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Notes to Accounts of Great Eastern Shipping Company Ltd.

Mar 31, 2017

The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from 1st April, 2016, with a transition date of 1st April, 2015. The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS 101 requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements be applied retrospectively and consistently for all financial years presented. Accordingly, the Company has prepared financial statements which comply with Ind AS for the year ended 31st March, 2017, together with the comparative information as at and for the year ended 31st March, 2016 and the opening Ind AS Balance Sheet as at 1st April, 2015, the date of transition to Ind AS.

In preparing these Ind AS financial statements, the Company has availed certain exemptions and exceptions in accordance with Ind AS 101, as explained below. The resulting difference between the carrying values of the assets and liabilities in the financial statements as at the transition date under Ind AS and Previous GAAP have been recognized directly in equity (retained earnings or another appropriate category of equity). This note explains the adjustments made by the Company in restating its financial statements prepared under previous GAAP, including the Balance Sheet as at 1st April, 2015 and the financial statements as at and for the year ended 31st March, 2016.

Mandatory Exceptions from retrospective application

The Company has applied the following exceptions to the retrospective application of Ind AS as mandatorily required under Ind AS 101:

1. Estimates

On assessment of the estimates made under the Previous GAAP financial statements, the Company has concluded that there is no necessity to revise the estimates under Ind AS, as there is no objective evidence of an error in those estimates. However, estimates that were required under Ind AS but not required under Previous GAAP are made by the Company for the relevant reporting dates reflecting conditions existing as at that date.

2. Classification and measurement of financial assets

The classification of financial assets to be measured at amortised cost or fair value through Other Comprehensive Income is made on the basis of the facts and circumstances that existed on the date of transition to Ind AS.

Optional Exemptions

3. Deemed cost for property, plant and equipment (including ships under construction)(as per Ind AS requirement along with Ind AS 101 exemption)

The Company has used fair value as deemed cost for certain items of Property, Plant & Equipment (PPE) in accordance with the exemptions available under Ind AS 101 with the resultant impact being accounted for in reserves. The consequent impact on change in depreciation is reflected in the Statement of Profit and Loss. In other cases where items of PPE have not been fair valued, the Company has restated their written down values as per provisions under Ind AS 16 with restrospective effect.

4. Component Accounting (as per Ind AS requirement along with regrouping)

The Company has elected to account dry dock expenditure as a component of Fleet with useful life different than Fleet (Main). The same was earlier expensed out in the Statement of Profit and Loss.

The Company has elected to account Grabs as a component of Fleet with useful life different than Fleet (Main). The same was earlier accounted under the head ''Plant and Equipment''.

5. Long Term Foreign Currency Monetary Items (as per Ind AS 101 exemption)

The Company has elected to continue accounting for exchange differences arising from translation of long-term foreign currency monetary items recognized in the financial statements for the period ending immediately before the beginning of the first Ind AS financial reporting period as per the previous GAAP,

6. Investments in Equity of Subsidiaries (as per Ind AS 101 exemption)

The Company has elected to measure its investments in equity of subsidiaries at the previous GAAP carrying amount as on the date of transition to Ind AS i.e. April 01, 2015.

Transition to Ind AS - Reconciliations

The following reconciliations provide the explanations and quantification of the differences arising from the transition from Previous GAAP to Ind AS in accordance with Ind AS 101 :

(iii) Adjustments to Statement of Cash Flows :

There were no material differences between the Statement Of Cash Flows presented under Ind AS and the Previous GAAP,

Notes : A. Property, plant & equipment :

The Group, has used fair value as deemed cost for certain items of Property, Plant & Equipment in accordance with the exemptions available under Ind AS 101 with the resultant impact being accounted for in reserves. The consequent impact on change in depreciation is reflected in the Statement of Profit and Loss.

B. Fair value adjustment to financial instruments :

Investment in mutual funds are restated on April 1, 2015 (transition date) at fair value under Ind AS as against accounting at cost or market value (whichever is lower) under previous GAAP. This has resulted in an increase in equity by Rs. 71.45 crores as on March 31, 2016 and as on April 1, 2015.

Currency swaps derivative instruments entered against the debt exposure were accounted under previous GAAP adopting hedge accounting by matching the offsetting cash flows of the currency swaps against highly probable forecast revenues in foreign currency. But due to lack of economic relationship between these two types of cash flows, the said currency swaps derivative instruments do not qualify for hedge accounting under Ind AS. Hence, the hedge accounting for the said currency swaps derivative instruments is discontinued under Ind AS. Accordingly, the gain or loss on remeasurement of fair values of the said instruments will now be recognized in the Statement of Profit and Loss under Ind AS. This has resulted in an increase in equity by Rs.116.42 crores as on March 31, 2016 and by Rs.0.74 crores as on April 1, 2015.

C. Equity dividend including dividend tax :

Under Ind AS, dividend to holders of equity instruments is recognized as liability in the period in which the obligation to pay is established. Under previous GAAP, dividend payable was recorded as a liability in the period to which it related. Accordingly the said liability recognized under previous GAAP is derecognized under Ind AS as on April 1, 2015.

D. Investment in Redeemable Preference Shares :

Investment in preference shares is restated as at April 1, 2015 (transition date) incorporating effective interest rate (EIR) under Ind AS as against accounting the investment at cost under previous GAAP. Calculation of EIR takes into account premium on redemption and dividend. Interest will be accrued at each quarter end at EIR as against the accounting of dividend and premium on redemption on receipt basis under previous GAAP,

E. Derivative transactions :

Under Ind AS 109, all derivatives are required to be fair valued through Profit or Loss (FVTPL) unless they are designated as hedging instruments and tested for effectiveness. Consequently, USD/JPY swaps which were earlier treated as integral part of JPY loan were revalued and the exchange difference on principal was capitalized under previous GAAP, are now treated as derivative instruments under Ind AS.

F. Incomplete voyage accounting :

Revenues and expenses in respect of incomplete voyages at the end of the accounting period, are recognized in the Statement of Profit and Loss under Ind AS as detailed in the accounting policies stated above. Under the previous GAAP, the same were recognized in the Statement of Profit and Loss only on completion of the voyage.

G. Others :

Others comprises of adjustments on account of capitalization of borrowing costs (Rs. 7.80 crores), capitalization of dry dock expenditure as component of fleet (Rs. 0.82 crores) and Employee Benefits Actuarial loss transferred from the Statement of Profit and Loss to Other Comprehensive Income (Rs. 1.34 crores) as at March 31, 2016.

Others comprises of adjustments on account of capitalization of borrowing costs (Rs. 7.80 crores) and capitalization of dry dock expenditure as component of fleet (Rs. 0.82 crores) as at April 1, 2015.

a) On transition to Ind AS, the Company has elected to measure certain items of Property, Plant and Equipment at the date of transition to Ind AS at their fair values and use those fair values as its deemed cost on the date of transition in accordance with the exemptions available under Ind AS 101, the resultant impact being accounted for in reserves. The consequent impact on change in depreciation is reflected in the Statement of Profit and Loss. In other cases where items of PPE have not been fair valued, the Company has restated their written down values as per provisions under Ind AS 16 with restrospective effect.

The aggregate of the fair values used as deemed cost as on the date of the transition and the aggregate adjustments to the carrying amount reported under previous GAAP are as under:

b) The ownership flats and buildings include Rs.11,760 (Previous Year : Rs.11,760) being value of shares held in various co-operative societies.

c) The deed of assignment in respect of the Company''s leasehold property at Worli is yet to be transferred in the name of the Company.

d)Deductions under Fleet represent vessel acquired and sold on the same day and hence no depreciation has been charged thereon during the year ended March 31, 2016.

e) Other adjustments comprise of fluctuation of the rupee against foreign currencies and losses/(gains) on hedging contracts (including on cancellation of forward covers), relating to long term monetary items for acquisition of depreciable capital assets and losses/(gains) on forward contracts for hedging capital commitments for acquisition of depreciable assets.

f) Fleet with a carrying amount of Rs.3012.15 crores (as at March 31, 2016 : Rs.2222.82 crores; as at April 1, 2015 : Rs.2657.15 crores) and buildings with a carrying amount of Rs.0.26 crore (as at March 31, 2016 : Rs.0.26 crore; as at April 1, 2015 : Rs.0.27 crore) have been mortgaged to secure borrowings of the Company (Refer Note 16). The Company is not allowed to mortgage these assets as security for other borrowings or to sell them to another entity, without approval of the lenders / security trustees.

a) During the year ended March 31, 2016, the Company wound up its wholly owned subsidiary The Great Eastern Shipping Co. London Ltd.

b) During the year ended March 31, 2016, the terms of the outstanding 4,45,00,000 preference shares issued by the subsidiary company Greatship (India) Ltd. have been modified by increasing the rate of dividend from 7.5% to 21.75% p.a. effective financial year 2015-16 and deferring the redemption of the said shares in four equal installments from April 1, 2021 to April 1, 2024

The subsidiary company has an option of early redemption by providing one month''s notice to the Company. The redemption can be in part or in full subject to a minimum of 25 lakhs shares at a time. In case of early redemption, the premium on redemption would be determined at such time so as to provide an effective yield to maturity of 7% to the Company. The cumulative redeemable preference shares do not contain any equity component.

c) 22.50% 6,06,24,000 cumulative redeemable preference shares are redeemable at a premium of ''20 per share in four equal annual installments from April 1, 2018 to April 1, 2021.

The subsidiary company has an option of early redemption by providing one month''s notice to the Company. Early redemption can be in part or in full subject to a minimum of 25 lakhs shares at a time. The cumulative redeemable preference shares do not contain any equity component.

NOTE 7 : INVENTORIES

(Valued at lower of cost and net realizable value)

Note :

The cost of inventories recognized as an expense during the year was Rs.172.24 crores (Previous Year : Rs.255.68 crores)

Note :

Mutual Funds aggregating to Rs.152.64 crores (as at March 31, 2016 : Rs. 280.02 crores; as at April 1, 2015 : Rs.180.95 crores) of the above have been placed under lien with banks for facilities given by them.

i) Trade receivables are recognized at their original invoiced amounts which represent their fair values on initial recognition. Trade receivables are considered to be of short duration and are not discounted. The carrying values are assumed to approximate their fair values. Concentration of credit risk with respect to trade receivables are limited, due to the Company''s customer base being large and diverse. Historical experience of collection of receivables also indicates that credit risk is low. All trade receivables are reviewed and assessed for default on a quarterly basis. Trade receivables are due from customers having high credit quality and strong financials. In determining the allowances for doubtful trade receivables, the Company has used a practical expedient by computing the expected credit loss allowance for trade receivables based on historical credit loss experience and is adjusted for forward looking information. The expected credit loss allowance is based on the ageing of the receivables.

The movement in expected credit loss during the year is as follows :

ii) Trade receivables are subject to confirmation, reconciliation and adjustments, if any.

a) Terms/Rights attached to Equity Shares :

The Company has only one class of equity shares having a face value of Rs.10 each. Each holder of equity shares is entitled to one vote per share. The Company declares and pays dividends in Indian rupees. Interim dividend is paid as recommended by the Board of Directors.

In the event of liquidation, the equity shareholders are eligible to receive remaining assets of the Company, after distribution of all preferential amounts in proportion to their shareholding.

b) Details of shareholders holding more than 5% equity shares in the Company :

c) There are no shares reserved for issue under options and contracts or commitments for the sale of shares.

d) For the period of five years immediately preceding the date as at which the Balance Sheet is prepared :

i) No shares were allotted pursuant to contracts without payment being received in cash.

ii) No bonus shares have been issued.

iii) 15,45,019 equity shares have been bought back during the financial year 2013-14.

e) There are no securities convertible into equity/preference shares.

f) Under orders from the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992, the allotment of 2,53,522 (as at March 31, 2016 : 2,53,522; as at April 1, 2015 : 2,53,522) rights equity shares of the Company have been kept in abeyance in accordance with Section 126(b) of the Companies Act, 2013 till such time as the title of the bonafide owner is certified by the concerned Stock Exchanges. Additional 40,608 (as at March 31, 2016 : 40,608; as at April 1, 2015 : 40,608) shares have also been kept in abeyance for disputed cases in consultation with the Bombay Stock Exchange.

NOTE 8 : OTHER EQUITY

A. Summary Of Other Equity

(Refer Statement of Changes in Equity for detailed movement)

B. Nature of Reserves :

i) Capital Reserve : Capital Reserve created on cancellation of convertible warrants in financial year 2008-09.

ii) Securities Premium Reserve : Securities Premium Reserve is used to record the premium on issue of securities of the Company. The reserve is utilized in accordance with the provisions of the Companies Act, 2013.

iii) General Reserve : General Reserve is used from time to time to transfer profits from Retained Earnings for appropriation purposes.

iv) Tonnage Tax Reserve : Tonnage Tax Reserve created as per the provisions of the Section 115VT of the Income-tax Act, 1961, whereby a minimum of 20% of book profits from the tonnage tax activities are to be utilized for acquiring new ships within 8 years.

v) Retained Earnings : Retained Earnings are the profits that the Company has earned till date, less any transfers to General Reserves, Tonnage Tax Reserves, dividends or other distributions paid to shareholders.

During the year ended March 31, 2017, the Board of Directors declared and paid an interim dividend of '' 3.60 per equity share aggregating to Rs.60.58 crores including dividend distribution tax.

In respect of the year ended March 31, 2017, the Board of Directors propose that a dividend of '' 6.50 per equity share be paid on fully paid equity shares. This equity dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. The total outflow on this account is estimated to be Rs.117.96 crores including dividend distribution tax.

Retained Earnings as at April 1, 2015 (date of transition) includes transfer from Cash Flow Hedging Reserve as detailed in Note (vi) below.

vi) Cash Flow Hedging Reserve : The Cash Flow Hedging Reserve represents the cumulative effective portion of gains or losses arising on changes in fair value of designated portion of hedging instruments entered into for cash flow hedges. The cumulative gain or loss arising on changes in fair value of the designated portion of the hedging instruments that are recognized and accumulated under the heading of Cash Flow Hedging Reserve will be reclassified to the Statement of Profit and Loss only when the hedged transaction affects the profit or loss.

Currency swaps derivative instruments entered against the debt exposure were accounted under previous GAAP adopting hedge accounting by matching the offsetting cash flows of the currency swaps against highly probable forecast revenues in foreign currency. The hedge accounting for the said currency swaps derivative instruments is discontinued under Ind AS since said currency swaps derivative instruments do not qualify for hedge accounting under Ind AS due to lack of economic relationship between these two types of cash flows. Accordingly, the balance in Cash Flow Hedging Reserve pertaining to the said currency swaps derivative instruments amounting to Rs.914.40 crores as at April 1, 2015 (transition date) is transferred to Retained Earnings.

vii) Foreign Currency Monetary Item Translation Difference Account : Exchange differences arising on translation of long term foreign currency monetary items not related to depreciable assets are transferred to Foreign Currency Monetary Item Translation Difference Account and shown in the financial statements under Other Equity and amortized over the balance life of such assets / liabilities by recognition as income / expenditure, but not beyond March 31, 2020 as per the requirement of notification issued by Ministry of Corporate Affairs.

i) 9.80% 2400 Secured Redeemable Non-Convertible Debentures of Rs.10,00,000 each, redeemable on July 3, 2019, are secured by exclusive charge on specified ships with 1.25 times cover on the book value of ships and additional security by way of mortgage on immovable property of the Company.

ii) The Company maintains unencumbered assets (including cash and cash equivalents) of market value not less than outstanding face value amount of the unsecured debentures.

iii) Foreign currency loans availed from banks carry interest rates of LIBOR plus 35 to 150 bps for USD loans and LIBOR plus 62 bps for JPY loans. Some loans are on fixed rates basis. The principal repayments are due quarterly, half yearly and annually. These loans are secured by mortgage of specified ships and a financial covenant to maintain unencumbered assets.

iv) The terms of repayments are as under :

v) Term Loans from bank shown under current borrowings represent Buyer''s Credit for a minimum tenure of 6 months repayable on demand.

vi) The Company does not have any continuing default in repayment of loans and interest as at the reporting date.

vii) No loans have been guaranteed by Directors or others.

The Company has recognized the following provisions in its accounts in respect of obligations arising from past events, the settlement of which is expected to result in an outflow embodying economic benefits.

Notes :

i) According to the information available with the Company regarding the status of the suppliers as defined under the ''Micro, Small and Medium Enterprises Development Act, 2006'', no amount is overdue as at the reporting date, to Micro and Small Enterprises on account of principal interest.

ii) Trade payables are recognized at their original invoiced amounts which represent their fair values on initial recognition. Trade payables are considered to be of short duration and are not discounted and the carrying values are assumed to approximate their fair values.

iii) Trade payables are subject to confirmation, reconciliation and adjustments, if any.

The weighted average capitalization rate on funds borrowed is 4.76% p.a. (Previous Year : 4.97% p.a.).

Pursuant to the introduction of Section 115VA under the Income-tax Act, 1961, the Company has opted for computation of its income from shipping activities under the Tonnage Tax Scheme. Thus, income from the business of operating ships is assessed on the basis of the Deemed Tonnage Income of the Company and no deferred tax is applicable to such income as there are no timing differences. The timing differences in respect of the non-tonnage activities of the Company are not material, in view of which provision for deferred taxation is not considered necessary.

NOTE 9: EMPLOYEE BENEFIT PLANS

A. DEFINED CONTRIBUTION PLANS :

The Company has recognized the following amounts in the Statement of Profit and Loss for the year :

(i) General description of Significant Defined Contribution Plans :

Provident Fund :

In accordance with Indian law, all eligible employees of the Company are entitled to receive benefits under the provident fund, a defined contribution plan in which both the employee and employer (at a determined rate) contribute monthly. The Company contributes as specified under the law to the Provident Fund where set up as a trust is liable for future provident fund benefits to the extent of its annual contribution and any shortfall in fund assets based on government specified minimum rates of return relating to current period service and recognizes such contributions and shortfall, if any, as an expense in the year incurred. There is no deficiency in the interest cost as the present value of the expected future earnings on the fund is greater than the expected amount to be credited to the individual members based on the expected guaranteed rates of interest.

Seamen''s Provident Fund :

The Company''s contribution towards Provident Fund in respect of seamen i.e. crew who sail on Company''s ships is paid to the Seamen''s Provident Fund as per the National Maritime Board Agreement.

Seamen''s Annuity Fund :

The Company''s contribution towards Annuity in respect of seamen is paid to the Seamen''s Annuity Fund as per the National Maritime Board Agreement.

Seamen''s Rehabilitation Fund :

The Company''s contribution towards rehabilitation in respect of seamen is paid to the National Maritime Board Rehabilitation and Welfare Trust as per the National Maritime Board Agreement.

Seamen''s Gratuity Fund :

The Company''s contribution towards Gratuity in respect of seamen is paid to the Seafarer''s Welfare Fund Society as per the National Maritime Board Agreement.

Superannuation Fund :

In addition to gratuity benefits, employees have the option to become a member of the Superannuation Fund Trust set up by the Company and receive benefits there under. It is a defined contribution plan. The Company makes contributions to the trust in respect of the said employees until their retirement or resignation. The Company recognizes such contributions as an expense when incurred. The Company has no further obligation beyond its contribution.

National Pension Scheme (NPS) :

NPS is an additional option for offering retirement benefits to the employees. NPS is designed on defined contribution basis wherein the Company contributes to the employees account.

There is no defined benefit that would be available at the time of exit from the system and the accumulated wealth depends on the contributions made and the income generated from the investment of such wealth. The Company recognizes such contributions as an expense when incurred. The Company has no further obligation beyond its contribution.

B. Defined Benefit Plans and Other Long Term Benefits :

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

(viii) General Description of Significant Defined Benefit Plans :

Gratuity Plan :

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

The Company''s investment strategy in respect of its funded plans is implemented within the framework of the applicable statutory requirements. The plans expose the Company to a number of actuarial risks such as investment risk, interest rate risk, longevity risk and inflation risk. The Company does an Asset - Liability matching study each year in which the consequences of the strategic investment policies are analysed in terms of risk and return profiles.

Retirement Benefit Scheme including Pension Plan :

Under the Company''s Retirement Benefit Scheme for the Whole-time Directors, all the eligible Whole-time Directors are entitled to the benefits of the scheme only after attaining the age of 62 years, except for retirement due to physical disability or death while in office, in which case, the benefits shall start on his retirement due to such physical disability or death. The benefits are in the form of monthly pension @ 50% of his last drawn monthly salary subject to maximum of Rs.1.25 crores p.a. (Previous Year : Rs.1.25 crores p.a.) during his lifetime. If he predeceases the spouse, she will be paid monthly pension @ 50% of his last drawn pension during her lifetime. Benefits include reimbursement of medical expenses for self and spouse, overseas medical treatment up to Rs.0.50 crore for self / spouse, office space including office facilities in the Company''s office premises. Benefits also include use of Company''s car including reimbursement of driver''s salary and other related expenses during his lifetime and in the event of his demise, his spouse will be entitled to avail the said benefit during her lifetime.

Leave Encashment :

All eligible union grade employees had an option to freeze the accumulated leave balance as on June 30, 2008. Such frozen accumulated leave balance will be encashed as per the last drawn basic salary at the time of superannuation, death, permanent disablement, resignation or promotion to the non-union category.

With effect from April 1, 2012, all eligible non-union employees have an option to freeze their leave accumulation days on 30th June every year and such frozen accumulated leave balance will be encashed as per the basic salary for the month of June of the relevant year for which leave was frozen at the time of superannuation, death, permanent disablement or resignation.

For all union and non-union grade employees, maximum leave that can be carried forward is 15 days.

The leave over and above 15 days is encashed and paid to employees on June 30th of every year.

NOTE 10 : SEGMENT INFORMATION

The Company is considered to be a single segment company engaged in shipping business. Consequently, the Company has in its primary segment only one reportable business segment. As per Ind AS 108, ''Operating Segments'' if a single financial report contains both consolidated financial statements and the separate financial statements of the parent, segment information needs to be presented only on the basis of the consolidated financial statements. Accordingly, information required to be presented under Ind AS 108, ''Operating Segments'' has been given in the consolidated financial statements.

(c) Other related parties :

Employees'' Benefit Plans :

The Provident Fund of The Great Eastern Shipping Company Ltd

The Great Eastern Shipping Co Ltd Employees Gratuity Fund

The Great Eastern Shipping Co Limited Executives Superannuation Fund

The Great Eastern Shipping Co Ltd Floating Staff Superannuation Fund

The Great Eastern Shipping Co Ltd Staff Superannuation Fund

i) During the year ended March 31, 2016, the Company transferred Served from India Scheme (SFIS) License worth Rs.1.00 crore to its wholly owned subsidiary Greatship (India) Ltd.

ii) The above includes, provision for retirement pension benefits payable Rs.2.68 crores (Previous year : Rs.0.57 crore) on the basis of actuarial valuation as per the revised Retirement Benefits Scheme approved by the Board of Directors.

NOTE 11 : CAPITAL AND OTHER COMMITMENTS

Estimated amount of contracts, net of advances paid thereon amounting to Rs.12.76 crores (Previous Year : Rs.134.19 crores), remaining to be executed on capital account and not provided for Rs.48.48 crores (Previous Year : Rs.480.32 crores).

Notes :

i) It is not practicable for the Company to estimate the timings of cash outflows, if any, in respect of the above pending resolution of the respective proceedings as it is determinable only on receipt of judgements/decisions pending with various forums/authorities.

ii) The Company does not expect any reimbursements in respect of the above contingent liabilities.

iii) The Company''s pending litigations comprise of claims pertaining to proceedings pending with Income Tax, Custom, Sales tax/VAT, Service Tax and other authorities. The Company has reviewed all its pending litigations and proceedings and has adequately provided for where provisions were required and disclosed as contingent liabilities where applicable, in its financial statements. The Company does not expect the outcome of these proceedings to have a materially adverse effect on its financial results.

NOTE 12 : FINANCIAL INSTRUMENTS

The significant accounting policies, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognized, in respect of each class of financial asset, financial liability and equity instruments are disclosed in Note 2(p) to the financial statements :

A. Financial Assets and Liabilities :

The carrying value of financial instruments by categories is as follows :

Carrying amounts of trade receivables, cash and cash equivalents and trade payables as at March 31, 2017, March 31, 2016 and April 1, 2015 approximate the fair values because of their short term nature. Difference between carrying amounts and fair values of other bank balances, borrowings, and other financial liabilities subsequently measured at amortized cost is not significant in each of the years presented.

B. Fair value hierarchy :

The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable and consists of the following three levels :

- Level 1 - Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities

- Level 2 - Inputs are other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

- Level 3 - Inputs are not based on observable market data (unobservable inputs). Fair values are determined in whole or in part using a valuation model based on assumptions that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data.

The following table summarizes financial assets and liabilities measured at fair value.

The Company uses foreign exchange forward contracts, currency and interest rate swaps and options to hedge its exposure to the movements in foreign exchange rates. The use of these foreign exchange forward contracts, currency and interest rate swaps and options reduces the risk or the cost to the Company and the Company does not use foreign exchange forward contracts, currency and interest rate swaps and options for trading or speculation purposes.

The Company has identified certain derivative contracts entered into to hedge foreign currency risk of firm commitments and highly probable forecast transactions and the interest rate swaps as hedged instruments that qualify as effective cash flow hedges. The mark-to-market gain / (loss) on such derivative contracts is recorded in the Hedging Reserve.

The Company also uses commodity futures contracts for hedging the exposure to bunker price risk.

(i) Derivative instruments in hedging relationship (Cash Flow Hedges) (a) Commodity Futures Contracts for Import of Bunker :

The derivative contracts mentioned under ''(i) Derivative instruments in hedging relationship (Cash flow Hedges) above, having been entered into to hedge foreign currency risk of firm commitments and highly probable forecast transactions and the interest rate swaps and forward exchange contracts have been designated as hedged instruments that qualify as effective cash flow hedges. The mark-to-market loss on these foreign exchange derivative contracts outstanding as at March 31, 2017, amounting to Rs.7.32 crores (as at March 31, 2016 : Rs.2.01 crores; as at April 1, 2015 : Rs.3.39 crores) has been recorded in the Cash Flow Hedging Reserve.

The interest rate swaps are entered into to hedge the floating monthly, quarterly and half yearly interest payments on borrowings. Fair value gains / (losses) on the interest rate swaps recognized in the Cash Flow Hedging Reserve are transferred to the Statement of Profit and Loss as part of interest expense over the period of borrowings.

Gains / (losses) on forward exchange contracts and spot currency contracts recognized in the Cash Flow Hedging Reserve are transferred to the Statement of Profit and Loss on the occurrence of the underlying cash flow, except for forwards used to hedge highly probable forecast foreign currency purchases relating to construction of new vessels, whose gains / (losses) are included in the cost of the assets and recognized in the Statement of Profit and Loss over the estimated useful lives as part of depreciation expense.

The currency swap derivative contracts, forward exchange option contracts and forward exchange contract mentioned under ''(ii) Derivative instruments not in hedging relationship'' above, economically hedge the underlying exposures but hedge accounting is not opted for the same. The currency swap derivative contracts were entered into to economically hedge the JPY and INR debt by converting the same into USD liability.

The forward exchange option contracts and forward exchange contract were entered into to hedge highly probable forecast transactions denominated in foreign currency.

Gains / losses on the derivative contracts mentioned under (ii) above, are transferred to the Statement of Profit and Loss. The mark-to-market gain on these derivative contracts outstanding as at March 31, 2017 amounting to Rs.327.44 crores (as at March 31, 2016 : loss of Rs.108.61 crores) has been recorded in the Statement of Profit and Loss.

C. Market risk :

(i) Foreign currency risk

Since the majority of the revenues of the Company are denominated in US dollars, there is a translation risk as the Company has to report its financial performance in INR. A significant part of this exposure is hedged by denominating most of its debt servicing obligations in U.S. Dollars and incurring some of its operating and repair costs in foreign currency. The net currency exposure is then managed actively using hedged products like foreign exchange forwards and option contracts. The tenure of these contracts is up to one year.

The Company exposure to unhedged foreign currency is listed as under :

Sensitivity Analysis :

A 5% strengthening / weakening of Indian Rupee against key currencies to which the Company is exposed (net of hedge), with all other variables being held constant, would have led to approximately a gain / loss of Rs.149.19 crores (Previous Year : Rs.101.26 crores)

(ii) Interest rate risk

External Commercial Borrowings (ECBs) raised by the Company are based on floating rate and thus the Company is exposed to changes in interest rates. Company has a system for taking suitable hedges through fixed rate interest swaps to minimize its effective borrowing costs.

Sensitivity Analysis :

The sensitivity analysis below has been determined to assess the interest rate risk on floating rate borrowings outstanding at the end of the reporting period. The impact of change in floating interest rate by 50 basis point on the Company''s annual interest liability would be Rs.4.26 crores (Previous Year : Rs.4.70 crores).

(iii) Price risk

The Company is mainly exposed to the price risk due to its investment in debt mutual funds. The price risk arises due to uncertainties about the future market values of these investments.

Sensitivity Analysis :

A 1% increase in prices would have led to approximately an additional gain of Rs.8.63 crores (Previous Year : Rs.8.86 crores) in the Statement of Profit and Loss. A 1% decrease in prices would have led to an equal but opposite effect.

(iv) Credit risk

Credit risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to the Company. The major class of financial asset of the Company is trade receivables. For credit exposures to customer, management assesses the credit quality of the customer, taking into account its financial position, past experience and other factors.

As the Company does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the statement of financial position.

(v) Liquidity risk

Liquidity risk may arise from inability to meet financial obligations, including loan repayments and payments for vessel acquisitions. This is dealt with by keeping low leverage, as a result of which the Company is able to borrow even in challenging markets. It is also mitigated by keeping substantial liquidity at all times, which enables the Company to capitalize on any opportunities that may arise.

NOTE 13 : GOVERNMENT GRANTS

The Company receives government assistance in the form of SFIS/DFCEC Licenses, which are issued to eligible Indian service providers having free foreign exchange earnings. It can be utilised for duty-free imports of office & professional equipment, spares, furniture and consumables or any other items notified by the Government from time to time.

Following are the balances of SFIS/DFCEC Licenses held by the Company :

NOTE 14 : PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS COVERED UNDER SECTION 186 OF THE COMPANIES ACT, 2013

a) No loans or guarantees have been given to subsidiaries during the year.

b) The particulars of the Company''s investments in wholly owned subsidiaries are disclosed in Note 6.

NOTE 15 : CORPORATE SOCIAL RESPONSIBILITY (CSR)

As part of its Corporate Social Responsibility, the Company has set up the Great Eastern CSR Foundation for promoting education, knowledge enhancement and other activities to which the Company has contributed Rs.5.84 crores during the current year (Previous Year : Rs.2.99 crores)[Refer Note 27(q)].

NOTE 16 : SPECIFIED BANK NOTES DISCLOSURE (SBNS)

In accordance with the MCA notification G.S.R. 308 (E) dated March 30, 2017 details of Specified Bank Notes (SBNs) and Other Denomination Notes (ODNs) held and transacted during the period from November 8, 2016 to December 30, 2016, are provided as under :

NOTE 17 : GENERAL

Previous year''s figures have been regrouped / restated wherever necessary to conform to current year''s classification.


Mar 31, 2014

Note 1 : Corporate Information

The Great Eastern Shipping Company Ltd. (the Company) is a public limited company registered in India under the provision of the Companies Act, 1913. Its shares are listed at Bombay Stock Exchange and National Stock Exchange in India and at the Luxembourg Stock Exchange. The Company is a major player in the Indian Shipping industry.

Note 2 : Capital and Other Commitment

Estimated amount of contracts, net of advances paid thereon amounting to Rs. 135.23 crores (Previous Year Rs. 18.99 crores), remaining to be executed on capital account and not provided for - Rs. 1103.64 crores (Previous Year Rs. 158.40 crores).

Note 3 : Contingent Liabilities

(Rs. in crores) Sr. Particulars Current Year Previous Year No.

Claims against the Company, not acknowledged as debts :

(a) Sales Tax demands under BST Act, CST Act and VAT Act against which the 7.46 7.46 Company has preferred appeals.

(b) Lease Tax liability in respect of a matter decided against the Company, against 17.40 17.40 which the Company has filed a revision petition in the Madras High Court.

(c) Demand from the Office of the Collector & District Magistrate, Mumbai City and 4.34 4.34 from Brihanmumbai Mahanagarpalika towards transfer charges for transfer of premises not acknowledged by the Company.

(d) Demand for Custom Duty disputed by the Company 7.29 6.50 [The Company has given bank guarantees amounting to Rs. 3.63 crores (Previous Year Rs. 2.71 crores) against the said Custom Duty demand which are included under ''Guarantees'' below]

(e) Service Tax Demands disputed by the Company 4.75 4.75

(f) Income Tax Demands for various Assessment Years disputed by the Company 5.47 11.98 Guarantees :

(a) Guarantees given by banks counter guaranteed by the Company. 75.20 3.24

(b) Guarantees given to banks on behalf of subsidiaries. 97.58 108.80

The Company has also provided performance guarantees in favour of parties which have contracted with its subsidiaries which would require it to assume the benefits and costs of these contracts in the event the subsidiaries are not able to fulfill the same, in which event, the Company does not expect any net liability or outflow of resources.

Note 4 : Hedging Contracts

The Company uses foreign exchange forward contracts, currency and interest rate swaps and options to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts, currency and interest rate swaps and options reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts, currency and interest rate swaps and options for trading or speculation purposes.

The Company also uses commodity futures contracts for hedging the exposure to bunker price risk.

The derivative/forward contracts mentioned under (i) above, having been entered into to hedge foreign currency risk of firm commitments and highly probable forecast transactions and the interest rate risk, have been designated as hedge instruments that qualify as effective cash flow hedges. The mark-to-market loss/(gain) on these foreign exchange derivative/forward contracts outstanding as on March 31, 2014 amounting to loss of Rs. 911.44 crores (Previous Year : loss of Rs. 712.24 crores) has been recorded in the Hedging Reserve Account.

In addition to above, the balance in Hedging Reserve Account also includes gain on cancellation of forward contracts amounting to Rs. ''NIL'' (Previous Year : gain of Rs. 0.07 crores) which will be recognised in the Statement of Profit and Loss in the same period or periods during which the hedged transaction affects profit and loss or is transferred to the cost of the hedged non-monetary asset upon acquisition in accordance with the principles of hedge accounting enunciated in Accounting Standard ''(AS) 30 – Financial Instruments : Recognition and Measurement'' as issued by the Institute of Chartered Accountants of India.

The derivative contracts mentioned under (ii) above, having been entered into to hedge foreign currency risk of firm commitments and highly probable forecast transactions, have been designated as hedge instruments that qualify as effective fair value hedges. The mark-to-market loss/(gain) on these foreign exchange derivative contracts outstanding as on March 31, 2014 amounting to gain of Rs. 0.36 crores (Previous Year : gain of Rs. ''NIL'') has been recorded in the Statement of Profit and Loss.

Note 5

(a) As a result of the peculiarities of the trading pattern, it is not possible to identify the heads of expenses based on the locus of consumption. Therefore it would not be feasible to provide the information relating to imports calculated on C.I.F. basis as prescribed by revised Schedule VI.

Note 6: General

Other Information required by Schedule VI (Revised) of the Companies Act, 1956, has been given only to the extent applicable. Previous year''s figures have been regrouped/restated wherever necessary to conform to current year''s classification.


Mar 31, 2013

Note 1 : Corporate Information

The Great Eastern Shipping Company Ltd. (the Company) is a public limited company registered in India under the provision of the Companies Act, 1913. Its shares are listed at Bombay Stock Exchange and National Stock Exchange in India and at the Luxembourg Stock Exchange. The Company is a major player in the Indian Shipping industry.

Note 2 : Tax Expenses

Pursuant to the introduction of Section 115VA under the Income-tax Act, 1961, the Company has opted for computation of its income from shipping activities under the Tonnage Tax Scheme. Thus, income from the business of operating ships is assessed on the basis of the deemed Tonnage Income of the Company and no deferred tax is applicable to such income as there are no timing differences. The timing difference in respect of the non-tonnage activities of the Company are not material, in view of which provision for deferred taxation is not considered necessary.

Note 3 : Disclosure pursuant to Accounting Standard (AS) 15 (Revised) "Employee Benefits"

A) Defined Contribution Plans :

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

B) Denned Benefit Plans and Other Long Term Benefits :

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

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

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

(viii) General Description of Significant Defined Benefit Plans :

Gratuity Plan :

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

Pension Plan :

Under the Company''s Pension Scheme for the whole-time Directors as approved by the Shareholders, all the whole- time Directors are entitled to the benefits of the scheme only after attaining the age of 62 years, except for retirement due to physical disability, in which case, the benefits shall start on his retirement. The benefits are in the form of monthly pension @ 50% of his last drawn monthly salary subject to maximum of Rs.75 lakhs p.a. during his lifetime. If he predeceases the spouse, she will be paid monthly pension @ 50% of his last drawn pension during her lifetime. Benefits also include reimbursement of medical expense for self and spouse, overseas medical treatment upto Rs. 50 lakhs per illness, office space including telephone in the Company''s office premises and use of Company''s car including reimbursement of driver''s salary and other related expenses during his lifetime.

Leave Encashment

All eligible employees can carry forward and encash leave upto superannuation, death, permanent disablement or resignation subject to maximum accumulation allowed upto 15 days. The leave over and above 15 days is encashed and paid to employees on June 30th every year as per the last drawn basic salary, except for union category employees who had exercised an option to freeze the accumulated leave balance as on June 30, 2008 (over and above 15 days). This frozen accumulated leave balance will be encashed as per the last drawn basic salary at the time of superannuation, death, permanent disablement, resignation or promotion to the non-union category.

Note 4 : Segment information

The Company is considered to be a single segment company engaged in shipping business. Consequently, the Company has in its primary segment only one reportable business segment. As per AS-17 ''Segment Reporting'' if a single financial report contains both consolidated financial statements and the separate financial statement of the parent, segment information need be presented only on the basis of the consolidated financial statements. Accordingly, information required to be presented under AS-17 ''Segment Reporting'' has been given in the consolidated financial statements.

Note 5 : Related Party Transactions

(I) List of Related Parties

(a) Parties where control exists :

Subsidiary Companies :

The Great Eastern Shipping Co. (London) Ltd.

The Greatship (Singapore) Pte. Ltd.

The Great Eastern Chartering L.L.C. (FZC)

Greatship (India) Ltd. and its subsidiaries :

- Greatship Global Holdings Ltd., Mauritius.

- Greatship Global Energy Services Pte. Ltd., Singapore.

- Greatship Global Offshore Services Pte. Ltd., Singapore.

- Greatship Subsea Solutions Singapore Pte. Ltd., Singapore.

- Greatship Subsea Solutions Australia Pty. Ltd., Australia.

- Greatship (UK) Ltd., UK.

- Greatship Global Offshore Management Services Pte. Ltd., Singapore.

(b) Other related parties :

(i) Key Management Personnel :

Mr. K. M. Sheth - Executive Chairman

Mr. Bharat K. Sheth - Deputy Chairman and Managing Director

Mr. Ravi K. Sheth - Executive Director

Note 6 : Capital and Other Commitment

Estimated amount of contracts, net of advances paid thereon amounting to Rs. 18.99 crores (Previous Year Rs. 247.01 crores), remaining to be executed on capital account and not provided for - Rs. 158.40 crores (Previous Year Rs. 281.11 crores).

Note 7 : Hedging Contracts

The Company uses foreign exchange forward contracts, currency and interest rate swaps and options to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts, currency and interest rate swaps and options reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts, currency and interest rate swaps and options for trading or speculation purposes.

The Company also uses commodity futures contracts for hedging the exposure to bunker price risk.

1 Derivative Instruments Outstanding : i) Cash Flow Hedges :

(a) Commodity Futures Contracts for Import of Bunker :

Note 8

(a) As a result of the peculiarities of the trading pattern, it is not possible to identify the heads of expenses based on the locus of consumption. Therefore it would not be feasible to provide the information relating to imports calculated on C.I.F. basis as prescribed by revised Schedule VI.

(d) The Company has not remitted any amount in foreign currencies on account of dividend during the year.

Note 9: General

Other information required by Schedule VI (Revised) of the Companies Act, 1956, has been given only to the extent applicable. Previous year''s figures have been regrouped/restated wherever necessary to conform to current year''s classification.


Mar 31, 2012

Note 1 : Corporate Information

The Great Eastern Shipping Company Ltd. (the Company) is a public limited company registered in India under the provision of the Companies Act, 1913. Its shares are listed at Bombay Stock Exchange and National Stock Exchange in India and at the Luxembourg Stock Exchange. The Company is a major player in the Indian Shipping industry.

Note 2 : Tax Expenses

Pursuant to the introduction of Section 115VA under the Income-tax Act, 1961, the Company has opted for computation of it's income from shipping activities under the Tonnage Tax Scheme. Thus, income from the business of operating ships is assessed on the basis of the deemed Tonnage Income of the Company and no deferred tax is applicable to such income as there are no timing differences. The timing difference in respect of the non-tonnage activities of the Company are not material, in view of which provision for deferred taxation is not considered necessary.

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

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

(ii) General Description of Significant Defined Benefit Plans :

Gratuity Plan :

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

Pension Plan :

Under the Company's Pension Scheme for the whole-time Directors as approved by the Shareholders, all the whole- time Directors are entitled to the benefits of the scheme only after attaining the age of 62 years, except for retirement due to physical disability, in which case, the benefits shall start on his retirement. The benefits are in the form of monthly pension @ 50% of his last drawn monthly salary subject to maximum of Rs. 75 lakhs p.a. during his lifetime. If he predeceases the spouse, she will be paid monthly pension @ 50% of his last drawn pension during her lifetime. Benefit also include reimbursement of medical expense for self and spouse, overseas medical treatment upto Rs. 50 lakhs per illness, office space including telephone in the Company's office premises and use of Company's car including reimbursement of driver's salary and other related expenses during his lifetime.

Leave Encashment

All eligible employees can carry forward and encash leave upto superannuation, death, permanent disablement or resignation subject to maximum accumulation allowed upto 15 days. The leave over and above 15 days is encashed and paid to employees on June 30th every year as per the last drawn basic salary, except for union category employees who had exercised an option to freeze the accumulated leave balance as on June 30,2008 (over and above 15 days). This frozen accumulated leave balance will be encashed as per the last drawn basic salary at the time of superannuation, death, permanent disablement, resignation or promotion to the non-union category.

Note 25 : Segment information

The Company is considered to be a single segment company engaged in shipping business. Consequently, the Company has in its primary segment only one reportable business segment. As per AS-17 'Segment Reporting' if a single financial report contains both consolidated financial statement and the separate financial statement of the parent, segment information need be presented only on the basis of the consolidated financial statements. Accordingly, information required to be presented under AS-17 'Segment Reporting' has been given in the consolidated financial statements.

Note 26 : Related Party Transactions

(I) List of Related Parties

(a) Parties where control exists : Subsidiary Companies :

The Great Eastern Shipping Co. (London) Ltd. The Greatship (Singapore) Pte. Ltd. The Great Eastern Chartering LLC (FZC) Greatship (India) Ltd. and its subsidiaries :

Greatship Global Holdings Ltd., Mauritius.

Greatship Global Energy Services Pte Ltd., Singapore.

Greatship Global Offshore Services Pte Ltd., Singapore.

Greatship DOF Subsea Projects Private Ltd., India. (upto 30th December, 2011)

Greatship Subsea Solutions Singapore Pte. Ltd., Singapore.

Greatship Subsea Solutions Australia Pty. Ltd., Australia.

Greatship (UK) Ltd., UK.

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

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

Mr. K. M. Sheth - Executive Chairman

Mr. Bharat K. Sheth - Deputy Chairman and Managing Director

Mr. Ravi K. Sheth - Executive Director

Note 27 : Capital and Other Commitment

Estimated amount of contracts, net of advances paid thereon, remaining to be executed on capital account and not provided for - Rs. 281.11 crores (Previous Year Rs. 1055.21 crores).

Note 28 : Contingent liabilities

(Rs. in crores)

Sr. Particulars Current Year Previous Year No.

(a) Guarantees given by banks counter guaranteed by the Company. 0.60 0.55

(b) Guarantees by bank given on behalf of a subsidiary company. 2.16 1.89

(c) Guarantees given to banks on behalf of subsidiaries. 121.06 122.84

(d) Sales Tax demands under BST Act, CST Act and VAT Act against which the 7.46 7.46 Company has preferred appeals.

(e) Lease Tax liability in respect of a matter decided against the Company, against 17.40 17.40 which the Company has filed a revision petition in the Madras High Court.

(f) Demand from the Office of the Collector & District Magistrate, Mumbai City and 4.34 4.34 from Brihanmumbai Mahanagarpalika towards transfer charges for transfer of

premises not acknowledged by the Company.

The Company has also provided performance guarantees in favour of parties which have contracted with its subsidiaries which would require it to assume the benefits and costs of these contracts in the event the subsidiaries are not able to fulfill the same, in which event, the Company does not expect any net liability or outflow of resources.

Note 29 : Hedging Contracts

The Company uses foreign exchange forward contracts, currency and interest rate swaps and options to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts, currency and interest rate swaps and options reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts, currency and interest rate swaps and options for trading or speculation purposes.

The above mentioned derivative contracts having been entered into to hedge foreign currency risk of firm commitments and highly probable forecast transactions and the interest rate risk, have been designated as hedge instruments that qualify as effective cash flow hedges. The mark-to-market loss / (gain) on the foreign exchange derivative contracts outstanding as on March 31, 2012 amounting to loss of Rs. 573.42 crores (Previous Year Rs. 172.28 crores) has been recorded in the Hedging Reserve Account.

In addition to above, the balance in Hedging Reserve Account also includes loss on cancellation of forward contracts amounting to Rs. 1.77 crores (previous year Rs. NIL) which will be recognised in the Statement of Profit and Loss in the same period or periods during which the hedged transaction affects profit and loss or is transferred to the cost of the hedged non- monetary asset upon acquisition in accordance with the principles of hedge accounting enunciated in Accounting Standard '(As) 30 - Financial Instruments : Recognition and Measurement' as issued by the Institute of Chartered Accountants of India.

Note 30

(a) As a result of the peculiarities of the trading pattern, it is not possible to identify the heads of expenses based on the locus of consumption. Therefore it would not be feasible to provide the information relating to imports calculated on C.I.F. basis as prescribed by revised Schedule VI.

In the previous year, shipping companies were exempted to give information pursuant to Para 4D(a), (b), (c) and (e) of Part II of the pre-revised Schedule VI of the Companies Act, 1956, as per a notification on general exemption under Section 211 of the Companies Act, 1956, issued by the Ministry of Corporate Affairs on February 8, 2011.

(d) The Company has not remitted any amount in foreign currencies on account of dividend during the year.

Note 31

The adoption of the Revised Schedule VI does not impact recognition and measurement principles followed for preparation of Financial Statements and has no significant impact on the disclosures made in the Financial Statement.

All Assets and Liabilities have been classified as current or non current as per the Company's normal operating cycles and other criteria set out in the Revised Schedule VI to the Companies Act, 1956 which is applicable from the current year ended March 31,2012.

Note 32 : Previous Year Regrouping

Previous year's figures have been regrouped/restated wherever necessary to conform to current year's classification as per the revised Schedule VI notified under The Companies Act, 1956 which is applicable from the current year.


Mar 31, 2011

For the year ended March 31, 2011.

1. Contingent Liabilities :

(RS. IN LAKHS)

SR. PARTICULARS CURRENT PREVIOUS NO. YEAR YEAR

(a) Guarantees given by banks counter guaranteed by the Company. 55 23627

(b) Guarantees by bank given on behalf of a subsidiary company. 189 190

(c) Guarantees given to banks/shipyard on behalf of subsidiaries. 69661 34898

(d) Sales Tax demands under BST Act for the years 1995-96,1996-97,1997-98,1998-99, 2001-02,2009-10,2010-11 against which the Company has preferred appeals. 746 746

(e) Lease Tax liability in respect of a matter decided against the Company, against which the Company has filed a revision petition in the Madras High Court. 1740 1740

(f) Possible obligation in respect of matters under arbitration/appeal. - 59

(g) Demand from the Office of the Collector & District Magistrate, Mumbai City and from Brihanmumbai Mahanagarpalika towards transfer charges for transfer of premises not acknowledged by the Company. 434 434

2. Share Capital :

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment of 2,85,922 (previous year 2,85,922) right equity shares of the Company have been kept in abeyance in accordance with section 206A of the Companies Act, 1956, till such time as the title of the bonafide owner is certified by the concerned Stock Exchanges. An additional 40,608 [previous year 40,608] shares have also been kept in abeyance for disputed cases in consultation with the Bombay Stock Exchange.

3. Secured Loans :

(a) Term loans from banks are secured by mortgage of specific ships.

(b) Term loans from banks includes a syndicated loan of USD 16 million from a consortium of banks against security by way of assignment of bank deposit of USD 2.5 million and a financial covenant inter-alia, to maintain unencumbered assets of value not less than 1.25 times the said borrowing.

(c) 9.80% 2500 Secured Redeemable Non-Convertible Debentures of Rs. 10,00,000 each, redeemable on July 03, 2019, are secured by exclusive charge on ships with 1.25 times cover on the book value of ships and additional security by way of mortgage on immovable property of the company.

4. Fixed Assets :

(a) Estimated amount of contracts, net of advances paid thereon, remaining to be executed on capital account and not provided for - Rs. 105521 lakhs (previous year Rs. 206426 lakhs).

(b) The amount of exchange gains / (losses) on account of fluctuation of the rupee against foreign currencies and gains / (losses) on hedging contracts (including on cancellation of forward covers), relating to long term monetary items for acquisition of depreciable capital assets and gains / (losses) on forward contracts for hedging capital commitments for acquisition of depreciable assets, deducted from the carrying amount of fixed assets during the year is Rs. 305 lakhs. Corresponding gain relating to the previous year deducted from the carrying amount of fixed assets was Rs. 31022 lakhs.

(c) The deed of assignment in respect of the Companys leasehold property at Worli is yet to be transferred in the name of the Company.

(d) In accordance with the Accounting Standard (AS-28), during the year the Company has recognised an impairment loss of Rs. 8570 lakhs in respect of the three Very Large Crude Carriers under construction which are proposed to be sold. These assets have been impaired on account of the agreed sale price being lower than the contracted purchase price.

5. Debtors and Creditors :

Debtors and Creditors are subject to confirmation, reconciliation and adjustments, if any.

6. Cash and Bank Balance :

Balances with scheduled banks on deposit account include margin deposits of Rs. 1651 lakhs (previous year Rs. 1301 lakhs) placed with the bank, under a lien against the guarantees issued by the said bank. Balances with other banks include a deposit of Rs. 1246 lakhs (previous year Rs. 1122 lakhs) which is under lien as security against a syndicated loan.

8. Current Liabilities :

According to the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006", no amount is overdue as on March 31, 2011, to Micro, Small and Medium Enterprises on account of principal or interest.

9. Deferred Ta x :

Pursuant to the introduction of Section 115VA under the Income-tax Act, 1961, the Company has opted for computation of its income from shipping activities under the Tonnage Tax Scheme. Thus, income from the business of operating ships is assessed on the basis of the deemed Tonnage Income of the Company and no deferred tax is applicable to such income as there are no timing differences. The timing difference in respect of the non-tonnage activities of the Company are not material, in view of which provision for deferred taxation is not considered necessary.

10. Provisions :

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

11. The Company has provided performance guarantees in favour of parties which have awarded a contract to the Companys wholly owned subsidiary which would require it to assume the benefits and costs of this contract in the event the subsidiary is not able to fulfill the same, in which event, the company does not expect any net liability or outflow of resources.

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

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

(viii) General description of significant defined plans :

Gratuity Plan :

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

Pension Plan :

Under the Companys Pension Scheme for the whole-time Directors as approved by the Shareholders, all the whole-time Directors are entitled to the benefits of the scheme only after attaining the age of 62 years, except for retirement due to physical disability, in which case, the benefits shall start on his retirement. The benefits are in the form of monthly pension @ 50% of his last drawn monthly salary subject to maximum of Rs. 75 lakhs p.a. during his lifetime. If he predeceases the spouse, she will be paid monthly pension @ 50% of his last drawn pension during her lifetime. Benefit also include reimbursement of medical expense for self and spouse, overseas medical treatment upto Rs. 50 lakhs per illness, office space including telephone in the Companys office premises and use of Companys car including reimbursement of drivers salary and other related expenses during his lifetime.

Leave Encashment :

Eligible employees can carry forward and encash leave upto superannuation, death, permanent disablement and resignation subject to maximum accumulation allowed at 15 days for employees on CTC basis and at 300 days for other employees. The leave over and above 15 days for CTC employees and over 300 days for others is encashed and paid to employees as per the balance as on June 30th every year. Benefit would be paid at the time of separation based on the last drawn basic salary.

16. Hedging Contracts :

The Company uses foreign exchange forward contracts, currency & interest rate swaps and options to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts, currency & interest rate swaps and options reduces the risk or cost to the Company and the Company does not use the foreign exchange forward contracts, currency & interest rate swaps and options for trading or speculation purposes.

The Company also uses commodity futures contracts for hedging the exposure to bunker price risk.

3. The above mentioned derivative contracts having been entered into to hedge foreign currency risk of firm commitments and highly probable forecast transactions and the interest rate risk, have been designated as hedge instruments that qualify as effective cash flow hedges. The mark-to-market loss / (gain) on the foreign exchange derivative contracts outstanding as on March 31, 2011 amounting to loss of Rs. 17228 lakhs (previous year Rs. 17727 lakhs) has been recorded in the Hedging Reserve Account.

17. Segment Reporting :

The Company is only engaged in shipping business and there are no separate reportable segments as per Accounting Standard AS -17 ‘Segment Reporting.

18. Related Party Disclosures :

(I) List of Related Parties

a) Parties where control exists : Subsidiary Companies :

The Great Eastern Shipping Co. London Ltd. The Greatship (Singapore) Pte. Ltd. Great Eastern Chartering LLC (FZC) Greatship (India) Ltd. and its subsidiaries :

- Greatship Global Holdings Ltd., Mauritius.

- Greatship Global Energy Services Pte Ltd., Singapore.

- Greatship Global Offshore Services Pte Ltd., Singapore.

- Greatship DOF Subsea Projects Private Ltd., India.

- Greatship Subsea Solutions Singapore Pte. Ltd., Singapore.

- Greatship Subsea Solutions Australia Pty. Ltd., Australia.

- Greatship (UK) Ltd., UK.

- Greatship Global Offshore Management Services Pte. Ltd., Singapore.

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

Mr. K. M. Sheth - Executive Chairman

Mr. Bharat K. Sheth - Deputy Chairman and Managing Director

Mr. Ravi K. Sheth - Executive Director

20. The Ministry of Corporate Affairs has issued on February 8, 2011 a notification on General Exepmtion under Section 211 of the Companies Act 1956. Accordingly shipping companies are exempted to give information pursuant to para 4D(a), (b), (c) and (e) of Part II of Schedule VI to the Companies Act, 1956.

The Company has not remitted any amount in foreign currencies on account of dividend during the year.

21. Previous years figures have been regrouped/restated wherever necessary to conform to current years classification.


Mar 31, 2010

For the year ended March 31,2010.

1. Contingent Liabilities:

RS.IN LAKHS

PARTICULARY CURRENT PREVIOUS YEAR YEAR

(a) Guarantees given by banks counter guaranteed by the Company 23627 26712

(b) Guarantees by bank given on behalf of a subsidiary company /jointventure 190 409

(c) Guarantees given to banks/shipyard on behalf of subsidiaries 34898 128192

(d) Sales Tax demands under BST Act for the years 1995-96, 1996-97,1997-98, 1998-99, 746 746 2001-02, against which the Company has preferred appeals

(e) Lease Tax liability in respect of a matter decided against theCompany, against which the 1740 1740 Company has filed a revision petition in the Madras High Court

(f) Possible obligation in respect of matters under arbitration/appeal 59 59

(g) Demand from the Office of the Collector & District Magistrate,Mumbai City and from 434 434 Brihanmumbai Mahanagarpalika towards transfer charges for transfer of premises not acknowledged by the Company

2. Share Capital:

Under orders from the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, - the allotment of 2,85,922 (previous year 2,85,922) rights equity shares of the Company have been kept in abeyance in accordance with section 206A of the Companies Act, 1956, till such time as the title of the bonafide owner is certified by the concerned Stock Exchanges. An additional 40,608 (previous year 40,608) shares have also been kept in abeyance for disputed cases in consultation with the Bombay Stock Exchange. During the year "Nil" (previous year 5,760) equity shares have been allotted out of the shares kept in abeyance.

3. Secured Loans:

(a) Term loans from banks are secured by mortgage of specific ships.

(b) Term loans from banks includes a syndicated loan of USD 32 million from a consortium of banks against security by way of assignment of bank deposit of USD 2.5 million and a financial covenant inter alia, to maintain unencumbered assets of value not less than 1.25 times the said borrowing.

(c) 6.05% 95 Secured Redeemable Non-Convertible Debentures of Rs. 1,00,00,000 each, redeemable on September 19,2010, are secured by pari-passu first charge on assets of the Company and the asset cover ratio will be not less than 1.25 times.

(d) 9.80% 2500 Secured Redeemable Non-Convertible Debentures of Rs. 10,00,000 each, redeemable on July 03, 2019 are secured by exclusive charge on ships with 1.25 times cover on the book value of ships and additional security by way of mortgage on immovable property of the Company.

4. Fixed Assets:

(a) Estimated amount of contracts, net of advances paid thereon, remaining to be executed on capital account and not provided for-Rs. 206426 lakhs (previous year Rs. 236883 lakhs).

(b) The amount of exchange gain on account of fluctuation of the rupee against foreign currencies and gains/(losses) on hedging contracts (including on cancellation of forward covers), relating to long-term monetary items for acquisition of depreciable capital assets and gains/(losses) on forward contracts for hedging capital commitments for acquisition of depreciable assets, deducted from the carrying amount of fixed assets during the year is Rs. 31022 lakhs. Corresponding loss relating to the previous year added to the carrying amount of fixed assets was Rs. 54023 lakhs.

(c) The deed of assignment in respect of the Companys leasehold property at Worli is yet to be transferred in the name of the Company.

5. Debtors and Creditors :

Debtors and Creditors are subject to confirmation, reconciliation and adjustments, if any.

6. Cash and Bank Balance:

Balances with scheduled banks on deposit account include margin deposits of Rs. 1301 lakhs (previous year Rs. 201 lakhs) placed with the bank, under a lien against guarantees issued by the said bank. Balance with other banks include a deposit of Rs. 1122 lakhi (previous year Rs. 1268 lakhs) which is under lien as security against a syndicated loan.

7. Loans and Advances:

Loans and Advances include amount due from subsidiary companies :

8. Current Liabilities:

According to the information available with the Company regarding the status of the suppliers as defined under the "Micro, Small and Medium Enterprises Development Act, 2006", no amount is overdue as on March 31, 2010, to Micro, Medium and Small Enterprises on account of principal or interest.

9. Deferred Tax:

Pursuant to the introduction of Section 115VA under the Income-tax Act, 1961, the Company has opted for computation of its income from shipping activities under the Tonnage Tax Scheme. Thus, income from the business of operating ships is assessed on the basis of the deemed Tonnage Income of the Company and no deferred tax is applicable to such income as there are no timing differences. The timing difference in respect of the non-tonnage activities of the Company are not material, in view of which provision for deferred taxation is not considered necessary.

10. Provisions:

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

11. The Company has provided a performance guarantees in favour of parties which have awarded a contract to the Companys wholly owned subsidiary which would require it to assume the benefits and costs of this contracts in the event the subsidiary is not able to fulfill the same, in which event, the company does not expect any net liability or outflow of resources.

12. Managerial Remuneration:

(i) Managerial Remuneration paid/payable to Directors for the year is as follows:

Notes:

The above does not include:

- Contribution to Gratuity Fund and provision for retirement leave encashment benefit as separate figures are not available in respect of the whole time directors.

- Provision for retirement pension benefits payable [Rs. 35 lakhs (previous year Rs. 778 lakhs)] (on the basis of an actuarial valuation) to the whole-time directors as per the scheme approved by the Board of Directors.

ii) Computation of Net Profit in accordance with Section 198 of the Companies Act, 1956 :

13. Disclosure pursuant to Accounting Standard (AS) 15 (Revised) "Employee Benefits":

A) Defined Contribution Plans :

The Company has recognised the following amounts in the Profit and Loss Account for the year:

B) Defined Benefit Plans and Other Long Term Benefits:

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

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

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

(vii) General description of significant defined plans:

Gratuity Plan:

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

Pension Plan:

Under the Companys Pension Scheme for the Whole-time Directors as approved by the Shareholders, all the Whole- time Directors are entitled to the benefits ofthe scheme only after attaining the age of 62 years, except for retirement due to physical disability, in which case, the benefits shall start on his retirement. The benefits are in the form of monthly pension @ 50% of his last drawn monthly salary subject to maximum of Rs.75 lakhs p.a. during his lifetime. If he predeceases his spouse, she will be paid monthly pension @ 50% of his last drawn pension during her lifetime. Benefit also include reimbursement of medical expense for self and spouse, overseas medical treatment upto Rs. 50 lakhs per illness, office space including telephone in the Companys office premises and use of Companys car including reimbursement of drivers salary and other related expenses during his lifetime.

Leave Encashment:

Eligible employees can carry forward and encash leave upto superannuation, death, permanent disablement and resignation subject to maximum accumulation allowed at 15 days for employees on CTC basis and at 300 days for other employees. The leave over and above 15 days for CTC employees and over 300 days for others is encashed and paid to employees as per the balance as on June 30th every year. Benefit would be paid at the time of separation based on the last drawn basic salary.

16. Hedging Contracts:

The Company uses foreign exchange forward contracts, currency & interest rate swaps and options to hedge its exposure to movements in foreign exchange rates. The use of these foreign exchange forward contracts, currency & interest rate swaps and options reduces the risk or cost to the Company and the Company does not use foreign exchange forward contracts, currency & interest rate swaps and options for trading or speculation purposes.

The Company also uses commodity futures contracts for hedging the exposure to bunker price risk.

3. The above mentioned derivative contracts having been entered into to hedge foreign currency risk of firm commitments and highly probable forecast transactions and the interest rate risk, have been designated as hedge instruments that qualify as effective cash flow hedges. The mark-to-market loss/(gain) on the foreign exchange derivative contracts outstanding as on March 31,2010 amounting to loss of Rs. 17727 lakhs (previous year Rs. 36003 lakhs) has been recorded in the Hedging Reserve Account.

17. Segment Reporting:

The Company is only engaged in shipping business and there are no separate reportable segments as per Accounting Standard AS -17 Segment Reporting.

18. Related Party Disclosures :

(I) List of Related Parties

a) Parties where control exists :

Subsidiary Companies:

The Great Eastern Shipping Co.(London) Ltd. The Creatship (Singapore)Pte. Ltd. Great Eastern Chartering LLC - FZC Greatship (India) Ltd.and its subsidiaries :

- Greatship Holdings Ltd., Mauritius.

- Greatship Global Energy Services Pte Ltd., Singapore.

- Greatship Global Offshore Services Pte Ltd., Singapore.

- Greatship DOF Subsea Projects Private Ltd., Mumbai.

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

CGU Logistic Ltd. (Upto March 31,2009) (ii) Key Management Personnel:

Mr. K. M. Sheth - Executive Chairman

Mr. Bharat K. Sheth - Deputy Chairman and Managing Director

Mr. Ravi K. Sheth - Executive Director

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