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TRANSCRIPT
Approaching Destination
Approaching waters
Our Vision 03
Year at a Glance 05
Board of Directors 07
Chairman’s Letter to the Shareholders 09
Business Segments 11
Directors' Report 13
Corporate Governance Report 21
Management Discussion & Analysis Report 35
Auditors' Report 43
The Financials
Balance Sheet 46
Profit & Loss Account 47
Cash Flow Statement 48
Schedules 49
Consolidated Financials 79
Financial Data Analysis 99
CONTENTS
Seeing Beyond Boundaries
Seeking Horizon
OUR CORE VALUES
OUR CORE PURPOSE
OUR GOAL
Honouring Commitments towards all the stake holders.
Consistent growth.
Ensuring that every employee feels pride in being called a
“Mercatorian”.
Innovation... We believe in doing things differently.
Giving the best solutions and offering outstanding value
and service to our customers.
To become a dominant player in the international shipping
and offshore
OUR VISION
ANNUAL REPORT 2007-2008
2
Fostering Teamwork
Forcing Migration ON BOARD
Mr. H. K. Mittal - Executive Chairman
Mr. Atul J. Agarwal - Managing Director
Mr. Manohar Bidaye - Director
Mr. H. K. Mittal, aged 58 years, the Executive Chairman of the
company. Having received masters from Indian Institute of
Technology (IIT), Roorkee; he started his tryst with enterprise
by forming a proprietorship firm; way back 1975, which was
later converted into a limited company. This Company was
primarily into the manufacturing of Sulphuric Acid and
Ferric Alum. Expansion of businesses both vertically and horizontally; soon became his
passion that still continues to be a major driving force backed up by more than three
decades of entrepreneurial experience.
Mr. Mittal acquired Mercator Lines Ltd. in 1988 and with his vision and keen insight has
brought the Company to where it is today.
Mr. Atul J. Agarwal, aged 50 years, the Managing Director of
the Company, is a Chartered Accountant, with 27 years of
professional experience. He has been associated with the
Company since its inception.
As a Chartered Accountant, Mr. Agarwal specializes in the
financial aspects of business. He looks after day - to - day
management and financial matters of the Company. He also has a strong expertise in
financial and strategic planning and execution. Mr. Agarwal has been accredited with
memberships of various committees formed by the Government for shipping reforms.
He has been instrumental in the successful implementation of many of the
Company's projects.
He is also member of the Board of Trustees of Mumbai Port Trust and is on the Board of
Directors of various organizations such as Indian National Ship-owners' Association
(INSA); Thirumalai Chemicals Ltd., and Mercator Healthcare Ltd.
Mr. Manohar Bidaye, aged 45 years, has Masters in
Commerce (M.Com) from the University of Mumbai, and has
a general Degree in Law (LLB - Gen.). He is also an Associate
Member of The Institute of Company Secretaries of India
(ACS).
He has been a practicing Company Secretary since 1989 and
has a broad based experience in corporate advisory and counseling. He also brings
expertise in corporate and taxation laws to the board.
Mr. Bidaye is the Promoter and Chairman of Zicom Electronic Security Systems Limited,
where he's involved with the overall Corporate Planning, Strategy and
Implementation, Financial Management, Banking, Accounts, Taxation and Legal
aspects.
He joined the board of Mercator Lines Limited in May 1994.
Mr. Anil Khanna - Director
Mr. M. G. Ramkrishna - Director
Mr. K. R. Bharat - Director
Mr. Anil Khanna aged 49 years, a
Fellow Chartered Accountant, is a
practicing professional specializing
in business management, joint
ventures and auditing. He has been
on the Board of Directors of several
Indian and multinational companies. Mr. Khanna has over 10
years of experience in consultancy.
He joined Mercator Lines Limited in May 1994.
M. G. Ramkrishna, aged 64 years, an
M. A., L. L. B. & CAIIB, has over 35 years
of experience in handling treasury,
financial and banking matters.
During the span of his service, he has
worked with reputed national and
international Companies and banks, in various capacities and
is on the Board of many companies.
He joined Mercator Lines Limited in January 2003.
Mr. K. R. Bharat, aged 46 years is MBA
f r o m I n d i a n I n s t i t u t e o f
Management . He has been
associated with Capital Market for
more than 25 years in various
segments like Merchant Banking,
Equities and Investment banking; Risk Management, research
etc. He is on the Board of many companies. He worked as
Managing Director at Credit Suisse First Boston Securities
(CSFB) India and Pregrine Securities (India). Before that he had
a successful stint of 10 yrs with Citi Bank. He was also member
of Market Advisory Committee of Bombay Stock Exchange.
He joined Mercator Lines Limited in July 2007
ANNUAL REPORT 2007-2008
6
Instilling Stability
Installing Anchor
Dear Shareholders,
At the outset; it has been yet another eventful year at
Mercator; fast tracking growth and sustain ability by exigent
expansions and prudent diversifications. Your company
undertook expansion to broad base offerings to the
customers; and diversification to take on newer opportunities
on the horizon.
May I share with you the firsts, Mercator embarked upon this year. Your company forayed into Dredging – another highly promising sector;
and integrated backwards by diversifying into coal mining. Opportunities in these areas are infinite; will ensure growth over medium to
even long term. The offshore segment appears firmer, having employed one jack-up rig already.
In shipping segment, the fleet expansion continued this year as well keeping the tradition of growth. Our consolidated capacity increased
by 15% to 2.34 Million DWT. In addition to the capacity; the type and age of vessels were once again rationalized to improve market access.
Your company demonstrated a solid all round performance; top line growth being 39% and bottom line grew by about 196%.
Mercator Lines (Singapore) Ltd – the Singapore based subsidiary got listed on main board of Singapore Stock Exchange successfully this
year after maiden IPO, raising USD 143 million. It is already the second largest shipping company in Singapore now; obviously the numbers
are simply indicative.
Our customer base has been growing continually. Several names of international repute find mention on our order books; such as Arcelor
Mittal; Cosco and Petronas to name but a few.
Your company continued its pursuit to continually improve and remain a world class organization by recognizing human capital as its real
assets. A holistic and systemic approach has been taken to spearhead sustainability initiatives towards ensuring safety, quality, our
responsibility towards environment and society at large.
We shall continue to endeavor, in all possible ways, to constantly and consistently return long term value to you, our shareholders. We truly
realize the enormity of responsibility arising out of your unwavering support and confidence bestowed on us. We are sure of the path and
the direction your company is headed towards.
Thank You,
Yours sincerely,
H. K. Mittal
Mumbai June 29, 2007
ANNUAL REPORT 2007-2008
8
Unearthing Opportunities
Exploring Natural
Resources
BUSINESS SEGMENTS
ANNUAL REPORT 2007-2008
10
SHIPPING
u
u
u
u
u
u
u
u
u
u
OFFSHORE
u
u
LOGISTIC SOLUTIONS
u
MINING
u
Tankers (Wet Bulk)
Dry Bulk Carriers
Dredgers
VLCC's
Suezmax
Aframax
Product Carriers
Chemical Carriers
Panamax – Geared
Panamx – Geareless
Post Panamax
Kamsarmax
Trailer Hopper Suction Dredgers (THSD's)
Premium Jack-Up Rigs
Oil and Gas Exploration
Coal Handling
Coal Mining
Sustaining GrowthSustaining Growth
Sustaining Energy
DIRECTORS’ REPORT
To
The Members,
Mercator Lines Limited
thWe take great pleasure in presenting the 24
annual report of your Company for the year ended
on March 31, 2008.
ANNUAL REPORT 2007-2008
12
FINANCIAL HIGHLIGHTS:
Particulars Year ended
31.03.2007
Standalone
Year ended
31.03.2008
Standalone
Year ended
31.03.2008
Consolidated
Year ended
31.03.2007
Consolidated
Income from operations
Total Income
Operating Profit
Interest
Depreciation
Profit before Tax & Minority Interest
Minority Interest
Taxes
-Current Year
-Fringe Benefit Tax
Net Profit After Tax & Minority Interest
Balance brought forward from last year
Prior Period Adjustments
Short provision for tax of earlier years
Profit available for appropriations:
Less: Appropriations:
Transfers to Reserves
-Tonnage Tax Reserve
-General Reserve
Interim Dividend on Preference shares
Dividend on Equity Shares of previous yr
Provision for final Dividend on Equity
Shares
Tax on Dividend
Balance carried to Balance Sheet
1,122.76
1142.69
322.91
80.77
103.80
138.34
(0.08)
(3.27)
(0.13)
134.86
150.99
(0.43)
Nil
285.42
16.00
7.50
3.20
Nil
18.92
3.67
236.13
781.14
863.07
339.14
58.56
103.83
176.75
N.A.
(7.70)
(0.21)
168.84
153.06
(1.20)
(1.30)
319.41
33.00
17.70
3.08
0.80
25.84
5.05
233.94
1454.87
1588.98
721.48
144.64
167.49
409.35
(29.89)
(8.81)
(0.21)
370.44
236.13
(41.49)
(1.30)
563.79
33.00
17.70
3.08
0.80
25.84
5.05
478.32
783.26
801.15
235.78
63.38
97.54
74.86
N.A.
(3.10)
(0.13)
71.63
131.15
(0.43)
Nil
202.35
16.00
7.50
3.20
Nil
18.92
3.67
153.06
Amount Rs. in Crores
ANNUAL REPORT 2007-2008
13
contracted to acquire one more dredger at a cost of about Rs.
57.60 crore which was proposed to be financed through mix of
internal accruals and debt. The Company through its subsidiary
Mercator Lines (Singapore) Ltd. (MLS), acquired five Kamsarmax
vessels; thereby adding a total tonnage of 387,265 MT, during the
year under review. The total cost of acquisitions was Rs. 1048.26
crores which was financed by a mix of internal accruals and debt.
Subsequent to the year end, MLS also contracted to acquire two
Panamax vessels of 1,38,442 DWT in aggregate, at a cost of about
Rs. 522 crores, equivalent to USD 131 million. These are proposed
to be financed by its IPO proceeds.
In December 2007, MLS successfully concluded its maiden IPO for
an amount of about Rs. 568.56 crores, which is equivalent of USD
142.80 million. MLS also issued shares arising upon conversion of
FCCB Series A of USD 35mn which is about Rs. 139 crores (together
with an interest amount of USD 4mn (about Rs. 16 crores ) accrued
thereon) as per the terms of the issue. The shares of this subsidiary
are listed on the main board of the Singapore Stock Exchange.
With a foray into dredging during the year, your Company has
added one more segment under its fold in addition to its existing
range of segments of Bulk Carriers, Tankers and Offshore.
The global demand for commodities still continues to be mainly
driven by India and China. India expects the rate of growth to be
around 8-9% per annum. With a consolidation in double hulls
taking place at faster pace; the tanker market is expected to
remain firm in near future.
All major Indian ports are presently working at 100% capacity,
whereas India further expects 8 to 9% growth rate. This would
translate into a meteoric rise in seaborne trade from current levels
of about 400mn tons to 900mn tones by the year 2013. The Indian
Government plans to develop new ports, as well as deepen the
existing ports to absorb additional requirements. In addition to
this is the “Sethusamduram” project that promises to provide
tremendous opportunities in dredging.
In the offshore services; the delivery of the jack-up rig is expected
as scheduled during the quarter of Jan-March 2009. Subsequent
to the year end; this rig has been contracted for deployment with
effect from date of its delivery. With the demand overhang from
the year 2008; the business prospects of further acquisitions and
the deployment of rigs appears good. Your Company is also
equipped to take up Exploration and Production (E&P) activities in
the Oil & Gas sector. With forthcoming NELP VII by the Government
of India; your Company foresees good opportunities in this sector
too.
BUSINESS OPERATIONS & FUTURE OUTLOOK:
The consolidated turnover for the year under review was
significantly higher at Rs. 1588.98 crores as against Rs. 1142.69
crores in the previous year; registering a substantial growth of
39%. The operating profit for the year of Rs. 721.48 crores was
higher by 123% over previous year of Rs. 322.91 crores.
Inspite of 79% higher interest costs amounting to Rs. 144.64 crores
(previous year Rs. 80.77 crores); and 61% higher depreciation to the
tune of Rs. 167.49 crores (The previous year Rs. 103.80 crores). The
Profit Before Tax (PBT) almost tripled this year; precisely an increase
of 196% to Rs. 409.35 crores as against Rs. 138.34 crores in the
previous year. Profit After Tax (PAT) also grew correspondingly by
197% to Rs. 400.33 crores as against Rs. 134.93 crores for the
previous year in spite of the higher tax outgo of Rs. 9.02 crores
against Rs. 3.41 crores in the previous year; increase of 165%. After
providing for the minority interest of Rs. 29.89 crores (Rs. 0.08 crore,
previous year) the net profit was recorded at Rs. 370.44 crores
(Rs. 134.86 crore); an increase of 175%.
The key driver of this exciting consolidated performance of the
Company was timely expansion of the fleet, culminating in
achievement of 99% fleet utilization.
On a standalone basis, the turnover of the Company for the year
under review was Rs. 863.07 crores as against Rs. 801.15 crores in
the previous year, registering a growth of 8% for the year. The
operating profit for the year under review at Rs. 339.14 crores was
higher by 44% as against Rs. 235.78 crores of the previous year. The
Profit Before Tax increased by 136% to Rs. 176.75 crores as against
Rs. 74.86 crores in the previous year. Profit after Tax also grew by
136% to Rs. 168.84 crores as against Rs. 71.63 crores for the
previous year. Better utilization of the fleet and the profits due to
sale of vessels have contributed to register a remarkable growth in
the bottom line of the Company.
A few more feathers to our cap were added this year too.
Mr. H. K. Mittal, the Executive Chairman of the Company was
awarded the “Newsmaker of the Year 2007” by Lloyd's List Middle
East and India Subcontinent and “Outstanding Achievement
Innovation” by Shipping & Marine Leadership & Excellence Awards
2008.
During the year under review, the Company continued its
expansion-cum diversification drive, and forayed into Dredging by
acquiring three dredgers of 24,153 DWT at a total cost of about Rs.
240.23cr. Two of these dredgers were financed by internal accruals
and one with a mix of internal accruals and financial assistance
from the banks. Subsequent to the year end, the Company
AWARDS AND RECOGNITIONS
EXPANSION AND FINANCE
ANNUAL REPORT 2007-2008
14
Being one of the largest carriers of coal into the country; one of the
strategic fit was to integrate the company backwards. Your
company has therefore, forayed into coal mining through its
subsidiaries. Two coal licenses in Indonesia and one in
Mozambique have already been granted to the said subsidiaries.
Both the projects are progressing well in terms of timelines and
operational milestones. The company expects revenues from
these projects in the current year.
In view of the global trade in commodities continuing to be
growing at a higher rate, the future outlook of industry in general,
and that for your Company in particular, appears to be bright,
barring unforeseen circumstances.
During the year, the Company allotted 3,76,52,887 equity shares of
Rs. 1/- each on the conversion of 5,150 FCCB's of an aggregate
amount of USD 51,500,000 at a price of Rs. 59/812 per share at a
fixed exchange rate of Rs. 43/73 per USD. The Company also issued
and allotted 32,00,000 equity shares of Re. 1/- each at a price of Rs.
137/50 along with the entitlement of 48,00,000 equity shares as
bonus shares to the promoter's group Company in exchange of
warrants allotted to them, pursuant to the resolution passed by
the shareholders of the Company at their EOGM held on January 17,
2006. Subsequent to the year end, further 10,96,686 equity shares
of Re. 1/- each were issued and allotted in lieu of surrender of 150
FCCB for conversion out of the abovementioned FCCB issue.
Further during the year 285,00,000 warrants carrying an option to
apply and subscribe for an equivalent number of shares at a price
not less than Rs. 58/50 per share to one of promoters on
preferential basis in accordance with SEBI Guidelines pursuant to
the resolution passed by shareholders of the Company at their
EOGM held on October 11, 2007.
During the last quarter of the financial year; the Company
redeemed its 8% Preference Share capital aggregating Rs. 40
crores on maturity.
The Board of Directors are pleased to recommend a 110% dividend
i.e. Rs. 1.10 per equity share of Re. 1/- each for the financial year
2007-08 on the enlarged capital base post issue of shares on
conversion of FCCBs; for your approval. The previous year total
dividend was 100% i.e. Re.1 per share aggregating Rs. 19.72 crores
on 19,72,42,500 shares. The aggregate amount of the dividend on
equity shares for the financial year 2007-08 would be Rs. 30.23
crores including corporate tax & surcharge thereon (as against Rs.
22.14 crores in the previous year). The dividend pay out has
therefore increased significantly in absolute value i.e. by 37%.
SHARE CAPITAL:
DIVIDEND:
Further during the year; the Directors declared and paid pro-rata
dividend of 8% on the Redeemable Cumulative Preference shares
of Rs. 4000 lacs, amounting to Rs. 3.60 crores (as against the
previous year at Rs. 3.65 crores) inclusive of the Corporate Tax &
surcharge thereon amounting to Rs. 0.52 crore (as against Rs. 0.45
crore in the previous year).
In accordance with the provisions of the Companies Act, 1956 and
the Articles of Association of the Company, Anil Khanna is the
Director liable to retire by rotation at the ensuing Annual General
Meeting and being eligible, has offered himself for re-
appointment. The brief resume of Anil Khanna is included under
the Corporate Governance section of this report.
Your Directors recommend for your approval the re-appointment
of Anil Khanna at the ensuing Annual General Meeting.
Your company has following subsidiaries/fellow subsidiaries:
DIRECTORS:
SUBSIDIARY COMPANIES:
Sl No. Name Country of
Incorporation
Mercator International Pte. Ltd. Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Mercator Offshore Ltd.
Mercator Lines (Singapore) Ltd.
Varsha Marine Pte. Ltd.
Vidya Marine Pte. Ltd.
Mercator Lines (Panama) Inc.
Mercator Oil & Gas Ltd.
Oorja Holdings Pte. Ltd.
Oorja 1 Pte. Ltd.
Oorja 2 Pte. Ltd.
Oorja 3 Pte. Ltd.
Oorja Indo KGS.
Oorja Mozambique Lda.
Broadtec Mozambique Minas Lda.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
Panama
India
Indonesia
Mocambique
Mocambique
Pursuant to Accounting Standard (AS 21) issued by the Institute of
Chartered Accountants of India, consolidated financial statements
presented by the Company include financial information of its
subsidiaries.
ANNUAL REPORT 2007-2008
15
Your Company has not imported any technology during the year. It
has earned foreign exchange of Rs. 269.00 crores (as against the
previous year earnings of Rs. 201.73 crores) and spent Rs. 602.12
crores (as against Rs. 751.75 crores for the previous year) in foreign
exchange on account of acquisition of vessels, charter hire & other
vessel expenses and interest etc.
Your Company complies with the provisions laid down in
Corporate Governance laws. It believes in and practices good
corporate governance. Mercator maintains transparency, creates
value and wealth for its shareholders and also enhances corporate
accountability.
A separate report on the Corporate Governance, along with the
requisite certificate from the Auditors of the Company is annexed
herewith as part of this Annual Report.
Your company is a responsible corporate citizen, both in letter and
in spirit. Mercator therefore is always keen to discharge its social
responsibility towards the society it operates within. The company
has several such initiatives; mainly focused on education sector.
Your company has increased its amount of donations by about 9%
during the year to Rs. 32 lacs.
All properties of the Company are adequately insured.
Pursuant to the provisions of section 217(2AA) of the Companies
Act, 1956, the Directors hereby confirm that:
(I) In preparation of the annual accounts, the applicable
accounting standards have been followed along with proper
explanation relating to material departures;
(ii) They have selected such accounting policies and applied
them consistently and made judgments and estimates that
are reasonable and prudent, so as to give a true and fair view
of the state of affairs of the Company at the end of the
financial year and of the profit for the year under review;
CORPORATE GOVERNANCE:
OUR SOCIAL RESPONSIBILITY:
INSURANCE:
DIRECTORS' RESPONSIBILITY STATEMENT:
A statement in respect of the said subsidiaries pursuant to Section
212 of the Companies Act, 1956 is enclosed herewith as required.
The Company has received an exemption from the Government of
India u/s 212(8) of the Companies Act 1956 from attachment of the
documents of above subsidiaries for the year ended on March 31,
2008. The annual reports and accounts of subsidiaries will be kept
for inspection at the registered office of the Company and also of
the subsidiary companies concerned; and the same along with
related detailed information will be made available to the
investors of the Company, as well as, subsidiaries at any point of
time. Investors desirous of obtaining annual accounts of the
Company's subsidiaries may obtain the same on request.
The Auditors of your Company, M/s. Contractor, Nayak &
Kishnadwala, Chartered Accountants, retire at the ensuing Annual
General Meeting and have confirmed their eligibility for re-
appointment under Section 224 (1-B) of the Companies Act, 1956.
The Directors recommend their re-appointment for approval of
the members.
At Mercator, we believe that our employees are our partners in our
success and hence our partners in rewards. It is nothing but their
dedication, hard work and inimitable team spirit that has enabled
the Company to achieve new milestones in business.
As required under provisions of Section 217(2A) of the Companies
Act, 1956, read with the Companies (Particulars of Employees)
Rules 1975 as amended, the requisite particulars in respect of the
employees of the Company, who were in receipt of remuneration
in excess of the limits specified under the said section are set out in
the annexure forming part of this report.
The Conservation of Energy and Technology Absorption under the
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988 are not applicable to your Company. All the
same, the Directors would like to assure you that every measure is
taken to save and conserve energy at all the stages of our
operation of the vessels, as well as, in our shore activities.
In its endeavor of the development of the export market, the
Company has formed new subsidiaries during the year.
AUDITORS:
PARTICULARS OF EMPLOYEES:
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION;
EXPORT MARKET DEVELOPMENT AND FOREIGN EXCHANGE
EARNINGS & OUTGO:
ANNUAL REPORT 2007-2008
16
(iii) They have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance
with the provision of the Companies Act 1956, for
safeguarding the assets of the Company and for preventing
and detecting fraud and other irregularities;
(iv) They have prepared the annual accounts on a going concern
basis.
As required under clause 3(1) (e) of the Securities and Exchange
Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997 persons constituting “Group” (within the
meaning as defined in the Monopolies and Restrictive Trade
Practices act, 1969) for the purpose of availing exemption from
applicability of the provisions of Regulation 10 to 12 of the aforesaid
Regulations, are given in the annexure B attached herewith and
forms part of this Annual Report.
GROUP FOR TRANSFER OF SHARES:INTERSE
ACKNOWLEDGMENTS:
The Directors' would like to take this opportunity to thank the
Ministry of Shipping, M/s. Transchart, the Directorate General of
Shipping and other statutory authorities for their continual
support and encouragement.
We would also like to express our gratitude towards our bankers;
all the stakeholders and employees for their unflinching support
and faith in the Company.
For and on behalf of the Board
H. K. MITTAL
Executive Chairman
Regd. Office:rd3 Floor, Mittal Tower,
B-wing, Nariman Point,
Mumbai - 400021
Dtd: May 14, 2008
ANNUAL REPORT 2007-2008
ANNEXURE - A TO THE DIRECTORS' REPORT
Information as per Section 217(2-A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 and forming
part of the Report of the Board of Directors for the year ended on March 31, 2008.
17
NOTES
1. The employment at 1& 2 above are on contractual basis. All others are on non-contractual basis.
2. Gross Remuneration includes salary, commission, reimbursement of medical expenses and all other monetary benefits.
3. None of the above is relative of any Director of the Company.
4. *indicates the employees employed for part of the financial year.
Name Nature Of
Duties
Gross
Remune-
ration
(Rs. In Lacs)
Qualification Experience
(Yrs.)
Date of
Commen-
cement of
Employment
Age
Yrs.
Particulars of Previous
Employment
H. K. Mittal Executive
Chairman
800.29 M. Tech
(IIT - Roorkee)
32 Yrs Managing Director with
Natraj Organic Ltd for
17 Yrs.
59
Atul J.
Agarwal
Managing
Director
805.49 B. Com, F.C.A. 27 Yrs 01/01/1990
01/01/1990
Proprietor of A.J Agarwal &
Co. Chartered Accountant
for 7 Yrs
49
Atul M.
Malhotra
General Manager
- Logistic
34.45 B. Com 14 Yrs 22/09/1996 35
Kowshik
Kuchroo
Vice President -
Strategy
39.90 HND (Nautical
Science) MICS
14 Yrs 43
T. V.
Shanbhag
Advisor- Shipping 34.91 MA (Economics),
F.I.C.S (London),
A.I.I.I.
36 Yrs 18/04/2005 Chief Controller of
Chartering GOI for 10 Yrs
61
F. X. Chacko* Marine
Superintendent
22.44 B. Sc, Master -
Foreign Going
40 Yrs 11/01/2006 K Steamship Agencies Ltd.
for 2 years
53
Valentine
Dias*
Marine
Superintendent
8.52 Master - Foreign
Going
26 Yrs 01/02/2006 Wallem Ship Management
Hongkong for 7 Yrs
44
Ranjan
Agarawal
C.E.O.- Oil and
Gas
42.28 B. Tech (Chemical
Engg.) PGDBM
24 Yrs 10/07/2006 Reliance Industries Ltd for
2.5 Yrs
47
S. M. Rai Technical Head 29.46 B. E. 40 Yrs 16/08/2006 Shipping Corporation of
India for 37 years
61
Arun Nanda Vice President -
Tankers
Operations
42.07 Master - Foreign
Going
35 Yrs 28/08/2006 Marshall Produce Ship
Brokers, Mumbai for
6 Months
53
Joshua
Kandula
Vice President -
Offshore
69.46 B. Tec (Electrical)
MBA - IIMS
24 Yrs 21/08/2006 The Great Eastern Shipping
Co of India for 9 Yrs
48
Nitin
Kolhatkar*
Vice President -
Finance and
Accounts
22.86 M. Com, AICWA 19 Yrs 06/08/2007 United Phosphorous Ltd
for 14 years
44
Madhusudhan
Thayi*
General Manager
- Dredging
Operation
6.34 B. E (Civil) 30 yrs. 01/12/2007 Dredging Corporation of
India for 29 years
51
K. S. Raheja General Manager
- Projects
5.61 B. Tech (IIT), MBA
(XLRI)
03/01/2007 Tata Steel for 13 years 38
Jayesh Doshi* Chief Financial
Officer
8.56 F. C. A.; L.L.B 13/06/2006 Gujarat Ambuja Cement
Ltd. for 15 years
43
Mundo Gas for 7 Years01/04/2005
NA
21 yrs.
14 yrs.
ANNUAL REPORT 2007-2008
18
ANNEXURE – B TO THE DIRECTORS' REPORT
For the purpose of transfer of shares under Regulation 3 (1) (e) of the Securities and Exchange board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997, the following person constitute “Group” as defined in the
Monopolistic & Restrictive Trade Practices, 1969, (54 of 1969):
1. Mercator Healthcare Ltd.
2. MLL Logistics Pvt. Ltd.
3. AHM Investments Pvt. Ltd.
4. Mercator Mechmarine Ltd.
5. Ankur Fertilizers Pvt. Ltd.
6. Rishi Holdings Pvt. Ltd.
7. AAAM Properties Private Ltd.
8. Mercator International Pte. Ltd.
9. Mercator Offshore Ltd.
10. Mercator Oil & Gas Ltd.
11. Mercator Petroleum Pvt. Ltd.
12. Mercator Lines (Singapore) Ltd.
13. Mercator Lines (Panama) Inc
14. Varsha Marine Pte. Ltd.
15. Vidya Marine Pte. Ltd.
16. Oorja Holdings Pte. Ltd.
17. Oorja 1 Pte. Ltd.
18. Oorja 2 Pte. Ltd.
19. Oorja 3 Pte. Ltd.
20. Oorja Indo KGS
21. Oorja Mocambique Minas Limitada
22. Broadtec Mocambique Minas Limitada
23. Oorja Indo Pentangis Three
24. Oorja Indo Pentangis Four
25. H. K. Mittal
26. Archna Mittal
27. Atul J. Agarwal
28. Manjuli Agarwal
29. Shalabh Mittal
30. Shruti Mittal
31. Adip Mittal
32. Aayush Agarwal
33. Arooshi Agarwal
inter se
Building Future
Cultivating Industry
COMPANY'S PHILOSOPHY:
I. BOARD OF DIRECTORS:
The Company strongly believes in ethical way of
conducting business. The Company upholds its
relationship with the society and hence its social
responsibility of environmental safety and human
welfare.
Corporate governance to us is not just a compliance
issue but central guiding principle for everything it
does. It’s a way of thinking, way of conducting business
and a way to steer the organization to take on
challenges for now and for the future.
The Company recognizes its responsibility towards its
shareholders and therefore constantly endeavors to
create and enhance shareholder's wealth and value
by implementing its business plans at appropriate
times and thus taking maximum advantage of
available opportunities to benefit the Company, its
shareholders and the society at large. The Company
believes in monitoring its performance regularly and
with utmost transparency to ensure ethical
governance at all levels within the organization.
The Board of Directors of the Company comprises of
six Directors with a combination of two Executive
Directors and four Non-executive Independent
Directors. Among the two Executive Directors one is
Executive Chairman and the other is Managing
Director. The Company is in compliance with the
requirement of at least half of the Board comprising of
Independent Directors as the Chairman of the Board
is an Executive Director.
None of the Independent Directors:
a. apart from receiving director's remuneration, does not have any
material pecuniary relationships or transactions with the
company, its promoters, its directors, its senior management or
its holding company, its subsidiaries and associates which may
affect independence of the director;
b. is not related to promoters or persons occupying management
positions at the board level or at one level below the board;
c. has not been an executive of the company in the immediately
preceding three financial years;
d. is not a partner or an executive or was not partner or an executive
during the preceding three years, of any of the following:
i) the statutory audit firm or the internal audit firm that is
associated with the company, and
ii) the legal firm(s) and consulting firm(s) that have a material
association with the company.
e. is not a material supplier, service provider or customer or a lessor
or lessee of the company, which may affect independence of the
director;
f. is not less than 21 years of age
g. is not a substantial shareholder of the company i.e. owning two
percent or more of the block of voting shares.
There is no Nominee Director on the Board of the Company.
REPORT ON CORPORATE
GOVERNANCE
(Forming part of Directors' report for the year stended on 31 March 2008)
ANNUAL REPORT 2007-2008
20
ANNUAL REPORT 2007-2008
21
No Director of the Company is either member in more than ten
committees and/or Chairman of more than five committees
across all Companies in which he is Director and necessary
disclosures to this effect has been received by the Company from
all the Directors.
During the year, in all Eight Board meetings were held i.e. on May
28, 2007; June 29, 2007; July 30, 2007, September 13, 2007;
October 24, 2007; December 26, 2007; January 28, 2008; and
March 13, 2008. The time gap between any two meetings was not
more than 4 months.
The details of Directors and their attendance record at Board
Meetings held during the year, at last Annual General Meeting and
number of other Directorships and Chairmanships/ membership
of Committees is given below:
Sr.
No.
Name of Director Category No. of Board
Meetings
Attended
Attendance
at last AGM
No. of other
Directorship
No. of
committee
membership
in other
Companies*
No. of
committee
Chairmanship
in other
Companies *
H. K. Mittal Chairman & Managing
Director-Executive-Promoter
8 Yes Nil1
2 A. J. Agarwal Joint Managing Director,
Executive-Promoter
8
8
Yes
3 Manohar Bidaye Non-Executive
Independent Director
5 Yes
4 Anil Khanna Non-Executive
Independent Director
Yes
5 M. G. Ramkrishna Non-Executive
Independent Director
Yes
5
7
6 K. R. Bharat Non-Executive
Independent Director
Yes
5
8
11
8
2
2
1
2
1
2
Nil
Nil
Nil
1
Nil
1
Nil
*In accordance with Clause 49 of the Listing Agreement, Memberships / Chairmanships of only the Audit Committees and Shareholders'/ Investors' Grievance Committees of all Public Limited Companies have been considered.
II. AUDIT COMMITTEE:
Composition:
Pursuant to the provisions of Section 292(A) of the Companies Act,
1956 and Clause 49 of the Listing Agreements, the Company has a
qualified and independent Audit Committee comprising of three
Independent Non-executive Directors. Anil Khanna, a senior
member of Institute of Chartered Accountants of India, having a
sound accounting and financial background, is the Chairman of
the Committee with the other members being Manohar Bidaye, a
senior member of Institute of Company Secretaries of India and M.
G. Ramkrishna, a veteran from the banking & finance industry. The
Managing Director, Head of Finance Department along with the
Internal Auditors and Statutory Auditors are always invitees to the
Audit Committee Meeting. All other Functional Managers are
invited to attend the meeting, as and when necessary. The
Committee is vested, inter alia, with following powers and terms of
references as prescribed under relevant provisions of the
Companies Act, 1956 and Stock Exchanges Listing Agreement:
None of the independent directors had resigned nor removed for
the Board of the Company during the year and hence compliance
in respect of replacement thereof did not arise.
All the information required to be furnished to the Board was
made available to them along with detailed agenda notes.
The Board reviews compliance reports of all laws applicable to the
Company, presented by Managing Director at the meeting.
Code of Conduct:
The Board has laid down a Code of Conduct for all Board members
and senior management personnel of the Company, which has
been posted on the website of the Company www.mercator.in
All Board members and senior management personnel have
affirmed compliance with the code for the year ended on March
31, 2008. Declaration to this effect signed by the Chief Executive
Officer for the year ended on March 31, 2008 has been included
elsewhere in this report.
ANNUAL REPORT 2007-2008
22
Powers:
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, if it
considers necessary.
Terms of Reference:
The Audit committee reviews the reports of the Internal Auditors
and the Statutory Auditors periodically and discuss their findings
and suggest the corrective measures. The role of the Audit
Committee is as follows: -
1. Oversight of 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 Director's
Responsibility Statement to be included in the Board's
Report in terms of clause (2AA) of Section 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 judgment by the management.
d. Significant adjustments made in the financial statements
arising out of the audit findings.
e. Compliance with 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.
5A. Reviewing, with the management, the statement of uses /
application of funds raised through an issue (public issue,
rights issue, preferential issue, etc.), the statement of funds
utilized for purposes other than those stated in the offer
document/prospectus/notice and the report submitted by
the monitoring agency monitoring the utilisation of proceeds
of a public or rights issue, and making appropriate
recommendations to the Board to take up steps in this
matter.
6. Reviewing, with the management, performance of statutory
and internal auditors and 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.
Meetings:
During the year, in all five meetings of the Committee were held i.e.
on May 28, 2007; June 29, 2007; July 30, 2007; October 24, 2007
and January 28, 2008. The time interval between two meetings of
the Committee was not more than four months.
ANNUAL REPORT 2007-2008
23
ESPS COMMITTEE:
III. SUBSIDIARY COMPANIES:
The Company has Employee Stock Purchase Committee (ESPS) of
Directors comprising of two Executive Directors viz. H. K. Mittal & A.
J. Agarwal and three Non-executive Independent Directors viz.
Manohar Bidaye; Anil Khanna & M. G. Ramkrishna, to implement the
Employee Stock Purchase Scheme of the Company.
As at March 31, 2008 the Company had following subsidiaries:
No. of Audit Committee
Meetings attended
Name of Director
5
5
5
H. K. Mittal
Atul J. Agarwal
Anil Khanna
3K.R. Bharat
No. of Audit Committee
Meetings attended
Name of Director
5
4
5
Anil Khanna
Manohar Bidaye
M. G. Ramkrishna
The Managing Director, as a head of the Finance Department;
Statutory Auditors and Internal Auditors attended all the four
meetings. The Company Secretary acted as the Secretary to the
committee.
Review of Information:
The Audit committee was presented with and reviewed following
information:
1. Management discussion and analysis of financial condition
and results of operations;
2. Statement of significant related party transactions (as defined
by the audit committee), submitted by management.
3. Management letters/letters of internal control weaknesses
issued by the statutory auditors, if any.
4. Internal audit reports related to internal control weaknesses;
and
5. The appointment, removal and terms of remuneration of the
Internal Auditor. Presently the Company has independent
Chartered Accountant's firm as its Internal Auditor
There was no instance of management letter/letter of internal
control weaknesses issued by the Statutory Auditors during the
financial year 2007-08.
The Company has Expansion Committee comprising of two
Executive Directors viz. H. K. Mittal & A. J. Agarwal and two Non-
executive Independent Directors viz. Anil Khanna & K.R. Bharat. The
Committee is authorized to assess the business opportunities and
take the decisions from time to time on expansion projects; means
of finance and other related matters, within the limits sanctioned
by the Board. During the year five meetings were held.
Attendance of each member at the audit Committee Meetings:
EXPANSION COMMITTEE:
Sl
No.
Name
1
Incorporated
in
Mercator International
Pte. Ltd. (MIPL)
Remark
Singapore Wholly Owned
Subsidiary (WOS)
2 Mercator Offshore Ltd. Singapore Wholly Owned
Subsidiary
3 Mercator Oil & Gas Ltd. India Wholly Owned
Subsidiary
5 Varsha Marine Pte. Ltd. Singapore Step down
subsidiary
(WOS of MLS)
4 Mercator Lines
(Singapore) Ltd.(MLS)
Singapore Step down
Subsidiary
(Subsidiary of
MIPL with
71.35% holding)
6 Vidya Marine Pte. Ltd. Singapore Step down
subsidiary
(WOS of MLS)
7 Mercator Lines
(Panama) Inc
Panama Step down
subsidiary
(WOS of MLS)
8 Oorja Holdings Pte.
Ltd.(OHPL)
Singapore Step down
Subsidiary
(WOS of MIPL)
9 Oorja 1 Pte. Ltd. Singapore Step down
Subsidiary
(WOS of OHPL)
10 Oorja 2 Pte. Ltd. Singapore Step down
Subsidiary
(WOS of OHPL)
11 Oorja 3 Pte. Ltd. Singapore Step down
Subsidiary
(WOS of OHPL)
ANNUAL REPORT 2007-2008
24
12 Oorja Mocambique
Lda (OML)
Mocambique Step down
Subsidiary
(WOS of OHPL)
13 Broadtec Mocambique
Lda
Mocambique Step down
subsidiary
(Subsidiary of
OML with 85%
holding)
14 Oorja Indo KGS Indonesia Step down
subsidiary
(Subsidiary of
Oorja 3 wih 70%
holding)
Sl
No.
Name Incorporated
in
Remark
The Indian Subsidiary Mercator Oil & Gas Ltd., was neither listed nor
material as at March 31, 2008.
Mercator Lines (Singapore) Ltd., a then wholly owned subsidiary of
Mercator International Pte. Ltd., (MIPL) completed its IPO during
the year. Consequently, holding of MIPL reduced to 72.35%. The
shares of Mercator Lines (Singapore) Ltd. are listed on the main
Board of Singapore Stock Exchange.
Mercator Lines (Panama) Inc is dormant company.
Oorja 1 Pte. Ltd. has 50% joint venture Company Oorja Indo
Pentagis Four in Indonesia.
Oorja 2 Pte. Ltd. has 50% joint venture Company Oorja Indo
Pentagis Three in Indonesia
Subsequent to year end; Mercator Petroleum Private Ltd., was
taken over as 100%WOS by the Company.
The Audit Committee reviews the financial statements of all the
subsidiary companies including the investment made by the
Company.
The Minutes/resolutions of the Board Meetings of all the subsidiary
companies (including the step down subsidiary Companies) are
placed before the Board periodically.
The management periodically reviews a statement of all
significant transactions, if any, entered into by all the subsidiary
companies.
IV. DISCLOSURES:
(A) Basis of related party transactions:
i. A statement in summary form of transactions with related
parties in the ordinary course of business are placed
periodically before the audit committee.
ii. Details of material individual transaction with related parties,
which are not in the normal course of business, are placed
before the audit committee, whenever applicable.
iii. During the year, there was no material individual transaction
with related parties or others, which was not on an arm's
length basis.
(B) Disclosure of Accounting Treatment:
In the preparation of financial statements for the year ended on
March 31, 2008; there was no treatment different from that
prescribed in an accounting standard had been followed.
(C) Board Disclosures-Risk Management:
The Company has laid down procedures to inform Board members
about the risk assessment and minimization procedures. These
procedures are periodically reviewed to ensure that executive
management controls risk through means of properly defined
framework.
(D) Proceeds from public issues, rights issues, preferential
issues etc.
During the year, the Company raised an amount of Rs. 56.27 crores
through two separate preferential issues on private placement
basis, the uses/application of funds of which were disclosed to the
Audit Committee as a part of their quarterly declaration of
financial results. The funds were utilized for their intended
purposes as disclosed in the respective notices calling general
meeting seeking shareholders for such issues. All such disclosures
were duly certified by the statutory auditors.
(E) Remuneration cum Selection Committee &
Remuneration of Directors:
The Company has Remuneration Committee comprising of three
Non-executive Independent Directors. Manohar Bidaye is the
Chairman of the Committee with Anil Khanna and M. G.
Ramkrishna being other members. The committee, on behalf of
the Board and the shareholders, determines, with agreed terms of
reference, the Company's policy on specific remuneration
packages for Executive Directors and senior management people
including pension rights and any compensation payment.
ANNUAL REPORT 2007-2008
25
Non-executive Directors:
During the year, non-executive Directors were paid following
remuneration for the financial year 2007-08:
No other convertible instrument was held by any of the above
Non-executive Directors.
No stock options were issued to the Non-executive Directors
during the year.
Anil Khanna, the Non-Executive Director retiring by rotation at the
ensuing Annual General Meeting has declared his shareholding in
the Company and the same has been disclosed in the notice of the
Annual General Meeting.
(F) Management
A Management Discussion and Analysis report forming part of this
Directors' report is attached herewith.
During the year, there was no material financial and commercial
transaction by senior management that may have a potential
conflict with the interest of the Company at large.
The Board decided the payment of commission to Non-executive
directors within the limits approved by members of the Company
in their Annual General Meeting held on September 26, 2007.
Presently the Company pays remuneration to Non-executive
Directors by way of commission not exceeding 1% of its net profit
being distributed among themselves equally. No sitting fees are
being paid to non-executive Directors.
All the Non-executive Directors have disclosed their
shareholdings to the Company, which is as under:
Manohar Bidaye
Anil Khanna
M. G. Ramkrishna
Name No of equity shares held
as on 31/03/2008
K. R. Bharat
97,500
2,51,120
17,000
Nil
Name Commission
Amount Rs in Lacs
Manohar Bidaye
Anil Khanna
M. G. Ramkrishna
K. R. Bharat
2.50
2.50
2.50
2.50
The remuneration to the Executive Directors is governed by the
agreements executed with them as approved by the members of
the Company in their General Meeting. As per the agreement,
salary and perquisites are a fixed component and the commission
is based on the performance of the Company, i.e. on the net profit
of the year, calculated as per the provisions of the Companies Act,
1956. The present terms & conditions of appointment agreements
of both the Executive Directors were approved by the shareholders
at the Annual General Meeting of the Company held on September
26, 2007. As per the terms of respective agreements, the
appointments of Executive Chairman and Managing Director are
valid upto July 31, 2012 and can be terminated by either party by
giving six month's notice in writing. There is no severance fees
payable. The Executive Directors were not issued any Stock Options
during the year.
H. K. Mittal
Executive Chairman
Name Salary Commission Perquisites
A. J. Agarwal
Managing Director
Amount Rs in Lacs
48.00
48.00
746.25
746.25
6.04
11.24
This Committee also acts as a Remuneration Committee under
Schedule XIII and as Selection Committee under Section 314 of the
Companies Act, 1956.
Two meetings of Remuneration Committee were held during the
year. Except M.G. Ramkrishna, who attended one meeting; all other
members attended both the meetings.
The remuneration of non-executive Directors is decided by the
Board/Shareholders.
The Company did not have any pecuniary relationship or
transaction with the Non-executive Directors during the year
other than those disclosed elsewhere in this report. Except
commission on net profits for the year ended on March 31, 2008 as
fixed by the Board of Directors and approved by the shareholder's
resolution; no Non-Executive Director was paid any
fees/compensation.
Details of remuneration paid to Directors for the financial
year ended March 31, 2008:
Executive Directors:
ANNUAL REPORT 2007-2008
26
(G) Shareholders
Details of General Meetings held during last three years are given
below:
(i) GENERAL BODY MEETINGS:
No special resolution through postal ballot was passed last year nor proposed at the ensuing Annual General Meeting.
(ii) DISCLOSURES:
During the year, there were no transactions of materially
significant nature with the Promoters or Directors or the
Management or their subsidiaries or relatives etc. that had
potential conflict with the interest of the Company. However, the
transactions entered into with the related parties as per
Accounting Standard 18 are reported at Note No. 20 of Notes
forming part of the Accounts under Schedule I (B) annexed to the
Accounts for the year under review.
There were no instances of non-compliance on any matter related
to the capital market during the past three years and that no
penalties or strictures were imposed on the Company by any Stock
Exchange or SEBI.
Presently the Company does not have any Whistle Blower Policy.
Financial
Year
Date VenueTime Special Resolution(s)
11/10/20072007-08
(E.G.M)
Y. B. Chavan Centre,
General Jagannath Bhosle
Marg, Nariman Point,
Mumbai-400021
11.00 A.M. 1. Issue of warrants on preferential basis to
promoter.
31/07/20062006-07
(A.G.M.)
C. K. Nayudu Hall,
Brabourne Stadium,
Churchgate,
Mumbai-400020
12.00 Noon 1. Alteration of Object Clause of Memorandum
of Association.
2. Approval for commencing new business
activity set out in the object clause of
Memorandum of Association.
28/09/20052005-06
(A.G.M.)
C. K. Nayudu Hall,
Brabourne Stadium,
Churchgate,
4.00 P.M. 1. Approval to payment of sitting fees to
Non- Executive Directors.
2. Appointment of Whole-time Director
26/09/20072007-08
(A.G.M.)
Y. B. Chavan Centre,
General Jagannath Bhosle
Marg, Nariman Point,
Mumbai-400021
3.30 P.M. 1. Appointment of Mr. H. K. Mittal as
Executive Chairman of the Company and
remuneration thereof.
2. Appointment of Mr. A.J. Agarwal as
Managing Director of the Company and
remuneration thereof.
3. Appointment of Mr. Adip Mittal, a relative
of Director to hold the office or place
of profit of the Company.
4. Delisting of equity shares from Ahmedabad
Stock Exchange
17/01/20062005-06
(E.G.M.)
C. K. Nayudu Hall,
Brabourne Stadium,
Churchgate,
Mumbai-400020
4.30 P.M. 1. Increase in Authorised Share Capital and
amendments to the capital clauses of
Memorandum and Articles of Association
of the Company.
2. Issue of Bonus shares
3. Issue of warrants on preferential basis to
Promoter's group Company.
4. Increase in the limit of investments by FIIs
in the capital of the Company.
ANNUAL REPORT 2007-2008
29
Shareholding of nominal
value of
No. of
Shareholders
% to total
Shareholders
No. of Shares % to total Capital
UPTO 5000 60,093 97.59 2,49,93,106 10.64
5001 10000 627 1.02 47,66,971 2.03
10001 20000 397 0.64 56,05,668 2.38
10001 20000 397 0.64 56,05,668 2.38
20001 30000 158 0.26 39,42,353 1.68
30001 40000 63 0.10 22,06,319 0.94
40001 50000 41 0.07 18,83,606 0.80
50001 100000 84 0.13 60,07,575 2.56
100001 AND ABOVE 116 0.19 18,54,89,789 78.97
TOTAL 61,579 100.00 23,48,95,387 100.00
SHARE TRANSFER:
SHAREHOLDERS'/ INVESTORS' GRIEVANCES COMMITTEE:
The Company has Shareholders'/Investors' Grievances Committee
comprising of one Executive Director and two Non-executive
Directors to look after share transfer and other related matters,
including the shareholders' grievances. Manohar Bidaye, a senior
member of Institute of Company Secretaries of India, is the
Chairman of the Committee with the other members being, A. J.
Agarwal and Anil Khanna, both senior members of Institute of
Chartered Accountants of India. The Committee normally meets
fortnightly and looks into the shareholder & investor grievances
that are not settled at the level of the Company
Secretary/Compliance Officer and helps to expedite share
transfers & related matters.
Twenty three Meetings of the Committee were held during the
year. All the members attended all the meetings except one such
meeting by Manohar Bidaye.
Supriya Joshi, who was appointed as Company Secretary (under
the designation of Dy. Company Secretary) within the meaning of
the Companies Act, 1956 w.e.f. March 7, 2007 resigned w.e.f.
January 28, 2008. As at March 31, 2008, Deepak Dalvi, Manager
Secretarial was acting as Compliance officer. During the year, the
Company received 78 complaints from the shareholders and
which were duly resolved. Further, during the year requests for
transfer of 1,39,750 equity shares; and for demat of 87,30,547
equity shares were received and processed.
Registrar and Transfer Agents and Share Transfer System:
Intime Spectrum Registry Ltd., having their office at C-13, Pannalal
Silk Mills Compound, LBS Road, Bhandup (W), Mumbai - 400 078 (Tel
No.91-22-25963838) and branch office at 203, Dawer House,
197/199, D.N. Road, Mumbai - 400 001 (Tel No. 91-22-22694127) are
the Registrar and Transfer Agents (RTA) as also the registrar for
electronic connectivity. Entire functions of Share Registry, both for
physical transfer as well as dematerialisation/rematerialisation of
shares, issue of duplicate/split/consolidation of shares is being
carried out by the RTA at their above address.
The correspondence regarding query of dividends shall be
addressed to Compliance Officer at the registered office of the
Company.
(xiii)DISTRIBUTION OF SHAREHOLDING AS ON MARCH 31,
2008
0
Ap
ril 2007
Marc
h 2
008
Sh
are
Pri
ce (Ru
pees)
30
50
70
90
110
130
150
170
190
Feb
ruary
2008
Sep
tem
ber2
007
Oct
ob
er
2007
Nove
mb
er
2007
Dece
mb
er
2007
Jan
uary
2008
May
2007
Jun
e 2
007
July
2007
Au
gu
st 2
007
High
Low
ANNUAL REPORT 2007-2008
30
(xiv)SHAREHOLDING PATTERN AS ON MARCH 31, 2008:
Series No Category % to Capital No. of Holders
1 Promoters / Directors and their Relatives
Mutual Funds / UTI
38.11
12.13
10
38
No. of Shares
8,95,23,975
2,85,03,5322
Banks 0.47 211,12,8003
FIIs / Foreign Companies/foreign Banks 22.24 325,22,30,0224
Private Corporate Bodies 6.66 1,2771,56,35,1945
Indian Public 18.74 58,7294,40,23,2236
NRIs / OCBs 0.71 1,08116,69,7317
Non-promoter Independent Directors and their relatives 0.20 74,80,5958
Clearing members 0.73 40317,16,3159
Total 100.00 61,57923,48,95,387
(xv) DEMATERIALISATION OF SECURITIES:
The equity shares of the Company are under compulsory trading in de-mat form. Out of total capital of 23,48,95,387 equity shares;
23,03,69,303 equity shares representing 98.07% were held in de-mat form and balance 45,26,084 equity shares representing 1.93% were
in physical form as on March 31, 2008. The ISIN of the equity shares of the Company is INE934B01028.
The shares are actively traded on BSE and NSE and the turnover data during the financial year 2007-08; was as under:
Particulars
No of shares 24,35,37,639
228,611.85
29,13,43,341
284,112.88
53,49,00,980
512,724.73Value (Rs. In lacs)
BSE NSE Total
Promoters / Directors and
their Relatives - 38.11%
Mutual Funds /
UTI - 12.13%
Banks -
0.47%
FIIs / Foreign Companies /
foreign Banks - 22.24%
Private Corporate
Bodies - 6.66%
Indian Public - 18.74%
NRIs / OCBs -
0.71%
Non-promoter Independent
Directors and their
relatives - 0.2%
Clearing members - 0.73%
ANNUAL REPORT 2007-2008
31
Series No No. of NCDs Coupon rate O/s. Face value
As on 31/03/08
Outstanding
Amount
ISIN
IV 30,00,000 10.00% Rs. 10/- each Rs. 3.00 crores INE934B07033
V 30,00,000 10.00% Rs. 20/- each Rs. 6.00 crores INE934B07041
VII-A 1600 7.50% Rs. 6,87,500/- each Rs. 110.00 crores INE934B07066
VII-B 50 7.50% Rs. 7,50,000/- each Rs. 3.75 crores INE934B07074
2,85,00,000 Warrants carrying an option to apply for equivalent
number of equity shares of Re. 1/- each in the Company; were
issued to a promoter on October 25, 2008, on preferential basis in
accordance with SEBI Guidelines on Preferential Issue, as approved
by shareholders in their meeting held on October 11, 2008; and the
same were outstanding as on March 31, 2008.
Further, out of 10,000 1.50% Foreign Currency Convertible Bonds of
USD 10,000 each aggregating USD 60 millions; 850 FCCBs of an
aggregate amount of USD 8.50 mn were outstanding as at March
31, 2008 consequent upon surrender of 9,150 FCCBs for conversion
by the Bondholders during the year. The conversion price of
the Bonds is fixed at Rs. 59.812 (ex-bonus) per share with a fixed
rate of exchange on conversion of Rs. 43.73= USD 1.00 with
maturity date as April 27, 2010.
Subsequent to year end, further 10,96,686 equity shares of Re. 1/-
each were issued and allotted in lieu of surrender of 150 FCCBs for
conversion out of the said issue. Consequently, there were 700
outstanding FCCBs of aggregate amount of USD 7 million.
If all the FCCB holders exercise their rights to convert FCCB into
equity shares then the paid up equity capital of the Company
would increase by 51,17,869 shares of Re. 1/- each.
'Mercator Lines (Singapore) Ltd', a step-down subsidiary of the
company, had issued Convertible Bonds aggregating USD 51
million, consisting of Bonds-A of USD 35 Million and Bonds-B of USD
16 Million, during last financial year. Consequent to the IPO by the
said subsidiary in the month of October 2007; Bonds-A were
converted into shares pursuant to the terms of the issue. However,
these conversion of bonds had no impact on equity capital of the
Company.
Other than above, there was no outstanding GDRs/ADRs or
warrants or any other convertible instruments.
(xvi)OUTSTANDING GDRs/ADRs OR WARRANTS OR ANY
CONVERTIBLE INSTRUMENTS, CONVERSION DATE AND
LIKELY IMPACT ON EQUITY
(V) CEO/CFO CERTIFICATION:
VI) COMPLIANCE:
VII) PLANT LOCATIONS:
The necessary certification from Chief Executive Officer H. K. Mittal
and Chief Financial Officer Atul J. Agarwal in respect of the financial
year ended on March 31, 2008 has been annexed to this report.
The Company has complied with all the mandatory requirements
of Corporate Governance Clause 49 of the Listing Agreement with
Stock Exchanges. Further, the Company has also adopted
Remuneration committee requirements out of Non-mandatory
requirements of the Clause.
A certificate from the Auditors of the Company regarding
compliance of conditions of corporate governance is annexed to
the Directors' Report.
The Company does not have any plant.
As at March 31, 2008, the Company owns total thirteen vessels of
aggregate tonnage of 1,137,712 DWT consisting of a Very Large
Crude Carrier (VLCC); a Suezmax tanker; five Aframax tankers; two
MR Tankers; a Panamax and three dredgers. Seven vessels of
aggregate tonnage of 543,105 MT were owned by Subsidiary of the
Company consisting of four panamax and three Kansarmax
vessels. Further, as at March 31, 2008; the Company alongwith its
subsidiaries also had seven chartered vessels of aggregate
tonnage of 660,021 DWT comprising of four panamax; a VLCC;
an aframax and a chemical tanker. The consolidated capacity was
27 vessels of 2,340,838 DWT. All the vessels are deployed on various
sea-route.
Address for correspondence:
Mercator Lines Limited
3rd Floor, Mittal Tower, B-wing,
Nariman Point, Mumbai-400 021
Tel Nos: 91-22-66373333
Fax Nos: 91-22-66373344
E-mail:[email protected] / [email protected]
Besides LOA for debentures amounting Rs. 25 crores issued during the year under ISIN INE934B08064; the Company has following series
of listed Redeemable Non-Convertible Debentures on private placement basis in dematerialized form:
ANNUAL REPORT 2007-2008
32
Whistle blower policy
The Company does not have any formal whistle blower policy.
However, the employees are welcomed to report to the
management, their concerns about unethical behaviour, actual
or suspected fraud or violation of the company's code of
conduct and they are provided direct access to the Chairman
of the Audit Committee of Board of Directors of the Company.
For and on behalf of the Board
H. K. MITTAL
Executive Chairman
Regd. Office:rd3 Floor, Mittal Tower,
B-wing, Nariman Point,
Mumbai - 400021
Dtd: May 14, 2008
Compliance with Non-Mandatory Requirement
Company continuously strives for improving its Corporate
Governance practices. Besides following mandatory requirements;
the Company follows non-mandatory requirements also as under:
Office Space for Non-Executive Chairman
The Company's Chairman is an Executive Chairman and hence the
issue of providing office space for Non-executive Chairman is not
applicable.
There is no specific tenure specified for Independent Directors.
But, some of Independent Directors' tenure exceeds the period of
9 years. All the independent Directors have requisite qualifications
and experience which has been of use to the Company and which
enables them to contribute effectively to the Company in their
capacity as an independent Directors.
Remuneration Committee
The Company's Remuneration Committee details have already
been mentioned earlier in this Annual Report.
Rights of Shareholders to receive financial results
The Company's financial results for every quarter are published in
the newspapers and are put on the Company's website as well,
besides being made available on the SEBI website
www.sebiedifar.nic.in.
Audit Qualifications
There was no audit qualification in the Company's financial
statements during the year under review. The company continues
to adopt best practices to ensure the regime of unqualified
financial statements.
Board Members Training
The management and the working Directors give extensive
briefings to the Board members on the business scenario of the
company and factors affecting the business during the Audit and
Board meetings.
Evaluating Performance of non-executive Board Members
Based on the criteria of attendance at the Board / Committee
meetings as also the contributions made at the said meetings, the
performance evaluation of the non executive Board members is
done by the Board annually.
Paving the Ways
Dredging the Ways
(Forming part of Directors' report for
the year ended on 31st March 2008)
THE SHIPPING INDUSTRY
Shipping is a primary means of international transportation of
many essential commodities. In Indian context, it is all about
maritime transport as our country's international trade;
approximately 95% by volume and 70% by value is sea-borne.
Shipping as industry, though a component of service industry;
plays a pivotal role in shaping economy by facilitating international
trade. It is therefore an ideal candidate to enjoy the status of a
mother industry. The industry is classified globally in several ways;
such as capacity specific to route specific; however, in general it is
broadly classified into Wet bulk; Dry bulk and Liners. Sub sets of wet
bulk are Tankers and offshore; whereas Dry Bulk is mainly further
classified based on carrying capacities. Under Liners, it has
Containers, MPP and Ro-Ros type of vessels.
The Offshore Industry is a logical offshoot of the Shipping Industry.
The Offshore sector is further segmented into drilling, exploration
and production, development and maintenance of floating
production systems etc; essentially based on the services offered
to petroleum sector.
As with any other industry, the sub sectors are driven by a
combination of demand and supply with pricing and services
offered, being the key. The underlying trend for demand in
shipping is mainly driven by the strength of the global economy
and global trade. The tanker segment or even the offshore
segment, for example, is further driven by oil demand, while the
Dry Bulk segment is influenced by the commodity demand,
primarily iron ore and coal. In each segment; the freight rates and
consequently vessel values have exhibited volatility in varying
degrees at various points in time. These fluctuations have been
primarily due to changes in the level and pattern of global
economic growth, trade balance or trade deficits. The degree of
competition within the global shipping industry largely depends
on the changes in the availability of vessels.
RECENT DEVELOPMENTS
SHIPPING:
Tanker Markets (Wet Bulk):
All the segments of the tanker market were very stable for most
part of the year. In the last quarter of the financial year, a sudden
spurt in the tanker demand sent the VLCC freight rates soaring.
The Suezmax segment also enjoyed a boost in their earnings, as
charterers made efforts to control the VLCC rates by splitting the
parcel sizes. The demand was created by the flurry of cargos fixed
by the charterers before the Christmas holidays. However, the
Aframax segment did not see any increase in demand with the
year ending on a soft note. The last quarter ended very well, giving
the much required boost to the tanker earnings, which ensured
that tanker owners continued being bullish about this segment in
medium to even long term.
Dry Bulk Markets:
It was a historical year for bulk carriers with Baltic Dry Index (BDI)
touching an all time high of 11,039 points in November 2007. The
dry bulk market which has seen firm earnings over the last three
years is likely to continue to do so in future. The strength of the dry
bulk market is due to the large import of coal into India and iron
ore into China. Chinese economic progress; particularly
unprecedented growth in infrastructure sector; have given a fresh
impetus to steel production; therefore iron ore imports into China
and record steel exports from China have pushed the momentum
in dry bulk market. The foregoing commodity aspects, when
coupled with marine infrastructural limitations and ageing fleets,
slower deliveries of the new builts led to the above historical high
indices.
MANAGEMENT DISCUSSION &
ANALYSIS REPORT
ANNUAL REPORT 2007-2008
34
ANNUAL REPORT 2007-2008
This increased prices and the steady rising demand gave impetus
to exploration activities, resulting in greater demand for offshore
services like Seismic, Drilling Rigs etc. To bridge the increasing
'demand - supply' gap, there is an increased thrust on the
'Development and Production' from the existing fields which
further increases demand for 'versatile' and 'improved' technology
based Jack-Up Rigs. Also Oil companies revised their basis for
exploration & production cost from a level of USD 45 to an amount
in excess of USD 65-70 per barrel thereby becoming a driver for
increased drilling activity backed by an increased demand and
improved remunerative rates for service providers. Consequently
the offshore segment shall continue to remain bullish over
medium to even long term.
The company is into shipping operations, with its own fleet of
Tankers, Bulk Carriers and Dredgers. The consolidated income
from our shipping operations was Rs. 1,477 crores for the year
under review as compared to Rs. 1,138 crores in the previous year,
recording top line growth of about 30% year on year.
The company's tanker fleet consists of VLCC, Suezmaz, Aframax,
Product Tankers and Chemical Tankers. Within the tanker segment,
the Company had ten tankers owned by it totaling a capacity of
11,44,761 DWT at the beginning of the year. During the year, the
Company sold one of its tankers of 1,00,488 DWT; therefore, at the
end of the year, the Company had 9 tankers owned by it; with an
aggregate tonnage of 10,44,273 DWT. Further, during the year the
Company chartered in two tankers and one chemical tanker with
an aggregate capacity of 3,74,337 DWT through its subsidiary.
During the year, the Company achieved a turnover of Rs. 759 crores
as compared to Rs. 713 crores in the previous year, with gross
profits of Rs. 203 crores (Previous year Rs. 211 crores) from its
tanker division. An increase in the number of operating days by
about 16%, figuratively speaking to 5,589days in absolute terms;
resulted from better utilization of fleet. This efficiency was further
backed up by firm market during the last quarter of the year
consequently resulting in a satisfactory performance of this
division. Overall contribution from the tanker division was pegged
at 52% of the total shipping income.
The Company's bulk carrier fleet comprises of Geared and Gearless
Panamaxes and Kamsarmaxes.
DISCUSSION OF FINANCIAL PERFORMANCE WITH RESPECT
TO OPERATIONAL PERFORMANCE:
Dredging:
The dredging industry is passing through a good phase as the
development of various ports the world over are offering
opportunities for the deployment of dredgers. The market fared
well in the financial year ended March 31st, 2008. Many ports in the
East Coast of India are being developed including Ganagavaram,
Krishnapatnam and Dhamra Ports. Extensive dredging works of
deepening and re-claiming are required in the preparation of
ports. The availability of dredgers or the supply side has been a real
concern in recent past; with new opportunities on the anvil; the
charter hire rates are getting firmer rather quickly.
In addition to the development of new ports, requirement of
extensive maintenance dredging works in the Hugli River, Kandla,
Mangalore and Cochin Port also presenting decent opportunities
to the owners.
Offshore :
Continuous rise in oil prices has resulted into an environment that
has never been witnessed before and therefore, one that was
almost unpredictable in the past is beginning to happen.
The trends presented here, clearly show while growth in
consumption has been rather consistent; the price of oil has been
moving up rather exponentially:
12000
10000
8000
6000
4000
2000
0
2/4
/2007
23/4
/2007
10/5
/2007
27/5
/2007
13/6
/2007
30/6
/2007
17/7
/2007
3/8
/2007
20/8
/2007
6/9
/2007
23/9
/2007
10/1
0/2
007
27/1
0/2
007
13/1
1/2
007
30/1
1/2
007
19/1
2/2
007
5/1
/2008
22/1
/2008
8/2
/2008
25/2
/2008
13/3
/2008
30/3
/2008
BDI
BTDI
01965 168 1971 1974 1977 1980 1983 186 189 1992 1995 1998 2001 2004 2007
Oil Consumption (million b/d)
Oil Price (USD per barrel)
World Oil Consumption and price 1965-2007
10
20
30
40
50
60
70
80
90
Source: BP Statistical Review of World Energy June 2007, EIA
35 ANNUAL REPORT 2007-2008
The Dry Bulk division was another major contributor to the
shipping income of the company.
At the beginning of the year, there were three bulk carriers
aggregating a tonnage of 2,25,126 DWT, owned by the Company
(including two through a subsidiary) and five bulk carriers
chartered in through the subsidiary with an aggregate capacity of
356,108 DWT. One of the chartered in bulk carriers of 70,424 DWT
met with an accident at the beginning of the year and became
inoperative. During the year, further five bulk carriers were
acquired through the company's subsidiary thereby increasing
aggregate capacity by 3,87,265 DWT. Consequently, at the end of
the year the Company had twelve bulk carriers with an aggregate
capacity of 8,98,075 DWT. With this enhanced capacity, an increase
in vessel operating days of about 19% over the last year; or up to
3,820 days was recorded. Further, at the strength of firm market
conditions, the bulk division performed extremely well during the
year. It achieved a turnover of Rs. 658 crores (Rs. 410 crores previous
year) from bulk carriers with gross profit of Rs.424 crores (Rs. 125
crores in the previous year). This division contributed about 45% of
the total shipping income.
During the year, the Company forayed into dredging by acquiring
three of our own dredgers aggregating 24,153 DWT. On 271 days of
operating, the Company achieved a turnover of Rs. 38crores from
dredgers with a gross profit of Rs. 19 crores. This contributed about
0.9% of total shipping income.
In our pursuit to gain customer delight; we have been offering
complete logistical solutions package by handling coal to deliver
the same to the end user. The turnover from coal handling was Rs.
22 crores (previous year Rs. 15 crores) with a profit of Rs. 13 crores.
This contributed about 1.50% of the total shipping income.
Review of Operations of Subsidiaries:
1) Mercator International Pte. Ltd. (MIPL) – (Wholly Owned
Overseas Subsidiary-WOS):
MIPL was incorporated in Singapore in January 2007, as an apex
Company. This company has multiple subsidiaries or fellow
subsidiaries in Singapore and other countries. MIPL had chartered
in a VLCC; an Aframax and a chemical tanker of aggregate capacity
of 374,337 DWT on standalone basis. MIPL is also contemplating
entry into commodity mining and trade business as a move
towards backward integration of the Company's business strategy.
Last year was the first full year of operation of MIPL. It achieved a
turnover of about Rs. 132.03 crores equivalent of USD 32.78mn (as
against Rs. 15.62 crores equivalent to USD 3.62mn in the previous
year) with a net profit of Rs. 3.90 crores equivalent to USD 0.97mn
(as against a previous year loss of Rs. 3.28 crores equivalent to USD
0.76mn) on standalone basis; that is excluding contribution from
its fellow subsidiaries.
2) Mercator Lines (Singapore) Ltd. (MLS)
This is a subsidiary of MIPL, which owns 72.35% controlling interest
in the company. The balance holding of 27.65% was diluted in
December 2007, when MLS concluded its maiden IPO successfully
and is listed on the Singapore Stock Exchange (SGX). MLS has three
fully owned subsidiaries; namely, Varsha Marine Pte. Ltd., Vidya
Marine Pte. Ltd. and Mercator Lines (Panama) Inc. MLS fleet as at
31st March 2008, comprised of seven owned vessels of aggregate
capacity of 5,43,373 DWT and four chartered-in vessels of
aggregate capacity of 285,684 DWT.
During the year, MLS achieved a turnover of Rs. 429.94 crores
equivalent of USD 106.74 mn on standalone basis (as against Rs.
349.05 crores equivalent to USD 80.86mn in the previous year) and
earned net profit after tax of Rs. 161.94 crores equivalent to USD
40.20mn (as against Rs. 47.14 crores equivalent to USD 10.92mn
previous year).
i) Varsha Marine Pte. Ltd.
This is a SPV of MLS, incorporated in December 2006. This
subsidiary owns 1 Kamsarmax vessel of 82,379 DWT partially
financed by financial assistance as a term loan from the bank.
During the year; this subsidiary achieved a turnover of Rs. 103.49
crores equivalent to USD 25.69mn (as against Rs. 18.51 crores
equivalent to USD 4.29mn in the previous year) with a net profit
thereon of Rs. 58.32 crores equivalent to USD 14.48mn (as against
Rs. 8.86 crores equivalent to USD 2.05mn in the previous year).
ii) Vidya Marine Pte. Ltd.
This is a SPV of MLS, incorporated in December 2006. In July 2007,
the subsidiary acquired 1 Kamsarmax vessel of 82,273 DWT
partially financed by financial assistance as a term loan from the
bank and achieved a turnover of Rs. 55.60 crores equivalent to USD
13.80 mn with a net profit thereon of Rs. 10.18 crores equivalent of
USD 2.53 mn.
iii) Mercator Lines (Panama) Inc.
This is a wholly owned subsidiary of MLS incorporated in Panama.
The subsidiary did not carry out any business other than holding
and assigning charter hire rights of 4 Panamax vessels on a back to
back basis and remained dormant during the year.
3) Mercator Offshore Ltd. (MOL)-WOS:
This is a 100% wholly owned overseas subsidiary of MIL. This
subsidiary was incorporated in May 2006 in Singapore with an
objective of exploring offshore business worldwide,
headquartered at Singapore. This subsidiary has placed an order
for construction of a premium jack-up rig suitable for worldwide
operations, which is expected to be delivered during the quarter
ending March 2009. The construction of the jack-up rig is
progressing well and is as per schedule. This rig has been
contracted for deployment with effect from its date of delivery.
36
ANNUAL REPORT 2007-2008
During the year; this subsidiary earned interest income of Rs. 0.01
crore equivalent to USD 0.003mn (previous year Rs.0.02 crore
equivalent of USD 0.004mn) and suffered a loss of Rs. 0.14 crores
equivalent to USD 0.03mn (previous year Rs. 0.02 crore equivalent
to USD 0.005mn).
4) Mercator Oil & Gas Ltd. (MOGL)-WOS:
This is an Indian non-listed non-material subsidiary, with an object
to explore business opportunities in the oil and gas sector
domestically. The company has been participating in various
tenders floated by the Government and private organizations alike
and is hopeful of commencing business shortly.
During the year, this subsidiary recorded a notional turnover of Rs.
0.003 crore (previous year Rs.0.001 crore) by way of exchange
fluctuation gain; and suffered loss of Rs. 0.52 crore (previous year
Rs.0.27 crore). The carried forward loss was Rs. 0.80 crore.
5) Oorja Holdings Pte. Ltd. (OHPL)
This is a 100% fellow subsidiary of Mercator International Pte. Ltd.
(MIPL) incorporated in July 2007 in Singapore with the objective to
explore business opportunities in commodity mining and trade. As
at March 31, 2008, OHPL had four wholly owned subsidiaries
further; namely, Oorja 1 Pte. Ltd., Oorja 2 Pte. Ltd., Oorja 3 Pte. Ltd.
and Oorja Mocambique Minas Limitada.
Pending commencement of principal activities of business, OHPL
earned interest income of Rs. 0.14 crore (equivalent of USD
34,284/-) and suffered a loss of Rs. 1.42 crores (equivalent of USD
353,090/-) during the year.
I) Oorja 1 Pte. Ltd. (Oorja 1):
This is a SPV of Oorja Holdings Pte. Ltd., incorporated in July 2007 in
Singapore. This subsidiary has a joint venture by the name of Oorja
Indo Petangis Four incorporated in Indonesia in which it holds 50%
shareholding at a cost of Rs. 0.50 crore equivalent of USD 125,000.
This JV was dormant as at the end of the year.
Pending commencement of principal activities of business; Oorja 1
earned an interest income of Rs. 0.04 crore (equivalent of USD
9,008/-) and suffered a loss of Rs. 0.08 crore (equivalent of USD
15,267/-) during the year.
ii) Oorja 2 Pte. Ltd. (Oorja 2):
This is a SPV of Oorja Holdings Pte. Ltd., incorporated in August
2007 in Singapore. This subsidiary has a joint venture by the name
of Oorja Indo Petangis Three incorporated in Indonesia, in which it
holds 50% shareholding at a cost of Rs. 0.50 crore equivalent to
USD 125,000. This JV was dormant as at the end of the year.
Pending commencement of principal activities of business; Oorja 2
earned interest income of Rs. 0.04 crore (equivalent of USD 9,008/-)
and suffered a loss of Rs. 0.06 crore (equivalent of USD 14,085/-)
during the year.
iii) Oorja 3 Pte. Ltd. (Oorja 3):
This is a SPV of Oorja Holdings Pte. Ltd., incorporated in August
2007. This subsidiary has a fellow subsidiary named Oorja Indo KGS
incorporated in Indonesia in February 2008 with 70% shareholding
at a cost of Rs. 0.70 crore equivalent of USD 175,000
Pending commencement of principal activities of business; Oorja 3
earned interest income of Rs. 0.03 crore) equivalent of USD 6,959/-
and suffered a loss of Rs. 0.03 crore (equivalent of USD 7,125/-)
during the year.
iv) Oorja Mocambique Minas Limitada: (Oorja Mocambique):
This is a SPV of Oorja Holdings Pte. Ltd., incorporated in May 2007 in
Mozambique. OHPL holds 24,500 ordinary shares amounting to
USD 1017/- equivalent to Rs. 0.004 crores; representing 98% share
holding of Oorja Mocambique. As at March 31, 2008; Oorja
Mocambique had carried forward pre-operative expenses of Rs.
0.01 crore equivalent of USD 3436/-
Oorja Mozambique has a fellow subsidiary named Broadtec
Mocambique Minas Limitada with 85% holding incorporated in
Mocambique at a cost of Rs. 0.004 crores.
Tanker Markets (Wet Bulk):
The tanker market is expected to remain steady during the year
2008-09. The demand for the crude oils is expected to remain firm
and the tanker owners are likely to witness another steady year of
earnings. The continuing conversion of single hull tankers to ore
carriers would have a positive impact on the supply and demand
scenario. The phasing out of the single hull carriers and the
addition of new tonnage in the market is also well balanced. The
availability of tonnage is also closely matched with the
requirement which should keep the rates at steady to firm levels.
Improvement in global economy, inconsistent weather and
political situations will result in further strengthening of the tanker
freight market.
OPPORTUNITIES & OUTLOOK
37 ANNUAL REPORT 2007-2008
Dry Bulk Market:
Prospects for both coal and iron ore seaborne trades continue to
be extremely buoyant. Barring unforeseen circumstances,
developments in both trades will continue to contribute positively
to the Group's top and bottom lines in the next financial year.
Based on Drewry reports, India's growing position as a major coal
importer with its “Power for All” mission to achieve 100,000 MW of
power generation by 2012 will also boost dry bulk demand. China,
which accounted for 49% of seaborne iron ore imports in 2007, is
set to maintain its position as major importer as its share of
seaborne iron ore imports is expected to increase to around 55%
by 2012. The above factors clearly demonstrate that the dry bulk
market will remain very firm in short to medium term.
Dredging:
All major Indian ports are presently working to 100% capacity,
whereas India further expects an 8 to 9% growth rate. This would
translate the present seaborne trade of about 400mn tons to
900mn tones by 2013. To cope up with this new demand, the
Indian Government plans to develop new ports, as well as, deepen
the existing ports to absorb the requirements. Further, the
“Sethusamduram” project undertaken by the Government of India
would require about 96 million cubic capacity dredging.
In view of the above, the market outlook is very much promising
and the earnings in this sector are expected to remain strong.
Further developments in various ports around the world such as
extensive dredging and reclamation works in Singapore, China,
Vietnam and Taiwan would offer good opportunities to this
segment.
Offshore:
The Asian demand primarily from China and India has been one of
the main factors behind the volatility of world energy prices. With
the crude prices more than 'doubling' in the past 2 years, a
speculative merger and acquisition frenzy has gripped offshore Oil
& Gas services market. Globally, about 15% of Oil Companies' capital
expenditure is ear-marked for exploration, 35% to field
Development and 50% slated for production. With the global oil
majors competing for the scarce drilling rig charter services, the
offshore sector is booming and is set to become an important and
paying sector.
Also with the spiraling prices of Oil & Gas, exploration and
production has became a high priority area. In the recent past,
major 'strikes' have been made in NELP blocks in India resulting in
the discovery of oil & gas fields of fairly large size. These fields are
expected to go on 'stream' within the next 2 to 3 years
progressively and would also open up a huge market for
specialized offshore services.
THREATS, RISKS AND CONCERNS
Tanker
The rising steel prices could pose a very stiff challenge to the
renewal of the fleet. The shipyards had increased the new building
prices to retain their profit making status. The reduction in the
profit margins on orders under execution is also being
compensated by a sharp increase in the new building order prices.
The phasing out of the single hull carriers and marine casualty
involving a single hull tanker remains a big threat to the company's
earnings. The increase in the demolition activity caused by the
phasing out of the single hull tankers is likely to affect the rates.
The expected supply disruptions in Nigeria, Iraq and Mexico, rising
crude oil demand in the Middle East, China and India and the
continuing erosion of the U.S. dollar, the crude and bunker prices
are likely to hit a new high. Oil prices have risen by 35% and the U.S.
dollar has dropped 10% since the U.S Federal Reserve began
lowering rates commencing the third quarter of last year. The
slowing U.S. economy alone was not enough to reduce the global
energy demand. The political instability in Iraq on a short term has
had adverse effects on the fuel oil prices.
Bulk Carrier
There is a huge order book on dry bilk vessels which when
delivered will put pressure on freight rates.
The Chinese Government is focused on development of internal
infrastructure and is looking to squeeze steel and coke exports.
The sub-prime casualty which resulted in global financial crises has
still not been fully addressed and could worsen if United States
does not show improved economic indications soon.
All the above could result in a downtrend in the freight rate.
Dredging:
The down time of the China built vessels and the equipment may
be greater than normal. The availability of dredgers and their
purchase price advantage could be a matter of concern.
The Company's dredgers are currently employed in the
'Sethusamudram' Canal Project which is a politically sensitive issue.
The company does not have any past experience in dredging.
The sector does not offer detailed reports and it is difficult to
establish the correct level of charter rates. The competition in this
sector is currently limited amongst few big players.
38
ANNUAL REPORT 2007-2008
Offshore :
Despite a major thrust through NELP, the National Oil Companies
viz. ONGC and Oil India Ltd, still hold large acreages for E&P
activities. Typically, National Oil Companies award contracts
through tenders which include encouraging local companies
through a policy of 'Price Preference' for Indian companies.
However, there is a resistance from some foreign offshore service
providers opposing such preference. Therefore, Indian companies
have taken up the issue with the National Oil Companies and
concerned Ministry individually and collectively through trade
associations like CII and INSA etc. for continuation of such policies
to encourage local companies.
Large Indian and MNCs having “deep pockets” are already
entrenched in the E&P activities in India. Therefore, mid sized
companies are strategically working towards 'partnering' with
National Oil Companies to play a role in the marginal and small
fields and to scale up their operations.
The Company has adequate internal control systems in place.
These systems ensure that all corporate policies are strictly
adhered to and absolute transparency is followed in accounting
and all of its business dealings.
The Internal Auditors appointed by the Company ensure that
adequate internal controls are in place and all mandatory
accounting policies are complied with. The Audit Committee
constituted by the Board of Directors assesses the financials of the
Company at regular intervals, in consultation with internal and
statutory auditors.
The Company gives utmost importance to its human capital and
recognizes the importance of organization building. The company
has embarked on several HR initiatives with a focus on improving
organizational and individual productivity and excellence. The
company implemented a performance linked incentive scheme
for the employees and organized several training programs in
order to motivate and help the employees to realize their
potential. Apart from productivity related initiatives, the company
also organized health and welfare related activities for the
employees.
Over the year the number of employees grew by 20 per cent. As on
March 31, 2008, there were 65 employees with an average age of
38 years.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
HUMAN RESOURCES POLICIES:
CAUTIONARY STATEMENT:
The Statement in this Management Discussion and Analysis
Report describing the Company's objectives, projections,
estimates, expectations or predictions may be 'forward looking
statements' within the meaning of applicable laws and
regulations. Actual results might differ substantially or materially
from those expressed or implied. Important developments that
could affect the Company's operations include demand-supply
conditions, changes in Government and International regulations,
tax regimes, economic developments within and outside India and
other factors such as litigation and labour relations.
For and on behalf of the Board
H. K. MITTAL
Executive Chairman
Regd. Office:rd3 Floor, Mittal Tower,
B-wing, Nariman Point,
Mumbai - 400021
Dtd: May 14, 2008
39 ANNUAL REPORT 2007-2008
For Mercator Lines Limited
H.K. Mittal
Chief Executive Officer
Place: Mumbai
Dated: May 14, 2008
For Mercator Lines Limited
A. J. Agarwal
Chief Financial Officer
CEO/CFO CERTIFICATION
To,
The Board of Directors
Mercator Lines Limited
Mumbai
Dear Sir,
This is to certify that:
a) We have reviewed financial statement for the F. Y. ended on 31.03.2008 and the cash flow statement for the year (consolidated and
unconsolidated) and that to the best of our knowledge and belief:-
i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be
misleading;
ii) these statements together present a true and fair copy of the company's affairs and are in compliance with existing accounting
standards, applicable laws and regulations.
b) There are, to the best of our knowledge and belief, no transactions entered into by the company during the year which are fraudulent,
illegal or violative of the company's code of conduct.
c) We accept responsibility for establishing and maintaining internal controls and that we have evaluated the effectiveness of the
internal control systems of the company and we have disclosed to the auditors and the Audit Committee, deficiencies in the
design or operation of internal controls, if any, of which we are aware and the steps we have taken or propose to take to rectify
these deficiencies.
d) We have indicated to the auditors and the Audit Committee:
i) significant changes in internal control during the year, whenever applicable;
ii) that there were no significant changes in accounting policies during the year and that the same have been disclosed in the notes
to the financial statements; and
iii) that there were no instances of significant fraud of which we have become aware and the involvement therein, if any, of the
management or an employee having such significant role in the company's internal control system.
We further declare that all board members and senior managerial personnel have affirmed compliance with the code of conduct for the
current year.
40
ANNUAL REPORT 2007-2008
AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE
To the members,
Mercator Lines Limited,
Mumbai
We have examined the compliance of conditions of corporate governance by Mercator Lines Limited for the year ended on 31st March
2008, as stipulated in Clause 49 of the Listing Agreement of the said company with stock exchange.
The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to
procedure and implementation thereof, adopted by the company for enduring the compliance of the conditions of the corporate
Governance. It is neither an audit nor an expression of the financial statement of the company.
We certify that the company has complied with the conditions of corporate Governance as stipulated in the above mentioned Listing
Agreement.
We state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or effectiveness with
which the management has conducted the affairs of the company.
For and on behalf of
Contractor Nayak & Kishnadwala
Chartered Accountants
H. V. Kishnadwala
Partner,
Membership No 37391
Mumbai
14th May 2008
41 ANNUAL REPORT 2007-2008
AUDITORS' REPORT
The Members of
MERCATOR LINES LIMITED
1. We have audited the attached Balance Sheet of MERCATOR
LINES LIMITED as at 31st March 2008, the related Profit and
Loss Account and the Cash Flow Statement of the Company
for the year ended on that date annexed thereto. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We conducted our audit in accordance with auditing
standards generally accepted in India. These Standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
3. As required by the Companies (Auditor's Report) Order, 2003,
issued by the Central Government in terms of Section 227(4A)
of the Companies Act, 1956, and on the basis of such checks as
considered appropriate and according to the information and
explanations given to us during the course of the audit, we
enclose in the Annexure hereto a statement on the matters
specified in Paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in above
paragraph, we report that:
a) We have obtained all the information and explanations,
which to the best of our knowledge and belief were
necessary for the purposes of our audit;
b) In our opinion, proper books of account, as required by
law have been kept by the Company so far as appears
from our examination of the books of the Company;
c) The Balance Sheet, Profit and Loss Account and the Cash
Flow Statement dealt with by the report are in
agreement with the books of account of the Company;
d) In our opinion, the Balance Sheet, Profit and Loss Account
and the Cash Flow Statement comply with the
mandatory Accounting Standards referred to in Section
211 (3C) of the Companies Act, 1956.
d) On the basis of written representations received from the
directors of the Company as on 31st March 2008, and taken
on record by the Board of Directors, we report that none of the
directors is disqualified as on 31st March 2008, from being
appointed as a director in terms of Section 274(1) (g) of the
Companies Act, 1956.
f) In our opinion and to the best of our information and
according to the explanations given to us, the said accounts
read together with the Notes to Accounts in Schedule 'I' give
the information required by the Companies Act, 1956 in the
manner so required and give a true and fair view in conformity
with the accounting principles generally accepted in India:
a. In the case of the Balance Sheet, of the state of affairs of
the Company as at 31st March 2008;
b. In the case of the Profit and Loss Account, of the Profit for
the year ended on that date,
c. In the case of the Cash Flow Statement, of the cash flows
of the Company for the year ended on that date.
For and on behalf of
Contractor Nayak & Kishnadwala
Chartered Accountants
H. V. Kishnadwala
Partner,
Membership No 37391
Mumbai
14th May 2008
42
ANNUAL REPORT 2007-2008
Statement referred to in paragraph 3 of the Auditors'
Report of even date to the Members of MERCATOR LINES
LIMITED on the accounts for the year ended 31st March
2008.
On the basis of such checks as considered appropriate and in
terms of the information and explanations given to us, we state as
under:
1(a) The company has maintained proper records showing full
particulars including quantitative details and situation of the
fixed assets;
1(b) As explained to us, the management at reasonable intervals
carries out the physical verification of the fixed assets. The
discrepancies noticed on such verification, which were not
material, have been appropriately dealt with in the accounts
1(c) The fixed assets disposed off by the company were not
substantial and does not affect the going concern
assumption.
2(a) As explained to us, the inventories of bunker and lube have
been physically verified during the year by the management.
In our opinion, having regard to the nature and location of
stocks, the frequency of the physical verification is reasonable.
2(b) In our opinion and according to the information and
explanations given to us, the procedures of physical
verification of the above mentioned inventory followed by the
management are reasonable and adequate in relation to the
size of the Company and the nature of its business.
2(c) In our opinion, the Company is maintaining proper records of
inventory and no material discrepancies were noticed on
physical verification.
3(a) As per the information and explanations given to us, the
Company has granted unsecured loans to 6 parties covered in
the register maintained under section 301 of the Companies
Act, 1956. The outstanding balance as on 31st March 2008 is
Rs. 43,103.40 Lacs and maximum balance outstanding during
the year is 61,428.28 lacs.
3(b) In case of the aforesaid unsecured loans granted to the
parties covered in the register maintained under Section 301
of the Companies Act, 1956, looking to the long term
involvement of the company in the subsidiaries and their
businesses, the rate of interest and the other terms and
conditions are not prima-facie prejudicial to the interests of
the Company.
3(c) In case of the aforesaid unsecured loan granted to the parties
covered in the register maintained under Section 301 of the
Companies Act, 1956, the repayment of principal amount and
interest, where applicable is regular.
3(d) In case of the aforesaid unsecured loans granted to the
parties covered in the register maintained under Section 301
of the Companies Act, 1956, the company is taking reasonable
steps for the timely recovery of the principal and interest.
3(e) As per the information and explanations given to us, the
Company has not taken unsecured loans from a Company or
any other party covered in the register maintained under
section 301 of the Companies Act, 1956, the provisions of
Clause 3(f) and 3(g) are not applicable.
4 In our opinion and as explained to us, there are adequate
internal control procedures commensurate with the size of
the Company and the nature of its business with regard to
purchase of inventory and fixed assets and for the sale of
goods and services. During the course of our audit, no major
weakness has been noticed in the internal controls and there
is no continuing failure for the same.
5(a) Based on the audit procedures applied by us and according to
the information and explanations provided by the
management, we are of the opinion that the particulars of
contracts or arrangements referred to in section 301 of the
Companies Act, 1956 have been entered in register required
to be maintained under that section.
5(b) In our opinion and as explained to us, the transactions made
in pursuance of such contracts or arrangements have been
made at prices which are reasonable having regard to the
prevailing market prices at the relevant time.
6 The Company has not accepted any deposits from public
during the year
7 In our opinion, the Company has an internal audit system
commensurate with the size of the Company and the nature
of its business.
8 The maintenance of cost records has not been prescribed by
the Central Government under section 209 (1) (d) of the
Companies act, 1956.
43 ANNUAL REPORT 2007-2008
9(a) According to the information and explanations given to us
and the records examined by us, the Company is regular in
depositing with appropriate authorities undisputed statutory
dues including provident fund, investor education and
protection fund, employees' state insurance, income-tax,
sales-tax, wealth-tax, service tax, custom duty, excise-duty,
cess and other statutory dues and there are no undisputed
statutory dues outstanding as at 31st March 2008, for a
period of more than six months from the date they became
payable.
9(b) According to the information and explanations given to us,
there are no dues of income-tax, sales tax, wealth tax, service
tax, custom duty, excise duty and cess which have not been
deposited on account of any dispute.
10 The company does not have any accumulated losses as on
31st March 2008 and has not incurred any cash losses during
the financial year and in the immediately preceding financial
year.
11 Based on the information and explanations given to us, the
Company has not defaulted in repayment of any dues to
financial institutions and banks.
12 Based on our examination of the records and as explained to
us, the Company has not granted any loans and/or advances
on the basis of security by way of pledge of shares, debentures
and other securities.
13 In our opinion, the company is not a chit fund, nidhi/mutual
benefit fund/society. The provisions of clause 4(xiii) are
therefore not applicable to the company.
14 During the year, the Company does not have any transactions
in respect of dealing and trading in shares, securities,
debentures and other investments. All shares, debentures
and other investments held by the company are held by the
Company in its own name.
15 According to the information and explanations given to us,
the terms and conditions on which the Company has given
guarantees for loans taken by subsidiaries and others from
banks and financial institutions are, considering the long term
involvement of the company in these entities, not prejudicial
to the interests of the company.
16 According to the information and explanations given to us,
the term loans raised were used for the purpose for which
they were raised.
17 As explained to us and on an overall examination of the
balance sheet of the Company, in our opinion there are no
funds raised on short-term basis which have been used for
long-term investment by the Company.
18 According to the information and explanation given to us, the
Company has made preferential allotment of shares/warrants
to parties covered in the register maintained under section
301 of the Companies Act, 1956 at prices not prejudicial to the
interests of the company.
19 During the period covered by our audit report the Company
has issued unsecured debentures and there is no question of
creating any security for the same.
20 The Company has not raised any money by public issues
during the period covered by our report.
21 Based upon the audit procedures performed for the purpose
of reporting the true and fair view of the financial statements
and as per the information and explanations given by the
management, we report that no fraud on or by the company
has been noticed or reported during the course of our audit.
For and on behalf of
Contractor Nayak & Kishnadwala
Chartered Accountants
H. V. Kishnadwala
Partner,
Membership No 37391
Mumbai
14th May 2008
44
ANNUAL REPORT 2007-2008
BALANCE SHEET AS AT MARCH 31, 2008
As per our report of even date
For Contractor, Nayak & Kishandwala
Chartered Accountants
Himanshu Kishanadwala
Partner
M No. 37391
Mumbai - 14th May 2008
Dated:
Mumbai
14th May 2008
For and on behalf of the Board
H.K. Mittal
Executive Chairman
A.J. Agarwal
Managing Director
Anil Khanna
Director
M. G. Ramkrishna
Director
As at As atParticulars Schedule 31, March 2008 31, March 2007
SOURCES OF FUNDS Shareholders’ Funds Share Capital A 2,348.95 5,892.43Warrants against Share Capital A 1 1,667.25 488.00Reserves and Surplus B 87,863.64 50,292.47
91,879.84 56,672.90Loan Funds Secured Loans C 91,293.82 107,532.52Unsecured Loans D 5,909.35 26,262.00
97,203.17 133,794.52
Total 189,083.01 190,467.42
APPLICATION OF FUNDS Fixed Assets EGross Block 158,187.86 148,335.12Depreciation (28,392.27) (19,920.58) Net Block 129,795.59 128,414.54Capital work in progress 10,010.47 -
139,806.06 128,414.54Investments F 2,014.93 10,292.34
Current Assets, Loans & Advances GInventories 2,244.33 1,491.00Sundry Debtors 10,377.96 13,329.61Cash and Bank Balances 5,642.17 11,814.87Loans and Advances 51,053.93 35,567.69
69,318.40 62,203.17Current Liabilities and Provisions HCurrent Liabilities 18,797.11 7,249.80Provisions 3,071.25 2,246.59Incomplete Voyages (Net) 188.02 946.24
22,056.38 10,442.63
Net Current Assets 47,262.02 51,760.54
Total 189,083.01 190,467.42Significant Accounting Policies I& Notes to the Accounts
(Amount Rs. in Lacs)
45 ANNUAL REPORT 2007-2008
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH 31, 2008
As per our report of even date
For Contractor, Nayak & Kishandwala
Chartered Accountants
Himanshu Kishanadwala
Partner
M No. 37391
Mumbai - 14th May 2008
Dated:
Mumbai
14th May 2008
For and on behalf of the Board
H.K. Mittal
Executive Chairman
A.J. Agarwal
Managing Director
Anil Khanna
Director
M. G. Ramkrishna
Director
As at As atParticulars Schedule 31, March 2008 31, March 2007
INCOMEShipping Income J 78,114.26 78,326.25Other Income K 4,913.91 1,388.19Profit on Sale of Investments (Net) 325.80 89.74Profit on Sale of Assets (Net) 2,953.95 310.91
Total 86,307.92 80,115.10
ExpensesShip Operating Expenses L 49,221.93 54,509.21Administrative and Other Expenses M 3,170.85 2,028.19 Finance Charges N 5,856.87 6,337.94Depreciation 10,382.84 9,753.73
Total 68,632.49 72,629.07
Profit Before Taxes 17,675.43 7,486.03Provision for TaxationCurrent (770.00) (310.00)Deferred Tax - -Fringe Benefit Tax (21.00) (13.50)Profit After Taxes 16,884.43 7,162.53
Prior Year Expenses / Income (Net) (119.54) (42.74)Short Provision for Tax of earlier Year (130.00) -Balance brought forward from last year 15,305.96 13,115.09
Available for Appropriations 31,940.86 20,234.88Less/(Add): AppropriationsTransfer to General Reserve 1,770.00 750.00 Transfer to Tonnage Tax Reserve 3,300.00 1,600.00Dividend on Preference Shares 307.76 320.00Dividend On Equity Shares (for Previsous Year) 80.00 -Proposed Dividend on Equity Shares 2,583.85 1,892.43Tax on Dividend (including for previous year Rs. 13.60 Lacs 505.03 366.50Balance Carried to Balance Sheet 23,394.22 15,305.96Earning Per Share (Equity Share of Re. 1/- Each) Basic Rs. 7.26 3.12Diluted Rs. 6.91 3.02Significant Accounting Policies I& Notes to the Accounts
(Amount Rs. in Lacs)
46
ANNUAL REPORT 2007-2008
CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2008
Particulars Current Year Previous Year
Cash Flow from Operating Activities Net Profit Before Tax 17,675.43 7,486.03Adjustment for: Depreciation 10,382.84 9,753.73Interest Paid 5,856.87 6,337.93(Profit)/Loss on Fixed Assets Scrapped / Sold (2,953.95) (310.91)(Profit)/Loss on Sale of Investment (325.80) (89.74) Dividend Income (406.91) (624.38)Operating Profit before Working Capital Changes 30,228.48 22,552.66Adjustment for: Trade and Other Receivables (13,351.36) (11,639.10)Trade Payables 11,613.75 4,478.23Cash Generated from Operations 28,490.87 15,391.79Direct Taxes Paid (921.00) (323.50)
Total Cash Generated from Operating Activities 27,569.87 15,068.29 Cash Generated from Prior Period Items (119.54) (42.74)Net Cash from Operating Activities 27,450.33 15,025.54Cash flow from Investing ActivitiesIncrease in Fixed Assets including Capital Work in Progress (25,005.12) (28,631.58)Sale of Fixed Assets 6,184.70 25,312.03 Proceed from sale of Non Trade Investments 325.80 89.74(Purchase)/sale of Investment 8,277.41 (306.95)Dividend Income 406.91 624.38Net Cash from Investing Activities (9,810.30) (2,912.38)Cash Flow from Financing ActivitiesProceeds from issue of Share Capital from conversion of Bonds and warrants 22,048.69 -Proceeds from Long Term Borrowing (36,591.35) 2,763.52Interest Paid (5,856.87) (6,337.93)Dividends Paid including tax thereon (3,476.63) (2,578.92)Net Cash from Financing Activities (23,876.16) (6,153.33)
Net Increase in Cash and Cash Equivalents (6,236.13) 5,959.84Cash and Cash Equivalents as at beginning of the year 11,966.33 6,006.50Cash and Cash Equivalents as at end of the year 5,730.18 11,966.33
Cash and Cash Equivalents comprise of: Cash and Bank Balances 5,642.17 11,814.87Accrued Interest on fixed deposit with banks 88.01 151.46
(Amount Rs. in Lacs)
47
As per our report of even date
For Contractor, Nayak & Kishandwala
Chartered Accountants
Himanshu Kishanadwala
Partner
M No. 37391
Mumbai - 14th May 2008
Dated:
Mumbai
14th May 2008
For and on behalf of the Board
H.K. Mittal
Executive Chairman
A.J. Agarwal
Managing Director
Anil Khanna
Director
M. G. Ramkrishna
Director
ANNUAL REPORT 2007-2008
SCHEDULE FORMING PART OF ANNUAL ACCOUNTS
Particulars Current Year Previous Year
SCHEDULE ‘A’Share Capital Authorised 35,00,00,000 Equity Shares of Re 1/- each. 3,500.00 3,500.00200,00,000 Preference Shares of Rs. 100 each. 20,000.00 20,000.00
23,500.00 23,500.00Issued Capital 23,48,95,387 (19,40,42,500) Equity of Re. 1/- each fully paid up 2,348.95 1,940.43NIL (40,00,000)-8% Cumulative Redeemable Preference Shares of Rs.100/- each fully paid up - 4,000.00
2,348.95 5,940.43Subscribed and Paid Up CapitalEquity23,48,95,387(18,92,42,500) Equity Shares of Re. 1/- each fully paid up. 2,348.95 1,892.43(a) 11,83,45,500 shares of Re 1/- each were allotted as bonus Shares by capitilisation of Securities Premium Account. (b) 32,00,000 shares of Re. 1/- each are issued on preferential basis on conversion of warrants during the year.
(c) 37, 652,887 Shares of Re. 1/- each are issued on conversion of FCCBs during the Year.
PreferenceNIL (40,00,000)-8% Cumulative Redeemable Preference Shares of Rs. 100/- each fully paid up. (redeemed during the year on maturity) - 4,000.00
2,348.95 5,892.43SCHEDULE ‘A1’Warrants against Share Capital NIL (32,00,000) Warrants (Each Warrant carry option/ entitlement to subscribe to 1 number of equity share of Re. 1/- each on or before July 31, 2007 at a price not less then Rs. 137.50 per share, (converted during the Year). - 440.00
NIL (48,00,000) bonus equity shares of Re. 1/- each relating to bonus entitlement to the above warrant holders was kept in abeyance till the time the warrant holder exercises the option to subscribe to the above (allotted during the year) - 48.002,85,00,000 Warrants (Each Warrant carry option / entitlement to subscribe to 1 number of equity sahre of Re. 1/- each on or before April 24,2009 at a price not less than Rs. 58.50 per share.) 1,667.25 -
1,667.25 488.00SCHEDULE ‘B’Reserves and Surplus
Capital ReserveAs per last Balance Sheet 26.24 26.24
26.24 26.24Capital Redemption ReserveAs per last Balance Sheet - -Add: Transferred From General Reserve on redemption of Preference Shares 4,000.00 -
4,000.00 -Securities Premium Account As per last Balance Sheet 7,532.61 7,532.61Add: Received during the year on conversion of warrants and FCCBs 24,439.88 -Less: Share Issue Expenses (26.97) -
31,945.52 7,532.61
(Amount Rs. in Lacs)
48
ANNUAL REPORT 2007-2008
SCHEDULE FORMING PART OF ANNUAL ACCOUNTS
Particulars Current Year Previous Year
Tonnage Tax ReserveAs per last Balance Sheet 1,600.00 6,924.83Add: Transferred from Profit and Loss Account 3,300.00 1,600.00Less: Transferred to Utilised Account (1,600.00) (6,924.83)
3,300.00 1,600.00Tonnage Tax Reserve (Utilised) As per last Balance Sheet 6,924.83 -Add: Trasnfer from Tonnage Tax Reserve 1,600.00 6,924.83
8,524.83 6,924.83Debenture Redemption Reserve As per last Balance Sheet 8,000.00 13,980.00Transferred to General Reserve on redemption of debentures (1,800.00) (5,980.00)
6,200.00 8,000.00General Reserve As per last Balance Sheet 10,902.83 4,172.83Add Transferred from Debentures Redemption Reserve 1,800.00 5,980.00Add: Transferred From Profit and Loss Account 1,770.00 750.00 Less: Transferred to Capital Redemption Reserve on redemption ofPreference Shares (4,000.00) -
10,472.83 10,902.83
Surplus in Profit and Loss Account 23,394.22 15,305.96 87,863.64 50,292.47
SCHEDULE ‘C’ Secured Loans (a) Debentures (1) NIL (12,00,000), 12.50% Non Convertible Secured Debentures Series I of Rs. NIL (Rs. 25/-) each, redeemable at the end of 3rd, 4th, 5th and 6th year from the date of allotment i.e. January 30, 2002 in equal installments towards face value - 300.00
(2) 30,00,000 - 10.00% Non Convertible Secured Debentures Series IV of Rs. 10/- (Rs. 30/-) each, redeemable in 10 half yearly instalments of Rs. 300 lacs each commencing from six months after the date of allotment i.e. July 29, 2003 towards face value 300.00 900.00
(3) 30,00,000 - 10.00% Non Convertible Secured Debentures Series V of Rs. 20/-, (Rs. 40/-) each redeemable in 10 half yearly instalments of Rs. 300 lacs each commencing from six months after the date of allotment i.e. October 10,2003 towards face value 600.00 1,200.00
(4) 1,600 - 7.50% Non Convertible Secured Debentures of Rs. 6,87,500/-(Rs. 8,12,500/-) each, redeemable in 12 half yearly instalments of 6.25%and last two of 12.50% of face value each commencing from six monthsafter one year from the date of allotment i.e. June 30, 2004 toward face value Series VII A. There is a put/call option at the end of 4th Year & 6th year from the date of allotment. 11,000.00 13,000.00
(5) 50 - 7.50% Non Convertible Secured Debentures Series VII B of Rs. 7,50,000 (8,75,000/-) each, redeemable in 12 half yearly instalments of 6.25% and last two of 12.50% of face value each commencing from six months after one year from the date of allotment i.e. February 10,2005toward face value. There is a put/call option at the end of 4th Year & 6thyear from the date of allotment. 375.00 437.50
(Amount Rs. in Lacs)
49ANNUAL REPORT
2007-2008
SCHEDULE FORMING PART OF ANNUAL ACCOUNTS
Particulars Current Year Previous Year
(b) Foreign Currency Loans from Banks
(1) External Commercial Borrowings 10,829.70 13,568.70
(2) Foreign Currency Non-Resident (B) Loan Scheme 17,982.12 22,585.32
(c) Term Loans from Scheduled Banks 50,207.00 55,541.00
91,293.82 107,532.52
Note 1) Debentures referred in (a) above are secured by first mortgage on specified vessels of the company on pari-passu basis with other lendersand first charge on the specified immovable properties together with structure thereon.
2) Debentures refered in a (2) & a (3) above are further secured by way of Personal Guarantee from Mr. H.K. Mittal Executive Chairman and Mr. Atul J Agarwal Mg. Director
3) Foreign Currency Loan refered in (b) above are secured by 1st Charge on specified vessels of the company on pari-passu basis with other lenders.
4) Term Loan refered in (c) above are secured by 1st charge on specified vessels, on pari passu basis with other lenders.
5) Working capital facilities from Schedule Banks are secured by second charge on specified vessels and 1st charge on all receivables and other current assets of the company on pari-passu basis.
SCHEDULE ‘D’ Unsecured Loans 1) 850 (6,000) 1.50% Foreign Currency Convertible Bonds of USD 10,000each 3,409.35 26,262.00During the year, pursuant to notices received from Bondholders 5150FCCBs of aggregate amount of USD 51,500,000 were converted into 37,652,887 equity shares of Re. 1/- each at a predetermined price of Re. 59.812 per share at a fixed exchange rate of Rs. 43.73 per USD
The balance bonds are convertible at any time up to the close of Business on 20 April 2010 by holders into newly issued ordinary shares of Re. 1 each at agreed conversion price. The Bonds may be redeemed in whole atthe option of the Company at any time on or after 15 May 2008 and or prior to 20 April 2010 at the accreted principal amount together with accrued interest. 2) Other Loans 2,500.00 -(Amount repayable within one year Rs. 2500.00 Lacs)
5,909.35 26,262.00
(Amount Rs. in Lacs)
50
ANNUAL REPORT 2007-2008
SC
HED
ULE
FO
RM
ING
PA
RT O
F A
NN
UA
L A
CC
OU
NTS
Sch
ed
ule
E
Fix
ed
Ass
ets
Off
ice P
rem
ises
(Refe
r N
ote
1, 2
)
Vess
els
(Refe
r N
ote
3)
Off
ice a
nd
Com
pu
ter
Eq
uip
men
t
Furn
itu
re a
nd
Fix
ture
s
Veh
icle
s
Tota
l
Pre
viou
s Ye
ar
Cap
ital W
ork
In
Pro
gre
ss
344.2
8
147,402.7
5
166.8
2
281.
96
139.3
1
148,3
35.1
2
147,831
.06
-
14,8
85.7
8
12.6
0
35.2
6
61.0
1
14,9
94.6
5
28,6
31.5
8
-
5,13
3.9
2 - -
7.98
5,14
1.90
28,12
7.54
344.2
8
157,1
54.6
1
179.4
2
317.22
192.3
4
158,18
7.86
148,3
35.1
2
76.9
0
19,7
06.5
3
47.7
4
33.0
4
56.3
7
19,9
20.5
8
13,2
93.2
8
-
1,907.05 - -
4.1
0
1,911
.15
3,12
6.4
2
13.3
7
10,2
53.5
1
27.65
57.78
30.5
3
10,3
82.8
4
9,7
53.7
3
90.2
7
28,0
52.9
9
75.3
9
90.8
2
82.8
0
28,3
92.2
7
19,9
20.5
8
254.0
1
129,10
1.62
104.0
3
226.4
0
109.5
4
129,7
95.5
9
128,4
14.5
4
10,0
10.4
7
267.37
127,696.2
2
119.0
7
248.9
2
82.9
5
128,4
14.5
3
134,5
37.79
Co
stD
ep
recia
tio
nN
et
Blo
ck
Ne
t B
lock
Pa
rtic
ula
rsA
s a
t
Ap
ril
1, 2
00
7
Ad
dit
ion
for
the
ye
ar
De
du
cti
on
for
the
ye
ar
As
at
Ma
rch
31, 2
00
8
Up
to
Ma
rch
31, 2
00
7
Ad
just
me
nt
in r
esp
ect
of
Ass
ets
So
ld /
Dis
ca
rd
Fo
r th
e Y
ea
rU
p t
o
Ma
rch
31,2
00
8
As
at
Ma
rch
31, 2
00
8
As
at
Ma
rch
31, 2
00
7
(Am
ou
nt
Rs.
in
Lacs
)
Note
1.In
clu
des
cost
of 1
0 s
hare
s of R
s. 5
0/-
each
fully
paid
in M
itta
l Tow
er Pre
mis
es
Co-o
p. S
oci
ety
Ltd
.
2.
The o
ffic
e p
rem
ises
(Gro
ss V
alu
e R
s. 3
43.17La
cs a
nd
Acc
um
ula
ted
Dep
reci
ati
on
Rs.
90 L
acs
) is
giv
en
on
op
era
tin
g Lease
.
3.
Incl
ud
es
exc
han
ge fl
uct
uati
on
on
fore
ign
cu
rren
cy lo
an
s on
vess
els
acq
uir
ed
ou
tsid
e In
dia
Rs.
NIL
(Rs.
1379
.87 L
acs
)
4.
Cap
ital w
ork
in P
rog
ress
Incl
ud
es
Rs.
873
. 35 la
cs tow
ard
s ad
van
ces
for Cap
ital G
ood
s.
51 ANNUAL REPORT 2007-2008
SCHEDULE FORMING PART OF ANNUAL ACCOUNTS
Schedule F Investments
Items Current Year Previous Year Nos Cost Nos. Cost
Non-Trade
Long Term
In shares of Subsidiaries (Unquoted) Mercator Oil and Gas Ltd 150,000 15.00 107,140 10.71Mercator International Pte Ltd. 100,000 28.80 100,000 28.80Mercator Offshore Ltd. 5,226,070 1,546.13 5,226,070 1,546.13Note: The Company has given an undertaking to the lenders of one of its fellow subsidiary ie Mercator Lines Singapore Ltd. (MLS) that the company will continue to hold majority shares of MLS (directly or indirectly) till the term of the respectivefacilities to MLS.
1,589.93 1,585.64
In Units of Mutual Funds (Quoted) Reliance Equity Fund - - 1,106,501 110.65Prudential ICICI Fusion Fund - - 5,000,000 500.00Franklin India Flexi Cap Fund - - 371,034 57.44HDFC Equity Fund - - 161,279 57.06Prudential ICICI Discovery Fund - - 287,550 55.19 Prudential ICICI Emerging Staf Fund - - 488,059 106.36Reliance Equity Opportunity Fund - - 348,760 60.59Standard Chartered Ent Equity Fund - - 1,000,000 100.00 Sundaram BNP Paribas Select Midcap-Fund - - 307,499 60.80Lotus FMP - Series I (Quoted) 3,000,000 300.00 3,000,000 300.00DBS Chola Hedged Equity Fund - - 10,000,000 100.00
300.00 1,508.10
In others (Unquoted)Vijaya Bank Bonds - - 1,000,000 1,000.00 Indian Real Opportunity Venture Capital Fund 12,500 125.00 - -
125.00 1,000.00(Repurchase Value of quoted investments on 31.3.08 is Rs. 458.51 Lacs (Previous Year Rs. 1300 lac)
2,014.93 4,093.74
Current Investments (at lower of cost and Market value In units of Mutual Funds
Quantum Liquid Fund - - 5,151,487 515.15 Lotus India Liquid Plus Fund - Institutional Weekly Dividend - - 5,001,224 500.12J P Morgan International Investment Fund - - 11,624,413 5,183.33 Sub Total - - - 6,198.60 (Repurchase Value of quoted investments on 31.3.08 is NIL (Previous Year Rs6198.59 Lacs)
Grand Total 2,014.93 10,292.34
(Amount Rs. in Lacs)
52
ANNUAL REPORT 2007-2008
SCHEDULE FORMING PART OF ANNUAL ACCOUNTS
Particulars Current Year Previous Year
SCHEDULE ‘G’Current AssetsSundry Debtors(Unsecured, Considered Good) Debts Outstanding over Six Months 1,337.32 1,517.35 Other Debts 9,040.64 11,812.26
10,337.96 13,329.61
Cash and Bank Balances Balances with Scheduled BanksIn fixed Deposit Accounts 2,088.98 6,301.65In current Accounts 3,402.11 3,168.49In Exchange Earners Foreign Currency Account 8.57 160.76In Dividend Accounts 39.40 39.40Bank Balance / Fixed Deposits with Foreign Banks (Refer Note B (9) of Schedule I) 93.54 2,142.03 Cash hand 9.57 2.54
5,642.17 11,814.87
Loans and Advances (Unsecured Considered Good) Loan to Subsidiary Companies 43,094.24 29,831.28Advances recoverable in cash or in kindor for value to be received 5,388.76 3,250.00 Deposits with Government and semi Government Bodies 16.78 15.78Inter Coroporate Deposits 689.43 413.03Other Deposits 959.79 796.97Accrued Interest on fixed deposit with banks 88.01 151.46Advance payment of tax (Net of provisions) 816.92 1,109.17
51,053.93 35,567.69
SCHEDULE ‘H’ Current Liabilities Sundry Creditors For Services and expenses
Due to Micro, Small and Medium Enterprises (Previous Year-Due to Small Scale Undertaking) (Refer Note B7 of Schedule I) - -Others 3,379.48 3,956.84(Includes Rs. 664.78 Lacs (Rs. NIL) to subsidiary companies) Acceptances 7,580.79 -Advances from Customers 4,206.14 -Deposits 85.26 127.75Unclaimed Dividend* 39.40 39.40Other liabilities 3,506.03 3,125.81*(There is no amount due and outstanding to be credited to InvestorEducation and Protection Fund) 18,797.11 7,249.80
Provisions For Proposed Dividend 2,583.85 1,892.43For Tax on Dividend 439.13 321.62For Employees Retirement Benefits 48.27 32.54
3,071.25 2,246.59
(Amount Rs. in Lacs)
53 ANNUAL REPORT 2007-2008
SCHEDULE FORMING PART OF ANNUAL ACCOUNTS
(Amount Rs. in Lacs)
Particulars Current Year Previous Year
SCHEDULE ‘J’Shipping IncomeFreight 47,543.59 50,311.04Charter Hire 26,998.65 25,111.78Dispatch and Demurrage 3,572.02 2,903.43
78,114.26 78,326.25
SCHEDULE ‘K’Other Income Cargo Handling Services 2,197.80 1,477.40Dividend from Investments 406.91 624.38Rent Received 113.87 -Exchange Fluctuations Net 2,194.76 (732.34) Miscellaneous Income 0.57 18.75
4,913.91 1,388.19 SCHEDULE ‘L’Ship Operating Expenses Bunker Consumed 14,400.57 9,203.51Vessel/Equipment Hire Charges 15,702.48 26,696.59Technical, Service expenses 4,089.44 3,622.21Agency, Professional and Service Charges 620.65 467.43Crew Expenses 535.81 596.27Communication Expenses 135.62 157.43Miscellaneous Expenses 216.26 208.62Commission 1,566.54 910.68Insurance 827.86 1,096.25Port Expenses 3,694.05 2,850.88Repairs and Maintenance 6,927.26 8,382.37Stevedoring, Transport and Freight 505.41 316.96
49,221.93 54,509.20 SCHEDULE ‘M’Administrative and Other Expenses Advertisement 8.89 8.16Auditors Remuneration 17.00 13.65Conveyance, Car Hire and Traveling 145.32 117.75Communication expenses 31.59 29.07Donation 11.26 35.61Directors’ Remuneration 1,615.79 805.56Miscellaneous expenses 273.19 268.52Insurance 8.77 4.50Legal, Professional and Consultancy expenses 109.23 101.57Rents, Repairs and Maintenance 427.16 191.20 Salary, Wages, Bonus etc. 421.18 364.67Staff Welfare, Training etc. 22.17 6.14Contribution to Provident and other funds 24.75 18.68Bad Debts and other amounts written off (Net) 54.55 63.11
3,170.85 2,028.19 SCHEDULE ‘N’Finance Charge Interest on Debentures 1,108.40 1,927.28Fixed Loans 6,518.76 5,100.18
7,627.16 7,027.46Less : Interest received (TDS Rs. 60.85 Lacs Previous Year 95.12 Lacs) (1,504.06) (729.54)Less: (Profit)/Loss on Derivative Transactions (266.23) 40.02
5,856.87 6,337.94
54
ANNUAL REPORT 2007-2008
SCHEDULE 'I’
A.SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Accounting
The financial statements are prepared under the historical
cost convention, on the accrual basis of accounting and in
conformity with Generally Accepted Accounting Principles in
India, Accounting Standards as notified by the Companies
(Accounting Standards) Rules, 2006 and the other relevant
provisions of the Companies Act, 1956.
2. Use of Estimates
The preparation of financial statements in conformity with
Generally Accepted Accounting Principles requires the
management to make estimates and assumptions that affect
the reported balances of assets and liabilities as of the date of
the financial statements and reported amounts of income
and expenses during the period. The management believes
that the estimates used in the preparation of financial
statements are prudent and reasonable.
3. Fixed Assets
a) Fixed assets are stated at cost less accumulated
depreciation.
b) Cost includes cost of acquisition or construction
including attributable interest, duties and other
incidental expenses related to the acquisition of the
asset.
c) Operating costs and other incidental costs including
initial stores and spares of newly acquired vessels till the
port of first loading are included in the cost of the
respective vessels.
d) Exchange differences arising on repayment of foreign
currency loans and year end translation of foreign
currency liabilities relating to acquisition of assets from a
country outside India including substitution of one
foreign currency loan by another are from this year
charged to the Profit and Loss Account following
notification of Accounting Standard 11 “Effects of
changes in Foreign Exchange Rates” during the year as
against the earlier policy of adjusting the same to the
carrying cost of the respective assets.
e) Individual fixed assets costing up to Rs. 25,000 are fully
written off under the head fixed assets written off.
4. Depreciation
a) Depreciation on all the vessels is computed on Straight
Line Method so as to write off the original cost as reduced
by the expected/estimated scrap value over the balance
useful life of the vessels. If however, the rates as
prescribed under the Schedule XIV of the Companies Act,
1956, are higher; the said higher rate is applied, which
ranges from 5% to 12% of the original cost of the vessel.
b) Depreciation on all assets other than vessels is computed
on the Written Down Value method in the manner and at
the rates prescribed under schedule XIV of the
Companies Act, 1956.
c) On additions made to the existing vessels depreciation is
provided for the full year over the remaining useful life of
the ships.
d) Depreciation on furniture, fixtures and electrical fittings
installed at office premises taken on lease is provided
over the initial period of lease.
5. Capital Work in Progress
All expenditure, including advances given to contractors and
borrowing cost incurred during the vessel acquisition period,
are accumulated and shown under this head till the vessel is
put to commercial use.
6. Retirement and Disposal of Ships
a) Profits on sale of vessels are accounted for on completion
of sale thereof.
b) Assets which are retired from active use and are held for
disposal are stated at the lower of their net book value or
net realisable value.
7. Inventories
Bunker and Lubes on vessels are valued at lower of cost and
net realisable value ascertained on first in first out basis.
8. Investments
a) Investments are classified into Long Term and Current
investments.
b) Long Term Investments are stated at cost of acquisition
and related expenses. Provision for diminution, if any, in
the value of such investments is made to recognise a
decline, other than of a temporary nature.
55 ANNUAL REPORT 2007-2008
c) Current Investments are stated at cost of acquisition
including incidental / related expenses or at fair value as
at 31st March 2008, whichever is less and the resultant
decline, if any, is charged to revenue.
d) Investment in shares of subsidiaries outside India is
stated at cost by converting at the rate of exchange at
the time of their acquisition.
9. Incomplete Voyages
Incomplete voyages represent freight received and direct
operating expenses on voyages which are not complete as at
the Balance sheet date.
10. Borrowing Costs
Borrowing costs incurred for the year for acquisition of vessels
are capitalized till first loading of cargo, only if the time gap
between date of Memorandum of Agreement and “Date when
vessel is ready for use” is more than three months.
11. Revenue Recognition
a) Income on account of freight earnings is recognised in all
cases where loading of the cargo is completed before the
close of the year. All corresponding direct expenses are
also provided.
b) Where loading of the cargo is not completed before the
close of the year, revenue is not recognised and the
corresponding expenses are carried forward to the next
accounting year.
c) Income from charter hire and demurrage are recognised
on accrual basis.
d) Income from services is accounted on accrual basis as per
the terms of the relevant agreement.
e) Dividend on investments is recognised when the right to
receive the same is established.
12. Foreign Exchange Transactions
a) Monetary Current assets and liabilities denominated in
foreign currency outstanding at the end of the year are
valued at the rates prevalent on that date.
b) Differences in translation of monetary assets and
liabilities and realised gains and losses on foreign
currency transactions are recognised in the Profit and
Loss Account.
c) Contracts in the nature of foreign currency swaps, are
converted at the exchange rate prevailing as on 31st
March 2008 and the profits or losses thereon are charged
to the Profit and Loss account.
d) Differences on account of swap contracts for interest
payable in foreign currency are accounted on accrual
basis and the profit or loss thereon are charged to the
Profit and Loss account.
13. Employees Benefits
a) Short – term employee benefits
All employee benefits payable wholly within twelve
months of rendering the service are classified as short
term employee benefits. Benefits such as salaries, wages,
performance incentives, etc. are recognised at actual
amounts due in the period in which the employee
renders the related service.
b) Post – employment benefits
i. Defined Contribution Plans
Payments made to defined contribution plans such
as Provident Fund are charged as an expense as they
fall due.
ii. Defined Benefit Plans
The cost of providing benefit i.e. gratuity is
determined using the Projected Unit Credit Method,
with actuarial valuation carried out as at the balance
sheet date. Actuarial gains and losses are recognised
immediately in the Profit and Loss Account.
c) Other Long – term employee benefits
Other Long–term employee benefit viz. leave
encashment is recognised as an expense in the profit and
loss account as and when it accrues. The company
determines the liability using the Projected Unit Credit
Method, with actuarial valuation carried out as at the
balance sheet date. The Actuarial gains and losses in
respect of such benefit are charged to the profit and loss
account.
14. Lease Accounting
a) In respect of operating lease agreements entered into by
the Company as a lessee, the lease payments are
recognised as expense in the profit and loss account over
the lease term.
b) In respect of operating lease agreement entered into by
the Company as a lessor, the initial direct costs are
recognised as expenses in the year in which they are
incurred.
56
ANNUAL REPORT 2007-2008
B] NOTES TO THE ACCOUNTS
1. Contingent Liabilities not provided for
15. Earning per share:
The company reports basic and diluted earnings per share
(EPS) in accordance with Accounting Standard – 20. The Basic
EPS has been computed by dividing the income available to
equity shareholders by the weighted average number of
equity shares outstanding during the accounting year. The
diluted EPS have been computed using the weighted average
number of equity shares and dilutive potential equity shares
outstanding at the end of the year.
16. Provision for Taxation :
a) The company has opted for the Tonnage Tax scheme and
provision for tax has been accordingly made under the
relevant provisions of the Income Tax Act, 1961.
b) Tax on incomes on which the Tonnage Tax is not
applicable is provided as per the other provisions of the
Income Tax Act, 1961.
c) Deferred tax resulting from timing differences, if any,
between book and tax profits for income other than that
covered under Tonnage Tax scheme is accounted for
under the liability method, at the current rate of tax, to
the extent that the timing differences are expected to
reverse in future.
17. Impairment of assets
The Company reviews the carrying values of tangible and
intangible assets for any possible impairment at each balance
sheet date. Impairment loss, if any, is recognized in the year in
which impairment takes place.
18. Provisions and Contingent Liabilities:
Provisions are recognized in the accounts in respect of
present probable obligations, the amount of which can be
reliably estimated. Contingent Liabilities are disclosed in
respect of possible obligations that arise from past events but
their existence is confirmed by the occurrence or non
occurrence of one or more uncertain future events not wholly
within the control of the Company.
2. Estimated amount of contracts remaining to be
executed on capital accounts and not provided for (net
of advances) as at March 31, 2008 Rs. 14,928.51 Lacs (Rs.
NIL).
Amount Rs in Lacs
885.00Counter guarantees issued by
the Company for guarantees
obtained from the bank
Name Current Year
1,456.54
Previous Year
604.99Counter guarantees issued by
the company for guarantees
obtained from the bank on
behalf of subsidiaries
458.89
6,725.83Corporate guarantees issued
by the company on behalf of
wholly owned subsidiaries
29,962.17
13,359.50Corporate guarantees issued
by the company on behalf
of business associates
19,400.00
5,500.00Letter of comforts issued by
the company on behalf of
wholly owned / fellow
subsidiaries
45,123.75
TOTAL 96,401.35 27,075.32
57 ANNUAL REPORT 2007-2008
3. Investments purchased and sold during the financial year 2007-08
Name of the Company
Amount Rs in Lacs
Purchase
Amount
Sold AmountSr. No. Quantity (Units)
Birla Sun Life
Mutual Fund
Canbank Mutual Fund
DBS Chola
Mutual Fund
DSP Merrill Lynch
Mutual Fund
Deutche Asset
Management
Mutual Fund
DWS Investments
Franklin Templeton
Investments
Mutual Fund
HDFC Mutual Fund
JM Money Manager
Fund
1.
2.
3.
4.
5.
6.
7.
8.
9.
Nature of Investment
Birla Cash Plus-Instl. Prem
(Daily Dividend)
Birla Sun life Liquid Plus-Instl.Prem
(Daily Dividend)
Canliquid Fund-Institutional
(Daily Dividend)
DBS Chola Short Term Floating Rate Fund
(Equity)
DBS Chola Short Term Floating Rate Fund
(Daily Dividend)
DBS Chola Liquid Inst.Prem
(Daily Dividend)
DSP Merrill Lynch Liquid Institutional Fund
(Daily Dividend)
DWS Insta Cash Plus Institutional Plan
(Daily Dividend)
DWS Money Plus Fund - Institutional Plan
(Daily Dividend)
DWS Alpha Equity Fund- Dividend option
Franklin India FLEXI CAP FUND
Dividend Reinvestment(Equity)
Templeton India Treasury Management
Account Insti Plan
(Daily Dividend)
HDFC Equity Fund-Dividend
JM Money Manager Fund Super Plus Plan
(Daily Dividend)
92,314,916.02
(32,632,110.97)
15,010,463.15
(NIL)
NIL
(26,764,226.35)
1,000,000.00
(NIL)
1,516,501.36
(NIL)
20,154,392.12
(14,177,403.46)
160,885.04
(423,049.78)
25,066,111.43
(NIL)
46,664,160.01
(47,118,377.24)
NIL
(283,929.59)
57,870.66
(247,960.56)
NIL
(391,078.36)
NIL
(141,295.00)
32,719,504.02
(23,639,354.34)
9,249.49
(3,269.58)
1,502.07
(NIL)
NIL
(2,687.37)
100.00
(NIL)
151.90
(NIL)
2,021.83
(1,422.22)
1,609.17
(4,231.34)
2,511.50
(NIL)
4,670.24
(4,720.46)
NIL
(50.00)
9.28
(42.56)
NIL
(3,911.76)
NIL
(50.00)
3,272.81
(2,363.94)
9,249.49
(3,269.57)
1,502.07
(NIL)
NIL
(2,687.40)
123.80
(NIL)
151.90
(NIL)
2,021.83
(1,422.23)
1,609.17
(4,231.34)
2,511.50
(NIL)
4,669.14
(4,720.46)
NIL
(52.21)
10.55
(50.13)
NIL
(3,911.76)
NIL
(60.23)
3,272.99
(2,363.09)
58
ANNUAL REPORT 2007-2008
Name of the Company
Amount Rs in Lacs
Purchase
Amount
Sold AmountSr. No. Quantity (Units)
Kotak Mutual Fund
Lotus India Mutual
Fund
LIC Mutual Fund
Prudential ICICI
Mutual Fund
Quantum Mutual
Fund
Reliance Mutual Fund
10.
11.
12.
13.
14.
15.
Nature of Investment
Kotak Liquid Fund Inst. Premium
(Daily Dividend)
Lotus India Short Term Plan -Institutional
(Daily Dividend)
Lotus India Liquid Fund Institutional Plus
(Daily Dividend)
Lotus India Liquid Plus Fund-Inst. Weekly
Dividend
LIC MF Liquid Fund Dividend Plan
LIC MF FMP Series 7 - 3 Months Dividend
Plan
LIC MF Floating rate Fund
ICICI Prudential Emerging STAR Fund-
Dividend(Equity)
ICICI Prudential Discovery Fund-Dividend
(Equity)
ICICI Prudential Institutional Liquid Plan
Super Institutional DD
Quantum Mutual Fund Daily Dividend
Reliance Liquid Fund-Daily Dividend
Reinvestment
RLF Treasury Plan - Institutional Option
(Daily Dividend)
Reliance Equity Fund-Dividend Plan
4,114,788.25
(21,431,669.34)
5,194,862.39
(NIL)
15,205,266.53
(17,092,415.34)
NIL
(10,121,144.45)
NIL
(42,843,378.55)
NIL
(20,301,372.10)
NIL
(39,539.00)
32,183.22
(254,453.00)
33,730.21
(259,740.00)
9,169,764.17
(20,797,215.11)
11,000,000.00
(NIL)
1,641,334.09
(NIL)
NIL
(7,941,957.52)
NIL
(286,682.00)
503.16
(2,512.75)
519.56
(NIL)
1,521.02
(1,709.24)
NIL
(1,012.12)
NIL
(4,702.99)
NIL
(2,030.14)
NIL
(4.00)
7.09
(50.90)
5.75
(50.00)
916.98
(207.97)
1,123.63
(NIL)
250.91
(NIL)
NIL
(1,213.73)
NIL
(50.00)
503.16
(2,515.61)
522.40
(NIL)
1,520.71
(1,709.24)
NIL
(1,013.33)
NIL
(4,703.43)
NIL
(2,030.14)
NIL
(3.95)
6.86
(54.58)
5.76
(54.70)
917.02
(2,079.72)
1,123.63
(NIL)
250.91
(NIL)
NIL
(1,213.86)
NIL
(55.29)
59 ANNUAL REPORT 2007-2008
Name of the Company
Amount Rs in Lacs
Purchase
Amount
Sold AmountSr. No. Quantity (Units)
Standard Chartered
Mutual Fund
SBI Mutual Fund
TATA Mutual Fund
ING VYSYA Mutual
Fund
Sundaram BNP
Paribas Mutual
HSBC Mutual Fund
16.
17.
18.
19.
20.
21.
Nature of Investment
Standard Chartered Liquidity Manager
Plus
(Daily Dividend)
SBI Premier Liquid Fund -Institutional-
Daily Dividend
SBI Infrastructure Fund-I-Dividend(Equity)
Magnum Institutional Income-Savings-
Dividend
TATA Liquid Super High Investment Fund
DD
TATA Floter Fund-DD-Reinvestment
TATA Tresury Manager Fund-SHIP-Gr.
UTI Liquid Cash Plan Institutional Daily
Income
UTI Money Market Fund
(Daily Dividend)
UTI Liquid Plus Institutional Daily Income
Optimix Active Debt Multi- Manager FOF
Scheme-Dividend
Sundaram BNP Paribas Select Midcap-
Dividend
HSBC Cash Fund -Institutional Plan
(Daily Dividend)
NIL
(217,276.74)
8,100,367.43
(NIL)
5,000,000.00
(NIL)
NIL
(24,978,990.42)
194,307.30
(36,027.82)
25,994,949.56
(NIL)
47,708.91
(NIL)
316,173.50
(770,313.03)
NIL
(4,899,730.93)
102,885.08
(NIL)
NIL
(2,000,000.00)
NIL
(307,498.00)
NIL
(19,877,332.66)
NIL
(2,014.23)
812.67
(NIL)
500.00
(NIL)
NIL
(2,506.02)
2,165.59
(401.54)
2,608.75
(NIL)
500.08
(NIL)
3,223.22
(7,850.97)
NIL
(854.06)
1,028.85
(NIL)
NIL
(200.00)
NIL
(68.16)
NIL
(2,012.90)
NIL
(2,014.23)
812.67
(NIL)
555.00
(NIL)
NIL
(2,506.02)
2,165.59
(401.54)
2,608.75
(NIL)
500.61
(NIL)
3,223.22
(7,852.22)
NIL
(854.07)
1,028.85
(NIL)
NIL
(202.04)
NIL
(54.98)
NIL
(2,012.90)
60
4. The Company has made preferential issue of equity shares,
and warrants aggregating to Rs. 5,627.25 Lacs (including
premium) (Rs. Nil) The said funds have been utilized for
Working Capital requirements.
5. The company has raised Foreign Currency Loans aggregating
to Nil (Rs. 20,108 Lacs). The same has been utilized for
acquisition of vessels.
6. The Company has established Letters of Credit aggregating to
Rs. 7,580.79 Lacs (Nil). The same has been utilized for
acquisition of vessel.
7. The company has not received any intimation from its
vendors regarding the status under the Micro, Small and
Medium Enterprises Development Act 2006 and hence
disclosures required under this act have not been made.
8. The balance in the Exchange Earners Foreign Currency
account is maintained in US Dollars and shown in equivalent
Indian Rupees. The balance in the said account as at the
Balance Sheet date was USD 0.217 Lacs (Previous Year USD 3.72
Lacs)
9. Details of bank balances with Foreign Banks
Amount Rs in Lacs
Name of the Bank Balance as at March 31, 2008 Maximum Balance during the year
Citibank NA New York NIL
(NIL)
NIL
(53.90)
HSBC Bank Singapore 72.22
(12.24)
6,428.73
(23,042.85)
HSBC Bank Singapore
(Fixed Deposit)
21.32
(2,079.32)
2,086.38
(37,671.60)
Name of the Company
Amount Rs in Lacs
Purchase
Amount
Sold AmountSr. No. Quantity (Units)
Fidelity International
Principle Asset
Management
22.
23.
Nature of Investment
Fidelity India Special Situations Fund-
Dividend
Principal Cash Prem Inst
(Daily Dividend)
NIL
(1,955,990.22)
NIL
(9,233,202.00)
NIL
(200.00)
NIL
(923.38)
NIL
(238.98)
NIL
(923.38)
ANNUAL REPORT 2007-2008
61
10.
11.
12.
13.
Value of material imported by the company on CIF basis during the
accounting year in respect of
Stores & Spares
Capital Goods (including CWIP)
Details of Spare Parts consumed
Raw Material
Imported Spares
Indigenous Spares
Expenditure in foreign currency during the year
On Repairs / Renovations and expenses of Vessels
On Charter Hire
On Vessel Expenses
On Travelling
On Interest
Disclosure as required under clause 32 of the listing agreement
Loans and Advances include amount receivable from
Amount Receivable from Subsidiaries
Mercator International (Pte) Ltd.
Balance outstanding at year end
Maximum amount Outstanding during the year.
Mercator Lines Singapore (Pte) Ltd.
Balance outstanding at year end
Maximum amount Outstanding during the year.
Mercator Oil & Gas Limited
Balance outstanding at year end
Maximum amount Outstanding during the year.
Mercator Offshore Limited
Balance outstanding at year end
Maximum amount Outstanding during the year.
Companies in which some directors were directors
Mercator Mechmarine Limited
Balance outstanding at year end
Maximum amount Outstanding during the year.
Mercator Petroleum Limited
Balance outstanding at year end
Maximum amount Outstanding during the year.
Amount Rs in Lacs
Sr. No. Current Year Previous Year
451.35
21,726.12
451.35
22.88%
1,521.32
77.12%
354.30
14,414.54
21,243.73
25.36
1,996.62
37,990.66
42,330.33
NIL
31,401.51
76.27
76.27
5,291.35
5,514.01
9.00
9.00
0.16
0.16
267.83
28,257.51
267.83
15.07%
1,508.83
84.93%
4,363.77
25,357.04
16,901.45
27.31
2,618.14
267.78
273.64
27,992.16
33,525.45
18.19
18.19
1,553.15
3,042.56
NIL
1.64
NIL
NIL
ANNUAL REPORT 2007-2008
62
ANNUAL REPORT 2007-2008
18. Disclosures in accordance with Revised Accounting Standard (AS) -15 on “Employee Benefits”:
AS – 15 (Revised 2005) on “Employee Benefits” has been adopted by the Company effective from April 1, 2007. The disclosures are as
required by the said AS are given hereunder.
63
14.
15.
16.
17.
a) Remuneration to Directors
Executive Chairman and Managing Directors
Salary
Perquisites
Commission
Non-Executive Directors
Commission
b) Computation of Net Profit in accordance with section 349 of
the Companies Act, 1956 for calculation of commission payable to
Executive Chairman and Managing Director
Profit before Tax
Add: Remuneration paid to Directors
Less: Gain on sale of Fixed Assets
Less: Prior years adjustments
Net Profit on which remuneration is payable
Directors' Commission within overall Remuneration
Executive Directors
Non Executive Directors
Payment to Auditors
Audit Fees
Tax Audit Fees
For Quarterly Limited Review
For certification and other matters
Service Tax
Total
Earnings in foreign currency on account of
Shipping Income
Other Income
Dividend remitted in foreign currency
Amount Rs in Lacs
Sr. No. Current Year Previous Year
96.00
17.29
1,492.50
10.00
17,675.43
1,615.79
(2,953.95)
(162.27)
16,175.00
1,605.79
10.00
10.00
1.50
1.50
4.00
2.10
19.10
25,725.52
1,174.67
NIL
48.00
21.83
728.23
7.50
7,486.03
805.56
(310.91)
NIL
7,980.68
798.06
7.50
8.00
1.25
0.90
3.50
1.66
15.31
20,098.72
73.79
NIL
ANNUAL REPORT 2007-2008
Amount Rs in Lacs
For the year ended March 31, 2008
(ii) Contribution to Employees' Family Pension Fund NIL
(iii) Contribution to Employees' Superannuation Fund
(I) Contribution to Employees' Provident Fund 22.02
NIL
Total 22.02
(B) Defined Benefit Plans:
(I) Changes in the Present Value of Obligation
(II) Expenses recognized in the Profit and Loss Account
For the Year Ended March 31, 2008
Gratuity Leave
Encashment
Total
(a) Current Service Cost 13.67 8.87 22.54
(b) Past Service Cost NIL NIL NIL
(c) Interest cost 1.43 1.17 2.6
(d) Curtailment Cost/ (Credit) NIL NIL NIL
(e) Settlement Cost/ (Credit) NIL NIL NIL
(f) Net Actuarial (Gain)/ Loss 1.78 5.72 7.5
(g) Employees' Contribution NIL NIL NIL
(h) Total Expenses recognized in Profit and Loss A/C 13.32 4.32 17.64
Amount Rs in Lacs
64
(A) Defined Contribution Plans:
The Company has recognized the following amounts in the Profit and Loss Account for the year:
For the year ended March 31, 2008
(a) Present Value of Obligation as at April 1, 2007
(b) Interest cost
(c) Past Service Cost
(d) Current Service Cost
Gratuity Leave Encashment Total
17.91
1.43
NIL
13.67
14.64
1.17
NIL
8.87
32.55
2.6
NIL
22.54
Amount Rs in Lacs
(e) Curtailment Cost / (Credit)
(f) Settlement Cost / (Credit)
(g) Benefits Paid
(h) Actuarial (Gain) / Loss
NIL
NIL
0.33
1.78
NIL
NIL
1.58
5.72
NIL
NIL
1.91
7.5
(I) Present Value of Obligation as at March 31, 2008 30.89 17.38 48.27
ANNUAL REPORT 2007-2008
(iii) Following are the Principal Actuarial Assumptions used as at the balance sheet date:
Particulars Gratuity Leave Encashment
(a) Discount Rate 8% 8%
(b) Salary Escalation Rate – Management Staff 7% 7%
(c) Turnover Rate 3% 3%
(d) Mortality Table LIC (1994-96) Ultimate LIC (1994-96) Ultimate
The estimates of future salary increases considered in actuarial
valuation takes into account inflation, seniority, promotion and
other relevant factors.
(iv) This being the first year of implementation of AS-15
(Revised) previous year figures have not been given.
19. Segment Reporting
As the company principal business activities fall within the single
segment viz Shipping and related activities there is no reportable
segment pursuant to Accounting Standard 17 'Segment
Reporting; issued by Institute of Chartered Accountants of India
are not applicable.
65
20
A)
i)
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
k)
l)
m)
n)
o)
p)
ii)
a)
b)
c)
d)
e)
Related Party Disclosures:
List of Related Parties
Subsidiaries
Mercator International (Pte) Limited (MIPL)
Mercator Oil and Gas Limited
Mercator Offshore Limited
Mercator Lines ( Singapore) Limited (MLS) (subsidiary of MIL)
Oorja Holdings Pte. Limited. (OHL) Singapore - subsidiary of MIL
Mercator Lines (Panama) Inc (subsidiary of MLS)
Varsha Marine Pte Limited (subsidiary of MLS)
Vidya Marine Pte Limited (subsidiary of MLS)
Oorja 1 Pte Limited - (Oorja 1) - Singapore - Subsidiary of OHL
Oorja 2 Pte Limited - (Oorja 2) - Singapore - Subsidiary of OHL
Oorja 3 Pte Limited - (Oorja 3) - Singapore - Subsidiary of OHL
Oorja Mocambique Minas Limitada - (Oorja Mocambique) -
Mocambique- Subsidiary of OHL
Oorja Indo KGS - Indonesia- Subsidiary of Oorja 3
Broadtec Mocambic Minas Limitada - Mozambique -
Subsidiary of Oorja Mozambique
Oorja Indo Petangis Three (Indonesia)
Oorja Indo Petangis Four (Indonesia)
Companies in which the directors/relatives of directors
have substantial interest
MLL Logistics Private Limited
Mercator Petroleum Private. Limited (MPPL) - INDIA
Mercator Mechmarine Limited
Mercator Healthcare Limited
Ankur Fertilizers Private Limited
f)
g)
iii)
a)
b)
c)
d)
e)
f)
iv)
a)
b)
v)
a)
Rishi Holding Private Limited
AHM Investments Private Limited.
Directors of the Company
H.K Mittal
A. J. Agarwal
Manohar Bidaye
Anil Khanna
M. G. Ramakrishna
K. R. Bharat (w.e.f. 30th july,2007)
Key Management Personnel
H. K. Mittal
A. J. Agarwal
Relative of Key Management Personnel
Adip Mittal
ANNUAL REPORT 2007-2008
66
B)
De
tails
of th
e t
ran
sacti
on
wit
h a
bo
ve
pa
rtie
s
Serv
ices
Ren
dere
d
Serv
ices
Rece
ived
Inte
rest
In
com
e
Exp
en
ses
rech
arg
ed
by
oth
er
com
pan
ies
Exp
en
ses
Ch
arg
ed
by
the c
om
pan
y
Fin
an
ce P
rovi
ded
(Incl
ud
ing
Loan
s &
Eq
uity
Con
trib
uti
on
s)Lo
an
sLo
an
s G
iven
du
rin
g t
he Y
ear
Loan
s Rep
aid
Eq
uity
Con
trib
uti
on
s
Gu
ara
nte
es
Com
fort
Lett
er
Gu
ara
nte
es
Giv
en
Ou
tsta
nd
ing
Gu
ara
nte
es
as
on
31/0
3/2
008
Ou
tsta
nd
ing
ba
lan
ce
s a
s o
n 3
1.0
3.2
00
8Lo
an
s, A
dva
nce
s an
d R
ece
ivab
les
Su
nd
ry D
eb
tors
Paya
ble
s Su
nd
ry C
red
itors
Ad
va
nce
s R
ece
ive
d F
or
Ca
pit
al G
oo
ds
De
po
sit
De
po
sit
giv
en
du
rin
g t
he
ye
ar
Ba
lan
ce
as
on
31
/03
/20
08
-
4724.2
4
1090.7
2
1228.7
2
175.6
9
55045.5
443872
.55
4.2
8
451
23.7
523812
.94
30421.
05
43358.2
8
-
664.8
9
34
09
.35 - -
2225.5
5
4548.8
8
361
6.0
4
0.8
5
112.9
0
8239.2
65588.7
3
1607.85
5500.0
073
30.8
173
30.8
1
29887.43
667.72
- - -
-
232.8
4 - -
24.2
3
0.8
2
9.0
0 - - - - -
277
.29
1170
.25 - -
500.0
0505.0
0
1376
.99 - -
19.4
4 -
1.63 - - - -
770.7
5
1256.2
2 - - -15
.00
232.8
4
4724.2
4
1090.7
2
1252.9
6
176.5
1
55054.5
443872
.55
4.2
8
451
23.7
523812
.94
30421.
05
43635.5
7
1170
.25
664.8
9
34
09
.35
500.0
0505.0
0
3602.5
4
4548.8
8
361
6.0
4
20.2
9
112.9
0
8240.9
05588.7
3
1607.85
5500.0
073
30.8
173
30.8
1
30658.1
8
1923.9
4 - - -15
.00
Na
me
of
the
Tra
nsa
cti
on
(Am
ou
nt
Rs.
in
Lacs
)
Su
bsi
dia
ry C
om
pa
nie
sC
om
pa
nie
s in
wh
ich
the
dir
ecto
rs /
re
lati
ve
s
of
dir
ecto
rs h
ave
su
bst
an
tia
l
inte
rest
Tota
l
Cu
rre
nt
Yr
Pre
vio
us
Yr
Cu
rre
nt
Yr
Pre
vio
us
Yr
Cu
rre
nt
Yr
Pre
vio
us
Yr
ANNUAL REPORT 2007-2008
67
C)
De
tails
in r
esp
ect
of m
ate
ria
l tra
nsa
cti
on
s w
ith
pa
rtie
s re
ferr
ed
to
in it
em
A o
f th
e a
bo
ve
Se
rvic
es
Re
nd
ere
dM
erc
ato
r Li
nes
(Sin
gap
ore
) Li
mit
ed
MLL
Log
isti
cs P
riva
te L
imit
ed
Tota
l
Se
rvic
es
Re
ce
ive
dM
erc
ato
r Li
nes
(Sin
gap
ore
) Li
mit
ed
Merc
ato
r In
tern
ati
on
al Pte
. Lim
ited
Tota
l
Inte
rest
In
co
me
Merc
ato
r Li
nes
(Sin
gap
ore
) Li
mit
ed
Merc
ato
r In
tern
ati
on
al Pte
. Lim
ited
Tota
l
Exp
en
ses
rech
arg
ed
by o
the
r co
mp
an
ies
Merc
ato
r Li
nes
(Sin
gap
ore
) Li
mit
ed
An
kur
Fert
ilize
rs P
riva
te L
imit
ed
Merc
ato
r In
tern
ati
on
al Pte
. Lim
ited
Tota
l
Exp
en
ses
Ch
arg
ed
by t
he
co
mp
an
yM
erc
ato
r O
ffsh
ore
Lim
ited
MLL
Log
isti
cs P
riva
te L
imit
ed
Merc
ato
r Petr
ole
um
Pri
vate
. Lim
ited
To
tal
Fin
an
ce
Pro
vid
ed
(In
clu
din
g L
oa
ns
& E
qu
ity C
on
rib
uti
on
s)
Loa
ns
Loa
ns
Giv
en
du
rin
g t
he
Ye
ar
Merc
ato
r In
tern
ati
on
al Pte
. Lim
ited
Merc
ato
r Li
nes
(Sin
gap
ore
) Li
mit
ed
Merc
ato
r O
ffsh
ore
Lim
ited
Merc
ato
r M
ech
mari
ne L
imit
ed
Tota
l
--
--
--
1510
.60
3213
.64
472
4.2
4
138.6
6952.0
510
90
.72
1227.41
122
7.41
175.7
0
175
.70
51202.3
0
512
02
.30
2225.5
5
22
25
.55
4548.8
8 -
45
48
.88
361
6.0
4 -3
616
.04
0.8
5
0.8
5
112.9
0
112
.90
6338.1
216
09.3
0
79
47.
42
232.8
42
32
.84 - - - - - -
24.2
4
24
.24
0.6
60.1
60
.82
9.0
09
.00
1376
.99
1376
.99 - - - - - -
17.6
4
17.6
4 - -
1.63
1.6
3
23
2.8
4
472
4.2
4
109
0.7
2
1251.6
4
176
.51
512
11.3
0
36
02
.54
45
48
.88
3616
.04
18.4
9
112
.90
79
49
.06
Na
me
of
the
Tra
nsa
cti
on
(Am
ou
nt
Rs.
in
Lacs
)
Su
bsi
dia
ry C
om
pa
nie
sC
om
pa
nie
s in
wh
ich
the
dir
ecto
rs /
re
lati
ve
s
of
dir
ecto
rs h
ave
su
bst
an
tia
l
inte
rest
Tota
l
Cu
rre
nt
Yr
Pre
vio
us
Yr
Cu
rre
nt
Yr
Pre
vio
us
Yr
Cu
rre
nt
Yr
Pre
vio
us
Yr
ANNUAL REPORT 2007-2008
68
Merc
ato
r O
ffsh
ore
Lim
ited
Merc
ato
r Li
nes
(Sin
gap
ore
) Li
mit
ed
5291.
35
279
92.1
5
Ad
va
nce
sM
LL L
og
isti
cs P
riva
te L
imit
ed
Tota
l4
30
17.9
72
79
92
.15
268.1
2
26
8.1
5
770.7
5
770
.75
43
28
.10
28
76
2.9
0
Na
me
of
the
Tra
nsa
cti
on
(Am
ou
nt
Rs.
in
Lacs
)
Su
bsi
dia
ry C
om
pa
nie
sC
om
pa
nie
s in
wh
ich
the
dir
ecto
rs /
re
lati
ve
s
of
dir
ecto
rs h
ave
su
bst
an
tia
l
inte
rest
Tota
l
Cu
rre
nt
Yr
Pre
vio
us
Yr
Cu
rre
nt
Yr
Pre
vio
us
Yr
Cu
rre
nt
Yr
Pre
vio
us
Yr
Loa
ns
Re
pa
idM
erc
ato
r In
tern
ati
on
al Pte
. Lim
ited
Merc
ato
r Li
nes
(Sin
gap
ore
) Li
mit
ed
Tota
l
Eq
uit
y C
on
trib
uti
on
sM
erc
ato
r O
il an
d G
as
Lim
ited
Merc
ato
r O
ffsh
ore
Lim
ited
Tota
l
Gu
ara
nte
es
Co
mfo
rt L
ett
er
Gu
ara
nte
es
Giv
en
Merc
ato
r O
ffsh
ore
Lim
ited
Merc
ato
r O
il an
d G
as
Lim
ited
Tota
l
Ou
tsta
nd
ing
Gu
ara
nte
es
as
on
31
/03
/20
08
Merc
ato
r O
il an
d G
as
Lim
ited
Merc
ato
r O
ffsh
ore
Lim
ited
Tota
l
Ou
tsta
nd
ing
ba
lan
ce
s a
s o
n 3
1.0
3.2
00
8Lo
an
s, A
dva
nce
s an
d R
ece
ivab
les
Loa
ns
Merc
ato
r In
tern
ati
on
al Pte
Lim
ited
15880.4
0
279
92.1
54
38
72
.55
4.2
8
4.2
8
4512
3.7
5
23236.3
3576
.61
23
812
.94
458.8
829962.17
30
421.0
5
5588.7
35
58
8.7
3
1546.1
315
46
.13
55
00
.00
672
5.8
3
672
5.8
3
672
5.8
36
72
5.8
3
- - - - -
- - - - -
43
872
.55
4.2
8
4512
3.7
5
23
812
.94
30
421.0
5
55
88
.73
154
6.1
3
55
00
.00
672
5.8
3
672
5.8
3
377
26.6
2
ANNUAL REPORT 2007-2008
69
Su
nd
ry D
eb
tors
MLL
Log
isti
cs P
riva
te L
imit
ed
M
erc
ato
r Li
nes
(Sin
gap
ore
) Li
mit
ed
Tota
l
Paya
ble
s Su
nd
ry C
red
itors
Merc
ato
r Li
nes
(Sin
gap
ore
) Li
mit
ed
Tota
l
Ad
va
nce
s R
ece
ive
d F
or
Ca
pit
al G
oo
ds
Merc
ato
r Li
nes
(Sin
gap
ore
) Li
mit
ed
Tota
l
De
po
sit
De
po
sit
giv
en
du
rin
g t
he
ye
ar
MLL
Log
isti
cs P
riva
te L
imit
ed
To
tal
Ba
lan
ce
as
on
31
/03
/20
08
Ris
hi H
old
ing
Pri
vate
Lim
ited
MLL
Log
isti
cs P
riva
te L
imit
ed
To
tal
-
664.8
96
64
.89
3409.3
53
40
9.3
5 - -
667.72
66
7.72 - - - -
1170
.25
1170
.25 - -
500.0
05
00
.00
500.0
05
00
.00
1256.2
2
125
6.2
2 - - -
15.0
0
15.0
0
1170
.25
66
4.8
9
34
09
.35
50
0.0
0
50
0.0
0
192
3.9
4 - - -
15.0
0
Na
me
of
the
Tra
nsa
cti
on
(Am
ou
nt
Rs.
in
Lacs
)
Su
bsi
dia
ry C
om
pa
nie
sC
om
pa
nie
s in
wh
ich
the
dir
ecto
rs /
re
lati
ve
s
of
dir
ecto
rs h
ave
su
bst
an
tia
l
inte
rest
Tota
l
Cu
rre
nt
Yr
Pre
vio
us
Yr
Cu
rre
nt
Yr
Pre
vio
us
Yr
Cu
rre
nt
Yr
Pre
vio
us
Yr
D)
R
em
un
era
tio
n p
aid
to
Ke
y M
an
ag
em
en
t P
ers
on
ne
l16
05
.78
79
8.0
6
E)
C
om
mis
sio
n P
aid
to
No
n-E
xe
cu
tive
Dir
ecto
rs10
.00
7.5
0
F)
R
em
un
era
tio
n t
o r
ela
tive
of
Ke
y M
an
ag
em
en
t P
ers
on
ne
l2
.81
-
ANNUAL REPORT 2007-2008
70
22. Disclosure in respect of operating lease (as Lessor):
(a) Operating Leases
Disclosures in respect of cancellable agreements for office and
residential premises taken on lease
(I) Lease payments recognized in the Profit and Loss Account NIL
(ii) Significant leasing arrangements
The Company has given refundable interest free security
deposits under the agreements.
The lease agreements are for a period of ninety months.
These agreements are non cancelable by both the parties for
12 months except in certain exceptional circumstances.
(iii) Future minimum lease payments under non-cancellable agreements
Not later than one year NIL
Later than one year and not later than five years NIL
Later than five years NIL
113.87
113.87
113.87
NIL
NIL NIL
Amount Rs in Lacs
Particulars Current Year Previous Year
(a) Operating Leases
Disclosures in respect of cancelable agreements for office and
residential premises taken on lease
(I) Lease payments recognized in the Profit and Loss Account
(ii) Significant leasing arrangements
The Company has given refundable interest free security
deposits under the agreements.
The lease agreements are for a period of sixty months.
These agreements also provided for increase in rent.
These agreements are non cancellable by both the parties
except in certain exceptional circumstances.
(iii) Future minimum lease payments under non-cancellable agreements
Not later than one year
Later than one year and not later than five years
Later than five years
118.01
314.71
1,715.14
NIL
Amount Rs in Lacs
Current Year
314.71
314.71
1844.46
NIL
Particulars Previous Year
21. Disclosure in respect of operating lease (as Lessee):
ANNUAL REPORT 2007-2008
71
23. Earning Per Share
24. Derivative Instruments
The Company uses foreign currency forward contracts to hedge its risks associated with foreign Currency fluctuations relating to certain
firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Company's strategy
approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Company's Risk
Management Policy. The Company does not use forward contracts for speculative purposes.
Net Profit after Tax and preference dividend including tax thereon
Basic 16,274.83 6,754.92
Diluted 16,333.56 7,195.31
Number of Shares used in computing Earning Per Share
Basic 224,225,062 216,634,232
Diluted 236,414,299 237,909,951
Earning per share (equity shares of face value Re 1/-)
Basic 7.26 3.12
Diluted 6.91 3.02
Amount Rs in Lacs
Particulars Current Year Previous Year
Outstanding Forward Exchange Contracts entered into by the Company:-
Particulars Current Year Previous Year
(a) Interest Rate Swap Contracts
Total No. of Contract - 3
Loan Value US Dollar (Million) - 4.54
- 5717.45Loan Value JPY (Million)
(b) Currency Swap Contracts
Total No. of Contract - 1
- 4.54Loan Value
ANNUAL REPORT 2007-2008
72
25. Foreign Currency Exposures
The year end exposure in a currency other than the financial currency of the Company that were not hedged by a derivative instrument or
otherwise are given below:
32221.17 $80.92 62416.02 $142.60
2006-072007-08
Rs. Lacs Fx.Million Rs. Lacs Fx.Million
Account Receivable 968.95 $2.44 2272.14 $5.19
Loan & Advances 43017.97 $108.04 29813.09 $68.11
Accounts Payable/Acceptance
(including capital commitments made but not provided for)
27771.82 $666.04 440.46 $8.13
J¥ 3250
Borrowings
26. The Company did not have full-time company secretary
for the period 29th January'2008 till date as required under
section 383A of the Companies Act, 1956. Company is in the
process of appointing company secretary.
27. Previous years figures have been regrouped /
rearranged wherever necessary.
ANNUAL REPORT 2007-2008
73
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE 31/03/2008
1. Registration Details
Registration No. 11-31418 State Code 011
Balance Sheet Date 31/03/2008 Date Month Year
31 3 2008
II. Capital Raised during the year (Amount in Rs. Thousand)
Public Issue NIL Right Issue NIL
Bonus Issue NIL Private Placement` NIL
III. Position of Mobilsation and Deployment of Funds (Amount in Rs. Thousands)
Total Liabilities 18,908,301.50 Total Assets 18,908,301.50
Source of Funds
Paid-up Capital 401,620.39 Reserves & Surplus 8,786,364.56
Secured Loans 9,129,381.52 Unsecured Loans 590,935.00
IV. Application of Funds
Net Fixed Assets 13,980,605.93 Investments 201,492.91
Net Current Assets 4,726,202.66 Misc. expenditure NIL
Deferred Tax Asst.
V. Performance of Company (Amount of Rs. Thousands)
Turnover 8,630,791.58 Total Expenditure 6,863,248.54
Profit/(Loss) Before tax 1,767,543.03 Profit/(Loss) after tax 1,688,443.03
Earning per Share 7.26 Dividend Rate % 110%
VI. Generic Name of the Principal Products /Services of the Company (As per monetary terms)
Item Code No. : NA
Product Description : Shipping Services
Dated:
Mumbai
14th May 2008
For and on behalf of the Board
H.K. Mittal
Executive Chairman
A.J. Agarwal
Managing Director
Anil Khanna
Director
M. G. Ramkrishna
Director
ANNUAL REPORT 2007-2008
74
STA
TEM
EN
T P
UR
SU
AN
T T
O S
EC
TIO
N 2
12 O
F T
HE C
OM
PA
NIE
S A
CT,
19
56
RELA
TIN
G T
O S
UB
SID
IAR
Y C
OM
PA
NIE
S
Pro
fit
Rs.
16,0
06.6
0 L
acs
Fin
an
cia
l
Yea
r
En
de
d
Sr.
No
.
Na
me
of
Co
mp
an
y
Merc
ato
r Li
nes
(Sin
gap
ore
) Lt
d.
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
Merc
ato
r Li
nes
(Pan
am
a) In
c.
Merc
ato
r In
tern
ati
on
al Pte
. Ltd
.
Merc
ato
r O
ffsh
ore
Ltd
.
Vid
ya M
ari
ne P
te. L
td.
Vars
ha M
ari
ne P
te.
Ltd
.
Merc
ato
r O
il &
Gas
Ltd
.
1
Oorj
a H
old
ing
s Pte
. Ltd
.
Oorj
a 1
Pte
. Ltd
..
2 3 4 5 6 7 8
Exte
nt
of
inte
rest
of
the
Ho
ldin
g C
om
pa
ny
in t
he
ca
pit
al o
f
sub
sid
iary
No
. of
Sh
are
s
he
ld b
y
Co
mp
an
y d
ire
ctl
y
or
thro
ug
h its
sub
sid
iary
Ne
t a
gg
reg
ate
of
the
pro
fit
or
loss
es
of
the
su
bsi
dia
ry
for
the
cu
rre
nt
pe
rio
d s
o f
ar
as
it c
on
ce
rns
the
me
mb
ers
of
the
ho
ldin
g c
om
pa
ny
Ne
t a
gg
reg
ate
of
pro
fits
or
loss
es
for
pre
vio
us
fin
an
cia
l
ye
ars
of
the
su
bsi
dia
ry s
o f
ar
as
it c
on
ce
rns
the
me
mb
ers
of
the
ho
ldin
g c
om
pa
ny
Not
dealt
wit
h
or
pro
vid
ed
for
in t
he a
ccou
nts
of th
e h
old
ing
com
pan
y
Dealt
wit
h
or
pro
vid
ed
for
in t
he a
ccou
nt
of th
e h
old
ing
com
pan
y
Dealt
wit
h
or
pro
vid
ed
for
in t
he a
ccou
nt
of th
e h
old
ing
com
pan
y
Not
dealt
wit
h
or
pro
vid
ed
for
in t
he a
ccou
nts
of th
e h
old
ing
com
pan
y
9,0
08,8
50
10,0
00
100,0
00
74,9
22,8
50
2 2 2 2 2 700
25,0
00
2 150,0
00
Loss
Rs.
0.0
1 L
acs
Pro
fit
Rs.
385.4
9 L
acs
Loss
Rs.
13.6
9 L
acs
Pro
fit
Rs.
5,7
64.5
6 L
acs
Pro
fit
Rs.
1,0
07.49 L
acs
Loss
Rs.
52.0
0 L
acs
Loss
Rs.
140.5
8 L
acs
Loss
Rs.
6.0
8 L
acs
NIL
NIL
NIL
NIL
Loss
Rs.
10.3
7 L
acs
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Loss
Rs.
19.3
9 L
acs
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
Pro
fit
Rs.
5857.11
Lacs
100%
72.3
5%
100%
100%
100%
100%
70%
85%
100%
100%
100%
100%
100%
100%
Loss
Rs.
345.9
7 L
acs
Loss
Rs.
2.6
0 L
acs
Loss
Rs.
0.6
8 L
acs
Pro
fit
Rs.
830.4
6 L
acs
9 10 11 12 13 14
Oorj
a 2
Pte
. Ltd
.
Oorj
a 3
Pte
. Ltd
.
Oorj
a In
do K
GS
Oorj
a M
oca
mb
iqu
e M
inas
Lim
itad
a
Bro
ad
tech
Moca
mb
iqu
e M
inas
LDA
Loss
Rs.
5.6
1 L
acs
Loss
Rs.
1.3
7 L
acs
Loss
Rs.
2.8
4 L
acs
ANNUAL REPORT 2007-2008
75
31-M
ar-
08
31-M
ar-
08
1,000
1,000
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
50%
50%
15 16
Oorj
a In
do P
eta
ng
is T
hre
e
Oorj
a P
eta
ng
is F
ou
r
Fin
an
cia
l
Yea
r
En
de
d
Sr.
No
.
Na
me
of
Co
mp
an
yExte
nt
of
inte
rest
of
the
Ho
ldin
g C
om
pa
ny
in t
he
ca
pit
al o
f
sub
sid
iary
No
. of
Sh
are
s
he
ld b
y
Co
mp
an
y d
ire
ctl
y
or
thro
ug
h its
sub
sid
iary
Ne
t a
gg
reg
ate
of
the
or
loss
es
of
the
su
bsi
dia
ry
for
the
cu
rre
nt
pe
rio
d s
o f
ar
as
it c
on
ce
rns
the
me
mb
ers
of
the
ho
ldin
g c
om
pa
ny
Ne
t a
gg
reg
ate
of
pro
fits
or
loss
es
for
pre
vio
us
fin
an
cia
l
ye
ars
of
the
su
bsi
dia
ry s
o f
ar
as
it c
on
ce
rns
the
me
mb
ers
of
the
ho
ldin
g c
om
pa
ny
Not
dealt
wit
h
or
pro
vid
ed
for
in t
he a
ccou
nts
of th
e h
old
ing
com
pan
y
Dealt
wit
h
or
pro
vid
ed
for
in t
he a
ccou
nt
of th
e h
old
ing
com
pan
y
Dealt
wit
h
or
pro
vid
ed
for
in t
he a
ccou
nt
of th
e h
old
ing
com
pan
y
Not
dealt
wit
h
or
pro
vid
ed
for
in t
he a
ccou
nts
of th
e h
old
ing
com
pan
y
Date
d: M
um
bai
14th
May
2008
Fo
r a
nd
on
be
ha
lf o
f th
e B
oa
rd
H.K
. Mit
tal
Exe
cuti
ve C
hair
man
A.J
. Ag
arw
al
Man
ag
ing
Dir
ect
or
An
il K
ha
nn
a
Dir
ect
or
M. G
. Ra
mk
rish
na
Dir
ect
or
ANNUAL REPORT 2007-2008
76
STA
TEM
EN
T R
ELA
TIN
G T
O S
UB
SID
IAR
Y C
OM
PA
NIE
S F
OR
TH
E Y
EA
R E
ND
ED
31
ST,
MA
RC
H 2
00
8
Date
d:
Mu
mb
ai
14th
May
2008,
Fo
r a
nd
on
be
ha
lf o
f th
e B
oa
rd
H.K
. Mit
tal
Exe
cuti
ve C
hair
man
A.J
. Ag
arw
al
Man
ag
ing
Dir
ect
or
An
il K
ha
nn
a
Dir
ect
or
M. G
. Ra
mk
rish
na
Dir
ect
or
12 13 14
Merc
ato
r Li
nes
(Sin
gap
ore
) Lt
d.
Merc
ato
r Li
nes
(Pan
am
a) In
c.
Merc
ato
r In
tern
ati
on
al Pte
. Ltd
.
Merc
ato
r O
ffsh
ore
Ltd
.
Vid
ya M
ari
ne P
te. L
td.
Vars
ha M
ari
ne P
te.
Ltd
.
Merc
ato
r O
il &
Gas
Ltd
.
1
Oorj
a H
old
ing
s Pte
. Ltd
.
Oorj
a 1
Pte
. Ltd
..
2 3 4 5 6 7 8 9 10 11
Oorj
a 2
Pte
. Ltd
.
Oorj
a 3
Pte
. Ltd
.
Oorj
a In
do K
GS
Oorj
a M
oca
mb
iqu
e L
DA
Bro
ad
tech
Moca
mb
iqu
e M
inas
LDA
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
31-M
ar-
08
1,233 15 99 10
-
20,2
33
209,12
3
-1
(14)
-(1
4)
-
1,233 91
100
-
76
80,2
28
108,6
6142,4
98
16,10
716
,007
100
4(1
89)
(185)
---
--
--
-
24
81
53,6
86
53,5
81
-13
,050
39
0385
- -
01,
007
18,2
02
17,19
6-
5,4
96
1,017
101,
007
- -5,7
65
-5,7
65
10,2
30
-19
,630
21,
400
1,77
00
-- -------
- ---
14
(52)
(52)
-
(1)
(1)
-
(3)
(3)
(6)
(6)
(6)
(6)
(141)
(141)
- -------
--
- -------0 0 0 0 10
(141)
(6)
(6)
(3) -
148
1,951
705
705
562
158
158
2,0
92
711
710
565 0 -
148
4 4 3
Sr.
No
.
Na
me
of
Co
mp
an
yFin
an
cia
l
Yea
r
En
de
d
Ca
pit
al
Re
serv
eTo
tal
Ass
et
Tota
l
Lia
bilit
y
Inve
st-
me
nt
Turn
ove
rP
rofi
t /
(Lo
ss)
aft
er
tax
Pro
fit
/
(Lo
ss)
aft
er
tax
Pro
po
sed
div
ide
nd
Pro
vis
ion
for
tax
(Am
ou
nt
Rs.
in
Lacs
)
3,7
79
ANNUAL REPORT 2007-2008
77
Auditors' report to the Board of Directors on the
consolidated financial statements of Mercator Lines
Limited and its subsidiaries
1. We have audited the attached consolidated balance sheet of
Mercator Lines Limited (the Company) and its subsidiaries
(collectively called 'the Mercator Group') as at March 31, 2008,
the consolidated profit and loss account and the
consolidated cash flow statement for the year ended on that
date, annexed thereto. These financial statements are the
responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
2. We conducted our audit in accordance with the auditing
standards generally accepted in India. Those Standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as
evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our
opinion.
3. We did not audit the financial statements of subsidiaries,
whose financial statements reflect total assets (net) of Rs.
2,015.63 crores as at 31st March, 2008, and total revenues of
Rs. 773.23 crores. These financial statements and other
financial information have been audited by other auditors
whose reports have been furnished to us, and our opinion is
based solely on the report of the other auditors.
4. We report that the consolidated financial statements have
been prepared by the Company's management in
accordance with the requirements of Accounting Standard
(AS) 21, Consolidated Financial Statements, as notified by the
Companies (Accounting Standards) Rules, 2006.
In our opinion and to the best of our information and according to
the explanations given to us, the consolidated financial
statements give a true and fair view in conformity with the
accounting principles generally accepted in India:
a. in the case of the consolidated balance sheet, of the state of
affairs of the Mercator Group as at March 31, 2008;
b. in the case of the consolidated profit and loss account, of the
profit of the Mercator Group for the year ended on that date;
and
c. in the case of the consolidated cash flow statement, of the
cash flows of the Mercator Group for the year ended on that
date.
For and on behalf of
Contractor Nayak & Kishnadwala
Chartered Accountants
H. V. Kishnadwala
Partner,
Membership No 37391
Mumbai
14th May 2008
ANNUAL REPORT 2007-2008
78
Consolidated Balance Sheet as at March 31, 2008
As at Particular Schedule 31, March 2008 31, March 2007
As at
SOURCES OF FUNDS Shareholders’ Funds Share Capital A 2,348.95 5,892.43Warrants against Share Capital A 1 1,667.25 488.00Reserves and Surplus B 158,051.71 56,456.25Minority Interest 15,483.39 -
177,551.31 62,836.62Loan Funds Secured Loans C 198,832.01 150,208.27Unsecured Loans D 12,280.55 33,265.20
211,112.56 183,473.47
Total 388,663.87 246,310.09
APPLICATION OF FUNDS Fixed Assets EGross Block 314,196.02 189,446.46Depreciation (35,286.91) (20,547.24)Net Block 278,909.11 168,899.22Capital work in progress 45,101.72 9,585.51
324,010.83 178,484.73
Investments F 425.00 8,706.70
Current Assets, Loans & Advances GInventories 2,704.68 2,499.74Sundry Debtors 20,795.84 18,593.30Cash and Bank Balances 85,314.49 37,646.34Loans and Advances 41,954.77 21,109.90
150,769.77 79,849.28
Current Liabilites and Provisions HCurrent Liabilities 83,126.34 16,614.64Provisions 3,071.25 2,246.59Incomplete Voyages (Net) 344.15 1,869.39
86,541.74 20,730.62
Net Current Assets 64,228.04 59,118.66
Total 388,663.87 246,310.09Significant Accounting Policies I& Notes to the Accounts
(Amount Rs. in Lacs)
As per our report of even date
For Contractor, Nayak & Kishandwala
Chartered Accountants
Himanshu Kishanadwala
Partner
M No. 37391
Mumbai - 14th May 2008
Dated:
Mumbai
14th May 2008
For and on behalf of the Board
H.K. Mittal
Executive Chairman
A.J. Agarwal
Managing Director
Anil Khanna
Director
M. G. Ramkrishna
Director
ANNUAL REPORT 2007-2008
79
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH MARCH 31, 2008
(Amount Rs. in Lacs)
As at As atParticulars Schedule 31, March 2008 31, March 2007
INCOMEShipping Income J 145,487.29 112,275.75Other Income K 10,131.45 1,592.63Profit on Sale of Investments (Net) 325.80 89.74Profit on Sale of Assets (Net) 2,953.95 310.91
Total 158,898.49 114,269.03
EXPENSESShip Operating Expenses L 81,871.63 79,471.09Administrative and Other Expenses M 4,877.58 2,506.26Finance Charges N 14,464.28 8,076.84Depreciation 16,749.92 10,380.39
Total 117,963.41 100,434.58
Profit Before Taxes 40,935.08 13,834.46Provision for TaxationCurrent (880.89) (327.53)Deferred Tax - -Fringe Benefit Tax (21.00) (13.50)Profit After Taxes 40,033.19 13,493.43
Minority Interest (2,988.90) (7.87)Prior Year Expenses / Income (Net) (4,148.60) (42.74)Short Provision for Tax of earlier Year (130.00) -Balance brought forward from last year 23,612.86 15,098.97
Available for Appropriations 56,378.55 28,541.79Less/(Add): AppropriationsTransfer to General Reserve 1,770.00 750.00 Transfer to Tonnage Tax Reserve 3,300.00 1,600.00Dividend on Preference Shares 307.76 320.00Dividend On Equity Shares (for Previous Year) 80.00 -Proposed Dividend on Equity Shares 2,583.85 1,892.43Tax on Dividend (including for previous year Rs. 13.60 Lacs) 505.02 366.50Balance Carried to Balance Sheet 47,831.92 23,612.86Earning Per Share (Equity Share of Re. 1/- Each) Basic (Rs.) 14.45 6.04Diluted (Rs.) 13.73 5.68Significant Accounting Policies I& Notes to the Accounts
As per our report of even date
For Contractor, Nayak & Kishandwala
Chartered Accountants
Himanshu Kishanadwala
Partner
M No. 37391
Mumbai - 14th May 2008
Dated:
Mumbai
14th May 2008
For and on behalf of the Board
H.K. Mittal
Executive Chairman
A.J. Agarwal
Managing Director
Anil Khanna
Director
M. G. Ramkrishna
Director
ANNUAL REPORT 2007-2008
80
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED ON MARCH MARCH 31, 2008
(Amount Rs. in Lacs)
Particulars Current Year Previous Year
Cash Flow from Operating Activities Net Profit Before Tax 37,946.18 13,826.59Adjustment for: Depreciation 16,749.92 10,380.39Interest Paid 14,464.28 8,076.84(Profit)/Loss on Fixed Assets Scrapped / Sold (2,953.95) (310.91)(Profit)/Loss on Sale of Investment (325.80) (89.74) Dividend Income (406.91) (624.38)Interest Income - -Foreign Currency Translation Adjustment 1,839.23 (2,124.84)Operating Profit before Working Capital Charges 67,312.95 31,258.79Adjustment for: Trade and Other Receivables (23,162.76) (6,458.75)Trade Payables 65,811.12 14,010.19Cash Generated from Operations 109,961.31 36,685.39Direct Taxes Paid (1,031.89) (341.03)
Total Cash Generated from Operating Activities 108,929.42 36,344.36Cash Generated from Prior Period Items (4,148.60) (42.74)Net Cash from Operating Activities 104,780.82 36,301.62Cash flow from Investing ActivitiesIncrease in Fixed Assets including Capital Work in Progress (165,407.63) (79,328.45)Sale of Fixed Assets 6,085.61 25,312.03 Proceed from sale of Non Trade Investments 325.80 89.74Purchase/sale of Investment 8,281.69 1,271.30Interest Income - -Dividend Income 406.91 624.38Net Cash from Investing Activities (150,307.62) (52,031.00)Cash Flow from Financing ActivitiesProceeds from issue of Share Capital from conversion of Bonds and warrants 83,586.35 -Proceeds from Long Term Borrowings 27,639.09 52,442.47Proceeds from issue of Equity Shares to Promoters - -Adjustment for Minority Interest - (0.06)Interest Paid (14,464.28) (8,076.84)Dividends Paid including tax thereon (3,476.63) (2,578.92)Net Cash from Financing Activities 93,284.53 41,786.65
Net Increase in Cash and Cash Equivalents 47,757.74 26,057.26Cash and Cash Equivalents as at beginning of the year 37,877.56 11,820.30Cash and Cash Equivalents as at end of the year 85,635.30 37,877.56
Cash and Cash Equivalents comprise of: Cash and Bank Balances 85,314.49 37,877.56Accrued Interest on fixed deposit with banks 302.81 -
As per our report of even date
For Contractor, Nayak & Kishandwala
Chartered Accountants
Himanshu Kishanadwala
Partner
M No. 37391
Mumbai - 14th May 2008
Dated:
Mumbai
14th May 2008
For and on behalf of the Board
H.K. Mittal
Executive Chairman
A.J. Agarwal
Managing Director
Anil Khanna
Director
M. G. Ramkrishna
Director
ANNUAL REPORT 2007-2008
81
SCHEDULE FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS
(Amount Rs. in Lacs)
Particulars Current Year Previous Year
SCHEDULE ‘A’Share Capital Authorised 35,00,00,000 Equity Shares of Re 1/- each. 3,500.00 3,500.00200,00,000 Preference Shares of Rs. 100 each. 20,000.00 20,000.00
23,500.00 23,500.00Issued Capital 23,48,95,387 (19,40,42,500) Equity of Shares Re. 1/- each fully paid up 2,348.95 1,940.43NIL (40,00,000)-8% Cumulative Redeemable Preference Shares of Rs. 100/- each fully paid up - 4,000.00
2,348.95 5,940.43Subscribed and Paid Up Capital Equity 23,48,95,387(18,92,42,500) Equity Shares of Re. 1/- each fully paid up. 2,348.95 1,892.43(a) 11,83,45,500 shares of Re 1/-were allotted as bonus shares by capitilisation of Securities Premium Account. (b) 32,00,000 shares of Re. 1/- each are issued on preferential basis on conversion of warrants during the year. (c) 37, 652,887 Shares of Re. 1/- each are issued on conversion of FCCBs during the Year.
PreferenceNIL (40,00,000)-8% Cumulative Redeemable Preference Shares of Rs. 100/- each fully paid up. (redeemed during the year on maturity) - 4,000.00
2,348.95 5,892.43SCHEDULE ‘A1’Warrants against Share Capital NIL (32,00,000) Warrants (Each Warrant carry option/ entitlement to subscribe to 1 number of equity share of Re. 1/- each on or before July 31, 2007 at a price not less than Rs. 137.50 per share, (converted during the Year). - 440.00
NIL (48,00,000) bonus equity shares of Re. 1/- each relating to bonus entitlement to the above warrant holders was kept in abeyance till the time the warrant holder exercises the option to subscribe to the above - 48.00
2,85,00,000 Warrants (Each Warrant carry option / entitlement to subscribe to 1 number of equity share of Re. 1/- each on or before April 24, 2009 at a price not less than Rs. 58.50 per share.) 1,667.25 -
1,667.25 488.00SCHEDULE ‘B’Reserves and Surplus
Capital ReserveAs per last Balance Sheet 26.24 26.24
26.24 26.24Capital Redemption ReserveAs per last Balance Sheet - -Add: Transferred From General Reserve on redemption of Preference Shares 4,000.00 -
4,000.00 -
ANNUAL REPORT 2007-2008
82
SCHEDULE FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS
(Amount Rs. in Lacs)
Particulars Current Year Previous Year
Securities Premium Account As per last Balance Sheet 7,532.61 7,532.61Add: Received during the year on conversion of warrants and FCCBs 24,439.88 -Less: Share Issue Expenses (26.97) -
31,945.52 7,532.61Tonnage Tax ReverseAs per last Balance Sheet 1,600.00 6,924.83Add: Transferred from Profit and Loss Account 3,300.00 1,600.00Less: Transferred to Utilised Account (1,600.00) (6924.83)
3,300.00 1,600.00Tonnage Tax Reserve (Utilised)As per last Balance Sheet 6,924.83 -Add: Transfer from Tonnage Tax Reserve 1,600.00 6,924.83
8,524.83 6,924.83Debenture Redemption ReserveAs per last Balance Sheet 8,000.00 13,980.00Transferred to General Reserve on redemption of debentures (1,800.00) (5,980.00)
6,200.00 8,000.00General Reserve As per last Balance Sheet 10,902.83 4,172.83Add: Transferred from Debenture Redemption Reserve 1,800.00 5,980.00Add: Transferred From Profit and Loss Account 1,770.00 750.00 Less: Transferred to Capital Redemption Reserve on redemption ofPreference Shares (4,000.00) -
10,472.83 10,902.83
Profit / (Loss) on cash flow hedging reserve account (5,701.31) -
Capital Reserve (on consolidation) 54,459.24 -
Foreign currency Translation Reserve (3,007.57) (2,143.13)Surplus in Profit and Loss Account 47,831.92 23,612.86
158,051.71 56,456.25
SCHEDULE ‘C’ Secured Loans (a) Debentures (1) NIL (12,00,000) - 12.50% Non Convertible Secured Debentures Series I of Rs. NIL (Rs. 25/-) each, redeemable at the end of 3rd, 4th, 5th and 6th year from the date of allotment i.e. January 30, 2002 in equal installments towards face value - 300.00
(2) 30,00,000 - 10.00% Non Convertible Secured Debentures Series IV of Rs. 10/- (Rs. 30/-) each, redeemable in 10 half yearly instalments of Rs. 300 lacs each commencing from six months after the date of allotment i.e. July 29, 2003 towards face value 300.00 900.00
(3) 30,00,000 - 10.00% Non Convertible Secured Debentures Series V of Rs. 20/-, (Rs. 40/-) each redeemable in 10 half yearly instalments of Rs. 300 lacs each commencing from six months after the date of allotment i.e. October 10, 2003 towards face value 600.00 1,200.00
ANNUAL REPORT 2007-2008
83
SCHEDULE FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS
(Amount Rs. in Lacs)
Particulars Current Year Previous Year
(4) 1,600 - 7.50% Non Convertible Secured Debentures of Rs. 6,87,500/-(Rs. 8,12,500/-) each, redeemable in 12 half yearly instalments of 6.25%and last two of 12.50% of face value each commencing from six monthsafter one year from the date of allotment i.e. June 30, 2004 toward face value Series VII A. There is a put/call option at the end of 4th Year & 6th year from the date of allotment. 11,000.00 13,000.00
(5) 50 - 7.50% Non Convertible Secured Debentures Series VII B of Rs.
7,50,000 (8,75,000/-) each, redeemable in 12 half yearly instalments of
6.25% and last two of 12.50% of face value each commencing from six
months after one year from the date of allotment i.e. February 10,2005
toward face value. There is a put/all option at the end of 4th Year & 6th
year from the date of allotment. 375.00 437.50
(b) Foreign Currency Loans from Banks 136,350.01 63,510.27
(c) Rupee Term Loans 50,207.00 55,541.00
(d) USD 35,000,000 Zero % Convertible Bonds A - 15,319.50
198,832.01 150,208.27
Note
1) Debentures referred in (a) above are secured by first mortgage on specified vessels of the company on pari-passu basis with other
lenders and first charge on the specified immovable properties together with structure thereon.
2) Debentures referred in a (2) & a (3) above are further secured by way of Personal Guarantee from Mr. H. K. Mittal Executive Chairman
and Mr. Atul J. Agarwal Managing Director
3) Foreign Currency Loan referred in (b) above are secured by 1st Charge on specified vessels of the company on pari-passu basis with
other lenders.
4) Term Loan referred in (c) above are secured by 1st charge on the specified vessels, on pari passu basis with other lenders.
5) Working capital facilities from Schedule Banks are secured by second charge on specified vessels and 1st charge on all receivables
and other current assets of the company on pari-passu basis.
6) Bonds A are Zero coupons secured convertible bonds due in 2009. Bonds A are only mandatory convertible on and after April 2, 2007
in the event of an IPO by the company on or closure of the business on March 30, 2009. The initial conversion price of Bonds A will be at
a discount which is higher of (a) such amount so as to yield 15% IRR to the bondholders or (b) 10% discount to the IPO Price.
ANNUAL REPORT 2007-2008
84
SCHEDULE FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS
(Amount Rs. in Lacs)
Particulars Current Year Previous Year
SCHEDULE ‘D’
Unsecured Loans
1) 850 (6,000) 1.50% Foreign Currency Convertible Bonds of USD 10,000
each 3,409.35 26,262.00
During the year, pursuant to notices received from Bondholders 5150
FCCBs of aggregate amount of USD 51,500,000 were converted into
37,652,887 equity shares of Re. 1/- each at a predetermined price of
Rs. 59.812 per share at a fixed exchange rate of Rs. 43.73 per USD
The balance bonds are convertible at any time up to the close of Business
on 20 April 2010 by holders into newly issued ordinary shares of Re. 1
each at agreed conversion price. The Bonds may be redeemed in whole at
the option of the Company at any time on or after 15 May 2008 and or
prior to 20 April 2010 at the accreted principal amount together with
accrued interest.
b) USD 16,000,000 - 2.50% Convertible Bonds B 6,371.20 7,003.20
Bonds B are 2.50% unsecured convertible bonds due 2012.
Bonds B are optionally convertible on and after 45 days from
the date of listing of the ordinary shares of the after 45 days from
the date of listing of the ordinary shares of the company in the SGX
or alternative stock Exchange pursuant to the IPO and on or before
the close of business on March 12,2012. the conversion price is now fixed
at SG$ 0.76 per Share.
2) Other Loans 2,500.00 -
(Amount repayable within one year Rs. 2500.00 Lacs)
12,280.55 33,265.20
ANNUAL REPORT 2007-2008
85
SC
HED
ULE
FO
RM
ING
PA
RT O
F A
NN
UA
L A
CC
OU
NTS
Sch
ed
ule
E
Fix
ed
Ass
ets
Off
ice P
rem
ises
(Refe
r N
ote
1, 2
)
Vess
els
(Refe
r N
ote
3)
Off
ice a
nd
Com
pu
ter
Eq
uip
men
t
Furn
itu
re a
nd
Fix
ture
s
Veh
icle
s
Tota
l
Cap
ital W
ork
In
Pro
gre
ss
Pre
viou
s Ye
ar
344.2
8
188,4
57.42
167.35
316.2
1
161.
20
189
,44
6.4
6 -
147,831
.06
864.2
0
128,8
49.1
3
30.7
6
86.3
6
61.0
1
129
,89
1.4
6 -
69,7
42.9
4
-
5,13
3.9
2 - -
7.98
5,141.9
0 -
28,12
7.54
1,208.4
8
312,17
2.6
3
198.1
1
402.5
7
214
.23
314
,19
6.0
2 -
189,4
46.4
6
76.9
0
20,3
27.58
47.9
0
34.6
0
60.2
5
20
,547.
23 -
13,2
93.2
8
-
2,0
06.1
5 - -
4.0
9
2,0
10.2
4 -
3,12
6.4
3
20.5
2
16,5
74.6
0
30.1
3
90.1
1
34.5
6
16,7
49
.92 -
10,3
80.3
9
97.42
34,8
96.0
3
78.0
3
124.7
1
90.7
2
35
,28
6.9
1 -
20,5
47.2
4
1,11
1.06
277
,276
.60
120.0
8
277
.86
123.5
1
278
,90
9.1
1
45,10
1.72
168,8
99.2
2
267.38
168,12
9.8
4
119.4
5
281.
61
100.9
5
168
,89
9.2
3 -
134,5
37.79
Co
stD
ep
recia
tio
nN
et
Blo
ck
Pa
rtic
ula
rsA
s a
t
Ap
ril
1, 2
00
7
Ad
dit
ion
for
the
ye
ar
De
du
cti
on
for
the
ye
ar
As
at
Ma
rch
31, 2
00
8
Up
to
Ma
rch
31, 2
00
7
Ad
just
me
nt
in r
esp
ect
of
Ass
ets
So
ld /
Dis
ca
rd
Fo
r th
e
Yea
r
Up
to
Ma
rch
31,2
00
8
As
at
Ma
rch
31, 2
00
8
As
at
Ma
rch
31, 2
00
7
(Am
ou
nt
Rs.
in
Lacs
)
Note
1.In
clu
des
cost
of 1
0 s
hare
s of R
s. 5
0/-
each
fully
paid
in M
itta
l Tow
er Pre
mis
es
Co-o
p. S
oci
ety
Ltd
.
2.
The o
ffic
e p
rem
ises
(Gro
ss V
alu
e R
s. 3
43.17 L
acs
an
d A
ccu
mu
late
d D
ep
reci
ati
on
Rs.
90 L
acs
) is
giv
en
on
op
era
tin
g Lease
.
3.
Incl
ud
es
exc
han
ge fl
uct
uati
on
on
fore
ign
cu
rren
cy lo
an
s on
vess
els
acq
uir
ed
ou
tsid
e In
dia
Rs.
NIL
(Rs.
1379
.87 L
acs
)
4.
Cap
ital w
ork
in P
rog
ress
Incl
ud
es
Rs.
873
.35 L
acs
tow
ard
s ad
van
ces
for Cap
ital G
ood
s.
ANNUAL REPORT 2007-2008
86
SCHEDULE FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS
(Amount Rs. in Lacs)
Schedule F Investments
Items Current Year Previous Year Nos Cost Nos. Cost
In Units of Mutual Funds (Quoted) Reliance Equity Fund - - 1,106,501 111.00Prudential ICICI Fusion Fund - - 5,000,000 500.00Franklin India Flexi Cap Fund - - 371,034 57.44HDFC Equity Fund - - 161,279 57.06Prudential ICICI Discovery Fund - - 287,550 55.19 Prudential ICICI Emerging Star Fund - - 488,059 106.36Reliance Equity Opportunity Fund - - 348,760 60.59Standard Chartered Ent Equity Fund - - 1,000,000 100.00 Sundaram BNP Paribas Select Midcap-Fund - - 307,499 60.80Lotus FMP - Series (Quoted) 3,000,000 300.00 3,000,000 300.00DBS Chola Hedged Equity Fund - - 10,000,000 100.00(Repurchase Value as on 31.3.08 is Rs. NIL (Previous Year Rs. 1276.84 Lacs) 300.00 1,508.10
In others (Unquoted) Vijaya Bank Bonds - - 1,000,000 1,000.00 Indian Real Opportunity Venture Capital Fund 12,500.00 125.00
125.00 1000.00(Repurchase Value of quoted investments on 31.3.08 is Rs. 458.51 Lacs (Pvevious Year Rs. 1300 Lacs)
425.00 2,508.10
Current Investments (at lower of cost and Market value) In units of Mutual Funds
Quantum Liquid Fund - - 5,151,487 515.15 Lotus India Liquid Plus Fund - Institutional Weekly Dividend - - 5,001,224 500.12J P Morgan International Investment Fund - - 11,624,413 5,183.33 Sub Total - - - 6,199.00 (Repurchase Value of quoted investments on 31.3.08 is NIL (Previous Year Rs. 6198.59 Lacs)
Grand Total 425.00 8,706.70
ANNUAL REPORT 2007-2008
87
SCHEDULE FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS
(Amount Rs. in Lacs)
Particulars Current Year Previous Year
SCHEDULE ‘G’Current AssetsSundry Debtors(Unsecured, Considered Good) Debts Outstanding over Six Months 1,337.32 1,548.01 Other Debts 19,458.52 17,045.29
20,795.84 18,593.30Cash and Bank Balances Balances with Scheduled Banks In fixed Deposit Accounts 76,919.69 6,301.65 In current Accounts 8,243.11 3,173.16 In Exchange Earners Foreign Currency Account 8.57 160.76 In Dividend Accounts 39.40 39.40Bank Balance / Fixed Deposits with Foreign Banks (Refer Note B (9) of Schedule I) 93.54 27,968.75Cash in hand 10.17 2.62
85,314.48 37,646.34Loans and Advances (Unsecured Considered Good) Advances recoverable in cash or in kindor for value to be received 15,893.73 15,813.87Deposits with Government and semi Government Bodies 16.78 2,764.02Inter Corporate Deposits 689.43 413.03Other Deposits 960.52 796.97Accrued Interest on fixed deposit with banks 320.81 231.22Advance payment of tax (Net of provisions) 704.58 1,090.78Derivative Financial Instrument 23,368.91 -
41,954.77 21,109.90
SCHEDULE ‘H’ Current Liabilities Sundry Creditors For Services and expenses 10,006.76 12,597.71 Due to Micro, Small and Medium Enterprises (Previous Year - Due to Small Scale Undertaking) (Refer Note B7 of Schedule I) - -Others 6,777.65 3,849.78Acceptances 37,905.27 -Advances from Customers 796.79 -Deposits 85.26 127.75Unclaimed Dividend* 39.40 39.40Derivative Financial Instrument 27,515.21 -*(There is no amount due and outstanding to be credited to InvestorEducation and Protection Fund) 83,126.34 16,614.64
Provisions For Proposed Dividend 2,583.85 1,892.43For Tax on Dividend 439.13 321.62For Employees Retirement Benefits 48.27 32.54
3,071.25 2,246.59
ANNUAL REPORT 2007-2008
88
SCHEDULE FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS
(Amount Rs. in Lacs)
Particulars Current Year Previous Year
SCHEDULE ‘J’Shipping IncomeFreight 81,549.86 68,457.89Charter Hire 59,996.57 40,166.53Dispatch and Demurrage 3,940.86 3,651.33
145,487.29 112,275.75SCHEDULE ‘K’Other Income Cargo Handling Services 2,197.80 1,477.40Dividend from Investments 406.91 624.38Rent Received 121.96 -Exchange Fluctuations 4,333.55 (733.40)Gain on Derivatives of FFA 3,079.70 -Miscellaneous Income (8.47) 224.24
10,131.45 1,592.63SCHEDULE ‘L’Ship Operating Expenses Bunker Consumed 23,010.93 14,584.78Vessel/Equipment Hire Charges 31,761.88 43,179.56Technical, Service expenses 5,598.66 3,680.91Agency, Professional and Service Charges 620.65 585.79Crew Expenses 846.18 824.32Communication Expenses (Ships) 188.86 164.95Miscellaneous Expenses (Ships) 254.68 238.90Commission 4,276.02 2,005.11Ship Insurance 1,425.98 1,209.43Port Expenses 5,478.93 4,205.39Repairs and Maintenance 7,887.30 8,469.55Stevedoring, Transport and Freight 521.55 322.40
81,871.63 79,471.09 SCHEDULE ‘M’Administrative and Other Expenses Advertisement 11.74 8.16Auditors Remuneration 68.16 33.75Conveyance, Car Hire and Traveling 229.27 144.70Communication expenses 50.53 35.37Donation 11.26 35.62Directors’ Remuneration 1,615.79 984.26Miscellaneous expenses 644.97 373.79Insurance 10.27 6.11Legal, Professional and Consultancy expenses 252.11 129.43Rents, Repairs and Maintenance 551.00 193.83Salary, Wages, Bonus etc. 1,326.31 473.21Staff Welfare, Training etc. 26.89 6.22Contribution to Provident and other funds 24.75 18.68Bad Debts and other amounts written off (Net) 54.55 63.12
4,877.58 2,506.26SCHEDULE ‘N’Finance Charge Interest on Debentures 1,108.39 1,927.28Fixed Loans 12,955.07 7,004.18Others 2,137.62 40.02
16,201.08 8,971.48Less : Interest received (TDS Rs. 60.85 Lacs Previous Year 95.12 Lacs) (1,470.57) (894.64)Less: (Profit)/Loss on Derivative Transactions (266.23) -
14,464.28 8,076.84
ANNUAL REPORT 2007-2008
89
SCHEDULE 'I’
A. Basis of Consolidation
The Consolidated Financial Statements relate to Mercator
Lines Limited (the company), its subsidiary companies and
associates. The Company and its subsidiaries constitute the
Group.
a) Basis of Accounting
I. The financial statements of the subsidiary companies
used in the consolidation are drawn upto the same
reporting date as of the Company i.e. year ended 31st,
March 2008.
II. The financial statements of the Group have been
prepared in accordance with the principles and
procedures required for the preparation and
presentation of consolidated financial statements as laid
down under the Accounting Standard 21 “Consolidated
Financial Statements” as notified by the Companies
Accounting Statements Rules 2006.
b) Principles of consolidation
The Consolidated Financial Statements have been prepared
on the following basis:
I. The Financial statements of the Company and its
subsidiary companies have been combined on a line by
line basis by adding together book values of similar items
of assets, liabilities income and expenses. The intra-group
balances and intra-group transactions have been fully
eliminated.
II. Minority Interest in the net assets of consolidated
subsidiaries consists of the amount of equity attributable
to the minority shareholders at the date on which
investments are made by the company in the subsidiary
companies and further movements in their share in
equity, subsequent to the date of the investment as
stated above.
III. Consolidated Financial Statements are prepared by
applying uniform accounting policies in use at the group.
For the consolidation of the foreign subsidiaries, items of
revenue and expenses are consolidated at the mean rate
prevailing during the period. All assets and liabilities are
consolidated at the closing mean rate as on 31st March,
2008. Exchange difference resulting from the differences
due to translation of foreign currency assets and
liabilities in subsidiaries are disclosed as “Foreign
Currency Translation Adjustment”
c) The following subsidiary companies are considered in
the Consolidated Financial Statements:
Mercator International Pte. Ltd. (MIPL) Singapore
Name of the Subsidiary Company Country of
incorporation
% of holding either
directly or through
subsidiary as at
March 31, 2008
% of holding either
directly or through
subsidiary as at
March 31, 2007
100 100
Mercator Offshore Ltd. Singapore
Singapore
100 100
Mercator Oil & Gas Ltd. India 100
100
71
Mercator Lines (Singapore) Ltd. 72.35 100
SingaporeVarsha Marine Pte. Ltd. 100
100SingaporeVidya Marine Pte. Ltd. 100
100PanamaMercator Lines (Panama) Inc. 100
100SingaporeOorja Holdings Pte. Ltd. N. A.
100SingaporeOorja 1 Pte. Ltd. N. A.
100SingaporeOorja 2 Pte. Ltd. N. A.
100SingaporeOorja 3 Pte. Ltd. N. A.
100MocambiqueOorja Mocambique Minas, Limitada N. A.
50*MocambiquePt Oorja Indo Petangis Four N. A.
50*IndonesiaPt Oorja Indo Petangis Three N. A.
70IndonesiaPt Oorja Indo KGS N. A.
85Broadtec Mocambique Minas, Lda. N. A.
* Considered as subsidiaries for consolidation purposes on account of control as per principles of AS-21.
ANNUAL REPORT 2007-2008
90
B .SIGNIFICANT ACCOUNTING POLICIES
1. Basis of Accounting
The financial statements are prepared under the historical cost
convention, on the accrual basis of accounting and in conformity
with Generally Accepted Accounting Principles in India, Accounting
Standards as notified by the Companies (Accounting Standards)
Rules, 2006 and the other relevant provisions of the Companies
Act, 1956.
2. Use of Estimates
The preparation of financial statements in conformity with
Generally Accepted Accounting Principles requires the
management to make estimates and assumptions that affect the
reported balances of assets and liabilities as of the date of the
financial statements and reported amounts of income and
expenses during the period. The management believes that the
estimates used in the preparation of financial statements are
prudent and reasonable.
3. Fixed Assets
a) Fixed assets are stated at cost less accumulated depreciation.
b) Cost includes cost of acquisition or construction including
attributable interest, duties and other incidental expenses
related to the acquisition of the asset.
c) Operating costs and other incidental costs including initial
stores and spares of newly acquired vessels till the port of first
loading are included in the cost of the respective vessels.
d) Exchange differences arising on repayment of foreign
currency loans and year end translation of foreign currency
liabilities relating to acquisition of assets from a country
outside India including substitution of one foreign currency
loan by another are from this year charged to the Profit and
Loss Account following notification of Accounting Standard 11
“Effects of changes in Foreign Exchange Rates” during the
year as against the earlier policy of adjusting the same to the
carrying cost of the respective assets.
e) Individual fixed assets costing up to Rs. 25,000 are fully written
off under the head fixed assets written off.
4. Depreciation
a) Depreciation on all the vessels is computed on Straight Line
Method so as to write off the original cost as reduced by the
expected/estimated scrap value over the balance useful life of
the vessels. If however, the rates as prescribed under the
Schedule XIV of the Companies Act, 1956, are higher; the said
higher rate is applied, which ranges from 5% to 12% of the
original cost of the vessel.
b) Depreciation on all assets other than vessels is computed on
the Written Down Value method in the manner and at the
rates prescribed under schedule XIV of the Companies Act,
1956.
c) On additions made to the existing vessels depreciation is
provided for the full year over the remaining useful life of the
ships.
d) Depreciation on furniture, fixtures and electrical fittings
installed at office premises taken on lease is provided over the
initial period of lease.
5. Capital Work in Progress
All expenditure, including advances given to contractors and
borrowings cost incurred during the vessel acquisition period, are
accumulated and shown under this head till the vessel is put to
commercial use.
6. Retirement and Disposal of Ships
a) Profits on sale of vessels are accounted for on completion of
sale thereof.
b) Assets which are retired from active use and are held for
disposal are stated at the lower of their net book value or net
releasable value.
7. Inventories
Bunker and Lubes on vessels are valued at lower of cost and net
Realisable value ascertained on first in first out basis.
8. Investments
a) Investments are classified into Long Term and Current
Investments.
b) Long Term Investments are stated at cost of acquisition and
related expenses. Provision for diminution, if any, in the value
of such investments is made to recognise a decline, other
than of a temporary nature.
c) Current Investments are stated at cost of acquisition
including incidental/related expenses or at fair value as at
31st March 2008, whichever is less and the resultant decline, if
any, is charged to revenue.
d) Investment in shares of subsidiaries outside India is stated at
cost by converting at the rate of exchange at the time of their
acquisition.
9. Incomplete Voyages
Incomplete voyages represent freight received and direct
operating expenses on voyages which are not complete as at the
Balance sheet date.
10. Borrowing Costs
Borrowing costs incurred for the year for acquisition of vessels are
capitalized till first loading of cargo, only if the time gap between
date of Memorandum of Agreement and “Date when vessel is
ready for use” is more than three months.
ANNUAL REPORT 2007-2008
91
11. Revenue Recognition
a) Income on account of freight earnings is recognised in all
cases where loading of the cargo is completed before the
close of the year. All corresponding direct expenses are also
provided.
b) Where loading of the cargo is not completed before the close
of the year, revenue is not recognised and the corresponding
expenses are carried forward to the next accounting year.
c) Income from charter hire and demurrage are recognised on
accrual basis.
d) Income from services is accounted on accrual basis as per the
terms of the relevant agreement.
e) Dividend on investments is recognised when the right to
receive the same is established.
12. Foreign Exchange Transactions
a) Monetary Current assets and liabilities denominated in
foreign currency outstanding at the end of the year are valued
at the rates prevalent on that date.
b) Differences in translation of monetary assets and liabilities
and realised gains and losses on foreign currency
transactions are recognised in the Profit and Loss Account.
c) Contracts in the nature of foreign currency swaps, are
converted at the exchange rate prevailing as on 31st March
2008 and the profits or losses thereon are charged to the
Profit and Loss account.
d) Differences on account of swap contracts for interest payable
in foreign currency are accounted on accrual basis and the
profit or loss thereon are charged to the Profit and Loss
account.
13. Employees Benefits
a) Short – term employee benefits
All employee benefits payable wholly within twelve months of
rendering the service are classified as short term employee
benefits. Benefits such as salaries, wages, performance
incentives, etc. are recognised at actual amounts due in the
period in which the employee renders the related service.
b) Post – employment benefits
i. Defined Contribution Plans
Payments made to defined contribution plans such as
Provident Fund are charged as an expense as they fall
due.
ii. Defined Benefit Plans
The cost of providing benefit i.e. gratuity is determined
using the Projected Unit Credit Method, with actuarial
valuation carried out as at the balance sheet date.
Actuarial gains and losses are recognised immediately in
the Profit and Loss Account.
c) Other Long – term employee benefits
Other Long – term employee benefit viz. leave encashment is
recognised as an expense in the profit and loss account as
and when it accrues. The company determines the liability
using the Projected Unit Credit Method, with actuarial
valuation carried out as at the balance sheet date. The
Actuarial gains and losses in respect of such benefit are
charged to the profit and loss account.
14. Lease Accounting
a) In respect of operating lease agreements entered into by the
Company as a lessee, the lease payments are recognised as
expense in the profit and loss account over the lease term.
b) In respect of operating lease agreement entered into by the
Company as a lessor, the initial direct costs are recognised as
expenses in the year in which they are incurred.
15. Earning per share:
The company reports basic and diluted earnings per share (EPS) in
accordance with Accounting Standard–20. The Basic EPS has been
computed by dividing the income available to equity shareholders
by the weighted average number of equity shares outstanding
during the accounting year. The diluted EPS have been computed
using the weighted average number of equity shares and dilutive
potential equity shares outstanding at the end of the year.
16. Provision for Taxation :
a) The company has opted for the Tonnage Tax scheme and
provision for tax has been accordingly made under the
relevant provisions of the Income Tax Act, 1961.
b) Tax on incomes on which the Tonnage Tax is not applicable is
provided as per the other provisions of the Income Tax Act,
1961.
c) In case of subsidiaries companies incorporated in Singapore,
no provision is made for taxation on qualifying shipping
income derived which is exempt form taxation under section
13 A of the Singapore Income Tax Act and the Singapore
Approved International shipping enterprise Tax Incentive.
d) Deferred tax resulting from timing differences, if any, between
book and tax profits for income other than that covered
under Tonnage Tax scheme is accounted for under the liability
method, at the current rate of tax, to the extent that the
timing differences are expected to reverse in future.
17. Impairment of assets
The Company reviews the carrying values of tangible and
intangible assets for any possible impairment at each balance
sheet date. Impairment loss, if any, is recognized in the year in
which impairment takes place.
ANNUAL REPORT 2007-2008
92
18. Provisions and Contingent Liabilities:
Provisions are recognized in the accounts in respect of present
probable obligations, the amount of which can be reliably
estimated. Contingent Liabilities are disclosed in respect of
possible obligations that arise from past events but their existence
is confirmed by the occurrence or non occurrence of one or more
uncertain future events not wholly within the control of the
Company.
19. Derivative instruments and hedge accounting
The Group uses foreign currency forward contracts; forward
freight agreements, options on forward freight agreements and
currency options to hedge its risks associated with foreign
currency fluctuations and fluctuations in freight rates relating to
certain firm commitments and forecasted transactions. The
Company has designated these hedging instruments as cash flow
hedges or economic hedges applying the recognition and
measurement principles set out in the Accounting Standard 30
“Financial Instruments : Recognition and Measurement” (AS – 30).
The use of hedging instruments is governed by the Company's
policies approved by the board of directors, which provide
principles on the use of such financial derivatives consistent with
the Company's risk management strategy.
Derivatives are initially recognised at fair value at the dates the
derivative contracts are entered into and are subsequently re-
measured to their fair values at each balance sheet date.
The resulting gain or loss is recognised in the profit and loss
statement immediately unless the derivative is designated and
effective as a hedging instrument, in which event the timing of the
recognition in the profit and loss statement depends on the
nature of the hedge relationship.
Hedge accounting
Hedges which include derivatives, embedded derivatives and non-
derivatives in respect of price risk, are designated as either hedges
of fair value of recognised assets or liabilities or fair commitments
(fair value hedges) or hedges of highly probable forecast
transactions (cash flow hedges).
Some forward freight agreements that the Group has entered into
fall within the definition of fair value hedge. Some other forward
freight agreements fall within the definition of cash flow hedge as
described below.
At the inception of the hedge relationship, the relationship
between the hedging instrument and hedged item is determined,
along with its risk management objectives and the strategy for
undertaking the hedge. At the inception of the hedge and on a
quarterly basis, the effectiveness of the hedging relationship in
offsetting changes in fair values or cash flows of the hedged item is
determined.
Fair value hedge
Changes in the fair value of derivatives that are designated and
qualify as fair value hedges will be recorded in the profit and loss
statement immediately, together with any changes in the fair
value of the hedged item that is attributable to the hedged risk.
Hedge accounting will be discontinued when the Group revokes
the hedging relationship, the hedging instrument expires or is
sold, terminated, or exercised, or no longer qualifies for hedge
accounting. The adjustment to the carrying amount of the hedged
item arising from the hedged risk will be amortised to the profit
and loss statement from that date.
Cash flow hedge
The effective portion of changes in the fair value of derivatives that
are designated as and qualify as cash flow hedges are deferred in
equity. The gain or loss relating to the ineffective portion of the
hedge, if any, is recognised immediately in the profit and loss
statement.
Amounts deferred in equity will be recycled in the profit or loss in
the periods when the hedged item is recognised in the profit and
loss statement. However, when the forecast transaction that is
hedged results in the recognition of a non-financial asset or a non-
financial liability, the gains and losses previously deferred in equity
will be transferred from equity and included in the initial
measurement of the cost of the asset or liability.
Hedge accounting will be discontinued when the Group revokes
the hedging relationship, the hedging instrument expires or is
sold, terminated, or exercised, or no longer qualifies for hedge
accounting. Any cumulative gain or loss deferred in equity at that
time will remain in equity and will be recognised when the forecast
transaction is ultimately recognised in the profit and loss
statement. When a forecast transaction is no longer expected to
occur, the cumulative gain or loss that had been deferred in equity
will be recognised immediately in the profit and loss statement.
ANNUAL REPORT 2007-2008
93
2. Estimated amount of contracts remaining to be
executed on capital accounts and not provided for (net
of advances) as at March 31, 2008 Rs. 14,928.51 Lacs (Rs.
NIL).
Amount Rs in Lacs
885.00Counter guarantees issued by
the Company for guarantees
for guarantees obtained
the bank
Name Current Year
1,456.54
Previous Year
13,359.50Corporate guarantees issued
by the company on behalf
of business associates
19,400.00
TOTAL 20,856.54 14,244.50
B] NOTES TO THE ACCOUNTS
1. Contingent Liabilities not provided for
Amount Rs in Lacs
Executive Chairman and
Managing Directors
3. Remuneration to Holding Company Directors
Current Year Previous Year
Salary 96.00 48.00
Perquisites 17.29 21.83
Commission 1,492.50
1,615.79
728.23
805.56
Commission 10.00 7.50
Non-Executive Directors
Total
4. Disclosures in accordance with Accounting Standard
(AS) -15 on “Employee Benefits”:
AS – 15 (Revised 2005) on “Employee Benefits” has been
adopted by the Company effective from April 1, 2007. The
disclosures are as required by the said AS are given hereunder.
(A) Defined Contribution Plans:
The Company has recognized the following amounts in the Profit
and Loss Account for the year:
Amount Rs in Lacs
For the year ended
March 31, 2008
(I) Contribution to Employees'
Provident Fund
(ii) Contribution to Employees' Family
Pension Fund
22.02
NIL
(B) Defined Benefit Plans:
a. Changes in the Present Value of Obligation
b. Expenses recognized in the Profit and Loss Account
Amount Rs in Lacs
For the Year Ended March 31, 2008
Gratuity Leave En-
cashment
Total
(a) Present Value of
Obligation as at
April 1, 2007
(i) Present Value of
Obligation as at
March 31, 2008
17.91
30.89
1.43
NIL
NIL
NIL
13.67
14.64
17.38
1.17
NIL
NIL
NIL
8.87
32.55
48.27
2.6
NIL
NIL
NIL
22.54
(b) Interest cost
(c) Past Service Cost
(d) Current Service Cost
0.33
1.78
1.58
5.72
1.91
7.5
(g) Benefits Paid
(h) Actuarial (Gain) / Loss
(e) Curtailment Cost /
(Credit)
(f) Settlement Cost /
(Credit)
Amount Rs in Lacs
For the Year Ended March 31, 2008
Gratuity Leave En-
cashment
Total
a) Current Service Cost
(b) Past Service Cost
(c) Interest cost
(d) Curtailment Cost /
(Credit)
(e) Settlement Cost /
(Credit)
(f) Net Actuarial (Gain) /
Loss
(g) Employees'
Contribution
(h) Total Expenses
recognized in Profit
and Loss A/c
13.67
NIL
1.43
NIL
NIL
1.78
NIL
13.32
8.87
NIL
1.17
NIL
NIL
5.72
NIL
4.32
22.54
NIL
2.6
NIL
NIL
7.5
NIL
17.64
(iii) Contribution to Employees'
Superannuation Fund
Total 22.02
NIL
Amount Rs in Lacs
For the year ended
March 31, 2008
ANNUAL REPORT 2007-2008
94
c. Following are the Principal Actuarial Assumptions used as
at the balance sheet date:
iv) Key Management Personnel
a) H. K. Mittal
b) A. J. Agarwal
c) Shalabh Mittal
v) Relative of Key Management Personnel
a) Adip Mittal
b) Shruti Mittal
B) Details of the transaction with above parties
C) Details in respect of material transactions with parties
referred to in item A of the above
The estimates of future salary increases considered in actuarial
valuation takes into account inflation, seniority, promotion and
other relevant factors.
(iv) This being the first year of implementation of AS-15 (Revised)
previous year figures have not been given.
5. Segment Reporting
As the company principal business activities fall within the single
segment viz Shipping and related activities there is no reportable
segment pursuant to Accounting Standard 17 'Segment
Reporting; issued by Institute of Chartered Accountants of India
are not applicable.
6. Related Party Disclosures
i) List of Related Parties (Refer Schedule 'I' (A) (c)
ii) Companies in which the directors/relatives of directors
have substantial interest
a) MLL Logistics Private Limited
b) Mercator Petroleum Private. Limited (MPPL) – INDIA
c) Mercator Mechmarine Limited
d) Mercator Healthcare Limited
e) Ankur Fertilizers Private Limited
f) Rishi Holding Private Limited
g) AHM Investments Private Limited.
iii) Directors of the Company
a) H. K. Mittal
b) A. J. Agarwal
c) Manohar Bidaye
d) Anil Khanna
e) M. G. Ramakrishna
f) K. R. Bharat (w.e.f. 30th july,2007)
Amount Rs in Lacs
Particulars Gratuity Leave
Encashment
8%
7%
3%
LIC (1994-96)
Ultimate
8%
7%
3%
LIC (1994-96)
Ultimate
Discount Rate
Salary Escalation Rate-
Management Staff
Turnover Rate
Mortality Table
(a)
(b)
(c)
(d)
Amount Rs in Lacs
Name of the Transaction Companies in which the
directors / relatives of
directors have substantial
interest
Current Yr Previous Yr
Services Rendered 232.84
Expenses recharged by
other companies
Expenses Charged by
the company
Finance Provided
(Including Loans & Equity
Contributions)
Loans Given during the Year
Outstanding balances as
on 31.03.2008
Loans, Advances and
Receivables
Sundry Debtors
Deposit
Deposit given during
the year
Balance as on 31/03/2008
24.24
0.66
9.00
268.29
1,170.25
500.00
505.00
1,376.99
19.44
-
1.64
770.75
1,256.22
-
15.00
Amount Rs in Lacs
Name of the Transaction Companies in which the
directors / relatives of
directors have substantial
interest
Current Yr Previous Yr
Services Rendered
232.84
232.84
1,376.99
1,376.99
MLL Logistics Private Limited
Total
ANNUAL REPORT 2007-2008
95
D) Remuneration Paid to Key Management Personnel
1,658.78 (969.17)
E) Commission paid to Non – Executive Directors
10.00 (7.50)
F) Remuneration to Relative of Key Management
Personnel
6.04 (-)
7. Disclosure in respect of operating lease (as Lessee):
Amount Rs in Lacs
Name of the Transaction Companies in which the
directors / relatives of
directors have substantial
interest
Current Yr Previous Yr
Expenses recharged by
other companies
Ankur Fertilizers Private
Limited
Total
Expenses Charged by
the company
MLL Logistics Private Limited
Total
24.24
24.24
0.66
0.66
17.64
17.64
-
-
Finance Provided
(Including Loans & Equity
Contributions)
Loans
Loans Given during the Year
Mercator Mechmarine Limited
Total
9.00
9.00
1.64
1.64
Outstanding balances as
on 31.03.2008
Loans ,Advances and
Receivables
Advances
MLL Logistics Private Limited
(Advance)
Total
Sundry Debtors
MLL Logistics Private Limited
Total
Deposit
Deposit given during
the year
MLL Logistics Private Limited
Total
Balance as on 31/03/2008
Rishi Holding Private Limited
MLL Logistics Private Limited
Total
268.13 770.75
770.75
1,256.22
1,256.22
-
-
-
15.00
15.00
268.13
1,170.25
1,170.25
500.00
500.00
-
500.00
500.00
Amount Rs in Lacs
Year Ended
31st March,
2008
Year ended
31st March,
2007
(a)
-
-
-
-
-
-
Operating Leases
Disclosures in respect of
cancelable agreements
for office and residential
premises taken on lease
(I) Lease payments
recognized in the
Profit and Loss
Account
(ii) Significant leasing
arrangements
The Company has
given refundable
interest free security
deposits under the
agreements.
The lease agreements
are for a period of
sixty months.
These agreements
also provided for
increase in rent.
These agreements
are non cancellable
by both the parties
except in certain
exceptional
circumstances.
(iii)Future minimum
lease payments
under non-
cancellable
agreements
Not later than one
year
Later than one year
and not later than
five years
Later than five years
375.62
510.99
1979.04
NIL
118.01
314.71
1,715.14
NIL
ANNUAL REPORT 2007-2008
96
8. Disclosure in respect of operating lease (as Lessor):
Amount Rs in Lacs
Year Ended
31st March,
2008
Year ended
31st March,
2007
(a)
-
-
-
-
-
-
Operating Leases
Disclosures in respect of
cancellable agreements
for office and residential
premises taken on lease
(I) Lease payments
recognized in the
Profit and Loss
Account
(ii) Significant leasing
arrangements
The Company has
given refundable
interest free security
deposits under the
agreements.
The lease
agreements are for
a period of ninety
months.
These agreements
are non cancelable by
both the parties for
12 months except in
certain exceptional
circumstances.
(iii)Future minimum
lease payments
under non-
cancellable
agreements
Not later than one
year
Later than one year
and not later than
five years
Later than five years
113.87
NIL
113.87
113.87
NIL
NIL
NIL
NIL
NIL
NIL
Amount Rs in Lacs
Year Ended
31st March,
2008
Particulars Year ended
31st March,
2007
Number of Shares used in
computing Earning Per Share
-Basic
-Diluted
Earning per share (equity
shares of face value Re 1/-)
-Basic (in Rs.)
-Diluted (in Rs.)
224,225,062
236,414,299
14.45
13.73
216,634,232
237,909,951
3.14
3.04
Amount Rs in Lacs
As on 31st
March 2008
Contract Foreign Forwards
As on 31st
March 2007
Total No. of Contracts
Value of Contracts
(In US$ Millions)
22
341.33
NA
NA
10. Derivative Instruments
a) The Company uses foreign currency forward contracts to
hedge its risks associated with foreign currency fluctuations
relating to certain firm commitments and forecasted
transactions. The use of foreign currency forward contracts is
governed by the Company's strategy approved by the Board
of Directors, which provide principles on the use of such
forward contracts consistent with the Company's Risk
Management Policy. The Company does not use forward
contracts for speculative purposes.
Outstanding Forward Exchange Contracts entered into by
the Company:-
Amount Rs in Lacs
Current Year Previous Year
Total No. of Contract
Loan Value US Dollar (Million)
Loan Value JPY (Million)
(a) Interest Rate Swap
Contracts
(b) Currency Swap
Contracts
NIL
NIL
NIL
3
4.54
5717.45
Total No. of Contract
Loan Value
NIL
NIL
1
4.54
(b) The recognition and measurement principles for the cash
flow hedges as set out in
AS-30 has been adopted by the company for 2007-08. Due to this
the profit for the year is higher by Rs. 1,555.01Lacs.
9. Earning Per Share
Amount Rs in Lacs
Year Ended
31st March,
2008
Particulars Year ended
31st March,
2007
Net Profit after Tax and
preference dividend including
tax thereon
-Basic
-Diluted
32,405.63
32,464.36
6,797.65
7,238.05
ANNUAL REPORT 2007-2008
97
11. Foreign Currency Exposures
The year end exposure in a currency other than the functional
currency of the Company that were not hedged by a derivative
instrument or otherwise are given below:
12. Previous years figures have been regrouped / rearranged wherever necessary.
2006-072007-08
Rs. Lacs Fx.Million Rs. Lacs Fx.Million
Account Receivable
Loan & Advances
Accounts Payable/Acceptance
(including capital commitments made but not provided for)
Borrowings
968.95
43,017.97
97,423.87
32,221.16
U$ 2.44
$ 108.04
U$ 746.04
S$ 131.00
J¥ 325.00
U$ 80.92
2,272.14
29,813.09
72,981.41
62,416.02
U$ 5.19
U$ 68.11
U$ 88.13
S$ 131.00
U$ 142.6
Dated:
Mumbai
14th May 2008
For and on behalf of the Board
H.K. Mittal
Executive Chairman
A.J. Agarwal
Managing Director
Anil Khanna
Director
M. G. Ramkrishna
Director
ANNUAL REPORT 2007-2008
98
FINANCIAL SUMMARY
120,000
100,000
80,000
60,000
40,000
20,000
-
03-04 04-05 05-06 06-07 07-08
Financial Year
Rs.
In
Lacs
140,000
160,000
24,223
56,065
82,624
112,275
145,487Shipping Income
Continual Growth!
Net Profit
Year Wise Cash!
Dividend
Benefitting Shareholders Consistently!
03-04 04-05 05-06 06-07 07-08
Financial Year
Rs.
In
Lacs
2400
2600
2200
2000
1800
1600
1400
1200
1000
800
600
400
200
0
340
1,613
1,891
2,214
3,023
2800
3000
3200
-
03-04 04-05 05-06 06-07 07-08
Financial Year
Rs.
In
Lacs
5008.63
17443.5419803.02
13493.43
40033.19
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
ANNUAL REPORT 2007-2008
99
Net Worth
Building Confidence!
Per Share Data
Raising The Bar!
Fixed Assets And Net Worth
Creating Value For The Long Term!
-
20,283
87,316
147,831
199,032
03-04 04-05 05-06 06-07 07-08
Financial Year
Rs.
In
Lacs
320,000
280,000
240,000
200,000
160,000
120,000
80,000
40,000
359,298360,000
380,000
03-04 04-05 05-06 06-07 07-08
Financial Year
Rs.
In
Lacs
80,000
0
60,000
20,000
40,000
100,000
120,000
140,000
160,000
180,000
62,836
162.068
54,097
34,336
9,037
Financial Year
04-05 05-06 06-07 07-080.00
Ru
pees
10.00
20.00
30.00
40.00
50.00
60.00
70.00
11.13
16.60
Basic Earnings (Rs.) Cash Earnings (Rs.) Book Value (Rs.)
03-04
4.296
9.75
3.33
10.42
15.41
26.21
6.04
12.62
33.20
14.45
30.33
69
ANNUAL REPORT 2007-2008
Financial Year
Tonnage viz-a-vis!
100
FINANCIAL PERFORMANCE RATIO
Improving Efficiencies!
Balance Sheet Ratio
Leveraging For Future!
Year 04-05 05-06
Operational Profit Turnover (%)
Net Profit/Total Turnover (%)
RONW (PAT/Shareholders fund (%)
39.54
30.94
50.80
43.30
23.48
36.1
28.26
11.81
21.46
06-07 07-08
45.41
25.19
24.70
03-04
30.86
20.66
55.42
Debt Equity Ratio
Current Ratio
Year
0.77
1.74
07-08
2.39
3.85
06-07
1.53
1.83
1.12
2.12
1.92
7.04
04-0503-04 05-06
03-04 04-05 05-06 06-07 07-08
Financial Year
Rs.
In
Lacs
0
461,657
1,031,400
1,338,621
2,029,908
2,347,130
500,000
1,000,000
2,000,000
3,000,000
461,657
1,031,400
1,338,6211,369,887
1,656,664
Owned Chartered
660,021
687,174
ANNUAL REPORT 2007-2008
101
Tankers - 53%
Dry Bulk - 45%
Coal Handling - 1% Dredging - 1%
TURNOVER BREAK-UP
Adding Segments!
COMPOSITION OF FLEET (As on May 14, 2008)
Rationalising The Fleet!
VLCC - 24%
Suezmax - 6%
Aframax - 26%
Panamax - 27%
Chemical Tanker - 1%
Kamsarmax - 11% Dredgers - 1%
MR Tankers - 4%
ANNUAL REPORT 2007-2008
102
Consolidated Balance Sheet as at March 31, 2008
As at Particular 31, March 2008 31, March 2007
As at
SOURCES OF FUNDS Shareholders Funds Share Capital 5.90 13.56Warrants against Share Capital 4.19 1.12Reserves and Surplus 396.97 129.87Minority Interest 38.89 -
445.94 144.55Loan Funds Secured Loans 499.39 345.54Unsecured Loans 30.84 76.52
530.23 422.07
Total 976.17 566.62
APPLICATION OF FUNDS Fixed Assets Gross Block 789.14 435.81Depreciation (88.63) (47.27)Net Block 700.51 388.54Capital work in progress 113.28 22.05
813.79 410.59
Investments 1.07 20.03
Current Assets, Loans & AdvancesInventories 6.79 5.75Sundry Debtors 52.23 42.77Cash and Bank Balances 214.28 86.60Loans and Advances 105.37 48.56
378.68 183.69
Current Liabilites and ProvisionsCurrent Liabilities 208.78 38.22Provisions 7.71 5.17Incomplete Voyages (Net) 0.86 4.30
217.36 47.69
Net Current Assets 161.32 136.00
Total 976.17 566.62
Rate of conversion 1 USD = Rupees 39.815 43.47
(Amount in USD Million)
ANNUAL REPORT 2007-2008
AUDIT COMMITTEE
SHAREHOLDERS’ GRIEVANCE COMMITTEE
REMUNERATION CUM SELECTION COMMITTEE
EXPANSION COMMITTEE
AUDITORS
BANKERS
DEBENTURE AND SECURITY TRUSTEE
Anil Khanna Chairman
Manohar Bidaye Member
M.G. Ramkrishna Member
Manohar Bidaye Chairman
Anil Khanna Member
Atul J. Agarwal Member
Manohar Bidaye Chairman
Anil Khanna Member
M. G. Ramkrishna Member
H. K. Mittal Chairman
Atul J. Agarwal Member
Anil Khanna Member
K. R. Bharat Member
M/s. Contractor, Nayak & Krishnadwala
State Bank of India, ICICI Bank, Axis Bank, HDFC Bank
Axis Bank Limited
REGISTERED OFFICE
REGISTRAR & TRANSFER AGENTS
3rd Floor, Mittal Tower, B-Wing,
Nariman Point, Mumbai - 400 021
Tel: +91-22-66373333
Fax: +91-22-66373344
Website: www.mercator.in
Email: [email protected]
Intime Specturm Registry Ltd.
C-13, Pannalal Silk Mills Compound,
LBS Road, Bhandup West,
Mumbai - 400078.
Tel: 022-25963838
Fax: 022 25946969
e-mail: [email protected]
ANNUAL REPORT 2007-2008
103
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH MARCH 31, 2008
As at As atParticulars 31, March 2008 31, March 2007
INCOMEShipping Income 365.41 258.28Other Income 25.46 3.66Profit on Sale of Investments (Net) 0.82 0.21Profit on Sale of Assets (Net) 7.42 0.72
Total 399.10 262.87
EXPENSESShip Operating Expenses 205.63 182.82Administrative and Other Expenses 12.26 5.77Finance Charges 36.33 18.58Depreciation 42.07 23.88
Total 296.29 231.04
Profit Before Taxes 102.81 31.83Provision for TaxationCurrent (2.21) (0.75)Deferred Tax - -Fringe Benefit Tax (0.05) (0.03)Profit After Taxes 100.55 31.04
Minority Interest (7.51) (0.02)Prior Year Expenses / Income (Net) (10.42) (0.10)Short Provision for Tax of earlier Year (0.33) -Balance brought forward from last year 59.31 34.73
Available for Appropriations 141.60 65.66Less/(Add): AppropriationsTransfer to General Reserve 4.45 1.73 Transfer to Tonnage Tax Reserve 8.29 3.68Dividend on Preference Shares 0.77 0.74Dividend On Equity Shares (for Previous Year) 0.20Proposed Dividend on Equity Shares 6.49 4.35Tax on Dividend 1.27 0.84Balance Carried to Balance Sheet 120.14 54.32Earning Per Share (Equity Share of Re. 1/- Each) Basic (USD) 0.36 0.14Diluted (USD) 0.34 0.13
Rate of conversion 1 USD = Rupees 39.815 43.47
(Amount in USD Million)