BSE Prices delayed by 5 minutes... << Prices as on May 24, 2019 >>   ABB 1494.65 [ 4.57 ]ACC 1705 [ 4.09 ]AMBUJA CEM 232.05 [ 4.27 ]ASIAN PAINTS 1385.55 [ 1.18 ]AXIS BANK 793.65 [ 2.14 ]BAJAJ AUTO 3077.3 [ 0.31 ]BANKOFBARODA 137.05 [ 7.49 ]BHARTI AIRTE 353.3 [ 4.40 ]BHEL 69 [ 3.76 ]BPCL 395.2 [ 2.73 ]BRITANIAINDS 2851.75 [ 0.44 ]CAIRN INDIA 285.4 [ 0.90 ]CIPLA 570.35 [ 1.22 ]COAL INDIA 244.6 [ 0.23 ]COLGATEPALMO 1161.8 [ 0.72 ]DABUR INDIA 399.2 [ 3.50 ]DLF 191.5 [ 6.04 ]DRREDDYSLAB 2664.2 [ 1.02 ]GAIL 341.1 [ 1.13 ]GRASIM INDS 908.3 [ 2.46 ]HCLTECHNOLOG 1061.65 [ -0.46 ]HDFC 2127.5 [ 0.56 ]HDFC BANK 2372.3 [ 1.63 ]HEROMOTOCORP 2828.35 [ 3.24 ]HIND.UNILEV 1749.2 [ -0.10 ]HINDALCO 195.8 [ 1.79 ]ICICI BANK 431.5 [ 5.09 ]IDFC 38.5 [ 7.09 ]INDIANHOTELS 151.6 [ 2.05 ]INDUSINDBANK 1649.85 [ 3.32 ]INFOSYS 709.45 [ 1.17 ]ITC LTD 290.15 [ 0.57 ]JINDALSTLPOW 160.95 [ 5.89 ]KOTAK BANK 1513.85 [ 0.88 ]L&T 1543.65 [ 4.60 ]LUPIN 762.95 [ 1.84 ]MAH&MAH 663.9 [ 3.82 ]MARUTI SUZUK 7096.15 [ 2.36 ]MTNL 8.96 [ 2.87 ]NESTLE 10692.35 [ -0.67 ]NIIT 102.7 [ 3.27 ]NMDC 97.9 [ 1.66 ]NTPC 129.2 [ -0.54 ]ONGC 174.4 [ 0.20 ]PNB 88.15 [ 5.19 ]POWER GRID 185.65 [ 0.65 ]RIL 1336.8 [ 0.07 ]SBI 354.6 [ 3.59 ]SESA GOA 163.85 [ 4.20 ]SHIPPINGCORP 33.2 [ 6.92 ]SUNPHRMINDS 415.55 [ 0.56 ]TATA CHEM 627.35 [ 1.66 ]TATA GLOBAL 234.55 [ 1.85 ]TATA MOTORS 182.15 [ 4.09 ]TATA STEEL 483.5 [ 3.78 ]TATAPOWERCOM 67.7 [ 4.80 ]TCS 2049.65 [ -0.20 ]TECH MAHINDR 736 [ -0.94 ]ULTRATECHCEM 4796.35 [ 2.64 ]UNITED SPIRI 546.25 [ 2.36 ]WIPRO 283.15 [ 0.35 ]ZEETELEFILMS 375.9 [ 4.14 ] BSE NSE
You can view the entire text of Notes to accounts of the company for the latest year

BSE: 523598ISIN: INE109A01011INDUSTRY: Shipping

BSE   ` 33.20   Open: 31.20   Today's Range 31.05
+2.15 (+ 6.48 %) Prev Close: 31.05 52 Week Range 30.50
Year End :2018-03 

Note 2: Critical Accounting Estimates and Judgements

Preparing the financial statements under Ind AS requires management to take decisions and make estimates and assumptions that may impact the value of revenues, costs, assets and liabilities and the related disclosures concerning the items involved as well as contingent assets and liabilities at the balance sheet date. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The Company make estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

a) Useful lives of vessels

Management of the Company decided the estimated useful lives of vessels and respective depreciation. The accounting estimate is based on the expected wears and tears. Wears and tears can be significantly different following renovation each time. When the useful lives differ from the original estimated useful lives, management will adjust the estimated useful lives accordingly. It is possible that the estimates made based on existing experience are different to the actual outcomes within the next financial period and could cause a material adjustment to the carrying amount of fixed assets.

b) Residual Value

Residual value is considered as 5% of original cost of Vessel. The residual value is reviewed every year on 31st March.

c) Impairment of assets

The recoverable amount of an asset or a cash-generating unit is determined based on value-in-use calculations prepared on the basis of management’s assumptions and estimates An impairment loss is recognised for the amount by which the asset’s or cash generating unit’s carrying amount exceeds its recoverable amount and is recognised in the Statement of Profit and Loss. Recoverable amount is higher of an asset’s net selling price and its value in use. Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life.

d) Defined benefit obligations

The present value of the defined benefit obligations depends on a number of factors that are determined on an actuarial basis using a number of assumptions. The assumptions used in determining the net cost (income) for post employments plans include the discount rate. Any changes in these assumptions will impact the carrying amount of such obligations.

Discount Rate for the valuation is determined by reference to market yields at the balance sheet date on Government Bonds. This is the rate that is used to determine the present value of estimated future cash outflows expected to be required to settle the defined benefit obligations.

e) Provision

Estimates of the amounts of provisions recognised are based on current legal and constructive requirements, technology and price levels. Because actual outflows can differ from estimates due to changes in laws, regulations, public expectations, technology, prices and conditions, and can take place many years in the future, the carrying amounts of provisions are regularly reviewed and adjusted to take account of such changes.

f) Impairment of Trade Receivable

The methodology followed by SCI is the use of a provision matrix as a practical expedient to measure expected credit losses on its portfolio of trade receivables. The model uses historical credit loss experience for trade receivables i.e. this model uses aging analysis of trade receivables as at the reporting date.

Considering the different services provided by our company and provisioning made segment wise in SCI, analysis and computation of expected credit loss for trade receivables is done for different segments.

g) Demurrage

Vessel Demurrage income due as per contractual terms is recognized. A provision on estimated basis is made towards deduction from demurrage based on past experience of settlements.

h) Income Tax

Due to Tonnage tax regime applicable on the main part of the company's activities, resulting in a lower income tax payable in the future, the amount of deferred tax to be recognised is limited. Considering the tonnage tax regime applicable to shipping activities, difference between taxable and book values of assets and liabilities are generally of permanent nature. This is due to the fact that the taxable result for tonnage tax eligible activities has no correlation with either carrying value or the generally applicable tax value of assets and liabilities. As a consequence, temporary differences are limited to those arising from other activities which are subject to normal Income tax provisions.

(A) Sethusamudram Corporation Ltd. (SCL), a Special Purpose Vehicle was incorporated on 06.12.2004 for developing the Sethusamudram Channel Project with Tuticorin Port Trust, Ennore Port Ltd, Visakhapatnam Port trust, Chennai Port Trust, Dredging Corporation of India Ltd., Shipping Corporation of India Ltd. and Paradip Port Trust as the shareholders. SCI participated with an investment of Rs 5000 lakhs (previous year Rs 5000 lakhs). The dredging work is suspended from 17.09.2009 consequent upon the direction of the Hon'ble Supreme Court of India. As there is no progress in the project since then, the Management had provided for diminution towards the investment in FY 2012 - 13.

(B) India LNG Transport Companies No. 1 & 2 Ltd. are two joint venture companies promoted by the Corporation and three Japanese companies Viz. M/S Mitsui O.S.K.lines Ltd. (MOL), M/S Nippon Yusen Kabushiki Kaisha Ltd (NYK Lines) and M/S Kawasaki Kisen Kaisha Ltd (K Line) along with M/S Qatar Shipping Company ( Q Ship), Qatar. SCI and MOL are the largest shareholders, each holding 29.08% shares while NYK Line 17.89%, K Line 8.95% & Q Ship holds 15% respectively. The Shares held by the Corporation and other partners in the two joint venture Companies have been pledged against loans provided by lender banks to these companies. India LNG Transport Company No.1 Ltd owns and operates one LNG tanker SS Disha and India LNG Transport Company No. 2 Ltd owns and operates one LNG Tanker SS Raahi.

(C) India LNG Transport Company No. 3 Ltd. is the 3rd joint venture company which owns and operates one LNG tanker MT Aseem. The company is promoted by the Corporation and its three Japanese partners viz. MOL, NYK Lines, K Line along with M/S Qatar Gas Transport Company (QGTC) and M/s Petronet LNG Limited (PLL) who are the other partners. SCI and MOL are the largest shareholders with 26% share each, while NYK, K Line, QGTC and PLL hold 16.67%, 8.33%, 20% and 3% respectively. The Shares held by the Corporation and other partners in the joint venture company have been pledged against loans provided by lender banks to these companies.

(D) India LNG Transport Company No. 4 Ltd. is a Joint Venture Company incorporated in Singapore in November 2013 and is promoted by the Corporation with its three Japanese partners viz NYK, MOL and K Line along with PLL. SCI, NYK and PLL are the largest shareholders with 26% share each, while MOL and Kline hold 15.67% and 6.33% respectively. The Shares held by the Corporation and other partners in the joint venture company have been pledged against loans provided by lender banks to these companies.

(E) “Inland and Coastal Shipping Limited " is wholly owned subsidiary company incorporated in India on 29th September 2016.

a) The Government of India in meeting of cabinet held on 02.04.2013 approved the proposal for dissolution of Irano Hind Shipping Company (IHSC) and splitting the assets/liabilities of IHSC between Joint Venture partners shall be undertaken. The Company holds 49% in IHSC, a joint venture company incorporated in Iran on which sanction has been imposed by United Nations Organisation (UN). Substantive efforts are made to eventually dissolve the JV which is depending on geo political environment and sanctions imposed by UN which is completely beyond SCI's control. SCI shall remain committed by the decision of cabinet and therefore is making all efforts for dissolution of JV. Further, Government of India vide letter dated 08th May 2018 has advised SCI to go ahead with the dissolution of IHSC. Under Ind AS, investment in Irano Hind has been written off during FY 16-17 to reflect its fair value.

b) The Company entered into a joint venture agreement with Steel Authority of India Ltd. with participation interest in the ratio of 50:50 and promoted a jointly controlled entity SAIL SCI Shipping Pvt. Ltd. (SSSPL). The said company was incorporated on 19.05.2010 with an authorised share capital of Rs 1000 lakhs. The Company has subscribed equity capital of 100000 shares of Rs 10 each amounting to Rs 10 lakhs. It has been decided by the joint venture partners to wind up this company. Under Ind AS, investment in SSSPL has been written down during FY 15-16 to reflect its fair value.

Non-recurring fair value measurements

Investments classified as held for sale during the reporting period is measured at the lower of its carrying amount and fair value less costs to sell at the time of the reclassification, resulting in the recognition of a write down of Rs 42 (Previous year Rs 3) as impairment loss in the statement of profit and loss in FY 2016-17 . The fair value of the investments were determined using the book value approach. This is a level 3 measurement as per the fair value hierarchy as set out in fair value measurement disclosures (refer note 36).

c) For the period of five years immediately preceding the date as at which the Balance Sheet is prepared, no shares have been issued for consideration other than cash, no shares have been issued as bonus shares & no shares have been bought back.

d) Rights/Preference/Restriction attached to Equity Shares

The Company has only one class of Equity shares having par value of ' 10. Each shareholder of equity shares is entitled to one vote per share. In the event of liquidation of the Company, the holder of equity shares will be entitled to receive the remaining assets of the company after distribution of all preferential allotment in proportion to their shareholding. The dividend whenever proposed by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

e) The Company does not have holding company.

f) There are no shares reserved for issue under option and contract/ commitment for the sale of shares/ disinvestment.

Nature and Purpose of other reserves

Capital Reserve: The amount of sales proceeds in excess of original cost of ships sold by the Company. This is not available for distribution of dividend but can be utilised for issuing bonus shares.

Securities Premium Reserve: The amount received in excess of face value of the equity shares is recognised in Share Premium Reserve. This is not available for distribution of dividend but can be utilised for issuing bonus shares.

Tonnage Tax Reserve: This reserve is a statutory reserve as per requirement of section 115VT of the Income Tax Act, 1961 for the purpose of complying with the conditions for applicability of tonnage tax scheme.

Note: Status of contingent Liabilty with reference to the opening balance as on 01-04-2017

There is a reduction of Rs 554.97 lakhs from opening balance in cases of Central Government Departments There is a reduction of Rs 1850.50 lakhs from opening balance in cases of CPSE There is a reduction of Rs 94.75 lakhs from opening balance in cases of Local Authority There is a reduction of Rs 319.23 lakhs from opening balance in cases of others

* The contingent Liability includes cases decided in favour of SCI amounting to Rs 14800 lakhs. Thereafter, department have gone in appeal.

Note 2 Correction of errors in accounting

In order to decide materiality for determining prior period items as per Ind AS 8, the Company has fixed various thresholds limits for different category of items / transactions depending on the size and nature of amount.

On the basis of various threshold limits for determining prior period items for FY 2017-18, the errors mentioned below are in nature of "Remaining items" i.e., other category item for which transaction level limit decided is Rs 10 lakhs for each item and overall limit is Rs 1 crore for each item.

Due to error and omissions, during the year 2017-18, few expenses/income incurred/receivable on behalf of managed vessels/owned were not correctly booked. The provision for deferred tax liability in previous year was miscalculated due to misinterpretation of letter of allotment of land.

Note 3: Related party transactions

(a) Control

Government of India enterprises controlled by Central Government

(b) Subsidiaries

Inland & Coastal Shipping Ltd. is the 100 percent Subsidiary formed during 2016-17

(c) Joint Venture Companies

1. Irano Hind Shipping Co. Ltd.

2. India LNG Transport Co. (No. 1) Ltd.

3. India LNG Transport Co. (No. 2) Ltd.

4. India LNG Transport Co. (No. 3) Ltd.

5. India LNG Transport Co. (No. 4) Ltd.

6. SAIL SCI Shipping Pvt. Ltd.

(d) Key Management Personnel Executive Director

1. Shri A.K.Sharma

2. Smt H.K Joshi

3. Shri S.V Kher

4. Shri Bipin Bihari Sinha (Resigned w.e.f. 12.08.2017)

5. Shri Sarveen Narula (Superannuated on 31.07.2017)

6. Smt. Sangeeta Sharma (w.e.f. 29.12.2017)

7. Shri Rajesh Sood (w.e.f. 29.12.2017)

8. Shri Surinder Pal Singh Jaggi (w.e.f. 24.04.2018)

9. Shri Dipankar Haldar Non-Executive Director

1. Shri Pradeep Kumar (ceases to be on the Board of SCI w.e.f. 27.07.2017)

2. Shri Pravir Krishn (ceases to be on the Board of SCI w.e.f. 25.07.2017)

3. Smt. Leena Nandan (w.e.f. 03.08.2017)

4. Shri Satinder Pal Singh (w.e.f. 28.08.2017)

5. Shri Arun Balakrishnan

6. Shri Sukamal Chandra Basu

7. Shri Gautam Sinha (w.e.f. 29.09.2017)

8. Shri Raj Kishore Tewari (w.e.f. 29.09.2017)

9. Shri P Kanagasabapathi (w.e.f. 20.11.2017)

Transactions with other government-related entities

Apart from the transactions disclosed in (g) above, the Company also conducts business with other government related entities. The Company has bank deposits ,borrowings and other general banking relations with PSU banks. Other than the substantial amount of bank balances, bank borrowings and the facilities with these banks, transactions with other government related entities are individually insignificant.

(h) Other transactions with related parties

The following transactions occurred with related parties:

Note 4 Segment information

(a) Business Segments

The Company is managed by the Board which is the chief decision maker. The Board has determined the operating segments based on the pattern of vessels deployed by the Company, for the purposes of allocating resources and assessing performance.

(I) Liner

Liner segment includes break-bulk, container transport, passenger vessels & research vessels managed on behalf of other organisations.

(II) Bulk

Bulk Carriers include dry bulk carriers.

(III) Tanker

Tankers segment includes both crude and product carriers, gas carriers, phosphoric acid carriers.


Technical & Offshore services segment includes company owned offshore vessels, offshore vessels managed on behalf of other organisations and income from technical consultancy.

(V) Others

Others segment include income earned from Maritime Training Institute.

(VI) Unallocated

Unallocable items and interest income/expenses are disclosed separately.

Expense and Revenue items are allocated vessel wise wherever possible. Expenses and revenue items that cannot be allocated vessel wise are allocated on the basis of age of the vessel i.e., (Built year - Current year) - 1.

(b) Geographical Segments

Presently, the Company’s operations are predominantly confined in India.

(c) Adjusted Earnings before Interest & Tax (EBIT)

Adjusted EBIT excludes discontinued operations and the effects of significant items of income and expenditure which may have an impact on the quality of earnings such as restructuring costs, impairments when the impairment is the result of an isolated, nonrecurring event. It also excludes the effects of gains or losses on financial instruments.

Interest income and finance cost are not allocated to segments, as this type of activity is driven by the central treasury function, which manages the cash position of the Company.

Note 5 Employee Benefit Obligations

(A) Description of type of employee benefits

a) The Company offers to its employee’s defined benefits plans in the form of Gratuity, leave encashment and post-retirement Medical Scheme

a) Represents benefits to employee on the basis of number of years of service rendered

by employee. The employee is entitled to receive the same on retirement or resignation.

i. Gratuity -

b) SCI has formed a trust for gratuity which is funded by the Company on a regular basis. The assets of the trust have been considered as plan assets.

ii. Leave Encashment Represents unavailed leave to the credit of the employee and carried forward in accordance with terms of agreement.

iii. Post-Retirement Medical Benefit Scheme Represents benefits given to employees subsequent to retirement on the happening of any unforeseen event resulting in medical costs to the employee

b) The Company offers to its employees defined contribution plan in the form of provident fund, postretirement medical scheme (New w.e.f. 01.01.2007) and pension contribution

The details of the plan are as follows:-

i. Provident Fund It is a contribution made on monthly basis @ 12% of monthly Basic and DA to the PF

Trust who credits annual interest on PF balances. The corpus accumulated is paid on retirement of the employee.

ii. Post-Retirement Medical Scheme (New It is a contribution @ 4% of monthly Basic and DA towards provision of employees’ w.e.f. 01.01.2007) medical expenses incurred after retirement.

iii. Pension contribution It is a contribution @ 12% of monthly Basic and DA towards provision of annuity after retirement of employees.

None of the financial assets of SCI have been considered in the fair value of plan assets.

The expected rate of return on plan assets has been estimated on the basis of actual returns of the trust in the past years. The securities of trust have an effect on the fair value of plan assets as the value of the securities vary with the changes in the market interest rates.

Actual Return on plan assets ' 749 lakhs (Prev. period ' 1430 lakhs)

Through its defined benefit plans, the company is exposed to a number of risks, the most significant of which are detailed below:

Asset volatility:

The plan liabilities are calculated using a discount rate set with reference to bond yields; if plan assets underperform this yield, this will create a deficit. Most of the plan asset investments is in fixed income securities with high grades and in government securities. The Company intends to maintain the above investment mix in the continuing years.

Changes in bond yields:

A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the plans’ bond holdings. Life expectancy:

The gratuity plan obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an increase in the plans’ liabilities. This is particularly significant where inflationary increases result in higher sensitivity to changes in life expectancy. Contribution expected to be paid in the next year is Nil.

The weighted average duration of the defined benefit obligation is 17.15 years (2017 - 17.78 years).

The fair value of financial instruments referred above have been classified into three categories depending on the inputs used in the valuation technique. The hierarchy gives the highest priority to quoted prices in active market for identical assets or liabilities (level 1 measurements) and lowest priority to unobservable inputs (level 3 measurements). The categories used are as follows :

Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual funds that have a quoted price. The mutual funds are valued using the closing NAV.

Level 2: The fair value of financial instruments that are not traded in an active market is determined using valuation techniques which maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities which are included in level.

There were no transfers between any levels during the year.

(ii) Valuation technique used to determine fair value

Specific valuation techniques used to value financial instruments include:

- the use of closing NAV for investment in mutual funds

- the use of book values for investment in unlisted equity securities

- the fair value of the remaining financial instruments is determined using discounted cash flow analysis.

(iii) Fair value measurements using significant unobservable inputs (level 3)

The following table presents the changes in level 3 items for the periods ended 31 March 2018 and 31 March 2017:

Note 7 Financial risk management

The Company has exposure to the Credit risk, Liquidity risk and Market risk.

The Company's Board of Directors has overall responsibility for the establishment and supervision of the Company's risk management framework. The Board of Directors has established the Risk Management Committee (RMC), which is responsible for developing and monitoring the Company's risk management policies. The Audit Committee oversees how management monitors compliance with the Company's risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

(A) Credit Risk :

(i) Credit risk is the risk of financial loss to the Company if a customer to a financial instrument fails to meet its contractual obligations. Company's exposure to credit risk primarily arises on account of its Trade receivables. Trade receivables consist of a large number of customers spread across diverse geographical areas. A default on a trade receivable is considered when the customer fails to make contractual payments within the credit period. This credit period has been determined by considering the business environment in which the Company operates.

The Company considers dealing with creditworthy customers and obtaining sufficient collateral, where appropriate, as a means of mitigating the risk of financial loss from defaults. The credit risk due to above is periodically monitored. Based on the periodical analyses, the credit risk is managed by continuous review and follow-up.

(ii) Provision for expected credit losses : The Company provides for expected credit loss on trade receivables based on a provision matrix. This matrix is a simplified basis of recognition of expected credit losses in case of trade receivables. The model uses historical credit loss experience for trade receivables i.e. this model uses aging analysis of trade receivables as at the reporting date and is based on the number of days that a trade receivables is past due. The aging has been done for bracket of 90 days over a period of last 3 years. Receivables that are more than 3 years old are considered uncollectible. Further, customers declaring bankruptcy or failing to engage in repayment plan with the Company, provisioning is made on case to case basis i.e. such customers do not form part of this impairment exercise and provided for separately.

Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

(ii) Maturities of financial liabilities

The tables below analyse the Company’s non-derivative financial liabilities into relevant maturity groupings based on their contractual maturities.

The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. In the table below, borrowings include both interest and principal cash flows. To the extent that interest rates are floating rate, the undiscounted amount is derived from interest rate curves at the end of the reporting period.

(C) Market risk

Market risk is the risk that changes in market indicators such foreign exchange rates, interest rates and commodity prices will affect the Company's income or the value of its financial instruments. The Company's activities mainly expose it to risks arising from changes in foreign exchange rate and interest rate and freight/charter hire rates.

(i) Foreign currency risk

The Company operates vessels in foreign waters, earns revenues and incurs expenditure in foreign currencies, primarily with respect to USD, EURO and certain other foreign currencies. Foreign currency risk arises from future commercial transactions and recognised assets and liabilities denominated in a currency that is not the Company's functional currency (INR).

Considering the business environment in which Company operates, exposure to foreign exchange rate risk is largely managed by collection of income in fore

foreign currencies in short term bank accounts abroad.

(a) Foreign currency risk exposure:

The Company’s exposure to foreign currency risk at the end of the reporting period expressed in INR, are as follows

(ii) Interest rate risk

Interest rate risk is the risk that the future cash flows of floating interest bearing borrowings will fluctuate because of fluctuations in the interest rates. The Company’s main interest rate risk arises from long-term borrowings with variable rates, which expose the Company to cash flow interest rate risk.

The Company's fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate because of a change in market interest rates.

The Company manages its interest rate risk by regularly monitoring the interest rate movement and deciding on type of interest rate i.e. fixed or fluctuating.

(iii) Freight/Charter hire risk

Shipping industry is governed by various national and international economic and geopolitical developments. Local and international demand and supply determine freight and charter hire rates. Since Company's vessels ply in international waters, it is affected by such developments. Also, bunker cost is major component of Company's cost structure and bunker prices are highly volatile.

Note 38: Capital management

(a) Risk management

The Company’s objectives when managing capital are to safeguard the company’s ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

The Company monitors capital on the basis of the debt equity ratio. This ratio is calculated as debt divided by total equity. Debt is calculated as Long Term Borrowings (including current portion of Long Term borrowings as shown in the Balance Sheet).

(b) Loan covenants

The Company has 11 ECB Loan Agreement wherein 9 of the agreements have a financial covenant of Debt Service Coverage Ratio (DSCR). The Company has not been able to meet the DSCR covenant. However the Company has given an alternate covenant of ‘Minimum Cash Covenant’ in lieu of the DSCR covenant in 4 of the loans and other 5 lenders have waived the DSCR default.

Note 8 During the year ended 31st March, 2018, the company lost MV SCI Ratna an Offshore Support Vessel 96 nautical miles off the coast of Mumbai on 21st November 2017. The WDV of the vessel was Rs 7535 .61 lakhs. The vessel was insured with Hull Underwriter under Hull & Machinery cover. The Company has submitted total loss claim of USD 11,000,000 to M/s Oriental Insurance Co Ltd and same was settled during the year. The Company has recognised the claim amount and loss of Rs 485.89 lakhs during the year.

Note 9 The following changes were made in accounting policy for recognising of foreign currency transactions and balances during the year:

Old Policy - All foreign currency transactions for each month are recorded at the closing exchange rate of the second last Friday of the preceding month published on website.

The foreign currency balances other than in US Dollars appearing in the books of account at the period end are translated into US Dollars at the closing exchange rate of the second last Friday of preceding month published on website. Thereafter, the monetary assets and monetary liabilities as well as the Long Term Loans are translated into rupees at SBI Mean Rate prevailing at the period end.

New Policy - All foreign currency transactions are recorded at the previous day’s available RBI reference rate/exchange rate. Since the RBI reference rate is available for four major currencies only i.e., USD, UKP EUR, YEN, exchange rates of other currencies are taken from website. The foreign currency balances in US Dollars, UK Pounds, Euro and Japanese yEn appearing in the books of account at the period end are translated into US Dollars at the available RBI reference rate/exchange rate at the period end. The foreign currency balances other than US Dollars, UK Pounds, Euro and Japanese YEN appearing in the books of account at the period end are translated into US Dollars at the rate available on website at the period end. Thereafter, the monetary assets and monetary liabilities as well as the Long Term Loans are translated into rupees at RBI reference rate/exchange rate prevailing at the period end.

The effects of above changes are not determinable. However, the Company does not expect any material impact on the financial results for the year.

Note 10The revenue from operations includes reimbursement of management expenses of Rs 120.91 Crores from Customers (Refer note no.19). The management has revised the method of allocation of “Management Expenses” on these vessels w.e.f.1st April 2017. The revised method of allocating the expenses has resulted into increase of revenue by Rs 78 Crores (approx.) for the financial year 2017-18. The same is in process of approbation by the respective Customers.

Note 11): Trade Payables, Trade Receivables, Loans & Advances and Deposits are subject to confirmation and reconciliation. During the year, letters for confirmation of balances have been sent to various trade payable and trade receivable parties by the Company and the same are under reconciliation wherever replies have been received. The management, however, does not expect any material changes on reconciliation.

Note 12): The figures of previous year have been regrouped or rearranged wherever necessary to conform to current year's presentation as per Schedule III (Division II) to the Companies Act 2013.