Shipping Corporation of India

1.  Contingent Liabilities not provided for:-
 
 (i) Claim against the corporation not acknowledged as debts -
 
 (1) Claim made by M/s. Chokhani International Ltd.  
 towards dry dock
 expenses pending before
 High Court, Chennai                                    3,569    3,327
 (2) Claim by National Institute of 
 Oceanography towards loss of ship
 and other incidental charges
 due to fire                                             NIL      924
 (3) Forfeiture of Earnest Money Deposit,
 Cargo Loss, Freight, Demurrage, Slot Payments,
 Fuel Cost, other operational claims, income tax and
 Custom duty disputed demand.                          8,909     6,265
 (As certified by the Management)
 (ii) Guarantees given by the Banks                    7,070     5,655
      on behalf of the Corporation
 (iii)Undertaking cum Indemnity given by               1,000     1,000
 Corporation
 (iv)   Cargo Claims covered by                          480       638
 P&l Club
 (v)  Bonds/Undertakings given by the                  2,789    19,097
 Corporation to Customs Authorities
 (vi)   (a) Corporate Guarantees/Undertakings
 
 - In respect of Joint Ventures          Not ascertainable   Not ascert   
                                                                ainable
 -    Others                                           6,025       1,494
 (vii)  Liability towards NYSA USA 
 Pension -                                             NIL         Not 
                                                                   ascert
                                                                   ainable
 Exit from INDAMEX / IDX service -
 
 2.  RELATED PARTY DISCLOSURES:
 
 Related Party disclosures, as required by AS -18 Related Party
 Disclosures are given below:
 
 (a) Names of related party entities with whom transactions were carried
 out during the year:
 
 (i) Joint Venture Companies
 
 1.  Irano Hind Shipping Co. Ltd.
 2.  India LNG Transport Co. (No. 1) Ltd.
 3.  India LNG Transport Co. (No. 2) Ltd.
 4.  India LNG Transport Co. (No. 3) Ltd.
 5.  SCI Forbes Ltd.
 
 (ii) Key Management Personnel
 
 Functional Directors
 
 1.  Shri S. Hajara, CMD
 2.  Shri B.K. Mandal
 3.  Shri Kailash Gupta
 4.  Shri U.C. Graver
 5.  Shri. J.N. Das
 6.  Shri K.S. Nair (w.e.f. 03-11-2008)
 
 (b) The following transactions were carried out with related parties.
 
 3. India LNG Transport Companies No. 1 & 2 Ltd. are two joint venture
 companies promoted by the corporation and three Japanese companies Vis.
 M/S Mitsui O.S.K.Iines Ltd. (MOL), M/S Nippon Yusen Kabushiki Kaisha
 Ltd (NYK Lines) and M/S Kawasaki Kisen Kaisha Ltd (K Line) and M/S
 Qatar Shipping Company ( Q Ship), Qatar. SCI and MOL are the largest
 shareholders, each holding 29.08% shares while NYK Line, K Line & Q
 Ship hold the rest. The Shares held by the Corporation and other
 partners in the two joint venture Companies have been pledged against
 loans provided by lender banks to these companies.
 
 India LNG Transport Company No.1 Ltd owns and operates one LNG tanker
 SS Disha and India LNG Transport Company No. 2 Ltd owns and operates
 one LNG Tanker SS Raahi.
 
 As per the provisions of the Time Charter Agreement, transfer of
 know-how to the Corporation for on board operation and management of
 the two LNG Tankers was successfully completed and SCI took over the
 management of SS Raahi on 24.12.08 and SS Disha on 29.12.08. The entire
 operation and management of the two companies was taken over by SCI
 from 1st January 2009 and it has received a management and accounting
 fee of US $ 313,166 (Rs. 156 lakhs) during the year.
 
 4.  Sethusamudram Corporation Ltd. (SCL), a Special Purpose Vehicle
 was incorporated on 06.12.2004 at Chennai (for developing the
 Sethusamudram Channel Project) with Tuticorin Port Trust, Ennore Port
 Ltd., Visakhapatnam Port Trust, Chennai Port Trust, Dredging
 Corporation of India Ltd., Shipping Corporation of India Ltd. and
 Paradip Port Trust as the shareholders. SCI participated for an
 investment not exceeding Rs.5,000 lakhs in the proposed project. SCIs
 total contribution as on 31.03.2009 amounted to Rs. 5,000 lakhs
 (previous year Rs. 4,050 lakhs).
 
 5.  SCI Forbes Ltd, a Joint Venture Company (JVC) promoted by The
 Shipping Corporation of India Ltd (SCI), Forbes Gokak Ltd. & Sterling
 Investment Pvt. Ltd was incorporated in July 2006 with an objective of
 owning and operating chemical tankers which are under construction. The
 said tankers are expected to be delivered from June 2009 onwards.
 
 During the 2008-09, the share capital of SCI Forbes was revised so as
 to conform to the norms of debt equity ratio for raising funds for ship
 financing. The Authorised Share Capital is increased from Rs. 500 lakhs
 to Rs 16000 lakhs. The paid-up share capital of Rs. 100 lakhs is
 increased to Rs. 12200 lakhs by way of right issue in the ratio of
 1:121 and accordingly SCI further contributed Rs. 6050 lakhs towards
 equity contribution.
 
 SCI Forbes has fully repaid outstanding shareholders loan aggregating
 to Rs. 5237 lakhs including interest.
 
 6.  The Corporation has with effect from 1st April 2008 changed the
 following accounting policies:
 
 (a) During the year, the Corporation has exercised the option available
 vide Notification No. GSR 225(E) dated 31st March 2009 issued by the
 Ministry of Corporate Affairs under section 211 (3C) of the Companies
 Act, 1956 relating to Accounting Standard 11 The Effect of Changes in
 Foreign Exchange Rates and accordingly the exchange difference arising
 on repayment of liabilities and conversion of year-end foreign currency
 balances in respect of such long term loans relating to acquisition of
 depreciable capital assets arising out of transactions entered on or
 after 1 st April 2004 has been adjusted to the cost of the respective
 asset/ assets under construction which was hitherto recognised in the
 Profit & Loss Account except to the extent that they were regarded as
 an adjustment to the interest cost during the period of construction.
 
 Further, the exchange gain of Rs. 4286 lakhs recognised in Profit and
 Loss Account during the previous financial year ended March 31, 2008
 has been debited to the opening balance of General Reserve net of
 depreciation of Rs. 177 lakhs and credited to the cost of respective
 fixed assets and assets under construction amounting to Rs. 3637 lakhs
 and Rs. 472 lakhs respectively.
 
 Consequent to the change, the fixed assets, assets under construction,
 depreciation and other income are higher by Rs. 16633 lakhs, Rs. 6336
 lakhs, Rs. 539 lakhs and Rs. 5643 lakhs respectively and General
 Reserve and expenditure are lower by Rs. 4109 lakhs and Rs. 21,974
 lakhs respectively.
 
 If the option provided under AS 11 revised issued by Ministry of
 Corporate Affairs vide Notification No. GSR 225(E) dated 31st March
 2009, was not exercised the profit and the reserves would have been
 lower by Rs. 27078 lakhs.
 
 (b) Hitherto, the dry dock repair expenditure was recognized only on
 completion of entire dry dock jobs.  During the year, dry dock repair
 expenditure is recognized to the extent of work done based on technical
 evaluation. As a result of this change in accounting policy, there is
 no impact on profit for the year.
 
 7.  Disclosures of Employee benefits as per Accounting Standard-15
 Employees benefits, as defined there in are given below
 
 A) Description of type of employee benefits
 
 The Company offers to its employees defined benefits plans in the form
 of Gratuity, leave encashment and post retirement Medical Scheme
 
 - The details under the plan are as follows:
 
 i Gratuity
 
 (a) Represents benefits to employee on the basis of number of years of
 service rendered by employee. The employee is entitled to receive the
 same on retirement or resignation.
 
 (b) SCI has formed a trust for gratuity which is funded by the Company
 on a regular basis.
 
 The assets of the trust have been considered as plan assets.
 
 ii.  Leave Encashment
 
 Represents unavailed leave to the credit of the employee and carried
 forward in accordance with terms of aareement.
 
 iii. Post Retirement Medical Benefit Scheme
 
 Represents benefits given to employees subsequent to retirement on the
 happening of any unforeseen event resulting in medical costs to the
 employee.
 
 8.  Sundry Creditors, Debtors, Loans & Advances and Deposits are
 subject to confirmation and reconciliation.  During the year, letters
 for confirmation of balances have been sent to various parties by the
 Corporation and same are under reconciliation wherever replies have
 been received. The management, however, does not expect any material
 changes.
 
 9.  Service tax department has issued show cause notices to the
 corporation proposing to impose levy of service tax aggregating to Rs.
 26,78,75,717/- for the period from 01/10/2002 to 31/12/2007 and Rs.
 7,54,22,525/- for the period from 01/01/2008 to 31/12/2008 and also
 interest and penalty alleging that corporation has provided storage &
 warehousing services to Oil & Natural Gas Corporation (ONGC) in respect
 of vessels given to ONGC under Time Charter arrangement.
 
 According to the management, service tax is not leviable for such
 chartering arrangement under the category, of Storage and Warehousing
 Service and therefore SCI has challenged the applicability of service
 tax and has not accepted any liability towards service tax on this
 account.
 
 10.  Borrowing cost and Interest capitalised during the year is Rs.
 2888 lakhs (Previous year Rs.5248 lakhs).
 
 11.  (i) The Corporation has obtained exemption from complying with
 Para 4 (D) (a), (b), (c) & (e) of Part II
 
 of Schedule VI to the Companies Act, 1956.
 
 (ii) Remittance of dividends in foreign currency Rs. NIL (Previous year
 Rs. Nil).
 
 12.  Sales proceeds received by the Corporation in excess of the
 original cost in respect of sale of vessel during the year amounting to
 Rs. 750 lakhs (net of tax) (Previous Year Rs.282 lakhs (net of tax) on
 sale of other fixed assets) have been appropriated out of Profit and
 Loss Account and transferred to Capital Reserve.
 
 13.  Loans and Advances include an amount of Rs. 5.23 lakhs (Previous
 year Rs 6.48 lakhs) due from whole time directors - maximum amount due
 during the year 6.51 lakhs (Previous year Rs.6.48 lakhs).
 
 14.  During the year, the Corporation has reviewed its fixed assets for
 impairment loss as required by Accounting Standards 28 - Impairment of
 Assets In the opinion of management no provision for impairment is
 considered necessary.
 
 15. The figures of previous year have been regrouped or rearranged
 wherever necessary/practicable to conform to current years
 presentation. Further the figures are rounded off to the nearest lakh
 rupees.