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Sical Logistics Ltd - Directors' Report

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Your Directors are pleased to present this Sixty Second Annual Report of your companyand the audited financial statements for the year ended 31st March 2017.


The stand-alone financial results for the year ended 31st March 2017 asprepared under Ind-AS adopted for the first time during the fiscal are summarised below.

Year ended 31 March 2017 2016
Sales and other income 82406 64628
Profit before interest depreciation and tax 19657 13122
Interest 9540 7479
Cash Profit 10117 5643
Depreciation 2720 1704
Profit before tax 7397 3939
Provision for tax 2743 1508
Net profit 4554 2431
Earnings per share [EPS] in ' [after exceptional items] 8.19 4.37


Considering the ongoing projects in the mining areas such as overburden removalcontracts and Mine Developer and Operator contracts and the projects that are on the anvilfor the company as well as the subsidiaries it has been proposed by the Board ofDirectors to conserve the resources and not to declare any dividendsforthefinancialyear2016-17.


Debenture redemption reserve of ' 5 crores has been created in accordance with theprovisions of Rule 18[7] of the Companies [Share Capitaland Debenture] Rules 2014.


The Company has not issued any shares / securities which are convertible into equityshares during the financial year 2016-17.

The Company ssued Rated Listed Redeemable Non-Convertible Debentures on privateplacement to IDFC Bank Limited for an amount of ' 100 crores during the financial year andwith the proceeds of the same made an early redemption of the NCDs already issued to INGVysya Bank Limited [now Kotak Mahindra Bank Limited] in accordance with the terms of theissue of debentures.


The Company has not invited any deposits from public. There are no unclaimed depositswhich were matured as on 31st March 2017.


Pursuant to the provisions of the Companies Act any dividend amount which remainsunpaid or unclaimed for a period of 7 years will have to be transferred to the InvestorEducation and Protection Fund of the Central Government. The Company does not have anyamount lying under unclaimed dividend as on 31st March 2017 and hence the saidprovisions are not applicable.


The company's revenues for financial year 2016-17 was ' 82406 lakhs as against ' 64628lakhs in the previous fiscal which is 27.51% higher than the previous fiscal while ProfitAfter Tax was ' 4554 lakhs as against ' 2431 lakhs in the previous year registering agrowth of 87.33%. The improved performance is mainly attributable to the operations of thecompany in the mining and integrated logistics contracts executed during the year as wellthe company's continued focus on prudent utilisation of available resources and aneffective control on operating expenses.

The highlights on the performance of various divisions of the company during thefinancial year 2016-17 is summarised below:


The prestigious contract for movement of coal from Mahanadhi Coal Fields in Odisha tothe power plant of NLC at Tuticorin through road-rail-sea movement continued itsoperations during the year under review. The volume handled was at 1.43 MMT. Further thecoal washery operations have commenced during the month of February 2017.


The Companies operation of surface mining of coal and overburden removal contracts werefurther strengthened during the financialyear.The Company was awarded the second term inBharatpurwhich is expected to fetch a turnoverof over? 289 crores over a period of 3 yearsand has commenced its operations during the first quarter of the current financialyear.The operation of removal and transportation of overburden atSamaleswari mines continuedwith improved performance and operations at Lajkura mines have commenced. AH the aboveoperations are at Odisha for Mahanadhi Coalfields Limited. The Company got a freshcontract for overburden removalat Jhingurda in mines of Northern Coalfields Limited inMadhya Pradesh during theyear and has commenced its activities. The company owns a fi.eetof over 325 equipments for executing the various contracts. The Company has handled 9.5million metric tonnes of coal and 19.7 million cubic meters of overburden during thefinancialyear 2016-17. The Company received an order from West Bengal Power DevelopmentCorporation Limited as a Mine Developer and Operator for the Tara East and West Mines fora contract value of ?1500 crores to be executed over a period of 7 years.


During the year under review this division performed stevedoring activities at thePorts of Chennai Tuticorin Mangalore Vizag and Ennore. 17.2 million MTs of Coallimestone dolomite etc. were handled at various ports for TNEB and various othercustomers.

During the year under review the Company has commenced coastal shipping businessduring September 2016 for moving automobiles and has moved around 14275 vehicles at theend of the fiscal under review.


The Road Logistics division extends movement of cargo through trucks and has aclientele operating in petroleum construction steel fertiliser and chemical sectors.This division also provides services for the integrated logistics sector for movement ofcoal removal of overburden at coalfields - surface mining and copper concentrates.


The Retail Supply Chain Solutions division comprises of cold chain warehousing and drylogistics. The cold chain segment operates with a combination of owned and hiredrefrigerated vehicles from various distribution centres across the country. The company isin the process of extending its operations to FMCG Pharma and other areas where theoutreach will be promising. Latest technologies including GPS based tracking have beenimplemented for an effective delivery. The Company is proposing to acquire companies withexpertise in the pharma and logistics sectors in order to strengthen its presence in theretail supply solutions sectors. During the year under review the Division has handledover 450000 consignments.


Custom house agency is engaged in providing services as an agency for clearing andforwarding goods through customs meant for imports / exports. This division handled 116.05million MTs of bulk cargo and 4753 TEUs of containerised cargo during the financialyear2016-17.

Shipping division facilitates and ensures quick turnaround of the ships at berths atall major ports. This division handled 101 vessels across various ports during the yearunder review including the movement of coal from Paradip Port to Tuticorin Port throughsea for the NLC contract.

GoodwiUtravels division is engaged in booking railand airlineticketing apartfrombooking worldwide hotels and conducting tour packages car rentals online visas andtravel insurances. This division also operates as an authorised dealer for full hedgedmoney changing business.


As on 31st March 2017 the Company has the following subsidiaries and joint venturecompanies

1 Sical Iron Ore Terminals Limited

2 Sical Infra Assets Limited

3 Sical Multimodal and RailTransport Limited [subsidiary of Sical Infra Assets Limited]

4 Sical Iron Ore Terminal [Mangalore] Limited

5 Sical Adams Offshore Limited

6 Norsea Offshore India Limited

7 Sical Mining Limited [during the financialyear 2016-17]

8 Sical Bangalore Logistics Park Limited [during the financialyear 2016-17][subsidiaryof Sical Infra Assets Limited]

9 Bergen Offshore Logistics Pte Ltd [Overseas subsidiary]

10 Norsea Global Offshore Pte Ltd [subsidiary of Bergen Offshore Logistics Pte Ltd]

Joint Venture Companies

1 PSA Sical Terminals Limited

2 Sical Sattva Rail Terminals Private Limited [a JV between Sical Multimodal andRailTransport Limited and Sattva Logistics Private Limited]

3 Sical Saumya Mining Limited


1. Sical Iron Ore Terminals Limited

The Company had completed the construction activities for an iron ore terminal at theKamarajar Port [erstwhile Ennore Port] in 2010 but however could not commence itscommercial operations due to the prevailing ban on the export of iron ore from out of theKarnataka Region. In order to utilize the idle terminal the company has made requests tothe Kamarajar Port and Ministry of Shipping to allow handling of alternate cargoes in theterminal. Kamarajar Port accordingly invited bids for modifying the existing iron oreterminal also to handle coal and Sical Iron Ore Terminals Limited emerged as thesuccessful bidder and a fresh licence agreement was signed on 11th July 2016.The Company is in the process of finalising the vendors for the equipments andmodification project activities that are to be taken up. The operations are expected tocommence during the financialyear 2018-19.

2. Sical Infra Assets Limited [SIAL] and Sical Multimodal and Rail Transport Limited[SMART]

SIAL extends logistics services of providing transportation. The SIAL's subsidiarySical Multimodal and RailTransport Limited has two divisions viz. Container rail andContainer Freight Stations. The company moves containers through rail on Pan India basis.The contract with HCL for transportation of copper concentrates to various destinationswas executed during the year under review. The volumes handled during the year underreview are 17479 TEUs. The project activities relating to development of its ownrailterminals ICD/CFS at Chennai and Bangalore are in progress. The Company has a JV with50% stake in Sical Sattva Rail Terminals Private Limited which operates the Melpakkamterminal. The performance of the rail division was affected on account of the increasedhaulage charges payable to Railways and competition from other ContainerTrain Operators.

CFS operations were continued at Chennai and Tuticorin. During February 2017 a newCFS facility was inaugurated at Vizag. The totalvolume handled during 2016-17 was 123133TEUs.

To achieve effective performance of the railterminals a subsidiary company wasincorporated in May 2016 underthe name and style of Sical Bangalore Logistics Park Limitedfor the purpose of taking care of the Bengaluru ICD terminal operations. Subsequent tothis the Board of Directors of both the subsidiaries viz. Sical Multimodal andRailTransport Limited and Sical Bangalore Logistics Park Limited have proposed a Scheme ofArrangement [Demerger] for hiving off the Bangalore ICD to the newly incorporated companyand have filed an application before the National Company Law Tribunal Southern RegionChennai forthe approvalof the Scheme of Arrangement [Demerger]

3. Sical Iron Ore Terminal [Mangalore] Limited

A concession agreement was entered with New Mangalore port in 2009 for setting up ofmechanised iron ore terminal and operation and maintenance at the Mangalore Port. Sincethere remains a ban on the movement and export of iron ore from out of Karnataka regionrequired cargo cannot be generated and hence approached the Port authorities for allowingto handle multi purpose cargoes in the berth to be constructed. Since this was not agreedto the Company was left with no choice but to issue a termination notice on force majeurecondition and the New Mangalore Port authorities have referred the matter to arbitrationand arbitral proceedings continued during the financialyear under review.

4. Sical Adams Offshore Limited

This company as formed with intent to venture into offshore segment. The Company willcommence operations as and when suitable opportunities emerge.

5. Norsea Offshore India Limited

This company owns and operates a cutter suction dredger Sical Portofino carryingdredging activities at ports.

6. Sical Saumya Mining Limited

This subsidiary was formed in association with Saumya Mining Limited for the purpose ofexecuting the overburden removal contract awarded by the Mahanadhi Coal Fields Odisha forthe operations at coal mines located at Samaleshwari and Lajkurato handle 37 and 53million CBM in 3 and 5 years respectively. The activities at Samaleshwari and Lajkuramines carried out during the financialyear and the revenue earned during the financialyearunder review was ' 12907 lakhs and a Profit AfterTax at' 83.53 lakhs.

7. Sical Mining Limited

The company has been incorporated during the fiscal under review for carrying out theMining Development and Operation contract of West Bengal Power Development CorporationLimited forthe Tara [East] mines in West Bengal.

8. Bergen Offshore Logistics Pte Ltd and Norsea Global Offshore Pte Ltd

The overseas subsidiary of the Company Bergen Offshore Logsitics Pte Ltd and the whollyowned subsidiary of Bergen viz. Norsea Global Offshore Pte Ltd have their offices inSingapore. Currently there are no operations under these subsidiaries.

9. PSA Sical Terminals Limited

This is a joint venture company with Ports of Singapore Authority in which Sical has ashareholding of 37.5%. This company operates a container terminal at Tuticorin Port andhas handled 533049 TEUs during the year under review and earned a revenue of '16132 lakhswith a Profit of'382 lakhs. The challenge faced by this Company has been the royaltypayable being higher than the tariff allowed to be charged which was disputed and theCompany has received a favourable arbitral award where royalty model would change intorevenue share model which is in accordance with 2013 guidelines of Ministry of Shipping.The said Arbitral Award was challenged before the District Court by Tuticorin Port and theDistrict Court has upheld the Arbitral Award in favour of the Company. Now the saidDistrict Court Order has been challenged by Tuticorin Port before the High Court of Madrasat Madurai Bench.


As per Section 129[3] of the Companies Act 2013 read with Rule 5 of the Companies[Accounts] Rules 2014 the Company has prepared consolidated financial statement and thesame is being laid before the members for their approval at the ensuingAnnualGeneralMeeting. Also a separate statement containingthe salient featuresofthefinancialstatement of the subsidiaries and joint ventures in Form AOC-1 is attachedalong with the financial statements.


During the year under review:

• highest tonnage handled by Stevedore during 2015-16 by Chennai Port Trust

• Best Transporter at Driver Management Centre of Shell India

• Haulier League award for best practices [Health Safety Security andEnvironment league performance 2016]

• Best Transporter for 2013-14 2014-15 award from Tata Chemicals Limited


The Company has 08 [eight] directors consisting of 04 [four] Independent Directors

03 [three] non-executive director [including 1 woman director] and 01 [one] executivedirector


In terms of the definition of Independence of Directors as prescribed under Regulation17 of the SEBI [Listing Obligations and Disclosure Requirements] Regulations 2015 andSection 149[6] of the Companies Act 2013 and based on the confirmation/ disclosuresreceived from the Directors the following Non-Executive Directors are IndependentDirectors as on 31st March 2017.

1. Mr.H.R.Srinivasan

2. Mr.Harady Rathnakar Hegde

3. Mr. S. Ravinarayanan

4. Mr.Sudhir V Kamath


Mr. R. Ram Mohan serves as the Chairman of the Board.


Mr. Kush S Desai is an Executive Director.


The following directors are considered to be non-independent non-executive directors

1. Mr. Sunil Deshmukh

2. Ms. Shweta Shetty [Woman Director]


There were no fresh appointments / resignations took place during the year underreview.


In terms of Section 152 of the Companies Act 2013 Mr. Sunil Deshmukh being longest inthe office shall retire at the ensuing AGM and being eligible to be re-appointed offershimself for re-appointment.


The Board met 9 times during the financialyear 2016-17. Detailed information on themeetings of the Board are included in the report on Corporate Governance which forms partof the Directors Report.

Additionally several committee meetings were held including Audit Committee which met04 [four] times during the year. COMMITTEES OF THE BOARD

The Company has several committees which have been established as a part of the bestcorporate governance practices and are in compliance with the requirements of the relevantprovisions of applicable laws and statutes.

The Company has the following committees of the Board

• Audit Committee

• Stakeholders Relationship Committee

• Corporate Social Responsibility Committee

• Nomination and Remuneration Committee

• Risk Mitigation Committee

• Management Committee

The details with respect to the composition powers roles terms of reference ofrelevant mandatory committees are given in detail in the Report on Corporate Governancewhich forms part of the Directors Report.


In compliance with Section 135 of the Companies At 2013 read with Companies [CorporateSocial Responsibility Policy] Rules 2014 the Company has established a Corporate SocialResponsibility [CSR] Committee and statutory disclosures with respect to the CSR Committeeand an Annual Report on CSR Activities form part of this Report as Annexure -1.


In accordance with Section 178 of the Companies Act 2013 and Regulation 17 of the SEBI[Listing Obligations and Disclosure Requirements] Regulations 2015 [earlier Clause 49 [IV] of the Listing Agreement] the Company has laid down a Nomination and RemunerationPolicy. Further to this the manner in which formal annual evaluation of the directorsthe Board and Board level committees were devised by the Committee. Accordingly theevaluation of the performance of the members of the Board Board level committee and theBoard as a whole were carried out at the meeting of the available independent directorsand the board of the directors on 10th May 2017.


The Company is committed to achieve the highest standards of Corporate Governance andstrives to comply with the requirements as set by the Regulators / applicable laws.

A separate section providing a Report on the Corporate Governance as stipulated underRegulation 34 [3] and Schedule V [c] of the SEBI [Listing Obligations and DisclosureRequirements] Regulations 2015 is attached as an Annexure to this report. The said reporton corporate governance also contains certain disclosures required under the CompaniesAct 2013.

A certificate from the Statutory Auditors M/s. CNGSN & Associates LLP CharteredAccountants conforming compliance to the conditions of Corporate Governance as stipulatedunder Regulation 34[3] of the SEBI [Listing Obligations and Disclosure Requirements]Regulations 2015 is annexed to the Report.


A Management Discussion and Analysis Report pursuant to Schedule V [B] of the SEBI[Listing Obligations and Disclosure Requirements] Regulations 2015 is furnished as anAnnexure to this report.


The Company has implemented a Vigil Mechanism / Whistle Blower Policy pursuant to whichWhistle Blowers are allowed to raise concerns relating to Reportable Matters [as definedin the Policy] Further the policy encourages whistle blowers to bring the genuineconcerns or grievances and provides for adequate safeguards against victimisation ofWhistle Blower who avail of such mechanism and also provides for direct access to theChairman of the Audit Committee in exceptional circumstances. The functioning of thevigil mechanism is reviewed by the Audit Committee from time to time. None of the whistleblowers were denied access to the Audit Committee of the Board of Directors. The detailsof Vigil Mechanism / Whistle Blower Policy are available on the website of the Company .


The Board has implemented the risk management policy for effective management of risksthat are envisaged on the conduct of business wherein all material risks faced by thecompany are identified and assessed and evolves assessment of controls and policies andput in place procedure for monitoring mitigating and reporting risk on a periodic basis.


AH related party transactions thatwere entered into duringthefinancialyearwere intheordinary course of business of the Company and were on arm's length basis. There were nomaterially significant related party transactions entered into by the Company with thePromoters Directors Key Managerial Personnel or other persons which may have a potentialconflict with the interest of the Company. The details of such related party transactionsin Form AOC-2 is furnished as Annexure-2 to this Report.

Considering the nature of the industry in which the Company operates related partytransactions are in the ordinary course of business on an arm's length basis. AH suchrelated party transactions are placed before the Audit Committee for approval whereverapplicable. Prior omnibus approval for normal transactions is also obtained from the AuditCommittee for the related party transactions which are of repetitive in nature as well forthe normal transactions which can not be foreseen and accordingly the required disclosuresare made to the Committee on quarterly basis in terms of the approval of the Committee.

The policy on Material Related Party Transactions and also on dealing with the RelatedParty

Transactions as approved by the Board of Directors is uploaded on the website of theCompany and the link for the same is


Corporate guarantees were provided to banks / financial institutions for the financialfacilities availed by the company's subsidiaries after obtaining due approval from theshareholders through postal ballot wherever such transactions are considered to bematerial related party transactions. The Corporate Guarantees as provided during thefinancial year 201617 are furnished below.

S.No. Name of the Bank / Financial Institution Name of the Corporate Body on whose behalf guarantee has been given Relationship Purpose Amount in ' Crores Date of Execution
1 RBL Bank Limited Sical Saumya Mining Limited Subsidiary For credit facilities provided to the subsidiary 60.00 29.06.2016
2 Bank of Baroda Sical Multimodal and Rail Transport Limited Step-down subsidiary For credit facilities provided to the subsidiary 192.45 [earlier provided for '147.49 crores now increased by '44.96 crores due to additionalfacility provided by the Bank] 07.10.2016

The Company subscribed for 10000 equity shares of 10 each in its wholly ownedsubsidiary M/s. Sical Mining Limited a newly incorporated company during the year underreview.

The following are the closing balances to the amounts extended as loans / advances tosubsidiaries as per Section 186 of the Companies Act 2013 as at 31st March 2017

Name of the Body Corporate Amount in ' Lakhs Nature of the Body Corporate
Sical Iron Ore Terminals Limited 24476 Subsidiary
Sical Iron Ore Terminal (Mangalore) Limited 108 Subsidiary
Sical Bangalore Logistics Park Limited 108 Step down subsidiary


The Company has laid down set of standards processes and structure which enables toimplement internal financial control across the organisation and ensure that the same areadequate and operating effectively. The statutory auditors M/s. CNGSN & Associates LLPhave provided their report on the internal financial control as part of their auditreport.

[a] Statutory Auditors

M/s. CNGSN & Associates LLP Chartered Accountants retire at the conclusion of theensuing Annual General Meeting. As per the provisions of the Companies Act 2013 a newstatutory auditor is to be appointed for the current financial year as M/s. CNGSN &Associates LLP have completed their tenure. In this connection the Audit Committee andBoard of Directors have recommended for the approval of the shareholders at the ensuingAGM the appointment of M/s. SRSV & Associates Chartered Accountants with FirmRegistration No.:015041S as the Statutory Auditors of the Company for the currentfinancial year 2017-18 ona remuneration to be decided by the Board or Committee thereof.

[b] Secretarial Auditors and Secretarial Audit Report

Pursuant to Section 204 of the Companies Act 2013 Mr. R. Kannan Practicing CompanySecretary Chennai was appointed the Secretarial Auditor for the financial year 2016-17.The report of the Secretarial Auditor for the FY 2016-17 is annexed to this report asAnnexure - 3.

There are no audit qualifications in the Statutory Auditors Report and SecretarialAuditReport.


There are no material changes and commitments affecting the financial position of thecompany which has occurred between the end of the financialyear of the company i.e. 31stMarch 2017 and the date of the Directors Report i.e. 10th May 2017.


1. The statement containing particulars of the names of top ten employees in terms ofremuneration drawn as required under Sec 197[2][i] of the Companies Act 2013 is furnishedbelow and the details relating to employees as required under Section 197[2] [ii] of theCompanies Act 2013 read with Rule 5[2] of the Companies [Appointment and Remuneration ofManagerial Personnel] Rules 2014 as amended is not applicable since none of the employeesare in receipt of remuneration exceeding ' 1.02 crores p.a. or ' 850000 per month duringthe financialyear 2016-17.

2. The ratio of the remuneration of each director to the median employee's remunerationand other details in terms of sub-section 12 of Section 197 of the Companies Act 2013read with Rule 5[1] of the Companies [Appointment and Remuneration of ManagerialPersonnel] Rules 2014 are forming part of this report as Annexure - 4.


[1] The disclosures to be made under sub-section [3][m] of Section 134 of the CompaniesAct 2013 read with Rule 8[3] of the Companies [Accounts] Rules 2014 are furnished below.

Since the company is engaged in providing logistics services the details as toconservation of energy and technology absorption are not applicable.

Total ForeignExchange : Earned : ' 866 lakhs
Used : ' 4512 lakhs

[2] No significant and material orders were passed by the regulators or courts ortribunals impacting the going concern status and company's operations in future.

[3] There were no complaints received / cases filed under Section 22 of the SexualHarrassment of Women at Workplace [Prevention Prohibition and Redressal] Act 2013.

[4] No stock options were issued to the Directors of the Company.


Pursuant to sub-section 3[a] of Section 134 and sub-section [3] of Section 92 of theCompanies Act 2013 read with Rule 12 of the Companies [Management and Administration]Rules 2014 the extracts of the Annual Return as at March 31 2017 forms part of thisreport as Annexure -5.


Pursuant to the requirement of Section 134[5] of the Companies Act 2013 it is herebyconfirmed that:

[a] in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures.

[b] the directors had selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financialyear and ofthe profit of the company for that period.

[c] the directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities.

[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 thecompany and that such internal financial controls are adequate and were operatingeffectively.

[f] the directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.


The Directors wish to thank the Port Authorities Governmental Agencies company'sbankers financial institutions customs authorities foreign collaborators suppliersstatutory regulators investors customers and all stakeholders for their continuedsupport and patronage.

For and on behalf of the Board
R. Ram Mohan
Place :Bengaluru Chairman
Date :10th May 2017 DIN:02506342

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