had resigned from the Board on 17th July, 2014 and 9th January, 2015 respectively. Your directors placed on record its appreciation of the valuable services rendered by Mr. Shardul Thacker and Ms. Bhavna Doshi during their tenure as Directors of the Company. Mr. Manu Chadha, DIN No. 00068577 was appointed on the Board as Directors of the Company on 14th November, 2014. Mr. Chadha appointment as Independent Director was approved by the members of the Company through Postal Ballot for a consecutive term of five years. Mr. Chadha by qualification is Chartered Accountant and is having a degree of Law. He is the Managing Partner of M/s. T. R. Chadha & Company, Chartered Accountants. Mr. Chadha has long standing experience of over 30 years. Finance and Accounts are his areas of expertise. Mr. Chadha is the Chairman of the Audit Committee and Risk Management Committee of your Company. Mr. Chadha is also a member of Nomination and Remuneration Committee. Mr. Chadha does not hold any shares in your Company. The tenure of Captain C.J.Rodricks as Managing Director expired on 31st December, 2014. Your Directors reposed faith and confidence with Captain Rodricks and appointed him as Managing Director of the Company for a period of three years effective from 22nd January, 2015. The appointment including terms of appointment were approved by Members of the Company through Postal Ballot on 21st April, 2015. Ms. Seema Modi, DIN No. 05327073 was appointed by Board as Non-Executive Independent Director of the Company. Her appointment is effective from 1st April, 2015. Members approval is sought for appointment of Ms. Seema Modi as Independent Director for a consecutive period of five years in the ensuing Annual General Meeting of the Company. The appointment of Ms. Modi meets the regulatory requirement of Woman Director on the Board of your Company. Ms. Seema Modi by qualification is holding Master's degree in Organic Chemistry and MMS in Marketing and having a vast experience of over 25 years in Corporate both in India and overseas including working with a MNC. She was holding the position of Managing Director in Heinz ASEAN and Heinz India Private Limited and later appointed to Regional Director in Strategic projects (RIMEA region). General Management and Marketing are her core area of expertise. The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules. The Company had familirised Independent Directors the nature of industry in which the Company operates and their roles, rights and resposibilities in the Company. The familirisation programme is available in Company's website www.seamec.in (weblink:www.seamec.in/attachments/FAMILIARISATION-ID.pdf) In accordance to the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Sanjeev Agrawal, Director of the Company, retires by rotation at the ensuing Annual General Meeting and is eligible for re-appointment. The brief details of all members of Board are annexed to this report. The following persons are Key Managerial Personnel of the Company. 1. Captain C. J. Rodricks - Managing Director 2. Virendra Kumar Gupta - President & Chief Financial Officer 3. S. N. Mohanty - Chief Legal Officer & Company Secretary Remuneration and other details of Key Managerial Personnel for the year ended 31st March, 2015 are stated in the extract of the Annual Return. 6. RECONSTITUTION OF COMMITTEES: With the Change in composition of the Board, various committees of your Board have been reconstituted: The reconstituted Committees are as under: AUDIT COMMITTEE Mr. Manu Chadha Chairman Mr. Surinder Singh Kohli Member Mr. Jagdish Persad Suri Member Ms. Seema Modi Member STAKEHOLDERS RELATIONSHIP COMMITTEE Ms. Seema Modi Chairperson Captain. C. J. Rodricks Member Mr. Jagdish Persad Suri Member Mr. Sanjeev Agrawal Member NOMINATION AND REMUNERATION COMMITTEE Mr. Amarjit Singh Soni Chairman Mr. Jagdish Persad Suri Member Mr. Surinder Singh Kohli Member Mr. Manu Chadha Member CORPORATE SOCIAL RESPONSIBILITY COMMITTEE Mr. Sanjeev Agrawal Chairman Mr. Jagdish Persad Suri Member Captain C. J. Rodricks Member Ms. Seema Modi Member RISK MANAGEMENT COMMITTEE Mr. Manu Chadha Chairman Mr. Surinder Singh Kohli Member Mr. Jagdish Persad Suri Member Captain C. J. Rodricks Member Ms. Seema Modi Member Mr. Virendra Kumar Gupta Member Mr. S. N. Mohanty Member 7. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT 9 is annexed herewith as "Annexure A" 8. AUDITORS AND AUDIT REPORT M/s. S R B C & CO LLP, Chartered Accountants, the Statutory Auditors of the Company, will hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment as per section 139 of the Companies Act, 2013. The observations in the Auditors' Report have been dealt with in the relevant Notes to Accounts, which are self-explanatory. 9. AUDIT COMMITTEE Audit Committee was constituted on 26th February, 2001. The Composition of Audit Committee was changed from time to time. The present composition of Audit Committee consists of the following members: Mr. Manu Chadha Mr. Surinder Singh Kohli Mr. Jagdish Persad Suri Ms. Seema Modi The above composition of the Audit Committee, interalia, consists of independent Directors viz., Messers Manu Chadha, Surinder Singh Kohli, Jagdish Persad Suri and Ms. Seema Modi who forms the majority. The Company has established a vigil mechanism to over see through the committee, the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The Company has also provided direct access to the Chairman of the Audit Committee on reporting issues concerning the interests of co employees and the Company. The more details of the Audit Committee are stated under Corporate Governance Report. 10. STAKEHOLDERS RELATIONSHIP COMMITTEE The Share Transfer Committee constituted was renamed as The Share Transfer and Investors Grievances Committee. To comply with the requirements of the Companies Act, 2013 and the listing agreement with the Stock Exchanges, the name of the Committee was further changed to Stakeholders Relationship Committee. The Composition of Committee is as under: a. Ms. Seema Modi b. Mr. Jagdish Persad Suri c. Mr. Sanjeev Agrawal d. Captain C. J. Rodricks 11. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE The Company has constituted a Corporate Social Responsibility Committee pursuant to the provisions of the Companies Act, 2013. The Committee framed Corporate Responsibility Policy which was approved by Board on 11th August 2014. The Policy is available on Company's Website www.seamec.in. The terms of reference of Committee, number and dates of meetings held, attendance of Directors are given separately in the Corporate Governance Report. The Company has commenced implementation of Policy and areas of activities have been made pursuant to provisions of Companies Act, 2013. Annual Report of CSR Committee in the prescribed format is attached and forms a part of this report. (Annexure B) 12. NOMINATION AND REMUNERATION COMMITTEE Pursuant to the provisions of Section 178 of the Companies Act, 2013 read with Companies (Meetings of Board and its Powers) Rules, 2014 framed there under, every listed company and prescribed class of companies, shall constitute Nomination and Remuneration Committee (NRC) of the Board consisting of 3 or more non-executive directors out of which not less than ^ shall be independent director. In view of the above provision of law, the Board of Directors at its meeting held on 25th April, 2011 has constituted NRC committee. The Composition of NRC was changed from time to time. The present composition of NRC consists of the following members: Mr. Amarjit Singh Soni Mr. Jagdish Persad Suri Mr. Surinder Singh Kohli Mr. Manu Chadha The above composition of the Nomination and Remuneration Committee, interalia, consists of independent Directors viz., Messers Amarjit Singh Soni, Manu Chadha, Surinder Singh Kohli, who forms the majority. The Nomination and Remuneration Committee have formulated a policy as prescribed under the Act which, interalia, includes criteria for determining qualification, positive attributes and independence of a director and recommended to the Board for adoption of the Policy. The Policy also covers recommendation to the Board on the remuneration to the Board of Independent Directors, Key Managerial Personnel and other employees. The Nomination and Remuneration Policy is also available in Company's website www.seamec.in (weblink:www.seamec.in/attachments/Nomination%20and%20 RemunerationX20Policy.pdf) and the said policy is annexed hereto and marked as Annexure J. 13. SECRETARIAL AUDIT: Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules made there under, M/s Satyajit Mishra & Co, Company Secretaries in Whole-time practice (FCS no. 5759, C P No. 4997), was appointed to conduct Secretarial Audit for the year ended 31st March, 2015. M/s Satyajit Mishra & Co, Practising Company Secretaries has submitted Report on the Secretarial Audit which is attached as Annexure C and forms a part of this report. There are no Qualifications or observations or remarks made by the Secretarial Auditor in the Report. 14. COMPANY'S POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES The Company has a Policy relating to appointment of Directors, payment of Managerial remuneration, Directors' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013 and under the provisions of Listing Agreement. 15. PERFORMANCE EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out the annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination and Remuneration and Compliance Committees, which covers various aspects of the Board's functioning such as adequacy of the composition of the Board and its Committees, Board Culture, execution and performance of specific duties, obligations and governance. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairman and the Non Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Secretarial Department. The Directors expressed their satisfaction with the evaluation process. 16. RELATED PARTY TRANSACTIONS All the related party that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. All Related Party Transactions are placed before the Audit Committee and Board for approval. The Material Related Party transactions made by the Company with Promoters, its relatives were approved by Shareholders' through Postal Ballot in two cases. The details are attached and forms a part of Board Report (Annexure D). The Company has also formulated a policy on "Material Subsidiaries" and the said policy is available in Company's website www.seamec.in (weblink:www.seamec.in/ attachments/Material%20Subsidiary%20Policy.pdf). The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website www.seamec. in (weblink:www.seamec.in/attachments/Related%20Party%20Transaction.pdf). 17. CORPORATE GOVERNANCE The Company believes that Corporate Governance is a way of business life rather than legal compulsion. Your Directors re-affirm their commitment to the Corporate Governance standards prescribed by Securities and Exchange Board of India (SEBI) codified as Clause 49 of the Listing Agreement with Stock Exchanges. Corporate Governance Report as well as Corporate Governance compliance certificate by Secretarial Auditors is set out in separate Annexures to this report marked as Annexure F. Management Discussion Analysis Report forms a part of Directors Report and marked as Annexure G. 18. BUSINESS RESPONSIBILITY REPORTING As required under Clause 55 of the Listing Agreement with the Stock Exchanges, a separate section on Business Responsibility Reporting annexed as (Annexure H) which forms an integral part of this Report. 19. NUMBER OF BOARD MEETINGS CONDUCTED DURING THE YEAR UNDER REVIEW The Company had 7 Board meetings during the financial year under review. The details of the Board meetings and the attendance of the Directors are provided in the Corporate Governance Report. 20. INVESTOR SERVICES As the members are aware, your company's shares are tradeable compulsorily in electronic form with effect from 24 August 2000 and your company has established connectivity with both the depositories viz. National Securities Depository Ltd. (NSDL) and Central Depository Services (India) Ltd. (CDSL). In view of the numerous advantages offered by the Depository system, members are requested to avail of the facility of de-materialization of Company's shares on either of the Depositories as aforesaid. 21. WHOLLY OWNED SUBSIDIARY SEAMEC INTERNATIONAL FZE, Dubai, UAE is the Wholly Owned Subsidiary (WOS) of your Company. As per the regulatory provision, the consolidated financial statement of your Company and its wholly owned subsidiary for the financial Year ended on 31st March 2015 duly audited by Statutory Auditors is attached to the annual report of the Company. The Annual Accounts of the Wholly Owned Subsidiary and the related detailed information shall be made available to the shareholders on request at any point of time. A. SALE OF VESSEL ALLIANCE OF SEAMEC INTERNATIONAL FZE, WHOLLY OWNED SUBSIDIARY WOS owned a vessel by name "ALLIANCE" which was sold in 14th October, 2014. B. SALE OF VESSEL "SEAMEC PRINCESS" TO SEAMEC INTERNATIONAL FZE, WHOLLY OWNED SUBSIDIARY Your Company has got the sanction of Shareholders for sale of vessel SEAMEC PRINCESS to Company's WOS. The appropriate decision in this regard will be taken in future. 22. HUMAN RESOURCES Your Company considers people as one of the most valuable resources. It believes in the theme that success of any organization depends upon the engagement and motivation level of employees. All employees are committed to their work and proactively participate in their area of operations. Autonomy to people at different levels created a sense of ownership amongst the employees. The continuous training courses give employees the opportunity to improve their skill leading to consistent improvements in learning and development and adhering to SEAMEC value. Health and Safety of the employees and our associates we work with remains our paramount importance. Your Company ensures that operations are carried out as per the safety guidelines and procedures in place which are regularly updated. Employees are regularly made aware of hazards/risks associated with their jobs and appropriate training is imparted to them to improve their skills. Periodic safety audit are undertaken to confirm the proper functioning of system and procedures. 23. INTERNAL CONTROLS The Company has an adequate system of internal controls commensurate with size, scale and complexity of its operations. Conscious efforts are in place on a continuous basis to ensure that all its assets are safeguarded and protected against loss from unauthorized use and disposal and that all transactions are authorized, recorded and financial statements show a true and fair picture of the state of affairs of the Company. Compliance is in place as regards to statutory and regulatory requirements. The internal controls system of the Company are monitored and evaluated by external and internal audit, reviewed by Management and Audit Committee of the Board of Directors. Auditor's observations in confirmation to policy in force has also been received. 24. BUY BACK OF SHARES The Board of Directors of the Company in the meeting held on 27th May, 2015, interalia, considered and approved buyback of equity shares of the Company not exceeding 25% of the equity share capital of face value of Rs. 10/- each at a price of 125/- per equity shares through "Tender Offer" route as prescribed under the Securities and Exchange Board of India (Buyback of securities) Regulations, 1998 as amended, on a proportionate basis subject to the approval of the shareholder by way of special resolution through Postal Ballot and regulatory compliances required under law including provisions of Companies Act, 2013. 25. MARITIME LABOUR CONVENTION (MLC) 2006 Maritime Labour Convention (MLC) 2006 adopted by International Labour Organisation, establishing minimum requirements for almost all aspects of working and living conditions on board ships has come into force from 20th August, 2013. Government of India issued compliance of specific requirements in early February, 2013 related to conditions of employment, hours of work and rest, accommodation, recreation facilities, food and catering, health, medical care, welfare and social security. Your Company has implemented the requirement as per MLC 2006 and has received certification from the flag administration for its vessels. 26. POLICY ON SEXUAL HARASSMENT OF WOMEN AT WORK PLACE Pursuant to provisions of Sexual Harassment of women at work place (Prosecution, prohibition and redressal) Act, 2013 and rules made there under, Company has adopted a policy with effect from 13th February, 2015. 27. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND EXPENDITURE The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in Annexure E and is attached to this report. 28. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. Business Risk Evaluation and Management is an ongoing process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risk as also identify business opportunities. The objectives and scope of the Risk Management Committee broadly comprises: • Oversight of risk management performed by the executive management; • Reviewing the Risk Management Policy and Framework in line with Local legal requirements and SEBI guidelines • Reviewing risks and evaluate treatment including initiating mitigation actions and ownership as per a pre-defined cycles. • Defining framework for identification, assessment, monitoring, mitigation and reporting of risk. Within its overall scope as aforesaid, the Committee shall review risk trends, exposure, potential impact analysis and mitigation plan. The Risk management committee was constituted as on 13.02.2015. 29. PARTICULARS OF EMPLOYEES The particulars required under Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are also furnished in the Annexure I. 30. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134 (3) (c) of the Companies Act, 2013, your Directors state that: a. in the preparation of Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departure; 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 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 Companies Act, 201 3 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; e. the Directors 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 deviced proper system to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating efficiently. 31. APPRECIATION Your Company has been able to operate efficiently because of the professionalism, creativity, integrity and continuous improvement in all functions and areas as well as efficient utilization of Companys' resources for sustainable and profitable growth. The Directors wish hereby to place on record their appreciation of the efficient and loyal services rendered by each and every employee with whole hearted effort for making satisfactory performance possible. Your Directors thank the valued shareholders, customers, suppliers, Banks, Registrar and Share Transfer Agent for their continuous support to the company. For and on behalf of the Board of Directors Sanjeev Agrawal Chairman Place: Mumbai Date: May 27, 2015 |