Mercator Ltd

BSE: 526235 | NSE: MERCATOR | ISIN: INE934B01028 
Market Cap: [Rs.Cr.] 722.46 | Face Value: [Rs.] 1
Industry: Shipping

Director's Report
DIRECTORS

To

The Members,

Mercator Limited

We take pleasure in presenting Thirtieth Annual Report of your Company for the yearended 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 Rs3,458 crores as against Rs 3,733 crores in the previous year. The operating profit hasincreased by 30% to Rs 659 crores against Rs 506 crores in previous year. The profit afterprovision for tax and minority interest; was Rs 32 crores as against net loss of Rs 372crores in the previous year.

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

During the year, Debenture Redemption Reserve ( Rs 27.50 crores) and Tonnage TaxUtilised Reserve ( Rs 175.25 crores) being no more required were transferred to GeneralReserve. Further, balance in General Reserve amounting Rs 345 crores was utilised to setoff the deficit in the Profit & Loss A/c of Rs 316.59 crores. An amount of Rs 1.50crores was transferred from Profit & Loss A/c to Tonnage Tax Reserve. After providingfor Dividend and tax thereon amounting Rs 2.87 crores; the surplus in P & L account ofRs 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 ofyour Company in consortium with Oil India Ltd. and others has been chosen as selectedcandidate for 2 offshore oil blocks by the Ministry of Energy; Republic of Myanmar in theMyanmar Offshore Block Bidding Round – 2013.

The Floating Production Unit (FPU) contract is running smoothly in Nigeria. During theyear, Mercator Offshore (P) Pte. Ltd. received certificate of Excellence from theCharterers of FPU in recognition of its safety performance resulting in 1000 operatingdays without lost time and injury. The Sagar Samrat Conversion project is progressingwell.

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

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

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

Your Company had obtained consent of the shareholders by way of special resolutionthrough postal ballot for Issue and allotment of securities in the form of FCCB/ADR/GDRetc. up to Rs 100 crores. Subsequent to the end of the financial year, in May, 2014, yourCompany has successfully concluded the FCCB issue and mobilised USD 16 million. The FCCBproceeds 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 ofthe financial year, Mercator Energy Pte. Ltd., subsidiary company has entered into anagreement to avail a term loan facility of USD 55 million.

The Dredging division has performed well during the year. The Company has a healthyorder 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 Rs1/- each, i.e. 10%, on 244,892,073 equity shares, payable to those shareholders whosenames 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 wouldabsorb 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 Articlesof Association of the Company, Mr. M. M. Agrawal (DIN: 00681433), is the Director liableto retire by rotation at the ensuing Annual General Meeting and being eligible, hasoffered himself for re-appointment. Pursuant to Section 149 of the Companies Act, 2013 andthe Companies (Appointment and Qualification of Directors) Rules, 2014; it is proposed tore-appoint Mr. M. M. Agrawal, who has offered himself for appointment as an IndependentDirector not liable to retire by rotation.

In order to comply with the provisions of Sections 149, 152 and other applicableprovisions of the Companies Act, 2013, the Companies (Appointment and Qualification ofDirectors) Rules, 2014 as well as the Listing Agreement; your Board has also approvedappointments 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) resignedfrom the office of Director of the Company and on August 13, 2014, the Board of Directorhas appointed Mr. Gunender Kapur (DIN: 01927304) as an Independent Director of theCompany from August 13, 2014. Mr. Gunender Kapur appointed as an Additional Director inaccordance with Sec.161 (1) of the Companies Act, 2013 will hold office till the ensuingAnnual General Meeting; and is eligible for re-appointment.

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

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

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

The brief profile of all the above Directors seeking appointment/ re-appointment aregiven 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. Auditedconsolidated financial statements for the year ended on March 31, 2014; together withAuditors’ Report thereon forming part of this Annual Report includes financialinformation of all the subsidiaries.

Pursuant to general exemption granted by the Ministry of Corporate Affairs, Governmentof India, the Board of Directors of your Company has granted its consent for dispensingwith the requirement of attaching to its Annual Report, the annual audited accounts ofyour Company’s subsidiaries. Accordingly, this Annual Report is presented withoutattaching annual accounts of the subsidiaries. A statement in respect of the saidsubsidiaries pursuant to Section 212 of the Companies Act, 1956, is enclosed herewith asrequired. The annual reports and accounts of these subsidiaries will be made available forinspection during working hours at the registered office of the Company and also of thesubsidiary Companies concerned. The same, along with related detailed information willalso be made available to the investors of the Company as well as of subsidiaries, onrequest. The brief financial details of the subsidiaries as prescribed under the saidnotification 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 toM/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 forthcomingAnnual 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 (Auditand Auditors) Rules 2014, M/s. CNK & Associates LLP are eligible for appointment asAuditors. Your Company has received a written confirmation from M/s. CNK & AssociatesLLP, Chartered Accountants to the effect that their appointment, if made, would satisfythe criteria provided in Section 141 of the Companies Act, 2013 for their appointment. TheBoard recommends the reappointment of M/s. CNK & Associates LLP, Chartered Accountantsas the Auditors of the Company from the conclusion of the ensuing Annual General Meetinguntil 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 theCompanies (Cost Accounting Records) Rules, 2011 for maintenance of cost records.Accordingly, as prescribed under Rule 5 of the said Rules, your Company has obtainedCompliance 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, readwith the Companies (Particulars of Employees) Rules 1975 as amended, the requisiteparticulars of employees of the Company, who were in receipt of remuneration in excess ofthe limits specified under the said section are set out in the annexure forming part ofthis report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act1956, the report and the accounts are being sent to all members of the Company excludingthis annexure of particulars of employees. Any member interested in obtaining suchparticulars 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 ForeignExchange Earnings and Outgo

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

Your Company has not imported any technology during the year. It has earned foreignexchange of Rs 86.82 crores (previous year Rs 98.80 crores) and spent Rs 68.70crores (previous year Rs 195.08 crores) in foreign exchange, on account of acquisition ofvessels, charter hire, other vessel expenses, and interests etc.; details of which areavailable 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 deploymentopportunities overseas.

Corporate Governance & Social Responsibilities

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

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

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

In order to comply with the provisions of Section 135 of the Companies Act 2013 and theCompanies (Corporate Social Responsibility Policy) Rules, 2014, your Company, subsequentto end of the year under review, constituted a Corporate Social Responsibility Committee.This Committee shall be responsible for formulating a CSR policy, recommending theactivities that can be undertaken under CSR, deciding the amount to be incurred on suchactivities 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 interestamount was outstanding on the date of the Balance Sheet. The details of loans andadvances, which are required to be disclosed in the Financial Statements of the Companypursuant to Clause 32 of the Listing Agreement with the Stock Exchanges, are furnishedseparately 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, theDirectors hereby confirm that:

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

(ii) They have selected such accounting policies in consultation with StatutoryAuditors and applied them consistently and made judgments and estimates that arereasonable and prudent, so as to give a true and fair view of the state of affairs of theCompany 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 adequateaccounting records in accordance with the provision of the Companies Act 1956, forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

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

Acknowledgements

The Directors express their sincere thanks to all customers, suppliers, serviceproviders, regulators, Governmental agencies and other statutory authorities for theircontinued 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
   
Futures & Options Quote
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

 
Fund Holding
 
 
Better Investment Avenue

Check whether Taxed / Tax free investment avenue is better for you

  Taxed Avenue Tax-Free Avenue
Investment amount (Rs.)  
Tenure of Investment (years)  
Interest earned (% p.a)
Compounded every
Your tax bracket (%)