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Notes to Accounts of GOL Offshore Ltd.

Mar 31, 2015

1 CORPORATE INFORMATION

GOL Offshore Limited is a Public Limited Company whose equity shares are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited.The Company is India's prominent integrated offshore oilfield services provider offering a broad spectrum of services to upstream oil and gas producers to carry out offshore exploration and production (E&P) activities. The Company operates Drilling Rigs, Offshore Support Vessels and undertakes Marine Construction Projects and Services.

NOTE 2 : DEFERRED TAX LIABILITIES (NET)

Upon the introduction of Section 115 V in the Income Tax Act, 1961, the Company has opted for computation of its income from shipping activities under the Tonnage Tax Scheme. Thus income from the business of operating ships is assessed on the basis of deemed Tonnage Income of the Company and no deferred tax is applicable to this income as there is no timing differences.

NOTE 3: Investment and unsecured loan to KEI-RSOS Maritime Limited

As on March 31, 2015, the Company has long term, strategic investment in the equity/redeemable preference shares of it's wholly owned subsidiary company KEI-RSOS Maritime Limited amounting to Rs.21,374 Lakhs (Previous Year Rs.18,863 Lakhs). A further sum of receivables of Rs.3, 399 Lakhs (Previous Year Rs. 2,363 Lakhs) and a loan amount of Rs. 3,502 Lakhs (Previous Year Rs.3, 502 Lakhs) are also due from them.

The Company has also issued bank guarantee to Indian Bank amounting to Rs.14,168 Lakhs (Previous year Rs.14,168 lakhs) against which outstanding facilities as on March 31, 2015 amount to Rs.3,656 Lakhs (previous year Rs.4,719 Lakhs).

As auditors had in their report for the financial year ended 31.03.2012 onwards expressed their doubts about the realization of these amounts, due to continuous losses suffered by the subsidiary resulting in its net worth becoming negative, QARC of SEBI vide its Order dated 27th April,15 has directed Restatement of financial results for Financial year 2012-13 and 2013-14 for giving effect to the impact of the audit qualification, and the effect of the restated adjustments to be carried out in the annual accounts of the financial year 2014-15 as prior period item.

The Company is in the process of filing appeal against the said order, and believes that, the said investment being strategic and long term in nature with a long term out look, no provision is required to be made as the management is confident of turning around this company into profit. Hence no reinstatement has been carried out presently, pending final decision from the Securities Appellate Tribunal.

NOTE 4: Share Capital

The allotment of 63,380 equity shares (previous year 63,380 equity shares) is under abeyance. These shares will be allotted upon the receipt of the order of the Special Court established under the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992 or such other authority as may be directed, from time to time. Transfer of an additional 10,153 equity shares (previous year 10,153 equity shares) have been kept in abeyance pursuant to Section 206A of the Companies Act, 1956 as their title is under Legal dispute. These shares will be allotted as and when the dispute regarding their title is resolved. Accordingly, in aggregate, 73,533 (63,380 10,153) equity shares (Previous year 73,533 equity shares) have been kept in abeyance. The unpaid dividend of Rs.2.81 Lakhs on these equity shares has not been transferred to Investor Education and Protection Fund in view of the legal dispute.

NOTE 5: Hedge Reserve

a) The Company has borrowings and the revenue streams in foreign currency, which provide an inherent hedge against foreign currency exchange rate fluctuations. Accordingly, the Company has adopted, with regard to recognition of exchange differences arising on translation of foreign currency borrowings, an appropriate hedge accounting policy by applying the principles set out in AS-30 Financial Instruments: Recognition and Measurement. The objective of adopting Hedge Accounting is to ensure that gain or loss on the hedging instrument is recognized in the Profit and Loss Statement in the same period when Hedged items affect profit or loss. The Company has, w.e.f. 1st April 2008 designated borrowings in foreign currency as Hedge instrument to hedge its foreign currency risk of its firm commitments and highly probable forecast transactions ( of revenue streams) to be accounted as cash flow hedge.

b) The Company recognises Mark to Market losses in respect of derivative instruments like interest rate swaps as per the principles enunciated in Accounting Standard (AS) 30 "Financial Instruments:Recognition and Measurement" and in accordance with the recommendation of the Institute of Chartered Accountants of India. Accordingly, Mark to market (MTM) losses in respect of derivative instruments like Interest Rate Swaps have been accounted in accordance with principles of hedge accounting and the MTM losses on such derivative instruments are recorded in the Hedge reserve account instead of recognising the same in the Profit and Loss Statement. As at March 31, 2015, MTM gain on oustanding Interest Rate Swaps and unrealised exchange gain on foreign currency loans referred to above amounting to Rs..9,103 lakhs (Previous Year loss Rs. 9,008 lakhs) has been recognised in Hedge Reserves instead of crediting the same to the Profit and Loss Statement.

c) Consequent to Recall / Recovery proceedings of certain loans by the Lenders, the Company has discontinued hedge accounting prospectively in respect of the said recalled loans from the date of recall notice. Accordingly, foreign exchange fluctuation from the date of recall is recognised in Profit & Loss Statement. The provision for exchange fluctuation made during the year and in earlier year of Rs. 4,374 lakhs on such recalled loan and installments which have fallen due, has been netted off against the Hedge Reserve at the year end. The cumulative foreign exchange fluctuation upto the date of recall will be recognized in the Profit & Loss Statement when the corresponding hedged item (forecasted exports) affects the Profit & Loss Statement.

NOTE 6 : Unsecured Loans

The 7.25% Unsecured Foreign Currency Convertible Bonds with an outstanding amount of USD 40 mio due in the previous year were repaid in full during the year after obtaining requisite approval from the Reserve Bank of India. The interest upto the date of actual redemption and net exchange loss, in this regard, have been fully recognised in the Profit and Loss Statement.

NOTE 7: Interest on loan given to subsidiary Great Offshore (International) Limited

Interest recovered on loan given to subsidiary Great Offshore (International) Limited Rs. 3,837 lakhs (Previous Year Rs. 3,808 lakhs) has been netted out against the interest expense on specific loans and net interest is disclosed in the Profit and Loss Statement. Interest Receivable upto March 31, 2015 is Rs. 5,800 lakhs (Previous Year Rs. 1,963 lakhs)

NOTE 8: Investment in and Unsecured Loan to Great Offshore (International) Limited

The company has an investment of Rs. 155 Lakhs and has also granted unsecured loan amounting to Rs..53,765 lakhs (Previous Year Rs.. 56,609 lakhs) to its wholly owned overseas subsidiary company Great Offshore (International) Limited which in turn has invested/advanced the said amount to its step down overseas subsidiaries/partnership firms for purchase of vessels with higher capacities and latest technologies from Bharati Shipyard Limited(BSL). In addition the Company has provided Corporate Guarantee aggregating to Rs. 46,815 Lakhs to the lenders of the said subsidiary which have been invoked. The investment in this subsidiary is considered strategic and long term in nature. That Company is in discussions with the lenders for settlement of dues and restoration of initial repayment terms. BSL is currently in negotiation with an Asset Reconstruction Company(ARC) who has taken over a major part of its debts for restarting the vessel construction activity. The vessels of the company under construction at BSL will be delivered thereafter.In the opinion of the management, no provision is required for investments, unsecured loan and invoked corporate guarantees as that company is expected to turn around in the long term on improvement of market conditions and delivery of vessels under construction.

NOTE 9: Inventories

Closing stock of stores and spares on board the vessels amounting to Rs. 5,136 lakhs (Previous Year Rs. 4,671 lakhs) was determined by the management on the basis of inventory system implemented by the company. The company has in place preset cyclical programme for physical verification of inventory on board the vessels. Auditors have relied upon the management certification for the valuation of stock of stores and spares on board the vessels.

NOTE 10: Capital Work In Progress:

Capital Work in Progress of Rs. 94,192 lakhs including Rs. 11,965 lakhs being interest and indirect expenses capitalised as appropriate in earlier years relate to vessels under construction with various shipyards where there was no progress during the year and is delayed much beyond the original dates of completion. The unpaid liability on this account is Rs. 30,006 lakhs.

During the year, the company has made efforts to revive the progress of construction of the vessels, but it was affected due to unavailability of adequate funds, and also due to financial difficulties and consequent non-operation of certain shipyards. However, alternate options are being actively pursued and the management is hopeful of early resolution of the matter.

The management of the Company believes that the carrying value of CWIP as reflected in the financial statements is fair and reasonable and will have a value on realisation which is not less than the carrying value and hence no impairment provision is considered necessary.

NOTE 11: Going Concern

As stated in Note Nos. 5, 9 and 11, the Company has not been able to service a substantial part of its borrowings on the original due dates. In respect of Loans, Corporate Guarantees and dues including instances where recovery proceedings have been initiated as stated in other notes the Company is making all efforts for early settlement by taking various steps including: i) more aggressive employment of its vessels and resources, ii) disposal of some assets, iii) settlement of significant current dues and restoration of initial repayment terms iv) entering into corrective action plan as approved by Joint Lenders Forum. Some of its arrear dues could be settled during the year due to these efforts. The management is very hopeful of arriving at full settlement over a period of two years. The Company is also able to earn operating profit margin by carrying on its business in the normal course. Hence these accounts have been prepared on going concern assumption which is considered appropriate.

NOTE 12: Dues to Micro & Small Enterprises

According to information available with the Company regarding the status of the suppliers, as defined under The Micro, Small and Medium Enterprises Development Act, 2006, amount overdue as on 31st March, 2015 to the Micro, Small and Medium enterprises on account of principal amount, together with interest for delayed payment under the Act, is Rs. 199 lakhs (Previous Year Rs. 23 lakhs) .

NOTE 13 The balances of Trade Receivables, Trade Payables and Loans & Advances are subject to confirmation.

NOTE 14 Disclosures pursuant to Accounting Standard (AS) 15 (revised) "Employee Benefits"

(a) Effective April 1, 2007 the Company adopted Accounting Standars 15 (Revised 2005) on "Employee Benefits" issued by ICAI.

(b) The Company has recognised the following amounts in the Profit and Loss Statement for the year:

NOTE 15 : Segment reporting

The Company is mainly engaged in offshore business and there are no separate reportable segments as per Accounting Standards (AS) 17.

NOTE 16 : Related Party Disclosures

(i) List of Related Parties

(a) Parties where control exists :

Subsidiary Companies :

Deep Water Services (India) Ltd

GOL Ship Repairs Ltd (formerly Great Offshore Ship Repairs Ltd.)

KEI - RSOS Maritime Ltd

GOL Salvage Services Ltd (formerly Great Offshore Salvage Services Limited)

Great Offshore ( International) Ltd

GOL Offshore Fujairah L.L.C. - FZE (formerly Great Offshore Fujairah L.L.C - FZC)

Deep Water Services (International) Ltd

Norwegian Shipping I Ltd

Norwegian Shipping II Ltd

Great Offshore International (Malaysia) Ltd.

Great Offshore International Manning & Ship Management (Lubuan) Ltd.

Glory Shipping Pvt Ltd

Great Offshore Germany GmbH

SGB Verwaltungs GmbH

SGB Emssun GmbH & Co. KG

SGB Emssky GmbH & Co. KG

SGB Emsstar GmbH & Co. KG

GOL Offshore Marshall Islands Limited

(b) Other related parties with whom transactions have taken place during the year :

1 Joint Venture :

United Helicharters Pvt Ltd.

2 Key Management Personnel :

Mr. P.C.Kapoor - Executive Director*

Mr. Vijay Kumar -Executive Director*

Mr. Navin Joshi - Company Secretary & Chief Compliance Officer

* Mr. P.C. Kapoor and Mr. Vijay Kumar ceased to be Executive Director w.e.f 30th April 2015 upon expiry of the terms of their appointment

3 Enterprises over which Key Management Personnel Exercise Significant Influence :

Bharati Shipyard Limited

Pinky Shipyard Pvt Ltd

Bharati Maritime Services Pvt Ltd

Harsha Infrastructure Pvt Ltd

Sea Splice Shipping Pvt Ltd

Port Side Shipping Pvt Ltd

Dhanshree Properties Pvt Ltd

Natural Power Ventures Pvt Ltd

4 Relatives of Key Managerial Personnel

Ms. Sukriti Kumar

NOTE 17 : Interest in Joint Venture

The Company has a joint venture interest in United Helicharters Pvt. Ltd. (a company incorporated in India) and its proportionate share in the assets, liabilities, income and expenses of the jointly controlled entity, based on the unaudited management accounts drawn up to March 31, 2015, is as under :

NOTE 18: Consequent to the application of schedule II of the Companies Act,2013, with effect from 01.04.2014, the depreciation has been charged based on the useful life as estimated by the manage- ment/ consultant in earlier years. There is no material impact on Profit and Loss Statement arising from this change.

NOTE 19: Previous year's figures have been regrouped/recasted/restated wherever necessary.


Mar 31, 2014

1 CORPORATE INFORMATION

GOL Offshore Limited is Public Limited Company whose equity shares are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Foreign Currency Convertible Bonds (FCCBs) issued by the Company are listed on Singapore Exchange Securities Trading Limited (SGX - ST). The Company is India''s prominent integrated offshore oilfield services provider offering a broad spectrum of services to upstream oil and gas producers to carry out offshore exploration and production (E&P) activities. The Company operates Drilling Rigs, Offshore Support Vessels and undertakes Marine Construction Projects and Services.

2 Contingent Liabilities and Commitments

Rs in Lakhs

Sr. Particulars No. As at March As at March 31, 2014 31,2013 I Contigent Liabilities (A) Claims against the Company/disputed dues not acknowledged as debts

Customs Duty on Tug 341 306

Sales Tax and Service Tax demand on Charter hire payment 363 218

Income Tax Demand 1,260 -

Possible obligation in respect of matters under arbitration 1,597 1,518

Other disputes claims 578 -

(B) Guarantees i Guarantees Guarantees given by bank including performance and bid bond, counter guaranteed by the Company 12,720 5,429 ii Corporate Guarantee given to Customs Department 583 583 iii Corporate Guarantee given to bank on behalf of subsidiary 72,938 76,886 (C) Other Money for which the Company is Contingently Liable i Letters of Credit Outstanding - 9 II Commitments Estimated amount of Contracts remaining to be executed on Capital account and not provided for 65,801 85,950

3 As on March 31, 2014 , the company has investment in the equity / redeemable preference shares of its wholly owned subsidiary company KEI - RSOS Maritime Limited amounting to Rs 18,863 lakhs (previous year Mrs 18,863 lakhs) and also a loan outstanding amounting to Mrs 3,502 lakhs (previous year Mrs 3,331 lakhs) . The company has also issued bank guarantees to Indian Bank amounting to Rs 14,168 lakhs (previous year Rs 14,168 lakhs) against which outstanding facilities as on March 31, 2014 amount to Rs 4,719 lakhs (previous year Rs 6,327 lakhs). The said investment is strategic and long term in nature. The management is confident of turning around the company and as such, in the opinion of the management, no provision is considered necessary for depletion, if any, in value of investment and loans and advances given by the company due to losses suffered by that company.

4 Share Capital

The allotment of 63,380 equity shares (Previous year 63,380 equity shares) is under abeyance. These shares will be allotted upon the receipt of the order of the Special Court established un- der the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992 or such oth- er authority as may be directed, from time to time. Transfers of an additional 10,153 equity shares (previous year 10,153 equity shares) have been kept in abeyance pursuant to Section 206A of the Com- panies Act, 1956 as their title is under legal dispute. These shares will be allotted as and when the dis- pute regarding their title is resolved. Accordingly in aggregate 73,533 (63,380 10,153) equity shares ( Previous year 73,533 equity shares) have been kept in abeyance.

5 Hedge Reserve

a) The Company has borrowings and the revenue streams in foreign currency, which provide an inherent hedge against foreign currency exchange rate fluctuations. Accordingly, the Company has adopted its accounting policy with regard to recognition of exchange differences arising on translation of foreign currency borrowings by following an appropriate hedge accounting policy and applying the principle set out in AS-30 Financial Instruments: Recognition and Measurement. The objective of adopting Hedge Accounting is to ensure that gain or loss on the hedging instrument is recognised in the Profit and Loss Statement in the same period when Hedge items affects profit or loss. The Company has w.e.f. 1st April 2008 designated borrowings in foreign currency as Hedge instrument to hedge its foreign currency risk of its firm commitments and highly probable forecast transactions ( of revenue streams) to be accounted as cash flow hedge. During the current year, the net incremental exchange difference on foreign currency borrowings and on rupee loans hedged in USD (referred in (b) below) being derivative instruments aggregating to Rs. 9,008 Lakhs(PY Rs.1,987 Lakhs) has been debited to Hedge Reserve Account, and cumulative amount as on 31st March 2014 is Debit of Rs. 36,493 Lakhs(PY Debit of Rs.27,485 Lakhs).

b) The company recognises Mark to Market losses in respect of derivatives instruments like interest rate swaps as per the principles enunciated in Accounting Standard (AS)30 "Financial Instruments: Recogni- tion and Measurement" and in accordance with the recommendation of the Institute of Chartered Ac- countants of India. Accordingly Mark to market (MTM) losses in respect of derivatives instruments like Interest Rate Swaps have been accounted in accordance with principle of hedge accounting and the MTM losses on such derivative instruments is recorded in the Hedge reserve account instead of recog- nising the same in the Profit and Loss Statement. Accordingly as at March 31, 2014, MTM loss on out- standing Interest Rate Swaps amounting to Rs. 12,491 Lakhs (Previous Year Rs. 11, 422 Lakhs) has been recognised in hedge reserves instead of debiting the same to the Profit and Loss Statement.

6 Unsecured Loans

This includes 400 nos 7.25% Unsecured Foreign Currency Bonds of USD 100,000 each aggregating to US $ 40,000,000 listed on the Singapore Exchange Securities Trading Limited (SGX - ST) which were due for redemption in October, 2012. Since these could not be repaid on the due date and all efforts at extending the due date did not get the requisite approvals, the same together with applicable interest (Including penal inter- est) has been provided for and since paid in full to the extent approval has been received from the Reserve Bank of India (RBI). The net exchange loss in this regard upto the Balance Sheet date has also been recognised in the Profit and Loss Statement.

7 Interest on loan given to subsidiary Great Offshore (International) Limited

Interest recovered on loan given to subsidiary Great Offshore (International) Limited Mrs 3,808 lakhs (Previous Year Rs 3,932 lakhs) has been netted out against the interest expense on other loans and net interest is disclosed in the Profit and Loss Statement. Interest Receivable upto March 31, 2014 is Rs 1,963 lakhs (Previous Year Rs 2,748 lakhs)

8 Unsecured Loan to Great Offshore (International) Limited

The company has granted unsecured loan amounting to Rs 56,609 lakhs ( Previous Year Rs52,885 lakhs) to its wholly owned overseas subsidiary company Great Offshore (International) Limited which in turn has invested/ advanced the said amount to its step down overseas subsidiaries/partnership firms for purchase of vessels with higher capacities and latest technologies from Bharati Shipyard Limited, the promoters of the Company. All such vessels procured from Bharati Shipyard Limited are to be delivered over the next 12 to 24 months. Recoverability of aforesaid loan and interest thereon is dependent upon timely delivery of vessels by Bharati Shipyard Limited. In the opinion of the management, the said advances are fully recoverable.

9 Inventories

Closing stock of stores and spares on board the vessels amounting to Rs 4,671 lakhs (Previous Year Rs 4,389 lakhs) was determined by the management on the basis of inventory system implemented by the company. The company has in place preset cyclical programme for physical verification of inventory on board the ves- sels. Auditors have relied upon the management certification for the valuation of stock of stores and spares on board the vessels.

10 Capital Work In Progress:

Capital Work in Progress includes Rs 116,801 Lakhs relating to vessels under construction with various shipyards where the progress is very slow and is delayed much beyond the original dates of completion. The unpaid liability on this account is Rs 52,114 Lakhs. In view of the slow progress, interest and overhead expenses relating to such assets are not being capitalized where considered appropriate.

11 Going Concern

As stated in note nos. 5, 11 and 33 the company has not been able to service some of its borrowings on the original due dates. In respect of FCCBs, the company has since repaid the entire amount of principal and interest to the extent approved by the RBI and has thus made significant progress in settlement of its overdues. In respect of other loans and dues including instances where recovery proceedings have been initiated, the company is making all efforts for early settlement by taking various steps including i) more aggressive employment of its vessels and resources, ii) disposal of some assets including operating assets,iii) discharge of significant current liabilities.

The management is attempting to achieve this in the ensuing financial year. The company is also earning reasonable operating margins by carrying on its business in the normal course. Hence these accounts have been prepared on going concern assumption which is considered appropriate.

12 Current Liabilities

According to information available with the Company regarding the status of the suppliers, as defined under The Micro, Small and Medium Enterprises Development Act, 2006, amount overdue as on 31st March, 2014 to the Micro, Small and Medium enterprises on account of principal amount, together with interest for delayed payment under the Act, is Rs 23 lakhs (Previous Year Rs 28 lakhs).

13 The balances of Trade Receivables,Trade Payables and Loans & Advances are subject to confirmation.

(i) Basis used to determine expected rate of return on assets:

Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio since these are generally held to maturity, along with the estimated incremental investments to be made during the year.

(ii)General description of significant defined plans:

Gratuity Plan:

Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provisions of the Payment of Gratuity Act or as per the Company''s Scheme whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn base salary.

Leave Encashment:

Eligible employees can carry forward and encash leave upto superannuation, death, permanent disablement and resignation subject to maximum accumulation allow @ 90 days for employees. The Leave over and above 90 days is lapse every year. Benefit would be at the time of separation based on the last drawn basic salary.

14 Previous year''s figures have been regrouped/recasted/restated wherever necessary.


Mar 31, 2013

1 Corporate Information

GOL Offshore Limited is Public Limited Company whose equity shares are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Foreign Currency Convertible Bonds (FCCBs) issued by the Company are listed on Singapore Exchange Securities Trading Limited (SGX - ST). The Company is India''s prominent integrated offshore oilfeld services provider offering a broad spectrum of services to upstream oil and gas producers to carry out offshore exploration and production (E&P) activities. The Company operates Drilling Rigs, Offshore Support Vessels and undertakes Marine Construction Projects and Services.

NOTE 2 : DEFERRED TAx

Pursuant to the introduction of Section 115 V under the Income Tax Act, 1961, the Company has opted for computation of its income from shipping activities under the Tonnage Tax Scheme. Thus income from the business of operating ships will be assessed on the basis of deemed Tonnage Income of the Company and no deferred tax will be applicable to this income as there will be no timing differences.

Deferred Tax is accounted for in respect of the timing differences under the non-tonnage activity of the Company. The break-up of net deferred tax assets/ (liability) is as under:

NOTE 3

As on March 31, 2013, the Company has investment in the equity / redeemable preference shares of its wholly owned subsidiary company KEI - RSOS Maritime Limited amounting to Rs. 18,863 lakhs (previous year Rs. 18,863 lakhs) and also a loan outstanding amounting to Rs. 3,331 lakhs (previous year Rs. 3,100 lakhs). The Company has also issued bank guarantees to Indian Bank amounting to Rs. 14,168 lakhs (previous year Rs. 14,585 lakhs) against which outstanding facilities as on March 31, 2013 amount to Rs. 6,327 lakhs (previous year Rs. 8,775 lakhs). The said investment is strategic and long term in nature. The management is confdent of turning around the company and as such, in the opinion of the management, no provision is considered necessary for depletion, if any, in value of investment and loans and advances given by the Company due to losses suffered by that Company.

NOTE 4 : Share Capital

During the year ended March 31, 2013, the Company allotted 8,100 equity shares in pursuance of the order of the Special Court established under the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992. These shares were a part of 71,480 equity shares which were kept in abeyance upon being notifed by the Custodian under the said Act. The allotment of 63,380 equity shares (Previous year 71,480 equity shares) is now under abeyance, after the allotment of the said 8,100 equity shares. These will be allotted upon the receipt of the order of the Special Court or such other authority as may be directed, from time to time. Transfers of an additional 10,153 equity shares (previous year 10,153 equity shares) have been kept in abeyance pursuant to Section 206A of the Companies Act, 1956 as their title is under legal dispute. These shares will be allotted as and when the dispute regarding their title is resolved.

NOTE 5 : Hedge Reserve

a) The Company has borrowings and the revenue streams in foreign currency, which provide an inherent hedge against foreign currency exchange rate fuctuations. Accordingly, the Company changed its accounting policy with regard to recognition of exchange differences arising on translation of foreign currency borrowings by following an appropriate hedge accounting policy and applying the principle set out in AS-30 Financial Instruments: Recognition and Measurement. The objective of adopting Hedge Accounting is to ensure that gain or loss on the hedging instrument is recognised in the Proft and Loss Statement in the same period when Hedge items affects proft or loss. The Company has w.e.f. 1st April 2008 designated borrowings in foreign currency as Hedge instrument to hedge its foreign currency risk

of its frm commitments and highly probable forecast transactions (of revenue streams) to be accounted as cash fow hedge. During the current year, the net unrealised exchange difference on foreign currency borrowings aggregating to Rs. 2,335 Lakhs has been debited to Hedge Reserve, and net realised exchange loss debited to the Proft and Loss Statement is Rs. 348 lakhs. As a result, balance in the Hedge Reserve is debit of Rs. 27,485 Lakhs. (Previous Year Debit of Rs.25,498 lakhs)

b) With effect from 1st April 2011, the company has changed its accounting policy for recognition and measurement of Mark to Market losses in respect of derivatives instruments like interest rate swaps as per the principles enunciated in Accounting Standard (AS)30 "Financial Instruments: Recognition and Measurement" and in accordance with the recommendation of the Institute of Chartered Accountants of India. Accordingly Mark to market (MTM) losses in respect of derivatives instruments like Interest Rate Swaps have been accounted in accordance with principle of hedge accounting and the MTM losses on such derivatives instruments is recorded in the Hedge Reserve Account instead of recognising the same in the Proft and Loss Statement. Accordingly as at March 31, 2013, MTM loss on outstanding Interest Rate Swaps amounting to Rs. 11,422 lakhs (PY Rs. 9,685 lakhs) has been recognised in hedge reserves instead of debiting the same to the Proft and Loss Statement.

NOTE 6 : unsecured Loans

The Company has 7.25% Unsecured Foreign Currency Convertible Bonds (FCCB) (due Oct. 2012) of US$ 100,000 each aggregating to US $ 40,000,000, listed on the Singapore Exchange Securities Trading Limited (SGX-ST). As these bonds were neither converted nor redeemed by the original due date, the Board of Directors have authorised the management to approach the Trustees for the Bond Holders to extend the redemption date to Dec''2013 subject to regulatory approvals. The matter is presently pending fnal resolution and accordingly these outstandings have been shown under "Short Term Borrowings" after restating the same at closing exchange rates. The exchange loss in this regard has been recognised in the Proft and Loss Statement.

NOTE 7 : Interest on loan given to subsidiary Great Offshore (International) Limited

Interest recovered on loan given to subsidiary Great Offshore (International) Limited Rs. 3,932 lakhs (Previous Year Rs.5,164 lakhs) has been netted out against the interest expense on other loans and net interest is disclosed in the Proft and Loss Statement. Interest Receivable upto March 31, 2013 is Rs. 2,748 lakhs (Previous Year Rs. 1,465 lakhs)

NOTE 8 : unsecured Loan to Great Offshore (International) Limited

The company has granted unsecured loan amounting to Rs. 52,885 lakhs ( Previous Year Rs.72,658 lakhs) to its wholly owned overseas subsidiary company Great Offshore (International) Limited which in turn has invested/ advanced the said amount to its step down overseas subsidiaries/partnership frms for purchase of vessels with higher capacities and latest technologies from Bharati Shipyard Limited, the promoters of the Company. All such vessels procured from Bharati Shipyard Limited are to be delivered over the next 12 to 24 months.

Recoverability of aforesaid loan and interest thereon is dependent upon timely delivery of vessels by Bharati Shipyard Limited. In the opinion of the management, the said advances are fully recoverable.

NOTE 9 : Inventories

Closing stock of stores and spares on board the vessels amounting to Rs. 4,389 lakhs (Previous Year Rs.4616 lakhs) was determined by the management on the basis of inventory system implemented by the Company w.e.f. January 1, 2012. The Company has in place preset cyclical programme for physical verifcation of inventory on board the vessels. Auditors have relied upon the management certifcation for the valuation of stock of stores and spares on board the vessels.

NOTE 10 : Going Concern

As stated in note nos. 5, 11 and 32 the company has not been able to service some of its foreign currency bonds and loans on the original due dates. In respect of FCCB, the Board of Directors have approved extension of its due date upto December''13 subject to concurrence of the Bond Holders and regulatory approvals as may be applicable. In respect of other loans the company is in discussions for settlement of the dues over the next one year. Management has taken effective steps for collection of certain loans and advances, disposal of some assets including some of which are still operating assets, as in the opinion of the management, their value on sale will be higher than their value in use as also to meet the signifcant current liabilities. The management is very hopeful of achieving this before the end of the current fnancial year. The company is also able to earn margin by carrying on its business in the normal course. Hence these accounts have been prepared on going concern assumption which is considered appropriate.

NOTE 11 : Current Liabilities

According to information available with the Company regarding the status of the suppliers, as defned under The Micro, Small and Medium Enterprises Development Act, 2006, amount overdue as on 31st March, 2013 to the Micro, Small and Medium enterprises on account of principal amount, together with interest for delayed payment under the Act, is Rs. 28 lakhs (Previous Year Rs. Nil) .

NOTE 12 : The balances of Trade Receivables, Trade Payables and Loans & Advances are subject to confrmation.

NOTE 13 : Disclosures pursuant to Accounting Standard (AS) 15 (revised) "Employee Benefts"

(a) Effective April 1, 2007 the Company adopted Accounting Standars 15 (Revised 2005) on "Employee Benefts" issued by ICAI.

(b) The Company has recognised the following amounts in the Proft and Loss Statement for the year:

NOTE 14 : Segment reporting

The Company is mainly engaged in offshore business activity and there are no separate reportable segments as per Accounting Standards (AS) 17.

NOTE 15 : Related Party Disclosures (i) List of Related Parties

(a) Parties where control exists : Subsidiary Companies :

Deep Water Services (India) Ltd

GOL Ship Repairs Ltd (formerly Great Offshore Ship Repairs Limited)

KEI - RSOS Maritime Ltd

GOL Salvage Services Limited

(formerly known as Great Offshore Salvage Service Limited)

Great Offshore (International) Ltd. (Cayman Islands)

GOL Offshore Fujairah L.L.C. - FZE (formerly Great Offshore Fujairah L.L.C - FZC)

Deep Water Services (International) Ltd. (Cayman Islands)

Norwegian Shipping I Ltd (Cyprus)

Norwegian Shipping II Ltd (Cyprus)

Great Offshore International (Malaysia) Ltd.

Great Offshore International Manning & Ship Management (Labuan) Ltd. (Malaysia)

Glory Shipping Pvt Ltd (Dubai)

Great Offshore Germany GmbH

SGB Emssun GmbH & Co. KG (Germany)

SGB Emssky GmbH & Co. KG (Germany)

SGB Emsstar GmbH & Co. KG (Germany)

(b) Other related parties with whom transactions have taken place during the year :

1 Joint Venture :

United Helicharters Pvt Ltd.

2 Key Management Personnel :

Mr. P.C.Kapoor - Executive Director Mr. Vijay Kumar - Executive Director

3 Enterprises over which Key Management Personnel Exercise Signifcant Infuence :

Bharati Shipyard Limited Pinky Shipyard Pvt Ltd Bharati Maritime Services Pvt Ltd Harsha Infrastructure Pvt Ltd Sea Splice Shipping Pvt Ltd Port Side Shipping Pvt Ltd Dhanshree Properties Pvt Ltd Natural Power Ventures Pvt Ltd Weizmann Forex Ltd

4 Relatives of Key Managerial Personnel

Sukriti Kumar

NOTE 16 : Interest in Joint Venture

The Company has a joint venture interest in United Helicharters Pvt. Ltd. (a company incorporated in India) and its proportionate share in the assets, liabilities, income and expenses of the jointly controlled entity, based on the unaudited management accounts drawn up to March 31, 2013, is as under :

NOTE 17 : Previous year''s fgures have been regrouped/recasted/restated wherever necessary.


Mar 31, 2012

1 Corporate Information

Great Offshore Limited is public Limited Company whose equity shares are listed on Bombay Stock Exchange Limited and National Stock Exchange of India Limited. The Foreign Currency Convertible Bonds(FCCBs) issued by the company are listed on Singapore Exchange Securities Trading Limited (SGX - ST). The Company is India's prominent integrated offshore oilfield services provider offering a broad spectrum of services to upstream oil and gas producers to carry out offshore exploration and production (E&P) activities. The Company operates Drilling Rigs, Offshore Support Vessels and undertakes Marine Construction Projects and Services.

(a) Terms/ Rights attached to equity shares

The company has one class of equity shares having a par value of Rs. 10/- per share. Each shareholder is eligible for one vote per share held. The company declares and pays dividends in Indian Rupees. The dividend recommonded by the Board of Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

1) The company has issued and allotted 15,00,000, 10% Optionally Convertible Redeemable Cumulative Preference shares (OCRCPS) of Rs. 1000 each during the year 2007-08.

2) The company has redeemed 15,00,000, 10% Optionally Convertible Redeemable Cumulative Preference shares (OCRCPS) of Rs.1000 each during the year 2008-09.

3) The company had alloted 91,017 Equity Shares for part conversion of 7.25% Foreign Currency Convertible Bonds @ 875/- per share aggregating to USD 2 Million in the year 2009-10.

(i) The company has availed foreign currency loans from banks which carry interest rate of LIBOR plus 60 to 800 bps for USD loans and INR loans from banks are at 14% to 14.90% . These loans are secured by mortgage of specified ships. The principal payments are due monthly / quarterly / half yearly.

(ii) Rupee loan availed from a Financial Institution during the year carried interest rate of 13%. The loan is secured by mortgage of a ship and second charge on a rig. The principal payment is due monthly / quartely.

(iii) The company has also availed general purpose loans in Foreign currency from banks which carry interest rate of LIBOR plus 190 to 500 bps and INR loans from banks at the rate of 12.50% to 16.25%. The loans are secured by mortgage of ships, first / second charge / subservient charge on ships / rigs / fixed assets of the company. The principal payments / interest thereon are due monthly /quarterly / half yearly.

(iv) The loans availed from banks on mortgage of rig 'Amarnath' was repaid during the year on sale of the rig.

(v) The loans and advances availed from related parties are unsecured and carry interest rate of 6% to 9.50%.

NOTE 2 : DEFERRED TAX

Pursuant to the introduction of Section 115 V under the Income Tax Act, 1961, the Company has opted for computation of its income from shipping activities under the Tonnage Tax Scheme. Thus, income from the business of operating ships will be assessed on the basis of deemed Tonnage Income of the Company and no deferred tax will be applicable to this income as there will be no timing differences.

Deferred Tax is accounted for in respect of the timing differences under the non-tonnage activity of the Company. The break-up of net deferred tax assets/ (liabilities) is as under:

3 Contingent Liabilities Rs. in Lakhs

Sr. Particulars As at March As at March No. 31, 2012 31, 2011

i Guarantees given by bank including performance and bid bond, counter 6,889 9164 guarantees by the Company.

ii Corporate Guarantee given to Custom Department 583 583

iii Corporate Guarantee given to bank on behalf of subsidiary 68,073 39511

iv Claims not acknowledged by Company Customs Duty on Tug 306 70

Sales Tax and Service tax demand on Charter hire payment 271 271

Possible obligation in respect of matters under arbitration 2,700 2700

v Letters of Credit Outstanding 195 -

4 As on March 31, 2012, the company has investment in the equity / redeemable preference shares of its wholly owned subsidiary company KEI - RSOS Maritime Limited amounting to Rs. 18,863 lakhs and also a loan outstanding amounting to Rs. 3,100 lakhs. The company has also issued corporate guarantees to Indian Bank amounting to Rs. 14,585 lakhs against which outstanding facilities as on March 31, 2012 amount to Rs. 8,775 lakhs. The said investment is strategic and long term in nature.The management is confident of turning around the company and as such, in the opinion of the management, no provision is considered necessary for depletion, if any, in value of investment and loans and advances given by the company.

5 Share Capital

The allotment of 71,480 equity shares of the Company have been kept in abeyance in accordance with the section 206A of the Companies Act, 1956 till such time as the title of the bonafide holder of the shares is certified by the concerned Stock Exchange as per the orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992. An additional 10,153 (Previous Year 10,153) shares have also been kept in abeyance for disputed cases in consultation with the Bombay Stock Exchange.

6 Hedge Reserve

The Company has borrowings and the revenue streams in foreign currency, which provides an inherent hedge against foreign currency exchange rate fluctuations. Accordingly, the Company changed its accounting policy with regard to recognition of exchange differences arising on translation of foreign currency borrowings by following an appropriate hedge accounting policy and applying the principle set out in AS-30 Financial Instruments: Recognition and Measurement. The objective of adopting Hedge Accounting is to ensure that gain or loss on the hedging instrument is recognised in the Statement of Profit and Loss in the same period when Hedge items affects profit or loss. The Company has w.e.f. 1st April 2008 designated borrowings in foreign currency as Hedge instrument to hedge its foreign currency risk of its firm commitments and highly probable forecast transactions ( of revenue streams) to be accounted as cash flow hedge. During the current year, the net unrealised exchange difference on foreign currency borrowings aggregating to Rs. 25,568 lakhs has been credited to Hedge Reserve, and net realised exchange gain credited to the Statement of Profit and Loss is Rs. 311 lakhs. As a result, balance in the Hedge Reserve is debit of Rs. 25,498 lakhs. (Previous Year Credit of Rs.381 lakhs)

7 Change in Accounting Policy

With effect from 1st April 2011, the company has changed its accounting policy for recognition and measurement of Mark to Market losses in respect of derivatives instruments like interest rate swaps as per the principals enunciated in Accounting Standard (AS)30 "Financial Instruments: Recognition and Measurement" and in accordance with the recommendation of the Institute of Chartered Accountants of India. Accordingly Mark to Market (MTM) losses in respect of derivatives instruments like Interest Rate Swaps have been accounted in accordance with principal of hedge accounting and the MTM losses on such derivative instruments is recorded in the Hedge reserve account instead of recognising the same in the Statement of Profit and Loss. Accordingly as at March 31, 2012, MTM loss on outstanding Interest Rate Swaps amounting to Rs. 9,685 lakhs has been recognised in hedge reserves instead of debiting the same to the Statement of Profit and Loss. Accordingly the profit for the year is higher by Rs.9,046 lakhs.

8 Unsecured Loans

The Company has 7.25% Unsecured Foreign Currency Convertible Bonds (FCCBs) (due 2012) of US$ 100,000 each aggregating to US $ 40,000,000, listed on the Singapore Exchange Securities Trading Limited (SGX-ST). The Bondholders may, as per the terms, convert the Bonds in whole or in part from time to time, at their option, during the period commencing 11th October, 2007 to 28th September, 2012.

The Company had revised pricing of Foreign Currency Convertible Bonds (FCCBs) in accordance with the new pricing norms such that each FCCB of face value USD 100,000 will convert to 7964 equity shares of the company as against the original proposal of each FCCB converting into 4550.86 equity shares. This will imply a conversion price of Rs. 565 per equity share as against the original conversion price of Rs. 875 per share. (USD 1 = Rs. 45, Original Rate USD 1 = 39.82). The necessary approvals from the bondholders and Reserve Bank of India have been obtained for the same.

As per the Mandatory Conversion Right embedded in the offer document, the Company has the option to convert the entire outstanding bonds on the terms and conditions agreed upon. In the event, the Bonds are not repurchased and cancelled; or converted; the Company will redeem the Bonds on the Maturity Date.

9 Fixed Assets

Estimated amount of contracts, net of advances paid thereon, remaining to be executed on capital account and not provided for Rs. 74,198 lakhs (Previous Year Rs. 14,742 lakhs).

10 Investment in KEI-RSOS Maritime Limited

On January 14, 2012, loan of Rs. 5,000 lakhs granted to KEI-RSOS Maritime Limited, a wholly owned subsidiary of the Company, has been converted into 40 lakhs, 1% Cumulative Redeemable Preference Shares of Rs. 10 each at a premium of Rs. 115 per share.

11 Corporate Guarantee

During the year, the Company has given Corporate Guarantees to Banks, for financing acquisition of assets by Wholly Owned Subsidiary - Great Offshore (International) Ltd. for 47,970 lakhs (Previous Year 24,926 lakhs) , Kei-Rsos Maritime Limited - Rs. 8,775 lakhs (Previous Year Rs. 14,585 lakhs), Deepwater Services (india) Ltd - Rs.2,500 lakhs ( Previous Year Rs. Nil)

12 Interest on loan given to subsidiary Great Offshore (International) Limited Interest on loan given to subsidiary Great Offshore (International) Limited Rs. 5,164 lakhs (Previous Year Rs. 2,201 lakhs) has been netted out against the interest expense and net interest is disclosed in the Statement of Profit & Loss Account. Interest Receivable upto March 31, 2012 is Rs. 1,465 lakhs (Previous Year Rs. 2,201 lakhs)

13 Unsecured Loan to Great Offshore (International) Limited

The company has granted unsecured loan amounting to Rs. 72,658 lakhs (Previous Year 70,738 lakhs) to its wholly owned overseas subsidiary company Great Offshore (International) Limited which in turn has invested/advanced the said amount to its step down overseas subsidiaries/partnership firms for purchase of vessels with higher capacities and latest technologies from Bharati Shipyard Limited, the promoters of the Company. All such vessels procured from Bharati Shipyard Limited are to be delivered over the next 24 to 36 months. Recoverability of aforesaid loan and interest thereon is dependent upon timely delivery of vessels by Bharati Shipyard Limited. In the opinion of the management, the said advances are fully recoverable.

14 Inventories

Closing stock of stores and spares on board of the vessels amounting to Rs. 4606 lakhs was determined by the management on the basis of inventory system implemented by the company w.e.f. January 1, 2012. The company has in place preset cyclical programme for physical verification of inventory on board of the vessel .The auditors have relied upon the management certification for the valuation of stock of stores and spares on board of vessels.

15 Capital Advance

Capital Advance of Rs. 6,396 lakhs represents a contract between the Company and Gultare Energy Projects Private Limited for the purchase of six, 70 Ton Bollard Pull Harbour Tugs. As per the terms of contract the first installment of 25% is to be made on signing of contract and on submission of builders invoice.

16 Current Liabilities

According to information available to the Company regarding the status of the suppliers, as defined under The Micro, Small and Medium Enterprises Development Act, 2006, amount overdue as on 31st March, 2012 to the Micro, Small and Medium enterprises on account of principal amount, together with interest for delayed payment under the Act, is Rs. Nil.

17 Provisions

The Company has recognised the provisions given below in its accounts in respect of obligations arising from past events, the settlement of which are expected to result in an outflow embodying economic benefits.

Manning dues and related contributions to welfare funds was Rs. 329 lakhs as on 1st April, 2011, additions during the year was Rs. 196 lakhs, (Previous Year Rs. 176 lakhs), reversed / paid during the year was Rs.159 lakhs (Previous Year Rs. 136 lakhs), hence balance as on 31st March, 2012 is Rs. 366 lakhs (Previous Year 329 lakhs).

18 The balances of Trade Receivables and Trade Payables are subject to confirmations.

19 Disclosures pursuant to Accounting Standard (AS) 15 (revised) "Employee Benefits".

(a) Effective April 1, 2007 the Company adopted Accounting Standard 15 (Revised 2005) on "Employee Benefits" issued by the ICAI.

(b) The Company has recognised the following amounts in the Statement of Profit and Loss for the year:

(vi) Basis used to determine expected rate of return on assets:

Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio since these are generally held to maturity, along with the estimated incremental investments to be made during the year.

(vii) General description of significant defined plans:

Gratuity Plan:

Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provisions of the Payment of Gratuity Act or as per the Company's Scheme whichever is more beneficial. Benefit would be paid at the time of separation based on the last drawn base salary.

Leave Encashment:

Eligible employees can carry forward and encash leave upon superannuation, death, permanent disablement and resignation subject to maximum accumulation allow @ 60 days for employees. The Leave over and above 60 days is encashed and paid to employees in April every year. Benefit would be at the time of separation based on the last drawn basic salary.

20 Segment reporting

The Company is mainly engaged in offshore business and there are no separate reportable segments as per Accounting Standards (AS) 17.

21 Related Party Disclosures (i) List of Related Parties

(a) Parties where control exists :

Subsidiary Companies :

Deep Water Services (India) Ltd

KEI - RSOS Maritime Ltd

Great Offshore Salvage Services Limited

Great Offshore Ship Repairs Ltd

Great Offshore Fujairah L.L.C. - FZC

Great Offshore (International) Ltd

Glory Shipping Pvt Ltd

Great Offshore Germany GmbH

SBG Emssun GmbH & Co.

SGB EMMSKY GmbH & Co. KG.

SGB EMSSTAR GmbH & Co. KG.

Norwegian Shipping I Ltd

Norwegian Shipping II Ltd

Great Offshore International (Malaysia) Ltd.

Great Offshore International Manning & Shipping Management (Labuan) Ltd. (Malaysia)

(b) Other related parties with whom transactions have taken place during the year :

1 Joint Venture :

United Helicharters Pvt Ltd.

2 Key Management Personnel :

Mr. P.C.Kapoor - Executive Director

Mr. Vijay Kumar - Executive Director

Mr. Soil C. Engineer - Executive Director (upto 30th March,2012)

Mr. Chetan Mehra - Executive Director (From 2nd September,2011 to 19th November,2011)

3 Enterprises over which Key Management Personnel Exercise Significant Influence :

Bharati Shipyard Limited

Pinky Shipyard Pvt Ltd

Weizman Forex Limited

Bharati Maritime Services Pvt Ltd

Harsha Infrastructure Pvt Ltd

Sea Splice Shipping Pvt Ltd

Port Side Shipping Pvt Ltd

Dhanshree Properties Pvt Ltd

Natural Power Ventures Pvt Ltd

4 Relatives of Key Managerial Personnel Sukriti Kumar

22 Interest in Joint Venture

The Company has a joint venture interest in United Helicharters Pvt. Ltd. (a company incorporated in India) and its proportionate share in the assets, liabilities, income and expenses of the jointly controlled entity, based on the unaudited management accounts drawn up to March 31, 2012, is as under :

23 These financial statements have been prepared in the format prescribed by the Revised Schedule VI to the Companies Act, 1956. Previous year's figures have been recast/ restated.


Mar 31, 2010

1. Great Offshore Limited was incorporated on July 14, 2005 and the offshore services business of The Great Eastern Shipping Co. Ltd. was demerged and vested in the Company with effect from April 1, 2005 pursuant to a Scheme of Arrangement sanctioned by the Mumbai High Court. The Company specialises in providing offshore support solutions to the Exploration & Production Industry. In this segment the Company operates Drilling Rigs, Offshore Support Vessels and undertakes Marine Construction Projects and services.

2. Contingent Liabilities: Rs. Lakhs Sr. Particulars As on As on No. 31.3.2010 31.3.2009 (i) Guarantees given by banks including performance and bid bonds, counter 11613 14516 guaranteed by the Company. (ii) Guarantees by bank given on behalf of a subsidiary company 991 1064 (iii) Corporate guarantee given to Customs 583 583 (iv) Claims not acknowledged by Company in respect of: Customs Duty 76 70 Income Tax matter in appeal 37 27 Sales tax and Service tax demands on charter hire payments 265 265 Possible obligation in respect of matters under arbitration 2700 1451 (v) Letters of Credit outstanding 378 -

3. Share Capital:

On October 31, 2009 the Company has allotted 91,017 fully paid Equity Shares of Rs.10 each at a premium of Rs. 865/- per share on part conversion of FCCBs aggregating to USD 2,000,000. Consequently, the Issued, Subscribed and Paid up capital of the Company has increased by Rs.9.10 lakhs.

The allotment of 71,480 equity shares of the Company have been kept in abeyance in accordance with the section 206A of the Companies Act, 1956 till such time as the title of the bonafde holder of the shares is certifed by the concerned Stock Exchange as per the orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992. An additional 10,153 (Previous Year 10,153) shares have also been kept in abeyance for disputed cases in consultation with the Bombay Stock Exchange.

4. Reserves & Surplus :

Hedge Reserve

The Company has borrowings and the revenue streams in foreign currency, which provides an inherent hedge against foreign currency exchange rate fuctuations. Accordingly, the Company changed its accounting policy with regard to recognition of exchange differences arising on translation of foreign currency borrowings by following an appropriate hedge accounting policy and applying the principle set out in AS-30 Financial Instruments: Recognition and Measurement. The objective of adopting Hedge Accounting is to ensure that gain or loss on the hedging instrument is recognized in the statement of Proft and Loss in the same period when Hedge items affects proft or loss. The Company has w.e.f. 1st April 2008 designated borrowings in foreign currency as Hedge instrument to hedge its foreign currency risk of its frm commitments and highly probable forecast transactions ( of revenue streams) to be accounted as cash fow hedge. During the current year, the net unrealized exchange difference on foreign currency borrowings aggregating to Rs.16361 lakhs has been recognized directly in Hedge Reserve. As a result, balance in the Hedge Reserve is Rs.1139 lakhs. (Previous Year Debit of Rs.17500 lakhs)

5. Secured Loans:

The secured redeemable non convertible debentures have been taken over from The Great Eastern Shipping Co. Ltd. (G. E. Shipping) under a Scheme of Arrangement. The said debentures continue to be secured by mortgage of specifed immovable properties & ships of G. E. Shipping and the Company is under an obligation to reimburse G. E. Shipping all repayments and interest in respect of the aforesaid debentures, before the respective due dates as per the terms of the Scheme.

6. Unsecured Loans :

The Company has 7.25% Unsecured Foreign Currency Convertible Bonds (FCCB) (due 2012) of US$ 100,000 each aggregating to US $ 40,000,000 listed on the Singapore Exchange Securities Trading Limited (SGX-ST). The Bondholders may, as per the terms, convert the Bonds in whole or in part from time to time, at their option, during the period commencing 11th October, 2007 to 28th September, 2012 at a price of Rs. 875/- per share and YTM of 7.25% with a fxed rate of exchange on conversion of Rs. 39.82 = US$ 1.00.

During the Year, as per The Bondholders request, the Company has converted FCCB aggregating to USD 2,000,000. As per the Mandatory Conversion Right embedded in the offer document, the Company has the option to convert the entire outstanding bonds on the terms and conditions agreed upon. In the event, the Bonds are not repurchased and cancelled; or converted; the Company will redeem the Bonds on the Maturity Date.

7. Fixed Assets:

Estimated amount of contracts, net of advances paid thereon, remaining to be executed on capital account and not provided for Rs.14841 Lakhs (Previous Year Rs. 26375 lakhs).

8. Investments:

On November 5 2008, the Company has acquired 100% equity shares of KEI-RSOS Maritime Limited and Rajamahendri Shipping & Oil Field Services Limited for a consideration of Rs.14705 lakhs and Rs.573 lakhs respectively subject to certain adjustments as per Share Purchase Agreement. Out of the above, the consideration paid till the Balance Sheet date amounted to Rs.13863 lakhs and Rs. 501 lakhs respectively.

9. Deferred tax:

Pursuant to the introduction of Sec 115V under the Income Tax Act, 1961, the Company has opted for computation of its income from shipping activities under the Tonnage Tax Scheme. Thus income from the business of operating ships will be assessed on the basis of the deemed Tonnage Income of the Company and no deferred tax will be applicable to this income as there will be no timing differences.

Deferred tax is accounted for in respect of the timing differences under the non-tonnage activity of the Company.

The breakup of net deferred tax assets / (liability) is as under:

10. Current Liabilities:

According to information available to the Company regarding the status of the suppliers, as defned under The Micro, Small and Medium Enterprises Development Act, 2006, amount overdue as on 31st March, 2010 to the Micro, Small and Medium enterprises on account of principal amount, together with interest for delayed payment under the Act, is Rs. Nil .

11. Provisions:

The Company has recognized the provisions given below in its accounts in respect of obligations arising from past events, the settlement of which are expected to result in an outfow embodying economic benefts.

Manning dues and related contributions to welfare funds was Rs. 251 lakhs as on 1st April, 2009, additions during the year was Rs.151 lakhs, (Previous Year Rs. 130 lakhs), reversed / paid during the year was Rs.113 lakhs (Previous Year Rs. 427 lakhs), hence balance as on 31st March, 2010 is Rs. 289 lakhs (Previous Year 251 lakhs).

Pool Payable Provision was recognised for amounts payable to a pool of charterers estimated on the basis of average pool earnings. Opening balance as on 1st April, 2009 was Rs. 1325 lakhs, additions during the year was Rs.1020 lakhs, (Previous Year Rs. 1937 lakhs), reversed / paid during the year was Rs.1916 lakhs (Previous Year Rs. 2466 lakhs), hence balance as on 31st March, 2010 is Rs.429 lakhs.

12. The balances of debtors and creditors are subject to confirmation.

13. Change in Accounting Policy :

(a) The Company has changed its Accounting Policy with effect from 1st April, 2009 in respect of expenses incurred at the time of fve yearly Special Surveys and / or life enhancement programmes by which Class certifcates / Operating licenses are renewed and capitalized the expenses and the same will be depreciated over the period of fve years. During the year ended 31st March 2010, the Company has capitalized Rs.3989 lakhs expenditure incurred on fve yearly Special Surveys and consequently charge on Proft & Loss Account is lesser by Rs.3511 lakhs.

(b) The Company has changed its accounting policy with regard to recognition of exchange difference arising on translation of foreign currency borrowing by following an appropriate hedge accounting policy and applying principles set out in Accounting Standard (AS) 30 - ‘ Financial Instrument Recognition and Measurement’. The objective of adopting hedge accounting is to ensure that the gain or losses of the hedging instrument is recognized in statement of proft and loss in same period when the hedge affected proft or loss. The Company w.e.f. 1st April 2008 has designated borrowing in foreign currency as hedge instrument to hedge its foreign currency risk of its frm commitments and highly probable forecast transactions (of revenue streams) to be accounted as cash fow hedge. During the year, the net unrealized exchange difference on foreign currency borrowing aggregating to Rs. 16361 lakhs has been recognized directly in Hedge Reserve. As a result, balance in the Hedge Reserve is Rs.1139 lakhs. (Previous Year Debit of Rs.17500 lakhs)

14. Disclosure pursuant to Accounting Standard (AS) 15 (Revised) “Employee Benefts”:

(a) Effective April1,2007 the Company adopted Accounting Standard 15 ( Revised 2005) on “Employee Benefts” issued by ICAI.

(b) The Company has recognised the following amounts in the Proft and Loss Account for the year :

B) Defned Beneft Plans:

Valuations in respect of Gratuity, Pension Plan for whole-time Directors, Leave Encashment have been carried out by an independent actuary, as at the Balance Sheet date on Projected Unit Credit method, based on the following assumptions:

(vi) Basis used to determine expected rate of return on assets:

Expected rate of return on investments is determined based on the assessment made by the Company at the beginning of the year on the return expected on its existing portfolio since these are generally held to maturity, along with the estimated incremental investments to be made during the year.

(vii) General description of signifcant defned plans:

Gratuity Plan:

Gratuity is payable to all eligible employees of the Company on superannuation, death, permanent disablement and resignation in terms of the provisions of the Payment of Gratuity Act or as per the Company’s Scheme whichever is more benefcial. Beneft would be paid at the time of separation based on the last drawn base salary.

Leave Encashment:

Eligible employees can carry forward and encash leave upto superannuation, death, permanent disablement and resignation subject to maximum accumulation allowed @ 30 days for employees. The Leave over and above 30 days is encashed and paid to employees in April every year. Beneft would be paid at the time of separation based on the last drawn basic salary.

15. Hedging Contracts:

(a) Interest Rate Swap contracts payable at predetermined fxed rate vis-à-vis LIBOR relating to loans of USD 4.74 million (Previous Year USD 30 million).

(b) The Company uses interest rate swaps to hedge its exposure to foreign exchange and interest rate changes.

(c) Unhedged foreign currency exposure : as on 31st March 2010:

16. Segment Reporting:

The Company is mainly engaged in offshore business and there are no separate reportable segments as per Accounting Standards (AS) 17.

17. Related Party Disclosures :

(i) List of Related Parties

a) Parties where control exists : Subsidiary Companies:

Great Offshore Fujairah L.L.C.- FZC

Deep Water Services (India) Ltd.

KEI - RSOS Maritime Ltd.

Rajamahendri Shipping and Oil Field Services Ltd.

Great Offshore (International) Ltd.

b) Other related parties with whom transactions have taken Place during the year:

1. Joint Venture :

United Helicharterers Pvt. Ltd.

2. Key Management Personnel :

Mr.Vijay Kantilal Sheth - Vice Chairman cum Managing Director (upto 30-05-2009) Mr.Soli C.Engineer - Executive Director (w.e.f.29-07-2009)

3. Enterprises over which Key Management Personnel Exercise Signifcant Infuence : Allcargo Global Logistic Limited

Bharati Shipyard Limited Indian National Shipowners Association Indian Register of Shipping Weizmann Forex Limited

18. Interest in Joint Venture:

The Company has a joint venture interest in United Helicharters Pvt. Ltd. (a company incorporated in India) and its proportionate share in the assets, liabilities, income and expenses of the jointly controlled entity, based on the unaudited management accounts drawn up to 31 December, 2009, is as under :

Percentage of ownership interest as at 31st March 2010. - 26%

19. Information pursuant to para 4D of Part II of Schedule VI of the Companies Act, 1956 has not been given in view of exemption granted by Government of India, Ministry of Corporate Affairs vide order no.46/45/2010-CL-III dated April 15, 2010.

20. Previous Years fgures have been regrouped wherever necessary to confrm to current year’s classifcation.

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