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Sical Logistics Ltd - Directors' Report

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Code: 520086
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Code: SICAL
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1 Year : Rs 55.90 (83.45%)
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Directors` Report




Your directors are pleased to present this fifty eighth annual report of your company and the audited accounts for the year ended 31 March 2014.

FINANCIAL REVIEW

The financial results for the year ended 31 March 2014 are summarized below:-

(Rs In lakhs)
Year ended 31 March 2014 2013
Sales and other income 60094 51321
Profit before interest, depreciation and tax 8447 6800
Interest 5808 4705
Cash profit 2638 2095
Depreciation 1668 1454
Profit before tax 970 641
Provision for tax (55) (754)
Exceptional Items 80 132
Prior period items (38) (355)
Net profit 1067 1178
Earnings per share (EPS) in Rs (after exceptional items) 1.92 2.11

DIVIDEND

The directors have been steering the Company in the path to reach the dividends paying stage. Your Company`s new initiatives of Integrated Logistics to move coal for NLC Tamilnadu Power Limited, vide Road-Rail-Sea route after washing the coal from Odisha to Tuticorin, Tamilnadu (expected to commence during the second quarter of the current financial year) and contracts for Surface Mining and transportation of coal for Mahanadhi Coal Fields in its Lajkura and Bharatpur mines at Odisha (already commenced business during the current financial year) coupled with conversion of iron ore terminal at Ennore Port to coal terminal (proposal under the review of the Central Government) will enable your company to reach dividend paying stage.

DEBENTURES

During the year under review, the Company had raised funds by way of issue of 12.75% secured Non-convertible Debentures for a value of Rs.100 crores with 50% maturity in 2017 and balance 50% in 2018. These debentures are listed with National Stock Exchange Limited. The Company has created the debenture redemption reserve in accordance with the regulations.

PERFORMANCE

The company`s revenues for 2013-14 stood at Rs. 60094 lakhs as against Rs.51320 lakhs in the previous year while profit after tax was Rs.1066 lakhs as against Rs.1171 lakhs in the previous fiscal. Profit before interest, depreciation and tax for the fiscal 2013-14 was Rs.8447 lakhs as against Rs.6800 lakhs in the previous year.

The performance of various divisions of the company during the year under review 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 and for various other private sector customers. 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 2013-14 was 26.01 million MT as against 20.76 million MT in FY 2012-13. The increase in volume is attributable to better capacity utilization and increase in power capacity by TNEB requiring higher volume of coal.

Customs House Agency

This division acts as an agency for clearing and forwarding goods through customs for imports and exports. This division handled 16.34 million MTs (12.57 million MTs in the previous year) of bulk cargo and 4025 TEUs (4240 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 121 vessels (143 vessels in the previous year) at various ports in the country handling both dry and liquid bulk

Road Logistics

This division was impacted by the economic instability experienced by the key sectors of the country especially the construction, steel, fertiliser and chemical industries. To overcome this, the division selected high profile customers with consistent operation yielding a reasonable margin.

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. During the year under review the division has operated full fledged packaged tours to Bangkok and far east countries and has plans for operating packaged tours to other destinations.

New Initiatives

Surface Mining and transportation of coal

The Company has bagged prestigious contract for surface mining and transportation of 44.36 million ton of coal from Lajukura and Bharatpur mines of Mahanadhi Coal Fields in Odisha. The operations have commenced during first quarter of 2014-2015.

Integrated coal logistics

The prestigious integrated coal logistics contract from NLC Tamilnadu Power Limited is expected to commence in the second quarter of 2014-2015. The Company has received the communication from NLC Tamilnadu Power Limited to commence the project.

Port handling

The Company has commenced stevedoring and logistics operations at Kandla Port during the first quarter of 2014-2015.

SUBSIDIARIES AND JOINT VENTURES

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

1. Sical Infra Assets Limited

Sical Infra Assets Limited is the infrastructure holding company currently having Sical Multimodal and Rail Transport Limited comprising of container rail and container freight station divisions.

Due to non-viability of the Road and Rail Terminal Projects at MIHAN, Nagpur, the company had opted to withdraw from the same and accordingly a settlement was reached with MADC by Nagpur Sical Gupta Road Terminal Limited and Nagpur Sical Gupta Logistics Limited. Subsequent to this, the Company has divested its investment in these entities effective 25th March, 2014.

Sical Multimodal and Rail Transport Limited

This Company operates container rail as well as CFS. CFS business is continuing its operations at Chennai and Tuticorin subsequent to the completion of the Strategic Alliance Management Operation with CWC at Vizag. The total volume handled during 2013-14 was 123705 TEUs as against 135879 TEUs in the previous year. The fall in volume handled is due to dip in import traffic as well as cessation of the contract at Vizag.

Container Rail business operates own rakes pan India under category 1, licence. The Company ran 368 trains during the year on multiple sectors. The company also handled export cargo during the year in its pursuit to engage in the EXIM business. The project activities relating to development of its own rail terminals ICD/CFS at Chennai and Bangalore are in progress.

The overall revenue for the company during the financial year was Rs.22384 lakhs and Profit was at Rs.1464 lakhs, as against the profit of Rs. 1020 lakhs in the previous year. The real turnaround for this business will start once the terminals become operational.

2. Sical Iron Ore Terminals Ltd

Sical Iron Ore Terminals Limited has developed a 6 million ton Iron ore terminal at Ennore Port [now known as Kamarajar Port] on BOT basis. As has been stated earlier, the project was completed in all respects and is ready for commercial operation which could not be commenced for want of cargo viz. iron ore on account of the prevailing ban on export of iron ore from out of Karnataka Region and subsequent stoppage of mining activities in the region. Though the mining activities have started in restricted manner, the strong demand of the commodity in the domestic market, coupled with restrictive conditions imposed by Supreme Court of India, would continue to pose challenge for exports The Company has approached the Kamarajar Port as well Shipping Ministry for obtaining necessary approvals 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 mechanize Iron Ore handling facilities at the deep draft multipurpose berth of New Mangalore Port on BOT basis. This project is also impacted for the same reasons that affect SIOT, Ennore project, explained above.

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”.

5. Sical Adams Offshore Limited

This company was incorporated in the year 2012 and is exploring the possibility of entering into the offshore segment.

6. PSA Sical Terminals Ltd

PSA SICAL Terminals Limited, a joint venture with Port of Singapore Authority operates a container terminal at Tuticorin. In 2013-14, the company handled container volumes of 507,294 TEUs as against 461,011 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 for Major Ports. The Company is in the process of resolving the tariff issue.

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 [now known as Kamarajar Port] for handling the export cars. This company handled cars for Nissan, Honda and Toyota during the year.

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 2013-14 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 ACCREDITATIONS THE COMPANY RECEIVED

During the year under review the company received Award of the “Master Haulier” status for the third consecutive year by Shell India Markets Limited by trucking division “Best Transporter for 2013/14” award from Tata Chemicals Limited Award from Tamil Chamber of Commerce for achieving No.1 place in Stevedoring and dry bulk handling as well for CFS

DIRECTORS

Shri S.R. Ramakrishnan, Director resigned from the Directorship effective close of working hours of 30th June, 2014.

Shri Sunil Sudhakarrao Deshmukh was appointed additional director effective 01st July, 2014. He can be in office only until the conclusion of the ensuing Annual General Meeting. He seeks election to the Board.

In accordance with the provisions of the new Companies Act, 2013, the appointment of Independent Directors Shri A.S. Sundaresha, Shri H. Rathnakar Hegde and Shri H.R. Srinivasan for a term of 5 years is being placed before the shareholders for their approval at the ensuing Annual General Meeting.

Shri Kush S Desai, Director retire by rotation at the ensuing Annual General Meeting and being eligible offer himself for re-appointment.

AUDITORS

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

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 2014 amounted to Rs 1.06 lakh.

DEMATERIALISATION OF EQUITY SHARES

5,41,53,413 equity shares representing 97.40% of the paid-up share capital, have been dematerialized upto 31.03.2014. Shareholders who continue to hold shares in physical form are advised to dematerialize their shares. The Company has sent the 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 ofthe 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). Amendment Rules, 2011, 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 sincere appreciation to all the employees for their continued support in the Company`s activities.

ACKNOWLEDGEMENT

The directors wish to thank the Port Authorities, Governmental Agencies, company`s bankers, financial institutions, customs authorities, foreign collaborators, suppliers, statutory regulators, investors, customers and all stakeholders for their continued support.

For and on behalf of the Board
Place Bengaluru R. Ram Mohan Kush S Desai
Date 11 August 2014 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. 1210.56 lacs
Used Rs. 117.09 lacs
DISCLOSURE OF PARTICULARS WITH REFERENCE TO CONSERVATION OF ENERGY NIL
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