Directors Report of Shipping Corporation of India Ltd.

Mar 31, 2025

Your Directors have pleasure in presenting the 75th Annual Report on the working of your Company for the Financial Year ended 31st March, 2025.

FINANCIAL PERFORMANCE

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

(Amt. in Rs. Crores)
Particulars	Current	Previous
Â	Financial year	Financial year
Â	(2024-2025)	(2023-2024)
Revenue from Operations	5,592.33	5,046.04
Other Income	193.04	215.52
Profit/loss before Depreciation, Finance Costs, Exceptional items and Tax Expense	1,959.94	1,638.99
Less: Depreciation/ Amortisation/ Impairment	951.20	889.38
Profit /loss before Finance Costs, Exceptional items and Tax Expense	1,008.74	749.61
Less: Finance Costs	186.29	171.13
Profit /loss before Exceptional items and Tax Expense	822.45	578.48
Add/(less): Exceptional items	-	-
Profit /loss before Tax Expense	822.45	578.48
Less: Tax Expense (Current & Deferred)	8.35	(33.67)
Profit /loss for the year (1)	814.10	612.15
Other Comprehensive Income/loss (2)	(10.56)	0.53
Total (1+2)	803.54	612.68

The above figures have been extracted from the standalone financial statements as per Indian Accounting Standards (Ind-AS). Appropriations:

The working results of your company for the year 2024-25 shows a net profit of Rs. 814.10 crore. A sum of Rs 137.30 crore has been transferred to Tonnage Tax Reserve. Retained Earnings has been further adjusted for dividend payment of Rs. 23.29 Crores during the financial year 2024-25.

Dividend:

The Board of Directors at their meeting held on 16.05.2025 recommended a dividend of Rs. 6.59 /- per equity share of face value of Rs.10 each i.e. 65.90% per share on the paid up Capital of the Company. The Dividend will become payable once approved by the shareholders at the ensuing AGM. The said dividend will be paid within 30 days of its declaration at the AGM.

The dividend, subject to approval of the Members at the Annual General Meeting scheduled to be held on 19.09.2025 will be payable to those Shareholders, whose names appear in the Register of Members/ list of beneficial owners as on the Record Date. The payment of dividend will be subject to deduction of tax at source. The dividend pay-out is in accordance with the company’s dividend distribution policy which is available on the Company’s website http://shipindia.com/upload/policies/SCI_Dividend_Distribution_ Policy1.pdf and also as per the prevalent provisions of laws, rules and regulations.

Share Capital:

The Company has not issued any Equity Shares with differential voting rights. Hence, no information as required under Section 43(a) (ii) of the Companies Act, 2013 read with Rule 4(4) of the Companies (Share Capital and Debentures) Rules, 2014 is furnished. The Company has only one class of Equity Shares having face value of Rs. 10/- each.

Brief Analysis of Financial Performance:

SCI has reported a net profit after tax of Rs.814.10 crores for the financial year 2024-25. Liner segment reported profit of Rs. 154.20 crores in current financial year as compared to loss of Rs. 87.66 crores in previous financial year due to strategic decisions. Tanker and Bulk segment revenue and profits are in line with market scenarios. Tanker segment posted profit of Rs. 664.51 crores while Bulk segment posted loss of Rs. 46.10 Crores during the financial year 2024-25. T&OS segment has reported profit of Rs. 24.69 Crores during current year.

The consolidated net profit for the company for Financial Year 2024-25 is Rs. 843.58 crores. Performance and Financial positions of joint ventures and subsidiary Companies included in consolidated financial (A												statements: Lmt Rs. in Lakhs)
Particulars		ILT 1		ILT 2		ILT 3		ILT 4		ICSL		SCI Bharat IFSC Limited
As on		31.03.2025		31.03.2025		31.03.2025		31.03.2025		31.03.2025		31.03.2025
Total Income		23,574		21,793		22,131		21,127		86		1,334
PAT		5,470		2,088		755		2,572		(4)		(111)
Equity capital		14		14		6		26590		105		3,000
Number of equity shares		10,000		10,000		10,000		4,24,48,300		10,50,000		3,00,00,000
EPS (Rs/share)		54,700		20,880		7,550		6		(0.38)		(0.37)
Dividend paid by JV / Subsidiary		9,414		5,991		Â		856		Â		Â
Net worth		78,781		80,889		21,269		48,156		_(188)		2,956
Net Impact on Consolidated profits for the year ended 31st March 2025 is increase of Rs 29.48 crores upon consolidation of above joint ventures and subsidiary companies. Credit Rating Details :
(a) credit rating obtained in respect of various securities;					a) Rating is done for bank loan rating only,
(b) name of the credit rating agency;					b) The latest rating is by Acuite Ratings & Research
(c) date on which the credit rating was obtained;					c) published on 18th October, 2024
(d) Current credit rating;					d) Acuite Ratings & Research Limited (Acuite) has reaffirmed its long-term rating to ‘ACUITE AA+’ (read as ACUITE double A plus) and reaffirmed its short-term rating of ‘ACUITE A1+’ (read as ACUITE A one plus) on the Rs.7,500.00 Crores bank facilities of The Shipping Corporation of India Limited (SCIL). The outlook is ’Stable’.
Subs Your owne whol owne Purs comp In ac webs PARI	idiaries and Associates company has two subsidiary Companies and has four Joint Venture Companies, A) “Inland and Coastal Shipping Limited” a wholly id subsidiary of Shipping Corporation of India Limited, was incorporated on 29th September 2016. B) “SCI Bharat IFSC Limited”, a y owned subsidiary of Shipping Corporation of India Limited, was incorporated on 12 August 2024. Both companies are wholly id subsidiaries of your company. uant to section 129(3) of the Companies Act, 2013, a statement containing salient features of our subsidiary and associates 3anies in form AOC-1 is appended to the Director’s Report as Annexure - III cordance to section 136 of the Companies Act, 2013 the audited financial statements of the company are available on our site www.shipindia.com fICULARS OF HOLDING, SUBSIDIARY & ASSOCIATE COMPANIES
Sl. No	Name & Address of the Company		CIN/GLN				Subsidiary/ Associate		% of Shares Held		Applicable section of Companies Act 2013
1	India LNG Transport Co. (No. 1) Ltd. 171, Old Bakery Street, Valletta, Malta		NA				Associate		29.08%		2(6)
2	India LNG Transport Co. (No. 2) Ltd. 171, Old Bakery Street, Valletta, Malta								29.08%
3	India LNG Transport Co. (No. 3) Ltd. 171, Old Bakery Street, Valletta, Malta								26.00%
4	India LNG Transport Co. (No. 4) Pvt. Ltd. 1, Harbourfront Place, # 13-01 Harbourfront Tower One, Singapore								26.00%

5	Inland & Costal Shipping Ltd., "Shipping House", 13, Strand Road, Kolkata - 700 001	U61100WB2016GOI217822	Subsidiary	100.00%	2(87)
6	SCI Bharat IFSC Limited. T/5, GIFT House 3rd Floor, Block 12, Road 1-D,Zone-1, Gift City, Gandhi Nagar, Gandhi Nagar- 382355, Gujarat	U64990GJ2024GOI154335	Subsidiary	100.00%	2 (87)

A SUBSIDIARY COMPANIES

Inland and Coastal Shipping Limited

Inland and Coastal Shipping Limited (ICSL), a wholly owned subsidiary of your Company, was incorporated on 29.09.2016. As per the Ministry of Ports, Shipping and Waterways (MoPSW), Inland Waterways Transport (IWT) Division’s letter dated 27.10.2020, approval was granted to the Inland Waterways Authority of India (IWAI) for handing over three vessels to ICSL:

(i)    M.V. Rabindra Nath Tagore

(ii)    M.V. Lal Bahadur Shastri

(iii)    M.V. Homi Bhabha

Subsequently, ICSL signed a Memorandum of Understanding (MoU) with IWAI on 22.01.2021 for operation and management of above mentioned cargo vessels of IWAI. M.V. Rabindra Nath Tagore, & M.V. Lal Bahadur Shastri were taken over by ICSL on

22.01.2021    & 26.02.2021 respectively & M.V. Homi Bhabha was taken over by ICSL on 05.12.2024.

Further, to support RO-RO (Roll-on/Roll-off) transportation and reduce road congestion, ICSL and IWAI signed an MoU on

11.03.2022    for transfer of two RO-RO vessels owned by IWAI. As part of this initiative, ICSL took over M.V. Gopinath Bordoloi on 08.08.2023. The second vessel, M.V. Sankar Dev, is expected to be taken over in due course.

ICSL has been designated as the implementing agency for establishing scheduled cargo services on National Waterways 1 and 2 i.e., Haldia/Kolkata to Varanasi (NW-1) and Kolkata to Dhubri/Pandu (NW-2) under Jal Vahak Scheme, a promotional initiative announced by MoPSW in December 2024, for enhancing cargo movement through Inland Waterways Transport (IWT).

B. SCI Bharat IFSC Limited

SCI BHARAT IFSC LTD, wholly-owned subsidiary of Shipping Corporation of India Limited, has been incorporated on August 12, 2024 with paid-up share capital of INR 30 crores through an Overseas Direct Investment (ODI) on 17.09.2024, after obtaining the necessary approval from the Reserve Bank of India (RBI).

SCI BHARAT IFSC LTD has obtained the certificate of registration on 23.09.2024 to commence business as Finance Company at GIFT City, Gujarat, from International Financial Services Centres Authority (IFSCA) and commenced its operations by in-chartering an oil tanker ship to transport crude oil from Persian Gulf to India. During 2024-25, the first year of operation of your company, a new office was set up in the GIFT City and relationships are being developed with local authorities.

At present SCI Bharat IFSC Ltd is in budding stage and various initiatives are being taken at company level as well as in Ministry to develop structures and systems which can enable efficient and smooth functioning of the organization.

SPECIAL PURPOSE VEHICLE:

Sethusamudram CorporationLtd.

The Government of India established Sethusamudram Corporation Limited (SCL) to fund and manage the Sethusamudram Ship Channel Project, aiming to create a navigable channel from the Gulf of Mannar to the Bay of Bengal through Palk Bay. As mandated by the government, various PSUs, including SCI, were to contribute equity to this project. By FY 2016-17, SCI had invested '50 crore. Work was suspended on September 17, 2007, due to an interim stay order from Hon’ble Supreme Court, regarding dredging operations in the Adam’s Bridge area. All dredgers were subsequently withdrawn by July 27, 2009, as a final decision on an alternative alignment remained pending. A Supreme Court hearing scheduled for April 6, 2018, was indefinitely withheld.

At its meeting held on August 9, 2024, the Board of Directors of SCI approved the nomination of Rear Admiral Jaswinder Singh, Director (L&PS) as SCI’s representative on the Board of Sethusamudram Corporation Ltd (SCL), subject to the approval of the Ministry of Ports, Shipping and Waterways (MoPSW). Following MoPSW’s advice that the earlier established procedure be followed, as per which, SCI may directly appoint a Nominee Director to the SCL Board. Accordingly, at its meeting held on November 8, 2024, the SCI Board granted approval for the appointment of the Director (L&PS) as a Nominee Director on the SCL Board to represent SCI.

The Board of Sethusamudram Corporation Ltd. thereafter appointed Director (L&PS) as an Additional Director of SCL on February 4, 2025.

B. JOINT VENTURES

(i)    India LNG Transport Co. (No.1), (No.2) and (No.3) Ltd

SCI has entered into three JVCs, registered in Malta, with three Japanese Companies viz. Mitsui O.S.K.Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha Ltd (K Line) along with Qatar Shipping Company (Q Ship) in case of ILT No. 1 & 2 and Qatar Gas Transport Company (QGTC) in case of ILT No. 3, each owning and operating an LNG tanker deployed in the import of a total of 7.5 million metric ton per annum of LNG for the Dahej Terminal of M/s Petronet LNG Ltd (PLL). SCI is the first and only Indian company to enter into the high-technology oriented & sunrise sector of LNG. SCI is the manager for these three companies, managing the techno-commercial operations of 3 LNG tankers.

(ii)    India LNG Transport Co. No.4 Pvt Ltd

SCI has entered into 4th JV registered in Singapore, with the same three Japanese companies viz. Mitsui O.S.K.Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha Ltd (K Line) and Petronet LNG Ltd to own and operate one 173,000 CBM LNG Tanker for transporting LNG primarily from Gorgon, Australia to India and Far East region for charterers Exxon Mobil LNG Services B.V. SCI is the manager for this company and is managing the techno-commercial operations of the tanker.

Fleet position during the year:

During the year under report, there were NIL additions to the SCI fleet. The overall fleet position of SCI stood at 57 vessels of 5.245 million DWT at the end of the year.

Fleet profile during the year:

Particulars	As on 31	.03.2024	Add	itions	Deletions		As on 31	.03.2025
Â	No.	DWT	No	DWT	No.	DWT	No.	DWT
Crude oil Tanker	18	3,231,602	-	-	-	-	18	3,231,602
Product tanker	11	797,073	-	-	-	-	11	797,073
Gas carriers	1	53,503	-	-	-	-	1	53,503
Bulk carriers	15	1,022,344	-	-	-	-	15	1,022,344
Container vessels	2	115,598	-	-	-	-	2	115,598
Offshore vessels	10	25,238	-	-	-	-	10	25,238
Total	57	5,245,358	-	-	-	-	57	5,245,358
During the end of the year, the Company had no new built vessels on order.

Particulars of Loans Guarantees and Investments.

Details of Loans, Guarantees and Investments are given in the notes to financial statements. Further, SCI is as an Infrastructure Company under Schedule VI referred to in Section 186 of the Companies Act, 2013, hence the provisions of Section 186 are not applicable to it.

The details of transaction with related party are available in Note 29 under ‘Notes to Financial statements.

Annual Return

Pursuant to Section 92(3) of the Companies Act, 2013 read with Section 134(3)(a) of the Companies Act, 2013, the Annual Return in Form MGT 7 is available on the Company’s website and can be accessed at www.shipindia.com/investors/agm new/13 Particulars of contracts/arrangements with related parties

Particulars of contracts/arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed form AOC-2 is appended to the Director’s Report as Annexure -IV. The details are also available in Note 29 under ‘Notes to Financial statements’

For the purpose of above disclosures directors’ interest shall have the same meaning as given in Section 184 of Companies Act, 2013. Particulars of Employees

Your Company, being a Government Company, is exempted to furnish information under Section 197 of Companies Act, 2013 vide Ministry of Corporate Affairs (MCA) Notification dated 05.06.2015.

Employees Stock Option Scheme

The company does not have any Employee Stock Option Scheme.

Company’s Policy on Directors appointment and remuneration

The terms of Directors appointment and remuneration are fixed by the Government of India.

Receipt of Remuneration by Managing Director from Subsidiary Companies.

Capt. B.K. Tyagi, CMD has not received any remuneration from the Subsidiary Companies of SCI.

Risk Management.

SCI considers Risk Management to be a core component of the Management of the Company and its ability to identify and address risks is central to achieving Corporate objectives. Accordingly, SCI has developed a detailed Risk Management Policy in line with the requirements of SEBI (LODR) Regulations, 2015, which includes framework for identification of risks, measures for risk mitigation and Business Continuity Plan. The Policy has been approved by the Risk Management Committee and the Board.

The company has identified entity level Risks which includes:

i)    Strategic Risk

ii)    Operational Risk

iii)    Financial Risk

iv)    Compliance Risk

Some of the risks identified by SCI include market volatility, increasing bunkering cost, cyber security risk, geo-political risks, decarbonisation challenges, Piracy, Foreign exchange fluctuation, regulatory compliances among others. All efforts are made for mitigating and controlling the risks through well-defined mitigation measures and coordination with all stakeholders.

SCI has formulated a three line of Risk Reporting viz. Corporate Risk Committee, Risk Management Committee and Audit Committee.

A corporate level Risk Register is maintained and reviewed quarterly by the Corporate Risk Committee. At each meeting of the RMC, the Corporate Risk Committee reports all the risks including the High risks and their mitigation plans. Further, in the area of ’Risk Management’, the Audit Committee and the Board continued to function in accordance with the applicable laws, rules and regulations. Conservation of Energy, Technology Absorption

The information pertaining to conservation of energy, technology absorption is forming a part of the Management Discussion and Analysis Report.

Foreign exchange earnings and outgo

Rs.in crores
Particulars	2024-25	2023-24
Foreign exchange earned1	5,480.93	5,390.48
Foreign exchange outgo1	4,159.94	4,018.42
*includes deemed foreign exchange earnings and outgo.

Public Deposit

During the financial year 2024-25, SCI has not accepted any deposit within the meaning of Section 73 and 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

Proposed Strategic Disinvestment and Demerger of SCI

The proposed strategic disinvestment of SCI is being handled by Department of Investment and Public Asset Management (DIPAM) with the engagement of Transaction Advisor. In this regard, Preliminary Information Memorandum (PIM) for inviting expression of interest was released on 22.12.2020. The Virtual Data Room is open and is being managed by the Transaction Advisor for the process of due diligence by the Qualified Interested Parties.

Updates on transfer of non-core assets from Shipping Corporation of India Limited to Shipping Corporation of India Land and Assets Limited

In accordance with the MCA Order dated 22.02.2023, during the Financial Year 2023-2024, titles of all Fixed Deposits eligible to be transferred to Shipping Corporation of India Land and Assets Limited (SCILAL) have been transferred in to their name.

Consequent to the approved Demerger Scheme, all non-core assets (i.e., real estate properties) of The Shipping Corporation of India Ltd. (SCI), as listed in the scheme, have been transferred de facto to Shipping Corporation of India Land and Assets Limited (SCILAL). To effectuate the de jure transfer, the execution and registration of conveyance deeds with the respective Land & Revenue Departments of

State Governments is required. The Company is actively pursuing the necessary legal and administrative steps in this regard. Brief details

of transfer of non-core assets are as under:

a)    Subsequent to the issuance of a Stamp Duty Exemption Order by the Government of West Bengal, registration of all freehold properties located in Kolkata has been completed on 22.03.2024. Transfer Deeds for 15 flats and Shipping House, Kolkata have been registered and the original registered documents have been received by the Company. Mutation (name change) entries with the Kolkata Municipal Corporation will also be undertaken in due course.

b)    To facilitate transfer of properties in Maharashtra from SCI to SCILAL, Office of the Collector of Stamps, Enforcement - 1 in Case No. ADJ/249/2024 dated 16.09.2024, has issued a certificate, which was received by the company on 16.07.2025, wherein it has been certified that under Section 32(1)(a)(b) of the Maharashtra Stamp Act, the Demerger Scheme is exempted from payments of Stamp Duty vide Government of Maharashtra Notification No. Mudrank-2023/698/C.R. 436/M-1 (Dhoran) dated 12.10.2023. Adjudication process for residential freehold properties aimed at enabling the execution of Transfer Deeds at the respective Sub-Registrar offices is currently in process. Additionally, follow-ups are being actively pursued with the concerned authorities for issuance of No Objection Certificates (NOCs) for Lease hold and Grant properties from Maharashtra State Govt., by SCI to facilitate the transfer of Shipping House (Lease hold property) and Maritime Training Institute (Land given on Grant) to the Resultant Company i.e., SCILAL.

c)    The Company is taking necessary and appropriate actions for the legal transfer of Irano Hind Shipping Company,P.J.S(IHSC) from SCI to SCILAL.

MANAGEMENT DISCUSSION AND ANALYSIS

The following remaining information w.r.t. to addition of new sub clause (i) under clause 1 in Part B (‘Management Discussion and

Analysis) of schedule V of SEBI (LODR) Regulations, 2015.

The Company has identified the following ratios as key financial ratios :_ ^1 2

Particulars	Standalone		Consol	dated
Â	2024-25	2023-24	2024-25	2023-24
Return on Networth (%)	10.61	8.89	10.25	9.15
Net Profit Margin (%)	14.56	12.13	15.05	13.45
Operating Profit Margin (%)	18.04	14.86	18.52	16.18
Debt Equity Ratio	0.25	0.42	0.23	0.38
Current Ratio	2.18	1.25	2.19	1.25
Interest coverage Ratio	5.41	4.38	5.57	4.77
Inventory Turnover Ratio	7.45	7.55	7.45	7.55
Debtors Turnover Ratio	4.30	4.16	4.31	4.16

i]    WORLD SCENARIO

The world GDP grew by an average of 2.8% in 2023. In the near term, global growth is projected to fall from an estimated 3.3% in 2024 to 2.8% in 2025, before recovering to 3% in 2026. (Source: IMF World Economic Outlook publication, April 2025)

In emerging market and developing economies, growth is expected to slow down from 4.3% in 2024 to 3.7% in 2025 and 3.9% in 2026, with significant downgrades for countries affected most by recent trade measures, such as China. Global headline inflation is expected to decline at a pace that is slightly slower than what was expected in January, reaching 4.3% in 2025 and 3.6% in 2026, with notable upward revisions for advanced economies and slight downward revisions for emerging market and developing economies in

2025.

Global Trade

According to IMF’s World Economic Update outlook update in, Global trade growth is expected to slow down in 2025 to 1.7 percentage point, a downward revision of 1.5 percentage point since January. This revised forecast reflects increased tariff restrictions affecting trade flows and, to a lesser extent, the waning effects of cyclical factors that have underpinned the recent rise in goods trade.

Seaborne Trade, Fleet & Market

In 2024, global seaborne trade reached an estimated 12.6 billion tonnes, marking a 2.4% year-on-year increase over 2023.

In terms of fleet, the world fleet grew by only 3.4% to 2.4 bn dwt (1.7bn GT), but with wide variations (tanker fleet +0.8%, container fleet +10.1%).

With respect to market for dry bulk carriers in 2024, demand surged by an estimated 165 MMT, driven largely by Chinese stock piling particularly coal and iron ore.

During the first half of 2024, Dry bulk earnings and charter rates were strong, especially for Capesize vessels, supported by disruptions (Red Sea re-routing, Panama Canal drought).

The global crude oil trade, after a decline in 2024, is expected increase in 2025 supported by growing Asian imports. Global crude seaborne trade in 2025 is expected to grow around 0.8 - 1%. Likewise, the crude oil tanker fleet is likely to expand at a modest pace in 2025 and is forecast to grow by 0.9% in 2025 amid increased deliveries, mostly led by Suezmax vessels, and improved yet lower demolitions, leading to net growth.

The outlook for crude tanker owners in 2025 is expected to be mixed, with VLCCs likely to outshine their smaller counterparts. While an increase in Asia-bound trade will benefit VLCCs, a likely weakness in refinery runs in the West will hurt the demand for mid-size tankers.

For product tankers, seaborne trade is expected to grow by 0.4% in 2025. The trading fleet on the other hand is expected to grow at a healthy 3.7% this year. Overall, product tanker market is facing mounting pressure, with earnings set to decline, especially in 2025 and

2026.

ii]    INDIAN SCENARIO

India, the world’s fourth-largest economy, has emerged as the fastest-growing major economy and is on track to become the world’s third-largest economy with a projected GDP of $7.3 trillion by 2030. India is projected to be world’s fastest growing major economy (6.3% to 6.8% in 2025-26).

This sustained economic expansion is set to bolster India’s seaborne dry bulk import demand, driven by infrastructure development, manufacturing activity, and energy needs.Thermal coal imports are likely to remain firm or even increase moderately, as domestic coal output struggles to keep pace with soaring power demand, thus supporting demand for Panamax and Supramax vessels. Infrastructure led demand for steel and cement, coupled with the government’s emphasis on largescale projects such as the Gati Shakti plan, will also drive imports of steelmaking raw materials, benefiting the Capesize segment.

Additionally, steady growth in agriculture related imports, including fertilizers such as urea and DAP, will support Handysize and Supramax traffic. However, the upside potential may be capped by domestic production expansion in coal and iron ore, and the government’s long term push toward renewable energy.

Overall, India’s strong economic growth trajectory will remain a positive factor for regional dry bulk demand in 2025, ensuring stable import volumes across multiple commodity groups, even as global dry bulk trade growth moderates.

On the tanker front, India’s steady economic trajectory for 2025 are expected to have a positive impact on the country’s crude and product tanker demand. As the world’s third-largest crude importer, India’s strong growth ensures continued high refinery runs to meet rising domestic fuel consumption particularly for diesel, gasoline, and petrochemicals which in turn supports inbound crude shipments.

On the clean product tanker front, India’s role as an emerging exporter of refined petroleum products is expanding due to its modern refining capacity and competitive pricing. Rising exports of diesel, jet fuel, and naphtha especially to Europe, Africa, and Southeast Asia are expected to support MR and LR tanker demand.

Overall, India’s economic momentum will continue to provide firm underlying support to both crude and product tanker markets in 2025.

iii]    STRENGTHS

SCI has decades of experience in the industry and operates a diversified fleet including crude oil tankers, product tankers, LPG carriers, bulk carriers, container ships, and offshore supply vessels. This allows your company to better hedge the volatility in the shipping market and provides with a unique ability to exploit demand growth in any given.

The company’s fleet is deployed in India’s EXIM and Coastal trade as well as international cross trade. Moreover, SCI is the only Indian shipping company providing both coastal as well as international container liner service and it also enjoys a unique distinction of being the only Indian shipping company operating LNG carriers, which are owned by its joint venture companies. The depth and vastness in expertise of your company makes it a front runner in the industry.

Your company also has longstanding relationships with major Indian oil refineries and other major players. The strong clientele base offer cargo security & employment assurance for sizeable part of the fleet.

iv]    OUTLOOK

Projections for 2025 indicate a deceleration in the dry bulk sector’s demand growth to 2.4%, influenced by escalating geopolitical tensions and the looming threat of a global recession after the sector experienced robust growth of 3.6% in 2024. While global dry bulk trade is anticipated to expand 2.1%, the demand for key commodities such as grains and steel is expected to contract due to the ongoing trade disputes. Conversely, the demand for commodities like coal and bauxite is forecast to remain strong, partially offsetting the downturn in other sectors.

However India’s growth will be a bright spot and will see healthy demand for Iron Ore, Coal as well as fertilizer.

v]    OPPORTUNITIES

Growth in Iron Ore Trade, strong Thermal coal demand in Asia and increase in bauxite trade to China are likely key opportunities in Dry Bulk trade.

Iron ore remains the biggest opportunity driver as Australia and Brazil expand exports. With respect to Thermal coal, India’s government policy to operate coal-based power plants at full capacity ensures continued coal import demand. India also presents an opportunity as a significant force in global coking coal demand. The nation’s infrastructure expansion and plans to boost steel production capacity to 300 million tonnes by 2031 will sustain high import levels. Additionally, medium-sized steel plants are expanding output, further elevating coking coal requirements.

Minor bulk and bauxite trade will also present growth opportunities. Bauxite shipments from Guinea to China are increasing and expected to engage more Capesize tonnage, boosting tonne-miles.

In the oil and gas sector, India’s growing crude oil demand owing to expansion in domestic refining capacity and country’s robust gas demand present good opportunity for tonnage deployment in this sector.

vi]    RISKS AND CONCERNS

Most of the risk and concerns are likely to be a direct or indirect result of the changes in current trade policy and geo political situations.

The recently proposed US Trade Representative (USTR) fee could bring in negative sentiment and curb cargo shipments in 2H25 and the political instability in the Red Sea continues to pose risks.

With respect to the trade, fears of a possible recession in the global economy could slow down the manufacturing and construction sectors across the globe.

Another possible downside is China growing emphasis on self sufficiency with respect to grain. While China remained among the largest importers of grains historically, its share of global grain imports declined massively over 2024, reflecting the country’s aim to meet its grain needs primarily through domestic production.

B. BULK CARRIERS & TANKERS

1) Crude Oil & Product Tankers

Crude Oil market in the year 2024 experienced notable fluctuations influenced by a combination of geopolitical tensions, shifting supply-demand dynamics and macroeconomic factors. There was marginal increase in global oil demand for the year 2024 with a

growth of about 0.9% compared to 2023. It is expected that further expansion in the EV fleet, increase in fuel efficiency of vehicles and a shift towards cleaner fuels might dampen the global crude oil demand growth after 2025. On the contrary, Asian market demand is expected to revive in the year 2025. The increase in crude oil flows through the TMX pipeline in Canada will also add to the seaborne trade. The sanctions on Russian tankers has influenced freight rates. These sanctions will also impact crude oil supply from Russia in the short term forcing India and China to increase imports from other sources, which will benefit VLCCs. Global refinery run has shown modest growth of 470 kbpd in 2024 and it is further expected that refinery throughput will improve in year 2025. The increased throughput will be supported by improved demand and stocking activity in the crude as well as product segment. With new refineries coming up in the Middle East, Africa (Nigeria) and North America (Mexico) will boost the trade.

In case of Crude tanker fleet, it is expected that the fleet to expand 0.9% in 2025 amid increased deliveries and fewer demolitions. A robust expansion of the Suezmax fleet will lead to this fleet growth. Demolitions are still muted as owners are unwilling to scrap their vessels due to strong earnings amid high freight rates resulting from longer voyages and the shift in trade patterns. However, transit risks through the Suez Canal seem to be easing as the Houthis have pledged to limit their attacks in the Red Sea. If transits via the Suez improve, voyages could shorten and earnings could decrease.

The Israel-Iran conflict that began in mid June 2025 led to a highly volatile security situation in the Middle East Gulf and the Strait of Hormuz, through which around 20% of global oil passes. The risk was further heightened in the wake of US military strike on Iran’s nuclear facilities and tanker rates saw a sudden spike. With the subsequent declaration of ceasefire the freight rates began to decline, but were still higher compared to the pre-conflict levels. The situation in the Middle East, which is a major loading area for oil and gas cargoes, remains fluid. Going forward, any changes in US policy on Iranian sanctions and the re-opening of the Red Sea shall have fundamental shift in demand supply situation across entire spectrum of shipping markets

In the year 2024 a total of 15 vessels (2.21 m dwt) comprising seven Aframaxes, seven Suezmaxes and one VLCC joined the crude tanker fleet; as against this, 37 crude carriers are scheduled to be delivered in 2025. For product tankers, as per reports around 20 Large Range and 3 small tankers joined the fleet in 2024. It is to be noted that along with conventional tankers, new orders of alternative-fuelled vessels have also increased in 2024.

VLCC earnings were seen to be at healthy levels in 2024, which are expected to rise in 2025, but decrease by the 2026. Sanctions on Russia linked tankers are forcing Asian buyers of Russian crude to look for alternative supplies, boosting tonnage demand in the Arabian Gulf. However, if disruption to the Russian crude exports extends for long, it will keep Middle Eastern crude exports to Asia strong benefitting VLCCs at the expense of mid-size tankers. For the Suezmax segment, fleet expansion amid weakening demand is causing softness in the market. Usually decline in Russian exports would mean lower demand for mid-size tankers because of the dominance of these tankers in Russian trade. View this, average spot earnings of the Aframax segment that showed good for the year 2024, is expected to exhibit downward trend in 2025 and 2026. There could be support for the Aframax tonnage demand due to increase in Canadian exports to Asia through the TMX pipeline.

Spot earnings of LR2 and LR1 product tankers, which were at healthy levels in 2024, declined subsequently as many large crude tankers cleaned up and switched to refined products trade inflating tonnage supply in the LR market. The average spot rate yield (TCE) of TC12, WCI - Japan route for the year 2024 was US$ 17,500 and for the MEG- East Africa TC17 route, was around US$ 27,700. The product tanker market has shown less movement in year 2024 due to significant changes in the supply-demand balance. Inspite of tight supply of the existing product carriers on account of a shift in trade patterns, there was softening of rates. One of major reason was the surge in new building vessel deliveries in the year 2025. Going forward, any possible improvements in the Suez Canal traffic or a resolution to the Russia-Ukraine conflict could lower tonne-miles demand and suppress product tanker earnings. The unfolding of post Iran-Israel conflict situation would be crucial in deciding the freight rates in tanker market. Furthermore, the shift to clean energy has added another dimension to the tanker market as it will significantly replace oil with renewables, while the petchem industry will support the demand for LPG and Naphtha. With future oil demand driven primarily by Naphtha and Jet fuel, LR tankers are expected to see stronger demand than smaller product tankers in the segment.

Opportunities

A likely rebound in China’s refinery runs in coming months will boost long-haul crude trade, which will keep tonnage utilisation of VLCCs high amid the stable fleet. Any possible resolution of the Russia-Ukraine conflict will increase short haul crude trade between Russia and Europe, hurting tonne-mile demand for crude tankers, especially mid-size tankers. It is expected that OPEC+ producers may continue to curb production amid surging non-OPEC output. However, any possible easing in production cut by OPEC+ members will have positive demand scenario and can boost trade. Stricter sanctions on tankers employed in the shadow trade of Russian oil will squeeze tonnage supply in the market and more non-sanctioned vessels will be needed for the Russian crude within price cap. Any shift in Iranian sanctions policy will increase the oil supply from the Middle East Gulf providing loading opportunities.

Further, as a result of the new IMO regulations there could be increase in tonnage scrapping which will tighten the tonnage list and further improving rates. For product tankers, increasing refinery runs in East of Suez, especially in the Middle East and India, will support the export of refined product. Further, with future oil demand driven primarily by naphtha and jet fuel, LR tankers are expected to see stronger demand than smaller product tankers.

Risks and Concerns

The ongoing economic and geopolitical uncertainties pose a significant risk to the prospects of crude tankers. The recent Iran-Israel conflict as well as US sanctions on Russian tankers will impact largely on freight rates as it will disrupt crude oil supply in the coming years. The Israel-Hamas conflict has forced many tankers avoid the Suez Canal and transit via the Cape of Good Hope. However, the recent peace deal between Israel and Hamas has increased the odds of potential normalisation of the trade through the Suez Canal. Any such improvement in Suez Canal traffic will ease Red Sea transits and it will normalise the voyages, hurting tonne-mile demand for crude tankers. Further disruption to the Russian crude flows will squeeze global crude oil trade and tanker demand. Any delay in reaching full capacity utilisation of the TMX pipeline because of operational bottlenecks will hurt the seaborne exports of Canadian crude and thereby, tonnage demand for Aframax tankers.

In long term the demand for the diesel and gasoline is set to decline gradually due to higher EV sales and increasing fuel efficiency. It will be a major concern for the product tankers. The shift to clean energy will further replace oil with renewables, while the petchem industry will support the demand for LPG and naphtha.

The new IMO Regulations pertaining to decarbonisation will increasingly have a significant impact on the tanker trade. There will be requirement of retrofitting Energy Saving Devices on old vessels which are burning fossil fuel. Such retrofitting may become economically unviable and can lead to fleet owners to invest in modern energy efficient tonnage by incurring substantial capital costs.

2) Dry Bulk

The overall dry bulk segment earnings for the year FY 24-25 were weaker as compared to FY 23-24. The average Baltic Dry Index (BDI) slipped slightly in FY 24-25 when compared to FY 23-24 and the TCY earning were also lower, especially for Panamax segment. While the first 3 quarters of FY 24-25 were relatively healthy, the Dry Bulk market endured a tough time in Q4 of 24-25, with markets staying below breakeven levels for most of the quarter. Unlike Q4 of 23-24, which had defied the cyclical lull of Q4, the months of Jan and Feb were very subdued with market exhibiting weaknesses in both supply and demand.

In 2025, total Dry Bulk Trade is expected to grow more softly than it did in 2024, both volume wise as well as tonne-mile wise. By volume, dry bulk trade forecast to grow by 2.1% in 2025, down from a higher growth rate of 3.2% in 2024 and by tonne-mile demand (reflecting distance and volume) is expected to increase by 2.4% in 2025, also slower than the 3.6% growth in 2024. The moderation in growth projection reflects recessionary fears, trade tensions, and policy uncertainties globally.

In the first 6 months of 2025 so far, Dry bulk markets have been dull. In Jan - Feb the Dry Bulk market had tumbled and was at one of the lowest levels since 2020, especially in the Indian Ocean region. While in March the market did improve with occasional spikes, the average yields were not comfortably above the breakeven levels. From demand point of view, the rest of 2025 is not expected to be not very exciting as global economy is appears to be sliding into a recessionary phase whereby the economic growth is projected to slow down to below 2.5% in 2025 and 2026. Iron Ore and coal movement will continue to be major drivers in 2025, however China’s stockpiling and slower domestic demand may temper overall impact. Moreover, grain trade is also expected to decline after strong 2024 trade, owing to reduced exports from major suppliers like the US, EU, Russia, and Ukraine.

From supply point of view, some support can be expected as fleet Growth will slow to 1.4% in 2025, down from 2.1% in 2024, due to modest new build deliveries, higher demolitions, and IMO Carbon Intensity Indicator (CII) speed restrictions.

The effective supply is expected to remain constrained, which is likely to support the freight market despite moderate demand growth. Overall, the dry bulk market in 2025 is expected to grow more moderately than in 2024, with supply constraints supporting freight rates, especially for Capesize vessels. However, downside risks from economic slowdown, trade policy shifts, and geopolitical uncertainties may cap upside potential for smaller segments.

Your company’s dry bulk fleet comprises of eight modern Supramax vessels of around 57,000 dwt each & seven modern Panamax / Kamsarmax dry bulk carriers of around 80-82,000 dwt. The dry bulk carrier fleet is relatively young with an average age of about 13.1 years. The company’s dry bulk carriers have been engaged over a spread of various trade & deployment pattern like spot voyages, period time charter including index linked time charter, COA’s etc. In addition to import/export/cross trade voyages, your dry bulk carriers were also employed on Indian coast, performing a few coastal time charters & voyage charters, whose earnings compare well with markets. The diverse trade & deployment patterns ensured that the market volatility and geo political uncertainties were well covered.

Opportunities

About 65% of dry bulk trade is expected to be Iron Ore and Coal. Iron ore remains the biggest opportunity driver as Australia and Brazil expand exports.

China’s strategic stockpiling and stable demand from sectors like machinery and EV manufacturing will sustain seaborne trade. The global iron ore trade is projected to grow 2.9% in 2025,underpinned by stable steel demand worldwide especially in Asia Pacific.

India is seen as a bright opportunity with India’s strong GDP and industrial growth in 2025 expected to create significant demand-side opportunities. India’s crude steel production is projected to grow by 7.1% in 2025, driven by infrastructure expansion and private sector investments. This will drive Iron ore requirements. Similarly, increasing power demand is expected to provide good support for growth in coal trade.

From the supply side, slower fleet growth (1.4%) and regulatory measures (IMO’s Carbon Intensity Indicator) are expected to restrain supply expansion and thus support freight levels. This supply-side discipline will support higher earnings for modern, fuel-efficient vessels.

Other than pure supply demand factors, a lot will depend on how geo-political issues and trade war pan out. US - China trade tensions and new tariffs could create fresh routing opportunities. As geopolitical tensions and tariff risks continue to weigh on the US - China trade, Chinese buyers increasingly shift away from American soyabeans in favour of competitively priced Brazilian produce, thereby likely to fuel Panamax tonne-mile demand.

Another possible upside is the growth in tonne-mile of Bauxite and other minor bulk trade. Bauxite shipments from Guinea to China are increasing and expected to engage more Capesize tonnage, boosting tonne-miles.

Risks & Concerns

Leading indicators suggest that GDP growth across major economies may slow to below 2.5%, impacting industrial activity, manufacturing output, and infrastructure spending. This poses a direct risk to demand for key dry bulk commodities.

Also, China remains central to the dry bulk market due to its dominance in iron ore, coal, and steel-related trades. However, structural challenges in its property sector, environmental restrictions on steel mills, and evolving trade policies could constrain its import appetite.

In terms of geo politics, the stability (or the lack of it) in Red Sea/Suez canal will also play a role. Any geopolitical easing in the Red Sea/Suez Canal region could reduce tonne-mile demand. Also, US Tariff Measures tariffs targeting Chinese-owned, operated, or built vessels may distort trade flows and restrict some fleet utilization, which may lead to a two-tier market.

3) LNG Transportation

The year 2024 marked a downturn in the global LNG market, primarily due to reduced gas demand in key European and Northeast Asian countries. This was largely driven by the accelerated adoption of renewable and nuclear energy sources. At the same time, uncertainties surrounding over 300 million tonnes per annum (mtpa) of planned LNG supply amid geopolitical, financial, and environmental concerns has further constrained trade activity.

Despite these challenges, the global LNG trade is projected to grow at a compound annual growth rate (CAGR) of 7.7% from 2024 to 2029. Asia is expected to dominate, accounting for 70-75% of total LNG trade by 2029. China, India, Taiwan, Japan, and South Korea are set to drive this growth, together comprising nearly 50% of global imports. While imports from Japan and South Korea are forecasted to decline gradually due to expanding nuclear generation, both countries will remain critical to the global LNG market. China and India are expected to register the strongest import growth 11% and 8% respectively driven by economic expansion, a shift from coal to gas, and the growing role of gas in the power and industrial sectors.

In Europe, LNG imports weakened in 2024 amid strong renewable and nuclear generation and above average inventory levels. However, a colder than expected 2024-25 winter temporarily boosted LNG demand. A modest recovery in European imports is anticipated from 2025, peaking in 2026, as the region continues to diversify its energy mix and extends its reliance on LNG due to delayed renewable integration and growing opportunities in synthetic and bio-LNG.

The LNG market is expected to remain tight through 2025-26, with limited new liquefaction capacity scheduled. This could lead to price volatility, potentially hindering LNG-to-power and bunkering projects in price-sensitive regions. An oversupply scenario is likely by the decade’s end, which should support broader demand growth and expansion into new import and export markets.

The U.S. is expected to lead in new LNG supply volumes, though its political and fiscal environment will influence project timelines. On the demand side, China will remain the top importer, driven by growing use of LNG in power, industry, and transportation. However, geopolitical factors such as the U.S.- China trade relationship, Russia’s pivot to China, and China’s economic trajectory will

be key in shaping the market.

While European demand is expected to stabilize, South and Southeast Asia are set to drive the next wave of LNG growth. Market dynamics may hift in favor of sellers by 2027, potentially leading to price reductions. The competition among top exporters - Qatar, U.S., and Australia is expected to intensify, with scepticism surrounding Australia’s cost competitiveness.

Shipping rates declined in 2024-25 amid fleet expansion and weak demolition activity. Fleet growth outpaced trade as 41 vessels were added by Q3 2024, exacerbating vessel oversupply during a period of limited liquefaction growth and soft demand.

Longer voyage routes, particularly via the Cape of Good Hope, may help support shipping rates in 2025, especially given rising U.S. -Asia trade and on-going tensions at the Strait of Hormuz. However, it will be other way as US is trying to resolve the Red Sea crisis. Charter rates are not expected to improve in 2025 but moderately grow as supply-demand fundamentals may be rebalanced. More than 50% of the total current estimated required LNG fleet are in the order books and these vessels will be delivered by 2027. Vessel demolitions are expected to rise due to ageing fleets and stricter regulations, peaking around 2027-28. New regulations by EU and IMO on the methane ships are expected to be implemented by 2027-28.

The global regasification capacity is projected to expand at a CAGR of 4.0% reaching 1,432.3 mtpa by the end of 2029. The growth will be driven by the rising interest in LNG-to-power projects and increasing LNG demand in Asia, which accounts for 73% of the current under-construction capacity.

Europe has been investing heavily in building regasification capacities to diversify its supply from Russia, but the long-term use of the existing terminals is at risk, especially given the recent weak demand and stiff competition from alternative energy sources. It is expected that Europe’s regasification capacity to grow modestly over the period, but larger potential still lies in Asia.

Moreover, the development of LNG import terminals will be boosted by the expected rise in investments for more LNG-fired power plants, mainly in Asia and South America, supported by the ease in prices (expected post-2026).

Further, it is expected that there will be increase in conversion opportunities for older ships to FSRUs and FSUs due to the rising scrutiny and shrinking employment opportunities for the ageing steam turbine vessels amid tight new building capacity.

Although 45 mtpa of new liquefaction build-up is expected in 2025, it will be insufficient to absorb newly built vessels as 1) Most of the new supply will be added by the 2025, 2) The delays in project start-up will curtail the expected supply growth, 3) nearly about 83 and 88 LNGCs are scheduled to be delivered in 2025 and 2026, respectively, despite adjusted slippages, and 4) demolitions will be higher in 2025, a greater impetus will be required to stabilise the supply-demand imbalance, which seems unlikely in 2025. Thus, high vessel availability will nudge buyers towards spot purchases, keeping short-term chartering subdued in 2025-26.

Over the long term, countries such as Ecuador, Nicaragua, Ghana, Morocco, South Africa, and Mozambique may begin importing LNG as affordability and availability improve. By 2030, 350 mtpa of new liquefaction capacity is expected to come online.

India

•    India is considered as one of the bright spots, recording YoY increases in their LNG imports in Q4 of 24 due to higher gas demand for electricity generation and declining domestic production. Imports increased 26% YoY in 2024, to a high 27.8 million tonnes in 2024. This surge can be attributed to the rise in consumption, particularly by city gas distribution companies. Despite the increase in consumption, domestic production remained muted, leading to a rise in imports

The key reasons for the steady increase in LNG imports are mainly due to the Increasing demand from city gas distribution, Falling domestic gas production, Expanding LNG import Infrastructure, Supportive policy and shift towards natural gas.

•    India’s LNG imports to remain robust in 2025, driven by following factors:

-    The stronger economic growth and growing dependence of the country on imported LNG, which now accounts for more than 50% of the country’s LNG consumption

-    A gradual increase in offshore gas production and the expansion of pipeline infrastructure to the northern regions

-    The growing government support to LNG infrastructure development with the goal of increasing the share of LNG to 15% in the energy mix by 2030

-    The shift towards piped natural gas from bottled petroleum gas

-    Government support for increasing the number of CNG stations to 18,000 across the country by 2032.

•    The expansion project, which is set to be completed in 2025, will also support this trend - the 5 mtpa Dhamra LNG terminal is expected to see increased imports with the completion of the Pradhan Mantri Urja Ganga pipeline

•    Furthermore, GAIL India will start operating its 5 mtpa Dabhol LNG terminal at full capacity, boosted by new breakwater facility

infrastructure. To seek additional LNG supplies for meeting India’s growing demand GAIL (India) is actively seeking long-term supply deals for LNG amounting to 5.5 mtpa, raising its capacity to 21 mtpa by 2030. The company has already signed deals for the supply of 15.53 mtpa of LNG, with recent deals with Vitol and ADNOC for the supply of 1 mtpa and 2 mtpa, respectively.

•    With renewable energy still not fully capable for grid connectivity, dependency on coal-based and gas-based plants is expected to increase to meet the incremental power demand, especially during seasonal peaks as witnessed in 2024 when higher cooling demand amplified the role of LNG power generation.

•    LNG consumption by India’s power sector is also expected to grow as the country progresses with various LNG to power projects. The Central Electricity Authority projects that the country’s power demand will grow at a CAGR of 7% over the next five years.

•    Three terminals of India that is Chhara LNG, Jafrabad FSRU, and Dahej LNG Phase 2 are under construction with a combined capacity of 15 mtpa. Upon completion, India’s total regasification capacity will rise to 62.7 mtpa. While current utilization remains low, it is expected to improve as LNG import demand grows at a projected CAGR of 8%.

•    Your company jointly owns and operates 3 LNG carriers under long term charters with charterers Petronet LNG Limited, India for transportation of LNG predominantly from Qatar. The 4th LNG carrier is under long term charter to Exxon Mobil LNG Services B.V, Netherlands. In order to ensure its presence in the new areas of the LNG market, your company is exploring opportunities for operating small LNG carriers and coastal LNG shipping as well as other emerging opportunities in India’s LNG import sector. Your company has built up a pool of trained LNG officers and the experience of independent technical operation of LNG tankers has helped to provide ship management services.

4) LPG Transportation

India’s LPG imports surged to 27% in 2024 from last year. The LPG imports of 2024 were 22.7 million tonnes compared to 17.9 million tonnes in 2023. The top four Asian importers (China, Japan, South Korea and India) surged 10.4% in 2024, reaching 75.8 million tonnes and constituting 57.3% of the global LPG trade. The growth was driven by India’s stronger than expected residential and industrial demand. The LPG imports account for 90% of the India’s LPG demand. Additionally China’s resilient petchem demand of 2024 and Vietnam’s robust demand all throughout year led the surge in 2024.

After the national elections held in 2024, the country added 75 million low-income households under the Pradhan Mantri Ujjwala Yojna (PMUY) subsidy scheme, increasing residential demand. State policy to keep the price of a 14.2 kg LPG cylinder stable throughout 2024 also added to the residential demand. Further, competitive pricing of propane as compared to piped natural gas resulted in strong industrial demand for LPG, particularly from the ceramic manufacturers in Gujarat’s Morbi region.

While 2024 marked a year of record imports, India’s LPG consumption is expected to dip in 2025 due to multiple headwinds:

-    Urban Transition to Piped Natural Gas (PNG): Urban households are increasingly shifting from LPG to PNG, especially in metros.

-    Subsidy Reduction: The anticipated rollback of government subsidies will likely temper residential demand.

-    Price Adjustments: Expected alignment of residential LPG prices with Saudi Arabia Contract Prices (CP), along with a projected increase in CP particularly if a US - China tariff war boosts Chinese demand could make LPG less affordable for price-sensitive consumers.

-    Competitive Energy Sources: The rise of PNG and other alternatives in urban areas will pose additional challenges.

Despite a potentially softer demand outlook, several factors are expected to support India’s LPG import levels in 2025:

-    Infrastructure Development: The Kandla-Gorakhpur LPG pipeline, spanning 2,800 km, is scheduled to commence operations by March 2025.

-    Petrochemical Investments: New capacity additions, such as Reliance Industries’ Jamnagar Polypropylene Plant 3 (with a capacity of 5.2 mtpa), will increase LPG use in the industrial and petrochemical sectors.

-    Terminal Expansion: Continued investments in LPG import terminals will enhance handling and distribution capacity.

India’s economy is projected to grow at 6.5% annually until 2029, with inflation expected to ease to 4.5% in 2025, moving toward the RBI’s target of 4% by 2029. Additionally, the country’s aggressive push in renewable energy (solar, wind and green hydrogen) is likely to reshape energy consumption patterns and reduce dependency on fossil fuels over the long term, including coal.

Your company’s sole VLGC carrier - VLGC Nanda Devi, was employed under time charter with Indian energy PSU during the financial year under review. The daily earnings were attractive as compared with markets.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The bottom line and top line of tanker segment exhibited improvement to the already strong performance of last year. The financial performance of the tanker segment has been largely influenced by earnings on all segments.

Your company’s five VLCCs were gainfully employed during the financial year under review; in a mix of time charters and spot voyage charters with Indian charterers both in public and private sector. The segment earnings were in line with the prevailing market and brought good margins over vessels’ operating costs.

Your company’s modern Suezmax tankers were deployed in a mix of Indian as well as foreign charterers mainly on voyage charter basis. Older Suezmax vessels were available for trading after their fourth special survey and were gainfully deployed on account of Indian oil refiners to carry import cargoes.

Aframax tankers were deployed in a mix of COA, spot voyages and time charter for carriage of Indian import cargoes as well as cross trade cargoes. Through judicious deployment of some of the modern tankers in international cross trades and by triangulation of voyages, your Company maximized earnings of these tankers.

Out of five LR1 tankers trading in DPP, four tankers were employed on Indian coast in a mix of COAs and spot voyages, catering to coastal crude movement for the Indian oil industry. One DPP LR1 tanker was employed with foreign charterers ensuring steady earnings at healthy levels.

In case of product carriers, LR2 and LR1 tankers of your Company were deployed in the East of Suez market in the international cross trades and achieved a healthy level of revenue as compared to the prevailing market. Three MR product tankers were gainfully employed on the Indian coast supporting coastal movement of Indian oil industry’s product cargoes.

With respect to Dry Bulk segment, contrary to FY 23-24, the 1st half of FY 24-25 was relatively healthy before the market started tapering off.

Although the period of Jan- Feb is generally seen to be weak for the Dry Bulk segment, the drop in levels was lot more significant as against what was expected. In Q4 of 24-25, the grain movement from South America, especially Brazil was seen to be weak, leading to lot of ships stuck in the Pacific. As these ships were engaged in trade movement within the Pacific, the tonne-mile dropped substantially, thereby exacerbating the situation.

However your company’s diversified strategic tonnage deployment of tonnages (including a COA in dry bulk segment) minimized the negative impact of decline in the dry bulk segment. The segment revenue of Dry Bulk carrier actually improved slightly in FY 24-25 visa-vis FY 23-24, however, the PBIT fell short due to higher depreciation and other non operating expenses.

C. LINER AND Passenger Services

A. Industry Structure & Developments

1) World Scenario:

A.1 In 2024-25, the shipping industry grappled with weaker global growth and complex trade dynamics. The OECD cut its 2025 GDP forecast to 2.9% amid inflation and tighter monetary policies. Modest trade gains and ongoing tensions impacted regional demand and strategic shifts across the sector.

A.2 Container shipping saw strong growth from e-commerce and inventory replenishment, prompting record fleet expansion and a shipbuilding boom, with yards booked till 2028. However, this has raised concerns regarding capacity oversupply leading to weak demand. While containers led orders, demand also surged for LNG and car carriers. New builds increasingly featured dual-fuel and green-ready designs to meet future environmental norms.

A.3 Geopolitical risks—especially Red Sea disruptions forced longer routes around the Cape of Good Hope, raising costs and transit times. Additional challenges from U.S.-China tensions, the Russia-Ukraine war, and rising protectionism disrupted trade flows. Meanwhile, de-carbonization pressures driven by IMO mandates, drove investments in alternative fuels and efficiency, though progress varied due to cost and technological challenges.

B) Indian Scenario:

In fiscal year 2024-25, India’s economy experienced robust growth of 6.5%, establishing it as one of the fastest-growing major economies globally, a fact confirmed by both the Reserve Bank of India and the World Bank. This expansion was primarily driven by strong performances in the construction and manufacturing sectors, alongside a significant rebound in rural consumption during the final quarter. While impressive, this pace did moderate slightly from the previous year’s 8.2%, reflecting a post-pandemic normalization and the influence of global economic headwinds. Despite these challenges, India’s external sector remained stable, with resilient export performance—particularly in services—helping to narrow the trade deficit, even as imports remained high due to energy, defense, and capital goods need.

A key highlight for India’s maritime sector in FY 2024-25 was the impressive 4.3% annual growth in cargo handling at its Major Ports,

which processed approximately 855 million tonnes. This increase underscored the ports’ resilience and growing capacity, driven by higher container throughput and increased handling of various commodities, with Petroleum, Oil, and Lubricants (POL) remaining dominant. Furthermore, May 2025 marked a pivotal moment with the inauguration of the Vizhinjam International Seaport in Kerala. As India’s first deep-water transshipment and automated port, capable of accommodating ultra-large container ships, it significantly strengthens India’s role in global maritime trade.

2)    Business Sector & Outlook

Global GDP growth is expected to slow to 2.7-2.9% in 2025 (World Bank, IMF, OECD), down from 3.3% in 2024, with UNCTAD projecting a lower 2.3% amid uncertainty and geopolitical tensions. Merchandise trade is forecast to rise by 3.3% (WTO), while services exports - led by IT, tourism, and digital trade are set to continue outpacing goods.

The global container shipping market anticipates moderate demand growth of approximately 3% in TEU-mile demand for 2025, a significant deceleration from 2024’s 17% increase. This is set against fleet expansion of over 5.4%, raising concerns about overcapacity and potential softening freight rates. While temporary trade rerouting due to the Red Sea crisis offers some short-term support, analysts like MSI caution that this is fleeting. The influx of roughly 2.1 million TEUs of new vessel capacity in 2025, concentrated in ultra-large vessels, could lead to renewed rate volatility once current disruptions ease.

3)    SWOT Analysis - L&PS Division

A)    Strength & Weaknesses:

A.1 Liner Division of SCI has vast experience in liner trade, instilling confidence in cargo interests / owners who continue to lend their invaluable support to SCI.

A.2 Global network of agent provides and facilitates for localized contacts in markets to offer bespoke, customised, end-to-end total logistics solutions.

A.3 Operating partnerships have been forged with internationally recognized container carriers in select consortia, to enhance coverage and frequency on major trading routes.

A.4 Break-bulk operations are providing a stable source of revenue.

A. 5 Compared to Global Shipping Lines, the percentage share of SCI’s Liner Fleet is small.

B)    Opportunities & Threats:

B. 1 Substantial growth of Indian EXIM container trade facilitated by enabling GOI policies viz. Maritime AmritKaal Vision 2047, Maritime

Vision 2030, Sagarmala, Gati Shakti, National Logistics Policy, Foreign Trade Policy 2023 etc.

B.2 Substantial potential for enhancing presence on Indian coast in coastal shipping sector, feeder operations etc.

B.3 India-Maldives service would serve as template for expansion into Indian Ocean Region (IOR) & near Coastal Regions.

B.4 Break-bulk sector affords inherent potential for carriage of ODC / Project / Heavy Lift cargoes of Government Organizations / Departments / PSUs etc.

B.5 Supply / demand overhang with increased box-ship order book dominated by larger ships (ULCS / VLCS) placing considerable stress on already depressed freight markets.

B.6 Merchandise/EXIM trade growth is being hindered by geopolitical risks, global inflation, slowing demand, trade tariffs, high inventory overhang, and rising protectionism, all of which are depressing capacity utilization and impacting emerging markets.

B.7 Extreme volatility in input costs viz. especially bunker prices, charter hire rates, container shortage/surplus depending on the service routes, increased regulations by regulatory bodies, huge investments in advance technologies which is ever evolving, port / terminal / depot tariffs etc. severely impacting bottom line.

4)    Liner Shipping Services 2024-25 A) Segment-Wise Performance

Liner Vessels: Table below shows profile of SCI’s liner fleet as on 31.03.2025 having a total container carrying capacity of 20,000 TEUs (nominal capacity).

Type of Ownership	No.	Nominal Capacity (TEUs)	DWT (MT)
SCI Owned	2	8,800	1,15,598
In chartered	3	11,200	1,54,600
Total	5	20,000	2,70,198

SCI owned container vessels viz. MV SCI Chennai and MV SCI Mumbai are 16 years old. As on 31.03.2025, 5 vessels including 3 inchartered container vessels having combined DWT of about 2,70,198 MT were operated by SCI.

In addition to above owned and in-chartered vessel, SCI also has loading rights on 13 vessels of its partners in various consortia arrangements with leading Shipping Lines.

SCI continued to be present in following sectors.

B)    Container Services

B.1 India - Europe Shipping Services: SCI launched its UK-Continent Cellular Container Service in 1994, initially as a sole operator with three 1,800 TEU vessels. The service evolved to a fixed-day weekly schedule with partners, then rationalized in 2009 by forming a consortium with MSC, with SCI contributing two 4,400 TEU vessels to an eight-vessel operation. By early 2016, the service was upgraded to nine vessels of 8,500-10,000 TEU, with SCI providing one 8,500 TEU chartered vessel until its redelivery in August 2021, after which SCI maintained its presence via slot purchase from MSC.

The ongoing Red Sea crisis, prompting rerouting via the Cape of Good Hope, increased voyage durations for MSC’s Asia-Europe services (IPAK and Himalaya) from 63 to 84 days, necessitating an increase from nine to twelve vessels. MSC subsequently reorganized these services. In response, SCI in-chartered the 9,000 TEU "SCI Delhi" in January 2024 and inducted it into the India-Europe Service at Nhava Sheva on October 18, 2024.

B.2 SCI’s Coastal Shipping Services: SCI operates the SMILE service, linking India’s West Coast to its Southern ports. Additionally, through a partnership, it provides connectivity to the East Coast via the Chennai-Colombo-Gulf (CCG) Service. This collaboration significantly enhances SCI’s capabilities, allowing for high-quality, fixed-day, fixed-window coastal services. These two services, SMILE and CCG, create a robust network that enables SCI to connect pan-Indian ports with improved transit times. This expanded reach includes connecting the West Coast to Eastern ports like Vizag, Kattupalli, and Krishnapatnam, effectively promoting a pan-India shipping service. SCI is actively cooperates with other entities to develop optimal, commercially viable, and environmentally friendly transportation solutions for the trading community. By facilitating increased coastal shipping and modal shifts, SCI is a key contributor to the propagation of Indian coastal trade and the goals of the Sagarmala initiative.

B.3 India—Maldives Shipping Services: India-Maldives Cargo Shipping Service was jointly launched through a virtual ceremony on 21.09.2020, adding a new chapter in connectivity initiatives taken by both Countries in the Indian Ocean Region (IOR). Although majority shipments are containerized in nature, this service also caters to Breakbulk cargoes. Currently, MV MSM Douro, a 220 TEU (nominal capacity) vessel in-chartered by SCI, has been deployed in IMS Service operating between ports of Tuticorin & Male.

B.4 Inland Waterways Services: SCI’s wholly owned subsidiary, Inland & Coastal Shipping Ltd (ICSL), established in 2016, focuses on inland waterway transportation. In 2021, ICSL signed an MOU with the Inland Waterways Authority of India (IWAI) to operate three cargo vessels on bareboat charter on National Waterways serving Indian hinterlands & 2 cargo vessels were taken over by ICSL in January and February 2021 and third vessel was taken over by ICSL in December 2024. ICSL launched scheduled services on NW1 and NW2 in December 2024 under the JalVahak Scheme, promoting cargo movement on inland waterways. Furthermore, ICSL and IWAI also agreed in March 2022 for ICSL to operate two IWAI-owned RO-RO vessels to boost RO-RO transportation; one vessel, MV Gopinath Bordoloi, was out-chartered in August 2023, and the second, MV Sankar Dev, is expected to be taken over by ICSL soon.

B.5 Feeder Operations: SCI enters feeder arrangements with “Common Carriers” between various destinations / port-pairs on Indian Sub-continent for providing seamless connectivity for EXIM & Coastal trade.

B.6 Break-Bulk Services: SCI arranges carriage of break-bulk cargoes on space charter basis from various regions across globe including USA, Europe, Far-East etc. for imports of Government Departments / PSUs and other GOI Organisations, which includes ODC / Project / Heavy Lift / IMO Class-I Cargoes etc. and also containers.

B. 7 Marketing: SCI’s marketing team continues to make regular customer calls through its own Offices and also through Agents

appointed at various ports in India and abroad in order to market its container and break-bulk services. Both physical & virtual meetings with Agents, Customers, Shippers, and Cargo Consolidators etc. are held periodically, and SCI representatives also participate in various trade meets at important locations in India.

C)    Managed Vessels

L&PS Division also oversees the operation and management (O&M) of vessels belonging to other government organizations. The O&M brief for these managed vessels includes:

C. 1 O&M of A&NA (Andaman & Nicobar Administration) owned vessels: L&PS Division operates domestic passenger and cargo

transportation services between mainland and A&N group of islands and inter-islands by managing vessels owned by Andaman &

Nicobar Administration (A&NA). Presently, a total of 25 vessels of A&N administration are being managed by SCI. These comprise of 17 nos. Foreshore passenger vessels, 6 nos. inter-island vessels, 01 no. Mainland vessel and 01 no. cargo vessel.

C.2 O&M of other organizations: During the year, SCI continued operation and management of Oceanographic and Coastal Research vessels on behalf of the Government agencies / departments, viz, three vessels owned by Geological Survey of India (GSI) under Ministry of Mines.

The following table shows the profile of Passenger vessels, cargo vessels and other vessels of various Government departments managed by L&PS Division.

As on 31.03.2025
Type of Ships	Nos.	Pax. Capacity	Cargo Capacity (MT)
Pax cum Cargo vessels	07	3898	1636
Cargo ships	01	-	400
Fore Shore Vessels	17	1601	250
Research Vessels	03	-	-

C.3 ndia-Sri Lanka Ferry Service: International passenger ferry services between Nagapattinam, India and Kankesanthurai, Sri Lanka, began on October 14, 2023, initially using the HSC Cheriyapani as a temporary measure. To secure a long-term solution, SCI issued an Expression of Interest (EOI) in October 2023. After thorough evaluation of the proposals, M/s IndSri Ferry Services Pvt. Ltd. was chosen to operate the route.

M/s IndSri Ferry Services then acquired the 150-capacity passenger vessel "Sivagangai." Following its relocation from Port Blair to Chennai, the vessel underwent essential repairs, surveys, and certifications. The "Sivagangai" officially commenced service on August 16, 2024, connecting Nagapattinam and Kankesanthurai.

SCI has been instrumental in supporting M/s IndSri Ferry Services, providing comprehensive assistance with certifications, planning, and ensuring regulatory compliance for the international service. Initially, the ferry operated three times a week. By October 2024, M/s IndSri Ferry Services increased the frequency to four times a week (Tuesday, Thursday, Saturday, and Sunday) to meet passenger demand. Due to seasonal weather conditions, the service was temporarily suspended from November 19, 2024, and restarted in February 2025.

5)    Outlook:

(A)    India’s FY 2025-26 GDP growth forecasts vary, with the IMF projecting 6.2% due to global trade uncertainties, while the ADB remains more optimistic at 6.7% citing strong domestic demand and investment. Simultaneously, India’s maritime infrastructure is expanding, notably with the recent inauguration of Vizhinjam International Seaport and ongoing developments at various other Indian ports, enhancing port capacity and trans-shipment capabilities. Despite this, the global maritime outlook remains uncertain due to persistent geopolitical challenges like the Red Sea crisis, which causes extended transit times and increased costs, impacting freight rates. Ongoing tariff impositions are also reshaping global trade flows.

(B)    The India-Europe Service is projected to grow in 2025-26, supported by infrastructure upgrades and strategic realignments, despite global uncertainties. However, Red Sea disruptions are forcing route adjustments, while a growing focus on sustainability emphasizes low-emission vessels. Agility and collaboration will be key for players like SCI.

(C)    SCI is committed to expand India’s coastal trade, planning to add more vessels in line with government initiatives like ’Make in India’ and ’Sagarmala’ that foresee significant market growth. Furthermore, SCI is pursuing inland waterway expansion through its subsidiary, ICSL, capitalizing on government efforts to develop this underutilized sector as a key multimodal transport mode.

6)    Risks & Concerns:

Container freight rates are unlikely to sustain the growth seen in the past two years. This, combined with geopolitical instability, could lead to significant volatility and downward pressure on the Liner division’s revenue and profit. However, the L&PS Division’s costcutting efforts may mitigate these impacts. Concurrently, SCI is seeking to expand its liner shipping services and achieve further market penetration in both EXIM and coastal sectors.

7)    Discussion on Financial Performance w.r.t. To Operational Performance:

SCI’s Liner Segment registered a net profit of Rs. 166.22 crores in FY 2024-25, driven by improvements in both volumes and freight rates.

8)    Important Developments, If Any:

As a path breaking initiative to promote cargo transportation through inland waterways, an innovative Cargo Promotion Scheme was

announced by Hon’ble Minister, MoPSW on 15.12.2024. The Scheme named as JalVahak Scheme comprises of two components viz., Scheduled Services on National Waterways 1 & 2 by ICSL (a wholly owned subsidiary of SCI) and grant of 35% incentive to Cargo Owners for modal shift of cargo to Inland Waterways. These initiatives by MoPSW & IWAI are aimed at providing reliable, cost effective and efficient cargo movement to key catchment areas along Kolkata / Patna / Varanasi on NW1 & Kolkata / Pandu (Assam) on NW2. ICSL has been designated as the implementing agency for JalVahak Scheme.

9) Information Technology:

E-tendering platform is extensively being used for procurements, thus enabling transparency and efficiency in the procurement process. SCI has implemented a Vendor Invoice Management system which facilitates registration of invoices centrally by the vendors which then goes through a work flow mechanism for approvals till settlement. Vendor has a facility to track and understand the status of their invoices.

Further to strengthen SCI IT system, SCI is in the process of upgrading complete IT infrastructure. As a first step complete workstations have been replaced with latest machines. Server and other equipment are in the process and expected to complete at the earliest.

D. Technical and Offshore Services Division

Information relating to the year under review viz 01.04.2024 to 31.03.2025:

The T&OS Division of SCI operates fleet of 10 owned offshore vessels. In addition to the above, it has also been managing two (02) vessels of ONGC.

Offshore vessels:

SCI owned Offshore vessels:

Your Company’s owned offshore fleet comprises of 10 vessels i.e. 02 nos. 80T Anchor Handling, Towing & Supply Vessels (AHTSVs), 04 nos. 120T AHTSVs, 02 nos. Platform Supply Vessels (PSVs) and 02 nos. Multi-Purpose Support Vessels (MPSV).

During the year under review, five (5) vessels (one PSV and four 120T BP AHTSVs) continued to be on long term charter with ONGC. Further, two vessels were under deployment with DRDO (one MPSV and one 80T BP AHTSV); and two vessels were under deployment with Indian Navy (one MPSV and one PSV). Vessels deployed with DRDO and Indian Navy were providing assistance in national missions of strategic importance.

While at the beginning of the year, five (5) vessels were with ONGC, all the contracts have been concluded during the year and your company could secure long term contracts for four (4) vessels from ONGC through international competitive bidding process of ONGC. Out of these, one vessel has been deployed back with ONGC after upgradation to DP2 and other fitments. Further, another three vessels were under upgradation, DD/repairs, etc. would be deployed with ONGC in the beginning of the FY 2025-26.

O&M of ONGC owned vessels

i. Specialized vessels of ONGC:

During the year 2024-25, your company continued the Operation & Maintenance (O&M) of ONGC’s one Geotechnical vessel (GTV Samudra Sarvekshak) and one Well Stimulation vessel (WSV Samudra Nidhi).

ii    Other Projects:

DRDO Project:

Your Company continued to deploy its one Multi-Purpose Support vessel (MPSV) “SCI Saraswati” and one OSV “SCI Mukta” with the Defence Research & Development Organisation (DRDO) during the entire FY 2024-25. These vessels are being utilized to meet support requirements towards DRDO’s strategic missions of national importance.

iii    Indian Navy Projects:

Similar to previous year, during the current year also, the Indian Navy has continued to avail services of your company’s one MPSV “SCI Sabarmati” and one PSV “SCI Yamuna”. Your company is proud to have been associated and assisting the Indian Navy in their critical missions of national importance.

Risks and Concerns:

Availability of competent/suitable manpower for the Indian Flag Offshore vessels has become a serious concern. The acute shortage of manpower onboard vessels is hampering the employment of vessels and thereby affecting adversely in commercial operation of vessels. Moreover, with good opportunities available across globe, Indian seafarers are moving to foreign/private shipping lines for pay & taxation benefits, thereby India is facing shortage of competent manpower onboard Offshore vessels.

Further, there has been shortage of availability of yards on the Indian Coast for dry-docking and repairs of Offshore vessels. There are only limited yards present and various difficulties are being faced in availability of dry-dock slots as per the vessels requirements.

Entry of new players in the Indian market with low Capex is another concern and challenge for your company. Many small private players acquiring vintage secondhand vessels at low cost and competition' with these players is a big challenge for SCI. To counter the same, your company has been taking all efforts to deploy vessels on long term basis, so as to avoid the impact of fluctuations in charter hire rates in market.

Strengths and Weaknesses:

Your company has a diversified fleet of offshore vessels with 02 nos. 80T AHTSVs, 04 nos. 120T AHTSVs, 02 nos. PSVs and 02 nos. MPSVs, thus enabling it to cater to requirements of various clients in the offshore market. Your company is also in the process of tonnage acquisition in the required segments.

Further to keep the vessels technologically up-to-date your company has upgraded two 120T BP AHTS vessels to DP-2 and remaining two vessels are in the process of upgrading from DPI to DP2, in line with the market requirements of E&P operators.

During the period under review, your Company has successfully deployed majority vessels on long term charter thus ensuring steady revenues for long term period.

ONGC being the biggest E&P company in India, your company has been employing majority of its vessels with them on long term basis. However to mitigate the risk of dependence on one client, your company has been in constant discussions with various other public/private operators to deploy our vessels for their offshore activities.

While SCI has diversified Offshore fleet, it is comparatively small to cater/fulfill to the needs of E&P companies in India, which is being capitalized by the private & small players by adding low cost assets.

Opportunities and Threats:

The offshore vessel market in India presents several opportunities, driven by the country’s expanding energy sector, regulatory initiatives and increasing demand for maritime infrastructure. Here are some key opportunities:

i.    Oil and Gas Exploration:

>    Increased Exploration Activities: The Indian Government has been encouraging exploration and production activities in its offshore oil and gas fields. This creates demand for offshore assets like Offshore Support Vessels (OSVs), Platform Supply Vessels (PSVs), Anchor Handling Tug Supply Vessels (AHTSVs) and Multi-Purpose Support Vessels (MPSVs).

>    Deepwater and Ultra-Deepwater Projects: As exploration moves to deeper waters, there is a growing need for specialized vessels capable of operating in challenging environments.

ii.    Renewable Energy:

>    Offshore Wind Farms: India is exploring the potential of offshore wind energy. The development of offshore wind farms will require various types of support vessels for installation, maintenance and operations.

iii.    Subsea Operations:

>    Pipeline and Cable Laying: With the expansion of offshore oil and gas fields and the development of renewable energy projects, there is a need for vessels specializing in laying subsea pipelines and cables.

>    Inspection, Maintenance, and Repair (IMR): Regular IMR activities for existing offshore infrastructure present ongoing opportunities for offshore vessels.

iv.    Maritime Security:

>    Coastal Surveillance: Enhancing coastal security and monitoring activities requires specialized vessels equipped with advanced surveillance and monitoring systems.

>    Search and Rescue Operations: The need for efficient search and rescue operations in India’s vast maritime domain creates demand for well-equipped and versatile offshore vessels.

Investment in Technology: Investing in modern, technologically advanced vessels can enhance efficiency and safety in offshore operations.

By capitalizing on these opportunities, companies in the offshore vessel market can play a crucial role in supporting India’s maritime infrastructure and energy ambitions.

With steady growth in the demand for crude oil, the E&P activities are expected to rise, thereby creating shipping demand for offshore assets in the Indian coast. Substantial potential is foreseen for growth in offshore services on the Indian coast as well as in the

neighboring areas. Informatively, during the second half of the year, ONGC floated tender for chartering of various offshore vessels for a long term period of 3 years, wherein SCI was successful in getting contract for one vessel for 3 years period under OSV category. Further, OnGc is expected to publish a global tender for their further requirements in the Offshore field. Also your Company is being approached by various Government organizations as well as private operators for requirement of Offshore vessels. Thus various opportunities exist in the market for deployment of Offshore vessels of your Company.

The Indian offshore market, while presenting considerable opportunities, faces significant competition from both domestic private players and an increasing influx of foreign assets. Recent ONGC tenders vividly illustrated this intense rivalry, evidenced by the high volume of vessel offers from Indian private shipping companies and international entities alike.

Furthermore, the offshore industry exhibits a strong preference for operational efficiency, driving demand towards modern, technologically advanced vessels boasting superior fuel economy. Consequently, older, high fuel consumption vessels, particularly those with DP1 classification, are encountering increasing challenges in securing employment.

Industry Structure and Developments:

i) World scenario:

i)    The offshore support vessels industry is dependent on utilization of rigs, E&P activities and other activities in oil fields, which in turn depends upon strategic decisions of energy security by oil and gas producers, shifts in Government policies and long term crude oil price trends.

Global headwinds, economic turmoil, recessionary trends in many developed economies, impact of Russia-Ukraine war, US Tariffs, etc. played / will be playing the critical role in deciding future course for the off-shore market.

In summary, the global OSV market has shifted from a buyer’s market to a seller’s market, particularly for modern, capable assets.While challenges remain, the outlook is broadly positive, driven by recovering oil and gas activity and the strong secular growth trend in offshore renewables.

ii)    Indian scenario:

The Indian OSV market is primarily driven by the activities of state-owned oil and gas companies, predominantly ONGC, with significant operations on both the West Coast (Mumbai High, Bassein fields) and the East Coast (Krishna Godavari Basin). Consistent demand arises from exploration drilling, production support, and extensive Inspection, Maintenance, and Repair (IMR) programs for the substantial existing offshore infrastructure.

Huge competition is observed in the recent tenders of ONGC, this competitive pressure often means that charter rates in India may not fully mirror the sharp increases seen in some other global regions, although there is likely upward pressure compared to the market lows of previous years.

Meanwhile, offshore vessels of your company were engaged on long term charter with ONGC and other Govt. Departments also, thus having less impact of the subdued market.

iii)    Outlook:

The outlook for the Indian offshore oil industry is influenced by various factors, including domestic and global demand for oil, technological advancements, regulatory frameworks, and geopolitical dynamics. Here’s an overview:

^ Reserves and Exploration: India has significant offshore oil reserves, particularly in the western offshore region of the Arabian Sea and the eastern offshore region of the Bay of Bengal. Exploration efforts continue to identify new reserves, including deepwater and ultradeepwater prospects.

^ Production Growth: The Indian offshore oil industry has experienced steady production growth over the years, driven by projects operated by state-owned companies like Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), as well as private players like Reliance Industries Limited (RIL). However, ageing fields and declining production rates in some areas pose challenges to sustaining growth.

^ Investment and Development: The Indian Government has been encouraging investment in the offshore oil sector through policies aimed at attracting domestic and foreign investment, promoting exploration and production activities, and facilitating technology transfer. Initiatives such as the Open Acreage Licensing Policy (OALP) and the Hydrocarbon Exploration and Licensing Policy (HELP) aim to boost exploration and production activities in both shallow and deepwater areas.

^ Technological Advancements: Advancements in exploration and production technologies, including seismic imaging, drilling techniques and enhanced oil recovery methods, are enhancing the viability of offshore oil projects in deeper waters and challenging environments. These technologies contribute to unlocking new reserves and improving production efficiency.

^ Global Market Dynamics: The Indian offshore oil industry is influenced by global oil market dynamics, including oil prices, supply-demand trends and geopolitical developments. Fluctuations in oil prices can impact investment decisions, project economics and Government revenue from oil exports.

^ Renewable Energy Transition: The global transition towards renewable energy sources, including solar, wind and hydroelectric power, presents both challenges and opportunities for the offshore oil industry. While there is increasing pressure to reduce reliance on fossil fuels and mitigate climate change, oil will likely remain a significant part of the energy mix for the foreseeable future, especially for industries like transportation and petrochemicals.

In summary, the outlook for the Indian offshore oil industry is influenced by a complex interplay of factors, including technological advancements, regulatory frameworks, market dynamics and the transition towards renewable energy. Despite challenges, the industry is expected to continue playing a significant role in India’s energy security and economic development. Furthermore, ONGC is also expected to come up with more tenders with long term requirements for its offshore assets. Also, more requirements, albeit short term, are emanating from private operators / contractors in the Indian offshore market.

Technical Services:

Technical Consultancy Services

During the year under report, the Company continued to provide technical consultancy services to A&N Administration, Union Territory of Lakshadweep Administration, Geological Survey of India and other Government Departments for their various ship acquisition projects. During the year, your Company assisted A&N Administration in construction supervision of 2 nos. 1200 Passenger-cum-cargo vessels, which are under construction at M/s. Cochin Shipyard Ltd. Similarly, your Company has also been providing assistance to the UTL Administration for supervision of 2 nos. 2000 LpG Cylinder carriers under construction at M/s Goa Shipyard Ltd. The first vessel was delivered to UTL Administration on 19.07.2024 and the second vessel is scheduled to be delivered on 31.10.2025. Your Company is actively exploring opportunities to add new clients to its consultancy base such as SSNNL, ONGC etc. Tonnage Acquisition Programme

During the year under report, your company had envisaged acquisition of new-building and secondhand vessels in various segments viz., Container, Gas, Product Carrier, Offshore vessels, etc.

Necessary steps were taken in this regard and accordingly tenders were floated for acquisition of various vessels and the acquisition is in advance stage of finalization.

Informatively, your company has been continuously scanning the market for right assets in the market in relation to the available employment opportunities and is optimistic about acquisition of vessels at the opportune time.

Eco-Friendly and Conservation of Energy

As a policy, your Company remained committed to environmental protection as per International Convention for the Prevention of Pollution from Ships (MARPOL). Necessary steps have been taken to minimize air pollution and oil pollution from ships.

Your company has floated a tender for acquisition of 2 + 2 Optional new building Platform Supply Vessels having provision of duel fuel capability.

Your company has embarked on various Technical & Operational measures to improve energy efficiency with options to use bio-fuels. Bio-fuel was tried out on one of the Bulk carriers during this period on pilot basis.

As far as Carbon Intensity Indicator (CII) is concerned, SCI is exploring various types of Energy Saving Devices (ESDs)/technology such as propeller boss cap fins, low resistance (high performance) anti-fouling paints, trim optimization, time & speed monitoring, etc with an objective to achieve continuous improvement in ship’s operational CII.

Fitment of Engine Power Limitation (EPL), fitment of PBCF (Energy Saving Device) on some of the vessels, Prevention of use of Single Use Plastics (SUP) onboard vessels in compliance with DGS orders, regular hull cleaning, propeller cleaning / polishing / periodic hull coating during drydock, use of tin free and cybutryne free Anti-fouling paints, using environmental friendly refrigerants, use of asbestos free products onboard, installation of Ballast Water Treatment plants in a phased manner on existing vessels depending on their dry dock schedule (BWTS installation completed on 44 existing vessels till 31.03.2025), replacement of existing lights with LED lights, etc are some of the measures showing your company’s commitment to Eco-friendly policies and conservation of energy. Technology Absorption, Adoption and Innovation

The technological advancement in Maritime sector is focused towards optimizing ship operations, building cost efficiencies, developing sustainable and environment friendly maritime business.

The 2023 IMO GHG Strategy is particularly focusing on reduction in carbon intensity of international shipping (to reduce CO2

emissions per transport work), as an average across international shipping, by at least 40% by 2030. The 2023 IMO GHG Strategy also includes a new level of ambition relating to the uptake of zero or near-zero GHG emission technologies, fuels and/or energy sources which are to represent at least 5%, striving for 10%, of the energy used by international shipping by 2030.Your company is committed to align with IMO’s 2023 revised GHG Emissions strategy.

Your company is continuously trying to identify and implement emission reduction technologies and best practices.

The Company has estimated the Carbon Intensity Indicator (CII) ratings for its fleet, which is helping to monitor vessel’s CII rating and appropriate action plan can be formulated accordingly to improve CII (2% improvement in CII annually from 2023 to 2026).

Your company has taken initiative to install Ballast Water Treatment Plants on all those vessels which are not fitted with the treatment plants. This exercise is being carried out in a phased manner in order to comply with the IMO regulations.

To take of the Cyber related risk, SCI has developed “Cyber Risk Management Policy” in line with the IMO regulations, so as to build capabilities to prevent, mitigate and respond to cyber risks, to reduce vulnerabilities and minimize damage from cyber incidents and protect information systems of SCI.

For the (2 firm + 1 optional) 2000 Domestic LPG Carriers for UTL Administration which are under construction at M/s Goa Shipyard Limited, your company as the technical consultant has recommended various optional features such as installation of sewage treatment plant, double hull protection to fuel oil tanks, etc. over and above rule requirement for such size of vessels which reflects your company’s commitment environment protection and technology absorption.

Situation in Coastal operation and Offshore areas:

Coastal shipping is receiving significant government attention as a means to decongest road and rail networks, reduce logistics costs, and promote sustainable transport.Coastal cargo traffic has seen impressive growth, reportedly surging 119% over the last decade (from 74 million tonnes in 2014-15 to 162 million tonnes in 2023-24).

ONGC continues to be the main player, focusing on maintaining production from mature fields like Mumbai High (recently signing a technical service agreement with BP to enhance production) and developing deepwater assets on the East Coast (KG Basin).ONGC is expected to spend significantly ($3.9-$4.1 billion) on E&P projects this financial year. ONGC has recently concluded tender for chartering of 6 offshore vessels and it is expected that few more tenders are likely to be floated shortly.

Shortage of competent/suitable manpower onboard vessels and limited availability of repair yards on the Indian coast for dry-docking/repairs of offshore vessels has been a major cause of concern for SCI’s Offshore business.

Measures taken to improve services and operations

To keep the vessels technologically up-to-date your company has upgraded 02nos. 120T BP AHTSVs from DP1 to DP2, in line with the market requirements of E&P operators, these vessels also fitted with EFMS (Electronic Fuel management system), CCTV, Data Logger etc. Further, another two vessels (120T BP AHTSVs) are also scheduled to be upgraded to DP2 along with other fitments in the current financial year.

Further your company also endeavours to augment its offshore fleet by acquisition of vessels and deploy on the Indian coast Purchase & Services department Procurement of Good & Services:

Your company enters into rate contract on periodical basis for procurement and supply of high value and safety items like Marine Lubes, Marine Paints, Charts, Wire ropes, LSA / FFA, Life Rafts etc. both at Indian ports and major foreign ports, like Singapore and Fujairah. This ensures timely supply of right quality goods / services to the vessels at reasonable price.

During the financial year 2024-25, your Company continues to support the Micro and Small scale Enterprises (MSEs) by procuring 55.06% of its applicable supplies of goods and services from MSEs as against the set target of 25% in line with the Public Procurement Policy. The Procurement from Women MSE vendors during the year is 5.71% of total eligible procurement exceeding the target of 3% earmarked for women category, while the procurement from sC/ST owned MSE Vendors is 0.65% of eligible procurement as against the requirement of 4% specified under Public Procurement Policy. The shortfall in sub-target of SC-ST vendors has been met from other MSE vendors.

Further, your company actively participates in the programs organized by the Ministry so as to make MSEs aware of the SCI’s requirements. The Vendor Development Programmes (VDP) were conducted by your company on 03rd May 2024, 25th September 2024 and 4th October 2024 for developing SC/ST and Women owned MSE vendors. Your company was appreciated for conducting Special Vendor Development Program on 04.10.2024 for National Small Industries Corporation Ltd - National SC-ST Hub (Agra) in the financial

year 2024-2025. Further, a Vendor Development programme was conducted on 12th& 13th Feb. 2025 in association with MSME Development and Facilitation office, Mumbai and All India Rubber Industries Association, Western Region.

In line with Government’s vision for procurement through Government-E-Marketplace, your company has adopted the Government e-Marketplace (GeM) system of procurement for items which are available in GeM. Target for procurement through GeM portal was set at Rs.260 Crore for the financial year 2024-25. With consistent efforts, your company was able to achieve 100% target set for the procurement through GeM portal.

Protection & Indemnity (P&I) Insurance:

Protection and Indemnity (P&I) Insurance cover entered with three International Group P&I Clubs for your company’s fleet for the policy year 2024-25 commencing from 20.02.2024 has been negotiated by your Company. There was an increase of 1.40% in the renewal premium over the expiring premium for policy year 2023-24.

Developments, if any, There is no material changes affecting the financial position of the company which have occurred between the end of financial year of the Company to which financial statement relates and the date of the report.

Your Company had participated in the tender floated by M/s.ONGC last year and has emerged successful in the global competitive bidding process and accordingly deploying one vessel in OSV category International Safety Management Cell -

The SCI has introduced the Safety Management System by setting up a dedicated International Safety Management (ISM) Cell, which has developed, structured and documented procedures in compliance with the International Management Code for Safe Operation of Ships and for Pollution Prevention (ISM Code), in accordance with the resolution A.788(9) of the International Maritime Organization (IMO) and SOLAS, Chapter IX.

The SCI has laid the foundation of the Safety Management System (SMS) by recognising that the cornerstone of good Safety Management is a commitment from the top management, coupled with the competence, attitude and motivation of individuals at all levels, that determines the expectations of a good Safety Management System.

The SCI has complied with all the functional requirements of the ISM Code, which includes the Safety, Occupational Health & Environment Protection Policy, Drug & Alcohol Policy and Cyber Security Policy.

As regards, Safety Management Certificate (SMC) for SCI fleet, all ships are put up for periodical/ renewal SMC audits within time frame and respective SMCs are accordingly endorsed.

The requirements of various amendments to ISM Code and Statutory regulations from IMO/Flag are also complied with.

Towards addressing all emergency related issues officers with dedicated single point contact numbers remain manned 24 hours in the operating divisions.

The achievement of time-bound certifications was the result of the SCI’s strength of professional experience, planning, training, execution, systematic analysis and quality expertise, which enables SCI to remain world-class ship operator/ owner. The SCI is also in a position to provide such management expertise to other national/ international ship operators.

ISPS Cell

The SCI has successfully implemented the ISPS Code on all vessels on international voyages and coastal trade vessel as per the Administration requirement.

SCI is committed to the following objectives to fulfil the requirements of its security policy:

•    Security of its ships and their crew, passengers and cargo

•    Support to its ships in implementing and maintaining the Ship Security Plan.

Integrated Management System (IMS)

SCI is now in compliance with IMS (ISO 9001:2015 - Quality Management System, ISO 14001:2015 - Environmental Management System and ISO 45001:2018 - Occupational Health and Safety Management System) on board all vessels and shore establishments.

The scope of IMS certification includes

(1)    Owning, Managing and Chartering of ships for transportation of Goods and Passengers,

(2)    Offshore and Marine Advisory Services.

The Certificate is valid till 20th December 2027.

E. PERSONNNEL AND ADMINISTRATION

A.    FLEET PERSONNEL

The global maritime industry is facing a significant challenge in the form of a growing shortage of qualified seafarer officers. Reports from the Baltic and International Maritime Council (BIMCO) and the International Chamber of Shipping (ICS) have highlighted the existing shortfall and projected a potential crisis by 2026, driven by the rapid expansion of the global merchant fleet. The shortage is particularly acute in senior ranks across vessel types, with Bulk Carriers being especially affected.

To proactively address this issue, the Fleet Personnel Department of SCI has implemented a multi-pronged strategy focused on both retention and recruitment. Key initiatives include market-aligned wage enhancements, career progression incentives, rejoining bonuses, family carriage permissions, and targeted talent acquisition drives. These measures have resulted in visible improvements, especially in the manning of offshore vessels and Special Trade Passenger Ships.

Vacancies for fleet personnel are regularly published on the SCI website, and engagement through social media platforms is being actively encouraged to expand outreach. In addition, officers are being recruited both on contract and through manning agents to bridge immediate shortages.

SCI continues to maintain a robust pipeline of future officers by inducting Deck Cadets, Engine Cadets, and Trainee Electrical Officers into the regular roster upon successful completion of shipboard training and acquisition of Certificates of Competency (CoC), under the terms of the INSA-MUI Agreement. While the overall pool of officers has grown, efforts continue to address specific gaps, particularly at the 2nd Mate and MEO Class IV levels, through open market recruitment.

As a pioneer of diversity and inclusion in the Indian shipping industry, SCI remains at the forefront of empowering women at sea. In Calendar Year (CY) 2024, SCI employed 23 women officers and 8 women trainees, supported by initiatives such as age relaxations and fee concessions for aspiring female cadets.

To modernize operations and ensure transparency, SCI has successfully implemented an online system for the selection of crew (ratings). The selection process is continuously reviewed and updated to remain aligned with evolving industry dynamics.

In line with SCI’s mission to be a key player in global maritime logistics, the Fleet Personnel Department remains committed to enhancing the competencies of seafarers in areas such as safety management, green practices, and digital innovation. The Department continues to promote careers at sea through competitive compensation, a supportive work culture, structured performance evaluations, and ample opportunities for professional growth—ensuring SCI maintains its position as a leading Indian shipping company in a rapidly changing global landscape.

B.    SHORE PERSONNEL

Material developments in Human Resource / Industrial Relations front, including number of people employed:

The total Manpower as on 31.03.2025 is 473 (excluding Board Level members), out of which 440 are officers (including AMs on contract) and 33 are staff members. With a view to meet the present and future challenges and be a globally competitive Corporation, various capacity development initiatives and employee engagement activities were carried out in the year 2024-25.

Training and Employee Engagement Activities of 2024-25:

SCI ensures that its employees are up to date to tackle the ever changing landscape of the shipping industry. During FY 2024-25, SCI employees benefited from over 17 in - house and external training programmes. Training man days per employees stood at 0.5 days. Employees were sent for a plethora of trainings ranging from Skill development, specialized courses in Domain, compliance related trainings, Enhancing Inter personal Skills & Business communication, Training for the Technical Superintendents Familiarization / Workshop and Training programme on Reservation in services.

In an attempt to ensure the health of the employees, so as to live a holistic and balanced life style, employees were provided training on stress management, work life balance, general health awareness through trained medical professionals.

Training on IT systems like DANAOS, SAP HCM, SRM, MM and FI was imparted by the IT department. Phygital trainings were conducted to ensure knowledge dissemination to all our offices pan India.

Some of the key conferences attended by employees are Bunkering India, India tanker Shipping and Trade Summit 2025, Coaltrans India Conference and Centre of Excellence in Maritime and Shipbuilding.

Employee engagement

Concerted efforts of the leadership team of SCI to ‘invest in people’ have led to tremendous progress in employee engagement initiatives across the organization. Numerous in-house events was carried out for employees both ashore as well as onboard.

Besides celebrating International Day of Yoga, World Environment Day, Constitution day, Communal Harmony week and Flag Day, National Space Day, Marathi Fortnight, a series of activities were organized.

For the wellness of employees, health check-up camps were organized at the Head Office & Regional Offices. The International Day of Yoga 2024 was celebrated. Various activities including physical yoga and sessions on benefits of yoga by eminent yoga teachers / faculty was conducted for employees, ship staff & all regional offices.

133rd birth anniversary of Bharat Ratna Ambedkar was celebrated on 14th April. Public Sector Week was celebrated by organizing various activities like Health Check-up Camp, essay Writing Competition, Speech Competition from 10th April to 16th April 2024. 1st National Space Day was celebrated on 23rd August.

Marathi Language Preservation Fortnight was celebrated from 14 January to 28th January 2025. Presentation cum Interactive session on NPS by Protean was organized on 18th February 2025. A 2 days camp and session was organized to highlight the various Government Schemes of the Postal Department for all SCI employees.

Reservation Policy

SCI is complying with all the guidelines issued by the Government regarding Reservation from time to time in Recruitments and Promotions.

SC/ST/OBC Report

Annual Statement showing the representation of SCs, STs and OBCs as on 31.03.2025 and number of appointments made during the preceding Financial Year (01.04.2024 to 31.03.2025).

Note:

In financial year 2024-25, process for recruitment of 43 Master Mariners and Chief Engineers in the rank of Senior Manager (E-5) was carried out, out of which 9 Master Mariners and 8 Chief Engineers were selected. In financial year 2024-25, 12 candidates joined.

Women Representation

Company is committed to the principle of equal employment opportunity and strives to provide employees with a workplace free from discrimination. All HR activities of recruitment, placement, promotion, transfer, separation, compensation, benefits and training ensure equal opportunities for skill enhancement and career progression. Company’s efforts are reflected in the representation of women across various hierarchical grades. Women constitute around 21% of total workforce at shore establishments of SCI.

SCI was conferred with "Third Place" for "Best Enterprise Award 2025", a tribute to Excellence in Public Enterprise Management under ’Navratna Category’ in recognition of the commendable work done for the development of women in the organization, at WIPS 35th National Meet at SCOPE Complex, Vigyan Bhavan, New Delhi on 17th and 18th February 2025.

Policy to prevent sexual harassment in work place.

SCI promotes gender equality and has been taking proactive measures to prevent any Sexual Harassment at workplace. SCI has been complying with the requirements of the “The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013”. SCI has prepared a Prevention of Sexual Harassment policy in line with the Act. SCI has constituted a committee comprising of senior women executives and a woman representative from the NGO Pratham to enquire into complaints of Sexual Harassment at the workplace. No complaints were received in the year 2024-25 related to Sexual Harassment.

Additional Information :

There have been no cases of sexual harassment in SCI during 2024-25.

A statement that the company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 [14 of 20131a ong with the following details:-

(a)	number of complaints of sexual harassment received in the year	Nil
(b)	number of complaints disposed off during the year; and	Not applicable
(c)	number of cases pending for more than ninety days	Not applicable

2. A statement by the company with respect to the compliance to the provisions relating to the Maternity Benefits Act, 1961.

SCI is complying with the necessary provisions as contained in the Maternity Benefits Act, 1961.

CORPORATE SOCIAL RESPONSIBILITY (CSR) AND SUSTAINABLE DEVELOPMENT FORFY2024-25

The Corporate Social Responsibility vision of SCI articulates its aim to be a corporate with its strategies, policies and actions aligned with wider social concerns, through initiatives in education, public health, women empowerment, environment sustainability, skill development and other areas of social upliftment.

SCI has framed its CSR policy in line with the guidelines contained in the Companies Act 2013 and Companies (CSR Policy) Rules, 2021 & 2022 notified therein" and constituted a CSR committee as per the act to coordinate and oversee the implementation of CSR initiatives. The budget available for CSR initiatives in the year 2024-25, as per applicable provisions was Rs.14.32 Crores which was allocated against the following initiatives in the year 2024-25:

CSR Activities for the Year 2024-25

A.    Health & Nutrition

1.    Support for two cardiac ambulance for underprivileged people in urban slums.

2.    A programme towards prevention, detection, treatment and improved nutrition for reducing the incidence and impact of Tuberculosis in households targeting 2500 beneficiaries.

3.    Support for a programme "Nanha sa Dil - Saving Little Hearts" - Screening, diagnosis, treatment support and post-operative care of 66 children with congenital heart diseases.

4.    Support for medical and supportive equipments at Narayanpur District Hospital.

5.    Support of treatment of Clubfoot in 350 children through clinics developed at government hospitals.

6.    Support for running community based program for screening of cervical cancer and nutritional deficiencies among 500 women.

7.    Support for installation of 11 medical equipments in sub-district (govt.) hospital, Kankavali.

8.    Support for Ulcer Care Treatment - a disability prevention treatment - for people affected by leprosy.

9.    Drinking Water Access Improvement for Integrated Child Development Services (Anganwadi Centers) Centers - Installation of 15 deep tube wells (1000 ft) with hand pumps.

10.    Support for sanitation, safe drinking water and other infrastructure facilities at an Inter College for the safety of students.

11.    Support for essential medical equipment’s at Jewar government hospital (PHC).

12.    Support for essential medical equipment’s for sub district hospital - Karanprayag and district hospital Gopeshwar.

B.    Environment Sustainability

13.    Sustainable Afforestation Initiative in Dr. Shyama Prasad Mukherjee Zoological Garden on approximately 6230 sq. m. land by planting 10,000 saplings of 60+ species.

C.    Promotion of Education

14.    Support for Construction of 5 Classrooms and other school infrastructure in Primary School.

15.    Setting up open gym at government schools.

16.    Support for "Savitri Leki Chalaya Pudhe" Project for distribution of bicycles to underprivileged schools girls who walk more than 2KMs to reach schools.

17.    Infrastructure Development (which will have 4 classrooms, one toilet block each for boys & girls) including drinking water facilities at Government Primary School.

18.    Annual Grants for Maritime Education for SC/ST/Financially weaker students studying maritime related courses at Indian Maritime University and Maritime Training Institute.

D.    Skill Development & Women Empowerment

19.    Support for project NARITVA - Socio-economic empowerment of 1000 Women/ girls.

20.    Support for training and upskilling of sanitation workers.

21.    Empowering transgender by Livelihood skill training as per protocols of National Skill Development Council.

22.    Skill development for fishermen / coastal communities in the fields of Aquaculture Worker and Fish & Seafood processing technicians as per National Skill Development Corporation protocols.

E.    Cultural Heritage

23.    An initiative towards commitment to preserve the beauty of country’s heritage by intervening at Vijaydurg Fort, at Vijaydurg, fulfilling the PM’s vision of "VIRAASAT BHI, VIKAS BHI".

24.    Support for development of the National Maritime Heritage Complex.

F.    Social Welfare

25.    Rehabilitation, Upliftment of divyangjan, orphans and elderly people - Support for completing the construction work of the hostel building (2nd Floor).

26.    Support for construction of residential skill development centre for tribal students.

G.    Promotion of Sports

27.    Financial support for development of para sports by contributing to the common fund of Paralympic Committee of India.

The Annual Report on Corporate Social Responsibility 2024-2025 is annexed to the Director’s report as Annexure - I Material Orders of Judicial Bodies/Regulators

Details of significant and material orders passed by any Regulator, Court, Tribunal, Statutory and quasi-judicial body, impacting the going concerns tatus of the company and itsfuture operations-The Canteen Workers deployed in SCI by M/s Saikripa Foods Services Pvt. Ltd. have been deemed to have been absorbed into the payroll of SCI w.e.f 31.03.2011 consequent to Hon’ble Supreme Court Order dtd. 27.01.2025.

Implementation of Official Language Policy.

In accordance with the Official Language policy of the Union Government, SCI continued its persistent efforts towards the progressive use of Hindi in its day-to-day affairs during the year under report. As per annual programme, SCI conducted Hindi activities and competitions at regular intervals and awarded prizes to the employees. Apart from this, SCI also arranged in-house Hindi typing and translation training programme.

Under the Hindi Incentive Scheme, employees’ children were encouraged by giving incentive prizes for scoring 70% and above marks in Hindi subject in SSC / HSC level exams held in the academic year 2023-24.

With a view to creating a sense of competition amongst all Divisions/Departments and individual officers for increasing the use of Hindi in daily correspondence and activities, the Annual Rajbhasha Shield (at Divisional Level) and Annual Rajbhasha Gaurav Sammaan (at Individual Level) schemes were continued for 2024-25 after necessary modifications. For the year 2023-24, the “Annual Rajbhasha Shield” was awarded to Liner & Passenger Services Division, and “Annual Rajbhasha Gaurav Sammaan” was awarded to eligible officers on the basis of their Hindi performance. All these initiatives have proved to be a booster for progressive use of Hindi in daily office routine work.

During Hindi Pakhwada in September 2024, an appeal made by CMD was emailed to all employees to enhance the usage of Hindi in official noting and correspondence. SCI also attended meetings of Town Official Language Implementation Committee (TOLIC) during the year under report and participated in their activities. SCI has conducted a Hindi Seminar under the auspices of TOLIC on “Stress Management through Mental Strength”. In this year SCI has released Hindi Magazine named "SCI Samudri Safarnama" which encourages creativity of employees, provides a platform to share their insightful thoughts and knowledge.

Appointment and Remuneration policy

The appointments in our company are done in accordance with Government of India guidelines. The remuneration to the senior management and other shore employees of SCI is governed by the Presidential Directives issued by the Ministry of Ports, Shipping and Waterways (MoPSW) and Department of Public Enterprises (DPE), from time to time, which forms the remuneration policy of our company.

Memorandum of Understanding (MOU) with the Ministry of Ports, Shipping & Waterways

The MOU for the Financial year 2024-25 is under progress. The MOU is being processed as per the consolidated guidelines issued by

Department of Public Enterprise (DPE) vide circular dated 12th October 2022. Under the new guidelines, entering, signing, monitoring and evaluation of MOU will be done through online dashboard.

SCI MOU rating for past three years are as follows :
Year	MOU Score	Ratings
2021-22	79.21	Very Good
2022-23	89.50	Very Good
2023-24	86.00	Very Good

 

MOU performance evaluation data for Financial year 2024-25 on the basis of Audited accounts will be submitted to DPE through online dashboard after the approval of the Board and through the Administrative Ministry by 31st October 2025.

a)    Ship Availability as a percentage of Total Ships:

The Planned Ship Availability (Total days of the year less quoted days for planned repair and dry dock) for 57 ships for 2024-25 was 20242 days. The Ships were available (Total days of the year less Actual repair and dry dock days) for 19006 days which is 93.89 % to the Planned Ship Available days.

b)    Revenue from Exports:

Earnings of SCI from Export Revenue as per the GST Returns filed for the FY 2024-25 amounts to INR 1,78,151 Lakhs (previous year INR 1,54,472 Lakhs). Basis the above, export earnings as a percentage of Revenue from Operations for the FY 2024-25 stands at 31.78% (previous year 30.62%).

c)    Compliance parameters not verifiable from any outside sources:

(i)    DPE guidelines issued from time to time on CSR expenditure by CPSEs has been complied with.

(ii)    SCI has integrated ERP with Vendor Invoice Management (VIM) system on GeM portal

(iii)    Parameters w.r.t. steps and initiative taken for Health & Safety improvement of Human Resources in CPSEs has been complied with.

Utilization of Proceeds from public issues, right issues, preferential issues etc.

During the year 2010-11, your Company had floated a “Further Public Offer”, (FPO), comprising of a ‘fresh issue’ of 42,345,365 equity shares in your company and an ‘offer for sale’ of 42,345,365 equity shares by the President of India. The FPO proceeds of Rs. 582.45 crores were fully utilized in the financial year 2011-12 as per object of the issue for part financing of capital expenditure on nine shipbuilding projects. However, due to delays in the projects resulting in default by the shipyards, during the period January 2014 to May 2014, your Company rescinded contracts for four shipbuilding projects and also, re-negotiated the payments for two projects. The investment in the rescinded contracts out of the FPO Proceeds was Rs. 330.65 crores.

Your Company has received back entire sum of Rs. 330.65 crores from the shipyards. The shareholders vide the resolution passed through postal ballot on 11.02.2017 approved the proposal to re-deploy the said sum of Rs. 330.65 crores received as refund from Shipyards, towards various shipbuilding projects including offshore assets and liquid petroleum gas (LPG) vessels and also for acquisition of the any other such vessels, on such terms and conditions as the Board would deem fit from time to time as mentioned in the approval of the postal ballot. Further based on the approval granted by the shareholders, the Company can also utilize the sum towards the balance payments remaining due for the tonnage acquisition made by it.

Out of the said amount of Rs.330.65 crs, an amount of Rs. 196.80 crs has been utilised till date as follows -
Month & Year	Rs. Crs	Utilised for
November 2016	34.37	Equity portion of PSV - SCI Sabarmati
April 2017	63.82	Equity portion of Suezmax Tanker - Desh Abhiman
July 2017	27.63	Equity portion of PSV - SCI Saraswati
September 2017	70.98	Equity Portion of VLGC - Nanda Devi
Total Utilised till date	196.80	Â

The un-utilised FPO proceeds amount of Rs 133.85 crores are kept in fixed deposit.

Large Corporate Entity

SCI is a “Large Corporate” fulfilling the criteria specified in para 3.2 of the SEBI circular no SEBI/HO/DDHS-RACPOD1/P/CIR/2023/172 dated 19.10.2023. There was no “incremental borrowings” by SCI in FY 2023 and FY 2024. The outstanding Qualified borrowings as at the

start of Financial year 2025 was 2267 crores and the outstanding Qualified borrowings as at the end of the Financial year 2025 was 1585 crores. Hence, there are no “incremental borrowings” by SCI in FY 2025.

Additional Disclosures as required under the Guidelines laid down by DPE

i.    Disclosure on materially related party transactions that may have potential conflict with the interest of the company at large. Transactions with all related parties have been entered at arm’s length or in accordance with Provisions of relevant Act.

ii.    Items of expenditure debited in books of accounts, which are not for the purposes of the business:-

There is no item of expenditure debited in books of accounts which are not for the purposes of the business

iii.    Expenses incurred which are personal in nature and incurred for the Board of Directors and Top Management - NIL

iv.    The office and administration expenses as a percentage of total expenses are 5.89% in FY 2024- 25 as against 4.88% in FY 2023-24.

v.    The finance expenses as a percentage of total expenses is 3.75% in FY 2024-25 as against 3.66% in FY 2023-24.

Segment-wise Performance

Report on performance of the various operating segments of the Company (audited) is included at Note No. 31 of the Notes on Financial Statements (Standalone) for the year ended 31st March 2025, which is forming part of the Annual Accounts.

Internal Control System and their adequacy:

The Company has an internal control system that is adequate and commensurate with the size, scale and complexity of its operations. Internal control framework and Risk Control Matrix (RCM) for various business processes is in place. The internal control systems (including Internal Financial Controls over Financial Reporting) are reviewed on an ongoing basis and necessary changes are carried out to align with the changing business / statutory requirements.

Internal audit is carried out by an independent firm of Chartered Accountants / Cost and Management Accountants on concurrent basis. The scope and authority of the Internal Audit function is defined in the Internal Audit Plan, which is approved by the Audit Committee. To maintain its objectivity and independence, the Internal Audit function submits quarterly reports to the Audit Committee of the Board. The internal audit examines, evaluates and reports on the adequacy and effectiveness of the internal control systems in the company, its compliance with the laid down policies and procedures and ensure compliance with applicable laws and regulations. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are reviewed, deliberated and presented to the Audit Committee of the Board. Dividend Distribution Policy:

As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 the top 1000 listed entities shall formulate a dividend distribution policy. Accordingly, dividend distribution policy has been adopted to set out the parameters and circumstances that will be taken into account by the Board in determining the distribution of dividend to its shareholders and/ or retaining the profit into the business. The policy is available on the website of the Company at the link https://www.shipindia.com/upload/policies/SCI_Dividend_Distribution_Policy2.pdf Role of Vigilance Division in SCI:

SCI has a full-fledged Vigilance Division headed by Chief Vigilance Officer. The Division operates as per the guidelines of the Central Vigilance Commission for Vigilance management in Public Sector Enterprises and is guided further by the instructions issued by the Ministry of Ports, Shipping and Waterways. During the year under review, the Chief Vigilance Officer put in place preventive vigilance initiatives in the business processes thereby striving towards greater transparency and improved ethical & corporate governance standards. There was concerted effort to achieve greater transparency and eliminate systemic weaknesses through use of technology in business processes such as e-payments, Supplier Relationship Management, bill tracking, greater use of GeM portal and online dissemination of important circulars/ guidelines. Vigilance Division interacted with various employees of SCI as well as various stake holders which has helped in understanding the issues from their perspective as well.

Activities of the Vigilance Division carried out in 2024-25

During the year under review, the Vigilance Division carried out the activities under Preventive, Punitive and Participative Vigilance. The important activities carried out in 2024-25 by the Vigilance Division were as follows:

A.    Complaints were handled as per complaint handling policies stipulated in Vigilance Manual issued by the Central Vigilance Commission.

B.    In adherence to the CVC guidelines, random scrutiny of APRs of SCI employees was carried out.

C.    Active monitoring of the implementation of Integrity Pact in SCI has been done.

D.    Vigilance Division has acted as a catalyst in the implementation of preventive vigilance measures such as e-payments, bill tracking systems, transfers of employees posted in sensitive areas in a phased manner etc.

E.    As part of preventive vigilance activities, a surprise inspection on - board SCI’s vessel MT Swarna Sindhu was carried out by the Vigilance Division, on basis of which recommendations for systemic improvements were issued. Subsequently, a second surprise inspection was conducted in TAX cell of F&A Division in which files are being scrutinized.

F.    1) As a part of system improvement measures, Vigilance Division regularly undertake scrutiny of ship repair invoices. Upon such

Scrutiny/observations, Vigilance Division has recommended following preventive vigilance measures which was also accepted and appreciated by CVC through publishing the said recommendations of SCI Vigilance Division in CVC annual report.

I)    Technical superintendent should ensure that the work done certificates which are issued and endorsed by the shipstaff should be specific and corroborate to the type of job carried out on board.

II)    Vendors empaneled with SCI should adhere to the tariff terms and conditions and delayed submission of invoices to Shipping Corporation of India Ltd. (SCI) Head Office should be suitably dealt with.

III)    Work completion certificates issued by the vessels should clearly mention the condition of the machinery after the repair work are carried out and if such post repair trails could not be carried put successfully due to unavoidable circumstances, same should be clearly mentioned in the work completion certificates, providing scope for carrying out inspections of repair work done later when the invoices are being processed.

2) Additionally Selective scrutiny of Dry-docking bills have been done during the year.

G.    A number of training sessions in various thematic areas as a part of precursor campaign period of the Vigilance Awareness Week 2024 were conducted for SCI officers as follows:

1)    Training session on “General awareness on procurement guidelines”

2)    Cyber security training session on “Email Security for Safeguarding your Digital Communication” by external speaker Mr.Amol Suroshe, CDAC.

3)    Training session on benefits of electronic BG and its implementation/ execution process by external speaker Mr. Chetan Lulla, Assistant Vice President, NeSL

4)    Training session on Conduct Rules and Ethics

5)    Training session on e-office software

H.    Following Seminars/Workshops were organized by SCI to increase awareness and participation among vendors

1)    Special Vendor Development Program conducted in association with NSIC NSSHO for MSME- SC/ST Women vendors

2)    Vendor Development Awareness Program and on boarding of new vendors in SCI

3)    A workshop on “Enhancing Interpersonal Skills and Business Communication”

I.    As part of Vigilance Awareness Week, The outreach programmes such as Poster making competition, Slogan writing competition, Quiz competition, Essay - writing competition were conducted throughout India by SCI in two schools in Mumbai namely, Lok Kalyan Public School, Kalyan and PM Shri Kendriya Vidyalaya I, Colaba, Mumbai, Queens of Mission School in Kolkata, P&T Senior Secondary School in New Delhi, Ebenezeer Marcus Higher Secondary School in Chennai and Andaman Law College in Port Blair Wherein various competitions for schoolchildren were conducted with the aim of inculcating ethical behavior among younger generation.

Outreach programmes were also conducted in professional institute viz. Maritime Training Institute (MTI) in Mumbai and Indian Maritime Institute in Kolkata. In MTI, the cadets presented a thought- provoking skit which was based on theme of Vigilance Awareness Week. These activities were geared towards making the youngsters reflect on prevalent corrupt activities which have become a norm in our day to day life and the ways these can be stopped.

J.    In order to spread the awareness about Vigilance machinery among people, an awareness campaign was organized via FM Radio, wherein jingles related to the Vigilance functions and VAW-2024 theme were composed in house and broadcasted on FM Rainbow-Radio during Vigilance Awareness Week and played at various events/places also.

In continuation with this, SCI also has made banners in vernacular languages for wider publicity and to sensitize the general public about the need for transparency and integrity in public governance

K.    Awareness campaign was conducted on-board SCI ships for generating awareness about Vigilance amongst seafarers. The Integrity pledge was also administered onboard the ships and banners were displayed.

During the FY 2024 - 25, 11 nos. registered complaints were processed by the Vigilance Division. As on 31/03/2025, all of these registered complaints have been disposed off as per prescribed procedure.

Cautionary Statement

The statements made in the Management Discussion and Analysis report describing Company’s objectives, projections, estimates and expectations may be “forward looking statements” within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

Key Managerial Personnel

Tpfailsof Kpv Maoanprial Pprsooopl as nn 31 03 ?n?F>arp as follows-

|Sr. No	Name of KMPs	Designation
01	Capt. Binesh Kumar Tyagi	Chairman and Managing Director & Additional Charge of Director (P&A)
02	Shri Atul Ubale	Director (B&T) and Additional Charge of Director (Finance)
03	Shri Vikram Dingley	Director (T&OS)
04	Shri Chirayu Indradeo Acharya	Whole-time Director
05	Rear Admiral Jaswinder Singh	Director (L&PS)
06	Smt. Charusheela Golapalli (w.e.f. 01.01.2025)	Chief Financial Officer
07	Smt. Swapnita Vikas Yadav	Company Secretary

Changes in KMP during financial year 2024-25 till the date of report

Shri Atul Ubale, erstwhile Director (B&T) pursuant to his superannuation on 30.06.2025 ceased to be a Director w.e.f. 01.07.2025.

Shri C.I Acharya, erstwhile Whole-Time Director (Finance), who was suspended w.e.f. 07.03.2024, has now been dismissed from service by Competent Authority w.e.f. 05.05.2025.

Shri Manjit Singh Saini, erstwhile Director (P&A) pursuant to his superannuation on 31.01.2025 ceased to be a Director w.e.f. 01.02.2025. Shri N. Subramanya Prakash, erstwhile Chief Financial Officer ceased to be the Chief Financial Officer w.e.f. 01.01.2025 pursuant to his superannuation on 31.01.2025.

Smt. Charusheela Golapalli was appointed as Chief Financial Officer w.e.f. 01.01.2025.

Declaration of Independence

The Company has received Declaration from Independent Directors conforming that they meet the criteria of Independence and have complied with the Code for Independent Directors as prescribed under Companies Act 2013, the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 and DPE guidelines.

Composition and Meeting of the Board and its Committee

1.    Board Composition - As on 31.03.2025, the Company is non-compliant with Regulation 17(1)(a) & (b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, regarding the requirement of having at least half of the Board of Directors and appointment of women Independent Director on board as Independent Directors. To this extent, the Company is non-compliant with the relevant provisions of DPE Guidelines on Corporate Governance, 2010 and Companies Act, 2013.

2.    Committees of the Board - The Company has constituted Audit Committee, Corporate Social Responsibility Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee, Risk Management Committee and other Committees for operational convenience in terms of requirements of the Companies Act, 2013 read with rules made thereunder, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPE Guidelines on Corporate Governance, 2010. Due to completion of tenure of all Independent Directors on SCI Board on 21.11.2024, during the period 22.11.2024 to 10.04.2025 the Composition of various Statutory Committees was non-compliant with the applicable provisions of extant laws. Thereafter, consequent to appointment/re-appointment of 3 Independent Directors on SCI Board, all Statutory Committees were reconstituted in compliance with the applicable provisions of extant laws. The composition and scope of the Board level Committees are provided in the Report on Corporate Governance, which forms part of this report.

3. Number of Meetings of the Board and Committees thereof - The details in respect of the number of Board Meeting and Committee meetings of the Company are set out in the Corporate Governance Report which forms part of the Annual Report.

Performance Evaluation of Board, Committee and Directors

In accordance with applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the evaluation of the Board as a whole, Committees and the Directors was conducted, as per the internally designed evaluation process approved by the Board.

Secretarial Standard

The Company complied with all the applicable Secretarial Standards.

Secretarial Audit

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Board had appointed M/s Mehta & Mehta, Practicing Company Secretary firm to conduct Secretarial Audit for the Financial Year 2024-2025.The Annual Secretarial Compliance Report in compliance to Regulation 24 A of SEBI LODR Regulations 2015 and Secretarial Audit Report in Form MR-3 as per Companies Act, 2013 for the financial year 2024-25 is appended to the Director’s report.

The Secretarial Auditor in this report for the year ended 31st March,2025 has brought out that:

During the period under review the Company has complied with the provisions of the Companies Act, 2013 read with Rules made thereunder, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, and other Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above except;

a)    Regulation 17(1)(a) of SEBI Listing Regulations and Clause 3.1.2 of DPE Guidelines, regarding requirement of having at least 50% of the Board of Directors as Non-executive Directors during the period 22.11.2024 till 31.03.2025.

b)    Regulation 17(1)(b) of SEBI Listing Regulations, Section 149 of the Act and Clause 3.1.4 of DPE Guidelines, regarding requirement of having at least half of the Board of Directors as Independent Directors.

c)    Regulation 17 (1)(a) of SEBI Listing Regulations regarding having an Independent Woman Director on the Board of the Company and Section 149(1) of the Act read with Rule 3 of The Companies (Appointment and Qualifications of Directors) Rules, 2014 regarding requirement of appointing a Woman Director on the Board of the Company during the period 22.11.2024 till 31.03.2025.

d)    Regulation 17(2A) of SEBI Listing Regulations regarding requirement of quorum for meetings of the Board of Directors held during

22.11.2024    till 31.03.2025, due to absence of Independent Directors on the Board of the Company during the said period.

e)    Regulation 20 of SEBI Listing Regulations and Section 178(4) of the Act regarding requirement for Composition of the Stakeholders Relationship Committee viz. absence of Chairperson, adequate number of members and Independent Directors, during the period

22.11.2024    till 31.03.2025, due to absence of Independent Directors on the Board of the Company during the said period.

f)    Regulation 21 of SEBI Listing Regulations regarding requirement for composition of Risk Management Committee viz. absence of adequate number of Independent Directors during the period 22.11.2024 till 31.03.2025, due to absence of Independent Directors on the Board of the Company during the said period.

g)    Regulation 18 of SEBI Listing Regulations, Section 177 of the Act and Clause 4.1.1 and 4.1.2 of DPE Guidelines regarding requirement for composition of the Audit Committee viz. absence of adequate number of Independent Directors and Chairperson of said Committee to be Independent Director during the period 22.11.2024 till 31.03.2025, due to absence of Independent Directors on the Board of the Company during the said period. Additionally, the Audit Committee did not have requisite number of members as stipulated in the aforementioned statutory provisions during the period 22.11.2024 to 28.01.2025

h)    Regulation 19 of SEBI Listing Regulations, Section 178 of the Act and Clause 5.1 of DPE Guidelines regarding requirement for composition of the Nomination & remuneration Committee viz. absence of Chairperson, adequate number of members and Independent Directors during the period 22.11.2024 till 31.03.2025, due to absence of Independent Directors on the Board of the Company during the said period.

In light of the aforesaid the National Stock exchange (“NSE”) and the Bombay Stock Exchange (“BSE”) vide their letter(s)/email(s) dated as stated below in the table, have levied fine(s) for the aforesaid non-compliance as follows:

The Management response on the above observation was as follows:

The Company being Navratna Public Sector Undertaking (PSU), the Competent Authority nominates Directors on Board. The Company through its various communication letters dated 28.05.2024, 04.09.2024, 15.10.2024, 18.11.2024, 22.11.2024, 02.01.2025 and

27.03.2025 had taken up the matter with Competent authority with a request to appoint requisite number of Independent Directors on the Board of the Company. The matter is under active consideration with the Competent Authority.

Auditors Report

The Statutory Auditors have given an unqualified report on the Financial Statement of the Company for the Financial Year 2024-25. Further, there are NIL comment made by Controller and Auditor General of India on the Statement of Standalone and Consolidated Financial for year ended 31.03.2025.

Cost Auditors and Cost Audit report

The Central Government has not prescribed the maintenance of cost records for any of the business activities carried out by the Company under sub-section (1) of section 148 of the Act and the rules framed there under. Hence not applicable.

150th Report of the Committee of Papers Laid on the Table (COPLOT) presented in Rajya Sabha on 31March 2017-Para 24 of the COPLOT recommendations

Please find the following information with respect to Audit Para No.9.2 of CAG Report No.13 of 2019:

Name of Audit Para: Para No.9.2 of CAG Report No.13 of 2019 Brief of the Para:

Payment of Performance Related Pay in violation of DPE guidelines.

SCI paid an amount of Rs. 11.03 crore as Performance Related Pay to employees for the financial year 2014-15. C&AG, however, raised an observation that payment of Performance Related Pay of Rs. 11.03 crore for the year 2014-15 was made in violation of DPE guidelines and that the non-core profits had not been deducted for calculation of PRP.

PRP of year 2014-15 was paid after approval of Nomination and Remuneration Committee. However, matter was again put upto Nomination and Remuneration Committee held on 04.02.2020 specifically to review the position with respect to C&AG observation.

SCI’s stand on C&AG’s unsettled observations is reiterated below:-

a)    Profit on sale of Vessels: Scrapping of vessels is a normal activity in shipping and SCI follows a policy of scrapping at the end of the useful life of the vessel after a techno economic study is done on possible further extension of the life of the vessel. All activities starting from placing of an order, building a ship till the end point of scrapping of the ship at the end of its useful life, fall within the ambit of core business activity of a shipping company.

b)    Income (Compensation) received from rescindment of Contract: Possibility of contract rescindment termination in any business is normal and cannot be ruled out. Hence, rescindment of contract needs to be considered within the purview of normal business activity. In our case compensation/ income received for rescindment of contract is nothing but is in nature of liquidated damaged given by shipyard for their subpar performance and not completing the contract on time. Had the vessel been delivered in time, SCI would have earned normal income from freight/charter hire.

c)    Interest on loans given to Joint Ventures: Formation of Joint venture is a normal business activity. Loans given to Joint Venture Companies is part of well deliberated strategic planning by all JV partners and in line with the MOA

The Nomination & Remuneration Committee deliberated the matter in detail and concluded that all the above mentioned items are core activities of SCI.

Resolution of minutes of above agenda is placed below:

“The Committee thereafter passed the following resolution:

RESOLVED That any business activity which is undertaken to sustain, promote, enhance or grow its primary business is to be considered as “Core Business Activity" of the Company,

RESOLVED Further THAT income from rescindment of contract (liquidated damages), interest earned on loan exposure to the joint venture companies, profit on sale of ships constitute as income arising from core activity

Resolved Further that payments made by the company to the employees as Performance Related Pay for the FY2014-15 based on the above notion, on which taxes have been paid by the employees and further in order to avoid complications arising on account of differential treatment afforded to the same class of employees whether serving or otherwise, should not be recovered,

RESOLVED FURTHER THAT the Company may communicate the above decision of the Committee to the Ministry of Ports, Shipping and Waterways (MoPSW) for further action."

In view of instructions of the Nomination and Remuneration Committee, matter was put to The Ministry of Ports, Shipping and Waterways (MoPSW) on 27.07.2020 seeking guidance on the way forward considering the above resolution of the Nomination & Remuneration Committee.

Reporting Status:

The clarifications on the above unsettled observations were provided by SCI to CAG on the subject of “Core Business Activity” of SCI, which was also concurred by MoPSW vide response dated 13^th January 2021. However, C&AG did not agree to the SCI/MoPSW clarifications and subsequently the matter of PRP payment to SCI Employees for FY 2014-15 was referred by the MoPSW, on advice from C&AG, to Committee on Public Undertakings (COPU) for decision.

The Committee on Public Enterprises (COPU) at their sitting held on 5^th December, 2024 undertook examination of ’Audit Para No. 9.2 of C&AG Report No. 13 of 2019 relating to Payment of Performance Related Pay (PRP) in violation of DPE Guidelines relating to Shipping Corporation of India (SCI) Limited’ for final decision. SCI is in receipt of the corresponding report of COPU which was tabled in the Parliament on 12.08.2025.

The Committee’s (COPU) recommendations, inter alia include the following:

1.    As regards for Interpretation of Core and Non-Core Business Activities in PRP Calculation, the Committee recommend that (i) DPE, in future, should issue clear sector-specific Guidelines clarifying ’core’ and ’non-core’ activities for applicability to the shipping industry not only for PRP calculation but also for other related matters; (ii) Given the non-specificity of the then existing Guidelines and approval by SCI’s Board and concurred by its administrative Ministry on activities forming ’Core Business’, the Committee is also of unanimous opinion that the unsettled observations should be resolved in favor of SCI as a one-time measure; and (iii) Further, the future cases should follow updated DPE Guidelines to prevent any scope of ambiguity.

2.    As regards Final Resolution of Three Unsettled Audit Observations of SCI, the Committee recommended (i) Settling the three remaining audit observations as a one-time resolution. The three unsettled cases may be cleared for settlement, in line with submission made by the SCI before the Committee on sympathetic ground and non-specificity of DPE Guidelines which have already been approved by the Board and its administrative Ministry; and (ii) Also, since the MoPSW had approved the Board’s decision on activities of SCI forming part of ’Core Business’, the Ministry may see for uniform applicability of the same across all CPSUs under its wing.

3.    As regards Bell Curve Approach, the Committee recommend that (i) DPE should issue a clear directive on the Bell Curve model’s applicability in CPSUs, (ii) Settlement of SCI’s PRP Case- considering that SCI’s approach was aimed at employee motivation rather than guideline violation, this specific instance be accepted as a one-time exception and closed. Future PRP distribution in SCI should align with DPE’s clarified stance, once issued.

The detailed Report of COPU is available at website: https://sansad.in Thus, view above, the matter of PRP 2014-15 may be treated as closed.

Corporate Governance

A report on Corporate Governance pursuant to the SEBI (Listing Obligation sand Disclosure Requirements) Regulations, 2015 is attached to this report and forms part of it.

The Annual Report on Corporate Governance 2024 -25 is annexed to Director Reports as Annexure - V Business Responsibility and Sustainability Report:

The Shipping Corporation of India’s Business Responsibility and Sustainability Report (BRSR) for the fiscal year 2024-25 emphasizes its unwavering commitment to Environmental, Social, and Governance (ESG) principles and the strides we have made in addressing sustainability challenges. We see our responsibility to take the lead in sustainable development not only as a duty to the society but also as an opportunity to do well by doing good.

The Annual Report on BRSR 2024 -25 is annexed to Director Reports as Annexure - II ESG Related Challenges:

Over the past year, we have encountered a range of ESG challenges that have guided our focus on responsible business practices. We acknowledge our responsibility in mitigating the impact of shipping operations on the environment and communities. Additionally, ensuring the safety, well-being, and growth of our workforce while fostering transparency, diversity and inclusion both within and outside our organisation continues to be a priority for us.

Processes:

In response to these challenges, we have set ESG processes that align with our commitment to sustainable shipping and fostering a culture of diversity and inclusion within our organization.

1.    Emission Reduction: The Company is compliant with International Maritime Organization (IMO) - MARPOL Convention and has taken appropriate actions impacting Emissions, Ballast Water Treatment, Domestic discharges and Oil Pollution enabling us to contribute to global efforts to combat climate change and promote cleaner oceans.

2.    Waste Management: Waste generated on board during normal operation of the ship is managed as per the vessel-specific garbage management plan and landed ashore at approved reception facilities for further processing. Also, the discharge of oil, solid waste & sewage etc. from its ships is prohibited under MARPOL (International Convention for the Prevention of Pollution from Ships). Most of our vessels comply with Green Passport or equivalent notation. In addition, the Company diligently adheres to the compliance requirements specified in the administration circular concerning the Transport and Handling of hazardous and noxious liquid substances in bulk on Indian-flagged offshore support vessels.

3.    Workforce Development: Multiple training programs with a core focus on the principles of varied topics such as Leadership, Soft Skills, Health & Wellness and Industrial skills were conducted for the workforce ensuring their professional growth and well-being while fostering a diverse and inclusive work culture.

4.    CSR Initiatives: Our community engagement initiatives positively impacted the lives of multiple individuals and many families, focusing on education, healthcare and livelihood opportunities across diverse communities.

5.    Vendor Selection: The Company sources vendors who are maintaining registration under local/ regional laws, are complying with National and International applicable legislations, and are maintaining management systems under ISO 9001 and 14001 or any other equivalent systems wherever applicable. Additionally, suppliers are requested to be in accordance with SOLAS Chapter 11-1/ Reg 35. Furthermore, the sellers should guarantee that no hazardous material identified under MEPC269 (68) and EUSRR has been used in the supplies, no use of plastic for packing material and whenever possible assist the vessel in collecting back the packing material if the vessel so requests.

Flexibility in Placement:

As an organization that values transparency and accountability, we have exercised our flexibility in placing this disclosure within the Annual Report. This ensures that stakeholders have easy access to crucial information about our sustainability efforts and responsible business practices.

Conclusion:

At The Shipping Corporation of India Limited, sustainability is ingrained in our corporate ethos. We view ESG as a foundation for creating long-term value and positively impacting the world around us. Through collaboration and unwavering commitment, we remain steadfast in our pursuit of sustainable shipping solutions.

Directors’ Responsibility Statement:

Pursuant to the requirement under Section 134 of the Companies Act, 2013, with respect to Directors’ Responsibility Statement, it is here by confirmed that :

a)    Applicable standards have been followed in preparation of financial statements.

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.

e)    The Company has an internal control system that is adequate and commensurate with the size, scale and complexity of its operations. Internal control framework and Risk Control Matrix (RCM) for various business processes is in place. The internal control systems (including Internal Financial Controls over Financial Reporting) are reviewed on an ongoing basis and necessary changes are carried out to align with the changing business / statutory requirements.

Internal audit is carried out by an independent firm of Chartered Accountants / Cost and Management Accountants on concurrent basis. The scope and authority of the Internal Audit function is defined in the Internal Audit Plan, which is approved by the Audit Committee. To maintain its objectivity and independence, the Internal Audit function submits quarterly reports to the Audit Committee of the Board. The internal audit examines, evaluates and reports on the adequacy and effectiveness of the internal control systems in the company, its compliance with the laid down policies and procedures and ensure compliance with applicable laws and regulations. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are reviewed, deliberated and presented to the Audit Committee of the Board.

Explanation - For the purposes of this clause, the term “internal financial controls” means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information;

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.

General Disclosures

Your directors state th at:

(1)    There was no change in the nature of business of the company during the financial year ended 31st March 2025.

(2)    During the year, the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code 2016, along with their status was ’NIL’.

Acknowledgements.

The Directors express their sincere gratitude for the help, guidance and support received from the Government of India, especially the Ministry of Ports, Shipping and Waterways, as well as various State Governments, regulatory and statutory authorities.

Your Directors also wish to express their thanks to the officials in the Ministry of Ports, Shipping and Waterways for the unstinted support

given by them in various matters concerning the Company. Your Directors would also like to convey their thanks to other Ministries, Trade Organizations, and Shippers’ Councils, who have played a vital role in the continued success of your Company. The Directors thank the shareholders, other stakeholders and valued customers for the continued patronage extended by them to your Company.

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

1

Ratios of comparative period i.e, 2023-24 are based on previous year figures which have been regrouped and rearranged wherever necessary to confirm to current year presentation of the financial statements as per Schedule III (Division II) to the Companies Act 2013. Ratio - Details of Significant changes and explanation thereto:

1)    Return on Net Worth- Return on Net worth has increased to 10.61 for F.Y. 2024-25 as compared to Return on Net worth of 8.89 for F.Y. 2023-24 due to increase in profit.

2)    Operating Profit Margin- Increase in operating profit from Rs. 74,979 in 2023-24 to Rs. 100,874 in 2024-25 has resulted in increase in Operating profit margin.

3)    Debt Equity Ratio- Debt Equity ratio has reduced due to repayment of debts.

4)    Current Ratio- Current ratio has improved due to increase in current assets.

2

Return on Net Worth is calculated on Net Worth as per Section 2(57) of Companies Act 2013 - Standalone Net Worth is Rs. 7,67,022 lakhs and Consolidated Net worth works out to Rs. 8,23,313 lakhs Accounting treatment

In preparation of financial statements, the Company has followed the Indian Accounting Standards (IND AS) laid down by the Ministry of Corporate Affairs and the relevant provisions of the Companies Act, 2013

A. INDUSTRY STRUCTUREAND DEVELOPMENTS

The overall scenario under which the Shipping industry operated and which impacted the various segments is discussed below.

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Mar 31, 2024

Your Directors have pleasure in presenting the 74^th Annual Report on the working of your Company for the Financial Year ended 31^st March, 2024.

FINANCIAL PERFORMANCE

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

(' in Crores)
Particular	Current Financial Year (2023-2024)	Previous Financial Year (2022-2023)
Revenue from Operations	5046.04	5793.95
Other Income	215.52	112.70
Profit/loss before Depreciation, Finance Costs, Exceptional items and Tax Expense	1639.17	1670.33
Less: Depreciation/ Amortisation/ Impairment	889.38	753.16
Profit /loss before Finance Costs, Exceptional items and Tax Expense	749.79	917.17
Less: Finance Costs	171.31	184.19
Profit /loss before Exceptional items and Tax Expense	578.48	732.98
Add/(less): Exceptional items	-	-
Profit /loss before Tax Expense	578.48	732.98
Less: Tax Expense (Current & Deferred)	(33.67)	(67.14)
Profit/loss for the year (1)	612.15	800.12
OtherComprehensive Income/loss (2)	0.53	9.72
Total (1+2)	612.68	809.84

The above figures have been extracted from the standalone financial statements as per Indian Accounting Standards (Ind-AS). Appropriations:

The working results for your company for the year 2023-24 shows a net profit of ' 612.15 crore. A sum of ' 75.50 crore has been transferred to Tonnage Tax Reserve. Retained Earnings has been further adjusted for dividend payment of ' 20.50 Crores during the financial year 2023-24.

Dividend:

The Board of Directors at their meeting held on 17.05.2024 had recommended a dividend of ' 0.50/- per equity shares of' 10/- each i.e. @ 5.00% on the paid up Capital of the Company. The Dividend will become payable once approved by the shareholders at the ensuing AGM. The said dividend will be paid within 30 days of its declaration atthe AGM.

The dividend, subject to approval of the Members at the Annual General Meeting scheduled to be held on 18/09/2024 will be payable to those Shareholders, whose names appear in the Register of Members / list of beneficial owners as on the Book Closure / Record Date. The payment of dividend will be subject to deduction of tax at source. The dividend pay-out is in accordance with the company’s dividend distribution policy which is available on the Company’s website http://shipindia.com/upload/policies/SCI_Dividend_Distribution_Policy1.pdf and also as per the prevalent provisions of laws, rules and regulations.

Share Capital:

The Company has not issued any Equity Shares with differential voting rights. Hence, no information as required under Section 43(a) (ii) of the Companies Act, 2013 read with Rule 4(4) of the Companies (Share Capital and Debentures) Rules, 2014 is furnished. The Company has only one class of Equity Shares having face value of' 10/- each.

Brief Analysis of Financial Performance:

SCI has reported a net profit after tax of' 612.15 crores for the financial year 2023-24.

Profit after Tax (PAT) is reduced to ' 612.15 Crores in FY 2023-24 as compared with profit of' 800.12 Crores in FY 2022-23. Dip in freight rate of Liner and Bulk segment has resulted in reduction in profit.

Liner segment has reported loss of ' 187.15 Crores in FY 2023-24 as compared to loss of' 31.19 Crores in FY 2022-23. Bulk segment

has reported profit of' 23.70 Crores in FY 2023-24 as compared to profit of' 203.80 Crores in FY 2022-23. Tanker segment has reported profit of' 605.53 Crores in FY 2023-24 as compared to profit of' 822.45 Crores in FY 2022-23 due to increased cost of services. T&OS segment has posted profit of' 159.59 Crores in FY 2023-24 as compared to profit of' 13.27 Crore in FY 2022-23. In T&OS segment profit has risen sharply during current year pursuant to agreements signed with A&N Administration w.e.f July 2021.

The consolidated net profit for the company for Financial Year 2023-24 is ' 678.97 crores.

Performance and Financial positions of joint ventures and subsidiary included in consolidated financial statements:

(' in Lakhs)
Particulars	ILT1	ILT 2	ILT 3	ILT 4	ICSL
As on	31.03.2024	31.03.2024	31.03.2024	31.03.2024	31.03.2024
Total Income	19,932	22,941	23,783	24,558	50
PAT	6,003	6,980	3704	7,850	(97)
Equity capital	18	18	8	35391	105
Number of equity shares	10000	10000	10000	42448300	10,50,000
EPS ('/share)	60,030	69,800	37,040	18	(9)
Dividend	6670	5836	-	3335	-
Net worth	78,456	77,765	20,602	55,575	(184)

Net Impact on Consolidated profits for the year ended 31^st March 2024 is increase of ' 66.82 crores upon consolidation of above joint ventures and subsidiary company.

Credit Rating Details:

(a) credit rating obtained in respect of various securities;	a) Rating is done for bank loan only,
(b) name of the credit rating agency;	b) The latest rating is by Acuite Ratings & Research
(c) date on which the credit rating was obtained;	c) published on 18th July, 2023
(d) Currentcredit rating;	d) Acuite Ratings & Research Limited (Acuite) has upgraded its long-term rating to ACUITE AA+’ (read as ACUITE double A plus) from 'ACUITE AA1 (read as ACUITE double A) and reaffirmed its short-term rating of ACUITE A1+’ (read as ACUITE A one plus) on the ' 7,500.00 Crores bank facilities of The Shipping Corporation of India Limited (SCIL). The outlook is 'Stable'.

Subsidiaries and Associates

Your company has two subsidiary Companies and has four Joint Ventures. “Inland and Coastal Shipping Limited” was incorporated on 29^th September 2016 and the second subsidiary, SCI Bharat IFSC Limited has been incorporated on 12.08.2024. Both of these subsidiaries, are in the nature of wholly-owned subsidiary of your Company. Pursuant to section 129(3) of the Companies Act, 2013, a statement containing salient features of our subsidiary and associates companies as on 31^st March 2024 in form AOC-1 is appended to the Director’s Report.

In accordance to section 136 of the Companies Act, 2013 the audited financial statements of the company are available on our website www.shipindia.com

PARTICULARS OF SUBSIDIARY & ASSOCIATE COMPANIES (As on 31^st March 2024)

Sl. No	Name & Address of the Company	CIN/GLN	Subsidiary/ Associate	% of Shares Held	Applicable section of Companies Act 2013
1	India LNG TransportCo. (No. 1) Ltd. 171, Old Bakery Street, Valletta, Malta	NA	Associate	29.08%	2(6)
2	India LNG TransportCo. (No. 2) Ltd. 171, Old Bakery Street, Valletta, Malta			29.08%
3	India LNG TransportCo. (No. 3) Ltd. 171, Old Bakery Street, Valletta, Malta			26.00%
4	India LNG Transport Co. (No. 4) Pvt. Ltd. 1, Harbourfront Place, # 13-01 Harbourfront Tower One, Singapore			26.00%
5	Inland & Costal Shipping Ltd. "Shipping House", 13, Strand Road, Kolkata -700 001	U61100WB2016GOI217822	Subsidiary	100.00%	2(87)

A SUBSIDIARY

Inland and Coastal Shipping Limited

Inland and Coastal Shipping Limited (ICSL), incorporated on 29.09.2016, is a wholly owned subsidiary of your Company. As per Ministry of Ports, Shipping and Waterways (MoPSW), Inland Waterways Transport (IWT) Division letter dated 27.10.2020, approval was accorded to IWAI for handing over three vessels i.e. (i) M.V. RabindraNath Tagore, (ii) M.V. Lal Bahadur Shastri and (iii) M.V. Homi Bhabha to ICSL.

M/s. Inland & Coastal Shipping Limited (ICSL) signed a MOU on 22.01.2021 with Inland Waterways Authority of India (IWAI) for operation and management of above mentioned cargo vessels and subsequently took delivery of M.V. R N Tagore on 22.01.2021 and M.V. Lal Bahadur Shastri on 26.02.2021. Third vessel M.V. Homi Bhabha would be taken over by ICSL in due course after completion of repairs by IWAI. ICSL is in the process of establishing scheduled services in NW1 (Haldia / Kolkata to Varanasi) and NW2 (Kolkata to Dhubri / Pandu).

ICSL and IWAI (Inland Waterways Authority of India) executed MOU on 11.03.2022 for taking over 2 RO-RO vessels owned by the IWAI to promote RO-RO transportation aimed at decongesting roads. Informatively, one RO-RO vessel m.v. Gopinath Bordoi was taken over by ICSL and out chartered to M/s Ziria Corporation on 29.08.2023 and second vessel m.v. Sankar Dev, would be taken over by ICSL shortly.

SCI Bharat IFSC Limited

The Strategy Committee and the Board of Directors of the Company in their respective meetings held on 08.02.2024 and 09.02.2024 accorded in-principle approval for the formation of a wholly owned subsidiary (“WOS”) of the Company at GIFT City subject to the approval of Competent Authorites.

On approval of MoPSW, NITI Aayog and DIPAM, the Board of Directors of SCI in their meeting dated 24.07.2024, subject to approval of MoPSW accorded approval for various decisions which are required for the formation a wholly owned subsidiary in GIFT City. Subsequently, The Ministry of Ports, Shipping and Waterways vide Letter no. SS-11027/1/2024-SU dated 01.08.2024 have communicated the approval of Competent Authority for the following decisions taken by Board of SCI in the Board Meeting held on 24.07.2024:

A)    Formation of a Wholly-Owned Subsidiary in the nature of Public Company Limited by Shares

B)    Name of the proposed Subsidiary

C)    First Subscribers of the Subsidiary Company

D)    First Directors of the Subsidiary Company

E)    Paid up Share Capital and Authorised Share Capital

Consequently, wholly-owned subsidiary of Shipping Corporation of India Limited, has been incorporated effective August 12, 2024 with the name ‘SCI Bharat IFSC Limited’ bearing CIN of U64990GJ2024GOI154335.Your Company is undertaking further expeditious actions in this regard.

B. JOINTVENTURES

(i)    India LNG Transport Co. (No.1), (No.2) and (No.3) Ltd

SCI has entered into three JVCs, registered in Malta, with three Japanese Companies viz. Mitsui O.S.K.Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha Ltd (K Line) along with Qatar Shipping Company (Q Ship) in case of ILT No. 1 & 2 and Qatar Gas Transport Company (QGTC) in case of ILT No. 3, each owning and operating an LNG tanker deployed in the import of a total of 7.5 million metric ton per annum of LNG for the Dahej Terminal of M/s Petronet LNG Ltd (PLL). SCI is the first and only Indian company to enter into the high-technology oriented & sunrise sector of LNG. SCI is the manager for these three companies, managing the techno-commercial operations of 3 LNG tankers.

(ii)    India LNG Transport Co. No. 4 Pvt Ltd

SCI has entered into 4^th JV registered in Singapore, with the same three Japanese companies viz. Mitsui O.S.K. Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha Ltd (K Line) and Petronet LNG Ltd to own and operate one 173,000 CBM LNG Tanker for transporting LNG primarily from Gorgon, Australia to India and Far East region for charterers Exxon Mobil LNG Services B.V. SCI is the manager for this company and is managing the techno-commercial operations of the tanker.

Fleet position during the year:

During the year under report, there were NIL additions to the SCI fleet. However two Product tankers viz. M.T. Suvarna Swarajya and M T Sampurna Swarajya were disposed-off. Thus, the overall feet position of SCI stood at 57 vessels of 5.245 million DWT at the end of the year.

Fleet Profile during the Year:
Particulars	As on	11.03.2023	Additions		De	etions	As on 31	.03.2024
	No.	DWT	No.	DWT	No.	DWT	No.	DWT
Crude oil Tanker	18	3231602	-	-	-	-	18	3231602
Product tanker	13	862925	-	-	2	65852	11	797073
Gas carriers	1	53,503	-	-	-	-	1	53,503
Bulk carriers	15	1022344	-	-	-	-	15	1022344
Containervessels	2	115598	-	-	-	-	2	115598
Offshore vessels	10	25238	-	-	-	-	10	25238
Total	59	5311210	-	-	2	65852	57	5245358
During the end of the year, the Company had no new built vessels on order.

Particulars of Loans, Guarantees and Investments.

Details of Loans, Guarantees and Investments are given in the notes to financial statements.

Annual Return

The Annual Return referred to in Section 134(3)(a) of the Companies Act, 2013 is available on the website of the Company: www.shipindia.com.

Particulars of contracts/arrangements with related parties

Particulars of contracts/arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed form AOC-2 is appended to the Director’s Report. The details are also available in Note 29 under ‘Notes to Financial statements’

Particulars of Employees

Your Company, being a Govt. Company, is exempted to furnish information under Section 197c of Companies Act, 2013 vide Ministry of Corporate Affairs (MCA) Notification dated 05.06.2015.

Employees Stock Option Scheme

The Company does not have any Employee Stock Option Scheme.

Company’s Policy on Directors appointment and remuneration

The terms of Directors appointment and remuneration are fixed by the Government of India.

Receipt of Remuneration by Managing Director from Subsidiary Companies.

Capt. B.K. Tyagi, CMD has not received any remuneration from the Subsidiary Companies.

Risk Management.

SCI considers Risk Management to be a core component of the Management of the Company and its ability to identify and address risks is central to achieving Corporate objectives. Accordingly, SCI has developed a detailed Risk Management Policy in line with the requirements of SEBI (LODR) Regulations, 2015, and other allied laws, rules and regulations which includes framework for identification of risks, measures for risk mitigation and Business Continuity Plan. The Policy has been approved by the Risk Management Committee and the Board. Other details in this regard are provided in the Report of Directors on Corporate Governance, which forms part of this Annual Report.

The company has identified entity level Risks which includes:

i)    Strategic Risk

ii)    Operational Risk

iii)    Financial Risk

iv)    Compliance Risk

Some of the risks identified by SCI include market volatility, increasing bunkering cost, cyber security risk, geo-political risks, decarbonisation challenges, Piracy, Foreign exchange fluctuation, regulatory compliances among others. All efforts are made for mitigating and controlling the risks through well-defined mitigation measures and coordination with all stakeholders.

SCI has formulated a three line of Risk Reporting viz. Corporate Risk Committee, Risk Management Committee and Audit Committee.

A corporate level Risk Register is maintained and reviewed quarterly by the Corporate Risk Committee. At each meeting of RMC, the Corporate Risk Committee reports all the risks including the High risks and their mitigation plans. Further, in the area of ‘Risk Management’, the Audit Committee and Board continued to function in accordance with the applicable laws, rules and regulations.

Conservation of Energy, Technology Absorption

The information pertaining to conservation of energy, technology absorption is forming a part of the Management Discussion and Analysis Report.

Foreign exchange earnings and outgo	Â	(' in Crores)
Particulars	2023-24	2022-23
Foreign exchange earned*	5,390.48	5,258.75
Foreign exchange outgo*	4,018.42	4,948.45
*includes deemed foreign exchange earnings and outgo.

Public Deposit

During the financial year 2023-24, your Company has not accepted any deposit within the meaning of Section 73 and 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

Proposed Strategic Disinvestment and Demerger of SCI

The proposed strategic disinvestment of SCI is being handled by Department of Investment and Public Asset Management (DIPAM) with the engagement of Transaction Advisor. In this regard, Preliminary Information Memorandum (PIM) for inviting expression of interest was released on 22.12.2020. The Virtual Data Room is open and is being managed by the Transaction Advisor for the process of due diligence by the Qualified Interested Parties.

UPDATES ON TRANSFER OF NON-CORE ASSETS FROM SHIPPING CORPORATION OF INDIA LIMITED

In accordance with the MCA Order dated 22.02.2023, during the Financial Year 2023-2024, titles of all Fixed Deposits eligible to be transferred to Shipping Corporation of India Land and Assets Limited (SCILAL) have been transferred into their name.

All other Non-Core assets of SCI as mentioned in the Demerger Scheme were transferred to SCILAL, by ‘de-facto’; however the same is also required to be carried out ‘de-jure’. Brief details are as under

a)    Subsequent to issue of stamp duty exemption order by Govt. of West Bengal, the Registration of all Kolkata free-hold properties for transfer from SCI to SCILAL is completed on 22.03.2024. Receipt of original transfer deeds and Mutation entry (change of name) formalities at Municipal Corporation are due and same will be completed soon.

b)    To facilitate transfer of properties in Maharashtra from SCI to SCILAL, follow-up is being done with the concerned authorities for seeking NOC towards transfer of Shipping House and MTI to SCILAL. Concurrently, adjudication of free-hold properties (residential) is being initiated to execute transfer deeds at respective sub-registrar offices.

c)    The Company is taking necessary and appropriate actions for the legal transfer of Irano Hind Shipping Company, PJ.S (IHSC) from SCI to SCILAL.

MANAGEMENT DISCUSSION AND ANALYSIS

The following remaining information w.r.t. to addition of new sub clause (i) under clause 1 in Part B (‘Management Discussion and Analysis) of schedule V of SEBI (LODR) Regulations, 2015.

Particulars	Standalone		Consolidated
	2023-24	2022-23	2023-24	2022-23
Return on Net worth (%)	9.18	13.39	9.40	13.52
Net Profit Margin (%)	12.13	13.81	13.45	15.02
Operating Profit Margin (%)	7.19	10.71	8.52	10.68
Debt Equity Ratio	0.42	0.41	0.38	0.37
Current Ratio	1.25	0.96	1.25	0.96
Interest coverage Ratio	4.38	4.98	4.77	5.36
Inventory Turnover Ratio	7.55	8.49	7.55	8.49
Debtors Turnover Ratio	4.16	7.00	4.16	7.00

* Ratios of comparative period i.e., 2022-23 are based on previous year figures which have been regrouped and rearranged wherever necessary to confirm to current year presentation of the financial statements as per Schedule III (Division II) to the Companies Act 2013.

Ratio - Details of Significant changes and explanation thereto:

1)    Return on Net Worth- Return on Net worth has reduced to 9.18 for F.Y 2023-24 as compared to Return on Net worth of 13.39 for F.Y 2022-23 due to reduction in profit.

2)    Operating Profit Margin- Reduction in operating profit from ' 620 crores in 2022-23 to ' 363 crores in 2023-24 has resulted in decrease in Operating profit margin.

3)    Current Ratio- Current ratio has improved due to increase in current assets.

4)    Debtors Turnover ratio- Debtor turnover ratio has reduced due to increase in Trade receivable

A. INDUSTRY STRUCTURE AND DEVELOPMENTS

The overall scenario under which the Shipping industry operated and which impacted the various segments is discussed below.

i]    WORLD SCENARIO

The world GDP grew by an average of 3.2% in 2023, which was quite healthy. However, global merchandise trade volume contracted by 1.2 per cent in 2023 from an expansion of 3.0 per cent in 2022, dragged down by rising trade restrictions and a rotation of demand away from goods to services. Amid a favourable outlook for the US economy, receding inflation in the EU and continual fiscal support in China, the Global economic growth projections have improved. Although the absolute growth percentage projected for 2024 might be lower than that of 2023, the outlook for 2024 is more promising since the surge in 2023 was largely attributed to the rebound from the contraction in 2022. The baseline forecast is for the world economy to continue growing at 3.2 percent during 2024 and 2025. Thus, with growth holding steady and core inflation seemingly under control, global economy appears to remain resilient.

ii]    GLOBAL TRADE

According to IMF, global trade volume (both goods and services) growth has been low at 0.3 % in 2023. After attacks on commercial shipping in the Red Sea—through which 11 percent of global trade flows—global transportation costs increased, refecting the rerouting of cargo from the Suez Canal to the Cape of Good Hope and continued trade disruptions from climate extremes in the Panama Canal. Global trade volume is, however, expected to improve with world trade growth being projected to grow at 3.0 percent in 2024 and 3.3 percent in 2025. Advanced economies are expected to see growth rise slightly, with the increase mainly refecting a recovery in the euro area from low growth in 2023, whereas emerging market and developing economies are expected to experience stable growth through 2024 and 2025, with regional differences. The global GDP growth and corresponding economic activity directly represents the international trade (export and imports) and in turn provides useful pointers to the shipping industry as about 80% of the international trade by volume is carried out by shipping.

iii]    SEABORNE TRADE. FLEET & MARKET

On the dry bulk trade front, the start to 2023 was sluggish. However the segment improved in the second half of the year and in 2024 dry bulk market is poised to cater to the rising import demand. The trade for most of the dry bulk commodities looks promising and the volume of trade shall likely convert into positive tonne-miles due to geo-political uncertainties leading vessels to divert and, thus, haul longer. On the feet supply front, dry bulk feet is expected to expand a mere 1.6% in 2024 owing to high demolitions against weaker deliveries this year. The effective expansion in supply is expected to be further subdued at 1.4%, as more vessels will curtail their annual average speed to comply with the IMO regulations. With the modest expansion in supply growth in 2024 amid buoyant demand, the dry bulk market in 2024-25 is expected to be healthy in all segments, provided that the geo-political situation does not change much.

With respect to prospects for crude tankers, global oil demand after rising by 2.3% in 2023, is expected to grow by a moderate 1.2% in 2024 because of a slowdown in demand in the West, hurting the growth in global crude trade. However, in view of the changes in trade patterns, it is expected that tonne-mile demand for crude tankers is likely to increase by 3% in 2024, significantly higher than corresponding 1% growth in trade. Global crude oil trade patterns changed dramatically in 2022-23 afterthe Russia-Ukraine war, and are expected to evolve further in 2024 because of significant midstream and downstream infrastructure developments. Additionally, rerouting of trade because of the disruptions to the Suez Canal traffic will again stretch the voyages in 2024. With respect to feet growth, continued weakness is expected to be 0.1% and 0.5% respectively for 2024 and 2025. This weak growth in feet will support tonnage utilization, capping any major decline in rates. Product tanker owners would continue to see healthy earnings in 2024 as high tonnage utilization due to stretched voyages will keep freight markets firm. However, the feet growth is expected to match the growth in trade in 2025 which may lead to rates to recede after 2024.

iv]    INDIAN SCENARIO

Growth in India is projected to remain strong at 6.8 percent in 2024 and 6.5 percent in 2025. With a robust economic expansion combined with increasing population, urbanization and industrialization, in the years ahead, India shall see strong domestic demand.

India’s National Steel Policy envisages the country’s production capacity to reach 300 million tonnes by 2030 from the current 161 million tonnes and this is likely to spearhead the trade growth in dry bulk cargoes. India is increasing its production of coking coal under India’s ‘Mission Coking Coal’. The Government of India aims to increase coal production to 140 million tonnes by FY30, which could moderate imports towards the end of the forecast period. However, the demand will continue to outpace the supply. With regards to non-coking coal, although there is thrust to increase output from captive mines and increase domestic production, the Country’s dependence on imports will persist in order to meet the robust power demand. Overall, the India centric trade for bulk carriers looks to be firm and robust in the near future.

India’s rising economic activity, supporting oil demand will ensure healthy India centric demand for crude oil. India’s demand for crude oil is expected to outpace China’s demand by 2027. India’s product exports are also set to rise during the upcoming years as domestic refinery capacity expansion will outpace demand. India is expected to remain a key supplier of refined products to Asia and the Atlantic Basin. Following the 2022 Russian sanctions, India’s middle distillate exports from East to West have increased, supporting the tonne-mile demand.

V] STRENGTHS

SCI has had decades of experience in the industry with diversified fleet across all major segments. Having a diversified fleet allows the company to better hedge against the market volatility across various segments and also provides the Company with a unique ability and flexibility to exploit demand growth in any given sector with a quick-mover advantage.

The relatively young feet of vessels with an average age about 15.2 years is widely accepted and the Company’s feet is deployed in India’s EXIM and Coastal trade as well as international cross trades. Moreover, the Company also enjoys a unique distinction of being the only Indian shipping company operating LNG carriers, which are owned by its joint venture companies. The depth and vastness in expertise of your company makes it a front runner in the industry.

Your company also has longstanding relationships with major Indian cargo interests such as Indian oil industry, steel companies, etc. The strong local and international clientele base offers cargo security and employment assurance for sizeable part of the Company’s feet. Vi] OUTLOOK

In the dry bulk market, the outlook for 2024 and early 2025 is generally seen to be positive. Charter rates across all segments are expected to remain healthy.

While all shipping segments are likely going to be benefitted due to strong demand and tight effective supply as vessels have been slow steaming to maintain a good rating under IMO’s CII regulations, some are likely to be benefitted due to increased tonne-mile demand as a result of geo-political uncertainty. Further the demand is also likely to hold well due to absolute volume of trade also being healthy, with major economies seen to be reviving. However, freight rates are expected to recede post-2025 on account of the strong order book increasing effective supply. It is, however, important to note that the outlook can swing if there are major changes in the current geo-political scenario.

While 2024 has been good so far for tankers, it’s not entirely due to trade volume growth; but, rather due to trade pattern shift. In terms of absolute volume the prospects of crude oil trade are not bright for the next couple of years because of a slowdown in oil demand growth and expansion in refinery capacity in oil production hubs. The ongoing production curbs by OPEC+ will keep oil supply tight, further curbing trade growth. Nonetheless, despite a significant deceleration in oil trade, tonne-mile demand will increase briskly in 2024 due to the changes in trade patterns and the rerouting of trade because of the ongoing geopolitical tensions. The prospects oil demand will rise 1.1% in 2024 due to a weak economic outlook, efficiency improvement and high EV feet. The growth is skewed towards non-OECD countries, with the largest increase coming from Asia Pacific, especially India, whose demand is expected to outpace China’s demand by 2027.

Vii] OPPORTUNITIES

Production rise and rebound of major global economy bodes well for the dry bulk carrier market and presents the opportunity for shipowners to cater to the growing demand. The demand for dry bulk commodities is projected to increase and is likely to improve in tandem with the growth in the global economic outlook which is primarily expected to be driven by Asia’s robust coal demand, rebound in global grain exports and stable Iron ore demand in 2024.

With grain trade season looking to be better than 2023, shipowners shall have the opportunity to deploy their tonnage in these high yielding voyages of longer duration. From the point of view of India centric trade, the coastal movement of cargo is expected to be healthy. Moreover, with Asian Pacific countries like China, Indonesia, Vietnam, etc. expected to have healthy trade requirement, it will provide improved opportunity for triangulation from India.

With OPEC tightening supply it is expected that Asian imports of American crude shall increase in 2024-25, helping increase in tonne-mile demand. Also, amid the ongoing disruption in the Red Sea and rising transportation costs, Europe’s imports from India have been replaced by those in the US.

It’s likely that Europe’s diesel imports from the US are not sustainable in the long run, and the continent will have to turn to either India orthe Middle East, increasing the tonne-miles of large-sized vessels.

Viii] RISKS AND CONCERNS

Most of the risk and concerns are likely to be a direct or indirect result of the changes in current geo-political situations.

The supply side equation is unlikely to be impacted by fleet addition in 2024. However a key factor in aiding or limiting supply will be the ongoing Red Sea crisis and Panama Canal drought.

For dry bulk carriers, China’s appetite for Iron Ore and coal will also be major factor in driving demand and if requirement from China falls or remains subdued, it will adversely impact the demand drive.

The economic uncertainties and the on-going geopolitical tensions over the conflicts in the Middle East can significantly change the outlook for crude tankers. The crisis in the Red Sea has forced many tankers employed on the Middle East-Europe trade to avoid Suez Canal and transit via the Cape of Good Hope, squeezing supply. However, any easing in tensions will normalize the trade through Suez Canal, increasing tonnage supply.

B.    BULK CARRIERS & TANKERS

a)    Crude Oil & Product Tankers

In the year 2023 the global demand for crude oil registered a decent rebound of 2.30% over the previous year. It is expected that the crude tanker earnings will continue to be decent in view of tight tonnage supply and healthy demand. The start of new refineries in Nigeria and Mexico and the expansion in refineries of the Middle East will affect the overall growth in crude oil trade. Further the ongoing Red Sea crisis has changed the trade patterns as the Owners need to transit via the Cape of Good Hope, thus, increasing the cost of transportation. On the other hand, the expected start of the Trans Mountain Pipeline (expansion) in Canada will increase Cananda’s seaborne crude exports, boosting the global seaborne trade. After surging by 4% in 2023, it is expected that the global seaborne crude trade to increase by 1.1% in 2024.The expected decline in crude exports from West Africa and North America after the start of Nigeria’s Dangote refinery and Mexico’s Olmeca refinery will also lead to a shift in trade patterns as buyers will have to find alternative sources. Europe’s imports from the US and Latin America will increase at the expense of African and Middle Eastern crude and at the same time, US imports of Latin American crude will also replace Middle Eastern and Nigerian crude. Sanctions on Iran, Venezuela and Russia will keep the grey trade active. Mid-size crude tankers will continue to benefit from the new crude oil trade patterns as Russian crude exports to Asia will remain stable and European imports of the US will increase.

It is expected that the demand growth will ease in 2024 and it may align with the pre-pandemic trend. An acceleration in the adoption of alternative fuels and a brisk expansion in the EV market will squeeze oil demand in OECD countries in coming years. Nonetheless, oil demand will remain high in developing countries driven by healthy economic growth and rising population. Asia will remain the main growth hub for oil demand.

Meanwhile, reimposition of sanctions on Venezuela by the US government will affect the Suezmax demand as Venezuelan crude trade will again shift back to the dark fleet. However, any possible permanent removal of the sanctions after US elections will gradually expand Venezuelan production, increasing long-haul trade on the Latin America to Asia route, boosting VLCC demand. A likely rise in Venezuelan exports to the US will also support demand for mid-size tankers. Overall, the volatile action in the oil trade will hurt the growth in crude oil trade but it will lead to an increase in the average haul length of the crude tanker, boosting the tonne-mile demand.

It is expected that sharp decline in newbuilding deliveries will keep fleet growth subdued over the next two years. The small orderbook will restrain tonnage deliveries during 2024-25. Although tonnage ordering increased in 2023, most deliveries are scheduled for 2026-27. On the other hand, the ongoing firm freight rates and absence of any substantial penalties for lower CII ratings will cap the overall tonnage scraping in 2024. Nonetheless, demolitions will start increasing in 2025 before surging in 2026. Furthermore, the tonnage ordering is expected to remain strong in 2024-25 as owners will need replacementtonnage for their old vessels. Among the segments, Suezmaxtankers new orders were high in 2023 and it can change trade patterns slowly. However, it is expected that the VLCC ordering will catch momentum in 2024-25 as a positive outlook for the long-haul Asia-bound trade from the Atlantic and the Middle East will also keep tonnage demand for VLCCs growing in the foreseeable future.The ongoing economic uncertainties, geopolitical tensions in the Middle East, uncertain Venezuelan crude exports can change the outlook for crude tankers significantly. Meanwhile, OPEC countries and their non-OPEC allies (collectively known as OPEC+) are doing production cuts which will keepthe OPEC+ output almost flat in 2024, ifthe extra voluntary cuts will continue.

There were deliveries of 9.8 million dwt of crude oil tanker tonnage and 2.41 million dwt of (IMO Class) product tankers tonnage in 2023. Going forward, the expected deliveries of crude oil tankers in 2024 and 2025 are 2.2 million dwt and 5.8 million dwt respectively. For product tankers 2.3 million dwt delivery is expected towards the end of 2024. Furthermore, the demand for replacement tonnage is also robust as owners seek to renew their fleets in response to the decarbonisation regulations.

The average spot rate yield of AG/China route (TD3C) for VLCC was US$ 35,700 per day in 2023. As crude oil exports from the Middle East is likely to shrink further in 2024-25, there will be no major respite for VLCC demand in the Arabian Gulf. Similarly, reduced Nigerian crude exports after the start of the Dangote refinery will hamper VLCC demand on the West Africa-India route. However, most Middle Eastern crude will continue to move to Asia on VLCCs. Furthermore, VLCCs shall find employment in rising long-haul crude exports from Latin America and US to Asia. The Suezmax rate yield on West Africa - North West Europe route (TD20) was about US$ 40,500 per day in 2023, which is expected to have downward trend in 2024. For Aframax segment, the average spot rate on AG/Far East route (TD8) was US$ 45,600 per day.

Although these freight levels are expected to exhibit downward trend in 2024, overall Aframax earnings will remain attractive on account of continued strong demand growth and tepid tonnage supply growth.

For product tankers, LR2 and LR1 Spot rates on AG/East routes, (TC1 and TC5) were US$ 32,200 and US$ 27,100 per day respectively in 2023. LR tankers’ earnings are expected to be attractive in the remainder of 2024 as buoyant demand and sluggish supply growth will keep tonnage utilisation strong. LR tankers will continue to benefit from the stretched voyages due to the Red Sea crisis and Europe’s dependence on the Middle East and Asia for diesel and jet due to the ongoing sanctions on Russia. However, tonnage demand in the LR market will soften once the trade through the Suez Canal normalizes. It is expected that rates shall start cooling off from 2025 as tonnage supply will improve. In case of MR tankers, spot earnings on WCI/Japan route (TC12) was at lower levels of US$17,900 per day in 2023. MR tanker earnings are expected to remain robust in 2024; however, rates will moderate from 2025 amid improving fleet growth.

Your company’s five VLCCs were gainfully employed during the financial year under review; mainly on spot voyage charters with Indian charterers both in public and private sector. The segment earnings were in line with the prevailing market and brought good margins over vessels’ indirect operating costs. Your Company’s Suezmax tankers were deployed in a mix of Indian as well as foreign charterers mainly on voyage charter basis. Older Suezmax vessels, however, had lesser employment opportunities owing to theirtrading limitations. Aframax tankers were deployed in a mix of COA, spot voyages and time charter for carriage of Indian import cargoes as well as cross trade cargoes. Through judicious deployment of some of the modern tankers in international cross trade and by triangulation of voyages, your Company maximized earnings of these tankers. Out of five LR1 tankers trading in DPR four tankers were employed on Indian coast in a mix of COAs and spot voyages, catering to coastal crude movement for the Indian oil industry. One DPP LR1 tanker was employed on time charter business with foreign charterer ensuring steady earnings at healthy levels.

LR2 and LR1 product carriers of your Company were deployed in the East of Suez market and maintained a healthy level of revenue as compared to the prevailing market. The LR2 product tankers were employed with foreign charterers on voyage charters, achieving good returns. The CPP LR1 tanker was also deployed fortransporting international cross trade cargoes. Three MR producttankers were gainfully employed on the Indian coast supporting coastal movement of Indian oil industry’s product cargoes.

Opportunities

According to the IEA, global oil and products demand will expand by 1.1 and 1.2 mbpd in 2024 and 2025 respectively. Nearly 40% of this expansion is expected to be driven by increasing demand for petrochemicals. Tonne-mile demand will increase briskly in 2024 due to the changes in trade patterns and the rerouting of trade because of the ongoing geopolitical tensions. Crude tanker demand is forecast to outpace supply in 2024 but grow slower than supply in 2025 as ships may return to the Suez canal and sailing distances shorten. Driven by increasing sailing distances product tanker demand is also expected to grow faster than supply in 2024 but slower in 2025.

Global crude oil trade patterns changed dramatically after the Russia-Ukraine conflict, and are expected to evolve further in 2024 because of significant midstream and downstream infrastructure developments. The expected start of the Trans Mountain Pipeline expansion (TMX) in Canada will increase seaborne export capacity in the Pacific. An increase in refinery throughput in Nigeria’s Dangote refinery will require Nigerian crude buyers such as India and Europe to look for alternative supply of light crude from the US, boosting tonne-mile demand for tankers. Similarly, a possible start of Mexico’s Olmeca refinery (most likely in 2025) will induce US refiners to increase heavy crude imports from Latin America, which again will be positive for the tonne-mile demand for mid-size tankers.

Product tanker cargo volumes are forecast to grow by 1.0-2.0% in both 2024 and 2025. Product tanker tonne miles demand is also forecast to be impacted by changes in sailing distances, which are predicted to increase in 2024. With high newbuilding prices, tonnage ordering has reduced in 2023 after moderate ordering in 2022. Reduction in charter hire rates and corresponding improvement in the bottomlines of product shipping companies over the last two years will improve the credit rating and it will assist them in getting financing for new acquisitions at attractive terms. Also, the tightening environmental regulations also call for feet renewal, as these regulations will make the employability of old and inefficient vessels difficult in the coming years. In view of this, tonnage ordering will be healthy over the next two to three years.

Risks and Concerns

The production cuts by OPEC+ will keep oil supply tight; however, will hamper the growth in trade since the tight oil supply might lead to a drawdown in oil inventories. The economic uncertainties and geopolitical tensions over the conflicts in the Middle East can significantly change the outlook for crude tankers. The crisis in the Red Sea has forced tankers employed on the Middle East-Europe trade to avoid Suez Canal and transit via the Cape of Good Hope, which has squeezed the tonnage supply. However, any easing in tensions will normalize the trade through Suez Canal, increasing tonnage supply. On the contrary, any possible disruption to the Strait of Hormuz traffic will be a disaster for the oil tanker market as it will significantly squeeze the global oil supply and thereby its trade. Moreover, economic outlook is still highly uncertain. Any weakness in the global economy, especially in China, will hurt the oil demand and thereby the demand for crude tankers.

b) Dry Bulk

The overall dry bulk segment earnings for the year FY 23-24 was weaker as compared to FY 22-23. While the average Baltic Dry Index (BDI) remained more or less similar in FY 23-24 when compared to FY 22-23, the tCy earning were lower. In contrast to FY 22-23, the first 2 quarters of FY 23-24 were subdued. It was only in the second half of FY 23-24 that the segment defied the seasonal trend and recovered. When compared to 2023, dry bulk trade is set to exhibit a growth of 3.9% in 2024, with tonne-mile demand increasing by an estimated 4.2%. Also the dry bulk global trade is expected to grow at an average of 2.2% - 3.0% forthe subsequent 3 years.

In the first quarter of 2024, dry bulk markets have defied seasonal weakness and are expected to remain reasonably buoyant in the near future. Dry bulk demand is expected to improve in tandem with the growth in the global economic outlook, with Asia’s robust coal demand, rebound in global grain exports and stable iron ore demand in 2024. With geopolitical disruptions influencing the market and highertrade of bauxite, grain and steel products on long-haul routes continuing, dry bulk shipping demand is projected to expand in 2024. In addition to the ongoing geopolitical disruption, the tonne-mile demand is also aided by Panama canal drought.

The buoyant dry bulk demand is juxtaposed with a modest expansion in effective supply in 2024. The dry bulk feet is expected to expand a mere 1.6% in 2024 owing to high demolitions against weaker deliveries this year. The effective expansion in supply is expected to be subdued at 1.4% as more vessels will curtail their annual average speed to comply with the IMO regulations. The average vessel speed has been treading downwards, indicating ship-owners’ preference for reducing speed to maintain the required CII rating. The existing squeeze in supply amid buoyant demand will continue to help vessel utilization, which has been trending upwards in 1Q24, aiding charter rates in 2024-25. Your company’s dry bulk feet comprises of eight modern Supramax vessels of around 57,000 dwt each and seven modern Panamax / Kamsarmax dry bulk carriers of around 80-82,000 dwt. The dry bulk carrier feet is relatively young with an average age of about 12.1 years. The Company’s dry bulk carriers have been engaged over a spread of various trades and deployment patterns such as spot voyages, period time charters including index linked time charter, COA’s, etc. In addition to import, export and cross trade voyages, your dry bulk carriers were also employed on Indian coast, performing a few coastal time charters and voyage charters, whose earnings compare well with markets. The diverse trade and deployment patterns ensured that the market volatility and geo political uncertainties were well covered. Opportunities

Rebounding of major global economies from relatively lower levels of 2023 will be a key driver in dry bulk demand. Trade requirement for most of the major dry bulk cargoes like Iron Ore, Coal, Grain etc look positive for 2024.

Global steel output is expected to rise by 2.8% in 2024 as production in advanced economies rebounds. While China’s GDP growth will play a key role in driving the demand, India too is expected to spearhead the growth in Steel output. Chinese steel output is projected to improve 1.8% in 2024 as there will be ample demand for competitive Chinese steel products in the rest of the world despite the sluggish demand from the country’s real estate sector. Iron ore imports will strengthen amid an expected revival in demand, as the inventory was 1.4% down in 1Q24 despite a 4.5% jump YTD.

The demand for non-coking coal import from India, China, Vietnam and Thailand is also expected to be healthy. China’s power demand is projected to increase another 6% in 2024 and their continued reliance on coal in the shortterm would imply necessitating coal imports to ensure energy security. Meanwhile, India’s thermal coal imports are projected to expand 4.6% in 2024 amid its robust power demand. The Indian government has set a target to produce 170 million tonnes of coal from captive and commercial coal blocks during the 2024-25 financial year. This target is 26% higher than 116 million tonnes in 2023- 24. The target for coal output for Coal India Limited (OIL) in 2024-25 is one billion tonnes from CIL mines. NTPC has also set a target of 40 million tonnes of production capacity from its captive mines in the fiscal year 2025. However, the country’s dependence on imports will persist to meet the robust power demand as the country’s coal-powered generation will increase by 16% by 2030 compared to 2022.

Grain trade is also expected to rebound and this is likely to provide additional support to the shipping demand. Argentina’s grain exports are recovering after the severe drought last year. With grain exports from US and Brazil also looking promising, the overall demand for grain trade is set to expand in 2024 in comparison to 2023.

Trade requirements apart, the demand side is likely to be impacted by geopolitical uncertainty. Ongoing crisis in the Red Sea and transit restrictions in the Panama Canal have aided in tonne-mile demand. Amid the geopolitical tensions in the Red Sea, a significant share of vessels heading from West to East have rerouted through the COGH, increasing shipping demand and raising the share of dry bulk vessels passing through the COGH from 55% at end April 2023 to 77% at end April 2024. This is at the expense of the Panama and Suez Canal vessel transits. As a result, Panamax tonne-miles have soared since the majority of grain and soybean trade on the USG-Asia route is carried out on these vessels.

Risks & Concerns

Dry bulk trade demand is generally driven by the global economic outlook. However, geopolitical tensions and economic uncertainties also impact the trade. Although, currently, geopolitical tensions and economic uncertainties have worked in favor of the freight market, any shift or

change may impact the freight rates adversely. For example, if worsening of the Red Sea crisis leads to further increase in freight rates, it may lead Chinese importers to import a higher share of grain from Brazil instead of the US. This may limit the additional tonne-mile demand that is presently being generated due to the rerouting of vessels. With respect to geo-political tensions in the Black Sea, any adverse development with respect to the grain corridor will also pose a risk.

Additionally, if the Iran-lsrael crisis escalates to a full-hedged war in the Middle East, engulfing the major economies, the demand for dry bulk commodities might contract in the short term due to an increase in commodity prices and a surge in vessel operating expenses with a spike in bunker costs.

Even though the impact of El Nino has started waning, the expected La Nina in 2H24 could disrupt mining and port activities. The resulting hoods could affect iron ore and coal mining, particularly in Australia, where portactivities could be hampered.

Lastly, since China’s appetite for Iron Ore and Coal plays a major role in dry bulk demand, any sluggishness or production cap in China might change the otherwise positive demand outlook.

c) LNG Transportation

Year 2023 brought the much needed normalization for LNG market after a chaotic 2022 that witnessed the Russian invasion of Ukraine and Europe’s consequent switch to pipeline LNG from Russia. In 2022, the significant change in trade patterns with Europe facing a potential energy crisis saw LNG prices spiral to record highs, leading to a surge in vessel chartering and shipping rates. European demand was more stable in 2023 than it was in 2022 as the continent had successfully secured storage well ahead of winter, overcoming the fears of supply shortage. By February 2023 nearly 63% of storage level was still available with Europe. Some LNG cargoes were diverted to Brazil from Europe owing to the high inventory created by Europe and Brazil experiencing heat waves, accentuating LNG demand for power generation. Factors such as robust Norwegian supply and mild winters due to El Nino effect dissuaded LNG cargo imports during the peak winter season in Europe.

Going forward, global LNG trade and projects are expected to grow at a compound annual growth rate of 9.5% from 2024 to 2029. The factors that may play vital roles are the continued and growing relevance of LNG globally, improving supply, long-lasting demand, advancing geo-economics and changing weather conditions. While Asian economies continued moving towards LNG mainly on account of fuel switching (coal to gas), more countries became LNG importers, with some countries having higher economic growth prospects. In long run it is expected that Asia will lead the LNG trade. The Asian countries are likely to increase the share of LNG in their energy mix as it will play a crucial role in decarbonizing the developing Asian economies, such as China, India and Bangladesh, which still largely depend on coal for power generation.

The LNG shipping rates continued to fall in tandem with seasonality despite LNGCs avoiding the Suez Canal due to the ongoing attacks in the Red Sea. The expected effect of the supply dynamics due to volatility in the LNG market, with growing Panama Canal restrictions and Australian strikes buoying the fears of global supply disruptions was not significant.

Lower price is incentivized LNG buying in Asia with countries such as China and India increasing their imports. Despite China’s gradual rebound, Japan and South Korea were less active in securing LNG amid the revival of their nuclear plants. Asian prices are expected to be at a premium with Europe, creating significant change in trade patterns.

Due to the addition of liquefaction capacities despite the ongoing scrutiny by the US over LNG expansion plans and growing LNG demand in advanced and emerging economies. Geopolitical disturbances, high LNG demand in emerging economies and erratic weather conditions will further boost the global LNG trade. However, downward risks such as the Panama and Suez Canal disruptions, low industrial growth in Europe, sporadic investment and inflationary pressure in the West pose concerns to the LNG market. The upward trajectory in the trade is expected to continue until 2027 as Europe continues to increase its imports and China remains the top importer. Despite Europe’s robust appetite for LNG, Asia will remain the top LNG importer. On the supply side, the US will retain its position as the top exporter, followed by Qatar, Australia and Russia.

The new projects will alter the trading patterns for both Asia and Europe due to the shorter trade distances. It is expected that additions in capacity from 2025 will ease the market constraints as prices stabilise. Egypt has also resumed their LNG exports. Africa is expected to be next in line (after the US, Qatar and Australia) to becoming a major LNG exporter with high-profile LNG projects planned in countries such as Mozambique, Gabon, Congo, Senegal and Tanzania. Growing liquefaction capacity will complement increasing regasification build-up, which is expected to expand at a compound annual growth rate of 2.4% between 2024 and 2029, reaching 1,418 mtpa by the end of 2029. Europe and China will be the growth drivers in the short term, while South and Southeast Asia will be the frontrunners in the long run.

Meanwhile, the boost in liquefaction projects has bought investments in the shipping sector. The LNGC feet grew more than 6% in 2023. The feet expansion is forecast to increase further at 9% and 11% in 2024 and 2025, respectively, with 74 and 86 carriers expected to be delivered. Qatar aims to increase its LNG production capacity to 142 mtps by 2030 from the current plan of 126 mtpa. The country’s ambition would impact process, contracts and shipping, especially post 2028, when a surplus production capacity becomes operational.

Vessel demand is further supported by the EEXI regulations, which encourage reduced vessel speeds, and Cll regulations, which will boost vessel scrapping. Higher newbuild prices and tight shipbuilding capacity has restrained the new orders. It is projected that supply will outpace demand over 2024-25 which could depress the charter rates. Virtually all delivery slots till 1st half of 2027 are booked with major LNGC shipyards triggering re-jigs in the order book. Shipyards are also facing inflation and shortage of labour and raw material, potentially delaying scheduled deliveries. However, with slippages in 2023-24, major capacities being added from 2025 and older steam turbine vessels being phased out, the market is likely to re-establish equilibrium.

India’s LNG imports were marginally up by 6% QoQ to 27% YoYto 6 million tonnes in 1Q24, supported by low prices and improved domestic demand. India’s LNG imports are expected to rise at a CAGR of 12% between 2024 and 2029, aided by the rise in City Gas Distribution (CGD) demand, increasing regasification capacities and improving global LNG supply. The fall in LNG prices (around $8-10 MMBtu) is boosting demand from India’s fertiliser, refinery, petchem sectors, with major LNG buyers - IOCL, GAIL, GSPC, Torrent Gas and BPCL buying spot cargoes. Several Asian governments are targeting to increase the share of natural gas in their energy mix and plan to develop more gas-fired power plants to support power generation. It is planned to increase India’s share of gas to 15% by 2030 from the current 5%. India’s LNG imports are projected to jump by 18% in 2024, with consumption recovering across sectors due to the lower LNG prices. The Country is ramping up its regasification capabilities and it is expected to add 65.7 mtpa by 2029.

Strategic alliances and partnerships will also become increasingly essential in supporting the FSRU development. More collaboration in the future is anticipated, strengthening regional energy security, which will further support the demand for FSRUs.

Your company jointly owns and operates 3 LNG carriers under long term charters with charterers Petronet LNG Limited, Indiafortransportation of LNG predominantly from Qatar. The fourth LNG carrier jointly owned by your Company is deployed under long term charter to Exxon Mobil LNG Services B.V, Netherlands. In order to ensure its presence in the new areas of the LNG market, your company is exploring further growth opportunities in LNG shipping. Your company has built up a pool of trained LNG officers and has acquired substantial experience of independenttechnical and commercial operation of LNG tankers.

d) LPG Transportation

The global LPG trade reached 124.8 million tonnes in 2023, rising by 7.2% YoY Asian LPG imports increased by 6.5% in 2023, spearheaded by China’s 22% YoY growth, negating the contraction in imports by Japan and South Korea. India’s LPG imports dropped slightly to 18.2 million tonnes in 2023 from 18.6 million tonnes in 2022. Though country imported 5.1 million tonnes in 4Q23, up by 17% QoQ, yet down by 8% YoY The rise in India’s LPG imports in 4Q23 is attributed to the manufacturing sector switching back to propane from LNG amid firm gas prices over the winter season. An increase in the demand for Liquefied Petroleum Gas from residential, industrial, and transportation sector is the major driver for India’s LPG demand. The growing demand for clean cooking fuels in rural, as well as urban households is expected to give a boostto the Country’s LPG market.

India’s LPG imports are expected to reach 19.9 million tonnes in 2024 and 21.1 million tonnes in 2025 on robust residential demand, which currently accounts for about 90% of the country’s LPG demand. While residential demand will remain firm, industrial demand for propane is also likely to pick up following the government’s recent reduction in customs duty to 5% from 15% on LPG imports. Meanwhile, policy support will boost LPG imports in the Country. The Government of India aims to provide new LPG connections to 7.5 million households (low-income) under Pradhan Mantri Ujjwala Yojana (PMUY), starting from FY24-25.

While some short-term incentives will support LPG demand in India this year, the country’s infrastructure development will strengthen its capabilities to accommodate the growing appetite for LPG in the long run. The Kandla-Gorakhpur LPG pipeline from Gujarat to Uttar Pradesh is scheduled to come online in 2024, while Indian Oil Corporation (IOC) is also due to commence operations at the import terminal in Kochi, with capacity of 15.4 kt of LPG. India is also attracting foreign investment in its LPG sector, which will provide further impetus for the country’s infrastructure, strengthening its LPG import capabilities.

The charter hire rates for VLGCs surged in 2023 because of increased long-haul trade, supported by a wide US-Asia arbitrage, recovery in Asian petchem production and supply inefficiencies created due to the Panama Canal restrictions and Red Sea tensions. The Panama Canal restrictions due to drought conditions since August 2023 supported the sector as VLGCs are compelled to take longer routes, squeezing vessel supply. However, the attacks in the Red Sea also forced VLGCs to take even longer route via the Cape of Good Hope.

Your company’s VLGC carrier - VLGC Nanda Devi, was gainfully employed under time charter with Indian energy PSU during this financial year. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance of the tanker segment has been largely influenced by healthy earnings on all segments. Your company operates a diversified feet, including five VLCCs, which were primarily employed on spot voyage charters with Indian charterers. However, due to dry-dock activities, revenue-earning days were lower compared to the previous year. Suezmax tankers were deployed in a mix of Indian as well as foreign charterers mainly in spot market. The older Suezmax vessels faced reduced employment opportunities owing to technical and age related limitations. Your company’s Aframax COA earnings remained at decent level throughout the year. Four LR-I crude tankers were employed on the Indian coast, engaging in a mix of COAs, spot voyages, and other operations like lighterage and boating storage duties; whereas one unit was deployed on time charter with a foreign charterer. The LR product tankers were employed with foreign charterers on voyage charters, achieving stable returns. MR tankers were employed on the Indian coast.

The earning of the dry bulk segment was subdued for the first half of the year owing to low demand. China’s appetite was low and grain trade was also muted. However several factors resulted in the segment picking up in the second half of FY 23-24. China’s import of iron ore surged, likely to replenish low inventories. This along with Panama canal drought and Red Sea crisis escalation that led to vessel’s rerouting, resulted in demand supply gap that drove the markets up. This ended up defying the seasonal cycle. And although the recovery in the second half of the year did help ship owners, the overall earnings for the full financial year were lower than that of FY 22-23, as the levels seen for dry bulk market in the first few months of FY 22-23 were much higher, thereby driving earnings. Also, some of the dry bulk vessels of your Company were scheduled for dry-dock. However your company’s diversified strategic deployment of tonnages, including COA, produced profitable financial results in dry bulk segment.

C. LINER AND PASSENGER SERVICES Industry Structure & Developments

i) World Scenario:

A.1 Global shipping industry found itself at epicentre of unprecedented challenges in 2023. It navigated through substantial economic hurdles, escalating inflation, significant shifts in consumer behaviour, increased geopolitical uncertainties, and a pronounced move towards diversifying global supply chains. Conflict in Ukraine, resulted in closure of Black Sea ports, causing congestion and delays in goods transportation and had a particularly significant impact. Moreover, notable decrease in Ukraine’s exports, especially grains & food products, contributed to global price hikes. Recent conflicts in Middle East have also exerted substantial pressure on shipping industry, prompting international Companies to issue advisories and make adjustments to their networks / operations etc. Challenges posed to key shipping routes, including Suez Canal and Strait of Hormuz, added further uncertainty to industry in 2024. Expansion of BRICS, now including UAE, Saudi Arabia, Iran, Ethiopia, Egypt, and Argentina, is expected to bring about major shifts in international trade routes, introduce new alternative payment systems, and support infrastructure development across regions. However, outcome depends on how BRICS leverage its expanded influence in evolving global landscape, presenting both opportunities and challenges for global and regional shipping & maritime sector. This collaboration, combined with other recent developments in region, such as inception of India-Middle East-Europe Economic Corridor (IMEC), is poised to reshape dynamics, scope & reach of global shipping. A.2 In response to ongoing trade tensions between US & China, escalating labour costs, and concerns about potential manufacturing disruptions akin to those witnessed during COVID-19 pandemic, Companies, especially in technology sector are increasingly exploring strategies to diversify their global supply chain operations away from China. While completely severing ties with China poses challenges due to robust electronic supply chains, established over past three decades, Companies are strategically relocating their final manufacturing and assembly processes outside of China while maintaining reliance on Chinese suppliers for essential raw materials. Establishing a manufacturing presence in a new location is a gradual process, typically taking more than two to three years. Anticipated growth in production in alternative regions is expected to gain momentum in 2024, with significant transitions occurring after 2025.

A.3 In 2024, pivotal shipping & maritime trends mentioned above are poised to shape global shipping landscape. Persistent consumer spending caution will influence container shipping demand and imbalanced inventory availability, potentially leading to an increase in blank sailings in certain regions. Simultaneously, oversupply is expected to drive intense competition and reduced profitability, paving wayfor possibly more consolidation, mergers and acquisitions in 2024.

A.4 Geopolitical uncertainties are anticipated to cast shadows on established trade routes, and expanding influence of BRICS countries is set to introduce new market dynamics, further impacting shipping & maritime landscape. Additionally, gradual shift in supply chains away from China emerges as a key trend with significant implications for market. Future of whole shipping & maritime industry is unpredictable, yet interconnected economic trends and geopolitical events mentioned above are set to guide course & destiny of global shipping ecosystem in 2024 and beyond.

A.5 As per UNCTAD, in 2023, global economy grew by 2.7%, but international trade in goods decreased by 1%. Although there has been some recovery in 2024, it's unlikely that merchandise trade will be a significant driver of growth this year. Global maritime trade routes, crucial to world’s trade & commerce, are facing increasing challenges. Most recently, escalating attacks on ships in Red Sea since November 2023 have been compounding already existing disruptions in Black Sea caused by war in Ukraine. Additionally, climate-induced droughts are affecting trade through Panama Canal.

A.6 In 2023, global container market grew 0.2% year-on-year to 173.8 million TEUs, which is 1.5% more than in 2019 before COVID-19 pandemic. However, this is 3.9% lowerthan in 2021, with cargo volumes declining by almost 7 Million TEUs due to regional and East/ West trade decreases. According to BIMCO, global container volumes are expected to grow between 3% and 4% in 2024 and 2025. In 2023, world's top 20 ports generated 387.5 million TEUs in cumulative traffic, which is 1.24% more than previous year. Asia was main driver of growth, with 15 of top 20 ports in 2023, including Beibu Gulf, a new entrant. Africa's leading port, Tangier Med, also entered ranking in 2023.

A. 7 As 2023 saw a relatively low level of container ship recycling, new ships entering fleet caused an 8% increase in capacity of container

fleet, fastest growth registered since 2011. In 2023, shipyards delivered 350 new container ships with a total capacity of 2.2 Million TEUs, beating previous record from 2015 when 1.7 Million TEUs was delivered. Ships larger than 15,000 TEUs continued to dominate deliveries, and segment grew 28% after 1.3 million TEUs were delivered in 2023.

B) Indian Scenario:

B. 1    India’s 12 Major Ports handled 819.23 Million Tonnes (MT) of cargo in FY24, some 4.45 % more than 784.30 MT handled during last

year on back of strong growth in Iron Ore, Raw Fertiliser, Coking Coal and Container shipments, as per IPA. Mormugao saw highest increase in traffic in percentage terms, by nearly 19% to 21 MT in FY24. It was 17 MT in FY23. Rise came on back of increased Iron Ore exports to 5 MT, up 117% y-o-y. Traffic across all other categories, like Petroleum, Coking Coal & Thermal Coal saw a decline.

B.2 India's maritime sector is set to undertake a transformative journey with a comprehensive roadmap launched during Global Maritime India Summit, involving an investment of ' 80,000 lakh crores. Amrit Kaal Vision 2047, formulated by Ministry of Ports, Shipping & Waterways (MoPSW), builds on Maritime India Vision 2030 and aims to develop world class ports and promote inland water transport, coastal shipping, and a sustainable maritime sector. It encompasses aspirations in Logistics, Infrastructure, and Shipping, supporting India's 'Blue Economy'. Vision, shaped through over 150 consultations with various stakeholders and analysis of 50 international benchmarks, outlines more than 300 actionable initiatives for enhancing ports, shipping, and waterways by 2047.

B.3 GMIS 2023, organized by MoPSW, was largest summit ever conducted in Mumbai. Hon’ble Prime Minister inaugurated summit and launched 'Maritime Amrit Kaal Vision 2047'. Ministers from 10 foreign countries, official delegations, business delegates, and exhibitors from 42 countries participated. Event witnessed signing of 360 MOUs worth Rs. 8.35 lakh crores, and additional investible projects worth ' 1.68 lakh crore were announced. Summit facilitated 2,460 B2B meetings and more than 500 G2B / G2G meetings. Hon’ble Prime Minister also laid foundation stone for eleven projects, totalling ' 14,440 crores, and eleven projects valued at ' 8,924 crores were dedicated to the Nation.

B.4 To meet larger vision of achieving Zero Carbon Emission Goal, Government launched ‘HaritSagar’ Green Port Guidelines on 10.05.2023. Four major ports viz. Deendayal Port, Visakhapatnam Port, New Mangalore Port and VOC Port are already generating renewable energy more than their demand. On 27.09.2023, Green Hydrogen NGEL signed an agreement with SMP Kolkata to develop a Green Hydrogen Hub in Kolkata. SMP Kolkata and Saif Powertec Ltd., Bangladesh signed a MOU on 25.09.2023, to establish a new multimodal transport route for container movement between India and Bangladesh for fostering trade & shipment between two countries through Mongla and Chattogram Sea Ports, as well as Pangaon River Port.

B.5 On 03.11.2023, Costa Serena, first international cruise liner in India, was launched from Mumbai by Hon’ble Union Minister of MoPSW. This is a significant milestone in history of cruising and tourism in India and was made possible by "Dekho Apna Desh" campaign of Hon’ble Prime Minister. From April to November 2023, 86.47 MMT of cargo was moved through Waterways as compared to 80.44 MMT moved during April to November 2022, i.e. an increase of 7.49%.

II) Business Sector & Outlook

(i)    Shipping industry is considered a crucial barometer refecting trends of global economy, and particularly container shipping sector, dealing with consumer goods, is known to react sensitively to economic and political changes. In 2024, container shipping is expected to be influenced by complex changes in shipping industry environment, global economic conditions, and political situations, which will likely have a significant impact on cargo volumes & freight rates. Consequently, 2024 is anticipated to be a challenging year for predicting container freight rates.

(ii)    Global container cargo volumes is directly influenced by worldwide economic situation, and this impact has been pronounced in recent years. Due to pandemic, there was a 1.5% decrease in 2020 compared to previous year. Subsequently, in 2021, with launching of economic stimulus measures by various governments including interest rate cuts, consumption increased, leading to a 6.6% rise in cargo volumes. However, in 2022, Russia-Ukraine war resulted in inflation & interest rate hikes, leading to a decrease in consumption and a 3.7% decline in cargo volumes. In 2023, as inflation moderated, there has been a slight 0.5% increase in cargo volumes. Examining cargo volume by routes, in 2023, routes in Asian region experienced a 1.4% decrease, while European routes saw a 7.2% increase, and North American routes decreased by 4%.

(iii)    According to Clarkson's forecast, global container cargo volume outlook for 2024 is approximately 208.54 Million TEUs, representing an increase of about 3.7% compared to 2023. Maritime Strategies International (MSI) provides a more optimistic projection, anticipating a growth rate of 4.5% for 2024. This upward trend is primarily associated with cessation of interest rate hikes in US, EU etc., interpreted as refecting expectations for recovery in consumer spending and corporate demand. Breaking it down by routes, forecast suggests

that route within Asia will experience a 3.4% increase to 89.42 Million TEUs, Europe route will see a 1.5% rise to 16.75 Million TEUs, and North American routes is expected to increase by 6.5% to 22.49 Million TEUs.

(iv)    On supply side, starting from 2023, delivery of large container ships has gained momentum. Looking at data for 2023, delivery of container ships with a capacity of over 8,000 TEUs was 130,000 TEUs in May, 230,000 TEUs in June, 170,000 TEUs in July, and 120,000 TEUs in August. In December, 150,000 TEUs were delivered. These figures represent increases of 458%, 99%, 169%, 406%, and 191% compared to same months in previous year, indicating substantial influx of container ship capacity into shipping market. As of end 2023, global container ship capacity reached 27.83 Million TEUs, signalling significant change in shipping industry. This figure represents an increase of approximately 8.3% as compared to 25.7 Million TEUs in 2022, marking highest growth rate in past decade.

(v)    Delivery of a large number of container ships can contribute to stabilization of freight rates, simultaneously, it can also lead to intensified market competition and sustained pressure for reduction of freight rates due to oversupply. Container shipping industry needs to respond flexibly and strategically to these challenging market changes. To achieve this, a focus on analysing market trends, improving operational efficiency, developing long-term business plans (such as diversification of business) etc. is considered crucial. Through such an approach, container shipping industry can effectively cope with market volatility and strive for long-term stability and sustainable growth.

(vi)    According to predictions from Clarkson’s and MSI, growth rates for cargo volume in 2024 are forecasted to be approximately 3.7% and 4.5%, respectively. In contrast, growth rate for container ship capacity, according to Clarkson’s, is expected to reach 7.0%. It appears that demand growth rate may not keep pace with increase in supply, indicating a less favourable freight rate, profit & profitability outlook as compared to previous year.

Ill) Future Trends in Shipping Industry

(a)    Low Carbon Fuels: Adoption of low carbon fuels, such as Liquefied Natural Gas (LNG) & Biofuels, represents a significant step towards reducing greenhouse gas emissions in shipping industry. As environmental regulations become stricter and sustainability concerns grow, ship-owners are increasingly investing in alternative fuels to power their vessels. This shift towards low carbon fuels not only helps reduce emissions but also positions Companies favourably in a market increasingly focused on environmental responsibility and compliance with emissions targets.

(b)    Streamlined Hulls: Advancements in hull design, including development of more streamlined shapes & structures, aim to improve hydrodynamics of vessels and reduce drag. By minimizing resistance encountered by ships moving through water, streamlined hulls can enhance fuel efficiency and reduce operational costs. As fuel expenses constitute a significant portion of operating expenses for shipping companies, investments in streamlined hulls offer potential for substantial long-term savings and increased competitiveness in market.

(c)    Efficient Propeller Design: Innovations in propeller design focus on optimizing blade geometry, materials, & propulsion systems to maximize propulsion efficiency and minimize energy consumption. Efficient propeller designs help vessels achieve higher speeds with lower fuel consumption, leading to improved performance and reduced environmental impact. By investing in more efficient propeller technologies, shipping companies can enhance their operational efficiency; lower operating costs, and comply with regulatory requirements aimed at reducing emissions and improving sustainability.

(d)    Improved Voyage Planning & Fuels Savings: Enhanced voyage planning techniques leverage advanced weather forecasting, AI route optimization algorithms, and real-time data analytics to optimize vessel routes and minimize fuel consumption. By identifying most fuel-efficient routes and adjusting speed and course accordingly, shipping companies can achieve significant fuel savings and reduce environmental emissions. Improved voyage planning not only contributes to cost savings but also enhances operational efficiency, reliability, and safety, positioning companies for success in an increasingly competitive and environmentally conscious industry.

(e)    Hull Coatings: Development of advanced hull coatings aims to reduce friction between ships & water, thereby, improving fuel efficiency and reducing emissions. Innovative coatings, such as silicone-based or non-toxic foul-release coatings, prevent marine growth and reduce drag, allowing vessels to maintain optimal performance over extended periods. Investing in better hull coatings not only helps shipping companies reduce fuel consumption and operating costs but also prolongs lifespan of vessels and minimizes environmental impact by reducing use of biocidal antifouling paints.

(f)    Air Cushions: Air lubrication systems, also known as air cushions or air bubbles, create a thin layer of air bubbles along hull of a vessel, reducing frictional resistance and improving fuel efficiency. By injecting compressed air or micro-bubbles beneath hull, air cushion systems enable ships to glide more smoothly through water, requiring less propulsion power and fuel consumption. Adopting air cushion technology offers significant fuel savings and environmental benefits, making it an attractive option for shipping companies seeking to enhance efficiency and sustainability in their operations.

(g)    Sails: Modern sail-powered cargo ships are incorporating innovative technologies to enhance efficiency and sustainability. Rigid sails, made from durable materials like carbon fibre, and kite sails, which capture high-altitude winds, are among latest trends. Rotor sails, using Magnus effect, are gaining popularity for their effectiveness in various wind conditions. Hybrid propulsion systems combine traditional engines with sail power to reduce fuel consumption and emissions. Automated sailing systems optimize sail adjustments

in real-time, minimizing human intervention. Additionally, some ships integrate solar panels with sails to harness both solar and wind energy. Wind-Assisted Ship Propulsion (WASP) technology leverages multiple wind propulsion methods for maximum energy savings. New ship designs focus on aerodynamics and hull efficiency to complement sail power. Maritime industry is also seeing increasing regulatory support and incentives for sustainable shipping practices, further driving innovation in sail-powered technologies.

IV)    SWOT Analysis - L&PS Division

A)    Strength & Weaknesses

A.1 Liner Division of SCI has vast experience in liner trade, which is most formidable force instilling confidence in cargo interests / owners who continue to lend their invaluable support to SCI.

A.2 Customerfriendly approach at all levels and SCI’s customized services puts SCI ahead in league.

A.3 Wide network of agents, world over, provides and facilitates for localized contacts in markets to offer bespoke, customised, end-to-end total logistics solutions.

A.4 Operating partnerships have been forged with internationally recognized container carriers in select consortia, to enhance coverage and frequency on major trading routes.

A.5 Break-bulk operations are largely profitable and provide stable source of revenue.

A. 6 Though SCI started predominantly as a liner shipping company but currently has only 2 liner vessels with a meagre share of global liner

capacity.

B)    Opportunities & Threats:

B. 1    Substantial growth of Indian EXIM container trade facilitated by enabling GOI policies viz. Maritime Amrit Kaal Vision 2047, Maritime

Vision 2030, Sagarmala, Gati Shakti, National Logistics Policy, Foreign Trade Policy 2023 etc.

B.2 Substantial potential for enhancing presence on Indian coast in coastal shipping sector, feeder operations, IWT etc.

B.3 Capitalise on substantial movement of project cargoes, heavy lift shipments; tapping more PSU / GOI / Defence cargoes.

B.4 India-Maldives service to serve as template for expansion into Indian Ocean Region (IOR) & near Coastal Regions.

B.5 Provide Technical, Operational & Commercial Management, of IWAI Vessels through ICSL.

B.6 Break-bulk sector affords inherent potential for carriage of ODC/Project/ Heavy Lift cargoes of Government Organizations/ Departments / PSUs etc.

B.7 Supply / demand overhang with huge box-ship order book dominated by larger ships (ULCS / VLCS) placing considerable stress on already depressed freight markets.

B.8 Declining merchandise / EXIM trade owing to emerging geopolitical risks, global infiationary trends, slowing consumer demand, high inventory overhang etc. depressing fill factor/capacity utilization etc.

B.9 Trade-wars, protectionism etc. & its impact on emerging markets pose serious headwinds.

B.10 On-going industry consolidation, capacity management & network optimisation forcing cascading of bigger vessels into niche segments stressing outfreight rates, capacity utilisation, revenues and profitability.

B.11 Extreme volatility in inputcosts viz. especially bunker prices, port/terminal/depottariffs etc. severely impacting bottom line.

V)    Liner Shipping Services 2023-24

A)    Segment-Wise Performance

A.1 Liner Vessels: Table below shows profile of your Company’s liner fleet having a total container carrying capacity of 8,800 TEU (nominal capacity).

Type of Ownership	As on 31.03.2023		Addition		Scrapping		As on 31.03.2024
	No.	DWT (MT)	No.	DWT (MT)	No.	DWT (MT)	No.	DWT (MT)
SCI Owned	2	1,15,598	-	-	-	-	2	1,15,598
In chartered	1	10,643	1	28,632	Â	Â	2	39,275
Total	3	1,26,241	1	28,632	Â	Â	4	1,54,873

A.2 SCI owned container vessels viz. m.v. SCI Chennai and m.v. SCI Mumbai are 14 years old. As on 31.03.2024, 4 vessels including 2 in-chartered containervessels having combined DWT of about154,873 MT was operated by your Company.

In addition to above owned and in-chartered vessel, your Company also has loading rights on 18 vessels of its partners in various consortia arrangements that your Company has with leading Shipping Lines such as Mediterranean Shipping Company (MSC), Sima Marine / Simatech etc. to name a few. Your Company continued to be present in following sectors.

B) Container Services

B.1 India Europe Service / Himalaya Service / IPAK Service: UK-Continent Cellular Container Service was commenced by SCI in 1994, as a single operator, deploying three vessels of 1,800 TEU capacity. Service was subsequently upgraded to a fixed day weekly service with two partners deploying a total of seven vessels of similar capacity. During economic downturn of 2008-09, service was rationalised by forming a consortium with MSC in May 2009, to operate a weekly service with a total of eight vessels, out of which two vessels of 4,400 TEU capacity were contributed by SCI. A slot swap arrangement between SCI & MSC was agreed, under which SCI was allotted 150 TEUs on India Pakistan Europe Service (IPAK service) operated by MSC, against allotment of 150 TEUs from SCI’s allocation on India Europe Service. Thereafter, in early 2016, service was upgraded to nine vessels of 8,500 - 10,000 TEU capacity with SCI contributing one in-chartered vessel of about 8,500 TEU capacity. Since re-delivery of in-chartered vessel in August 2021, SCI has been maintaining its presence in India-Europe sector through purchase of slots from MSC. In meantime, owing to on-going Red Sea crisis and attacks on commercial ships, Shipping Lines started to route their vessels via Cape of Good Hope as transiting through Suez Canal became unsafe. In view of above, round voyage duration of Asia Europe Services viz. IPAK service & Himalaya Service operated by MSC increased from 63 days to 84 days and number of vessels deployed in services also increased from nine to twelve vessels. Accordingly, MSC re-organized Himalaya Service to cover Mediterranean ports and IPAK service for catering to European / North Continent Ports. Hence, SCI is now operating India-Europe service through slot purchase on IPAK Service operated by MSC. During January 2024, SCI finalized in-chartering of an 8,000 TEU vessel, which is expected to be delivered to SCI during lastweek of August 2024 & is planned for deployment in IPAK Service.

B.2 SCI Middle East India Liner Express (SMILE) Service & Chennai Colombo Gulf Service (CCG) of Partner: SMILE & CCG services seamlessly link up with East Coast of India and West Coast of India, thereby, strengthening and expanding SCI’s presence in Coastal Shipping Sector. Joint operation on this route is a force multiplier for SCI, which provides high quality Coastal Services on fixed day, fixed window basis with potential for even bigger expansion in Coastal and near Coastal trades with special emphasis on East Coast of India ports. These two services viz. SMILE and CCG, with their service rotations makes it feasible to connect pan-Indian ports with improved transit time. SCI seeks to cooperate with other Indian Companies to work out besttransportation solutions fortrading community visa-vis commercially viable and environmentally feasible options. SCI connects West Coast of India to Southern & Eastern ports of India viz. Vizag, Katupalli & Krishnapatnam offering Pan India service since thereby promoting GOI initiative ‘Sagarmala’, increased coastal shipping and effecting modal shift.

B.3 India—Maldives Shipping Services (IMSS): India-Maldives Cargo Shipping Service between India and Maldives, was jointly launched through a virtual ceremony on 21.09.2020, adding a new chapter in connectivity initiatives taken by both countries in Indian Ocean Region (IOR), connecting Indian Ports of Cochin and Tuticorin with Kulhuduffushi and Male. Majority shipments are of bulk/break-bulk nature, whereas, thrust is to fill-up vessel with containerized cargo for better profitability. Informatively, service was briefly discontinued in September 2022, due to off hiring of inchartererd vessel. However, Service was continued through interim arrangement with other carriers. On 05.05.2023, direct shipping service recommenced between India and Maldives, through induction of m.v. MSS Galena, from VO Chidambarnar Port. m.v. MSS Galena, since her inaugural sailing on 05.05.2023, gave much needed connectivity between both Nations. On completion of charter of m.v. MSS Galena and for maintaining continuity of IMS Service, SCI has taken m.v. MSM Douro, a 220 TEU (nominal capacity) vessel, for induction in IMS Service.

B.4 Inland Waterways Services: “Inland & Coastal Shipping Ltd” (ICSL), a wholly owned subsidiary of SCI, was incorporated on 29.09.2016 for undertaking / providing transportation services through inland waterways, coastal shipping and end to end logistics. A MOU was executed between ICSL and Inland Waterways Authority of India (IWAI) on 22.01.2021 for Operations & Management of three cargo vessels on bareboat charter basis. Vessels would navigate on National Waterways and serve hinterlands of India. Two cargo vessels were taken over by ICSL in January and February 2021 respectively and third vessel would be taken over by ICSL after completion of formalities by IWAI. ICSL is in process of establishing scheduled services in NW1 (Kolkatato Patna/Varanasi) and NW2 (Kolkatato Dhubri/ Pandu) in collaboration with IWAI. Subsequently, ICSL and IWAI executed a MOU on 11.03.2022 for taking over two RO-RO vessels owned by IWAI to promote RO-RO transportation aimed at decongesting roads. Informatively, one of the RO-RO vessels viz. m.v. Gopinath Bordoloi, was taken over by ICSL and out-chartered on 29.08.2023 and second vessel m.v. Sankar Dev, would be taken over by ICSL shortly.

B.5 Feeder Operations: SCI enters feeder arrangements with “Common Carriers” between various destinations/ port-pairs on Indian Subcontinent for providing seamless connectivity for EXIM & Coastal trade fraternity.

B.6 Slot Swap Arrangements: SCI enters into slot-swap arrangements with service providers depending upon trade requirements.

B.7 Break-Bulk Services: SCI arranges carriage of break-bulk cargoes on space charter basis from various regions across globe including USA, Europe, Far-East etc. for imports of Government Departments / PSUs and other GOI Organisations, which includes ODC / Project / Heavy Lift / IMO Class-I Cargoes etc. and also containers.

VI)    Marketing: SCI’s marketing team continues to make regular customer calls through its own Offices and also through Agents appointed at various ports in India and abroad in order to market its container and break-bulk services. Both physical & Virtual Meetings with Agents, Customers, Shippers, Cargo Consolidators etc. are held periodically, and SCI representatives also participate in various trade meets at important locations in India.

VII)    Outlook:

a)    IMF projects a GDP growth of 6.8% for FY 2024-25, citing strong domestic demand, whereas, ADB has a more optimistic outlook, forecasting a growth of 7% GDP growth for FY 2024-25, based on expectations of robust investments and a strong service sector. Further, Budget 2023-24 has emphasised significant increase in capital expenditure outlay, with a focus on infrastructure development, including investments in ports, waterways, and related logistics infrastructure, which would directly & indirectly benefit shipping sector by augmenting capacity & improving efficiency and connectivity.

b)    On international side, according to predictions from Clarkson’s and MSI, growth rates for cargo volume in 2024 are forecasted to be approximately 3.7% and 4.5%, respectively. In contrast, growth rate for container ship capacity, according to Clarkson’s, is expected to reach 7.0%. It appears that demand growth rate may not keep pace with increase in supply, indicating a less favourable freight rate outlook during 2024-25. Further, uncertainty arising from prolonged geo-political conflicts such as Russia-Ukraine war, attacks on commercial vessels in Red Sea region forcing diversion of vessels via longer & riskier route of Cape of Good Hope has had a debilitating impact on shipping services. Longer sailing distances & transit times, higher bunker consumption, increased insurance premiums, risk allowances for crew, etc., have caused a spike in freight rates. As complex macroeconomic and geopolitical factors are beyond control of shipping lines & there is considerable uncertainty regarding their impact on shipping services during 2024. In view of above, India Sub-continent Europe Sector would remain extremely volatile in terms of both cargo volumes and freight rates in coming months.

c)    SCI's weekly Coastal service (SMILE) with owned vessels viz. m.v. SCI Chennai & m.v. SCI Mumbai (115,598 DWT each) is operated in partnership with Chennai-Colombo-Gulf Service (CCG) operated by partner. Informatively, m.v. SCI Chennai & m.v. SCI Mumbai are largest vessels ever deployed in coastal services. In addition, vessel m.v. Alexandria has been in-chartered & inducted in SCI’s Coastal feet to maintain continuity and expand SCI’s Coastal services. With presence of m.v. Alexandria and two owned vessels, SCI is ideally poised to expand presence on Indian coastal trade & post favourable results in 2024-25. However, due to influx of excess tonnage by competing lines, reduction in cargo volumes, downward trend in freight rates etc. is expected to continue at least till mid of FY 2024-25.

d)    As regards Inland Waterways, though navigable waterways of India continue to be underutilized, government’s focus on development and promotion of Inland Waterways as a supplementary mode of transport through initiatives like Amritkaal 2047, MIV 2030, Gati Shakti Plan and Sagarmala for development of Multimodal Transport, would give necessary impetus to further development & usage of Inland Waterways making it next sunrise sector. SCI is already operating in inland waterways and is looking for further opportunities forexpansion through its subsidiary, Inland & Coastal Shipping Limited, located at Kolkata.

VIII)    Risks & Concerns: As container freight rates in last two years touched record high levels, it is unlikely that such rates will continue to maintain at same levels this year. This can taper down SCI’s Liner services profitability depending on degree of reduction in box rates. SCI needs more partners for market expansion for its EXIM as well as coastal services. However, in absence of suitable partners / alliance with other EXIM / coastal operators, SCI’s EXIM / coastal services growth may remain stagnant.

IX)    Discussion on Financial Performance w.r.t. To Operational Performance: Your Company’s liner segment registered a net loss of' 187.15 crores in FY 2023-24 as against ' 31.19 crores in 2022-23. Operating Income decreased to ' 460.99 crores in 2023-24 from ' 1,128.59 crores in preceding year due to lower volumes and sub-optimal freight levels. You may like to note that your Company is adopting various cost saving measures accruing to liner services viz. considerable saving on feeder & trans-shipment costs by reducing carrying cargoes to non-base ports, better inventory management, control on repair costs of vessels & containers. On time schedule reliability of our services, especially, in Europe sector, continues to be very good and comparable or better than global players.

X)    Measures Taken To Improve Services & Operations: Liner Division is ensuring that General Rate Increases (GRI) are being strictly implemented from time to time keeping in mind market sentiments and demand-supply gap dynamics. Performance of each service is being reviewed monthly from point of view of profitability. Ultra slow steaming is planned and achieved on container ships. Liner Division has already expanded its Coastal and Feeder Services and is trying for further expansion. Further, ports like Kandla and newly emerging container ports in East Coast of India like Kattupalli, Krishnapatnam and Vizag are offering substantial discounts on transhipment costs and storage charges, and by using these ports optimally, substantial system costs reductions are being achieved. Our focus is to maintain right sized leased equipment inventory to optimum levels to make services sustainable and undertaking firm negotiations with Leasing Companies and Vendors for achieving desired results. Aging vessel is being replaced by younger feet at betterterms. Division is scouting forsecond hand vessel(s) if itfits operational, technical and commercial requirements.

XI) Information Technology: SCI has a robust ERP system in place. These systems are hosted at SCI’s Data center located at Powai. To ensure Business Continuity, SCI also has a Disaster Recovery Site at Kolkata office. There is an E-tendering platform which is being extensively being used for procurements, thus enabling transparency and efficiency in the procurement process. SCI has implemented a Vendor Invoice Management system which facilitates registration of invoices centrally by the vendors which then goes through a work how mechanism for approvals till settlement. Vendor has a facility to track and understand the status of their invoices.

As part of the Cyber Suraksha initiative, SCI has been making employees aware on various topics like cyber security awareness, whatsapp scams, phishing, desktop, laptop and mobile security, precautions against fraudulent transactions and Courier Frauds through articles, emails and talks by eminent personalities.

D. Technical and Offshore Services Division

Information relating to the year under review viz 01.04.2023 to 31.03.2024:

The T&OS Division of SCI operates fleet of 10 owned offshore vessels. In addition to the above, it has also been managing vessels of various organizations/Government departments. As on 31.03.2024, this comprised of 02 vessels of ONGC, 27 vessels of A&N Administration, 3 vessels of Geological Survey of India and 01 vessel of UTL Administration.

Offshore vessels:

SCI owned Offshore vessels:

Your Company’s owned offshore fleet comprises of 10 vessels i.e. 02 nos. 80T Anchor Handling, Towing & Supply Vessels (AHTSVs), 04 nos. 120T AHTSVs, 02 nos. Platform SupplyVessels (PSVs) and 02 nos. Multi-Purpose SupportVessels (MPSV).

During the year under review, five (5) vessels (one PSV and four 120T BP AHTSVs) continued to be on long term charter with ONGC. Further, two vessels were under deployment with DRDO (one MPSV and one 80T BP AHTSV); and two vessels were under deployment with Indian Navy (one MPSV and one PSV). Vessels deployed with DRDO and Indian Navy were providing assistance in national missions of strategic importance.

While at the beginning of the year, two (2) 80T BP AHTSVs were operating in the spot market and were deployed with various Government and private clients; subsequently, during the year one 80T BP AHTSV has been deployed with DRDO on long term basis. O&M of ONGC owned vessels

i.    Specialized vessels of ONGC:

During the year 2023-24, your company continued the Operation & Maintenance (O&M) of ONGC’s one Geotechnical vessel (GTV Samudra Sarvekshak)

Also your company continued to provide O&M to ONGC owned Well Stimulation vessel (WSV Samudra Nidhi), since the vessel’s delivery in the year 1986.

ii.    Mobile Offshore Drilling Unit (MODU):

Your Company had been providing Marine Man Management services to one MODU of ONGC viz; ‘Sagar Bhushan’, since last 6 years. As perthe directions from ONGC, the vessel has been handed over back in Mar’2024.

O&M of other organizations:

i.    O&M of A&NA owned vessels:

In addition to Offshore operations, your Company operates domestic passenger and cargo transportation services between the Mainland and the A&N group of islands and inter-islands by managing vessels owned by the Andaman and Nicobar Administration(A&NA). Presently a total of 27 vessels of A&N Administration are being managed by SCI. These comprise of 17 nos. Foreshore Passenger vessels, 8 inter-island vessels, 01 Mainland-island vessel and 01 cargo vessel.

ii.    O&M of UTLA owned vessels:

Your company, on 02.02.2022, had executed an agreement with Union Territory of Lakshadweep Administration (UTLA) towards Operation and Management (O&M) of their entire fleet of vessels.

Subsequently, your company received letter dated 21.02.2023 from the UTL Administration informing about signing of MoU with Cochin Port Authority, Cochin Shipyard Limited and Lakshadweep Development Corporation Limited (LDCL) for Port Infrastructure development projects and Shipping operations and maintenance of UTLA vessels. As per the letter, your company was requested to take necessary action for handing over operation and management of UTL vessels to LDCL. Accordingly, suitable arrangements were made by your company for smooth handing over. During the year 2023-24, 22 vessels of UTL Administration were handed overto M/s. LDCL in a phased mannerand remaining 01 vessel was handed over in April’2024.

iii.    O&M of other organizations:

During the year, your company continued operation and management of Oceanographic and Coastal Research vessels on behalf of Government agencies / departments viz; three vessels owned by Geological Survey of India (GSI) under Ministry of Mines.

iv.    Manned and Managed vessels:

The following table shows the profile of Passenger vessels, cargo vessels and other vessels of various Government departments managed by your company:

Type of ships	As on 31.03.2!		23	Â	Â	As on 31.03.20		24
	Nos.	PAX capacity	Cargo Capacity (MT)	Addition	Scrap/ Redelivered	Nos.	PAX capacity	Cargo capacity (MT)
Pax-cum-cargo	14	6517	4390	-	5	9	5098	4390
Cargo ships	8	-	4400	-	7	1	-	400
POL ships	3	-	910	-	2	1	-	700
High Speed Crafts	6	600	-	-	6	-	-	-
Tug	2	-	-	-	2	-	-	-
Other vessels	17 Foreshore & 3 Research	1601	250	-	-	17 Foreshore & 3 Research	1601	250
Â	53	8718	9950	-	22	31	6699	5740

DRDO Project:

Your Company continued to deploy its one Multi-Purpose Support vessel (MPSV) “SCI Saraswati” with the Defence Research & Development Organisation (DRDO) during the entire FY 2023-24. Further to this, your company has also provided one more Offshore vessel to DRDO to cater to their requirements. These vessels are being utilized to meet support requirements towards DRDO’s strategic missions of national importance.

Indian Navy Projects:

Similar to previous year, during the current year also, the Indian Navy has continued to avail services of your company’s one MPSV “SCI Sabarmati” and one PSV “SCI Yamuna”. Your company is proud to have been associated and assisting the Indian Navy in their critical missions of national importance.

India-SriLanka Passenger ferry service:

As per directions of Government of India, your company rendered necessary assistance for commencement of International Passenger Ferry service between Nagapattinam, India and Kankesanthurai, Sri Lanka, which was flagged off on 14.10.2023 from Nagapattinam.

SCI took over the High Speed Craft (HSC) ‘Cheriyapani’ owned by the UTL Administration, completed mandatory audits & certification and obtained permissions from D.G. Shipping and vessel was made ready to be deployed for the ferry service. The vessel HSC ‘Cheriyapani’ successfully completed four round voyages between Nagapattinam and Kankesanthurai on 14^th, 16^th, 18^th & 20^th Oct 2023 and has catered to the requirements of passengers of both countries.

Thereafter, as weather conditions started deteriorating at Nagapattinam and Kankesanthurai, passenger service had to be suspended beyond 20^th Oct 2023. Accordingly HSC Cheriyapani sailed from Nagapattinam on 24.10.2023 for Kochi and the vessel was handed over to LDCL (UTLA) on 28.10.2023.

Strengths and Weaknesses:

Your company has a diversified fleet of offshore vessels with 02 nos.80T AHTSVs, 04 nos. 120T AHTSVs, 02 nos. PSVs and 02 nos. MPSVs, thus enabling it to cater to requirements of various clients in the offshore market. Your company is also in the process of tonnage acquisition in the required segments.

Further to keep the vessels technologically up-to-date your company is in the process of upgrading four (4) 120T BP AHTSVs from DP1 to DP2, in line with the market requirements of E&P operators.

During the period under review, your Company has successfully deployed majority vessels on long term charter thus ensuring steady revenues for long term period.

ONGC being the biggest E&P company in India, your company has been employing majority of its vessels with them on long term basis. However to mitigate the risk of dependence on one client, your company has been in constant discussions with various other public/private operators to deploy our vessels for their offshore activities.

While SCI has diversified Offshore fleet, it is comparatively small to cater/fulfill to the needs of E&P companies in India, which is being capitalized by the private & small players by adding low cost assets.

Opportunities and Threats:

The offshore vessel market in India presents several opportunities, driven by the country's expanding energy sector, regulatory initiatives and increasing demand for maritime infrastructure. Here are some key opportunities:

i.    Oil and Gas Exploration:

>    Increased Exploration Activities: The Indian Government has been encouraging exploration and production activities in its offshore oil and gas fields. This creates demand for offshore assets like Offshore Support Vessels (OSVs), Platform Supply Vessels (PSVs), Anchor Handling Tug SupplyVessels (AHTSVs) and Multi-Purpose SupportVessels (MPSVs).

>    Deepwater and Ultra-Deepwater Projects: As exploration moves to deeper waters, there is a growing need for specialized vessels capable of operating in challenging environments.

ii.    Renewable Energy:

>    Offshore Wind Farms: India is exploring the potential of offshore wind energy. The development of offshore wind farms will require various types of support vessels for installation, maintenance and operations.

iii.    Subsea Operations:

>    Pipeline and Cable Laving: With the expansion of offshore oil and gas fields and the development of renewable energy projects, there is a need for vessels specializing in laying subsea pipelines and cables.

>    Inspection. Maintenance, and Repair (IMR): Regular IMR activities for existing offshore infrastructure present ongoing opportunities for offshore vessels.

iv.    Maritime Security:

>    Coastal Surveillance: Enhancing coastal security and monitoring activities requires specialized vessels equipped with advanced surveillance and monitoring systems.

>    Search and Rescue Operations: The need for efficient search and rescue operations in India's vast maritime domain creates demand forwell-equipped and versatile offshore vessels.

Investmentin Technology: Investing in modern, technologically advanced vessels can enhance efficiency and safety in offshore operations. By capitalizing on these opportunities, companies in the offshore vessel market can play a crucial role in supporting India’s maritime infrastructure and energy ambitions.

With steady growth in the demand for crude oil, the E&P activities are expected to rise, thereby creating shipping demand for offshore assets in the Indian coast. Substantial potential is foreseen for growth in offshore services on the Indian coast as well as in the neighboring areas. Informatively, during the second half of the year, ONGC floated tender for chartering of various offshore vessels for a long term period of 3 years, wherein SCI was successful in getting contract for three vessels for 3 years period. Further, ONGC has also declared that they have made 11 discoveries during the last one year, which includes 5 discoveries Offshore and 6 onshore. Also your Company is being approached by various Government organizations as well as private operators for requirement of Offshore vessels. Thus various opportunities exist in the market for deployment of Offshore vessels of your Company.

While opportunities exist in the Indian market, there is lot of competition from the private players as well as foreign assets that are being diverted to Indian waters. This was observed in the last ONGC tender, wherein the participation was 60 vessel offers as against the tender requirement of 17 vessels, thus highlighting the stiff competition in the Indian market with Indian private shipping companies as well as from foreign shipping companies.

Industry Structure and Developments:

i)    World scenario:

The offshore support vessels industry is dependent on utilization of rigs, E&P activities and other activities in oil fields, which in turn depends upon strategic decisions of energy security by oil and gas producers, shifts in Government policies and long term crude oil price trends.

Global headwinds, economic turmoil, recessionary trends in many developed economies, impact of Russia-Ukraine war, etc. played / will be playing the critical role in deciding future course for the off-shore market.

ii)    Indian scenario:

With ONGC already floated tender for chartering of 17 vessels on long term basis of 3 years, the Indian market was upbeat, with opportunities to deploy vessels on long term basis. ONGC is in the process of floating few more tenders for requirement of Offshore vessels in the next year also. Opportunities also existed during the year for deployment of vessels on short term basis, thus indicating that the Indian market was comparatively less impacted by the global geo-political tensions.

Meanwhile, offshore vessels of your company were engaged on long term charter with ONGC and other Govt. Departments, thus having less impact of the subdued market.

iii) Outlook:

The outlook for the Indian offshore oil industry is influenced by various factors, including domestic and global demand for oil, technological advancements, regulatoryframeworks, and geopolitical dynamics. Here's an overview:

>    Reserves and Exploration: India has significant offshore oil reserves, particularly in the western offshore region of the Arabian Sea and the eastern offshore region of the Bay of Bengal. Exploration efforts continue to identify new reserves, including deepwater and ultradeepwater prospects.

>    Production Growth: The Indian offshore oil industry has experienced steady production growth over the years, driven by projects operated by state-owned companies like Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), as well as private players like Reliance Industries Limited (RIL). However, ageing fields and declining production rates in some areas pose challenges to sustaining growth.

>    Investment and Development: The Indian Government has been encouraging investment in the offshore oil sector through policies aimed at attracting domestic and foreign investment, promoting exploration and production activities, and facilitating technology transfer. Initiatives such as the Open Acreage Licensing Policy (OALP) and the Hydrocarbon Exploration and Licensing Policy (HELP) aim to boost exploration and production activities in both shallow and deepwater areas.

>    Technological Advancements: Advancements in exploration and production technologies, including seismic imaging, drilling techniques and enhanced oil recovery methods, are enhancing the viability of offshore oil projects in deeper waters and challenging environments. These technologies contribute to unlocking new reserves and improving production efficiency.

>    Global Market Dynamics: The Indian offshore oil industry is influenced by global oil market dynamics, including oil prices, supply-demand trends and geopolitical developments. Fluctuations in oil prices can impact investment decisions, project economics and Government revenue from oil exports.

>    Renewable Energy Transition: The global transition towards renewable energy sources, including solar, wind and hydroelectric power, presents both challenges and opportunities for the offshore oil industry. While there is increasing pressure to reduce reliance on fossil fuels and mitigate climate change, oil will likely remain a significant part of the energy mix for the foreseeable future, especially for industries like transportation and petrochemicals.

In summary, the outlook for the Indian offshore oil industry is influenced by a complex interplay of factors, including technological advancements, regulatory frameworks, market dynamics and the transition towards renewable energy. Despite challenges, the industry is expected to continue playing a significant role in India's energy security and economic development. Furthermore, ONGC is also expected to come up with more tenders with long term requirements for its offshore assets. Also, more requirements, albeit shortterm, are emanating from private operators / contractors in the Indian offshore market.

Risks and Concerns:

Availability of competent/suitable manpower for the Indian Flag Offshore vessels has become a serious concern. The acute shortage of manpower onboard vessels is hampering the employment of vessels and thereby affecting adversely in commercial operation of vessels. Moreover, with good opportunities available across globe, Indian seafarers are moving to foreign/private shipping lines for pay & taxation benefits, thereby India is facing shortage of competent manpower onboard Offshore vessels.

Further, there has been shortage of availability of yards on the Indian Coast for dry-docking and repairs of Offshore vessels. There are only limited yards present and various difficulties are being faced in availability of dry-dock slots as perthe vessels requirements.

Entry of new players in the Indian market with low Capex is another concern and challenge for your company. Many small private players acquiring vintage secondhand vessels at low cost and competition with these players is a big challenge for sCi. To counter the same, your company has been taking all efforts to deploy vessels on long term basis, so as to avoid the impact of fluctuations in charter hire rates in market.

Technical Services:

Technical Consultancy Services

During the year under report, the Company continued to provide technical consultancy services to A&N Administration, Union Territory of Lakshadweep Administration, Geological Survey of India and other Government Departments for their various ship acquisition projects. During the year, your Company assisted A&N Administration in construction supervision of 2 nos. 1200 Passenger-cum-cargo vessels, which are under construction at M/s. Cochin Shipyard Ltd. Similarly, your Company has also been providing assistance to the UTL Administration for supervision of 2 nos. 2000 LPG Cylinder carriers under construction at M/s Goa Shipyard Ltd. This first vessel is scheduled to be delivered to UTL Administration by end July 2024. Your Company is actively exploring opportunities to add new clients to its consultancy base such as NCPOR, etc.

Tonnage Acquisition Programme

During the year under report, your company had envisaged acquisition of secondhand vessels in various segments viz., Container, Gas, Product Carrier, Offshore vessels, etc.

Necessary steps were taken in this regard and accordingly during the month of March to May 2024, tenders were floated for acquisition of various vessels as stated above. As per the response received for the tender and technical evaluations of the offers, next course of action would be pursued as per the laid down procedures for acquisition of vessels.

Additionally, your company had also floated tender for acquisition of one secondhand High Speed Craft (HSC) of 15 to 20 years old having capacity to carry about l5o passengers to support the Government of India’s vision for starting the international ferry services between Nagapattinam - India and Kakensanthurai - Sri Lanka.

Informatively, your company has been continuously scanning the market for right assets in the market in relation to the available employment opportunities and is optimistic about acquisition of vessels atthe opportune time.

Eco-Friendly and Conservation of Energy

As a policy, your Company remained committed to environmental protection as per International Convention for the Prevention of Pollution from Ships (MARPOL). Necessary steps have been taken to minimize air pollution and oil pollution from ships.

Under the National Green Hydrogen Mission (NGHM), your company has identified 2 vessels to be retrofitted to run on Green Methanol by 2027. The retrofit would be carried out in line with the Scheme Guidelines for Implementation of Pilot Projects for use of Green Hydrogen in Shipping Sector underthe NGHM. Detailed feasibility study and discussions with Engine OEM is in progress.

Prevention of use of Single Use Plastics (SUP) onboard vessels in compliance with DGS orders, regular hull cleaning, propeller cleaning / polishing / periodic hull coating during drydock, use of tin free and cybutryne free Anti-fouling paints, using environmental friendly refrigerants, use of asbestos free products onboard, installation of Ballast Water Treatment plants in a phased manner on existing vessels depending on their dry dock schedule (completed on 33 out of 42 vessels required to be fitted with BWTS), etc are some of the measures showing your company’s commitment to Eco-friendly policies and conservation of energy.

Your company has geared itself to comply with latest emission reduction targets set for shipping by IMO. The IMO has introduced Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) regulations as part of its interim measure underthe Green House Gas strategy. Ship Energy Efficiency Management plan developed for all ships which includes SEEMP Part III (w.e.f 01.01.2023 - CII rating based on the annual fuel consumption of each ship) has been completed.

Your company has embarked on various Technical & Operational measures to improve energy efficiency with options to use bio-fuels.

As far as Carbon Intensity Indicator (CII) is concerned, SCI is exploring various types of Energy Saving Devices (ESDs)/technology such as propeller boss cap fins, low resistance (high performance) anti-fouling paints, trim optimization, time & speed monitoring, etc with an objective to achieve continuous improvement in ship’s operational CII.

Technology Absorption, Adoption and Innovation

The technological advancement in Maritime sector is focused towards optimizing ship operations, building cost efficiencies, developing sustainable and environment friendly maritime business.

The 2023 IMO GHG Strategy is particularly focusing on reduction in carbon intensity of international shipping (to reduce CO2 emissions per transport work), as an average across international shipping, by at least 40% by 2030. The 2023 IMO GHG Strategy also includes a new level of ambition relating to the uptake of zero or near-zero GHG emission technologies, fuels and/or energy sources which are to represent at least 5%, striving for 10%, of the energy used by international shipping by 2030.Your company is committed to align with IMO’s 2023 revised GHG Emissions strategy.

Your company is continuously trying to identify and implement emission reduction technologies and best practices. The technology for retrofit of existing 4-stroke diesel engines to run on Green Methanol is now available with OEM. Your company has identified 2 such vessels feasible for conversion of main propulsion engines to run on Green Methanol by 2027.

Your Company has also completed preparation and approval of EEXI technical files and plan to fully comply with the new MARPOL regulation effective from 01.01.2023 through a combination of Engine Power Limitation (EPL) and other energy savings devices and using zero/low carbon fuels eventually. The Company is also exploring other fuel optimization technologies in order to support compliance with the EEXI requirements. All vessels of your company built after 2013 have Energy Efficiency Design Index (EEDI) certificates.

The Company has estimated the Carbon Intensity Indicator (CII) ratings for its fleet, which is helping to monitor vessel’s CII rating and appropriate action plan can be formulated accordingly to improve CII (2% improvement in CII annually from 2023 to 2026).

Your company has taken initiative to install Ballast Water Treatment Plants on all those vessels which are not fitted with the treatment plants. This exercise is being carried out in a phased manner in order to comply with the IMO regulations.

To take of the Cyber related risk, SCI has developed “Cyber Risk Management Policy” in line with the IMO regulations, so as to build capabilities to prevent, mitigate and respond to cyber risks, to reduce vulnerabilities and minimize damage from cyber incidents and protect information systems of SCI.

For the (2 firm + 1 optional) 2000 Domestic LPG Carriers for UTL Administration which are under construction at M/s Goa Shipyard Limited, your company as the technical consultant has recommended various optional features such as installation of sewage treatment plant, double hull protection to fuel oil tanks, etc. over and above rule requirement for such size of vessels which reflects your company's commitment environment protection and technology absorption.

Situation in Coastal operation and Offshore areas:

The E&P activities are expected to continue steadily in the Indian offshore region, with new discoveries being made by the E&P companies. ONGC has recently concluded tender for chartering of 17 offshore vessels and it is expected that few more tenders are likely to be floated shortly.

Shortage of availability of competent/suitable manpower onboard vessels and limited availability of yards on the Indian coast for dry-docking/ repairs of offshore vessels has been a matter of concern.

Measures taken to improve services and operations

To keep the vessels technologically up-to-date your company is in the process of upgrading four (4) 120T BP AHTSVs from DPI to DP2, in line with the market requirements of E&P operators.

Further your company also endeavours to augment its offshore fleet by acquisition of vessels and deploy on the Indian coast.

Purchase & Services department:

Procurement of Goods and Services:

Your company enters into rate contract on periodical basis for procurement and supply of high value and safety items like Marine Lubes, Marine Paints, Charts, Wire ropes, LSA/FFA, Life Rafts etc. both at Indian ports and major foreign ports, like Singapore and Fujairah. This ensures timely supply of right quality goods / services to the vessels at reasonable price.

During the financial year 2023-24, your Company continues to support the Micro and Small scale Enterprises (MSEs) by procuring 49.21% of its applicable supplies of goods and services from MSEs as against the set target of 25% in line with the revised Public Procurement Policy. The Procurement from Women MSE vendors during the year is 2.49% of total eligible procurement, while from SC/ST owned MSE Vendors there is 0.001% procurement. The shortfall in sub-target has been metfrom other MSE vendors.

Further, your company actively participates in the programs organized by the Ministry so as to make MSEs aware of the SCI’s requirements. The Vendor Development Programme (VDP) was conducted by your company on 12^th & 13^th June 2023 for the SC/ST owned MSEs and also forthe Women owned MSEs in the financial year 2023-24.

In line with Government’s vision for procurement through Government e-marketplace (GeM), your Company has adopted the GeM system of procurement for items which are available on GeM Portal. Target for procurement through GeM portal was set at' 230 crore forthe financial year 2023-24. With consistent efforts, your Company was able to achieve 100% target set for the procurement through GeM portal. Protection & Indemnity (P&l) Insurance:

Protection and Indemnity (P&I) Insurance cover entered with three International Group P&I Clubs for your company’s fleet for the policy year 2023-24 commencing from 20.02.2023 has been negotiated by your Company. There was an increase of 8.85% in the renewal premium over the expiring premium for policy year 2022-23 due to hardening of insurance and reinsurance markets globally.

Developments, if any, of material nature affecting the financial position of the Company subsequent to the close of the said year viz; after 01.04.2024 till the preparation of the report.

Your Company had participated in the tender floated by M/s.ONGC last year and has emerged successful in the global competitive bidding process. Your Company has been successful in obtaining long term contracts of 3 years for three of its Offshore vessels, which includes two 120T BP AHTSVs and one PSV.

Your company has conducted Vendor Development Programmes (VDP) on 3^rd May 2024.

Your company has floated tenders from March to May 2024 for acquisition of secondhand/ resale vessels of various types and sizes, which includes Tankers, Containers, Offshore vessels, etc. These tenders are now in various stages of evaluation and processing.

E. International Safety Management Cell

SCI has introduced the Safety Management System by setting up a dedicated International Safety Management (ISM) Cell, which has developed, structured and documented procedures in compliance with the International Management Code for Safe Operation of Ships and for Pollution Prevention (ISM Code), in accordance with the resolution A.788(9) of the International Maritime Organization (IMO) and SOLAS, Chapter IX.

SCI has laid the foundation of the Safety Management System (SMS) by recognising that the cornerstone of good Safety Management is a commitment from the top management, coupled with the competence, attitude and motivation of individuals at all levels, that determines the expectations of a good Safety Management System.

SCI has complied with all the functional requirements of the ISM Code, which includes the Safety, Occupational Health & Environment Protection Policy, Drug & Alcohol Policy and Cyber Security Policy.

As regards, Safety Management Certificate (SMC) for SCI fleet, all ships are put up for periodical / renewal SMC audits within time frame and respective SMCs are accordingly endorsed.

The requirements of various amendments to ISM Code and Statutory regulations from IMO / Flag are also complied with.

Towards addressing all emergency related issues officers with dedicated single point contact numbers remain manned 24 hours in the operating divisions.

The achievement of time-bound certifications was the result of the SCI’s strength of professional experience, planning, training, execution, systematic analysis and quality expertise, which enables SCI to remain world-class ship operator / owner. The SCI is also in a position to provide such management expertise to other national/ international ship operators.

ISPS Cell

SCI has successfully implemented the ISPS Code on all vessels on international voyages and coastal trade vessel as perthe Administration requirement.

SCI is committed to the following objectives to fulfil the requirements of its security policy:

•    Security of its ships and their crew, passengers and cargo

•    Supportto its ships in implementing and maintaining the Ship Security Plan.

Integrated Management System (IMS)

SCI is nowin compliance with IMS (ISO 9001:2015-Quality Management System, IS014001:2015-Environmental Management System and ISO 45001:2018 - Occupational Health and Safety Management System) on board all vessels and shore establishments.

The scope of IMS certification includes Owning, Managing and Chartering of ships for transportation of Goods and Passengers, Offshore and Marine Advisory Services, Maritime Training Services The Certificate is valid till 20^th December 2024.

E) PERSONNELANDADMINISTRATION

A.    FLEET PERSONNEL

To meet the demand for seafarers it is vital that the SCI promotes careers at sea and enhances maritime education and training, with a focus on the diverse skills needed for a greener and more digitally connected industry. Fleet Personnel Department in keeping with the vision of SCI is committed to maintain its status as a leading Indian Shipping Company in building skills, knowledge and attitude and significantly contribute to the capacity building in the sector.

As predicted by BIMCO Seafarer Workforce Report 2021, the shortage in the supply of seafarer officers continues through FY 2023-24. The demand has outpaced the supply. The shortage is being felt in all the ranks across the different types of vessels ranging from Bulk Carriers to Special Trade Passenger Ships. The shortage is also being feltfor Near Costal Vessel (NCV) certified officers to sail on coastal vessel. The Fleet Personnel Department has attempted to address the shortage by taking various steps which includes the enhancement of wages as market correction factors, promotion of officers on direct contract with parallel sailing in senior ranks, family carrying permission and rejoining bonus for senior officers; as applicable.

All the vacancies related to the fleet personnel are advertised on our website regularly. The engagement on social media platform is being encouraged to build our online presence. To further mitigate the shortage, officers are also being recruited on contract directly and through manning agents.

2^nd Mate and MEO Class IV are being presently accepted from the open market to address the deficit. Deck/Engine Cadets and Trainee Electrical Officers are being inducted as regular officers as part of the Roster upon completion of their shipboard training, after receiving the certificate of competency (CoC) and are offered employment under the terms of the InSa-MUI Agreement. This is being done to ensure an uninterrupted supply of officers.

The Collective Bargaining Agreements (CBA) viz. NMB Agreement applicable to ratings / petty officers and the INSA-MUI Agreement applicable to officers was valid up to December 31, 2023. The new agreements have now been signed between INSA & the Union representatives and will be effective till December 31,2027.

SCI has implemented online system for crew (rating) selection and same is being used successfully. The selection process is being reviewed regularly in order to keep up with the changing scenario.

The Fleet Excellence Award 2022 Ceremony was held in phygital mode on March 14^th, 2024, at SCI HO Auditorium. Senior Management, Seafarers on board vessels as well as those ashore on leave, Cadets and Shore Personnel were present to acknowledge the outstanding contribution of Seafarers with regard to safety, adherenceto ISM norms, efficiency, and incident-free sailing.

SCI has been a pioneer in employing women seafarers onboard its vessels and has implemented various initiatives including age relaxations and fee concessions to aspiring female cadets. There were 23 Women Officers and l0 trainees employed by SCI in calendar year 2023.

B.    MARITIME TRAINING INSTITUTE (’De-facto’ transferred to SCILAL by virtue of Demerger Order dated 22.02.2022)

Maritime Training Institute of India is located at Powai, Mumbai in an area of 45 acre of land and aims to provide the service to the Indian

Shipping Industry (Shore and onboard seafarers) to meet the training and re-training requirements in line with vision of the Govt, of India to become an advanced seafaring nation.

Maritime Training Institute (MTI) conducts three pre-sea training courses, namely, Diploma in Nautical Science (DNS), leading to B,Sc, (Nautical Science), Graduate Marine Engineering (GME) and Electro-Technical Officer (ETO) course, MTI also conducts various competency courses, such as Second Mate (F.G,) Functions course, revalidation courses for Deck Officers (i,e, Master, Mates and 2^nd Mates).

In year 2023-24, Maritime Training Institute, Powai has conducted 314 nos. of residential and non-residential courses for imparting training to 3011 seafarers / candidates on following categories:

a,    DNS (TNOCs), pre-sea training residential course leading to 77 nos, Navigating Officers;

b,    GMEs (TMEs) pre-sea training residential course leading to 40 nos, Marine Engineer Officers;

c,    ETOs, pre-sea training residential course leading to 80 nos, Electrical / Electro-Technical Officers;    and,

d,    Various STCW / Modular and Industry need based non-residential courses to 2814 nos, seafarers,

MTI has commenced GP Rating leading to 2^nd Mate NCV Course in July, 2024 to cater to the needs of the industry,

MTI has trained 1,89,525 candidates since its inceptionin 1988.

On demand of the industry, MTI has introduced many new modular courses such as VICT, AECS etc, MTI also commenced Master’s Revalidation Course w,e,f, July 2023,

MTI is in the process of modernizing the GMDSS GOC Laboratory and Computer Laboratory and installation of a modern Electrical Laboratory/ workshop for imparting training to ETOs and GMEs,

Information towards major achievement during the year under review i.e. FY 2023-24 Academic Achievements Major Academic Achievements -

a)    MTI, Powai has been rated A1 (outstanding) grade continuously as perthe CIP (Comprehensive Inspection Program) of the Directorate General of Shipping (DGS) Govt, of India, Last CIP was conducted on July 2023, Also Flag Administration (DG Shipping) inspection was completed successfully on 22.03.2024.

b)    MTI, Powai is the only institute to conduct Extra 1^st Class Examination under the direct supervision of DG Shipping,

c)    MTI has also conducted “Certificate of Competency” examinations for engineers (i,e, Class I, Class II, Class IV and    ETOs)    in    March

2024 under the direct supervision of DG Shipping,

d)    MTI is one of two (02) training institute to conduct GMDSS GOC examination in India West Zone approved by DG Shipping    and    WPC,

e)    To augment its training infrastructure and capabilities, MTI has MoU with the following institutes:

i,    The International Maritime Training Centre (IMTC) for practical training of IGF Basic Course and various DG approved Fire Fighting Courses

ii,    The Institute of Marine Engineers of India (IMEI) for practical training of Basic IGF Course, Basic Training for Oil & Chemical Tanker Cargo Operation and Basic Training for Liquefied Gas Tanker Cargo Operations,

iii,    The Loyalty Marine Education Trust (LMET) for practical training of Basic Training for Oil & Chemical Tanker Cargo Operation and Basic Training for Liquefied Gas Tanker Cargo Operations,

Other Initiatives -

As a contribution towards realizing Govt, of India's vision of self-sustainability,

>    MTI has a “Solar Plant” with a capacity of 515,5kWp (1^st green house campus in the Indian Maritime Education Industry) for internal electric powersupply requirements,

>    MTI also utilizes the in-campus natural waste (leaves etc,) to create manure and Lake/Well Waterfor gardening work in MTI Campus, It is envisaged by Ministry of Ports, Shipping and Waterways (MoPSW) to establish South Asia Centre for Excellence for Sustainable Maritime Transport (SACE-SMaRT) at MTI, Powai, with following aim:

a.    to transform the maritime sector in India and South Asia into a technologically advanced, environmentally sustainable, and digitally proficient industry; the National Centre of Excellence

b.    with a regional dimension, to focus on the latest technologies and practices for reducing greenhouse gas emissions, fostering technical cooperation, capacity building, and the digital transition of the maritime sector in India specifically and South Asia broadly,

SHORE PERSONNEL

Material developments in Human Resource / Industrial Relations front, including number of people employed:

The total Manpower as on 01,04,2024 is 466 (excluding Board Level members), out of which 426 are officers and 40 are staff members, With a view to meet the present and future challenges and be a globally competitive Corporation, various capacity development initiatives and employee engagement activities were carried out in the year 2023-24.

Training and Employee Engagement Activities of 2023-24:

Following activities were undertaken to enhance organizational capability and employee enagagement:

Training

SCI ensures that its employees are upto date to tackle the ever changing landscape of the shipping industry. During FY 2023-24, SCI employees benefitted from over 50 in-house and external training programmes. Training man-days per employee stood at 4.1 days. Employees were sent for a plethora of trainings ranging from Skill development, Specialized courses in Domain, compliance related trainings, New Labour codes, CSO, DPA, Infrastructure Financing, Public procurement with special focus Public Procurement policy for Micro & Small Enterprises(MSEs) and Project Management. Middle Management officers attended a Training programme for building infrastructure for a Viksit Bharat. To improve knowledge with practical Orientation on Marine Hull business, a training session was conducted on Marine Hull and energy Insurance.

In an attempt to enhance soft skills, employees were nominated for trainings like Building Competencies for Personal Excellence, Gender Equality and Women Empowerment. Sessions for Wellness, Stress Management & well-being were also organized.

Training of Trainer’s Program for IO/PO Training, Preventive Vigilance, Public Procurement, Cyber Hygiene and Security, Ethics and Governance training programs were organized under 3-Month Capacity building campaign during Vigilance Awareness week-2023-24.

As a part of Orientation Programme, ship visits were organized for new joinees. A Management Development Programme for young Managers was also organized. Training on IT systems like DANAOS, SAP HCM, SRM, MM and FI was imparted by the IT department. Phygital trainings were conducted to ensure knowledge dissemination to all our offices pan India.

Some of the key conferences attended by employees are Bunkering India, Navigating the changes through the lens of Materiality - SEBI (LODR) Regulations amendment, Women in Energy Sector (WIES) and Asia Dry Bulk Cargo summit.

Employee engagement

Concerted efforts of the leadership team of SCI to ‘invest in people’ have led to tremendous progress in employee engagement initiatives across the organization. Numerous in-house events was carried out for employees both ashore as well as onboard.

Besides celebrating International Mother Language Day, International Day of Yoga, World Environment Day, Constitution day, Communal Harmony week and Flag Day, a series of activities were organized such as employees and family welfare programs on Career Guidance, Nutrition & Exercise and Self Defense Techniques. SCI also implemented the Har Ghar Tiranga and Har Ghar Dhyan Campaign. Various initiatives & programs were also implemented under Azadi ka Amrit Mohostav (AKAM).

For the wellness of employees, health check-up camps were organized at the Head Office & Regional Offices. The International Day of Yoga 2023 was celebrated under the theme of “Yoga Sagarmala”. Various activities including physical yoga and sessions on benefits of yoga by eminent yoga teachers / faculty was conducted for employees, ship staff & all stakeholders.

Various Events including plantation, seminar on millets, etc were conducted on Mission Lifestyle for Awareness on “World Environment Day”. SCI sponsored its employees to take part in the Maritime 10K Challange-Run together for cleaner Oceans. SCI employees also participated in the Energy Literacy Training during the National Energy Literacy week. Public Sector Week was celebrated by organizing various activities like Health Check-up Camp, essay Writing Competition, Speech Competition from 10^th April to 16^th April 2024.

SCI Management, other employees and cadets attended and actively participated in the Global Maritime India Summit 2023 event at BKC ground from 17^th to 19^th October, 2023.

Reservation Policy

SCI is complying with all the guidelines issued by the Government regarding Reservation from time to time in Recruitments and Promotions. SC/ST/OBC Report

Annual Statement showing the representation of SCs, STs and OBCs as on 1^st January 2024 and number of appointments made during the preceding calendar year.

Groups	Representation of SC/ST/OBC as on 01.01.2024*				Number of appointments made during the calendar year 2023
					By Direct Recru		tment		By Absorption
	Total No. of Employees	SC	ST	OBC	Total	SC	ST	OBC	Total	SC	ST	OBC
Executive GroupA	435	98	43	78	41	6	3	16	4	2	0	0
Non-Executive Group B (SV and SIV)	30	9	4	2	0	0	0	0	0	0	0	0
Group C (SIII and SII)	10	4	1	0	0	0	0	0	0	0	0	0
Group D	0	0	0	0	0	0	0	0	0	0	0	0
Total (Executives + Non Executives)	475	111	48	80	41	6	3	16	4	2	0	0
*Below board level executives

Note:

1. In calendar year 2022, recruitment process of 44 Assistant Managers on Contract was carried out, of which 41 Assistant Managers on Contract joined in calendar year 2023. As on 01.01.2024, 36 AM on Contract were present.

2. In 2023, recruitment process for Senior Managers was carried out. 17 Senior Managers were given offer of appointment. As on August 07, 2024 12 Senior Managers have joined.

Women Representation

Company is committed to the principle of equal employment opportunity and strives to provide employees with a workplace free from discrimination. All HR activities of recruitment, placement, promotion, transfer, separation, compensation, benefits and training ensure equal opportunities for skill enhancement and career progression. Company’s efforts are reflected in the representation of women across various hierarchical grades. Women constitute around 20% of total workforce at shore establishments of SCI.

SCI was conferred with "First Place" for "Best Enterprise Award", a tribute to Excellence in Public Enterprise Management under 'Navratna Category’ in recognition of the commendable work done for the development of women in the organization, at WIPS 34^th National Meet at Bangalore on 12^th February 2024.

Policy to prevent sexual harassment in workplace.

SCI promotes gender equality and has been taking proactive measures to prevent any Sexual Harassment at workplace. SCI has been complying with the requirements of the “The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013”. SCI has prepared a Prevention of Sexual Harassment policy in line with the Act. SCI has constituted a committee comprising of senior women executives and a woman representative from the NGO Pratham to enquire into complaints of Sexual Harassment at the workplace. No complaints were received in the year 2023-24 related to Sexual Harassment.

CORPORATE SOCIAL RESPONSIBILITY (CSRt AND SUSTAINABLE DEVELOPMENT FOR FY 2023-24

The Corporate Social Responsibility vision of SCI articulates its aim to be a corporate with its strategies, policies and actions aligned with wider social concerns, through initiatives in education, public health, women empowerment, environment sustainability, skill development and other areas of social upliftment.

SCI has framed its CSR policy in line with the guidelines contained in the Companies Act 2013 and Companies (CSR Policy) Rules, 2021 & 2022 notified therein" and constituted a CSR committee as perthe actto coordinate and oversee the implementation of CSR initiatives. The budget available for CSR initiatives in the year 2023-24, as per applicable provisions was ' 14.70 Crores which was allocated against the following initiatives in the year 2023-24:

CSR Activities for the Year 2023-24 A. Health & Nutrition

1.    Supplementary Nutrition Kits for 65 children infected & affected with HIV / AIDS in Mumbai.

2.    Elimination of Disability from Clubfoot in 600 Children in Rajasthan Karnataka, Kerala & Andhra Pradesh.

3.    Organizing Health checkup cum awareness camps with focus on menstrual / maternal health, infant health and general health in Khandwa, Vidisha, Guna and Rajgarh (aspirational districts in Madhya Pradesh).

4.    Distribution of 75 nos. of Motorized Tricycle, done in two tranches of 25 nos. and 50 nos. respectively, to the needy divyangjans in Deoria, Uttar Pradesh.

5.    Health Awareness and capacity building programe - Project Naritva (Socio-economic empowerment of 1000 women under Integrated Village Development Programme) in Bahraich, Aspirational district in Uttar Pradesh.

6.    Installation of 20 nos of Submersible Pumps for making available safe drinking water at Dakshin Dinajpur, West Bengal.

7.    Rural Mobile Medical Unit (one advanced Life Support Mobile Medical Van) in Jhargham, West Bengal.

8.    Improving Nutrition & Health of Government School Children through Gift milk Programme for 2000 children in Gadchiroli, aspirational district of Maharashtra & Muzzafarpur, aspirational district in Bihar.

9.    Procurement of 2 nos of T.B. Handheld X-ray Machines to strengthen the National TB Programme in Andhra Pradesh.

10.    Swasthya Project- Improving Healthcare facilities by supporting with Critical Medical Equipment’s and Instruments to Rishikul Govt. PG.Ayurvedic College & Hospital, Haridwar, Uttrakhand.

11.    Construction of Deep Bore Well for Drinking Water in Dimapur, Nagaland.

12.    Construction and Maintenance of 2 nos of deluxe Sulabh Public Toilets at Ramagundama and Mahbubabad, Railway Stations of Telangana.

13.    Medical Equipment Support to Govt Civil Hospital, Roorkee, Uttrakhand.

14.    Providing free meals to vulnerable families of patients hospitalized in public hospitals of Mumbai, Maharashtra.

15.    Medical Research Equipments for IIT Madras.

16.    Distribution of 200 wheelchairs to needy divyangjans in urban slums of New Delhi

17.    Livelihood Enhancement and increasing the nutritional status of 1000 tribal women farmers through pro-organic vegetable cultivation in Vallabhnagar block of Udaipur, Rajasthan

18.    Provision of mid-day meals for 2428 tribal children in Ghatshila, East Singhbhum and Jharkhand.

19.    Upgrading the medical infrastructure of Punjab Kesari Charitable Hospital, Vashi by providing One Shaver System & Arthroscopy machine with Ortho Drill System.

B.    Environment Sustainability

20.    Distributing solar led tube lights to 370 families in tribal Village in Mayurbhanj, Odisha.

21.    Supply and Installation of 500 solar street lights in North Goa.

22.    Installation of 75 KW Solar Power Generating Systems at Children Village of SOS, Latur, Maharashtra.

C.    Promotion of Education

23.    Maritime Education at Indian Maritime Universities across nation and Maritime Training Institute - Powai, Mumbai as Annual Grants for 30 SC/ST Students.

24.    Construction and Establishment of Amenities Building comprising of Indoor Shooting Range and Library with reading room at Netaji Subhash Chandra Bose Military Academy, Silvassa and Dadra & Nagar Haveli.

25.    Setting up 23 Smart Class rooms at government schools of Vijayapur / Yadagari / Bagalkot, Karnataka.

26.    Creating a sports ground and science Lab at Zila Prishad High School, Majeru Andhra Pradesh.

27.    Residential care Centre forthe deprived children with one School Bus in Mumbai, Maharashtra.

28.    Construction of Classrooms and Admin Block at a Primary School in Noida, Uttar Pradesh

D.    Skill Development & Women Environment

29.    Skill Development Training as per protocols of National Skill Development Corporation for 150 candidates in the area in General Duty Assistantin Delhi and National Capital Region.

30.    Skill Development Training for 360 underprivileged women in various trades in Ferozpur & Moga (aspirational district), Punjab.

31.    Support for 18 Sewing Machines and One Ironing set for creating employment for underprivileged women in Habra, West Bengal.

32.    Hand embroidery training and distribution of tailoring machine to 100 nos of women in Bhadohi, Uttar Pradesh.

E.    Promotion of Sports

33.    100 youths for 3 years for sports training programmes for preparing them for local / state & national level events in Jammu & Kashmir.

34.    Contribution to National Sports Development Fund for promotion and development of sports

Against the allocation of ' 14.70 crores, ' 5.45 Crores have already been disbursed and balance will be disbursed on achievement/ completion of project specific timelines.

Material Orders of Judicial Bodies/Regulators

Details of significant and material orders passed by any Regulator, Court, Tribunal, Statutory and quasi-judicial body, impacting the going concern status of the company and its future operations - Nil.

Implementation of Official Language Policy.

In accordance with the Official Language policy of the Union Government, SCI continued its persistent efforts towards the progressive use of Hindi in its day-to-day affairs during the year under report. As per annual programme, sCi conducted Hindi activities and competitions at regular intervals and awarded prizes to the employees. Apart from this, SCI also arranged in-house Hindi typing and translation training programme.

Under the Hindi Incentive Scheme, employees' children were encouraged by giving incentive prizes for scoring 70% and above marks in Hindi subject in SSC / HSC level exams held in the academic year 2022-23.

With a view to creating a sense of competition amongst all Divisions/Departments and individual officers for increasing the use of Hindi in daily correspondence and activities, the Annual Rajbhasha Shield (at Divisional Level) and Annual Rajbhasha Gaurav Sammaan (at Individual Level) schemes were continued for 2023-24 after necessary modifications. For the year 2022-23, the “Annual Rajbhasha Shield” was awarded to CMD Division, and “Annual Rajbhasha Gaurav Sammaan” was awarded to eligible officers on the basis of their Hindi performance. All these initiatives have proved to be a boosterfor progressive use of Hindi in daily office routine work During Hindi Pakhwara in September 2023, an appeal made by CMD was emailed to all employees to enhance the usage of Hindi in official noting and correspondence. SCI also attended meetings of Town Official Language Implementation Committee (TOLIC) during the year under report and participated in their activities.

It is a matter of great honour that SCI's Head Office at Mumbai has been awarded Rajbhasha Shields by the Ministry of Ports, Shipping & Waterways in July 2023 for having attained 2^nd place twice for excellence of Rajbhasha implementation in 'B' region during the year 2017-18 and 2018-19.

Appointment and Remuneration policy

The appointments in our company are done in accordance with Government of India guidelines. The remuneration to the senior management and other shore employees of SCI is governed by the Presidential Directives issued by the Ministry of Ports, Shipping and Waterways (MoPSW) and Department of Public Enterprises (DPE), from time to time, which forms the remuneration policy of our company.

SPECIAL PURPOSE VEHICLE:

Sethusamudram Corporation LIMITED

The Government of India had constituted Sethusamudram Corporation Limited (SCL) to raise finance and to undertake activities to facilitate operation of a navigable channel from Gulf of Mannar to Bay of Bengal through Palk Bay (Sethusamudram Ship Channel Project). As per the Government directive, this project is to be funded by way of equity contributions from various PSUs including the SCI. As on FY 2016-17, SCI had invested ' 50 crore in the project. Work suspended since 17.09.2007 consequent to an interim stay by the Hon’ble Supreme Court for carrying out dredging operations in Adam’s bridge area. Pending a final decision on alternative alignment, all the dredgers were withdrawn since 27.7.2009. Supreme Court’s final hearing on the matter was scheduled on 06.04.2018, however, the hearing was withheld indefinitely. SCL Board during its Board meeting held on 18.03.2021 accepted the resignation of Smt. Sangeeta Sharma, Director (L&PS), SCI, as Director, SCL from the Company. Further, SCL requested SCI to nominate new Director on SCL Board, in place of Smt Sangeeta Sharma who has been superannuated.

The board of Directors of SCI in their meeting dated 09.08.2024, approved the nomination of Director (L&PS) on the Board of Sethusamudram Corporation Ltd subjectto approval of MoPSW to representthe interest of SCI.

Memorandum of Understanding (MOU) with the Ministry of Ports, Shipping & Waterways

The MOU for the financial year 2023-24 is under progress. The MOU is being processed as per the consolidated guidelines issued by Department of Public Enterprise (DPE) vide circular dated 12^th October 2022. Under the new guidelines, entering, signing, monitoring and evaluation of MOU will be done through online dashboard. SCI rating for 2021-22 & 2022-23 is Very Good.

MOU performance evaluation data for financial year 2023-24 on the basis of Audited accounts will be submitted to DPE through online dashboard after the approval of the Board and through the Administrative Ministry by 31^st October 2024.

a)    Ship Availability as a percentage of Total Ships:

The Planned Ship Availability (Total days of the year less quoted days for planned repair and dry dock) for 59 ships for 2023-24 was 20530 days. The Ships were available (Total days of the year less Actual repair and dry dock days) for 19358 days which is 94.29% to the Planned Ship Available days.

b)    Revenue from Exports:

Earnings of SCI from Export Revenue as perthe GST Returns filed forthe FY 2023-24 amountsto INR 1,54,472 Lakhs (previousyear INR 1,71,809 Lakhs). Basis the above, export earnings as a percentage of Revenue from Operations for the FY 2023-24 stands at 30.62% (previous year 29.65%).

c)    Compliance parameters not verifiable from any outside sources:

(i)    DPE guidelines issued from time to time on CSR expenditure by CPSEs has been complied with.

(ii)    Target as given by DIPAM / NITI Aayog on Assets Monetization Milestones has been complied with.

(iii) Parameters w.r.t. steps and initiative taken for Health & Safety improvement of Human Resources in CPSEs has been complied with. Utilization of Proceeds from public issues, right issues, preferential issues etc.

During the year 2010-11, your Company had floated a “Follow-on Public Offer”, (FPO), comprising of a ‘fresh issue’ of 42,345,365 equity shares in your company and an ‘offer for sale’ of 42,345,365 equity shares by the President of India. The FPO proceeds of' 582.45 crores were fully utilized in the financial year 2011-12 as per object of the issue for part financing of capital expenditure on nine shipbuilding projects. However, due to delays in the projects resulting in default by the shipyards, during the period January 2014 to May 2014, your Company rescinded contracts for four shipbuilding projects and also, re-negotiated the payments for two projects. The investment in the rescinded contracts out of the FPO Proceeds was ' 330.65 crores.

Your Company has received back entire sum of' 330.65 crores from the shipyards. The shareholders vide the resolution passed through postal ballot on 11.02.2017 approved the proposal to re-deploy the said sum of ' 330.65 crores received as refund from Shipyards, towards various shipbuilding projects including offshore assets and liquid petroleum gas (LPG) vessels and also for acquisition of the any other such vessels, on such terms and conditions as the Board would deem fit from time to time as mentioned in the approval of the postal ballot. Further based on the approval granted by the shareholders, the Company can also utilize the sum towards the balance payments remaining due for the tonnage acquisition made by it.

Out of the said amount of ' 330.65 crs, an amount of ' 196.80 crs has been utilised till date as follows -
Month & Year	' Crs	Utilised for
November 2016	34.37	Equity portion of PSV - SCI Sabarmati
April 2017	63.82	Equity portion of Suezmax Tanker-Desh Abhiman
July 2017	27.63	Equity portion of PSV - SCI Saraswati
September 2017	70.98	Equity Portion of VLGC - Nanda Devi
Total Utilised till date	196.80	Â
The un-utilised FPO proceeds amount of ' 133.85 crores are kept in fixed deposit.

Large Corporate Entity

As Per SEBI circular no SEBI/HO/DDHS-RACPOD1/P/CIR/2023/172 dated 19.10.2023 on “Ease of doing business and development of corporate bond market- revision in framework for fund raising by issuance of debt securities by Large Corporates”, all Large Corporates shall endeavor to comply with the requirement of raising 25% of their incremental borrowings done in FY2022, FY 2023 and FY2024 respectively by issuance of debt securities till March 31,2024, failing which the large corporate shall provide a onetime explanation in their Annual report for FY 2024.

SCI is a “Large Corporate” fulfilling the criteria specified in para 3.2 of the circular. There was no “incremental borrowings” by SCI in FY 2022 and FY 2023. The outstanding Qualified borrowings as at the start of financial year 2024 was ' 1860 crores and the outstanding Qualified borrowings as at the end of the financial year 2024 was ' 2267 crores resulting in incremental borrowings of ' 407 crores. The outstanding qualified borrowings as on 31.03.2024 includes a disbursement of RS. 500 crores from State Bank of India for refinancing of outstanding loan from EXIM Bank. The disbursement was done by State Bank of India on the last working day for forex transactions in FY 2024 ie, 28.03.2024 but the repayment to EXIM was done on 03.04.2024 as EXIM required 5 days prepayment notice. Thus, the incremental borrowing was technically on account of pending refinancing transaction which was ultimately completed on 03.04.2024.The company will endeavor to comply with the requirements of this circular as and when required.

Additional Disclosures as required under the Guidelines laid down by DPE

i.    Disclosure on materially related party transactions that may have potential conflict with the interest of the company at large.

To the best of our knowledge and from the data gathered from all the departments, transactions with all related parties have been entered at arm’s length or in accordance with Provisions of relevant Act.

ii.    Items of expenditure debited in books of accounts, which are not for the purposes of the business:-

To the best of our knowledge there is no item of expenditure debited in books of accounts which are not for the purposes of the business

iii.    Expenses incurred which are personal in nature and incurred forthe Board of Directors and Top Management-NIL

iv.    The office and administration expenses as a percentage of total expenses are 4.88% in FY 2023-24 as against 4.89% in FY 2022-23.

v.    The finance expenses as a percentage of total expenses is 3.66% in FY 2023-24 as against 3.56% in FY 2022-23.

Segment-wise Performance

Report on performance of the various operating segments of the Company (audited) is included at Note No. 31 of the Notes on Financial Statements (Standalone) for the year ended 31st March 2024, which is forming part of the Annual Accounts.

Internal Control System:

The Company has an internal control system that is adequate and commensurate with the size, scale and complexity of its operations. Internal financial controls framework and Risk Control Matrix (RCM) for various business processes is in place. The internal control systems (including Internal Financial Controls over Financial Reporting) are reviewed on an ongoing basis and necessary changes are carried out to align with the changing business/statutory requirements.

Internal audit is carried out by an independent firm of Chartered Accountants / Cost and Management Accountants on concurrent basis. The scope and authority of the Internal Audit function is defined in the Internal Audit Plan, which is approved by the Audit Committee. To maintain its objectivity and independence, the Internal Audit function submits quarterly reports to the Audit Committee of the Board. The Internal Audit examine, evaluate and report on the adequacy and effectiveness of the internal control systems in the company, its compliance with the laid down policies and procedures and ensure compliance with applicable laws and regulations. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are reviewed, deliberated and presented to the Audit Committee of the Board.

Dividend Distribution Policy:

As per the guidelines dated 27.5.2016 issued by Department of Investment and Public Asset Management (DIPAM), MOF, GOI in respect of dividend, bonus shares, etc. the Company has an obligation to comply with these guidelines. However, the company shall take into

consideration and be guided by the provisions of the Companies Act 2013, Companies (Declaration and Payment of Dividend) Rules, 2014 and Guidance Note on Dividend & Secretarial Standard 3 (SS3) and company’s future plan and cash position for taking necessary action appropriate and deemed fit in the circumstances.

The link to access SCI Dividend Distribution Policy is https://www.shipindia.com/ -> About SCI -> Policies OR https://www.shipindia.com/upload/policies/SCI_Dividend_Distribution_Policy2.pdf Transfer of Equity Shares / Unclaimed Dividend to IEPF:

May kindly refer report of Directors on Corporate Governance for information in this regard.

Role of Vigilance Division in SCI:

SCI has a full-fledged Vigilance Division headed by Chief Vigilance Officer. The Division operates as per the guidelines of the Central Vigilance Commission for Vigilance management in Public Sector Enterprises and is guided further by the instructions issued by the Ministry of Ports, Shipping and Waterways. During the year under review, the Chief Vigilance Officer put in place preventive vigilance initiatives in the business processes thereby striving towards greater transparency and improved ethical & corporate governance standards. There was concerted effort to achieve greater transparency and eliminate systemic weaknesses through use of technology in business processes such as e-payments, Supplier Relationship Management, bill tracking, greater use of GeM portal and online dissemination of important circulars/ guidelines. Vigilance Division interacted with various employees of SCI as well as various stake holders which has helped in understanding the issues from their perspective as well.

Activities of the Vigilance Division carried out in 2023-24

During the year under review, the Vigilance Division carried out the activities under Preventive, Punitive and Participative Vigilance. The important activities carried out in 2023-24 bythe Vigilance Division were as follows:

A.    Complaints were handled as per complaint handling policies stipulated in Vigilance Manual issued by the Central Vigilance Commission. Investigations into complaints of corruption/ malpractice were conducted.

B.    In adherence to the CVC guidelines, random scrutiny of APRs of SCI employees was carried out.

C.    Active monitoring of the implementation of Integrity Pact in SCI has been done.

D.    Vigilance Division has acted as a catalyst in the implementation of preventive vigilance measures such as e-payments, bill tracking systems, transfers of employees posted in sensitive areas in a phased manner etc.

E.    As part of preventive vigilance activities, four Chief Technical Examiner Type inspections were carried out and recommendations for systemic improvements were issued on basis of their findings. A surprise inspection at the SCI’s regional office at Delhi was carried out by the CVO. Another surprise inspection by a Vigilance officer was carried out at SCI’s regional office in Kolkata/ Haldia.

F.    In view of the many common mistakes being made by the employees while filling up the online APRs, an interactive session on ‘Common Errors in filing of Online Annual Property Return’ was conducted on 26/05/2023 at SCI HO, which was also made available to the employees at regional offices through webcast.

G.    Selective scrutiny of Voyage Repairs Bills, dry-docking bills, various accounts have been done during the year.

H.    For the annual Vigilance Awareness Week, in - house programmes were held to spread Vigilance Awareness among employees and their families.

I.    As part of Vigilance Awareness Week, SCI organized various outreach activities, such as Poster making competition, Slogan writing competition, Quiz competition, Essay - writing competition among youths in schools and colleges in Mumbai and other cities where SCI has regional offices, including Port Blair.

J.    In order to spread the awareness about Vigilance machinery among people, an awareness campaign was organized via FM Radio, wherein jingles related to the Vigilance functions and VAW-2023 theme were aired throughoutthe Vigilance Awareness Week.

K.    Awareness campaign was conducted on-board SCI ships for generating awareness about Vigilance amongst seafarers. The Integrity pledge was also administered onboard the ships and banners were displayed.

L.    A number of training sessions in various thematic areas for Capacity Building as a part of precursor campaign period of the Vigilance Awareness Week were conducted for SCI officers.

During the FY 2023-24, 3 nos. registered complaints brought forward from previous FY 2022 - 23 and 19 nos. newly registered complaints were processed by the Vigilance Division. As on 31/03/2024, all of these 22 registered complaints have been disposed off as per prescribed procedure.

Vigilance Study Circle Mumbai Chapter:

The Vigilance Study Circle Mumbai Chapter, started on the initiative of SCI Vigilance Division in 2010, is today a thriving forum for knowledge - sharing with active participation from CVOs of various member organizations from varied sectors in the Western zone. It continues to spread Vigilance awareness and develop the knowledge and skills of Vigilance Professionals and provides an ideal platform for the Chief

Vigilance Officers of Mumbai based PSUs, Banks etc. to meet and exchange their views/ experiences, etc. During the FY 2023 - 24, a two days’ training program for current and potential IOs/ POs of the member organizations of VSC, Mumbai was conducted by the faculty associated with the training module of HPCL.

Cautionary Statement

The statements made in the Management Discussion and Analysis report describing Company’s objectives, projections, estimates and expectations may be “forward looking statements” within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

Key Managerial Personnel

Details of Key Managerial Personnel as on 31.03.2024 are as follows:

Sr. No	Name of KMPs	Designation
01	Capt. Binesh KumarTyagi	Chairman and Managing Director
02	Shri Atul Ubale*	Director (B&T) and holding Additional Charge of Director (F)
03	Shri Vikram Dingley	Director (T&OS)
04	Shri Chirayu Indradeo Acharya**	Whole-time Director
05	Shri Manjit Singh Saini***	Director (P&A)
06	Rear Admiral Jaswinder Singh****	Director (L&PS)
07	Shri N. Subramanya Prakash	Chief Financial Officer
08	Smt. Swapnita Vikas Yadav	Company Secretary

 

*Shri Atu Ubale, Director (B&T), SCI is also holding the additional charge of Director (Finance) w.e.f. 07.03.2024.

**Shri C.I. Acharya who was holding post of Director (Finance), SCI is currently under suspension w.e.f 07.03.2024.

***Shri Manjit Singh Saini, SCI was appointed on the Board of SCI as Director (P&A) w.e.f 05.07.2023.

****Rear Admiral Jaswinder Singh was appointed on the Board of SCI as Director (L&PS) w.e.f 29.12.2023.

Declaration of Independence

The Company has received Declaration from Independent Directors conforming that they meet the criteria of Independence and have complied with the Code for Independent Directors as prescribed under Companies Act 2013, the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 and DPE guidelines.

Composition and Meeting of the Board and its Committee

1.    Board Composition - As on 31.03.2024, the Company is non-compliant with the Regulation 17(1) (b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, regarding the requirement of having at least half of the Board of Directors as Independent Directors. To this extent, the Company is non-compliant with the relevant provisions of DPE Guidelines on Corporate Governance, 2010.

2.    Committees of the Board - The Company has constituted Audit Committee, Corporate Social Responsibility Committee, Nomination and Remuneration Committee, Stakeholders’ Relationship Committee, Risk Management Committee and other Committees for operational convenience in terms of requirements of the Companies Act, 2013 read with rules made thereunder, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPE Guidelines on Corporate Governance, 2010. The composition and scope ofthe Board level Committees are provided in the Report on Corporate Governance, which forms part of this report.

3.    Number of Meetings of the Board and Committees thereof- The details in respect of the number of Board Meeting and Committee meetings of the Company are set out in the Corporate Governance Report which forms part of the Annual Report.

Performance Evaluation of Board. Committee and Directors

In accordance with applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the evaluation of the Board as a whole, Committees and the Directors was conducted, as per the internally designed evaluation process approved by the Board.

Secretarial Standard

The Company complied with all the applicable Secretarial Standards.

Secretarial Audit

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Board had appointed M/s Mehta & Mehta, Practicing Company Secretary firm to conduct Secretarial Audit for the Financial Years 2023-2024 and 2024-2025. The Annual Secretarial Compliance Report in compliance to Regulation 24A of SEBI LODR Regulations 2015 and Secretarial Audit Report in Form MR-3 as per Companies Act, 2013 for the financial year 2023-24 is appended to the Director’s report. The Secretarial Auditor in this report for the year ended 31^st March, 2024 has brought out that:

During the period under review the Company has complied with the provisions of the Act, Rules, Regulations, Guidelines, Standards, etc. mentioned above except Regulation 17(1) (b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 prescribes the requirement of having at least half of the Board of Directors as Independent Directors. However, the composition of the Board is not duly constituted in the absence of requisite number of Independent Directors. Further, the requisite number of Independent Directors were not appointed on Board of the Company as contemplated in the Clause 3.1.4 of Guidelines on Corporate Governance for Central Public Sector Enterprises (CPSE) issued by the Department of Public Enterprises (DPE), Ministry of Heavy Industries and Public Enterprises, Government of India vide their O.M.No.18/(8)/2005-GM dated 14th May, 2010. Further, it may be noted that the Board of the Company is non-compliant with the aforesaid mentioned regulation from 01.04.2023 till 31.03.2024.

The Management views on the above observation are as follows:

The Company being Navratna Public Sector Undertaking (PSU), the Competent Authority nominates Directors on Board. The Company through its various communication letters dated 01.06.2023, 04.09.2023, 23.11.2023, 04.01.2024 and 26.02.2024 had taken up the matter with Competent authority with a request to appoint requisite number of Independent Directors on the Board of the Company. The matter is under active consideration with the Competent Authority.

Cost auditors and cost audit report

The provisions of Section 148 of Companies Act 2013 are not applicable to the Company, hence cost accounts and records are not required to be maintained by the Company.

Auditors Report

The Statutory Auditors have given an unqualified report on the Financial Statement of the Company for the Financial Year 2023-24. Further, there are NIL comment made by Controller and Auditor General of India on the Statement of Standalone and Consolidated Financial for year ended 31.03.2024.

150^th Report of the Committee of Papers Laid on the Table (COPLOT) presented in Rajya Sabha on 31 March 2017 - Para 24 of the COPLOT recommendations

Please find the following information with respectto Pending Audit Para:

Name of Audit Para: Para No. 9.2 of CAG Report No. 13of 2019 Brief of the Para

Payment of Performance Related Pay in violation of DPE guidelines.

SCI paid an amount of' 11.03 crore as Performance Related Pay to employees for the financial year 2014-15. C&AG however raised an observation that payment of Performance Related Pay of ' 11.03 crore for the year 2014 -15 was made in violation of DPE guidelines and thatthe non-core profits had not been deducted forcalculation of PRP

PRP of year 2014-15 was paid after approval of Nomination and Remuneration Committee. However, matter was again put up to Nomination and Remuneration Committee held on 04.02.2020 specifcallyto reviewthe position with respectto C&AG observation.

SCI stand on C&AG observation is reiterated below:-

a)    Profit on sale of Vessels: Scrapping of vessels is a normal activity in shipping and SCI follows a policy of scrapping at the end of the useful life of the vessel after a techno economic study is done on possible further extension of the life of the vessel. All activities starting from placing of an order building a ship till the end point of scrapping of the ship at the end of its useful life fall within the ambit of core business activity of a shipping company.

b)    Income (Compensation) received from rescindment of Contract: Possibility of contract rescindment termination in any business is normal and cannot be ruled out. Hence, rescindment of contract needs to be considered within the purview of normal business activity. In our case compensation/ income received for rescindment of contract is nothing but is in nature of liquidated damaged given by shipyard fortheir subpar performance and not completing the contract on time. Had the vessel been delivered in time SCI would have earned normal income from freight/charter hire.

c)    Interest on loans given to Joint Ventures: Formation of Joint venture is a normal business activity. Loans given to Joint Venture Companies is part of well deliberated strategic planning by all JV partners and in line with the MOA.

The Nomination & Remuneration Committee deliberated the matter in detail and concluded that all the above mentioned items are core activities of SCI.

Resolution of minutes of above agenda is placed below:

The Committee thereafter passed the following resolution:

RESOLVED That any business activity which is undertaken to sustain, promote, enhance or grow its primary business is to be considered as “Core Business Activity" of the Company

RESOLVED Further THAT income from rescindment of contract (liquidated damages), interest earned on loan exposure to the joint venture companies, profit on sale ofships constitute as income arising from core activity

Resolved Further that payments made by the company to the employees as Performance Related Pay for the FY 2014-15 based on the above notion, on which taxes have been paid by the employees and further in order to avoid complications arising on account of differential treatment afforded to the same class of employees whether serving or otherwise, should not be recovered

RESOLVED FURTHER THAT the Company may communicate the above decision of the Committee to the Ministry of Ports, Shipping and Waterways (MoPSW) forfurther action.

In view of instructions of the Nomination and Remuneration Committee, matter was put to The Ministry of Ports, Shipping and Waterways (MoPSW) on 27.07.2020 seeking guidance on the way forward considering the above resolution of the Nomination & Remuneration committee.

Thereafter, on 02.12.2021, letterwas sentto MoPSW stating that considering the Strategic Disinvestment of SCI being in advanced stages, DIPAM had opined that the Administrative ministry should take necessary action to get all employee related liabilities pertaining to the period that the company is a CPSE cleared before the company’s management control is transferred so as to safeguard the interest of the employees.

Reporting Status:

A communication was sent by Under Secretary, MoPSW to refer this matter to Committee on Public Undertakings for final decision. Corporate Governance:

A report on Corporate Governance pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to this report and forms part of it.

Business Responsibility and Sustainability Report.

The Shipping Corporation of India's Business Responsibility and Sustainability Report (BRSR) for the fiscal year 2023-24 emphasizes its unwavering commitment to Environmental, Social, and Governance (ESG) principles and the strides we have made in addressing sustainability challenges. We see our responsibility to take the lead in sustainable development not only as a duty to the society but also as an opportunity to do well by doing good.

ESG Related Challenges:

Over the past year, we have encountered a range of ESG challenges that have guided our focus on responsible business practices. We acknowledge our responsibility in mitigating the impact of shipping operations on the environment and communities. Additionally, ensuring the safety, well-being, and growth of our workforce while fostering transparency, diversity and inclusion both within and outside our organisation continues to be a priority for us.

Processes:

In response to these challenges, we have set ESG processes that align with our commitment to sustainable shipping and fostering a culture of diversity and inclusion within our organization.

1.    Environmental protection: The Company is compliant with International Maritime Organization (IMO) - MARPOL Convention and has taken appropriate actions impacting Emissions, Ballast Water Treatment, Domestic discharges and Oil Pollution enabling us to contribute to global efforts to combat climate change and promote cleaner oceans.

2.    Waste Management: Waste generated on board during normal operation of the ship is managed as per the vessel-specific garbage management plan and landed ashore at approved reception facilities for further processing. Also, the discharge of oil, solid waste & sewage etc. from its ships is prohibited under MARPOL (International Convention for the Prevention of Pollution from Ships). Most of our vessels comply with Green Passport or equivalent notation. In addition, the Company diligently adheres to the compliance requirements specified in the administration circular concerning the Transport and Handling of hazardous and noxious liquid substances in bulkon Indian-flagged offshore supportvessels.

3.    Workforce Development: Multiple training programs with a core focus on the principles of varied topics such as Leadership, Soft Skills, Health & Wellness, Industrial skills and Building Infrastructure for a Viksit Bharat were conducted for the workforce ensuring their professional growth and well-being while fostering a diverse and inclusive work culture.

4.    CSR Initiatives: Our community engagement initiatives positively impacted the lives of multiple individuals and many families, focusing on education, healthcare and livelihood opportunities across diverse communities.

5.    Vendor Selection: The Company sources vendors who are maintaining registration under local/ regional laws, are complying with National and International applicable legislations, and are maintaining management systems under ISO 9001 and 14001 or any other equivalent systems wherever applicable. Additionally, suppliers are requested to be in accordance with SOLAS Chapter 11-1/ Reg 3-5. Furthermore, the sellers should guarantee that no hazardous material identified under MEPC269 (68) and EUSRR has been used in the supplies, no use of plastic for packing material and whenever possible assist the vessel in collecting back the packing material if the vessel so requests.

Flexibility in Placement:

As an organization that values transparency and accountability, we have exercised our flexibility in placing this disclosure within the Annual Report. This ensures that stakeholders have easy access to crucial information about our sustainability efforts and responsible business practices.

Conclusion:

At The Shipping Corporation of India Limited, sustainability is ingrained in our corporate ethos. We view ESG as a foundation for creating long-term value and positively impacting the world around us. Through collaboration and unwavering commitment, we remain steadfast in our pursuit of sustainable shipping solutions.

Directors’ Responsibility Statement:

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, with respect to Directors’ Responsibility Statement, it is hereby confirmed:

(a)    That 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.

Explanation - For the purposes of this clause, the term “internal financial controls” means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information;

(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.

General Disclosures Your directors state that:

(1)    There was no change in the nature of business of the company during the financial year ended 31^st March 2024.

(2)    During the year, the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code 2016,    along    with

theirstatuswas 'NIL¹.

Acknowledgements

Your Directors express their gratitude to the Government of India for its support to your Company and thank sincerely Shri Sarbananda Sonowal, Hon'ble Minister of Ports, Shipping and Waterways, Hon’ble Minister of State for Ministry of Ports, Shipping and Waterways Shri Shripad Naik and Shri Shantanu Thakur for their support and guidance in managing the affairs of the Company. Your Directors also extend their gratitude to Secretary (Shipping), Ministry of Port, Shipping and Waterways for guidance.

Your Directors also wish to express their thanks to the officials in the Ministry of Ports, Shipping and Waterways for the unstinted support given by them in various matters concerning the Company. Your Directors would also like to convey their thanks to other Ministries and Departments of the Government of India, Trade Organizations, and Shippers’ Councils, who have played a vital role in the continued success of your Company. The Directors thank the shareholders, other stakeholders and valued customers for the continued patronage extended by themto yourCompany.

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

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Mar 31, 2018

DIRECTORS’ REPORT

To the Members,

The Directors have pleasure in presenting the 68th Annual Report on the working of your Company for the financial year ended 31st March, 2018.

Accounting Year

The year under report covers a period   of 12 months ended on 31^st March, 2018.

FINANCIAL PERFORMANCE

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

                                                                                                                      (Rs,in Crores

Â	Â	2017-18	Â	2016-17
Gross Earnings	Â	3617	Â	3592
Gross Profit (before interest, depreciation & exceptional items & tax)	Â	820	Â	923
Less : Interest	180	Â	172	Â
Depreciation and Impairment	610	790	566	738
Profit before exceptional items & tax	Â	30	Â	185
Exceptional items	Â	-	Â	-
Provision for Taxation	Â	224	Â	(43)
Net Profit	Â	254	Â	142

The above figures have been extracted from the standalone financial statements as per Indian Accounting Standards (Ind-AS). The financial statement for the year 2016-17 has been restated to comply with Ind AS 8.

Appropriations:

The working results for your company for the year 2017-18 shows a net profit of Rs.253.75 crores. A sum of Rs. 9.07 crores has been transferred to Capital Reserve for financial year 2017-18. After adjusting an opening credit balance of Rs. 166.95 crores (being balance retained earnings brought forward from previous year) and adding items of other comprehensive income of Rs. 11.03 crores that are recognized directly in retained earnings, there is a credit balance in retained earnings of Rs. 422.67 crores as on 31st March 2018.

Brief Analysis of Financial Performance

SCI has reported a net profit after tax of Rs. 253.75 crores for the financial year 2017-18. The freight and charter hire rates in the tanker segment continued its downward trend due to depressed shipping market. Efficient capacity utilization of offshore and liner vessels coupled with cost control measures resulted profit in liner and offshore segment. During the year SCI has reversed the deferred tax liability on shifting of base year of indexation from year 1981 to 2001 as announced in Union Budget 2017 which has resulted in reduction in liability by Rs. 284.27 Cr. The consolidated net profit for the company for Financial Year 2017-18 was Rs. 306.50 crores.

Performance and Financial positions of joint ventures and subsidiary included in Consolidated Financial Statements: Fig (Rs, i_n l_acs

Particulars	ILT 1	ILT 2	ILT 3	ILT 4	ICSL
As on	31.03.2018	31.03.2018	31.03.2018	31.03.2018	31.03.2018
Total Income	17056	15659	17218	22278	0.21
PAT	7311	5954	848	5450	-0.14
Equity capital	14	14	6	27528	5
Number of equity shares	10,000	10,000	10,000	42448300	50000
EPS (Rs/share)	73110	59540	8480	12.84	-0.27
Dividend	0	0	0	0	0
Net worth	25537	24800	-14713	25006	-5

The Consolidated profits for the year ended 31st March 2018 is increased by Rs 52.75 crores upon consolidation of above joint ventures and subsidiary and on Net worth there is an increase of Rs 136.61 crores.

1.0 Fleet Position during the Year:

During the year under report, there has been an addition of three vessels (Desh Abhimaan, SCI Saraswati and Nanda Devi) and deletion of six vessels (Indira Gandhi, Rajiv Gandhi, SCI Ratna, B.C. Chatterjee, A.K. Azad and Harshavardhana) to SCI’s fleet. Thus the overall fleet of SCI stood at 66 vessels of 5.86 million DWT at the end of the year.

Fleet Profile during the Year

Particulars		As on 1.4.2017		Additions		Deletions		As on 31.3.2018
		No.	DWT	No.	DWT	No.	DWT	No.	DWT
1.	(a) Crude Oil Tanker	21	3,608,001	1	1,58,710	1	92,687	21	3,674,024
Â	(b) Product Tankers	14	908,059	-	-	1	45,134	13	862,925
Â	(c) Gas Carriers	2	35,202	1	53,503	-	-	3	88,705
2.	Bulk Carriers	16	1,068,088	-	-	Â	Â	16	1,068,088
3.	Liner Ships	5	202,413	-	-	2	57,913	3	144,500
4.	Offshore Supply Vessels	10	23,502	1	3,719	1	1,983	10	25,238
5.	Passenger-Cum-Cargo Vessels	1	5,140	-	-	1	5,140	0	0
Total		69	5,850,405	3	215,932	6	202,857	66	5,863,480

2.0 During the period under report, the following vessel was inducted in SCI fleet:

Vessel Name	Type	Yard Built	DWT
Desh Abhimaan	Suezmax Tanker	2007	158,710
SCI Saraswati	MPSV	2017	3,719
Nanda Devi	VLGC	2001	53,503

2.1 During the same period, the following vessels were disposed off from SCI fleet:

Vessel Name	Type	Year Built	DWT
Indira Gandhi	Container vessel	1993	28,948
Rajiv Gandhi	Container vessel	1994	28,965
SCI Ratna 1	AHTSV	2011	1,983
Bankimchandra Chatterjee	Product Tanker	1994	45,134
Abul Kalam Azad	Crude Oil Tanker	1999	92,687
Harshavardhana	Passenger-cum-cargo carrier	1974	5,140

2.9 Conservation of Energy, Technology Absorption

The information pertaining to conservation of energy, technology absorption is forming a part of the Management Discussion and Analysis Report.

3.0 Foreign exchange earnings and outgo

                                                                                                  (Rs, in crores)

Particulars	2017-18	2016-17
Foreign exchange earned & saved including deemed earned & saved	3459.77	3555.76
Foreign exchange used including deemed used	3767.53	3675.89

3.1 Expenses on entertainment, foreign tours etc - FY 2017-18

During the year under report, your Company spent Rs.21 lakhs on entertainment, Rs.97 lakhs on publicity & advertisements and Rs.269 lakhs on foreign tours of Company’s executives.

MANAGEMENT DISCUSSION AND ANALYSIS

The overall scenario under which the Shipping industry operated and which impacted the various segments is discussed below.

A. INDUSTRY STRUCTURE AND DEVELOPMENTS

i)    World Scenario

The world GDP grew by 3.8% in 2017, compared to the economic expansion of about 3.1% in the previous year. Emerging European economies also contributed positively to the growth, having shown considerable upward momentum. An accommodative financial policy was also adopted by other developed countries; some due to positive global signals, others owing to cyclic periods of relaxation in their financial policies. It is estimated that the developed market growth rose from 1.6% in 2016 to 2.2% in 2017 while the emerging market growth rose from 3.8% to 4.6% in 2017. The growth in volume of global trade in goods and services during 2017 exceeded the growth rate of world GDP for the first time since 2014. This year commodity prices upturn has lent a helping hand to the commodity-exporting economies (For ex. Brazil, Russia, Angola, Equador, Nigeria) which were severely hampered by commodity prices downturn in 2015-16.

For the next two years, the global GDP growth is forecasted to be comparatively stronger (3.9%), owing to positive global indications. This may lead to an investment-friendly environment & give traction to capital investments around the globe. Expansionary fiscal policy of US along with similar policies of other developed countries is also expected to generate stronger momentum & healthy sentiments. China, the world’s second largest economy will be critical to global supply and demand and signs of higher GDP growth in 2017 at 6.9% over 6.7% in 2016 is a positive indicator. The One Belt One Road initiative will extend China’s influence westward and add to the infrastructure along with it. The possibility of US trade war with China starting with steel, aluminum, solar panels and white goods may to an extent upset the process, unless an early resolution is reached. After these two years i.e. 2019 onwards, the prospects seem to be slightly subdued due to eventual cyclical tightening of financial policies by advanced economies & pressure on export-intensive economies due to rising inflation levels.

ii)    Global GDP

According to IMF, Global Trade Volume growth (goods & services) has been 4.9% in 2017 and is expected to be up to around 5.1% in 2018. Developed countries having large exports have performed quite well through the year & contributed strongly to the rise in trade volumes. This rebounding of trade in advanced economies came as a positive. In the recent years it is observed that advanced countries have been gradually recovering from the aftermath of economic crises in the recent past. The expected output levels are mainly being attributed to policy relaxations creating favorable market sentiments. Intensely conservative tax reforms by the incumbent US government are supposed to drive up the country’s output numbers.

In the EMDE (Emerging Markets & Developing Economies) area, the growth in trade volume during the year 2017 was 6.4% in imports & 6.4% in exports as well. Sharp recovery in commodity prices acted as a catalyst for the rebound in many EMDE economies. Some countries which particularly benefitted from this development are commodity-export oriented economies like Brazil, Russia, Angola, Equador & Nigeria. A facilitative environment for exports meant China’s numbers also surged up, showing impressive growth figures. This jump in export growth led to return of the investments (especially capital investments) & rise in trade volumes of the developing countries. Overall, the world’s total trade volume is expected to go up by 5% or so in 2018.

IMF’s World Economic Outlook states that global trade volume will expand by 5.1% in 2018 and marginally slow down thereafter to 4.7% in 2019, as against 4.9% in 2017. The economy (GDP) of developed nations is expected to grow by 2.5% in 2018 and 2.2% in 2019. Whereas, the report forecasts that economies of Emerging Markets & Developing Countries will grow by 4.9% and 5.1% in 2018 and 2019 respectively, as against the growth of 4.8% in 2017. Going forward, strong organic demand and accompanying domestic as well as international trade will be the key growth driver for the EMDE countries.

The global GDP growth and corresponding economic activity directly represents the international trade (export and imports) and in turn provides useful pointers to the shipping industry as about 80% of the international trade by volume is carried out by shipping.

iii)    Seaborne Trade, Fleet & Market

Globally, the seaborne oil trade (i.e. ‘Crude Oil’ and ‘Products’ segments) exhibited a growth of 3.49% in 2017 as compared to 4.17% growth in 2016. Within the seaborne oil trade development, the ‘Crude oil’ trade increased by 4.06% with total figure at 2,125 million tonnes in 2017,whereas, ‘Products’ trade was at 898 million tonnes in 2017, increasing by 2.16%. The crude & product tanker fleets expanded by 4.24% & 5.17% respectively in 2017 (when calculated by gross dwt.), as compared to figures of 6.48% & 6.16% during the previous year. The downward trend in tanker charter rates is expected to continue further because of oversupply of tonnage and efforts by OPEC and other oil producing countries to limit production in order to get better price for crude. Hence, the overall outlook on tanker markets in large part of 2018 is projected to be quite bearish.

The dry bulk trade showed moderate growth of 2.53% in volume over the course of the year 2017 and the freight forecasts are quite positive due to continual slowdown in fleet growth. In view of these developments, Drewry has revised its forecasts to higher freight levels & has opined that dry bulk markets will grow steadily, citing the driving factors as decreasing tonnage supply & increase in tonne-mile demand owing to wider sourcing of iron ore and coal. The total dry bulk fleet growth rate was about 4.75% in 2017, significantly up from -0.08% (fleet shrinkage) in 2016. The shrinking supply of tonnage bodes well for the market and charter rates are likely to see moderate upturn in short term & medium term, provided cargo growth is maintained.

iv)    Indian Scenario

As per Central Statistics Office (CSO), Indian economy grew by a moderate 6.7 % (estimated) in FY 2017-18, as compared to the growth rate of 7.1% in 2016-17. The growth numbers have exhibited a downslide due to the strain caused by multitude of long-term structural economic changes taken up. A substantial increase in the oil prices has also been another factor which has put significant strain on import bill of the country. On the other hand there have been no major factors rendering an upwards swing in the gDp thereby causing the growth to slip up. As per IMF Economic Outlook, India’s GDP growth has fallen marginally below China for this year 2017, thereby losing India’s GDP growth lead for consecutive years over China. The agriculture/farming sector exhibited a subdued annual GVA (Gross Value Added) growth of 3.4% in 2017-18, while the sector had registered 6.3% GVA expansion in the earlier period. The power and utility sectors also posted GVA growth at an annual rate of 7.2% in 2017-18 as compared with 9.2% growth rate in the previous year 2016-17.

According to sources from Ministry of Commerce, India’s exports in value terms has increased by 12.06% to US$ 303.38 billion in 2017-18, while imports surged up with a spike of 21.13% to US$ 465.58 billion. As per Indian Port Association (IPA) statistics, the quantum of Cargo Traffic at India’s 13 major ports rose by 4.77% during 2017-18 i.e. cargo traffic rose from around 648.40 million tons in 2016-17 to 679.37 million tons in the corresponding period a year later. Looking at commodity-wise breakdown of cargo traffic, the largest commodity group in the total traffic was PO.L.(Petroleum, Oil & Lubricants) with around 33.74% share, followed by Container traffic at 19.7%, Thermal & Steam Coal at 13.72%, ‘Other Misc. Cargo’ (12.09%), Coking & Other Coal (7.60%), Iron Ore & Pellets (6.72%), Other Liquid (4.15%), finished Fertilizer (1.17%) and FRM (1.11%) respectively. This improvement of performance is the result of many measures initiated by the Ministry of Shipping to improve the performance of the ports. These include mechanization of the terminals, focus on improving the TAT (turn-around time), introduction of new processes & practices for quick evacuation of cargo, thrust on coastal transportation, expansion of infrastructure and skill development of employees. Similarly, the existing non-major ports, especially private ports, continue to grow due to factors such as a diversified cargo portfolio, superior operating efficiency and contemporary infrastructure and the presence of captive cargo streams.

v)    Strengths

Years of experience in Shipping together with diversified fleet across all major segments gives SCI a unique ability to exploit demand growth in any given segment with a quick-mover advantage. New acquisitions have brought down average age from 18 years in 2007 to about 10.2 years presently (excluding the 2 LPG Tankers of 26 years each). Longstanding COA relationships with major Indian Oil Refineries offer cargo security and employment assurance for major part of the tanker fleet.

vi)    Outlook

The prospects for global economy point to a reasonable growth at about 3.9% in 2018-19. The global overall oil demand is expected to be sluggish in the coming 2 years with a clear shift towards renewable energy in the developed world. This era of low demand growth is supposed to bring new challenges to the tanker owners. The recovery prospects of an already stressed market are further marred by slow growth of oil demand. There are many factors putting pressure on ton-mile oil demand, such as increase in the refinery capacity especially within Middle East & Asian regions, crude pipelines from Russia to Chinese refinery zones, persistent overcapacity. Hence tanker freight markets are forecasted to continue on their downward path at least till 2019. Some scenarios such as increase in US crude oil export could provide much needed support to the market, by offering the possibility of long haul voyages, provided adequate evacuation infrastructure is in place. Another factor which would support the tanker markets is the encouraging pace of demolitions/scrapings of 15 years plus tonnage due to sulphur emission and ballast water treatment regulation, which would diffuse the oversupply to some extent. Middle East & Asia will account for a combined 78% in the global refinery capacity rise (Middle East 48% & Asia 30%). Asian refineries are predicted to curb product tanker demand. Overall the tanker markets are forecasted to be bearish during the next 1.5 - 2 years with freight levels sliding further downwards.

In the dry bulk market, things are looking optimistic & freight rates are continually exhibiting upwards trend. Drewry has also upwardly revised their forecast for 2018 & 2019. Healthy growth in dry bulk demand, complemented by gradual downsizing in supply has rendered a favourable market situation in the dry bulk trade. Charter rate forecasts for the first two quarters of 2018 are quite optimistic & are above the corresponding figures in 2017. The rising demand for high-grade iron ore in China instead of domestically produced iron ore is expected to raise tonne-mile demand, whereas, significant increase in the seaborne trades of bauxite & grain trade is projected to generate firm demand for dry bulk carriers. The controlled tonnage supply, along with increased possibility of demolitions due to IMO regulations would further enhance the supply-demand balance, leading to an owner-favourable market scenario.

The impending IMO 2020 regulations on Ballast Water Management & usage of Low Sulphur Bunkers could play a key part in both tankers & bulk carrier fleets, due to possible demolitions. However the actual impact of these regulations will depend upon the framework & strictness adopted by IMO in implementing these regulations & its acceptance & adherence within the shipping community.

vii)    Opportunities

The global GDP is expected to grow at 3.9% in 2018. This however, is dependent on the two largest economies, US and China followed by emerging economies such as India, Russia, Brazil. US economy is expected to grow by 2.9% in 2018, up from 2.3% growth achieved in the year 2017. A wholesome rise in the refinery capacities of Middle East as well as Asia regions will offer a new dynamic in both crude & product tanker markets. Strategically placed vessels in these regions will be primed to take advantage of this shifting dynamic. The Chinese GDP growth is expected to be 6.6% in 2018, marginally lower than the 6.9% growth exhibited in 2017, on the backdrop of cyclical gradual slowdown. The Indian GDP growth is again predicted to surge ahead of China in the year 2018. The Asia region (Emerging & Developing Asia) is expected to grow by 6.5% in 2018, on par with the level of 6.5% growth in 2017, with India poised to grow at 7.4%. The Euro economy is expected to show a reasonable growth of 2.4% in 2018, with growth coming in primarily from the recovering Euro economies & stronger domestic demand. The Japanese economy is expected to grow at a modest rate of about 1% in 2018.

viii)    Risks & Concerns

The return of cyclical monetary policy tightening, adverse impact of aging population & reduced productivity on GDPs of European countries, the near-constant inflation hampering growth figures, more conservative & tight financial policies especially by advanced nations, on-going cyclical recovery in Europe & timid growth in crude oil demand remain the major macro risks. Also, the possibility of eruption of geopolitical tensions within various regions may bog down the economic activity & as such present a significant risk. The recent US decision to re-impose sanctions on Iran will marginally disrupt the oil trade requiring the other producers to fill in the gap in oil production and may also result in increased crude oil prices. Saber rattling on protectionist trade and imposition of duties by large economies would curb trade growth. More recently, the high tariffs by the US on its Chinese imports & subsequent retaliatory steps initiated by China may hamper a lot of the dry bulk trade. The already rising crude oil prices have strained the economies of oil importing countries in both Africa & Asia who in turn may be forced to cut subsidies and this may consequently hurt overall demand. In South America, Venezuela remains in deep economic & political crisis, as its GDP is expected to contract by a staggering 15.0% in 2018 & further 6% in 2019. In Africa, frequent port outages & resurgence of Piracy on the Nigeria region is a major cause for concern. The crude tanker freight rates are also expected to remain at depressed levels during 2018-19.

Similarly in the dry bulk segment, although the freight levels are on the upside the oversupply has not completely vanished yet. There is always a possibility of localized oversupply situation in some regular trade routes and continued occurrence of local volatility is liable to affect the rates. Additionally, the declining cost of renewable energy & its growing acceptance & compatibility remains a concern for the traditional coal importers. In India, Coal India, which is the major coal producer, continues to increase its domestic production and this thrust to reduce coal imports might adversely affect the seaborne coal trade to India.

B. SEGMENT-WISE FLEET & MARKET STUDY

1.1 BULK CARRIERS & TANKERS

a) Crude Oil & Product Tankers

In the year 2017 the global consumption of Crude Oil registered a marginal increase of 1.55% to 97.81 mbpd (million barrels per day) over the previous year. It is anticipated that the oil demand growth will decline slightly over the course of next 4-5 years. Sluggish forecasts for oil demand growth could primarily be attributed to following factors: (i) rising crude oil prices, (ii) upcoming paradigm shift in China about diversifying their economy & shifting the focus away from an oil-intensive, heavy manufacturing, export-driven economy, (iii) rising presence of electric vehicles (EVs) & overall movement towards cleaner fuels etc. In India’s case, the Indian government has announced plans for shifting from oil based vehicles to EVs. The Indian crude oil demand has been fairly constant over the year 2017, languishing around 4 mbpd levels. The oil demand of the country is likely to grow as the recovery from the recent structural reforms gathers pace but crude oil price increase could be a dampener. While OECD oil demand/consumption is expected to be more or less on the same levels as that of previous year, China & Asia’s demand is expected to grow at a good pace.

US domestic crude output is likely to increase by about 1 mbpd, a rise of strong 11.36% over the year. For US, the surging oil prices, combined with supply problems of its neighbouring producers Venezuela, will motivate it to keep its production at high levels. Meanwhile, OPEC countries & Russia-led OECD members have extended the production cuts till 2018 year-end. Both these phenomena combined should increase the exports from US, which would boost the tonne-mile demand. There were deliveries of 26.3 million dwt of Crude oil tanker tonnage and 10.2 million dwt of Products tanker tonnage in 2017. Further down the line, the expected deliveries of Crude oil tankers are 19.8 million dwt and 19.2 million dwt in 2018 and 2019 respectively. For Product tankers, the respective figures are 8.0 million dwt and 6.6 million dwt each. New building prices for tankers went further down in 2017, falling by about 7%, due to falling markets sending negative sentiments thereby hampering ordering activity. In tonne-mile terms, the crude oil trade increased by 5.67% in 2017 as compared to the previous year, while products trade decreased by 1.16% in the same period.

The lack of demand for VLCCs in the AG & Latin America regions is bound to worsen the freight rates. Also, higher crude prices & consequent inventory drawdown by refiners is likely to have adverse effect on freight rates on both crude & product freight markets. The average spot rate of TD3 route of AG/East for VLCC was US$ 22,600/day in 2017. The future market in this segment seems to be very volatile, with rates in the range of US$ 14,500-24,500/day, hugely impacted by the oversupply of vessels & decline in cargoes. One Year tC rate for VLCC was about US$ 27,200/day in 2017, with some fixtures done at higher levels during the latter part of the year. The Suezmax rate on West Africa -North West Europe (TD20) route was about US$ 12,100/day in 2017 which is expected to significantly decrease by about 33.98% year over year. For Aframax, the spot rate on AG/Far East route (TD8) was US$7,000/day. These freight levels are very low and they are forecasted to remain low as there is still no upside on the horizon over the next 2 years. For Product tankers, LR1 Spot rate on AG/East was US$ 8,600/day in 2017 and expected to exhibit depressed levels in 2018 & 2019. One year TC rate for LR1 was US$ 11,700/day, which is almost on par or slightly lesser than operating costs. In MR tankers, on US Gulf/NWE route the spot rate was as low as US$ 2,800/day in 2017. One Year TC rate for MR tankers was US$ 12,400/day in 2017 and is expected to be around US$ 12,600/day over the next year.

Your company has five VLCCs & all were operational during the year 2017-18. They were mainly employed on a mix of Time charter with Indian Oil Corporation & Voyage Charters with Indian as well as foreign charterers. The time charters earned reasonable returns, while spot trades faced the wrath of markets due to highly depressed markets. Your Suezmax tankers were mainly deployed with the Indian oil industry and performed COA voyages under HPCL & BPCL COAs, except occasionally performing spot voyages for Indian and foreign charterers. Older Suezmax vessels however, had lesser employment days due to performance issues & problems in port acceptances. The COA earnings are based on AFRA & TD8, which has been moderate to low. The time charter rates compare well with market benchmarks.

Five LR-I tankers of the Swarna series were employed on Indian coast, catering to coastal crude movement of the Indian oil industry. They also had a few other kinds of employment such as lighterage operations, FPSO loadings etc. Their earnings compare well with market levels. Another LR-I tanker MT Swarna Kaveri was used as a CPP tanker for Product cargoes, mainly in the AG to Indian coast & Far East regions, with market equivalent freight levels achieved.

Your product tankers in the Swarajya Series were well employed with Indian charterers on time charter & sporadic voyage charters and their earnings are in line with market averages.

The three MR product tankers in the Swarna series were gainfully employed with Indian as well as Foreign charterers and their earnings are comparable with the market. MT Swarna Mala was deployed with foreign charterers for long periods during the financial year. MT Swarna Kalash was deployed along Indian coast, employed in a mix of time & voyage charters in coastal product movements. Meanwhile, MT Swarna Pushp was employed with a pool in the 1st half of year & was brought to Indian coast to participate in the Indian coastal movements of clean products.

The two LR-II tankers MT Swarna Jayanti and MT Swarna Kamal were employed with foreign charterers in a mix of pools & voyage charters. Their returns were stable and in line with available markets.

Earnings of your coiled Aframax tankers were in line with markets, along with the average of benchmark yields under AFRA / TD8 (Arabian Gulf to Singapore) and TD14 (Indo-Australia) routes on the back of COA voyages under TD8 pricing formula and triangulation spot voyages due to intermittent fuel oil arbitrage trades which minimized ballast voyages. The Aframaxes mainly performed India centric / Far East / Red Sea voyages.

i) Opportunities

Tanker trade is currently undergoing a paradigm shift. OPEC’s decision to continue the production cuts till end of 2018, upcoming big increases in the refinery capacities of Middle East and Asia, US decision to re-impose sanctions on Iran and rise in US exports due to increased oil prices are some of the major factors which will have adverse impact on tanker markets. The ship-owners who position the ships in prospective basins will stand to reap benefits of positional advantage.

The looming era of low crude oil demand growth presents a challenge as well as an opportunity. The tonnage demand is forecasted to be low for large crude oil tankers, however the bulging capacity rises in the Middle East & Asian refinery capacities may present demand spike for product tanker tonnage. Since, Asia & especially China are growth drivers for the product oil demand, trade routes of MEG-SEA, AG-Far East may get lot of employment, especially for Clean MR & LR-I tankers.

In Indian context, the country’s economy has recovered from the last few sluggish quarters and recorded higher growth in the fourth quarter 2017-18.The increased tax collection owing to structural reforms & tax system overhaul (GST) is also expected to increase government spending. On similar lines, policies implemented by the government to encourage the manufacturing industry under ‘Make In India’ will generate significant demand. India’s crude oil imports hovered to reasonable levels around 4.3 million barrels per day in the January -October 2017 period. Post October the imports spiked to almost 4.6 mbpd & are likely to increase further in 2018. Indian tanker tonnage will have opportunities to grab such import cargoes though at prevailing subdued market rates.

The US crude oil imports are set to remain low, and the Asian demand for the same is expected to increase, banking on strong GDP performances by the corresponding economies & rising refinery throughputs. Net global crude trade flow is expected to shift eastwards, with Asian appetite being the key driver.

With its diversified tanker fleet & especially a modern clean tanker fleet, your company’s vessels stand to secure employment and the company is well-equipped to withstand contingent market pressures.

ii) Risks and Concerns

The growth in global oil trade is expected to be slow in the coming years. The global oil trade (both crude & products) is expected to grow by a meagre 1.89% in the year 2018. This is set to hurt the tanker demand in already depressed markets. Although the crude tanker fleet is expected to grow moderately by 2.76% in 2018, there is still a lot of supply overhang & this combined with low demand growth, may hold the overcapacity situation in the markets & reduce freight levels.

In products trade, the impact of increasing oil prices globally may deter buyers & thereby restrict free movements of product cargoes. The other impact of increased oil prices is the falling inventory levels & deterrence to building inventory levels. This may pose challenges to the product tanker demand. China has added additional refinery capacity, which is set to effect the product trade in the region. Apart from this there are no major factors directly affecting the demand but unfortunately the supply overhang persists in the product segment also. Thus freight markets are expected to soften over the course of next years. Prolonged depressed earning may be a cause of concern.

b) Dry Bulk

The benchmark Baltic Dry Index (BDI) rose to an average of 1204 in 2017-18 against an average of 820 in 2016-17 registering a staggering 46.83% increase, reaching its highest average monthly value in December 2017.

When compared to 2017, dry bulk trade is set to exhibit a trade growth of 2.28% in 2018, with tonne-mile demand growing by an estimated 3.27%. The dry bulk global trade is expected to grow on an average of 2 - 2.10% for subsequent 3 years.

Dry bulk markets are exhibiting optimistic signs. The steady improvement in tonnage demand growth is accompanied by gradual contraction in supply. The dry bulk freight rates have shown promising increases year-on-year in 2017 when compared with the rates in 2016. The dry bulk commodity trade is expected to grow handsomely for the next 5 years. China’s demand for high-grade iron ore & bauxite is set to increase in the coming year. Since indigenously produced iron in China is not of sufficiently high grade, the country’s imports of iron are set to rise, giving boost to tonne-mile demand in the region. The probability of demolitions of some older tonnage on account of looming IMO’s Ballast Water Management System & revised Sox emission guidelines, may further improve the demand-supply balance, lending a supporting hand to the rates.

The dry bulk fleet grew by 4.75% in the year 2017. However, considering the fleet shrinkage during 2016, the controlled fleet supply bodes well for the dry bulk market as the oversupply situation is likely to diffuse. The dry bulk market has been underperforming every year for the past several years. Naturally this has put a strain on new building orders over the years & resultantly the fleet growth has been low to moderate at best.

The total dry bulk cargo demand is expected to be on growing track for the next few years. The dry bulk seaborne trade is expected to grow by 2.28% in 2018, while the tonne-mile demand is expected to register a growth of 3.36%.

India’s iron ore exports rebounded to 32.8 mmt in 2017 as compared to 21.4 mmt exported in 2016. Global seaborne iron ore trade continues to show a healthy growth of 2.77% (forecasted) in 2018. With regard to Thermal Coal, India’s imports are predicted to remain constant, from the levels of 147.5 million tons in 2017 to a forecast of around 145.3 million tons for 2018.

India’s urea imports rose by 9.01% to 5.97 million tons last fiscal on the basis of revived demand. The country, which is among the world’s top three consumers of urea, produces about 22 million tons urea as against the annual domestic demand of 30 MMT. India imported 5.97 million mt of urea in fiscal 2017-2018. Out of this, 2.51 million mt came from Oman and 2.034 million mt came from Iran. Urea movements into India, which is a key cargo for dry bulk vessels and is part of minor dry bulk commodities, has for the last few years been a “supporting trade” for bulkers ranging from Handysize to Panamax.

Grain trade provided a positive boost to dry segment during the FY 17-18. Seaborne trade (imports) of major grains grew by 4.59% in the year 2017, with major exporters being USA, Australia, Canada, Argentina & European Union. On demand side, encouraging trends are there such as growing population, increasing demand from Asian & African countries & overall global economy performing well.

Global steel production is projected to increase by 1.59% in 2018 with increased production from China, India & other countries. The causes of this growth in steel production are overall increase in industrial activity, rise in Global GDP & rise in steel-intensive sectors such as construction & automobiles. India’s steel production is expected to grow at the fastest rate among major steel producers. This is likely because of increased economic activity due to a recovering economy & increased government spending on infrastructure.

So far, in this year 2018, 22 dry bulk ships are sold for demolition as against 218 dry bulkers for the last entire year. 67 Supramax bulkers were scrapped in 2017. Such high scrapping numbers is an encouraging sign for future dry bulk market.

In the year 2018, One-year Time Charter rate of Handymax is projected to be US$ 12,800/- pdpr, whereas for Supramaxes the same is US$ 14,000/- pdpr. In the Panamax segment, the one-year TC rate in 2018 is forecasted to be US$ 15,000/- pdpr. In the upcoming years, the freight rate estimates exhibit an upward trend, with market forecasts showing handsome increases year-on-year.

The company’s dry bulk fleet now comprises of one Handymax, eight modern Supramax vessels of around 57,000 dwt each & seven modern Panamax / Kamsarmax dry carriers of around 80-82,000 dwt as on 31st March, 2018.The bulk carriers fleet is very young with an average age of about 6.9 years. The earnings of our dry bulk fleet were in line with markets. Our dry bulk carriers were also employed on Indian coast with a few coastal time charters & voyage charters, whose earnings compare well with markets. In order to maintain a healthy cash flow your company preferred fixing the bulk carriers on trip time charter and short-to-medium term time charters.

i)    Opportunities

Dry bulk market is looking optimistic at least in the near future. Drewry has revised its estimates upwards, which is clearly an indication of an upward trend. China has been a major driver for the dry bulk trade and the rising Chinese demand for iron ore & bauxite presents a good opportunity for dry bulk tonnage. The high-grade iron ore required by China & other rising Asian powers will be procured majorly from Brazil & Australia. This trade will give a good boost to tonne-mile demand & smart positioning of vessels will be key in tapping these routes. India’s coal import trade is gradually shifting the focus from Indonesia to South Africa & Australia. This is a welcome development for our dry bulk ships, hauling a good share of import coal cargoes for India. The coking coal markets seem pretty favourable for the trade, since shipping costs for the trade have declined & coking coal prices have endured quite a hit. India’s prime source of coking coal is Australia, and hence this route may see handsome dividends.

India has launched many schemes such as ‘Saubhagya Yojna’, which plan to electrify all the Indian households. Such ambitious plans for domestic electricity, along with focus on creation Industrial infrastructure, is expected to generate a significant demand for electricity. Government has also proposed other projects like ‘Bharatmala’ which plan to create a unprecedented road network in India by constructing roads spanning thousands of kilometers. The coal, steel & cement needed to implement these schemes will see a high demand growth. This elevated demand will contribute to increased demand for dry bulk tonnage, both for coastal movements as well as for imports.

Shrinking fleet profiles due to a high number of scrapings/demolitions (on account of various reasons like - reduced profitability, lack of sustaining capacity, costly overhauls required to comply to IMO regulations etc.) may create tonnage vacuums across the markets & dry bulkers in respective trades may take advantage of the same.

ii)    Risks & Concerns

Advent of renewable energy-centric policies & use of renewable energy sources as a means of mass-scale production poses a significant threat to the dry bulk trade. Many countries are shifting focus from traditional sources of energy to renewable sources & are actively taking strategic initiatives for the same. This will not only reduce the demand for shipping of traditional sources of energy like coal & oil, but bring their prices down which will make shipping costs unviable.

Domestic factors such as ban on iron ore mining in Goa / Karnataka, lengthy legal process involved in clearing the procedures to re-start the mines, high export duty on iron ore in India will continue to negatively affect the growth of dry bulk demand on India’s export centric dry bulk trades.

In parallel, the traditional coal trade is also showing signs of nervousness. Both India & China, the top importers of coal worldwide, are introducing policies to reduce the dependence on imported coal. Although China’s coal imports are forecasted to remain high in 2018 since the country is putting a stop to its unproductive coal mines & will prefer to import the coal instead, the medium term and long term future of the thermal coal trade is not very encouraging. Along with many other countries globally, India is also shifting focus towards renewable energy. Indian government has publicly stated its plan on cutting dependency on coal. As such the long term future of traditional thermal coal shipping appears bleak.

Grain and fertilizer trades are seasonal and could be relatively short term in nature with uncertain parcel sizes which require timely positioning of tonnage to exploit the trade.

SCI’s presence in Panamaxes is catering to transportation of three major commodities such as Iron ore, coal and grain, which are prone to be affected by economy slowdowns. View slowdown in these major trades globally the earnings of Panamaxes may suffer.

The absence of long-standing COAs & similar assured business opportunities stand to make your company’s dry bulk trade volatile & open for adverse impacts by the market forces. One more aspect that may turn charter rates volatile is sluggishness by the other owners in the scrapping/demolitions of the vessels, on account of temporary spikes in rates, leading to recurrence of overcapacity situation in the market. The macro economic factors such as interest rate volatility, subsidies on petroleum products, volatile rupee value vis-a-vis the dollar and inflation continue to plague the national demand. Shipping being a derived demand will be negatively affected by these factors.

c) LNG Transportation

The global demand for gas is expected to grow at an average of 2 percent per year until 2035, which would make gas the fastest-growing source of energy over the period. The surge in demand will be driven by environmental measures in China, South Korea & India, rising power generation in Southeast Asia and reduction in the domestic production in Europe.

India plans to double the share of natural gas in its energy mix from 6.5% now to 15% by 2025, but this will require construction of LNG receiving terminals for increased imports. India presently imports around 20 mtpa through 4 LNG receiving terminals, but within a decade there are plans to build another 11 terminals to raise India’s LNG import capacity to more than 70 mtpa. New terminals are planned at Mangalore, Mundra, Pipapav, Ennore, Haldia and capacity additions at Hazira and Dahej. The Government is intent upon reducing carbon emissions and is encouraging Indian railway companies, LNG importers to look at fuelling trains by LNG instead of diesel. India also wants to become a hub for supplying ships that run on LNG, with plans to build more facilities like the LNG fuelling station at Kochi port.

With LNG being encouraged as green fuel for future, the LNG market has been seeing a steady growth over the years. Owing to the high demand and potential for LNG, the LNG shipyards enjoyed increased order books. However with the LNG production not increasing in line with demand, a situation of over-supply of the LNG vessels was witnessed, leading to lower charter hire rates. The global LNG fleet as on

March 2018 consists of 522 ships. With increased competition and ever changing market dynamics in the LNG segment, there is a shift in the charter trends to short term contracts. The high capital investment involved in the construction of the loading and discharge terminals on land, is leading the LNG market players to simultaneously look at alternate options such as Floating Storage Regasification Units (FSRUs), Small LNG carriers for coastal lNg shipping, Floating Liquefied Natural Gas (FLNG) carriers etc.

Your company jointly owns and operates 3 LNG carriers under long term charters with charterers Petronet LNG Limited, India for transportation of LNG predominantly from Qatar. The 4th LNG carrier is under long term charter to Exxon Mobil LNG Services B.V, Netherlands. In order to ensure its presence in the new areas of the LNG market, your company is exploring opportunities for participation by ownership and in operations of FSRU, small LNG carriers and coastal LNG shipping.

SCI and GAIL had signed a Memorandum of Understanding for cooperation in transportation of 5.8 MMTPA LNG sourced by GAIL from U.S. terminals. In line with the objectives under the MOU, SCI has been awarded two contracts, one for assisting GAIL in In-Chartering of LNG ships and the other for Post-fixture Management services to GAIL for their In-chartered vessels which will be carrying LNG from USA to India. The initial contract is for a period of three years effective from 2018. This collaboration between GAIL and SCI aims to augment the natural gas supply through LNG imports.

Your company has built up a pool of trained LNG officers and the experience of independent technical operation of LNG tankers has helped to provide ship management services. Your company is jointly working with one of its Japanese partners, and will start training its LNG officers on construction and operations of FSRU from 2018.

d)    RGPPL Terminal Management

Your company has successfully performed the Port and Marine Services Contract at the RGPPL Dabhol Terminal for further 3 years i.e. 2015 - 2018. The SCI team successfully handled 53 LNG tanker calls at the Dabhol LNG receiving terminal and the total imported LNG under the contract stands at 7.36 million cbm. The contract is due for renewal and expected to be awarded to SCI.

e)    LPG Carriers

Given the continued demand for LPG, your company has acquired second hand VLGC named Nandadevi in September 2017 to ensure SCI's continued presence in the LPG segment. Your company is in the process of phasing out the other two older and smaller LPG carriers and replacing them with larger capacity vessels.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance of the tanker segment has been largely influenced by low earnings on the VLCC, Suezmax and Aframax segments where SCI has had a mix of cross trade charters, market linked Contract of Affreightments and Time charter businesses to effectively hedge employment and earnings risks. On the smaller segment product carriers and LR I dirty carriers; the employment was mainly to meet the domestic product and indigenous crude movements on long term contracts and time charter business. The mix of employment types and geographical concentration in niche coastal business segments has ensured returns in line with market trends. However, with globally weak tanker markets, there was strong competition in product trades which hampered their earnings to some extent. Internationally, the sharp fall in market fortunes across all segments resulted in very low freight rates, due to which the tankers segment gave a very subdued performance. The dry bulk segment is still recovering from historically bad period and loss of key cargoes such as Iron ore from India resulting in non-profitable ballast voyage legs thereby reducing earnings. Although some relief was offered by coal cargoes & minor bulks, earnings remained subdued and below the breakeven levels due to low freight markets. Few profitable trades emerged during the year where dry bulk charter rates went into profitable levels, but this bliss was short-lived & the markets stabilized to their normal levels. In the early parts of 2018, continuous flow of coals & iron ore cargoes from Indian companies helped to assure reasonable alternate employment options.

2 LINER & PASSENGER SERVICES A Industry Structure & Developments

i) World Scenario

The liner shipping industry is encountering myriad of major issues including burgeoning overcapacity, influx of mega ships and its cascading effect, infrastructure insufficiency, competing modes of transport, cost inflationary regulations, reluctance of investors & financiers and many more. Such factors have given rise to an unprecedented imbalance between supply and demand in the industry. On the other hand, certain key developments viz. consolidation, mergers & acquisitions, shipping alliances, accelerated ship demolition, and technological developments viz. smart / eco ships etc. are at play to restore the balance in the marketplace in the coming years.

The maritime world witnessed an eventful 2016 and proved to be the most challenging period of a six-year long slump the liner shipping industry has fallen into. Liner freight rates dipped to historical lows in 1st Half of 2016 and liner operating losses piled up by year end. Last year saw a spate of consolidation in the industry, as several carriers sought safety in numbers. The year was full of surprises, which saw the collapse of giants like Hanjin Shipping in the liner industry, to unprecedented consolidation among other operators led by the merger of NYK, MOL& K Line to ONE, Hapag-Lloyd and UASC, COSCO Shipping and OOCL to name a few. Along expected lines, the formidable amount of overcapacity that was built up not only deteriorated the marketplace completely, but also led an unprecedented number of vessels being sent to the ship breaking yards. The slowdown of global economic growth also worsened the conditions for liner shipping, weakening the revenue streams & capacity utilisation and eventually leading the global liner industry incurring a collective loss of US$ 3billion.

The year 2017 began with a slow recovery in the markets bringing some improvement to freight rates in the main trade lanes. Global container traffic grew by more than 5% in 2017. Container traffic in North America and Europe grew by 3% and 3.9% respectively in 2017. The tide is turning in Latin America, particularly in Brazil that was in doldrums until the third quarter of 2016. The positive demand global outlook had its impact on the box traffic in India. However, trends indicate that the road to the heights of prosperity in liner business is a long and bumpy one with geopolitical tensions and trade protectionism remaining the biggest threat for economic and, particularly, for trade growth. Bilateral trade disputes and national frictions can easily proliferate and exert a global impact given today’s interconnectivity of the world economy, thus derailing the global economic recovery.

Indian Scenario

As per Indian container market trends over the last few years, installed capacities and handled volumes have been growing proportionately showing a positive sign for the industry apart from achieving best capacity utilization levels. Govt. of India has announced a massive investment in India’s ports and roads sector, which is likely to help boost the country’s economy. The Indian Government plans to develop 10 coastal economic regions as part of plans to revive the country’s Sagarmala (string of ports) project. The zones would be converted into manufacturing hubs, supported by port modernization projects, and could span 300-500 km of the coastline. The government is also looking to develop the inland waterway sector as an alternative to road and rail routes to transport goods to the nation’s ports and hopes to attract private investment in the sector. This is expected to boost the coastal shipping and SCI is an active partner in the above projects of GOI. Strength & Weaknesses

The vast experience in the Liner trade, accumulated over last several decades, is the foremost and most formidable force which instils confidence in the cargo interests / owners who lend their invaluable support to SCI. The customer friendly approach at all the levels and SCI’s customized services puts SCI ahead in the league. The wide network of the agents all across the world, provides and facilitates for localized contacts in markets to offer customized logistics solutions. Operating partnerships have been forged with internationally recognized container carriers in select consortia, to enhance coverage and frequency on the major trading routes. SCI is a licensed MTO in India and also has International Freight Forwarding License. Break-bulk operations are largely profitable and passenger services provided by SCI provide stable source of revenue, not to mention the vital link that supports the islander’s to the mainland. Efforts are on to expand the India-centric focus to garner the benefits of economies of scale.

iv) Opportunities & Threats

The liner market is poised to witness significant improvement in operating profitability in the future despite the continuous influx of mega-ship new-buildings, underpinned by market sentiments of a reviving global economy and upbeat economic forecasts. New operating alliances are expected to contribute by allowing global carriers to further synergize network efficiencies and vessel deployment optimization bringing about higher savings. Improving economic conditions in the US and Europe is expected to boost market fundamentals and support carriers in their effort to restore freight rates. An improvement in liner operating profitability is also expected to act as a catalyst for higher charter vessel demand and higher charter rates. Despite improving market fundamentals, the industry has to overcome challenges in the year ahead due to increase of mega-ship deliveries before the capacity growth moderates in 2017. The break bulk sector continues to maintain good potential in respect of ocean freight arrangements of General cargoes, Over-Dimensional Cargoes (ODC), Project cargoes, Heavy Lift cargoes etc. on account of the Government Departments / PSUs and other GOI organizations.

B Segment-Wise Performance

1 Liner Vessels: The table below shows the profile of your Company’s owned liner fleet having total container carrying capacity of 14,407 TEU.

Type of Ships	As on 31.03.2017		Addition		Scra	pping	As on 31.03.2018
Â	No.	Dwt (MT)	No.	Dwt.	No.	Dwt.	No.	Dwt (MT)
Fully Cellular	5	202,413	-	-	2	57,913	3	144,500

Average age of three owned Container vessels is approx. 15 years (one vessel aged about 25 years and two 10 years). As on 31.03.2018, an in-chartered container vessel having total Net Tonnage of 55,203 MT was operated by your Company. In addition to the above owned and in-chartered vessel, your Company also has cargo loading rights on 27 vessels of its partners in various consortia arrangements that your Company has with leading shipping lines, such as Mediterranean Shipping Company (MSC), PIL of Singapore, K-Line of Japan, etc. to name a few. Your Company continued to deploy its owned / operated Container vessels in the following sectors.

2 Container Services

i) Himalaya Service (Erstwhile ISE Service)

The UK-C Cellular Container Service commenced in 1994 with SCI as a single operator operating three vessels with 1,800 TEU capacities, which was later upgraded to a fixed day weekly service operating with seven vessels of similar capacity. The service, from May 2009, is being operated in consortia comprising of two partners viz. SCI and MSC, with eight vessels of which two vessels have been contributed by SCI. Since end-Feb 2016, the consortia contribution has been changed to one SCI vessel. This strategic reduction has been done to improve profitability of the service. The service is operated on round voyage duration of 56 days.

ii)    IPAK Service

In a slot swap arrangement between SCI and MSC, SCI has been allotted 200 TEUs slots by MSC, which operates IPAK service in exchange for similar slots allotted to MSC on the ISE service.

iii)    India / Far East Cellular Service (INDFEX 1)

This service commenced in June, 2001. Presently, it is operated with 6 vessels, with 1 vessel each deployed by 6 partners viz. K-Line, PIL, Simatech, Wanhai, Cosco and SCI. The service is operated as a weekly direct service from India’s West Coast to Central China, Hong Kong, Singapore and Malaysia with round voyage duration of 42 days. The service also links North Chinese ports, Busan and Japan through feeder services via Shanghai on Indfex Service. The SCI has deployed m.v. SCI Chennai in this service. This service would end in June’2018 and m.v. SCI Chennai would be deployed in coastal (SMILE) service.

iv)    SCI Middle East India Liner Express (SMILE) Service & Pan India Service (PIX2):

SMILE and PIX 2 services seamlessly links up Persian Gulf with East Coast of India and West Coast of India, thereby, strengthening and expanding SCI’s presence in the Coastal Shipping Sector. The joint operation on this route will be a force multiplier for SCI which will provide a high quality of Coastal Services on fixed day fixed window basis with potential for even bigger expansion in Coastal and near Coastal trades with special emphasis on the East Coast of India ports. Two services viz. SMILE and PIX2 with their service rotations makes it feasible to connect pan-Indian ports with an improved transit time. SCI seeks to cooperate with other Indian Companies to work out the best transportation solutions for the trading community vis-a-vis commercially, economically viable and environmentally feasible options. SCI connected west coast of India to southern and eastern ports of India viz Katupalli / Krishnapatnam/Vizag/Haldia/Kolkata during 2016-17 and the Pan India service got stabilized during 2017-18, thus, promoting GOI initiative ‘Sagarmala’ and increased coastal shipping.

v)    Feeder Operations

SCI makes feeder arrangements with ‘Common Carriers’ between various destinations on the Indian subcontinent.

vi)    Slot swap arrangements:

SCI enters into slot swap arrangements with service providers depending upon trade requirements.

vii)    Break-Bulk Services

SCI arranges carriage of break-bulk cargoes on space charter basis from various regions across the globe including USA, Europe and Far East for imports on account of the Government Departments / PSUs and other GOI organisations, which includes Shipments of Over-Dimensional Cargoes (ODC)/Project cargoes / Heavy Lift cargoes/ IMO Class I Cargoes etc. and also containers.

viii)    Coastal Operations

Domestic Passenger-Cum-Cargo Service: In addition to International operations, SCI with its one owned Passenger-cum-Cargo vessel and eleven (11) managed vessels operates domestic passenger and cargo transportation services between the Mainland and the Andaman & Nicobar (A&N) group of islands and inter-islands, on behalf of the Government of India. Also, 17 numbers of Foreshore passenger vessels of A&N Administration are technically managed by SCI. Informatively, SCI’s owned Passenger cum cargo vessel viz. m.v. Harshavardhana was sold for scrapping on 28.03.2018.

ix)    Other Coastal Services

SCI also manages Oceanographic & Coastal Research vessels on behalf of Government Agencies/ Departments viz. three vessels owned by Geological Survey of India, under Ministry of Mines and one vessel of National Centre for Antarctic & Ocean Research, one vessel of Centre of Marine Living Resources and Ecology and three vessels of National Institute of Ocean Technology under Ministry of Earth Sciences.

3 Manned & Managed Vessels

The following table shows the profile of the Passenger-cum-Cargo vessels and other vessels managed by your Company on behalf of the various Governmental Organizations/Departments:

Type of Ships	As on 31.03.2017			Additions Nos.	Scrap/ Redelivered (Nos.)	As on 31.03.201		8
	Nos.	Pax. Cap.	Cargo Cap. (MT)			Nos.	Pax. Cap.	Cargo Cap. (MT)
Pax-Cum-Cargo Ships	11	7,066	6,200	0	1	10	6,317	5,200
Cargo barge	1	Â	500	0	0	1	Â	500
Other vessels	17 Foreshore & 8 Research	1,599	100	0	0	17 Foreshore & 8 Research	1,599	100
Total	37	8,665	6,800	0	0	36	7,916	5,800

The pattern of deployment of these vessels is as follows:

- Four vessels for carrying Passengers and cargo between the Mainland and Andaman and Nicobar Islands. - Six vessels and One Cargo ship for Inter-Islands run (A&N Islands).

- Seventeen vessels for Fore Shore Sector run (A&N Islands).

- Eight Research vessels of GSI, NCAOR, NIOT, CLMRE carrying out scientific expedition in the Indian Coast.

C Marketing

SCI’s marketing team continues to make regular customer calls through its own offices and also through agents appointed at various ports in India and abroad in order to market its container and break-bulk services. Meetings with the agents are held periodically, and SCI representatives also participate in various trade meets at important locations in India. Your Company has obtained Freight Forwarding and Multimodal Transport Operator (MTO) licenses and continues to use its vast experience and large agency network to render 3PL (Third Party Logistics) services to the customers. This helps your Company to retain the clients while generating additional revenue.

D Outlook

Under the new Foreign Trade Policy (2015 - 2020), India aims to increase its share in the global trade to 3.5% by 2020. Incentives to agricultural exports and extension of the same under Merchandise Exports from India Scheme to units in SEZ are part of the new FTP! This is aimed to integrate with Make in India and Digital India initiatives. Multiple infrastructure projects, eyeing to improve India’s logistics efficiency and hinterland connectivity, will boost the country’s box trade in the coming years. Some of the key projects that will be a game changer when fully operational is (A) Multi-modal terminal under Jal Marg Vikas project: The 170 crore multi-modal terminal at Varanasi, under the Jal Marg Vikas project that will open before December 2018, will be a major logistics hub connecting North India to North East India. The government will also develop 35 multi-modal logistics parks for freight aggregation and distribution, multi-modal transportation and warehousing. (B) Port based multi-product SEZ at JNPT, first of its kind, a port-based SEZ at JNPT will be developed with Free Trade Warehousing Zone, Engineering Goods sector, Electronics & Hardware sector and Pharma sector. (C) Dedicated Freight Corridor (DFC), DFC will provide logistics support for the Make in India initiative. Two of the three DFCs are scheduled to be operational in the next three years. DFC will reduce the inland transit time significantly. (D) Sagarmala programme, The Indian government is implementing the Sagarmala programme in phases, spanning over 20 years from 2015-2035. Four hundred and fifteen projects have been identified for port modernisation, new port development, port connectivity enhancement and port linked industrialisation. Six new port locations have also been identified for proposed transhipment hubs in the south. The government has approved Rs. 27,000 crore port project at Enayam.

E.    Risks & Concerns

There are several trends that may affect transport costs in the coming years. First of all, ship size growth trend that has targeted economies of scale in sea, has practically raised diseconomy in ports. This trend has caused essential need for capacity enhancement in ports, which unfortunately cannot keep pace with the developments of shipping in terms of time. This usually ends with chronic shortage of port capacity in the short term and added costs both in the short and long run. In container shipping, which is the more competitive part of the industry, this trend also exacerbates the need for hub and spoke networks, which involve addition of transhipment costs (and costs of delay in delivery of goods) to overall transport costs in supply chains of regional hinterlands. Some shipping lines are also inclined to adopt monopolistic behaviour in markets, which can increase dissatisfaction and resistance of stakeholders in supply chains i.e. government, consumers, tax payers, manufacturers, etc. and motivate them to react to such measures and arrangements which contribute to higher transport prices or more concentration in the industry.

The rise of the protectionism in US, UK and some other developed countries is a matter of grave concern that can affect trade and investment throughout the world. A vast series of disrupting consequences can be perceived in this context that can include re-shoring or near-shoring of industries, significant changes in the trade balance of countries, rescinding of trade treaties, disrupting military conflicts, wars, etc. While the world is still recovering from the global financial credit crisis, the nations as well as international businesses are encountering an increasing number of financial risks. Among the crucial financial concerns, we can point to the financial challenges of Greece as the leading ship owner state in the world. Insolvency of Hanjin shipping in 2016 was an instance of the possible ground breaking financial shocks in the industry and their acute consequences in the global supply chains. There are multitudes of micro-economic level financial risks and concerns that can afflict the industry in the coming years.

F.    Discussion on Financial Performance With Respect To Operational Performance

Your Company’s liner segment registered a profit of Rs. 79.66 crores in FY 2017-18 as against loss of Rs 95.54 crores in 2016-17. The Operating Income increased from Rs. 445.90 crores in 2016-17 to Rs. 676.38 crores in 2017-18 due to better volumes and better freight levels. Further, your Company was able to reduce losses by adopting various cost saving measures accruing to the liner services viz. considerable saving on feeder and transhipment costs by reducing carrying cargoes to non-base ports, better inventory management, control on repair costs of vessels and containers. Our on time schedule reliability on our services, particularly in Europe sector continues to be very good and comparable or better than the global players.

G.    Measures Taken By Us to Improve Our Services & Operations

Liner Division is ensuring General Rate Increases are being strictly implemented keeping in mind the market sentiments and demand-supply gap. Performance of each Container Service is being reviewed monthly from the point of view of profitability. Ultra slow steaming planned / achieved on the container ships. Fuel additives are also being used to save on fuel consumption. Liner division is also looking out for further expanding on the Coastal, Feeder Services and Services to the Indian Sub-continent and the adjacent areas in the Indian Ocean countries. SCI’s strategy has been to use all our Indian Flag ships on these routes when Indian Flag commands a premium and to use Foreign Flag vessels on the other routes. The big game plan is to run seamless services between Persian Gulf and Iran to East Coast India - Bangladesh with several port calls in West Coast Indian ports by forming a consortium of Indian operators. Foreign companies dominate in Indian Subcontinent feeder routes and provide seamless connections. By mutual cooperation with the other Indian Companies through slot exchange, it is envisaged that feeding freight would be retained within the country, which would also help in minimizing the working capital requirements for the Division. Further, ports like Kandla and newly emerging container ports in East Coast of India like Kattupalli, Krishnapatnam and Vizag are offering substantial discounts on transhipment costs and storage charges, and by using these ports optimally, substantial system costs reductions are being achieved. The Division is in advance state of negotiations for starting multipurpose services on Indian Coast using heavy lift geared and ramped ships. Our focus is to maintain right sized leased equipment inventory to optimum levels to make services sustainable and undertaking firm negotiations with leasing companies and vendors for achieving desired results. Aging inventory is being replaced by the younger fleet at better terms. We are identifying niche sectors to commence new services, like, feasibility study has been done for intended services viz. Ex-India / Maldives, Ex-India / Myanmar / Bangladesh / Thailand, extending Coastal Services to include Iranian port(s) viz. Chabahar & Bandar Abbas. Other feasibility studies have been conducted for services like Ex-India / East African ports. Liner division has slowed down on new acquisitions for now with ISE / Himalaya Service and is continuing to operate with one in-chartered vessel of about 8,500 TEU capacity. No CAPEX expansion planned this year so far. But option are kept on and Division is scouting for second hand vessel(s) if it fits commercial requirements. Engagement with landside Logistics PSU firms viz. CONCOR, Balmer Lawrie, CWC etc. for offering seamless multi-modal services between Inland locations and ports on the Indian Coasts as well as overseas ports. We have also undertaken feasibility study for setting up owned or jointly operated CFS / ICDs for various viable routes and also freight forwarding operations.

H.    Important Developments

a)    Induction of higher capacity vessel (m.v. SCI Chennai) in SMILE Service, thereby, increasing the slot allocation & revenue realization.

b)    Induction of higher capacity vessel in ISE service to meet trade requirements.

I.    Awards and Accolades

1)    Mrs. Sangeeta Sharma, Director (Liner & Passenger Services) is the winner of India Maritime Awards of “Woman Professional in Shipping & Logistics” for her outstanding contribution in the shipping business. She was conferred with the prestigious trophy in an award ceremony held on 22^nd June 2018 in Mumbai.

2)    The Shipping Corporation of India Ltd. has been awarded with the Certificate as the Runner-Up for the "Best Shipping Line of the Year -Break bulk / Heavy Lift Operator".

J. Material changes and commitments, if any, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statement relates and date of report: None

3 TECHNICAL & OFFSHORE SERVICES

A) TECHNICAL SERVICES ACTIVITIES

i)    World scenario

The offshore support vessels industry is dependent on utilization of rigs, E&P activities and other activities in oil fields, which in turn depends upon strategic decisions of energy security by oil and gas producers, shifts in Government policies and long term crude oil price trends.

Till mid of FY 2017-18, in last four years the oil price were falling. However, since winter of 2017, the oil prices are showing some recovery and by end of FY 2017-18 average OPEC basket crude oil is improving. The positive is that at the end of 17-18, crude prices moved beyond US$70 and is showing further signs of strengthening. Some new E&P activities across the globe are expected to take place during FY 201819. During 2017-18, with low crude oil prices, oversupply of offshore assets across globe, less number of offshore E&P activities and hence the lower charter / freight rates for offshore vessels, the utilization of offshore assets globally was below 60% range throughout the year.

ii)    Outlook:

The lower charter hire rate for the vessels has resulted in fall in selling price of the assets and many asset owners filed bankruptcy during the year. Many assets exchanged ownership, with purchase of second-hand ships at lower price and considering competition of already oversupplied market, the freight rates for offshore assets are expected to remain under pressure. However, with improvement in crude prices during Q4 of FY 2017-18, the E&P activities are expected to rise and hence the requirement of offshore assets. Experts believe that the crude

oil price is expected to breach US$ 80.00 per barrel mark in near future. Considering self-sufficient policy by Governments of most of the developed and developing countries for the requirement of energy resources, the E&P activities throughout the world are expected to show upward trend soon and hence the requirement of offshore assets are expected to rise.

iii)    Indian scenario

Historically, India’s domestic production of oil and gas has fallen short of its burgeoning energy requirements, compelling our country to rely on imports. In view of stable crude oil prices, there has been increase in import of crude and private players are avoiding any new exploration and discovery activities. Though, there is an increase in consumption of crude by the country over the years, the requirement is majorly fulfilled by import of crude / petroleum products. In terms of quantity, the Crude oil imports in India was 213 million tonne (MT) in FY 2016

17 and same is pegged at 219 million tonne (MMT) for FY 2017-18. The oil import bill for FY 2016-17 was at US$ 70.196 billion, which is expected to be at US$ 87.7 billion for FY 2017-18, which is an increase of about 25%. The outcome of ONGC and other E&P operators tender shows that the expected per day rates for offshore assets were at bottom during the first quarter of FY 2017-18. However, by the end of FY 2017-18, the rates are firming up and freight market is showing some upward movement. During last quarter of FY 2017-18, crude oil prices shot up by around 24% and same rise was reflected in freight rates as well.

iv) Outlook:

With upward movement of crude oil prices and the Government of India’s intervention on reduction of oil import bill, E&P activities on Indian coast is definitely expected to rise. And with increasing E&P activities, requirement of offshore assets would automatically see a surge in demand.

B OFFSHORE ACTIVITIES:

1    SCI owned Offshore vessels

In the previous year, your Company’s owned offshore fleet comprised of 10 vessels i.e. 03 nos. 80T Anchor Handling, Towing Supply Vessels (AHTSVs), 04 nos. 120T AHTSVs, 02 nos. Platform Supply Vessels (PSVs) and 01 no. Multi-Purpose Support Vessel (MPSV). During the year, your company acquired one resale Multi-Purpose Support Vessel (MPSV), “SCI Saraswati”, on 07.07.2017 of 3,616GT and 3,719 DWT. This vessel is successfully deployed on a distinguished long term charter with Defence Research & Development Organization (DRDO). During the year, one 120 T BP AHTSV viz. SCI Kundan continued to remain on long term charter with ONGC, while 3 nos. 120 T BP AHTSVs (Viz. SCI Pawan, SCI Ahimsa and SCI Urja) completed their contract during first half of the financial year. After completion of long term charter, these 3 nos. 120 T AHTSVs were operating in spot market /short-term charter. 2 nos. MPSVs (viz. SCI Sabarmati and SCI Saraswati) are on long term contract with DRDO. One 80 T AHTSV (SCI Ratna) of your company capsized on 21st November, 2017, due to ingress of water in the engine room. The incident took place 96 nautical miles off the coast of Mumbai and there was neither loss of life nor any oil spill in the vicinity. Further your company has already received the Insurance amount due in the matter. Remaining 2 nos. PSVs and 2 nos. 80T AHTSVs were predominantly operating in spot charter.

2    O&M of ONGC owned vessels

2.1    Mobile Offshore Drilling Units (MODU)

In view of the expertise of your Company in management of offshore vessels, ONGC has awarded long term contract for Marine Man Management services of their two MODUs viz. “Sagar Vijay” and “Sagar Bhushan” with effect from July 2016 and August 2016, respectively, for a period of 06 years.

The interim Document of Compliance (DOC) Audit for MODUs was completed successfully by the Directorate General of Shipping on 28.12.2016    without any NC or observation. This is a significant achievement in terms of MODU operations, which is completely different from other vessels and has proved Company’s expertise in the diversified field.

2.2    Newly acquired OSVs by ONGC

ONGC had placed orders for 12 new built OSVs at M/s Pipavav Defence and Offshore Engineering Company Ltd. Your company has successfully included seven ONGC owned vessels under its fleet of managed vessels, delivered from the shipyard, from 2013 onwards. Balance 5 vessels will also be handed over to SCI under O&M contract as per their respective construction & delivery schedule.

ONGC has already given Notification of Award to your Company to operate, man and manage all these 12 vessels under Operations & Maintenance (O&M) contract on cost plus remuneration basis valid till 31.03.2023, thus ensuring continued long term business for SCI.

2.3    Specialized vessels

Your Company has continued the Operation & Maintenance management (O&M) of ONGC’s 2 Multi Support Vessels (MSVs)(“Samudra Sevak” & “Samudra Prabha”) and one Geotechnical Vessel (GTV)(“Samudra Sarvekshak”) on nomination basis under ‘Cost plus’ arrangement. The existing contract for GTV is valid up to  31.03.2018, extension of which is in process and that of MSVs is valid till 31.03.2019.

Your Company has also continued the Operation & Maintenance management (O&M) of ONGC owned Well Stimulation Vessel (WSV) “Samudra Nidhi” on ‘cost plus basis’ since the vessel's delivery in year 1986. Your company has been awarded 6 years long term contract by ONGC for Samudra Nidhi, valid till 31.03.2023.

3    Emergency Towing Vessel (ETV) 2017

On request of Directorate General of Shipping (DGS), this year also your company provided one Emergency Towing Vessel (ETV), "SCI Panna", for emergency services in the monsoon period, on West Coast of India and East Coast of India, for a total of about 153 days, w.e.f. 01.07.2017    till 30.11.2017.

4    DRDO Project

The Defence Research & Development Organization (DRDO), Government of India (GOI), Ministry of Defence (MOD) had requested your company for hiring of three support vessels as a platform for ship-borne tracking stations for flight trials over the Bay of Bengal and Indian Ocean. Your company had in-chartered two suitable vessels w.e.f. 27.03.2012 and 05.04.2012. The contract for these vessels had come to an end in 2016.

Thereafter, your company has acquired two suitable offshore vessels (Multi-Purpose Support Vessels) and has provided the same to DRDO on a long term charter of 4 years, for their above missions of national importance. The two MPSVs acquired by SCI are “SCI Sabarmati” on 18.11.2016 and “SCI Saraswati” on 07.07.2017, which have been deployed with DRDO.

5    Risks and Concerns

About 7 vessels are primarily operating in spot market. In spot market, per day charter hire rates are generally higher than the long term rates (industry average), however, there are more operational challenges and loss of employable days during frequent change of charter in spot market for conducting inspections/clearances. Hence efforts are being made by your company to obtain long term charters, albeit the prevailing rates are on the lower side.

Your company is keeping contacts with many E&P operators and EPC contractors with expected future requirement for offshore vessels for their offshore activities. Simultaneously, your company is also continuously on lookout for any long term employment for these vessels, not only in the Indian waters but also in Foreign waters. Informatively, majority charterers in spot market are satisfied with performance of your company’s vessels during FY 2017-18.

Strengths and Weaknesses

Your company has a diversified fleet of offshore vessels with 02 nos.80T AHTSVs, 04 nos.120T AHTSVs, 02 nos.PSVs and 02 nos.MPSVs, thus enabling it to cater to requirements of various clients in the offshore market. Your company also owns a fleet of young offshore vessels, thus giving a technological advantage compared to the older vessels in the market.

SCI has always focused on employing its vessels on long term basis with ONGC, which is the biggest E&P Company in India. However, dependence for majority activities on one client has its own dis-advantages, especially considering the de-hiring of vessels by ONGC last year. Thereafter, in view of the subdued markets and increased supply of vessels in the market, employing these off-hired vessels was difficult for SCI. By the end of year, only three out of ten offshore vessels owned by SCI were on long term charter. Though the per day charter hire rates for spot is more than the long term ONGC rates (industry average), there are more operational challenges and loss of employable days during frequent change of charter in spot market for conducting inspections/clearances. Meanwhile, your Company has been approaching and employing its vessels aggressively with other private players in the market and yielding successful results. Further, with the ‘Make in India’ campaign of Government of India and with the Governments’ view of being self-sufficient in all possible ways, the offshore industry is also expected to improve in coming years.

7 Opportunities and Threats

With increase in crude oil prices and increase in oil import bill, the E&P activities are expected to rise, thereby creating shipping demand for offshore assets in Indian coast. Further, with merger of ONGC (E&P player) and HPCL (Oil Marketing Company), their strategic decisions are now inter-linked with each other’s requirement. Your company’s offshore vessels have an average age of only 5 years and have balance economic life of about 20 years. The long remaining years of economic life will definitely help your company’s offshore division to take advantage of growing offshore market in future.The weakness in asset prices also presents opportunities for SCI to acquire good vessels in the second hand / resale markets at a very competitive prices, which can earn good profits at lower charter levels as currently prevailing in the short term.

However, with falling charter hire rates and fall in asset prices, many new players entered in India’s offshore market. Entry of new players and availability of old offshore assets at lower price are leading to high competition resulting in charter hire rates in ONGC’s recent tenders to be very low and it has not been gainful for offshore assets of your company to be employed at these low levels.

Your company is also looking at various other prospects for employing its vessels, which include Government organizations, like DRDO, and is also trying to boost its revenues by enhancing its managed vessel fleet/technical consultancy services. Your company is also approaching new clients like Inland Waterways Authority of India (IWAI) for providing technical consultancy services for their forthcoming ship acquisition plans for development of the inland waterways.

C) Technical Services:

1    Technical Consultancy Services

During the year under report the Company continued to provide technical consultancy services to A&N Administration, UTL Administration, Geological Survey of India, Andaman Lakshadweep Harbour Works (ALHW), Union Territory of Daman and Diu Administration (UTDD) and other Government Departments for their various ship acquisition/retrofit projects.

2    Tonnage Acquisition Programme

During the year under report, your company had proposed an outlay of Rs.500 crore towards acquisition of vessels. Your company had envisaged acquisition of second-hand/ resale offshore vessel, Suezmax Tankers and VLGC size LPG carriers. SCI has taken delivery of three vessels during the year, and named as “SCI Saraswati” (MPSV); “Desh Abhimaan” (Suezmax Tanker); and “Nanda Devi” (VLGC).

Presently, the asset prices are comparatively at low levels, hence looking at the favourable market for second-hand/resale vessels, your company is endeavouring to buy second-hand/resale vessels to increase the Indian/SCI tonnage and for immediate deployment in the market. Your company is optimistic to acquire offshore vessels and oil tankers/gas carriers at this opportune time, with low asset prices so as to expand its fleet size.

3    Eco-Friendly and Conservation of Energy

As a policy, your Company remained committed to environmental protection as per International Convention for the Prevention of Pollution from Ships. Necessary steps have been taken to minimize air pollution and oil pollution from ships.

On new vessels electronic engines are being fitted in order to reduce fuel consumption and improve operational efficiency. Your company has decided to implement specific measures to improve fuel consumption and operational efficiency, like turbocharger cut out device was fitted on some of the Container vessels and trim optimization was implemented on some of the Aframax tankers and bulk carriers.

As per directive from IMO, all ship owners are required to report fuel oil consumption data from 1^st January 2019. Your company is geared up to meet IMO's fuel oil data collection system directive.

For the existing vessels, your company had developed a Ship Specific energy efficiency management plan to further improve and monitor energy efficiency in ship operations. All engines being fitted on board are meeting latest requirement of NOx compliance. Installation of Ballast Water Treatment plants, Silt Water Management, usage of eco-friendly refrigerants, usage of TBT free paints, ship recycling plan, etc are some of the measures showing your company’s commitment to Eco-friendly policies and conservation of energy.

4    Technology Absorption, Adoption and Innovation

The SCI has taken all steps to comply with requirements of The International Maritime Organization’s MARPOL Annex-VI aimed at Controlling Air Pollution and setting limits on Emissions to the Atmosphere from Ships. On the new vessels SCI has voluntarily accepted higher than mandatory requirements on emission standards.

For 500 passenger vessels under construction at M/s Cochin Shipyard Ltd., SCI as a technical consultant recommended installation of "Active Fin Stabilizers" to reduce the rolling periods thereby increasing the passenger comfort. Further on 1200 Passenger vessels under construction at same yard, automatic anti-heeling system, Ballast Water Treatment Plant (BWTP) and Integrated Alarm & Monitoring System (IAMS) have been recommended by SCI.

The main engines and auxiliaries on board existing vessels in the fleet are being modified and equipped to handle low sulphur distillate fuels in order to comply with regulatory fuel sulphur limits in IMO emission control areas, ports in the European Union and ports in the State of California. Further, on new 1200 Passenger ships for A&N Administration, SCI has recommended diesel-electric propulsion system to improve operational efficiency.

5    Situation in Coastal operation and Offshore areas

The offshore industry has been through a very difficult phase over the past three years, and hence, all the companies in the Offshore Support Vessel market (OSV) have been severely affected. Exploration & Production (E&P) companies have reduced their rig counts drastically, causing demand for OSV services to plunge. Excess rig capacity has hit Platform Supply Vessels (PSVs) and Anchor Handling, Towing & Supply (AHTS) vessels the hardest. However, as the oil price has doubled since reaching the bottom in January 2016, the OSV market to some extent moved into recovery stage during the period under review, especially during the last quarter of 2017-18.

6    Measures taken to improve services and operations

During the year under review, your company has taken continuous efforts to maintain the offshore fleet to the required standards for optimal utilization in the tough shipping market. The greater emphasis has been given on preventive and planned maintenance for cost effective operations and maintenance of OSVs. Your company has availed every opportunity to employ vessels on spot charter. The available downtime was well utilized for maintenance and overhauls of machinery.

To improve its operations, your Company has taken various steps, like upgrading the conventional seals of 80T AHTSV vessel in a phased manner with advance sealing system with additional sealing arrangement called UNNET assembly to protect seals from nets, ropes and foreign particles. Also necessary changes have been made in the A/C system of 120T AHTSVs resulting in smooth operation of the vessels. Further, your company has already entered into long term rate contracts with Original Equipment Manufacturers (OEMs) of major spare suppliers, so as to benefit from the discounted rates and streamline un-interrupted supply to our vessels.

7    Awards and Accolades:

The following managed vessels have received the BEST HSE PERFORMANCE award from ONGC during the year 2017-18 for the category mentioned against the vessel:

1.    MODU Sagar Vijay - ONGC Drillship

2.    OSV L.J. Johnson - ONGC Offshore Logistic Vessel

3.    WSV Samudra Nidhi - ONGC MSV (IMR & Stimulation Vessel)

Further, MSV Samudra Sevak has received appreciation from ONGC for the commendable job undertaken by the vessel of recovery of damaged boat landing of B55 platform successfully and resumption of huge blocked gas production. The praiseworthy accomplishment of MSV Samudra Sevak team deserves highest level of appreciation.

Also, MSV Samudra Sevak has received appreciation from Master of "Aban Ice" (oil rig) for carrying out commendable job of disconnecting kill line from sub-sea - BOP (blow out preventer) of "Aban Ice" and connecting new line lowered from rig in zero visibility and very rough sea conditions.

8    Material changes and commitments, if any, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statement relates and date of report

M.t. Guru Gobind Singh disposed off on 12.07.2018. The vessel was a crude oil tanker built in 1995 with 147,474 DWT and 80,130 GT

IV International Safety Management Cell

The SCI has introduced the Safety Management System by setting up a dedicated International Safety Management (ISM) Cell, which has developed, structured and documented procedures in compliance with the International Management Code for Safe Operation of Ships and for Pollution Prevention (ISM Code), in accordance with the resolution A.788(9) of the International Maritime Organization (IMO) and SOLAS, Chapter IX.

The SCI has laid the foundation of the Safety Management System (SMS) by recognizing that the cornerstone of good Safety Management is a commitment from the top management, coupled with the competence, attitude and motivation of individuals at all levels, that determines the expectations of a good Safety Management System.

The SCI has complied with all the functional requirements of the ISM Code, which includes the Safety, Occupational Health & Environment Protection Policy and Drug & Alcohol Policy.

Presently SCI holds 07 (Seven) separate Document of Compliance for individual ship types as under:

1.    Bulk Carriers (Indian Administration) - Valid till 31.10.2022.

2.    Oil Tankers and Gas Carriers (Indian Administration) - Valid till 31.10.2022.

3.    Passenger Ships (Indian Administration) - Valid till 31.10.2022.

4.    Other Cargo Ships (Indian Administration) - Valid till 31.10.2022.

5.    MODU Vessels (Indian Administration) - Valid till 31.10.2022.

6.    Gas Carriers (Malta) for LNG Vessels - Valid till 26.05.2019.

7.    Gas Carrier (Singapore) for LNG Vessel - Valid till 26.05.2019.

As regards, Safety Management Certificate (SMC) for SCI fleet, all ships are put up for periodical/ renewal SMC audits within time frame and respective SMCs are accordingly endorsed.

The last Renewal/ annual DOC Verification Audit of the Company was carried out as follows:

1.    DOC issued by Indian Administration - 01.11.2017 (Renewal Audit)

2.    DOC issued by Malta Administration - 20.07.2017 (Annual Audit)

3.    DOC issued by Singapore Administration - 20.07.2017(Annual Audit)

Also, the requirements of various amendments to ISM Code and Statutory regulations from IMO/Flag are also complied with. New acquisitions are brought under the SMS, before delivery, with full compliance of the ISM Code.

The achievement of time-bound certifications was the result of the SCI’s strength of professional experience, planning, training, execution, systematic analysis and quality expertise, which is an asset for any world-class ship operator or owner. The SCI is also in a position to provide such management expertise to other national/international ship operators.

Awards & Appreciation:-

1.    Appreciation received from Chief Scientist to vessel Sagar Sampada towards retrieval of SREP on 16.05.2017.

2.    Appreciation was received on 03.07.2017 to team of MSV Samudra Sevak for commendable job of recovery of damaged boat landing of B55 platform successfully and resumption of huge blocked gas production.

3.    Various vessels of your company were awarded the AMVER award - trophies from U.S.Coast Guard through United States Consulate, Mumbai in September 2017.

Company's Safety, Occupational Health and Environment Protection Policy was reviewed and amended on 01.03.2018.

ISPS Cell

The SCI has successfully implemented the ISPS Code on all vessels on international voyages and coastal trade vessel as per the Administration requirement.

SCI is committed to the following objectives to fulfil the requirements of its security policy:

-    Security of its ships and their crew, passengers and cargo

-    Support to its ships in implementing and maintaining the Ship Security Plan.

Integrated Management System (IMS)

SCI has successfully upgraded to 2015 version of ISO 9001:2008-Quality Management System and ISO 14001:2004 - Environmental Management System on board all vessels and shore establishments.

SCI is certified with IMS (ISO 9001:2015-Quality Management System, ISO 14001:2015 -Environmental Management System and OHSAS 18001:2007-Occupational Health and Safety Management System) w.e.f. 27.04.2018 and Certification is valid till 22.12.2019.

V PERSONNEL AND ADMINISTRATION FLEET PERSONNEL

Consequent to the negotiations held between INSA Negotiating Committee and MUI Representatives for revision of INSA-MUI Wage

Agreements of Officers serving on Foreign-Going, Home Trade and Offshore Support Vessels, the revised INSA-MUI Wage Agreement for the period effective 01.04.2015 to 31.03.2019 was signed on 03.10.2017.

There is an acute shortage of senior Floating Staff officers, especially in the ranks of Masters, Chief Engineer Officers and 2nd Engineer Officers. The Fleet Personnel Department is trying to mitigate the shortage by recruiting officers on direct contract and through manning agents by offering market-related wages which have been revised significantly in the Main Fleet and Offshore Sector. However, the shortage continues due to taxation issues.

To facilitate development of employees with an aptitude for learning and for improving their in-born skills, the department organized the following seminars and training programmes:

i.    Professional Development Course for ratings on 30th November and 1st December 2017.

ii.    Professional Development Seminar for the senior officers on 30th November and 1st December 2017 covering topics like Maritime Labour Convention, Automation and Control Engineering, SEEMP Risk Management, Vetting Requirements, Safety and Security Issues, Vessel Resource Management, Hydraulic and Pneumatic control etc.

To uphold and appreciate the safety culture, the Fleet Safety Awards function was organized on 01.12.2017. The fleet was divided into nine groups and against stiff competition the following nine vessels were awarded Fleet Safety Awards for being the Safest Ships in the year 2016.

Tanker Group T1:    M.T. Desh Viraat

Tanker Group T2:    M.T. Swarma Kamal

Specialized Vessels Cell (SVC Gas Carrier) Group: Aseem Bulk Carrier Group:    M.V. Vishva Preeti

Container, Research and Survey:    M.V. Samudra Ratnakar

Passenger Ship Group:    M.V. Campbell Bay

SCI Offshore Vessels Group:    SCI Kundan

ONGC Offshore Vessels Group:    N.B. Prasad

MSV Offshore Vessels Group:    Samudra Sevak

The Master and leading categories of officers and ratings of the prize winning ships were invited and they participated in the event.

To ensure an uninterrupted supply of officers, deck cadets, on completion of their shipboard training and subsequent to their obtaining the certificate of competency, are being offered regular employment on the terms of INSA-MUI Agreement.

2 MARITIME TRAINING INSTITUTE

Your company’s Maritime Training Institute (MTI) at Powai has been awarded two prestigious awards in 2017 for excellence in maritime education - The Maritime Standard Award, Dubai and Lloyd’s List: South Asia Middle East & Africa Award, Dubai. Approvals have been sought for commencing new courses at MTI Powai, including Second Mate (F.G.) function course (competency course), Electro -Technical Officer (ETO) Course, ROC-ARPA (Radar Observer's Course - Automatic Radar Plotting Aids), Proficiency in Survival Craft and Rescue Boats (PSCRB), and few others to cater to SCI and external participants in both - Nautical and Engineering domain. Presently, four batches of Diploma in Nautical Sciences (DNS) at Powai campus and two batches of Diploma in Nautical Science (DNS) Course at Tuticorin campus are underway. MTI, Powai has also successfully commenced two batches of Graduate Marine Engineering (GME) this year. Regular Guest lectures, seminars, professional development programs and skill enhancement programs are being conducted for all ranks of officers, petty officers, ratings and shore officers to enhance their competence and build a sense of belonging in them towards the company.

Your Company’s Training Centre - Maritime Training Institute at Powai, Mumbai has been assigned GRADE A1 (Outstanding) rating by Class NKK after the inspection as per the Comprehensive Inspection Programme Guidelines of the Director General of Shipping. The Institute has also improved upon the Indian Maritime University (IMU) ranking from 19th to 14th and aims to reach in top 10 Maritime Training Institutes. MTI has actively contributed to the discussions and meeting for skill development and employment creation in Maritime sector under the purview of Sagarmala, Ministry of Shipping, Government of India.

Your Company’s Training Centre at the Maritime Training Institute at Powai, Mumbai has conducted 333 Courses for 5545 participants and the total man-days trained during this year is 101114. These included 92321 man-days for SCI’s personnel and 8793 man-days for personnel from other companies. In addition to this, 164 of SCI’s personnel were trained outside MTI and the additional man-days of training are 535. However, 105 SCI shore personnel were provided 105 man-days of in-house training. Every endeavour is made to ensure that our training institute is self-sustaining.

Reservation policy

- At MTI we have followed centre's policy of reservation during the cadet admissions. We had admitted the DNS cadets as per the table below:

Intake	Batch	ST	SC	OBC	GEN
Jul 2017	42, 43 & 44	3	8	50	56
Jan 2018	45, 46 & 47	2	12	47	57

 

Batch	ST	SC	OBC	GEN
GME-06	02	08	14	16
GME-0703	07	12	18	Â

2.2 Information towards major achievement during the year under Review i.e. FY 2017-18 Non-Academic Achievements:

A.    SOLAR POWER PLANT

SCI-MTI became the first Green Campus in Maritime Education Industry in 2017.

SCI-MTI has already increased its solar power generation capacity to 0.5 MW and reduced its electricity bills by approx. 50 - 60% on monthly basis.

SCI-MTI is also utilizing the in-campus natural waste (leaves etc) to create manure and Lake/Well Water for gardening work in MTI campus.

B.    Wi-Fi

SCI-MTI has sought management approval for becoming a Wi-Fi enabled campus. M/s. Reliance Jio is in process of providing the Wi-Fi infrastructure and required internet access in the campus.

Academic Achievements

SCI-MTI has been awarded with the following awards this year;

Lloyd’s List: South Asia Middle East & Africa Award - ‘Training Award’, Dubai

The Maritime Education & Training Award at The Maritime Standard Award (TMSA), Dubai

Pass percentage for first semester IMU exams have gone up from 62% to 79% in December 2017 examinations in comparison to June 2017 examinations.

Sessions, lectures and training beyond academia has been provided to participants at SCI-MTI, pertaining to stress management, yoga and holistic development.

C.    Business Development Initiatives

SCI-MTI has aggressively communicated about its pre-sea courses (DNS and GME) to various schools, colleges, and coaching institutes for increasing awareness of Merchant Navy as a career and about academic and career opportunities with SCI-Maritime Training Institute. Institute’s various courses are being offered to non-marine industry as well for skill development and enhancement, such as Fire Prevention and Fire Fighting Techniques, Training of Trainers and Assessors etc.

D.    Others

E.    The Fleet Safety Awards function was held at the MTI Auditorium on 01^st December, 2017.

3    Shore Personnel

The total manpower as on 01.05.2018 is 718 excluding CMD, five Functional Directors and CVO, out of which 661 are officers and 86 are staff members.

Various training programmes, both in-house and outside, including General Management Training programmes have been held for the employees for development of their skill sets and domain knowledge.

4    Reservation Policy

Your company is complying with all government guidelines as applicable from time to time in respect of reservation policy so as to empower the weaker sections of the society.

5    SC/ST/OBC REPORT

Annual Statement showing the representation of SCs, STs and OBCs as on 1st January 2018 and number of appointments made during the preceding calendar year:

Name of the Public Enterprise: The Shipping Corporation of India Ltd.
Groups	Representation of SCs/STs/OBCs (As on 1.1.2018)				Number of appointments made during the calendar year 2017
					By Direct Recruitment				By Deputation/ Absorption
	Total no. of employees	SCs	STs	OBCs	Total	SCs	STs	OBCs	Total	SCs	STs
1	2	3	4	5	6	7	8	9	10	11	12
Executives A	636	125	52	99	2	0	0	1	0	0	0
Non Executives B	68	22	4	3	0	0	0	0	0	0	0
C	19	6	1	0	0	0	0	0	0	0	0
D	1	0	0	0	0	0	0	0	0	0	0
Total (Executives in Grade ‘A’ plus Non - executives)	724	153	57	102	0	0	0	0	0	0	0

6    Women Representation

Your company is committed to the principle of equal employment opportunity and strives to provide employees with a work place free of discrimination. All HR activities of recruitment, placement, promotion, transfer, separation, compensation, benefits and training ensure equal opportunities for skill enhancement and career progression.

Your company’s efforts are reflected in the representation of women across various hierarchical grades. At present women constitute around 20.75% of total workforce at shore establishments of your company.

SCI has been the pioneer in India with regards to recruiting women for jobs on board its fleet. Presently, four Masters, five Chief Officers, two Second Engineers, 36 Second/Third Officers and Third/Fourth Engineers are women serving on various types of ships.

Your company encourages active involvement in the activities of the Forum of Women in Public Sector (WIPS) since its inception. WIPS, Western Region, under the aegis of SCOPE has appreciated your company’s efforts by conferring the “Best Enterprise Award (2nd Prize)” under Navratna Category.

7    Policy to prevent sexual harassment in workplace

Your company promotes gender equality and has been taking proactive measures to prevent any Sexual Harassment at workplace. Your company has constituted a committee comprising of senior women executives and a woman representative from the NGO Pratham to enquire into complaints of Sexual Harassment at the workplace. One case of sexual harassment have been reported during the year ended 31st March, 2018 for which enquiry is in progress.

8    Corporate Social Responsibility (CSR) and Sustainable Development (SD)

The Corporate Social Responsibility vision of your company articulates its aim to be a corporate with its strategies, policies and actions aligned with wider social concerns, through initiatives in education, public health, environment and other areas of social upliftment.

Your company has framed its CSR policy in line with the guidelines contained in the Companies Act 2013 and Companies (CSR Policy) Rules, 2014 notified therein and constituted a CSR - SD committees as per the act to coordinate and oversee the implementation of CSR initiatives. The budget available for CSR initiatives in the year 2017 - 18, as per applicable provisions was Rs. 5.85 Crores. Against the available budget, your company allocated Rs. 5.85 Crores against following initiatives in the year 2017-18. The details about the policy developed and implemented by your Company on CSR initiatives taken during the year is available on SCI's website at the following link : http://www. shipindia.com/investor-relations/Notice.shareholders.aspx In line with the above vision following initiatives have been undertaken:

(i)    Promoting Preventive Health Care: Your Company has joined hands with Vivekananda Medical Research Trust, Palampur to start Urology Surgeries program at Vivekananda Medical Institute. Your company has also joined hands with Sri Chaitanya Seva Trust for supporting financially weaker patients battling with Cancer for surgeries at Bhaktivedanta Hospital & Research Institute, Thane.

(ii)    Promotion of Education - Your company awarded scholarships to meritorious students from weaker section of the society, viz. SC/ST/ BPl candidates, pursuing Ocean Engineering/Naval Architecture/Nautical Science/GME courses at premier institutes (IMU’s, IIT’s & MTI) to encourage and support Maritime Education in the country.

9    Women Empowerment & Gender Equality

Your Company has undertaken following initiatives under this head:

a) Supporting Parichay Foundation for providing bicycles to 59 girls coming from financially weaker background of tribal areas of Orissa. This will help these girls to reach their place of study, thus empowering them to continue with their education.

b)    Joining hands with Sahayog Society for Participatory Rural Development for supporting the project ‘Badhte Kadam, Buland Awaazein’ -An initiative to reduce girl dropout rates in schools by reducing violence against girls and promoting menstrual hygiene management facilities.

c)    Supporting Uddipan Educational Trust (UET) for construction of Girls’ Hostel for less privileged girls.

d)    Joining hands with Apparel Made-Ups & Home Furnishing Sector Skill Council (AMHSSC) for skill development training of 150 women

10    Environmental Sustainability & Rural Development - Your Company has joined hands with Rajasthan Electronic & Instruments Ltd. for Installation & Commissioning 100 Solar Photovoltaic Based Led Street Lighting Systems at Purna, Bihar for ensuring better illumination in the streets, safety and security and extended night life in the villages.

11    Eradicating Hunger & Malnutrition - Your Company is supporting Akshaya Patra Foundation for provision of mid-day meals to 1121 school children.

12    Employment Enhancing Vocational Skills for Divyangjans - Your Company has joined hands with The National Association of Disabled's Enterprises for setting up a Livelihood Project, "printing & stationary manufacturing" to provide training & employment to 100 divyangjans. Your Company has also joined hands with National Handicapped Finance & Development Corporation to provide skill development training to the 150 divyangjan to make them capable and self-dependent.

13    Swachh Bharat Abhiyan & Ganga Rejuventaion - Your Company undertook the construction/renovation/maintenance of 145 toilets across the country and your Company is also supporting for Solid Waste Management at port Blair under Swachh Bharat Abhiyan of Govt. of India. Additionally, your Company has joined hands with the National Mission for Clean Ganga for development of Katwa Ghat, West Bengal.

14    Recently, in wake of the Okhi Cyclone, your Company also initiated distribution of blankets to cyclone affected fishermen.

Against the allocation of Rs. 5.85 Crores, Rs. 1.70 Crores have already been spent and balance will be released on achievement/completion of project specific timelines.

15    Implementation of Official Language Policy

With an objective to implement the Official Language policy of the Govt of India, your Company remain committed to enhance the usage of Hindi in its day-to-day affairs during the year under report. In order to achieve the targets prescribed in the Annual Programme issued by the Ministry of Home Affairs, your Company organized various Hindi activities and competitions at a regular interval. Besides this, a half-day Hindi Unicode computer workshops were also conducted on monthly basis to train employees in Hindi on computers.

Your Company has also created an atmosphere to spread the use of Hindi through email correspondence by introducing a Quarterly Hindi correspondence incentive scheme. As a result, a number of employees are encouraged to take active part in this Scheme, and the eligible employees are being rewarded every quarter.

During the Hindi Pakhwara in September 2017, an appeal by CMD was emailed to all employees calling upon them to increase Hindi work in official correspondence, and thereafter, a Linguistic Harmony Culture Programme was organized for employees wherein poetry recitals and songs in different regional Indian languages like Marathi, Gujarati, Punjabi were presented. Your Company also attended TOLIC meetings during the year under report.

16    Procurement

Your company enters into rate contract on periodical basis for procurement and supply of high value and safety items like Marine Lubes, Marine Paints, Charts, Wire ropes, LSA / FfA, Life Rafts etc. This ensures timely supply of quality goods / services to the vessels at reasonable price. Being a responsible Corporate, your Company continues to support the medium and small scale Enterprises by procuring a part of its supplies and services from MSME.

17    Protection & Indemnity (P&I) Insurance

Protection and Indemnity (P&I) Insurance cover entered with 3 Group P&I Clubs for your company’s fleet for the policy year 2018-19 commencing from 20.02.2018 has been negotiated by your Company. Your Company, after protracted negotiations, was able to obtain a further reduction of 3.47% over and above the reductions obtained in the last financial year in the renewal premium over the expiring premium resulting in a net reduction of USD 178,727 towards renewal premium for policy year 2018-19.

Further, your company is glad to inform you that Group P&I Clubs have refunded 5% - 10% of the annual premium for the policy year 2017-18 to your company (and other members) in view of their better financial performance.

18    Appointment and Remuneration Policy

The appointments in your company are done in accordance with Government of India guidelines. The remuneration to the senior management and other shore employees of your company is governed by the Presidential Directives issued by the Ministry of Shipping and Department of Public Enterprises (DPE), from time to time, which form the remuneration policy of your company.

VI RIGHT TO INFORMATION ACT 2005 (RTI ACT 2005)

A suitable mechanism has been put in place for dealing with the requests and appeals under RTI Act 2005. The RTI manual is posted on the Company’s website. Your Company has been complying with the provisions of the Act within the stipulated time limit provided under the Act. As on 31.03.2018, your Company has disposed off most of the applications and appeals received from the parties.

VII (A) JOINT VENTURE COMPANIES

India LNG Transport Co.(No.1), (No.2) and (No.3) Ltd

SCI has entered into three JVCs with three Japanese Companies viz. Mitsui O.S.K.Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha Ltd (K Line) along with Qatar Shipping Company (Q Ship) in case of ILT No. 1&2 and Qatar Gas Transport Company (QGTC) in case of ILT No. 3, each owning and operating an LNG tanker deployed in the import of a total of 7.5 million metric ton per annum of LNG for the Dahej Terminal of M/s Petronet LNG Ltd (PLL). SCI is the first and only Indian company to enter into the high-technology oriented

& sunrise sector of LNG. SCI is the manager for these three companies and managing techno-commercial operations of 3 LNG tankers. India LNG Transport Co. No. 4 Ltd

SCI had entered into 4th JV formed in Singapore, with the same three Japanese companies viz. Mitsui O.S.K.Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha Ltd (K Line) along with Petronet LNG Limited (PLL), to own and operate one 173,000 CBM LNG Tanker for transporting 1.44 million metric tons of lNg from Gorgon, Australia to Kochi, India for charterers PLL. The 4th LNG carrier has been constructed at the Hyundai Heavy Industries, South Korea and was delivered on 30th November 2016. However with effect from 1st January 2018, PLL novated the time charter agreement to the new charterers Exxon Mobil Services B.V., Netherlands and the vessel is now trading worldwide. SCI is the manager for this company and is managing the techno-commercial operations since the delivery of the vessel.

SAIL SCI Shipping Pvt Ltd (SSSPL)

SCI and SAIL had co-promoted a JVC “SAIL SCI Shipping Pvt Ltd” (SSSPL), which was primarily to cater to SAILs shipping requirements. The JVC was incorporated on 19.05.2010. However, due to continued depressed freight levels, the JVC could not justify tonnage acquisition and both the Boards of SCI & SAIL decided to voluntarily wind up the company. The company is in the process of winding up.

Irano Hind Shipping Company Ltd. (IHSC)

The decision for dissolution of the Company taken by the Cabinet has been reiterated by the Ministry of Shipping and steps in this regard are being taken. Determination of assets and liabilities of the Company is being undertaken after which closure of the company as per the process stipulated under the Iranian Commercial Code will be achieved.

VII (B) SUBSIDIARY

Inland and Coastal Shipping Limited

India has a long coastline admeasuring 7500 km. and a large network of river systems. Despite this, very little attempt has been made to interlink these natural assets for a seamless, environment friendly transport system. In a bid to remedy this lacuna, during the Maritime India Summit 2016, the Inland Waterways Authority of India (IWAI) entered into a Memorandum of Understanding with The Shipping Corporation of India (SCI) on 15th of April 2016 to develop this field of domestic transport. Both parties agreed to work towards tapping the synergies of high sea shipping, coastal shipping and inland waterways to establish an integrated system of water transportation across the hinterland, the coasts and the high seas.

For this purpose, the SCI Board approved the formation of a dedicated subsidiary company of SCI, based in Kolkata. The Company has been named as “INLAND and COASTAL SHIPPING LIMITED” (ICSL). The subsidiary company is working on development of a viable business plan on this segment.

VII    (C) SPECIAL PURPOSE VEHICLE Sethusamudram Corporation Ltd.

The Government of India had constituted Sethusamudram Corporation Limited (SCL) to raise finance and to undertake activities to facilitate operation of a navigable channel from Gulf of Mannar to Bay of Bengal through Palk Bay (Sethusamudram Ship Channel Project). As per the Government directive, this project is to be funded by way of equity contributions from various PSUs including the SCI. As on FY 201617, SCI has invested ' 50 crore in the project. Work suspended since 17.09.2007 consequent to an interim stay by the Hon'ble Supreme Court for carrying out dredging operations in Adam's bridge area. Pending a final decision on alternative alignment, all the dredgers were withdrawn since 27.7.2009. Supreme Court's final hearing on the matter was scheduled on 06.04.2018, outcome of which is not yet known. Informatively, M/s RITES was given the task of finding an alternative alignment to execute the project without affecting the Ram Sethu. The report submitted by them is under Ministry consideration.

VIII    Memorandum of Understanding (MOU) with the Ministry of Shipping

The MOU for the financial year 2018-2019 was signed on 08.05.2018. The MOU, finalized as per the guidelines issued by the Department of Public Enterprise (DPE) for the year incorporates performance targets in sync with the changing dynamics of the shipping scenario. In addition to Financial Parameters, Sector-Specific Operational Parameters and Human Resource Management parameters, as per the DPE requirements, have also been incorporated in the mOu for achieving sustained overall growth. The MOU for the financial year 2017-18 would be due for evaluation by the DPE in November 2018.

IX. Details of shares lying unclaimed

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

Sr. No.	Details	No. of Shareholders	No. of Shares
1	Aggregate number of shareholders and the outstanding shares in the suspense account lying as on 01.04.2017	4	436
2	Number of shareholders who approached for transfer of shares from suspense account till 31.03.2017	0	0
3	Number of shareholders to whom shares were transferred from suspense account till 31.03.2017	0	0
4	Aggregate number of shareholders and the outstanding shares in the suspense account lying as on 31.03.2018	4	436
5	Aggregate number of shareholders and the outstanding shares in the suspense account lying as on 30.05.2018 *	0	000

* 2 shareholders claimed 224 & 50 shares respectively and the said shares were accordingly transferred to them in the month of May 2018. The remaining shares have been transferred to IEPF.

An amount of Rs.15,14,484/- w.r.t. 46 applicants lying unclaimed in the Refund Account has been transferred to IEPF.

X Utilization of FPO Proceeds

Proceeds from public issues, right issues, preferential issues etc.

During the year 2010-11, your Company had floated a “Further Public Offer”, (FPO), comprising of a ‘fresh issue’ of 42,345,365 equity shares in your company and an ‘offer for sale’ of 42,345,365 equity shares by the President of India. The FPO proceeds of Rs. 58245 lakhs were fully utilized in the financial year 2011-12 as per object of the issue for part financing of capital expenditure on nine shipbuilding projects. However, due to delays in the projects resulting in default by the shipyards, during the period January 2014 to May 2014, your Company rescinded contracts for four shipbuilding projects and also, re-negotiated the payments for two projects. The investment in the rescinded contracts out of the FPO Proceeds was Rs. 330.65 crores.

Your Company has received back entire sum of Rs. 330.65 crores from the shipyards. The shareholders vide the resolution passed through postal ballot on 11.02.2017 approved the proposal to re-deploy the said sum of Rs. 330.65 crores received as refund from Shipyards, towards various shipbuilding projects including offshore assets and liquid petroleum gas (LPG) vessels and also for acquisition of any other such vessels, on such terms and conditions as the Board would deem fit from time to time as mentioned in the aforesaid resolution. Further based on the approval granted by the shareholders, the Company can also utilize the sum towards the balance payments remaining due for the tonnage acquisition made by it.

Out of the said amount of Rs.330.65 crs, an amount of Rs. 196.80 crs has been utilized till date as under -

Month and Year	' Crs.	Utilized for
November 2016	34.37	Equity portion of PSV - SCI Sabarmati
April 2017	63.82	Equity portion of Suezmax Tanker - Desh Abhiman
July 2017	27.63	Equity portion of PSV - SCI Saraswati
September 2017	70.98	Equity Portion of VLGC - Nanda Devi
Total Utilised till date	196.80	Â

XI    Segment-wise Performance

Report on performance of the various operating segments of the Company (audited) is included at Note No. 32 of Notes on Financial Statements (Standalone) for the year ended 31st March 2018, which is forming part of the Annual Accounts.

XII    Internal Control System

The Company has an internal control system, commensurate with the size, scale and complexity of its operations. Internal audit is carried out by an independent firm of Chartered Accountants M/s T.R. Chadha and Co. LLP on concurrent basis. The scope and authority of the Internal Audit function is defined in the Internal Audit Plan, which is approved by the Audit Committee. To maintain its objectivity and independence, the Internal Audit function submits quarterly reports to the Chairman of the Audit Committee of the Board. The Internal Audit examine, evaluate and report on the adequacy and effectiveness of the internal control systems in the Company, its compliance with the laid down policies and procedures and ensure compliance with applicable laws and regulations. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are reviewed, deliberated and presented to the Audit Committee of the Board.

XIII    Dividend Distribution Policy

The Dividend Distribution Policy of SCI seeks to reward its shareholders for their trust and investment in Company’s business objectives. The declaration and payment of dividend will be regulated by the Companies Act 2013 (LoDR) Govt. of India’s guidelines as amended from time to time. The quantum of dividend payments will depend on annual consolidated Profits, fund requirement for company’s expansion plans, present and anticipated future business environment with special reference to Shipping Industry and various other factors impacting company’s performance. The dividend distribution will also be subjected to restrictions / conditions, if any, imposed by lenders, orders of Courts and / or statutory bodies.

XIV    Role of Vigilance Division in SCI

During the year under review, the Chief Vigilance Officer continued to ensure the integration of preventive vigilance initiatives in the business process thus striving towards greater transparency and towards improved ethical and corporate governance standards. Vigilance Division undertook activities of preventive and punitive vigilance and also ensured adoption of good and ethical corporate governance practices towards achieving the stated objective of making your Company processes fair, transparent and corruption-free.

Technology has been leveraged for achieving greater transparency and for eliminating systemic weaknesses through various implemented and ongoing initiatives such as e-payments, promoting online registration of complaints via the Vigilance Webpage contained in the SCI website; migration to Supplier Relationship Management platform for all procurements; bill tracking system and dissemination of important circulars/guidelines on the webpage.

Vigilance Division has been propagating the culture of lodging of complaints under the Public Interest Disclosure and Protection of Informers’ Resolution (PIDPI Resolution - popularly known as Whistle Blowers Resolution) whereby the identity of the complainant would be kept secret and he/she would be protected from victimization.

Vigilance Division continued to interact with various employees of SCI as well as various stake holders including Suppliers, Ship Repair Workshops, Vendors, Contractors etc. which has helped in understanding the issues from their perspective as well.

Activities of the Vigilance Division carried out in 2017-18:

During the year under review, the Vigilance Division continued the following normal activities which encompassed the 5 Ps of Vigilance:-

-    Preventive Vigilance

-    Punitive Vigilance

-    Participative Vigilance

-    Proactive vigilance

-    Predictive vigilance

The important activities that were carried out in 2017-18 by the Vigilance Division were as follows:-

A)    Investigations into complaints of corruption/malpractice were conducted.

B)    Random scrutiny of Annual Property Returns (APRs).

C)    Active monitoring of the implementation of Integrity Pact in SCI

D)    Acted as a catalyst in the implementation of preventive vigilance measures by your Management such as e-payments, bill tracking systems, phased transfers of employees posted in sensitive areas etc.

E)    Conducting surprise and periodic inspections, CTE type inspections, conducting Systems Studies and recommending systemic improvements.

F)    Selective scrutiny of Voyage Repairs Bills, dry-docking bills, various accounts.

G)    Ensuring training of Vigilance Officers both on vigilance related subjects as well as general management

H)    Imparting training to fresh recruits on vigilance issues.

I)    For the annual Vigilance Awareness Programme, apart from in-house programmes major emphasis was placed on reaching out to youth through various programmes in schools and colleges as desired by the Central Vigilance Commission.

J) The message of Vigilance Division of SCI was spread to the public via a live interview of Chief Vigilance Officer in FM Rainbow during Vigilance Awareness Week-2017.

K) Awareness campaign on board SCI ships: In order to spread the awareness about Vigilance amongst them, the Integrity pledge was administered on board the ships and banners were displayed. This was the first time that the VAW activity has been also extended to SCI’s ships.

An annual Newsletter titled “SCI Voyager” was also brought out on the occasion of Vigilance Awareness Week. This is being done with a view to spreading vigilance awareness amongst employees.

Vigilance Study Circle Mumbai Chapter:

The Vigilance Study Circle Mumbai Chapter was started on the initiative of SCI Vigilance Division on 16-8-2010. It continues to spread Vigilance awareness and develop the knowledge and skills of Vigilance Professionals and provides an ideal platform for the Chief Vigilance Officers of Mumbai based PSUs, Banks etc. to meet and exchange their views/ experiences, etc. Following activities are carried out by VSC

Mumbai chapter during the year 2017-18:

1)    Organised WALKATHON on November 02, 2017 at BKC, Bandra (E), Mumbai during the Vigilance Awareness Week - 2017. CVOs and Employees from over 25 PSUs / PSBs participated in the march against Corruption.

2)    Workshop for senior officials of PSUs/PSBs on "Principles of Procurement and Departmental Proceedings" was organized by VSC-Mumbai at the office of Bank of Baroda on February 02, 2018. Expert speakers on the subject were invited to share their experiences with the participants. About 50 senior officials from different PSUs/PSBs attended the workshop.

During the period under review, the Vigilance Division had investigated 27 complaints (i.e. 14 complaints B/F from previous year - 13 new complaints registered during the period and 17 complaints closed after investigation leaving 10 balance complaints.

Integrity Pact in the Shipping Corporation of India Ltd.

SCI had signed a Memorandum of Understanding (MoU) with Transparency International India for the adoption of Integrity Pact. By signing the MoU, your Company is committed to have most ethical and corruption free business dealings with the counterparties whether they are bidders, contractors or suppliers. The ‘threshold value’ for implementation of Integrity Pact in domestic goods and service contracts is Rs.1 crore. Thus, any goods/services contract of Rs.1 crore and above will incorporate the Integrity Pact thereby assuring the concerned parties of the transparent and ethical practices in SCI. During the year under review, the Integrity Pact was monitored by a panel of 2 eminent Independent External Monitors (IEMs). Meetings were held periodically with the IEMs to review the progress of implementation of Integrity Pact in SCI.

XV    UNGC compliance

Your company is a signatory to UN Global Compact initiative which signifies our commitment to uphold the ten principles of Global Compact on protection of human rights, prevention of child labour, protection of environment and anti-corruption initiatives. Your company is an equal opportunity employer and does not discriminate on grounds of sex, religion, caste, creed, colour etc. The freedom of association is recognized and allowed. Fair labour practices are followed and it is ensured that no child labour is directly/indirectly employed. Your company is committed to do business consciously and responsibly setting sustainable systems to protect the environment. Your company ensures transparency, equity and competitiveness in public procurement through various inbuilt mechanism and anti-corruption initiatives.

XVI    SET IT

The GST Project went live on 01.07.2017 and SCI systems are GST ready for tax compliances. Other IT initiatives such as implementation of Business Intelligence Dashboard are being implemented. Hardware refresh project is kick started to have the latest hardware for a better performance.

XVII    Cautionary Statement

The statements made in the Management Discussion and Analysis describing Company’s objectives, projections, estimates and expectations may be “forward-looking statements” within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

XVIII    Board of Directors

Capt. Anoop Kumar Sharma, CMD (SCI) held additional charge of Director (T&OS) and Director (L&PS) up to  28.12.2017. Shri Rajesh Sood and Smt. Sangeeta Sharma were appointed as Director (T&OS) and Director (L&PS) respectively w.e.f 29.12.2017.

Shri Shambhu Singh was appointed as Additional Secretary and Financial Advisor w.e.f 3.5.2018 in place of Smt. Leena Nandan who ceased to be Director on the Board of SCI w.e.f 2.5.2018. Shri Satinder Pal Singh, Joint Secretary (MoS) was appointed as Director on the Board of SCI on 28.8.2017 in place of Shri Pravir Krishn, Joint Secretary who ceased to be on the Board of SCI w.e.f 25.7.2017.

Dr. Gautam Sinha and Shri Raj Kishore Tewari joined the Board of SCI on 29.9.2017 as Independent Directors on the Board of SCI. Dr. P Kanagasabapathi joined the Board of SCI as an Independent Director on the Board of SCI on 20.11.2017 and Shri Vijay Tulshiramji Jadhao joined as an Independent Director on the Board of SCI on 3.7.2018.

Capt. Sinha ceased to be Director on the Board of SCI w.e.f 12.8.2017 as he decided to opt for VRS which was accepted by Government of India. Mrs. H.K. Joshi, Director (F) held additional charge of Director (P&A) up to  23.4.2018. Shri Surinder Pal Singh Jaggi joined SCI as Director (P&A) on 24.4.2018.

Capt. S. Narula ceased to be Director on the Board of SCI w.e.f 1.8.2017 due to superannuation.

The Board record its appreciation for the services rendered by the concerned Directors.

XIX    Declaration of Independence

The Company has received Declaration from Independent Directors conforming that they meet the criteria of Independence as prescribed under Companies Act 2013, the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 and DPE guidelines.

XX    Auditors Report

There are no qualifications made by Statutory Auditors & no comments made by the Comptroller and Auditor General of India on the Standalone and Consolidated Financial Statements for the year ended 31st March 2018.

XXI    Secretarial Audit

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014, the Board has appointed Mr. Upendra Shukla, Practicing Company Secretary to conduct the Secretarial Audit for the Company for Financial Years 2017-18 and 2018-19. The Secretarial Audit report for the FY 2017-18 is appended to the Director’s Report. The secretarial auditor in his report for the year ended 31st March, 2018 has brought out that:

The Corporation has complied with the requirements of Corporate Governance as provided under Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPE Guidelines on Corporate Governance, with the exception of appointment of Independent Directors to the extent of 50% of the total strength of the Board. It is clarified by the Corporation that the matter is being pursued with the Administrative Ministry for appointing required number of Independent Directors on the Board.

The Management views on the above observation are as follows:

As on date, the Board of SCI includes the following six Independent Directors: Shri Arun Balakrishnan (appointed on 30.03.2016) and Shri Sukamal Chandra Basu (appointed on 26.05.2016), Shri Gautam Sinha, Shri Raj Kishore Tewari (appointed on 29.09.2017), Shri P Kanagasabapathi (appointed on 20.11.2017) and Shri Vijay Tulshiramji Jadhao (appointed on 03.07.2018). SCI is following up with the Ministry of Shipping for appointment of required number of Independent Directors.

XXII    Corporate Governance

Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, report on Corporate Governance is attached to this Report.

XXIII    Directors’ Responsibility Statement

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, with respect to Directors’ Responsibility Statement, it is hereby confirmed:

(a)    That 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 asto 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, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

Explanation — For the purposes of this clause, the term “internal financial controls” means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information;

(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.

XXIV    Acknowledgements

Your Directors extend their gratitude to Shri Nitin Gadkari, Union Minister of Shipping, and Shri Pon Radhakrishnan, Minister of State for Shipping and Shri Mansukhlal Mandaviya, Minister of State for Shipping and look forward to their support and guidance in managing the affairs of the Company. Your Directors also extend their gratitude to Shri Ravikant, former Secretary to the Government of India, Ministry of Shipping and the existing Secretary, Shri Gopal Krishna, Ministry of Shipping for their guidance.

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

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

                                                                       For and on behalf of the Board of Directors

Place : Mumbai                                              Capt. Anoop Kumar Sharma

Dated: 3^rd August, 2018                                Chairman & Managing Director

 

 

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Mar 31, 2014

Dear Members,

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

Accounting Year

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

FINANCIAL PERFORMANCE

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

( in Crores) 2013-14 2012-13

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

Less : Interest 208 162

Depreciation 856 1,064 760 922

Profit before items relating to earlier years, exceptional

items & tax (168) (430)

Prior year''s adjustments (53) 62

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

Extraordinary items - 300

Provision for Taxation (53) (46)

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

Appropriations:

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

Brief Analysis of Financial Performance:

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

Fleet Position during the Year:

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

FLEET PROFILE DURING THE YEAR

Particulars As on 1.4.2013 Additions

No. DWT No. DWT

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

(b) Product Tankers 15 952,728 - -

(c) Chemical Tankers 1 33,058 - -

(d) Gas Carriers 2 35,202 - -

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

3. Liner Ships 5 202,413 - -

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

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

TOTAL 80 5,909,298 2 163,430

Particulars Deletions As on 31.3.2014

No. DWT No. DWT

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

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

(c) Chemical Tankers - - 1 33,058

(d) Gas Carriers - - 2 35,202

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

3. Liner Ships - - 5 202,413

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

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

TOTAL 9 217,943 73 5,854,784

NEW BUILDING VESSELS DELIVERED DURING THE YEAR

Vessel Name Type Yard Built DWT

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

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

VESSELS DISPOSED OF DURING THE YEAR

Vessel Name Type Yard Built DWT

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

m.v. Maharashtra Dry Bulk 1996 43,037

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

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

m.v. Feroze Gandhi AHTSV 1984 1,758

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

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

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

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

VESSELS ON ORDER AT THE END OF THE YEAR

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

Type No. Shipyard Total DWT

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

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

7* 811,200

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

Implementation of Official Language Policy

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

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

Particulars of Employees

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

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

Foreign exchange used including deemed used 4570.05 4332.55

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

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

Board of Directors

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

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

1. Shri T. S. Ganeshan 10.08.2013

2. Shri Arun Ramanathan 10.08.2013

3. Shri Arun K. Verma 10.08.2013

4. Shri Nasser Munjee 10.08.2013

5. Shri U. Sunderarajan 10.08.2013

6. Shri S. C. Tripathi 10.08.2013

7. Shri S. K. Roongta 28.10.2013

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

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

Shri Arun Ramanathan 12.11.2013 Reappointment

Shri Arun K. Verma 12.11.2013

Shri Ashish Makhja 26.05.2014

Shri P Umashankar 26.05.2014

Shri N. C. Sridharan 26.05.2014 Appointment

Prof. Gopal V 26.05.2014

Shri R. Santhanam 26.05.2014

Auditors'' Report

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Corporate Governance

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

Directors’ Responsibility Statement

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

Statement, it is hereby confirmed:

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

* That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

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

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

Acknowledgements

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

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

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

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

A. K. Gupta Chairman & Managing Director

---

Mar 31, 2013

To the Members,

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

Accounting Year

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

FINANCIAL PERFORMANCE

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

(Rs. In crores)

2012-13 2011-12

Gross Earnings 4796 4500

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

Less : Interest 162 387

Depreciation 760 922 609 996

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

Prior year''s adjustments 62 33

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

Extraordinary items 300 -

Provision for Indian Taxation (46) (88)

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

Appropriations :

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

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

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

Staff Welfare Fund 1.2 crores

Total 1.2 crores

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

Brief Analysis of Financial Performance:

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

Fleet Position during the Year:

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

NEWBUILDING VESSELS DELIVERED DURING THE YEAR

Vessel Name Type Yard Built DWT

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

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

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

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

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

SCI Nalanda Platform Supply Vessel Cochin Shipyard 3,093

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

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

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

SCI Yamuna Platform Supply Vessel Cochin Shipyard 3,095

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

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

Total 630,172

VESSELS DISPOSED OF DURING THE YEAR

Vessel Name Type Year Built DWT

m.v. Ramanujam Passenger 1987 163

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

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

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

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

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

SCI-01 AHTSV 1984 1,775

SCI-04 AHTSV 1984 1,812

VESSELS ON ORDER AT THE END OF THE YEAR

Type No. Shipyard Total DWT

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

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

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

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

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

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

16 1,193,800

Particulars of Employees

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

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

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

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

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

Expenses on Entertainment, Foreign tours etc.

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

Board of Directors

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

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

Details of shares lying unclaimed

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

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

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

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

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

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

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

Auditors'' Report

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

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

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

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

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

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

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

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

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

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

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

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

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

Corporate Governance

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

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

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

- That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

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

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

Acknowledgements

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

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

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

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

For and on behalf of the

Board of Directors

Place : Mumbai B.K.Mandal

Dated : 8th August, 2013 Chairman & Managing Director

---

Mar 31, 2012

To the Members,

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

Accounting Year

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

Financial Performance

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

(Rs. Crores)

2011-12 2010-11

Gross Earnings 4500 4018

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

Less : Interest 387 67

Depreciation 609 996 465 532

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

Prior year's adjustments 33 30

Excess Provision / sundry credit balances written back 0 0

Profit before Exceptional items & tax (340) 657

Exceptional items -

Provision for Indian Taxation (88) (89)

Net Profit (428) 568

Appropriations

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

Brief Analysis of Financial Performance :

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

Fleet Position during the Year :

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

Implementation of Official Language Policy

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

Particulars of Employees

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

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

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

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

Foreign exchange used including deemed used ? 4258.09 crores.

Expenses on Entertainment, Foreign Tours, etc.

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

Board of Directors

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

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

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

Auditors' Report

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

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

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

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

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

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

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

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

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

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

Corporate Governance

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

Directors' Responsibility Statement

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

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

That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

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

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

Acknowledgements

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

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

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

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

Place : Mumbai S. Hajara

Dated : 13.08.2012 Chairman & Managing Director

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Mar 31, 2011

To the Members,

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

Accounting Year

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

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

(Rs. Crores)

2010-2011 2009 -2010

Gross Earnings 4020 3896

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

Less: Interest 64 53

Depreciation 465 529 380 433

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

Prior year's adjustments 30 (6)

Excess Provision / sundry credit balances written back 0 66

Profit before Exceptional items & tax 657 476

Exceptional items -

Provision for Indian Taxation (89) (99)

Net Profit 568 377

Appropriations

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

1. Capital Reserve Rs. 17.59 crores

2. General Reserve Rs. 57.00 crores

3. Staff Welfare Fund Rs. 1.00 crore

4. Corporate Social Responsibility Reserve Rs. 5.67 crores

Total Rs. 81.26 crores

Dividend

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

Fleet Position during the Year :

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

FLEET PROFILE DURING THE YEAR

Particulars As on 1.4.2010 Additions Deletions As on 31.3.2011

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

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

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

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

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

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

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

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

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

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

NEWBUILDING VESSELS DELIVERED DURING THE YEAR

Vessel Name Type Yard Built Dwt.

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

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

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

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

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

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

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

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

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

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

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

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

VESSELS DISPOSED OF DURING THE YEAR

Vessel Name Type Year Built Dwt.

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

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

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

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

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

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

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

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

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

VESSELS ON ORDER AT THE END OF THE YEAR

Type No. Shipyard Total Dwt.

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

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

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

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

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

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

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

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

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

TOTAL VESSELS ON ORDER 29 19,07,820

Implementation of Official Language Policy

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

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

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

Particulars of Employees

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

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

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

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

Foreign exchange used including deemed used Rs. 3103.94 crores.

Expenses on Entertainment, Foreign Tours, etc.

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

Board of Directors

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

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

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

Auditors Report

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Currency February 2011 March 2011 % difference

Euro 62.632 62.311 (-) 0.005%

USD 45.615 45.325 (-) 0.006%

SGD 35.670 35.591 (-) 0.002%

UKP 72.705 72.846 ( ) 0.002%

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

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

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

Corporate Governance

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

Directors' Responsibility Statement

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

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

That the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for the year under review;

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

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

Acknowledgements

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

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

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

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

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

For and on behalf of the Board of Directors

Place : Mumbai S. Hajara

Dated : 13th August, 2011 Chairman & Managing Director

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Mar 31, 2010

The Directors have pleasure in presenting the 60th Annual Report on the working of your Company for the financial year ended 31st March 2010.

Accounting Year

The year under report covers a period of 12 months ended on 31st March, 2010.

Financial Performance

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

(Rs. Crores)

2009- 2010 2008 - 2009

Gross Earnings 3,896 4,564

Gross Profit (before interest, depreciation, items relating to earlier years, exceptional items & tax) 849 1,469

Less : Interest 53 65

Depreciation 380 433 324 389

Profit before items relating to earlier years,

exceptional items & tax 416 1,080

Prior year’s adjustments (6) 4

Excess Provision/sundry credit balances

written back 66 10

Profit before Exceptional items & tax 476 1,094

Exceptional items - (39)

Provision for Indian Taxation 99 (114)

Net Profit 377 941

Appropriations

The working results of your Company for the year 2009-2010 after considering prior period adjustments show a profit of Rs.376.91 crores. An amount of Rs.80 crores has been transferred to Tonnage Tax Reserve u/s 115VT of the Income Tax Act, 1960. After adding a sum of Rs.511.38 crores (being balance in profit and loss account brought forward from the previous year), the amount available for disposal works out to Rs.808.29 crores. Your" Directors propose to make the following appropriations from this amount:

1. General Reserve - Rs. 40.00 crores

2. Staff Welfare Fund - Rs. 1.00 crore

3. Corporate Social Responsibility Reserve - Rs. 3.77 crores

Total - Rs. 44.77 crores

Dividend

Your Directors recommend payment of dividend @ 50% for the year 2009-10 absorbing a sum of Rs.211.73 crores. In addition, dividend tax of Rs.35.16 crores will be payable by the Company. After the proposed appropriations, the sum available is Rs.516.63 crores which is being carried forward to next year’s accounts.

Fleet Position during the Year

During the year under report, eight vessels aggregating to 4,53,540 dwt. were disposed of; one newbuilding crude oil tanker and three newbuilding product tankers aggregating to 4,68,007 dwt. were delivered. Thus, the overall fleet position, which was 80 ships at the beginning of the year, closed at 76 ships at the end of the year as shown in the following table:

FLEET PROFILE DURING THE YEAR

Particulars As on 1.4.2009 Additions

No. Dwt. No. Dwt.

1. (a) Crude Oil Tanker 30 35,89,597 1 3,21,137

(b) Product Tankers 9 3,67,240 3 1,46,870

(c) Chemical Tankers 3 99,174 - -

(d) Gas Carriers 2 35,202 - -

2. Bulk Carriers 19 8,08,505 - -

3. Liner Ships 5 2,02,413 - -

4. Offshore Supply Vessels 10 17,904 - -

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

Total 80 51,25,338 4 4,68,007







Particulars Deletions As on 31.3.2010 No. Dwt. No. Dwt.

1. (a) Crude Oil Tanker 5 3,35,875 26 35,76,271

(b) Product Tankers 2 90,937 10 4,23,172

(c) Chemical Tankers 3 99,174 - -

(d) Gas Carriers 2 35,202 - -

2. Bulk Carriers 1 26,728 18 7,81,777

3. Liner Ships - - 5 2,02,413

4. Offshore Supply Vessels - - 10 17,904

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

Total 8 4,53,540 76 51,41,216



NEWBUILDING VESSELS DELIVERED DURING THE YEAR

Vessel Name Type Yard Built Dwt.

m.t. Desh Vishal VLCC DSME , S.Korea 3,21,137

m.t. Swarna Kalash Product Tanker Jinling Shipyard, China 47,878

m.t. Swarna Pushp Product Tanker Jinling Shipyard, China 47,795

m.t. Swarna Mala Product Tanker STX Shipyard, S. Korea 51,196*

* Resale vessel acquired on 25.1.2010.



VESSELS DISPOSED OF DURING THE YEAR

Vessel Name Type Yard Built Dwt.

m.v Lok Prakash Bulk Carrier 1989 26,728

m.t. Major Somnath Sharma, PVC Crude Oil Tanker 1984 67,225

m.t. Naik Jadunath Singh, PVC Crude Oil Tanker 1984 67,169

m.t. CHM Piru Singh, PVC Crude Oil Tanker 1984 67,161

m.t. Capt. G.S. Salaria, PVC Crude Oil Tanker 1984 67,167

m.t. Major Dhan Singh Thapa, PVC Crude Oil Tanker 1984 67,153

m.t. F.O. Nirmaljit Singh Sekhon, PVC Product Tanker 1985 45,485

m.t. Lt. Arun Khetarpal, PVC Product Tanker 1985 45,452

VESSELS ON ORDER AT THE END OF THE YEAR

Type No. Shipyard Total Dwt.

LR-I Product Tankers 6 STX Shipbuilding Co. Ltd., S. Korea 4,33,800

LR-II Product Tanker 2 Hyundai Heavy Industries Co. Ltd., S. Korea 2,10,000

Aframax Crude Oil Carrier 4 Hyundai Heavy Industries

Co. Ltd., S. Korea 4,60,000

Anchor Handling, Towing & 4 Bharati Shipyard Ltd., India 8,000

Supply Vessel (AHTSV) (80T BP)

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

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

Anchor Handling, Towing & 2 Cochin Shipyard Ltd., India 3,940

Supply vessel (AHTSV) (120 T BP)

Platform Supply Vessels 2 Cochin Shipyard Ltd., India 6,120

(UT 755 Design)

MANAGEMENT DISCUSSION AND ANALYSIS

The overall scenario under which the Shipping industry operated and which impacted the various segments is discussed below.

A) INDUSTRY STRUCTURE AND DEVELOPMENTS

World Scenario

The global economy witnessed a 0.7% contraction in GDP during 2009 after registering a moderate growth of around 3% in the previous year. The performance of major economies / regions during 2009 indicated that, with the exception of China and ‘Other Asia’ which recorded positive growths of 8.3% and 2.6% respectively, the economies of North America, OECD Europe and Japan shrunk by 2.5%, 3.9% and 5.4%, respectively.

* China led the growth in the second half of 2009, mainly fuelled by its domestic demand with the government’s stimulus package contributing to off-set slowdown in exports; and South Korea, Singapore and India also posted significant growth. North American economy reversed the trend of contraction in the second half of 2009 with a surge in manufacturing activity on account of strong exports and inventory build-up. OECD Europe also showed a similar trend, though the pattern was not uniform across the region with Germany and Italy experiencing moderate growth while the British and Spanish economies continued to contract. Japanese economy also reversed the trend by mid-2009 after a double digit rate of decline since late 2008.

Although global Dry Bulk trade contracted slightly during 2009, the year witnessed a massive rebound in Chinese imports with around 50% increase and a stronger than expected recovery in trade in other countries. Deliveries of vessels were 40% below schedule and there was widespread port congestion. Together, these developments contributed to improvement in spot rates throughout the year.

The global Oil trade was characterised by very weak OECD demand, which was off-set to some extent by a massive 12% increase in Chinese imports as also by strong demand in rest of Asia. Overall, the oil trade shrank during 2009 with the crude trade falling somewhat more than the product trade. The total fleet grew by around 7% during the year. The year thus witnessed unfavourable conditions with spot rates falling by around 65% from the previous year. Crude tanker spot rates touched the low levels not experienced since 2002. However, late 2009 and early 2010 brought some encouraging signs with the crude tanker spot rates maintaining a rising trend.

Global "Dry Bulk" imports were 2.9 billion tonnes witnessing a fall of 0.5%. Global "Crude oil" imports during 2009 were around 1.96 billion tonnes, 3.7% lower than in 2008. "Products" imports were 0.8 billion tonnes, declining by 2.3% compared to its previous year’s level. The total "Oil" trade thus witnessed a decline of 3.3%. Global Container trade was in the region of 120 million TEUs, registering an unprecedented contraction of 7.7%.

The share of "Oil" trade in the total ‘Oil & Dry bulk imports in 2009 declined marginally to 48.7% from 50% in the previous year. The share of "Dry Bulk" trade correspondingly increased slightly to 51.3%.

Indian Scenario

As per the Advance Estimates of the Central Statistical Organisation (CSO), Indias GDP growth for 2009-10 is reckoned at 7.2%, nearly the same level as in the previous year despite the unfavourable global economic scenario. This was aided by strong growth in manufacturing and services’ sectors and a lower decline than previously expected in agriculture sector. As per another estimate, the IMF has projected India’s GDP growth in 2009-10 at 6.75% while the RBI has projected 7.5% growth. India’s Foreign Exchange reserves have increased by almost 10% from their year ago level and stood at US$ 277 billion at the end of March 2010. India’s Merchandise Exports in 2009-10 are estimated at US$176.5 billion, lower by 4.7% than the previous year mainly due to global economic meltdown. Imports during the same period were US$278.7 billion, a fall of 8.2% from last-year.

The total Cargo traffic handled by the Major Indian ports during 2009-10 was around 561 million tonnes, increasing by 5.7%. This comprised around 175 million tonnes of POL (Petroleum and Other Liquids) remaining constant at previous year’s level, 189 million tonnes of major Dry Bulk cargoes (Iron Ore, Fertilisers, Coal) which increased by 3.7%, 101 million tonnes of Container traffic showing a substantial increase of 8.6% (however, in terms of TEUs, the increase was around 4.3% indicating that heavy weight cargo was handled at major ports) and 95 million tonnes of "Other Cargoes" (i.e. minor bulks, breakbulk etc.), which declined by 21%.

The share of "Dry Bulk" cargo in Indias Major ports traffic was around 34%, followed by "POL" at 31%, Containerised cargoes at 18% and "Other cargo" accounting for the remaining 17%. The change in the traffic pattern from the previous year indicates that the share of Dry Bulk and POL cargoes has declined with Containerised cargoes and ‘Minor bulk & Breakbulk’ cargoes increasing their share in the trade.

B. OPPORTUNITIES & THREATS

Global Economy

Global GDP is expected to expand by 3.7% in 2010, indicating a considerable improvement over the contraction experienced in 2009. A slightly higher growth at 3.9% is projected for 2011 with similar growth likely to be witnessed over the next three years. However, even this improvement is still below the 4.7% growth witnessed during the 2004-2007 boom period. The overall scenario thus appears to present a somewhat limited growth opportunity for global trade and commerce. As per a recent CMIE (Centre for Monitoring Indian Economy) Report, world trade volume contracted by almost 13% in 2009 with a modest recovery of 5% projected for 2010, subject to a sustained global recovery setting in.

In the dry bulk segment, the Chinese infrastructure spending is expected to slow down and its steel demand projected to mature, with the growth in its overall imports likely to average around 7% p.a. over the next five years. Global demand is also expected to be quite strong over the next two years. However, with the bulk carrier fleet projected to continue growing rapidly in 2010, considerable tonnage would be available for employment. This trend of substantially high addition to the fleet is expected to continue for the next two years.

In the tanker segment, global oil trade is expected to recover in 2010 with both crude and product trades increasing by a little over 3% each. Long-haul shipments such as from Middle East to North America and Europe are projected to rise significantly. However, a new pipeline from Russia to China is scheduled to become operative in late 2010, which would slightly curtail seaborne import shipments. Also, the anticipated decline in floating storage of oil over the coming year would release additional tanker tonnage thereby tempering the demand for tankers. Although global economic growth is projected to accelerate slightly from 2011 to 2014, the demand for oil is expected to grow at a moderate pace as other energy forms such as LNG and nuclear power are likely to increase their market shares. Oil trade is thus projected to grow by around 3% p.a. during this period, with the product trade growing slightly faster than crude trade. China is reckoned to continue to be the most significant market in this segment, followed by ‘Developing Asia’ with India’s oil demand expected to be twice the level of this region. On the fleet side, tanker deliveries are expected to remain relatively high through 2011, and the tanker & combination carrier fleet is expected to continue to expand substantially through 2012.

The projections for the overall economic growth of various countries and regions and the developments in seaborne trade and shipping indicated above are expected to impact global trade as given below.

Global Trade

During 2010 "Dry Bulk" trade is expected to present substantial opportunity for shipping with a robust growth of 10.5% over 2009, however, in 2011 the growth is expected to slow down to about 6.1%.

The "Oil" trade is expected to witness a modest growth of 3.2% in 2010 with both crude and product trades increasing by a little over 3% each. However, in 2011, a lower growth of around 2.8% is projected for the total "Oil" trade with "crude oil" segment witnessing slower growth and the "products" segment likely to register a higher growth compared to their previous years levels.

The Container trade is expected to recover after a drastic contraction in 2009 with a substantial upswing of 8% in 2010, followed by 9% in 2011.

Indian Economy & Trade

A number of investment banks, including certain foreign-owned, have forecast Indias GDP growth of 8.5% for 2010-11. However, one of the foreign banks has projected a slightly lower GDP growth of 8.1% reflecting the global uncertainty arising from the European sovereign debt crisis. A recent CII (Confederation of Indian Industry) survey reckons the growth to be between 7.5% and 8.5%, fuelled mainly by rising capital investment and expanding exports.

C. OUTLOOK

With supply of dry bulk tonnage outpacing the expected growth in demand, the shipping market in this sector is projected to weaken during 2010 with average freight rates declining by more than 20% compared to their 2009 levels. The anticipated deliveries of vessels would continue to exert downward pressure on rates through the first half of 2012, and a recovery is expected to gain momentum only in 2013.

In the tanker segment, crude tanker spot rates are likely to fall back relative to their high levels in January 2010, however, they are expected to remain above 2009 average levels through to 2012. Thereafter, the rates are projected to witness an upturn during the next two years.

Your Company has formulated its Ship Acquisition Programme for the 11th Five Year Plan (2007-12) period reflecting the strategy of focusing on value-adding businesses by building on its core competencies so as to realize the objective of enhancing shareholder value. This Acquisition programme for expansion / diversification/ modernisation of SCI’s fleet envisages acquisition of 62 vessels aggregating to over 2.5 million GT (4.5 million Dwt.) and includes Bulk Carriers (Capesize / Panamax / Handymax), Crude Tankers (VLCC / Suezmax / Aframax, etc.), Product Tankers (LR-II / MR), Offshore Vessels, etc. The Ship acquisition programme is reviewed from time to time in order to sync it with the latest trend of pricing and the conditions of charter market. During the last financial year, your company acquired a resale MR Product tanker built in a first class Korean Yard for US$ 32.9 million (originally priced at US$ 45.2 million) from a Greek owner. Your Company is also on the look-out for suitable Liner vessels. Your Company believes that in the wake of erstwhile meltdown, opportunities for value buying in limited manner may come up and, the Company will consider these proposals.

D. RISKS & CONCERNS .

Although global economic recovery is presently reckoned to continue at a relatively steady pace over the next few years, there is considerable uncertainty with regard to the US economy, which may experience a recession during the second half of 2010, especially if its private sector demand does not improve as the Government’s stimulus package gets phased out. In such a scenario, global GDP growth would not continue at the pace being projected now, and consequently, there would be an adverse impact on trade and shipping activities.

As a result of improvement in freight rates / markets, there is a possibility of reduced slippages (postponement) in the deliveries of dry bulk and tanker vessels from the shipyards than what is presently envisaged and in case the slippages reduce substantially, the increased addition to the respective fleets would result in much faster deterioration in the freight rates.-

Another concern would be a much faster reduction of floating storage (in tankers) of refined products than presently reckoned which would also release much greater tonnage of tankers for employment than projected, thereby putting further downward pressure on rates.

These developments, singly or in combination, would adversely affect revenues and profitability of shipping operations.

A detailed analysis of how the above would impact or strengthen each segment of the Company is discussed below. The segments have been divided into three parts viz. (1) Bulk Carrier & Tanker (Bulk Segment), (2) Liner & Passenger Services (Liner Segment) and (3) Others.

(1) BULK CARRIER & TANKER

The Bulk Carrier & Tanker has been further sub-divided into two segments viz. (I) Tanker and (II) Dry Bulk.

I) TANKER

A) INDUSTRY STRUCTURE & DEVELOPMENTS

World Scenario

The global credit crisis and world economic downturn in 2008-09 dramatically undermined the prospects for tonnage demand for all main ship types; thus, the year 2009-10 opened amid far more negative sentiment than a year earlier.

In the financial year 2009-10, the shipping industry faced rough weather with tanker freight markets not being steady at all. There were huge declines in spot earnings, both for clean and dirty tankers, mainly due to (i) poor oil demand, particularly in the mature industrial economies, and resulting cuts in crude imports (ii) increased oil output from US and Former Soviet Union (FSU); in particular, a 0.58 mb/d (million barrels per day) rise in its domestic crude oil production made the US less dependent on imported supplies, (iii) far faster net fleet growth (net fleet expansion was also compounded by fewer removals from the fleet, as interest in buying "single-hulled" ships for conversion (to bulk carriers or FPSOs) had diminished significantly) (iv) relatively strict adherence by OPEC members to the oil output cuts that had been enacted from late 2008 onwards.

The fourth quarter of 2009-10 showed an upward trend in the tanker freight market as a steady recovery in oil demand (mainly non-OECD), amid bettering economic conditions, and rising offshore storage, pushed up the demand for tonnage.

Indian Scenario

The oil and gas industry has been instrumental in fuelling the rapid growth of the Indian economy. According to the Ministry of Petroleum, India has total reserves of 775 million metric tonnes (mmt.) of crude oil and 1074 billion cubic metres (bcm.) of natural gas as on April 1, 2009.

Under New Exploration Licensing Policy (NELP VIII), 1.62 sq.km. of area comprising 70 blocks was put up for bidding.

Production

By the end of the Eleventh Plan, the refinery capacity is expected to reach 240.96 million metric tonnes per annum (mmtpa.).

- Crude oil production during 2009-10 was 33.68 mt. as compared to 33.50 mt. in 2008-09. -

- Refinery production in terms of crude throughput was 160.03 mt. in 2009-10.

- The production of natural gas went up to 47.57 bcm. in 2009-10 from 32.84 bcm. in 2008-09.

Consumption

The sales/consumption of petroleum products during 2008-09 was 133.40 mt. (including sales through private imports) registering an increase of 3.45 per cent over sales of 128.94 mt. during 2007-08, according to the Ministry of Petroleum.

India"s domestic demand for oil and gas is on the rise. As per the Ministry of Petroleum, demand for oil and gas would increase from 186.54 million metric tonnes of oil equivalent (mmtoe.) in 2009-10 to 233.58 mmtoe. in 2011-12.

The refining capacity in the country increased to 177.97 million tonnes per annum (mtpa.) as on April 1, 2009 as compared to 148.968 mtpa. as on April 1, 2008.

There are various projects under implementation to expand the capacity of the existing refineries and some projects are on the anvil to install new refineries. Considering the expected refining capacity, India is going to emerge as a major refining base and the main business hub for petroleum products for the whole world by 2011.

With respect to crude oil imports it has been observed that there is a shift to higher parcel sizes and, in order to obtain benefit from economies of scale, the use of VLCCs have increased considerably for transportation of crude oil to Indian shores. This is also evident as more number of SBMs are set up/being set up to handle VLCCs.

B) OPPORTUNITIES & THREATS

Opportunities

It is expected that there would be recovery in the global economy thereby brightening the near-term outlook for tanker trade. A pick up in vessel scrapping due to Marpol single-hull phase out deadline would tame growth in tonnage supply in 2010. Tonnage demand is also likely to grow faster with rising long-haul trade and offshore storage. The refining capacity is expected to grow at about 3.24 million bpd (barrels per day) across the world between the years 2009-14. The Indian refining capacity and utilization are set to increase which provides increased opportunity for tanker trade. Increased oil imports in 2 million barrel parcels is resulting into enhanced usage of VLCCs and thus an opportunity for acquisition of more VLCC units. Emergence of India as a significant refining base and the expansion of RIL refinery and Essar refinery would result in enhanced exports of products from India, which would require Clean LR-I and LR-II tankers. With the phase-out of single hulls, freight market levels are likely to improve in Indian crude oil import trade.

Threats

High supply growth next year on the back of hefty deliveries would place downward pressures in 2010 and 2011 as the tonnage supply may improve. Slack oil demand, particularly in the mature industrial economies viz. USA and Japan would adversely affect the trade activity. Demand growth, especially in short term, is heavily dependent on growth in India and China. However, this growth cannot offset the declines in imports by more mature . markets such as the US.

C) SEGMENTWISE PERFORMANCE

Crude Oil Tankers

Your Company has been competing with other players in the global competitive market as few tankers including . VLCCs were employed gainfully on cross trade. M/s. Hindustan Petroleum Corporation Ltd. (HPCL) and M/s. Bharat Petroleum Corporation Ltd. (BPCL) continue to have COA arrangements with SCI for their crude transportation.

During the year 2009-10, the total quantity of crude oil transported by your Company was about 24.89 mmt., which includes 2.89 mmt. in cross trade, 11.42 mmt. of imported crude for Indian Oil Industry and 6.90 mmt. coastal movement. In addition, through in-chartered vessels, your Company transported about 3.68 mmt. of imported crude for Indian Oil Industry.

Of the total 15.10 mmt. of crude oil transported by your Company for Indian PSU refineries, 75% was carried by owned vessels and 25% carried by in-chartered vessels.

Your Company, as an integrated service provider, has also handled lighterage operations during the year 2009-10 at various locations along the Indian Coast and has lightened liquid and dry bulk cargo of 7.16 mmt.

Ship-to-Ship (STS) Lighterage operations

During 2009-10, your Company’s Lighterage Cell carried out 192 STS lighterage operations for STS transfer of 2.541 mmt.(million metric tonnes) of crude oil ( import and indigenous) at various locations off the East & West Coasts of India, and 45 lighterage operations for STS transfer of 4.617 mmt. of bulk Iron ore off Goa.

In January 2010, the Lighterage Cell also commenced STS operations for transfer of Clean Petroleum Products (CPP) for M/s. Reliance Industries Ltd.(RIL) off Sikka.

During 2009-10, the Lighterage Cell supervised/conducted 52 Single Buoy Mooring (SBM) operations of storage tankers at Mumbai High and satellite oilfields.

Contract of Affreightment (COA)

During the year 2009-10, your Company successfully performed COA with HPCL and BPCL. The contracted quantities are 11 mmtpa. of imported crude plus 2 mmtpa. of indigenous crude for HPCL and 6 mmtpa. of imported crude plus 2.35 mmtpa. of indigenous crude for BPCL.

Your company is transporting Mumbai high crude to various Coastal refineries viz. M/s. MRPL(Mangalore Refinery & Petrochemicals Ltd.), M/s. HPCL, M/s. BPCL, M/s. IOCL and M/s.CPCL (Chennai Petroleum Corporation Ltd).

Product Carriers

During the year 2009-10, eight (8) product vessels were gainfully employed with the Indian Oil Industry on time charter basis and one vessel had been employed outside. Out of these, two vessels were phased out during the year.

Your Company took deliveries of 3 new MR tankers. m.t. "Swarna Kalash" was delivered on 10.10.2009, m.t. "Swarna Pushp" on 27.01.2010 and m.t. -Swarna Mala" on 25.01.2010.

Specialized Vessels

Your Companys LPG/Ammonia carriers were operated for carriage of both LPG and Ammonia. After spotting, for few voyages, these vessels, for a major part of the year, were deployed on time charter to M/s. Indian Oil Corporation Ltd.

The three chemical tankers continue to be deployed under COA with M/s. Maroc Phosphor and performed few coastal voyages for M/s. Sterlite Industries.

D) OUTLOOK

A recovery in the global economy, rising demolitions and a slowing pace of new tonnage deliveries are some factors which may bring some positive outlook for the tanker market. Global oil demand is now projected to recover by 1.9% in 2010, driven up by strong non-OECD demand. However, downside risks still remain, with OECD oil demand forecast to further decline by 0.6% (or 110,000 bpd) from 2009. Moreover, oil product stocks -in the US, even after declining significantly over the quarter, still stand at a significantly high level.

However, the tanker freight market is expected to witness downward pressures on freight rates over the next two years viz. 2010 and 2011 on account of a significant expansion in the tonnage supply-demand balance. While tonnage demand is anticipated to continue to grow at a steady rate of around 4% per annum, tonnage supply is forecast to expand at a much more rapid pace of 7% per year, further widening the tonnage supply- demand gap. Going further, decline in floating storage over the next twelve months shall increase the tonnage supply.

In short, the outlook for tanker market in the year 2010-11 looks grim as demand gains are likely to be offset by lower floating storage and steady fleet growth.

Your Company is expected to grow its tanker fleet in the financial year 2010-11 with new deliveries of LRIs, LR2s and Aframax tankers.

SCIs COA with M/s. HPCL and M/s. BPCL for transportation of crude oil has been extended by both the companies. M/s. BPCL has signed COA with SCI till September 2012 with an option of extension for a period of further two years on mutual consent of both parties. The COA signed with M/s. HPCL is valid till September 2010 with two extensions of one year each at charterers’ option.

SCI would continue its dominant position in transportation of indigenous crude.

The movement of clean petroleum products (CPP) along the Coast would remain steady and majority of our product tankers would continue to remain deployed on time charter basis to Indian oil companies.

D) RISKS & CONCERNS

Economic slump, higher tonnage, supply coupled with falling oil demand are the major areas of concern for Tanker market. However, with secured cargoes by way of COA with Indian oil companies and SCI’s quality fleet exposed to cross trades, SCI expects to tide over the challenges posed by the current market environment.

Taking into account the current levels of vessels on order and the further tonnage acquisition planned, SCI is likely to retain its dominant position among Indian Shipowners in terms of tonnage and actually widening the gap from other Indian Shipowners in the tanker segment.

Integrated Management System (IMS)

The Integrated Management System (IMS) is in force across our entire Tanker Fleet since 2006. Key Performance Indicators (KPIs) as stated in TMSA (Tanker Management and Self Assessment) guidelines are being continuously monitored and the status is regularly updated on the website. Accordingly, the tankers are maintained to the highest standards and remain competitive and marketable. The IMS also covers, within its ambit, Risk Assessment, Hazard Identification & Analysis (which will become a requirement under the revised ISM Code effective 1st July 2010).

TMSA compliance is the Oil Majors’ requirement under OCIMF (Oil Companies International Marine Forum), without which the tankers are not accepted by Oil Terminals around the world. TMSA offers a standard of "Best Practice" framework for assessment of Ship Operators’ Management system. Ship operators are expected to conduct and regularly review their TMSA assessment on line against the highest practices recommended in their programme.

Indian Register Quality System, IRQS (IRS) have certified that the Tankers manned and operated by SCI are compliant with ISO 9001 - 2008, EMS 14001 - 2004 and OHSAS 18001- 2008.

Outstanding Payment from the oil industry

As on 31.03.2010, payment under various heads outstanding from the oil industry was approximately Rs.149.92 crores. A substantial portion of the outstandings was in connection with the payment in respect of tankers’ oil transportation including freight, demurrage and charter hire. Your Company has been continuously following up with the oil industry for realization of overdue demurrage claims.

II) DRY BULK

A) INDUSTRY STRUCTURE & DEVELOPMENTS

World Scenario

The average BDI (Baltic Dry Index) during the year 2009-10 was 2978 (as compared to 4896 during 2008-09).

The Baltic Supramax Index (BSMI) also witnessed a decline from 2009-10 where the average stood at 2001 as compared to 2999 during 2008-09.

As mentioned earlier, 2009-10 started with a negative sentiment. The difficulties facing vessel owners were set to be accentuated by softer cargo demand at a time of accelerating net fleet growth. Though the year began in a depressed state, there were series of upturns witnessed during this year. These were largely linked to (a) continued firm import demand by China and (b) the build up of huge volumes of port congestion at some key dry bulk terminals in East Coast Australia and China. Dry bulk carrier earnings predominantly rose in the fourth quarter of financial year 2009-10.

Indian Scenario

Indian Iron Ore shipments and Coal imports are the driving forces for dry bulk demand in India. During the period from April to January 2010, India imported about 61.01 million tones of Coal as against 49.90 million tones imported during the period from Apr-Jan 2009. The iron ore traffic accelerated to 7.1% of total port cargo traffic

in 2009-10 from a modest 2.3% in 2008-09. The exports of iron ore, a key ingredient in steel manufacturing, increased in 2009-10 as compared to last year. Your Companys Handymax fleet continued to perform well in this segment. Growing domestic demand for steel and the augmentation of power generation capacities are driving the Coal demand and SCI is a major transporter for these imports.

B) OPPORTUNITIES & THREATS

Opportunities

Coal demand is increasing in India driven by rising steel production and thermal power plants. Many Ultra Mega Power Projects are being set up near ports and their requirements would be met mainly through shipping imports. Indian Power generation is projected to increase by 21355 MW (7.2%) in 2010-11. The thermal coal imports are projected at 30 MMT in 2008, 60 MMT in 2009 and 81 MMT in 2012. Indian Companies are acquiring coal mines abroad from which coal are to be shipped to India. Coking Coal imports are expected to increase in line with Steel capacity and thus, increasing shipping activity. Coastal Trade is increasing. Deepwater ports with better infrastructure are being developed thereby enabling Indian owners to opt for larger vessels like Panamaxes for shipments. World GDP growth is projected to grow in near future and dry-bulk trade has close co-relation to World GDP growth.

Threats

Changing Government Regulations and Duty structures can affect imports and exports of dry cargoes to a great extent. India is over dependent on Chinese demand for iron ore exports. Eurozone economic downturn will result in reduced demand for industrial raw-materials which can contribute to falling dry bulk freight rates. Large iron ore exports from Brazil to China can reduce demand for Indian iron ore, a trade in which SCI has been an active participant. Leading ore supplier M/s. VALE has embarked on large scale conversion of VLCCs to VLOCs. If shipments from Brazil to China take place on Very Large Ore Carriers (VLOCs), better economies of scale can be achieved and Chinese importers may shift to imports from Brazil. In the iron ore sector, China’s proposed import ban on lower grade iron ore below ‘Fe’ content 60% is likely to curb exports from India. Fleet growth of 10% per year till 2012 will delay any significant rise in freight rates. India’s exports of iron ore will decline as domestic demand is increasing and the Government has just raised the duty on iron ore exports (from 5% to 10% for iron ore lumps and from zero to 5% on fines).

C) SEGMENTWISE PERFORMANCE

Your Company owns 18 bulk carriers (average age 20 yrs.) as on 31st March, 2010 comprising of 15 Handymax and 3 Handysize vessels. .

Eleven (11) units of Handymax vessels were primarily deployed on a triangular voyage for transportation of coking Coal from Australia to ECI both on COA and spot basis for Steel Authority of India Ltd. (SAIL), Kolkata and then mainly deployed for carrying iron ore from ECI to China on spot basis. On account of SAIL, SCI tonnages had lifted from Australia about 13,43,850 mt. during the year 2009-10.

Few Handymax vessels, which are less older tonnages of 45000 DWT, were deployed on short period charter and occasionally to lift urea parcel under COA arrangements and 3 units of Handysize vessels were mainly employed on cross-trades or short-term period charters to carry cargoes like urea, steel, grain, fertilizers, , agri-products etc.

D) OUTLOOK

The Baltic Dry Index (BDI) opened the year in January 2010 at 3005 and reached 3300 in the middle of January 2010. However, the BDI then slipped back to close fourth quarter of 2009-10 at 2998. The major factor affecting poor business in the middle of Q4 of 2009-10 was China going into holiday mode and enquiry levels, therefore, - declined drastically. Another issue that affected the freight market, especially the Pacific, was the uncertainty over the pricing of iron ore.

The world dry bulk fleet at the end of Q4 of 2009-10 stood at 469 million dwt. and by end of this year it is expected to increase to 518 million dwt. showing an increase of 14% over the same period in the previous year. The increase in fleet size is expected to be more than 10% until 2012, after which the deliveries will slacken.

Wth deliveries likely to accelerate further in the short term as slipped and delayed vessels finally get completed, the outlook for the dry market remains weak. Demand is not expected to be sufficiently strong to meet the wave of dry bulk deliveries from shipyards.

Despite indications of some vessel cancellations and delays in 2010, dry bulk vessel supply is expected to negate any improvement in demand, capping freight market gains. However, if China again performs strongly this year and global demand recovers, the glut in supply could be negated to some extent.

E) RISKS & CONCERNS

Ageing fleet demands high level of maintenance and repairs which is adversely affecting Company’s profitability.

Due to shortage of shipbuilding steel globally, the cost of steel renewal in ship repair yard is rising.

The volatility in bunker prices is making the charterers look towards more fuel efficient ships.

Nevertheless, in the current market conditions, there is a niche for SCI’s bulk carriers. Further the delivery of the bulk carrier new buildings, which are Supramax vessels meeting the market requirements, shall be added to the SCI fleet when these vessels are close to reaching 25 years of age.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE (BULK CARRIER AND TANKER)

The overall financial performance of bulk carriers and tankers though had been on a decline on Y-O-Y basis has, however, remained competitive despite poor market conditions. The bulk carriers continued its contribution; the crude sector showed a decline in earnings as crude tanker shipping suffered a heavy fall in 2009-10 but the vessels on period charter served as a hedge both for revenues and against fluctuating bunker prices The product tankers have performed satisfactorily and the performance of LPG vessels has also been impressive. Acid Carriers were affected due to the downturn in the phosphoric acid trade.

The Bulk Carrier & Tanker segment (Tanker and Dry Bulk together) recorded a revenue of Rs.2670.94 crores in 2009-10 as compared to Rs.3271.01 crores in 2008-09. The segment recorded a Profit before Tax of Rs.485.93 . crores in 2009-10 as against Rs.980.11 crores in 2008-09.

(2) LINER & PASSENGER SERVICES

A) INDUSTRY STRUCTURE & DEVELOPMENTS

World Scenario:

The trend of contraction in global Container trade witnessed during 2008 continued in 2009 as well with trade volumes shrinking steeply by an unprecedented 7.7%. The contraction was particularly severe in the two premier lanes, the Asia-Europe West-Bound (15%) and the Transpacific East Bound (17%).

Operators embarked on a major programme of capacity management to substantially curtail vessel capacity through two measures i.e. ‘slow steaming of vessels and vessel lay-ups. The total container capable fleet growth fell drastically from a 12% annual pace at start of 2009 to 6% by year end. Further, there were record high scrappings and deferring of deliveries of new-building ships from the shipyards. By end of 2009, scrappings accounted for 2.8% of the cellular fleet capacity and deferment of deliveries amounted to 43% of total scheduled deliveries.

The container ship markets experienced the worst ever conditions with freight rates and charter rates declining sharply in 2009. Despite small charter rate gains in January 2010, the rates remained near historical lows, in most cases below operating expenses. Freight rate increases in early 2010 in the premier lanes are basically attributed to strict capacity control actions, although market fundamentals have also started to show improvement. For 2009 as a whole, however, most of the liner companies world wide have experienced substantial losses.

Indian Scenario:

The Major Indian ports handled 6.87 Million TEUs of Container traffic in 2009-10 which was only 4.3% higher than the previous year. This is equivalent to 101 Million Tonnes of containerised cargo, representing a significant growth of 8.6%. The SCI continues to be the only Indian mainline carrier providing services from India to some of the major global destinations including Far East / China, Europe, Middle-East / West Asia Gulf etc. However, several international container majors are offering direct services or calling Indian ports enroute on their East-West services.

B) OPPORTUNITIES & THREATS

Global Container trade is projected to rebound by 8% in 2010, which is, however, on a negative growth base seen in 2009. Subsequently, the projections indicate robust growth of 9% in 2011, followed by 8.5% average annual growth upto 2014. The positive growth in container trade is based on expectations of rapid economic growth in both emerging and developed economies. The expansion of emerging economies is particularly attributed to China and India as also Latin America etc., which would accelerate trade to these regions.

On the fleet side it is expected that delivery slippage of container vessels would reduce to around 33% of scheduled deliveries in 2010 and 2011. While this would ease fleet growth in the near term, it would in any case result in faster capacity expansion in later years. The container-Capable fleet is expected to grow by an average of 7% during the next three years (i.e. 2010 to 2012). Most of the expansion is in the Panamax and Post-panamax sizes, especially mega-ships of over 7500 TEU. Though the Smaller size fleet of under 3000 TEU is likely to actually decline slightly over next three years, the cascading down of larger vessels is likely to reduce the demand for charter-vessels and hinder recovery of charter rates.

The breakbulk sector continues to have good potential in respect of imports of Over-Dimensional Cargoes (ODC), Project cargoes, Heavy Lift cargoes etc. on account of the Government departments / PSUs and other commercial organisations as the Infrastructure sector in India will remain strong.

C) Segmentwise Performance of Liner & Passenger Services

Liner Vessels:

The table below shows the profile of SCI’s owned liner fleet having total container carrying capacity of 14,407 TEU.

Type of Ships As on 31.03.2009 Additions Scrapping As on 31.03.2010

No. Dwt. No. Dwt. No. Dwt. No. Dwt. Fully Cellular 5 2,02,413 - - - - 5 2,02,413

Total 5 2,02,413 - - - - 5 2,02,413

Average age of the five(5) owned Container vessels: Approx. 11 years, out of which 2 vessels are around

2 years old.

- As on 31.03.2010, the in-chartered container vessel tonnage operated by SCI comprised of 4 vessels of a total Dwt. of 1,62,399 tonnes and 11,784 TEU total capacity.

Your Company continued to deploy its owned/operated Container vessels and Breakbulk vessels in the various sectors as described below.

Container Services

UK - Continent sector:

Indian Subcontinent Europe Service (ISES):

The UK-Continent cellular container service was started in 1994, with a single operator viz. SCI deploying its

3 owned vessels.

SCI operates this service in consortium with M/s Mediterranean Shipping Lines (MSC) with SCI deploying 2 owned and 1 in-chartered vessel and MSC 4 vessels in this service. It has round voyage duration of 49 days.

Ports of call: Colombo / JNP / Mundra / Salalah / Port Said / Barcelona / Hamburg / Antwerp / Felixstowe / Jeddah / Colombo.

Due to recession, the freight rates had reduced severely. However, the freight rates have now shown signs of recovery.

Far Eastern Sector:

India / Far East Cellular (INDFEX 1): Service

This service commenced in June, 2001 with 5 vessels of 1,600 to 1,800 TEU capacity. It was upgraded in stages and the service is presently operated as a weekly direct service from India’s West Coast to Central China, Korea, Hong Kong, Singapore and Malaysia with 5 vessels of 1950-2250 TEU on a round voyage schedule of 35 days.

The main ports of call are NSICT / Colombo / Singapore / Busan / Shanghai / Ningbo / Hong Kong / Singapore/ Port Kelang / Colombo / NSICT.

The four Vessel Operating Partners are SCI, PIL of Singapore, K-Line of Japan and Wan Hai of Taiwan with one vessel each; and the other remaining one vessel which is shared by the partners (50% by Wan Hai & 50 % by other 3 Partners).

The One vessel deployed by SCI is of 2700 TEU capacity and the average weekly allocation for SCI is about 532 TEU considering owner’s merit.

India / Far East Cellular (INDFEX 2) Service

This service commenced in June 2002, connecting East coast of India to North China and is operated as a weekly direct service with 5 vessels on a round voyage schedule of 35 days.

The constituents of the consortium are SCI, PIL, K LINE and HANJIN.

The main ports of call are Chennai / Vizag / Singapore / Hong Kong / Xingang / Dalian / Qingdao / Hong Kong/ Shekou / Singapore / Port Kelang and Chennai.

Through the INDFEX 1 and INDFEX 2 services, SCI covers the Chinese market extensively with direct calls at 6 mainland Chinese ports and Hong Kong. Due to recession the freight rates continued to be severely affected in the Far East Sector. However, the Freight rates in the sector have started improving, and there is optimism - that the Far- East services will improve in the current year.

SCI Middle East India Liner Express (SMILE) Service

SCI is operating this new independent weekly service (commenced in March 2008) to the Gulf with its 3 owned vessels on a round voyage schedule of 21 days.

This service covers "India & the Indian Subcontinent - West Asia Gulf sector catering to the trade requirement in the Gulf markets as also the Far East, Red Sea, UK-Continent through transhipment at Colombo.

Upper Gulf locations are also covered by feeder services ex-Jebel Ali. In December 2008, the SMILE service was expanded to carry feeder and coastal cargoes on the west coast of India. With this service SCI is now one of the leading coastal carriers for domestic cargo on west coast of India.

The main ports of call are Colombo / Jebel Ali / Mundra / Pipavav / JNPT/ Cochin / Tuticorin / Colombo.

The freight rates between India and Gulf owing to recession have also dropped. However, catering to coastal shipping and some feeder cargoes mitigated the losses. As this service is also acting as feeder to other services, the revenues on this service also are reflected in other mainline services.

India-Red Sea Service

This is a new service launched at the end of 2008-09. This service was affected by the recession in the industry. In order to cut costs, this service has been discontinued and the vessel mv SCI Trust has been suitably redeployed in other services.

Break-Bulk Services

SCI is the only Indian company providing overseas liner break-bulk services to Indian trade. SCI arranges carriage of breakbulk cargoes on space charter basis from various regions across the globe including USA and Far East for imports on account of the Government departments / PSUs and other commercial organisations which includes Shipments of Over-Dimensional Cargoes (ODC) / Project cargoes / Heavy Lift cargoes / IMO

Class I Cargoes etc. and also containers. SCI continues to operate its India-UK Continent breakbulk service from European ports to India jointly with Rickmers Linie on space sharing basis on their vessels.

Feeder Service

SCI makes feeder arrangements with ‘Common Carriers’ between various destinations on the Indian subcontinent depending on market requirements.

SCIMAX Feeder Service

SCI operated a feeder service in consortium with another Indian Feeder operator i.e. Maxicon Line. This service was catering to Kolkata - Colombo sector. Besides SCI’s own captive cargoes, this service also catered to other mainline operators cargo as a feeder operator. With the completion of the charter period and redelivery of the vessel, SCI has suspended this service. Currently SCI is using common feeder lines to cater to its feeder cargoes in this sector.

Currently SCI is using common feeder lines to cater to its feeder cargoes in this sector.

Coastal Operations

Domestic Passenger-Cum-Cargo Service

In addition to International operations, the SCI with its 2 Owned Passenger-cum-Cargo vessels and 30 Managed vessels operates domestic passenger & cargo transportation services between the Mainland and Andaman & Nicobar and Lakshadweep groups of Islands and inter-island, on behalf of the Government of India.

Other Coastal Services:

SCI also manages / mans certain other types of (Coastal) Research vessels on behalf of Government agencies/ departments viz. 3 vessels of Ministry of Steel and Mines (Geological Survey of India) and 2 vessels of Ministry of Earth Sciences (Dept. of Ocean Development).

SCI’s Owned Passenger-Cum-Cargo Vessels:

The table below shows the profile of the owned Passenger-cum-Cargo carrier fleet owned by your Company:

Type of Ships As on 31.03.2009 Additions Scrapped As on 31.03.2010

Nos. Nos.

Nos. Pax. Cargo Nos. Pax. Cargo

Cap. Cap. Cap. Cap.

(mt.) (mt.)

Pax-Cum- Cargo Ships 2 1,502 1,500 - - 2 1,502 1,500

Total 2 1,502 1,500 - - 2 1,502 1,500

The deployment pattern of the above mentioned owned fleet of your Company was as under:

- m.v"Harshavardhana" was deployed in the Mainland/Andaman Sector.

- m.v"Ramanujam" was deployed in the Inter-Island Services of the Andaman and Nicobar Islands.

Manned and Managed Vessels:

The following table shows the profile of the vessels Passenger-cum-Cargo vessels and other vessels managed by your Company on behalf of the various Governmental Organisations/Departments:

Type of Ships As on 31.03.2009 Additions Scrapped As on 31.03.2010

Nos. Nos.

Nos. Pax. Cargo Nos. Pax. Cargo

Cap. Cap. Cap. Cap.

(mt.) (mt.)

Pax-Cum- Cargo Ships 29 9,178 6,498 1 - 30 9,278 6,498

Other vessels 6 - - - - 6 - -

Total 35 9,178 6,498 1 - 36 9,278 6,498

The deployment of these vessels on behalf of various organizations was as follows:

- Twenty Six (26) Ships on account of the A&N Administration, of which 4 are for carrying Passengers and cargo between the Mainland and Andaman and Nicobar Islands and 22 for Inter-Islands run.

- Five (5) Ships on account of the Union Territory of Lakshadweep Administration, of which two (2) are for carrying Passengers and cargo between the Mainland and Lakshadweep Islands, 2 for Inter Islands and the remaining One (1) is an Oil Barge.

- Five (5) Research vessels on behalf of various Governmental organisations/ Departments, of which three (3) ships on behalf of the Ministry of Steel and Mines (Geological Survey of India) and two (2) on behalf of the Ministry of Earth Sciences (Department of Ocean Development).

During the year under review, the SCI carried Passengers and cargo on the Mainland/Island sector on owned and managed vessels as under:

Sector No. of Passengers General Cargo (mt.)

Mainland/A&N Islands 1,76,962 16,485.62

Mainland/UTL Islands 24,718 NIL

Total 2,01,680 16,485.62

Marketing

Your Company has intensified the marketing efforts for its break-bulk and container services. Sales calls are being regularly made by the SCI’s marketing team, through own offices and also through agents appointed at various ports in India and abroad so as to build a sound rapport with its customers viz. various Government of India Departments, Public Sector Undertakings and major Export / Import Business Houses. Your Company has adopted a proactive approach towards competition by undertaking an all India customer contact programme, gathering market intelligence on trade activities, cargo prospects and projects in pipeline etc. Marketing efforts have also been specifically directed at various Departments of the Government of India, Public Sector Undertakings etc., for retaining their valuable patronage and cargo support.

D) OUTLOOK

Global container trade started to show signs of recovery in the fourth quarter of 2009-10 / first quarter of 2010-11, with only slight positive impact on the container freight rates. The losses in the SCIs Container services segment during 2009-10 are on account of severe drop in the freight rates and are a matter of serious concern to the management. The major reasons attributed to the dismal results are higher cost of operations like bunkers and port dues along with abysmally low freight rates ever experienced in the liner services.

The SCI’s flagship ISE (Indian Subcontinent Europe) service has undergone a change with the earlier partners having withdrawn from the consortium. The service is now continuing with a new partner, M/s. Mediterranean Shipping Company, Geneva. SCI has deployed two owned vessels and one in-chartered vessel at a very attractive charter rate in the service, and the service is expected to perform well in the future.

In the Far East sector, two of the high cost vessels were redelivered in 2009, thereby reducing the outgo of about US$ 50,000 per day, which has a positive effect in the INDFEX services. In the current year also, SCI is redelivering 2 inchartered vessels with high charter rates, which will reduce the input costs and thus improve the profitability of the services. However, INDFEX 2 Service would still be hampered by the deployment of m.v SCI Vijay, which is a relatively higher cost vessel.

The freight rate levels, as on date, are showing signs of revival in various sectors, and it is expected that this trend will improve. On its part, the Management is continuing to work on the loss mitigating plan in order to ensure overall profitability of SCI. Efforts are being made for acquiring the required tonnage from the market at attractive prices. This will enable the SCI to be insulated from the fluctuating charter markets in future and reap the benefits once the global economy recovers.

SCI has also obtained the freight forwarding licences, and is now registered as a Multimodal Transport Operator (MTO). With this, the SCI is also rendering in a limited way 3PL (Third Party Logistics) business using its vast experience and agency network.

The prospects of Breakbulk services provided by your Company continue to be reasonably bright in respect of both the independent space charter arrangements being made by SCI for carriage of import cargoes from various locations worldwide and also SCI’s joint service with M/s Rickmers Linie on space sharing basis on their vessels for imports from European ports to India.

Your Company will continue to operate Coastal and Passenger Services successfully by deploying its owned / managed vessels for the Andaman & Nicobar Administration, Ministry of Steel and Mines (Geological Survey of India), Ministry of Earth Sciences (Dept. of Ocean Development) and Union Territory of Lakshadweep Administration (till July 2010).

Developments of material nature affecting the financial position of the Company subsequent to the close of the year 2009-10 i.e. after 31.03.2010:

In the passenger-cum-cargo coastal service, UTL Administration has decided to take over 4 vessels and one vessel will be scrapped during 2010-11.

E) RISKS & CONCERNS

There is a concern regarding relapse of the global economic crisis in view of the debt problem in EU countries, a "job-less" economic recovery in the US, and an over-heating Chinese economy. These factors could affect the global economic recovery with the possibility of a "W" shaped recovery scenario which would have adverse impact on world trade. In such an event, the prospects of shipping industry including container shipping would not be very encouraging in the year ahead.

F) DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The freight rates on almost all the container services have been severely impacted by the global recession which has adversely affected performance of the Liner Services.

In the Breakbulk sector, your Company continued to achieve very encouraging positive results during the year under review. Coastal and Passenger services sector also earned good remuneration, thereby further enhancing the Company’s profitability.

In financial terms, overall the Liner segment recorded revenue of Rs.833.64 crores in 2009-10 as against Rs.825.46 crores in 2008-09. However, as compared to loss of Rs.187.23 crores in 2008-09, the Liner Division has recorded a loss of Rs. 225.09 crores in the year 2009-10.

(3) OTHERS

TECHNICAL & OFFSHORE SERVICES

OFFSHORE SERVICES

(A) DEVELOPMENTS

During the year under review, all the 10 Offshore Supply Vessels (OSVs) of your Company continued to be gainfully employed with ONGC. All the 10 vessels secured the contract against ONGCs global tender floated in 2006 for charter hire of OSVs, Anchor Handling Tug Supply Vessels (AHTSVs) and Platform Supply Vessels (PSVs) for Offshore operations. The contract period is for 5 years from the date of mobilization of vessels. As per the ONGCs tender requirements, the vessels were upgraded by installing DP1, Fresh water generator and partial UKOOA compliance. SCI has also imparted training, especially to Masters and other officers, to man these vessels.

Your Company also continued the Operation & Maintenance management (O&M) of ONGCs Seismic Survey Vessel (SSV) ‘Sagar Sandhani’ since 1986 on ‘cost plus’ basis. The previous contract expired on 31.03.2007 -and the same was renewed for a period of 39 months upto 30.06.2010 on ‘cost plus’ basis. The terms and conditions of the contract are similar, with some changes with regard to increase in payment of monthly advance to SCI and inclusion of "Monsoon lay up repairs" in Drydocking clause. The review of percentage of SCIs remuneration beyond 31.03.2008 had also been done and the same has been increased from 5% to 6% w.e.f. 01.04.2008.

Your Company has also continued to provide O&M services onboard ONGC’s Well Simulation Vessel (WSV) Samudra Nidhi on ‘cost plus’ basis. The present contract is upto 31.03.2011.

Your Company continues to provide O&M services to ONGCs two Multi Support Vessels (MSVs) "Samudra Sevak" and "Samudra Prabha" and one Geotechnical vessel (GSV) "Samudra Sarvekshak" since March 2003 on nomination basis under ‘cost plus’ arrangement. The existing contract is valid upto 23.03.2011.

Your company continues to provide O&M services to ONGC’s 16 "SAMUDRIKA" series OSVs on nomination basis under ‘cost plus’ arrangement.

ONGC has also entrusted O&M contract of ONGC owned 14 ‘Sindhu’ series OSVs to your Company on nomination basis under ‘cost plus’ arrangement. Accordingly SCI has already taken over 7 vessels during the period 09.11.2009 to 04.03.2010. This contract is valid till 31.03.2011. The terms and conditions of the contract are similar to existing "SAMUDRIKA" vessels’ O&M contract.

Outstanding amount from ONGC: An amount of Rs. 14.96 crores was outstanding charter hire as of 31.03.2010 from ONGC against SCI owned OSVs (including service tax).

B) OUTLOOK

Due to the global financial crisis, there was a slowdown in the industrial output which has had a direct impact on the demand for oil. In the first half of 2009-10, the oil prices were prevailing at low US$ 70 per barrel due to which many deep-sea exploration and new oil well drilling activities had been put on a slow burner. This had negatively impacted the offshore sector. However due to long ‘period charter’ arrangements, your Company was not affected with the falling charter rates for AHTSVs.

In the second half of the financial year 2009-10, however, things have started to look bright with the oil prices having risen to US$87.4 per barrel. Oil prices averaged to US$ 73 per barrel over the last 12 months and have been relatively stable. OPEC has increased its estimate for 2010 world oil demand growth and expects a 9,50,000 bpd increase for the year.

Considering the countrys low level of self sufficiency in the energy sector (only about 22%) and the recovery in the international crude oil prices, future prospects of the Indian offshore sector would remain attractive for many years to come. Your Company is taking active measures to increase its exposure in this promising sector.

C) RISKS AND CONCERNS:

Evolution of new markets in the Offshore shipping Sector has led to entry of new players in the industry including foreign operators, some of which are equipped with modern technologies. In order to survive the competition, your Company would require adequate resources in the form of modern vessels and expertise. * Your Company’s offshore fleet is about 25 years old and is being replaced in phased manner.

Considering Indian Oil Industrys requirement of advanced vessels which are equipped with DP1, Reverse Osmosis, etc., SCI also needs to acquire vessels such as MSVs, DSVs, PSVs, etc. meeting the existing / future offshore logistic requirement.

Information relating to period from 01.04.2009 till date: O&M of ONGC owned Vessels

16 SAMUDRIKA series OSVs:

Your Company has taken over sixteen (16) ONGC OSVs, out of which, as on 31.03.2010, fifteen (15) OSVs were put in operation. The remaining vessel "Samudrika-7" was not considered a viable proposal for revamping and ONGC has requested SCI to dispose of the vessel.

14 SINDHU series OSVs:

As requested by ONGC, the balance seven (7) Sindhu series vessels are being taken in phased manner, out of which three (3) Sindhu series vessels have been taken over till date. All these vessels are not viable for revamping; hence, ONGC has advised SCI to dispose of all these fourteen (14) vessels. One vessel (Sindhu-17) is being disposed of shortly and action is being initiated for disposing remaining vessels.

SSV "Sagar Sandhani":

ONGC has given e