Great Eastern Shipping Company

From its humble beginning as the owner of a single dry bulk ship in
 1948, your Company has emerged as one of the most respected shipping
 companies in the world. The last 6 decades have been full of challenges
 and changes both within and outside our industry. Your Company has
 effectively managed both, setting milestones for itself and others, as
 you will observe from the 60th Annual Report on the business and
 operations of your Company for the financial year ended March 31, 2008.
 Your Directors believe that it will continue to do so in the times to
 come. The glimpses of your Company’s journey of 6 decades have been
 captured elsewhere in this Annual Report. You will find the journey as
 interesting as the financial performance for the year under review.
 
 Financial Performance
 
 The Company has for the 8th year in succession achieved record
 profits:
                                                           rs. in lakhs
                                                 2007-08        2006-07
 
 Total Income                                     320351        225110
 Total Expenditure                                180058        134121
 Profit before tax                                140293         90989
 Less : Provision for taxation
 -Current tax                                       4500          3100
 -Fringe Benefit tax                                 120           100
 Profit for the year after tax                    135673         87789
 Add : Prior period adjustments                        8           542
                                                  135681         88331
 Less: Transfer to Tonnage Tax Reserve Account 
 under section 115VT of the Income-tax Act, 1961   22500         15000 
                                                  113181         73331
 Add: Transfer from Reserve under Section 33AC 
 of the Income-tax Act,                             1961         24000
 Add: Transfer from Exchange Fluctuation Reserve    2500         -
 (Less): Transfer to Debenture Redemption Reserve   -           (1500)
                                                  139681        71831
 Add : Surplus brought forward from previous year  90991        59331
 Amount available for appropriation               230672       131162
 
 Appropriations:
 -Transfer to General Reserve                      20000        20000
 -Interim Dividend on Equity Shares                22841        10659
 -Proposed Dividend on Equity Shares                   -         6852
 -Tax on Dividends                                  3882         2660
 Balance Carried Forward                          183949        90991
 
 The total income for the year was recorded at Rs. 320351 lakhs as
 against Rs. 225110 lakhs in the previous year and Net Profit after
 prior period adjustments of Rs. 135681 lakhs as against Rs. 88331 lakhs
 in the previous year.
 
 Dividend on Equity Shares
 
 For the year under review, your Directors declared 3 interim dividends
 of Rs. 4/-, Rs. 3.50/- and Rs.5/- per share respectively. Your
 Directors also declared a one time Special Diamond Jubilee interim
 dividend of Rs.2.50/- per share to commemorate your Company’s 60th
 year.
 
 The aggregate outflow on account of the equity dividend for the year @
 Rs.15/- per share would be Rs.26723 lakhs including tax on dividend.
 This represents a payout ratio of 19.70% (previous year 23%).
 
 The Board does not recommend any final dividend for the year under
 review.
 
 Preferential issue of Convertible Warrants
 
 Consequent upon your approval at the last Annual General Meeting held
 on July 26, 2007, the Company on August 09, 2007, allotted 50,05,000
 Warrants on preferential basis to certain Promoters and Non Executive
 Directors of the Company. Each Warrant is convertible into one equity
 share of the face value of Rs.10/- each of the Company at the option of
 the Warrant holders at anytime prior to the expiry of 18 months from
 the date of allotment of the Warrants, i.e. August 09, 2007. As per the
 terms of the issue, out of the conversion price of Rs.312.75/- per
 share, Rs. 32/- per Warrant has been paid by the Warrant holders and
 the balance is payable on exercising the option.
 
 Subsidiaries
 
 Your Company has following wholly owned subsidiaries -
 
 a) The Great Eastern Shipping Co. London Ltd.
 
 b) The Greatship (Singapore) Pte. Ltd.
 
 c) The Great Eastern Chartering LLC (FZC)
 
 d) Greatship (India) Ltd., which, in turn, has the following wholly
 owned subsidiaries-
 
 i) Greatship Global Holdings Ltd., Mauritius (incorporated on May 30,
 2007)
 
 ii) Greatship Global Offshore Services Pte. Ltd., Singapore
 (incorporated on May 08, 2007)
 
 iii) Greatship Global Energy Services Pte. Ltd., Singapore
 
 iv) Greatship Holdings B.V., Netherlands (under liquidation)
 
 Greatship (India) Limited (GIL) is establishing itself as a premier
 service provider in the offshore energy exploration and production
 domain globally and in India. During FY 08 your Company invested
 Rs.38600 lakhs in the equity share capital of GIL taking the total
 investment by way of equity to Rs.64200 lakhs.
 
 GIL commenced commercial activities during FY 07. It has achieved a
 profit of Rs.4402 lakhs on a stand-alone basis and Rs.4103 lakhs on a
 consolidated basis for the year ended March 31, 2008. The net worth of
 GIL for FY 08 was Rs.68845 lakhs as compared to Rs.25533 lakhs for FY
 07 on a consolidated basis.
 
 GIL is currently owning and operating 3 Platform Supply Vessels (PSV)
 and 2 Anchor Handling Tug cum Supply Vessels (AHTSV). In addition, GIL
 with its subsidiaries, has a committed capital expenditure of USD 706
 million (approx Rs.2860 crores) for 19 more assets. These include 2
 PSVs, 8 Multipurpose Platform Supply & Support Vessels, 2 MSVs, 6
 AHTSVs and a 350 ft Jack up Rig. These assets are likely to be
 delivered between FY 09 and FY 11.
 
 During the year, GIL allotted 42,07,000 Warrants convertible into
 equity shares on preferential basis to the promoter directors of The
 Great Eastern Shipping Co. Ltd. and granted 7,94,300 stock options to
 its employees (including employees of Parent Company) under various
 Employee Stock Options Schemes.
 
 During the year, GIL had invested in Greatship Global Offshore Services
 Pte. Ltd., Singapore through Greatship Holdings B. V, Netherlands
 (GHBV) and Greatship Global Holdings Ltd., Mauritius (GGHL) and in
 Greatship Global Energy Services Pte. Ltd., Singapore through GGHL,
 Mauritius. GHBV, Netherlands has been put into voluntary dissolution on
 March 28, 2008 and now both the Singapore companies are subsidiaries of
 GGHL, Mauritius.
 
 The Central Government, in exercise of the powers conferred by sub
 section (8) of Section 212 of the Companies Act, 1956, has directed
 that the provisions contained in sub section (1) of Section 212 of the
 Companies Act, 1956 shall not apply in respect of the subsidiaries of
 the Company for the financial year ended March 31, 2008. Accordingly,
 the annual accounts of the subsidiary companies have not been attached
 to the Balance Sheet of the Company as at March 31, 2008. The annual
 accounts of the subsidiary companies and the related detailed
 information will be made available to the investors of the Company and
 subsidiary companies seeking such information at any point of time. 
 
 The annual accounts of the subsidiary companies are also available for
 inspection, during business hours, at the Registered Office of the
 Company and at the head offices of the respective subsidiary companies.
 As per the terms of the exemption letter, a statement containing brief
 financial details of the Company’s subsidiaries for the year ended
 March 31, 2008 is included in the Annual Report.
 
 Management Discussion and Analysis
 
 Company Performance
 
 In FY 08, the Company recorded a total income of Rs.320351 lakhs
 (Previous year Rs.225110 lakhs) and earned a PBIDT of Rs.189316 lakhs
 (previous year Rs.128233 lakhs).
 
 Tanker Business Market Trend and Analysis
 
 Similar to FY 07, FY 08 was characterized by significant volatility in
 shipping markets. World oil demand grew by 1.2%, or 1.1 million barrels
 per day (“b/d”), in 2007, after recording a growth of 1% in 2006. The
 growth rate in 2007 was similar to that of 2006 primarily due to
 virtually unchanged oil demand growth in the U.S. and Europe. China, on
 the other hand increased its petroleum consumption by 5.5% in 2007.
 Higher oil prices and global economic concerns kept a lid on crude oil
 demand in 2007.
 
 The world tanker fleet increased to 387.7 million dwt at the end of the
 financial year, 5% higher than the 369.2 million dwt at the beginning
 of FY 07-08.
 
 OPEC production cuts towards the end of 2006 and early 2007 in
 anticipation of slower demand growth and willingness of the refiners to
 draw down on the inventories in view of backwardation in oil prices
 resulted in decline in tanker earnings in the 1st half of the FY 08.
 OPEC raised production in November, which led to increased imports by
 US refiners to replenish the depleted inventories, resulting in
 increased loadings from the Arabian Gulf.
 
 Overall, tanker rates in 2007, though healthy as compared to historical
 averages, fell during the middle of the year as a result of subdued
 demand emanating from high oil prices and an increasing world tanker
 fleet.
 
 The markets however witnessed a high degree of volatility due to
 imbalances in tonnage supply and also periodic geopolitical tensions
 and safety concerns. VLCC spot rates, for instance for the route
 between the Arabian Gulf to Japan ranged between World Scale 319 (WS)
 (Time Charter Equivalent, or TCE, approx. $ 260,000 /day) and WS 49
 (TCE approx. $ 12,500/day) during the year.
 
 Company Performance
 
 The tanker business accounted for around 62 % of the Company’s net
 revenues and 49% of the operating profits.
 
 In FY 07-08, around 42% of the earnings was derived from the spot
 market. The crude tankers earned an average TCY of $ 30,000/day
 (previous year ,700/day). The product carriers earned an average TCY
 of $ 20,250/day (previous year ,000/day). Your Company’s two LPG
 carriers earned an average TCY of ,000/day (previous year
 ,800/day).
 
 Tanker Fleet Changes
 
 The tanker fleet of your Company stood at 33 tankers aggregating 2.35
 million dwt, with an average age of 10.53 years (as of March 31, 2008)
 as against 34 tankers aggregating 2.65 million dwt with an average age
 of 12.09 years as on March 31, 2007.
 
 Your Company acquired two 2000 built double hull Suezmax tankers, ‘Jag
 Lakshita’ and ‘Jag Lateef in September 2007.
 
 Your Company also took delivery of two double hull product tankers ‘Jag
 Pushpa’ in April 2007 and ‘Jag Prerana’ in October 2007.
 
 During the year, your Company sold the following vessels - VLCC tanker
 ‘Ardeshir H Bhiwandiwalla’ in September 2007, Af ram ax tankers ‘Jag
 Labh’ and ‘Jag Leher’ in November 2007 and product tanker ‘Jag Anjali’
 in February 2008
 
 During the year, your Company also delivered ‘Jag Laadki’ in April
 2007.
 
 Subsequently your Company also delivered product tankers ‘Jag Praja’
 and ‘Jag Ar pan’ in April 2008.
 
 Your Company has contracted to deliver the ice class product tankers
 ‘Jag Panna’ and ‘Jag Payal’ in May 2010.
 
 Total tanker new buildings orders for the Company now rest at four
 vessels.
 
 Outlook for the Tanker Market
 
 International Energy Agency (IEA) expects that the average oil demand
 for 2008 in total will be 87.2 million barrels per day or a 1.5 %
 growth from 2007, hence showing belief in continued demand growth. It
 is expected that the incremental demand for tankers will be
 approximately 3-4%. With a total of 40.5 million dwt of tankers to be
 delivered in 2008 and about 18 million dwt of removals expected, the
 net fleet growth in tankers in 2008 will be about 6%.  Hence broadly
 the average earnings for tanker markets in FY 09 may not far exceed the
 averages for FY 08. However, on the larger size crude tankers there is
 an upside potential in spot earnings due to tighter tonnage supply.
 
 The tanker orderbook stands at about 159.9 million dwt or 41.2% of the
 fleet, at the end of March 2008.
 
 Dry Bulk Business
 
 Market Trend and Analysis
 
 2007 was the strongest year ever for the Dry Bulk Markets. Yearly
 average freight rates more than doubled compared to the previous year.
 Apart from a short-lived drop in the early part of the year, freight
 rates rose steadily from the beginning of the year until the end of
 November when a moderate downturn was recorded. The dry-bulk markets in
 2007 were predominantly driven by the Chinese demand for commodities.
 Chinese imports of iron ore grew by 57.3 million ton over the 2006
 level of 326.3 million ton totaling 383.6 million ton, while steel
 production moved up 73 million ton to 487 million ton in 2007. India
 too registered a robust increase in steel production from 42 million
 ton in 2006 to 49.5 million ton in 2007.
 
 Surging demand for both coking coal and steam coal led to record
 waiting delays in Australian ports in Q2 FY08.  Drought in Australia
 led to increased grain shipments from South America to Asia, which
 supported the Handymax and Handysize trades. Also, demand of cement
 clinker in the Middle East firmed up significantly in 2007. Against
 this, the world dry bulk fleet increased to 396.7 million dwt at the
 end of FY 08, 7% higher than the 371.6 million dwt at the beginning of
 FY 08. Though the fleet growth was robust, it was not enough to service
 the trade growth adequately.
 
 Company Performance
 
 The dry bulk fleet contributed around 38% of the Company’s net revenues
 and 51% of the operating profits. The average TCY for dry bulk vessels
 was approximately ,400/day as compared to ,500/day in the
 previous year.
 
 Dry Bulk Fleet Changes
 
 The dry bulk fleet stood at 13 vessels aggregating 0.72 million dwt,
 with an average age of 14.48 years (as of March 31, 2008) as against 11
 vessels aggregating 0.62 million dwt with an average age of 14.37 years
 on March 31, 2007.
 
 Your Company acquired a 1997 built Handymax bulk carrier ‘Jag Riddhi’
 in April 2007 and 2001 built Supramax bulk carrier, ‘Jag Ratan’ in
 October 2007.
 
 Subsequently your Company also delivered Panamax bulk carrier ‘Jag
 Akshay’ in April 2008.
 
 Subsequently your Company will deliver handysize bulk carrier, ‘Jag
 Vikas’ in May 2008.
 
 During FY 2007-08, your Company placed orders for four new building
 Supram axes, all of which are to be delivered in 2010.
 
 Your Company also placed orders for four new building Kamsarmaxes with
 delivery in 2011.
 
 Total bulker new buildings orders for the Company now rest at eight
 vessels.
 
 Outlook for the Dry Bulk Market
 
 After five years with persistent high economic growth it seems like
 2008 is bringing a slow-down, initiated by the US subprime crisis. The
 global economy is projected to grow by about 4% in 2008 down from last
 year’s 5.2%. The demand for dry bulk commodities is expected to grow by
 4.5-5%. A total of 30.4 million dwt is due for delivery in 2008
 resulting in a fleet growth of about 7%. Average earnings may therefore
 be slightly lower than FY 08, but due to periodic supply- demand
 mismatches, sharp volatility in freight markets may continue during FY
 09 as well.
 
 The dry bulk vessel orderbook stands at about 236.1 million dwt, or
 about 59.5% of the existing fleet, at the end of March 2008.
 
 Asset Values
 
 Second-hand values for modern and older tankers witnessed marginal
 gains of 5-15 % over the year, while modern dry- bulk carriers
 appreciated by 40-60% in value during the same period. Older bulkers
 also saw their values go up in line with the modern vessels.
 
 New building prices for tankers increased by about 10-15% during the
 year, while those for the dry bulk ships however moved up higher by
 about 20-30%.
 
 Risks and Concerns
 
 Economic risk: Shipping is a global business whose performance is
 closely linked to the state of the global economy.  Therefore, any
 slowdown of the pace of growth globally, especially in the major
 economies like the US and China, could negatively impact the earnings
 of the Company.
 
 Volatility: Over and above the economic risks the shipping industry is
 impacted by numerous short term and regional factors, like political
 fallouts, weather changes etc. This results in great amount of
 volatility in the freight market, which in turn impacts your Company’s
 earnings.
 
 Your Company has attempted to hedge some of this risk by entering into
 time charters for part of its fleet. For the year 2008-09,
 approximately half of the Company’s operating days has been covered in
 this manner.
 
 Single hull tankers in the fleet: As stated above, 75% of your
 Company’s tanker fleet is double-hulled. The single hull tankers in the
 fleet could be vulnerable to any further changes in regulations that
 may take place.
 
 Shipboard personnel: Indian officers continue to be in great demand all
 over the world. Given the unfavorable tax status conferred on a
 seafarer sailing on Indian-flagged vessels, it is becoming increasingly
 difficult for your Company to source officers capable of meeting the
 modern day challenges of world wide trading. This is more relevant for
 tanker personnel and may become a hindrance to growth.
 
 Oil Price Risk: With crude oil prices expected to remain high, there is
 a risk of increase in operating costs due to higher cost of bunkers,
 lube oil etc which could negatively impact the earnings of the Company.
 Your Company continuously endeavors to mitigate the same by hedging at
 least part of the risk at opportune times.
 
 Foreign Exchange and Risk Management
 
 Your Company’s revenue is largely denominated in U.S. Dollars, this
 exposes the Company to profit/loss on currency fluctuation. A
 significant part of this exposure is hedged by denominating most of its
 debt servicing obligations in U.S. Dollars and incurring some of its
 operating and repair costs in foreign currency. The net currency
 exposure is then managed actively using hedged products like foreign
 exchange forwards and option contracts. The tenure of these contracts
 is up to five years.
 
 As on March 31, 2008, your Company had forward sold position of U.S.
 Dollars 360 million.
 
 Similarly your Company also has a system for taking suitable hedges
 through fixed rate interest swaps to minimize its effective borrowing
 costs.
 
 Quality, Safety, Health & Environment
 
 Your Company, in order to ensure provision of highest standard of
 service, has implemented and initiated various measures with respect to
 Quality, Safety and Environment Management Systems.
 
 Tanker Management and Self Assessment
 
 Your Company has embraced Tanker Management and Self Assessment of the
 Oil Companies International Marine Forum (OCIMF) and is incorporating
 and implementing OCIMF’s various requirements in a phased manner in its
 quest for achieving highest standard of Safety and Environmental
 Excellence. To facilitate its implementation, major changes have been
 made in areas of Incident Investigation and Analysis, Management of
 Change, Environment Management, Emergency Preparedness, Contingency
 Planning and Risk Management Systems.
 
 Training of Floating Staff
 
 Declining competency standards and shortage of seafarers is a cause of
 serious concern to all in the shipping industry today. To deal with
 this situation your Company has embarked on a training initiative in
 various fronts e.g. Company specific shore based training programme on
 technical and navigational topics for shipboard Officers and Engineers,
 Vessel Resource Management Programme for senior floating staff ashore,
 Shore based training program me for ratings, Computer based training
 programme on specific technical and management topics on board ships,
 etc. It is expected with these measures that vessels would be operated
 by personnel of competency standard set by the Company.
 
 Safety Management System
 
 During the year Directorate General of Shipping has carried out
 Document of Compliance Audits required by International Safety
 Management Code with satisfactory results. The Audits carried out were
 Initial Audits for Ship Type Chemical Carrier, Annual Audit for Ship
 Type Bulk Carrier and Renewal Audit for Ship Type Oil Tanker and Gas
 Carrier.
 
 Occupational Health and Environment Management System
 
 Your Company is in the process of implementing Environment Management
 System and Occupational Health & Safety Standards and would be seeking
 certification to ISO 14001 and OSHAS 18001 shortly.
 
 Great Eastern Institute of Maritime Studies
 
 Spread over 18.3 acres, Great Eastern Institute of Maritime Studies
 (GEIMS) at Lonavala, an ISO 9001-2000 Certified Institute, has been
 providing residential Graduate Marine Engineer (GME) and Trainee
 Navigating Officer Cadet (TNOC) courses since January 2006. The first
 regular Batch of TNOC (37 Cadets) passed out on December 30, 2006 and
 GME Batch (32 Cadets) passed out on January 31, 2007. Of the above, 27
 TNOCs and 22 GMEs were placed on your Company’s vessels and the balance
 were accommodated by an agency, with whom your Company has a tie-up.
 Till date 294 trainees (TNOC & GME) have been trained of which 242 were
 absorbed by the Company & 52 by the agency referred to above.
 
 Consolidated Financial Statements
 
 The Consolidated Financial Statements have been prepared by your
 Company in accordance with the requirements of the accounting standards
 issued by The Institute of Chartered Accountants of India. The audited
 Consolidated Financial Statements together with Auditor’s Report
 thereon form part of the Annual Report.
 
 The group recorded a consolidated net profit after prior period
 adjustment of Rs.145335 lakhs for the year under review as compared to
 Rs.13 5681 lakhs for the Company. The networth of the group as on March
 31, 2008 was Rs.433165 lakhs as compared to Rs.417339 lakhs for the
 Company.
 
 Debt Fund Raising
 
 Overall, your Company has raised Rs.78118 lakhs for the year towards
 capital expenditure for expansion of fleet as against Rs.68118 lakhs in
 the previous year. In spite of this level of borrowings, as on March
 31, 2008 your Company’s gross debt : equity ratio was 0.60:1 and net
 (of cash) debt : equity ratio was 0.33:1.
 
 Internal Control System and their Adequacy
 
 Your Company has instituted internal control systems which are adequate
 for the nature of its business and the size of its operations. In the
 beginning of the year, the scope of the audit exercise and the key
 business processes and selected risk areas to be audited are decided in
 consultation with the Audit Committee. The Internal Audit is carried
 out by a firm of external Chartered Accountants and covers all
 departments. All significant audit observation and follow up actions
 thereon are reported to the Audit Committee. The Audit Committee
 comprises of 4 Independent Directors with the Chairman being a person
 well qualified and conversant with matters pertaining to Accounts and
 Finance. The Audit Committee met 5 times during the year.
 
 Role of Information Technology
 
 In keeping with trends worldwide, your Company has redefined the role
 of its Information Technology Department.  Hitherto it used to be seen
 as a mere processor of accounting related information and an enabler of
 e-communications within and outside the Company. The Department now
 plays an active role in the Company’s business processes and is
 expected to aid the timely and efficient delivery of the Company’s
 services to its customers.
 
 To meet its enhanced role, the Department has substantially upgraded
 the IT infrastructure in the Company’s offices with a view to improve
 productivity. During the year new processes were put in place that has
 speeded up the work flow. The Department has now initiated a programme
 to replace certain existing business related softwares with more
 efficient ones that will be developed in house.
 
 Human Resources
 
 Focused efforts were initiated during the year to enhance competence
 and commitment levels of employees, the two main aspects of Human
 capital.
 
 A 360 degree process named ‘Total Perspective’ was launched at your
 Company with development intent. The target group for this process were
 employees in the grade of Senior Managers and above. The on line survey
 was designed in house to customize to your Company’s organization. Each
 individual was rated by his superior, peers/internal customers and
 subordinates. The feedback received was shared with the concerned
 employees so as to enable them to identify their developmental needs.
 
 Taking into consideration the importance of identifying and nurturing
 young leadership your Company have commenced a series of developmental
 programmes during the course of the year. Programmes included
 leadership workshops and exposure to psychometric profiling. This
 endeavor will help your Company create a talent pipeline for future
 organizational requirements. Workshops were held for the middle
 management executives to enable them enhance business performance.
 
 Like last year, your Company saw enthusiastic participation from
 employees for Mumbai Marathon run.
 
 Fleet Personnel function played a creditable role to ensure manning
 levels on board ships in a difficult market plagued by shortage of
 competent sea farers. Great Eastern Institute of Maritime Studies at
 Lonavala is functioning as per plan and will help alleviate the
 shortage situation in the long run.
 
 Your Company had employee strength of 185 on shore and 378 floating as
 on March 31, 2008.
 
 Directors
 
 At the last Annual General Meeting of the Company held on July 26,
 2007, Mr. Bharat K. Sheth and Mr. Ravi K. Sheth were, subject to the
 approval of the Central Government, made non-retiring Directors so long
 as they continue to be the Directors of the Company and Article No.
 117A of the Articles of Association of the Company was altered
 accordingly. Approval of the Central Government has since been
 received.
 
 Ms. Asha V. Sheth and Mr. Keki Mistry retire by rotation and being
 eligible, offer them selves for re-appointment.
 
 Corporate Governance
 
 Your Company was Corporate Governance compliant much before SEBI
 stipulated deadline in the year 2005. Your Company has complied with
 the mandatory provisions of Clause 49 of the Listing Agreement,
 relating to Corporate Governance. A separate section on Corporate
 Governance forms part of the Directors’ Report and the certificate from
 the Company’s auditors confirming the compliance of conditions on
 Corporate Governance is included in the Annual Report.
 
 Risk Management Process
 
 In accordance with requirements of Clause 49 of the Listing Agreement
 your Company has established a Risk Management programme for its
 business risks, with assistance from external experts. The programme is
 built upon the foundation of the existing risk management process and
 practices of the Company and has evolved a structured approach for risk
 management to manage significant risks faced by your Company.
 
 The Risk Management framework and reporting regime enables the Company
 to assess and demonstrate whether its significant risks are properly
 identified and controlled, and to potentially eliminate unnecessary
 control related overheads. The Risk Management framework involves Risk
 Identification, Assessment, Treatment/Action Plan, Review and Reporting
 as a continuous process. The Risk Management framework itself is being
 reviewed and modified to suit the business requirements of your
 Company.
 
 Your Directors believe that your Company has a sound risk assessment
 and minimisation procedure in place.
 
 Directors Responsibility Statement
 
 Pursuant to the requirement of Section 217 (2AA) of the Companies Act,
 1956 the Board of Directors hereby state that:
 
 i.  in preparation of the annual accounts, the applicable accounting
 standards had been followed (alongwith proper explanation relating to
 material departures) and that there are no material departures;
 
 ii.  they have, selected the accounting policies and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the Company at the end of the financial year and of the profit of the
 Company for that period;
 
 iii. the Directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act, 1956 for safeguarding the assets of
 the Company and for preventing and detecting fraud and other
 irregularities;
 
 iv. they have prepared the annual accounts on a going concern basis.
 
 Companies (Disclosure of Particulars in the Report of Board of
 Directors) Rules, 1988
 
 Pursuant to Notification No. GSR 1029 dated 31.12.1988 your Company is
 not required to furnish prescribed information regarding conservation
 of energy and technology absorption, as Shipping Industry is not
 covered by the schedule to the said rules. The details of Foreign
 Exchange Earnings and Outgo are:
 
 (rs. in lakhs)
 
 (a) Foreign Exchange earned on account of freight, charter hire
 earnings, etc.  217417
 
 (b) Foreign Exchange used including operating expenses, capital
 repayment,
 
 down payments for acquisition of ships (net of loan), interest payment,
 etc.  188308
 
 Particulars of Employees
 
 Statement pursuant to Section 217(2A) of the Companies Act, 1956 (Act),
 read with the Companies (Particulars of Employees) Rules, 1975, is
 annexed to this Report. As contemplated by Section 219 of the Act,
 members are provided with abridged accounts. Members desirous of
 receiving the Statement pursuant of Section 217(2A) will be provided
 the same on receipt of written request from them.
 
 Auditors
 
 Messrs. Kalyaniwalla & Mistry, the Auditors of your Company, who hold
 office until the conclusion of the forthcoming Annual General Meeting
 being eligible, offer themselves for re-appointment.
 
 Appreciation
 
 Your Directors express their sincere thanks to all customers,
 charterers, vendors, investors, shareholders, shipping agents, bankers,
 insurance companies, protection and indemnity clubs, consultants and ad
 visors for their continued support throughout the year. Your Directors
 also sincerely acknowledge the significant contributions made by all
 the employees for their dedicated services to the Company.
 
 Your Directors are grateful to the Government of India, Ministry of
 Shipping, Transchart, Ministry of Petroleum & Natural Gas, Ministry of
 Finance, Directorate General of Shipping, Port Authorities, ONGC Ltd.,
 Mercantile Marine Department and various other authorities for their
 co-operation. Your Directors look forward to their continued support.
 
                        For and on behalf of the Board of Directors
 
                                           K.M. Sheth
                                           Executive Chairman
 
 Mumbai, May 02, 2008