SKS Annual Report 16-08-07 - shahilogistics.com Report 06-07.pdf · 1. To receive, consider and...

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17th Annual Report 2006-2007


SKS LOGISTICS LIMITED

BOARD OF DIRECTORSMr. S. K. Shahi Chairman & Managing DirectorMr. F. M. Koli Wholetime DirectorCapt. Walter Gonsalves Wholetime DirectorMr. R. V. Iyer IDBI Nominee DirectorCmde. M. Bhada I. N. (Retd.) DirectorMr. H. N. Thakore Director (up to 31.12.2006)Mr. B. B. Bhawsar DirectorMr. Tony Adam Director

COMPANY SECRETARYMr. A. A. Lambay

BANKERSState Bank of Indore, MumbaiHDFC Bank Ltd., Mumbai

AUDITORSM/s. N. D. Heda & Co.Chartered Accountants

REGISTERED OFFICE404, Abhay Steel House,Baroda Street, Mumbai - 400 009.Tel. : 2373 0713 / 14 / 15 / 16Fax : 91 (22) 2371 0362 / 2374 0219Website : www.shahiship.com / www.shahilogistics.comE-mail : [email protected]

CORPORATE OFFICEShahi Marine HousePlot No. 11 & 11/1, Sector-26Near Grain Market, Vashi,Navi Mumbai - 400 703.Tel. : 2784 3047-49 / 2784 3051-53Fax : 91 (22) 2784 3041 & 2784 3044E-mail : [email protected]

REGISTRAR & SHARE TRANSFER AGENTSystem Support Services209, Shivai Industrial Estate,89, Andheri Kurla Road,Sakinaka, Mumbai - 400 072.Tel. : 2850 0835 / 3940Fax : 2850 1438E-mail : [email protected]

Contents Page

Board of Directors 1

Chairman’s Statement 2

Notice 3

Directors’ Report 5

Management Discussion,

Analysis and Review 7

Report on Corporate Governance 9

Auditors’ Report 17

Balance Sheet 20

Profit & Loss Account 21

Cash Flow Statement 22

Schedules 23

Notes to Accounts 29

Balance Sheet Abstract 32

Auditors’ Report on consolidated 33

Financial Statements

Statement Pursuant to Section 45

212 of Companies Act, 1956

Shahi Shipping (Singapore) Pte Ltd. 46

Shahi Shipping (BD) Ltd. 53

Details of Fleet 58

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CHAIRMAN’S STATEMENT

Dear shareholders,

I take this opportunity to thank you all for your continued trust and support to the Company. I am, indeed,delighted to speak to you today at this 17th AGM of the Company.

The year under review was quite successful with your company turnover above Rs. 40.00 crore and thegross and net margins improving significantly. During the year we have also added one M.S. class vesselto our fleet thus taking the total number of vessels in the fleet to 37 and significantly raising our tonnage.

The Company is very seriously thinking of entering into offshore segment and planning to buy someoffshore vessels and conversion of one of the floating vessel into offshore accommodation vessel.

We have also signed two MOU’s with Inland Waterways Authority of India for construction and operationsof 14 vessels in the National Waterways No. 1 i.e. between Kolkata and Pandu and National WaterwaysNo. 2 i.e. between Kolkata and Mongla. Once in operation, these two projects will significantly add to theprofit and growth of our Company. We are also planning to acquire a few more MS class vessels with aview to expand into global operations.

As you all may be aware, the Inland Waterways Transportation in India is still an insignificant percentageof the total transportation requirements. This mode of transportation has comparatively greater advantageon energy efficiency and pollution fronts vis-à-vis rail and road transportation and also is a cheaper mode.The Inland Waterways transportation share in some of the advanced countries like Netherland, France,Hungary, Germany, Belgium and USA etc. varies between 13% to 42% whereas this share in India ismerely 0.28%. This demonstrates the tremendous scope which lies ahead for growth in this field in thecountry and therefore for your Company.

To keep up with the fast and ever increasing needs of the Container Trade Industry, the Bulk Cargo Exportand Import Market and also the emerging tanker market we are continuously striving to strengthen ourfleet, improve productivity and provide quality services thereby creating a strong position for us in themarket.

As you all are aware, there has been tremendous boost and exceptional growth in the world economywhich, in turn, has great impact on our industry as well. The demand on shipping tonnage continues to begreater than the supply which is leading to continuous rise in the shipping trades.

I assure you that the future is bright and the initiatives we have undertaken and our vision for the near futureas well as long term will enable the Company to achieve sustained profitability and attain global presence.

I once again thank you for your continued support and we shall move together to higher and higher goals.

Place : Mumbai Sarvesh Kumar ShahiDate : 20th August 2007 Chairman & Managing Director

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NOTICE

Notice is hereby given that the Seventeenth Annual General Meeting of the members of SKS LOGISTICS LIMITED will be held onThursday, 27th September, 2007, at 11.00 a.m. at Walchand Hirachand Hall, Indian Merchants’ Chamber Building (4th Floor),Churchgate, Mumbai – 400 020, to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Audited Balance Sheet as at 31st March 2007, the Profit and Loss Account for the yearended on that date, together with the Reports of the Board of Directors and the Auditors thereon.

2. To declare dividend on equity shares.

3. To appoint a Director in place of Cmde. M. Bhada, who retires by rotation and, being eligible, offers himself for reappointment.

4. To appoint a Director in place of Capt. Walter Gonsalves, who retires by rotation and, being eligible, offers himself forreappointment.

5. To appoint M/s. N.D. Heda & Co. Chartered Accountants, Mumbai the retiring Auditors, as Auditors of the Company to holdoffice from the conclusion of this Annual General Meeting till the conclusion of the next Annual General Meeting at a remunerationto be mutually decided between them and the Board of Directors.

By order of the Board of Directors,

Place : Mumbai S. K. ShahiDate : 14th August, 2007 Chairman and Managing Director

Registered Office:404, Abhay Steel House,Baroda Street, Mumbai - 400009

Notes :

1. A MEMBER ENTITLED TO ATTEND AND VOTE AT THE MEETING IS ENTITLED TO APPOINT A PROXY OR PROXIES TOATTEND AND VOTE AT THE MEETING INSTEAD OF HIM/HER SELF AND THE PROXY NEED NOT BE A MEMBER OF THECOMPANY.

2. Proxies in order to be effective must be lodged with the Company at its Registered Office, not later than 48 hoursbefore the commencement of the meeting.

3. A body corporate being a member shall be deemed to be personally present at the meeting, if represented in accordance withthe provisions of Section 187 of the Companies Act, 1956.

4. Register of Members and Share Transfer books will be closed from 21.9.2007 to 27.9.2007(both days inclusive) for thepurpose of declaration of dividend.

5. All correspondence regarding shares of the Company should be addressed to the Company’s Registrar and Transfer Agent(RTA) viz. System Support Services, 209, Shivai Industrial Estate, 89, Andheri Kurla Road, Sakinaka, Mumbai 400 072.Members who hold shares in physical form and wish to make/change a nomination in respect of their shareholding in theCompany, as permitted under Section 109A of the Companies Act, 1956, may submit the prescribed Form 2B to SystemSupport Services.

6. Members who wish to obtain any information on the Company as regards the accounts for the financial year 31st March 2007

are requested to write to the Company at least 10 days before the Annual General Meeting.

7. For convenience of the members and for proper conduct of the meeting, entry to the place of meeting will be regulated by

the attendance slip, which is annexed to the Proxy Form. Members are requested to sign at the place provided on the

attendance slip and hand it over at the entrance of the Meeting.

8. In case of joint holders attending the meeting, only such joint holder who is higher in the order of names will be entitled

to vote.

9. Members/Beneficial Owners are requested to quote their full name as per the Company’s record, Folio No. / DPand Client ID Nos., as the case may be, in all correspondences with the Company.

10. Members who hold shares in dematerialized form, are requested to bring their depository account number for identification.

11. pursuant to Section 205A(5) of the Companies Act, 1956, the Company has transferred all unclaimed / unpaid dividends ontheir respective due date to the Investor Education and Protection Fund established by the Central Government pursuant toSection 205 C of the Companies Act.,1956. Shareholders who have not so far encashed the dividend warrants(s) arerequested to seek issue of duplicate warrant(s) by writing to the Registrar and Transfer Agents, M/s System Support Services.Shareholders are requested to note that no claims shall lie against the said fund or the Company in respect of any amount ofunclaimed dividend once the same is transferred to the above fund.

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Graduate from National Defence Academy,M. Sc.(Defence Studies). Certificate in AdvanceManagement from Jamnalal Bajaj Institute ofManagement, Mumbai.

Total Service Providers Pvt. Ltd.

4 Qualification

5 Directorship inother Companies(Excludingforeign Company )

6 Shareholding NIL

Cmde. Bhada was General Manager Projectsand Corporate Administration at Mahindraand Mahindra Limited and was handed overthe additional responsibility as CEO ofGuestline Hospitality and ManagementDevelopment Services Ltd. He was in chargeof management of the company’s projectsand properties and Administration ofCorporate Centre.

He retired from the Indian Navy in the rank ofCommodore in 1994 after 32 years of service.He is a member of the Audit Committee,Remuneration Committee & Shareholders/Investors Grievance Committee.

Master Marine (Ex-Merchant Navy)

NIL

NIL

14. Members are requested to bring their copies of the AnnualReport to the meeting.

By order of the Board of Directors

Place: Mumbai S.K. ShahiDate : 14th August , 2007 Chairman & Managing Director

13. Corporate Members intending to send their authorizedrepresentative are requested to send a duly certified copyof the Board Resolution authorizing their representativesto attend and vote at the Annual General Meeting.

12. Details of Directors seeking Re-appointment at the forthcoming Annual General Meeting in pursuance ofClause 49 of the Listing Agreement.

1 Name of Director Capt. Walter Gonsalves Cmde. M. Bhada I. N. (Retd.)

2 Date of Birth 21 - 04 - 1942 21 - 03 - 1940

3 Experience in SpecificFunctional area andPosition held :

Capt. W. Gonsalves has more than threedecades of experience to his credit in theShipping Sector. During his tenure he hasserved in the Merchant Steam Navigation Co.as Cadet & Navigation Officer and in ShippingCorporation of India as Navigating Officer &Master . During his tenure on Board Ship, hehas served as Master on General CargoContainer Vessel and Passenger Vesselhaving carried out loading and dischargingoperations of General Cargo and ISOContainers. He is a member of the AuditCommittee & Shareholders/ InvestorsGrievance Committee

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DIRECTORS’ REPORT

To,The Members of SKS Logistics Limited

Your directors have pleasure in presenting the 17th Annual Report together with the Audited accounts of the company for the financialyear ended on 31st March 2007.

1. FINANCIAL RESULTS:

The summary of financial results of the company for the year ended 31st March 2007 is furnished below.

2006-2007 2005-2006Rs in lacs Rs in lacs

Gross Profit 1697 1379

Less: Interest and Finance Charges 488 348

Less: Provision for Depreciation 615 501

Profit before Tax 594 530

Less: Provision for Taxation:

Current Tax 110 108

Deferred Tax 76 76

Fringe Benefit Tax 8 10

Profit After Tax 400 336

2. DIVIDEND:

Your Directors are pleased to recommend dividend of 7.5% (Rs 0.75 per share) on 1,44,94,874 equity shares of Rs 10/- eachfor the year ended 31st March 2007. The total payout on dividend (including corporate tax thereon) will be Rs 1,27,18,707/- asagainst Rs 82,63,890/- in the previous year.

3. PERFORMANCE:

Income from operations during the current year was Rs. 40.62 crores as against Rs 35.33 crores in the previous year registeringa growth of about 15% over the previous year. The gross profit of Rs 16.97 crores registered an increase of about 23%over previous year’s 13.79 crores. This is considered significant in view of the fact that during the current year the Interest andFinance Charges have increased significantly from Rs 3.48 crores in the earlier year to Rs 4.88 crores during the current year.

Indian economy has been poised for major growth. It expanded by an impressive 9% growth during 2005-2006and by 9.2% during 2006-2007. With all sectors of the economy including services sector registering robust growth rates, theGovernment is now targeting a sustained 9% future growth. This definitely augurs well for shipping and logisticsindustry as well.

The Government has also been giving boost to shipping industry and accordingly has undertaken various measuressuch as encouraging public and private investment in development and improvement of ports, tonnage tax, dedicated freightcorridors, 100% FDI in shipping etc.

Keeping the overall growth rates in mind, the company has also been continuing with its expansion drive and hasacquired one more vessel during the year under review. The vessel is of M.S. Class and named M.V. Royal Pisces has a DWTof 4562 Tons and is expected to boost the company’s revenue by a significant margin. With this acquisition, the total fleetstrength of your company goes up to 37.

4. FIXED DEPOSITS:

The company has not accepted any deposits from the public within the meaning of section 58A of the Companies Act, 1956during the year under review.

5. POLLUTION, ENVIRONMENT AND SAFETY:

The conservation of Energy and Technology Absorption under the Companies (Disclosure of Particulars in the report of theBoard of Directors) Rules, 1988 are not applicable to your company. However all measures are taken by your company to ensurethat conservation of energy takes place at all stages of operations of the vessels as well as onshore activities.

There is no import of technology during the current year. The details of Foreign exchange earned and out go are separately givenin this report.

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6. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to section 217(2AA) of the Companies Act, 1956, the Directors confirm that:(1) In the preparation of the annual Accounts, the applicable accounting standards have been followed with explanatory notes

relating to material departures.(2) Appropriate accounting policies have been selected and applied consistently and judgements and estimates made are

reasonable and prudent so as to give true and fair view of the state of affairs of the company at the end of the financial yearand the profit and loss account of the company for that year.

(3) Proper and sufficient care has been taken for maintaining adequate accounting records in accordance with the provisionsof the Companies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and otherirregularities.

(4) The annual accounts have been prepared on a going concern basis.

7. CORPORATE GOVERNANCE AND MANAGEMENT DISCUSSION AND ANALYSIS:

Pursuant to clause 49 of the listing agreement with the stock exchange, Management Discussion and Analysis Report and areport on the corporate governance are given as annexures “A” and “B” to this report. A certificate from the statutory auditors of thecompany regarding compliances of conditions of corporate governance is also enclosed hereto.

8. PARTICULARS REGARDING THE EMPLOYEES:

The information required under section 217(2A) of the Companies Act, 1956 read with companies (Particulars of Employees)Rules 1975, as amended, forms part of this report. However as per section 219 (1) (b) (iv) of the Companies Act, 1956, the reportand accounts are being circulated to all the shareholders excluding the aforesaid information. Shareholders interested inobtaining this information may write to Compliance Officer of the company.

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

Pursuant to the notification No GSR 1029 dated 31-12-1988, companies are required to furnish prescribed information regardingconservation of energy and technology absorption. However this does not apply to your company as the shipping industry is notincluded in the schedule to the relevant rules. The details, however, as regards Foreign exchange earnings and out go are givenbelow.(a) Foreign Exchange earned : Rs. 29.16 Lacs(b) Foreign Exchange outgo : Rs. 2123.15 Lacs

10. SUSBSIDIARIES:

As required under section 212 of the Companies Act, 1956, we are required to attach to the directors Report, the Balance sheetand Profit and loss account of our subsidiary companies. Accordingly these have been appended to this report.

11. DIRECTORS:

Cmde. M. Bhada I. N. (Retd) and Capt Walter Gonsalves retire by rotation and being eligible offer themselves for reappointment.The Board recommends their reappointment.

Mr. H. N. Thakore resigned during the year with effect from January 01, 2007 due to preoccupation. The Board wishes to placeon record its gratitude for the valuable services rendered by him during his tenure.

12. AUDITORS:

You are requested to appoint auditors for the financial year 2007-2008 and authorize the Board to fix their remuneration.The retiring auditors M/s N. D. Heda & Co, Chartered Accountants, Mumbai being eligible offer themselves for reappointment.

13. OTHER NOTABLE DEVELOPMENTS:

During the year under review the name of the company has been changed from SKS (Ship) Limited to SKS Logistics Limited.This is in keeping with the broad scope of activities undertaken by the company.

During the year under review, MOUs have been signed by your company for joint venture with Inland Waterways Authority of IndiaLimited, for acquisition, operation, management and /or maintenance of barges/ vessels on National Waterway No. 1 vizKolkata - Pandu stretch and National Waterways No.2 viz Kolkata – Mongla stretch.

14.ACKNOWLEDGEMENTS:Your directors take this opportunity to place on record the appreciation of the technical, commercial and financial teams of thecompany for their untiring efforts. Your directors also wish to thank the officials of Directorate General of Shipping, Indian Registryof Shipping, Mercantile Marine Deptt, Financial institutions and Banks for their continued support during the year. Your directorsare also thankful to the shareholders and other business partners for the trust reposed in them. Your directors also thank theemployees at all the levels without whose support the growth levels achieved by the company would never have been possible.

For and on behalf of the Board of Directors

S. K. Shahi Chairman & Managing Director

Place : MumbaiDate : 14th August 2007

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ANNEXURE A

MANAGEMENT DISCUSSION, ANALYSIS AND REVIEW

a. INDUSTRY STRUCTURE AND DEVELOPMENT

The overall economic growth coupled with removal of trade barriers resulted in growth for the Indian shipping industry.Statistics reveals that the shipping industry in general is expected to grow at 11% in the next few years.

The shipping industry can be generally classified into wet bulk, dry bulk and liners. Your Company is in the coastal shippingbusiness and operates within the territorial waters of Indian ports and provides a variety of support services. The activitiesin this segment can broadly be classified into providing liquid cargo lighterage operations of petroleum and chemicalproducts, lighterage operations of bulk cargo, tug services, supply of bunkers to vessels, container feeder service on Indiancoasts, water supply services and port services. The need for such services primarily is a result of ships needing to anchoraway from the harbour on account of the shallow coastal waters and non availability of berths inside the port therebyneeding a variety of support services. Your company specialises in transportation of container, bulk and liquid cargo in sea.

The Indian freight transport system carries more than 1000 billion tonne-kilometers in India. The share of coastal shippingin this is barely 6-7% and bulk of transport takes place through rail/road transportation means. The share of coastal shippingin western countries is more than 40%. With Indian economy registering a growth of more than 9%, the freight transportdemand is likely to grow to 2000 billion tonne-km in next 8-10 years. As such, there is a need for integrated transport planningaccompanied by modal shifts in favour of cost efficient mode such as coastal shipping.

With a view to give much needed fillip to Indian shipping industry, the government is formulating a comprehensive NationalMaritime Policy, which will facilitate enhanced private investment, improve service quality and promote competitiveness. Withthis objective, the Department of Shipping has taken up the preparation of National Maritime Development Programme(NMDP) to complement the National Maritime Policy by implementing time bound schedule for schemes/projects for enhancingcapacity and transport efficiency.

The NMDP would also include a major drive for promotion of coastal shipping through various schemes such as CoastalShipping Development Fund (CSDF) for soft lending for the purpose of acquisition of coastal vessels and Centrally SponsoredScheme (CSS) for development of coastal shipping infrastructure.

b. OUTLOOK ON OPPORTUNITIES

As India continues to pursue liberalized economic regime, it is expected that industry would post a healthy growth rate in thecoming years. Continuous robust economic growth accompanied by increase in domestic consumption would lead tovibrant growth especially for shipping industry in container, bulk cargo both in liquid and dry cargo segments.

The government, with a view to give boost to shipping industry, is undertaking various initiatives such as encouraging privateand public investments in development of ports, tonnage tax, dedicated freight corridors, 100% FDI in shipping etc. As per thedraft NMDP, the government proposes to invest Rs. 1,00,000 Crores in NMDP in the next 10 years.

All these initiatives coupled with the economic growth would translate into better opportunities for Indian Shipping Industryincluding the Coastal Shipping.

With certain inherent advantages i.e. mixed fleet with a focus on coastal shipping, efficient utilization of fleet, experiencedpersonnel and innovation and diversification, that your Company has, it is expected to be benefited from thisemerging scenario.

c. THREATS, RISKS AND CONCERNS

Amongst the cyclical industries, the shipping industry is considered to be most cyclical with shortest buoyancy and longestrecessionary periods. This is reflected in volatile freight rates. Thus, aligning with the international trends, the shippingindustry in India is also exposed to perceived risks of decline in charter/freight rates from time to time.

India’s shipping industry is governed by the Ministry of Shipping and thus is exposed to risks arising from political instabilityand changes in government policies from time to time.

Shipping Industry being highly capital intensive, there is no assurance that additional resources would be availablewhen needed.

The substantial upsurge in fuel costs world over in the past year has created a hindrance in the growth of the profitability ofthe company since fuel forms a major part of operating costs for ships.

The Company in its endeavour to minimise the risks associated with its type of business is employing competent team ofprofessionals and is focused towards implementation of modern shore based management practices. Manning scalestandards, levy of duty on oil bunkers and spares continue to be a concern.

In order to mitigate the risks the Company has taken various steps to limit the various factors that emanate risks. Thesefactors include :

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•· Insurance

• Proper credit check of the client portfolio

• A judicious mix of time and voyage charters to hedge spurt in the freight rates.

•· Supporting customers, growth and competitiveness

• Engaging in long term charter hires.

d. SEGMENT WISE PERFORMANCE

The Company operates in only one segment i.e. shipping, and therefore, has no separate reportable segments. Yourcompany continued to provide services in the areas of Container Liquid Cargo lighterage operations of Petroleum & ChemicalProducts, lighterage operations of Bulk Cargo, Tug services for port related activities, supply of bunkers to vessels andContainer Feeder Service on Indian Coasts through its fleet of 37 vessels. The Industry being seasonal in nature, operationsclose during rains for a period of three/four months. The lean period provides an opportunity for repairs and maintenance. Thefleet utilisation during the period under review has been efficient.

e. OUTLOOK

The Indian Shipping industry is poised for growth in the next few years. Your Company, with some inherent advantages suchas low operational costs, committed professional manpower and proper upkeep of vessels, is expected to cash on theopportunities provided.

Your Company has since last few years taken initiatives to broaden its fleet base to minimize the risks and maximize thegains. In its effort in this regard, the Company is in talks to acquire two more vessels for international charter. With expansionof fleet the Company would be in a better position to maximize its gains from the buoyant markets.

f. PROJECT

The process of setting up dry-dock facility at Alibaug, in the state of Maharashtra, is in its finalisation stage and thecommencement of work will take place soon. The project is spread over 35 Acres of land.

The Company is converting one of the dumb barge into offshore accommodation vessel, which will accommodate nearly500 persons and will have helipad and crane to carry out various support services in offshore field.

g. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Much of the success of your company is attributed to the quality of its people, their dedication and contribution. The dedicatedteam of shore and floating staff provides continuous support to the operations of the company, which is reflected in theoperational efficiency. Voyage operations are managed professionally, ensuring high productivity levels, thus increasingthe revenues. Your Company employs skilled personnel to monitor and maintain its oil-spill and other emergencyresponse plans.

h. QUALITY & SAFETY

Your company continues to focus on the safety, training and development of the employees. The company also conductsfrequent training sessions including onboard drills to enhance the effectiveness of the safety of the staff. Your companyfirmly believes that pursuit of excellence is one of the critical components for competitive success in the global market. YourDirectors take pleasure in informing you that your company continues to have the prestigious ISO 9001-2000 Certificationand is on continuous journey towards continual improvement to make its Quality Management System more effective.

i. HUMAN RESOURCES

The Company considers its employees as partners in growth. They have played a significant role and enabled the Companyto deliver superior performance year after year.

j. ADEQUACY OF INTERNAL CONTROLS

The Company has adequate and effective internal control systems commensurate with the size of its operations. Theinternal control system provides for well-documented policies, guidelines, authorizations and approval procedures andensures optimal use of resources at its disposal.

Internal audit is being carried out extensively throughout the year in areas such as Income, Expenditure, Financial Accountingand Statutory Compliances. The primary objective of such audit is to test the adequacy and effectiveness of all internalcontrols laid down by the Management and to suggest improvements.

k. CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Company’s strategies on business, projectionsand estimates are forward looking statements. The actual results may vary from those expressed or implied, dependingupon economic conditions, Government policies, regulations, tax laws and other incidental factors.

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ANNEXURE B

CORPORATE GOVERNANCE REPORT

INTRODUCTION

Corporate Governance has become an integral part of the business at your company aligning the organization to the best national andinternational practices of good governance. This encompasses the value systems of integrity, fairness, transparency and adoption of thehighest standards of business ethics which aims to benefit the stake holders.

1 COMPANY’S PHILOSOPHY ON CORPORATE GOVERNANCE

SKS Logistics Limited (SKS) is committed to good corporate governance in order to enhance the shareholders’ value and promotenational interest.

In order to achieve the objectives of good corporate governance, SKS follows the principles of transparency, disclosure, fairness,independent supervision, healthy competition, provision of equal opportunity in employment, political non alignment, promotion ofhealth, safety and welfare, generation of quality service, compliance with all the relevant laws, regulations, improvement in quality oflife and meeting social responsibility.

It is expected that good corporate governance by SKS would protect and enhance the trust of shareholders, customers,suppliers, financiers, employees, government agencies and the society at large.

2 BOARD OF DIIRECTORS

The company has Executive Chairman. The number of independent directors is more than fifty percent of the total number of Directors.

None of the Directors on the Board is a member of more than 10 committees and Chairman of more than five committees (asspecified in clause 49) across all the companies in which he is a director. The necessary disclosures regarding committee positionshave been made by the Directors.

The names and categories of the Directors on the Board, their attendance at Board Meetings during the year and at the last AnnualGeneral Meeting as also the number of Directorships and Committee Memberships held by them in other companies is given inseparate tables below.

Name of Category No. of other No. of Board No. of other BoardDirector Directorships* committees (other than committees (other than

SKS Logistics Ltd.) SKS Logistics Ltd.)where Chairman where Member

Mr. S. K. Shahi Promoter, Executive 2 - 2Chairman and Managing Director

Mr. F. M. Koli Promoter, Executive 2 - -Whole time Director

Capt. Walter Non Promoter, Executive - - -Gonsalves Whole time Director

Cmde. M. Bhada Non Promoter,Non Executive, 1 - -I. N. (Retd) Independent Director

Mr. B. B. Bhawsar Non Promoter, Non Executive, - - -Independent Director

Mr. H. N. Thakore** Non Promoter, Non Executive, - - -Independent Director

Mr. Tony Adam Non Promoter, Non Executive, 1 - -Independent Director

Mr. R. V. Iyer Non Promoter, Non Executive, 1 - -Independent Director(Nominee of IDBI)

Note :

*This includes directorships in private limited companies but excludes directorships held in Foreign Companies and Companiesformed under section 25 of the Companies Act, 1956.

**Ceased to be a director with effect from 01-01-2007

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ATTENDANCE OF EACH DIRECTOR AT THE BOARD MEETINGS AND THE LAST ANNUAL GENERAL MEETING

A total of seven meetings of the Board of Directors were held during the year under review on 29th April 2006, 5th July 2006, 11th July2006, 31st July 2006, 28th October 2006, 30th January 2007 and 12th February 2007.

The maximum time gap between two board meetings was less than four months.

Attendance of each director at the Board meetings and the last Annual General Meeting (AGM) is as under.

Name of Meetings held during Meetings Attended Attendance at the last AGMDirector the tenure of the said Director held on 22nd September 2006

Mr. S. K. Shahi 7 7 Yes

Mr. F. M. Koli 7 6 Yes

Capt. Walter Gonsalves 7 6 Yes

Cmde. M. Bhada I. N. (Retd) 7 5 Yes

Mr. B. B. Bhawsar 7 7 Yes

Mr. H. N. Thakore 5 Nil Absent(up to 31-12-2006)

Mr. Tony Adam 7 4 Absent

Mr. R. V. Iyer (Nominee of IDBI) 7 7 (out of which one Absentthrough representative)

3 AUDIT COMMITTEE

BROAD TERMS OF REFERENCEThe composition of the audit committee meets the requirements of section 292A of the Companies Act, 1956 and Clause 49 of theListing Agreement. The Company Secretary is the Secretary to the Audit Committee. The primary objective of the audit committeeis to monitor and effectively supervise the company’s financial reporting process with view to providing accurate, timely and properdisclosures and integrity and quality of the financial reporting. The terms of reference of the audit committee are in accordance withClause 49 of the Listing Agreement and inter alia covers the following :

• To investigate any activity within its terms of reference.• To seek information from any employee/records of the company.• To obtain outside legal or other professional advice.• To secure attendance of outsiders with relevant expertise, if it considers necessary.• Overseeing Company’s financial reporting process and the disclosure of its financial information to ensure that the financial

statements are correct, sufficient and credible.• Recommending the appointment and removal of external auditor, fixation of audit fees and also approval of payment for any

other services.• Reviewing with management quarterly/half yearly/annual financial statements before submission to the Board.• Reviewing the adequacy of internal audit function including discussions with internal auditor any significant findings and

follow up thereon.• Discussion with external auditors before the commencement of audit, the nature and scope of audit and also to discuss the

areas of concern on basis of audit findings.

• Reviewing the company’s financial and risk management policies including any other item referred to it by the Board ofDirectors.

The audit committee inter alia has following powers:

• To investigate any activity within its terms of reference.• To seek information from any employee/records of the company.• To obtain outside legal or other professional advice.• To secure attendance of outsiders with relevant expertise, if it considers necessary.

The Chairman of the audit committee Cmde. M Bhada I. N. (Retd) was present at 16th Annual General Meeting held on 22nd Sept 2006.

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COMPOSITION

Composition, name of members and Chairperson and attendance details of the Audit Committee are as under:

Name of Director Designation Status No. of meetings held No. of meetingsattended

Cmde. M. Bhada I. N. (Retd.) Chairman Non Executive, Independent Director 5 5

Mr. B. B. Bhawsar Member Non Executive, Independent Director 5 5

Capt. Walter Gonsalves Member Executive, Whole Time Director 1 1(From 28.10.2006)

Mr. H. N. Thakore Member Non Executive, Independent Director 4 Nil(up to 31.12.2006)

During the year 2006-2007 five meetings of the Audit Committee were held on the following dates:

29th April 2006, 11th July 2006, 31st July 2006, 28th October 2006 and 30th January 2007.

4 REMUNERATION COMMITTEE

TERMS OF REFERENCE

The terms of reference of the Remuneration Committee are:

(1) Reviewing the overall compensation policy, service agreements and other employment conditions of Managing /Wholetime Director(s)

(2) Reviewing the performance of the Managing/Whole time director(s) and recommending to the Board the quantum of annualincrements and annual commission.

COMPOSITION, MEETINGS AND ATTENDANCE

The Remuneration committee comprises of 3 directors, all of whom are Independent Non Executive Directors. The Chairman ofthe committee is an Independent Non Executive Director nominated by the Board.

The Composition of the Remuneration Committee is as follows.

Name of Director Designation Status

Cmde. M. Bhada I. N. (Retd.) Chairman Independent, Non Executive

Mr. B. B. Bhawsar Member Independent, Non Executive

Mr. Tony Adam ( from 28.10.2006) Member Independent, Non Executive

Mr. H. N. Thakore (up to 31.12.2006) Member Independent, Non Executive

During the year 2006-2007, the committee met once viz. on 28th October 2006.

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REMUNERATION POLICY

(A) REMUNERATION TO NON EXECUTIVE DIRECTORS

The Non Executive Directors are paid sitting fees @ Rs 2500/ for each meeting of the Board or any committee thereof attended bythem.

The compensation of Non Executive Directors is approved unanimously by the Board.

None of the Non Executive Directors has any material pecuniary relationship or transactions with the company.

(B) REMUNERATION TO CHAIRMAN AND MANAGING AND WHOLE TIME DIRECTOR(S)

The appointment of Chairman and Managing Director and whole time director(s) is governed by resolutions passed by the Board ofdirectors and shareholders of the company which covers the terms of such appointment and remuneration read with service rules of thecompany. Payment of remuneration to Chairman and Managing Director and whole time Director(s) is governed by the respectiveagreements executed between them and the company. Remuneration paid to Chairman and Managing Director and Whole time Director(s)is recommended by the Remuneration committee, approved by the Board and is within the limits set by the shareholders at the AnnualGeneral Meetings.

The remuneration package of Chairman and Managing Director and whole time Director(s) comprises of salary, perquisites and allowances,commission and contribution to Provident and other retirement benefit funds as approved by the shareholders at the Annual GeneralMeetings. Annual increments are linked to performance and are decided by the Remuneration Committee and recommended to theBoard for approval thereof.

The remuneration policy is directed towards rewarding performance, based on review of achievements, it is aimed at attracting andretaining high caliber talent.

There is no separate provision for payment of severance fees under the resolutions governing the appointment of Chairman andManaging Director and whole time Director(s).

Presently the company does not have a scheme for grant of stock options or performance linked incentives for its Directors.

Details of Remuneration paid to all Directors:

Name of Director Category/Status Sitting Fees Salary & Bonus/ Service ContractPerquisites Commission

(Rs.) (Rs.) (Rs.)

Mr. S.K. Shahi Promoter, Executive, Chairman & Managing Director - 31, 80,000 7,76,098 5 years w.e.f. 1st June, 2003

Mr. F.M. Koli Promoter, Executive, Whole Time Director - 1, 80,000 14,994 5 years w.e.f. 1st June, 2003

Capt. Walter Gonsalves Executive, Whole Time Director - 7, 50,000 38,318 3 years w.e.f. 1st Feb., 2005

Cmde. M. Bhada Non Executive, Independent Director 27,500 - - No service contractI. N. (Retd.)

Mr. B.B. Bhawsar Non Executive, Independent Director 32,500 - - No service contract

Mr. H.N. Thakore Non Executive, Independent Director - - - No service contractup to 31.12.2006

Mr. Tony Adam Non Executive, Independent Director 10,000 - - No service contract

Mr. R.V. Iyer Non Executive, Independent Director 15,000 - - N.A.

5 SHAREHOLDERS’ / INVESTORS’ GRIEVANCES COMMITTEE

The Board has constituted a Shareholders’/Investors’ Grievances Committee consisting of Mr. B.B. Bhawsar,Cmde. M. Bhada I.N. (Retd.) and Capt. Walter Gonsalves. Mr. B.B. Bhawsar is the Chairman of the Committee.

The committee met twenty times during the year to discuss various matters relating to:

• Transfer/transmission/transposition of shares• Consolidation/splitting of folios• Issue of share certificates for lost, sub divided, consolidated, rematerialized, defaced shares• Review of shares dematerialized and all other related matters• Investors’ grievances and redressal mechanism and recommend measures to improve the level of investor services

13


The share department of the company and the Registrar and Share Transfer Agent (RTA) System Support Services attend to allgrievances of the shareholders and investors received directly or through SEBI, Stock Exchange, Registrar of Companies, Ministry ofCorporate affairs etc

The minutes of the shareholders’/investors’ grievances committee are noted by the Board of Directors at their each meeting.Continuous efforts are made to ensure that grievances are redressed expeditiously to the fullest satisfaction of the shareholders andinvestors. Shareholders are requested to forward their telephone numbers and e mail IDs to facilitate prompt action.

COMPLIANCE OFFICERThe Board has designated Mr. A.A. Lambay, Company Secretary as the compliance officer.

DETAILS OF SHAREHOLDERS’ COMPLAINTS RECEIVED, NOT SOLVED AND PENDING SHARE TRANSFERS.

Number of Shareholders complaints received during the year: Nine

Number of complaints not solved to the satisfaction of shareholders. Nil

Number of pending share transfer: Nil(Except those rejected on technical grounds)

CEO/CFO CERTIFICATIONThe requisite CEO/CFO certification pursuant to Sub- clause V of the Clause 49 of the Listing Agreement has been placed before theboard at the meeting of Directors held on 14th August, 2007.

RISK MANAGEMENT

The Company has set in motion a system for management of risks associated with the orderly functioning of the Company. The auditcommittee has been mandated the accountability for integration of risk management practices into day to day activities

6 GENERAL BODY MEETINGSThe venue, and time where last three Annual General Meetings were held is given below.

FinancialYear Meeting Date Time Location

2003-04 EOGM 16.12.2003 11.30 AM Corporate Office, Vashi, Navi Mumbai

2003-04 AGM 29.09.2004 11.30 AM Walchand Hirachand Hall, Churchgate, Mumbai

2004-05 EOGM 31.05.2004 11.30 AM Corporate Office, Vashi, Navi Mumbai



2006-07 EOGM 09.01.2007 11. 00 AM Corporate Office, Vashi, Navi Mumbai

(1) At the 16th Annual General Meeting held on 22.09.2006 the company obtained approval of share holders by passing SpecialResolution for revision in the remuneration payable to Mr. S.K. Shahi, Chairman & Managing Director.

At the last Extra Ordinary General Meeting held on 09.01.2007 the company obtained approvals of share holders by passingSpecial Resolutions (a) for change of name of the Company from SKS (Ship) Limited to SKS LOGISTICS LIMITED. (b) forrevision in the remuneration payable to Capt. Walter Gonsalves, Whole time Director.

(2) At the 15th Annual General Meeting held on 28.09.2005 the following Special Resolutions were passed (a) amending the MainObject Clause of Memorandum of Association of the Company (b) appointing Capt. Walter Gonsalves as a Whole TimeDirector. The Resolution at (a) was passed with requisite majority through Postal Ballot and resolution at (b) was passed unanimously.

(3) At the 14th Annual General Meeting held on 29.09.2004 the following Special Resolutions were passed (a) Increasing theAuthorised Share Capital (b) Alteration of Articles of Association consequent to increase in the Authorized Share Capital (c)Enabling resolution for issue of further shares. The said resolutions were passed unanimously.

7 SUBSIDIARIESThe company has made investments in various entities in the past as a result of which subsidiaries have been created. Thedetails of the same are provided in Directors’ Report.There is however no material non listed Indian subsidiary whose turnover or net worth(paid up capital and free reserves)exceeds 20% of the consolidated turn over or net worth respectively of the listed holding company and its subsidiary companiesin the immediately preceding accounting year.

8 DISCLOSURESDuring the last three years, no penalty or strictures have been imposed on the Company by the Stock Exchange/SEBI/StatutoryAuthorities on matters related to capital markets.There are no materially significant related party transactions i.e. transactions of the Company of material nature, with itspromoters, directors or the management, their subsidiaries or relatives etc. that may have potential conflict with the interests ofthe Company at large, except as reported elsewhere in the report/accounts.

14


The Company has not issued any GDRs/ADRs/Warrants or any convertible instruments during the year and there are no suchinstruments which are outstanding as of the date of this Report.

The Company has complied with the mandatory requirements and has not adopted any non-mandatory requirement of Clause 49of the Listing Agreements.

9 INSIDER TRADING

The Securities and Exchange Board of India (SEBI) has, effective February 20, 2002, introduced amendments to the existingInsider Trading Regulations of 1992 which require new action steps by the corporate and market intermediaries for the purpose ofprevention of Insider Trading.

Pursuant to the above requirements of SEBI (Prohibition of Insider Trading) Regulations, 1992 as amended, the company hasadopted a “Code of Conduct for Prevention of Insider Trading”. The code is applicable to all the Directors and such designatedemployees who are expected to have access to unpublished price sensitive information relating to the company.

Mr A.A. Lambay, Company Secretary is the compliance officer for adherence to the Regulations.

10 CODE OF CONDUCT

The Board of Directors have adopted a Code of Business Conduct and Ethics for Directors and Senior Management. The said codehas been communicated to the directors and Senior Management. The code is also uploaded on the company’s websitewww.shahilogistics.com

11 MEANS OF COMMUNICATION

The approved financial results are forthwith sent to the Listed Stock Exchange and are published in the leading national newspapers namely Free Press Journal and Nav Shakti (Marathi) within forty-eight hours of approval thereof. These results and otherofficial releases are also available at the company’s website www. shahilogistics.com and of the Bombay Stock Exchange Ltd,Mumbai at www.bseindia.com. The Management Discussion and Analysis Report forms part of the Annual Report.)

12 COMPLIANCE CERTIFICATE OF THE AUDITORS

The statutory auditors have certified that the company has complied with the conditions of Corporate Governance as stipulated inclause 49 of the listing agreement with the stock exchange and the same is annexed to the Directors Report and ManagementDiscussion and Analysis.

The certificate from the auditors will be sent to the stock exchange where company’s shares are listed.

13 GENERAL SHAREHOLDER INFORMATION(a) ANNUAL GENERAL MEETING:

Date and time : Thursday, September 27, 2007 at 11.00 a.m.

Venue : Walchand Hirachand Hall, 4th Floor,

Indian Merchants’, Chamber, Churchgate,

Mumbai – 400 020

(b) FINANCIAL CALENDARFinancial reporting forQuarter ending 30th June, 2007 : July, 2007Quarter ending 30th September, 2007 : October, 2007Quarter ending 31st December, 2007 : January, 2008Year ending 31st March, 2008 : April, 2008

(c) DATE OF BOOK CLOSURE : 21st September 2007 to 27th September 2007

(d) DIVIDEND PAYMENT DATE : On or after 27-09-2007

(e) Listing of Equity shares : Bombay Stock Exchange Limited

The Company has paid listing fees to the Bombay Stock Exchange Limited for the financial year 2007-08.

(f) Scrip code : 526508 SKS LOGISTICS LIMITED

(g) Demat ISIN No. : INE 825 D 01016

15


Month High (Rs.) Low (Rs.)

April 2006 44.15 24.60

May 2006 49.90 27.10

June 2006 38.00 19.05

July 2006 28.35 22.00

August 2006 30.80 22.60

September 2006 37.00 25.30

October 2006 44.60 28.50

November 2006 33.50 27.00

December 2006 32.75 25.75

January 2007 33.20 28.70

February 2007 32.50 21.10

March 2007 25.30 18.10

(i) Registrar and Share Transfer Agent : System Support Services209, Shivai Industrial Estate, 89, Andheri Kurla Road,Sakinaka, Mumbai – 400 072.Telephone: 28500835 . Fax 28501438E.mail : [email protected]

(j) Distribution of shareholding as on 31st March 2007

Shareholding No of % to no of Amount % to PaidShare holders Share holders Rs. up Capital

Up to 500 4351 85.247 9157840 6.318

501- 1000 411 8.052 3305350 2.280

1001 -2000 163 3.194 2611330 1.802

2001 -3000 50 0.980 1297760 0.895

3001 -4000 29 0.568 1074930 0.742

4001 -5000 22 0.431 1051470 0.725

5001 -10000 24 0.470 1814420 1.252

10001 and above 54 1.058 124635640 85.986

Total 5104 100.00 144978740 100%

(k) Shareholding Pattern as on 31 March 2007

Category No. of Shares Percentage

Promoters 8614372 59.430%

Mutual fund 200 0.001%

Banks / Financial Institutions 200 0.001%

Corporate bodies 1778570 12.270%

FII/NRI/OCB 152426 1.052%

Indian Public 3949106 27.246%

Total 14494874 100%

(h) Stock market data :The month-wise movement (High & Low) of the equity shares of the Company at the Bombay Stock Exchange Limited,Mumbai, during each month for the year ended 31st March 2007 is as under:

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( l ) Dematerialization of shares

The Company’s shares are compulsorily traded in dematerialized form. As on 31st March 2007, 95,13,610 shares were indematerialization form with the NSDL & CDSL. This work out to 65.63 % of the total number of shares.

(m) Share Transfer System

Share transfer in physical form are processed and returned to the shareholders within stipulated time. Half yearly Transfer Auditand Quarterly Secretarial Audits are carried out by a Practicing Company Secretary.

(n) Plant locations

The Company does not have any plants since it is engaged in the business of Shipping.

(0) Investors Correspondence

System Support Services,209 Shivai Industrial Estate89, Andheri Kurla Road, Sakinaka,Mumbai- 400072.E.mail : [email protected]

Mr. A.A. Lambay , Company Secretary & Compliance Officer404, Abhay Steel House, Baroda Street,Mumbai – 400 009E.mail : [email protected]

Place: MumbaiDate: 14th August 2007

AUDITORS’ CERTIFICATE ON CORPORATE GOVERNANCE

To,The Members ofSKS LOGISTICS LIMITEDMumbai.

We have examined the compliance of the conditions of Corporate Governance by SKS Logistics Limited (the company) for the yearended 31st March 2007, as stipulated in Clause 49 of the Listing Agreement of the Company with the Stock Exchange.

The compliance of the 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 the conditions of CorporateGovernance. It is neither an audit nor an expression of opinion on the financial statement 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 further state that such compliance is neither an assurance as to future viability of the Company nor the efficiency or effectivenesswith which the management has conducted the affairs of the Company.

For N. D. HEDA & CO.Chartered Accountants

N. D. HedaProprietor

Membership NO. 32450Place: Mumbai

Dated: 14th August 2007

S. K. ShahiChairman & Managing Director

17


AUDITORS’ REPORT

TO THE MEMBERS OF SKS LOGISTICS LIMITED

1. We have Audited the attached Balance Sheet of SKS Logistics Limited as at 31st March, 2007 and also the annexedProfit and Loss Account of the Company for the year ended on that date annexed thereto and Cash Flow Statement of Companyfor the year ended on that date. These financial statement are the responsibility of the Company’s management. Our responsibilityis to express an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. Those standards require that weplan and perform the audit to obtain reasonable assurance about whether the financial statements are free of materialmisstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significant estimates made by themanagement, as well as evaluating the overall financial statement presentation. We believe that our audit provides a resonablebasis for our opinion.

3. As required by the Companies (Auditors Report) Order, 2003 (as amended) issued by the Central Government of India in termsof sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose in the annexure, a statement of the matters specifiedin paragraphs 4 and 5 of the said Order.

4. Further to our comments in the annexure referred to in paragraph 3 above :

(a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for thepurpose of our audit.

(b) In our opinion, proper books of accounts as required by law have been kept by the company, so far as appears from ourexamination of such books.

(c) The Balance Sheet and Profit and Loss Account and Cash Flow Statement dealt with by this report are in agreement withbooks of accounts.

(d) In our opinion, and to the best of our information the Balance Sheet and Profit and Loss Account and Cash Flow Statementdealt with this report comply with the Accounting Standards referred to in Section 211 (3C) of the Companies Act 1956, to theextent applicable.

(e) On the basis of written representations received from the directors as on 31st March, 2007 and taken on record by theBoard of Directors, none of the Directors is prima-facie disqualified as on 31st March, 2007 from being appointed as adirector in terms of clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956.

(f) Disclosure of Deferred Tax Liability is made under the head “Reserve and Surplus” for the reasons stated in note 25 ofschedule 19.

(g) In our opinion and to the best of our information and according to the explanations given to us the said accounts read withthe Significant Accounting Policies and other Notes thereon, give the information required by the Companies Act, 1956 inthe manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India :

I) In the case of the Balance Sheet of the state of affairs of the Company as at 31st March, 2007.

II) In the case of the Profit & Loss Account of the Profit for the year ended on that date, and

III) In the case of Cash Flow Statement of the Cash Flow for the year ended on that date.


N. D. HEDAPlace : Mumbai ProprietorDate : 14th August 2007 Membership No. 32450

18


ANNEXURE TO THE AUDITOR REPORT :

(Referred to in paragraph 3 of our Report of even date on the accounts of SKS Logistics Limited for the year ended31st March, 2007)

1. (a) The Company has maintained on year to year basis the records showing particulars including quantitative details of fixedassets and company is in process of updating the fixed assets register.

(b) Some fixed assets have been physically verified by the management during the year in accordance with phasedprogramme of verification adopted by the company. No material discrepancies between the book records and physicalinventory were noticed in respect of assets physically verified during the year.

(c) The company has not disposed off substantial part of its fixed assets during the year.

2. The Company is in Shipping business, therefore clauses (ii) (a), (ii) (b) and (ii) (c) of para 4 of the above mentioned orderregarding inventory and its physical verification, etc., do not apply in its case. The Company does purchase stores and spareparts for its ships & barges which are directly treated as consumed as and when supplied to its ships & barges.

3. (a) The Company has not given any Loans, secured or unsecured to companies, firm or other parties listed in the registermaintained under section 301 of Companies Act, 1956. The company has taken unsecured loan from Companies andDirectors listed in the registered maintained under section 301 of the Companies Act, 1956. The maximum balanceoutstanding during the year is Rs. 224.30 lacs.

(b) In our opinion and according to the information and explanation given to us the unsecured loans taken by the company areinterest free, the same are repayable on demand and therefore question of overdue amount does not arise.

4. In our opinion and according to the information and explanation given to us, there are adequate internal control procedurescommensurate with the size of the company and the nautre of its business with regards to purchases of stores, spare parts, fixedassets and services rendered. During the course of our audit, no major weakness has been noticed in the internal controls.

5. a) Based on the audit procedures applied by us and according to the information and explanations provided by the management,we are of the opinion that the transactions that need to be entered in to the register maintained under Section 301 have beenso entered.

b) In our opinion and according to the information and explanations given to us, there are no transactions in pursuance ofcontracts or arrangements entered in the register maintained under Section 301 of the Companies Act, 1956 aggregatingduring the year to Rs. 5,00,000/- (Rupees Five Lacs Only) or more in respect of any party.

6. In our opinion and according to the information and explanations given to us, the Company has not accepted any depositsfrom the public within the meaning of Section 58A and 58AA of the Companies Act, 1956 and the rules framed there under.

7. In our opinion the company has internal Audit system commensurate with the size and nature of its business.

8. As informed to us the maintenance of cost records has not been prescribed by the Central Government under clause (d) of subsection (1) of Section 209 of the Companies Act, 1956, in repsect of activities carried on by the company.

9. (a) According to the information and explanations given to us and according to the books and records as produced andexamined by us, in our opinion, the undisputed statutory dues in respect of provident fund, investor education and protectionfund, employees state insurance, income-tax, sales-tax, wealth-tax, customs duty, excise duty, cess and other materialstatutory dues as applicable, have been generally regularly deposited by the Company during the year with the appropriateauthorities. According to the information and explanations given to us, no undisputed amounts payable in respect of incometax, wealth tax, sales tax, custom duty and excise duty were outstanding, as at 31.03.2007 for a period of more than sixmonths from the date they become payable.

(b) According to the information and explanations given to us, except for Rs. 3.59 lacs in respect of Income Tax for financial year2003-04 against the CIT order the company has preferred an appeal before Income Tax Appellate Tribunal, there are nodues of Sales Tax, Income Tax, Custom Duty, Wealth Tax, Excise Duty or Cess Outstanding on account of any dispute.

10. The Company does not have any accumulated losses nor has it incurred any cash losses during the financial year convered byour audit and the immediately preceding financial year.

11. Based on our audit procedures and on the information and explanations given by the management, we are of the opinion that theCompany has not defaulted in repayment of dues to any financial institution, bank or debenture holders, as at the balance sheet date.

12. The Company has not granted any loans and advances on the basis of security by way of pledge of shares etc.

13. In our opinion, considering the nature of activities carried on by the Company during the year, the provisions of any special statuteapplicable to chit fund / nidhi / mutual benefit fund / societies are not applicable to the Company.

19


14. The Company is not dealing or trading in shares, securities, etc.

15. The Company has not given any guarantee for loans taken by others from banks or financial institutions.

16. In our opinion and according to the information and explanations given to us and on an overall examination, the term loans havebeen applied for the purpose for which they were raised.

17. Based on our examination and the information and explanation given to us, we report that the Company has not utilised any fundsraised on short term basis for long term investments and vice-versa.

18. The Company has not made any preferential allotment of shares to parties and companies covered in the register maintainedunder Section 301 of the Act.

19. In our opinion, the Company has created securities in respect of debentures issued and outstanding at the year end.

20. The company has not raised any money by public issue during the year.

21. During the course of our examination of the books of account carried out in accordance with the generally accepted auditingpractices in India, and according to the information and explanations given to us, we have neither come across any instance offraud on or by the Company, noticed or reported during the year, nor have we been informed of such case by the management.

For N. D. HEDA & CO.

Chartered Accountants

N. D. HEDA

Place : Mumbai Proprietor

Date : 14th August 2007 Membership No. 32450

20


BALANCE SHEET AS AT 31ST MARCH, 2007SCH As atNo. 31st March

SOURCES OF FUNDSShare Capital 1 144,948,740 144,948,740Reserves & Surplus 2 274,517,397 239,654,352Secured Loans 3 531,467,115 343,558,984Unsecured Loans 4 3,630,300 23,410,300

954,563,552 751,572,376

APPLICATION OF FUNDSFixed Assets 5 785,412,035 576,667,068Investments 6 192,560 192,560CURRENT ASSETS, LOANS & ADVANCESSundry Debtors 7 134,522,799 143,764,146Cash & Bank Balances 8 9,134,047 15,706,971Other Current Assets 9 64,601,951 64,564,995Loans & Advances 10 64,020,385 47,225,200

272,279,182 271,261,312

LESS : CURRENT LIABILITIES & PROVISIONSCurrent Liabilities 11 46,200,350 54,733,092Provisions 12 58,257,625 42,953,222

104,457,975 97,686,314

NET CURRENT ASSETS 167,821,207 173,574,998

MISCELLANEOUS EXPENDITURE 13 1,137,750 1,137,750(to the extent not written off or adjusted)

954,563,552 751,572,376- -

SIGNIFICANT ACCOUNTING POLICIES ANDNOTES TO THE ACCOUNTS 19The Schedules referred to above form an integralpart of Balance Sheet

As per our report of even date FOR AND ON BEHALF OF THE BOARD

For N. D. HEDA & CO. S. K. SHAHI Capt. W. GONSALVESChartered Accountants Chairman & Managing Director Wholetime Director

N. D. HEDA A. A. LAMBAYProprietor Company SecretaryMembership No. 32450

Place : MumbaiDated : 14th August 2007

2006Rs.

2007Rs.

As at31st March

21


PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2007

SCH As at As atNo. 31st March 31st March

2007 2006Rs. Rs.

INCOMEIncome from Operations 14 406,153,332 353,308,153Other Income 15 3,675,544 621,843Profit on sale of Assets 381,441 175,553

410,210,317 354,105,549EXPENDITUREDirect Operation expenses 16 172,342,133 158,038,860Administrative expenses 17 67,743,247 57,690,090Financial expenses 18 48,821,027 34,750,937Depreciation 61,483,227 50,131,033Loss on sale of Assets 436,013 525,192

350,825,647 301,136,112

Profit before Texation 59,384,670 52,969,437Less : Current Tax 10,970,000 10,778,000Less : Deferred Tax 7,560,000 7,647,000Less : Fringe Benefit Tax 832,918 953,232Less : Taxation of earlier year - 17,909

Profit after Tax 40,021,752 33,573,296Less : Tonnage Tax Reserve under Section 115VT of the Income Tax Act, 1961 1,550,000 -Add : Transfer from Reserve u/s 33AC of Income Tax Act ‘1961 (Amount Utilised) - 41,500,000Add : Surplus from Previous Year 110,481,081 68,671,675

Profit available for Appropriations 148,952,833 143,744,971APPROPRIATIONS :Transfer to General Reserve 25,000,000 25,000,000Proposed Dividend 10,871,155 7,247,437Income Tax on Proposed Dividend 1,847,552 1,016,453

BALANCE CARRIED FORWARD 111,234,126 110,481,081

Earnings per share (Rs.) (Basic & Diluted) 2.76 2.32SIGNIFICANT ACCOUNTING POLICIES ANDNOTES TO THE ACCOUNTS 19The Schedules referred to above form an integral part of Profit & Loss Account





22


CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2007(Rs. in ‘000s) (Rs. in ‘000s)

2006-07 2005-06

A. CASH FLOW FROM OPERATING ACTIVITIESNet Profit Before Tax & Extraordinary Items 59,385 52,969Adjustment forDepreciation 61,483 50,131Sundry Credit Balance written back - (27)Loss / (Profit) on sale of Assets (Net) 55 350Dividend Income (9) (9)Interest Income (727) (307)Miscellaneous Expenditure Amortised - 44Interest Expenses 44,980 105,782 33,230 83,412

165,167 136,381Operating Profit before working Capital ChangesAdjustment forTrade & Other receivables (2,880) 6,409Trade Payables (8,533) (11,413) (17,491) (11,082)

153,754 125,299Cash genearated from operationDirect taxes paid (4,674) (18,399)Fringe Benefit Tax Paid (953) -Interest paid (44,980) (38,159)

Net cash from operating Activities (A) 103,147 68,741

B. CASH FLOW FROM INVESTMENT ACTIVITIESPurchase of Fixed Assets (271,359) (148,501)Sale of Fixed Assets 1,076 962Dividend Received 9 9Interest Received 690 291

Net Cash used in Investing Activities (B) (269,584) (147,239)

C. CASH FLOW FROM FINANCING ACTIVITIESProceeds from Borrowings 168,128 33,574Increased in Misc. Expenditure - (137)Dividend paid (8,263) -

Net Cash used in Financing Activities (C) 159,865 33,437

Net Changes in Cash & cash equivalents (A+B+C) (6,572) (45,061)

Cash & cash equivalents in - Opening Balance 15,706 60,767Cash & cash equivalents in - Closing Balance 9,134 15,706

6,572 45,061Note :1. Purchase of Fixed Assets are stated inclusive of capital work-in progress and advances for capital

goods between beginning and end of the year and is treated as part of investing activities.2. Proceeds from borrowings are shown as net of repayments.3. Figures in brackets indicates cash outflow


For N. D. HEDA & CO. S. K. SHAHI Capt. W. GONSALVESChartered Accountants Chairman & Managing Director Wholetime DirectorN. D. HEDA A. A. LAMBAYProprietor Company SecretaryMembership No. 32450Place : MumbaiDated : 14th August 2007

23


SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2007

As at As at31st March 31st March

2007 2006Rs. Rs.

SCHEDULE : 1SHARE CAPITALAUTHORISED SHARE CAPITAL300,00,000 EQUITY SHARES OF RS. 10/- EACH 300,000,000 300,000,000(Previous year 3,00,00,000 Equity Shares of Rs.10/- each)ISSUE, SUBSCRIBED & PAID UP1,44,94,874 EQUITY SHARES OF RS.10/- EACH FULLY PAID 144,948,740 144,948,740(Previous year 1,44,94,874 Equity Shares of Rs.10/- each fully paid)(Out of the above 72,47,437 Equity Shares of Rs.10/- each was allotted as fullypaid-up bonus shares by capitalisation of general reserve)

SCHEDULE : 2RESERVES & SURPLUSGENERAL RESERVEAS PER LAST BALANCE SHEET 79,479,421 54,479,421Add : Transferred from Profit & Loss Account 25,000,000 25,000,000

104,479,421 79,479,421

RESERVES U/S 115VT OF THE INCOME TAX ACT, 1961AS PER LAST BALANCE SHEET 911,850 911,850Add : Transferred from Profit & Loss A/C 1,550,000 -

2,461,850 911,850

RESERVES U/S 33 AC OF THE INCOME TAX ACT, 1961AS PER LAST BALANCE SHEET - 41,500,000Less : Utilised Amount transferred to Profit & Loss A/C - 41,500,000

- -

DEFERRED TAX RESERVEAS PER LAST BALANCE SHEET 48,782,000 41,135,000Add : Transferred from Profit & Loss A/C 7,560,000 7,647,000

56,342,000 48,782,000

PROFIT AND LOSS ACCOUNT 111,234,126 110,481,081

274,517,397 239,654,352

24




2007 2006Rs. Rs.

SCHEDULE : 3SECURED LOANS11% SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURE 38,500,000 60,500,000(Privately placed with the Financial Institution Secured by hypothecation

of charges on specific barges and personal guarantee of certain Directors as per deed of

hypothecation, redeemable in 20 quarterly instalments commenced from April, 2004)

IDBI 13,680,639 21,492,639(Secured by hypothecation of specific barges & assignment of receivable of specificbarges and Personal guarantee of some of the Directors)IIBI - 11,326,975(Secured by hypothecation of specific barges &Personal guarantee of some of the Directors)DENA BANK-TERM LOAN 98,990,073 80,011,711(Secured by hypothecation of specific barges &Personal guarantee of certain Directors)OVERDRAFT FACILITY FROM STATE BANK OF INDORE 52,089,594 53,807,490(Secured by Book Debts, hypothecation of specific barges & personal guaranteeof certain Directors)STATE BANK OF INDORE-TERM LOAN 43,499,682 44,283,717(Secured by hypothecation of specific barges & personal guaranteeof certain Directors)UNITED BANK OF INDIA-TERM LOAN 40,469,048 37,219,803(Secured by hypothecation of specific barges & personal guaranteeof certain Directors)DENA BANK - TERM LOAN-FCDL 133,400,000 -(Secured by hypothecation of specific barges & Personal guarantee of certain Directors)PUNJAB NATIONAL BANK CORPORATE LOAN 43,743,698 -(Secured by hypothecation of specific barges & Personal guarantee of certain Directors)STATE BANK OF HYDERABAD-CORPORATE LOAN 49,970,204 -(Secured by hypothecation of specific barges & Personal guarantee of certain Directors)HDFC LTD. 13,301,106 -(Secured by deposit of title Documents of Vashi Site)HDFC BANK LTD. 3,823,071 4,259,310(Secured by hypothecation of Motor vehicles)IDBI BANK LTD.-SHORT TERM LOAN - 30,229,315STANDARD CHARTERED BANK - 428,024(Secured by hypothecation of Motor vehicles)

531,467,115 343,558,984SCHEDULE : 4UNSECURED LOANSFrom Corporate Bodies 2,430,300 21,110,300From Director 1,200,000 2,300,000

3,630,300 23,410,300

25


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26




2007 2006Rs. Rs.

SCHEDULE : 6INVESTMENTSInvestments in in Equity Shares (at cost)Quoted :Other Than TradeEquity Share of Bank of Baroda 85,000 85,000(1000 Equity Share of Rs. 10/- each Fully Paid)(Market Value Rs.2,15,400/-)Unquoted :I.Other Than TradeEquity Shares of Shamrao Vithal Co-op Bank 10,000 10,000(400 Equity Share of Rs. 25/- each Fully Paid)Equity Shares of Saraswat Co-op Bank Ltd. 10,050 10,050(1005 Equity Shares of Rs.10/- each Fully Paid)II.TradeIn Subsidiary Companies:Equity Shares of Shahi Shipping (Singapore) Pte. Ltd. 27 27(1Equity Share of 1 Singapore $ each)Equity Shares of Shahi Shipping (Bangladesh) Ltd. 87,483 87,483(997 Equity Shares of 100 Bangladesh Takka each)

192,560 192,560

SCHEDULE : 7SUNDRY DEBTORS (Considered Good)Debts outstanding for a period exceeding six months* 60,467,184 60,520,795Other Debts 74,055,615 83,243,351

* includes Rs. 60,890/- (previous year Rs. 130,264/-) 134,522,799 143,764,146due from a company under the same management

SCHEDULE : 8CASH & BANK BALANCESCash balance on hand 145,274 406,937Foreign Currency in hand 84,127 -Bank balances with Scheduled Banks :Margin Money Deposit against Guarantees 1,906,545 3,064,478Current Accounts 6,240,098 11,907,271Dividend Accounts 479,573 328,285Cheques on hand 278,430 -

9,134,047 15,706,971SCHEDULE : 9OTHER CURRENT ASSETSInterest accrued on Bank FDR’s 78,807 41,851Interest Subsidy Receivable 64,523,144 64,523,144

64,601,951 64,564,995

27


SCHEDULES ANNEXED TO AND FORMING PART OF BALANCE SHEET AS AT 31ST MARCH, 2007As at As at

31st March 31st March2007 2006

Rs. Rs.SCHEDULE : 10LOANS & ADVANCES (Considered good)Tax paid (including TDS) 47,816,765 32,454,218Deposit with statutory bodies 2,259,304 2,021,019Deposit with other 5,404,219 5,255,223Advances Recoverable in Cash or in kind for value to be received * 8,540,097 7,494,740

* Includes Rs. 2,942,555/- (Previous year Rs.21,61,427/-) dues from 64,020,385 47,225,200Subsidiaries

SCHEDULE : 11CURRENT LIABILITIESSundry Creditors 42,723,483 51,407,513Trade Deposits 1,750,000 1,750,000Advance from Customers 1,250,000 1,250,000Unclaimed Dividend* 476,867 325,579*( There are no amount due and outstanding to be credited to Investor Education and Protection Fund)

46,200,350 54,733,092SCHEDULE : 12PROVISIONSFor Current Tax 44,706,000 33,736,000For Fringe Benefit Tax 832,918 953,332For Proposed Dividend 10,871,155 7,247,437For Tax on Proposed Dividend 1,847,552 1,016,453

58,257,625 42,953,222SCHEDULE : 13MISCELLANEOUS EXPENDITUREExpenditure incurred for Public issue 1,137,750 1,137,750(To the extent of not written off or adjusted)

1,137,750 1,137,750

SCHEDULES ANNEXED TO AND FORMING PART OF PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2007

Year ended Year ended31st March 31st March

2007 2006Rs. Rs.

SCHEDULE : 14INCOME FROM OPERATIONSIncome from Operations 406,153,332 353,308,153

406,153,332 353,308,153SCHEDULE : 15OTHER INCOMEInterest from Banks & Others 726,692 307,563Interest on Income tax Refund - 278,450Dividend 8,800 8,600Insurance Claim Received 241,714 -Vat Refund from UK 30,075 -Rebate and Discount Received 164,835 -Sundry balances written back (Net) - 27,230Misc. Income 2,503,428 -

3,675,544 621,843

28


SCHEDULES ANNEXED TO AND FORMING PART OF PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 31ST MARCH, 2007


2007 2006Rs. Rs.

SCHEDULE : 16DIRECT OPERATION EXPENSESHire, Transporatation & Water Charges 13,976,816 6,640,427Voyage expenses 767,075 1,561,796Agency fees 6,838,784 2,380,320Crane Charges 2,760,381 2,289,090Stevedoring Charges 5,249 4,282,146Repairs & Maintainance (Fleet) 32,694,251 41,453,097Barge Operation Expenses 27,076,710 23,238,801Port Dues 17,843,982 15,390,563Fuel & Oil 61,236,641 54,048,202Insurance Charges 6,765,071 5,907,782Survey Charges 2,377,173 846,636

172,342,133 158,038,860SCHEDULE : 17ADMINISTRATIVE EXPENSESSalary & Bonus & Gratuity etc. 21,911,528 18,863,043Cotribution to PF & other Funds 1,233,381 1,219,819Staff welfare 1,675,354 2,144,017Rent 985,653 1,036,161Rates & Taxes 327,104 563,841Insurance charges 490,077 488,441Travelling expenses 4,421,236 4,083,798Telephone, Telex, Fax Expenses 2,536,664 2,410,125Auditors remunneration 352,374 339,161Advertisement & publicity expenses 2,156,543 654,390Bad debts written off 80,100 45,600Directors remuneration 4,759,410 3,684,599Directors sitting fees 85,000 62,500Electricity charges 1,114,168 1,295,840Printing & Stationery expenses 869,841 876,289Legal, professional & consultancy charges 7,126,360 5,704,330Secretarial expenses 98,856 324,271Conveyance expenses 1,011,856 5,06,482Other expenses 7,238,552 9,102,176Rebates & discounts 5,631,980 1,060,480Loss on Exchange - 3,530Preliminary expenses written off - 44,325Repairs & maintenance - Building 74,470 71,877Repairs & maintenance (others) 3,562,740 3,104,995

67,743,247 57,690,090SCHEDULE : 18FINANCE EXPENSESInterest to Banks & Financial Institution 44,980,124 33,229,779Bank Charges & Commission 3,840,903 1,384,648Other Interest - 136,510

48,821,027 34,750,937

29


SCHEDULE : 19Significant Accounting Policies and Notes to the Accounts1. Method of Accounting

The accounts are prepared under historical cost convention and are based on the accrual basis of accounting exceptthat liability for bonus, leave encashment and receipt of insurance claims, which are accounted on cash basis.

2. Fixed Assets :Fixed assets are stated at cost of acquisition including interest during construction period, if any, less accumulateddepreciation. Exchange differences at the year-end translation of foreign currency loan relating to acquisition of suchassets are adjusted to the carrying cost of the assets.

3. Capital Work in Progress and Advances for Capital Goods :Capital work-in-progress and Advances for capital goods includes advances for projects and advances for capital goods.

4. Depreciation :(i) Depreciation is provided on the Written Down Value Method at rates specified in the Schedule XIV of the Companies Act, 1956(ii) Depreciation on addition to Assets and sale of Assets is calculated pro-rata, from the date of such addition and up

to the date of such sale respectively.(iii) Cost of lease-hold land is amortised over the period of lease.

5. Investments :All Investments are considered as long term Investments and are stated at cost.

6. Revenue Recognition :Income from operation consists of vessel hire charges on time charter and spot charter basis. In certain cases, ‘timecharter hire charges are billed at a composite rate, which includes reimbursementof incidental expenses.

7. Retirement Benefits :Company’s contribution to Employees’ Provident Fund and Employees State Insurance are being charged to theProfit & Loss Account. Liability for gratuity in case of shore staff is determined on accural basis and is provided in thebooks of accounts. In case of crew members, gratuity is accounted for on cash basis.

8. Treatment of major repairs :Major repairs including survey expenses carried out on vessels are written off to revenue in the year the expenses areincurred. However, in the opinion of the management if such expenses are of a capital nature, the same are added tothe cost of the respective vessels.

9. Stores & Spares :Stores & Spares purchased are directly issued to the Barges and the values of such purchases are charged to theRevenue and are included in Repairs and Maintenance Account.

10. Taxes on Income :Provision for current tax including tonnage tax is made, based on tax payable under Income Tax Act 1961. The Companyhas provided for Deferred Tax Liability which arises due to the timing difference between accounting income andtaxable income except on income under tonnage tax scheme. Deferred Tax assets are recognized only to the extentthat there is reasonable certainty of realisation.

11. Issue expenses :Issue expenses pertaining to the projects are capitalized.

12. Contingent liability not provided for :(i) On account of guarantees executed by the company’s Bankers for Rs.58.44 lacs (previous year Rs. 313.77 lacs)which is partly secured by the Margin Money amounting to Rs.19.06 lacs (previous year Rs.30.64 lacs) retained by the Bank.(ii) Rs. 3.59 lacs, in respect of an Appellate Order passer by the CIT for accounting year 2003-04, allowing the Company’sappeal partially. The Company has preferred an appeal against the said Order, before the Income Tax Tribunal.

13. Debtors include Rs.22.67 lacs (previous year Rs.22.67 lacs) in respect of cases which are under arbitration/dispute. Inthe opinion of the management the said debts are considered good.

14. On account of being a shipping company, details in connection with para 3 of Part II of Schedule VI of theCompanies Act, 1956 have not been given.

15. The other current assets in schedule 9 includes Rs. 645.23 lacs (previous year 645.23 lacs) of interest subsidy receivablefrom Central Government Inland Waterways Authority. The amount outstanding is considered good by the management.

16. The Profit & Loss account for the year includes income of Rs. 25.00 lacs declared by the Company u/s 132 of theIncome Tax Act, 1961

17. The Sundry Debtors, Sundry Creditors, Loans, Deposits and Loans & Advances are subject to confirmation / reconciliation.The management does not expect any material difference affecting the current financial statements.

30


18. In the opinion of the Board, Current Assets, Loan and Advances have a value on realisation in the ordinary course ofbusiness at least equal to the amount at which they are stated in the Balance Sheet.

19. The company is engaged only in the business of shipping and as such there is no separate reportable segment as perAccounting standard 17.

20. (a) Sundry Creditors include amounts due to small scale Industrial undertakings - Rs. 2.07 lacs (previous yearRs. 2.42 lacs).

(b) The party being small scale / ancillary industrial undertaking to whom amount exceeding Rs. 100,000/- is outstandingfor more than 30 days but not overdue : Dipti Fire Services.

(c) There were no amounts overdue to Small Scale and/or Ancilliary Industrial suppliers on account of principal and/orinterest as at the close of the year.

(d) The above disclosure is based on the information/documents available with the company.21. Previous year’s figures have been regrouped and rearranged wherever necessary to confirm to those of the current year.

31st March 2007 31st March 200622. Expenditure in Foreign Currency :

Travelling 678,785 3,96,643Subscription 7,620 76,280Purchase of vessel 209,814,718 NILInterest 1,814,153 NIL

23. Earnings in Foreign Currency :From Operations 2,915,545 NIL

24. Auditors’ Remuneration includes :For Company Law Audit 118,125 1,18,125For Tax Audit 39,375 39,375For Taxation 28,125 28,125For Certification 149,417 1,47,853For Reimbursement of Expenses 17,332 5,683

25. The break-up of net Deferred Tax Liability is as under.except on income under tonnage tax scheme

Deferred Tax AssetsUnabosorbed Capital Loss NIL 0.24

NIL 0.24

Deferred Tax LiabilityDifference between Book & Tax Depreciation 563.42 488.06Net deferred tax liabilityon account of timing differences 563.42 487.82

As in the past years the accumulated credit balance in the Deferred Tax Account has been shown under the head“Reserves & Surplus”, as in the opinion of the management the liability for deferred tax does not exist on the date of theBalance Sheet.

26. There was no impairment loss on fixed assets on the basis of review carried out by the management in accordance withthe Accounting Standard 28 issued by the Institute of Chartered Accountants of India.

27. Earnings per Share 31st March 2007 31st March 2006Profit after taxation as perProfit & Loss Account 40,021,752 3,35,73,295Number of equity shares outstanding for basic and diluted EPS 14,494,874 1,44,94,874Basic & diluted EPS Rs. 2.76 Rs. 2.32Face value per share Rs. 10/- Rs. 10/-

28. Prior period expenses debited during the year was Rs. 1.05 lac (previous year was Rs. 1.18 lacs).

31


29. A. Remuneration to Directors including Managing Director & Whole-time Directors.Rs. in Lacs Rs. in Lacs

2006-07 2005-06Salary & Perquisites 41.08 36.85Contribution to Provident Fund and other funds 1.80 1.80Commission to Managing Director 6.51 Nil

49.39 38.6529. B. Computation of Net Proft under section 349 of the Companies Act, 1956. (Rs. in Lacs)

Net Profit before Tax as per Profit & Loss Account 600.36ADD : (i) Managerial remuneration 49.39

(ii) Directors’ sitting fees 0.85(iii) Loss on sale of fixed assets 4.36

LESS : (i) Profit on sale of fixed assets 3.81Net Profit under section 349 of the Companies Act, 1956 651.15Commission payable to Managing Director @ 1% of Net Profit 6.51

30. Related Party Disclosures :RELATED PARTY RELATIONSHIPS :a) Where control exists : Shahi Shipping (Singapore) Pte Limited

Shahi Shipping (BD) LimitedIndia First Logistics LimitedShahi Gasol Limited

b) Key Management Personnel : Mr. S. K. ShahiChairman & Managing DirectorMr. F. M. KoliWhole Time DirectorCapt. W. GonsalvesWhole Time Director

c) Relatives of Key Managements Mrs. Anjana S. ShahiPersonnel :

d) Other Related Parties : Shahi Finance LimitedAce Pharmaceutical Pvt. Ltd.Aryan Transport Company Pvt. Ltd.Royal Cruise Liners LimitedKoli Finance Pvt. LimitedAryan Transport Co.

TRANSACTIONS WITH RELATED PARTIES Rs. in Lacs Rs. in LacsAmount Amount2006-07 2005-06

TYPE OF RELATED PARTY NATURE OF TRANSACTIONSWhere control exists Advance given 12.56 15.52

Loans Taken 35.00 13.00Loans Repaid 52.90 NIL

Key Management Personnel Remuneration paid to KeyManagement Personnel 49.39 38.65Purchase of Fixed Assets 39.60 NILLoans Taken 45.00 23.00Loans Repaid 56.00 NIL

Relatives of key management personnel Rent NIL 2.25Other related parties Loans Taken 36.50 51.00

Loans Repaid 102.40 NILOTHER BALANCES OUTSTANDING AS AT THE YEAR END1. Where Control Exists

Debtors 0.61 1.30Advances given 53.56 49.05Unsecured Loans taken NIL 17.90

2. Key Management Personnel Unsecured Loans taken 12 23.003. Other Related Parties Unsecured Loans taken 24.00 89.90

Creditors 0.20 0.20Trade Deposit 14.50 14.50

32


31. BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILEI. Registration Details

Registration No. State Code

Balance Sheet Date

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

Public Issue Right Issue

Bonus Issue Private Issue

III. Position of Mobilisation and deployment of Funds (Amount in Rs. Thousands)Total Liabilities Total Assets

Source of Funds

Paid-up Capital Reserves & Surplus

Secured Loans Unsecured Loans

Application of Funds

Net Fixed Assets Investments

Net Current Assets Misc. Expenditure

Accumulated Losses

IV. Performance of Company (Amount in Rs. Thousands)

Turnover (Gross Revenue) Total Expenditure

Profit (+) / Loss (-) before Tax Profit (+) / Loss (-) after Tax

Earning per Share in Rs. Dividend Rate (%)

V. Generic Names of Three principal Products / Services of the Company (as per Monetary Terms)Item Code No. (ITC Code)Product Description




Place : Mumbai Dated : 14th August 2007

0 5 8 6 8 0

3 1 0 3 2 0 0 7

N I L

N I L

N I L

N I L

1 0 5 9 0 2 1 1 0 5 9 0 2 1

1 4 4 9 4 9 2 7 4 5 1 7

5 3 1 4 6 7 3 6 3 0

7 8 5 4 1 2 1 9 3

1 6 7 8 2 1 1 1 3 7

N I L

4 1 0 2 1 0 3 5 0 8 2 5

5 9 3 8 5 4 0 0 2 2

2. 7 6 7. 5

N I LS H I P P I N G

1 1

33

Consolidated Annual Report 2006-2007

REPORT OF THE AUDITORS ON CONSOLIDATED FINANCIAL STATEMENTS

Auditors’ Report to the Board of Directors of SKS Logistics Limited on the Consolidated FinancialStatements of SKS Logistics Limited and its subsidiaries Shahi Shipping (Singapore) Pte Ltd. andShahi Shipping (BD) Ltd.

We have examined the attached Consolidated Balance Sheet of SKS Logistics Limited and its subsidiaries, as at 31st March, 2007 andalso the related consolidated Profit & Loss Account and Consolidated Cash Flow Statement as described iNote 1 to the consolidatedfinancial statements, for the year ended on that date, annexed thereto. These consolidated financial statements are the responsibility ofthe management of the SKS Logistics Ltd. Our responsiblity is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards genrally accepted in India. These standards require that we plan andperform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An auditincludes, examining on a test bisis, evidence supporting the amounts and disclosures in the financial statements. An audit alsoincludes assessing the accouning principles used and significant estimates made by the management, as well as evaluating theoverall financial statement presetation. We believe that our audit provides a reasonable basois for our opinion.

We did not audit the financial statement of the subsidiaries, whose financial statements reflect total assets ofRs.2,09,661/- as at 31st March, 2007 and total loss of Rs. 1,014,974/- for the year then ended. These financial statements have beenaudited by other auditors whose reports have been furnished to us, and our opinion, in so far as it relates to the amounts included inrespect of the subsidiaries, is based solely on the report of the other auditors.

We report that the consolidated financial statements have been prepared by the Company in accodance with the requirements ofAccounting Standard (AS) 21, ‘Consolidated Financial Statements” issued by the Institute of Chartered Accountants of India and on thebasis of the separate audited financial statements of SKS Logistics Ltd. and its subsidiaries included in the consolidated financialstatements.

On the basis of the information and explanation given to us and on the consideration of the separate audit reports on individual auditedfinancial statements of SKS Logistics Ltd. and its aforesaid subsidiaries, we are of the opinion that :

(a) The Consolidated Balance Sheet gives a true and fair view of the consolidated state of affairs of SKS Logistics Ltd. and itssubsidiaries as at 31st March, 2007.

(b) The Consolidated Profit & Loss Account gives a true and fair view of the consolidated results of operations ofSKS Logistics Ltd. and its subsidiaries for the year then ended; and

(c) The Consolidated Cash Flow Statement gives a true and fair view of the Cash Flow of SKS Logistics Ltd. and its subsidiaries for

the year ended on that date.


N. D. HEDAPlace : Mumbai ProprietorDated : 14th August 2007 Membership No. 32450

34


CONSOLIDATED BALANCE SHEET OF SKS LOGISTICS LIMITED AND ITS SUBSIDIARY COMPANIESAS AT 31ST MARCH 2007

SCH As at As atNo. 31st March 2007 31st March 2006

Rs. Rs.

SOURCES OF FUNDSShareholder’s FundsShare Capital 1 144,948,740 144,948,740Reserves & Surplus 2 272,995,742 238,660,485Secured Loans 3 531,467,115 343,558,984Unsecured Loans 4 3,630,300 23,410,300Minority Interest 4A (1,455,799) (911,651)

951,586,098 749,666,858

APPLICATION OF FUNDSFixed Assets 5 785,432,725 576,710,019Investments 6 105,050 105,050CURRENT ASSETS, LOANS & ADVANCESSundry Debitors 7 134,522,799 143,764,146Cash & Bank Balances 8 9,146,641 15,937,253Other Current Assets 9 64,601,951 64,564,995Loans & Advances 10 61,084,854 45,138,832

269,356,245 269,405,226

LESS : CURRENT LIABILITIES & PROVISIONSCurrent Liabilities 11 46,300,392 54,850,131Provisions 12 58,257,625 42,953,222

104,558,017 97,803,353

NET CURRENT ASSETS 164,798,228 171,601,873

MISCELLANEOUS EXPENDITURE 13Preliminary expenses 1,250,095 1,249,916(to the extent not written off or adjusted)

951,586,098 749,666,858

SIGNIFICANT ACCOUNTING POLICIES ANDNOTES TO THE ACCOUNTS 19The Schedules referred to above form an integral part of Balance Sheet





35


SCH As at As atNo. 31st March 2007 31st March 2006

Rs. Rs.

INCOMEIncome from Operations 14 406,153,332 353,308,153Other Income 15 3,675,544 621,843Profit on sale of Assets 381,441 175,553

410,210,317 354,105,549

EXPENDITUREDirect Operation expenses 16 172,342,133 158,038,860Administrative expenses 17 68,744,773 59,028,508Financial expenses 18 48,836,237 34,753,877Depreciation 61,505,489 50,152,550Loss on sale of Assets 436,013 525,192

351,864,645 302,498,987

Profit before Texation 58,345,672 51,606,562Less : Current Tax 10,970,000 10,778,000Less : Deferred Tax 7,560,000 7,647,000Less : Fringe Benefit Tax 832,918 953,232Less : Taxation of earlier year - 17,909Add : Share of Minority Interest in Losses of Subsidiaries 511,210 671,548

Profit after Tax 39,493,964 32,881,969Less : Tonnage Tax Reserve U/S 115VT of the Income Tax Act, 1961 1,550,000 -Add : Transfer from Reserve u/s 33AC of Income Tax Act ‘1961 (Amount Utilised) - 41,500,000Add : Surplus from Previous Year 109,487,214 68,369,135

Profit available for Appropriations 147,431,178 142,751,104APPROPRIATIONS :Transfer to General Reserve 25,000,000 25,000,000Proposed Dividend 10,871,155 7,247,437Income Tax on Proposed Dividend 1,847,552 1,016,453

BALANCE CARRIED FORWARD 109,712,471 109,487,214

Earnings per share (Rs.) (Basic & Diluted) 2.72 2.27

SIGNIFICANT ACCOUNTING POLICIES ANDNOTES TO THE ACCOUNTS 19The Schedules referred to above form an integral part of Profit & Loss Account





CONSOLIDATED PROFIT & LOSS ACCOUNT OF SKS LOGISTICS LIMITED AND ITS SUBSIDIARYCOMPANIES FOR THE YEAR ENDED 31ST MARCH 2007

36


(Rs. in ‘000s) (Rs. in ‘000s)2006-07 2005-06

A). CASH FLOW FROM OPERATING ACTIVITIESNet Profit Before Tax & Extraordinary Items 58,346 51,608Adjustment forDepreciation 61,505 50,152Sundry Credit Balance written back - (27)Loss / (Profit) on sale of Assets (Net) 55 350Dividend Income (9) (9)Interest Income (727) (307)Miscellaneous Expenditure Amortised - 44Interest Charges 44,980 105,804 33,230 83,433

Operating Profit before Working Capital Changes 164,150 135,041Adjustment forTrade & Other receivables (2,048) 7,862Trade Payables (8,550) (10,598) (17,430) (9,568)

Cash Generated from operation 153,552 125,473Direct taxes paid (4,674) (18,399)Frirge Benefit tax paid (953) -Interest paid (44,980) (38,159)Net cash from Operating Activities (A) 102,945 68,915

B). CASH FLOW FROM INVESTMENT ACTIVITIESPurchase of Fixed Assets (271,359) (148,565)Sale of Fixed Assets 1,076 962Dividend Received 9 9Pre-Operative expenses of Bangaldesh Subsidiary (17) 17Interest Received 690 291

Net Cash used in Investing Activities (B) (269,601) (147,286)

C). CASH FLOW FROM FINANCING ACTIVITIESProceeds from Borrowings 168,128 33,574Increased in Deferred Revenue Expenditure - (154)Dividend paid (8,263) -

Net Cash Used in Financing Activities (C) 159,865 33,420

Net Changes in Cash & Cash Equivalents (A+B+C) (6,791) (44,951)

Cash & cash equivalents - Opening Balance 15,938 60,889Cash & cash equivalents - Closing Balance 9,147 15,938

6,791 44,951Note :1. Purchase of Fixed Assets are stated inclusive of capital work-in progress and advances for capital

goods between beginning and end of the year and is treated as part of investing activities.2. Proceeds from borrowings are shown as net of repayments.3. Figures in brackets indicate cash outflow





CONSOLIDATED CASH FLOW STATEMENT OF SKS LOGISTICS LIMITED AND ITS SUBSIDIARYCOMPANIES FOR THE YEAR ENDED 31ST MARCH 2007

37


SCHEDULES ANNEXED TO AND FORMING PART OF THE CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2007


2007 2006Rs. Rs.

SCHEDULE : 1SHARE CAPITALAUTHORISED SHARE CAPITAL300,00,000 EQUITY SHARES OF RS. 10/- EACH 300,000,000 300,000,000(Previous year 3,00,00,000 Equity Shares of Rs.10/- each)ISSUE, SUBSCRIBED & PAID UP1,44,94,874 EQUITY SHARES OF RS.10/- EACH FULLY PAID 144,948,740 144,948,740(Previous year 1,44,94,874 Equity Shares of Rs.10/- each fully paid)(Out of the above 72,47,437 Equity Shares of Rs.10/- each was allotted as fullypaid-up bonus shares by capitalisation of general reserve)SCHEDULE : 2RESERVES & SURPLUSGENERAL RESERVE AS PER LAST BALANCE SHEET 79,479,421 54,479,421Add : Transferred from Profit & Loss Account 25,000,000 25,000,000

104,479,421 79,479,421

RESERVES U/S 115VT OF THE INCOME TAX ACT, 1961AS PER LAST BALANCE SHEET 911,850 911,850Add : Transferred from Profit & Loss A/C 1,550,000 -

2,461,850 911,850

RESERVES U/S 33 AC OF THE INCOME TAX ACT, 1961AS PER LAST BALANCE SHEET - 41,500,000Add : Transferred from Profit & Loss A/C - -Less : Utilised Amount transferred to Profit & Loss A/C - 41,500,000

- -

DEFERRED TAX RESERVEas per last Balance Sheet 48,782,000 41,135,000Add : Transferred from Profit & Loss A/C 7,560,000 7,647,000

56,342,000 48,782,000

PROFIT AND LOSS ACCOUNT 109,712,471 109,487,214

272,995,742 238,660,485

38




2007 2006Rs. Rs.

SCHEDULE : 3SECURED LOANS11% SECURED REDEEMABLE NON-CONVERTIBLE DEBENTURE 38,500,000 60,500,000(Privately placed with the Financial Institution Secured by hypothecationof charges on specific barges and personal guarantee of certain Directors as per deed ofhypothecation, redeemable in 20 quarterly instalments commenced from April, 2006)IDBI 13,680,639 21,492,639(Secured by hypothecation of specific barges & assignment of receivable of specificbarges and Personal guarantee of some of the Directors)IIBI - 11,326,975(Secured by hypothecation of specific barges &Personal guarantee of some of the Directors)DENA BANK-TERM LOAN 98,990,073 80,011,711(Secured by hypothecation of charges on specific barges &Personal guarantee of certain Directors)OVERDRAFT FACILITY FROM STATE BANK OF INDORE 52,089,594 53,807,490(Secured by Book Debts, hypothecation of specific barges & personal Guarantee of some of the Directors)STATE BANK OF INDORE-TERM LOAN 43,499,682 44,283,717(Secured by hypothecation of charges on specific barges & personal guarantee of certain Directors)UNITED BANK OF INDIA-TERM LOAN 40,469,048 37,219,803(Secured by hypothecation of specific barges & personal guarantee of certain Directors)DENA BANK - TERM LOAN-FCDL 133,400,000 -(Secured by hypothecation of specific barges & Personal guarantee of certain Directors)PUNJAB NATIONAL BANK CORPORATE LOAN 43,743,698 -(Secured by hypothecation of specific barges & Personal guarantee of certain Directors)STATE BANK OF HYDERABAD-CORPORATE LOAN 49,970,204 -(Secured by hypothecation of specific barges & Personal guarantee of certain Directors)HDFC LTD. 13,301,106 -(Secured by deposit of title Documents of Vashi Site)HDFC BANK LTD. 3,823,071 4,259,310(Secured by hypothecation of Motor vehicles)IDBI BANK LTD.-SHORT TERM LOAN - 30,229,315STANDARD CHARTERED BANK - 428,024(Secured by hypothecation of Motor vehicles)

531,467,115 343,558,984SCHEDULE : 4UNSECURED LOANSFrom Corporate Bodies 2,430,300 21,110,300From Director 1,200,000 2,300,000

3,630,300 23,410,300SCHEDULE : 4AMINORITY INTERESTShare Capital 218 249Share in the losses of subsidiaries (1,456,017) (911,900)(To the extent not written off or adjusted)

(1,455,799) (911,651)

39


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40




2007 2006Rs. Rs.

SCHEDULE : 6INVESTMENTSInvestments in Equity Shares (at cost)Quoted :(Other Than Trade)Equity Share of Bank of Baroda 85,000 85,000(1000 Equity Share of Rs. 10/- each Fully Paid)(Market Value Rs.215,400/-)Unquoted :(Other Than Trade)Equity Shares of Shamrao Vithal Co-op Bank 10,000 10,000(400 Equity Share of Rs. 25/- each Fully Paid)Equity Shares of Saraswat Co-op Bank Ltd. 10,050 10,050(1005 Equity Shares of Rs.10/- each Fully Paid)

105,050 105,050

SCHEDULE : 7SUNDRY DEBTORS (Considered Good)Debts outstanding for a period exceeding six months* 60,467,184 60,520,795Other Debts 74,055,615 83,243,351

134,522,799 143,764,146

*(Includes Rs. 60,890/- (previous year Rs. 1,30,264/-) due from a company under the same management)

SCHEDULE : 8CASH & BANK BALANCESCash balance on hand 145,274 406,937Bank balances with Scheduled Banks :Margin Money Deposit against Guarantees 1,906,545 3,064,478Current Accounts 6,252,692 12,137,553Dividend Accounts 479,573 328,285Cheques in hand 278,430 -Foreign Currency in Hand 84,127 -

9,146,641 15,937,253SCHEDULE : 9OTHER CURRENT ASSETSInterest accrued on Bank FDR’s 78,807 41,851Interest Subsidy Receivable 64,523,144 64,523,144

64,601,951 64,564,995

41




2007 2006Rs. Rs.

SCHEDULE : 10LOANS & ADVANCES (Considered good)Income Tax deducted at source & Wealth-tax paid 47,816,765 32,454,218Deposit with statutory bodies 2,321,850 2,111,703Deposite with other 5,404,219 5,255,223Advances Recoverable in Cash or kind for value to be received 5,542,020 5,317,688

61,084,854 45,138,832

SCHEDULE : 11CURRENT LIABILITIESSundry Creditors 42,823,525 51,524,552Trade Deposits 1,750,000 1,750,000Advance from Customers 1,250,000 1,250,000Unclaimed Dividend* 476,867 325,579*(There are no amount due and outstanding to be credited to Investor Educationand Protection Fund ) 46,300,392 54,850,131

SCHEDULE : 12PROVISIONSFor Current Tax 44,706,000 33,736,000For Fringe Benefit Tax 832,918 953,332For Proposed Dividend 10,871,155 7,247,437For Tax on Proposed Dividend 1,847,552 1,016,453

58,257,625 42,953,222SCHEDULE : 13MISCELLANEOUS EXPENDITUREExpenditure incurred for Public issue 1,137,750 1,137,750Preliminary / Preoperative Expenses 112,345 112,166(To the extent of not written off or adjusted)

1,250,095 1,249,916SCHEDULE : 14INCOME FROM OPERATIONSIncome from Operations 406,153,332 353,308,153

406,153,332 353,308,153SCHEDULE : 15OTHER INCOMEInterest from Banks & others 726,692 307,563Interest on Income tax Refund - 278,450Dividend 8,800 8,600VAT Refund from UK 30,075 -Rebate & discount Received 164,835 -Insurance Claim Received 241,714 -Sundry balances written back (Net) - 27,230Misc. Income 2,503,428 -

3,675,544 621,843

42


SCHEDULES ANNEXED TO AND FORMING PART OF CONSOLIDATEDPROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31ST MARCH, 2007


2007 2006Rs. Rs.

SCHEDULE : 16DIRECT OPERATION EXPENSESHire, Transporatation & Water Charges 13,976,816 6,640,427Voyage expenses 767,075 1,561,796Agency fees 6,838,784 2,380,320Crane Charges 2,760,381 2,289,090Stevedoring Charges 5,249 4,282,146Repairs & Maintainance (Fleet) 32,694,251 41,453,097Barge Operation Expenses 27,076,710 23,238,801Port Dues 17,843,982 15,390,563Fuel & Oil 61,236,641 54,048,202Insurance Charges 6,765,071 5,907,782Survey Charges 2,377,173 846,636

172,342,133 158,038,860

SCHEDULE : 17ADMINISTRATIVE EXPENSESSalary & Bonus & Gratuity etc. 22,230,455 19,354,138Cotribution to PF & other Funds 1,262,891 1,262,715Staff welfare 1,675,354 2,144,017Rent 1,142,018 1,157,074Rates & Taxes 327,104 563,840Insurance charges 490,077 488,441Travelling expenses 4,421,236 4,127,409Telephone, Telex, Fax Expenses 2,658,458 2,499,353Auditors remunneration 392,956 379,140Advertisement & publicity expenses 2,164,333 654,390Bad debts written off 80,100 45,600Directors remuneration 4,759,410 3,684,599Directors sitting fees 85,000 62,500Electricity charges 1,114,168 1,295,840Printing & Stationery expenses 869,841 882,554Legal, professional & consultancy charges 7,403,989 6,218,934Secretarial expenses 98,856 324,271Conveyance expenses 1,011,857 506,482Other expenses 7,263,457 9,109,486Rebates & discounts 5,631,980 1,060,480Loss on Exchange - 3,530Preliminary expenses written off - 44,325Repairs & maintenance - Building 74,470 71,877Repairs & maintenance (others) 3,562,740 3,104,995Currency conversion difference 24,023 (17,482)

68,744,773 59,028,508SCHEDULE : 18FINANCE EXPENSESInterest to Banks & Financial Institution 44,980,124 33,229,779Bank Charges 3,856,113 1,387,588Other Interest - 136,510

48,836,237 34,753,877

43


SCHEDULE : 19Notes to Consolidated Financial Statements

1. The consolidated financial statements comprise financial statements of SKS Logistics Ltd. and its subsidiaries viz.Shahi Shipping (Singapore) Pte Ltd. and Shahi Shipping (BD) Ltd.

2. The consolidated financial statements have been prepared in accordance with Accounting Standard 21 “Consolidated FinancialStatements” issued by the Institute of Chartered Accountants of India.

3. RELATED PARTY DISCLOSURES :RELATED PARTY RELATIONSHIPS :a) Where control exists : India First Logistics Limited

Shahi Gasol Limited

b) Key Management Personnel : Mr. S. K. Shahi

Chairman & Managing Director

Mr. F. M. Koli

Wholetime Director

Capt. W. GonsalvesWholetime Director

c) Relatives of Key Management Mrs. Anjana S. Shahi

Personnel :

d) Other Related Parties : Shahi Finance Pvt. Ltd.

Ace Pharmaceuticals Pvt. Ltd.

Aryan Transport Co. Pvt. Ltd.

Royal Cruise Liners Ltd.

Koli Finance Pvt. Ltd.

Aryan Transport Co.

TRANSACTIONS WITH RELATED PARTIES Rs. in lacs Rs. in lacsAmount Amount2006-07 2005-06

TYPE OF RELATED PARTY NATURE OF TRANSACTIONS

Where Control Exists Advance given 4.75 0.33

Loans Taken 35.00 13.00

Loans Repaid 52.90 Nil

Key Management Personnal Remuneration paid to Key Management Personnel 49.39 38.65

Loans Taken 45.00 23.00

Loan Repaid 56.00 Nil

Purchase of Fixed Assets 39.60 Nil

Relatives of Key Management Rent Nil 2.25

Other Related Parties Loans taken 36.50 51.00

Loans Repaid 102.40 Nil

44


OTHER BALANCES OUTSTANDING AS AT THE YEAR END

1. Where Control Exists Debtors 0.61 1.30

Advances Given 24.14 19.39

Unsecured Loans taken - 17.90

2. Key Management Personnel

Unsecured Loans taken 12 23.00

3. Other Related Parties

Unsecured Loans taken 24.00 89.90

Trade Deposit 14.50 14.50

Creditors 0.20 0.20

4. Earnings per Share 31st March 2007 31st March 2006

Profit after taxation as per Profit & Loss Account 39,493,964 32.881.969

Number of equity shares outstanding for basic and diluted EPS 14,494,874 14,494,874

Basic & diluted EPS Rs. 2.72 Rs. 2.27

Face value per share Rs. 10/- Rs. 10/-

5. Other significant Accounting Policies & Notes to the AccountsThese are set out under the section “Significant Accounting Policies & Notes to the Accounts” of SKS Logistics Ltd. and under the

section “Notes to the Financial Statements” of Shahi Shipping (Singapore) Pte Ltd. Sinpaore and Shahi Shipping (BD) Ltd.




Place : Mumbai

Dated : 14th August 2007

45


STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956

1. Name of the Subsidiaries : Shahi Shipping (Singapore) Pte Ltd. Shahi Shipping (BD) Ltd.

2. Financial year ended : 31st March 2007 31st March 2007

3. Date from which it become a : 18th November 1999 7th October 2001Subsidiary

4. Extent of Interest of the Holding : 50% 99.7%

Company in the Capital of the Subsidiary

5. Net Aggregate Amount of the : Current Year : Singapre ($ 17,554) Bangladesh Taka : NilSubsidiary’s profit (loss) not dealt

within the Holding Company’s Previous Year : Singapore ($ 24,755) Bangaladesh Taka : NilAccounts so far as they concernmembers of the Company.

6. Net aggregate amount of the : Current Year : Nil NilSubsidiary’s profit (loss) dealt

within the Holding Company’s Previous Year : Nil Nil

FOR AND ON BEHALF OF THE BOARD

S. K. SHAHI Capt. W. GONSALVESChairman & Managing Director Wholetime Director

A. A. LAMBAYCompany Secretary


46

Shahi Shipping (Singapore) Pte Ltd.

SHAHI SHIPPING (SINGAPORE) PTE LTDREPORT OF THE DIRECTORS

The directors present their report to the members together with the audited financial statements of the company for the financialyear ended 31 March 2007.

1. DIRECTORS

The Directors of the Company in office at the date of this Report are :

Mr. Philip Charles Tolath

Mr. Sarvesh Kumar Shahi

2. ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE SHARES OR DEBENTURES

Neither at the end of the financial year nor at any time during the financial year was the company a party to any arrangementwhose object is to enable the directors of the company to acquire benefits by means of the acquisition of shares ordebentures of the company or any other body corporate.

3. DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The directors of the company holding office at the end of the financial year had no interests in the share capital of thecompany as recorded in the Register of Directors’ shareholdings kept by the company under Section 164 of theCompanies Act except as follows :

Name of directors and companies At begining At endin which interest are held of year of year

Ultimate holding company :Shahi Shipping Limited

Ordinary shares of Ind Rs. 10/- each

Sarvesh Kumar Shahi 250,184 250,184

By virtue of Section 7 of the Companies Act, Mr. Sarvesh Kumar Shahi is deemed to have an interest in the company.

4. DIRECTORS’ CONTRACTUAL BENEFITSSince the end of the last financial year, no director has received or become entitled to receive a benefit which is required tobe disclosed under Section 201(8) of the Companies Act, by reason of a contract made by the company with the directoror with a firm of which he is a member, or with a company in which he has a substantial financial interest.

5. AUDITORSThe auditors, K K Wong & Associates, have expressed their willingness to accept re-appointment.

S. K. Shahi Philip Charles Tolath (Director) (Director)

SingaporeDated : August 10, 2007

47


STATEMENT BY DIRECTORS

In the opinion of the directors, the accompanying financial statements are drawn up so as to give a true and fair view of the stateof affairs of the company as at 31 March 2007 and of the results of the business and changes in equity of the company for thefinancial year then ended and at the date of this statement there are reasonable grounds to believe that the company will be ableto pay its debts as and when they fall due.

Sarvesh Kumar Shahi Philip Charles TolathDirector Director


48


REPORT OF THE AUDITORS TO THE MEMBERS OFSHAHI SHIPPING (SINGAPORE) PTE LTD

We have audited the accompaying financial statements of Shahi Shipping (Singapore) Pte Ltd. set out on 6 to 16, which comprise thebalance sheet of the Company as at 31st March 2007, the statement of changes in equity of the Company, the profit and loss accountand cash flow statement of the Company for the year then ended, and a summary of significant accounting policies and otherexplanatory notes.

Directors’ Responsibility for the Financial Statements

The Company’s directors are responsible for the preparation and fair presentation of these financial statements in accordance withSingapore Financial Reporting Standards. This responsibility includes : designing, implementing and maintaining internal controlrelevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraudor error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in thecircumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordancewith Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Theprocedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of thefinancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevantto the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit alsoincludes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made bydirectors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for your audit opinion.

In our opinion,

(i) The financial statements of the Company and the balance sheet and statement of changes in equity of theCompany are properly drawn up in accordance with the provisions of the Singapore Companies Act, Cap. 50(the Act) and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of theCompany as at 31 March 2007 and the results, changes in equity and cash flows of the Company as at 31 March 2007and the results, changes in equity and cash flows of the Company for the year ended on that date; and

(ii) the accounting and other records required by the Act to be kept by the Company have been properly kept inaccordance with the provisions of the Act.

K K WONG & ASSOCIATES

Certified Public Accountants


49


SHAHI SHIPPING (SINGAPORE) PTE LTDBALANCE SHEET AS AT 31ST MARCH 2007

Note 2007 2006$ $

(CAPITAL DEFICIENCY) / SHAREHOLDERS’EQUITY AND LIABILITIES

Share Capital 3 2 2Accumulated losses (103,240) (68,132)

Capital deficiency (103,238) (68,130)

Current liabilities :Accruals 2,600 1,300Sundry creditors 30 2,580Amount due to holding company 4 104,031 77,493

Total current liabilities 106,661 81,373

Total equity and liabilities 3,423 13,243

ASSETSNon-current assets :Plant and equipment 5 780 1,563

Total non-current assets 780 1,563

Current assets :Deposit 2,200 2,200Prepayments - 1,100Cash and cash equivalents 6 443 8,380

2,643 11,680

Total assets 3,423 13,243

Note 2007 2006

$ $

Othe Income Nil NilOther operating expenses (35,108) (49,511)

Loss before taxation 7 (35,108) (49,511)Taxation 8 - -

Loss after taxation (35,108) (49,511)

PROFIT AND LOSS STATEMENT FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007

Share Accumulated TotalCapital losses

$ $ $Balance at 31 March 2005 2 (18,621) (18,619)Net loss for the year - (49,511) (49,511)

Balance at 31 March 2006 2 (68,132) (68,130)Net loss for the year - (35,108) (35,108)

Balance at 31 March 2007 2 (103,240) (103,238)See accompanying notes to the financial statements

STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2007

50


SHAHI SHIPPING (SINGAPORE) PTE LTD

CASH FLOW STATEMENT

FOR THE FINANCIAL YEAR ENDED 31st MARCH 20072007 2006

$ $

Cash flow form operatin activites :Loss before taxation (35,108) (49,511)

Adjustment for :Depreciation 783 783Operating loss before working capital change (34,325) (48,728)Deposit - (2,200)Prepayments 1,100 (1,100)Accrued expenses 1,300 (330)Sundry creditors (2,550) 2,580Amount due to holding company 26,538 55,938

Net cash generated from/(used in) operating activities (7,937) 6,160

Cash flow from investing activitiesPurchase of plant and equipment - (2,346)

Net cash used in investing activities - (2,346)

Net (decrease) increase in cash and cash equivalents (7,937) 3,814Cash and cash equivalents brought forward 8,380 4,566

Cash and cash equivalents carried forward 443 8,380

Cash and cash equivalent comprisesCash and bank balances 443 8,380

NOTES TO THE FINANCIAL STATEMENTS - 31st MARCH, 2007These notes form an integral part of and should be read inconjunction with the accompanying financial statements.1. GENERAL

The company is a private limited company incorporate inthe Republic of Singapore.The company’s principal activities are those relating to thebusiness of shipping agent in the freight and shipping lineand providing ship broking service.

Its registered office is at 8 Robinson Road, #14-00,

Singapore 048544.

No income was derived from such activities during thefinancial year.

2. SIGNIFICANT ACCOUNTING POLICIES(a) Basis of accounting

The financial statements, expressed in Singaporedollars, have been prepared under the historical costconvention and are in accordance with SingaporeStatements of Accounting Standard.

The financial statements have been prepared on anormal going concern basis, on the assumption thatfinancial support from the ultimate holding companywill continue to be available. In the event that there is no

such financial support, the going concern basis wouldbe invalid and provision would have to be made for anyfurther costs which might arise. The directors aresatisfied that financial support from the ultimate holdingcompany will be available when required.

(b) Properth, plant and equipment and depreciation

Depreciation is calculated to write off the cost of theassets over their estimated useful lives by thestraightline method. The annual rates of depreciationare as follows :Computer 3 yearsOffice equipment 3 yearsOffice furniture 3 yearsFully depreciation assets still in use are retained in thefinancial statements.

(c) TaxationTax expense is determined on the basis of tax effectaccounting, using the liability method, and it is appliedto all significant timing differences except that thepotential tax saving relating to losses carried forward isnot recorded as an asset.

51


(d) Impairment of assetsProperty, plant and equipment and intangible assetsare reviewed for impairment whenever events orchanges in cricumstances indicate that the carryingamount of the asset may not be recoverable. Wheneverthe carrying amount of an asset exceeds its recoverableamount, an impairment loss is recognized in the profitand loss statement and intangible assets carried atcost. The equipment and intagible assets carried atcost. The recoverable amount is the higher of an assets’net selling price and value in use. The net selling priceis the amount obtainable from the sale of an sset in an

arm’s length trasaction. Value in use is the present value oflength transaction. Value in use is the present value ofestimated future cash flows expected to arise from thecontinuing use of an asset and from its dosposal at the endof its useful life.Recoverable amounts are estimated for individual assetsor, if it is not possible for the cosh-generating unit.Reversal of an impairment loss recognized in prior years isrecorded when there is an indication that the impairmentloss recognised for an asset not logner exists or hasdecreased. The reversal is recorded in profit and lossstatement or as a revaluation increase.(e) Cash and cash equivalents

Cash and cash equivalents comprise cash in bankwhich readily convertible to cash and which are subject toinsignificant risk of changes in value, net of bank overdraftwhich are repayable on demand and which form an integralpart of the company’s cash management.(f) Trade payables and other payables

Trade payables and other payables, which are generallysettled on 60-90 days terms, are carried at cost whichis the fair value of the consideration to be paid in thefuture for goods and services recieved, whether or notbilled ot the company.Payable to holding company are carried at cost.

(g) ProvisionsProvisions are recognized when the Company has apresent obligation (legal or constructive) as a result of apast evetn, it is probable that an outflow of resourcesembodying econimic benefits will be required to settlethe obligation and a reliable estimate can be made ofthe amount of the obligation.

(h) Financial instrumentsFinancial assets and financial liabilities carried on thebalance sheet include cash and cash equivalents andother acoounts payable. The accounting policies onrecognition and measurement of these items arereflected in the respective accounting policies found inthis Note.

(i) Cash flow statementCash for the cash flow statement includes cash andcash equivalents.

3. SHARE CAPITAL2007 2006

$ $Authorised :100,000 ordinary shares of $ 1 each 100,000 100,000Issued and fully paid :2 ordinary shares of $ 1 each 2 2

4. AMOUNT DUE TO HOLDING COMPANYThe amount due to holding company is unsecured, free ofinterest and has no fixed repayment terms.

5. PLANT AND EQUIPMENTOffice Office

Computer Equipment Furniture Total$ $ $ $

2006 :Cost :At beginning of year - - - -

1,400 446 500 2,346

At end of year 1,400 446 500 2,346

Accumulated depreciationAt beginning of year - - - -Charge 467 149 167 783

At end of year 467 149 167 783

Net book value 933 297 333 1,563

6. CASH AND CASH EQUIVALENTS2007 2006

$ $Cash and bank balance 443 8,380

7. LOSS BEFORE TAXATION2007 2006

$ $This is determined after charging :Auditors’ remuneration 800 800Depriciation of plant and equipment 783 783

8. TAXATION2007 2006

$ $Current taxation - -A reconciliation between the tax expenses and the product ofaccounting profit multiplied by the applicable tax rate toincome from the company’s operations are as follows :

2007 2006$ $

Loss before taxation (35,108) (49,511)Tax at statutory rate at 20% (2005 : 20.5%) (6,319) (9,902)Other items 6,319 9,902

-9. HOLDING COMPANY

The company is a wholly owned subsidiary ofShahi Logistics Ltd., incorporated in India, which is also thecompany’s ultimate holding company.

10. STAFF COSTS2007 2006

$ $Staff costs 12,256 19,432Total number of persons employedexcluding directors at the end of thefinancial year;

2007 2006Full time staff 1 1

52


11. FINANCIAL RISK MANAGEMENT OBJECTIVES ANDPOLICIES

The main risks arising from the company’s financialinstruments are liquidity risk and creadit risk. The boardreviews and agrees policies fro managing each of theserisks and they are summarised below :

Liquidity risk

Liquidity risk rises in general funding of the company’soperating activities. It included in the risk of not being able tofund operating activities at settlement dates and liquidatesposition in timely manner at a reasonable price.

Short term funding is obtained from holding company.

Credit risk

The carrying amounts of cash and cash equivalentsrepresent the company’s maximum exposure to credit risk.

Surplus cash is placed with reputable financial institutions.

Fair value of financial instruments

Fair value is defined as the amount at which the instrumentcould be exchanged in a current transaction betweenknowledgeable willing parties in an arm’s length transaction,other than a forced or liquidation sale. Fair values areobtained from quoted market prices and discounted cashflow models as appropriate.

The following methods and assumptions are used toestimate the fair value of each class of financial instruments.

Cash and cash equivalents

The carrying amount approximates fair value due to therelatively short-term maturity of these financial statements.

Other current payables

The carrying amount approximates fair value because of theshort period to maturity.

Short term funding is obtained from holding company.

12. AUTHORISATION OF FINANCIAL STATEMENTS

The financial statements for the year ended 31 March 2007were authorised for issue in accordance with a resolution ofthe director on 10 August 2007.

2007 2006$ $

OTHER INCOME - -Less : EXPENSESAdvertising expenses 274 -Auditors’ remuneration 800 800Bank Charges 535 107Business promotion - 143CPF 1,038 1,561Depreciation of plant & equipment 783 783General expenses 50 -Office expenses 826 123Printing and stationery - 228Professional fees 9,300 18,161Rent 5,500 4,400Salary 11,218 17,871Tax fees 500 500Telephone / Telex 4,284 3,247Travel expenses - 1,587

Net loss 35,108 49,511

(Not part of the audited financial statements)

DETAILED PROFIT AND LOSS STATEMENTFOR THE FINANCIAL YEAR ENDED 31st MARCH, 2007

53

Shahi Shipping (BD) Limited

SHAHI SHIPPING (BD) LIMITEDREPORT OF THE DIRECTOR

The directors present their report to the members together with the audited financial statements of the company for the financialyear ended 31 March 2007.

1. DIRECTORS

The Directors of the Company in office at the date of this Report are :

Mr. S. K. Shahi

Mr. R. K. Mukherjee

2. BUSINESS

The principal activities of the Company, inter alia, are relating to the business of shipping agent in the freight and shippingline and providing ship broking services. The Company is yet to commence its operations.

3. CAPITAL

The capital of the Company is Taka 100,000 divided into 1,000 ordinary shares of Taka 100 each. The Company has notissued any shares during the year under review.

4. ACKNOWLEDGMENTS

The Directors wish to place on record their appreciation for the support received from its business associates.

S. K. Shahi R. K. Mukherjee (Director) (Director)

DhakaDated : August 12, 2007

54


SHAHI SHIPPING (BD) LTD

AUDITORS’ REPORT TO THE MEMBERS OF

SHAHI SHIPPING (BD) LTD

We have audited the accompanying Balance Sheet of SHAHI SHIPPING (BD) LIMITED as of March 31, 2007 and the relatedProfit & Loss account for the period then ended together with the annexed notes thereto. These financial statements are theresponsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements basedon our audit.

We conducted our audit in accordance with International Standards on auditing as adopted by the Institute of CharteredAccountants of Bangladesh. Those standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. An audit includes examining on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principlesused and significant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve that our audit provides a reasonable basis for our opinion.

We report that :

a) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary forthe purpose of our audit;

b) In our opinion, the annexed Balance Sheet and Profit and Loss Account are drawn up in conformity with the Law;c) Such Balance Sheet and Profit and Loss Account exhibit a true and fair view of the state of the affairs of the company

as of March 31, 2007 and of the results of its operations for the period then ended according to the information and explanationsgiven to us and as shown by the books of accounts of the company;

ANDd) In our opinion, proper books of account as required by law have been kept by the company so far as it appeared from

our examination of those books.

Dhaka AYUB & MAHMOOD Date : August 12, 2007 Chartered Accountants

55


SHAHI SHIPPING (BD) LIMITEDBALANCE SHEET AS AT 31st MARCH 2007

Note 2006-2007 2005-2006

TAKA TAKA

SOURCE OF FUNDSShare Capital 4.2 100,000 100,000

Unappropriated profit / (loss) (26,750) (26,750)

73,250 73,250

APPLICATION OF FUNDS

ASSETS

Preliminary Expenses 3.2 26,090 26,090

Pre-incorporation expense 3.3 18,485 18,485

Deferred cost 7 133,750 107,000

178,325 151,575

Current Liabilities :

With Ayub & Mahmood 5 40,827 14,077

Amount due to Holding Co. 6 64,248 64,248

105,075 78,325

Net Current Asset (105,075) (78,325)

73,250 73,250

The accompanying notes form an integral part of these Financial Statements

S. K. SHAHI R. K. MUKHERJEE(DIRECTOR) (DIRECTOR)Signed in terms of our separate report of same date.

AYUB & MAHMOODChartered Accountants

Dated : August 12, 2007

56


SHAHI SHIPPING (BD) LIMITEDPROFIT AND LOSS ACCOUNT FOR THE PERIOD ENDED 31st MARCH 2007

Note 2006-2007 2005-2006

TAKA TAKA

INCOME

2.2 - -

EXPENSES

Adiministrative Expense - -

Net Profit / (Loss) for the period - -

Net loss transferred to Balance Sheet - -

These accounts should be read in conjunction with the annexed notes

S. K. SHAHI R. K. MUKHERJEE(DIRECTOR) (DIRECTOR)Signed as per our annexed report of same date.

AYUB & MAHMOODChartered Accountants

Dated : August 12, 2007

57


Notes to the Financial Statements for the year ended March 31, 2007

1. The Company

The company was incorporated in Bangladesh in October,2001 as a Private Company Limited by shares under theprovisions of Companies Act. 1994.

2. General

2.1 Principal Activities :Principal activities of the company are those relating tothe business of shipping agent in the freight andshipping line and providing ship broking service.

2.2 Commercial operations :Company has not started commercial operations as ofthe Balance Sheet date and also the company has noemployee in employment as of the same date.

2.3 Currency :

Unless otherwise stated, currency used in thesefinancial statements in Bangladesh Taka.

3. Significant Accounting Policies

3.1 Basis of Accounting

The accounts are complied and presented mainly inaccordance with the relevant requirement of theCompanies Act 1994, following Generally AcceptedAccounting Principles, consistently.

3.2 Preliminary expense :

Peliminary expense will be written off from the period ofcommercial operations equally at five annual sums.

3.3 Pre-incorporation Expenses :

Pre-incorporation expense will be written off from theperiod of commercial operations equally at five annualsums.

3.4 Deferred Cost :

Deferred cost will be written off from the period ofcommercial operations equally at five annual sums. Allexpenses before commercial operations are booked toDeferred Cost.

2006-2007 2005-2006

4. Share Capital : TAKA TAKA

4.1 Authorised

1,00,000 Ordinary shares

of Tk. 100 each 1,000,000 1,000,000

4.2 Subscribed and paid up capital :

1000 Ordinary shares of

Tk. 100 each 1,000,000 1,000,000

2006-2007 2005-2006

TAKA TAKA

5. Current Account with

Ayub & Mahmood - Taka 40,827

This is as follows :

Opening Balance (14,077) 12,673

Add : Remittance received

from India - -

(14,077) 12,673

Less : Deferred cost (Note-7) (26,750) (26,750)

Balance (40,827) (14,077)

6. Amount due to Holding company - Taka 64,248

6.1 The amount due to the Holding

company is free of interest

6.2 This is as follows :

Opening Balance 64,248 64,248

Add : Remittance received net

from SKS Logistics Ltd. India, - -

64,248 64,248

7. Deferred cost - Taka 133,750

This is as follows :

Opening Balance 107,000 80,250

Add : Audit fees 5,750 5,750

Add : Professional fees

(tax and secretarial filing) 21,000 21,000

26,750 26,750

Less : Written off / Authorized - -

133,750 107,000

S. K. Shahi R. K. Mukherjee(Director) (Director)Dated : August 12, 2007

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DETAILS OF FLEET

NAME OF VESSEL TYPE OF VESSELLOADEDDRAFT

METRES

DEADWEIGHTTONNES

BULK CARGO CARRIERS

1. M. V. ROYAL AMBA BULK CARRIER 3.20 2458

2. M. V. YAMUNA BULK CARRIER 3.20 2458

3. M. V. ROYAL SARASWATI BULK CARRIER 3.20 2458

4. M. V. ROYAL TAPI BULK CARRIER 3.20 2458

5. M. V. ROYAL SHARAYU BULK CARRIER 3.20 2458

6. M. V. ROYAL KAVERI BULK CARRIER 3.20 2458

7. M. V. ROYAL SARAVATI BULK CARRIER 3.20 2458

8. M. V. ROYAL GANGA BULK CARRIER 3.20 2450

9. M. V. ROYAL GOA BULK CARRIER 3.20 2450

10. M. V. ROYAL VIKRANT BULK CARRIER 3.16 1804

11. M. V. ROYAL KALI BULK CARRIER 3.11 1804

12. M. V. VISHAL LAXAMI BULK CARRIER 2.80 1150

13. B. B. S. BHILAI BULK CARRIER 2.40 710

14. M. V. ROYAL TIMBLO-8 BULK CARRIER 2.00 600

15. M. V. ROYAL ADITI BULK CARRIER 2.40 1000

16. M. V. SCREEVANI BULK CARRIER 1.00 210

17. M. V. PARVATI BULK CARRIER 1.75 250

LIQUID CARGO CARRIERS

18. M. V. ROYAL GOMATI CHEMICAL CARRIER 3.20 2450

19. D. B. ROYAL PETROL-1 (CHEMICAL) DUMB BARGE 3.10 2800

20. D. B. MAHANADI DUMB BARGE 1.25 200

21. D. B. PRIYABANDHU DUMB/FLOATING BARGE 2.50 650

22. M. V. SHASTHA OIL TANKER 1.80 450

23. M. V. KRISHNA OIL TANKER 1.60 310

24. M. V. ROYAL GANDAK TANKER 2.40 710

25. M. V. SUPER TANKER 1.50 300

26. M. V. ROYALPAMBA TANKER 2.00 350

27. M. V. ROYAL JOSNA TANKER 1.70 200

28. M. V. VIJAYA DUMB BARGE 5.20 9508

MULTIPURPOSE VESSEL (BCD/CONTAINER)

29. M. V. ROYAL INDIA MPV (BCD/CONTAINER) 3.85 1161

30. M. V. ROYAL SUTLEJ MPV (BCD/CONTAINER) 4.20 3600

31. M. V. ROYAL BRAHMAPUTRA MPV (BCD/CONTAINER) 4.20 3600

32. M. V. ROYAL HUGLI MPV (BCD/CONTAINER) 4.20 3600

OTHERS

33. M. V. ROYAL GODAVARI TUG (TOWING) 3.10 121*

34. M. V. VIMLA TUG 4.00 428*

35. M. V. ROYAL SEWREE MOTOR LOUNCH 1.50 9.30*

36. M. V. ROYAL OCEANPRIDE MOTOR LOUNCH 2.12 31.59*

37. M. V. ROYAL PISCES MPP CONTAINER 5.97 4562

* Denotes the Gross Registered Tonnage.

SKS LOGISTICS LTD.Regd. Office : 404, Abhay Steel House, Baroda Street, Mumbai - 400 009

DP ID * Master Folio

Client ID * No. of Shares

I/We of

being a member / members of SKS LOGISTICS LTD. hereby appoint

of

or falling him / her ofas my / our proxy to vote for me / us on my / our behalf at the SEVENTEENTH ANNUAL GENERAL MEETING of theCompany be held on Thursday the 27th September 2007 at 11.00 a.m. and at any adjournment thereof.

Signed this day of 2007 Signature

Notes : The form duly completed and signed must be deposited at the Registered Office of the Company not less than 48hours before the time fixed for holding the aforesaid meeting.

Affix1 RupeeRevenueStamp

PROXY FORM

SKS LOGISTICS LTD.Regd. Office : 404, Abhay Steel House, Baroda Street, Mumbai - 400 009

Tear Here

ATTENDANCE SLIP(To be handed over at the entrance of the meeting hall)

17th ANNUAL GENERAL MEETING - Thursday the 27th September, 2007

I hereby record my presence at the SEVENTEENTH ANNUAL GENERAL MEETING of the Company at Walchand Hirachand Hall,4th Floor, Indian Merchants’ Chember, Churchgate, Mumbai - 400 020. on Thursday the 27th September, 2007 at 11.00 a.m.

Full Name of the Member :(in BLOCK LETTER)

DP ID * : Master Folio :

Client ID * : No. of Shares :

Full Name of proxy :

(in BLOCK LETTER)Member’s / Proxy’s Signature :

Tear

Her

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