Directors Report of Mercator Ltd.

Mar 31, 2018

To

The Members,

Mercator Limited

The take pleasure in presenting Thirty Fourth Annual Report of your Company for the year ended on March 31, 2018.

Financial highlights: (Rs. in Crore)

	Consolidated		Standalone
Particulars	Year ended		Year ended
	March 31, 2018	March 31, 2017	March 31, 2018	March 31, 2017
Income from operations	974.21	2115.39	405.67	538.33
Total Income	1010.68	2271.62	448.07	568.83
Operating Profit	141.89	610.23	99.15	173.78
Interest	(173.16)	(232.42)	(104.23)	(96.90)
Depreciation	(186.04)	(318.64)	(137.76)	(147.28)
Impairment	-	0.01	-	-
Exceptional Items		(9.16)	-	(9.16)
Profit/(Loss) before Tax & Minority Interest	(217.30)	50.01	(142.84)	(29.55)
Minority Interest	17.97	(4.23)	-	-
Other Comprehensive Income Adjustment	1.49	(0.43)	0.92	(0.61)
Taxes
- Current Year	(58.12)	(20.03)	42.17	(1.00)
- Deferred Tax	(2.12)	(1.18)	-	-
Net Profit/(Loss) After Tax	(294.02)	24.14	(184.10)	(31.15)

During the year under review, the income from operations on a consolidated basis was Rs. 974.21 cr as against Rs. 2115.39 cr in the previous year. The consequential loss in revenue were on account of (i) reduction of coal trading activities (ii) disruption of coal mining and infrastructure business for a part of the year (iii) sale of three tankers during the year and (iv) decline in dredging income during the year affected the revenue.

The consolidated EBIDTA was Rs. 141.89 cr against profit of Rs. 610.24 cr in the previous year. The consolidated loss before tax was Rs. 217.30 cr against previous year profit of Rs. 50.01 cr. After providing loss for the minority interest of Rs. 17.97 cr (previous year Rs. 4.23 cr); the loss after tax was Rs. 294.02 cr as against profit of Rs. 24.14 cr in the previous year.

On a standalone basis, the income from operations for the year under review was Rs. 405.67 cr. (Rs. 538.33 cr in the previous year). Depreciation was Rs. 137.76 crore against Rs. 147.28 cr in previous year and Interest was Rs. 104.23 cr against Rs. 96.90 cr in previous year); the Company had standalone loss of Rs. 184.10 cr (previous year loss of Rs. 31.15 cr) after provision of tax of Rs. 42.17 cr (previous year Rs. 1 cr).

Operations & finance:

Coal

Oorja Holdings Pte Ltd. (‘Oorja Holdings”), a wholly owned subsidiary of the Company along with other investors owns an operational open cut thermal coal asset in the entity named PT Karya Putra Borneo (KPB) and logistics infrastructure services in coal business in another entity named PT Indo Perkasa (IPK). KPB is located in Butuah village, province of Kalimantan Timur, Indonesia covering c.914 hectares of license area with all requisite licenses consisting of an operational coal mine since 2012 having c.26.30 MMT of present reserves with 3600/4200 GAR thermal coal. The local logistics infrastructure services business includes haul road logistics and load port handling supported by own logistics and infrastructure facilities.

We had temporary disruption in operations of the above mentioned step down subsidiaries in Indonesia for about 5-6 months in the period under review due to change in the senior management. Such material event led to stoppage of coal production and infrastructure facilities from September, 2017 till January, 2018 and resulted into certain legal proceedings which are presently sub-judice at various forums. Since early part of 4^th quarter of FY18, the operations have recommenced and have since attained optimum levels and third party logistics operations have been stabilized.

We are aiming to rapidly ramp up production of 4200 GAR coal through village shifting exercise and merging of 4200 GAR coal pits. We also intend to foray into coal transportation operations through chartered vessels based on existing relationship with infra logistics clientele. This will be a capex light business. We plan to pursue opportunities of acquiring neighboring mines to strengthen portfolio and drive growth in the longer term.

Oil and Gas

Mercator Petroleum Limited (‘MPL’), a subsidiary of the Company has Production Sharing Contracts with the Government of India for exploration of petroleum in two blocks viz. CB-3 & CB-9, under the Seventh New Exploration Licensing Policy round (NELP-VII). MPL has 100% participating interest (‘PI’) in both the above blocks. Discovery highlights include oil flowing to the surface @ over 2,000 barrels/day which is an excellent quality light oil (42 degrees API) and enjoys at least 5% premium over Bonny Light. Indian State Refineries benchmark the price of this oil to Bonny Light, using 4-cut Analysis. ~26 million barrels of recoverable oil is estimated though recoverable reserves according to Filed Development Plan (FDP) approved by DG Hydrocarbons are 23.79 million barrels. Competent Persons Report (CPR)/ Third party Certification for reserves were obtained from Leap Energy, Australia and Darcy Reservoir Consultancy Services, India. Test run was conducted in the discovered wells in April, 2018. MOU with Indian Oil Corporation Limited (IOCL) for crude oil sale is in place for the nearest IPCL refinery in Kayoli, Gujarat, just 85 Kms from the block. For evacuation of oil through pipelines, an MOU with ONGC for using their pipeline passing through CB-9 block for evacuation of oil is in place.

Mining Lease (ML) for commercial production has been applied for and the approval is expected from the Government of Gujarat by end of May Rs. 18/early June Rs. 18 upon receipt of which the commercial production would begin in the discovered oil wells. Environmental Clearance (EC) for discovered wells already available and requisite equipment already mobilized. Production in the developmental wells expected to commence by December, 2018, i.e. post receipt of EC for the said wells which shall augment the overall production profile of the Block. Exploration in the 8^th and last exploratory well is underway and is expected to be completed by May, 2018. Testing in 6^th exploratory well is underway, Discovery in the well could add to the existing Reserves in place.

Mercator Oil & Gas Limited (‘MOGL’), a subsidiary of the Company engaged in EPC project awarded by ONGC for conversion of their Mobile Offshore Drilling Unit (MODU) ‘Sagar Samrat’ into a Mobile Offshore Production Unit (MOPU), it is expected that MOPU would sail away post monsoon i.e. by September/October, 2018. While most of the yard activities have been accomplished, consortium plans to use the interim time to complete string test and other balance commissioning activities which were planned offshore. The above shall help in fast tracking the hand over process which is expected by December, 2018 / January, 2019.

Shipping

All the vessels are deployed under time charter except VLGC (Sisouli Prem) being on voyage and VLCC (Nerissa) being on pool charter. During the year under review, Prem Mala was sent for scheduled dry docking and completed successfully. The outlook for the tanker market remains soft. The freight rates have been sliding and remained depressed. The supply and demand ratio is in favour of the charterers with freight remaining under pressure. The US exports of Shale 011 would contribute in firming of the VLCC freight rates on account of increased tonne mile. American light crude shipments to Asia will reach almost 1.3 million barrels/day in the next 5 years from almost nothing in 2016, according to Wood Mackenzie.

During the year, the Company has monetized its aged fleet by selling Dry Bulk Carrier “M. T. Sri Prem Poorva” and a Tanker “M. T. Harsha Prem” at a net loss of Rs. 37.28 Crore in Q3 and further by selling another Dry Bulk Carrier “M. V. Vrinda” at a loss of Rs. 27.70 Crore in Q4; thereby loss on sale of vessels aggregating to Rs. 64.98 Crore. With this successful monetization of its aged fleet, the Company now has a younger fleet and the proceeds were utilized for reduction of debts.

Dredging

In September, 2017, there was a change in senior management with Dr. GVY Victor joining the Dredging Division as President - Dredging along with his key team. During the year, the dredging division accounted for works at various ports including Paradip, Vishakhapatnam, Karaikal, Goa, Cochin, Mangalore etc. During the year, the Company won a dredging contract for reclamation of Jawahar Dweep, Mumbai Port for Rs. 30.40 Crore. The work on this contract commenced from March, 2018 and the contract period is 12 months. The dredgers were operating at various ports across the Indian coast during the year under review except once under major breakdown.

The existing dredging contracts in hand are expected to contribute a revenue of about Rs. 156 Crore in FY19 with an average capacity utilization of around 69%. The Dredging Division has targets of bagging new contracts which could additionally contribute to the topline of dredging business by over Rs. 200 Crore in FY19.

Central Government’s Sagar Mala project which envisages minimum draft of 18 meters in major ports, expanding capacity in existing major ports, creation of new ports and development of inland waterways traffic is expected to add to the demand for dredging in India. The Company intends to diversify by an early contractor to work on Sagar Mala projects, wherein projects worth Rs. 20,000 Crore are allocated out of which dredging for inland waterways would be for about Rs. 5,000 Crore. While increasing its share in maintenance dredging, the Company is looking to participate and bid for capital projects with JV partners or on its own considering the soil parameters and operating efficiency of dredgers. The Company also plans to diversify into marine civil works including construction of breakwaters, bank protection works, coastal defence and coastal protection works.

The Company is also looking into oil and gas trenching works for laying submersible pipeline. The Company is seeking opportunities to establish its presence in blue and green energy sectors and work closely with NIO and NIOT to establish its presence for shallow water and deep sea mining activities.

Finance

Pursuant to the approval received from the members of the Company at the last Annual General Meeting held on September 15, 2017; the Company successfully completed QIP issue of Rs. 145.41 Cr during the year. Under the issue 3,25,67,262 Equity shares of face value of Re. 1/- each at a premium of Rs. 43.65 per equity share aggregating to Rs. 145.41 Cr were placed which were subscribed fully by marquee investors. The proceeds of the issue were utilized for intended purposes i.e. repayment of loans and general corporate purposes. As a result of above issue the paid up capital of the Company has increased by Rs. 3.25 Cr and Securities premium account increased by Rs. 142.15 Cr.

UTI Structured Debt Opportunities Fund I sanctioned for subscribing to the Company’s Secured Unlisted NonConvertible Debentures aggregating to Rs. 190 Cr, out of which the Company has raised total fund of Rs. 100 Cr by issue of unlisted Non-Convertible Debentures, which was in pursuance of the approval of the members as aforesaid. Further, the Company has sought approval of members by way of Postal Ballot, for issue of Secured/Unsecured, Redeemable, Non-convertible Debentures upto an amount not exceeding Rs. 100 Crore, the results of which will be declared on or before Wednesday, June 6, 2018. Upon receipt of approval of members through the said Postal Ballot, the Company proposes to raise the Balance amount of Rs. 90 Cr by way of issue of Secured Unlisted Non-Convertible Debentures to UTI Structured Debt Opportunities Fund I.

During the year under review the Company has redeemed the total 500 Non-Convertible Debentures amounting to Rs. 50 Cr comprising of Series IX, NCD of Rs. 150 Crore. In view of this the total debentures stands at Rs. 100 Crore including Non-Convertible debentures issued during the year under review.

Demerger of dredging business undertaking of mercator limited into mercator dredging private limited:

The Board of Directors at its meeting held on February 14, 2018, accorded its approval for Scheme of Arrangement between Mercator Limited (‘Demerged Company’) and Mercator Dredging Private Limited (‘Resulting Company’) and their respective shareholders for the demerger of Dredging Business Undertaking of Mercator Limited into Mercator Dredging Private Limited, a wholly owned subsidiary subject to necessary approvals. The Board is in process of filing the said scheme with the Stock Exchanges to obtain their No-objection letter in accordance with the provisions of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015.

Transfer to reserves:

In view of loss incurred during the year, no amount proposed to be transferred to Reserves, including Debenture Redemption Reserve (as against Rs. 12.50 Cr in the previous year).

Dividend:

In view of losses suffered during the year under review, your Directors regret their inability to recommend any dividend.

Changes in board of directors and key managerial personnel:

Board of Directors:

During the year under review, Mr. Desh Raj Dogra (DIN:00226775) resigned from the office of Directors of the Company with effect from the closure of business hours on January 8, 2018. The Board of Directors place on record its sincere appreciation for the support and contribution made by Mr. Desh Raj Dogra during his tenure as Director of the Company.

Mr. Anil Khanna (DIN: 00199924) was appointed as an Additional Director (Independent Non-Executive Director) by the Board with effect from November 21, 2017. Subsequent to the financial year end, Mr. Chetan Desai (DIN:03595319) and Mr. Paritosh Kakkad (DIN:02558443) were also appointed as Additional Directors (Independent Non-Executive Directors) by the Board with effect from April 27, 2018. Pursuant to the provisions of the Section 161 of the Companies Act, 2013; Mr. Khanna; Mr. Desai and Mr. Kakkad holds their respective offices as such upto the date of ensuing Annual General Meeting. The Company has received a notice from a member proposing appointment of Mr. Khanna; Mr. Desai and Mr. Kakkad for the office of Director along with necessary deposit.

Mr. H. K. Mittal (DIN:00007690) shall be the Director liable to retire by rotation at the ensuing Annual General Meeting in accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company; and being eligible, offers himself for re-appointment. Additional information on Directors recommended for appointment / reappointment, as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), is provided in the notice convening 34^th Annual General meeting of the Company accompanying this report. The Company has received declarations from Mr. M. M. Agrawal, Mr. Anil Khanna, Mr. Chetan Desai and Mr. Paritosh Kakkad confirming that they meet with the criteria of Independence as prescribed under provisions of the Companies Act, 2013, Rules made thereunder and the Listing Regulations. Your Directors recommend the above appointment / reappointment for your approval.

Key managerial personnel:

Mr. Prasad Patwardhan resigned from the office of Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. May 29, 2017. Mr. Kiran Vaidya who was appointed w.e.f May 30, 2017, resigned from the Office of Chief Financial Officer and Key Managerial Personnel of the Company w.e.f January 31, 2018. Mr. Suhas Pawar who was appointed w.e.f. April 10, 2017, resigned from the office of Company Secretary and Key Managerial Personnel w.e.f. March 26, 2018. Mr. Rajendra Kothari was appointed as Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. February 1, 2018. The Company is looking for a right candidate for the office of Company Secretary and Key Managerial Personnel of the Company.

Board evaluation process:

Pursuant to the provisions of the Companies Act, 2013 & the Listing Regulations, and guidance note on Board Evaluation issued by the Securities and Exchange Board of India on January 5, 2017, the evaluation of every Director’s performance was done by the Nomination and Remuneration Committee at its meeting held on February 14, 2018. The performance evaluation of the Non Independent Directors and the Board as a Whole, committees thereof and the Chairman of the Company was carried out by the Independent Directors. Evaluation of the Independent Directors was carried out by the Board. A structured questionnaire was prepared based on criteria approved by Nomination and Remuneration Committee and circulated to the Directors for evaluation process.

Subsidiary companies and consolidated financial statements:

As on March 31, 2018, your Company had total 33 subsidiaries/step-down subsidiaries. During the year under review, M/s. Mercator Oceantransport Limited was incorporated as a Wholly Owned Subsidiary. As per Section 134 of the Companies Act, 2013, your Company has provided the Audited consolidated financial statements for the year ended on March 31, 2018; together with Auditors’ Report thereon forming part of this Annual Report, which includes financial information of all the subsidiaries. These documents will also be available for inspection during the business hours at the Registered Office of your Company and the respective subsidiary companies. A statement pursuant to the provisions of the Section 129 (3) of the Companies Act, 2013 read with relevant rules in the prescribed form AOC-1, showing financial highlights of the subsidiary companies is attached to the consolidated financial statements and therefore not repeated here for the sake of brevity. The Annual Report of your Company though does not contain full financial statements of the subsidiary companies; the audited annual accounts and related information of subsidiary companies is placed on its website and will be made available, upon request by any member of the Company.

Auditors:

Pursuant to the provisions of Section 139 of the Companies Act, 2013, M/s. Singhi and Co. (FRN: 302049E), were appointed as the Statutory Auditors for a period of five years by the Members in the 33^rd Annual General Meeting held on September 15, 2017 to hold office from the 33^rd Annual General Meeting till the conclusion of 38^th Annual General Meeting of the Company.

Auditors’ report:

Statutory Auditors’ Observations in Audit Report on Consolidated/ Standalone Financials and Directors’ explanation thereto -

a. In case of a step down subsidiary, the auditors have given a modified opinion for the financial year ended March 31, 2018 on the following basis:

i. recoverability and non-provision of impairment loss in case of long overdue Trade Receivables amounting to Rs. 126.01 Crore (US$ 19.37 Mn), (Previous Year Rs. 72.97 Crore (US$ 11.25 Mn))

ii. in case of claim of Hindustan Zinc Ltd (HZL), the company had forwarded a draft settlement agreement proposing a full and final additional cash settlement of Rs. 7.39 Crore (US$ 1.13 Mn), which is currently being reviewed by the claimant. However, the company has not made any provision for the potential claim amount and other incidental costs, pending final settlement of the claim.

- i) The Management is reasonably confident of the recovery of these receivables amounting to Rs. 126.01 Crore (US$ 19.37 Mn), (Previous Year Rs. 72.97 Crore, US$ 11.25 Mn).

ii) Once the Amount is ascertained and after the settlement agreement is executed, the required liability shall be recognized by us in the books of accounts

b. In case of two step down subsidiaries the respective auditors have given a modified opinion for the financial year ended March 31,2018, raising concern regarding the recoverability of deposits amounting to Rs. 22.03 Crore (USD 3.39 Mn,) (Previous Year Rs. 21.96 Crore (US$ 3.39 Mn))paid in the past to acquire 70% equity interests in companies which own coal mining concessions.

- The Management is reasonably confident of the recoverability of those advances amounting to Rs. 22.03 Crore (USD 3.39 Mn)

Secretarial audit report:

As required under the provisions of Section 204 of the Companies Act, 2013, your Company has obtained a Secretarial Audit Report for the financial year ended on March 31, 2018, from M/s. Ganesh Narayan & Co. (FCS: 6910), Company Secretaries which is appended as Annexure I and forms part of this report. The said report is self-explanatory and does not contain any qualifications, reservations, or adverse remarks or disclaimers.

Meetings of the board:

Nine meetings of the Board of Directors were held during the year. The details are provided in the Corporate Governance Report forming part of this Report.

Committees of the board:

The details of the Committees of the Board constituted under the Companies Act, 2013 and Listing Regulations are given in the Corporate Governance Report forming part of this Report.

Particulars of employees:

The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 (1) and Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is appended as Annexure II and IIA respectively.

Conservation of energy, technology absorption and foreign exchange earnings and outgo:

Your Company operates offshore and onshore activities in environment friendly manner. The major activities carried by the Company are offshore and your Company work towards minimizing the impact of its operations on the environment including marine life.

Several steps are taken for conservation of energy, some of which are listed below:

(A) Conservation of Energy:

(i) The steps taken or impact on conservation of energy:

- Having regular track on weather updates, M/E RPM and settings of the Auto Pilot System of Vessels are adjusted accordingly which in turn helps to save the fuel oil. Besides, the crews are properly trained to steer in bad weather using minimum Rudder movements.

- Cleaning of Hull and Polishing the propeller in afloat condition of some of the vessels was done to reduce the Hull Roughness and thereby fuel consumption.

- Using the latest Performance Monitoring Technology helps in maintaining engines and generators of Vessels in good conditions; which leads higher operation efficiently and reduce consumption of energy considerably.

- Weekly inspection of entire vessels and providing training to Crew and Officers about preservation of resources by Master brings the consumption of energy down.

- Machineries are run efficiently by following the laid down procedures and following the PMS (Planned Maintenance Schedule) so that fuel consumption are kept under control.

- Machineries which are not required are immediately shut down, this reduces the load on generators which leads to fuel saving.

- Cargo Planning load and discharge is done in such a way so as to use relevant cargo gear to the optimum levels. Ballasting and Deballasting is carried out by using gravity which shortens time frame to use pumping arrangements, this in turn helps us to reduce fuel consumption.

(ii) The steps taken by the company for utilizing alternate sources of energy:

Since your Company operates mostly from offshore; options for utilizing of alternate sources of energy options are minimal but your Company takes every necessary step to use alternate energy source as and when available.

(iii) The capital investment on energy conservation equipment’s:

Your Company has not made any material capital investment on energy conservation equipment during the year. All vessels are equipped with Exhaust Gas Economizers, so that the hot exhaust gases which are going up the funnel are used to provide heat source, this piece of equipment undergoes regular repairs and maintenance.

(B) Technology Absorption:

Your Company has neither entered into technical collaboration with any entity, relating to technology absorption nor imported any technology during the year.

(C) Foreign Exchange Earnings and Outgo:

Your Company has earned foreign exchange of Rs. 80.03 cr (previous year Rs. 78.83 cr) and spent Rs. 150.34 cr (previous year Rs. 126.46 cr) in foreign exchange, on account of import of stores & spares, capital goods, repairs / renovations of vessels, bunker, other vessel expenses, travelling and interests etc.

(D) Expenditure Incurred on Research & Development:

During the year, the Company has not incurred any expenditure on research and development.

Directors’ responsibility statement:

Pursuant to the provisions of Section 134 of the Companies Act, 2013, the Directors hereby confirm that:

i. In preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii. They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of loss for the year under review;

iii. They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 2013, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

iv. They have prepared the annual accounts on a going concern basis;

v. They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

vi. They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Details in respect of fraud reported by auditors:

No fraud was reported by Auditors of the company during the year under review pursuant to Section 143(12) of the Companies Act, 2013.

Corporate governance and management discussion and analysis reports:

The Company is committed to good corporate governance in compliance with the Listing Regulations; and the Philosophy of the Mercator Group. A report on Corporate Governance including the relevant Auditors’ Certificate regarding compliance with the conditions of Corporate Governance as stipulated in the Listing Regulations is annexed. Management Discussion and Analysis Report is also annexed.

Corporate social responsibility (CSR):

In compliance with regulations under the Companies Act, 2013; CSR Committee has been constituted and CSR policy has been adopted by the Company.

In respect of financial year 2016-17, the Company’s liability for spending on CSR activities was determined as Rs. 0.27 Cr, against which the Company could not spend any amount. Further, in respect of financial year 2015-16, Company’s liability to spend towards CSR was Rs. 0.53 Cr against which Rs. 0.05 Cr was spent during the year 2016-17. The Balance amount of R.s 0.48 Cr to be spend during the financial year 2017-18 as well as liability towards CSR for the year 201617 were to be met by spending during the financial year 2017-18.

However, on account of losses during the year, and due to liquidity crunch, the Company could not spend the amount on CSR activities, but the Company is committed to spend the said amount in years to come.

During the year under review, Your Company have revised CSR Policy to expand its scope and also authorized to complete CSR Activities with the help of external agencies. Your Company is ascertaining the expenditure in consultation with them and will spend accordingly the balance money. The details of the Committee and initiatives on CSR are set out in the Corporate Governance Report forming part of the Directors’ Report. Reporting on CSR in format specified is forming part of this report as Annexure III.

Particulars of loans given, investments made, guarantees given and securities provided:

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement.

Particulars of contracts or arrangements with related parties:

All related party transactions that were entered into during the financial year; were on an arm’s length basis and in the ordinary course of business. The requirement of giving particulars of contracts/arrangement made with related parties, in Form AOC-2 are not applicable for the year under review. There were no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all such related party transactions is placed before the Audit Committee and the Board of Directors for their approval on quarterly basis. The Company has framed a Related Party Transactions policy to ensure proper identification, approval process and reporting of transactions. The policy on Related Party Transactions as approved by the Board is available on the Company’s website. http://mercator.in/investors/index.aspx?id=7055 Risk management policy:

The Company has a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Directors’ Report. The Company has framed policy to identify, evaluate business risks and opportunities and to mitigate the risk. The policy defines the risk management approach at various levels including documentation and reporting. The policy helps in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments.

Internal control systems and their adequacy:

The Company has in place adequate internal financial controls. The Audit Committee of Directors periodically reviews the internal control systems with the top management and the Statutory and Internal Auditors. The Audit Committee also looks after adequacy of internal audit function, significant findings of the internal audit, and subsequent follow-up action on the same from time to time.

Vigil mechanism / whistle blower policy:

The Company has a Vigil Mechanism and Whistle Blower Policy for Directors and employees to deal with instance of fraud and mismanagement. The policy facilitates reporting of genuine concern or grievances, unethical behavior, actual or suspected fraud, or violation of the Code of Conduct of the Company, or its ethics Policy. They provide adequate safeguards to Directors/employees who avail of the mechanism. The same is overseen by the Audit Committee. During the year under review, no personnel of the Company approached the Audit Committee on any issue falling under the Policy. The said Policy is posted on the website of the Company.

http://mercator.in/investors/index.aspx?id=7055

Familiarization program for independent directors:

The details of the training and familiarization program are provided in the Corporate Governance Report. Further at the time of appointment of an independent director, the Company issues a formal letter of appointment outlining his /her role, function, duties and responsibilities. The format of letter of appointment is available on the website at http://mercator.in/investors/Statutory%20Disclosures/Policies/TermsandConditions.pdf.

Transfer of shares to investor education and protection fund:

Pursuant to Sections 124 and 125 of the Act read with the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (“IEPF Rules”), dividends, if not claimed for a consecutive period of 7 years from the date of transfer to Unpaid Dividend Account of the Company, are liable to be transferred to the Investor Education and Protection Fund (“IEPF”).

Further, shares in respect of such dividends which have not been claimed for a period of 7 consecutive years are also liable to be transferred to the demat account of the IEPF Authority.

The Company has also displayed details of shares so transferred to IEPF on the website of the Company at http://mercator.in/investors/index.aspx?id=7043

Disclosures with respect to demat suspense account/ unclaimed suspense account:

Material changes and commitments:

There have not been any material changes and commitments affecting the financial position of the Company between the end of the financial year of the Company as on March 31, 2018 and the date of this report i.e. May 28, 2018.

Extract of annual return:

Pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of Annual Return of the Company for the financial year ended on March 31, 2018 in Form MGT-9 is appended as Annexure IV.

General:

- During the year under review, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 and rules made thereunder.

- During the year under review, there was no change in nature of business of the Company.

- The Company’s policy on Directors’ appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 is appended as Annexure V.

- No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future.

- The Company has in place policy as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, no case was reported to the Committee constituted under the said Act.

Acknowledgements:

The Directors express their sincere thanks to all customers, suppliers, service providers, regulators, Governmental agencies and other statutory authorities for their continued whole hearted support to the Company during the year. We also acknowledge the support lent and confidence bestowed upon us by our bankers, stakeholders and all Mercatorians.

Regd. Office: For and on behalf of the Board

3^rd Floor, Mittal Tower, For Mercator Limited

B-wing, Nariman Point,

Mumbai - 400 021 H. K. Mittal

Dated: May 28, 2018 Executive Chairman

(DIN:00007690)

---

Mar 31, 2017

To

The Members,

Mercator Limited

We take pleasure in presenting Thirty Third Annual Report of your Company for the year ended on March 31, 2017.

FINANCIAL HIGHLIGHTS:

(Amount Rs, in Crores)

Particulars	Consolidated		Standalone
	Year ended		Year ended
	March 31, 2017	March 31, 2016	March 31, 2017	March 31, 2016
Income from operations	2115.39	2706.75	538.33	588.64
EBIDTA	610.24	(31.98)	223.78	245.85
Interest	(232.42)	(273.42)	(96.89)	(92.83)
Depreciation Impairment	(318.64) .(0.01)	(427.46) (348.83)	(147.28)	(127.24)
Exceptional Items	(9.16)	-	(9.16)	-
Profit/(Loss) before Tax & Minority Interest	50.01	(1081.69)	(29.55)	25.78
Minority Interest	(4.23)	209.61	-	-
Other Comprehensive Income Adjustment	(0.43)	1.31	(0.60)	1.25
Taxes
- Current Year	(20.03)	(2.49)	(100)	(100)
- Deferred Tax	(118)	(7.72)	-	-
Net Profit/(Loss) After Tax	24.14	(880.98)	(31.15)	26.03

During the year under review, the income from operations on a consolidated basis was Rs, 2115.39 cr as against Rs, 2,706.75 cr in the previous year. The consequential loss of revenue on account of (i) sale of Floating Production Unit (FPU) and (ii) lower volume of coal trading during the year affected the revenue. Further; the revenue of the FY 2016 included operations of dry bulk unit Mercator Lines (Singapore) Ltd. for a period upto December 2015; whose stake was subsequently divested.

The consolidated EBIDTA was Rs, 610.24 cr against loss of Rs, 31.98 cr in the previous year. The consolidated profit before tax was Rs, 50.01 cr against previous year loss of Rs, 1081.69 cr. After providing loss for the minority interest of Rs, 4.23 cr (previous year Rs, 209.61 cr); the profit after tax was Rs, 24.14 cr as against loss of Rs, 880.98 cr in the previous year.

On a standalone basis, the income from operations for the year under review was Rs, 538.33 cr. (Rs, 588.64 cr in the previous year). In view of higher Depreciation by about 16% (Rs, 147.28 crores against Rs, 127.24 cr in previous year) and Interest of about 4% (Rs, 96.90 cr against Rs, 92.83 cr in previous year); exceptional item of Rs, 9.16 cr; the Company had standalone loss of Rs, 31.15 cr (previous year profit of Rs, 26.03 cr) after provision of tax of Rs, 1 cr (previous year Rs, 1 cr).

OPERATIONS & FINANCE:

Coal

Globally, all commodities including Coal have witnessed falling prices during the major part of the year. However, these have stabilized & risen towards the year end. Rationalization measures were undertaken across the coal business which has yielded fruitful results. During the year, coal logistics business improved due to better utilization of assets.

During the year, though there was increase in coal mined (1.74 MMT against 1.17 MMT in previous year); the trading volume was decreased (2.77 MMT against 3.65 MMT in previous year).

Oil and Gas

As members are aware; Mercator Petroleum Limited (‘MPL''), a subsidiary of the Company has Production Sharing Contracts with the Government of India for exploration of petroleum in two blocks viz. CB-3 & CB-9, under the Seventh New Exploration Licensing Policy round (NELP-VII). MPL has 100% participating interest (‘PI'') in both the above blocks. Exploration activities continue in CB-9. Subsequent to the financial year end; one more well was drilled. The said well too, has encountered potential hydrocarbon zones and is planned to be tested alongside 3^rd and 4^th well, post monsoon, in order to achieve higher efficiency. Block CB-3 is currently under exploration period.

MPL in consortium with Oil India Ltd. and others, had entered into Production Sharing Contract with the Ministry of Energy, Myanmar for two (2) shallow offshore oil blocks viz. M-4 and YEB. MPL has held 25% PI in both these blocks. While the initial study has been completed in both the blocks, prospects for M-4 appeared to be poor and therefore the Consortium, along with Oil India, applied to relinquish the said Block during the year under review.

The most of the work at EPC project awarded by ONGC for conversion of their Mobile Offshore Drilling Unit (MODU) ‘Sagar Samrat'' into a Mobile Offshore Production Unit (MOPU) was completed and it was floated on water subsequent to year end. The project would be now delivered post monsoon after completion of Installation.

During the year; the Floating Production Unit operating in Nigeria was sold; proceeds of which were used for repayment of debts.

Shipping

All the tankers and gas carrier continued to be deployed gainfully during the year. One of the MR Tankers secured a contract of 4 years for an aggregate value of '' 120 cr.

Dredging

All the dredgers were gainfully deployed under various contracts; except one that had long unscheduled repairs. During the year the dredging division accounted for works at various ports including Kandla, Paradip, Goa, Cochin, Mangalore etc.

Finance

Pursuant to the approval received at the last Annual General Meeting; the Company successfully completed QIP issue during the year. Under the issue 2,50,00,000 Equity shares of face value of Re. 1/- each at a premium of '' 39.75 per equity share aggregating to '' 101.87 cr were placed which were subscribed fully by marquee investors. The proceeds of the issue were utilized for intended purposes i.e repayment of loans and general corporate purposes.

With clear focus on deleveraging balance sheet; Mercator group took some proactive measures on reduction of debts such as strategic refinancing; efficient working capital management. This has resulted into reduction of debts about 34% to '' 1416 cr (from '' 2139 cr as at March 31, 2016).

It is proposed to seek consent from the members for issue of securities upto an amount USD 50 mn in equivalent Indian and/or any other foreign currency to augment long term working capital requirements, replace high cost debt, general corporate purposes and other permissible end uses.

TRANSFER TO RESERVES:

During the year under review, the Company has transferred '' 12.50 Cr to Debenture Redemption Reserve.

DIVIDEND:

The Board of Directors are pleased to recommend dividend @5% i.e. Re. 0.05 per share on 26,98,92,073 Equity shares of Re.1/- each for the year under review subject to the approval of members at the ensuing Annual General Meeting of the Company.

The dividend, if approved by the members at the Annual General Meeting, shall entail a payout of '' 1.62 Cr including Dividend Distribution Tax (DDT) of '' 0.27 Cr.

CHANGES IN BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Board of Directors:

During the year under review, Mr. Atul Agarwal (DIN:00007663) and Mr. K. R. Bharat (DIN: 00584367) resigned from office of Directors of the Company w.e.f close of business hours on September 30, 2016 and November 30, 2016 respectively. Mr. Prem Rajani (DIN:00062833); who was appointed as an Additional Director (Independent Non- Executive Director) by the Board of Directors vide circular resolution passed on December 1, 2016, resigned from the office of Director with effect from January 10, 2017. The Board of Directors place on record its sincere appreciation for the support and contribution made by aforesaid Directors during their tenure as Director of the Company.

Mr. Desh Raj Dogra (DIN:00226775) was appointed as an Additional Director (Independent Non-Executive Director) by the Board with effect from February 15, 2017. Pursuant to the provisions of the Section 161 of the Companies Act, 2013; Mr. Dogra holds office upto the date of ensuing Annual General Meeting. The Company has received a notice from a member proposing appointment of Mr. Dogra for the office of Director along with necessary deposit.

Mrs. Archana Mittal (DIN:00007972) shall be the Director liable to retire by rotation at the ensuing Annual General Meeting in accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company; and being eligible, offers herself for re-appointment.

Additional information on Directors recommended for appointment / reappointment, as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), is provided in the notice convening 33rd Annual General meeting of the Company accompanying this report. The Company has received declarations from Mr. M. M. Agrawal, Mr. Gunender Kapur and Mr. Desh Raj Dogra confirming that they meet with the criteria of Independence as prescribed under provisions of the Companies Act, 2013, Rules made there under and the Listing Regulations.

Your Directors recommend the above appointment / reappointment for your approval.

KEY MANAGERIAL PERSONNEL

Mr. Kishor Shah resigned from the office of Group Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. November 12, 2016. Mr. Deepesh Joishar resigned from the office of Company Secretary and Key Managerial Personnel w.e.f. February 28, 2017. Mr. Shalabh Mittal was appointed as Chief Executive Officer and Key Managerial Personnel of the Company w.e.f. May 27, 2016. Mr. Suhas Pawar (Membership No. A36560) has been appointed as Company Secretary and Key Managerial Personnel of the Company w.e.f. April 10, 2017. Mr. Prasad Patwardhan resigned from the office of Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. May 29, 2017. Mr. Kiran Vaidya has been appointed as Officiating Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. May 30, 2017.

BOARD EVALUATION PROCESS:

Pursuant to the provisions of the Companies Act, 2013 & the Listing Regulations, evaluation of every Director''s performance was done by the Nomination and Remuneration Committee. The performance evaluation of the Non Independent Directors and the Board as a Whole, committees thereof and the Chairman of the Company was carried out by the Independent Directors. Evaluation of the Independent Directors was carried out by the Board. A structured questionnaire was prepared based on criteria approved by Nomination and Remuneration Committee and circulated to the Directors for evaluation process.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS:

As on March 31, 2017, your Company had total 33 subsidiaries / step-down subsidiaries.

As per Section 134 of the Companies Act, 2013, your Company has provided the Audited consolidated financial statements for the year ended on March 31, 2017; together with Auditors'' Report thereon forming part of this Annual Report, which includes financial information of all the subsidiaries. These documents will also be available for inspection during the business hours at the Registered Office of your Company and the respective subsidiary companies. A statement pursuant to the provisions of the Section 129 (3) of the Companies Act, 2013 read with relevant rules in the prescribed form AOC-1, showing financial highlights of the subsidiary companies is attached to the consolidated financial statements and therefore not repeated here for the sake of brevity. The Annual Report of your Company though does not contain full financial statements of the subsidiary companies; the audited annual accounts and related information of subsidiary companies is placed on website and will be made available, upon request by any member of the Company.

AUDITORS:

Pursuant to the provisions of Section 139 of the Companies Act, 2013, the term of Statutory Auditors of the Company M/s. CNK & Associates LLP (FRN:101961W), ends at the conclusion of the ensuing Annual General Meeting and not eligible for re-appointment. The Audit Committee has recommended the appointment of M/s. Singhi and Co. (FRN: 302049E), at its meeting held on May 30, 2017 in place of retiring Statutory

Auditors. M/s. Singhi and Co. have furnished a certificate that their appointment, if made, will be within the limits prescribed under the Companies Act. The Directors recommend their appointment as the Statutory Auditors for a period of five years for approval of the Members. Members are requested to approve their appointment as Statutory Auditors to hold office from the conclusion of this Annual General Meeting until the conclusion of the 38th Annual General Meeting of the Company, subject to the ratification of their appointment by the Members as may be required in this regard.

AUDITORS’ REPORT:

Statutory Auditors'' Observations in Audit Report on Consolidated Financials and Directors'' explanation thereto -

i) In respect of the observation in the Audit Report regarding, the unaudited financial statements of one step down subsidiary as approved by the management of the said subsidiary was considered where in the GroupRs,s share of Net Assets of Rs, 18,586 lakhs as at March 31, 2017, Revenues of Rs, 13,675 lakhs and profit for the year of Rs, 13,669.42 lakhs for the year ended on that date in the Consolidated Financial Statements. AuditorRs,s statement in their report is based on the unaudited financial statement of the said subsidiary.

The respective step down subsidiary is in the process of getting its accounts audited.

ii) In respect of the observation in the Audit Report regarding recoverability of long overdue trade receivables by one step down subsidiary viz. MCS Holdings Pte Ltd. amounting to Rs, 7,297.01 lakhs (USD 11.25Mn) (PY Rs, 9212.85 lakhs (USD 13.89 Mn)) for which no allowance for impairment has been made.

The Company is reasonably confident of the recovery of these receivables amounting to Rs, 7297.01 Lakhs (USD 11.25Mn) (PY Rs, 9212.85 Lakhs (USD 13.89 Mn)) and dispatch income of Rs, 648.32 Lakhs (USD 0.99 Mn) recognized in the current year.

iii) In respect of the observation in the Audit Report regarding recoverability of the deposits paid by two step down subsidiaries viz. Oorja 1 Pte. Ltd. and Oorja 2 Pte Ltd. amounting to Rs, 2195.92 lakhs (USD 3.39 Mn.) paid to acquire 70% equity interests in companies which own coal mining concessions.

The Company is reasonably confident of the recoverability of those advances amounting to Rs, 2,195.92 lakhs (USD 3.39 Mn).

SECRETARIAL AUDIT REPORT

As required under the provisions of Section 204 of the Companies Act, 2013, your Company has obtained a Secretarial Audit Report for the financial year ended on March 31, 2017 from M/s. Ganesh Narayan & Co., Company Secretaries which is appended as Annexure I and forms part of this report. The said report does not contain any qualifications, reservations, or adverse remarks or disclaimers.

MEETINGS OF THE BOARD

Six meetings of the Board of Directors were held during the year. The details are provided in the Corporate Governance Report forming part of this Report.

COMMITTEES OF THE BOARD

The details of the Committees of the Board constituted under the Companies Act, 2013 and Listing Regulations are given in the Corporate Governance Report forming part of this Report.

PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197 of the Companies Act, 2013 read with Rule 5 (1) and Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is appended as Annexure II and IIA respectively.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company operates offshore and onshore activities in environment friendly manner. The major activities carried by the Company are offshore and your Company work towards minimizing the impact of its operations on the environment including marine life.

Several steps are taken for conservation of energy, some of which are listed below:

(A) Conservation of Energy:

(i) The steps taken or impact on conservation of energy:

- Having regular track on weather updates, M/E RPM and settings of the Auto Pilot System of Vessels are adjusted accordingly which in turn helps to save the fuel oil. Besides, the crew are properly trained to steer in bad weather using minimum Rudder movements.

- Using the latest Performance Monitoring Technology helps in maintaining engines and generators of Vessels in good conditions; which leads higher operation efficiently and reduce consumption of energy considerably.

- Weekly inspection of entire vessels and providing training to Crew and Officers about preservation of resources by Master brings the consumption of energy down.

- Switching off the lights/Air condition systems whenever possible.

(ii) The steps taken by the company for utilizing alternate sources of energy:

Since your Company operates mostly from offshore; options for utilizing of alternate sources of energy options are minimal but your Company takes every necessary step to use alternate energy source as and when available.

(iii) The capital investment on energy conservation equipment''s:

Your Company has not made any material capital investment on energy conservation equipment during the year. All vessels are equipped with Exhaust Gas Economizers, so that the hot exhaust gases which are going up the funnel are used to provide heat source, this piece of equipment undergoes regular repairs and maintenance.

(B) Technology Absorption:

Your Company has neither entered into technical collaboration with any entity, relating to technology absorption nor imported any technology during the year.

(C) Foreign Exchange Earnings and Outgo:

Your Company has earned foreign exchange of Rs, 14.34 cr (previous year Rs, 16.80 cr) and spent Rs, 94.58 cr (previous year Rs, 75.86 cr) in foreign exchange, on account of import of stores & spares, capital goods, repairs / renovations of vessels, bunker, other vessel expenses, travelling and interests etc.

(D) Expenditure Incurred on Research & Development:

During the year, the Company has not incurred any expenditure on research and development.

DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 134 of the Companies

Act, 2013, the Directors hereby confirm that:

i) I n preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss for the year under review;

iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 2013, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

iv) They have prepared the annual accounts on a going concern basis;

v) They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively;

vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

DETAILS IN RESPECT OF FRAUD REPORTED BY

AUDITORS

There was no such frauds reported by the Auditors of the company during the year under review pursuant to Section 143(12) of the Companies Act, 2013.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORTS

The Company is committed to good corporate governance in compliance with the Listing Regulations; and the Philosophy of the Mercator Group. A report on Corporate Governance including the relevant Auditors'' Certificate regarding compliance with the conditions of Corporate Governance as stipulated in the Listing Regulations is annexed. Management Discussion and Analysis Report is also annexed.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with regulations under the Companies Act, 2013; CSR Committee has been constituted and CSR policy has been adopted by the Company.

As per the criteria laid down under the Companies Act, 2013, of average profit in the last three financial years; your Company was required to spend an amount of Rs, 0.53 cr statutorily on CSR activities during the year. Your Company has initiated the CSR activities through its Implementing Agency Prem Punita Foundation and spent Rs, 0.05 cr during FY 2017. Your Company is ascertaining the expenditure in consultation with them and will spend accordingly the balance money.

The details of the Committee and initiatives on CSR are set out in the Corporate Governance Report forming part of the Directors'' Report. Reporting on CSR in format specified is forming part of this report as Annexure III

LOANS, GUARANTEES AND INVESTMENTS

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All related party transactions that were entered into during the financial year; were on an arm''s length basis and in the ordinary course of business. The requirement of giving particulars of contracts/arrangement made with related parties, in Form AOC-2 are not applicable for the year under review. There were no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all such related party transactions is placed before the Audit Committee and the Board of Directors for their approval on quarterly basis.

The Company has framed a Related Party Transactions policy to ensure proper identification, approval process and reporting of transactions. The policy on Related Party Transactions as approved by the Board is available on the Company''s website.

http://mercator.in/investors/index.aspx?id=7055 RISK MANAGEMENT POLICY

The Company has a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Directors'' Report.

The Company has framed policy to identify, evaluate business risks and opportunities, and to mitigate the risk. The policy defines the risk management approach at various levels including documentation and reporting. The policy helps in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate internal financial controls. The Audit Committee of Directors periodically reviews the internal control systems with the top management, and the Statutory and Internal Auditors. The Audit Committee also looks after adequacy of internal audit function, significant findings of the internal audit, and subsequent follow-up action on the same from time to time.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a Vigil Mechanism and Whistle Blower Policy for Directors and employees to deal with instance of fraud and mismanagement. The policy facilitates reporting of genuine concern or grievances, unethical behavior, actual or suspected fraud, or violation of the Code of Conduct of the Company, or its ethics Policy. They provide adequate safeguards to Directors/employees who avail of the mechanism. The same is overseen by the Audit Committee. During the year under review, no personnel of the Company approached the Audit Committee on any issue falling under the Policy. The said Policy is posted on the website of the Company.

http://mercator.in/investors/index.aspx?id=7055

FAMILIARIZATION PROGRAM FOR INDEPENDENT DIRECTORS:

The details of the training and familiarization program are provided in the Corporate Governance Report. Further at the time of appointment of an independent director, the Company issues a formal letter of appointment outlining his /her role, function, duties and responsibilities. The format of letter of appointment is available on the website at http:// mercator.in/investors/Statutory%20Disclosures/Policies/ TermsandConditions.pdf.

TRANSFER OF SHARES TO INVESTOR EDUCATION AND PROTECTION FUND

In pursuance of the provisions of Section 124(6) of the Companies Act, 2013 and the IEPF (Accounting, Audit,

Transfer and Refund) Rules, 2016 notified on September 7,

2016, in addition to the transfer of amounts of unclaimed/ unpaid dividend for 2008-09, the underlying shares are also required to be transferred to the IEPF Authority in case the dividend of further 7 (Seven) consecutive years.

Individual reminders have been sent to concerned members advising them to encash their dividend and the complete List of such members whose Shares are due for transfer to the IEPF is also placed in the Unclaimed Dividend section of the Investor Section on the website of the Company at http:// mercator.in/investors/index.aspx?id=7043.

The Company will transfers corresponding shares to IEPF in accordance with the provisions of the Companies Act, 2013 and rules made there under including any statutory modification, re-enactments for the time being in force.

MATERIAL CHANGES AND COMMITMENTS

There have not been any material changes and commitments affecting the financial position of the Company between the end of the financial year of the Company as on March 31, 2017 and the date of this report i.e. July 25, 2017.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of Annual Return of the Company for the financial year ended on March 31, 2017 in Form MGT-9 is appended as Annexure IV.

GENERAL

- During the year under review, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 and rules made there under.

- During the year under review, there was no change in nature of business of the Company.

- The Company''s policy on Directors'' appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 is appended as Annexure V.

- No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

- The Company has in place policy as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, no case was reported to the Committee constituted under the said Act.

ACKNOWLEDGEMENTS:

The Directors express their sincere thanks to all customers, suppliers, service providers, regulators, Governmental agencies and other statutory authorities for their continued whole hearted support to the Company during the year.

We also acknowledge the support lent and confidence bestowed upon us by our bankers, stakeholders and all Mercatorians.

For and on behalf of the Board

For Mercator Limited

H. K. Mittal

Executive Chairman

(DIN:00007690)

Regd. Office:

3rd Floor, Mittal Tower,

B-wing, Nariman Point,

Mumbai - 400021.

Dated: July 25, 2017

---

Mar 31, 2016

The Members,

Mercator Limited

We take pleasure in presenting Thirty Second Annual Report of your Company for the year ended on March 31, 2016.

FINANCIAL HIGHLIGHTS:

Amount Rs, in crores

Particulars Consolidated Standalone
Year ended Year ended

March
31, 2016 March
31, 2015 March
31, 2016 March 31, 2015

Income from
operations 2,706.41 3,091.63 588.31 659.42

Total Income 2,668.48 3,086.47 578.67 658.60

Operating Profit (55.64) 527.46 211.57 197.23

Interest 244.71 213.09 61.86 52.48

Depreciation 422.41 474.56 122.19 92.38

Impairment 348.83 409.01 - -

Exceptional
Items - 115.96 - -

Profit/(Loss)
before Tax &
Minority Interest (1,089.53) (690.32) 17.87 51.55

Minority Interest 209.61 257.37 N.A. N.A.
Taxes

-Current Year (2.49) (10.58) (1.00) (2.00)

-Deferred Tax (7.71) (6.00) - -

Net Profit/(Loss)
After Tax (890.13) (449.53) 16.87 49.55

Balance brought
forward from
last year 253.98 719.34 66.26 33.25

Transfer to
Tonnage Tax
Reserve 357.40 1029.69 (3.57) (10.31)

Depreciation of
previous year - (0.30) - (0.30)

Proposed Dividend 2.45 (4.90) (2.45) (4.90)

Tax on Dividend 0.50 (1.02) (0.50) (1.03)

Balance carried
to Balance Sheet 203.84 253.98 76.61 66.26

During the year under review, the income from operations on a consolidated basis was Rs, 2,706 cr as against Rs, 3,092 cr in the
previous year.

The challenging conditions in dry bulk market since the past few years affected the performance of the Company. Mercator Lines
(Singapore) Limited (MLS), a step down subsidiary of the Company engaged in the business of dry bulk shipping was placed under
Judicial Management in January 2016. MLS on standalone basis suffered a loss of Rs, 656 cr and impairment loss on account of its
investment was Rs, 329 cr which forms part of consolidated results. The entire stake of MLS was sold in March 2016. Regulatory
authorities have approved sale of shares of MLS. Going forward, financial performance of MLS will not form part of consolidated
results.

In view of above, the consolidated performance resulted in a loss before tax of Rs, 1,090 cr (previous year loss of Rs, 690 cr).
After providing loss for minority interest of Rs, 210 cr (previous year Rs, 257 cr), the loss after tax was Rs, 890 cr as against
loss of Rs, 449 cr in the previous year.

On a standalone basis, the income from operations for the year under review was Rs, 588 cr. (Rs, 659 cr in the previous year

which included onetime mobilization fees ofRs, 50 cr under one of long term contract). While the dredging segment recorded a top
line growth of about 31%; the shipping segment reported flat turnover. The Company had Coal handling operations under long term
contract with Mumbai Port Trust at Haji Bunder. These operations were suspended by State Government during the year due to
non-renewal of environmental license of Mumbai Port Trust. Consequently, revenue in this segment declined sharply by 67%.

The standalone operating profits were marginally higher at Rs, 212 cr (previous year Rs, 197 cr), however higher Depreciation by
about 33% (Rs, 122 crores against Rs, 92 cr in previous year) and Interest of about 17% (Rs, 62 cr against Rs, 53 cr in previous
year) led to lower standalone profit at Rs, 18 cr (previous year Rs, 52 cr). After provision of tax of Rs, 1 cr (previous year
Rs, 2 cr) the standalone Profit after tax was Rs, 17 cr (previous year Rs, 50 cr).

OPERATIONS & FINANCE:

Oil and Gas

The Directors are pleased to report that during the year; Mercator Petroleum Limited (MPL), a subsidiary of the Company has
carried out drilling & testing operations in the Cambay basin block CB-9. Two wells Jyoti-1 & Jyoti-2 have had successful oil
discoveries. The same have been notified to the Director General of Hydrocarbons (DGH) also. MPL has also been awarded two oil
blocks in Myanmar in consortium with Oil India Ltd. & others. These blocks are in the study period prior to exploration. During
this period, a study of existing technical data is being conducted to better understand the sub-surface characteristics.

During the year, the Sagar Samrat Conversion Project received a minor setback due to a fire incident at the yard delaying its
completion. The corrective actions have thereafter been undertaken and the project is back on track. The final delivery of the
project would now take place towards the end of current year.

There has been smooth and trouble free operation of the Floating Production Unit in Nigeria during the year under review.

Coal

Globally, all commodities including Coal witnessed a fall in prices, however, this free fall has stabilized towards the year end.
Rationalization measures were undertaken across the coal business to overcome the difficult market scenario which have yielded
fruitful results. During the year, coal logistics business was expanded which improved utilization of assets.

During the year, there was reduction in volume sold 4.81 MT (previous year 5.82 MT) mainly on account of closure of one mine in
Indonesia. Further, there was impairment loss amounting Rs, 23 crores also on account of same.

Shipping

The tankers and gas carrier were gainfully deployed on long term charter during the year. Three tankers whose contract expired
during the year, were re-deployed on slightly better medium term charter rates than the existing rates.

Dredging

During the year, Mercator acquired and commissioned two European built dredgers - one Trailer Suction Hopper Dredger & one Bucket
Ladder Dredger, taking the total dredger fleet to nine. Both dredgers were deployed on multi-year contract and provided a growth
impetus to the business segment.

Finance

The above acquisitions / other capital expenditure were part financed by debts and internal accruals.

The Board of Directors have sought consent from the shareholders for issue of securities for an amount not exceeding Rs, 200
crore to augment long term working capital requirements, replace high cost debt and other permissible end uses.

DIVIDEND:

The Board of Directors are pleased to recommend dividend of 10% i.e. Rs, 0.10 (previous year 20 % i.e. Rs, 0.20) per Equity Share
on 24,48,92,073 shares for the financial year ended March 31, 2016. The said dividend shall be subject to the approval of the
members at the ensuing Annual General Meeting.

The dividend, if approved by the shareholders at the Annual General Meeting, shall entail a payout of Rs, 2.95 cr including
Dividend Distribution Tax (DDT) of Rs, 0.50 cr. (Previous Year Rs, 5.92 cr & Rs, 1.04 cr respectively).

CHANGES IN BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Board of Directors:

During the year under review, Mr. Shalabh Mittal (DIN 00007919) and Mr. Manohar Bidaye (DIN 00010699) resigned from office of
Directors of the Company w.e.f. December 24, 2015 and March 31, 2016 respectively.

Mr. Atul Agarwal (DIN 00007663) shall be the Director liable to retire by rotation at the ensuing Annual General Meeting in
accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company; and being eligible, offers
himself for re-appointment.

Further, it is also proposed to appoint Mr. H. K. Mittal as Executive Chairman and appoint Mr. Atul Agarwal as Executive Vice
Chairman of the Company with effect from August 1, 2016 when their present terms are expiring. Their terms of appointment and
remuneration have been approved by the Nomination and Remuneration Committee and the Board of Directors in their respective
meetings held on May 27, 2016. The same are detailed in the accompanying notice of Annual General Meeting.

Additional information on Directors recommended for appointment / reappointment, as required under the SEBI (Listing Obligations
and Disclosures Requirements) Regulations 2015 (Listing Regulations), is provided in the notice convening 32nd Annual General
meeting of the Company accompanying this report. The Company has received declarations from Mr. M. M. Agrawal, Mr. K. R. Bharat
and Mr. Gunender Kapur confirming that they meet with the criteria of Independence as prescribed under provisions of the
Companies Act, 2013, Rules there under and Listing Regulations.

Your Directors recommend the above appointment / re-appointment for your approval.

Key Managerial Personnel

Mr. Kishor Shah has been appointed as the Group Chief Financial Officer and Key Managerial Personnel of the Company w.e.f.
December 15, 2015. Mr. Shalabh Mittal has been appointed as Chief Executive Officer and Key Managerial Personnel of the Company
w.e.f. May 27, 2016.

BOARD EVALUATION PROCESS:

Pursuant to the provisions of the Companies Act, 2013 & the Listing Regulations, evaluation of every director''s performance was
done by the Nomination and Remuneration Committee. The performance evaluation of the Non Independent Directors and the Board as a
Whole, committees thereof and the chairman of the Company was carried out by the Independent Directors. Evaluation of the
Independent Directors was carried out by the Board. A structured questionnaire was prepared based on criteria approved by
Nomination and Remuneration Committee and circulated to the Directors for evaluation process.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS:

As on March 31, 2016, your Company had total 36 subsidiaries / step-down subsidiaries. During the year, Mercator Global Pte.
Ltd., Marvel Value International Ltd., Brio Resources Pte. Ltd. Fortune Of shore O&M Pte. Ltd. and RDPT Batavia Drill were
formed / acquired as step-down subsidiaries. Mercator Lines (Singapore) Ltd. (MLS), as step-down subsidiary ceased to be
subsidiary of the Company and Consequently Chitra Prem Pte. Ltd. and Vidya Varsha INC, subsidiary of MLS also ceased to be
subsidiary of the Company

As per Section 134 of the Companies Act, 2013, your Company has provided the Audited consolidated financial statements for the
year ended on March 31, 2016; together with Auditors'' Report thereon forming part of this Annual Report, which includes financial
information of all the subsidiaries. These documents will also be available for inspection during the business hours at the
Registered Office of your Company and the respective subsidiary companies. A statement pursuant to the provisions of Section 129
(3) of the Companies Act, 2013 read with relevant rules in the prescribed form AOC-1, showing financial highlights of the
subsidiary companies is attached to the consolidated financial statements. Further, a detailed analysis of activities and
business operations of major Subsidiary Companies and their business prospects have been dealt with at length separately in
Section under Management Discussion and Analysis Report annexed hereto; and therefore not repeated here for the sake of brevity.
The Annual Report of your Company though does not contain full financial statements of the subsidiary companies, the audited
annual accounts and related information of subsidiary companies is placed on its website and will be made available, upon request
by any shareholder of the Company.

AUDITORS:

M/s. CNK & Associates LLP, retires at the conclusion of the forthcoming Annual General Meeting and are eligible for
re-appointment. The Audit Committee has recommended the re-appointment of M/s. CNK & Associates LLP, at its meeting held on May
27, 2016 M/s. CNK & Associates LLP have furnished a certificate that their appointment, if made, will be within the limits
prescribed under the Companies Act. The Directors recommend their re-appointment for approval of the members. Members are
requested to approve their re-appointment as Auditors to hold office from the ensuing Annual General Meeting till the conclusion
of the next Annual General Meeting.

AUDITORS'' REPORT:

Statutory Auditors'' Observations in Audit Report on Consolidated Financials and Directors'' explanation thereto -

i) In respect of the observation in Audit Report regarding recoverability of long overdue trade receivables by one step down
subsidiary amounting to Rs, 9,212.85 lakhs (USD 13.89 Mn) for which no allowance for impairment has been made.

The Company is reasonably confident of the recoverability of the trade receivables amounting to Rs, 9,212.85 lakhs.

ii) In respect of the observation in Audit Report regarding recoverability of the deposits paid by two step down subsidiaries
amounting to Rs, 2,103.89 lakhs (USD 3.17 Mn) to acquire 70% equity interest in the companies which own concessions for coal
mining.

The Company is reasonably confident of the recoverability of the advances amounting to Rs, 2,103.89 lakhs.

SECRETARIAL AUDIT REPORT

As required under the provisions of Section 204 of the Companies Act, 2013, your Company has obtained a Secretarial Audit Report
for the financial year ended on March 31, 2016 from M/s Anil Jani & Co., Company Secretaries which is appended as Annexure I and
forms part of this report. The said report does

not contain any qualifications, reservations, or adverse remarks or disclaimers.

MEETINGS OF THE BOARD

Nine meetings of the Board of Directors were held during the year. The details are provided in the Corporate Governance Report
forming part of this Report.

COMMITTEES OF THE BOARD

The details of the Committees of the Board constituted under the Companies Act, 2013 and Listing Regulations are given in the
Corporate Governance Report forming part of this Report.

PARTICULARS OF EMPLOYEES:

The information required pursuant to Section 197 of the Companies Act 2013 read with Rule 5 (1) and Rule 5 (2) of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is appended as Annexure
II and IIA respectively.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company operates of shore and onshore activities in environment friendly manner. The major activities carried by the Company
are of shore and your Company work towards minimizing the impact of its operations on the environment including marine life.

Several steps are taken for conservation of energy, some of which are listed below:

(A) Conservation Of Energy:

(i) The steps taken or impact on conservation of energy:

All Vessels are fully compliant to take shore power where ever available so that generators can be stopped. The generators when
not required; are switched off to save fuel.

All electrical motors are checked regularly if they are drawing the correct current as per their ratings.

Entire machinery in engine room and on deck is kept well maintained and efficiently operated so energy conservation can be
achieved.

The Master of the ship and his team make good passage planning on board for more use of ocean currents and winds during voyages,
which helps to conserve fuel.

(ii) The steps taken by the company for utilizing alternate sources of energy:

Since your Company operates mostly from offshore; utilizing of alternate sources of energy options are minimal but your Company
takes every necessary step to use alternate energy source as and when available.

(iii) The capital investment on energy conservation equipment''s:

Your Company has not made any material capital investment on energy conservation equipment during the year. All vessels are
equipped with Exhaust Gas Economizers, so that the hot exhaust gases which are going up; the funnel are used to provide heat
source, this piece of equipment undergoes regular repairs and maintenance and also at time need to change the entire tubing''s
etc.

(B) Technology absorption:

As your Company has not entered into technical collaboration with any entity, there are no particulars relating to technology
absorption and not imported any technology during the year.

(C) Foreign Exchange Earnings and Outgo:

Your Company has earned foreign exchange of Rs, 16.80 cr (previous year Rs, 182.38 cr) and spent Rs, 322.31 cr (previous year ^
324.78 cr) in foreign exchange, on account of import of stores & spares, capital goods, repairs / renovations of vessels, bunker,
other vessel expenses, travelling and interests etc.

(D) Expenditure Incurred on Research & Development:

During the year, the Company has not incurred any expenditure on research and development.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 134 of the Companies Act, 2013, the Directors hereby confirm that:

(i) In preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation
relating to material departures;

(ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are
reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial
year and of the profits for the year under review;

(iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the
provision of the Companies Act, 2013, to safeguard the assets of the Company and to prevent and detect fraud and other
irregularities;

(iv) They have prepared the annual accounts on a going concern basis.

(v) They have laid down internal financial controls to be followed by the company and that such internal financial controls are
adequate and were operating effectively.

(vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were
adequate and operating effectively.

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORTS

The Company is committed to good corporate governance in compliance with the Listing Regulations; and the Philosophy of the
Mercator Group. A report on Corporate Governance including the relevant Auditors'' Certificate regarding compliance with the
conditions of Corporate Governance as stipulated in the Listing Regulations is appended. Management Discussion and Analysis
Report is also appended.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with regulations under the Companies Act, 2013; CSR Committee has been constituted and CSR policy has been adopted
by the Company.

Since there was no average profit in the last three financial years; your Company was not required to spend statutorily on CSR
activities during the year. However, your Company continues to support social initiatives through Prem Punita Foundation which it
had appointed in the previous year as its Implementing Agency.

The details of the Committee and initiatives on CSR are set out in the Corporate Governance Report forming part of the Directors''
Report.

LOANS, GUARANTEES AND INVESTMENTS

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan
or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All related party transactions that were entered into during the financial year were on an arm''s length basis and in the ordinary
course of business. The requirement of giving particulars of contracts/arrangement made with related parties, in Form AOC-2 are
not applicable for the year under review. There are no materially significant related party transactions made by the Company with
Promoters, Directors or Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee
is obtained on yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into
pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is
placed before the Audit Committee and the Board of Directors for their approval on quarterly basis.

The Company has framed a Related Party Transactions policy to ensure proper identification, approval process and reporting of
transactions. The policy on Related Party Transactions as approved by the Board is available on the Company''s website.

RISK MANAGEMENT POLICY

The Company has a Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate
Governance Report forming part of the Directors'' Report.

The Company has framed policy to identify, evaluate business risks and opportunities, and to mitigate the risk. The policy
defines the risk management approach at various levels including documentation and reporting. The policy helps in identifying
risks trend, exposure and potential impact analysis at a Company level as also separately for business segments.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate internal financial controls. The Audit Committee of Directors periodically reviews the
internal control systems with the top management, and the Statutory and internal auditors. The Audit Committee also looks after
adequacy of internal audit function, significant findings of the internal audit, and subsequent follow-up action on the same from
time to time.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a Vigil Mechanism and Whistle Blower Policy for Directors and employees to deal with instance of fraud and
mismanagement. The policy facilitates reporting of genuine concern or grievances, unethical behavior, actual or suspected fraud,
or violation of the Code of Conduct of the Company, or its ethics Policy. They provide adequate safeguards to Directors/
employees who avail of the mechanism. The same is overseen by the Audit Committee. The said Policy is posted on the website of
the Company.

MATERIAL CHANGES AND COMMITMENTS

There have not been any material changes and commitments affecting the financial position of the Company between the end of the
financial year of the Company as on March 31, 2016 and the date of this report i.e. May 27, 2016.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and
Administration) Rules, 2014, the extract of Annual Return of the Company for the financial year ended on March 31, 2016 in Form
MGT-9 is appended as Annexure III.

GENERAL

During the financial year 2015-16, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the
Companies Act, 2013 and rules made there under.

The Company''s policy on Directors'' appointment and remuneration and other matters provided in Section 178(3) of the Companies
Act, 2013 is appended as Annexure IV.

No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and
Company''s operations in future.

The Company has in place policy as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and
Redressal) Act, 2013. During the year, no case was reported to the Committee constituted under the said Act.

ACKNOWLEDGEMENTS

The Directors express their sincere thanks to all customers, suppliers, service providers, regulators, Governmental agencies and
other statutory authorities for their continued whole hearted support to the Company during the year.

We also acknowledge the support lent and confidence bestowed upon us by our bankers, stakeholders and all Mercatorians.

For and on behalf of the Board

For Mercator Limited

H. K. Mittal

Executive Chairman

(DIN: 00007690)

Regd. Office:

3rd Floor, Mittal Tower, B-wing,

Nariman Point, Mumbai - 400021.

Dated: May 27, 2016

---

Mar 31, 2015

Dear Members,

We take pleasure in presenting Thirty First Annual Report of your Company for the year ended on March 31,2015.

FINANCIAL HIGHLIGHTS:

(Amount Rs. in crores)

Consolidated Year ended Particulars

March 31, March 31, 2015 2014

Income from operations 3,091.63 3,457.78

Total Income 3,086.47 3,477.78

Operating Profit 527.46 639.69

Interest 213.09 193.56

Depreciation 474.56 440.87

Impairment 409.01 12.19

Exceptional Items 115.96 2.98

Profit/(Loss) before Tax & Minority (690.32) 10.10

Interest

Minority Interest 257.37 47.08

Taxes

-Current Year (10.58) (25.70)

-Deferred Tax (6.00) 0.70

Net Profit/(Loss) After Tax (449.53) 32.17

Transfer to Tonnage Tax Reserve (10.31) (1.50)

Transfer from General Reserve - 345.00

Depreciation of previous year (0.30) -

Proposed Dividend (4.90) (2.45)

Tax on Dividend (1.02) (0.42)

Balance brought forward from last year 719.34 346.54

Balance carried to Balance Sheet 253.98 719.34

Standalone Year ended Particulars

March 31, March 31, 2015 2014

Income from operations 659.42 497.04

Total Income 658.60 508.41

Operating Profit 197.23 124.10

Interest 52.48 57.24

Depreciation 92.38 67.52

Impairment - -

Exceptional Items - -

Profit/(Loss) before Tax & Minority 51.55 10.71

Interest

Minority Interest N.A. N.A

Taxes

-Current Year (2.00) (1.50)

-Deferred Tax - -

Net Profit/(Loss) After Tax 49.55 9.21

Transfer to Tonnage Tax Reserve (10.31) (1.50)

Transfer from General Reserve - 345.00

Depreciation of previous year (0.30) -

Proposed Dividend (4.90) (2.45)

Tax on Dividend (1.02) (0.42)

Balance brought forward from last year 33.25 (316.59)

Balance carried to Balance Sheet 66.27 33.25

During the year under review, the income from operations on a consolidated basis was Rs. 3,092 cr as against Rs. 3,458 cr in the previous year. Unfavorable conditions prevailing in dry bulk market and lower volume and price of coal impacted the consolidated performance, however the other business segments of the Company performed satisfactorily. Mercator Lines (Singapore) Limited, the Subsidiary Company suffered a loss of Rs. 766 cr including non-cash items viz. Rs. 775 cr. As a consequence, the consolidated performance has resulted into loss before tax of Rs. 690 cr (previous year profit of Rs. 101 cr). After providing loss for the minority interest of Rs. 257 cr (previous year profit Rs. 47.08 cr); the loss after tax was Rs. 448 cr as against loss of Rs. 32 cr in the previous year.

On a standalone basis, the Company has recorded improved performance. The income from operations for the year under review was Rs. 659 cr as against Rs.497 cr in the previous year. After provision of tax of Rs. 2 cr (previous year Rs. 1.50 cr) the Company has earned net profit of Rs. 50 cr (previous year Rs. 9 cr). The healthy order book of dredging division and full year deployment of Gas Carrier and other tankers on medium / long term time charter added substantially to top-line and bottom-line of standalone performance of the Company.

OPERATIONS & FINANCE:

Oil and Gas

The Directors are pleased to report that during the year; Mercator Petroleum Limited, a subsidiary of the Company in consortium with Oil India Ltd. and others; has entered into Product Sharing Contracts with Ministry of Energy; Republic of Myanmar; for two oil blocks allotted in the Offshore Block Bidding Round-2013.

The drilling operations in the Cambay Basin block awarded by the Government of India under NELP VII round of bidding are progressing well. During the year under review; one well was drilled in each oil block. Further testing and drilling is planned in the current year. The Floating Production Unit (FPU) contract in Nigeria is running smoothly. The Sagar Samrat conversion project is progressing as per schedule.

Coal

Globally, all commodities including Coal have witnessed falling prices and lower demand; Mercator continued its strategy of controlling mining costs and improving utilization of resources. This has helped in sustaining the margins.

Shipping

In Shipping, the Directors are pleased to report the Very Large Gas Carrier (VLGC) which was acquired at the end of previous financial year, was deployed gainfully on long term charter during the year. Further, the refurbishment of the Storage Tanker was completed ahead of its schedule by about one & half month, thus enabling the Company to start charter realizations early under the long term contract.

Dredging

The Dredging business has consolidated its presence in India, registering a higher volume of operations as compared to the previous year resulting from repeat orders from existing customers as well as some new orders. During the year, your Company was awarded a 2 year dredging contract by Kandla Port Trust, valued at Rs. 275 cr approx. Your Company acquired one dredger during the year and is in the process of acquiring two more dredgers, to augment the dredging capabilities.

Finance

The above acquisitions / refurbishments / other capital expenditure were part financed by debts. During the year your Company issued Foreign Currency Convertible Bonds (FCCBs) for an amount of USD 16 mn. The FCCBs are listed on Singapore Stock Exchange (SGX). As overseas step-down subsidiary of the Company successfully availed a Convertible term loan facility of USD 55 mn of which USD 20 mn has been disbursed. This will help your Company to expand in the oil and gas space.

DIVIDEND:

The Board of Directors are pleased to recommend higher dividend of 20% i.e. Rs. 0.20 (previous year 10 % i.e. Rs. 0.10) per Equity Share on 24,48,92,073 shares for the financial year ended March 31,2015. The said dividend shall be subject to the approval of the members at the ensuing Annual General Meeting.

The dividend, if approved by the shareholders at the Annual General Meeting, shall entail a payout of Rs. 5.92 cr including Dividend Distribution Tax (DDT) of Rs. 1.04 cr (Previous Year Rs. 2.87 cr & Rs. 0.42 cr respectively). The dividend is free of tax in the hands of the shareholders.

CHANGES IN BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL:

Board of Directors:

During the year under review, Mr. Kapil Garg (DIN 01360843) resigned as Director of the Company w.e.f May 29, 2014. Mr. Gunender Kapur (DIN 01927304) was appointed as an Independent Director of the Company w.e.f. August 13, 2014. Further the Board inducted Mr. Shalabh Mittal (DIN 00007919) as an Additional Director of the Company w.e.f. November 7, 2014. In addition it was proposed to induct Mr. Shalabh Mittal as Joint Managing Director of the Company w.e.f. January 1, 2015. However, vide his letter dated December 31, 2014; Mr. Shalabh Mittal withdrew his proposed appointment as Joint Managing Director and opted to continue as an Additional Director of the Company.

Mrs. Archana Mittal (DIN 00007972) was appointed as an Additional Director w.e.f March 25, 2015 and the Company has complied with the requirement of appointment of Women Director under the Companies Act, 2013 and Listing Agreements.

As per the provisions of Section 161 (1) of the Companies Act, 2013, Mr. Shalabh Mittal and Mrs. Archana Mittal hold office till the date of the ensuing Annual General Meeting. Notice under Section 160 (1) of the Companies Act, 2013, in respect of each of them has been received from a member proposing their candidature for the office of Directors of the Company.

Mr. H. K. Mittal (DIN 00007690) is liable to retire by rotation at the ensuing Annual General Meeting in accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company; and being eligible, offers himself for re-appointment.

Additional information on Directors recommended for appointment / reappointment, as required under Clause 49 of the Listing Agreement, is given in the notice convening 31st Annual General meeting of the company accompanying this report. The Company has received declarations from Mr. M. M. Agrawal, Mr. Manohar Bidaye, Mr. K. R. Bharat and Mr. Gunender Kapur confirming that they meet with the criteria of Independence as prescribed under provisions of the Companies Act, 2013, Rules thereunder and Clause 49 of the Listing Agreement.

Your Directors recommend the above appointment / re-appointment for your approval.

Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Companies Act, 2013, Mr. H. K. Mittal, Executive Chairman, Mr. Atul Agarwal, Managing Director, Mr. Prasad Patwardhan, Chief Financial Officer and Mrs. Amruta Sant, Company Secretary were designated as Key Managerial Personnel of the Company.

Subsequently Mrs. Amruta Sant, resigned w.e.f. April 10, 2015. Mr. Deepesh Joishar has been appointed as the Company Secretary; Compliance Officer and Key Managerial Personnel of the Company w.e.f. May 4, 2015.

BOARD EVALUATION PROCESS:

Pursuant to the provisions of the Companies Act, 2013 & Clause 49 of the Listing Agreement, evaluation of every directors'' performance was done by the Nomination and Remuneration Committee. The performance evaluation of the Non Independent Directors and the Board as a Whole, committees thereof and the chairman of the Company was carried out by the Independent Directors. Evaluation of the Independent Directors was carried out by the Board. A structured questionnaire was prepared based on criteria approved by Nomination and Remuneration Committee and circulated to the Directors for evaluation process.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS:

As on March 31, 2015, your Company had total 34 subsidiaries / step-down subsidiaries. During the year, Panther Resources Pte.; Ltd. Mercator Project Pte. Ltd. and MCS Fuel Trading Sdn. Bhd. were formed / acquired as step-down subsidiaries. Mercator Lines (Panama) Inc. a step-down subsidiary of the Company was closed by way of voluntary winding up during the year.

As per Section 134 of the Companies Act, 2013, your Company has provided the Audited consolidated financial statements for the year ended on March 31, 2015; together with Auditors'' Report thereon forming part of this Annual Report, which includes financial information of all the subsidiaries. These documents will also be available for inspection during the business hours at the Registered Office of your Company and the respective subsidiary companies. A statement pursuant to the provisions of the Section 129 (3) of the Companies Act, 2013 read with relevant rules in the prescribed form AOC-1, showing financial highlights of the subsidiary companies is attached to the consolidated financial statements and therefore not repeated here for the sake of brevity. The Annual Report of your Company though does not contain full financial statements of the subsidiary companies, your Company has placed the audited annual accounts and related information of subsidiary companies on its website and will make available, upon request by any shareholder of your Company.

AUDITORS:

M/s. CNK & Associates LLP, retires at the conclusion of the forthcoming Annual General Meeting and are eligible for re-appointment. The Audit Committee has recommended the proposed re-appointment of M/s. CNK & Associates LLP, at its meeting held on May 29, 2015 M/s. CNK & Associates LLP have furnished a certificate that their appointment, if made, will be within the limits prescribed under the Companies Act. The Directors recommend their reappointment for approval of the members. Members are requested to approve their re-appointment as Auditors to hold office from the ensuing Annual General Meeting till the conclusion of the next Annual General Meeting.

COST AUDIT COMPLAINCE REPORT:

Specified operations of your Company were covered under the Companies (Cost Records and Audit) Rules, 2014 (earlier the Companies (Cost Accounting Records) Rules, 2011) for maintenance of cost records. Accordingly, as prescribed in the said Rules, your Company has obtained Compliance Certificate from a Cost Accountant, which does not contain any qualification, reservation, or adverse remark, or disclaimer.

SECRETARIAL AUDIT REPORT

As required under the provisions of Section 204 of the Companies Act, 2013, your Company has obtained a Secretarial Audit Report for the financial year ended on March 31,2015 from M/s Anil Jani & Co., Company Secretaries is appended as Annexure I and forms part of this report. The said report does not contain any qualifications, reservations, or adverse remarks or disclaimers.

MEETINGS OF THE BOARD

Six meetings of the Board of Directors were held during the year. The details are provided in the Corporate Governance Report forming part of this Report.

COMMITTEES OF THE BOARD

The details of the Committees of the Board constituted under the Companies Act, 2013 and Listing Agreements are given in the Corporate Governance Report forming part of this Report.

PARTICULARS OF EMPLOYEES

The information required pursuant to Section 197 of the Companies Act 2013 read with Rule 5 (1) and Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is appended as Annexure II and IIA respectively.

No ESOPs were issued during the year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

Your Company operates offshore and onshore activities in environment friendly manner. The major activities carried by the Company are offshore and your Company work towards minimizing the impact of its operations on the environment including marine life.

Several steps are taken for conservation of energy, some of which are listed below:

(A) Conservation Of Energy:

(i) The steps taken or impact on conservation of energy:

* All vessels main engines have Energy Efficiency Design Index (EEDI) which reduces emissions greenhouse gases and helps in reducing impact on global warming. Engine RPM is reduced in rough seas (head wind and swell) so that the speed matches with the theoretical engine speed. Vessel main engine/generators are overhauled as per the running hours schedule so that optimum power is generated with the fuel economy.

* Bridge team watches the movement of autopilot very precisely so that fine tune adjustments can be done to the system so that the rudder does not move unnecessary which cause''s loss of speed. Weather routing is used so that fuel is not wasted due to rough seas in certain areas. Good quality fuel is used in all vessels which help in full optimization of engine capacity.

* Vessels are Dry Docked at regular intervals so that the hull form is clean and also propellers are polished. This gives better speed ratio when compared to the fuel consumption.

* Entire machinery in engine room and on deck is kept well maintained so that there are no leakages of water / steam / hydraulic oil. Air Condition plants are monitored very closely and temperature is controlled, wherever required. Some ships are equipped with vacuum toilets, this helps us to conserve lot of water and in turn the hydrophore system works less. Garbage management is followed on board so that most of the garbage which is generated on board is sent ashore for recycling purposes. Energy efficient bulbs and lights are used on board.

* The Master of the ship and his team make good passage planning on board for more use of currents and wind during voyages. The generators when not required; are switched off to save fuel.

(ii) the steps taken by the company for utilizing alternate sources of energy:

Since your Company operates mostly from offshore; utilizing of alternate sources of energy options are minimal but your Company takes every necessary step to use alternate energy source as and when available.

(iii) the capital investment on energy conservation equipment''s:

Your Company has not made any material capital investment on energy conservation equipment during the year. All vessels are equipped with Exhaust Gas Economizers, so that the hot exhaust gases which are going up; the funnel are used to provide heat source, this piece of equipment undergoes regular repairs and maintenance and also at time need to change the entire tubing''s etc.

(B) Technology absorption:

As your Company has not entered into technical collaboration with any entity, there are no particulars relating to technology absorption and not imported any technology during the year.

(C) Foreign Exchange Earnings and Outgo:

Your Company has earned foreign exchange of Rs. 182.38 cr (previous year Rs. 86.82 cr) and spent Rs. 324.78 cr (previous year Rs. 150.73 cr) in foreign exchange, on account of import of stores & spares, capital goods, repairs / renovations of vessels, bunker, other vessel expenses, travelling and interests etc.

(D) Expenditure Incurred on Research & Development:

During the year, the Company has not incurred any expenditure on research and development.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 134 of the Companies Act, 2013, the Directors hereby confirm that:

(i) In preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profits for the year under review;

(iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 2013, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

(iv) They have prepared the annual accounts on a going concern basis.

(v) They have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively

(vi) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively

CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS REPORTS

The Company is committed to good corporate governance in compliance with the Listing Agreement with Stock Exchanges; and the Philosophy of the Mercator Group. A report on Corporate Governance including the relevant Auditors'' Certificate regarding compliance with the conditions of Corporate Governance as stipulated in Clause 49 of the listing agreement with stock exchanges is appended. Management Discussion and Analysis Report is also appended.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In compliance with regulations under the Companies Act, 2013; CSR Committee has been constituted and CSR policy has been adopted by the Company.

Since there was no average profit in the last three financial years; your Company was not required to spend statutorily on CSR activities during the year. However, your Company has initiated its own CSR policy and appointed Prem Punita Foundation as Implementing Agency for implementation.

The details of the Committee and initiatives on CSR are set out in the Corporate Governance Report forming part of the Directors'' Report.

LOANS, GUARANTEES AND INVESTMENTS

Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All related party transactions that were entered into during the financial year were on an arm''s length basis and in the ordinary course of business. The requirement of giving particulars of contracts/ arrangement made with related parties, in Form AOC-2 are not applicable for the year under review. There are no materially significant related party transactions made by the Company with Promoters, Directors or Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained on yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted are audited and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on quarterly basis.

The Company has framed a Related Party Transactions policy to ensure proper identification, approval process and reporting of transactions. The policy on Related Party Transactions as approved by the Board is available on the Company''s website.

RISK MANAGEMENT POLICY

Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Director''s Report.

The Company has framed policy to identify, evaluate business risks and opportunities, and to mitigate the risk. The policy defines the risk management approach at various levels including documentation and reporting. The policy helps in identifying risks trend, exposure and potential impact analysis at a Company level as also separately for business segments.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place adequate internal financial controls. The Audit Committee of Directors periodically reviews the internal control systems with the top management, and the Statutory and internal auditors. The Audit Committee also looks after adequacy of internal audit function, significant findings of the internal audit, and subsequent follow- up action on the same.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a Vigil Mechanism and Whistle Blower Policy for Directors and employees to deal with instance of fraud and mismanagement. The policy facilitates reporting of genuine concern or grievances, unethical behavior, actual or suspected fraud, or violation of the Code of Conduct of the Company, or its ethics Policy. They provide adequate safeguards to Directors/employees who avail of the mechanism. The same is overseen by the Audit Committee. The said Policy is posted on the website of the Company.

MATERIAL CHANGES AND COMMITMENTS

There have not been any material changes and commitments affecting the financial position of the Company between the end of the financial year of the Company as on March 31,2015 and the date of this report i.e. May 29, 2015.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92(3) of the Companies Act, 2013 read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of Annual Return of the Company for the financial year ended on March 31, 2015 in Form MGT-9 is appended as Annexure III.

GENERAL

* During the financial year 2014-15, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 and rules made thereunder.

* The Company''s policy on Directors'' appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 is appended as Annexure IV.

* No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

* The Company has in place policy as per the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, no case was reported to the Committee constituted under the said Act.

ACKNOWLEDGEMENTS

The Directors express their sincere thanks to all customers, suppliers, service providers, regulators, Governmental agencies and other statutory authorities for their continued whole hearted support to the Company during the year.

We also acknowledge the support lent and confidence bestowed upon us by our bankers, stakeholders and all Mercatorians.

For and on behalf of the Board For Mercator Limited

H. K. Mittal Executive Chairman

Regd. Office:

3rd Floor, Mittal Tower, B-wing, Nariman Point, Mumbai - 400021. Dated: May 29, 2015

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Mar 31, 2014

To the Members,

We take pleasure in presenting Thirtieth Annual Report of your Company for the year ended on March 31, 2014.

Financial Highlights

(Rs. in crores)

Particulars Consolidated Standalone Year ended Year ended

March 31, March 31, March 31, March 31, 2014 2013 2014 2013

Income from operations 3457.78 3733.35 497.04 551.49 Total Income 3486.20 3753.47 524.25 569.67 Operating Profit 659.09 505.96 151.31 92.70 Interest 205.14 239.45 73.08 125.56 Depreciation 440.87 447.48 67.52 109.16 Impairment - 87.91 - 81.18 Profit/ (Loss) before Tax & Minority Interest 10.10 (479.30) 10.71 (215.94) Minority Interest Taxes 47.08 120.39 N.A. N.A. -Current Year (25.45) (18.60) (1.25) (1.50) -Deferred Tax 0.70 5.42 - - -Short provision of earlier years (0.25) - (0.25) - Net Profit/(Loss) After Tax 32.18 (372.09) 9.21 (217.44)

During the year under review, the income from operations on a consolidated basis was Rs. 3,458 crores as against Rs. 3,733 crores in the previous year. The operating profit has increased by 30% to Rs. 659 crores against Rs. 506 crores in previous year. The profit after provision for tax and minority interest; was Rs. 32 crores as against net loss of Rs. 372 crores in the previous year.

On a standalone basis, the income from operations for the year under review was Rs. 497 crores (Rs. 551crores in the previous year). The Company has earned net profit of Rs. 9 crores (Loss of Rs. 217 crores in the previous year) after provision of tax of Rs. 1.50 crores (Rs. 1.50 crores in the previous year).

During the year, Debenture Redemption Reserve (Rs. 27.50 crores) and Tonnage Tax Utilised Reserve (Rs. 175.25 crores) being no more required were transferred to General Reserve. Further, balance in General Reserve amounting Rs. 345 crores was utilised to set off the deficit in the Profit & Loss A/c of Rs. 316.59 crores. An amount of Rs. 1.50 crores was transferred from Profit & Loss A/c to Tonnage Tax Reserve. After providing for Dividend and tax thereon amounting Rs. 2.87 crores; the surplus in P & L account of Rs. 33.25 crores was carried to Balance sheet as at year end.

Operations & Finance

The Directors are pleased to report that, Mercator Petroleum Limited; a subsidiary of your Company in consortium with Oil India Ltd. and others has been chosen as selected candidate for 2 offshore oil blocks by the Ministry of Energy; Republic of Myanmar in the Myanmar Offshore Block Bidding Round - 2013.

The Floating Production Unit (FPU) contract is running smoothly in Nigeria. During the year, Mercator Offshore (P) Pte. Ltd. received certificate of Excellence from the Charterers of FPU in recognition of its safety performance resulting in 1000 operating days without lost time and injury. The Sagar Samrat Conversion project is progressing well.

In Coal segment; Mercator was able to effectively control the mining costs and through improved utilisation of resources was able to improve upon the margins in spite of a fall in coal volumes and prices due to global economic factors.

In Shipping; during the year, your Company acquired a Medium Range (MR) Tanker, which has been deployed on a 5 years contract. Your Company has further diversified into the Gas Carrier Segment and acquired one Very Large Gas Carrier (VLGC) in March 2014. The total cubic capacity of the VLGC is 76,933 Cub.m. and DWT of 50,400. Both the acquisitions were part funded by foreign currency loans.

Your Company has been awarded a long term contract for hiring of a Storage Tanker for a period of 1720 days commencing from April 2015. This is the third consecutive contract received by your Company from this customer. The Company proposes to refurbish its tanker for this contract, which will entail incurring of capital expenditure. In order to part finance the same, the Company has tied up a long term foreign currency facility with a tenor of 7 years.

Your Company had obtained consent of the shareholders by way of special resolution through postal ballot for Issue and allotment of securities in the form of FCCB/ADR/GDR etc. up to Rs. 100 crores. Subsequent to the end of the financial year, in May, 2014, your Company has successfully concluded the FCCB issue and mobilised USD 16 million. The FCCB proceeds raised were utilised by the Company for capital expenditure.

With a view to expand its operations in the Oil and Gas space, subsequent to the end of the financial year, Mercator Energy Pte. Ltd., subsidiary company has entered into an agreement to avail a term loan facility of USD 55 million.

The Dredging division has performed well during the year. The Company has a healthy order book, including some repeat orders from existing customers.

Dividend

Your Directors are pleased to recommend a dividend of Rs. 0.10 per equity share of Rs. 1/- each, i.e. 10%, on 244,892,073 equity shares, payable to those shareholders whose names appear in the Register of Members as on the Book Closure Date.

The Equity Dividend outgo for the year inclusive of tax on distributed profits would absorb a sum of Rs. 2.87 crores. No dividend was paid for the previous financial year.

Directors

Pursuant to the provisions of Section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. M. M. Agrawal (DIN: 00681433), is the Director liable to retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. Pursuant to Section 149 of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors) Rules, 2014; it is proposed to re-appoint Mr. M. M. Agrawal, who has offered himself for appointment as an Independent Director not liable to retire by rotation.

In order to comply with the provisions of Sections 149, 152 and other applicable provisions of the Companies Act, 2013, the Companies (Appointment and Qualification of Directors) Rules, 2014 as well as the Listing Agreement; your Board has also approved appointments of Mr. Manohar Bidaye (DIN: 00010699) and Mr. K.R. Bharat (DIN: 00584367) being eligible, as an Independent Directors not liable to retire by rotation.

Subsequent to year end, on May 29, 2014, Mr. Kapil Garg (DIN: 01360843) resigned from the office of Director of the Company and on August 13, 2014, the Board of Director has appointed Mr. Gunender Kapur (DIN: 01927304) as an Independent Director of the Company from August 13, 2014. Mr. Gunender Kapur appointed as an Additional Director in accordance with Sec.161 (1) of the Companies Act, 2013 will hold office till the ensuing Annual General Meeting; and is eligible for re-appointment.

The Company has received requisite notices in writing from Members proposing the candidature of Mr. M. M. Agrawal, Mr. Manohar Bidaye, Mr. K. R. Bharat and Mr. Gunender Kapur at the ensuing Annual General Meeting, for the office of Independent Director.

The Company has also received declarations from all the aforesaid Directors confirming that they meet with the criteria of Independence as prescribed under provisions of the Companies Act, 2013, Rules thereunder and Clause 49 (existing as well as revised effective from October 1, 2014) of the Listing Agreement.

Mr. Atul Agarwal (DIN: 00007663) shall be a Director liable to retire by rotation at the ensuing Annual General Meeting in accordance with the provisions of the Companies Act and Articles of Association of the Company; and being eligible has offered himself for reappointment.

The brief profile of all the above Directors seeking appointment/ re-appointment are given in the Notice of the Annual General Meeting.

Your Directors recommend the above appointments for your approval.

Subsidiary Companies and Consolidated Financial Statements

As at March 31, 2014, your Company had 32 subsidiaries/step-down subsidiaries. Audited consolidated financial statements for the year ended on March 31, 2014; together with Auditors'' Report thereon forming part of this Annual Report includes financial information of all the subsidiaries.

Pursuant to general exemption granted by the Ministry of Corporate Affairs, Government of India, the Board of Directors of your Company has granted its consent for dispensing with the requirement of attaching to its Annual Report, the annual audited accounts of your Company''s subsidiaries. Accordingly, this Annual Report is presented without attaching annual accounts of the subsidiaries. A statement in respect of the said subsidiaries pursuant to Section 212 of the Companies Act, 1956, is enclosed herewith as required. The annual reports and accounts of these subsidiaries will be made available for inspection during working hours at the registered office of the Company and also of the subsidiary Companies concerned. The same, along with related detailed information will also be made available to the investors of the Company as well as of subsidiaries, on request. The brief financial details of the subsidiaries as prescribed under the said notification have been disclosed in the consolidated financial statements of the Company.

Auditors

The name of your Auditors M/s. Contractor, Nayak & Kishnadwala has been changed to M/s. CNK & Associates LLP pursuant to conversion of their firm in to LLP.

M/s. CNK & Associates LLP, hold office up to the conclusion of the forthcoming Annual General Meeting of the Company and have given their consent for re-appointment. Pursuant to provisions of Section 139(2) of Companies Act, 2013 read with Companies (Audit and Auditors) Rules 2014, M/s. CNK & Associates LLP are eligible for appointment as Auditors. Your Company has received a written confirmation from M/s. CNK & Associates LLP, Chartered Accountants to the effect that their appointment, if made, would satisfy the criteria provided in Section 141 of the Companies Act, 2013 for their appointment. The Board recommends the re- appointment of M/s. CNK & Associates LLP, Chartered Accountants as the Auditors of the Company from the conclusion of the ensuing Annual General Meeting until the conclusion of the next Annual General Meeting.

Cost Audit Compliance Report

For the year under review, specified operations of your Company were covered under the Companies (Cost Accounting Records) Rules, 2011 for maintenance of cost records. Accordingly, as prescribed under Rule 5 of the said Rules, your Company has obtained Compliance Certificate from a Cost Accountant, which does not contain any adverse remarks.

Particulars of Employees

As required under the provisions of Section 217(2A) of the Companies Act 1956, read with the Companies (Particulars of Employees) Rules 1975 as amended, the requisite particulars of employees of the Company, who were in receipt of remuneration in excess of the limits specified under the said section are set out in the annexure forming part of this report. However, as per the provisions of Section 219(1)(b)(iv) of the Companies Act 1956, the report and the accounts are being sent to all members of the Company excluding this annexure of particulars of employees. Any member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

No ESOPs were issued during the year.

Conservation of Energy, Technology Absorption, Export Market Development and Foreign Exchange Earnings and Outgo

The requirements of giving particulars of Conservation of Energy and Technology Absorption under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are not applicable to your Company. However, the Directors would like to assure you that every measure is taken to save and conserve energy at all the stages of operating the vessels, as well as, on shore activities.

Your Company has not imported any technology during the year. It has earned foreign exchange of Rs. 86.82 crores (previous year Rs. 98.80 crores) and spent Rs. 68.70 crores (previous year Rs. 195.08 crores) in foreign exchange, on account of acquisition of vessels, charter hire, other vessel expenses, and interests etc.; details of which are available in notes 3.7 and 3.8 of the Notes forming part to the Accounts for the year. Your Company endeavours to develop export markets by exploring more vessel deployment opportunities overseas.

Corporate Governance & Social Responsibilities

A separate report on Corporate Governance, along with certificate from the Auditors of the Company is annexed herewith forming a part of this Annual Report. Management Discussion and Analysis Report is also annexed herewith as part of this Report.

Your Company sincerely believes that a corporate must contribute to the growth and betterment of the environment, society and economy in which it operate; and it is fully aware about its responsibility in this regard. Your Company also values its employees and considers them as the key for its success. The Corporate Social Responsibility (CSR) initiatives undertaken by your Company have been enumerated elsewhere in this Report, which are focused on education, skill development, and creating job opportunities in the Society.

In order to comply with the provisions of Section 135 of the Companies Act 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company, subsequent to end of the year under review, constituted a Corporate Social Responsibility Committee. This Committee shall be responsible for formulating a CSR policy, recommending the activities that can be undertaken under CSR, deciding the amount to be incurred on such activities and any other matters related to CSR, which it should consider.

Deposits, Loans and Advances

Your Company has not accepted any fixed deposits, and as such, no principal or interest amount was outstanding on the date of the Balance Sheet. The details of loans and advances, which are required to be disclosed in the Financial Statements of the Company pursuant to Clause 32 of the Listing Agreement with the Stock Exchanges, are furnished separately as note 5.4 of the Notes forming part to the Accounts for the year.

Insurance

All the assets of the Company are adequately insured.

Directors'' Responsibility Statement

Pursuant to the provisions of section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that:

(i) In preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) They have selected such accounting policies in consultation with Statutory Auditors and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit for the year under review;

(iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) They have prepared the annual accounts on a going concern basis.

Acknowledgements

The Directors express their sincere thanks to all customers, suppliers, service providers, regulators, Governmental agencies and other statutory authorities for their continued whole hearted support to the Company during the year.

We also acknowledge the support lent and confidence bestowed upon us by our bankers, stakeholders and all Mercatorians.

For and on behalf of the Board For Mercator Limited

H.K.Mittal Executive Chairman Regd. Office: 3rd Floor, Mittal Tower B-Wing, Nariman Point, Mumbai-400021 Dated: August 13, 2014

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Mar 31, 2013

To The Members of Mercator Limited

The take pleasure in presenting Twenty-Ninth Annual Report of your Company for the year ended on March 31, 2013.

FINANCIAL HIGHLIGHTS:

(Rs.in crores)

Particulars Consolidated Standalone Year ended Year ended March 31, 2013 March 31, 2012 March 31, 2013 March 31, 2012

Income from operations 3733.35 3699.91 551.49 547.98

Total Income 3753.47 3755.40 569.67 595.86

Operating Profit 505.96 582.91 92.70 84.11

Interest 239.45 203.32 125.56 128.18

Depreciation 447.48 382.41 109.16 119.00

Impairment 87.91 81.8

Profit before Tax & Minority Interest (479.30) 52.37 (215.94) (115.17)

Minority Interest 120.39 (9.58) N.A N.A. Taxes

-Current Year (18.60) (24.95) (1.50) (3.50)

-Deferred Tax 5.42 2.72

Net Profi t/(Loss) After Tax (372.09) 20.56 (217.44) (118.67)

Balance brought forward from last year 718.62 698.06 (99.15) 19.52

Balance carried to Balance Sheet 346.53 718.62 (316.59) (99.15)

During the year under review, the income from operations on a consolidated basis was Rs. 3734 crores as against Rs. 3700 crores in the previous year. After providing loss for the minority interest of Rs. 120 crores (previous year profi t Rs. 10 crores); the loss after provision for tax was Rs. 372 crores as against net profi t of Rs. 21 crores in the previous year.

On a standalone basis, the income from operations for the year under review was Rs. 551 crores (Rs. 548 crores in the previous year). The Company suffered a loss of Rs. 217 crores (Rs. 119 crores in the previous year).

OPERATIONS:

Highlights of the consolidated operations of Mercator during the year includes, commencement of commercial operations at the new coal mining concession acquired in Indonesia last year. The fi rst shipment of coal from the new mine was dispatched in August 2012.

The Mobile Offshore Production Unit (MOPU) and Floating Storage Offshore Unit (FSO), which is deployed on a nine year contract in Nigeria is operating successfully.

During the year, Oil and Natural Gas Corporation Limited handed over its Rig, Sagar Samrat for conversion into a Processing Unit. The EPC contract is under execution at an overseas yard and the work is progressing satisfactorily.

The E&P activities at two blocks awarded to the Company under New Exploration Licensing Policy (NELP VII) are progressing well. The required land has been acquired and environmental clearances have also been received.

During the year, Mercator entered into early termination and settlement agreements in respect of chartered- in bulk carriers. The compensation paid under the agreements has been charged off during the year. Further Mercator sold its Very Large Ore Carrier (VLOC) and incurred a book loss on the same.

The Company''s Aframax tanker, which had suffered an accident in December 2011 was sold for scrapping during the year and the insurance claim was partly realised. The proceeds were used to prepay debt.

The company entered into a MOA for the sale of its Very Large Crude Carrier (VLCC) to its WOS in Singapore. The VLCC has now been refi nanced by a foreign currency loan with extended maturity.

During the year the company also entered into a MOA for the sale of an Aframax tanker, which was delivered subsequently.

The company assessed the carrying value of the vessels based on the discounted cash fl ows of the future earnings and recognised an impairment provision in the books in respect of the VLCC and aframax tanker.

The one-time charges to the Profi t & Loss arising from early termination agreements, sale of VLOC and impairment provision have resulted in the group reporting a loss for the year. However, these initiatives together with the cash fl ow from the realisation of the insurance claim have resulted in reducing the long term liabilities of the company and improving the cash fl ows over the next few years.

DIVIDEND:

In view of the accumulated losses as also due to losses suffered during the year under review, your Directors regret their inability to recommend any dividend.

DIRECTORS:

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Manohar Bidaye is the Director liable to retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment.

Further, it is also proposed to re-appoint Mr. H. K. Mittal as Executive Chairman and Mr. Atul J. Agarwal as Managing Director of the Company for a period of three years commencing from August 1, 2013, when their present terms are expiring. Their terms of appointment and remunerations have been approved by the Remuneration Committee and Board of Directors in their respective meetings held on May 18, 2013. The same are detailed in the accompanying notice of Annual General Meeting for the perusal and approval of the members.

Your Directors recommend for your approval the re-appointments of Mr. Manohar Bidaye, Mr. H. K. Mittal and Mr. Atul J. Agarwal at the ensuing Annual General Meeting. A brief resume of all the three directors is included in the notice of the ensuing Annual General Meeting scheduled to be held on September 19, 2013.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS:

As at March 31, 2013, your Company had 29 subsidiaries/step-down subsidiaries. Audited consolidated fi nancial statements for the year ended on March 31, 2013; together with Auditors'' Report thereon forming part of this Annual Report includes fi nancial information of all the subsidiaries.

Pursuant to general exemption granted by the Ministry of Corporate Affairs, Government of India, this Annual Report is presented without attaching annual accounts of the subsidiaries. A statement in respect of the said subsidiaries pursuant to Section 212 of the Companies Act, 1956, is enclosed herewith as required. The annual reports and accounts of subsidiaries will be made available for inspection during working hours at the registered offi ce of the Company and also of the subsidiary companies concerned. The same, along with related detailed information will also be made available to the investors of the Company as well as of subsidiaries, on request. The brief fi nancial details of the subsidiaries as prescribed under the said notifi cation have been disclosed in the consolidated fi nancial statements of the Company.

AUDITORS:

The Auditors of your Company, M/s. Contractor, Nayak & Kishnadwala, Chartered Accountants, retires at the ensuing Annual General Meeting and have confi rmed their eligibility for re-appointment under Section 224 (1-B) of the Companies Act, 1956.

The Directors recommend their re-appointment for approval of the members.

AUDITORS'' REPORT:

In response to the qualifi cation in the Auditors'' Report on the consolidated fi nancial statements, it is clarifi ed that the unaudited fi nancial statements as approved by the management of the respective subsidiaries, were considered for reporting to the Singapore Stock Exchange by the listed subsidiary of Mercator Ltd, which is the holding company of the six subsidiaries. The auditors relied on these fi nancials for preparing the consolidated fi nancial statements. Based on the explanation received, the Directors are of the opinion that there would not be any material differences upon completion of their audits.

There is no qualifi cation/ remark in the Auditor''s Report on standalone fi nancial statements.

COST AUDIT COMPLIANCE REPORT:

The Companies (Cost Accounting Records) Rules 2011 are applicable to the specifi ed operations of the Company. The Company has taken necessary steps for compliance with the said rules.

PARTICULARS OF EMPLOYEES:

As required under the provisions of Section 217(2A) of the Act, read with the Companies (Particulars of Employees) Rules 1975 as amended, the requisite particulars with respect to the employees of the Company, who were in receipt of remuneration in excess of the limits specifi ed under the said section are set out in the annexure forming part of this report. However, as per the provisions of Section 219(b)(iv) of the Act, the report and the accounts are being sent to all members of the Company excluding this annexure of particulars of employees. Any member interested in obtaining such particulars may write to the Company at the registered offi ce.

No ESOPs were issued during the year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, EXPORT MARKET DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The requirements of giving particulars of Conservation of Energy and Technology Absorption under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are not applicable to your Company. However, the Directors would like to assure you that every measure is taken to save and conserve energy at all the stages of operating the vessels, as well as, on shore activities.

Your Company has not imported any technology during the year. It has earned foreign exchange of Rs. 98.80 crores (previous year Rs. 87.98 crores) and spent Rs. 195.08 crores (previous year Rs. 223.69 crores) in foreign exchange, on account of acquisition of vessels, charter hire, other vessel expenses, and interests etc.

CORPORATE GOVERNANCE & SOCIAL RESPONSIBILITIES:

A separate report on Corporate Governance, along with certifi cate from the Auditors of the Company; including report on Corporate Social Responsibility is annexed herewith forming a part of this Annual Report. Management Discussion and Analysis Report is also annexed herewith as part of this Report.

INSURANCE:

All properties of the Company are adequately insured.

FIXED DEPOSITS:

The Company has not accepted any public deposits falling under the purview of section 58-A of the Companies Act, 1956.

DIRECTORS'' RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confi rm that:

(i) In preparation of the annual accounts, all applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) They have selected such accounting policies in consultation with Statutory Auditors and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the fi nancial year and of the loss for the year under review;

(iii) They have taken proper and suffi cient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 1956, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

(iv) They have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS:

The Directors express their sincere thanks to all customers, suppliers, service providers, regulators, Governmental agencies and other statutory authorities for their continued whole hearted support to the Company during the year.

We also acknowledge the support lent and confi dence bestowed upon us by our bankers, stakeholders and all Mercatorians.

For and on behalf of the Board

For Mercator Limited

H. K. Mittal

Executive Chairman

Regd. Office:

3rd Floor, Mittal Tower,

B-wing, Nariman Point,

Mumbai – 400021.

Dated: May 18, 2013.

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Mar 31, 2012

To The Members of Mercator Limited

The take pleasure in presenting Twenty-Eighth Annual Report of your Company for the year ended on March 31, 2012.

FINANCIAL HIGHLIGHTS:

(Rs. in cr)

Particulars Consolidated Standalone Year ended Year ended March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011

Income from operations 3699.91 2828.88 547.98 638.99

Total Income 3755.10 2811.64 639.15

Operating Profit 582 621.29 84.11 108.58

Interest 203.32 215.23 128.18 85.99

Depreciation 382.41 306.67 119.00 116.63

Profit before Tax & Minority Interest 52.37 99.39 (115.17) (94.04)

Minority Interest (9.58) (39.01) N.A. N.A. Taxes

-Current Year (24.95) (15.74) (3.50) (4.00)

-Deferred Tax 2.72 2.21 - -

-Short provision of tax for earlier years - 47.15 - 0.07

Net Profit/ (Loss) After Tax 20.56 94.00 (118.67) (98.04)

Balance brought forward from last year 698.06 604.60 19.52 11.49

Balance carried to Balance Sheet 718.621 698.06 (99.15) 19.52

During the year under review, the income from operations on a consolidated basis was Rs. 3700 cr as against Rs. 2829 cr in the previous year; registering a growth of 31%. Significant ramp up in Coal operations increased Coal revenues by 67% from Rs. 1388 cr last year to Rs. 2317 cr. The consolidated operating profit for the year was Rs. 583 cr against Rs. 621 cr in the previous year. After providing for the minority interest of Rs. 10 cr (previous year Rs. 39 cr); the net profit after tax was Rs. 21 cr (Rs. 94 in the previous year).

On a standalone basis, the income from operations for the year under review was Rs. 548 cr (Rs. 639 cr in the previous year). The Company suffered a loss of Rs. 119 cr (Rs. 98 cr in the previous year). A subdued shipping market coupled with over supply of vessels adversely affected the Charter rates and hence the overall performance.

CHANGE IN NAME OF THE COMPANY:

During the year, the name of your Company was changed to Mercator Limited. The logo of your Company has also been changed to reflect its diversified business operations.

OPERATIONS:

During the year under review, Mercator successfully completed the conversion of a Mobile Offshore Drilling Unit (MODU) into Mobile Offshore Production Unit (MOPU) as also conversion of a tanker into a Floating Storage Offshore Unit (FSO); collectively called Floating Production Unit (FPU) at a cost of USD 200 mn. The FPU has been deployed on a nine year contract in Nigeria. The FPU has since been operating successfully. The project was funded by way of a mix of internal resources and debt.

Mercator in consortium with an overseas shipyard, has been awarded an EPC contract by M/s. Oil And Natural Gas Corporation Limited (Navratna PSU) for the conversion of a Mobile Offshore Drilling Unit into a Processing Unit. This bodes well for the operations in this segment with more such projects coming up in India and elsewhere.

During the year Mercator concluded acquisition of 50% stake in a mining concession located in Indonesia. The mine has substantial coal reserves. The mine is expected to commence operations this year and further boost revenues.

One Trailer Suction Hopper Dredger (TSHD) and one Cutter Section Dredger (CSD) were acquired by your company during the year. The dredgers have been gainfully deployed immediately upon their acquisition. The dredgers have been funded by a mix of internal resources and debt.

In December, 2011, Prem Divya, an Aframax Tanker suffered an accident near Fujairah Port. The vessel is fully insured including for all third party liabilities. The company is confident of early settlement of claims by the insurance company. After restoration and repairs, the tanker is expected to resume operations.

DIVIDEND:

In view of the losses suffered by your Company, your Directors regret their inability to recommend any dividend.

DIRECTORS:

In accordance with the provisions of the Companies Act, 1956 (the Act), and the Articles of Association of the Company, Mr. Kapil Garg and Mr. M. G. Ramkrishna are the Directors liable to retire by rotation at the ensuing Annual General Meeting. Mr. Kapil Garg, being eligible, has offered himself for re-appointment. Mr. M. G. Ramkrishna aged 68 years retires as per the age policy of the Company for the Directors. The Directors place on record their sincere appreciation for the guidance and valuable contributions by Mr. M. G. Ramkrishna during his tenure.

A brief resume of Mr. Kapil Garg is included in the notice of the ensuing Annual General Meeting scheduled to be held on August 29, 2012. The Directors recommend reappointment of Mr. Kapil Garg for the approval of members.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS:

During the year five subsidiaries were formed/ acquired. As at March 31, 2012, your Company had 32 subsidiaries/ step-down subsidiaries. Audited consolidated financial statements for the year ended on March 31, 2012; together with Auditors' Report thereon forming part of this Annual Report includes financial information of all the subsidiaries.

Pursuant to general exemption granted by the Ministry of Corporate Affairs, Government of India, this Annual Report is presented without attaching annual accounts of the subsidiaries. A statement in respect of the said subsidiaries pursuant to Section 212 of the Act, is enclosed herewith as required. The annual reports and accounts of subsidiaries will be made available for inspection during working hours at the registered office of the Company and also of the subsidiary companies concerned. The same, along with related detailed information will also be made available to the investors of the Company as well as of subsidiaries, on request. The brief financial details of the subsidiaries as prescribed under the said notification have been disclosed in the consolidated financial statements of the Company.

AUDITORS:

The Auditors of your Company, M/s. Contractor, Nayak & Kishnadwala, Chartered Accountants, retires at the ensuing Annual General Meeting and have confirmed their eligibility for re-appointment under Section 224 (1-B) of the Act.

The Directors recommend their re-appointment for approval of the members.

PARTICULARS OF EMPLOYEES:

As required under the provisions of Section 217(2A) of the Act, read with the Companies (Particulars of Employees) Rules 1975 as amended, the requisite particulars with respect to the employees of the Company, who were in receipt of remuneration in excess of the limits specified under the said section are set out in the annexure forming part of this report. However, as per the provisions of Section 219(b) (iv) of the Act, the report and the accounts are being sent to all members of the Company excluding this annexure of particulars of employees. Any member interested in obtaining such particulars may write to the Company at the registered office.

No ESOPs were issued during the year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, EXPORT MARKET DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The Conservation of Energy and Technology Absorption under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are not applicable to your Company. However, the Directors would like to assure you that every measure is taken to save and conserve energy at all the stages of operating the vessels, as well as, on shore activities. In its endeavor to develop the export market, your Company has formed/acquired subsidiaries abroad.

Your Company has not imported any technology during the year. It has earned foreign exchange of Rs. 87.98 cr (as against previous year's earnings of Rs. 132.85 cr) and spent Rs. 223.69 cr (as against Rs. 312.16 cr for the previous year) in foreign exchange, on account of acquisition of vessels, charter hire, other vessel expenses, and interests etc.

CORPORATE GOVERNANCE & SOCIAL RESPONSIBILITIES:

The Ministry of Corporate Affairs (MCA), India, has issued voluntary guidelines on Corporate Governance and Corporate Social Responsibilities. Mercator has already been following many of the recommendations of the MCA on Corporate Governance which is in consonance with the Clause 49 of Listing Agreement of Stock Exchanges.

A separate report on Corporate Governance, along with certificate from the Auditors of the Company; including report on Corporate Social Responsibility is annexed herewith forming a part of this Annual Report. Management Discussion and Analysis Report is also annexed herewith as part of this Report.

INSURANCE:

All properties of the Company are adequately insured.

FIXED DEPOSITS:

The Company has not accepted any public deposits falling under the purview of section 58-A of the Companies Act, 1956.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that:

(i) In preparation of the annual accounts, all applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) They have selected such accounting policies in consultation with Statutory Auditors and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss for the year under review;

(iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 1956, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

(iv) They have prepared the annual accounts on a going concern basis.

ACKNOWLEDGEMENTS:

The Directors express their sincere thanks to all customers, suppliers, service providers, regulators, Governmental agencies and other statutory authorities for their continued whole hearted support to the Company during the year.

We also acknowledge the support lent and confidence bestowed upon us by our bankers, stakeholders and all Mercatorians.

For on behalf of the Board For Mercator Limited

H. K. Mittal Executive Chairman

Regd. Office:

3rd Floor, Mittal Tower, B-wing, Nariman Point, Mumbai - 400 021.

Dated: May 25, 2012

---

Mar 31, 2011

The Members,

Mercator Lines Limited

We take pleasure in presenting Twenty-Seventh Annual Report of your Company for the year ended on March 31, 2011.

FINANCIAL HIGHLIGHTS

(Amount Rs. in cr)

Consolidated Standalone

Particulars Year ended Year ended Year ended Year ended

March 31, 2011 March 31, 2010 March 31, 2011 March 31, 2010

Income from operations 2828.88 1808.73 638.99 580.79

Total Income 2811.64 1837.56 639.15 699.91

Operating Profit 621.29 655.93 108.58 242.90

Interest 215.23 205.77 85.99 94.94

Depreciation 306.67 340.91 116.63 137.12

Profit before Tax & Minority Interest 99.39 109.25 (94.04) 10.85

Minority Interest (39.01) (50.97) N.A. N.A.

Taxes

- Current Year (15.74) (23.33) (4.00) (21.95)

- Deferred Tax 2.21 0.79 - -

- MAT Credit Entitlement - 17.50 - 17.50

Net Profit/(Loss) After Tax 46.85 53.24 (98.04) 6.40

Balance brought forward from last year 604.06 726.03 117.49 286.30

Excess provision of earlier years 47.15 - 0.07 -

Profit available for appropriations: 698.06 779.27 19.52 292.69

Less: Appropriations:

Transfers to Reserves

- General Reserve - 1.00 - 1.00

- Debenture Redemption Reserve - 168.7 - 168.7

Provision for final Dividend on Equity Shares - 4.72 - 4.72

Tax on Dividend - 0.78 - 0.78

Balance carried to Balance Sheet 698.06 604.06 19.52 117.49

On consolidated basis, a milestone was achieved during the year with consolidated income from operations crossing the Rs. 2500 cr mark. The income from operations was at Rs. 2829 eras againstRs. 1809 cr in the previous year; registering a growth of 56%. The operating profit for the year was Rs. 621 cr against previous year's Rs. 656 cr.

After providing for the minority interest of Rs. 39 cr (previous year Rs. 51 cr) the net profit was recorded at Rs. 47 cr as against Rs. 53 cr in the previous year. Scale up in Coal mining and procurement activities boosted revenues of the Company. However, overall performance was affected due to lower realizations of shipping freight. Exceptional items in the nature of loss on account of write offs against sale of Rig and Dry docking expenses also added to lower profits.

On a standalone basis, the income from operations for the year under review was Rs. 639 cr as against Rs. 581 cr in the previous year, registering a growth of 10% for the year. The Company suffered a loss of Rs. 94 cr against as Profit Before Tax (PBT) of Rs. 11 cr in the previous year. Loss after provision of tax was Rs. 98 cr against Net Profit of Rs. 6 cr in the previous year. This was mainly on account of dry docking of two vessels on which an amount of Rs. 15 cr was spent besides loss of revenue from those vessels during the period of dry-dock, coupled with lower Time Charter Yield in dredger division. Lower realization of shipping freight further aggravated the loss. Dredger deployment has improved substantially since the year end, and your Company expects better standalone performance in the coming years.

EXPANSION AND FINANCE

During the year under review, one aframax; two panamax and one post panamax vessels were acquired at an aggregate cost of Rs. 542.50 cr (equivalent of USD 121.50 mn). A Mobile Offshore Production Unit (MOPU) was acquired & refurbished and a suezmax was converted into a Floating Storage Offshore Unit (FSO) collectively called FPU. The total cost incurred for FPU as at March 31, 2011 was Rs. 805 cr.

The aframax has been deployed gainfully since its acquisition. Panamaxes/post-panamaxes too were deployed immediately upon their acquisitions on long- term charter ranging a period of 35 to 74 months. The MOPU and the FSO have been deployed on a nine-year contract. The acquisition of key assets such as these proves the Company's foresight and its ability to monetise future opportunities. A mix of internal resources and debts financed these expansions.

Towards the end of the year, your Company issued Un- secured Redeemable Non-convertible Debentures of an aggregate amount of Rs. 100 cr on private placement basis, which have been listed on the Bombay Stock Exchange.

Your Company would consider raising of funds for general corporate purposes including capital expenditure, working capital requirements, strategic investments byway of issue of securities (whether in India and/or abroad) at appropriate time.

BUSINESS OPERATIONS AND FUTURE OUTLOOK

Your Company has well diversified business segments i.e. Shipping (Tanker & Dry bulk); Dredging; Oil & Gas; Coal (Mines & Procurement); and Logistics. While the Coal division performed extremely well, the Dry bulk & Logistics division performed satisfactorily. The tanker and dredging divisions were affected due to subdued market conditions. Exploration activities have commenced on two oil blocks that the Company owns. The FPU (MOPU & FSO) has been commissioned successfully subsequent to the end of the year. The commissioning of the FPU project is expected to add substantial revenue from current year. During the year; the Jack-up Rig was sold.

Going forward, performance of Coal mining and procurement is estimated to scale up further. While the Dredging Division has good improvements in terms of order book, Dry Bulk and Logistics are expected to continue to perform satisfactorily except in the event of any downturn in the world economy. The tanker division may remain soft with exceptional spikes.

SHARE CAPITAL

During the year, 2,77,80,000 warrants were issued to Promoters/Persons Acting in concert/Directors/entities controlled by them on a preferential basis in accordance with SEBI Regulations, as approved by the shareholders of the Company in their Extra-Ordinary General meeting held on October 28, 2010. The warrants carried an option to apply and subscribe for an equivalent number of equity shares of Rs. 1/- each at a price not less than Rs. 55 per share. Out of these, one of the promoters exercised the option and 89,00,000 warrants were converted into equivalent equity shares of Rs. 1/- each at a price of Rs. 55 per share. Consequently; the issued and paid up share capital increased from 23,59,92,073 equity shares of Rs. 1/- each aggregating Rs. 23.60 cr to 24,48,92,073 equity shares of Rs. 1/- each aggregating Rs. 24.49 cr. At the year end, 1,88,80,000 warrants were outstanding.

DIVIDEND

In view of losses suffered by the Company during the year under review, your Directors do not recommend any dividend.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956, and the Articles of Association of the Company, Mr. K. R. Bharat and Mr. Anil Khanna are the Directors liable to retire by rotation at the ensuing Annual General Meeting. Mr. Bharat, being eligible, has offered himself for re- appointment. Mr. Anil Khanna has expressed his inability to continue as Director of the Company. The Directors place on record their gratitude for the guidance extended by Mr. Anil Khanna during his tenure. Your Directors do not intend to fill the vacancy caused by the retirement of Mr. Anil Khanna.

Subsequent to year end, the Board of Directors in their meeting held on August 12, 2011 appointed Mr. M. M. Agrawal as an Additional Director of the Company. He being the Additional Director, holds office only up to the ensuing Annual General Meeting. Resolution for appointment of Mr. M. M. Agrawal as Director is proposed for approval of shareholders at ensuing Annual General Meeting in response to notices received from member of the Company proposing his candidature.

A brief resume of Mr. K. R Bharat and Mr. M. M. Agrawal is included in the notice of the ensuing Annual General Meeting scheduled to be held on September 22, 2011.

The Directors recommend their re-appointment for approval of the members.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS

As at March 31, 2011, your Company had 27 subsidiaries/ step-down subsidiaries. Pursuant to the Accounting Standard (AS 21) issued by the Institute of Chartered Accountants of India, audited consolidated financial statements together with Auditors' Report thereon form part of his Annual Report includes financial information of the subsidiaries.

Pursuant to general exemption granted vide notification dated February 8, 2011, issued by the Ministry of Corporate Affairs, Government of India, this Annual Report is presented without attaching annual accounts of the subsidiaries for the year ended March 31, 2011. A statement in respect of the said subsidiaries pursuant to Section 212 of the Companies Act, 1956, is enclosed herewith as required. The annual reports and accounts of subsidiaries will be made available for inspection at the registered office of the Company and also of the subsidiary companies concerned during working hours. The same, along with related detailed information will be made available to the investors of the Company as well as of subsidiaries, on request. The brief financial details of the subsidiaries for the year ended March 31, 2011, as prescribed under the said notification have been disclosed in the consolidated balance sheet of the Company.

AUDITORS

The Auditors of your Company, M/s. Contractor, Nayak & Kishnadwala, Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmed their eligibility for re-appointment under Section 224 (1-B) of the Companies Act, 1956.

The Directors recommend their re-appointment for approval of the members.

PARTICULARS OF EMPLOYEES

As required under the provisions of Section 217(2A) of the Companies Act, 1956 (the Act), read with the Companies (Particulars of Employees) Rules 1975 as amended, the requisite particulars with respect to the employees of the Company, who were in receipt of remuneration in excess of the limits specified under the said section are set out in the annexure forming part of this report. However, as per the provisions of Section 219(b) (iv) of the Act, the report and the accounts are being sent to all members of the Company excluding this annexure of particulars of employees. Any member interested in obtaining such particulars may write to the Company at the registered office.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, EXPORT MARKET DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS and OUTGO

The Conservation of Energy and Technology Absorption under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988, are not applicable to your Company. However, the Directors would like to assure you that every measure is taken to save and conserve energy at all the stages of operating the vessels, as well as, in our shore activities.

In its endeavor to develop the export market, your Company has formed/acquired new overseas subsidiaries during the year.

Your Company has not imported any technology during the year. It has earned foreign exchange of Rs. 132.85 cr (as against previous year's earnings of Rs. 216.46 cr) and spent Rs. 312.16 cr (as against Rs. 379.91 cr for the previous year) in foreign exchange, on account of acquisition of vessels, charter hire, other vessel expenses, and interests etc.

CORPORATE GOVERNANCE

A separate report on Corporate Governance, along with the requisite certificate from the Auditors of the Company, as required under the provisions of Clause 49 of the Listing Agreements with the Stock Exchanges, is annexed herewith forming a part of this Annual Report. Management Discussion and Analysis Report, as per the Corporate Governance requirement is also annexed herewith as part of this Report.

The Ministry of Corporate Affairs (MCA), India, has issued "Corporate Governance Voluntary Guidelines 2009". While following the Corporate Governance requirements prescribed under Clause 49 of the Listing Agreement, your Company has adopted many of the recommendations of the MCA which are in consonance with the Clause 49 of Listing Agreement of Stock Exchanges. It is in the process of reviewing the possibilities to implement the remaining recommendations as well.

INSURANCE

All properties of the Company are adequately insured.

FIXED DEPOSITS

The Company has not accepted any public deposits falling under the purview of section 58-A of the Companies Act, 1956.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that:

(i) In preparation of the annual accounts, all applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) They have selected such accounting policies in consultation with Statutory Auditors and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss for the year under review;

(iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act, 1956, to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

(iv) They have prepared the annual accounts on a going concern basis.

GROUP FORINTERSE TRANSFER OF SHARES

As required under clause 3(1) (e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997, persons constituting a "Group" (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of the aforesaid Regulations, are given in the Annexure A attached herewith and forms a part of this Annual Report.

ACKNOWLEDGEMENTS

The Directors would like to express their gratitude to customers, suppliers, service providers, regulators and Governmental agencies, such as Ministry of Shipping, Ministry of Petroleum & Natural Gas, the Directorate General of Shipping; Directorate General of Hydrocarbon; and other statutory authorities for their continual support and encouragement.

We also acknowledge the support lent and confidence bestowed upon us by our bankers, stakeholders and all Mercatorians.

For and on behalf of the Board

H. K. Mittal

Executive Chairman

Regd. Office:

3rd Floor, Mittal Tower, B-wing,

Nariman Point, Mumbai - 400021

Dtd: August 12, 2011

---

Mar 31, 2010

We have pleasure in presenting 26th annual report of your Company for the year ended on March 31, 2010.

FINANCIAL HIGHLIGHTS:

(Amount Rs.In crores)

Particulars Year ended Year ended

31.03.2010 31.03.2009 Consolidated Consolidated

Income from operations 1808.73 2210.51

Total Income 1819.72 2173.82

Operating Profit 655.93 910.23

Interest 205.77 166.32

Depreciation 340.91 268.70

Profit before Tax & Minority Interest 109.25 475.21

Minority Interest (50.97) (90.55) Taxes

-Current Year (23.33) (7.55)

- Deferred Tax 0.79 (0.38)

- MAT Credit Entitlement 17.50 -

- Fringe Benefit Tax -- (0.25)

Net Profit After Tax & Minority Interest 53.24 376.48

Balance brought forward from last year 726.03 478.31

Prior Period Adjustments - (0.01)

Short provision for tax of earlier years - (0.02)

Profit available for appropriations: 779.27 854.77

Less: Appropriations:

Transfers to Reserves

- Tonnage Tax Reserve - 57.00

- General Reserve 1.00 18.80

- Debenture Redemption Reserve 168.70 39.00

Dividend on Equity Shares of previous year - 0.12

Provision for final Dividend on Equity Shares 4.72 11.80

Tax on Dividend 0.78 2.02

Balance carried to Balance Sheet 604.06 726.03

Particulars Year ended Year ended 31.03.2010 31.03.2009 Standalone Standalone

Income from operations 580.79 1182.76

Total Income 699.91 1183.11

Operating Profit 242.90 433.37

Interest 94.94 101.84

Depreciation 137.12 143.66

Profit before Tax & Minority Interest 10.85 187.87

Minority Interest N.A N.A

Taxes - Current Year (21.95) (6.5)

- Deferred Tax - -

- MAT Credit Entitlement 17.50 -

- Fringe Benefit Tax - (0.25)

6.40 181.12

Balance brought forward from last year 286.30 233.94

Prior Period Adjustments - -



Short provision for tax of earlier years - (0.02)

Profit available for appropriations: 292.69 415.04

Less: Appropriations: Transfers to Reserves

- Tonnage Tax Reserve - 57.00

- General Reserve 1.00 18.80

- Debenture Redemption Reserve 168.70 39.00

Dividend on Equity Shares of previous year - 0.12



Provision for final Dividend on Equity Shares 4.72 11.80

Tax on Dividend 0.78 2.02

Balance carried to Balance Sheet 117.49 286.30

DIVIDEND:

The Directors recommend dividend @ Rs. 0.20 per equity share of Re. 1/- each i.e. 20% for the financial year 2009-10 (previous year Rs. 0.50 per share i.e. 50%). The aggregate amount of the dividend on 23,59,92,073 equity shares for the financial year 2009-10 would be Rs. 5.50 crores including corporate tax & surcharge thereon (Rs. 13.69 crores in the previous year on the same number of shares).

DIRECTORS:

During the year, Kapil Garg was appointed as Additional Director of the Company w.e.f. January 30, 2010. Pursuant to the provisions of Section 260 of the Companies Act, 1956, he holds office only up to the ensuing Annual General Meeting and is eligible for re-appointment as Director. The Company has received notice pursuant to Section 257 of the Companies Act, along with necessary deposit, from a member proposing his candidature as Director of the Company at the ensuing Annual General Meeting.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Manohar Bidaye is the Director liable to retire by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment.

Further, it is also proposed to re-appoint H, K. Mittal as Executive Chairman and Atul Agarwal as Managing Director of the Company for a period of three years commencing from August 1, 2010 with revised remunerations; as approved by the Remuneration Committee and Board of Directors in their meeting held on May 25, 2010. The revised terms are detailed in the accompanying notice of Annual General Meeting for the perusal and approval of the members.

Your Directors recommend for your approval the re-appointments of Kapil Garg, Manohar Bidaye, H. K. Mittal and Atul Agarwal at the ensuing Annual General Meeting. The brief resume of all the four directors is included in the notice of the ensuing Annual General Meeting scheduled to be held on September 7, 2010.

SUBSIDIARY COMPANIES:

Your company had following subsidiaries/step-down subsidiaries as at March 31, 2010:

Sr. No.Name incorporated in

1. Mercator International Pte. Ltd. Singapore

2. Mercator Oil & Gas Ltd. India

3. Mercator Petroleum Private Ltd. India

4. Mercator Offshore Holdings Pte. Ltd. Singapore

5. Mercator Offshore Ltd. Singapore

6. Mercator Lines (Singapore) Ltd. Singapore

7. Varsha Marine Pte. Ltd. Singapore

8. Vidya Marine Pte. Ltd. Singapore

9. Mercator Lines (Panama) Inc Panama

10 Oorja Holdings Pte. Ltd. Singapore

11 Oorja 1 Pte. Ltd. Singapore

12 Oorja 2 Pte. Ltd. Singapore

13 Oorja 3 Pte. Ltd. Singapore

14 Oorja Mozambique Minas Limitada Mozambique

15 Broadtec Mozambique Minas Limitada Mozambique

16 PT Oorja Indo Petangis Four Indonesia

17 PT Oorja Indo Petangis Three Indonesia

18 PT Oorja Indo KGS Indonesia

19 MCS Holdings Pte. Ltd. Singapore

20 PT Mincon Indo Resources Indonesia

21 Mercator Offshore (Nigeria) Pte. Ltd. Singapore

22 Mercator PH (Dutch) Holding By Netherlands

23 Mercator Petroleum (Turkey) By Netherlands

24 Mercator Petroleum (Romania) Pte.Ltd. Singapore

Pursuant to Accounting Standard (AS 21) of the Companies (Accounting Standards) Rules 2006, consolidated financial statements presented by the Company include financial information of all its subsidiaries. A statement in respect of the said subsidiaries pursuant to Section 212 of the Companies Act, 1956 is enclosed herewith as required.

The Company has received an exemption from the Government of India u/s 212(8) of the Companies Act 1956; from attachment of the documents of above subsidiaries to its accounts for the year ended on March 31, 2010. The annual reports and accounts of subsidiaries are available for inspection; at the registered offices of the Company and those of the subsidiary companies concerned; during the working hours. Upon request, the same along with related detailed information will be made available to the investors of the Company as well as of subsidiaries. A statement in respect of brief financial details of the Companys subsidiaries for the year ended March 31, 2010 is annexed to this report.

Subsequent to the year end, one more step-down subsidiary was formed by name Ivorene Oil Services Nigeria Ltd. in Nigeria to provide local support services.

AUDITORS:

The Auditors of your Company, M/s. Contractor, Nayak & Kishnadwala, Chartered Accountants, retire at the ensuing Annual General Meeting and have confirmed their eligibility for re-appointment under Section 224 (1-B) of the Companies Act, 1956.

The Directors recommend their re-appointment for approval of the members.

PARTICULARS OF EMPLOYEES:

As required under provisions of Section 217(2A) of the Companies Act, 1956 (the Act), read with the Companies (Particulars of Employees) Rules 1975 as amended, the requisite particulars in respect of the employees of the Company, who were in receipt of remuneration in excess of the limits specified under the said section are set out in the annexure forming part of this report. However, as per the provisions of section 219 (b) (iv) of the Act; the report and the accounts are being sent to all members of the Company excluding this annexure of particulars of employees. Any member interested in obtaining such particulars may write to the Company at the registered office.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION: EXPORT MARKET DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS & OUTGO:

The Conservation of Energy and Technology Absorption under the Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 are not applicable to your Company. However, your Company has taken all possible measures to save and conserve energy at all the stages of its operation of its vessels, as well as, in our Shore and Off-shore activities.

On export front, your Company has been carrying out its activities through its various overseas subsidiaries; and it has formed new subsidiaries abroad during the year.

Your Company has not imported any technology, and hence the requirement for disclosure in this regard is nil. It has earned foreign exchange of Rs. 216.46 crores (previous year Rs. 403.94 crores) and spent Rs. 379.91 crores (previous year Rs. 1457 crores) in foreign exchange on account of acquisition of vessels, charter hire, other vessel expenses and interests etc.

CORPORATE GOVERNANCE:

A separate report on the Corporate Governance, along with the requisite certificate from the Auditors of the Company as required under the provisions of Clause 49 of the Listing Agreements with the Stock Exchanges is annexed herewith forming part of this Annual Report. Management Discussion and Analysis Report as per the Corporate Governance requirement is also annexed herewith as part of this Report.

Ministry of Corporate Affairs (MCA), India issued a "Corporate Governance Voluntary Guidelines 2009" during the year under review. While following the Corporate Governance requirements prescribed under Clause 49 of the Listing Agreement, your Company has adopted many of the recommendations of the MCA; and is reviewing the possibilities to implement the remaining recommendations.

Your Directors are pleased to inform you that in token of appreciation of the Corporate Governance Practices followed by the subsidiary Company Mercator Lines (Singapore) Limited, it has been awarded coveted Singapore Corporate Awards in two different categories consecutively for second year.

INSURANCE:

All properties of the Company are adequately insured.

FIXED DEPOSITS:

The Company has not accepted any public deposits falling under the purview of section 58-A of the Companies Act; 1956. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the provisions of section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that:

(i) In preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit for the year under review;

(iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) They have prepared the annual accounts on a going concern basis.

GROUP FOR INTERSE TRANSFER OF SHARES:

As required under clause 3(1) (e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations 1997, persons constituting "Group" (within the meaning as defined in the Monopolies and Restrictive Trade Practices Act, 1969) for the purpose of availing exemption from applicability of the provisions of Regulation 10 to 12 of the aforesaid Regulations, are given in the Annexure A attached herewith and forms part of this Annual Report.

ACKNOWLEDGEMENTS:

The Directors would like to express their gratitude to the suppliers, customers, service providers, regulators and the governmental agencies, such as Ministry of Shipping, Ministry of Petroleum & Natural Gas, the Directorate General of Shipping; Directorate General of Hydrocarban; and other statutory authorities for their continual support and encouragement.

We also acknowledge the support lent and confidence bestowed upon us by the bankers; all the stakeholders and all Mercatorians.

For and on behalf of the Board H.K.Mittal Executive Chairman Regd.Office: 3rd Floor,Mittal Tower,B-wing, Nariman Point,Mumbai -400021 Dated:May 25,2010