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Great Eastern Shipping Company Ltd.

BSE: 500620 Sector: Infrastructure
NSE: GESHIP ISIN Code: INE017A01032
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NSE 00:00 | 20 Sep 362.10 -14.10
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OPEN 368.30
PREVIOUS CLOSE 376.95
VOLUME 31793
52-Week high 477.00
52-Week low 210.85
P/E 9.31
Mkt Cap.(Rs cr) 5,317
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 368.30
CLOSE 376.95
VOLUME 31793
52-Week high 477.00
52-Week low 210.85
P/E 9.31
Mkt Cap.(Rs cr) 5,317
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 73rd annual report on the business operationsand the financial statements of your company for the financial year ended march 31 2021.

Financial performance

The financial results of the company (standalone) for the financial year ended march31 2021 are presented below:

2020-21 2019-20
Total revenue 2892.85 3090.61
Total expenses 1826.98 2771.08
Profit before tax 1065.87 319.53
Less : tax expenses 35.74 38.84
Profit for the year 1030.13 280.69
Retained earnings
Balance at the beginning of the year 1344.39 1247.95
Add :
- profit for the year 1030.13 280.69
- other comprehensive income - 32.32
Less :
- other comprehensive loss 19.13 -
- transfer to tonnage tax reserve 180.00 35.00
- final dividend on equity shares (fy 2018-19) - 81.03
- 1st interim dividend on equity shares (fy 2019-20) - 79.37
- 2nd interim dividend on equity shares (fy 2019-20) 39.68 -
- dividend distribution tax - 21.17
Balance at the end of the year 2135.71 1344.39

The net worth of the company as on march 31 2021 was rs. 6097.99 crores as compared tors. 5067.05 crores for the previous year.

The financial statements have been prepared in accordance with the indian accountingstandards (indas) notified under the companies (indian accounting standards) rules 2015.

Dividend

Your directors recommend a final dividend of rs. 9.00 per share which will result in anoutflow of rs. 132.27 crores. The dividend will be paid after your approval at the ensuingannual general meeting.

Management discussion and analysis

Company performance

In financial year 2020-21 (fy 21) the company recorded a total income of rs. 2892.85crores (previous year rs. 3090.61 crores) and earned a pbidt of rs. 1731.83 crores(previous year rs. 1113.79 crores).

Market analysis

Crude tanker market

With the exception of q1 fy 21 crude tanker freight rates averaged much lower in fy21compared to fy20.

Factors that contributed to a particularly strong q1 fy 21 were as follows:

1. Covid led national lockdowns impacted oil demand severely.

2. On the other hand in march 2020 opec & its allies (opec+) could not arrive ata deal to extend oil production cuts further. This led to saudi arabia & otherproducers increasing their crude oil production significantly in the month of april 2020.

3. Amidst a very weak demand environment this rise in oil supply created a massiveoverhang of crude oil in the market. The consequent development of contango in crudeprices led to a huge build-up of floating storage. At the peak in april 2020 nearly 12%of crude tanker fleet was tied up in floating storage.

4. As a result of the above factors crude tanker freight rates touched historicalhighs during q1 fy21. However the freight market rally proved to be short-lived as theopec+ group eventually arrived at a deal to cut crude oil production from may 2020 whichsharply curtailed tanker tonnage demand thereafter.

Crude tanker freight rates languished very close to opex levels for the balance part ofthe year. Some of the major factors that led to this market weakness were:

1. Depressed oil demand due to second/third covid wave in several countries across theworld.

2. Sharp cut in crude oil production by opec+ allies & consequent inventorydrawdown impacted trade/tonnage demand adversely.

3. Release of vessels from floating storage through h2fy21 increased spot fleetcapacity. By the end of the year about 5 % of the crude tanker fleet was employed infloating storage down from 12 % levels at the start of the year.

4. Towards the end of q4 fy21 the suez canal was blocked but only for a brief while.Hence its impact on freight rates was very marginal & short lived.

The table below captures the market spot earnings of the suezmax and the aframax typeof ships overthefinancialyear (in $/day).

Earnings ($/day) Fy 21 Fy 20 Yoy change
Suezmax 18856 40396 -53%
Aframax 14465 31038 -53%

Orderbook and outlook

Going forward oil demand is expected to pick up especially in h2 fy22 asvaccinations gather pace across countries and economic activity partly restores. Given thepotentially improving demand scenario and the fact that oil inventories are close tonormalizing opec+ have also announced that they will roll back the production cuts byabout 2 million barrels per day from may to july 2021. Higher oil supply is clearlybeneficial for tanker freight market. However concerns including the slow spread ofvaccination efficacy of the vaccines and second/third wave in several countriescontinue to hang over oil demand in the near-term.

The great eastern shipping co. Ltd.

The orderbook for crude & product tankers continue to be at multiyear low levels atabout 9% and 6% respectively. While crude tanker contracting has gathered pace over thelast few months most of the newly ordered ships are likely to be delivered from h2 2022onwards by which time oil/ tonnage demand is expected to move up substantially fromcurrent levels.

In line with decline in freight earnings asset values also corrected during the yearfor both crude and product tankers. Values have dropped between

5%-30% depending upon the age profile and the type of the vessel. However beginningq4 fy21 we have witnessed early signs of a stabilization/ recovery in asset values as anincreasing number of tanker owners are becoming reluctant sellers at lower asset prices.

Lpg carrier market

Vlgc freight rates averaged approx. 17% lower in fy21 compared to fy20. Despite thisdrop average vlgc earnings remained fairly healthy during the year as this declineoccurred from a particularly strong base of last year (fy20 vlgc earnings were the highestsince fy16).

1. The year started off on a particularly weak note due to a) drop in lpg exports frommiddle east led by opec+ oil production cuts and b) decline in us-asia trade arbitrage.

2. Despite negative lpg trade growth during q2fy21 freight market held up relativelywell on the back of increased congestion in asia & scheduled dockings.

3. During q3fy21 exceptionally cold winter drove demand for us lpg in asiasignificantly higher. This led to a mini vlgc freight boom during the quarter and spotrates reached usd 100000 per day for some time. Waiting at the panama canal increased toan all-time high due to a simultaneous pick up in container & lng transits through thecanal. Unless slots are prebooked these vessel types have a preference over lpg vesselsfor this canal transit. Vessels started taking longer route via suez/cape of good hope toasia. This contributed significantly to ton – mile growth.

4. However in the last quarter delays at the panama canal eased substantially whilewinter freeze in the us curtailed lpg production and exports. Vlgc freight rates droppedsignificantly towards the end of the quarter.

The table below captures the market spot earnings of vlgc type of ships over thefinancial year (in $/day).

Order book and outlook

In the near term us exports could stay rangebound as lpg inventories have dropped tolevels lower than last year. However the scheduled number of dockings during h1fy22 isrelatively high which could help support the market during this time. As the yearprogresses further lpg production from opec+ and the us could step up boosting lpgtonnage demand. The vlgc orderbook is relatively high at about 18% of the fleet whichcould present headwinds to freight market.

Asset values have gained about 5-10% over the course of the year.

Dry bulk carrier markets

Dry bulk freight rates ended up largely flat in fy 21 vis-a-vis fy 20 with capesizesaveraging a shade lower than last year & panamax and handymax averaging about 6%-11%better than fy 20. The dry bulk market started on a weak footing but touched multi-yearhighs by the end of the year in q4 fy21.

Key factors that contributed to a weak h1 fy21 were:

1. Covid-19 led national lockdowns severely restricted supply/demand for commodities.

2. As manufacturing activity took a hit demand especially for coal & minor bulkswas majorly impacted. Furthermore coal trade was also impacted by chinese governmentregulations to curb imports and the nickel ore trade suffered due to indonesian exportban.

3. Strong fleet growth (high newbuilding deliveries) further compounded this weakmarket balance.

4. However increased congestion in china (led by floods/slower custom clearance ofcoal cargoes) and strong brazilian iron ore exports partially supported the capesizefreight market.

Dry bulk freight rates firmed up towards the end of q3 fy21 and rose to particularlystrong levels in q4 fy21 with sub-capes hitting decade high freight rates during thequarter. Some of the factors that contributed to this strength were:

1. Sudden surge of coal imports due to a cold wave in far east/china.

2. Particularly strong grain trade led by chinese animal feed demand.

3. Strong manufacturing activity in china led to strong steel production growth &supported iron ore imports/minor bulk trade (steel product exports).

4. Recovery in global industrial activity also led to improved dry commodities demandespecially for minor bulks.

5. Rising dry commodities demand led to congestion at major load ports to levels notseen since 2012.

The table below shows the market spot earnings of the various categories of dry bulkships over the financial year (in $/day).

Earnings ($/day) Fy 21 Fy 20 Yoy change
Capesize 16012 16808 -5%
Panamax 11373 10710 6%
Supramax 10631 9543 11%

Orderbook and outlook

As the world gradually recovers from the covid pandemic economic activity andindustrial demand have picked up. This has already driven prices for various dry bulkcommodities to multi year highs. This is likely to result in higher dry commodity suppliesfrom various parts of the world as even the marginal ton will be incentivized to hit theseaborne market. Overall dry bulk trade for the year is expected to rise significantlyespecially compared to the weak base of last year. Resurgence of covid (second/thirdwave) high net deliveries and higher sailing speeds could act as dampeners for thismarket rally. Currently the dry bulk orderbook stands at about 5.6% of the fleet which isthe lowest since at least jan 1996.

Asset values have increased substantially over the course of the year by about 15-20%.

Fleet size and change during the year

As on march 31 2021 your company's fleet stood at 45 vessels comprising 32 tankers(9 crude carriers 18 product tankers 5 lpg carriers) and 13 dry bulk carriers with anaverage age of 11.86 years aggregating 3.64 mn dwt.

During the financial year your company took delivery of a very large gas carrier -‘jag vishnu' an lr2 tanker - ‘jag lara' and a capesize bulk carrier - ‘jagalaia'. Your company also contracted to buy a mid-sized gas carrier - ‘jag vikram'(which was delivered to the company subsequent to the end of the financial year) and asupramax bulk carrier.

During the financial year your company sold and delivered to the buyers a very largegas carrier ‘jag vidhi' two suezmax crude oil carriers ‘jag lateef' and‘jag laadki' and a supramax bulk carrier ‘jag roopa'. Your company alsocontracted to sell a mid-sized gas carrier 'jag vayu'.

A detailed asset profile section forms part of this annual report.

Key financial ratios

Conventional return ratios are not appropriate to assess the performance or conditionof your company for the following reasons:

1. A very significant part of the return in shipping comes from the appreciation in thevalue of

Loss account except at the time of sale.

2. In recent years due to the change in accounting standards the company's profitshave been affected very significantly by the movement in exchange rates. This hasgenerally had the effect of increasing the company's profits when the rupee appreciatesagainst the us dollar and of reducing its profits when the rupee depreciates against theus dollar. In reality the depreciation of the rupee against the us dollar improves theprofitability of the company.

Considering the cyclical and highly volatile nature of the shipping industry theability to survive weak markets and if possible even take advantage of them is criticalto success. The company therefore believes that the following are the key financial ratiosapplicable to its business:

1. Gross and net debt:equity ratio – this shows the extent of leverage taken bythe business both at a gross level and net of the cash and cash equivalents held. Netdebt:equity is a standard ratio used in assessing a shipping company's creditworthiness.

There has been a drop in these ratios over the course of fy 21 thanks to the improvedbusiness results of fy 21.

Fy 21 Fy 20
Gross 0.61 0.71
Net 0.10 0.26

2. Cash debt service coverage ratio this represents the company's ability to meet itsdebt servicing obligations. It is the sum of the pbidt plus the cash and cash equivalentsheld by the company divided by the expected debt service payments over the next 12 months.This ratio stood at 6.33 as of end fy 21 versus 5.50 at the end of the previous financialyear. The improvement in the ratio is due to (i) improved pbidt and (ii) increase in cashand cash equivalents in fy21.

3. Net debt:pbidt – this shows the number of years earnings it would take to coverthe repayment of the debt which is not covered by the cash and equivalents. The ratio was0.34 as of end fy 21 versus 1.19 as at the end of the previous financial year. The changewas due to both the drop in net debt and the higher pbidt for the year.

4. Return on net worth - while the business results were slightly better than in theprevious year the appreciation of the rupee versus the us dollar created a higher swingin profitability. As a result the profit after tax was much higher than in fy 20 leadingto a return on net worth of 18.45% for fy 21 versus 5.54% for fy 20. In fy 2020-21 the netimpact of the movement in exchange rate and mark-to-market gain or loss on derivatives wasa positive effect of rs. 279.52 crores in the net result while in fy 2019-20 the netimpact was a negative effect of rs. 328.51 crores in the net result. Changes in theshipping markets have been explained hereinabove.

Risks and concerns

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 board of directors and audit committee are regularly briefed onthe company's risk management process.

The material risks and challenges faced by the company are as follows:

Economic risk:

Shipping is a global business whose performance is closely linked to the state of theglobal economy. Therefore if global economic growth is adversely impacted it could havean unfavourable effect on the state of the shipping market.

Geo-political risk:

Opec nations control more than one third of the world oil supply. Therefore theirdecision on whether to comply with (or extend) crude production targets can have amaterial impact on the crude product and lpg freight markets.

Many of the countries producing and exporting crude oil are politically volatile. Anychange in the political situation in these countries may alter the supply-demand scenario.This would have a consequential impact on the tanker market.

Issues such as sanctions and wars may also affect shipping markets.

Chinese economy:

China has been a major driver of global growth especially for commodities. If theeconomy falters or changes its policy towards import of various goods the consequentialdamage to shipping will be significant.

Challenges faced by the shipping business

Earnings volatility:

The shipping industry is a truly global business with a host of issues potentiallyimpacting the supply demand balance of the industry. This results in tremendous volatilityin freight earnings and asset values.

Your company attempts to manage that risk in various ways.

If the company believes that the freight market could weaken it may enter into timecharter contracts ranging from 6 months to 3 years. Another method of managing risk is byadjusting the mix of assets in the fleet through sale or purchase of ships.

The company also ensures that assets are bought at cheap prices as capital cost is amajor cost component. The company hopes to weather the depressed markets better than mostplayers in the business by having among the lowest fleet break-evens.

The company operates ships in different asset classes and different markets. Thisensures that the company's fortunes are not fully dependent upon a single market.

Liquidity risk:

The sale and purchase market and time charter markets are not always liquid. Thereforethere could be times when the company is not able to position the portfolio in the idealmanner.

Finance risk:

The company's business is predominantly usd denominated as freight rates are determinedin usd and so are ship values. The company has its liabilities also denominated inusd.anysignificantmovement in currency or interest rates could meaningfully impact thefinancials of the company.

Shipboard personnel:

Indian officerscontinue to be in great demand all over the world. Given theunfavourable taxes on a seafarer sailing on an indian flagged vessel it is becomingincreasingly difficult to source officers capable of meeting the modern-day challenges ofcovid-19 pandemic it has been very difficult to carry out crew changes due to the travelrestrictions across the world.

Cyber risk:

A new and worrying threat to our business is cyber risk. The company is taking steps tosecure its assets and systems from this threat including by having suitable protection inplace and by constant training to employees on how to avoid such issues.

Internal control systems and their adequacy

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 have been well documented and communicated. The systems are tested andaudited from time to time by the company and internal as well as statutory auditors toensure that the systems are reinforced on an ongoing basis. Significant thereon arereported to the audit committee.

No reportable material weakness or significant deficiencies in the design or operationof internal financial controls were observed during the year.

Of external chartered accountants (ernst & young llp) and covers all departments.The company also theinternalauditiscarriedoutby afirm has an independent internal auditdepartment. Apart from facilitating the internal audit by ernst & young llp theinternal audit department also conducts internal audit as per the scope to be decided fromtime to time.

Both ernst & young llp and head (internal audit) report to the audit committee intheir capacity of internal auditors of the company.

In the beginning of the year the scope of the internal audit exercise including thekey business processes and selected risk areas to be audited are finalised in consultationwith the audit committee. All significant audit observations and follow up

The audit committee comprises of mr. Cyrus guzder (chairman) mr. Raju shukla and ms.Rita bhagwati all of whom are independent directors and mr. Berjis desai who is anon-executive director on board of the company.

Consolidated financial statements

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 rs. 918.52 crores for the year underreview as compared to net profitof rs. 207.14 crores for the previous year. The net worthof the group as on march 31 2021 was rs. 7704.27 crores as compared to rs. 6795.64 croresfor the previous year.

Subsidiaries

The statement containing the salient features of the financial statements of thecompany's subsidiaries for the year ended march 31 2021 has been attached along with thefinancial statements of the company. The report on performance of the

Greatship (india) limited mumbai

Greatship (india) limited (gil) wholly owned subsidiary of your company and one ofindia's largest offshore oilfield services providers has completed another challengingyear of operations. In financial year 2020-21 gil has recorded a total income of rs.586.75 crores (previous year rs. 741.66 crores) on a standalone basis and rs. 688.14crores (previous year rs. 846.80 crores) on a consolidated basis. In the current financialyear gil has earned a profit before interest depreciation (including impairment) &tax of rs. 159.16 crores (previous year rs. 310.07 crores) and rs. 205.75 crores (previousyear rs. 348.78 crores) on a standalone and consolidated basis respectively. Gil's netloss for the current financial year isrs. 134.29 crores (previous year rs. 113.34 crores)and rs. 131.12 crores (previous year rs. 64.75 crores) on a standalone and consolidatedbasis respectively.

Gil alongwith its subsidiaries currently owns and operates nineteen vessels and fourjack up drilling rigs. The operating fleet of nineteen vessels comprises of four platformsupply vessels (psvs) five r-class supply vessels eight anchor handling tug cum supplyvessels (ahtsvs) and two multi-purpose platform supply and support vessels (mpssvs).

Gil has the following four wholly owned subsidiaries whose performance during the yearis summarised hereunder:

1. Greatship global energy services pte. Ltd. singapore (gges)

Gges has earned a net profit of usd 0.20 mn for the current financialyear as againstthe net profit of usd 0.27 mn in the previous year. The net profit in the current year andthe previous year has been on account of the interest received on bank deposits.

2. Greatship global offshore services pte. Ltd. singapore (ggos)

Ggos owns and operates two multi-purpose platform supply and support vessels and oner-class supply vessel. Ggos has earned a net profit usd 2.05 mn for the current financialyear as against the net profit of usd 1.36 mn in the previous year.

3. Greatship (uk) limited united kingdom (guk)

Guk's net profit for the current financial year amounted to usd 0.01 mn as against thenet profit of usd 0.11 mn in the previous in the current year and previous year isattributable to the interest received on bank deposits/exchange gain on forex.

4. Greatship oilfield services limited india (gosl)

During the year under review gosl has been exploring possible business opportunitiesand has incurred certain expenses resulting into net losses of rs. 0.01 crore for thecurrent financial year same as the net loss of rs. 0.01 crore in the previous year.

The greatship (singapore) pte. Ltd. singapore

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 2021 there were 94 ship calls at singapore. Thecompany's profit after tax for the current financial year amounted to s$ 2991 as againstthe profit of s$ 90674 in the previous year.

The great eastern chartering llc (fzc) u.a.e.

The great eastern chartering llc (fzc) is a wholly owned subsidiary of your company.During the year ended march 31 2021 the company made a profit of usd 3.88 mn (previousyear net profit of usd 3.42 mn). The company had invested in shares of some listedshipping companies during the year and these shares were valued at usd 7.25 mn as ofmarch 31 2021.

In the year ended march 31 2019 the company had sold the spread between gasoil andhsfo of which it held a position of 3000 mt of cal 2022 as of april 1 2020. This positionwas closed out during the year.

Subsequent to the end of the year the company made an investment of usd 3 mn in equityshares of its wholly owned subsidiary the great eastern

Chartering (singapore) pte limited singapore.

The great eastern chartering (singapore) pte. Ltd. singapore

The great eastern chartering (singapore) pte ltd is a wholly owned subsidiary of thegreat eastern chartering llc (fzc) uae. During the financial year ended march 31 2021the company made a profit of usd 0.09 mn (previous year loss of usd 0.01 mn).

The company held a position in dry bulk freight futures as of march 31 2021.

Subeuquent to the end of the year the company received an investment of usd 3 mn inits equity shares from its parent the great eastern chartering llc (fzc) u.a.e.

Great eastern csr foundation india

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 rs. 3.36 crores from the company during the year endedmarch 31 2021. The foundation spent rs. 12.78 crores on csr activities during the year.

Details of csr activities carried out by great eastern csr foundation are set out inthe reports on csr activities which form part of this annual report.

Great eastern services limited india

Great eastern services limited was incorporated on june 23 2020 as a whollyownedsubsidiaryofyourcompany.thefirstfinancialyear of the company ended on march 31 2021.During the financial year ended march 31 2021 the company made a loss of rs. 32198.

Debt fund raising

During the year fresh debt of rs. 435.77 crores was raised. The gross debt:equityratio as on march 31 2021 was 0.61:1 (including effect of currency swaps on rupee debtwas 0.68:1) and the debt:equity ratio net of cash and cash equivalents as on march 312021 was 0.10:1 (including effect of currency swaps on rupee debt was 0.17:1). The companyredeemed non-convertible debentures aggregating to `100.00 crores during the year and alsosettled the swaps relating to those debentures.

Quality safety health and environment (hseq)

Owing to the on-going covid-19 pandemic fy 21 has remained very challenging throughoutin terms of health and safety of people be it on ship or ashore. It has thrown variouschallenges which are not only limited to crew change or logistics support to the shipbut also to keep people motivated and focussed. However with the implementation of riskbased disease outbreak plan by committed teams on ships and ashore the company hasmanaged to minimise its impact on business operations so far. As the pandemic continues toaffect different geographies in waves the company is reviewing and deploying strictercontrol measures to deal with the continuously evolving situation.

The company cares for its employees and during the difficult times of covid 19pandemic extraordinary measures were taken to give priority to their health and safety.Arrangements like work from home option for all shore employees shared chartered flights& vessel diversion for crew sign on /sign off and telephone/email based counsellingservice from the experts were some of the measures.

The company has taken several initiatives to foster the safety culture on board whichincludes introduction of gesco safety culture course and dynamic safety trainings. Theseinitiatives have started yielding results and has translated into reduction of lost timeinjury with zero fatalities or

Partial / total disability cases.

In our effort to reduce the ghg emissions the company has fitted its vessels withmewis duct propeller boss cap fins (pbcf) high efficiency

Propeller led lighting and applied superior antifouling coatings on selected vessels.The company shall continue to keep researching on the feasibility of use of alternatefuels technologies and retrofits for use on its existing fleet.

The company believes in ensuring clean seas reducing generation of waste and avoidingpollution at sea. This year the company has had zero non-compliance with marpol and zerospills to sea.

Training and assessment

Keeping in mind the company's vision and mission to man the entire fleet with a pool ofcompetent confident and well-trained seafarers the

Training and assessment department has continued to manage and satisfactorily conductmandatory and recommendatory value-added training for the seafarers. Given the constraintsimposed by the pandemic many of these were through online training.

The shore-based and computer-based trainings have been happening in an orderly mannerand majority of the trainings have been shifted to online platform due to covid-19restrictions. For a few courses which could not be done completely online the riskmitigation exercise was done for such candidates by providing study material/ adequatebriefing/ handout/ training videos onboard etc.

In view of the new maritime regulatory requirements and updated training matrix thedepartment developed and conducted various in-house training modules with assessment vizvetting familiarization for officers and crew planned maintenance system danaos buildinga safety culture maritime english and competency assessment for crew etc.

In addition various other value-added courses (beyond the training matrix) wereconducted on e-platforms.

The department continued conducting the competency assessments for every rank ofseafarers. Clearing these competency assessments is a mandatory requirement of the companyfor recruitment and promotions of the seafarers.

The management of entire training training needidentification(tni) and monitoring ofeffectiveness of training (eot) is being done through in-house developed training andassessment portal of the department.

It initiatives

The company's business continuity process (bcp) digital transformation and processimprovement initiatives in fy 2019-20 have enabled it to continue business operationssmoothly. There was no disruption during lockdown and it was business as usual as thecompany had started working from home one week before the lockdown started. It has alsocreated a new culture of smart working within the organisation and also with thestakeholders.

In fy20-21 it has focused on the following major initiatives:

Global maritime software suite digitalization and process improvement

To ensure efficient and effective performance of core business functions and enterpriseservices by improving process efficiency and quality the company has partnered withdanaos (greece based shipping software company) for their powerful maritime softwaresuite which is an integrated and unified environment between ship and office. In phase 1the company has completed implementation of the planned maintenance system (pms) fortechnical department.

Digital collaboration workspaces between ship and shore

The company has implemented solution for collaboration between the ships and shorethrough single platform which has enabled faster decision making optimized communicationand travel costs and allowed quick access for experts to advise from office to resolvetechnical issues.

Ships are now well connected with high bandwidth and are powered with new technologieslike office 365 collaboration tool. Major dry dock operations were carried out on multipleships through video conferencing. The company has also conducted live interactive trainingprograms for seafarers.

As it was very crucial during covid-19 the company has conducted special cybersecurityawareness programs for all onboard ship staff.

Ships it management:

As part of modernization of assets the company has replaced it infrastructure onboardall ships with latest software and hardware which enabled better performance and seamlessaccess to information resources.

The company has brought about a major change in managing and monitoring its it assetson ships remotely by implementing centrally managed solution which has resulted inimproved monitoring quick resolution of issues and better governance. Also it hasresulted in major saving on travel cost by removing the need for physical visit to theships.

Business continuity plan

In order to respond quickly to any kind of disruption and be prepared with a strongrecovery and response time to any form of a potential threat or disruptions in 2019-20the company ensured continuity of critical business operations through various technologyinitiatives so that business can run smoothly during or after the crisis.

Technology transformation initiatives like modernised infrastructure cloud-firststrategy and setup of complete disaster recovery site (dr) have helped the company to runthe business from work from home (wfh) without compromising on employee productivity.

Work from home (wfh): the company has ensured that there are zero cybersecurityincidents 100% application availability and provided 24x7 remote support to ships forsmooth business operations.

Cyber resilence

Cybersecurity will continue to be on top priority in the international maritime sector.The company has strengthened the cybersecurity posture for ships and shore to protect theintegrity of the organization's information and it assets.

The company has launched “sea hawk” an ai & ml based solution forreal-time collection advanced detection & behaviour threat identification &automated analysis and integrated resolution & remediation.

Human resources

The pandemic forced the organization to adopt work from home as the new normal. Hrfunction was on the frontline of the crisis ensuring health safety and motivation to allemployees. The first half of the year was focused on adapting to wfh technology tools andensuring productivity and learning to respond to the sudden disruption caused by covid.The company created new policies to enable employees to be productive and brought in newapproaches to manage all the hr processes- viz talent acquisition onboarding talentdevelopment employee engagement and performance management. The crisis provided animmense opportunity for building collective resilience. Hr played a crucial role inimproving organizational resilience through compassion and by building competence.

The company tied up with various online training platforms like harappa nomadiclinkedin and learning to provide training across all employees. Like in the past thecompany has rolled out 360 degree feedback process to all senior and middle levelmanagers. A holistic development program was delivered to junior management during theyear. A program on resilience as well as many wellness sessions were carried during thecourse of the year.

The company is pleased to report that the employee engagement score moved up and stoodat 76 during the year. Employee retention was 97%.

Total number of permanent shore staff and ship board personnel was 218 and 1044respectively at the end of the year.

Great eastern institute of maritime studies (geims)

Education and training has been one of the sectors worst hit by the pandemic andmaritime training has been no exception. The team at geims has been striving hard toovercome multiple challenges brought forth by pandemic and to ensure smooth conduct ofits training programme.

In compliance with govt. Of india's directives & nationwide lockdown in the wake ofcovid -19 pandemic the institute was closed on march 17 2020 causing serious disruptionto its training schedule. However you will be happy to note that the institute wasamongst thefirstmaritime training institutes to start on line classes for its cadetsthereby ensuring continued learning & minimal disruption to the training schedule.

The institute reopened on october 16 2020 at one-third its capacity to impart theworkshop/ practical training for its cadets while continuing with the online theoryclasses.

During fy 2020-21 261 cadets from the nautical marine engineering electricalengineering & gp rating courses have passed out from the institute despite increase induration of all the courses due to prolonged lockdown. The institute also admitted 248 newcadets during the year in these 4 courses.

The institute was also audited & certified for quality management system iso2008-2015 by indian register of shipping & scored an impressive 98.2% during thecomprehensive inspection programme (cip) audit of director general of shipping.

You will be happy to note that the institute was awarded the best maritime traininginstitute in the country at the hands of hon. Minister of ports shipping & waterwaysat a glittering online function organised to celebrate national maritime day on april 052021.

Corporate social responsibility

The company has always been conscious of its role as a good corporate citizen andstrives to fulfil this role by running its business with utmost care for the environmentand all the stakeholders. The company looks at corporate social responsibility (csr)activities as significant to society.

The board of directors of the company has constituted a committee of directors knownas the corporate social responsibility committee comprising of mr. Vineet nayyar(chairman) mr. Cyrus guzder and mr. Bharat k. Sheth to steer its csr activities.

During the year the company amended its corporate social responsibility policy toincorporate the amendments made by the ministry of corporate

Affairs. In view of the widespread distress caused on account of the covid-19pandemic your company allocated additional funds over and above the mandatory requirementtowards relief measures.

Copy of the revised corporate social responsibility policy of the company asrecommended by the csr committee and approved by the board is enclosed as ‘annexurea'. The csr policy is also available on the website of the company: www. Greatship.com.

The csr policy is implemented by the company through great eastern csr foundation awholly owned subsidiary of the company specifically set up for the purpose.

The annual report on csr activities is enclosed herewith as “annexure b”.

Directors

Following re-appointments were approved by the members at their annual general meetingheld on july 30 2020:

re-appointment of mr. K. M. Sheth as a director of the company liable to retire byrotation.

re-appointment of ms. Rita bhagwati as independent director of the company for a secondterm of 5 years w.e.f. November 14 2019. Re-appointment of dr. Shankar acharya asindependent director of the company for a second term of 5 years w.e.f. February 05 2020.Re-appointment of mr. Bharat k. Sheth as ‘deputy chairman & managing director'for a term of 3 years w.e.f. April 012020. Re-appointment of mr. G. Shivakumar as‘executive director' for a term of 3 years w.e.f. November 14 2019.

The board of directors at its meeting held on july 30 2020 appointed mr. Urjit patelas additional director and independent director of the company for a term of 5 yearsw.e.f. August 01 2020. Mr. Urjit patel brings with him years of rich experience andknowledge of working with private sector as well as public services which will be ofimmense benefit to your company. He has served as governor of the reserve bank of india.

Mr. Urjit patel being additional director ceases to be the director of the company onthe date of the ensuing annual general meeting and is required to be appointed by themembers. Notice under section 160 of the companies act 2013 has been received in respectof his appointment as independent director of the company.

The board of directors at its meeting held on may 07 2021 re-appointed mr. Tapasicot as ‘executive director' of the company for a term of 3 years w.e.f. November 022021.

Appointment of mr. Urjit patel as ‘independent director' and re-appointment of mr.Tapas icot as ‘executive director' require your approval at the ensuing annualgeneral meeting.

Mr. G. Shivakumar shall retire by rotation at the ensuing annual general meeting andbeing eligible offers himself for re-appointment.

Necessary resolutions for appointment of mr. Urjit patel and re-appointment of mr.Tapas icot and mr. G. Shivakumar have been included in the notice convening the ensuingannual general meeting.

As per the provisions of the companies act 2013 independent directors shall not beliable to retire by rotation. The independent directors of your

Company have given the certificate of independence to your company stating that theymeet the criteria of independence as mentioned under section 149(6) of the companies act2013 and under regulation 16(1)(b) of sebi (listing obligations and disclosurerequirements) 2015. In the opinion of the board all the independent directors (includingthose appointed during the year) are persons of integrity and possess relevant expertiseand experience to effectively discharge their duties as independent directors of thecompany.

The policies on director's appointment and remuneration including criteria fordetermining qualificationspositive attributes independence of director and alsoremuneration for key managerial personnel and other employees are enclosed herewith asannexure ‘c' and ‘d'. The details of remuneration as required to be disclosedpursuant to the companies (appointment and remuneration of managerial personnel) rules2014 are enclosed as annexure ‘e'.

Board meetings

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.

Board evaluation

With a view to bring in objectivity and independence in the process of performanceevaluation of the board its committees and individual directors the company engaged theservices of grant thornton bharat llp (‘gtbl') to assist in conducting performanceevaluation for fy 2020-21. The performance evaluation framework of the company wasaccordingly modified to enable the same.

Gtbl conducted the assessment in line with the regulatory requirements and leadingpractices in the market and submitted its ‘board assessment report'.

The annual performance evaluation of the board its committees (namely auditnomination and remuneration corporate social responsibility and stakeholders'relationship committees) and all the directors individually was done based on the‘board assessment report' submitted by gtbl.

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 and remuneration committee also reviewed performance of thecompany and every director.

Directors responsibility statement

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) thedirectors had selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company at the end of the financial year and of the profitand loss of the company for that period;

(c) the directors had taken proper and sufficientcare 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 in the case of a listed company had laid down internal financialcontrols to be followed by the company and that such internal financial controls areadequate and were operating effectively.

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

Corporate governance

Maintaining high standards of corporate governance has been fundamental to the ethos ofyour company since its inception. A separate report on corporate governance is providedtogether with a certificate from the practicing company secretary regarding compliance ofconditions of

Corporate governance as stipulated under listing regulations.

The company has formally adopted the voluntary ‘national guidelines on responsiblebusiness conduct' (‘ngrbc') issued by ministry of corporate affairs. The company hasalso initiated the process to ensure that all the applicable aspects of the principles ofngrbc are incorporated in the internal policy framework and operating processes followedby the company.

The business responsibility and sustainability report as per the format recommended bythe committee on business responsibility reporting constituted by the ministry ofcorporate affairs and circulated by securities & exchange board of india on august 182020 forms part of this annual

Report. Thought not mandatory yet the company has voluntarily decided to publish it.

A separate section on esg (environment social & governance) also forms part ofthis annual report.

Copy of annual return as required under section 92(3) of the companies act 2013 hasbeen placed on the website of the company www.greatship.com.

Prevention of sexual harassment at workplace

With a view to create safe workplace the company has formulated and implemented sexualharassment (prevention prohibition and redressal) policy in accordance with therequirement of the sexual harassment of women at workplace (prevention prohibition andredressal) act 2013. For the purpose of handling and addressing complaints regardingsexual harassment the company has constituted internal complaint committee with anexternal lady representative (who has the requisite experience in this area) as a memberof the committee. To build awareness in this area the company also conducts awarenessprogrammes within the organisation.

At the beginning of the year one complaint with allegations of sexual harassment waspending. During the year one more complaint was received by the company. Both thecomplaints were investigated by the internal committee. Based on the internal committee'srecommendations appropriate actions were taken and the cases were concluded.

Vigil mechanism

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 company:www.greatship.com

Related party transactions

The company has formulated a policy on dealing with related party transactions a copyof which is available on the website of the company: www. Greatship.com

The great eastern shipping co. Ltd.

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.

Particulars of loans guarantees or investments

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.

Significant and material orders passed by the regulators or courts

And material orders passed by the regulators or courts or tribunals impacting the goingconcern status and company's therearenosignificant operations in future.

Cost records ibc proceedings valuation etc.

Maintenance of cost records as specified by the central government under sub-section(1) of section 148 of the companies act 2013 is not required by the company.

Neither any application was made nor any proceeding were pending under the insolvencyand bankruptcy code 2016 in respect of the company during or at the end of the financialyear 2020-21.

The disclosures on valuation of assets as required under rule 8(5)(xii) of thecompanies (accounts) rules 2014 are not applicable.

Dividend distribution policy

The dividend distribution policy of the company is available on the website of thecompany: www. Greatship.com.

Energy conservation and technology absorption

Conservation of energy

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

Energy saving devices

During the financial year the company has started a process of replacing traditionallighting such as fluorescent halogen and incandescent lights onboard its vessels withenergy efficient led lights. The use of led lights will reduce the electrical powerrequirement and emissions from each ship and also provide savings in consumables since thelifetime of led lights are far longer than traditional lights.

The replacements have been done on ‘jag arnav' and in suitable areas of ‘jagviraat' and ‘jag lakshya'.

For a typical bulk carrier or tanker loss of energy through hull resistance is around30% and this increases with growth of hull roughness due to bio-fouling. To minimizegrowth of bio-fouling the company has applied superior anti-fouling coatings on ‘jagpooja jag lok jag leena jag arnav jag padma jag lakshya jag punit and jag rohan'during their respective dry dockings during the financial year.

The cost incurred for application of the superior anti-fouling coatings was usd981900.

During the year saving of usd 2.13 million was achieved in fuel cost from propulsionenergy saving retrofits (viz. Mewis duct propeller boss cap fins kappel propeller) anduse of superior anti-fouling hull coatings carried out on fleet vessels in previous years.This fuel saving also resulted in reduction of co2 emission by 19570 mt during the year.

Technology absorption

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

Compliance with imo dcs and eu mrv regulations

With effect from january 01 2019 all vessels above gt 5000 are mandatorily required toreport their annual fuel consumption distance sailed and sailing hours and certain othertechnical features of individual ships to its flag state and upon satisfactoryverification of the turn are obliged to submit such data to international maritimeorganization (imo) all as per regulation 22a - collection and reporting of ship fuel oilconsumption data of marpol convention annex vi. The data will be used by imo for makingfuture policy decision with respect to further reduction of ghg emission from ships oninternational trade. Your company has developed ship specific required data collectionplans which describes the procedure of collection quality control storage andtransmission of relevant data and the same have been approved by recognized organizations(r.o). Data for the calendar year 2020 have been submitted to r.o by the due date fortheir review.

Similar exercise for corresponding requirement of european union but applicable tovessels which have made commercial voyages to or from eu for the calendar year 2020 hasbeen completed.

Quantification and reporting of ghg emission

Your company since fy 2015-2016 has started to capture and quantify ghg emission fromits business operations in a transparent and standardized manner for the information ofstakeholders of the company on a voluntary basis. The ghg emission quantificationandreporting has been done taking into account: iso 14064-1 (2006) “greenhouse gasespart 1: specification with guidance at the organization level for quantification andreporting of greenhouse gas emissions and removals and

the greenhouse gas protocol a corporate accounting and reporting standard (revisededition) published by world business council for

Sustainable development and world resources institute.

Compliance with energy efficiency existing ship index (eexi) and carbon intensityindicator (cii)

In november 2020 the marine environment protection committee (mepc) of internationalmaritime organization (imo) has approved amendments to marpol convention introducing (1) atechnical energy efficiency standard named energy efficiency existing ship index (eexi)and (2) an operational energy efficiency standard named carbon intensity indicator (cii).Subject to adoption at mepc 76 in june 2021 the requirements will enter into force in2023 and apply to existing ships.

We have carried out assessment of our vessels to ensure compliance with eexi standardwith appropriate technical measures. These assessments will be completed once the relevantguidelines are agreed and approved by mepc in june 2021.

Cii will have major impact on vessel operations and charter party agreements from 2023.We are exploring all avenues to reduce carbon intensity of our vessels by retrofittingenergy saving devices and improving operational efficiencies.

Foreign exchange earnings and outgo

The details of foreign exchange earnings and outgo are as follows:

A) Foreign exchange earned on account of freight charter hire earnings sale proceeds of ships etc. 1901.68
B) Foreign exchange used including operating expenses capital repayment down payments for 2282.15
Acquisition of ships (net of loan) interest payment etc.

Auditors

Pursuant to the provisions of section 139 of the companies act 2013 deloitte haskins& sells llp were appointed as the statutory auditors of your company to hold officeuntil the conclusion of the annual general meeting of the company to be held in thecalendar year 2022.

The report given by the auditors on the financial statements of the company is part ofthis report. There has been no qualification adverse remark of disclaimer given by theauditors in their report.

Secretarial auditors

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 2021.

The secretarial audit report of the company is annexed herewith as “annexureg”.

The secretarial audit report of greatship (india) limited the material unlisted indiansubsidiary of the company is annexed herewith as “annexure h”.

Appreciation

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 be made about the shipboard personnel who have soldieredtirelessly to keep global supply chain open even in the phase of the covid-19 pandemic.Your directors look forward to their continued support.

For and on behalf of the board of directors

K.m. Sheth

Chairman

(din: 00022079)

Mumbai may 7 2021

.