mercator delux pages for web pdf...

rdRegistered Office: 3 Floor, Mittal Tower, B-Wing, Nariman Point, Mumbai-400 021.

Tel: +91-22-66373333 • Fax: +91-22-66373344

Website: www.mercator.in • Email: [email protected] A n n u a l R e p o r t 2 0 0 8 - 2 0 0 9

ReflectingExcellence

YEARSS

YN

AP

SE

Pri

nte

d a

t In

fom

ed

ia18

Our Vision 03

Year at a Glance 05

Board of Directors 07

Chairman's Letter to the Shareholders 09

Business Segments 11

Directors' Report 13

Corporate Governance Report 21

Management Discussion & Analysis Report 39

Auditors' Report 52

The Financials

Financial Data Analysis 116

- Balance Sheet 56

- Profit & Loss Account 57

- Cash Flow Statement 58

- Schedules 59

- Consolidated Financials 89

YEARS

Index

Annual Report 2008-2009

1

ReflectingG r o w t h

1995

1998

Acquired a 9000 DWT Tanker

2000 -2002

Acquired 5 Tankers of

75000 DWT in aggregate

2003

Acquired 4 Aframaxes of


2004

2005

Mr. H. K. Mittal awarded “Entrepreneur

of the Year” Award by Ernst & Young

Acquired 4 Tankers of 197466 DWT

in aggregate and 2 Panamaxes of


Chartered in fleet of 9 geared Panamaxes

Mr. H. K. Mittal awarded “Entrepreneur

of the Year” Award by Economic Times

Acquired a of 73461 DWTPanamax

Foray into offshore - orders first Jack-up Rig

2006

2007

Mercator Singapore IPO listed on SGX

Foray into Dredging and acquired 2 Dredgers

Acquired an Aframax of 109000 DWT,

3 Kamsarmaxes of 247111 aggregate DWT &

3 of 222801 aggregate DWT

Crossed 2 million ton DWT

Panamaxes

Acquired coal mines in Indonesia and Mozambique

Acquired another VLCC of 299235 DWT

Acquired 2 more Dredgers

Acquired 2 more of


Panamaxes

2009

Awarded “Star Company of the Year”

Award in SME by Business Standard

Acquired first VLCC of 280,000 DWT

and 1 Aframax of 100000 DWT

Crossed 1 million ton DWT

Delivery of Jack-up Rig

1988

1993

1983

And the journey continues….

Built 5 Dumb Barges

2 52 5Years of Years of

ExcellenceExcellence

Current management acquired Mercator

Acquired three Mini Bulk Carriers

IPO; listed on BSE

Mercator was formed

2008

OUR CORE VALUES

‘Honouring Commitments’ towards all the stakeholders.

Consistent Growth.

Ensuring that every employee takes pride in being called

a “Mercatorian”.

Innovation... We believe in doing things differently!

OUR CORE PURPOSE

Giving the best solutions and offering outstanding value

and service to our customers.

OUR GOAL

To become a dominant player in the international shipping

and offshore

Our Vision

YEARSReflectingV i s i o n


2 3

Crossed consolidated turnover mark of

Rs. 2000 crores

Increase in consolidated own tonnage by 26%

Delivery of Jack-up Rig ahead of schedule and

deployed immediately for a period of three years

on firm bare-boat charter

Udyog Ratna Award (for Company Excellence) to

Mr. H. K. Mittal from the Institute of Economic Studies

in the month of November 2008.

Mercator Lines Singapore,

won ‘Singapore Corporate Awards’

in two categories in the first year of

operations as listed company

Yearat aGlance


4 5

YEARSReflectingInnovation

OnBoard

Mr. H. K. Mittal

Executive Chairman

Mr. H.K. Mittal, aged 59 years, is the

Executive Chairman of the company.

Having received Masters from Indian

Institute of Technology (IIT), Roorkee;

he started his tryst with enterprise

by forming a proprietorship firm; way

back in 1975, which was later converted

into a limited company. Expansion of

businesses both vertically and horizontally soon became his

passion that still continues to be a major driving force backed up

by more than three decades of entrepreneurial experience.

Mr. Mittal acquired Mercator Lines Ltd. in 1988, and with his vision

and keen insight has scaled up the Company to one of the leading

shipping companies in India with diversified segments.

He is also Chairman of Board of Mercator Lines (Singapore) Ltd.

(step-down subsidiary listed on SGX); Mercator Offshore Ltd. (WOS,

Singapore), Mercator Oil & Gas Ltd., and Mercator Petroleum Pvt. Ltd.

Mr. Atul J. Agarwal

Managing Director

Mr. Atul J. Agarwal, aged 51 years, the

Managing Director of the Company, is

a Chartered Accountant, with 27 years

of professional experience. He has

been associated with the Company

since its inception.

As a Chartered Accountant, Mr. Agarwal

specializes in the financial aspects of the business. He looks

after day-to-day management and financial matters of the

Company. He also has a strong expertise in financial and strategic

planning and execution. Mr. Agarwal has been accredited with

memberships of various committees formed by the Government

for shipping reforms. He has been instrumental in the successful

implementation of many of the Company's projects.

He is on the Board of Directors of various organizations such

as Indian National Ship-owners' Association (INSA); Thirumalai

Chemicals Ltd., Mercator Healthcare Ltd. and many others including

step-down overseas subsidiaries.

Mr. Manohar Bidaye

Independent & Non-executive Director

Mr. Manohar Bidaye, aged 45 years, is

a Master of Commerce (M.Com) from

the University of Mumbai, and has a

general Degree in Law (LLB - Gen.). He

is also Fellow Member of The Institute

of Company Secretaries of India (FCS).

After establishing himself as successful

Consultant in Corporate Laws and Finance by servicing many

mid-size organizations, in 1995 he co-founded Zicom, a leading

electronic security provider in India. He is leading a foray of Zicom

in many allied fields in the domain of safety and training.

He joined Mercator Lines Limited in May 1994.

Mr. Anil Khanna

Independent & Non-executive Director

Mr. Anil Khanna aged 50 years, a Fellow

Chartered Accountant, is a practicing

professional specializing in business

management, joint ventures and

international taxation. He has been

on the Board of Directors of several

Indian and multinational companies.

Mr. Khanna has over 15 years of

experience in consultancy specially

relating to foreign companies engaged in Oil exploration business

in India.

He joined Mercator Lines Limited in May 1994.

Mr. M. G. RamkrishnaIndependent & Non-executive Director

Mr. M. G. Ramkrishna, aged 65

years, an M. A., L. L. B. & CAIIB, has over

35 years of experience in handling

treasury, financial and banking matters.

During the span of his service, he has

worked with reputed national and

international banks in various

capacities and currently is on the Board

of many companies.

He joined Mercator Lines Limited in

January 2003.

Mr. K. R. BharatIndependent & Non-executive Director

Mr. K. R. Bharat, aged 47 years is an

MBA f rom Indian Inst i tute of

Management. He has been associated

with Capital Market for more than 26

years in various segments like

Merchant Banking, Equities and

Investment banking; Risk Management,

research etc. He is on the Boards many

companies. He worked as Managing Director at Credit Suisse First

Boston Securities (CSFB) India and Pregrine Securities (India). Before

that he had a successful stint of 10 yrs with Citi Bank. He was also

member of Market Advisory Committee of Bombay Stock Exchange.

YEARSReflectingTeamwork


6 7

Dear Shareholders,

Many Congratulations!!

I enjoin the entire team of Mercatorians to congratulate each one of you as your company commemorates its Silver Jubilee this year!

It has been a wonderful journey of just twenty five years during which your company has grown from

strength to strength both vertically and horizontally. Beginning with a moderate barge operator to India's second largest private sector company with six solid verticals, the growth trajectory seems to have been satisfactory. Moreover, your company reached out geographically as well, having a base at Singapore, further expanding in Indonesia and Mozambique. Yet, for us at Mercator, it still is the beginning!

At Mercator, we believe, nothing gets accomplished without challenges and ability to weather the storms, this daunting spirit of your company is once again demonstrated by this year's annual report at hand. As you are aware, this year witnessed a historical global meltdown, recession across the board with many countries even slipping into depression; many economists compared this with the great depression of 1930 in different ways. Despite recessive markets and negative sentiments; your company's operating results are in line with its legacy of growth and expansions. I would let the figures and numbers presented fill the details for you.

Apart from growth, we have been equally focusing on building organizational development, cutting across the entire gamut of people, processes and corporate governance. I am delighted to share with you, our Singapore based subsidiary, Mercator Lines (Singapore) Ltd. has won the coveted Singapore Corporate Awards in two categories in its first year of operation itself, as listed company.

Companies never make great organizations but for its people. As over past few years, this year too. We have laid emphasis on human capital development, talent management and talent retention. I would like to thank each Mercatorian for their spirit and support in making Mercator what it is today.

We shall endeavor to continually and consistently improve and deliver. Deliver long term value to all of our stakeholders in general and to you our shareholders.

I take this opportunity to thank all of you for your faith in the company, trust in the organization and support to our businesses.

Thank You,Yours Sincerely,

H. K. MittalMay 19, 2009

Chairman's Letter to the Shareholders


8 9

YEARSReflectingLeadership

BusinessSegments

VLCC Suezmax Aframax Product Carriers Chemical Carriers

Shipping

Tankers (Wet Bulk)

Panamax – GearedPanamax - GearlessPost PanamaxKamsarmaxVLOC

Dry Bulk Carriers

Premium Jack-Up RigOil and Gas Exploration

Trailer Hopper Suction Dredgers (THSD's)

Coal Handling Coal Mining

Offshore Dredgers

Logistic solutions Mining


10 11

YEARSReflectingOpportunities

CMYK


Income from operations

Total Income

Operating Profit

Interest

Depreciation

Profit before Tax & Minority Interest

Minority Interest

Taxes

- Current Year

- Deferred Tax

- Fringe Benefit Tax

Net Profit After Tax & Minority Interest

Balance brought forward from last year

Prior Period Adjustments

Short provision for tax of earlier years

Profit available for appropriations:

Less: Appropriations:

Transfers to Reserves

- Tonnage Tax Reserve

- General Reserve

- Debenture Redemption Reserve Interim Dividend on Preference Shares

Dividend on Equity Shares of

previous year

Provision for final Dividend on Equity

Shares:

Tax on Dividend

Balance carried to Balance Sheet

1476.85

1588.98

721.48

144.64

167.49

409.35

(29.89)

(8.81)

-

(0.21)

370.44

236.13

(41.49)

(1.30)

563.79

33.00

17.70

-

3.08

0.80

25.84

5.05

478.32

1182.78

1183.11

433.37

101.84

143.66

187.87

N.A.

(6.50)

-

(0.25)

181.12

233.94

-

(0.02)

415.04

57.00

18.80

39.00

-

0.12

11.80

2.02

286.30

2210.51

2173.82

910.23

166.32

268.70

475.21

(90.55)

(7.55)

(0.38)

(0.25)

376.48

478.31

0.01

0.02

854.77

39.00

18.80

39.00

-

0.12

11.80

2.02

726.03

803.12

863.08

339.14

58.56

103.83

176.75

N.A.

(7.70)

-

(0.21)

168.84

153.06

(1.20)

(1.30)

319.41

33.00

17.70

-

3.08

0.80

25.84

5.05

233.94

YEARSReflecting

Directors’Report

Accomplishments

To The Members,Mercator Lines Limited

We take great pleasure in presenting Silver Jubilee annual report of your Company for the year ended

on March 31, 2009.

Year ended 31.03.2009

Standalone


Consolidated


Consolidated

(Rs. in Crores)


Standalone

12 13

FINANCIAL HIGHLIGHTS:

Particulars

2 5 Y e a r s R e f l e c t i n g E x c e l l e n c e


14 15

The consolidated income from operations for the year under review crossed Rs. 2000 crore mark and was at Rs. 2210.51

crores as against Rs. 1476.85 crores in the previous year; registering a impressive growth of 50%. The operating profit for

the year of Rs. 910.23 crores was higher by 26% over previous year of Rs. 721.48 crores. In spite of difficult times of

recession prevailing all over the world; the Company was able to maintain its growth trajectory, thus maintaining its

legacy of growth and expansion.

The Profit Before Tax (PBT) too registered an increase of 16% to Rs. 475.21 crores as against Rs. 409.35 crores in the

previous year; despite of 60% higher depreciation, totaling to Rs. 268.70 crores (previous year Rs. 167.49 crores) and 15%

higher interest costs amounting to Rs. 166.32 crores (previous year Rs. 144.64 crores). Profit After Tax (PAT) also

correspondingly grew by 17% to Rs. 467.03 crores as against Rs. 400.33 crores for the previous year. After providing for

the minority interests of Rs. 90.55 crores (Rs. 29.89 crore, previous year) the net profit was recorded at Rs. 376.48 crores as

against Rs. 370.44 crore in the previous year.

On a standalone basis, the income from operations for the year under review was Rs. 1182.78 crores as against

Rs. 830.28 crores in the previous year, registering a growth of 42% for the year. The operating profit for the year under

review at Rs. 433.37 crores was higher by 28% as against Rs. 339.14 crores for the previous year. The Profit Before Tax

(PBT) increased by 6% to Rs. 187.87 crores as against Rs. 176.75 crores in the previous year. Profit after Tax also grew by

7% to Rs. 181.12 crores as against Rs. 168.84 crores for the previous year

Mercator has had a consistent track record of organic growth and expansion; that is also central to its core values too.

While expanding vertically in its core segment of shipping by acquisition of vessels; the Mercator Group also expanded

horizontally by backward integration into related activities such as drilling and coal mining.

During the year; a Very Large Crude Carrier (VLCC) was acquired at a cost of Rs. 685.04 crores (equivalent of USD 160 mn).

The Company also took delivery of one more dredger at a cost of Rs. 61.54 crores (equivalent of USD 14.40 mn). These

acquisitions were financed by mix of debt and internal accruals.

During the year, Mercator achieved another major milestone by receiving most sought after delivery of Jack-up Rig

through its subsidiary Mercator Offshore Ltd. The cost of Rig amounting to approximately Rs. 1000 crores (equivalent of

USD 200 mn) was funded by mix of internal accruals and debt. The rig received ahead of its schedule; was deployed

immediately upon delivery in March 2009; for a period of three years on firm bare boat charter. It speaks volumes about

your company’s ability to execute projects of this nature ahead of time.

Your Company’s subsidiary Mercator Lines (Singapore) Ltd. (MLS), acquired two Panamax vessels during the year, thus

increasing total tonnage of the subsidiary by 138,407 DWT during the year under review. The total cost of acquisitions

was Rs. 667 crores (equivalent of USD 131 mn) that was financed by a mix of IPO proceeds; internal accruals and debt. At

the end of the year, MLS also contracted to acquire one more Panamax vessel of 73,652 DWT which was on charter, at a

cost of about Rs. 123 crores, (equivalent of USD 24.20 million); by exercising options of right to purchase.

As you are aware, your company developed coal fields and commenced mining last year through its subsidiaries. Your

company scaled up to full commercial production during the year at Indonesia, producing about 327,000 Metric tones

of quality coal.

EXPANSION AND FINANCE:

Your company would consider raising funds for general corporate purposes including capital expenditure, working

capital requirements, strategic investments by way of issue securities (whether in India and/or aboard) at appropriate

time.

Your Company has added a new business segment, namely, Offshore Drilling with the acquisition of Jack Up Rig; in

addition to its existing range of segments of Bulk Carriers, Tankers; Dredgers; Coal Mining and Logistics. Mercator Petroleum Private Ltd., wholly owned subsidiary of the Company has entered into a Production Sharing

Contract with the Government of India for exploration of petroleum under the NELP-VII and has been allotted two

blocks under the scheme.

The Baltic Dry Bulk Index (BDI) that saw extreme lows about six months ago has now been on recovery path until as on

date. Though the tanker market index is expected to remain soft; current year will have full year and consistent earnings

from almost volatility neutral segments such as Rig and coal mining; therefore top and bottom lines of your company

are expected to stay firm.

During the year, the Company issued and allotted 10,96,686 equity shares of Re. 1/- each upon conversion of 150

FCCB’s of an aggregate amount of USD 1,500,000 at a price of Rs. 59.812 per share at a fixed exchange rate of Rs. 43.73

per USD.

Subsequent to the year end; 285,00,000 warrants; carrying an option to apply and subscribe for an equivalent number

of shares at a price not less than Rs. 58.50 per share issued to one of promoters on preferential basis; were lapsed as

options were not exercised within the validity period. Accordingly, all 2,85,00,000 warrant stood cancelled and

consequently, the entire amount of Rs. 16.67 crores received thereon from the warrant holder was forfeited in

accordance with SEBI Guidelines.

During these times of recession, the company would like to conserve resources to enable it to plough back accruals

into its operations. Your directors still recommend dividend @ 50% i.e. Rs. 0.50 per equity share of Re. 1/- each for the

financial year 2008-09 (previous year 110% i.e. Rs. 1.10 per share). The aggregate amount of the dividend on

23,59,92,073 equity shares for the financial year 2008-09 would be Rs. 13.69 crores including corporate tax & surcharge

thereon (Rs. 30.23 crores in the previous year).

In accordance with the provisions of the Companies Act, 1956 and the Articles of Association of the Company, M. G.

Ramkrishna is the Director liable to retire by rotation at the ensuing Annual General Meeting and being eligible, has

offered himself for re-appointment. A brief resume of M. G. Ramkrishna is included under the Corporate Governance

section of this report.

Your Directors recommend re-appointment of M. G. Ramkrishna and present for your approval at the ensuing Annual

General Meeting.

BUSINESS OPERATIONS & FUTURE OUTLOOK:

SHARE CAPITAL:

DIVIDEND:

DIRECTORS:



PARTICULARS OF EMPLOYEES:

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION; EXPORT MARKET DEVELOPMENT AND FOREIGN EXCHANGE

EARNINGS & OUTGO:

CORPORATE GOVERNANCE:

INSURANCE:

We firmly believe that real strength of the company lies in its human capital; our employees are not just the key

enablers of the success that your company has witnessed this year but are also the think tank to define the future of the

company.

As required under provisions of Section 217(2A) of the Companies Act, 1956 (the Act), read with the Companies

(Particulars of Employees) Rules 1975 as amended, the requisite particulars in respect of the employees of the

Company, who were in receipt of remuneration in excess of the limits specified under the said section are set out in the

annexure forming part of this report. However, as per the provisions of section 219(b) (iv) of the Act; the report and the

accounts are being sent to all members of the Company excluding this annexure of particulars of employees. Any

member interested in obtaining such particulars may write to the Company at the registered office.

The Conservation of Energy and Technology Absorption under the Companies (Disclosure of Particulars in the Report

of the Board of Directors) Rules, 1988 are not applicable to your Company. However, the Directors would like to assure

you that every measure is being taken to save and conserve energy at all the stages of the operation of the vessels, as

well as, in our shore activities.

In its endeavor to develop the export market, your Company has formed new subsidiaries abroad during the year, so

that localized and focused attention could be assigned to the export markets.

Your Company has not imported any technology during the year. It has earned foreign exchange of Rs. 403.94 crores (as

against the previous year earnings of Rs. 269 crores) and spent Rs. 1457.01 crores (as against Rs. 602.12 crores for the

previous year) in foreign exchange on account of acquisition of vessels, charter hire, other vessel expenses and

interests etc.

Your Company complies with the provisions laid down in Corporate Governance laws. At Mercator, several key

initiatives have been taken to look at Corporate Governance not just a compliance issue but to practice sound

principles of corporate governance to value add company's processes and return long term value to its shareholders.

Mercator Lines (Singapore) Limited has recently received coveted Singapore Corporate Awards in two different

categories in its first year operations itself as listed company.

A separate report on the Corporate Governance, along with the requisite certificate from the Auditors of the Company is

annexed herewith as part of this Annual Report. Management Discussion and Analysis Report as per the Corporate

Governance requirement is also annexed herewith and forms part of this Report.

All properties of the Company are adequately insured.

16

SUBSIDIARY COMPANIES:

Your company has following subsidiaries/step-down subsidiaries:

Pursuant to Accounting Standard (AS 21) issued by the Institute of Chartered Accountants of India, consolidated

financial statements presented by the Company include financial information of its subsidiaries.

A statement in respect of the said subsidiaries pursuant to Section 212 of the Companies Act, 1956 is enclosed herewith

as required. The Company has applied to the Government of India u/s 212(8) of the Companies Act 1956 for exemption

from attachment of the documents of above subsidiaries for the year ended on March 31, 2009. The annual reports and

accounts of subsidiaries will be kept for inspection at the registered office of the Company and also of the subsidiary

companies concerned during the working hours; and the same along with related detailed information will be made

available to the investors of the Company as well as of subsidiaries, on request. A statement in respect of brief financial

details of the Company's subsidiaries for the year ended March 31, 2009 is annexed to this report.

The Auditors of your Company, M/s. Contractor, Nayak & Kishnadwala, Chartered Accountants, retire at the ensuing

Annual General Meeting and have confirmed their eligibility for re-appointment under Section 224 (1-B) of the

Companies Act, 1956.

The Directors recommend their re-appointment for approval of the members.

AUDITORS:

Sr. No. Name Country of Incorporation

1 Mercator Oil & Gas Ltd. India

2 Mercator Petroleum Private Ltd. India

3 Mercator International Pte. Ltd. Singapore

4 Mercator Offshore Ltd Singapore

5 Mercator Lines (Singapore) Ltd. Singapore

6 Varsha Marine Pte. Ltd Singapore

7 Vidya marine Pte. Ltd Singapore

8 Mercator Lines (Panama) Inc. Panama

9 Mercator Offshore Holdings Pte. Ltd. Singapore

10 MCS Holdings Pte. Ltd. Singapore

11 Oorja Holdings Pte. Ltd. Singapore

12 Oorja 1 Pte. Ltd. Singapore



15 Oorja Indo KGS PT Indonesia

16 Oorja Mozambique Minas Limitada Mozambique

17 Broadtec Mozambique Minas Limitada Mozambique

18 Oorja Indo Petangis Three PT Indonesia

19 Oorja Indo Petangis Four PT Indonesia

20 PT Mincon Indo Resources Indonesia

17



18 19

ANNEXURE – A TO THE DIRECTORS' REPORT

For the purpose of interse transfer of shares under Regulation 3 (1) (e) of the Securities and Exchange board of India

(Substantial Acquisition of Shares and Takeovers) Regulations, 1997, the following person constitute “Group” as

defined in the Monopolistic & Restrictive Trade Practices, 1969, (54 of 1969):

1. Mercator Healthcare Ltd.2. MLL Logistics Pvt. Ltd.3. AHM Investments Pvt. Ltd.4. Mercator Mechmarine Ltd.5. Ankur Fertilizers Pvt. Ltd.6. Rishi Holdings Pvt. Ltd.7. AAAM Properties Private Ltd.8. Mercator International Pte. Ltd.9. Mercator Offshore Ltd.10. Mercator Oil & Gas Ltd.11. Mercator Petroleum Pvt. Ltd.12. Mercator Lines (Singapore) Ltd.13. Mercator Lines (Panama) Inc14. Varsha Marine Pte. Ltd.15. Vidya Marine Pte. Ltd.16. Oorja Holdings Pte. Ltd.17. Mercator Offshore Holdings Pte. Ltd.18. MCS Holdings Pte. Ltd.19. Oorja 1 Pte. Ltd.20. Oorja 2 Pte. Ltd.21. Oorja 3 Pte. Ltd.22. Oorja Indo KGS PT23. Oorja Mozambique Minas Limitada24. Broadtec Mozambique Minas Limitada25. Oorja Indo Pentangis Three PT26. Oorja Indo Pentangis Four PT27. PT Mincon Indo Resources28. H. K. Mittal29. Archna Mittal30. Atul J. Agarwal31. Manjuli Agarwal32. Shalabh Mittal33. Shruti Mittal34. Tanvi Mittal35. Adip Mittal36. Aayush Agarwal37. Arooshi Agarwal

FIXED DEPOSITS:

DIRECTORS' RESPONSIBILITY STATEMENT:

GROUP FOR INTERSE TRANSFER OF SHARES:

ACKNOWLEDGEMENTS:

The Company has not accepted any public deposits falling under the purview of section 58-A of the Companies Act;

1956.

Pursuant to the provisions of section 217(2AA) of the Companies Act, 1956, the Directors hereby confirm that:

(I) In preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit for the year under review;

(iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provision of the Companies Act 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) They have prepared the annual accounts on a going concern basis.

As required under clause 3(1) (e) of the Securities and Exchange Board of India (Substantial Acquisition of Shares and

Takeovers) Regulations, 1997 persons constituting “Group” (within the meaning as defined in the Monopolies and

Restrictive Trade Practices act, 1969) for the purpose of availing exemption from applicability of the provisions of

Regulation 10 to 12 of the aforesaid Regulations, are given in the annexure A attached herewith and forms part of this

Annual Report.

The Directors would like to thank the suppliers, customers, service providers, regulators and the governmental

agencies, such as Ministry of Shipping, M/s. Transchart, the Directorate General of Shipping and other statutory

authorities for their continual support and encouragement.

We would also like to express our gratitude towards our bankers; all the stakeholders and employees for their kind

support to the Company.

For and on behalf of the Board

H. K. MittalExecutive Chairman

Regd. Office:

3rd Floor, Mittal Tower, B-wing,

Nariman Point, Mumbai - 400021

Dtd: May 19, 2009

COMPANY'S PHILOSOPHY:

I. BOARD OF DIRECTORS:

The Company strongly believes in ethical way of conducting business. The Company

upholds its relationship with the society and hence its social responsibility of

environmental safety and human welfare.

Corporate governance to the company is not just a compliance issue but central guiding

principle for everything it does. It's a way of thinking, way of conducting business and a

way to steer the organization to take on challenges for now and for the future.

The Company recognizes its responsibility towards its shareholders and therefore

constantly endeavors to create and enhance shareholder's wealth and value by

implementing its business plans at appropriate times and thus taking maximum

advantage of available opportunities to benefit the Company, its shareholders and the

society at large. The Company believes in monitoring its performance regularly and with

utmost transparency to ensure ethical governance at all levels within the organization.

The Board of Directors of the Company comprises of six Directors; Two Executive Directors

and four Non-Executive Independent Directors. Among the two Executive Directors one is

the Executive Chairman and the other is Managing Director. The Company is in compliance

with the requirement of at least half of the Board comprising of Independent Directors as

the Chairman of the Board is an Executive Director and a Promoter.

There is no Nominee Director on the Board of the Company.

No Director of the Company is either member in more than ten committees and/or

Chairman of more than five committees across all Companies in which he is Director and

necessary disclosures to this effect has been received by the Company from all the

Directors.

During the year, in all Four Board meetings were held i.e. on May 14, 2008; July 29, 2008,

October 27, 2008 and January 29, 2009. The time interval between any two meetings was

not more than 4 months.

The details of Directors and their attendance record at Board Meetings held during the year,

at last Annual General Meeting and number of other Directorships and Chairmanships/

membership of Committees is given below:

Report onCorporateGovernance

Forming part of Directors' report

for the year ended on

31st March 2009

2120

YEARSReflectingT r u s t




22 23

*In accordance with Clause 49 of the Listing Agreement, Memberships / Chairmanships of only the Audit Committees

and Shareholders'/ Investors' Grievance Committees of all Public Limited Companies have been considered.

None of the independent directors had resigned nor removed from the Board of the Company during the year and

hence compliance in respect of replacement thereof did not arise.

All the information required to be furnished to the Board was made available to them along with detailed agenda

notes.

The Board reviews compliance reports of all laws applicable to the Company, presented by Managing Director at the

meeting.

The Board has laid down a Code of Conduct for all Board members and senior management personnel of the Company,

which has been posted on the website of the Company

All Board members and senior management personnel have affirmed compliance with the code for the year ended on

March 31, 2009. Declaration to this effect signed by the Chief Executive Officer for the year ended on March 31, 2009 has

been included elsewhere in this annual report.

Code of Conduct:

www.mercator.in

Sr. No Name of Director Category No. of Attendance No. of No. of No. of Board at last Other committee committee Meetings AGM Directorship membership ChairmanshipAttended in other in other

Companies * Companies *

1 H. K. Mittal Chairman & 4 Yes 5 Nil NilManaging Director- Executive-Promoter

2 A. J. Agarwal Managing Director, 4 Yes 10 1 NilExecutive-Promoter

3 Manohar Bidaye Non-Executive 3 Yes 11 2 1Independent Director

4 Anil Khanna Non-Executive 4 Yes 8 1 NilIndependent Director

5 M. G. Ramkrishna Non-Executive 4 Yes 3 2 1Independent Director

6 K. R. Bharat Non-Executive 2 Yes 2 Nil NilIndependent Director

II. AUDIT COMMITTEE:

Composition:

Powers:

Terms of Reference:

Pursuant to the provisions of Section 292(A) of the Companies Act, 1956 and Clause 49 of the Listing Agreements, the

Company has a qualified and independent Audit Committee comprising of three Independent Non-Executive

Directors. Anil Khanna, a senior member of Institute of Chartered Accountants of India, having a sound accounting and

financial background, is the Chairman of the Committee, the other members being Manohar Bidaye, a senior member

of Institute of Company Secretaries of India and M. G. Ramkrishna, a veteran from the banking & finance industry. The

Managing Director, Head of Finance Department along with the Internal Auditors and Statutory Auditors are always

invitees to the Audit Committee Meeting. All other Functional Managers are invited to attend the meeting, as and when

necessary. The Committee is vested, inter alia, with following powers and terms of references as prescribed under

relevant provisions of the Companies Act, 1956 and Stock Exchanges Listing Agreement:

a) To investigate any activity within its terms of reference.b) To seek information from any employee.c) To obtain outside legal or other professional advice.d) To secure attendance of outsiders with relevant expertise, if it considers necessary.

The Audit committee reviews the reports of the Internal Auditors and the Statutory Auditors periodically and discuss

their findings and suggest the corrective measures. The role of the Audit Committee is as follows: -

1. Oversight of the company's financial reporting process and the disclosure of its financial

information to ensure that the financial statement is correct, sufficient and credible.

2. Recommending to the Board, the appointment, re-appointment and, if required, the replacement or removal of the

statutory auditor and the fixation of audit fees.

3. Approval of payment to statutory auditors for any other services rendered by the statutory auditors.

4. Reviewing, with the management, the annual financial statements before submission to the board for approval, with particular reference to:

(a) Matters required to be included in the Director's Responsibility Statement to be included in the Board's Report in terms of clause (2AA) of Section 217 of the Companies Act, 1956.

(b) Changes, if any, in accounting policies and practices and reasons for the same.(c) Major accounting entries involving estimates based on the exercise of judgment by the management. (d) Significant adjustments made in the financial statements arising out of the audit findings.(e) Compliance with listing and other legal requirements relating to financial statements.(f) Disclosure of any related party transactions.(g) Qualifications in the draft audit report.

5. Reviewing, with the management, the quarterly financial statements before submission to the board for approval.



24 25

Review of Information:

EXPANSION COMMITTEE:

Attendance of each member at the Expansion Committee Meetings:

ESPS COMMITTEE:

The Audit committee was presented with and reviewed following information:

1. Management discussion and analysis of financial condition and results of operations;2. Statement of significant related party transactions (as defined by the audit committee), submitted by management.3. Management letters/letters of internal control weaknesses issued by the statutory auditors, if any. 4. Internal audit reports related to internal control weaknesses; and5. The appointment, removal and terms of remuneration of the Internal Auditor. Presently the Company has

independent Chartered Accountant's firm as its Internal Auditor.6. Financial statements and the investments made by the unlisted subsidiary company.7. Related Party Transactions i.e.;

(i) Transactions with related parties in the ordinary course of business.(ii) Details of material individual transactions with related parties, which are not in the normal course of business.(iii) Details of material individual transactions with related parties or others, which are not on an arm's length basis,

together with Management's justification for the same; as and when applicable.

There was no instance of management letter/letter of internal control weaknesses issued by the Statutory Auditors

during the financial year 2008-09.

The Company has Expansion Committee comprising of two Executive Directors viz. H. K. Mittal & A. J. Agarwal and two

Non-executive Independent Directors viz. Anil Khanna & K.R. Bharat. The Committee is authorized to assess the

business opportunities and take the decisions from time to time on expansion projects; means of finance and other

related matters, within the limits sanctioned by the Board. During the year ten meetings were held.

The Company has Employee Stock Purchase Committee (ESPS) of Directors comprising of two Executive Directors viz.

H. K. Mittal & A. J. Agarwal and three Non-executive Independent Directors viz. Manohar Bidaye; Anil Khanna &

M. G. Ramkrishna, to implement the Employee Stock Purchase Scheme of the Company. No meeting was held during

the year.

5A. Reviewing, with the management, the statement of uses / application of funds raised through an issue (public issue, rights issue, preferential issue, etc.), the statement of funds utilized for purposes other than those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations to the Board to take up steps in this matter.

6. Reviewing, with the management, performance of statutory and internal auditors, and adequacy of the internal control systems.

7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit department, staffing and seniority of the official heading the department, reporting structure coverage and frequency of internal audit.

8. Discussion with internal auditors any significant findings and follow up there on.

9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the matter to the

board.

10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit, as well as, post-audit discussion to ascertain any area of concern.

11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders, shareholders (in case of non payment of declared dividends) and creditors.

12. To review the functioning of the Whistle Blower mechanism, in case the same is existing.

13. Carrying out any other function as is mentioned in the terms of reference of the Audit Committee.

During the year, in all four meetings of the Committee were held i.e. on May 14, 2008; July 29, 2008; October 27, 2008

and January 29, 2009. The time intervals between two meetings of the Committee was not more than four months.

Meetings:

Attendance of each member at the audit Committee Meetings:

Name of Director No. of Audit Committee Meetings attended

Anil Khanna 4

Manohar Bidaye 3

M. G. Ramkrishna 4

The Managing Director, as a head of the Finance Department; Statutory Auditors and Internal Auditors attended all the

four meetings. The Company Secretary and in his/her absence Sr. Manager-Secretarial acted as the Secretary to the

committee.

Name of Director No. of Expansion Committee Meetings attended

H. K. Mittal 10 Atul J. Agarwal 9

Anil Khanna 10

K. R. Bharat 10



2726

The Indian Subsidiaries Mercator Oil & Gas Ltd. and Mercator Petroleum Private Limited were neither listed nor material

as at March 31, 2009.

The Audit Committee reviews the financial statements of all the subsidiary companies including the investment made

by the Company.

The Minutes/resolutions of the Board Meetings of all the subsidiary companies (including the step down subsidiary

Companies) are placed before the Board periodically.

The management periodically reviews a statement of all significant transactions, if any, entered into by all the

subsidiary companies.

(A) Basis of related party transactions:

I. A statement in summary form of transactions with related parties in the ordinary course of business is placed periodically before the audit committee.

ii. Details of material individual transaction with related parties, which are not in the normal course of business, are placed before the audit committee, whenever applicable.

iii. During the year, there was no material individual transaction with related parties or others, that was not on an arm's length basis.

(B) Disclosure of Accounting Treatment:

In the preparation of financial statements for the year ended on March 31, 2009; there was no treatment different from

that prescribed in an Accounting Standards and applicable Laws & Regulations that had been followed.

(C) Board Disclosures-Risk Management:

The Company has laid down procedures to inform Board members about the risk assessment and minimization

procedures. These procedures are periodically reviewed to ensure that executive management controls risk through

means of properly defined framework.

(D) Proceeds from public issues, rights issues, preferential issues etc.

During the year; the Company raised an amount of Rs. 150 crores through issue of Non-convertible Secured

Redeemable Debentures on private placement basis; proceeds of which were utilized for the intended purpose.

Besides this, the Company did not raise any amount through public or right or preferential issues.

(E) Remuneration of Directors:

The remuneration of non-executive Directors is decided by the Board/Shareholders.

The Company did not have any pecuniary relationship or transaction with the Non-executive Directors during the year

other than those disclosed elsewhere in this report. Except commission on net profits for the year ended on March 31,

2009 as decided by the Board of Directors and approved by the shareholder's resolution; no Non-Executive Director

was paid any fees/compensation.

IV. DISCLOSURES:

REMUNERATION-CUM-SELECTION COMMITTEE:

III. SUBSIDIARY COMPANIES:

The Company has Remuneration Committee comprising of three Non-executive Independent Directors. Manohar

Bidaye is the Chairman of the Committee with Anil Khanna and M. G. Ramkrishna being other members. The

committee, on behalf of the Board and the shareholders, determines, with agreed terms of reference, the Company's

policy on specific remuneration packages for Executive Directors and senior management people including pension

rights and any compensation payment. This Committee also acts as a Remuneration Committee under Schedule XIII

and as Selection Committee under Section 314 of the Companies Act, 1956.

Two meetings of Remuneration Committee were held during the year. Except Manohar Bidaye, who attended one

meeting; all other members attended both the meetings.

As at March 31, 2009 the Company had following subsidiaries:

Sr. No. Name Incorporated in Remark

1 Mercator International Pte. Ltd. (MIPL) Singapore Wholly Owned Subsidiary (WOS)

2 Mercator Offshore Ltd. Singapore Wholly Owned Subsidiary

3 Mercator Offshore Holdings Pte. Ltd. Singapore Wholly Owned Subsidiary

4 Mercator Oil & Gas Ltd. India Wholly Owned Subsidiary

5 Mercator Petroleum Private Ltd. India Wholly Owned Subsidiary

6 Mercator Lines (Singapore) Ltd.(MLS) Singapore Step down Subsidiary (Subsidiary

of MIPL with 72.35% holding)

7 Varsha Marine Pte. Ltd. Singapore Step down subsidiary (WOS of MLS)

8 Vidya Marine Pte. Ltd. Singapore Step down subsidiary (WOS of MLS)

9 Mercator Lines (Panama) Inc Panama Step down subsidiary (WOS of MLS)

10 Oorja Holdings Pte. Ltd.(OHPL) Singapore Step down Subsidiary (WOS of MIPL)

11 Oorja 1 Pte. Ltd. Singapore Step down Subsidiary (WOS of OHPL)



14 Oorja Mocambique Minas Limitada (OML) Mocambique Step down subsidiary (WOS of OHPL)

15 Broadtec Mocambique Minas Limitada Mocambique Step down subsidiary

(Subsidiary of OML with 85% holding)

16 Oorja Indo Petangis Four PT Indonesia Step down subsidiary

(Subsidiary of Oorja 1 with 50% holding)

17 Oorja Indo Petangis Three PT Indonesia Step down subsidiary


18 Oorja Indo KGS PT Indonesia Step down subsidiary


19 MCS Holdings Pte. Ltd. Singapore Step down subsidiary(WOS of OHPL)

20 PT Mincon Indo Resources Indonesia Step down subsidiary with Oorja Indo

Petangis Three holding 99% and

Oorja Indo Petangis Four holding 1%)



28 29

The remuneration to the Executive Directors is governed by the agreements executed with them as approved by the

members of the Company in their General Meeting. As per the agreement, salary and perquisites are a fixed

component and the commission is based on the performance of the Company, i.e. on the net profit of the year,

however aggregate of which shall not exceed 5% of net profit calculated as per the provisions of the Companies Act,

1956; per Executive Director. The present terms & conditions of appointment agreements of both the Executive

Directors were approved by the shareholders at the Annual General Meeting of the Company held on September

26, 2007. As per the terms of respective agreements, the appointments of Executive Chairman and Managing Director

are valid upto July 31, 2012 and can be terminated by either party by giving six month's notice in writing. There is no

severance fees payable. The Executive Directors were not issued any Stock Options during the year.

During the year, non-executive Directors were paid following remuneration for the financial year 2008-09:

The Board decided the payment of commission to Non-executive directors within the limits approved by members of

the Company in their Annual General Meeting held on September 26, 2007. Presently the Company pays remuneration

to Non-executive Directors by way of commission not exceeding 1% of its net profit being distributed among them

equally. No sitting fees are being paid to non-executive Directors.

Non-executive Directors:

Name Salary Commission Perquisites

H. K. Mittal

Executive Chairman 68.00 960.00 8.98

A. J. Agarwal

Managing Director 68.00 966.48 2.49

Executive Directors:

Name Commission Rs. In lacs

Manohar Bidaye 2.50

Anil Khanna 2.50

M. G. Ramkrishna 2.50

K. R. Bharat 2.50

All the Non-executive Directors have disclosed their shareholdings to the Company, which is as under:

Name No of equity shares held as on 31/03/2009

Manohar Bidaye 97,500

Anil Khanna 2,47,120

M. G. Ramkrishna 15,000

K. R. Bharat Nil

No other convertible instrument was held by any of the above Non-executive Directors.

No stock options were issued to the Non-executive Directors during the year.

(F) Management

(G) Shareholders

A Management Discussion and Analysis report forming part of this Directors' report is attached herewith.

During the year, there was no material financial and commercial transaction by senior management that may have a

potential conflict with the interest of the Company at large.

(i) GENERAL BODY MEETINGS:Details of General Meetings held during last three years are given below:

No special resolution through postal ballot was passed last year nor proposed at the ensuing Annual General Meeting.

Financial Year Date Time Venue Special Resolution(s)

2008-09 16/07/2008 4.00P.M. C. K. Nayudu Hall,

The Cricket Club of India

Limited, Brabourne

Stadium, Churchgate,

Mumbai-400020

2007-08 11/10/2007 11.00 A.M. Y. B. Chavan Centre, 1. Issue of warrants on preferential

(E.G.M) General Jagannath basis to promoter.

Bhosle Marg, Nariman Point,

Mumbai-400021

2007-08 26/09/2007 3.30 P.M. Y. B. Chavan Centre, 1. Appointment of Mr. H. K. Mittal as

(A.G.M.) General Jagannath Executive Chairman of the Company

Bhosle Marg, Nariman Point, and remuneration thereof.

Mumbai-400021 2. Appointment of Mr. A.J. Agarwal as

Managing Director of the Company

and remuneration thereof.

3. Appointment of Mr. Adip Mittal, a

relative of Director to hold the office

or place of profit of the Company.

4. Delisting of equity shares from

Ahmedabad Stock Exchange

2006-07 31/07/2006 12.00 C. K. Nayudu Hall, Brabourne 1. Alteration of Object Clause of

(A.G.M.) Noon Stadium, Churchgate, Memorandum of Association.

Mumbai-400020 2. Approval for commencing new

business activity set out in the object

clause of Memorandum of Association.

NIL



30 31

(ii) DISCLOSURES:

During the year, there were no transactions of materially significant nature with the Promoters or Directors or the

Management or their subsidiaries or relatives etc. that had potential conflict with the interest of the Company.

However, the transactions entered into with the related parties as per Accounting Standard 18 are reported at

Note No. 21 of Notes forming part of the Accounts under Schedule I (B) annexed to the Accounts for the year under

review.

There were no instances of non-compliance and that no penalties or strictures were imposed on the Company by any

Stock Exchange or SEBI or any statutory authority on any matter related to capital market during the past three years.

Presently the Company does not have any Whistle Blower Policy. However, no person has been denied access to the

Audit Committee on any matter.

(iii) MEANS OF COMMUNICATION:

Quarterly/half-yearly/yearly results are normally published in Economics Times or Business Standard and Sakal or

Lokmat. The audited annual results are posted to every member of the Company. Quarterly shareholding distribution

and quarterly/half yearly/yearly results submitted to the Stock Exchanges are posted on the website of the Company

www.mercator.in and SEBI i.e. www.sebiedifar.nic.in.The Company also displays official news releases on its website

i.e. www.mercator.in. The Company has created an email id: [email protected], to facilitate redressal of investors/

shareholders grievances.

The presentations made to institutional investors/analysts through personal meetings are also displayed on website of

the Company and submitted to the Stock Exchanges simultaneously.

(iv) ANNUAL GENERAL MEETING

Twenty Fifth Annual General Meeting is scheduled to be held on Thrusday, the September 24, 2009 at 4.00 p.m. at

C. K. Nayudu Hall, The Brabourne Stadium, Churchgate, Mumbai - 400020.

RE-APPOINTMENT OF NON-EXECUTIVE DIRECTOR:

M. G. Ramkrishna, the Director retiring by rotation at the ensuing Annual General Meeting has offered himself for

re-appointment as Director of the Company. M. G. Ramkrishna, aged 66 years, an M. A., L. L. B. & CAIIB, has over 35 years

of experience in handling treasury, financial and banking matters. He is also member of Audit Committee and

Selection-cum-remuneration Committee of Directors of the Company. During the span of his service, he has worked

with reputed national and international banks, in various capacities and is on the Board of following companies viz.

Saint Gobain Sekurit India Ltd.; Summit Securities Ltd. (erstwhile KEC Infrastructure Ltd.) and Binani Cements Ltd. He is a

member of Audit Committees of Saint Gobain Sekurit India Ltd. and KEC Infrastructure Ltd.

He has been actively associated with the Company since 2003 and his advisory Services have always been of great

importance in the growth of the Company. He holds 15,000 equity shares of the Company.

He does not have any relationship with any of the other Directors of the Company.

ISSUE OF SECURITIES:

To enable the Company to raise funds, for general corporate purposes including capital expenditure, working capital

requirements, strategic investments as the Board may deem fit, it is proposed to seek approval of the members of the

Company; to issue Securities (whether in India and/or abroad).

(v) FINANCIAL CALENDER FOR THE YEAR 2009-10:

First Quarter Results (June, 30) End July 2009

Mailing of Annual Reports End August 2009

Annual General Meeting September 24, 2009

Payment of Dividend Last week of September 2009

Second Quarter Results (September, 30) End October 2009

Third Quarter Results (December, 31) End January 2010

Fourth Quarter/ Annual Results End June 2010

(vi) DATES OF BOOK-CLOSURE:

The Share Transfer Books and Register of Members of the Company will remain Closed from Wednesday, September

16, 2009 to Thursday, September 24, 2009 (Both days inclusive), for deciding entitlement of shareholders for payment of

dividend on Equity share capital.

(vii) DIVIDEND:

The Board of Directors has recommended dividend on Equity Shares of the Company @ 50% i.e. Re. 0.50 per share for the

year ended on March 31, 2009 amounting Rs. 13.69 crores (inclusive of Corporate Tax & Surcharge thereon amounting

Rs. 1.89 cr.) The dividend if declared at the Annual General meeting; will be payable on or after September 24, 2009.

(viii) LISTING OF SHARES:

The Equity Shares of the Company are listed on Bombay Stock Exchange (Scrip Code 526235); National Stock Exchange

(Scrip Code MLL EQ) and the annual listing fees in respect of the year 2009-2010 have been paid to these exchanges.

The monthly high-low quotations of the equity shares of the Company on Bombay Stock Exchange and National Stock

Exchange during the financial year 2008-09 vis-à-vis Sensex performance of Bombay Stock Exchange is given below:



32 33

BSE:

High Low High Low

April 2008 105.85 73.55 17378.46 15343.12

May 2008 129.30 93.25 17600.12 16275.59

June 2008 121.50 78.55 16063.18 13461.60

July 2008 98.80 68.25 14942.28 12575.80

August 2008 99.50 76.25 15503.92 14048.34

September2008 85.25 49.00 15049.86 12595.75

October 2008 59.20 25.15 13055.67 8509.56

November 2008 40.00 23.00 10631.12 8451.01

December 2008 38.30 22.35 10099.91 8739.24

January 2009 41.15 26.00 10335.93 8674.35

February 2009 34.20 25.10 9647.47 8822.06

March 2009 29.85 21.00 10048.49 8160.40

Month Share Price (Rupees) Sensex Performance

0

20

40

60

80

100

120

140

160

180

Ap

ril 2008

May

2008

Jun

e 2

008

July

2008

Au

gu

st 2

008

Sep

tem

ber

2008

Oct

ob

er

2008

No

vem

ber

2008

Dece

mb

er

2008

Jan

uary

2009

Feb

ruary

2009

Sh

are

Price

(Ru

pees)

0

Sen

sex

Perf

orm

an

ce

12000

13000

14000

15000

16000

17000

18000

Marc

h 2

009

11000

10000

9000

8000

High Share price

Low Share price

High Sensex Performance

Low Sensex Performance

High Low

April 2008 105.80 73.55

May 2008 129.20 93.10

June 2008 121.40 78.90

July 2008 98.80 68.15

August 2008 99.40 76.30

September 2008 85.25 48.50

October 2008 59.50 25.15

November 2008 40.20 20.70

December 2008 39.70 22.40

January 2009 41.10 26.30

February 2009 34.15 25.10

March 2009 29.80 20.90

Month Share Price (Rupees)

NSE:

(ix) SHARE TRANSFER:

SHAREHOLDERS'/ INVESTORS' GRIEVANCES COMMITTEE:

The Company has Shareholders'/Investors' Grievances Committee comprising of one Executive Director and two Non-

executive Directors to look after share transfer and other related matters, including the shareholders' grievances.

Manohar Bidaye, a Fellow Member of Institute of Company Secretaries of India, is the Chairman of the Committee with

the other members being, A. J. Agarwal and Anil Khanna, both senior members of Institute of Chartered Accountants of

India. The Committee normally meets fortnightly and looks into the shareholder & investor grievances that are not

settled at the level of the Company Secretary/Compliance Officer and helps to expedite share transfers & related

matters. The committee has also delegated power of transfer/transmission; dematerialsation /rematerialisation of

shares; issue of duplicate/split/consolidated certificates to expedite relative process.

0

30

50

70

90

110

130

150

170

190

Ap

ril 2008

May

2008

Jun

e 2

008

July

2008

Au

gu

st 2

008

Sep

tem

ber

2008

Oct

ob

er

2008

No

vem

ber

2008

Dece

mb

er

2008

Jan

uary

2009

Feb

ruary

2009

Sh

are

Price

(Ru

pees)

Marc

h 2

009

High Share price

Low Share price



34 35

Twenty four Meetings of the Committee were held during the year. All the members attended all the meetings.

As at March 31, 2009; Deepak Dalvi- Sr. Manager-Secretarial was acting as Compliance Officer.

During the year, the Company received 51 complaints from the shareholders which were duly resolved. Further, during

the year requests for transfer of 38,500 equity shares; and for demat of 24,23,372 equity shares were received and

processed.

Registrar and Transfer Agents and Share Transfer System:

Link Intime India Private Limited (erstwhile Intime Spectrum Registry Ltd.) having their office at C-13, Pannalal Silk Mills

Compound, LBS Road, Bhandup (W), Mumbai - 400 078 (Tel No.91-22-25963838) and branch office at 203, Dawer House,

197/199, D.N. Road, Mumbai - 400 001 (Tel No. 91-22-22694127) are the Registrar and Transfer Agents (RTA) as also the

registrar for electronic connectivity. Entire functions of Share Registry, both for physical transfer, as well as,

dematerialization/rematerialization of shares, issue of duplicate/split/consolidation of shares is being carried out by

the RTA at their above address.

The correspondence regarding query of dividends shall be addressed to Compliance Officer at the registered office of

the Company.

(x) DISTRIBUTION OF SHAREHOLDING AS ON MARCH 31, 2009:

Shareholding of No. of % to total No. of Shares % to total Capital nominal value of Shareholders Shareholders

5000 1,00,036 98.12 3,98,79,520 16.90UPTO

5001 10000 904 0.89 68,42,454 2.90

10001 20000 496 0.49 69,49,284 2.94

20001 30000 190 0.18 47,03,126 1.99

30001 40000 67 0.07 23,48,798 0.99

40001 50000 36 0.03 16,62,118 0.70

50001 100000 108 0.11 76,20,997 3.23

100001 AND ABOVE 113 0.11 16,59,85,776 70.34

TOTAL 1,01,950 100.00 23,59,92,073 100.00

(xi) SHAREHOLDING PATTERN AS ON MARCH 31, 2009:

Sr. No Category No. of Shares % to Capital No. of Holders

1 Promoters/Directors and their Relatives 8,95,84,066 37.96 10

2 Mutual Funds/UTI 1,81,27,824 7.68 20

3 Banks; FIs etc. 12,65,975 0.54 5

4 FIIs 3,44,97,738 14.62 30

5 Private Corporate Bodies 2,25,55,161 9.56 1,595

6 Indian Public 6,39,09,159 27.08 98,212

7 NRIs/OCBs 23,95,659 1.02 1,605

8 Non-promoter Independent Directors 4,74,895 0.20 8

and their relatives

9 Clearing members 31,81,596 1.35 465

Total 23,59,92,073 100.00 1,01,950

Promoters/Directors

and their Relatives

37.96%

Mutual Funds/UTI7.68%FIIs

14.62%

Private Corporate Bodies9.56%

Indian Public27.08%

NRIs/OCBs1.02%

Non-promoter Independent Directors

and their relatives0.20%

Clearing members 1.35%

Banks; FIS etc.0.54%



36 37

V) CEO/CFO CERTIFICATION:

The necessary certification from Chief Executive Officer H. K. Mittal and Chief Financial Officer Atul J. Agarwal in respect

of the financial year ended on March 31, 2009 has been annexed to this report.

VI) COMPLIANCE:

The Company has complied with all the mandatory requirements of Corporate Governance Clause 49 of the Listing

Agreement with Stock Exchanges. Further, the Company has also adopted Remuneration committee requirements out

of Non-mandatory requirements of the Clause.

A certificate from the Auditors of the Company regarding compliance of conditions of corporate governance is annexed

to the Directors' Report.

VII) PLANT LOCATIONS:

The Company does not have any plant.

As at March 31, 2009, the Company owns total fifteen vessels of aggregate tonnage of 14,43,239 DWT consisting of a

Very Large Crude Carriers (VLCCs); a Suezmax tanker; five Aframax tankers; two MR Tankers; a Panamax and four

dredgers. The Company also owns a 350' Jack-up Rig through its subsidiary. Further, nine vessels of aggregate tonnage

of 6,81,780 DWT were owned through Subsidiary of the Company consisting of six Panamaxs and three Kansarmax

vessels. Additionally, as at March 31, 2009; the Company along with its subsidiaries also had four chartered vessels of

aggregate tonnage of 1,78,103 DWT comprising of two Panamax and two chemical tankers. The consolidated capacity

was 28 vessels of 23,03,122 DWT and one 350' jack-up Rig. All the vessels are deployed on various sea-routes.

The Company has coal mines; one in Mozambique and two in Indonesia; owned by its subsidiaries.

Address for correspondence:Mercator Lines Limited3rd Floor, Mittal Tower, B-wing, Nariman Point, Mumbai - 400 021Tel Nos: 91-22-66373333 Fax Nos: 91-22-66373344E-mail: [email protected] /

[email protected]


H. K. MITTAL Executive Chairman Regd. Office:3rd Floor, Mittal Tower, B-Wing, Nariman Point, Mumbai - 400021Dtd: May 19, 2009.

(xiii) OUTSTANDING GDRs/ADRs OR WARRANTS OR ANY CONVERTIBLE INSTRUMENTS, CONVERSION DATE AND LIKELY

IMPACT ON EQUITY

2,85,00,000 Warrants carrying an option to apply for equivalent number of equity shares of Re. 1/- each in the Company;

were issued to a promoter on October 25, 2008, on preferential basis in accordance with SEBI Guidelines on

Preferential Issue, as approved by shareholders in their meeting held on October 11, 2007; and the same were

outstanding as on March 31, 2009. Subsequent to year end; the same stood lapsed on maturity date i,e, April 24, 2009;

as warrant holder did not exercise the option. Consequently; the entire amount of application money paid thereon was

forfeited.

Further, out of 10,000 1.50% Foreign Currency Convertible Bonds of USD 10,000 each aggregating USD 60 millions

issued in April 2005; 700 FCCBs of an aggregate amount of USD 7.00 mn were outstanding as at March 31, 2009. The

conversion price of the Bonds was fixed at Rs. 59.812 per share with a fixed rate of exchange on conversion of

Rs. 43.73= USD 1.00 with maturity date as April 27, 2010. If all the FCCB holders exercise their rights to convert FCCB into

equity shares then the paid up equity capital of the Company would increase by 51,17,869 shares of Re. 1/- each.

Other than above, there were no outstanding GDRs/ADRs or warrants or any other convertible instruments.

As at March 31, 2009; the Company had following series of listed Redeemable Non-Convertible Debentures issued on

private placement basis in dematerialized form:

Series No. No. of NCDs Coupon rate O/s. Face value As on 31/03/09 Outstanding Amount ISIN

VII-A 900 11.25% Rs. 5,62,500/- each Rs. 50.62 crores INE934B07066

IX-A 1500 11.90% Rs. 10,00,000/- each Rs. 150.00 crores INE934B07207

Particulars BSE NSE Total

No of shares 37,80,45,624 59,81,39,272 97,61,84,896

Value (Rs. In lacs) 2579,08.69 3774,43.14 6353,51.83

(xii) DEMATERIALISATION OF SECURITIES:

The equity shares of the Company are under compulsory trading in demat form. Out of total capital of 23,59,92,073

equity shares; 23,27,83,075 equity shares representing 98.64% were held in demat form and balance 32,08,998 equity

shares representing 1.36% were in physical form as on March 31, 2009. The ISIN of the equity shares of the Company is

INE934B01028.

The shares are actively traded on BSE and NSE and the turnover data during the financial year 2008-09; was as under:

SHIPPING:

Industry Structure:

“Without shipping, there would be virtually no international commerce and as a result, one

half of the world would starve, while the other would freeze”

Recent Developments:

Tanker Markets:

To quote, Mr. Efthimios E. Mitropoulos, Secretary General of International Maritime

Organization (IMO):

The Shipping Industry is probably the most aptly and most succinctly defined as above.

Once again shipping industry arguably is one of the oldest commercial endeavors.

Even in Indian context, it is all about maritime transport as our country's international trade;

approximately 95% by volume and 70% by value is sea-borne. Although the bug picture is

transport, but shipping by itself stands out as all other modes of transport heavily and at

times entirely depend on it. Therefore, this industry plays a pivotal role in shaping economy

by facilitating international trade. It is therefore an ideal candidate to enjoy the status of a

mother industry.

Globally, the industry is classified in several ways; ranging from capacity specific

classification to route specific classification. Most commonly, it is broadly classified into Wet

Bulk; Dry bulk and Liners. Wet Bulk gets further sub divided into Tankers and Offshore;

whereas Dry Bulk is mainly further broken down into sub segments based on carrying

capacities; VLOCs, Panamax, Cape Size and so on. Similarly, typical Liner firms deal with

Container Carriers, MPP, Ro-Ro's etc. Obviously, individual focus of each one these

segments stays firm on the type of commodities being transported; wet bulk largely

include crude and petroleum; whereas dry bulk is coal and ores and liners provide services

to a very large and broad industry base.

In spite of global financial crises; the tanker market that was firm at the beginning of the

year; started showing signs of weakness in the month of August 2008. The impact of global

economic meltdown was so enormous that the market that clearly peaked in July 2008 did

not recover until March 31, 2009. The declining freight rates were due to the worldwide

decline in the demand of petroleum

products and falling crude oil price that

triggered output cuts. The OPEC cut the

crude oil production by nearly 4.2 MBPD

as it was fighting hard to stabilize the

falling prices. The price of crude oil fell

from a high of USD 150 a barrel to about

USD 40 a barrel.

YEARSReflectingDiversification

Management Discussion & Analysis Report

(Forming part of Directors' report

for the year ended on

31st March 2009)

38 39



40 41

Dry Bulk Markets:

Opportunities and Outlook:

Tanker Markets:

Dry Bulk Market:

Threats; Risks and Concerns:

Tanker

The world economy directly impacts dry bulk business. First quarter of last year saw Baltic Dry Index (BDI) a barometer of

dry bulk market touching historical high at around 11700 while third quarter saw BDI touching historical low at about

600; a drop of nearly 95% over just about 6 months. This drop was primarily due to economical meltdown.

The recession in developing and developed nations caused lack of demand in the transportation of crude oils. The

freight market which softened since the highs in July 2008 is expected to slide down and remain soft for most period of

the year.

The phasing out of single hull tankers would be accelerated from third quarter of current year but one cannot discount

addition of new building tonnage which would increase total tonnage by about 4%. The tonnage would be adequate

for the carriage of crude oils and thus would not assist the freight market in firming up. In addition; owners will be

confronted with high operating costs.

The economic growth of OECD/developed countries is one of the indicators for crude oil demand. Lately the macro

economic numbers coming out of these countries indicates that slump is at its lowest and that the turn around should

start soon. Reading further into this; it is felt that large economies of US and Europe should be back on track by the

fourth quarter of calendar year 2009 which in turn hopefully will also revive the tanker market.

The IMF has revised down its projection for 2009 for global economic growth at -1.30%. The economic forecast for China

is to grow at 6.5%; down from 6.7% in 2008. The other major economies that would contract are Japan at -6.2%, EU at -

4.2%; & US at -2.8%. Keeping these indications in mind 2009-10 will definitely test a Company's Balance Sheet. As

regards commodities; the total seaborne trade for coal stood at 831.4 mn. tons in 2008 as against 815 mn tons for 2007;

rise of only 2%. With regard to iron ore; the total seaborne trade was 884 mn ton as against 820 mn ton in 2007. In 2009,

it is estimated there will be decline in excess of about 10% in iron ore trade.

Despite the abovementioned supply demand negativity; there are some positive factors that make ship-owners rise

and encounter these challenging times. The USD 800 bn stimulus package has finally been approved by US Govt. The

USD 4 trillion RMB stimulus package has been rolled out by Chinese Govt. The G-20 is also making the right noises. We

expect the impact of these spends to be seen in second half of 2009 as raw materials & non ferrous shipments should

pick-up. The inflow of funds should also ease credit situation with the banks.

The new building order book executed at peak prices will not be economically viable in the present scenario of

depressed freight rates. Till recovery from present economic crisis not visible; freight rates will continue to be

depressed. Daily operational cost will continue to increase as net additional tonnage is delivered. The main

contributor in this increase being limited availability of skilled man power.

High inventory of crude oil & petroleum products whereby storages on land are full leading to further storage on ships

when coupled with high crude oil prices makes the possibility of incremental demand more so difficult than before.

Heightened piracy attacks lead to added insurance and daily operating cost vessels also deviate from normal shipping

lanes to join-up with security convoy thereby traveling extra distances leading to higher time and fuel consumption.

The line-up of deliveries of vessels that were contracted during steep buoyant markets in 2008 which would expand the dry bulk fleet by about 42% would have adverse effect on the freight rates if the recession is prolonged.

Credit defaults in financial sector due to continued recession would worsen the situation of industry.

Extreme short term volatility in commodity markets will be a matter of concern.Unpredictable weather patterns would lead to inconsistent season demand.

Long lead time for critical equipments/spares due to prevailing recession and consequent uncertainty would lead to increased demurrage.

The Offshore Industry is a logical offshoot of the Shipping Industry. The Offshore sector is further segmented into

drilling, exploration and production, development and maintenance essentially based on the services required by the

petroleum sector.

A drilling rig or oil rig is a structure housing equipment used to drill for water, oil or natural gas from underground

reservoirs. Sometimes a drilling rig is also used to complete (prepare for production) the well. However, the rig itself is

not involved with the extraction of the oil, its primary function is to make a hole in the ground so that the oil can be

produced.

There are two basic types of offshore drilling rigs: those that can be moved from place to place, allowing for drilling in

multiple locations, and those rigs that are permanently placed. Moveable rigs are often used for exploratory purposes

because they are much cheaper to use than permanent platforms. Once large deposits of hydrocarbons have been

found, a permanent platform is built to allow their extraction.

The offshore drilling sector withstood economic downturn for most of 2008. Rates for Jack-up started tumbling down in

last quarter of 2008 but have since March 2009 maintained a steady level. This downward event was due to global

economic collapse which then led to price of oil falling from about USD 150 to less than USD 40 a barrel. The utilization

The falling commodity prices and the crude oil production cuts imposed by OPEC could continue to create a negative

impact on the demand for transportation.

The three of company's single hull tankers would be phased out in the year 2010. Some of the long term time charters that were contracted at steep rate during buoyant markets and due for renewal during near future; will have bearing of current soft market rates.

Dry Bulk Markets:

OFFSHORE DRILLING:

Industry Structure:




42 43




The dredging industry witnessed a buoyant phase in the first half of financial year 2008-09. The charter rates were firm

boosted by the large scale development in the infrastructure projects. Most of the ports globally were engaged in

deepening their channels and development of berths. West Asia Gulf region offered tremendous opportunity in the

deployment of dredgers in reclamation projects.

Three of the company’s dredgers were fixed at a very firm rate on time charter basis with the Government of India

Undertaking. The fourth dredger was engaged in operation in Taipei Port. All the four dredgers were gainfully

employed through the year 2008-09.

With the onset of the financial melt down witnessed in September 2008, many of the dredging projects were severely

affected. The erosion in these projects lead to increased availability of dredgers causing the charter hire rate to soften.

The company’s dredgers were not affected as they were tied up in long term charters which still continue .

India did not remain isolated from the global financial crisis but was affected to a lesser degree. Many of the

development programs were put on hold and the competition increased. The maintenance dredging projects in

various ports however continue to be undertaken.

The ports need to cater to faster turn-around and utilization of large vessels. Capital dredging projects are undertaken

at ports to meet such requirements. The trade requirements change with time and require cost effective measures for

their commercial viability. Many ports were recently developed and are being upgraded to service the industry

located in their hinterland.

The Gujrat Pipavav Port Limited recently entered in a capital dredging work and increased the available depth in the

port from 12.5 meters to 14.5 meters. It had undertaken development of a container yard with dredgers utilized for

reclamation works. Similarly, other ports would follow the suit. Further, the maintenance dredging requirements

being unavoidable would continue. This opportunity would not be adequate to create a positive impact on the charter

rates. The dredging requirements having reduced the market outlook would remain weak.

The opportunities still exist in the deployment of dredgers but the rates continue to soften.

The global financial crisis had compelled the erosion of various development and reclamation projects in the West

Asia Gulf region. The development in various ports and shipyards worldwide was placed on hold as finances required

were not available. The lack of confidence in the bankers resulted in some projects being left incomplete. The projects

in hand were progressing slowly. The revenue generated from these projects would be softer so would be the

earnings of the dredge owners.

The down time of the dredgers built in China continues to be greater than normal.

for jack-up dropped from high of 90% to about 77% in March 09 and has been steady since then. Oil prices have now

inched upto round about USD 55 per barrel and oil companies are reworking their E&P programmes. Rigs which are on

charter continued to be employed even though they are at rate higher than present market. Rigs without an

employment at the very best get contracts for few wells only.

Global spending on offshore drilling is forecast to rise 32% over the period 2009-2013 compared with 2004-2008,

despite reduced spending in 2009 and 2010. By 2013 the global drilling market will be worth close to $100 billion, more

than doubling since 2004.

From 2010 a return to increases in spending are forecast, especially directed at deepwater development projects. The

big expansion in the number of rigs available for these projects will just about meet market demandAsia will be the

driver, followed by North America. Thus in early 2009 the supply/demand balance for oil had already stabilized, despite

the worsening recession. The numbers in segment point to a return to stability in 2010 and, by 2011, a strong growth in

the offshore drilling industry is forecast

Capex and Schedule overruns during upgradation or refurbishment of an acquired old asset Volatile Oil prices leading

to renegotiations or even cancellation of contracts

JV partner or Technical collaborator may not honor the required commitments and cash calls at all times, may be

expected. Intense competition due to recent major expansions during buoyant times, leading to lower day rates.

The dredging industry is primarily driven by infra structural growth, particularly port infrastructure. India having a

coastline of about 7200 Km and with changes in port development policies of the government of India, this segment

seems to become a sunrise sector.

The dredging industry has mainly two segments, viz. maintenance and capital dredging; former being maintenance of

existing ports or channels whereas latter involves dredging for development of new major or minor ports. Most ports in

India being naturally developed receive large amounts of silt during the monsoons. All these ports require dredging

operation to maintain the available depth in the approach channel and at the berths. Kandla, Goa, Mangalore, Cochin

and river Hoogly are typical ports that require maintenance dredging each year. In River Hoogly and Port Cochin the

dredging requirement is nearly through the year as river brings silt with the flowing waters. Such dredging

requirements are met by trailer suction hopper dredgers.

The dredging industry on account of numerous infrastructure projects under development was in very big demand in

the last few years. Until the middle of year 2008, the demand for the dredgers exceeded availability. The numerous

capital dredging and reclamation projects, particularly in the Middle East and Asia kept the dredgers fully occupied.



DREDGING:

Industry Structure:



44 45


INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The alternative source of power generation is gas and oil. But due to cost efficiency coal is and will always be attractive.

But it has some Environmental concerns which remain a threat. With stricter environmental regulatory framework

globally, GHG's and carbon emissions will continue to pose challenges; however, Clean Development Mechanisms

will get mature over a period of time and these challenges will then get met with.

Infrastructure and transportation bottlenecks are viewed as a major challenge to the continued expansion of the coal industry and are expected to contribute to a rise in import demand. Coal is expected to remain an important source

of new electricity generation capacity because of its low cost, reliability of supply and wide geographic spread of producers. Although, the need for rapid development of electricity capacity favors coal fired technology over others, there is also expected to be an increased uptake of natural gas for electricity generation in many economies. Expansion to nuclear power generation is also expected in Asian countries with existing nuclear programs such as Japan, China and India.

The Company has adequate internal control systems in place. These systems ensure that all corporate policies are

strictly adhered to and absolute transparency is followed in accounting and all of its business dealings.

The Internal Auditors appointed by the Company ensure that adequate internal controls are in place and all mandatory

accounting policies are complied with. The Audit Committee constituted by the Board of Directors assesses the

financials of the Company at regular intervals, in consultation with internal and statutory auditors.

The Company standalone as well as through its various subsidiaries; has diversified operations with its own fleet of

Tankers, Bulk Carriers; Dredgers and a Jack Up Rig. The consolidated income from the operations was Rs. 2211 crores for

the year under review as compared to Rs. 1,477 crores in the previous year, recording top line growth of about 50% year

on year.

The company's tanker fleet consists of Very Large Crude Carriers (VLCCs), Suezmaz, Aframaxes, Product Tankers and

Chemical Tankers.

Within the tanker segment, the Company had nine tankers owned by it totaling a capacity of 10,44,273 DWT at the

beginning of the year. During the year, the Company acquired a VLCC of 2,99,235 DWT. Consequently at the end of the

year, the Company had ten tankers owned; with an aggregate tonnage of 1,343,508 DWT. Out of these; one VLCC was

under conversion to Very Large Ore Carrier (VLOC) at the end of the year. Further, at the year end the Company had; two

chartered in chemical tankers with an aggregate capacity of 30,826 DWT; through its subsidiary.

The performance of tanker division was satisfactory. The Company was able to achieve targeted returns. During the

year, the Company achieved a turnover of Rs. 966 crores as compared to Rs. 771 crores in the previous year for this

division. Though the number of operating days by reduced by about 19% to 4196 days (previous year increase of 16% to

5,589 days) the performance was offset by 19% increase in Time Charter Equivalent (TCE) to USD 27,976/-. Overall

contribution from the tanker division was pegged at 43% (previous year 52%) of the total operational income.

The Company's bulk carrier fleet is comprised of Geared and Gearless Panamaxes and Kamsarmaxes.

Three Company’s dredgers are currently employed in the ‘Sethusamudram’ Canal Project which is a politically sensitive

issue. The increased availability of dredgers and reduced charter rate is prompting charterers to re-negotiate their

terms of contract. This would adversely affect the returns.

The sector is not well reported in the market and the activity is little known.

Coal industry is all about mining, transportation, storage and logistics. Miners usually look for long term contracts, so do

the primary users such as power plants. Therefore, coal linkage contracts present a win-win opportunity for power

plants and major coal user industries.

Coal is a major global energy source and is expected to be the dominant fuel for power generation well into the

foreseeable future. Despite having very large domestic coal industries, China and India are actively seeking to secure

the supply of coal from other countries. Out of total steam coal production of 4 billion tons worldwide approx 750

million tons of coal per annum is traded internationally. There is currently up to 200 years of proven coal reserves at

current rates of production. Fuel cost is the largest component in electricity generation. Making use of coal is relatively

advantageous due to its low cost compared with other fuels such as oil and natural gas. Other advantages of coal

include stable supply from a wide range of geographic locations, easy and safe storage, and ease of transportation by

rail or ship.

Internationally coal is traded mainly from Australia, South Africa and Indonesia. China which used to be the coal

exporter has become the net coal importer in recent years due to their huge internal demand. For Fareast Asian

markets the coal from Indonesia remains attractive because of its low haul. The coal from Indonesia is mostly of sub

bituminous type which is suitable for power generations and of late 75 to 80% of the coal production from Indonesia is

exported. There has been a spurt in interest to invest in coal resources. Many Indian companies have made a bee-line

to such places and even some are endowed with hostile terrain. The question now being asked is will coal be the

new “black gold”?

Asian countries mainly China and India will continue to drive the steam coal demand because of the power

deficiencies' in those countries. Coal will always remain the cheaper source of power generation as compared to other

sources. Due to the huge demand for power and the technological improvements in power generations the lower

quality of coal will become useful. Indonesia which has got huge reserves of thermal coal will be the major exporter

and cheap source of coal in future. So in our opinion power generation will be the demand driver and Indonesia will be

fulfilling the supply for this increase in demand. Coal accounts for 27% of world energy consumption. Of the total coal

produced worldwide, 63% is consumed by electricity producers, 34% by industrial consumers, and most of the

remaining 3 % went to coal consumers in the residential and commercial sectors. Coal's share of total world energy

consumption is projected to increase to 29 percent by 2030, and its share in the electric power sector is projected to

rise from existing 42 percent to 46 percent in 2030. Over the outlook period growing demand for thermal coal is

expected to be met by increased production in Indonesia, Australia, and South Africa.

COAL MINING:

Industry Structure:





46 47

The bulk division too performed satisfactorily. The Company's strategy of employing a large portion of the fleet on term

business with renowned customers ensured that it met its targets even in such challenging year.

At the beginning of the year, there were eight own bulk carriers aggregating a tonnage of 6,12,659 DWT (including

seven through a subsidiary) and four chartered-in bulk carriers through the subsidiary with an aggregate capacity of

2,85,684 DWT. During the year, two bulk carriers were acquired by the company's subsidiary by exercising options on

the chartered vessels. Therefore aggregate own capacity increased by 1,38,407 DWT. At the end of the year the

Company had ten bulk carriers with an aggregate capacity of 7,51,066 DWT and two chartered in bulk carriers of

1,47,277 DWT. An increase in vessel operating days of about 18% over the last year to 4499 days (previous year increase

of 19% to 3,820 days) backed by 4% increase in TCE to USD 39,966/-, the bulk division performed well during the year. It

achieved a turnover of Rs. 935 crores (Rs. 670 crores previous year. This division contributed about 42% of the total

operational income (Previous year 45%).

Last year the Company forayed into dredging by acquiring three own dredgers aggregating 24,153 DWT. This was

strengthened further by acquiring one more dredger of 6,292 DWT. The aggregate capacity of these four dredgers is

23500 Cubic meter. On 1208 (previous year 271) days of operating, the Company achieved a turnover of Rs. 168 cr

(Previous year Rs. 14 crores). This contributed about 7% of total operational income (Previous year 1%).

During the year, the operations of coal mines in Indonesia commenced through subsidiaries of the Company. About

327,000 MT coal was generated and traded on which a turnover of Rs. 77 cr (net of inter company transactions) was

achieved. This contributed about 4% of the total operational income (previous year Nil%).

The turnover from coal handling was Rs. 57 crores (previous year Rs. 22crores). This contributed about 3% of the total

operational income (previous year 1%).

At the end of the year; a jack-up rig was delivered and the same was received through a subsidiary of the Company that

was deployed immediately thereafter. On 21 operating days; a turnover of Rs. 9 cr. was achieved. This contributed about

0.4% of the total operational income (previous year Nil %)

Dry Bulk*42.3%

Tanker 43.7%

Dredger7.6%

Coal Handling

2.6%

Coal Mining*

3.5%

Off Shore Drilling*

0.4%

* These figures include turnovers achieved by applicable subsidiaries for this business segment.

Review of Operations of Subsidiaries:

1) Mercator International Pte. Ltd. (MIPL) – (Wholly Owned Overseas Subsidiary -WOS):

MIPL was incorporated in Singapore in January 2007 as WOS. This company has multiple subsidiaries or fellow subsidiaries in Singapore and other countries. As at the beginning of the year; MIPL had fleet of chartered in VLCC; anAframax and a chemical tanker of aggregate capacity of 374,337 DWT on standalone basis. At the end of the year it had two chartered in chemical tankers of aggregate 30,826 DWT MIPL has also diversified interest through its Subsidiaries; in commodity mining and trade business as a move towards backward integration of the Company’s business strategy.

Last year was the first full year of operation of MIPL. It achieved a turnover of about Rs. 139.14 crores equivalent of USD 29.95 mn (as against Rs. 132.03 crores equivalent to USD 32.78 mn in the previous year) with a net profit of Rs. 12.66 crores equivalent of USD 2.72 mn (previous year Rs. 3.90 crores equivalent of USD 0.97mn) on standalone basis; that is excluding contribution from its fellow subsidiaries.

2) Mercator Lines (Singapore) Ltd. (MLS)

This is a Singapore Stock Exchange listed subsidiary of MIPL, which owns 72.35% controlling interest in the company.MLS has three fully owned subsidiaries; namely, Varsha Marine Pte. Ltd., Vidya Marine Pte. Ltd. and Mercator Lines (Panama) Inc. Consolidated fleet of MLS as at 31st March 2009, comprised of nine own vessels of aggregate capacity of 6,90,650 DWT and two chartered-in vessels of aggregate capacity of 1,38,407 DWT.

During the year, MLS achieved a consolidated turnover of Rs. 898.52 crores equivalent of USD 187.64 mn (as against Rs. 589.03 crores equivalent to USD 148.48 mn in the previous year) and earned net profit after tax of Rs. 380.20 crores equivalent to USD 75.84 mn (as against Rs. 230.44 crores equivalent to USD 57.21 mn in previous year).

The Board of Directors of MLS recommended dividend @ 1.16 cents per share for the year ended on 31st Mach 2009.

The Board of Directors of wholly owned subsidiaries of MLS; namely Varsha Marine and Vidya Marine declared and paid interim dividends of USD 3 mn for each of the companies, during the year under review.

Mercator Lines Panama did not carry out any business other than holding and assigning charter hire rights of two Panamax vessels (previous year four) on a back to back basis and remained dormant during the year.

3) Mercator Offshore Ltd. (MOL)-WOS:

This is a wholly owned overseas subsidiary incorporated in May 2006 in Singapore with an objective of exploringoffshore business worldwide, headquartered at Singapore. This subsidiary had placed an order for construction of a premium jack-up rig suitable for worldwide operations, delivery of which was received on 11th March 2009 and commenced operations immediately thereafter. The rig has been deployed for a period of three years on firm bare boat contract.

During the year; this subsidiary achieved turnover of Rs. 8.92 crore equivalent of USD 1.92 mn (previous year only interest income of Rs.0.01 crore equivalent of USD 0.003mn) and recorded net profit of Rs. 3.89 crores equivalent of USD 0.84 mn (previous year loss of Rs. 0.14 crore equivalent of USD 0.03mn).

4) Mercator Oil & Gas Ltd. (MOGL)-WOS:

This an Indian based non-listed non-material wholly owned subsidiary is yet to commence any business activities.



48 49

5) Mercator Petroleum Private Ltd. (MPPL)-WOS:

This is an Indian non-listed non-material subsidiary, with an object to explore business opportunities in the oil and gas sector domestically. The company has entered into a Production Sharing Contract with the Government of India for exploration of Petroleum under the Seventh New Exploration Licensing Policy round (NELP-VII) and has been allotted tow blocks under the scheme in Cambay Basin, Western India.

Pursuant to the provisions of the Companies Act, 1956; MPPL has become deemed public limited company in view of entire share capital held by the Company

6) Oorja Holdings Pte. Ltd. (OHPL) and its subsidiaries:

OHPL is 100% subsidiary of Mercator International Pte. Ltd. (MIPL) based in Singapore with the objective to explore business opportunities in commodity mining and trade. As at March 31, 2009, OHPL had four wholly owned subsidiaries further; namely, Oorja 1 Pte. Ltd., Oorja 2 Pte. Ltd., Oorja 3 Pte. Ltd.; Oorja Mocambique Minas Limitada; and MCS Holdings Pte. Ltd.,

Oorja 1 has a further subsidiary by the name of Oorja Indo Petangis Four (OIP-4) incorporated in Indonesia.

Oorja 2 has further subsidiary by the name of Oorja Indo Petangis Three incorporated in Indonesia (OIP-3).

Oorja 3 has further subsidiary named Oorja Indo KGS incorporated in Indonesia.

Oorja Mocambique has a step-down subsidiary named Broadtec Mocambique Minas Limitada with 85% holding incorporated in Mocambique.

During the year; OHPL achieved consolidated turnover of Rs. 137.54 crores equivalent of USD 29.51 mn and suffered loss of Rs 17.19 crores equivalent of USD 2.49 mn.

7) Mercator Offshore Holdings Pte. Ltd.

This was in corporated in March 2009 as WOS of the Company in Singapore as a part of internal strategy of the comapny.

None of above subsidiaries audit report contains any qualification.

(For the purpose of financial performances conversion rate of per dollar has been taken as Rs. 46.455 for profit and loss account (previous year Rs. 40.28) and Rs. 50.95 for balance sheet items (previous year Rs. 39.82).

The Company gives utmost importance to its human capital and recognizes the importance of organization building.

The company has embarked on several HR initiatives with a focus on improving organizational and individual

productivity and excellence. The company organized several training programs in order to motivate and help the

employees to realize their potential. Apart from productivity related initiatives, the company also organized programs

on team building and several welfare related activities for the employees.

HUMAN RESOURCES POLICIES:

Over the year the company’s strength grew remarkably by 60 per cent. As on March 31, 2009, there were 104 on-shore

employees with an average age of 37 years and 134 shore staff crew members.

The Statement in this Management Discussion and Analysis Report describing the Company’s objectives, projections,

estimates, expectations or predictions may be ‘forward looking statements’ within the meaning of applicable laws and

regulations. Actual results might differ substantially or materially from those expressed or implied. Important

developments that could affect the Company’s operations include demand-supply conditions, changes in

Government and International regulations, tax regimes, economic developments within and outside India and other

factors such as litigation and labour relations.


H. K.MITTAL Executive Chairman Regd. Office:3rd Floor, Mittal Tower, B-Wing, Nariman Point, Mumbai - 400021Dtd: May 19, 2009.

CAUTIONARY STATEMENT:



50 51

AUDITORS' CERTIFICATE ON CORPORATE GOVERNANCE

To the members,Mercator Lines Limited,Mumbai

We have examined the compliance of conditions of corporate governance by Mercator Lines Limited for the year ended

on 31st March 2009, as stipulated in Clause 49 of the Listing Agreement of the said company with stock exchange.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination was

limited to procedure and implementation thereof, adopted by the company for ensuring the compliance of the

conditions of the corporate Governance. It is neither an audit nor an expression of the financial statement of the

company.

We certify that the company has compiled with the conditions of corporate Governance as stipulated in the above

mentioned Listing Agreement.

We state that such compliance is neither an assurance as to the future viability of the company nor the efficiency or

effectiveness with which the management has conducted the affairs of the company.

For and on behalf ofContractor Nayak & KishnadwalaChartered Accountants

Himanshu KishnadwalaPartnerMembership No. 37391Mumbai19th May 2009

CEO / CFO CERTIFICATION

To,The Board of DirectorsMercator Lines LimitedMumbai

Dear Sir,

This is to certify that:

a) We have reviewed financial statement for the F.Y. ended on 31.03.2009 and the cash flow statement for the year (consolidated and unconsolidated) and that to the best of our knowledge and belief:-

I) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

ii) these statements together present a true and fair copy of the company's affairs and are in compliance with existing accounting standards, applicable laws and regulations.

b) There are, to the best of our knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violative of the company's code of conduct.

c) We accept responsibility for establishing and maintaining internal controls and that we have evaluated the effectiveness of the internal control systems of the company and we have disclosed to the auditors and the Audit Committee, deficiencies in the design or operation of internal controls, if any, of which we are aware and the stepswe have taken or propose to take to rectify these deficiencies.

d) We have indicated to the auditors and the Audit Committee:

i) significant changes in internal control during the year, whenever applicable;

ii) that there were no significant changes in accounting policies during the year and that the same have been disclosed in the notes to the financial statements; and

iii) that there were no instances of fraud of which we have become aware and the involvement therein, if any, of the management or an employee having such significant role in the company's internal control system.

e) We further declare that all board members and senior managerial personnel have affirmed compliance with the code of conduct for the current year.

For Mercator Lines Limited For Mercator Lines Limited

H. K. Mittal A. J. AgarwalChief Executive Officer Chief Financial Officer19th May, 2009



52 53

AUDITORS' REPORT

The Members ofMERCATOR LINES LIMITED

1. We have audited the attached Balance Sheet of MERCATOR LINES LIMITED as at 31st March 2009, the related Profit and Loss Account and the Cash Flow Statement of the Company for the year ended on that date annexed thereto. These financial statements are the responsibility of the Company's management. Our responsibility is 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. These Standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor's Report) Order, 2003, issued by the Central Government in terms of Section 227(4A) of the Companies Act, 1956, and on the basis of such checks as considered appropriate and according to the information and explanations given to us during the course of the audit, we enclose in the Annexure hereto a statement on the matters specified in Paragraphs 4 and 5 of the said Order.

4. Further to our comments in the Annexure referred to in above paragraph, we report that:a) We have obtained all the information and explanations, which to the best of our knowledge and belief were

necessary for the purposes of our audit;b) In our opinion, proper books of account, as required by law have been kept by the Company so far as appears

from our examination of the books of the Company;c) The Balance Sheet, Profit and Loss Account and the Cash Flow Statement dealt with by the report are in

agreement with the books of account of the Company;d) In our opinion, the Balance Sheet, Profit and Loss Account and the Cash Flow Statement comply with the

mandatory Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956. e) On the basis of written representations received from the directors of the Company as on 31st March 2009, and

taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st March 2009, from being appointed as a director in terms of Section 274(1) (g) of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said accounts read together with the Notes to Accounts in Schedule 'I' give the information required by the Companies Act, 1956 in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India:a. In the case of the Balance Sheet, of the state of affairs of the Company as at 31st March 2009; b. In the case of the Profit and Loss Account, of the Profit for the year ended on that date, c. In the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date.

For and on behalf ofContractor Nayak & Kishnadwala Chartered Accountants

Himanshu KishnadwalaPartner, Membership No 37391Mumbai19th May 2009

Statement referred to in paragraph 3 of the Auditors' Report of even date to the Members of MERCATOR LINES

LIMITED on the accounts for the year ended 31st March 2009.

On the basis of such checks as considered appropriate and in terms of the information and explanations given to us, we

state as under:

1(a) The company has maintained proper records showing full particulars including quantitative details and situation of the fixed assets;

1(b) As explained to us, the management at reasonable intervals carries out the physical verification of the fixed assets. The discrepancies noticed on such verification, which were not material, have been appropriately dealt with in the accounts.

1(c) The fixed assets disposed off by the company were not substantial and does not affect the going concern assumption.

2(a) As explained to us, the inventories of bunker and lube have been physically verified during the year by the management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical verification is reasonable.

2(b) In our opinion and according to the information and explanations given to us, the procedures of physical verification of the above mentioned inventory followed by the management are reasonable and adequate in relation to the size of the Company and the nature of its business.

2(c) In our opinion, the Company is maintaining proper records of inventory and no material discrepancies were noticed on physical verification.

3(a) As per the information and explanations given to us, the Company has granted unsecured loans to 5 parties covered in the register maintained under section 301 of the Companies Act, 1956. The outstanding balance as on 31st March 2009 is Rs. 57,303.26 Lacs and maximum balance outstanding during the year is 85,564.11 lacs.

3(b) In case of the aforesaid unsecured loans granted to the parties covered in the register maintained under Section 301 of the Companies Act, 1956, looking to the long term involvement of the company in the subsidiaries and their businesses, the rate of interest and the other terms and conditions are not prima-facie prejudicial to the interests of the Company.

3(c) In case of the aforesaid unsecured loan granted to the parties covered in the register maintained under Section 301 of the Companies Act, 1956, the repayment of principal amount and interest, where applicable is regular.

3(d) In case of the aforesaid unsecured loans granted to the parties covered in the register maintained under Section 301 of the Companies Act, 1956, the company is taking reasonable steps for the timely recovery of the principal and interest

3(e) As per the information and explanations given to us, the Company has not taken unsecured loans from a Company or any other party covered in the register maintained under section 301 of the Companies Act, 1956,the provisions of Clause 3(f) and 3(g) are not applicable.



54 55

4 In our opinion and as explained to us, there are adequate internal control procedures commensurate with the size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the internal controls and there is no continuing failure for the same.

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 particulars of contracts or arrangements referred to in section301 of the Companies Act, 1956 have been entered in register required to be maintained under that section.

5(b) In our opinion and as explained to us, the transactions made in pursuance of such contracts or arrangements have been made at prices which are reasonable having regard to the prevailing market prices at the relevant time.

6 The Company has not accepted any deposits from public during the year

7 In our opinion, the Company has an internal audit system commensurate with the size of the Company and the nature of its business.

8 The maintenance of cost records has not been prescribed by the Central Government under section 209 (1) (d) of the Companies act, 1956.

9(a) According to the information and explanations given to us and the records examined by us, the Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax,service tax, custom duty, excise-duty, cess and other statutory dues and there are no undisputed statutory dues outstanding as at 31st March 2009, for a period of more than six months from the date they became payable.

9(b) According to the information and explanations given to us, there are no dues of income-tax, sales tax, wealth tax, service tax, custom duty, excise duty and cess which have not been deposited on account of any dispute.

10 The company does not have any accumulated losses as on 31st March 2009 and has not incurred any cash losses during the financial year and in the immediately preceding financial year.

11 Based on the information and explanations given to us, the Company has not defaulted in repayment of any dues to financial institutions and banks.

12 Based on our examination of the records and as explained to us, the Company has not granted any loans and/or advances on the basis of security by way of pledge of shares, debentures and other securities

13 In our opinion, the company is not a chit fund, nidhi/mutual benefit fund/society. The provisions of clause 4(xiii) are therefore not applicable to the company.

14 During the year, the Company does not have any transactions in respect of dealing and trading in shares, securities, debentures and other investments. All shares, debentures and other investments held by the company are held by the Company in its own name.

15 According to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for loans taken by subsidiaries and others from banks and financial institutions are, considering the long term involvement of the company in these entities, not prejudicial to the interests of the company.

16 According to the information and explanations given to us, the term loans raised were used for the purpose forwhich they were raised.

17 As explained to us and on an overall examination of the balance sheet of the Company, in our opinion thereare no funds raised on short-term basis which have been used for long-term investment by the Company.

18 According to the information and explanation given to us, the Company has not made any preferential allotment of shares/warrants during the year.

19 In respect of secured debentures issued during the year for Rs. 15,000 lakhs, the company has created adequate charge.

20 The Company has not raised any money by public issues during the period covered by our report.

21 Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and as per the information and explanations given by the management, we report that no fraud on or by the company has been noticed or reported during the course of our audit.

For and on behalf ofContractor Nayak & Kishnadwala Chartered Accountants

Himanshu KishnadwalaPartner, Membership No 37391Mumbai19th May 2009



56 57

Dated: 19th May 2009

As per our report of even date

For Contractor, Nayak & KishnadwalaChartered Accountants

Himanshu KishnadwalaPartnerM No. 37391Mumbai - 19th May 2009


Anil KhannaDirector


A. J. Agarwal Managing Director

M. G. RamkrishnaDirector

As at As atParticulars Schedule 31, March 2009 31, March 2008

SOURCES OF FUNDS Shareholders’ Funds Share Capital A 2,359.92 2,348.95Warrants against Share Capital A1 1,667.25 1,667.25Reserves and Surplus B 107,095.25 87,863.64

111,122.42 91,879.84Loan Funds Secured Loans C 125,742.11 91,293.82Unsecured Loans D 15,551.70 5,909.35

141,293.81 97,203.17

Total 252,416.23 189,083.01

APPLICATION OF FUNDS Fixed Assets EGross Block 239,581.02 158,187.87Depreciation (37,478.73) (28,392.27) Net Block 202,102.29 129,795.60Capital work in progress 4,914.12 10,010.47Asset Held for Disposal 26,060.57 -

233,076.99 139,806.07

Investments F 4,342.80 2,014.93

Current Assets, Loans & Advances GInventories 1,082.01 2,244.33Sundry Debtors 22,763.28 10,377.96Cash and Bank Balances 45,958.27 5,642.17Loans and Advances 68,433.05 51,053.93

138,236.61 69,318.39Current Liabilities and Provisions HCurrent Liabilities 121,380.81 18,797.11Provisions 1,504.95 3,071.25Incomplete Voyages (Net) 354.41 188.02

123,240.17 22,056.38

Net Current Assets 14,996.45 47,262.01

Total 252,416.23 189,083.01Significant Accounting Policies I& Notes to the Accounts

(Amount Rs. in Lacs)BALANCE SHEET AS AT MARCH 31, 2009


INCOMEShipping Income J 113,770.02 80,312.06Other Income K 4,505.84 2,716.11Profit on Sale of Investments (Net) 36.50 325.80Profit on Sale of Assets (Net) (1.17) 2,953.95Total 118,311.19 86,307.92

ExpensesShip Operating Expenses L 70,208.32 49,221.93Administrative and Other Expenses M 4,766.14 3,170.85Finance Charges N 10,183.97 5,856.87Depreciation 14,365.62 10,382.84Total 99,524.05 68,632.49

Profit Before Taxes 18,787.14 17,675.43Provision for TaxationCurrent Tax (650.00) (770.00)Deferred Tax - -Fringe Benefit Tax (25.00) (21.00)Profit After Taxes 18,112.14 16,884.43

Prior Year Expenses / Income (Net) - (119.54)Short Provision for Tax of earlier Year (1.94) (130.00)Balance brought forward from last year 23,394.22 15,305.96

Available for Appropriations 41,504.43 31,940.85Less/(Add): AppropriationsTransfer to General Reserve 1,880.00 1,770.00Transfer to Debenture Redemption Reserve 3,900.00 -Transfer to Tonnage Tax Reserve 5,700.00 3,300.00Dividend on Preference Shares - 307.76Dividend On Equity Shares (on conversion of FCCB/warrants) 12.06 80.00Proposed Dividend on Equity Shares 1,179.96 2,583.85Tax on Dividend (including for previous year Rs.13.60 Lacs) 202.58 505.02Balance Carried to Balance Sheet 28,629.83 23,394.23Earning Per Share (Equity Share of Re. 1/- Each) Basic (Rs) 7.68 7.24Diluted (Rs) 7.54 6.91

Significant Accounting Policies I& Notes to the Accounts

(Amount Rs. in Lacs)PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH 31, 2009






Anil KhannaDirector






58 59

(Amount Rs. in Lacs)CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009

Particulars Current Year Previous YearCash Flow from Operating Activities Net Profit Before Tax 18,787.15 17,675.43Adjustment for: Depreciation 14,365.62 10,382.84Interest Paid 10,183.97 5,856.87(Profit)/Loss on Fixed Assets Scrapped/Sold 1.17 (2,953.95)(Profit)/Loss on Sale of Investment (36.50) (325.80) Dividend Income (168.81) (406.91)Interest Income - -Operating Profit before Working Capital Changes 43,132.60 30,228.48Adjustment for: Trade and Other Receivables (27,489.68) (13,351.36)Trade Payables 101,183.80 11,613.75Cash Generated from Operations 116,826.72 28,490.86Direct Taxes Paid (676.94) (921.00)

Total Cash Generated from Operating Activities 116,149.78 56,060.73 Cash Generated from Prior Period Items - (119.54)Net Cash from Operating Activities 116,149.78 27,450.32Cash flow from Investing ActivitiesAcquisition of Fixed Assets including Capital Work in Progress (107,644.35) (25,005.12)Sale of Fixed Assets 6.64 6,184.70 Proceed from sale of Non Trade Investments 36.50 325.80(Purchase)/sale of Investment (2,327.87) 8,277.41Dividend Income 168.81 406.91Net Cash from Investing Activities (109,760.27) (9,810.30)Cash Flow from Financing ActivitiesProceeds from issue of Share Capital from conversionof Bonds and warrants 10.97 22,048.69Proceeds from Long Term Borrowing 44,090.64 (36,591.35)Increase / Decrease in Reserves 2,516.00 -Interest Paid (10,183.97) (5,856.87)Dividends Paid including tax thereon (1,394.61) (3,476.63)Net Cash from Financing Activities 35,039.03 (23,876.17)

Net Increase in Cash and Cash Equivalents 41,428.54 (6,236.14)Cash and Cash Equivalents as at beginning of the year (As per Schedule G) 5,730.18 11,966.32Cash and Cash Equivalents as at end of the year (As per Schedule G) 47,158.72 5,730.18

Notes:1) Figures in bracket represent outflows2) Cash and cash equivalents include gain/(loss) on foreign exchange revaluation of Rs.208.10 lacs (Previous Year Loss of Rs. 76.71)3) Interest paid/acquisition of Fixed Assets is exclusive/inclusive of interest capitalised Rs. 67.14 (Previous Year Rs. 91.63)4) Cash and cash equivalents include Fixed Deposit of Rs.370,00 lacs ( Previous Year NIL) as margin deposit against an acceptance.*5) Previous year's figures have been recast/restated wherever necessary.






Anil KhannaDirector




(Amount Rs. in Lacs)SCHEDULES FORMING PART OF ANNUAL ACCOUNTS

Particulars Current Year Previous Year

SCHEDULE ‘A’Share Capital Authorised 35,00,00,000 Equity Shares of Re 1/- each. 3,500.00 3,500.00200,00,000 Preference Shares of Rs. 100 each. 20,000.00 20,000.00

23,500.00 23,500.00Issued Capital 23,59,92,073(23,48,95,387) Equity of Shares Re. 1/- each fully paid up 2,359.92 2,348.95

2,359.92 2,348.95Subscribed and Paid Up Capital Equity 23,59,92,073(23,48,95,387) Equity of Shares Re. 1/- each fully paid up. 2,359.92 2,348.95(a) NIL (11,83,45,500) shares of Re 1/- were allotted

as bonus shares by capitilisation of Securities Premium Account during the year 2005-06

(b) NIL (32,00,000) shares of Re. 1/- each were allotted on conversion of warrants issued on preferential basis.

(C)10,96,686(37,652,887) Shares of Re. 1/- each were allotted on conversion of FCCBs during the Year.

2,359.92 2,348.95SCHEDULE ‘A1’Warrants against Share Capital 2,85,00,000 Warrants (Each Warrant carry option/entitlement to subscribe to 1 number of equity share of Re. 1/- each on or before April 24, 2009 at a price not less than Rs. 58.50 per share.) 1,667.25 1,667.25(The warrant holder has not exercised the above option by validity and the amount received has been subsequently forfeited.)

1,667.25 1,667.25SCHEDULE ‘B’Reserves and Surplus

Capital ReserveAs per last Balance Sheet 26.24 26.24

26.24 26.24Capital Redemption ReserveAs per last Balance Sheet 4,000.00 -Add: Transferred From General Reserve on redemption of Preference Shares - 4,000.00 4,000.00 4,000.00 Securities Premium AccountAs per last Balance Sheet 31,945.52 7,532.61Add: Received during the year on conversion of warrants and FCCBs 612.71 24,439.88Less: Share Issue Expenses (0.66) (26.97) 32,557.57 31,945.52

Tonnage Tax ReserveAs per last Balance Sheet 3,300.00 1,600.00 Add: Transfer from Profit and Loss Account 5,700.00 3,300.00Less: Transferred to Utilised Account (3,300.00) (1,600.00) 5,700.00 3,300.00



60 61

(Amount Rs. in Lacs)SCHEDULES FORMING PART OF ANNUAL ACCOUNTS


Tonnage Tax Reserve (Utilised)

As per last Balance Sheet 8,524.83 6,924.83

Add: Transfer from Tonnage Tax Reserve 3,300.00 1,600.00

11,824.83 8,524.83

Debenture Redemption ReserveAs per last Balance Sheet 6,200.00 8,000.00Transferred from Profit & Loss Account 3,900.00 -Transferred to General Reserve on redemption of debentures - (1,800.00)

10,100.00 6,200.00General Reserve As per last Balance Sheet 10,472.83 10,902.83Add: Transferred from Debenture Redemption Reserve - 1,800.00Add: Transferred from Profit and Loss Account 1,880.00 1,770.00

Less: Exchange fluctuation for 2007-08 on long term foreign currency MonetaryItems as per transitional provision of AS 11 (Refer Note 25 of Schedule I) (4,696.00) -Less: Transferred to Capital Redemption Reserve on redemption of Preference Shares - (4,000.00)

7,656.83 10,472.83Foreign Exchange Fluctuation ReserveAs per last Balance Sheet - -Exchange fluctuation on Long Term Loans in relation to non integral foreign operations 6,571.15 -

6,571.15 -

Foreign currency Monetary Item Translation DifferenceExchange fluctuation on Long Term Loans utilised for other purpose as pertransitional provision of AS 11 (Refer Note 25 of Schedule I) 28.80 -(Net of amortisations Rs.81.95 lacs)Surplus in Profit and Loss Account 28,629.83 23,394.22

107,095.25 87,863.64

SCHEDULE ‘C’ Secured Loans (a) Debentures

(1) NIL (30,00,000), 10.00% Non Convertible Secured Debentures Series IV of Rs. NIL (Rs. 10/-) each - 300.00(2) NIL (30,00,000), 10.00% Non Convertible Secured

Debentures Series V of Rs. 10/- (Rs. 20/-) each - 600.00 (3) 900 (1,600) 11.25% (7.5% upto 30th June, 2008) Non

Convertible Secured Debentures of Rs.5,62,500/- (Rs.6,87,500/-) each, redeemable in 12 half yearly instalments of 6.25% and last two of 12.50% of face value each commencing from six months after one year fromthe date of allotment i.e. June 30, 2004 towards face value Series VII A. There is a put/call option at the 30th June every year. 5,062.00 11,000.00

(4) NIL (50) 7.50% Non Convertible Secured Debentures Series VII B of NIL (Rs. 7,50,000/-) each. - 375.00


5) 1500 11.90% Non Convertible Secured Debentures Series IX A of Rs.10,00,000/- each with the tenure of 10 years, redeemable in 3 yearly instalments at the end of 8th, 9th and 10th year from the date of allotment. There is call optionat the end of 4th year from the date of allotment. In the event, this call option is not exercised by the Issuer at the end of 4th year, the coupon on the debentures shall stand increased to 12.35% p.a. payable half yearly effective immediately there after for the balance tenor. 15,000.00 -

(b) Foreign Currency Loans from Banks

(1) External Commercial Borrowings 20,103.53 10,829.70(2) Foreign Currency Non-Resident (B) Loan Scheme 19,308.01 17,982.12

(c) Term Loans from Scheduled Banks 64,873.00 50,207.00(d) Cash Credit facilities from scheduled Banks 1,395.07 -

125,742.11 91,293.82

(Amount Rs. in Lacs)SCHEDULE FORMING PART OF ANNUAL ACCOUNTS

Note:

1) Debentures referred in (a) above are secured by first mortgage on specified vessels of the company on pari-passubasis with other lenders and first charge on the specified immovable properties together with structure thereon.

2) Foreign Currency Loan refered in (b) above are secured by first Charge on specified vessels of the company on paripassu basis with other lenders and also include a External Commercial Borrowings of Rs. 12,359.12 lacs which is secured by exclusive charge on specified vessels of the company.

3) Term Loan refered in (c) above are secured by first charge on specified vessels, on pari passu basis with other lenders.

4) Working capital facilities from Schedule Banks are secured by second charge on specified vessels and 1st charge on all receivables and other current assets of the company on pari-passu basis.

SCHEDULE ‘D’ Unsecured Loans 1) 700 (850)1.50% Foreign Currency Convertible Bonds of

USD 10,000 each 3,566.50 3,409.35During the year, pursuant to notices received from Bondholders 150 (5150) FCCBs of aggregate amount of USD 15,00,000 (USD 51,500,000) were converted into 10,96,686 (37,652,887) equity shares of Re.1/- each at a predetermined price of Rs.59.812 per share at a fixed exchange rate of Rs.43.73 per USD The balance bonds are convertible at any time up to the close of Business on 20 April 2010 by holders into newly issued ordinary shares of Re.1 each at agreed conversion price. The Bonds may be redeemed in whole at the option of the Company at any time on or after 15 May 2008 and or prior to 20 April 2010 at the accreted principal amount together with accrued interest.

2) Other Loans - 2,500.003) Commercial Paper 10,000.00 -

(Maximum balance outstanding for commercial paper Rs.10,000 lacs)(Amount repayable within one year Rs.10,000 Lacs (Rs.25000 Lacs))

4) Overdraft facility from Scheduled Banks 1,985.20 -15,551.70 5,909.35



62 63

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SCHEDULE FORMING PART OF ANNUAL ACCOUNTS

Schedule F Investments

Items Current Year Previous Year Nos Cost Nos. Cost

Non-Trade (Unquoted)Long Term (At cost)In shares of Subsidiaries Mercator Oil and Gas Ltd. 150,000 15.00 150,000 15.00Mercator International Pte. Ltd. 100,000 28.80 100,000 28.80Mercator Offshore Ltd. 5,226,170 1,546.13 5,226,170 1,546.13Mercator Offshore Holdings Pte. Ltd. 1 **0.00 - -Mercator Petroleum Private Ltd. 10,000 1.00 - -

Note: 1) The Company has given an undertaking to the lenders of one of

its fellow subsidiary ie Mercator Lines (Singapore) Ltd. (MLS) that the company will continue to hold majority shares of MLS (directly or indirectly) till the term of the respective facilities to MLS.

2) The Company has agreed with the lender of Mercator Offshore Limited, that its direct or indirect holding in this Company will not fall below 51% **Cost Rs.52/-

In shares of Companies (Unquoted)Marg Swarnabhoomi Port Private Ltd 1,250 0.13 - -

1,591.05 1,589.93

In Units of Mutual FundsLotus FMP - Series I - - 3,000,000 300.00(Repurchase Value is Rs. NIL (Previous year Rs.458.51 Lacs) - -

- 300.00

In others (Unquoted)Units of Indian Real Opportunity Venture Capital Fund 37,500 375.00 12,500 125.00

375.00 125.001,966.05 2,014.93

Current Investments (at lower of cost and Market value) In units of Mutual Funds Birla Sun Life Saving Fund - Instl - Daily Dividend 401.02 - -ICICI Prudential Flexible Income Plan Premium - Daily Dividend 1,363.90 - -Reliance Money Manager Fund Institutional Option - Daily Dividend 611.82 - -Sub Total 2,376.74 -(Repurchase Value of current investment on 31.3.09 isRs. 2,376.74 Lacs (Previous Year Nil)

4,342.80 2,014.93

(Amount Rs. in Lacs)



64 65




SCHEDULE ‘G’Current AssetsSundry Debtors(Unsecured, Considered Good) Over Six Months 2,724.16 1,337.32Others 20,039.12 9,040.64(Includes Rs.1962.33 lacs from Subsidiary Companies) 22,763.28 10,377.96Cash and Bank Balances Balances with Scheduled BanksIn fixed Deposit Accounts 42,144.33 2,088.98(Includes Margin Deposit of Rs.37000 Lakhs given against an Acceptance)In current Accounts 1,679.71 3,402.11In Exchange Earners Foreign Currency Account 1,944.67 8.57In Dividend Accounts 67.10 39.40Bank Balance/Fixed Deposits with Foreign Banks (Refer Note B (9) of Schedule I) 119.47 93.54Cash hand 2.99 9.57

45,958.27 5,642.17Loans and Advances (Unsecured Considered Good) Loan to Subsidiary Companies 58,855.94 43,094.24(Loan to Mercator Offshore Limited of Rs 5121.32 Lacs (US $ 10.05mn) is also subordinated to the other lenders.)Advances recoverable in cash or in kindor for value to be received 4,993.12 5,388.76 Deposits with Government and semi Government Bodies 16.78 16.78Inter Corporate Deposits 1,382.60 689.43Other Deposits 961.13 959.79Accrued Interest on fixed deposit with banks 1,200.45 88.01Advance payment of tax (Net of provisions) 1,023.02 816.92

68,433.05 51,053.93SCHEDULE ‘H’

Current Liabilities

Sundry Creditors

For Services and expenses

Due to Micro, Small and Medium Enterprises

(Refer Note B7 of Schedule I) --Others 3,438.01 3,379.48(Includes NIL (Rs. 664.78 lakhs) due to subsidiary companies)

Acceptances 74,629.11 7,580.79

Advances from Customers 32,192.64 4,206.14

Deposits 87.98 85.26

Unclaimed Dividend* 67.10 39.40

Other liabilities 10,965.97 3,506.03

*(There is no amount due and outstanding to be

credited to Investor Education and Protection Fund) 121,380.81 18,797.11

Provisions

Proposed Dividend 1,179.96 2,583.85

Tax on Proposed Dividend 200.53 439.13

Employees Retirement Benefits 124.45 48.27

1,504.94 3,071.25




SCHEDULE ‘J’Shipping and related IncomeFreight 57,890.74 47,543.59Charter Hire 48,481.62 26,998.65Dispatch and Demurrage 1,432.01 3,572.02Ship Management Fees 328.26 -Cargo Handling Services 5,637.39 2,197.80 113,770.02 80,312.06

SCHEDULE ‘K’Other Income Dividend from Current Investments 168.81 406.91Rent Received 106.47 113.87Exchange Fluctuations (Net) 4,229.30 2,194.76 Miscellaneous Income 1.26 0.57

4,505.84 2,716.11 SCHEDULE ‘L’Ship Operating Expenses Bunker Consumed 19,153.08 14,400.57Vessel/Equipment Hire Charges 23,677.56 15,702.48Technical Service Expenses 5,385.90 4,089.44Agency, Professional and Service Charges 784.70 620.65Crew Expenses 2,195.37 535.81Communication Expenses 204.34 135.62Miscellaneous Expenses 563.18 216.26Commission 1,628.45 1,566.54Insurance 1,080.11 827.86Port Expenses 4,143.81 3,694.05Repairs and Maintenance 9,275.92 6,927.26Stevedoring, Transport and Freight 2,115.90 505.41

70,208.32 49,221.93 SCHEDULE ‘M’Administrative and Other Expenses Advertisement 7.71 8.89Auditors Remuneration 19.25 17.00Conveyance, Car Hire and Travelling 163.23 145.32Communication expenses 48.45 31.59Donation 62.12 11.26Directors’ Remuneration 2,083.94 1,615.79Miscellaneous expenses 277.89 273.19Insurance 16.54 8.77Legal, Professional and Consultancy expenses 561.04 109.23Rent 395.65 364.39Repairs and Maintenance 63.12 62.77 Salary, Wages, Bonus etc. 948.06 421.18Staff Welfare, Training etc. 38.96 22.17Contribution to Provident and other funds 38.48 24.75Bad Debts and other amounts written off (Net) 41.69 54.55

4,766.14 3,170.85



66 67

(Amount Rs. in Lacs)SCHEDULE FORMING PART OF ANNUAL ACCOUNTS


SCHEDULE ‘N’Finance Charge Interest on Debentures 1,501.75 1,108.40Fixed Loans 12,632.13 6,518.76

14,133.88 7,627.16Less: Interest received (TDS Rs.372.60 lacs Previous Year 60.85 lacs) 3,949.91 1,504.06Less: Profit on Derivative Transactions - 266.23

10,183.97 5,856.87

Schedule 'I'

A. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of AccountingThe financial statements are prepared under the historical cost convention, on the accrual basis of accounting and in conformity with Generally Accepted Accounting Principles in India, Accounting Standards as notified by the Companies (Accounting Standards) Rules, 2006 and the other relevant provisions of the Companies Act, 1956.

2. Use of EstimatesThe preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities as of the date of the financial statements and reported amounts of income and expenses during the period. The management believes that the estimates used in the preparation of financial statements are prudent and reasonable.

3. Fixed Assetsa) Fixed assets are stated at cost less accumulated depreciation.b) Cost includes cost of acquisition or construction including attributable borrowing cost, duties and other

incidental expenses related to the acquisition of the asset.c) Operating costs and other incidental costs including initial stores and spares of newly acquired vessels till the

port of first loading are included in the cost of the respective vessels. d) Exchange differences arising on repayment of foreign currency loans and year end translation of foreign

currency liabilities relating to acquisition of depreciable assets are, following option given by notification of Ministry of Corporate Affairs (MCA) dt. 31st March 2009, adjusted to carrying cost of the respective fixed assets.

e) Individual fixed assets costing up to Rs. 25,000 are fully written off under the head fixed assets written off.

4. Depreciation a) Depreciation on all the vessels is computed on Straight Line Method so as to write off the original cost as

reduced by the expected/estimated scrap value over the balance useful life of the vessels. If however, the rates as prescribed under the Schedule XIV of the Companies Act, 1956, are higher; the said higher rate is applied, which ranges from 5% to 12% of the original cost of the vessel.

b) Depreciation on all assets other than vessels is computed on the Written Down Value method in the manner and at the rates prescribed under schedule XIV of the Companies Act, 1956.

c) On additions made to the existing vessels depreciation is provided for the full year over the remaining useful life of the ships.

d) Depreciation on furniture, fixtures and electrical fittings installed at office premises taken on lease is provided over the initial period of lease.

5. Capital Work in ProgressAll expenditure, including advances given to contractors and borrowings cost incurred during the vessel acquisition period, are accumulated and shown under this head till the vessel is put to commercial use.

6. Retirement and Disposal of Shipsa) Profits on sale of vessels are accounted for on completion of sale thereof. b) Assets which are retired from active use and are held for disposal are stated at the lower of their net book value

or net realisable value.

7. Inventories Bunker and Lubes on vessels are valued at lower of cost and net realisable value ascertained on first in first out

basis.8.Investments a) Investments are classified into Long Term and Current investments.b) Long Term Investments are stated at cost of acquisition and related expenses. Provision for diminution, if any, in

the value of such investments is made to recognise a decline, other than of a temporary nature. c) Current Investments are stated at cost of acquisition including incidental / related expenses or at fair value as at

31st March 2009, whichever is less and the resultant decline, if any, is charged to revenue.d) Investment in shares of subsidiaries outside India is stated at cost by converting at the rate of exchange at the

time of their acquisition.

8. Investments a) Investments are classified into Long Term and Current investments.b) Long Term Investments are stated at cost of acquisition and related expenses. Provision for diminution, if any, in

the value of such investments is made to recognise a decline, other than of a temporary nature. c) Current Investments are stated at cost of acquisition including incidental / related expenses or at fair value as at

31st March 2009, whichever is less and the resultant decline, if any, is charged to revenue.d) Investment in shares of subsidiaries outside India is stated at cost by converting at the rate of exchange at the

time of their acquisition.

9. Incomplete VoyagesIncomplete voyages represent freight received and direct operating expenses on voyages which are not complete as at the Balance sheet date.

10. Borrowing CostsBorrowing costs incurred for the acquisition of vessels are capitalized till first loading of cargo, only if the time gap between date of Memorandum of Agreement and “Date when vessel is ready for use” is more than three months.

11. Revenue Recognitiona) Income on account of freight earnings is recognised in all cases where loading of the cargo is completed

before the close of the year. All corresponding direct expenses are also provided. b) Where loading of the cargo is not completed before the close of the year, revenue is not recognised and the

corresponding expenses are carried forward to the next accounting year. c) Income from charter hire and demurrage are recognised on accrual basis.d) Income from services is accounted on accrual basis as per the terms of the relevant agreement.e) Dividend on investments is recognised when the right to receive the same is established.f) Insurance claims are accounted on accrual basis when there is a reasonable certainty of the realisability of the

claim amount.

12. Foreign Exchange Transactionsa) Monetary Current assets and liabilities denominated in foreign currency outstanding at the end of the year are

valued at the rates prevalent on that date.b) Exchange differences arising on Long Term Foreign Currency Monetary (LTFCM) items are following option

given by notification of MCA dt. 31st March 2009, treated in the following manner:



68 69

i) In respect of borrowings relating to or utilized for acquisition of depreciable capital assets, the same is adjusted to the cost of the relevant capital asset and depreciated over the balance life of the said capital asset.ii) In other cases, the same is accumulated in a 'Foreign Currency Monetary Item Translation Difference

Account'. The amount so accumulated in this account is amortized over the balance period of such assets / liabilities or 31st March 2011, whichever is earlier.

c) Differences in translation of other monetary assets and liabilities and realised gains and losses on foreigncurrency transactions are recognised in the Profit and Loss Account.

d) Exchange difference arising on long term foreign currency loans given to non integral foreign operations is accumulated in foreign currency fluctuation reserve. On disposal of investment , the balance in the reserve will be transferred to profit and loss account

e) Contracts in the nature of foreign currency swaps, are converted at the exchange rate prevailing as on 31st March 2009 and the profits or losses thereon are charged to the Profit and Loss account.

f) Differences on account of swap contracts for interest payable in foreign currency are accounted on accrual basis and the profit or loss thereon are charged to the Profit and Loss account.

13. Employees Benefitsa) Short – term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, performance incentives, etc. are recognised at actual amounts due in the period in which the employee renders the related service.

b) Post – employment benefitsi. Defined Contribution Plans Payments made to defined contribution plans such as Provident Fund are charged as an expense as they fall due.ii.Defined Benefit Plans The cost of providing benefit i.e. gratuity is determined using the Projected Unit Credit Method, with actuarial valuation carried out as at the balance sheet date. Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

c) Other Long – term employee benefitsI. Other Long – term employee benefit viz. leave encashment is recognised as an expense in the profit and loss account as and when it accrues. The company determines the liability using the Projected Unit Credit Method, with actuarial valuation carried out as at the balance sheet date. The Actuarial gains and losses in respect of such benefit are charged to the profit and loss account.

14. Lease Accountinga) In respect of operating lease agreements entered into by the Company as a lessee, the lease payments are

recognised as expense in the profit and loss account over the lease term.b) In respect of operating lease agreement entered into by the Company as a lessor, the initial direct costs are

recognised as expenses in the year in which they are incurred.

15. Earning per share:The company reports basic and diluted earnings per share (EPS) in accordance with Accounting Standard – 20. The Basic EPS has been computed by dividing the income available to equity shareholders by the weighted average number of equity shares outstanding during the accounting year. The diluted EPS have been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding at the end of the year.

16. Provision for Taxation : a) The company has opted for the Tonnage Tax scheme and provision for tax has been accordingly made under

the relevant provisions of the Income Tax Act, 1961. b) Tax on incomes on which the Tonnage Tax is not applicable is provided as per other provisions of the Income

Tax Act, 1961.

Current Year Previous Year(Rs in Lacs) (Rs in Lacs)

Counter guarantees issued by the Company 1,632.09 1,456.54for guarantees obtained from bank

Counter guarantees issued by the company for NIL 458.89 guarantees obtained from the bank on behalf of subsidiaries

Corporate guarantees issued by the company on 88,398.25 29,962.17 behalf of wholly owned subsidiaries

Corporate guarantees issued by the company on NIL 19,400.00behalf of business associates

TOTAL 90,030.34 51,277.60

3. Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) as at March 31, 2009 Rs 34,707.63 Lacs (Rs. 14,928.51 Lacs)*.

4. Estimated amount of commitment outstanding towards contribution to Milestone Domestic Fund is Rs. 125.00Lacs (Rs. 375.00 Lacs)*.

B] NOTES TO THE ACCOUNTS

1. Contingent Liabilities not provided for

2. Letter of comfort issued

Current Year Previous Year(Rs in Lacs) (Rs in Lacs)

Letters of comfort issued by the company on 57,318.75 45,123.75bebehalf of wholly owned / fellow subsidiaries

c) Deferred tax resulting from timing differences, if any, between book and tax profits for income other than that covered under Tonnage Tax scheme is accounted for under the liability method, at the current rate of tax, to the extent that the timing differences are expected to reverse in future.

17. Impairment of assets The Company reviews the carrying values of tangible and intangible assets for any possible impairment at each balance sheet date. Impairment loss, if any, is recognized in the year in which impairment takes place.

18. Provisions and Contingent Liabilities:Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.

Note*- The amount in the brackets at the end of the report/ page are of the previous year.



70 71

5. Investments purchased and sold during the financial year 2008-09

.

Sr. No. MF House Name Scheme ( Units ) Amount

1 AIG India Mutual Fund Liquid Fund -I P- DDR 50,240.67 502.81

(NIL) (NIL)

2 Birla Sun Life Mutual Fund Cash Plus-Instl. Prem - DDR 102,082,470.88 10,228.15

(92,314,916.02) (9,249.49)

Saving Fund-Inst-DDR 19,98,640.24 200.00

(NIL) (NIL)

Liquid Plus-Instl. Prem-DDR NIL NIL

(15,010,463.15) (1,502.07)

3 CANARA Robeco Mutual Fund Liquid- Super IP-DDR 90,05,938.49 904.28

(NIL) (NIL)

4 DBS Chola Mutual Fund Short Term Floating Rate(Equity) NIL NIL

(1,000,000.00) (100.00)

Short Term Floating-DDR NIL NIL

(1,516,501.36) (151.90)

Liquid Inst. Prem-DDR NIL NIL

(20,154,392.12) (2,021.83)

5 DSP Merrill Lynch Mutual Fund Liquid- Inst.-DDR NIL NIL

(160,885.04) (1,609.17)

6 Deutsche Asset Management DWS Money Plus Fund - IP-DDR NIL NIL

Mutual Fund (46,664,160.01) (4,670.24)

DWS Insta Cash Plus Fund-DDR 24,999,286.29 2,504.85

(25,066,111.43) (2,511.50)

7 Franklin Templeton Mutual Fund FLEXI CAP FUND (Equity) NIL NIL

(57,870.66) (9.28)

8 HDFC Mutual Fund Liquid Fund Premium Plan-DDR 40,291,687.84 4,939.68

(NIL) (NIL)

9 ICICI Prudential Mutual Fund Liquid Fund- Inst.-DDR 44,631,274.64 4,463.35

(9,169,764.17) (916.98)

Flexible Income-DDR 5,698,146.90 602.49

(NIL) (NIL)

Emerging Star Fund (Equity) NIL NIL

(32,183.22) (7.09)Discovery Fund (Equity) NIL NIL

(33,730.21) (5.75)

10 JM Money Manager Fund Manager Fund-SuperPlus- DDR NIL NIL

(32,719,504.02) (3,272.81)

11 Kotak Mutual Fund Liquid Fund- Institutional-DDR 7,387,413.32 903.34 (4,114,788.25) (503.16) 12 LIC MF LIC Mutual Fund Liquid Plus Fund -DDR 49,032,730.74 4,903.27 (NIL) (NIL) Liquid Fund - DDR 101,366,464.70 11,130.69 (NIL) (NIL)

Quantity Purchase


.

Sr. No. MF House Name Scheme ( Units ) Amount

13 Lotus India Mutual Fund Liquid Plus Fund-Inst-DDR 3,364,083.25 336.93

(15,205,266.53) (1,521.02)

Short Term Plan-Inst-DDR NIL NIL

(5,194,862.39) (519.56)

14 Quantum Mutual Fund Liquid Fund-DDR NIL NIL

(11,000,000.00) (1,123.63)

15 Reliance Mutual Fund Liquidity Fund-DDR 20,999,302.18 2,100.58

(1,641,334.09) (250.91)

Liquid Plus Fund-DDR/ 420,062.12 4,205.41

Money Manager Fund-DDR (NIL) (NIL)

Medium Term Fund-DDR 15,272,632.38 2,610.93

(NIL) (NIL)

16 SBI Mutual Fund Liquid Fund - Super IP -DDR 29,925,795.43 3,002.31

(8,100,367.43) (812.67)

Infrastructure Fund (Equity) NIL NIL

(5,000,000.00) (500.00)

LIQUID PLUS -Inst-DDR 4,026,153.86 402.81

(NIL) (NIL)

17 Sundaram BNP Paribas Mutual Liquid-SIP-DDR 14,977,941.11 1,501.54

(NIL) (NIL)

18 Tata Mutual Fund Liquid Fund-SHIP-DDR 468,261.78 5218.87

(194,307.30) (2,165.59)

Floater Fund - DDR 32,117,856.59 3,223.22

(25,994,949.56) (2,608.75)

Treasury Manager Fund SHIP-Gr. NIL NIL

(47,708.91) (500.08)

19 UTI Mutual Fund Liquid Cash Plan Instit.-DDR 245,793.23 2,505.73

(770,313.03) (7,850.97)

Liquid Plus Instit.-DDR NIL NIL

(102,885.08) (1,028.85)

Quantity Purchase

6. In view of long term interest of the company in its subsidiaries namely Mercator Offshore Holding Pte Ltd (Singapore), Mercator Oil and Gas Ltd and Mercator Petroleum Pvt Ltd, no provision is made for diminution in value of investment in these subsidiary companies.

7. a) The company has raised Foreign Currency Loans aggregating to USD 25 Mn ( Nil)b) The Company has established Letters of Credit aggregating to Rs. 74,629.11 Lacs (Rs. 7,580.79 Lacs). The same

has been utilized for acquisition of vessels.

8. The company has not received any intimation from its vendors regarding the status under the Micro, Small and Medium Enterprises Development Act 2006 and hence disclosures required under this act have not been made.




72 73

9. The balance in the Exchange Earners Foreign Currency account is maintained in US Dollars and shown in equivalent Indian Rupees. The balance in the said account as at the Balance Sheet date was USD 40.51 Lacs (Previous Year USD 0.217 Lacs)

10. Details of bank balances with Foreign Banks

Name of the Bank Balance as at March 31, Maximum Balance during 2009 (Rs. in lacs) the year (Rs. in lacs)

HSBC Bank Singapore 119.47 119.47(72.22) (6,428.73)

HSBC Bank Singapore NIL 22.93(Fixed Deposit) (21.32) (2,086.38)

Current Year (Rs in Lacs.) (Rs in Lacs)

Previous Year

11) Value of material imported by the company on CIF basis during the accounting year in respect ofStores & Spares 1,257.65 384.14Capital Goods (including CWIP) 102,342.33 21,726.12

12) Details of Spare Parts consumedRaw MaterialImported Spares 1,257.65 384.14

39.24% 19.48%Indigenous Spares 1,946.95 1,586.95

60.76% 80.52%

13) Expenditure in foreign currency during the yearOn Repairs / Renovations and expenses of Vessels 3354.19 3,405.21 On Charter Hire 8,892.65 12,837.37On Vessel Expenses 22,993.23 20,990.15On Travelling 11.15 9.32On Interest 4,451.43 2,710.98

14) Disclosure as required under clause 32 of the listing agreementLoans and Advances include amount receivable from Amount Receivable from SubsidiariesMercator International (Pte) Ltd.Balance outstanding at year end 53,880.45 37,990.66Maximum amount Outstanding during the year. 76,104.38 42,330.33

Mercator Lines Singapore (Pte) Ltd.Balance outstanding at year end NIL NILMaximum amount Outstanding during the year. NIL 31,401.51

Mercator Oil & Gas LimitedBalance outstanding at year end 91.27 76.27

Maximum amount Outstanding during the year. 91.27 76.27

Current Year (Rs in Lacs.) (Rs in Lacs)

Previous Year

Mercator Offshore LimitedBalance outstanding at year end 5,121.32 5,291.35Maximum amount Outstanding during the year. 7,203.73 5,514.01Mercator Petroleum LimitedBalance outstanding at year end 125.73 0.16Maximum amount Outstanding during the year. 125.73 0.16MCS Holdings Pte LimitedBalance outstanding at year end 2.22 NILMaximum amount Outstanding during the year. 2.22 NILOorja Indo Petangis 3.48 NILBalance outstanding at year end 3.48 NILMaximum amount Outstanding during the year.Companies in which some directors are directorsMercator Mechmarine LimitedBalance outstanding at year end NIL 9.00Maximum amount Outstanding during the year. 2,039.00 9.00

15) a) Remuneration to Directors Executive Chairman and Managing Directors

Salary 136.00 96.00Perquisites 11.46 17.29Commission 1,926.48 1,492.50Non-Executive DirectorsCommission 10.00 10.00

b) Computation of Net Profit in accordance with section 349 of the Companies Act, 1956 for calculation of commission payable to Executive Chairman and Managing Director

Profit before Tax 18,787.15 17,675.43 Add: Remuneration paid to Directors 2,083.94 1,615.79 Less: Gain on sale of Fixed Assets (2,953.95) Less: Adjustments (1.17) (162.27) Net Profit on which remuneration is payable 20,869.92 16,175.00

Directors' Commission within overall Remuneration Executive Directors 2,073.94 1,605.79 Non Executive Directors 10.00 10.00

16) Payment to AuditorsAudit Fees 11.00 10.00Tax Audit Fees 1.50 1.50For Quarterly Limited Review 2.00 1.50For certification and other matters 4.75 4.00Service Tax 1.98 2.10Total 21.23 19.10

17) Earnings in foreign currency on account ofShipping Income 38,149.30 25,725.52Other Income 2,244.56 1,174.67



74 75

18. Remittance in foreign currencies for dividendsThe Company has not remitted any amount in foreign currencies on account of dividends during the year and does not have information as to the extent to which remittance, if any, of foreign currencies on account of dividends have been made by/on behalf of non-resident shareholders. The particulars of dividend payable to non-resident shareholder which were declared during the year are as under:

19. Disclosures in accordance with Revised Accounting Standard (AS) -15 on “Employee Benefits”:Disclosure as required by AS-15 is as under

(A) Defined Contribution Plans: The Company has recognized the following amounts in the Profit and Loss Account for the year:

Current Year Previous Year

(Rs in Lacs) (Rs in Lacs)

i) Number of non-resident shareholders 1,343 941ii) Number of ordinary shares held by them 4,66,97,593 4,14,44,348iii) Gross amount of dividend 414.44 513.67



(i) Contribution to Employees’ Provident Fund 34.20 22.02(ii) Contribution to Employees’ Family Pension Fund NIL NIL(iii) Contribution to Employees’ Superannuation Fund NIL NIL Total 34.20 22.02

(B) Defined Benefit Plans:(i) Changes in the Present Value of Obligation

Gratuity Leave Total Gratuity Leave TotalEncashment Encashment

(a) Present Value Obligation as at April 1, 2008 30.89 17.37 48.26 17.91 14.64 32.55

(b) Interest cost 2.16 1.21 3.37 1.43 1.17 2.6(c) Past Service Cost NIL NIL NIL NIL NIL NIL(d) Current Service Cost 22.17 18.77 40.94 13.67 8.87 22.54(e) Curtailment Cost/(Credit) NIL NIL NIL NIL NIL NIL(f) Settlement Cost/(Credit) NIL NIL NIL NIL NIL NIL(g) Benefits Paid NIL 7.68 7.68 0.33 1.58 1.91(h) Actuarial (Gain)/Loss 24.10 15.42 39.52 (1.78) (5.72) (7.5)(i) Present Value of Obligation

as at March 31, 2009 79.33 45.12 124.45 30.89 17.38 48.27

For the Year Ended March 31, 2009 For the Year Ended March 31, 2008

(ii) Expenses recognized in the Profit and Loss Account

Gratuity Leave Total Gratuity Leave Total

Encashment Encashment

(a) Current Service Cost 22.17 18.77 40.94 13.67 8.87 22.54

(b) Past Service Cost NIL NIL NIL NIL NIL NIL

(c) Interest cost 2.16 1.21 3.37 1.43 1.17 2.6

(d) Curtailment Cost/(Credit) NIL NIL NIL NIL NIL NIL

(e) Settlement Cost/(Credit) NIL NIL NIL NIL NIL NIL

(f) Net Actuarial (Gain)/Loss 24.10 15.42 39.52 (1.78) (5.72) (7.5)

(g) Employees' Contribution NIL NIL NIL NIL NIL NIL

(h) Total Expenses recognized

in Profit and Loss A/c 48.44 35.42 83.86 13.32 4.32 17.64

For the Year Ended March 31, 2009 For the Year Ended March 31, 2008

(iii) Following are the Principal Actuarial Assumptions used as at the balance sheet date:

(a) Discount Rate 7% 7% 8% 8%

(b) Salary Escalation Rate –

Management Staff 12% 12% 7% 7%

(c) Turnover Rate 11% 11% 3% 3%

(d) Mortality Table LIC (1994-96) LIC (1994-96) LIC (1994-96) LIC (1994-96)

Ultimate Ultimate Ultimate Ultimate

Particulars FY 2008-09

Gratuity Leave Encashment Gratuity Leave Encashment

FY2008-09 FY 2007-08 FY2007-08

The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority,

promotion and other relevant factors.

20. Segment Reporting

As the company principal business activities fall within the single segment viz Shipping and related activities there is no

reportable segment pursuant to Accounting Standard 17 'Segment Reporting; as notified by the Companies

(Accounting Standards) Rules, 2006



76 77

A List of Related Parties

i) Subsidiaries

1. Mercator Offshore Limited (MOL) - Singapore

2. Mercator International Pte Limited (MIPL) - Singapore

3. Mercator Offshore Holdings Pte. Limited - Singapore

4. Mercator Oil and Gas Limited (MOGL) - India

5. Mercator Petroleum Private Limited - India

6. Mercator Lines ( Singapore) Limited (MLS) (subsidiary of MIL)

7. Oorja Holdings Pte. Limited. (OHL) Singapore - subsidiary of MIL

8. Varsha Marine Pte Limited (subsidiary of MLS)

9. Vidya Marine Pte Limited (subsidiary of MLS)

10. Mercator Lines (Panama) Inc (subsidiary of MLS)

11. Oorja 1 Pte Limited - (Oorja 1) - Singapore - Subsidiary of OHL



14. Oorja Mocambique Minas Limitada - (Oorja Mocambique) - Mocambique- Subsidiary of OHL

15. MCS Holdings Pte. Ltd – Singapore- Subsidiary of OHL

16. Oorja Indo Petangis Four (Indonesia) – Subsidiary of Oorja 1

17. Oorja Indo Petangis Three (Indonesia) – Subsidiary of Oorja 2

18. Oorja Indo KGS - Indonesia- Subsidiary of Oorja 3

19. Broadtec Mocambic Minas Limited - Mozambique - Subsidiary of Oorja Mozambique

20. PT Mincon Indo Resources- Indonesia – Subsidiary of Oorja Indo Petangis Three

ii) Companies in which the directors/relatives of directors have substantial interest

1. MLL Logistics Private Limited

2. Mercator Mech Marine Limited

3. Mercator Healthcare Limited

4. Ankur Fertilizers Private Limited

5. Rishi Holding Private Limited

6. AHM Investments Private Limited.

7. CMA Constructions & Properties Private Limited.

iii) Directors of the Company

1. H. K Mittal

2. A. J Agarwal

3. Manohar Bidaye

4. Anil Khanna

5. M. G Ramakrishna

6. K. R Bharat

iv) Key Management Personnel

1. H. K Mittal

2. A. J. Agarwal

V) Relative of Key Management Personnel

1. Adip Mittal

21. Related Party Disclosures

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2 5 Y e a r s R e f l e c t i n g E x c e l l e n c e78 79

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st

(Am

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nt

Rs.

in

Lacs

)

22. Disclosure in respect of operating lease (as Lessee):


(a) Operating Leases

Disclosures in respect of cancellable agreements for

office premises taken on lease

(i) Lease payments recognized in the Profit and Loss Account 354.86 314.71

(ii) Significant leasing arrangements

The Company has given refundable interest free security

deposits under the agreements.

The lease agreements are for a period from 60 to 108 months.

These agreements also provided for increase in rent.

These agreements are non cancellable by both the parties for

period of 60 months except in certain exceptional circumstances.

(iii) Future minimum lease payments under

non-cancellable agreements

Not later than one year 373.21 351.25

Later than one year and not later than five years 578.87 952.07

Later than five years NIL NIL

Year Ended31st March, 2009 31st March, 2009

Year ended

23. Disclosure in respect of operating lease (as Lessor):



Disclosures in respect of cancellable agreements for office

premises given on lease

(i) Lease payments recognized in the Profit and Loss Account 106.47 113.87


The Company has taken refundable interest free security


The lease agreements are for a period of sixty months.

These agreements are non cancelable by both the parties

for 18 months except in certain exceptional circumstances.

Year Ended

31st March, 2009 31st March, 2009

Year ended

80 81



(iii) Future minimum lease payments under non-cancellable

agreements

Not later than one year 138.00 NIL

Later than one year and not later than five years NIL NIL


Year Ended


Year ended

24. Earning Per Share

tax thereon

- Basic (Rs. in Lacs) 18,112.15 16,274.83

- Diluted (Rs. in Lacs) 18,168.97 16,333.56

Number of Shares used in computing Earning Per Share

- Basic 235,946,403 224,883,073

- Diluted 241,064,272 236,414,299

Earning per share (equity shares of face value Re 1/-)

- Basic (in Rs.) 7.68 7.24

- Diluted (in Rs.) 7.54 6.91

Year Ended


Year ended

Net Profit after Tax and preference dividend including

25. The Company has opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with the notification of Ministry of Corporate Affairs (MCA) dt. 31st March 2009, On Accounting Standard AS 11.

a) Losses arising from the effect of changes in foreign exchange rates on foreign currency loans relating to acquisition of depreciable capital assets, amounting to Rs.21,832.90 Lacs for the year ended March 31,2009, are added to the cost of such assets. Consequent to the change, the depreciation for the year is higher by Rs.827.03 Lacs and the profit for the year and reserves are higher by Rs.21,000.62 Lacs The corresponding foreign exchange gains of Rs.4,991.38 Lacs (net of depreciation of Rs.295.37 Lacs) for the year ended March 31, 2008, have been reversed from the General Reserve and deducted from the cost of such assets.

b) Losses arising from the effect of change in foreign exchange rates on foreign currency loan not relating to acquisition of depreciable capital assets amounting to Rs.144.12Lacs for FY 2008-09 and gain of Rs.90.97 Lacs for the 2007-08, are transferred to Foreign Currency Monetary Item Translation Difference Account. In line with the policy referred to in point no 12. (b) (ii) above, Rs.81.95 Lacs has been amortised during the year. Consequent to

the change, profit for the year is lower by Rs.28.80 Lacs.

26. Out of the total outstanding loans given to subsidiaries amounting to Rs.58,638.94 Lacs (USD 115.08Mn), Company has considered loans of Rs.43,205.60 Lacs (USD 84.8Mn) as long term loans. Gains of Rs.6571.15 lacs on restatement of these foreign currency long term loans, given to non integral foreign operations is, following applicable provisions of AS 11, accumulated in foreign currency fluctuation reserve in Reserves and Surplus. On disposal of the investment, the corresponding balance in the said reserve will be transferred to profit and loss account.

27. Derivative Instruments The Company uses foreign currency forward contracts to hedge its risks associated with foreign Currency

fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Company's strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Company's Risk Management Policy. The Company does not use forward contracts for speculative purposes. There are no outstanding Forward Exchange Contracts entered into by the Company as on 31st March 2009.

28. Foreign Currency ExposuresThe year end exposure in a currency other than the financial currency of the Company that were not hedged by a derivative instrument or otherwise are given below:

Rs. Lacs Fx.Million Rs. Lacs Fx.Million Account Receivable 4,978.99 $ 9.77 968.95 $ 2.44

Balance in EEFC Account 2064.13 $ 4.05 80.78 $ 0.20

Fixed Deposit with foreign Bank NIL NIL 21.32 $ 0.05 Loan & Advances 60,906.73 $ 118.49 43,017.97 $108.04

Euro 0.65 JPY 2.71

SGD 0.27

Accounts Payable/Acceptance 74,629.11 $ 145.86 27771.82 $ 66.60 (including capital commitments Euro 0.49 J¥ 325.0

made but not provided for)

Borrowings 42,978.04 $ 84.35 32221.17 $ 80.92

2008-09 2007-08

29. During the year the Company did not have full-time company secretary as required under section 383A of the

Companies Act, 1956. Company is in the process of appointing company secretary.

30. Previous years figures have been regrouped / rearranged wherever necessary.


2 5 Y e a r s R e f l e c t i n g E x c e l l e n c e84

I. Registration Details

Registration No. 11-31418 State Code 011

Balance Sheet Date 3/31/2009 Date Month Year

31 3 2009

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

Public Issue NIL Right Issue NIL

Bonus Issue NIL Private Placement NIL

III. Position of Mobilisation and Deployment of Funds (Amount in Rs. Thousand)

Total Liabilities 25,241,623.21 Total Assets 25,241,623.21

Source of Funds

Paid-up Capital 402,717.07 Reverse & Surplus 10,709,525.37

Secured Loans 12,574,210.34 Unsecured Loans 1,555,170.44

IV. Application of Funds

Net Fixed Assets 20,210,229.32 Investments 434,279.94

Net Current Assets 1,499,644.65 Misc, Expenditure NIL

Deferred Tax Asst

V. Performance of Company (Amount in Rs. Thousand)

Turnover 11,831,120.77 Total Expenditure 9,952,405.30

Profit/(Loss) Before Tax 1,878,715.47 Profit/(Loss) after Tax 1,811,215.47

Earning per Share (Rs.) 7.68 Dividend Rate% 50%

VI. Generic Name of the Principle Product / Services of the company (AS per monetary terms)

Item Code No: NA

Product Description: Shipping

BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE



Anil KhannaDirector




85

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88 89

1. We have audited the attached consolidated balance sheet of Mercator Lines Limited (the Company) and its subsidiaries (collectively called ‘the Mercator Group’) as at March 31, 2009, the consolidated profit and loss account and the consolidated cash flow statement for the year ended on that date, annexed thereto. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

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

3. We did not audit the financial statements of subsidiaries, whose financial statements reflect total assets (net) of Rs.2,913.36 Crores as at 31st March, 2009, and total revenues of Rs. 999.81 Crores. These financial statements and other financial information have been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the report of the other auditors.

4. We report that the consolidated financial statements have been prepared by the Company’s management in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, as notified by the Companies (Accounting Standards) Rules, 2006.

In our opinion and to the best of our information and according to the explanations given to us, the consolidated financial statements give a true and fair view in conformity with the accounting principles generally accepted in India:

a. in the case of the consolidated balance sheet, of the state of affairs of the Mercator Group as at March 31, 2009;b. in the case of the consolidated profit and loss account, of the profit of the Mercator Group for the year ended on

that date; andc. in the case of the consolidated cash flow statement, of the cash flows of the Mercator Group for the year ended

on that date.

For and on behalf ofContractor, Nayak & Kishnadwala Chartered Accountants

Himanshu KishnadwalaPartner, M. No 37391 Mumbai19th May 2009

Auditors’ report to the Board of Directors on the Consolidated financial statements of Mercator Lines Limited

and its subsidiaries(Amount Rs. in Lacs)

CONSOLIDATED BALANCE SHEET AS AT MARCH 31, 2009


SOURCES OF FUNDS Shareholders’ Funds Share Capital A 2,359.92 2,348.95Warrants against Share Capital A1 1,667.25 1,667.25Reserves and Surplus B 224,579.10 158,051.71Minority Interest 29,533.07 15,483.39

258,139.34 177,551.30Loan Funds Secured Loans C 259,859.90 198,832.01Unsecured Loans D 23,703.70 12,280.55

283,563.60 211,112.56

Deferred Tax Liabilities 0.30 -Total 541,703.24 388,663.86

APPLICATION OF FUNDS Fixed Assets EGross Block 607,876.71 314,196.02Depreciation (59,345.15) (35,286.91) Net Block 548,531.56 278,909.11Capital work in progress 5,185.69 45,101.71Asset Held for Disposal 26,060.57 -

579,777.83 324,010.82Investments F 4,196.50 425.00

Current Assets, Loans & Advances GInventories 2,369.22 2,704.68Sundry Debtors 29,954.91 20,795.84Cash and Bank Balances 85,448.08 85,314.49Loans and Advances 35,025.21 41,954.77

152,797.42 150,769.78Current Liabilities and Provisions HCurrent Liabilities 192,332.14 83,126.34Provisions 1,504.94 3,071.25Incomplete Voyages (Net) 1,271.16 344.15

195,108.24 86,541.74Net Current Assets (42,310.81) 64,228.04Deferred Tax Assets 39.74 -

Total 541,703.24 388,663.86Significant Accounting Policies I& Notes to the Accounts






Anil KhannaDirector






90 91

(Amount Rs. in Lacs)CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED ON MARCH 31, 2009

INCOMEShipping Income J 213,359.98 147.685.09Sale of Coal 7,690.75 -Other Income K (3,657.93) 7,933.65Profit on Sale of Investments (Net) 36.50 325.80Profit/(loss) on Sale of Assets (Net) (47.43) 2,953.95

Total 217,381.87 158,898.49

EXPENSESShip Operating Expenses L 111,408.97 81,871.63Mining Expenses M 6,800.98 -Administrative and Other Expenses N 7,907.76 4,877.58Diminusion in Value of Investment 239.81 -Finance Charges O 16,632.29 14,464.28Depreciation 26,870.56 16,749.92

Total 169,860.37 117,963.41

Profit Before Taxes 47,521.50 40,935.08Provision for TaxationCurrent Tax (755.50) (880.89)Deferred Tax (37.53) -Fringe Benefit Tax (25.00) (21.00)Profit After Taxes 46,703.47 40,033.19

Minority Interest (9,055.06) (2,988.90)Prior Year Expenses / Income (Net) (1.17) (4,148.60)Short Provision for Tax of earlier Year (1.94) (130.00)Balance brought forward from last year 47,831.92 23,612.86Available for Appropriations 85,477.23 56,378.55Less/(Add): AppropriationsTransfer to General Reserve 1,880.00 1,770.00Transfer to Debenture Redemption Reserve 3,900.00 -Transfer to Tonnage Tax Reserve 5,700.00 3,300.00Dividend on Preference Shares - 307.76Dividend On Equity Shares (on conversion of FCCB’s/Warrents) 12.06 80.00Proposed Dividend on Equity Shares 1,179.96 2,583.85Tax on Dividend (including for previous year Rs.2.05 Lacs( Rs. 13.60 Lacs) 202.58 505.02Balance Carried to Balance Sheet 72,602.63 47,831.92Earning Per Share (Equity Share of Re. 1/- Each) Basic (Rs) 15.96 14.45Diluted (Rs) 15.64 13.73Significant Accounting Policies I& Notes to the Accounts

Year Ended Year EndedParticulars Schedule 31, March 2009 31, March 2008



Himanshu Kishnadwala Partner M No. 37391 Mumbai - 19th May 2009


Anil KhannaDirector




(Amount Rs. in Lacs)CASH FLOW STATEMENT FOR THE YEAR ENDED MARCH 31, 2009

Particulars Current Year Previous YearCash Flow from Operating Activities Net Profit Before Tax 38,466.44 37,946.18Adjustment for: Depreciation 26,870.56 16,749.92Interest Paid 16,632.29 14,464.28(Profit)/Loss on Fixed Assets Scrapped/Sold 47.43 (325.80)(Profit)/Loss on Sale of Investment (36.50) (2,953.95) Dividend Income 168.81 (406.91)Foreign Currency Translation Adjustment (41,609.62) 1,839.23Operating Profit before Working Capital Changes 40,539.41 67,312.95Adjustment for: Trade and Other Receivables (1,053.85) (23,162.76)Trade Payables 108,566.50 65,811.12Cash Generated from Operations 148,052.06 109,961.31Direct Taxes Paid (819.97) (1,031.89)

Total Cash Generated from Operating Activities 147,232.09 108,929.42 Cash Generated from Prior Period Items (1.17) (4,148.60)Net Cash from Operating Activities 147,230.92 104,780.82Cash flow from Investing ActivitiesIncrease in Fixed Assets including Capital Work in Progress (242,154.80) (165,407.63)Sale of Fixed Assets 1,079.41 6,085.61 Proceed from sale of Non Trade Investments 36.50 325.80(Purchase)/sale of Investment (3,771.50) 8,281.69Dividend Income (168.81) 406.91Net Cash from Investing Activities (244,979.20) (150,307.62)Cash Flow from Financing ActivitiesProceeds from issue of Share Capital from conversion of Bonds and warrants 10.97 83,586.35Proceeds from Long Term Borrowing 72,451.04 27,639.09Minority Interest 14,049.68 -Increase/Decrease in Reserves 30,276.70 -Interest Paid (16,632.29) (14,464.28)Dividends Paid including tax thereon (1,394.60) (3,476.63)Net Cash from Financing Activities 98,761.50 93,284.53Net Increase in Cash and Cash Equivalents 1,013.22 47,757.73Cash and Cash Equivalents as at beginning of the year (refer Schedule G) 85,635.29 37,877.56Cash and Cash Equivalents as at end of the year (refer Schedule G) 86,648.51 85,635.29





Anil KhannaDirector




Notes:1) Figures in bracket represent outflow2) Cash and cash equivalents include gain/(loss) on foreign exchange revaluation of Rs.208.10 lacs (Previous Year Loss of Rs. 76.71)3) Interest paid/acqusition of Fixed Assets is exclusive/inclusive of interest capitalised Rs. 67.14 (Previous Year Rs.91.63)4) Cash and cash equivalent include Fixed Deposit of Rs.370,00 lacs ( Previous Year NIL) as margin deposit against an acceptance.5) Previous year's figures have been recast/restated wherever necessary.




92 93

(Amount Rs. in Lacs)SCHEDULE FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS


SCHEDULE ‘A’

Share Capital

Authorised

35,00,00,000 Equity Shares of Re 1/- each. 3,500.00 3,500.00

200,00,000 Preference Shares of Rs. 100 each. 20,000.00 20,000.00

23,500.00 23,500.00

Issued Capital

23,59,92,073(23,48,95,387) Equity of Shares Re. 1/- each fully

paid up 2,359.92 2,348.95

2,359.92 2,348.95

Subscribed and Paid Up Capital

Equity

23,59,92,073 (23,48,95,387) Equity of Shares Re. 1/- each fully

paid up. 2,359.92 2,348.95

(a) 11,83,45,500 shares of Re 1/-were allotted as bonus

shares by capitalisation of Securities Premium Account..

(b) NIL (32,00,000) shares of Re. 1/- each are issued on

preferential basis on conversion of warrants.

(c) 10,96,686 (37,652,887) Shares of Re. 1/- each are issued

on conversion of FCCBs during the Year.

2,359.92 2,348.95

SCHEDULE ‘A1’

Warrants against Share Capital

2,85,00,000 Warrants (Each Warrant carry option/entitlement

to subscribe to 1 number of equity share of Re. 1/- each on

or before April 24, 2009 at a price not less than Rs.58.50

per share.) 1,667.25 1,667.25

(The warrant holder has not exercised the above option on

or before April, 24 2009 and the amount received has been

subsequently forfeited.)

1,667.25 1,667.25

SCHEDULE ‘B’Reserves and Surplus

Capital ReserveAs per last Balance Sheet 26.24 26.24

26.24 26.24Capital Redemption ReserveAs per last Balance Sheet 4,000.00 -Add: Transferred From General Reserve on redemption of Preference Shares - 4,000.00

4,000.00 4,000.00 Securities Premium AccountAs per last Balance Sheet 31,945.52 7,532.61Add: Received during the year on conversion of warrants and FCCBs 612.71 24,439.88Less: Share Issue Expenses (0.66) (26.97)

32,557.57 31,945.52Tonnage Tax Reserve

As per last Balance Sheet 3,300.00 1,600.00 Add: Transfer from Profit and Loss Account 5,700.00 3,300.00

Less: Transferred to Utilised Account (3,300.00) (1,600.00)5,700.00 3,300.00

(Amount Rs. in Lacs)SCHEDULES FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS


Tonnage Tax Reserve (Utilised)as per last Balance Sheet 8,524.83 6,924.83Add: Transfer from Tonnage Tax Reserve 3,300.00 1,600.00

11,824.83 8,524.83Debenture Redemption ReserveAs per last Balance Sheet 6,200.00 8,000.00Transferred to Profit & Loss Account 3,900.00 -Transferred to General Reserve on redemption of debentures - (1,800.00)

10,100.00 6,200.00General Reserve As per last Balance Sheet 10,472.83 10,902.83Add: Transferred from Debenture Redemption Reserve - 1,800.00Add: Transferred From Profit and Loss Account 1,880.00 1,770.00 Less: Exchange fluctuation for 2007-08 on long term foreign currency MonetaryItems as per transitional provision of AS 11 (Refer Note 11 of Schedule I) (4,696.00) -Less: Transferred to Capital Redemption Reserve on redemption of Preference Shares - (4,000.00)

7,656.83 10,472.83

Profit/Loss on Cash Flow hedging Reserve Account - (5,701.31)

Foreign Exchange Fluctuation ReserveExchange fluctuation on Long Term Loans in relation to integral foreign operations 6,571.15 -

6,571.15 -

Capital Reserve (on Consolidation) 69,681.03 54,459.24-

Foreign currency Translation Reserve 3,830.03 (3,007.57)

Foreign currency Monetary Item Translation Difference - -Exchange fluctuation on Long Term Loans utilised forother purpose as per transitional provision of AS 11 - -(Refer Note 11 of Schedule I) (Net of amortisation Rs.81.95) 28.80 -Surplus in Profit and Loss Account 72,602.62 47,831.92

224,579.10 158,051.71

SCHEDULE ‘C’ Secured Loans

(a) Debentures (1) NIL (30,00,000) - 10.00% Non Convertible Secured Debentures

Series IV of Rs. NIL (Rs. 10/-) each - 300.00

(2) NIL (30,00,000) - 10.00% Non Convertible Secured Debentures Series V of Rs. 10/- (Rs. 20/-) each - 600.00

(3) 900 (1,600) 11.25% (7.5% upto 30th June, 2008) Non Convertible Secured Debentures of Rs.5,62,500/- (Rs.6,87,500/-) each, redeemable in 12 half yearly instalments of 6.25% and last two of 12.50% of face value each commencing from six months after one year from the date of allotment i.e. June 30, 2004 towards face value Series VII A. There is a put/call option at the end of the 4th Year & 6th Year from the date of allotment. 5,062.50 11,000.00



94 95



4) NIL (50) 7.50% Non Convertible Secured Debentures Series VII B of NIL (7,50,000/-) each. - 375.00

(5) 1500 11.90% Non Convertible Secured Debentures Series IX A of Rs.10,00,000/- each with the tenor of 10 years, redeemable in 3 yearly instalments at the end of 8th, 9th and 10th year from thedate of allotment. There is call option at the end of 4th year from the date of allotment. In the event, this call option is not exercised by the Issuer at the end of 4th year, the coupon on the debentures

shall stand increased to 12.35% p.a. payable half yearly effective immediately there after for the balance tenure. 15,000.00 -

(b) Foreign Currency Loans from Banks 173,529.33 136,350.01

(c) Term Loans from Banks 64,873.00 50,207.00

(d) Cash Credit facilities from scheduled Banks 1,395.07 -

259,859.90 198,832.01

Note

1) Debentures referred in (a) above are secured by first mortgage on specified vessels of the company on pari-passu basis with other lenders and first charge on the specified immovable properties together with

structure thereon.

2) Foreign Currency Loan refered in (b) above are secured by first Charge on specified vessels of the companyon pari-passu basis with other lenders and also include a External Commercial Borrowing of Rs. 12,359.12 lacs which is secured by exclusive charge on specified vessels of the company.

3) Term Loan refered in (c) above are secured by first charge on specified vessels, on pari passu basis with other lenders.

4) Working capital facilities from Schedule Banks are secured by second charge on specified vessels and 1st charge on all receivables and other current assets of the company on pari-passu basis.



SCHEDULE ‘D’ Unsecured Loans 1) 700 (850) 1.50% Foreign Currency Convertible Bonds of

USD 10,000 each 3,566.50 3,409.35During the year, pursuant to notices received from Bondholders 150 (5150) FCCBs of aggregate amount of USD 1,500,000 (USD 51,500,000) were converted into 10,96,686 (37,652,887) equity shares of Re. 1/- each at a predetermined price of Rs. 59.812 per share at a fixed exchange rate of Rs.43.73 per USD

The balance bonds are convertible at any time up to the close of Business on 20 April 2010 by holders into newly issued ordinary shares of Re. 1 each at agreed conversion price. The Bonds may be redeemed in whole at the option of the Company at any time on or after 15 May 2008 and or prior to 20 April 2010 at the accreted principal amount together with accrued interest.

(b) USD 16,000,000 2.50% Convertible Bonds B (Unsecured convertible bonds due in 2012. They are optionally convertible on and after 45 days from the date of listing of the ordinary shares of the company in the SGX or alternative stock exchange pursuant to the IPO and on or before the close of business on March 12, 2012. The conversion price is fixed at SG$ 0.76 per share.)

8,152.00 6,371.20

2) Other Loans - 2,500.00

10,000.00 -3) Commercial Paper from Financial Institution (Amount repayable within one year Rs.10,000 Lacs(Rs.25000 Lacs))

4) Overdraft from Scheduled Banks facility 1,985.20 -

23,703.70 12,280.55



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(Amount Rs. in Lacs)SCHEDULE FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS

Items Current Year Previous Year Nos Cost Nos. Cost

Schedule F Investments

Non-Trade - UnquotedLong Term (At Cost)In shares of company (Unquoted)Marg Swarnabhoomi Part Pvt.. Ltd. 1,250 0.13 -

0.13In Other s (Unquoted)Units of Indian Real Opportunity Venture Capital Fund 37,500 375.00 12,500.00 125.00 375.00 125.00 (Repurchase Value is Rs.NIL Lacs(Previous Year Rs.458.51 Lacs)Axis Infrastructure Ltd 1,439.78Investment in shares 4.85 1,444.63 125.00

Current Investments (at lower of cost and Market value In units of Mutual Funds Lotus FMP mutual Fund - - 3,000,000.00 300.00Birla Sun Life Saving Fund - Instl - Daily Dividend 401.02ICICI Prudential Flexible Income Plan Premium - Daily Dividend 1,363.90Reliance Money Manager Fund Institutional Option - Daily Dividend 611.82Sub Total - 2,376.74 300.00(Repurchase Vale of current investment on 31.3.09 isRs.2,376.74 Lacs (Previous Year Nil)Grand Total 4,196.50 425.00

SCHEDULE ‘G’

Current AssetsInventoriesBunker/Lubes 1,687.90 2 ,704.68Coal 681.32 - 2,369.22 2,704.68Sundry Debtors(Unsecured, Considered Good)Over Six Months 2,762.88 1,337.32Other 27,192.03

19,458.52

29,954.91 20,795.84

Balances with Scheduled BanksIn fixed Deposit Accounts 77,698.79 76,919.69Includes Margin Deposit of Rs.37000 Lakhs given against an Acceptance)In current Accounts 5,612.91 8,243.11In Exchange Earners Foreign Currency Account 1,944.67 8.57In Dividend Accounts 67.10 39.40Bank Balance / Fixed Deposits with Foreign Banks (Refer Note B (9) of Schedule I) 119.47 93.54Cash on hand 5.14 10.17

85,448.08 85,314.49

Cash and Bank Balances



98 99

SCHEDULES FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS


Loans and Advances (Unsecured Considered Good) Advances recoverable in cash or in kindor for value to be received 20,141.93 15,893.73

Deposits with Government and semi Government Bodies 16.78 16.78Inter Corporate Deposits 1,382.60 689.43Other Deposits 1,156.75 960.52Accrued Interest on fixed deposit with banks 1,200.45 320.81Advance payment of tax (Net of provisions) 871.92 704.58Derivative Financial Instruments 10,254.77 23,368.91

35,025.21 41,954.77SCHEDULE ‘H’

Current Liabilities

Sundry Creditors

For Services and expenses 5,077.91 10,006.76

Other liabilities 19,183.58 6,777.65

Acceptances 159,907.90 37,905.27

Advance from customer 12.93 796.79

Deposits 87.98 85.26

Unclaimed Dividend * 67.10 39.40

Derivative Financial Instrument 7,994.74 27,515.21

*(There is no amount due and outstanding to

be credited to Investor

Education and Protection Fund) 192,332.14 83,126.34

Provisions

Proposed Dividend 1,179.96 2,583.85

Tax on Dividend 200.53 439.13

Employees Retirement Benefits 124.45 48.27

1,504.94 3,071.25

SCHEDULE ‘J’Shipping and related IncomeFreight 91,863.93 81,549.86Charter Hire 109,086.26 59,996.57Dispatch and Demurrage 6,772.40 3,940.86Cargo Handling Services 5,637.39 2,197.80 213,359.98 147,685.09

SCHEDULE ‘K’Other Income Dividend from Investments 168.81 406.91Rent Received 106.47 121.96Exchange Fluctuations Net 3,831.75 4,333.55 Gain / (Loss) on FFA Transaction (7,767.30) 3,079.70Miscellaneous Income 2.34 (8.47)

(3,657.93) 7,933.65

(Amount Rs. in Lacs) (Amount Rs. in Lacs)SCHEDULE FORMING PART OF CONSOLIDATED ANNUAL ACCOUNTS


SCHEDULE ‘L’Ship Operating Expenses Bunker Consumed 29,859.94 23,010.93Vessel/Equipment Hire Charges 43,524.79 31,761.88Technical, Service expenses 8,430.69 5,598.66Agency, Professional and Service Charges 1,198.97 620.65Crew Expenses 2,779.87 846.18Communication Expenses 204.34 188.86Miscellaneous Expenses 642.16 254.68Commission 4,360.72 4,276.02Insurance 1,799.58 1,425.98Port Expenses 5,346.60 5,478.93Repairs and Maintenance 11,131.96 7,887.30Stevedoring, Transport and Freight 2,129.35 521.55

111,408.97 81,871.63 SCHEDULE ‘M’Mining Expenses Mining 3,509.74 -Distribution Cost 1,107.48 -Government Payment 629.24 - Freight and Shipment 829.72 - Miscellaneous Expenses 724.80 -

6,800.98 -SCHEDULE ‘N’Administrative and Other Expenses Advertisement 23.33 11.74Auditors Remuneration 80.79 68.16Conveyance, Car Hire and Traveling 318.99 229.27Communication expenses 98.57 50.53Donation 81.25 11.26Directors’ Remuneration 2,291.82 1,615.79Miscellaneous expenses 738.00 644.97Insurance 29.48 10.27Legal, Professional and Consultancy expenses 931.56 252.11Rent 575.73 364.39Repairs and Maintenance 71.27 186.61 Salary, Wages, Bonus etc. 2,481.20 1,326.31Staff Welfare, Training etc. 64.04 26.89Contribution to Provident and other funds 56.07 24.75Bad Debts and other amounts written off (Net) 65.65 54.55

7,907.76 4,877.58 SCHEDULE ‘O’Finance Charge Interest on Debentures 1,501.75 1,108.39Fixed Loans 19,853.82 12,955.07Others - 2,137.62

21,355.57 16,201.08Less : Interest received (TDS Rs. 372.60 Lacs Previous Year 60.85 Lacs) 4,723.28 1,470.57(Less: (Profit)/Loss on Derivative Transactions - 266.23

16,632.29 14,464.28



100 101

Schedule 'I'

A. BASIS OF CONSOLIDATIONThe Consolidated Financial Statements relate to Mercator Lines Limited (the company), its subsidiary companies and associates. The Company and its subsidiaries constitute the Group.

a) Basis of AccountingI. The financial statements of the subsidiary companies used in the consolidation are drawn upto the same

reporting date as of the Company i.e. year ended 31st, March 2009.

II. The financial statements of the Group have been prepared in accordance with the principles and procedures required for the preparation and presentation of consolidated financial statements as laid down under the Accounting Standard 21 “Consolidated Financial Statements” as notified by the Companies (Accounting Standards) Rules 2006.

b) Principles of consolidationThe Consolidated Financial Statements have been prepared on the following basis:I. The Financial statements of the Company and its subsidiary companies have been combined on a line by

line basis by adding together book values of similar items of assets, liabilities income and expenses. Theintra-group balances and intra-group transactions have been fully eliminated.

II. Minority Interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable to the minority shareholders at the date on which investments are made by the company in the subsidiary companies and further movements in their share in equity, subsequent to the date of the investment as stated above.

III.Consolidated Financial Statements are prepared by applying uniform accounting policies to the extent possible, in use at the group.

IV. Indian Rupee is the reporting currency for the Group. However, the reporting currencies of non-integral overseas subsidiaries are different from the reporting currency of the Group. The translation of those currencies into Indian Rupee is performed for assets and liabilities, using the exchange rate as at the balance sheet date, and for revenues, costs and expenses using average exchange rate during the reporting period. Resultant currency translation exchange gain/loss is carried as foreign currency translation reserve under Reserves and Surplus.

c) The following subsidiary companies are considered in the Consolidated Financial Statements:

Name of the Subsidiary Company Country of % of holding either directly % of holding either directly incorporation or through subsidiary as or through subsidiary as

at March 31, 2009 at March 31, 2008

Mercator International Pte.Ltd. Singapore 100 100Mercator Offshore Ltd Singapore 100 100Mercator Oil & Gas Ltd India 100 100Mercator Lines (Singapore) Ltd Singapore 72.35 72.35Varsha Marine Pte. Ltd Singapore 100 100Vidya Marine Pte. Ltd Singapore 100 100Mercator Lines (Panama) Inc Panama 100 100Oorja Holdings Pte. Ltd Singapore 100 100Oorja 1 Pte. Ltd. Singapore 100 100Oorja 2 Pte. Ltd. Singapore 100 100Oorja 3 Pte. Ltd. Singapore 100 100Oorja Mocambique Minas, Limitada Mocambique 100 100Pt Oorja Indo Petangis Four Indonesia 50* 50*

B. SIGNIFICANT ACCOUNTING POLICIES

1. Basis of AccountingThe financial statements are prepared under the historical cost convention, on the accrual basis of accounting and in conformity with Generally Accepted Accounting Principles in India, Accounting Standards as notified by the Companies (Accounting Standards) Rules, 2006 and the other relevant provisions of the Companies Act, 1956.

2. Use of EstimatesThe preparation of financial statements in conformity with Generally Accepted Accounting Principles requires the management to make estimates and assumptions that affect the reported balances of assets and liabilities as of the date of the financial statements and reported amounts of income and expenses during the period. The management believes that the estimates used in the preparation of financial statements are prudent and reasonable.

3. Fixed Assetsa) Fixed assets are stated at cost less accumulated depreciation.b) Cost includes cost of acquisition or construction including attributable interest, duties and other incidental

expenses related to the acquisition of the asset.c) Operating costs and other incidental costs including initial stores and spares of newly acquired vessels till

the port of first loading are included in the cost of the respective vessels. d) Exchange differences arising on repayment of foreign currency loans and year end translation of foreign

currency liabilities relating to acquisition of depreciable assets are, following option given by notification of Ministry of Corporate Affairs (MCA) dt. 31st March 2009, adjusted to carrying cost of the respective assets.

e) Individual fixed assets costing up to Rs. 25,000 are fully written off under the head fixed assets written off.

4. Exploration and evaluation expenditure Exploration and evaluation expenditure are capitalized when it is considered likely to be recoverable by future exploitation or sale. This policy requires management to make certain estimates and assumptions as to futureevents and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalized the expenditure under the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalized amount will be written off to the income statement.

Name of the Subsidiary Company Country of % of holding either directly % of holding either directly incorporation or through subsidiary as or through subsidiary as

at March 31, 2009 at March 31, 2008

Pt Oorja Indo Petangis Three Indonesia 50* 50*Pt Oorja Indo KGS Indonesia 70 70Broadtec Mocambique Minas, Lda Mocambique 85 85Mercator Offshore Holdings Pte. Ltd. Singapore 100 NAMercator Petroleum Pvt. Ltd. India 100 NAMCS Holdings Pte. Ltd. Singapore 100 NAPT Mincon Indo Resources Indonesia 100 NA

* Considered as subsidiaries for consolidation purposes on account of control as per principles of AS-21.



102 103

5. Environmental ObligationsRestoration, rehabilitation and environmental expenditures incurred during the production phase are chargeto cost of revenue as incurred.

Provision for decommissioning, demobilization and restoration provides for the legal obligations associated with the retirement of the tangible long-lived asset that result from the acquisition, construction or development and/or the normal operation of a long-lived asset. The retirement of a long-lived asset is its other than temporary removal from service, including its sale abandonment, recycling or disposal in some other manner.

These obligations are recognized as liabilities when a legal obligation with respect to the retirement of an asset is incurred, with the initial measurement of the obligation at fair value. These obligations are accreted to full value over time through charges to the statement of income. In addition, an asset retirement cost equivalent to these liabilities is capitalized as part of the related asset’s carrying value and is subsequently depreciated or depleted over the asset’s useful life. A liability for asset retirement obligation is incurred over more than one reporting period when the even that create the obligation occur over more than one reporting period. For example, if a facility is permanently closed but the closure plan is developed over more than one reporting period, the cost of closure of the facility is incurred over those reporting period when the closure plan is finalized. Any incremental liability incurred in a subsequent reporting period is considered to be an addition layer of the original liability. Each layer is initially measured at fair value. A separate layer shall be measure, recognized and accounted for prospectively. The obligations consist primarily of costs associated with mine reclamation, decommissioning and demobilization of facilities and other closure activities.

For environmental issues that may not involve the retirement of an asset, where the Company is a responsible party and is determined that a liability exists, and amounts can be quantified, the Company accrues for the estimated liability exists in respect of such environmental issues, the Company applies the criteria for liability recognition under the applicable accounting standards.

6. Depreciation a) Depreciation on all the vessels is computed on Straight Line Method so as to write off the original cost as

reduced by the expected/estimated scrap value over the balance useful life of the vessels. If however, the rates as prescribed under the Schedule XIV of the Companies Act, 1956, are higher; the said higher rate is applied, which ranges from 5% to 12% of the original cost of the vessel.

b) Depreciation on all assets other than vessels is computed on the Written Down Value method in the manner and at the rates prescribed under schedule XIV of the Companies Act, 1956.

c) On additions made to the existing vessels depreciation is provided for the full year over the remaining useful life of the ships.

d) Depreciation on furniture, fixtures and electrical fittings installed at office premises taken on lease is provided over the initial period of lease.

e) In respect of the non-shipping assets held outside India, depreciation is computed on the basis of estimated useful life of the assets. The estimated useful life of the non-shipping assets held outside India is as follows:

Asset Country Useful life

Offshore Rig Singapore 20 years

Furniture & Fixtures Indonesia 4 - 8 years

Office & Electronic Equipment Indonesia 4 - 8 years

Vehicles Indonesia 8 years

Mining & Heavy Equipment Indonesia 16 years

Roads & Bridges Indonesia 16 years

7. Capital Work in ProgressAll expenditure, including advances given to contractors and borrowings cost incurred during the asset acquisition period, are accumulated and shown under this head till the asset is put to commercial use.

8. Retirement and Disposal of Assetsa) Profits on sale of assets are accounted for on completion of sale thereof. b) Assets which are retired from active use and are held for disposal are stated at the lower of their net book

value or net releasable value.

9. InventoriesBunker and Lubes on vessels are valued at lower of cost and net Realisable value ascertained on first in first out basis.

Coal inventory valued at the lower of cost or net realizable value. Cost is determined based on the weighted average cost incurred during the period and includes an appropriate portion of fixed and variable overheads. Net realizable value is the estimated sales amount in the ordinary course of business less the costs of completion and selling expense.

10. Investments a) Investments are classified into Long Term and Current investments.b) Long Term Investments are stated at cost of acquisition and related expenses. Provision for diminution, if

any, in the value of such investments is made to recognise a decline, other than of a temporary nature. c) Current Investments are stated at cost of acquisition including incidental / related expenses or at fair value

as at 31st March 2009, whichever is less and the resultant decline, if any, is charged to revenue.

11. Incomplete VoyagesIncomplete voyages represent freight received and direct operating expenses on voyages which are not complete as at the Balance sheet date.

12 . Borrowing CostsBorrowing costs incurred for the year for acquisition of vessels are capitalized till first loading of cargo, only if the time gap between date of Memorandum of Agreement and “Date when vessel is ready for use” is more than three months.

In respect of other assets, borrowing cost incurred till the date when asset is put to use are capitalized.

13.Revenue Recognitiona) Income on account of freight earnings is recognised in all cases where loading of the cargo is completed

before the close of the year. All corresponding direct expenses are also provided. b) Where loading of the cargo is not completed before the close of the year, revenue is not recognised and the

corresponding expenses are carried forward to the next accounting year. c) Income from charter hire and demurrage are recognised on accrual basis.d) Income from services is accounted on accrual basis as per the terms of the relevant agreement.e) Dividend on investments is recognised when the right to receive the same is established.f) Insurance claims are accounted on accrual basis when there is a reasonable certainty of the realisability of

the claim amount.g) Revenue from coal mining is recognized on transfer of risk, reward and ownership of the goods, and is

recorded net of returns, trade allowance, and government duties.



104 105

14. Foreign Exchange Transactionsa) Monetary Current assets and liabilities denominated in foreign currency outstanding at the end of the year

are valued at the rates prevalent on that date.

b) Exchange differences arising on Long Term Foreign Currency Monetary (LTFCM) items are following option given by notification of MCA dt. 31st March 2009, treated in the following manner:i) In respect of borrowings relating to or utilized for acquisition of depreciable capital assets, the same is

adjusted to the cost of the relevant capital asset and depreciated over the balance life of the said capital asset.

ii) In other cases, the same is accumulated in a 'Foreign Currency Monetary Item Translation Difference Account'. The amount so accumulated in this account is amortized over the balance period of such assets / liabilities or 31st March 2011, whichever is earlier.

c) Differences in translation of other monetary assets and liabilities and realised gains and losses on foreign currency transactions are recognised in the Profit and Loss Account.

d) Exchange difference arising on long term foreign currency loans given to non integral foreign operations is accumulated in foreign currency fluctuation reserve. On disposal of investment , the balance in the reserve will be transferred to profit and loss account

e) Contracts in the nature of foreign currency swaps, are converted at the exchange rate prevailing as on 31st March 2009 and the profits or losses thereon are charged to the Profit and Loss account.

f) Differences on account of swap contracts for interest payable in foreign currency are accounted on accrual basis and the profit or loss thereon are charged to the Profit and Loss account.

15. Employees Benefitsa) Short – term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short term employee benefits. Benefits such as salaries, wages, performance incentives, etc. are recognised at actual amounts due in the period in which the employee renders the related service.

b) Post – employment benefitsi. Defined Contribution Plans

Payments made to defined contribution plans such as Provident Fund are charged as an expense as they fall due.

ii. Defined Benefit PlansThe cost of providing benefit i.e. gratuity is determined using the Projected Unit Credit Method, with actuarial valuation carried out as at the balance sheet date. Actuarial gains and losses are recognised immediately in the Profit and Loss Account.

c) Other Long – term employee benefitsi. Other Long – term employee benefit viz. leave encashment is recognised as an expense in the profit and

loss account as and when it accrues. The company determines the liability using the Projected Unit Credit Method, with actuarial valuation carried out as at the balance sheet date. The Actuarial gains and losses in respect of such benefit are charged to the profit and loss account.

16 . Lease Accountinga) In respect of operating lease agreements entered into by the Company as a lessee, the lease payments are

recognised as expense in the profit and loss account over the lease term.

b) In respect of operating lease agreement entered into by the Company as a lessor, the initial direct costs are recognised as expenses in the year in which they are incurred.

17. Earning per share:The company reports basic and diluted earnings per share (EPS) in accordance with Accounting Standard – 20. The Basic EPS has been computed by dividing the income available to equity shareholders by the weightedaverage number of equity shares outstanding during the accounting year. The diluted EPS have been computed using the weighted average number of equity shares and dilutive potential equity shares outstanding at the end of the year.

18. Provision for Taxation : a) The company has opted for the Tonnage Tax scheme and provision for tax has been accordingly made under

the relevant provisions of the Income Tax Act, 1961. b) Tax on incomes on which the Tonnage Tax is not applicable is provided as per the other provisions of the

Income Tax Act, 1961.c) In case of subsidiaries companies engaged in shipping and incorporated in Singapore, no provision is

made for taxation on qualifying shipping income derived which is exempt form taxation under section 13 A of the Singapore Income Tax Act and the Singapore Approved International shipping enterprise Tax Incentive.

d) In respect of a subsidiary company in Singapore engaged in offshore drilling & support services, no provision for tax is made for qualifying offshore income as it is exempt from taxation under Section 13 F of Singapore Income Tax Act.

e) Deferred tax resulting from timing differences, if any, between book and tax profits for income other than that covered under relevant Tax exempt schemes is accounted for under the liability method, at the currentrate of tax, to the extent that the timing differences are expected to reverse in future.

19. Impairment of assets The Company reviews the carrying values of tangible and intangible assets for any possible impairment at each balance sheet date. Impairment loss, if any, is recognized in the year in which impairment takes place.

20. Provisions and Contingent Liabilities:Provisions are recognized in the accounts in respect of present probable obligations, the amount of which can be reliably estimated. Contingent Liabilities are disclosed in respect of possible obligations that arise from past events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future events not wholly within the control of the Company.

21. Derivative instruments and hedge accountingThe Group uses foreign currency forward contracts; forward freight agreements, options on forward freight agreements and currency options to hedge its risks associated with foreign currency fluctuations and fluctuations in freight rates relating to certain firm commitments and forecasted transactions. The Company has designated these hedging instruments as cash flow hedges or economic hedges applying the recognition and measurement principles set out in the Accounting Standard 30 “Financial Instruments : Recognition and Measurement” (AS – 30).

The use of hedging instruments is governed by the Company’s policies approved by the board of directors, which provide principles on the use of such financial derivatives consistent with the Company’s risk management strategy.

Derivatives are initially recognised at fair value at the dates the derivative contracts are entered into and are subsequently re-measured to their fair values at each balance sheet date.

The resulting gain or loss is recognised in the profit and loss statement immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the recognition in the profit and loss statement depends on the nature of the hedge relationship.



106 107

Hedge accountingHedges which include derivatives, embedded derivatives and non-derivatives in respect of price risk, are designated as either hedges of fair value of recognised assets or liabilities or fair commitments (fair value hedges) or hedges of highly probable forecast transactions (cash flow hedges).

Some forward freight agreements that the Group has entered into fall within the definition of fair value hedge.Some other forward freight agreements fall within the definition of cash flow hedge as described below.

At the inception of the hedge relationship, the relationship between the hedging instrument and hedged item is determined, along with its risk management objectives and the strategy for undertaking the hedge. At the inception of the hedge and on a quarterly basis, the effectiveness of the hedging relationship in offsetting changes in fair values or cash flows of the hedged item is determined.

Fair value hedgeChanges in the fair value of derivatives that are designated and qualify as fair value hedges will be recorded in the profit and loss statement immediately, together with any changes in the fair value of the hedged item that is attributable to the hedged risk.

Hedge accounting will be discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. The adjustment to the carrying amount of the hedged item arising from the hedged risk will be amortised to the profit and loss statement from that date.

Cash flow hedgeThe effective portion of changes in the fair value of derivatives that are designated as and qualify as cash flow hedges are deferred in equity. The gain or loss relating to the ineffective portion of the hedge, if any, is recognised immediately in the profit and loss statement.

Amounts deferred in equity will be recycled in the profit or loss in the periods when the hedged item is recognised in the profit and loss statement. However, when the forecast transaction that is hedged results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously deferred in equity will be transferred from equity and included in the initial measurement of the cost of the asset or liability.

Hedge accounting will be discontinued when the Group revokes the hedging relationship, the hedging instrument expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or loss deferred in equity at that time will remain in equity and will be recognised when the forecast transaction is ultimately recognised in the profit and loss statement. When a forecast transaction is no longer expected to occur, the cumulative gain or loss that had been deferred in equity will be recognised immediately in the profit and loss statement.

B] NOTES TO THE ACCOUNTS1. Contingent Liabilities not provided for


(Rs. In Lacs) (Rs. In Lacs)

Counter guarantees issued by the Company for

guarantees obtained the bank 2,132.09 1,456.54

Corporate guarantees issued by the company

on behalf of business associates NIL 19,400.00

TOTAL 2,132.09 20,856.54

2. Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of advances) as at March 31,2009 Rs. 47,037.53 Lacs (Rs.14,928.51 Lacs).

3. Estimated amount of commitments outstanding towards contributions to funds are Rs. 1,547.52 Lacs (Rs. 375.00Lacs)

4. Remuneration to Holding Company Directors



Executive Chairman and Managing Directors

Salary 136.00 96.00

Perquisites 11.46 17.29

Commission 1,926.48 1,492.50

Non-Executive Directors

Commission 10.00 10.00

Total 2,083.94 1,615.79

5. Disclosures in accordance with Accounting Standard (AS) -15 on “Employee Benefits”:AS – 15 (Revised 2005) on “Employee Benefits” has been adopted by the Company effective from April 1, 2007. The disclosures are as required by the said AS are given hereunder.

(A) Defined Contribution Plans: The Company has recognized the following amounts in the Profit and Loss Account for the year:



(i) Contribution to Employees’ Provident Fund 34.20 22.02

(ii) Contribution to Employees’ Family Pension Fund NIL NIL

(iii) Contribution to Employees’ Superannuation Fund NIL NIL

Total 34.20 22.02



(a) Present Value of Obligation

as at April 1, 2008 30.89 17.37 48.26 17.91 14.64 32.55 (b) Interest cost 2.16 1.21 3.37 1.43 1.17 2.6

(c) Past Service Cost NIL NIL NIL NIL NIL NIL

(d) Current Service Cost 22.17 18.77 40.94 13.67 8.87 22.54

(e) Curtailment Cost/ (Credit) NIL NIL NIL NIL NIL NIL

(f) Settlement Cost/ (Credit) NIL NIL NIL NIL NIL NIL

(g) Benefits Paid NIL 7.68 7.68 0.33 1.58 1.91

(h) Actuarial (Gain)/ Loss 24.10 15.42 39.52 (1.78) (5.72) (7.5)

(i) Present Value of Obligation

as at March 31, 2009 79.33 45.12 124.45 30.89 17.38 48.27

Year Ended March 31, 2009 Year Ended March 31, 2008

(Amount Rs. in Lacs)(B) Defined Benefit Plans: (i) Changes in the Present Value of Obligation



108 109

The estimates of future salary increases considered in actuarial valuation takes into account inflation, seniority,

promotion and other relevant factors.

6. Segment ReportingThe company’s principal business activities fall within the segment shipping and related activities. Along with the other activities of the group, there is no reportable segment pursuant to Accounting Standard 17 ‘Segment Reporting; notified by Companies (Accounting Standards) Rules, 2006.



a) Current Service Cost 22.17 18.77 40.94 13.67 8.87 22.54

(b)Past Service Cost NIL NIL NIL NIL NIL NIL

(c) Interest cost 2.16 1.21 3.37 1.43 1.17 2.6

(d) Curtailment Cost/ (Credit) NIL NIL NIL NIL NIL NIL

(e) Settlement Cost/ (Credit) NIL NIL NIL NIL NIL NIL

(f) Net Actuarial (Gain)/ Loss 24.10 15.42 39.52 (1.78) (5.72) (7.5)

(g) Employees' Contribution NIL NIL NIL NIL NIL NIL

(h) Total Expenses recognized in

` Profit and Loss A/c 48.44 35.42 83.86 13.32 4.32 17.64

Year Ended March 31, 2009 Year Ended March 31, 2008


(Ii) Expenses recognized in the Profit and Loss Account

(iii) Following are the Principal Actuarial Assumptions used as at the balance sheet date:

(a) Discount Rate 7% 7% 8% 8%

(b) Salary Escalation Rate –

Management Staff 12% 12% 7% 7%

(c) Turnover Rate 11% 11% 3% 3%

(d) Mortality Table LIC (1994-96) LIC (1994-96) LIC (1994-96) LIC (1994-96)

Ultimate Ultimate Ultimate Ultimate

Particulars FY 2008-09

Gratuity Leave Encashment Gratuity Leave Encashment

FY2008-09 FY 2007-08 FY2007-08

7. Related Party Disclosures

A List of Related Parties i) Companies in which the directors/relatives of directors have substantial interest

1. MLL Logistics Private Limited2. Mercator Mech Marine Limited3. Mercator Healthcare Limited4. Ankur Fertilizers Private Limited5. Rishi Holding Private Limited6. AHM Investments Private Limited.7. CMA Constructions & Properties Pvt Ltd

ii) Directors of the Company

1. H. K Mittal2. A. J Agarwal3. Manohar Bidaye4. Anil Khanna5. M. G Ramakrishna6. K. R Bharat

iii) Key Management Personnel

1. H. K Mittal2. A. J. Agarwal3. Shalabh Mittal

iv) Relative of Key Management Personnel

1. Adip Mittal2. Shruti Mittal



110 111

Year Ended 31st March, 2009

Services Rendered 1,969.61 232.84

Interest Income - -

Services Received - -

Expenses Recharged by other companies 75.85 24.23

Expenses Charged by the company 27.46 0.81

Finance Provided(Including Loans & Equity Contributions)

LoansLoans Given during the Year 2,030.00 9.00

Advances Given for Capital Goods 4,230.00 -

Loans Repaid 2,039.00 -

Equity ContributionsDuring the Year - -

Guarantees

Comfort Letter - - Guarantees Given

Outstanding Guarantees as on 31.03.2009 - -

Outstanding Balances as on 31.03.2009Loans, Advances and Receivables 268.12 268.29

Sundry Debtors 1,419.14 1,170.25

Advances Received for Capital Goods - -

Outstanding Balances as on 31.03.2009 Payables - -

Deposit

Deposit given during the year 10.00 500.00

Balance as on 31.03.2009 515.00 500.00

Remuneration paid to Key Management Personnel 3,137.54 1,658.78

Commission Paid to Non-Executive Directors 10.00 10.00

Remuneration to relative of Key Management Personnel 5.03 6.04

Year Ended 31st March, 2008

Name of the Transaction Companies in which the directors/relatives of directors have substantial interest

(Rs. in Lacs)B. Details of transactions with the above parties:

Services RenderedMLL Logistics Private Limited 1,969.61 232.84 Total 1,969.61 232.84

Interest Income NIL NIL

Services Received NIL NIL

Expenses recharged by other companiesAnkur Fertilizers Private Limited 75.85 24.23Total 75.83 24.23

Expenses Charged by the companyMLL Logistics Private Limited 27.33 0.65Mech Marine Engineers Pvt Ltd 0.13 -Total 27.46 0.65

Finance Provided(Including Loans & Equity Conributions )

LoansLoans Given during the YearMercator Mech Marine Limited 2,030.00 9.00Total 2,030.00 9.00

Advances Given for Capital GoodsMech Marine Engineers Pvt Ltd 4,230.00Total 4,230.00 -

Loans RepaidMercator Mech Marine Limited 2,039.00 - Total 2,039.00 -

Equity Contributions NIL NIL During the Year

Guarantees

Comfort Letter NIL NIL Guarantees Given NIL NIL

- -

Outstanding Guarantees as on 31.03.2009 NIL NIL

Year Ended 31st March, 2009 Year Ended 31st March, 2008

Name of the TransactionCompanies in which the directors/relatives of

directors have substantial interest


C. Details in respect of material transactions with parties refer to in item A above:



112 113

Outstanding balances as on 31.03.2009Loans, Advances and Receivables

Loans Advances and ReceivablesMLL Logistics Private Limited (Advance) 268.13 268.12Total 268.13 268.12 Sundry DebtorsMLL Logistics Private Limited 1,419.14 1,170.25 Total 1,419.14 1,170.25

Advances Received for Capital Goods NIL NIL

Outstanding Balances as on 31.03.2009Payables NIL NIL Sundry Creditors NIL NIL

Deposit

Deposit given during the yearRishi Holding Private Limited 10.00 - MLL Logistics Private Limited - 500.00Total 10.00 500.00

Balance as on 31.03.2009Rishi Holding Private Limited 15.00 MLL Logistics Private Limited 500.00 500.00Total 515.00 500.00

Remuneration paid to Key Management Personnel 3,137.54 1,658.78

Commission Paid to Non-Executive Directors 10.00 10.00

Remuneration to relative of Key Management Personnel 5.03 6.04

Year Ended 31st March, 2009 Year Ended 31st March, 2008

Name of the Transaction Companies in which the directors/relatives of directors have substantial interest



Disclosures in respect of cancelable agreements for office

premises taken on lease

(I) Lease payments recognized in the Profit and Loss Account 530.64 392.66


Year Ended


Year ended

(Amount Rs. in Lacs)8. Disclosure in respect of operating lease (as Lessee):

The Company has given refundable interest free security


` The lease agreements are for a period from 60- 108 months.

These agreements also provided for increase in rent.

These agreements are non cancellable by both the parties

for 24–60 months except in certain exceptional circumstances.

(iii) Future minimum lease payments under non-cancellable

agreements

Not later than one year 478.68 533.65

Later than one year and not later than five years 578.87 1068.24


Year Ended


Year ended

9. Disclosure in respect of operating lease (as Lessor):


Disclosures in respect of cancellable agreements for office

given on lease

(I) Lease receipt recognized in the Profit and Loss Account 106.47 113.87


- The Company has taken refundable interest free security


- The lease agreements are for a period of 60 months.

- These agreements are non cancelable by both the parties

for 18 months except in certain exceptional circumstances.

(iii) Future minimum lease receivable under non-cancellable

agreements

- Not later than one year 138.00 NIL

- Later than one year and not later than five years NIL NIL

- Later than five years NIL NIL

Disclosures in respect of cancellable agreements for

Rig given on lease

(i) Lease receipt recognized in the Profit and Loss Account 891.77 NIL


- The lease agreements are for a period of 36 months.

- These agreements are non cancelable by both the parties

except in certain exceptional circumstances.

Year Ended


Year ended





114 115

(iii) Future minimum lease receivable under non-cancellable

agreements

- Not later than one year 17,239.19 NIL

- Later than one year and not later than five years NIL

- Later than five years 33,533.76 NIL

Year Ended


Year ended

10. Earning Per Share

(Rs. in Lacs)

Net Profit after Tax, Minority interest and preference dividend

including tax thereon

- Basic (Rs. in Lacs) 37,645.31 32,405.63

- Diluted (Rs. in Lacs) 37,702.13 32,464.36

Number of Shares used in computing Earning Per Share

- Basic 235,946,403 224,225,062

- Diluted 241,064,272 236,414,299

Earning per share (equity shares of face value Re 1/-)

- Basic (in Rs.) 15.96 14.41

- Diluted (in Rs.) 15.64 13.73

Year Ended


Year ended

11. The Company has opted for accounting the exchange differences arising on reporting of long term foreign currency monetary items in line with the notification of Ministry of Corporate Affairs (MCA) dt. 31st March 2009, On Accounting Standard AS 11.

a) Losses arising from the effect of changes in foreign exchange rates on foreign currency loans relating to acquisition of depreciable capital assets, amounting to Rs. 21,832.90 Lacs for the year ended March 31, 2009, are added to the cost of such assets. Consequent to the change, the depreciation for the year is higher by Rs. 827.03 Lacs and the profit for the year and reserves are higher by Rs. 21,000.62Lacs The corresponding foreign exchange gains of Rs. 4,991.38 Lacs (net of depreciation of Rs 295.37 Lacs) for the year ended March 31, 2008, have been reversed from the General Reserve and deducted from the cost of such assets.

b) Losses arising from the effect of change in foreign exchange rates on foreign currency loan not relating to acquisition of depreciable capital assets amounting to Rs.144.12Lacs for FY 2008-09 and gain of Rs.90.97 Lacs for the 2007-08, are transferred to Foreign Currency Monetary Item Translation Difference Account. In line with the policy referred to in point no 12. (b) (ii) above, Rs. 81.95 Lacs has been amortised during the year. Consequent to the change, profit for the year is lower by Rs. 28.80 Lacs.

12. Out of the total outstanding loans given to subsidiaries amounting to Rs. 58,638.94 Lacs (USD 115.08Mn), Company has considered loans of Rs. 43,205.60Lacs (USD 84.8 Mn) as long term loans. Gains of Rs. 6571.15 lacs on restatement of these foreign currency long term loans, given to non integral foreign operations is, following applicable provisions of AS 11, accumulated in foreign currency fluctuation reserve in Reserves and Surplus. On disposal of the investment, the corresponding balance in the said reserve will be transferred to profit and loss account.

13. Derivative InstrumentsThe Company uses foreign currency forward contracts to hedge its risks associated with foreign currency fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency forward contracts is governed by the Company’s strategy approved by the Board of Directors, which provide principles on the use of such forward contracts consistent with the Company’s Risk Management Policy. The Company does notuse forward contracts for speculative purposes.

There are no outstanding Forward Exchange Contracts entered into by the Company.

14. Foreign Currency ExposuresThe year end exposure in a currency other than the financial currency of the relevant Company that were not hedged by a derivative instrument or otherwise are given below:

Rs. in Lacs Fx. Million Rs. in Lacs Fx. Million

Account Receivable 4,978.99 $ 9.77 968.95 $ 2.44

Bank Balance 2,086.04 $ 4.05 38,175.38 $ 0.20 SGD 0.65 SGD 132.03

Fixed Deposit in other currency NIL NIL 21.32 $ 0.05 Loan & Advances 60,906.73 $ 118.49 43,017.97 $108.04

Euro 0.65 JPY 2.71

SGD 0.27

Accounts Payable/Acceptance 74.681.59 $ 145.86 97,652.81 $ 146.60 (including capital commitments Euro 0.49 SGD 131.69 made but not provided for) SGD 0.16 J¥ 325.00

INR 2.99 Borrowings 42,978.04 $ 84.35 32,221.17 $ 80.92

Year Ended 31st March,2009

15. Previous years figures have been regrouped / rearranged wherever necessary.

Year Ended 31st March,2008



Anil KhannaDirector






116 117

Income From Operations

56,066

82,625

112,276

145,487

213,360

Rs.

In

Lacs

120,000

100,000

80,000

60,000

40,000

20,000

140,000

160,000

180,000

200,000

220,000

04-0505-06

06-07

08-09

F I N A N C I A L Y E A R

07-08

Net Profit

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

17,444

19,803

13,493

37,044

37,648

Rs.

In

Lacs

F I N A N C I A L Y E A R04-05

05-06

06-07

07-08

08-09

Fixed Assets

320,000

280,000

240,000

200,000

160,000

120,000

80,000

40,000

360,000

380,000

Rs.

In

Lacs 400,000

440,000

480,000

520,000

560,000

620,000

660,000

87,316

147,831

199,032

359,298

639,123

05-0606-07

07-08

08-09

F I N A N C I A L Y E A R04-05

Cash Profit

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

50,000

55,000

60,000

65,000

70,000

20,229

29,170

23,874

68,258

64,519

Rs.

In

Lacs

F I N A N C I A L Y E A R04-0505-06

06-07

07-0808-09



118 119

FINANCIAL PERFORMANCE RATIO

Balance Sheet Ratio

Year

Operational Profit Turnover (%)

Net Profit/Total Turnover (%)

RONW (PAT/Shareholders fund (%)

05-06

39.54

30.94

50.80

43.30

23.48

36.1

28.26

11.81

21.46

06-07 07-08

45.41

25.19

24.70

3.02Current Ratio 3.851.83 7.04

08-09

41.08

12.48

23.46

04-05

3.06

Tonnage

DW

T IN

MT

500,000

1,000,000

2,000,000

3,000,000

Owned

Chartered

1,031,400

2,029,908

2,340,838

2,303,122

1,3

69,8

87

1,6

56,6

64

684,1

74

660,0

21

178,1

03

2,1

25,0

19

04-0505-06

06-0707-08

08-09


1,3

38,6

21

644,0

21

1,982,642

Very Large Crude Carrier 26%

Suezmax Tanker 6%

Aframax Tankers 22%

MR Tanker 4%

Panamax 29%

Chemical Tanker 1%

Kamsarmax 11%

Dredgers1%

COMPOSITION OF FLEET- AS AT 31-03-09

Year 07-0806-0704-05 05-06

Debt Equity Ratio (Net) 1.012.181.53 2.02

08-09

1.57

Net Worth

Per Share Data

34,336

54,097

62,836

162,068

228,606

04-0505-06

06-0707-08

08-09


Rs.

In

Lacs

80,000

0

60,000

20,000

40,000

100,000

120,000

140,000

160,000

180,000

200,000

220,000

240,000

0.00

Ru

pees

10.00

20.00

30.00

40.00

50.00

60.00

70.00


80.00

90.00

04-05

9.75

11.13

16.606.04

12.62

32.20

14.45

29.06

69.00

08-09

15.96

27.34

96.87

Basic Earning (RS.)

Cash Earning (Rs.)

Book Value (Rs.)

07-08

10.42

15.41

26.21

05-06

06-07

100.00



AUDIT COMMITTEE

SHAREHOLDERS’ GRIEVANCE COMMITTEE

REMUNERATION CUM SELECTION COMMITTEE

EXPANSION COMMITTEE

AUDITORS

BANKERS

DEBENTURE AND SECURITY TRUSTEES

Anil Khanna Chairman

Manohar Bidaye Member

M. G. Ramkrishna Member

Manohar Bidaye Chairman

Anil Khanna Member

Atul J. Agarwal Member

Manohar Bidaye Chairman

Anil Khanna Member

M. G. Ramkrishna Member

H. K. Mittal Chairman

Atul J. Agarwal Member

Anil Khanna Member

K. R. Bharat Member

M/s. Contractor, Nayak & Kishnadwala

State Bank of India, ICICI Bank, Axis Bank, HDFC Bank

Axis Bank LimitedUnit Trust of India Investment & Advisory Services Ltd.

REGISTERED OFFICE

REGISTRAR & TRANSFER AGENTS

3rd Floor, Mittal Tower, B-Wing,

Nariman Point, Mumbai - 400 021

Tel: +91-22-66373333

Fax: +91-22-66373344

Website: www.mercator.in

Email: [email protected]

Link Intime India Pvt. Ltd.

C-13, Pannalal Silk Mills Compound,

LBS Road, Bhandup West,

Mumbai - 400078.

Tel: 022-25963838

Fax: 022 25946969

Email: [email protected]

N o t e s :

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