renewed spirit - mercatormercator.in/investors/annualreport/annual report 2011-12.pdf · renewed...

RENEWED SPIRIT SUSTAINED COMMITMENT

ANNUAL REPORT 2011-12

Mercator Limited

RENEWED SPIRIT SUSTAINED COMMITMENT

ANNUAL REPORT 2011-12Mercator Limited

Mercator assumes new identity

as we move beyond shipping.

The picture depicts the new

logo while the old logo fades

away.

CONTENTSCOMPANY OVERVIEW Corporate Identity 02

Global Presence 06

Chairman’s Message 08

The Board 10

Key Executives 12

BUSINESS REVIEWFinancial Highlights 14

Operational Highlights 16

Divisional Analysis 18

Our Fleet 22

BOARD AND MANAGEMENT REPORTS Directors’ Report 24

Report on Corporate Governance 28

Management Discussion and Analysis Report 44

FINANCIAL STATEMENTSStandalone Financials 52

Consolidated Financials 88

Therefore, a renewed Mercator’s journey begins all over again!

In sequel to our sustained commitment and building further on our

core strength of shipping, Mercator has established its footprint

on the energy landscape. We are focusing on the energy-based

resources like Oil & Gas and Coal. Our significant presence across

energy logistics and infrastructure has enabled us to remain at

the forefront of the energy momentum.

Business segments other than shipping have already become

significant contributors to the company’s growth trajectory. No

longer just a shipping company, we are present right across the

energy value chain, from Coal (mining, procurement and logistics)

to Oil & Gas (onshore and offshore) augmented with expertise of

shipping of wet and dry bulk. Our marine infrastructure focus

continues to gain strengths by the dredging segment.

Going forward, Mercator will continue to stay innovative in finding

ways to make a positive impact on the global energy industry.

ENERGY MATTERS TO THE WORLD, MORE THAN EVER BEFORE.

CORE VALUES ‘Honouring Commitments‘ towards all the stakeholders consistent and constant growth

Ensuring that every employee feels pride in being called a ‘Mercatorian‘

Innovation...we believe in doing things differently!

CORE PURPOSECreating the best solutions and offering outstanding value and service to our customers

GOALTo become a dominant global player in the Energy Value Chain of Coal, Oil & Gas, and Marine Services & Infrastructure

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A TALE OF DIVERSITY AND DYNAMISMMercator Limited is a diversified organisation, operating across

the Coal, Oil & Gas, Shipping and Dredging verticals. Mercator

is strengthening its position as a prominent service provider

in the integrated energy value chain. Incorporated in 1983 as

a shipping organisation, Mercator is reinforcing its presence

across the energy domain with a sustained commitment. Such

a commitment may be demonstrated as:

One of the largest coal exporters of Indonesia.

India’s only company to have Engineered, Procured,

Constructed, Installed and Commissioned (EPCIC) a

Floating Production Unit (FPU) project.

Currently executing the prestigious Sagar Samrat project of

ONGC.

Mercator, its Singapore listed subsidiary and the Chairman

have been conferred with prestigious awards.

RENEWED MERCATOR!Mercator Lines Ltd. is now Mercator Limited!

It is more than opportune to assume new identity at this

juncture to reflect our repositioning in the integrated energy

value chain. Our identity is depicted by our new logo in red,

black and grey. These colours represent high energy, vitality,

positive change and progress. Mercator’s spirit of enterprise,

growth, hard work and commitment is captured in the spinning

lines. The new logo drew inspiration from cog wheels, which

indicate movement, efforts and energy.

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annual report 2011-12

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FACETS OF OUR BUSINESSMercator is present across the energy value chain, with

shipping and dredging providing end-to-end solutions to

clients, comprising storage, transportation, logistics and port

infrastructure. Our coal business contributes 62% to the top

line, while shipping accounts for less than 30%. Last year, we

had undertaken an energised transformation, and this year we

further strengthened our position in the energy domain. Over

the past four years, the revenue contribution from the shipping

segment has been constantly declining from 89% in 2008-09 to

COAL OIL & GAS SHIPPING DREDGING

E & P

Offshore Services

Mining

Procurement

Logistics

Dry bulk Carriers

Wet bulk Carriers

Capital Dredging

Maintenance Dredging

29% in 2011-12 due to adverse market conditions. In order to

maintain growth momentum, Mercator strengthened its energy

segments. Consequently, the revenue from these segments has

increased from 3% in 2008-09 to 68% in 2011-12.

During the year, we completed the acquisition of a coal mine

and won an EPC contract of Sagar Samrat. This has further

strengthened our footprint in the integrated value chain from

resources to delivery.

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A GLIMPSE OF GLOBAL OPERATIONSOur global operations showcase a significant presence across

diverse markets and geographies. Mercator’s business verticals

complement each other, creating sustainable value.

The shipping business segment has helped supply wet and dry

energies across the globe. We are one of the prominent players

in Indonesian coal business. We have executed an Oil & Gas

project on EPCIC basis as well as various dredging projects.

Our subsidiary, Mercator Lines (Singapore) Limited at Singapore

operates the dry bulk carriers business. Mercator has a number

of subsidiaries in Singapore, Indonesia and Africa to help explore

business opportunities.

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Coal: Indonesia-India

Iron Ore: India-China

Nigeria

Oil & Gas FPU Project

Mozambique

Coal mine licence Singapore

Mercator Lines (Singapore)

and Mercator Offshore

headquarters

Indonesia

Coal mines

Procurement and

Logistics

Sri Lanka

Coal logistics contract

China

Client base

Indonesia-India – Coal

India –China – Iron Ore

India

Mercator

headquarters

Oil & Gas blocks

in Gujarat

Oil & Gas EPC

project

Dredging projects

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MERCATOR

CHAIRMAN’S MESSAGE

HAVING EXPERIENCED A

POSITIVE IMPACT OF NON-

SHIPPING BUSINESSES ON

OUR TOP LINE AND BOTTOM

LINE DURING 2010-11, WE

CONTINUED TO STAY FOCUSED.

TO BE A SIGNIFICANT SERVICE

PROVIDER IN THE INTEGRATED

ENERGY VALUE CHAIN.

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Dear Shareholders,

Global economic slowdown continued to haunt all industry

players during the year. Shipping being the pivotal industry

has historically been, unfortunately, at the receiving end

whenever markets slow down. We continued to face the same

set of challenges during the year. Energy is one sector that is

almost insulated from economic imbalances so far as demand

is concerned. Human survival as well as human endeavour

depends primarily on energy consumption. The energy demand

dynamics may keep changing from developed to emerging

economies or from western to eastern geographies but remain

firm. Enthused with this fact, we continue to believe that our

presence in energy value chain, howsoever humble it may be,

will remain promising.

Having experienced a positive impact of non-shipping businesses

on our top line and bottom line during 2010-11, we continued

to stay focused. To be a significant service provider in the

integrated energy value chain. Expansions in the Coal, Oil & Gas

segments therefore became a natural choice. The acquisition of

one more coal mine in Indonesia got concluded during the year,

thus adding to our mineable reserves further. Similar strategic

initiatives resulted in the award of prestigious ‘Sagar Samrat’—

Independent India’s maiden rig’s conversion project from ONGC.

The project is quite specialised involving the conversion of Mobile

Offshore Drilling Unit (MODU) into Mobile Offshore Processing

Unit (MOPU). This contract became a reality mainly due to the

experience gained during the successful commissioning of

MOPU in Nigeria in the recent past.

Apart from energy, another key driver for emerging economies

is infrastructure. India is gearing up to take on infrastructure

challenges right from shore based to marine based. The

demand for dredging services stays robust and continues to

present opportunities. The Dredging segment of our Company

added two more dredgers to its fleet.

I would like to reiterate, in view of the re-strengthening and

our renewed focus, it may have been opportune to assume a

new corporate identity, which is reflected in our new logo. We

remain as committed as ever, to growth and value creation to

our stakeholders.

At Mercator, we are confident to brave the future with more

determination and courage.

I earnestly thank all our stakeholders for their unflinching faith

and belief in us.

Thanks and warm regards,

H. K. Mittal

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MERCATOR

THE BOARD

1 2 3 4

1 Mr. H. K. MittalExecutive Chairman

Mr. H. K. Mittal, 62, has completed his Masters from the Indian

Institute of Technology (IIT), Roorkee. He ventured into business

with the production of Sulphuric Acid and Ferric Alum in 1975.

He expanded this business both vertically and horizontally. Apart

from the Sulphuric Acid production plant in North India, his other

business ventures include a shipbuilding yard in Mumbai and a

healthcare unit.

In 1988, Mr. Mittal acquired Mercator. His vision and strong

entrepreneurial acumen have been the driving force behind

Mercator’s expansions, success and growth. He is also the

Chairman of Board of Mercator Lines (Singapore) Ltd. (step-

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

Singapore), and Indian subsidiaries viz. Mercator Oil & Gas Ltd.,

Mercator FPSO Private Limited and Mercator Petroleum Ltd.

3 Mr. Manohar BidayeIndependent and Non-Executive Director

Mr. Manohar Bidaye, 48, is a Master of Commerce (M.Com)

from the University of Mumbai and has a Degree in Law (LLB -

Gen.). He is also a Senior Member of The Institute of Company

Secretaries of India. He has a rich experience in corporate

planning, strategy formulation, corporate laws and taxation,

finance and other related areas. He has been honoured with the

‘Yashashree 2008’ Award, and ‘Marathi Udyog Bhushan’ Award

recognising his achievements across various industry segments.

Mr. Bidaye is a Promoter and the Chairman of Zicom Electronic

Security Systems Limited, where he is involved with the overall

Corporate Planning, Strategy Forming and Implementation,

Financial Management, Banking, Accounts, Taxation and Legal

affairs.

4 Mr. M. G. RamkrishnaIndependent and Non-Executive Director

Mr. M. G. Ramkrishna, 68, is an M. A., L. L. B. and CAIIB and a

veteran banker. He has over 31 years of experience in various

segments of banking, such as commercial, investment and

international. He has worked as Group Head of a reputed

industrial group, managing the treasury functions. At present,

he is engaged as an advisor/consultant on financial matters. He

is also on the Board of several companies as an Independent

Director.

2 Mr. Atul J. AgarwalManaging Director

Mr. Atul J. Agarwal, 54, is a Chartered Accountant, with 29 years

of professional experience. He is associated with Mercator since

its inception. As a Chartered Accountant, Mr. Agarwal specialises

in the financial aspects of the business, and is responsible for

the financial and strategic planning and execution. He manages

the day-to-day operations of the organisation. He has also been

instrumental in the successful implementation of many of the

Company’s projects. Mr. Agarwal has been accredited with

memberships of various committees formed by the Government

for shipping reforms. He is on the Board of Directors of Indian

National Shipowners’ Association (INSA), Indian Register of

Shipping (IRS) Thirumalai Chemicals Ltd., Mercator Petroleum

Ltd., Mercator Oil & Gas Ltd. and other subsidiary companies.

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5 Mr. K. R. BharatIndependent and Non-Executive Director

Mr. K. R. Bharat, 50, is an MBA from the Indian Institute of

Management. He has been associated with the capital markets

for more than 27 years in various segments, such as Merchant

Banking, Equities and Investment Banking, Risk Management

and Research, among others.

He is on the Boards of Advent Advisory Services Pvt. Ltd., BSR

Advent Advisors Ltd., Maruti Koatsu Cylinders Ltd. and Vaitarna

Marine Infrastructure Pvt. Ltd. He has worked as the Managing

Director at Credit Suisse First Boston Securities (CSFB) India

and Peregrine Securities (India). He has also worked in Citi Bank

for more than a decade. Mr Bharat also had been a member of

the Market Advisory Committee of the Bombay Stock Exchange.

6 Mr. Kapil GargNon-Executive Director

Mr. Kapil Garg, 46, is a graduate in Chemical Engineering from

the Indian Institute of Technology, Roorkee. Mr. Garg has over

20 years of intensive management experience in both upstream

and downstream businesses with companies, such as ONGC,

Enron Oil and Gas India Ltd. (EOGIL), BG-Group, located in India

and in other nations of the world. He is also on the Board of

Mercator Petroleum Ltd., Mercator Oil & Gas Ltd., Oilmax Energy

Pvt. Ltd., Optimum Oil & Gas Pvt. Ltd. and Ivorene Oil Services

Nigeria Ltd.

7 Mr. M. M. AgrawalIndependent and Non-Executive Director

Mr. M. M. Agrawal, 62, is a Bachelor of Engineering from

Nagpur University. He has more than 35 years of experience in

the Banking and Finance industry, having worked with the State

Bank of Bikaner & Jaipur and Axis Bank Ltd (as Dy. Managing

Director). He is on the Board of many companies, such as Axis

Private Equity Ltd., Essar Power Ltd., Jaguar Overseas Ltd.,

Bombay Rayon Fashion Ltd., Bhoruka Cogen Power Private

Limited, Paragon Asset Reconstruction Private Ltd. BSCPL

Infrastructure Ltd.

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MERCATOR

KEY EXECUTIVES

1 2 3 4 5

1 Mr. Shalabh MittalManaging Director and CEO - Mercator Lines (Singapore) Ltd.

Mr. Shalabh Mittal, 33, completed Masters of Commerce from

the University of Mumbai. He holds a post-graduation diploma in

Business Administration from S.P. Jain Institute of Management

and Research. His primary role is to effectively manage and

supervise the day-to-day business operations of the Dry bulk

segment in accordance with the overall strategies and policies

as enumerated and approved by the Board. His principal duties

include improving, developing, extending, maintaining, advising

and promoting the business and to observe and comply with all

regulations.

2 Capt. Kowshik KuchrooPresident - Shipping

Capt. Kowshik, 48, is a Master Mariner with HND from UK. He is

also a qualified Ship Broker. He has around 30 years of experience

in Marine Industry (shore/ ashore) having worked with companies

like Maersk, Mundo Gas and involved with Chartering as well as

infrastructure projects in the Oil & Gas space. At Mercator he is

responsible for overall shipping business strategy; Chartering;

Compliances, Branding, Expansion and Industry interaction.

4 Mr. Prasad PatwardhanChief Financial Officer

Mr. Prasad Patwardhan, 46, is the Chief Financial Officer of

the Group. He holds a Bachelors degree in Commerce from

the University of Mumbai and is an Associate Member of The

Institute of Chartered Accountants of India. He has over 20

years of experience in Resource Mobilisation, Accounting and

Taxation. As the Chief Financial Officer, he is in charge of Group

Financial Reporting, Financial Strategy, Compliance, Taxation

and co-ordination of statutory and management reporting.

5 Mr. Atul MalhotraVice President - Coal & Logistics

Mr. Atul Malhotra, 40, a Commerce graduate started his career

with Mercator in 1995 setting up of the Coal Logistics Division.

A pioneer, he has been instrumental in commencing many

projects, such as coal handling at Dahanu Navlakhi and the

prestigious Tata Power Coal handling contract at Haji Bunder

among others. He has been heading Group’s Coal Marketing

division and has contributed immensely to the growth of the

division.

3 Mr. K. S. RahejaCountry Head - Indonesia

Mr. Raheja, 42, is B.Tech (Hons.) in Mining Engineering from

the Indian Institute of Technology, Kharagpur and has done his

Business Management, from XLRI Jamshedpur. He has around

20 years of experience in the field of Mining, Logistics, Shipping,

Trading and Strategy Formulation. His expertise lies in the areas

of Coal Mining, Coal Trading and Development of New Mining and

Port Related Projects. At Mercator, he is responsible for mining

existing coal blocks, developing new coal concession, trading

and logistics consolidation in Indonesia and development of coal

mining project in Mozambique. He is on the Board of group coal

companies.

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6 Mr. Ashutosh KumarExecutive Vice President - Oil & Gas

Mr. Ashutosh Kumar, 47, is B.E. (Electronics and Tele

communication). He started his career with ONGC as

Asst. Executive Engineer (E&I). He later joined Enron Oil &

Gas followed by British Gas where held various positions

such as Project Manager, General Manager-Operations

and then Project Director. At Mercator, he is responsible for

operational performance of assets and delivery of projects

within Oil & Gas division.

7 Capt. Arun NandaVice President - Tanker Operations

Capt. Nanda, 57, holds a Master’s Foreign Going Certificate

of Competency. With a career in shipping spanning across 35

years, Capt. Nanda held various roles at Shipping Corporation

of India where he served various responsibilities including

serving as Deputy General Manager- Tankers and Bulk Carriers

Division. He was also the Chief Executive Officer of Pratibha

Shipping Company Limited and General Manager Operations at

The Dredging Corporation of India prior to joining Mercator.

At Mercator, he is responsible for leading Mercator’s tanker

business that includes contracts, chartering, operations, and

business management.

9 Mr. Vijay AroraVice President - Technical

Mr. Arora, 45, Marine Engineer with 11 years of sailing experience

on oil tankers, holds a Bachelors in Marine Engineering from

DMET Kolkata. His major sailing carrier was with OMI Marine an

American company. Thereafter took shore job as superintendent

and subsequently for past 12 years been working ashore in

companies such as OMI Marine, Gulf Energy maritime UAE, W-O

Shipping/ OMCI Ship management in position such as Head of

Projects, Technical Manager, V.P Technical overseeing fleet of

oil, product, chemical tankers & dredgers. At Mercator he is

heading Technical department for Shipping and Dredging.

10 Mr. Vikram MadaneVice President - HR

Mr. Madane, 41, is a BSC and a post graduate in Management.

He has extensive Human Resources experience, with exposure

in managing change and transformation, building organisation

capability, global mobility and remuneration. At Mercator his

role is to formulate and manage Group HR policies, trainings

and development of employees.

8 Capt. M.S. WadhwaVice President - Fleet

Capt. Wadhwa, 48, is a Master Mariner has been with the

Mercator Group for the last 5 years. He completed his pre Sea

Training on board T.S. Rajendra (1982-83), and after his initial

stint with SCI as a cadet, served in various companies in different

ascending capacities and rose to become a Master.

Prior to joining Mercator, he was the India representative of

a Gulf based Ship owning company in Mumbai. Within the

Mercator Group, Capt. M.S. Wadhwa is associated with the Ship

Management, Coal Logistics, Operations and Special Projects.

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A SNAPSHOT OF OUR NUMBERS

Operating Income (` in Lakhs)

20

07

-08

20

07

-08

20

07

-08

20

07

-08

20

07

-08

20

07

-08

20

07

-08

20

07

-08

1,5

5,6

19

20

08

-09

20

08

-09

20

08

-09

20

08

-09

20

08

-09

20

08

-09

20

08

-09

20

08

-09

2,2

1,0

51

20

09

-10

20

09

-10

20

09

-10

20

09

-10

20

09

-10

20

09

-10

20

09

-10

20

09

-10

1,8

0,8

73

20

10

-11

20

10

-11

20

10

-11

20

10

-11

20

10

-11

20

10

-11

20

10

-11

20

10

-11

2,8

2,8

88

20

11

-12

20

11

-12

20

11

-12

20

11

-12

20

11

-12

20

11

-12

20

11

-12

20

11

-12

3,6

9,9

91

Total Income (` in Lakhs)

1,5

8,8

98

2,1

7,3

82

1,8

1,9

72

2,8

1,1

64

3,7

5,5

09

PROFIT BEFORE TAX (PBT) (` in Lakhs)

40

,93

5

47

,52

2

10

,92

5

9,9

39

5,2

37

NET PROFIT AFTER TAX (PAT) (` in Lakhs)

40

,03

3

46

,70

3

10

,42

1

9,4

00

2,0

56

Cash Profit (` in Lakhs)

56

,78

3

73

,57

4

44

,51

1

39

,25

2

41

,25

5

EBITDA (` in Lakhs)

72

,14

9

91

,02

4

65

,59

3

62

,12

9

63

,81

0

Fixed Assets (Gross Block) (` in Lakhs)

3,1

4,1

96

6,0

7,8

77

5,9

1,7

16

5,3

7,0

60

6,9

9,8

48

Debt Equity Ratio

1.0

1

1.5

7

1.4

5

1.6

7

1.4

4

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SEGMENTAL REVENUE BREAK-UP

FY 2011-12

4%

62%

29%

5%

Coal Oil & Gas Shipping Dredging Coal Oil & Gas Shipping Dredging

FY 2010-11

3%

49%

43%

5%

FLEET TONNAGE CAPACITY

20

10

-11

20

11

-12

21

,13

,69

1

21

,11

,14

8

Owned vessels (DWT in MT)

20

10

-11

20

11

-12

2,9

8,3

36

2,9

8,3

36

Chartered vessels (DWT in MT)

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AN INSIGHT INTO OPERATIONS DURING THE YEAR

Mercator crossed a turnover

` 3,500 cr.

Achieved a cumulative volume

of 14 million MT coal export

from Indonesia in a short span

of 3 years.

The MOPU facility in Nigeria

commenced well and achieved

an excellent plant utilisation

rate. The Charterer awarded

additional block operations.

Acquired two dredgers

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Awarded an EPC contract by

ONGC Ltd. for the conversion

of their Mobile Offshore

Drilling Unit (MODU) ‘Sagar

Samrat’ into Mobile Offshore

Production Unit (MOPU) in

consortium with Abu Dhabi

based shipyard.

The Company changed

its name (from Mercator

Lines Limited to Mercator

Limited) and identity with the

introduction of a new logo.

Concluded the acquisition of

coal mine in Indonesia.

Oil blocks exploration is

progressing as per schedule.

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AN OVERVIEW OF BUSINESS VERTICALS

COAL We are present across Coal mining, Coal procurement and

Coal logistics. We forayed into Coal logistics in 1998 and the

Coal mining and Coal procurement businesses in 2007. Our

coal mines are equipped with state-of-the-art infrastructure

facilities and are located very close to the port, providing us with

an edge over other miners. We also procure different qualities

and varieties of coal with planned asset-backed solutions from

miners to customers. We provide logistical solutions from load

port to the point of usage to a strong base of customers in India

and China.

Coal mines

Integrated value chain from mining to delivery

Coal Mining

& Procuring

Load Port

LogisticsMother

Vessel

Dry Bulk

Shipping

Discharge

Port LogisticsCustomer

PlantStock

Yard

1Coal mine in Mozambique, Africa

3Coal mines in Indonesia with an

estimated resources of 75 million MT

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OIL & GAS

The Oil & Gas value chain

Oil &

Gas Blocks ExplorationProduction /

ProcessingStorage Transportation

Mercator operates in the upstream segment of Oil & Gas

Exploration & Production (E&P). We commenced our journey

in 2004 with the chartering-out of an FSO to BG Group. This

was followed by two Oil & Gas blocks awarded to us in Cambay

Basin, Gujarat by the Indian government under the Seventh

New Exploration Licensing Policy (NELP-VII). We are currently

conducting exploration activities at these oil blocks.

We have been awarded a long-term contract to charter out a

Floating Production Unit (FPU) at an oil field in Nigeria. The FPU

is a combination of a Mobile Offshore Production Unit (MOPU)

and has been entirely Engineered, Procured, Constructed,

Installed and Commissioned by us.

We have been awarded an EPC contract by ONGC Ltd. for the

conversion of their Mobile Offshore Drilling Unit (MODU) ‘Sagar

Samrat’ into an MOPU in consortium with an Abu Dhabi based

shipyard. Mercator is currently executing this project.

Oil & Gas presence

2Oil & Gas Blocks at Cambay Basin, Gujarat

1FPU (1 MOPU + 1 FSO) in Nigeria

1EPC contract from ONGC

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SHIPPING

TANKERSWe forayed into wet bulk transportation in 1998 and commenced

crude oil transportation in 2003. Our tankers transport crude

oil and petroleum products between domestic and international

ports on spot contract basis (single-voyage) and period contract

basis (charter contracts).

Tanker fleet size

8 ships

Total capacity

7,60,189 DWT

Average age

13 years

Tanker fleet

Very Large Crude Carriers (VLCC)

Aframaxes

Product Tankers

Chemical Tanker

DRY BULK CARRIERSWe commenced coal and iron ore transportation in 2005. We

are majorly focused on the triangular route of Indonesia-India-

China. We transport coal from Indonesia into India and we

transport iron ore into China from India to cater to large thermal

plants and steel conglomerates based in India and China.

Dry bulk fleet size

18 ships

Total capacity

16,18,850 DWT

Average age

9 years

Dry bulk fleet

Very Large Ore Carrier (VLOC)

Panamaxes

Kamsarmaxes

Post Panamaxes

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DREDGINGWe entered into the dredging business in 2007. We undertake

both capital dredging and maintenance dredging projects on

both long-term and short-term basis in India and abroad.

Dredger fleet size

6

Total capacity

33,595 DWT

Average age

5 years

Dredger fleet

Trailer Suction Hopper Dredgers (TSHDs)

Cutter Suction Dredger (CSD)

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OUR FLEET

TANKERS

Sr. No. Name of the vessel Vessel type DWT/ capacity Ownership

1. M.T. Kamakshi Prem VLCC 299,235 Owned

2. M.T. Prem Pride Aframax 109,610 Owned

3. M.T. Prem Divya Aframax 109,227 Owned

4. M.T. Omvati Prem Aframax 90,607 Owned

5. M.T. Prem Mala MR Tanker 47,044 Owned

6. M.T. Harsha Prem MR Tanker 42,235 Owned

7. M.T. Vedika Prem MR Tanker 42,235 Owned

8. Royal Natura Chemical Tanker 19,996 Chartered In

DREDGERS


1. Bhagvati Prem TSHD 8,556 Owned

2. Darshani Prem TSHD 8,538 Owned

3. Tridevi Prem TSHD 7,059 Owned

4. Omkara Prem TSHD 6,292 Owned

5. Uma Prem TSHD 3,150 Owned

6. Yukti Prem CSD Not applicable Owned

OIL & GAS (Offshore Services)

Sr. No. Name of the vessel Vessel type Capacity

1. Virini Prem FSO 1.2 mn barrels storage

2. Veer Prem MOPU 50,000 BOPD Processing

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DRY BULK CARRIERS


1. M.V. Sri Prem Putli VLOC 2,79,022 Owned

2. M.V. Prem Poorva Panamax 69,286 Owned

3. M.V. Gaurav Prem Panamax 73,901 Owned

4. M.V. Sri Prem Aparna Panamax 73,461 Owned

5. M.V. Garv Prem Panamax 74,444 Owned

6. M.V. Garima Prem Panamax 74,456 Owned

7. M.V. Kesari Prem Panamax 69,186 Owned

8. M.V. Kanak Prem Panamax 69,221 Owned

9. M.V. Kalpana Prem Panamax 73,652 Owned

10. M.V. Gauri Prem Panamax 74,483 Owned

11. M.V. Aarti Prem Panamax 69,087 Owned

12. M.V. Sri Prem Varsha Kamsarmax 82,379 Owned

13. M.V. Sri Prem Vidya Kamsarmax 82,273 Owned

14. M.V. Sri Prem Veena Kamsarmax 82,459 Owned

15. M.V. Chitra Prem Post Panamax 93,200 Owned

16. M.V. Maria Laura Prem Post Panamax 91,800 Chartered In

17. M.V. Chaitali Prem Post Panamax 93,270 Chartered In

18. M.V. Chanchal Prem Post Panamax 93,270 Chartered In

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MERCATOR

Directors’ ReportTo

The Members,

Mercator Limited

We take pleasure in presenting Twenty-Eighth Annual Report of your

Company for the year ended on March 31, 2012.

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FINANCIAL HIGHLIGHTS: (` in cr)

Particulars

Consolidated Standalone

Year ended Year ended

March 31, 2012 March 31, 2011 March 31, 2012 March 31, 2011

Income from operations 3699.91 2828.88 547.98 638.99

Total Income 3755.10 2811.64 595.87 639.15

Operating Profit 582.91 621.29 84.11 108.58

Interest 203.32 215.23 128.18 85.99

Depreciation 382.41 306.67 119.00 116.63

Profit before Tax & Minority Interest

Minority Interest

Taxes

-Current Year

-Deferred Tax

-Short provision of tax for earlier years

52.37

(9.58)

(24.95)

2.72

--

99.39

(39.01)

(15.74)

2.21

47.15

(115.17)

N.A.

(3.50)

--

--

(94.04)

N.A.

(4.00)

--

0.07

Net Profit/(Loss) After Tax 20.56 94.00 (118.67) (98.04)

Balance brought forward from last year 698.06 604.06 19.52 117.49

Balance carried to Balance Sheet 718.62 698.06 (99.15) 19.52

During the year under review, the income from operations

on a consolidated basis was ` 3700 cr as against ` 2829

cr in the previous year; registering a growth of 31%.

Significant ramp up in Coal operations increased Coal

revenues by 67% from ` 1388 cr last year to ` 2317 cr.

The consolidated operating profit for the year was ` 583

cr against ` 621 cr in the previous year. After providing

for the minority interest of ` 10 cr (previous year ` 39 cr);

the net profit after tax was ` 21 cr (` 94 in the previous

year).

On a standalone basis, the income from operations

for the year under review was ` 548 cr (` 639 cr in the

previous year). The Company suffered a loss of ` 119 cr

(` 98 cr in the previous year). A subdued shipping market

coupled with over supply of vessels adversely affected

the Charter rates and hence the overall performance.

CHANGE IN NAME OF THE COMPANY:

During the year, the name of your Company was changed

to Mercator Limited. The logo of your Company has

also been changed to reflect its diversified business

operations.

OPERATIONS:

During the year under review, Mercator successfully

completed the conversion of a Mobile Offshore Drilling

Unit (MODU) into Mobile Offshore Production Unit

(MOPU) as also conversion of a tanker into a Floating

Storage Offshore Unit (FSO); collectively called Floating

Production Unit (FPU) at a cost of USD 200 mn. The FPU

has been deployed on a nine year contract in Nigeria. The

FPU has since been operating successfully. The project

was funded by way of a mix of internal resources and

debt.

Mercator in consortium with an overseas shipyard,

has been awarded an EPC contract by M/s. Oil And

Natural Gas Corporation Limited (Navratna PSU) for

the conversion of a Mobile Offshore Drilling Unit into a

Processing Unit. This bodes well for the operations in

this segment with more such projects coming up in India

and elsewhere.

During the year Mercator concluded acquisition of 50%

stake in a mining concession located in Indonesia. The

mine has substantial coal reserves. The mine is expected

to commence operations this year and further boost

revenues.

One Trailer Suction Hopper Dredger (TSHD) and one

Cutter Section Dredger (CSD) were acquired by your

company during the year. The dredgers have been

gainfully deployed immediately upon their acquisition.

The dredgers have been funded by a mix of internal

resources and debt.

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In December, 2011, Prem Divya, an Aframax Tanker

suffered an accident near Fujairah Port. The vessel is

fully insured including for all third party liabilities. The

company is confident of early settlement of claims by the

insurance company. After restoration and repairs, the

tanker is expected to resume operations.

DIVIDEND:

In view of the losses suffered by your Company, your

Directors regret their inability to recommend any

dividend.

DIRECTORS:

In accordance with the provisions of the Companies Act,

1956 (the Act), and the Articles of Association of the

Company, Mr. Kapil Garg and Mr. M. G. Ramkrishna are

the Directors liable to retire by rotation at the ensuing

Annual General Meeting. Mr. Kapil Garg, being eligible,

has offered himself for re-appointment. Mr. M. G.

Ramkrishna aged 68 years retires as per the age policy

of the Company for the Directors. The Directors place on

record their sincere appreciation for the guidance and

valuable contributions by Mr. M. G. Ramkrishna during

his tenure.

A brief resume of Mr. Kapil Garg is included in the notice

of the ensuing Annual General Meeting scheduled to

be held on August 29, 2012. The Directors recommend

reappointment of Mr. Kapil Garg for the approval of

members.

SUBSIDIARY COMPANIES AND CONSOLIDATED FINANCIAL STATEMENTS:

During the year five subsidiaries were formed/ acquired.

As at March 31, 2012, your Company had 32 subsidiaries/

step-down subsidiaries. Audited consolidated financial

statements for the year ended on March 31, 2012;

together with Auditors’ Report thereon forming part of

this Annual Report includes financial information of all

the subsidiaries.

Pursuant to general exemption granted by the Ministry

of Corporate Affairs, Government of India, this Annual

Report is presented without attaching annual accounts

of the subsidiaries. A statement in respect of the said

subsidiaries pursuant to Section 212 of the Act, is

enclosed herewith as required. The annual reports

and accounts of subsidiaries will be made available for

inspection during working hours at the registered office

of the Company and also of the subsidiary companies

concerned. The same, along with related detailed

information will also be made available to the investors of

the Company as well as of subsidiaries, on request. The

brief financial details of the subsidiaries as prescribed

under the said notification have been disclosed in the

consolidated financial statements of the Company.

AUDITORS:

The Auditors of your Company, M/s. Contractor, Nayak

& Kishnadwala, Chartered Accountants, retires at the

ensuing Annual General Meeting and have confirmed

their eligibility for re-appointment under Section 224 (1-

B) of the Act.

The Directors recommend their re-appointment for

approval of the members.

PARTICULARS OF EMPLOYEES:

As required under the provisions of Section 217(2A) of the

Act, read with the Companies (Particulars of Employees)

Rules 1975 as amended, the requisite particulars with

respect to the employees of the Company, who were in

receipt of remuneration in excess of the limits specified

under the said section are set out in the annexure forming

part of this report. However, as per the provisions of

Section 219(b) (iv) of the Act, the report and the accounts

are being sent to all members of the Company excluding

this annexure of particulars of employees. Any member

interested in obtaining such particulars may write to the

Company at the registered office.

No ESOPs were issued during the year.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, EXPORT MARKET DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The Conservation of Energy and Technology Absorption

under the Companies (Disclosure of Particulars in the

Report of the Board of Directors) Rules, 1988, are not

applicable to your Company. However, the Directors

would like to assure you that every measure is taken to

save and conserve energy at all the stages of operating

the vessels, as well as, on shore activities. In its endeavor

to develop the export market, your Company has formed/

acquired subsidiaries abroad.

Your Company has not imported any technology during

the year. It has earned foreign exchange of ` 87.98 cr (as

against previous year’s earnings of ̀ 132.85 cr) and spent

` 223.69 cr (as against ` 312.16 cr for the previous year)

in foreign exchange, on account of acquisition of vessels,

charter hire, other vessel expenses, and interests etc.

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CORPORATE GOVERNANCE & SOCIAL RESPONSIBILITIES:

The Ministry of Corporate Affairs (MCA), India, has issued

voluntary guidelines on Corporate Governance and

Corporate Social Responsibilities. Mercator has already

been following many of the recommendations of the MCA

on Corporate Governance which is in consonance with

the Clause 49 of Listing Agreement of Stock Exchanges.

A separate report on Corporate Governance, along

with certificate from the Auditors of the Company;

including report on Corporate Social Responsibility is

annexed herewith forming a part of this Annual Report.

Management Discussion and Analysis Report is also

annexed herewith as part of this Report.

INSURANCE:

All properties of the Company are adequately insured.

FIXED DEPOSITS:

The Company has not accepted any public deposits falling

under the purview of section 58-A of the Companies Act,

1956.

DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the provisions of Section 217(2AA) of the

Companies Act, 1956, the Directors hereby confirm that:

(i) In preparation of the annual accounts, all applicable

accounting standards have been followed along with

proper explanation relating to material departures;

(ii) They have selected such accounting policies in

consultation with Statutory Auditors 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

loss for the year under review;

(iii) They have taken proper and sufficient care for the

maintenance of adequate accounting records in

accordance with the provision of the Companies Act,

1956, to safeguard the assets of the Company and to

prevent and detect fraud and other irregularities;

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

concern basis.

ACKNOWLEDGEMENTS:

The Directors express their sincere thanks to all

customers, suppliers, service providers, regulators,

Governmental agencies and other statutory authorities

for their continued whole hearted support to the

Company during the year.

We also acknowledge the support lent and confidence

bestowed upon us by our bankers, stakeholders and all

Mercatorians.

For on behalf of the Board

For Mercator Limited

H. K. MittalExecutive Chairman

Regd. Office:

3rd Floor, Mittal Tower,

B-wing, Nariman Point,

Mumbai - 400 021.

Dated: May 25, 2012DI

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MERCATOR

Report on Corporate Governance(Forming part of Directors’ report for the year ended on March 31, 2012)

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COMPANY’S PHILOSOPHY

The Company strongly believes in ethical way of conducting business. The Company upholds its relationship with the

society and hence its social responsibility for environmental safety and human welfare.

Corporate governance to the company is not just a compliance issue but central guiding principle for everything it

does. It’s a way of thinking, way of conducting business and a way to steer the organisation to take on challenges for

now and for the future.

I. BOARD OF DIRECTORS:

As at the year end March 31, 2012, the Board of Directors of the Company comprised of seven Directors; Two

Executive Directors and five Non-Executive Directors out of which four are Independent Directors. Among the

two Executive Directors; one is the Executive Chairman and the other is Managing Director. The Company is

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

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

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

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

committees across all Companies in which he is Director; and necessary disclosures to this effect has been

received by the Company from all the Directors.

During the year, in all Five Board meetings were held i.e. on May 28, 2011; August 12, 2011, November 14, 2011;

December 15, 2011 and February 13, 2012. The time interval between any two meetings was not more than 4

months.

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

General Meeting and number of other Directorships and Chairmanships / membership of Committees is given

below:

Sr.No

Name of Director Category No. of Board

MeetingsAttended

Attendance at last AGM

No. of other Directorships

in Indian Public

Companies*

No. of committee

membership in other

Companies **

No. of committee

Chairmanship in other

Companies **

1 Mr. H. K. Mittal Executive Chairman

& Promoter

5 Yes 2 Nil Nil

2 Mr. Atul J. Agarwal Managing Director,

Executive-Promoter

5 Yes 3 1 Nil

3 Mr. Manohar Bidaye Non-Executive

Independent

3 Yes 2 1 1

4 Mr. M. G.

Ramkrishna

Non-Executive

Independent

4 Yes 2 1 1

5 Mr. K. R. Bharat Non-Executive

Independent

4 Yes 2 Nil Nil

6 Mr. Kapil Garg Non-Executive Non

Independent

4 Yes 2 Nil Nil

7 Mr. Anil Khanna

(upto 22/09/2011)

Non-Executive

Independent

Nil Yes 1 1 Nil

8 Mr. M. M. Agrawal Non-Executive

Independent

2 Yes 7 6 1

*Other directorships does not include Private Companies, Companies registered u/s 25 of the Companies Act,

1956, Alternate directorships and foreign Companies.

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

Committees and Shareholders’/ Investors’ Grievance Committees of all Public Limited Companies have been

considered.

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Mr. Anil Khanna retired by rotation at the previous Annual General Meeting of the Company held on September

22, 2011 and did not seek re-appointment. Other than him; none of the Independent Directors had resigned

or removed from the Board of the Company during the year and hence compliance in respect of replacement

thereof did not arise.

Mr. M. G. Ramkrishna a Director of the Company liable to retire by rotation; retires at the ensuing 28th Annual

General Meeting pursuant to age policy of the Company for Directors. Accordingly, he ceases to be member of the

Board and all the Board Committees in which he is a member, from the conclusion of Annual General Meeting

scheduled on August 29, 2012. The casual vacancy caused by resignation is not proposed to be filled up and

accordingly the Board and all these Committees will be deemed to be reconstituted.

All the information required to be furnished to the Board as mentioned in Annexure IA to Clause 49 was placed

before the Board.

The Board reviews compliance report presented by Managing Director at the meeting.

Code of Conduct:

The Board has laid down a Code of Conduct for all Board members and Senior Management personnel of the

Company, which has been posted on the website of the Company www.mercator.in

All Board members and Senior Management personnel have affirmed compliance with the code for the year

ended on March 31, 2012. Declaration to this effect signed by the Chief Executive Officer for the year ended on

March 31, 2012 has been included elsewhere in this annual report.

II. AUDIT COMMITTEE:

Composition:

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

the Company has a qualified and independent Audit Committee. As at March 31, 2012, the Committee comprised

of three Independent Non-Executive Directors and one Executive Promoter Director. Mr. Manohar Bidaye, Senior

member of Institute of Company Secretaries of India is the Chairman of the Committee; other members being

Mr. K. R. Bharat, MBA from Indian Institute of Management; Mr. M. G. Ramkrishna, a veteran from the banking &

finance industry; and Mr. Atul J. Agarwal, Fellow member of Institute of Chartered Accountants of India, a Head

of finance division and Managing Director of the Company having a sound accounting and financial background.

Chief Financial Officer as well as General Manager (Finance & Accounts) along with the Internal Auditors and

Statutory Auditors are always invitees to the Audit Committee Meeting. All other Functional Heads/Managers are

invited to attend the meeting, as and when necessary. Mr. Manohar Bidaye, Chairman of the Audit Committee was

present at the last Annual General Meeting to answer the shareholder queries. The Committee is vested, inter

alia, with following powers and terms of references as prescribed under relevant provisions of the Companies

Act, 1956 and Stock Exchanges Listing Agreement.

Powers:

a) To investigate any activity within its terms of reference.

b) To seek information from any employee.

c) To obtain outside legal or other professional advice.

d) To secure attendance of outsiders with relevant expertise, if it considers necessary.

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Terms of Reference:

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

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

1. Overview of the company’s financial reporting process and the disclosure of its financial information to

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

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

of the statutory auditor and the fixation of audit fees.

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

4. Reviewing, with the management, the annual/quarterly financial statements before submission to the board

for approval, with particular reference to:

(a) Matters required to be included in the Director’s Responsibility Statement to be included in the Board’s

Report in terms of clause (2AA) of Section 217 of the Companies Act, 1956.

(b) Changes, if any, in accounting policies and practices and reasons for the same.

(c) Major accounting entries involving estimates based on the exercise of judgment by the management.

(d) Significant adjustments made in the financial statements arising out of the audit findings.

(e) Compliance with listing and other legal requirements relating to financial statements.

(f) Disclosure of any related party transactions.

(g) Qualifications in the draft audit report.

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

approval.

5A. Reviewing, with the management, the statement of uses / application of funds raised through an issue

(public issue, rights issue, preferential issue, etc.), the statement of funds utilised for purposes other than

those stated in the offer document/prospectus/notice and the report submitted by the monitoring agency

monitoring the utilisation of proceeds of a public or rights issue, and making appropriate recommendations

to the Board to take up steps in this matter.

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

internal control systems.

7. Reviewing the adequacy of internal audit function, if any, including the structure of the internal audit

department, staffing and seniority of the official heading the department, reporting structure coverage and

frequency of internal audit.

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

9. Reviewing the findings of any internal investigations by the internal auditors into matters where there is

suspected fraud or irregularity or a failure of internal control systems of a material nature and reporting the

matter to the board.

10. Discussion with statutory auditors before the audit commences, about the nature and scope of audit, as well

as, post-audit discussion to ascertain any area of concern.

11. To look into the reasons for substantial defaults in the payment to the depositors, debenture holders,

shareholders (in case of non payment of declared dividends) and creditors.

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

12A. Approval of appointment of CFO( i.e. the whole-time finance director or any other person heading the finance

function and discharging the function) after assessing the qualifications, experience & background etc. of

the candidate.

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

The minutes of the Audit Committee meeting are circulated to the Board, discussed and taken note of.

Meetings:

During the year, in all four meetings of the Committee were held i.e. on May 26, 2011; August 12, 2011; November

14, 2011 and February 11, 2012. The time intervals between two meetings of the Committee were not more than

four months.

Attendance of each member at the audit Committee Meetings:

Name of Director No. of Meetings attended out of four held

Mr. Manohar Bidaye 3

Mr. Atul Agarwal 4

Mr. M. G. Ramkrishna 3

Mr. K. R. Bharat 2

Mr. Anil Khanna* 1

*Ceased to be Chairman/Member of Audit Committee w.e.f May 28, 2011.

Chief Financial Officer; Statutory Auditors and Internal Auditors attended all the four meetings. Other functional

heads attended the meetings as and when called for. The Company Secretary acted as the Secretary to the

Committee.

Review of Information:

The Audit committee was presented with and reviewed necessary information as required under Clause 49 of the

Listing Agreement.

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

Auditors during the financial year 2011-12.

Remuneration-Cum-Selection Committee:

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

Manohar Bidaye is the Chairman of the Committee with Mr. K.R. Bharat and Mr. M. G. Ramkrishna being other

members as at March 31, 2012. The committee, on behalf of the Board and the shareholders, determines, with

agreed terms of reference, the Company’s policy on specific remuneration packages for Executive Directors and

Senior Management personnel including pension rights and any compensation payment. This Committee also

acts as a Remuneration Committee under Schedule XIII and as Selection Committee under Section 314; of the

Companies Act, 1956.

Two meetings of Remuneration Committee were held during the year that were attended by all the Directors.

Expansion Committee:

The Company has Expansion Committee comprising of two Executive Directors viz. Mr. H. K. Mittal and Mr. Atul

Agarwal and one Non-executive Independent Directors viz. Mr. K.R. Bharat.

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The Committee is authorised to assess the business opportunities and take the decisions from time to time on

expansion/modernisation/diversification projects; means of finance and other related matters, within the limits

sanctioned by the Board. During the year five meetings were held, that were attended by all the Directors.

ESOP Compensation Committee:

The Company has ESOP Compensation Committee of Directors comprising of two Executive Directors viz. Mr. H.

K. Mittal & Mr. A. J. Agarwal and two Non-executive Independent Directors viz. Mr. Manohar Bidaye and Mr. M.

G. Ramkrishna, to implement the Employee Stock Option Scheme 2010 that was approved by the members of the

Company at their EOGM held on October 28, 2010 .

The Committee is authorized to formulate entire Employee Stock Option scheme; to carry out process of determining

eligibility criteria; to issue and allot the shares and to do all acts, deeds, things, matters as may be required in this

regard, in accordance with the provisions of SEBI (Employee Stock Option Scheme and Employee Stock Purchase

Scheme) Guidelines, 1999. However no ESOPS were issued and no meeting was held during the year.

III. SUBSIDIARY COMPANIES:

As at March 31, 2012 the Company had total 32 subsidiaries. The Indian Subsidiaries viz. Mercator Oil & Gas Ltd.,

Mercator Petroleum Limited, Oorja Resources India Private Limited and Mercator FPSO Private Limited were

neither listed nor material as at March 31, 2012.

The Audit Committee reviews the financial statements of all the subsidiary companies.

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

Companies) are placed before the Board periodically.

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

subsidiary companies.

IV. DISCLOSURES:

(A) Basis of related party transactions:

i. A statement in summary form of transactions with related parties in the ordinary course of business is

placed periodically before the audit committee.

ii. Details of material individual transaction with related parties, are placed before the audit committee,

whenever applicable.

iii. During the year, there was no material individual transaction with related parties or others, that was not on

an arm’s length basis.

(B) Disclosure of Accounting Treatment:

In the preparation of financial statements for the year ended on March 31, 2012; there was no treatment

different from that prescribed in an Accounting Standard and applicable Laws and Regulations that had been

followed.

(C) Board Disclosures-Risk Management:

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

minimisation procedures. These procedures are periodically reviewed to ensure that executive management

controls risk through means of properly defined framework.

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

During the year, the Company did not raise any funds through public/rights/preferential issues.

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(E) Remuneration of Directors:

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

Details of remuneration paid to Directors for the financial year ended March 31, 2012:

Executive Directors:

` in lakhs

Name Salary Perquisites Total

Mr. H. K. Mittal

Executive Chairman

37.53 10.47 48.00

Mr. A. J. Agarwal

Managing Director

38.94 9.06 48.00

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

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

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

the year. However, aggregate remuneration shall not exceed 5% of net profit calculated as per the provisions

of the Companies Act, 1956; per Executive Director with payment of minimum remuneration to them in

case of loss or inadequacy of profit in any financial year during their tenure, subject however, to the ceiling

prescribed under the Companies Act, 1956; and approval of the Central Government, if required.

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

Appointment of the both the above Executive Directors are valid up to July 31, 2013 as approved by the

Members of the Company at their Annual General Meeting held on September 22, 2011. The appointments

can be terminated by either party by giving six moths’ notice in writing. There is no severance fees payable.

However, subject to provisions of Sec.318 and other applicable provisions of the Companies Act, 1956, both are

entitled by way of compensation for the loss of office in case of premature termination of the office, the amount

equivalent to the remuneration, which they would have earned if each of them would have been in office for the

unexpired residue of their respective term, or for three years, whichever is shorter, calculated as provided in their

respective agreements with the Company.

Promoter Directors and-or persons acting in concern (PAC) with them were holding 1,53,00,000 warrants of

Face value of ` 1 each as per the details given below as on March 31, 2012:

Name of the Promoter Director/PAC No of warrants held

AHM Investments Private Limited 14,250,000

Adip Mittal 10,000

Shalabh Mittal 10,000

Atul Agarwal 1,000,000

Manjuli Agarwal 10,000

Aayush Agarwal 10,000

Aarooshi Agarwal 10,000

All the above warrants held by promoters and person acting in concern with them have lapsed on expiry of

validity i.e on May 8, 2012 and May 12, 2012 respectively due to non-exercise of options by any of them. Entire

amount of application money paid on warrants has been forfeited as per the SEBI Regulations

Non-executive Directors:

The Board decides the payment of commission within the limits approved by members of the Company in

their Annual General Meeting not exceeding 1% of its net profit to Non-executive directors. However, in view

of inadequate profits for the year ended on March 31 2012; no commission was paid to the Non-executive

Directors.

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Remuneration by way of sitting fees for attending Board meetings and Audit Committee meetings are paid

to Non-executive Directors @ ` 20,000/- per such meeting attended by them. Details of sitting fees paid to

Non-executive Directors are as follows:

Name of the Director ` In lakhs

Mr. Manohar Bidaye 1.20

Mr. M.G. Ramkrishna 1.40

Mr. K.R. Bharat 1.20

Mr. Kapil Garg 0.80

Mr. Anil Khanna* 0.20

Mr. M. M .Agrawal 0.40

*Ceased to be Director w.e.f September 22, 2011

All the Non-executive Directors have disclosed their shareholdings as at March 31, 2012 to the Company.

Details of the same and of the warrants convertible into equivalent number of equity shares held by them as

on that date were as under:

Name of the Director No of equity shares held

No of warrants held

Mr. Manohar Bidaye

(Through Company in which Mr. Manohar Bidaye and his wife are

Directors and hold 100% shares)

97,500 5,00,000

Mr. M. G. Ramkrishna 15,000 10,000

Mr. K. R. Bharat

(Through Company in which Mr. K. R. Bharat and his wife are

Directors and hold 50% of shares.

Nil 25,00,000

Mr. Kapil Garg Nil 5,00,000

All the above warrants held by Non-executive Directors have lapsed on expiry of validity i.e. on May 8, 2012

and May 12, 2012 respectively due to non-exercise of options by any of them. Entire amount of application

money paid on warrants has been forfeited as per the SEBI Regulations

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

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

(F) Management:

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

Based on the disclosures received from the Senior Management personnel, during the year, there was no

material financial and commercial transaction by any of the Senior Management Personnel that may have a

potential conflict with the interest of the Company at large.

(G) Shareholders:

(i) General Body Meetings:

Details of General Meetings held during last three years are given below:

Financial Year

Date Time Venue Special Resolution(s)

2011-12

(AGM)

22/9/2011 4.00P.M. C. K. Nayudu Hall,

The Cricket Club of India

Limited, Brabourne Stadium,

Churchgate, Mumbai-400020

1. Issue of securities

2. Change in Name of the Company to

Mercator Limited

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Financial Year

Date Time Venue Special Resolution(s)

2010-11

(EGM)

28/10/2010 4.30P.M. C. K. Nayudu Hall,



Churchgate,

Mumbai-400020

1. Issue of Warrants convertible into

equity shares on Preferential Basis

to Promoters/Directors/their entities

2. Issue of Employee Stock Options

3. Appointment of Mr. Adip Mittal,

relative of Director as Business

Associate.

2010-11

(AGM)

07/09/2010 3.30P.M. C. K. Nayudu Hall,




1. Payment of Minimum Remuneration

to & Re-Appointment of Executive

Chairman and Managing Director

2009-10

(AGM)

24/09/2009 4.00P.M. C. K. Nayudu Hall,




1. Issue of securities

2. Issue of Redeemable cumulative

preference shares for an aggregate

amount of not exceeding ` 200 crores

Neither special resolution through postal ballot was passed last year; nor proposed at the ensuing

Annual General Meeting.

(ii) Disclosures:

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

Directors or the Management or their subsidiaries or relatives etc. that had potential conflict with the

interest of the Company. However, the transactions entered into with the related parties are reported

as per Accounting Standard 18 at Note No. 4.5 of Notes forming part of the Accounts for the year under

review.

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

Company by any Stock Exchange or SEBI or any statutory authority on any matter related to capital

market during the past three years.

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

access to the Audit Committee on any matter.

(iii) Means of Communication:

Quarterly/yearly results are normally published into Financial Express and Mumbai Lakshadweep.

The audited annual accounts are posted to every member of the Company. Quarterly shareholding

distribution and quarterly/yearly results submitted to the Stock Exchanges are posted on the website

of the Company www. mercator.in. The Company also displays official news releases on its website i.e.

www.mercator.in. The Company has created an email id [email protected] to facilitate redressal of

investors’/ shareholders’ grievances.

The presentations if any, made to institutional investors/analysts through personal meetings are also

displayed on website of the Company and submitted to the Stock Exchanges simultaneously.

(iv) Annual General Meeting:

Twenty Eighth Annual General Meeting is scheduled to be held on Wednesday, August 29, 2012 at M.C.

Ghia Hall, 4th Floor, Bhogilal Hargovindas Building, 18/20, K. Dubhash Marg, Kala Goda, Mumbai-400001

at 2.30 pm

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(v) Re-Appointment of Directors:

Brief resume of Mr. Kapil Garg whose re-appointment is to be considered at the ensuing annual general

meeting along with his expertise in specific functional areas and names of the companies in which

he holds directorships and chairmanships/membership of Committees of the Board is provided in the

notice of the ensuing Annual General Meeting scheduled to be held on August 29, 2012.

(vi) Financial Calender For The Year 2012-13:

First Quarter Results (June, 30) Mid of August 2012

Mailing of Annual Reports By end of July 2012

Annual General Meeting August 29, 2012

Second Quarter Results (September, 30) Mid of November, 2012

Third Quarter Results (December, 31) Mid of February, 2013

Fourth Quarter/ Annual Results May 2013.

(vii) Dates of Book-Closure:

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

August 22, 2012 to Wednesday, August 29, 2012 (both days inclusive).

(viii) Dividend:

In view of the loss suffered during the year, the Board of Directors has not recommended any dividend

on Equity Shares of the Company.

(ix) Listing of Shares, Non-Convertible Debentures:

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

Stock Exchange (Scrip Code MERCATOR) and the annual listing fees in respect of the year 2012-2013

have been paid to these exchanges.

The monthly high-low quotations of the equity shares of the Company on Bombay Stock Exchange (BSE)

and National Stock Exchange (NSE) during the financial year 2011-12 vis-à-vis Sensex performance of

Bombay Stock Exchange is given below:

BSE:

MonthShare Price (`) Sensex Performance

High Low High Low

April 2011 46.00 38.50 19811.14 18976.19

May 2011 41.40 35.40 19253.87 17786.17

June 2011 42.45 35.00 18873.39 17314.38

July 2011 42.30 35.70 19131.70 18131.86

August 2011 36.70 21.15 18440.07 15765.53

September 2011 27.75 23.40 17211.80 15801.01

October 2011 27.45 21.80 17908.13 15745.43

November 2011 27.10 20.45 17702.26 15478.69

December 2011 23.50 15.80 17003.71 15135.86

January 2012 25.50 16.10 17258.97 15358.02

February 2012 33.80 23.55 18523.78 17061.55

March 2012 31.35 23.40 18040.69 16920.61

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NSE:

MonthShare Price (`)

High Low

April 2011 46.10 38.50

May 2011 41.40 35.00

June 2011 42.50 34.80

July 2011 41.50 35.50

August 2011 36.70 21.05

September 2011 27.90 23.35

October 2011 27.50 21.60

November 2011 27.10 20.30

December 2011 22.95 15.60

January 2012 25.50 16.05

February 2012 33.75 23.85

March 2012 31.40 23.15

As at March 31, 2012; the Company had following series of listed Redeemable Non-Convertible

Debentures issued on private placement basis in dematerialised form:

Series No

No. of NCDs

Coupon rate

O/s. Face valueAs on 31/03/2012

Outstanding Amount

ISIN

VII-A 900 10.50% ` 1,25,000/- each ` 11.25 crores INE934B07066

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

X- A 400 9.50% ` 10,00,000/- each ` 40.00 crores INE934B07215

X- A1 100 9.50% ` 10,00,000/- each ` 10.00 crores INE934B07249

X- B 400 9.50% ` 10,00,000/- each ` 40.00 crores INE934B07223

X- B1 100 9.50% ` 10,00,000/- each ` 10.00 crores INE934B07256

X- C 1200 9.50% ` 10,00,000/- each ` 120.00 crores INE934B07231

X- C1 300 9.50% ` 10,00,000/- each ` 30.00 crores INE934B07264

XI 1000 9.50% ` 10,00,000/- each ` 100.00 crores INE934B07272

OUTSTANDING GDRs/ADRs OR WARRANTS OR ANY CONVERTIBLE INSTRUMENTS, CONVERSION

DATE AND LIKELY IMPACT ON EQUITY

2,77,80,000 warrants carrying an option/entitlement for equivalent number of equity shares `1/- each

in the Company were issued in November, 2010 on preferential/private placement basis to Promoters/

Directors/Entities in which directors were interested in accordance with SEBI Regulations for preferential

issue, as approved by shareholders in their meeting held on October 28,2010. The number of warrants

outstanding as at March 31, 2012 were 1,88,80,000. Subsequent to year end; the same lapsed on maturity

as warrant holders did not exercise the option. Consequently, the entire amount of application money

paid thereon was forfeited.

The Company had no outstanding GDR/ADR or other convertible instrument as on March 31, 2012.

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(x) Share Transfer:

Shareholders’/ Investors’ Grievances Committee:

The Company has Shareholders’/Investors’ Grievances Committee comprising of one Executive Director

and two Non-executive Directors to look after share transfer and other related matters, including

the shareholders’ grievances. Mr. Manohar Bidaye, is the Chairman of the Committee with the other

members being, Mr. Atul Agarwal and Mr. K. R. Bharat. The Committee normally meets fortnightly

and looks into the shareholder & investor grievances that are not settled at the level of the Company

Secretary/Compliance Officer and helps to expedite share transfers & related matters. The committee

has delegated power of transfer/transmission; dematerialisation/ rematerialisation of shares; issue

of duplicate/split/consolidated certificates to the Registrar and Transfer Agents to expedite relative

process.

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

meetings.

As at March 31, 2012; Ms. Suchita Shirambekar, Company Secretary and Mr. Deepak Dalvi - Assistant

General Manager – Secretarial were acting as Compliance Officers.

During the year, the Company received 19 complaints from the shareholders all of which were duly

resolved. No complaint was pending as on March 31, 2012.

Further, during the year requests for transfer of 8,000 equity shares; replacement of 1,500 Shares;

transmission of 5,500 equity shares and demat of 92,005 equity shares were received and processed.

Registrar and Transfer Agents and Share Transfer System:

Link Intime India Private Limited having their office at C-13, Pannalal Silk Mills Compound, LBS Road,

Bhandup (W), Mumbai - 400 078 (Tel No.91-22-25963838) are the Registrar and Transfer Agents (RTA) as

also the registrar for electronic connectivity. Entire functions of Share Registry, both for physical transfer,

as well as, dematerialization/ rematerialisation of shares, issue of duplicate / split / consolidation of

shares is being carried out by the RTA at their above address.

The correspondence regarding query of unpaid dividends shall be addressed to Compliance Officer at

the registered office of the Company.

(xi) Distribution of Shareholding as on March 31, 2012:

Shareholding of nominal value of

No. of Shareholders

% to total Shareholders

No. of Shares % to total Capital

UPTO 500 83697 78.65 14175872 5.79

501 - 1000 10443 9.81 8664159 3.54

1001 - 2000 5464 5.13 8477691 3.46

2001 - 3000 2659 2.50 6826882 2.79

3001 - 4000 829 0.78 3031805 1.24

4001 - 5000 970 0.91 4661071 1.90

5001 - 10000 1247 1.17 9376383 3.83

10001 AND ABOVE 1113 1.05 189678210 77.45

TOTAL 106422 100.00 244892073 100.00

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(xii) Shareholding Pattern as on March 31, 2012:

Sr. No

Category No. of Shares

% to Capital

No. of Holders

1 Promoters/Directors and their Relatives 98484066 40.22 12

2 Mutual Funds / UTI 403000 0.16 4

3 Banks; FIs etc. 2066880 0.84 5

4 FIIs 43108867 17.60 51

5 Private Corporate Bodies 17273572 7.05 1326

6 Indian Public 77576179 31.68 103141

7 NRIs /OCBs 3113874 1.28 1581

8 Non-promoter Independent Directors and their relatives 185250 0.08 4

9 Clearing members 2680385 1.09 298

Total 244892073 100 106422

(xiii) Dematerialisation of Securities:

The equity shares of the Company are under compulsory trading in demat form. Out of total capital of

24,48,92,073 equity shares; 24,22,09,062 equity shares representing 98.90% were held in demat form

and balance 26,83,011 equity shares representing 1.10% were in physical form as on March 31, 2012.

The ISIN of the equity shares of the Company is INE934B01028.

The shares are actively traded on BSE and NSE and the turnover data during the financial year 2011-12;

was as under:

Particulars BSE NSE Total

No of shares 7,97,44,360 30,07,26,552 38,04,70,912

Value (` in Cr) 239.35 907.52 1,146.87

V) CEO/CFO CERTIFICATION:

The necessary certification from Chief Executive Officer, Mr. H. K. Mittal and Chief Financial Officer, Mr. Prasad.

B. Patwardhan in respect of the financial year ended on March 31, 2012 has been annexed to this report.

VI) COMPLIANCE:

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

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

requirements out of Non-mandatory requirements of the Clause.

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

annexed to the Directors’ Report.

VII) PLANT LOCATIONS:

The Company does not have any plant.

Address for correspondence:

Mercator Limited

3rd Floor, Mittal Tower, B-wing,

Nariman Point, Mumbai-400 021

Tel Nos: 91-22-66373333

Fax Nos: 91-22-66373344

E-mail: [email protected] / [email protected]

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CORPORATE SOCIAL RESPONSIBILITIES (CSR)

INITIATIVES:

Mercator strongly believes that Corporate Social Responsibility as a philosophy and approach can help bring together

different sector of the society and provide equal opportunities for development.

As a responsible Corporate; Mercator always endeavours to adopt responsible social business practices. Mercator

governance systems do not allow its business practices to be abusive, unfair, corrupt or anti-competitive.

Mercator has always been responsive towards all its stakeholders and is focussed and committed to protect all

stakeholders including society and environment. The following are the initiatives and activities under taken by

Mercator during the year ended March 31, 2012:

CSR TOWARDS SOCIETY:

Creating Career Opportunities, Aids to Weaker Section and Providing training & Education:

Mercator has extended support to the financially incapable candidates aspiring for career in Shipping by

providing financial support for completion of courses as well as securing placement after passing out. In

this direction, Mercator is also associated with Prem Punita Foundation, a platform created by its Chairman

Mr. H. K. Mittal to reach out to the weaker section of the society in the field of education. Prem Punita

Foundation is a registered charitable Trust. The Foundation aims at enhancing and actualising career

opportunities for the weaker section of the society in the ever-growing marine industry. Mr. H. K. Mittal

heads the Foundation as its Chief Trustee and is assisted by a senior Trustees.

The Foundation is presently developing an effective environment for nurturing minds for a career in the

marine industry.

Mercator has been regularly extending support to local social and charitable organisation for their

philanthropic, charitable and social activities, thereby participating in social celebration and good causes.

CSR TOWARDS ENVIRONMENT & ENERGY CONSERVATION:

On board of our vessels, we adopt strict HSSE Management System and Procedures to ensure safe, secure

and healthy working environment by training our staff continuously with the latest technology to ensure

high levels of maintenance. Regular audits and checks are held to ensure that our assets comply with

international regulations to protect the environment.

All our vessels are IMO Rules and Regulations compliant which ensures lesser consumption of energy and

water. On our FSO, we have installed Reverse Osmasis Plant for converting sea water into fresh water to

save scarce fresh water on shore. Using fuel with lesser sulphur content to minimise oxide of sulphur and

installing equipments to reduce Nitrogen Oxide (NOX)/Sulphur Oxide (SOX) are some of our majors initiatives

to protect environment. On shore; its our endeavour to protect environment and natural resources with

variuos ways such as putting ACs on 24o Celsius; using power saver lights; putting switches off whenever

not required etc.

CSR TOWARDS INVESTORS:

We aim to maintain high levels of transparency and disclosure through regular communication with our investors.

On a timely basis we disseminate our financial information through Stock Exchange in due compliance with Listing

agreement. We reach to our investors through news releases, tele conferences, one to one meeting etc. and provide

regular update on business performance. To facilitate better accessibility for investor queries; we have designated

e-mail ID and also provide our contact details in our website, annual reports etc. We are focussed to strengthen our

investor relations framework to better serve the needs of the investor community.

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CSR TOWARDS EMPLOYEES:

Mercator always thrives towards care and betterment of its valuable Human Resources. We follow best possible human

resource policies and practices for the benefit and betterment of our employees. We provide equal opportunities to

all our employees without any prejudice based on their religion, caste, race, marital status, gender, disability, sexual

orientation, age, ethnic origin, nationality, etc. With this as a foundation, Mercator has incorporated developmental

HR policies to encourage talented and competent people through individual guidance, corporate training and well

defined career paths. We have a well defined Code of Conduct for our associates in consistent with our values and

ethics.

Mercator is committed to human rights of our employees and treat all employees with utmost dignity and ensuring a

work environment, free of any form of harassment. Our employee policies as well as our practices reflect our strong

ethical values and the respect and fairness to all employees. We strongly believe that our associates are our greatest

assets and the key to the success of our organisation.

CSR INITIATIVES AT GROUP LEVEL:

Our Singapore Stock Exchange (SGX) listed subsidiary Mercator Lines (Singapore) Ltd. has designated CSR Committee

and organises its own programmes as well as participates in other programmers’ in support of social causes.

For on behalf of the Board

For Mercator Limited

H. K. MittalExecutive Chairman

Regd. Office:



Mumbai - 400 021.

Dated: May 25, 2012

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CEO/CFO Certification

To, The Board of Directors, Mercator Limited Mumbai

This is to certify that:

(a) We have reviewed financial statements for the financial year ended on March 31, 2012 and the cash flow statement for the year (consolidated and unconsolidated) and that to the best of their knowledge and belief:

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

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

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

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

(d) We have indicated to the auditors and the Audit committee

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

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

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

(e) We further declare that all Board members and Senior Management personnel have affirmed compliance with the Code of conduct for the current year.

For Mercator Limited For Mercator Limited

H. K. Mittal Prasad Patwardhan Executive Chairman & Designated Chief Executive Officer Chief Financial Officer Place: Mumbai

Dated: May 25, 2012

Auditors’ Certificate on Corporate GovernanceThe Members,MERCATOR LIMITED (Formerly known as MERCATOR LINES LIMITED)Mumbai

We have examined the compliance of conditions of corporate governance by Mercator Limited for the year ended on 31st March 2012, as stipulated in Clause 49 of the Listing Agreement of the said company with stock exchange.

The compliance of conditions of corporate governance is the responsibility of the management. Our examination was limited to procedure and implementation thereof, adopted by the company for ensuring the compliance of the conditions of the corporate Governance. It is neither an audit nor an expression of the financial statement of the company.

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

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

For and on behalf of Contractor Nayak & Kishnadwala Chartered Accountants Firm Registration No 101961W

[Himanshu Kishnadwala] Partner Membership No. 37391

Mumbai May 25, 2012

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Management Discussion & Analysis Report(Forming part of Directors’ report for the year ended on March 31, 2012)

45


Mercator is spread across multiple verticals: Coal Mining; Procurement and Logistics | Oil and Gas | Shipping

|Dredging

I. COAL:

Coal contributes significantly to the global energy mix, covering almost a third of global primary energy

consumption and over 40% of electricity production. Below graph shows pattern of energy sources:

Biomass

OtherSolar

Nuclear

Hydro

GAS

Oi l

Coal

Traditionalrenewables

100%

80%

60%

40%

20%

0%1850 1900 1950 2000 2050 2100

Source: World Coal Institute, www.wci-coal.org

Coal is the largest source of energy for the generation of electricity worldwide. India is the third largest coal

producing and consuming country of the world after China and USA. The Coal consumption is driven by energy

sector in India as most of the operating power plants (around 68%) depend on Coal as a fuel. During FY 2011-

12 production of electricity in India was 569 Tera Watt Hour Per year - Twh after China (2759 Twh) and in USA

(2266 Twh) therefore and Coal vital importance for Electricity generation. China and India together produced 40%

global electricity in FY 2011-12. (Source : World Coal Institute)

China Coal market:

China’s thermal coal supply scenario has altered radically in the last decade from a production base of about

1.4 billion MT in 2002 to over 3.2 billion MT in 2011-12. Despite this growth, it still cannot produce enough, as

consumption has grown over the same period from 1.3 billion MT in 2002 to over 3.45 billion MT in 2012. Imports

will continue to play a key role, but runaway growth will be limited by China’s ability to boost domestic output.

China has swung from a net exporter in 2008 to a net importer since 2009. (Source: Platts)

Indian Coal market:

Currently coal accounts for 68% of the India’s energy needs.

Commercial primary energy consumption in India has grown by about 700% in the last four decades. Considering

the limited reserve potentiality of petroleum & natural gas, eco-conservation restriction on hydel project and

geo-political perception of nuclear power, Coal will continue to occupy centre-stage of India’s energy scenario.

India’s per capita power consumption is almost one fourth of world average.

During the 11th Five year plan (2007-2012), India has added 100,000 MW of our out of which 77% is from Coal and

Lignite. The present installed generation capacity in India is more than 181,000 MW and over 80,000 MW of new

power capacity is under construction. The Twelfth plan aims at capacity addition of nearly 100,000 MW. Power

generating companies are entering into long term supply agreements especially for imported coal for secured

coal supply. (Source : Independant Power Producers’ Association of India)

India’s Coal import has touched 140 Mio MT in FY 12, representing a 50% jump over 86 Mio MT imported last

year. Of the total imports, 90 Mio MT would be Thermal Coal. The major share of thermal coal imports has come

through Indonesia and South Africa with other sources like US (high Sulphur coal) and Colombia chipping in from

time to time.

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Indonesian Coal:

Indonesia is world’s largest thermal coal exporter. Indonesian coal production has grown from 230 Mio MT in 2008

to 352 Mio MT in 2011. It is further expected to grow at a compounded annual growth rate of 13.7% and should

touch 480 Mio MT by 2014. Around 20% of the coal produced is consumed domestically and 80% is exported out of

Indonesia. The percentage is likely to remain similar till 2014 as per industry estimates. With its proximity to India

& China and with huge production base of Coal, Indonesia will continue to remain one of the largest exporter of

thermal coal. (Source : Indonesian Chamber of Commerce)

With owned coal mines as well as procurement and logistical expertise, in depth understanding of local coal

market; Mercator expect to achive higher business in this segments.

II. OIL & GAS:

The global oil demand for the year 2012 is estimated to be 90.7 mb/d. World oil demand will grow at a rapid

pace with a major share of this demand coming from emerging economies. In its annual forecast, the Energy

Information Administration pointed out that global oil demand would average about 105 million barrels per

day(BPD) in 2030 and almost 111 million bpd in 2035. Total global energy demand is expected to grow by 27

percent by 2035, with developing countries like China and India expected to account for most of that increase.

With strong economic growth projected for both these countries, combined energy use is forecasted to soar to

30% of world’s energy consumption.

1990 2005 2006 2010 2015 2020 2025 2030

41.4

25.3

56.640 43.4 47.8 52.2

34.5 35.8

49.5 49.2 46.3 47.2 48.1 48.9 50

OECD Consumption (In Mn bpd)Non OECD Consumption (In Mn bpd)120

100

80

60

40

20

0

CAGR (FY10- FY30) : 1.1%

Source: US Energy Information Administration

World Oil Supply Projections:

World oil supply rose by 1.0 mb/d in August 2011, i.e. from to 89.1 mb/d, with non-OPEC production up by 0.8 mb/d.

Non-OPEC supply has been revised lower to 52.8 mb/d in 2011 on outages in the Middle East and China, rising

to 53.8 mb/d in 2012. Over the last few months, oil supply has been tightening, with spare capacity down to 6% of

demand from a corresponding figure of 8% a year earlier. Oil production is slated to remain fairly stable over the

next few decades, with global oil production slated to reach 96 mb/d in 2035 based on an US Energy Information

Administration forecast. With an increase in demand for oil as envisaged, the demand-supply deficit is bound to

increase going forward.

Oil prices

140

120

100

80

60

106.07

2006 2007 2008 2009 2010 2011CLJI - WTI CRUDE FUTURE Apr11 G14 Daily 3/7/06 to 3/7/11 Copyright 2011 Bloomberg Finance L.P. 07-Mar-2011 09:32:46

CLJI – WTI CRUDE FUTURE Apr11Daily 3/7/06 - 3/7/11

Last Price 106.07

High on 07/14/08 143.06Average 80.41Low on 02/18/09 55.42

Source: World Bank Commodity price data

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Crude oil prices witnessed a sharp correction in late

2008 and first half of 2009, after reaching record

highs of nearly USD 140 per barrel. The oil prices

inched up and touched a 2 year high of USD 120 per

barrel in May 2011. With such a strong recovery in

oil prices, upstream oil companies have increased

their E&P investments. Of late, the oil prices have

corrected to some extent, but are well above the

2009 lows and are more or less stable at around

USD 80 per barrel. Going forward, looking at the

demand-supply outlook, the oil prices are expected

to go up or at least remain stable. Such a scenario

will spur both onshore and offshore E&P activities

globally.

India’s march from being a developing nation to

major economical power is going to be fuelled

by fossil fuel in which Oil & Gas will play a major

role. With rising prices of crude oil and our need to

fuel our growth, dependence on imported oil has

to be minimised. The Government is focussing on

indigenous crud to reduce dependence on expensive

import. ONGC has already commenced extracting

oil from marginal fields such as D-1; Cluster 7 etc.

Mercator has successfully completed first year of

operation at its EBOK facility at Nigeria and during

the year, secured a new EPC contract from ONGC

for converting Mobile Offshore Drilling Unit – Sagar

Samrat into Mobile Offshore Production Unit (MOPU).

Mercator is scouting for new opportunities in this

segment. Mercator E&P foray with two onshore

blocks in Cambay basin are also progressing well.

III. SHIPPING:

Wet Bulk Carriers:

The Baltic Clean Tanker Index opened at 900 points

in April 2011, and closed at 642 points on March 31,

2012 remaining range bound between 600 to 900

during the year.. The Baltic Dirty Tanker Index also

remained subdued during the year with opening at

900 points in April 2011 and closing at 818 points on

March 31, 2012.

Wet bulk fleet stood at about 5600 vessels comprising

DWT of 478 mn tonnes as on March 31, 2012 and the

order book was for 608 vessels for DWT of 72 mn

tonnes. In comparison, the fleet comprised 5500

vessels of 457 DWT mn tonnes and order book of

846 vessels of 102 mn DWT as at April 1, 2011 thus

increase in fleet size by 2% in number and 5% in DWT

during FY 2011-12. The order book has reduced by

29% in number as well as in DWT. (Source :SSY). The

supply side although seeing reduction in number; is

still a matter of concer. The shipping industry world

wide is witnessing a difficult phase with the freight

markets remaining subdued. We have seen a small

glimour of hope in the VLCC market where in the

month March/April 2012 the rates were closed to

50000 USD per day. This spike in tanker rates has

been due to discipline shown by VLCC owners e.g.

formation of pools; scrapping of assets as young

as 13 years old, slow steaming as low as 6 knots

from normal 14 knots to save on bunker cost etc. In

addition, Chinese imports have hit the record of 6mn

barrels per day in Feb 2012. This demand in China

was largely due to China supplementing its part of

second stage of Strategic Petroleum Reserve (SPR)

project.

Many large consumers of petroleum products have

developed emergency oil storage facilities to cover

their potential requirements and provide security

from global oil price fluctuations. The months in

which the crude oil inventories are increased caused

a spike in the freight market, otherwise the outlook

for the year appears flat.

Dry Bulk Carriers:

Dry bulk fleet stood at about 8900 vessels comprising

DWT of 627 mn tonnes as at March 31, 2012 and the

order book was for 2100 vessels for DWT of 180 mn

tonnes. In comparison, the fleet comprised 8200

vessels of 555 DWT mn tonnes and the order book

was 2800 vessels of 240 mn DWT as at April 1, 2011

thus increase in fleet size by 8% in number and 12%

in DWT. (Source: SSY). The order book has reduced

by 22% in number and 25% in DWT as on March 31,

2012.

The Baltic Dry Index sank to its lowest point since

past 25 years. This was largely due to the oversupply

of tonnage and partly due to reweighting of index

which took place in 2009. On the cargo side,

demand also eased up as export from places such

as Port Hedland. Brazil experienced force majoure.

Richards Bay showed a drop of 25% in coal export

and US department of agriculture cut around 10 mn

tonnes South America grain forecast. Going forward,

we expect production out of Richards Bay to improve

and import of Coal into India to increase with more

coal fired power plants coming online and deficit

of indigenous coal. These marginal positives will

support the Bulk carrier owners in coming years but

at the same times enormous tonnage surplus will

test its strength to survive.

A very challenging operating environment is

awaiting the shipping companies in the year 2012

as the world economy continues to reel under the

shadows of recession and debt crises hitting major

economies.

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However, the shipping industry needs to be viewed

from a long term perspective. Those who can sustain

the challenges of downturn will be the first to gain

advantages of upturn. Shipping is characterised

by peaks and trough and those who are resilient,

patient and perceptive players can stay on the

course. With its diversified fleet, Mercator would

benefit once shipping industry recovers.

IV. DREDGING:

Dredging activities are requisite across deepening

of channels in ports; construction of new ports;

reclamation of land; beach nourishment; sand

mining; shore protection – dykes; trenching –

pipeline laying; dredging canals and rivers; lakes;

reservoirs and intake water column for power

plants.

As more and more ports are coming up the

requirement to maintain them increases the

dredging activity. Also, upgradation / increasing

navigable depths of existing ports results in

increased dredging requirement. The rise of water

levels and the threat to low lying areas requires

dredging companies to put their fleet to reclaim

large tracts of land under threat to sustain the

coastal population.

Further, emerging trends in shipbuilding like ultra-

big ships is imperative for port developers and

operators to go for dredging to increase draft of the

channels.

The total dredging requirement between FY11-12

and FY15-16, including minor ports, is estimated

to be 996 million cum. Among this, maintenance

dredging alone is expected to account for 414 million

cum.

The Maritime Agenda 2010-20 of India envisages

increase in the draft in all major ports to a minimum

of 14 metres and in some ports to 17 metres.

Dredging projects worth over ` 200 billion have been

planned between now and the year 2020.

CHALLENGES, RISKS AND CONCERNS:

The Mercator Group has diversified sources of

revenue ranging from Coal; Oil & Gas; Shipping and

Dredging. Given the wide range of our operations and

the geographical spread, we are exposed to different

challenges and risks. The Group’s approach to identifying,

assessing, and managing risks is formalised through

an in depth process of market research, collection of

updated industry information and data and research

intelligence.

A major portion of our revenue as well expenditure is

in foreign currency and hence we are naturally hedged

against risks arising from exchange rate fluctuations.

We operate in different countries around the world and

hence are exposed to political and other risk arising

from our operations in these countries. The Company’s

successful track record, rich management experience,

and diversified portfolio of business segments, aids the

company in de-risking itself to a large extent.

Mercator continuously engages with strong counter

parties to avoid any counter party risk.

The vessels remained exposed to the risk of piracy while

transiting the Indian Ocean and the Gulf of Aden. As a

preventive measure the vessels embarked armed guards

and transited the Gulf of Aden under naval escort.

Shipping is a cyclical business. Global movement of

goods and commodities is linked directly to the level of

economic activity. A slow down or recession will have

adverse implications for the shipping business. The

management had taken strategic steps to diversify the

business by entering into the Coal and Oil & Gas, and

now more than 70% of revenue is from non-shipping.

Our vessels and other assets could be exposed to the risk

from accidents. The Company has insured all its assets,

and before embarking on any voyage, all the ships are

tested and scrutinised.

We are exposed to environmental risk like oil spillage

during transportation, drilling and exploration; pollution

while coal mining and transportation is extremely critical.

We strictly adhere to globally accepted environmental

regulations as preventive measures.

OPERATIONAL AND FINANCIAL PERFORMANCE:

Mercator Group has diversified operations with its own

fleet of Tankers, Bulk Carriers; Dredgers and a Floating

Production Units (FPU). Mercator also has coal minning

licences in Indonesia and Mozambique. Mercator has

signed Production Sharing Contract with Government of

India in respect of two oil blocks in the Cambay basin

in Western India awarded under NELP-VII. Mercator, in

consortium, has been awarded a contract from ONGC for

conversion of Mobile Offshore Drilling Unit (MODU) into

Mobile Offshore Production Unit (MOPU).

The consolidated income from the operations was ̀ 3700

cr for the year under review as compared to ` 2829 cr

in the previous year. The Profit After Tax and Minority

Interest was ` 21 cr against ` 94 cr in the previous year.

Coal Mining, Procurement and Logistics:

During the year one of our subsidiary Oorja Holdings Pte.

Ltd., Singapore completed acquisition of 50% stake in a

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new mining asset in East Kalimantan, Indonesia having

reserve of about 60 Million MT. The new coal mine is

expected to start production in Q-2 FY13-14.

There was an increase in coal procurement volume as

well; contributing to both top line and bottom line.

Overall, Mercator sold 7.35 mn MT (previous year 4.88

mn MT) of coal (both mining and procurement); a growth

of 51% over previous year. Total turnover of ` 2317 cr

(previous year ` 1388 cr) was achieved. This contributed

about 62% of the total operating income (previous year

49%). Mercator has successfully diversified its coal

selling market and during the year sold 1.76 mnMT coal

to China. India and China together contributed 93% of

the sales volume.

Oil & Gas:

Offshore performance:

Mercator owns one Mobile Offshore Production Unit

(MOPU) and one Floating Storage Offloading Unit (FSO)

which are deployed at EBOK field in Nigeria under

long term contract with UK listed oil major Afren Plc.

Both these MOPU and FSO collectively called Floating

Production Unit (FPU); have been commissioned

successfully during the year. MOPU has a processing

capacity of 50,000 barrels oil per day whereas FSO has

storage capacity of 1.2 mn barrels oil.

In November 2011, consortium of Mercator Oil & Gas

Ltd., and Mercator Offshore (P) Pte. Ltd. alongwith a

Abu Dhabi based shipyard viz. Gulf Piping Company was

awarded an EPC contract by ONGC Ltd. for conversion

of their Mobile Offshore Drilling Unit (“MODU”) ‘Sagar

Samrat’ into a Mobile Offshore Production Unit (“MOPU”).

The scope of work for this project includes Surveys,

Design, Engineering, Procurement, Fabrication,

Transportation, Jack up, Hook-up, Testing, Certification/

Inspection, Pre-commissioning, Start-up and

Commissioning of entire facilities including demolition

of existing Drilling equipment for the conversion of Sagar

Samrat to Mobile Offshore Production Unit (MOPU).

In this segment; Mercator achieved total turnover of ̀ 199

cr as compare to previous year turnover of `142 crore.

This has contributed about 5% of the total operating

income (previous year 5%).

Oil Blocks:

Mercator has Production Sharing Contracts with the

Government of India for exploration of Petroleum in two

blocks under the Seventh New Exploration Licensing

Policy round (NELP-VII). . The “S-Type” blocks are

situated onshore in the prolific Cambay Basin, Gujarat,

India and cover an area of about 180.22 Sq. Km. Mercator

has successfully acquired good quality seismic data for

both the blocks and currently processing & interpretation

work is going on. Mercator is planning to commence

exploratory drilling programme.

Tanker (Wet Bulk) performance:

Mercator’s tanker fleet consists of very Large Crude

Carrier (VLCC), Aframaxes, Product tankers and

Chemical tanker. Within the tanker segment, Mercator

has 7 own tankers of aggregate capacity of 740,193 DWT

since beginning of the year and 1 in-chartered chemical

tanker of 19,996 DWT. There was no change in tonnage

during the year under review. In December 2011, one

of tanker vessel M T Preme Divya had an accident. The

Management is endeavouring to repair the vessel and

put it into operation.

Mercator achieved a turnover of ` 290 cr as compared

to ` 463 cr in the previous year. The performance was

affected due to tanker market remaining soft throughout

the year in view of excessive tonnage capacity. The

numbers of operating days were reduced by about 2% to

2618 days (previous year 2.672 days). The time charter

equivalent (TCE) at USD 15884 increased marginally

by 1% from USD 15,728 in the previous year. Overall

contribution from the tanker division was 8% (previous

year 16%) of the total operating income.

Dry Bulk performance:

Mercator’s bulk carrier fleet comprises of Geared and

Gearless Panamaxes; Kamsarmaxes and Very Large

Ore Carrier (VLOC). Since beginning of the year, there

are 15 own bulk carriers aggregating to the tonnage of

1,340,510 DWT and 3 chartered-in bulk carriers with an

aggregate capacity of 278,340 DWT. There was no change

in tonnage during the year under review. Mercator

achieved a turnover of ` 733 cr (` 751 cr previous year).

Though vessel operating days increased by about 12%

over the last year to 6619 days (previous year 5,908 days)

TCE of USD 20,069 declined by 23% against previous year

of USD 25,997. This segment too was affected primarily

due to excessive supply of tonnage. This segment

contributed about 20% of the total operating income

(previous year 27%).

Dredging performance:

At the beginning of the year; Mercator had 4 dredgers

having Aggregate capacity of 23500 Cubic meter. During

the year, one 2004 built dredger of 2600 Cubic meter

capacity and one 2011 built Cutter Suction Dredger were

acquired by the company and thus as at March 31, 2012

Mercator had 6 dredgers. With 1349 operating days

(previous year 583), Mercator achieved a turnover of `

161 cr (previous year ` 85 cr). This segment contributed

about 4% of total operating income (previous year 3%).

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With a fleet of 5 Trailer Suction Hopper Dredgers &

1 Cutter Suction Dredger fitted with technologically

advanced machinery, Mercator is capable of providing

the best service to all ports for accelerating their

development initiatives.

REVIEW OF OPERATIONS OF SUBSIDIARIES:

Mercator International Pte. Ltd. (MIPL):

MIPL is an apex wholly owned subsidiary incorporated in

Singapore in January 2007. This company has multiple

subsidiaries and fellow subsidiaries in Singapore and

other countries. As at the beginning of the year; MIPL

had one in-chartered chemical tanker of 19,926 DWT on

standalone basis. There was no change in the tonnage

capacity during the year. During the year under review,

it achieved a turnover of about ` 121 cr equivalent of

USD 25.116 mn (as against ` 115 cr equivalent of USD

25.263 mn in the previous year) with a net profit of ` 51 cr

equivalent of USD 10.528 mn (previous year net net profit

of ` 47 cr equivalent of USD 10.365 mn) on standalone

basis; that is excluding contribution from its subsidiaries.

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

OHPL is 100% Singapore based subsidiary of MIPL

established with the objective of exploring business

opportunities in commodity mining and trade. As at March

31, 2012, OHPL had six wholly owned subsidiaries of

which five are situated in Singapore and one in Indonesia.

OHPL had further nine step down subsidiaries holding

coal mining/trading licenses as well as equipments

situated in Indonesia; Singapore and Mozambique.

OHPL through its subsidiaries, has investments in

three coal mines in Indonesia and one in Mozambique.

According to the reserves and resource estimation

carried by independent agencies, the total coal resources

of the company currently stand at approx. 70 mn tonnes

in Indonesia and estimated coal deposits of 3 billion

tonnes in Mozambique. All of these mines are open pit, of

which 2 are operational, one will commence operations

by quarter 2 of FY13-14. A mine in Mozambique is in the

initial stage of development.

OHPL has further established itself in the coal

procurement and logistics business and has been

considered as a preferred and reliable coal supplier from

Indonesia. It has already handled over 14 mn tonnes of

coal in last 3 yrs with over 7.7 mn tonnes in FY 2012 and

enjoys about 7% share of Indonesian coal exports to

India.

OHPL, through PT Oorja Indo KGS (a Group Company),

domiciled in Indonesia holding a Coal Trader License,

procures coal from various miners in South and East

Kalimantan regions as well as Sumatra region in

Indonesia.

MCS, a WOS of OHPL, undertakes marketing for coal

from OHPL’s own mines as well as coal procured from

third parties. The Company exports coal to India, China,

Thailand, Pakistan, Srilanka, Philippines and other Asian

countries.

The contribution of the coal business in the overall

revenues has increased significantly over the past three

years. For FY12, the coal business contributed about

62% of the total revenues.

During the year; OHPL achieved consolidated turnover of

` 2220 cr equivalent of USD 461 mn (previous year ̀ 1338

cr equivalent of USD 293.424 mn) and earned profit of

` 99 cr equivalent of USD 21 mn (previous year profit of

` 69 cr equivalent of USD 15 mn). During the year, OHPL

and MCS each paid dividend of USD 15 mn.

Mercator Offshore (P) Pte. Ltd. (MOPPL):

This subsidiary based in Singapore has been awarded

a contract for charter out of Floating Production Unit

(FPU) comprising of Mobile Offshore Production Unit

(MOPU) and Floating Storage Offshore Unit (FSO) to the

UK listed Company Afren PLC through its subsidiary

for deployment in their EBOK field in Nigeria. During

the year; the FPU was commissioned successfully on

April 30, 2011. The Charter contract has been extended

for two more years from original period of seven years.

MOPPL has a subsidiary located in Nigeria by the name

of IVORENE Oil Services Ltd. to undertake local support

activities.

This was first year of commercial operation of MOPPL

which achieved turnover of ` 199 cr equivalent of USD

41 mn and earned profit of ` 26 cr equivalent of USD 5

mn.

Mercator Oil & Gas Ltd. (MOGL):

This is an Indian non-listed subsidiary.

During the year under review; MOGL in consortium

with MOPPL and a Abu Dhabi based shipyard; has been

awarded contract by ONGC for conversion of Mobile

Offshore Drilling Unit (MODU) into Mobile Offshore

Production Unit (MOPU). MOGL is a lead contractor. The

value of contract is apprx USD 155 mn and is expected to

be completed by May 2013

Mercator Petroleum Ltd. (MPL):

This is an Indian non-listed subsidiary. MPL has entered

into a Production Sharing Contract with the Government

of India in respect of two blocks allotted to it under

the Seventh New Exploration Licensing Policy round

(NELP-VII). MPL has initiated exploration activities and

undertaken surveys.

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Mercator Lines (Singapore) Ltd. (MLS):

This is a Singapore Stock Exchange listed subsidiary of

MIPL that owns 71.95% controlling interest in MLS. MLS

has five subsidiaries being ship owning/management

companies.

Consolidated fleet of MLS as at March 31, 2012,

comprised of 14 own vessels of aggregate capacity of

1,271,224 DWT and 3 in-chartered vessels of aggregate

capacity of 278,340 DWT. During the year, MLS achieved

a consolidated turnover of ` 712 cr equivalent of USD

147.737 mn (as against ̀ 708 cr equivalent of USD 155.360

mn in the previous year) and earned net profit after tax

of ` 38 cr equivalent to USD 7.837 mn (as against ` 142

cr equivalent to USD 31.100 in previous year). The Board

of Directors of MLS recommended dividend at 0.20

Singapore cents per share for year ended on March 31,

2012 which represents 25% of the profits. The Board of

Directors of wholly owned subsidiaries of MLS; namely

Varsha Marine; Vidya Marine and Chitra Prem declared

and paid interim dividends of USD 12.685 mn (pre. year

USD 3.000 mn); USD 4.883 mn (pre. year USD 4.90 mn)

and USD 2.540 mn (pre. year USD 0.2 mn).

None of above subsidiary’s Audit Report contains any

qualification.

(For the purpose of financial performances conversion

rate of per dollar has been taken as ` 48.19 for Profit

& Loss account (previous year ` 45.59); and ` 51.16 for

Balance Sheet items (previous year ` 44.65).

QUALITY, SAFETY & ENVIRONMENT:

For excellent business performance we have recognised

and imbibed safety, quality and environmental

conservation in our day to day operations. We follow

Health Safety Security Environment (HSSE) management

system which provides direction, education, support,

training and supervision to ensure that all employees

understand and follow the Company policy and

procedure. This has been achieved by having adequate

systems and procedures in place which safeguard the

health and safety of our people, the security of our

personnel, security of our physical assets and reputation

and the protection of the environment. Our fleet has

maintained the highest level of safety and cost effective

quality during the year, and are in compliance with the

international pollution and prevention protocols.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

Mercator’s internal control systems are adequate and

ensure that all corporate policies are strictly adhered

to and that transparency is maintained at all levels and

functions throughout the organisation. The Internal

Auditors ensure that adequate internal controls are

in place and all management policies are complied

with. The Audit Committee constituted by the Board

of Directors regularly assesses the financials as well

as administrative performance of the Company, in

consultation with internal and statutory auditors.

HUMAN RESOURCES POLICIES:

Mercator has always believed that Human Resources are

integral to the efficient functioning of the organisation.

This is reflected through our philosophy of ‘People First’.

Our key Management and HR focus during the year had

been to attract and retain the best talent along with

creation of a more positive employee workforce which

is vital for the long term competitive advantage of the

business. With this vision a set of employee engagement

initiatives and training programmes were organised

which aimed at contributing towards employee

development. We plan to elevate the same to the next

level in the coming years.

There has been an emphasis on execution of unilateral

and transparent set of policies which are market driven

and people oriented. We provide a work environment

in which employees are empowered, productive,

contributing and happy.

As on March 31, 2012 there were 121 employees with

Mercator India. Globally, Mercator group had 392

employees as on March 31, 2012.

CAUTIONARY STATEMENT:

The Statement in this Management Discussion and

Analysis Report describing the Company’s objectives,

projections, estimates, expectations or predictions may

be ‘forward looking statements’ within the meaning of

applicable laws and regulations. Actual results might

differ substantially or materially from those expressed

or implied. Important developments that could affect

the Company’s operations include demand-supply

conditions, changes in Government and International

regulations, tax regimes, economic developments within

and outside India and other factors such as litigation and

labour relations.

For on behalf of the BoardFor Mercator Limited

H. K. Mittal

Executive Chairman

Regd. Office:



Mumbai - 400 021.

Dated: May 25, 2012

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Standalone Financial Statements

53


Auditors’ ReportThe Members of

MERCATOR LIMITED (Formerly known as MERCATOR LINES LIMITED)

1. We have audited the attached Balance Sheet of MERCATOR LIMITED as at 31st March 2012, the related Statement

of Profit and Loss and the Cash Flow Statement of the Company for the year ended on that date annexed thereto.

These financial statements are the responsibility of the Company’s management. Our responsibility is to express

an opinion on these financial statements based on our audit.

2. We conducted our audit in accordance with auditing standards generally accepted in India. These Standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are

free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts

and disclosures in financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

3. As required by the Companies (Auditor’s Report) Order, 2003, issued by the Central Government in terms of

Section 227(4A) of the Companies Act, 1956, and on the basis of such checks as considered appropriate and

according to the information and explanations given to us during the course of the audit, we enclose in the

Annexure hereto a statement on the matters specified in Paragraphs 4 and 5 of the said Order.

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

a) We have obtained all the information and explanations, which to the best of our knowledge and belief were

necessary for the purposes of our audit;

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

from our examination of the books of the Company;

c) The Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement dealt with by the report are

in agreement with the books of account of the Company;

d) In our opinion, the Balance Sheet, Statement of Profit and Loss and the Cash Flow Statement comply with

the mandatory Accounting Standards referred to in Section 211 (3C) of the Companies Act, 1956.

e) On the basis of written representations received from the directors of the Company as on 31st March 2012,

and taken on record by the Board of Directors, we report that none of the directors is disqualified as on 31st

March 2012, from being appointed as a director in terms of Section 274(1) (g) of the Companies Act, 1956.

f) In our opinion and to the best of our information and according to the explanations given to us, the said

accounts read together with the Significant Accounting Policies and notes thereon 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 2012;

b. In the case of the Statement of Profit and Loss, of the loss for the year ended on that date,

c. In the case of the Cash Flow Statement, of the cash flows of the Company for the year ended on that

date.

For and on behalf of Contractor Nayak & Kishnadwala Chartered Accountants

Firm Registration No 101961W

Himanshu Kishnadwala Partner,

Membership No 37391

Mumbai

May 25, 2012

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MERCATOR

Statement referred to in paragraph 3 of the Auditors’ Report of even date to the Members of MERCATOR LIMITED on the accounts for the year ended 31st March, 2012.

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

we state as under:

1(a) The company has maintained proper records showing full particulars including quantitative details and

situation of the fixed assets.

1(b) As explained to us, the management at reasonable intervals carries out the physical verification of the fixed

assets. The discrepancies noticed on such verification, which were not material, have been appropriately dealt

with in the accounts.

1(c) In our opinion, there have been no significant disposals of fixed assets during the year which affect the going

concern assumption.

2(a) As explained to us, the inventories of bunker and lube have been physically verified during the year by the

management. In our opinion, having regard to the nature and location of stocks, the frequency of the physical

verification is reasonable.

2(b) In our opinion and according to the information and explanations given to us, the procedures of physical

verification of the above mentioned inventory followed by the management are reasonable and adequate in

relation to the size of the Company and the nature of its business.

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

noticed on physical verification.

3(a) As per the information and explanations given to us, the Company has not granted any loans, secured or

unsecured, to companies, firms or other parties covered in the register maintained under section 301 of the

Companies Act, 1956. Hence, provisions of clauses 3(b), 3(c), 3(d) are not applicable to the company.

3(e) During the year the company has taken interest free loan from a company covered in the register maintained

under section 301 of the Companies Act,1956 and there is no balance outstanding at the year end. The maximum

amount outstanding at any time during the year was ` 1,57,50,000.

3(f) The rate of interest and other terms and conditions of loan taken from a company covered in the register

maintained under section 301 of the Companies Act,1956 are not prima facie prejudicial to the interest of the

company.

3(g) The repayment of the principal amount for the aforesaid loan is regular.

4 In our opinion and as explained to us, there are adequate internal control procedures commensurate with the

size of the Company and the nature of its business with regard to purchase of inventory and fixed assets and

for the sale of goods and services. During the course of our audit, no major weakness has been noticed in the

internal control system and there is no continuing failure for the same.

5(a) As per information and explanations given by the management and based on the audit procedures applied by

us, during the year the company has not entered into any contracts or arrangements referred to in section 301

of the Act. Hence, clauses 5(a) and 5(b) are not applicable to the company

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

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

nature of its business.

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

of the Companies act, 1956.

9(a) According to the information and explanations given to us and the records examined by us, the Company is

regular in depositing with appropriate authorities undisputed statutory dues including provident fund, investor

education and protection fund, employees' state insurance, income-tax, sales-tax, wealth-tax, service tax,

custom duty, excise-duty, cess and other statutory dues and there are no undisputed statutory dues outstanding

as at 31st March, 2012, for a period of more than six months from the date they became payable.

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9(b) According to the information and explanations given to us, the disputed statutory dues that have not been

deposited on account of disputed matters pending before appropriate authorities are as under:

Name of the Statute Nature of the dues

Amount (` In lakhs)

Year/s to which the amount relates

Forum where dispute is pending

Service Tax under Finance Act,

1994

Service Tax 7,452.60 2006-07 to 2010-11 Commissioner of

Service tax

Income Tax Income Tax 3,508.13

597.47

3.70

46.44

2007-08

2006-07

2005-06

2002-03

Commissioner of

Income tax (Appeals)

Amounts paid under protest and not charged to Statement of Profit and Loss have not been included above.

[Also refer Notes 3.3 and 3.4]

10 The company does not have any accumulated losses as on 31st March, 2012 and has not incurred any cash

losses during the financial year and in the immediately preceding financial year.

11 Based on the information and explanations given to us, the Company has not defaulted in repayment of any

dues to financial institutions, banks or debenture holders.

12 Based on our examination of the records and as explained to us, the Company has not granted any loans and/

or advances on the basis of security by way of pledge of shares, debentures and other securities.

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

are therefore not applicable to the company.

14 According to the information and explanations given to us, the Company has during the year no dealing or

trading in shares, securities, debentures and other investments.

15 According to the information and explanations given to us, the terms and conditions on which the Company has

given guarantees for loans taken by subsidiaries from banks and financial institutions are, considering the long

term involvement of the company in these entities, not prejudicial to the interests of the company.

16 According to the information and explanation given to us, term loans raised during the year were applied for

the purpose for which the loans were obtained.

17 As explained to us and on an overall examination of the balance sheet of the Company, in our opinion there are

no funds raised on short-term basis which have been used for long-term investment by the Company.

18 The company has not made any preferential allotment of shares to any parties covered in the register maintained

under section 301 of the Companies Act, 1956.

19 During the period covered by our audit, the company has not issued any secured debentures.

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

21 Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial

statements and as per the information and explanations given by the management, we report that no fraud on

or by the company has been noticed or reported during the course of our audit.




Membership No 37391

Mumbai

May 25, 2012

56

MERCATOR

BALANCE SHEET AS AT MARCH 31, 2012` in Lakhs

Particulars Note As atMarch 31, 2012

As atMarch 31, 2011

A EQUITY AND LIABILITIES

1 Shareholder's funds

(a) Share capital 2.1 2,448.92 2,448.92

(b) Reserves and surplus 2.2 84,911.29 97,589.28

(c) Money received against share warrants 2.3 2,596.00 2,596.00

89,956.21 102,634.20

2 Non - current liabilities

(a) Long-term borrowings 2.4 92,205.71 105,768.87

(b) Other long term liabilities 2.5 4,671.48 3,656.84

(c) Long-term provisions 2.6 285.88 182.97

97,163.07 109,608.68

3 Current liabilities

(a) Short-term borrowings 2.7 4,296.94 11,363.33

(b) Trade payables 2.8 8,861.63 61,520.30

(c) Other current liabilities 2.9 27,737.14 21,619.06

(d) Short-term provisions 2.10 45.89 34.62

40,941.60 94,537.31

Total 228,060.88 306,780.19

B ASSETS

1 Non- current assets

(a) Fixed assets 2.11 163,482.93 169,968.93

(b) Non-current investments 2.12 425.49 462.18

(c) Long-term loans and advances 2.13 25,604.85 64,536.21

(d) Other non-current assets 2.14 0.48 0.30

189,513.75 234,967.62

2 Current assets

(a) Current investments 2.12 50.00 150.00

(b) Inventories 2.15 1,740.89 2,348.64

(c) Trade receivables 2.16 19,896.30 16,070.83

(d) Cash and bank balances 2.17 4,126.20 44,273.11

(e) Short-term loans and advances 2.18 11,528.71 8,030.00

(f) Other current assets 2.19 1,205.03 939.99

38,547.13 71,812.57

Total 228,060.88 306,780.19

Significant Accounting Policies 1

Notes forming part of the financial statements 2,3,4,5,6

As per our report of even date For and on behalf of the Board For Contractor, Nayak & Kishnadwala Chartered Accountants H. K. Mittal A. J. Agarwal Manohar Bidaye Executive Chairman Managing Director Director

Himanshu Kishnadwala Kapil Garg M. M. Agrawal K. R. Bharat Partner Director Director Director

Suchita Shirambekar

Company Secretery

Dated: May 25, 2012 Dated: May 25, 2012

Place: Mumbai Place: Mumbai

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STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED MARCH 31, 2012` in Lakhs

Particulars Note

Year EndedMarch 31, 2012


INCOME

(a) Revenue from operations 2.20 54,797.68 63,724.08

(b) Other income 2.21 7,268.52 6,516.66

1 Total Revenue 62,066.20 70,240.74

EXPENSES:

(a) Ship operating expenses 2.22 43,358.96 50,184.47

(b) Employee benefit expenses 2.23 1,705.73 1,261.91

(c) Finance cost 2.24 15,296.93 14,925.13

(d) Depreciation and amortisation expenses 11,899.61 11,662.55

(e) Other expenses 2.25 1,321.87 1,610.49

2 Total Expenses 73,583.10 79,644.55

3 Profit /(Loss) before taxes (1 - 2) (11,516.90) (9,403.81)

4 Tax expense:

(a) Current tax (350.00) (400.00)

(b) Short provision of tax for earlier years - 6.75

Profit /(Loss) for the period (3 - 4) (11,866.90) (9,797.06)

Earnings per share (Equity share of ` 1/- Each)

Basic and Diluted (In `) 4.7 (4.85) (4.12)


Notes forming part of the financial statements 2,3,4,5,6



Suchita Shirambekar

Company Secretery



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MERCATOR

Cash Flow Statement for the year ended March 31, 2012` in Lakhs

Particulars March 31, 2012 March 31, 2011A Cash Flow from Operating Activities

Net (Loss) / Profit Before Tax (11,516.90) (9,403.81)

Adjustment for:

Depreciation 11,899.61 11,662.55

Interest Paid 12,817.80 8,599.03

(Profit)/Loss on Fixed Assets Scrapped / Sold (1.13) 3.24

(Profit)/Loss on Sale of Investment (25.22) (18.41)

Dividend Income (0.48) (31.39)

Operating profit before working capital changes 13,173.68 10,811.21

Adjustment for:

Trade and Other Receivables (5,219.86) (8,134.45)

Trade and Other Payables (53,035.53) (12,471.80)

Cash flow from / (used in) Operating activities (45,081.71) (9,795.04)

Direct Taxes Paid (350.00) (393.25)

Total cash from / (used in) operating activites (45,431.71) (10,188.29)

B Cash Flow from Investing Activities

Acqusition of Fixed Assets including Capital Work in Progress (5,418.73) (9,954.79)

Sale of Fixed Assets 6.24 9,212.78

(Increase) / Decrease in loans and advances 36,240.41 (2,223.64)

Proceed from sale of Investments 25.22 18.41

(Purchase)/sale of Investment 136.70 5,244.16

Dividend Income 0.48 31.39

Net Cash from Investing Activities 30,990.32 2,328.31

C Cash Flow from Financing Activities

Proceeds from Issue of Share Capital from conversion of Bonds and warrants - 2,685.00

Proceeds from Borrowings (13,005.79) (12,892.29)

Increase / Decrease in Reserves (811.10) 4,352.20

Interest Paid (12,817.80) (8,599.03)

Dividends Paid including tax thereon - -

Net Cash from Financing Activities (26,634.69) (14,454.12)

Net Increase / (decrease) in cash and cash equivalents (A + B + C) (41,076.08) (22,314.10) Cash and Cash Equivalents as at beginning of the year (As per Note 2.17) 45,213.40 5,730.18

Cash and Cash Equivalents as at end of the year (As per Note 2.17) 4,137.33 45,213.40

Cash and Cash Equivalents comprise of:

Cash and Bank Balances ( Refer Note 2.17) 4,126.20 44,273.12

Accrued Interest on fixed deposit with banks 11.13 940.28

Notes:

1) Figures in bracket represent outflows

2) Cash and cash equivalents include :

(a) Gain/(loss) on foreign exchange revaluation of ` 119.19 lakhs (P.Y. ` 86.84 lakhs).

(b) Fixed Deposit of ` 397.53 lakhs (P.Y. ` 36,019.50 lakhs) as margin deposit against acceptances and guarantees.

(c) Unclaimed dividend accounts of ` 68.06 lakhs (P.Y. ` 77.17 lakhs) which are not available for use by the company.

3) Previous Year’s figures have been recast / restated wherever necessary.

As per our report of even date For and on behalf of the BoardFor Contractor, Nayak & Kishnadwala Chartered Accountants H. K. Mittal A. J. Agarwal Manohar Bidaye Executive Chairman Managing Director Director


Suchita Shirambekar

Company Secretery



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SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE FINANCIAL STATEMENTS

1. SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis of Accounting

The financial statements are prepared under

the historical cost convention, on the accrual

basis of accounting and in conformity with

Generally Accepted Accounting Principles in India,

Accounting Standards as notified by the Companies

(Accounting Standards) Rules, 2006 and the other

relevant provisions of the Companies Act, 1956.

1.2 Use of Estimates

The preparation of financial statements in

conformity with Generally Accepted Accounting

Principles requires the management to make

estimates and assumptions that affect the reported

balances of assets and liabilities as of the date of

the financial statements and reported amounts

of income and expenses during the period. The

management believes that the estimates used

in the preparation of financial statements are

prudent and reasonable.

1.3 Fixed Assets

a) Fixed assets are stated at cost less

accumulated depreciation.

b) Cost includes cost of acquisition or

construction including attributable borrowing

cost, duties and other incidental expenses

related to the acquisition of the asset.

c) Operating costs and other incidental costs

including initial stores and spares of newly

acquired vessels till the port of first loading

are included in the cost of the respective

vessels.

d) Exchange differences arising on repayment

of foreign currency loans and year end

translation of foreign currency liabilities

relating to acquisition of depreciable assets

are, following option given by notification of

Ministry of Corporate Affairs (MCA) dated 29th

December 2011, adjusted to carrying cost of

the respective fixed assets.

e) Individual fixed assets costing up to ` 25,000

are fully written off.

1.4 Depreciation

a) Depreciation on all the vessels is computed

on Straight Line Method so as to write off

the original cost as reduced by the expected/

estimated scrap value over the balance useful

life of the vessels or the rates as prescribed

under the Schedule XIV of the Companies Act,

1956, whichever are higher. The said higher

rate ranges from 5% to 6% of the original cost

of the vessel.

b) Depreciation on all assets other than vessels is

computed on the Written Down Value method

in the manner and at the rates prescribed

under schedule XIV of the Companies Act,

1956.

c) On additions made to the existing vessels

depreciation is provided for the full year over

the remaining useful life of the ships.

d) Depreciation on furniture, fixtures and

electrical fittings installed at office premises

taken on lease is provided over the initial

period of lease.

1.5 Capital Work in Progress

All expenditure, including borrowings cost

incurred during the vessel acquisition period, are

accumulated and shown under this head till the

vessel is put to commercial use.

1.6 Retirement and Disposal of Ships

a) Profits on sale of vessels are accounted for on

completion of sale thereof.

b) Assets which are retired from active use and

are held for disposal are stated at the lower of

their net book value or net realisable value.

1.7 Inventories

Bunker and Lubes on vessels are valued at lower

of cost and Net Realisable Value ascertained on

First in First out basis.

1.8 Investments

a) Investments are classified into Long Term and

Current investments.

b) Long Term Investments are stated at cost of

acquisition and related expenses. Provision

for diminution, if any, in the value of such

investments is made to recognise a decline,

other than of a temporary nature.

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MERCATOR

c) Current Investments are stated at cost of

acquisition including incidental / related

expenses or at fair value as at 31st March 2012,

whichever is less and the resultant decline, if

any, is charged to revenue.

d) Investment in shares of subsidiaries outside

India is stated at cost by converting at the rate

of exchange at the time of their acquisition.

1.9 Incomplete Voyages

Incomplete voyages represent freight received and

direct operating expenses on voyages which are

not complete as at the Balance sheet date.

1.10 Borrowing Costs

Borrowing costs incurred for the acquisition of

vessels are capitalised till first loading of cargo,

only if the time gap between date of Memorandum

of Agreement and “Date when vessel is ready for

use” is more than three months.

Incidental expenses related to borrowing are

amortised over the term of the said borrowings.

1.11 Revenue Recognition

a) Income on account of freight earnings is

recognised in all cases where loading of the

cargo is completed before the close of the

year. All corresponding direct expenses are

also provided.

b) Where loading of the cargo is not completed

before the close of the year, revenue is not

recognised and the corresponding expenses

are carried forward to the next accounting

year.

c) Income from charter hire and demurrage are

recognised on accrual basis.

d) Income from services is accounted on

accrual basis as per the terms of the relevant

agreement.

e) Dividend on investments is recognised when

the right to receive the same is established by

the balance sheet date.

f) Insurance claims are accounted on accrual

basis when there is a reasonable certainty of

the realisability of the claim amount.

1.12 Foreign Exchange Transactions

a) Monetary Current assets and liabilities

denominated in foreign currency outstanding

at the end of the year are valued at the rates

prevalent on that date.

b) Exchange differences arising on Long Term

Foreign Currency Monetary (LTFCM) items

are, following option given by notification of

MCA dated 29th December 2011, treated in the

following manner:

i. In respect of borrowings relating to or

utilised for acquisition of depreciable

capital assets, the same is adjusted to

the cost of the relevant capital asset and

depreciated over the balance life of the

said capital asset.

ii. In other cases, the same is accumulated

in a ‘Foreign Currency Monetary Item

Translation Difference Account’. The

amount so accumulated in this account

is amortised over the balance period of

such assets / liabilities or 31st March 2020,

whichever is earlier.

c) Differences in translation of other monetary

assets and liabilities and realised gains and

losses on foreign currency transactions are

recognised in the Statement of Profit and Loss.

d) Exchange differences arising on long term

foreign currency loans given to non integral

foreign operations is accumulated in Foreign

Currency Fluctuation Reserve. On disposal

of investment, the balance in the reserve is

transferred to statement of profit and loss.

1.13 Derivative instruments and Hedge Accounting

Pursuant to ICAI Announcement “Accounting for

Derivatives” on the early adoption of Accounting

Standard AS 30 “Financial Instruments:

Recognition and Measurement”, the company

has adopted the Standard, to the extent that the

adoption does not conflict with existing mandatory

accounting standards and other authoritative

pronouncements, Company Law and other

regulatory requirements.

The company classifies foreign currency

derivatives in respect of the identified transactions

at the inception of each contract meeting the

hedging criterion, as cash flow hedges. Changes

in the fair value of derivatives classified as cash

flow hedges are recognised directly in reserves

and surplus (under the head “Hedging Reserves”)

and are reclassified into the statement of profit and

loss upon occurrence of the hedged transaction.

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In respect of other derivative transactions which do

not meet the hedging criteria, the changes in their

value are recognised in the Statement of Profit and

Loss.

1.14 Employees Benefits

a) Short – term employee benefits

All employee benefits payable wholly within

twelve months of rendering the service

are classified as short term employee

benefits. Benefits such as salaries, wages,

performance incentives, etc. are recognised at

actual amounts due in the period in which the

employee renders the related service.

b) Post – employment benefits

i. Defined Contribution Plans

Payments made to defined contribution

plans such as Provident Fund are charged

as an expense as they fall due.

ii. Defined Benefit Plans

The cost of providing benefit i.e. gratuity

is determined using the Projected Unit

Credit Method, with actuarial valuation

carried out as at the balance sheet date.

Actuarial gains and losses are recognised

immediately in the Statement of Profit and

Loss.

c) Other Long – term employee benefits

i. Other Long – term employee benefit

viz. leave encashment is recognised as

an expense in the statement of profit

and loss as and when it accrues. The

company determines the liability using

the Projected Unit Credit Method, with

actuarial valuation carried out as at the

balance sheet date. The actuarial gains

and losses in respect of such benefit are

charged to the statement of profit and

loss.

1.15 Lease Accounting

a) In respect of operating lease agreements

entered into by the Company as a lessee, the

lease payments are recognised as expense in

the statement of profit and loss over the lease

term.

b) In respect of operating lease agreement

entered into by the Company as a lessor, the

initial direct costs are recognised as expenses

in the year in which they are incurred.

1.16 Earning per share:

The company reports basic and diluted earnings

per share (EPS) in accordance with Accounting

Standard – 20. The Basic EPS has been computed

by dividing the income available to equity

shareholders by the weighted average number of

equity shares outstanding during the accounting

year. The diluted EPS have been computed using

the weighted average number of equity shares and

dilutive potential equity shares outstanding at the

end of the year.

1.17 Provision for Taxation :

a) The company has opted for the Tonnage

Tax scheme and provision for tax has

been accordingly made under the relevant

provisions of the Income Tax Act, 1961.

b) Tax on incomes on which the Tonnage Tax is not

applicable is provided as per other provisions

of the Income Tax Act, 1961.

c) Deferred tax resulting from timing differences,

if any, between book and tax profits for income

other than that covered under Tonnage Tax

scheme is accounted for under the liability

method, at the current rate of tax, to the extent

that the timing differences are expected to

reverse in future.

1.18 Impairment of assets

The Company reviews the carrying values of tangible

and intangible assets for any possible impairment

at each balance sheet date. Impairment loss, if

any, is recognised in the year in which impairment

takes place.

1.19 Provisions and Contingent Liabilities:

Provisions are recognised in the accounts in respect

of present probable obligations, the amount

of which can be reliably estimated. Contingent

Liabilities are disclosed in respect of possible

obligations that arise from past events but their

existence is confirmed by the occurrence or non

occurrence of one or more uncertain future events

not wholly within the control of the Company.

1.20 Premium on redemption of Bonds / Debentures

Premium on redemption of bonds / debentures is

adjusted against Securities Premium Account.

1.21 Cash and Cash equivalents

Cash and cash equivalents for the purpose of the

cash flow statement comprise cash at bank and in

hand and short-term investments with an original

maturity of three months or less.

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Notes forming part of the financial statements

2.1 Share Capital` in Lakhs

Particulars As atMarch 31, 2012

As atMarch 31, 2011

Authorised

35,00,00,000 Equity shares of ` 1/- par value. 3,500.00 3,500.00

200,00,000 Preference shares of ` 100/- par value. 20,000.00 20,000.00

23,500.00 23,500.00

Issued Capital

24,48,92,073 (24,48,92,073)Equity shares of ` 1/- each fully paid up 2,448.92 2,448.92

2,448.92 2,448.92

Subscribed and Paid Up Capital

Equity

24,48,92,073 (24,48,92,073) Equity shares of ` 1/- each fully paid up. 2,448.92 2,359.92

(a) Nil (89,00,000) shares of ` 1/- alloted on exercise of option of

conversion of 89,00,000 warrants issued on preferential basis during

the year.

-

89.00

2,448.92 2,448.92

Reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period

Equity Shares


As atMarch 31, 2011

Number of shares at the beginning of the year 244,892,073 235,992,073

Add: Shares issued on exercise of option of conversion of warrants - 8,900,000

Number of shares at the end of the year 244,892,073 244,892,073

The company has two class of shares referred to as equity shares having a par value of ` 1/- and preference

shares having a par value of ` 100/-. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividend in Indian rupees. The dividend whenever proposed by the Board of

Directors is subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the

remaining assets of the company, after distribution of all preferetial amounts. The distribution will be in

proportion to the number of equity shares held by the shareholders.

The aggregate number of bonus shares issued during the period of five years immediately preceeding the

balance sheet date is Nil (P.Y. 11,83,45,500 which were issued in the year 2005-06)

Details of each shareholder holding more than 5 percent shares in the company:

Name of the shareholder As at March 31, 2012 As at March 31, 2011

Equity shares of ` 1 each fully paid No of shares % of holding No of shares % of holding

H. K. Mittal 46,654,200 19.05 48,254,200 19.70

Archana Mittal 26,327,400 10.75 24,727,400 10.10

AHM Investments Private Limited 18,406,250 7.52 18,406,250 7.52

Lotus Global Investments Limited 14,229,669 5.81 14,350,000 5.86

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2.2 Reserves and Surplus ` in Lakhs


As atMarch 31, 2011

Capital Reserve

As per last Balance Sheet 1,693.49 1,693.49

Capital Redempetion Reserve


Securities Premium Account


Add: Received during the year on conversion of warrants - 4,806.00

Less: Premium paid on redemption of FCCBs - (91.39)

Less: Expenses on issue of shares pursuant to conversion of

warrants during the year

- (4.90)

Less: Premium on redemption of Unsecured debentures (81.65) (18.35)

36,374.92 36,456.57

Tonnage Tax Reserve (Utilised)


Debenture Redemption Reserve


Add/(Less):Transferred to/from General Reserve 4,230.00 (5,637.50)

25,562.50 21,332.50

General Reserve


Add/(Less) : Transferred from/to Debenture Redemption Reserve (4,230.00) 5,637.50

9,164.33 13,394.33

Foreign Exchange Fluctuation Reserve


Add/Less: Exchange fluctuation on Long Term Loans in relation to

non integral foreign operations (Net)

5,955.91 (631.76)

Add/Less: Transfer to Statement of Profit and Loss (6,187.00) 292.60

1,004.51 1,235.60

Hedging Reverse (Refer Note 1.13)

As per last Balance Sheet - -

Add/Less: For the year (498.35) -

(498.35) -

Surplus in Statement of Profit and Loss


Net (Loss) after tax transferred from Statement of Profit and Loss (11,866.90) (9,797.06)

(9,914.94) 1,951.96

Closing 84,911.29 97,589.28

2.3 Money received against share warrants ` in Lakhs


As atMarch 31, 2011

Warrants against share capital

1,88,80,000 warrants of face value of ` 13.75 each 2,596.00 2,596.00

During the year ended 31.03.2011 2,77,80,000 warrants (each warrant carrying option / entitlement to subscribe 1 number of equity share of ` 1/- each) on or before May 2012 at a price of ` 55/- per share were allotted on preferential basis. Out of these option for conversion of 89,00,000 warrants was excercised during the year 2010-11, the balance 1,67,70,000 warrants lapsed on 8th May 2012 and 21,10,000 warrants on 12th May 2012 on maturity for non exercise of option.

2,596.00 2,596.00

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2.4 Long term borrowings Amount ` in Lakhs


As atMarch 31, 2011

Secured

(A) Debentures 45,000.00 51,125.00

(B) External commercial borrowings 10,295.25 8,818.38

(C ) Term loans from banks 36,910.46 45,825.49

92,205.71 105,768.87

Notes:

(i) Security details

a) Debentures referred in (A) above are secured by first mortgage on specified vessels of the company

on pari-passu basis with other lenders and first / pari-passu charge on the specified immovable

properties.

b) External Commercial Borrowings referred in (B) above are secured by exclusive charge on specified

vessels of the company of which ` 2,557.83 lakhs (P.Y. ` Nil) additonally secured by charge on loan

extended to subsidiary as well as charge on cash flows of specified vessels.

c) Term Loan refered in (C) above are secured by first charge on specified vessels, on pari passu basis

with other lenders and includes ` 13,500 lakhs (P.Y. ` 8,000 lakhs) additonally secured by charge on

loan extended to subsidiary as well as charge on cash flows of specified vessels.

(ii) Terms of repayment and interest are as follows:Loan from ROI* No. of instalments

left as on 31.03.2012

Year of maturity

Amount outstanding31.03.2012

Amount outstanding31.03.2011

Debentures 10.50% 1 2013 1,125.00 2,812.50

Debentures 9.50% 6 2015 25,000.00 25,000.00

Debentures 9.50% 1 2015 10,000.00 10,000.00

Debentures 11.90% 3 2019 15,000.00 15,000.00

Indian Banks 15.25% 8 2016 16,000.00 17,600.00

Indian Banks 11.40% 2 2013 2,499.20 4,999.20

Indian Banks 13.90% 11 2018 8,000.00 8,000.00

Indian Banks 14.50% 2 2013 7,500.00 15,000.00

Indian Banks 11.75% 2 2013 1,249.60 2,499.60

Indian Banks 14.10% 11 2018 5,500.00 -

Indian Banks 10.05% 9 2017 12,117.95 12,691.32

Indian Banks 3.42% 8 2016 10,103.41 9,488.13

Indian Banks 5.55% 13 2019 2,557.83 -

116,652.99 123,090.74 Less: Shown in current maturities of long term debt 24,447.27 17,321.87

Balance shown as above 92,205.71 105,768.87

* Applicable Rate of Interest as on 31.03.2012

2.5 Other long term liabilities ` in Lakhs

Particulars As at March 31, 2012

As at March 31, 2011

Trade payable

Acceptances 4,189.72 3,656.84

Others

Liability towards cash flow hedges (Refer note 4.8) 481.76 -

4,671.48 3,656.84

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2.6 Long term provisions ` in Lakhs



Provision for employee benefits

Gratuity 222.35 118.69

Compensated absences 63.53 64.28

285.88 182.97

2.7 Short term borrowings ` in Lakhs



Secured

Loans repayable on demand

Working capital facilities from scheduled banks 2,320.72 1,363.33

Unsecured

1) Debentures

Nil (1000) - 10.25% Non convertible redeemable debentures of

` 10,00,000 each redeemed in January 2012 with 1% redemption

premium.

- 10,000.00

2) Working capital facilities from scheduled banks 1,976.22 -

4,296.94 11,363.33

Note:

Working capital facilities from Scheduled Banks are secured by second charge on specified vessels and 1st

charge on all receivables and other current assets of the company on pari-passu basis.

2.8 Trade payables ` in Lakhs



Due to Micro, Small and Medium Enterprises (Refer Note 5.1) - -

Others 8,861.63 61,520.30

8,861.63 61,520.30

2.9 Other current liabilities ` in Lakhs



Current maturities of long-term debt

1) Debentures (Refer Note 2.4 (ii) ( c) and (d)) 6,125.00 1,687.50

2) External commercial borrowings (Refer Note 2.4 (i)(b)) 2,365.99 669.75

3) Term loans from banks (Refer Note 2.4 (i) (c) and (d)) 15,956.29 14,964.62

Interest accrued and not due on borrowings 2,437.80 2,768.25

Unpaid dividend* 68.05 77.17

For Other liabilities

Salaries & wages payable 112.74 89.66

Statutory dues payables 554.99 914.61

Liability towards cash flow hedges (Refer Note 4.8) 16.60 -

Advance from customer - 165.66

Other payables** 99.68 281.83

27,737.14 21,619.06

* These figures do not include any amounts, due and outstanding, to be credited to Investor Education and

Protection Fund.

** Other payables includes uncompleted voyages net off income accrued but not due in the previous year.

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2.10 Short term provisions ` in Lakhs




Gratuity 24.71 13.19


45.89 34.62

2.11 Fixed Assets ` in Lakhs

Original Cost Depreciation/Amortisation Net Book Value

Net Book Value

Particulars As at April 1, 2011

Addition for the

year

Other Adjustments

Deduction for the

year

As at March 31,

2012

Upto March 31,

2011

Adjustment in respect of Assets

Sold/Discarded

/held for disposal

For the Year

Up to March 31,

2012

As at March 31,

2012

As at March 31,

2011

Tangible AssetsLand 11.31 – – – 11.31 – – – – 11.31 11.31

Office Premises

(Refer Note 1 , 2)

344.28 – – – 344.28 126.50 – 10.89 137.39 206.89 217.78

Vessels (Refer

Note 3)

212,288.68 3,087.39 2,317.04 – 217,693.11 42,794.48 – 11,794.76 54,589.24 163,103.87 169,494.19

Furniture and

Fixtures

314.57 – – – 314.57 246.00 – 49.00 295.00 19.57 68.56

Vehicles 254.62 – – 11.77 242.85 150.30 7.30 26.37 169.37 73.48 104.33

Office

Equipments

105.11 – – – 105.11 54.56 – 7.07 61.63 43.48 50.56

Computer

Equipments

115.22 14.30 – 1.10 128.42 93.03 0.46 11.52 104.09 24.33 22.20

Total 213,433.79 3,101.69 2,317.04 12.87 218,839.65 43,464.87 7.76 11,899.61 55,356.72 163,482.93 169,968.93Previous Year 222,009.09 9,954.78 (385.52) 18,144.54 213,433.81 41,116.39 9,314.06 11,662.55 43,464.88 169,968.93 180,892.69

Note

1) Includes cost of 10 shares of ` 50/- each fully paid in Mittal Tower Premises Co-op. Society Ltd.

2) Office premises having gross value ` 343.16 lakhs (P.Y. ` 343.16 lakhs) and accumulated depreciation

` 136.96 lakhs (P.Y. ` 126.11 /- lakhs) are given on operating Lease.

3) Other adjustments include exchange fluctation loss on Long term foreign currency Loans ` 2,317.04 lakhs

(P.Y. Exchange Fluctuation Gain ` 385.52 /- lakhs)

2.12 Investments ` in Lakhs

Particulars Nos As at March 31, 2012

Nos As at March 31, 2011

Non Current Investments – At cost

Trade investments (Unquoted)

Investment in Equity Instruments of Subsidiaries

Mercator Oil and Gas Limited 150,000 15.00 150,000 15.00

Mercator International Pte Limited 100,000 28.80 100,000 28.80

Mercator Offshore Holdings Pte. Limited ** 1 – 1 –

Mercator Petroleum Limited 89,000 8.90 89,000 8.90

Mercator Offshore (P) Pte Limited 13,992 4.57 13,992 4.57

Oorja Resources India Private Limited 25,000 2.50 – –

Mercator FPSO Private Limited 10,000 1.00 – –

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` in Lakhs



OthersInvestment in Equity InstrumentsMarg Swarnabhoomi Port Private Limited 1,250 0.13 1,250 0.13

Non trade investments (Unquoted)Investment in OthersUnits of Indian Real Opportunity Venture Capital Fund 36,459 364.59 40,479 404.78

Aggregate amount of Unquoted investments 425.49 462.18

Current Investments – at the lower of cost and fair valueQuotedInvestments in Mutual FundsAxis Equity Fund 500,000 50.00 500,000 50.00

SBI Magnum Insta Cash Fund Daily Dividend – – 597,004 100.00

(Market value of current investments on 31.3.12 is

` 51.75 lakhs (P.Y. ` 155.15 lakhs)

Aggregate amount of Quoted investments 50.00 150.00

Note: The Company has agreed to maintain its beneficial stake of 100% in its subsidiary viz. Mercator

International Pte. Ltd. and upto 51% in subsidiary/step down subsidiary viz. Mercator Offshore (P) Pte. Ltd.; and

Mercator Lines (Singapore) Ltd. to the respective lenders under their financial assistance.

** Cost ` 51/-

2.13 Long term loans and advances ` in Lakhs



Unsecured, Considered Good

Loans and advances to related parties* 17,892.62 56,564.14

Capital Advances 940.00 940.00

Capital Advances to related parties** 4,199.96 4,199.96

Deposits

Deposits with government and semi government bodies 17.28 17.28

Other deposits 940.21 927.71

Other loans and advances

Unamortised finance charges 269.78 351.30

Prepaid expenses - 0.82

MAT credit available 1,345.00 1,535.00

25,604.85 64,536.21

* Loans and advances to related parties

Mercator FPSO Private Limited 196.46 -

Mercator International Pte Limited 14,576.62 35,601.86

Mercator Offshore (P) Pte Limited 1.89 20,542.85

Mercator Offshore Holding Pte Limited - 44.65

Mercator Oil & Gas Limited - 92.04

Mercator Petroleum Limited 2,052.14 282.74

Oorja Resources India Private Limited 1,065.51 -

17,892.62 56,564.14

** Capital Advances to related parties

Vaitarna Marine Infrastructure Private Limited 4,199.96 4,199.96

4,199.96 4,199.96

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2.14 Other non current assets ` in Lakhs



Accrued interest on fixed deposit with banks 0.48 0.30

0.48 0.30

2.15 Inventories ` in Lakhs



At Cost

Bunker and lubes 1,740.89 2,348.64

1,740.89 2,348.64

2.16 Trade receivables ` in Lakhs




Debts outstanding for a period exceeding six months from the date they

were due for payment

9,908.12 8,371.19

Others 9,988.18 7,699.64

19,896.30 16,070.83

2.17 Cash and bank balances ` in Lakhs



Cash and cash equivalents

Cash in hand 3.02 3.31

Balances with banks 3,654.96 1,148.72

Deposits with banks with 3 months maturity 98.41 7,000.00

Others

Fixed Deposits with bank with maturity more than 3 months 369.81 36,121.08

4,126.20 44,273.11

Balances with banks in unpaid dividend accounts 68.06 77.17

Balances with banks includes amount in escrow account 4.90 4.90

Fixed Deposits with more than 12 months maturity 2.20 352.40

Balances with banks held as margin money deposits against guarantees 397.53 36,018.30

2.18 Short term loans and advances ` in Lakhs




Loans and advances to related parties* 323.13 340.08

Others

Advance to employees 51.65 57.82

Advance to suppliers 3,940.27 4,087.36

Advances recoverable 0.46 -

Inter corporate deposits to related parties** 1,850.00 -

Inter corporate deposits to others 1,834.51 1,253.39

Advance payment of tax (net of provisions) 3,259.77 1,653.01

Service tax receivable 68.45 123.48


Prepaid expenses 66.20 258.12

11,528.71 8,030.00

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` in Lakhs



Loans and advances to related parties

MLL Logistics Private Limited 323.13 318.13

MCS Holdings Pte Limited - 21.95

323.13 340.08

Inter corporate deposits to related parties

MLL Logistics Private Limited 1,850.00 -

1,850.00 -

2.19 Other current assets ` in Lakhs




Income accrued but not due * 1,194.38 -

1,205.03 939.99

* Income accrued but not due includes uncompleted voyages

2.20 Revenue from operations ` in Lakhs

Particulars Year Ended March 31, 2012

Year Ended March 31, 2011

Freight 31,028.06 43,143.66

Charter hire 14,773.92 13,423.72

Dispatch and demurrage 349.67 1,999.50

Ship management fees - 168.38

Cargo handling services 8,646.03 4,988.82

54,797.68 63,724.08

2.21 Other income ` in Lakhs



Dividend received on current investments 0.48 31.39

Rent received 93.68 144.00

Net gain on foreign currency transactions/translation 4,506.08 -

Interest income 2,479.13 6,326.10

Gain on sale of current investments (net) 25.22 18.41

Gain on sale of assets (net) 1.13 (3.24)

Insurance claims received 137.24 -

Miscellaneous income* 25.57 -

7,268.52 6,516.66

* Miscellaneous income includes sundry balances written off/back.

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2.22 Ship operating expenses ` in Lakhs



Bunker consumed 14,098.59 14,284.87

Vessel /Equipment hire expenses 6,341.40 15,575.62

Technical services 4,443.30 4,342.85

Agency, Professional and service expenses 646.79 639.58

Crew expenses 2,666.97 2,050.16

Communication expenses 130.38 124.30

Miscellaneous expenses 517.50 808.02

Commission 67.12 351.08

Insurance 713.49 678.68

Port expenses 2,273.97 2,413.81

Repairs and maintenance 8,044.67 6,807.90

Stevedoring, transport and freight 3,414.78 2,107.60

43,358.96 50,184.47

2.23 Employee benefits expenses ` in Lakhs



Salaries, wages, bonus, etc. 1,576.52 1,147.32

Contribution to provident and other funds 62.33 49.21

Employee welfare expenses 66.88 65.38

1,705.73 1,261.91

2.24 Finance cost ` in Lakhs



Interest expense 14,898.57 13,751.12

Other borrowing costs 298.66 1,174.01

Applicable net gain/loss on foreign currency transactions/translation 99.70 -

15,296.93 14,925.13

2.25 Other expenses ` in Lakhs



Rent 412.37 407.47

Payment to auditors

As auditors 20.00 15.00

For Tax Audit 2.00 1.75

For Other services (certification and other matters) 16.00 15.60

Repairs to office premises and premises acquired on lease 74.83 69.93

Insurance 24.26 21.34

Net loss on foreign currency transaction/translation - 425.22

Legal, Professional and consultancy expenses 143.31 132.61

Donation 0.70 0.60


Conveyance, car hire and travelling 212.94 206.77

Advertisement 9.26 4.29

Bad Debts and other amounts adjusted (Net) - 2.41


1,321.87 1,610.49

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3. ADDITIONAL DISCLOSURES AS PER REVISED SCHEDULE VI

3.1 Contingent Liabilities not provided forCurrent Year(` in Lakhs)

Previous Year(` in Lakhs)

Counter guarantees issued by the Company for guarantees obtained from

bank (net of margin).

5,243.83 2,190.81

Counter guarantees issued by the Company for guarantees obtained from

bank on behalf of subsidiaries.

256.05 253.64

Corporate guarantees issued by the company on behalf of subsidiaries. 101,320.89 50,611.22

TOTAL 1,06,820.77 53,055.67

3.2 Letters of comfort issuedCurrent Year(` in Lakhs)

Previous Year(` in Lakhs)

Letters of comfort issued by the company on behalf of wholly owned / step

down subsidiaries.

6,906.13 29,384.17

3.3 The company received the Show Cause cum Demand notices from the Commissioner of service tax aggregating to

` 7,453 Lakhs for FY 2006-07 to FY 2010-11. The Company has filed its reply against the said notices. There is

no further communication for the same from the authorities. The company is advised that the said demand is

legally unsustainable and hence the Company does not expect any liability in the matter.

3.4 No provision has been made in respect of disputed demands from Income-tax Authorities to the extent of

` 5697.51 Lakhs Lakhs (` 645.14 Lakhs), since the company has reasons to believe that it would get relief at the

appellate stage as the said demands are excessive and erroneous. Against the above, the Company has already

paid ` 1,541.77 Lakhs (NIL).

3.5 Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of

advances) as at March 31, 2012 ` NIL (` NIL).

3.6 CIF value of Imports

Current Year(` in Lakhs)

On CIF basis during the accounting year in respect of:

Stores & Spares 718.63

Capital Goods (including CWIP) 3014.50

3.7 Value of Imported & Indigenous Spare Parts consumed

Current Year

(` in Lakhs) %

Imported Spares 718.63 40 %

Indigenous Spares 1096.83 60 %

3.8 Expenditure in foreign currency


On Repairs/Renovations and expenses of Vessels 8431.96

On Bunker 7621.07

On Freight 654.85

On Vessel Expenses 1684.96

On Travelling 89.54

On Interest 872.04

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3.9 Earnings in foreign currency on account of


Shipping Income 7170.13

Other Income 1627.46

Note: – For previous year figures refer point 5.6

3.10 Remittance in foreign currencies for dividends

The Company has not remitted any amount in foreign currencies on account of dividends during the year and

does not have information as to the extent to which remittance, if any, of foreign currencies on account of

dividends have been made by/on behalf of non-resident shareholders. The particulars of dividend payable to

non-resident shareholders declared during the year is as under:

Current Year Previous Year

i) Number of non-resident shareholders - 1,839

ii) Number of ordinary shares held by them - 4,74,55,857

iii) Gross amount of dividend - 94.91

4. DISCLOSURES AS PER ACCOUNTING STANDARDS NOTIFIED BY THE COMPANIES (ACCOUNTING STANDARDS) RULES, 2006.

4.1 The company has opted for accounting the exchange differences arising on reporting of long term foreign

currency monetary items in line with the notification of Ministry of Corporate Affairs (MCA) dated 31st March

2009/29th December 2011 on Accounting Standard (AS)-11. In line with the above notification, gains / losses

arising during the year from the effect of changes in foreign exchange rates on foreign currency loans relating

to acquisition of depreciable capital assets, are adjusted to the cost of the fixed assets. The addition to fixed

assets on account of the same is ` 2,317.04 Lakhs (Previous year deduction ` 385.53 Lakhs).

4.2 In view of long term interest of the company in its subsidiaries and step down subsidiaries no provision is

made for diminution in value of investment, if any, in these subsidiary companies and step down subsidiary

companies.

4.3 Disclosures in accordance with Revised Accounting Standard (AS) – 15 on “Employee Benefits”:

Disclosure as required by AS-15 is as under:

(A) Defined Contribution Plans:

The Company has recognised the following amounts in the Statement of Profit and Loss for the year:

(` In Lakhs)

Sr. No.

Current Year Previous Year

i Contribution to Employees’ Provident Fund 55.47 42.96

ii Contribution to Employees’ Family Pension Fund NIL NIL

iii Contribution to Employees’ Superannuation Fund NIL NIL

Total 55.47 42.96

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(B) Defined Benefit Plans:

(i) Changes in the Present Value of Obligation

(` In Lakhs)

Sr. No.

Particulars For the Year Ended March 31, 2012

For the Year Ended March 31, 2011

Gratuity Leave Encashment


Present Value of Obligation as at April

1, 2011 (Opening)

131.88 85.70 87.28 58.56

Interest Cost 10.55 6.86 6.55 4.39

Past Service Cost NIL NIL NIL NIL

Current Service Cost 47.35 26.95 44.18 27.84

Curtailment Cost/ (Credit) NIL NIL NIL NIL

Settlement Cost/(Credit) NIL NIL NIL NIL

Benefits paid 5.90 19.35 4.89 18.34

Actuarial (Gain)/Loss 63.18 (15.45) (1.24) 13.25

Present Value of Obligation as at March

31, 2012

247.06 84.71 131.88 85.70

(ii) Expenses recognised in the Statement of Profit and Loss

(` In Lakhs)

Sr. No.

Particulars For the Year Ended March 31, 2012

For the Year Ended March 31, 2011



Current Service Cost 47.35 26.95 44.18 27.84

Past Service Cost NIL NIL NIL NIL

Interest cost 10.55 6.86 6.55 4.39

Curtailment Cost/ (Credit) NIL NIL NIL NIL

Settlement Cost/ (Credit) NIL NIL NIL NIL

Net Actuarial (Gain)/ Loss 63.18 (15.45) (1.24) 13.25

Employees’ Contribution NIL NIL NIL NIL

Total Expenses recognised in

Profit and Loss A/c

121.08 18.35 49.49 45.48

(ii) Following are the Principal Actuarial Assumptions used as at the balance sheet date:

Sr.No.

Particulars FY 2011-12Gratuity and Leave

Encashment

FY 2010-11Gratuity and Leave

Encashment

a Discount Rate 8.00% 7.5%

b Salary Escalation Rate –

Management

12% 12%

c Staff Turnover Rate 10% to 2% p.a. age related

on graduated scale

11%

d Mortality Table LIC (1994-96) Ultimate LIC (1994-96) Ultimate

The estimates of future salary increases considered in actuarial valuation takes into account inflation,

seniority, promotion and other relevant factors.

4.4 Segment Reporting

In accordance with paragraph 4 of Accounting Standard (AS) 17 ‘Segment Reporting’, the company has disclosed

segment result on the basis of Consolidated Financial Statements. The same are therefore not disclosed for

stand alone Financial Statements.

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4.5 Related Party Disclosures:

A List of Related Parties

I Subsidiaries – Fellow/ Step down subsidiaries

1 Mercator International Pte Limited (MIPL) – Singapore

2 Mercator Oil and Gas Limited (MOGL) – India

3 Mercator Petroleum Limited – India

4 Oorja Resources India Pvt. Ltd – India

5 Mercator FPSO Pvt. Ltd. – India

6 Mercator Offshore Holdings Pte Ltd (MOHPL) – Singapore

7 Mercator Offshore (P) Pte Ltd – (formerly known as Mercator Offshore (Nigeria) Pte Ltd

8 Oorja Holdings Pte.Limited. (OHL) Singapore

9 Mercator Lines Singapore Pte Ltd (MLS)

10 Mercator Offshore Ltd Singapore

11 Ivorene Oil Services Nigeria Ltd. (Singapore)

12 Varsha Marine Pte Ltd (Singapore)

13 Vidya Marine Pte Ltd (Singapore)

14 Mercator Lines (Panama) Inc

15 Chitra Prem Pte. Ltd. (Singapore)

16 Target Ship Management Pte. Ltd. (Singapore)

17 Oorja 1 Pte Ltd (Singapore)



20 Oorja Mozambique Limitada (Mozambique)

21 MCS Holdings Pte Ltd (Singapore)

22 Oorja (Batua) Pte. Ltd.(Singapore)

23 PT Karya Putra Borneo

24 PT Indo Perkasa (IPK)

25 Oorja Indo Petangis Four (Indonesia)

26 Oorja Indo Petangis Three (Indonesia)

27 Oorja Indo KGS (Indonesia)

28 Broadtec Mozambique Minas Limitada (Mozambique)

29 PT Mincon Indo Resources (Jakarta)

30 Bima Gema Permata PT (Jakarta)

31 Nuansa Sakti Kencana PT (Jakarta)

32 Varsha Vidya Inc (Panama)

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II Key Management Personnel

1 H.K Mittal

2 A.J. Agarwal

III Enterprises over which Key Management Personnel exercise significant control

1 AAAM Properties Private Limited

2 Ankur Fertilizers Private Limited

3 AHM Investments Private Limited.

4 Vaitarna Marine Infrastructure Ltd. (Erstwhile Mech Marine Engineers Pvt Ltd)

5 Mercator Healthcare Limited

6 Rishi Holding Private Limited

IV Enterprises over which Directors/Relative of Directors/Key Management Personnel/Relative of Key Management Personnel exercise significant influence.

1 MLL Logistics Private Limited

2 MMAXX Dredging Pvt Ltd (Liquidated during the year)

3 CMA Constructions & Properties Pvt Ltd (Liquidated during the year)

4 Zicom Electronic Security Systems Ltd

5 OMCI Ship Management Pvt Limited

V Relative of Key Management Personnel

1 Adip Mittal

B Details of Transactions with above parties (` In Lakhs)

Name of the Transaction Subsidiary Companies

Enterprises over which Key

Management Personnel exercise significant control

Enterprises over which Directors/Relative of Directors/

Key Management Personnel/Relative of Key Management

Personnel exercise significant influence.

Total

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Services Rendered 1,145.76 452.32 – – – – 1,145.76 452.32

Interest Income 1,638.94 4,241.94 – – 24.08 – 1,663.01 4,241.94

Services Received 654.85 – 30.60 – – 36.37 685.45 36.37

Sale of Capital Asset – 8,825.00 – – – – – 8,825.00

Purchase of Capital Asset – 7,481.60 – – – – – 7,481.60

Reimbursments of Expenses Paid 932.40 102.31 30.97 642.95 3.24 – 966.61 745.27

Reimbursments of Expenses Received

1,200.06 4,148.11 135.76 0.06 – 0.02 1,335.83 4,148.19

Finance Provided – –

(Including Loans & Equity

Conributions)

– –

Loans – –

Loans Given during the Year 5,093.34 29,872.36 – – – – 5,093.34 29,872.36

Loans Repaid During the Year 45,691.93 33,833.22 – – – – 45,691.93 33,833.22

Equity Contributions – –

During the Year – 4.57 – – – – – 4.57

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B Details of Transactions with above parties (` In Lakhs)

Name of the Transaction Subsidiary Companies

Enterprises over which Key Management

Personnel exercise significant control




Total

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Inter Corporate Deposits

Inter Corporate Deposits given

during the year

– – – – 1,850.00 – 1,850.00 –

Inter Corporate Deposits received

during the year

– – – – 157.50 – 157.50 –

Inter Corporate Deposits repaid

during the year

– – – – 157.50 – 157.50 –

Advances – –

Advances Given During the Year – – 15.38 4,914.46 5.00 – 20.38 4,914.46

Advances Received Back During

the Year

– 9.97 – – – 0.19 – 10.16

Advances Received From

Customers

– 465.65 – – – – – 465.65

Advances Adjusted Against Services

Rendered

– 299.99 – – – – – 299.99

Guarantees and Comfort Letters – –

Guarantees Given 320,534.75 58249.525 320,534.75 58,249.53

Outstanding as on 31.03.2012 – –

Comfort Letter 6,906.13 29,384.17 6,906.13 29,384.17

Guarantees 101,376.94 50,864.42 101,376.94 50,864.42

Outstanding balances as on 31.03.2012

– –

Loans, Advances and Receivables – –

Loans Advances and Receivables – –

Loans 17,892.61 56,586.09 – – – – 17,892.61 56,586.09

Advances – – 15.61 – 323.13 318.13 338.74 318.13

Capital Advances – – 4,199.96 – – – 4,1996.96 -

Receivables 190.08 759.91 – – – – 190.08 759.91

Outstanding Balances of Trade & Other Receivables & Payable as on 31.03.2012

Trade & Other Receivables 763.90 2.06 – – 924.36 1,003.53 1,688.26 1,005.59

Trade & Other Payables 669.34 – 19.62 129.33 – – 688.96 129.33

Advance Received From Customers – 165.66 – – – – – 165.66

Inter Corporate Deposit

Balance as on 31.03.2012 – – – – 1,850.00 – 1,850.00 -

Deposit

Balance as on 31.03.2012 – – 15.00 15.00 500.00 500.00 515.00 515.00

Remuneration paid to Key

Management Personnel

96.00 96.00

Remuneration paid to Relative of

Key Management Personnel

16.64 5.58

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Partywise details of material transactions (` In Lakhs)

Name of the Transaction Subsidiary Companies Enterprises over which Key Management





Total

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Services RenderedMercator Lines (Singapore) Limited 1,145.76 452.32 1,145.76 452.32

Total 1,145.76 452.32 – – 1,145.76 452.32Interest IncomeMercator International Pte Limited 623.90 3,468.43 623.90 3,468.43

Mercator Offshore (P) Pte. Ltd. 984.17 773.51 984.17 773.51

MLL Logistics Private Limited – 24.08 24.08 –

Total 1,608.06 4,241.94 – – 24.08 – 1,632.14 4,241.94Services ReceivedMercator International Pte Limited 654.85 654.85 –

Vaitarna Marine Infrastructure Ltd 30.60 30.60 –

MLL Logistics Private Limited 3.60 – 3.60

OMCI Ship Management Pvt Limited 32.77 – 32.77

Total 654.85 – 30.60 – – 36.37 685.45 36.37Sale of Capital AssetMercator Offshore (P) Pte. Ltd. 8,825.00 – 8,825.00

Total – 8,825.00 – – – – – 8,825.00Purchase of Capital Asset –

Mercator International Pte Limited 7,481.60 – 7,481.60

Total – 7,481.60 – – – – – 7,481.60Reimbursments of Expenses PaidAnkur Fertilizers Private Limited 7.60 7.60 –

MLL Logistics Pvt Limited 3.24 3.24 –

Mercator Offshore (P) Pte. Ltd. – – –

Mercator Lines (Singapore) Limited 932.40 932.40 –

Mercator International Limited 102.31 – 102.31

OMCI Ship Management Pvt Limited 23.37 630.85 23.37 630.85

Total 932.40 102.31 30.97 630.85 3.24 – 966.61 733.16Reimbursments of Expenses ReceivedMercator Lines (Singapore) Limited 2,898.80 – 2,898.80

Ankur Fertilizers Private Limited – –

Vaitarna Marine Infrastructure Ltd 0.06 – 0.06

Mercator FPSO Pvt Ltd 196.76 196.76 –

Mercator Offshore (P) Pte. Ltd. 636.00 1,215.58 636.00 1,215.58

MMAXX Dredging Pvt Ltd 0.02 – 0.02

OMCI Ship Management Pvt Limited 129.43

Total 832.76 4,114.38 129.43 0.06 – 0.02 832.76 4,114.46Finance Provided(Including Loans & Equity Conributions)LoansLoans Given during the YearMercator International Pte Limited 10,007.74 – 10,007.74

Mercator Petroleum Limited 1,769.40 1,769.40 –

Mercator Offshore (P) Pte. Ltd. 893.90 19,724.63 893.90 19,724.63

Mercator Oil & Gas Limited 1,203.70 1,203.70 –

Oorja Resources India Private Ltd 1,000.00 1,000.00 –

Total 4,866.99 29,732.36 – – – – 4,866.99 29,732.36

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Total

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Loans Repaid During the YearMercator International Pte Limited 21,220.63 32,703.82 21,220.63 32,703.82

Mercator Offshore (P) Pte. Ltd. 23,055.03 23,055.03 –

Total 44,275.66 32,703.82 – – – – 44,275.66 32,703.82Equity ContributionsDuring the YearMercator Offshore (P) Pte. Ltd. 4.57 – 4.57

Total – 4.57 – – – – – 4.57Inter Corporate DepositsInter Corporate Deposits given during the yearMLL Logistics Private Limited – – – – 1,850.00 1,850.00 –

Total – – – – 1,850.00 – 1,850.00 –Inter Corporate Deposits received during the yearZicom Electronic Security Systems

Ltd

– 157.50 157.50 –

Total – – – – 157.50 – 157.50 –Inter Corporate Deposits repaid during the yearZicom Electronic Security Systems

Ltd

– 157.50 157.50 –

Total – – – – 157.50 – 157.50 –AdvancesAdvances Given During the YearMLL Logistics Pvt Ltd 5.00 5.00 –

Vaitarna Marine Infrastructure Ltd 15.38 4,914.46 15.38 4,914.46

Total – – 15.38 4,914.46 5.00 – 20.38 4,914.46Advances Received Back During the YearOorja Resources India Pvt Ltd 9.97 – 9.97

MMAXX Dredging Pvt Ltd 0.19 – 0.19

Total – 9.97 – – – 0.19 – 10.16Advances Received From CustomersMercator Lines ( Singapore) Limited 465.65 – 465.65

Total – 465.65 – – – 465.65Advances Adjusted Against Services RenderedMercator Lines ( Singapore) Limited 299.99 – 299.99

Total – 299.99 – – – – – 299.99Guarantees and Comfort LettersGuarantees GivenMercator International Pte Ltd 9,823.00 – 9,823.00

Mercator Oil and Gas Limited 243,800.00 243,800.00 –

Mercator Offshore (P) Pte. Ltd. 76,734.75 37,282.75 76,734.75 37,282.75

Mercator Petroleum Limited 10,943.78 – 10,943.78

Total 320,534.75 58,049.53 – – – – 320,534.75 58,049.53Outstanding as on 31.03.2012Comfort LetterMercator Lines (Singapore) Limited 6,906.13 6,920.75 6,906.13 6,920.75

Varsha Marine Pte Ltd/ Vidya Marine

Pte Ltd

22,463.42 – 22,463.42

Total 6,906.13 29,384.17 – – – – 6,906.13 29,384.17

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Total

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

GuaranteesMercator International Pte Ltd 4,670.39 – 4,670.39

Mercator Offshore (P) Pte. Ltd. 72,424.81 35,050.25 72,424.81 35,050.25

Mercator Petroleum Limited 12,533.12 10,943.78 12,533.12 10,943.78

Total 84,957.94 50,664.42 – – – – 84,957.94 50,664.42Outstanding balances as on 31.03.2012Loans, Advances and ReceivablesLoans Advances and ReceivablesLoansMercator International Pte Limited 14,576.62 35,601.86 14,576.62 35,601.86

Mercator Petroleum Limited 2,052.14 2,052.14 –

Mercator Offshore (P) Pte. Ltd. 20,542.85 – 20,542.85

Total 16,628.75 56,144.71 – – – – 16,628.75 56,144.71AdvancesMLL Logistics Pvt Ltd 323.13 318.13 323.13 318.13

Vaitarna Marine Infrastructure Ltd 15.61 15.61 –

Total – – 15.61 – 323.13 318.13 338.74 318.13Capital AdvancesVaitarna Marine Infrastructure Ltd 4,199.96 4,199.96 –

Total – – 4,199.96 – – – 4,199.96 –ReceivablesMercator Lines ( Singapore) Limited 190.08 759.91 190.08 759.91

Total 190.08 759.91 – – – – 190.08 759.91Outstanding Balances of Trade andOther Receivables & Payables as on 31.03.2012Trade and Other ReceivablesMercator Lines ( Singapore) Limited 763.90 2.06 763.90 2.06

MLL Logistics Private Limited 924.36 1,003.53 924.36 1,003.53

Total 763.90 2.06 – – 924.36 1,003.53 1,688.26 1,005.59Trade and Other PayablesMercator Lines ( Singapore) Limited 669.34 669.34 –

OMCI Ship Management Pvt Limited 19.62 129.33 19.62 129.33

Total 669.34 – 19.62 129.33 – – 688.96 129.33Advance Received From CustomersMercator Lines (Singapore) Limited 165.66 – 165.66

Total – 165.66 – – – – – 165.66Inter Corporate DepositBalance as on 31.03.2012MLL Logistics Private Limited 1,850.00 1,850.00 –

Total – – – – 1,850.00 – 1,850.00 –DepositBalance as on 31.03.2012MLL Logistics Private Limited – – 500.00 500.00 500.00 500.00

Rishi Holding Private Limited – – 15.00 15.00 15.00 15.00

Total – – 15.00 15.00 500.00 500.00 515.00 515.00Remuneration paid to Key Management Personnel

96.00 96.00

Remuneration paid to Relative of Key Management Personnel

16.64 5.58

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4.6 Disclosure in respect of Leases as per AS 19:

(A) In respect of Operating Leases (as Lessee): ` In Lakhs

Year EndedMarch 31,

2012

Year endedMarch 31,

2011(a) Operating Leases

Disclosures in respect of cancellable agreements for office premises taken

on lease

(i) Lease payments recognised in the Statement of Profit and Loss 389.36 383.63

(ii) Significant leasing arrangements

The Company has given refundable interest free security deposits

under the agreements.

The lease agreements are upto 60 months.

These agreements also provide for periodical increase in rent.

During the year one of the lease agreement was renewed for 60 months

and the non cancellable period by both the parties is 24 months.

(iii) Future minimum lease payments under non-cancellable agreements

Not later than one year 348.34 165.88

Later than one year and not later than five years 159.66 NIL

Later than five years NIL NIL

(B) In respect of Operating Leases (as Lessor): ` In Lakhs

Year EndedMarch 31,

2012

Year endedMarch 31,

2011(a) Operating Leases

Disclosures in respect of cancellable agreements for office premises

given on lease



- During the year the above lease agreement has been expired

and the company has refunded the interest free security

deposit.

(iii) Future minimum lease payments under non-cancellable

agreements

- Not later than one year NIL NIL

- Later than one year and not later than five years NIL NIL

- Later than five years NIL NIL

General Description of leasing arrangement

(i) Leased Assets: Premises, Godown

(ii) Future lease rentals are determined as per Agreements.

4.7 Earning Per Share as per AS 20

Particulars Year Ended31/03/2012

Year ended31/3/2011

Net Profit after Tax

– Basic and Diluted (` in Lakhs) (11,866.90) (9803.81)

Number of Shares used in computing Earning Per Share

– Basic and Diluted 244,892,073 237,893,991

Earning per share (equity shares of face value ` 1/-)

– Basic and Diluted (in `) (4.85) (4.12)

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4.8 Derivative Instruments

(A) The Company uses foreign currency forward contracts to hedge its risks associated with foreign Currency

fluctuations relating to certain firm commitments and forecasted transactions. The use of foreign currency

forward contracts is governed by the Company’s strategy approved by the Board of Directors, which provide

principles on the use of such forward contracts consistent with the Company’s Risk Management Policy.

The Company does not use forward contracts for speculative purposes.

(B) Details of outstanding Hedging Contracts

Derivative contracts

Amount in foreign currency

Equivalent ` In Lakhs


Equivalent ` In Lakhs

March 31, 2012 March 31, 2012 March 31, 2011 March 31, 2011

USD/INR 39.49 2,000.00 NIL NIL



(C) Foreign Currency Exposures

The year end exposure in currencies other than the financial currency of the Company, that were not hedged

by a derivative instrument or otherwise are given below:

2011-12 2010-11` Lakhs Fx.Million ` Lakhs Fx.Million

Accounts Receivable 2469.88 USD 4.65 9,370.76 USD 20.99

Balance in EEFC Account 170.64 USD 0.33 32.19 USD 0.07

Fixed Deposit with foreign Banks 98.41 USD 0.19 Nil Nil

Loan & Advances 14773.46 USD 28.91 3,832.82 USD 8.18

SGD 0.21

EURO 0.13

JPY 3.02

0.00

SLR 0.13

DKK0.05

Advance from Customers - - 165.66 USD 0.37

Accounts Payable/Acceptances

(including capital commitments

made but not provided for)

2344.62 USD4.45

EURO 0.03

SGD 0.03

JPY 2.78

AED 0.13

2,732.68 USD 6.09

Euro 0.01

SGD 0.01

JPY 0.28

Borrowings 28968.90 USD 56.63 78,058.92 USD 174.82

5. OTHER DISCLOSURES AND NOTES

5.1 The company has not received any intimation from its vendors regarding the status under the Micro and Small

Enterprises Development Act 2006 and hence disclosures required under the said Act have not been made.

5.2 Tonnage Tax reserve

In terms of section 115VT of the Income Tax Act, 1961, the company is required to transfer amounts out of its

profit to Tonnage Tax Reserve. In view of NIL “Income from shipping” (As defined u/s 115V – I sub clause (i) and

(ii) of Income Tax Act, 1961), there is no transfer during the year as well as in the previous year to the Tonnage

Tax Reserve.

5.3 Note on Prem Divya

During the year, in Dec 2011, an Aframax Tanker, Prem Divya, suffered an accident near Fujairah Port. The

vessel is fully insured including for all third party liabilities. The insurance claim is being processed by the

insurance company and we are confident of its early settlement which would adequately cover the costs of

repairs and restoration of the tanker.

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5.4 Disclosure as required under clause 32 of the Listing agreement

Loans and Advances in nature of Loans given to subsidiaries Current Year

(` In Lakhs)

Previous Year

(` In Lakhs)

Mercator International (Pte) Ltd.

Balance outstanding at year end 14,576.62 35,601.86

Maximum amount Outstanding during the year. 36,838.27 67,792.24

Mercator Oil & Gas Limited

Balance outstanding at year end NIL 92.04

Maximum amount Outstanding during the year. 1,332.49 92.04

Mercator Offshore Limited

Balance outstanding at year end NIL NIL

Maximum amount Outstanding during the year. NIL 85.70

Mercator Petroleum Limited

Balance outstanding at year end 2,052.14 282.74

Maximum amount Outstanding during the year. 2,052.14 342.74

Mercator FPSO Private Limited

Balance outstanding at year end 196.46 NIL

Maximum amount Outstanding during the year. 196.46 NIL

MCS Holdings Pte Limited


Maximum amount Outstanding during the year. 53.78 31.46

Mercator Offshore Holding Pte. Ltd.


Maximum amount outstanding during the year 44.65 45.14

Mercator Offshore (P) Pte. Ltd.

Balance outstanding at year end 1.89 20,542.85

Maximum amount outstanding during the year 2,178.28 20,634.35

Oorja Resources India Private Limited

Balance outstanding at year end 1,065.61 NIL

Maximum amount outstanding during the year 1,065.61 NIL

5.5 (a) The Ministry of Corporate Affairs, Government of India vide its General Notification No. S.O. 301 (E) dated

8th February 2011 issued under Section 211(3) of the Companies Act, 1956 has exempted certain classes of

companies from disclosing certain information in their statement of profit and loss. The Company being a

‘shipping company’ is entitled to the exemption. Accordingly, disclosures mandated by paragraphs 4-D (a),

(b), (c) & (e) of Part II, Schedule VI to the Companies Act, 1956 have not been provided.

(b) The Ministry of Corporate Affairs, Government of India, vide General Circular No. 2 and 3 dated 8th February

2011 and 21st February 2011 respectively has granted a general exemption from compliance with section

212 of the Companies Act, 1956, subject to fulfillment of conditions stipulated in the circular. The Company

has satisfied the conditions stipulated in the circular and hence is entitled to the exemption. Necessary

Information relating to the subsidiaries has been included in the Consolidated Financial Statements.

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6. PREVIOUS YEAR FIGURES

The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements.

This has significantly impacted the disclosure and presentation made in the financial statements. Previous

year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s

classification / disclosure.



Suchita Shirambekar

Company Secretery



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MERCATOR

Consolidated Financial Statements

89


Auditors’ Report

The Members of

MERCATOR LIMITED (Formerly known as MERCATOR LINES LIMITED)

Auditors’ report to the Board of Directors on the Consolidated financial statements of Mercator Limited (formerly known as Mercator Lines Limited) and its subsidiaries

1. We have audited the attached consolidated balance sheet of Mercator Limited (the Company) and its subsidiaries

(collectively called ‘the Mercator Group’) as at March 31, 2012, the consolidated statement of profit and loss

and the consolidated cash flow statement for the year ended on that date, annexed thereto. These financial

statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on

these financial statements based on our audit.

2. We conducted our audit in accordance with the auditing standards generally accepted in India. Those Standards

require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts

and disclosures in the financial statements. An audit also includes assessing the accounting principles used and

significant estimates made by management, as well as evaluating the overall financial statement presentation.

We believe that our audit provides a reasonable basis for our opinion.

3. We did not audit the financial statements of subsidiaries, whose financial statements reflect total assets (net) of

` 2,05,097.08 lakhs as at 31st March, 2012, total revenues of ` 3,13,899.54 lakhs and net cash outflow of

` 2942.83 lakhs for the year ended on that date. These financial statements and other financial information have

been audited by other auditors whose reports have been furnished to us, and our opinion is based solely on the

report of the other auditors.

4. We report that the consolidated financial statements have been prepared by the Company’s management in

accordance with the requirements of Accounting Standard (AS) 21, Consolidated Financial Statements, as notified

by the Companies (Accounting Standards) Rules, 2006.

In our opinion and to the best of our information and according to the explanations given to us, the consolidated

financial statements give a true and fair view in conformity with the accounting principles generally accepted in

India:

a. in the case of the consolidated balance sheet, of the state of affairs of the Mercator Group as at March 31,

2012;

b. in the case of the consolidated statement of profit and loss , of the profit of the Mercator Group for the year

ended on that date; and

c. in the case of the consolidated cash flow statement, of the cash flows of the Mercator Group for the year

ended on that date.




Membership No 37391

Mumbai

25th May, 2012

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MERCATOR

Consolidated Balance Sheet as at March 31, 2012` in Lakhs

Particulars Note As at March 31, 2012


A EQUITY AND LIABILITIES1 Shareholder's funds

(a) Share capital 2.1 2,448.92 2,448.92

(b) Reserves and surplus 2.2 247,101.12 224,617.58

(c) Money received against share warrants 2.3 2,596.00 2,596.00

252,146.04 229,662.50

Minority interest 42,779.94 34,985.00

294,925.98 264,647.50

2 Non – current liabilities(a) Long-term borrowings 2.4 274,263.25 239,192.66

(b) Other long term liabilities 2.5 5,007.94 3,656.84

(c) Long-term provisions 2.6 398.59 245.91

279,669.78 243,095.41

3 Current liabilities(a) Short-term borrowings 2.7 34,424.05 32,888.00

(b) Trade payables 26,360.18 73,040.05

(c) Other current liabilities 2.8 72,870.95 77,777.93

(d) Short-term provisions 2.9 45.89 34.62

133,701.07 183,740.60

Total 708,296.83 691,483.51

B ASSETS1 Non – current assets

(a) Fixed assets 2.10 569,962.64 455,645.29

Capital work in progress 3,129.17 80,504.61

573,091.81 536,149.90

Goodwill on consolidation 1,517.41 139.64

(b) Non-current investments 2.11 2,897.99 409.16

(c) Deferred tax asset 467.74 323.64

(d) Long-term loans and advances 2.12 12,822.53 8,217.65

(e) Other non-current assets 2.13 263.59 0.30

591,061.07 545,240.28

2 Current assets(a) Current investments 2.11 1,173.81 2,436.26

(b) Inventories 2.14 9,322.78 6,271.71

(c) Trade receivables 2.15 50,875.34 37,634.19

(d) Cash and bank balances 2.16 28,045.46 71,159.44

(e) Short-term loans and advances 2.17 25,644.53 27,797.85

(f) Other current assets 2.18 2,173.83 943.77

117,235.75 146,243.22

Total 708,296.83 691,483.51


Notes forming part of the financial statements 2,3,4,5



Suchita Shirambekar

Company Secretery



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Consolidated Statement of Profit and Loss for the year ended March 31, 2012` in Lakhs

Particulars Note Year Ended March 31, 2012


INCOME

(a) Revenue from operations 2.19 369,990.76 282,888.46

(b) Other income 2.20 6,512.60 2,740.93

1 Total Revenue 376,503.36 285,629.39

EXPENSES:

(a) Operating expenses 2.21 299,780.02 212,303.08

(b) Employee benefit expenses 2.22 4,777.81 2,652.91

(c) Finance cost 2.23 21,294.71 23,790.58

(d) Depreciation and amortisation expenses 38,241.08 30,666.67

(e) Other expenses 2.24 7,172.71 6,277.32

2 Total Expenses 371,266.33 275,690.56

3 Profit before taxes (1 – 2) 5,237.03 9,938.83

4 Tax expense:

(a) Current tax (2,495.26) (1,573.66)

(b) Short provision of tax for earlier years – 4,715.17

(c) Deferred Tax 271.75 220.56

Profit for the year before adjustment for Minority Interest 3,013.52 13,300.90

Less: share of profit / loss transferred to Minority Interest (957.89) (3,900.97)

Profit for the period 2,055.63 9,399.93

Earnings per share (Equity share of ` 1/ – Each)

Basic and Diluted (In `) 4.6 0.84 1.97


Notes forming part of the financial statements 2,3,4,5



Suchita Shirambekar

Company Secretery



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MERCATOR

Consolidated Cash Flow Statement for the year ended March 31, 2012` in Lakhs

Particulars March 31, 2012 March 31, 2011A Cash Flow from Operating Activities

Net (Loss) / Profit Before Tax 5,237.03 9,938.83

Adjustment for:

Depreciation 38,241.08 30,666.67

Interest Paid (net) 20,331.77 21,523.31

(Profit)/Loss on Fixed Assets Scrapped / Sold 30.97 2,198.07

(Profit)/Loss on Sale of Investment (287.62) (18.41)

Dividend Income (0.48) (31.41)

Operating profit before working capital changes 63,552.75 64,277.06

Adjustment for:

Trade and Other Receivables (18,723.87) (30,404.87)

Trade and Other Payables (44,431.26) (10,369.88)

Cash flow from / (used in) Operating activities 397.62 23,502.31

Direct Taxes Paid (2,223.51) 3,362.07

Total cash from / (used in) operating activites (1,825.89) 26,864.38

B Cash Flow from Investing Activities Acqusition of Fixed Assets including Capital Work in Progress (76,713.29) (137,102.40)

Sale of Fixed Assets 121.57 88,517.50

(Increase) / Decrease in loans and advances (2,431.12) (984.40)

Proceed from sale of Investments 287.62 18.41

(Purchase)/sale of Investment (1,226.38) 4,613.36

Dividend Income 0.48 31.41

Net Cash from Investing Activities (79,961.12) (44,906.12)

C Cash Flow from Financing Activities Proceeds from Issue of Share Capital from conversion of Bonds and warrants – 2,685.00

Proceeds from Borrowings 30,966.10 15,746.13

Increase / Decrease in Reserves 20,427.92 3,319.37

Increase / Decrease in DT (144.10) 660.20

Increase / Decrease in Minority Intt 6,837.05 (416.78)

Interest Paid (net) (20,331.77) (21,523.31)

Dividends Paid including tax thereon – –

Net Cash from Financing Activities 37,755.20 470.61

Net Increase / (decrease) in cash and cash equivalents (A + B + C) (44,031.82) (17,571.13)

Cash and Cash Equivalents as at beginning of the year ( As per Note 2.16) 72,103.51 89,674.64

Cash and Cash Equivalents as at end of the year ( As per Note 2.16) 28,071.67 72,103.51

Cash and Cash Equivalents comprise of: Cash and Bank Balances ( Refer Note 2.16) 28,045.46 71,159.44

Accrued Interest on fixed deposit with banks 26.21 944.07

Notes:

1) Figures in bracket represent outflows

2) Cash and cash equivalents include :

(a) Gain/(loss) on foreign exchange revaluation of ` 119.19 lakhs (P.Y. ` 86.84 lakhs).

(b) Fixed Deposit of ` 397.53 lakhs (P.Y. ` 36,672.00 lakhs) as margin deposit against an acceptance.

(c) Unclaimed dividend accounts of ` 68.06 lakhs (P.Y. ` 77.17 lakhs) which are not available for use by the company .

3) Previous Year’s figures have been recast / restated wherever necessary.



Suchita Shirambekar

Company Secretery



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SIGNIFICANT ACCOUNTING POLICIES AND NOTES FORMING PART OF THE CONSOLIDATED FINANCIAL STATEMENTS

A. BASIS OF CONSOLIDATION

The Consolidated Financial Statements relate to Mercator Limited (the company) and its subsidiary companies.

The Company and its subsidiaries constitute the Group.

I. Basis of Accounting

1. The financial statements of the subsidiary companies used in the consolidation are drawn upto the same

reporting date as of the Company i.e. year ended 31st March, 2012.

2. The financial statements of the Group have been prepared in accordance with the principles and procedures

required for the preparation and presentation of consolidated financial statements as laid down under the

Accounting Standard 21 “Consolidated Financial Statements” as notified by the Companies (Accounting

Standards) Rules, 2006.

II. Principles of consolidation

The Consolidated Financial Statements have been prepared on the following basis:

1. The Financial statements of the Company and its subsidiary companies have been combined on a line by

line basis by adding together book values of similar items of assets, liabilities income and expenses. The

intra-group balances and intra-group transactions have been fully eliminated.

2. The difference between the cost of investments in the subsidiaries, over the net assets at the time of

acquisition of shares in the subsidiaries is recognised in the financial statements as Goodwill or Capital

Reserve, as the case may be.

3. Minority Interest in the net assets of consolidated subsidiaries consists of the amount of equity attributable

to the minority shareholders at the date on which investments are made by the company in the subsidiary

companies and further movements in their share in equity, subsequent to the date of the investment as

stated above.

4. Consolidated Financial Statements are prepared by applying uniform accounting policies to the extent

possible, in use at the group.

5. Indian Rupee is the reporting currency for the Group. However, the reporting currencies of non-integral

overseas subsidiaries are different from the reporting currency of the Group. The translation of those

currencies into Indian Rupee is performed for assets and liabilities, using the exchange rate as at the

balance sheet date, and for revenues, costs and expenses using average exchange rate during the reporting

period. Resultant currency translation exchange gain/loss is carried as Foreign Currency Translation

Reserve under Reserves and Surplus.

6. The carrying value of goodwill is tested for impairment as at each balance sheet date.

III. The following subsidiary companies are considered in the Consolidated Financial Statements:

Name of the Subsidiary Company Country of incorporation

% of holding either directly or through

subsidiary as at March 31, 2012



Mercator International Pte.Ltd. Singapore 100 100

Mercator Oil & Gas Ltd India 100 100

Mercator Petroleum Ltd. India 89 89

Mercator FPSO Pvt. Ltd. India 100 -

Oorja Resources India Pvt. Ltd. India 100 -

Mercator Offshore Holdings Pte. Ltd. Singapore 100 100

Mercator Offshore (P) Pte Ltd Singapore 100 100

Oorja Holdings Pte. Ltd Singapore 100 100

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MERCATOR

Name of the Subsidiary Company Country of incorporation





Mercator Lines (Singapore) Ltd Singapore 71.95 71.95

Mercator Offshore Ltd Singapore 100 100

Varsha Marine Pte. Ltd Singapore 100 100

Vidya Marine Pte. Ltd Singapore 100 100

Mercator Lines (Panama) Inc Panama 100 100

Oorja 1 Pte. Ltd. Singapore 100 100



Oorja Mocambique Minas, Limitada Mozambique 100 100

MCS Holdings Pte. Ltd. Singapore 100 100

Pt Oorja Indo Petangis Four Indonesia 100 100

Pt Oorja Indo Petangis Three Indonesia 100 100

Pt Oorja Indo KGS Indonesia 100 95

Broadtec Mocambique Minas, Lda Mozambique 85 85

PT Mincon Indo Resources Indonesia 100 100

Target Ship Management Pte. Ltd Singapore 100 100

Chitra Prem Pte. Ltd Singapore 100 100

Vidya Varsha Inc. Panama 100 -

Bima Gema Permata PT Jakarta 100 100

Nuansa Sakti Kenca PT Jakarta 100 100

Ivorene Oil Services Nigeria Ltd Singapore 100 100

Oorja (Batua) Pte Ltd Singapore 100 100

P.T. Karya Putra Borneo* Indonesia 50 -

P.T. Indo Pekasa Indonesia 51 -

* Considered as subsidiary for consolidation purposes on account of control as per principles of AS-21.

1. SIGNIFICANT ACCOUNTING POLICIES

1.1 Basis of Accounting

The financial statements are prepared under the historical cost convention, on the accrual basis of accounting

and in conformity with Generally Accepted Accounting Principles in India, Accounting Standards as notified by

the Companies (Accounting Standards) Rules, 2006 and the other relevant provisions of the Companies Act,

1956.

1.2 Use of Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles requires

the management to make estimates and assumptions that affect the reported balances of assets and liabilities

as of the date of the financial statements and reported amounts of income and expenses during the period.

The management believes that the estimates used in the preparation of financial statements are prudent and

reasonable.

1.3 Fixed Assets

a) Fixed assets are stated at cost less accumulated depreciation.

b) Cost includes cost of acquisition or construction including attributable interest, duties and other incidental

expenses related to the acquisition of the asset.

c) Operating costs and other incidental costs including initial stores and spares of newly acquired vessels till

the port of first loading are included in the cost of the respective vessels.

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d) Exchange differences arising on repayment of foreign currency loans and year end translation of foreign

currency liabilities relating to acquisition of depreciable assets are, following option given by notification of

Ministry of Corporate Affairs (MCA) dated 29th December 2011, adjusted to carrying cost of the respective

assets.

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

1.4 Goodwill

Goodwill arising on the acquisition of a subsidiary represents the excess of the cost of acquisition over the

Group’s interest in the net fair value of the identifiable assets and liabilities of the subsidiary recognised at the

date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less

any accumulated impairment losses.

1.5 Exploration and evaluation expenditure

Exploration and evaluation expenditure are capitalised when it is considered likely to be recoverable by future

exploitation or sale. This policy requires management to make certain estimates and assumptions as to future

events and circumstances, in particular whether an economically viable extraction operation can be established. Any

such estimates and assumptions may change as new information becomes available. If, after having capitalised the

expenditure under the policy, a judgment is made that recovery of the expenditure is unlikely, the relevant capitalised

amount will be written off to the statement of profit and loss .

1.6 Environmental Obligations

Restoration, rehabilitation and environmental expenditure incurred during the production phase are charged to

statement of profit and loss as incurred.

Provision for decommissioning, demobilisation and restoration provides for the legal obligations associated with

the retirement of the tangible long-lived asset that result from the acquisition, construction or development and/

or the normal operation of a long-lived asset. The retirement of a long-lived asset is it’s other than temporary

removal from service, including its sale abandonment, recycling or disposal in some other manner.

These obligations are recognised as liabilities when a legal obligation with respect to the retirement of an asset

is incurred, with the initial measurement of the obligation at fair value. These obligations are accreted to full

value over time through charges to the statement of income. In addition, an asset retirement cost equivalent to

these liabilities is capitalised as part of the related asset’s carrying value and is subsequently depreciated or

depleted over the asset’s useful life. A liability for asset retirement obligation is incurred over more than one

reporting period when the event creating the obligation occur over more than one reporting period. For example,

if a facility is permanently closed but the closure plan is developed over more than one reporting period, the

cost of closure of the facility is incurred over those reporting period when the closure plan is finalised. Any

incremental liability incurred in a subsequent reporting period is considered to be an addition layer of the

original liability. Each layer is initially measured at fair value. A separate layer shall be measured, recognised

and accounted for prospectively. The obligations consist primarily of costs associated with mine reclamation,

decommissioning and demobilisation of facilities and other closure activities.

For environmental issues that may not involve the retirement of an asset, where the Company is a responsible

party and is determined that a liability exists, and amounts can be quantified, the Company accrues for the

estimated liability existing in respect of such environmental issues. The Company applies the criteria for liability

recognition under the applicable accounting standards.

1.7 Depreciation

a) Depreciation on Vessels and on fixed assets held outside India is provided using straight line method based

on estimated useful life or on the basis of depreciation rates prescribed under respective local laws.

b) Depreciation on all other assets is computed on the Written Down Value method in the manner and at the

rates prescribed under schedule XIV of the Companies Act, 1956.

c) Depreciation on assets acquired under lease is spread over the lease period.

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MERCATOR

1.8 Capital Work in Progress

All expenditure and borrowings cost incurred during the asset acquisition period, are accumulated and shown

under this head till the asset is put to commercial use.

1.9 Retirement and Disposal of Assets

a) Profit on sale of assets is accounted for on completion of sale thereof.

b) Assets which are retired from active use and are held for disposal are stated at the lower of their net book

value or net releasable value.

1.10 Inventories

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

basis.

Inventory of coal is valued at the lower of cost or net realisable value. Cost is determined based on the weighted

average cost incurred during the period and includes an appropriate portion of fixed and variable overheads. Net

realisable value is the estimated sales amount in the ordinary course of business less the costs of completion

and selling expense.

1.11 Oil and Gas Assets:

The Successful Efforts method is followed for accounting for oil and gas as per the Guidance Note issued by the

Institute of Chartered Accountants of India on “Accounting for Oil and Gas producing activities”.

Expenditure incurred on the acquisition of a licence interest is initially capitalised on a licence by licence basis.

Costs are held, undepleted, within exploratory and development wells-in – progress until the exploration phase

relating to the licence area is complete or commercial oil and gas reserves have been discovered.

1.12 Investments

a) Investments are classified into Long Term and Current investments.

b) Long Term Investments are stated at cost of acquisition and related expenses. Provision for diminution, if

any, in the value of such investments is made to recognise a decline, other than of a temporary nature.

c) Current Investments are stated at cost of acquisition including incidental / related expenses or at fair value

as at 31st March 2012, whichever is less and the resultant decline, if any, is charged to revenue.

1.13 Incomplete Voyages

Incomplete voyages represent freight received and direct operating expenses on voyages which are not complete

as at the Balance sheet date.

1.14 Borrowing Costs

Borrowing costs incurred for the year for acquisition of vessels are capitalised till first loading of cargo, only if

the time gap between date of Memorandum of Agreement and Date when vessel is ready for use is more than

three months.

In respect of other assets, borrowing cost incurred till the date when asset is put to use is capitalised.

Incidental expenses related to borrowing are amortised over the term of the said borrowings.

1.15 Revenue Recognition

a) Income on account of freight earnings is recognised in all cases where loading of the cargo is completed

before the close of the year. All corresponding direct expenses are also provided.

b) Where loading of the cargo is not completed before the close of the year, revenue is not recognised and the

corresponding expenses are carried forward to the next accounting year.

c) Income from charter hire and demurrage are recognised on accrual basis.

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d) Income from services is accounted on accrual basis as per the terms of the relevant agreement.

e) Dividend on investments is recognised when the right to receive the same is established.

f) Insurance claims are accounted on accrual basis when there is a reasonable certainty of the realisability of

the claim amount.

g) Revenue from coal mining is recognised on transfer of risk, reward and ownership of the goods, and is

recorded net of returns, trade allowance, and government duties.

h) In case of a subsidiary, revenue from long-term construction contracts is recognised on the percentage of

completion method as mentioned in Accounting Standard (AS) 7 “Construction Contracts” notified by the

Companies (Accounting Standards) Rules, 2006. The stage of completion is measured with reference to

costs incurred as a percentage of total estimated costs for the project.

1.16 Foreign Exchange Transactions

a) Monetary Current assets and liabilities denominated in foreign currency, outstanding at the end of the year

are valued at the rates prevalent on that date.

b) Exchange differences arising on Long Term Foreign Currency Monetary (LTFCM) items are, following option

given by notification of MCA dated 29th December 2011, treated in the following manner:

- In respect of borrowings relating to or utilised for acquisition of depreciable capital assets, the same is

adjusted to the cost of the relevant capital asset and depreciated over the balance life of the said capital

asset.

- In other cases, the same is accumulated in a ‘Foreign Currency Monetary Item Translation Difference

Account’. The amount so accumulated in this account is amortised over the balance period of such

assets / liabilities or 31st March 2012, whichever is earlier.

c) Differences in translation of other monetary assets and liabilities and realised gains and losses on foreign

currency transactions are recognised in the Statement of Profit and Loss.

d) Exchange difference arising on long term foreign currency loans given to non integral foreign operations is

accumulated in foreign currency fluctuation reserve. On disposal of investment , the balance in the reserve

will be transferred to statement profit and loss.

1.17 Employees Benefits

a) Short – term employee benefits

All employee benefits payable wholly within twelve months of rendering the service are classified as short

term employee benefits. Benefits such as salaries, wages, performance incentives, etc. are recognised at

actual amounts due in the period in which the employee renders the related service.

b) Post – employment benefits

i. Defined Contribution Plans

Payments made to defined contribution plans such as Provident Fund are charged as an expense as

they fall due.

ii. Defined Benefit Plans

The cost of providing benefit i.e. gratuity is determined using the Projected Unit Credit Method, with

actuarial valuation carried out as at the balance sheet date. Actuarial gains and losses are recognised

immediately in the Statement Profit and Loss.

c) Other Long – term employee benefits

i. Other Long – term employee benefit viz. leave encashment is recognised as an expense in the statement

of profit and loss as and when it accrues. The company determines the liability using the Projected Unit

Credit Method, with actuarial valuation carried out as at the balance sheet date. The Actuarial gains

and losses in respect of such benefit are charged to the statement of profit and loss.

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1.18 Lease Accounting

a) In respect of operating lease agreements entered into as a lessee, the lease payments are recognised as

expense in the statement of profit and loss over the lease term.

b) In respect of operating lease agreement entered into as a lessor, the initial direct costs are recognised as

expenses in the year in which they are incurred.

c) At the beginning of the lease period, the finance lease is capitalised based on the fair value of leased assets

or based on the present value of a minimum lease payment, if the present value is lower than the fair

value. The minimum lease payment is bifurcated between the financial cost and the payment obligation

so as to produce a constant periodical interest rate for the obligation. Lease expense is recorded in the

Statement of Profit & Loss. Leased assets under finance lease are recorded in the fixed assets account and

depreciated based on the useful lives of the assets or the lease period, whichever is shorter.

1.19 Earning per share:

Basic and diluted earnings per share (EPS) are reported in accordance with Accounting Standard – 20. The

Basic EPS has been computed by dividing the income available to equity shareholders by the weighted average

number of equity shares outstanding during the accounting year. The diluted EPS is computed using the

weighted average number of equity shares and dilutive potential equity shares outstanding at the end of the

year.

1.20 Provision for Taxation :

a) The holding company has opted for the Tonnage Tax scheme and provision for tax has been accordingly

made under the relevant provisions of the Indian Income Tax Act, 1961.

b) Tax on incomes on which the Tonnage Tax is not applicable is provided as per the other provisions of the

Indian Income Tax Act, 1961.

c) In case of subsidiary companies engaged in shipping and incorporated in Singapore, no provision is made

for taxation on qualifying shipping income derived which is exempt form taxation under section 13 A of the

Singapore Income Tax Act and the Singapore Approved International shipping enterprise Tax Incentive.

d) In respect of a subsidiary company in Singapore engaged in offshore drilling & support services, no

provision for tax is made for qualifying offshore income as it is exempt from taxation under Section 13 F of

Singapore Income Tax Act.

e) In respect of subsidiary companies incorporated in Singapore and Indonesia and engaged in activities other

than shipping and offshore, provision for taxation is made as per the applicable local laws of the respective

countries.

f) Deferred tax resulting from timing differences, if any, between book and tax profits for income other than

that covered under relevant Tax exempt scheme is accounted for under the liability method, at the current

rate of tax, to the extent that the timing differences are expected to be reversed in future.

1.21 Impairment of assets

A review is done of the carrying values of tangible and intangible assets for any possible impairment at each

balance sheet date. Impairment loss, if any, is recognised in the year in which impairment takes place.

1.22 Provisions and Contingent Liabilities:

Provisions are recognised in the accounts in respect of present probable obligations, the amount of which can

be reliably estimated. Contingent Liabilities are disclosed in respect of possible obligations that arise from past

events but their existence is confirmed by the occurrence or non occurrence of one or more uncertain future

events not wholly within the control of the Company or its subsidiary companies.

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1.23 Derivative instruments and hedge accounting

The Group uses foreign currency forward contracts; forward freight agreements, options on forward freight

agreements and currency options to hedge its risks associated with foreign currency fluctuations and

fluctuations in freight rates relating to certain firm commitments and forecasted transactions. The Company

has designated these hedging instruments as cash flow hedges or economic hedges applying the recognition

and measurement principles set out in the Accounting Standard 30 “Financial Instruments : Recognition and

Measurement” (AS – 30).

The use of hedging instruments is governed by the Company’s policies approved by the board of directors, which

provide principles on the use of such financial derivatives consistent with the Company’s risk management

strategy.

Derivatives are initially recognised at fair value at the dates the derivative contracts are entered into and are

subsequently re-measured to their fair values at each balance sheet date.

The resulting gain or loss is recognised in the statement of profit and loss immediately unless the derivative is

designated and effective as a hedging instrument, in which event the timing of the recognition in the statement

of profit and loss depends on the nature of the hedge relationship.

Hedge accounting

Hedges which include derivatives, embedded derivatives and non-derivatives in respect of price risk, are

designated as either hedges of fair value of recognised assets or liabilities or fair commitments (fair value

hedges) or hedges of highly probable forecast transactions (cash flow hedges).

Some forward freight agreements that the Group has entered into fall within the definition of fair value hedge.

Some other forward freight agreements fall within the definition of cash flow hedge as described below.

At the inception of the hedge relationship, the relationship between the hedging instrument and hedged item

is determined, along with its risk management objectives and the strategy for undertaking the hedge. At the

inception of the hedge and on a quarterly basis, the effectiveness of the hedging relationship in offsetting

changes in fair values or cash flows of the hedged item is determined.

Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges will be recorded in

the statement of profit and loss immediately, together with any changes in the fair value of the hedged item that

is attributable to the hedged risk.

Hedge accounting will be discontinued when the Group revokes the hedging relationship, the hedging instrument

expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. The adjustment to the

carrying amount of the hedged item arising from the hedged risk will be amortised to the statement of profit

and loss from that date.

Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated as and qualify as cash

flow hedges are deferred in equity. The gain or loss relating to the ineffective portion of the hedge, if any, is

recognised immediately in the statement of profit and loss.

Amounts deferred in equity will be recycled in the profit or loss in the periods when the hedged item is

recognised in the statement of profit and loss. However, when the forecast transaction that is hedged results in

the recognition of a non-financial asset or a non-financial liability, the gains and losses previously deferred in

equity will be transferred from equity and included in the initial measurement of the cost of the asset or liability.

Hedge accounting will be discontinued when the Group revokes the hedging relationship, the hedging instrument

expires or is sold, terminated, or exercised, or no longer qualifies for hedge accounting. Any cumulative gain or

loss deferred in equity at that time will remain in equity and will be recognised when the forecast transaction

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is ultimately recognised in the statement of profit and loss. When a forecast transaction is no longer expected

to occur, the cumulative gain or loss that had been deferred in equity will be recognised immediately in the

statement of profit and loss.

1.24 Cash and Cash equivalents

Cash and cash equivalents for the purpose of the cash flow statement comprise cash at bank and in hand and

short-term investments with an original maturity of three months or less.

2.1 Share Capital ` in Lakhs


As atMarch 31, 2011

Authorised 35,00,00,000 Equity shares of ` 1/- par value. 3,500.00 3,500.00

200,00,000 Preference shares of ` 100/- par value. 20,000.00 20,000.00

23,500.00 23,500.00

Issued Capital 24,48,92,073 (24,48,92,073)Equity shares of ` 1/- each fully paid up 2,448.92 2,448.92

2,448.92 2,448.92

Subscribed and Paid Up Capital Equity

24,48,92,073 (24,48,92,073) Equity shares of ` 1/- each fully paid up. 2,448.92 2,359.92

(a) Nil (89,00,000) shares of ` 1/- alloted on exercise of option of

conversion of 89,00,000 warrants issued on preferential basis during

the year.

-

89.00

2,448.92 2,448.92

Reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period

Equity Shares


As atMarch 31, 2011

Number of shares at the beginning 244,892,073 235,992,073

Add: Shares issued on exercise of option of conversion of warrants - 8,900,000

Number of shares at the end 244,892,073 244,892,073

The company has two class of shares referred to as equity shares having a par value of ` 1/- and preference

shares having a par value of ` 100/-. Each holder of equity shares is entitled to one vote per share.

The Company declares and pays dividend in Indian rupees. The dividend proposed by the Board of Directors is

subject to the approval of the shareholders in the ensuing Annual General Meeting.

In the event of liquidation of the Company, the holders of equity shares will be entitled to receive any of the

remaining assets of the company, after distribution of all preferetial amounts. The distribution will be in

proportion to the number of equity shares held by the shareholders.

The aggregate number of bonus shares issued during the period of five years immediately preceeding the

balance sheet date is Nil (P.Y. 11,83,45,500 which were issued in the year 2005-06)

Details of each shareholder holding more than 5 percent shares in the company:

Name of the shareholder As at March 31, 2012 As at March 31, 2011Equity shares of ` 1 each fully paid No of shares % of holding No of shares % of holding

H. K. Mittal 46,654,200 19.05 48,254,200 19.70

Archana Mittal 26,327,400 10.75 24,727,400 10.10

AHM Investments Private Limited 18,406,250 7.52 18,406,250 7.52

Lotus Global Investments Limited 14,229,669 5.81 14,350,000 5.86

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2.2 Reserves and Surplus ` in Lakhs



Capital Reserve As per last Balance Sheet 1,693.49 1,693.49

Capital Redempetion Reserve As per last Balance Sheet 4,000.00 4,000.00

Securities Premium Account As per last Balance Sheet 36,456.57 31,765.21

Add: Received during the year on conversion of warrants - 4,806.00

Less: Premium paid on redemption of FCCBs - (91.39)

Less: Expenses on issue of shares pursuant to conversion of warrants

during the year

- (4.90)

Less: Premium on redemption of Unsecured debentures (81.65) (18.35)

36,374.92 36,456.57

Tonnage Tax Reserve (Utilised) As per last Balance Sheet 17,524.83 17,524.83

Debenture Redemption Reserve As per last Balance Sheet 21,332.50 26,970.00

Add/(Less):Transferred to/from General Reserve 4,230.00 (5,637.50)

25,562.50 21,332.50

General Reserve As per last Balance Sheet 13,394.33 7,756.83

Add/(Less) : Transferred from/to Debenture Redemption Reserve (4,230.00) 5,637.50

9,164.33 13,394.33

Capital Reserve on Consolidation 69,625.88 60,770.89

Foreign Exchange Currency Translation Reserve 10,787.30 (1,596.72)

Foreign Exchange Fluctuation Reserve As per last Balance Sheet 1,235.60 1,574.76

Add/Less: Exchange fluctuation on Long Term Loans in relation to non

integral foreign operations (Net)

5,955.91 (631.76)

Add/Less: Transfer to Statement of Profit and Loss (6,187.00) 292.60

1,004.51 1,235.60

Hedging Reverse As per last Balance Sheet - -

Add/Less: For the year (498.35) -

(498.35) -

Surplus in Statement of Profit and Loss As per last Balance Sheet 69,806.09 60,406.16

Net Profit after tax transferred from Statement of Profit and Loss 2,055.63 9,399.93

71,861.72 69,806.09

247,101.12 224,617.58

2.3 Money received against share warrants` in Lakhs


As at 31. March 2011

Warrants against share capital 1,88,80,000 warrants of face value of ` 13.75 each 2,596.00 2,596.00

During the year ended 31.03.2011 2,77,80,000 warrants (each warrant

carrying option / entitlement to subscribe 1 number of equity share

of ` 1/- each) on or before May 2012 at a price of ` 55/- per share

were allotted on preferential basis. Out of these option for conversion

of 89,00,000 warrants was excercised during the year 2010-11, the

balance 1,67,70,000 warrants have lapsed on 8th May 2012 and

21,10,000 warrants on 12th May 2012 on non exercise of option.

2,596.00 2,596.00

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2.4 Long term borrowings` in Lakhs



Secured (A) Debentures 45,000.00 51,125.00

(B) Foreign Currency Loans 192,352.79 152,818.86

(C) Term loans from banks 36,910.46 35,248.80

274,263.25 239,192.66

Notes:

Security details

a) Debentures referred in (A) above are secured by first mortgage on specified vessels of the company on

pari-passu basis with other lenders and first / pari- passu charge on the specified immovable properties.

b) Foreign Currency Loan referred in (B) above are secured by, wherever applicable

(i) By way of exclusive charge on specified vessels

(ii) By way of pari-passu charge on specified vessels

(iii) By way of exlusive charge on specified mining assets

(iv) Corporate guarantees

(v) Charge on loan provided to subsidiary

(vi) Assigment of contract(s); earnings; insurance

(vii) Charge on shares; deposits & accounts

c) External Commercial Borrowings included in (B) above are secured by exclusive charge on specified

vessels of the company of which ` 2,557.83 lakhs (P.Y. ̀ Nil) additonally secured by charge on loan extended

to subsidiary as well as charge on cash flows of specified vessels.

d) Term Loan refered in (C) above are secured by first charge on specified vessels, on pari passu basis

with other lenders and includes ` 13,500 lakhs (P.Y. ` 8,000 lakhs) additonally secured by charge on loan

extended to subsidiary as well as charge on cash flows of specified vessels.

Terms of repayment and interest are as follows: ` in Lakhs

Loan from ROI* No. of instalments left as on

31.03.2012

Year of maturity

Amount outstanding 31.03.2012


Debentures 10.50% 1 2013 1,125.00 2,812.50

Debentures 9.50% 6 2015 25,000.00 25,000.00

Debentures 9.50% 1 2015 10,000.00 10,000.00

Debentures 11.90% 3 2019 15,000.00 15,000.00

Indian Banks 15.25% 8 2016 16,000.00 17,600.00

Indian Banks 11.40% 2 2013 2,499.20 4,999.20

Indian Banks 13.90% 11 2018 8,000.00 8,000.00

Indian Banks 14.50% 2 2013 7,500.00 15,000.00

Indian Banks 11.75% 2 2013 1,249.60 2,499.60

Indian Banks 14.10% 11 2018 5,500.00 -

Indian Banks 10.05% 9 2017 12,117.95 12,691.32

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Loan from ROI* No. of instalments left as on

31.03.2012

Year of maturity



Indian Banks 3.42% 8 2016 10,103.41 9,488.13

Indian Banks 5.55% 13 2019 2,557.83 -

Indian Banks Libor +4.25% 3 2016 7,140.38 12,502.00

Indian Banks Libor +4.30% 16 2017 10,231.20 -



Indian Banks Libor +3.35% - - - 35,050.25

Indian Banks Libor +0.95% 21 2018 54,012.02 54,095.19

Foreign Banks Libor +2.50% 31 2020 21,605.71 -

Foreign Banks Libor +1.0% 6 2015 6,906.06 6,920.75

Foreign Banks Libor +0.95% - - - 11,231.71






Indian Banks 2.10% 1 2013 2,557.80 2,232.50

Indian Banks 2.10% - - - 4,465.00

323,273.65 294,456.91

Less: Shown in current maturities of long term debt 49,010.40 55,264.25

Balance shown as above 274,263.25 239,192.66

* Applicable Rate of Interest as on 31.03.2012

2.5 Other long term liabilities

` in Lakhs



Trade payable 80.68 -

Acceptances 4,189.72 3,656.84

Others

Due to Related Party 255.78 -

Liability towards cash flow hedges 481.76 -

5,007.94 3,656.84

2.6 Long term provisions

` in Lakhs




Gratuity 335.06 181.63


398.59 245.91

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2.7 Short term borrowings

` in Lakhs



SecuredLoans repayable on demand

Working capital facilities from banks* 32,447.83 15,744.00

UnsecuredDebentures1) Nil (1000) - 10.25% Non convertible redeemable debentures of `

10,00,000 each redeemed in January 2012 with 1% redemption premium.

- 10,000.00

2) 2.5% Convertible bond B** - 7,144.00

3) Working capital facilities from scheduled bank 1,976.22 -

34,424.05 32,888.00

Note:

* Working capital facilities from Banks are secured by second charge on specified vessels and 1st charge on

all receivables and other current assets of the company on pari-passu basis; and further by way of Corporate

Guarantees, wherever applicable.

** The convertible bond B were convertible to ordinary equity shares of the Company at the option of the holders

of the Bond B on or before March 14, 2012; at a fixed price of 76 Singapore cents per share based on the nominal

issued amount of the bonds totalling to USD 16 Mn. However the Bond B holders did not exercise their options

and on March 20, 2012, the company has repurchased the Bonds B in its entirety.

2.8 Other current liabilities` in Lakhs



Current maturities of long-term debt

1) Debentures 6,125.00 1,687.50

2) Foreign Currency Loan (Refer Note 2.4 (b) & (c)) 27,044.06 40,726.75

3) Term loans from banks (Refer Note 2.4 (d) 15,956.29 12,850.00

Interest accrued and not due on borrowings 2,850.09 3,345.90

Income received in advance 14,589.66 9,068.39

Unpaid dividend* 68.05 77.17

For Other liabilities

Salaries & wages payable 378.92 95.36

Statutory dues payables 601.18 921.51

Liability towards cash flow hedges 16.60 -

Advance from customer 0.17 165.66

Other payables** 5,240.93 8,839.69

72,870.95 77,777.93

* These figures do not include any amounts, due and outstanding, to be credited to Investor Education and

Protection Fund.

** Other payables includes uncomplete voyages net off income accrued but not due in the previous year.

2.9 Short term provisions` in Lakhs




Gratuity 24.71 13.19


45.89 34.62

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annual report 2011-122.

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2.11 Investments ` in Lakhs



Non Current Investments – At cost

Trade investments (Unquoted)

Investment in Equity Instruments

Marg Swarnabhoomi Port Private Limited 1250 0.13 1,250 0.13

Others – 2,533.27 – 4.25

Non trade investments (Unquoted)

Investment in Others

Units of Indian Real Opportunity Venture Capital Fund 36459 364.59 40,479 404.78

Aggregate amount of Unquoted investments 2,897.99 409.16

Current Investments – at the lower of cost and fair value

Quoted

Investments in Mutual Funds

Axis Equity Fund 500000 50.00 500000 50.00

SBI Magnum Insta Cash Fund Daily Dividend – – 597,004 100.00

Axis Infra Bond – 1,118.77 – 2,286.26

(Market value of current investments on 31.3.12

is ` 1,170.72 lakhs (P.Y. ` 2,441.41 lakhs)

Aggregate amount of Quoted investments 1,168.77 2,436.26

Unquoted

Investment in Shares – 5.04 – –

Aggregate amount of Unquoted investments 5.04 –

Aggregate amount of Current investments 1,173.81 2,436.26

2.12 Long term loans and advances ` in Lakhs




Capital Advances 1,136.46 940.00

Capital Advances to related parties 4,199.96 4,199.96

Deposits

Deposits with government and semi government bodies 18.03 17.28

Other deposits 1,277.25 1,173.29

Exploration and development expenses recoverable 2,053.06 -

Deffered exploration and development of mine 2,151.88 -

Advances Recoverable 371.11 -

Other loans and advances


Prepaid expenses 1,345.00 0.82

MAT credit available - 1,535.00

12,822.53 8,217.65

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2.13 Other non current assets` in Lakhs



Assets not in use 233.81 -

Prepaid Tax 29.30 -


263.59 0.30

2.14 Inventories` in Lakhs



At Cost

Coal 3,011.95 2,399.73

Bunker and lubes 6,310.83 3,871.98

9,322.78 6,271.71

2.15 Trade receivables ` in Lakhs




Debts outstanding for a period exceeding six months from the date

they were due for payment 12,268.70 8,462.66

Others 38,606.64 29,171.53

50,875.34 37,634.19

2.16 Cash and bank balances` in Lakhs



Cash and cash equivalents

Cash in hand 95.68 10.82

Balances with banks 20,480.70 8,907.66

Deposits with banks with 3 months maturity 1,535.58 26,119.88

Others

Fixed Deposits with bank with maturity more than 3 months 5,933.50 36,121.08

28,045.46 71,159.44

Balances with banks in unpaid dividend accounts 68.06 77.17

Balances with banks includes amount in escrow account 4.90 4.90

Fixed Deposits with more than 12 months maturity 2,713.50 352.40

Balances with banks held as margin money deposits against

guarantees 397.53 36,672.00

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2.17 Short term loans and advances ` in Lakhs




Loans and advances to related parties 323.13 340.07

Deposits 30.78 –

Others

Advance to employees 161.26 57.82

Advance to suppliers 11,960.94 15,635.30

Advances recoverable 3,944.64 6,663.50

Inter corporate deposits to related parties 1,850.00 –

Inter corporate deposits to others 1,834.51 1,253.39

Advance payment of tax (net of provisions) 1,048.92 625.55

Indirect Tax receivable 164.92 123.48

Insurance receivable 1,810.31 968.85


Prepaid expenses 2,380.85 1,873.15

25,644.53 27,797.85

2.18 Other current assets ` in Lakhs




Statutory Dues 6.06 –

Contract cost incurred 947.66 –

Income accrued but not due * 1,194.38 –

2,173.83 943.77

* Income accrued but not due includes uncomplete voyages

2.19 Revenue from operations ` in Lakhs



Freight 60,621.22 61,911.84

Charter hire 75,304.34 78,266.11

Dispatch and demurrage 780.24 3,904.52

Sale of Coal 224,235.83 133,638.99

Cargo handling services 9,049.13 5,167.00

369,990.76 282,888.46

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2.20 Other income ` in Lakhs



Dividend received on current investments 0.48 31.41

Rent received 93.68 144.00

Net gain on foreign currency transactions/transalation 4,763.74 -

Net gain on Derivatives translation 13.81 -

Interest income 962.94 2,267.27

Gain on sale of current investments (net) 287.62 18.41

Insurance claims received 137.24 -

Miscellaneous income 253.09 279.84

6,512.60 2,740.93

2.21 Operating expenses ` in Lakhs



Purchase of Coal 153,103.69 98,122.77

Coal Mining and Logistics expenses 53,190.23 25,174.76

Bunker consumed 19,704.82 17,546.60

Vessel /Equipment hire expenses 26,410.83 33,250.29

Technical services 12,245.60 8,952.19

Agency, Professional and service expenses 1,626.62 1,190.39

Crew expenses 4,172.63 2,830.64



Commission 2,084.51 2,552.63

Insurance 2,235.43 1,678.52

Port expenses 3,866.50 3,325.65

Repairs and maintenance 16,226.25 14,591.02

Stevedoring, transport and freight 3,658.10 2,107.60

299,780.02 212,303.08

2.22 Employee benefits expenses ` in Lakhs



Salaries, wages, bonus, etc. 4,404.97 2,444.73

Contribution to provident and other funds 171.03 79.33

Employee welfare expenses 201.81 128.85

4,777.81 2,652.91

2.23 Finance cost ` in Lakhs



Interest expense 20,107.52 21,917.79

Other borrowing costs 1,087.49 1,872.79

Applicable net gain/loss on foreign currency transactions/translation 99.70 –

21,294.71 23,790.58

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2.24 Other expenses` in Lakhs



Rent 834.95 555.09

Payment to auditors

As auditors 98.59 87.01

For Tax Audit 2.00 1.75

For Other services (certification and other matters) 16.10 15.60

Repairs to office premises and premises acquired on lease 96.40 108.20

Insurance 61.82 36.68

Net loss on foreign currency transaction/transalation 30.19 539.59

Legal, Professional and consultancy expenses 1,277.00 713.75

Donation 19.26 44.31


Conveyance, car hire and travelling 1,132.37 524.12

Advertisement 15.08 5.16

Bad Debts / Sundry balance Written off 1,725.47 267.79

Loss on sale of assets (net) 30.97 2,198.07

Miscellaneous expenses 1,707.05 1,078.45

7,172.71 6,277.32

3. ADDITIONAL DISCLOSURES AS PER REVISED SCHEDULE VI

3.1 Contingent Liabilities not provided for


Previous Year (` in Lakhs)

Counter guarantees issued by the Company for guarantees obtained

from the bank (net of margin).

5,809.05 2,747.74

Counter guarantees issued by the Company for guarantees obtained

from bank on behalf of subsidiaries

256.05 253.64

Corporate guarantees issued for performance by the company 20,327.60 10,890.14

TOTAL 26,392.71 13,891.52

3.2 Estimated amount of contracts remaining to be executed on capital accounts and not provided for (net of

advances) as at March 31, 2012 ` 12,477.07 Lakhs (` 10,890.13 Lakhs).

3.3 Estimated amount of commitments outstanding towards contributions to funds are ` 969.93 Lakhs (` 900.59

Lakhs).

3.4 No provision has been made in respect of disputed demands from Income-tax Authorities to the extent of

` 5,697.51 Lakhs (` 666.67 Lakhs), since the company has reasons to believe that it would get relief at the

appellate stage as the said demands are excessive and erroneous. Against the above, the company has already

paid ` 1,541.77 Lakhs (Nil).

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4. DISCLOSURES AS PER ACCOUNTING STANDARDS NOTIFIED BY THE COMPANIES (ACCOUNTING STANDARDS) RULES, 2006.

4.1 Details of contract revenue and costs as per Accounting Standard 7

(` In Lakhs)

ParticularsFor the year

ended March 31, 2012

For the year ended

March 31, 2011

Contract revenue recognised during the year Nil Nil

Aggregate of contract costs incurred and recognised profits (less

recognised losses) upto the reporting date

1,468 Nil

Advances received for contracts in progress Nil Nil

Retention money for contracts in progress Nil Nil

Gross amount due from customers for contract work (asset) 948 Nil

Gross amount due to customers for contract work (liability) Nil Nil

4.2 The company has opted for accounting the exchange differences arising on reporting of long term foreign

currency monetary items in line with the notification of Ministry of Corporate Affairs (MCA) dated 31st March

2009/29th December 2011 on Accounting Standard (AS)-11. In line with the above notification, gains / losses

arising during the year from the effect of changes in foreign exchange rates on foreign currency loans relating

to acquisition of depreciable capital assets, are adjusted to the cost of the fixed assets. The addition to fixed

assets on account of the same is ` 2,317.04 Lakhs (previous year deduction ` 385.53 Lakhs).

4.3 Disclosure in accordance with Accounting Standard 17 on “Segment Reporting”.

Primary Segments:

The group has identified Business Segment as the primary segment. Segments have been identified taking into

account the nature of the services / products, the differing risks and returns, the organisation structure and

internal reporting system. The group’s operations predominantly relate to

a) Shipping

b) Offshore

c) Coal Mining, Trading and Logistics.

Secondary Segment:

The shipping activities are managed from India and Singapore. The Off Shore activities are managed from

Singapore. The Coal Mining, Coal Trading and logistics are managed from India, Singapore and Indonesia.

Segment Revenue, Segment Results, Segment Assets and Segment Liabilities include the respective amounts

identifiable to each of the segments as also amounts allocated on a reasonable basis. The expenses, which are

not directly attributable to the business segment, are shown as others.

Assets and Liabilities that cannot be allocated between the segments are shown as a part of unallocated

corporate assets and liabilities respectively.

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There are no Inter Segment transfers.

Segment Revenue Shipping Offshore Coal Mining, Trading and Logistics

Others Unallocated Total Total

2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 2011-12 2010-11 Revenue 118,500.85 1,29,903.59 19,871.56 11,980.81 231,618.34 1,38,805.99 – – 5,518.69 473.66 375,509.45 281,164.05 Results Profit / (Loss) before tax and interest

1,122.13 13,083.88 4,940.01 8,351.14 13,955.86 9,555.66 – (2.21) 5,550.80 473.66 25,568.80 31,462.14

Less :Interest (20,331.77) (21,523.31) Total Profit Before Tax 5,237.03 9,938.82 Provision for Taxation Current Tax (2,495.26) (1,573.66) Deferred Tax 271.75 220.56 Minimum Alternate Tax – – Net Profit 3,013.52 8,585.72 Other Information Assets 534,184.47 5,67,527.04 103,536.77 82,527.22 66,487.41 39,283.58 336.42 4,088.17 2,845.42 708,296.82 692,520.24 Liabilities 25,088.35 21,454.76 18,554.30 14,949.33 7,723.99 8,101.49 142.77 362,003.83 383,224.39 413,370.47 427,872.74 Capital Expenditure 2,994.12 55,892.83 103,650.94 22.01 495.81 478.39 107,140.87 56,393.23 Depreciation 28,334.77 26,842.93 9,415.98 3,355.48 490.33 468.25 38,241.08 30,666.67

4.4 Related Party Disclosures as per Accounting Standard 18 on “Related Party Disclosures”

A List of Related Parties

I Key Management Personnel

1 H.K Mittal

2 A.J. Agarwal

3 Shalabh Mittal

4 K.S.Raheja

5 Shruti Mittal

6 Hondoko Soeseno

7 Taufik Surya Darma

II Enterprises over which Key Management Personnel exercise significant control

1 AAAM Properties Pvt Ltd

2 Ankur Fertilizers Private Limited

3 AHM Investments Private Limited.

4 Vaitarna Marine Infrastructure Ltd. (Erstwhile Mech Marine Engineers Pvt Ltd)

5 Rishi Holding Private Limited

6 OMCI Ship Management Pvt Limited

III Enterprises over which Directors/Relative of Directors/Key Management Personnel/Relative of Key Management Personnel exercise significant influence.

1 MLL Logistics Private Limited

2 MMAXX Dredging Pvt Ltd (Liquidated during the year)

3 CMA Constructions & Properties Pvt Ltd (Liquidated during the year)

4 Zicom Electronic Security Systems Ltd

5 Oilmax Energy Pvt Ltd

6 PT United Coal Indonesia

IV Relative of Key Management Personnel

1 Adip Mittal

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B Details of Transactions with above parties ` In Lakhs

Name of the Transaction Key Management Personnel



Enterprises over which Directors/Relative of

Directors/Key Management Personnel/Relative of Key

Management Personnel exercise significant

influence.

Total

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Interest Income – – – – 24.08 – 24.08 –

Services Received – – 30.60 – 226.42 105.69 257.02 105.69

Reimbursments of Expenses Paid – – 30.97 642.95 30.40 0.52 61.37 643.48

Reimbursments of Expenses

Received

– – 135.76 0.06 – 0.02 135.76 0.08


Inter Corporate Deposits given during

the year

– – – – 1,850.00 –

1,850.00

–

Inter Corporate Deposits received

during the year

– – – – 157.50 – 157.50 –

Inter Corporate Deposits repaid

during the year

– – – – 157.50 – 157.50 –

Advances

Advances Given During the Year – – 15.38 4,914.46 5.00 – 20.38 4,914.46

Advances Received Back During the

Year

– – – 9.97 – 0.19 – 10.16

Outstanding balances as on

31.03.2012

Loans ,Advances and Receivables

Advances – – 15.61 – 323.13 318.13 338.74 318.13

Capital Advances – – 4,199.96 – – – 4,199.96 –

Outstanding Balances of Trade and

Other Receivables & Other Payables

as on 31.03.2012

Trade & Other Receivables 966.29 – – – 1,091.83 1,003.53 2,058.13 1,003.53

Trade & Other Payables 255.78 – 72.10 139.42 – – 327.88 139.42


Balance as on 31.03.2012 – – – – 1,850.00 – 1,850.00 –

Deposit

Balance as on 31.03.2012 – – 65.00 65.00 500.00 500.00 565.00 565.00

Remuneration paid to Key


423.67 690.84

Remuneration paid to Relative of Key


16.64 5.58

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Partywise details of material transactions ` In Lakhs







influence.

Total

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Interest Income

MLL Logistics Private Limited – – – – 24.08 – 24.08 –

Total – – – – 24.08 – 24.08 –

Services Received

MLL Logistics Private Limited – – – – – 3.60 – 3.60

Vaitarna Marine Infrastructure Ltd – – 30.60 – – – 30.60 –

Oilmax Energy Pvt Ltd – – – – 226.42 69.32 226.42 69.32

OMCI Ship Management Pvt Limited – – – – – 32.77 – 32.77

Total – – 30.60 – 226.42 105.69 257.02 105.69

Reimbursments of Expenses Paid

Ankur Fertilizers Private Limited – – 7.60 12.10 – – 7.60 12.10

MLL Logistics Pvt Limited – – – – 3.24 – 3.24 –

Oilmax Energy Pvt Ltd – – – – 27.16 0.52 27.16 0.52

OMCI Ship Management Pvt Limited – – 23.37 630.85 – – 23.37 630.85

Total – – 30.97 642.95 30.40 0.52 61.37 643.48

Reimbursments of Expenses Received

Vaitarna Marine Infrastructure Ltd – – – 0.06 – – – 0.06

MMAXX Dredging Pvt Ltd – – – – – 0.02 – 0.02

OMCI Ship Management Pvt Limited – – 129.43 – – – 129.43 –

Total – – 129.43 0.06 – 0.02 129.43 0.08


Inter Corporate Deposits given during the year

MLL Logistics Private Limited – – – – 1,850.00 – 1,850.00 –

Total – – – – 1,850.00 – 1,850.00 –

Inter Corporate Deposits received during the year

Zicom Electronic Security Systems

Ltd

– – – – 157.50 – 157.50 –

Total – – – – 157.50 – 157.50 –

Inter Corporate Deposits repaid during the year

Zicom Electronic Security Systems

Ltd

– – – – 157.50 – 157.50 –

Total – – – – 157.50 – 157.50 –

Advances

Advances Given During the Year

MLL Logistics Pvt Ltd – – – – 5.00 – 5.00 –

Vaitarna Marine Infrastructure Ltd – – 15.38 4,914.46 – – 15.38 4,914.46

Total – – 15.38 4,914.46 5.00 – 20.38 4,914.46

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Partywise details of material transactions ` In Lakhs







influence.

Total

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Current Yr

Previous Yr

Advances Received Back During the Year

MMAXX Dredging Pvt Ltd – – – – – 0.19 – 0.19

Oorja Resources India Pvt Ltd. – – – 9.97 – – – 9.97

Total – – – 9.97 – 0.19 – 10.16

Outstanding balances as on 31.03.2012

Loans ,Advances and Receivables

Advances

MLL Logistics Pvt Ltd – – – – 323.13 318.13 323.13 318.13

Vaitarna Marine Infrastructure Ltd – – 15.61 – – – 15.61 –

Total – – 15.61 – 323.13 318.13 338.74 318.13

Capital Advances

Vaitarna Marine Infrastructure Ltd – – 4,199.96 – – – 4,199.96 –

Total – – 4,199.96 – – – 4,199.96 –

Outstanding Balances of Trade and

Other Receivables & Other Payables as on 31.03.2012

Trade and Other Receivables

PT United Coal Indonesia – – – – 167.47 – 167.47 –

Handoko Soeseno 966.29 – – – – – 966.29 –

MLL Logistics Private Limited – – – – 924.36 1,003.53 924.36 1,003.53

Total 966.29 – – – 1,091.83 1,003.53 2,058.13 1,003.53

Trade and Other Payables

Oilmax Energy Pvt Ltd – – 52.48 – – – 52.48 –

Handoko Soeseno 255.78 – – – – – 255.78 –

OMCI Ship Management Pvt Limited – – 19.62 129.33 – – 19.62 129.33

Total 255.78 – 72.10 129.33 – – 327.88 129.33


Balance as on 31.03.2012

MLL Logistics Private Limited – – – – 1,850.00 – 1,850.00 –

Total – – – – 1,850.00 – 1,850 –

Deposit

Balance as on 31.03.2012

MLL Logistics Private Limited – – – – 500.00 500.00 500.00 500.00

Rishi Holding Private Limited – – 15.00 15.00 – – 15.00 15.00

Oilmax Energy Pvt Ltd – – 50.00 50.00 – – 50.00 50.00

Total – – 65.00 65.00 500.00 500.00 565.00 565.00

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4.5 Disclosure in respect of Leases as per AS 19:

(A) Disclosure in respect of operating lease (as Lessee):` in Lakhs


Year endedMarch 31, 2011

(a) Operating Leases

Disclosures in respect of cancelable agreements for office

premises taken on lease



The Company has given refundable interest free security

deposits under the agreements.

The lease agreements are for a period from 60 – 108 months.

These agreements also provided for increase in rent.

These agreements are non cancellable by both the parties for

24–60 months except in certain exceptional circumstances.

(iii) Future minimum lease payments under non-cancellable

agreements

Not later than one year 459.86 291.35

Later than one year and not later than five years 159.66 76.35

Later than five years NIL NIL

(B) Disclosure in respect of operating lease (as Lessor):` in Lakhs


Year endedMarch 31, 2011

(a) Operating Leases

Disclosures in respect of cancellable agreements for office

given on lease

(i) Lease receipt recognised in the Statement of Profit and

Loss

93.68 144.00


- The Company has taken refundable interest free security

deposits under the agreements.

- The lease agreements are for a period of 60 months.

- These agreements are non cancelable by both the parties

for 18 months except in certain exceptional circumstances.

(iii) Future minimum lease receivable under non-cancellable

agreements

- Not later than one year NIL NIL

- Later than one year and not later than five years NIL NIL

- Later than five years NIL NIL

Disclosures in respect of cancellable agreements for Rig given

on lease

(i) Lease receipt recognised in the Statement of Profit and

Loss

NIL 14,178.88


– The lease agreements are for a period of 36 months.

– These agreements are non cancelable by both the parties

except in certain exceptional circumstances.

(iii) Future minimum lease receivable under non-cancellable

agreements

– Not later than one year NIL NIL

– Later than one year and not later than five years NIL NIL

– Later than five years NIL NIL

General description of leasing arrangement:

i. Leased Assets: Office premises, Godown And Vehicle

ii. Future Lease rentals are determined on the basis of agreed terms.

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(C) Disclosure in respect of finance lease (as Lessee): ` In Lakhs

Total Minimum Lease Payments outstanding



Within 1 year 117.01 64.95

Later than 1 year and not later than 5 years 101.93 124.04

Later than 5 years Nil Nil

Total 218.94 188.96Less: Interest 23.32 26.32

Present Value of Minimum Lease Payments 195.63 162.64

4.6 Earning Per Share as per AS 20` in Lakhs

Particulars Year Ended 31/03/2012

Year Ended 31/3/2011

Net Profit after Tax, Minority interest

- Basic and Diluted 2,055.63 4,684.75

Number of Shares used in computing Earning Per Share

– Basic and Diluted 244,892,073 237,893,991

Earning per share (equity shares of face value ` 1/-)

– Basic and Diluted (in `) 0.84 1.97

4.7 Derivative Instruments

(A) Details of outstanding Hedging Contracts ` in Lakhs

Derivative contracts


Equivalent Indian rupee


Equivalent Indian rupee

March 31, 2012 March 31, 2012 March 31, 2011 March 31, 2011USD/INR 39.49 2,000.00 NIL NIL



(B) Foreign Currency Exposures

The year end exposure in a currency other than the functional currency of the relevant Company that were

not hedged by a derivative instrument or otherwise are given below:

March 31, 2012 March 31, 2011` Lakhs Fx.Million ` Lakhs Fx.Million

Account Receivable 4,019.69 USD 4.65

IDR 27,811.22

9,370.76 USD 20.99

Balance in Bank 863.78 USD 0.33

IDR 12,438.32

523.01 USD 0.07

SGD 0.50

IDR 6,174.43

Fixed Deposit with foreign

Bank

200.72 USD 0.19 NIL NIL

IDR 1,836.00

Loan & Advances 15,327.06 USD 28.91

SGD 0.08

Euro 0.24

JPY 0.02

IDR 6,813.12

4,399.39 USD 8.18

SGD 0.27

Euro 0.22

JPY 3.02

SLR 0.13

DKK 0.05

IDR 9,509.66

Advance from Customers - - 165.66 USD 0.37

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March 31, 2012 March 31, 2011` Lakhs Fx.Million ` Lakhs Fx.Million

Accounts Payable/

Acceptance

(including capital

commitments made but not

provided for)

5,730.73 USD 4.45

SGD 1.06

Euro 0.04

JPY 2.84

AED 0.13

GBP 0.01

IDR 50,541.08

5,532.33 USD 6.09

SGD 1.04

Euro 0.68

JPY 34.25

IDR 43,125.29

Borrowings 28,968.90 USD 56.63 78,058.92 USD 174.82

5 PREVIOUS YEAR FIGURES

The Revised Schedule VI has become effective from 1 April, 2011 for the preparation of financial statements.

This has significantly impacted the disclosure and presentation made in the financial statements. Previous

year’s figures have been regrouped / reclassified wherever necessary to correspond with the current year’s

classification / disclosure.



Suchita Shirambekar

Company Secretery



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NOTES

120

MERCATOR

CORPORATE INFORMATIONBOARD OF DIRECTORSH. K. Mittal, Executive Chairman

Atul J. Agarwal, Managing Director

Manohar Bidaye

M. G. Ramkrishna

K. R. Bharat

Kapil Garg

M. M. Agrawal

AUDIT COMMITTEEManohar Bidaye

Chairman

M. G. Ramkrishna

Member

K. R. Bharat

Member

Atul J. Agarwal

Member

SHAREHOLDERS GRIEVANCE COMMITTEEManohar Bidaye

Chairman

K. R. Bharat

Member

Atul J. Agarwal

Member

COMPANY SECRETARYSuchita Shirambekar (Upto 29 May 2012)

AUDITORSM/s Contractor, Nayak & Kishnadwala

BANKERSState Bank of India

ICICI Bank

Axis Bank

HDFC Bank

DEBENTURE AND SECURITY TRUSTEESAxis Trustee Services Limited

REGISTERED OFFICE3rd Floor, Mittal Tower, B-Wing.

Nariman Point, Mumbai – 400021

Tel : + 91 – 22 – 66373333/40373333

Fax : + 91 – 22 – 66373344

Website : www.mercator.in

E-mail : [email protected]

[email protected]

REGISTRAR & TRANSFER AGENTSLink Intime India Pvt. Ltd.

C-13, Pannalal Silk Mills Compound

LBS Road. Bhandup West,

Mumbai – 400078.

Tel : 022 – 25963838

Fax : 022 - 25946969

E-mail : [email protected]

The Mercator Limited Annual Report 2010-11 was awarded at

the prestigious LACP Vision Awards, 2011 - the world’s largest

annual reports competition featuring over 5,500 companies from

25 countries.

The awards are based on a rating received across factors,

such as First Impression, Cover, Letter to Shareholders,

Narrative, Financial Message Clarity, Creativity and Information

Accessibility.

GLOBAL RECOGNITION FOR MERCATOR LIMITED‘S ANNUAL REPORT 2010-11

Platinum Award in Energy - Oil, Gas & Consumable Fuels

No. 27 in top 100 Annual Reports worldwide

No. 4 on Asia-Pacific Top 50

Platinum Award and Bronze Award for being the ‘Most

Engaging Report’ in the Asia-Pacific Region and worldwide

respectively

Top 10 Indian Annual Reports of 2011

Driven by growth......Sustained by values

Registered office

3rd Floor, Mittal Tower, B-wing,

Nariman Point, Mumbai-400021, India.

Tel : 91-22-66373333 / 40373333

Fax : 91-22-66373344

Website: www.mercator.in

Email : [email protected]

renewed spirit - mercatormercator.in/investors/annualreport/annual report 2011-12.pdf · renewed...

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