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Mercator Ltd

BSE: 526235 | NSE: MERCATOR ISIN: INE934B01028
Market Cap: [Rs.Cr.] 477.56 Face Value: [Rs.] 1
Industry: Shipping

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Director's Report
DIRECTORS

To

The Members,

Mercator Limited

We take pleasure in presenting Thirtieth Annual Report of your Company for the year ended on March 31, 2014.

Financial Highlights

( Rs in crores)
Particulars Consolidated Standalone

Year ended

Year ended

March 31, 2014 March 31, 2013 March 31, 2014 March 31, 2013
Income from operations 3457.78 3733.35 497.04 551.49
Total Income 3486.20 3753.47 524.25 569.67
Operating Profit 659.09 505.96 151.31 92.70
Interest 205.14 239.45 73.08 125.56
Depreciation 440.87 447.48 67.52 109.16
Impairment - 87.91 - 81.18
Profit/ (Loss) before Tax & 10.10 (479.30) 10.71 (215.94)
Minority Interest
Minority Interest 47.08 120.39 N.A. N.A
Taxes
-Current Year (25.45) (18.60) (1.25) (1.50)
-Deferred Tax 0.70 5.42 - -
-Short provision of earlier years (0.25) - (0.25) -
Net Profit/(Loss) After Tax 32.18 (372.09) 9.21 (217.44)

During the year under review, the income from operations on a consolidated basis was Rs 3,458 crores as against Rs 3,733 crores in the previous year. The operating profit has increased by 30% to Rs 659 crores against Rs 506 crores in previous year. The profit after provision for tax and minority interest; was Rs 32 crores as against net loss of Rs 372 crores in the previous year.

On a standalone basis, the income from operations for the year under review was Rs 497 crores ( Rs 551crores in the previous year). The Company has earned net profit of Rs 9 crores (Loss of Rs 217 crores in the previous year) after provision of tax of Rs 1.50 crores ( Rs 1.50 crores in the previous year).

During the year, Debenture Redemption Reserve ( Rs 27.50 crores) and Tonnage Tax Utilised Reserve ( Rs 175.25 crores) being no more required were transferred to General Reserve. Further, balance in General Reserve amounting Rs 345 crores was utilised to set off the deficit in the Profit & Loss A/c of Rs 316.59 crores. An amount of Rs 1.50 crores was transferred from Profit & Loss A/c to Tonnage Tax Reserve. After providing for Dividend and tax thereon amounting Rs 2.87 crores; the surplus in P & L account of Rs 33.25 crores was carried to Balance sheet as at year end.

Operations & Finance

The Directors are pleased to report that, Mercator Petroleum Limited; a subsidiary of your Company in consortium with Oil India Ltd. and others has been chosen as selected candidate for 2 offshore oil blocks by the Ministry of Energy; Republic of Myanmar in the Myanmar Offshore Block Bidding Round – 2013.

The Floating Production Unit (FPU) contract is running smoothly in Nigeria. During the year, Mercator Offshore (P) Pte. Ltd. received certificate of Excellence from the Charterers of FPU in recognition of its safety performance resulting in 1000 operating days without lost time and injury. The Sagar Samrat Conversion project is progressing well.

In Coal segment; Mercator was able to effectively control the mining costs and through improved utilisation of resources was able to improve upon the margins in spite of a fall in coal volumes and prices due to global economic factors.

In Shipping; during the year, your Company acquired a Medium Range (MR) Tanker, which has been deployed on a 5 years contract. Your Company has further diversified into the Gas Carrier Segment and acquired one Very Large Gas Carrier (VLGC) in March 2014. The total cubic capacity of the VLGC is 76,933 Cub.m. and DWT of 50,400. Both the acquisitions were part funded by foreign currency loans.

Your Company has been awarded a long term contract for hiring of a Storage Tanker for a period of 1720 days commencing from April 2015. This is the third consecutive contract received by your Company from this customer. The Company proposes to refurbish its tanker for this contract, which will entail incurring of capital expenditure. In order to part finance the same, the Company has tied up a long term foreign currency facility with a tenor of 7 years.

Your Company had obtained consent of the shareholders by way of special resolution through postal ballot for Issue and allotment of securities in the form of FCCB/ADR/GDR etc. up to Rs 100 crores. Subsequent to the end of the financial year, in May, 2014, your Company has successfully concluded the FCCB issue and mobilised USD 16 million. The FCCB proceeds raised were utilised by the Company for capital expenditure.

With a view to expand its operations in the Oil and Gas space, subsequent to the end of the financial year, Mercator Energy Pte. Ltd., subsidiary company has entered into an agreement to avail a term loan facility of USD 55 million.

The Dredging division has performed well during the year. The Company has a healthy order book, including some repeat orders from existing customers.

Dividend

Your Directors are pleased to recommend a dividend of Rs 0.10 per equity share of Rs 1/- each, i.e. 10%, on 244,892,073 equity shares, payable to those shareholders whose names appear in the Register of Members as on the Book Closure Date.

The Equity Dividend outgo for the year inclusive of tax on distributed profits would absorb a sum of Rs 2.87 crores. No dividend was paid for the previous financial year.

Directors

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. M. M. Agrawal (DIN: 00681433), is the Director liable to retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. Pursuant to Section 149 of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014; it is proposed to re-appoint Mr. M. M. Agrawal, who has offered himself for appointment as an Independent Director not liable to retire by rotation.

In order to comply with the provisions of Sections 149, 152 and other applicable provisions of the Companies Act, 2013, the Companies (Appointment and Qualification of Directors) Rules, 2014 as well as the Listing Agreement; your Board has also approved appointments of Mr. Manohar Bidaye (DIN: 00010699) and Mr. K.R. Bharat (DIN: 00584367) being eligible, as an Independent Directors not liable to retire by rotation.

Subsequent to year end, on May 29, 2014, Mr. Kapil Garg (DIN: 01360843) resigned from the office of Director of the Company and on August 13, 2014, the Board of Director has appointed Mr. Gunender Kapur (DIN: 01927304) as an Independent Director of the Company from August 13, 2014. Mr. Gunender Kapur appointed as an Additional Director in accordance with Sec.161 (1) of the Companies Act, 2013 will hold office till the ensuing Annual General Meeting; and is eligible for re-appointment.

The Company has received requisite notices in writing from Members proposing the candidature of Mr. M. M. Agrawal, Mr. Manohar Bidaye, Mr. K. R. Bharat and Mr. Gunender Kapur at the ensuing Annual General Meeting, for the office of Independent Director.

The Company has also received declarations from all the aforesaid Directors confirming that they meet with the criteria of Independence as prescribed under provisions of the Companies Act, 2013, Rules thereunder and Clause 49 (existing as well as revised effective from October 1, 2014) of the Listing Agreement.

Mr. Atul Agarwal (DIN: 00007663) shall be a Director liable to retire by rotation at the ensuing Annual General Meeting in accordance with the provisions of the Companies Act and Articles of Association of the Company; and being eligible has offered himself for reappointment.

The brief profile of all the above Directors seeking appointment/ re-appointment are given in the Notice of the Annual General Meeting.

Your Directors recommend the above appointments for your approval.

Subsidiary Companies and Consolidated Financial Statements

As at March 31, 2014, your Company had 32 subsidiaries/step-down subsidiaries. Audited consolidated financial statements for the year ended on March 31, 2014; together with Auditors’ Report thereon forming part of this Annual Report includes financial information of all the subsidiaries.

Pursuant to general exemption granted by the Ministry of Corporate Affairs, Government of India, the Board of Directors of your Company has granted its consent for dispensing with the requirement of attaching to its Annual Report, the annual audited accounts of your Company’s subsidiaries. Accordingly, this Annual Report is presented without attaching annual accounts of the subsidiaries. A statement in respect of the said subsidiaries pursuant to Section 212 of the Companies Act, 1956, is enclosed herewith as required. The annual reports and accounts of these subsidiaries will be made available for inspection during working hours at the registered office of the Company and also of the subsidiary Companies concerned. The same, along with related detailed information will also be made available to the investors of the Company as well as of subsidiaries, on request. The brief financial details of the subsidiaries as prescribed under the said notification have been disclosed in the consolidated financial statements of the Company.

Auditors

The name of your Auditors M/s. Contractor, Nayak & Kishnadwala has been changed to M/s. CNK & Associates LLP pursuant to conversion of their firm in to LLP.

M/s. CNK & Associates LLP, hold office up to the conclusion of the forthcoming Annual General Meeting of the Company and have given their consent for re-appointment. Pursuant to provisions of Section 139(2) of Companies Act, 2013 read with Companies (Audit and Auditors) Rules 2014, M/s. CNK & Associates LLP are eligible for appointment as Auditors. Your Company has received a written confirmation from M/s. CNK & Associates LLP, Chartered Accountants to the effect that their appointment, if made, would satisfy the criteria provided in Section 141 of the Companies Act, 2013 for their appointment. The Board recommends the reappointment of M/s. CNK & Associates LLP, Chartered Accountants as the Auditors of the Company from the conclusion of the ensuing Annual General Meeting until the conclusion of the next Annual General Meeting.

Cost Audit Compliance Report

For the year under review, specified operations of your Company were covered under the Companies (Cost Accounting Records) Rules, 2011 for maintenance of cost records. Accordingly, as prescribed under Rule 5 of the said Rules, your Company has obtained Compliance Certificate from a Cost Accountant, which does not contain any adverse remarks.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Rules 1975 as amended, the requisite particulars of employees of the Company, who were in receipt of remuneration in excess of the limits specified under the said section are set out in the annexure forming part of this report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act 1956, the report and the accounts are being sent to all members of the Company excluding this annexure of particulars of employees. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

No ESOPs were issued during the year.

Conservation of Energy, Technology Absorption, Export Market Development and Foreign Exchange Earnings and Outgo

The requirements of giving particulars of Conservation of Energy and Technology Absorption under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are not applicable to your Company. However, the Directors would like to assure you that every measure is taken to save and conserve energy at all the stages of operating the vessels, as well as, on shore activities.

Your Company has not imported any technology during the year. It has earned foreign exchange of Rs 86.82 crores (previous year Rs 98.80 crores) and spent Rs 68.70 crores (previous year Rs 195.08 crores) in foreign exchange, on account of acquisition of vessels, charter hire, other vessel expenses, and interests etc.; details of which are available in notes 3.7 and 3.8 of the Notes forming part to the Accounts for the year. Your Company endeavours to develop export markets by exploring more vessel deployment opportunities overseas.

Corporate Governance & Social Responsibilities

A separate report on Corporate Governance, along with certificate from the Auditors of the Company is annexed herewith forming a part of this Annual Report. Management Discussion and Analysis Report is also annexed herewith as part of this Report.

Your Company sincerely believes that a corporate must contribute to the growth and betterment of the environment, society and economy in which it operate; and it is fully aware about its responsibility in this regard. Your Company also values its employees and considers them as the key for its success. The Corporate Social

Responsibility (CSR) initiatives undertaken by your Company have been enumerated elsewhere in this Report, which are focused on education, skill development, and creating job opportunities in the Society.

In order to comply with the provisions of Section 135 of the Companies Act 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company, subsequent to end of the year under review, constituted a Corporate Social Responsibility Committee. This Committee shall be responsible for formulating a CSR policy, recommending the activities that can be undertaken under CSR, deciding the amount to be incurred on such activities and any other matters related to CSR, which it should consider.

Deposits, Loans and Advances

Your Company has not accepted any fixed deposits, and as such, no principal or interest amount was outstanding on the date of the Balance Sheet. The details of loans and advances, which are required to be disclosed in the Financial Statements of the Company pursuant to Clause 32 of the Listing Agreement with the Stock Exchanges, are furnished separately as note 5.4 of the Notes forming part to the Accounts for the year.

Insurance

All the assets of the Company are adequately insured.

Directors’ Responsibility Statement

Pursuant to the provisions of section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that:

(i) In preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) They have selected such accounting policies in consultation with Statutory Auditors 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 for the year under review;

(iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) They have prepared the annual accounts on a going concern basis.

Acknowledgements

The Directors express their sincere thanks to all customers, suppliers, service providers, regulators, Governmental agencies and other statutory authorities for their continued whole hearted support to the Company during the year.

We also acknowledge the support lent and confidence bestowed upon us by our bankers, stakeholders and all Mercatorians.

For and on behalf of the Board For Mercator Limited

H.K.Mittal
Executive Chairman
Regd. Office:
3rd Floor, Mittal Tower
B-Wing, Nariman Point,
Mumbai-400021
Dated: August 13, 2014
   
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Future Data Not present
Key Information

Key Executives:

H K Mittal , Executive Chairman

Atul J Agarwal , Managing Director

Manohar Bidaye , Director

K R Bharat , Director


Company Head Office / Quarters:

3rd Floor Mittal Towers,
B-Wing Nariman Point,
Mumbai,
Maharashtra-400021
Phone : Maharashtra-91-22-66373333/40373333 / Maharashtra-
Fax : Maharashtra-91-22-66373344 / Maharashtra-
E-mail : mercator@mercator.in/investors@mercator.in
Web : http://www.mercator.in

Registrars:

Intime Spectrum Reg. Pvt. Ltd.
203 Daver House,197/199 D N Road,Fort,Mumbai - 400001

 
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