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Shipping Corporation of India Ltd.

BSE: 523598 | NSE: SCI |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE109A01011 | SECTOR: Shipping

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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Director’s Report


To the Members,

The Directors have pleasure in presenting the 68th Annual Report on the working of your Company for the financial year ended 31st March, 2018.

Accounting Year

The year under report covers a period   of 12 months ended on 31st March, 2018.


The comparative position of the working results for the year under report vis-a-vis earlier year is as under:

                                                                                                                      (Rs,in Crores





Gross Earnings





Gross Profit (before interest, depreciation & exceptional items & tax)





Less : Interest





Depreciation and Impairment





Profit before exceptional items & tax





Exceptional items





Provision for Taxation





Net Profit





The above figures have been extracted from the standalone financial statements as per Indian Accounting Standards (Ind-AS). The financial statement for the year 2016-17 has been restated to comply with Ind AS 8.


The working results for your company for the year 2017-18 shows a net profit of Rs.253.75 crores. A sum of Rs. 9.07 crores has been transferred to Capital Reserve for financial year 2017-18. After adjusting an opening credit balance of Rs. 166.95 crores (being balance retained earnings brought forward from previous year) and adding items of other comprehensive income of Rs. 11.03 crores that are recognized directly in retained earnings, there is a credit balance in retained earnings of Rs. 422.67 crores as on 31st March 2018.

Brief Analysis of Financial Performance

SCI has reported a net profit after tax of Rs. 253.75 crores for the financial year 2017-18. The freight and charter hire rates in the tanker segment continued its downward trend due to depressed shipping market. Efficient capacity utilization of offshore and liner vessels coupled with cost control measures resulted profit in liner and offshore segment. During the year SCI has reversed the deferred tax liability on shifting of base year of indexation from year 1981 to 2001 as announced in Union Budget 2017 which has resulted in reduction in liability by Rs. 284.27 Cr. The consolidated net profit for the company for Financial Year 2017-18 was Rs. 306.50 crores.

Performance and Financial positions of joint ventures and subsidiary included in Consolidated Financial Statements: Fig (Rs, in lacs







As on






Total Income












Equity capital






Number of equity shares






EPS (Rs/share)












Net worth






The Consolidated profits for the year ended 31st March 2018 is increased by Rs 52.75 crores upon consolidation of above joint ventures and subsidiary and on Net worth there is an increase of Rs 136.61 crores.

1.0 Fleet Position during the Year:

During the year under report, there has been an addition of three vessels (Desh Abhimaan, SCI Saraswati and Nanda Devi) and deletion of six vessels (Indira Gandhi, Rajiv Gandhi, SCI Ratna, B.C. Chatterjee, A.K. Azad and Harshavardhana) to SCI’s fleet. Thus the overall fleet of SCI stood at 66 vessels of 5.86 million DWT at the end of the year.

Fleet Profile during the Year


As on 1.4.2017



As on 31.3.2018










(a) Crude Oil Tanker










(b) Product Tankers










(c) Gas Carriers










Bulk Carriers









Liner Ships










Offshore Supply Vessels










Passenger-Cum-Cargo Vessels


















2.0 During the period under report, the following vessel was inducted in SCI fleet:

Vessel Name


Yard Built


Desh Abhimaan

Suezmax Tanker



SCI Saraswati




Nanda Devi




2.1 During the same period, the following vessels were disposed off from SCI fleet:

Vessel Name


Year Built


Indira Gandhi

Container vessel



Rajiv Gandhi

Container vessel



SCI Ratna 1




Bankimchandra Chatterjee

Product Tanker



Abul Kalam Azad

Crude Oil Tanker




Passenger-cum-cargo carrier



2.9 Conservation of Energy, Technology Absorption

The information pertaining to conservation of energy, technology absorption is forming a part of the Management Discussion and Analysis Report.

3.0 Foreign exchange earnings and outgo

                                                                                                  (Rs, in crores)




Foreign exchange earned & saved including deemed earned & saved



Foreign exchange used including deemed used



3.1 Expenses on entertainment, foreign tours etc - FY 2017-18

During the year under report, your Company spent Rs.21 lakhs on entertainment, Rs.97 lakhs on publicity & advertisements and Rs.269 lakhs on foreign tours of Company’s executives.


The overall scenario under which the Shipping industry operated and which impacted the various segments is discussed below.


i)    World Scenario

The world GDP grew by 3.8% in 2017, compared to the economic expansion of about 3.1% in the previous year. Emerging European economies also contributed positively to the growth, having shown considerable upward momentum. An accommodative financial policy was also adopted by other developed countries; some due to positive global signals, others owing to cyclic periods of relaxation in their financial policies. It is estimated that the developed market growth rose from 1.6% in 2016 to 2.2% in 2017 while the emerging market growth rose from 3.8% to 4.6% in 2017. The growth in volume of global trade in goods and services during 2017 exceeded the growth rate of world GDP for the first time since 2014. This year commodity prices upturn has lent a helping hand to the commodity-exporting economies (For ex. Brazil, Russia, Angola, Equador, Nigeria) which were severely hampered by commodity prices downturn in 2015-16.

For the next two years, the global GDP growth is forecasted to be comparatively stronger (3.9%), owing to positive global indications. This may lead to an investment-friendly environment & give traction to capital investments around the globe. Expansionary fiscal policy of US along with similar policies of other developed countries is also expected to generate stronger momentum & healthy sentiments. China, the world’s second largest economy will be critical to global supply and demand and signs of higher GDP growth in 2017 at 6.9% over 6.7% in 2016 is a positive indicator. The One Belt One Road initiative will extend China’s influence westward and add to the infrastructure along with it. The possibility of US trade war with China starting with steel, aluminum, solar panels and white goods may to an extent upset the process, unless an early resolution is reached. After these two years i.e. 2019 onwards, the prospects seem to be slightly subdued due to eventual cyclical tightening of financial policies by advanced economies & pressure on export-intensive economies due to rising inflation levels.

ii)    Global GDP

According to IMF, Global Trade Volume growth (goods & services) has been 4.9% in 2017 and is expected to be up to around 5.1% in 2018. Developed countries having large exports have performed quite well through the year & contributed strongly to the rise in trade volumes. This rebounding of trade in advanced economies came as a positive. In the recent years it is observed that advanced countries have been gradually recovering from the aftermath of economic crises in the recent past. The expected output levels are mainly being attributed to policy relaxations creating favorable market sentiments. Intensely conservative tax reforms by the incumbent US government are supposed to drive up the country’s output numbers.

In the EMDE (Emerging Markets & Developing Economies) area, the growth in trade volume during the year 2017 was 6.4% in imports & 6.4% in exports as well. Sharp recovery in commodity prices acted as a catalyst for the rebound in many EMDE economies. Some countries which particularly benefitted from this development are commodity-export oriented economies like Brazil, Russia, Angola, Equador & Nigeria. A facilitative environment for exports meant China’s numbers also surged up, showing impressive growth figures. This jump in export growth led to return of the investments (especially capital investments) & rise in trade volumes of the developing countries. Overall, the world’s total trade volume is expected to go up by 5% or so in 2018.

IMF’s World Economic Outlook states that global trade volume will expand by 5.1% in 2018 and marginally slow down thereafter to 4.7% in 2019, as against 4.9% in 2017. The economy (GDP) of developed nations is expected to grow by 2.5% in 2018 and 2.2% in 2019. Whereas, the report forecasts that economies of Emerging Markets & Developing Countries will grow by 4.9% and 5.1% in 2018 and 2019 respectively, as against the growth of 4.8% in 2017. Going forward, strong organic demand and accompanying domestic as well as international trade will be the key growth driver for the EMDE countries.

The global GDP growth and corresponding economic activity directly represents the international trade (export and imports) and in turn provides useful pointers to the shipping industry as about 80% of the international trade by volume is carried out by shipping.

iii)    Seaborne Trade, Fleet & Market

Globally, the seaborne oil trade (i.e. ‘Crude Oil’ and ‘Products’ segments) exhibited a growth of 3.49% in 2017 as compared to 4.17% growth in 2016. Within the seaborne oil trade development, the ‘Crude oil’ trade increased by 4.06% with total figure at 2,125 million tonnes in 2017,whereas, ‘Products’ trade was at 898 million tonnes in 2017, increasing by 2.16%. The crude & product tanker fleets expanded by 4.24% & 5.17% respectively in 2017 (when calculated by gross dwt.), as compared to figures of 6.48% & 6.16% during the previous year. The downward trend in tanker charter rates is expected to continue further because of oversupply of tonnage and efforts by OPEC and other oil producing countries to limit production in order to get better price for crude. Hence, the overall outlook on tanker markets in large part of 2018 is projected to be quite bearish.

The dry bulk trade showed moderate growth of 2.53% in volume over the course of the year 2017 and the freight forecasts are quite positive due to continual slowdown in fleet growth. In view of these developments, Drewry has revised its forecasts to higher freight levels & has opined that dry bulk markets will grow steadily, citing the driving factors as decreasing tonnage supply & increase in tonne-mile demand owing to wider sourcing of iron ore and coal. The total dry bulk fleet growth rate was about 4.75% in 2017, significantly up from -0.08% (fleet shrinkage) in 2016. The shrinking supply of tonnage bodes well for the market and charter rates are likely to see moderate upturn in short term & medium term, provided cargo growth is maintained.

iv)    Indian Scenario

As per Central Statistics Office (CSO), Indian economy grew by a moderate 6.7 % (estimated) in FY 2017-18, as compared to the growth rate of 7.1% in 2016-17. The growth numbers have exhibited a downslide due to the strain caused by multitude of long-term structural economic changes taken up. A substantial increase in the oil prices has also been another factor which has put significant strain on import bill of the country. On the other hand there have been no major factors rendering an upwards swing in the gDp thereby causing the growth to slip up. As per IMF Economic Outlook, India’s GDP growth has fallen marginally below China for this year 2017, thereby losing India’s GDP growth lead for consecutive years over China. The agriculture/farming sector exhibited a subdued annual GVA (Gross Value Added) growth of 3.4% in 2017-18, while the sector had registered 6.3% GVA expansion in the earlier period. The power and utility sectors also posted GVA growth at an annual rate of 7.2% in 2017-18 as compared with 9.2% growth rate in the previous year 2016-17.

According to sources from Ministry of Commerce, India’s exports in value terms has increased by 12.06% to US$ 303.38 billion in 2017-18, while imports surged up with a spike of 21.13% to US$ 465.58 billion. As per Indian Port Association (IPA) statistics, the quantum of Cargo Traffic at India’s 13 major ports rose by 4.77% during 2017-18 i.e. cargo traffic rose from around 648.40 million tons in 2016-17 to 679.37 million tons in the corresponding period a year later. Looking at commodity-wise breakdown of cargo traffic, the largest commodity group in the total traffic was PO.L.(Petroleum, Oil & Lubricants) with around 33.74% share, followed by Container traffic at 19.7%, Thermal & Steam Coal at 13.72%, ‘Other Misc. Cargo’ (12.09%), Coking & Other Coal (7.60%), Iron Ore & Pellets (6.72%), Other Liquid (4.15%), finished Fertilizer (1.17%) and FRM (1.11%) respectively. This improvement of performance is the result of many measures initiated by the Ministry of Shipping to improve the performance of the ports. These include mechanization of the terminals, focus on improving the TAT (turn-around time), introduction of new processes & practices for quick evacuation of cargo, thrust on coastal transportation, expansion of infrastructure and skill development of employees. Similarly, the existing non-major ports, especially private ports, continue to grow due to factors such as a diversified cargo portfolio, superior operating efficiency and contemporary infrastructure and the presence of captive cargo streams.

v)    Strengths

Years of experience in Shipping together with diversified fleet across all major segments gives SCI a unique ability to exploit demand growth in any given segment with a quick-mover advantage. New acquisitions have brought down average age from 18 years in 2007 to about 10.2 years presently (excluding the 2 LPG Tankers of 26 years each). Longstanding COA relationships with major Indian Oil Refineries offer cargo security and employment assurance for major part of the tanker fleet.

vi)    Outlook

The prospects for global economy point to a reasonable growth at about 3.9% in 2018-19. The global overall oil demand is expected to be sluggish in the coming 2 years with a clear shift towards renewable energy in the developed world. This era of low demand growth is supposed to bring new challenges to the tanker owners. The recovery prospects of an already stressed market are further marred by slow growth of oil demand. There are many factors putting pressure on ton-mile oil demand, such as increase in the refinery capacity especially within Middle East & Asian regions, crude pipelines from Russia to Chinese refinery zones, persistent overcapacity. Hence tanker freight markets are forecasted to continue on their downward path at least till 2019. Some scenarios such as increase in US crude oil export could provide much needed support to the market, by offering the possibility of long haul voyages, provided adequate evacuation infrastructure is in place. Another factor which would support the tanker markets is the encouraging pace of demolitions/scrapings of 15 years plus tonnage due to sulphur emission and ballast water treatment regulation, which would diffuse the oversupply to some extent. Middle East & Asia will account for a combined 78% in the global refinery capacity rise (Middle East 48% & Asia 30%). Asian refineries are predicted to curb product tanker demand. Overall the tanker markets are forecasted to be bearish during the next 1.5 - 2 years with freight levels sliding further downwards.

In the dry bulk market, things are looking optimistic & freight rates are continually exhibiting upwards trend. Drewry has also upwardly revised their forecast for 2018 & 2019. Healthy growth in dry bulk demand, complemented by gradual downsizing in supply has rendered a favourable market situation in the dry bulk trade. Charter rate forecasts for the first two quarters of 2018 are quite optimistic & are above the corresponding figures in 2017. The rising demand for high-grade iron ore in China instead of domestically produced iron ore is expected to raise tonne-mile demand, whereas, significant increase in the seaborne trades of bauxite & grain trade is projected to generate firm demand for dry bulk carriers. The controlled tonnage supply, along with increased possibility of demolitions due to IMO regulations would further enhance the supply-demand balance, leading to an owner-favourable market scenario.

The impending IMO 2020 regulations on Ballast Water Management & usage of Low Sulphur Bunkers could play a key part in both tankers & bulk carrier fleets, due to possible demolitions. However the actual impact of these regulations will depend upon the framework & strictness adopted by IMO in implementing these regulations & its acceptance & adherence within the shipping community.

vii)    Opportunities

The global GDP is expected to grow at 3.9% in 2018. This however, is dependent on the two largest economies, US and China followed by emerging economies such as India, Russia, Brazil. US economy is expected to grow by 2.9% in 2018, up from 2.3% growth achieved in the year 2017. A wholesome rise in the refinery capacities of Middle East as well as Asia regions will offer a new dynamic in both crude & product tanker markets. Strategically placed vessels in these regions will be primed to take advantage of this shifting dynamic. The Chinese GDP growth is expected to be 6.6% in 2018, marginally lower than the 6.9% growth exhibited in 2017, on the backdrop of cyclical gradual slowdown. The Indian GDP growth is again predicted to surge ahead of China in the year 2018. The Asia region (Emerging & Developing Asia) is expected to grow by 6.5% in 2018, on par with the level of 6.5% growth in 2017, with India poised to grow at 7.4%. The Euro economy is expected to show a reasonable growth of 2.4% in 2018, with growth coming in primarily from the recovering Euro economies & stronger domestic demand. The Japanese economy is expected to grow at a modest rate of about 1% in 2018.

viii)    Risks & Concerns

The return of cyclical monetary policy tightening, adverse impact of aging population & reduced productivity on GDPs of European countries, the near-constant inflation hampering growth figures, more conservative & tight financial policies especially by advanced nations, on-going cyclical recovery in Europe & timid growth in crude oil demand remain the major macro risks. Also, the possibility of eruption of geopolitical tensions within various regions may bog down the economic activity & as such present a significant risk. The recent US decision to re-impose sanctions on Iran will marginally disrupt the oil trade requiring the other producers to fill in the gap in oil production and may also result in increased crude oil prices. Saber rattling on protectionist trade and imposition of duties by large economies would curb trade growth. More recently, the high tariffs by the US on its Chinese imports & subsequent retaliatory steps initiated by China may hamper a lot of the dry bulk trade. The already rising crude oil prices have strained the economies of oil importing countries in both Africa & Asia who in turn may be forced to cut subsidies and this may consequently hurt overall demand. In South America, Venezuela remains in deep economic & political crisis, as its GDP is expected to contract by a staggering 15.0% in 2018 & further 6% in 2019. In Africa, frequent port outages & resurgence of Piracy on the Nigeria region is a major cause for concern. The crude tanker freight rates are also expected to remain at depressed levels during 2018-19.

Similarly in the dry bulk segment, although the freight levels are on the upside the oversupply has not completely vanished yet. There is always a possibility of localized oversupply situation in some regular trade routes and continued occurrence of local volatility is liable to affect the rates. Additionally, the declining cost of renewable energy & its growing acceptance & compatibility remains a concern for the traditional coal importers. In India, Coal India, which is the major coal producer, continues to increase its domestic production and this thrust to reduce coal imports might adversely affect the seaborne coal trade to India.



a) Crude Oil & Product Tankers

In the year 2017 the global consumption of Crude Oil registered a marginal increase of 1.55% to 97.81 mbpd (million barrels per day) over the previous year. It is anticipated that the oil demand growth will decline slightly over the course of next 4-5 years. Sluggish forecasts for oil demand growth could primarily be attributed to following factors: (i) rising crude oil prices, (ii) upcoming paradigm shift in China about diversifying their economy & shifting the focus away from an oil-intensive, heavy manufacturing, export-driven economy, (iii) rising presence of electric vehicles (EVs) & overall movement towards cleaner fuels etc. In India’s case, the Indian government has announced plans for shifting from oil based vehicles to EVs. The Indian crude oil demand has been fairly constant over the year 2017, languishing around 4 mbpd levels. The oil demand of the country is likely to grow as the recovery from the recent structural reforms gathers pace but crude oil price increase could be a dampener. While OECD oil demand/consumption is expected to be more or less on the same levels as that of previous year, China & Asia’s demand is expected to grow at a good pace.

US domestic crude output is likely to increase by about 1 mbpd, a rise of strong 11.36% over the year. For US, the surging oil prices, combined with supply problems of its neighbouring producers Venezuela, will motivate it to keep its production at high levels. Meanwhile, OPEC countries & Russia-led OECD members have extended the production cuts till 2018 year-end. Both these phenomena combined should increase the exports from US, which would boost the tonne-mile demand. There were deliveries of 26.3 million dwt of Crude oil tanker tonnage and 10.2 million dwt of Products tanker tonnage in 2017. Further down the line, the expected deliveries of Crude oil tankers are 19.8 million dwt and 19.2 million dwt in 2018 and 2019 respectively. For Product tankers, the respective figures are 8.0 million dwt and 6.6 million dwt each. New building prices for tankers went further down in 2017, falling by about 7%, due to falling markets sending negative sentiments thereby hampering ordering activity. In tonne-mile terms, the crude oil trade increased by 5.67% in 2017 as compared to the previous year, while products trade decreased by 1.16% in the same period.

The lack of demand for VLCCs in the AG & Latin America regions is bound to worsen the freight rates. Also, higher crude prices & consequent inventory drawdown by refiners is likely to have adverse effect on freight rates on both crude & product freight markets. The average spot rate of TD3 route of AG/East for VLCC was US$ 22,600/day in 2017. The future market in this segment seems to be very volatile, with rates in the range of US$ 14,500-24,500/day, hugely impacted by the oversupply of vessels & decline in cargoes. One Year tC rate for VLCC was about US$ 27,200/day in 2017, with some fixtures done at higher levels during the latter part of the year. The Suezmax rate on West Africa -North West Europe (TD20) route was about US$ 12,100/day in 2017 which is expected to significantly decrease by about 33.98% year over year. For Aframax, the spot rate on AG/Far East route (TD8) was US$7,000/day. These freight levels are very low and they are forecasted to remain low as there is still no upside on the horizon over the next 2 years. For Product tankers, LR1 Spot rate on AG/East was US$ 8,600/day in 2017 and expected to exhibit depressed levels in 2018 & 2019. One year TC rate for LR1 was US$ 11,700/day, which is almost on par or slightly lesser than operating costs. In MR tankers, on US Gulf/NWE route the spot rate was as low as US$ 2,800/day in 2017. One Year TC rate for MR tankers was US$ 12,400/day in 2017 and is expected to be around US$ 12,600/day over the next year.

Your company has five VLCCs & all were operational during the year 2017-18. They were mainly employed on a mix of Time charter with Indian Oil Corporation & Voyage Charters with Indian as well as foreign charterers. The time charters earned reasonable returns, while spot trades faced the wrath of markets due to highly depressed markets. Your Suezmax tankers were mainly deployed with the Indian oil industry and performed COA voyages under HPCL & BPCL COAs, except occasionally performing spot voyages for Indian and foreign charterers. Older Suezmax vessels however, had lesser employment days due to performance issues & problems in port acceptances. The COA earnings are based on AFRA & TD8, which has been moderate to low. The time charter rates compare well with market benchmarks.

Five LR-I tankers of the Swarna series were employed on Indian coast, catering to coastal crude movement of the Indian oil industry. They also had a few other kinds of employment such as lighterage operations, FPSO loadings etc. Their earnings compare well with market levels. Another LR-I tanker MT Swarna Kaveri was used as a CPP tanker for Product cargoes, mainly in the AG to Indian coast & Far East regions, with market equivalent freight levels achieved.

Your product tankers in the Swarajya Series were well employed with Indian charterers on time charter & sporadic voyage charters and their earnings are in line with market averages.

The three MR product tankers in the Swarna series were gainfully employed with Indian as well as Foreign charterers and their earnings are comparable with the market. MT Swarna Mala was deployed with foreign charterers for long periods during the financial year. MT Swarna Kalash was deployed along Indian coast, employed in a mix of time & voyage charters in coastal product movements. Meanwhile, MT Swarna Pushp was employed with a pool in the 1st half of year & was brought to Indian coast to participate in the Indian coastal movements of clean products.

The two LR-II tankers MT Swarna Jayanti and MT Swarna Kamal were employed with foreign charterers in a mix of pools & voyage charters. Their returns were stable and in line with available markets.

Earnings of your coiled Aframax tankers were in line with markets, along with the average of benchmark yields under AFRA / TD8 (Arabian Gulf to Singapore) and TD14 (Indo-Australia) routes on the back of COA voyages under TD8 pricing formula and triangulation spot voyages due to intermittent fuel oil arbitrage trades which minimized ballast voyages. The Aframaxes mainly performed India centric / Far East / Red Sea voyages.

i) Opportunities

Tanker trade is currently undergoing a paradigm shift. OPEC’s decision to continue the production cuts till end of 2018, upcoming big increases in the refinery capacities of Middle East and Asia, US decision to re-impose sanctions on Iran and rise in US exports due to increased oil prices are some of the major factors which will have adverse impact on tanker markets. The ship-owners who position the ships in prospective basins will stand to reap benefits of positional advantage.

The looming era of low crude oil demand growth presents a challenge as well as an opportunity. The tonnage demand is forecasted to be low for large crude oil tankers, however the bulging capacity rises in the Middle East & Asian refinery capacities may present demand spike for product tanker tonnage. Since, Asia & especially China are growth drivers for the product oil demand, trade routes of MEG-SEA, AG-Far East may get lot of employment, especially for Clean MR & LR-I tankers.

In Indian context, the country’s economy has recovered from the last few sluggish quarters and recorded higher growth in the fourth quarter 2017-18.The increased tax collection owing to structural reforms & tax system overhaul (GST) is also expected to increase government spending. On similar lines, policies implemented by the government to encourage the manufacturing industry under ‘Make In India’ will generate significant demand. India’s crude oil imports hovered to reasonable levels around 4.3 million barrels per day in the January -October 2017 period. Post October the imports spiked to almost 4.6 mbpd & are likely to increase further in 2018. Indian tanker tonnage will have opportunities to grab such import cargoes though at prevailing subdued market rates.

The US crude oil imports are set to remain low, and the Asian demand for the same is expected to increase, banking on strong GDP performances by the corresponding economies & rising refinery throughputs. Net global crude trade flow is expected to shift eastwards, with Asian appetite being the key driver.

With its diversified tanker fleet & especially a modern clean tanker fleet, your company’s vessels stand to secure employment and the company is well-equipped to withstand contingent market pressures.

ii) Risks and Concerns

The growth in global oil trade is expected to be slow in the coming years. The global oil trade (both crude & products) is expected to grow by a meagre 1.89% in the year 2018. This is set to hurt the tanker demand in already depressed markets. Although the crude tanker fleet is expected to grow moderately by 2.76% in 2018, there is still a lot of supply overhang & this combined with low demand growth, may hold the overcapacity situation in the markets & reduce freight levels.

In products trade, the impact of increasing oil prices globally may deter buyers & thereby restrict free movements of product cargoes. The other impact of increased oil prices is the falling inventory levels & deterrence to building inventory levels. This may pose challenges to the product tanker demand. China has added additional refinery capacity, which is set to effect the product trade in the region. Apart from this there are no major factors directly affecting the demand but unfortunately the supply overhang persists in the product segment also. Thus freight markets are expected to soften over the course of next years. Prolonged depressed earning may be a cause of concern.

b) Dry Bulk

The benchmark Baltic Dry Index (BDI) rose to an average of 1204 in 2017-18 against an average of 820 in 2016-17 registering a staggering 46.83% increase, reaching its highest average monthly value in December 2017.

When compared to 2017, dry bulk trade is set to exhibit a trade growth of 2.28% in 2018, with tonne-mile demand growing by an estimated 3.27%. The dry bulk global trade is expected to grow on an average of 2 - 2.10% for subsequent 3 years.

Dry bulk markets are exhibiting optimistic signs. The steady improvement in tonnage demand growth is accompanied by gradual contraction in supply. The dry bulk freight rates have shown promising increases year-on-year in 2017 when compared with the rates in 2016. The dry bulk commodity trade is expected to grow handsomely for the next 5 years. China’s demand for high-grade iron ore & bauxite is set to increase in the coming year. Since indigenously produced iron in China is not of sufficiently high grade, the country’s imports of iron are set to rise, giving boost to tonne-mile demand in the region. The probability of demolitions of some older tonnage on account of looming IMO’s Ballast Water Management System & revised Sox emission guidelines, may further improve the demand-supply balance, lending a supporting hand to the rates.

The dry bulk fleet grew by 4.75% in the year 2017. However, considering the fleet shrinkage during 2016, the controlled fleet supply bodes well for the dry bulk market as the oversupply situation is likely to diffuse. The dry bulk market has been underperforming every year for the past several years. Naturally this has put a strain on new building orders over the years & resultantly the fleet growth has been low to moderate at best.

The total dry bulk cargo demand is expected to be on growing track for the next few years. The dry bulk seaborne trade is expected to grow by 2.28% in 2018, while the tonne-mile demand is expected to register a growth of 3.36%.

India’s iron ore exports rebounded to 32.8 mmt in 2017 as compared to 21.4 mmt exported in 2016. Global seaborne iron ore trade continues to show a healthy growth of 2.77% (forecasted) in 2018. With regard to Thermal Coal, India’s imports are predicted to remain constant, from the levels of 147.5 million tons in 2017 to a forecast of around 145.3 million tons for 2018.

India’s urea imports rose by 9.01% to 5.97 million tons last fiscal on the basis of revived demand. The country, which is among the world’s top three consumers of urea, produces about 22 million tons urea as against the annual domestic demand of 30 MMT. India imported 5.97 million mt of urea in fiscal 2017-2018. Out of this, 2.51 million mt came from Oman and 2.034 million mt came from Iran. Urea movements into India, which is a key cargo for dry bulk vessels and is part of minor dry bulk commodities, has for the last few years been a “supporting trade” for bulkers ranging from Handysize to Panamax.

Grain trade provided a positive boost to dry segment during the FY 17-18. Seaborne trade (imports) of major grains grew by 4.59% in the year 2017, with major exporters being USA, Australia, Canada, Argentina & European Union. On demand side, encouraging trends are there such as growing population, increasing demand from Asian & African countries & overall global economy performing well.

Global steel production is projected to increase by 1.59% in 2018 with increased production from China, India & other countries. The causes of this growth in steel production are overall increase in industrial activity, rise in Global GDP & rise in steel-intensive sectors such as construction & automobiles. India’s steel production is expected to grow at the fastest rate among major steel producers. This is likely because of increased economic activity due to a recovering economy & increased government spending on infrastructure.

So far, in this year 2018, 22 dry bulk ships are sold for demolition as against 218 dry bulkers for the last entire year. 67 Supramax bulkers were scrapped in 2017. Such high scrapping numbers is an encouraging sign for future dry bulk market.

In the year 2018, One-year Time Charter rate of Handymax is projected to be US$ 12,800/- pdpr, whereas for Supramaxes the same is US$ 14,000/- pdpr. In the Panamax segment, the one-year TC rate in 2018 is forecasted to be US$ 15,000/- pdpr. In the upcoming years, the freight rate estimates exhibit an upward trend, with market forecasts showing handsome increases year-on-year.

The company’s dry bulk fleet now comprises of one Handymax, eight modern Supramax vessels of around 57,000 dwt each & seven modern Panamax / Kamsarmax dry carriers of around 80-82,000 dwt as on 31st March, 2018.The bulk carriers fleet is very young with an average age of about 6.9 years. The earnings of our dry bulk fleet were in line with markets. Our dry bulk carriers were also employed on Indian coast with a few coastal time charters & voyage charters, whose earnings compare well with markets. In order to maintain a healthy cash flow your company preferred fixing the bulk carriers on trip time charter and short-to-medium term time charters.

i)    Opportunities

Dry bulk market is looking optimistic at least in the near future. Drewry has revised its estimates upwards, which is clearly an indication of an upward trend. China has been a major driver for the dry bulk trade and the rising Chinese demand for iron ore & bauxite presents a good opportunity for dry bulk tonnage. The high-grade iron ore required by China & other rising Asian powers will be procured majorly from Brazil & Australia. This trade will give a good boost to tonne-mile demand & smart positioning of vessels will be key in tapping these routes. India’s coal import trade is gradually shifting the focus from Indonesia to South Africa & Australia. This is a welcome development for our dry bulk ships, hauling a good share of import coal cargoes for India. The coking coal markets seem pretty favourable for the trade, since shipping costs for the trade have declined & coking coal prices have endured quite a hit. India’s prime source of coking coal is Australia, and hence this route may see handsome dividends.

India has launched many schemes such as ‘Saubhagya Yojna’, which plan to electrify all the Indian households. Such ambitious plans for domestic electricity, along with focus on creation Industrial infrastructure, is expected to generate a significant demand for electricity. Government has also proposed other projects like ‘Bharatmala’ which plan to create a unprecedented road network in India by constructing roads spanning thousands of kilometers. The coal, steel & cement needed to implement these schemes will see a high demand growth. This elevated demand will contribute to increased demand for dry bulk tonnage, both for coastal movements as well as for imports.

Shrinking fleet profiles due to a high number of scrapings/demolitions (on account of various reasons like - reduced profitability, lack of sustaining capacity, costly overhauls required to comply to IMO regulations etc.) may create tonnage vacuums across the markets & dry bulkers in respective trades may take advantage of the same.

ii)    Risks & Concerns

Advent of renewable energy-centric policies & use of renewable energy sources as a means of mass-scale production poses a significant threat to the dry bulk trade. Many countries are shifting focus from traditional sources of energy to renewable sources & are actively taking strategic initiatives for the same. This will not only reduce the demand for shipping of traditional sources of energy like coal & oil, but bring their prices down which will make shipping costs unviable.

Domestic factors such as ban on iron ore mining in Goa / Karnataka, lengthy legal process involved in clearing the procedures to re-start the mines, high export duty on iron ore in India will continue to negatively affect the growth of dry bulk demand on India’s export centric dry bulk trades.

In parallel, the traditional coal trade is also showing signs of nervousness. Both India & China, the top importers of coal worldwide, are introducing policies to reduce the dependence on imported coal. Although China’s coal imports are forecasted to remain high in 2018 since the country is putting a stop to its unproductive coal mines & will prefer to import the coal instead, the medium term and long term future of the thermal coal trade is not very encouraging. Along with many other countries globally, India is also shifting focus towards renewable energy. Indian government has publicly stated its plan on cutting dependency on coal. As such the long term future of traditional thermal coal shipping appears bleak.

Grain and fertilizer trades are seasonal and could be relatively short term in nature with uncertain parcel sizes which require timely positioning of tonnage to exploit the trade.

SCI’s presence in Panamaxes is catering to transportation of three major commodities such as Iron ore, coal and grain, which are prone to be affected by economy slowdowns. View slowdown in these major trades globally the earnings of Panamaxes may suffer.

The absence of long-standing COAs & similar assured business opportunities stand to make your company’s dry bulk trade volatile & open for adverse impacts by the market forces. One more aspect that may turn charter rates volatile is sluggishness by the other owners in the scrapping/demolitions of the vessels, on account of temporary spikes in rates, leading to recurrence of overcapacity situation in the market. The macro economic factors such as interest rate volatility, subsidies on petroleum products, volatile rupee value vis-a-vis the dollar and inflation continue to plague the national demand. Shipping being a derived demand will be negatively affected by these factors.

c) LNG Transportation

The global demand for gas is expected to grow at an average of 2 percent per year until 2035, which would make gas the fastest-growing source of energy over the period. The surge in demand will be driven by environmental measures in China, South Korea & India, rising power generation in Southeast Asia and reduction in the domestic production in Europe.

India plans to double the share of natural gas in its energy mix from 6.5% now to 15% by 2025, but this will require construction of LNG receiving terminals for increased imports. India presently imports around 20 mtpa through 4 LNG receiving terminals, but within a decade there are plans to build another 11 terminals to raise India’s LNG import capacity to more than 70 mtpa. New terminals are planned at Mangalore, Mundra, Pipapav, Ennore, Haldia and capacity additions at Hazira and Dahej. The Government is intent upon reducing carbon emissions and is encouraging Indian railway companies, LNG importers to look at fuelling trains by LNG instead of diesel. India also wants to become a hub for supplying ships that run on LNG, with plans to build more facilities like the LNG fuelling station at Kochi port.

With LNG being encouraged as green fuel for future, the LNG market has been seeing a steady growth over the years. Owing to the high demand and potential for LNG, the LNG shipyards enjoyed increased order books. However with the LNG production not increasing in line with demand, a situation of over-supply of the LNG vessels was witnessed, leading to lower charter hire rates. The global LNG fleet as on

March 2018 consists of 522 ships. With increased competition and ever changing market dynamics in the LNG segment, there is a shift in the charter trends to short term contracts. The high capital investment involved in the construction of the loading and discharge terminals on land, is leading the LNG market players to simultaneously look at alternate options such as Floating Storage Regasification Units (FSRUs), Small LNG carriers for coastal lNg shipping, Floating Liquefied Natural Gas (FLNG) carriers etc.

Your company jointly owns and operates 3 LNG carriers under long term charters with charterers Petronet LNG Limited, India for transportation of LNG predominantly from Qatar. The 4th LNG carrier is under long term charter to Exxon Mobil LNG Services B.V, Netherlands. In order to ensure its presence in the new areas of the LNG market, your company is exploring opportunities for participation by ownership and in operations of FSRU, small LNG carriers and coastal LNG shipping.

SCI and GAIL had signed a Memorandum of Understanding for cooperation in transportation of 5.8 MMTPA LNG sourced by GAIL from U.S. terminals. In line with the objectives under the MOU, SCI has been awarded two contracts, one for assisting GAIL in In-Chartering of LNG ships and the other for Post-fixture Management services to GAIL for their In-chartered vessels which will be carrying LNG from USA to India. The initial contract is for a period of three years effective from 2018. This collaboration between GAIL and SCI aims to augment the natural gas supply through LNG imports.

Your company has built up a pool of trained LNG officers and the experience of independent technical operation of LNG tankers has helped to provide ship management services. Your company is jointly working with one of its Japanese partners, and will start training its LNG officers on construction and operations of FSRU from 2018.

d)    RGPPL Terminal Management

Your company has successfully performed the Port and Marine Services Contract at the RGPPL Dabhol Terminal for further 3 years i.e. 2015 - 2018. The SCI team successfully handled 53 LNG tanker calls at the Dabhol LNG receiving terminal and the total imported LNG under the contract stands at 7.36 million cbm. The contract is due for renewal and expected to be awarded to SCI.

e)    LPG Carriers

Given the continued demand for LPG, your company has acquired second hand VLGC named Nandadevi in September 2017 to ensure SCI's continued presence in the LPG segment. Your company is in the process of phasing out the other two older and smaller LPG carriers and replacing them with larger capacity vessels.


The financial performance of the tanker segment has been largely influenced by low earnings on the VLCC, Suezmax and Aframax segments where SCI has had a mix of cross trade charters, market linked Contract of Affreightments and Time charter businesses to effectively hedge employment and earnings risks. On the smaller segment product carriers and LR I dirty carriers; the employment was mainly to meet the domestic product and indigenous crude movements on long term contracts and time charter business. The mix of employment types and geographical concentration in niche coastal business segments has ensured returns in line with market trends. However, with globally weak tanker markets, there was strong competition in product trades which hampered their earnings to some extent. Internationally, the sharp fall in market fortunes across all segments resulted in very low freight rates, due to which the tankers segment gave a very subdued performance. The dry bulk segment is still recovering from historically bad period and loss of key cargoes such as Iron ore from India resulting in non-profitable ballast voyage legs thereby reducing earnings. Although some relief was offered by coal cargoes & minor bulks, earnings remained subdued and below the breakeven levels due to low freight markets. Few profitable trades emerged during the year where dry bulk charter rates went into profitable levels, but this bliss was short-lived & the markets stabilized to their normal levels. In the early parts of 2018, continuous flow of coals & iron ore cargoes from Indian companies helped to assure reasonable alternate employment options.

2 LINER & PASSENGER SERVICES A Industry Structure & Developments

i) World Scenario

The liner shipping industry is encountering myriad of major issues including burgeoning overcapacity, influx of mega ships and its cascading effect, infrastructure insufficiency, competing modes of transport, cost inflationary regulations, reluctance of investors & financiers and many more. Such factors have given rise to an unprecedented imbalance between supply and demand in the industry. On the other hand, certain key developments viz. consolidation, mergers & acquisitions, shipping alliances, accelerated ship demolition, and technological developments viz. smart / eco ships etc. are at play to restore the balance in the marketplace in the coming years.

The maritime world witnessed an eventful 2016 and proved to be the most challenging period of a six-year long slump the liner shipping industry has fallen into. Liner freight rates dipped to historical lows in 1st Half of 2016 and liner operating losses piled up by year end. Last year saw a spate of consolidation in the industry, as several carriers sought safety in numbers. The year was full of surprises, which saw the collapse of giants like Hanjin Shipping in the liner industry, to unprecedented consolidation among other operators led by the merger of NYK, MOL& K Line to ONE, Hapag-Lloyd and UASC, COSCO Shipping and OOCL to name a few. Along expected lines, the formidable amount of overcapacity that was built up not only deteriorated the marketplace completely, but also led an unprecedented number of vessels being sent to the ship breaking yards. The slowdown of global economic growth also worsened the conditions for liner shipping, weakening the revenue streams & capacity utilisation and eventually leading the global liner industry incurring a collective loss of US$ 3billion.

The year 2017 began with a slow recovery in the markets bringing some improvement to freight rates in the main trade lanes. Global container traffic grew by more than 5% in 2017. Container traffic in North America and Europe grew by 3% and 3.9% respectively in 2017. The tide is turning in Latin America, particularly in Brazil that was in doldrums until the third quarter of 2016. The positive demand global outlook had its impact on the box traffic in India. However, trends indicate that the road to the heights of prosperity in liner business is a long and bumpy one with geopolitical tensions and trade protectionism remaining the biggest threat for economic and, particularly, for trade growth. Bilateral trade disputes and national frictions can easily proliferate and exert a global impact given today’s interconnectivity of the world economy, thus derailing the global economic recovery.

Indian Scenario

As per Indian container market trends over the last few years, installed capacities and handled volumes have been growing proportionately showing a positive sign for the industry apart from achieving best capacity utilization levels. Govt. of India has announced a massive investment in India’s ports and roads sector, which is likely to help boost the country’s economy. The Indian Government plans to develop 10 coastal economic regions as part of plans to revive the country’s Sagarmala (string of ports) project. The zones would be converted into manufacturing hubs, supported by port modernization projects, and could span 300-500 km of the coastline. The government is also looking to develop the inland waterway sector as an alternative to road and rail routes to transport goods to the nation’s ports and hopes to attract private investment in the sector. This is expected to boost the coastal shipping and SCI is an active partner in the above projects of GOI. Strength & Weaknesses

The vast experience in the Liner trade, accumulated over last several decades, is the foremost and most formidable force which instils confidence in the cargo interests / owners who lend their invaluable support to SCI. The customer friendly approach at all the levels and SCI’s customized services puts SCI ahead in the league. The wide network of the agents all across the world, provides and facilitates for localized contacts in markets to offer customized logistics solutions. Operating partnerships have been forged with internationally recognized container carriers in select consortia, to enhance coverage and frequency on the major trading routes. SCI is a licensed MTO in India and also has International Freight Forwarding License. Break-bulk operations are largely profitable and passenger services provided by SCI provide stable source of revenue, not to mention the vital link that supports the islander’s to the mainland. Efforts are on to expand the India-centric focus to garner the benefits of economies of scale.

iv) Opportunities & Threats

The liner market is poised to witness significant improvement in operating profitability in the future despite the continuous influx of mega-ship new-buildings, underpinned by market sentiments of a reviving global economy and upbeat economic forecasts. New operating alliances are expected to contribute by allowing global carriers to further synergize network efficiencies and vessel deployment optimization bringing about higher savings. Improving economic conditions in the US and Europe is expected to boost market fundamentals and support carriers in their effort to restore freight rates. An improvement in liner operating profitability is also expected to act as a catalyst for higher charter vessel demand and higher charter rates. Despite improving market fundamentals, the industry has to overcome challenges in the year ahead due to increase of mega-ship deliveries before the capacity growth moderates in 2017. The break bulk sector continues to maintain good potential in respect of ocean freight arrangements of General cargoes, Over-Dimensional Cargoes (ODC), Project cargoes, Heavy Lift cargoes etc. on account of the Government Departments / PSUs and other GOI organizations.

B Segment-Wise Performance

1 Liner Vessels: The table below shows the profile of your Company’s owned liner fleet having total container carrying capacity of 14,407 TEU.

Type of Ships

As on 31.03.2017




As on 31.03.2018



Dwt (MT)






Dwt (MT)

Fully Cellular









Average age of three owned Container vessels is approx. 15 years (one vessel aged about 25 years and two 10 years). As on 31.03.2018, an in-chartered container vessel having total Net Tonnage of 55,203 MT was operated by your Company. In addition to the above owned and in-chartered vessel, your Company also has cargo loading rights on 27 vessels of its partners in various consortia arrangements that your Company has with leading shipping lines, such as Mediterranean Shipping Company (MSC), PIL of Singapore, K-Line of Japan, etc. to name a few. Your Company continued to deploy its owned / operated Container vessels in the following sectors.

2 Container Services

i) Himalaya Service (Erstwhile ISE Service)

The UK-C Cellular Container Service commenced in 1994 with SCI as a single operator operating three vessels with 1,800 TEU capacities, which was later upgraded to a fixed day weekly service operating with seven vessels of similar capacity. The service, from May 2009, is being operated in consortia comprising of two partners viz. SCI and MSC, with eight vessels of which two vessels have been contributed by SCI. Since end-Feb 2016, the consortia contribution has been changed to one SCI vessel. This strategic reduction has been done to improve profitability of the service. The service is operated on round voyage duration of 56 days.

ii)    IPAK Service

In a slot swap arrangement between SCI and MSC, SCI has been allotted 200 TEUs slots by MSC, which operates IPAK service in exchange for similar slots allotted to MSC on the ISE service.

iii)    India / Far East Cellular Service (INDFEX 1)

This service commenced in June, 2001. Presently, it is operated with 6 vessels, with 1 vessel each deployed by 6 partners viz. K-Line, PIL, Simatech, Wanhai, Cosco and SCI. The service is operated as a weekly direct service from India’s West Coast to Central China, Hong Kong, Singapore and Malaysia with round voyage duration of 42 days. The service also links North Chinese ports, Busan and Japan through feeder services via Shanghai on Indfex Service. The SCI has deployed m.v. SCI Chennai in this service. This service would end in June’2018 and m.v. SCI Chennai would be deployed in coastal (SMILE) service.

iv)    SCI Middle East India Liner Express (SMILE) Service & Pan India Service (PIX2):

SMILE and PIX 2 services seamlessly links up Persian Gulf with East Coast of India and West Coast of India, thereby, strengthening and expanding SCI’s presence in the Coastal Shipping Sector. The joint operation on this route will be a force multiplier for SCI which will provide a high quality of Coastal Services on fixed day fixed window basis with potential for even bigger expansion in Coastal and near Coastal trades with special emphasis on the East Coast of India ports. Two services viz. SMILE and PIX2 with their service rotations makes it feasible to connect pan-Indian ports with an improved transit time. SCI seeks to cooperate with other Indian Companies to work out the best transportation solutions for the trading community vis-a-vis commercially, economically viable and environmentally feasible options. SCI connected west coast of India to southern and eastern ports of India viz Katupalli / Krishnapatnam/Vizag/Haldia/Kolkata during 2016-17 and the Pan India service got stabilized during 2017-18, thus, promoting GOI initiative ‘Sagarmala’ and increased coastal shipping.

v)    Feeder Operations

SCI makes feeder arrangements with ‘Common Carriers’ between various destinations on the Indian subcontinent.

vi)    Slot swap arrangements:

SCI enters into slot swap arrangements with service providers depending upon trade requirements.

vii)    Break-Bulk Services

SCI arranges carriage of break-bulk cargoes on space charter basis from various regions across the globe including USA, Europe and Far East for imports on account of the Government Departments / PSUs and other GOI organisations, which includes Shipments of Over-Dimensional Cargoes (ODC)/Project cargoes / Heavy Lift cargoes/ IMO Class I Cargoes etc. and also containers.

viii)    Coastal Operations

Domestic Passenger-Cum-Cargo Service: In addition to International operations, SCI with its one owned Passenger-cum-Cargo vessel and eleven (11) managed vessels operates domestic passenger and cargo transportation services between the Mainland and the Andaman & Nicobar (A&N) group of islands and inter-islands, on behalf of the Government of India. Also, 17 numbers of Foreshore passenger vessels of A&N Administration are technically managed by SCI. Informatively, SCI’s owned Passenger cum cargo vessel viz. m.v. Harshavardhana was sold for scrapping on 28.03.2018.

ix)    Other Coastal Services

SCI also manages Oceanographic & Coastal Research vessels on behalf of Government Agencies/ Departments viz. three vessels owned by Geological Survey of India, under Ministry of Mines and one vessel of National Centre for Antarctic & Ocean Research, one vessel of Centre of Marine Living Resources and Ecology and three vessels of National Institute of Ocean Technology under Ministry of Earth Sciences.

3 Manned & Managed Vessels

The following table shows the profile of the Passenger-cum-Cargo vessels and other vessels managed by your Company on behalf of the various Governmental Organizations/Departments:

Type of Ships

As on 31.03.2017






As on 31.03.201





Cargo Cap. (MT)




Cargo Cap. (MT)

Pax-Cum-Cargo Ships









Cargo barge









Other vessels

17 Foreshore & 8 Research





17 Foreshore & 8 Research












The pattern of deployment of these vessels is as follows:

- Four vessels for carrying Passengers and cargo between the Mainland and Andaman and Nicobar Islands. - Six vessels and One Cargo ship for Inter-Islands run (A&N Islands).

- Seventeen vessels for Fore Shore Sector run (A&N Islands).

- Eight Research vessels of GSI, NCAOR, NIOT, CLMRE carrying out scientific expedition in the Indian Coast.

C Marketing

SCI’s marketing team continues to make regular customer calls through its own offices and also through agents appointed at various ports in India and abroad in order to market its container and break-bulk services. Meetings with the agents are held periodically, and SCI representatives also participate in various trade meets at important locations in India. Your Company has obtained Freight Forwarding and Multimodal Transport Operator (MTO) licenses and continues to use its vast experience and large agency network to render 3PL (Third Party Logistics) services to the customers. This helps your Company to retain the clients while generating additional revenue.

D Outlook

Under the new Foreign Trade Policy (2015 - 2020), India aims to increase its share in the global trade to 3.5% by 2020. Incentives to agricultural exports and extension of the same under Merchandise Exports from India Scheme to units in SEZ are part of the new FTP! This is aimed to integrate with Make in India and Digital India initiatives. Multiple infrastructure projects, eyeing to improve India’s logistics efficiency and hinterland connectivity, will boost the country’s box trade in the coming years. Some of the key projects that will be a game changer when fully operational is (A) Multi-modal terminal under Jal Marg Vikas project: The 170 crore multi-modal terminal at Varanasi, under the Jal Marg Vikas project that will open before December 2018, will be a major logistics hub connecting North India to North East India. The government will also develop 35 multi-modal logistics parks for freight aggregation and distribution, multi-modal transportation and warehousing. (B) Port based multi-product SEZ at JNPT, first of its kind, a port-based SEZ at JNPT will be developed with Free Trade Warehousing Zone, Engineering Goods sector, Electronics & Hardware sector and Pharma sector. (C) Dedicated Freight Corridor (DFC), DFC will provide logistics support for the Make in India initiative. Two of the three DFCs are scheduled to be operational in the next three years. DFC will reduce the inland transit time significantly. (D) Sagarmala programme, The Indian government is implementing the Sagarmala programme in phases, spanning over 20 years from 2015-2035. Four hundred and fifteen projects have been identified for port modernisation, new port development, port connectivity enhancement and port linked industrialisation. Six new port locations have also been identified for proposed transhipment hubs in the south. The government has approved Rs. 27,000 crore port project at Enayam.

E.    Risks & Concerns

There are several trends that may affect transport costs in the coming years. First of all, ship size growth trend that has targeted economies of scale in sea, has practically raised diseconomy in ports. This trend has caused essential need for capacity enhancement in ports, which unfortunately cannot keep pace with the developments of shipping in terms of time. This usually ends with chronic shortage of port capacity in the short term and added costs both in the short and long run. In container shipping, which is the more competitive part of the industry, this trend also exacerbates the need for hub and spoke networks, which involve addition of transhipment costs (and costs of delay in delivery of goods) to overall transport costs in supply chains of regional hinterlands. Some shipping lines are also inclined to adopt monopolistic behaviour in markets, which can increase dissatisfaction and resistance of stakeholders in supply chains i.e. government, consumers, tax payers, manufacturers, etc. and motivate them to react to such measures and arrangements which contribute to higher transport prices or more concentration in the industry.

The rise of the protectionism in US, UK and some other developed countries is a matter of grave concern that can affect trade and investment throughout the world. A vast series of disrupting consequences can be perceived in this context that can include re-shoring or near-shoring of industries, significant changes in the trade balance of countries, rescinding of trade treaties, disrupting military conflicts, wars, etc. While the world is still recovering from the global financial credit crisis, the nations as well as international businesses are encountering an increasing number of financial risks. Among the crucial financial concerns, we can point to the financial challenges of Greece as the leading ship owner state in the world. Insolvency of Hanjin shipping in 2016 was an instance of the possible ground breaking financial shocks in the industry and their acute consequences in the global supply chains. There are multitudes of micro-economic level financial risks and concerns that can afflict the industry in the coming years.

F.    Discussion on Financial Performance With Respect To Operational Performance

Your Company’s liner segment registered a profit of Rs. 79.66 crores in FY 2017-18 as against loss of Rs 95.54 crores in 2016-17. The Operating Income increased from Rs. 445.90 crores in 2016-17 to Rs. 676.38 crores in 2017-18 due to better volumes and better freight levels. Further, your Company was able to reduce losses by adopting various cost saving measures accruing to the liner services viz. considerable saving on feeder and transhipment costs by reducing carrying cargoes to non-base ports, better inventory management, control on repair costs of vessels and containers. Our on time schedule reliability on our services, particularly in Europe sector continues to be very good and comparable or better than the global players.

G.    Measures Taken By Us to Improve Our Services & Operations

Liner Division is ensuring General Rate Increases are being strictly implemented keeping in mind the market sentiments and demand-supply gap. Performance of each Container Service is being reviewed monthly from the point of view of profitability. Ultra slow steaming planned / achieved on the container ships. Fuel additives are also being used to save on fuel consumption. Liner division is also looking out for further expanding on the Coastal, Feeder Services and Services to the Indian Sub-continent and the adjacent areas in the Indian Ocean countries. SCI’s strategy has been to use all our Indian Flag ships on these routes when Indian Flag commands a premium and to use Foreign Flag vessels on the other routes. The big game plan is to run seamless services between Persian Gulf and Iran to East Coast India - Bangladesh with several port calls in West Coast Indian ports by forming a consortium of Indian operators. Foreign companies dominate in Indian Subcontinent feeder routes and provide seamless connections. By mutual cooperation with the other Indian Companies through slot exchange, it is envisaged that feeding freight would be retained within the country, which would also help in minimizing the working capital requirements for the Division. Further, ports like Kandla and newly emerging container ports in East Coast of India like Kattupalli, Krishnapatnam and Vizag are offering substantial discounts on transhipment costs and storage charges, and by using these ports optimally, substantial system costs reductions are being achieved. The Division is in advance state of negotiations for starting multipurpose services on Indian Coast using heavy lift geared and ramped ships. Our focus is to maintain right sized leased equipment inventory to optimum levels to make services sustainable and undertaking firm negotiations with leasing companies and vendors for achieving desired results. Aging inventory is being replaced by the younger fleet at better terms. We are identifying niche sectors to commence new services, like, feasibility study has been done for intended services viz. Ex-India / Maldives, Ex-India / Myanmar / Bangladesh / Thailand, extending Coastal Services to include Iranian port(s) viz. Chabahar & Bandar Abbas. Other feasibility studies have been conducted for services like Ex-India / East African ports. Liner division has slowed down on new acquisitions for now with ISE / Himalaya Service and is continuing to operate with one in-chartered vessel of about 8,500 TEU capacity. No CAPEX expansion planned this year so far. But option are kept on and Division is scouting for second hand vessel(s) if it fits commercial requirements. Engagement with landside Logistics PSU firms viz. CONCOR, Balmer Lawrie, CWC etc. for offering seamless multi-modal services between Inland locations and ports on the Indian Coasts as well as overseas ports. We have also undertaken feasibility study for setting up owned or jointly operated CFS / ICDs for various viable routes and also freight forwarding operations.

H.    Important Developments

a)    Induction of higher capacity vessel (m.v. SCI Chennai) in SMILE Service, thereby, increasing the slot allocation & revenue realization.

b)    Induction of higher capacity vessel in ISE service to meet trade requirements.

I.    Awards and Accolades

1)    Mrs. Sangeeta Sharma, Director (Liner & Passenger Services) is the winner of India Maritime Awards of “Woman Professional in Shipping & Logistics” for her outstanding contribution in the shipping business. She was conferred with the prestigious trophy in an award ceremony held on 22nd June 2018 in Mumbai.

2)    The Shipping Corporation of India Ltd. has been awarded with the Certificate as the Runner-Up for the Best Shipping Line of the Year -Break bulk / Heavy Lift Operator.

J. Material changes and commitments, if any, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statement relates and date of report: None



i)    World scenario

The offshore support vessels industry is dependent on utilization of rigs, E&P activities and other activities in oil fields, which in turn depends upon strategic decisions of energy security by oil and gas producers, shifts in Government policies and long term crude oil price trends.

Till mid of FY 2017-18, in last four years the oil price were falling. However, since winter of 2017, the oil prices are showing some recovery and by end of FY 2017-18 average OPEC basket crude oil is improving. The positive is that at the end of 17-18, crude prices moved beyond US$70 and is showing further signs of strengthening. Some new E&P activities across the globe are expected to take place during FY 201819. During 2017-18, with low crude oil prices, oversupply of offshore assets across globe, less number of offshore E&P activities and hence the lower charter / freight rates for offshore vessels, the utilization of offshore assets globally was below 60% range throughout the year.

ii)    Outlook:

The lower charter hire rate for the vessels has resulted in fall in selling price of the assets and many asset owners filed bankruptcy during the year. Many assets exchanged ownership, with purchase of second-hand ships at lower price and considering competition of already oversupplied market, the freight rates for offshore assets are expected to remain under pressure. However, with improvement in crude prices during Q4 of FY 2017-18, the E&P activities are expected to rise and hence the requirement of offshore assets. Experts believe that the crude

oil price is expected to breach US$ 80.00 per barrel mark in near future. Considering self-sufficient policy by Governments of most of the developed and developing countries for the requirement of energy resources, the E&P activities throughout the world are expected to show upward trend soon and hence the requirement of offshore assets are expected to rise.

iii)    Indian scenario

Historically, India’s domestic production of oil and gas has fallen short of its burgeoning energy requirements, compelling our country to rely on imports. In view of stable crude oil prices, there has been increase in import of crude and private players are avoiding any new exploration and discovery activities. Though, there is an increase in consumption of crude by the country over the years, the requirement is majorly fulfilled by import of crude / petroleum products. In terms of quantity, the Crude oil imports in India was 213 million tonne (MT) in FY 2016

17 and same is pegged at 219 million tonne (MMT) for FY 2017-18. The oil import bill for FY 2016-17 was at US$ 70.196 billion, which is expected to be at US$ 87.7 billion for FY 2017-18, which is an increase of about 25%. The outcome of ONGC and other E&P operators tender shows that the expected per day rates for offshore assets were at bottom during the first quarter of FY 2017-18. However, by the end of FY 2017-18, the rates are firming up and freight market is showing some upward movement. During last quarter of FY 2017-18, crude oil prices shot up by around 24% and same rise was reflected in freight rates as well.

iv) Outlook:

With upward movement of crude oil prices and the Government of India’s intervention on reduction of oil import bill, E&P activities on Indian coast is definitely expected to rise. And with increasing E&P activities, requirement of offshore assets would automatically see a surge in demand.


1    SCI owned Offshore vessels

In the previous year, your Company’s owned offshore fleet comprised of 10 vessels i.e. 03 nos. 80T Anchor Handling, Towing Supply Vessels (AHTSVs), 04 nos. 120T AHTSVs, 02 nos. Platform Supply Vessels (PSVs) and 01 no. Multi-Purpose Support Vessel (MPSV). During the year, your company acquired one resale Multi-Purpose Support Vessel (MPSV), “SCI Saraswati”, on 07.07.2017 of 3,616GT and 3,719 DWT. This vessel is successfully deployed on a distinguished long term charter with Defence Research & Development Organization (DRDO). During the year, one 120 T BP AHTSV viz. SCI Kundan continued to remain on long term charter with ONGC, while 3 nos. 120 T BP AHTSVs (Viz. SCI Pawan, SCI Ahimsa and SCI Urja) completed their contract during first half of the financial year. After completion of long term charter, these 3 nos. 120 T AHTSVs were operating in spot market /short-term charter. 2 nos. MPSVs (viz. SCI Sabarmati and SCI Saraswati) are on long term contract with DRDO. One 80 T AHTSV (SCI Ratna) of your company capsized on 21st November, 2017, due to ingress of water in the engine room. The incident took place 96 nautical miles off the coast of Mumbai and there was neither loss of life nor any oil spill in the vicinity. Further your company has already received the Insurance amount due in the matter. Remaining 2 nos. PSVs and 2 nos. 80T AHTSVs were predominantly operating in spot charter.

2    O&M of ONGC owned vessels

2.1    Mobile Offshore Drilling Units (MODU)

In view of the expertise of your Company in management of offshore vessels, ONGC has awarded long term contract for Marine Man Management services of their two MODUs viz. “Sagar Vijay” and “Sagar Bhushan” with effect from July 2016 and August 2016, respectively, for a period of 06 years.

The interim Document of Compliance (DOC) Audit for MODUs was completed successfully by the Directorate General of Shipping on 28.12.2016    without any NC or observation. This is a significant achievement in terms of MODU operations, which is completely different from other vessels and has proved Company’s expertise in the diversified field.

2.2    Newly acquired OSVs by ONGC

ONGC had placed orders for 12 new built OSVs at M/s Pipavav Defence and Offshore Engineering Company Ltd. Your company has successfully included seven ONGC owned vessels under its fleet of managed vessels, delivered from the shipyard, from 2013 onwards. Balance 5 vessels will also be handed over to SCI under O&M contract as per their respective construction & delivery schedule.

ONGC has already given Notification of Award to your Company to operate, man and manage all these 12 vessels under Operations & Maintenance (O&M) contract on cost plus remuneration basis valid till 31.03.2023, thus ensuring continued long term business for SCI.

2.3    Specialized vessels

Your Company has continued the Operation & Maintenance management (O&M) of ONGC’s 2 Multi Support Vessels (MSVs)(“Samudra Sevak” & “Samudra Prabha”) and one Geotechnical Vessel (GTV)(“Samudra Sarvekshak”) on nomination basis under ‘Cost plus’ arrangement. The existing contract for GTV is valid up to  31.03.2018, extension of which is in process and that of MSVs is valid till 31.03.2019.

Your Company has also continued the Operation & Maintenance management (O&M) of ONGC owned Well Stimulation Vessel (WSV) “Samudra Nidhi” on ‘cost plus basis’ since the vessel's delivery in year 1986. Your company has been awarded 6 years long term contract by ONGC for Samudra Nidhi, valid till 31.03.2023.

3    Emergency Towing Vessel (ETV) 2017

On request of Directorate General of Shipping (DGS), this year also your company provided one Emergency Towing Vessel (ETV), SCI Panna, for emergency services in the monsoon period, on West Coast of India and East Coast of India, for a total of about 153 days, w.e.f. 01.07.2017    till 30.11.2017.

4    DRDO Project

The Defence Research & Development Organization (DRDO), Government of India (GOI), Ministry of Defence (MOD) had requested your company for hiring of three support vessels as a platform for ship-borne tracking stations for flight trials over the Bay of Bengal and Indian Ocean. Your company had in-chartered two suitable vessels w.e.f. 27.03.2012 and 05.04.2012. The contract for these vessels had come to an end in 2016.

Thereafter, your company has acquired two suitable offshore vessels (Multi-Purpose Support Vessels) and has provided the same to DRDO on a long term charter of 4 years, for their above missions of national importance. The two MPSVs acquired by SCI are “SCI Sabarmati” on 18.11.2016 and “SCI Saraswati” on 07.07.2017, which have been deployed with DRDO.

5    Risks and Concerns

About 7 vessels are primarily operating in spot market. In spot market, per day charter hire rates are generally higher than the long term rates (industry average), however, there are more operational challenges and loss of employable days during frequent change of charter in spot market for conducting inspections/clearances. Hence efforts are being made by your company to obtain long term charters, albeit the prevailing rates are on the lower side.

Your company is keeping contacts with many E&P operators and EPC contractors with expected future requirement for offshore vessels for their offshore activities. Simultaneously, your company is also continuously on lookout for any long term employment for these vessels, not only in the Indian waters but also in Foreign waters. Informatively, majority charterers in spot market are satisfied with performance of your company’s vessels during FY 2017-18.

Strengths and Weaknesses

Your company has a diversified fleet of offshore vessels with 02 nos.80T AHTSVs, 04 nos.120T AHTSVs, 02 nos.PSVs and 02 nos.MPSVs, thus enabling it to cater to requirements of various clients in the offshore market. Your company also owns a fleet of young offshore vessels, thus giving a technological advantage compared to the older vessels in the market.

SCI has always focused on employing its vessels on long term basis with ONGC, which is the biggest E&P Company in India. However, dependence for majority activities on one client has its own dis-advantages, especially considering the de-hiring of vessels by ONGC last year. Thereafter, in view of the subdued markets and increased supply of vessels in the market, employing these off-hired vessels was difficult for SCI. By the end of year, only three out of ten offshore vessels owned by SCI were on long term charter. Though the per day charter hire rates for spot is more than the long term ONGC rates (industry average), there are more operational challenges and loss of employable days during frequent change of charter in spot market for conducting inspections/clearances. Meanwhile, your Company has been approaching and employing its vessels aggressively with other private players in the market and yielding successful results. Further, with the ‘Make in India’ campaign of Government of India and with the Governments’ view of being self-sufficient in all possible ways, the offshore industry is also expected to improve in coming years.

7 Opportunities and Threats

With increase in crude oil prices and increase in oil import bill, the E&P activities are expected to rise, thereby creating shipping demand for offshore assets in Indian coast. Further, with merger of ONGC (E&P player) and HPCL (Oil Marketing Company), their strategic decisions are now inter-linked with each other’s requirement. Your company’s offshore vessels have an average age of only 5 years and have balance economic life of about 20 years. The long remaining years of economic life will definitely help your company’s offshore division to take advantage of growing offshore market in future.The weakness in asset prices also presents opportunities for SCI to acquire good vessels in the second hand / resale markets at a very competitive prices, which can earn good profits at lower charter levels as currently prevailing in the short term.

However, with falling charter hire rates and fall in asset prices, many new players entered in India’s offshore market. Entry of new players and availability of old offshore assets at lower price are leading to high competition resulting in charter hire rates in ONGC’s recent tenders to be very low and it has not been gainful for offshore assets of your company to be employed at these low levels.

Your company is also looking at various other prospects for employing its vessels, which include Government organizations, like DRDO, and is also trying to boost its revenues by enhancing its managed vessel fleet/technical consultancy services. Your company is also approaching new clients like Inland Waterways Authority of India (IWAI) for providing technical consultancy services for their forthcoming ship acquisition plans for development of the inland waterways.

C) Technical Services:

1    Technical Consultancy Services

During the year under report the Company continued to provide technical consultancy services to A&N Administration, UTL Administration, Geological Survey of India, Andaman Lakshadweep Harbour Works (ALHW), Union Territory of Daman and Diu Administration (UTDD) and other Government Departments for their various ship acquisition/retrofit projects.

2    Tonnage Acquisition Programme

During the year under report, your company had proposed an outlay of Rs.500 crore towards acquisition of vessels. Your company had envisaged acquisition of second-hand/ resale offshore vessel, Suezmax Tankers and VLGC size LPG carriers. SCI has taken delivery of three vessels during the year, and named as “SCI Saraswati” (MPSV); “Desh Abhimaan” (Suezmax Tanker); and “Nanda Devi” (VLGC).

Presently, the asset prices are comparatively at low levels, hence looking at the favourable market for second-hand/resale vessels, your company is endeavouring to buy second-hand/resale vessels to increase the Indian/SCI tonnage and for immediate deployment in the market. Your company is optimistic to acquire offshore vessels and oil tankers/gas carriers at this opportune time, with low asset prices so as to expand its fleet size.

3    Eco-Friendly and Conservation of Energy

As a policy, your Company remained committed to environmental protection as per International Convention for the Prevention of Pollution from Ships. Necessary steps have been taken to minimize air pollution and oil pollution from ships.

On new vessels electronic engines are being fitted in order to reduce fuel consumption and improve operational efficiency. Your company has decided to implement specific measures to improve fuel consumption and operational efficiency, like turbocharger cut out device was fitted on some of the Container vessels and trim optimization was implemented on some of the Aframax tankers and bulk carriers.

As per directive from IMO, all ship owners are required to report fuel oil consumption data from 1st January 2019. Your company is geared up to meet IMO's fuel oil data collection system directive.

For the existing vessels, your company had developed a Ship Specific energy efficiency management plan to further improve and monitor energy efficiency in ship operations. All engines being fitted on board are meeting latest requirement of NOx compliance. Installation of Ballast Water Treatment plants, Silt Water Management, usage of eco-friendly refrigerants, usage of TBT free paints, ship recycling plan, etc are some of the measures showing your company’s commitment to Eco-friendly policies and conservation of energy.

4    Technology Absorption, Adoption and Innovation

The SCI has taken all steps to comply with requirements of The International Maritime Organization’s MARPOL Annex-VI aimed at Controlling Air Pollution and setting limits on Emissions to the Atmosphere from Ships. On the new vessels SCI has voluntarily accepted higher than mandatory requirements on emission standards.

For 500 passenger vessels under construction at M/s Cochin Shipyard Ltd., SCI as a technical consultant recommended installation of Active Fin Stabilizers to reduce the rolling periods thereby increasing the passenger comfort. Further on 1200 Passenger vessels under construction at same yard, automatic anti-heeling system, Ballast Water Treatment Plant (BWTP) and Integrated Alarm & Monitoring System (IAMS) have been recommended by SCI.

The main engines and auxiliaries on board existing vessels in the fleet are being modified and equipped to handle low sulphur distillate fuels in order to comply with regulatory fuel sulphur limits in IMO emission control areas, ports in the European Union and ports in the State of California. Further, on new 1200 Passenger ships for A&N Administration, SCI has recommended diesel-electric propulsion system to improve operational efficiency.

5    Situation in Coastal operation and Offshore areas

The offshore industry has been through a very difficult phase over the past three years, and hence, all the companies in the Offshore Support Vessel market (OSV) have been severely affected. Exploration & Production (E&P) companies have reduced their rig counts drastically, causing demand for OSV services to plunge. Excess rig capacity has hit Platform Supply Vessels (PSVs) and Anchor Handling, Towing & Supply (AHTS) vessels the hardest. However, as the oil price has doubled since reaching the bottom in January 2016, the OSV market to some extent moved into recovery stage during the period under review, especially during the last quarter of 2017-18.

6    Measures taken to improve services and operations

During the year under review, your company has taken continuous efforts to maintain the offshore fleet to the required standards for optimal utilization in the tough shipping market. The greater emphasis has been given on preventive and planned maintenance for cost effective operations and maintenance of OSVs. Your company has availed every opportunity to employ vessels on spot charter. The available downtime was well utilized for maintenance and overhauls of machinery.

To improve its operations, your Company has taken various steps, like upgrading the conventional seals of 80T AHTSV vessel in a phased manner with advance sealing system with additional sealing arrangement called UNNET assembly to protect seals from nets, ropes and foreign particles. Also necessary changes have been made in the A/C system of 120T AHTSVs resulting in smooth operation of the vessels. Further, your company has already entered into long term rate contracts with Original Equipment Manufacturers (OEMs) of major spare suppliers, so as to benefit from the discounted rates and streamline un-interrupted supply to our vessels.

7    Awards and Accolades:

The following managed vessels have received the BEST HSE PERFORMANCE award from ONGC during the year 2017-18 for the category mentioned against the vessel:

1.    MODU Sagar Vijay - ONGC Drillship

2.    OSV L.J. Johnson - ONGC Offshore Logistic Vessel

3.    WSV Samudra Nidhi - ONGC MSV (IMR & Stimulation Vessel)

Further, MSV Samudra Sevak has received appreciation from ONGC for the commendable job undertaken by the vessel of recovery of damaged boat landing of B55 platform successfully and resumption of huge blocked gas production. The praiseworthy accomplishment of MSV Samudra Sevak team deserves highest level of appreciation.

Also, MSV Samudra Sevak has received appreciation from Master of Aban Ice (oil rig) for carrying out commendable job of disconnecting kill line from sub-sea - BOP (blow out preventer) of Aban Ice and connecting new line lowered from rig in zero visibility and very rough sea conditions.

8    Material changes and commitments, if any, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statement relates and date of report

M.t. Guru Gobind Singh disposed off on 12.07.2018. The vessel was a crude oil tanker built in 1995 with 147,474 DWT and 80,130 GT

IV International Safety Management Cell

The SCI has introduced the Safety Management System by setting up a dedicated International Safety Management (ISM) Cell, which has developed, structured and documented procedures in compliance with the International Management Code for Safe Operation of Ships and for Pollution Prevention (ISM Code), in accordance with the resolution A.788(9) of the International Maritime Organization (IMO) and SOLAS, Chapter IX.

The SCI has laid the foundation of the Safety Management System (SMS) by recognizing that the cornerstone of good Safety Management is a commitment from the top management, coupled with the competence, attitude and motivation of individuals at all levels, that determines the expectations of a good Safety Management System.

The SCI has complied with all the functional requirements of the ISM Code, which includes the Safety, Occupational Health & Environment Protection Policy and Drug & Alcohol Policy.

Presently SCI holds 07 (Seven) separate Document of Compliance for individual ship types as under:

1.    Bulk Carriers (Indian Administration) - Valid till 31.10.2022.

2.    Oil Tankers and Gas Carriers (Indian Administration) - Valid till 31.10.2022.

3.    Passenger Ships (Indian Administration) - Valid till 31.10.2022.

4.    Other Cargo Ships (Indian Administration) - Valid till 31.10.2022.

5.    MODU Vessels (Indian Administration) - Valid till 31.10.2022.

6.    Gas Carriers (Malta) for LNG Vessels - Valid till 26.05.2019.

7.    Gas Carrier (Singapore) for LNG Vessel - Valid till 26.05.2019.

As regards, Safety Management Certificate (SMC) for SCI fleet, all ships are put up for periodical/ renewal SMC audits within time frame and respective SMCs are accordingly endorsed.

The last Renewal/ annual DOC Verification Audit of the Company was carried out as follows:

1.    DOC issued by Indian Administration - 01.11.2017 (Renewal Audit)

2.    DOC issued by Malta Administration - 20.07.2017 (Annual Audit)

3.    DOC issued by Singapore Administration - 20.07.2017(Annual Audit)

Also, the requirements of various amendments to ISM Code and Statutory regulations from IMO/Flag are also complied with. New acquisitions are brought under the SMS, before delivery, with full compliance of the ISM Code.

The achievement of time-bound certifications was the result of the SCI’s strength of professional experience, planning, training, execution, systematic analysis and quality expertise, which is an asset for any world-class ship operator or owner. The SCI is also in a position to provide such management expertise to other national/international ship operators.

Awards & Appreciation:-

1.    Appreciation received from Chief Scientist to vessel Sagar Sampada towards retrieval of SREP on 16.05.2017.

2.    Appreciation was received on 03.07.2017 to team of MSV Samudra Sevak for commendable job of recovery of damaged boat landing of B55 platform successfully and resumption of huge blocked gas production.

3.    Various vessels of your company were awarded the AMVER award - trophies from U.S.Coast Guard through United States Consulate, Mumbai in September 2017.

Company's Safety, Occupational Health and Environment Protection Policy was reviewed and amended on 01.03.2018.


The SCI has successfully implemented the ISPS Code on all vessels on international voyages and coastal trade vessel as per the Administration requirement.

SCI is committed to the following objectives to fulfil the requirements of its security policy:

-    Security of its ships and their crew, passengers and cargo

-    Support to its ships in implementing and maintaining the Ship Security Plan.

Integrated Management System (IMS)

SCI has successfully upgraded to 2015 version of ISO 9001:2008-Quality Management System and ISO 14001:2004 - Environmental Management System on board all vessels and shore establishments.

SCI is certified with IMS (ISO 9001:2015-Quality Management System, ISO 14001:2015 -Environmental Management System and OHSAS 18001:2007-Occupational Health and Safety Management System) w.e.f. 27.04.2018 and Certification is valid till 22.12.2019.


Consequent to the negotiations held between INSA Negotiating Committee and MUI Representatives for revision of INSA-MUI Wage

Agreements of Officers serving on Foreign-Going, Home Trade and Offshore Support Vessels, the revised INSA-MUI Wage Agreement for the period effective 01.04.2015 to 31.03.2019 was signed on 03.10.2017.

There is an acute shortage of senior Floating Staff officers, especially in the ranks of Masters, Chief Engineer Officers and 2nd Engineer Officers. The Fleet Personnel Department is trying to mitigate the shortage by recruiting officers on direct contract and through manning agents by offering market-related wages which have been revised significantly in the Main Fleet and Offshore Sector. However, the shortage continues due to taxation issues.

To facilitate development of employees with an aptitude for learning and for improving their in-born skills, the department organized the following seminars and training programmes:

i.    Professional Development Course for ratings on 30th November and 1st December 2017.

ii.    Professional Development Seminar for the senior officers on 30th November and 1st December 2017 covering topics like Maritime Labour Convention, Automation and Control Engineering, SEEMP Risk Management, Vetting Requirements, Safety and Security Issues, Vessel Resource Management, Hydraulic and Pneumatic control etc.

To uphold and appreciate the safety culture, the Fleet Safety Awards function was organized on 01.12.2017. The fleet was divided into nine groups and against stiff competition the following nine vessels were awarded Fleet Safety Awards for being the Safest Ships in the year 2016.

Tanker Group T1:    M.T. Desh Viraat

Tanker Group T2:    M.T. Swarma Kamal

Specialized Vessels Cell (SVC Gas Carrier) Group: Aseem Bulk Carrier Group:    M.V. Vishva Preeti

Container, Research and Survey:    M.V. Samudra Ratnakar

Passenger Ship Group:    M.V. Campbell Bay

SCI Offshore Vessels Group:    SCI Kundan

ONGC Offshore Vessels Group:    N.B. Prasad

MSV Offshore Vessels Group:    Samudra Sevak

The Master and leading categories of officers and ratings of the prize winning ships were invited and they participated in the event.

To ensure an uninterrupted supply of officers, deck cadets, on completion of their shipboard training and subsequent to their obtaining the certificate of competency, are being offered regular employment on the terms of INSA-MUI Agreement.


Your company’s Maritime Training Institute (MTI) at Powai has been awarded two prestigious awards in 2017 for excellence in maritime education - The Maritime Standard Award, Dubai and Lloyd’s List: South Asia Middle East & Africa Award, Dubai. Approvals have been sought for commencing new courses at MTI Powai, including Second Mate (F.G.) function course (competency course), Electro -Technical Officer (ETO) Course, ROC-ARPA (Radar Observer's Course - Automatic Radar Plotting Aids), Proficiency in Survival Craft and Rescue Boats (PSCRB), and few others to cater to SCI and external participants in both - Nautical and Engineering domain. Presently, four batches of Diploma in Nautical Sciences (DNS) at Powai campus and two batches of Diploma in Nautical Science (DNS) Course at Tuticorin campus are underway. MTI, Powai has also successfully commenced two batches of Graduate Marine Engineering (GME) this year. Regular Guest lectures, seminars, professional development programs and skill enhancement programs are being conducted for all ranks of officers, petty officers, ratings and shore officers to enhance their competence and build a sense of belonging in them towards the company.

Your Company’s Training Centre - Maritime Training Institute at Powai, Mumbai has been assigned GRADE A1 (Outstanding) rating by Class NKK after the inspection as per the Comprehensive Inspection Programme Guidelines of the Director General of Shipping. The Institute has also improved upon the Indian Maritime University (IMU) ranking from 19th to 14th and aims to reach in top 10 Maritime Training Institutes. MTI has actively contributed to the discussions and meeting for skill development and employment creation in Maritime sector under the purview of Sagarmala, Ministry of Shipping, Government of India.

Your Company’s Training Centre at the Maritime Training Institute at Powai, Mumbai has conducted 333 Courses for 5545 participants and the total man-days trained during this year is 101114. These included 92321 man-days for SCI’s personnel and 8793 man-days for personnel from other companies. In addition to this, 164 of SCI’s personnel were trained outside MTI and the additional man-days of training are 535. However, 105 SCI shore personnel were provided 105 man-days of in-house training. Every endeavour is made to ensure that our training institute is self-sustaining.

Reservation policy

- At MTI we have followed centre's policy of reservation during the cadet admissions. We had admitted the DNS cadets as per the table below:







Jul 2017

42, 43 & 44





Jan 2018

45, 46 & 47





















2.2 Information towards major achievement during the year under Review i.e. FY 2017-18 Non-Academic Achievements:


SCI-MTI became the first Green Campus in Maritime Education Industry in 2017.

SCI-MTI has already increased its solar power generation capacity to 0.5 MW and reduced its electricity bills by approx. 50 - 60% on monthly basis.

SCI-MTI is also utilizing the in-campus natural waste (leaves etc) to create manure and Lake/Well Water for gardening work in MTI campus.

B.    Wi-Fi

SCI-MTI has sought management approval for becoming a Wi-Fi enabled campus. M/s. Reliance Jio is in process of providing the Wi-Fi infrastructure and required internet access in the campus.

Academic Achievements

SCI-MTI has been awarded with the following awards this year;

Lloyd’s List: South Asia Middle East & Africa Award - ‘Training Award’, Dubai

The Maritime Education & Training Award at The Maritime Standard Award (TMSA), Dubai

Pass percentage for first semester IMU exams have gone up from 62% to 79% in December 2017 examinations in comparison to June 2017 examinations.

Sessions, lectures and training beyond academia has been provided to participants at SCI-MTI, pertaining to stress management, yoga and holistic development.

C.    Business Development Initiatives

SCI-MTI has aggressively communicated about its pre-sea courses (DNS and GME) to various schools, colleges, and coaching institutes for increasing awareness of Merchant Navy as a career and about academic and career opportunities with SCI-Maritime Training Institute. Institute’s various courses are being offered to non-marine industry as well for skill development and enhancement, such as Fire Prevention and Fire Fighting Techniques, Training of Trainers and Assessors etc.

D.    Others

E.    The Fleet Safety Awards function was held at the MTI Auditorium on 01st December, 2017.

3    Shore Personnel

The total manpower as on 01.05.2018 is 718 excluding CMD, five Functional Directors and CVO, out of which 661 are officers and 86 are staff members.

Various training programmes, both in-house and outside, including General Management Training programmes have been held for the employees for development of their skill sets and domain knowledge.

4    Reservation Policy

Your company is complying with all government guidelines as applicable from time to time in respect of reservation policy so as to empower the weaker sections of the society.


Annual Statement showing the representation of SCs, STs and OBCs as on 1st January 2018 and number of appointments made during the preceding calendar year:

Name of the Public Enterprise: The Shipping Corporation of India Ltd.


Representation of SCs/STs/OBCs (As on 1.1.2018)

Number of appointments made during the calendar year 2017

By Direct Recruitment

By Deputation/ Absorption

Total no. of employees




































Non Executives B





































(Executives in Grade ‘A’ plus Non - executives)












6    Women Representation

Your company is committed to the principle of equal employment opportunity and strives to provide employees with a work place free of discrimination. All HR activities of recruitment, placement, promotion, transfer, separation, compensation, benefits and training ensure equal opportunities for skill enhancement and career progression.

Your company’s efforts are reflected in the representation of women across various hierarchical grades. At present women constitute around 20.75% of total workforce at shore establishments of your company.

SCI has been the pioneer in India with regards to recruiting women for jobs on board its fleet. Presently, four Masters, five Chief Officers, two Second Engineers, 36 Second/Third Officers and Third/Fourth Engineers are women serving on various types of ships.

Your company encourages active involvement in the activities of the Forum of Women in Public Sector (WIPS) since its inception. WIPS, Western Region, under the aegis of SCOPE has appreciated your company’s efforts by conferring the “Best Enterprise Award (2nd Prize)” under Navratna Category.

7    Policy to prevent sexual harassment in workplace

Your company promotes gender equality and has been taking proactive measures to prevent any Sexual Harassment at workplace. Your company has constituted a committee comprising of senior women executives and a woman representative from the NGO Pratham to enquire into complaints of Sexual Harassment at the workplace. One case of sexual harassment have been reported during the year ended 31st March, 2018 for which enquiry is in progress.

8    Corporate Social Responsibility (CSR) and Sustainable Development (SD)

The Corporate Social Responsibility vision of your company articulates its aim to be a corporate with its strategies, policies and actions aligned with wider social concerns, through initiatives in education, public health, environment and other areas of social upliftment.

Your company has framed its CSR policy in line with the guidelines contained in the Companies Act 2013 and Companies (CSR Policy) Rules, 2014 notified therein and constituted a CSR - SD committees as per the act to coordinate and oversee the implementation of CSR initiatives. The budget available for CSR initiatives in the year 2017 - 18, as per applicable provisions was Rs. 5.85 Crores. Against the available budget, your company allocated Rs. 5.85 Crores against following initiatives in the year 2017-18. The details about the policy developed and implemented by your Company on CSR initiatives taken during the year is available on SCI's website at the following link : http://www. In line with the above vision following initiatives have been undertaken:

(i)    Promoting Preventive Health Care: Your Company has joined hands with Vivekananda Medical Research Trust, Palampur to start Urology Surgeries program at Vivekananda Medical Institute. Your company has also joined hands with Sri Chaitanya Seva Trust for supporting financially weaker patients battling with Cancer for surgeries at Bhaktivedanta Hospital & Research Institute, Thane.

(ii)    Promotion of Education - Your company awarded scholarships to meritorious students from weaker section of the society, viz. SC/ST/ BPl candidates, pursuing Ocean Engineering/Naval Architecture/Nautical Science/GME courses at premier institutes (IMU’s, IIT’s & MTI) to encourage and support Maritime Education in the country.

9    Women Empowerment & Gender Equality

Your Company has undertaken following initiatives under this head:

a) Supporting Parichay Foundation for providing bicycles to 59 girls coming from financially weaker background of tribal areas of Orissa. This will help these girls to reach their place of study, thus empowering them to continue with their education.

b)    Joining hands with Sahayog Society for Participatory Rural Development for supporting the project ‘Badhte Kadam, Buland Awaazein’ -An initiative to reduce girl dropout rates in schools by reducing violence against girls and promoting menstrual hygiene management facilities.

c)    Supporting Uddipan Educational Trust (UET) for construction of Girls’ Hostel for less privileged girls.

d)    Joining hands with Apparel Made-Ups & Home Furnishing Sector Skill Council (AMHSSC) for skill development training of 150 women

10    Environmental Sustainability & Rural Development - Your Company has joined hands with Rajasthan Electronic & Instruments Ltd. for Installation & Commissioning 100 Solar Photovoltaic Based Led Street Lighting Systems at Purna, Bihar for ensuring better illumination in the streets, safety and security and extended night life in the villages.

11    Eradicating Hunger & Malnutrition - Your Company is supporting Akshaya Patra Foundation for provision of mid-day meals to 1121 school children.

12    Employment Enhancing Vocational Skills for Divyangjans - Your Company has joined hands with The National Association of Disabled's Enterprises for setting up a Livelihood Project, printing & stationary manufacturing to provide training & employment to 100 divyangjans. Your Company has also joined hands with National Handicapped Finance & Development Corporation to provide skill development training to the 150 divyangjan to make them capable and self-dependent.

13    Swachh Bharat Abhiyan & Ganga Rejuventaion - Your Company undertook the construction/renovation/maintenance of 145 toilets across the country and your Company is also supporting for Solid Waste Management at port Blair under Swachh Bharat Abhiyan of Govt. of India. Additionally, your Company has joined hands with the National Mission for Clean Ganga for development of Katwa Ghat, West Bengal.

14    Recently, in wake of the Okhi Cyclone, your Company also initiated distribution of blankets to cyclone affected fishermen.

Against the allocation of Rs. 5.85 Crores, Rs. 1.70 Crores have already been spent and balance will be released on achievement/completion of project specific timelines.

15    Implementation of Official Language Policy

With an objective to implement the Official Language policy of the Govt of India, your Company remain committed to enhance the usage of Hindi in its day-to-day affairs during the year under report. In order to achieve the targets prescribed in the Annual Programme issued by the Ministry of Home Affairs, your Company organized various Hindi activities and competitions at a regular interval. Besides this, a half-day Hindi Unicode computer workshops were also conducted on monthly basis to train employees in Hindi on computers.

Your Company has also created an atmosphere to spread the use of Hindi through email correspondence by introducing a Quarterly Hindi correspondence incentive scheme. As a result, a number of employees are encouraged to take active part in this Scheme, and the eligible employees are being rewarded every quarter.

During the Hindi Pakhwara in September 2017, an appeal by CMD was emailed to all employees calling upon them to increase Hindi work in official correspondence, and thereafter, a Linguistic Harmony Culture Programme was organized for employees wherein poetry recitals and songs in different regional Indian languages like Marathi, Gujarati, Punjabi were presented. Your Company also attended TOLIC meetings during the year under report.

16    Procurement

Your company enters into rate contract on periodical basis for procurement and supply of high value and safety items like Marine Lubes, Marine Paints, Charts, Wire ropes, LSA / FfA, Life Rafts etc. This ensures timely supply of quality goods / services to the vessels at reasonable price. Being a responsible Corporate, your Company continues to support the medium and small scale Enterprises by procuring a part of its supplies and services from MSME.

17    Protection & Indemnity (P&I) Insurance

Protection and Indemnity (P&I) Insurance cover entered with 3 Group P&I Clubs for your company’s fleet for the policy year 2018-19 commencing from 20.02.2018 has been negotiated by your Company. Your Company, after protracted negotiations, was able to obtain a further reduction of 3.47% over and above the reductions obtained in the last financial year in the renewal premium over the expiring premium resulting in a net reduction of USD 178,727 towards renewal premium for policy year 2018-19.

Further, your company is glad to inform you that Group P&I Clubs have refunded 5% - 10% of the annual premium for the policy year 2017-18 to your company (and other members) in view of their better financial performance.

18    Appointment and Remuneration Policy

The appointments in your company are done in accordance with Government of India guidelines. The remuneration to the senior management and other shore employees of your company is governed by the Presidential Directives issued by the Ministry of Shipping and Department of Public Enterprises (DPE), from time to time, which form the remuneration policy of your company.


A suitable mechanism has been put in place for dealing with the requests and appeals under RTI Act 2005. The RTI manual is posted on the Company’s website. Your Company has been complying with the provisions of the Act within the stipulated time limit provided under the Act. As on 31.03.2018, your Company has disposed off most of the applications and appeals received from the parties.


India LNG Transport Co.(No.1), (No.2) and (No.3) Ltd

SCI has entered into three JVCs with three Japanese Companies viz. Mitsui O.S.K.Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha Ltd (K Line) along with Qatar Shipping Company (Q Ship) in case of ILT No. 1&2 and Qatar Gas Transport Company (QGTC) in case of ILT No. 3, each owning and operating an LNG tanker deployed in the import of a total of 7.5 million metric ton per annum of LNG for the Dahej Terminal of M/s Petronet LNG Ltd (PLL). SCI is the first and only Indian company to enter into the high-technology oriented

& sunrise sector of LNG. SCI is the manager for these three companies and managing techno-commercial operations of 3 LNG tankers. India LNG Transport Co. No. 4 Ltd

SCI had entered into 4th JV formed in Singapore, with the same three Japanese companies viz. Mitsui O.S.K.Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha Ltd (K Line) along with Petronet LNG Limited (PLL), to own and operate one 173,000 CBM LNG Tanker for transporting 1.44 million metric tons of lNg from Gorgon, Australia to Kochi, India for charterers PLL. The 4th LNG carrier has been constructed at the Hyundai Heavy Industries, South Korea and was delivered on 30th November 2016. However with effect from 1st January 2018, PLL novated the time charter agreement to the new charterers Exxon Mobil Services B.V., Netherlands and the vessel is now trading worldwide. SCI is the manager for this company and is managing the techno-commercial operations since the delivery of the vessel.

SAIL SCI Shipping Pvt Ltd (SSSPL)

SCI and SAIL had co-promoted a JVC “SAIL SCI Shipping Pvt Ltd” (SSSPL), which was primarily to cater to SAILs shipping requirements. The JVC was incorporated on 19.05.2010. However, due to continued depressed freight levels, the JVC could not justify tonnage acquisition and both the Boards of SCI & SAIL decided to voluntarily wind up the company. The company is in the process of winding up.

Irano Hind Shipping Company Ltd. (IHSC)

The decision for dissolution of the Company taken by the Cabinet has been reiterated by the Ministry of Shipping and steps in this regard are being taken. Determination of assets and liabilities of the Company is being undertaken after which closure of the company as per the process stipulated under the Iranian Commercial Code will be achieved.


Inland and Coastal Shipping Limited

India has a long coastline admeasuring 7500 km. and a large network of river systems. Despite this, very little attempt has been made to interlink these natural assets for a seamless, environment friendly transport system. In a bid to remedy this lacuna, during the Maritime India Summit 2016, the Inland Waterways Authority of India (IWAI) entered into a Memorandum of Understanding with The Shipping Corporation of India (SCI) on 15th of April 2016 to develop this field of domestic transport. Both parties agreed to work towards tapping the synergies of high sea shipping, coastal shipping and inland waterways to establish an integrated system of water transportation across the hinterland, the coasts and the high seas.

For this purpose, the SCI Board approved the formation of a dedicated subsidiary company of SCI, based in Kolkata. The Company has been named as “INLAND and COASTAL SHIPPING LIMITED” (ICSL). The subsidiary company is working on development of a viable business plan on this segment.

VII    (C) SPECIAL PURPOSE VEHICLE Sethusamudram Corporation Ltd.

The Government of India had constituted Sethusamudram Corporation Limited (SCL) to raise finance and to undertake activities to facilitate operation of a navigable channel from Gulf of Mannar to Bay of Bengal through Palk Bay (Sethusamudram Ship Channel Project). As per the Government directive, this project is to be funded by way of equity contributions from various PSUs including the SCI. As on FY 201617, SCI has invested ' 50 crore in the project. Work suspended since 17.09.2007 consequent to an interim stay by the Hon'ble Supreme Court for carrying out dredging operations in Adam's bridge area. Pending a final decision on alternative alignment, all the dredgers were withdrawn since 27.7.2009. Supreme Court's final hearing on the matter was scheduled on 06.04.2018, outcome of which is not yet known. Informatively, M/s RITES was given the task of finding an alternative alignment to execute the project without affecting the Ram Sethu. The report submitted by them is under Ministry consideration.

VIII    Memorandum of Understanding (MOU) with the Ministry of Shipping

The MOU for the financial year 2018-2019 was signed on 08.05.2018. The MOU, finalized as per the guidelines issued by the Department of Public Enterprise (DPE) for the year incorporates performance targets in sync with the changing dynamics of the shipping scenario. In addition to Financial Parameters, Sector-Specific Operational Parameters and Human Resource Management parameters, as per the DPE requirements, have also been incorporated in the mOu for achieving sustained overall growth. The MOU for the financial year 2017-18 would be due for evaluation by the DPE in November 2018.

IX. Details of shares lying unclaimed

The details of the shares issued pursuant to FPO remaining unclaimed and lying in the escrow account, the voting rights of which shall remain frozen till the rightful owner of such shares claims the shares, are given as under:

Sr. No.


No. of Shareholders

No. of Shares


Aggregate number of shareholders and the outstanding shares in the suspense account lying as on 01.04.2017




Number of shareholders who approached for transfer of shares from suspense account till 31.03.2017




Number of shareholders to whom shares were transferred from suspense account till 31.03.2017




Aggregate number of shareholders and the outstanding shares in the suspense account lying as on 31.03.2018




Aggregate number of shareholders and the outstanding shares in the suspense account lying as on 30.05.2018 *



* 2 shareholders claimed 224 & 50 shares respectively and the said shares were accordingly transferred to them in the month of May 2018. The remaining shares have been transferred to IEPF.

An amount of Rs.15,14,484/- w.r.t. 46 applicants lying unclaimed in the Refund Account has been transferred to IEPF.

X Utilization of FPO Proceeds

Proceeds from public issues, right issues, preferential issues etc.

During the year 2010-11, your Company had floated a “Further Public Offer”, (FPO), comprising of a ‘fresh issue’ of 42,345,365 equity shares in your company and an ‘offer for sale’ of 42,345,365 equity shares by the President of India. The FPO proceeds of Rs. 58245 lakhs were fully utilized in the financial year 2011-12 as per object of the issue for part financing of capital expenditure on nine shipbuilding projects. However, due to delays in the projects resulting in default by the shipyards, during the period January 2014 to May 2014, your Company rescinded contracts for four shipbuilding projects and also, re-negotiated the payments for two projects. The investment in the rescinded contracts out of the FPO Proceeds was Rs. 330.65 crores.

Your Company has received back entire sum of Rs. 330.65 crores from the shipyards. The shareholders vide the resolution passed through postal ballot on 11.02.2017 approved the proposal to re-deploy the said sum of Rs. 330.65 crores received as refund from Shipyards, towards various shipbuilding projects including offshore assets and liquid petroleum gas (LPG) vessels and also for acquisition of any other such vessels, on such terms and conditions as the Board would deem fit from time to time as mentioned in the aforesaid resolution. Further based on the approval granted by the shareholders, the Company can also utilize the sum towards the balance payments remaining due for the tonnage acquisition made by it.

Out of the said amount of Rs.330.65 crs, an amount of Rs. 196.80 crs has been utilized till date as under -

Month and Year

' Crs.

Utilized for

November 2016


Equity portion of PSV - SCI Sabarmati

April 2017


Equity portion of Suezmax Tanker - Desh Abhiman

July 2017


Equity portion of PSV - SCI Saraswati

September 2017


Equity Portion of VLGC - Nanda Devi

Total Utilised till date



XI    Segment-wise Performance

Report on performance of the various operating segments of the Company (audited) is included at Note No. 32 of Notes on Financial Statements (Standalone) for the year ended 31st March 2018, which is forming part of the Annual Accounts.

XII    Internal Control System

The Company has an internal control system, commensurate with the size, scale and complexity of its operations. Internal audit is carried out by an independent firm of Chartered Accountants M/s T.R. Chadha and Co. LLP on concurrent basis. The scope and authority of the Internal Audit function is defined in the Internal Audit Plan, which is approved by the Audit Committee. To maintain its objectivity and independence, the Internal Audit function submits quarterly reports to the Chairman of the Audit Committee of the Board. The Internal Audit examine, evaluate and report on the adequacy and effectiveness of the internal control systems in the Company, its compliance with the laid down policies and procedures and ensure compliance with applicable laws and regulations. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are reviewed, deliberated and presented to the Audit Committee of the Board.

XIII    Dividend Distribution Policy

The Dividend Distribution Policy of SCI seeks to reward its shareholders for their trust and investment in Company’s business objectives. The declaration and payment of dividend will be regulated by the Companies Act 2013 (LoDR) Govt. of India’s guidelines as amended from time to time. The quantum of dividend payments will depend on annual consolidated Profits, fund requirement for company’s expansion plans, present and anticipated future business environment with special reference to Shipping Industry and various other factors impacting company’s performance. The dividend distribution will also be subjected to restrictions / conditions, if any, imposed by lenders, orders of Courts and / or statutory bodies.

XIV    Role of Vigilance Division in SCI

During the year under review, the Chief Vigilance Officer continued to ensure the integration of preventive vigilance initiatives in the business process thus striving towards greater transparency and towards improved ethical and corporate governance standards. Vigilance Division undertook activities of preventive and punitive vigilance and also ensured adoption of good and ethical corporate governance practices towards achieving the stated objective of making your Company processes fair, transparent and corruption-free.

Technology has been leveraged for achieving greater transparency and for eliminating systemic weaknesses through various implemented and ongoing initiatives such as e-payments, promoting online registration of complaints via the Vigilance Webpage contained in the SCI website; migration to Supplier Relationship Management platform for all procurements; bill tracking system and dissemination of important circulars/guidelines on the webpage.

Vigilance Division has been propagating the culture of lodging of complaints under the Public Interest Disclosure and Protection of Informers’ Resolution (PIDPI Resolution - popularly known as Whistle Blowers Resolution) whereby the identity of the complainant would be kept secret and he/she would be protected from victimization.

Vigilance Division continued to interact with various employees of SCI as well as various stake holders including Suppliers, Ship Repair Workshops, Vendors, Contractors etc. which has helped in understanding the issues from their perspective as well.

Activities of the Vigilance Division carried out in 2017-18:

During the year under review, the Vigilance Division continued the following normal activities which encompassed the 5 Ps of Vigilance:-

-    Preventive Vigilance

-    Punitive Vigilance

-    Participative Vigilance

-    Proactive vigilance

-    Predictive vigilance

The important activities that were carried out in 2017-18 by the Vigilance Division were as follows:-

A)    Investigations into complaints of corruption/malpractice were conducted.

B)    Random scrutiny of Annual Property Returns (APRs).

C)    Active monitoring of the implementation of Integrity Pact in SCI

D)    Acted as a catalyst in the implementation of preventive vigilance measures by your Management such as e-payments, bill tracking systems, phased transfers of employees posted in sensitive areas etc.

E)    Conducting surprise and periodic inspections, CTE type inspections, conducting Systems Studies and recommending systemic improvements.

F)    Selective scrutiny of Voyage Repairs Bills, dry-docking bills, various accounts.

G)    Ensuring training of Vigilance Officers both on vigilance related subjects as well as general management

H)    Imparting training to fresh recruits on vigilance issues.

I)    For the annual Vigilance Awareness Programme, apart from in-house programmes major emphasis was placed on reaching out to youth through various programmes in schools and colleges as desired by the Central Vigilance Commission.

J) The message of Vigilance Division of SCI was spread to the public via a live interview of Chief Vigilance Officer in FM Rainbow during Vigilance Awareness Week-2017.

K) Awareness campaign on board SCI ships: In order to spread the awareness about Vigilance amongst them, the Integrity pledge was administered on board the ships and banners were displayed. This was the first time that the VAW activity has been also extended to SCI’s ships.

An annual Newsletter titled “SCI Voyager” was also brought out on the occasion of Vigilance Awareness Week. This is being done with a view to spreading vigilance awareness amongst employees.

Vigilance Study Circle Mumbai Chapter:

The Vigilance Study Circle Mumbai Chapter was started on the initiative of SCI Vigilance Division on 16-8-2010. It continues to spread Vigilance awareness and develop the knowledge and skills of Vigilance Professionals and provides an ideal platform for the Chief Vigilance Officers of Mumbai based PSUs, Banks etc. to meet and exchange their views/ experiences, etc. Following activities are carried out by VSC

Mumbai chapter during the year 2017-18:

1)    Organised WALKATHON on November 02, 2017 at BKC, Bandra (E), Mumbai during the Vigilance Awareness Week - 2017. CVOs and Employees from over 25 PSUs / PSBs participated in the march against Corruption.

2)    Workshop for senior officials of PSUs/PSBs on Principles of Procurement and Departmental Proceedings was organized by VSC-Mumbai at the office of Bank of Baroda on February 02, 2018. Expert speakers on the subject were invited to share their experiences with the participants. About 50 senior officials from different PSUs/PSBs attended the workshop.

During the period under review, the Vigilance Division had investigated 27 complaints (i.e. 14 complaints B/F from previous year - 13 new complaints registered during the period and 17 complaints closed after investigation leaving 10 balance complaints.

Integrity Pact in the Shipping Corporation of India Ltd.

SCI had signed a Memorandum of Understanding (MoU) with Transparency International India for the adoption of Integrity Pact. By signing the MoU, your Company is committed to have most ethical and corruption free business dealings with the counterparties whether they are bidders, contractors or suppliers. The ‘threshold value’ for implementation of Integrity Pact in domestic goods and service contracts is Rs.1 crore. Thus, any goods/services contract of Rs.1 crore and above will incorporate the Integrity Pact thereby assuring the concerned parties of the transparent and ethical practices in SCI. During the year under review, the Integrity Pact was monitored by a panel of 2 eminent Independent External Monitors (IEMs). Meetings were held periodically with the IEMs to review the progress of implementation of Integrity Pact in SCI.

XV    UNGC compliance

Your company is a signatory to UN Global Compact initiative which signifies our commitment to uphold the ten principles of Global Compact on protection of human rights, prevention of child labour, protection of environment and anti-corruption initiatives. Your company is an equal opportunity employer and does not discriminate on grounds of sex, religion, caste, creed, colour etc. The freedom of association is recognized and allowed. Fair labour practices are followed and it is ensured that no child labour is directly/indirectly employed. Your company is committed to do business consciously and responsibly setting sustainable systems to protect the environment. Your company ensures transparency, equity and competitiveness in public procurement through various inbuilt mechanism and anti-corruption initiatives.


The GST Project went live on 01.07.2017 and SCI systems are GST ready for tax compliances. Other IT initiatives such as implementation of Business Intelligence Dashboard are being implemented. Hardware refresh project is kick started to have the latest hardware for a better performance.

XVII    Cautionary Statement

The statements made in the Management Discussion and Analysis describing Company’s objectives, projections, estimates and expectations may be “forward-looking statements” within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

XVIII    Board of Directors

Capt. Anoop Kumar Sharma, CMD (SCI) held additional charge of Director (T&OS) and Director (L&PS) up to  28.12.2017. Shri Rajesh Sood and Smt. Sangeeta Sharma were appointed as Director (T&OS) and Director (L&PS) respectively w.e.f 29.12.2017.

Shri Shambhu Singh was appointed as Additional Secretary and Financial Advisor w.e.f 3.5.2018 in place of Smt. Leena Nandan who ceased to be Director on the Board of SCI w.e.f 2.5.2018. Shri Satinder Pal Singh, Joint Secretary (MoS) was appointed as Director on the Board of SCI on 28.8.2017 in place of Shri Pravir Krishn, Joint Secretary who ceased to be on the Board of SCI w.e.f 25.7.2017.

Dr. Gautam Sinha and Shri Raj Kishore Tewari joined the Board of SCI on 29.9.2017 as Independent Directors on the Board of SCI. Dr. P Kanagasabapathi joined the Board of SCI as an Independent Director on the Board of SCI on 20.11.2017 and Shri Vijay Tulshiramji Jadhao joined as an Independent Director on the Board of SCI on 3.7.2018.

Capt. Sinha ceased to be Director on the Board of SCI w.e.f 12.8.2017 as he decided to opt for VRS which was accepted by Government of India. Mrs. H.K. Joshi, Director (F) held additional charge of Director (P&A) up to  23.4.2018. Shri Surinder Pal Singh Jaggi joined SCI as Director (P&A) on 24.4.2018.

Capt. S. Narula ceased to be Director on the Board of SCI w.e.f 1.8.2017 due to superannuation.

The Board record its appreciation for the services rendered by the concerned Directors.

XIX    Declaration of Independence

The Company has received Declaration from Independent Directors conforming that they meet the criteria of Independence as prescribed under Companies Act 2013, the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 and DPE guidelines.

XX    Auditors Report

There are no qualifications made by Statutory Auditors & no comments made by the Comptroller and Auditor General of India on the Standalone and Consolidated Financial Statements for the year ended 31st March 2018.

XXI    Secretarial Audit

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial personnel) Rules, 2014, the Board has appointed Mr. Upendra Shukla, Practicing Company Secretary to conduct the Secretarial Audit for the Company for Financial Years 2017-18 and 2018-19. The Secretarial Audit report for the FY 2017-18 is appended to the Director’s Report. The secretarial auditor in his report for the year ended 31st March, 2018 has brought out that:

The Corporation has complied with the requirements of Corporate Governance as provided under Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPE Guidelines on Corporate Governance, with the exception of appointment of Independent Directors to the extent of 50% of the total strength of the Board. It is clarified by the Corporation that the matter is being pursued with the Administrative Ministry for appointing required number of Independent Directors on the Board.

The Management views on the above observation are as follows:

As on date, the Board of SCI includes the following six Independent Directors: Shri Arun Balakrishnan (appointed on 30.03.2016) and Shri Sukamal Chandra Basu (appointed on 26.05.2016), Shri Gautam Sinha, Shri Raj Kishore Tewari (appointed on 29.09.2017), Shri P Kanagasabapathi (appointed on 20.11.2017) and Shri Vijay Tulshiramji Jadhao (appointed on 03.07.2018). SCI is following up with the Ministry of Shipping for appointment of required number of Independent Directors.

XXII    Corporate Governance

Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, report on Corporate Governance is attached to this Report.

XXIII    Directors’ Responsibility Statement

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, with respect to Directors’ Responsibility Statement, it is hereby confirmed:

(a)    That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b)    the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so asto 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 and loss of the company for that period;

(c)    the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d)    the directors had prepared the annual accounts on a going concern basis; and

(e)    the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

Explanation — For the purposes of this clause, the term “internal financial controls” means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information;

(f)    the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

XXIV    Acknowledgements

Your Directors extend their gratitude to Shri Nitin Gadkari, Union Minister of Shipping, and Shri Pon Radhakrishnan, Minister of State for Shipping and Shri Mansukhlal Mandaviya, Minister of State for Shipping and look forward to their support and guidance in managing the affairs of the Company. Your Directors also extend their gratitude to Shri Ravikant, former Secretary to the Government of India, Ministry of Shipping and the existing Secretary, Shri Gopal Krishna, Ministry of Shipping for their guidance.

Your Directors also wish to express their thanks to the officials in the Ministry of Shipping, Road Transport and Highways for the unstinted support given by them in various matters concerning the Company. Your Directors would also like to convey their thanks to other Ministries, Trade Organizations, and Shippers’ Councils, who have played a vital role in the continued success of your Company. The Directors thank the shareholders and valued customers for the continued patronage extended by them to your Company.

Last but not the least, your Directors wish to record their deep appreciation for the dedicated and loyal service of your Company’s employees, both afloat and ashore, without whose co-operation and efforts the achievements made by your Company would not have been possible.

                                                                       For and on behalf of the Board of Directors

Place : Mumbai                                              Capt. Anoop Kumar Sharma

Dated: 3rd August, 2018                                Chairman & Managing Director



Director’s Report