Dear Members,
 
 The Directors have pleasure in presenting the Fortieth Annual Report
 together with the audited statements of account of the Company for the
 year ended 31st March, 2011.
 
                                       (Figures in millions of Rupees)
 
                                       Current Year      Previous Year
                                              ended              ended
                                         31.03.2011         31.03.2010
 
 PROFIT BEFORE TAX                         168.22             538.86
 
 Less: Provision for Taxation
 
 Current Tax                                33.52             413.58
 
 Excess provision of Income-Tax for 
 prior years written back                  (12.78)
 
 Fringe Benefit Tax                          -                 (0.25)
 
 PROFIT AFTER TAX                          147.48             125.53
 
 Add : Surplus brought forward from 
 previous year                             934.92             949.33
 
 Amount available for appropriation       1082.40           1,074.86
 
 Your Directors have recommended payment of dividend of Rs.0.80 per
 equity share for the year ended 31 st March, 2011, which will absorb
 Rs.120.01 million. Additional amount of Rs.19.47 million will be
 absorbed towards dividend tax. After the above appropriations, your
 Directors propose to carry forward a balance of Rs.942.92 million in
 the Profit and Loss Account.
 
 Freight and charter hire income was Rs.4,914.27 million compared to Rs.
 6,662.23 million for the year ended 31st March, 2010. Profit before tax
 was Rs.168.22 million for the year ended 31st March, 2011 as against
 Rs. 538.86 million during the preceding year. Net profit after tax was
 Rs.147.48 million for the year ended 31st March, 2011 as against
 Rs.125.53 million during the preceding year.
 
 In order to reduce the incidence of tax, the Company has decided to opt
 out of tonnage tax system with effect from assessment year 2011-2012
 (corresponding financial year 2010-2011) and be assessed under normal
 income tax.
 
 During the financial year under review, the Company set up and invested
 in the following joint venture companies in Singapore and Cyprus :
 
 i) Varun Asia Pte. Ltd. in Singapore and acquired 19,600 shares
 aggregating USD 19,600, which forms 49 per cent of the paid up capital
 of the joint venture company.
 
 ii) Ocean Race Shipping Company Limited in Cyprus and acquired 490
 shares aggregating Euro 490, which forms 49 per cent of the paid up
 capital of the joint venture company.
 
 iii) Varun Cyprus Limited in Cyprus and acquired 490 shares aggregating
 USD 490, which forms 49 per cent of the paid up capital of the joint
 venture company.
 
 iv) Sea Fidelity Shipping Company Limited in Cyprus and acquired 490
 shares aggregating Euro 490, which forms 49 per cent of the paid up
 capital of the joint venture company.
 
 In addition to the above, in April, 2011 the Company also promoted and
 established a new Company in India, namely Varun Gas Infrastructure
 Limited. The Company will be initially acquiring 999,994 equity shares
 of Rs.10 each aggregating Rs.9,999,940, which forms 100 per cent of the
 paid up capital of the newly formed company thereby making it Company''s
 subsidiary.
 
 During the financial year ended 31st March, 2011 Company sold Maharshi
 Shubhatreya to its associate company Tarun Shipping and Industries
 Limited and has thereafter taken the said vessel on bareboat charter.
 During the financial year ended 31st March, 2011 the Company sold two
 of its crude oil tankers, namely Amba Bhakti and Amba Bhavanee to its
 joint venture company, namely Varun Asia Pte. Ltd., Singapore, on
 bareboat charter cum demise basis. During the financial year ended 31st
 March, 2011 the company sold two of its AHTS vessels, namely Subhiksha
 and Sudaksha on bareboat charter cum demise basis to its joint venture
 company, namely Varun Cyprus Limited, Cyprus.
 
 The Company presently owns and/or operates a well diversified fleet of
 21 vessels. The LPG carrier fleet presently owned by the company is the
 largest in India in terms of both fleet size and cargo carrying
 capacity
 
 In November, 2010 the Company received The Safety at Sea Award at the
 Lloyd''s List Middle East & Indian Sub-continent Awards-2010 ceremony,
 held at Dubai.
 
 In September, 2010 Mr. Yudhishthir D. Khatau, Vice Chairman & Managing
 Director received Young Entrepreneur of the Year award at the All
 India Maritime and Logistics Awards 2010 ceremony, held at Mumbai.
 
 In October, 2010 Mr. Arun Mehta, Chairman & Managing Director received
 Lifetime Achievement Award at the Lloyds'' List Asia Awards- 2010
 ceremony, held at Singapore.
 
 
 (i) Social Responsibility:
 
 As a socially responsible corporate citizen, the company continues to
 support a wide spectrum of community initiatives through NGOs as well
 as programmes for health, education and environment.
 
 Total foreign exchange earned and saved including deemed earnings of
 the company for the year ended 31st March, 2011 was Rs. 4,858.77
 million and the foreign exchange used was Rs. 6,211.70 million.
 
 As required under Section 217(2AA) of the Companies Act, 1956, your
 Directors confirm to the best of their knowledge and belief that:
 
 i) in the preparation of the annual accounts, the applicable accounting
 standards have been followed;
 
 ii) the Directors have selected such accounting policies and applied
 them consistently and made judgements 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 profit or
 loss of the company for that period;
 
 iii) the Directors have taken proper and sufficient care 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
 
 iv) the Directors have prepared the annual accounts on a going concern
 basis.
 
 As required by the Listing Agreement with Stock Exchanges on which
 shares of the company are listed, a Report on Corporate Governance
 together with the certificate from the Auditors of the Company
 regarding compliance with Corporate Governance is attached to this
 report.
 
 Mr.Charles Cayzer resigned as a Director of the Company with effect
 from 27th August, 2010. The Board places on record its deep
 appreciation of the advice and guidance given by Mr. Cayzer during his
 tenure as a Director of the Company.
 
 Mr.C.M. Maniar and Dr. A. K. Bhattacharya retire by rotation and being
 eligible, offer themselves for re- appointment. Separate resolutions
 are being proposed for their respective re-appointments.
 
 You are requested to appoint Auditors of the company and fix their
 remuneration. The retiring Auditors Messrs. Sorab S. Engineer & Co.
 being eligible, offer themselves for re-appointment.
 
 The Company had sought approval of Central Government for waiver of
 excess remuneration paid to Mr.Arun Mehta and Mr.Yudhishthir D. Khatau
 as approved by the shareholders for the financial year ended 31 st
 March, 201 0 as mentioned in the previous year''s Directors'' Report,
 which approval has since been received.
 
 As required by Section 21 7(2A) of the Companies Act, 1 956, read with
 Companies (Particulars of Employees) Rules, 1 975, as amended, the
 names and other particulars of the employees are set out in the
 Annexure to the Directors'' Report. However, as per the provisions of
 Section 21 9(1 )(b)(iv) of the Companies Act, 1 956, the Report and the
 Accounts are being sent to all shareholders of the company excluding
 the aforesaid information. Any shareholder interested in obtaining such
 particulars may write to the Vice President - Corporate Affairs,
 Secretarial & Legal and Company Secretary at the registered office of
 the Company.
 
 Your Directors express their thanks to all the officers of the Ministry
 of Shipping, Directorate General of Shipping, Ministry of Petroleum and
 Natural Gas, oil companies and charterers for the valuable help and
 co-operation extended by them to the company. Your Directors also thank
 the banks for their continued support to the company. Your Directors
 also thank the shareholders of the Company for their sustained
 confidence reposed in the company and its management. Last but not the
 least, your Directors express their deep appreciation for the sincere
 and hard work put in by the floating as well as the shore based
 officers and staff of the Company.
 
                              On behalf of the Board of Directors
 
                                                       ARUN MEHTA
                                   Chairman and Managing Director 
 Mumbai, May 26, 2011