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Shipping Corporation of India Ltd.

BSE: 523598 Sector: Infrastructure
NSE: SCI ISIN Code: INE109A01011
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OPEN 137.00
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VOLUME 72330
52-Week high 160.20
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P/E 10.13
Mkt Cap.(Rs cr) 6,384
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OPEN 137.00
CLOSE 136.15
VOLUME 72330
52-Week high 160.20
52-Week low 86.00
P/E 10.13
Mkt Cap.(Rs cr) 6,384
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Shipping Corporation of India Ltd. (SCI) - Director Report

Company director report

To the Members

Your Directors have pleasure in presenting the 72nd AnnualReport on the working of your Company for the Financial Year ended 31stMarch2022.

FINANCIAL PERFORMANCE

The comparative position of the working results for the year underreport vis - a vis earlier year is as under: (Rs. in Crores)

Particulars Current Financial year Previous Financial year
(2021-2022) (2020-2021)
Revenue from Operations 4994.55 3703.25
Other Income 104.04 125.56
Profit/loss before Depreciation Finance Costs Exceptional itemsandTax Expense 1631.32 1283.82
Less: Depreciation/ Amortisation/ Impairment 635.44 627.94
Profit /loss before Finance Costs Exceptional items and Tax Expense 995.88 655.88
Less: Finance Costs 157.7 21.11
Profit /loss before Exceptional items and Tax Expense 838.18 634.77
Add/(less): Exceptional items 0
Profit /loss before Tax Expense 838.18 634.77
Less: Tax Expense (Current & Deferred) 43.39 16.67
Profit /loss for the year (1) 794.79 618.1
Other Comprehensive Income/loss (2) 14.47 20.68
Total (1+2) 809.26 638.78

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

Appropriations :

The working results for your company for the year 2021-22 shows a netprofit of `794.79 crore. A sum of `142.10 crore has been transferred to Tonnage TaxReserve for the financial year 2021-22. Retained earnings has been further adjusted fordividend payment of `11.64 Crores and items of other comprehensive income of ` 14.47crores

Dividend:

The Board of Directors in their meeting held on 06.05.2022 hadrecommended a dividend @ 3.3% on the paid up Capital out of free Reserves of the Company.The Dividend will become payable once approved by the shareholders at the AGM. The saiddividend will be paid within 30 days of its declaration at the AGM.

The dividend subject to approval of the Members at the Annual GeneralMeeting scheduled to be held on 28th September 2022 will be payable to thoseShareholders whose names appear in the Register of Members as on the Book Closure /Record Date. The payment of dividend will be subject to deduction of tax at source. Thedividend pay-out is in accordance with the company's dividend distribution policywhich is available on the Company's websitehttp://shipindia.com/upload/policies/SCI_Dividend_Distribution_Policy1.pdf

Share Capital:

The Company has not issued any Equity Shares with differential votingrights. Hence no information as required under Section 43(a) (ii) of the Companies Act2013 read with Rule 4(4) of the Companies (Share Capital and Debentures) Rules 2014 isfurnished. The Company has only one class of Equity Shares having face value of `10/-each.

Brief Analysis of Financial Performance

SCI has reported a net profit after tax of `794.79 crores for thefinancial year 2021-22. Tanker market was under pressure throughout the year and hasreported loss during the year while Bulk segment performance has improved drastically dueto high demand in Bulk segment. The Technical & Offshore segment has shown improvementin terms of revenue as well as profit due to long term contracts and better utilisation ofvessels. Container market was at its peak throughout the year resulting into highestprofit of segment in a decade The consolidated net profit for the company for FinancialYear 2021-22 is ` 865.22 crores.

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

(Rs. in Lakhs)
Particulars ILT 1 ILT 2 ILT 3 ILT 4 ICSL SCILAL
As on 31.03.2022 31.03.2022 31.03.2022 31.03.2022 31.03.2022 31.03.2022
Particulars ILT 1 ILT 2 ILT 3 ILT 4 ICSL SCILAL
Total Income 18694 19676 21212 18383 38 0
PAT 8493 9297 5441 2093 -89 -0.17
Equity capital 17 17 8 32179 105 1
Number of equity shares 10000 10000 10000 42448300 1050000 10000
EPS (`share) 84930 92970 54410 5 -8.48 -1.73
Dividend - - - - - 0
Net worth 60501 62892 6128 37407 -19 0.83

Net Impact on Consolidated profits for the year ended 31st March 2022is increase of `70.43 crores upon consolidation of above joint ventures and subsidiarycompany.

Credit Rating Details

(a) credit rating obtained in respect of various securities; a) Rating is done for bank loan rating only
(b) name of the credit rating agency; b) The latest rating is by Acuite Ratings & Research
(c) date on which the credit rating was obtained; c) published on 31st Mar 2022
(d) Current credit rating; d) Reaffirmed as "AA" with rating outlook as "Stable" and the short term Rating is also reaffirmed at the highest grade for the Cor- poration as "A1+"

SUBSIDIARIES & ASSOCIATES

Your company has two subsidiary Companies and has six Joint Ventures.Investment in subsidiary "Inland and Coastal Shipping Limited" was done on 29thSeptember 2016. It is a wholly owned subsidiary of your company. The subsidiary ShippingCorporation of India Land and Assets Limited (SCILAL) was incorporated on 10th November2021 for holding and disposing of Non-Core Assets of SCI. Joint Venture Company SCI SAILShipping Co. Private Limited is struck off as on 31.03.2022. Pursuant to section 129(3) ofthe Companies Act 2013 a statement containing salient features of our subsidiary andassociates companies in form AOC-1 is appended to the Director's Report. Inaccordance to section 136 of the Companies Act 2013 the audited financial statements ofthe company are available on our website www.shipindia.com.

A SUBSIDIARY

Inland and Coastal Shipping Limited

Inland and Coastal Shipping Limited (ICSL) incorporated on 29.09.2016is a wholly owned subsidiary of your Company. As per Ministry of Ports Shipping andWaterways (MoPSW) Inland Waterways Transport (IWT) Division letter dated 27.10.2020approval was accorded to IWAI for handing over three vessels i.e. (i) M.V. Rabindra NathTagore (ii) M.V. Lal Bahadur Shastri and (iii) M.V. Homi Bhabha to ICSL. M/s. Inland& Coastal Shipping Limited (ICSL) signed a MOU on 22.01.2021 with Inland WaterwaysAuthority of India (IWAI) for operation and management of above mentioned cargo vesselsand subsequently took delivery of M.V. R N Tagore on 22.01.2021 and M.V. Lal BahadurShastri on 26.02.2021. Third vessel M.V. Homi Bhabha is presently non-operational andwould be taken over by ICSL after she is made operational by IWAI. M.V. R N Tagore andM.V. Lal Bahadur Shastri are presently operating on NW1 & NW2 respectively.

ICSL and IWAI further signed an MOU on 11.03.2022 for take over of twoRO-RO vessels viz m.v. Gopinath Bordoloi & m.v. Sankar Dev to promote InlandWaterway transportation with ultimate objective to decongest roads & railways. TheseRO-RO vessels would be taken over by ICSL soon after completion of required certificationsetc.

The Shipping Corporation of India Land and Assets Limited

Shipping Corporation of India Land and Assets Limited (SCILAL) is aGovernment Company within the meaning of section 2(45) of the Companies Act 2013incorporated under the Companies Act 2013 on November 10 2021 having its registeredoffice at ‘Shipping House' 245 Madame Cama Road Mumbai-400021 India.

The Government of India is in the process of strategic disinvestment ofits equity stake in SCI together with transfer of management control. To facilitatedisinvestment process of the Company in an effective efficient and rapid manner and alsoto unlock the value of the business and the assets it is found appropriate that theNon-core Assets of the Company the value of which is not getting reflected in the valueof business of SCI should be separated from SCI and should be kept in an independententity and a separate strategy should be formed for unlocking the value of such Non-coreAssets. Considering this and in line with the guidance of DIPAM and other CompetentAuthority Shipping Corporation of India Land and Assets Limited has been incorporatedwith the object of holding and disposing the Non-core Assets of SCI distinct from thedisinvestment transaction

B JOINT VENTURES

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

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

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

SCI had entered into 4th JV formed in Singapore with the same threeJapanese companies viz. Mitsui O.S.K.Lines (MOL) Nippon Yusen Kabushiki Kaisha (NYK) andKawasaki Kisen Kaisha Ltd (K Line) and Petronet LNG to own and operate one 173000 CBMLNGTanker for transporting 1.44 million metric tons of LNG primarily from Gorgon Australiato India for charterers Petronet LNG Limited . The vessel is now novated to Exxonmobil byPetronet LNG and operating world-wide with a focus on India and Far East region. SCI isthe manager for this company and is managing the techno-commercial operations of thetanker.

(iii) Irano Hind Shipping Company

Irano Hind Shipping Company The Company holds 49% in Irano HindShipping Company P.J.S (IHSC) a joint venture company. As per directives received fromthe Govt. of India it has been agreed to dissolve the Company. The investment in IHSC isclassified as Non-Core Assets Held for Demerger.

(iv) SAIL SCI Shipping Pvt Ltd (SSSPL)

SAI L SCI Shipping Pvt Ltd (SSSPL) SCI and SAIL had co-promoted a JVC"SAIL SCI Shipping Pvt Ltd" (SSSPL) which was primarily to cater to SAIL'sshipping requirements. The JVC was incorporated on 19.05.2010. However due to continueddepressed freight levels the JVC could not justify tonnage acquisition and both theBoards of SCI & SAIL decided to voluntarily wind up the company. The company hascompleted the process of winding and the said Company is now dissolved.

Fleet position during the year:

During the year under report there has been NIL additions or deletionsto the SCI owned fleet. Thus the overall fleet position of SCI stood at 59 vessels of5.311 million DWT at the end of the year.

Fleet Profile during the Year

Particulars As on 31.03.2021 Additions Deletions As on 31.03.2022
No. DWT No DWT No. DWT No. DWT
Crude oil Tanker 18 3231602 - - - - 18 3231602
Product tanker 13 862925 - - - - 13 862925
Gas carriers 1 53503 - - - - 1 53503
Bulk carriers 15 1022344 - - - - 15 1022344
Container vessels 2 115598 - - - - 2 115598
Offshore vessels 10 25238 - - - - 10 25238
Total 59 5311210 - - - - 59 5311210

At the end of the year the Company had no new built vessels on order.

Particulars of Loans Guarantees and investments

Details of Loans Guarantees and Investments are given in the notes tofinancial statements.

Extract of Annual Return

In accordance with section 134 (3) (a) and section 92(3) of thecompanies Act 2013 read with relevant rules the annual return as on March 31st 2022 isavailable on the Company's website- www.shipindia.com Particulars ofcontracts/arrangements with related parties

Particulars of contracts/arrangements with related parties referred toin Section 188(1) of the Companies Act 2013 in the prescribed form AOC-2 is appended tothe Director's Report. The details are also available in Note 30 under ‘Notes toFinancial statements.

Particulars of Employees

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

Employees Stock Option Scheme

The Company does not have any Employee Stock Option Scheme.

Company's Policy on Directors appointment and remuneration

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

Receipt of Remuneration by Managing Director from Subsidiary Companies

Shri Atul Ubale holding Addl.charge of CMD & Director (B&T) hasnot received any remuneration from any of its subsidiary companies.

Risk Management

SCI has approved Risk Management framework and risk registers to buildup a strong Risk Management Culture within SCI in achieving company's goals andobjectives. The entity level Risk Assessment includes; i) Strategic Risk ii) OperationalRisk iii) Financial Risk iv) Compliance Risk In specific SCI has identified risks whichincludes volatility in freight rates bunker procurement exposure delay in revenuetransfer etc. In SCI concerted efforts are made for mitigating / containing andcontrolling risks. The top priority in the present situation includes the implicationsarising from pandemic circumstance and continuing with the business as per the businesscontinuity model by identifying the critical functions. The meetings of the RiskManagement Committee were held on 7.4.2021 12.3.2022 26.3.2022 and 6.5.2022.

Conservation of Energy Technology Absorption

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

Foreign exchange earnings and outgo Rs in crores
Particulars 2021-22 2020-21
Foreign exchange earned* 4982.68 3891.24
Foreign exchange outgo* 4048.50 2810.35

*includes deemed foreign exchange earnings and outgo.

Public Deposit

During the financial year 2020-21 your Company has not accepted anydeposit within the meaning of Section 73 and 76 of the Companies Act 2013 read with theCompanies (Acceptance of Deposits) Rules 2014 and as such no amount of principal orinterest was outstanding as on the date of the Balance Sheet.

Proposed Strategic Disinvestment of SCI

The proposed strategic disinvestment of SCI is being handled byDepartment of Investment and Public Asset Management (DIPAM) with the engagement ofnecessary advisors. In this regard Preliminary Information Memorandum (PIM) for invitingexpression of interest was released on 22nd December 2020. The Virtual Data Room is openand is being managed by the Transaction Advisor for the process of due diligence by theQualified Interested Parties.

The Demerger Scheme (‘the Scheme') for hiving off theidentified Non-cCore assets has been approved by the SCI Board on 03.08.2021. Pursuant toinstructions of Ministry of Ports Shipping and Waterways (MoPSW) the Company hasincorporated a wholly owned Subsidiary viz. Shipping Corporation of India Land and AssetsLimited (SCILAL) for the demerger of Non-Core assets on 10.11.2021 in terms of the Scheme.The Board of SCILAL has approved the Scheme on 16.11.2021. On 02.03.2022 the SEBI throughStock Exchanges have communicated the approval to the Scheme of Demerger .

Subsequent to the approval of Scheme by the Boards of SCI as well asSCILAL assets and liabilities to be transferred to SCILAL have been categorised asNon-Core Assets / Liabilities Held for Demerger and consequential impact has been given inProfit and Loss account w.r.t reversal of amortisation of deferred tax liabilitydepreciation and foreign exchange loss. Post approval of the Scheme by MCA the assets andliabilities pertaining to the said non-core assets will be transferred to SCILAL basis theappointed date mentioned in the Scheme as per the book value as on 31.03.2021 and from16.11.2021 income and expenses related to Non-Core assets as per the Scheme will beaccordingly transferred to SCILAL.

In accordance with the directions of MoPSW and DIPAM the Board of SCIand SCILAL in their meetings dated 06th May 2022 and 25th May 2022 respectively approvedthe modifications in the Scheme of Demerger. The modifications do not have any impact oncarrying value of Non-Core assets in the financial statements. Presently the RevisedScheme of Demerger is pending with Ministry of Corproate Affairs for further orders.Considering the reiteration by MoPSW and DIPAM to expedite the demerger process there isa certainty of completion of the process in the near future and accordingly the relevantdisclosures with continued accounting effects have been considered in the financialstatements.

MANAGEMENT DISCUSSION AND ANALYSIS

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

Particulars Standalone Consolidated
2021-22 2020-21* 2021-22 2020-21*
Debtors Turnover Ratio 7.88 5.99 7.88 5.99
Inventory Turnover Ratio 7.39 6.51 7.39 6.51
Interest coverage Ratio 6.32 31.07 6.76 34.76
Current Ratio 1.83 0.95 1.83 0.95
Debt Equity 0.37 0.46 0.35 0.45
Operating Profit Margin (%) 19.94 17.71 21.35 19.81
Net Profit Margin (%) 15.91 16.69 17.32 18.80
Return on Net worth (%) 9.14 7.82 9.51 8.52

* Ratios of comparative period i.e 2020-21 are based on previous yearfigures which have been regrouped and rearranged wherever necessary to confirm to currentyear presentation of the financial statements as per Schedule III (Division II) to theCompanies Act 2013. ** Net Worth has been calculated basis Average Net Worth as perSection 2(57) of the Companies Act.

Ratio Details of Significant changes and explanation thereto:

1. Debtors Turnover Ratio : Debtors turnover ratio for Standalone andConsolidated Financials has increased from 5.99 during FY 2020-21 to 7.88 during FY2021-22. The ratio has improved due to timely collection of Trade Receivables.

2. Interest coverage Ratio - Interest Coverage ratio for standalone hasdecreased to 6.32 in F.Y. 2021-22 as compared to 31.07 in F.Y. 2020-21 while forconsolidated financials same has reduced to 6.76 in FY 2021-22 as compared to 34.76 for FY2020-21. This is due to increase in Finance cost for the year 21-22 due to ForeignCurrency loss which are adjusted in Finance cost as per requirement of Ind AS 23. DuringFY 2020-21 there was Exchange gain which was adjusted to Finance cost as per requirementof Ind AS 23. 3. Current Ratio:- The current ratio has increased due to classification ofNon Core assets to Assets Held for Demerger as per Demerger Scheme.

A. INDUSTRY STRUCTURE AND DEVELOPMENTS (i) World Scenario

The world GDP rebounded by an average of 6.1% in 2021 compared to theeconomic contraction of about (-)3.3% in the previous year. The growth estimates for 2022and 2023 are 3.6% and 3.6% . With most of the world economies slowly charting a course torecovery from the destructive economic impacts of COVID-19 pandemic the recently eruptedwar situation between Russia and Ukraine has dealt a major blow to the global recovery.Omicron variant's impact was relatively short-lived and hence it was believed thatworld was now on the path to recovery. This optimism had also reflected in the IMF'sWorld Economic Outlook of January 2022 however the economic forecasts have since beendowngraded by IMF. Russia is a major exporter of energy (oil and gas) as well as metalswhile Ukraine is a major producer of agricultural produce (especially wheat and corn) andalso of some rare metals that are crucial for global electronic industry. The impact ofwar has driven up the prices of all the aforementioned commodities and thus most of globaleconomies are now dealing with severe inflationary headwinds. Ultra-loose monetarypolicies adopted by most countries during COVID-19 times were already pushing inflationaryboundaries even before the war. Now the soaring prices of commodity prices after yetanother supply shock has turned many central banks hawkish and accordingly they havestarted tightening the monetary supply which threatens to hamper global economic growth.Apart from war in Europe re-introduction of lockdowns in China is dealing yet anothershock to global supply chains. With inflation now a prime concern of central banks of mostof the countries in the world it will be even more difficult for them to do the balancingact of stimulating growth and managing inflationary pressures. In advanced economiesthough economic recovery is expected to continue it will be dragged and will face severeinflationary pressures.

Economic sanctions on Russia and European countries trying to slowlywean themselves off of Russian energy will certainly dampen the recovery in Europe.Meanwhile U.S. also shall face problems caused by global inflationary environment. U.S.& U.K. both saw their inflation levels soaring to near 40-year highs and are thereforebound to tighten the monetary supply to tackle inflation. This will mean that U.S. andEurope would trade-off some growth in the process. It looks like there will be long drawnand multi-front fight with inflation and supply bottlenecks. Meanwhile EMDE (EmergingMarkets and Developing Economies) are expected to exhibit strong demand in numbers howevertheir growth trajectory will be severely hampered by the devil of inflation. Most of theEMDE economies are highly dependent on major energy and commodity suppliers to cater totheir domestic demand. However with Russia and Ukraine now out of the equation andChina's production showing hiccups due to lockdowns as a result of their zero-COVIDpolicy there are bound to be new supply bottlenecks in almost all major commodities.Thus economies of EMDEs in South America Africa as well as Asia will be forced to fightraging inflationary headwinds.

For the next two years the global GDP growth is forecasted at 3.6% in2022 and 3.6% in 2023. The downgraded forecasts of global growth underline the pressuresof inflation and strained supply chains. Looking at the year 2022 the advanced economiesare expected to grow at 3.3% and EMDEs (Emerging Markets and Developing Economies) areexpected to grow at 3.8%. In the subsequent year 2023 the world growth trajectoryforecast is still unknown as of now with Global growth forecasted to clock in at 3.6%.However this forecast comes with severe downside risks as long drawn war will hammerworld economies right to the verge of breaking (case in point - Sri Lanka) and any futureescalation would be disastrous for all.

(ii) Global GDP

According to IMF Global Trade Volume (goods and services) growth hasbeen very impressive at 10.1% in 2021 (on the back of low-base created in 2020) and isexpected to sustain at good levels to around 5.0% in 2022. In developed countries thetrade volume growth is expected to remain at decent levels in 2022 at an average ofaround 9.0%. Most developed regions have come out of the pandemic related curbs and haveseen the business activity pick up. However how the developed countries (especially fromEuropean region) tackle the problems of inflation and supply disruption due to warremains to be seen. In the EMDE (Emerging Markets & Developing Economies) region thegrowth in trade volume during the year 2021 was 11.8% in imports and 12.3% in exports.EMDE economies are mostly import-dependent for their energy and production input needs andare thus particularly vulnerable to supply chain shocks and inflationary pressures. Withlimited fiscal flexibility the middle class and lower populations of EMDE countries areexposed to bear the brunt of inflation. This in turn puts severe pressures on demand andthus EMDEs trade volumes should theoretically languish in the upcoming year. Overall theworld's total trade volume is forecasted to grow by 5.0% in 2022 with significantdownside risks. Statistics-wise as per IMF's World Economic Outlook global tradevolume is expected to exhibit a decent growth by 5.0% in 2022 and then owing to higherbase moderate to post a forecasted 4.4% rise in 2023 as against a significant bounceback figure of 10.1% in 2021. The combined economy (GDP) of developed nations is expectedto grow by 3.3% in 2022 and then rise by 2.4% in 2023. Whereas the report forecasts thateconomies of Emerging Markets & Developing Countries will expand by 3.8% and then growfurther by 4.4% in 2022 and 2023 respectively as against the expansion of 6.8% in 2021.Going forward strong organic demand accompanied with robust domestic trade as well asexport-focused international trade will be the key growth determinants particularly forEMDE countries.

The global GDP growth and corresponding economic activity directlyrepresents the international trade (export and imports) and in turn provides usefulpointers to the shipping industry as about 80% of the international trade by volume iscarried out by shipping.

(iii) Seaborne Trade Fleet & Market

Globally the average seaborne oil trade (inclusive of both crude oil& refined products) exhibited a slight drop of -1.07% in 2021 as compared tocalamitous -9.13% drop in 2020. Within the seaborne oil trade development the ‘Crudeoil' trade decreased by -0.53% with total figure at 1875 million tons in 2021.Whereas ‘Product trade' (excluding Fuel Oil) was at 660 million tons in 2021rebounding by 5.94%. The crude & product tanker fleets expanded by 1.05% & 4.99%respectively in 2021 (when calculated by gross dwt) as compared to the growth(+)/reduction(-) figures of +1.85% & +2.74% during the previous year. For the year 2022crude and product tanker markets are forecasted to remain fairly depressed (similar to theprevious year 2021) due to oversupply of tonnage and dwindling oil demand. The uncertainsituation and war does not really set the tone for new upstream investments. For CPPdemand to return to pre-COVID levels large parts of major refined products consumercountries or continent need to have conclusively brought the pandemic under control sothat transportation and international aviation begin to have positive effect on the mediumterm demand scenario. Thus both crude and clean products markets are set to see a yetanother disappointing year in 2022. Even though there is an uptick in the CPP tankermarket due to the war in Europe it is predicted to be a short-term phenomenon.

The dry bulk trade registered a decent increase of 3.36% in gross cargoquantity over the course of year 2021 however the forecasts for the 2022 are lookingmoderate at best. The war between Russia and Ukraine has pushed up the commodity pricessignificantly. Higher commodity price inflation is likely to affect lower income countriesthe most and since these countries tend to be net importers of dry bulk commodities itis likely to hurt their dry bulk demand. Also China's strict COVID lockdowns isanother factor which will have a negative impact on dry bulk trade The total dry bulkfleet growth rate was about 4.20% in 2021 which is quite higher than the figure of -3.08%in 2020 Dry bulk charter rates have moderated quite a bit in 2022 however are still atdecent levels especially for smaller size vessel segments. Although there are questionmarks over overall dry bulk trade volume in near future the increased tonne-miles due towar in Europe higher commodity prices translating into better rates and possible slowsteaming due to EEXI and CII implications is expected to keep dry bulk rates at reasonablygood levels.

(iv)Indian Scenario

As per National Statistical Office (NSO) Indian economy expanded by animpressive 8.95%(estimated) in FY 2021-22 as compared to the growth rate of -6.59% in2020-21. The GDP numbers have rebounded from the slump in 2020-21 due to COVID-19 relatedcurbs. However there are many downside risks to India's GDP growth as India being animport-intensive country will face the heat of commodity and energy price inflations in amajor way. Spiraling inflation might force Reserve Bank of India to further tighten themonetary supply which has the potential to hurt credit growth and overall economic growthof the country. Lack of major capital investments due to jittery investment climatedepressed domestic demand sluggishness in manufacturing sector and dampened sentimentsacross almost all the sectors could lead to significant downturn in economic activity. Onthe other hand any upside triggers for an immediate upswing in the economy looks lesslikely as long as the inflation persists. A combination of these factors has therebygenerated a significant downside risk probability in the future GDP forecasts. As per IMFWorld Economic Outlook India's GDP growth has surpassed China for the year 2021 incontrast to last year when India's growth had remained lower than that of China in2020. The agricultural/farming sector exhibited an encouraging annual GVA (Gross ValueAdded) growth of 3.3% in 2021-22 while the sector had registered 3.3% GVA expansion inthe earlier period also. The power and utility sectors (Electricity Gas Water Supply andOther Utility Services) also posted an estimated GVA growth at an annual rate of 7.8% in2021-22 as compared with -3.6% growth rate exhibited in the previous year 2020-21 (onaccount of pandemic related curbs). As per the Ministry of Commerce website India'sexports in value terms rose significantly by 44.57% (mainly due to low-base formed duringCOVID-19 pandemic) to US$ 421.89 billion in 2021-22 while imports also jumped sharply bya figure of 55.31% to US$ 612.61 billion. One of the main reasons for this extraordinaryrise in exports as well as imports was the low-base formed during economic havoc wreakedby the COVID-19 pandemic and now that the economy has been opened up hence there is areturn to the numbers comparable with pre-pandemic era . As per the Press InformationBureau & Indian Ports Association (IPA) the quantum of Cargo Traffic at India's13 major ports increased by 6.94% in the period April 2021 to March 2022 i.e. cargotraffic increased to around 719.38 million tons in the period April 2021 - March 2022 ascompared to the handled traffic of 672.68 million tons in the corresponding period ofprevious year. Looking at commodity-wise breakdown of cargo traffic the largest commoditygroup in the total traffic was P.O.L. (Petroleum Oil & Lubricants) with around 30.74%share followed by Container traffic at 21.37% Thermal & Steam Coal at 11.60%‘Other Misc. Cargo' (10.83%) Iron Ore & Pellets (10.56%) Coking &Other Coal (8.04%) Other Liquids (4.20%) Finished Fertilizers (1.54%) and RawFertilizers (1.13%) respectively. This improvement in port performances is the result ofmany strategic measures initiated by the Ministry of Ports Shipping and Waterwaysfocused towards elevating the performance of Indian ports. These measures includemechanization of the terminals focus on improving the TAT (turn-around time)introduction of new processes and practices for quick evacuation of cargo activeencouragement towards use of new technologies like electronic tagging blockchain etc.special thrust on coastal transportation expansion/modernization of port-relatedinfrastructure and skill development of port employees. The existing non-major portsespecially private ports continue to grow due to factors such as a diversified cargoportfolio superior operating efficiency and contemporary infrastructure and the presenceof captive cargo streams.

(v) Strengths

Years of experience in Shipping together with diversified fleet acrossall major segments give SCI a unique ability to exploit demand growth in any given segmentwith a quick-mover advantage on the peak of learning curve. New acquisitions have broughtdown average age from 18 years in 2007 to about 13.28 years presently (w.r.t. B&TFleet). Longstanding COA relationships with major Indian oil refineries offer cargosecurity & employment assurance for major part of the tanker fleet.

vi) Outlook

The prospects for global economy point to diminishing levels of growthat about 3.5% to 3.6% in 2022-23 on account of geopolitical crisis in Europe andinflationary pressures. In the crude tanker markets after a quite disastrous 2021 tankerowners are hoping for better fortunes in 2022-23. However from the current geopoliticalsituation and presence of multiple negative triggers it does not look like this year willbe significantly better than the previous one. The war between Russia and Ukraine isexpected to put a major dent in oil trade recovery. The increased oil prices due to warare expected to translate into weaker demand. Further currently there are other stressingfactors apart from high oil prices such as recurrence of lockdowns in China and overallsluggishness in economies due to monetary policy tightening which will keep the crudetanker markets under pressure. However there is a silver lining in the form ofstrengthening of product tanker markets which are expected to experience an upturncuriously due to same factors which are affecting crude tanker rates. The Russia-Ukrainewar has made Russian refined products unacceptable to many western nations and theirallies due to sanctions. This has created a huge supply gap in CPP space since Russia was3rd largest supplier of diesel for the last 5 years. This gap in European CPP supply willbe covered by US & Middle East which will boost tonne-miles. Thus the product tankermarkets are exhibiting an upturn and are expected to do well compared to 2021. Howeverthere are serious downside risks also to this scenario as recurrence of lockdowns inChina and ever rising prices may hamper CPP demand retracting the global CPP trade. Inthe dry bulk market the levels were pretty decent initially in the first month and halfof FY23 however rates & consequently earnings of dry bulk owners have been droppingsteadily since then and could not be sustained at higher levels. Although the freightrates have not maintained the excellent peak levels achieved in 2021 still most of thedry bulk segments (especially smaller size segments) were doing pretty well till aroundApril 2022. The rebound in activity post-COVID era has generated significant demand pickupfor dry bulk commodities. Along with good flow of dry bulk cargoes other factors thatsupported dry bulk markets were: scarcity of vessels created due vessels being stuck inBlack sea due to war some vessels stuck in China due to COVID related curbs and possibleslow steaming to meet EEXI and CII regulations. Thereafter as war erupted between Russiaand Ukraine and inflation began to rise there was major overhaul in the dry bulk tradingpatterns owing to war-zone trade disruption sanctions on Russia by the West and formingof new demand-supply balances basis these factors. Accordingly the dry bulk freightmarkets have witnessed a steady fall since May 2022. Meanwhile there were also someregional issues which could have detrimental impact on dry bulk trade such as reducedproduction of iron by Brazil's Vale slowdown in China's manufacturing sectordue to COVID related curbs surging inflation in import intensive countries in Africa andAsia affecting demand are some of the factors which may potentially hamper dry bulk trade.

It would be prudent here to mention that all of the above forecastshave an underlying assumption of COVID-19 pandemic being under control during 2022-23 andno further escalation in Russia Ukraine war. Since the situation is quite dynamic it hascapacity to weaken the global trade thus sharply pulling down the shipping freightmarkets across segments. The outlook for shipping markets depends to a large extent uponoverall global economic activity and upon readiness of the major trading economies inre-integrating with the world markets via increased globalization. National policiesbacking free movement of goods in the global markets enable companies to endeavor inbuilding extensively integrated global supply chains thereby generating more seabornetrade.

B SEGMENTWISE FLEET & MARKET STUDY

1. BULK CARRIER AND TANKERS a) Crude Oil & Product Tankers

In the year 2021 the global demand for Crude Oil registered a decentrebound of 6.20% to 97.6 mbpd (million barrels per day) over the previous year. It isforecasted that recovery in global oil demand will be thwarted by Russia-Ukraine crisisand re-emergence of COVID-related restrictions in China. China's manufacturing willbe affected if COVID cases persist in China as the Chinese government has implemented astrict zero-COVID policy. This may adversely impact the China's oil demand.Meanwhile an even greater impact is forecasted on the oil supply side due to Russiancrude and CPP being sidelined on account of sanctions. It is estimated that the gapgenerated by absence of Russian crude may not be fully covered even if rest of OPEC+ andUS significantly raise their crude production outputs. Thus global oil recovery which waspredicted to render pre-COVID oil demand levels in 2022 may be delayed and as perpredictions pre-COVID oil demand levels are now seen only in 2023. Further down the roadimproving fuel efficiency and rising adoption of electric vehicles are expected to limitglobal oil demand growth. The Indian crude oil import demand which had been steadilyrising for the past few years rebounded after a sharp dive to the levels of around 211.98MMT in 2021-22 which represents an increase of 7.90% over 2020-21. The Indian oil demandwas already showing signs of stagnation even before the pandemic. The pandemic and nowinflation plus geopolitical crisis are expected to dampen recovery prospects. US domesticcrude output is likely to increase by about 0.8 mbpd in 2022 a decent bounce back of7.15% over the year. In case of US the new administration has put the new oil and gasleases on hold for days soon after taking charge. The climate plans of new administrationare expected to make it difficult for shale oil producers to increase production.Meanwhile OPEC countries & their non-OPEC allies (collectively known as (OPEC+) areset to ease their production curbs thus marginally increasing their share in the globalcrude oil production. However Russia's crude production is expected to drasticallyfall in the face of weak demand for its crude basis sanctions. There were deliveries of16.6 million dwt of Crude oil tanker tonnage and 4.82 million dwt of (IMO Class) Producttankers tonnage in 2021. Looking further down the line the expected deliveries of Crudeoil tankers in 2021 and 2022 are 18.6 million dwt and 12.8 million dwt respectively. ForProduct tankers the respective delivery figures are 4.97 million dwt and 4.14 million dwtfor 2022 and 2023. New building prices for crude tankers saw a deep decline in 2021decreasing by 10.16% on average since the freight markets are unattractive and owners arehesitant to place new building orders due to uncertain scenario in near future on charterrate as well as environmental regulations side. The prices are forecasted to soften tillmarkets recover as weak oil demand will translate into weak orderbook. Meanwhile Newbuilding prices for product tankers also decreased in 2021 decreasing by 4.23% onaverage. In tonne-mile terms the crude oil trade contracted by -0.53% in 2021 as comparedto the previous year while products trade expanded by 5.94% in the same period.

In near future crude as well as product tanker freight markets willstrongly depend on how Ukraine-Russia war situation develops as global oil supply &demand are greatly interlinked with the same. Also other important factors such asinflation and COVID lockdown situations will have a bearing on oil trade and tanker tradein the coming year. The average spot rate yield (TCE) of TD3C route of AG/China for VLCCwas US$ -742/day in 2021. The future market in this segment appears to be in the range ofUS$ 8000-17000/day impacted significantly by global crude oil supply as well as demandshock and increased tonnage oversupply creating market imbalance. One Year TC rate forVLCC was about US$ 21000/day in 2021 however unfortunately due to Russia-Ukraine warthere will be no respite for VLCC owners. This is due to large oversupply of tonnage andshift in trade leading to very weak demand of VLCCs. The Suezmax rate yield on West AfricaNorth West Europe (TD20) route was about US$ 3000/day in 2021 which is expected to returnto marginally decent level of by about 291.19% year over year in the next year. ForAframax segment the spot rate on AG/Far East route (TD8) was US$ 1800/day. These freightlevels were drastically depressed but like Suezmax segement rates are expected pick upsomewhat decent levels of upto $9000 in 2022 and currently the projections thereafterare decent. For Product tankers LR1 Spot rate on AG/East route (TC5) was US$ 6900/day in2021 and expected to exhibit rising trend in 2022 and 2023. Average One year TC rate forLR1 was US$ 14400/day which is a significant decrease from the previous year's TCrate and not enough for LR1 owners to earn sizeable profits. In MR tankers on USGulf/UKC route the spot rate was at lower levels of US$ 8100/day in 2020. One Year TCrate for MR tankers was US$ 12400/day in 2021 and is expected to rise up to level of US$13200/day over the next year.

Your company has five VLCCs & all were operational during the year2021-22. They were mainly employed on a mix of a time charter & spot voyage charterswith Indian as well as foreign charterers. The time charter fixture rendered goodearnings while voyage charter fixtures earnings were in line with market. Your Suezmaxtankers were mainly deployed with the Indian oil industry and performed voyage chartersmainly for both PSU as well as private charterers. Older Suezmax vessels howeverunfortunately had lesser employment opportunities due to performance issues & problemsin port acceptances. The Aframax COA earnings are based on AFRA which has been moderatethroughout the year. The time charter rates compare well with respective marketbenchmarks.

Five LR-I tankers of the Swarna series were employed on Indian coast ona mix of COAs Spot voyages and time charters catering to Indian coastal crude movementof the Indian oil industry. They also had other kinds of employments such as lighterageoperations FPSO loadings and floating storage duties etc. Their earnings compare wellwith market levels. Another LR-I tanker MT Swarna Kaveri was used in CPP cargoes tankerfor hauling Clean Petroleum Product cargoes worldwide. It was employed with Indian as wellas foreign charterers in voyage charters.

Your GP product tankers in the Swarajya Series were well employed withIndian charterers on time charter & sporadic voyage charters and their earnings werein line with market levels.

Your three MR product tankers in the Swarna series were gainfullyemployed with Indian as well as Foreign charterers and their earnings compare well withthe market. All 3 tankers were deployed on Indian coast on Spot voyages for short periodsduring the financial year. MT Swarna Kalash MT Swarna Pushp and MT Swarna Mala whichwere deployed along the Indian coast were employed in a profitable mix of time and voyagecharters supporting coastal product movements. The two LR-II tankers MT Swarna Jayanti andMT Swarna Kamal were employed with foreign charterers in a mix of pools & voyagecharters. Their returns were stable and in line with available markets.

Earnings of your coiled / double hull Aframax tankers were in line withmarkets along with the average of benchmark yields under TD8 (Arabian Gulf to Singapore)and TD14 (Indo-Australia) routes on the back of COA voyages and triangulation spot voyagesowing to intermittent fuel oil arbitrage trades which minimized ballast voyages. TheAframaxes mainly performed India centric - Far East / Red Sea voyages along withoccasional lighterages in Indian waters.

OPPORTUNITIES

Ongoing Russia-Ukraine war will be changing the trade patterns in bothcrude as well as clean petroleum product tanker spaces. Most European nations arecontemplating a complete ban on Russian oil. Also many Asian countries shall reduceimports of Russian oil due to fear of sanctions. This gap in supply to Europe and Asia isexpected to be filled by Middle East and U.S. This is predicted to give significant boostto tonne-mile demand thereby generating opportunity for higher freight rates. Further ifthe scenario of low oil supply brings about a change in US's stance on Iran thenIranian oil can fill the oil supply gap and generate cargo opportunities in crude tankerspace. In product tanker trade also the changing trade pattern due to sanctions onRussian crude is likely to boost tonne-mile demand. There will be more demand for MRs inAtlantic basin due to increased CP trade between Europe and US. Thus strategicallydeployed MRs as well as larger vessels will have opportunities to perform long hauls atelevated freight levels. Also due to prolonged low freight levels in tanker marketsthere might be a liquidity crunch in the market. Moreover new building orders may dry updue to unresolved ambiguity with respect to decarbonization and green shipping norms. Boththese factors combined shall bring down rates in both primary and secondary tankersale/purchase markets creating good value-buying opportunities for tanker owners. InIndian context barring a major shock the economy would generally be on the growth trackfor the near future as many government initiatives and schemes kick in giving a boost tomanufacturing and capital goods sector. Consumption is also forecasted to be on strongerside. These factors will translate into robust oil demand lending a strong hand tosustained import cargoes into the country as well as coastal oil movements. SCI isuniquely positioned to cater to these trades and reap benefits therein. With itsdiversified and modern tanker fleet your company's vessels stand to secure a lot ofgainful employments and on the other side the company is well-equipped to withstandcontingent market pressures.

Risks and Concerns

There were geopolitical and structural concerns to the oil trade evenbefore the pandemic struck. Many of those issues - US and China trade tensions sanctionson Iran violence in Middle East waters Venezuelan crisis slowdown conditions in USEurope and some Asian economies etc. still persist. However Ukraine Russia war has nowupstaged them all and has unfortunately become the leading cause of concern across theglobe. It has caused major surges in inflation worldwide which has forced countries totighten monetary policies thereby hampering growth worldwide. It has caused bothsupply-side shocks as well as demand-side shocks in global oil trade. This has thepotential to derail the tanker market recovery in medium-term and keep tanker rates atultra-low levels. Furthermore any escalation in COVID cases in China could causeprolonged lockdowns and severely impact China's oil demand. This could hurttonne-mile demand in a significant manner. Also reduced oil demand in China will not letVLCC markets recover to profitable levels. A change of stance by new US administration onIran sanctions may change the Middle East tonnage scenario overnight as a lot of Iranianvessels shall be free to do global market cargoes. This tonnage oversupply also poses arisk to an already off-balance market pulling the tanker earning still lower.

b) Dry Bulk

Dry bulk markets fared quite well in the passing year due to thedemand-rebound for commodities upon easing of the pandemic restrictions worldwide. Lookingahead though the dry bulk rates will step off from their peaks they are expected toremain at reasonably high levels in 2022 also. Presently the deliveries of dry bulktonnage have not risen aggressively whereas there is reasonable activity in demolitionmarket. Also the tonnage will be well occupied due to mandatory slow steaming due to CIIregulations making tonnage demand-supply favourable for owners. However there are somenegative developments also which might affect dry bulk trade such as re-impositions oflockdowns in China after 1 year persistent inflation hampering growth prospects etc. Thebenchmark Baltic Dry Index (BDI) rose sharply to an average value of 3020 in 2021-22against an average of 1357 in 2020-21 exhibiting a phenomenal 122.53% increase whileregistering its highest average monthly value of 4820 in October 2021. When compared to2021 dry bulk trade is set to exhibit a rise of 3.99% in 2022 with tonne-mile demandincreasing by an estimated 3.84%. The dry bulk global seaborne trade is expected to growat an average of 2.7% - 4.0% for the subsequent 3 years.

The dry bulk fleet grew by 1% in the year 2021. Dry bulk fleet growthis expected to be elevated for the next 2 years however as a high number of deliveriesare scheduled. On account of attractive charter rates a lot of inactive dry bulk tonnagewill be made available for chartering. This extra active tonnage in the market is expectedto offset low deliveries and keep the trading fleet at a higher level. The total dry bulktonnage demand is expected to be on growing track for the next few years after an obviousdip in 2020. The dry bulk seaborne trade is expected to grow by 3.84% in 2022 while thetonne-mile demand is expected to also register a rise of 3.84%. Global seaborne iron oretrade is set to expand by 3.08% (forecasted) in 2022. With regard to Non-Coking CoalIndia's imports are predicted to rise marginally from the levels of 138 million tonsin 2021 to a forecast of around 146 million tons for 2022. India's imports of CokingCoal are set to rise in 2022 with imports of about 68 million tons in 2022 as comparedwith imports of 63 million tons in 2021. Urea movements into India which is a key cargofor dry bulk vessels and is part of minor dry bulk commodities has for the last few yearsbeen a "supporting trade" for bulkers ranging from Handysize to Panamax.

Grain trade provided a positive support to the dry segment during theyear FY21-22. Seaborne trade(imports) of major grains remained upbeat recording a rise of12.20% in the year 2021 with major exporters being European Union USA Ukraine RussiaAustralia Canada Argentina and Brazil. On demand side encouraging trends are presentwith factors such as growing population translating into growing grain demand increasingdemand from Asian and African countries and corresponding increase in tonne-miles in thegrain trade. Global steel production is projected to increase by 4.32% in 2022 witheconomies recovering from the disruptions caused by the pandemic. Major drivers of thecrude steel trade will be India and China with European steel trade taking a hit due toRussia-Ukraine crisis. Moreover the Indian government's push for infrastructuredevelopment will eventually strengthen demand for steel over the next few quarters. In theyear 2022 it is projected that 77 dry bulk ships will be sold for demolition as against60 dry bulkers in the previous year. Such reduced scrapping numbers are mostly because ofhigher market levels discouraging owners from scrapping in spite of tonnage restructuringalong with liquidity crunch and inflated fleet size is a discouraging sign for future drybulk market. In the year 2022 One-year Time Charter rate of Handymax is projected to beUS$ 19200/- pdpr whereas for Supramaxes the same is US$ 19800/- pdpr. In the Panamaxsegment the one-year TC rate in 2022 is forecasted to be US$ 21200/- pdpr. In theupcoming years the freight rate forecasts exhibit an upward trend with market forecastsshowing decent increases year-on-year. The company's dry bulk fleet now comprises ofeight modern Supramax vessels of around 57000 dwt each & seven modern Panamax /Kamsarmax dry carriers of around 80-82000 dwt as on 31st March 2022. The bulk carriersfleet is relatively young with an average age of about 10.2 years. The earnings of our drybulk fleet were in line with markets. In addition to the usual foreign voyage//trip-timecharter/time charter mix your dry bulk carriers were also employed on Indian coastperforming a few coastal time charters & voyage charters whose earnings compare wellwith markets. In order to maintain a healthy cash flow your company preferred fixing thebulk carriers on trip time charter and short-to-medium term time charters.

Opportunities and Threats

The dry bulk trade is expected to provide fairly good returns toshipowners in 2022 similar to 2021 when dry bulk trade picked up in the 2nd half of year.Although there may be occasional dips due to geopolitical pandemic curbs-related factorsmost dry bulk analysts have predicted a decent market in general for the next 1.5-2 years.As mentioned earlier the rebound due to opening up of economies from COVID restrictionsgenerated high demand for dry bulk commodities in a short span of time. The freight ratesincreased because of the same and have stayed higher. This presents an opportunity for drybulk owners to galvanize their tonnage and earn handsome income helping to mitigate theirmulti-year losses. Moreover there are factors which are lending support to the tonnagedemand-supply balance in favour of owners. One of the main factors amongst them will bethe Russia-Ukraine war. Both Russia and Ukraine are major producers of agriculturalcommodities. The destruction hampering of Ukraine's produce and sanctions on Russianproduce will mean European and African grain importers will have to cover their demandfrom further away U.S. and Australia. This will translate into a significant boost totone-mile demand. Also another important tilting the tonnage demand-supply balance infavour of owners will be the upcoming EEXI and CII regulations due to which many vesselsare expected to sail at a lesser speed. Thus strategically positioned tonnage will standto gain backhaul and triangulation benefits to earn good returns.

India's continued push to phase off petcoke has caused a big spikein its coal imports in the recent years. The Indian coal imports are expected to risecoming year too. This is a welcome development for our dry bulk ships which are hauling agood portion of the import coal cargoes for India. India has launched many schemes such as‘Saubhagya Yojna' which plans to electrify all the left-out Indian households.Such ambitious plans for boosting domestic electricity along with focus on creation ofIndustrial infrastructure is expected to generate a significantly robust demand-supplynetwork for electricity. Government of India has also proposed other projects like‘Bharatmala' which plan to create an unprecedented road network in India byconstructing roads spanning thousands of kilometers. Also PM GatiShakti National MasterPlan (PMGS-NMP) was launched in October 2021 for providing multimodal connectivityinfrastructure to various economic zones. PM GatiShakti a transformative approach foreconomic growth is driven by 7 engines namely: Railways Roads Ports WaterwaysAirports Mass Transport and Logistics Infrastructure. The coal steel & cement neededto implement these schemes will see a high demand growth in dry bulk materials both forcoastal movements as well as for imports.

Risks & Concerns

Advent of renewable energy-centric policies and increasing use ofrenewable energy sources as a means of transportation and mass-scale production poses asignificant threat to the dry bulk trade. Many countries are shifting focus fromtraditional energy sources towards the renewable sources of energy & are activelybuilding strategic initiatives for the same. This will not only reduce the demand forshipping of traditional energy sources like coal & oil but bring their prices downwhich will make extant shipping costs unviable. This puts a question mark on future oftraditional dry bulk cargo like coal and poses a significant risk on seaborne dry bulktrade.

Domestic factors such as ban on iron ore mining in Goa / Karnatakalengthy legal process involved in clearing the hurdles to re-start the mines high exportduty on iron ore in India will continue to negatively affect the growth of dry bulkdemand on India export-centric dry bulk trades.

Dry bulk trade is affected mainly by following factors recurrence ofCOVID cases in China have led to lockdowns and restrictions. It has affected manymanufacturing hubs in China. This may reduce Chinese appetite for raw materials and drybulk commodities. Hence reduced tonnage demand to and from China presents a significantdownside risk to the dry bulk trade. Another factor is that rising commodity prices due towar in Europe have created severe inflationary pressures on a global scale. Thus manydeveloping countries especially the countries having high import dependence will havetheir currencies deteriorated and could face a slowdown in growth due to inflation.Economic slowdowns may result in reduced demand for dry bulk commodities and this mayderail the recovery in dry bulk trade. One more incidental factors affecting the dry bulktrade in 2022 is the reduced production of iron ore by Brazil's Vale (due to heavyrainfall) and by Australian BHP due to worker-related issues in western Australia. Grainand fertilizer trades are seasonal and could be relatively short term in nature withuncertain parcel sizes which require timely positioning of tonnage to exploit the trade.

SCI with critical mass in panamaxes is catering to transportation ofthree major commodities such as Iron ore coal and grain which are prone to be affectedby economic slowdowns. In case of persisting future slowdown in these major tradesglobally the earnings of panamaxes may suffer.

The absence of long-standing COAs & similar assured businessopportunities stand to make your company's dry bulk business volatile & open toadverse impacts by the market forces. One more aspect that may churn charter rates isdelayed scrapping of the vessels (especially older tonnage) on account of temporaryspikes in freight rates which could lead to recurrence of overcapacity situation in themarket. The macro economic factors such as interest rate volatility subsidies onpetroleum products volatile rupee value vis a-vis the dollar and inflation continue toplague the national demand. Shipping being a derived demand will be negatively affected bythese factors.

c) LNG Transportation

LNG Transportation LNG is playing a major role in the energy marketswith many countries turning to natural gas to meet their energy needs. The global LNGmarket is expected to witness a compound annual growth rate of 8.1% from 2022 to 2030 toreach USD 208.85 billion by 2030. 50% of the global LNG demand growth upto 2035 isexpected to come from Asia. The Global Trade in LNG rebounds strongly during 2021. Thetrade hits 380 million tones an increase of 21 million tones (or 6%) compared to 2020With the increasing thrust on cleaner fuels the Asian markets have seen rapid increase inthe usage of liquefied natural gas (LNG). China becomes the world's largest LNGimporter with LNG imports reaching 79 million tones. India is the 4th largest importer ofLNG in the world with imports of about 22 MMT last year. Owing to continual growth ineconomy and rising concern on using cleaner source of energy has led to the gradualincrease in share of natural gas in the energy mix of India. It is expected to increasefrom 8.5% now to 10% in 2025 and 15% by 2030. A number of new infrastructure e.g.regasification terminals and natural gas pipeline are being developed in various parts ofthe country which would strengthen the development of LNG market in India. Indiapresently has regasification capacity of 30 mmtpa which is expected to go up to 55 mmtpaby 2025. Similarly India's gas transmission pipeline of 16200 km is also witnessinghuge capacity augmentation and is expected to reach around 27430 km by the year 2025. Itis likely that India would be the third largest importer of LNG in the world in the nextfive years.

India has made a commitment in the Paris Agreement 2015 to reduce theCarbon Emissions Intensity by one third and has agreed to achieve this by increasing theshare of renewals in it's energy mix from 6.2% now to 15% by 2022 and 40% by 2030.This is a very ambitious target and Natural Gas and Solar power are going to be thebiggest contributors in achieving the same.

Power and Fertilizer sector remain the two biggest contributors tonatural gas demand in India and continue to account for more than 75% of gas consumption.Balance 25% is consumed by the Petrochem and other industries and city distribution forvehicles and domestic consumption. Currently the natural gas demand far exceeds domesticsupply in India and the situation is likely to prevailing future as well. Given that thereare very few new domestic sources available additional demand is likely to be cateredthrough Re-Gasified Liquefied Natural Gas (R-LNG) in future. India's increasingappetite for LNG has spawned a dozen plans for import terminals across the west and eastcoasts of the country. The ramp-up of existing facilities and Construction of new LNGterminals could theoretically more than triple current capacity to over 80mtpa ofregasified LNG over the next 10 years.

While the Middle East in particular Qatar was the sole supplier ofLNG to India till 2004 and remains the largest LNG supplier at present the range ofsuppliers is becoming increasingly diverse. India started diversifying its supplyportfolio from 2006 onwards and imported LNG from many other countries including AlgeriaNigeria Yemen Australia Trinidad and Tobago Russia UAE Norway Indonesia and Oman.Currently LNG is imported in India through mix of long term short-term and spot basis.An important factor in the future viability of planned import projects is India'sability to secure long-term LNG contracts at competitive prices. Current long- termcontracted volumes fall way short of the potential growth in LNG demand forecast bynumerous sources with newly-signed contracts pointing towards only an incrementalincrease.

Earlier the Indian market was unable to commit to short-term contacts(up to two years) and spot purchases as the country lacked adequate gas infrastructure.However short -term and spot market accounted for most of the increased LNG supply in thetwo years given that only 7.5 mtpa of LNG import is through long term contracts. WhileIndia remains one of the most price sensitive markets for LNG in Asia short-term demandis not solely determined by the level of spot LNG prices. Competition from competingfuels the price of contractual LNG and terminal constraints can play a role in temperingthe level of spot imports. In an uncertain crude price environment buyers may also favouran alternative balance between pure spot trades and structured contracts as part of theoverall short-term mix in the near term. India will remain sensitive to the pricemovements in the global LNG market with buyers switching to coal from gas for powergeneration with reasonable flexibility. Hence we can conclude that going forward theindustry is likely to see an increased trend of procuring LNG through midterm andshort-term contracts as these will be negotiated at rates cheaper than spot prices.

The Indian Government has plans to connect 10 million households withpiped gas from the current 4.8 million households. There have been many rounds of biddingfor various geographic areas for giving out licenses to companies for setting updistribution network and supplying Natural Gas in many districts. Overall Billions ofDollars have been committed in total and once implemented almost 70% of the country wouldbe geographically covered with Piped Gas for Domestic use.

While India is emerging as major LNG market of future with all rounddevelopment in LNG terminals gas pipelines to attain desired sustainable growth acomprehensive approach which can meet suppliers expectation on one side and meet consumersprice expectation on other side needs to be firmed up. India would also need to takestrategic decisions like upstream participation in integrated liquefaction projects taxefficient structures and a consumer friendly regulatory environment to make this dream areality.

Your company jointly owns and operates 3 LNG carriers under long termcharters with charterers Petronet LNG Limited India for transportation of LNGpredominantly from Qatar. The 4th LNG carrier is under long term charter to Exxon MobilLNG Services B.V Netherlands. In order to ensure its presence in the new areas of the LNGmarket your company is exploring opportunities for operating small LNG carriers andcoastal LNG shipping. Your company has built up a pool of trained LNG officers and theexperience of independent technical operation of LNG tankers has helped to provide shipmanagement services. Your company is jointly working with one of its Japanese partner andhas trained its LNG officers on construction and operations of FSRU. SCI officers alsotook delivery of Vasant 1 the FSRU which will be positioned at Swan Energy'sJaffrabad Terminal in Gujarat once the terminal is fully operational.

d) LPG Carriers

Imports of Liquefied Petroleum Gas in India averaged 1.06 Million Tonsper month from 2014 until 2022 reaching an all time high of 1.71 Million Tons in Augustof 2021. India LPG market demand stood at 30.6 Million Tonnes in FY2021 and is forecast toreach 36.9 Million Tonnes by FY2030. An increase in the demand for Liquefied Petroleum Gasas a residential industrial and transportation sector is the major driver for theforecast period. The growing demand for clean cooking fuels in rural as well as urbanhouseholds is expected to give a boost to the country's LPG market in the forecastperiod. Support of the government in form of initiatives and subsidies to boost the salesof LPG is contributing to fuel the market growth. During the COVID-19 pandemic the Indiangovernment ramped up wholesale distribution of LPG and retail distribution of LPGcylinders which fall under essential services. Demand from the household sector increasedmani-fold to satisfy the growing demand due to the government's imposed lockdownrestrictions and the increase in the number of consumers staying at home and preferringhome-cooked meals. However the demand from commercial and industrial sectors faced setback due to the temporary closure of the industries which may hinder the growth of themarket. Your company's sole VLGC carrier - VLGC Nanda Devi was employed under timecharter with Indian energy PSUs during this financial year. The daily earnings wereattractive as compared with markets.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONALPERFORMANCE

The financial performance of the tanker segment has been largelyinfluenced by earnings on the VLCCs Suezmax and Aframax segments where SCI has had a mixof cross trade charters market linked Contract of Affreightments and Time charterbusinesses to effectively hedge employment and earnings risks. In the smaller segmentsconsisting of product carriers and LR-I dirty carriers the employment was mainly to meetthe domestic product and indigenous crude movements on long term contracts and timecharter business. The mix of employment types and geographical concentration in nichecoastal business segment has ensured returns in line with market trends. However withglobally weak tanker markets there was strong competition in coastal & clean producttrades which hampered their earnings to an extent. Also a noteworthy chunk of potentiallylucrative earnings opportunities was lost due to unfortunate mishaps and inherenttechnical issues on the vessels. Internationally in the aftermath of COVID-19 induced oildemand plunge a heavy fall in market fortunes across the company's usual traderoutes resulted in very low charter rates. Overall overly depressed freight levels meantthe tankers segment gave a highly subdued performance.

The dry bulk segment is still recovering from historically bad periodand loss of key cargoes such as Iron ore exports from India resulting in longnon-profitable ballast legs thereby putting pressure on earnings. Although in later partsof 2021 dry bulk trade recovered remarkably well on account of stimulus packages given byvarious governments and rebounding of demand worldwide. Simultaneous occurrence ofmultiple factors conducive for the dry bulk shipping business viz. spike in dry bulkmaterials demand strong trade in grain coal and iron ore segments low active fleetgrowth maintaining tonnage balance etc. gave a hefty push to the dry bulk rates. Alsostrong trade growth and tapering dry bulk carrier deliveries bode well for the nearfuture.

(e) Information Technology:

SCI has a robust ERP system in place. These systems are hosted on ourown Data center located at Powai and having a Disaster Recovery Site at Kolkata office toensure business continuity during any emergency. E-tendering platform is being extensivelybeing used for procurements which enable transparency and efficiency in procurementprocesses. SCI has implemented Vendor Invoice Management system which facilitates thevendors to register their invoices centrally and the same go through a work flow mechanismfor approvals till settlement. Vendor has a facility to track and understand the status oftheir invoices. The system ensures transparency and efficiency. SCI web site www.shipindia.com has been revamped with a new look and accessibility.

2 LINER & PASSENGER SERVICES

Industry Structure & Developments

(i) World Scenario

The shipping industry witnessed serious onset of the COVID-19 pandemicin year 2020 and then year 2021 showed the after-effects and side-effects of thepandemic really hitting hard sparing no one globally least of all global supply chains.The year 2021 saw widespread disruptions in the industry globally characterized byserious port congestion caused by a combination of the impact of COVID-19 pandemic portinefficiencies an increased trade demand and not to mention the brief but disruptiveblockage of the Suez Canal; The year was also marked by extreme rate hikes on all tradeshigh container dwell times inside ports both on exports and imports increased blanksailings record volumes of containers handled at various ports around the world; shortageof ships and containers due to these two vital assets being held up elsewhere thanrequired.

In spite of these disruptions global trade touched record highs in2021. As per UNCTAD global trade reached about US$ 28.5 trillion in 2021 which is anincrease of 25% compared to 2020. While most global trade growth took hold during thefirst half of 2021 progress continued in the year's second half. After a relativelyslow third quarter trade growth picked up again in the fourth quarter when trade ingoods increased by almost US $200 billion achieving a new record of US $5.8 trillion.

While the positive trend for international trade in 2021 seems to havebeen largely as a result of strong recovery in demand on the back of subsidised pandemicrestrictions economic stimulus packages and increases in commodity prices the forecastfor 2022 remains uncertain due to several factors such as :

Slowing economic recovery in second half of 2021 mostly due to sloweconomic growth of China in 3rd Quarter of 2021 which was below expectations and lowerthan in previous quarters.

COVID-19 disruptions continue in many economies including in EU andthis could negatively affect consumers' demand and ultimately be reflected in tradestatistics for upcoming quarters.

Global semiconductor shortage due to unprecedented demand has disruptedmany industries especially automotive industry and if this persists could continue tonegatively affect production and trade in many manufacturing sectors.

Geopolitical factors such as regionalization of trade flows andimplementation of regional trade agreements such as the African Continental Free TradeArea and Regional Comprehensive Economic Partnership could influence global trade patternsdue to an expected increase in regional trade cooperation within Africa and withinAsia-Pacific area.

Debt burdens such as additional borrowing by governments to sustaintheir economies during COVID-19 crisis could pose continuous risks of financialinstability in many countries and negatively affect investments and international tradeflows especially for developing countries whose fiscal policy space is limited.

Apart from above major factors economic recovery from pandemic in 2021has been characterized by large and unpredictable swings in demand which have resulted inincreased stress on supply chains brings us to a never before seen scenario ofdisruptions in logistic networks and unprecedented increases in shipping costs. Backlogscreated by this increased demand has had a major impact on global supply chain hubsnegatively affecting trade and reshaping trade flows across the world.

While COVID-19 pandemic ravaged global trades economies and manyindustries maritime industry seems to have defied the COVID-19 disruption with a lessthan feared impact in 2020.Volumes fell less dramatically than expected and had reboundedby the end of the year 2020 laying the foundation for a big transformation in globalsupply chains and new maritime trade patterns emerging in 2021. Maritime trade contractedby 3.8% in first half of 2020 with global volumes returning for both containerized tradeand dry bulk commodities by the end of 2020 setting the stage of a solid year for 2021.UNCTAD attributes the better than expected performance of the maritime trade to fact thatthe COVID-19 pandemic unfolded in phases and at different speeds with diverging pathsacross regions and markets. In 2020 global container trade fell by 1.1% to 149 milliontwenty-foot equivalent units (TEU) which was a better outcome compared to the 8.4% plungein 2009 following financial crisis. Container volumes bounced back quickly as consumerdemand increased boosted by stimulus packages and measures to support incomes duringCOVID-19. The bounce-back in 2021 brought along with it a shift in consumption patternsaway from services and more towards goods especially online purchases along with healthproducts and pharmaceuticals to counter COVID-19 and home office equipment as work fromhome increased.

This surge in trade however resulted in several logistical bottlenecksglobally and in 2021 the whole industry including shipping ports shippers and inlandcarriers struggled with shortages in containers transport equipment like chassis andspace on container ships. This has added to severe port congestion across several portsglobally and reduced service levels and carrier reliability while exponentiallyincreasing freight rates and surcharges.

On supply side global fleet increased by an overall 3.04% in 2021compared to 2020 across all types except for General Cargo Ships and other ships.

(ii) Indian Scenario

Major Indian ports reported 719.38 million metric tonnes (mmt) oftraffic movement in FY 2021-22. This is 6.94 % higher than 672.68 mmt traffic movement inFY 2020-21.Five major ports of the country recorded their highest ever traffic during theyear. These were Kamarajar Port Jawaharlal Nehru Port Trust Deendayal Port Mumbai Portand Cochin Port. Cargo traffic at Non Major ports reached 575 mmt in FY 2021-22. InNovember 2020 Prime Minister launched the Maritime India Vision 2030 which contains thetargets to be achieved by Maritime Sector over next decade along with strategies relatedto each of the stakeholders of MoPSW. Sagar-Manthan: Mercantile Marine Domain AwarenessCentre (MM-DAC) which is an information system to enhance maritime safety search rescuecapability and environment protection was also launched.

Maritime India Vision 2030 was formulated by Ministry of PortsShipping and Waterways with objective of propelling India to the fore?front of GlobalMaritime Sector in next decade. Over 150 initiatives covering 515 key activities across 10themes encompassing all facets of maritime sector have been identified to form thebuilding blocks for future of Indian Maritime sector.

MIV 2030 envisions an overall investment of INR 300000 350000 Cracross ports shipping and in?land waterways categories. This Investment amount excludesprojects already under implementation stage as part of Sagarmala project. This visionroadmap is estimated to help unlock INR 20000+ Cr worth of potential annual revenue forIndian Ports. Further it is expected to create an additional 2000000+ jobs (direct andnon-direct) in the Indian maritime sector.

Major strides have been taken at major ports towards the digitizationof key EXIM processes. The PCS 1x has digitized processes such as Electronic Invoice(e-Invoice) Electronic Payment (e-Payment) and Electronic Delivery Order (e-DO) forphysical release of cargo by custodians. Further process of generation of electronic Billof Lading (e-BL) and enabling Letter of Credit (LC) process to be conducted digitally havealready been implemented in the PCS 1x. There is also going to be complete integrationbetween PCS 1x and Indian Customs EDI Gateway (ICEGATE). Radio Frequency IdentificationDevice (RFID) solution has been implemented at all major ports to enable seamless movementof traffic across port gates including substantial reductions in documentation checks.Upgradation and integration with recent technologies - IGoT Block Chain etc. to easetransaction and real time basis tracking has been envisaged in Maritime India Vision 2030.Further process to bootstrap PCS 1x into National Logistics Portal-Marine (NLP-Marine) isalready underway which will act as a Unified Digital Platform for all maritimestakeholders. NLP Marine + PCS 1x platform is envisaged as the central hub for allinteractions with various stakeholders viz. Ports Terminals Shipping Lines/ Agents CFSand Customs Brokers Importer / Exporter etc.

In line with the "Act East" policy the Ministry of PortsShipping & Waterways (MoPSW) has taken up several infrastructure projects on NationalWaterway-1 Indo-Bangladesh Protocol route and NW2 through the Inland WaterwaysAuthority of India (IWAI). Union Minister of Ports Shipping & Waterways and AYUSHflagged off an inland waterway vessel m.v. Lal Bahadur Shastri from Patna to Guwahati on05.02.2022. Vessel started its journey from Patna carried 200 Metric Tonnes of food grainsheaded for Pandu in Guwahati & travelled via Bangladesh to reach the destination.These steps are expected to enhance connectivity with North Eastern Region (NER) throughwaterways. As a part of its Diamond Jubilee celebrations of SCI SCI commenced its direct"India Middle East Shipping Service". Flagging-off the vessel was done byHon'ble Minister of Ports Shipping & Waterways. This service connects East &West Coast of India with Middle East ports of Jebel Ali and Hamad and will also cater toother ports in Persian Gulf thereby providing greater port coverage while maintaining anefficient and reliable service. The Shipping Corporation of India Ltd. achieved ahistorical feat when Shri Minister of State (Independent Charge) for Ports Shipping& Waterways virtually flagged of the "All Women Officers' Sailing" onMT Swarna Krishna - SCI's crude oil carrier from JNPT Liquid Berth Jetty on March 062021.

(iii) Business Sector and Outlook

The Ongoing between Russia and Ukraine has major ramifications forglobal economy which is just recovering from stress of the coronavirus pandemic. Economicdamage from conflict may further result in a significant slowdown in global growth in2022. According to the WTO World merchandise trade volume is expected to grow at 3% in2022 and 3.4% in 2023.

A severe double-digit drop in GDP for Ukraine and a large contractionin Russia are expected along with worldwide spillovers through commodity markets tradeand financial channels. Even as the war reduces growth it will add to inflation. Fuel andfood prices have increased rapidly with vulnerable populations particularly in low-incomecountries being most affected. Elevated inflation will complicate the trade-offs CentralBanks face between containing price pressures and safeguarding growth. Interest rates areexpected to rise as Central Banks tighten fiscal policy exerting pressure on emergingmarket and developing economies. Moreover many countries have limited fiscal policy spaceto cushion the impact of the war on their economies. The invasion has contributed toeconomic fragmentation as a significant number of countries sever commercial ties withRussia and risks derailing the post-pandemic recovery. It also threatens the rules-basedframeworks that have facilitated greater global economic integration and helped liftmillions out of poverty. In addition conflict adds to economic strains wrought by thepandemic.

It is estimated that freight rates will be moderated and will drop by30-40% in 2022. However it is highly unlikely that they will drop back to the 2019 level.In 2021 delays caused transport capacity to decrease by over 3.1 million TEU (12.5% ofsea transport). However in 2022 this situation is to change for the better it will beeasier to secure a container. It is estimated that containerized export will increase by2-3% in 2022.

On supply side in 2022 the global fleet is expected to be expanded bymany units. In 2020 the fleet increased by 3% in 2021 4.3% and in 2022 it is expectedto increase by 4.5%. However the biggest increase is forecasted for 2023 7.5%. In 2022at least 22 large container ships (COSCO Shipping CMA OOCL and MSC) are set to make abeginning.

(iv) Expected changes and trends in Shipping during 2021

Continued Disruptions and Equipment & Space Scarcity

Most defining characteristic of Container Shipping market would be acontinuation of the large scale disruptions that industry has witnessed since 2020 whenCovid wreaked havoc across global supply chains. These disruptions and consequentunreliability have manifested into exponentially higher transport costs and historicallylow schedule reliability levels which have affected Shippers and Carriers differently.While Shippers and end consumers have been forced to pay premium for shipping space andthus ensure that their Supply Chains are at least partly functional Carriers have bookedrecord profits. Though Shippers were hopeful of a return to pre-Covid levels in 2022 theway events have unfolded since the start of the year has heightened probability of supplychain breakages and schedule unreliability continuing into 2022 as well.

Congestion at Ports

One of the contributory factors behind the disrupted transport chainswas the unprecedented levels of congestion that afflicted major ports worldwide. While thespotlight has primarily been on US West Coast ports most major ports in the US East Coastand Europe have been affected as well. The congestion initially started at US West Coastports as a consequence of increased American consumer demand (on account of changedspending and trading patterns fuelled by a lockdown induced shift from services togoods). As vessels started queuing up and congesting US West Coast ports Shippers andCarriers started substituting with East Coast ports (an option enabled by the Panama Canalexpansion a few years back). This however has caused congestion at East Coast ports aswell. A similar sequence of events played out at European ports too.

Vessel capacity and containers tied up at congested American andEuropean ports meant that there was a corresponding scarcity at origin ports across Asiathus making it a global phenomenon. A perusal of congestion levels in the first 3 monthsof 2022 as well as the sailing schedules published by Container Carriers makes it seemunlikely that any mitigation in congestion levels will happen in 2022.

Covid-Induced Lockdowns

The Entire chain of disruptive events was triggered by the Covidpandemic and precautionary lockdowns imposed thereafter by countries around the world.While the risks posed by Covid have abated somewhat over the past year emergence of newvariants and resurgence in China has threatened tenuous global recovery.

Situation in China is particularly alarming with lockdowns imposed atmain ports and manufacturing centres such as Yantian Shanghai etc. More concerning isthe potential magnitude of the impact of these lockdowns. Analysts estimate that thelockdown in Yantian a couple of months back delayed more cargo than Suez Canal blockagelast year. Even though ports and terminals are at times operational during lockdowns themobility restrictions imposed on population centres in the vicinity mean that in effectiveterms port operations are hampered due to the unavailability of manpower and cargo notbeing delivered at the port premises/ evacuated to hinterland locations.

Unpredictability of the situation has weighed upon the entire transportchain as Carriers find that port calls in their schedules can be closed at amoment's notice and Shippers find inland transport restrictions impede cargo andinventory movement thus curtailing production and skewing delivery schedules.

Environmental Focus and Green Supply Chains

As environmental awareness grows world over and consumers andcorporates become progressively aware of their responsibilities in reducing overall carbonfootprint we are witnessing enhanced focus on environment-friendly business andcommercial practices. Driven by a growing consumer preference for eco-friendly productsand services coupled with the willingness to pay a premium for such productssustainability has become a keyword for major corporates.

While selecting transport vendors (including shipping companies andinland hauliers) shippers and manufacturers the world over are laying greater emphasis onreduction of emissions and lower carbon footprints to the extent that higher weightage isbeing given to these aspects in the annual tendering process.

Governments and international trade and maritime organisations too havebeen becoming increasingly cognizant of the need for shipping to reduce emissions and havebeen setting stiff emission reduction targets. Major container carriers have taken this astep further and set themselves emission reduction targets that are even more ambitiousthan what regulations stipulate.

Carriers are also allocating higher amounts for research on reducingemissions and becoming open to investing in new technology and fuel types. Proof of thisis the LNG fuelled vessels that a growing number of Carriers have opted for in the lastcouple of years. It might seem counterintuitive that Shipping has been subject to suchintense scrutiny despite being one of the least polluting modes of transport. This ishowever explained by the fact that even though shipping is the most environmentallyfriendly mode of transport in relative terms (to other transport modes) and also at aper-unit level sheer volume of internationally traded cargo that the maritime sectorcaters to means that total emission levels generated by the shipping industry are massive.Overall this is one of the positive trends in the shipping industry and though expectedto raise freight rates will in the long run contribute immensely to sustainableinternational trade and development.

Digitization and Automation

While shipping industry has generally not been one of the prime moverswhen it comes to the adoption of new and innovative technologies unpredictability andchaos caused by successive black swan events over the last 2 years have significantlyadded to the complexity of planning the transport and shipping process for both Carriersand Shippers alike and has compelled Carriers to consider investing in sophisticatedtransport planning systems and laying greater emphasis on digitization and automation intheir internal processes. The Permutations and combinations that the present scenariothrows up render it impracticable to rely on rudimentary planning tools; a realizationthat is slowly dawning on Carriers. The Sector has therefore been heavily investing intechnological solutions and also formed industry associations to standardize processes andfacilitate automation and adoption of common industry-wide processes.

The Biggest players in the industry have for a few years now beenexploring Blockchain technology and the increased usage of Big Data AI and ML withmarket leaders even forming a partnership to adopt these technologies to the maritimesector. Post the participation of the bigger players medium-sized carriers and ports toohave joined the partnership thus rapidly creating the core mass that would be necessaryfor such technology to be widely adopted and become the industry standard.

(v) Strength & Weaknesses

Liner Division of SCI has vast experience in liner trade which is themost formidable force instilling confidence in cargo interests / owners who continue tolend their invaluable support to SCI. The Customer friendly approach at all levels andSCI's customized services puts SCI ahead in the league. The Wide network of agentsall across the world provides and facilitates for localized contacts in markets to offercustomized end to end logistics solutions. Operating partnerships have been forged withinternationally recognized container carriers in select consortia to enhance coverage andfrequency on major trading routes. Breakbulk operations are largely profitable and providestable source of revenue.

Though SCI started predominantly as a liner shipping company butcurrently has only 2 liner vessels with a meagre share of global DWT.

(vi) Opportunities & Threats

Govt. of India is taking lot of initiatives and is making hugeinvestments to increase capacity of the Indian ports. Under Sagarmala Programme thegovernment has envisioned a total of 189 projects for modernisation of ports involving aninvestment of `1.42 trillion (US$ 22 billion) by the year 2035. As per MOC merchandiseexport target for FY23 is expected to be around 10-12% growth over the US $419 billionrecorded in FY22. This is expected to result in significant improvement in operatingprofitability in the future. New operating alliances are expected to contribute byallowing global carriers to further synergize network efficiencies and vessel deploymentoptimization bringing about higher revenue and profitability. Improving economicconditions in the US and Europe is expected to boost market fundamentals and supportcarriers in their effort to restore freight rates. An improvement in liner operatingprofitability is also expected to act as a catalyst for higher charter vessel demand andhigher charter rates. Despite improving market fundamentals industry has to overcomechallenges in the year ahead due to increase of mega-ship deliveries. Break bulk sectorcontinues to maintain good potential in respect of ocean freight arrangements of Generalcargoes Over-Dimensional Cargoes (ODC) Project cargoes Heavy Lift cargoes etc. onaccount of Government Departments / PSUs and other GOI organizations.

A Segment-Wise Performance

A.1. Liner Vessels: Table below shows profile of your Company'sowned liner fleet having a total container carrying capacity of 8800 TEU (nominalcapacity).

Type of Ships As on 31.03.2021 Addition Scrapping As on 31.03.2022
No. Dwt (MT) No. Dwt. No. Dwt. No. Dwt (MT)
Fully Cellular 2 115598 - - - - 2 115598

A.2. Both container vessels namely m.v. SCI Chennai and m.v. SCIMumbai are 13 years old. As on 31.03.2022 1 in-chartered container vessel having NetTonnage of about 7600 MT was operated by your Company. In addition to above owned andin-chartered vessel your Company also has cargo loading rights on 23 vessels of itspartners in various consortia arrangements that your Company has with leading ShippingLines such as Mediterranean Shipping Company (MSC) Sima Marine / Simatech etc. to name afew. Your Company continued to be present in the following sectors.

B). Container Services

B.1. Himalaya Service (erstwhile ISE Service): UK-C Cellular ContainerService was commenced in 1994 by SCI as a single operator deploying three vessels of1800 TEU capacity. Service was subsequently upgraded to a fixed day weekly service withtwo partners deploying a total of seven vessels of similar capacity. During economicdownturn of 2008-09 service was rationalized by forming a consortium with MSC in May2009 to operate a weekly service with a total of eight vessels out of which two vesselsof 4400 TEU capacity was contributed by SCI. Thereafter in early 2016 service wasupgraded to eight vessels of 8500- 10000 TEU capacity and accordingly SCI'scontribution was revised to one in-chartered vessel of about 8500 TEU capacity. SinceAugust 2021 service is being operated by MSC with 9 vessels and SCI is maintaining itspresence in India Europe sector through purchase of slots from MSC as SCI was unable toinduct a suitable vessel.

B.2. IPAK Service: In a slot swap arrangement between SCI and MSC SCIhas been allotted 150 TEUs slots @ 12 MT/TEU by MSC which operates IPAK service inexchange for similar slots allotted to MSC on Himalaya service. B.3. SCI Middle East IndiaLiner Express (SMILE) Service of SCI and India West Coast Service (IWCS) & ChennaiColombo Gulf Service (CCG) of Partner: SMILE IWCS and CCG services seamlessly links upPersian Gulf with East Coast of India and West Coast of India thereby strengthening andexpanding SCI's presence in Coastal Shipping Sector. Joint operation on this route isa force multiplier for SCI which provides high quality Coastal Services on fixed dayfixed window basis with potential for even bigger expansion in Coastal and near Coastaltrades with special emphasis on the East Coast of India ports. Three services viz. SMILEIWCS and CCG with their service rotations makes it feasible to connect pan-Indian portswith improved transit time. SCI seeks to cooperate with other Indian Companies to work outthe best transportation solutions for the trading community vis-a-vis commerciallyeconomically viable and environmentally feasible options. SCI connected West Coast ofIndia to Southern and Eastern ports of India viz. Katupalli / Krishnapatnam / Vizag /Haldia / Kolkata and the Pan India service got stabilized during 2017-18 up till February2021 thus promoting GOI initiative ‘Sagarmala' and increased coastal shipping.

B.4. India Maldives Shipping Services: India - Maldives Cargo ShippingService between India and Maldives was jointly launched through a virtual ceremony on21.09.2020 adding a new chapter in the connectivity initiatives taken by both thecountries in the Indian Ocean Region (IOR) connecting Indian Ports of Cochin andTuticorin with Kulhuduffushi and Male. Majority shipments are of bulk/break-bulk naturewhereas thrust is to fill-up vessel with containerized cargo for better profitability. Ason 31st March 2022 the service has completed 32nd voyage.

B.5. Inland Waterways Services: Inland and Coastal Shipping Limited awholly owned subsidiary of your Company has forayed into Inland Waterways ShippingServices by taking over IWAI vessels viz. m.v. Rabindra Nath Tagore and m.v. Lal BahadurShastri for operating these vessels on NW1 between Kolkata Patna Varanasi and on NW2between Kolkata and Pandu. Subsequently an MoU has been signed on 11.03.2022 with IWAI fortaking over of two RO-RO vessels viz. m.v. Gopinath Bordoloi and m.v. Sankar Dev B.6.Feeder Operations: SCI makes feeder arrangements with the "Common Carriers"between various destinations / port-pairs on the Indian Sub-continent. B.7. Slot swaparrangements: SCI enters into slot-swap arrangements with service providers depending upontrade requirements. B.8. Break-Bulk Services: SCI arranges carriage of break-bulk cargoeson space charter basis from various regions across the globe including USA Europe and FarEast for imports on account of the Government Departments / PSUs and other GOIorganizations which includes Shipments of Over-Dimensional Cargoes (ODC) / Projectcargoes / Heavy Lift cargoes / IMO Class I Cargoes etc. and also containers.

Marketing

SCI's marketing team continues to make regular customer callsthrough its own offices and also through agents appointed at various ports in India andabroad in order to market its container and break-bulk services. Meetings VirtualMeetings with the agents are held periodically and SCI representatives also participatein various trade meets at important locations in India.

Outlook

As per RBI GDP growth is projected at 7.2-7.5% in 2022-23 withexports playing a crucial role. India's exports rebounded strongly and surpassedpre-Covid levels during 2021-22. Merchandise exports touched all-time high to US $418billion during 2021-22 more than yearly exports ever registered so far.

Budget 2022-23 has emphasized the long-term potential for Indianexports. It has set its priorities right with emphasis on infrastructure developmentbuilding capacities in sunrise sectors and continued support to R&D to supportexports. While rationalization of customs duties and tariff simplification would boostexports in the short term infra and institutional push envisioned in Budget would go along way in generating positive externalities for export ecosystem in the medium tolong-term.

In tandem with the above mentioned developments SCI's HimalayaService (erstwhile ISE Service) which posted positive results in the year 2020-21 isexpected to continue to register positive performance in year 2021-22 and 2022-23 also.

SCI's weekly Coastal service (SMILE) and India West Coast Service(IWCS) & Chennai Colombo Gulf Service (CCG) of Partner with Owned vessels viz m.v. SCIChennai & SCI Mumbai (52000 DWT) each deploying largest vessels ever deployed incoastal services is also expected to contribute to SCI's profits in the next year2022-23 with Govt. of India's Make in India initiative and focus on increasing shareof coastal shipping in cargo transportation.

For Inland Waterways though India has been underutilizing itsnavigable waterways; however with government's focus and initiatives like Sagarmalaand Gati Shakti Plan for development of Multimodal Transport Inland Waterways could be anew sunrise sector. SCI is already operating in inland waterways and is looking forfurther opportunities for expansion through its Inland & Coastal Shipping LimitedCompany which is a wholly owned subsidiary of the Shipping Corporation located out ofKolkata.

Risks & Concerns

As container freight rates in the last two years touched record highlevels it is unlikely that such rates will continue to maintain at the same levels thisyear. This can taper down SCI's Liner services profitability depending on reductionin box rates. SCI needs more partners for market expansion for its coastal servicesexpansion. However in absence of suitable partners / alliance with other coastaloperators SCI's coastal services growth may remain stagnant.

Discussion On Financial Performance w.r.t. To Operational Performance:

Your Company's liner segment registered a net profit of Rs.612.27crores in FY 2021-22 as against Rs. 75.95 crores in 2020-21. Operating Income increased toRs 1469.14 crores in 2021-22 from Rs 601.66 crores in preceding year due to enhancedvolumes and higher average freight levels. You may like to note that your Company hasreviewed & revised existing SOPs and adopted various cost saving measures accruing tothe liner services viz. considerable saving on feeder and trans-shipment costs by reducingcarrying cargoes to non-base ports better inventory management control on repair costsof vessels and containers. On time schedule reliability of our services particularly inEurope sector continues to be very good and comparable or better than the global players.

Measures Taken By Us To Improve Our Services & Operations:

Liner Division is ensuring that General Rate Increases (GRI) are beingstrictly implemented from time to time keeping in mind market sentiments and demand-supplygap dynamics. Performance of each Container Service is being reviewed monthly from thepoint of view of profitability. Ultra slow steaming is planned and achieved on thecontainer ships. Liner Division has already expanded it's Coastal and Feeder Servicesand is trying for further expansion. Further ports like Kandla and newly emergingcontainer ports in East Coast of India like Kattupalli Krishnapatnam and Vizag areoffering substantial discounts on trans-shipment costs and storage charges and by usingthese ports optimally substantial system costs reductions are being achieved. Our focusis to maintain right sized leased equipment inventory to optimum levels to make servicessustainable and undertaking firm negotiations with leasing companies and vendors forachieving desired results. Aging inventory is being replaced by the younger fleet atbetter terms. We are identifying niche sectors to commence new services like feasibilitystudy was done for intended services viz. Ex-India / Myanmar / Bangladesh / Thailand etc.Other feasibility studies been conducted for services like Ex-India / East African ports.Division is scouting for second hand vessel(s) if it fits commercial requirements.

Important Developments If Any:

On 11th March 2022 a historic Memorandum of Understanding (MOU) wassigned between Inland Waterways Authority of India & Inland & Coastal Shipping awholly owned subsidiary of The Shipping Corporation of India Ltd for taking over of twoRO-PAX vessels mv Gopinath Bordoloi & mv Sankar Dev. It was an exciting moment for usas this would mark entry of SCI & ICSL in to the sunrise segment of RO RO operations.

3. TECHNICAL & OFFSHORE SERVICES

Industry Structure and Developments World scenario

The offshore support vessels industry is dependent on utilization ofrigs E&P activities and other activities in oil fields which in turn depends uponstrategic decisions of energy security by oil and gas producers shifts in Governmentpolicies and long term crude oil price trends. Due to the covid-19 pandemic the year 2020was hit by declining crude oil prices. This has changed in 2021-22 when the crudewitnessed increasing rates. By the end of the year 2021-22 the crude price touched US$100 per barrel which is a positive indication for E&P companies to enhance theirproductions and in-turn leading to improved utilization for offshore assets.

Indian scenario

The restricted conditions due to covid-19 pandemic from 2020 hadresulted in fall in consumption and production levels and many E&P projects wereaffected and rig movements were very low. The Indian offshore market showed some respiteonly when in the second half of 2020-21 ONGC processed and concluded its tenders forlong term charter helping many owners secure employment for their vessels. Howeverthroughout the year 2021-22 the offshore activities has remained subdued with only fewselective opportunities for employment of offshore vessels.

Outlook

Most of the demand for Offshore Support Vessels (OSV) can be attributedto the rising deep-water development activities driven by the deciling production fromthe mature fields and increasing crude oil demand. As per market dynamics PSVs areexpected to account for the largest share owing to the increasing demand for these vesselsdriven by the uptake in offshore drilling activities.

With the continuous upward trend shown by crude oil prices the year2022-23 is expected to generate increased opportunities for employment of offshore assets.Further ONGC is also expected to come up with many tenders with long term requirement ofoffshore assets. Also more requirements albeit short term are emanating from privateoperators/contractors in the Indian market.

Strengths and Weaknesses

Your company has a diversified fleet of offshore vessels with 02nos.80T AHTSVs 04 nos. 120T AHTSVs 02 nos. PSVs and 02 nos. MPSVs thus enabling it tocater to requirements of various clients in the offshore market. It also has a young fleetgiving technological advantage compared to older vessels in market. Further to keep thevessels technologically up-to-date your company has taken the initiative to upgrade itsoffshore vessels from UKOOA ‘C' compliant to UKOOA ‘B' compliant asper UKOOA ERRV guidelines. Further during the period under review your Company hassuccessful deployed majority vessels on long term charter thus ensuring steady revenuesfor long term period. The effect of covid-19 pandemic continued in the year 2021-22 aswell especially during the 1st half of the year with less employment opportunities inthe spot market.

While SCI has a young and diversified offshore fleet it iscomparatively small to cater to needs of all the E&P companies in India. ONGC beingthe biggest E&P company in India your company has been employing majority of itsvessels with them on short term / long term basis. However to mitigate the risk ofdependence on one client your company has been in constant discussions with various otherpublic/private operators to deploy our vessels for their offshore activities.

Opportunities and Threats

With increase in crude oil prices the E&P activities are expectedto rise thereby creating shipping demand for offshore assets in Indian coast. Substantialpotential foreseen for growth in offshore services on the Indian coast as well as in theneighboring areas. ONGC is coming up with many tenders with long term requirement ofoffshore assets. Further in general more requirements albeit short term are emanatingfrom private operators/contractors thus various opportunities are expected for offshorevessels of your company.

Global economic instability has led to curtailment of E&Pactivities all over the world. This in turn has resulted in loss of employment for OSVsworldwide and few assets are being diverted to Indian waters due to which thecompetition in upcoming tenders of ONGC for offshore vessels is expected to increasefurther impacting the charter rates adversely. Further due to fall in asset prices inthe global Offshore S&P market few private companies have bought offshore assets (formeeting ONGC requirements) at very low capex which may become a threat while competing inupcoming ONGC tenders. Also uncertainty about renewal of O&M contracts by ONGC forvessels which your company has been managing since many years is a threat to the steadyrevenue that your company has been earning.

Risks and concerns

Although presently there is better control over the pandemic theimpact that the covid-19 pandemic would have in the future cannot be ascertained. Entry ofnew players in the Indian market with low capital expenditure is also major concern andchallenge for your company. To counter the same your company has been taking all effortsto deploy vessels on long term basis so as to avoid the impact of in charter hire ratesin market.

Uncertainty about renewal of O&M contracts of vessels of ONGCwhich were being managed by your company since many years is also a matter of concern.Meanwhile your company has enhanced its fleet of managed vessels by entering into anO&M agreement with Union Territory of Lakshadweep Administration (UTLA) for managingtheir vessels. In total 21 vessels of UTL Administration are being taken over by yourcompany in a phased manner.

OFFSHORE ACTIVITIES:

The T&OS Division of SCI operates fleet of 10 owned offshorevessels. In addition to the above it also manages 48 vessels of variousorganizations/Government departments. This comprises of 12 vessels of ONGC 28 vessels ofA&N Administration 3 vessels of Geological Survey of India and 5 vessels of Ministryof Earth Science.

Information relating to the year under review viz 01.04.2021 to31.03.2022:

The T&OS Division of SCI operates fleet of 10 owned offshorevessels. In addition to the above it also manages vessels of variousorganizations/Government departments. As on 31.03.2022 this comprised of 12 vessels ofONGC 26 vessels of A&N Administration 3 vessels of Geological Survey of India 4vessels of Ministry of Earth Science and 9 vessels of UTL Administration.

SCI owned Offshore vessels

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

During the year under review two MPSVs continued their charter withDRDO assisting them in their national missions of strategic importance. Also one PSV (SCINalanda) which had entered into long term charter with ONGC last year continued to be oncharter. Similarly two 120T AHTSVs which were hired on long term contract with ONGCduring Q4 2020-21 continued their charter.

One of the MPSV successfully completed its charter with DRDO inDec'2021 and subsequently was immediately deployed on long term charter with IndianNavy for their prestigious project. Similarly during the year after completion ofnecessary modifications two 120T AHTSVs were on hired with ONGC on long term contract.Further one more vessel has been deployed with Indian Navy for one year period.

O&M of ONGC owned vessels i. Offshore Supply Vessels (OSVs) ofONGC:

Your company continues to provide Operation & Maintenance (O&M)services of seven OSVs of M/s ONGC. These vessels are being managed by your company sincetheir induction from 2013 onwards. These O&M contracts have been awarded till31.03.2023 thus ensuring long term business for your company. ii. Mobile OffshoreDrilling Units (MODU): In view of the expertise of your Company in management ofoffshore vessels ONGC had awarded long term contract for Marine Man Management servicesof their two MODUs viz. "Sagar Vijay" and "Sagar Bhushan"respectively for a period of 06 years.

Your company continued the O&M of these ONGC owned MODU vessels oncost-plus basis and the present contracts are valid till 30.06.2022 and 18.07.2022respectively. iii. Specialized vessels: During the year 2021-22 your companycontinued the Operation & Maintenance management (O&M) of ONGC's one DivingSupport Vessel (DSV) (Samudra Prabha) and one Geotechnical Vessel (GTV) (SamudraSarvekshak). The existing contract for Samudra Sarvekshak which was valid till31.03.2022 has been extended for further period of 6 months. The ongoing contract withONGC for the vessel Samudra Prabha came to an end on 31.03.2022 which was thereafterextended by one month i.e. till 30.04.2022.

Your Company has also continued the Operation & Maintenancemanagement (O&M) of ONGC owned Well Stimulation Vessel (WSV) "Samudra Nidhi"since the vessels delivery in year 1986. Your company has been awarded 6 years long termcontract by ONGC for Samudra Nidhi valid till 31.03.2023.

3.0 O&M of A&NA owned vessels:

In addition to Offshore operations your Company operates domesticpassenger and cargo transportation services between the Mainland and the A&N group ofislands and inter-islands by managing 26 vessels owned by the Andaman and NicobarAdministration(A&NA). These comprise of 17 nos. Foreshore Passenger vessels 7inter-island vessels 01 Mainland-island vessel and 01 cargo vessel.

O&M of UTLA owned vessels

Your company on 02.02.2022 executed an agreement with UnionTerritories of Lakshadweep Administration (UTLA) towards Operation and Management(O&M) of their entire fleet of vessels. This includes 05 Passenger vessels 06 HighSpeed Passenger Crafts 03 POL vessels 02 Cargo vessels and 02 Harbour Tugs.Subsequently your Company was requested for taking over of 03 more cargo vessels owned byUTLA thus making a total of 21 vessels to be managed by your company for UTLAdministration. As on 31.03.2022 09 vessels of the UTL Administration were already takenover by your company and the remaining are being taken over in a phased manner.

O&M of other organizations

Your company also manages Oceanographic and Coastal Research vessels onbehalf of Government agencies/ departments viz; three vessels owned by Geological Surveyof India (GSI) under Ministry of Mines and four vessels of Ministry of Earth Science. Thevessels of Ministry of Earth Science comprises of one vessel of National Centre for Polar& Ocean Research (NCPOR) one vessel of Centre of Marine Living Resources and Ecology(CMLRE) and two vessels of National Institute of Technology (NIOT).

Manned and Managed vessels

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

As on 31.03.2022 As on 31.03.2021
Type of Ships Nos. Pax Cap Cargo Cap. (MT) Additions Nos. Scrap / Redelivered (Nos.) Nos. Pax Cap Cargo Cap. (MT)
Pax-Cum-Cargo 10 6263 4370 3 2 11 5067 3740
Cargo ships 1 400 2 - 3 - 2000
POL Ships - - - 3 - 3 - 910
Tug - - - 1 - 1 - -
Other Vessels 17 Foreshore & 8 Research 1601 250 0 1 17 Foreshore & 8 Research 1601 250
As on 31.03.2022 As on 31.03.2021
Type of Ships Nos. Pax Cap Cargo Cap. (MT) Additions Nos. Scrap / Redelivered (Nos.) Nos. Pax Cap Cargo Cap. (MT)
Total 36 7864 5020 9 3 42 6668 6900

DRDO Project

Defence Research & Development Organization (DRDO) had placed itsrequirement with your company for hiring of two support vessels for a firm period of 4years plus 1 year extension option. Accordingly SCI had acquired two secondhand/resaleMPSVs "SCI Sabarmati" and "SCI Saraswati" customized to suitrequirements of DRDO. These vessels are being utilized to meet support requirementstowards DRDO's strategic missions of national importance. The contract for one of thevessel has been completed successfully in Dec'2021 and the vessel has been deployedon its next charter i.e. with Indian Navy. The contract for 2nd vessel is valid tillJul'2022. Discussions are ongoing with DRDO for entering into long term contract fortheir projects.

Further similar to the previous year during the current year alsoIndian Navy has continued to avail the services of your company's offshore vessel‘SCI Sabarmati' for assisting in its new Deep Submergence Rescue Vehicle (DSRV)project. Your company is proud to have been associated & assisted the Indian Navy inconducting their trials on the West coast & East coast of India.

Technical Services

Technical Consultancy Services

During the year under report the Company continued to provide technicalconsultancy services to A&N Administration Union Territory of LakshadweepAdministration Geological Survey of India and other Government Departments for theirvarious ship acquisition projects. During the year your Company assisted A&NAdministration in construction supervision of 2nd 500 Passenger-cum-cargo vessel"m.v.Nalanda" which after successful sea trials in March 2022 was scheduled tobe delivered to the Administration by end Jun'2022. The 2nd 1200 PAX vessel out ofseries of 2 nos. 1200 PAX vessel at M/s CSL is scheduled to be launched in Jul'2022.The 2 nos. 2000 LPG cylinder carriers under construction at M/s Goa Shipyard Ltd. arescheduled to be delivered to UTL Administration in Oct'2022 and Dec'2022respectively. In 2021-22 technical consultancy was continued to M/s Cochin Shipyard Ltd.(CSL) for acquisition of secondhand floating dry-dock to be deployed at Indira Dock inMumbai Port Trust (MbPT).

Tonnage Acquisition Programme

During the year under report your company had envisaged acquisition ofsecondhand vessels in various segments viz. Crude Oil Carriers Product Carriers smallsize Container carriers Gas Carriers and Offshore vessels. Out of the above your Companyfloated global tender for acquisition of upto 2 nos. of VLGC size LPG carrier(s) of about12-16 years old technical evaluation of which is in progress and has also floated adomestic tender for acquisition of upto 10 year old resale/secondhand OSV which is in thefinal stage of process. If the ordered vessels meet the technical & commercialrequirements the vessel(s) are planned to be acquired during the next financial year i.e.FY 2022-23. Acquisition of vessels in other segments were kept on hold considering themarket dynamics and fund position. Informatively your company has been continuouslyscanning the market for right assets in the market in relation to the available employmentopportunities and is optimistic about acquisition of vessels at the opportune time.

Eco-Friendly and Conservation of Energy

As a policy your Company remained committed to environmentalprotection as per International Convention for the Prevention of Pollution from Ships.Necessary steps have been taken to minimize air pollution and oil pollution from ships.Your company has successfully complied with IMO's 0.5% sulphur fuel regulation whichcame into force from January 2020 and all vessels are being supplied low sulphur fuel oilsince 1st January 2020.

Your company has already taken necessary steps to meet IMO's fueloil data collection system directive as per IMO directives to report fuel oil consumptiondata from 01st Jan'2019. For the existing vessels your company had developed a ShipSpecific Energy Efficiency Management Plan (SEEMP) to improve and monitor energyefficiency in ship operations. Installation of Ballast Water Treatment plants on new shipsand in phased manner on existing vessels availability of Inventory of Hazardous Materialson most of its ships usage of TBT free paints replacing conventional lights on all shipswith LED lights etc are some of the measures showing your company's commitment toEco-friendly policies and conservation of energy. Installation of Ballast Water treatmentplants have been completed on few of the vessels. The IMO has introduced Energy EfficiencyExisting Ship Index (EEXI) and Carbon Intensity Indicator (CII) regulations as part of itsinterim measure under the Green House Gas strategy. The EEXI calculations are being donein-house by your company and the EEXI technical files have been compiled and submitted tothe Classification Society for approval. The regulations would be applicable by the 1stAnnual Intermediate or renewal IAPP survey falling due on or after 01.01.2023.

For compliance with aforesaid regulation as far as Carbon IntensityIndicator (CII) is concerned as an operational measure to reduce emissions SCI isexploring various types of Energy Saving Devices (ESDs) low resistance anti-foulingpaints alternate fuels for main and auxiliary machinery wind assisted propulsion etcwith an objective to achieve continuous improvement in ship's operational CII.

Technology Absorption Adoption and Innovation

The SCI has taken all steps to comply with requirements of TheInternational Maritime Organization's MARPOL ANNEX VI aimed at Controlling AirPollution and setting limits on Emissions to the Atmosphere from Ships. On the new vesselsSCI has voluntarily accepted higher than mandatory requirements on emission standards.Your company is continuously trying to identify and implement emission reductiontechnologies and best practices.

Your company has taken the initiative to upgrade its offshore vesselsfrom UKOOA ‘C' compliant to UKOOA ‘B' compliant as per UKOOA ERRVguidelines. As per Emergency Response Rescue Vehicle (ERRV) Group ‘B' guidelinesvessels are to be equipped with two Fast Rescue Crafts with Inboard Diesel Engines ofcapacity of 15 persons each. After the up gradation offshore vessels of your company willbe capable of rescuing persons from water providing medical aid place of safety forworkers and on scene co-ordination in the event of emergency on offshore installations.

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

To take of the Cyber related risk SCI has developed "Cyber RiskManagement Policy" in line with the IMO regulations so as to build capabilities toprevent mitigate and respond to cyber risks to reduce vulnerabilities and minimizedamage from cyber incidents and protect information systems of SCI.

For the (2 firm + 1 optional) 2000 Domestic LPG Carriers for UTLAdministration which are under construction at M/s Goa Shipyard Limited your company asthe technical consultant has recommended various optional features such as installation ofsewage treatment plant double hull protection to fuel oil tanks etc. over and above rulerequirement for such size of vessels which reflects your company's commitmentenvironment protection and technology absorption. Similarly for 500/1200 Passengervessels under construction for A&N Administration your company had recommendedadoption of certain technological up gradations for comfort and operational efficiency.

Situation in Coastal operation and Offshore areas

The onset of the second wave of covid-19 pandemic at the beginning ofthe year 2021-22 again bought with it uncertainties of vessel employment and reducedopportunities. Thereafter while the pandemic situation has improved the overall offshoremarket has remained subdued with limited opportunities in the spot market.

Further there has been shortage of availability of yards on the Indiancoast for dry-docking and repairs of offshore vessels. These are only limited yardspresent and various difficulties are being faced in availability of dry-dock slots as pervessel requirement. This in turn leads to delay in on hiring of vessels with thecharterers.

The spares supply from OEM located overseas are delayed due tologistics issues caused by the pandemic. The delivery of spares is also getting delayeddue to airlines not having fully resumed cargo operations.

Measures taken to improve services and operations

The covid-19 global pandemic and the related restrictions that itbought along had an impact on UKOOA B up gradation projects that were being undertaken intwo of 120 AHTS to meet charter party requirement. However in spite several restrictionsthe up gradation were completed by end of first quarter of year 2021-22 and vessels werehanded over to ONGC for operations. The up gradation of crane on SCI Yamuna was carriedout to meet Indian Navy long term charter contract.

One MPSV-SCI Sabarmati was released by DRDO after completion of charterhire period in 3rd quarter of 2021-22. Thereafter the vessel's LSA and accommodationcapacity is enhanced to meet charter party requirement by undertaking necessarymodifications/up gradation with prior approvals from Class. The vessel is engaged byIndian Navy for their project of national importance on long term contract. The Chemicalcode applicable to Offshore vessels came into force from 01.01.2021. The necessary upgradation is carried out on WSV Samudra Nidhi cargo ventilation bilge pumping systemsetc to meet guidelines for transport and handling of limited amounts of hazardous andnoxious substances in bulk on offshore vessels.

Awards and Accolades

WSV Samudra Nidhi ONGC has conveyed their appreciation to your companyfor obtaining Certificate of Fitness by DNV for Carriage of Dangerous Chemicals in Bulk.This is the first certificate issued to Indian flag vessel.

Appreciations have also been received from high authorities of theIndian Navy for the excellent services provided by offshore vessels of your company. Oneof the comments received was: "A unique and highly specialized vessel which is anasset to the IN. We must strive to maintain train and be ready to employ this vitallifesaving asset in IN's AOR. I urge the entire team to reach a high level ofconfidence. All assistance would be provided by WNC." During the period under reviewappreciation was also received from ONGC for two 120T AHTSVs of your company for safe rigmovement of rig DDB from PLQP location.

Procurement of Goods and Services:

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

During the financial year 2021-22 your Company continues to supportthe Micro and Small scale Enterprises (MSEs) by procuring 48.27% of its applicablesupplies of goods and services from MSEs as against the set target of 25% in line with therevised Public Procurement Policy. Further your company actively participated in theprograms organized by the Ministry so as to make MSEs aware of the SCI'srequirements. A Vendor Development Programme (VDP) was also arranged virtually duringDec'2021 which was attended by more than 150 representatives from vendors.

Your company dealt with all challenges posed by covid-19 pandemiceffectively and efficiently and continued to maintain uninterrupted supply of stores andservices to all vessels.

Protection & Indemnity (P&I) Insurance

Protection and Indemnity (P&I) Insurance cover entered with threeGroup P&I Clubs for your company's fleet for the policy year 2021-22 commencingfrom 20.02.2021 has been negotiated by your Company. There was an increase of 3.66% in therenewal premium over the expiring premium for policy year 2020-21 due to hardening ofinsurance and reinsurance markets globally.

Developments if any of material nature affecting the financialposition of the Company subsequent to the close of the said year viz; after 01.04.2022till the preparation of the report.

After expiry of the contract with ONGC for O&M of vessel SamudraPrabha on 31.03.2022 the contract was extended by 1 more month and the vessel wasre-delivered back to ONGC on 30.04.2022.

Subsequent to taking over of 9 vessels of UTL Administration by31.03.2022 further 10 more vessels have been taken over. Thus in all your company hasnow taken over O&M of 19 vessels and remaining 2 vessels will also be taken overshortly.

The O&M contract for ONGC owned MODU Sagar Vijay was valid till30.06.2022. The contract was extended by few days and vessel was re-delivered back to ONGCon 04.07.2022.

The 2nd 500 PAX vessel for which your company was providing technicalconsultancy service to the A&N Administration was successfully delivered to theAdministration on 05.07.2022 and inducted into SCI's fleet of managed vessels.

4. International Safety Management Cell

The SCI has introduced the Safety Management System by setting up adedicated International Safety Management (ISM) Cell which has developed structured anddocumented procedures in compliance with the International Management Code for SafeOperation of Ships and for Pollution Prevention (ISM Code) in accordance with theresolution A.788(9) of the International Maritime Organization (IMO) and SOLAS ChapterIX. The SCI has laid the foundation of the Safety Management System (SMS) by recognisingthat the cornerstone of good Safety Management is a commitment from the top managementcoupled with the competence attitude and motivation of individuals at all levels thatdetermines the expectations of a good Safety Management System. The SCI has complied withall the functional requirements of the ISM Code which includes the Safety OccupationalHealth & Environment Protection Policy and Drug & Alcohol Policy. As regardsSafety Management Certificate (SMC) for SCI fleet all ships are put up for periodical/renewal SMC audits within time frame and respective SMCs are accordingly endorsed. Therequirements of various amendments to ISM Code and Statutory regulations from IMO/Flag arealso complied with.

Towards addressing all emergency related issues dedicated contactnumbers remain manned 24 hours in the operating divisions: The achievement of time-boundcertifications was the result of the SCI's strength of professional experienceplanning training execution systematic analysis and quality expertise which is anasset for any world-class ship operator or owner. The SCI is also in a position to providesuch management expertise to other national/ international ship operators.

SCI's Drug & Alcohol Policy

SCI has implemented new Drug & Alcohol Policy prohibiting drug andalcohol abuse both ashore and afloat for the health and welfare of its employeesoperational safety and the environment from 03rd May 2016.

ISPS Cell

The SCI has successfully implemented the ISPS Code on all vessels oninternational voyages and coastal trade vessel as per the Administration requirement. SCIis committed to the following objectives to fulfil the requirements of its securitypolicy:

Security of its ships and their crew passengers and cargo

Support to its ships in implementing and maintaining the Ship SecurityPlan.

Integrated Management System (IMS)

SCI is now in compliance with IMS (ISO 9001:2015 Quality ManagementSystem ISO 14001:2015

Environmental Management System and ISO 45001:2018 Occupational Healthand Safety Management System) on board all vessels and shore establishments.

The scope of IMS Certification includes owning managing and ccharteringof ships for transportation of goods and passengers offshore and Marine Advisory servicesand Maritime Training services.

The required certification is valid till 20th December 2024.

5. PERSONNEL AND ADMINISTRATION

A) FLEET PERSONNEL

There is an acute shortage of senior Floating Staff officersespecially in the ranks of Masters & Chief Engineer Officers (CEO) as well as ChiefOfficer and Second Engineer (2EO) for Matrix requirement. The Fleet Personnel Departmentis trying to mitigate the shortage by recruiting officers on direct contract and throughmanning agents by offering market-related wages which have been revised in the Main Fleetand Offshore Sector in 2021/2022. The Fleet Personnel Department is also trying to manageshortage with early promotion of Class -1 and Class-2 COC holders in non- matrix / coastaltanker and bulk carriers with management approval. However the shortage also continuesdue to Indian taxation implications and demand in the Global Shipping Market. To ensure anuninterrupted supply of officers Deck Cadets and Trainee Marine Engineers on completionof their shipboard training and subsequent to their obtaining the certificate ofcompetency are being offered employment on Contract and terms of INSA-MUI Agreement. Dueto the Pandemic two-day Shipboard Orientation Workshop could not be organized. Theworkshop enhances the quality of our seafarers and their level of awareness of thecontinuous evolving shipboard developments. Superintendents from ISM Cell BNT Vetting andFleet Personnel Department conduct the workshop. This initiative will help us to grow as aknowledge-based learning Company. We endeavor to start the workshop physically as theCovid situation improves further.

Though there were instances of Covid infection on board which washandled promptly however inspite of the best efforts there were 05 deaths due to Covideither on board or in hospital

B) MARITIME TRAINING INSTITUTE

Your company's Maritime Training Institute (MTI) at Powai hassuccessfully conducted all DGS approved STCW courses in the year 2021-22. Presently 3batches of Diploma in Nautical Sciences (DNS) and one batch of Graduate Marine Engineering(GME) course are underway at Powai campus. Two batches of DNS course and one batch ofElectro Technical Officer (ETO) course have successfully completed at MTI in April 2021which slightly got delayed due to lockdown and ongoing pandemic condition. SCI-MTIsuspended all the courses (pre-sea competency and modular) as per instructions issued byGovernment of Maharashtra Directorate General of Shipping (DGS) Order 32 of 2021 dated22.10.2021. All residential pre-sea training courses were started with 100% capacity inMTI campus whereas modular courses and post-sea courses were still on online mode withpractical at 50% capacity of total strength of each course. It was ensured that both dosesof COVID-19 vaccination were taken by candidates attending MTI campus. Cadets were issueda travel advisory with precautions to be taken during journey and on safe arrival at MTI.Further by DGS order 12 of 2022 dated 29.03.2022 MTI started with 100% physical lecturesand 100% capacity for practical exercise with the strict compliance of SOP for COVID from31.03.2022. Regular Technical Seminars for Non-Technical Officers Guest lecturesseminars and professional development programs have been conducted for all ranks ofofficers petty officers ratings and shore officers through online platforms to enhancetheir competence and build a sense of belonging towards the company. The STCW course hasconducted through three tier approach Completion of E-Learning module (on DGS website)satisfactory completion of relevant course at approved MTIs through online classes &practical training under controlled condition and Exit Exam conducted by DGS. YourCompany's Training Centre - Maritime Training Institute at Powai Mumbai has beenassigned GRADE A1 (Outstanding) rating by DNV-GL during the last inspection as per theComprehensive Inspection Programme (CIP) Guidelines of the Director General of Shipping(DGS). CIP audit for the current financial year is due and will be carried out in July2022 by DNV-GL. The Institute has significantly improved in the external examinationsconducted by Indian Maritime University (IMU).

In view of recent increase in the COVID-19 cases in Mumbai since mid ofFebruary 2021 SCI-MTI has already taken preventive measures to mitigate the risk ofCOVID-19 spread. Employees are working at 100% strength in line with instructions fromGovt. of Maharashtra and SCI Management. Students inside the campus (reporting forpractical training) are accommodated in single occupancy rooms during quarantine periodand checked for strict compliance of COVID SOP.

Your Company's Training Centre at the Maritime Training Instituteat Powai Mumbai has conducted 211 Courses for 2867 participants in FY 2021-22 and thetotal man-days of training during this year are 87072 These included 64913 man-days forSCI's personnel and 22159 man-days for personnel from other companies.

Details of presidential directives issued by Central Govt. and theircompliance during the year and in last three years.

SCI has fully complied with the requirements of Directorate General ofShipping pertaining to conduct courses and has also complied with the Indian MaritimeUniversity guidelines.

SCI had actively participated in Swachh Bharat drive within the campusand in public places. Cadets trainees faculties and staff ere involved in the activitiesplanned at regular intervals. In line with Govt.'s vision SCI-MTI contributedmassively in the Swachhta Pakhwada from 1st to 15th Nov.2021 and organized variouscleaning drives. The cadets contribute 2 hours every Sunday in the upkeep of MTI Hosteland Garden area making MTI more green and beautiful.

Information towards major achievement during the year under review i.e.FY 2021-22 Academic Achievements

SCI-MTI has successfully started following new courses from DG Shippingin the year 2021-22: Passenger Ship Crisis Management Advance Training for Oil TankerCargo Operations (TASCO) Refresher Training in Proficiency in Survival Craft and RescueBoats (Ref. P.S.C.R.B.) Crisis Management and Human Behaviour course

B. Pass Percentage of SCI-MTI for DNS batches 57 & 58 was 93% inDecember 2021 examinations where the practical training and examinations were completed inphase-wise manner in January 2022. C. SCI-MTI proactively and safely sent the residentialcadets of pre-sea courses to their respective homes prior to announcement of 2nd lockdownduring April 2021. The students of DNS 59 & 60 batch were called for collection oftheir books uniforms so that they have study material for online studies and homerevision. Regular communication was done with the students to ensure their well-being andcontinuation of their training through online platform and physical. D. SCI-MTIsuccessfully completed practical training of all cadets of DNS 54 55 & 56 batches atMTI in phase-wise manner with utmost safety and compliance to stringent guidelines ofGovernment of Maharashtra Indian Maritime University and Directorate General of Shippingwithout having any COVID-19 case in the campus among the students. Regular courses werestarted in September 2021. E. SCI-MTI for the first time ever selected the 09th batch ofGraduate Marine Engineering (GME) course through its completely online admission processwhere applications submission document verification and personal interviews wereconducted online and with full transparency. Now GME 10th course will commencefrom 4.7.2022. IMU end semester examination of DNS batch 57 & 58 were completed duringApril-May 2022. F. SCI-MTI continued to receive the highest ever applications (per vacantseat) in our admission process for August 2021 (DNS-59 & 60) batch of Diploma inNautical Science (DNS) course. Approximately 25 applications for one vacant seat werereceived.

Non-Academic Achievements:

G. SCI-MTI became CCTV enabled campus with 24 x 7 CCTV surveillance ofall the administrative and residential buildings including security posts throughout thecampus. Classrooms in MTI have also been added to the CCTV surveillance. H. SCI-MTI isutilizing the in-campus natural waste (leaves etc) to create manure and Lake/Well Waterfor gardening work in MTI campus thus realizing Government of India and SCI's visionof self-sustainability. I. SCI-MTI continued to save around 30% on the monthly expendituretoward electricity consumption with support of its solar power plant of 0.5 MW capacitywhich is operational since December' 2017. J. SCI-MTI has significantly improved itstendering process by following online tendering for all tenders and contracts at MTI.Procurement from Government e-Marketplace (GeM) portal has been exercised whereverpossible. Proudly SCI-MTI has reduced the annual financial implications of many majortenders/contracts of the Institute including catering contract uniform contract civilcontracts etc. K. Many assignments of structural renovation and repairs have been carriedout at SCI-MTI during the lockdown period. The accommodation facility at MTI has beenstrengthened from existing 240 beds to 300 beds to meet projected accommodationrequirement in view of commencement of post-sea courses at MTI. No.5 Hostel with 36 bedscapacity were made competency students.

L. Plantation of around 100 new trees in MTI Campus.

M. Session by Ex-DGS Mr. Shetty for prevention of corruption inInternational Maritime industry. N. Installation of Centralized attendance system forFaculty and course participants.

Other Initiatives:

Institute's course booking office has become completely onlinewhere candidates can enquire and book courses online. The course fee is accepted only inonline mode. No cash is collected from course participants. Classes are now conductedthrough physical mode i.e. in classrooms whereas certificates are issued digitally in linewith DGS guidelines.

C. SHORE PERSONNEL

Material developments in Human Resource / Industrial Relations frontincluding number of people employed

The total Manpower as on 01.05.2022 is 540 (excluding Board Levelmembers) out of which 490 are officers and 50 are staff members. With a view to meet thepresent and future challenges and be a globally competitive Corporation a number ofcapacity development initiatives and employee engagement activities were carried out inthe year 2021-22. .

Training and Employee Engagement Activities of 2021-22:

Organizing proper training and development sessions holds an enormousvalue as it keeps the employees motivated encourages them to utilize their skills in abetter way and facilitates career development. To implement this we pooled in thestalwarts of SCI and nominated our employees to external training from industry experts toenhance the knowledge of the employees. The various trainings imparted to the employeesduring the year were majorly towards Skill Development Specialized courses in Domain andother areas compliance related trainings session towards Wellness Stress &well-being and towards Art of living were also organized. External trainings also involvedDPE Trainings on the Topics - Implementation of International Financial ReportingStandards (IFRS)/Ind-AS in CPSEs Public Procurement/GeM and Contract Management/Arbitration in CPSEs building competencies for Personal Excellence of executives ofCPSE. implementation of Corporate Governance Framework for enhancing performance ofCPSEs. HR related Issues like RTI Act Establishment Rules Review under FR(56)j Enquiry& Disciplinary Proceedings Vigilance Aatma Nirbhar Bharat identification of Sectorspecific opportunities for CPSEs session on Cyber Security Women Empowerment in CPSEs.

To recognize and award the employees who performed admirably wellduring these challenging times of the ongoing Pandemic Covid-19 both on-board vessels andashore a COVID Warrior Award scheme was launched in the year 2020-21 which was continuedin the 2021-22 also. These awards were dedicated to the employees who performedexceptionally by remaining committed and dedicated to their profession who truly rose tothe occasion and made significant contributions in some cases even beyond their normalscope of work towards ensuring unhindered operations support services and timelycompliance(s). A Valediction function was organized on the occasion of SCI's DiamondJubilee. The occasion was by graced by Hon'ble Minister for Ports Shipping andWaterways and Ministry of Ayush Shri Sarbananda Sonowal as Chief Guest Hon'bleMinister of State for Ports Shipping & Waterways Shri Shantanu Thakur as Guest ofHonour Hon'ble MP Shri Manoj Kotak and Shri Rajiv Jalota Chairman MBPT.

Hon'ble Minister Shri Sarbananda Sonowal Ji in his addressacknowledged the key role played by SCI of "Transformation throughTransportation' in Nation's progress & commended the women power in SCI andthe Aatma Nirbhar spirit exhibited in successfully managing the event.

As a step towards Safety & well-being free onsite vaccinationcamps were organized at SCI HO. A total of 2481 people have been vaccinated through SCIscontinued service to humanity.

5 days of Diwali festivities was observed at SCI wherein Maa Lakshmi& Lord Dhanvantari(God of medicines) were worshipped on Dhanteras. On this auspiciousday traditional Puja was performed in SCI for divine blessings of well-being &welfare of all.

On the eve of Diwali a customary get together was organised at SCI HOwherein CMD addressed the SCIans and called on to stay postive and conitnue momentum ofperformance excellance for bright and prosperous future. Other activities like SwachhtaPakhwada and Vigilance Awareness Week were also observed.

Steps taken by SCI to combat Covid-19 Pandemic:

With the onset of the worldwide Pandemic COVID-19 SCI has been veryproactive and has introduced all the precautionary measures to safeguard the wellbeing ofits employees. SCI has issued various advisories time to time to employees regardingwashing hands avoiding personal travels limiting the entry of visitors into thebuilding. Sanitizers were installed in the Head Office and the branch offices practice ofchecking temperature of employees while entering the work area was started. VariousCirculars pertaining to work from office premises and work from home along with observanceof various Covid hygiene guidelines have been issued in line with Government guidelinesissued from time to time. Intimation about one's health in form of COVID Declarationform was made mandatory for all employees who attend office on any given day in order toanalyze the health condition of the employees by the respective Head of the Departments.With a view to facilitate employees to commute during peak hours the flexi timing wasextended. Onsite vaccination camps were organized for employees and their families. Atotal of 2515 vaccines were given to eligible individuals during the onsite vaccinationcamps. N95 Face Masks were distributed to employees for maintaining covid protocols whilein office.

Reservation Policy

All the guidelines issued by the Government regarding Reservation fromtime to time are followed in Recruitments and Promotions.

SC/ST/OBC REPORT

Annual Statement showing the representation of SCs STs and OBCs as on1st January 2022 and number of appointments made during the preceding calendar year:

Representation of SCs/STs/OBCs Number of appointments made during the calendar year 2021
Groups as on 01.01.2022 By Direct Recruitment By Absorption
Total Number of Employees SCs STs OBCs Total SCs STs OBCs Total SCs STs OBCs
Executive Group A 500 106 45 88 0 0 0 0 0 0 0 0
Non Executives Group B 39 11 4 2 0 0 0 0 0 0 0 0
Group C 15 5 1 0 0 0 0 0 0 0 0 0
Group D 0 0 0 0 0 0 0 0 0 0 0 0
Total (Executives in Group A and Non Executives 554 122 50 90 0 0 0 0 0 0 0 0

e) Women Representation:

Company is committed to the principle of equal employment opportunityand strives to provide employees with a workplace free of discrimination. All HRactivities of recruitment placement promotion transfer separation compensationbenefits and training ensure equal opportunities for skill enhancement and careerprogression. Company's efforts are reflected in the representation of women acrossvarious hierarchical grades. At present women constitute around 20.85% of total workforceat shore establishments of your company. As an effort to boost the morale of womenseafarers Company felicitated all Women Seafarers onboard SCI Tanker Swarna Ganga asprelude to International Women's Day 2022. Thus acknowledging their professionalcontribution to Shipping and encouraging them to excel further. During a phygital eventorganized at SCI HO Smt. Archana Ramasundaram Hon'ble Member Lokpal of IndiaFormer IPS Officer and first women to head the paramilitary force Services Selection Board(SSB) interacted with SCIans and highly praised and lauded the women centric work cultureat SCI..

f) Policy to prevent sexual harassment at workplace:

The Company promotes gender equality and has been taking proactivemeasures to prevent any Sexual Harassment at workplace. The Company has constituted acommittee comprising of senior women executives and a woman representative from the NGOPratham to enquire into complaints of Sexual Harassment at the workplace. No complaintswere received in the year 2021-22.

g) Corporate Social Responsibility (CSR) and Sustainable Development(SD)

The Corporate Social Responsibility vision of your company articulatesits aim to be a corporate with its strategies policies and actions aligned with widersocial concerns through initiatives in education public health women empowerment andother areas of social upliftment. Your company has framed its CSR policy in line with theguidelines contained in the Companies Act 2013 and Companies (CSR Policy) Rules 2021notified therein" and constituted a CSR committee as per the act to coordinate andoversee the implementation of CSR initiatives. The policy is available on company'swebsite www.shipindia.com/csr/csrpage/overview.

The budget available for CSR initiatives in the year 2021-22 as perapplicable provisions was Rs. 6.05 Crores. Against the available budget your companyallocated Rs. 6.05 Crores against the following initiatives in the year 2021-22:

1. Health & Nutrition – a. Support to 60 children infectedand affected with HIV/AIDS residing at institutional care centres in Mumbai with"supplementary nutrition kits" to improve the immunity levels of the kids forfurther survival. b. Supporting underprivileged Cancer patients for surgeries atBhaktivedanta Hospital Mira Road Thane. c. Support to 250 newly borne for treatment ofclubfoots. Under this project treatment facility is provided to 250 children born withclubfoot through clinics developed at 12 different government hospitals in Maharashtra andNCR. The Ponseti Method (Non - surgical) performed by the doctors in these clinicscomprises of three phases including manipulation and casting tenotomy (minor surgery)followed by a three week long plaster casting. Thereafter a scientifically developed footabduction brace (FAB) is used to keep the foot in the corrective position to controlrelapse. The brace has to be worn by the children for four to five years and is changedfrequently along with the growth of the feet. 8 to 10 braces are given on an average toevery child during this five year follow up. d. Nutritional support to address the issueof Malnutrition. 1500 government school children are supported through supply of free milk& milk products by a network of milk producer organizations (dairy cooperatives andproducer companies) to help reduce malnutrition in association with National DairyDevelopment Board (NDDB) - Foundation for Nutrition (NFN) in Gadchiroli district ofMaharashtra.

2. Promotion of Education & Skill Development a. Award ofAnnual Grants to meritorious students from weaker section of the society viz. SC/ST/BPLcandidates pursuing Ocean Engineering/Naval Architecture/Nautical Science/GME courses atpremier institutes (IMU's & IIT's) to encourage and support Maritime

Education in the country. b. Support for setting up 10 smart classroomsat municipal schools under Thane Municipal Corporation in association with Society forNEED. c. Skill Development training of 360 underprivileged women in apparel sector &other technical fields in association with Regional Centre for EntrepreneurshipDevelopment (RCED) at aspirational districts in Maharashtra. SCI has associated withRegional Centre for Entrepreneurship Development (RCED) for providing Skill Developmenttraining to 360 underprivileged women in apparel sector and other technical fields. Theproject has been implemented in Gadchiroli aspirational districts in Maharashtra. Theproject aims to provide skill development training to 360 women to make them capable andself-dependent through proper technical training in the field of traditional and technicaloccupations. d. Setting up 35 KW Solar Plant at New Vruddhashram (162 bedded Old AgeHome) managed by Tara Sansthan at Udaipur Rajasthan.

3. Health Care including Covid-19 Related Measures: a. Support toDistrict Hospital Washim with 2 Neo Natal Ventilators and One Cardiac Ambulance. b.Support to AIMS Bhubaneswar with 3 ventilators 500 PPE-Kits 500 sterile PPE Kits &500 surgeon gowns. c. Setting up One centralized Oxygen Plant of 150LPM capacity atCommunity Health Centre (CHC) Punhana block District-Nuh (Mewat) Haryana. d. As part ofCOVID relief measures 5 vaccination camps were organized at SCI HO. A total of 2744people (general public seafarers and marine fraternity) were vaccinated through SCIinitiative. e. Support to Panvel Gurudwara for carrying out Covid relief activities. f.Support to Thane Municipal Corporation with sanitizing vending machines thermal guns etc.g. Organized 24 Medical Health Camps for identification/ awareness of Tuberculosis andother general diseases like Diabetes & Blood Pressure among the poor & vulnerablein 6 districts of Maharashtra viz. Sindhudurg Gondia Kholapur Nasik Ahmednagar andDhule in association with Delhi Competitive & Vocational Society (DCVS). h. Support ofan Ambulance was extended to Aizawl Football Club to provide encouragement and confidenceto the trainees while undergoing trainings as sometimes injuries of serious nature occurswhile training and requires immediate treatment in the hospitals.

4. Environment Sustainability a) Project for Urban Plantation/Forestation" by Teamwork Welfare Foundation for plantation of 6000 plants throughMiyawaki Technology in an area of approximately 2000 square meter under Delhi/NCR.

Against the allocation of Rs. 6.05 crores Rs. 3.98 Crores have alreadybeen disbursed and balance will be disbursed on achievement/ completion of projectspecific timelines.

Material Orders of Judicial Bodies / Regulators

Details of significant and material orders passed by any RegulatorCourt Tribunal Statutory and quasi-judicial body impacting the going concern status ofthe company and its future operations Nil.

Implementation of Official Language Policy

In accordance with the Official Language policy of the UnionGovernment your company reiterated its commitment and made consistent efforts towards theprogressive use of Hindi in its day-to-day affairs during the year under report. Keepingin view of the prevailing COVID-19 situation your Company conducted Hindi activities andcompetitions online/through email at regular intervals and awarded prizes to the winners.Apart from this your company also arranged Hindi typing and translation trainingprogramme to its officers online/offline. An online session in Hindi-English on"Self-Management to Make Self-Force Resilient for Empowerment during AdverseTimes" was held by Guest Speaker Sister B. K. Shivani as a part of the DIAMONDJUBILEE YEAR celebrations of SCI. Under the Hindi Incentive Scheme children of 14employees were encouraged by giving incentive prizes for scoring 70% and above marks inHindi subject in SSC and HSC level exams held in the academic year 2020-21.

In order to create a sense of competition amongst allDivisions/Departments and individual officers for increasing the use of Hindi in dailycorrespondence and activities the Annual Rajbhasha Shield (at Divisional Level) andAnnual Rajbhasha Gaurav Sammaan (at Individual Level) schemes were continued for 2021-22after necessary modifications. However for the year 2021-22 the "Annual RajbhashaShield" was awarded to Bulk Carriers & Tankers Division and "AnnualRajbhasha Gaurav Sammaan" was awarded to three officers on the basis of their Hindiperformance. Besides this twelve employees from various divisions were given Certificatesand dictionaries. All these initiatives have culminated in very conducive environment forprogressive use of Hindi in daily office routine work.

Appointment and Remuneration Policy:

The appointments in your company are done in accordance with Governmentof India guidelines. The remuneration to the senior management and other shore employeesof your company is governed by the Presidential Directives issued by the Ministry ofPorts Shipping and Waterways (MoPSW) and Department of Public Enterprises (DPE) fromtime to time which form the remuneration policy of your company.

Right to Information Act 2005 (RTI ACT 2005)

Right to Information Act 2005 (RTI) which became effective on 12thOctober 2005 is complied by SCI. Detailed information on RTI is hosted on SCI Websiteunder following link http://shipindia.com/rti/rtipage/rti-act-2005 and updated the samefrom time to time as per the guidelines received from concerned authority. Shri S.R.Bandekar GM (B&T) was the Public Information Officer (PIO) for the year 2021-22 todeal with queries received from the Indian Citizens under RTI. Presently as on date Mrs.Soma Tandon Deputy General Manager has been appointed as Public Information Officer forRTI.

A suitable mechanism has been put in place for dealing with therequests and appeals under RTI Act 2005. The RTI manual is posted on the Company'swebsite. Your Company has been complying with the provisions of the Act within thestipulated time limit provided under the Act. As on 31.03.2022 your Company has disposedoff most of the applications and appeals received from the parties.

6. SPECIAL PURPOSE VEHICLE Sethusamudram Corporation Ltd.

The Government of India had constituted Sethusamudram CorporationLimited (SCL) to raise finance and to undertake activities to facilitate operation of anavigable channel from Gulf of Mannar to Bay of Bengal through Palk Bay (SethusamudramShip Channel Project). As per the Government directive this project is to be funded byway of equity contributions from various PSUs including the SCI. As on FY 2016-17 SCI hasinvested Rs. 50 crore in the project. Work suspended since 17.09.2007 consequent to aninterim stay by the Hon'ble Supreme Court for carrying out dredging operations inAdam's bridge area. Pending a final decision on alternative alignment all thedredgers were withdrawn since 27.7.2009. Supreme Court's final hearing on the matterwas scheduled on 06.04.2018 however the hearing was withheld SCL Board during its Boardmeeting held on 18.03.2021 accepted the resignation of Smt. Sangeeta Sharma Director(L&PS) SCI as Director SCL from the Company. Further SCL requested SCI to nominatenew Director on SCL Board in place of Smt Sangeeta Sharma who has been retired onsuperannuation.

7. Memorandum of Understanding (MOU) with the Ministry of PortsShipping & Waterways

The MOU for the financial year 2022-23 is under progress. The MOU isbeing processed as per the consolidated guidelines issued by Department of PublicEnterprise (DPE) vide circular dated 10th March 2022. Under the new guidelines enteringsigning monitoring and evaluation of MOU will be done through online dashboard. SCIrating for 2019-20 is Excellent. SCI's Composite score for the year 2020-21 has beenevaluated by the DPE.

MOU performance evaluation data for financial year 2021-22 on the basisof Audited accounts will be submitted to DPE through online dashboard after the approvalof the Board and through the Administrative Ministry by 31st October 2022.

Compliance to some of the MOU Parameters are mentioned below

a) Ship Availability as a percentage of Total Ships

The Planned Ship Availability (Total days of the year less quoted daysfor planned repair and dry dock) for 59 ships for 2021-22 was 20576 days. The Ships wereavailable (Total days of the year less Actual repair and dry dock days) for 18960 dayswhich is 92.18 % to the planned Ship Available days.

b) Revenue from Exports

Earnings of SCI from Export Revenue as per the GST Returns filed forthe FY 2021-22 amounts to INR 151814 Lakhs (previous year INR 100091 Lakhs). Basis theabove export earnings as a percentage of Revenue from Operations for the FY 2021-22stands at 30.39% (previous year 27.03%).

c) Compliance parameters not verifiable from any outside sources

i. Parameters on DPE guidelines on select matters (i) Pay Revisionguidelines and review of profitability of CPSEs for pay revision (ii) ExpenditureManagement Economy Measures and Rationalisation of Expenditure (iii) Guidelines onAccessible India Campaign (Sugamya Bharat Abhiyan) (iv) Guidelines on implementation ofthe Apprenticeship Act 1961 (v) Guidelines issued from time to time on CSR expenditure byCPSEs has been complied with. ii. Target as given by DIPAM / NITI Aayog w.r.t. (i).Dividend Payout (ii) Assets Monetization Milestones and (iii) Specific disinvestmentMilestones have been complied with. iii. Parameters w.r.t. steps and initiative taken forHealth & Safety improvement of Human Resources in CPSEs has been complied with

8. Utilization of FPO Proceeds

During the year 2010-11 your Company had floated a "FurtherPublic Offer" (FPO) comprising of a ‘fresh issue' of 42345365 equityshares in your company and an ‘offer for sale' of 42345365 equity shares bythe President of India. The FPO proceeds of Rs. 58245 lakhs were fully utilized in thefinancial year 2011-12 as per object of the issue for part financing of capitalexpenditure on nine shipbuilding projects. However due to delays in the projectsresulting in default by the shipyards during the period January 2014 to May 2014 yourCompany rescinded contracts for four shipbuilding projects and also re-negotiated thepayments for two projects. The investment in the rescinded contracts out of the FPOProceeds was Rs. 330.65 crores. Your Company has received back entire sum of Rs. 330.65crores from the shipyards. The shareholders vide the resolution passed through postalballot on 11.02.2017 approved the proposal to re-deploy the said sum of Rs. 330.65 croresreceived as refund from Shipyards towards various shipbuilding projects includingoffshore assets and liquid petroleum gas (LPG) vessels and also for acquisition of the anyother such vessels on such terms and conditions as the Board would deem fit from time totime as mentioned in the approval of the postal ballot. Further based on the approvalgranted by the shareholders the Company can also utilize the sum towards the balancepayments remaining due for the tonnage acquisition made by it. Out of the said amount ofRs.330.65 crs an amount of Rs. 196.80 crs has been utilised till date as under

Month & Year ` Crs Utilised for
November 2016 34.37 Equity portion of PSV SCI Sabarmati
April 2017 63.82 Equity portion of Suezmax Tanker Desh Abhiman
July 2017 27.63 Equity portion of PSV SCI Saraswati
September 2017 70.98 Equity Portion of VLGC Nanda Devi
Total Utilised till date 196.80

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

9. Segment-wise performance

Report on performance of the various operating segments of the Company(audited) is included at Note No. 32 of Notes on Financial Statements (Standalone) for theyear ended 31st March 2021 which is forming part of the Annual Accounts.

10. Internal Control System and Their Adequacy

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

Internal audit is carried out by an independent firm of CharteredAccountants on concurrent basis. The scope and authority of the Internal Audit function isdefined in the Internal Audit Plan which is approved by the Audit Committee. To maintainits objectivity and independence the Internal Audit function submits quarterly reports tothe Audit Committee of the Board. The Internal Auditor examine evaluate and report on theadequacy and effectiveness of the internal control systems in the company its compliancewith the laid down policies and procedures and ensure compliance with applicable laws andregulations. Based on the report of internal audit function process owners undertakecorrective action in their respective areas and thereby strengthen the controls.Significant audit observations and corrective actions thereon are reviewed deliberatedand presented to the Audit Committee of the Board.

11. Dividend Distribution Policy

As per the guidelines dated 27.5.2016 issued by Department ofInvestment and Public Asset Management (DIPAM) MOF GOI in respect of dividend bonusshares etc. the Company has an obligation to comply with these guidelines. However thecompany shall take in to consideration and be guided by the provisions of the CompaniesAct 2013 Companies (Declaration and Payment of Dividend) Rules 2014 and Guidance Note onDividend & Secretarial Standard 3 (SS3) for taking necessary action appropriate anddeemed fit in the circumstances.

12. Role of Vigilance Division in SCI

SCI has a full-fledged Vigilance Division headed by Chief VigilanceOfficer. The Division operates as per the guidelines of the Central Vigilance Commissionfor Vigilance management in Public Sector Enterprises and is guided further by theinstructions issued by the Ministry of Ports Shipping and Waterways from time to time.During the year under review the Chief Vigilance Officer put in place preventivevigilance initiatives in the business processes thereby striving towards greatertransparency and improved ethical & corporate governance standards. There wasconcerted effort to achieve greater transparency and eliminate systemic weaknesses throughuse of technology in business processes such as e-payments Supplier RelationshipManagement bill tracking and online dissemination of important circulars/guidelines.Further there was provision for online registration of complaints via the VigilanceWebpage contained in the SCI website. Vigilance Division propagated the culture of lodgingof complaints under the Public Interest Disclosure and Protection of Informers'Resolution (PIDPI Resolution) whereby the identity of the complainant would be kept secretand he/she would be protected from victimization. Vigilance Division interacted withvarious employees of SCI as well as various stake holders which has helped inunderstanding the issues from their perspective as well.

12. Activities of the Vigilance Division carried out in 2021-22

During the year under review the Vigilance Division carried out theactivities under Preventive Punitive and Participative Vigilance. The importantactivities carried out in 2021-22 by the Vigilance Division were as follows: A. Complaintswere handled as per complaint handling policies stipulated in Vigilance Manual issued bythe Central Vigilance Commission. Investigations into complaints of corruption/malpractice were conducted.

B. Random scrutiny of Annual Property Returns (APRs) C. Activemonitoring of the implementation of Integrity Pact in SCI

D. Acted as a catalyst in the implementation of preventive vigilancemeasures by your Management such as e-payments bill tracking systems phased transfers ofemployees posted in sensitive areas etc.

E. Conducting surprise and periodic inspections CTE type inspectionsconducting Systems Studies and recommending systemic improvements.

F. Selective scrutiny of Voyage Repairs Bills dry-docking billsvarious accounts G. Training of Officers on vigilance related subjects as well as CDARules.

H. Vigilance Division has developed a specific vigilance relatedtraining module which forms a part of Management Development Programme for various levelsof executives. Through this module participants are made aware of the rules whichenhances the levels of participative and preventive vigilance and helps improve governancestandards in the organization.

I. An interactive workshop on 27.10.2021 was organized for theempaneled IOs/POs on the topic "Role and functions of the Inquiry Officer andPresenting Officer" by an external speaker. J. 13th Edition of the annual Vigilancenewsletter "SCI Voyager-2021" was published on the occasion of inauguration ofVigilance Awareness Week 2021.

K. A "Compendium of Vigilance Circulars" with specialemphasis on PIPDI was released during the inaugural function of Vigilance Awareness Week2021.

L. To commemorate the 60 years of SCI a special edition magazine"Vigilance in SCI @ 60 years" showcasing past Vigilance activities was releasedduring valedictory function of Vigilance Awareness Week 2021.

M. For the annual Vigilance Awareness Programme in-house programmeswere held to spread Vigilance Awareness among employees and their families.

N. SCI organized various outreach activities in schools and college forcreating awareness about corruption and existing mechanism available for combatingcorruption. Poster making competition Slogan writing competition and In-person elocutioncompetition was organized at various Kendriya Vidyalayas. Poster and Slogan writingcompetition was organized at a College in Navi Mumbai. Regional Office New Delhi alsoconducted slogan writing competition at Kendriya Vidyalaya.

O. In order to spread the awareness about Vigilance machinery amongpeople an awareness campaign was organized via FM Radio wherein jingles related to theVigilance functions and VAW-2021 theme were aired throughout the Vigilance Awareness Week.P. Awareness campaign was conducted on-board SCI ships for generating awareness aboutVigilance amongst seafarers. The Integrity pledge was also administered onboard the shipsand banners were displayed.

Vigilance Study Circle Mumbai Chapter:

The Vigilance Study Circle Mumbai Chapter started on the initiative ofSCI Vigilance Division in 2010 is today a forum of 33 member organizations from variedsectors. It continues to spread Vigilance awareness and develop the knowledge and skillsof Vigilance Professionals and provides an ideal platform for the Chief Vigilance Officersof Mumbai based PSUs Banks etc. to meet and exchange their views/ experiences etc.Taking forward the continual learning and knowledge sharing initiative followingworkshops / training sessions were organized by the Mumbai chapter of VSC during the FY2021 22: A. A one and half day training program for the member CVOs of VSC Mumbai andtheir senior officers on the Securities markets to equip the Vigilance fraternity towardseffective corporate governance was conducted by the National Institute of SecuritiesMarkets (NISM). B. A training session on ‘Financial frauds and Cybercrime' wasorganized by VSC Mumbai in collaboration with E & Y India in September 2021.

C. In view of the incorporation of a dedicated chapter on e-Vigilance(Chapter XII) by the Central Vigilance Commission (CVC) in the latest updated CVC Manual(updated 2021) a number of familiarization programs and knowledge sharing sessions onthis topic were conducted by VSC Mumbai for CVOs and Vigilance functionaries of its memberorganizations.

D. A meeting of the member CVOs of VSC Mumbai with Hon'ble CentralVigilance Commissioner Shri. Suresh N Patel and other dignitaries from the CentralVigilance Commission was conducted at Mumbai in October 2021 wherein a number ofvigilance related issues and roadmap for future activities were discussed.

13. Cautionary Statement

The statements made in the Management Discussion and Analysis reportdescribing Company's objectives projections estimates and expectations may be"forward looking statements" within the meaning of applicable laws andregulations. Actual results might differ materially from those expressed or implied.

14. Key Managerial Personnel

Shri Prabir Kumar Gangopadhyay was appointed by the Ministry of PortsShipping and Waterways as a whole Time Director (Personnel and Administration) w.e.f07.09.2021.

Shri Dipankar Haldar has ceased to be the Company Secretary andCompliance Officer of the Company on 31.01.2022.

Further the Board of Directors at their Meeting held on 31.01.2022have appointed Smt Swapnita Vikas Yadav a qualified Company Secretary bearing ACS Number64626 as the new Company Secretary and Compliance Officer of the Company with effect from01.02.2022. Shri Rajesh Sood Director (Technical & Offshore Services) completed histenure on the Board of the Company consequent to his superannuation on 30.04.2021.

Shri Vikram Dingley was appointed by the Ministry of Ports Shippingand Waterways as Director (Technical & Offshore Services) w.e.f 19.05.2022.

Shri C.I Acharya was appointed by the Ministry of Ports Shipping andWaterways as Director (Finance) w.e.f 13.06.2022.

Shri Lawrence Serrao ceased to be the Chief Financial Officer of theCompany w.e.f 13.06.2022. Shri Subramanya Prakash is appointed as the Chief FinancialOfficer of the Company w.e.f 05.08.2022.

Smt H K Joshi Chairperson and Managing Director of the Companycompleted her tenure on the Board of the Company consequent to her superannuation on31.05.2022. Further Shri Atul Ubale vide Ministry letter dated 27.05.2022 has been giventhe additional charge of the position of Chairperson and Managing Director of the Companyw.e.f. 01.06.2022.

As on date Shri Atul Ubale Director (B&T) holding AdditionalCharge of Chairman and Managing Director CaptB.K.Tyagi Director (L&PS) Shri PrabirKumar Gangopadhyay Director (P&A) Shri Vikram Dingley Director( T&OS) ShriC.I.Acharya Director (Finance). Smt Swapnita Vikas Yadav Company Secretary are the KeyManagerial Personnel of the Company.

15. Declaration of Independence

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

16. Composition and Meeting of the Board and its Committee

The Board and its various Committees are constituted in terms ofrequirements of the Companies Act 2013 read with the rules made there under and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.

The details in respect of the number of Board meetings and Committeemeetings of the Company are set out in the Corporate Governance Report which forms part ofthe Annual Report.

Performance Evaluation of Board Committee and Directors

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

17. Secretarial Standard

The Company complied with all the applicable Secretarial Standards.

18. Secretarial Audit

Pursuant to Section 204 of the Companies Act 2013 and the Companiesappointment and Remuneration of Managerial personnel Rules 2014 the Board had appointedMr. Upendra Shukla Practicing Company Secretary to conduct Secretarial Audit for theFinancial Years 2020-2021 and 2021-2022.The Secretarial Audit report for the financialyear 2021-22 is appended to the director's report The Secretarial Auditor in hisreport for the year ended 31st March 2022 has brought out that: The Corporation hascomplied with the requirement of Corporate Governance as provided under regulation 17 ofthe SEBI (Listing Obligation and Disclosure Requirement) regulations 2015 and DPEGuidelines on Corporate Governance with the exception of appointment of IndependentDirectors to the extent of 50% of the total strength of the Board during the period fromApril 1st 2021 to December 6th 2021. It was clarified by the Corporation that the matterwas being pursued with the concerned Administrative Ministry i.e the Ministry of PortsShipping and Waterways for appointment of required number of Independent Directors andone Woman Independent Director on the Board within the period prescribed under Section 149of the Companies Act 2013 and Regulation 25(6) of the SEBI (LODR) Regulations 2015. Theconcerned Administrative Ministry vide its letter dated 22/11/2021 had conveyed theappointments of 5 Non-Executive Independent Directors including one Woman IndependentDirector. Consequently the Corporation is compliant with the provisions of Regulation17(1) (a) and (b) of SEBI (LODR) Regulations2015 Composition of the Board of Directorswith effect from 07.12.2021 till 31st March 2022.

19. Auditors Report

The Statutory Auditors have given an unqualified report on theFinancial Statement of the Company for the Financial Year 2021-22. Further there are NILComment made by Comptroller an Auditor General of India on the Statement of Standalone andConsolidated Financial Statements for the year ended 31.03.2022.

20. 150th Report of the Committee of Papers Laid on theTable (COPLOT) presented in Rajya Sabha on 31 March 2017 -Para 24 of the COPLOTrecommendations

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

Brief of the Para

Payment of Performance Related Pay in violation of DPE guidelines.

SCI paid an amount of Rs. 11.03 crore as Performance Related Pay toemployees for the financial year 2014-15. C&AG however raised an observation thatpayment of Performance Related Pay of Rs. 11.03 crore for the year 2014 -15 was made inviolation of DPE guidelines and that the non-core profits had not been deducted forcalculation of PRP. PRP of year 2014-15 was paid after approval of Nomination andRemuneration Committee. However matter was again put up to Nomination and RemunerationCommittee held on 04.02.2020 specifically to review the position with respect to C&AGobservation.

SCI stand on C&AG observation is reiterated below:-a) Profit onsale of Vessels: Scrapping of vessels is a normal activity in shipping and SCI followsa policy of scrapping at the end of the useful life of the vessel after a techno economicstudy is done on possible further extension of the life of the vessel. All activitiesstarting from placing of an order building a ship till the end point of scrapping of theship at the end of its useful life fall within the ambit of core business activity of ashipping company. b) Income (Compensation) received from rescindment of Contract: Possibilityof contract rescindment termination in any business is normal and cannot be ruled out.Hence rescindment of contract needs to be considered within the purview of normalbusiness activity.

In our case compensation/ income received for rescindment of contractis nothing but is in nature of liquidated damaged given by shipyard for their subparperformance and not completing the contract on time. Had the vessel been delivered in timeSCI would have earned normal income from freight/charter hire. c) Interest on loansgiven to Joint Ventures: Formation of Joint venture is a normal business activity.Loans given to Joint Venture Companies is part of well deliberated strategic planning byall JV partners and in line with the MOA.

The Nomination & Remuneration Committee deliberated the matter indetail and concluded that all the above mentioned items are core activities of SCI.Resolution of minutes of above agenda is placed below:

 

The Committee thereafter passed the following resolution:

RESOLVED That any business activity which is undertaken to sustainpromote enhance or grow its primary business is to be considered as "Core BusinessActivity" of the Company

RESOLVED Further THAT income from rescindment of contract (liquidateddamages) interest earned on loan exposure to the joint venture companies profit on saleof ships constitute as income arising from core activity Resolved Further that paymentsmade by the company to the employees as Performance Related Pay for the FY 2014-15 basedon the above notion on which taxes have been paid by the employees and further in orderto avoid complications arising on account of differential treatment afforded to the sameclass of employees whether serving or otherwise should not be recovered

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

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

Thereafter on 02.12.2021 letter was sent to MoPSW stating thatconsidering the Strategic Disinvestment of SCI being in advanced stages DIPAM had opinedthat the Administrative ministry should take necessary action to get all employee relatedliabilities pertaining to the period that the company is a CPSE cleared before thecompany's management control is transferred so as to safeguard the interest of the

For and on behalf of the Board of Directors
Place: Mumbai Shri Atul Ubale
Dated: 5/8/2022 CMD Addl. Charge & Director (B&T)

.