Annual Report - Garware Offshore Services - 2009-2010

GARWARE OFFSHORE SERVICES LIMITED

ANNUAL REPORT 2009-2010

DIRECTOR'S REPORT

TO,
THE MEMBERS,

Your Directors are pleased to present their report as under:



FINANCIAL RESULTS

(Rs. in Crores)
Year ended Year ended
March 31, 2010 March 31, 2009

Income from Operations 181.48 162.24
Other Income 7.19 3.30
Gross Income 188.67 165.54
Expenses for the year 80.40 76.34
Operating Profit 108.27 89.20
Interest & Finance charges 30.89 25.49
Profit Before Depreciation 77.38 63.71
Depreciation 34.09 22.90
Profit Before Tax 43.29 40.81
Provision for Taxation
- Current Tax 2.38 0.30
- Fringe Benefit Tax - 0.20
- Tax for earlier years written back (0.08) (0.06)
Net Profit After Tax 40.99 40.37
Cash Profit 75.08 63.27

FINANCIAL HIGHLIGHTS:

Income from Operations for the year ended on 31.03.2010 stood at Rs. 181.48
crores, as against Rs. 162.24 crores for the previous year, an increase of
11.86%.

The Net Profit for the year ended 31.03.2010 stood at Rs. 40.99 crores as
against Rs. 40.37 crores for the previous year.

The Company continues to follow Accounting Standard 30 ('AS-30' Financial
Instrument: Recognition & Measurement).

OPERATIONS:

During the year under review, the Company sold its second hand Platform
Supply Vessel M.V. Everest' in January, 2010. Presently Eight Vessels are
on long term contract in India and the North Sea. Two Vessels are on a
short term contract in the Far East.

The Curative Petition filed by the Company before the Hon'ble Supreme Court
against Oil & Natural Gas Corporation Limited was dismissed, in spite of
using the best legal talent in the Country.

DIVIDEND:

During the year under review, the Company has declared and paid two Interim
Dividends C@ 8% each aggregating to 16%.

Your Directors subject to the Shareholders approval, are pleased to
recommend a Final Dividend of 7%, for the year under review. Thus, the
total Dividend for the year under review is 23%, as against 21% for the
previous year. The Final Dividend will be paid to the Shareholders, whose
names appear on the Register of Members as on 28.06.2010.

The total cash outflow on account of Dividend and Tax thereon (including
Interim Dividends) amounts to Rs.6.40 crores (previous year Rs 5.85
crores).

EXPANSION / DIVERSIFICATION:

The delivery of the Company's latest acquisition- a 'State of the Art',
Large Platform Supply Vessel having a dead weight of 4315 tons is expected
to be delivered in the month of December 2010/January, 2011.

FUTURE OUTLOOK:

Even though the price of Oil appeared to have stabilized during the last
quarter of the year under review, the very recent global adverse conditions
resulted in downfall of the Oil prices owing to which the Offshore Supply
Vessel market continues to experience some wild fluctuations in charter
rates. The vessels in the spot markets of North Sea and Singapore have been
faced with idle time and on certain occasions, low charter rates. However,
since the majority of the Company's vessels are on long term contracts,
these fluctuations do not greatly affect your Company. The Company is
hopeful that the situation for the vessels in the Spot Market (two AHTSVs
in the Far East) will improve as the world sees more and more exploration
efforts by Exploration & Production (E&P) companies in view of rise in the
price of Oil. The Company will continue to look at the possibility of
acquiring additional vessels / assets within the Offshore Sector.

WHOLLY OWNED SUBSIDIARY (WOS) AT SINGAPORE:

The Wholly Owned Subsidiary of the Company viz., Garware Offshore
International Services Pte. Ltd., (GOISPL) has made a Profit of USD 0.106
million during the year under review.

GOISPL has taken the delivery of 'M.V. Shergar' (an Anchor Handling Tug cum
Supply Vessel) and 'M.V. Beau Geste'(an Accommodation Work Barge) on a long
term 'Bare boat, Charter basis'. These assets were delivered to the Company
in August 2009, and are presently working in the Middle East and India
respectively. (as on 31.03.2010)

The Directors' Report, Auditors' Report and Audited Accounts of GOISPL for
the year ended 31.03.2010 are enclosed pursuant to provisions of Section
212 of the Companies Act, 1956.

LISTING FEES TO STOCK EXCHANGES:

The Company has paid the Listing Fees for the year 2010-11 to Bombay Stock
Exchange Ltd. and The National Stock Exchange of India Ltd.

RESPONSIBILITY STATEMENT:

The Directors confirm:

a) That in the preparation of the Annual Accounts, the applicable
accounting standards have been followed and that no material departures
(save and except as stated in the Directors' Report) have been made from
the same.

b) That they have selected such Accounting Policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the State of Affairs of the
Company at the end of the year and the Profit of the Company for that year
ended as on 31.03.2010.

c) That they have taken proper and sufficient care for the maintenance of
adequate accounting records in accordance with provision of the Companies
Act, 1956, for safe-guarding the assets of the Company and for preventing
and detecting fraud and other irregularities.

d) That they have prepared the Annual Accounts on a going concern basis.

INSURANCE:

All the Vessels owned and operated by the Company have been insured for
Hull & Machinery, War Risks and Protection & Indemnity (P & I) claims. The
vessels that transit through the Gulf of Suez and Malacca Straits are also
insured for piracy, kidnapping and ransom. The crew on all the vessels are
also covered under (P & I) insurance.

FIXED DEPOSITS:

During the year under review the Company has not accepted any deposits from
the Public and Shareholders.

DIRECTORATE:

Mr. D.J. Thakkar and Dr. B.S. Cooper, Directors of the Company retire by
rotation Dr. B.S. Cooper offers himself for re-election. Members are
requested to re-elect him. Mr. D.J. Thakkar, retires by rotation and is not
standing for re-election.

AUDITORS:

You are requested to re-appoint Statutory Auditors, Messrs. Raman S. Shah &
Associates, Chartered Accountants for the current year and to fix their
remuneration.

The Company has obtained a Certificate from Auditors certifying that their
re-appointment, if made at the ensuing Annual General Meeting shall be
within the limits prescribed under Section 224 (1-B) of the Companies Act,
1956.

PERSONNEL:

The relations with all Employees of the Company, both Shore and Floating
Staff have been extremely cordial. Your Directors wish to express their
appreciation of the services rendered by the devoted Employees.

PARTICULARS OF EMPLOYEES:

Statement of Particulars of Employees as required by the Provisions of
Section 217(2A) of The Companies Act, 1956 read with Companies (Particulars
of Employees) Rules, 1975 as amended and forming part of the Directors'
Report is annexed here to as Annexure I'.

DEMATERIALISATION OF SHARES:

The Company's shares continue to be traded in Electronic Form.

CORPORATE GOVERNANCE:

A separate report on Corporate Governance along with the Auditors'
Certificate on its compliance is given in a separate Annexure.

ACKNOWLEDGEMENT:

The Board wish to thank the Office of Directorate General of Shipping,
Mercantile Marine Department, Shipping Master, Indian Register of Shipping,
DNV, ABS, State Bank of India, DVB Group Merchant Bank (Asia) Ltd.,
Singapore, State Bank of Travancore, United Bank of India and State Bank of
Hyderabad for their continued support and co-operation during the year.

On Behalf of the Board

Place: Mumbai ASHOK GARWARE
Dated: 21st May, 2010 CHAIRMAN

ANNEXURE TO DIRECTORS' REPORT

STATEMENT REGARDING CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND
FOREIGN EXCHANGE EARNINGS AND OUTGO AS REQUIRED UNDER CLAUSE (e) OF SUB-
SECTION (1) OF SECTION 217 OF THE COMPANIES ACT, 1956.

Particulars
A. CONSERVATION OF ENERGY

(a) Measures Taken Being Offshore Company, taking of Energy
Conservation measures does not arise.
(b) Additional investments and
proposals, if any, being
implemented for reduction of
energy consumption. Nil

(c) Impact of the Measures (a)
and (b) above and consequent
Impact on Cost of Production. Not Applicable

(d) Total energy consumption and
consumption per Unit of
production in Form A'. Not Applicable

B. TECHNOLOGY ABSORPTION

(e) Efforts made in Technology As per Form 'B' enclosed
absorption.

C. FOREIGN EXCHANGE EARNINGS AND
OUTGO

(f) Activities relating to
exports, initiative taken to
increase exports, development of
New Export market for product
and services and export plans. Nil

(g) (a) Foreign exchange earned
and saved (on account of freight,
charter hire, earnings etc.)
including deemed earnings. Rs. 16604.16 lacs

(b) Foreign exchange used
including Operating expenses,
Standby expenses, Capital
repayment, down payments for
acquisition of Ships and
interest payment. Rs. 7022.96 lacs

FORM 'B'

(SEE RULE - 2)

FORM FOR DISCLOSURE OF PARTICULARS WITH RESPECT TO TECHNOLOGY ABSORPTION,
RESEARCH AND DEVELOPMENT (R & D)

1. Specific areas in which R & D carried out
by the Company. : None

2. Benefits derived as a result of the above
R & D. : Not Applicable

3. Future Plan of Action. : None

4. Expenditure on R & D

a) Capital : Nil

b) Recurring : Nil

c) Total : : Nil

d) Total R & D Expenditure as a Percentage of
Total Turnover Technology absorption, adaptation
and innovation. : Nil

1. Efforts in brief, made towards technology
absorption, adaption and innovation. : None

2. Benefits derived as a result of the above
efforts e.g. Product improvement, cost
reduction, product development, import
substitution etc. : Not Applicable

3. In case of imported technology
(imported during the last 5 years reckoned
from the beginning of the financial year)
following information may be furnished. : Not Applicable

a) Technology Imported -

b) Year of Import -

c) Has technology been fully absorbed ? -

d) If not fully absorbed, Areas where this
has not taken place, reasons therefore and
future plans and actions. -

On Behalf of the Board

Place : Mumbai ASHOK GARWARE
Dated : 21st May, 2010 CHAIRMAN