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Mercator Ltd

BSE: 526235 | NSE: MERCATOR ISIN: INE934B01028
Market Cap: [Rs.Cr.] 655.11 Face Value: [Rs.] 1
Industry: Shipping

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Director's Report



Mercator Limited

We take pleasure in presenting Thirty First Annual Report of your Company for the year ended on March 31, 2015.


(Amount Rs in crores)

Consolidated Standalone
Particulars Year ended Year ended
March 31, 2015 March 31, 2014 March 31, 2015 March 31, 2014
Income from operations 3,091.63 3,457.78 659.42 497.04
Total Income 3,086.47 3,477.78 658.60 508.41
Operating Profit 527.46 639.69 197.23 124.10
Interest 213.09 193.56 52.48 57.24
Depreciation 474.56 440.87 92.38 67.52
Impairment 409.01 12.19 - -
Exceptional Items 115.96 2.98 - -
Profit/(Loss) before Tax & Minority Interest (690.32) 10.10 51.55 10.71
Minority Interest 257.37 47.08 N.A. N.A
-Current Year (10.58) (25.70) (2.00) (1.50)
-Deferred Tax (6.00) 0.70 - -
Net Profit/(Loss) After Tax (449.53) 32.17 49.55 9.21
Transfer to Tonnage Tax Reserve (10.31) (1.50) (10.31) (1.50)
Transfer from General Reserve - 345.00 - 345.00
Depreciation of previous year (0.30) - (0.30) -
Proposed Dividend (4.90) (2.45) (4.90) (2.45)
Tax on Dividend (1.02) (0.42) (1.02) (0.42)
Balance brought forward from last year 719.34 346.54 33.25 (316.59)
Balance carried to Balance Sheet 253.98 719.34 66.27 33.25

During the year under review, the income from operations on a consolidated basis was Rs 3,092 cr as against Rs 3,458 cr in the previous year. Unfavorable conditions prevailing in dry bulk market and lower volume and price of coal impacted the consolidated performance, however the other business segments of the Company performed satisfactorily. Mercator Lines (Singapore) Limited, the Subsidiary Company suffered a loss of Rs 766 cr including non-cash items viz. Rs 775 cr. As a consequence, the consolidated performance has resulted into loss before tax of Rs 690 cr (previous year profit of Rs 101 cr). After providing loss for the minority interest of Rs 257 cr (previous year profit Rs 47.08 cr); the loss after Rs 448 crtax was as against loss of Rs 32 cr in the previous year. On a standalone basis, the Company has recorded improved performance. The income from operations for the year under review was Rs 659 cr as against Rs 497 cr in the previous year. After provision of tax of Rs 2 cr (previous year Rs 1.50 cr) the Company has earned net profit of Rs 50 cr (previous year Rs 9 cr). The healthy order book of dredging division and full year deployment of Gas Carrier and other tankers on medium / long term time charter added substantially to top-line and bottom-line of standalone performance of the Company.


Oil and Gas

The Directors are pleased to report that during the year; Mercator Petroleum Limited, a subsidiary of the Company in consortium with Oil India Ltd. and others; has entered into Product Sharing Contracts with Ministry of Energy; Republic of Myanmar; for two oil blocks allotted in the Offshore Block Bidding Round-2013. The drilling operations in the Cambay Basin block awarded by the Government of India under NELP VII round of bidding are progressing well. During the year under review; one well was drilled in each oil block. Further testing and drilling is planned in the current year. The Floating Production Unit (FPU) contract in Nigeria is running smoothly. The Sagar Samrat conversion project is progressing as per schedule.


Globally, all commodities including Coal have witnessed falling prices and lower demand; Mercator continued its strategy of controlling mining costs and improving utilization of resources. This has helped in sustaining the margins.


In Shipping, the Directors are pleased to report the Very Large Gas Carrier (VLGC) which was acquired at the end of previous financial year, was deployed gainfully on long term charter during the year. Further, the refurbishment of the Storage Tanker was completed ahead of its schedule by about one & half month, thus enabling the Company to start charter realizations early under the long term contract.


The Dredging business has consolidated its presence in India, registering a higher volume of operations as compared to the previous year resulting from repeat orders from existing customers as well as some new orders. During the year, your Company was awarded a 2 year dredging contract by Kandla Port Trust, valued at Rs 275 cr approx. Your Company acquired one dredger during the year and is in the process of acquiring two more dredgers, to augment the dredging capabilities.


The above acquisitions / refurbishments / other capital expenditure were part financed by debts. During the year your Company issued Foreign Currency Convertible Bonds (FCCBs) for an amount of USD 16 mn. The FCCBs are listed on Singapore Stock Exchange (SGX). As overseas step-down subsidiary of the Company successfully availed a Convertible term loan facility of USD 55 mn of which USD 20 mn has been disbursed. This will help your Company to expand in the oil and gas space.


The Board of Directors are pleased to recommend higher dividend of 20% i.e. Rs 0.20 (previous year 10 % i.e. Rs 0.10) per Equity Share on 24,48,92,073 shares for the financial year ended March 31, 2015. The said dividend shall be subject to the approval of the members at the ensuing Annual General Meeting. The dividend, if approved by the shareholders at the Annual General Meeting, shall entail a payout of Rs 5.92 cr including Dividend Distribution Tax (DDT) of Rs 1.04 cr (Previous Year Rs 2.87 cr & Rs 0.42 cr respectively). The dividend is free of tax in the hands of the shareholders.


Board of Directors:

During the year under review, Mr. Kapil Garg (DIN 01360843) resigned as Director of the Company w.e.f May 29, 2014. Mr. Gunender Kapur (DIN 01927304) was appointed as an Independent Director of the Company w.e.f. August 13, 2014. Further the Board inducted Mr. Shalabh Mittal (DIN 00007919) as an Additional Director of the Company w.e.f. November 7, 2014. In addition it was proposed to induct Mr. Shalabh Mittal as Joint Managing Director of the Company w.e.f. January 1, 2015. However, vide his letter dated December 31, 2014; Mr. Shalabh Mittal withdrew his proposed appointment as Joint Managing Director and opted to continue as an Additional Director of the Company. Mrs. Archana Mittal (DIN 00007972) was appointed as an Additional Director w.e.f March 25, 2015 and the Company has complied with the requirement of appointment of Women Director under the Companies Act, 2013 and Listing Agreements.

As per the provisions of Section 161 (1) of the Companies Act, 2013, Mr. Shalabh Mittal and Mrs. Archana Mittal hold office till the date of the ensuing Annual General Meeting. Notice under Section 160 (1) of the Companies Act, 2013, in respect of each of them has been received from a member proposing their candidature for the office of Directors of the Company.

Mr. H. K. Mittal (DIN 00007690) is liable to retire by rotation at the ensuing Annual General Meeting in accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company; and being eligible, offers himself for re-appointment. Additional information on Directors recommended for appointment / reappointment, as required under Clause 49 of the Listing Agreement, is given in the notice convening 31st Annual General meeting of the company accompanying this report. The Company has received declarations from Mr. M. M. Agrawal, Mr. Manohar Bidaye, Mr. K. R. Bharat and Mr. Gunender Kapur confirming that they meet with the criteria of Independence as prescribed under provisions of the Companies Act, 2013, Rules thereunder and Clause 49 of the Listing Agreement. Your Directors recommend the above appointment / re-appointment for your approval.

Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Companies Act, 2013, Mr. H. K. Mittal, Executive Chairman, Mr. Atul Agarwal, Managing Director, Mr. Prasad Patwardhan, Chief Financial Officer and Mrs. Amruta Sant, Company Secretary were designated as Key Managerial Personnel of the Company.

Subsequently Mrs. Amruta Sant, resigned w.e.f. April 10, 2015. Mr. Deepesh Joishar has been appointed as the Company Secretary; Compliance Officer and Key Managerial Personnel of the Company w.e.f. May 4, 2015.


Pursuant to the provisions of the Companies Act, 2013 & Clause 49 of the Listing Agreement, evaluation of every directors’ performance was done by the Nomination and Remuneration Committee. The performance evaluation of the Non Independent Directors and the Board as a Whole, committees thereof and the chairman of the Company was carried out by the Independent Directors. Evaluation of the Independent Directors was carried out by the Board. A structured questionnaire was prepared based on criteria approved by Nomination and Remuneration Committee and circulated to the Directors for evaluation process.


As on March 31, 2015, your Company had total 34 subsidiaries / step-down subsidiaries. During the year, Panther Resources Pte.; Ltd. Mercator Project Pte. Ltd. and MCS Fuel Trading Sdn. Bhd. were formed / acquired as step-down subsidiaries. Mercator Lines (Panama) Inc. a step-down subsidiary of the Company was closed by way of voluntary winding up during the year.

As per Section 134 of the Companies Act, 2013, your Company has provided the Audited consolidated financial statements for the year ended on March 31, 2015; together with Auditors’ Report thereon forming part of this Annual Report, which includes financial information of all the subsidiaries. These documents will also be available for inspection during the business hours at the Registered Office of your Company and the respective subsidiary companies. A statement pursuant to the provisions of the Section 129 (3) of the Companies Act, 2013 read with relevant rules in the prescribed form AOC-1, showing financial highlights of the subsidiary companies is attached to the consolidated financial statements and therefore not repeated here for the sake of brevity. The Annual Report of your Company though does not contain full financial statements of the subsidiary companies, your Company has placed the audited annual accounts and related information of subsidiary companies on its website and will make available, upon request by any shareholder of your Company.


M/s. CNK & Associates LLP, retires at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The Audit Committee has recommended the proposed re-appointment of M/s. CNK & Associates LLP, at its meeting held on May 29, 2015 M/s. CNK & Associates LLP have furnished a certificate that their appointment, if made, will be within the limits prescribed under the Companies Act. The Directors recommend their reappointment for approval of the members. Members are requested to approve their re-appointment as Auditors to hold office from the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting.


Specified operations of your Company were covered under the Companies (Cost Records and Audit) Rules, 2014 (earlier the Companies (Cost Accounting Records) Rules, 2011) for maintenance of cost records. Accordingly, as prescribed in the said Rules, your Company has obtained Compliance Certificate from a Cost Accountant, which does not contain any qualification, reservation, or adverse remark, or disclaimer.


As required under the provisions of Section 204 of the Companies Act, 2013, your Company has obtained a Secretarial Audit Report for the financial year ended on March 31, 2015 from M/s Anil Jani & Co., Company Secretaries is appended as Annexure I and forms part of this report. The said report does not contain any qualifications, reservations, or adverse remarks or disclaimers.


Six meetings of the Board of Directors were held during the year. The details are provided in the Corporate Governance Report forming part of this Report.


The details of the Committees of the Board constituted under the Companies Act, 2013 and Listing Agreements are given in the Corporate Governance Report forming part of this Report.


The information required pursuant to Section 197 of the Companies Act 2013 read with Rule 5 (1) and Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is appended as Annexure II and IIA respectively. No ESOPs were issued during the year.


Your Company operates offshore and onshore activities in environment friendly manner. The major activities carried by the Company are offshore and your Company work towards minimizing the impact of its operations on the environment including marine life.

Several steps are taken for conservation of energy, some of which are listed below:

(A) Conservation Of Energy:

(i) The steps taken or impact on conservation of energy:

All vessels main engines have Energy Efficiency Design Index (EEDI) which reduces emissions greenhouse gases and helps in reducing impact on global warming. Engine RPM is reduced in rough seas (head wind and swell) so that the speed matches with the theoretical engine speed. Vessel main engine/generators are overhauled as per the running hours schedule so that optimum power is generated with the fuel economy.

Bridge team watches the movement of autopilot very precisely so that fine tune adjustments can be done to the system so that the rudder does not move unnecessary which cause’s loss of speed. Weather routing is used so that fuel is not wasted due to rough seas in certain areas. Good quality fuel is used in all vessels which help in full optimization of engine capacity.

Vessels are Dry Docked at regular intervals so that the hull form is clean and also propellers are polished. This gives better speed ratio when compared to the fuel consumption.

Entire machinery in engine room and on deck is kept well maintained so that there are no leakages of water / steam / hydraulic oil. Air Condition plants are monitored very closely and temperature is controlled, wherever required. Some ships are equipped with vacuum toilets, this helps us to conserve lot of water and in turn the hydrophore system works less. Garbage management is followed on board so that most of the garbage which is generated on board is sent ashore for recycling purposes. Energy efficient bulbs and lights are used on board.

The Master of the ship and his team make good passage planning on board for more use of currents and wind during voyages. The generators when not required; are switched off to save fuel.

(ii) the steps taken by the company for alternate sources of energy: Since your Company operates mostly from offshore; utilizing of alternate sources of energy options are minimal but your Company takes every necessary step to use alternate energy source as and when available.

(iii) the capital investment on energy conservation equipment’s: Your Company has not made any material investment on energy conservation equipment during the year. All vessels are equipped with Exhaust Gas Economizers, so that the hot exhaust gases which are going up; the funnel are used to provide heat source, this piece of equipment undergoes regular repairs and maintenance and also at time need to change the entire tubing’s etc.

(B) Technology absorption:

As your Company has not entered into technical collaboration with any entity, there are no particulars relating to technology absorption and not imported any technology during the year.

(C) Foreign Exchange Earnings and Outgo:

Your Company has earned foreign of Rs 182.38 cr (previous year Rs 86.82 cr) and spent Rs 324.78 cr (previous year Rs 150.73 cr) in foreign exchange, on account of import of stores & spares, capital goods, repairs / renovations of vessels, bunker, other vessel expenses, travelling and interests etc.

(D) Expenditure Incurred on Research & Development:

During the year, the Company has not any expenditure on research and development.


Pursuant to the provisions of Section 134 of the Companies Act, 2013, the Directors hereby confirm that:

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

(ii) They have 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 utilizing affairs of the Company at the end of the financial year and of the profits 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, 2013, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

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

(v) They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively

(vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively


The Company is committed to good corporate governance in compliance with the Listing Agreement with Stock Exchanges; and the Philosophy of the Mercator Group. A report on Corporate Governance including the relevant Auditors’ Certificate regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement with stock exchanges is appended. Management Discussion and Analysis Report is also appended.


In compliance with regulations under the Companies incurred Act, 2013; CSR Committee has been constituted and CSR policy has been adopted by the Company.

Since there was no average profit in the last three financial years; your Company was not required to spend statutorily on CSR activities during the year. However, your Company has initiated its own CSR policy and appointed Prem Punita Foundation as Implementing Agency for implementation.

The details of the Committee and initiatives on CSR are set out in the Corporate Governance Report forming part of the Directors’ Report.


Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement.


All related party transactions that were entered into during the financial year were on an arm’s length basis and in the ordinary course of business. The requirement of giving particulars of contracts/ arrangement made with related parties, in Form AOC-2 are not applicable for the year under review. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on quarterly basis. The Company has framed a Related Party Transactions policy to ensure proper identification, approval process and reporting of transactions. The policy on Related Party Transactions as approved by the Board is available on the Company’s website.


Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Director’s Report.

The Company has framed policy to identify, evaluate business risks and opportunities, and to mitigate the risk. The policy defines the risk management approach at various levels including documentation and reporting. The policy helps in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments.


The Company has in place adequate internal financial controls. The Audit Committee of Directors periodically reviews the internal control systems with the top management, and the Statutory and internal auditors. The Audit Committee also looks after adequacy of internal audit function, significant findings of the internal audit, and subsequent follow-up action on the same.


The Company has a Vigil Mechanism and Whistle Blower Policy for Directors and employees to deal with instance of fraud and mismanagement. The policy facilitates reporting of genuine concern or grievances, unethical behavior, actual or suspected fraud, or violation of the Code of Conduct of the Company, or its ethics Policy. They provide adequate safeguards to Directors/employees who avail of the mechanism. The same is overseen by the Audit Committee. The said Policy is posted on the website of the Company.


There have not been any material changes and commitments affecting the financial position of the Company between the end of the financial year of the Company as on March 31, 2015 and the date of this report i.e. May 29, 2015.


Pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of Annual Return of the Company for the financial year ended on March 31, 2015 in Form MGT-9 is appended as Annexure III.


During the financial year 2014-15, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 and rules made thereunder.

The Company’s policy on Directors’ appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 is appended as Annexure IV.

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future.

The Company has in place policy as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, no case was reported to the Committee constituted under the said Act.


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: May 29, 2015


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,
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


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

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