The greatest discovery by mankindbegan through seaways…

The greatest discovery by mankindbegan through seaways…

59th

Ann

ual R

epor

t 20

08-2

009

A Navratna Company

2

3

The Shipping Corporation of India Ltd. – Growth through Excellence

Starting as a Liner Shipping Company, SCI has, in more than four and a half decades, come a long way andhas established itself in the Indian maritime industry and carved a niche for itself in the global maritime industryas a truly diversified shipping entity.

Driven by ‘state-of-the-art” technology, steadfast commitment to customer satisfaction, high level of efficiencyin all areas and continued focus on human resource training, safety and security, SCI has evolved into a qualityand a conscious organization.

SCI has, over the years, been able to post profitable and excellent financial results due to the innovative andtimely strategies adopted by the Management, in turn, creating value and viable returns for all stakeholdersand customers.

In line with the worldwide trend of specialization and premium placed on core competencies, SCI hascharted a definitive course of action for the future and today, once again, SCI renews its commitment to growththrough excellence.

CONTENTS

Board of Directors ...................................................................................... 5

Brief Profile of the Directors of the Company ............................................ 6

Notice of Meeting ....................................................................................... 9

Salient Statistics ......................................................................................... 14

Decade at a Glance ................................................................................... 15

Director’s Report ........................................................................................ 19

Management Discussion and Analysis ...................................................... 21

Report of Directors on Corporate Governance .......................................... 44

Auditors’ Certificate on Corporate Governance ......................................... 57

Auditors Report .......................................................................................... 58

Annexure to the Auditors’ Report ............................................................... 60

Comments of the Comptroller and Auditor General of India .................... . .63

Annual Accounts ........................................................................................ 64

Cash Flow Statement ................................................................................. 97

Glossary ..................................................................................................... 98

5

BOARD OF DIRECTORS

Shri S. HajaraChairman & Managing Director

Registered Office: Shipping House, 245, Madam Cama Road, Mumbai 400 021.

Registar & Transfer Agents: M/s. Sharepro Services (India) Pvt. Ltd., Samhita Warehousing Complex,Gala No-52 to 56, Bldg No.13 A -B, Near Sakinaka Telephone Exchange, Andheri-Kurla Road,

Sakinaka, Mumbai-400072.·(Investor Relation Centre) 912, Raheja Centre, Free Press Journal Road, Nariman Point, Mumbai-400 021.

Photographs of Directors (other than S/Shri S. Hajara, Vijay Chhibber and Rajeev Gupta) appear in alphabetical order of Surnames.

Messrs. KHANDELWAL JAIN & CO.Messrs. S. BHANDARI & CO.

Auditors

Messrs. MULLA & MULLA &CRAIGIE BLUNT & CAROE

Solicitors

Shri Dipankar HaldarSVP (Legal Affairs) &Company Secretary

Shri A. D. FernandoShri Vijay ChhibberGovernment Director

Shri Rajeev GuptaGovernment Director

Shri J. N. Das Dr. Bakul H. Dholakia

Shri U. C. Grover Shri Kailash Gupta Shri A. K. Mago Shri B. K. Mandal Shri Nasser Munjee

Capt. K. S. Nair Shri Keshav Saran Shri J. N. L. Srivastava Shri U. Sundararajan Shri S. C. Tripathi

6

BRIEF PROFILE OF THE DIRECTORS OF THE COMPANY

Shri S. Hajara is Chairman & Managing Director since September 2005 before which he held the post ofDirector (Personnel & Administration). He holds a Bachelor’s degree in Science - Chemistry and a PostGraduate Diploma in Management from IIM, Kolkata. He also holds a degree in Law, diploma in ProfessionalShip Management, Norwegian Shipping Academy, Oslo. He is also experienced in marketing, chartering,import operations, liner conference / bilateral matters, commercial operations in liner, bulk and tanker.

Shri Vijay Chhibber, Additional Secretary and Financial Advisor, Ministry of Shipping, Road Transport &Highways, an ex-officio part-time Director of the Company was appointed on Board of Directors in December2008. Shri Chhibber, an I.A.S. Officer of the Manipur Tripura cadre, holds a Graduate and Post GraduateDegree in History from St. Stephen’s College, University of Delhi. He held several posts in both the State andCentral Governments and was the Under Secretary and Deputy Secretary in the Department of Commerce,Deputy Director in AIIMS, Director in Cabinet Secretariat and Joint Secretary in Department of Fertilizers. Hehas also worked as Deputy and Joint Secretary in the Departments of Energy, Public Works, as Director inDepartment of Industries and Secretary to the Chief Minister Manipur. He was also a District Magistrate ofUkhrul District in Manipur. He has held the post of Principal Secretary/Commissioner, Government of Manipurwith responsibilities relating to Finance, Health, Education, Public Health & Engineering, Social Welfare,Tribal Welfare, Elections, etc. He has also been the Chief Election Officer of the State of Manipur. He is alsoan alumni of the National Defence College.

Shri Rajeev Gupta, Joint Secretary (Shipping), Ministry of Shipping Road Transport & Highways, an ex-officio part-time Director of the Company, was appointed on the Board of Directors in June 2007. Shri RajeevGupta, an I.R.S.M.E. Officer, is a graduate in both Mechanical and Electrical Engineering. He has had experiencein shipping, inland waterways, chartering, enterprise planning, vigilance, human resource management amongother subjects. He has held several posts in Central Governments and was in the Railway Board and wasinvolved in formulating the Tenth Five Year Plan for Railways.

Shri J.N. Das is Director (Liner & Passenger Services) since December 2007. He is a Marine Engineer fromMarine Engineering Training College (DMET), Kolkata and possesses First Class Engineer (MOTOR) Certificateof Competency from MOT. He is a member of the Institute of Engineers (MIE India) and a fellow of Institute ofMarine Engineers (FIME) India. He has vast experience in shipping management, bulk carriers, tankers,chemicals, LPG & LNG operations, new building and offshore services.

Dr. Bakul H. Dholakia is a part-time non-official Director inducted on the Board in July 2007. He is also amember of the Audit Committee of the Board. He was the former Director of Indian Institute of Management(IIM), Ahmedabad and holds Master’s Degree in Economics and is also a Ph.D. in Economics. He has 38years of professional experience including 32 years in IIMA and in recognition of his contribution to ManagementEducation in India, Dr. Dholakia was awarded Padma Shree in 2007. He is presently the Chairman of NationalBoard of Accreditation for Technical Education in India and has also served as part time External Director onthe Board of several companies. His areas of specialization include Business Economics, Economic Policy,Corporate Strategy and Public Enterprise Management.

Shri A.D. Fernando is a part-time non-official Director inducted on the Board in July 2007. He is the Chairman& Managing Director of Victoria Marine & Agro Export Ltd. He is a BE in Mechanical Engineering from MadrasUniversity and has a diploma in Global Trade from the City University of New York, USA. He has vast knowledgein global trade, export and import of Marine & Agro products, Marine Biotech, Shipping & Port Management,Thermal Plant operations and Governmental Aquarian policy planning (State planning commission).

Shri U.C. Grover is Director (Technical & Offshore Services) since April 2006. He is a Marine Engineer fromMarine Engineering College (DMET), Kolkata and possesses First Class Engineer (MOTOR) Certificate ofCompetency from MOT. He has vast experience and knowledge in ship acquisitions, project management,

7

new business development, commercial operations in Liner & Container Services, Marketing, LinerConferences / Bilateral Matters, Stevedoring Operations, Bulk Carrier & Tanker Operations, Fleet Management,etc. He also has the experience in Maritime Training, Safety and Marine Environment Protection, developmentand implementation of the requirements of ISM Code in the Company and fleet.

Shri Kailash Gupta is Director (Personnel & Administration) since July 2006. He is a post graduate in PersonnelManagement from XLRI, Jamshedpur, and also has degree in law from the University of Delhi. Shri Guptahas also worked with NALCO Ltd. as General Manager (HRD & Administration) for over six years prior tojoining SCI.

Shri A.K. Mago is a part-time non-official Director inducted on the Board in July 2007 and is the Chairman ofthe Shareholders’/Investors’ Grievance Committee of the Board. He is also a member of the Audit Committee.He joined the IAS in 1967 and retired in 2004 as Chief Secretary, Govt. of Maharashtra. He was also theformer Chairman of Maharashtra State Electricity Board and Mumbai Port Trust. He is M.Sc.(Physics),M.Phil.(Social Sciences) and holds diplomas in management, public administration (Paris and Delhi), publicfinance (Paris) and possesses knowledge of French language. He also holds a certificate in International Law& Diplomacy. He has valuable administrative and management expertise/skills and is also well conversantwith matters relating to policy/planning and implementation in power, port and urban infrastructure sectors.He has worked, for over 37 years, in different capacities in the State and Central Government in severalsectors which include energy, port, urban infrastructure, environment & forest and industries sectors.

Shri B.K. Mandal is Director (Finance) since November 2005 and is a post graduate in Management fromthe Indian Institute of Management, Ahmedabad and also a Fellow member of the Institute of Cost & WorksAccountants of India. Shri Mandal was working in NTPC Ltd., Delhi, as General Manager (Finance) and hasalso worked with BHEL in the initial years of his career.

Shri Nasser Munjee is a part-time non-official Director inducted on the Board in August 2007. He is presentlythe Chairman of Development Credit Bank (DCB) and was the former Managing Director & CEO of the IDFC.He holds a Bachelor’s degree from the University of Chicago and Master’s degree from the London School ofEconomics, U.K. His journey in creating financial institutions began with the HDFC (which he has been assistingsince its inception in 1978) and he joined the Board as an Executive Director in 1993 with primary responsibilityfor resource mobilization, research, publications, training, communication and managing the Centre for HousingFinance. He has deep interest for rural development, housing finance, urban issues, specially the developmentof modern cities and humanitarian causes. Shri Munjee is also a Technical Advisor on the various Funds ofthe World Bank and the memberships held by him include that of the Goa Planning Board, Managing Committeeof the Bombay Chamber of Commerce & Industry and CII, Western Region. He is also on the Board ofGovernors of the NMIMS and a Member and Honorary Distinguished Professor at IIT, Kanpur. He continuesto be on the Board of HDFC and the Board of other companies and several other institutions as Chairman,Member of the Board or as a Trustee.

Capt. K.S. Nair is Director (Bulk Carrier & Tankers) since November 2008. He has graduated in Commercewith specialization in banking from Pune University and has obtained Certificate of Competency for Master(Foreign going) from the Directorate General of Shipping, Government of India. He has been the Dean ofNautical Studies in the SCI’s Maritime Training Institute, Powai. Capt. Nair has been instrumental in expandingfull fledged operations of the SCI’s Chennai Office when it was created in 1987 and had also set up the SCIShanghai Representative Office.

Shri Keshav Saran is a part-time non-official Director inducted on the Board in July 2007. He is also amember of both, the Audit and Shareholders’/Investors’ Grievance Committees of the Board. He was theformer Chairman & Managing Director of Engineers India Ltd. and has also been Director (Projects) in theNational Thermal Power Corporation (NTPC). He is an electrical engineering graduate with a post-graduatediploma in Industrial Management and holds an MBA and LL.B. degree. He has vast experience and knowledge

8

in PSU (public sector undertakings) management, project management and commercial management Hehas around 44 years’ experience mainly in Public Sector Undertakings in Petroleum and Power Sector. Hehas presented number of papers in international and national seminars and has been associated with variousprofessional organizations. He started his career at IIT Kharagpur and has worked for about 15 years withBharat Heavy Electricals Ltd. in various capacities.

Shri J.N.L. Srivastava is a part-time non-official Director inducted on the Board in July 2007. He is an IASand presently the Managing Trustee of IFFCO Foundation. He has held the posts of Secretary in the Agriculture& Co-operation Dept. of Government of India, the Department of Animal Husbandry & Dairying & Fisheriesand the Ministry of Non-conventional Energy Sources. He has vast experience in public administration andmanagement of public enterprises and a long association with Agriculture, Industry, Commerce and Trade.He was the former Chairman of Indian Potash Ltd and the Managing Director of the Punjab State IndustrialDevelopment Corporation (PSIDC) and has held directorships in various Companies which include NABARD,IFFCO, KRIBHCO, NAFED, Max India Ltd. He has represented India in the Food & Agricultural Organisation(FAO) of the United Nations and the World Trade Organisation (WTO).

Shri U. Sundararajan is a part-time non-official Director of the Company inducted on the Board in July 2007and is also the Chairman of the Audit Committee of the Board. He was the former Chairman and ManagingDirector of BPCL. He is a Cost Accountant and has vast experience and knowledge in financial managementand general management. He has also served as part time External Director on the Board of several companieswhich include Gujarat State Petronet Ltd. and Larsen & Toubro Ltd.

Shri S.C. Tripathi is a part-time non-official Director of the Company inducted on the Board in December2007. He is an IAS and was the former Secretary to Government of India and had rich experience in finance,economics and in petroleum sector. Shri Tripathi, an M.Sc. (Physics-Specialisation in Electronics), LL.B., PGDiploma in Development Studies (Cantab.), AIMA Diploma in Management, started his career as Lecturer inPhysics in 1964 and joined the Indian Administrative Service in 1968 (Second Rank in the country). He spentnearly 20 years in Finance and Industry sectors at Chief Executive / Secretary levels at the State and CentralGovernment and in representative capacity at international levels. Mr. Tripathi retired as Secretary, Ministry ofPetroleum and Natural Gas in the Government of India in December 2005.

9

NOTICE OF MEETINGNOTICE is hereby given that the 59th Annual General Meeting of The Shipping Corporation of India Ltd. will beheld at the Registered Office of the Company at “Shipping House”, 245, Madam Cama Road, Mumbai-400 021at 1530 hrs. on Wednesday, the 30th September 2009 to transact the following as:-

ORDINARY BUSINESS1. To receive, consider and adopt the Balance Sheet as at 31st March 2009, Profit & Loss Account for the year

ended on that date and Reports of Auditors and Directors thereon.

2. To declare dividend.

3. To appoint a Director in place of Dr. Bakul H. Dholakia who retires at this meeting and being eligible, offershimself for re-appointment.

4. To appoint a Director in place of Shri Keshav Saran who retires at this meeting and being eligible, offershimself for re-appointment.

5. To appoint a Director in place of Shri Nasser Munjee who retires at this meeting and being eligible, offershimself for re-appointment.

6. To appoint a Director in place of Shri Sushil Tripathi who retires at this meeting and being eligible, offershimself for re-appointment.

7. To fix remuneration of auditors.

SPECIAL BUSINESSBY ORDINARY RESOLUTION8. To appoint a Director in place of Capt. K.S. Nair who under Article 125 of the Articles of Association of the

Company and Section 260 of the Companies Act, 1956 holds office only upto the date of this AnnualGeneral Meeting and from whom the Company has received a notice in writing signifying his candidatureto the office of Director and who is eligible for appointment.

By Order of the Board of Directorsfor The Shipping Corporation of India Ltd.

Dipankar HaldarSenior Vice President (Legal Affairs) & Company Secretary

Registered Office:Shipping House,245, Madam Cama Road,Mumbai - 400 021.

Dated : 29th July, 2009

Notes:

a) A MEMBER ENTITLED TO ATTEND AND VOTE IS ENTITLED TO APPOINT A PROXY TO ATTEND ANDVOTE INSTEAD OF HIMSELF/HERSELF AND A PROXY NEED NOT BE A MEMBER OF THE COMPANY.THE PROXY FORM DULY COMPLETED AND SIGNED MUST BE DEPOSITED AT THE REGISTEREDOFFICE OF THE COMPANY NOT LESS THAN 48 HOURS BEFORE THE MEETING.

b) Explanatory Statement pursuant to Section 173 of the Companies Act, 1956, in respect of Item No. 8 of theNotice set out above is annexed hereto.

c) The Register of Members and the Share Transfer Books of the Company will remain closed from 23.09.2009to 30.09.2009 (both days inclusive).

10

d) Members are requested to notify any change in their address to the Share Transfer Agents of the Companyat the following address:

M/s. Sharepro Services (India) Pvt. Ltd.Samhita Warehousing Complex

Gala No. 52 to 56, Bldg. No.13 A-BNear Sakinaka Telephone Exchange

Andheri - Kurla Road, SakinakaMumbai - 400072

e) Pursuant to the provisions of Section 205A of the Companies Act, 1956, the amount of dividend whichremains unpaid/unclaimed for a period of 7 years is required to be transferred to the “Investor Educationand Protection Fund (IEPF)”, constituted by the Central Government and after such transfer the member(s)would not be able to claim any dividend so transferred to the Fund. Therefore, member(s) who have notyet encashed his/their dividend warrant(s) is/are requested in his/their own interest to write to the CompanySecretary immediately for claiming outstanding dividend declared by the Company for the year 2002-2003and onward. Details of shareholders who have not encashed their dividend warrants in spite of the samebeing sent to them, have been uploaded on the Company’s website www.shipindia.com. Members mayvisit “Shareholder Information” under “Investor Relation” appearing on the Home Page.

The dividend declared for the year 1998-99, 1999-2000, 2000-01 (Interim), 2000-01 (Final), 2001-02(Interim) and remaining unclaimed/unpaid has already been transferred to the IEPF.

11

ANNEXURE TO THE NOTICE

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THECOMPANIES ACT, 1956.

The following explanatory statement sets out all the material facts relating to special business mentioned atItem Nos. 8 of the accompanying Notice dated 29th July, 2009, convening the 59th Annual General Meeting ofthe Company.

Item No. 8 of the Notice

The Company has received a notice in writing dated 3rd November, 2008 from the Govt. of India, Ministry ofShipping, Road Transport & Highways, conveying the nomination of Capt. K.S. Nair for appointment as Director,for a period of five years with effect from the date of assumption of charge of the post i.e. 3rd November, 2008or till the date of his superannuation or until further orders, whichever is earlier. Accordingly, Capt. Nair wasappointed as Additional Director by the Board of Directors pursuant to the powers vested in it. In accordancewith Section 260 of the Companies Act, 1956, he holds office upto the date of this Annual General Meeting.

Capt. Nair had graduated in Commerce with banking specialization from Pune University and has obtainedCertificate of Competency for Master (Foreign going) from the Directorate General of Shipping (DG Shipping),Government of India. He has vast experience in handling various aspects of shipping such as Operation andCommercial Management of different types of vessels, Safety Management, International Ship Port facilityand Security Code, Chartering, Technical Management and Fleet development activities. It is, therefore,recommended that in the interest of the Company, he may be appointed as Director.

Capt. Nair is interested in the resolution as it concerns him. No other Director is interested in the resolution.

Dipankar Haldar

Senior Vice President (Legal Affairs) & Company Secretary

Registered Office:Shipping House,245, Madam Cama Road,Mumbai - 400 021.

Dated : 29th July, 2009.

12

DETAILS OF THE DIRECTORS RE-APPOINTMENT /APPOINTMENTAT THE FORTHCOMING ANNUAL GENERAL MEETING

Name of the Director Dr. Bakul H. Dholakia Shri Keshav Saran Shri Nasser Munjee

Date of Birth 15.07.1947 04.07.1942 18.11.1952

Date of Appointment 28.07.2007 28.07.2007 13.08.2007

Qualifications • Masters’ Degree in • B.Sc. • Bachelors Degree fromEconomics • B.Sc. (Engg.) (Hons.) University of Chicago

• Ph.D in Economics • Post Graduate • Master’s degree fromdiploma (Industrial the London School ofManagement) Economics, UK

• MBA• L.L.B.

Expertise in specificfunctional areas

Name of the Director Shri S.C. Tripathi Capt. K.S. Nair

Date of Birth 01.01.1946 29.12.1950

Date of Appointment 13.12.2007 03.11.2008

Qualifications • M.Sc. (Physics) • B.Com (with banking specialization)• L.L.B. • Certificate of Competency• Diploma in Development (Cantab.) for Master (Foreign Going) from• AIMA Diploma in Management DG Shipping, Govt. of India• Fellow Energy Institute (UK)• Fellow Institution of Electronic &

Telecom Engineers• Professional member All India

Management Association• Member Computer Society of India• Life member Indian Institute of

Public Administration

Expertise in specificfunctional areas

EQUITY SHARES HELD BY THE NON-EXECUTIVE DIRECTORS SEEKING RE-APPOINTMENT ATTHE FORTHCOMING ANNUAL GENERAL MEETING

Sr. No. Name of non-executive Director No. of Shares held1. Dr. Bakul H. Dholakia Nil2. Shri Keshav Saran Nil3. Shri Nasser Munjee Nil4. Shri S.C. Tripathi Nil

Vast experience in housinghousing finance ruraldevelopment, urban issues,specially the developmentof modern cities andhumanitarian causes

Vast experience in PublicSector Undertakings(PSUs) management,project management,commercial management,systems and proceduralaspects in PSUs.

Areas of specializationinclude BusinessEconomics, EconomicPolicy, CorporateStrategy and PublicEnterprise Management.

Vast experience in handling variousaspects of shipping such as operationand commercial management ofdifferent types of vessels, chartering,technical management and fleetdevelopment activities.

Vast experience in Public Administrationand has held important positions inGovernments of Uttar Pradesh and India,nearly 20 years’ experience in Financeand Industry sector.

13

CHAIRMANSHIP / DIRECTORSHIP HELD IN OTHER PUBLIC COMPANIESAND MEMBERSHIP HELD IN COMMITTEES OF SUCH BOARDS

IN TERMS OF CLAUSE 49 OF THE LISTING AGREEMENT

Name of the Director Chairmanship/Directorship held in Chairmanship/Membership held inother public companies Committees of such Boards

Dr. Bakul H. Dholakia Directorship1. Reliance Natural Resources Ltd. 1. Member - Audit Committee

Member - Investors’ GrievanceCommittee

2. Ashima Ltd. 2. Chairman - Audit Committee

3. Ashima Dyecot Ltd. 3. Chairman - Audit Committee

Shri Keshav Saran 1. ITI Ltd. 1. Member - Audit Committee

Shri Nasser Munjee 1. ABB Ltd. 1. Chairman - Audit Committee

2. Apollo Health Street Ltd. 2. Member - Audit Committee

3. Bharati AXA Life Insurance Co. Ltd. 3. Member - Audit & ComplianceCommittee

4. Ciba India Ltd. 4. Member - Audit Committee

5. Cummins India Ltd. 5. Chairman - Audit & FinanceCommittee

6. Tata Chemicals Ltd. 6. Chairman - Audit Committee

7. Unichem Laboratories Ltd. 7. Member - Audit Committee

8. Voltas Ltd. 8. Member - Audit Committee

9. Indian Railway Finance Corporation Ltd. 9. Chairman - Audit Committee

10. Tata Motors Ltd. 10. Chairman - Audit Committee

11. Development Credit Bank Ltd.

12. HDFC Ltd.

13. Ambuja Cements Ltd.

Shri S.C. Tripathi 1. Reliance Capital Asset -Management Co. Ltd.

2. Indusind Bank Ltd.

3. Orient Green Power Co. Ltd.

4. IL&FS Energy DevelopmentCorporation Ltd.

5. IL&FS Infrastructure DevelopmentCorporation Ltd.

6. Modi Rubber Ltd.

7. Gammon Infrastructure Projects Ltd.

8. Power Grid Corporation Ltd.

9. Kailash Hospital & Research CentreLtd., Delhi

Capt. K.S. Nair - -

14

SALIENT STATISTICS 2008 / 2009

Authorised Capital Rs. 450.00 Crores

Subscribed and Paid-up Capital Rs. 423.45 Crores

Depreciation Provision Rs. 323.88 Crores

Gross Earnings Rs. 4564.49 Crores

Gross Investment on Fleet Rs.10136.12 Crores

No. of Voyages made 502

No. of Passengers carried (including managed vessels) 2,12,596

No. of Employees (including crew) (As on 1st August, 2009) 4929

Vessels Owned (As on 1st August, 2009)

Number 79

Tonnage 3.04 Million GRT

5.35 Million DWT

Vessels on Order

Number 32

Tonnage 1.05 Million GRT

1.88 Million DWT

15

THE SHIPPING CORPORATION OF INDIA LTD.DECADE AT A GLANCE

1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Operating Earnings 2,542.8 2,994.8 2,784.7 2,376.5 3,100.3 3,396.1 3,531.0 3,703.4 3,726.9 4,166.6

Interest Income 48.1 37.0 54.1 35.3 60.7 80.2 172.1 219.7 227.7 272.7

Other Income 65.2 137.4 121.5 66.9 74.5 249.7 59.0 287.2 129.8 125.2

Total Earnings 2,656.1 3,169.2 2,960.3 2,478.7 3,235.5 3,726.0 3,762.1 4,210.3 4,084.4 4,564.5

Operating Expenses 1,908.1 2,049.0 1,982.3 1,826.1 2,019.8 2,033.7 2,119.3 2,567.7 2,594.4 2,815.7

Other Expenses 150.1 189.3 256.8 156.9 166.5 183.7 145.3 149.4 221.3 266.5

Interest Expenses 120.5 102.7 76.7 49.1 55.7 64.3 79.1 80.1 61.6 64.7

Depreciation 274.8 273.6 265.2 257.8 280.0 297.1 303.5 303.1 303.2 323.9

Exceptional items 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 39.1

Tax Liability 41.0 172.0 137.7 (86.0) 86.5 22.8 72.8 95.5 90.0 113.9

Deffered Tax Provision 0.0 0.0 0.0 0.0 0.0 (295.5) 0.0 0.0 0.0 0.0written back

Total Expenses 2,494.5 2,786.6 2,718.7 2,203.9 2,608.5 2,306.1 2,720.0 3,195.8 3,270.5 3,623.8

Profit after Tax 161.6 382.6 241.6 274.8 627.0 1,420.0 1,042.2 1,014.5 813.9 940.7

FINANCIAL HIGHLIGHTS: (FIGURES IN CRORES OF RUPEES)

31-03-00 31-03-01 31-3-02 31-3-03 31-3-04 31-03-05 31-03-06 31-03-07 31-03-08 31-03-09

WHAT THE COMPANY OWNED

Fixed Assets

Gross Block 5,303.0 5,254.3 5,142.0 5,243.2 6,073.8 6,506.1 6,818.9 6,705.4 6,737.1 8,161.9

Less:Depreciation(Cum) 2,477.6 2,559.1 2,679.4 2,871.4 3,092.0 3,270.3 3,559.4 3,744.2 4,047.2 4,333.9

Net Block 2,825.4 2,695.2 2,462.6 2,371.8 2,981.8 3,235.8 3,259.5 2,961.2 2,689.9 3,828.0

Assets under Construction 89.5 303.7 432.3 681.3 385.7 122.5 237.3 762.5 2,007.2 2,099.9

Asset Retired from Operation 0.0 0.0 4.9 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Working Capital 434.2 442.8 402.0 561.3 667.6 1,618.6 2,224.1 2,596.7 2,347.7 2,640.9

Investments 9.3 21.9 51.0 0.5 0.5 1.5 8.9 24.0 41.5 111.5

3,358.4 3,463.6 3,352.8 3,614.9 4,035.6 4,978.4 5,729.8 6,344.4 7,086.3 8,680.2

WHAT THE COMPANY OWED

Long Term Funds:

SDFC/Govt. Loans 381.9 308.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Bank Loans 1,060.2 948.0 1,031.6 1,112.1 1,371.3 1,402.7 1,374.4 1,244.7 1,454.2 2,471.7

Unsecured Loans 30.8 19.8 6.9 6.9 0.0 0.0 0.0 0.0 0.0 0.0

1,472.9 1,276.1 1,038.5 1,119.0 1,371.3 1,402.7 1,374.4 1,244.7 1,454.2 2,471.7

Deferred Tax Liability 0.0 0.0 218.7 233.0 295.5 0.0 0.0 0.0 0.0 0.0

NET WORTH OF THE COMPANY

Share Capital 282.3 282.3 282.3 282.3 282.3 282.3 282.3 282.3 282.3 423.5

Reserves & Surplus 1,636.0 1,924.8 1,852.1 2,029.6 2,114.7 3,309.8 4,077.8 4,817.4 5,349.8 5,785.0

Deferred Revenue (32.8) (19.6) (38.8) (49.0) (28.2) (16.4) (4.7) 0.0 0.0 0.0Expenditure

1,885.5 2,187.5 2,095.6 2,262.9 2,368.8 3,575.7 4,355.4 5,099.7 5,632.1 6,208.5

Dividend paid 45.2 84.7 98.8 84.7 479.9 197.6 239.9 239.9 239.9 275.2

Dividend % 16.0 30.0 35.0 30.0 170.0 70.0 85.0 85.0 85.0 65.0*

OPERATIONAL STATISTICS(FIGURES IN CRORES OF RUPEES)

* on increased capital base

16

TOTAL INCOME (AMOUNT IN RS. CRORES)

PROFIT BEFORE TAX (AMOUNT IN RS. CRORES)

17

COMPOSITION OF SCI FLEETIn DWT (%) as on 31.03.2009

GROSS BLOCK (AMOUNT IN RS. CRORES)

6506

6819 6705 6737

8162

4500

5500

6500

7500

8500

2004-05 2005-06 2006-07 2007-08 2008-09

18

BOOK VALUE OF SHARES (VALUE IN RUPEES)

DEBT / EQUITY RATIO

* During the financial year 2008 - 2009, the corporation has issued 141151215fully paid up equity shares of Rs. 10/- each as bonus shares.

19

DIRECTORS’ REPORT

To the Members,

Your Directors have pleasure in presenting the 59th Annual Report on the working of your Company for thefinancial year ended 31st March 2009.

Accounting Year

The year under report covers a period of 12 months ended on 31st March 2009.

Financial Performance

The comparative position of the working results for the year under report vis-à-vis earlier year is as under:

(Rs. Crores)

2008- 2009 2007-2008

Gross Earnings 4,564 4,084

Gross Profit (before interest, depreciation,items relating to earlier years, exceptionalitems & tax) 1,469 1,188Less : Interest 65 62

Depreciation 324 389 303 365

Profit before items relating to earlieryears, exceptional items & tax 1,080 823

Prior year’s adjustments 4 23

Excess Provision/sundry credit balanceswritten back 10 58

Profit before Exceptional items & tax 1,094 904

Exceptional items (39) -

Provision for Indian Taxation (114) (90)

Net Profit 941 814

Appropriations

The working results of your Company for the year 2008-2009 after considering prior period adjustments showa profit of Rs.940.67 crores. An amount of Rs.200 crores has been transferred to Tonnage Tax Reserveu/s 115VT of Income Tax Act. After adding a sum of Rs.460.39 crores (being balance profit and loss accountbrought forward from the previous year), the amount available for disposal works out to Rs.1201.06 crores.Your Directors propose to make the following appropriations from this amount:

1. General Reserve …. Rs. 350.00 crores2. Capital Reserve .... Rs. 7.50 crores3. Staff Welfare Fund .... Rs. 0.75 crores4. Corporate Social Responsibility Reserve … Rs. 9.41 crores

Total .... Rs. 367.66 crores

Dividend

Your Directors recommend payment of dividend @ 65% for the year 2008-09 absorbing a sum ofRs.275.24 crores. In addition dividend tax of Rs.46.78 crores will be payable by the company. After the proposedappropriations, the sum available is Rs.511.38 crores which is being carried forward to next year’s accounts.

20

Fleet Position during the Year

During the year under report, two vessels aggregating 67,576 dwt. tonnage were disposed of and a new-building crude oil tanker and two new-building container vessels aggregating to 434,598 dwt. were delivered.Thus, the overall fleet position, which was 79 ships at the beginning of the year, closed at 80 ships at the endof the year as shown in the following table :

FLEET PROFILE DURING THE YEAR

Particulars As on 1.4.2008 Additions Deletions As on 31.3.2009No. DWT No. DWT No. DWT No. DWT

1. (a) Crude Oil Tankers 30 33,11,723 1 319,000 1 41,126 30 35,89,597

(b) Product Tankers 9 3,67,240 - - - - 9 3,67,240

(c) Chemical Tankers 3 99,174 - - - - 3 99,174

(d) Gas Carriers 2 35,202 - - - - 2 35,202

2. Bulk Carriers 20 8,34,955 - - 1 26,450 19 8,08,505

3. Liner Ships 3 86,815 2 115,598 - - 5 202,413

4. Offshore Supply Vessels 10 17,904 - - - - 10 17,904

5. Passenger-Cum-CargoVessels 2 5,303 - - - - 2 5,303

Total 79 47,58,316 3 434,598 2 67,576 80 51,25,338

NEWBUILDING VESSELS DELIVERED DURING THE YEAR

Vessel Name Type Yard Built DWT

m.t. Desh Viraat VLCC DSME , S.Korea 319,000

m.v. SCI Chennai Container Vessel Hyundai Samho, S. Korea 57,813

m.v. SCI Mumbai Container Vessel Hyundai Samho, S. Korea 57,785

VESSELS DISPOSED OF DURING THE YEAR

Vessel Name Type Yard Built DWT

m.v. Lok Maheshwari Bulk Carrier 1986 26,450

m.t. Homi Bhabha Crude Oil Tanker 1982 41,126

VESSELS ON ORDER AT THE END OF THE YEAR

Type No. Shipyard Total DWT

Crude Oil Tanker 1 Daewoo Shipbuilding and Marine 3,19,000Engineering Co. Ltd., S. Korea

LR-I Product Tankers 6 STX Shipbuilding Co. Ltd., S. Korea 4,33,800

MR Product Tankers 2 Jinling Shipyard, China 94,000

LR-II Product Tankers 2 Hyundai Heavy Industries Co. Ltd. S.Korea 2,10,000

Aframax Crude Oil Carriers 4 Hyundai Heavy Industries Co. Ltd. S.Korea 4,60,000

Anchor Handling, Towing & 4 Bharati Shipyard Ltd., India 8,000Supply Vessels (AHTSVs)

Handymax Bulk Carriers 6 STX (Dalian) Shipbuilding Co. Ltd., China 3,44,400

Panamax Bulk Carriers 4 STX (Dalian) Shipbuilding Co. Ltd., China 3,22,620

21

MANAGEMENT DISCUSSION AND ANALYSIS

The overall scenario under which the Shipping industry operated and which impacted the various segments isdiscussed below.

A) INDUSTRY STRUCTURE AND DEVELOPMENTS

World Scenario

The global economy witnessed a slower GDP growth of around 3.1% in the year 2008 as compared to 4.7%in the previous year. The recessionary trend in the American economy started being noticed in late 2007, andby mid-2008 the European and Japanese economies had also contracted. However, China, India, Latin Americaand many other important non-OECD countries remained relatively healthy upto the third quarter of 2008; butthe economic meltdown eventually spread rapidly from region to region since September 2008. Althoughindustrialised nations were the most affected, the non-OECD countries mentioned above and much ofdeveloping Asia also witnessed sharp slowdown. Overall in 2008, China continued to lead with around 9%growth, followed by ‘Developing Asia’ with 5% growth, but the USA and European economies grew by justover 1%. The global economy declined sharply in the last quarter of 2008 and contracted further in the firstquarter of 2009 with GDP shrinking by over 1%.

The growth in total bulk trade (i.e. Oil & Dry Bulk imports) in 2008 was slower at 2.3% than in the previousyear. The ‘Oil’ trade comprised Crude oil imports of around 2052 million tonnes with only a marginal growth of0.9% and Products imports of 788 million tonnes, growing by 1.4%. ‘Dry Bulk’ imports were 2907 milliontonnes, witnessing a comparatively higher growth of 3.5%. Global Container trade was in the region of 129million TEUs, with growth slowing down steeply by 3.5%.

The share of ‘Oil’ trade and ‘Dry Bulk’ trade in the global bulk imports continued to be nearly 50% each. ‘CrudeOil’ share also remained at its 2007 level of around 36% with ‘Products’ share being nearly 14%.

Indian Scenario

As per recent estimates of the Central Statistical Organisation (CSO Advance Estimate), India’s GDP growthfor the year 2008-09 is reckoned at 7.1% compared to the previous year’s level of nearly 9%. The ‘Centre forMonitoring Indian Economy’ (CMIE) has estimated a further lower growth at 6.5% despite signs of recovery inthe industrial sector in view of the sustained and substantial slowdown in the trade and transport sectors tillFebruary 2009. India’s foreign exchange reserves have declined from their year ago level and stood at US$241.7 billion at the end of March 2009. India’s exports in 2008-09 estimated at US$168 billion were higherthan the previous year but only by 3%. This is attributed to a sudden reversal in growth rates from October2008 onwards after which exports stared declining. Imports touched US$288 Billion, clocking a growth of15%, but even imports exhibited a declining trend since October 2008 continuing into the first quarter of 2009.

The total cargo traffic handled by the major Indian ports during 2008-09 was around 530 million tonnes,increasing only marginally by around 2%. This comprised 176 million tonnes of POL (Petroleum and OtherLiquids) with a growth of 4.2%, 184 million tonnes of major Dry Bulk cargoes (Iron Ore, Fertilisers, coal),which increased by 5.8%, 93 million tonnes of Container traffic with only 0.9% growth and 78 million tonnes of“Other Cargoes” (i.e. minor bulks, breakbulk etc.), which declined by 8%.

The share of ‘Dry Bulk’ cargo in India’s major ports traffic was around 35%, followed by ‘POL’ at 33%,containerised cargoes 17% and “other cargo” accounting for the remaining 15%.

B) OPPORTUNITIES & THREATS

Global Economy

During 2009, global GDP is expected to shrink by 1.3% and, as per WTO estimates, global trade is projectedto decline by 9%. However, there are some positive developments such as the massive government stimuluspackage in China which is helping to offset a decline in Chinese exports. In addition, the announcement bythe G-20 countries of boosting loan resources and the stimulus packages announced by several countries inEurope, USA and India together provide basis for optimism. As per recent reports, the pace of contraction inworld economic output appears to be easing and recovery could begin by end-2009. Also the financial marketsare showing signs of recovery in developed countries with recovery anticipated at end-2009 / beginning 2010.

22

There are expectations that the US economy may emerge from the recession in the fourth quarter of 2009and European economies beginning to recover in the first half of 2010. Worldwide GDP is expected toexpand by 2.1% in 2010 and thereafter by around 3.5% annually for the next three years or so. Even so, thiswould be below the average annual growth of around 4.4% witnessed during the 2003-2008 period. Theabove mentioned developments and the anticipated performance of the economies of various countries andregions are expected to impact global trade as indicated below.

Global Trade

During 2009, both ‘Dry Bulk’ and ‘Oil’ imports are projected to decline by 4.3% and 3.9%, respectively. CrudeOil trade is likely to fall by 5.3% with Products trade remaining stagnant. However, the prospects are expectedto brighten in 2010 with ‘Dry Bulk’ trade likely to grow by 3.4% and thereafter at a faster pace over the nextthree years. ‘Oil’ trade is also likely to grow in 2010, though, at a somewhat slower pace of around 2.1% andthen on slightly a faster trajectory over the next few years. The Container trade after contracting by 3.3% in2009 is expected to recover in 2010.

Indian Economy & Trade

The GDP growth in 2009-10 is expected to be flat at around 6.5%. Although there are signs of a revival of theindustrial sector, with a weak monsoon, the risks in agricultural growth have increased.

In terms of volumes (quantity), the Major Indian ports are expected to handle around 554 Million Tonnes ofCargo traffic comprising both coastal and overseas trades in 2009-10 marking an increase of 5.2%. Thiswould be an improvement over the modest growth witnessed in 2008-09.

C) OUTLOOK

In the Dry Bulk sector, with the Chinese demand continuing to slowdown slightly during 2009 and the OECDeconomies delivering a weak performance, the shipping market is likely to witness a period of weak ratesthrough mid-2010. The market is expected to recover only from late 2010 onwards through the next threeyears. In the Oil sector, OECD demand continues to be subdued, and the Chinese demand is not expectedto recover until 2010. With rapid fleet growth over the coming years, the prospects of tanker market are notencouraging. However, moderate recovery is anticipated during the next two years thereafter.

Your Company has formulated its Ship Acquisition Programme for the 11th Five Year Plan (2007-12) periodreflecting the strategy of focusing on value-adding businesses by building on its core competencies so as torealize the objective of enhancing shareholder value. The SCI’s ship acquisition programme thus includesBulk Carriers, Crude Tankers, Product Tankers, Container Vessels, Offshore Vessels etc., aggregating to 62vessels of about 47 lakhs tonnes dwt. However, in view of the ongoing global economic slowdown, the orderingof ships would be judiciously planned as per the trade requirements and priorities of the SCI.

D) RISKS & CONCERNS

Despite the stimulus packages and measures initiated by governments in several countries, there would beuncertainty in terms of the extent and timing of such efforts actually bearing the desired results in a sustainedmanner. The possibility of global economy continuing in deep recession till end of 2010 with OECD countriesexperiencing negative growth cannot be fully ruled out. In such a scenario, the world steel demand wouldremain depressed for most of the next two years with the dry bulk trade demand being adversely impacted.Accordingly, Dry Bulk freight rates would remain near operating cost levels. Further, if global Oil demandstagnates, Tanker demand would remain weak. Under such conditions, the growth in revenues and profitabilityof shipping operations would remain a cause for concern.

A detailed analysis of how the above would impact or strengthen each segment of the Company is discussedbelow. The segments have been divided into three parts viz. (1) Bulk Carrier & Tanker (Bulk Segment), (2)Liner & Passenger Services (Liner Segment) and (3) Others.

23

(1) BULK CARRIER & TANKER

The Bulk Carrier & Tanker has been further sub-divided into two segments viz. (1) Tanker and (ii) Dry Bulk.

I) TANKER

A) INDUSTRY STRUCTURE & DEVELOPMENTS

World Scenario

The year 2008 became a year of ‘highs and lows’ in the oil market, as oil having treaded an upward curve inthe first half of the year (to a record $145/bbl in July), completely transformed its course in the latter half to endat a low ($31/bbl) in December. Prices rose relentlessly during the first seven months, setting several records,on account of a steady growth in middle distillate demand (mainly from non-OECD) against OPEC’s reluctanceto relax production targets. The trend reversed at the beginning of August, as dull economic activity in theOECD raised recessionary fears, with the contagion spreading to non-OECD countries. Falling demand amidample inventory stocks pulled down the price of oil, compelling OPEC to cut production. Prices however failedto recover with oil demand falling faster than supply. A grim outlook for the world economy and successivedownward revisions to oil demand in 2009, in addition to OPEC’s announced production cuts, are expected tokeep a check on activity in the oil and tanker markets in the near term.

Indian Scenario

The present refining capacity in India is about 156.1 mmt. There are various projects under implementation toexpand the capacity of the existing refineries and some projects are on the anvil to install new refineries. If allthese projects fructify, the total refining capacity of India would be about 203 mmt. by the year 2011. Consideringthe expected refining capacity, India is going to emerge as a major refining base and the main business hubfor petroleum products for the whole world by 2011.

Domestic crude oil production was weak in most of the months in 2008-09 and down by 1.8 per cent to 33.506mmt. in the year. Refinery throughput grew up by three percent to 160.77 mmt. in 2008-09. This was about 2.7per cent growth and bolstered by production by IOC and Essar Oil.

Since, there is a shift to higher parcel sizes in order to obtain benefit from economies of scale, the uses ofVLCCs have increased considerably for transportation of crude oil to Indian shores. This is evident as moreand more number of SBMs are set up/being set up to handle VLCCs.

In 2009-10, it is expected that refinery throughput could grow at 4.7 per cent to 168.3 mmt. During the year,additional refining capacity is expected from refining companies like IOC, BPCL, CPCL and HPCL to the tuneof 12.28 mmt. This, alongwith an expected 4.7 per cent growth in demand for petro-products are expected toboost production in 2009-10.

B) OPPORTUNITIES & THREATS

Installation of new refining capacity in India would result in greater employment opportunities for tanker fleetin general and Indian tankers in particular.

Increased oil imports in 2 million barrel parcels are resulting into enhanced usage of VLCCs and thus anopportunity for acquisition of more VLCC units. Coming on stream of Paradeep-Haldia pipeline would result ingreater usage of VLCCs for imports of crude on East Coast of India (ECI).

Emergence of India as a significant refining base, the expansion of RIL refinery and coming on stream ofEssar refinery would result in enhanced exports of products from India, which would require Clean LR-I andLR-II tankers.

High oil prices and the need to augment indigenous crude oil production are likely to lead to usage of FPSOsalong the coast so as to start immediate production from new oil fields and revive marginal fields. FPSOspresent a cost-effective means of starting production from new/marginal oil fields with an almost ‘nil’ gestationperiod. This would provide another opportunity for Indian ship-owners, including SCI, to diversify in a relatedbut new field.

24

Collapsing oil demand and the global recession are clearly hurting the tanker market. Despite OPEC’s recentdecision not to adjust production targets, cartel’s previous cuts combined with global slow-down have had animpact on global oil trade, subsequently affecting tanker demand.

New MARPOL regulations along with the change in parcel size preferences of Indian oil companies has led toreduced usage and marketability of SCI’s eleven old single hull LR-I tankers.

Non-stringent quality tonnage requirements of both, Indian Oil Companies and Indian Flag Administration,have led to deployment of majority of world’s older tonnage for India-centric business. This impacts the freightrates for India-centric business in general and SCI in particular, which owns new building quality tonnage andis unable to compete with low-quality and older tonnage.

The acute shortage of quality manpower and the inability to retain them to man our ‘state of the art’ tankers,which serve world’s best/quality charterers like Shell, BP, Total, Koch, Chevtex, Exxon Mobil, Vitol, Trafigura,etc., who have stringent requirements regarding qualification and experience of floating staff, poses a threatto acceptability of our tankers and also safe operation of vessels.

C) SEGMENTWISE PERFORMANCE

Crude Oil Tankers

Your Company has been competing with other players in the Global competitive market as a number oftankers including two VLCCs are employed gainfully on cross trade. M/s. Hindustan Petroleum CorporationLtd. (HPCL) and M/s Bharat Petroleum Corporation Ltd. (BPCL) continue to have COA arrangements withSCI for their crude transportation.

During the year 2008-09, the total quantity of crude oil transported by your company was about 24.67 mmt,which includes 3.28 mmt. in cross trade, 10.26 mmt. of imported crude for Indian Oil Industry and 7.56 mmt.coastal movement. In addition, through in-chartered vessels SCI transported about 3.45 mmt. of importedcrude for Indian Oil Industry.

Of the total of 19.66 mmt. of crude oil transported by SCI for Indian PSU refineries, 80% was carried by ownvessels and 20% carried by in-chartered vessels.

SCI, as an integrated service provider, has also handled lighterage operations during the year 2008-09 atvarious locations along the Indian coast and lightened liquid and dry bulk cargo of 14.449 mmt.

Ship-to-Ship (STS) Lighterage operations

During 2008-09, SCI’s Lighterage Cell carried out 425 lighterage operations for STS transfer of 11.014 mmt.of crude oil ( import and indigenous) at various locations off the East & West coasts of India, and 46 lighterageoperations for STS transfer of 3.435 MMT of bulk iron ore off Goa.

During 2008-09, our Lighterage Cell also carried out the inaugural ‘tandem mooring operation’ at FPSO“Dhirubhai”, at the newly commissioned KG Basin offshore oilfield in the Bay of Bengal, on account ofM/s. HPCL.

Contract of Affreightment (CoA)

During the year 2008-09, your Company successfully performed COA with HPCL and BPCL. The contractedquantities are 11.0 mmt. p.a. of imported crude plus 2 mmt. p.a. of indigenous crude for HPCL and 6 mmt.p.a. of imported crude plus 2.35 mmt. p.a. of indigenous crude for BPCL.

Employment pattern :

MR Tankers

The tanker, C.V. Raman was on time charter with IOC for lighterage operation at Sandheads and at Pannafields. The vessel, m.t. Homi Bhabha, was put up for scrap during August 2008.

LR-1 Tankers

As a result of revision of regulation 13G and addition of new regulation 13H of MARPOL Annex 1, SCI’sLR 1 tankers were unable to load HGO (Heavy Grade Oils). In view of the same, these vessels were not

25

workable for cross-trade shipments. However, your Company managed to employ all these LR-1 tankersmainly for carriage of BH/ Ravva crude along the coast and lighterage operations under the COA. Beside,LR-1 tankers were also operated for transportation of crude oil from Iraq & Iran from time to time for theIndian Oil Industry.

CSL tankers

These tankers performed mix of COA and open market cross-trade voyages. The vessel, m.t.A.K. Azad wason time charter with BPCL.

Aframax tankers

These tankers performed a mix of COA and open market cross-trade voyages both in time charter andvoyage basis. The vessels, m.t. Desh Prem and m.t. Desh Bhakt, were on cross-trade voyages for major partof the year after being re-delivered from charterers, Norden. The vessel, m.t. Desh Rakshak, was deliveredon time charter to Navig8.

Suezmax tankers

The Suezmax tankers performed a mix of COA and open market cross-trade voyages. The tanker, DeshShakti, was re-delivered by the time-charterers, M/s. S.T. Shipping, and m.t. Guru Gobind Singh was deliveredon time-charter for 2 years to IOCL.

VLCCs

Two VLCCs viz. m.t. Desh Ujaala and m.t. Desh Vaibhav were successfully employed on time charter basis.Your Company took advantage of the premium charter rates for its double hull tankers in the tanker market.The vessel, m.t. Desh Viraat, new built was delivered on 29/10/08 and was deployed on time charter for shorttime charter right from South Korea ex. delivery yard.

Product Carriers

During the year, 8 vessels viz. m.t. Bhartidasan, m.t. Suvarna Swarajya, m.t. Sampurna Swarajya, m.t. LanceNaik Albert Ekka PVC, m.t. Flying Officer Nirmaljit Sekhon PVC, m.t. Arun Khetrapal PVC, m.t. Major HoshiarSingh PVC and m.t. B.C. Chatterjee (after being re-delivered by the time-charterers, M/s. S.T. Shipping) weregainfully employed with the Indian Oil Industry on time charter basis which ended on 31st March 2009.

The vessel, m.t. Rabindranath Tagore, has been employed with Dorado Tanker Pool.

Specialized Vessels

Your Company’s LPG/Ammonia carriers were operated for carriage of both LPG and Ammonia. While onetanker serviced IOCL on time-charter for transportation of LPG from WAG, Malaysia to India as well ascoastal movement of LPG from Indian refineries, the second tanker was deployed on time-charter withM/s. Malaysia International Shipping Corporation (MISC), Malaysia for transportation of Ammonia oncross-trade in the international market at attractive rates.

Three chemical tankers continue to be deployed under a long–term COA with M/s. Maroc Phosphor/IMACID.During the year, 3 tankers carried about 0.30 mmt. of phosphoric acid. The Chemical Carriers have alsocarried two back haul cargoes from India for Dammam and Turkey and 15 coastal parcels from Tuticorin toIndian Coast.

D) OUTLOOK

As the first quarter of 2009 came to a close, the combination of falling world oil demand and an expandingfleet took a big bite out of tanker rates. In January and February 2009, floating storage provided temporaryreprieve, but as the contango started to dissipate, there was a negative impact on the freight rates.

Oil prices fell from over $147 barrel in July 2008 to $32.40 in December, hit by recession. Crude oil rates arerallying above $60 and it will not provide much comfort fro the oil tanker market as weak global demand andthe tonnage will affect the firming up of tanker rates.

26

The International Energy Agency (IEA), energy adviser to 28 industrialised countries, forecast that world oildemand this year will post the sharpest annual fall since 1981. Moves by the Organization of the PetroleumExporting Countries to cut production also hints weak freight markets.

With oil demand contracting this year and with a lot of the associated reduction in oil production coming fromOPEC countries which support seaborne crude trade, the tanker market is getting hit from both sides.

The IEA has said the recent rise in oil prices was due to sentiment rather than evidence of higher consumption.Growth in the number of vessels coming on stream is set to compound difficulties. Accordingly, the outlookfor tanker market is grim.

However, tanker demand in Asia will remain firm, with imports into China and developing Asia region expectedto continue rising rapidly. In addition, it is expected that the trend towards longer-haul imports into theseregions would continue in 2009.

Taking into account the current levels of ‘vessels on order’ and further tonnage acquisition planned, SCI islikely to retain its position among Indian Shipowners in terms of tonnage and operations.

SCI’s COA with HPCL and BPCL/KRL combine for transportation of crude oil has been extended by both thecompanies till September 2009. Prior to expiry of this period, SCI would initiate a dialogue with the respectivecompanies to sign a new COA.

The reduced marketability and usage of LR-I tankers due to change in MARPOL regulations and their singlehull status poses a major challenge for SCI to gainfully deploy these vessels. These tankers would however,continue to be deployed for coastal movement of indigenous crude and import of crude oil from Arabian Gulfunder COA.

The movement of clean petroleum products along the coast would remain steady and our product tankerswould continue to remain deployed on time charter basis to Indian oil companies.

E) RISKS & CONCERNS

Economic slump and worsening credit scenario coupled with falling oil demand are the major areas of concernfor the Tanker market. However, with secured cargoes by way of COA with Indian oil companies and SCI’squality fleet exposed to cross trades, SCI expects to tide over the challenges faced in the current marketenvironment.

The acute shortage of quality manpower and the inability to retain them to man our tankers is posing a threatto acceptability of our tankers by world’s best/quality charterers. However SCI has suitably upgraded thecompensation of fleet personnel to match the levels of other Indian Shipping companies and this problem hasbeen effectively brought under control.

Integrated Management System (IMS)

In order that our tankers maintain the highest standards and remain competitive and marketable, SCI hasdecided to implement the IMS (Integrated Management System) that encompasses provisions of QualityManagement System (QMS), Environmental Management System (EMS) of the ISO and Occupational Health& Safety Management System (OHSAS). The IMS also covers within its ambit Risk Assessment, HazardIdentification & Analysis and TMSA (Tanker Management and Self Assessment). TMSA is the requirement ofOil Majors without which the tankers may face rejection by them and the Oil Terminals around the world.TMSA offers a standard framework for assessment of ship operators’ management system. Ship-operatorsare expected to conduct and regularly review their TMSA assessment ‘online’ against the highest practicesrecommended in their programme. Implementation of IMS has been taken up as a time-bound programme tomaintain profitability of SCI vessels at the internationally highest levels.

27

The IMS (OHSAS 18001, EMS 14001 & TMSA Requirements) have now been implemented across thetanker fleet. M/s. Indian Register Quality System, IRQS (IRS) have recommended conformance of compliancewith OHSAS 18001 & EMS 14001 standards.

Outstanding Payment from the oil industry

As on 31.03.2009, payment under various heads outstanding from the oil industry was approximately Rs.235crores. A substantial portion of the outstandings was in connection with the payment in respect of tankers oiltransportation including freight, demurrage and charter hire. Your Company has been continuously followingup with the oil industry for realization of overdue demurrage claims.

II) DRY BULK

World Scenario

The average BDI (Baltic Dry Index) during the year 2008-09 was 4896 (as compared to 7771 during 2007-08).

The global economic slowdown has drastically reduced commodity demand and therefore, dry market keptdeclining and remained ‘lack-luster’ during 2008-09. The Baltic Dry Index witnessed continuous correctionsand closed at 1615 points on 31.3.09. This fiscal year not only witnessed financial turmoil but also fear ofcross-party default which restricted chartering activity across all vessel segments. Post Olympics, reducedcommodity demand in China was a significant feature in 2008-09.

Indian Scenario

Indian iron ore shipments and coal imports are the driving forces for dry bulk demand in India. DuringApril–December 2008, India imported about 46.37 million tones of coal as against 39.95 million tones importedduring April-December 2007. The exports of iron ore, a key ingredient in steel manufacturing, plunged by 54per cent in March from the previous year due to recession in world’s major economies like the US andEurope. Despite this reduction, your Company’s Handymax fleet continued to perform well in this segment.Growing domestic demand for steel and the augmentation of power generation capacities are driving the ironore and coal demand and in, both these trades, India is a major participant as an exporter and importer,respectively.

B) OPPORTUNITIES & THREATS

With increasing demand from steel makers and power producers, the coal import requirements of India areset to grow significantly. Though, at present the import requirements are met through Panamax and Handymaxvessels, the trend is changing towards Capesize ships due to the setting up of UMPP (Ultra Mega PowerProjects) in the coastal areas and the commissioning of new deep water ports in Krishnapatnam andGangavaram.

Currently, 85% of SCI’s dry bulk fleet is more than 15 years old, of which 80% is Handymax size. Out of a total15 Handymax vessels, 12 are aged over 20 years. The marketability of these Handymax vessels has comedown due to their age, as most of the reputed charterers prefer to take vessels aged 15 years or younger.Moreover, for movement of iron ore from East Coast of India (ECI) to China, the charterers prefer to usevessels equipped with grabs. None of the SCI vessels are installed with the grabs suitable for loading/unloadingof iron ore. At present, their lower cost structure and consequently higher profits serve to balance the highercosts of the newer tankers in the SCI fleet. Further, these vessels ply from East Coast of India to China wheretheir marketability is not an issue. Further, cargo security for these vessels has been ensured through a longterm COA, for coal from Australia/New Zealand to India with SAIL.

As all new acquisitions of Handymax size vessels are mainly in the range of 50000+ dwt. range (SuperHandymax) with greater capacity cranes and grabs and also more economic in fuel consumption, the existingSCI’s Handymax fleet of 47000 dwt. range is facing tough competition especially due to very high bunkercosts. However, SCI’s new buildings of 6 Handymax Bulk carriers due for delivery in 2011-12 shall be at parwith the Super Handymax vessels.

28

C) SEGMENTWISE PERFORMANCE

Your Company owns 19 bulk carriers (average age 19 yrs) as on 31st March 2009 comprising of 15 Handymaxand 4 Handysize vessels.

The 11 Handymax vessels were primarily deployed on a triangular voyage for transportation of coking coalfrom Australia to ECI both on COA and spot basis for Steel Authority of India Ltd. (SAIL), Kolkata and thendeployed for carrying iron ore from ECI to China on spot basis. Due to reduced exports of iron ore to China,post Olympics, the leg of ECI to China remained depressed during the year 2008-09. These vessels weresometimes deployed for carriage of Metcoke from China to India on spot as well as on COA. On account ofSAIL, SCI tonnages had lifted from Australia about 16,84,678 mt. during the year 2008-09.

In addition to the above, few Handymax vessels, which are less older tonnages of 45000 DWT, were deployedon short period charter.

In the Handysize segment, m.v. Lok Maheshwari was put up for scrap. The remaining 4 units of Handysizevessels were mainly employed on cross-trades for short-term/long-term period charters or spot basis to carryoverseas cargoes like urea, steel, grain, fertilizers, agri-products etc.

D) OUTLOOK

The second half of 2008 witnessed falling in freight rates of more than 80 to 90 percent. However, despite theeconomic slump, dry bulk market showed signs of recovery during February 2009. After a relatively strongFebruary, the dry bulk market was mixed in March. In the first half of the month, rates generally moved up,with the Baltic Dry Index climbing to its highest level in five months, but the index declined steadily during thelatter half of the month.

The Chinese iron ore imports soared in March 2009 thereby giving a hint that this trade may pick up in the firstquarter of 2009-10. It is expected that Chinese demand would continue to recover over the course of thisyear. But trade demand outside China is likely to remain weak, and deliveries are set to accelerate in thecoming months. Giving these developments, the recent rebound in rates is likely to fizzle out in the secondhalf of 2009.

The long term picture is considerably brighter. Trade growth is projected to rebound nicely over the 2011-2013 period, with fleet growth slowing in response to lower ordering activity, a high level of scrapping, and asignificant amount of cancellations from the existing order book.

However, it is anticipated that non-OECD economies, most notably China and India will remain relativelyhealthy and continue with trade activity in larger scale.

E) RISKS & CONCERNS

Ageing fleet demands high level of maintenance and repairs which is adversely affecting Company’s profitability.

Due to shortage of shipbuilding steel globally, the cost of steel renewal in ship repair yard is rising.

The volatility in bunker prices is making the charterers look towards more fuel efficient ships.

Nevertheless, in the current market conditions there is a niche for SCI’s bulk carriers which is being cateredto. Further the delivery of the bulk carrier new-buildings, which are Supramax tankers meeting the marketrequirements, shall be added to the SCI fleet when these vessels are close to reaching 25 years of age.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE(BULK CARRIER AND TANKER)

The overall financial performance of bulk carriers and tankers has been impressive. The contribution of bulkcarriers has been healthier. The vessels on period charter served as a hedge both against the steep rise inbunker prices during first half of 2008-09 and also for the revenue as crude sector was affected by the

29

softness of the market in last quarter of 2008-09. The product tankers have performed satisfactorily and theperformance of LPG vessels has also been very impressive. Acid Carriers were affected due to the downturnin the Phosphoric Acid trade.

The Bulk Carrier & Tanker segment (Tanker and Dry Bulk together) recorded a revenue of Rs.3271.01 croresin 2008-09 as compared to Rs.2889.86 crores in 2007-08. The segment recorded a Profit before Tax andinterest of Rs.980.11 crores in 2008-09 as against Rs.822.30 crores in 2007-08.

(2) LINER & PASSENGER SERVICES

A) INDUSTRY STRUCTURE & DEVELOPMENTS

World Scenario:

Global Container trade in 2008 was characterised by surging volumes during much of the first half of the year,only to experience an unexpected sharp decline in growth during the later part. European imports from Asiasaw the largest swings, with similar trends in the imports to Japan and Asian NIEs (Newly IndustrialisedEconomies) such as South Korea. Chinese imports were also affected, falling even faster than its exportswith domestic consumption reducing substantially. In 2008, as a whole, the main arterial routes namely the‘Transpacific Eastbound’ and ‘Asia-Europe Westbound’ lanes experienced a negative growth of 9% and 0.5%,respectively. Substantial corrections were seen in the Intra-Asia trades by the year-end. This declining trendin trade volumes continued into the first two months of 2009 as well, and eased only in March. Global Containertrade in 2008-09 is estimated at around 129 million TEUs, marking a meagre growth of 3.5% compared toover 10% witnessed in 2007-08.

In this scenario of shrinking trade volumes and double-digit fleet expansion, Liner operators withdrew substantialtonnage plying in the main trade lanes during the final months of 2008 and January 2009. Yet, vessel utilizationand freight rates continued to slide. Liners announced additional capacity cuts for the next few months toscale back costs, while the amount of idle tonnage piled up. Leading carriers implemented substantive cost-cutting measures such as charter-vessel discharge, laying up vessels, scrapping owned tonnage, slow-steamingin select routes, reducing administrative costs, etc.

The freight and charter rates fell sharply at the end of 2008 with the slide continuing into 2009. Liner operatorsincreasingly re-delivered charter vessels instead of renewing charter agreements. It is reported that severalnew-building vessels, including mega-ships over 7,000 TEUs, will be directly proceeding for lay-up from the shipyards.

Indian Scenario:

The major Indian ports handled 6.85 million TEUs of container traffic in 2008-09 which was only 2% higherthan the previous year. This is equivalent to 93 million tonnes of containerised cargo, representing a negligiblegrowth of 0.9%. The SCI continues to be the only Indian mainline carrier providing services from India tosome of the major global destinations. However, several international container majors are offering directservices or calling Indian ports en-route on their East-West services.

B) OPPORTUNITIES & THREATS

Global Container trade is projected to contract by 3.3% in 2009. However, there are some signs that the UShousing sector and financial markets could stabilize in the near term. With recovery anticipated at end-2009or early 2010, it is reckoned that Container trade could see an upswing in that period.

The prospects for growth in India’s container trade are encouraging. However, with the trade picking up, thelaid-up vessels would be redeployed thereby keeping downward pressure on the freight rates. After the recoveryof world economy gets underway, the continuing growth of the Chinese economy, the expected consolidationof other Asian economies and potential for feeder trade may arrest the falling freight rates.

The breakbulk sector has good potential in respect of imports of Over-Dimensional Cargoes (ODC), Projectcargoes, Heavy Lift cargoes etc. on account of the Government departments / PSUs as the Infrastructuresector in India will remain strong.

30

C) Segmentwise Performance of Liner & Passenger Services

Liner Vessels:

The table below shows the profile of SCI’s owned liner fleet having total container carrying capacity of14,407 TEUs.

Type of Ships As on 31.03.2008 Additions Scrapping As on 31.03.2009

No. DWT No. DWT No. DWT No. DWT

Fully Cellular 3 86,815 2 1,15,598 - - 5 2,02,413

Total 3 86,815 2 1,15,598 - - 5 2,02,413

Average age of 5 owned Container vessels: Approx. 10 years, out of which 2 vessels are of less than 1 yearage.

As on 31.03.2009, the in-chartered container vessel tonnage operated by SCI comprised 5 vessels of a totaldwt. of 1,63,664 tonnes and 11,389 TEU total capacity. The SCI operates 7 in-chartered vessels of total dwt.of 2,50,064 tonnes and 18,282 TEU capacity.

Your Company continued to deploy its owned/operated container vessels and breakbulk vessels in the varioussectors as indicated below.

Container Services

Indian Subcontinent Europe Service (ISES):

The UK-Continent cellular container service was started in 1994, with a single operator viz. SCI deploying its3 owned vessels of 1,800 TEU capacity. Over the years, the service was upgraded in stages with deploymentof larger vessels operated jointly in consortium with other internationally reputed lines.

As per the earlier arrangement, (which was phased out in May 2009), the service was being operated by fivePartners viz. SCI, Yang Ming Lines (YML) of Taiwan, ZIM lines of Israel, K-Line of Japan and MISC of Malaysia.Initially, one of the partners, namely MISC withdrew from the arrangement in March 2009, and subsequentlyZim Lines withdrew in May 2009, followed by K-Line and YML, who withdrew later in end-May 2009.

The SCI formed a new consortium, namely “SCI-MSC” with M/s Mediterranean Shipping Lines w.e.f. 17.05.2009which operates the new ISE service with 7 vessels ranging from 2750 to 3500 TEU capacity on a roundvoyage duration of 49 days. SCI is contributing two owned vessels and two in-chartered vessels and MSCthree vessels upto October 2009; thereafter SCI will deploy two owned vessels and one in-chartered vesseland MSC four vessels. The port rotation is: Colombo / JNP / Mundra / Salalah / Port Said / Barcelona /Hamburg / Rotterdam / Felixstowe / Port Said / Jeddah / Colombo. The allocation for each partner is on a50:50 basis of the total space available in this Service, which works out to about 1650 TEU per vessel each.

This service has performed consistently in spite of the overall downturn in the economy. The two newvessels, m.v. SCI Mumbai and m.v. SCI Chennai, have been deployed in this service. With the withdrawalof the erstwhile partners from the service, this service has been successfully restructured by inductingM/s Mediterranean Shipping Company, Geneva as partner. Presently SCI has deployed four vessels inthe service.

Far Eastern Sector:

India / Far East Cellular (INDFEX 1): Service

This service was commenced in June, 2001 in consortium with other international lines and upgraded inMarch 2008 with induction of larger vessels. It is now operated as a weekly direct service from India’s WestCoast to Central China, Korea, Hong Kong, Singapore and Malaysia with 5 vessels of 1950–2250 TEU on around voyage schedule of 35 days. The three Vessel Operating Partners are SCI, PIL of Singapore andK-Line with each having one vessel; and of the other two vessels which are equally shared by the partners.The two vessels deployed by SCI (including one shared vessel) are of 2250 TEU capacity and the average

31

weekly allocation for SCI is about 750 TEU considering owner’s merit. The main ports of call are NSICT /Colombo / Singapore / Busan / Shanghai / Ningbo / Hong Kong / Singapore / Port Kelang / Colombo / NSICT.

India / Far East Cellular (INDFEX 2) Service

This service commenced in June 2002 with the same consortium operating the INDFEX-1 service. Theservice was upgraded and is operated as a weekly direct service connecting East coast of India to NorthChina with 5 vessels of 2100 – 2200 TEU on a round voyage schedule of 35 days. SCI deploys one 2200 TEUvessel and has an average weekly allocation of 440 TEU considering owner’s merit. The main ports of call areChennai / Vizag / Singapore / Hong Kong / Shanghai / Dalian / Xingang / Qingdao / Hong Kong / Shekou /Singapore / Port Kelang and Chennai. Through the INDFEX 1 and INDFEX 2 services, SCI covers theChinese market extensively with direct calls at 6 mainland Chinese ports and Hong Kong.

The freight rates have been severely affected in the Far East Sectors. From freight levels of about US$ 1500per TEU from Far East to India, the rates have plummeted to about US$ 100 per TEU. This has severelydented the services profitability, which were also already affected due to high charter rates being paid towardsin-chartered vessels.

Far East to Middle East Service (“HYPER GALEX”)

SCI had started this weekly service from the Far East to Middle East via India on 11.11.2006 with two otherpartners namely, Emirates Shipping Lines and TS Line. The service, “HYPER GALEX” offered direct servicefrom Xingang, Qingdao and Ningbo to Cochin and Nhava Sheva and calls the Middle East ports of Jebel Ali,Abu Dhabi and Dammam. It was operated with 6 vessels of 2700 TEU capacity and round voyage time of42 days. SCI and TS Line deployed one vessel each in the service and ESL 4 vessels, the ports of call beingXingang – Qingdao – Shanghai – Ningbo – Hongkong – Singapore - Port Kelang – Colombo – Cochin - NhavaSheva - Jebel Ali - Abu Dhabi - Dammam - Jebel Ali – Colombo –Singapore - Xingang. However, after operatingthe service for about a year, the partners gave 3 months’ notice of closure in mid-December 2007. Thisservice was terminated in April 2008.

SCI Middle East India Liner Express (SMILE) Service

SCI is operating this new independent weekly service (commenced in March 2008) to the Gulf with its3 owned 1600 TEU (1800 TEU nominal) vessels on a round voyage schedule of 21 days. This service covers‘India & the Indian Subcontinent - West Asia Gulf’ sector catering to the trade requirement in the Gulf marketsas also the Far East, Red Sea, UK-Continent through transshipment at Colombo. Upper Gulf locations arealso covered by feeder services ex-Jebel Ali. In December 2008, the SMILE service was expanded to carryfeeder and coastal cargoes on the West Coast of India. The main ports of call are Colombo / Tuticorin /Cochin / Nhava Sheva / Mundra / Jebel Ali / Mundra / Cochin / Tuticorin / Colombo. Through the SmileService, SCI has commenced a coastal service on the West Coast of India between Mundra, Cochin andTuticorin from December 2008.

The freight rates between India and Gulf have dropped from US$500 per TEU to US$50 per TEU. This hasaffected the service profitability. However, this service has also started catering to coastal shipping movementsand some feeder cargoes, which has mitigated the losses. This service has also been affected due todry-docking of the vessels as well as phasing-in and phasing-out of various vessels for other services. As thisservice is also acting as feeder to other services, the revenues on this service also are reflected in othermainline services.

India-Red Sea Service

SCI commenced this service in consortium with Hull & Hatch (H&H) Lines Ltd. on 01.02.2009. The service isoperated with 2 vessels, an 1100 TEU vessel deployed by H&H and a 1700 TEU vessel by SCI, on a roundvoyage schedule of 24 days with a 12 days frequency connecting India’s west coast to several ports in theRed Sea region and East African countries. The average allocation for SCI with owner’s merit is 775 TEU.The ports of call are: Mundra - Nhava Sheva - Jeddah - Port Sudan - Hodeidah – Djibouti – Aden – Salalah –Mundra. When there is adequate inducement, the SCI vessels in the service call at Eilat. This is the onlyservice making direct calls to Red Sea ports.

After initial slow start, this service has picked up and is expected to perform satisfactorily.

32

Feeder Service

From April 2008, after the termination of the earlier joint feeder service with M/s Seacon Consortium Ltd.(Singapore), the SCI makes feeder arrangements with ‘Common Carriers’ between various ports on theIndian subcontinent depending on market requirements. In addition, based on similar arrangements, the SCIcontinues to provide feeder services covering ports in West Asia Gulf, Red Sea, Europe etc.

SCIMAX Feeder Service

SCI commenced a joint feeder service between Kolkata / Haldia and Colombo on 01.02.2009 with M/sMAXICON Shipping Agency (Vizag) to serve various trade lanes between these ports. The service is operatedwith 2 vessels of around 700 TEU each with a frequency of about 8-9 days. Due to draft restrictions at theIndian ports, the actual loadable parcel size is reduced up to around 440 TEU, depending on the draft availableduring the voyage.

Besides SCI’s own captive cargoes, this service is also catering to other mainline operators’ cargo as afeeder operator. This service has started showing positive results both, in terms of attracting additional cargoesas well as reduction of SCI’s feedering expenses.

Break-Bulk Services

SCI is the only Indian company providing overseas liner break-bulk services to Indian trade. SCI arrangescarriage of breakbulk cargoes on space charter basis from various regions across the globe including USAand Far East for imports on account of the Government departments / PSUs which includes shipments ofOver-Dimensional Cargoes (ODC) / Project cargoes / Heavy Lift cargoes / IMO Class I Cargoes, etc. andalso containers. SCI continues to operate its India–UK Continent breakbulk service from European ports toIndia jointly with Rickmers Linie on space sharing basis on their vessels.

Coastal Operations

Domestic Passenger - Cum - Cargo Service

In addition to international operations, the SCI with its 2 owned Passenger-cum-Cargo vessels and 29 managedvessels operates domestic passenger & cargo transportation services between the Mainland and Andaman& Nicobar and Lakshadweep groups of Islands and inter-island, on behalf of the Government of India.

Other Coastal Services:

SCI also manages / mans certain other types of (Coastal) Research vessels on behalf of Government agencies/departments viz. Geological Survey of India, Ministry of Steel and Mines (3 vessels) and Ministry of EarthSciences (2 vessels).

SCI’s Owned Passenger - Cum - Cargo Vessels:

The table below shows the profile of the owned Passenger-cum-Cargo carrier fleet owned by your Company.

Type of Ships As on 31.03.2008 Additions Scrapped As on 31.03.2009Nos. Nos.

Nos. Pax. Cap. Nos. Pax. Cap.

Pax-Cum-Cargo Ships 2 1,502 1,500 — — 2 1,502 1,500

Total 2 1,502 1,500 — — 2 1,502 1,500

The deployment pattern of the above mentioned owned fleet of your Company was as under:

• m.v.”Harshavardhana” was deployed on the Mainland/Andaman Sector.

• m.v.”Ramanujam” was deployed on the Inter-Island Services of the Andaman and Nicobar Islands.

CargoCap.(MTs)

CargoCap.(MTs)

33

Manned and Managed Vessels:

The following table shows the profile of the vessels Passenger-cum-Cargo vessels and other vessels managedby your Company on behalf of the various Governmental Organisations/Departments.

Type of Ships As on 31.03.2008 Additions Withdrawn/ As on 31.03.2009Nos. Scrapped

No. Pax. Cap. Cargo Nos. No. Pax. Cap. CargoCap. Cap.

(MTs) (MTs)

Pax-Cum-Cargo Ships 26 8,784 6,810 3 - 29 9178 6498

Other Vessels 6 - - - - 6 - -

Total 32 8784 6810 - - 35 9178 6498

The deployment of these vessels on behalf of various organizations was as follows:

• Twenty five (25) Ships on account of the A&N Administration, of which four (4) are for carrying Passengersand cargo between the Mainland and Andaman and Nicobar Islands and twenty-one (21) for Inter-Islandsrun.

• Five (5) Ships on account of the Union Territory of Lakshadweep Administration, of which two (2) are forcarrying Passengers and cargo between the Mainland and Lakshadweep Islands, two (2) for Inter Islandsand the remaining One (1) is an Oil Barge.

• Five (5) Research vessels on behalf of various Governmental Organisations/ Departments, of which three(3) ships on behalf of the Geological Survey of India and two (2) on behalf of the Ministry of Earth Sciences(Department of Ocean Development).

During the year under review, the SCI carried passengers and cargo on the Mainland/Island sector on ownedand managed vessels as under:

Sector No. of Passengers General Cargo (MTs)

Mainland/A&N Islands 1,76,713 28,446.507

Mainland/UTL Islands 35,883 171.320

Total 2,12,596 28617.827

Marketing

The SCI has intensified the marketing efforts for its break-bulk and container services. Sales calls are beingregularly made by the SCI’s marketing team, through own offices and also through agents appointed atvarious ports in India and abroad so as to build a sound rapport with its customers viz. various Government ofIndia Departments, Public Sector Undertakings and major Export / Import Business Houses. The SCI hasadopted a proactive approach towards competition by undertaking an all-India customer contact programme,gathering market intelligence on trade activities, cargo prospects and projects in pipeline etc. The SCI’smarketing efforts have also been specifically directed at various Government of India Departments, PublicSector Undertakings etc., for retaining their valuable patronage and cargo support.

D) OUTLOOK

The global container trade is expected to recover by fourth quarter 2009 / first quarter 2010, which would havea limited positive impact on the container freight rates. The losses in the container segment are on account offalling freight rates.

Significantly, the SCI is also re-delivering two of its three in-chartered vessels having high charter hire rates inthe current year thereby reducing the outgo of about USD 50,000 per day, which will have positive effect in therespective INDFEX services. The Management is working on the loss mitigating plan in order to ensureoverall profitability of SCI.

34

SCI has also renegotiated the charter hire of one of the in-chartered vessels downwards, which will also havea positive effect on the Sector’s performance in 2009-10. However, INDFEX Services would still be hamperedby the deployment of another in-chartered vessel, which has a relatively higher charter rate and whose charterperiod is expiring in end-2010.

SCI has also obtained the freight forwarding licences, and is now registered as a Multimodal Transport Operator(MTO). With this, the SCI is also expected to render 3PL (Third Party Logistics) business using its vastexperience and agency network.

The prospects of Breakbulk services provided by your Company continue to be reasonably bright in respectof both the independent space charter arrangements being made by SCI for carriage of import cargoes fromvarious locations worldwide and also SCI’s joint service with M/s. Rickmers Linie on space sharing basis ontheir vessels for imports from European ports to India.

Your Company will continue to operate Coastal and Passenger Services successfully by deploying its owned/managed vessels for the Andaman & Nicobar Administration, Union Territory of Lakshadweep Administration,Geological Survey of India and Ministry of Earth Sciences.

Developments of material nature affecting the financial position of the Company subsequent to theclose of the year 2008-2009 i.e. after 31.03.2009

In view of the losses in Liner division, the Management has taken note of this development and is working onvarious plans to mitigate the losses so that there is no adverse effect in the overall profitability of SCI.

E) RISKS & CONCERNS

There are concerns that the steps being adopted by governments the world over may not yield the desiredresults in the timeframe envisaged. In case the global economy continues to be in recession until mid-2011,world container trade would decline more than presently envisaged and then witness a modest growth in 2010.

F) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year 2008-09, the freight rates on almost all the services have been severely impacted by theglobal recession. This coupled with high charter rates for in-chartered vessels has resulted in very poorperformance of the Liner Services.

In the Breakbulk sector, your Company continued to achieve very encouraging positive results during the yearunder review. Coastal and Passenger Services sector also earned good remuneration, thereby furtherenhancing the Company’s profitability.

In financial terms, overall the Liner segment recorded revenue of Rs.825.46 crores in 2008-09 as againstRs.847.36 crores in 2007-08. However, as compared to loss of Rs.94.59 crores in 2007-08, the Liner Segmenthas recorded a loss of Rs. 187.23 crore in the year 2008-09.

(3) OTHERS

TECHNICAL & OFFSHORE SERVICES

OFFSHORE SERVICES

(A) DEVELOPMENTS

During the year under review, all the 10 Offshore Supply Vessels (OSVs) of your Company continued to begainfully employed with ONGC. All the 10 vessels secured the contract against ONGC’s global tender floatedin 2006 for charter hire of OSVs, Anchor Handling Tug Supply Vessels (AHTSVs), and Platform SupplyVessels (PSVs) for Offshore operations. The contract period will be 5 years from the date of mobilization ofvessels. As per the ONGC’s tender requirements, the vessels need to be fitted with DP1 (Dynamic PositioningSystem), Fresh water generator, UKOOA compliant (United Kingdom Offshore Owners’ Association-compliant),etc. SCI has upgraded its vessels with ONGC’s above tender requirements and have mobilized its 7-OSVs toONGC under new contract during the period September 2007 to March 2008 and balance 3-OSVs have beenmobilized during the current year, after upgradation as per ONGC’s above tender requirements.

35

Your Company has also continued the Operation & Maintenance management (O&M) of ONGC’s SeismicSurvey Vessel (SSV) Sagar Sandhani since 1986 on “cost plus” basis. The previous contract expired on31.03.2007. ONGC renewed this contract for a period of 39 months w.e.f. 01.04.2007 to 30.06.2010 on ‘costplus’ basis, on the same terms and conditions with some changes with regard to increase in payment ofmonthly advance to SCI, inclusion of ‘Monsoon lay up repairs’ in Drydocking clause, review of percentage ofSCI’s remuneration beyond 31.03.2008, etc.

Your Company has also continued to provide marine management services onboard ONGC’s Well SimulationVessel (WSV) Samudra Nidhi w.e.f. 01.04.2005 for a period of 3 years viz. up to 31.03.2008. Prior expiry ofthis contract period, ONGC has awarded the contract for provision of marine manning services on boardONGC’s WSV Samudra Nidhi for a period of 3 years w.e.f. 01.04.2008.

ONGC had entrusted Operations & Manning Management (O&M) contract of ONGC owned 16 ‘Samudrika’series Offshore Supply Vessels (OSVs) to your Company for a total period of 3 years on nomination basis.Out of these 16 OSVs, 15 OSVs were taken over by your Company during the period November 2007 toMarch 2008 and one OSV was taken over during April 2008. Out of these 16 OSVs, as on 31.03.2009,7 OSVs were put in operation after extensive repairs/retrofitting and other 9 OSVs are in final stage of repairs/retrofitting and would be commissioned shortly.

ONGC had entrusted the Operations, Maintenance and Management contract (O&M) of their Multi SupportVessels (MSVs) and Geotechnical Vessel to your Company on nomination basis in March 2003 initially for aperiod of one year which was subsequently extended for a further period of 3 years and further one more yeari.e. up to 23.03.2008.

ONGC has again awarded the O&M contract for above vessels for a period of 3 years w.e.f. 24.03.2008 onnomination.

Outstanding amount from ONGC: An amount of Rs.37.77 was outstanding as of 31.03.2009 from ONGCagainst SCI owned OSVs and as on date the outstanding charterhire amount is Rs.9.11 crores (includingservice tax).

B) OUTLOOK

Ever increasing demand of energy and limited available sources led to a continuous rise in oil prices to overUS$ 110 a barrel in the first half of the financial year 2008-09. This also encouraged oil and gas companies toincrease exploration & development activities in search of new offshore reserves, resulting in increased focuson deepwater and ultra deep water areas as the potential locations for new Hydrocarbon reserves. NELP VII(New Exploration Licensing Policy) awarded 12 deep water blocks as against 7 shallow water blocks forexploration. The deep sea drilling activity is very specialized in nature requiring highly sophisticated vesselsand expertise. While the activity is very expensive, it is also very remunerative and your Company is planningto venture into this area. There is a huge demand for rigs, OSVs, PSVs, AHTSVs, barges, FPSOs (FloatingProduction Storage & Offloading), Specialized vessels such as SSVs, DSVs (Diving Support Vessel), WSVs,MSVs, etc. for the Indian offshore sector.

For the second half of the financial year 2008-09, the prices of crude oil remained in the range of US$ 48~58per barrel making deep water & ultra deep water drilling less attractive. However, considering the country’slow level of self-sufficiency in the energy sector (only about 22%) and the recovery in the international crudeoil prices, future prospects of the Indian offshore sector would remain attractive for many years to come. YourCompany is taking active measures to increase its exposure in this promising sector.

C) RISKS AND CONCERNS :

Evolution of new markets in the Offshore shipping Sector has led to entry of new players in the industryincluding foreign operators, some of which are equipped with modern technologies. In order to survive theonslaught of these operators, your Company would require adequate resources in the form of modern vesselsand expertise. Your Company’s Offshore fleet is about 24 years old and the Company would have to replacethese vessels soon.

36

Considering Indian Oil Industry’s requirement of advanced vessels which are equipped with DP1, ReverseOsmosis, etc., SCI also needs to acquire vessels such as MSVs, DSVs, PSVs, etc. meeting the existing/future offshore logistic requirement. Considering this factor, your Company has already placed an order forfour 80 Tons Bollard Pull AHTS vessels with Bharti Shipyard. The vessels are expected to be delivered during2010-11.

Since, as per ONGC’s new tender requirement, all OSVs are required to be fitted with Dynamic PositioningSytem-1(DP1), SCI imparted training especially to Masters and other officers to man these vessels.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The “Others” segment which includes the Technical & Offshore Services recorded a revenue of Rs.190.44crores in 2008-09 as against Rs.117.46 crores in 2007-08. The Profit before Tax interest increased fromRs. 13.70 crores in 2007-08 to Rs.53.69 crores in 2008-09.

TECHNICAL SERVICES

Technical Managerial services for acquisition of ships & supervision of construction of ships

During the year under report, the Company continued to provide technical consultancy services to A&NAdministration, UTL Administration, UTL Tourism Dept., Directorate of Light Houses & Light ships, GeologicalSurvey of India, National Institute of Oceanography and other Government Departments for their various shipacquisition/retrofit projects.

TONNAGE ACQUISITION PROGRAMME

The year under report is the second year of the country’s eleventh Five Year Plan. The Government hasapproved a total outlay of Rs.13,135 crores for SCI under the eleventh Five Year Plan. SCI has a proposal toinduct 62 new vessels of diversified fleet profile during the current Five Year Plan period and, by the end ofthe year 2008-09 (i.e. second year of the 11th Plan), your company has placed orders for 20 vessels. TheCompany’s tonnage acquisition programme for the year 2008-09 envisaged an outlay of Rs.2,342.01 crores,which included existing commitments as well as outlay for new projects.

During the period under report, your Company placed orders for 4 Panamax Bulk Carriers of 80,655 dwt.each at STX (Dalian) Shipbuilding Co. Ltd. The vessels would be delivered during the period June-August2012. While your Company had planned to acquire 4 Capesize bulk carriers, 4 Very Large Crude Oil Carriersand Offshore Vessels, considering the downturn in the shipping markets and likely correction in the shipbuildingprices, the vessel acquisition projects were kept on hold. Your Company is waiting for an opportune time foracquiring the proposed vessels and is likely to invest in assets during the next few years in order to takeadvantage of the lower prices.

Eco - Friendly and Conservation of Energy

As a policy, your Company remained committed to environmental protection as per International Conventionfor the Prevention of Pollution from Ships. All engines being fitted on board are meeting latest requirement ofNOx compliance. Necessary steps have been taken to minimize air pollution from ships. New designs ofcritical ship’s systems have been adopted which further minimize/eliminate risk of oil pollution. Further, tominimize risk of oil pollution, we have already completed conversion to double hull of our tankers, m.t. MaharshiKarve and m.t. C.V. Raman. Your Company took various steps to conserve energy loss at sea through theexhaust of Marine Diesel Engines/ Boilers in addition to other forms of conservation e.g. use of Fresh WaterGenerator. Application of Tin-free Self-Polishing Paints, etc. Ballast Water Management and Silt WaterManagement are being introduced for the recent/new ships under construction. Vessels anti-fouling coatinghas also been changed to TBT free paints.

Technology Absorption

The company has taken steps to install the following equipment /systems on board vessels towards technologyabsorption:

37

• Inmarsat Fleet 77 - For economic and speedy communication from ship to shore and vice versa on E-mailusing High speed data/MPDS (Mobile Packet Data Service)/ISDN line. Incorporated ISDN telephones/Video Telephones on new vessel.

• Implemented Installation of Water ingress detection system to detect the presence of water in cargo holdson all existing bulk carriers in line with requirement of IMO.

• Implemented Installation of Ship-Security Alert system on applicable coastal and foreign going vessels asper ISPS Code/ DGS circulars.

• Installed AIS (Automatic Identification System) on applicable vessels as per SOLAS amendment/DGScircular.

• Installed ECDIS (Electronic Chart Display and Information Systems) on new constructions viz. Suezmax,VLCCs, Container projects and would be installing on subsequent projects.

• Incorporated in our technical specifications the feature of adequate hull girder strength to meet the specifiedflooded conditions in each of the cargo and ballast loading conditions as per Unified Requirement for NewBulk Carriers projects.

• CSR (Common Structural Rule) for Bulk Carrier and Tankers incorporated in our technical specification.IMO PSPC (Performance Standard for Protective Coatings) is mandatory under CSR.

Performance and Safety Enhancement Measures

In accordance with the International Safety Management (ISM) Code, your Company has obtained the requiredISM Certification from D.G. Shipping for its owned as well as managed vessels in two phases. Under PhaseI, the Document of Compliance (DOC) for Oil Tankers, Gas Carriers, Passenger Ships and Passenger High-Speed Crafts, was renewed in November 2007 and is valid till 18.11.2012. Under Phase II, for Other CargoShips (Liner Ships and Offshore Vessels), the Document of Compliance (DOC) was renewed in February2006 and is valid till 14.03.2011.

The Interim DOC for the two LNG carriers which were newly inducted in the Company’s management wasobtained from the Malta Flag State Administration on 21.10.2008 and is valid till 20.10.2009. Also, InitialExternal Audit of Ship Managers’ Office has been carried out on 27.05.2009 at SCI Head Office premises byBureau Veritas and the Initial DOC has been issued, valid until 26.10.2009.

The DOCs are subject to periodical verification by the Administration. Last periodical verification of Phase I &Phase II vessels were successfully completed in January 2009.

As regards, Safety Management Certificate (SMC) for SCI fleet, all ships are put up for periodical/renewalSMC audits within time frame and respective SMCs are accordingly endorsed.

Compliance with ISO 9001:2000 Quality Standards - Quality Management System (QMS)

Your Company is now certified as ISO 9001:2000 compliant by Indian Register of Quality Services (IRQS)from 08.05.2007. The certificate is valid upto 09.05.2010 subject to surveillance audit at intervals of one year.The second annual surveillance audit of quality system has been successfully completed in April 2009.

Implementation of ISPS Code

ISPS Code (International Ship and Port Facility Security Code) has become mandatory from 1st July, 2004 forforeign going vessels. For the coastal ships, limited compliance with the ISPS Code is required as per theDirector General of Shipping (DGS) guidelines. All the vessels of fleet are compliant with the international andnational security requirements.

Revision, as per Administration Guidelines, of the Ship Security Assessment and Ship Security Plans of allvessels i.e. Foreign Going and Coastal Vessels has been completed.

38

PERSONNEL & ADMINISTRATION

Industrial Relations

Your Directors are happy to report that the industrial relations continued to remain harmonious during theyear.

Fleet Personnel

During the year, your Company has been facing acute shortage of fleet officers for our vessels which is beingfaced by the Shipping Companies all over the world. As per BIMCO and ISF Study, there will be shortage of27000 fleet officers by 2015. In order to mitigate the impact of the shortages, your Company has grantedincrease in the salary of officers on contract as also permitted the regular officers to draw the salary applicableto those on contract. As a long term solution, your Company has invested around 86000 training man-daystowards training Nautical and Engineering side new entrants during the year 2008-09. There is no shortage ofrating for your Company.

Your Company has taken over the management of LNG Vessels Disha and Raahi since December 2008 andthe vessels are manned by SCI officers and crew.

Maritime Training Institute

Your Company’s Training Centre at the Maritime Training Institute at Powai, Mumbai has conducted 315Courses for 7605 participants and the total man-days trained during this year is 76710. These included 61695man-days for SCI’s personnel and 15015 man-days for personnel from other shipping companies. In additionto this, 112 of SCI’s personnel were trained in India/abroad and the additional man-days of training are 406.

DG Shipping has granted the Maritime Training Institute additional slots of 40 cadets per year for training ofNautical cadets. Accordingly, 120 cadets were admitted at Maritime Training Institute on 1st August 2008.

Government of India has passed a bill for setting up Indian Maritime University at Chennai and the Universityhas notified that all marine related training Institutes will have to be affiliated to this University. Accordingly,Maritime Training Institute has applied for affiliation to this new University for the 1-year DGS approvedNautical Science Course which was being run under IGNOU-DGS MOU.

Shore Personnel

During the aforesaid financial year, 4 Masters and 1 Marine Engineer were absorbed from our fleet to theshore cadre. Further 16 young professionals were recruited from open market during the year. The processof the next batch of recruitment of young professionals has started and the written examination was held on22.2.2009 and, selections made. The total number of employees as on 31.3.2009 was 980 shore staff.

Welfare Activities

Various training programmes including General Management Training programme, Stress Managementprogramme and SAP Training have been arranged for officers and staff during the year. Seminars have beenarranged for employees on topics like Naturopathy, Communication Skills and Prevention of Heart Risk andJoint Pain.

Assistance to the weaker sections of society

For the financial year 2008-09, your Company had set aside Rs.40 lakhs for welfare of SCs/STs, out of whichRs.17,50,000 has been utilized for reimbursement of fees paid by 37 SC/ST Trainee Marine Engineers/Trainee Navigating Cadets and balance amount will be utilized for various welfare activities for general welfareof weaker section.

Corporate Social Responsibility (CSR)

Your Company is in the process of evolving an articulated policy on CSR for the benefit of the society at largeand the Board has in March 2009 approved an allocation of 1% net profit for CSR. Assistance from the TataInstitute of Social Sciences has been sought for effective programme design, management and delivery ofthe CSR initiatives.

39

JOINT VENTURE COMPANIES

Irano-Hind Shipping Company

Your Joint Venture Company in Iran continues to perform satisfactorily and during the Iranian year ended19th March 2009 earned a net profit after tax of Iranian Rials 30.33 billion (USD 3.38 million). The consolidatednet profit after tax of your joint venture company and its subsidiaries for the Iranian year ended 19th March2009 stood at Iranian Rials 466.45 billion (USD 52.00 million). The fleet owned by your Joint Venture Companytogether with its subsidiaries, as at 19th March 2009, stood at eight ships with an aggregate of 0.494 millionDWT.

Your Joint Venture Company paid a dividend of Rials 9.240 billion (USD one million) for the year 2007-08(Iranian year 1386) to shareholders SCI and IRISL of which an amount equivalent to EURO 322658.48 waspaid to SCI in August 2008. Your Joint Venture Company has approved payment of dividend of Rials 10.00billion for the year 2008-09 (Iranian year 1387) to shareholders.

Your Joint Venture Company has recommended issue of bonus shares of Rials 15 billion and Rials 100 billionto shareholders at the 34th and 35th Annual General Assemblies held on 8th August 2008 and 19th July 2009,respectively.

SCI’s Joint Venture in LNG (liquefied Natural Gas) vessels

Until 31st March 2009, both vessels, SS Disha and SS Raahi have carried about 195 cargoes and 160 cargoesof LNG each from the inception of the two Joint Venture Companies (JVC) in May, 2001, namely India LNGTransport Companies No.1 & 2 Ltd. SS Disha, which started its operations from 09.01.2004 was dry-dockedfor the second time in June 2008 and was back in service during 2008-09.

Your Company had extended Shareholders’ loan to the two companies, which includes the equity componentalong with interest on unpaid Shareholders’ loan. During the year 2008-09 an amount of US$ 1.69 million ofShareholders loan and US$ 2.42 million as interest on Shareholders’ loan has been repaid by the joint venturesto SCI. The outstanding amount of Shareholders’ loan as on 31st March 2009 is US$ 33.04 million. SCI hastaken over the management of SS Raahi & SS Disha from 24.12.08 and 29.12.08, respectively. SCI is managingtechno-commercial operations of these LNG tankers independently. SCI has been paid US$313,166.96 towardsManagement Fee & Accounting fee until 31.03.09.

The third JVC, India LNG Transport Company No. 3 Ltd, set up to service the Dahej Expansion Project, wasformed on 21.02.2006. Pursuant to the execution of the TCA (Time Charter Agreement) and other relatedproject agreements viz. SBC (Ship Building Contract) etc., the Loan Agreement was executed on 19.12.2006by the JVC for a loan of US$ 178.29 million. The conditions precedent set out in the Loan Agreement for thefirst draw-down have been met on 24.04.2007 and about US$ 7.31 million has been reimbursed to SCI by thelenders. The outstanding Shareholders’ loan as on 31st March 2009 is US$ 18.47 million. The LNG tanker, tobe named m.t Aseem, is scheduled to be delivered in the middle of November, 2009 and will transport2.5 million tons per annum of LNG from Ras Gas, Qatar to Dahej for Petronet LNG Ltd.’s expansion project.SCI will undertake manning of the tanker from inception i.e, delivery of the tanker in mid–November 2009.

Joint Venture Company for Chemical Carriers (SCI Forbes Ltd.)

Your Company has entered into a Joint Venture with M/s. Forbes & Company Ltd. and M/s. Sterling InvestmentPvt. Ltd. for owning and operating Chemical Tankers. The JVC was incorporated on 18.07.2006, as“M/s. SCI Forbes Ltd.” and has placed order for four chemical tankers of about 13,000 dwt. each with areputed shipyard in South Korea.

M/s. SCI Forbes Ltd. has appointed a CEO w.e.f. October 2008, who will be overall in-charge of the company.Three more executives viz. technical, commercial and finance have been inducted.

During the year 2008–09, the share capital of M/s.SCI Forbes Ltd. was revised so as to conform to the normsof debt-equity ratio for raising funds for ship financing. The authorized share capital was increased fromRs.5 crores to Rs.160 crores. The paid-up share capital of Rs.1 crore was increased by way of right issue inratio of 1:121. The current paid-up share capital of JVC is Rs.122 crores. The required ship financing loan forship under construction has been tied up.

40

The shipyard is in the advanced stage of shipbuilding and the vessels of M/s.SCI Forbes Ltd. are expected tobe delivered as per the delivery schedule from July 2009 onwards.

SCI’s participation in the Sethusamudram Ship Canal Project

The Government of India through Ministry of Shipping has set up a “Special Purpose Vehicle” (SPV) in thename & style “Sethusamudram Corporation Limited” (SCL) to raise finance and to undertake such otheractivities as may be necessary to facilitate creation and operation of a navigable channel from Gulf of Mannarto Bay of Bengal through Palk Bay (Sethusamudram Ship Channel). As per the Government directive, thisProject is to be funded by way of equity contributions from various PSUs including SCI. Pursuant to theGovernment directive, SCI Board decided to participate in the project with a capital investment upto Rs.50crores. The SCI’s total contribution towards equity in SCL as on 22.05.2008 is Rs.50 crores.

Issue of bonus shares

Your Company has declared issue of bonus shares on 1:2 basis (1 bonus share for every 2 shares held) in theAGM held on 29.09.2008 and the shares were allotted on 3rd November 2008; the paid up share capital of theCompany, after issue of the bonus shares, is Rs.4,23,45,36,450/-.

Memorandum of Understanding (MOU) with the Ministry of Shipping (erstwhile Ministry of Shipping,Road Transport and Highways)

Your Company’s performance based on audited results under the MOU system has been rated as “Excellent”for over a decade and half, and it has signed the MOU for the financial year 2009 – 2010 as per the guidelinesissued by the Department of Public Enterprise (DPE). The SCI has set very challenging targets in the prevailingdifficult economic environment and, in addition to Financial Parameters, has accorded due emphasis on otherareas also such as Quality Management System, HRD, Occupational Health and Safety Management System,Fleet Expansion & Modernization, IT, etc. for achieving continuous improvement in the Company’s overallperformance.

Segment-wise Performance

A report on performance of the various operating segments of the Company (audited) is included at ItemNo.13 of Schedule 25 - “Notes on Accounts”, which is forming part of the Annual Accounts.

Internal Control Systems and their adequacy

Your Company has in place a system of internal controls commensurate with the nature and size of its operations.Internal controls are supplemented by an extensive programme of internal audits carried out by a firm ofChartered Accountants viz. M/s. Karnavat & Co. The internal audit reports along with recommendations andimplementation thereof are constantly reviewed by the Audit Committee of the Board.

SET-IT Project

SCI’s Enterprise Transformation through Information Technology (SET-IT) project was initiated in January2008 with the assistance of M/s TCS Ltd. the program manager and consultant. This project involvesimplementation of the ‘state of the art’ software packages i.e Enterprise Resource Planning (ERP) - SAP andCommercial off the Shelf (COTS) packages viz. Danaos for fleet management and chartering and InformationDynamics for liner operations to meet the current and future business needs of the SCI. This project will havea positive impact in all the areas of operations of your Company, besides bringing in best business practice.

Role of Vigilance Division in SCI

During the year under report, the Vigilance Division made efforts to improve the efficiency of the Company bycarrying out :-

a) Preventive Vigilance

b) Punitive Vigilance

c) Surveillance and detection

The Vigilance Division, besides normal activities of investigation into complaints of corruption / mal-practice,scrutiny of Annual Property Returns (APRs), etc. conducted periodic inspections of areas where the Company

41

was expected to interface with public. Certain high value activities were also chosen for carrying out surpriseinspections where the scope of irregularities would have been higher. Selective scrutiny of the voyage repairs,major works, dry-docking bills, voyage accounts, general accounts, agents’ ports accounts, pre-funding andpost-funding of agents’ accounts were conducted. The Company’s Conduct, Discipline & Appeal (CDA) Ruleswere strictly enforced and where complaints were established to be correct, disciplinary actions against theerrants, as per the Company’s CDA Rules, were recommended to the Management. Suggestions were givento the Management, from time to time, for streamlining the procedures in order to check corruption and bringgreater transparency.

Various initiatives have been taken by the Vigilance Division for seamless integration with the SCI mainstream,encouraging a participative role in the organization, building up meaningful rapport between the Government,Company, its Board and sub-Committees and ensuring a paradigm shift towards the stated objective ofmaking your Company totally corruption-free. Vigilance Division has a challenging task ahead as it has toachieve a proper balance between preventive and punitive vigilance.

The Vigilance Division has been leveraging technology for achieving greater transparency by promoting onlineregistration of complaints on the Company’s website, providing means to secure and allow free flow ofinformation wherever necessary, especially to tenderers for sending price bids/quotations by electronicallyand installing dedicated email IDs for auto-generated responses to tenderers. A CVO’s corner for access toSCI employees was developed on the Company’s intranet. The Vigilance Division hopes to achieve 100%application of IT in terms of e-procurement, e-tendering, reverse auctions and also have COTS packages forB&T, L&PS through ERP solutions provided by SAP for an end to end integration of the IT system. It has beenpropagating the culture of lodging of complaints under the Public Interest Disclosure and Protection of Informers’Resolutions (PIDPR-popularly known as Whistle Blowers Resolution) whereby the identity of the complainantwould be kept secret and he/she would be protected from victimization. A scheme for reward for informershas been instituted by creation of a recoupment fund viz. “Secret Services Fund” (SS Fund) whereby suitablerewards would be given to informants who give reliable and verifiable source information. In terms of thedirectives of the Central Vigilance Commission, Vigilance Awareness Week was observed from 3rd to 7th

November, 2008 in all offices of SCI and a pledge was taken by all the employees. Vigilance Division has alsopublished a news letter titled SCI VOYAGER completely dedicated to vigilance. The Vigilance Division hasthrough various programs tried to create awareness among the employees on “prevention of corruption/Vigilance Awareness”.

The Vigilance Division, like the rest of the Divisions in SCI, has been audited by M/s. Indian Register QualitySystem, IRQS, and has obtained ISO certification.

Signing of Memorandum of Understanding between the Shipping Corporation of India Ltd. andTransparency International India regarding adoption of Integrity Pact in the Shipping Corporation ofIndia Ltd.

The Central Vigilance Commission (CVC), in its endeavor to enhance and ensure transparency, equity andcompetitiveness in public procurement, had suggested implementation of an Integrity Pact programme inmajor procurement activities in major Public Sector Undertakings. The SCI Board had desired its implementationin SCI in consultation with CVO.

Your Company entered into a Memorandum of Understanding (MoU) with Transparency International Indiaand the Integrity Pact was signed by Shri S. Hajara, Chairman & Managing Director and Adml. (Retd.) R. H.Tahiliani of TII. With the signing of this pact, your Company is committed to have most ethical and corruptionfree business dealings with the counterparties whether they are bidders, contractors or suppliers.

Integrity Pact is a tool developed in Berlin by M/s.Transparency International for enhancing the degree offairness and transparency in procurement and contracts, resulting in substantial improvement in the systemsand reduction in corruption in public dealings. The same will go a long way in enhancing the image of theorganisations as well as the nation. Its implementation is observed by the Independent External Monitors(IEMs) of impeccable integrity, appointed by the Central Vigilance Commission (CVC). SCI has also beenable to draw persons of eminence with impeccable record and integrity to be IEMs. Your Company is pleasedto inform that SCI’s IEMs are Shri D.T. Joseph, Former Secretary (Shipping), Shri Sudesh Punhani, FunctionalDirector (Retd.) Air India and Shri S.K. Singh, Former Managing Director, State Bank of Saurashtra.

42

The SCI’s scope or ambit is very wide. The SCI Management has decided to keep the threshold value to Rs.1crore only so that any contract of Rs. 1 crore and above will be having the Integrity Pact as a pre-bid documentwhereby very high stake holders as well as the common vendors would be assured of the transparent andethical practices in SCI.

Cautionary Statement

The statements made in the Management Discussion & Analysis describing Company’s objectives, projections,estimates and expectations may be “forward-looking statements” within the meaning of applicable laws andregulations. Actual results might differ materially from those expressed or implied.

Implementation of Official Language Policy

Your Company made concerted efforts during the year with an objective to spread the use of Official LanguageHindi in its day-to-day official affairs and to ensure implementation of the provisions of the Official Language Act,1963 and the Official Language Rules, 1976 framed there-under. Your Company also continued to impart Hinditraining by conducting Hindi workshops/computer software training regularly at its Maritime Training Institute,Mumbai for its employees so as to achieve the training and correspondence targets set out in the AnnualProgramme issued by the Central Government. Your Company’s website is also made available in Hindi.

Your Company organized quarterly meetings of its Departmental Official Language Implementation Committeeto review the overall progress of Hindi in its offices so that suitable follow-up action could be taken. SCI alsofocused on promoting and popularizing the use of Hindi amongst its employees, and thus organized a numberof Hindi competitions and programmes during the year under report.

Particulars of Employees

Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars ofEmployees) Rules 1975 and Companies (Particulars of Employees) Amendment Rules, 1988, forms part ofthis report. Any shareholder interested in obtaining a copy of this information may write to the CompanySecretary at the Registered Office of the Company.

Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988

In terms of the Notification No. GSR 1029 dated 31.12.1988, your Company is required to furnish informationunder Clause (e) of Sub-section (1) of Section 217 of the Companies Act, 1956. The information to befurnished in Form A is not applicable to the shipping industry. Your Company, being a shipping company, hasno particulars to furnish in Form B as regards technology absorption. The foreign exchange earnings andoutgo during the year under report were as under:

• Foreign exchange earned and saved including deemed earned and saved Rs. 4250.91 crores.

• Foreign exchange used including deemed used Rs. 2885.80 crores.

Expenses on Entertainment, Foreign Tours, etc.

During the year under report, your Company spent Rs.64 lakhs on entertainment, Rs.451 lakhs on publicityand advertisements and Rs.405 lakhs on foreign tours of Company’s executives.

Board of Directors

Shri C. Balakrishnan ceased to be a Director w.e.f. 25.12.2008 consequent upon relinquishment of the chargeof Additional Secretary & Financial Advisor in the Ministry of Shipping, Road Transport & Highways. TheBoard placed on record its appreciation for the valuable services rendered by Shri Balakrishnan. Shri VijayChhibber, Additional Secretary & Financial Advisor, Ministry of Shipping, Road Transport & Highways, hasbeen appointed as Director with effect from 26.12.2008 by the President of India under the provisions ofArticle 122 of the Articles of Association of the Company.

Capt. K.S. Nair has been appointed as Director (Bulk Carrier & Tanker Services) w.e.f. 03.11.2008 by thePresident of India. He holds office up to the date of the forthcoming Annual General Meeting and beingeligible, offers himself for appointment.

Dr. Bakul H. Dholakia, Shri Keshav Saran, Shri Nasser Munjee and Shri Sushil Tripathi are retiring by rotationat the forthcoming Annual General Meeting and being eligible, offer themselves for appointment.

43

Corporate Governance

Pursuant to Clause 49 of the Listing Agreement, Report on Corporate Governance is attached to this Report.

Directors’ Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors’Responsibility Statement, it is hereby confirmed:

• That in the preparation of the accounts for the financial year ended 31st March 2009, the applicableaccounting standards have been followed along with proper explanation relating to material departures;

• That the Directors have selected such accounting policies and applied them consistently and madejudgements and estimates that were reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company at the end of the financial year and of the profit or loss of the Company for theyear under review;

• That the Directors have taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

• That the Directors have prepared the accounts for the financial year ended 31st March 2009 on a “goingconcern” basis.

Acknowledgements

Your Directors extend a very hearty welcome to Shri G.K. Vasan, Hon’ble Minister for Shipping and Shri MukulRoy, Hon’ble Minister of State in the Ministry of Shipping, and look forward to their support and guidance inmanaging the affairs of the Company. Your Directors also take this opportunity to express their gratitude andthanks to Shri T.R. Baalu, former Hon’ble Minister for Shipping, Road Transport and Highway for his supportand guidance extended to your Company during his tenure.

Your Directors also extend their gratitude to Shri A.P.V.N. Sarma, Secretary to the Government of India,Department of Shipping, Ministry of Shipping, Road Transport & Highways, and look forward to his supportand guidance in managing the affairs of your Company. Your Directors also wish to express their thanks to theofficials in the Ministry of Shipping, Road Transport & Highways for the unstinted support given by them invarious matters concerning the Company. Your Directors would also like to convey their thanks to otherMinistries, Trade Organizations, Shippers’ Councils, who have played a vital role in the continued success ofyour Company.

Your Directors thank the shareholders and valued customers for the continued patronage extended by themto your Company.

Last but not the least, your Directors wish to record their deep appreciation for the dedicated and loyal serviceof your Company’s employees, both afloat and ashore, without whose co-operation and efforts, theachievements made by your Company would not have been possible.

For and on behalf of the Board of Directors

S. HajaraChairman & Managing Director

Place : MumbaiDated : 10.08.2009

44

REPORT OF THE DIRECTORS ON CORPORATE GOVERNANCE

SCI’s Philosophy on Corporate GovernanceSCI constantly keeps the Corporate Governance issues in focus. It is SCI’s policy to provide adequate andtimely information to all stakeholders. SCI’s endeavour in this respect has been acknowledged and appreciatedyear after year. SCI has been awarded accolades for providing meaningful information on its activities. Thisyear too, SCI will strive to meet the expectations of various stakeholders.

SCI’s Code of ConductThe Board of Directors of the Company adopted “Code of Conduct for Board & Senior Management Personnel”.This Code of Conduct is bifurcated into the “Code of Conduct for Board Members” & “ Code of Conduct forSenior Management Personnel”. The Code is in alignment with Company’s vision and values to achieve theMission & Objectives and aims at enhancing ethical and transparent process in managing the affairs of theCompany. The Code is posted on the Company’s Website- www.shipindia.com

The Board members and Senior Management Personnel have affirmed compliance to this code and adeclaration to this effect signed by Chairman & Managing Director is provided at the end of this Report.

Board of DirectorsAs of date, the Board of Directors of your Company comprises 16 members with a mix of 6 executive (includingChairman & Managing Director) and 10 non-executive Directors. Of the 10 non-executive Directors, 2Government Directors represent the Promoters i.e. Government of India and 8 are Independent Directors.

The Clause 49 of the Listing Agreement dealing with Corporate Governance requires at least 50% of the totalstrength of the Board of Directors of a company to comprise of Independent Directors, which has an ExecutiveChairman. In terms of the nominations received from the Ministry of Shipping, Road Transport & Highways,the administrative Ministry of the Shipping Corporation of India Ltd., eight non-official part time Directors hadbeen appointed on the Board of Directors and the Company is fully compliant with Clause 49 of the ListingAgreement.

The directorships held in other public limited companies and memberships/chairmanships held in the Committeesof such Boards by the members of the Board of your Company as on 31st March 2009 are set out below:

Name Designation No. of Directorships and committeememberships / chairmanships

Directorships in Committee Committeeother public memberships ** chairmanships **

limitedcompanies**

Executive Directors (Whole-Time)

Shri S. Hajara Chairman & Managing 02 NIL NILDirector

Shri B.K. Mandal Director (Finance) 01 NIL NIL

Shri U.C. Grover Director (Technical & NIL NIL NILOffshore Services)

Shri Kailash Gupta Director (Personnel & NIL NIL NILAdministration)

Shri J.N. Das Director (Liner & NIL NIL NILPassenger Services)

Capt. K.S. Nair Director (Bulk Carrier & NIL NIL NILTanker Division)

45

Name Designation No. of Directorships and committeememberships / chairmanships

Directorships in Committee Committeeother public memberships ** chairmanships **

limitedcompanies**

Non-Executive Directors (Part-Time Ex-Officio)

Shri Vijay Chhibber Addl. Secretary & NIL NIL NILFinancial Advisor

Shri Rajeev Gupta Joint Secretary 02 NIL NIL

Non-Executive Directors (Part-Time Independent)

Shri A.K. Mago Director 03 01 01

Shri A.D. Fernando Director 01 NIL NIL

Shri U. Sundararajan Director 03 02 NIL

Shri J.N.L. Srivastava Director 01 NIL NIL

Dr. Bakul H. Dholakia Director 05 04 02

Shri Keshav Saran Director 01 01 NIL

Shri Nasser Munjee Director 13 05 05

Shri S.C. Tripathi Director 10 NIL NIL

** In accordance with Clause 49(I)(C) of the Listing Agreement with the Stock Exchanges, only directorshipson public limited companies have been considered and the directorships on private limited companies,foreign companies and companies under Section 25 of the Companies Act, 1956 have been excluded.Similarly, in terms of the above Clause, membership/chairmanship of only the Audit Committee andShareholders’/Investors’ Grievance Committee of all Public Limited Companies has been considered.

Board Meetings / Annual General MeetingDuring the financial year 2008-2009, 12 Board Meetings were held, the dates being 16.04.2008, 20.05.2008,11.06.2008, 09.07.2008, 26.07.2008, 27.08.2008, 25.10.2008, 24.11.2008, 12.12.2008, 24.01.2009, 25.02.2009and 19.03.2009.

The details about attendance of the Directors at the Board Meetings and at the 58th Annual General Meeting(AGM) held on 29.09.2008 are given below:

Name of the Director No. of Meetings Attendance at the last

held during the tenure attended AGM held on

of Directors 29.09.2008

Shri S. Hajara 12 12 Yes

Shri C. Balakrishnan * 09 06 No

Shri Vijay Chhibber # 03 02 -

Shri Rajeev Gupta 12 09 No

Shri J.N. Das 12 11 Yes

Dr. Bakul H.Dholakia 12 Nil No

Shri A.D. Fernando 12 08 Yes

Shri U.C. Grover 12 12 Yes

Shri Kailash Gupta 12 12 Yes

46

Name of the Director No. of Meetings Attendance at the last

held during the tenure attended AGM held on

of Directors 29.09.2008

Shri A.K. Mago 12 11 No

Shri B.K. Mandal 12 12 Yes

Shri Nasser Munjee 12 04 No

Capt. K.S. Nair # 05 05 -

Shri Keshav Saran 12 11 No

Shri J.N.L. Srivastava 12 10 No

Shri U. Sundararajan 12 08 Yes

Shri S.C. Tripathi 12 10 No

* The following Directors ceased to be Directors on the Board w.e.f. the dates mentioned alongside theirnames :-

Shri C. Balakrishnan 25.12.2008

# The following Directors were appointed as Directors on the Board w.e.f. the dates mentioned alongside theirnames :-

Capt K.S. Nair 03.11.2008

Shri Vijay Chhibber 26.12.2008

Committees of the Board

To enable better and more focused attention on the affairs of the Company, the Board has constituted thefollowing Committees of the Board besides other Committees as required under Clause 49 :

Contracts Committee of the Board

This Committee of the Board comprises the whole-time Directors, including Chairman & Managing Directoras the Chairman of the Committee. The Committee deliberates on the matters pertaining to contracts havingfinancial implication of high value nature or any other matter, which in the view of Chairman & ManagingDirector requires the attention of the Committee. During the year under review, 3 meetings of the ContractsCommittee of the Board were held.

Sub Committee of the Board for raising finances

This Committee of the Board was formed on 24.11.2008 for the purpose of raising finances from the Banks/other Financial Institutions, with Shri Nasser Munjee as Chairman and Shri U. Sundararajan and Shri B.K.Mandal, Director(Finance), as its other two members. Shri Nasser Munjee and Shri U. Sundararajan areindependent Directors. The total amount which the Committee can borrow will be upto US $ 500 million pertransaction either in Indian Rupees or in foreign exchange or partly in one or partly in others. During the yearunder review, 1(one) meeting of the Sub Committee of the Board for raising finances was held.

47

Committees of the Board constituted under Clause 49

Audit Committee

The Board of Directors of the Company had constituted an Audit Committee in 2000. The Audit Committee iscomprised of Shri U. Sundararajan as Chairman, and Shri A.K. Mago, Dr. B.H. Dholakia and Shri KeshavSaran as its members. All the members of the Committee are ‘financially literate’ and have accounting andfinancial management expertise.

The Company Secretary acts as Secretary to the Committee. The Director (Finance) and the Directors incharge of operations attend the meetings as invitees. The Statutory Auditors and Internal Auditor also attendmeetings at which the audit reports / Company’s financial statements are reviewed by the Committee. Theinternal audit function continues to be outsourced to a firm of Chartered Accountants.

The terms of reference of Audit Committee include all matters specified in Clause 49(II) of the Listing Agreementwith Stock Exchanges and covers, inter-alia, overseeing Company’s financial reporting process, adequacy ofinternal control systems, reviewing financial risks’ management policies, compliance with Accounting Standards,etc.

The Audit Committee held 12 meetings during the year. Apart from reviewing the quarterly / annual financialresults of the Company, the Committee devoted these meetings inter alia for detailed review of the systemsand procedures, accounting practices, internal control measures, status of risk management and processreview of statutory and regulatory compliances. The attendance of each member of the Committee is givenbelow:

Name of the Directors No. of meetings held No. of meetings attended

Shri U.Sundararajan 12 11

Shri A.K. Mago 12 12

Dr. Bakul H. Dholakia 12 Nil

Shri Keshav Saran 12 09

The Chairman of Audit Committee was present at the Annual General Meeting of the Company held on29.09.2008.

Share Transfer Committee

This Committee of the Board comprising of Chairman & Managing Director and an Executive Director, regularlyapproves the transfer and transmission of shares and other related matters. As and when the shareholdersmade lodgements for transfer, the Share Transfer Committee held their Meetings promptly to effect the transfers.

Shareholders/Investors Grievance Committee

The Shareholders/Investors Grievance Committee of the Board met four times during the financial year 2008-2009 i.e. on 11.06.2008, 26.07.2008, 25.10.2008 and 24.01.2009, which were attended by all its members. TheCommittee consists of three members viz. Shri A. K. Mago as Chairman and Shri Keshav Saran and Shri B. K.Mandal, as its members. As stated earlier, Shri A. K. Mago and Shri Keshav Saran are independent directors.

• Grievances & their redressals : During the year under review, 8 (eight) complaints were received. All thecomplaints have been replied/sorted out within 7 days of receipt of each complaint as against the stipulatedtime of 15 days as per SEBI norms. No share transfers were pending at the end of the financial year. Thesources of complaints received and other details are given below:

Source(s) of Complaints Received Redressed Pending

SEBI 02 02 Nil

Stock Exchange, Mumbai 05 05 Nil

Shareholders (other than SEBI) Nil Nil Nil

ROC 01 01 Nil

48

• Compliance Officer: The Compliance Officer for monitoring the share transfer process and for carrying outother related functions as per Listing Agreement, is Shri Dipankar Haldar, Senior Vice President (Legal Affairs)& Company Secretary, and can be contacted at:

“Shipping House” Tel. : 2277 2213 (D)245, Madame Cama Road, 2202 4572 (D)Nariman Point, Fax : 2202 2906Mumbai - 400 021 E-mail : dipankar.haldar@sci.co.in

Investors can lodge their complaints, if any, on shippingcorp@shareproservices.com by providing their folionumber, contact number and the address for correspondence which would enable us to respond to them promptly.

As per the provisions of Section 205A read with Section 205C of the Companies Act, 1956, the Company isrequired to transfer the unpaid dividends remaining unclaimed and unpaid for a period of 7 years from the duedate to the Investor Education and Protection Fund (IEPF) set up by the Central Government. Details ofshareholders who have not encashed their dividend warrants in spite of the same being sent to them hasbeen uploaded on the Company’s website.

Given below are the due dates for transfer of unclaimed and unpaid dividend to the IEPF by the Company:

Financial Year Date of declaration Proposed date for transfer to IEPF

2002-03 (Interim) 10.03.2003 09.04.2010

2003-04 (Spl.Interim) 03.10.2003 02.11.2010

2004-05 (Interim) 30.10.2004 29.11.2011

2004-05 (Final) 28.09.2005 28.10.2012

2005-06 (Interim) 27.01.2006 26.02.2013

2006-07 (Interim) 17.03.2007 14.04.2014

2007-08 (Interim) 22.02.2008 21.03.2015

2007-08 (Final) 29.09.2008 28.10.2015

Unpaid/unclaimed balance of the interim dividend 2001-02 was due for transfer to IEPF after 31.03.2009 asper Section 205A of the Companies Act, 1956 and the same has been transferred accordingly.

General Body Meetings

The date, time and venue of the last three Annual General Meetings of the Company held are given below:

General Meetings Date Time Venue

56th AGM (FY 2005-2006) 29.09.2006 1530 hrs. Registered Office of the Company, Mumbai

57th AGM (FY 2006-2007) 28.09.2007 1530 hrs. Registered Office of the Company, Mumbai

58th AGM (FY 2007-2008) 29.09.2008 1130 hrs. Registered Office of the Company, Mumbai

56th Annual General Meeting : At this meeting one Special Resolution was proposed for amendment in theArticles of Association.

57th Annual General Meeting : At this meeting no Special Resolution was proposed.

58th Annual General Meeting: At this meeting two special resolutions were proposed viz. for amendment inthe Articles of Association of the Company and for issue of bonus shares to the shareholders on 1:2 basis.

Postal Ballot : During the year under review, no postal ballot voting was exercised in your Company as noissue arose requiring consent by postal ballot.

49

Means of Communication

Half-yearly Report sent to No, as the unaudited financial results of the Companyeach household of shareholders are published in the newspapers every quarter and

are also made available on the EDIFAR and theCompany’s website.

Quarterly Results published in newspapers Yes, the newspapers being:

For Quarter ended June 2008 -

a. The Times of India, Mumbai Edition.

b. Maharashtra Times, Mumbai Edition.

For Quarter ended September 2008 -

a. Hindustan Times, Mumbai Edition.

b. DNA, Mumbai Edition.

c. Financial Express, Mumbai Edition.

d. Business Standard, Mumbai Edition.

e. Nav Bharat Times, Mumbai Edition.

d. Business Line, Mumbai Edition.

f. Free Press Journal, Mumbai Edition.

g. Nav Shakti, Mumbai Edition.

For Quarter ended December 2008 -a. Hindustan Times, Mumbai & Delhi Edition.

b. DNA, Mumbai Edition.

c. Free Press Journal, Mumbai Edition.

d. Nav Shakti, Mumbai Edition.e. Nav Bharat Times, Mumbai Edition.

f. Business Line, Mumbai Edition.

g. Financial Express, Mumbai Edition.

For Year ended 31st March 2009 -a. DNA, Mumbai Edition.

b. Hindustan Times, Mumbai & Delhi Edition.

c. Mint, All India Edition.d. Free Press Journal, Mumbai Edition.

e. Nav Shakti, Mumbai Edition.

f. Business Line, Mumbai Edition.

g. Financial Express, Mumbai Edition.h. Business Standard, Mumbai Edition.i. Nav Bharat Times, Mumbai Edition.

Website, where results and/or official On the Company’s Website www.shipindia.comnews are displayed On the Edifar Website www.sebiedifar.nic.in

The presentation made to Institutional A presentation was made for the press representativesInvestors or to the Analysts on 15.06.2009 informing them about the Company’s

performance during the F.Y. 2008-09.

Whether Management Discussion and Yes.Analysis is a part of Annual Report or not

50

General Shareholder Information

Annual General Meeting - 30th September 2009, at 1530 hrs. at the Registered Office of the Company,Date, Time & Venue “Shipping House”, 245, Madame Cama Road, Mumbai - 400 021.

Financial Calendar • The financial year under review covers the period from1st April 2008 to 31st March 2009.

• First Quarter Results – July 2008.• Second Quarter Results – October 2008.• Third Quarter Results – January 2009.• Audited Results in lieu of Fourth Quarter Results - June 2009.

Date of Book Closure 23.09.2009 to 30.09.2009 (Both days inclusive)

Proposed Dividend The Board of Directors has recommended a final divided @ Rs.6.5 per share, which,subject to approval at the AGM, will be paid to the shareholders within the statutory timeperiod.

Listing on Stock Exchanges & Bombay Stock Exchange Ltd., Phiroze Jeejeebhoy Towers, Dalal Street,payment of listing fees Mumbai - 400 001.

National Stock Exchange of India Limited, The Calcutta Stock ExchangeExchange Plaza, 5th Floor, Plot No. C/1, Association Limited,G Block, Bandra - Kurla Complex, 7, Lyons Range,Mumbai - 400 051. Kolkata - 700 001.The Delhi Stock Exchange Madras Stock Exchange Limited,Association Limited, Exchange Building,DSE House, 3/1, Asaf Ali Road, 11, Second Line Beach,New Delhi - 110 002. Chennai - 600 001.The Company has paid the annual listing fees for the year 2008-2009 to theaforesaid Stock Exchanges within the stipulated time.

Stock Code The Stock Exchange, Mumbai - 523598National Stock Exchange of India Limited - SCIDemat-ISIN Number for NSDL & CDSL - INE 109 A 01011

Monthly high and low quotation ofshares on the BSE and NSE during Please see ANNEXURE - ‘A’.the financial year 2008-2009Stock Performance in Please see ANNEXURE - ‘B’.comparison to BSE SensexRegistrar and Transfer Agents M/s. Sharepro Services (India) Pvt. Ltd.

Regd. Office: Investor Relation Centre:Samhita Warehousing Complex, Gala No.52 912, Raheja Centre,to 56, Bldg No.13 A-B, Near Sakinaka Free Press Journal Road,Telephone Exchange, Andheri-Kurla Road, Nariman Point,Sakinaka, Mumbai-400072. Mumbai - 400 021.Telephone-022-67720314. Tel.: 22881568/22881569022-67720300, 022-67720400 Fax. 2282 54 84Fax No. 022-28591568/28508927

Share Transfer System

Distribution of Shareholding Please see ANNEXURE - ‘C’.as on 31st March 2009

Dematerialization of sharesand liquidity

Outstanding GDRs/ ADRs/ Not issued.Warrants or any convertibleinstruments, conversion dateand likely impact on equity

Plant locations The Company has no Plant.

Address for Correspondence

With effect from 26.06.2000, trading in the Company’s shares was made compulsory in thedematerialized form. The Company’s shares are available for trading in the depositorysystems of both National Securities Depository Limited (NSDL) and Central DepositoryServices (India) Limited (CDSL). As at 31st March, 2009 99.96% of the paid-up equityshare capital, representing 423301699 shares was held in depository mode. The processingactivities with respect to the requests received for dematerialization are completed within15 days from the date of receipt of request.

Shareholders’ correspondences should be addressed to the Company’s ShareTransfer Agents, M/s. Sharepro Services (India) Pvt. Ltd. at their addressesmentioned above.

The transfers’ processing are done by the Registrar and Transfer Agents andapproved by the Share Transfer Committee of the Company. There are no pendingshare transfer requests as on 31st March 2009.

51

ANNEXURE - ‘A’

Monthly high and low quotation of shares on the BSE and NSE during the financial year 2008-2009

Month Share Price on BSE Share Price on NSEHigh (Rs.) Low (Rs.) High (Rs.) Low (Rs.)

April-08 249.00 198.00 249.00 198.00May-08 300.90 234.10 301.40 233.50June-08 288.00 213.00 286.00 211.00July-08 240.00 197.15 252.80 197.50August-08 245.30 201.55 245.25 201.20September-08 218.00 132.00 219.75 143.00October-08 158.75 81.00 159.80 80.00November-08 * 94.85 70.25 94.40 70.00December-08 88.80 67.00 88.85 67.50January-09 93.90 74.10 94.00 74.00February-09 90.40 73.55 90.30 73.60March-09 80.10 70.00 80.20 68.60

*Ex-bonus price (Bonus shares in the ratio 1:2 were allotted on 03.11.2008)

ANNEXURE - ‘B’

Stock Performance in comparison to BSE Sensex

Month SCI’s Closing Price (Rs.) BSE SensexApril-08 242.50 17,287.31 May-08 280.55 16,415.57 June-08 217.45 13,461.60 July-08 230.80 14,355.75 August-08 206.95 14,564.53 September-08 145.45 12,860.43 October-08 83.80 9,788.06 November-08 * 70.85 9,092.72 December-08 79.50 9,647.31 January-09 86.60 9,424.24 February-09 74.80 8,891.61 March-09 76.70 9,708.50

*Ex-bonus price (Bonus shares in the ratio 1:2 were allotted on 03.11.2008)

Graph showing the SCI share price movement based on the above data**

** The Company allotted 1 (one) bonus share for every 2 existing shares held on 03.11.2008

52

ANNEXURE - ‘C’

Distribution of Shareholding as on 31st March 2009

Dematerialised Physical Total %

No. ofHolding Holding

Shares No. of No. of No. of No. of Total Total Folios Holding Held Folios Shares Folios Shares No. of No. of

Folios Shares

1-500 42043 5180759 153 26224 42196 5206983 87.7438 1.2296

501-1000 3026 2202811 13 10350 3039 2213161 6.3194 0.5226

1001-2000 1559 2213123 6 8122 1565 2221245 3.2543 0.5246

2001-3000 533 1362626 1 2400 534 1365026 1.1104 0.3224

3001-4000 139 491916 0 0 139 491916 0.2890 0.1162

4001-5000 145 664592 0 0 145 664592 0.3015 0.1569

5001- 10000 209 1481732 1 6000 210 1487732 0.4367 0.3513

10001 & Above 259 409704140 3 98850 262 409802990 0.5448 96.7764

Total 47913 423301699 177 151946 48090 423453645 100.0000 100.0000

*The figures are rounded off.

Distribution of Shareholding by ownership as on 31st March 2009

53

Directors’ Remuneration

The details of the remuneration paid to the Executive Directors and sitting fees paid to the IndependentDirectors during the year under review are set out below:-

(Rupees)

Name of the Director Consolidated Perquisites, Performance Sitting Fees TotalSalary Allowances & Linked

(Note No.1) Other Benefits Incentives

Executive Directors (Whole-time)

Shri S. Hajara 996004 677592 348028 - 2021624

Shri U.C. Grover 805910 1082876 299652 - 2188438

Shri Kailash Gupta 1119214 524893 289712 - 1933819

Shri B.K. Mandal 943872 640202 358201 - 1942275

Shri J.N. Das 770835 618901 285702 - 1675437

Capt. K.S. Nair # 357947 250777 88415 - 697140

Non-Executive Director (Part-Time Ex-Officio)

Shri C. Balakrishnan * - - - - -

Shri Vijay Chhibber # - - - - -

Shri Rajeev Gupta - - - - -

Non-Executive Directors (Part-Time Independent)

Shri A.K. Mago - - - 440000 440000

Shri A.D. Fernando - - - 130000 130000

Shri U. Sundararajan - - - 350000 350000

Shri J.N.L. Srivastava - - - 155000 155000

Dr. Bakul H. Dholakia - - - Nil Nil

Shri Keshav Saran - - - 425000 425000

Shri Nasser Munjee - - - 85000 85000

Shri S.C. Tripathi - - - 190000 190000

Note No. 1:- Consolidated Salary includes Basic Salary, Dearness Allowance, Contribution to ProvidentFund, Leave Encashment and Leave Salary on superannuation.

54

* The following Directors ceased to be Directors on the Board w.e.f. the dates mentioned alongside theirnames :-

Shri C. Balakrishnan 25.12.2008

# The following Directors were appointed as Directors on the Board w.e.f. the dates mentioned alongside theirnames :-

Capt K.S. Nair 03.11.2008

Shri Vijay Chhibber 26.12.2008

i) SCI, being a Government Company, the remuneration of the Executive Directors, who are Governmentappointees, is decided by the Government.

ii) The part-time official Government Directors do not receive any remuneration from the Company.

iii) The non-executive Directors (Independent Directors) are paid sitting fees of Rs.20,000/- per meeting perday of attendance. The sitting fees had been revised from Rs.5,000/- to Rs.20,000/- w.e.f. 9.7.2008.Apart from the sitting fees, the non-executive Directors do not receive any other remuneration.

iv) In addition to above, wherever necessary, the Directors are reimbursed the travelling and other relatedexpenses for attending Board and other Meetings.

v) Criterion for payment of performance linked incentive is based on the policy prevailing in the Company.

vi) SCI being a Government Company, the appointment, tenure and remuneration of Directors are decidedby the Government of India. All appointments of Executive Directors are contractual in nature. Governmentnominates non-official part-time Directors from time to time on board of the Company.

vii) The Company presently does not have any stock option scheme.

viii) Amongst the non-executive Directors, Shri A. K. Mago holds 100 shares in the SCI. Shri Vijay Chhibberand Shri Rajeev Gupta are holding 1010 and 30 shares, respectively, as Government Nominees. Ministryof Shipping’s communication conveying transfer of 505 shares held in the name of the erstwhile GovernmentDirector, Shri C. Balakrishnan, is awaited.

Subsidiary Companies

The Company does not have any subsidiary company.

Disclosures

During the year under review, the Company has not entered into financial or other transactions of materialnature with its Promoters, the Directors, and senior management that may have potential conflict with theinterests of the Company at large.

No penalties/strictures have been imposed on the Company by the Stock Exchanges or SEBI or any statutoryauthority on any matter related to capital market during the last three years.

Code of Conduct for Prevention of Insider Trading

SCI has its code of conduct for prevention of insider trading in accordance with the SEBI (Prohibition ofInsider Trading) Regulations, 1992. The Code lays down guidelines which advises the management and thestaff on procedures to be followed and disclosures to be made while dealing with shares of Company, andcautions them of the consequences of violations.

55

Related Party Transactions

The details of all the transactions with related parties which are entered into the ordinary course of businessare placed before the audit committee on quarterly basis. However the related party disclosures, as requiredunder Accounting Standard 18 “Related Party Disclosures”, are given in the Notes on Accounts of the BalanceSheet (Refer note 4 of Schedule 25). There were no material individual transactions with related party whichwere not in normal course of business required to be placed before the Audit Committee that may havepotential conflict with the interest of the Company at large. All individual transactions with related parties wereon arm’s length basis.

Accounting Treatment

In the preparation of financial statements, the Company has followed the Accounting Standards issued by theInstitute of Chartered Accountants of India and the relevant provisions of the Companies Act, 1956.

Risk Management

The Company had appointed M/s. Ernst & Young (E&Y) to undertake an analysis of risk assessment andminimization procedures. M/s. E&Y had reviewed the mechanism and submitted their report to the AuditCommittee and the Board, which was thereafter adopted by the Board. The Company has appointed ChiefRisk Officer and Divisional Risk Officers. As per the procedure, the reports are to be discussed internally andthereafter in the Management Committee Meetings and later presented to the Audit Committee andthe Board.

Proceeds from public issues, right issues, preferential issues etc.

During the year under review, the Company has not raised any money through public issue, right issue,preferential issue, etc.

Management Discussions and Analysis Report

The report forms a part of the Directors’ Report to the Shareholders and it includes discussions on matters,as required under the provisions of Clause 49 of the Listing Agreement with the Stock Exchanges.

Material Financial and Commercial Transactions of Senior Management Personnel

There have been no material financial and commercial transactions entered into by the Senior ManagementPersonnel where they have personal interest that may have a potential conflict with the interest of the Company.

CEO/CFO Certification

A certificate from Chairman and Managing Director and Director (Finance) on the financial statements of thecompany and on the matters which were required to be certified according to the clause 49 (V) was placedbefore the Board.

Compliance with Non Mandatory Requirements of Clause 49

Maintenance of Office and reimbursement of expenses of Non Executive Chairman

As the Company has an Executive Chairman, the requirements of this clause are not applicable.

Tenure of Independent Directors on the Board

SCI, being a Government Company, the appointment and tenure of the Directors are decided by the Governmentof India; however, currently, they do not exceed the time limits provided in this Clause.

Remuneration Committee

SCI, being a Government Company, the remuneration of the Executive Directors, who are Governmentappointees, is decided by the Government and hence, the Company has not constituted a Directors’Remuneration Committee.

However, a Remuneration Committee of the Board for deciding on annual bonus/variable pay pool and policyfor distribution to employees below Board level, was formed on 24.01.2009 to decide upon the annual bonusvariable pay pool and policy for its distribution to employees within the limits and as per the conditions prescribed

56

by the Government as a part of the salary revision package of the shore officers. The Committee is headed byan independent director. At present, Shri A. K. Mago is the Chairman. Director (Finance) and Director (Personnel& Administration) are members of the Committee.

Shareholder Rights - Declaration of financial performance

The financial results are posted on the EDIFAR Website as also on the Company’s website immediately. Theresults of the Company are also published in the newspapers within the time limits prescribed under theListing Agreement.

Audit Qualifications

There are no qualifications made by Statutory Auditors and the Comptroller & Auditor General of India.

Training of Board members

Besides the executive directors who have wide experience in the field of shipping, the Company has drawnprofessionals on its Board who have served/ are serving at a very senior positions in Financial Institutions,Banks and other institutions. The Board is also represented by senior IAS Officers. Keeping the above inview, it appears that there is no requirement for training of Board members at the current juncture.

Mechanism for evaluating Non-Executive Board Members

SCI being a Government Company where the Directors are appointed/nominated by the Government, therequirement of performance evaluation as envisaged in this clause does not apply.

Whistle Blower Policy

The Company being a Government Company, Whistle Blower policy is followed as per Central VigilanceCommission(CVC) guidelines which was approved by the Board.

For and on behalf of the Board of Directors

S. HajaraChairman & Managing Director

Place : Mumbai

Dated : 8th August, 2009

DECLARATION OF COMPLIANCE OF CODE OF CONDUCTBY CHAIRMAN & MANAGING DIRECTOR

The Company has adopted a Code of Conduct for the Board Members and Senior Management of the Company,which has been posted on the website of the Company.

It is hereby affirmed that all the Directors & Senior Management personnel have complied with the Code ofConduct for the financial year 2008-09 and a confirmation to this effect has been obtained from the Directors& Senior Management personnel.

For The Shipping Corporation of India Ltd.

S. HajaraChairman & Managing Director

Place : Mumbai

Dated : 28th May, 2009

57

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

TO THE MEMBERS OF THE SHIPPING CORPORATION OF INDIA LTD.

We have examined the compliance of conditions of Corporate Governance by THE SHIPPING CORPORATIONOF INDIA LTD. for the year ended on 31st March, 2009, as stipulated in Clause 49 of the Listing Agreementof the said Corporation with Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Ourexamination was limited to procedures and implementation thereof, adopted by the Corporation for ensuringthe compliance of the conditions of Corporate Governance. It is neither an audit nor an expression of opinionon the financial statements of the Corporation.

In our opinion and to the best of our information and according to the explanations given to us, we certify thatthe Corporation has complied with the conditions of Corporate Governance as stipulated in Clause 49 of theabove mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the future viability of the Corporation northe efficiency or effectiveness with which the Management has conducted the affairs of the Corporation.

For S. BHANDARI & CO., For KHANDELWAL JAIN & CO.,Chartered Accountants Chartered Accountants

(P.D. BAID) (NARENDRA JAIN)Partner Partner

Membership No. 72625 Membership No. 48725

Place : Mumbai

Dated : 8th August, 2009

58

S. BHANDARI & CO. KHANDELWAL JAIN & CO.Chartered Accountants Chartered Accountants

AUDITORS’ REPORT

To the shareholders of The Shipping Corporation of India Ltd:

1) We have audited the attached Balance Sheet of The Shipping Corporation of India Ltd. as at 31st March,2009, and the Profit and Loss Account and Cash Flow Statement for the year ended on that date, annexedthereto. These financial statements are the responsibility of the Company’s management. Our responsibilityis to express an opinion on these financial statements based on our audit.

2) We conducted our audit in accordance with auditing standards generally accepted in India. Those Standardsrequire that we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating theoverall financial statement presentation. We believe that our audit provides a reasonable basis for ouropinion.

3) As required by the Companies (Auditor’s Report) Order, 2003 and the Companies (Auditor’s Report)(Amendment) Order, 2004, issued by the Central Government of India in terms of Section 227(4A) of theCompanies Act, 1956, and on the basis of such checks as we considered appropriate and as per theinformation and explanations given to us, we annex hereto a statement on the matters specified in paragraphs4 and 5 of the said Order as are applicable to the Corporation.

4) Further to our comments in the Annexure referred to in Paragraph (3) above, we report that:

a) We have obtained all the information and explanations which to the best of our knowledge and beliefwere necessary for the purposes of our audit;

b) In our opinion, proper books of account as required by law have been kept by the Corporation so far asappears from our examination of those books;

c) The Balance Sheet, Profit and Loss account and Cash Flow Statement dealt with by this report are inagreement with the books of account;

d) In our opinion, the Balance Sheet, Profit and Loss Account and Cash Flow Statement comply with theAccounting Standards referred to in Sub section (3C) of Section 211 of the Companies Act, 1956;

e) On the basis of the written representations received from the Directors as on 31st March, 2009 andtaken on record by the Board of Directors, we report that none of the directors of the Corporation aredisqualified as on 31st March 2009 from being appointed as directors in terms of Clause (g) ofsub-section (1) of Section 274 of the Companies Act, 1956 on the said date;

f) We draw attention to;

(i) Note No. 14(a) of Schedule 25 to the accounts regarding change in accounting policy, due to exerciseof the option available vide Notification No. GSR 225(E) dated 31st March 2009 issued by the Ministryof Corporate Affairs regarding adjustment of exchange difference arising on repayment of liabilities andconversion of year end foreign currency balances relating to acquisition of depreciable capital assetsarising out of transactions entered on or after 1st April, 2004 to the cost of respective assets / assetunder construction. As a result of the same the profit for the year is higher by Rs. 27078 lakhs.

(ii) Note No. 16 of Schedule 25 to the accounts regarding balances of Sundry Creditors, Debtors, Loans &Advances and Deposits which are subject to confirmation and reconciliation.

59

g) In our opinion and to the best of our information and according to the explanations given to us, the saidaccounts read together with the Significant Accounting Policies stated in Schedule 24 and Notes on theAccounts in Schedule 25, give the information required by the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformity with the accounting principles generally accepted inIndia:

i) in the case of the Balance Sheet, of the state of affairs of the Corporation as at 31st March, 2009;

ii) in the case of the Profit and Loss Account, of the Profit of the Corporation for the year ended on thatdate; and

iii) in the case of Cash Flow Statement, of the cash flows for the year ended on that date.

For S. BHANDARI & CO., For KHANDELWAL JAIN & CO.,Chartered Accountants Chartered Accountants

(P.D. BAID) (NARENDRA JAIN)Partner Partner

Membership No. 72625 Membership No. 48725

Mumbai,Dated the 15th June 2009.

60

ANNEXURE TO THE AUDITORS’ REPORT

Referred to in Paragraph 3 of our report of even date on the accounts of The Shipping Corporation of IndiaLimited for the year ended March 31, 2009:

i) (a) The physical verification of the fixed assets was conducted by the Management at reasonableintervals. In our opinion, the frequency of the verification is reasonable and commensurate with thesize and operations of the Corporation and the nature of its assets. We are also informed that nomaterial discrepancies were noticed on such verification as compared to book records.

(b) The Corporation generally maintains proper records showing full particulars including quantitativedetails and situation of fixed assets.

(c) The Corporation has not disposed off a substantial part of its fixed assets during the year, so as toaffect the going concern status of the Corporation.

ii) (a) We are informed that the Management has conducted physical verification of fuel oil and bondeditems on board at reasonable intervals during the year and of stores and spares lying in godowns atthe year end.

(b) In our opinion, the procedures followed by the Management for such physical verification arereasonable and adequate in relation to the size of the Corporation and nature of its business.

(c) The Corporation is maintaining proper records of inventory. The discrepancies noticed on verificationbetween physical inventories and the book records were not material in relation to the operations ofthe Corporation and the same have been properly dealt with in the books of account.

iii) Based on the records examined by us and according to the information and explanations given to us,there are no loans granted/taken to/from companies, firms or other parties required to be listed in theregister maintained under Section 301 of the Companies Act, 1956.

iv) In our opinion and according to the information and explanations given to us, there is an adequateinternal control system commensurate with the size of the Corporation and the nature of its businessfor the purchase of inventory and fixed assets and rendering of services. The Corporation does nothave any sale of goods. During the course of our audit, we have not observed any continuing failure tocorrect major weaknesses in internal control systems of the Corporation.

v) Based on the audit procedures applied by us and according to the information and explanations givento us, we are of the opinion that there are no transactions during the year that need to be entered intothe register maintained under Section 301 of the Companies Act, 1956.

vi) In our opinion and according to the information and explanations given to us, the Corporation has notaccepted any deposits attracting provisions of Section 58A and 58AA of the Companies Act, 1956 andthe Companies (Acceptance of Deposits) Rules, 1975 or any other relevant provision of the Act.

vii) The Corporation has an internal audit system commensurate with its size and nature of its business.The audit is carried out by an independent firm of Chartered Accountants.

viii) As per the information and explanations given to us, maintenance of cost records has not beenprescribed by the Central Government under Section 209(1)(d) of the Companies Act, 1956.

61

ix) (a) We are informed by the Management that it is not possible to ascertain the Provident Fund dues andtax deducted at source of the floating staff accurately and ad-hoc monthly payments are made to theappropriate authorities on the basis of previous year and the final dues are adjusted on thedetermination of the liability month to month. The Corporation is generally regular in making suchad-hoc monthly payments. In respect of the shore staff, Provident Fund deductions and tax deductedat source have generally been regularly paid to the appropriate authorities. As regards the crewmembers, Provident Fund dues are paid to the appropriate authorities on signing off. Further, wehave been informed that the provisions of the Employees State Insurance Act are not applicable tothe Corporation. The Corporation is generally regular in depositing dues payable in respect of InvestorEducation and Protection Fund, Income Tax, Wealth Tax, Sales Tax, Service Tax, Custom Duty,Excise Duty, Cess and other statutory dues applicable to it with the appropriate authorities exceptfor dues relating to service tax on supply of tangible goods for use which became applicable w.e.f.16th May 2008, where there was delay in payments during the year, details of the same are asbelow;

Amount of Due Date of Actual Date of DelayService Tax Payment Payment (in days)

2,86,46,421 05.06.2008 05.09.2008 92

6,64,94,539 05.07.2008 05.09.2008 62

6,81,49,997 05.08.2008 05.09.2008 31

(b) According to the information and explanations given to us, no undisputed amounts payable in respectof income tax, wealth tax, sales tax, service tax, customs duty, excise duty and cess were in arrearsas at 31st March 2009 for a period of more than six months from the date they became payable.

(c) According to the information and explanations given to us, there are no dues of sales tax, incometax, customs duty, wealth tax, excise duty and cess, which have not been deposited on account ofany dispute except as under:

Sr. Name of the Statute Nature of Dues Amount Period to which Forum whereNo. (Rs. In lakhs) the amount relates dispute is pending

1. Customs Act, 1962 Custom Duty 243 2003-2004 Regional Bench,Penalty 243 2003-2004 CESTAT, Mumbai

2. Income Tax Act, 1961 Tax u/s 143 (3) 284 2005-06 CIT Appeals, Mumbai

3. Income Tax Act, 1961 Tax u/s 195 362 2003-04 The Corporation is inthe process of filingappeal before ITAT,Mumbai

4. Income Tax Act, 1961 Tax u/s 195 37 2004-05 CIT Appeals, Mumbai

5. Income Tax Act, 1961 Tax u/s 195 79 2005-06 CIT Appeals, Mumbai

x) The Corporation has no accumulated losses at the end of the financial year and it has not incurredany cash losses during the financial year covered by our audit and the immediately preceding financialyear.

xi) According to the information and explanations given to us and records examined by us, theCorporation has not defaulted in repayment of dues to a financial institution or bank.

62

xii) Based on our examination of documents and records and according to the information andexplanations given to us, the Corporation has not granted any loans and advances on the basis ofsecurity by way of pledge of shares, debentures and other securities.

xiii) In our opinion, the nature of the activities of the Corporation does not attract any special statuteapplicable to chit fund and nidhi/mutual benefit fund/societies.

xiv) In our opinion, the Corporation is not dealing in and trading in shares, securities, debentures andother investments.

xv) In our opinion and according to the information and explanations given to us, the terms and conditionson which the Corporation has given guarantees for loans taken by others from banks are not prejudicialto the interest of the Corporation.

xvi) On the basis of the records examined by us, we have to state that, the Corporation has, prima facie,applied the term loans for the purposes for which they were obtained.

xvii) According to the information and explanations given to us and on an overall examination of thefinancial statements of the Corporation, we are of the opinion that, prima facie the Corporation hasnot utilised the funds raised on short term basis for long term investments.

xviii) The Corporation has not made any preferential allotment of shares to parties or companies coveredin the register maintained under Section 301 of the Act.

xix) The Corporation has not issued any debentures.

xx) The Corporation has not raised any money through a public issue during the year.

xxi) On the basis of information and explanations given to us by the Management, we report that nomaterial fraud on or by the Corporation has been noticed or reported during the year.

For S. BHANDARI & CO., For KHANDELWAL JAIN & CO.,Chartered Accountants Chartered Accountants

( P. D. BAID ) (NARENDRA JAIN)Partner Partner

Membership No. 72625 Membership No. 48725

Mumbai,Dated the 15th June 2009.

63

COMMENTS OF THE COMPTROLLER AND AUDITOR GENERAL OF INDIA

UNDER SECTION 619(4) OF THE COMPANIES ACT, 1956 ON THE

ACCOUNTS OF THE SHIPPING CORPORATION OF INDIA LIMITED FOR

THE YEAR ENDED 31 MARCH 2009.

The preparation of financial statements of The Shipping Corporation of India Limited for the year ended 31

March 2009 in accordance with the financial reporting framework prescribed under the Companies Act, 1956

is the responsibility of the management of the company. The statutory auditors appointed by the Comptroller

and Auditor General of India under Section 619(2) of the Companies Act, 1956 are responsible for expressing

opinion on these financial statements under Section 227 of the Companies Act, 1956 based on independent

audit in accordance with the auditing and assurance standards prescribed by their professional body the

Institute of Chartered Accountants of India. This is stated to have been done by them vide their Auditor Report

dated 15 June 2009.

I, on behalf of the Comptroller and Auditor General of India, have conducted a supplementary audit under

Section 619(3)(b) of the Companies Act, 1956 of the financial statements of The Shipping Corporation of India

Limited for the year ended 31 march 2009. This supplementary audit has been carried out independently

without access to the working papers of the statutory auditors and is limited primarily to the inquiries of the

statutory auditors and company personnel and a selective examination of some of the accounting records. On

the basis of my audit nothing significant has come to my knowledge which would give rise to any comment

upon or supplement to Statutory Auditors’ Report under Section 619(4) of the Companies Act, 1956.

For and on the behalf of theComptroller and Auditor General of India

(Mridula Sapru)

Place : Mumbai Principal Director of Commercial Audit and

Date : 29th July 2009 Ex-Officio Member, Audit Board-I, Mumbai

64

BALANCE SHEET AS AT 31ST MARCH, 2009

As at As at31.03.2009 31.03.2008

Rupees Rupees RupeesSchedule in lakhs in lakhs in lakhs

SOURCES OF FUNDSSHAREHOLDERS’ FUNDS

Capital 1 42,345 28,230

Reserves & Surplus 2 5,78,500 5,34,980

6,20,845 5,63,210

LOAN FUNDSSecured Loans 3 2,47,167 1,45,420

TOTAL 8,68,012 7,08,630

APPLICATION OF FUNDSFIXED ASSETSGross Block 4 8,16,184 6,73,713

Less : Depreciation 4,33,393 4,04,723

Net Block 3,82,791 2,68,990 Assets under Construction 5 2,09,985 2,00,720

5,92,776 4,69,710ASSETS HELD FOR DISPOSAL 2 2INVESTMENTS 6 11,146 4,146CURRENT ASSETS, LOANS & ADVANCES

Inventories 7 6,334 9,007Sundry Debtors 8 42,945 37,774Cash & Bank Balances 9 2,67,283 2,09,120Deposit with Public Financial Institutions 16,000 16,500Other Current Assets 10 10,106 9,313 Amounts advanced to Joint Venture Companies 11 26,343 26,589Loans and Advances 12 33,842 29,818

4,02,853 3,38,121Less :CURRENT LIABILITIES & PROVISIONS

Sundry Creditors & Other Liabilities 13 98,062 84,052Provisions 14 40,703 19,297

1,38,765 1,03,349

NET CURRENT ASSETS 2,64,088 2,34,772

TOTAL 8,68,012 7,08,630

SIGNIFICANT ACCOUNTING POLICIES 24

NOTES ON ACCOUNTS 25

As per our report of even date attached hereto.

For S BHANDARI & CO., For KHANDELWAL JAIN & CO., For and on behalf of the Board of Directors,Chartered Accountants Chartered Accountants

(P.D. Baid) (Narendra Jain) Dipankar Haldar B K Mandal S. HajaraPartner Partner SVP (LA) & Director Chairman &Membership No. 72625 Membership No. 48725 Company Secretary (Finance) Managing Director

Mumbai, Mumbai,Dated the 15th June, 2009 Dated the 15th June, 2009

65

PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009

2008-2009 2007-2008Rupees Rupees Rupees

Schedule in lakhs in lakhs in lakhs

INCOMEOperating Earnings 15 416,664 372,684Profit on sale of Ships (Net) 16 3,446 -Interest Income 17 27,271 22,768Other Income 18 7,686 4,940

455,067 400,392EXPENDITURE

Operating Expenses 19 281,569 259,435Administration Expenses 20 20,559 18,209Other Expenses, Provisions etc. 21 6,099 3,917Interest 22 6,467 6,163Depreciation 4 32,388 30,318

347,082 318,042

PROFIT BEFORE ITEMS RELATING TO 107,985 82,350EARLIER YEARS AND EXCEPTIONAL ITEMS

Prior period adjustments (net)(Refer Note No.7 of Schedule 25) 367 2,268Excess provision/Sundry credit balances 23 1,015 5,776written back

1,382 8,044

PROFIT BEFORE EXCEPTIONAL ITEMS 109,367 90,394Less : Provision towards loss of Ship / 2,140 -other incidental chargesLess : Provision towards NYSA USA pension 1,768 -liability due to exit from IDX Service

3,908 -

PROFIT BEFORE TAX 105,459 90,394Provision for Indian Income Tax - Current 11,500 9,600

- Fringe Benefit Tax 400 385- Wealth Tax - -

Rs.0.27 lakhs (Pr. Yr Rs. 0.31 lakhs)11,900 9,985

Less : Excess Provisions written back 508 981

11,392 9,004

PROFIT AFTER TAX 94,067 81,390Less: Transferred to Tonnage Tax Reserveu/s 115VT of Income Tax Act 20,000 17,000

BALANCE 74,067 64,390Add : Balance brought forward from last year 46,039 58,080

AMOUNT AVAILABLE FOR APPROPRIATION 120,106 122,470AppropriationsStaff Welfare Fund 75 75Corporate Social Responsibility Reserve 941 -Capital Reserve (Refer Note No. 20 of Schedule 25) 750 282General Reserve 35,000 48,000Interim Dividend - 12,704Tax on Interim Dividend - 2,159Proposed Dividend 27,524 11,292Tax on Proposed Dividend 4,678 1,919

68,968 76,431

BALANCE CARRIED TO BALANCE SHEET 51,138 46,039

Rs. Rs.Earnings per share (Basic/Diluted) 22.21 19.22Nominal Value of Shares 10.00 10.00(Refer Note No. 6 of Schedule 25)

SIGNIFICANT ACCOUNTING POLICIES 24NOTES ON ACCOUNTS 25

As per our report of even date attached hereto.

For S BHANDARI & CO., For KHANDELWAL JAIN & CO., For and on behalf of the Board of Directors,Chartered Accountants Chartered Accountants

(P.D. Baid) (Narendra Jain) Dipankar Haldar B K Mandal S. HajaraPartner Partner SVP (LA) & Director Chairman &Membership No. 72625 Membership No. 48725 Company Secretary (Finance) Managing Director

Mumbai, Mumbai,Dated the 15th June, 2009 Dated the 15th June, 2009

66

SCHEDULES FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2009

SCHEDULE ‘1’SHARE CAPITAL

As at As at31.03.2009 31.03.2008

Rupees Rupeesin lakhs in lakhs

Authorised :

45,00,00,000 (Pr. Yr. 45,00,00,000) Equity Shares of Rs. 10 each 45,000 45,000

Issued and subscribed :

In cash :

26,46,12,870 (Pr. Yr. 26,46,12,870) Equity Shares of 26,461 26,461

Rs. 10 each fully paid

For Consideration Other than Cash :

15,88,40,765 (Pr. Yr. 1,76,89,550) Equity Shares of 15,884 1,769

Rs. 10 each fully paid

Partly in Cash and partly for Consideration other than Cash :

10 Equity Shares of Rs. 10 each fully paid Nil Nil

Received in Cash Rs. 1.80 each

For Consideration other than Cash Rs. 8.20 each

During the year 14,11,51,215 fully paid up Equity shares of

Rs. 10 each amounting to Rs. 14115 lakhs were issued as bonus shares by

capitalisation of General Reserve

TOTAL 42,345 28,230

67

SCHEDULE ‘2’RESERVES AND SURPLUS

As at As at31.03.2009 31.03.2008

Rupees Rupees Rupeesin lakhs in lakhs in lakhs

Capital Reserve 11,789 11,507

Add : Transferred from Profit & Loss Account 750 282

12,539 11,789General Reserve :

As per Last Balance Sheet 2,56,007 2,08,007Add : Transferred from Profit & Loss Account 35,000 48,000

Less : Issue of Bonus Shares 14,115Less : Currency Exchange difference transferred 4,109

to Assets / Asset under construction

(Refer Note No. 14 (a) of Schedule 25)

2,72,783 2,56,007

Special Reserve U/S 33AC of I.T. Act, 1961 (Utilised)

As per last Balance Sheet 1,21,500 1,21,500Tonnage Tax Reserve

As per Last Balance Sheet 69,500 52,500

Add : Transferred from Profit & Loss Account 20,000 17,000Less : Tonnage Tax Reserve utilised U/s 115VT of I.T.Act 69,500 -

20,000 69,500Tonnage Tax Reserve (Utilised)

As per last Balance Sheet 30,000 30,000

Add Tonnage Tax Reserve utilised during the year 69,500 -

99,500 30,000

Staff Welfare Fund :

As per Last Balance Sheet 145 149Add : Interest Received 17 20

1162 169Less : Expenses incurred 138 99

24 70

Add : Transferred from Profit and Loss Account 75 75

99 145

Corporate Social Responsibility Reserve -Add : Transferred from Profit & Loss Account 941

941 -

Balance in Profit & Loss Account 51,138 46,039

TOTAL 5,78,500 5,34,980

68

SCHEDULE ‘3’SECURED LOANS

As at As at31.03.2009 31.03.2008

Rupees Rupeesin lakhs in lakhs

State Bank of India:

Secured by Statutory first ship mortgage of m.v. A.K. Azad

(Installments due within one year Rs.1067 lakhs;

Prev yr. Rs. 1067 lakhs) 2,667 3,733

Oriental Bank of Commerce

(Out of the total balance of Rs. 14519 lakhs

1) A sum of Rs. 6741 lakhs (Pr. Yr. 8,988 lakhs) is secured by Statutory

first ship mortgage of m.t. Desh Shakti

2) A sum of Rs. 7778 lakhs (Pr. Yr. Rs. 10001 lakhs) is secured by Statutory

first ship mortgage over m.t. Desh Shanti)

(Installments due within one year Rs. 4467 lakhs;

Prev. yr. Rs. 4467 lakhs) 14,519 18,989

Bank of Maharashtra

Secured against mortgage of part of the fleet

(Installments due within one year Rs.4000; Prev. yr. - Nil) 12,000 12,000

FCNR Loan from State Bank of India

Against Refundment Guarantee of EXIM Bank, Korea 19,748 5,140

(Installments due within one year Rs. 2633; Prev. yr - Nil)

Foreign Banks (In Foreign Currency)

Loans of Rs.153591 lakhs (Prev. yr :- Rs. 51818 lakhs) secured

by mortgage of certain ships, Rs.40090 lakhs (Prev. yr :-

Rs. 53740 lakhs) secured by Refundment Guarantee of

EXIM Bank, Korea and Rs.4552 (Prev. yr.:- Nil) secured by

Refundment Guarantee of SBI.

(Installments due within one year Rs. 22620 lakhs ; Prev yr. - Rs.9771 lakhs) 1,98,233 1,05,558

TOTAL 2,47,167 1,45,420

69

SCHEDULE ‘4’FIXED ASSETS Rupees in lakhs

GROSS BLOCK DEPRECIATION NET BLOCK

PARTICULARS Cost as at Additions Deductions Cost as at Upto Provided Deductions/ Upto As at As at31-3-2008 31-3-2009 31-3-2008 during the Adjust- 31-3-2009 31-3-2009 31-3-2008

year ments

Fleet 6,62,672 1,45,772 3,427 8,05,017 3,96,143 31,986 3,604 4,24,525 3,80,492 2,66,529OwnershipContainers 5,263 - 99 5,164 4,144 153 78 4,219 945 1,119Freehold Land 271 - - 271 - - - - 271 271Buildings 1,104 - - 1,104 721 19 - 740 364 383Ownership Flats and ‘Residential Buildings 318 - - 318 229 4 - 233 85 89Furniture, Fittings &Equipments etc. 3,786 188 23 3,951 3,212 177 26 3,363 588 574Motor Vehicles 82 - 10 72 76 1 10 67 5 6ComputerSoftware 217 70 - 287 198 48 - 246 41 19

Current Year’sTotal 6,73,713 1,46,030 3,559 8,16,184 4,04,723 32,388 3,718 4,33,393 3,82,791 2,68,990

Previous Year’sTotal 6,70,541 3,213 41 6,73,713 3,74,426 30,318 21 4,04,723 2,68,990

Notes : (1) Additions to Fleet include Rs. 27,788 lakhs (Prev. yr.-Rs. (-) 2972 lakhs) on account of currency exchangedifference as per Significant Accounting Policy No. 8 (d) of Schedule 24.

(2) Additions to Fleet include Rs. (-) 3814 lakhs (Prev. yr.-Rs.NIL) on account of currency exchange differenceas per Note No. 14 (a) Schedule 25.

(3) Deductions / Adjustments in respect of containers include NIL (Prev. yr. Rs. 7 lakhs) towards cost ofcontainers held for disposal and Rs. NIL (Prev. yr. Rs. 5 lakhs) towards depreciation in respect of suchcontainers.

(4) Deduction / Adjustments - Depreciation in respect of fleet includes Rs. 177 Lakhs (Prev. yr.:- Rs. Nil) onaccount of currency exchange difference as per Note No 14 (a) Schedule 25.

(5) Buildings include cost of Shipping House at Bombay Rs. 134 lakhs (Prev. yr.:- Rs. 134 lakhs) which is onleasehold land valued at Rs. Nil.

(6) Ownership Flats and Residential Buildings include :Cost of shares and bonds in Cooperative Societies/Company of face value Rs. 0.73 lakh(Prev. yr.:- Rs. 0.73 lakh).

SCHEDULE ‘5’ASSETS UNDER CONSTRUCTION

As at As at31.03.2009 31.03.2008

Rupees Rupeesin lakhs in lakhs

Ships - Work in progress & Advances 2,08,595 2,00,720Intangible Assets - Work in progress & Advances 1,389 -Other Assets - Work in progress & Advances 1 -

TOTAL 2,09,985 2,00,720

(1) Ships - Work in Progress and Advances includes Rs. 9,818 lakhs (Prev. yr Rs. 311 lakhs) on account ofcurrency exchange difference as per Significant Accounting Policy No. 8 (d) of Schedule 24.

(2) Ships - Work in Progress and Advances includes Rs. (-) 472 lakhs (Prev. yr.-Rs.NIL) on account ofcurrency exchange difference as per Note No. 14 (a) Schedule 25.

70

SCHEDULE ‘6’INVESTMENTS (At Cost - unless other wise specified)

As at As at31.03.2009 31.03.2008

Rupees Rupeesin lakhs in lakhs

QUOTED :Trade Investments :

In Shares3438 Equity Shares of Rs. 20/- each of Scindia Steam NavigationCompany Ltd., Fully paid (Rs. 0.30 lakhs; Prev. yr.:- Rs.0.30 lakh) - -Less : Provision for Diminution in Value of Investment(Rs.0.03 lakh, Prev. yr.:- Nil) - -Market Value Rs.0.27 lakh (Prev. yr. - Rs. 0.33 lakh). - -

UNQUOTED :TRADE INVESTMENTS :*245,00,000 Registered Shares of Rials 5,000 each of Irano HindShipping Co. Ltd.,Tehran, Fully paid 39 39(including 244,93,385 Bonus Shares)

295,029 shares of 1 USD each fully paid of ISI Maritime Ltd. - -(Shares are received as a gift from Irano-Hind Shipping Co. Ltd.)

** 16 shares of 1 USD each fully paid up of BIIS Maritime - -(Shares are received as gift from Irano-Hind Shipping Co. (P.J.S)

500 shares of Rs. 10 each fully paid up of - -Jaladhi Shipping Services Pvt. Ltd.(Shares are received as gift from Irano-Hind Shipping Co. (P.J.S)

***2908 Ordinary Shares of 2.33 Euro each (Pr. Yr. 1 Malta Lira each)fully paid of India LNG Transport Company (No. 1) Ltd. 3 3

***2908 Ordinary Shares of 2.33 Euro each (Pr. Yr. 1 Malta Lira each)fully paid of India LNG Transport Company (No.2 ) Ltd. 3 3

***2600 Ordinary Shares of 1 USD each fully paid ofIndia LNG Transport Company (No. 3) Ltd. 1 1

6,10,00,000 (Prev. yr 5,00,000) ordinary Shares ofRs. 10 each fully paid up of SCI Forbes Ltd. 6,100 50

5,00,00,000 (Prev. yr 3,10,00,000) ordinary Shares of 5,000 3,100Rs. 10 each fully paid of Sethusamudram Corp. Ltd.

Share Application Money - Sethu Samudram Corporation Ltd. - 950

TOTAL 11,146 4,146

* 30 Shares are held in the name of SCI Directors and are with Irano Hind Shipping Co. Ltd,Tehran

** Shares have been pledged to banks against loans given by them

*** The shares are pledged to banks against loans given by them to joint venture companies.

Refer Note No. 9 of Schedule ‘25’

71

SCHEDULE ‘7’INVENTORIES

As at As at31.03.2009 31.03.2008

Rupees Rupees Rupeesin lakhs in lakhs in lakhs

Fuel Oil 5,880 8,396

Provisions on Board 1 13

Stores and Spares in Godown 12 3

Stores and Spares In Transit 861 946

Less :

Adjustment made towards consumption 420 351

(Refer Significant Accounting Policy No. 7(e) of Schedule 24) 441 595

TOTAL 6,334 9,007

(As verified, valued and certified by the Management)

SCHEDULE ‘8’

SUNDRY DEBTORS (UNSECURED)

As at As at31.03.2009 31.03.2008

Rupees Rupees Rupeesin lakhs in lakhs in lakhs

Debts outstanding for more than six months

(a) Considered good 15,627 13,524

(b) Considered doubtful 5,470 3,669

21,097 17,193

Less : Provision for Doubtful Debts 5,470 3,669

15,627 13,524

Other debts - Considered good 27,318 24,250

TOTAL 42,945 37,774

72

SCHEDULE ‘9’CASH & BANK BALANCES

As at As at31.03.2009 31.03.2008

Rupees Rupees Rupeesin lakhs in lakhs in lakhs

Cash on hand 12 9Remittances in Transit 804 438

816 447Bank BalancesWith Scheduled Banks :In Current Accounts 9,759 9,461In Deposit Accounts 2,50,262 1,94,943

2,60,021 2,04,404For Staff Welfare Fund :In Savings Bank Account - -(0.26 lakhs Prev.yr :- 0.27 lakhs)In Fixed Deposit Account 162 208

162 208

2,60,183 2,04,612

With Non-Scheduled Banks :In Current AccountUttara Bank, Bangladesh(Maximum balance during the year Rs. 182 lakhs; 31 35Prev. yr. - Rs.107 lakhs)CIMB Bank (formerly Bhumiputra Commerce Bank), Berhad , - -Malaysia (Rs. 0.51 lakhs, Prev. yr. 0.45 lakhs)(Maximum balance during the year Rs. 0.51 lakhs;Prev. yr. :- Rs. 0.46 lakhs)Unicredit Banca d’impresa (formerly Credito Italino Bank, Genoa) 30 37(Maximum balance during the year Rs. 109 lakhs;Prev. yr. :- Rs. 200 lakhs)Bayerische Hypo-und Vereins Bank AG (formerly Vereins Bank,Hamburg)(Maximum balance during the year - 138Rs. 496 lakhs; Prev. yr. - Rs. 848 lakhs)Citi Bank London - USD Pool(Maximum balance during the year 250 266Rs. 669 lakhs; Prev. yr. Rs.398 lakhs)Citi Bank London - Euro Pool(Maximum balance during the year 238 -Rs. 437 lakhs; Prev. yr. Rs. NIL)Citi Bank Germany Euro Freight(Maximum balance during the year 211 82Rs. 202 lakhs; Prev. yr. Rs. 176 lakhs)

Citi Bank Belgium Euro Freight(Maximum balance during the year 120 62Rs. 116 lakhs; Prev. yr. Rs. 62 lakhs)

Citi Bank Spain Euro Freight(Maximum balance during the year 136 308Rs. 309 lakhs; Prev. yr. Rs. 308 lakhs)Citi Bank France 5 -(Maximum balance during the year Rs. 5 lakhs; Prev. yr. Rs. NIL)Citi Bank UK GBP Freight Account 102 -(Maximum balance during the year Rs. 1005 lakhs; Prev. yr. Rs. NIL)Citi Bank Sweden Freight 8 -(Maximum balance during the year Rs. 22 lakhs; Prev. yr. Rs. NIL)

73

As at As at31.03.2009 31.03.2008

Rupees Rupees Rupeesin lakhs in lakhs in lakhs

Citi Bank Netherlands Freight 13 -(Maximum balance during the year Rs. 310 lakhs; Prev. yr. Rs. NIL)Citi Bank Germany USD Freight Account 475 -(Maximum balance during the year Rs. 476 lakhs; Prev. yr. Rs. NIL)HSBC Honkong HKD Freight 32 103(Maximum balance during the year Rs. 251 lakhs; Prev. yr. Rs. 139 lakhs)HSBC Egypt USD Freight 82 5(Maximum balance during the year Rs. 91 lakhs; Prev. yr. Rs. 5 lakhs)HSBC Singapore SGD Freight 255 88(Maximum balance during the yearRs. 250 lakhs; Prev. yr. Rs. 128 lakhs)HSBC Malaysia MYR Freight 54 46(Maximum balance during the yearRs. 142 lakhs; Prev. yr. Rs. 138 lakhs)HSBC UAE AED Freight 91 -(Maximum balance during the yearRs. 420 lakhs; Prev. yr. Rs. 19 lakhs)HSBC London USD Pool 4,036 2,521(Maximum balance during the yearRs. 9266 lakhs; Prev. yr. Rs. 2529 lakhs)HSBC Honkong USD Freight 98 89(Maximum balance during the yearRs. 123 lakhs; Prev. yr. Rs. 89 lakhs)HSBC Honkong China USD Freight 2 8(Maximum balance during the yearRs. 1398 lakhs; Prev. yr. Rs. 1049 lakhs)HSBC Bank Japan - Yen Freight 6 272(Maximum balance during the yearRs. 272 lakhs; Prev. yr. Rs. 272 lakhs)HSBC Indonesia USD Freight 7 -(Maximum balance during the year Rs. 65 lakhs; Prev. yr. Rs. NIL)HSBC Turkey USD Freight 1 -(Maximum balance during the year Rs. 1 lakhs; Prev. yr. Rs. NIL)HSBC Honkong - HKD Freight Saving 1 1(Maximum balance during the year Rs. 11 lakhs; Prev. yr. Rs. 77 lakhs)

6,284 4,061

TOTAL 2,67,283 2,09,120

SCHEDULE ‘10’OTHER CURRENT ASSETS

As at As at31.03.2009 31.03.2008

Rupees Rupees Rupeesin lakhs in lakhs in lakhs

Interest Accrued on :Deposits with Banks 3,706 2,504Deposits with Public Financial Institutions 230 255Loans to employees 661 655

4,597 3,414Silver Medals (Rs. 0.01 lakh;Prev. yr.- Rs. 0.01 lakh) - -Unfinished Voyages 5,474 5,877Course fee receivable 35 22

TOTAL 10,106 9,313

74

SCHEDULE ‘11’AMOUNTS ADVANCED TO JOINT VENTURE COMPANIES

As at As at31.03.2009 31.03.2008

Rupees Rupeesin lakhs in lakhs

* Shareholder’s Contribution towards project cost -India LNG Transport Co. (No.3) Ltd. 7,879 6,152

* India LNG Transport Company (No. 1) Ltd - Loan 6,345 4,954* India LNG Transport Company (No. 2) Ltd - Loan 6,359 4,966** Shareholder’s loan SCI Forbes - 5,099

Other recoverables 5,760 5,418

TOTAL 26,343 26,589

* Refer Note No. 9 of Schedule 25** Refer Note No. 11 of Schedule 25

SCHEDULE ‘12’LOANS AND ADVANCES

As at As at31.03.2009 31.03.2008

Rupees Rupees Rupeesin lakhs in lakhs in lakhs

LOANS AND ADVANCES -(Considered good unless otherwise stated)(A) Secured :

Loans and Advances to Employees and Employees’Co-operative Societies- Considered Good 1,521 1,760- Considered Doubtful 2 2

1,523 1,762Less : Provision for doubtful Loans & Advances 2 2

1,521 1,760(B) Unsecured :

Advances recoverable in cash or in kind orfor value to be received :- Considered Good 25,345 22,017- Considered Doubtful 3,422 943

28,767 22,960Less : Provision for doubtful Advances 3,422 943

25,345 22,017Excess of fair value of plan assets over acturial gratuityliability (Refer Note No. 15 (E) of Schedule 25) 5,777 3,784Loans and Advances to employees and employees’Co-operative Societies under Staff Welfare Scheme - 1Other Loans 41 48Advance Indian Income Tax & Tax Deducted at - 641Source (Net of Provisions)Balances with Customs, Port Trust etc.

(a) Considered good 946 1,392(b) Considered doubtful 773 763

1,719 2,155Less : Provision for doubtful balances with Customs, 773 763

Port Trust etc. 946 1,392Deposits 212 175

TOTAL 33,842 29,818

75

SCHEDULE ‘13’SUNDRY CREDITORS & OTHER LIABILITIES

As at As at31.03.2009 31.03.2008

Rupees Rupees Rupeesin lakhs in lakhs in lakhs

Sundry Creditors :

- Small and Medium Enterprises 211 152

- Others 77,318 61,712

77,529 61,864

Interest accrued but not due 2,421 1,118

Advances and Deposits 6,741 10,526

Security and other Deposits 119 118

Other Liabilities 9,628 7,784

Unpaid Dividend (Note 1) 41 57

Unfinished Voyages 1,583 2,585

Bank Overdrafts

Bayerische Hypo-und Vereins Bank AG - -

(formerly Vereins Bank, Hamburg)

(Rs. 0.07 lakhs)

(Maximum debit balance during the year

Rs. 0.10 lakhs; Prev. yr. - Rs. NIL)

City Bank Israel - USD Freight - -

(Rs. 0.01 lakhs, Prev. yr. NIL)

(Maximum debit balance during the year Rs.0.20 lakhs; Prev. yr. Rs. NIL) -

TOTAL 98,062 84,052

Note 1 : There is no amount due and outstanding to be credited

to Investor Education and Protection Fund

SCHEDULE ‘14’PROVISIONS

As at As at31.03.2009 31.03.2008

Rupees Rupeesin lakhs in lakhs

Foreign Taxation (Net of Advances) 541 176

Indian Income Tax (Net of Advances) 49 -

Leave Encashment 5,417 3,928

Post retirement medical scheme 2,494 1,982

Proposed Dividend 27,524 11,292

Tax on Proposed Dividend 4,678 1,919

TOTAL 40,703 19,297

76

SCHEDULES FORMING PART OF PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2009

SCHEDULE ‘15’OPERATING EARNINGS

2008-2009 2007-2008Rupees Rupees Rupeesin lakhs in lakhs in lakhs

Freight (Net) 2,40,250 2,27,466

Charter Hire 1,60,012 1,27,582

Demurrage 9,538 13,371

Receipts towards Managed Vessels -

- Remuneration 2,890 1,338

- Reimbursement of overheads 3,974 2,927

6,864 4,265

TOTAL 4,16,664 3,72,684

SCHEDULE ‘16’PROFIT ON SALE OF SHIPS (NET)

2008-2009 2007-2008Rupees Rupees Rupeesin lakhs in lakhs in lakhs

Sales Realisation/Insurance Claims (Net) 3,724 -

Less : Book Value - -

Surplus 3,724 -

Less:Expenses incurred upto date of sale:

Fuel Oil 117 -

Wages and Victualling 137 -

Stores and Maintenance 17 -

Sundries 7 -

278 -

TOTAL 3,446 -

SCHEDULE ‘17’INTEREST INCOME

2008-2009 2007-2008Rupees Rupeesin lakhs in lakhs

Interest earned (Gross): (TDS - Rs. 5308 Lakhs ; Prev. yr. - Rs. 234 lakhs)

On Bank Deposits 22,657 19,250

On Deposits with Public Financial Institutions 2,160 1,640

Others 2,454 1,878

TOTAL 27,271 22,768

77

SCHEDULE ‘18’OTHER INCOME

2008-2009 2007-2008Rupees Rupees Rupeesin lakhs in lakhs in lakhs

Sundry Receipts

- Core shipping activities 1,181 1,288- Incidental activities 590 496

1,771 1,784

Profit on sale of Fixed Assets (other than Ships) 17 349Dividend on trade Investments 209 193

Currency exchange difference 5,643 2,614Profit on Sale of Bunker 46 -

TOTAL 7,686 4,940

SCHEDULE ‘19’OPERATING EXPENSES

2008-2009 2007-2008Rupees Rupees Rupeesin lakhs in lakhs in lakhs

DIRECT OPERATING EXPENSES:

Agency fees 1,530 1,454

Brokerage 906 928Commission 5,661 6,055

Stevedoring, Dunnage, Cargo expenses etc. &Slot Expenses on joint sector container services (Net) 26,938 26,236

Marine, Light and Canal Dues 25,267 24,341

Fuel Oil (Net) 75,359 67,374Water charges 341 277

1,36,002 126,665

HIRE OF CHARTERED STEAMERS 47,321 48,189*INDIRECT OPERATING EXPENSES:

Wages, Bonus and other expenses on Floating Staff 36,686 24,482Gratuity (1,142) (636)

Contribution to Provident Fund 304 491

Victualling, Transfer and Repatriation and other benefits etc. 3,087 4,570Stores & Spares 21,927 20,731

Sundry Steamer Expenses 1,675 1,299Repairs and Maintenance, Survey expenses etc. 27,173 26,443

Insurance and Protection , Indemnity Club Fees & 8,536 7,201

Insurance Franchise etc. 98,246 84,581

TOTAL 2,81,569 259,435

* Net of recoveries on account of managed vessels.

78

SCHEDULE ‘20’

ADMINISTRATION EXPENSES

2008-2009 2007-2008Rupees Rupeesin lakhs in lakhs

Salaries and Bonus 10,377 8,160

Gratuity (763) (362)

Contribution to Provident Fund 687 684

Staff Welfare Expenses 2,269 1,599

Remuneration to Directors 93 57

Directors’ Sitting Fees 18 4

Directors’ Travel Expenses 157 110

Donations & Grants 50 402

Establishment Charges 4,988 4,928

Repairs and Maintenance-Buildings 668 653

Rent 550 521

Lease Rent to Shore Employees 1,197 1,217

Rates and Taxes 146 117

Insurance 15 14

Auditors’ Remuneration 72 71

Bank charges 35 34

TOTAL 20,559 18,209

SCHEDULE ‘21’OTHER EXPENSES, PROVISIONS ETC.

2008-2009 2007-2008Rupees Rupeesin lakhs in lakhs

Provision for Off Hire Etc. 729 492

Provision for Doubtful Debts and Advances 4,600 1,201

Foreign Taxation 650 382

Miscellaneous Expenses 118 75

Debts / Advances written off 2 1,767

TOTAL 6,099 3,917

79

SCHEDULE ‘22’

INTEREST

2008-2009 2007-2008Rupees Rupeesin lakhs in lakhs

On Term Loans 6,461 6,141

Others 6 22

TOTAL 6,467 6,163

SCHEDULE ‘23’EXCESS PROVISIONS/SUNDRY CREDIT BALANCES WRITTEN BACK

2008-2009 2007-2008Rupees Rupees Rupeesin lakhs in lakhs in lakhs

A. Excess Provision written back (core activities)

Direct Operating Expenses 219 433

Freight & Charter hire 139 1,552

Wages, Bonus & other expenses on floating staff 91 53

Insurance, P&I, Cargo claims & P&I Club fees 20 389

Provision for Doubtful Debts & Advances 110 537

Foreign Taxation 43 203

Balances with Custom Ports 183 -

Pilotage 13 -

Provision for Offhire - 3

Ship Repairs, Stores and Maintainence - 1

Sundry Steamer expenses - 9

Others 26 8

844 3,188

B. Sundry credit balances written back (core activities) 171 2,588

TOTAL 1,015 5,776

80

SIGNIFICANT ACCOUNTING POLICIES

1. ACCOUNTING CONVENTIONThe financial statements are prepared to comply in all material aspects under the Historical Costconvention and in accordance with generally accepted Accounting practices in India, the AccountingStandards issued by the Institute of Chartered Accountants of India and the relevant provisions ofthe Companies Act, 1956.

2. RECOGNITION OF REVENUE AND EXPENDITURE(a) The Profit & Loss Account reflects,

(i) The Earnings and Direct Operating Expenses (Voyage related variable costs) in respect of allFinished Voyages on accrual basis.

(ii) Standing Charges (Vessel related Fixed Costs) for all the vessels for the entire period of operationduring the year on accrual basis.

(iii) Income and Expenditure in respect of adhoc slot operations, the customs penalty claims, andcontainer detention charges which are accounted for on realisation.

(iv) In respect of slot sharing agreement with other shipping lines, the earnings and expenses on anaccrual basis based on voyages completed during the year.

(v) In respect of time charter arrangements, incomes and expenses are booked on accrual basis.

(b) The criteria followed for the purpose of determining the Finished Voyages are as under:-

(i) Passenger cum Cargo Vessels:- Disembarkation of passengers and discharge of cargo shouldbe completed on or before the last date of the financial year.

(ii) Cargo Vessels (other than those serviced by Feeder or Daughter Vessels):- Discharge of cargoshould be completed on or before the last date of the financial year.

(iii) Cargo vessels serviced by Daughter vessels:- The ultimate discharge of cargo by all daughtervessels should be completed on or before the last date of the financial year.

(iv) Cargo vessels serviced by feeder vessels: - The discharge of cargo at the transhipment port bythe mainline and feeder vessels should be completed on or before the last date of financial year.Transhipment port is the point of commencement and completion of both the services. Thecompletion of the mainline and feeder voyage is determined independent of each other.

(c) Unfinished Voyages:-

Any voyage, which does not fulfil the above mentioned criteria, is treated as an unfinished voyage.Collections made on account of freight and other charges in respect of such voyages are carriedforward as Unfinished Voyage Earnings. Direct operating expenses booked for such voyages includinghire and freight for vessels chartered-in are carried forward as Unfinished Voyage Expenses.

(d) Allocation of Container Expenses:-

Expenses relating to container activities such as stevedoring, stuffing and destuffing, transportation,etc. are identified with the relevant voyage and classified as direct operating expenses. Expensessuch as container hire, kobi charges, ground rent and handling of empty containers, etc., which arenot directly identifiable with any particular voyage are allocated to all voyages on the basis of unitsdays for each voyage. The sum so allocated to unfinished voyages is carried forward as UnfinishedVoyage Expenses.

3. FIXED ASSETS AND DEPRECIATIONa) Fixed Assets are stated at cost of acquisition less accumulated depreciation. Cost includes borrowing

cost, duties and other expenses relating to acquisition of assets.

SCHEDULE ‘24’

81

b) Depreciation on ships is charged on “Straight Line Method” at the rates prescribed in Schedule XIVto The Companies Act, 1956 except in cases of Offshore Vessels, which are written off over a periodof 12 years and second hand vessels, which are written off over their respective useful lives (not lessthan rates prescribed in Schedule XIV) as determined by Technical evaluation.

On additions made to the existing ships (including adjustments resulting on account of exchangerate fluctuation) depreciation is provided for the full year irrespective of the date of addition andbalance over the remaining useful life of the ships.

Additions made to the ships which have completed their useful life are fully depreciated in the year ofaddition. However, in respect of additions made on or after 1st April 2007 involving structural changesresulting in extension of useful life based on the technical evaluation, the depreciation is providedover the extended remaining useful life.

c) On assets other than ships, depreciation is charged on the “Written Down Value Method” as per therates prescribed in Schedule XIV to the Companies Act, 1956 for the full year irrespective of thedates of additions and no depreciation is being charged on assets sold/discarded during the year.

d) Computer software is amortised over the useful life not exceeding five years.

e) Assets costing individually Rs.5,000/- and below are fully depreciated in the year of addition.

f) The carrying amounts of assets are reviewed at each Balance Sheet date for impairment so as todetermine the provision for impairment loss, if any, required, or the reversal, if any, required ofimpairment loss recognised in previous periods.

4. CAPITALISATION OF EXPENSESInterest and other expenses, incurred till the date of first loading, on amounts borrowed for acquisition/improvement of assets, are charged to the cost of respective assets acquired/improved. In addition,operating costs including initial stores and spares of newly acquired ships till the port of first loading areadded to the cost of the respective ship.

5. RETIREMENT AND DISPOSAL OF SHIPS(a) Ships which have been retired from operations for eventual disposal are withdrawn from the fixed

assets and exhibited separately at book value in the Balance Sheet under “Ships Retired FromOperation”.

(b) Anticipated loss, if any, in the disposal of such ships is recognised immediately and provision for thesame is made in the accounts for the year in which these have been retired. For the purpose ofdetermining the loss, the sale price is recognised, if contract for sale is concluded. In other cases,assessment of the realisable value is made on the basis of the prevailing market conditions. Losseson such ships are provided for after taking into account the expenses such as customs duty, salestax / value added tax, etc. in connection with the disposal as well as estimated expenses in maintainingthe ship, till its sale. Wherever the exact amount under each item of expenses is not known, anassessment is done on the best estimate basis.

(c) Profits on sale of ships are accounted for only upon completion of sale thereof.

6. MAJOR REPAIRS AND RENEWALS OF SHIPS(i) Advances given towards repairs/renewals of capital/revenue nature, are adjusted only on completion

of the entire work duly certified by the concerned Authority.

(ii) Drydock repair expenditure are recognised in the Profit & Loss account to the extent work is done,based on technical evaluation.

82

7. VALUATION OF STOCKS

(a) Inventories are valued at lower of cost and net realisable value unless otherwise stated.

(b) Fuel oil purchases are initially booked as stock. The value of year-end stock is arrived at after chargingconsumption on ‘First-in-First-out’ method.

(c) As regards provisions purchased for victualling on board the ships, where catering is underdepartmental catering system, all purchases are treated as consumed.

(d) Corporation maintains godowns for keeping certain limited items of stores pending issue to theships. Stock of stores lying in the godowns at the year end are valued at lower of cost and netrealisable value.

(e) Store/Spares including paints, etc. are charged to revenue as consumed when directly issued toships. Items of Stores/Spares, which cannot be delivered immediately are shown under Stores/Sparesin Transit and are cleared on receiving acknowledgement from the ship. However, all items of Stores/Spares purchased within last 3 months of the financial year, for which acknowledgement are notreceived, are treated as stock and valued at lower of cost and net realizable value.

8. ACCOUNTING OF FOREIGN CURRENCY TRANSACTIONS

(a) All transactions during the year are booked at rates published in the last week of the precedingmonth in Financial Times, London.

(b) Liner freight is booked at rates referred to in (a) above relevant to the months in which the dates ofsailing fall.

(c) The year-end foreign currency balances other than in US Dollars appearing in the books of accountare converted into US Dollars at the rates published in Financial Times, London in the last week ofMarch and thereafter, the monetary assets and monetary liabilities as well as the Long Term Loansare converted into rupees at SBI Mean Rate prevailing at the end of the financial year.

(d) Exchange difference arising on repayment of liabilities and conversion of year-end foreign currencybalances pertaining to long term loans for acquiring ships/ownership containers/other assets andasset under construction is adjusted in the carrying cost of ships/ownership containers/other assetsand asset under construction.

(e) The exchange difference arising on revenue and other account except as stated under (d) above isadjusted in the Profit & Loss Account.

9. EMPLOYEE BENEFITS

(a) Liabilities towards provident fund are accounted for on accrual basis.

(b) For defined benefit plans, in case of shore staff, officers afloat, and crew on Company’s roster, thecost of providing benefits is determined using the projected unit credit method, with actuarial valuationsbeing carried out at each balance sheet date. Actuarial gains and losses are recognised in full in theprofit and loss account for the period in which they occur. The retirement benefit obligation recognisedin the balance sheet represents the present value of defined benefit obligation as reduced by the fairvalue of the plan assets. Any asset resulting from this calculation is limited to the present value ofavailable refunds and reduction in the future contribution to the plan.

(c) In case of crew on the general roster, gratuity, which is insignificant in value, is accounted on cashbasis.

83

10. INSURANCE, P&I AND OTHER CLAIMS

(a) Provision in respect of claims against the Corporation and covered by Insurance and P&I risks ismade as under:-

i. In respect of claims falling under Hull & Machinery Insurance, which are estimated to be abovethe deductible limit, to the extent of deductible limit.

ii. In case of Cargo claims, on the basis of the actual claims registered and/or paid pertaining tothe relevant year’s voyages as ascertained at the year-end as reduced by the amounts recoverablefrom the insurers.

(b) All types of claims settled and paid above the deductible limits are shown as recoverable from HullUnderwriters / P&I Clubs until these are finally accepted by them as per the conditions of insurancepolicy and/or P&I cover. Adjustments, if any of revenue nature are made after statement of claimsare received from the Average Adjusters.

(c) Claims made by the Corporation against other parties including ship repair yards, shipowners, shipcharterers, customs and others, etc. are accounted for on realisation, due to uncertainty in the amountsof their ultimate recovery.

11. INVESTMENTS

(a) Long Term Investments are stated at cost. Provision for diminution is made to recognize a decline,other than temporary, in the value of such investments.

(b) Current Investments are stated at lower of cost and fair value.

12. TAXES ON INCOME

In view of opting for Tonnage Tax scheme, provision for income tax liability is made as per special provisionsrelating to income of shipping companies under Income Tax Act, 1961 from financial year 2004-05.

13. LEASES

In respect of assets leased prior to 1st April 2001, lease rentals are accounted on accrual basis over theperiod of the lease.

Assets acquired from 1st April 2001, are accounted in accordance with AS-19 “Accounting for Leases”.

14. PROVISIONS

Provisions are recognised when the company has a present obligation as a result of past events, forwhich it is probable that an outflow of resources embodying economic benefits will be required to settlethe obligation and a reliable estimate of the amount can be made.

84

SCHEDULE ‘25’

NOTES ON ACCOUNTS

31.03.2009 31.03.2008Rupees Rupeesin lakhs in lakhs

1. Estimated amount of contractson capital account, remainingto be executed and hence notprovided for (Net of Advance paid) 599,790 467,254(As certified by the Management)

2. Contingent Liabilities not provided for:-

(i) Claim against the corporationnot acknowledged as debts -(1) Claim made by M/s. Chokhani International Ltd.towards dry dock expenses pending beforeHigh Court, Chennai 3,569 3,327

(2) Claim by National Institute of Oceanographytowards loss of ship and other incidental chargesdue to fire NIL 924

(3) Forfeiture of Earnest Money Deposit,Cargo Loss, Freight, Demurrage, Slot Payments,Fuel Cost, other operational claims, income tax andCustom duty disputed demand. 8,909 6,265(As certified by the Management)

(ii) Guarantees given by the Banks 7,070 5,655on behalf of the Corporation

(iii) Undertaking cum Indemnity given by 1,000 1,000Corporation

(iv) Cargo Claims covered by 480 638P&I Club

(v) Bonds/Undertakings given by the 2,789 19,097Corporation to Customs Authorities

(vi) (a) Corporate Guarantees/Undertakings- In respect of Joint Ventures Not ascertainable Not ascertainable

- Others 6,025 1,494

(vii) Liability towards NYSA USA Pension - NIL Not ascertainableExit from INDAMEX / IDX service -

3. Remuneration to whole time Directors

(a) Salaries and Allowances 77.36 49.41

(b) Contribution to Provident Fund 5.01 3.31

(c) Medical Expenses 10.68 4.15

(d) Monetary value of perquisites 11.54 9.17

In addition to above;The Corporation has made a provision for defined benefit of Rs. 45 lakhs (Previous year Rs. 10 lakhs)during the year.

85

4. RELATED PARTY DISCLOSURES:

Related Party disclosures, as required by AS - 18 “Related Party Disclosures” are given below:

(a) Names of related party entities with whom transactions were carried out during the year:

(i) Joint Venture Companies1. 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. SCI Forbes Ltd.

(ii) Key Management Personnel

Functional Directors1. Shri S. Hajara, CMD2. Shri B.K. Mandal3. Shri Kailash Gupta4. Shri U.C. Grover5. Shri. J.N. Das6. Shri K.S. Nair (w.e.f. 03-11-2008)

(b) The following transactions were carried out with related parties.

(i) Joint Venture Companies 2008-2009 2007-2008(Rs. in lakhs) (Rs. in lakhs)

1. Investments made during the year 6050 462. Dividends Received 209 1933. Interest Charged 1777 17974. Expenses Charged 18 105. Loans/Advances given / adj. during the year 4510 6926. Loans/Advances realised / adj. during the year 5099 48637. Receivables as at year end 26343 265898. Charter Hire payments NIL NIL9. Management and Accounting Fees 156 NIL

(ii) Key Management Personnel 2008-2009 2007-2008(Rs. in lakhs) (Rs. in lakhs)

1. Remuneration 93.05 56.872. Loans recovered during the year 1.28 0.993. Loan amounts due as at the end of the year 5.23 6.48

5. JOINT VENTURE INFORMATION:-Details of Joint Venture, as required by AS-27 “Financial Reporting of Interests in Joint Ventures” aregiven below:

i) Details of Joint Venture Interest

Name Description Country of Percentage Percentageof Interest Incorpo- of Interest of Interest

-ration As on As on31.03.09 31.03.08

1.

1. Irano Hind Shipping Company Ltd. Equity Shareholding Iran 49.00% 49.00%2. India LNG Transport Company (No.1) Ltd. Equity Shareholding Malta 29.08% 29.08%3. India LNG Transport Company (No.2) Ltd. Equity Shareholding Malta 29.08% 29.08%4. India LNG Transport Company (No.3) Ltd. Equity Shareholding Malta 26.00% 26.00%5. SCI Forbes Ltd. Equity Shareholding India 50.00% 50.00%

1.

86

ii) Corporation’s Interest in the Joint Venture

Name As on Assets Liabilities For the Income Expenditure(Rs. in (Rs. in period (Rs. in (Rs. inlakhs) lakhs) ended lakhs) lakhs)

1. Irano Hind Shipping 19-03-08 53104.99 22212.50 19.03.08 17795.48 10912.13Company Ltd.

2. India LNG Transport 31-12-08 26240.03 31952.03 31-12-08 3516.73 4063.29Company (No. 1) Ltd.

3. India LNG Transport 31-12-08 27880.44 32869.43 31-12-08 3852.29 3581.97Company (No. 2) Ltd.

4. India LNG Transport 31-12-07 12893.62 13579.82 31-12-07 - 57.80Company (No. 3) Ltd.

5. SCI Forbes Ltd. 31-03-08 14124.06 8528.24 31-03-08 1.96 111.26

The above figures are based on latest available audited accounts except the figures of SCI Forbes Ltd. whichare based on unaudited accounts.

6. EARNINGS PER SHARE:

As on 31.03.2009 As on 31.03.2008

a) Profit after tax (Rs. in lakhs) 94067 81390b) Weighted average number of Equity Shares (Nos) 423453645 423453645c) Basic & Diluted Earnings per Share (in Rs.) 22.21 19.22d) Nominal Value per Equity Share (in Rs.) 10.00 10.00

(i) The Corporation does not have any outstanding diluted potential equity shares. Consequently,the basic and diluted earnings per share of the Corporation remains the same.

(ii) During the year the Corporation has issued 141151215 fully paid up equity shares of Rs. 10/-each as bonus shares amounting to Rs. 1,41,15,12,150/- Accordingly the basic earnings pershare is calculated including the bonus shares. The basic earnings per share for previous financialyear has been restated after taking into account the bonus shares.

7. Prior year’s adjustments (Net) amounting to Rs. 367 lakhs (Cr.) [Previous year Rs. 2268 lakhs(Cr.)]includes income of Rs. 881 lakhs (Previous Year Rs. 2682 lakhs) and expenses Rs. 514 lakhs(Previous year Rs. 414 lakhs).The summary of income is as follows:

2008-2009 2007-2008(Rs. In lakhs) (Rs. In lakhs)

Freight (-) 557 1698Charter Hire (-) 14 (-) 168Demurrage 769 662Recovery of Container Related Costs 632 176Remuneration from managed vessels 46 (-) 3Currency Exchange Difference NIL NILInsurance NIL 317Interest - others 1 1Sundry receipts 1 (-) 1Others 3 NILService tax NIL NIL

TOTAL 881 2682

87

The summary of expenses is as follows:

2008-2009 2007-2008(Rs. In lakhs) (Rs. In lakhs)

Stevedoring 87 (-) 192Marine, Light & Canal Dues 24 602Brokerage & Commission 1 349Agency Fees 16 8Fuel Oil 41 707Wages, Bonus & Other Exp. - Floating Staff 4 (-) 3Stores, Repairs & Maintenance (-) 223 (-) 591Insurance & P&I 2 30Hire of Chartered Steamer 138 (-) 98Establishment Expenses (-) 2 25Sundry Steamer Charges 38 (-) 1Salaries - shore staff (-) 2 3Currency Exchange Difference (-) 128 (-) 3Service tax (-) 690 (-) 427Provision for OFF Hire 1289 NILInterest (-) 74 NILOthers (-) 7 5

TOTAL 514 414

8. Auditors’ Remuneration:

2008-2009 2007-2008(Rs. In lakhs) (Rs. in lakhs)

Audit Fees (including service tax) 24.26 24.72

Certification Work (incl. limited review fees) 22.97 # 20.22

Travelling & Out of Pocket Expenses 24.67 # 25.51

# excluding service tax

9. India LNG Transport Companies No. 1 & 2 Ltd. are two joint venture companies promoted by the corporationand three Japanese companies Vis. M/S Mitsui O.S.K.lines Ltd. (MOL), M/S Nippon Yusen KabushikiKaisha Ltd (NYK Lines) and M/S Kawasaki Kisen Kaisha Ltd (K Line) and M/S Qatar Shipping Company( Q Ship), Qatar. SCI and MOL are the largest shareholders, each holding 29.08% shares while NYKLine, K Line & Q Ship hold the rest. The Shares held by the Corporation and other partners in the two jointventure 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 LNGTransport Company No. 2 Ltd owns and operates one LNG Tanker SS Raahi.

As per the provisions of the Time Charter Agreement, transfer of know-how to the Corporation for onboard operation and management of the two LNG Tankers was successfully completed and SCI tookover the management of SS Raahi on 24.12.08 and SS Disha on 29.12.08. The entire operation andmanagement of the two companies was taken over by SCI from 1st January 2009 and it has received amanagement and accounting fee of US $ 313,166 (Rs. 156 lakhs) during the year.

88

India LNG Transport Company No. 3 Ltd. is a Joint Venture Company promoted by the corporation alongwith M/S Mitsui O.S.K. Line Ltd (MOL), M/S Nippon Yusen Kabushiki Kaisha Ltd (NYK Lines) and M/SKawasaki Kisen Kaisha Ltd (K Line), M/S Qatar Gas Transport Company Ltd. (QGTC) and M/s PetronetLNG Ltd. (PLL) to construct, own and operate one LNG Tanker of about 155,000 cbm, and is charteredunder a long-term Time Charter Agreement for 25 years. The tanker is currently under construction andwill be delivered by mid November 2009. The Shares held by the Corporation and other partners in thejoint venture Company have been pledged against loans provided by lender banks to the company.

Details of contribution to Joint Ventures

Name of the India LNG Transport India LNG Transport India LNG Transportcompany Co. No. 1 Ltd. Co. No. 2 Ltd. Co. No. 3 Ltd.

USD Rupees USD Rupees USD Rupees

Contribution 6,421 3,11,665 6,421 3,11,665 2,600 1,25,197towards Equity

Contribution towards 1,24,43,621 63,45,00,222 1,24,71,746 63,59,34,337 1,54,52,060 78,79,00,539Shareholders loan

As per the requirements under the Time Charter Agreement and in proportion to its shareholding, SCIassumed certain obligations towards Joint Venture Companies (India LNG Transport companies No.1,No.2 and No.3) including providing the Performance Bank Guarantee (PBG) to the charterer totalling toUSD 8.339 million (Rs.4,252.24 lakhs), which has been included under contingent liabilities in Note No.2(ii) of Schedule 25. However, it is expected that these obligations may not devolve upon SCI in thenormal circumstances on account of highly experienced Japanese LNG operators who are the partnersin the Joint Venture Companies. Corporate Guarantees / undertakings have also been given in respect ofloans taken by Joint Ventures which have been included under Contingent Liabilities in Note 2(vi) ofSchedule 25 and quantification of the same is not ascertainable.

10. Sethusamudram Corporation Ltd. (SCL), a Special Purpose Vehicle was incorporated on 06.12.2004 atChennai (for developing the Sethusamudram Channel Project) with Tuticorin Port Trust, Ennore PortLtd., Visakhapatnam Port Trust, Chennai Port Trust, Dredging Corporation of India Ltd., ShippingCorporation of India Ltd. and Paradip Port Trust as the shareholders. SCI participated for an investmentnot exceeding Rs.5,000 lakhs in the proposed project. SCI’s total contribution as on 31.03.2009 amountedto Rs. 5,000 lakhs (previous year Rs. 4,050 lakhs).

11. SCI Forbes Ltd, a Joint Venture Company (JVC) promoted by The Shipping Corporation of India Ltd(SCI), Forbes Gokak Ltd. & Sterling Investment Pvt. Ltd was incorporated in July 2006 with an objectiveof owning and operating chemical tankers which are under construction. The said tankers are expectedto be delivered from June 2009 onwards.

During the 2008-09, the share capital of SCI Forbes was revised so as to conform to the norms of debtequity ratio for raising funds for ship financing. The Authorised Share Capital is increased from Rs. 500lakhs to Rs 16000 lakhs. The paid-up share capital of Rs. 100 lakhs is increased to Rs.12200 lakhs byway of right issue in the ratio of 1:121 and accordingly SCI further contributed Rs. 6050 lakhs towardsequity contribution.

SCI Forbes has fully repaid outstanding shareholders loan aggregating to Rs. 5237 lakhs including interest.

89

12. The company has amounts due to suppliers under The Micro, Small and Medium Enterprise DevelopmentAct, 2006, (MSMED Act) as at 31-3-2009. The disclosure pursuant to the said Act is as under:

Particulars As on 31.03.09 As on 31.03.08(Rs. in lakhs) (Rs. In lakhs)

Principal amount due to suppliers under MSMED Act, 2006 211 152

Interest accrued and due to suppliers under MSMED Act, NIL NILon the above amount

Payment made to suppliers (other than interest) NIL NILbeyond the appointed day, during the year

Interest paid to suppliers under MSMED Act, NIL NIL(Other than Section 16)

Interest paid to suppliers under MSMED Act, (Section 16) NIL NIL

Interest due and payable to suppliers under MSMED Act, NIL NILfor payments already made

Interest accrued and remaining unpaid at the end NIL NILof the year to suppliers under MSMED Act.

The information has been given in respect of such vendors to the extent they could be identified as“Micro, Small and Medium” enterprises on the basis of information available with the company.

90

13. SEGMENT REPORTING:(Rs. in lakhs)

Sr. Particulars 2008-09 2007- 08

1. Segment Revenue

i) Liner Segment 82546 84736

ii) Bulk Segment 327101 288986

iii) Others 19044 11746

iv) Unallocated Revenue 221 200

Total 428912 385668

2. Segment Results

Profit/(Loss) before tax & interest

i) Liner Segment (-) 18723 (-) 9459

ii) Bulk Segment 98011 82230

iii) Others 5369 1370

Total 84657 74141

Less : Unallocated Expenditure (Net of income) 2 352

Add : Interest ( Net ) 20804 16605

Total Profit before tax 105459 90394

Segment Assets

Liner Segment 94459 63236

Bulk Segment 543041 456960

Others 36578 23879

Total 674078 544075

Unallocable Corporate Assets 332651 268118

Total 1006729 812193

Segment Liabilities

Liner Segment 12300 13609

Bulk Segment 65739 52057

Others 22128 19946

Total 100167 85612

Unallocable Corporate Liabilities 285718 163372

Total 385885 248984

Capital Expenditure during the year

Liner Segment 67788 12

Bulk Segment 77246 907

Others 998 2294

Total 146032 3213

Depreciation

Liner Segment 4189 2765

Bulk Segment 27192 25249

Others 1007 2304

Total 32388 30318

91

Notes :-1) Segment definitions - Liner segment includes break bulk and container transport. Bulk segment includes

tankers (both crude and product), dry bulk carriers, gas carriers and phosphoric acid carriers. Othersinclude offshore vessels, passenger vessels and services and ships managed on behalf of otherorganisations. Unallocable items and interest income / expenses are disclosed separately.

2) All assets/liabilities and revenue items are allocated vessel wise wherever possible. Assets/liabilities andrevenue items that cannot be allocated vessel wise are allocated on the basis of unit cum GRT method i.e.50% allocated on the basis of units and balance 50% on the basis of adjusted GRT. GRT is adjusted to onethird of GRT or 20000 GRT, whichever is more in case of vessels which are bigger than 20000 GRT.

3) The components of capital employed that cannot be directly identified are allocated on the basis of GRTmethod.

14. The Corporation has with effect from 1st April 2008 changed the following accounting policies:(a) During the year, the Corporation has exercised the option available vide Notification No. GSR 225(E)

dated 31st March 2009 issued by the Ministry of Corporate Affairs under section 211 (3C) of theCompanies Act, 1956 relating to Accounting Standard 11 “The Effect of Changes in Foreign ExchangeRates” and accordingly the exchange difference arising on repayment of liabilities and conversion ofyear-end foreign currency balances in respect of such long term loans relating to acquisition ofdepreciable capital assets arising out of transactions entered on or after 1st April 2004 has beenadjusted to the cost of the respective asset/ assets under construction which was hitherto recognisedin the Profit & Loss Account except to the extent that they were regarded as an adjustment to theinterest cost during the period of construction.Further, the exchange gain of Rs. 4286 lakhs recognised in Profit and Loss Account during theprevious financial year ended March 31, 2008 has been debited to the opening balance of GeneralReserve net of depreciation of Rs. 177 lakhs and credited to the cost of respective fixed assets andassets under construction amounting to Rs. 3637 lakhs and Rs. 472 lakhs respectively.Consequent to the change, the fixed assets, assets under construction, depreciation and other incomeare higher by Rs. 16633 lakhs, Rs. 6336 lakhs, Rs. 539 lakhs and Rs. 5643 lakhs respectively andGeneral Reserve and expenditure are lower by Rs. 4109 lakhs and Rs. 21,974 lakhs respectively.If the option provided under AS 11 revised issued by Ministry of Corporate Affairs vide NotificationNo. GSR 225(E) dated 31st March 2009, was not exercised the profit and the reserves would havebeen lower by Rs. 27078 lakhs.

(b) Hitherto, the dry dock repair expenditure was recognized only on completion of entire dry dock jobs.During the year, dry dock repair expenditure is recognized to the extent of work done based on technicalevaluation. As a result of this change in accounting policy, there is no impact on profit for the year.

15. Disclosures of Employee benefits as per Accounting Standard-15 “Employees benefits”, as definedthere in are given belowA) Description of type of employee benefits

The Company offers to its employees defined benefits plans in the form of Gratuity, leave encashmentand post retirement Medical SchemeThe details under the plan are as follows:

i Gratuity (a) Represents benefits to employee on thebasis of number of years of service renderedby employee. The employee is entitled toreceive the same on retirement or resignation.

(b) SCI has formed a trust for gratuity which isfunded by the Company on a regular basis.The assets of the trust have been consideredas plan assets.

ii. Leave Encashment Represents unavailed leave to the credit of theemployee and carried forward in accordancewith terms of agreement.

iii. Post Retirement Medical Benefit Scheme Represents benefits given to employeessubsequent to retirement on the happening ofany unforeseen event resulting in medical coststo the employee.

92

B) Movement in the net liability recognised in the balance sheet are as follows:(Rs. In Lakhs)

Particulars Gratuity Leave Encashment Post RetirementMedical Benefit Scheme

2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Status Funded Funded Unfunded Unfunded Unfunded Unfunded

At the beginning of the year 13508 14493 3928 3402 1982 1517

Current service cost 1268 1002 541 416 177 125

Interest Cost 1014 1136 302 289 165 136

Actuarial (gains) and losses (2972) (1677) 1087 320 279 295(including for prior years)

Benefits Paid (1286) (1446) (441) (499) (109) (91)

At the end of the year 11532 13508 5417 3928 2494 1982

C) Analysis of Percentage of defined Benefit obligation into funded and unfunded

Particulars 2008-09 2007-08

Total Amount of defined benefit obligation 19443 19417

Amount of funded Defined benefit obligation 11532 13507

Percentage of funded defined benefit obligation 59.31% 69.56%

Percentage of defined benefit obligation not funded 40.69% 30.44%

D) Movement in Fair Value of plan assets during the year (Rs. In Lakhs)

Particulars Gratuity Leave Encashment Post RetirementMedical Benefit Scheme

2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Opening value of fair value of plan assets 17290 17229 NIL NIL NIL NIL

Expected Return on plan assets 1374 1372 NIL NIL NIL NIL

Benefits Paid (1286) (1446) NIL NIL NIL NIL

Actuarial gain/(loss) on plan assets (69) 135 NIL NIL NIL NIL

Closing value of fair value of plan assets 17309 17290 NIL NIL NIL NIL

E) Reconciliation of the present value of defined obligation and fair value to the assets and liabilities recognisedin the balance sheet

(Rs. In Lakhs)

Particulars Gratuity Leave Encashment Post RetirementMedical Benefit Scheme

2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Present value of obligations at the 11532 13507 5417 3928 2494 1982end of the year

Less: Fair value of assets as the 17309 17291 NIL NIL NIL NILbalance sheet date

Net Liability/(Asset) disclosed in the (5777) (3784) 5417 3928 2494 1982balance sheet

93

F) Total Expense recognised in the profit and loss account (Rs. In Lakhs)

Particulars Gratuity Leave Encashment Post RetirementMedical Benefit Scheme

2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Current Service Cost 1268 1002 541 416 177 125

Interest Cost 1014 1136 302 289 165 136

Expected return on plan assets (1374) (1372) NIL NIL NIL NIL

Actuarial (gains) and losses (2972) (1677) 1087 320 279 295

Past Service Cost NIL NIL NIL NIL NIL NIL

Losses (gains) on curtailments and NIL NIL NIL NIL NIL NILsettlements

Benefits Paid* NIL NIL (441) (499) (109) (91)

Actuarial gains/loss on plan assets 69 (135) NIL NIL NIL NIL

Total charged to profit and loss (1995) (1046) 1489 526 512 465

* For gratuity, the benefits are paid by the trust and are not debited to the profit and loss of the Corporation.

G) Percentage of category of plan assets to fair value of plan assets (Rs. In Lakhs)

Particulars 2008- 09 2007- 08

Fair Value % of Total Fair Value % of Total

Investment in Government securities 6374 36.83% 5109 29.55%

Investment in Bonds 3612 20.87% 2773 16.04%

Investment in deposits including bank balances 6896 39.84% 8888 51.40%

Other Assets including accrued interest 427 2.46% 520 3.01%

Total 17309 17290

(i) None of the financial assets of SCI have been considered in the fair value of plan assets.(ii) The expected rate of return on plan assets have been estimated on the basis of actual returns of the

trust in the past years. The assets of the trust are in the nature of investments in securities, fixeddeposits, Interest accrued, and balances in current accounts with Bank. The securities of trust havean effect on the fair value of plan assets as the value of the securities vary with the changes in themarket interest rates.

(iii) Actual return on plan assets: Rs. 1304 Lakhs (Previous Year Rs. 1507 lakhs)

H) Principal actuarial assumptions at the balance sheet date:

Particulars Gratuity Leave Encashment Post RetirementMedical Benefit Scheme

2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Discount rate at 31 March 7.13% 8.09% 7.13% 8.09% 7.13% 8.09%

Expected return on plan assets at 31 March 8.00% 8.00% NIL NIL NIL NIL

Future salary increases 7.50% 7.50% 7.50% 6.00% NA NA

Moratlity Rate LIC LIC LIC LIC LIC LIC1994-96 1994-96 1994-96 1994-96 1994-96 1994-96

Medical cost incremental trend rates 16% 16%

Normal Retirement Age 60 Years 60 Years 60 Years 60 Years 60 Years 60 Years

95

I) Effect of an increase of one percentage point and the effect of a decrease of one percentage point inthe assumed medical cost trend rates on:(i) the aggregate of the current service cost and interest cost components of net periodic post-employmentmedical costs; and (ii) the accumulated post-employment benefit obligation for medical costs.

Post Retirement Medical Benefit Scheme

Aggregate of the current Accumulated post-employmentservice cost and interest cost benefit obligation for medical costs

Particulars 2008-09 2007-08 2008-09 2007-08

Effect of one percentage up 10 7 211 165

Effect of one percentage down (9) (7) (193) (151)

J) The estimates of future salary increases, considered in the actuarial valuation, takes into account inflation,security, promotion and other relevant factors.

K) The Guidance on implementing AS 15, Employee benefits (revised 2005) issued by Accounting StandardBoard (ASB) states benefit involving employer established provident funds, which requires interest shortfallsto be recompensed are to be considered as defined benefit plans. Pending the issuance of the guidancenote from the Actuarial Society of India, the Company’s actuary has expressed an inability to reliablymeasure provident fund liabilities. Accordingly the company is unable to exhibit the related information.However, such interest shortfall has been recompensed by the company upto the current period onaccrual basis.

16. Sundry Creditors, Debtors, Loans & Advances and Deposits are subject to confirmation and reconciliation.During the year, letters for confirmation of balances have been sent to various parties by the Corporationand same are under reconciliation wherever replies have been received. The management, however,does not expect any material changes.

17. Service tax department has issued show cause notices to the corporation proposing to impose levy ofservice tax aggregating to Rs. 26,78,75,717/- for the period from 01/10/2002 to 31/12/2007 andRs. 7,54,22,525/- for the period from 01/01/2008 to 31/12/2008 and also interest and penalty alleging thatcorporation has provided storage & warehousing services to Oil & Natural Gas Corporation (ONGC) inrespect of vessels given to ONGC under Time Charter arrangement.

According to the management, service tax is not leviable for such chartering arrangement under thecategory of “Storage and Warehousing Service” and therefore SCI has challenged the applicability ofservice tax and has not accepted any liability towards service tax on this account.

18. Borrowing cost and Interest capitalised during the year is Rs. 2888 lakhs (Previous year Rs.5248 lakhs).

19. (i) The Corporation has obtained exemption from complying with Para 4 (D) (a), (b), (c) & (e) of Part IIof Schedule VI to the Companies Act,1956.

(ii) Remittance of dividends in foreign currency Rs. NIL (Previous year Rs. Nil).

20. Sales proceeds received by the Corporation in excess of the original cost in respect of sale of vesselduring the year amounting to Rs. 750 lakhs (net of tax) (Previous Year Rs.282 lakhs (net of tax) on saleof other fixed assets) have been appropriated out of Profit and Loss Account and transferred to CapitalReserve.

21. Loans and Advances include an amount of Rs. 5.23 lakhs (Previous year Rs 6.48 lakhs) due from wholetime directors - maximum amount due during the year Rs. 6.51 lakhs (Previous year Rs.6.48 lakhs).

22. During the year, the Corporation has reviewed its fixed assets for impairment loss as required by AccountingStandards 28 - “Impairment of Assets” In the opinion of management no provision for impairment isconsidered necessary.

23. The figures of previous year have been regrouped or rearranged wherever necessary/practicable toconform to current year’s presentation. Further the figures are rounded off to the nearest lakh rupees.

96

I. Registration DetailsState Code 1 1 Registration No. 8 0 3 3

Balance Sheet Date 3 1 0 3 2 0 0 9

Day Month Year

II. Capital Raised During The Year (Amount in Rs.Lakhs)Public Issue Rights Issue

N I L N I L

Bonus Issue Private Placement

1 4 1 1 5 N I L

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Lakhs)Total Liabilities Total Assets

1 0 0 6 7 7 7 1 0 0 6 7 7 7

Sources of FundsShare Capital Reserves & Surplus

4 2 3 4 5 5 7 8 5 0 0

Secured Loans Unsecured Loans

2 4 7 1 6 7 N I L

Application of Funds InvestmentsNet Fixed Assets

5 9 2 7 7 8 1 1 1 4 6

Net Current Assets Misc. Expenditure

2 6 4 0 8 - -

Accumulated Losses

N I L

IV. Performance of The Company (Amount in Rs.Lakhs)Turnover Total Expenditure

4 5 6 4 4 9 3 5 0 9 9 0

Profit/(Loss) Before Tax Profit/(Loss) After Tax

1 0 5 4 5 9 9 4 0 6 7

Earnings Per Share Rs. Dividend Rate %

2 2 . 2 1 6 5

V. Generic Names of the Three Principal Services of the Company

Item Code No. N I L

Product Description N I L

Note:This is a Shipping Company.

ADDITIONAL INFORMATION UNDER PART IV OF SCHEDULE VI OF THECOMPANIES ACT, 1956.

As per our report of even date attached hereto.

For S BHANDARI & CO., For KHANDELWAL JAIN & CO., For and on behalf of the Board of Directors,Chartered Accountants Chartered Accountants

(P.D. Baid) (Narendra Jain) Dipankar Haldar B K Mandal S. HajaraPartner Partner SVP (LA) & Director Chairman &Membership No. 72625 Membership No. 48725 Company Secretary (Finance) Managing Director

Mumbai, Mumbai,Dated the 15th June, 2009 Dated the 15th June, 2009

97

2008-09 2007-08Rs. in lakhs Rs. in lakhs

A) CASH FLOW FROM OPERATING ACTIVITIESNet profit before Tax & extraordinary items 105,459 90,394ADJUSTMENTS FOR:Depreciation 32,388 30,318Interest Income (27,271) (22,768)Interest paid 6,467 6,163Dividend Received (209) (193)Surplus on sale of Fixed Assets (other than ships) (17) (349)Surplus on Sale of Ships (3,724) 0

7,634 13,171

Operating profit before working capital changes (i) 113,093 103,565

Adjustments for : Increase in working capital(a) Trade & other receivables (10,876) (428)(b) Inventories 2,673 (1,622)(c) Trade payables 16,178 (2,072)

7,975 (4,122)

Cash generated from operations (ii) 121,068 99,443

Tax paid (Net of Refunds) (10,702) (10,216)

Net Cash From Operating Activities (A) 110,366 89,227

B) CASH FLOW FROM INVESTING ACTIVITIESPurchase / Acquisition of Fixed Assets (159,404) (127,677)Investment with Public Financial Institutions 0 (16,500)Receipts from Maturity of Investments 500 0Sale of Fixed Assets 3,582 366Income from Investments 1,986 1,990Interest Received 25,494 20,971Sale / Purchase of Investments (7,000) (1,746)Advances to Joint Venture Companies 707 4,149

Net cash used in investing activities (B) (134,135) (118,447)

C) CASH FLOW FROM FINANCING ACTIVITIESLoans Borrowed (Net of Repayments) 101,747 20,949Dividends Paid (Incl. Dividend Tax) (13,227) (38,836)Interest Charges (6,467) (6,163)Staff Welfare Activities (121) (79)

Net cash flow from financing activities (C) 81,932 (24,129)

NET INCREASE / (DECREASE) IN CASH &CASH EQUIVALENTS (A+B+C) 58,163 (53,349)Cash & cash equivalents at the Begining of the Year 209,120 262,469Cash & cash equivalents at the end of the Year. 267,283 209,120

CASH FLOW STATEMENT

As per our report of even date attached hereto.

For S BHANDARI & CO., For KHANDELWAL JAIN & CO., For and on behalf of the Board of Directors,Chartered Accountants Chartered Accountants

(P.D. Baid) (Narendra Jain) Dipankar Haldar B K Mandal S. HajaraPartner Partner SVP (LA) & Director Chairman &Membership No. 72625 Membership No. 48725 Company Secretary (Finance) Managing Director

Mumbai, Mumbai,Dated the 15th June, 2009 Dated the 15th June, 2009

98

Aframax A Tanker measuring between 80,000-1,20,000 MT in DWT terms and primarilyused for the carriage of crude oil

APM Administered Price Mechanism

BDI Baltic Dry Index

BH Bombay High

BHMI Baltic Handymax Index

Bpd Barrels per day

CSL Cochin Shipyard Ltd.

DWT Dead Weight Ton

DSME Daewoo Shipbuilding & Marine Engineering Co. Ltd.

FOB Free on Board

GRT Gross Registered Tonnage

Handymax A bulk carrier vessel of 35,000 to 55,000 DWT

Handysize A bulk carier vessel of 10,000 to 35,000 DWT

HHI Hyundai Heavy Industries Ltd.

ISM International Safety Management

JVC Joint Venture Company

K-Line Kawasaki Kisen Kaisha Ltd.

MOL Mitsui O.S.K. Lines Ltd.

MTI Maritime Training Institute

NSICT Nhava Sheva International Container Terminal

NYK Nippon Yusen Kabushiki Kaisha

ODC Over Dimensional Cargoes

OSV Offshore Supply Vessels

Panamax A vessel of 55,000 to 80,000 DWT whose dimensions enable her to pass throughthe Panama Canal

SBM Single Buoy Mooring

SCP Special Component Plan

TMEs Trainee Marine Engineers

TNOCs Trainee Navigating Officer Cadets

ULCC Ultra Large Crude Carrier (320,000 dwt and above)

VLCC Very Large Crude Carrier (200,000 to 319,000 DWT)

WAG West Asia Gulf

GLOSSARY

99

100

(A Government of India Enterprise)Regd. Office : Shipping House, 245, Madame Cama Road, Mumbai - 400 021.

T r a n s p o r t i n g G o o d s . T r a n s f o r m i n g L i v e s .