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Great Eastern Shipping Company Ltd.

BSE: 500620 Sector: Infrastructure
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OPEN 354.00
52-Week high 482.40
52-Week low 348.90
P/E 16.05
Mkt Cap.(Rs cr) 5,274
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OPEN 354.00
CLOSE 357.75
52-Week high 482.40
52-Week low 348.90
P/E 16.05
Mkt Cap.(Rs cr) 5,274
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Great Eastern Shipping Company Ltd. (GESHIP) - Director Report

Company director report

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


The financial results of the Company (standalone) for the financial year ended March31 2017 are presented below:

2016-17 2015-16*
Total Revenue 2226.74 2110.39
Total Expenses 1585.35 1473.11
Profit before tax 641.39 637.28
Less : Tax Expenses 40.00 19.00
Profit for the period 601.39 618.28
Retained Earnings
Balance at the beginning of the year 1558.29 1448.45
Add :
- Profit for the year 601.39 618.28
- Other Comprehensive Income (2.14) (134)
Less :
-Transfer to Tonnage tax reserve 100.00 125.00
-Transfer to Debenture redemption reserve 591.25 25.00
-Dividend on Equity Shares 54.28 309.09
-Dividend Distribution Tax 6.30 48.01
Balance at the end of the year 1405.71 1558.29

*recasted as per Ind AS

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

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


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

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



In Financial Year (FY) 17 the Company recorded a total income of '2226.74 crores(Previous year '2110.39 crores) and earned a PBIDT of '1261.97 crores (previous year'1108.30 crores).



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

• Disruptions in oil supply from West Africa and Canada.

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

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

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

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

In FY 17 crude tankers inclusive of 'spot' and 'period' earned an average TCY of $21853 /day (previous year $31913/day).


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

• Due to high refinery runs in FY 16 inventory of products increasedsignificantly capping product prices and shutting many arbitrage plays.

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

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

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

• Fleet supply was also quite strong at 5.5%.

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

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

Product carriers inclusive of 'spot' and 'period' earned an average TCY of $15707/day (previous year S20155/day).


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

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

The Gas carriers inclusive of 'spot' and 'period' earned an average TCY of S38114/day (previous year S77586/day).


The dry bulk markets began the financial year on a weak note thus continuing thesentiment of the previous financial year. The defining characteristic of the Dry Bulkmarket over the last few years is that it is intrinsically dependent on what happens toChinese cargo volumes.

The following events followed each other during the financial year:

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

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

• The fleet supply remained subdued during the first three quarters due to a highlevel of scrapping.

The raft of measures by the Chinese government led to a steadily strengthening marketthrough the year with the fourth quarter taking a major turn upwards. The Companypurchased several dry bulk ships in the financial year in order to capitalise on the lowasset values. These acquisitions are already proving to be value accretive.

In FY 17 the average TCY for dry bulk vessels inclusive of 'spot' and 'period' wasapproximately S 7051 /day as compared to S 6638/day in the previous year.


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


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


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

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


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

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


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


Over and above the economic risks the shipping industry is impacted by numerous shortterm and regional factors like political fallouts weather changes etc. This results ingreat amount of volatility in the freight market which in turn impacts your Company'searnings.

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


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


If the OPEC decides to prolong the cut in output this drop in supply along withincreased new building deliveries could continue to negatively impact the demand fortankers.


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


Your Company has instituted internal financial control systems which are adequate forthe nature of its business and the size of its operations. The policies and proceduresadopted by the Company ensure the orderly and efficient conduct of its business includingadherence to Company's policies safeguarding of its assets prevention and detection offrauds and errors accuracy and completeness of the accounting records and timelypreparation of reliable financial information.

The systems include a range of activities such as approvals authorizationsverifications reconciliations review of operating and financial performance security ofassets segregation of duties preventive and detective controls.

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

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

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


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

The group recorded a consolidated net profit of '754.96 crores for the year underreview as compared to '1096.98 crores for the previous year. The net worth of the group ason March 31 2017 was '7223.33 crores as compared to '6563.48 crores for the previousyear.


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


Greatship (India) Limited (GIL) wholly owned subsidiary of your Company and one ofIndia's largest offshore oilfield services providers has completed its one of the mostchallenging years in the midst of worst downturn in the offshore oil and gas industry. GILhas after accounting for an impairment of '184.33 crores in asset values recorded aprofit after tax of '154.71 crores on a consolidated basis for the year ended March 312017 as compared to '523.77 crores for the year ended March 31 2016 after accounting forimpairment of '163.09 crores in asset values. The consolidated net worth of GIL forfinancial year 2017 was '3219.65 crores as compared to '3098.39 crores for financialyear 2016.

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

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

GIL has the following wholly owned subsidiaries:

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

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

Greatship Global holdings ltd. mauritius (GGHL)

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

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

GGOS owns and operates three offshore support vessels which include one Anchor HandlingTug cum Supply Vessel (AHTSV) and two Multipurpose Platform Supply and Support Vessels(MPSSVs). GGOS after accounting for an impairment of USD 16.32 Mn in asset valuesincurred a loss of USD 19.96 Mn for the current financial year as against the loss of USD5.33 Mn in the previous year after accounting for impairment of USD 8.93 Mn in assetvalue.

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

Greatship (uK) limited united Kingdom (GuK)

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

Greatship Oilfield Services Ltd. India (GOSL)

GOSL did not carry out any operations during the year.


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


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


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


The Great Eastern Chartering (Singapore) Pte. Ltd. is a wholly owned subsidiary of TheGreat Eastern Chartering LLC (FZC) UAE. The company has done no trading activity duringthe year due to deteriorating market conditions. During the financial year ended March 312017 the company made a loss of USD 0.05 Mn as against the loss of USD 0.10 Mn in theprevious year.


Great Eastern CSR Foundation (Foundation) is a wholly owned subsidiary of your Companywhich handles the CSR activities of your Company and its subsidiaries. The Foundationreceived a total contribution of '8.28 crores from the Company and Greatship (India)Limited during the year ended March 31 2017. The Foundation spent '6.87 crores on CSRactivities during the year.

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


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

During the year the Company has bought back and extinguished 100 Secured and 550Unsecured Debentures of '1000000 each aggregating to '65 crore.

quality safety training health & environment

A high level of safety on board assets has been maintained during the year on theCompany's vessels by continued efforts of the seafarers and the office staff. Thisrequirement continues to be emphasised during the scheduled meetings with the managementlevel floating staff and the Company's top management. Lost Time due to Injury (LTI) was2.34 per million exposure hours and Total Recordable case Frequency (TRCF) was 5.23 permillion exposure hours. This is slightly more than the Company's KPI of 2.0 and 4.8respectively. The increase as compared to last year is due to the re-classification ofdata collected based on OCIMF guidelines.

The Company to ensure that the assets are maintained in good condition carried outadditional inspections of vessels. The Company's assets continued to perform well duringoil major inspections. The Company also ensured that new acquisitions into the fleet weretaken into the Company's quality management system quickly during the rapid fleetexpansion phase.

The need for continuous improvement in safety and operating standards is recognised bythe Company and to achieve greater level of compliance a separate department dealing withtraining at all levels of seafarers has been established. This department identifies theseafarer's training needs on an individual basis and organizes shore-based training inestablished training institutes. The department is also involved in designing companyspecific training modules.


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


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

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


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


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


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


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

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

Social cafe approach was utilized to harness employee camaraderie which included QuizMarathon and cultural programs during festive occasions. The annual townhall held inDecember 2016 helped in employee alignment and building team spirit.

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

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

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


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

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

GEIMS was inspected as per the Comprehensive Inspection Programme (CIP) enhancedguidelines of the Director General of Shipping in November 2016 by an Audit team from DNVGL Ship Classification Society. GEIMS was certified that it meets the training requirementcriteria as per IMO STCW Convention and effectively complies with all applicable MerchantShipping Rules and other associated orders circulars and guidelines issued by theDirectorate General of Shipping. On basis of the successful inspection GEIMS was onceagain assigned Grade A1 (outstanding) for three years.

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


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

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

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


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

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

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


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


The Nomination & Remuneration Committee has framed a policy for appointment ofDirectors. The Nomination & Remuneration Committee has also framed policies forremuneration of Directors Key Managerial Personnel and other employees which have beenadopted by the Board.

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

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


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

The Performance Evaluation Framework sets out the performance parameters as well as theprocess for performance evaluation to be followed. Performance evaluation forms werecirculated to all the Directors to record their evaluation of the Board its Committeesand Non-executive Directors of the Company. The performance evaluation of the Company andExecutive Directors was done on the basis of presentation made by the management.

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

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


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

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

b) The directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit and loss of the company for that period;

c) The directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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 thecompany and that such internal financial controls are adequate and were operatingeffectively.

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


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


The Company has established a vigil mechanism (Whistle Blower Policy) for directors andemployees to report genuine concerns. The Whistle Blower Policy provides for adequatesafeguards against victimisation of persons who use such mechanism and make provision fordirect access to the Chairperson of the Audit Committee in appropriate or exceptionalcases.

A copy of the Whistle Blower Policy is available on the website of the


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

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

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

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

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


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


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


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


The Dividend Distribution Policy of the Company is enclosed as 'Annexure H'. Copy ofthe Dividend Distribution Policy is also available on the website of the Company



In order to contribute to and prepare for a low carbon future your Company has beenundertaking various initiatives with regard to enhancing energy efficiency in its businessoperations.


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

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

Total cost incurred on above two ships: USD 150000.

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

The additional cost incurred for application of the superior anti-fouling coatings wasUSD 290000.

During the year saving of USD 1.06 million was achieved in fuel cost from energysaving retrofits and use of superior anti-fouling hull coatings alone. This fuel savingalso resulted in reduction of CO2 emission by 13973 MT.


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


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


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

• ISO 14064-1 (2006) 'Greenhouse gases - Part 1: Specification with guidance atthe organization level for quantification and reporting of greenhouse gas emissions andremovals' and

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


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


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

('in crores)
a) Foreign Exchange earned on account of freight charter hire earnings etc. 1150.34
b) Foreign Exchange used including operating expenses capital repayment down payments for acquisition of ships (net of loan) interest payment etc. 2142.38


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

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

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


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

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


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

For and on behalf of the Board of Directors
K.M. Sheth
(DIN : 00022079)
Mumbai May 05 2017