Shreyas Shipping

The Directors are pleased to present the Twentieth Annual Report and
 the audited accounts for the financial year ended 31st March, 2008.
 
 FINANCIAL PERFORMANCE
 
                                                       (Rs. in Lacs)
                                        Current Year      Previous Year
                                    ended 31.03.2008   ended 31.03.2007
 
 Operating Income                          16,970.27        13,493.24
 
 Other Income                                 641,05           611.74
 
 Profit before Interest, 
 Depreciation and Tax                       3,554.16         4,104.72
 
 Less: Interest                             1,219.50           465.85
 
 Depreciation                               1,323.14           919.69
 
 Profit before Tax and Prior Year 
 Adjustment                                 1,011.52         2,719.18
 
 Add / Less: Extraordinary items              (88.59)          431.58
 
 Less: Prior Year Adjustment                   60.05             2.94
 
 Less: Provision for Current Taxation and 
 Fringe Benefit Tax                            26.33           173.30
 
 Provision for Prior Year Tax                  (1.84)           22.27
 
 Profit After Tax And Exceptional Items       836.39         2,952.27
 
 Add: Balance brought forward from 
 previous year                              4,588.81         3,258.92
 
 Amount available for appropriation         5,427.21         6,211.19 
 
 Appropriations:
 
 Transfer to General Reserve                   84.00           350.00
 
 Transfer to Tonnage Tax Reserve              250.00           600.00
 
 Interim Dividend paid on Equity Shares          -             483.07
 
 Preference Dividend paid                        -             106.60
 
 Tax on dividend paid                            -              82.70
 
 Proposed Equity Dividend                     439.15
 
 Tax on Equity Dividend                        74.63
 
 Proposed Preference Dividend                 106.60
 
 Tax on Preference Dividend                    18.12
 
 Balance carried to Balance Sheet           4,454.71         4,588.82
 
 DIVIDEND
 
 In order to appropriately reward the Members while conserving the
 resources to meet the future financial requirements, the Board of
 Directors recommend a Dividend of Rs.2/- per Equity Share of Rs.10/-
 each (20%; previous year total dividend: 22%) and Rs.8.20 per
 Preference share (8.20%; previous year total dividend: 8.20%). This
 Dividend is subject to the approval of the Members at the Twentieth
 Annual General Meeting to be held on Saturday, 27th September, 2008.
 
 The payment of dividend on Equity shares and Preference shares will
 entail a cash outflow of Rs. 638.50 lacs including dividend
 distribution tax.
 
 REVIEW OF OPERATIONS
 
 Turnover increased sharply by 24.86% and stood at Rs.17611.31 lacs as
 compared to Rs.14104.98 lacs in the previous year. The key driver that
 contributed to the growth was the logistics business.
 
 The Profit after Tax during the year reduced to Rs.838.40 lacs from Rs.
 2952.27 lacs during the previous year mainly on account of the
 additional interest and depreciation cost due to new vessels purchased
 over the last two years.
 
 During the year, the Company continued its expansion drive and acquired
 an additional container vessel in November, 2007 adding thereby a total
 tonnage of 1,021 Teus to its tonnage of 5927 Teus as on 31st March,
 2007. The cost of acquisition was Rs. 5008.53 lacs, which was financed
 by a mix of internal accruals and debt.
 
 The logistics volumes during the year improved by 40.43% and the feeder
 volumes improved by 61.44% over the previous year. The logistics
 volumes constituted 32.40% of the total volumes during the year. The
 Company was awarded The Best Vessel Operator 2007 Award by the India
 Gateway Terminal Pvt Ltd., Cochin.
 
 In August, 2007, the Company acquired a 51% stake in Haytrans (India)
 Ltd thereby making it a subsidiary of the Company.
 
 Shreyas Relay Systems Ltd (SRSL), the wholly owned subsidiary of the
 Company commenced services on the East coast of India in June, 2007 and
 is now an accepted participant in this sector. SRSL is hopeful to
 improve capacity utilization levels on this service which would
 substantially add to the bottom line from the year 2008-09. During the
 year, SRSL has set up offices at Delhi, Cochin, Kolkata, Tuticorin,
 Chennai, Coimbatore and Kandla and acquired additional warehousing
 space at Delhi. SRSL has purchased 508 additional containers during the
 year to service the growing cargo volumes. In a major move to
 facilitate smoother, streamlined and cost-effective automotive
 logistics, SRSL has introduced movement of cars in the country in
 containers by coastal shipping mode. It has been honoured with the 2nd
 Best Shipping Line Award 2007 by the India Gateway Terminal Pvt Ltd.,
 Cochin.
 
 Charter rates have kept climbing non-stop until October, 07 and have
 softened only moderately since then. High oil prices started to have a
 much bigger influence on the maritime industry, with latest estimates
 suggesting bunker costs are now more than 60% of total ship operating
 costs.
 
 As far as India is concerned, the buoyancy in economy has proved to be
 a boon for cargo handling since it has witnessed a whopping 22.16%
 growth during April to November 07 compared to the same period in the
 previous fiscal. Exports have gone up by as much as 25 percent this
 year and so is the volume of finished goods that are required to be
 transported by boxes.
 
 The Indian logistics industry is still in its growth phase and it is
 expected that this will continue for another decade. The Company has
 recognized this and has made huge investments in the right direction.
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 A detailed review of the operations, performance and future outlook of
 the Company and its business is given in the Management Discussion and
 Analysis appearing as Annexure I to this Report.
 
 EVENTS AFTER THE YEAR UNDER CONSIDERATION
 
 Your Company has sold off its vessel M. V. OEL Express on 13th June,
 2008 at a consideration of USD 11.5 million. Your Company has also
 entered into a Memorandum of Understanding (MOU) for the sale of its
 vessel M. V. OEL Strength and M. V. OEL India.
 
 TRANSFER TO THE INVESTOR EDUCATION AND PROTECTION FUND
 
 No unclaimed dividend was due for transfer to the Investor Education
 and Protection Fund established by the Central Government during the
 year.
 
 QUALITY
 
 As part of its continuous improvement programme, the Company has
 successfully completed the periodic audit with respect to the ISO
 9001:2000 certification for itself and its wholly owned subsidiary,
 SRSL.
 
 The Company has also deployed a well researched Business Continuity
 Management system in place to prevent and contain potential business
 disruptions in the event of any disaster and quickly resume services to
 the customer at acceptable service levels. Moving forward, the Company
 shall continue to further strengthen its processes by adopting
 best-in-class standards.
 
 FIXED DEPOSITS
 
 The Company has not accepted fixed deposits from the public during the
 year under review.
 
 DIRECTORS
 
 Mr. Bherulal Choudhary, Mr K. P. Medhekar and Mr. V. Ramnarayan retire
 by rotation at the ensuing Annual General Meeting, and being eligible,
 offer themselves for re-appointment.
 
 Mr. D. T. Joseph and Mr. Amitabha Ghosh (erstwhile Nominee Director
 appointed by ICICI Bank Ltd.) were appointed as Additional Directors
 with effect from 10th September, 2007 and 20th March, 2008
 respectively, to hold office till the conclusion of the forthcoming
 Annual General Meeting of the Company. The Company has received notice
 under Section 257 of the Companies Act, 1956 from members proposing
 their appointment as a Director of the Company.
 
 The above appointment and re-appointments form part of the Notice of
 the Annual General Meeting and the Resolutions are recommended for your
 approval.
 
 Profiles of these Directors, as required by Clause 49 of the Listing
 Agreement, are given in the Report on Corporate Governance forming part
 of this Report.
 
 SUBSIDIARY COMPANY
 
 In compliance with the provisions of Section 212 of the Companies Act,
 1956, the audited statement of accounts alongwith the Directors and
 Auditors report for the year ended 31st March, 2008 of Shreyas Relay
 Systems Ltd, the wholly owned subsidiary and Haytrans (India) Ltd, the
 subsidiary of the Company are annexed.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the requirement under section 217(2AA) of the Companies
 Act, 1956, the Directors confirm that, to the best of their knowledge
 and belief, in respect of the year ended on 31st March, 2008;
 
 a) in the preparation of the annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 b) appropriate accounting policies have been selected and applied
 consistently, and such judgements and estimates have been made that are
 reasonable and prudent so as to give a true and fair view of the state
 of affairs of the Company as at 31st March, 2008 and of the profit of
 the Company for the year ended on 31st March, 2008;
 
 c) proper and sufficient care has been taken 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; and
 
 d) the annual accounts have been prepared on a going concern basis.
 
 CORPORATE GOVERNANCE
 
 As required by Clause 49 of the Listing agreement entered into with the
 Stock Exchanges, a detailed Report on Corporate Governance
 
 is given as Annexure II to this Report alongwith the Auditors
 Certificate on its compliance by the Company (Annexure IV) and
 applicable
 
 certification of the Chief Executive Officer and Chief Financial
 Officer (Annexure III).
 
 AUDITORS
 
 M/s. PKF Sridhar & Santhanam, Chartered Accountants, retire at the
 conclusion of the 20th Annual General Meeting and offer themselves for
 re-appointment. A Certificate from the Auditors has been received to
 the effect that their re-appointment, if made, would be within the
 limits prescribed under Section 224(1B) of the Companies Act, 1956.
 
 As regards the observation made in the Auditors Report, your Directors
 wish to state that your Company has entered into forward contracts to
 hedge its exchange rate fluctuation risks in respect of stage payments
 to be made to supplier in Singapore for building a new vessel. Your
 Company is of the opinion that since this vessel is yet to be delivered
 the amount involved has to be charged to the capital work in progress
 and is therefore capitalised. Furthermore, your Company has entered
 into Memorandum of Understanding (MOU)) for sale of this vessel.
 Therefore the entire amount that has been capitalised will net off
 against the sale proceeds consequent to the sale of this vessel.
 
 COST AUDIT
 
 The Central Government has not recommended cost audit of the Company
 during the year under consideration.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNING
 AND OUTGO
 
 Under the Notification No.GSR 1029, dated 31st December, 1988,
 companies are required to furnish prescribed information regarding
 conservation of energy and technology absorption. This, however, does
 not apply to your Company, as the shipping industry is not included in
 the Schedule to the relevant rules.
 
 With regard to foreign exchange earnings and outgo, the position is as
 under:
 
 Rs. in Lacs (2007-08)
 
 (i) Foreign exchange earnings including proceeds on sale of ship (on
 accrual basis) 4,152.19
 
 (ii) Foreign exchange outgo including operating components and spare
 parts and other 6,597.10
 expenditure in foreign currency (on accrual basis) 
 
 PERSONNEL
 
 Information as per section 217(2A) of the Companies Act, 1956, read
 with the Companies (Particulars of Employees) Rules, 1975, forms part
 of this Report. However, as per the provisions of section 219(1)(b)(iv)
 of the said Act, this Report and the Accounts Statement are being sent
 to all Shareholders excluding the Statement of Particulars of Employees
 under Section 217(2A). Any Shareholder interested in obtaining a copy
 of the statement may write to the Company Secretary at the Registered
 Office of the Company.
 
 ACKNOWLEDGMENTS
 
 Your Directors thank the Companys clients, vendors, charterers,
 business associates, main line operators, investors and bankers for
 their continued support during the year. It will be your Companys
 endeavour to build and nurture strong links with them based on
 mutuality, respect and co-operation with each other. Your Directors
 take this opportunity to thank all employees for their hard work,
 dedication and commitment. The enthusiasm and unstinting efforts of the
 employees have enabled the Company to remain at the forefront of the
 industry despite increased competition from several existing and new
 players.
 
 Your Directors place on record their appreciation for the support and
 continued co-operation that the Company received from the Government of
 India, the Ministry of Shipping, the Ministry of Finance, the Ministry
 of Corporate Affairs, the Directorate General of Shipping, the
 Mercantile Marine Department, the Stock Exchanges, the Reserve Bank of
 India, the Central Board of Excise and Customs, and other Government
 agencies. Your Directors also express their sincere thanks to the
 Indian National Ship Owners Association, Port authorities, Insurance
 companies, Protection and Indemnity clubs for their continued support
 during the year.
 
                           For and on behalf of the Board of Directors
 
 Place: Mumbai                                S. Ramakrishnan
 Date : 30th June, 2008                  Chairman & Managing Director