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Directors Report of Shipping Corporation of India Ltd.

Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the 64th Annual Report on the working of your Company for the financial year ended 31st March 2014.

Accounting Year

The year under report covers a period of 12 months ended on 31st March 2014.

FINANCIAL PERFORMANCE

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

( in Crores) 2013-14 2012-13

Gross Earnings 4539 4796 Gross Profit (before interest, depreciation, items relating to earlier years, exceptional items & tax) 896 492

Less : Interest 208 162

Depreciation 856 1,064 760 922

Profit before items relating to earlier years, exceptional

items & tax (168) (430)

Prior year''s adjustments (53) 62

Profit before Extraordinary items & tax (221) (368)

Extraordinary items - 300

Provision for Taxation (53) (46)

Net Profit/Loss (-) (274) (114)

Appropriations:

The working results for your company for the year 2013-14 after considering prior period adjustments show a loss of Rs. 274.66 crores. After adjusting a sum of Rs. 46.20 crores (being balance profit and loss account brought forward from previous year), there is a debit balance in Profit & Loss A/c of Rs. 228.46 crores.

Brief Analysis of Financial Performance:

At an overall level SCI has incurred a loss of Rs. 274.66 crores in the current year as against loss of Rs. 114.31 crores in the preceding year. The financial performance of your Company continued to be impacted by the low levels of freight rates during the year. The Company rescinded nine shipbuilding contracts during the year due to default by the shipyard and this has resulted in foreign exchange gain and interest income upside to the Company by about Rs. 66 crores. However operationally, SCI has improved its performance as can be seen from the fact that our loss before items relating to earlier years, exceptional items & tax has reduced from Rs. 430 crores to Rs. 168 crores. It may also be observed that the preceding year had a write back of Rs. 300 crores of borrowing cost.

Fleet Position during the Year:

During the year under report, nine vessels aggregating to 217,943 DWT were phased out from the SCI fleet whereas two new building bulk carriers, vessels aggregating to 163,430 DWT were delivered to SCI. Thus, the overall fleet position, which was 80 ships at the beginning of the year, declined to 73 ships at the end of the year as shown in the following table. However, there has been only a marginal reduction in the total tonnage.

FLEET PROFILE DURING THE YEAR

Particulars As on 1.4.2013 Additions

No. DWT No. DWT

1. (a) Crude Oil Tanker 23 3,627,893 - -

(b) Product Tankers 15 952,728 - -

(c) Chemical Tankers 1 33,058 - -

(d) Gas Carriers 2 35,202 - -

2. Bulk Carriers 17 1,020,214 2 163,430

3. Liner Ships 5 202,413 - -

4. Offshore Supply Vsls. 16 32,650 - -

5. Passenger-Cum-Cargo Vessels 1 5,140 - -

TOTAL 80 5,909,298 2 163,430

Particulars Deletions As on 31.3.2014

No. DWT No. DWT

1. (a) Crude Oil Tanker 1 94,540 22 3,533,353

(b) Product Tankers 1 44,669 14 908,059

(c) Chemical Tankers - - 1 33,058

(d) Gas Carriers - - 2 35,202

2. Bulk Carriers 2 69,755 17 1,113,889

3. Liner Ships - - 5 202,413

4. Offshore Supply Vsls. 5 8,979 11 23,670

5. Passenger-Cum-Cargo Vessels - - 1 5,140

TOTAL 9 217,943 73 5,854,784

NEW BUILDING VESSELS DELIVERED DURING THE YEAR

Vessel Name Type Yard Built DWT

m.v. Vishva Chetna Dry Bulk carrier Jiangsu Eastern Heavy 81,733 Industries

m.v. Vishva Uday Dry Bulk carrier Jiangsu Eastern Heavy 81,696 Industries

VESSELS DISPOSED OF DURING THE YEAR

Vessel Name Type Yard Built DWT

m.v. Lok Pratap Dry Bulk 1993 26,718

m.v. Maharashtra Dry Bulk 1996 43,037

m.t. Motilal Nehru Crude Oil Tanker 1990 94,540

m.t. Rabindranath Tagore Product Carrier 1993 44,669

m.v. Feroze Gandhi AHTSV 1984 1,758

m.v. SCI-02 AHTSV 1984 1,776

m.v. SCI-05 AHTSV 1984 1,818

m.v. SCI-06 AHTSV 1985 1,817

m.v. Capt F M Juvale AHTSV 1985 1,809

VESSELS ON ORDER AT THE END OF THE YEAR

The number of vessels on order of your company reduced from sixteen vessels at the start of the year to seven vessels at the end of the year. Thereafter your company has rescinded contracts of four more vessels (2 nos. 6,500 TEU Container vessels and 2 nos. AHTSVs) thus bringing the vessels on order to three vessels as on 31.07.2014.

Type No. Shipyard Total DWT

VLCC 2 Jiangsu Rongsheng Heavy Industries Co. Ltd. 634,000 6,500 TEU Cellular Container vessel 2 STX (Dalian) Shipbuilding Co. Ltd. 171,200

AHTSV (80T BP) 3 ABG Shipyard Ltd. 6,000

7* 811,200

*- Vessels on order as on 31.07.2014, stood at three vessels of 636,000 dwt.

Implementation of Official Language Policy

In accordance with the Official Language Policy of the Government of India, Constitutional provisions of the Official Language Act, 1963, the Official Language Rules, 1976 your Company continued its consistent efforts to spread the usage of Hindi language during the year.

Besides various Hindi competitions and computer training workshops, your Company also organized a Hindi Talk on "Social Media" in January 2014 and an Annual Hindi Review Meeting in February 2014 in Mumbai. In order to create a conducive atmosphere, Bhashayee Sauhard Sanskritik Karyakram was also conducted in October 2013 wherein a good number of SCI employees presented their items like songs, poetries, etc in Hindi and other Indian languages. Your company also took active participation in the Town Official Languages Implementation Committee (TOLIC) meetings held twice during the year under report.

Particulars of Employees

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

Companies (Disclosure of Particulars in the Report of Board of Directors) Rules 1988 In terms of the Notification No. GSR 1029 dated 31.12.1988, your Company is required to furnish information under Clause (e) of Sub-section (1) of Section 217 of the Companies Act, 1956. The information to be furnished in Form A is not applicable to the shipping industry. Your Company, being a shipping company, has no particulars to furnish in Form B as regards technology absorption. The foreign exchange earnings and outgo during the year under report were as under: Rs. in Crores 2013-14 2012-13 Foreign exchange earned and saved including deemed earned and saved 4301.70 4258.93

Foreign exchange used including deemed used 4570.05 4332.55

Expenses on Entertainment, Foreign tours etc. - FY 2013-14

During the year under report your Company spent Rs. 52 lakhs on entertainment, Rs. 258 lakhs on publicity & advertisements and Rs. 307 lakhs on foreign tours of Company''s executives.

Board of Directors

Shri J. N. Das, Director (L&PS) ceased to be a director on the Board of SCI due to superannuation on 30.04.2014. On 07.07.2014, the Board appointed Capt S Narula as Director (L&PS). Shri B. K. Mandal, Director (Finance), who was holding additional charge as CMD from 01.01.2013 to 27.01.2014, ceased to be a director on the Board of SCI due to superannuation on 31.05.2014. Shri A. K. Gupta was appointed Chairman & Managing Director (CMD) w.e.f. 28.01.2014. Shri A. K. Gupta also holds additional charge of the post of Director (T&OS) and Director (Finance). The following independent directors ceased to be a part of the Board of Directors on expiry of their term:

Sr. Name of Director Date of Completion of Tenure No.

1. Shri T. S. Ganeshan 10.08.2013

2. Shri Arun Ramanathan 10.08.2013

3. Shri Arun K. Verma 10.08.2013

4. Shri Nasser Munjee 10.08.2013

5. Shri U. Sunderarajan 10.08.2013

6. Shri S. C. Tripathi 10.08.2013

7. Shri S. K. Roongta 28.10.2013

Subsequently the following Independent Directors were appointed/ reappointed on the Board of Directors of SCI:

Name Date of Appointment/ Remarks Reappointment Shri T. S. Ganeshan 12.11.2013

Shri Arun Ramanathan 12.11.2013 Reappointment

Shri Arun K. Verma 12.11.2013

Shri Ashish Makhja 26.05.2014

Shri P Umashankar 26.05.2014

Shri N. C. Sridharan 26.05.2014 Appointment

Prof. Gopal V 26.05.2014

Shri R. Santhanam 26.05.2014

Auditors'' Report

The auditors in their audit report for the quarter ended 31st March, 2014 have brought out that;

a. In absence of sufficient documentary evidence to comply with clause 50 and 51 of AS 28 Impairment of Assets issued by ICAI in respect of the adjustments required to the Discount rate currently taken at 6% for the specific risks associated with the cash flows such as currency risk, price risk, country risk, cash flow risk etc. and estimation of expected rate of return on equity to arrive at the Weighted Average Cost of Capital, the effect of which on discount rate remains unascertainable on the statement of profit and loss account, fixed assets and provision for impairment.

b. In the absence of positive confirmations required in response of letters issued by the management as per para 13 of SA 505 External confirmations issued by ICAI for trade receivables that may require adjustment to the statement of profit and loss account and their balances respectively, the consequential impact of the same on statement of profit and loss account and balance sheet remains unascertainable.

c. We draw attention toward the direct access of the Accounting Software provided to the Agents for accounting of the expenses relating to the port and 36% of the same are yet to be verified by the Company, due to which global netting is done without reconciliation towards the prefunding to agents and Vendor Reconciliation account, the consequential effect of the same on the Statement of Profit and Loss remains unascertainable.

d. In our opinion and according to the information and explanations given to us, special emphasis is required on the continued failure to correct major weakness in internal control systems as applicable to SAP and other sub systems in relation to the agents working, accounting and timely and proper verification by the Corporation. Emphasis also needs to be given on the implementation of the system audit report conducted by the organization in relation to the SAP - ERP and other critical business process, to establish checks on the complete and proper recording of the transaction relating to the expenses and revenue.

e. In our opinion, the company does have an internal audit system commensurate with its size and the nature of its business. However due care needs to be given to the timely and proper recording of transactions and the inspection of agents needs to be conducted.

f. We have been informed that one of the foreign agents of the company has manipulated the container movement report submitted from time to time and thus did not pay to the company its rightful dues. After the discovery of the same, the agent has deposited an amount of Rs. 13 crores on adhoc basis for last five years. The company has constituted a committee to further investigate the matter and to exactly quantify the actual amount. The report of the committee has not been submitted as yet. Except as mentioned in the Foregoing lines, any other material fraud on or by the Company has not been noticed or reported during the year nor we have been informed of any such case by the management that causes the financial statements to be materially misstated.

The management''s views on the above observations are as below:

a. While doing the impairment exercise, company has taken weighted average cost of capital as the discounting factor as per clause 50 of AS 28 which works out to approximately 6%. The Company has done analysis of risks such as country risk, currency risk, price risk, cashflow risk and asset specific risks. It is found that there is no necessity to make any adjustment to the discounting rate as per clause 51 of AS 28.

b. The PSUs and government organisations constitute more than 50% of the trade receivables. The Company had sent letters requesting balance confirmation to all major customers including PSUs. However, despite persistent follow up through letters, emails, personal visits and correspondence at highest levels, most of the debtors did not respond. The management does not expect any material impact on the Statement of Profit & Loss Account due to this.

c. As per the system adopted by the company, port related expenses are booked by the agents through specially designed software. The same are subsequently verified by an external firm & approved by the company. This process takes time due to involvement of multiple departments in the approval process. About 64.3 % of the expenses have been verified and approved by the company and the balance is in process for FY 2013-14. From our past experience it has been observed that relatively minor amount of expenses are disallowed by the company subsequently. Hence, the impact on Statement of Profit & Loss Account is not expected to be material.

d. The Management is continuously reviewing the functioning of ERP system and incorporating changes to remove deficiencies found / brought to its notice. The systems are reviewed constantly and additional controls are introduced as considered necessary. The accounts and supporting documents are thoroughly checked by the Company and then transactions are approved in the system. System audit was carried out by M/s Deloitte and their recommendations are under implementation.

e. The company is making serious efforts to ensure timely recording of transactions. However, since substantial business is carried out through global network of agents, the receipt of accounts with supporting documents takes some time. We have already commenced inspection of agents accounts. During the year 2014-15, one Indian Agent was inspected by our statutory auditors and four overseas agents were inspected by a team of the company and external internal audit personnel. Management has taken steps to conduct such inspections on regular basis in future as well for better internal controls on agency accounts.

f. As a consequence of discovery of such irregularity in case of one agent, the container movement reporting is being scrutinized thoroughly in respect of all the agents. A specially constituted team of the management comprising representatives from the commercial division, SCI London office representative and a senior partner of SCI''s external-internal auditor had visited four agents in Europe. The movement of containers was scrutinized by this team in all the four locations and no discrepancy was observed. Currently, even in case of agent, who has deposited the above mentioned Rs. 13 crores no further discrepancy has been observed by the visiting team. Management is of the view that this issue is an isolated matter and the financial statements are not materially misstated.

Corporate Governance

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

Directors’ Responsibility Statement

Pursuant to the requirement under Section 217(2AA) of the Companies Act, 1956, with respect to Directors’ Responsibility

Statement, it is hereby confirmed:

* That in the preparation of the accounts for the financial year ended 31st March 2014, the applicable accounting standards have been followed along with proper explanation relating to material disclosures;

* That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for the year under review;

* That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

* That the Directors have prepared the accounts for the financial year ended 31st March 2014 on a “going concern” basis.

Acknowledgements

Your Directors extend their gratitude to Dr. Vishwapati Trivedi, Secretary to the Government of India, Ministry of Shipping, and look forward to his continued support and guidance. Your Directors also welcome Shri Nitin Gadkari, Minister of Shipping and Shri Krishan Pal, Minister of State for Shipping and look forward to their support and guidance in managing the affairs of the Company.

Your Directors also wish to express their thanks to the officials in the Ministry of Shipping, Road Transport & Highways for the unstinted support given by them in various matters concerning the Company. Your Directors would also like to convey their thanks to other Ministries, Trade Organizations, Shippers’ Councils, who have played a vital role in the continued success of your Company.

The Directors thank the shareholders and valued customers for the continued patronage extended by them to your Company. Last but not the least, your Directors wish to record their deep appreciation for the dedicated and loyal service of your Company’s employees, both afloat and ashore, without whose co-operation and efforts the achievements made by your Company would not have been possible.

Place : Mumbai Dated : 12th August, 2014 For and on behalf of the Board of Directors

A. K. Gupta Chairman & Managing Director


Mar 31, 2013

To the Members,

The Directors have pleasure in presenting the 63rd Annual Report on the working of your Company for the financial year ended 31st March, 2013.

Accounting Year

The year under report covers a period of 12 months ending on 31st March, 2013.

FINANCIAL PERFORMANCE

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

(Rs. In crores)

2012-13 2011-12

Gross Earnings 4796 4500

Gross Profit (before interest, depreciation, items relating to earlier years, exceptional items & tax) 492 623

Less : Interest 162 387

Depreciation 760 922 609 996

Profit before items relating to earlier years, exceptional items & tax (430) (373)

Prior year''s adjustments 62 33

Profit before Extraordinary items & tax (368) (340)

Extraordinary items 300 -

Provision for Indian Taxation (46) (88)

Net Profit / Loss (-) (114) (428)

Appropriations :

The working results for your company for the year 2012-13 after considering prior period adjustments & extraordinary items show a loss of Rs. 114.31 crores.

After adding a sum of Rs. 161.71 crores (being balance profit and loss account brought forward from previous year), the amount available for disposal works out to 47.4 crores.

Your directors propose to make the following appropriations from this amount:

Staff Welfare Fund 1.2 crores

Total 1.2 crores

After the proposed appropriation, the sum available is Rs. 46.20 crores which is being carried forward to next year''s accounts.

Brief Analysis of Financial Performance:

The financial performance of your Company was impacted by the adverse freight markets during the year. There has been an increase in the operating earnings due to induction of twelve new vessels during the year though freight rates were depressed. The Company also had extraordinary income of Rs. 300 crs being the reversal of borrowing cost (arising on account of exchange loss arising out of revaluation of the foreign currency loans) of earlier years. However, the same has been offset primarily by increase in depreciation, creation of provision for diminution in value of investments and higher interest cost due to the new vessels inducted.

Fleet Position during the Year:

During the year under report, 8 vessels aggregating to 287,460 DWT were phased out from the SCI fleet whereas 12 vessels comprising of six newbuilding bulk carriers, one resale Crude oil tanker and five new building offshore vessels aggregating to 630,172 DWT were added to SCI fleet. Thus, the overall fleet position, which was 76 ships at the beginning of the year, improved to 80 ships at the end of the year as shown in the following table:

NEWBUILDING VESSELS DELIVERED DURING THE YEAR

Vessel Name Type Yard Built DWT

SCI KUNDAN AHTSV (120T Bollard Pull) Cochin Shipyard 2,011

m.v. Vishva Diksha Dry Bulk carrier STX (Dalian) yard 57,132

m.v. Vishva Anand Dry Bulk carrier STX (Dalian) yard 80,204

m.v. Vishva Vinay Dry Bulk carrier STX (Dalian) yard 80,139

SCI Ahimsa AHTSV (120T Bollard Pull) Cochin Shipyard 2,005

SCI Nalanda Platform Supply Vessel Cochin Shipyard 3,093

m.t. Desh Shobha Crude Oil Tanker Hyundai Samho Heavy Industries 158,034

m.v. Vishva Vijay Dry Bulk carrier STX (Dalian) yard 80,312

m.v. Vishva Preeti Dry Bulk Carrier STX (Dalian) yard 80,250

SCI Yamuna Platform Supply Vessel Cochin Shipyard 3,095

m.v. Vishva Jyoti Dry Bulk carrier Jiangsu Eastern Heavy Industries 81,894

SCI Urja AHTSV (120T Bollard Pull) Cochin Shipyard 2,003

Total 630,172

VESSELS DISPOSED OF DURING THE YEAR

Vessel Name Type Year Built DWT

m.v. Ramanujam Passenger 1987 163

m.v. Dakshineshwar Dry Bulk carrier 1987 47,277

m.v. Gangasagar Dry Bulk carrier 1987 47,281

m.t. Maharshi Karve Crude Oil Tanker 1978 122,109

m.t. C.V. Raman Crude Oil Tanker 1981 40,329

m.v. Lok Prem Dry Bulk carrier 1990 26,714

SCI-01 AHTSV 1984 1,775

SCI-04 AHTSV 1984 1,812

VESSELS ON ORDER AT THE END OF THE YEAR

Type No. Shipyard Total DWT

Anchor Handling, Towing & Supply Vessel (AHTSV) (80T BP) 1 Bharati Shipyard Ltd. 2,000

Kamsarmax bulk carrier 3 Jiangsu Eastern Heavy Industries Co. Ltd. 246,000

VLCC 2 Jiangsu Rongsheng Heavy Industries Co. Ltd. 634,000

6.500 teu Cellular Container vessel 3 STX (Dalian) Shipbuilding Co. Ltd. 256,800

3.500 teu Cellular Container vessel 1 Rongcheng Shenfei Shipbuilding Co. Ltd. 43,000

Anchor Handling, Towing & Supply Vessel (AHTSV) (80T BP) 6 ABG Shipyard Ltd. 12,000

16 1,193,800

Particulars of Employees

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

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

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

- Foreign exchange earned and saved including deemed earned and saved Rs. 4258.93 crores.

- Foreign exchange used including deemed used Rs. 4332.55 crores.

Expenses on Entertainment, Foreign tours etc.

During the year under report your Company spent Rs. 56 lakhs on entertainment, Rs. 270 lakhs on publicity & advertisements and Rs. 293 lakhs on foreign tours of Company''s executives.

Board of Directors

During the year under review, the Ministry of Shipping appointed Shri Sunil Kohli, Joint Secretary & Financial Advisor (JS&FA) as Non-Executive Director (ex-officio) on the Board of SCI w.e.f. 21.09.2012 in place of Shri Vijay Chibber who had relinquished his charge as Additional Secretary & Financial Advisor (Shipping). Subsequently, on relinquishment of the additional charge of JS&FA (Shipping) by Shri Sunil Kohli on 25.1 1.2012, the Ministry of Shipping appointed Dr. (Ms.) T. Kumar as Additional Secretary & Financial Advisor (Shipping) as Non-Executive Director (ex-officio) and her appointment on the SCI Board took effect on 26.11.2012.

Shri Kailash Gupta, Director (P&A) and Shri S. Hajara, Chairman & Managing Director (CMD) ceased to be directors on the Board of SCI due to superannuation w.e.f. 31.12.2012. Capt. B. B. Sinha was appointed Director (P&A) w.e.f. 1.1.2013. Shri B.K. Mandal, Director (Finance), Shipping Corporation of India (SCI) Ltd., holds additional charge of the post of Chairman & Managing Director (CMD), SCI w.e.f. 01.01.2013 to 31.3.2013 or until further orders of the Ministry, whichever is earlier. The tenure of Shri B K Mandal as CMD has been extended from time to time by the Ministry of Shipping. Prof. Sushil Khanna (Independent Director) tendered his resignation vide his email on 25.03.2013. The said resignation is under process at Ministry level. The tenure of Independent Directors has come to a close on 10th August, 2013. Ministry of Shipping is taking necessary action to fill up the vacant positions of Independent Directors.

Details of shares lying unclaimed

The details of the shares issued pursuant to FPO remaining unclaimed and lying in the escrow account, the voting rights of which shall remain frozen till the rightful owner of such shares claim the shares, are given as under:

Sr. No. Details No. of Share holders No. of Shares

1 Aggregate number of shareholders and the outstanding shares in the suspense account lying as on 01.04.2013 4 436

2 Number of shareholders who approached for transfer of shares from suspense account till 31.03.2013 0 0

3 Number of shareholders to whom shares were transferred from suspense account till 31.03.2013 0 0

4 Aggregate number of shareholders and the outstanding shares in the suspense account lying as on 31.03.2013 4 436

5 Aggregate number of shareholders and the outstanding shares in the suspense account lying as on 10.06.2013 4 436

Auditors'' Report

The auditors in their audit report for the year ended 31st March, 2013 have brought out that;

The Company has not complied with the requirements of AS - 28 - Impairment of Assets, issued by ICAI, the effect of which is unascertainable.

The accuracy of exchange gain / loss in respect of customer reconciliation / advances received from customers / trade payables recognized on revaluation as per accounting standard-11- "The effects of changes in foreign exchange rates" remains unverifiable and unascertainable.

The Company is unable to provide confirmation for accounts receivable, accounts of agents. In the absence of the reasonable audit evidence, the effect of the same remains unascertainable /unverifiable on the statement of profit and loss account and balance sheet.

We draw attention towards the direct access of the Accounting Software provided to the Agents for accounting of expenses relating to the port and 83% of the same are yet to be verified by the Company, the consequential effect of the same on the statement of profit and loss remains unascertainable.

The management''s views on the abovementioned points are as below:

The management has tested its assets for impairment and has computed the recoverable value for all the ships owned by the company following AS 28. The methodology adopted by the company has been consistent over the last 3 years. As per the calculations, there is no impairment on the assets hence provision for impairment is not considered necessary.

The company has developed software to match the collectibles and collections related to customers. Substantial progress has been achieved in this regard upto 31st March, 2013.

In case of vendors, the expenditure incurred by the agents is prefunded through Proforma Disbursement Account after scrutiny of the prefunding claims. The final claims for the expenditure booked by the agent are received through Final Disbursement Account which is verified after the physical documents are received from the agent. This process takes time due to the nature of the business.

We do not expect any material impact on the profit / loss due to this.

We have sent letters seeking confirmation of balances to all our major debtors. However; the confirmations have not been received. This does not have material impact on the accounts of the company.

SCI has a worldwide network of agents. As per the system adopted by the company, port related expenses are booked by the agents. The same are subsequently verified by an external firm. About 45% of the expenses have been verified by the company and the balance is in process. From our past experience it has been observed that relatively minor amount of expenses are disallowed by the company subsequently.

The audited accounts has been reviewed by the Comptroller & Auditor General of India (CAG) and the certificate of CAG is also annexed to this report.

Corporate Governance

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

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

- That in the preparation of the accounts for the financial year ended 31st March, 2013, the applicable accounting standards have been followed along with proper explanation relating to material disclosures;

- That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 or loss of the Company for the year under review;

- That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

- That the Directors have prepared the accounts for the financial year ended 31st March, 2013 on a "going concern" basis.

Acknowledgements

Your Directors extend their gratitude to Shri G. K. Vasan, Hon''ble Minister for Shipping, and look forward to his continued support and guidance. Your Directors also welcome Shri Milind Deora, Minister of State for Shipping and Shri Vishwapati Trivedi, Secretary to the Government of India, Ministry of Shipping, and look forward to their support and guidance in managing the affairs of the Company.

Your Directors also take this opportunity to express their gratitude and thanks to Shri Pradeep K. Sinha, former Secretary to the Government of India, Ministry of Shipping for the support and guidance extended to your Company during his tenure. Your Directors also wish to express their thanks to the officials in the Ministry of Shipping, for the unstinted support given by them in various matters concerning the Company. Your Directors would also like to convey their thanks to other Ministries, Trade Organizations, Shippers'' Councils, who have played a vital role in the continued success of your Company.

The Directors thank the shareholders and valued customers for the continued patronage extended by them to your Company.

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

For and on behalf of the

Board of Directors

Place : Mumbai B.K.Mandal

Dated : 8th August, 2013 Chairman & Managing Director


Mar 31, 2012

To the Members,

The Directors have pleasure in presenting the 62nd Annual Report on the working of your Company for the financial year ended 31st March 2012.

Accounting Year

The year under report covers a period of 12 months ended on 31st March 2012.

Financial Performance

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

(Rs. Crores)

2011-12 2010-11

Gross Earnings 4500 4018

Gross Profit (before interest, depreciation, items relating to earlier years, exceptional items & tax) 623 1159

Less : Interest 387 67

Depreciation 609 996 465 532

Profit before items relating to earlier years, exceptional items & tax (373) 627

Prior year's adjustments 33 30

Excess Provision / sundry credit balances written back 0 0

Profit before Exceptional items & tax (340) 657

Exceptional items -

Provision for Indian Taxation (88) (89)

Net Profit (428) 568

Appropriations

The working results of your Company for the year 2011-2012 after considering prior period adjustments show a loss of Rs. 428.21 crores. After adjusting a sum of Rs. 590.42 crores (being balance profit and loss account brought forward from the previous year), the amount available for disposal works out to Rs.162.21 crores. Your Directors propose to make an appropriation of Rs. 0.5 crore towards Staff Welfare Fund from this amount. After the proposed appropriation, the sum available is Rs. 161.71 crores which is being carried forward to next year's accounts.

Brief Analysis of Financial Performance :

The financial performance of your Company was impacted by the adverse freight markets during the year. There has been an increase in the gross earnings due to induction of ten new vessels during the year even though freight rates were depressed. However, the same have been offset primarily by an increase in fuel prices. Further your Company has also reported finance cost at Rs. 387.30 crores during the year which includes Rs. 296.73 crores on account of exchange loss arising out of revaluation of the foreign currency loans as a result of the depreciation of the Indian rupee to the US Dollar. This exchange loss has been considered as finance cost as per the requirement of the relevant accounting standard. The actual interest outgo in the current year was only Rs. 90.57 crores as against Rs. 63.94 crores in the earlier year.

Fleet Position during the Year :

During the year under report, fourteen vessels aggregating 570,443 dwt. tonnage were disposed of whereas eleven vessels comprising of seven newbuilding bulk carriers and four newbuilding offshore vessels total aggregating to 406,927 dwt. were delivered. Thus, the overall fleet position, which was 79 ships at the beginning of the year, closed at 76 ships at the end of the year as shown in the following table:

Implementation of Official Language Policy

During the year under report, your Company organized quarterly meetings of its Departmental Official Language Implementation Committee wherein a review on overall progress of Hindi in its offices was made and thereafter appropriate follow up actions were taken. Your Company has also represented by co-chairing the Town Official Language Implementation Committee (TOLIC) meetings with HPCL, during the year under report.

Particulars of Employees

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

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

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

Foreign exchange earned and saved including deemed earned and saved ? 4206.80 crores.

Foreign exchange used including deemed used ? 4258.09 crores.

Expenses on Entertainment, Foreign Tours, etc.

During the year under report your Company spent? 63 lakhs on entertainment, ? 356 lakhs on publicity & advertisements and ? 606 lakhs on foreign tours of Company's executives.

Board of Directors

Shri Rajeev Gupta ceased to be a Director w.e.f. 7.12.2011 consequent to relinquishment of the charge of Joint Secretary (Shipping) in the Ministry of Shipping. The Board places on record its appreciation for the valuable services rendered by him.

The Ministry of Shipping (MoS) thereafter communicated appointment of Shri Rakesh Srivastava [who had taken additional charge of Joint Secretary (Shipping) in the MoS] as a Director on the Board of your Company which took effect on 23.12.2011. However, on his relinquishment of the additional charge of Joint Secretary (Shipping), he ceased to be a Director on the Company's Board w.e.f. 1.2.2012 and Shri M. C. Jauhari who took over the charge of Joint Secretary (Shipping), was appointed on the SCI Board w.e.f. 2.2.2012.

Shri U. Sundararajan, Prof. Sushil Khanna, Shri Arun Kumar Verma and Shri Arun Ramanathan are retiring by rotation at the forthcoming Annual General Meeting and being eligible, offer themselves for appointment.

Auditors' Report

The Auditors' Report is attached to the Report. The Statutory Auditors had, in respect to the Audited Accounts for the year ended 31.03.2012, drawn the attention of the members on issues mainly arising out of switching over to integrated ERP System which are mentioned below :

1. Refer Note No 35 (i) accompanying to the Financial Statement deals with Netting of certain Balances with trade receivables and payables pending adjustment of likely transaction, verification of physical documents and its authorisation and Note No. 35 (ii) in respect of accounting of the effects of changes in foreign exchanges rates of monetary items and consequential accounting of the exchange gain / losses of which impact on the financial statement is not ascertainable in respect of loss for the year and trade receivables and payables.

2. During the course of audit, failure to correct weaknesses in internal control systems is observed in accounting of transactions, interface of transactions amongst the subsystems and SAP-ERP. Further, no system audit is carried out for interface of the data from functional subsystems to SAP-ERP and other critical business process, to establish checks on the complete and proper recording of the transaction relating to the expenses and revenue, post implementation of functional and accounting software - SAP.

3. The Company has an internal audit system; however the same is not commensurate with the size and nature of its business. In view of implementation of ERP and other functional packages it requires further strengthening.

The replies of the Management to the Auditors' observations are given below :

1. The problem had arisen on account of implementation of the new IT system which is in the process of stabilization. To overcome this, the company has developed software to match the collectibles and collections related to customers. Substantial progress has been achieved in this regard upto 31st March, 2012. The management does not expect the impact to be material.

In case of vendors, the expenditure incurred by the agents are prefunded through Proforma Disbursement Account after scrutiny of the prefunding claims. The final claims for the expenditure booked by the agent are received through Final Disbursement Account which are verified after the physical documents are received from the agent. This process takes time due to the nature of the business.

2. FY 2011-12 was the first full year of operations after the new systems were implemented. Expectedly, there were initial interface errors amongst the systems which were all effectively handled with the help of system vendors and consultants.

It was decided to carry out the system audit after stabilization of the systems. Accordingly, the management proposes to carry out system audit in FY 2012-13.

3. Internal audit is carried out in the organization by an external firm of Chartered Accountants. After assessing the necessity of having internal auditors with SAP certification, system audit related qualifications, capacity to engage more number of staff in SCI and sufficient experience of audits in ERP environment, a new firm of Chartered Accountants fulfilling these requirements has been engaged w.e.f. 01.04.2012. With the stabilization of new IT systems, the scope of internal audit has also been widened.

Corporate Governance

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

Directors' Responsibility Statement

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

That in the preparation of the accounts for the financial year ended 31st March 2012, the applicable accounting standards have been followed along with proper explanation relating to material departures;

That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 or loss of the Company for the year under review;

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

That the Directors have prepared the accounts for the financial year ended 31st March 2012 on a "going concern" basis.

Acknowledgements

Your Directors extend their gratitude to Shri G. K. Vasan, Hon'ble Minister for Shipping, and look forward to his continued support and guidance. Your Directors also extend a hearty welcome to Shri Pradeep K. Sinha, Secretary to the Government of India, Ministry of Shipping and look forward to his support and guidance in managing the affairs of the Company.

Your Directors also take this opportunity to express their gratitude and thanks to Shri Mukul Roy, former Hon'ble Minister of State in the Ministry of Shipping, and Shri K. Mohandaas, former Secretary to the Government of India, Ministry of Shipping for the support and guidance extended to your Company during their tenure. Your Directors also wish to express their thanks to the officials in the Ministry of Shipping, Road Transport & Highways for the unstinted support given by them in various matters concerning the Company. Your Directors would also like to convey their thanks to other Ministries, Trade Organizations, Shippers' Councils, who have played a vital role in the continued success of your Company.

The Directors thank the shareholders and valued customers for the continued patronage extended by them to your Company.

Last but not the least, your Directors wish to record their deep appreciation for the dedicated and loyal service of your Company's employees, both afloat and ashore, without whose co-operation and efforts the achievements made by your Company would not have been possible. For and on behalf of the Board of Directors

Place : Mumbai S. Hajara

Dated : 13.08.2012 Chairman & Managing Director


Mar 31, 2011

To the Members,

The Directors have pleasure in presenting the 61st Annual Report on the working of your Company for the financial year ended 31st March 2011.

Accounting Year

The year under report covers a period of 12 months ended on 31st March 2011. Financial Performance

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

(Rs. Crores)

2010-2011 2009 -2010

Gross Earnings 4020 3896

Gross Profit (before interest, depreciation, items relating to earlier years, exceptional items & tax) 1156 849

Less: Interest 64 53

Depreciation 465 529 380 433

Profit before items relating to earlier years, exceptional items & tax 627 416

Prior year's adjustments 30 (6)

Excess Provision / sundry credit balances written back 0 66

Profit before Exceptional items & tax 657 476

Exceptional items -

Provision for Indian Taxation (89) (99)

Net Profit 568 377

Appropriations

The working results of your Company for the year 2010-2011 after considering prior period adjustments show a profit of Rs. 567.35 crores. An amount of Rs. 114 crores has been transferred to Tonnage Tax Reserve u/s 115VT of Income Tax Act. After adding a sum of Rs. 516.63 crores (being balance profit and loss account brought forward from the previous year), the amount available for disposal works out to Rs. 969.98 crores. Your Directors propose to make the following appropriations from this amount:

1. Capital Reserve Rs. 17.59 crores

2. General Reserve Rs. 57.00 crores

3. Staff Welfare Fund Rs. 1.00 crore

4. Corporate Social Responsibility Reserve Rs. 5.67 crores

Total Rs. 81.26 crores

Dividend

The Board of Directors, in addition to the interim dividend @ 30% already paid for the year 2010-11, now recommends payment of final dividend @ 25% for the year 2010-11 absorbing a sum of Rs. 116.45 crores. In addition, dividend tax of Rs.18.89 crores will be payable by the Company. After the proposed appropriations, the sum available is Rs. 590.43 crores which is being carried forward to next year's accounts.

Fleet Position during the Year :

During the year under report, nine vessels aggregating 520,259 dwt. tonnage were disposed of whereas four new building crude oil tankers and eight new building product tankers aggregating to 1,109,145 dwt. were delivered. Thus, the overall fleet position, which was 76 ships at the beginning of the year, closed at 79 ships at the end of the year as shown in the following table:

FLEET PROFILE DURING THE YEAR

Particulars As on 1.4.2010 Additions Deletions As on 31.3.2011

No. Dwt. No. Dwt. No. Dwt. No. Dwt.

1. (a) Crude Oil Tanker 26 35,76,271 4 458,942 6 402,916 24 36,32,297

(b) Product Tankers 10 4,23,172 8 650,203 2 90,893 16 9,82,483

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

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

2. Bulk Carriers 18 781,777 - - 1 26,450 17 755,327

3. Liner Ships 5 202,413 - - - - 5 202,413

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

5. Passenger- Cum- Cargo Vessels 2 5,303 - - - - 2 5,303

Total 76 51,41,216 12 1,109145 9 520,259 79 57,30,103

NEWBUILDING VESSELS DELIVERED DURING THE YEAR

Vessel Name Type Yard Built Dwt.

m.t. Desh Mahima Crude oil Tanker Hyundai Heavy Industries (HHI), S.Korea 114,686

m.t. Desh Garima Crude oil Tanker HHI, S.Korea 114,790

m.t. Desh Suraksha Crude oil Tanker HHI, S.Korea 114,783

m.t. Desh Samman Crude oil Tanker HHI, S.Korea 114,683

m.t. Swarna Sindhu Product Tanker STX Shipyard, S.Korea 73,368

m.t. Swarna Ganga Product Tanker STX Shipyard, S.Korea 73,368

m.t. Swarna Brahmaputra Product Tanker STX Shipyard, S.Korea 73,606

m.t. Swarna Godavari Product Tanker STX Shipyard, S.Korea 73,368

m.t. Swarna Krishna Product Tanker STX Shipyard, S.Korea 73,368

m.t. Swarna Kaveri Product Tanker STX Shipyard, S.Korea 73,368

m.t. Swarna Jayanti Product Tanker HHI, S.Korea 104,895

m.t. Swarna Kamal Product Tanker HHI, S.Korea 104,862

VESSELS DISPOSED OF DURING THE YEAR

Vessel Name Type Year Built Dwt.

m.v. Lok Rajeshwari Bulk Carrier 1988 26,450

m.t. Lance Naik Karam Singh, PVC Crude Oil Tanker 1984 67,153

m.t. Lt. Rama Raghoba Rane, PVC Crude Oil Tanker 1984 67,153

m.t. Subedar Joginder Singh, PVC Crude Oil Tanker 1984 67,137

m.t. Major Saitan Singh, PVC Crude Oil Tanker 1985 67,185

m.t. Havildar Abdul Hamid, PVC Crude Oil Tanker 1985 67,164

m.t. Col. Ardeshir Burzorji Tarapore, PVC Crude Oil Tanker 1985 67,124

m.t. Major Hoshiar Singh, PVC Product Tanker 1985 45,420

m.t. Lance Naik Albert Ekka, PVC Product Tanker 1985 45,473

VESSELS ON ORDER AT THE END OF THE YEAR

Type No. Shipyard Total Dwt.

VLCC 2 Jiangsu Rongsheng Heavy Industries Co. Ltd. China 6,34,000

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

Kamsarmax Bulk Carriers 4 Jiangsu Eastern Heavy Industry Co. Ltd. China 3,28,000

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

6,500 TEU Cellular Container vessels 3 STX (Dalian) Shipbuilding Co. Ltd. China 2,56,800

Anchor Handling, Towing & Supply Vessels (AHTSVs) (80T BP) 4 Bharati Shipyard Ltd. India 8,000

Anchor Handling, Towing & Supply vessels (AHTSVs) (120 T BP) 2 Cochin Shipyard Ltd. India 3,940

Anchor Handling, Towing & Supply vessels (AHTSVs) (120 T BP) 2 Cochin Shipyard Ltd. India 3,940

Platform Supply Vessels (UT 755 Design) 2 Cochin Shipyard Ltd. India 6,120

TOTAL VESSELS ON ORDER 29 19,07,820

Implementation of Official Language Policy

Your Company put in all-out efforts to promote and popularize the use of Official Language Hindi in its day-to-day official work and ensured compliance of the provisions of the Official Language Act, 1963 and the Official Language Rules, 1976 during the year under report. On the occasion of Golden Jubilee Year celebration, you company organized an all-India level conference "Sagar Manthan" at its Maritime Training Institute, Mumbai, which was attended to by over 120 participants from various PSUs and Government Offices across the country.

In addition to this, your Company also acquired corporate license (unlimited users) of bilingual software viz. APS Saral, to increase the use of Hindi on computers, and made almost all PCs Unicode Hindi font enabled. As far as Hindi training is concerned, SCI is determined to impart bilingual software training to its employees regularly at its Maritime Training Institute so as to achieve the set targets in the Annual Programme issued by the Central Government. SCI's website is also available in Hindi and English bilingually.

During the year under report, your Company organized quarterly meetings of its Departmental Official Language Implementation Committee wherein a review on overall progress of Hindi in its offices was made and thereafter appropriate follow up actions were taken. Besides this, a number of Hindi promotional activities, competitions and programmes like Hindi Kavi Sammelan were also organized.

Particulars of Employees

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

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

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

Foreign exchange earned and saved including deemed earned and saved Rs. 3736.53 crores.

Foreign exchange used including deemed used Rs. 3103.94 crores.

Expenses on Entertainment, Foreign Tours, etc.

During the year under report your Company spentRs. 61 lakhs on entertainment, Rs. 269 lakhs on publicity & advertisements and Rs. 371 lakhs on foreign tours of Company's executives.

Board of Directors

Shri A.K. Mago, A.D. Fernando, U. Sundararajan, J.N.L. Srivastava, B.H. Dholakia and Keshav Saran ceased to be Directors w.e.f. 28.07.2010 consequent to the cessation of their tenure as non-official part-time Directors. Shri U.C. Grover and Capt. K.S. Nair ceased to be Directors on the Board consequent to their superannuation on 31.08.2010 and 31.12.2010, respectively. The Board places on record its appreciation for the valuable services rendered by them.

In terms of the nominations received from the Ministry of Shipping, eight non-official part time(independent) Directors have been appointed / reappointed on the Board of Directors. S/Shri Nasser Munjee, Sushil Tripathi and U. Sundararajan have been reappointed and S/Shri Arun Ramanathan, Arun Kumar Verma, Prof. Sushil Khanna and Rear Admiral (Retd.) T.S. Ganeshan have been appointed on the Board w.e.f 11.08.2010.

The Board has also appointed Shri S.K. Roongta as non-official part time Director w.e.f. 13.12.2007 on his nomination by the Ministry of Shipping Road Transport & Highways. Shri Arun Kumar Gupta and Capt. Sunil Thapar have been appointed as Director (Technical & Offshore Services) and Director (Bulk Carriers & Tankers) by the President of India w.e.f. 24.10.2010 and 11.01.2011, respectively. They hold office up to the date of the forthcoming Annual General Meeting and being eligible, offer themselves for appointment Shri B.K. Mandal, Shri J.N. Das, Shri Nasser Munjee and Shri S.C. Tripathi are retiring by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for appointment.

Auditors Report

The Auditors Report is attached to the Report. The Statutory Auditors had, in respect to the Audited Accounts for the year ended 31.03.2011, drawn the attention of the members on issues mainly arising out of switching over to integrated ERP System which are mentioned below.

1) The Auditors observed that various errors and omissions were made by the Company during the process of migration / uploading of data post migration in the new accounting software ERP-SAP in respect of accounting of the income and expenses, assets and liabilities for which necessary rectification were carried out by the Company.

2) They further observed that, there remain certain items where the company is unable to make appropriate adjustment and the effects of errors and adjustments, if any, as might have been determined to be necessary in the data migrated / uploaded in the accounting software post migration.

3) It has been further pointed out by them that the Company has:

i) Not accounted the income and expenditure in respect of unfinished voyages as per accounting policy No. 2 (c) having no impact on the profit for the year.

ii) Not accounted the foreign currency transactions at the rates as stipulated in Accounting Policy No. 8 (a) for the months of January 2011 and February 2011 instead, the same have been accounted at the exchange rates applicable for the month of March 2011.

4) The statutory Auditors observed some weakness in design of internal control in respect of migration of the data / uploading of the data in the process of implementation of ERP-SAP. They however concluded that as at the balance sheet data, the material errors and omission affecting the results as observed during the course of their audit were rectified by the company.

5) The Statutory Auditors further pointed out that post implementation of the ERP-SAP, the internal auditor expressed inability to cover many areas and report thereon including accounting of income and expenses on finished and unfinished voyages, etc.

The replies of the Management to the Auditors' observations are given below.

1) Post migration to SAP, errors coming to our notice have been attended to and necessary adjustments are carried out.

2) The Management has brought out in Schedule 25, Notes on Accounts, such cases where adjustments have not been possible due to issues arising on migration and uploading of data in the new system. The Management has also brought out therein that these have no material impact on the results of the Corporation.

3) (i) As per accounting policy no. 2 (c) of the company, for all unfinished voyages, amount received on account of freight earning and other charges in respect of such voyages are carried forward as Unfinished Voyage Earnings. Direct operating expenses incurred for such voyages including hire charges and freight for vessels chartered-in are carried forward as Unfinished Voyage Expenses except in case of time charter. As far as unfinished voyages are concerned the booking of both income and expenditure is done by SCI consistently on receipt / disbursement basis. It is in line with the accounting policy 2 (c) of the company.

(ii) As per accounting policy 8(a), "All foreign currency transactions are recorded at the exchange rate of the last Friday of the preceding month published in Financial Times, London."

There were no transactions from 1st February to 27th February either in the legacy or in the new system as it was a "Blackout period" prior to data migration to SAP.

The comparative rates for some of the major currencies for February 2011 and March 2011 are as below:

Currency February 2011 March 2011 % difference

Euro 62.632 62.311 (-) 0.005%

USD 45.615 45.325 (-) 0.006%

SGD 35.670 35.591 (-) 0.002%

UKP 72.705 72.846 ( ) 0.002%

Since the exchange rate difference for the month of February 2011 and March 2011 are insignificant, there is no material impact. Moreover, before migration, revaluation run was carried out in legacy system for January, 2011.

4) During data migration, even though a matched trial balance was uploaded but certain deficiencies were subsequently observed by the company in respect of line item wise migrations indicating details like foreign currency component, dates of invoices and debit notes, etc. Care has been taken to rectify such deficiencies as and when observed.

The new system went live on 28.02.2011. The time available before the Annual Closing was not sufficient for the Internal Auditors; at present, the Internal auditors are carrying out the audit.

Corporate Governance

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

Directors' Responsibility Statement

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

That in the preparation of the accounts for the financial year ended 31st March 2011, the applicable accounting standards have been followed along with proper explanation relating to material departures;

That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were 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 or loss of the Company for the year under review;

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

That the Directors have prepared the accounts for the financial year ended 31st March, 2011 on a "going concern" basis.

Acknowledgements

Your Directors take this opportunity to express their gratitude and thanks to Shri G.K. Vasan, Hon'ble Minister for Shipping, and Shri Mukul Roy, Hon'ble Minister of State in the Ministry of Shipping, and look forward to their support and guidance in managing the affairs of the Company.

Your Directors also extend a hearty welcome to Shri K. Mohandaas, Secretary to the Government of India, Department of Shipping, Ministry of Shipping, and look forward to his support and guidance.

Your Directors also wish to express their thanks to the officials in the Ministry of Shipping, for the unstinted support given by them in various matters concerning the Company. Your Directors would also like to convey their thanks to other Ministries, Trade Organizations, Shippers' Councils, who have played a vital role in the continued success of your Company.

The Directors thank the shareholders and valued customers for the continued patronage extended by them to your Company.

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

For and on behalf of the Board of Directors

Place : Mumbai S. Hajara

Dated : 13th August, 2011 Chairman & Managing Director







 
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