Companies & Industry »Directors' Report
Sical Logistics Ltd - Directors' Report

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Your Directors are pleased to present this Sixty First Annual Report of your companyand the audited financial statements for the year ended 31 st March 2016.


The stand-alone financial results for the year ended 31 st March 2016 are summarisedbelow.

[Rs. In lakhs]

Year ended 31 March 2016 2015
Sales and other income 64520 63954
Profit before interest depreciation and tax 13214 11248
Interest 7412 6442
Cash profit 5802 4806
Depreciation 2724 2250
Profit before tax 3078 2556
Provision for tax 1230 (163)
Net profit 1848 2719
Earnings per share (EPS) in Rs. (after exceptional items) 3.32 4.89


No dividend is proposed as it has been decided to conserve the resources for theongoing projects of the company as well as the subsidiaries.


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


The Company has not issued any shares / securities which are convertible into equityshares during the financial year 201516.


The Company has not invited any deposits from public. There are no matured andunclaimed deposits as on 31 st March 2016.


Pursuant to the provisions of Section 205A of the Companies Act 1956 any dividendamount which remains unpaid or unclaimed for a period of 7 years will have to betransferred to the Investor Education and Protection Fund of the Central Government. TheCompany does not have any amount lying under unclaimed dividend as on 31 st March 2016and hence the said provisions are not applicable.


The company’s revenues for financial year 2015-16 was Rs.64520 lakhs as againstRs.63954 lakhs in the previous fiscal while Profit After Tax was Rs.1848 lakhs as againstRs.2719 lakhs in the previous year. The reduction in Profit After Tax was mainly onaccount of higher tax expenses. However the Profit before interest depreciation and taxfor the year 2015-16 was Rs.13214 lakhs as compared to Rs.11248 lakhs in the previousfiscal. The overall improvement of 18% is due to Company’s focus on new businesssegments with higher margins better asset utilisation and control on operating costs.

The performance of various divisions of the company during the year under review issummarised 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 has commenced itsoperations during the year under review and have handled 575904 tonnes . The washeryoperations are expected to commence during the first half of the current financial year.


The Companies operation of surface mining of coal and transportation at Bharatpur andLajkura mines got strengthened during the financial year. Further the Company commencedthe operation of removal and transportation of overburden at Samaleshwari mines during theyear. All these mines are situated at Odisha and during the year Company has handled 13.07million metric tonnes of coal and 4.84 million cubic meters of overburden. One morecontract for removal of overburden at Lajkura mines is expected to commence operationsduring the second half of FY 2016-17. This activity is carried out in a joint venture withSaumya Mining Limited.


During the year under review this division performed stevedoring activities at thePorts of Chennai Tuticorin Mangalore and Ennore handling coal for TNEB at Ennore andTuticorin and limestone dolomite and other products at Chennai and Mangalore and hashandled 20.61 million MTs of cargo as against 26.33 million MTs in the previous fiscal.There is a conscious focus to improve the volumes at various ports.


The Road Logistics division extends movement of cargo through trucks and has aclientele base of petroleum construction steel fertiliser and chemical. This divisionalso provides services for the integrated logistics sector for movement of coal removalof overburden at coal fields - 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 17 distribution centres across the country. The Warehousingdivision consists of 20 hubs with 240000 sq. ft. Area catering mainly to foodindustries. The operation of these divisions is backed by technology including GPS basedtracking.


Custom house agency is engaged in providing services as an agency for clearing andforwarding goods through customs meant for imports / exports. This division handled 16.25million MTs of bulk cargo and 4355 TEUs of containerised cargo during the financial year2015-16.

Shipping division facilitates and ensues quick turnaround of the ships at berths at allmajor ports. This division handled 77 vessels across various ports during the year underreview.

Goodwill travels division is engaged in booking rail and airline ticketing apart frombooking worldwide hotels and conducting tour packages car rentals online visas andtravel insurances. This division also operates as an authorised dealer for full fledgedmoney changing business.


As on 31st March 2016 the Company has the following subsidiaries and joint venturecompanies


1. Sical Iron Ore Terminals Limited

2. Sical Multimodal and Rail Transport Limited

3. Sical Infra Assets Limited

4. Sical Iron Ore Terminal [Mangalore] Limited

5. Sical Adams Offshore Limited

6. Norsea Offshore India Limited

7. Bergen Offshore Logistics Pte Ltd [Overseas subsidiary]

8. Norsea Global Offshore Pte Ltd [subsidiary of Bergen Offshore Logistics Pte Ltd]

Joint Ventures

1. PSA Sical Terminals Limited ( a JV between PSA Singapore and Sical)

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

3. Sical Saumya Mining Limited ( a JV between Sical and Saumya Mining Ltd.)


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

1. Sical Iron Ore Terminals Ltd

The Company has 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 constantrequests to the Kamarajar Port and Ministry of Shipping to allow handling of alternatecargoes in the terminal. Kamarajar Port has now decided to modify the existing terminalalso to handle coal and has invited bids for the purpose. It is expected that a decisionon this terminal will be in place during the course of the current financial year.

2. Sical Infra Assets Limited and Sical Multimodal and Rail Transport Limited

Sical Infra Assets Limited was formed for owning and housing infrastructure companiesunder its fold. The company’s subsidiary Sical Multimodal and Rail Transport Limitedoperates container rail as well as two Container Freight Stations (CFS). CFS business iscontinuing its operations at Chennai and Tuticorin. The total volume handled during2015-16 was 117065 TEUs. Chennai CFS ended the year on a good note by garnering highestvolume and becoming number one CFS. Container Rail business operates own rakes pan Indiaunder category 1 licence. The Company handled 21686 TEUs during the year on multiplesectors. The company also handled export cargo during the year in its pursuit to engage inthe EXIM business. The project activities relating to development of its own railterminals ICD/CFS at Chennai and Bangalore are in progress. The Company has a JV with 50%stake in Sical Sattva Rail Terminals Private Limited which operates the Melpakkamterminal. Efforts are on to establish a CFS facility at Vizag on leased land and isexpected to be functional during the current financial year. Own rail terminals at Chennaiand Bengaluru are imperative for the turnaround of this division. The performance of therail division has been hit due to higher haulage charges payable to Railways.

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 are in progress.

4. Sical Adams Offshore Limited

This company was formed with an intent to venture into offshore segment. The Companywill commence operations as and when offshore contracts are bagged.

5. Norsea Offshore India Limited

This company owns and operates a cutter suction dredger Sical Portofino carryingdredging activities for various ports. Currently the dredger is in operation at GopalpurPort in Odisha. The revenue earned during the financial year under review was Rs.412 lakhsas compared to the previous year of Rs.442 lakhs.

6. Sical Saumya Mining Limited

This subsidiary was formed in association with Saumya Mining Limited for the purposeofexecuting the overburden removal contract awarded by the Mahanadhi Coal Fields Odishafor the operations at coal mines located at Samaleshwari and Lajkura to handle 37 and 53million CBM in 3 and 5 years respectively. The activities at Samaleshwari has begun andthe revenue earned during the financial year under review was Rs.2973 lakhs

7. Bergen Offshore Logistics Pte Ltd and Norsea Global Offshore Private Limited

The overseas subsidiary of the Company Bergen Offshore Logsitics Private Limited andthe wholly owned subsidiary of Bergen viz. Norsea Global Offshore Private Limited havetheir offices in Singapore. These companies are for providing support services foroffshore activities.

8. 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 510118 TEUs during the year under review and earned a revenue of Rs.152.52crores with a Profit of Rs.2.68 crores. The challenge faced by this Company has been theroyalty payable being higher than the tariff allowed to be charged which was disputed andthe Company has received a favourable arbitral award where royalty model would changeinto revenue share model which is in accordance with 2013 guidelines of Ministry ofShipping. The said Arbitral Award was challenged before the District Court by TuticorinPort and the District Court has upheld the Arbitral Award in favour of the Company. Nowthe said District Court Order has been challenged by Tuticorin Port before the High Courtof Madras at Madurai Bench and the same is pending hearing.


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 ensuing Annual GeneralMeeting. Also a separate statement containing the salient features of the financialstatement of the subsidiaries and joint ventures in Form AOC-1 is attached along with thefinancial statements.


During the year under review the following awards were received by the company:

- highest tonnage handled by Stevedore during 2014-15 by Chennai Port Trust

- highest Tonnage of Cargo Handled Including Thermal Coal as Stevedore during the2014-15 at VOC Port Tuticorin.

- maximum number of bulk carriers handled at Kamarajar Port during the year 2014- 15

- first prize for Emergency Response Drill as also for successful completion of 10years of business from SHELL India Markets Private 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 erstwhileClause 49 of the Listing Agreement and Regulation 17 of the SEBI [Listing Obligations andDisclosure Requirements] Regulations 2015 and Section 149[6] of the Companies Act 2013and based on the confirmation / disclosures received from the Directors the followingNon-Executive Directors are Independent Directors as on 31 st March 2016

1. Mr. H.R. Srinivasan

2. Mr. H. Rathnakar Hegde

3. Mr. S. Ravinarayanan

4. Mr. Sudhir V Kamath


Mr. Kush S Desai was appointed Joint Managing Director w.e.f. 04 th May 2015.


Mr. R. Ram Mohan was appointed Chairman of the Board w.e.f. 04 th May 2015 and movedfrom the position of Managing Director to Chairman.


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 appointment / resignation took place during the year under review.


In terms of Section 152 of the Companies Act 2013 Mr. R. Ram Mohan being Longest inthe office shall retire at the ensuing AGM and being eligible for re-appoint offershimself for re-appointment.


The Board met 13 times during the financial year 2015-16. 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 AuditCommittee which met 05 [five] times during the year.


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 CommitteeNomination and Remuneration Committee Risk Mitigation Committee Management Committee

The details with respect to the composition powers roles terms of reference ofrelevant committees are given in detail in the Report on Corporate Governance which formspart 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 independent directors and theboard of the directors on 18 th January 2016 for the FY 2015-16.


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 and 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 said 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

whistle blowers were denied access to the Audit Committee of the Board of Directors.The details of Vigil Mechanism / Whistle Blower Policy are available on the website of theCompany


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.


All related party transactions that were entered into during the financial year were inthe ordinary course of business of the Company and were on arm’s length basis. Therewere no materially significant related party transactions entered into by the Company withthe Promoters Directors Key Managerial Personnel or other persons which may have apotential conflict with the interest of the Company. The details of related partytransactions in 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. Allsuch related party transactions are placed before the Audit Committee for approvalwherever applicable. Prior omnibus approval for normal transactions is also obtained fromthe Audit Committee for the related party transactions which are of repetitive in natureas well for the normal transactions which can not be foreseen and accordingly the requireddisclosures are made to the Committee on quarterly basis in terms of the approval of theCommittee.

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 fromthe shareholders through postal ballot wherever such transactions are considered to bematerial related party transactions.

Name of the Bank / Financial Institution Name of the Corporate Body on whose behalf guarantee has been given Relationship Purpose Amount in Rs. Crores Date of Execution
IFCI Limited Sical Multimodal and Rail Transport Limited Step-down subsidiary For credit facilities provided to the subsidiary 100.00 03.09.2015
Bank of Baroda Sical Multimodal and Rail Transport Limited Step-down subsidiary For credit facilities provided to the subsidiary 147.49 18.11.2015
RBL Bank Limited Sical Saumya Mining Limited Subsidiary For credit facilities provided to the subsidiary 40.00 25.01.2016

The Company subscribed for 2500000 equity shares of Rs.10 each in its wholly ownedsubsidiary M/s. Sical Iron Ore Terminal [Mangalore] Limited and 6500 equity shares ofRs.10/= each in the newly incorporated Sical Saumya Mining Limited 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.

Name of the Body Corporate Amount in Rs. Crores Nature of the Body Corporate
Sical Iron Ore Terminals Limited 352 Subsidiary
Sical Iron Ore Terminal [Mangalore] Limited 1 Subsidiary
Bergen Offshore Logistics Pte Ltd 137 Overseas subsidiary
Sical Saumya Mining Limited 51 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 and Associates LLPhave provided their report on the internal financial control as part of their auditreport.

[a] Statutory Auditors

M/s. CNGSN and Associates LLP Chartered Accountants retire at the conclusion of theensuing Annual General Meeting and are eligible for re-appointment as the statutoryauditors of the Company for the current financial year viz. 2016-17. The company hasreceived the consent from the Auditors and confirmation to the effect that they are notdisqualified to be appointed as the Auditors of the Company in terms of the provisions ofthe Companies Act 2013 and the rules made thereunder. Accordingly the Board of Directorshave recommended the re-appointment of M/s. CNGSN and Associates LLP CharteredAccountants as the Statutory Auditors of the Company to hold office from the ensuing AGMuntil the conclusion of the next AGM on a remuneration to be decided by the Board orCommittee thereof to the shareholders for their approval.

[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 2015-16.The report of the Secretarial Auditor for the FY 2015-16 is annexed to this report asAnnexure - 3.

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


There are no material changes and commitments affecting the financial position of thecompany which has occurred between the end of the financial year of the company i.e. 31 stMarch 2016 and the date of the Directors Report i.e. 03 rd May 2016.


1. The statement containing particulars of employees as required under Section 197[2]of the Companies Act 2013 read with Rule 5[2] of the Companies [Appointment andRemuneration of Managerial Personnel] Rules 2014 are not applicable since none of theemployees are in receipt of remuneration exceeding Rs.5 lakhs in a month or Rs.60 lakhs ina year during the financial year 2015-16.

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

Statutory Disclosures

[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 Foreign Exchange Earned : Rs.867 lakhs
Used : Rs.1776 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 312016 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 financial year 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: 3rd May 2016 DIN : 02506342

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