BOARD OF DIRECTORS

Shashi Ruia Chairman Ravi Ruia Vice Chairman Anshuman Ruia Director Sanjay Mehta Managing Director A. R. Ramakrishnan Wholetime Director V. Ashok Wholetime Director R. N. Bansal Independent Director N. Srinivasan Independent Director K. V. Krishnamurthy Independent Director Dilip J. Thakkar Independent Director S. V. Venkatesan Independent Director Deepak Kumar Varma Independent Director SHARE TRANSFER & SHAREHOLDERS GRIEVANCE COMMITTEE Ravi Ruia Sanjay Mehta A. R. Ramakrishnan V. Ashok AUDIT COMMITTEE R. N. Bansal Anshuman Ruia N. Srinivasan

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

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

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

COMPANY SECRETARY Manoj Contractor

AUDITORS Deloitte Haskins & Sells

33rd Annual Report 2008 - 2009

NOTICE TO MEMBERS
NOTICE TO MEMBERS Notice is hereby given that the Thirty-third Annual General Meeting of Essar Shipping Ports & Logistics Limited will be held at the Registered Office of the Company at Administrative Building, Essar Refinery Complex, Okha Highway (SH-25), Taluka Khambhalia, District - Jamnagar, Gujarat 361 305 at 3.30 p.m. on Friday, July 31, 2009, to transact the following business: ORDINARY BUSINESS 1. To receive, consider and adopt the Profit and Loss Account for the year ended March 31, 2009 and the Audited Balance Sheet as on that date and the Reports of the Board of Directors and Auditors thereon. To appoint a Director in place of Mr. R. N. Bansal, who retires by rotation and being eligible, offers himself for reappointment. To appoint a Director in place of Mr. A. R. Ramakrishnan, who retires by rotation and being eligible, offers himself for re-appointment. To appoint a Director in place of Mr. Anshuman Ruia, who retires by rotation and being eligible, offers himself for reappointment. To re-appoint Messrs. Deloitte Haskins & Sells, Chartered Accountants as Auditors of the Company to hold office from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting and to fix their remuneration. 2. 3. General Meeting and in respect of whom the Company has received a notice in writing under Section 257 of the Companies Act, 1956, proposing his candidature for the office of Director, be and is hereby appointed as Director of the Company. By Order of the Board

MANOJ CONTRACTOR Company Secretary Mumbai May 18, 2009

2.

Notes: 1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote instead of himself on a poll. The proxy need not be a member of the Company. Proxy forms in order to be effective should be deposited at the Registered Office of the Company not less than 48 hours before the time fixed for the meeting. Members / Proxies should bring the attendance slip duly filled in for attending the meeting. The Register of Members and Share Transfer Books of the Company will remain closed from Monday, July 27, 2009 to Friday, July 31, 2009, both days inclusive. The members are requested to immediately notify, in their own interest, the change in their mailing address to the Companys Registrars and Share Transfer Agents, Data Software Research Company Private Limited, Sree Sovereign Complex, 22, 4 th Cross Street, Trustpuram, Kodambakkam, Chennai 600 024, Tel : 91-44-24801664, Fax: 91-44-24834636. Members who are holding shares in identical order of names in more than one folio are requested to send to the Company the details of such folios together with the Share Certificates for consolidating their holdings in one folio. Members are fur ther advised to hold the shares in dematerialised form, as the trading of the shares on Bombay Stock Exchange and National Stock Exchange where the shares of your Company are listed is in compulsory demat mode. Members are informed that in case of joint holders attending the meeting, only such joint holder who is higher in the order of names will be entitled to vote. In terms of Section 109A of the Companies Act, 1956,

3.

4.

5.

SPECIAL BUSINESS: 6. To consider and if thought fit, to pass with or without modification, the following resolution as an Ordinary resolution: RESOLVED THAT Mr. S. V. Venkatesan, who was appointed as an Additional Director by the Board of Directors pursuant to Section 260 of the Companies Act, 1956 and who holds office upto the date of this Annual General Meeting and in respect of whom the Company has received a notice in writing under Section 257 of the Companies Act, 1956, proposing his candidature for the office of Director, be and is hereby appointed as Director of the Company. 7. To consider and if thought fit, to pass with or without modification, the following resolution as an Ordinary resolution: RESOLVED THAT Mr. Deepak Kumar Varma, who was appointed as an Additional Director by the Board of Directors pursuant to Section 260 of the Companies Act, 1956 and who holds office upto the date of this Annual
2

4.

5.

6.

7.

Notice to the members

members are entitled to make nomination in respect of shares held by them in physical form. Members desirous of making nominations are requested to send their requests in Form 2B, in duplicate, to the Secretarial Department at the Registered Office of the Company or to the Registrars and Share Transfer Agents Data Software Research Company Private Limited. 8. Members desiring any information regarding the accounts are requested to write to the Company at Essar House, 11, Keshavrao Khadye Marg, Mahalaxmi, Mumbai 400 034 atleast 10 days before the date of the meeting to enable the Company to keep the information ready. Appointment / Re-appointment of Directors: At the ensuing Annual General Meeting, Mr. R. N. Bansal, Mr. A. R. Ramakrishnan and Mr. Anshuman Ruia retire by rotation and being eligible offer themselves for re-appointment. Mr. S. V. Venkatesan and Mr. Deepak Kumar Varma are proposed to be appointed as Directors. The information pertaining to the aforesaid Directors in terms of Clause 49 of the Listing Agreement with the Stock Exchanges is annexed hereto. 10. The Explanatory Statement pursuant to Section 173(2) of the Companies Act, 1956 in respect of the special business at Item Nos. 6 and 7 hereinabove, is annexed hereto.

He is an Independent Director of many public limited companies. Your Board is of the opinion that the appointment of Mr. Venkatesan would be in the best interest of the Company. Your Directors accordingly recommend the resolution at Item No. 6 of the Notice for your approval. None of the Directors, except Mr. Venkatesan, is concerned or interested in this resolution. Item No. 7 Mr. Deepak Kumar Varma was appointed as an Additional Director of the Company with effect from October 31, 2008. In terms of Section 260 of the Companies Act, 1956 and in accordance with Article 73 of the Articles of Association of the Company, Mr. Varma holds office upto the date of the ensuing Annual General Meeting. The Company has received a notice from a member under Section 257 of the Companies Act, 1956, with requisite deposit, proposing the name of Mr. Varma as a candidate for the office of Director of the Company. Accordingly, the resolution at Item No. 7 of the notice is being proposed for his appointment as Director of the Company. Mr. Varma is B.E. (Mech) and MBA by qualification and is a Management Consultant and Arbitrator by profession. He is also member of the Indian Council of Arbitrators. During his career, Mr. Varma has held various senior management positions such as senior executive positions in Steel Authority of India Limited, Chairman and Managing Director of Hindustan Shipyard Limited, Chairman and Managing Director of Cochin Shipyard Limited, Managing Director of National Ship Design & Research Centre (NSDRC), Chairman and Managing Director of Rashtriya Chemical & Fertilizers Limited, Chairman and Managing Director of Fertilizers & Chemicals (Cochin), Director & Group Leader of Oman India Fertilizers (OMIFCO) and Chairman of the Standing Conference of Public Enterprises, the Apex Body of all Central PSUs. Your Board is of the opinion that the appointment of Mr. Varma would be in the best interest of the Company. Your Directors accordingly recommend the resolution at Item No. 7 of the Notice for your approval. None of the Directors, except Mr. Varma, is concerned or interested in this resolution. By Order of the Board

9.

ANNEXURE TO NOTICE:
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956
Item No. 6 Mr. S. V. Venkatesan was appointed as an Additional Director of the Company with effect from October 31, 2008. In terms of Section 260 of the Companies Act, 1956 and in accordance with Article 73 of the Articles of Association of the Company, Mr. Venkatesan holds office upto the date of the ensuing Annual General Meeting. The Company has received a notice from a member under Section 257 of the Companies Act, 1956, with requisite deposit proposing the name of Mr. Venkatesan as a candidate for the office of Director of the Company. Accordingly, the resolution at Item No. 6 of the notice is being proposed for his appointment as Director of the Company. Mr. Venkatesan is B.Com., CAIIB by qualification and a Gold Medalist in Commerce from Madras University. Mr. Venkatesan has over 40 years experience in the field of banking and finance with 24 years in State Bank of India, a leading nationalised bank. Mr. Venkatesan has vast experience in the areas of resource mobilisation through Capital Markets and Institutions to fund large capital intensive projects.

Mumbai May 18, 2009

MANOJ CONTRACTOR Company Secretary

33rd Annual Report 2008 - 2009

Annexure to Notice: Details of Directors seeking re-appointment / appointment at the Thirty-third Annual General Meeting in pursuance of Clause 49 of the Listing Agreement.
Mr. R. N. Bansal Mr. R. N. Bansal has done his graduation in Commerce and M.A. in Economics. He is also a Fellow Member of the Institute of Chartered Accountants of India, Associate Member of the Institute of Chartered Secretaries and Administrators, London and Associate Member of the Institute of Company Secretaries of India. During his career, Mr. Bansal served as Investigating Officer in the Bose Commission of Enquiry. He was the Deputy Director Inspection, Registrar of Companies, Punjab, Himachal Pradesh and Haryana. He was also the Registrar of Companies, Chennai, Tamilnadu and Maharashtra. Mr. Bansal was Additional Director of Inspection and Investigation, Company Law Board, New Delhi, Regional Director (Southern and Western Regions), Director (Investment) and Additional Controller of Capital Issues, Department of Economic Affairs, Ministry of Finance and Member Company Law Board. He dealt with matters relating to share transfer appeals, Company Law Boards Bench Petitions, Policy Rules and Amendment of the Companies Act, MRTP Acts etc. He served as Government Nominee Director on all major Stock Exchanges. Mr. Bansal was member/conveyor of various Study Groups set up by the Government of India. Mr. Bansal also served as the Government Nominee Member on the Central Council of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India. He was Deputy Chairman of the Governing Council of the Rajiv Gandhi Cancer Hospital, Delhi. Mr. Bansal is serving as an independent Director on the Board of various Indian public limited companies viz., Chambal Fertilizers & Chemicals Limited, Gobind Sugar Mills Limited, Spice Mobiles Limited, Pushpsons Industries Limited, Orient Ceramics & Industries Limited, The Hindoostan Spinning & Weaving Mills Limited, Vadinar Oil Terminal Limited and Essar Logistics Limited. Mr. Bansal is the Chairman of the Audit Committee of Spice Mobiles Limited, Pushpsons Industries Limited, Orient Ceramics & Industries Limited. He is also a member of the Audit Committee of Chambal Fertilizers & Chemicals Limited, Gobind Sugar Mills Limited, The Hindoostan Spinning & Weaving Mills Limited and Vadinar Oil Terminal Limited. Mr. Bansal is the Chairman of the Investors Grievance Committee of Chambal Fertilizers & Chemicals Limited. Mr. Bansal does not hold any shares in the Company. Mr. A. R. Ramakrishnan Mr. A. R. Ramakrishnan graduated in Mechanical Engineering with an Honours Degree and is a Post Graduate from the Indian Institute of Management, Kolkata. He has been associated with the Essar Group since 1992. He spent the first two and half years as a Business Analyst, dealing with all the Essar Group companies. He joined the management team of Essar Shipping at the end of 1994 as General Manager (Commercial). In 1999, he took over as Chief Operating Officer. Mr. Ramakrishnan is the Wholetime Director of the Company since July 31, 2006. Prior to joining the Essar Group, Mr. Ramakrishnan was employed with Godrej & Boyce Manufacturing Company Limited for 12 years gaining experience in marketing, sales, manufacturing, systems and finance. He has wide experience in dealing with international companies and agencies, including building joint ventures. Mr. Ramakrishnan is also a Director on the Board of Indian National Shipowners Association. Mr. Ramakrishnan does not hold any shares in the Company. Mr. Anshuman Ruia Mr. Anshuman Ruia is a Commerce Graduate and has over a decades experience in overseeing Essar Groups major businesses. He currently looks after Essars Shipping Ports & Logistics, Communications, Power and BPO businesses. Mr. Ruia is responsible for the expansion and diversification of the Power business into new, renewable energy sources and the plans for entry into transmission and distribution. He is also involved in new business ventures of the Group in India and overseas. In addition, he also works on the consolidation of the Groups business enterprises and strategy for growth. He is a member of the YPO (Young Presidents Organisation). Mr. Ruia is also a Director on the Board of Essar Oil Limited, Essar Power Limited, Vadinar Power Company Limited, Mahan Coal Limited, Essar Bulk Terminal Limited, Vadinar Oil Terminal Limited, Vodafone Essar Limited, India Securities Limited, Essar Capital Limited, Aegis Limited and Essar Capital Holdings (India) Limited. He is a member of the Audit Committee of Vadinar Power Company Limited, Essar Bulk Terminal Limited, Vadinar Oil Terminal Limited, Aegis Limited and India Securities Limited. He is also a member of the Share Transfer and Shareholders Grievance Committee of India Securities Limited. Mr. Ruia does not hold any shares in the Company. Mr. S. V. Venkatesan Mr. S. V. Venkatesan is a B. Com., CAIIB by qualification and a Gold Medalist in Commerce from Madras University. Mr. Venkatesan has over 40 years experience in the field of banking and finance with 24 years in State Bank of India, a leading nationalised bank. Mr. Venkatesan has vast experience in the areas of resource mobilisation through Capital Markets and Institutions to fund large capital intensive projects. Mr. Venkatesan is also a Director on the Board of various Indian public limited companies viz., Essar Investments Limited, Essar Power Tamilnadu Limited, Essar Steel Limited, Bhander Power Limited, Essar Power MP Limited, Asia Motor Works Limited, Essar Information Technology Limited, Essar Teleholdings Limited, Essar Constructions (India) Limited, India Securities Limited, Essar Capital Limited, Lancor Holdings Limited, Best & Crompton Engineering Limited and Essar Power Limited. Mr. Venkatesan is a member of the Audit Committee of Essar Steel Limited, Essar Constructions (India) Limited, India Securities Limited, Essar Teleholdings Limited and Essar Power Limited. He is the Chairman of the Share Transfer and Shareholders Grievance Committee of India Securities Limited and a member of the Share Transfer and Shareholders Grievance Committee of Essar Steel Limited, Essar Power Limited and Essar Power MP Limited. Mr. Venkatesan does not hold any shares in the Company. Mr. Deepak Kumar Varma Mr. Varma is B.E. (Mech) and MBA by qualification and is a Management Consultant and Arbitrator by profession. He is also member of the Indian Council of Arbitrators. During his career, Mr. Varma has held various senior management positions such as senior executive positions in Steel Authority of India Limited, Chairman and Managing Director of Hindustan Shipyard Limited, Chairman and Managing Director of Cochin Shipyard Limited, Managing Director of National Ship Design & Research Centre (NSDRC), Chairman and Managing Director of Rashtriya Chemical & Fertilizers Limited, Chairman and Managing Director of Fertilizers & Chemicals (Cochin), Director & Group Leader of Oman India Fertilizers (OMIFCO) and Chairman of the Standing Conference of Public Enterprises, the Apex Body of all Central PSUs. Mr. Varma is also a Director on the Board of Venus Insurance Broking Company Limited. Mr. Varma does not hold any shares in the Company.

Directors Report

DIRECTORS REPORT
To the Members of Essar Shipping Ports & Logistics Limited Your Directors take pleasure in presenting the Thirty-third Annual Report of your Company together with Audited Accounts for the year ended March 31, 2009. Pursuant to the provisions of Section 219 of the Companies Act, 1956 and as permitted by the Securities and Exchange Board of India (SEBI), the abridged annual accounts of the Company are enclosed. Any member interested in obtaining a copy of the unabridged accounts may write to the Company Secretary at the Registered Office. 1. FINANCIAL RESULTS The summary of the standalone and consolidated financial results of your Company for the year ended March 31, 2009 are furnished below: (Rs. in crore) Particulars Consolidated For the year ended 31-03-2009 Total Income Total Expenditure EBITDA Less: Interest & Finance charges Less: Provision for Depreciation Profit before Tax Less: Provision for Tax Profit before Share of Minority Interest Add: Share of Minority Interest (loss) Profit after Tax On a consolidated basis, during the year under review, your Company registered an increase of 19% in the Total Income and an increase of 18% in EBITDA as compared to the previous year. The increase in Total Income and EBITDA is largely attributed to the contribution by the Ports & Terminals and Oilfields Services business. On a standalone basis which is represented by the Sea Transportation Business, your Company registered an increase of 8.54% in the Total Income during the year under review. The EBITDA for the year under review included Rs.197.10 crore being profit on Sale of Fleet and Currency Exchange Gain of Rs.75.65 crore. 2. DIVIDEND Your Company has consolidated the Ports & Terminals business and Oilfields Services business which are highly capital intensive in nature. Nurturing these new businesses in the initial phases along with the existing business of Sea Transportation to their full capacity and the various capital expenditure committed would require substantial resources. All this necessitates the operating profits to be ploughed back into the businesses. With a view to conserving resources for these requirements, your Directors have not recommended any dividend for the year ended March 31, 2009. 3. REORGANISATION Essar Sisco Ship Management Company Limited, India, (ESSMC), a wholly owned subsidiary of the Company and India Shipping, Mauritius (IS) have been amalgamated with the Company with effect from April 1, 2008 (the appointed date) in terms of Scheme of Amalgamation (the Scheme) sanctioned by the Honorable High Court of Madras and Honorable High Court of Gujarat vide their orders dated December 18, 2008 and January 16, 2009 respectively. 2,676.57 1,739.70 936.87 434.80 377.82 124.25 47.05 77.20 77.20 For the year ended 31-03-2008 2,255.67 1,460.36 795.31 266.55 221.48 307.28 43.68 263.60 13.81 277.41 Standalone For the year For the year ended 31-03-2009 ended 31-03-2008 1154.71 748.15 406.64 129.22 159.45 117.97 10.31 107.66 107.66 1063.93 598.73 465.20 89.19 106.64 269.37 27.70 241.67 241.67

In accordance with the Scheme, the undertaking of ESSMC and IS being all its assets and debts, outstandings, credits, liabilities, duties and obligations, have been transferred to and vested in the Company retrospectively with effect from the appointed date. Pursuant to the Scheme: a) The sole shareholder holding fully paid up equity shares in IS was allotted 364,905,489 equity shares of the Company based on allotment of 32 equity shares of Rs.10/- each (Rs.364.91 crore), at a premium of Rs.210/- per share (Rs.7,663.02 crore) for every hundred equity shares of US$ 1 each held in the capital of IS and 175,299,376 equity shares (including 376,000 GDS represented by 124,456,000 equity shares) of the Company held by IS have been cancelled. The net excess of the value of additional shares (shares allotted to the shareholder of IS reduced by the shares already held by IS and cancelled by the Company) issued over net assets of IS acquired by the Company amounting to Rs.3,712.43 crore has been deducted from the Securities Premium Account of the Company as per the Scheme. The erstwhile wholly owned subsidiaries of IS viz., Essar Oilfields Services Limited, Mauritius and Essar Oilfields Services FZE have become subsidiaries of the Company. No shares were issued on amalgamation of ESSMC as it was a wholly owned subsidiary of the Company. The difference between investment value of equity shares of ESSMC and equity share capital of Rs.4.36 crore has also been deducted from the Securities Premium Account of the Company as per the Scheme.

b)

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

33rd Annual Report 2008 - 2009 615,683,320 equity shares of Rs.10/- each from the earlier Rs.426.21 crore (includes Rs.0.13 crore on account of forfeited shares) divided into 426,077,207 equity shares of Rs.10/- each. 5. MANAGEMENT DISCUSSION & ANALYSIS Overview of the World Economy Economies around the world have been seriously affected by the financial crisis and slump in activity. The advanced economies experienced an unprecedented 7 percent decline in real GDP during the fourth quarter of Calendar Year 2008, and output has fallen almost as fast during the first quarter of 2009. Going forward, the stabilisation of the financial markets might take longer than previously envisaged, even with strong efforts being made by policymakers. Monetary policy interest rates are expected to be lowered to or remain near the zero bound in the major advanced economies, while central banks continue to explore ways to use both the size and composition of their balance sheets to ease credit conditions. Fiscal deficits are expected to widen sharply in both advanced and emerging economies, as governments are assumed to implement fiscal stimulus plans in G20 countries amounting to 2 percent of GDP in 2009 and 1 percent of GDP in 2010. Source: International Monetary Fund. Overview of the Indian Economy The Indian economy, which was on a robust growth path up to 2007-08, averaging at 8.9 per cent during the period 2003-04 to 2007-08, witnessed moderation in 2008-09, with the deceleration turning out to be somewhat sharper in the third quarter. The slowdown in the Indian economy during 2008-09 has been associated with a deceleration in investment demand, which had been an important driver of growth in recent years. The adverse conditions for access to external capital, and the depressing effects of the global crisis on domestic business confidence contributed to the moderation in investment demand. Based on recent production / sales data on cement, steel and automobiles there are visible indications of a strong recovery in the industrial sector. The current recovery seen in cement, steel, automobile and in the core industries index is expected to gather further momentum as the two major problems that the industry faced in the October-December quarter of the financial year 2008-09 are being addressed - inventory levels declining and liquidity easing. The industrial sector continues to repose faith in domestic demand as its investment intentions remain robust. Several new capacities whose commissioning was deferred during OctoberDecember 2008 are now being commissioned. New capacity expansion plans are being announced. Hence we are likely to see growth albeit at a slower rate than the one witnessed in last 5 years. Source: Centre for Monitoring Indian Economy, Reserve Bank of India. Your Companys Business Performance, Opportunities and Outlook The business model adopted by your Company is unique in nature with no peer group comparison. The business is based on the intrinsic demand for transportation services and logistics & cargo handling infrastructure required by the steel, power generation and refining industry. Your Company had reorganised its business with certain other businesses of the Essar Group to become a one-of-a-kind integrated logistics company. During the financial year, your Company has consolidated various businesses in the areas of dry bulk ports, oil terminals and oilfields drilling services under its fold. With interests in dry bulk ports and oil terminals, crude and dry bulk carriers, port to plant logistics and oilfield services, your Company now provides end-to-end logistics solutions to its customers. 6 b) a) Ports & Terminal Business: Consolidated cargo throughput at major ports in India grew by 2.13 percent in the current fiscal according to the latest data released by the Indian Ports Association. The countrys 12 gateway ports, six each on the east and west coasts, handled 530.35 million tons of cargo, compared to 519.31 million tons in the same period last year. Your Company through its subsidiary Vadinar Oil Terminal Limited (VOTL) is operating a 10.5 million metric tons per annum (mmtpa) terminal at Vadinar on the west coast of India. VOTL is currently expanding its capacity to support refinery capacity of upto 16 mmtpa from the existing capacity of 10.5 mmtpa. The blue print for this expansion is being finalised. In 2009, VOTL, was awarded Five Star Rating and the prestigious Sword of Honor by the British Safety Council. VOTL is one of only forty organisations worldwide to be awarded with this honor, thereby recognising the high standards of Safety maintained by your Company. In addition to the same, VOTL has also obtained ISO 9001:2000 certification this year. Your Company through its subsidiary Essar Bulk Terminal Limited (EBTL) is setting up an all weather deep draft dry bulk port at Hazira in Gujarat. The port will handle raw materials and finished products for the steel plant at Hazira. Your Company has achieved financial closure for the project and the terminal is expected to be operational in the current financial year. Your Company through another subsidiary Essar Bulk Terminal (Salaya) Limited is setting up a dry bulk port facility at Salaya in Gujarat. The port will handle import of coal and export of pet coke. The operations of the port are expected to begin during the financial year 2011-12. In view of the tremendous long term opportunities provided by the Government of India to privatise ports, especially container terminals, your Company is actively pursuing development of Ports & Terminal projects through a competitive bidding route or through Joint Ventures and Strategic Alliances. Sea Transportation Business: In the dry bulk segment a marginal increase in seaborne trade of dry bulk commodities was witnessed. Sailing distances were shorter and port congestion fell, while technical off-hire and Chinese Coastal trade saw an increase. During the year under consideration the dry bulk fleet expanded by 6.5 percent. In view of the uncertain global economic scenario resulting in restrained investment in housing and capital equipment and reduced spending on capital goods there is likely to be a fall in the seaborne transport of iron ore, coking coal and steel products during the next two financial years. In the energy transportation segment, global oil consumption declined by 2 to 3 percent during the year. An interesting phenomenon of traders employing Very Large Crude Carriers (VLCCs) for the purpose of storage to take advantage of the reverse arbitrage that existed in the futures market was witnessed during the year but after the latest round of supply cuts by OPEC, the oil futures market have witnessed a narrowing of the arbitrage opportunity thereby resulting in a decreased demand for VLCCs. Based on the macroeconomic view and oil market forecasts there is likely to be a significant decline in the utilisation rate of tankers and thus a decrease in freight rates for all segments of the tanker market. During the year under review, your Company has added two Supramax Dry Bulk Carriers in its fleet while having sold one Capesize vessel, one Suezmax tanker and one Product tanker. The ships were acquired, despite growing uncertainty in the markets as they were backed by long term charters with globally reputed steel

Directors Report majors. The philosophy of acquiring new vessels only on the basis of committed cargo from reputed companies has provided steady cashflows and is instrumental in weathering the downfall in the freight rates. Your Company was awarded the Most Quality Conscious Indian Shipping Company by the Director General of Shipping for the fourth time, which recognises the Companys ever increasing endeavor to provide good quality services to its clients. c) Oilfields Services Business: In Asia-Pacific, the Indian Ocean market has been the most active recently, with quite a few tenders being processed in all categories jackups, standard and deepwater floaters. Mexico remains the bright light in an otherwise quiet global jackup market, where Pemex Exploration and Production has outstanding tenders requesting the provision of six additional jackups, with more expected to follow. In South America, Petrobras is maintaining its ambitious newbuild floater plans, with the operator expected to tender for the provision of seven more ultra-deepwater newbuilds later in 2009. In 2009, your Company reaped the benefit of the reorganisation that was undertaken in 2008 with Essar Oilfields Services Limited (EOSL) becoming a subsidiary of your Company. EOSL has a fleet of 14 rigs which includes one semi submersible offshore rig and thirteen onshore rigs. The Company has successfully deployed its semi submersible rig, Essar Wildcat on a long term charter in the Krishna Godavari basin on the East Coast of India during the year. Of the thirteen onshore rigs, ten are currently contracted with global energy majors. During the year, your Company has also entered into an agreement to construct two New Building Jack Up Rigs which are expected to be delivered in 2011. Essar Wildcat, has received excellent recommendations for a Health Safety and Environment (HSE) audit carried out by International Risk Control Asia (IRCA). This audit is one of the best tools available to maintain and verify the condition of rigs. d) Logistics Business: Your Company through its subsidiary Essar Logistics Limited (ELL) provides transshipment, lighterage and trucking services to steel mills and oil refineries. ELL is now carrying out logistics handling for large project cargoes and is making investments in acquiring assets for project cargo movement. During the year under review, ELL handled 18.5 million tonnes of cargo. 6. RISK MANAGEMENT Economic Risks: As a business philosophy, your Company has followed the conservative policy of entering into long term contracts with reputed global majors in each of its divisions thereby ensuring long term profitability of the Company. Forex Risk: A majority of the revenues of your Company are in foreign currency which creates a natural hedge against foreign exchange exposures. Apart from this, Essar Groups specialised forex team provides efficient advice to mitigate the exchange risk of your Company. Interest Rate Risk: Your Company has been undertaking suitable hedging strategies to overcome any adverse interest rate risks. It has formulated internal target rates at which any open interest rate risk can be hedged. 7. QUALITY, SAFETY AND ENVIRONMENT Your Company, in order to ensure highest standard of safety, has implemented and initiated various measures with respect to Quality, Safety and Environment Management Systems. The initiatives by your Company have been rewarded with several recognitions. Some of the noticeable ones amongst the many are as follows: a) b) c) d) e) Five Star Rating and Sword of Honor by the British Safety Council to the oil terminal at Vadinar. ISO 9001:2000 certification for the oil terminal at Vadinar. Most Quality Conscious Indian Shipping Company by the Director General of Shipping. ISO 9001:2000 and ISO 14001:2004 certification to the sea transportation division by ABS Quality Evaluations Inc. Essar Wildcat, the semi submersible offshore rig of the Oilfields Services business has received excellent recommendations for the HSE audit carried out by International Risk Control Asia (IRCA).

8. INTERNAL CONTROL FRAMEWORK Your Company conducts its business with integrity and high standards of ethical behavior and in compliance with the laws and regulations that govern its business. Your Company has a well established framework of internal controls in operation, including suitable monitoring procedures. In addition to the external audit, the financial and operating controls of your Company at various locations are reviewed by Internal Auditors, who report their findings to the Audit Committee of the Board. 9. HUMAN RESOURCE Your Company has introduced contemporary Human Resource practices to enhance technical and managerial competence of the employees and to further leverage their capabilities to enhance the performance of the business. Further the Company has taken a series of initiatives to enhance emotional and intellectual engagement of employees with the Company and its business. 10. INFORMATION TECHNOLOGY Your company has prepared a comprehensive roadmap for implementation of SAP in its financial and budget management. The Company is also exploring various methods of automation so as to have greater visibility and control over its assets and further improve the turnaround time thereby increasing the asset utilisation and profitability. Your Company has implemented a robust Document Management System thus improving the availability of critical information in e-mode thereby reducing the use of paper. 11. SUBSIDIARIES: Your Company had the following Subsidiaries as on March 31, 2009: 1. Essar Ports & Terminals Limited, Mauritius (EPTL) 2. Vadinar Oil Terminal Limited, India (VOTL) (wholly owned subsidiary of EPTL) 3. Essar Bulk Terminal Limited, India (EBTL) (wholly owned subsidiary of EPTL) 4. Essar Bulk Terminal (Salaya) Limited, India (EBTSL) (wholly owned subsidiary of EPTL) 5. Essar Logistics Limited, India (ELL) 6. Essar Dredging Limited, India (EDL) (wholly owned subsidiary of EBTL) 7. Essar International Limited, Guernsey, Channel Islands (EIL) 8. Energy Transportation International Limited, Bermuda (ETIL) (wholly owned subsidiary of EIL) 9. Energy II Limited, Bermuda (E-II) (wholly owned subsidiary of EIL) 10. Essar Oilfields Services Limited, Mauritius (EOSL) 11. Essar Oilfields Services FZE, Dubai (EOSFZE) (wholly owned subsidiary of EOSL) Essar Oilfields Services Limited and Essar Oilfields Services FZE became the subsidiaries of the Company and Essar Sisco Ship Management Company Limited ceased to be a subsidiary of the Company with effect 7

33rd Annual Report 2008 - 2009 from April 1, 2008 upon amalgamation. Essar Dredging Limited became a subsidiary of the Company on January 12, 2009. Subsequent to March 31, 2009 two more companies have become subsidiaries of the Company viz. Essar Oilfield Services India Limited (effective April 13, 2009) and Vadinar Ports & Terminals Limited (effective April 21, 2009). The Company has obtained exemption from the Central Government under Section 212(8) of the Companies Act, 1956 from attaching the Balance Sheets, Profit & Loss Account, report of the Board of Directors and the report of the Auditors of the subsidiary companies with the Annual Report of the Company, as required under Section 212 of the Companies Act, 1956. The Company will make available the annual accounts of the subsidiary companies to members seeking such information at any point of time. In accordance with Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates, your Directors have pleasure in attaching the Abridged Consolidated Financial Statements, which forms part of the Annual Report. 12. DIRECTORS In accordance with the provisions of the Companies Act, 1956 and the Ar ticles of Association of the Company, Mr. R. N. Bansal, Mr. A. R. Ramakrishnan and Mr. Anshuman Ruia, retire at the ensuing Annual General Meeting of the Company and being eligible, offer themselves for re-appointment. Mr. S. V. Venkatesan and Mr. Deepak Kumar Varma were appointed as Additional Directors on your Companys Board with effect from October 31, 2008. They cease to be Directors on the date of the Thirty-third Annual General Meeting. Notices have been received from members proposing their appointment as Directors on the Board. 13. AUDITORS Your Companys Auditors, Messrs. Deloitte Haskins & Sells, Chartered Accountants, retire at the ensuing Annual General Meeting. It is proposed to re-appoint Messrs. Deloitte Haskins & Sells, Chartered Accountants as the Auditors of the Company from the conclusion of this Annual General Meeting until the conclusion of the next Annual General Meeting. 14. CORPORATE GOVERNANCE The Company has complied with the requirements under the Corporate Governance reporting system. The disclosures as required therein have been furnished in the Annexure to the Directors Report under the head Corporate Governance. 15. PARTICULARS REQUIRED UNDER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF THE BOARD OF DIRECTORS) RULES, 1988 This does not apply to your Company as the shipping industry is not included in the Schedule to the relevant rules. Foreign exchange earnings and outgo are summarised below: Total Foreign Exchange: (1) Earned (including loan receipts, sale of ships, freight, charter hire earnings, interest income, etc.). (2) Used (including cost of acquisition of ships, loan repayments, interest, operating expenses, etc.). Your Company has obtained exemption from the Central Government under Section 211(4) of the Companies Act, 1956 from giving information required under clauses (a), (b), (c) and (e) of Paragraph 4-D of Part II of 8 : Rs.887.70 crore : Rs.1,445.18 crore Persons constituting group coming within the definition of group as defined in the Monopolies and Restrictive Trade Practices Act, 1969 for the purpose of interse transfer of shares of the Company under regulation 3(1)(e)(i) of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997: Sr. No. 1. 2. 3. 4. Name of the Company Essar Investments Limited Teletech Investments (India) Limited Essar Global Limited Essar Shipping & Logistics Limited Mumbai May 18, 2009 Schedule VI to the Companies Act, 1956 vide Order no. 46/19/2009-CLIII dated March 23, 2009. 16. PARTICULARS OF EMPLOYEES Information as per Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975, as amended, is given in the Annexure forming part of this Report. However, as per the provisions of Section 219(1)(b)(iv) of the said Act, the Report and Accounts are being sent to all shareholders of the Company excluding the statement of particulars of employees u/s 217(2A) of the said Act. Any shareholder interested in obtaining a copy of this statement may write to the Company Secretary, for the same, at the Registered Office of the Company. 17. STATEMENT OF DIRECTORS RESPONSIBILITIES: Pursuant to the requirement of Section 217(2AA) of the Companies Act, 1956 the Board of Directors hereby state that: a) in the preparation of the annual accounts, the applicable accounting standards have been followed and there have been no material departures; the Directors 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 or loss of the Company for that period; the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; the Directors have prepared the annual accounts on a going concern basis.

b)

c)

d)

18. GOVERNMENT POLICY: The Government needs to take a serious relook at issues relating to Withholding Tax, Tax on Capital Gains on Sale of Ships, Tax on Ship Staff salary, Service Tax and Fringe Benefit Tax. Unless these are negated, the competitive edge of the Indian Shipping industry will be severelly affected and jeopardise growth of tonnage. 19. APPRECIATION AND ACKNOWLEDGEMENTS: Your Directors express their sincere thanks and appreciation to all the employees for their commendable teamwork and contribution to the growth of the Company. Your Directors also thank its bankers, charterers and other business associates for their continued support and co-operation during the year. For and on behalf of the Board

Sanjay Mehta Managing Director

R. N. Bansal Director

Corporate Governance Report

CORPORATE GOVERNANCE REPORT

1. Statement on Companys philosophy on Code of Corporate Governance Your Company believes that adhering to global standards of Corporate Governance is essential to enhance shareholders value and achieve long term corporate goals. The Companys philosophy on Corporate Governance stresses the importance of transparency, accountability and enhancement of shareholders value. The Board overseas periodic review of business plans, monitors performance and ensures compliance of regulatory requirements including SEBI Regulations and Listing requirements. 2. Board of Directors The Company has a non-executive Chairman and Independent Directors constitutes half the total number of Directors. A. Composition, category, attendance and number of other directorships of the Directors are furnished below: As at March 31, 2009 the Board consisted of twelve members. The composition, category of directors and directorships held in other companies was as under: Name of Director Category of Director * No. of outside Directorships in other Indian public companies 9 5 11 8 14 10 13 1 14 5 4 ** No. of Committee positions held in other public companies Chairman Mr. Shashi Ruia (Chairman) Mr. Ravi Ruia (Vice Chairman) Mr. Anshuman Ruia Mr. R. N. Bansal Mr. N. Srinivasan ***Mr. K. V. Krishnamurthy ***Mr. Dilip J. Thakkar #Mr. Deepak Kumar Varma #Mr. S. V. Venkatesan Mr. Sanjay Mehta (Managing Director) Mr. A. R. Ramakrishnan (Wholetime Director) Mr. V. Ashok (Wholetime Director) Promoter, Non-Executive Promoter, Non-Executive Promoter, Non-Executive Independent, Non-Executive Independent, Non-Executive Independent, Non-Executive Independent, Non-Executive Independent, Non-Executive Independent, Non-Executive Non-Promoter, Executive Non-Promoter, Executive Non-Promoter, Executive 4 5 3 5 1 Member 6 4 4 6 4 8 1 2

Mr. Rewant Ruia and Mr. S. K. Poddar, Directors have resigned with effect from June 20, 2008. * ** *** # excludes foreign companies, private limited companies, Section 25 companies and Alternate Directorships. includes membership of Audit and Share Transfer & Shareholders Grievance Committee only. have been appointed as Independent Directors with effect from June 20, 2008. have been appointed as Independent Directors with effect from October 31, 2008.

33rd Annual Report 2008 - 2009

B.

Details of Board Meetings held during the year: Sr.

No. 1 2 3 4 5 6 7 May 8, 2008 June 20, 2008 July 29, 2008 September 20, 2008 October 31, 2008 January 30, 2009 March 26, 2009

Composition: The Committee comprises of three Directors of which two are Independent Directors. The Chairman of the Audit Committee is an Independent Director. All the members of the Committee are financially literate and have relevant financial management and/or audit exposure. The Managing Director, Director Finance, Head - Accounts, Statutory Auditors and Internal Auditors attend the meetings. The Company Secretary is the Secretary to the Committee. Details of Audit Committee Meetings held during the year:

Date

Board Strength 10 12 10 10 12 12 12

No. of Directors present 8 9 4 6 9 9

Sr. No.

Date

7 1 2 3 4 May 8, 2008 June 20, 2008 July 29, 2008 October 31, 2008 January 30, 2009

Committee Strength 3 3 3 3 3

C.

Attendance of Directors at Board Meetings and at the last Annual General Meeting:
Director No. of Board Meetings attended 3 2 5 1 5 7 5 2 3 2 4 6 7 Attendance at last AGM

No. of Members present 3 2 2 2 3

Mr. Shashi Ruia Mr. Ravi Ruia Mr. Anshuman Ruia * Mr. Rewant Ruia * Mr. S. K. Poddar Mr. R. N. Bansal Mr. N. Srinivasan * Mr. K. V. Krishnamurthy * Mr. Dilip J. Thakkar * Mr. Deepak Kumar Varma * Mr. S. V. Venkatesan Mr. Sanjay Mehta Mr. A. R. Ramakrishnan Mr. V. Ashok

N N N N N Y N N Y N N N Y Y

Attendance at Audit Committee Meetings: Director Mr. R. N. Bansal (Chairman) Mr. N. Srinivasan Mr. Anshuman Ruia 4. No. of meetings held 5 5 5 No. of meetings attended 4 5 3

Remuneration to Directors : Details of Remuneration paid to the Managing Director and Wholetime Directors during the year ended March 31, 2009 are as under: (Rs.)
Name of Director Basic Salary Allowances and other benefits Perquisites Contribution to Provident & Superannuation Fund 6,50,000 1,20,000 Total

Mr. Sanjay Mehta, Managing Director Mr. A. R. Ramakrishnan, Wholetime Director Mr. V. Ashok, Wholetime Director

12,00,000 29,16,000

50,60,868 54,70,080

1,44,000 70,54,868 3,49,920 88,56,000

* were directors for only part of the year 3. Audit Committee: The Audit Committee of the Company inter-alia performs all the functions specified under the Companies Act, 1956 and Clause 49 of the Listing Agreement.

27,50,004

57,04,740

45

7,42,500 91,97,289

10

Corporate Governance Report

No Employee Stock Option Schemes have been provided by the Company till date. Services of the aforesaid Executive Directors can be mutually terminated by giving three months notice or three months salary in lieu thereof. Details of sitting fees paid to Non-Executive Directors for the meetings held during the year ended March 31, 2009: Non-Executive Directors Sitting Fees paid for Board / Committee meetings (Rs.) 22,500 15,000 52,500 7,500 57,500 82,500 37,500 15,000 15,000 22,500 6.

All the valid share transfer requests received during the year were duly attended to and processed in time. There were no valid requests pending for share transfers as on March 31, 2009. General Body Meeting: (a) Details of General Meetings held in last three years:
Financial year 2005-06 Meeting Date Time Location

AGM EGM

22-09-06 02-01-07

10.15 AM 11.00 AM

Mr. Shashi Ruia Mr. Ravi Ruia Mr. Anshuman Ruia Mr. Rewant Ruia Mr. R. N. Bansal Mr. N. Srinivasan Mr. K. V. Krishnamurthy Mr. Dilip J. Thakkar Mr. Deepak Kumar Varma Mr. S. V. Venkatesan

Dayanandasagar Memorial Hall, Chandrasagar Complex, No. 264 /266 T. Mariappa Road, 2 nd Block, Jayanagar, Bangalore 560 011. Srinivasa Sagar Kalyana Mahal, Chandrasagar Complex, No.264 /266 T. Mariappa Road, nd 2 Block, Jayanagar, Bangalore 560 011. Administrative Building, Essar Refinery Complex, Okha Highway (SH-25), Jamnagar, Gujarat.

2006-07

AGM EGM

25-09-07 23-02-08

11.00 AM 11.00 AM

2007-08

AGM

27-09-08

3.30 PM

No shares or convertible instruments are held by any members of the Board. 5. Share Transfer & Shareholders Grievance Committee: Terms of reference: To approve transfer, transmission, sub-division and issue of duplicate shares /debentures and for redressal of investor complaints on all matters. Composition: The Committee members comprise of Mr. Ravi Ruia, Vice Chairman, Mr. Sanjay Mehta, Managing Director, Mr. A. R. Ramakrishnan, Wholetime Director and Mr. V. Ashok, Wholetime Director. Mr. Ravi Ruia is the Chairman of the Committee. The Executive Directors and the Company Secretary are authorised to approve the Share Transfer and other related transactions on a day to day basis under the supervision of the Committee. Details of shareholders complaints received, solved and pending share transfers: There were no complaints pending at the beginning of the year. A total of 323 complaints were received during the year ended March 31, 2009, most of which being nonreceipt of dividend/debenture warrants, non-receipt of share certificates. All the complaints were redressed under the supervision of the Committee and no complaints were outstanding as on March 31, 2009. 7.

(b)

No special resolutions were passed in the previous 3 Annual General Meetings. Three special resolutions were passed during the financial year 2008-2009 through postal ballot for : i. inser ting an additional main object by amending the main objects clause of the Memorandum of Association; shifting the registered office from the State of Karnataka to the State of Gujarat; and issuance of Corporate Guarantee.

(c)

ii.

iii.

Mr. Prem Rajani, Advocate, acted as Scrutinizer for conducting the Postal Ballot. (d) No resolutions are proposed to be passed at the ensuing Annual General Meeting which require approval of members through Postal Ballot.

Disclosures: There are no materially significant related party transactions made by the Company with its Promoters, Directors or Management, their relatives, its subsidiaries, etc., that may have potential conflict with the interest of the Company at large.
11

33rd Annual Report 2008 - 2009

Transactions with related parties during the year are disclosed in Note No. B 12 of Schedule 13 to the accounts in the Annual Report. During the last three years no penalty or stricture has been imposed on the Company by Stock Exchanges/SEBI/Statutory Authorities on matters related to Capital Markets. 8. Means of Communication: Financial results The quarterly and annual financial and other information results are displayed on the about the Company Companys website: www.essar.com Publication of financial results Published in major newspapers such as Financial Express and Jai Hind, etc.

C.

Registrars and Share Transfer Agents: Data Software Research Company Private Limited Sree Sovereign Complex, 22, 4th Cross Street, Trustpuram, Kodambakkam, Chennai - 600 024 Tel: (044) 2480 1664, Fax: (044) 2483 4636 E-Mail: dsrcmd@vsnl.com.

D.

Share Transfer System: To expedite the process of share transfers, transmission, etc., the Board of your Company has delegated these powers to the Executive Directors and the Company Secretary. All valid share transfer requests received by the Company in physical form are registered within an average period of 15 days. The Company dematerialises the shares after getting the dematerialisation requests being generated by the Depository Participant.

Presentation to Press releases and presentations Institutional Investors made to Institutional Investors and and to the Analyst Analysts are displayed on the Companys website : www.essar.com Management Discussion & Analysis 9. Forms part of the Annual Report which is mailed to the shareholders of the Company

E.

Listing on Stock Exchanges: The Companys securities are listed on the following Stock Exchanges: Bombay Stock Exchange Limited Phiroze Jeejeebhoy Towers, Dalal Street, Mumbai 400 023. National Stock Exchange of India Limited Exchange Plaza, Bandra Kurla Complex, Bandra East, Mumbai 500 051. Annual Listing fee for the year 2009-10 has been paid to both the exchanges.

General Shareholders information: A. Annual General Meeting details: Date Venue July 31, 2009 Administrative Building, Essar Refinery Complex, Okha Highway (SH-25), Taluka Khambhalia, District Jamnagar, Gujarat 361 305. 3.30 p.m. July 27, 2009 to July 31, 2009 (both days inclusive)

F.

Market price data (High /Low) during each month in the year 2008-2009 on the Bombay Stock Exchange Limited and National Stock Exchange of India Limited: Bombay Stock Exchange Month April May June July August September October November December January February March 187.95 187.85 146.10 125.45 124.30 92.65 64.00 42.15 40.50 42.40 36.25 32.70 139.05 140.00 93.15 77.05 85.50 64.40 31.65 26.40 25.10 27.90 28.00 19.40 National Stock Exchange Highest Lowest 179.55 187.70 145.90 125.45 124.60 92.80 64.00 42.35 40.60 42.40 36.10 32.80 140.15 140.10 92.55 75.00 86.00 64.25 31.00 26.45 25.10 28.00 27.00 20.00 April May June July August September October November December January February March Highest Lowest Month

Time Book Closure Dates B.

Financial Calendar:
Financial year of Company First Quarter results Second Quarter results Third Quarter results Annual results for the year April 1, 2009 to March 31, 2010 On or before July 31, 2009 On or before October 31, 2009 On or before January 31, 2010 On or before June 30, 2010

Scrip Code : 500630

Scrip Code : ESSARSHIP

12

Corporate Governance Report

G.

Share Price performance in comparison to BSE Sensex

K.

Registered Office

: Administrative Building, Essar Refinery Complex, Okha Highway (SH-25), Taluka Khambhalia. District Jamnagar, Gujarat 361 305. : Essar House, 11, Keshavrao Khadye, Marg, Mahalaxmi, Mumbai 400 034. Tel : (022) 6660 1100 Fax: (022) 2354 4312 E Mail: espll.secretarial@essar.com

L.

Corporate Office

M. H. Shareholding Pattern as on March 31, 2009:

Shareholding By Promoters Financial Institutions Mutual Funds /Banks Insurance Companies Other Corporate Bodies Non-Domestic Companies / Foreign Banks Foreign Institutional Investors Non-Resident Individuals Public Total No. of Shares 51,53,81,397 13,21,893 % 83.71 0.21

Status of Dematerialisation of shares as on March 31, 2009:

Mode Physical Demat TOTAL No. of shares 37,51,15,196 24,05,68,124 61,56,83,320 No. of folios 68,105 53,488 1,21,593 % 60.93 39.07 100.00

1,45,41,479 22,709 5,03,86,107 9,82,589 3,30,47,146 61,56,83,320

2.37 0.00 8.18 0.16 5.37 100.00

10.

Nomination Facility: Shareholders holding shares in physical form and desirous of making a nomination in respect of their shareholding in the Company, as permitted under Section 109A of the Companies Act, 1956 are requested to submit to the R&T Agent of the Company the prescribed nomination form.

11.

I.

Distribution of Shareholding as on March 31, 2009:

No. of equity shares held Upto 5000 5001-10000 10001-20000 20001-30000 30001-40000 40001-50000 50001-100000 100001 and above TOTAL Number of shareholders 111746 6028 2193 574 261 204 303 286 1,19,341 % of shareholders 91.90 4.96 1.80 0.47 0.21 0.17 0.25 Total % of number holding of shares 1,43,29,725 44,75,219 32,03,323 14,55,656 9,35,045 9,64,961 22,92,288 2.33 0.73 0.52 0.24 0.15 0.16 0.37 95.50 100.00

Outstanding GDRs/ADRs /Warrants or any convertible instruments, conversion date and likely impact on equity: As on March 31, 2009 there are no GDRs/ADRs/Warrants or any convertible instruments, conversion of which is likely to have an impact on the equity of the Company.

12.

Secretarial Audit: A qualified Practicing Company Secretary carries out secretarial audit to reconcile the total admitted capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) and the total issued and listed capital. The audit confirms that the total issued/paid up capital is in agreement with the total number of shares in physical form and the total number of dematerialised shares held with NSDL and CDSL.

0.24 58,80,27,103 100.00 61,56,83,320

J.

Compliance Officer : Mr. Manoj Contractor Company Secretary

13

33rd Annual Report 2008 - 2009

13.

Non-mandatory requirements: 1. Remuneration Committee: The Committee comprises of three Non-Executive Directors with the Company Secretary as the Secretary of the Committee. The Committee is empowered to formulate and recommend to the Board from time to time, the compensation structure for Managing/Executive/Wholetime Directors and to administer and supervise the Employee Stock Option Schemes, whenever applicable.

2.

Shareholders right: Quarterly financial results including summary of the significant events in last six months are available on the website of the Company i.e. www.essar.com. No separate financials are sent to shareholders of the Company.

3.

Audit qualifications: There are no audit qualifications in the Auditors report on the financial statements to the Shareholders of the Company.

14

AUDITORS CERTIFICATE ON CORPORATE GOVERNANCE

To the Members of Essar Shipping Ports & Logistics Limited We have examined the compliance of conditions of corporate governance by Essar Shipping Ports & Logistics Limited (the Company), for the year ended 31st March, 2009, as stipulated in clause 49 of the listing agreement entered into by the said Company with stock exchanges in India. The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited to procedures and implementation thereof, adopted by the Company for ensuring the compliance of conditions of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company. In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company has complied 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 Deloitte Haskins & Sells Chartered Accountants

Khurshed Pastakia Partner (Membership No. 31544) Mumbai May 18, 2009

Declaration on Compliance of the Companys Code of Conduct to the members of Essar Shipping Ports & Logistics Limited
The Company has framed a specific code of conduct for the members of the Board and the Senior Management Personnel of the Company pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges to further strengthen corporate governance practices in the Company. All the members of the Board and Senior Management Personnel of the Company have affirmed due observance of the said code of conduct in so far as it is applicable to them and there is no non-compliance thereof during the year ended March 31, 2009.

Sanjay Mehta Managing Director Mumbai May 18, 2009

15

33rd Annual Report 2008 - 2009

AUDITORS REPORT ON ABRIDGED FINANCIAL STATEMENTS TO THE MEMBERS OF ESSAR SHIPPING PORTS & LOGISTICS LIMITED
We have examined the abridged Balance Sheet of Essar Shipping Ports & Logistics Limited (the Company), as at 31st March, 2009 and also the abridged Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto, together with significant notes thereon. These abridged financial statements have been prepared by the Company pursuant to Rule 7A of the Companies (Central Governments) General Rules and Forms, 1956 and are based on the audited financial statements of the Company for the year ended 31st March, 2009 prepared in accordance with the provisions of sub-section 3(C) of Section 211 of the Companies Act, 1956 and covered by our report of even date to the members of the Company, which is attached hereto. For Deloitte Haskins & Sells Chartered Accountants Khurshed Pastakia Partner (Membership No. 31544)

Mumbai May 18, 2009

AUDITORS REPORT TO THE MEMBERS OF ESSAR SHIPPING PORTS & LOGISTICS LIMITED
1. We have audited the attached Balance Sheet of Essar Shipping Ports & Logistics Limited (the Company), as at 31st March, 2009 and also the Statement of Profit and Loss and Cash Flow Statement for the year ended on that date annexed thereto. These financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with 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 misstatement. 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. As required by the Companies (Auditors Report) Order, 2003, (the order) issued by the Central Government of India in terms of sub-section (4A) of section 227 of the Companies Act, 1956, we enclose in the Annexure, a statement on the matters specified in paragraphs 4 and 5 of the said Order. Further to our comments in the Annexure referred to in paragraph 3 above, we report that: (i) 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; (ii) 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 those books; (iii) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report are in agreement with the books of account; (iv) In our opinion, the Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this report comply with the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956; (v) On the basis of written representations received from directors, 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 clause (g) of sub-section (1) of Section 274 of the Companies Act, 1956. (vi) In our opinion and to the best of our information and according to the explanations given to us, the said financial statements, read together with the notes thereon and in particular note B(10) of schedule 13, with reference to the accounting treatment given in the Securities premium account, 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 Statement of Profit and Loss, of the profit of the Company for the year ended on that date; and (c) in the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that date. For Deloitte Haskins & Sells Chartered Accountants Khurshed Pastakia Partner (Membership No. 31544)

2.

3.

4.

Mumbai May 18, 2009

16

Auditors Report

ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph 3 of our report of even date)
In our opinion and according to the information and explanations given to us, the nature of the Companys business/activities during the year are such that clauses (vi), (viii), (xii), (xiii), (xiv), (xviii), (xix) and (xx) of para 4 of the Companies (Auditors Report) Order, 2003 are not applicable to the Company. 1. In respect of its fixed assets: a. The Company has maintained proper records showing full particulars, including quantitative details and situation of its fixed assets. b. The fixed assets of the Company are physically verified by the management according to a phased programme designed to cover all the items over a period of three years, which in our opinion, is largely reasonable having regard to the size of the Company and the nature of its assets. As per the information given to us by the management, no material discrepancies as compared to book records were noticed in respect of fixed assets verified during the year. c. In our opinion and according to the information and explanations given to us, the Company has not made any substantial disposals of fixed assets during the year and the going concern status of the Company is not affected. 2. In respect of its inventories: a. As explained to us, inventories were physically verified during the year by the management at reasonable intervals. b. In our opinion and according to the information and explanations given to us, the procedures of physical verification of inventories followed by the management were reasonable and adequate in relation to the size of the Company and the nature of its business. c. According to the information and explanations given to us, the Companys inventories comprise fuel oil and lube oil on board the ships. Having regard to the nature of the Companys business and scale of operations, quantities are determined by physical count and it is not considered feasible to maintain records of movements of inventories of such items by the vessel in which they are carried. As quantities are determined by physical count and records of movements are not maintained on board the ships, the question of discrepancies on physical verification thereof does not arise. 3. In our opinion and according to the information and explanations given to us, there are no companies, firms or parties required to be entered into the register maintained under section 301 of the Companies Act, 1956. Accordingly, paragraphs 4(iii) (a) to (g) of the Order are not applicable to the Company. 4. In our opinion and according to the information and explanations given to us, there is an adequate internal control system commensurate with the size of the Company and the nature of its business for the purchase of inventory and fixed assets and for the sale of services. During the course of our audit, we have not observed any continuing failure to correct major weaknesses in such internal controls. The nature of the Companys business does not involve sale of goods. 5. In our opinion and according to the information and explanations given to us, there are no contracts or arrangements that need to be entered into the register maintained under section 301 of the Companies Act 1956. 6. In our opinion, the Company has an internal audit system commensurate with the size of the Company and the nature of its business. 7. According to the information and explanations given to us in respect of statutory dues: a. The Company has been generally regular in depositing undisputed statutory dues, including Provident Fund, Investor Education and Protection Fund, Income Tax, Sales Tax, Wealth Tax, Service Tax, Value Added Tax, Customs Duty, Excise Duty, Cess and any other material statutory dues, as applicable, with the appropriate authorities during the year. As informed to us Employees State Insurance Scheme is not applicable to the Company. There are no material undisputed amounts payable in respect of above statutory dues outstanding as at 31st March, 2009 for a period exceeding six months from the date they became payable. The details of disputed Income Tax and Sales Tax dues which have not been deposited as at March 31, 2009 on account of disputes pending, are given below:
Name of the statute Income Act, 1961 Nature of the disputed dues Income Amount (Rs. in crore) 117.97 (advance tax payment Rs.54.48) 58.10 (security deposit Rs.0.50) Period to which the amount relates Assessment Year from 1988-1989 to 2001-2002 Assessment Year 1997-98 Forum where dispute is pending Appellate Authority Tribunal Level

b.

Tamil Nadu Sales Tax and Sales Tax Act, penalty thereon 1959

Madras High Court

8.

9.

10.

11.

12.

13.

According to the information and explanation given to us, there were no dues pending to be deposited on account of any dispute in respect of Wealth Tax, Service Tax, Customs Duty, Excise Duty and Cess as on 31st March, 2009. The Company does not have accumulated losses as at 31st March, 2009. The Company has not incurred cash losses during the financial year covered by our audit and the immediately preceding financial year. In our opinion, on the basis of audit procedures and according to the information and explanations given to us, the Company has not defaulted in repayment of dues to banks. The Company has not borrowed any sums from financial institutions or through debentures. In our opinion and according to the information and explanations given to us, the terms and conditions on which the Company has given guarantees for the loans taken by others from banks and financial institutions, are not, prima facie, prejudicial to the interests of the Company. To the best of our knowledge and belief and according to the information and explanations given to us, in our opinion, term loans availed by the Company were, prima facie, applied by the Company during the year for the purposes for which the loans were obtained, other than temporary deployment pending application. According to the information and explanations given to us, and on an overall examination of the Balance sheet of the Company, we report that the funds raised on short-term basis have, prima facie, not been used during the year for long-term investment. To the best of our knowledge and belief and according to the information and explanations given to us, no material fraud on or by the Company was noticed or reported during the year. For Deloitte Haskins & Sells Chartered Accountants Khurshed Pastakia Partner (Membership No. 31544)

Mumbai May 18, 2009

17

33rd Annual Report 2008 - 2009

ABRIDGED BALANCE SHEET AS AT 31ST MARCH 2009

(Statement containing the salient features of Balance Sheet as per Section 219 (1) (b) (iv) of the Companies Act, 1956)
Particulars I. SOURCES OF FUNDS Shareholders funds: a) Capital i) Equity (refer note no. 1) b) Reserves and surplus i) Capital reserves (refer note no. 1) ii) Revenue reserves (refer note no. 2) iii) Revaluation reserve (refer note no. 2) iv) Tonnage tax reserve v) Surplus in Statement of Profit and Loss Loan funds: a) Secured loans (refer note no. 2) b) Finance lease obligations (refer note no. 4) c) Unsecured loans Total II. APPLICATION OF FUNDS Fixed assets: a) Net block (Original cost Rs.2763.98 (previous year Rs.2,680.86) crore less accumulated depreciation/ impairment Rs.746.84 (previous year Rs.557.15) crore) (refer note no.2) b) Capital work in progress - capital advances Investments a) Investments in subsidiary companies: i) Unquoted (refer note no. 1 and 12) b) Others: i) Quoted (refer note no. 12) ii) Unquoted [Aggregate market value of quoted investment is Rs.27.85 (previous year Rs.78.32) crore] Current assets, loans and advances: a) Inventories b) Sundry debtors (refer note no. 9) c) Cash and bank balances d) Other current assets e) Loans and advances: i) To subsidiary companies ii) To others Less: Current liabilities and provisions: a) Liabilities b) Provisions Net current assets Foreign currency monetary items translation difference account (refer note no. 2) Total Refer notes to abridged financial statements. Compiled from the audited annual accounts of the Company referred to in our report dated 18th May, 2009. As per our report of even date attached For Deloitte Haskins & Sells Chartered Accountants As at 31.03.2009 (Rs. in crore) As at 31.03.2008 (Rs. in crore)

615.81 4,253.35 911.14 151.09 180.50 1,069.91 6,565.99 1,115.65 1,134.90 160.00 2,410.55 9,592.35

426.21 307.09 835.89 538.01 162.50 801.60 2,645.09 559.36 778.09 373.00 1,710.45 4,781.75

2,017.14

2,123.71

19.68 2,036.82

2,123.71

6,664.56 2.27 500.22 7,167.05 14.84 193.90 19.70 0.08 111.27 91.91 431.70 51.13 3.68 54.81 376.89 11.59 9,592.35

3,107.35 2.27 15.00 3,124.62 21.03 105.94 134.84 1.07 0.05 252.35 515.28 975.36 6.50 981.86 (466.58) 4,781.75

For and on behalf of the Board Sanjay Mehta Managing Director V. Ashok Wholetime Director Mumbai May 18, 2009 R. N. Bansal Director Manoj Contractor Company Secretary

Khurshed Pastakia Partner Mumbai May 18, 2009

18

Abridged Statement of Profit and Loss Account

ABRIDGED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH 2009
(Statement containing the salient features of Profit & Loss as per Section 219 (1) (b) (iv) of the Companies Act, 1956)
Particulars For the year ended 31.03.2009 (Rs. in crore) 1,023.20 0.25 1.08 58.35 10.78 27.66 17.48 12.50 3.49 61.13 Total EXPENDITURE a) Fleet operating expenses: i) Direct voyage expenses ii) Employees expenses (offshore staff) iii) Other fleet operating expenses b) Establishment and other expenses: i) Employee expenses (office staff) ii) Managerial remuneration iii) Auditors remuneration iv) Other expenses c) Interest and finance expenses d) Depreciation / impairment (refer note no. 2) Total PROFIT BEFORE TAX Less: Provision for taxation: i) Current tax (including tonnage tax) ii) Fringe benefit tax iii) Tax adjustment for earlier years PROFIT AFTER TAX Balance brought forward from previous year Add: Balance of profit of erstwhile amalgamating companies (refer note no. 1) AMOUNT AVAILABLE FOR APPROPRIATION APPROPRIATIONS Less: Transferred to tonnage tax reserve Balance carried to balance sheet Basic and diluted earnings per share (Rs.) (face value of Rs.10/- each per share) (refer note no. 7) Refer notes to abridged financial statements Compiled from the audited annual accounts of the Company referred to in our report dated 18th May, 2009. As per our report of even date attached For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board Sanjay Mehta Managing Director V. Ashok Wholetime Director Mumbai May 18, 2009 R. N. Bansal Director Manoj Contractor Company Secretary 1,154.79 For the year ended 31.03.2008 (Rs. in crore) 776.24 1.33 5.21 197.10 75.65 8.40 281.15 1,063.93

INCOME a) Fleet operating and chartering earnings b) Dividend from subsidiary c) Dividend on non trade current investments d) Profit on sale of investments e) Interest income f) Other income: i) Profit on sale of fleet ii) Extinguishment of liability on cancellation of finance lease (refer note no. 4) iii) Currency exchange difference (net) (refer note no. 2) iv) Miscellaneous income

542.64 53.52 65.24 661.40 15.75 2.40 0.38 68.22 86.75 129.22 159.45 1,036.82 117.97 (14.00) (3.60) 7.29 (10.31) 107.66 801.60 178.65 1,087.91 (18.00) 1,069.91 1,087.91 1.75

423.35 43.47 54.14 520.96 16.99 2.54 0.66 57.58 77.77 89.19 106.64 794.56 269.37 (23.60) (3.45) (0.65) (27.70) 241.67 589.93 831.60 (30.00) 801.60 831.60 5.67

Khurshed Pastakia Partner Mumbai May 18, 2009

19

33rd Annual Report 2008 - 2009

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2009
Year ended 31.03.2009 (Rs. in crore) A CASH FLOW FROM OPERATING ACTIVITIES Net profit before tax Adjustments for : Depreciation Interest and finance expenses Interest income Profit on sale of assets Extinguishment of liability on cancellation of finance lease Provision for employee benefits - non funded Profit on sale of investments Dividend on current investments Foreign exchange difference gain Operating profit before working capital changes Adjustments for: Trade and other receivables Inventories Trade and other payables Cash generated from operations Income taxes paid (net of refund) Fringe benefit tax paid Net cash flow from operating activities B CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets including capital work in progress/advance Proceeds from sale of fixed assets Advance received against sale of fixed asset Advance received against sale investments Advance received against sale of investments repaid Advance given towards purchase of investments Purchase of current investments Proceeds from sale of current investments Proceeds from sale of non - current investments Investment in shares of subsidiaries Fixed deposits placed for a period of more than three months Advance from subsidiary Dividend on investments Interest received Net cash flow from investing activities (801.07) 219.13 (6.91) (829.16) 343.05 153.99 (405.64) 22.58 1.32 11.77 (1,290.94) (560.54) 205.36 22.06 911.92 (13.13) (344.56) 585.37 (1,562.19) 23.92 3.25 1.33 4.84 (722.37) (78.74) 6.19 (0.06) 214.50 (18.13) (3.70) 192.67 115.26 4.64 2.64 301.94 (18.19) (5.29) 278.46 159.44 129.22 (10.79) (31.11) (17.48) 0.88 (58.35) (1.32) (1.35) 287.11 106.64 89.19 (5.21) (196.99) 1.47 (7.85) (1.33) (75.89) 179.40 117.97 269.37 Year ended 31.3.2008 (Rs. in crore)

20

Abridged Cash Flow Statement

CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2009
Year ended 31.03.2009 (Rs. in crore) C CASH FLOW FROM FINANCING ACTIVITIES Interest and finance expenses paid Proceeds from term loans Additional lease obligations Proceeds from unsecured loans Repayment of term loans Repayment of finance lease obligations Repayment of unsecured loans Payment of unclaimed debentures and interest thereon Net cash flow from financing activities (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of the year Notes : 1 Cash and cash equivalents include : Cash and bank balances Balances in fixed deposits (maturity period of less than 3 months) Unrealised gain on foreign currency on cash and cash equivalents Total cash and cash equivalents Balances in fixed deposits (maturity period of more than 3 months) 17.02 0.18 17.20 2.50 49.61 58.17 1.98 109.76 25.08 (121.55) 563.75 761.50 290.00 (129.10) (68.49) (290.00) (0.40) 1,005.71 (92.56) 109.76 17.20 (88.53) 162.59 445.28 513.00 (169.42) (23.84) (300.00) (0.45) 538.63 94.72 15.04 109.76 Year ended 31.3.2008 (Rs. in crore)

CASH AND BANK BALANCES 19.70 134.84 2 Non cash investing and financing transactions: (a) Pursuant to scheme of amalgamation of India Shipping, Mauritius (IS) and Essar Sisco Ship Management Company Limited, India (ESSMC), (i) The Company has allotted 364,905,489 equity shares of Rs.10/- each fully paid up, at a premium of Rs.210/- per share to Essar Shipping & Logistics Limited, Cyprus (holding company and sole shareholder of erstwhile IS) and; (ii) 175,299,376 equity shares (including 376,000 GDS represented by 124,456,000 equity shares) of the Company held by IS have been cancelled. (iii) The net excess value of additional shares (shares allotted to the shareholder of IS reduced by the shares already held by IS and cancelled by the Company) issued over net assets of the IS acquired by the Company amounting to Rs.3712.43 crore has been deducted from the securities premium account of the Company. iv) The difference of Rs.4.33 crore, between Companys investment value in equity shares and equity share capital of ESSMC, has also been deducted from securities premium account of the Company (refer note no. 1). (b) During the year, receivables amounting to Rs.94.03 crore of India Shipping, Mauritius (merged with the Company) has been assigned in favour of Essar Oilfields Services Limited, Mauritius as an advance towards share application money from the Company. (c) The liability in the nature of unsecured loan amounting to Rs.213 crore along with interest of Rs.1.15 crore taken from ESSMC has been extinguished upon merger of ESSMC with the Company. 3 Cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 Cash Flow Statement as notified under the Companies (Accounting Standards) Rules, 2006.
As per our report of even date attached For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board Sanjay Mehta Managing Director V. Ashok Wholetime Director Mumbai May 18, 2009 R. N. Bansal Director Manoj Contractor Company Secretary

Khurshed Pastakia Partner Mumbai May 18, 2009

21

33rd Annual Report 2008 - 2009

NOTES TO ABRIDGED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2009
1) Amalgamation of companies: (Note no. B (10) of schedule 13 of annual accounts) Essar Sisco Ship Management Company Limited, India, (ESSMC), a wholly owned subsidiary of the Company engaged in shipping and investment activities and India Shipping, Mauritius (IS) engaged in investment activities, have been amalgamated with the Company with effect from 1st April, 2008 (the appointed date) in terms of scheme of amalgamation (the scheme) sanctioned by Honourable High Court of Madras and Honourable High Court of Gujarat vide their orders dated December 18, 2008 and January 16, 2009 respectively. In accordance with the scheme, the undertaking of ESSMC and IS being all its assets and debts, outstanding, credits, liabilities, duties and obligations, has been transferred to and vested in the Company retrospectively with effect from the appointed date. The Company has followed pooling of interest method of accounting to account the said amalgamations of the companies under the scheme. Pursuant to the scheme: a) The sole shareholder holding fully paid up equity shares in IS was allotted 364,905,489 equity shares of the Company based on allotment of 32 equity shares of Rs.10/- each (Rs.364.91 crore), at a premium of Rs.210/- per share (Rs.7663.02 crore) for every 100 equity shares of US$ 1 each held in the capital of IS and 175,299,376 equity shares (including 376,000 GDS represented by 124,456,000 equity shares) of the Company held by IS have been cancelled. The net excess of the value of additional shares (shares allotted to the shareholder of IS reduced by the shares already held by the IS and cancelled by the Company) issued over net assets of the IS acquired by the Company amounting to Rs.3712.43 crore has been deducted from the securities premium account of the Company. The erstwhile wholly owned subsidiaries of IS viz. Essar Oilfields Services Limited, Mauritius and Essar Oilfields Services FZE, Dubai have become subsidiaries of the Company. b) No shares were issued on amalgamation of ESSMC as it was a wholly owned subsidiary of the Company. The difference of Rs.4.33 crore, between Companys investment value in equity shares and equity share capital of ESSMC, has also been deducted from securities premium account of the Company. c) Had the accounting treatment not been prescribed in the said High Court orders, the Securities premium account would have been higher and general reserve would have been lower by Rs.3716.76 crore. d) The Company has become a subsidiary of Essar Shipping & Logistics Limited, Cyprus (immediate holding company) which in turn is the subsidiary of Essar Global Limited, Cayman Island (ultimate holding company). The financials of the Company for the year ended 31st March, 2009 are not therefore comparable with those of the previous year. Fixed assets: (Note no. B (1) of schedule 13 of annual accounts) a) Pursuant to notification issued by the Central Government under Companies (Accounting Standards) Amendment Rules, 2009 dated 31st March, 2009; the Company has chosen an option with effect from 1st April, 2007 to adjust the gains/losses arising on conversion/translation/settlement of long term foreign currency items into the corresponding costs of fixed assets to the extent it is related to acquisition of depreciable fixed assets and the balance gains/losses to be accumulated in Foreign Currency Monetary Item Translation Difference Account (FCMITDA). Consequently out of the exchange difference of Rs.71.58 crore (net of depreciation on exchange difference) relating to previous year, Rs.34.10 crore and Rs.38.62 crore has been adjusted to corresponding fixed assets and revaluation reserve respectively and the balance of Rs.1.14 crore has been accumulated in FCMITDA. During the year, exchange difference on long term foreign currency items relating to fixed assets amounting to Rs.459.78 crore has been adjusted in costs of corresponding fixed assets and the balance exchange difference of Rs.11.59 crore (net of Rs.5.79 crore amortised in the Statement of Profit and Loss) outstanding under FCMITDA as on the balance sheet date will be amortised over the balance period of the corresponding long term foreign currency item but not beyond 31st March, 2011, whichever is earlier. The compounding effect of this treatment has resulted into an increase in the profit for the year by an amount of Rs.449.89 crore. b) The Company had revalued its fleet on 1st April 2004 and on 31st March 2008. The valuations were done by accredited valuers on the basis of expected market value in an arms length transaction and free of encumbrances on the valuation date. The enhancement in the value of fleet amounting to Rs.669.52 crore and Rs.491.31 (including Rs.38.62 crore exchange difference, net of depreciation relating to earlier year) crore respectively were credited to fixed assets revaluation reserve. Incremental depreciation and impairment mainly on account of the revaluation amounting to Rs.144.73 (previous year Rs.26.95) crore and Rs.133.97 (previous year nil) crore have been recouped from the fixed assets revaluation reserve. c) The Company has three vessels and an aircraft on finance lease as on the Balance Sheet date. d) Gross block of plant and machinery includes Rs.38.84 (previous year Rs.38.84) crore leased out; Written down value as on 31st March 2009 is Rs.nil (previous year Rs. nil). e) The fleet alongwith its receivables is under charge for the secured loans. Contingent liabilities: (Rs. in crore) Particulars i) ii) iii) Guarantees given by banks* Corporate guarantee on behalf of a subsidiary Corporate guarantee on behalf of Essar Shipping & Logistics Limited, holding company Disputed sales tax demand under appeal in the Honorable High Court of Madras Income tax appeals before ITAT As on 31.03.2009 31.46 295.00 As on 31.03.2008 15.38 250.00 1346.44

3)

2)

iv)

58.10 117.97

58.10 110.76

v)

22

Abridged Notes to Financial Statements * include guarantees issued by banks which are backed by counter guarantee of the Company: 1) Issued on behalf of Energy Transportation International Limited Rs.15.44 (previous year Rs.13.44) crore. 2) Issued on behalf of Essar Oilfields Services Limited- Rs.3.86 (previous year Rs.nil) crore. 4) Finance leases: (Note No.B(3) of Schedule 13 of annual accounts) a) The minimum lease rentals outstanding at year end are as under:
(Rs. in crore) As on 31.03.2009 Particulars Minimum lease payments Interest Present Minimum value of lease minimum payments lease payments As on 31.03.2008 Interest Present value of minimum lease payments

6)

7)

Employee benefits: (Note no. B (9) of schedule 13 of annual accounts) The Company has adopted Accounting Standard (AS) 15 (Revised) Employee benefits as notified under the Companies (Accounting Standard) Rules, 2006, with effect from 1st April, 2007. Earnings per share: The calculation of the basic and diluted earnings per share is based on the following data: Particulars Earnings for the purpose of basic and diluted earnings per share (net profit for the year) (Rs. in crore) Equity shares at the beginning of the year (nos.) Equity shares issued pursuant to merger of India Shipping (nos.) refer note no. 1 Equity shares held by India Shipping in the Company cancelled upon merger (nos.) Equity shares at the end of the year (nos.) Weighted average equity shares for the purpose of calculating basic and diluted earnings per share (nos.) Earnings per share-basic and diluted (face value of Rs.10/- each) (Rs.) Year ended 31.03.2009 31.03.2008 107.66 241.67

Future lease rental obligation payable : - not later than one year - later than one year but not later than five years - later than five years TOTAL

426,077,207

426,077,207

162.28 658.19

72.04 222.88

90.24 435.31

85.04 326.26

48.57 167.95

36.47 158.31

364,905,489

(175,299,376)

703.86 1524.33

94.51 389.43

609.35 1134.90

644.13 1055.43

60.82 277.34

583.31 778.09

b)

5)

The finance lease arrangement in respect of a vessel, entered into between the Company and the ESLL has been mutually terminated during the year and consequently Rs.17.48 crore (net excess of finance lease obligation of Rs.548.53 crore over net book value of Rs.531.05 crore) has been recognised as extinguishment of liability on cancellation of finance lease in the Statement of Profit and Loss. Business segment and geographical segment: (Note No.B(4) of Schedule 13 of annual accounts) a) Business segment The Company has one primary business segment of fleet operations and chartering. b) Geographical segment The Companys fleet operations are managed on a worldwide basis from India. Fleet operating and chartering earnings based on the geographical location of customers: (Rs. in crore) Fleet operating and chartering earnings India China U.K. U.A.E. Rest of the world Year ended 31.03.2009 31.03.2008 621.16 92.74 116.57 30.44 162.29 451.64 90.08 77.38 77.26 79.88

615,683,320 615,683,320

426,077,207 426,077,207

1.75

5.67

8)

(a)

(b) (i)

There were no forward/options contracts entered in to by the Company during the financial year to hedge its foreign currency exposures. The outstanding foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below: Amount receivable in foreign currency on account of the following:
Particulars Rs. in crore 2008-09 i. Export of goods and services ii. Sale of assets iii. Advance to vendors iv. Bank balances and fixed deposits including interest accrued thereon 14.28 13.64 0.75 2007-08 38.90 2.29 USD USD USD Currency In million 2008-09 2.83 2.70 0.15 2007-08 9.84 0.58

TOTAL 1023.20 776.24 The main operating assets represent floating fleet, which is not identifiable to any geographical location.

0.32

93.41

USD

0.06

23.71

23

33rd Annual Report 2008 - 2009 ii) Amount payable in foreign currency on account of the following:
Particulars (i) Import of goods and services Rs. in crore 2008-09 14.05 0.07 0.47 0.68 0.75 0.04 0.02 0.02 0.00 16.10 551.90 2007-08 13.08 0.11 0.03 0.62 0.21 0.30 0.02 14.37 558.36 USD GBP DKK EUR JPY SGD NOK HKD ZAR AED USD Currency In million 2008-09 2.73 0.01 0.07 14.67 0.22 0.05 0.05 0.03 0.00 17.83 107.27 2007-08 3.34 0.01 0.03 0.10 5.23 0.10 0.01 8.82 139.21

(iii) (iv) (v) (vi) (vii) (viii) (ix)

c)

(ii) Secured loans payable (including interest accrued) (iii) Finance Lease obligations

Essar International Limited, Guernsey, Channel Islands Energy Transportation International Limited, Bermuda Energy II Limited, Bermuda Essar Ports & Terminals Limited, Mauritius Essar Bulk Terminal Limited, India Essar Bulk Terminal (Salaya) Limited, India Essar Oilfields Services Limited, Mauritius (w.e.f. April 1, 2008) (x) Essar Oilfields Services FZE Dubai (w.e.f. April 1, 2008) (xi) Essar Dredging Limited (w.e.f. January 12, 2009) Individuals owning directly or indirectly an interest in the voting power that gives them control or significant influence: (i) Mr. Shashi Ruia, Chairman Mr. Ravi Ruia, Vice Chairman (ii)

1134.90

778.09

USD

221.70

193.99

(iii) Mr. Anshuman Ruia, Director d) Key Management Personnel: (i) (ii) e) Mr. Sanjay Mehta, Managing Director Mr. A. R. Ramakrishnan, Wholetime Director

9)

(Note no. B (11) of schedule 13 of annual accounts) (i) Details of amount due from sundry debtors under the same management within the meaning of Section 370 (1B) of the Companies Act, 1956: (Rs. in crore) Sr. no. 1 Debtor Essar Shipping & Logistics (Panama) Inc.* As at As at 31st March, 2009 31st March, 2008 13.64 -

(iii) Mr. V. Ashok, Wholetime Director Other Related Parties where there have been transactions: Enterprises commonly controlled or influenced by major shareholders / directors / relatives of directors of the Company: (i) (ii) Essar Information Technology Limited Essar Agrotech Limited

13.64 * During the financial year 2007-08, the debtor was not covered within the meaning of Section 370 (1B) of the Companies Act, 1956. 10) Related party transactions: (Note no. B (12) of schedule 13 of annual accounts) a) Holding companies : (i) Essar Global Limited, Cayman Island, ultimate holding company (w.e.f. 1st April, 2008) (ii) Essar Shipping & Logistics Limited, Cyprus, immediate holding company (w.e.f. 1st April, 2008) b) Subsidiaries: (i) Vadinar Oil Terminal Limited, India (ii) Essar Logistics Limited, India The details of transactions with related parties Nature of transactions Holding and subsidiary companies 2008-09 2007-08

(iii) Essar House Limited (iv) Essar Infrastructure Services Limited (v) Essar Steel Limited (vi) Futura Travels Limited (vii) India Securities Limited (viii) Essar Oil Limited (ix) Essar Steel Hazira Limited (x) Aegis BPO Services Limited (xi) Essar Steel Algoma Inc. (xii) Essar Shipping & Logistics (Panama) Inc. (xiii) Essar Infrastructure Holdings Limited (xiv) Essar Logistics Holdings Limited (Rs. in crore) Other Related Parties 2008-09 2007-08 Key Management Personnel 2008-09 2007-08 Total 2008-09 2007-08

INCOME Fleet operating income Essar Steel Limited Essar Steel Hazira Limited Essar Steel Algoma Inc. Essar Logistics Limited Vadinar Oil Terminal Limited Essar International Limited Essar Oil Limited Total 24

13.57 18.07 4.85 36.49

11.37 9.16 20.53

469.76 30.59 5.18 505.53

400.48 1.89 2.36 404.73

469.76 30.59 13.57 18.07 4.85 5.18 542.02

400.48 1.89 11.37 9.16 2.36 425.26

Abridged Notes to Financial Statements (Rs. in crore) Nature of transactions Holding and subsidiary companies 2008-09 2007-08 0.25 Other Related Parties 2008-09 2007-08 0.02 0.01 0.19 Key Management Personnel 2008-09 2007-08 Total 2008-09 0.02 0.01 0.25 2007-08 0.19 -

Equipment lease rental income Essar Steel Limited Rental income on building Essar Steel Limited Dividend income Essar International Limited Interest income Essar Bulk Terminal (Salaya) Limited Essar Bulk Terminal Limited Total Agency and management fees Essar Shipping & Logistics Limited Remuneration Mr. Sanjay Mehta Mr. A. R. Ramkrishnan Mr. V. Ashok Total Purchase of fuel oil Essar Oil Limited Essar Logistics Limited Total Direct voyage expenses Essar Logistics Limited Hire charges Essar International Limited Business center fees Essar Infrastructure Services Limited Rent expenses Essar House Limited Essar Infrastructure Services Limited Total Repairs and maintenance Essar Agrotech Limited Traveling expenses Futura Travels Limited Reimbursement of expenses Futura Travels Limited Essar Infrastructure Services Limited Essar Shipping & Logistics Limited Essar Bulk Terminal (Salaya) Limited Essar Logistics Limited Total Professional /advisory / agency fees India Securities Limited Essar Steel Limited Aegis BPO Services Limited Essar Information Technology Limited Essar Logistics Limited Total Interest on loans Essar Shipping & Logistics Limited Essar Sisco Ship Management Company Limited Total

0.10 0.17 0.27 0.02 0.02 0.86 132.44 0.28 0.11 6.98 7.37 0.21 0.21 52.69 52.69

0.35 0.01 0.01 0.11 0.10 0.10 0.28 1.49 1.77

13.56 4.20 0.24 4.44 0.30 3.51 21.38 0.06 21.44 0.22 0.38 0.71 1.31 -

0.87 0.87 13.56 4.20 0.24 4.44 0.30 4.23 19.53 1.14 20.67 0.22 0.05 0.22 0.37 0.86 -

0.64 0.89 0.92 2.45 -

0.71 1.05 0.78 2.54 -

0.10 0.17 0.27 0.64 0.89 0.92 2.45 0.02 0.02 0.86 132.44 13.56 4.20 0.24 4.44 0.30 3.51 21.38 0.06 0.28 0.11 6.98 28.81 0.22 0.38 0.71 0.21 1.52 52.69 52.69

0.35 0.71 1.05 0.78 2.54 0.87 0.01 0.88 0.11 13.56 4.20 0.24 4.44 0.30 4.23 19.53 1.14 20.67 0.22 0.05 0.22 0.37 0.10 0.96 0.28 1.49 1.77 25

33rd Annual Report 2008 - 2009 (Rs. in crore) Nature of transactions Holding and subsidiary companies 2008-09 2007-08 Other Related Parties 2008-09 2007-08 13.16 5.38 Key Management Personnel 2008-09 2007-08 Total 2008-09 13.16 2007-08 5.38

Fixed assets sold Essar Shipping & Logistics (Panama) Inc. Cancellation of finance lease obligation Essar Shipping & Logistics Limited Balance taken over pursuant to merger of India Shipping Essar Infrastructure Holdings Limited Essar Logistics Holdings Limited Investment in Essar Oilfields Services Limited Total Assignment of receivables Essar Global Limited Essar Shipping & Logistics Limited Total Advance towards purchase of shares Essar Oilfields Services Limited Fixed assets acquired under finance lease Essar Shipping & Logistics Limited Investments in shares Essar Ports & Terminals Limited Loans and advances including deposits given Essar Sisco Ship Management Company Limited Essar House Limited Essar Infrastructure Services Limited Essar Information Technology Limited Essar Ports & Terminals Limited Essar Oilfields Services Limited Energy II Limited Essar Bulk Terminal (Salaya) Limited Essar Bulk Terminal Limited Total Loans and advances received Essar Sisco Ship Management Company Limited Advance received against sale of investments Essar Shipping & Logistics Limited Essar Ports & Terminals Limited Total Guarantee on behalf of others Essar Shipping & Logistics Limited Essar Logistics Limited Essar Oilfields Services Limited Total

548.53

548.53

4,056.96 4,056.96 92.57 94.03 186.60 100.94

92.57 1.46 94.03 -

92.57 1.46 4,056.96 4,150.99 92.57 94.03 186.60 100.94

5.38 -

632.85 405.64

445.28 1,562.19

632.85 405.64

445.28 1,562.19

0.02 3.92 3.57 10.00 16.95 34.46 -

0.14 0.04 0.42 0.02 0.62 213.00

2.45 1.41 0.71 4.57 -

0.02 3.92 3.57 10.00 16.95 34.46 -

0.14 2.45 1.41 0.71 0.04 0.42 0.02 5.19 213.00

45.00 1.16 46.16

9.90 911.92 921.82 615.99 615.99

45.00 1.16 46.16

9.90 911.92 921.82 615.99 615.99

26

Abridged Notes to Financial Statements The details of outstanding balance as on March 31, 2009 Nature of balances Holding and subsidiary companies 2008-09 2007-08 Other related Parties 2008-09 2007-08 Key Management Personnel 2008-09 2007-08 (Rs. in crore) Total 2008-09 2007-08

Sundry Debtors Essar Steel Limited Essar Shipping & Logistics (Panama) Inc. Essar Logistics Limited Vadinar Oil Terminal Limited Total Loans and advances including deposits given Essar House Limited Futura Travels Limited Essar Oil Limited Essar Logistics Limited Essar Information Technology Limited Essar Infrastructure Services Limited Essar Steel Limited Energy II Limited Essar Bulk Terminal (Salaya) Limited Total Interest receivable on loan Essar Bulk Terminal (Salaya) Limited Lease loan obligation Essar Shipping & Logistics Limited Unsecured loan Essar Sisco Ship Management Company Limited Advance received against sale of investments Essar Ports & Terminals Limited Advance for investment in shares Essar Oilfields Services Limited Sundry creditors Futura Travels Limited Essar Shipping & Logistics Limited Total Security deposit received Essar Steel Limited Interest accrued but not due on loans Essar Sisco Ship Management Company Limited Essar Shipping & Logistics Limited Total Guarantees given on behalf of others Essar Shipping & Logistics Limited Vadinar Oil Terminal Limited Essar Logistics Limited Others Total 4.68 7.70 12.38 21.46 4.38 25.84 135.17 13.64 148.81 36.94 5.34 42.28 135.17 13.64 4.68 7.70 161.19 36.94 5.34 21.46 4.38 68.12

0.08 0.25 10.00 10.33 0.08 733.95

0.01 0.01 441.21

31.00 6.25 0.46 0.75 38.46 -

31.45 6.25 12.00 0.71 1.41 0.95 52.77 -

31.00 6.25 0.08 0.46 0.75 0.25 10.00 48.79 0.08 733.95

31.45 6.25 12.00 0.01 0.71 1.41 0.95 52.78 441.21

213.00

213.00

100.94 4.81 4.81 8.13 8.13 250.00 45.00 14.90 309.90

911.92 2.38 2.38 1.15 0.28 1.43 1,346.44 250.00 13.74 1610.18

6.70 6.70 0.04 -

3.84 3.84 0.04 -

100.94 6.70 4.81 11.51 0.04 8.13 8.13 250.00 45.00 14.90 309.90

911.92 3.84 2.38 6.22 0.04 1.15 0.28 1.43 1,346.44 250.00 13.74 1,610.18

27

33rd Annual Report 2008 - 2009 11) (Note no. B (13) of schedule 13 of annual accounts) In view of exemption from Central Government obtained by the Company under section 211(4) of the Companies Act, 1956 vide order number 46/19/2009-CL-III dated 23rd March, 2009 , information required under sub-clauses (a), (b), (c) and (e) of paragraph 4-D of part II of schedule VI to the Companies Act, 1956, is not given. 12) Investments a) The Company has pledged its investments in equity shares of Essar Oil Limited amounting to Rs.2.27 (previous year Rs.2.27) crore in favour of lenders for loans availed by Essar Oil Limited. The Companys investments in shares of Essar Logistics Limited having negative lien undertaking in favour of lenders for the loan availed by Essar Steel Holdings Limited. The Company has pledged its investments in equity shares of Vadinar Oil Terminal Limited (VOTL) amounting to Rs.nil (previous year Rs.854.66) crore in favour of lender for loan availed by VOTL. 13) Performance ratios: Sr. no. Particulars 1. 2. 3. 4. Notes: 1. Total income / Total assets Net profit before interest and tax / Capital employed Return on net worth Net profit / Total income

2008-09 (%) 12.16 2.62 1.53 9.32

2007-08 (%) 20.36 8.45 9.54 22.71

b)

c)

Capital employed includes shareholders funds, loan funds and is net of revaluation reserve and advance against allotment of shares. 2. Total assets are net of revaluation on assets. 3. Net worth includes shareholders funds and is net of revaluation reserve and advance against allotment of shares. 14) (Note no. B (15) of schedule 13 of annual accounts) Previous years figures have been regrouped / reclassified wherever necessary.

As per our report of even date attached For Deloitte Haskins & Sells Chartered Accountants

For and on behalf of the Board Sanjay Mehta Managing Director V. Ashok Wholetime Director Mumbai May 18, 2009 R. N. Bansal Director Manoj Contractor Company Secretary

Khurshed Pastakia Partner Mumbai May 18, 2009

28

Balance Sheet Abstract and Companys General Business Profile BALANCE SHEET ABSTRACT AND COMPANYS GENERAL BUSINESS PROFILE (As per Schedule VI, part (iv) of the Companies Act, 1956)

I.

Registration Details: Registration No. Balance Sheet Date: 3 1 0 0 3 5 4 2 8 0 2 0 4 9 State Code 0 4

II.

Capital raised during the year: (Amount in Rs. Thousand) Public Issue: N I L Rights Issue: N I L

Bonus Issue: III.

Private Placement:

Position of mobilisation and deployment of funds: (Amount in Rs. Thousand) Total Liabilities: Sources of Funds: Paid up Capital: Reserves and Surplus: Secured Loans: Unsecured Loans: 6 1 1 6 5 1 2 1 6 1 9 5 5 5 4 8 9 6 9 1 9 4 0 3 5 9 1 9 5 6 0 9 5 9 2 3 6 0 0 Total Assets: Application of Funds: Net Fixed Assets: Investments: Net Current Assets: Miscellaneous Expenditure: 2 7 0 1 3 3 6 7 6 7 6 8 0 9 2 4 0 9 0 1 9 6 6 9 5 9 2 3 6 0 0

IV.

Performance of the Company: (Amount in Rs. Thousand) Net Turnover: Profit/(Loss) before tax: Earnings per Share in Rs: 1 1 1 5 1 4 7 7 9 1 8 6 . 4 2 7 0 8 5 Total Expenditure: Profit after tax: Dividend Rate (%): 1 0 1 3 0 6 7 8 6 2 5 N 1 8 I 2 0 L

V.

Generic Names of Three Principal Products / Services of Company (As per monetary terms) Item Code number (ITC Code) Item Code number (ITC Code) Item Code number (ITC Code) Item Code number (ITC Code) N N N N A A A A Product Description Product Description Product Description Product Description Ship Operation and Chartering N N N A A A

Note: For ITC code of products please refer to the publication Indian Trade Classification based on harmonized Commodity description and coding system by Ministry of Commerce, Directorate General of Commercial Intelligence and Stastics, Kolkata-700 001.
For and on behalf of the Board Sanjay Mehta Managing Director V. Ashok Wholetime Director Mumbai May 18, 2009 R. N. Bansal Director Manoj Contractor Company Secretary

29

STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES Essar Logistics Limited Mumbai 31.03.09 125,840,000 100% 100% 100% 100% 100% 99.98% 100% 100% 100% 1,952,000 12,000 477,430,851 1,046,142,000 65,339,004 3,004,875 50,000 100,000,001 1 100% 31.03.09 31.03.09 31.03.09 31.03.09 31.03.09 31.03.09 31.03.09 31.03.09 31.03.09 Guernsey Bermuda Vadinar Hazira Mumbai Essar International Limited Energy Transportation International Limited Bermuda Energy II Limited Essar Ports & Terminals Limited Mauritius Vadinar Oil Essar Terminal Bulk Terminal Limited Limited Essar Bulk Terminal (Salaya) Limited Mumbai Essar Dredging Limited Essar Essar Oilfields Oilfields Services Services FZE Limited Mauritius Dubai

33rd Annual Report 2008 - 2009

30
$20,986,094 $ 101,191 ($5,305) ($4,996,762) (Rs.789,552,150) NIL (Rs.110,300) Rs.344,453,032 (Rs.269,823) $34,408,891 $327,296 ($941) ($305,474) (Rs.1,458,458,597) (Rs.213,360) (Rs.293,215) NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL NIL

PARTICULARS

The relevant financial year of the subsidiary ended on 31.03.09 No. of shares in the subsidiary company held by Essar Shipping Ports & Logistics Limited as on 31.03.09 73,000,000 Extent of holding by Essar Shipping Ports & Logistics Limited as at the end of the financial period 100% The net aggregate amount of the subsidiary companies Profit / (Loss) so far as it concerns the members of the Holding Company. a) Not dealt with in the Holding Companys accounts : i) For the financial year ended 31st March, 2009 Rs.433,321,004 ii ) For the previous Financial years of the subsidiary companies since they became the Holding Companys subsidiaries Rs.287,922,719 b) Dealt with in Holding Companys accounts: i) For the financial year ended 31st March, 2008 NIL ii ) For the previous Financial years of the subsidiary companies since they became the Holding Companys subsidiaries NIL Change of interest of Essar Shipping Ports & Logistics Limited in the subsidiary between the end of the financial year of subsidiary and that of Essar shipping Ports & Logistics Limited NIL Material changes between the end of the financial year of the subsidiary and the end of the financial year to Essar Shipping Ports & Logistics Limited in respect of subsidiarys fixed assets, investments, monies lent and borrowed a) Fixed Assets NIL b) Investments NIL c) Money lent by the subsidiary NIL d) Money borrowed by the subsidiary company other than for meeting current liabilities (Net) NIL

For and on behalf of the Board Sanjay Mehta Managing Director V. Ashok Wholetime Director R. N. Bansal Director Manoj Contractor Company Secretary

Mumbai May 18, 2009

Details of Subsidiary Companies pursuant to approval obtained U/S.212 ( 8 ) (Rs. in crores)

Essar Logistics Limited Mumbai Guernsey Bermuda Vadinar Hazira Mumbai Essar International Limited Energy Transportation International Limited Bermuda Energy II Limited Essar Ports & Terminals Limited Mauritius Vadinar Oil Essar Terminal Bulk Terminal Limited Limited Essar Bulk Terminal (Salaya) Limited Mumbai Essar Dredging Limited Essar Essar Oilfields Oilfields Services Services FZE Limited Mauritius Dubai

PARTICULARS

31-Mar-09

31-Mar-09

31-Mar-09

31-Mar-09

31-Mar-09

31-Mar-09

31-Mar-09

31-Mar-09 31-Mar-09

31-Mar-09

31-Mar-09

Statement Pursuant to 212 of the Companies Act

73.00 84.61 383.24 383.24 965.99 65.84 22.51 43.33 10.01 285.59 106.92 106.92 0.25 0.65 0.52 0.52 26.49 0.83 0.03 0.03 3,330.26 0.01 (23.21) (23.21) 399.40 (78.59) 0.37 (78.96) (0.01) (0.01) 14.13 194.71 48.30 13.86 34.44 -

Year ending Sr. No. Particulars 1 Capital 2 Reserves 3 Total Assets 4 Total Liabilities 5 Details of investments (including investments in subsidiaries) 6 Turnover 7 Profit before taxation 8 Provision for taxation 9 Profit after taxation 10 Dividend paid 641.15 555.26 1,196.41 1,196.41 9.95 0.49 10.44 10.44 0.06 0.02 0.08 0.08 2,432.51 (27.01) 3,338.54 3,338.54 1,046.14 (225.41) 3,318.88 3,318.88 191.87 (0.02) 293.50 293.50 3.00 (0.04) 12.96 12.96 0.05 0.05 0.05 832.78 176.15 2,871.17 2,871.17

1.09 (0.06) 1.32 1.32 (0.03) (0.03) -

For and on behalf of the Board Sanjay Mehta Managing Director V. Ashok Wholetime Director R. N. Bansal Director Manoj Contractor Company Secretary

Mumbai May 18, 2009

31

33rd Annual Report 2008 - 2009

AUDITORS REPORT ON ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF ESSAR SHIPPING PORTS & LOGISTICS LIMITED
We have examined the attached abridged Consolidated Balance Sheet of Essar Shipping Ports & Logistics Limited (the Company), and its subsidiaries (together the Group) as at 31st March, 2009 and also the abridged Consolidated Statement of Profit and Loss and the Cash Flow Statement for the year ended on that date annexed thereto, together with significant notes thereon. These abridged financial statements have been prepared by the Company pursuant to Rule 7A of the Companies (Central Governments) General Rules and Forms, 1956 and are based on the audited consolidated financial statements of the Group for the year ended 31st March, 2009 prepared by the management in accordance with the requirements of Accounting Standard (AS) 21,Consolidated Financial Statements, as notified under the Companies (Accounting Standards) Rules, 2006 and covered by our report of even date to the members of the Company, which is attached hereto. For Deloitte Haskins & Sells Chartered Accountants Khurshed Pastakia Partner (Membership No. 31544)

Mumbai May 18, 2009

32

Consolidated Auditors Report

AUDITORS REPORT ON CONSOLIDATED FINANCIAL STATEMENTS TO THE BOARD OF DIRECTORS OF ESSAR SHIPPING PORTS & LOGISTICS LIMITED
1. We have audited the attached Consolidated Balance Sheet of Essar Shipping Ports & Logistics Limited (formerly Essar Shipping Limited) (the Company) and its subsidiaries (together the Group) as at 31st March, 2009, the Consolidated Statement of Profit and Loss and the Consolidated Cash Flow Statement for the year ended on that date annexed thereto. These consolidated financial statements are the responsibility of the Companys management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit. 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. We report that the consolidated financial statements have been prepared by the Company in accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, as notified under the Companies (Accounting Standards) Rules, 2006. Attention is invited to note B (3) of schedule 14 to the financial statements detailing the state of the Master Restructuring Agreement and the reasons for following principles laid down in other internationally recognized financial reporting frameworks as well as Accounting Standard (AS 30), Financial Instrument Recognition & Measurement, issued by the Institute of Chartered Accountants of India, in the absence of guidance available under the accounting standards referred to in sub-section (3C) of section 211 of the Companies Act, 1956. 5. Based on our audit, and to the best of our information and according to the explanations given to us, we are of the opinion that the said consolidated financial statements, read together with the notes thereon and in particular note B (12) of schedule 14, with reference to the accounting treatment given in the Securities Premium Account, give a true and fair view in conformity with the accounting principles generally accepted in India and in respect of the matter described in paragraph 4 above where accounting principles generally accepted in India do not provide specific guidance, in conformity with the principles laid down in related internationally recognised financial reporting frameworks: (i) (ii) In the case of the Consolidated Balance Sheet, of the state of affairs of the Group as at 31st March, 2009; In the case of Consolidated Statement of Profit and Loss, of the profit of the Group for year ended on that date; and

2.

3.

(iii) In the case of the Consolidated Cash Flow Statement, of the consolidated cash flows of the Group for the year ended on that date. For Deloitte Haskins & Sells Chartered Accountants Khurshed Pastakia Partner (Membership No. 31544)

4.

Mumbai May 18, 2009

33

33rd Annual Report 2008 - 2009

ABRIDGED CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2009

(Statement containing the salient features of Consolidated Balance Sheet as per Section 219 (1) (b) (iv) of the Companies Act, 1956)
Particulars I. SOURCES OF FUNDS Shareholders funds: a) Capital i) Equity (refer note no.2) ii) Advance against allotment of shares b) Reserves and surplus i) Capital reserves (refer note no.2) ii) Revenue reserves (refer note no.3) iii) Revaluation reserve (refer note no.3) iv) Tonnage tax reserve v) Surplus in Statement of Profit and Loss Preference share capital (refer note no.14) Minority Interest Loan funds: a) Secured loans (other than debentures)(refer note no.4) b) Finannce lease obligations (refer note no.6) c) Unsecured loans Deferred tax liability (net) Total II. APPLICATION OF FUNDS Fixed assets: a) Net block (original cost Rs.8,544.74 (previous year Rs.5,931.22) crore less accumulated depreciation/impairment of Rs.1,121.98 (previous year Rs.701.69) crore (refer note no.3) b) Capital work in progress (including capital advances) c) Expenditure during construction d) Goodwill on consolidation Investments a) Quoted* (refer note no.15) b) Unquoted * (Aggregate market value of quoted investments is Rs.27.85 (previous year Rs.78.32) crore). Current assets, loans and advances: a) Inventories b) Sundry debtors (refer note no.13) c) Cash and bank balances d) Other current assets e) Loans and advances Less: Current liabilities and provisions: a) Liabilities (refer note no.16) b) Provisions Net current assets Foreign currency monetary items translation difference account (refer note no.3) Total Refer notes to abridged consolidated financial statements Compiled from the audited annual accounts of the Company referred to in our report dated 18th May, 2009. As per our report of even date attached For Deloitte Haskins & Sells Chartered Accountants As at 31.03.2009 (Rs. in crore) As at 31.03.2008 (Rs. in crore)

615.81 0.50 4,253.36 964.69 151.09 180.50 1,328.14 6,877.78 433.08 32.91 4,927.46 1,134.90 676.53 6,738.89 32.52 14,731.49

426.21 47.14 307.10 728.58 538.01 162.50 1,258.24 2,994.43 32.60 3,084.63 778.09 307.33 4,170.05 18.90 7,689.33

7,422.76 979.20 8,401.96 72.01 5,037.11 2.27 517.96 520.23

5,229.53 248.10 5,477.63 27.83 1,387.62 2.27 15.00 17.27

150.20 504.92 117.30 2.41 649.32 1,424.15 720.96 14.60 735.56 688.59 11.59 14,731.49

35.61 199.79 308.91 1.77 482.83 1,028.91 238.02 11.91 249.93 778.98 7,689.33

For and on behalf of the Board Sanjay Mehta Managing Director V. Ashok Wholetime Director Mumbai May 18, 2009 R. N. Bansal Director Manoj Contractor Company Secretary

Khurshed Pastakia Partner Mumbai May 18, 2009

34

Abridged Consolidated Statement of Profit and Loss Account

ABRIDGED CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH, 2009
(Statement containing the salient features of Consolidated Profit & Loss as per Section 219 (1) (b) (iv) of the Companies Act, 1956)
Particulars For the year ended 31.03.2009 (Rs. in crore) 1,993.63 193.83 386.73 1.08 31.87 28.67 1.09 17.48 13.30 8.89 2,676.57 1,073.41 230.62 65.48 91.75 116.37 1,577.63 b) Establishment and other expenses: i) Salaries, wages and other employees benefits- office staff ii) Managerial remuneration iii) Auditors remuneration iv) Other expenses c) Interest expenses (refer note no.4) d) Depreciation/impairment Total PROFIT BEFORE TAX Less: Provision for taxation i) Current tax (including tonnage tax) ii) Adjustment for MAT credit entitlement iii) Fringe benefit tax iv) Deferred tax credit/(liability) v) Tax adjustments for earlier years PROFIT BEFORE SHARE OF MINORITY INTEREST Add: Share of minoritys interest (loss) PROFIT FOR THE YEAR Balance brought forward from previous year Add: Balance of profit of erstwhile amalagamating companies (refer note no. 2) AMOUNT AVAILABLE FOR APPROPRIATION APPROPRIATIONS Less: Transferred to tonnage tax reserve Less: Dividend on preference shares Balance carried forward to balance sheet 50.73 5.52 0.85 104.97 162.07 434.80 377.82 2,552.32 124.25 (35.20) (0.53) (4.31) (14.30) 7.29 (47.05) 77.20 77.20 1,258.24 10.72 1,346.16 18.00 0.02 1,328.14 1,346.16 For the year ended 31.03.2008 (Rs. in crore) 1,701.98 140.44 1.58 18.54 198.11 107.56 80.43 7.03 2,255.67 962.94 188.95 30.77 77.40 92.91 1,352.97 34.91 4.79 1.13 66.56 107.39 266.55 221.48 1,948.39 307.28 (29.09) 1.36 (3.93) (11.37) (0.65) (43.68) 263.60 13.81 277.41 1,010.83 1,288.24 30.00 1,258.24 1,288.24 6.51

INCOME a) Operating and chartering earnings b) Oilfields services income c) Port and terminal service income d) Dividend from non trade current investments e) Interest income f) Other income: i) Profit on sale of fleet ii) Profit on sale of units iii) Extinguishment of liability on cancellation of finance lease (refer note no.6) iv) Currency exchange gain (net) (refer note no.3) v) Miscellaneous income Total EXPENDITURE a) Operating expenses: i) Direct voyage expenses ii) Consumption of fuel, oil and water iii) Port and terminal service expenses iv) Salaries, wages and other employees benefits- floating staff v) Other operating expenses

Basic and diluted earnings per share (Rs.) (face value of Rs.10/- per share) (refer note no.8) 1.25 Refer notes to abridged consolidated financial statements Compiled from the audited annual accounts of the Company referred to in our report dated 18th May, 2009. As per our report of even date attached For and on behalf of the Board For Deloitte Haskins & Sells Chartered Accountants Sanjay Mehta R. N. Bansal Managing Director Director Khurshed Pastakia Partner Mumbai May 18, 2009 V. Ashok Wholetime Director Mumbai May 18, 2009 Manoj Contractor Company Secretary

35

33rd Annual Report 2008 - 2009

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009
Year ended 31.03.2009 (Rs. in crore) A CASH FLOW FROM OPERATING ACTIVITIES Net profit before tax Adjustments for : Depreciation Interest and finance expenses Interest income Profit on sale of assets (net) Extinguishment of liability on cancellation of finance lease Provision for employee benefits (non-funded) Profit on sale of investments (net) Dividend on current investments Foreign exchange gain Currency alignment on conversion of non-integral foreign subsidiaries and translation adjustment (net) Operating profit before working capital changes Adjustments for: Trade and other receivables Inventories Trade payables Cash generated from operations Income taxes paid (net of refund) Fringe benefit tax paid Net cash from operating activities B CASH FLOW FROM INVESTING ACTIVITIES Purchase of fixed assets including capital work in progress/advances Sale of fixed assets Insurance claim received on fixed asset Advance received against sale of fixed asset Advance received against sale investments repaid Advance given towards purchase of investments Purchase of current investments Proceeds from sale of current investments Proceeds from sale of non - current investments Investment in shares of subsidiaries Fixed deposits placed for a period of more than three months Dividend on current investment Interest received Net cash flow from investing activities (1,866.21) 220.12 (0.42) (836.02) 343.14 153.00 (17.45) 1.08 31.23 (1,971.53) (555.03) 206.38 1.00 22.06 (13.13) (331.86) 1,635.57 (1,516.36) (32.85) 1.58 17.83 (564.81) (360.09) (114.59) 2.70 544.32 (46.03) (4.59) 493.70 243.12 (3.00) (211.28) 351.11 (38.16) (3.79) 309.16 162.14 1,016.30 (72.95) 322.27 377.82 434.80 (31.87) (32.12) (17.48) 2.01 (1.09) (1.08) (1.08) 221.48 266.55 (18.54) (198.00) 4.71 (107.56) (1.58) (79.12) 124.25 307.28 Year ended 31.3.2008 (Rs. in crore)

36

Consolidated Cash Flow Statement

CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH, 2009
Year ended 31.03.2009 (Rs. in crore) C CASH FLOW FROM FINANCING ACTIVITIES Interest and finance expenses paid Proceeds from term loans Additional lease obligations Proceeds from unsecured loans Repayment of term loans Repayment of finance lease obligation Repayment of unsecured loans Payment of unclaimed debentures and interest thereon Payment of intercorporate deposits Advance towards allottment of shares Repayment of share application money received Net cash flow from financing activities (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of the year Cash and cash equivalents at end of year Notes : 1 Cash and cash equivalents include : Cash and bank balances Balances in fixed deposits (maturity period of less than 3 months) Unrealised gain on foreign currency on cash and cash equivalents Total cash and cash equivalents Balances in fixed deposits (maturity period of more than 3 months) CASH AND BANK BALANCES (357.63) 912.19 761.50 801.74 (296.17) (68.49) (437.33) (0.40) 0.50 (47.14) 1,268.77 (209.06) 260.35 51.29 Year ended 31.3.2008 (Rs. in crore) (174.36) 233.71 445.27 447.33 (103.88) (24.49) (300.00) (0.45) (36.58) (42.59) 443.96 188.31 72.04 260.35

50.24 0.87 0.18 51.29 66.01 117.30

147.65 110.72 1.98 260.35 48.56 308.91

2 Non cash investing and financing transactions: a Pursuant to scheme of amalgamation of India Shipping, Mauritius (IS) and Essar Sisco Ship Management Company Limited, India (ESSMC); (i) The Company has allotted 364,905,489 equity shares of Rs.10/- each fully paid up, at a premium of Rs.210/- per share to Essar Shipping & Logistics Limited, Cyprus (ESLL) (immediate holding company and sole shareholder of erstwhile IS) and; (ii) 175,299,376 equity shares (including 376,000 GDS represented by 124,456,000 equity shares) of the Company held by IS have been cancelled. (iii) The net excess value of additional shares (shares allotted to the shareholder of IS reduced by the shares already held by IS and cancelled by the Company) issued over net assets of the IS acquired by the Company amounting to Rs.3,712.43 crore has been deducted from the securities premium account of the Company. (iv)The difference of Rs.4.33 crore, between Companys investment value in equity shares and equity share capital of ESSMC, has also been deducted from securities premium account of the Company (refer note no. 2). b EOSL has issued preference shares amounting to Rs.433.08 crore to immediate holding company against the advances received in previous year. c During the year 2007-08, VOTL has allotted share against the share application money received in advance in prior year from ESLL amounting to Rs.89.73 crore.
As per our report of even date attached For Deloitte Haskins & Sells Chartered Accountants For and on behalf of the Board Sanjay Mehta Managing Director V. Ashok Wholetime Director Mumbai May 18, 2009 R. N. Bansal Director Manoj Contractor Company Secretary

Khurshed Pastakia Partner Mumbai May 18, 2009

37

33rd Annual Report 2008 - 2009 NOTES TO ABRIDGED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH 2009. (Compiled from audited annual accounts of the Company) 1) Subsidiaries The reporting date of all the subsidiaries is 31st March 2009. The list of the subsidiaries of the Company which are included in the consolidation and the Group's holding therein are as under: Name of companies Country of incorporation India India Guernsey Bermuda Bermuda Mauritius India India India Mauritius Dubai Immediate holding 2009 2008 ESPLL EPTL ESPLL EIL EIL ESPLL EPTL EPTL EBTL ESPLL EOSL ESPLL ESPLL ESPLL EIL EIL ESPLL EPTL EPTL NA ESLL EOSL Relationship Immediate holding % 2009 2008 100% 100% 100% 100% 100% 100% 99.98% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 74% 100% -

Essar Logistics Limited ("ELL") Vadinar Oil Terminal Limited ("VOTL") Essar International Limited ("EIL") Energy Transportation International Limited ("ETIL") Energy II Limited ("EII") Essar Ports & Terminals Limited ("EPTL") Essar Bulk Terminal Limited ("EBTL") Essar Bulk Terminal (Salaya) Limited ("EBTSL") Essar Dredging Limited ("EDL")* Essar Oilfields Services Limited ("EOSL")# Essar Oilfields Services FZE# *Incorporated on January 12, 2009

Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary Subsidiary

# Subsidiary with effect from April 1, 2008 upon merger of India Shipping, Mauritius with the Company. 2) Amalgamation of companies: (Note no. B (12) of schedule 14 of annual accounts) Essar Sisco Ship Management Company Limited, India, (ESSMC), a wholly owned subsidiary of the Company engaged in shipping and investment activities and India Shipping, Mauritius (IS) engaged in investment activities, have been amalgamated with the Company with effect from 1st April, 2008 (the appointed date) in terms of Scheme of Amalgamation ("the Scheme") sanctioned by Honourable High Court of Madras and Honourable High Court of Gujarat vide their orders dated 18th December, 2008 and 16th January, 2009 respectively. In accordance with the Scheme, the undertaking of ESSMC and IS being all its assets and debts, outstanding, credits, liabilities, duties and obligations, has been transferred to and vested in the Company retrospectively with effect from the appointed date. The Company has followed pooling of interest method of accounting to account the said amalgamations of the companies under the Scheme. Pursuant to the scheme: a) The sole shareholder holding fully paid up equity shares in IS was allotted 364,905,489 equity shares of the Company based on allotment of 32 equity shares of Rs.10/- each (Rs.364.91 crore), at a premium of Rs.210/- per share (Rs.7663.02 crore) for every 100 equity shares of US$ 1 each held in the capital of IS and 175,299,376 equity shares (including 376,000 GDS represented by 124,456,000 equity shares) of the Company held by IS have been cancelled. The net excess of the value of additional shares (shares allotted to the shareholder of IS reduced by the shares already held by the IS and cancelled by the Company) issued over net assets of the IS acquired by the Company amounting to Rs.3712.43 crore has been deducted from the securities premium account of the Company. The erstwhile wholly owned subsidiaries of IS viz. Essar Oilfields Services Limited, Mauritius and Essar Oilfields 3) b) Services FZE, Dubai have become wholly owned subsidiaries of the Company. No shares were issued on amalgamation of ESSMC as it was a wholly owned subsidiary of the Company. The difference of Rs.4.33 crore between Company's investment value in equity shares and equity share capital of ESSMC, has also been deducted from securities premium account of the Company. Had the accounting treatment not been prescribed in the said High Court orders, the Securities premium account would have been higher and general reserve would have been lower by Rs.3716.76 crore. The Company has become a subsidiary of Essar Shipping & Logistics Limited, Cyprus (ESLL) (immediate holding company) which in turn is the subsidiary of Essar Global Limited, Cayman Island (ultimate holding company).

c)

d)

The abridged consolidated financial statements of the Group for the year ended 31st March, 2009 are not therefore comparable with those of the previous year. Fixed assets (Note no. B (2) of schedule 14 of annual accounts) a) Pursuant to notification issued by the Central Government under Companies (Accounting Standard) Amendment Rules, 2009 dated 31st March 2009; the Company has chosen an option with effect from 1st April 2007 to adjust the gains/losses arising on conversion/translation/settlement of long term foreign currency items into the corresponding costs of fixed assets to the extent it is related to acquisition of depreciable fixed assets and the balance gains/losses to be accumulated in "Foreign Currency Monetary Item Translation Difference Account" (FCMITDA). Consequently out of the exchange difference of Rs.72.88 crore (net of depreciation on exchange difference) relating to previous year, Rs.35.40 crore and

38

Notes to Abridged Consolidated Financial Statement Rs.38.62 crore has been adjusted to corresponding fixed assets and revaluation reserve respectively and the balance of Rs.1.14 crore has been accumulated in FCMITDA. During the year, exchange difference on long term foreign currency items relating to fixed assets amounting to Rs.501.48 crore has been adjusted in costs of corresponding fixed assets and the balance exchange difference of Rs.11.59 crore (net of Rs.5.79 crore amortised in the Statement of Profit and Loss) outstanding under FCMITDA as on the balance sheet date will be amortised over the balance period of the corresponding long term foreign currency item or upto 31st March 2011 whichever is earlier. The compounding effect of this treatment has resulted into an increase in the profit for the year by an amount of Rs.489.32 crore. b) The Company had revalued its fleet on 1st April 2004 and on 31st March 2008. The valuations were done by accredited valuers on the basis of expected market value in an arm's length transaction and free of encumbrances on the valuation date. The enhancement in the value of fleet amounting to Rs.669.52 crore and Rs.491.31 (including Rs.38.62 crore exchange difference, net of depreciation relating to earlier year) crore respectively were credited to fixed assets revaluation reserve. Incremental depreciation and impairment mainly on account of the revaluation amounting to Rs.144.73 (previous year Rs.26.95) crore and Rs.133.97 (previous year nil) crore have been recouped from the fixed assets revaluation reserve. c) d) The Company has three vessels and an aircraft on finance lease as on the balance sheet date. Gross block of plant and machinery includes Rs.38.84 (previous year Rs.38.84) crore leased out; Written down value as on 31st March 2009 is nil (previous year nil). The fleet and dredgers along with its receivables, barge unloader and rigs are under charge on secured loans. The Master Restructuring Agreement ("MRA") dated 17th December, 2004 entered pursuant to corporate Debt Restructuring Scheme, subject to concurrence of lenders, gives an option to VOTL to prepay certain funded interest loans of Rs.869.08 (previous year Rs.869.08) crore arising from funding of interest for the period 1st October 1998 to 29th December 2003 at any point in time during their term at a reduced amount computed in accordance with mechanism provided in the MRA or in full by one bullet payment in March, 2026. In order to give accounting effect to reflect the substance of the transaction and considering the intention of the management to prepay the funded interest loans under the option aforementioned, in the absence of guidance available under the accounting standards referred to in sub-section (3C) of Section 211 of the Companies Act, 1956, the principles laid down in International Financial Reporting Standard (IAS) 39 (Revised) - Financial Instruments - Recognition and Measurement, Statement of Financial Accounting Standard (SFAS) 15 - Accounting by Debtors and Creditors for Troubled Debt Restructuring under United States Generally Accepted Accounting Principles (US-GAAP), and Accounting Standard (AS 30) Financial Instruments - Recognition and Measurement issued by the Institute of Chartered Accountants of India, have been followed. 5) d) In view of the above, an amount of Rs.706.96 (previous year Rs.722.21) crore shown under secured loans being the amount not payable as at balance sheet date, has been shown as deduction from the funded interest facilities of the financial institutions and banks (refer schedule 3) to reflect in substance the present obligation under the mechanism of the balance sheet date, with consequential deduction from "Expenditure during construction" till date of capitalisation of terminal project in the previous year. The change in the present obligation of the said loans subsequent to capitalisation of terminal project is treated as finance cost in the Statement of Profit and Loss. The Company has plans of prepaying the loans (including funded interest loans) in accordance with the option to prepayment available under MRA. b) Term loans and funded interest facilities from banks and financial institutions (other than (c) below) are secured/to be secured by first ranking security interests on all movable and immovable assets, present and future, pledge of shares of VOTL held by the promoters and persons associated with the promoters/VOTL, security interest on rights, titles and interests under each of the project documents, trust and retention accounts/sub-accounts, insurance policies related to the terminal project, immovable properties of Essar Oil Ltd. (EOL) pertaining to terminal project, guarantee by the promoters and guarantee of the Company for Rs.250 crore. The facilities provided by a financial institution upto Rs.200 (previous year Rs.200) crore and interest and other charges thereon are secured by a Guarantee of EOL for Rs.200 (previous year Rs.200) crore. To secure obligation of EOL pursuant to the said guarantee, security is created by first mortgage and charge on immovable and movable properties pertaining to the EOL refinery project, pledge over shares of EOL and an assignment of the project contracts relating to EOL refinery project, the trust and retention accounts pertaining thereto. i) The term loan of Rs.91.16 (previous year Rs.nil) crore is secured by first pari passu charge on all the present and future movable / immovable assets / properties, insurance contracts, accounts, receivables and all other assets of EBTL including but not limited to goodwill, trademarks and patents. The term loan of Rs.nil (previous year Rs.47) crore is secured by first charge on dredger (EBT-2). The term loan of Rs.nil (previous year Rs.40) crore is secured by extension of existing charge on the two dredgers (EBT-1 and EBT-2) and corporate guarantee of the immediate holding company. (Rs. in crore) As on 31.03.2009 92.44 84.98 111.39 As on 31.03.2008 17.27 15.98 1,346.44 -

c)

e) 4)

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

ii) iii)

(Note no. B (4) of schedule 14 of annual accounts) a) Contingent liabilities:

Particulars i) ii) Claims against the Group not acknowledged as debt Guarantees given by banks

iii) Corporate guarantees on behalf of ESLL iv) Performance guarantees given under contracts

39

33rd Annual Report 2008 - 2009 7) Business segment and geographical segment: (Note no. B (6) of schedule 14 of annual accounts) a) 0.02 104.00 0.01 104.00 Particulars Segment revenue 58.10 117.97 86.79 58.10 110.76 80.00 22.44 Fleet operating and chartering Surface transport services Port and terminal services Oilfields services Unallocated Total 87.82 41.43 Less : Inter segment revenue Net income from operation Segment results Fleet operating and chartering Surface transport services Port and terminal services Oilfields services Unallocated Profit from operation before interest and finance charges Less: Unallocable interest and finance expenses Profit before tax Less: Income tax Profit after tax Add: Share of loss transferred to minority Profit after tax (after adjustment for minority interest) Segment assets Fleet operating and chartering
659.15 703.86 1,526.34 222.95 578.71 873.89 436.21 609.35 1,136.65 328.28 644.13 1,058.50 168.21 60.82 277.90 160.07 583.31 780.60

Particulars v) Dividend on optionally convertible cumulative redeemable preference shares

As on 31.03.2009

As on 31.03.2008

Business segment (Rs. in crore) Year ended 31.03.2009 31.03.2008

vi) Guarantee on behalf of others vii) Disputed sales tax demand under appeal with the honorable high court of Madras viii) Income tax appeals before ITAT ix) Bills discounted with banks x) Letter of credit (against margin money kept as fixed deposit)

1716.58 500.89 386.73 193.83 73.71 2871.74 (195.17) 2,676.57 221.18 17.30 160.93 85.93 73.71 559.05 (434.80) 124.25 (47.05) 77.20 77.20 2,775.05 112.76 3,724.41 3,059.09 747.06 10,418.37 (2,680.54) (49.15) (2,767.02) (1,969.24) (8.55) (7,474.49)

1428.96 493.23 140.44 215.14 2,277.77 (22.10) 2255.67 338.90 19.60 6.33 190.46 555.29 (248.01) 307.28 (43.68) 263.60 13.81 277.41 2,695.22 93.01 4,664.38 486.65 7,939.26 (1,893.44) (69.30) (2,475.96) (0.17) (4,438.87)

xi) Interest on facility E on principal amount of facility stoppage as per MRA b)

Guarantee given by others on behalf of VOTL in respect of loan liability already existing in the books of account Rs.200 (previous year Rs.200) crore. Estimated amount of contracts remaining to be executed on capital account and not provided for is Rs.5,132.38 (previous year Rs.2,580.79) crore.

c)

Leases: (Note no. B (5) of schedule 14 of annual accounts) (a) Finance leases: (i) The minimum lease rentals outstanding at the year end are as under:
(Rs. in crore) As on 31.03.2009 Particulars Minimum lease payments Interest Present Minimum value of lease minimum payments lease payments As on 31.03.2008 Interest Present value of minimum lease payments

Future lease rental obligation payable : - Not later than one year - Later than one year but not later than five years - Later than five years Total 163.33 72.23 91.10 86.09 48.87 37.22

Surface transport services Port and terminal services Oilfields services Unallocated Total assets Segment liabilities Fleet operating and chartering Surface transport services Port and terminal services Oilfields services Unallocated Total liabilities

(ii)

The finance lease arrangement in respect of a vessel, entered into between the Company and ESLL, has been mutually terminated during the year and consequently Rs.17.48 crore (net excess of finance lease obligation of Rs.548.53 crore over net book value of Rs.531.05 crore) has been recognised as an extinguishment of liability on cancellation of finance lease in the Consolidated Statement of Profit and Loss.

(b) Operating leases: VOTL has a committed liability of Rs.6.70 (previous year Rs.6.95) crore for future lease rental charges in respect of land taken on lease which is owned by Essar Oil Limited.

40

Notes to Abridged Consolidated Financial Statement Particulars Adjusted net earnings for the purpose of basic and diluted earnings per share (Rs. in crore) Equity shares at the beginning of the year (nos.) Equity shares issued pursuant to merger of India Shipping (nos.) - (refer note no. 2) Equity shares held by India Shipping in the Company cancelled upon merger (nos.) Equity shares at the end of the year (nos.) Weighted average equity shares for the purpose of calculating basic and diluted earnings per share (nos.) Earnings per share-basic and diluted (face value of Rs.10/- each) (Rs.) 9) Foreign currency exposure: (Note no. B (8) of schedule 14 of annual accounts) (i) There were no forward/options contracts entered in to by the Group during the financial year to hedge its foreign currency exposures. The year-end foreign currency exposures that have not been hedged by a derivative instrument or otherwise are given below. (A) Amount receivable in foreign currency on account of the following:
Particulars Rs. in crore 2008-09 (i) Export of goods and services (ii) Sale of assets (iii) Sale of current investments (iv) Advance to vendors 14.79 13.64 9.72 7.20 11.30 0.00 0.02 18.52 (iii) Bank balance and fixed deposits including interest accrued there on 2007-08 38.92 19.12 2.89 0.11 0.00 3.00 USD USD QAR USD EUR SGD AED Currency In million 2008-09 2.84 2.70 1.91 1.30 1.71 0.00 0.00 3.01 2007-08 9.84 3.75 0.60 0.00 0.60

(Rs. in crore) Particulars Fixed assets acquired during the year Fleet operating and chartering Surface transport services Port and terminal services Oilfields services Total Depreciation* Fleet operating and chartering Surface transport services Port and terminal services Oilfields services Total 186.76 2.15 136.97 51.93 377.82 131.54 1.66 88.28 221.48 1,126.55 0.13 21.29 2,256.84 3,404.81 568.83 3.92 2,885.27 3,458.02 Year ended 31.03.2009 31.03.2008

Year ended 31.03.2009 31.03.2008

77.18 426,077,207

277.41 426,077,207

364,905,489

(175,299,376) 615,683,320

426,077,207

615,683,320 1.25

426,077,207 6.51

* excludes depreciation of Rs.7.54 (previous year Rs.4.43) crore transferred to expenditure during construction and Rs.278.71 (previous year Rs.26.95) crore recouped from fixed assets revaluation reserve. b) Geographical segment The Group's fleet operations are managed on a worldwide basis from India. Fleet operating and chartering earnings are based on the geographical location of customers. (Rs. in crore) Segment Revenue India China U.K. UAE Brazil Rest of the world Total Year ended 31.03.2009 31.03.2008 2127.42 92.74 116.57 30.40 46.45 262.99 2676.57 1664.88 90.08 86.08 27.69 49.57 337.37 2255.67

(ii)

The main operating assets represent floating fleet, which is not identifiable to any geographical location. 8) Earnings per share (Note no. B (7) of schedule 14 of annual accounts) The calculation of basic and diluted earnings per share is based on the following data: Particulars Earnings for the purpose of basic and diluted earnings per share (net profit for the year) (Rs. in crore) Less: Preference dividend to minority shares held in EOSL (Rs. in crore) Year ended 31.03.2009 31.03.2008

0.32 (5.53) (5.21)

93.41 0.32 0.01 93.74

USD GBP EUR

0.06 (1.09) (1.03)

23.71 0.06 23.77

77.20

277.41

0.02

41

33rd Annual Report 2008 - 2009 (B) Amount payable in foreign currency on account of the following:
Particulars Rs. in crore 2008-09 (i) Import of goods and services 38.85 16.11 3.42 7.61 0.78 18.35 0.02 14.44 1.28 0.17 10.75 0.01 72.94 (ii) Advance from customer (iii) Lease obligation (iv) Secured loans payable (including interest accrued thereon) 1.00 1,134.90 2007-08 12.92 21.12 0.11 0.03 0.62 0.29 0.37 0.05 35.51 778.09 USD USD INR USD GBP DKK EUR JY SGD HKD AED NOK ZAR OMR AUD Currency In million 2008-09 7.63 3.00 0.66 1.19 16.51 3.67 0.05 2.83 0.29 0.06 2.11 0.00 38.00 0.02 221.70 2007-08 2.54 3.54 0.01 0.03 0.10 5.42 0.12 0.01 11.77 193.99

(a)

Holding companies: (i) (ii) Essar Global Limited, Cayman Islands (ultimate holding company) (w.e.f 1st April 2008) Essar Shipping & Logistics Limited, Cyprus (immediate holding company) (w.e.f 1st April 2008)

(b) Individuals owning directly or indirectly an interest in the voting power that gives them control or significant influence: (i) (ii) (c) Mr. Shashi Ruia, Chairman Mr. Ravi Ruia, Vice Chairman

(iii) Mr. Anshuman Ruia, Director Key management personnel: (i) (ii) Mr. Sanjay Mehta, Managing Director (Essar Shipping Ports & Logistics Limited) Mr. A. R. Ramakrishnan, Wholetime Director (Essar Shipping Ports & Logistics Limited)

(iii) Mr. V. Ashok, Wholetime Director (Essar Shipping Ports & Logistics Limited) (iv) Mr. K. K. Sinha, Wholetime Director (Vadinar Oil Terminal Limited) (v) Mr. A. K. Musaddy, Wholetime Director (Essar Logistics Limited)

(vi) Admiral Sampath Gopal, Wholetime Director (Essar Bulk Terminal Limited) (till 31.12.08)
744.12 707.62 USD 111.01 142.93

(vii) Mr. Narasimhan Ramesh, Wholetime Director (Essar Oilfields Services Limited) (till 31.01.2009) (d) Other related parties where there have been transactions: Enterprises commonly controlled or influenced by major shareholders/directors/relatives of directors of the Group: (i) (ii) (iii) (iv) (v) (vi) (vii) (viii) (ix) (x) (xi) (xii) (xiii) (xiv) (xv) Essar Information Technology Limited Essar Agrotech Limited Essar House Limited Essar House Services Limited Essar Steel Limited Futura Travels Limited India Securities Limited Essar Oil Limited Bhander Power Limited Essar Steel (Hazira) Limited Essar Power Limited Click for steel Services Limited Essar Investments Limited Essar Teleholdings Limited Essar Oilfields Services Limited (upto 31st March, 2008)

10) Deferred tax liability The components of net deferred tax liability are as follows: (Rs. in crore) Details Deferred tax liability Depreciation on fixed assets (A) Deferred tax assets Disallowance u/s 40(a) Employee benefits (B) Net deferred tax liability (A-B) 11) Employee benefits: The Group has adopted Accounting Standard (AS) 15 (Revised) 'Employee benefits' as notified under the Companies (Accounting Standard) Rules, 2006, with effect from 1st April, 2007. 12) Related party transactions: (Note no. B (13) of schedule 14 of annual accounts) 1.18 0.76 1.94 32.52 0.48 0.32 0.80 18.90 34.46 34.46 19.72 19.72 As at 31-03-09 As at 31-03-08

42

Notes to Abridged Consolidated Financial Statement (xvi) (xvii) (xviii) (xix) (xx) (xxi) (xxii) (xxiii) (xxiv) (xxv) (xxvi) (xxvii) Aegis BPO Services Limited Essar Project Management Consultancy Limited Essar Engineering Services Limited Vadinar Power Company Limited Essar Steel Algoma Inc. Essar Heavy Engineering Services Limited Essar Steel Orissa Limited Hazira Pipe Mills Limited Hazira Plate Limited Essar Power Gujarat Limited Essar Power MP Limited Essar Infrastructure Services Limited (Rs. in crore) Nature of transactions Holding and subsidiary companies 2008-09 2007-08 Other related Parties 2008-09 2007-08 Key Management Personnel 2008-09 2007-08 Total 2008-09 2007-08 (xxviii) Essar Infrastructure Holdings Limited (xxix) (xxx) (xxxi) (xxxii) Essar Logistics Holdings Limited Essar Telecom Retail Limited Global Supplies (UAE) FZE Essar Gulf FZE

(xxxiii) Essar Exploration & Production (Bengal) Limited (xxxiv) Essar Steel Sharjah FZE (xxxv) Essar Energy Services Limited (xxxvi) Essar Constructions (India) Limited (xxxvii) Essar Shipping & Logistics (Panama) Inc. (xxxviii) Essar Properties Limited

The details of transactions with related parties are as under:

INCOME Fleet operating income Essar Steel Limited Essar Steel (Hazira) Limited Essar Steel Algoma Inc. Essar Constructions (India) Limited Essar Oil Limited Essar Shipping & Logistics (Panama) Inc. Others Total Equipment lease rental income Essar Steel Limited Rental income on building Essar Steel Limited Interest income Essar Shipping & Logistics Limited Essar Oil Limited Total Expenditure during construction- income Essar Constructions (India) Limited Essar Steel (Hazira) Limited Total Agency and management fees Essar Shipping & Logistics Limited Essar Investments Limited Total Freight / lease hire charges Essar Shipping & Logistics (Panama) Inc. 8.20 8.20 43 0.35 0.35 11.54 11.54 11.54 11.54 0.35 0.35 7.14 1.20 8.34 7.14 1.20 8.34 5.16 5.16 1.00 1.00 11.38 11.38 5.16 11.38 16.54 1.00 1.00 0.01 0.01 0.02 0.19 0.02 0.19 0.47 0.47 1,195.21 73.82 30.59 16.88 469.60 17.97 1,804.06 1,130.49 3.90 5.21 35.62 0.36 1,175.58 1,195.21 73.82 30.59 16.88 469.60 0.47 17.97 1,804.53 1,130.49 3.90 5.21 35.62 0.36 1,175.58

33rd Annual Report 2008 - 2009

(Rs. in crore) Nature of transactions Holding and subsidiary companies 2008-09 2007-08 0.80 0.80 Other related Parties 2008-09 2007-08 20.11 0.25 28.56 9.32 0.11 13.56 4.20 0.51 4.71 5.75 0.35 6.10 13.19 0.14 13.33 7.80 0.25 8.05 0.87 0.05 5.31 5.36 13.56 4.20 0.24 4.44 1.91 0.30 2.21 4.97 0.01 4.98 Key Management Personnel 2008-09 2007-08 0.64 0.89 0.92 0.84 0.48 0.77 0.26 0.72 5.52 0.71 1.05 0.78 0.98 0.30 0.78 0.27 4.87 Total 2008-09 20.11 0.25 28.56 9.32 0.11 0.64 0.89 0.92 0.84 0.48 0.77 0.26 0.72 5.52 13.56 0.80 4.20 0.51 5.51 5.75 0.35 6.10 13.19 0.14 13.33 2007-08 7.80 0.25 8.05 0.87 0.05 5.31 5.36 0.71 1.05 0.78 0.98 0.30 0.78 0.27 4.87 13.56 4.20 0.24 4.44 1.91 0.30 2.21 4.97 0.01 4.98

Essar Constructions (India) Limited Essar Oil Limited Total Fuel oil purchase Essar Oil Limited Dredging expense Essar Constructions (India) Limited Stores and spares purchase Essar Constructions (India) Limited Essar Steel Limited Total Remuneration Mr. Sanjay Mehta Mr. A. R. Ramkrishnan Mr. V. Ashok Mr. K. K. Sinha Mr. Rajen Sachar Mr. A. K Musaddy Mr. Sampath Gopal Mr. Narasinhan Ramesh Total Business center fees Essar Infrastructure Services Limited Rent Essar Global Limited Essar House Limited Others Total Repair and maintenance Essar Constructions (India) Limited Others Total Travelling/lodging expenses Futura Travels Limited Others Total Professional/advisory fees/ agency fees Essar Oil Limited Others Total

6.25 1.36 7.61

3.17 0.92 4.09

6.25 1.36 7.61

3.17 0.92 4.09

44

Notes to Abridged Consolidated Financial Statement (Rs. in crore) Nature of transactions Holding and subsidiary companies 2008-09 2007-08 Other related Parties 2008-09 2007-08 Key Management Personnel 2008-09 2007-08 Total 2008-09 2007-08

Reimbursement of expenses Futura Travels Limited Essar Oil Limited Essar Shipping & Logistics Limited Others Total Fixed asset sold Essar Shipping & Logistics (Panama) Inc. Jetty constructions and project management expenses Essar Constructions (India) Limited Essar Engineering Services Limited Essar Project Management Consultancy Limited Total Steel procurement Essar Steel Limited Essar Heavy Engineering Services Limited Total Purchase of materials Essar Constructions (India) Limited Hazira Pipe Mill Limited Essar Steel Limited Total Cenvat receivable Essar Oil Limited Cenvat payable Essar Constructions (India) Limited Interest Expenses Essar Shipping & Logistics Limited Essar Global Limited Others Total Construction of building Essar Constructions (India) Limited Cancellation of finance lease Essar Shipping & Logistics Limited Balance taken over pursuant to merger of India Shipping with ESPLL Essar Infrastructure Holdings Limited 92.57 92.57 548.53 548.53 0.23 0.23 54.11 36.17 90.28 0.47 0.47 0.76 0.76 0.40 0.40 54.11 36.17 0.76 91.04 0.47 0.40 0.87 14.65 14.65 7.63 7.63 0.05 1.28 1.35 2.68 0.54 0.54 0.05 1.28 1.35 2.68 0.54 0.54 0.47 0.30 0.77 0.68 0.68 0.47 0.30 0.77 0.68 0.68 53.93 0.45 2.55 56.93 3.80 0.23 4.03 53.93 0.45 2.55 56.93 3.80 0.23 4.03 13.16 5.38 13.16 5.38 0.28 0.28 21.38 37.21 1.36 59.95 19.53 1.27 20.80 21.38 37.21 0.28 1.36 60.23 19.53 1.27 20.80

45

33rd Annual Report 2008 - 2009 (Rs. in crore) Nature of transactions Holding and subsidiary companies 2008-09 2007-08 92.57 94.03 186.60 Other related Parties 2008-09 2007-08 1.46 94.03 15.88 0.42 1.58 0.17 0.01 1.76 0.50 0.89 0.89 Key Management Personnel 2008-09 2007-08 Total 2008-09 1.46 94.03 92.57 94.03 186.60 15.88 0.42 1.58 0.17 0.01 1.76 0.50 2007-08 0.89 0.89 -

Essar Logistics Holdings Limited Total Assignment of receivables Essar Global Limited Essar Shipping & Logistics Limited Total Settlement of payables Essar Infrastructure Holdings Limited Advance towards purchase of shares Essar Steel Limited Purchase of fixed assets Essar Constructions (India) Limited Essar Information Technology Limited Essar Telecom Retail Limited Total Share application money received Essar Steel Limited Fixed assets acquired under finance lease Essar Shipping & Logistics Limited Issue of equity shares Essar Shipping & Logistics Limited Allotment of preference shares Essar Shipping & Logistics Limited Capital expenses on project expansion Essar Engineering Services Limited Essar Project Management Consultancy Limited Global Supplies (UAE) FZE Total Advance given on capital account Essar Project Management Consultancy Limited Essar Constructions (India) Limited Global Supplies (UAE) FZE Total Advance received against sale of investments/allotment of shares Essar Shipping & Logistics Limited Loans and advances including deposits given Essar House Limited

632.85 433.07 -

445.28 89.73 82.02 -

20.30 1.17 6.67 28.14

13.62 13.62

632.85 433.07 20.30 1.17 6.67 28.14

445.28 89.73 82.02 13.62 13.62

0.50 3.80 5.19 9.49

0.50 3.80 5.19 9.49

57.04

57.04

2.45

2.45

46

Notes to Abridged Consolidated Financial Statement (Rs. in crore) Nature of transactions Holding and subsidiary companies 2008-09 2007-08 263.05 263.05 365.58 365.58 28.27 28.27 615.99 159.28 159.28 Other related Parties 2008-09 2007-08 21.09 0.48 21.57 279.61 4.67 10.00 4.20 5.93 0.68 25.48 1.41 0.71 25.08 112.37 0.51 142.53 135.72 42.03 12.00 54.03 Key Management Personnel 2008-09 2007-08 Total 2008-09 263.04 21.09 0.48 284.62 279.61 4.67 365.58 10.00 4.20 5.93 0.68 391.06 2007-08 1.41 0.71 28.27 25.08 112.37 0.51 170.80 615.99 135.72 159.28 42.03 12.00 213.31

Essar Infrastructure Services Limited Essar Information Technology Limited Essar Shipping & Logistics Limited Essar Steel Limited Essar Oil Limited Others Total Guarantee on behalf of others Essar Shipping & Logistics Limited Advances paid for expansion project Essar Constructions (India) Limited Loans and advances received Essar Steel Limited Essar Global Limited Essar Constructions (India) Limited Essar Shipping & Logistics Limited Essar Oil Limited Essar Power MP Limited Essar Investments Limited Others Total Sundry debtors Essar Steel Limited Essar Shipping & Logistics (Panama) Inc. Essar Oil Limited Essar Shipping & Logistics Limited Essar Steel (Hazira) Limited Essar Constructions (India) Limited Hazira Plate Limited Essar Power Gujarat Limited Others Total Interest receivable on loan Essar Shipping & Logistics Limited Lease loan obligation Essar Shipping & Logistics Limited Unsecured loans Essar Shipping & Logistics Limited Essar Constructions (India) Limited Total Loans and advances including deposits given Essar House Limited

The details of outstanding balances as on 31st March, 2009 64.52 64.52 5.02 733.95 441.21 147.33 147.33 190.44 13.64 41.84 8.13 2.45 2.42 3.48 2.05 264.45 10.00 10.00 111.60 5.34 37.65 0.40 0.33 0.74 156.06 190.44 13.64 41.84 64.52 8.13 2.45 2.42 3.48 2.05 328.97 5.02 733.95 10.00 10.00 111.60 5.34 37.65 0.40 0.33 0.74 156.06 441.21 147.33 147.33

31.00

31.45

31.00

31.45 47

33rd Annual Report 2008 - 2009 (Rs. in crore) Nature of transactions Holding and subsidiary companies 2008-09 2007-08 263.05 263.05 499.84 499.84 28.07 28.07 Other related Parties 2008-09 2007-08 6.25 122.85 1.21 161.31 1.49 1.76 1.33 1.07 3.80 6.69 5.05 21.19 6.25 161.39 89.50 3.26 291.85 Key Management Personnel 2008-09 2007-08 Total 2008-09 6.25 122.85 263.05 1.21 424.36 1.49 1.76 1.33 1.07 3.80 6.69 499.84 5.05 521.03 2007-08 6.25 161.39 89.50 28.07 3.26 319.92 -

Futura Travels Limited Essar Oil Limited Essar Constructions (India) Limited Essar Shipping & Logistics Limited Others Total Loans and advances received Essar Power MP Limited India Securities Limited Essar Engineering Services Limited Essar Project Management Consultant Limited Essar Constructions (India) Limited Essar Exploration & Production (Bengal) Limited Essar Global Limited Global Supplies FZE Total Advance received against allotment of shares Essar Shipping & Logistics Limited Security deposit received Essar Steel Limited Interest accrued but not due on loan Essar Shipping & Logistics Limited Sundry creditors Futura Travels Limited Essar Oil Limited Essar Constructions (India) Limited Essar Engineering Services Limited Essar Global Limited Global Supplies FZE Essar Investments Limited Essar Shipping & Logistics Limited Essar Shipping & Logistics (Panama) Inc. Others Total Guarantee given on behalf of others Essar Shipping & Logistics Limited Essar Oil Limited Total

8.13 18.47 4.81 23.28 -

47.14 0.47 2.38 2.38 1,346.44 1,346.44

0.04 13.20 4.66 218.53 21.08 6.90 14.93 0.52 5.07 284.89 104.00 104.00

0.04 3.90 17.60 12.72 13.11 12.00 0.45 59.78 104.00 104.00

0.04 8.13 13.20 4.66 218.53 21.08 18.47 6.90 14.93 4.81 0.52 5.07 308.17 104.00 104.00

47.14 0.04 0.47 3.90 17.60 12.72 13.11 12.00 2.38 0.45 62.16 1,346.44 104.00 1,450.44

48

Notes to Abridged Consolidated Financial Statement (Rs. in crore) Nature of transactions Holding and subsidiary companies 2008-09 2007-08 983.89 318.44 1,302.33 Other related Parties 2008-09 2007-08 200.00 200.00 200.00 200.00 Key management personnel 2008-09 2007-08 Total 2008-09 983.89 318.44 200.00 1,502.33 2007-08 200.00 200.00

Guarantee availed for loan taken Essar Shipping & Logistics Limited Essar Global Limited Essar Oil Limited Total

Note: The Company has paid sitting fees to group of individuals having significant influence: Rs.0.01 (previous year Rs.0.01) crore. 13) (Note no. B (14) of schedule 14 of annual accounts) Details of amount due from sundry debtors under the same management within the meaning of Section 370 (1B) of the Companies Act, 1956: Sr. No. 1 Debtor Essar Shipping & Logistics (Panama) Inc.* Total 31-03-2009 31-03-2008 creditors. There were no: a) interest paid during the year; b) interest payable at the end of the accounting year; and c) interest accrued and unpaid at the end of the accounting year, in respect of such suppliers. 17) Performance ratios: Sr.No. Particulars 1. 13.64 13.64 3. 4. Notes: 1. Capital employed includes shareholders funds, loan funds and is net of revaluation reserve and advance against allotment of shares. Total assets is net of revaluation on assets. Net worth includes shareholders funds and is net of revaluation reserve and advance against allotment of shares. 2. Total income / Total assets Net profit before interest and tax / Capital employed Return on net worth Net profit / Total income 2008-09 (%) 17.48 3.84 1.05 2.88 2007-08 (%) 30.48 8.10 9.62 12.30

*During the financial year 2007-08, the debtor was not covered within the meaning of Section 370 (1B) of the Companies Act, 1956. 14) Note no. B (17) of schedule 14 of annual accounts) Preference share capital represents 85,000,000 preference shares of US$ 1/- each held by Essar Shipping & Logistics Limited, Cyprus, the immediate holding company. 15) The Company has pledged its investments in equity shares of Essar Oil Limited amounting Rs.2.27 (previous year Rs.2.27) crore in favour of lenders for loans availed by Essar Oil Limited. 16) Note no. B (18) of schedule 14 of annual accounts) The Group has received intimations from certain suppliers regarding status under the Micro, Small and Medium Enterprises Development Act, 2006 (the Act). Amounts due to such suppliers at the end of the accounting year have been given in Schedule 9 under sundry

2. 3.

18) Note no. B (19) of schedule 13 of annual accounts) Previous year's figures have been regrouped/reclassified wherever necessary.

As per our report of even date attached For Deloitte Haskins & Sells Chartered Accountants

For and on behalf of the Board Sanjay Mehta Managing Director V. Ashok Wholetime Director Mumbai May 18, 2009 R. N. Bansal Director Manoj Contractor Company Secretary

Khurshed Pastakia Partner Mumbai May 18, 2009

49

33rd Annual Report 2008 - 2009

NOTES

50

ESSAR SHIPPING PORTS & LOGISTICS LIMITED

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

PROXY FORM
Members Folio No. and/or DPID No./Client ID No.* : :

I/We..............................................................................................................................................of ..........................................................................in the district of ............................................................................being a member of ESSAR SHIPPING PORTS & LOGISTICS LIMITED, hereby appoint..................................................................................... of ................................................. or failing him.............................................................. of ................................................... as my/our proxy to vote for me/us and on my/our behalf at the THIRTY-THIRD ANNUAL GENERAL MEETING of the Company to be held on Friday, July 31, 2009 at 3.30 P.M. at the Registered Office of the Company, Administrative Building, Essar Refinery Complex, Okha Highway (SH 25), Taluka Khambhalia, District Jamnagar, Gujarat 361 305 and at every adjournment thereof. Signed this ....................................day of ...............................2009 PROXY FORM MUST REACH THE COMPANYS REGD. OFFICE, AT ADMINISTRATIVE BUILDING, ESSAR REFINERY COMPLEX, OKHA HIGHWAY (SH-25), TALUKA KHAMBHALIA, DISTRICT JAMNAGAR, GUJARAT 361 305, NOT LESS THAN 48 HOURS BEFORE THE COMMENCEMENT OF THE MEETING. Affix Rs.1 Revenue Stamp

SIGNATURE

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

ESSAR SHIPPING PORTS & LOGISTICS LIMITED

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

ATTENDANCE SLIP
Members Folio No. and/or DPID No./Client ID No.* : 33rd ANNUAL GENERAL MEETING TIME : 3.30 P.M. DATE : JULY 31, 2009 VENUE : ADMINISTRATIVE BUILDING ESSAR REFINERY COMPLEX OKHA HIGHWAY (SH-25) TALUKA KHAMBHALIA DISTRICT JAMNAGAR GUJARAT 361 305 MEMBER PROXY [Name in Capital letters] NOTE: 1. Admission restricted to Members/Proxies only. 2. Please avoid bringing children/non-members with you. * Applicable only in case of Investors holding shares in electronic form. I hereby record my presence at the 33rd AGM of the Company Signature of Member/Proxy :

51