MANAGEMENT DISCUSSION & ANALYSIS REPORT 01. OVERVIEW The ground in the oil patch has shifted dramatically. The rug has been pulled and the oil industry is in a disarray brsently. The analyst's forecast for the industry is extremely different today compared with how it looked just a couple of years ago. That traditional structural discipline has been replaced by a systemic imbalance marked by vastly increased supply and receding demand growth. The analysts are brdicting oil price at $ 53 in 2020. The oil and gas industry is facing a challenge from new sources of energy such as shale gas and other renewable source of energy such as wind, solar and tidal energy which is attracting huge investments. The oil prices at one point of time around early 2008 was $147 per barrel is now less than at half the range. Lower oil prices pose the biggest threat to oil and gas industry earning. The oil majors have tightened their budgets and the projects are being under quoted and are on shoe string capex. The volatile pricing has seriously hit the major oil producers like Russia, Venezuela, Libya, Iran and the upcoming West African belt. The US is slowly but surely transforming from an import economy to dynamic export economy. SEAMEC continues to show a steady improvement and tenacity during the turbulent period and has constantly endeavored to keep the assets deployed at all time and are seriously contemplating to focus to a more projects, with a dual objective of use of vessel as a captive resource and to secure a position as a promising player in the changed business scenario. 02. OPPORTUNITIES AND THREATS Continued growth of the world's emerging economies will drive energy demand across globe, and will increase more opportunities for oil and gas companies to expand in these markets. With the high numbers of joint ventures and third-party service providers, the issue of partner and contractor assessment and management has now moved up the agenda for all leading oil companies and investors. The picture is a little bit brighter in the gas sector. Global demand for natural gas is expected to have risen by 2.2 percent per year by the end of 2019, according to the International Energy Agency. The new government with its "Make in India" slogan is driving the Indian Economy toward continued growth prospects. It is expected that GDP will improve in coming years and the foreign investments will drive the economy upwards. The Government is giving focus to the energy sector, oil and gas industry will play a pivotal role in the upward drive. As a significant departure from last year, ONGC is likely to come out with large amount of investments in Indian offshore region to boost domestic production. Projects on revamp of pipelines and EPC contracts are expected .ONGC remained as a brdominant oil and gas producer, and will be investing substantial capex on upgrading their assets on the West Coast and have started initiating the developments in the East Coast of India in a significant way. SEAMEC, a traditional marine offshore company with chartering diving vessels as its core competency is now aiming at newer avenues like top side work, projects and construction activities to improve its holistic approach in corroborating with its sub-contractors. Global economic weakness (in particular, slower growth in China and continuing financial woes in Europe), tougher fuel economy regulations, more viable forms of alternative energy and the development of extraordinarily efficient engines on equipment as varied as cars, earthmovers, marine vessels and power plants have all combined to dramatically curtail the need for oil. It is viewed that, companies in the oil sectors need to carefully consider the supply of assets, analyze the logistics of accessing available markets, and ensure a long-term brsence in these markets without getting into a bidding war. Oversupply and lower prices rebrsent a real challenge to the industry, but that doesn't mean the future is all gloom. It just means that producers and refiners need to be brpared and adopt strategies that take advantage of the new reality Aging of the vessels for SEAMEC remains as a concern as age restrictions are being imposed by major Charterers on one hand and on the other hand availability of new Tonnage adds to a potential threat. Shortage of offshore staff is still an acute concern. Seamec is evaluating means to address the issues. 03. BUSINESS SEGMENT ANALYSIS The only business segment for the Company during year was Offshore segment. 04. FINANCIAL PERFORMANCE Comments on Current Year's Performance: Revenue: Decline in Revenue mainly due to discontinuation of Bareboat Charter of Vessel ALLIANCE and dry dock of Vessel SEAMEC II and modification of Vessel SEAMEC I resulting decrease in deployment days. Opening Cost: The normal operating cost was not very significant considering utility factor of the vessels. All expenses incurred during the year are in relation to Project including Bare Boat hire charges. Operating Profit (Loss ): Despite decline in Revenue, there is increase in operating profit primarily due to change in treatment of Dry Docking expense. Debrciation: No significant variance. Debrciation Current Tax Exp: The Company is being assessed under Tonnage Tax scheme. Current tax is primarily on the interest income of short term deposits with Bank. Net Profit (Loss):Increase in profit primarily due to dry dock expenses capitalised under component accounting which were expensed out in the year of incurrence and also due to profit on sale of Sat Diving System. Business Responsibility Report for the year 2014-15 In terms of Clause 55 of the Listing Agreement SECTION A: GENERAL INFORMATION ABOUT THE COMPANY 1. Corporate Identity Number (CIN) of the Company: L63032MH1986PLC154910 2. Name of the Company: SEAMEC LIMITED 3. Registered address: A-901-905, 9th Floor, 215 Atrium, Andheri Kurla Road, Andheri (East), Mumbai - 400 093. 4. Website: www.seamec.in 5. E-mail id: seamec@bom5.vsnl.net.in / contact@seamec.in 6. Financial Year reported : 1st April, 2014 to 31st March, 2015 7. Sector(s) that the Company is engaged in (industrial activity code-wise): Offshore & Shipping 8. List three key products/services that the Company manufactures/provides (as in balance sheet) The Company provides offshore oilfields support services through its multi support diving vessels. This is the only service provided by the Company. 9. Total number of locations where business activity is undertaken by the Company i. Number of International Locations (Provide details of major 5) : NIL ii. Number of National Locations: Operation is controlled managed by its Corporate office at A-901-905, 9th Floor, 215 Atrium, Andheri Kurla Road, Andheri (East), Mumbai - 400 093. 10. Markets served by the Company - Both National and International SECTION B: FINANCIAL DETAILS OF THE COMPANY 1. Paid up Capital (INR) : 33,90,00,000 2. Total Turnover (INR) : Rs. 3858 million 3. Total profit after taxes (INR) : Rs. 540 million 4. Total Spending on Corporate Social Responsibility (CSR) as percentage of profit after tax (%) : The Company's total spending on CSR is 2% of the average profit after taxes in the brvious three financial years. For the year 2014-15, the Company spent Rs. 16.5 Lacs 5. List of activities in which expenditure in 4 above has been incurred:- a. Prime Minister National Relief Fund b. Sant Paramanand Blind Relief Mission c. Shanti Avedna Sadan (Cancer Foundation Society) d. Jagannath Cancer Aid Foundation (Cancer Aid Society) e. TOUCH (Education for under privileged children) SECTION C: OTHER DETAILS 1. Does the Company have any Subsidiary Company/ CompaniesRs. Yes, the Company has one subsidiary viz., Seamec International FZE, Dubai Airport Free Zone, UAE. 2. Do the Subsidiary Company/Companies participate in the BR Initiatives of the parent companyRs. If yes, then indicate the number of such subsidiary company(s): Business Responsibility initiatives of the parent company are applicable to the wholly owned subsidiary company. - 52 - 3. Do any other entity/entities (e.g. suppliers, distributors etc.) that the Company does business with, participate in the BR initiatives of the Company?. If yes, then indicate the percentage of such entity/entities?. [Less than 30%, 30-60%, More than 60%] No. The other entities with whom the Company does business viz., supplier, Charterer who do not participate in the BR initiatives of the Company. SECTION D: BR INFORMATION 1. Details of Director/Directors responsible for BR a) Details of the Director/Director responsible for implementation of the BR policy/policies • DIN Number 00153176 • Name : Captain C.J.Rodricks • Designation : Managing Director 2. Principle-wise (as per NVGs) BR Policy/policies (Reply in Y/N) The National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business (NVGs) released by the Ministry of Corporate Affairs has adopted nine areas of Business Responsibility. These briefly are as under: P1. Businesses should conduct and govern themselves with Ethics, Transparency and Accountability. P2. Businesses should provide goods and services that are safe and contribute to sustainability through their life cycle. P3. Businesses should promote the well-being of all employees. P4. Businesses should respect the interests of and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized. P5. Businesses should respect and promote human rights. P6. Businesses should respect, protect and make efforts to restore the environment. P7. Businesses, when engaged in influencing public and regulatory policy, should do so in a responsible manner. P8. Businesses should support inclusive growth and equitable development. P9. Businesses should engage with and provide value to their customers and consumers in a responsible manner. 3. Governance related to BR • Indicate the frequency with which the Board of Directors, Committee of the Board or CEO to assess the BR performance of the Company. Within 3 months, 3-6 months, Annually, More than 1 year The Directors of the Company assesses the BR performance of the Company on a Quarterly basis which is then appraised to the Board at its quarterly meeting as a part of larger brsentation on sustainability. • Does the Company publish a BR or a Sustainability Report?What is the hyperlink for viewing this report?. How frequently it is published?. The Company publishes its Sustainability Report on an Annual basis. SECTION E: PRINCIPLE-WISE PERFORMANCE PRINCIPLE 1 Business should conduct and govern themselves with Ethics, Transparency and Accountability 1. Does the policy relating to ethics, bribery and corruption cover only the company?. Yes/ No. Does it extend to the Group/Joint Ventures/Suppliers/Contractors/NGOs/Others?. Yes. The Company considers Corporate Governance as an integral part of good management. Company has well codified policy on Code of Conduct, Ethics, Whistle Blower & Vigil Mechanism, Risk Management. These are also applicable to all Board Members, employees of the Company and its subsidiary. Annual affirmation, whenever required, are taken from the designated employees. 2. How many stakeholder complaints have been received in the past financial year and what percentage was satisfactorily resolved by the management/?. If so, provide details thereof, in about 50 words or so. The Company received 2 complaints during the financial year and all these complaints are resolved. PRINCIPLE 2 Businesses should provide goods and services that are safe and contribute to sustainability throughout their lifecycles. 1. List up to 3 of your products or services whose design has incorporated social or environmental concerns, risks and/or opportunities. The Company has fairly understood its obligation on social and environmental concerns. Accordingly, Company has devised Marine operating systems and given emphasis to Quality, Health, Safety and Environmental obligations (QHSE). The Company has a specific policy to this effect in Company's MMS (Marine Management System). 2. For each such product, provide the following details in respect of resource use (energy, water, raw material etc.) per unit of product(optional): i. Reduction during sourcing/production/ distribution achieved since the brvious year throughout the value chain?. For the Company's operations major sources of requirement is the fuel and the electricity. The usage varies depending on the nature of operations. The Company endeavors to minimize the usage without compromising efficient operation. The comparative usage cannot be quantified. The Company has a ISO 14000 Certificate and consistently monitors the consumption of natural resources. ii. Reduction during usage by consumers (energy, water) has been achieved since the brvious year?. Vessels are following the SEEMP (Ship Energy Efficiency Management Plan). Each vessel has a vessel specific guideline to ensure maximum efforts in measuring the resources and improving operational efficiency. 3. Does the company have procedures in place for sustainable sourcing (including transportation)Rs. The Company has a documented mechanism in place. It has established a long term relationship with the suppliers committed to International Standards for the overseas supplies. All local suppliers comply with local and national laws. 4. Has the company taken any steps to procure goods and services from local & small producers, including communities surrounding their place of work?. If yes, what steps have been taken to improve their capacity and capability of local and small vendors?. The Company always encourage local suppliers where the vessel operates for its requirements meeting the applicable regulations. 5. Does the company have a mechanism to recycle products and waste?. If yes what is the percentage of recycling of products and waste (separately as <5%, 5-10%, >10%). Also, provide details thereof, in about 50 words or so. Yes, the gas Helios consumed by the Divers are recycled within the optimal limits. Garbage segregation is carried out on vessel as per Garbage management plan and disposed ashore accordingly, for recycling process. PRINCIPLE 3 Businesses should promote the well-being of all employees. 1. Please indicate the Total number of employees. a. Offshore : 43 b. On shore: 467 c. Total: 510 2. Please indicate the Total number of employees hired on temporary/contractual/casual basis.: 2 3. Please indicate the Number of permanent women employees.: 16 4. Please indicate the Number of permanent employees with disabilities : NIL 5. Do you have an employee association that is recognized by managementRs. Not Applicable 6. What percentage of your permanent employees is members of this recognized employee associationRs. NA 7. Please indicate the Number of complaints relating to child labour, forced labour, involuntary labour, sexual harassment in the last financial year and pending, as on the end of the financial year.: NA 8. What percentage of your under mentioned employees were given safety & skill up-gradation training in the last yearRs. • Permanent Employees • Permanent Women Employees • Casual/Temporary/Contractual Employees • Employees with Disabilities All permanent employees are given training to improve their skill on a regular basis as per the training schedule. PRINCIPLE 4 Businesses should respect the interests of and be responsive towards all stakeholders, especially those who are disadvantaged, vulnerable and marginalized. 1. Has the company mapped its internal and external stakeholders?. Yes. The Company has mapped its selective stakeholder's. 2. Out of the above, has the company identified the disadvantaged, vulnerable & marginalized stakeholders. Yes. Company has identified certain sections of society with the help of its own internal survey. 3. Are there any special initiatives taken by the company to engage with the disadvantaged, vulnerable and marginalized stakeholders. If so, provide details thereof, in about 50 words or so. As a part of discharging Corporate Social Responsibility, the Company supported the Cancer Society, education for under privileged children, Prime Minister National Relief Fund and Health Sectors. PRINCIPLE 5 Businesses should respect and promote human rights 1. Does the policy of the company on human rights cover only the company or extend to the Group/Joint Ventures/Suppliers/ Contractors/NGOs/OthersRs. The policy is embedded in the Company's code of business conduct, HR Policies and various other HR Practices. 2. How many stakeholder complaints have been received in the past financial year and what percent was satisfactorily resolved by the managementRs. Stakeholders' complaints as received were resolved satisfactorily during the Financial Year. PRINCIPLE 6 Businesses should respect, protect and make efforts to restore the environment. 1. Does the policy related to Principle 6 cover only the company or extends to the Group/Joint Ventures/Suppliers/ Contractors/NGOs/others. The Company is ISO 14000 Certified and is audited annually for compliance of environment management. 2. Does the company have strategies/ initiatives to address global environmental issues such as climate change, global warming, etcRs. Y/N. If yes, please give hyperlink for webpage etc. Yes. The vessels are complying with the international maritime organization guidelines. 3. Does the company identify and assess potential environmental risks?. Y/N Yes, this is part of the environment management system. 4. Does the company have any project related to Clean Development Mechanism?. If so, provide details thereof, in about 50 words or so. Also, if Yes, whether any environmental compliance report is filed?. The new assets will be compliant and certified as per the latest regulations. 5. Has the company undertaken any other initiatives on - clean technology, energy efficiency, renewable energy, etc. Y/N. If yes, please give hyperlink for web page etc. All the Vessels are complying with the energy efficiency plan. 6. Are the Emissions/Waste generated by the company within the permissible limits given by CPCB/SPCB for the financial year being reported?. Yes, as per the International guidelines. 7. Number of show cause/ legal notices received from CPCB/SPCB which are pending (i.e. not resolved to satisfaction) as on end of Financial Year. No Show cause notice has been received. PRINCIPLE 7 Businesses, when engaged in influencing public and regulatory policy should do so in a responsible manner 1. Is your company a member of any trade and chamber or associationRs. If Yes, Name only those major ones that your business deals with: a. Bombay Chamber of Commerce and Industry b. INSA (Indian National Shipowners' Association) 2. Have you advocated/lobbied through above associations for the advancement or improvement of public good?. Yes/ No; if yes specify the broad areas (drop box : Governance and Administration, Economic Reforms, Inclusive Development Policies, Energy security, Water, Food Security, Sustainable Business Principles, Others) Yes. We continue to closely work with Bombay Chamber of Commerce and Industry and INSA (Indian National Shipowners' Association) for advocating good sustainability practices and industry. Principle 8 Businesses should support inclusive growth and equitable development 1. Does the company have specified programmes/initiatives/projects in pursuit of the policy related to Principle 8Rs. If yes details thereof. Yes. Company has the Corporate Social Responsibility Policy. The Company carried out CSR activities primarily focusing on Natural calamity, Health, Education of under privileged. 2. Are the programmes/projects undertaken through in-house team/own foundation/external NGO/government structures/ any other organization? The Company's CSR activities implemented through its internal team. 3. Have you done any impact assessment of your initiative?. Yes 4. What is your company's direct contribution to community development projects- Amount in INR and the details of the projects undertaken. Prime Minister National Relief Fund - 5 lakh Sant Paramanand Blind Relief Mission - 8 lakh Shanti Avedna Sadan - 1.5 lakh Jaganath Cancer Aid Foundation - 1.5 lakh TOUCH - 0.5 lakh 5. Have you taken steps to ensure that this community development initiative is successfully adopted by the community?. Please explain in 50 words, Company's policy and its implementation on this front are wide open. Discussion held with the entities for effective utilization of the funds. Company's authorized staffs were in constant touch and the functioning of the institutions and the utilization of the funds contributed by the Company. PRINCIPLE 9 Businesses should engage with and provide value to their customers and consumers in a responsible manner. 1. What percentage of customer complaints/consumer cases are pending as on the end of financial year. As per the ISO 9001 guidelines a Customer Complaint procedure is in place and all complaints are redressed. 2. Does the company display product information on the product label, over and above what is mandated as per local laws?. Yes/No/N.A. /Remarks(additional information) The Company is ISO 9001 Certified and audited annually. Company's website describes the nature of business. 3. Is there any case filed by any stakeholder against the company regarding unfair trade practices, irresponsible advertising and/or anti-competitive behaviour during the last five years and pending as on end of financial year. If so, provide details thereof, in about 50 words or so No 4. Did your company carry out any consumer survey/ consumer satisfaction trends?. Yes, The Company gets a feedback from its client on completion of each charter. |