DIRECTORS' REPORT TO THE MEMBERS OF THE COMPANY: The Directors have pleasure in presenting the 59th Annual Report and Audited Statement of Accounts of the Company for the year ended 31st March 2016 Operating Performance: Company Standalone Revenue from operations increased marginally by 3.51% at Rs. 357.35 crores (previous year Rs. 345.22 crores). The Gross Profit (before net interest, depreciation, tax, hedging cost & foreign exchange loss (gain), PBIDT decreased to Rs.93.19 crores (previous year Rs. 156.66 crores) on account of lower other income. Profit before Tax was lower at Rs.73.90 crores (previous year Rs. 132.54 crores) and Profit after Tax decreased to Rs. 53.87 crores (previous year Rs. 107.83 crores) due to lower other income. Group Consolidated The Operating performance of the Group has shown improvement. The Revenue for the year decreased to Rs. 2213.22 crores (previous year Rs. 3916.00 crores) on account of lower commodity prices. The Profit before Tax for the year rose to Rs. 152.67 crores (previous year Rs. 142.22 crores) an increase of 7.35% on year on year basis. The Profit after Tax for the year rose to Rs. 126.14 crores (previous year Rs. 112.31 crores), an increase of 12.31% on year on year basis. Liquid Segment Revenues of the group for Liquid Division were higher for the year by 11.21% at Rs. 170.60 crores (previous year Rs. 153.40 crores) due to better capacity utilization. Normalised EBITDA increased to Rs. 102.38 crores compared to Rs. 97.39 crores in previous year, an increase of 5.12%. The revenues and margins continued to remain strong. Gas Segment The revenue for Gas Division during the year was Rs. 2042.62 crores (previous year Rs. 3762.60 crores) on account of lower LPG prices. The normalized EBITDA increased to Rs. 121.23 crores as compared to Rs. 84.65 crores in previous year, mainly due to improved margins and higher throughput volumes. Outlook for the Group The oil, gas and chemical logistics business continues to show good potential as India's import and exports of oil products, LPG and chemicals increase. The company is poised to take advantage of this growth by operating its newly established facilities at Haldia and Pipavav at higher rates of capacity utilization. A new LPG terminal is under construction at Haldia and a new liquids terminal is planned at Kandla. Dividend The company continues to evaluate and manage its dividend policy to build long term shareholder value. The Directors recommended three interim dividends during the financial year ended 31st March, 2016 aggregating to total dividend of 90% i.e. Rs. 0.90 per share of Rs. 1/- each (previous year Rs. 7.25 per share of Rs. 10/- each). New Projects and Expansion In light of increased demand for LPG in the region, the company recently tripled its LPG storage capacity at Pipavav to 8,100 MT. This additional capacity will be available for use in FY 2016-17. The Company is setting up a fully refrigerated LPG terminal at Haldia Dock Complex, West Bengal, with a static storage capacity of 25,000 MT and throughput capacity of 1,500,000 MT per annum. Terminal construction is underway with all the requisite environmental permits secured and is expected to be commissioned in 2017-18. This will be the largest LPG terminal in the Aegis portfolio. The Company has also signed a 20 year Memorandum of Understanding (MoU) with a large public sector unit as the anchor customer for use of this terminal. The Company is expanding its Haldia liquids terminal by adding 25,000 KL of storage capacity which is expected to be commissioned in Q4 FY16-17. The Company has initiated a project of debottlenecking of Mumbai LPG terminal by connecting it by pipeline to the Uran-Chakan cross country LPG pipeline. This will result in increased throughput capacity and less road movement of LPG. In Kandla, the Company is building 100,000 KL of liquid capacity for chemicals and petrochemicals, which is expected to be commissioned in Q1 FY 17-18. The company continues to look for opportunities to lease or acquire land at major and minor ports in India. Allotment of Land at Ports Aegis Group is continuing with its strategy of adding more terminals to its portfolio, offering its customers logistics services at every major gateway into and out of India. With the additional land allotments, Aegis Group is continuing its strategy of building a necklace of port terminals around India's coast line. The company already has additional land at the key ports of Pipavav, Haldia, New Mangalore, Kandla and Kochi available for new projects and will continue to evaluate new opportunities for land at all ports. Credit Rating The credit rating agency, Credit Analysis and Research Ltd. (CARE) has continued to assign a short term credit rating of 'A1+' (A One Plus) and long term rating of 'AA-' (Double A Minus). India Ratings and Research (Ind-Ra) has assigned the Company a Long-Term Issuer Rating of 'IND AA'. The Outlook is Stable. Consolidated Financial Statements In compliance with the directions by Ministry of Corporate Affairs, Govt. of India (MCA), the Consolidated Financial Statements of Aegis Group as provided in this Annual Report are prepared in accordance with the Accounting Standard (AS 21) "CONSOLIDATED FINANCIAL STATEMENTS". The Consolidated Financial Statements include Financial Results of its Subsidiary Companies. For information of members, a separate statement containing salient features of the financial details of the Company's subsidiaries for the year ended 31st March, 2016 in Form AOC-1 is included along with the financial statement in this Annual Report. The Annual Accounts of these subsidiaries will be made available to the holding and subsidiary companies' Members seeking such information at any point of time. The annual accounts of the subsidiary companies will also be kept for inspection by any Member at Head/Corporate Office of the Company and that of the subsidiary companies concerned and the same shall be displayed on the website of the Company www.aegisindia.com The Annual Report of the Company, the quarterly/half yearly and the annual results and the press releases of the Company are also placed on the Company's website: www.aegisindia.com Subsidiary Companies The Company has nine subsidiaries (out of which, seven are wholly owned subsidiaries) as on 31st March, 2016 having business akin and germane to the business of holding Company, whose details are given in the Annual Report and there has been no change in the nature of business of its subsidiaries during the year. The operating & financial Performance of the subsidiary Companies are as provided below: Sea Lord Containers Limited During the year under review, the Company's Bulk Liquid terminal continued operations at full capacity. The Company recorded a Turnover of Rs. 48.58 Crores (Previous year Rs. 39.38 Crores), increase of 23.34% on YoY basis on account of product mix. Net Profit after Tax was recorded at Rs. 33.29 Crores (Previous year Rs. 23.91 Crores), an increase of 39.20%. Aegis Gas (LPG) Private Limited (wholly owned subsidiary) The revenue for the year has decreased to Rs. 105.09 Crores as against Rs. 111.21 Crores of the previous year on account of lower commodity prices. The Company commissioned its additional Gas Storage Terminal capacity 2700 MT. Profit after tax was therefore higher at Rs. 15.64 Crores as compared to Rs. 12.58 Crores in previous year. Hindustan Aegis LPG Limited (wholly owned subsidiary) During the year 2015-16, the operating revenue decreased to Rs. 1215.59 Crores from Rs. 2789.15 Crores in previous year on account of lower volumes and prices. Profit after tax for the year ended 31st March, 2016 was Rs. 11.38 Crores as compared to profit of Rs. 5.40 Crores in previous year. Konkan Storage Systems (Kochi) Private Limited (wholly owned subsidiary) During the year under review, the Income was Rs. 4.55 Crores as against Rs. 4.85 Crores in the previous year. The company made a net profit of Rs. 0.65 Crore as against Rs. 1.53 Crore in the previous year. Aegis Group International Pte. Limited The revenue for the year has decreased to Rs. 1500.44 Crores as against Rs. 3374.32 Crores of the previous year. Profit after tax for the year ended 31st March, 2016 was Rs. 11.22 Crores as compared to profit of Rs. 16.09 Crores in previous year. Aegis International Marine Services Pte. Limited (wholly owned subsidiary) The revenue for the year has decreased to Rs. 8.82 Crores as against Rs. 41.22 Crores of the previous year on account of lower volumes. Loss for the year ended 31st March, 2016 was Rs. 0.06 Crore as compared to profit of Rs. 0.31 Crore in previous year. Aegis LPG Logistics (Pipavav) Limited (wholly owned subsidiary) The Company incurred normal expenditure of Rs. 0.20 lacs during the year (Previous year Rs. 0.26 lacs). The Company has not commenced any commercial operations as yet. Aegis Terminal (Pipavav) Limited (wholly owned subsidiary) The Company incurred normal expenditure of Rs. 0.20 lacs during the year (Previous year Rs. 0.27 lacs). The Company has not commenced any commercial operations as yet. Eastern India LPG Company Private Limited (wholly owned subsidiary) The Company incurred normal expenditure of Rs. 0.59 lacs during the year (previous year Rs. 0.58 lacs). The Company has not commenced any commercial operations as yet. Fixed Deposits During the year under review, the Company has not invited any fresh fixed deposits nor renewed any existing fixed deposits from its shareholders and general public. The total amount of fixed deposits matured and remaining unclaimed with the Company as on 31st March, 2016 was Rs. 2.45 lacs. There were no overdue deposits other than those unclaimed at the year end. There is no default in payment of interest and repayment of matured deposits & interest thereon by the Company. Corporate Governance A report on Corporate Governance, as stipulated under 'Schedule V' of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI LODR") together with a certificate of compliance from the Auditors, forms part of this report. Management Discussion and Analysis In compliance with 'Schedule V' of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate section on Management Discussion and Analysis, which also includes further details on the state of affairs of the Company, forms part of this Annual Report. Listing of Company's Securities Equity Shares The Company's Equity Shares continue to remain listed with the BSE Ltd. and National Stock Exchange of India Ltd. and the stipulated Listing Fees for the financial year 2016-17 have been paid to both the Stock Exchanges. During the year, the Company has sub-divided (split) its equity share from the face value of Rs. 10/- each into Re. 1/- each. Non-convertible Debentures The Company's Redeemable Non-Convertible Debentures are listed on the Wholesale Debt Market Segment of National Stock Exchange of India Ltd. and the stipulated Listing Fees for the financial year 2016-17 have been paid. Change in Registrar and Transfer Agent The Board of Directors of the Company has on 10th May, 2016 duly approved the appointment of M/s. Link Intime India Pvt. Ltd. as Registrar & Share Transfer Agent of the Company w.e.f. 21st May, 2016 in place of M/s. Sharepro Services (India) Private Limited, the Company's existing Registrar and Share Transfer Agent of the Company whose services are terminated w.e.f. closure of business hours on Friday, 20th May, 2016. The aforesaid was done in accordance with SEBI's Interim Order WTM/RKA/MIRSD2/41/2016 dated 22nd March, 2016. Directors & Key Management Personnel Pursuant to section 152 of the Companies Act, 2013, Mr. Anil M. Chandaria, Director of the Company retires by rotation and being eligible, offers himself for re-appointment. Pursuant to section 161 of the Companies Act, 2013, during the year Board of Directors, on recommendation of Nomination and Remuneration Committee, had appointed Ms. Poonam Ravi Kumar as Additional Director in the category Independent at their meeting held on 11th August, 2015 and Mr. Raj Kishore Singh as Additional Director at their meeting held on 10th March, 2016. Both the Directors will hold office upto the ensuing Annual General Meeting. Appropriate resolutions for the appointment/ re-appointment of the Directors are being placed for approval of the members at the Annual General meeting. Your Directors recommend the appointment of Ms. Poonam Ravi Kumar as Independent Director to hold office upto 5 (five) consecutive years up to 10th August, 2020 and appointment of Mr. Raj Kishore Singh as a Director at the ensuing Annual General Meeting. Disclosure from Independent Directors Pursuant to the provisions of Section 134 of the Companies Act, 2013 with respect to the declaration given by the Independent Director of the Company under Section 149(6) of the Companies Act, 2013, the Board hereby confirms that all the Independent Directors have given declarations and further confirms that they meet the criteria of Independence as per the provisions of Section 149(6) read with SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. Auditors As per the provisions of sections 139, 141 of the Companies Act, 2013 and rules made thereunder, the Company had, in its Annual General Meeting held on 31st July, 2014, approved the appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Mumbai, (ICAI Firm Registration No. 117366W/W-100018) to hold office till the conclusion of the third consecutive Annual General Meeting, subject to ratification by the members at every Annual General Meeting. In compliance with the same, the Directors do hereby place for ratification, the re-appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants, Mumbai, until the conclusion of the next Annual General Meeting. Occupational Health, Safety & Environment The Company is holding ISO-9001 (2008), ISO-14001 (2004) and OHSAS-18001 (2007) certifications and thereby meets all quality, environmental and safety standards specified under these Certifications. The company carries out a monthly review of health, safety and environment compliance for all sites and carries out regular mock drills and emergency preparedness tests. The company carried out various competitions like slogans, posters, 'spotting the hazards' to create awareness of safety amongst all levels of employees, contract workmen and also transporters. The company completed internal safety audit with external auditor. Conservation of Energy, Technology Absorption & Foreign Exchange Earnings and Outgo Details of energy conservation and research and development activities undertaken by the Company along with the information in accordance with the provisions of section 134 of Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014, the extent as are applicable to the Company, are given in Annexure 'A' to the Directors' Report. Particulars of Employees Disclosures pertaining to remuneration and other details as required under section 197(12) of the Act read with Rule 5 (2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of the Annual Report. However, having regard to the provisions of the first proviso to section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the registered office of the Company during working hours and any member interested in obtaining such information may write to the Company Secretary and the same will be furnished on request. Directors' Responsibility Statement The Directors would like to inform the Members that the Audited Accounts for the financial year ended 31st March 2016 are in full conformity with the requirement of the Companies Act, 2013. The Financial Accounts are audited by the Statutory Auditors, Messrs Deloitte Haskins & Sells LLP. The Directors further confirm that: a. In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b. The Directors had 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 and loss of the company for that period; c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; d. The Directors had prepared the annual accounts on a going concern basis; e. The Directors, had laid down adequate internal financial controls to be followed by the company and that such internal financial controls including with reference to Financial Statements are adequate and were operating effectively; and f. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Internal Control Systems and their Adequacy The Company has an effective internal control and risk-mitigation system, which are constantly assessed and strengthened. The Company's internal control system is commensurate with its size, scale and complexities of its operations. The internal and operational audit is entrusted to Messrs Natvarlal Vepari and Company, a reputed firm of Chartered Accountants. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Company has a robust Management Information System, which is an integral part of the control mechanism. The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. Significant and material orders There are no significant and material orders passed by the regulators/courts/tribunals impacting the going concern status and the Company's operations in future. Composition of Audit Committee The Company has an Audit Committee comprising of the following four Non-Executive Directors, out of which three are Independent Directors: 1. Mr. Dineshchandra J. Khimasia (Chairman) 2. Mr. Kapoorchand M. Chandaria 3. Mr. Kanwaljit S. Nagpal 4. Mr. Rajnikant J. Karavadia During the year, the Board of Directors of the Company had always accepted the recommendations of the Audit Committee. Vigil Mechanism for Directors and Employees The Company, pursuant to section 177 of Companies Act, 2013 read along with the rules made thereunder and Regulation 22 of SEBI LODR, have established vigil mechanism for Directors and Employees to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The scope of the policy is that it covers any alleged wrongful conduct and other matters or activity on account of which the interest of the Company is affected and is formally reported by Whistle Blower(s). The Whistle Blower's role is that of a reporting party with reliable information. They are not required or expected to act as investigators or finders of facts, nor would they determine the appropriate corrective or remedial action that may be warranted in a given case. The Company has a vigil mechanism to deal with instance of fraud and mismanagement, if any. The details of the said Policy are explained in the Corporate Governance Report and also posted on the website of the Company. Extract of the annual return as provided under sub-section (3) of section 92 Extract of the annual return as provided under sub-section (3) of section 92 of Companies Act, 2013 as prescribed in Form MGT-9 is given in Annexure 'B' to the Directors' Report. Policy relating to remuneration of Directors, Key Managerial Personnel and other Employees In terms of the provisions of section 178 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 19 of SEBI LODR, the Company duly constituted a Nomination and Remuneration (N&R) Committee comprising of the following members: 1. Mr. Dineshchandra J. Khimasia (Chairman) 2. Mr. Kanwaljit S. Nagpal 3. Mr. Rajnikant J. Karavadia The N&R Committee identified persons who are qualified to become Directors and who may be appointed in Senior Management in accordance with the laid down criteria, recommend to the Board their appointment and renewal and shall carry out evaluation of every Director's performance. The Committee formulates criteria for determining qualifications, positive attributes and independence of a Director and recommends to the Board a policy, relating to the remuneration for the directors, key managerial personnel and other employees. The Remuneration policy reflects the Company's objectives for good corporate governance as well as sustained and long-term value creation for stakeholders'. The Policy will also help the Company to attain optimal Board diversity and create a basis for succession planning. In addition, it is intended to ensure that - a) the Company is able to attract, develop and retain high-performing and motivated Executives in a competitive international market; b) the Executives are offered a competitive and market aligned remuneration package, with fixed salaries being a significant remuneration component, as permissible under the Applicable Law; c) remuneration of the Executives are aligned with the Company's business strategies, values, key priorities and goals. Disclosure of composition of the Corporate Social Responsibility Committee Disclosure of composition of the Corporate Social Responsibility Committee, contents of the CSR Policy and the format as provided under section 135 of Companies Act, 2013 read along with Companies (Corporate Social Responsibility Policy) Rules, 2014 is provided in Annexure - 'C' to the Directors' Report. Particulars of Loans, Guarantees or Investments The Company is engaged in the business of providing infrastructural facilities as specified under section 186(11)(a) of the Companies Act, 2013 read with Schedule VI to the Companies Act, 2013. However, details of Loans, Guarantees and Investments are given in the notes to the Financial Statements. Disclosure of particulars of contracts/arrangements with related parties All transactions entered into with the related parties are in the ordinary course of business and are on arm's length basis. There are no significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee on a quarterly basis. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website at <http://www.aegisindia.com/Corporate_Governances>. aspx. Development and implementation of Risk Management Policy The Company has constituted a Risk Management Committee which is not a mandatory requirement consisting of majority members of Board of Directors comprising of the following members: 1. Mr. Raj K. Chandaria (Chairman) 2. Mr. Dineshchandra J. Khimasia 3. Mr. Kanwaljit S. Nagpal 4. Mr. Rajiv M. Chohan The Committee lays down procedures to inform Board members about the risk assessment and minimization procedures, monitor and review risk management plan and for carrying out such other functions as may be directed by the Board. The Company adopted a risk management policy including identification therein of elements of risk, and action taken by the Company to mitigate those risks. The specific objectives of the Risk Management Policy are to ensure that all the current and future material risk exposures of the company are identified, assessed, quantified, appropriately mitigated and managed, to establish a framework for the company's risk management process and to ensure companywide implementation, to ensure systematic and uniform assessment of risks related with Oil, Gas & Chemicals Logistics business, to enable compliance with appropriate regulations, wherever applicable, through the adoption of best practices and to assure business growth with financial stability. The details of Committee and its terms of reference are also set out in the Corporate Governance Report forming part of the Board's Report. Material changes and commitments, if any, affecting the financial position of the company There were no material changes and commitments, which affected the financial position of the company between the end of the financial year of the company to which the financial statements relates and the date of the report. Number of meetings of the Board of Directors During the year ended 31st March, 2016, 5 Board Meetings were held on the following dates: 1. 28/05/2015 2. 11/08/2015 3. 03/11/2015 4. 28/01/2016 5. 10/03/2016 The detailed composition of the Board of Directors along with the number of Board Meetings and various committees has been provided in the Corporate Governance Report. Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 Your Company has always believed in providing a safe and harassment free workplace for every individual working in the Company's premises through various interventions and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment. The policy on prevention of sexual harassment at Workplace aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of undesired behaviour. During the year ended 31st March 2016, there were nil complaints recorded pertaining to sexual harassment. Secretarial Audit Report Pursuant to the provisions of section 134(3) and section 204 of Companies Act, 2013 read along with the rules made thereunder, the Board of Directors of the Company appointed Mr. Prasen Naithani of P. Naithani & Associates, Company Secretaries in Practice, to conduct the Secretarial Audit. The Secretarial Audit Report for the financial year ended 31st March, 2016 forms part of this Report and is annexed herewith as Annexure - 'D'. The Secretarial Audit Report confirms that the Company has complied with all the applicable provisions of the Companies Act, 2013, Securities Contracts (Regulation) Act, 1956, Depositories Act, 1996, the Foreign Exchange Management Act, 1999 to the extent applicable to Overseas Direct Investment (ODI) and Foreign Direct Investment (FDI), all the Regulations and Guidelines of SEBI as applicable to the Company, including the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 1992, Listing Agreements with the Stock Exchanges and the Memorandum and Articles of Association of the Company. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Regulation 17 (10) SEBI LODR, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Compliance Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Appreciation Your Directors place on the record their appreciation of the contribution made by the employees at all levels who, through their competence, diligence, solidarity, co-operation and support, have enabled the Company to achieve the desired results during the year. The Board of Directors gratefully acknowledge the assistance and co-operation received from the authorities of Port Trust, Bankers, Central and State Government Departments, Shareholders, Suppliers and Customers. For and on behalf of the Board Raj K. Chandaria Vice Chairman & Managing Director DIN: 00037518 Anish K. Chandaria Managing Director & CEO DIN:00296538 Place : Mumbai Dated : 30th May, 2016 |