MIRA INFORM REPORT
|
Report Date : |
04.04.2013 |
IDENTIFICATION DETAILS
|
Name : |
VARUN SHIPPING COMPANY LIMITED |
|
|
|
|
Registered
Office : |
Laxmi Building, 6, Shoorji Vallabhdas Marg, Ballard Estate, Mumbai -
400001, Maharashtra |
|
|
|
|
Country : |
|
|
|
|
|
Financials (as
on) : |
30.09.2012 |
|
|
|
|
Date of
Incorporation : |
29.01.1971 |
|
|
|
|
Com. Reg. No.: |
11-14985 |
|
|
|
|
Capital
Investment / Paid-up Capital : |
Rs.1500.078 Millions |
|
|
|
|
CIN No.: [Company Identification
No.] |
L61100MH1971PLC014985 |
|
|
|
|
TAN No.: [Tax Deduction &
Collection Account No.] |
MUMV00108D/ MUMV06824G/ MUMV07841B |
|
|
|
|
PAN No.: [Permanent Account No.] |
AAACV1658C |
|
|
|
|
Legal Form : |
A Public Limited Liability Company. The Company’s Shares are Listed on
the Stock Exchange. |
|
|
|
|
Line of Business
: |
Subject is
primarily engaged in the business of shipping and ship management activities.
|
|
|
|
|
No. of Employees
: |
Not Available |
RATING & COMMENTS
|
MIRA’s Rating : |
Ba (51) |
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
Maximum Credit Limit : |
USD 34000000 |
|
|
|
|
Status : |
Satisfactory |
|
|
|
|
Payment Behaviour : |
Usually correct |
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|
|
|
Litigation : |
Clear |
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|
|
Comments : |
Subject is a well-established company having a satisfactory track record.
Directors are reported to be an experienced and respectable businessmen.
Trade relations are reported as fair. Business is active. Payment are usually
correct and as per commitments. The company can be considered normal for business dealings at usual
trade terms and conditions |
NOTES:
Any query related to this report can be made
on e-mail: infodept@mirainform.com
while quoting report number, name and date.
ECGC Country Risk Classification List – June 30, 2012
|
Country Name |
Previous Rating (31.03.2012) |
Current Rating (30.06.2012) |
|
|
A1 |
A1 |
|
Risk Category |
ECGC
Classification |
|
Insignificant |
A1 |
|
Low |
A2 |
|
Moderate |
B1 |
|
High |
B2 |
|
Very High |
C1 |
|
Restricted |
C2 |
|
Off-credit |
D |
INDIAN ECONOMIC OVERVIEW
India is developing into an open-market economy, yet traces
of its past autarkic policies remain. Economic liberalization, including industrial
deregulation, privatization of state-owned enterprises, and reduced controls on
foreign trade and investment, began in the early 1990s and has served to
accelerate the country's growth, which has averaged more than 7% per year since
1997. India's diverse economy encompasses traditional village farming, modern
agriculture, handicrafts, a wide range of modern industries, and a multitude of
services. Slightly more than half of the work force is in agriculture, but
services are the major source of economic growth, accounting for more than half
of India's output, with only one-third of its labor force. India has
capitalized on its large educated English-speaking population to become a major
exporter of information technology services and software workers. In 2010, the
Indian economy rebounded robustly from the global financial crisis - in large
part because of strong domestic demand - and growth exceeded 8% year-on-year in
real terms. However, India's economic growth in 2011 slowed because of persistently
high inflation and interest rates and little progress on economic reforms. High
international crude prices have exacerbated the government's fuel subsidy
expenditures contributing to a higher fiscal deficit, and a worsening current
account deficit. Little economic reform took place in 2011 largely due to
corruption scandals that have slowed legislative work. India's medium-term
growth outlook is positive due to a young population and corresponding low
dependency ratio, healthy savings and investment rates, and increasing
integration into the global economy. India has many long-term challenges that
it has not yet fully addressed, including widespread poverty, inadequate
physical and social infrastructure, limited non-agricultural employment
opportunities, scarce access to quality basic and higher education, and
accommodating rural-to-urban migration.
|
Source
: CIA |
EXTERNAL AGENCY RATING
|
Rating Agency Name |
FITCH |
|
Rating |
Long term Rating: BBB+ (Withdrawn) |
|
Rating Explanation |
Good Credit Quality |
|
Date |
13.07.2012 |
RBI DEFAULTERS’ LIST STATUS
Subject’s name is not enlisted as a defaulter
in the publicly available RBI Defaulters’ list.
EPF (Employee Provident Fund) DEFAULTERS’ LIST STATUS
Subject’s name is not enlisted as a defaulter
in the publicly available EPF (Employee Provident Fund) Defaulters’ list as of
31-03-2012.
LOCATIONS
|
Registered Office : |
Laxmi Building, 6, Shoorji Vallabhdas Marg, Ballard Estate, Mumbai - 400001,
Maharashtra, India |
|
Tel. No.: |
91-22-66350100-109 |
|
Fax No.: |
91-22-66350274/ 280 |
|
|
|
|
Web site: |
|
|
|
|
|
Branches: |
5, |
|
Tel. No.: |
65-62211290 |
|
Fax No.: |
65-62213915 |
DIRECTORS
(AS ON 30.09.2012)
|
Name : |
Mr. Yudhishthir D. Khatau |
|
Designation : |
Chairman and Managing Director |
|
|
|
|
Name : |
Mr. C. M. Maniar |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Praveen Singh |
|
Designation : |
Director |
|
|
|
|
Name : |
Dr. A. K. Bhattacharya |
|
Designation : |
Director |
|
|
|
|
Name : |
Mr. Khurshed M. Thanawalla |
|
Designation : |
Director |
KEY EXECUTIVES
|
Name : |
Ms. Manali Parekh |
|
Designation : |
Vice President – Corporate Affairs and Company Secretary. |
MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN
(AS ON 31.12.2012)
|
Category of
Shareholder |
Total No. of Shares |
Total Shareholding as a % of Total No. of Shares |
|
|
|
|
|
(A) Shareholding
of Promoter and Promoter Group |
|
|
|
|
|
|
|
|
23341562 |
15.56 |
|
|
23341562 |
15.56 |
|
|
|
|
|
|
|
|
|
|
33350000 |
22.23 |
|
|
33350000 |
22.23 |
|
|
|
|
|
Total
shareholding of Promoter and Promoter Group (A) |
56691562 |
37.79 |
|
|
|
|
|
(B) Public
Shareholding |
|
|
|
|
|
|
|
|
11010 |
0.01 |
|
|
120965 |
0.08 |
|
|
1500000 |
1.00 |
|
|
10050528 |
6.70 |
|
|
10196700 |
6.80 |
|
|
21879203 |
14.59 |
|
|
|
|
|
|
|
|
|
|
8387838 |
5.59 |
|
|
|
|
|
|
38577235 |
25.72 |
|
|
18175528 |
12.12 |
|
|
6296407 |
4.20 |
|
|
6296407 |
4.20 |
|
|
71437008 |
47.62 |
|
|
|
|
|
Total Public
shareholding (B) |
93316211 |
62.21 |
|
|
|
|
|
Total (A)+(B) |
150007773 |
100.00 |
|
|
|
|
|
(C) Shares held by
Custodians and against which Depository Receipts have been issued |
|
|
|
|
0 |
0.00 |
|
|
0 |
0.00 |
|
|
0 |
0.00 |
|
|
|
|
|
Total
(A)+(B)+(C) |
150007773 |
100.00 |
BUSINESS DETAILS
|
Line of Business : |
Subject is
primarily engaged in the business of shipping and ship management activities.
|
GENERAL INFORMATION
|
No. of Employees : |
Not Available |
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Bankers : |
· State Bank of India Madame Cama Road, Mumbai - 400001, Maharashtra, India ·
Bank of · Axis Bank Limited · ICICI Bank Limited |
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Facilities : |
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Banking
Relations : |
-- |
|
|
|
|
Auditors : |
|
|
Name : |
Messrs Sorab S. Engineer and Company Chartered Accountant |
|
Address : |
|
|
|
|
|
Wholly
Owned Subsidiary : |
· Varun Cyprus Limited · Varun Gas Infrastructure Limited · Varun Resources Private Limited · Varun Global Private Limited |
|
|
|
|
Associate
Companies : |
· VSC International Pte. Limited · Tarun Shipping and Industries Limited · Varun Asia Pte. Limited · Ocean Race Shipping Company Limited · Sea Fidelity Shipping Company Limited |
|
|
|
|
Companies with
which transactions have taken place during the period : |
·
Varun Corporation Limited ·
Realpoint (Mauritius) Limited |
|
|
|
|
Companies with which
no transactions have taken place during the period: |
·
Sunbeam Talc Private Limited ·
Yuka Plantations Private Limited |
CAPITAL STRUCTURE
(AS ON 30.09.2012)
Authorised Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
300000000 |
Equity Share |
Rs.10/- each |
Rs.3000.000 Millions |
|
2000000 |
Preference Shares |
Rs.100/- each |
Rs.200.000
Millions |
|
|
|
|
|
|
|
|
Total |
Rs.3200.000
Millions |
Issued, Subscribed & Paid-up Capital :
|
No. of Shares |
Type |
Value |
Amount |
|
|
|
|
|
|
150007773 |
Equity Share |
Rs.10/- each |
Rs.1500.078 Millions |
|
|
|
|
|
Reconciliation of
number of shares outstanding at the beginning and end of the year
|
Particulars |
As at 30.09.2012 |
|
|
No. of Shares |
Rs. In millions |
|
|
|
|
|
|
Shares outstanding at the beginning of the year |
150,007,773 |
1500.078 |
|
Shares Issued during the year |
-- |
-- |
|
Shares bought back during the year |
-- |
-- |
|
Shares outstanding at the end of the year |
150,007,773 |
1500.078 |
Rights, Preferences
and Restrictions attached to Shares
The Company has
one class of shares referred to as equity shares having a par value of Rs.10
each. Each shareholder is entitled to one vote per share held. In the event of
liquidation, the equity shareholders are eligible to receive the remaining
assets of the Company after distribution of all preferential amounts, in
proportion to their shareholding.
List of
shareholders holding more than 5% shares
|
Name of
Shareholder |
As at 30.09.2012 |
|
|
No. of Shares held |
% of Holding |
|
|
|
|
|
|
Varun
Corporation Limited |
8,308,401 |
5.54% |
|
Tarun Shipping
and Industries Limited |
15,033,161 |
10.02% |
|
Realpoint (Mauritius) Limited |
33,350,000 |
22.23% |
|
Caledonia
Investments plc. |
9,972,769 |
6.65% |
The Company has
neither issued any Bonus Shares nor bought back any Shares during the last 5
years.
Unpaid calls- As
per of the Company, no calls remain unpaid by the directors and officers of the
Company as on 30th September, 2012
As per of the Company, no shares have been forfeited by the Company
during the year.
FINANCIAL DATA
[all figures are
in Rupees Millions]
ABRIDGED BALANCE
SHEET
|
SOURCES OF FUNDS |
30.09.2012 (18
Months) |
31.03.2011 |
31.03.2010 |
|
|
SHAREHOLDERS FUNDS |
|
|
|
|
|
1] Share Capital |
1500.078 |
1500.078 |
1500.078 |
|
|
2] Share Application Money |
0.000 |
0.000 |
0.000 |
|
|
3] Reserves & Surplus |
6923.991 |
6627.509 |
6619.506 |
|
|
4] (Accumulated Losses) |
0.000 |
0.000 |
0.000 |
|
|
NETWORTH |
8424.069 |
8127.587 |
8119.584 |
|
|
LOAN FUNDS |
|
|
|
|
|
1] Secured Loans |
7683.657 |
19562.711 |
27018.454 |
|
|
2] Unsecured Loans |
488.548 |
696.500 |
375.000 |
|
|
TOTAL BORROWING |
8172.205 |
20259.211 |
27393.454 |
|
|
DEFERRED TAX LIABILITIES |
0.000 |
0.000 |
0.000 |
|
|
FINANCE LEASE PAYABLE |
638.299 |
615.836 |
20.473 |
|
|
FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE |
0.000 |
0.000 |
52.614 |
|
|
|
|
|
|
|
|
TOTAL |
17234.573 |
29002.634 |
35586.125 |
|
|
|
|
|
|
|
|
APPLICATION OF FUNDS |
|
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS [Net Block] |
6532.810 |
18923.043 |
29469.043 |
|
|
Capital work-in-progress |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE |
9.241 |
0.000 |
0.000 |
|
|
FINANCE LEASE RECEIVABLE |
562.475 |
11462.366 |
0.000 |
|
|
INVESTMENT |
503.408 |
273.219 |
422.293 |
|
|
DEFERREX TAX ASSETS |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
CURRENT ASSETS, LOANS & ADVANCES |
|
|
|
|
|
|
Inventories |
76.177
|
63.491 |
0.000 |
|
|
Sundry Debtors |
7831.614
|
1426.054 |
3319.240 |
|
|
Cash & Bank Balances |
3347.575
|
162.121 |
340.609 |
|
|
Other Current Assets |
1633.377
|
760.802 |
160.993 |
|
|
Loans & Advances |
7031.452
|
5396.686 |
3571.171 |
|
Total
Current Assets |
19920.195
|
7809.154 |
7392.013 |
|
|
Less : CURRENT
LIABILITIES & PROVISIONS |
|
|
|
|
|
|
Sundry Creditor |
3345.438
|
1921.818 |
871.266 |
|
|
Other Current Liabilities |
6726.013
|
7290.718 |
196.132 |
|
|
Provisions |
222.105
|
252.612 |
629.826 |
|
Total
Current Liabilities |
10293.556
|
9465.148 |
1697.224
|
|
|
Net Current Assets |
9626.639
|
(1655.994) |
5694.789
|
|
|
|
|
|
|
|
|
MISCELLANEOUS EXPENSES |
0.000 |
0.000 |
0.000 |
|
|
|
|
|
|
|
|
TOTAL |
17234.573 |
29002.634 |
35586.125 |
|
PROFIT & LOSS
ACCOUNT
|
|
PARTICULARS |
30.09.2012 (18
Months) |
31.03.2011 |
31.03.2010 |
|
|
|
SALES |
|
|
|
|
|
|
|
Revenue from Operations (Net) |
4655.023 |
4914.266 |
6662.227 |
|
|
|
Profit on sale of ships and other assets (Net) |
1386.268 |
3454.477 |
2304.240 |
|
|
|
Other Income |
1800.732 |
437.480 |
59.478 |
|
|
|
TOTAL (A) |
7842.023 |
8806.223 |
9025.945 |
|
|
|
|
|
|
|
|
Less |
EXPENSES |
|
|
|
|
|
|
|
Operating Costs |
2566.043 |
3334.623 |
|
|
|
|
Employee benefits Expense0073 |
1063.357 |
1070.944 |
4190.156 |
|
|
|
Other Expenses |
394.242 |
242.118 |
|
|
|
|
Extraordinary Items |
(1607.377) |
46.541 |
|
|
|
|
TOTAL (B) |
2416.265 |
4694.226 |
4190.156 |
|
|
|
|
|
|
|
|
Less |
PROFIT
BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C) |
5425.758 |
4111.997 |
4835.789 |
|
|
|
|
|
|
|
|
|
Less |
FINANCIAL
EXPENSES (D) |
3604.609 |
2164.853 |
1931.994 |
|
|
|
|
|
|
|
|
|
|
PROFIT
BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E) |
1821.149 |
1947.144 |
2903.795 |
|
|
|
|
|
|
|
|
|
Less/ Add |
DEPRECIATION/
AMORTISATION (F) |
1443.883 |
1778.925 |
2364.933 |
|
|
|
|
|
|
|
|
|
|
PROFIT BEFORE
TAX (E-F) (G) |
377.266 |
168.219 |
538.862 |
|
|
|
|
|
|
|
|
|
Less |
TAX (H) |
(6.388) |
20.743 |
413.333 |
|
|
|
|
|
|
|
|
|
|
PROFIT AFTER TAX
(G-H) (I) |
383.654 |
147.476 |
125.529 |
|
|
|
|
|
|
|
|
|
Add |
PREVIOUS
YEARS’ BALANCE BROUGHT FORWARD |
NA |
NA |
949.334 |
|
|
|
|
|
|
|
|
|
Less |
APPROPRIATIONS |
|
|
|
|
|
|
|
Dividend and tax on distributed profits of
previous year |
NA |
NA |
0.007 |
|
|
|
Proposed final dividend equity shares |
NA |
NA |
120.006 |
|
|
|
Tax on proposed final equity dividend |
NA |
NA |
19.932 |
|
|
BALANCE CARRIED
TO THE B/S |
NA |
NA |
934.918 |
|
|
|
|
|
|
|
|
|
|
Earnings Per
Share (Rs.) |
2.56 |
0.98 |
0.84 |
|
QUARTERLY RESULTS
|
PARTICULARS |
|
|
31.12.2012 |
|
Type |
|
|
1st
Quarter |
|
Net Sales |
|
|
563.000 |
|
Total Expenditure |
|
|
535.800 |
|
PBIDT (Excl OI) |
|
|
27.200 |
|
Other Income |
|
|
96.900 |
|
Operating Profit |
|
|
124.100 |
|
Interest |
|
|
409.300 |
|
Exceptional Items |
|
|
313.700 |
|
PBDT |
|
|
28.500 |
|
Depreciation |
|
|
168.400 |
|
Profit Before Tax |
|
|
(139.800) |
|
Tax |
|
|
0.000 |
|
Provisions and contingencies |
|
|
0.000 |
|
Profit After Tax |
|
|
(139.800) |
|
Extraordinary Items |
|
|
0.000 |
|
Prior Period Expenses |
|
|
0.000 |
|
Other Adjustments |
|
|
0.000 |
|
Net Profit |
|
|
(139.800) |
KEY RATIOS
|
PARTICULARS |
|
30.09.2012 (18
Months) |
31.03.2011 |
31.03.2010 |
|
PAT / Total Income |
(%) |
4.89
|
1.67 |
|
|
|
|
|
|
|
|
Net Profit Margin (PBT/Sales) |
(%) |
8.10
|
3.42 |
8.09 |
|
|
|
|
|
|
|
Return on Total Assets (PBT/Total Assets} |
(%) |
1.43
|
0.63 |
1.46 |
|
|
|
|
|
|
|
Return on Investment (ROI) (PBT/Networth) |
|
0.04
|
0.02 |
0.07 |
|
|
|
|
|
|
|
Debt Equity Ratio (Total Debt/Networth) |
|
0.97
|
2.49 |
3.37 |
|
|
|
|
|
|
|
Current Ratio (Current Asset/Current Liability) |
|
1.94
|
0.83 |
4.36 |
LOCAL AGENCY FURTHER INFORMATION
|
Sr. No. |
Check List by Info Agents |
Available in Report (Yes / No) |
|
1] |
Year of Establishment |
Yes |
|
2] |
Locality of the firm |
Yes |
|
3] |
Constitutions of the firm |
Yes |
|
4] |
Premises details |
No |
|
5] |
Type of Business |
Yes |
|
6] |
Line of Business |
Yes |
|
7] |
Promoter's background |
Yes |
|
8] |
No. of employees |
No |
|
9] |
Name of person contacted |
No |
|
10] |
Designation of contact person |
No |
|
11] |
Turnover of firm for last three years |
Yes |
|
12] |
Profitability for last three years |
Yes |
|
13] |
Reasons for variation <> 20% |
----- |
|
14] |
Estimation for coming financial year |
No |
|
15] |
Capital in the business |
Yes |
|
16] |
Details of sister concerns |
Yes |
|
17] |
Major suppliers |
No |
|
18] |
Major customers |
No |
|
19] |
Payments terms |
No |
|
20] |
Export / Import details (if applicable) |
No |
|
21] |
Market information |
----- |
|
22] |
Litigations that the firm / promoter
involved in |
----- |
|
23] |
Banking Details |
Yes |
|
24] |
Banking facility details |
Yes |
|
25] |
Conduct of the banking account |
----- |
|
26] |
Buyer visit details |
----- |
|
27] |
Financials, if provided |
Yes |
|
28] |
Incorporation details, if applicable |
Yes |
|
29] |
Last accounts filed at ROC |
Yes |
|
30] |
Major Shareholders, if available |
Yes |
|
31] |
Date of Birth of
Proprietor/Partner/Director, if available |
Yes |
|
32] |
PAN of Proprietor/Partner/Director, if
available |
No |
|
33] |
Voter ID No of Proprietor/Partner/Director,
if available |
No |
|
34] |
External Agency Rating, if available |
Yes |
OPERATIONS
The Directors have recommended payment of dividend of Rs.0.50 per equity share for the 18 months period ended 30th September, 2012, which will absorb Rs.75.000 millions. Additional amount of Rs.12.170 millions will be absorbed towards dividend distribution tax. After the above appropriations, the directors propose to carry forward a balance of ` 1,239.40 million in the Profit and Loss Account.
Freight and charter hire income for the 18 months period ended 30th September, 2012 was Rs.4655.020 millions compared to Rs.4914.270 millions for the year ended 31st March, 2011. Profit before tax was ` 375.27 million for the 18 months period ended 30th September, 2012 as against Rs.168.220 millions during the year ended 31st March, 2011. Net profit after tax was Rs.383.650 millions for the 18 months period ended 30th September, 2012 as against Rs.147.480 millions during the year ended 31st March, 2011.
During the 18 months period ended 30th September, 2012, Company sold its AHTS vessel Suvarna and Amba Bhargavi on Bareboat Charter cum Demise (BBCD) basis to Varun Cyprus Limited, Cyprus andVarun Asia Pte. Limited, Singapore respectively and thereafter transferred the ownership of the vessels to the said companies. Further, the ownership of the vessels Amba Bhakti and Amba Bhavanee sold earlier on BBCD basis was transferred to Varun Asia Pte. Limited, Singapore and the ownership of AHTS vessels Subhiksha and Sudaksha sold earlier on BBCD basis was transferred to Varun Cyprus Limited, Cyprus.
The Company has also sold its AHTS vessels Subhadra and Suchandra to Varun Cyprus Limited. Due to flexibility of crewing under foreign flag and financing and fiscal benefits available to companies incorporated overseas, the subsidiaries/associate companies overseas have been able to obtain long-term low cost financing and long-term contracts/employment for the vessels acquired by them. The sale has also enabled the Company to reduce its debt from Rs.27036.500 millions as on 31st March, 2011 to Rs.13434.700 millions as on 30th September, 2012.
The Company together with its associates is the 5th largest in the world in terms of number of fully refrigerated LPG carriers and 7th largest in the world in terms of cbm, i.e. cargo carrying capacity under 10,000 + cbm category. The LPG carrier fleet presently owned and/or operated by the Company is the largest in India in terms of both fleet size and cargo carrying capacity.
With a view to realign businesses and increase focus on individual growth strategies of each business, the Company together with other companies has proposed to rearrange its businesses by segregating its traditional shipping business, ship management (technical and commercial management) and shipping investment business (presently confined to holding investment in group companies) into separate entities through a Composite Scheme of Arrangement and Amalgamation (the “Scheme”) under the provisions of the Companies Act, 1956 thereby resulting in enhancement of business prospects and shareholder’s value. The Company has received approval of Competition Commission of India and in-principle approvals from Bombay Stock Exchange Limited and National Stock Exchange of India Limited for the said Scheme.
The necessary application has also been made to the Hon’ble High Court of Judicature at Bombay for approval of the said Scheme.
During the period, following companies became wholly owned subsidiary companies of the Company:
Varun Gas Infrastructure Limited - the Company holds 1,000,000 equity shares of Rs.10 each.
Varun Global Private Limited - the Company holds 100,000 equity shares of Rs.1 each.
Varun Resources Private Limited - the Company holds 150,007,773 equity shares of Rs.1 each.
Further, Varun Asia Pte. Limited, Singapore was a wholly owned subsidiary of the Company for the period from 3rd April, 2012 to 28th September, 2012 and is now an associate of the Company.
Further, Varun Cyprus Limited, Cyprus became a wholly owned subsidiary of the Company on 15th December, 2011 - the Company holds 1,000 equity shares of US$ 1 each.
The consolidated financial statements presented by the Company include financial information of its subsidiaries prepared in compliance with applicable Accounting Standards. The Ministry of Corporate Affairs, Government of India vide its Circular No. 51/12/2007-CL-III dated 8th February, 2011 has granted general exemption under Section 212(8) of the Companies Act, 1956 from attaching the balance sheet, profit and loss account and other documents of the subsidiary companies to the balance sheet of the Company, provided certain conditions are fulfilled. Accordingly, annual accounts of the subsidiary companies and the related detailed information will be made available to the Company and subsidiary companies’ shareholders seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any shareholder at Company’s Registered Office in Mumbai and that of the subsidiary companies concerned.
MANAGEMENT DISCUSSION
AND ANALYSIS
(A) INDUSTRY
STRUCTURE AND DEVELOPMENT:
Transportation by sea is the leading and also most preferred mode of transportation the world over. The international shipping industry transports hydrocarbons and bulk commodities in wet bulk, dry bulk, liquefied gas, bulk chemicals and container sectors. Further, specialized vessels are also used to carry passengers, automobiles and project cargoes the world over. In addition thereto, offshore support vessels are used to provide services to offshore oil and gas exploration and production industry. The Company owns and/or operates a diversified fleet of 20 vessels, in the oil, gas and offshore support services sector.
According to Platou Report 2012, the steady relationship between the global GDP growth and sea-borne trade growth continued in 2011. Tonnage demand rose by 6.7 per cent compared to world GDP growth of 3.8 per cent. The respective figures were somewhat below observed long-term averages but broadly confirmed the 2:1 relationship between tonnage demand growth and GDP growth. However, had it not been for the strong increase in LNG volume, tonnage demand growth would have been weaker than expected based solely on the GDP vs. trade relationship. The main factor behind the slump in tonnage demand growth was the container trades which were hit hard by the weakness in the US and European economies. In addition, the continued strengthening of the Chinese yuan caused Chinese export growth to slow to 20 per cent from more than 30 per cent in 2010.
According to Platou Report 2012, the start of the year 2011 turned out to be a tough twelve months for the shipping industry overall. Market performance was weak, with the notable exception of LNG, despite relatively strong trade growth. With expectations for the world economy undergoing a marked shift to the negative and scheduled new building deliveries still high for 2012, any meaningful increase in capacity utilisation will be hard to come by for the main segments.
Further, overall capacity utilisation of 84 per cent was above the very depressed level of 2009 and in line with the low levels seen at the start of the previous decade which was not a satisfactory time for shipping. Big differences among segments still exist.
According to Platou Report 2012, the year 2011 turned out to be one of the most volatile and eventful years ever for the global shipping environment. Three sets of events stand out; another financial crisis raised its head, the social upheaval in the Middle East (known as the Arab Spring) continued and, lastly, it was a major year for natural disasters with the two biggest – a tsunami and earthquake in Japan and the “flood of the century” in Australia, having a direct impact on shipping.
While the effect of these disasters varied among segments, the overall impact was negative for world growth and hence for tonnage demand.
High new building deliveries for the third year in a row continued to drive a large increase in fleet capacity. Total fleet growth came in at 8.2 per cent, the highest level in more than 20 years.
A marked slowdown in tonnage demand growth added to the tanker market’s supply problems in 2012 and brought average freight rates down to the lowest level since 1994. Seaborne trade volume showed only marginal growth from the previous year. Fleet capacity continued its steady increase with a 6.2 per cent gain. Overall fleet utilisation fell by more than 3 percentage points to an estimated 83 percent in the tanker market.
The dry bulk market weakened in 2011, average freight rates fell by more than 40 per cent with Capesize rates leading the way with a 50 per cent drop. A sharp jump in fleet capacity outweighed continued strong albeit volatile, tonnage demand, which grew at 10 per cent. Fleet capacity growth was massive, despite ongoing delays, slippage and cancellations. Net fleet growth topped 15 per cent, a modern day record. Fleet utilisation fell by 4 percentage points but at 88 per cent remained well above the low levels seen for tankers and containers.
Average freight rates for container vessels rose in 2011 but market performance was very uneven. Demand growth was only half of the previous year’s sturdy pace, at 7.5 per cent. Fleet capacity added another 8.0 per cent resulting in a modest fall in capacity utilisation, keeping it below 80 per cent for the third straight year.
The LNG market had a fantastic year, in contrast to the rest of the industry. It is estimated that tonnage demand grew by more than 20 per cent while the active fleet increased only by 10 percent. This led to a significant tightening of market fundamentals.
According to Platou Report 2012 in the year 2011 in the crude oil tanker market, fleet capacity continued its above-trend expansion but the real negative surprise was that seaborne trade growth slowed to a trickle, only a year after one of the strongest performance on record. Fleet utilization thus moved significantly lower. VLCCs led the sharp drop in rates. Suezmaxes and Aframaxes also suffered, but rates did not fall as dramatically as for VLCCs. The seasonal upturn during the winter months was remarkably short and from the start of the second quarter and well into the fourth the market was exceptionally low for all segments.
LPG markets began a transition period in 2008. The year 2009 was the end of this beginning and start of a new era of sharply rising seaborne LPG supplies. The year 2012 has started seeing better utilisation of LPG vessels. Due to large expansion of Qatar Gas and Ras Gas LNG plants and establishment of new LNG export/import terminals, more LPG production and transportation is expected to take place during the times to come. Seaborne LPG supply is forecast to rise 47 percent to 83 mm t/year between 2008 and 2016. The growth a difference of 27 mm t/year of exports in 2016 v/s 2008 will alter the way LPG markets trade, changing trade dynamics and forcing product to new buyers.
According to Platou Report 2012, spending on oil and gas E and P accelerated further in 2011 and rose by an estimated 14 per cent, a very impressive figure considering that it came on top of robust double-digit growth in 2010. The sustained jump in oil prices to above $ 100 was an obvious catalyst. The demand for offshore support vessels (OSVs) in 2011 clearly benefited from significant increase in global offshore activity. The increase in offshore activity came on the back of rising oil prices and an estimated 14 per cent rise in global E&P spending. The rise in upstream investments produced growth across all the major drivers of OSV demand.
While day rates for large AHTS vessels generally increased in 2011, smaller sized vessels were left struggling to perform in many regions throughout the year.
Brazil was the epicentre of activity and increasing demand
there attracted a number of AHTS vessels from other regions.
SEGMENT-WISE
PERFORMANCE:
The Company is primarily engaged in the business of shipping and hence there are no separate reportable segments.
The Company together with its subsidiaries and associates, owns and/or operates a fleet of ten LPG carriers, including seven mid-size Gas Carriers (MGC’s), one Large Gas Carrier (LGC) and two Very Large Gas Carriers (VLGC’s), which have been deployed on a mix of time charters and spot charters with charterers such as Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited, Bharat Petroleum Corporation Limited, Reliance Industries Limited and Pertamina.
In the crude oil sector, as a ship manager, the Company operates three double hull Aframax crude oil tankers, which are placed in the Sigma Tanker Pool, trading globally. The benefit of working in the pool is that earnings of group of vessels owned by different owners are pooled together and distributed amongst various owners.
In the offshore support services sector, as a ship manager,
the Company operates a fleet of five large Anchor Handling Towing and Supply
(AHTS) vessels. The 3 large AHTS Vessels are on time charter to Petrobras,
Brazil for a firm period of four years with four extension options of one year
each. The other 2 large AHTS Vessels are on charter to Topaz Group in Caspian
Sea for ultimate charter to BP Exploration (Caspian Sea) Limited for a period
of two years with two extension options of one year each.
OUTLOOK:
There are encouraging signs that market mechanisms are being allowed to work and one may hope that a more balanced situation will emerge from 2013 onwards, world economy permitting.
One of the few bright spots for owners in 2011 has been the substantial reduction in the new building order book. New orders fell by almost 20 per cent, with conventional shipping segments seeing a decline of more than 50 per cent. That has brought the overall order book down to around 20 percent of the fleet, in line with the long-term pre 2007 trend. Another year of relatively high deliveries and limited ordering should take the ratio below trend. This is positive for everyone involved because the first step towards a balanced market and adequate earnings begins with a manageable supply side.
It appears that 2012 is another challenging year for world shipping markets, in line with 2011.
According to Platou Report 2012, freight market in the three major shipping segments-tankers, bulk carriers and container ships is expected to be subdued. However, less demand from the major segments may result in higher focus on smaller, industrial segment.
Increasing focus on fuel efficiency and new regulations for new tonnage might help boost ordering activity, as shipyards respond by offering new, improved designs. Another factor that will affect the balance in the new building markets is the potential downsizing of the building capacity. In difficult time shipbuilders will have to close down facilities due to lack of employment, but historically this has proven to be a slow process. However, yards may adopt conventional ship building capacity to offshore capacity or even utilize their capacity for other means than shipbuilding.
In conclusion, we foresee an oversupplied new building market in the coming year.
On the tanker markets, the supply side of the market will be the biggest challenge as more than 10 per cent of the fleet is scheduled to be delivered and considering other factors a net fleet growth of 6 per cent is expected. This will continue the downward pressure on fleet utilisation through 2012. LPG demand growth has been strong in Asia and the Middle East and while Asia is the largest LPG consuming region, it is still expanding. The Middle East has become a significant LPG demand centre due to rapid expansion of petrochemical industry and continued growth in both residential and commercial sectors. Overall demand in Europe and North America is reasonably flat but could increase if price sensitive LPG supplies are available. Also, demand will continue to expand slowly in Latin America due to rising consumption in residential and commercial markets. In the LPG sector, the order book is balanced considering the increased LPG demand in Asia, Middle East and Latin America. It is therefore expected that the freight rates will remain firm.
On a global basis, OSV day rates and fleet utilisation for
OSVs are forecast to rise but will vary by asset and region. OSV demand growth
is likely to be driven by a further focus on exploring and developing deepwater
assets. It seems likely that the main region propelling demand further will be
Brazil. As vessels per unit serviced in Brazil tend to be relatively high
compared to other regions combined with longer distances offshore, demand for
Offshore Supply Vessels is expected to receive an additional boost.
CONTINGENT LIABILITIES
|
Particulars |
30.09.2012 (18 Months) |
31.03.2011 |
|
|
|
|
|
On account of guarantees
executed by the Company’s bankers secured by charge on some of the Company’s
vessels and fixed deposits of Rs.5.865 Millions |
6240.960 |
38.850 |
|
|
|
|
|
Claims against the Company not acknowledged as debts |
182.565 |
84.845 |
|
|
|
|
|
Corporate
guarantees to the banks on behalf of VSC International Pte. Limited,
Singapore, Varun Asia Pte. Limited, Ocean Race Shipping Company Limited,
Cyprus, and Varun Gas Infrastructure Limited in respect of loans taken by
them for acquisition of ships. |
11068.564 |
2480.295 |
|
|
||
|
Deputy
Commissioner (CT) Chennai had raised a demand for Rs.83.284 Millions for
earlier years on account of levy of Commercial Tax on charter-hire in respect
of some of their ships. The Company was in appeal against the same and the
Appellate authority has given the ruling in favour of the Company. However
the Deputy Commissioner (CT) Chennai had preferred an appeal against the same
with Sales Tax Appellate Tribunal Chennai. The Appellate
Tribunal vide its Order dated 10th November, 2008, has allowed the Appeal
filed by the Revenue and has given the ruling in favour of the department.
Company has been advised that this demand is not sustainable and accordingly Company
has filed an appeal against the said Order in the Madras High Court. Hence no
provision has been made in the accounts. |
||
FIXED ASSETS:
· Ships
· Land
· Other Premises
· Office Equipment
· Furniture and Fixture
· Vehicles
PRESS RELEASE
VARUN SHIPPING’S PROFIT AFTER TAX IS
Rs.383.600 MILLIONS FOR THE 18 MONTHS PERIOD ENDED 30TH SEPTEMBER,
2012
RECOMMENDS DIVIDEND OF 5 PER CENT
Varun Shipping’s
freight and charter hire income for the eighteen months period ended 30th
September, 2012 was Rs.4655.000 Millions as compared to Rs.4914.200 Millions
for the previous financial year ended 31st March, 2011.
Company’s profit
after tax for the 18 months period ended 30th September, 2012 was Rs.383.600
Millions as compared to Rs.147.400 Millions for the previous financial year
ended 31st March, 2011.
Company has
recommended dividend of 5 per cent (Rs.0.50) per share of Rs.10 each for the
eighteen months period ended 30th September, 2012.
Earnings Per Share
(EPS) (basic) for the eighteen months period ended 30th September,
2012 was Rs.2.56.
The company
presently owns and/or operates a well diversified fleet of 20 vessels
comprising of 10 LPG carriers, 3 double hull aframax crude tankers and 7 Anchor
Handling Towing Supply (AHTS) vessels. The LPG Carrier fleet presently owned
and/or operated by the company is the largest in India in terms of both fleet
size and cargo carrying capacity.
VARUN SHIPPING
COMPANY LIMITED - LPG CARRIER MAHARSHI KRISHNATREYA
Maharshi Krishnatreya was on a ballast voyage
from Mangalore to Dubai after discharging cargo at Mangalore.
On 5th November, 2012, while the
vessel was at sea, 120 nautical miles off Gujarat, India, company received a
call from the Master of the vessel reporting that vessel’s six officers/crew
members including the Chief Officer and the Gas Engineer working in the
compressor room had fainted and medical first aid was being administered to
them.
On learning about the incident, company
immediately alerted the Navy and Indian Coast Guard for relief and rescue
operations. All regulatory authorities including Mercantile Marine Department,
Directorate General of Shipping, Coast Guards, P and I Club and Class were
informed and are being updated on a regular basis. Further, Maharshi
Krishnatreya was diverted to Porbandar Port, Gujarat.
Navy
and Coast Guard deployed vessels and a helicopter with a medical team for
evacuation of the officers/crew members. Team of Naval doctors examined the
casualties and confirmed that only the Gas Engineer could be saved. The
remaining five were declared dead.
The helicopter airlifted the survivor to
medical facility in Porbandar, who is now recovering in a hospital in Rajkot.
Five senior executives from office were sent
over to Porbandar the same day to assist the families of the affected
officers/crew members and to carry out detailed investigation of the incident.
Upon the preliminary investigation carried out
by the company, it is apparent that the team of officers and crew disassembled
a spectacle blank (which prevents flow through the pipe) on a pipeline carrying
inert gas while the vessel was undergoing a standard ‘gas freeing’ operation.
The removal of the spectacle blank without shutting off the inert gas supply and failure to ensure that there was no inert gas in the pipe caused an inert gas release into the compressor room causing asphyxiation of the team. There was no event of any LPG leakage, fire, explosion or damage to the vessel and this has not commercially affected the operations of the company.
The vessel is classed with Lloyd’s as well as Indian Register of Shipping (IRS). At Mangalore the vessel was inspected by IRS Class on 29th October, 2012 and all trading certificates were fully valid, vessel was class maintained with no conditions of Class and insured.
The vessel Maharshi Krishnatreya was awarded a Certificate of Excellence and the “Ship of the Year (Indian Flag in Foreign Trade)” award by the National Maritime Day Celebrations Committee (Central), Mumbai, Directorate General of Shipping, Government of India in April, 2008. This award is given to a ship which comes out successfully through various inspections depicting its clean image and efficiency of its master and crew. This vessel had also undertaken search and rescue operations in July, 2007 when a Korean vessel M.V. Orchid Sun, had sunk in the sea of Oman and was successful in rescuing two crew members.
The company is deeply saddened by the death of five officers/crew members and is with their families in this hour of grief.
The company deeply appreciates the support extended by the Navy and Coast Guard, Directorate General of Shipping, Mercantile Marine Departments, Class, police and local authorities at Porbandar.
The company has been awarded the following:
·
In
April, 2006, “Fastest Expanding Indian Shipping Company Award” from The
National Maritime Day Celebrations Committee, formed by Directorate General of
Shipping, Government of India.
·
In
October, 2008 “Marine and Offshore Services Award” at the Seatrade Middle East
& Indian Subcontinent Awards 2008 ceremony held in Dubai.
·
In
February, 2009, “Overall Best Managed Company in India – Small Cap” award in
the Corporate Governance Poll, 2008 conducted by ASIAMONEY.
·
In
October, 2009 “The Tanker Operator Award” at the Seatrade Middle East &
Indian Subcontinent Awards 2009 ceremony held at Dubai.
·
In
October, 2009 “Training and Crewing Award” at the 11th Lloyd’s List Asia Awards
2009 ceremony held at Singapore.
·
In
November, 2009 “The Energy Award” at the Lloyd’s List Middle East & Indian
Sub-continent Awards -2009 ceremony, held at Dubai.
·
In
November, 2010 “Safety at Sea” award at the Lloyds List Middle East &
Indian Subcontinent Awards 2010 ceremony held at Dubai.
These awards bear
testimony to the company’s commitment to global safety and quality standards
and best practices in management.
CMT REPORT (Corruption, Money Laundering & Terrorism]
The Public Notice information has been collected from various sources
including but not limited to: The Courts,
1] INFORMATION ON
DESIGNATED PARTY
No records exist designating subject or any of its beneficial owners, controlling
shareholders or senior officers as terrorist or terrorist organization or whom
notice had been received that all financial transactions involving their assets
have been blocked or convicted, found guilty or against whom a judgement or
order had been entered in a proceedings for violating money-laundering,
anti-corruption or bribery or international economic or anti-terrorism sanction
laws or whose assets were seized, blocked, frozen or ordered forfeited for
violation of money laundering or international anti-terrorism laws.
2] Court Declaration :
No records exist to suggest that subject is
or was the subject of any formal or informal allegations, prosecutions or other
official proceeding for making any prohibited payments or other improper payments
to government officials for engaging in prohibited transactions or with
designated parties.
3] Asset Declaration :
No records exist to suggest that the property or assets of the subject
are derived from criminal conduct or a prohibited transaction.
4] Record on Financial
Crime :
Charges or conviction
registered against subject: None
5] Records on Violation of
Anti-Corruption Laws :
Charges or
investigation registered against subject: None
6] Records on Int’l
Anti-Money Laundering Laws/Standards :
Charges or
investigation registered against subject: None
7] Criminal Records
No
available information exist that suggest that subject or any of its principals
have been formally charged or convicted by a competent governmental authority
for any financial crime or under any formal investigation by a competent
government authority for any violation of anti-corruption laws or international
anti-money laundering laws or standard.
8] Affiliation with
Government :
No record
exists to suggest that any director or indirect owners, controlling
shareholders, director, officer or employee of the company is a government
official or a family member or close business associate of a Government
official.
9] Compensation Package :
Our market
survey revealed that the amount of compensation sought by the subject is fair
and reasonable and comparable to compensation paid to others for similar
services.
10] Press Report :
No press reports / filings exists on
the subject.
CORPORATE GOVERNANCE
MIRA INFORM as part of its Due Diligence do provide comments on
Corporate Governance to identify management and governance. These factors often
have been predictive and in some cases have created vulnerabilities to credit
deterioration.
Our Governance Assessment focuses principally on the interactions
between a company’s management, its Board of Directors, Shareholders and other
financial stakeholders.
CONTRAVENTION
Subject is not known to have contravened any existing local laws,
regulations or policies that prohibit, restrict or otherwise affect the terms
and conditions that could be included in the agreement with the subject.
FOREIGN EXCHANGE RATES
|
Currency |
Unit
|
Indian Rupees |
|
US Dollar |
1 |
Rs.54.33 |
|
|
1 |
Rs.82.72 |
|
Euro |
1 |
Rs.69.82 |
INFORMATION DETAILS
|
Report Prepared
by : |
NIT |
SCORE & RATING EXPLANATIONS
|
SCORE FACTORS |
RANGE |
POINTS |
|
HISTORY |
1~10 |
|
|
PAID-UP CAPITAL |
1~10 |
|
|
OPERATING SCALE |
1~10 |
|
|
FINANCIAL CONDITION |
|
|
|
--BUSINESS SCALE |
1~10 |
|
|
--PROFITABILIRY |
1~10 |
|
|
--LIQUIDITY |
1~10 |
|
|
--LEVERAGE |
1~10 |
|
|
--RESERVES |
1~10 |
|
|
--CREDIT LINES |
1~10 |
|
|
--MARGINS |
-5~5 |
-- |
|
DEMERIT POINTS |
|
|
|
--BANK CHARGES |
YES/NO |
YES/NO |
|
--LITIGATION |
YES/NO |
YES/NO |
|
--OTHER ADVERSE INFORMATION |
YES/NO |
YES/NO |
|
MERIT POINTS |
|
|
|
--SOLE DISTRIBUTORSHIP |
YES/NO |
YES/NO |
|
--EXPORT ACTIVITIES |
YES/NO |
YES/NO |
|
--AFFILIATION |
YES/NO |
YES/NO |
|
--LISTED |
YES/NO |
YES/NO |
|
--OTHER MERIT FACTORS |
YES/NO |
YES/NO |
|
DEFAULTER |
|
|
|
--RBI |
YES/NO |
YES/NO |
|
--EPF |
YES/NO |
YES/NO |
|
TOTAL |
|
|
This score serves as a reference to assess
SC’s credit risk and to set the amount of credit to be extended. It is
calculated from a composite of weighted scores obtained from each of the major
sections of this report. The assessed factors and their relative weights (as
indicated through %) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend (10%) Operational size
(10%)
RATING EXPLANATIONS
|
RATING |
STATUS |
PROPOSED CREDIT LINE |
|
|
>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
|
71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit transaction.
It has above average (strong) capability for payment of interest and
principal sums |
Large |
|
56-70 |
A |
Financial & operational base are regarded healthy. General unfavourable
factors will not cause fatal effect. Satisfactory capability for payment of
interest and principal sums |
Fairly Large |
|
41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
|
26-40 |
B |
Capability to overcome financial difficulties seems comparatively
below average. |
Small |
|
11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
|
<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
|
- |
NB |
New Business |
- |
This report is issued at your request without any
risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL)
or its officials.