The Members,
 
 Mercator Lines Limited
 
 We take pleasure in presenting Twenty-Seventh Annual Report of your
 Company for the year ended on March 31, 2011.
 
 FINANCIAL HIGHLIGHTS
 
                                                 (Amount Rs. in cr) 
 
                              Consolidated             Standalone
 
 Particulars             Year ended  Year ended  Year ended  Year ended
 
                           March 31, 
                               2011    March 31, 
                                           2010    March 31,
                                                       2011    March 31,
                                                                   2010
 
 Income from operations     2828.88     1808.73      638.99      580.79
 
 Total Income               2811.64     1837.56      639.15      699.91
 
 Operating Profit            621.29      655.93      108.58      242.90
 
 Interest                    215.23      205.77       85.99       94.94
 
 Depreciation                306.67      340.91      116.63      137.12
 
 Profit before Tax & 
 Minority Interest            99.39      109.25      (94.04)      10.85
 
 Minority Interest           (39.01)     (50.97)        N.A.        N.A.
 
 Taxes 
 
 - Current Year              (15.74)     (23.33)      (4.00)     (21.95)
 
 - Deferred Tax                2.21        0.79           -           -
 
 - MAT Credit Entitlement         -       17.50           -       17.50
 
 Net Profit/(Loss) After Tax  46.85       53.24      (98.04)       6.40
 
 Balance brought forward 
 from last year              604.06      726.03      117.49      286.30
 
 Excess provision of 
 earlier years                47.15           -        0.07           -
 
 Profit available for 
 appropriations:             698.06      779.27       19.52      292.69
 
 Less: Appropriations: 
 
 Transfers to Reserves 
 
 - General Reserve                -        1.00           -        1.00
 
 - Debenture Redemption 
 Reserve                          -       168.7           -       168.7
 
 Provision for final
 Dividend on Equity Shares        -        4.72           -        4.72 
 
 Tax on Dividend                  -        0.78           -        0.78 
 
 Balance carried to
 Balance Sheet               698.06      604.06       19.52      117.49
 
 On consolidated basis, a milestone was achieved during the year with
 consolidated income from operations crossing the Rs. 2500 cr mark. The
 income from operations was at Rs. 2829 eras againstRs. 1809 cr in the
 previous year; registering a growth of 56%. The operating profit for
 the year was Rs. 621 cr against previous year''s Rs. 656 cr.
 
 After providing for the minority interest of Rs. 39 cr (previous year
 Rs. 51 cr) the net profit was recorded at Rs. 47 cr as against Rs. 53
 cr in the previous year. Scale up in Coal mining and procurement
 activities boosted revenues of the Company.  However, overall
 performance was affected due to lower realizations of shipping freight.
 Exceptional items in the nature of loss on account of write offs
 against sale of Rig and Dry docking expenses also added to lower
 profits.
 
 On a standalone basis, the income from operations for the year under
 review was Rs. 639 cr as against Rs. 581 cr in the previous year,
 registering a growth of 10% for the year. The Company suffered a loss
 of Rs. 94 cr against as Profit Before Tax (PBT) of Rs. 11 cr in the
 previous year. Loss after provision of tax was Rs. 98 cr against Net
 Profit of Rs. 6 cr in the previous year. This was mainly on account of
 dry docking of two vessels on which an amount of Rs. 15 cr was spent
 besides loss of revenue from those vessels during the period of
 dry-dock, coupled with lower Time Charter Yield in dredger division.
 Lower realization of shipping freight further aggravated the loss.
 Dredger deployment has improved substantially since the year end, and
 your Company expects better standalone performance in the coming years.
 
 EXPANSION AND FINANCE
 
 During the year under review, one aframax; two panamax and one post
 panamax vessels were acquired at an aggregate cost of Rs. 542.50 cr
 (equivalent of USD 121.50 mn). A Mobile Offshore Production Unit (MOPU)
 was acquired & refurbished and a suezmax was converted into a Floating
 Storage Offshore Unit (FSO) collectively called FPU. The total cost
 incurred for FPU as at March 31, 2011 was Rs. 805 cr.
 
 The aframax has been deployed gainfully since its acquisition.
 Panamaxes/post-panamaxes too were deployed immediately upon their
 acquisitions on long- term charter ranging a period of 35 to 74 months.
 The MOPU and the FSO have been deployed on a nine-year contract. The
 acquisition of key assets such as these proves the Company''s foresight
 and its ability to monetise future opportunities. A mix of internal
 resources and debts financed these expansions.
 
 Towards the end of the year, your Company issued Un- secured Redeemable
 Non-convertible Debentures of an aggregate amount of Rs. 100 cr on
 private placement basis, which have been listed on the Bombay Stock
 Exchange.
 
 Your Company would consider raising of funds for general corporate
 purposes including capital expenditure, working capital requirements,
 strategic investments byway of issue of securities (whether in India
 and/or abroad) at appropriate time.
 
 BUSINESS OPERATIONS AND FUTURE OUTLOOK
 
 Your Company has well diversified business segments i.e.  Shipping
 (Tanker & Dry bulk); Dredging; Oil & Gas; Coal (Mines & Procurement);
 and Logistics. While the Coal division performed extremely well, the
 Dry bulk & Logistics division performed satisfactorily. The tanker and
 dredging divisions were affected due to subdued market conditions.
 Exploration activities have commenced on two oil blocks that the
 Company owns. The FPU (MOPU & FSO) has been commissioned successfully
 subsequent to the end of the year. The commissioning of the FPU project
 is expected to add substantial revenue from current year. During the
 year; the Jack-up Rig was sold.
 
 Going forward, performance of Coal mining and procurement is estimated
 to scale up further. While the Dredging Division has good improvements
 in terms of order book, Dry Bulk and Logistics are expected to continue
 to perform satisfactorily except in the event of any downturn in the
 world economy. The tanker division may remain soft with exceptional
 spikes.
 
 SHARE CAPITAL
 
 During the year, 2,77,80,000 warrants were issued to Promoters/Persons
 Acting in concert/Directors/entities controlled by them on a
 preferential basis in accordance with SEBI Regulations, as approved by
 the shareholders of the Company in their Extra-Ordinary General meeting
 held on October 28, 2010. The warrants carried an option to apply and
 subscribe for an equivalent number of equity shares of Rs. 1/- each at
 a price not less than Rs. 55 per share. Out of these, one of the
 promoters exercised the option and 89,00,000 warrants were converted
 into equivalent equity shares of Rs. 1/- each at a price of Rs. 55 per
 share. Consequently; the issued and paid up share capital increased
 from 23,59,92,073 equity shares of Rs. 1/- each aggregating Rs. 23.60
 cr to 24,48,92,073 equity shares of Rs. 1/- each aggregating Rs. 24.49
 cr. At the year end, 1,88,80,000 warrants were outstanding.
 
 DIVIDEND
 
 In view of losses suffered by the Company during the year under review,
 your Directors do not recommend any dividend.
 
 DIRECTORS
 
 In accordance with the provisions of the Companies Act, 1956, and the
 Articles of Association of the Company, Mr.  K. R. Bharat and Mr. Anil
 Khanna are the Directors liable to retire by rotation at the ensuing
 Annual General Meeting.  Mr. Bharat, being eligible, has offered
 himself for re- appointment. Mr. Anil Khanna has expressed his
 inability to continue as Director of the Company. The Directors place
 on record their gratitude for the guidance extended by Mr. Anil Khanna
 during his tenure. Your Directors do not intend to fill the vacancy
 caused by the retirement of Mr. Anil Khanna.
 
 Subsequent to year end, the Board of Directors in their meeting held on
 August 12, 2011 appointed Mr. M. M.  Agrawal as an Additional Director
 of the Company. He being the Additional Director, holds office only up
 to the ensuing Annual General Meeting. Resolution for appointment of
 Mr. M. M. Agrawal as Director is proposed for approval of shareholders
 at ensuing Annual General Meeting in response to notices received from
 member of the Company proposing his candidature.
 
 A brief resume of Mr. K. R Bharat and Mr. M. M. Agrawal is included in
 the notice of the ensuing Annual General Meeting scheduled to be held
 on September 22, 2011.
 
 The Directors recommend their re-appointment for approval of the
 members.
 
 SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS
 
 As at March 31, 2011, your Company had 27 subsidiaries/ step-down
 subsidiaries. Pursuant to the Accounting Standard (AS 21) issued by the
 Institute of Chartered Accountants of India, audited consolidated
 financial statements together with Auditors'' Report thereon form part
 of his Annual Report includes financial information of the
 subsidiaries.
 
 Pursuant to general exemption granted vide notification dated February
 8, 2011, issued by the Ministry of Corporate Affairs, Government of
 India, this Annual Report is presented without attaching annual
 accounts of the subsidiaries for the year ended March 31, 2011. A
 statement in respect of the said subsidiaries pursuant to Section 212
 of the Companies Act, 1956, is enclosed herewith as required. The
 annual reports and accounts of subsidiaries will be made available for
 inspection at the registered office of the Company and also of the
 subsidiary companies concerned during working hours. The same, along
 with related detailed information will be made available to the
 investors of the Company as well as of subsidiaries, on request. The
 brief financial details of the subsidiaries for the year ended March
 31, 2011, as prescribed under the said notification have been disclosed
 in the consolidated balance sheet of the Company.
 
 AUDITORS
 
 The Auditors of your Company, M/s. Contractor, Nayak & Kishnadwala,
 Chartered Accountants, retire at the ensuing Annual General Meeting and
 have confirmed their eligibility for re-appointment under Section 224
 (1-B) of the Companies Act, 1956.
 
 The Directors recommend their re-appointment for approval of the
 members.
 
 PARTICULARS OF EMPLOYEES
 
 As required under the provisions of Section 217(2A) of the Companies
 Act, 1956 (the Act), read with the Companies (Particulars of Employees)
 Rules 1975 as amended, the requisite particulars with respect to the
 employees of the Company, who were in receipt of remuneration in excess
 of the limits specified under the said section are set out in the
 annexure forming part of this report. However, as per the provisions of
 Section 219(b) (iv) of the Act, the report and the accounts are being
 sent to all members of the Company excluding this annexure of
 particulars of employees. Any member interested in obtaining such
 particulars may write to the Company at the registered office.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, EXPORT MARKET
 DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS and OUTGO
 
 The Conservation of Energy and Technology Absorption under the
 Companies (Disclosure of Particulars in the Report of the Board of
 Directors) Rules, 1988, are not applicable to your Company. However,
 the Directors would like to assure you that every measure is taken to
 save and conserve energy at all the stages of operating the vessels, as
 well as, in our shore activities.
 
 In its endeavor to develop the export market, your Company has
 formed/acquired new overseas subsidiaries during the year.
 
 Your Company has not imported any technology during the year. It has
 earned foreign exchange of Rs. 132.85 cr (as against previous year''s
 earnings of Rs. 216.46 cr) and spent Rs. 312.16 cr (as against Rs.
 379.91 cr for the previous year) in foreign exchange, on account of
 acquisition of vessels, charter hire, other vessel expenses, and
 interests etc.
 
 CORPORATE GOVERNANCE
 
 A separate report on Corporate Governance, along with the requisite
 certificate from the Auditors of the Company, as required under the
 provisions of Clause 49 of the Listing Agreements with the Stock
 Exchanges, is annexed herewith forming a part of this Annual Report.
 Management Discussion and Analysis Report, as per the Corporate
 Governance requirement is also annexed herewith as part of this Report.
 
 The Ministry of Corporate Affairs (MCA), India, has issued Corporate
 Governance Voluntary Guidelines 2009.  While following the Corporate
 Governance requirements prescribed under Clause 49 of the Listing
 Agreement, your Company has adopted many of the recommendations of the
 MCA which are in consonance with the Clause 49 of Listing Agreement of
 Stock Exchanges. It is in the process of reviewing the possibilities to
 implement the remaining recommendations as well.
 
 INSURANCE
 
 All properties of the Company are adequately insured.
 
 FIXED DEPOSITS
 
 The Company has not accepted any public deposits falling under the
 purview of section 58-A of the Companies Act, 1956.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to the provisions of Section 217(2AA) of the Companies Act,
 1956, the Directors hereby confirm that:
 
 (i) In preparation of the annual accounts, all applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 (ii) They have selected such accounting policies in consultation with
 Statutory Auditors 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 loss for the year under review;
 
 (iii) They have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provision of the
 Companies Act, 1956, to safeguard the assets of the Company and to
 prevent and detect fraud and other irregularities;
 
 (iv) They have prepared the annual accounts on a going concern basis.
 
 GROUP FORINTERSE TRANSFER OF SHARES
 
 As required under clause 3(1) (e) of the Securities and Exchange Board
 of India (Substantial Acquisition of Shares and Takeovers) Regulations,
 1997, persons constituting a Group (within the meaning as defined in
 the Monopolies and Restrictive Trade Practices Act, 1969) for the
 purpose of availing exemption from applicability of the provisions of
 Regulation 10 to 12 of the aforesaid Regulations, are given in the
 Annexure A attached herewith and forms a part of this Annual Report.
 
 ACKNOWLEDGEMENTS
 
 The Directors would like to express their gratitude to customers,
 suppliers, service providers, regulators and Governmental agencies,
 such as Ministry of Shipping, Ministry of Petroleum & Natural Gas, the
 Directorate General of Shipping; Directorate General of Hydrocarbon;
 and other statutory authorities for their continual support and
 encouragement.
 
 We also acknowledge the support lent and confidence bestowed upon us by
 our bankers, stakeholders and all Mercatorians.
 
                                       For and on behalf of the Board
 
                                                         H. K. Mittal
 
                                                   Executive Chairman
 
 Regd. Office:
 
 3rd Floor, Mittal Tower, B-wing,
 
 Nariman Point, Mumbai - 400021
 
 Dtd: August 12, 2011