At first glance, it would seem that 2008-09 was a disappointing fiscal
 for Sical, with FY09 top-line and bottom- line were down from year-ago
 levels. The fall continued into the first quarter of FY1 0; that too
 has seen a drop in year-on-year performance.
 
 Our financial results, however, should be seen against the dark
 backdrop of the current global slowdown.
 
 Like it has been for enterprises the world over, the second half of
 fiscal 2008-09 onwards has been a tough, rough time for Indian
 businesses. For providers of logistics solutions, a direct play on
 global and domestic trade, the worst recession since World War 2 has
 been particularly painful.
 
 The macro factor
 
 There may be no better measure of the reach and depth of the global
 economic slowdown than the fortunes of the shipping industry, which
 moves nearly 90% of global trade.
 
 On 20 May 2008 the Baltic Dry Freight Index (BDI), which gauges the
 cost of shipping resources including iron ore, cement, grain, coal and
 fertilizer across the world, recorded 11,793 points, its highest level
 since its introduction in 1985.  In less than 7 months, on 5 December
 2008, the BDI was at 663 points, its lowest in 22 years, and down 94%
 from its all time high. The daily rental rate for the largest bulk
 carriers plunged from over USD 200,000 to less than USD 3,000 in early
 December, a staggering 99% reduction.
 
 As of end-March 2009, 485 container ships totaling 1.42 million TEUs
 (twenty foot equivalent units) capacity idled, accounting for 11.3% of
 the global fleet, surging from 70 ships of 1 50,000 TEUs in late
 October 2008. In 2005, the average day rate for the biggest container
 ships was USD 38,500; as I write to you, that rate is down to about USD
 6,000. For some time, freight rates for containers shipped from Asia to
 Europe have fallen to zero for the first time since records began,
 underscoring the dramatic collapse in trade since the world economy
 buckled in October.
 
 The World Trade Organisation (WTO) recently forecast that global trade
 in 2009 will drop by an average of 9%, the sharpest fall since World
 War 2.
 
 Amid all this gloom, we refused to buckle under and kept our chins up.
 We ensured that revenue was only marginally down, and we actually
 increased our operating profit and margins.
 
 To offset the expected drop in container logistics volumes, we focused
 on bulk logistics—this business involves mostly domestic volumes—in the
 later quarters of FY09, improving our operations efficiencies and
 getting our marketing to cross-sell our integrated logistics value
 proposition aggressively.
 
 We consider the resultant improvement in our bulk logistics business as
 a major takeaway from FY09.
 
 The business climate might have been extremely tough; it was also an
 opportunity for Sical to showcase its differentiated, optimized
 offering.  The fact that we actually increased our margins shows that
 customers will pay, and pay well, if they see value.
 
 Sicals confident show amid the all-pervading gloom has been helped in
 no small measure by key appointments at the top.
 
 Key appointments
 
 In May 2009, two major appointments were made to Sicals board: Karthik
 Menon as Vice-Chairman and LR Sridhar as Managing Director.
 
 The appointments signaled the boards commitment to bring in, at the
 ownership and management levels, strong performers with a track record
 of strategic, management, and operational success.
 
 Karthik Menon, who joins the board in a non-executive and honorary
 capacity, has been, without doubt, the strategist and driving force
 behind Sicals successful business and organizational structuring, set
 in motion in 2005-06. Given his stellar record not only with Sical, but
 with the promoter groups various companies, the board sees Mr Menon in
 the role of a facilitator to enhance shareholder value.
 
 LR Sridhar has a track record of consistent delivery that inspires
 confidence.  In less than three years of joining us, he transformed the
 container logistics business (Sical Distriparks) from an underachieving
 division into one of Sicals most significant businesses.  He was given
 charge of the bulk logistics business less than a year ago; his focused
 approach to operations and business development has resulted in
 profitability margins in that segment as well.
 
 This annual reports cover is a tribute to Mr Sridhar and the
 contribution of container logistics-steered by Mr Sridhar-towards
 realizing our vision of being Indias dominant solutions provider of
 integrated multi-modal logistics solutions for bulk and containerized
 cargo.
 
 We remain confident
 
 We are beginning to see some modest signs of stability coming back to
 the global and domestic economic order
 
 The global container industry is showing signs of improving in the
 second quarter of this year after more than nine months of a sharp
 downward trend, recent reports suggest.
 
 While container volumes continue to be a source of worry, the various
 Indian ports are reporting good volumes for bulk cargo.
 
 Our core bulk logistics business is for coal and iron ore with a mix of
 cement, fertilizer, and liquid bulk.  Coal handling continues
 uninterrupted as electricity from power plants is an essential
 commodity in todays urbanized environment. Iron ore has seen a
 slowdown as well as huge price dips with the Chinese imports on hold.
 Cement is slow, in keeping with the slowdown in realty, but fertilizer
 movement might be stable this year.
 
 Sical Multimodal and Rail Transport Ltd, our container rail services
 company, is now operating from nine locations across India. Currently,
 four rakes are operating on the north-south corridor and east-central
 corridor.  We plan to increase it to about six rakes, dependent on load
 factors.
 
 None of our plans is on hold; we have focused investments into lower
 gestation cycles for quick payback even if at lower margins. Cash flow
 management is a key focus.
 
 Annually, we move nearly 570,000 standard cargo containers and 22
 million tonnes of bulk cargo, more than any other third-party logistics
 provider in South Asia.
 
 As our infrastructure assets come into play over the next few fiscals,
 Sical’s mission of becoming an end-to-end supply chain enabler will
 start taking shape.
 
 With your encouragement and support, we look forward to strong
 value-led growth for all our stakeholders: investors, customers,
 business partners, bankers, and, indeed, Indian industry as a whole.
 
                                               ASHWIN MUTHIAH 
                                                     Chairman