Essar Shipping Ports & Logistics LimitedIndia Limited, Chairman and Managing Director of Hindustan...

1

BOARD OF DIRECTORS

Shashi RuiaChairman

Ravi RuiaVice Chairman

Anshuman RuiaDirector

Sanjay MehtaManaging Director

A. R. RamakrishnanWholetime Director

V. AshokWholetime Director

R. N. BansalIndependent Director

N. SrinivasanIndependent Director

K. V. KrishnamurthyIndependent Director

Dilip J. ThakkarIndependent Director

S. V. VenkatesanIndependent Director

Deepak Kumar VarmaIndependent Director

COMPANY SECRETARYManoj Contractor

AUDITORSDeloitte Haskins & Sells

AUDIT COMMITTEE

R. N. Bansal

Anshuman Ruia

N. Srinivasan

SHARE TRANSFER & SHAREHOLDERS’ GRIEVANCECOMMITTEE

Ravi Ruia

Sanjay Mehta

A. R. Ramakrishnan

V. Ashok

REGISTERED OFFICE

Administrative Building,

Essar Refinery Complex,Okha Highway (SH-25),Taluka Khambhalia,

District Jamnagar, Gujarat 361 305.

CORPORATE OFFICEEssar House,11, Keshavrao Khadye Marg,Mahalaxmi, Mumbai 400 034.

REGISTRARS & SHARE TRANSFER AGENTSData Software Research Company Private Limited“ Sree Sovereign Complex”,22, 4th Cross Street, Trustpuram, Kodambakkam,Chennai 600 024.

2

33rd Annual Report 2008 - 2009

NOTICE TO MEMBERS

NOTICE TO MEMBERS

Notice is hereby given that the Thirty-third Annual GeneralMeeting of Essar Shipping Ports & Logistics Limited will be heldat the Registered Office of the Company at AdministrativeBuilding, Essar Refinery Complex, Okha Highway (SH-25), TalukaKhambhalia, District - Jamnagar, Gujarat 361 305 at 3.30 p.m.on Friday, July 31, 2009, to transact the following business:

ORDINARY BUSINESS

1. To receive, consider and adopt the Profit and Loss Accountfor the year ended March 31, 2009 and the Audited BalanceSheet as on that date and the Reports of the Board ofDirectors and Auditors thereon.

2. To appoint a Director in place of Mr. R. N. Bansal, whoretires by rotation and being eligible, offers himself for re-appointment.

3. To appoint a Director in place of Mr. A. R. Ramakrishnan,who retires by rotation and being eligible, offers himself forre-appointment.

4. To appoint a Director in place of Mr. Anshuman Ruia, whoretires by rotation and being eligible, offers himself for re-appointment.

5. To re-appoint Messrs. Deloitte Haskins & Sells, CharteredAccountants as Auditors of the Company to hold office fromthe conclusion of this Annual General Meeting until theconclusion of the next Annual General Meeting and to fixtheir remuneration.

SPECIAL BUSINESS:

6. To consider and if thought fit, to pass with or withoutmodification, the following resolution as an Ordinaryresolution:

“RESOLVED THAT Mr. S. V. Venkatesan, who wasappointed as an Additional Director by the Board ofDirectors pursuant to Section 260 of the Companies Act,1956 and who holds office upto the date of this AnnualGeneral Meeting and in respect of whom the Companyhas received a notice in writing under Section 257 of theCompanies Act, 1956, proposing his candidature for theoffice of Director, be and is hereby appointed as Directorof the Company.”

7. To consider and if thought fit, to pass with or withoutmodification, the following resolution as an Ordinaryresolution:

“RESOLVED THAT Mr. Deepak Kumar Varma, who wasappointed as an Additional Director by the Board ofDirectors pursuant to Section 260 of the Companies Act,1956 and who holds office upto the date of this Annual

General Meeting and in respect of whom the Companyhas received a notice in writing under Section 257 of theCompanies Act, 1956, proposing his candidature for theoffice of Director, be and is hereby appointed as Directorof the Company.”

By Order of the Board

MANOJ CONTRACTORCompany Secretary

Mumbai

May 18, 2009

Notes:

1. A member entitled to attend and vote at the meeting isentitled to appoint one or more proxies to attend and voteinstead of himself on a poll. The proxy need not be amember of the Company. Proxy forms in order to beeffective should be deposited at the Registered Office ofthe Company not less than 48 hours before the time fixedfor the meeting.

2. Members / Proxies should bring the attendance slip dulyfilled in for attending the meeting.

3. The Register of Members and Share Transfer Books of theCompany will remain closed from Monday, July 27, 2009to Friday, July 31, 2009, both days inclusive.

4. The members are requested to immediately notify, in theirown interest, the change in their mailing address to theCompany’s Registrars and Share Transfer Agents, DataSoftware Research Company Private Limited, “SreeSovereign Complex”, 22, 4th Cross Street, Trustpuram,Kodambakkam, Chennai 600 024, Tel : 91-44-24801664,Fax: 91-44-24834636.

5. Members who are holding shares in identical order ofnames in more than one folio are requested to send to theCompany the details of such folios together with the ShareCertificates for consolidating their holdings in one folio.Members are fur ther advised to hold the shares indematerialised form, as the trading of the shares onBombay Stock Exchange and National Stock Exchangewhere the shares of your Company are listed is incompulsory demat mode.

6. Members are informed that in case of joint holders attendingthe meeting, only such joint holder who is higher in theorder of names will be entitled to vote.

7. In terms of Section 109A of the Companies Act, 1956,

3

Notice to the members

members are entitled to make nomination in respect ofshares held by them in physical form. Members desirousof making nominations are requested to send their requestsin Form 2B, in duplicate, to the Secretarial Department atthe Registered Office of the Company or to the Registrarsand Share Transfer Agents – Data Software ResearchCompany Private Limited.

8. Members desiring any information regarding the accountsare requested to write to the Company at “Essar House”,11, Keshavrao Khadye Marg, Mahalaxmi, Mumbai 400 034atleast 10 days before the date of the meeting to enablethe Company to keep the information ready.

9. Appointment / Re-appointment of Directors:

At the ensuing Annual General Meeting, Mr. R. N. Bansal,Mr. A. R. Ramakrishnan and Mr. Anshuman Ruia retire byrotation and being eligible offer themselves forre-appointment. Mr. S. V. Venkatesan and Mr. Deepak KumarVarma are proposed to be appointed as Directors. Theinformation pertaining to the aforesaid Directors in termsof Clause 49 of the Listing Agreement with the StockExchanges is annexed hereto.

10. The Explanatory Statement pursuant to Section 173(2) ofthe Companies Act, 1956 in respect of the special businessat Item Nos. 6 and 7 hereinabove, is annexed hereto.

ANNEXURE TO NOTICE:

EXPLANATORY STATEMENT PURSUANT TOSECTION 173(2) OF THE COMPANIES ACT, 1956

Item No. 6

Mr. S. V. Venkatesan was appointed as an Additional Director ofthe Company with effect from October 31, 2008. In terms ofSection 260 of the Companies Act, 1956 and in accordance withArticle 73 of the Articles of Association of the Company,Mr. Venkatesan holds office upto the date of the ensuing AnnualGeneral Meeting.

The Company has received a notice from a member underSection 257 of the Companies Act, 1956, with requisite depositproposing the name of Mr. Venkatesan as a candidate for theoffice of Director of the Company.

Accordingly, the resolution at Item No. 6 of the notice is beingproposed for his appointment as Director of the Company.

Mr. Venkatesan is B.Com., CAIIB by qualification and a GoldMedalist in Commerce from Madras University.

Mr. Venkatesan has over 40 years experience in the field ofbanking and finance with 24 years in State Bank of India, a leadingnationalised bank. Mr. Venkatesan has vast experience in theareas of resource mobilisation through Capital Markets andInstitutions to fund large capital intensive projects.

He is an Independent Director of many public limited companies.Your Board is of the opinion that the appointment ofMr. Venkatesan would be in the best interest of the Company.Your Directors accordingly recommend the resolution at Item No.6 of the Notice for your approval.

None of the Directors, except Mr. Venkatesan, is concerned orinterested in this resolution.

Item No. 7

Mr. Deepak Kumar Varma was appointed as an Additional Directorof the Company with effect from October 31, 2008. In terms ofSection 260 of the Companies Act, 1956 and in accordance withArticle 73 of the Articles of Association of the Company, Mr. Varmaholds office upto the date of the ensuing Annual General Meeting.

The Company has received a notice from a member underSection 257 of the Companies Act, 1956, with requisite deposit,proposing the name of Mr. Varma as a candidate for the office ofDirector of the Company.

Accordingly, the resolution at Item No. 7 of the notice is beingproposed for his appointment as Director of the Company.

Mr. Varma is B.E. (Mech) and MBA by qualification and is aManagement Consultant and Arbitrator by profession. He is alsomember of the Indian Council of Arbitrators.

During his career, Mr. Varma has held various senior managementpositions such as senior executive positions in Steel Authority ofIndia Limited, Chairman and Managing Director of HindustanShipyard Limited, Chairman and Managing Director of CochinShipyard Limited, Managing Director of National Ship Design &Research Centre (NSDRC), Chairman and Managing Directorof Rashtriya Chemical & Fertilizers Limited, Chairman andManaging Director of Fertilizers & Chemicals (Cochin), Director& Group Leader of Oman India Fertilizers (OMIFCO) andChairman of the Standing Conference of Public Enterprises, theApex Body of all Central PSU’s.

Your Board is of the opinion that the appointment of Mr. Varmawould be in the best interest of the Company. Your Directorsaccordingly recommend the resolution at Item No. 7 of the Noticefor your approval.

None of the Directors, except Mr. Varma, is concerned orinterested in this resolution.

By Order of the Board

MANOJ CONTRACTORMumbai Company SecretaryMay 18, 2009

4


Mr. R. N. BansalMr. R. N. Bansal has done his graduation in Commerce and M.A. in Economics.He is also a Fellow Member of the Institute of Chartered Accountants ofIndia, Associate Member of the Institute of Chartered Secretaries andAdministrators, London and Associate Member of the Institute of CompanySecretaries of India.

During his career, Mr. Bansal served as Investigating Officer in the BoseCommission of Enquiry. He was the Deputy Director Inspection, Registrar ofCompanies, Punjab, Himachal Pradesh and Haryana. He was also theRegistrar of Companies, Chennai, Tamilnadu and Maharashtra. Mr. Bansalwas Additional Director of Inspection and Investigation, Company Law Board,New Delhi, Regional Director (Southern and Western Regions), Director(Investment) and Additional Controller of Capital Issues, Department ofEconomic Affairs, Ministry of Finance and Member Company Law Board. Hedealt with matters relating to share transfer appeals, Company Law BoardsBench Petitions, Policy Rules and Amendment of the Companies Act, MRTPActs etc. He served as Government Nominee Director on all major StockExchanges.

Mr. Bansal was member/conveyor of various Study Groups set up by theGovernment of India. Mr. Bansal also served as the Government NomineeMember on the Central Council of the Institute of Chartered Accountants ofIndia and the Institute of Company Secretaries of India. He was DeputyChairman of the Governing Council of the Rajiv Gandhi Cancer Hospital,Delhi.

Mr. Bansal is serving as an independent Director on the Board of variousIndian public limited companies viz., Chambal Fertilizers & Chemicals Limited,Gobind Sugar Mills Limited, Spice Mobiles Limited, Pushpsons IndustriesLimited, Orient Ceramics & Industries Limited, The Hindoostan Spinning &Weaving Mills Limited, Vadinar Oil Terminal Limited and Essar LogisticsLimited.

Mr. Bansal is the Chairman of the Audit Committee of Spice Mobiles Limited,Pushpsons Industries Limited, Orient Ceramics & Industries Limited. He isalso a member of the Audit Committee of Chambal Fertilizers & ChemicalsLimited, Gobind Sugar Mills Limited, The Hindoostan Spinning & WeavingMills Limited and Vadinar Oil Terminal Limited. Mr. Bansal is the Chairman ofthe Investors Grievance Committee of Chambal Fertilizers & ChemicalsLimited.

Mr. Bansal does not hold any shares in the Company.

Mr. A. R. RamakrishnanMr. A. R. Ramakrishnan graduated in Mechanical Engineering with an HonoursDegree and is a Post Graduate from the Indian Institute of Management,Kolkata. He has been associated with the Essar Group since 1992. He spentthe first two and half years as a Business Analyst, dealing with all the EssarGroup companies. He joined the management team of Essar Shipping at theend of 1994 as General Manager (Commercial). In 1999, he took over asChief Operating Officer. Mr. Ramakrishnan is the Wholetime Director of theCompany since July 31, 2006. Prior to joining the Essar Group,Mr. Ramakrishnan was employed with Godrej & Boyce ManufacturingCompany Limited for 12 years gaining experience in marketing, sales,manufacturing, systems and finance. He has wide experience in dealing withinternational companies and agencies, including building joint ventures.

Mr. Ramakrishnan is also a Director on the Board of Indian NationalShipowners’ Association.

Mr. Ramakrishnan does not hold any shares in the Company.

Mr. Anshuman RuiaMr. Anshuman Ruia is a Commerce Graduate and has over a decade’sexperience in overseeing Essar Group’s major businesses. He currently looksafter Essar’s Shipping Ports & Logistics, Communications, Power and BPO

Annexure to Notice:

Details of Directors seeking re-appointment / appointment at the Thirty-third Annual General Meeting in pursuance ofClause 49 of the Listing Agreement.

businesses. Mr. Ruia is responsible for the expansion and diversification ofthe Power business into new, renewable energy sources and the plans forentry into transmission and distribution. He is also involved in new businessventures of the Group in India and overseas. In addition, he also works onthe consolidation of the Group’s business enterprises and strategy for growth.He is a member of the YPO (Young Presidents’ Organisation).

Mr. Ruia is also a Director on the Board of Essar Oil Limited, Essar PowerLimited, Vadinar Power Company Limited, Mahan Coal Limited, Essar BulkTerminal Limited, Vadinar Oil Terminal Limited, Vodafone Essar Limited, IndiaSecurities Limited, Essar Capital Limited, Aegis Limited and Essar CapitalHoldings (India) Limited.

He is a member of the Audit Committee of Vadinar Power Company Limited,Essar Bulk Terminal Limited, Vadinar Oil Terminal Limited, Aegis Limitedand India Securities Limited. He is also a member of the Share Transfer andShareholders Grievance Committee of India Securities Limited.

Mr. Ruia does not hold any shares in the Company.

Mr. S. V. Venkatesan

Mr. S. V. Venkatesan is a B. Com., CAIIB by qualification and a Gold Medalistin Commerce from Madras University.

Mr. Venkatesan has over 40 years experience in the field of banking andfinance with 24 years in State Bank of India, a leading nationalised bank.Mr. Venkatesan has vast experience in the areas of resource mobilisationthrough Capital Markets and Institutions to fund large capital intensiveprojects.

Mr. Venkatesan is also a Director on the Board of various Indian public limitedcompanies viz., Essar Investments Limited, Essar Power Tamilnadu Limited,Essar Steel Limited, Bhander Power Limited, Essar Power MP Limited, AsiaMotor Works Limited, Essar Information Technology Limited, EssarTeleholdings Limited, Essar Constructions (India) Limited, India SecuritiesLimited, Essar Capital Limited, Lancor Holdings Limited, Best & CromptonEngineering Limited and Essar Power Limited.

Mr. Venkatesan is a member of the Audit Committee of Essar Steel Limited,Essar Constructions (India) Limited, India Securities Limited, EssarTeleholdings Limited and Essar Power Limited. He is the Chairman of theShare Transfer and Shareholders Grievance Committee of India SecuritiesLimited and a member of the Share Transfer and Shareholders GrievanceCommittee of Essar Steel Limited, Essar Power Limited and Essar PowerMP Limited.

Mr. Venkatesan does not hold any shares in the Company.

Mr. Deepak Kumar Varma

Mr. Varma is B.E. (Mech) and MBA by qualification and is a ManagementConsultant and Arbitrator by profession. He is also member of the IndianCouncil of Arbitrators.

During his career, Mr. Varma has held various senior management positionssuch as senior executive positions in Steel Authority of India Limited,Chairman and Managing Director of Hindustan Shipyard Limited, Chairmanand Managing Director of Cochin Shipyard Limited, Managing Director ofNational Ship Design & Research Centre (NSDRC), Chairman and ManagingDirector of Rashtriya Chemical & Fertilizers Limited, Chairman and ManagingDirector of Fertilizers & Chemicals (Cochin), Director & Group Leader ofOman India Fertilizers (OMIFCO) and Chairman of the Standing Conferenceof Public Enterprises, the Apex Body of all Central PSU’s.

Mr. Varma is also a Director on the Board of Venus Insurance BrokingCompany Limited.

Mr. Varma does not hold any shares in the Company.

5

To the Members of Essar Shipping Ports & Logistics Limited

Your Directors take pleasure in presenting the Thirty-third Annual Report of your Company together with Audited Accounts for the year ended March31, 2009. Pursuant to the provisions of Section 219 of the Companies Act, 1956 and as permitted by the Securities and Exchange Board of India(SEBI), the abridged annual accounts of the Company are enclosed. Any member interested in obtaining a copy of the unabridged accounts maywrite to the Company Secretary at the Registered Office.

1. FINANCIAL RESULTS

DIRECTORS’ REPORT

The summary of the standalone and consolidated financial results of your Company for the year ended March 31, 2009 are furnished below:

(Rs. in crore)

Particulars Consolidated Standalone

For the year For the year For the year For the yearended 31-03-2009 ended 31-03-2008 ended 31-03-2009 ended 31-03-2008

Total Income 2,676.57 2,255.67 1154.71 1063.93

Total Expenditure 1,739.70 1,460.36 748.15 598.73

EBITDA 936.87 795.31 406.64 465.20

Less: Interest & Finance charges 434.80 266.55 129.22 89.19

Less: Provision for Depreciation 377.82 221.48 159.45 106.64

Profit before Tax 124.25 307.28 117.97 269.37

Less: Provision for Tax 47.05 43.68 10.31 27.70

Profit before Share of Minority Interest 77.20 263.60 107.66 241.67

Add: Share of Minority Interest (loss) - 13.81 - -

Profit after Tax 77.20 277.41 107.66 241.67

On a consolidated basis, during the year under review, your Companyregistered an increase of 19% in the Total Income and an increase of18% in EBITDA as compared to the previous year. The increase in TotalIncome and EBITDA is largely attributed to the contribution by the Ports& Terminals and Oilfields Services business.

On a standalone basis which is represented by the Sea TransportationBusiness, your Company registered an increase of 8.54% in the TotalIncome during the year under review. The EBITDA for the year underreview included Rs.197.10 crore being profit on Sale of Fleet andCurrency Exchange Gain of Rs.75.65 crore.

2. DIVIDEND

Your Company has consolidated the Ports & Terminals business andOilfields Services business which are highly capital intensive in nature.Nurturing these new businesses in the initial phases along with theexisting business of Sea Transportation to their full capacity and thevarious capital expenditure committed would require substantialresources. All this necessitates the operating profits to be ploughed backinto the businesses. With a view to conserving resources for theserequirements, your Directors have not recommended any dividend forthe year ended March 31, 2009.

3. REORGANISATION

Essar Sisco Ship Management Company Limited, India, (ESSMC), awholly owned subsidiary of the Company and India Shipping, Mauritius(IS) have been amalgamated with the Company with effect from April 1,2008 (the appointed date) in terms of Scheme of Amalgamation (theScheme) sanctioned by the Honorable High Court of Madras andHonorable High Court of Gujarat vide their orders dated December 18,2008 and January 16, 2009 respectively.

Directors’ Report

In accordance with the Scheme, the undertaking of ESSMC and IS beingall its assets and debts, outstandings, credits, liabilities, duties andobligations, have been transferred to and vested in the Companyretrospectively with effect from the appointed date.

Pursuant to the Scheme:

a) The sole shareholder holding fully paid up equity shares in IS wasallotted 364,905,489 equity shares of the Company based onallotment of 32 equity shares of Rs.10/- each (Rs.364.91 crore), ata premium of Rs.210/- per share (Rs.7,663.02 crore) for everyhundred equity shares of US$ 1 each held in the capital of IS and175,299,376 equity shares (including 376,000 GDS representedby 124,456,000 equity shares) of the Company held by IS havebeen cancelled. The net excess of the value of additional shares(shares allotted to the shareholder of IS reduced by the sharesalready held by IS and cancelled by the Company) issued over netassets of IS acquired by the Company amounting to Rs.3,712.43crore has been deducted from the Securities Premium Account ofthe Company as per the Scheme. The erstwhile wholly ownedsubsidiaries of IS viz., Essar Oilfields Services Limited, Mauritiusand Essar Oilfields Services FZE have become subsidiaries of theCompany.

b) No shares were issued on amalgamation of ESSMC as it was awholly owned subsidiary of the Company. The difference betweeninvestment value of equity shares of ESSMC and equity share capitalof Rs.4.36 crore has also been deducted from the SecuritiesPremium Account of the Company as per the Scheme.

4. SHARE CAPITAL

Upon issuance of shares consequent to the amalgamation, the issued,subscribed and paid up share capital stands increased to Rs.615.81 crore(includes Rs.0.13 crore on account of forfeited shares) divided into

6


615,683,320 equity shares of Rs.10/- each from the earlier Rs.426.21crore (includes Rs.0.13 crore on account of forfeited shares) divided into426,077,207 equity shares of Rs.10/- each.

5. MANAGEMENT DISCUSSION & ANALYSIS

Overview of the World Economy

Economies around the world have been seriously affected by the financialcrisis and slump in activity. The advanced economies experienced anunprecedented 7½ percent decline in real GDP during the fourth quarterof Calendar Year 2008, and output has fallen almost as fast during thefirst quarter of 2009.

Going forward, the stabilisation of the financial markets might take longerthan previously envisaged, even with strong efforts being made bypolicymakers. Monetary policy interest rates are expected to be loweredto or remain near the zero bound in the major advanced economies,while central banks continue to explore ways to use both the size andcomposition of their balance sheets to ease credit conditions. Fiscaldeficits are expected to widen sharply in both advanced and emergingeconomies, as governments are assumed to implement fiscal stimulusplans in G20 countries amounting to 2 percent of GDP in 2009 and 1½percent of GDP in 2010.

Source: International Monetary Fund.

Overview of the Indian Economy

The Indian economy, which was on a robust growth path up to 2007-08,averaging at 8.9 per cent during the period 2003-04 to 2007-08, witnessedmoderation in 2008-09, with the deceleration turning out to be somewhatsharper in the third quarter. The slowdown in the Indian economy during2008-09 has been associated with a deceleration in investment demand,which had been an important driver of growth in recent years. The adverseconditions for access to external capital, and the depressing effects ofthe global crisis on domestic business confidence contributed to themoderation in investment demand.

Based on recent production / sales data on cement, steel and automobilesthere are visible indications of a strong recovery in the industrial sector.The current recovery seen in cement, steel, automobile and in the coreindustries index is expected to gather further momentum as the two majorproblems that the industry faced in the October-December quarter ofthe financial year 2008-09 are being addressed - inventory levels decliningand liquidity easing. The industrial sector continues to repose faith indomestic demand as its investment intentions remain robust. Severalnew capacities whose commissioning was deferred during October-December 2008 are now being commissioned. New capacity expansionplans are being announced. Hence we are likely to see growth albeit at aslower rate than the one witnessed in last 5 years.

Source: Centre for Monitoring Indian Economy, Reserve Bank of India.

Your Company’s Business Performance, Opportunities and Outlook

The business model adopted by your Company is unique in nature withno peer group comparison. The business is based on the intrinsic demandfor transportation services and logistics & cargo handling infrastructurerequired by the steel, power generation and refining industry. YourCompany had reorganised its business with certain other businesses ofthe Essar Group to become a one-of-a-kind integrated logistics company.During the financial year, your Company has consolidated variousbusinesses in the areas of dry bulk ports, oil terminals and oilfields drillingservices under its fold. With interests in dry bulk ports and oil terminals,crude and dry bulk carriers, port to plant logistics and oilfield services,your Company now provides end-to-end logistics solutions to itscustomers.

a) Ports & Terminal Business:

Consolidated cargo throughput at major ports in India grew by 2.13percent in the current fiscal according to the latest data released bythe Indian Ports Association. The country’s 12 gateway ports, sixeach on the east and west coasts, handled 530.35 million tons ofcargo, compared to 519.31 million tons in the same period last year.

Your Company through its subsidiary Vadinar Oil Terminal Limited(VOTL) is operating a 10.5 million metric tons per annum (mmtpa)terminal at Vadinar on the west coast of India. VOTL is currentlyexpanding its capacity to support refinery capacity of upto 16 mmtpafrom the existing capacity of 10.5 mmtpa. The blue print for thisexpansion is being finalised. In 2009, VOTL, was awarded Five StarRating and the prestigious Sword of Honor by the British SafetyCouncil. VOTL is one of only forty organisations worldwide to beawarded with this honor, thereby recognising the high standards ofSafety maintained by your Company. In addition to the same, VOTLhas also obtained ISO 9001:2000 certification this year.

Your Company through its subsidiary Essar Bulk Terminal Limited(EBTL) is setting up an all weather deep draft dry bulk port at Hazirain Gujarat. The port will handle raw materials and finished productsfor the steel plant at Hazira. Your Company has achieved financialclosure for the project and the terminal is expected to be operationalin the current financial year.

Your Company through another subsidiary Essar Bulk Terminal(Salaya) Limited is setting up a dry bulk port facility at Salaya inGujarat. The port will handle import of coal and export of pet coke.The operations of the port are expected to begin during the financialyear 2011-12.

In view of the tremendous long term opportunities provided by theGovernment of India to privatise ports, especially containerterminals, your Company is actively pursuing development of Ports& Terminal projects through a competitive bidding route or throughJoint Ventures and Strategic Alliances.

b) Sea Transportation Business:

In the dry bulk segment a marginal increase in seaborne trade ofdry bulk commodities was witnessed. Sailing distances were shorterand port congestion fell, while technical off-hire and Chinese Coastaltrade saw an increase. During the year under consideration the drybulk fleet expanded by 6.5 percent. In view of the uncertain globaleconomic scenario resulting in restrained investment in housing andcapital equipment and reduced spending on capital goods there islikely to be a fall in the seaborne transport of iron ore, coking coaland steel products during the next two financial years.

In the energy transportation segment, global oil consumptiondeclined by 2 to 3 percent during the year. An interestingphenomenon of traders employing Very Large Crude Carriers(VLCC’s) for the purpose of storage to take advantage of the reversearbitrage that existed in the futures market was witnessed duringthe year but after the latest round of supply cuts by OPEC, the oilfutures market have witnessed a narrowing of the arbitrageopportunity thereby resulting in a decreased demand for VLCC’s.Based on the macroeconomic view and oil market forecasts thereis likely to be a significant decline in the utilisation rate of tankersand thus a decrease in freight rates for all segments of the tankermarket.

During the year under review, your Company has added twoSupramax Dry Bulk Carriers in its fleet while having sold oneCapesize vessel, one Suezmax tanker and one Product tanker. Theships were acquired, despite growing uncertainty in the markets asthey were backed by long term charters with globally reputed steel

7

majors. The philosophy of acquiring new vessels only on the basisof committed cargo from reputed companies has provided steadycashflows and is instrumental in weathering the downfall in the freightrates. Your Company was awarded the “Most Quality ConsciousIndian Shipping Company” by the Director General of Shipping forthe fourth time, which recognises the Company’s ever increasingendeavor to provide good quality services to its clients.

c) Oilfields Services Business:

In Asia-Pacific, the Indian Ocean market has been the most activerecently, with quite a few tenders being processed in all categories– jackups, standard and deepwater floaters. Mexico remains thebright light in an otherwise quiet global jackup market, where PemexExploration and Production has outstanding tenders requesting theprovision of six additional jackups, with more expected to follow. InSouth America, Petrobras is maintaining its ambitious newbuildfloater plans, with the operator expected to tender for the provisionof seven more ultra-deepwater newbuilds later in 2009.

In 2009, your Company reaped the benefit of the reorganisationthat was undertaken in 2008 with Essar Oilfields Services Limited(EOSL) becoming a subsidiary of your Company. EOSL has a fleetof 14 rigs which includes one semi submersible offshore rig andthirteen onshore rigs. The Company has successfully deployed itssemi submersible rig, “Essar Wildcat” on a long term charter in theKrishna Godavari basin on the East Coast of India during the year.Of the thirteen onshore rigs, ten are currently contracted with globalenergy majors. During the year, your Company has also enteredinto an agreement to construct two New Building Jack Up Rigs whichare expected to be delivered in 2011. “Essar Wildcat”, has receivedexcellent recommendations for a Health Safety and Environment(HSE) audit carried out by International Risk Control Asia (IRCA).This audit is one of the best tools available to maintain and verifythe condition of rigs.

d) Logistics Business:

Your Company through its subsidiary Essar Logistics Limited (ELL)provides transshipment, lighterage and trucking services to steelmills and oil refineries. ELL is now carrying out logistics handlingfor large project cargoes and is making investments in acquiringassets for project cargo movement. During the year under review,ELL handled 18.5 million tonnes of cargo.

6. RISK MANAGEMENT

Economic Risks: As a business philosophy, your Company has followedthe conservative policy of entering into long term contracts with reputedglobal majors in each of its divisions thereby ensuring long termprofitability of the Company.

Forex Risk: A majority of the revenues of your Company are in foreigncurrency which creates a natural hedge against foreign exchangeexposures. Apart from this, Essar Group’s specialised forex team providesefficient advice to mitigate the exchange risk of your Company.

Interest Rate Risk: Your Company has been undertaking suitablehedging strategies to overcome any adverse interest rate risks. It hasformulated internal target rates at which any open interest rate risk canbe hedged.

7. QUALITY, SAFETY AND ENVIRONMENT

Your Company, in order to ensure highest standard of safety, hasimplemented and initiated various measures with respect to Quality,Safety and Environment Management Systems. The initiatives by yourCompany have been rewarded with several recognitions. Some of thenoticeable ones amongst the many are as follows:

a) “Five Star Rating” and “Sword of Honor” by the British Safety Councilto the oil terminal at Vadinar.

b) ISO 9001:2000 certification for the oil terminal at Vadinar.

c) “Most Quality Conscious Indian Shipping Company” by the DirectorGeneral of Shipping.

d) ISO 9001:2000 and ISO 14001:2004 certification to the seatransportation division by ABS Quality Evaluations Inc.

e) Essar Wildcat, the semi submersible offshore rig of the OilfieldsServices business has received excellent recommendations for theHSE audit carried out by International Risk Control Asia (IRCA).

8. INTERNAL CONTROL FRAMEWORK

Your Company conducts its business with integrity and high standardsof ethical behavior and in compliance with the laws and regulations thatgovern its business. Your Company has a well established framework ofinternal controls in operation, including suitable monitoring procedures.In addition to the external audit, the financial and operating controls ofyour Company at various locations are reviewed by Internal Auditors,who report their findings to the Audit Committee of the Board.

9. HUMAN RESOURCE

Your Company has introduced contemporary Human Resource practicesto enhance technical and managerial competence of the employees andto further leverage their capabilities to enhance the performance of thebusiness. Further the Company has taken a series of initiatives to enhanceemotional and intellectual engagement of employees with the Companyand its business.

10. INFORMATION TECHNOLOGY

Your company has prepared a comprehensive roadmap forimplementation of SAP in its financial and budget management. TheCompany is also exploring various methods of automation so as to havegreater visibility and control over its assets and further improve theturnaround time thereby increasing the asset utilisation and profitability.Your Company has implemented a robust Document ManagementSystem thus improving the availability of critical information in e-modethereby reducing the use of paper.

11. SUBSIDIARIES:

Your Company had the following Subsidiaries as on March 31, 2009:1. Essar Ports & Terminals Limited, Mauritius (EPTL)

2. Vadinar Oil Terminal Limited, India (VOTL) (wholly owned subsidiaryof EPTL)

3. Essar Bulk Terminal Limited, India (EBTL) (wholly owned subsidiaryof EPTL)

4. Essar Bulk Terminal (Salaya) Limited, India (EBTSL) (wholly ownedsubsidiary of EPTL)

5. Essar Logistics Limited, India (ELL)

6. Essar Dredging Limited, India (EDL) (wholly owned subsidiary ofEBTL)

7. Essar International Limited, Guernsey, Channel Islands (EIL)

8. Energy Transportation International Limited, Bermuda (ETIL) (whollyowned subsidiary of EIL)

9. Energy II Limited, Bermuda (E-II) (wholly owned subsidiary of EIL)10. Essar Oilfields Services Limited, Mauritius (EOSL)

11. Essar Oilfields Services FZE, Dubai (EOSFZE) (wholly ownedsubsidiary of EOSL)

Essar Oilfields Services Limited and Essar Oilfields Services FZE becamethe subsidiaries of the Company and Essar Sisco Ship ManagementCompany Limited ceased to be a subsidiary of the Company with effect

Directors’ Report

8


from April 1, 2008 upon amalgamation. Essar Dredging Limited becamea subsidiary of the Company on January 12, 2009.

Subsequent to March 31, 2009 two more companies have becomesubsidiaries of the Company viz. Essar Oilfield Services India Limited(effective April 13, 2009) and Vadinar Ports & Terminals Limited (effectiveApril 21, 2009).

The Company has obtained exemption from the Central Governmentunder Section 212(8) of the Companies Act, 1956 from attaching theBalance Sheets, Profit & Loss Account, report of the Board of Directorsand the report of the Auditors of the subsidiary companies with the AnnualReport of the Company, as required under Section 212 of the CompaniesAct, 1956. The Company will make available the annual accounts of thesubsidiary companies to members seeking such information at any pointof time.

In accordance with Accounting Standard AS-21 on Consolidated FinancialStatements read with Accounting Standard AS-23 on Accounting forInvestments in Associates, your Directors have pleasure in attaching theAbridged Consolidated Financial Statements, which forms part of theAnnual Report.

12. DIRECTORS

In accordance with the provisions of the Companies Act, 1956 and theAr ticles of Association of the Company, Mr. R. N. Bansal,Mr. A. R. Ramakrishnan and Mr. Anshuman Ruia, retire at the ensuingAnnual General Meeting of the Company and being eligible, offerthemselves for re-appointment.

Mr. S. V. Venkatesan and Mr. Deepak Kumar Varma were appointed asAdditional Directors on your Company’s Board with effect from October31, 2008. They cease to be Directors on the date of the Thirty-third AnnualGeneral Meeting. Notices have been received from members proposingtheir appointment as Directors on the Board.

13. AUDITORS

Your Company’s Auditors, Messrs. Deloitte Haskins & Sells, CharteredAccountants, retire at the ensuing Annual General Meeting. It is proposedto re-appoint Messrs. Deloitte Haskins & Sells, Chartered Accountantsas the Auditors of the Company from the conclusion of this Annual GeneralMeeting until the conclusion of the next Annual General Meeting.

14. CORPORATE GOVERNANCE

The Company has complied with the requirements under the CorporateGovernance reporting system. The disclosures as required therein havebeen furnished in the Annexure to the Directors’ Report under the head“Corporate Governance”.

15. PARTICULARS REQUIRED UNDER THE COMPANIES(DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARDOF DIRECTORS) RULES, 1988

This does not apply to your Company as the shipping industry is notincluded in the Schedule to the relevant rules.

Foreign exchange earnings and outgo are summarised below:

Total Foreign Exchange:

(1) Earned (including loan receipts, : Rs.1,445.18 crore

sale of ships, freight, charter

hire earnings, interest income, etc.).

(2) Used (including cost of acquisition : Rs.887.70 crore

of ships, loan repayments, interest,

operating expenses, etc.).

Your Company has obtained exemption from the Central Governmentunder Section 211(4) of the Companies Act, 1956 from giving informationrequired under clauses (a), (b), (c) and (e) of Paragraph 4-D of Part II of

Schedule VI to the Companies Act, 1956 vide Order no. 46/19/2009-CL-III dated March 23, 2009.

16. PARTICULARS OF EMPLOYEES

Information as per Section 217(2A) of the Companies Act, 1956 read withthe Companies (Particulars of Employees) Rules, 1975, as amended, isgiven in the Annexure forming part of this Report. However, as per theprovisions of Section 219(1)(b)(iv) of the said Act, the Report and Accountsare being sent to all shareholders of the Company excluding the statementof particulars of employees u/s 217(2A) of the said Act. Any shareholderinterested in obtaining a copy of this statement may write to the CompanySecretary, for the same, at the Registered Office of the Company.

17. STATEMENT OF DIRECTORS RESPONSIBILITIES:

Pursuant to the requirement of Section 217(2AA) of the Companies Act,1956 the Board of Directors hereby state that:

a) in the preparation of the annual accounts, the applicable accountingstandards have been followed and there have been no materialdepartures;

b) the Directors have selected such accounting policies and appliedthem consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year andof the profit or loss of the Company for that period;

c) the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance withthe provisions of this Act for safeguarding the assets of the Companyand for preventing and detecting fraud and other irregularities;

d) the Directors have prepared the annual accounts on a going concernbasis.

18. GOVERNMENT POLICY:

The Government needs to take a serious relook at issues relating toWithholding Tax, Tax on Capital Gains on Sale of Ships, Tax on ShipStaff salary, Service Tax and Fringe Benefit Tax. Unless these are negated,the competitive edge of the Indian Shipping industry will be severellyaffected and jeopardise growth of tonnage.

19. APPRECIATION AND ACKNOWLEDGEMENTS:

Your Directors express their sincere thanks and appreciation to all theemployees for their commendable teamwork and contribution to thegrowth of the Company.

Your Directors also thank its bankers, charterers and other businessassociates for their continued support and co-operation during the year.

For and on behalf of the Board

Mumbai Sanjay Mehta R. N. BansalMay 18, 2009 Managing Director Director

Persons constituting ‘group’ coming within the definition of group asdefined in the Monopolies and Restrictive Trade Practices Act, 1969 forthe purpose of interse transfer of shares of the Company under regulation3(1)(e)(i) of SEBI (Substantial Acquisition of Shares and Takeovers)Regulations, 1997:

Sr. No. Name of the Company

1. Essar Investments Limited

2. Teletech Investments (India) Limited

3. Essar Global Limited4. Essar Shipping & Logistics Limited

9

CORPORATE GOVERNANCE REPORT

Corporate Governance Report

1. Statement on Company’s philosophy on Code of Corporate Governance

Your Company believes that adhering to global standards of Corporate Governance is essential to enhance shareholdersvalue and achieve long term corporate goals. The Company’s philosophy on Corporate Governance stresses the importanceof transparency, accountability and enhancement of shareholders value. The Board overseas periodic review of businessplans, monitors performance and ensures compliance of regulatory requirements including SEBI Regulations and Listingrequirements.

2. Board of Directors

The Company has a non-executive Chairman and Independent Directors constitutes half the total number of Directors.

A. Composition, category, attendance and number of other directorships of the Directors are furnished below:

As at March 31, 2009 the Board consisted of twelve members. The composition, category of directors and directorshipsheld in other companies was as under:

Name of Director Category of Director * No. of ** No. of Committeeoutside positions held in

Directorships other publicin other Indian companies

public companiesChairman Member

Mr. Shashi Ruia Promoter, 9 - -(Chairman) Non-Executive

Mr. Ravi Ruia Promoter, 5 - -(Vice Chairman) Non-ExecutiveMr. Anshuman Ruia Promoter, 11 - 6

Non-ExecutiveMr. R. N. Bansal Independent, 8 4 4

Non-Executive

Mr. N. Srinivasan Independent, 14 5 4Non-Executive

***Mr. K. V. Krishnamurthy Independent, 10 3 6Non-Executive

***Mr. Dilip J. Thakkar Independent, 13 5 4Non-Executive

#Mr. Deepak Kumar Varma Independent, 1 - -Non-Executive

#Mr. S. V. Venkatesan Independent, 14 1 8Non-Executive

Mr. Sanjay Mehta Non-Promoter, 5 - 1(Managing Director) Executive

Mr. A. R. Ramakrishnan Non-Promoter, - - -(Wholetime Director) ExecutiveMr. V. Ashok Non-Promoter, 4 - 2(Wholetime Director) Executive

Mr. Rewant Ruia and Mr. S. K. Poddar, Directors have resigned with effect from June 20, 2008.

* excludes foreign companies, private limited companies, Section 25 companies and Alternate Directorships.

** includes membership of Audit and Share Transfer & Shareholders’ Grievance Committee only.

*** have been appointed as Independent Directors with effect from June 20, 2008.

# have been appointed as Independent Directors with effect from October 31, 2008.

10


B. Details of Board Meetings held during the year:

Sr. Date Board No. of DirectorsNo. Strength present

1 May 8, 2008 10 8

2 June 20, 2008 12 9

3 July 29, 2008 10 4

4 September 20, 2008 10 6

5 October 31, 2008 12 9

6 January 30, 2009 12 9

7 March 26, 2009 12 7

C. Attendance of Directors at Board Meetings and at thelast Annual General Meeting:

Director No. of Board AttendanceMeetings at last AGMattended

Mr. Shashi Ruia 3 N

Mr. Ravi Ruia 2 N

Mr. Anshuman Ruia 5 N

* Mr. Rewant Ruia 1 N

* Mr. S. K. Poddar - N

Mr. R. N. Bansal 5 Y

Mr. N. Srinivasan 7 N

* Mr. K. V. Krishnamurthy 5 N

* Mr. Dilip J. Thakkar 2 Y

* Mr. Deepak Kumar Varma 3 N

* Mr. S. V. Venkatesan 2 N

Mr. Sanjay Mehta 4 N

Mr. A. R. Ramakrishnan 6 Y

Mr. V. Ashok 7 Y

* were directors for only part of the year

3. Audit Committee:

The Audit Committee of the Company inter-alia performsall the functions specified under the Companies Act, 1956and Clause 49 of the Listing Agreement.

Composition:

The Committee comprises of three Directors of which twoare Independent Directors. The Chairman of the AuditCommittee is an Independent Director. All the members ofthe Committee are financially literate and have relevantfinancial management and/or audit exposure. TheManaging Director, Director Finance, Head - Accounts,Statutory Auditors and Internal Auditors attend themeetings. The Company Secretary is the Secretary to theCommittee.

Details of Audit Committee Meetings held during the year:

Sr. No. Date Committee No. ofStrength Members

present

1 May 8, 2008 3 3

2 June 20, 2008 3 2

3 July 29, 2008 3 2

4 October 31, 2008 3 2

5 January 30, 2009 3 3

Attendance at Audit Committee Meetings:

Director No. of meetings No. of meetingsheld attended

Mr. R. N. Bansal 5 4(Chairman)

Mr. N. Srinivasan 5 5

Mr. Anshuman Ruia 5 3

4. Remuneration to Directors :

Details of Remuneration paid to the Managing Director andWholetime Directors during the year ended March 31, 2009are as under:

(Rs.)

Name of Director Basic Allowances Perquisites Contribution TotalSalary and other to Provident

benefits & Super-annuation

Fund

Mr. Sanjay Mehta, 12,00,000 50,60,868 6,50,000 1,44,000 70,54,868Managing Director

Mr. A. R. 29,16,000 54,70,080 1,20,000 3,49,920 88,56,000Ramakrishnan,Wholetime Director

Mr. V. Ashok, 27,50,004 57,04,740 45 7,42,500 91,97,289Wholetime Director

11


No Employee Stock Option Schemes have been providedby the Company till date. Services of the aforesaidExecutive Directors can be mutually terminated by givingthree months notice or three months salary in lieu thereof.

Details of sitting fees paid to Non-Executive Directorsfor the meetings held during the year ended March 31,2009:

Non-Executive Directors Sitting Fees paid forBoard / Committee

meetings(Rs.)

Mr. Shashi Ruia 22,500

Mr. Ravi Ruia 15,000

Mr. Anshuman Ruia 52,500

Mr. Rewant Ruia 7,500

Mr. R. N. Bansal 57,500

Mr. N. Srinivasan 82,500

Mr. K. V. Krishnamurthy 37,500

Mr. Dilip J. Thakkar 15,000

Mr. Deepak Kumar Varma 15,000

Mr. S. V. Venkatesan 22,500

No shares or convertible instruments are held by anymembers of the Board.

5. Share Transfer & Shareholders’ Grievance Committee:

Terms of reference:

To approve transfer, transmission, sub-division and issueof duplicate shares /debentures and for redressal of investorcomplaints on all matters.

Composition:

The Committee members comprise of Mr. Ravi Ruia, ViceChairman, Mr. Sanjay Mehta, Managing Director,Mr. A. R. Ramakrishnan, Wholetime Director andMr. V. Ashok, Wholetime Director. Mr. Ravi Ruia is theChairman of the Committee. The Executive Directors andthe Company Secretary are authorised to approve theShare Transfer and other related transactions on a day today basis under the supervision of the Committee.

Details of shareholders complaints received, solvedand pending share transfers:

There were no complaints pending at the beginning of theyear. A total of 323 complaints were received during theyear ended March 31, 2009, most of which being non-receipt of dividend/debenture warrants, non-receipt of sharecertificates. All the complaints were redressed under thesupervision of the Committee and no complaints wereoutstanding as on March 31, 2009.

All the valid share transfer requests received during theyear were duly attended to and processed in time. Therewere no valid requests pending for share transfers as onMarch 31, 2009.

6. General Body Meeting:

(a) Details of General Meetings held in last three years:

Financial Meeting Date Time Locationyear

2005-06 AGM 22-09-06 10.15 AM DayanandasagarEGM 02-01-07 11.00 AM Memor ial Hall,

ChandrasagarComplex,No. 264 /266T. Mariappa Road,2nd Block, Jayanagar,Bangalore 560 011.

2006-07 AGM 25-09-07 11.00 AM Srinivasa SagarEGM 23-02-08 11.00 AM Kalyana Mahal,

Chandrasagar Complex,No.264 /266T. Mariappa Road,2

nd Block, Jayanagar,

Bangalore 560 011.

2007-08 AGM 27-09-08 3.30 PM Administrative Building,Essar RefineryComplex, Okha Highway(SH-25), Jamnagar,

Gujarat.

(b) No special resolutions were passed in the previous3 Annual General Meetings.

(c) Three special resolutions were passed during thefinancial year 2008-2009 through postal ballot for :

i. inser ting an additional main object byamending the main objects clause of theMemorandum of Association;

ii. shifting the registered office from the State ofKarnataka to the State of Gujarat; and

iii. issuance of Corporate Guarantee.

Mr. Prem Rajani, Advocate, acted as Scrutinizer forconducting the Postal Ballot.

(d) No resolutions are proposed to be passed at theensuing Annual General Meeting which requireapproval of members through Postal Ballot.

7. Disclosures:

� There are no materially significant related partytransactions made by the Company with itsPromoters, Directors or Management, their relatives,its subsidiaries, etc., that may have potential conflictwith the interest of the Company at large.

12


C. Registrars and Share Transfer Agents:

Data Software Research Company Private Limited“Sree Sovereign Complex”, 22, 4th Cross Street,Trustpuram, Kodambakkam, Chennai - 600 024Tel: (044) 2480 1664, Fax: (044) 2483 4636E-Mail: [email protected].

D. Share Transfer System:

To expedite the process of share transfers,transmission, etc., the Board of your Company hasdelegated these powers to the Executive Directorsand the Company Secretary.

All valid share transfer requests received by theCompany in physical form are registered within anaverage period of 15 days. The Companydematerialises the shares after getting thedematerialisation requests being generated by theDepository Participant.

E. Listing on Stock Exchanges:

The Company’s securities are listed on the followingStock Exchanges:

Bombay Stock Exchange LimitedPhiroze Jeejeebhoy Towers, Dalal Street,Mumbai 400 023.

National Stock Exchange of India LimitedExchange Plaza, Bandra Kurla Complex,Bandra East, Mumbai 500 051.

Annual Listing fee for the year 2009-10 has beenpaid to both the exchanges.

F. Market price data (High /Low) during each monthin the year 2008-2009 on the Bombay StockExchange Limited and National Stock Exchangeof India Limited:

Bombay Stock Exchange National Stock Exchange

Month Highest Lowest Month Highest Lowest

April 187.95 139.05 April 179.55 140.15May 187.85 140.00 May 187.70 140.10June 146.10 93.15 June 145.90 92.55July 125.45 77.05 July 125.45 75.00August 124.30 85.50 August 124.60 86.00September 92.65 64.40 September 92.80 64.25October 64.00 31.65 October 64.00 31.00November 42.15 26.40 November 42.35 26.45December 40.50 25.10 December 40.60 25.10January 42.40 27.90 January 42.40 28.00February 36.25 28.00 February 36.10 27.00March 32.70 19.40 March 32.80 20.00

Scrip Code : 500630 Scrip Code : ESSARSHIP

� Transactions with related parties during the year aredisclosed in Note No. B 12 of Schedule 13 to theaccounts in the Annual Report.

� During the last three years no penalty or stricturehas been imposed on the Company by StockExchanges/SEBI/Statutory Authorities on mattersrelated to Capital Markets.

8. Means of Communication:

Financial results The quarterly and annual financialand other information results are displayed on theabout the Company Company’s website:

www.essar.com

Publication of Published in major newspapersfinancial results such as Financial Express and Jai

Hind, etc.

Presentation to Press releases and presentationsInstitutional Investors made to Institutional Investors andand to the Analyst Analysts are displayed on the

Company’s website :www.essar.com

Management Forms part of the Annual ReportDiscussion & which is mailed to theAnalysis shareholders of the Company

9. General Shareholders information:

A. Annual General Meeting details:

Date July 31, 2009

Venue Administrative Building,Essar Refinery Complex,Okha Highway (SH-25),Taluka Khambhalia,District Jamnagar,Gujarat 361 305.

Time 3.30 p.m.

Book Closure July 27, 2009 to July 31, 2009Dates (both days inclusive)

B. Financial Calendar:

Financial year of April 1, 2009 to March 31, 2010Company

First Quarter On or before July 31, 2009results

Second On or before October 31, 2009Quarter results

Third Quarter On or before January 31, 2010results

Annual results On or before June 30, 2010for the year

13


G. Share Price performance in comparison to BSESensex

H. Shareholding Pattern as on March 31, 2009:

Shareholding By No. of Shares %

Promoters 51,53,81,397 83.71

Financial Institutions 13,21,893 0.21Mutual Funds /BanksInsurance Companies

Other Corporate Bodies 1,45,41,479 2.37

Non-Domestic Companies / 22,709 0.00Foreign Banks

Foreign Institutional Investors 5,03,86,107 8.18

Non-Resident Individuals 9,82,589 0.16

Public 3,30,47,146 5.37

Total 61,56,83,320 100.00

I. Distribution of Shareholding as on March 31,2009:

No. of equity Number of % of Total % ofshares held shareholders share- number holding

holders of shares

Upto 5000 111746 91.90 1,43,29,725 2.33

5001-10000 6028 4.96 44,75,219 0.73

10001-20000 2193 1.80 32,03,323 0.52

20001-30000 574 0.47 14,55,656 0.24

30001-40000 261 0.21 9,35,045 0.15

40001-50000 204 0.17 9,64,961 0.16

50001-100000 303 0.25 22,92,288 0.37

100001 and above 286 0.24 58,80,27,103 95.50

TOTAL 1,19,341 100.00 61,56,83,320 100.00

J. Compliance Officer : Mr. Manoj Contractor

Company Secretary

K. Registered Office : Administrative Building,

Essar Refinery Complex,Okha Highway (SH-25),Taluka Khambhalia.

District Jamnagar,Gujarat 361 305.

L. Corporate Office : Essar House,11, Keshavrao Khadye,Marg, Mahalaxmi,Mumbai 400 034.Tel : (022) 6660 1100Fax: (022) 2354 4312

E Mail: [email protected]

M. Status of Dematerialisation of shares as on March31, 2009:

Mode No. of shares No. of folios %

Physical 37,51,15,196 68,105 60.93

Demat 24,05,68,124 53,488 39.07

TOTAL 61,56,83,320 1,21,593 100.00

10. Nomination Facility:

Shareholders holding shares in physical form and desirousof making a nomination in respect of their shareholding inthe Company, as permitted under Section 109A of theCompanies Act, 1956 are requested to submit to the R&TAgent of the Company the prescribed nomination form.

11. Outstanding GDRs/ADRs /Warrants or any convertibleinstruments, conversion date and likely impact onequity:

As on March 31, 2009 there are no GDRs/ADRs/Warrantsor any convertible instruments, conversion of which is likelyto have an impact on the equity of the Company.

12. Secretarial Audit:

A qualified Practicing Company Secretary carries outsecretarial audit to reconcile the total admitted capital withNational Securities Depository Limited (NSDL) and CentralDepository Services (India) Limited (CDSL) and the totalissued and listed capital. The audit confirms that the totalissued/paid up capital is in agreement with the total numberof shares in physical form and the total number ofdematerialised shares held with NSDL and CDSL.

14


13. Non-mandatory requirements:

1. Remuneration Committee:

The Committee comprises of three Non-ExecutiveDirectors with the Company Secretary as theSecretary of the Committee. The Committee isempowered to formulate and recommend to theBoard from time to time, the compensation structurefor Managing/Executive/Wholetime Directors and toadminister and supervise the Employee Stock OptionSchemes, whenever applicable.

2. Shareholders right:

Quarterly financial results including summary of thesignificant events in last six months are available onthe website of the Company i.e. www.essar.com. Noseparate financials are sent to shareholders of theCompany.

3. Audit qualifications:

There are no audit qualifications in the Auditor’sreport on the financial statements to the Shareholdersof the Company.

15

Declaration on Compliance of the Company’s Code of Conduct to themembers of Essar Shipping Ports & Logistics Limited

The Company has framed a specific code of conduct for the members of the Board and the Senior Management Personnel of theCompany pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges to further strengthen corporate governancepractices in the Company.

All the members of the Board and Senior Management Personnel of the Company have affirmed due observance of the said codeof conduct in so far as it is applicable to them and there is no non-compliance thereof during the year ended March 31, 2009.

Sanjay MehtaManaging Director

MumbaiMay 18, 2009

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

To the Members ofEssar Shipping Ports & Logistics Limited

We have examined the compliance of conditions of corporate governance by Essar Shipping Ports & Logistics Limited (“the Company”),for the year ended 31st March, 2009, as stipulated in clause 49 of the listing agreement entered into by the said Company with stockexchanges in India.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited toprocedures and implementation thereof, adopted by the Company for ensuring the compliance of conditions of the CorporateGovernance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company hascomplied with the conditions of Corporate Governance as stipulated in the above-mentioned listing agreement.

We state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or effectivenesswith which the management has conducted the affairs of the Company.

For Deloitte Haskins & SellsChartered Accountants

Khurshed PastakiaPartner

(Membership No. 31544)MumbaiMay 18, 2009

16


We have examined the abridged Balance Sheet of Essar ShippingPorts & Logistics Limited (“the Company”), as at 31st March, 2009and also the abridged Statement of Profit and Loss and the CashFlow Statement for the year ended on that date annexed thereto,together with significant notes thereon. These abridged financialstatements have been prepared by the Company pursuant toRule 7A of the Companies (Central Government’s) General Rulesand Forms, 1956 and are based on the audited financialstatements of the Company for the year ended31st March, 2009 prepared in accordance with the provisions of

AUDITORS’ REPORT ON ABRIDGED FINANCIAL STATEMENTSTO THE MEMBERS OF ESSAR SHIPPING PORTS & LOGISTICS LIMITED

sub-section 3(C) of Section 211 of the Companies Act, 1956 andcovered by our report of even date to the members of theCompany, which is attached hereto.


Khurshed PastakiaMumbai Partner

May 18, 2009 (Membership No. 31544)

1. We have audited the attached Balance Sheet of EssarShipping Ports & Logistics Limited (“the Company”), as at31st March, 2009 and also the Statement of Profit and Lossand Cash Flow Statement for the year ended on that dateannexed thereto. These financial statements are theresponsibility of the Company’s management. Ourresponsibility is to express an opinion on these financialstatements based on our audit.

2. We conducted our audit in accordance with auditingstandards generally accepted in India. Those standardsrequire that we plan and perform the audit to obtainreasonable assurance about whether the financialstatements are free of material misstatement. An auditincludes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. Anaudit also includes assessing the accounting principles usedand significant estimates made by management, as well asevaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for ouropinion.

3. As required by the Companies (Auditor’s Report) Order,2003, (the order) issued by the Central Government of Indiain terms of sub-section (4A) of section 227 of the CompaniesAct, 1956, we enclose in the Annexure, a statement on thematters specified in paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to inparagraph 3 above, we report that:

(i) We have obtained all the information and explanations,which to the best of our knowledge and belief werenecessary for the purposes of our audit;

(ii) In our opinion, proper books of account as required bylaw have been kept by the Company so far as appearsfrom our examination of those books;

(iii) The Balance Sheet, the Statement of Profit and Lossand the Cash Flow Statement dealt with by this reportare in agreement with the books of account;

AUDITORS’ REPORT TO THE MEMBERS OF ESSAR SHIPPING PORTS & LOGISTICS LIMITED

(iv) In our opinion, the Balance Sheet, the Statement of Profitand Loss and the Cash Flow Statement dealt with bythis report comply with the accounting standards referredto in sub-section (3C) of Section 211 of the CompaniesAct, 1956;

(v) On the basis of written representations received fromdirectors, as on 31st March, 2009 and taken on recordby the board of directors, we report that none of thedirectors is disqualified as on 31st March, 2009 frombeing appointed as a director in terms of clause (g) ofsub-section (1) of Section 274 of the Companies Act,1956.

(vi) In our opinion and to the best of our information andaccording to the explanations given to us, the saidfinancial statements, read together with the notesthereon and in particular note B(10) of schedule 13,with reference to the accounting treatment given in theSecurities premium account, give the informationrequired by the Companies Act, 1956, in the manner sorequired and give a true and fair view in conformity withthe accounting principles generally accepted in India:(a) in the case of the Balance Sheet, of the state of

affairs of the Company as at 31st March, 2009;(b) in the case of the Statement of Profit and Loss, of

the profit of the Company for the year ended onthat date; and

(c) in the case of the Cash Flow Statement, of the cashflows of the Company for the year ended on thatdate.


Khurshed PastakiaMumbai PartnerMay 18, 2009 (Membership No. 31544)

17

In our opinion and according to the information and explanations given to us,the nature of the Company’s business/activities during the year are suchthat clauses (vi), (viii), (xii), (xiii), (xiv), (xviii), (xix) and (xx) of para 4 of theCompanies (Auditor’s Report) Order, 2003 are not applicable to the Company.

1. In respect of its fixed assets:

a. The Company has maintained proper records showing fullparticulars, including quantitative details and situation of its fixedassets.

b. The fixed assets of the Company are physically verified by themanagement according to a phased programme designed to coverall the items over a period of three years, which in our opinion, islargely reasonable having regard to the size of the Company andthe nature of its assets. As per the information given to us by themanagement, no material discrepancies as compared to bookrecords were noticed in respect of fixed assets verified during theyear.

c. In our opinion and according to the information and explanationsgiven to us, the Company has not made any substantial disposalsof fixed assets during the year and the going concern status ofthe Company is not affected.

2. In respect of its inventories:

a. As explained to us, inventories were physically verified during theyear by the management at reasonable intervals.

b. In our opinion and according to the information and explanationsgiven to us, the procedures of physical verification of inventoriesfollowed by the management were reasonable and adequate inrelation to the size of the Company and the nature of its business.

c. According to the information and explanations given to us, theCompany’s inventories comprise fuel oil and lube oil on board theships. Having regard to the nature of the Company’s businessand scale of operations, quantities are determined by physicalcount and it is not considered feasible to maintain records ofmovements of inventories of such items by the vessel in whichthey are carried. As quantities are determined by physical countand records of movements are not maintained on board the ships,the question of discrepancies on physical verification thereof doesnot arise.

3. In our opinion and according to the information and explanations givento us, there are no companies, firms or parties required to be enteredinto the register maintained under section 301 of the Companies Act,1956. Accordingly, paragraphs 4(iii) (a) to (g) of the Order are notapplicable to the Company.

4. In our opinion and according to the information and explanations givento us, there is an adequate internal control system commensurate withthe size of the Company and the nature of its business for the purchaseof inventory and fixed assets and for the sale of services. During thecourse of our audit, we have not observed any continuing failure tocorrect major weaknesses in such internal controls. The nature of theCompany’s business does not involve sale of goods.

5. In our opinion and according to the information and explanations givento us, there are no contracts or arrangements that need to be enteredinto the register maintained under section 301 of the Companies Act1956.

6. In our opinion, the Company has an internal audit system commensuratewith the size of the Company and the nature of its business.

7. According to the information and explanations given to us in respect ofstatutory dues:

a. The Company has been generally regular in depositing undisputedstatutory dues, including Provident Fund, Investor Education andProtection Fund, Income Tax, Sales Tax, Wealth Tax,

ANNEXURE TO THE AUDITOR’S REPORT(Referred to in paragraph 3 of our report of even date)

Service Tax, Value Added Tax, Customs Duty, Excise Duty, Cessand any other material statutory dues, as applicable, with theappropriate authorities during the year. As informed to usEmployees State Insurance Scheme is not applicable to theCompany.

There are no material undisputed amounts payable in respect ofabove statutory dues outstanding as at 31st March, 2009 for aperiod exceeding six months from the date they became payable.

b. The details of disputed Income Tax and Sales Tax dues whichhave not been deposited as at March 31, 2009 on account ofdisputes pending, are given below:

Name of the Nature of the Amount Period to Forum wherestatute disputed (Rs. in crore) which the dispute is pending

dues amount relatesIncome Income 117.97 Assessment Appellate Authority –Act, 1961 (advance tax Year from Tribunal Level

payment 1988-1989 toRs.54.48) 2001-2002

Tamil Nadu Sales Tax and 58.10 Assessment Madras High CourtSales Tax Act, penalty thereon (security Year 1997-981959 deposit

Rs.0.50)

According to the information and explanation given to us, there wereno dues pending to be deposited on account of any dispute in respectof Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess as on31st March, 2009.

8. The Company does not have accumulated losses as at 31st March,2009. The Company has not incurred cash losses during the financialyear covered by our audit and the immediately preceding financial year.

9. In our opinion, on the basis of audit procedures and according to theinformation and explanations given to us, the Company has not defaultedin repayment of dues to banks. The Company has not borrowed anysums from financial institutions or through debentures.

10. In our opinion and according to the information and explanations givento us, the terms and conditions on which the Company has givenguarantees for the loans taken by others from banks and financialinstitutions, are not, prima facie, prejudicial to the interests of theCompany.

11. To the best of our knowledge and belief and according to the informationand explanations given to us, in our opinion, term loans availed by theCompany were, prima facie, applied by the Company during the yearfor the purposes for which the loans were obtained, other than temporarydeployment pending application.

12. According to the information and explanations given to us, and on anoverall examination of the Balance sheet of the Company, we reportthat the funds raised on short-term basis have, prima facie, not beenused during the year for long-term investment.

13. To the best of our knowledge and belief and according to the informationand explanations given to us, no material fraud on or by the Companywas noticed or reported during the year.


Khurshed PastakiaMumbai Partner

May 18, 2009 (Membership No. 31544)

Auditors’ Report

18


Particulars As at 31.03.2009 As at 31.03.2008(Rs. in crore) (Rs. in crore)

I. SOURCES OF FUNDSShareholders’ funds:a) Capital

i) Equity (refer note no. 1) 615.81 426.21b) Reserves and surplus

i) Capital reserves (refer note no. 1) 4,253.35 307.09ii) Revenue reserves (refer note no. 2) 911.14 835.89iii) Revaluation reserve (refer note no. 2) 151.09 538.01iv) Tonnage tax reserve 180.50 162.50v) Surplus in Statement of Profit and Loss 1,069.91 801.60

6,565.99 2,645.09Loan funds:a) Secured loans (refer note no. 2) 1,115.65 559.36b) Finance lease obligations (refer note no. 4) 1,134.90 778.09c) Unsecured loans 160.00 373.00

2,410.55 1,710.45

Total 9,592.35 4,781.75II. APPLICATION OF FUNDS

Fixed assets:a) Net block 2,017.14 2,123.71

(Original cost Rs.2763.98 (previous year Rs.2,680.86) crore less accumulated depreciation/impairment Rs.746.84 (previous year Rs.557.15) crore) (refer note no.2)

b) Capital work in progress - capital advances 19.68 -

2,036.82 2,123.71Investmentsa) Investments in subsidiary companies:

i) Unquoted (refer note no. 1 and 12) 6,664.56 3,107.35b) Others:

i) Quoted (refer note no. 12) 2.27 2.27ii) Unquoted [Aggregate market value of quoted investment is Rs.27.85 500.22 15.00

(previous year Rs.78.32) crore] 7,167.05 3,124.62Current assets, loans and advances:a) Inventories 14.84 21.03b) Sundry debtors (refer note no. 9) 193.90 105.94c) Cash and bank balances 19.70 134.84d) Other current assets 0.08 1.07e) Loans and advances:

i) To subsidiary companies 111.27 0.05ii) To others 91.91 252.35

431.70 515.28Less: Current liabilities and provisions:a) Liabilities 51.13 975.36b) Provisions 3.68 6.50

54.81 981.86

Net current assets 376.89 (466.58)Foreign currency monetary items translation difference account (refer note no. 2) 11.59 -

Total 9,592.35 4,781.75Refer notes to abridged financial statements.Compiled from the audited annual accounts of the Company referred to in our report dated 18th May, 2009.

ABRIDGED BALANCE SHEET AS AT 31ST MARCH 2009(Statement containing the salient features of Balance Sheet as per Section 219 (1) (b) (iv) of the Companies Act, 1956)

As per our report of even date attached For and on behalf of the BoardFor Deloitte Haskins & SellsChartered Accountants Sanjay Mehta R. N. Bansal

Managing Director Director

Khurshed Pastakia V. Ashok Manoj ContractorPartner Wholetime Director Company Secretary

Mumbai MumbaiMay 18, 2009 May 18, 2009

19

Particulars For the year ended For the year ended31.03.2009 31.03.2008

(Rs. in crore) (Rs. in crore)

INCOMEa) Fleet operating and chartering earnings 1,023.20 776.24b) Dividend from subsidiary 0.25c) Dividend on non trade current investments 1.08 1.33d) Profit on sale of investments 58.35e) Interest income 10.78 5.21f) Other income:

i) Profit on sale of fleet 27.66 197.10ii) Extinguishment of liability on cancellation of finance lease (refer note no. 4) 17.48 -iii) Currency exchange difference (net) (refer note no. 2) 12.50 75.65iv) Miscellaneous income 3.49 8.40

61.13 281.15

Total 1,154.79 1,063.93EXPENDITUREa) Fleet operating expenses:

i) Direct voyage expenses 542.64 423.35ii) Employees expenses (offshore staff) 53.52 43.47iii) Other fleet operating expenses 65.24 54.14

661.40 520.96b) Establishment and other expenses:

i) Employee expenses (office staff) 15.75 16.99ii) Managerial remuneration 2.40 2.54iii) Auditor’s remuneration 0.38 0.66iv) Other expenses 68.22 57.58

86.75 77.77c) Interest and finance expenses 129.22 89.19d) Depreciation / impairment (refer note no. 2) 159.45 106.64

Total 1,036.82 794.56

PROFIT BEFORE TAX 117.97 269.37Less: Provision for taxation:

i) Current tax (including tonnage tax) (14.00) (23.60)ii) Fringe benefit tax (3.60) (3.45)iii) Tax adjustment for earlier years 7.29 (0.65)

(10.31) (27.70)

PROFIT AFTER TAX 107.66 241.67Balance brought forward from previous year 801.60 589.93Add: Balance of profit of erstwhile amalgamating companies (refer note no. 1) 178.65 -

AMOUNT AVAILABLE FOR APPROPRIATION 1,087.91 831.60APPROPRIATIONSLess: Transferred to tonnage tax reserve (18.00) (30.00)Balance carried to balance sheet 1,069.91 801.60

1,087.91 831.60

Basic and diluted earnings per share (Rs.) 1.75 5.67(face value of Rs.10/- each per share) (refer note no. 7)Refer notes to abridged financial statements

Compiled from the audited annual accounts of the Company referred to in our report dated 18th May, 2009.

ABRIDGED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH 2009(Statement containing the salient features of Profit & Loss as per Section 219 (1) (b) (iv) of the Companies Act, 1956)





Abridged Statement of Profit and Loss Account

20


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2009

Year ended Year ended31.03.2009 31.3.2008


A CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax 117.97 269.37

Adjustments for :

Depreciation 159.44 106.64

Interest and finance expenses 129.22 89.19

Interest income (10.79) (5.21)

Profit on sale of assets (31.11) (196.99)

Extinguishment of liability on cancellation of finance lease (17.48) -

Provision for employee benefits - non funded 0.88 1.47

Profit on sale of investments (58.35) (7.85)

Dividend on current investments (1.32) (1.33)

Foreign exchange difference gain (1.35) (75.89)

Operating profit before working capital changes 287.11 179.40

Adjustments for:

Trade and other receivables (78.74) 115.26

Inventories 6.19 4.64

Trade and other payables (0.06) 2.64

Cash generated from operations 214.50 301.94

Income taxes paid (net of refund) (18.13) (18.19)

Fringe benefit tax paid (3.70) (5.29)

Net cash flow from operating activities 192.67 278.46

B CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets including capital work in progress/advance (801.07) (560.54)

Proceeds from sale of fixed assets 219.13 205.36

Advance received against sale of fixed asset - 22.06

Advance received against sale investments - 911.92

Advance received against sale of investments repaid - (13.13)

Advance given towards purchase of investments (6.91) -

Purchase of current investments (829.16) (344.56)

Proceeds from sale of current investments 343.05 585.37

Proceeds from sale of non - current investments 153.99 -

Investment in shares of subsidiaries (405.64) (1,562.19)

Fixed deposits placed for a period of more than three months 22.58 23.92

Advance from subsidiary - 3.25

Dividend on investments 1.32 1.33

Interest received 11.77 4.84

Net cash flow from investing activities (1,290.94) (722.37)

21



C CASH FLOW FROM FINANCING ACTIVITIES

Interest and finance expenses paid (121.55) (88.53)

Proceeds from term loans 563.75 162.59

Additional lease obligations 761.50 445.28

Proceeds from unsecured loans 290.00 513.00

Repayment of term loans (129.10) (169.42)

Repayment of finance lease obligations (68.49) (23.84)

Repayment of unsecured loans (290.00) (300.00)

Payment of unclaimed debentures and interest thereon (0.40) (0.45)

Net cash flow from financing activities 1,005.71 538.63

(DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS (92.56) 94.72

Cash and cash equivalents at beginning of the year 109.76 15.04

Cash and cash equivalents at end of the year 17.20 109.76

Notes :

1 Cash and cash equivalents include :

Cash and bank balances 17.02 49.61

Balances in fixed deposits (maturity period of less than 3 months) - 58.17

Unrealised gain on foreign currency on cash and cash equivalents 0.18 1.98

Total cash and cash equivalents 17.20 109.76

Balances in fixed deposits (maturity period of more than 3 months) 2.50 25.08

CASH AND BANK BALANCES 19.70 134.842 Non cash investing and financing transactions:

(a) Pursuant to scheme of amalgamation of India Shipping, Mauritius (IS) and Essar Sisco Ship Management Company Limited, India (ESSMC),(i) The Company has allotted 364,905,489 equity shares of Rs.10/- each fully paid up, at a premium of Rs.210/- per share to Essar Shipping

& Logistics Limited, Cyprus (holding company and sole shareholder of erstwhile IS) and;(ii) 175,299,376 equity shares (including 376,000 GDS represented by 124,456,000 equity shares) of the Company held by IS have been

cancelled.(iii) The net excess value of additional shares (shares allotted to the shareholder of IS reduced by the shares already held by IS and cancelled

by the Company) issued over net assets of the IS acquired by the Company amounting to Rs.3712.43 crore has been deducted from thesecurities premium account of the Company.

iv) The difference of Rs.4.33 crore, between Company’s investment value in equity shares and equity share capital of ESSMC, has also beendeducted from securities premium account of the Company (refer note no. 1).

(b) During the year, receivables amounting to Rs.94.03 crore of India Shipping, Mauritius (merged with the Company) has been assigned infavour of Essar Oilfields Services Limited, Mauritius as an advance towards share application money from the Company.

(c) The liability in the nature of unsecured loan amounting to Rs.213 crore along with interest of Rs.1.15 crore taken from ESSMC has beenextinguished upon merger of ESSMC with the Company.

3 Cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 ‘Cash Flow Statement’ as notified underthe Companies (Accounting Standards) Rules, 2006.

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2009





Abridged Cash Flow Statement

22


1) Amalgamation of companies:(Note no. B (10) of schedule 13 of annual accounts)Essar Sisco Ship Management Company Limited, India, (ESSMC),a wholly owned subsidiary of the Company engaged in shippingand investment activities and India Shipping, Mauritius (IS) engagedin investment activities, have been amalgamated with the Companywith effect from 1st April, 2008 (the appointed date) in terms ofscheme of amalgamation (the scheme) sanctioned by HonourableHigh Court of Madras and Honourable High Court of Gujarat videtheir orders dated December 18, 2008 and January 16, 2009respectively.

In accordance with the scheme, the undertaking of ESSMC and ISbeing all its assets and debts, outstanding, credits, liabilities, dutiesand obligations, has been transferred to and vested in the Companyretrospectively with effect from the appointed date. The Companyhas followed pooling of interest method of accounting to accountthe said amalgamations of the companies under the scheme.

Pursuant to the scheme:a) The sole shareholder holding fully paid up equity shares in IS

was allotted 364,905,489 equity shares of the Company basedon allotment of 32 equity shares of Rs.10/- each (Rs.364.91crore), at a premium of Rs.210/- per share (Rs.7663.02 crore)for every 100 equity shares of US$ 1 each held in the capitalof IS and 175,299,376 equity shares (including 376,000 GDSrepresented by 124,456,000 equity shares) of the Companyheld by IS have been cancelled. The net excess of the value ofadditional shares (shares allotted to the shareholder of ISreduced by the shares already held by the IS and cancelled bythe Company) issued over net assets of the IS acquired by theCompany amounting to Rs.3712.43 crore has been deductedfrom the securities premium account of the Company. Theerstwhile wholly owned subsidiaries of IS viz. Essar OilfieldsServices Limited, Mauritius and Essar Oilfields Services FZE,Dubai have become subsidiaries of the Company.

b) No shares were issued on amalgamation of ESSMC as it wasa wholly owned subsidiary of the Company. The difference ofRs.4.33 crore, between Company’s investment value in equityshares and equity share capital of ESSMC, has also beendeducted from securities premium account of the Company.

c) Had the accounting treatment not been prescribed in the saidHigh Court orders, the Securities premium account would havebeen higher and general reserve would have been lower byRs.3716.76 crore.

d) The Company has become a subsidiary of Essar Shipping &Logistics Limited, Cyprus (immediate holding company) whichin turn is the subsidiary of Essar Global Limited, Cayman Island(ultimate holding company).

The financials of the Company for the year ended 31st March, 2009are not therefore comparable with those of the previous year.

2) Fixed assets:(Note no. B (1) of schedule 13 of annual accounts)a) Pursuant to notification issued by the Central Government

under Companies (Accounting Standards) Amendment Rules,2009 dated 31st March, 2009; the Company has chosen anoption with effect from 1st April, 2007 to adjust the gains/lossesarising on conversion/translation/settlement of long term foreigncurrency items into the corresponding costs of fixed assets to

the extent it is related to acquisition of depreciable fixed assetsand the balance gains/losses to be accumulated in “ForeignCurrency Monetary Item Translation Difference Account”(FCMITDA). Consequently out of the exchange difference ofRs.71.58 crore (net of depreciation on exchange difference)relating to previous year, Rs.34.10 crore andRs.38.62 crore has been adjusted to corresponding fixed assetsand revaluation reserve respectively and the balance of Rs.1.14crore has been accumulated in FCMITDA.

During the year, exchange difference on long term foreigncurrency items relating to fixed assets amounting to Rs.459.78crore has been adjusted in costs of corresponding fixed assetsand the balance exchange difference of Rs.11.59 crore (net ofRs.5.79 crore amortised in the Statement of Profit and Loss)outstanding under FCMITDA as on the balance sheet date willbe amortised over the balance period of the correspondinglong term foreign currency item but not beyond 31st March,2011, whichever is earlier.The compounding effect of this treatment has resulted into anincrease in the profit for the year by an amount of Rs.449.89crore.

b) The Company had revalued its fleet on 1st April 2004 and on31st March 2008. The valuations were done by accreditedvaluers on the basis of expected market value in an arm’s lengthtransaction and free of encumbrances on the valuation date.The enhancement in the value of fleet amounting to Rs.669.52crore and Rs.491.31 (including Rs.38.62 crore exchangedifference, net of depreciation relating to earlier year) crorerespectively were credited to fixed assets revaluation reserve.Incremental depreciation and impairment mainly on accountof the revaluation amounting to Rs.144.73 (previous yearRs.26.95) crore and Rs.133.97 (previous year nil) crore havebeen recouped from the fixed assets revaluation reserve.

c) The Company has three vessels and an aircraft on financelease as on the Balance Sheet date.

d) Gross block of plant and machinery includes Rs.38.84 (previousyear Rs.38.84) crore leased out; Written down value as on 31st

March 2009 is Rs.nil (previous year Rs. nil).

e) The fleet alongwith its receivables is under charge for thesecured loans.

3) Contingent liabilities:

(Rs. in crore)

Particulars As on As on31.03.2009 31.03.2008

i) Guarantees given by 31.46 15.38banks*

ii) Corporate guarantee on 295.00 250.00behalf of a subsidiary

iii) Corporate guarantee - 1346.44on behalf of EssarShipping & LogisticsLimited, holding company

iv) Disputed sales taxdemand under appealin the HonorableHigh Court of Madras 58.10 58.10

v) Income tax appealsbefore ITAT 117.97 110.76

NOTES TO ABRIDGED FINANCIAL STATEMENTS FOR THEYEAR ENDED 31ST MARCH 2009

23

* include guarantees issued by banks which are backed by counterguarantee of the Company:

1) Issued on behalf of Energy Transportation International Limited -Rs.15.44 (previous year Rs.13.44) crore.

2) Issued on behalf of Essar Oilfields Services Limited- Rs.3.86 (previousyear Rs.nil) crore.

4) Finance leases:(Note No.B(3) of Schedule 13 of annual accounts)a) The minimum lease rentals outstanding at year end are as

under:

(Rs. in crore)

As on 31.03.2009 As on 31.03.2008

Particulars Minimum Interest Present Minimum Interest Presentlease value of lease value of

payments minimum payments minimumlease lease

payments payments

Future leaserentalobligationpayable : - not later 162.28 72.04 90.24 85.04 48.57 36.47than one year

- later than 658.19 222.88 435.31 326.26 167.95 158.31one year butnot later thanfive years

- later than 703.86 94.51 609.35 644.13 60.82 583.31five years

TOTAL 1524.33 389.43 1134.90 1055.43 277.34 778.09

b) The finance lease arrangement in respect of a vessel, enteredinto between the Company and the ESLL has been mutuallyterminated during the year and consequently Rs.17.48 crore(net excess of finance lease obligation of Rs.548.53 crore overnet book value of Rs.531.05 crore) has been recognised asextinguishment of liability on cancellation of finance lease inthe Statement of Profit and Loss.

5) Business segment and geographical segment:(Note No.B(4) of Schedule 13 of annual accounts)a) Business segment

The Company has one primary business segment of fleetoperations and chartering.

b) Geographical segmentThe Company’s fleet operations are managed on a worldwidebasis from India. Fleet operating and chartering earnings basedon the geographical location of customers:

(Rs. in crore)

Fleet operating and Year endedchartering earnings 31.03.2009 31.03.2008

India 621.16 451.64China 92.74 90.08U.K. 116.57 77.38U.A.E. 30.44 77.26Rest of the world 162.29 79.88

TOTAL 1023.20 776.24The main operating assets represent floating fleet, which isnot identifiable to any geographical location.

6) Employee benefits:(Note no. B (9) of schedule 13 of annual accounts)The Company has adopted Accounting Standard (AS) 15 (Revised)‘Employee benefits’ as notified under the Companies (AccountingStandard) Rules, 2006, with effect from 1st April, 2007.

7) Earnings per share:The calculation of the basic and diluted earnings per share is basedon the following data:

Particulars Year ended31.03.2009 31.03.2008

Earnings for the purpose 107.66 241.67of basic and dilutedearnings per share(net profit for the year)(Rs. in crore)

Equity shares at the 426,077,207 426,077,207beginning of the year(nos.)

Equity shares issued 364,905,489 -pursuant to mergerof India Shipping(nos.) – refer note no. 1

Equity shares held by (175,299,376) -India Shipping in theCompany cancelledupon merger (nos.)

Equity shares at the end 615,683,320 426,077,207of the year (nos.)

Weighted average equity 615,683,320 426,077,207shares for the purposeof calculating basic anddiluted earnings pershare (nos.)

Earnings per share-basic 1.75 5.67and diluted (face valueof Rs.10/- each) (Rs.)

8) (a) There were no forward/options contracts entered in to by theCompany during the financial year to hedge its foreign currencyexposures.

(b) The outstanding foreign currency exposures that have not beenhedged by a derivative instrument or otherwise are given below:

(i) Amount receivable in foreign currency on account of thefollowing:

Particulars Rs. in crore Currency In million

2008-09 2007-08 2008-09 2007-08

i. Export of goodsand services 14.28 38.90 USD 2.83 9.84

ii. Sale of assets 13.64 - USD 2.70 -

iii. Advance to vendors 0.75 2.29 USD 0.15 0.58

iv. Bank balances andfixed depositsincluding interestaccrued thereon 0.32 93.41 USD 0.06 23.71

Abridged Notes to Financial Statements

24


ii) Amount payable in foreign currency on account of the following:


2008-09 2007-08 2008-09 2007-08

(i) Impor t of goods 14.05 13.08 USD 2.73 3.34and services 0.07 0.11 GBP 0.01 0.01

- 0.03 DKK - 0.030.47 0.62 EUR 0.07 0.100.68 0.21 JPY 14.67 5.230.75 0.30 SGD 0.22 0.100.04 - NOK 0.05 -0.02 - HKD 0.05 -0.02 - ZAR 0.03 -0.00 0.02 AED 0.00 0.01

16.10 14.37 17.83 8.82

(ii) Secured loans 551.90 558.36 USD 107.27 139.21payable (includinginterest accrued)

(iii) Finance Lease 1134.90 778.09 USD 221.70 193.99obligations

9) (Note no. B (11) of schedule 13 of annual accounts)(i) Details of amount due from sundry debtors under the same

management within the meaning of Section 370 (1B) of theCompanies Act, 1956:

(Rs. in crore)

Sr. Debtor As at As atno. 31st March, 2009 31st March, 2008

1 Essar Shipping & Logistics(Panama) Inc.* 13.64 -

13.64 -

* During the financial year 2007-08, the debtor was not coveredwithin the meaning of Section 370 (1B) of the Companies Act,1956.

10) Related party transactions:(Note no. B (12) of schedule 13 of annual accounts)a) Holding companies :

(i) Essar Global Limited, Cayman Island, ultimate holdingcompany (w.e.f. 1st April, 2008)

(ii) Essar Shipping & Logistics Limited, Cyprus, immediateholding company (w.e.f. 1st April, 2008)

b) Subsidiaries:(i) Vadinar Oil Terminal Limited, India(ii) Essar Logistics Limited, India

(iii) Essar International Limited, Guernsey, Channel Islands

(iv) Energy Transportation International Limited, Bermuda

(v) Energy II Limited, Bermuda(vi) Essar Ports & Terminals Limited, Mauritius

(vii) Essar Bulk Terminal Limited, India

(viii) Essar Bulk Terminal (Salaya) Limited, India(ix) Essar Oilfields Services Limited, Mauritius (w.e.f. April 1,

2008)

(x) Essar Oilfields Services FZE – Dubai (w.e.f. April 1, 2008)

(xi) Essar Dredging Limited (w.e.f. January 12, 2009)c) Individuals owning directly or indirectly an interest in the

voting power that gives them control or significantinfluence:

(i) Mr. Shashi Ruia, Chairman

(ii) Mr. Ravi Ruia, Vice Chairman

(iii) Mr. Anshuman Ruia, Director

d) Key Management Personnel:

(i) Mr. Sanjay Mehta, Managing Director

(ii) Mr. A. R. Ramakrishnan, Wholetime Director

(iii) Mr. V. Ashok, Wholetime Director

e) Other Related Parties where there have been transactions:

Enterprises commonly controlled or influenced by majorshareholders / directors / relatives of directors of the Company:

(i) Essar Information Technology Limited

(ii) Essar Agrotech Limited

(iii) Essar House Limited

(iv) Essar Infrastructure Services Limited

(v) Essar Steel Limited

(vi) Futura Travels Limited

(vii) India Securities Limited

(viii) Essar Oil Limited

(ix) Essar Steel Hazira Limited

(x) Aegis BPO Services Limited

(xi) Essar Steel Algoma Inc.

(xii) Essar Shipping & Logistics (Panama) Inc.

(xiii) Essar Infrastructure Holdings Limited

(xiv) Essar Logistics Holdings Limited

The details of transactions with related parties (Rs. in crore)

Nature of transactions Holding and Other Related Key Management Totalsubsidiary companies Parties Personnel

2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

INCOME

Fleet operating income

Essar Steel Limited - - 469.76 400.48 - - 469.76 400.48

Essar Steel Hazira Limited - - - 1.89 - - - 1.89

Essar Steel Algoma Inc. - - 30.59 - - - 30.59 -

Essar Logistics Limited 13.57 11.37 - - - - 13.57 11.37

Vadinar Oil Terminal Limited 18.07 9.16 - - - - 18.07 9.16

Essar International Limited 4.85 - - - - - 4.85 -

Essar Oil Limited - - 5.18 2.36 - - 5.18 2.36

Total 36.49 20.53 505.53 404.73 - - 542.02 425.26

25

(Rs. in crore)


2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Equipment lease rental incomeEssar Steel Limited - - 0.02 0.19 - - 0.02 0.19Rental income on buildingEssar Steel Limited - - 0.01 - - - 0.01 -Dividend incomeEssar International Limited 0.25 - - - - - 0.25 -Interest incomeEssar Bulk Terminal(Salaya) Limited 0.10 - - - - - 0.10 -Essar Bulk Terminal Limited 0.17 - - - - - 0.17 -Total 0.27 - - - - - 0.27 -

Agency and management feesEssar Shipping & Logistics Limited - 0.35 - - - - - 0.35RemunerationMr. Sanjay Mehta - - - - 0.64 0.71 0.64 0.71Mr. A. R. Ramkrishnan - - - - 0.89 1.05 0.89 1.05Mr. V. Ashok - - - - 0.92 0.78 0.92 0.78

Total - - - - 2.45 2.54 2.45 2.54

Purchase of fuel oilEssar Oil Limited - - - 0.87 - - - 0.87Essar Logistics Limited 0.02 0.01 - - - - 0.02 0.01

Total 0.02 0.01 - 0.87 - - 0.02 0.88

Direct voyage expensesEssar Logistics Limited 0.86 0.11 - - - - 0.86 0.11Hire chargesEssar International Limited 132.44 - - - - - 132.44 -Business center feesEssar Infrastructure Services Limited - - 13.56 13.56 - - 13.56 13.56Rent expensesEssar House Limited - - 4.20 4.20 - - 4.20 4.20Essar Infrastructure Services Limited - - 0.24 0.24 - - 0.24 0.24

Total - - 4.44 4.44 - - 4.44 4.44

Repairs and maintenanceEssar Agrotech Limited - - 0.30 0.30 - - 0.30 0.30Traveling expensesFutura Travels Limited - - 3.51 4.23 - - 3.51 4.23

Reimbursement of expensesFutura Travels Limited - - 21.38 19.53 - - 21.38 19.53Essar Infrastructure Services Limited - - 0.06 1.14 - - 0.06 1.14Essar Shipping & Logistics Limited 0.28 - - - - - 0.28 -Essar Bulk Terminal (Salaya) Limited 0.11 - - - - - 0.11 -Essar Logistics Limited 6.98 - - - - - 6.98 -

Total 7.37 - 21.44 20.67 - - 28.81 20.67

Professional /advisory / agency feesIndia Securities Limited - - 0.22 0.22 - - 0.22 0.22Essar Steel Limited - - - 0.05 - - - 0.05Aegis BPO Services Limited - - 0.38 0.22 - - 0.38 0.22Essar Information Technology Limited - - 0.71 0.37 - - 0.71 0.37Essar Logistics Limited 0.21 0.10 - - - - 0.21 0.10Total 0.21 0.10 1.31 0.86 - - 1.52 0.96

Interest on loansEssar Shipping & Logistics Limited 52.69 0.28 - - - - 52.69 0.28Essar Sisco Ship ManagementCompany Limited - 1.49 - - - - - 1.49Total 52.69 1.77 - - - - 52.69 1.77


26


(Rs. in crore)


2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Fixed assets soldEssar Shipping & Logistics - - 13.16 5.38 - - 13.16 5.38(Panama) Inc.

Cancellation of financelease obligation

Essar Shipping & Logistics Limited 548.53 - - - - - 548.53 -

Balance taken over pursuantto merger of India ShippingEssar Infrastructure Holdings Limited - - 92.57 - - - 92.57 -Essar Logistics Holdings Limited - - 1.46 - - - 1.46 -Investment in Essar Oilfields 4,056.96 - - - - - 4,056.96 -Services Limited

Total 4,056.96 - 94.03 - - - 4,150.99 5.38

Assignment of receivablesEssar Global Limited 92.57 - - - - - 92.57 -Essar Shipping & Logistics Limited 94.03 - - - - - 94.03 -

Total 186.60 - - - - - 186.60 -

Advance towards purchase of sharesEssar Oilfields Services Limited 100.94 - - - - - 100.94 -

Fixed assets acquired underfinance leaseEssar Shipping & Logistics Limited 632.85 445.28 - - - - 632.85 445.28

Investments in sharesEssar Ports & Terminals Limited 405.64 1,562.19 - - - - 405.64 1,562.19

Loans and advances including deposits givenEssar Sisco Ship ManagementCompany Limited - 0.14 - - - - - 0.14Essar House Limited - - - 2.45 - - - 2.45Essar Infrastructure Services Limited - - - 1.41 - - - 1.41Essar Information Technology Limited - - - 0.71 - - - 0.71Essar Ports & Terminals Limited 0.02 0.04 - - - - 0.02 0.04Essar Oilfields Services Limited 3.92 0.42 - - - - 3.92 0.42Energy II Limited 3.57 - - - - - 3.57 -Essar Bulk Terminal (Salaya) Limited 10.00 - - - - - 10.00 -Essar Bulk Terminal Limited 16.95 0.02 - - - - 16.95 0.02

Total 34.46 0.62 - 4.57 - - 34.46 5.19

Loans and advances receivedEssar Sisco Ship Management - 213.00 - - - - - 213.00Company Limited

Advance received against saleof investmentsEssar Shipping & Logistics Limited - 9.90 - - - - - 9.90Essar Ports & Terminals Limited - 911.92 - - - - - 911.92

Total - 921.82 - - - - - 921.82

Guarantee on behalf of othersEssar Shipping & Logistics Limited - 615.99 - - - - - 615.99Essar Logistics Limited 45.00 - - - - - 45.00 -Essar Oilfields Services Limited 1.16 - - - - - 1.16 -

Total 46.16 615.99 - - - - 46.16 615.99

27

Nature of balances Holding and Other related Key Management Totalsubsidiary companies Parties Personnel

2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Sundry Debtors

Essar Steel Limited - - 135.17 36.94 - - 135.17 36.94Essar Shipping & Logistics (Panama) Inc. - - 13.64 5.34 - - 13.64 5.34Essar Logistics Limited 4.68 21.46 - - - - 4.68 21.46Vadinar Oil Terminal Limited 7.70 4.38 - - - - 7.70 4.38

Total 12.38 25.84 148.81 42.28 - - 161.19 68.12

Loans and advances includingdeposits givenEssar House Limited - - 31.00 31.45 - - 31.00 31.45Futura Travels Limited - - 6.25 6.25 - - 6.25 6.25Essar Oil Limited - - - 12.00 - - - 12.00Essar Logistics Limited 0.08 0.01 - - - - 0.08 0.01Essar Information Technology Limited - - 0.46 0.71 - - 0.46 0.71Essar Infrastructure Services Limited - - 0.75 1.41 - - 0.75 1.41Essar Steel Limited - - - 0.95 - - - 0.95Energy II Limited 0.25 - - - - - 0.25 -Essar Bulk Terminal (Salaya) Limited 10.00 - - - - - 10.00 -

Total 10.33 0.01 38.46 52.77 - - 48.79 52.78

Interest receivable on loanEssar Bulk Terminal (Salaya) Limited 0.08 - - - - - 0.08 -

Lease loan obligationEssar Shipping & Logistics Limited 733.95 441.21 - - - - 733.95 441.21

Unsecured loanEssar Sisco Ship ManagementCompany Limited - 213.00 - - - - - 213.00

Advance received against saleof investmentsEssar Ports & Terminals Limited - 911.92 - - - - - 911.92

Advance for investment in sharesEssar Oilfields Services Limited 100.94 - - - - - 100.94 -

Sundry creditorsFutura Travels Limited - - 6.70 3.84 - - 6.70 3.84Essar Shipping & Logistics Limited 4.81 2.38 - - - - 4.81 2.38

Total 4.81 2.38 6.70 3.84 - - 11.51 6.22

Security deposit receivedEssar Steel Limited - - 0.04 0.04 - - 0.04 0.04

Interest accrued but not due on loansEssar Sisco Ship Management - 1.15 - - - - - 1.15Company LimitedEssar Shipping & Logistics Limited 8.13 0.28 - - - - 8.13 0.28

Total 8.13 1.43 - - - - 8.13 1.43

Guarantees given on behalf of othersEssar Shipping & Logistics Limited - 1,346.44 - - - - - 1,346.44Vadinar Oil Terminal Limited 250.00 250.00 - - - - 250.00 250.00Essar Logistics Limited 45.00 - - - - - 45.00 -Others 14.90 13.74 - - - - 14.90 13.74

Total 309.90 1610.18 - - - - 309.90 1,610.18


The details of outstanding balance as on March 31, 2009 (Rs. in crore)

28


11) (Note no. B (13) of schedule 13 of annual accounts)

In view of exemption from Central Government obtained by theCompany under section 211(4) of the Companies Act, 1956 videorder number 46/19/2009-CL-III dated 23rd March, 2009 , informationrequired under sub-clauses (a), (b), (c) and (e) of paragraph 4-D ofpart II of schedule VI to the Companies Act, 1956, is not given.

12) Investments

a) The Company has pledged its investments in equity shares ofEssar Oil Limited amounting to Rs.2.27 (previous year Rs.2.27)crore in favour of lenders for loans availed by Essar Oil Limited.

b) The Company’s investments in shares of Essar LogisticsLimited having negative lien undertaking in favour of lendersfor the loan availed by Essar Steel Holdings Limited.

c) The Company has pledged its investments in equity shares ofVadinar Oil Terminal Limited (VOTL) amounting to Rs.nil(previous year Rs.854.66) crore in favour of lender for loanavailed by VOTL.

13) Performance ratios:Sr. no. Particulars 2008-09 2007-08

(%) (%)1. Total income / Total assets 12.16 20.362. Net profit before interest and tax / 2.62 8.45

Capital employed3. Return on net worth 1.53 9.544. Net profit / Total income 9.32 22.71

Notes:1. Capital employed includes shareholders funds, loan funds and

is net of revaluation reserve and advance against allotment ofshares.

2. Total assets are net of revaluation on assets.3. Net worth includes shareholders funds and is net of revaluation

reserve and advance against allotment of shares.14) (Note no. B (15) of schedule 13 of annual accounts)

Previous year’s figures have been regrouped / reclassified wherevernecessary.





29

Balance Sheet Abstract and Company’s General Business Profile

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE(As per Schedule VI, part (iv) of the Companies Act, 1956)

I. Registration Details:

Registration No. 0 5 4 8 2 4 State Code 0 4

Balance Sheet Date: 3 1 - 0 3 - 2 0 0 9

II. Capital raised during the year: (Amount in Rs. Thousand)

Public Issue: N I L Rights Issue: N I L

Bonus Issue: N I L Private Placement: N I L

III. Position of mobilisation and deployment of funds: (Amount in Rs. Thousand)

Total Liabilities: 9 5 9 2 3 6 0 0 Total Assets: 9 5 9 2 3 6 0 0

Sources of Funds: Application of Funds:

Paid up Capital: 6 1 5 8 1 3 9 Net Fixed Assets: 2 0 3 6 8 2 9 9

Reserves and Surplus: 6 5 6 5 9 9 5 5 Investments: 7 1 6 7 0 4 0 6

Secured Loans: 1 1 1 5 6 4 9 6 Net Current Assets: 3 7 6 9 0 1 6

Unsecured Loans: 1 2 9 4 9 0 1 0 MiscellaneousExpenditure: 1 1 5 8 7 9

IV. Performance of the Company: (Amount in Rs. Thousand)

Net Turnover: 1 1 5 4 7 8 4 0 Total Expenditure: 1 0 3 6 8 2 1 2

Profit/(Loss) before tax: 1 1 7 9 6 2 8 Profit after tax: 1 0 7 6 5 8 0

Earnings per Share in Rs: 1 . 7 5 Dividend Rate (%): N I L

V. Generic Names of Three Principal Products / Services of Company (As per monetary terms)

Item Code number N A Product Description Ship Operation and Chartering(ITC Code)

Item Code number N A Product Description N A(ITC Code)



Note: For ITC code of products please refer to the publication “Indian Trade Classification” based on harmonized Commodity description and codingsystem by Ministry of Commerce, Directorate General of Commercial Intelligence and Stastics, Kolkata-700 001.

For and on behalf of the Board

Sanjay Mehta R. N. BansalManaging Director Director

V. Ashok Manoj ContractorWholetime Director Company Secretary

MumbaiMay 18, 2009

30


STAT

EMEN

T PU

RSUA

NT T

O SE

CTIO

N 21

2 OF

THE

COM

PANI

ES A

CT, 1

956

RELA

TING

TO

SUBS

IDIA

RY C

OMPA

NIES

Essa

rEs

sar

Ener

gyEn

ergy

IIEs

sar

Vadi

nar O

ilEs

sar

Essa

rEs

sar

Essa

rEs

sar

PART

ICUL

ARS

Logi

stic

sIn

tern

atio

nal

Tran

spor

tatio

nLi

mite

dPo

rts &

Term

inal

Bulk

Ter

min

alBu

lk T

erm

inal

Dred

ging

Oilfi

elds

Oilfi

elds

Lim

ited

Lim

ited

Inte

rnat

iona

lTe

rmin

als

Lim

ited

Lim

ited

(Sal

aya)

Lim

ited

Serv

ices

Serv

ices

FZE

Lim

ited

Lim

ited

Lim

ited

Lim

ited

Mum

bai

Guer

nsey

Berm

uda

Berm

uda

Mau

ritiu

sVa

dina

rHa

zira

Mum

bai

Mum

bai

Mau

ritiu

sDu

bai

1Th

e re

levan

t fina

ncial

yea

r of t

hesu

bsidi

ary

ende

d on

31.0

3.09

31.0

3.09

31.0

3.09

31.0

3.09

31.0

3.09

31.0

3.09

31.0

3.09

31.0

3.09

31.0

3.09

31.0

3.09

31.0

3.09

2No

. of s

hare

s in

the

subs

idiar

y co

mpa

nyhe

ld by

Ess

ar S

hippin

g Po

rts &

Logis

tics

Limite

d as

on

31.0

3.09

73,0

00,0

0012

5,84

0,00

01,

952,

000

12,0

0047

7,43

0,85

11,

046,

142,

000

65,3

39,0

043,

004,

875

50,0

0010

0,00

0,00

11

3Ex

tent

of h

olding

by

Essa

r Ship

ping

Ports

& L

ogist

ics L

imite

d as

at t

he e

ndof

the

finan

cial p

eriod

100%

100%

100%

100%

100%

100%

99.9

8%10

0%10

0%10

0%10

0%4

The

net a

ggre

gate

am

ount

of t

hesu

bsidi

ary

com

panie

s Pr

ofit

/ (Lo

ss)

so fa

r as

it co

ncer

ns th

e m

embe

rsof

the

Holdi

ng C

ompa

ny.

a)No

t dea

lt wi

th in

the

Hold

ing

Com

pany

’s a

ccou

nts

:i)

For t

he fi

nanc

ial y

ear

ende

d 31

st M

arch

, 200

9Rs

.433

,321

,004

$20,

986,

094

$ 10

1,19

1($

5,30

5)($

4,99

6,76

2)(R

s.789

,552

,150

)NI

L(R

s.110

,300

)Rs

.344

,453

,032

(Rs.2

69,8

23)

ii )Fo

r the

pre

vious

Fina

ncial

yea

rsof

the

subs

idiar

y co

mpa

nies

since

they

beca

me

the

Holdi

ngCo

mpa

ny’s

subs

idiar

iesRs

.287

,922

,719

$34,

408,

891

$327

,296

($94

1)($

305,

474)

(Rs.1

,458

,458

,597

)(R

s.213

,360

)(R

s.293

,215

)NI

LNI

LNI

Lb)

Deal

t with

in H

oldi

ngCo

mpa

ny’s

acc

ount

s:i)

For t

he fi

nanc

ial y

ear

ende

d 31

st M

arch

, 200

8NI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

Lii )

For t

he p

revio

us F

inanc

ial y

ears

of

the

subs

idiar

y co

mpa

nies

since

they

beca

me

the

Holdi

ngCo

mpa

ny’s

subs

idiar

iesNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

L5

Chan

ge o

f int

eres

t of E

ssar

Ship

ping

Ports

& L

ogist

ics L

imite

d in

the

subs

idiar

ybe

twee

n th

e e

nd o

f the

finan

cial y

ear o

fsu

bsidi

ary

and

that

of E

ssar

ship

ping

Ports

& L

ogist

ics L

imite

dNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

L6

Mat

erial

cha

nges

bet

ween

the

end

ofth

e fin

ancia

l yea

r of t

he s

ubsid

iary

and

the

end

of th

e fin

ancia

l yea

r to

Essa

r Ship

ping

Ports

& L

ogist

icsLim

ited

in re

spec

t of s

ubsid

iary’s

fixed

ass

ets,

inves

tmen

ts, m

onies

lent a

nd b

orro

wed

a)Fi

xed

Asse

tsNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

Lb)

Inve

stmen

tsNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

Lc)

Mon

ey le

nt b

y th

e su

bsidi

ary

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NIL

d)M

oney

bor

rowe

d by

the

subs

idiar

yco

mpa

ny o

ther

than

for m

eetin

gcu

rrent

liab

ilities

(Net

)NI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

LNI

L

For a

nd o

n be

half

of th

e Bo

ard

Sanj

ay M

ehta

R. N

. Ban

sal

Man

agin

g Di

rect

orDi

rect

or

Mum

bai

V. A

shok

Man

oj C

ontra

ctor

May

18,

200

9W

hole

time

Dire

ctor

Com

pany

Sec

reta

ry

31

For a

nd o

n be

half

of th

e Bo

ard

Sanj

ay M

ehta

R. N

. Ban

sal

Man

agin

g Di

rect

orDi

rect

or

Mum

bai

V. A

shok

Man

oj C

ontra

ctor

May

18,

200

9W

hole

time

Dire

ctor

Com

pany

Sec

reta

ry

Statement Pursuant to 212 of the Companies Act

Deta

ils o

f Sub

sidi

ary

Com

pani

es p

ursu

ant t

o ap

prov

al o

btai

ned

U/S.

212

( 8 )

(Rs.

in c

rore

s)

Essa

rEs

sar

Ener

gyEn

ergy

IIEs

sar

Vadi

nar O

ilEs

sar

Essa

rEs

sar

Essa

rEs

sar

PART

ICUL

ARS

Logi

stic

sIn

tern

atio

nal

Tran

spor

tatio

nLi

mite

dPo

rts &

Term

inal

Bulk

Ter

min

alBu

lk Te

rmin

alDr

edgi

ngOi

lfiel

dsOi

lfiel

dsLi

mite

dLi

mite

dIn

tern

atio

nal

Term

inal

sLi

mite

dLi

mite

d(S

alay

a)Li

mite

dSe

rvic

esSe

rvic

es F

ZELi

mite

dLi

mite

dLi

mite

dLi

mite

dM

umba

iGu

erns

eyBe

rmud

aBe

rmud

aM

aurit

ius

Vadi

nar

Hazir

aM

umba

iM

umba

iM

aurit

ius

Duba

i

Year

end

ing

31-M

ar-0

931

-Mar

-09

31-M

ar-0

931

-Mar

-09

31-M

ar-0

931

-Mar

-09

31-M

ar-0

931

-Mar

-09

31-M

ar-0

931

-Mar

-09

31-M

ar-0

9Sr

.No

.Pa

rticu

lars

1Ca

pital

73.0

0

6

41.1

5

9

.95

0.

06

2,4

32.5

1

1,0

46.1

4

1

91.8

7

3.0

0

0

.05

832.

78

1.0

9

2Re

serv

es

8

4.61

555

.26

0.4

9

0.02

(27

.01)

(

225.

41)

(0.

02)

(0

.04)

-

17

6.15

(0

.06)

3To

tal A

sset

s

38

3.24

1

,196

.41

10.4

4

0.08

3

,338

.54

3

,318

.88

293

.50

12

.96

0.0

5

2,87

1.17

1

.32

4To

tal L

iabilit

ies

38

3.24

1

,196

.41

10.4

4

0.08

3

,338

.54

3

,318

.88

293

.50

12

.96

0.0

5

2,87

1.17

1

.32

5De

tails

of i

nves

tmen

ts(in

cludin

g inv

estm

ents

in su

bsidi

aries

)

-

10

.01

-

-

3,3

30.2

6

-

-

-

-

1

4.13

-

6Tu

rnov

er96

5.99

285

.59

0.6

5

0.83

0.01

399

.40

-

-

-

194.

71

-

7Pr

ofit

befo

re ta

xatio

n

6

5.84

106

.92

0.5

2

0.03

(23

.21)

(78.

59)

-

(0

.01)

-

4

8.30

(0

.03)

8Pr

ovisi

on fo

r tax

ation

22.

51

-

-

-

-

0.3

7

-

-

-

1

3.86

-

9Pr

ofit

afte

r tax

ation

43.

33

1

06.9

2

0

.52

0.

03

(

23.2

1)

(7

8.96

)

-

(0.0

1)

-

34.

44

(0.0

3)10

Divid

end

paid

-

0.2

5

26

.49

-

-

-

-

-

-

-

32


We have examined the attached abridged Consolidated Balance Sheetof Essar Shipping Ports & Logistics Limited (the Company), and itssubsidiaries (together the Group) as at 31st March, 2009 and also theabridged Consolidated Statement of Profit and Loss and the Cash FlowStatement for the year ended on that date annexed thereto, togetherwith significant notes thereon. These abridged financial statements havebeen prepared by the Company pursuant to Rule 7A of the Companies(Central Government’s) General Rules and Forms, 1956 and are basedon the audited consolidated financial statements of the Group for theyear ended 31st March, 2009 prepared by the management in accordancewith the requirements of Accounting Standard (AS) 21,Consolidated

AUDITORS’ REPORT ON ABRIDGED CONSOLIDATED FINANCIALSTATEMENTS TO THE BOARD OF DIRECTORS OF ESSAR SHIPPINGPORTS & LOGISTICS LIMITED

Financial Statements, as notified under the Companies (AccountingStandards) Rules, 2006 and covered by our report of even date to themembers of the Company, which is attached hereto.



33

AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTSTO THE BOARD OF DIRECTORS OF ESSAR SHIPPING PORTS &LOGISTICS LIMITED1. We have audited the attached Consolidated Balance Sheet of Essar

Shipping Ports & Logistics Limited (formerly Essar Shipping Limited)(the Company) and its subsidiaries (together the Group) as at 31stMarch, 2009, the Consolidated Statement of Profit and Loss andthe Consolidated Cash Flow Statement for the year ended on thatdate annexed thereto. These consolidated financial statements arethe responsibility of the Company’s management. Our responsibilityis to express an opinion on these consolidated financial statementsbased on our audit.

2. We conducted our audit in accordance with the auditing standardsgenerally accepted in India. Those standards require that we planand perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatements. An auditincludes examining, on a test basis, evidence supporting theamounts and disclosures in the financial statements. An audit alsoincludes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overallfinancial statement presentation. We believe that our audit providesa reasonable basis for our opinion.

3. We report that the consolidated financial statements have beenprepared by the Company in accordance with the requirements ofAccounting Standard (AS) 21, Consolidated Financial Statements,as notified under the Companies (Accounting Standards) Rules,2006.

4. Attention is invited to note B (3) of schedule 14 to the financialstatements detailing the state of the Master RestructuringAgreement and the reasons for following principles laid down inother internationally recognized financial reporting frameworks aswell as Accounting Standard (AS 30), Financial Instrument –Recognition & Measurement, issued by the Institute of CharteredAccountants of India, in the absence of guidance available underthe accounting standards referred to in sub-section (3C) of section211 of the Companies Act, 1956.

5. Based on our audit, and to the best of our information and accordingto the explanations given to us, we are of the opinion that the saidconsolidated financial statements, read together with the notesthereon and in particular note B (12) of schedule 14, with referenceto the accounting treatment given in the Securities PremiumAccount, give a true and fair view in conformity with the accountingprinciples generally accepted in India and in respect of the matterdescribed in paragraph 4 above where accounting principlesgenerally accepted in India do not provide specific guidance, inconformity with the principles laid down in related internationallyrecognised financial reporting frameworks:

(i) In the case of the Consolidated Balance Sheet, of the state ofaffairs of the Group as at 31st March, 2009;

(ii) In the case of Consolidated Statement of Profit and Loss, ofthe profit of the Group for year ended on that date; and

(iii) In the case of the Consolidated Cash Flow Statement, of theconsolidated cash flows of the Group for the year ended onthat date.



Consolidated Auditors’ Report

34


Particulars As at 31.03.2009 As at 31.03.2008(Rs. in crore) (Rs. in crore)

I. SOURCES OF FUNDSShareholders’ funds:a) Capital

i) Equity (refer note no.2) 615.81 426.21ii) Advance against allotment of shares 0.50 47.14

b) Reserves and surplusi) Capital reserves (refer note no.2) 4,253.36 307.10ii) Revenue reserves (refer note no.3) 964.69 728.58iii) Revaluation reserve (refer note no.3) 151.09 538.01iv) Tonnage tax reserve 180.50 162.50v) Surplus in Statement of Profit and Loss 1,328.14 1,258.24

6,877.78 2,994.43Preference share capital (refer note no.14) 433.08 -Minority Interest 32.91 32.60Loan funds:a) Secured loans (other than debentures)(refer note no.4) 4,927.46 3,084.63b) Finannce lease obligations (refer note no.6) 1,134.90 778.09c) Unsecured loans 676.53 307.33

6,738.89 4,170.05Deferred tax liability (net) 32.52 18.90

Total 14,731.49 7,689.33II. APPLICATION OF FUNDS

Fixed assets:a) Net block 7,422.76 5,229.53

(original cost Rs.8,544.74 (previous year Rs.5,931.22) crore less accumulateddepreciation/impairment of Rs.1,121.98 (previous year Rs.701.69) crore (refer note no.3)

b) Capital work in progress (including capital advances) 979.20 248.108,401.96 5,477.63

c) Expenditure during construction 72.01 27.83d) Goodwill on consolidation 5,037.11 1,387.62Investmentsa) Quoted* (refer note no.15) 2.27 2.27b) Unquoted 517.96 15.00

520.23 17.27* (Aggregate market value of quoted investments is Rs.27.85 (previous year Rs.78.32) crore).Current assets, loans and advances:a) Inventories 150.20 35.61b) Sundry debtors (refer note no.13) 504.92 199.79c) Cash and bank balances 117.30 308.91d) Other current assets 2.41 1.77e) Loans and advances 649.32 482.83

1,424.15 1,028.91Less: Current liabilities and provisions:a) Liabilities (refer note no.16) 720.96 238.02b) Provisions 14.60 11.91

735.56 249.93Net current assets 688.59 778.98Foreign currency monetary items translation difference account (refer note no.3) 11.59 -

Total 14,731.49 7,689.33Refer notes to abridged consolidated financial statementsCompiled from the audited annual accounts of the Company referred to in our report dated 18th May, 2009.

ABRIDGED CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2009(Statement containing the salient features of Consolidated Balance Sheet as per Section 219 (1) (b) (iv) of the Companies Act, 1956)





35

Particulars For the year ended For the year ended31.03.2009 31.03.2008


INCOMEa) Operating and chartering earnings 1,993.63 1,701.98b) Oilfields services income 193.83 -c) Port and terminal service income 386.73 140.44d) Dividend from non trade current investments 1.08 1.58e) Interest income 31.87 18.54f) Other income:

i) Profit on sale of fleet 28.67 198.11ii) Profit on sale of units 1.09 107.56iii) Extinguishment of liability on cancellation of finance lease (refer note no.6) 17.48 -iv) Currency exchange gain (net) (refer note no.3) 13.30 80.43v) Miscellaneous income 8.89 7.03

Total 2,676.57 2,255.67EXPENDITURE

a) Operating expenses:i) Direct voyage expenses 1,073.41 962.94ii) Consumption of fuel, oil and water 230.62 188.95iii) Port and terminal service expenses 65.48 30.77iv) Salaries, wages and other employees benefits- floating staff 91.75 77.40v) Other operating expenses 116.37 92.91

1,577.63 1,352.97b) Establishment and other expenses:

i) Salaries, wages and other employees benefits- office staff 50.73 34.91ii) Managerial remuneration 5.52 4.79iii) Auditor’s remuneration 0.85 1.13iv) Other expenses 104.97 66.56

162.07 107.39c) Interest expenses (refer note no.4) 434.80 266.55d) Depreciation/impairment 377.82 221.48

Total 2,552.32 1,948.39

PROFIT BEFORE TAX 124.25 307.28Less: Provision for taxation

i) Current tax (including tonnage tax) (35.20) (29.09)ii) Adjustment for MAT credit entitlement (0.53) 1.36iii) Fringe benefit tax (4.31) (3.93)iv) Deferred tax credit/(liability) (14.30) (11.37)v) Tax adjustments for earlier years 7.29 (0.65)

(47.05) (43.68)PROFIT BEFORE SHARE OF MINORITY INTEREST 77.20 263.60Add: Share of minority’s interest (loss) - 13.81

PROFIT FOR THE YEAR 77.20 277.41

Balance brought forward from previous year 1,258.24 1,010.83Add: Balance of profit of erstwhile amalagamating companies (refer note no. 2) 10.72 -AMOUNT AVAILABLE FOR APPROPRIATION 1,346.16 1,288.24APPROPRIATIONSLess: Transferred to tonnage tax reserve 18.00 30.00Less: Dividend on preference shares 0.02 -Balance carried forward to balance sheet 1,328.14 1,258.24

1,346.16 1,288.24

Basic and diluted earnings per share (Rs.) (face value of Rs.10/- per share) (refer note no.8) 1.25 6.51Refer notes to abridged consolidated financial statementsCompiled from the audited annual accounts of the Company referred to in our report dated 18th May, 2009.

ABRIDGED CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2009(Statement containing the salient features of Consolidated Profit & Loss as per Section 219 (1) (b) (iv) of the Companies Act, 1956)





Abridged Consolidated Statement of Profit and Loss Account

36


CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009



A CASH FLOW FROM OPERATING ACTIVITIES

Net profit before tax 124.25 307.28

Adjustments for :

Depreciation 377.82 221.48

Interest and finance expenses 434.80 266.55

Interest income (31.87) (18.54)

Profit on sale of assets (net) (32.12) (198.00)

Extinguishment of liability on cancellation of finance lease (17.48) -

Provision for employee benefits (non-funded) 2.01 4.71

Profit on sale of investments (net) (1.09) (107.56)

Dividend on current investments (1.08) (1.58)

Foreign exchange gain (1.08) (79.12)

Currency alignment on conversion of non-integral foreign

subsidiaries and translation adjustment (net) 162.14 (72.95)

Operating profit before working capital changes 1,016.30 322.27

Adjustments for:

Trade and other receivables (360.09) 243.12

Inventories (114.59) (3.00)

Trade payables 2.70 (211.28)

Cash generated from operations 544.32 351.11

Income taxes paid (net of refund) (46.03) (38.16)

Fringe benefit tax paid (4.59) (3.79)

Net cash from operating activities 493.70 309.16

B CASH FLOW FROM INVESTING ACTIVITIES

Purchase of fixed assets including capital work in progress/advances (1,866.21) (555.03)

Sale of fixed assets 220.12 206.38

Insurance claim received on fixed asset - 1.00

Advance received against sale of fixed asset - 22.06

Advance received against sale investments repaid - (13.13)

Advance given towards purchase of investments (0.42) -

Purchase of current investments (836.02) (331.86)

Proceeds from sale of current investments 343.14 1,635.57

Proceeds from sale of non - current investments 153.00 -

Investment in shares of subsidiaries - (1,516.36)

Fixed deposits placed for a period of more than three months (17.45) (32.85)

Dividend on current investment 1.08 1.58

Interest received 31.23 17.83

Net cash flow from investing activities (1,971.53) (564.81)

37



C CASH FLOW FROM FINANCING ACTIVITIESInterest and finance expenses paid (357.63) (174.36)Proceeds from term loans 912.19 233.71

Additional lease obligations 761.50 445.27

Proceeds from unsecured loans 801.74 447.33Repayment of term loans (296.17) (103.88)

Repayment of finance lease obligation (68.49) (24.49)

Repayment of unsecured loans (437.33) (300.00)Payment of unclaimed debentures and interest thereon (0.40) (0.45)

Payment of intercorporate deposits - (36.58)

Advance towards allottment of shares 0.50 -Repayment of share application money received (47.14) (42.59)

Net cash flow from financing activities 1,268.77 443.96

(DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS (209.06) 188.31Cash and cash equivalents at beginning of the year 260.35 72.04

Cash and cash equivalents at end of year 51.29 260.35

Notes :1 Cash and cash equivalents include :

Cash and bank balances 50.24 147.65

Balances in fixed deposits (maturity period of less than 3 months) 0.87 110.72Unrealised gain on foreign currency on cash and cash equivalents 0.18 1.98

Total cash and cash equivalents 51.29 260.35

Balances in fixed deposits (maturity period of more than 3 months) 66.01 48.56CASH AND BANK BALANCES 117.30 308.91

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009

2 Non cash investing and financing transactions:a Pursuant to scheme of amalgamation of India Shipping, Mauritius (IS) and Essar Sisco Ship Management Company Limited, India

(ESSMC);(i) The Company has allotted 364,905,489 equity shares of Rs.10/- each fully paid up, at a premium of Rs.210/- per share to Essar

Shipping & Logistics Limited, Cyprus (ESLL) (immediate holding company and sole shareholder of erstwhile IS) and;

(ii) 175,299,376 equity shares (including 376,000 GDS represented by 124,456,000 equity shares) of the Company held by IS have beencancelled.

(iii)The net excess value of additional shares (shares allotted to the shareholder of IS reduced by the shares already held by IS andcancelled by the Company) issued over net assets of the IS acquired by the Company amounting to Rs.3,712.43 crore has beendeducted from the securities premium account of the Company.

(iv)The difference of Rs.4.33 crore, between Company’s investment value in equity shares and equity share capital of ESSMC, has alsobeen deducted from securities premium account of the Company (refer note no. 2).

b EOSL has issued preference shares amounting to Rs.433.08 crore to immediate holding company against the advances received inprevious year.

c During the year 2007-08, VOTL has allotted share against the share application money received in advance in prior year from ESLLamounting to Rs.89.73 crore.





Consolidated Cash Flow Statement

38


1) Subsidiaries

The reporting date of all the subsidiaries is 31st March 2009. The list of the subsidiaries of the Company which are included in the consolidationand the Group's holding therein are as under:

Name of companies Country of Immediate Relationship Immediateincorporation holding holding %

2009 2008 2009 2008

Essar Logistics Limited ("ELL") India ESPLL ESPLL Subsidiary 100% 100%

Vadinar Oil Terminal Limited ("VOTL") India EPTL ESPLL Subsidiary 100% 100%

Essar International Limited ("EIL") Guernsey ESPLL ESPLL Subsidiary 100% 100%

Energy Transportation International Limited ("ETIL") Bermuda EIL EIL Subsidiary 100% 100%

Energy II Limited ("EII") Bermuda EIL EIL Subsidiary 100% 100%

Essar Ports & Terminals Limited ("EPTL") Mauritius ESPLL ESPLL Subsidiary 100% 100%

Essar Bulk Terminal Limited ("EBTL") India EPTL EPTL Subsidiary 99.98% 74%

Essar Bulk Terminal (Salaya) Limited ("EBTSL") India EPTL EPTL Subsidiary 100% 100%

Essar Dredging Limited ("EDL")* India EBTL NA Subsidiary 100% -

Essar Oilfields Services Limited ("EOSL")# Mauritius ESPLL ESLL Subsidiary 100% -

Essar Oilfields Services FZE# Dubai EOSL EOSL Subsidiary 100% -

*Incorporated on January 12, 2009

# Subsidiary with effect from April 1, 2008 upon merger of India Shipping, Mauritius with the Company.

2) Amalgamation of companies:

(Note no. B (12) of schedule 14 of annual accounts)

Essar Sisco Ship Management Company Limited, India, (ESSMC),a wholly owned subsidiary of the Company engaged in shippingand investment activities and India Shipping, Mauritius (IS) engagedin investment activities, have been amalgamated with the Companywith effect from 1st April, 2008 (the appointed date) in terms ofScheme of Amalgamation ("the Scheme") sanctioned by HonourableHigh Court of Madras and Honourable High Court of Gujarat videtheir orders dated 18th December, 2008 and 16th January, 2009respectively.

In accordance with the Scheme, the undertaking of ESSMC and ISbeing all its assets and debts, outstanding, credits, liabilities, dutiesand obligations, has been transferred to and vested in the Companyretrospectively with effect from the appointed date. The Companyhas followed pooling of interest method of accounting to accountthe said amalgamations of the companies under the Scheme.

Pursuant to the scheme:

a) The sole shareholder holding fully paid up equity shares in ISwas allotted 364,905,489 equity shares of the Company basedon allotment of 32 equity shares of Rs.10/- each (Rs.364.91crore), at a premium of Rs.210/- per share (Rs.7663.02 crore)for every 100 equity shares of US$ 1 each held in the capitalof IS and 175,299,376 equity shares (including 376,000 GDSrepresented by 124,456,000 equity shares) of the Companyheld by IS have been cancelled. The net excess of the valueof additional shares (shares allotted to the shareholder of ISreduced by the shares already held by the IS and cancelledby the Company) issued over net assets of the IS acquired bythe Company amounting to Rs.3712.43 crore has beendeducted from the securities premium account of the Company.The erstwhile wholly owned subsidiaries of IS viz. EssarOilfields Services Limited, Mauritius and Essar Oilfields

Services FZE, Dubai have become wholly owned subsidiariesof the Company.

b) No shares were issued on amalgamation of ESSMC as it wasa wholly owned subsidiary of the Company. The difference ofRs.4.33 crore between Company's investment value in equityshares and equity share capital of ESSMC, has also beendeducted from securities premium account of the Company.

c) Had the accounting treatment not been prescribed in the saidHigh Court orders, the Securities premium account would havebeen higher and general reserve would have been lower byRs.3716.76 crore.

d) The Company has become a subsidiary of Essar Shipping &Logistics Limited, Cyprus (ESLL) (immediate holding company)which in turn is the subsidiary of Essar Global Limited, CaymanIsland (ultimate holding company).

The abridged consolidated financial statements of the Group forthe year ended 31st March, 2009 are not therefore comparable withthose of the previous year.

3) Fixed assets


a) Pursuant to notification issued by the Central Governmentunder Companies (Accounting Standard) Amendment Rules,2009 dated 31st March 2009; the Company has chosen anoption with effect from 1st April 2007 to adjust the gains/lossesarising on conversion/translation/settlement of long termforeign currency items into the corresponding costs of fixedassets to the extent it is related to acquisition of depreciablefixed assets and the balance gains/losses to be accumulatedin "Foreign Currency Monetary Item Translation DifferenceAccount" (FCMITDA). Consequently out of the exchangedifference of Rs.72.88 crore (net of depreciation on exchangedifference) relating to previous year, Rs.35.40 crore and

NOTES TO ABRIDGED CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED 31st MARCH 2009.(Compiled from audited annual accounts of the Company)

39

Rs.38.62 crore has been adjusted to corresponding fixedassets and revaluation reserve respectively and the balanceof Rs.1.14 crore has been accumulated in FCMITDA.

During the year, exchange difference on long term foreigncurrency items relating to fixed assets amounting to Rs.501.48crore has been adjusted in costs of corresponding fixed assetsand the balance exchange difference of Rs.11.59 crore (net ofRs.5.79 crore amortised in the Statement of Profit and Loss)outstanding under FCMITDA as on the balance sheet datewill be amortised over the balance period of the correspondinglong term foreign currency item or upto 31st March 2011whichever is earlier.

The compounding effect of this treatment has resulted into anincrease in the profit for the year by an amount of Rs.489.32crore.

b) The Company had revalued its fleet on 1st April 2004 and on31st March 2008. The valuations were done by accreditedvaluers on the basis of expected market value in an arm'slength transaction and free of encumbrances on the valuationdate.

The enhancement in the value of fleet amounting to Rs.669.52crore and Rs.491.31 (including Rs.38.62 crore exchangedifference, net of depreciation relating to earlier year) crorerespectively were credited to fixed assets revaluation reserve.Incremental depreciation and impairment mainly on accountof the revaluation amounting to Rs.144.73 (previous yearRs.26.95) crore and Rs.133.97 (previous year nil) crore havebeen recouped from the fixed assets revaluation reserve.

c) The Company has three vessels and an aircraft on financelease as on the balance sheet date.

d) Gross block of plant and machinery includes Rs.38.84(previous year Rs.38.84) crore leased out; Written down valueas on 31st March 2009 is nil (previous year nil).

e) The fleet and dredgers along with its receivables, bargeunloader and rigs are under charge on secured loans.

4) Note no. B (3) of schedule 14 of annual accounts)

a) The Master Restructuring Agreement ("MRA") dated 17thDecember, 2004 entered pursuant to corporate DebtRestructuring Scheme, subject to concurrence of lenders, givesan option to VOTL to prepay certain funded interest loans ofRs.869.08 (previous year Rs.869.08) crore arising from fundingof interest for the period 1st October 1998 to 29th December2003 at any point in time during their term at a reduced amountcomputed in accordance with mechanism provided in the MRAor in full by one bullet payment in March, 2026.

In order to give accounting effect to reflect the substance ofthe transaction and considering the intention of themanagement to prepay the funded interest loans under theoption aforementioned, in the absence of guidance availableunder the accounting standards referred to in sub-section (3C)of Section 211 of the Companies Act, 1956, the principles laiddown in International Financial Reporting Standard (IAS) 39(Revised) - Financial Instruments - Recognition andMeasurement, Statement of Financial Accounting Standard(SFAS) 15 - Accounting by Debtors and Creditors for TroubledDebt Restructuring under United States Generally AcceptedAccounting Principles (US-GAAP), and Accounting Standard(AS 30) Financial Instruments - Recognition and Measurementissued by the Institute of Chartered Accountants of India, havebeen followed.

In view of the above, an amount of Rs.706.96 (previous yearRs.722.21) crore shown under secured loans being the amountnot payable as at balance sheet date, has been shown asdeduction from the funded interest facilities of the financialinstitutions and banks (refer schedule 3) to reflect in substancethe present obligation under the mechanism of the balancesheet date, with consequential deduction from "Expenditureduring construction" till date of capitalisation of terminal projectin the previous year. The change in the present obligation ofthe said loans subsequent to capitalisation of terminal projectis treated as finance cost in the Statement of Profit and Loss.

The Company has plans of prepaying the loans (includingfunded interest loans) in accordance with the option toprepayment available under MRA.

b) Term loans and funded interest facilities from banks andfinancial institutions (other than (c) below) are secured/to besecured by first ranking security interests on all movable andimmovable assets, present and future, pledge of shares ofVOTL held by the promoters and persons associated with thepromoters/VOTL, security interest on rights, titles and interestsunder each of the project documents, trust and retentionaccounts/sub-accounts, insurance policies related to theterminal project, immovable properties of Essar Oil Ltd. (EOL)pertaining to terminal project, guarantee by the promoters andguarantee of the Company for Rs.250 crore.

c) The facilities provided by a financial institution upto Rs.200(previous year Rs.200) crore and interest and other chargesthereon are secured by a Guarantee of EOL for Rs.200(previous year Rs.200) crore. To secure obligation of EOLpursuant to the said guarantee, security is created by firstmortgage and charge on immovable and movable propertiespertaining to the EOL refinery project, pledge over shares ofEOL and an assignment of the project contracts relating toEOL refinery project, the trust and retention accounts pertainingthereto.

d) i) The term loan of Rs.91.16 (previous year Rs.nil) crore issecured by first pari passu charge on all the present andfuture movable / immovable assets / properties, insurancecontracts, accounts, receivables and all other assets ofEBTL including but not limited to goodwill, trademarksand patents.

ii) The term loan of Rs.nil (previous year Rs.47) crore issecured by first charge on dredger (EBT-2).

iii) The term loan of Rs.nil (previous year Rs.40) crore issecured by extension of existing charge on the twodredgers (EBT-1 and EBT-2) and corporate guarantee ofthe immediate holding company.


a) Contingent liabilities: (Rs. in crore)


i) Claims against the Group notacknowledged as debt 92.44 17.27

ii) Guarantees given by banks 84.98 15.98

iii) Corporate guaranteeson behalf of ESLL - 1,346.44

iv) Performance guarantees givenunder contracts 111.39 -

Notes to Abridged Consolidated Financial Statement

40



v) Dividend on optionallyconvertible cumulativeredeemable preference shares 0.02 0.01

vi) Guarantee on behalf of others 104.00 104.00

vii) Disputed sales tax demand underappeal with the honorable highcourt of Madras 58.10 58.10

viii) Income tax appeals before ITAT 117.97 110.76

ix) Bills discounted with banks 86.79 80.00

x) Letter of credit (against marginmoney kept as fixed deposit) - 22.44

xi) Interest on facility E on principalamount of facility stoppageas per MRA 87.82 41.43

b) Guarantee given by others on behalf of VOTL in respect ofloan liability already existing in the books of account Rs.200(previous year Rs.200) crore.

c) Estimated amount of contracts remaining to be executed oncapital account and not provided for is Rs.5,132.38 (previousyear Rs.2,580.79) crore.

6 Leases:


(a) Finance leases:

(i) The minimum lease rentals outstanding at the year endare as under:

(Rs. in crore)

As on 31.03.2009 As on 31.03.2008

Particulars Minimum Interest Present Minimum Interest Presentlease value of lease value of

payments minimum payments minimumlease lease

payments payments

Future lease rental obligation payable :

- Not later thanone year 163.33 72.23 91.10 86.09 48.87 37.22

- Later than oneyear but not laterthan five years 659.15 222.95 436.21 328.28 168.21 160.07

- Later thanfive years 703.86 578.71 609.35 644.13 60.82 583.31

Total 1,526.34 873.89 1,136.65 1,058.50 277.90 780.60

(ii) The finance lease arrangement in respect of a vessel,entered into between the Company and ESLL, has beenmutually terminated during the year and consequentlyRs.17.48 crore (net excess of finance lease obligation ofRs.548.53 crore over net book value of Rs.531.05 crore)has been recognised as an extinguishment of liability oncancellation of finance lease in the ConsolidatedStatement of Profit and Loss.

(b) Operating leases:

VOTL has a committed liability of Rs.6.70 (previous yearRs.6.95) crore for future lease rental charges in respect of landtaken on lease which is owned by Essar Oil Limited.

7) Business segment and geographical segment:


a) Business segment

(Rs. in crore)


Segment revenue

Fleet operating and chartering 1716.58 1428.96

Surface transport services 500.89 493.23

Port and terminal services 386.73 140.44

Oilfields services 193.83 -

Unallocated 73.71 215.14

Total 2871.74 2,277.77

Less : Inter segment revenue (195.17) (22.10)

Net income from operation 2,676.57 2255.67

Segment results






Profit from operation beforeinterest and finance charges 559.05 555.29

Less: Unallocable interestand finance expenses (434.80) (248.01)

Profit before tax 124.25 307.28

Less: Income tax (47.05) (43.68)

Profit after tax 77.20 263.60

Add: Share of losstransferred to minority - 13.81

Profit after tax (afteradjustment for minority interest) 77.20 277.41

Segment assets

Fleet operating and chartering 2,775.05 2,695.22


Port and terminal services 3,724.41 4,664.38

Oilfields services 3,059.09 -


Total assets 10,418.37 7,939.26

Segment liabilities

Fleet operating and chartering (2,680.54) (1,893.44)

Surface transport services (49.15) (69.30)

Port and terminal services (2,767.02) (2,475.96)

Oilfields services (1,969.24) -

Unallocated (8.55) (0.17)

Total liabilities (7,474.49) (4,438.87)

41

(Rs. in crore)


Fixed assets acquiredduring the year

Fleet operating and chartering 1,126.55 568.83


Port and terminal services 21.29 2,885.27

Oilfields services 2,256.84 -

Total 3,404.81 3,458.02

Depreciation*





Total 377.82 221.48

* excludes depreciation of Rs.7.54 (previous year Rs.4.43) croretransferred to expenditure during construction and Rs.278.71(previous year Rs.26.95) crore recouped from fixed assetsrevaluation reserve.

b) Geographical segment

The Group's fleet operations are managed on a worldwidebasis from India. Fleet operating and chartering earnings arebased on the geographical location of customers.

(Rs. in crore)

Segment Revenue Year ended31.03.2009 31.03.2008

India 2127.42 1664.88

China 92.74 90.08

U.K. 116.57 86.08

UAE 30.40 27.69

Brazil 46.45 49.57

Rest of the world 262.99 337.37

Total 2676.57 2255.67

The main operating assets represent floating fleet, which is notidentifiable to any geographical location.

8) Earnings per share


The calculation of basic and diluted earnings per share is based onthe following data:


Earnings for the purpose ofbasic and diluted earnings pershare (net profit for the year)(Rs. in crore) 77.20 277.41

Less: Preference dividend tominority shares held in EOSL(Rs. in crore) 0.02 -


Adjusted net earnings for thepurpose of basic and dilutedearnings per share (Rs. in crore) 77.18 277.41

Equity shares at the beginningof the year (nos.) 426,077,207 426,077,207

Equity shares issued pursuantto merger of India Shipping (nos.)- (refer note no. 2) 364,905,489 -

Equity shares held by IndiaShipping in the Company cancelledupon merger (nos.) (175,299,376) -

Equity shares at the endof the year (nos.) 615,683,320 426,077,207

Weighted average equity sharesfor the purpose of calculating basicand diluted earnings per share (nos.) 615,683,320 426,077,207

Earnings per share-basic and diluted(face value of Rs.10/- each) (Rs.) 1.25 6.51

9) Foreign currency exposure:


(i) There were no forward/options contracts entered in to by theGroup during the financial year to hedge its foreign currencyexposures.

(ii) The year-end foreign currency exposures that have not beenhedged by a derivative instrument or otherwise are given below.

(A) Amount receivable in foreign currency on account of thefollowing:


2008-09 2007-08 2008-09 2007-08

(i) Export of goodsand services 14.79 38.92 USD 2.84 9.84

(ii) Sale of assets 13.64 - USD 2.70 -

(iii) Sale of currentinvestments 9.72 19.12 QAR 1.91 3.75

(iv) Advance to vendors 7.20 2.89 USD 1.30 0.60

11.30 0.11 EUR 1.71 0.00

0.00 - SGD 0.00 -

0.02 0.00 AED 0.00 -

18.52 3.00 3.01 0.60

(iii) Bank balance andfixed depositsincluding interestaccrued there on 0.32 93.41 USD 0.06 23.71

(5.53) 0.32 GBP (1.09) 0.06

- 0.01 EUR - -

(5.21) 93.74 (1.03) 23.77


42


(B) Amount payable in foreign currency on account of thefollowing:


2008-09 2007-08 2008-09 2007-08

(i) Import of goodsand services 38.85 12.92 INR 7.63 2.54

16.11 21.12 USD 3.00 3.54

3.42 0.11 GBP 0.66 0.01

- 0.03 DKK - 0.03

7.61 0.62 EUR 1.19 0.10

0.78 0.29 JY 16.51 5.42

18.35 0.37 SGD 3.67 0.12

0.02 - HKD 0.05 -

14.44 0.05 AED 2.83 0.01

1.28 - NOK 0.29 -

0.17 - ZAR 0.06 -

10.75 - OMR 2.11 -

0.01 - AUD 0.00 -

72.94 35.51 38.00 11.77

(ii) Advance fromcustomer 1.00 - USD 0.02 -

(iii) Lease obligation 1,134.90 778.09 USD 221.70 193.99

(iv) Secured loanspayable (includinginterest accruedthereon) 744.12 707.62 USD 111.01 142.93

10) Deferred tax liability

The components of net deferred tax liability are as follows:(Rs. in crore)

Details As at As at31-03-09 31-03-08

Deferred tax liability

Depreciation on fixed assets 34.46 19.72

(A) 34.46 19.72

Deferred tax assets

Disallowance u/s 40(a) 1.18 0.48

Employee benefits 0.76 0.32

(B) 1.94 0.80

Net deferred tax liability (A-B) 32.52 18.90

11) Employee benefits:

The Group has adopted Accounting Standard (AS) 15 (Revised)'Employee benefits' as notified under the Companies (AccountingStandard) Rules, 2006, with effect from 1st April, 2007.

12) Related party transactions:


(a) Holding companies:

(i) Essar Global Limited, Cayman Islands (ultimate holdingcompany) (w.e.f 1st April 2008)

(ii) Essar Shipping & Logistics Limited, Cyprus (immediateholding company) (w.e.f 1st April 2008)

(b) Individuals owning directly or indirectly an interest in thevoting power that gives them control or significantinfluence:

(i) Mr. Shashi Ruia, Chairman

(ii) Mr. Ravi Ruia, Vice Chairman

(iii) Mr. Anshuman Ruia, Director

(c) Key management personnel:

(i) Mr. Sanjay Mehta, Managing Director (Essar ShippingPorts & Logistics Limited)

(ii) Mr. A. R. Ramakrishnan, Wholetime Director (EssarShipping Ports & Logistics Limited)

(iii) Mr. V. Ashok, Wholetime Director (Essar Shipping Ports& Logistics Limited)

(iv) Mr. K. K. Sinha, Wholetime Director (Vadinar Oil TerminalLimited)

(v) Mr. A. K. Musaddy, Wholetime Director (Essar LogisticsLimited)

(vi) Admiral Sampath Gopal, Wholetime Director (Essar BulkTerminal Limited) (till 31.12.08)

(vii) Mr. Narasimhan Ramesh, Wholetime Director (EssarOilfields Services Limited) (till 31.01.2009)

(d) Other related parties where there have been transactions:

Enterprises commonly controlled or influenced by majorshareholders/directors/relatives of directors of the Group:

(i) Essar Information Technology Limited

(ii) Essar Agrotech Limited

(iii) Essar House Limited

(iv) Essar House Services Limited

(v) Essar Steel Limited

(vi) Futura Travels Limited

(vii) India Securities Limited

(viii) Essar Oil Limited

(ix) Bhander Power Limited

(x) Essar Steel (Hazira) Limited

(xi) Essar Power Limited

(xii) Click for steel Services Limited

(xiii) Essar Investments Limited

(xiv) Essar Teleholdings Limited

(xv) Essar Oilfields Services Limited (upto 31st March,2008)

43

(xvi) Aegis BPO Services Limited

(xvii) Essar Project Management Consultancy Limited

(xviii) Essar Engineering Services Limited

(xix) Vadinar Power Company Limited

(xx) Essar Steel Algoma Inc.

(xxi) Essar Heavy Engineering Services Limited

(xxii) Essar Steel Orissa Limited

(xxiii) Hazira Pipe Mills Limited

(xxiv) Hazira Plate Limited

(xxv) Essar Power Gujarat Limited

(xxvi) Essar Power MP Limited

(xxvii) Essar Infrastructure Services Limited

(xxviii) Essar Infrastructure Holdings Limited

(xxix) Essar Logistics Holdings Limited

(xxx) Essar Telecom Retail Limited

(xxxi) Global Supplies (UAE) FZE

(xxxii) Essar Gulf FZE

(xxxiii) Essar Exploration & Production (Bengal) Limited

(xxxiv) Essar Steel Sharjah FZE

(xxxv) Essar Energy Services Limited

(xxxvi) Essar Constructions (India) Limited

(xxxvii) Essar Shipping & Logistics (Panama) Inc.

(xxxviii) Essar Properties Limited

The details of transactions with related parties are as under:

(Rs. in crore)

Nature of transactions Holding and Other related Key Management Totalsubsidiary companies Parties Personnel

2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

INCOME

Fleet operating income

Essar Steel Limited - - 1,195.21 1,130.49 - - 1,195.21 1,130.49

Essar Steel (Hazira) Limited - - 73.82 3.90 - - 73.82 3.90

Essar Steel Algoma Inc. - - 30.59 - - - 30.59 -

Essar Constructions (India) Limited - - 16.88 5.21 - - 16.88 5.21


Essar Shipping & Logistics (Panama) Inc. 0.47 - - - - - 0.47 -

Others - - 17.97 0.36 - - 17.97 0.36

Total 0.47 - 1,804.06 1,175.58 - - 1,804.53 1,175.58

Equipment lease rental income


Rental income on building

Essar Steel Limited - - 0.01 - - - 0.01 -

Interest income

Essar Shipping & Logistics Limited 5.16 1.00 - - - - 5.16 1.00

Essar Oil Limited - - 11.38 - - - 11.38 -

Total 5.16 1.00 11.38 - - - 16.54 1.00

Expenditure during construction- income

Essar Constructions (India) Limited - - 7.14 - - - 7.14 -

Essar Steel (Hazira) Limited - - 1.20 - - - 1.20 -

Total - - 8.34 - - - 8.34 -

Agency and management fees

Essar Shipping & Logistics Limited - 0.35 - - - - - 0.35

Essar Investments Limited - - 11.54 - - - 11.54 -

Total - 0.35 11.54 - - - 11.54 0.35

Freight / lease hire charges

Essar Shipping & Logistics (Panama) Inc. - - 8.20 - - - 8.20 -


44


(Rs. in crore)


2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08



Total - - 28.56 8.05 - - 28.56 8.05

Fuel oil purchase


Dredging expense


Stores and spares purchase

Essar Constructions (India) Limited - - - 0.05 - - - 0.05

Essar Steel Limited - - - 5.31 - - - 5.31

Total - - - 5.36 - - - 5.36

Remuneration

Mr. Sanjay Mehta - - - - 0.64 0.71 0.64 0.71

Mr. A. R. Ramkrishnan - - - - 0.89 1.05 0.89 1.05

Mr. V. Ashok - - - - 0.92 0.78 0.92 0.78

Mr. K. K. Sinha - - - - 0.84 0.98 0.84 0.98

Mr. Rajen Sachar - - - - 0.48 0.30 0.48 0.30

Mr. A. K Musaddy - - - - 0.77 0.78 0.77 0.78

Mr. Sampath Gopal - - - - 0.26 0.27 0.26 0.27

Mr. Narasinhan Ramesh - - - - 0.72 - 0.72 -

Total - - - - 5.52 4.87 5.52 4.87

Business center fees

Essar Infrastructure Services Limited - - 13.56 13.56 - - 13.56 13.56

Rent

Essar Global Limited 0.80 - - - - - 0.80 -

Essar House Limited - - 4.20 4.20 - - 4.20 4.20

Others - - 0.51 0.24 - - 0.51 0.24

Total 0.80 - 4.71 4.44 - - 5.51 4.44

Repair and maintenance


Others - - 0.35 0.30 - - 0.35 0.30

Total - - 6.10 2.21 - - 6.10 2.21

Travelling/lodging expenses

Futura Travels Limited - - 13.19 4.97 - - 13.19 4.97

Others - - 0.14 0.01 - - 0.14 0.01

Total - - 13.33 4.98 - - 13.33 4.98

Professional/advisory fees/agency fees


Others - - 1.36 0.92 - - 1.36 0.92

Total - - 7.61 4.09 - - 7.61 4.09

45

(Rs. in crore)


2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Reimbursement of expenses


Essar Oil Limited - - 37.21 - - - 37.21 -


Others - - 1.36 1.27 - - 1.36 1.27

Total 0.28 - 59.95 20.80 - - 60.23 20.80

Fixed asset sold

Essar Shipping & Logistics (Panama) Inc. - - 13.16 5.38 - - 13.16 5.38

Jetty constructions andproject management expenses


Essar Engineering Services Limited - - 0.45 - - - 0.45 -

Essar Project ManagementConsultancy Limited - - 2.55 0.23 - - 2.55 0.23

Total - - 56.93 4.03 - - 56.93 4.03

Steel procurement


Essar Heavy Engineering Services Limited - - 0.30 - - - 0.30 -

Total - - 0.77 0.68 - - 0.77 0.68

Purchase of materials


Hazira Pipe Mill Limited - - 1.28 - - - 1.28 -


Total - - 2.68 0.54 - - 2.68 0.54

Cenvat receivable

Essar Oil Limited - - - 7.63 - - - 7.63

Cenvat payable


Interest Expenses



Others - - 0.76 0.40 - - 0.76 0.40

Total 90.28 0.47 0.76 0.40 - - 91.04 0.87

Construction of building


Cancellation of finance lease


Balance taken over pursuant to mergerof India Shipping with ESPLL

Essar Infrastructure Holdings Limited - - 92.57 - - - 92.57 -


46


(Rs. in crore)


2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Essar Logistics Holdings Limited - - 1.46 - - - 1.46 -

Total - - 94.03 - - - 94.03 -

Assignment of receivables



Total 186.60 - - - - - 186.60 -

Settlement of payables

Essar Infrastructure Holdings Limited - - 15.88 - - - 15.88 -

Advance towards purchase of shares


Purchase of fixed assets


Essar Information Technology Limited - - 0.17 - - - 0.17 -

Essar Telecom Retail Limited - - 0.01 - - - 0.01 -

Total - - 1.76 0.89 - - 1.76 0.89

Share application money received


Fixed assets acquired underfinance lease


Issue of equity shares


Allotment of preference shares


Capital expenses on project expansion

Essar Engineering Services Limited - - 20.30 13.62 - - 20.30 13.62

Essar Project ManagementConsultancy Limited - - 1.17 - - - 1.17 -

Global Supplies (UAE) FZE - - 6.67 - - - 6.67 -

Total - - 28.14 13.62 - - 28.14 13.62

Advance given on capital account

Essar Project ManagementConsultancy Limited - - 0.50 - - - 0.50 -


Global Supplies (UAE) FZE - - 5.19 - - - 5.19 -

Total - - 9.49 - - - 9.49 -

Advance received against sale ofinvestments/allotment of shares


Loans and advancesincluding deposits given

Essar House Limited - - - 2.45 - - - 2.45

47

(Rs. in crore)


2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Essar Infrastructure Services Limited - - - 1.41 - - - 1.41

Essar Information Technology Limited - - - 0.71 - - - 0.71



Essar Oil Limited - - - 112.37 - - - 112.37

Others - - 0.48 0.51 - - 0.48 0.51

Total 263.05 28.27 21.57 142.53 - - 284.62 170.80

Guarantee on behalf of others


Advances paid for expansion project


Loans and advances received






Essar Power MP Limited - - 5.93 - - - 5.93 -

Essar Investments Limited - - - 12.00 - - - 12.00

Others - - 0.68 - - - 0.68 -

Total 365.58 159.28 25.48 54.03 - - 391.06 213.31

The details of outstanding balances as on 31st March, 2009

Sundry debtorsEssar Steel Limited - - 190.44 111.60 - - 190.44 111.60

Essar Shipping & Logistics (Panama) Inc. - - 13.64 5.34 - - 13.64 5.34

Essar Oil Limited - - 41.84 37.65 - - 41.84 37.65Essar Shipping & Logistics Limited 64.52 - - - - - 64.52 -

Essar Steel (Hazira) Limited - - 8.13 - - - 8.13 -

Essar Constructions (India) Limited - - 2.45 0.40 - - 2.45 0.40Hazira Plate Limited - - 2.42 0.33 - - 2.42 0.33

Essar Power Gujarat Limited - - 3.48 - - - 3.48 -Others - - 2.05 0.74 - - 2.05 0.74

Total 64.52 - 264.45 156.06 - - 328.97 156.06

Interest receivable on loan


Lease loan obligation


Unsecured loans



Total - 147.33 10.00 - - - 10.00 147.33

Loans and advancesincluding deposits given

Essar House Limited - - 31.00 31.45 - - 31.00 31.45


48


(Rs. in crore)


2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08





Others - - 1.21 3.26 - - 1.21 3.26

Total 263.05 28.07 161.31 291.85 - - 424.36 319.92

Loans and advances received

Essar Power MP Limited - - 1.49 - - - 1.49 -

India Securities Limited - - 1.76 - - - 1.76 -

Essar Engineering Services Limited - - 1.33 - - - 1.33 -

Essar Project ManagementConsultant Limited - - 1.07 - - - 1.07 -


Essar Exploration &Production (Bengal) Limited - - 6.69 - - - 6.69 -


Global Supplies FZE - - 5.05 - - - 5.05 -

Total 499.84 - 21.19 - - - 521.03 -

Advance received againstallotment of shares


Security deposit received


Interest accrued but not due on loan


Sundry creditors




Essar Engineering Services Limited - - 21.08 13.11 - - 21.08 13.11


Global Supplies FZE - - 6.90 - - - 6.90 -

Essar Investments Limited - - 14.93 12.00 - - 14.93 12.00


Essar Shipping & Logistics (Panama) Inc. - - 0.52 - - - 0.52 -

Others - - 5.07 0.45 - - 5.07 0.45

Total 23.28 2.38 284.89 59.78 - - 308.17 62.16

Guarantee given on behalf of others

Essar Shipping & Logistics Limited - 1,346.44 - - - - - 1,346.44


Total - 1,346.44 104.00 104.00 - - 104.00 1,450.44

49

(Rs. in crore)

Nature of transactions Holding and Other related Key management Totalsubsidiary companies Parties personnel

2008-09 2007-08 2008-09 2007-08 2008-09 2007-08 2008-09 2007-08

Guarantee availed for loan taken




Total 1,302.33 - 200.00 200.00 - - 1,502.33 200.00

Note: The Company has paid sitting fees to group of individuals having significant influence: Rs.0.01 (previous year Rs.0.01) crore.


Details of amount due from sundry debtors under the samemanagement within the meaning of Section 370 (1B) of theCompanies Act, 1956:

Sr. Debtor 31-03-2009 31-03-2008No.

1 Essar Shipping &Logistics (Panama) Inc.* 13.64 -

Total 13.64 -

*During the financial year 2007-08, the debtor was not covered withinthe meaning of Section 370 (1B) of the Companies Act, 1956.


Preference share capital represents 85,000,000 preference sharesof US$ 1/- each held by Essar Shipping & Logistics Limited, Cyprus,the immediate holding company.

15) The Company has pledged its investments in equity shares of EssarOil Limited amounting Rs.2.27 (previous year Rs.2.27) crore infavour of lenders for loans availed by Essar Oil Limited.


The Group has received intimations from certain suppliers regardingstatus under the Micro, Small and Medium Enterprises DevelopmentAct, 2006 (the Act). Amounts due to such suppliers at the end ofthe accounting year have been given in Schedule 9 under sundry

creditors. There were no: a) interest paid during the year; b) interestpayable at the end of the accounting year; and c) interest accruedand unpaid at the end of the accounting year, in respect of suchsuppliers.

17) Performance ratios:

Sr.No. Particulars 2008-09 (%) 2007-08 (%)

1. Total income / Total assets 17.48 30.48

2. Net profit before interestand tax / Capital employed 3.84 8.10

3. Return on net worth 1.05 9.62

4. Net profit / Total income 2.88 12.30

Notes:

1. Capital employed includes shareholders funds, loan funds andis net of revaluation reserve and advance against allotment ofshares.

2. Total assets is net of revaluation on assets.

3. Net worth includes shareholders funds and is net of revaluationreserve and advance against allotment of shares.


Previous year's figures have been regrouped/reclassified wherevernecessary.






50


NOTES

51

Member’s Folio No. :

and/or

DPID No./Client ID No.* :

ESSAR SHIPPING PORTS & LOGISTICS LIMITEDREGD. OFFICE: Administrative Building, Essar Refinery Complex, Okha Highway (SH-25),

Taluka Khambhalia, District Jamnagar, Gujarat 361 305

PROXY FORM

I/We..............................................................................................................................................of ..........................................................................in

the district of ............................................................................being a member of ESSAR SHIPPING PORTS & LOGISTICS LIMITED, hereby

appoint..................................................................................... of ................................................. or failing him..............................................................

of ................................................... as my/our proxy to vote for me/us and on my/our behalf at the THIRTY-THIRD ANNUAL GENERAL MEETING

of the Company to be held on Friday, July 31, 2009 at 3.30 P.M. at the Registered Office of the Company, Administrative Building, Essar Refinery

Complex, Okha Highway (SH – 25), Taluka Khambhalia, District Jamnagar, Gujarat 361 305 and at every adjournment thereof.

Signed this ....................................day of ...............................2009

PROXY FORM MUST REACH THE COMPANY’S REGD. OFFICE, ATADMINISTRATIVE BUILDING, ESSAR REFINERY COMPLEX, OKHA HIGHWAY(SH-25), TALUKA KHAMBHALIA, DISTRICT JAMNAGAR, GUJARAT 361 305,NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF THEMEETING.

* Applicable only in case of Investors holding shares in electronic form.

Affix Rs.1

Revenue

Stamp

SIGNATURE

ESSAR SHIPPING PORTS & LOGISTICS LIMITEDREGD. OFFICE: Administrative Building, Essar Refinery Complex, Okha Highway (SH-25),

Taluka Khambhalia, District Jamnagar, Gujarat 361 305

ATTENDANCE SLIP

Member’s Folio No. :

and/or

DPID No./Client ID No.* :

MEMBER

PROXY

[Name in Capital letters]

33rd ANNUAL GENERAL MEETING

TIME : 3.30 P.M.

DATE : JULY 31, 2009

VENUE : ADMINISTRATIVE BUILDINGESSAR REFINERY COMPLEXOKHA HIGHWAY (SH-25)TALUKA KHAMBHALIADISTRICT JAMNAGARGUJARAT 361 305

I hereby record my presence at the 33rd AGM of the Company

Signature of Member/Proxy

NOTE:

1. Admission restricted to Members/Proxies only.

2. Please avoid bringing children/non-members with you.

* Applicable only in case of Investors holding shares in electronic form.

Essar Shipping Ports & Logistics LimitedIndia Limited, Chairman and Managing Director of Hindustan...

Documents

Transcript of Essar Shipping Ports & Logistics LimitedIndia Limited, Chairman and Managing Director of Hindustan...