Dear Shareholders,
 
 Even in a world of persistent economic uncertainty, most people will
 agree that global energy demand will continue to escalate in future.
 The reason is simple: the burgeoning global population and the
 sustained efforts of developing economies to attain the socio-economic
 standards of the advanced countries of the world have set into motion a
 spiralling energy demand. The result is that although developed
 economies have not curtailed their energy demand considerably, fresh
 demand at a humongous scale is being generated from the emerging
 economies.
 
 Seen against this backdrop, our decision to emerge as an integrated
 energy player can be interpreted as a pragmatic decision. As a major
 provider of smart shipping solutions globally, we had forged close
 relationships with coal mines and oil exploration companies to
 understand the dynamics of Coal mining and Oil & Gas businesses. The
 decision to focus more on the energy sector was largely influenced from
 that experience.
 
 Last year, shipping companies were badly hit by the global economic
 recession that led to a steep decline in world trade and caused freight
 rates to fall. The global economy (especially the US and the Eurozone)
 is still encountering considerable turbulence and recovery is sluggish.
 Global economic volatilities have impacted the shipping industry
 considerably. In such a scenario, our diversification initiatives stood
 us in good stead.  Today, a major portion of our revenue pie is derived
 from the non-shipping business.
 
 Mercator is proud to be the only Indian company to have executed the
 unique and complex Floating Production Unit (FPU) project. The project
 is an offshore venture in Nigeria, execution of which involved many
 countries across the world on a 24/7 basis. Capitalizing on the
 experience, we now look forward to executing more such projects. During
 the year, we commenced exploration activities with 2/3D seismic surveys
 at the oil blocks awarded to us by the government under NELP VII.
 
 During the year, we had turnover of about 5 mn metric tonnes of coal,
 and won a 5 year contract with the Ceylon Shipping Corporation for coal
 logistics in Sri Lanka.
 
 We are in the process of finalizing the acquisition of one more coal
 mine in Kalimantan, Indonesia, taking the total number of coal mines to
 fve in the upcoming year.
 
 The demand for dredging services has been fairly robust during the
 year, with a number of Indian ports increasingly demanding such
 services. We have already successfully executed multiple dredging
 projects, and on the basis of our strong track record, we now possess a
 healthy order book and a good revenue visibility.
 
 With sound risk management strategies in place and with proven
 expertise in the dry and wet energy segments, we plan to leverage the
 available market opportunities to grow profitably in the energy segment.
 
 Our energized transformation from being a focused shipping player to a
 diversified player in shipping and energy sector testifies to that fact
 that Mercator is not guided by conventional ways of thinking and doing
 things. We are not afraid of navigating uncharted waters and we will
 continue to explore new opportunities to grow our business.
 Nevertheless, we are guided by market pragmatism and deep insight to
 deliver exceptional value for all stakeholders.
 
 Warm regards,
 
 H. K. MITTAL
 
 August 12, 2011