1. BASIS OF ACCOUNTING
 
 The financial statements are prepared under the historical cost
 convention and in accordance with the applicable mandatory Accounting
 Standards and are based on accrual basis of accounting.
 
 2. FIXED ASSETS
 
 Fixed assets are recorded at cost of acquisition or at a revalued
 cost.  Cost of acquisition of vessels includes start up costs and
 major improvements/upgradation.  Interest on specific loans and roll
 over charges are capitalised as part of fleet cost. (Note 10)
 
 3. DEPRECIATION
 
 Depreciation is provided on straight line method at the rate provided
 for in Schedule XIV to the Companies Act, 1956 in respect of ships
 acquired prior to 31.03.1992.
 
 In respect of fleet acquired thereafter, depreciation is provided
 under the straight line method based on their economic life
 determined by technical evaluation, at rates presently ranging from
 6.10% to 20.00%.
 
 Water circulation treatment system, leased out, is classified as a
 continuous process plant and depreciation is provided on straight
 line method at the rate applicable in Schedule XIV to the Companies
 Act, 1956.
 
 All other assets are depreciated on the written down value method at
 the rate specified in Schedule XIV to the Companies Act, 1956.
 
 4. INVESTMENTS
 
 Investments are stated at cost together with all incidental cost of
 acquisition.  Investments meant for long term are carried at cost and
 diminution with reference to their market value, though material, is
 not recognised, if such shortfall in the opinion of Directors is
 temporary in nature.
 
 5. FLEET OPERATING EARNINGS
 
 Income from freight earnings is recognised where loading of the cargo
 is completed before the close of the year on a pro rata basis for the
 number of completed days of the voyage as at the close of the year.
 The direct expenditure on such voyages are also prorated excluding
 bunkers, the cost of which is accounted on the basis of actual
 consumption.  In other cases revenue is not recognised and the
 expenses related thereto are carried to next accounting period.  Hire
 receipts from Time Charter is accounted on the basis of Charter party
 Agreements.
 
 6. DIVIDEND
 
 Dividends on investments are accrued on the basis of declaration
 thereof.
 
 7. SALE OF FLEET
 
 All the expenses directly incidental to the sale of fleet are
 deducted from the surplus on sale of fleet.
 
 8. LEASE RENTALS
 
 Lease rentals in respect of fleet taken on lease are amortised over
 the useful life of the fleet as determined by the company which is
 not co-terminus with the primary lease period.
 
 9. RETIREMENT BENEFITS
 
 Contribution to Provident Fund is made according to the rules of
 Company.  Contribution to Superannuation for eligible employees is
 funded with Life Insurance Corporation of India.
 
 The gratuity liability to shore based, floating staff and crew is
 provided on accrual basis (not actuarially determined and funded).
 
 Provision has been made for encashable leave entitlement of eligible
 employees (not actuarially determined).
 
 10. FOREIGN CURRENCY TRANSLATION
 
 Foreign Currency loan balances for financing fixed assets are
 translated at the rate of exchange ruling at year end or on the basis
 of applicable forward contracts.  Net gain or loss due to
 increase/decrease in Rupee liabilities is adjusted to the cost of
 assets acquired through these loans.  Other transactions in foreign
 currency are recorded at the exchange rate prevailing on the date of
 transaction.
 
 Current assets and current liabilities are converted at the forward
 exchange contract rate wherever taken.
 
 In other cases,the conversion is done at the exchange rate prevailing
 at the year end.  The resultant gain or loss is recognised in tile
 profit and loss account effective from this year.