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Sical Logistics Ltd - Directors' Report

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DIRECTORS




Your directors are pleased to present this fifty eighth annual report of your company and the audited accounts for the year ended 31 March 2013.

FINANCIAL REVIEW

The financial results for the year ended 31 March 2013 are summarized below.-

(Rs In lakhs)

Year ended 31 March 2013 2012
Sales and other income 51320.85 50787.12
Profit before interest, depreciation and tax 6800.22 5380.07
Interest 4704.85 3148.07
Cash profit 2095.37 2232.00
Depreciation 1454.33 1336.51
Profit before tax 641.04 895.49
Provision for tax (753.75) (296.09)
Exceptional Items 132.46 137.17
Prior period items (355.43) -
Net profit 1171.82 1328.75
Earnings per share (EPS) in Rs (after exceptional items) 2.11 2.39

DIVIDEND

As funds would be required for ongoing projects and the new contract to be executed for Neyveli Lignite Corporation for their power plant at Tuticorin as also to service the subsidiaries which are yet to commence their business during the current financial year, the Directors have proposed to conserve the resources and hence are not recommending any dividend for the FY 2012-13.

PERFORMANCE

The company`s revenues for 2012-13 were Rs.51320.85 lakhs as against Rs.50787.12 lakhs in the previous year while profit after tax was Rs. 1171.82 lakhs as against Rs. 1328.75 lakhs in the previous fiscal. Profit before interest, depreciation and tax for 2012-13 was Rs.6800.22 lakhs as against Rs 5380.07 lakhs a year ago.

The performance of various divisions of the company during the previous fiscal is summarized below.

Port Handling

This division operates in ports like Chennai, Ennore, Tuticorin, Visakhapatnam and Mangalore. Mainly this division performs stevedoring operations for movement of coal for TNEB at Ennore and Tuticorin Ports apart from Terminal operations and an exclusive berth at the Chennai Port. Cargoes handled at the various ports vary from Coal, Dolomite, Iron Ore, Steel products and fertilizers. The total volume handled by Sical at the various ports during FY 2012-13 was 20.76 million MT as against 28.80 million MT in FY 2011-12. Ban in handling of coal at Chennai Port has impacted the volume significantly.

Customs House Agency

This division acts as an agency for clearing and forwarding goods through customs for imports and exports. This division handled 12.57 million MTs (12.83 million MTs in the previous year) of bulk cargo and 4240 TEUs (4820 TEUs in the previous year) of containerized cargo during the year under review. The cargoes handled vary from Coal, Iron Ore, Project Cargo, Capital Goods. Cement, Pulses, Non Ferrous Alloys and Steel in various forms.

Ship Agency

This division facilitates and ensures quick turnaround of the ships at berth at all major ports. During the year under review, the division handled 143 vessels (163 vessels in the previous year) at various ports in the country handling both dry and liquid bulk.

Road Logistics

This division is engaged in transporting cargoes such as dry bulk, liquid bulk, ODC and project equipments through trucks by road. The company currently owns 249 trucks and hires additional trucks based on consignments on a daily basis. The volume of cargo handled during the current fiscal year is 14.10 lakhMT(13.14 lakh MTs in the previous year). The goods handled ranges from project cargoes, steel tubes, plates and petroleum products. The Company has started its cold chain operations in Bengaluru. Chennai and Hyderabad duringthe year under review.

Goodwill Travels Division

This division carries out rail and airline ticketing for domestic as well as international and booking of worldwide hotels and tour packages, car rentals, online visas, and travel insurances apart from operating as an authorized dealer for full fledged money changing business.

SUBSIDIARIES AND JOINT VENTURES

The brief details on the Company`s key subsidiaries and joint ventures are furnished in the succeeding paragraphs.

1. Social Infra Assets Limited

Sical Infra Assets Limited is the infrastructure holding company currently having Sical Multimodal and Rail Transport Limited, Nagpur Sical Gupta Road Terminal Limited and Nagpur Sical Gupta Logistics Limited as its subsidiaries.

In order to integrate the container business under one fold, Sical Distriparks Limited and Sical Hambuja Logistics Private Limited were merged with Sical Multimodal and Rail Transport Limited.

• Sical Multimodal and Rail Transport Limited

Consequent to the merger, now this Company operates under two divisions viz. Rail Division and CFS Division. CFS Division is continuing its operations at Chennai. Tuticorin and Vizag with own CFS facilities at Chennai and Tuticorin apart from the CWC facility at Vizag and Tuticorin. The total volume handled during 2012-13 was 135879 TEUs as against 128287 TEUs in the previous year. Rail Division operates own rakes which are run between various sectors in India on a pan-India basis based on the licence provided by the Indian Railways for operating container trains by private operators. The Company ran 339 trains during the year on multiple sectors. The project activities relating to development of its own rail terminals ICD/CFS at Chennai and Bangalore are in progress. The revenue for the company during the financial year was Rs.21050.76 lakhs and Profit was at Rs.1020.44 lakhs

• Nagpur Sical Gupta Logistics Ltd & Nagpur Sical Gupta Road Terminal Ltd

Nagpur Sical Gupta Logistics Limited was issued a Letter of Authority for developing a rail terminal in MIHAN, Nagpur whereas Nagpur Sical Gupta Road Terminal Limited has signed a concession agreement with Maharashtra Airport Development Company Limited for developing a road terminal at MIHAN, Nagpur. The company carried out project activities but the activities were affected due to the global economic downturn and its feasibility in the previous years. Considering the non-viability of the project and as no further progress has happened around the MIHAN area that would fetch prospective business for the projects, the company decided to withdraw itself from the project. The companies are looking for other opportunities in the area of Rail and Road terminals.

2. Sical Iron Ore Terminals Ltd

Sical Iron Ore Terminals Limited has developed a 6 million ton Iron ore terminal at Ennore Port on BOT basis. The project was completed and is ready for commercial operation. Though there has been relaxation for mining and transporting of iron ore for domestic purposes, continuing ban on export of iron ore from Karnataka Region, the company could not commence its commercial operations. The Company is continuing its efforts in getting necessary nod from the Government for handling alternate cargoes.

3. Sical Iron Ore Terminal [Mangalore] Limited

Sical Logistics Limited has entered into a Concession Agreement with the New Mangalore Port Trust for the setting up of mechanized Iron Ore handling facilities at the deep draft multipurpose berth of New Mangalore Port on BOT basis. The company could not progress much on the project activities due to the continuing ban on export of iron ore from the Karnataka region.

4. Norsea Offshore India Limited

Norsea Offshore India Limited, a wholly owned subsidiary of the Company now owns and operates a Cutter Suction Dredger "SICAL Portofino". The dredger performed on a contract at Karaikal port during the year.

5. Sical Adams Offshore Limited

This company was incorporated on 20th September, 2012 for venturing into the offshore logistics business.

6. PSA Sical Terminals Ltd

PSA SICAL Terminals Limited, a joint venture with Port of Singapore Authority operates a container terminal at Tuticorin. In 2012-13, the company handled container volumes of 461011 TEUs as against 438538 TEUs in the previous year. The operation of this joint venture company was affected on account of the mismatch in the royalty being paid to the Port authorities and the tariff charged to customers as per the rules of Tariff Authority of Major Ports.

7. Ennore Automotive Logistics Limited

Ennore Automotive Logistics Limited is a Joint Venture with Mitsui OSK Lines Limited, Japan and Toyofuji Shipping Company Limited, Japan for the operation and maintenance of car yard at Ennore Port for handling the export cars. This company handled cars for Nissan, Honda & Toyota during the year. The company has handled 1,34,860 cars during the year under review.

SUBSIDIARY COMPANIES ACCOUNTS

As per Section 212 of the Companies Act, 1956, we are required to attach Director`s report. Balance sheet. Profit and loss account of subsidiaries. The Ministry of Corporate Affairs, Government of India vide its circular no. 2/2011 dated 8 February 2011 has provided an exemption to companies from complying with Section 212, provided such companies publish the audited consolidated financial statements in the Annual Report. Accordingly, the Annual Report for 2012-13 does not contain the financial statements of the subsidiaries. The audited annual accounts and related information of subsidiaries, where applicable, will be made available upon request. These documents will also be available for inspection during business hours at the registered office at Chennai, India.

AWARDS AND ACCOLADES

During the year under review,

• Certificate of Excellence was awarded at the Mahindra Transport Excellence Award 2012 under the Fleet Owner category from Southern Zone.

• Award from Tamil Chamber of Commerce for achieving No.1 place in Stevedoring.

• South East Conclave award for "Best CFS of the year" 2012

• Certificate of appreciation along with cash award from Shell India Markets Private Limited for outstanding performance and lasting contribution during the year 2012.

DIRECTORS

Shri A.S. Sundaresha and Shri H.R. Srinivasan, Directors retire by rotation at this annual general meeting and being eligible, offer themselves for re-election.

AUDITORS

M/s CNGSN & Associates, Chartered Accountants, retire at the conclusion of this annual general meeting and being eligible offer themselves for re-appointment.

FIXED DEPOSITS

The provisions of Section 58-A of the Companies Act, 1956, relating to the acceptance/renewal of fixed deposits, have been complied with. The Board of Directors at the meeting held on 27th May, 2010 decided not to invite deposits from the public from the year 2010 onwards. Accordingly no fresh deposits were accepted/ renewed by the Company. The value of matured and unclaimed deposits as on 31 March 2013 amounted to Rs 1.42 lakh.

DEMATERIALISATION OF EQUITY SHARES

5,40,85,835 equity shares representing 97.27% of the paid-up share capital, have been dematerialized upto 31.03.2013. Shareholders who continue to hold shares in physical form are advised to dematerialize their shares. The Company is also in the process of sending final reminder to the shareholders to whom new share certificates were sent during the year 1999 arising on account of mergers and the same being returned undelivered.

CORPORATE GOVERNANCE

The company has complied with the provisions of Clause 49 of the Listing Agreement relating to Corporate Governance. A report on corporate governance along with the statutory auditors` certificate and the management discussion and analysis report form part of this annual report.

STATUTORY INFORMATION

1. Under Section 217 [2AA] of the Companies Act, 1956, the board of directors report that:

• In the preparation of annual accounts, the applicable accounting standards have been followed with no material departures:

• 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 affairs of the company at the end of the financial year and of the profit or loss of the company for that period;

• They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities:

• They have prepared the annual accounts on a going concern basis.

2. The particulars required under Section 217 [1] [e] of the Companies Act, 1956, read with the rules framed under it are not applicable since the company is engaged in the business of providing logistics services. However, details of foreign exchange earnings and outgo are furnished in Annexure I to this report.

3. The particulars required under Section 217[2A] of the Companies Act, 1956 and the Companies [Particulars of Employees] Rules, 1975 as amended, are not applicable since none of the employees are in receipt of remuneration in excess of the limits as prescribed in the said Rules.

RELATIONSHIP WITH EMPLOYEES

The directors wish to place on record their appreciation to all the employees for their unstinted and dedicated efforts in leading the Company to greater heights.

ACKNOWLEDGEMENT

The directors wish to thank the company`s bankers, financial institutions, port and customs authorities, foreign collaborators, suppliers, statutory regulators, governmental agencies, investors and customers for their continued support at all times.

For and on behalf of the Board

Place Bengaluru R. Ram Mohan Kush S Desai
Date 09 August 2013 Managing Director Director

ANNEXURE - I TO THE DIRECTORS` REPORT

PARTICULARS REQUIRED UNDER THE COMPANIES [DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS] RULES. 1988.

A. CONSERVATION OF ENERGY : NA
B. TECHNOLOGY ABSORPTION NA
C. FOREIGN EXCHANGE EARNINGS AND OUTGO
Total Foreign Exchange Earned : Rs. 71.38 lacs
Used : Rs. 753.28 lacs
DISCLOSURE OF PARTICULARS WITH REFERENCE TO CONSERVATION OF ENERGY NIL

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Industry overview

The logistics sector in India has today become an area of priority. One prime reason for the same stems from the reason that years of high growth in the Indian economy have resulted in a significant rise in the volume of freight traffic moved. This large volume of traffic has provided for growth opportunities in all facets of logistics including transportation, warehousing, freight forwarding, express cargo delivery, container services, and shipping services. The growth path has also meant that increased demand is being placed on the sector to provide the solutions required for supporting future growth.

A sophisticated logistics sector should constitute the backbone of a large, mature economy. Although India`s logistics sector has witnessed increased investment, evolving regulatory policies, mega infrastructure projects and several other initiatives, there is a need to significantly accelerate the paceof such developments.

Various estimates put the market size of the logistics sector in India to be between USD 90-125 billion. Given that the Indian economy has grown to over USD 1.73 trillion these estimates may already be well below the actual size of the industry. Sources also estimate that the industry employs over 45 million people and is growing at the rate of 15% with sub-sector growing at even 30-40% per annum. Due to its current growth and its future growth potential the Indian logistics sector is viewed as one of the most attractive in the world. India`s rapid growth and market size were the key factors for global players looking at opportunities in the region.

Challenges faced by the Logistics industry in India

The Challenges faced by the industry in the country are enumerated in the succeeding paragraphs,

[a] Transportation related challenges

Rail Road Port Air
Important rail networks are over saturated Inadequate road network coverage High turnaround times With increased volumes of cargo major airports are getting congested resulting in long waiting time
Rail freight tariffs are high Less flexibility in carrying different types of products Poor road quality Inadequate depth at ports Also the airfreight sector suffers from high fuel costs and tariffs as well as several manpower issues
Rail terminal quality needs improvement Railway carriage not easy for industries which cannot provide full train loads Expressway network will take time to develop Costal shipping has not taken off
Multiple check points

[b] Other Challenges

Storage infrastructure Tax Technology and Skills
State of ICD/CFS is poor A complicated tax regime is in place The logistics industry is also hampered by low rates of technology adoption and poor skill levels.
Many of the older facilities today are located within city boundaries restricting day movement of trucks which places several challenges on the logistics industry.
The approach roads to the facilities are poor making evacuation of cargo difficult In addition to technology-related issues the skill levels in the logistics industry also need upgradation
Most facilities have issues of inadequate parking, lack of available land for expansion, paving etc.
State of warehousing needs improvement
State of cold storages needs improvement Multimodal Logistics parks yet to take off

Logistics Cost - an insight

The various challenges faced by the logistics industry lead to high logistics cost incurred by the Indian Economy. This is despite the fact that the cost of labor, one of the most significant contributors to logistics cost in developed countries, is significantly cheaper in India. With regards to cost of spends on logistics, India`s logistics sector accounts for 13% of the GDP of India. This is much higher than that in the US (9%), Europe (10%) and Japan (11 %) but lower than in China (18%)). Major elements of logistics costs typically include transportation, warehousing, inventory management and other value added services such as packaging. What is worrying about the logistics costs iri India is the distribution of costs across various heads. In India, as much as 31% of the logistics cost is attributable to the `others` category, which primarily includes various types of losses. If looked at from the perspective of logistics cost as a percentage of the total product cost India again fares poorly. The logistics cost as a percentage of total product cost in India is in the range of 4-5 times that in developed countries, to the tune of 20% of product cost. This is at a time when the quality of logistics services provided is not of the highest standards. Also worryingly, these costs have been showing a rising trend. Fuel price hikes have sharply increased the cost of freight transport. Ever increasing congestions at ports are resulting in high levels of ground rents required to be paidat CFS`s near the ports. High levels of inventories are being required to be maintained to guard against sudden disruptions in supply chain, all of which adds to the cost.

The high levels of logistics cost in the economy adversely impacts the competitiveness of the Indian economy as well as the financial well-being of the individual citizen. Additions to product cost due to inefficient logistics adds to inflation. Wastage leads to scarcity. This makes efforts for reducing logistics costs a critical goal to pursue. The rewards of reduction in logistics cost are many. As has been shown for other parts of the world, decrease in logistics cost leads to significant increase in employment opportunities in the economy. Also it helps in increasing the trade flows in a country by increasing the inherent competitiveness of the economy. Therefore stringent and coordinated efforts need to be made for logistics cost reduction.

Logistics - The Way Forward

The growth in the Indian economy in coming decade is likely to be driven by the increased activity in the manufacturing and retail sectors. To enable these sectors to contribute effectively to India`s growth the logistics sector will have to step up to provide value-enabling solutions for these sectors. This would require action on three fronts:

• Creating an environment for graduating the Indian logistics market to provide value propositions in logistics solutions

• Increasing the capability of the Indian Logistics Industry to provide such solutions

• Requiring Government and other regulatory mechanisms in the country to provide an enabling environment for value propositions in logistics services

The Logistics industry assesses client needs in practical terms. The Logistics market is predominantly occupied by unorganized sectors. Most logistics companies do not have the financial wherewithal to put in world class facilities upfront and wait for the returns to be realized at a later date through an `education` of the customer. Therefore a logistics service provider today gives exactly the service that is demanded of him. This is perpetuated by the fact that today a logistics company can set up business, offer base level service and earn profits, albeit with low margins because there is limited differentiation. Capabilities and skills are neither available nor do the customers currently demand them which is due to the fact the service providers are chosen only on the cost factor. The vicious circle of inadequacy and incompetence in supply and demand is self-propagating. There are stray instances of one supply chain streaking out of its orbit, but the risk perception in such ventures is high and generally discouraging. However the ray of hope is that perceptions seem to be changing. The reason behind the changing perceptions appears to be mainly that supply side pressure seems to be growing faster than the demand side in so far as logistics services are concerned. Increasing competition is forcing manufacturers and retailers to increasingly differentiate their products. One of the way through which differentiation is being made is through the supply chain strategies. Today for example, mastering the rural supply chain and making company products available in every corner shop in a rural area is becoming a business imperative for most retail products. This is because the pace of growth of markets in rural areas is handily beating those in urban centers. With such pressures the customers of logistics services are becoming ever more demanding. This is resulting in the capability and the inclination of the Indian Logistics industry to experience a change, which might be slow but is deliberate. The Indian market still remains extremely cost-conscious, and tolerant towards logistical mishaps, even misdemeanors but positive signs are being seen.

However this change may still be nipped in the bud if no efforts are made by the Government and its associated* regulatory mechanisms to provide an enabling environment to facilitate a paradigm shift in how logistics industry can grow unfettered.- It is well recognized that government is making efforts to make improvements to correct the infrastructure deficit- be it in physical transport, warehousing and terminal infrastructure etc. However while physical capacity creation is being facilitated, albeit slowly, there are other softer changes that are required to be made along with the capacity creation drive to realize the full impact of such changes. These include:

Coordination in infrastructure planning

• Improvements in tax regimes

• Reforms in urban planning

• Improving dialogue with industry

The future of the Indian Logistics Industry lies ultimately in value propositions for the customer. Value solutions can be engineered only if the complex strands of supply-chain mesh together seamlessly. These solutions are expected to command a premium but also come at a cost. The cost -conscious Indian Market first has to be made to appreciate the value of premium services. In a supply driven market, supply chain solutions need to unlock the cost -saving aspect of efficient logistics services first. This would result a reduction in cost down the line, which can only happen when most of the deficiencies mentioned above are removed. Logistics companies can leverage further economies of scale when operations are expanded. This may require industries to collaborate with logistic service providers to nurture their businesses, possibly in a way the automobile industry in India nurtured the auto-component companies. The future is bright for the logistics industry in India- the expectation is that a tipping point for the industry will soon be reached which will propel it to greater heights.

SICAL - Financial and Operational Performance

On the operational performance. Sical has its presence in almost all the major and minor ports. Sical provides integrated solutions for multimodal logistics of bulk and containerized cargo and is the one stop shop for executing multimodal logistics connecting sea, road and rail. The services are provided under the categories of bulk logistics & container logistics. The bulk logistics division comprises of port handling, CHA, Shipping Agency arid road logistics.

The Port Handling division handles cargo for TNEB at Ennore Port and also handles various other commodities including but not limited to dolomite, iron ore etc. Customs House Agency division provides services for clearing and forwarding of goods through customs for imports and exports. Ship Agency facilitates and ensures quick turnaround of the ships at berth at all major pofts. Road logistics transports various cargoes ranging from dry bulk to project equipments through own trucks as well as hired trucks. The Company has bagged a contract from Neyveli Lignite Corporation Limited for transportation of coal through Rail-Sea route for their power plant at Tuticorin for a period of 3 years which is extendible for further 2 years.

During the year under review, the Company integrated its container business under one umbrella by amalgamating Sical Distriparks Limited the CFS division and Sical Hambuja Logistics Private Limited with Sical Multimodal and Rail Transport Limited by an order of the Hon`ble High Court of Madras approving the scheme of amalgamation. The Rail division owns 7 rakes and has own as well as leased containers for the effective operation. The contain curtains are run on Pan-India basis in various sectors based on requirement. CFS Division is engaged in the CFS operations at Chennai, Tuticorin and Vizag. The CFS division handled 135879 TEUs during the financial year under review.

The impasse in commissioning the iron ore terminal project at Ennore Port continued through the year under review also due to the ban imposed by the Government of Karnataka on the mining and transportation of iron ore from the state of Karnataka though the Supreme court allowed mining for domestic consumption. The Company is in the continuous process of representing before the appropriate authorities seeking permission to handle alternate cargoes in this terminal. Similarly, the project activities could not progress with regard to the mechanization of the deep draft berth at the New Mangalore Port due to the similar situation on iron ore.

The profitability of the Joint Venture operation by PSA Sical at Tuticorin continues to be under pressure due to royalty and tariff related policy matters. The Company is in the process of resolving these policy issues. The joint venture for the car yard management and stevedoring of cars at Ennore Port with MOL and Toyofuji has improved its performance during the year.

Sical -The way forward

With the opportunities and challenges enumerated above for the logistics industry as a whole, and the picking up of the global economy, Sical is poised for an imminent growth. Sical is now in the process of identifying the best opportunities through which it can operate for a great growth in the years to come by providing cost economic world class multi-modal logistics solutions, With the co-operation of the employees at all levels, the Management expects better performance year after year.

Internal Control Systems and their adequacy

The Company has in place proper and adequate internal control systems which would automatically have the internal checks complied with then and there when transactions are executed. The Company has been in compliance with the various statutes of the Government and statutory authorities. Internal Audit has been entrusted to an external auditor and periodical review is being carried out by the Management. The Internal Audit findings involving high risks are reviewed by the Audit Committee at their meetings to check on the adequacy of internal controls and suggest measures for further improvement as well for mitigating risks.

Human Resources / Industrial Relations

The industrial relations at all levels remained cordial throughout the year. Employees are considered to be the ambassadors who really involve themselves in achieving the vision of the Company. They are considered to be the backbone of the organization and the development of the organization really depends on the improvement of each and every employee in the organization. With this in view, the Management has evolved best practices in evaluating the performance of the employees at all levels and provide growth opportunities in their career. Various developmental programs were carried out during the fiscal in addition to sponsoring employees for various seminars, symposiums and workshops organized by external agencies to enrich their knowledge and implement the best practices in their work place wherever feasible.

Cautionary Statement

Except for the historical information contained herein, statements in this Management Discussion and Analysis Report which may include words or phrases such as "will", "aim", "will likely result", "would", "believe", "may", "expect", "will continue", "anticipate", "estimate", "intend", "plan", "contemplate", "seek to", "future", "objective", "goal", "likely", "project", "should", "potential", "will pursue" and similar expressions or variations of such expressions may constitute "forward-looking statements". These forward-looking statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those suggested by the forward-looking statements. These risks and uncertainties include, but are not limited to our ability to successfully implement our strategy, our growth and expansion plans, obtain regulatory approvals, our provisioning policies, technological changes, investment and business income, cash flow projections, our exposure to market risks as.well as other risks.

REPORT ON CORPORATE GOVERNANCE

Your company is pleased to present the following report on Corporate Governance for the Financial Year 2012-13 [01 April 12-31 Mar 13].

1. GOVERNANCE PHILOSOPHY

Sical defines corporate governance as a set of guidelines that are followed by the company`s board of directors, management and employees to create value for Sical`s various stakeholders : investors, employees, customers, business partners, lenders and the communities we work in and live with.

We strive to conduct our business with integrity, fairness, accountability and transparency in all our dealings with our stakeholders and regulatory authorities.

The Company is committed to good corporate governance practices aimed at increasing value for all stakeholders namely, Shareholders, Employees, Government, Lenders, Customers, Dealers, Vendors, Bankers. Community, Government, Regulators and the Promoters.

2. BOARD OF DIRECTORS

The composition of the Board of Directors of the Company is as per the provisions of the Companies Act, 1956, Articles of Association of the Company and Clause 49 of the Listing Agreement entered into with the Stock Exchanges. As on 31st March, 2013, the Board comprised of

Promoter Director 2
Whole-time/ Executive Director 1
Non-whole time Directors 3

BOARD PROCEDURE

Sical`s board of directors meet regularly to discuss, apprise and approve matters relating to Sical`s strategy, plans, budgets, financials, and operations. The detailed agenda and relevant information is sent to every director in advance of each boarcl / committee meeting. Among otherthings. the board considers the following:

- Strategy and plans

- Operating and expenditure budgets

- Statutory compliance

- Quarterly/half yearly/annual results

Several board committees have been constituted to deal with specific matters and functional areas.

3. NUMBER OF BOARD OF DIRECTORS MEETINGS AND THE DATES ON WHICH HELD DURING THE FINANCIAL YEAR 2012-13.

Total Number of Board Meetings : 7
1 Quarter II Quarter III Quarter IV Quarter
[April - June 2012] (July - September 2012] [October - December 2012] [January - March 2013]
19th May. 2012 10th August 2012 10th November 2012 13th February 2013
28th May, 2012 06th December 2012
15th June, 2012

Attendance of Directors at the Board of Directors Meetings held during 2012-13 and the last Annual General Meeting [AGM] held on 28.09.2012 is as follows.

Attendance Particulars

Number of other directorships and committee member/chairmanships as at 31.03.2013

Director`s Name Category of Membership Board Meetings Last ACM Other Directorship Committee -Memberships Committee Chairmanships
Shri R. Ram Mohan Managing Director [Promoter Executive Director] 7 - - -
Shri Kush S Desai Non-executive & Non-independent Director 7 Whole-time Dire Director - 3 1 1
Shri S R Ramakrishnan Non-executive & Non-independent Director 3 Managing Director-1 Director 8 2 -
Shri A S Sundaresha Non-executive & Independent Director 7 - - -
Shri H Rathnakar Hegde Non-executive & Independent Director 6 Director 3 -
Shri H.R. Srinivasan Non-executive & Independent Director 1 - Managing Direct Director 5 1 -

Note

For reckoning the other Directorships - Private Limited Companies, Foreign Companies and Sec 25 companies have been excluded. For reckoning the Committee Memberships and Committee Chairmanships - Audit Committee and Shareholders / Investors Grievance Committee alone have been considered.

Regarding disclosure of all pecuniary relationships/transactions of the non-executive Directors vis-a-vis the Company, as per Clause 49[I][B] of the Listing Agreement, there were no materially significant related party transactions during the year having conflict with the interests of the; Company.

4. AUDIT COMMITTEE

The composition of the Audit Committee as on 31.03.2013 is as follows:-

1. Shri H.R. Srinivasan Chairman of the Committee
2. Shri A.S. Sundaresha Member
3. Shri H. Rathnakar Hegde Member
4. Shri R. Ram Mohan Member

The Committee met four times during the year i.e. on 28th May, 2012, 10th August, 2012, 10th November, 2012 and 13th February, 2013.

Attendance of Directors at the Audit Committee Meetings held during 2012-13.

Directors Name Category of Membership

Attendance Particulars

28.05.2012 10.08.2012 10.11.2012 13.02.2013
Shri H.R. Srinivasan Chairman of the Committee
Shri A.S. Sundaresha Member
Shri R. Ram Mohan Member
Shri H.Rathnakar Hegde Member

The broad terms of reference of the Audit Committee are:-

1. Overseeing the company`s financial reporting process and the disclosure of its financial information to ensure that the financial statement is correct, sufficient and credible.

2. Recommending to the Board, the appointment, re-appointment and. if required, the replacement or removal of the statutory auditor and the fixation of audit fees.

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

4. Reviewing with the management, the annual financial statements before submission to the board for approval, with particular reference to:-

a. Matters required to be included in the Directors` Responsibility Statement to be included in the Board`s report in terms of clause [2AA] of Sec 217 of the Companies Act, 1956.

b. Changes, if any, in accounting policies and practices and reasons for the same.

c. Major accounting entries involving estimates based on the exercise of judgement by management.

d. Significant adjustments made in the financial statements arising out of audit findings.

e. Compliance with the listing and other legal requirements relating to financial statements.

f. Disclosure of any related party transactions.

g. Qualifications in the draft audit report.

5. Reviewing, with the Management, the quarterly financial statements before submission to the board for approval.

6. Reviewing, with the Management, performance of statutory and internal auditors, adequacy of the internal control systems.

7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

8. Discussion with internal auditors any significant findings and follow up there on.

9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the board.

10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit as well as post-audit discussion to ascertain any area of concern.

11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders [in case of non payment of declared dividends] and creditors.

12. To review the functioning of the Whistle Blower mechanism, in case the same is existing.

13. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

14. Review of risk management policies and practices including the following:-

[a] to investigate any activity within its terms of reference.

[b] to seek information from any employee.

[c] to obtain outside legal or other professional advice.

[d] to secure attendance of outsiders with relevant expertise.

As per the terms of reference prescribed by the Board, the Committee performs such duties and tasks as are assigned by the Board and the Committee has access to all records and documents of the Company. The Committee reviews the report of the internal auditors and the statutory auditors and exercises internal control systems and also addresses the requirements of the Companies Act, 1956 and the Listing Agreement with the Stock Exchanges.

5. DETAILS OF REMUNERATION PAID TO THE DIRECTORS FOR THE FINANCIAL YEAR ENDED 31.03.2013.

(in Rs.)
Name of the Director Sitting Fee Commission
H.R. SRINIVASAN 100000 326000
S.R. RAMAKRISHNAN 60000 -
A.S. SUNDARESHA 220000 -
H. RATHNAKAR HEGDE 400000 326000
TOTAL 780000 652000

6. SHAREHOLDERS / INVESTORS GRIEVANCE AND SHARE & DEBENTURE COMMITTEE

The Committee comprises as of 31.03.2013

Shri H.R. Srinivasan : Chairman of the Committee
Shri R. Ram Mohan Member
Shri Kush S Desai : Member
Shri H. Rathnakar Hegde : Member [w.e.f. 28th May. 2012]

As per SEBI Circulars D&CC/FITT/CIR-15/2002 dated 27.12.2002 and D&CC/FITT/CIR-18/2002 dated 12.03.2004, the Company has appointed M/s. Cameo Corporate Services Limited, as common agency for shares relating to both electronic and physical segments. The appointment is effective 07.04.2003.

The broad terms of reference of this Committee shall be:-

1. To oversee the performance of share and debentures transfer and recommend measures to improve the shareholders / investors service.

2. To look into the redressal of investors` complaints and requests such as transfer of shares / debentures, non-receipt of dividend, annual report, etc.

The Board of Directors have authorized Chairman of the Committee and the Company Secretary to approve share transfers and resolve shareholders grievances.

The Board of Directors have designated the Company Secretary as Compliance Officer. During the year under report, the Company did not receive any significant complaints from the Shareholders. Investors. Stock Exchanges. Securities and Exchange Board of India or investors associations.

During the year, 2 complaints were received and all the complaints were replied / disposed off.

7. INSIDER TRADING

Pursuant to the Securities and Exchange Board of India [Prohibition of Insider Trading] Regulations, 1992, the Company has prescribed a Code of Conduct for Prevention of Insider Trading and a Code of Corporate Disclosure Practices.

8. CODE OF CONDUCT

The Company has formulated a Code of Conduct for the Board members and Senior Management Personnel. The same has also been posted on the website of the Company: A declaration by the Managing Director affirming the compliance on the Code of Conduct applicable to the Board members and the Senior Management personnel forms part of this report.

9. SECRETARIAL AUDIT

Periodical audits were carried out by a qualified Practising Company Secretary for reconciling the total admitted capital with National Securities Depository Limited [NSDL] and Central Depository Services [India] Limited [CDSL] and the total issued and listed capital. The audit confirms that the total issued / paid up capital is in agreement with the total number of shares held in physical form and the total number of dematerialized shares held with NSDL and CDSL..

10. GENERAL BODY MEETINGS

Location and time of last three Annual General Meetings [AGM] held

Year Date & Time Venue
2010 23rd September, 2010 at 3.05 p.m. "Rajah Annamalai Hall", Esplanade, Near High Court, Chennai 600 108
2011 19th December, 2011 at 2.00 p.m. "Rajah Annamalai Hall", Esplanade, Near High Court. Chennai 600 108
2012 28th September, 2012 at 10.25 a.m. "Rajah Annamalai Hall", Esplanade, Near High Court, Chennai 600 108

The following special resolutions were passed by the members during the past 3 Annual General Meetings:

Annual General Meeting held on 28th September, 2012 Payment of Commission to Directors other than the Managing/Whole-time Director[s] for a period of 5 years from the financial year commencing from 01 st April, 2012.
Annual General Meeting held on 19th December, 2011 Appointment of Shri R. Ram Mohan as Managing Director for a period of 5 years w.e.f. 26th September, 2011.
Annual General Meeting held on 23rd September, 2010 Increase in remuneration payable to Shri L.R. Sridhar as Managing Director w.e.f. 28th January, 2010.

11. POSTAL BALLOT

The Company through Postal Ballot passed a Special Resolution for obtaining approval of the members under Sec 372A of the Companies Act, 1956 for making investments / providing loans / guarantees to other bodies corporate[s] to the extent of Rs.450 crores over and above the limits prescribed. The results were declared on 08th October, 2012 and the resolution was passed with the requisite majority. The same is being placed before the shareholders for their confirmation.

12. DISCLOSURES

Disclosures on materially significant related party transactions i.e. transactions of the Company of material nature, with its promoters, the directors, the subsidiaries Or relatives, etc. that may have potential conflict with the interest of the Company at large:-

i There are no materially significant transactions with the related party viz. Promoters, Directors, or the Management, their subsidiaries or relatives that may have potential conflict with the interest of the Company at large.

ii There are no pecuniary relationships or transactions with the Non-executive Directors of the Company except the remuneration paid to them for services rendered as Directors of the Company.

Details of non-compliance by the Company, penalties, strictures imposed on the Company by the Stock Exchanges or SEBI or any statutory authority, on any matter related to capital markets during the lost three years:

The Company has complied with the various rules and regulations prescribed by the Stock Exchanges or any statutory authority on all matters related to capital markets during the last three years. No penalties or strictures have been imposed by them on the Company.

13. MINUTES OF SUBSIDIARY COMPANIES

The minutes of the meeting of the Board of Directors of the subsidiary companies viz. Sical Infra Assets Limited, Sical Iron Ore Terminals Limited, Sical Multimodal and Rail Transport Limited, Nagpur Sical Gupta Logistics Limited, Nagpur Sical Gupta Road Terminal Limited. Sical Distriparks Limited [upto 27th September, 2012], Bergen Offshore Logistics Pte. Ltd., Sical Iron Ore Terminal [Mangalore] Limited and Norsea Offshore India Limited were placed before the Board of the holding company i.e. Sical Logistics Limited.

14. GENERAL SHAREHOLDERS INFORMATION

i Disclosures regarding appointment or re-appointment of directors

Shri A.S. Sundaresha and Shri H.R. Srinivasan shall retire at the ensuing AGM and will be seeking reappointment to the Board. The details of the directors seeking re-appointment are disclosed in the notice to the shareholders convening the Annual General Meeting.

ii Committees of Board of Directors

Board has constituted various committees viz. Audit Committee and Shareholders/Investors and Share & Debenture Committee of the Directors. Whenever there is a change in the Directorate and whenever such change warrants induction of new members into these Committees at such times the committees are reconstituted.

iii Communication with shareholders

Quarterly / half yearly / annual results and information relating to convening of Annual General Meeting and Extra-ordinary General Meetings are published in leading newspapers and / or posted on the website of the Company and also notified to the Stock Exchanges as required under the Listing Agreement. The Balance Sheet, Profit & Loss Account, Directors Report, Auditors Report, Cash Flow Statements, Quarterly and Half Yearly Financial Statements, Corporate Governance Report, Shareholding Pattern, etc. can be retrieved by the investors from the website of the stock exchanges viz. BSE and NSE. Notices relating to Annual General Meeting and Extra-ordinary General Meetings and disclosure of Directors` interest in respect of contracts appointing Director[s] are sent to the members at their registered address.

iv Date, time and venue for 58th AGM:

24th September, 2013 at 10:35 a.m. at Rajah Annamalai Hall, Esplanade, Chennai

v Financial Calendar [2013-14]:

Financial reporting for the quarter ending [tentative]

1 June 30, 2013 Second week of August 2013
2 September 30, 2013 Second week of November 2013
3 December 31, 2013 Second week of February 2014
4 March 31, 2014 Audited results before last week of May 2014
Annual General Meeting [tentative]: By second / third week of September, 2014.
vi Dates of Book Closure: From: 21.09.2013 To: 24.09.2013 [both days inclusive]

vii Listing of Equity Shares on the Stock Exchanges and the Trade Name / Stock Code / Series :

Particulars Bombay Stock National Stock Bloomberg Code ISIN No.
Exchange Limited Exchange of India Limited
Trade Name SICAL SICAL SICAL INE075B01012
Stock Code / Series5 20086 SICAL SICLIN
Listing Fees for 2013-14 : Paid to the above stock exchanges
Depositories : National Securities Depository Limited
4th Floor, `A` wing Trade World
Kamala Mills Compound Senapati Bapat Marg,
Lower Parel, Mumbai : 400 013
Central Depository Services [India] Limited
P.J. Towers, Dalai Street Fort.
Mumbai: 400 023
Custodial Fees for 2013-14 : Paid to all the above depositories
viii Registered Office "South India House" 73, Armenian Street Chennai :: 600 001
Website: www.sical.in
ix Investor Services

2012-13

2011-12

Investor Complaints Received Attended to Received Attended to
Grievances / complaints 2 2 3 3

Most of the investors grievances / correspondences were attended to within a period of 10 days from the date of receipt of such grievances. The exceptions have been for cases constrained by disputes or legal impediments.

x Stock Market Data [Share prices on stock exchanges]

Monthly high and low closing quotation of shares traded on the National Stock Exchange and Bombay Stock Exchange:-

Month & Year

NSE

BSE

High Low Average High Low Average
April 2012 71.00 66.95 68.98 70.90 67.50 69.20
May 2012 68.00 67.00 67.50 69.50 67.00 68.25
June 2012 67.10 66.50 66.80 68.20 66.70 67.45
July 2012 70.75 65.00 67.88 73.30 67.00 70.15
August 2012 67.05 66.60 66.83 67.90 67.00 67.45
September 2012 67.05 64.65 65.85 67.70 65.05 66.38
October 2012 66.50 64.10 65.30 67.85 65.00 66.43
November 2012 65.00 64.85 64.93 65.90 65.00 65.45
December 2012 66.25 65.00 65.63 68.05 65.00 66.53
January 2013 66.50 64.10 65.30 71.00 65.00 68.00
February 2013 71.85 60.50 66.18 73.80 60.75 67.28
March 2013 61.00 53.95 57.48 61.80 60.00 60.90

xi Registrar and Share Transfer Agents [for Physical and Electronic mode]

Address for communication : Cameo Corporate Services Limited Unit: Sical Logistics Limited
"Subramanian Building", 5th Floor 1, Club House Road Chennai 600 002
Telephone : 044-28461073 Fax : 044-28460129
e-mail : cameo@cameoindia.com

xii Share Transfer System

Share transfers are effected on requests in Demat form as well as in physical form periodically at frequent intervals.

xiii Distribution of shareholding as on 31.03.2013

Number of shares Category No. of Shares % to total No. of Shareholders % to total
Upto 500 2210983 3.98 40082 95.84
501-1000 754682 1.36 967 2.31
1001-2000 529076 0.95 354 0.85
2001-3000 362218 0.65 137 0.33
3001-4000 189041 0.34 52 0.12
4001-5000 250370 0.45 53 0.13
5001-10000 557933 1.00 74 0.18
10001 & above 50747391 91.27 102 0.24
Total 55601694 100 41821 100

xiv Shareholding Pattern as on 31.03.2013

Category Shareholders [No.] Number of shares held Voting Strength [%]
PROMOTER HOLDING
Promoters & Associates 16 41701270 75.0000
NON-PROMOTER HOLDING
Institutional Investors
Financial Institutions 4 164837 0.2965
Fll 1 752681 1.3537
Banks 15 10658 0.0192
Mutual Funds 5 1211 0.0022
OTHERS
Other Bodies Corporate 531 3506067 6.3057
Trusts 2 1851 0.0033
NRIs 181 151090 0.2717
Clearing Members 26 10497 0.0189
Public 41040 9301532 16.7288
Total 41821 55601694 100

xv Dematerialisation of Shares

5,40,85,835 equity shares representing 97.27% of the paid-up share capital, have been dematerialized upto 31.03.2013. Trading in equity shares of the Company is permitted only in dematerialized form with effect from 28.08.2000 as per SEBI`s orders dated 29.05.2000.

xvi Nomination of Physical Shares

Members holding shares in physical form are encouraged to nominate a person to whom the shares in the Company shall vest in the event of death. Nomination forms will be sent to the Members on request.

xvii Performance of SICAL Share price in comparison to National Stock Exchange - S&P CNX NIFTY Index, [highest monthly closing]

xviii Performance of SICAL Share price in comparison to Bombay Stock Exchange - BSE Sensex [highest monthly closing].

xix Auditors` certificate on corporate governance

As required by Clause 49 of the Listing Agreement, the auditors certificate is given as an annexure to this report.

xx CEO / CFO certification

As required by Clause 49 of the Listing Agreement, the CEO/ CFO certification was submitted to the Board.

xxi Compliance with non-mandatory requirements of Clause 49 of the Listing Agreement

Clause 49 of the Listing Agreement mandates the Company to obtain a certificate from either the auditors or practicing company secretaries regarding compliance of conditions of corporate governance as stipulated in the Clause and annex the certificate with the directors report, which is sent annually to all the shareholders. We have obtained a certificate to this effect from our Statutory Auditors and the same is given as an annexure to this report.

Compliance with regard to non-mandatory requirement

We comply with the following non-mandatory requirements:

Shareholders` rights

The Clause states that a half-yearly declaration of financial performance including summary of the significant events in the last six months, may be sent to each household of shareholders.

Presently, the quarterly, half-yearly and annual results, notice regarding convening of general meetings and such other notices as are required under the listing agreement with the Stock Exchanges are published in English and Tamil dailies [Business Standard and Makkal Kural]. The results are also posted on the company`s website.

Whistle-blower policy

A mechanism for employees has been established to report concerns about unethical behavior, actual or suspected fraud, or violation of the code of conduct or ethics policy. The mechanism also provides for adequate safeguards against victimization of employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. We further affirm that duringthe financial year 2012-13, no employee has been denied access to the audit committee.

15. Investor Correspondence Sical Logistics Ltd. Cameo Corporate Services Ltd.
[Fortransfer/demat of shares Secretarial Department Unit: Sical Logistics Ltd.
Payment of dividend on "South India House" Subramanian Building
Shares, interest and redemption of debentures, any other query] relating to the shares and debentures of the Company. 73, Armenian Street V Floor
Chennai:: 600001 No.1. Club House Road
Telephone: 044-661 57016 Chennai:: 600 002
Fax:044-66157017 Telephone:044-28461073
e-mail: secl@sical.com Fax:044-28460129
Website: www.sical.com e-mail:cameo@cameoindia.com
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