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Directors Report of Great Eastern Shipping Company Ltd.

Mar 31, 2017

The Directors are pleased to present the 69th Annual Report on the business operations and the Financial Statements of your Company for the financial year ended March 31, 2017.

FINANCIAL PERFORMANCE

The financial results of the Company (standalone) for the financial year ended March 31, 2017 are presented below:

(Rs. in crores)

2016-17

2015-16*

Total Revenue

2226.74

2110.39

Total Expenses

1585.35

1473.11

Profit before tax

641.39

637.28

Less : Tax Expenses

40.00

19.00

Profit for the period

601.39

618.28

Retained Earnings

Balance at the beginning of the year

1558.29

1448.45

Add :

- Profit for the year

601.39

618.28

- Other Comprehensive Income

(2.14)

(134)

Less :

-Transfer to Tonnage tax reserve

100.00

125.00

-Transfer to Debenture redemption reserve

591.25

25.00

-Dividend on Equity Shares

54.28

309.09

-Dividend Distribution Tax

6.30

48.01

Balance at the end of the year

1405.71

1558.29

*recasted as per Ind AS

The net worth of the Company as on March 31, 2017 was Rs.5162.02 crores as compared to Rs.4620.08 crores for the previous year.

The financial statements have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015.

DIVIDEND

During the year, your Directors declared and paid an interim dividend of Rs.3.60 per share, resulting in an outflow of Rs.60.58 crores (inclusive of tax on dividend).

Your Directors recommend a final dividend of Rs.6.50 per share which will result in an outflow of Rs.117.96 crores (inclusive of tax on dividend). The dividend will be paid after your approval at the ensuing Annual General Meeting. The aggregate outflow on account of the equity dividend for the year will be Rs.178.54 crores (inclusive of tax on dividend). This represents a payout ratio of 29.69% (previous year 39.46%).

COMPANY PERFORMANCE

In Financial Year (FY) 17, the Company recorded a total income of Rs.2226.74 crores (Previous year Rs.2110.39 crores) and earned a PBIDT of Rs.1261.97 crores (previous year Rs.1,108.30 crores).

MARKET ANALYSIS

CRUDE MARKETS

The crude oil tanker market in FY 17 saw lower earnings than FY 16 due to the following factors:

- Disruptions in oil supply from West Africa and Canada.

- Oil demand growth slowed down to below 1.4 mbpd coupled with a significant growth in fleet supply at 6.5%.

- Flattening oil price curve leading to less demand for ships for storage and release of a significant number of ships already held in floating storage.

- Weaker refining margins, compared to last year, as products inventory was drawn down, leading to lower crude demand by refineries. The table below captures the earnings of the Suezmax and the Aframax type of ships over the financial year (S/day).

Source: Baltic Exchange

These weak earnings led to healthy correction in asset prices for the crude ships and the Company was able to capitalize on the same by acquiring a few modern ships. The Company believes that these acquisitions will be value accretive to the shareholders in the long term.

In FY 17, crude tankers, inclusive of ''spot'' and ''period'', earned an average TCY of $ 21,853 /day (previous year $31,913/day).

PRODUCT MARKETS

The clean products trade in FY 17 was adversely affected due to the following factors:

- Due to high refinery runs in FY 16, inventory of products increased significantly, capping product prices and shutting many arbitrage plays.

- The West to East movement of naphtha almost came to a standstill, while the movement of cargo between the EU and US reduced as well.

- Crude prices also began to rise which further added strain to refinery margins.

- The lack of a contango led to a reduction in the number of vessels employed on storage and in slow steaming on certain vessels.

- Fleet supply was also quite strong at 5.5%.

The table below captures the earnings of the LR and MR type of ships over the financial year (S/day).

Source: Baltic Exchange

As a result of the lackluster earnings, the prices of the clean ships also corrected. The Company bought an MR tanker during FY 17 and also entered into a contract to buy another modern MR tanker just after the conclusion of the financial year. The Company believes that these acquisitions will also be value accretive in the long term.

Product carriers, inclusive of ''spot'' and ''period'', earned an average TCY of $ 15,707/day (previous year S20,155/day).

GAS MARKET

The rise of the gas market over the last few years had been characterized broadly by robust demand and the incremental LPG flowing from the US gulf Asia rather than middle east thus contributing tonne miles. To put it in perspective, the total LPG exports from the US, which was 1.42 Mn tons in 2006, grew to about 27-28 Mn tons in Cal 2016, with the majority destined for Asia.

However in FY 17, the fall in crude prices has led to a major slowdown in shale production which consequently has reduced the supply of LPG. Price increases in the US and depressed prices in Asia led to the elimination of arbitrage opportunities. While fundamental demand still remains strong, the cargoes have reduced on the margin. FY 17 also witnessed unprecedented fleet growth at 14.76% with minimal scrapping. As a result the freight markets remained under pressure in FY 17.

The graph below shows the VLGC earnings for FY 17 (S/day).

Source: Clarksons

The Gas carriers, inclusive of ''spot'' and ''period'', earned an average TCY of $ 38,114/day (previous year $77,586/day).

DRY BULK MARKETS

The dry bulk markets began the financial year on a weak note, thus continuing the sentiment of the previous financial year. The defining characteristic of the Dry Bulk market over the last few years is that it is intrinsically dependent on what happens to Chinese cargo volumes.

The following events followed each other during the financial year:

- China closed some iron ore mines with a focus on reducing pollution and steel mills focused more on high quality imported ore. This resulted in a boost in imports.

- The Chinese government in a measure to combat air pollution shut around 290 Mn tons of domestic coal mining capacity, leading to a surge in high quality imported coal.

- The fleet supply remained subdued during the first three quarters due to a high level of scrapping.

The raft of measures by the Chinese government led to a steadily strengthening market through the year with the fourth quarter taking a major turn upwards. The Company purchased several dry bulk ships in the financial year in order to capitalize on the low asset values. These acquisitions are already proving to be value accretive.

The table below shows the earnings of the various Dry bulk ships over FY 17 (S/day).

Source: Baltic Exchange

In FY 17, the average TCY for dry bulk vessels, inclusive of ''spot'' and ''period'', was approximately $ 7,051 /day as compared to $ 6,638/day in the previous year.

FLEET SIZE AND CHANGE DURING THE FINANCIAL YEAR

As of 31st March 2017, the fleet of your Company stood at 44 ships aggregating 3.69 Mn dwt, with an average age of 9.41 years. During the financial year, your Company took delivery of 7 tankers, 1 Very Large Gas Carrier and 6 Dry bulk carriers aggregating 1.39 Mn dwt. The Company also sold an Aframax tanker in the financial year.

MOVEMENT OF ASSET VALUES

The weakness of the tanker freight markets translated into the weakening of vessel values over the year. The crude vessels lost about 35% - 40% of the value depending on size and age whereas the clean vessels lost about 20% - 30% of their value depending on size and age. The value of the dry bulk vessels moved up on the back of strengthening freight rates with gains of 40% - 80%. Currently, the Company believes that the values of crude tankers have a negative bias especially of the older vessels while the clean tankers have stabilized in values. The values of the dry bulk assets continue to exhibit positive bias on their current valuations.

ORDER BOOK AND OUTLOOK

The tanker order book stands at about 12.6% of the fleet. The majority of this order book is slated to be delivered over the next 12 -15 months. As this order book delivers, coupled with the expected extension of OPEC cuts and lower refinery throughputs, the tanker freight markets are expected to remain subdued over the next 6-9 months where after secular demand is expected to make its effect felt on the markets.

The Dry Bulk order book stands at about 8.1% of the fleet and the majority of it is slated to be delivered over the next 12-15 months. Whilst this order book does not seem large, the Company has already seen a large growth in fleet over the last few years and thus it is critical that the order book does not grow. The strength in the freight markets coupled with low asset values is however encouraging owners to order more new buildings which can postpone the return of robust earnings for these vessels. The Company expects the market to plateau around the current earnings level over the next 6 months and the trajectory thereafter shall be guided by additional demand for dry bulk commodities and the increase/decrease of order book in the interim.

RISKS AND CONCERNS

Your Company has carried out a detailed exercise to identify the various risks faced by the Company, and has put in place mitigation, control and monitoring plans for each of the risks. Risk owners have been identified for each risk, and these risk owners are responsible for controlling the respective risks. The efficacy of these processes is monitored on a regular basis by Risk Committees for the different areas in order to make continuous improvement and is further reviewed by the Risk Management Committee consisting of the three Whole-time Directors and the Compliance Officer.

The material risks and concerns faced by the Company are as follows:

ECONOMIC RISK:

Shipping is a global business whose performance is closely linked to the state of the global economy. Therefore, the earnings of your Company could be impacted negatively if the global economic situation does not improve over the longer term.

VOLATILITY:

Over and above the economic risks, the shipping industry is impacted by numerous short term and regional factors, like political fallouts, weather changes, etc. This results in great amount of volatility in the freight market, which in turn impacts your Company''s earnings.

Your Company has attempted to hedge some of the above risk by entering into time charters for part of its fleet. Your Company also believes that one of the main elements of risk management in shipping is the cost of the asset, and will endeavour to time acquisitions and sales in such a way as to reduce risk on the portfolio.

SHIPBOARD PERSONNEL:

Indian officers continue to be in great demand all over the world. Given the unfavorable tax status conferred on a seafarer sailing on Indian-flagged vessels, it is becoming increasingly difficult for your Company to source officers capable of meeting the modern day challenges of worldwide trading. This is more relevant for tanker personnel and may become a hindrance to growth.

OPEC ACTION:

If the OPEC decides to prolong the cut in output, this drop in supply along with increased new building deliveries, could continue to negatively impact the demand for tankers.

CHINESE ECONOMY:

As seen in the recent past, China has been the main driving factor of the shipping demand. The Chinese economy has over the last financial year increased its consumption of imported dry bulk commodities. Whilst this has impacted trade growth positively, this demand needs to continue going forward. If this demand were to falter, this along with increased new building deliveries may renew the negative impact on dry bulk freight markets.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has instituted internal financial control systems which are adequate for the nature of its business and the size of its operations. The policies and procedures adopted by the Company ensure the orderly and efficient conduct of its business, including adherence to Company''s policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.

The systems include a range of activities such as approvals, authorizations, verifications, reconciliations, review of operating and financial performance, security of assets, segregation of duties, preventive and detective controls.

The systems have been well documented and communicated. They are also tested from time to time through internal as well as external audits.

The internal audit is carried out by a firm of external Chartered Accountants and covers all departments. In the beginning of the year, the scope of the internal audit exercise including the key business processes and selected risk areas to be audited are finalized in consultation with the Audit Committee. All significant audit observations and follow up actions thereon are reported to the Audit Committee.

The Audit Committee comprises of Mr. Cyrus Guzder (Chairman), Mr. Berjis Desai, Mr. Farrokh Kavarana and Ms. Rita Bhagwati.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements have been prepared by your Company in accordance with Ind ASs notified under the Companies (Indian Accounting Standards) Rules, 2015. The audited Consolidated Financial Statements together with Auditors'' Report thereon form part of the Annual Report.

The group recorded a consolidated net profit of Rs.754.96 crores for the year under review as compared to Rs.1096.98 crores for the previous year. The net worth of the group as on March 31, 2017 was Rs.7223.33 crores as compared to Rs.6563.48 crores for the previous year,

subsidiaries

The statement containing the salient features of the financial statements of the Company''s subsidiaries for the year ended March 31, 2017 has been attached along with the financial statements of the Company. The report on performance of the subsidiaries is as follows:

GREATSHIP (INDIA) LIMITED, INDIA

Greatship (India) Limited (GIL), wholly owned subsidiary of your Company and one of India''s largest offshore oilfield services providers, has completed its one of the most challenging years in the midst of worst downturn in the offshore oil and gas industry. GIL has, after accounting for an impairment of Rs.184.33 crores in asset values, recorded a profit after tax of Rs.154.71 crores on a consolidated basis for the year ended March 31, 2017 as compared to Rs.523.77 crores for the year ended March 31, 2016, after accounting for impairment of Rs.163.09 crores in asset values. The consolidated net worth of GIL for financial year 2017 was Rs.3,219.65 crores as compared to Rs.3,098.39 crores for financial year 2016.

During the year under review, GIL sold one 1999 built Platform Supply Vessel (PSV), ''Greatship Disha'' and its subsidiary in Singapore sold one 2013 built ROV (Remotely Operated Vehicle) Support Vessel (ROVSV), ''Greatship Ragini''. There was no addition to the fleet during the year under review. GIL, along with its subsidiaries, currently owns and operates nineteen vessels and four jack up drilling rigs. The operating fleet of nineteen vessels comprises of four PSVs, eight Anchor Handling Tug cum Supply Vessels (AHTSVs), two Multipurpose Platform Supply & Support Vessels (MPSSVs) and five ROVSVs.

During the year under review, the company commenced group restructuring exercise whereby the company has acquired full ownership of its Singapore subsidiary, Greatship Global Energy Services Pte. Ltd. (GGES) and further has also decided to acquire the jack-up rigs owned by GGES.

GIL has the following wholly owned subsidiaries:

- Greatship Global Energy Services Pte. Ltd., Singapore (GGES)

Subsequent to acquisition of all shares of GGES from GGHL by GIL, GGES has become the direct 100% wholly owned subsidiary of GIL w.e.f March 28, 2017. GGES currently owns four Jack-up rigs and GGES has committed to sell all its four jack-up rigs to GIL. GGES after accounting for impairment of USD 223.7 Mn in the asset values on account of assets being held for sale, incurred a loss of USD 198.54 Mn for the current financial year as against the profit of USD 42.87 Mn in the previous year.

- Greatship Global holdings Ltd., Mauritius (GGHL)

During the year, GGHL sold all the shares held by it in GGES, representing 89.3% of share capital of GGES, to GIL and recognized a gain on disposal of its holding in GGES. GGHL is the holding company of GGOS.

- Greatship Global Offshore Services Pte. Ltd., Singapore (GGOS)

GGOS owns and operates three offshore support vessels which include one Anchor Handling Tug cum Supply Vessel (AHTSV) and two Multipurpose Platform Supply and Support Vessels (MPSSVs). GGOS after accounting for an impairment of USD 16.32 Mn in asset values, incurred a loss of USD 19.96 Mn for the current financial year as against the loss of USD 5.33 Mn in the previous year, after accounting for impairment of USD 8.93 Mn in asset value.

During the year, GGOS''s wholly owned subsidiary, GGOS Labuan Ltd., Malaysia was struck off with effect from March 4, 2017.

- Greatship (uK) Limited, united Kingdom (GuK)

During the year under review, the term of the charter party for one of the ROV Support Vessels (ROVSVs) inchartered from GIL was completed and GUK continued to operate the other ROV Support Vessel (ROVSV) inchartered from GIL. GUK''s profit after tax for the current financial year amounted to USD 0.41 Mn as against the profit of USD 1.55 Mn in the previous year.

- Greatship Oilfield Services Ltd., India (GOSL)

GOSL did not carry out any operations during the year.

THE GREATSHIP (SINGAPORE) PTE. LTD., SINGAPORE

The Greatship (Singapore) Pte. Ltd. is a wholly owned subsidiary of your Company. The Greatship (Singapore) Pte. Ltd. does shipping agency business for the ships owned by your Company. During the year ended March 31, 2017 there were 87 ship calls at Singapore. The company''s profit after tax for the current financial year amounted to S$ 0.13 Mn as against the profit of S$ 0.20 Mn in the previous year.

THE GREAT EASTERN SHIPPING CO. LONDON LTD., u.K.

The Great Eastern Shipping Co. London Ltd. was a wholly owned subsidiary of your Company. It did not carry out any operations during the year. The company had filed an application with the Companies House, UK for voluntarily striking off its name from Register of Companies, UK. The company has been dissolved w.e.f August 30, 2016.

THE GREAT EASTERN CHARTERING LLC (FzC), u.A.E.

The Great Eastern Chartering LLC (FZC) is a wholly owned subsidiary of your Company. Chartering of ships is the main activity of this company. The company had in-chartered one Suezmax tanker on 3 years charter which will end in June 2017. The vessel was chartered to The Great Eastern Shipping Co. Ltd. commencing 3rd April 2015 on back to back terms. During the financial year ended March 31, 2017, the company made a loss of USD 0.59 Mn as against the profit of USD 1.65 Mn in the previous year.

THE GREAT EASTERN CHARTERING (SINGAPORE) PTE. LTD., SINGAPORE

The Great Eastern Chartering (Singapore) Pte. Ltd. is a wholly owned subsidiary of The Great Eastern Chartering LLC (FZC), UAE. The company has done no trading activity during the year due to deteriorating market conditions. During the financial year ended March 31, 2017, the company made a loss of USD 0.05 Mn as against the loss of USD 0.10 Mn in the previous year.

GREAT EASTERN CSR FOUNDATION, INDIA

Great Eastern CSR Foundation (Foundation) is a wholly owned subsidiary of your Company which handles the CSR activities of your Company and its subsidiaries. The Foundation received a total contribution of Rs.8.28 crores from the Company and Great ship (India) Limited during the year ended March 31, 2017. The Foundation spent Rs.6.87 crores on CSR activities during the year.

Details of CSR activities carried out by Great Eastern CSR Foundation for your Company are set out in the annual report on CSR activities which forms part of this Board''s Report.

DEBT FUND RAISING

During the year, fresh debt of Rs.1931.21 crores was raised. The gross debt : equity ratio as on March 31, 2017 was 0.86:1 and the debt : equity ratio net of cash and cash equivalents was 0.27:1.

During the year, the Company has bought back and extinguished 100 Secured and 550 Unsecured Debentures of Rs.10,00,000 each, aggregating to Rs.65 crore.

QUALITY, SAFETY, TRAINING, HEALTH & ENVIRONMENT

A high level of safety on board assets has been maintained during the year on the Company''s vessels by continued efforts of the seafarers and the office staff. This requirement continues to be emphasised during the scheduled meetings with the management level floating staff and the Company''s top management. Lost Time due to Injury (LTI) was 2.34 per million exposure hours and Total Recordable case Frequency (TRCF) was 5.23 per million exposure hours. This is slightly more than the Company''s KPI of 2.0 and 4.8 respectively. The increase as compared to last year is due to the re-classification of data collected based on OCIMF guidelines.

The Company, to ensure that the assets are maintained in good condition, carried out additional inspections of vessels. The Company''s assets continued to perform well during oil major inspections. The Company also ensured that new acquisitions into the fleet were taken into the Company''s quality management system quickly during the rapid fleet expansion phase.

The need for continuous improvement in safety and operating standards is recognized by the Company and to achieve greater level of compliance a separate department dealing with training at all levels of seafarers has been established. This department identifies the seafarer''s training needs on an individual basis and organizes shore-based training in established training institutes. The department is also involved in designing company specific training modules.

IT INITIATIVES

In this financial year, IT has focused on the following major initiatives:

TIGHTENING OF CYBER SECURITY

In this digitally connected world, cyber security is a matter of great concern for all organizations. The Company has appointed a major IT service provider and security expert to assess the vulnerability, both in the shore office and on board the ships, with respect to Cyber security.

The agency is guiding the Company to implement the required technologies in order to reduce vulnerability of the Company''s systems.

UPGRADING PLANNED MAINTENANCE SYSTEM (PMS)

The PMS is one of the key functions on board to keep the ship''s equipment technically fit to operate with minimum disruption. Your Company is upgrading the PMS software, and this will further help the technical maintenance teams to ensure maximum uptime for all equipment, and to maintain the ship itself to the highest possible standards.

DIGITIZATION INITIATIVE

The goal has been set for the organization to go for paperless environment and IT is enabling the organization towards that direction, by way of making more user friendly software applications to increase usage of software. Also, old paper records are being digitized to maximize accessibility and minimize storage requirements.

GST IMPLEMENTATION INITIATIVE

The Company''s ERP system has been developed and built in-house over the past 10 years or more and all of the organization''s functions are working through this system. In order to implement GST, a significant amount of modifications are required to be done in the ERP platform before July 2017 deadline. A dedicated team has been on the job to make it happen before deadline, so as to enable your Company to move on to the GST platform seamlessly.

HUMAN RESOURCES

Your Company recognizes the ability to attract and retain the best talent is vital for sustainability and competitive advantage for the organization. A set of initiatives were implemented for enabling talent acquisition and development during the year. A focused social media campaign improved applicant base for the pre-sea courses held at GEIMS. Introduction of structured scientific recruitment methods resulted in enhancement of quality of cadets at the Institute.

Learning & Development continued to get organizational attention. As in the past, the Company has initiated the 3600 feedback process for senior roles to aid in individual development and succession planning. Employees underwent training in shipping business simulation, emotional intelligence, critical thinking and career planning. Team relationship reviews facilitated cohesiveness among members. A special workshop was held for women employees based on career anchors and wheel of balance.

Social cafe approach was utilized to harness employee camaraderie which included Quiz, Marathon and cultural programs during festive occasions. The annual town hall held in December 2016 helped in employee alignment and building team spirit.

The overall employee engagement measured by Coffman Index stood at 77% compared to 74% in the previous year.

For the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Total number of permanent shore staff and floating staff was 191 and 222 respectively.

GREAT EASTERN INSTITUTE OF MARITIME STUDIES (GEIMS)

The Great Eastern Institute of Maritime Studies, Lonavla (GEIMS) has since inception trained 3068 cadets. These cadets are serving on ships as Nautical, Engineering or Electro-Technical Officers. Almost 70% of the officers of Company''s vessels have been trained at GEIMS. This percentage will increase in the next few years.

In August 2016, GEIMS set up a state of the art ''Electrical High Voltage Safety and Switch Gear laboratory with simulator'' and obtained approval of the Directorate General of Shipping. With this facility GEIMS has provided the mandatory training to 145 senior Engineers of the Company and to others on payment of fees.

GEIMS was inspected as per the Comprehensive Inspection Programme (CIP) enhanced guidelines of the Director General of Shipping in November 2016 by an Audit team from DNV GL Ship Classification Society. GEIMS was certified that it meets the training requirement criteria as per IMO STCW Convention and effectively complies with all applicable Merchant Shipping Rules, and other associated orders, circulars and guidelines issued by the Directorate General of Shipping. On basis of the successful inspection, GEIMS was once again assigned Grade A1 (outstanding) for three years.

In December 2016, GEIMS was granted approval by the Directorate General of Shipping to conduct the 6-months training course for General Purpose Ratings (GP Rating). The GP Rating training course successfully commenced at GEIMS with a first batch of 37 trainees in January 2017. After successful completion of their training, these trainees are expected to be placed on Company''s vessels as trainee seamen.

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility Committee comprises of Mr. Vineet Nayyar (Chairman), Mr. Cyrus Guzder and Mr. Bharat K. Sheth.

Copy of the Corporate Social Responsibility Policy of the Company as recommended by the CSR Committee and approved by the Board is enclosed as ''Annexure A''. The CSR Policy is also available on the website of the Company : www.greatship.com.

The Annual Report on CSR activities is enclosed herewith as "Annexure B”.

DIRECTORS

Mr. K. M. Sheth shall retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Necessary resolution for re-appointment of Mr. K. M. Sheth has been included in the Notice convening the ensuing Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and under Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements), 2015.

BOARD MEETINGS

During the year, 5 meetings of the Board were held. The details of Board meetings as well as Committee meetings are provided in the Corporate Governance Report.

APPOINTMENT AND REMUNERATION POLICY FOR DIRECTORS AND SENIOR MANAGEMENT

The Nomination & Remuneration Committee has framed a policy for appointment of Directors. The Nomination & Remuneration Committee has also framed policies for remuneration of Directors, Key Managerial Personnel and other employees, which have been adopted by the Board.

The aforesaid policies are enclosed herewith as Annexure ''C'' and ''D''.

The details of remuneration as required to be disclosed pursuant the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are enclosed as Annexure ''E''.

BOARD EVALUATION

Annual performance evaluation of Board, its committees (namely, Audit, Nomination & Remuneration, Corporate Social Responsibility and Stakeholders'' Relationship Committees) and all the Directors individually has been done in accordance with the Performance Evaluation Framework adopted by the Nomination & Remuneration Committee of the Company.

The Performance Evaluation Framework sets out the performance parameters as well as the process for performance evaluation to be followed. Performance evaluation forms were circulated to all the Directors to record their evaluation of the Board, its Committees and Non-executive Directors of the Company. The performance evaluation of the Company and Executive Directors was done on the basis of presentation made by the management.

Pursuant to the provisions of the Companies Act, 2013, a separate meeting of Independent Directors reviewed performance of the Company, Board as a whole and Non-Independent Directors (including Chairman) of the Company.

The Board of Directors reviewed the performance of Independent Directors and Committees of the Board. Nomination & Remuneration Committee also reviewed performance of the Company and every Director.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134 (3) of the Companies Act, 2013 the Board of Directors hereby state that:

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

b) The directors had 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 of the company for that period;

c) The directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

d) The directors had prepared the annual accounts on a going concern basis; and

e) The directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

f) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

CORPORATE GOVERNANCE

Your Company has complied with all the mandatory provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, relating to Corporate Governance. A separate section on Corporate Governance forms part of the Board''s Report and the certificate from practicing Company Secretary confirming the compliance of conditions on Corporate Governance is included in the Annual Report.

VIGIL MECHANISM

The Company has established a vigil mechanism (Whistle Blower Policy) for directors and employees to report genuine concerns. The Whistle Blower Policy provides for adequate safeguards against victimization of persons who use such mechanism and make provision for direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases.

A copy of the Whistle Blower Policy is available on the website of the Company: www.greatship.com

RELATED PARTY TRANSACTIONS

The Company has formulated policy on dealing with Related Party Transactions, a copy of which is available on the website of the Company: www. greatship.com

The particulars of contracts or arrangements with related parties in Form AOC 2 is annexed herewith as "Annexure F”.

All the related party transactions have been entered into by the Company in the ordinary course of business and on arm''s length basis.

However, following transaction, though entered into in the ordinary course of business, may not strictly be treated on arm''s length basis:

During the year, the Company has transferred a Hyundai i20 Asta car to Mr. Jayesh M. Trivedi, President (Secl. & Legal) & Company Secretary for no consideration (subject to applicable taxes) as per employment rules of the Company. Mr. Jayesh M. Trivedi had availed the car in 2010 based on his entitlement. The value of car has already been deducted from his salary.

EXTRACT OF ANNUAL RETURN

The extract of the Annual Return in Form MGT 9 is enclosed herewith as "Annexure G”.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Particulars of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the financial statements.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company''s operations in future.

DIVIDEND DISTRIBUTION POLICY

The Dividend Distribution Policy of the Company is enclosed as ''Annexure H''. Copy of the Dividend Distribution Policy is also available on the website of the Company : www.greatship.com.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION

CONSERVATION OF ENERGY

In order to contribute to and prepare for a low carbon future, your Company has been undertaking various initiatives with regard to enhancing energy efficiency in its business operations.

ENERGY SAVING DEVICES

During the year under consideration, following Energy Saving Devices were retrofitted for reducing fuel consumption of main propulsion system:

- Jag Rani and Jag Pankhi were retrofitted with Propeller Boss Cap Fins (PBCF), a device which improves propulsive efficiency. The propeller''s rotational motion forms a strong vortex at the center, which causes overall loss of propulsive efficiency. The finned features of a PBCF break up this vortex, thereby reducing the loss of energy.

Total cost incurred on above two ships: USD 150,000.

- For a typical Bulk Carrier or Tanker, loss of energy through hull resistance is around 30% and this increases with growth of hull roughness due to bio-fouling. To minimize growth of bio-fouling, the Company has applied superior anti-fouling coatings on Jag Rishi, Jag Rani, Jag Roopa and Jag Vishnu during their respective dry dockings during the financial year.

The additional cost incurred for application of the superior anti-fouling coatings was USD 290,000.

During the year, saving of USD 1.06 million was achieved in fuel cost from energy saving retrofits and use of superior anti-fouling hull coatings alone. This fuel saving also resulted in reduction of CO2 emission by 13,973 MT.

INITIATIVES OF VESSEL PERFORMANCE MANAGEMENT CELL

VPM Cell in co-ordination with IT Department has developed a Main Engine Performance Monitoring tool and has been rolled out to fleet vessels. This will assist in closer monitoring and analysis of main engine performance over time i.e. trend analysis.

TECHNOLOGY ABSORPTION

Your Company has identified and absorbed several technologies on fleet vessels. These are reflected in paragraphs above.

QUANTIFICATION AND REPORTING OF GREENHOUSE GASES (GHG) EMISSION

Since last year, your Company has started to capture and quantify GHG emission from its business operation in a transparent and standardized manner for the information of stakeholders of the Company on a voluntary basis. The GHG emission quantification and reporting has been done taking into account:

- ISO 14064-1 (2006) ''Greenhouse gases - Part 1: Specification with guidance at the organization level for quantification and reporting of greenhouse gas emissions and removals'', and

- The Greenhouse Gas Protocol - A Corporate Accounting and Reporting Standard (Revised edition) published by World Business Council for Sustainable Development and World Resources Institute.

CONTRIBUTION IN THE WORK OF MARINE ENVIRONMENT PROTECTION COMMITTEE OF INTERNATIONAL MARITIME ORGANIZATION

Marine Environment Protection Committee of IMO is currently developing new regulations and reviewing existing regulations for reduction of CO2 emission from ships. Your Company, as a stake holder, has been providing feedback to this work through Government of India for development of pragmatic regulations for benefit of the environment and society.

FOREIGN EXCHANGE EARNINGS AND OUTGO

The details of Foreign Exchange Earnings and Outgo are as follows:

(Rs. in crores)

a) Foreign Exchange earned on account of freight, charter hire earnings, etc.

1150.34

b) Foreign Exchange used including operating expenses, capital repayment, down payments for

2142.38

acquisition of ships (net of loan), interest payment, etc.

AUDITORS

Pursuant to provisions of Section 139 of Companies Act, 2013, Kalyaniwalla & Mistry LLP were appointed as the Statutory Auditors of the Company at the Annual General Meeting held on September 25, 2014, to hold office till the conclusion of the ensuing Annual General Meeting. Since Kalyaniwalla & Mistry LLP has completed its term as prescribed under Section 139(2) of the Companies Act, 2013, the Company is required to appoint another firm as the Statutory Auditor in their place.

Accordingly, the Audit Committee and the Board of Directors have recommended appointment of Deloitte Haskins & Sells LLP as Statutory Auditors to hold office from conclusion of the ensuing Annual General Meeting till the conclusion of the 74th Annual General Meeting to be held in calendar year 2022.

Necessary resolution for their appointment has been included in the Notice convening the ensuing Annual General Meeting.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act, 2013, the Company appointed M/s. Mehta & Mehta, Company Secretaries to undertake the Secretarial Audit of the Company for the financial year ended March 31, 2017.

The Secretarial Audit Report is annexed herewith as "Annexure I”.

APPRECIATION

Your Directors express their sincere thanks to all customers, charterers, vendors, investors, shareholders, shipping agents, bankers, insurance companies, protection and indemnity clubs, consultants and advisors for their continued support throughout the year. Your Directors also sincerely acknowledge the significant contributions made by all the employees through their dedicated services to the Company. Your Directors look forward to their continued support.

For and on behalf of the Board of Directors

K.M. Sheth

Chairman

(DIN : 00022079)

Mumbai, May 05, 2017


Mar 31, 2014

Dear Members,

The Directors are pleased to present the 66th Annual Report on the business operations and the Financial Statements of your Company for the financial year ended March 31, 2014.

FINANCIAL PERFORMANCE

The financial result of the Company (standalone) for the financial year ended March 31, 2014 is presented below:

Rs. in crores

2013-14 2012-13

Total Revenue 1780.25 2033.79

Total Expenses 1571.57 1876.53

Profit before tax 208.68 157.26

Less : Tax Expenses 4.00 11.00

Profit for the period 204.68 146.26

Add : Profit as per last Balance Sheet 2904.98 2922.62 Less :

-Transfer to Tonnage tax reserve 30.00 10.00

-Transfer to General reserve 21.00 15.00

-Transfer to Debenture redemption reserve 25.00 15.00

-Transfer to Capital redemption reserve 1.54 -

-Interim Dividend on Equity Shares 60.32 45.70

-Proposed Dividend on Equity Shares 75.39 68.54

-Dividend Distribution Tax 14.85 9.66

Balance Carried Forward 2881.56 2904.98

DIVIDEND ON EQUITY SHARES

During the year, your Directors declared and paid interim dividend of Rs. 4 per share resulting in an outflow of Rs. 70.57 crore (inclusive of tax on dividend) and recommend a final dividend of Rs. 5 per share resulting in an outflow of Rs. 88.20 crore (inclusive of tax on dividend). The dividend will be paid after your approval at the ensuing Annual General Meeting. The aggregate outflow on account of the equity dividend for the year would be Rs.158.77 crore (inclusive of tax on dividend). This represents a payout ratio of 77.56% (previous year 84.71%).

Your Directors, at their meeting held on August 12, 2014, declared interim dividend of Rs. 4 per share for financial year 2014- 15 resulting in an outflow of Rs. 67.31 crore (inclusive of tax on dividend).

BUYBACK OF EQUITY SHARES

During the year under review, your Company announced buyback of its equity shares from the open market through stock exchanges at a price not exceeding Rs. 279 per share for an aggregate amount not exceeding Rs. 279 crores.

The buyback commenced on September 2, 2013 and was completed on February 28, 2014. The Company bought back 15,45,019 equity shares of face value of Rs.10 each for an aggregate amount of Rs. 41.27 crores. The highest, lowest and average price at which the shares were bought back was Rs. 279.00, Rs. 252.08 and Rs. 266.51 per share respectively.

The Company was unable to achieve the maximum buyback of Rs. 279 crores as the stock price remained above the maximum price of Rs. 279 per share during a substantial part of the buyback period.

Consequent upon the buyback, the paid up share capital of the Company was reduced from Rs. 1,52,32,20,840 comprising of 15,23,22,084 Equity Shares of Rs.10 each to Rs. 1,50,77,70,650 comprising of 15,07,77,065 Equity Shares of Rs. 10 each.

COMPANY PERFORMANCE

In FY 13-14, the Company recorded a total income of Rs. 1780.25 crores (Previous year Rs. 2033.79 crores) and earned a PBIDT of Rs. 780.84 crores (previous year Rs. 729.71crores).

TANKER BUSINESS

MARKET TREND AND ANALYSIS

Tanker average time charter equivalent earnings over the year ($ per day)

The Crude tanker market began the year with falling freight rates and weak sentiment. Declining US oil imports, lack of demand growth from developed markets, slowing demand growth from the emerging nations were seen as insurmountable hurdles for a market recovery. However, the market underwent a turnaround during Q3 FY14 and rates soared mainly on the back of stronger Chinese oil imports, slowing fleet growth, longer-haul trades for Atlantic barrels, and weather related delays primarily in the Atlantic.

The Product tanker market continued its steady run during the first 9 months of FY14, outperforming the crude market on a relative as well as on an absolute basis. The first nine months of FY14 were well supported by increased refined product exports out of US Gulf and a subdued fleet supply growth. However, in Q4FY14, reduced volatility in underlying commodity prices, refinery turnarounds, and a cold US winter, kept the rates subdued at the end of the year.

At the end of the FY14, the world tanker fleet increased by 1.15% to 485.31 mn dwt as against 479.76 mn dwt at the end of FY13.

COMPANY PERFORMANCE

The tanker business accounted for around 77% of the Company''s operating revenues and 74% of the operating profits.

In FY14, around 38% of the tanker earnings were derived from the period market. Crude tankers, inclusive of ''spot'' and ''period'', earned an average TCY of $16,700/day (previous year $17,700/day). Product carriers, inclusive of ''spot'' and ''period'', earned an average TCY of $14,900/day (previous year $15,000/day).

TANKER FLEET CHANGES

As of 31st March 2014, the tanker fleet of your Company stood at 22 tankers aggregating 1.79 mn dwt, with an average age of 10.52 years as against 23 tankers aggregating 1.86 mn with an average age of 10.43 years as on 31st March 2013.

During the year, your Company took delivery of:

- MR Tanker ''Jag Prabha'' in August 2013.

- MR Tanker ''Jag Pranav'' in September 2013.

During the year, your Company sold & delivered the following tankers:

- GP Tanker ''Jag Parwar'' in April 2013.

- GP Tanker ''Jag Preeti'' in June 2013.

- Aframax Tanker ''Jag Leela'' in July 2013. Subsequent to the year your Company:

- contracted to sell and delivered its 1996 built MR Tanker ''Jag Padma'' in Q1FY15.

- contracted to sell its 1990 built VLGC ''Jag Vidhi''. The ship will be delivered to the buyer in Q3/Q4 FY15.

- took delivery of the 1994 built VLGC ''Jag Vishnu'' in Q2FY15.

OUTLOOK FOR THE TANKER MARKET

Crude appetite is expected to remain strong in non - OECD countries. It has also been forecasted that developed economies would also have marginal growth in crude demand which is a more optimistic picture as compared to the last year. Oil demand is expected to grow by 1.2% y-o-y to 91.8 mn bbl per day versus a moderate fleet growth of 1.7%.

Crude sea borne demand is expected to be better than 2013 due to increased longer haul trades. The demand - supply remains well balanced as compared to previous years, where supply growth was greater than sea borne demand. Slowing fleet growth coupled with a positive demand scenario is giving rise to more positive expectations on the crude tanker segment.

On the clean product side, there exists a reasonably good demand scenario, however, there is concern over the substantial order book, wherein majority of new builds are being delivered in FY 2015 and FY 2016.

Therefore, it is expected that crude markets will fare better as compared to FY 2014 while the products earnings will be under pressure in FY 2015.

The global tanker orderbook stands at about 62.25 mn dwt or 13.59 % of the fleet at the end of March 2014.

DRY BULK BUSINESS

MARKET TREND AND ANALYSIS

Dry bulk average time charter equivalent earnings over the year ($ per day)

FY14 was a year of relief for the dry bulk owner as the freight levels steadily climbed from Q1 to Q3FY14. The positive sentiment on the Capesizes was on the back of growing Chinese iron ore imports. China was at the forefront of the recovery of rates as it accounted in excess of 80% share of global dry bulk demand growth during the financial year. Substantial recovery in global grain trade in the latter part of the year supported rates in the Panamax and Supramax categories. Indian coal imports were also higher by 20% during the year. The freight market however gave away most of it gains by the end of the year due to slower Chinese activity around its new year holidays, tonnage build up in the Atlantic and a disappointing South American grain season.

At the end of the FY14, the world dry bulk fleet increased by 7.1% to 740.46 mn dwt as against 691.16 mn dwt at the end of FY13.

COMPANY PERFORMANCE

The dry bulk fleet contributed around 23% of the Company''s operating revenues and 26% of the operating profits.

In FY14, around 29% of the bulk carrier earnings were derived from the period market.

In FY14, the average TCY for dry bulk vessels, inclusive of ''spot'' and ''period'', was approximately $ 12,100/day as compared to $9,800/day in the previous year.

DRY BULK FLEET CHANGES

As of 31st March 2014, the dry bulk fleet of your Company stood at 8 vessels aggregating 0.62 mn dwt, with an average age of 8.5 years as compared to 9 vessels aggregating 0.67 mn dwt with an average age of 7.8 years on 31st March 2013.

During the year, your Company sold & delivered:

- Handymax bulk carrier ''Jag Ravi'' in June 13.

During the year, your Company placed orders for 2 Kamsarmax Bulk carriers at Tsuneishi Shipbuilding Co. Ltd. The vessels are expected to join the fleet during H1 FY16.

Your Company also placed orders for 3 Kamsarmax Bulk carriers at Jiangsu New Yangzi Shipbuilding Co. Ltd. The vessels are expected to join the fleet during H1 FY17.

OUTLOOK FOR THE DRY BULK MARKET

Concerns on slowing Chinese demand for some dry bulk commodities, coupled with growing fleet supply, resulted in freight markets remaining weak in Q1FY15.

However, the Company expects Chinese import demand for dry bulk to recover once the current imbalances in commodities pricing are corrected favoring Chinese imports over domestic sourcing of raw materials.

On the tonnage supply side, new building deliveries are expected to slow down as we enter into H2 FY14. These will together help improve freight levels as we progress into FY15. Overall, we expect FY15 averages to be around FY 14 levels.

The global bulk carrier orderbook stands at about 158.52 mn dwt or 21.4% of the fleet at the end of March 2014.

ASSET VALUES

During FY14 second-hand values for modern crude tankers witnessed a rise of about 15-20% while product tanker values rose about 20%. Second-hand values of modern dry bulk carriers rose by about 25-30% during the same period. New building prices were up by about 15-20% for crude tankers while those of product tankers had firmed up by about 10% during the financial year. New building prices for dry bulk carriers witnessed a rise of about 10-15% for the same period.

RISKS AND CONCERNS

Economic risk: Shipping is a global business whose performance is closely linked to the state of the global economy. Therefore, the earnings of your Company could be impacted negatively if the global economic situation does not improve over the longer term.

Volatility: Over and above the economic risks the shipping industry is impacted by numerous short term and regional factors, like political fallouts, weather changes etc. This results in a great amount of volatility in the freight market, which in turn impacts your Company''s earnings.

Your Company has attempted to hedge some of this risk by entering into time charters for part of its fleet.

Shipboard personnel: Indian officers continue to be in great demand all over the world. Given the unfavourable tax status conferred on a seafarer sailing on Indian-flagged vessels, it is becoming increasingly difficult for your Company to source officers capable of meeting the modern day challenges of worldwide trading. This is more relevant for tanker personnel and may become a hindrance to growth.

OPEC action: If the OPEC decides to cut output, it could negatively impact the demand for tankers.

European financial crisis: The on-going European financial crisis can further depress the already subdued demand especially for dry bulk in the Euro zone.

Chinese economy: As we have seen in the recent past China has been the main driving factor of the shipping demand, in case there is a major downward shift in the Chinese economy, it could have negative impact on shipping.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements have been prepared by your Company in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956 to the extent applicable. The audited Consolidated Financial Statements together with Auditors'' Report thereon form part of the Annual Report.

The group recorded a consolidated net profit of Rs. 573.95 crores for the year under review as compared to Rs. 537.76 crores for the previous year. The net worth of the group as on March 31, 2014 was Rs. 6772.85 crores as compared to Rs. 6341.76 crores for the previous year.

SUBSIDIARIES

Greatship (India) Limited

Greatship (India) Limited (GIL), 100% wholly owned subsidiary (WOS) of your Company and one of India''s largest offshore oilfield services providers, had another rewarding year. GIL recorded a profit after tax of Rs. 228.23 crores on a standalone basis and Rs. 463.78 crores on a consolidated basis for the year ended March 31, 2014 as compared to Rs. 166.33 crores and Rs. 430.72 crores, respectively, for the year ended March 31, 2013. The consolidated net worth of GIL for financial year 2014 was Rs. 3472.32 crores as compared to Rs. 2889.63 crores for financial year 2013.

Subsequent to the year end, GIL redeemed 1.45 crores Preference Shares with the dividend rate of 7.5% p.a. held by your Company.

As on date, the total share capital held by your Company in GIL comprises of 11.13 crores equity shares of Rs. 10 each totalling in value to Rs. 1305.14 crores and 11.96 crores preference shares of Rs. 10 each totalling in value to Rs. 358.87 crores.

GIL, alongwith its subsidiaries, currently owns and operates twenty one vessels and three jack up drilling rigs and has one 350'' Jack Up Rig under construction. The operating fleet of twenty one vessels comprises of four Platform Supply Vessels (PSVs), nine Anchor Handling Tug cum Supply Vessels (AHTSVs), two Multipurpose Platform Supply & Support Vessels (MPSSVs) and six ROV (Remotely Operated Vehicle) Support Vessels (ROVSVs).

GIL has the following wholly owned subsidiaries:

a) Greatship Global Energy Services Pte. Ltd., Singapore

b) Greatship Global Offshore Services Pte. Ltd., Singapore (GGOS)

c) Greatship Global Holdings Ltd., Mauritius

d) Greatship (UK) Limited, United Kingdom

e) GGOS Labuan Ltd., Malaysia (Incorporated as WOS of GGOS on 25.06.2014)

During the year under review, GIL''s wholly owned subsidiary in Australia - Greatship Subsea Solutions Australia Pty. Limited has been voluntarily de-registered with effect from June 30, 2013. GIL''s two wholly owned subsidiaries in Singapore - Greatship Subsea Solutions Singapore Pte. Ltd. and Greatship Global Offshore Management Services Pte. Ltd. have amalgamated with their parent company – Greatship Global Offshore Services Pte. Ltd. (w.e.f December 31, 2013).

Other Subsidairies

Apart from GIL and its subsidiaries, your Company has the following wholly-owned subsidiaries:

a) The Great Eastern Shipping Co. London Ltd.

b) The Greatship (Singapore) Pte. Ltd.

c) The Great Eastern Chartering LLC (FZC)

d) The Great Eastern Chartering (Singapore) Pte. Ltd.

Subsidiaries'' Accounts

Ministry of Corporate Affairs, vide General Circular No : 2 /2011 dated February 08, 2011, has granted a general exemption to companies under Section 212(8) of the Companies Act, 1956. Pursuant to the said Circular, the Board of Directors of your Company has, by passing a resolution, given consent for not attaching the balance sheets, profit and loss accounts, reports of the Board of Directors, reports of the Auditors, etc. of the subsidiaries with the Balance Sheet of your Company as required under Section 212 of the Companies Act, 1956.

Accordingly, copies of the balance sheets, profit and loss accounts, reports of the Board of Directors, reports of the Auditors,etc. of the subsidiary companies have not been attached to the Balance Sheet of your Company as at March 31, 2014. As per the terms of the said Circular, a statement containing brief financial details of the subsidiaries of the Company for the year ended March 31, 2014 is included in the Annual Report.

The annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the Company at any point of time. The annual accounts of the subsidiary companies have been kept for inspection by any shareholder at the registered office of the Company and of the subsidiary companies concerned. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

DEBT FUND RAISING

During the year, the Company did not raise any funds by way of debt. As on March 31, 2014, the Company''s gross debt equity ratio was 0.69:1 and net (of cash) debt : equity ratio was 0.10:1.

QUALITY, SAFETY, HEALTH & ENVIRONMENT

Enhancement of Energy Efficiency of Ships

Your Company has undertaken the following initiatives to enhance energy efficiency of the ships. This effort would reduce the fuel burnt to carry a specific cargo for a specific distance which in turn reduces exhaust gas emission by the ships into the environment:

1. Reducing hull friction through application of ultra-smooth high grade Self Polishing Copolymer (SPC) antifouling paint on ships'' hull.

2. Wake equalizing duct "Mewis Duct" has been fitted on Jag Lata, Jag Lalit and Jag Aabha during their dry docking. These ducts increase the ship''s speed and hence the power requirement of the ship''s propulsion. Based on experience, a reduction of about 5% in fuel consumption for the vessel''s propulsion has been observed.

3. Fitting of highly efficient "tipped" propeller on ships to reduce power consumption.

Qualship 21 Program of United States Coast Guard

The United States Coast Guard (USCG) has a system for identifying superior quality ships and to provide incentives to encourage quality operations. They also feel that such quality vessels should be recognized and rewarded for their commitment to safety and quality. This initiative is called Qualship 21 (Quality Ships for the 21st Century).

A ship has to fulfill certain eligibility criteria to qualify i.e. superior Port State Control performance of the vessel, operating company, Flag State and Classification Society etc in US waters. USCG rewards Qualship 21 vessels by waiving annual inspection of non-tank vessels and reduced stringency during annual inspection of tank vessels.

We are proud to state that the USCG has now included the Company and five ships which visited USA in 2013 under their Qualship 21 program.

Training

The effort to increase knowledge of sea farers at all levels is an ongoing process in the Company. The continuous training both mandatory and non-mandatory enhances the level of safety and awareness on board the vessels and in turn reduces lost time due to incidents, injuries and accidents. The Company has decided to provide "on line" training to the ship''s staff and also conduct competency assessment at all levels based on a Learning Management System. This system would enable the sea-farer to access various modules on the Learning Management System even while on leave and enhance their knowledge. The platform would also be available on the vessels.

Maritime Labour Convention

The Company has completed certification of all vessels in the fleet to this convention which is adopted by the ILO, which establishes minimum requirements for all aspects of working and living conditions aboard the ship.

GREAT EASTERN INSTITUTE OF MARITIME STUDIES (GEIMS)

During the 8th year of your Company''s training Institute in Lonavala, following training facilities along with infrastructure were added in order to enhance the quality of training being imparted:

- Further to the first phase of Transas TECHSIM 5000 Engine Simulator - 5 more student stations (Computer Monitors) has been added for enhancement of training facilities for Cadets.

- Upgradation of Workshop & Shipboard Pollution Prevention Laboratory Equipments for Oily Water Separator (OWS). Equipments like Pressure Vaccum Calibrator, temperature Calibrator with accessories, Autoklean filter with various components have been overhauled and installed with latest electronic/ automatic monitors.

- Safety Equipments and High Voltage Circuit Breaker for Electrical High Voltage (6.6 KV) training has been procured and set up in the Electrical H.V Laboratory.

- Fire detection & Alarm Systems has been installed at prime locations.

During the year 2 batches of TNOCs with a total of 113 cadets, 3 batches of GMEs with a total of 119 Cadets & 2 batches of ETOs with a total of 79 cadets were trained. The total number of cadets trained so far is 2271.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has instituted internal control systems which are adequate for the nature of its business and the size of its operations. In the beginning of the year, the scope of the audit exercise and the key business processes and selected risk areas to be audited are decided in consultation with the Audit Committee. The Internal Audit is carried out by a firm of external Chartered Accountants and covers all departments. All significant audit observations and follow up actions thereon are reported to the Audit Committee.

IT INITIATIVES

With an objective of making your Company more technology driven and efficient, your Company has continuously striven to introduce new technology, and also to enhance existing technology.

Some highlights of the major initiatives completed in this financial year are:

Connectivity between shore & ship

Direct phone connectivity from the desk to the ship over internet has been implemented in 14 of your Company''s vessels. The process of implementing the solution on the remaining ships is in progress. This connectivity is done using latest technology called SIP trunking between two heterogeneous protocols. Besides making it easy to call ships and therefore improving the quality of interaction with the working assets, this will also save significantly on communication costs.

Mobile Apps

In the age of mobile connectivity, your Company is also progressing with pace by implementing quite a few mobile applications for senior and middle management, in order to making operational and MIS data available anywhere at any time. It is intended to develop many more of these in the next financial year.

Data Center Movement

As part of the risk reduction approach, the Company has successfully moved the production (LIVE) data center from Ocean House to a third party professional data centre.

HUMAN RESOURCES

As the business environment in which the organization operate has become more competitive and demanding, the need for a structured approach to developing talent has increased markedly. With this in mind, the Company has initiated a series of measures aimed at improving employee alignment and development summarized below:

- The heads of functions presented the key focus areas for their teams at the beginning of the year. Upon approval, these were converted as goals for individual team members to be achieved during the year.

- Talent genome - a 360 degree feedback targeted at middle and senior management was carried out during the year to identify strengths and improvement areas of critical talent.

- Based on the inputs from talent genome and performance history of key employees a talent review was held by the senior management team to plan medium to long term career deployment options.

- To aid learning and development of floating and shore staff employees, the Company is currently implementing an e-learning project. Modules which are both domain specific and soft skills will be offered on an e-learning platform to the respective audience. This initiative will enable virtual learning and resolve logistical and monitoring challenges in the final delivery of training modules.

- As in the past, training continued to be a key focus area. We held leadership conclaves and training sessions on topics like maritime insurance, interviewing skills and several expert sessions on career development, conflict resolution etc. during the year.

- Four year wage settlement with the staff union was signed in September, 2013.

Employee attrition for shore staff was 6% during the year. Number of shore employees was 190 while floating staff stood at 425.

DIRECTORS

Mr. K. M. Sheth, Whole-time Director and Executive Chairman of the Board of Directors, has decided to reduce his day to day commitments and, therefore, expressed a desire to relinquish the office of the Whole-time Director. He accordingly ceases to be the Whole-time Director of the Company with effect from September 01, 2014. Mr. K. M. Sheth has been associated with the Company since 1952 in various capacities as Managing Director, Deputy Chairman and Executive Chairman and has greatly contributed to the growth and progress of the Company for more than 6 decades.

Mr. K. M. Sheth will continue to be the Non-Executive Chairman on the Board of Directors of the Company.

Mr. K. M. Sheth has offered to be treated as Director liable to retire by rotation pursuant to Section 152 of the Companies Act, 2013. Accordingly, Mr. K. M. Sheth shall retire at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

The Board of Directors has further decided to appoint Mr. Tapas Icot and Mr G. Shivakumar as Whole-time Directors to be designated as ''Executive Directors'' of the Company. Mr. Tapas Icot has been associated with the Company since 1991 and is currently President (Shipping) of the Company. Mr. G. Shivakumar has been associated with the Company since 1990 and is currently Chief Financial Officer of the Group.

Whilst Mr. Tapas Icot''s appointment as an ''Additional Director'' and ''Executive Director'' is effective from August 12, 2014, keeping in view of the legal provisions relating to the proportion of Independent Directors and Non Independent Directors, appointment of Mr. G. Shivakumar will be held till the Company inducts one more Independent Director on the Board.

Mr. Tapas Icot, being an Additional Director, ceases to be a Director on the date of the 66th Annual General Meeting. Notice under section 160 of the Companies Act, 2013 has been received in respect of his appointment as Director on the Board. Appointment of Mr. Tapas Icot as an ''Executive Director'' also requires your approval at the 66th Annual General Meeting.

In view of the provisions of Section 149 of the Companies Act, 2013, all the Independent Directors, namely, Mr. Cyrus Guzder, Mr. Keki Mistry, Mr. Vineet Nayyar, Mr. Berjis Desai and Dr. Rajiv B. Lall, are proposed to be appointed at the ensuing Annual General Meeting upto a term of 5 years. Notices under section 160 of the Companies Act, 2013 have been received in respect of their appointment as Independent Directors on the Board.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges.

Necessary resolutions for the re-appointment of Mr. K. M. Sheth, Mr. Tapas Icot and all the Independent Directors as aforesaid have been included in the Notice convening the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Your Company was Corporate Governance compliant much before SEBI stipulated deadline in the year 2005. Your Company has complied with the mandatory provisions of Clause 49 of the Listing Agreement, relating to Corporate Governance. A separate section on Corporate Governance forms part of the Directors'' Report and the certificate from practicing Company Secretary confirming the compliance of conditions on Corporate Governance is included in the Annual Report. Your Company has also complied with the ''Corporate Governance -Voluntary Guidelines 2009'' issued by the Ministry of Corporate Affairs, to the extent disclosed in the Annual Report.

RISK MANAGEMENT PROCESS

In accordance with requirements of Clause 49 of the Listing Agreement, your Company has established a Risk Management mechanism to manage significant risks faced by your Company. The programme is built upon the foundation of the risk management process and practices followed by the Company over a period of time. The mechanism has been strengthened from time to time with a view to manage risks in a more structured way as an integral part of decision making process.

The Risk Management framework and reporting regime enables the Company to assess and demonstrate whether its significant risks are properly identified and controlled, and to potentially eliminate unnecessary control related overheads. The Risk Management framework involves risk identification, assessment, treatment / action plan, review and reporting as a continuous process.

Your Directors believe that your Company has a sound risk assessment and minimisation mechanism in place.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217 (2AA) of the Companies Act, 1956 the Board of Directors hereby state that :

i. in preparation of the annual accounts, the applicable accounting standards had been followed (alongwith proper explanation relating to material departures) and that there are no material departures;

ii. they have, selected the 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 of the Company for that period;

iii. 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;

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

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

Pursuant to Notification No. GSR 1029 dated 31.12.1988 your Company is not required to furnish prescribed information regarding conservation of energy and technology absorption, as Shipping Industry is not covered by the schedule to the said rules. The details of Foreign Exchange Earnings and Outgo are :

Rs. in crores

(a) Foreign Exchange earned on account of freight, charter hire earnings, etc. 971.75

(b) Foreign Exchange used including operating expenses, capital repayment, down payments for acquisition of ships (net of loan), interest payment, etc. 1780.82

PARTICULARS OF EMPLOYEES

Statement pursuant to Section 217(2A) of the Companies Act, 1956 (Act), read with the Companies (Particulars of Employees) Rules, 1975, is annexed to this Report. As contemplated by Section 219 of the Act, members are provided with abridged accounts. Members desirous of receiving the Statement pursuant to Section 217(2A) will be provided the same on receipt of written request from them.

AUDITORS

Messrs Kalyaniwalla & Mistry, the Auditors of your Company, who hold office until the conclusion of the forthcoming Annual General Meeting being eligible, offer themselves for re-appointment. Since Messrs Kalyaniwalla & Mistry has been functioning as Auditors of your Company for more than 10 years, as per Section 139 of the Companies Act, 2013, they can be appointed for maximum number of 3 years.

Necessary resolution for their re-appointment has been included in the Notice convening the ensuing Annual General Meeting.

APPRECIATION

Your Directors express their sincere thanks to all customers, charterers, vendors, investors, shareholders, shipping agents, bankers, insurance companies, protection and indemnity clubs, consultants and advisors for their continued support throughout the year. Your Directors also sincerely acknowledge the significant contributions made by all the employees for their dedicated services to the Company. Your Directors look forward to their continued support.

For and on behalf of the Board of Directors

K.M. Sheth Executive Chairman

Mumbai, August 12, 2014


Mar 31, 2013

The Directors are pleased to present the 65th Annual Report on the business and operations of your Company and Audited Accounts for the financial year ended March 31, 2013.

FINANCIAL PERFORMANCE

The financial results of the Company (standalone) for the financial year ended March 31, 2013 are presented below:

Rs. in crores

2012-13 2011-12

Total Revenue 2033.79 2011.92

Total Expenses 1876.53 1846.58

Profit before tax 157.26 165.34

Less : Tax Expenses 11.00 22.00

Profit for the period 146.26 143.34

Add : Profit as per last Balance Sheet 2922.62 2947.76

Less :

-Transfer to Tonnage tax reserve 10.00 20.00

-Transfer to General reserve 15.00 14.50

-Transfer to Debenture redemption reserve 15.00 20.00

-Interim Dividend on Equity Shares 45.70 45.69

-Proposed Dividend on Equity Shares 68.54 53.30

-Dividend Distribution Tax 9.66 14.99

Balance Carried Forward 2904.98 2922.62

DIVIDEND ON EQUITY SHARES

During the year, your Directors declared and paid interim dividend of Rs. 3/- per share resulting in an outflow of Rs. 53.11 crores (inclusive of tax on dividend). Your Directors recommend a final dividend of Rs. 4.50/- per share resulting in an outflow of Rs. 70.79 crores (inclusive of tax on dividend). The dividend will be paid after your approval at the ensuing Annual General Meeting. The aggregate outflow on account of the equity dividend for the year would be Rs. 123.90 crores of (inclusive of tax on dividend). This represents a payout ratio of 84.71% (previous year 79.51%).

ALLOTMENT OF FURTHER SHARES

During the year, the Company allotted 32,400 Equity Shares of Rs. 10 each pursuant to the order received from The Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992 which were held in abeyance. With this, the paid up Share Capital of the Company stands increased to Rs. 152,32,20,840 divided into 15,23,22,084 Equity Shares of Rs. 10/- each.

COMPANY PERFORMANCE

In FY 12-13, the Company recorded total income of Rs. 2033.79 crores (Previous year Rs. 2011.92 crores) and earned a PBIDT of Rs. 729.71 crores (previous year Rs. 781.26 crores).

TANKER BUSINESS

MARKET TREND AND ANALYSIS

Tanker average time charter equivalent earnings over the year ($ per day)

The crude tanker market remained depressed throughout FY 12-13. A sharp drop in tonnage demand coupled with steady fleet addition kept the charter rates under pressure. Shutdown of a major refinery in Venezuela (in Q2 FY 12-13) and continued decline in the US imports added to the woes resulting in lower fleet utilization. Some improvement in the crude tanker rates was witnessed in HY2 FY 12-13 on back of seasonal winter demand and increase in the Middle East exports. But this was short lived and the charter rates slid back to lower base. Compared to crude segment, the product tanker market remained relatively firm. Disruption of refineries on the US east coast due to Hurricane Sandy, improved demand from the Asian economies and emergence of new trade routes of distillates from US to South American countries like Peru & Chile kept the product tanker charter rates stable. But any meaningful improvement in the charter rates was dismissed by the excessive fleet supply in the market.

At the end of the FY 12-13, the world tanker fleet increased by 3.9% to 498.8 mn dwt as against 480.1 mn dwt at the end of FY 11-12.

COMPANY PERFORMANCE

The tanker business accounted for around 82% of the Company''s net revenues and 95% of the operating profits.

In FY 12-13, around 50% of the tanker earnings were derived from the period market. Crude tankers, inclusive of ''spot'' and ''period'', earned an average TCY of $17,700/day (previous year $19,000/day). Product carriers, inclusive of ''spot'' and ''period'', earned an average TCY of $15,000/day (previous year $15,300/day).

TANKER FLEET CHANGES

As of 31st March 2013, the tanker fleet of your Company stood at 23 tankers aggregating 1.86 mn dwt, with an average age of 10.43 years as against 24 tankers aggregating 1.88 mn dwt with an average age of 9.36 years as on 31st March 2012.

During the year, your Company took delivery of:

- Very Large Gas Carrier (VLGC) ''Jag Vidhi'' in Aug-12

During the year, your Company sold & delivered the following tankers:

- New Building Very Large Crude Carrier (VLCC) ''Vasant J Sheth'' in May-12

- Medium Range Product Carrier ''Jag Pradip'' in Jun-12

- LPG Carrier ''Jag Viraj'' in Jun-12

During the year, your Company contracted to sell its 1988 built General Purpose (GP) product carrier ''Jag Parwar'' with delivery in Q1 FY 13-14. Subsequently the Company delivered the vessel to the buyers in Q1 FY 13-14.

During FY 12-13, your Company placed an order for one Medium Range product carrier which will be delivered in Q4FY14-15.

Subsequent to the year, your Company contracted to sell its 1999 built Aframax crude carrier ''Jag Leela''. The vessel will be delivered to the buyers in H1FY 13-14.

OUTLOOK FOR THE TANKER MARKET

In view of the sluggish global macroeconomic environment, IEA has forecast oil demand growth of only 0.9% to 90.6 mn bpd. Muted demand from the EU countries and declining US oil imports are the key factors causing lower growth. With US turning out to be net exporter of distillates, the product tanker market has already started to witness a structural change in the trade pattern and the same impact is expected to continue going forward. Even though some positive signals like increase in scrapping activities are seen, excessive supply coupled with uncertain oil demand will keep the tanker markets volatile.

The global tanker orderbook stands at about 53.9 mn dwt or 10.8% of the fleet at the end of March 2013.

DRY BULK BUSINESS

MARKET TREND AND ANALYSIS

Dry bulk average time charter equivalent earnings over the year ($ per day)

Echoing the previous financial year, FY 12-13 also registered a steady supply of new vessels in the market which reflected in the subdued charter rates for dry bulk vessels. Although steady expansion in the demand was witnessed across all major commodities, excessive new fleet growth kept a lid on any potential improvement in the freight rates. Citing difficult operating environment, scrapping too picked up and a record 32.08 mn dwt got scrapped in FY 12-13.

At the end of the FY 12-13, the world dry bulk fleet increased by 9.2% to 690.5 mn dwt as against 632.3 mn dwt at the end of FY 11-12.

COMPANY PERFORMANCE

The dry bulk fleet contributed around 18% of the Company''s net revenues and 5% of the operating profits.

In FY 12-13 the average TCY for dry bulk vessels, inclusive of ''spot'' and ''period'', was approximately $9,800/day as compared to $15,500/day in the previous year.

DRY BULK FLEET CHANGES

As of 31st March 2013, the dry bulk fleet of your Company stood at 9 vessels aggregating 0.67 mn dwt, with an average age of 8.04 years as compared to 10 vessels aggregating 0.74 mn dwt with an average age of 7.9 years on 31st March 2012.

During the year, your Company sold & delivered:

- Panamax bulk carrier ''Jag Arnav'' in Mar-13

Subsequent to the year, the Company contracted to sell its 1997 built Handymax dry bulk carrier ''Jay Ravi''. The vessel will be delivered to the buyers in Q1 FY 13-14.

OUTLOOK FOR THE DRY BULK MARKET

Amidst the situation of new fleet overhang, the global commodity demand is expected to show some improvement in CY2013. Asian economies, largely China & India, will be the key for this commodity growth. However, any disruption in the demand from China can have a serious impact on the dry bulk trade. Going forward, slowing down of new deliveries in combination with world trade recovery should help in reducing the demand supply mismatch in this segment.

The global dry bulk orderbook stands at about 127.3 mn dwt or 18.4% of the fleet at the end of March 2013.

ASSET VALUES

During FY 12-13 second-hand values for modern crude tankers witnessed a drop of about 10-15% while product tanker witnessed a drop of about 5% vis-a-vis start of financial year. Second-hand values of modern dry bulk carriers dropped by about 10-15% during the same period. New building prices dropped by about 5-10% for crude tankers. However, new building prices for product tankers more or less remained same during the financial year. New building prices for dry bulk carriers witnessed a drop of about 5% for the same period.

RISKS AND CONCERNS

Economic risk: Shipping is a global business whose performance is closely linked to the state of the global economy. Therefore, the earnings of your Company could be impacted negatively if the global economic situation does not improve over the longer term.

Volatility : Over and above the economic risks the shipping industry is impacted by numerous short term and regional factors, like political fallouts, weather changes etc. This results in great amount of volatility in the freight market, which in turn impacts your Company''s earnings.

Your Company has attempted to hedge some of this risk by entering into time charters for part of its fleet.

Shipboard personnel : Indian officers continue to be in great demand all over the world. Given the unfavorable tax status conferred on a seafarer sailing on Indian-flagged vessels, it is becoming increasingly difficult for your Company to source officers capable of meeting the modern day challenges of worldwide trading. This is more relevant for tanker personnel and may become a hindrance to growth.

OPEC action : If the OPEC decides to cut output, this combined with inventories and increased new building deliveries, could negatively impact the demand for tankers.

European financial crisis : The on-going European financial crisis can further depress the already subdued demand in the Euro zone.

Chinese economy : As we have seen in the recent past that China has been the main driving factor of the shipping demand; in case there is a major downward shift in the Chinese economy, this along with increased new building deliveries could have negative impact on shipping.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements have been prepared by your Company in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956 to the extent applicable. The audited Consolidated Financial Statements together with Auditors'' Report thereon form part of the Annual Report.

The group recorded a consolidated net profit of Rs. 537.76 crores for the year under review as compared to Rs. 316.55 crores for the previous year. The net worth of the group as on March 31, 2013 was Rs. 6341.76 crores as compared to Rs. 5995.93 crores for the previous year.

SUBSIDIARIES

Greatship (India) Limited

Greatship (India) Limited (GIL) has successfully completed 7 years of operations. The Company, one of India''s largest offshore oilfield services provider, has recorded steady financial performance for this year, as in the last 6 years.

GIL has recorded a profit after tax of Rs. 166.33 crores on a standalone basis and Rs. 430.72 crores on a consolidated basis for the year ended March 31, 2013 as compared to Rs. 90.19 crores and Rs. 220.23 crores, respectively, for the year ended March 31, 2012. The consolidated net worth of GIL for financial year 2013 was Rs. 2889.63 crores as compared to Rs. 2455.77 crores for financial year 2012.

During the year, upon acquisition of shares of GIL from Mr. Ravi K. Sheth (jointly held with Mrs. Amita R. Sheth), GIL became a wholly owned subsidiary of your Company.

Subsequent to the year, on April 2, 2013, GIL redeemed 1.45 crores Preference Shares with the dividend rate of 7.5% p.a. held by your Company at Rs. 40.90/- per share (including the redemption premium of Rs. 30.90 per share) in accordance with the terms of issue. As on date, the total share capital held by your Company in GIL comprises of 11.13 crores equity shares of Rs. 10 each totalling in value to Rs. 1298.09 crores and Rs. 13.41 crores preference shares of Rs. 10 each totalling in value to Rs. 402.372 crores.

GIL, alongwith its subsidiaries,currently owns and operates twenty one vessels and three jack up drilling rigs. The operating fleet of twenty one vessels comprises of four Platform Supply Vessels (PSVs), nine Anchor Handling Tug cum Supply Vessels (AHTSVs), two Multipurpose Platform Supply & Support Vessels (MPSSVs) and six ROV (Remotely Operated Vehicle) Support Vessels (ROVSVs).

GIL has the following wholly owned subsidiaries:

a) Greatship Global Energy Services Pte. Ltd., Singapore

b) Greatship Global Offshore Services Pte. Ltd., Singapore

c) Greatship Global Holdings Ltd., Mauritius

d) Greatship Subsea Solutions Singapore Pte. Ltd., Singapore

e) Greatship Subsea Solutions Australia Pty Limited, Australia

f) Greatship (UK) Limited, United Kingdom

g) Greatship Global Offshore Management Services Pte. Ltd., Singapore

Subsequent to the end of the year, Greatship Subsea Solutions Australia Pty Limited has made an application to Austrlian Securities and Investments Commission for voluntary deregistration of the company.

Other subsidiaries

Apart from GIL and its subsidiaries, your Company has the following wholly-owned subsidiaries:

a) The Great Eastern Shipping Co. London Ltd.

b) The Greatship (Singapore) Pte. Ltd.

c) The Great Eastern Chartering LLC (FZC)

d) The Great Eastern Chartering (Singapore) Pte. Ltd. (wholly owned subsidiary of The Great Eastern Chartering LLC (FZC) incorporated on April 17, 2013.)

Subsidiaries'' accounts

Ministry of Corporate Affairs, vide General Circular No : 2 /2011 dated February 08, 2011, has granted a general exemption to companies under Section 212(8) of the Companies Act, 1956. Pursuant to the said Circular, the Board of Directors of your Company has, by passing a resolution, given consent for not attaching the balance sheets, profit and loss accounts, reports of the Board of Directors, reports of the Auditors, etc. of the subsidiaries with the Balance Sheet of your Company as required under Section 212 of the Companies Act, 1956.

Accordingly, copies of the balance sheets, profit and loss accounts, reports of the Board of Directors, reports of the Auditors, etc. of the subsidiary companies have not been attached to the Balance Sheet of your Company as at March 31, 2013. As per the terms of the said Circular, a statement containing brief financial details of the subsidiaries of the Company for the year ended March 31, 2013 is included in the Annual Report.

The annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the Company and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies have been kept for inspection by any shareholder at the registered office of the Company and of the subsidiary companies concerned. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

DEBT FUND RAISING

During the year, the Company did not raise any funds by way of debt. In the previous year, Rs. 452.57 crores were raised towards capital expenditure for building tangible assets and general corporate purposes. As on March 31, 2013, the Company''s gross debt equity ratio was 0.73:1 and net (of cash) debt : equity ratio was 0.09:1.

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Vineet Nayyar and Ms. Asha Sheth are liable to retire by rotation and being eligible, offer themselves for re-appointment. Necessary resolutions for their re-appointment have been included in the Notice convening the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Your Company was Corporate Governance compliant much before SEBI stipulated deadline in the year 2005. Your Company has complied with the mandatory provisions of Clause 49 of the Listing Agreement, relating to Corporate Governance. A separate section on Corporate Governance forms part of the Directors'' Report and the certificate from the Company''s Auditors confirming the compliance of conditions on Corporate Governance is included in the Annual Report. Your Company has also complied with the ''Corporate Governance -Voluntary Guidelines 2009'' issued by the Ministry of Corporate Affairs, to the extent disclosed in the Annual Report.

RISK MANAGEMENT PROCESS

In accordance with requirements of Clause 49 of the Listing Agreement, your Company has established a Risk Management mechanism to manage significant risks faced by your Company. The programme is built upon the foundation of the risk management process and practices followed by the Company over a period of time. During the year, your Company has strengthened the mechanism with a view to manage risks in a more structured way and making risk management process an integral part of decision making process.

The Risk Management framework and reporting regime enables the Company to assess and demonstrate whether its significant risks are properly identified and controlled, and to potentially eliminate unnecessary control related overheads.

The Risk Management framework involves risk identification, assessment, treatment / action plan, review and reporting as a continuous process.

Your Directors believe that your Company has a sound risk assessment and minimisation mechanism in place.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217 (2AA) of the Companies Act, 1956 the Board of Directors hereby state that :

i. in preparation of the annual accounts, the applicable accounting standards had been followed (alongwith proper explanation relating to material departures) and that there are no material departures;

ii. they have, selected the 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 of the Company for that period;

iii. 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;

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

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

Pursuant to Notification No. GSR 1029 dated 31.12.1988 your Company is not required to furnish prescribed information regarding conservation of energy and technology absorption, as Shipping Industry is not covered by the schedule to the said rules. The details of Foreign Exchange Earnings and Outgo are :

Rs.in crores

(a) Foreign Exchange earned on account of freight, charter hire earnings, etc. 1427.47

(b) Foreign Exchange used including operating expenses, capital repayment, down 1753.01 payments for acquisition of ships (net of loan), interest payment, etc.

PARTICULARS OF EMPLOYEES

Statement pursuant to Section 217(2A) of the Companies Act, 1956 (Act), read with the Companies (Particulars of Employees) Rules, 1975, is annexed to this Report. As contemplated by Section 219 of the Act, members are provided with abridged accounts. Members desirous of receiving the Statement pursuant to Section 217(2A) will be provided the same on receipt of written request from them.

AUDITORS

Messrs Kalyaniwalla & Mistry, the Auditors of your Company, who hold office until the conclusion of the forthcoming Annual General Meeting being eligible, offer themselves for re-appointment.

APPRECIATION

Your Directors express their sincere thanks to all customers, charterers, vendors, investors, shareholders, shipping agents, bankers, insurance companies, protection and indemnity clubs, consultants and advisors for their continued support throughout the year. Your Directors also sincerely acknowledge the significant contributions made by all the employees for their dedicated services to the Company. Your Directors look forward to their continued support.

For and on behalf of the

Board of Directors

K.M. Sheth

Executive Chairman

Mumbai, May 06, 2013


Mar 31, 2012

To The Members,

The Directors are pleased to present the 64th Annual Report on the business and operations of your Company and Audited Accounts for the financial year ended March 31, 2012.

FINANCIAL PERFORMANCE

The financial results of the Company for the financial year ended March 31, 2012 are presented below :

Rs. in crores 2011-12 2010-11

Total Revenue 2016.23 1662.06

Total Expenses 1850.89 1366.85

Profit before tax 165.34 295.21

Less : Tax Expenses 22.00 28.75

Profit for the period 143.34 266.46

Add : Profit as per last Balance Sheet 2947.76 2886.73

Less :

-Transfer to Tonnage tax reserve 20.00 40.00

-Transfer to General reserve 14.50 27.00

-Transfer to Debenture redemption reserve 20.00 -

-Interim Dividend on Equity Shares 45.69 53.30

-Proposed Dividend on Equity Shares 53.30 68.53

-Dividend Distribution Tax 14.99 16.60

Balance Carried Forward 2922.62 2947.76

The total income for the year was recorded at Rs. 2016.23 crores as against Rs. 1662.06 crores in the previous year and a Net Profit of Rs. 143.34 crores as against Rs. 266.46 crores in the previous year.

DIVIDEND ON EQUITY SHARES

During the year, your Directors declared and paid interim dividend of Rs. 3/- per share resulting in an outflow of Rs. 53.10 crores (inclusive of tax on dividend). Your Directors recommend a dividend of Rs. 3.50/- per share. The dividend will be paid after your approval at the ensuing Annual General Meeting. The aggregate outflow on account of the equity dividend for the year would be Rs. 113.98 crores including tax on dividend. This represents a payout ratio of 79.51% (previous year 51.95%).

COMPANY PERFORMANCE

In FY 11-12, the Company recorded total revenue of Rs. 2016.23 crores (Previous year Rs. 1662.06 crores) and earned a PBIDT of Rs. 781.26 crores (previous year Rs. 829.20 crores).

TANKER BUSINESS

MARKET TREND AND ANALYSIS

Tanker average time charter equivalent earnings over the year ($ per day)

Throughout the last financial year, the tanker market remained subdued. Steady fleet growth, disruption of Libya's crude supply, stagnant demand from western economies and closure of some US & EU refineries were the main factors, which reflected in the weak freight rates. Demand from the OECD countries too got negatively impacted on back of high crude oil prices. Some spurts in the tanker freight rates were witnessed due to increase in OPEC production, long haul shipments, scrapping activities and jump in seasonal demand, but new fleet addition capped any significant improvement in the freight rates.

The world tanker fleet increased to 480.1 mn dwt at the end of the financial year, about 5% higher than the 457.6 mn dwt at the beginning of FY 11-12.

COMPANY PERFORMANCE

The tanker business accounted for around 75% of the Company's net revenues and 74% of the operating profits.

In FY 11-12, around 51% of the tanker earnings were derived from the period market. Crude tankers, inclusive of 'spot' and 'period', earned an average TCY of $19,000/day (previous year $20,400/day). Product carriers, inclusive of 'spot' and 'period', earned an average TCY of $15,300/day (previous year $15,800/day).

TANKER FLEET CHANGES

The tanker fleet of your Company stood at 24 tankers aggregating 1.88 mn dwt, with an average age of 9.36 years (as of 31st March 2012) as against 27 tankers aggregating 2.10 mn dwt with an average age of 9.81 years as on 31st March 2011.

During the year, your Company sold and delivered the following tankers :

- Suezmax crude carrier 'Jag Lakshya' in Jun-11

- General Purpose product carrier 'Jag Pari' in Oct-11

- Medium Range product carrier 'Jag Pratap' in Dec-11

During the year, your Company also contracted to sell three New Building Very Large Crude Carrier tankers. Two of the VLCCs viz. 'Maneklal Ujamshi Sheth' & 'Ardeshir H Bhiwandiwalla' were delivered in Jan-12 & Feb-12 respectively. The third VLCC 'Vasant J Sheth' will be delivered in Q1 FY13.

OUTLOOK FOR THE TANKER MARKET

For 2012, IEA has anticipated a modest 0.9% growth in world oil demand to 89.9 mn bpd. This is on back of uncertain economic recovery, high crude oil prices and weak demand scenario. Apart from these negatives, the key macroeconomic factor to watch out closely will be the Western sanctions on Iran. If the Iran dispute aggravates, it can have a significant impact on the movement of oil, which can change the trade dynamics going forward. On the supply side, newbuilding cancellations and delays are expected to become more prevalent as the financing environment remains under stress.

The global tanker orderbook stands at about 78.2 million dwt or 16.3% of the fleet at the end of March 2012.

DRY BULK BUSINESS

MARKET TREND AND ANALYSIS

Dry bulk average time charter equivalent earnings over the year ($ per day)

As projected, FY 11-12 proved to be the year of record new building deliveries, which impacted the fleet utilization significantly. Increased Chinese coastal trade, prolonged port congestions and excessive scrapping augured well on the positive side, but the relentless fleet addition overshadowed any improvement in the freight rates. Logistical disruptions post Tsunami in Japan and weather related issues in the iron ore & coal producing countries resulted in decline of imports. Sharp reduction in the exports to European Union (EU) also resulted in lower tonnage utilization.

The world dry bulk fleet increased to 632.3 mn dwt at the end of FY 11-12, about 15% higher than the 551.9 mn dwt at the beginning of the financial year.

COMPANY PERFORMANCE

The dry bulk fleet contributed around 25% of the Company's net revenues and 26% of the operating profits.

In FY 11-12 the average TCY for dry bulk vessels, inclusive of 'spot' and 'period', was approximately $15,500/day as compared to $20,754/day in the previous year.

DRY BULK FLEET CHANGES

The dry bulk fleet stood at 10 vessels aggregating 0.74 mn dwt, with an average age of 7.9 years (as of 31st March 2012) as against 7 vessels aggregating 0.52 mn dwt with an average age of 9.9 years on 31st March 2011.

During the year, your Company took delivery of the following new built vessels –

- Two Kamsarmax bulk carriers 'Jag Aditi' in Apr-11 and 'Jag Arya' in Sep-11.

- Supramax bulk carrier 'Jag Rani' in Jul-11.

OUTLOOK FOR THE DRY BULK MARKET

Even though, cancellations and delivery slippages are likely to remain at very high levels due to volatile freight rates and tough financing environment, it is expected that the market will experience significant fleet growth resulting in depressed freight rates except for some short-term seasonal fluctuations. On the demand side, global seaborne commodity movement is expected to improve on back of increased imports in Asia. But a possible 'slowdown' in China or prolonged recession in Europe could possibly result in downward revision of these demand forecasts, which can have a negative impact on the cargo movement and freight rates.

The global dry bulk orderbook stands at about 191.5 mn dwt or 30.3% of the fleet at the end of March 2012.

ASSET VALUES

During FY 11-12 second-hand values for both modern crude tankers and dry bulk carriers witnessed a drop of 20-30% vis-à-vis start of FY 11-12. Second-hand values for modern product tankers also dropped albeit by 10% during the same period. New building prices for tankers witnessed a drop of 5-10% during the year, while those for the dry bulk ships moved down by about 15-20%. Your Company's decision not to acquire assets during the year therefore stands vindicated.

RISKS AND CONCERNS

Economic risk : Shipping is a global business whose performance is closely linked to the state of the global economy. Therefore, the earnings of your Company could be impacted negatively if the global economic situation does not improve over the longer term.

Volatility : Over and above the economic risks the shipping industry is impacted by numerous short term and regional factors, like political fallouts, weather changes etc. This results in great amount of volatility in the freight market, which in turn impacts your Company's earnings.

Your Company has attempted to hedge some of this risk by entering into time charters for part of its fleet.

Shipboard personnel : Indian officers continue to be in great demand all over the world. Given the unfavorable tax status conferred on a seafarer sailing on Indian-flagged vessels, it is becoming increasingly difficult for your Company to source officers capable of meeting the modern day challenges of worldwide trading. This is more relevant for tanker personnel and may become a hindrance to growth.

OPEC action : If the OPEC decides to cut output, this combined with inventories and increased new building deliveries, could negatively impact the demand for tankers.

European financial crisis : The growing European debt crisis can further depress the already subdued demand in the Euro zone.

Chinese economy : As we have seen in the recent past that China has been the main driving factor of the shipping demand, in case there is a major downward shift in the Chinese economy, this along with increased new building deliveries could have negative impact on shipping.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements have been prepared by your Company in accordance with Generally Accepted Accounting Principles in India, the Accounting Standards issued by The Institute of Chartered Accountants of India and the provisions of the Companies Act, 1956 to the extent applicable. The audited Consolidated Financial Statements together with Auditors' Report thereon form part of the Annual Report.

The group recorded a consolidated net profit after prior period adjustment of Rs. 316.55 crores for the year under review as compared to Rs. 468.70 crores for the previous year. The net worth of the group as on March 31, 2012 was Rs. 5997.19 crores as compared to Rs. 6030.66 crores for the previous year.

SUBSIDIARIES

Greatship (India) Limited

Greatship (India) Limited (GIL) has completed 6th year of its successful operations. The Company, now one of India's largest offshore oilfield services providers, has recorded steady financial performance for this year, as in the last 5 years.

GIL has recorded a profit after tax of Rs. 90.19 crores on a standalone basis and Rs. 220.23 crores on a consolidated basis for the year ended March 31, 2012 as compared to Rs. 118.38 crores and Rs. 215.71 crores respectively for the year ended March 31, 2011. The consolidated net worth of GIL for financial year 2012 was Rs. 2457.03 crores as compared to Rs. 2031.56 crores for financial year 2011 on a consolidated basis.

Your Company has till date invested total of Rs. 1714.43 crores by subscribing to 10.92 crores equity shares totaling in value to Rs. 1268.56 crores and 14.86 crores non-convertible preference shares totaling in value to Rs. 445.87 crores. Your Company's holding is 98.11% of the total equity share capital of GIL.

GIL, alongwith its subsidiaries, is currently owning/operating 4 Platform Supply Vessels (PSVs), 9 Anchor Handling Tug cum Supply Vessels (AHTSVs), 3 Multipurpose Platform Supply & Support Vessels (MPSSVs), 3 Multipurpose platform support vessels capable of Remotely Operated Vehicles operations (ROVSVs) and 2 Jack up Rigs. GIL and its subsidiaries also have an order book of three ROVSVs and one 350 feet Jack up Rig. During the year, the shipbuilding contracts for 2 Multipurpose Supply & Support Vessels were cancelled.

During the year, GIL granted 189600 stock options (net of cancelled/forfeited) under various Employee Stock Options Schemes.

GIL has the following wholly owned subsidiaries :

a) Greatship Global Energy Services Pte. Ltd., Singapore

b) Greatship Global Offshore Services Pte. Ltd., Singapore

c) Greatship Global Holdings Ltd., Mauritius

d) Greatship Subsea Solutions Singapore Pte. Ltd., Singapore

e) Greatship Subsea Solutions Australia Pty. Limited, Australia

f) Greatship (UK) Limited, United Kingdom

g) Greatship Global Offshore Management Services Pte. Ltd., Singapore

Greatship DOF Subsea Projects Private Limited, Mumbai, erstwhile wholly owned subsidiary of GIL was struck off from the Registrar of Companies under the Fast Track Exit mode on 30.12.2011.

Other subsidiaries

Apart from GIL and its subsidiaries, your Company has the following wholly-owned subsidiaries :

a) The Great Eastern Shipping Co. London Ltd.

b) The Greatship (Singapore) Pte. Ltd.

c) The Great Eastern Chartering LLC (FZC).

Subsidiaries' accounts

Ministry of Corporate Affairs, vide General Circular No : 2 /2011 dated February 08, 2011, has granted a general exemption to companies under Section 212(8) of the Companies Act, 1956. Pursuant to the said Circular, the Board of Directors of your Company has, by passing a resolution, given consent for not attaching the balance sheets, profit and loss accounts, reports of the Board of Directors, reports of the Auditors, etc. of the subsidiaries with the Balance Sheet of your Company as required under Section 212 of the Companies Act, 1956.

Accordingly, copies of the balance sheets, profit and loss accounts, reports of the Board of Directors, reports of the Auditors, etc. of the subsidiary companies have not been attached to the Balance Sheet of your Company as at March 31, 2012. As per the terms of the said Circular, a statement containing brief financial details of the subsidiaries of the Company for the year ended March 31, 2012 is included in the Annual Report.

The annual accounts of the subsidiary companies and the related detailed information shall be made available to shareholders of the Company and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies have been kept for inspection by any shareholder at the registered office of the Company and of the subsidiary companies concerned. The Company shall furnish a hard copy of details of accounts of subsidiaries to any shareholder on demand.

DEBT FUND RAISING

During the year, the Company raised funds of Rs. 452.57 crores towards capital expenditure for building tangible assets and general corporate purpose as against Rs. 410.62 crores in the previous year. As on March 31, 2012, the Company's gross debt equity ratio was 0.76 :1 and net (of cash) debt : equity ratio was 0.17 :1.

QUALITY, SAFETY, HEALTH & ENVIRONMENT

Environment Protection

To enhance fuel efficiency and reduce green house gas emission from your vessels 'Ship Energy Efficiency Management Plan' have been introduced on board all vessels with effect from 1st July, 2011. Several initiatives have been put in place to develop awareness among staff on this very important tool for sustainable shipping viz. Senior Officers are being briefed on the subject as a part of their pre-joining briefing, training CDs on the subject have been developed and sent to vessels, posters on best management practices have been developed and displayed on board.

Maritime Labour Convention

Maritime Labour Convention developed by International Labour Organization for setting minimum standard of living and working conditions for seafarers is scheduled to enter into force once condition for entry into force is met. Your Company has proactively implemented the requirements since 1st December 2011. Once flag administration issues their relevant specific requirements, the same will be incorporated. Once the Convention enters into force, each ship would require to be surveyed and certified.

To ensure high standard of medical care, a system of 24 x 7 Company doctor accessible to all vessel Masters for consultation through phone and e-mail has been put in place.

Piracy Risk

With continuing piracy incidents in Gulf of Aden & waters around Somalia and Indian Ocean, your Company is continuously updating and strictly enforcing Best Management Practices to mitigate the security risks of its vessels transiting through these waters.

Rescue at Sea

Jag Lakshita, while proceeding from San Diego Lighterage Area, USA towards the west coast of Africa, rescued 3 sailors' private sailing expedition from their disabled sailing vessel off Cape Horn on 24th February, 2011. The rescue had been carried out in coordination with MRCC Uruguay, MRCC Puerto Belgrano and MRCC Rio De Janeiro. The weather at that time was inclement, with gale force winds, rough seas and moderate swell. The rescued sailors, 1 South African national and 2 British nationals, were disembarked in good health at Cameroon.

Vice Admiral of Brazilian Navy commended the Master and Crew for their gallant action with these words "I know that this rescue operation caused a delay on the normal course of the M. V. Jag Lakshita, although it was for a noble reason and it was done without any thought of recognition or reward. The fast response and the professionalism of the Jag Lakshita's crew allowed all three crew members of Yacht Spraydust to be rescued alive in good health conditions."

Jag Pushpa, during her voyage from Gizan, Saudi Arabia to Sikka, India on 30th June, 2011, deviated from her planned passage to rescue 13 crew members, all Indian nationals of M.T. Pavit in Arabian Sea. The weather at that time was severe, with gale force winds, rough seas and heavy swell. However, to protect the lives of the 13 sailors on Pavit, Master of the vessel decided to take all necessary precautions and proceeded to the rescue. The vessel was immobilized with flooded machinery space. A UK Naval helicopter from a British naval vessel in the region transferred the crew, all of whom were safely disembarked at Sikka.

Cadet Training

In view of availability of spare accommodation on board Jag Preeti, large number of Cadets (27 nos.) have been placed on board the vessel and facility for class room training has been arranged. Highly experienced Cadet Training Officer has been placed onboard for achievement of training objectives and monitoring of discipline and behavioural aspects of Cadets in a systematic manner.

Anti Bribery Policy

During the year Anti Bribery Policy for fleet vessels has been introduced in view of increasing importance of the subject and to work towards compliance with international legislative requirements.

GREAT EASTERN INSTITUTE OF MARITIME STUDIES (GEIMS)

This year was the 6th year of operations of your Company's training Institute in Lonavala. During the year, there has been consolidation and augmentation of infrastructure as well as enhancement in training being imparted. During the year, the Institute admitted 3 batches of TNOC and 4 batches of GME totaling 278 cadets.

The Institute is the only Institute approved by DG Shipping, Government of India to conduct the newly introduced pre sea Electro Technical Officers course as mandated by IMO's STCW 2010. During the year, the Institute in addition to the TNOC and

GME cadets also trained 60 ETO cadets. This course was designed and developed by the Institute as per IMO requirements. In addition, the ongoing mandatory STCW safety and familiarisation courses for sea farers have been conducted for batches of students who have passed out from the Institute.

As per the Company's requirement the Institute designed a Special "Performance Enhancement Course" for officers which were earlier conducted by Germanischer Lloyd. The 18 day course for Nautical officers and engineers is now being conducted by the faculty from Jan 2012. During the year 2 such courses were conducted.

The additional hostel block of 23780 sq.feet was completed on 31st August, 2011. This block is being presently utilized for conducting post-sea courses.

Full Mission Engine Room Stimulator which was ordered in August, 2010 has been fully installed and is now functional for both pre-sea and post-sea level training.

The installation of Slow Speed Two stroke main engine was completed in October, 2011 alongwith the connected civil work. The availability of ships main propulsion engine in operational condition has substantially enhanced Institute's training capabilities.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has instituted internal control systems which are adequate for the nature of its business and the size of its operations. In the beginning of the year, the scope of the audit exercise and the key business processes and selected risk areas to be audited are decided in consultation with the Audit Committee. The Internal Audit is carried out by a firm of external Chartered Accountants and covers all departments. All significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee comprises of 3 Independent Directors with the Chairman being a person well qualified and conversant with matters pertaining to Accounts and Finance. The Audit Committee met 4 times during the year.

IT INITIATIVES

In line with the strategy of aligning IT with Business, your Company has completed the following initiatives this year -

- Internet connectivity for 5 ships

- The ships are disconnected with shore and in today's scenario it is extremely difficult to manage something remotely. In order to bridge the gap, the internet connectivity has been installed in 5 ships out of 34 fleet as part of phase I. The usage of Internet for communication as well as to and fro data flow between shore and ship have increased considerably. This will help to reduce significant amount of productivity loss by instant online communication between ship and shore.

- New Software applications

- As part of various in-house software development and implementation, the most significant software that has gone live is called 'geNautical' which captures day to day operational data and automatically integrates with related software at shore. It has streamlined the data flow from ship to shore.

- Class Approval for Planned Maintenance System (PMS)

- This year also your Company added Class approvals from different Groups for its successful operations of PMS at ships which are as follows :

- ABS Class - for 3 ships - total stands at 8

- LRS Class - for 1 ship - total stands at 5

- DNV Class - for 7 ships - total stands at 7

- First CLOUD initiative

- As a strategy of exploring the advantages of cloud computing, your Company has introduced first initiative with its Institute, GEIMS for their emailing service from Google cloud. It will be extended further in Company's IT area in future.

HUMAN RESOURCES

To remain at the leading edge of business and to be the best in the Industry, your Company's focus has been not only on business strategies but also on developing and nurturing talent. Your Company strongly believes that its people alone provide sustainable and competitive advantage. During the period under review, your Company initiated several HR practices aimed at people development and improving organizational health.

With support from an external consultancy firm, your Company carried out an exercise titled 'Organization Genome' to determine competencies critical for business success of the two divisions. This was aligned with the 360 degree process 'Talent Genome' to map competency profiles of senior and middle level executives, resulting in feedback and individual development plan for each employee. It is planned that the development progress will be measured during the annual talent review and succession planning process.

Based on employee feedback, your Company incorporated few changes in HR policy addressing diversity and flexibility needs of team members along with annual compensation review. The Social Café initiatives continued to focus on employee health, fitness and camaraderie. These initiatives have ensured that your Company remains an employer of choice in shipping sector.

Your Company played an active role to facilitate a milestone NMB agreement pertaining to shipping crew. This will help to optimize crew wages during the time shipping industry is faced with many challenges and uncertainties.

The employee attrition stood at 6% compared to 5 % last year. Your Company had employee strength of 195 on shore and 460 floating as on March 31, 2012.

DIRECTORS

Mr. K. V. Kamath conveyed his inability to continue as Director of the Company after taking over additional responsibility as Chairman of Infosys Limited. Mr. Kamath resigned from the Board of Directors of the Company with effect from November 11, 2011. Your Directors place on record their appreciation for the valuable guidance and support extended by him during his tenure as a Director.

Dr. Rajiv B. Lall was appointed as an Additional Director on the Board of Directors of the Company with effect from February 10, 2012 as an Independent Director. He ceases to be a Director on the date of the 64th Annual General Meeting. Notice under section 257 of the Companies Act, 1956 has been received in respect of his appointment as Director on the Board.

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Mr. Cyrus Guzder and Mr. Berjis Desai are liable to retire by rotation and being eligible, offer themselves for re-appointment. Necessary resolutions for their re-appointment have been included in the Notice convening the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Your Company was Corporate Governance compliant much before SEBI stipulated deadline in the year 2005. Your Company has complied with the mandatory provisions of Clause 49 of the Listing Agreement, relating to Corporate Governance. A separate section on Corporate Governance forms part of the Directors' Report and the certificate from the Company's Auditors confirming the compliance of conditions on Corporate Governance is included in the Annual Report. Your Company has also complied with the 'Corporate Governance -Voluntary Guidelines 2009' issued by the Ministry of Corporate Affairs, to the extent disclosed in the Annual Report.

RISK MANAGEMENT PROCESS

In accordance with requirements of Clause 49 of the Listing Agreement, your Company has established a Risk Management mechanism for its business risks. The programme is built upon the foundation of the existing risk management process and practices of the Company and has evolved a structured approach for risk management to manage significant risks faced by your Company.

The Risk Management framework and reporting regime enables the Company to assess and demonstrate whether its significant risks are properly identified and controlled, and to potentially eliminate unnecessary control related overheads.

The Risk Management framework involves risk identification, assessment, treatment/action plan, review and reporting as a continuous process.

Your Directors believe that your Company has a sound risk assessment and minimisation mechanism in place.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217 (2AA) of the Companies Act, 1956 the Board of Directors hereby state that :

i. in preparation of the annual accounts, the applicable accounting standards had been followed (alongwith proper explanation relating to material departures) and that there are no material departures;

ii. they have, selected the 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 of the Company for that period;

iii. 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;

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

PARTICULARS OF EMPLOYEES

Statement pursuant to Section 217(2A) of the Companies Act, 1956 (Act), read with the Companies (Particulars of Employees) Rules, 1975, is annexed to this Report. As contemplated by Section 219 of the Act, members are provided with abridged accounts. Members desirous of receiving the Statement pursuant of Section 217(2A) will be provided the same on receipt of written request from them.

AUDITORS

Messrs Kalyaniwalla & Mistry, the Auditors of your Company, who hold office until the conclusion of the forthcoming Annual General Meeting being eligible, offer themselves for re-appointment.

APPRECIATION

Your Directors express their sincere thanks to all customers, charterers, vendors, investors, shareholders, shipping agents, bankers, insurance companies, protection and indemnity clubs, consultants and advisors for their continued support throughout the year. Your Directors also sincerely acknowledge the significant contributions made by all the employees for their dedicated services to the Company. Your Directors look forward to their continued support.

For and on behalf of the Board of Directors

K.M. Sheth Executive Chairman

Mumbai, May 03, 2012


Mar 31, 2011

The Directors are pleased to present the 63rd Annual Report on the business and operations of your Company and Audited Accounts for the financial year ended March 31, 2011.

FINANCIAL PERFORMANCE

The financial results of the Company for the financial year ended March 31, 2011 are presented below:

Rs. in Lakhs

2010-11 2009-10

Total Income 165928 224539

Total Expenditure 136407 181343

Profit before tax 29521 43196

Less : Provision for Income Tax 2800 3915

Profit for the year after tax 26721 39281

Add/(Less): Prior period adjustments (75) 294

Net Profit 26646 39575

Less: Transfer to Tonnage Tax Reserve Account under section 115VT of the Income-tax Act, 1961 4000 4000

22646 35575

Add : Surplus brought forward from previous year 288673 271177

Amount available for appropriation 311319 306752

Appropriations:

-Transfer to General Reserve 2700 4000

-Interim Dividend on Equity Shares 5330 -

-Proposed Dividend on Equity Shares 6853 12183

-Tax on Dividends 1660 1896

Balance Carried Forward 294776 288673

The total income for the year was recorded at Rs. 165928 lakhs as against Rs. 224539 lakhs in the previous year and a Net Profit after prior period adjustments of Rs. 26646 lakhs as against Rs. 39575 lakhs in the previous year.

DIVIDEND ON EQUITY SHARES

During the year, your Directors declared and paid interim dividend of Rs. 3.50/- per share resulting in an outflow of Rs.6215 lakhs (inclusive of tax on dividend).

Your Directors recommend a dividend of Rs. 4.50/- per share. The dividend will be paid after your approval at the ensuing Annual General Meeting. The aggregate outflow on account of the equity dividend for the year would be Rs. 13843 lakhs including tax on dividend. This represents a payout ratio of 51.95% (previous year 35.57%).

DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, Ms. Asha V. Sheth and Mr. Keki Mistry are liable to retire by rotation and being eligible, offer themselves for re-appointment. Necessary resolutions for their re-appointment have been included in the Notice convening the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Your Company was Corporate Governance compliant much before SEBI stipulated deadline in the year 2005. Your Company has complied with the mandatory provisions of Clause 49 of the Listing Agreement, relating to Corporate Governance. A separate section on Corporate Governance forms part of the Directors Report and the certificate from the Companys auditors confirming the compliance of conditions on Corporate Governance is included in the Annual Report.

Your Company has also complied with the ‘Corporate Governance -Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs, to the extent disclosed in the Annual Report.

RISK MANAGEMENT PROCESS

In accordance with requirements of Clause 49 of the Listing Agreement, your Company has established a Risk Management mechanism for its business risks. The programme is built upon the foundation of the existing risk management process and

practices of the Company and has evolved a structured approach for risk management to manage significant risks faced by your Company.

The Risk Management framework and reporting regime enables the Company to assess and demonstrate whether its significant risks are properly identified and controlled, and to potentially eliminate unnecessary control related overheads.

The Risk Management framework involves risk identification, assessment, treatment/action plan, review and reporting as a continuous process.

Your Directors believe that your Company has a sound risk assessment and minimisation mechanism in place.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 217 (2AA) of the Companies Act, 1956 the Board of Directors hereby state that:

i. in preparation of the annual accounts, the applicable accounting standards had been followed (alongwith proper explanation relating to material departures) and that there are no material departures;

ii. they have, selected the 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 of the Company for that period;

iii. 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;

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

COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988

Pursuant to Notification No. GSR 1029 dated 31.12.1988 your Company is not required to furnish prescribed information regarding conservation of energy and technology absorption, as Shipping Industry is not covered by the schedule to the said rules. The details of Foreign Exchange Earnings and Outgo are:

Rs. in lakhs

(a) Foreign Exchange earned on account of freight, charter hire earnings, etc. 114186

(b) Foreign Exchange used including operating expenses, capital repayment, down payments for 149786 acquisition of ships (net of loan), interest payment, etc.

PARTICULARS OF EMPLOYEES

Statement pursuant to Section 217(2A) of the Companies Act, 1956 (Act), read with the Companies (Particulars of Employees) Rules, 1975, is annexed to this Report. As contemplated by Section 219 of the Act, members are provided with abridged accounts. Members desirous of receiving the Statement pursuant of Section 217(2A) will be provided the same on receipt of written request from them.

AUDITORS

Messrs Kalyaniwalla & Mistry, the Auditors of your Company, who hold office until the conclusion of the forthcoming Annual General Meeting being eligible, offer themselves for re-appointment.

APPRECIATION

Your Directors express their sincere thanks to all customers, charterers, vendors, investors, shareholders, shipping agents, bankers, insurance companies, protection and indemnity clubs, consultants and advisors for their continued support throughout the year. Your Directors also sincerely acknowledge the significant contributions made by all the employees for their dedicated services to the Company.

Your Directors are grateful to the Government of India, Ministry of Shipping, Transchart, Ministry of Petroleum & Natural Gas, Ministry of Finance, Directorate General of Shipping, Port Authorities, Mercantile Marine Department and various other authorities for their co-operation. Your Directors look forward to their continued support.

For and on behalf of the

Board of Directors

K.M. Sheth

Executive Chairman

Mumbai, May 06, 2011


Mar 31, 2010

The Directors are pleased to present the 62nd Annual Report on the business and operations of your Company and Audited Accounts for the financial year ended March 31, 2010.

Financial Performance

The financial results of the Company for the financial year ended March 31,2010 are presented below:

RS. IN LAKHS

2009-10 2008-09

Total Income 224539 336474

Total Expenditure 181343 194505

Profit Before Tax 43196 141969

Less : Provision for Taxation

-Current Tax 3915 4375

- Fringe Benefit Tax - 125

Profit for the Year after Tax 39281 137469

Add: Prior period adjustments 294 1013

Net Profit 39575 138482

Less transfer to Tonnage Tax

Reserve Account under Section

115VTofthe Income-tax Act, 1961 000 23000

35575 115482

Add : Surplus brought forward from previous year 71177 183949

Amount available for Appropriation 306752 299431



Appropriations:

-Transfer to General Reserve 4000 14000

- Interim Dividend on Equity Shares - 12183

- Proposed Dividend on Equity Shares 12183 -

-Taxon Dividends 1896 2071

Balance Carried Forward 288673 271177

The total income for the year was recorded at Rs. 224539 lakhs as against Rs. 336474 lakhs in the previous year and a Net Profit after prior period adjustments of Rs. 39575 lakhs as against Rs. 138482 lakhs in the previous year.

Dividend on Equity Shares

Your Directors recommend a dividend of Rs. 8/- per share. The dividend will be paid after your approval at the ensuing Annual General Meeting. The aggregate outflow on account of the equity dividend for the year would be Rs. 14079 lakhs including tax on dividend. This represents a payout ratio of 35.57% (previous year 10.29%).



Management Discussion and Analysis

Company Performance

In FY 10, the Company recorded a total income of Rs. 224539 lakhs (previousyear Rs. 336474 lakhs) and earned a PBIDT of Rs. 92139 lakhs (previousyear Rs. 199182 lakhs).

Tanker Business Market Trend and Analysis

After enjoying several years of strong tanker markets, FY 10 turned out to be a turbulent year for tanker owners. During the first half of the year, earnings across various segments fell to levels wherein certain tanker owners were faced with the dilemma of operating their ships at or below the operating costs. This was particularly true in the clean and dirty products category.

Consequent to the collapse of global financial stability, in the first nine months of FY 10 average world oil demand dipped by about 0.45% or 0.4 million barrels per day over FY 09. This was largely led bytheOECD nations where demand dropped by staggering 4% or 1.9 million barrels per day during the same period. To respond to the crisis, OPEC cut its average oil supply by about 5.4% or 1.7 million barrels per day during FY 10.

The world tanker fleet increased to 441.40 million dwt at the end of the financial year, about 6% higher than the 416.90 million dwt at the beginning of FY 10. The fleet growth was more skewed in favour of the product tanker segment.

Floating storage provided some relief to the tanker owners in such a challenging environment. The main driver of this situation was an oversupplied market, with land-based crude oil storage largely full up and final demand for refined products well down. To tap the then prevailing contango (a term used when future prices are higher than spot prices) in the spot and the future oil and oil products prices, it is believed that traders withdrew close to 150 tankers out of the active fleet to store approx. 55 million barrels of crude oil and 98 million barrels of clean products at the peak of this activity sometime in November 2009.

Amongst other factors that provided some respite to the tanker owners were increased scrapping vis-a-vis FY 09, slow steaming and lower single hull tonnage utilization. Also, towards the end of the financial year, increased crude oil imports by China, especially from West Africa, improved the tonne-mile demand.

Company Performance

The tanker business accounted for around 83% of the Companys net revenues and 87% of the operating profits.

In FY 09-10, around 61% of the tanker earnings were derived from the period market. The crude tankers, inclusive of spot and period, earned an average TCY of $22,300/day (previous year $41,200/day). The product carriers, inclusive of spot and period, earned an average TCY of $18,200/day (previous year $23,700/day).

Tanker Fleet Changes

The tanker fleet of your Company stood at 32 tankers aggregating 2.48 million dwt, with an average age of 10.6 years (as of 31st March 2010) as against 31 tankers aggregating 2.3 million dwt with an average age of 9.9 years as on 31st March 2009.

During the year, your Company acquired one double hull 1996 built Medium Range Product tanker Jag Padma in January 2010.

During the year, your Company also took delivery of the following new building vessels:

- Double hull Long Range One (LR1) Product tanker Jag Amisha in April 2009

Double hull Long Range One (LR1) Product tanker Jag Aparna in June 2009

During the year, your Company delivered to the buyers 2007 built Medium Range Product tankers Jag Panna in July 2009 and Jag Payalin May 2009.

Subsequentlyyour Company delivered tothe buyers 1996 built Suezmax Crude tankerJag Layakin April 2010 which was contracted for sale in October 2009 and 1985 built General Purpose Product tanker Jag Palak in May 2010.

During FY 08-09, your Company had placed orders for two Suezmax tankers, both of which were to be delivered in 2011. These have been replaced with three Very Large Crude Carrier tankers to be delivered in early 2012. The total tanker new building order-book for your Company now stands at three vessels.

Outlook for the Tanker Market

Prospects for the tanker market in FY 2010-11 remain uncertain. As per IEA, world oil demand in 2010 is expected to improve to 86.6 million barrels per day, which is about 2% or 1.7 million barrels higher than that seen in 2009. While Chinas oil demand growth is expected to stay in the region of 6.5%-7%, a lot depends on a sustainable oil demand recovery in the OECD nations, specifically the US and the Europe. While last quarter of the previous financial year did see slight improvement in the US oil demand, economic problems in Greece and surrounding Euro zone can dramatically alter demand dynamics. Significant refining capacity will come on stream in the Middle East and Asia in 2010, which will take away market share from refiners in the US and the Europe. This will boost tonne mile demand for the product tanker tonnage going forward.

On the supply side, the global tanker orderbook currently stands at about 128.6 million dwt or 29.1% of the fleet at the end of March 2010, with about 50.40 million dwt scheduled for delivery between April and December 2010. However, last calendar year registered 25% slippage in tanker new building deliveries against that scheduled at the beginning of the year. Assuming similar slippage and complete single hull tonnage phase out in 2010, net tanker fleet is expected to grow at approx. 2-3% in the calendar year. Overall, barring seasonal volatility, average tanker earnings in FY 11 are expected to remain similar to those seen in FY 10.

After experiencing 5 years of a supercharged cycle (2003-08), the dry bulk business witnessed a slump not seen in a long time in the third quarter of FY 09. In an environment characterized by extreme global economic uncertainty and fear of an impending flood of new building deliveries, FY 10 performance was expected to be very poor. However, to the surprise of dry bulk ship owners, the year turned out to be much better than generally expected at the beginning. While on a yearly average basis, freight rates were around 40-50% lowerthan those seen in FY 09, they represented a significant improvement over the lows of December 2008.

Most dramatically in a year in which global steel production fell by about 110 mt (Calendar 2009 over Calendar 2008), Chinese steel production increased by 67 mt (13.5%). Consequently Chinese iron ore imports rose by a massive 184 mt (41%) to reach 628 mt. As a result despite unprecedented fall in imports by EL) and Japan, global seaborne iron ore trade actually increased in one of the least expected years. The substantial escalation in Chinese imports was supported by a couple of factors. The massive economic stimulus package created strong growth in demand for steel and energy. The low price of raw materials gave great incentives to secure large volumes at bargain prices from the international market. For most of the calendar year 2009, international iron ore and coal prices were lowerthan domestic Chinese prices. The surge in imports triggered congestion in ports with average waiting delays both in loadports in Australia and discharge time in China increasing sharply.

The dry bulk fleet stood at 475.60 million dwt as at the end of the financial year, about 12.3% higher than the 423.4 million dwt at the beginning of FY 10. Fleet growth would have been even higher had it not been for significant slippage (about 40% in calendar 2009) in new building deliveries and sizable scrapping of the older vessels.

Overall, FY 10 turned out to be better than expected year for the dry bulk market.

Company Performance

The dry bulk fleet contributed around 17% of the Companys net revenues and 13% of the operating profits. The average TCY for dry bulk vessels, inclusive ofspot and period, was approximately $20,300/day as compared to $39,800/day in the previous year.

Dry Bulk Fleet Changes

The dry bulk fleet stood at 6 vessels aggregating 0.41 million dwt, with an average age of 13.6 years (as of March 31, 2010) as against 8 vessels aggregating 0.50 million dwt with an average age of 13.3 years on March 31, 2009.

During the year, your Company delivered to the buyers the following vessels -

1984 built Handymax bulk carrier Jag Rani in May 2009 and 2000 built Handymax bulk carrier Jag Reena in June 2009

The total bulker new building order-book for your Company now stands at five vessels.

Outlook for the Dry Bulk Market

Chinese imports policy and actual new building deliveries will set the undertone for the dry bulk shipping market in short to medium term. On the back of increased domestic demand backed by greener pastures outside China, there is a potential for Chinese steel mills to increase steel production at home at a quicker rate than domestic consumption. However, a cause of concern exists as international prices for iron ore and coal have shot up nearly 50-60% and have turned fairly uncompetitive to Chinese domestic ore. If this propels higher consumption of the domestic ore in China, sea borne iron ore and coal trade can suffer severe impact at a time when the dry bulk shipping industry is already under pressure from potential new building deliveries.

Currently the dry bulk orderbook stands at 288.2 million dwt or 60.6% of the existing fleet with 109.5 million dwt scheduled for delivery in the balance of calendar year 2010. However, it must be pointed out that the above delivery schedule is fairly theoretical in nature as we have already seen 40% slippage in new building deliveries during the last calendar year.

Further extraneous factors such as trade patterns, congestion, natural calamities and weather changes can have their multiplier effect on dry bulk freight earnings.

Overall, it is expected that going forward new building deliveries are likely to cap any improvement in dry bulk earnings in the short to medium term and hence FY 11 earnings are likely to average lowerthan FY 10.

Asset Values

Second-hand values for modern and older tankers witnessed a drop of 10-20% over the year while modern and older dry-bulk carriers appreciated by 20-30% during the same period. New building prices for tankers also witnessed a drop of 15-25% during the year, while those for the dry bulk ships moved down by about 10-20%.

Risks and Concerns

Economic risk : Shipping is a global business whose performance is closely linked to the state of the global economy. Therefore, the earnings of your Company could be impacted negatively if the global economic situation does not improve over the longer term.

Volatility: Over and above the economic risks the shipping industry is impacted by numerous short term and regional factors, like political fallouts, weather changes, etc. This results in great amount of volatility in the freight market, which in turn impacts your Companys earnings.

Your Company has attempted to hedge some of this risk by entering into time charters for part of its fleet. For the year 2010-11, approximately half of the Companys operating days has been covered in this manner.

Single hull tankers in the fleet: 82% of your Companys tanker fleet is double-hulled. The single hull tankers in the fleet could be vulnerable to any further changes in regulations that may take place. However, the existing single hull tankers are likely to be phased out in the near future.

Shipboard personnel: Indian officers continue to be in great demand all over the world. Given the unfavorable tax status conferred on a seafarer sailing on Indian-flagged vessels, it is becoming increasingly difficult for your Company to source officers capable of meeting the modern day challenges of worldwide trading. This is more relevant for tanker personnel and may become a hindrance to growth.

OPEC action: If the OPEC decides to cut output further, this combined with large inventories and increased new building deliveries, could negatively impact the demand for tankers.

European financial crisis: The growing European debt crisis can further depress the already subdued demand in the Euro zone.

Chinese economy: As we have seen in the recent past that China has been the main driving factor of the shipping demand, in case there is a major downward shift in the Chinese economy, this along with increased new building deliveries could have negative impact on shipping.

Piracy Risk : With escalation of piracy incidents in Gulf of Aden and waters around Somalia and Indian Ocean, your Company is strictly enforcing its Code of Practice to mitigate the security risks of its vessels transiting through these waters. Self protective measures are being provided to vessels transiting through piracy prone waters, wherever feasible. Your Company is engaged in dialogue and communication with Indian Government and international industry associations through Indian National Shipowners Association in finding solution to and mitigating risk of piracy.

Consolidated Financial Statements

The Consolidated Financial Statements have been prepared by your Company in accordance with the requirements of the accounting standards issued by The Institute of Chartered Accountants of India. The audited Consolidated Financial Statements together with Auditors Report thereon form part of the Annual Report.

The group recorded a consolidated net profit after prior period adjustment of Rs. 51276 lakhs for theyear under review as compared to Rs. 141783 lakhs for the Company. The Networth of the group as on March 31, 2010 was Rs. 570977 lakhs as compared to Rs. 523210 lakhs for the Company.

Subsidiaries

Creatship (India) Limited

Greatship (India) Limited (GIL), having commenced operations in the offshore oilfield services sector in April 2006, is one of the Indias largest offshore oilfield services providers. Your Company has till date invested total of Rs. 111600 lakhs by subscribing to

861 lakhs equity shares totaling in value to Rs. 85200 lakhs and 880 lakhs preference shares totaling in value to Rs. 26400 lakhs.



GIL has recorded a profit after tax of Rs. 8218 lakhs on a standalone basis and Rs. 10563 lakhs on a consolidated basis for the year ended March 31, 2010 as compared to Rs. 5063 lakhs and Rs. 4472 lakhs respectively for the year ended March 31, 2009. The net worth of GIL for FY 10 was Rs. 132342 lakhs as compared to Rs.128313 lakhs for FY 09 on a consolidated basis.

GIL, alongwith its subsidiaries, is currently owning/operating 5 Platform Supply Vessels (PSVs), 8 Anchor HandlingTug cum Supply Vessels (AHTSVs), 1 Multipurpose Platform Supply & Support Vessel (MPSSVs) and 2 Jack up Rigs.

Out of the 4207000 warrants (convertible into equity shares) of GIL, allotted to the promoter directors of the Company in FY 07-08, 2103500 warrants were converted into equal nos. of equity shares on April 30, 2010. The balance 2103500 warrants which were not converted lapsed. Upon allotment of the said equity shares, your Companys holding is 97.62% of the total equity share capital of GIL. GIL has now ceased to be a wholly owned subsidiary of the Company. During FY 10, GIL granted 492200 stock options under various Employee Stock Options Schemes. As on date GIL has 1554100 stock options outstanding.

As part of its growth plans, GIL is from time to time looking at various options to raise finances for its business and proposes to raise funds through an initial public offering. Any offering and its timing would be subject to market conditions, obtaining necessary shareholder and regulatory approvals. GIL has filed a draft red herring prospectus with the Securities and Exchange Board of India on May 12,2010.

GIL has the following wholly owned subsidiaries:

a) Greatship Global Holdings Ltd., Mauritius

b) Greatship Global Offshore Services Pte. Ltd., Singapore

c) Greatship Global Energy Services Pte. Ltd., Singapore

d) Greatship DOF Subsea Projects Private Limited

Other subsidiaries

Apart from GIL and its subsidiaries, your Company has the following wholly-owned subsidiaries :

a) The Great Eastern Shipping Co. London Ltd.

b) The Greatship (Singapore) Re. Ltd.

c) The Great Eastern Chartering LLC (FZC).

Subsidiaries accounts

The Central Government, in exercise of the powers conferred by sub-section (8) of Section 212 of the Companies Act, 1956, has directed that the provisions contained in sub-section(l) of Section 212 of the Companies Act, 1956 shall not apply in respect of the subsidiaries of the Company for the financial year ended March 31, 2010. Accordingly, the annual accounts of the subsidiary companies have not been attached to the Balance Sheet of the Company as at March 31, 2010. The annual accounts of the subsidiary companies and the related detailed information will be made available to the investors of the Company and subsidiary companies seeking such information at any point of time. The annual accounts of the subsidiary companies are also available for inspection, during business hours, at the Registered Officeof the Company and at the head offices of the respective subsidiary companies. As per the terms of the exemption letter, a statement containing brief financial details of the Companys subsidiaries for the year ended March 31,2010 is included in the Annual Report.

Debt Fund Raising

During the year, the Company has raised funds amounting to Rs. 156079 lakhs as against Rs. 37098 lakhs during the previous financial year. Apart of the debt was raised to fund capital expenditure for vessels delivered, and new-building instalments paid, during the year. Apart from this, Rs. 120000 lakhs has been raised by way of Non-Convertible Debentures with a view to fund the remaining order-book, and also to have cash in reserve for any opportunities that may arise.

Due to this level of borrowings, the Companys gross debt: equity ratio was 0.68: land net (of cash) debt: equity ratio was 0.04:1 as on March 31,2010.

Quality, Safety, Health & Environment

During the year, the quality management system of your Company was audited and certified to updated ISO 9001:2008 standard.

The management system now addresses the requirements of Environmental Management System to ISO 14001: 2004 and Occupational Health and Safety Management System to ISO 18001: 2008 and your Company would be seeking certification to these standards in next financial year.

Training of Floating Staff

Your Company has initiated several forms of training programmes for the floating staff and these range from class room training ashore to video / computer based training on board ships to shipboard training by visiting trainers. From this financial year the Company has initiated a compulsory shore-based training programme for all fresh Class IV Engineers and 2nd Mate COC holders prior to placing them on board for the first time as officers.

Introduction of Periodical Safety Campaign

Since June 2009 your Company has initiated a system of bimonthly safety campaign covering safety and pollution prevention aspects with a view to maintain a pro-active safety culture and to assess the operational readiness of the equipments/systems on board the Companys fleet of vessels. Some of the safety campaigns held include Personal Life Saving Equipment and Survival Crafts, Windlass and Mooring Equipment, etc.

Reduction of Green House Gas Emission from Ships

Your Company has introduced a system for measurement of C02 emission per tonne-mile of cargo moved by the ships as per MEPC.l/Circ.684 - Guidelines for Voluntary Use of the Ship Energy Efficiency Operational Indicator (EEOI). The information is available on line for analysis and to facilitate initiating strategy for reduction of emission and consequently fuel oil consumption. The IT based programme has been developed in-house.

AMVER Award from US Coast Guard

During the year 19 vessels of your Company were conferred award by United States Coast Guards in recognition of these vessels participation and contribution under their Automated Mutual-Assistance Vessel Rescue System (AMVER). It is a unique, computer- based and voluntary global ship reporting system used worldwide by search and rescue authorities to arrange for assistance to persons in distress at sea. With AMVER, rescue coordinators can identify participating ships in the area of distress and divert the best-suited ship or ships to respond. AMVERs mission is to quickly provide search and rescue authorities, on demand, accurate information on the positions and characteristics of vessels near a reported distress.

H1N1 Virus Threat

As a proactive measure, immediately at the outbreak of H1N1 Virus infection, your Company had engaged a medical expert of eminence and had developed and issued procedure detailing preventive actions and combating actions for H1N1 virus attacks and issued to the fleet. Necessary medicines and medical equipments have been also provided on vessels.

Internal Control Systems and their Adequacy

Your Company has instituted internal control systems which are adequate for the nature of its business and the size of its operations. In the beginning of the year, the scope of the audit exercise and the key business processes and selected risk areas to be audited are decided in consultation with the Audit Committee. The Internal Audit is carried out by a firm of external Chartered Accountants and covers all departments. All significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee comprises of 4 Independent Directors with the Chairman being a person well qualified and conversant with matters pertaining to Accounts and Finance. The Audit Committee met five times during the year.

Role of Information Technology

As a part of its strategy to align IT with Business, your Company attempts to introduce new technology solutions to improve operating efficiency and quality and reduce operational cost. The major initiatives that have been undertaken this year are discussed below.

* Disaster Recovery (DR) set up at Hyderabad & Business Continuity

- Your Company has successfully set up a DRdata center in a 3rd party premises at Hyderabad with an objective to fulfill the Business Continuity, in case of any disaster to our current data center at Corporate office.

- Your Company has implemented a technology called Server Virtualization at the time of DR set up which has saved a significant amount of cost vis-a-vis a set up of similar capacity without Virtualization. .

* New Communication system with Ship .-

- Your Company has implemented a new communication system in more than 50% of the current fleet (others are in progress) which has resulted, in significant savings in ship to shore communication cost, besides helping in smoother operations.

* YourCompany has developed in-house and implemented a new software namely LIVIS (Live Vessel Information System) whose objective is to make all relevant data available to employees from one single central place, based on their accessing authority defined in the system for day to day work. The operations, technical and OST department have gained huge efficiency and increased productivity out of this system.

Human Resources

One of the key areas of focus for the HR function during the year was improving the performance management system both for shore and floating staff.

Mid-term review was introduced for shore office employees to enhance the rigour of the process primarily through feedback and meaningful goal setting. The intervention is expected to result in better engagement and alignment of employees.

An improved online appraisal system was implemented for the top 2 ranks of the floating staff. This initiative has improved timely completion, neutralize biases and facilitate feedback mechanism. A similar process has been launched for rest of the officers from September 2009. During the year, the Company ran several leadership essentials workshops for the senior ranks.

A 360 degree feedback titled Total Perspective was initiated in the month of January for all senior and middle management. The multi rater feedback process was combined with psychometric instrument Workplace big 5 to aid reflection, self awareness and insights to ones own behavior.

Simultaneously an online team climate survey Team Perspective was carried out. The survey focused on clarity of roles, team flexibility, performance management, recognition, etc. The results of the survey were shared with respective teams.

The Social Cafe initiatives such as quizzes, sports and cultural events witnessed enthusiastic response from employees. This approach has helped the Company to harness informal network and build a positive social fabric. The Company had record number of participants for Mumbai Marathon this year.

Your Company had employee strength of 193 on shore and 295 floating as on March 31,2010.

Directors

Mr. Vineet Nayyar and Mr. Rusi N. Sethna retire by rotation. Mr. Nayyar, being eligible offers himself for re-appointment. On account of his advanced age, Mr. Sethna did not offer himself for re-appointment. Mr. Sethna has been associated as a Director of the Company since 1974. His active participation and contribution at the meetings of the Board and various Committees have been invaluable. Your Directors place on record their appreciation for the valuable guidance and support extended by him during his tenure as a Director.

Mr. K. V. Kamath was appointed as an Additional Director on the Board of Directors of the Company with effect from May 22,2010 as an Independent Director. He ceases to be a Director on the date of the 62nd Annual General Meeting. Notice under Section 257 of the Companies Act, 1956 has been received in respect of his appointment as Director on the Board.

The terms of appointment of Mr. K. M. Sheth as Executive Chairman and Mr. Bharat K. Sheth as Deputy Chairman & Managing Director expire in September 2011 and that of Mr. Ravi K. Sheth as Executive Director expires in January 2011. It was thought administratively convenient to terminate their existing terms with mutual consent and to re-appoint them for a period of 5 years with effect from April 01,2010 on fresh terms, particulars of which are set out in the Notice of 62nd Annual General Meeting.

Corporate Governance

Your Company was Corporate Governance compliant much before SEBI stipulated deadline in the year 2005. Your Company has complied with the mandatory provisions of Clause 49 of the Listing Agreement, relating to Corporate Governance. A separate section on Corporate Governance forms part of the Directors Report and the certificate from the Companys auditors confirming the compliance of conditions on Corporate Governance is included in the Annual Report.

The Company has also complied with the Corporate Governance-Voluntary Guidelines 2009 issued by the Ministry of Corporate Affairs, to the extent disclosed in the Annual Report.

Risk Management Process

In accordance with requirements of Clause 49 of the Listing Agreement, your Company has established a Risk Management programme for its business risks. The programme is built upon the foundation of the existing risk management process and practices of the Company and has evolved a structured approach for risk management to manage significant risks faced by your Company.

The Risk Management framework and reporting regime enables the Company to assess and demonstrate whether its significant risks are properly identified and controlled, and to potentially eliminate unnecessary control related overheads.

The Risk Management framework involves risk identification, assessment, treatment/action plan, review and reporting as a continuous process.

Your Directors believe that your Company has a sound risk assessment and minimisation procedure in place.

Directors Responsibility Statement

Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 the Board of Directors hereby state that:

i. in preparation of the annual accounts, the applicable accounting standards had been followed (alongwith proper explanation relating to material departures) and that there are no material departures;

ii. they have, selected the 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 of the Company for that period;

iii. they 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;

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

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

Pursuant to Notification No. GSR 1029 dated 31.12.1988 your Company is not required to furnish prescribed information regarding conservation of energy and technology absorption, as Shipping Industry is not covered by the schedule to the said rules. The details of Foreign Exchange Earnings and Outgo are:

RS. IN LAKHS

(a) Foreign Exchange earned on account of freight, charter hireearnings, etc. 162686

(b) Foreign Exchange used including operating expenses, capital repayment, down payments for acquisition of 157886 ships (net of loan), interest payment, etc.

Particulars of Employees

Statement pursuant to Section 217(2A) of the Companies Act, 1956 (Act), read with the Companies (Particulars of Employees) Rules, 1975, is annexed to this Report. As contemplated by Section 219 of the Act, members are provided with abridged accounts. Members desirous of receiving the Statement pursuant of Section 217(2A)will be provided the same on receipt of written request from them.

Auditors

Messrs Kalyaniwalla & Mistry, the Auditors of your Company, who hold office until the conclusion of the forthcoming Annual General Meeting being eligible, offer themselves for re-appointment.

Appreciation

Your Directors express their sincere thanks to all customers, charterers, vendors, investors, shareholders, shipping agents, bankers, insurance companies, protection and indemnity clubs, consultants and advisors for their continued support throughout the year. Your Directors also sincerely acknowledge the significant contributions made by all the employees for their dedicated services to the Company.

Your Directors are grateful to the Government of India, Ministry of Shipping, Transchart, Ministry of Petroleum & Natural Gas, Ministry of Finance, Directorate General of Shipping, Port Authorities, Mercantile Marine Department and various other authorities for their co-operation. Your Directors look forward to their continued support.

For and on behalf of the Board of Directors

K.M. Sheth

Executive Chairman

Mumbai, May 22, 2010

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