Equity Analysis

To the Members

Your Directors have pleasure in presenting the 74^th Annual Report on the working of your Company for the Financial Year ended 31^st March, 2024.

FINANCIAL PERFORMANCE

The comparative position of the working results forthe year under report vis-a-vis earlier year is as under:

(Rs. in Crores)

The above figures have been extracted from the standalone financial statements as per Indian Accounting Standards (Ind-AS). Appropriations:

The working results for your company for the year 2023-24 shows a net profit of Rs. 612.15 crore. A sum of Rs. 75.50 crore has been transferred to Tonnage Tax Reserve. Retained Earnings has been further adjusted for dividend payment of Rs. 20.50 Crores during the financial year 2023-24.

Dividend:

The Board of Directors at their meeting held on 17.05.2024 had recommended a dividend of Rs. 0.50/- per equity shares ofRs. 10/- each i.e. @ 5.00% on the paid up Capital of the Company. The Dividend will become payable once approved by the shareholders at the ensuing AGM. The said dividend will be paid within 30 days of its declaration atthe AGM.

The dividend, subject to approval of the Members at the Annual General Meeting scheduled to be held on 18/09/2024 will be payable to those Shareholders, whose names appear in the Register of Members / list of beneficial owners as on the Book Closure / Record Date. The payment of dividend will be subject to deduction of tax at source. The dividend pay-out is in accordance with the companyRs.s dividend distribution policy which is available on the CompanyRs.s website http://shipindia.com/upload/policies/SCI_Dividend_Distribution_Policy1.pdf and also as per the prevalent provisions of laws, rules and regulations.

Share Capital:

The Company has not issued any Equity Shares with differential voting rights. Hence, no information as required under Section 43(a) (ii) of the Companies Act, 2013 read with Rule 4(4) of the Companies (Share Capital and Debentures) Rules, 2014 is furnished. The Company has only one class of Equity Shares having face value ofRs. 10/- each.

Brief Analysis of Financial Performance:

SCI has reported a net profit after tax ofRs. 612.15 crores for the financial year 2023-24.

Profit after Tax (PAT) is reduced to Rs. 612.15 Crores in FY 2023-24 as compared with profit ofRs. 800.12 Crores in FY 2022-23. Dip in freight rate of Liner and Bulk segment has resulted in reduction in profit.

Liner segment has reported loss of Rs. 187.15 Crores in FY 2023-24 as compared to loss ofRs. 31.19 Crores in FY 2022-23. Bulk segment

has reported profit ofRs. 23.70 Crores in FY 2023-24 as compared to profit ofRs. 203.80 Crores in FY 2022-23. Tanker segment has reported profit ofRs. 605.53 Crores in FY 2023-24 as compared to profit ofRs. 822.45 Crores in FY 2022-23 due to increased cost of services. T&OS segment has posted profit ofRs. 159.59 Crores in FY 2023-24 as compared to profit ofRs. 13.27 Crore in FY 2022-23. In T&OS segment profit has risen sharply during current year pursuant to agreements signed with A&N Administration w.e.f July 2021.

The consolidated net profit for the company for Financial Year 2023-24 is Rs. 678.97 crores.

Performance and Financial nositions of joint ventures and subsidiary included in consolidated financial statements:

Net Impact on Consolidated profits for the year ended 31^st March 2024 is increase of Rs. 66.82 crores upon consolidation of above joint ventures and subsidiary company.

Credit Rating Details:

Subsidiaries and Associates

Your company has two subsidiary Companies and has four Joint Ventures. "Inland and Coastal Shipping Limited" was incorporated on 29^th September 2016 and the second subsidiary, SCI Bharat IFSC Limited has been incorporated on 12.08.2024. Both of these subsidiaries, are in the nature of wholly-owned subsidiary of your Company. Pursuant to section 129(3) of the Companies Act, 2013, a statement containing salient features of our subsidiary and associates companies as on 31^st March 2024 in form AOC-1 is appended to the DirectorRs.s Report.

In accordance to section 136 of the Comnanies Act, 2013 the audited financial statements of the comnany are available on our website www.shinindia.com

PARTICULARS OF SUBSIDIARY & ASSOCIATE COMPANIES (As on 31^st March 2024)

A SUBSIDIARY

Inland and Coastal Shipping Limited

Inland and Coastal Shipping Limited (ICSL), incorporated on 29.09.2016, is a wholly owned subsidiary of your Company. As per Ministry of Ports, Shipping and Waterways (MoPSW), Inland Waterways Transport (IWT) Division letter dated 27.10.2020, approval was accorded to IWAI for handing over three vessels i.e. (i) M.V. RabindraNath Tagore, (ii) M.V. Lal Bahadur Shastri and (iii) M.V. Homi Bhabha to ICSL.

M/s. Inland & Coastal Shipping Limited (ICSL) signed a MOU on 22.01.2021 with Inland Waterways Authority of India (IWAI) for operation and management of above mentioned cargo vessels and subsequently took delivery of M.V. R N Tagore on 22.01.2021 and M.V. Lal Bahadur Shastri on 26.02.2021. Third vessel M.V. Homi Bhabha would be taken over by ICSL in due course after completion of repairs by IWAI. ICSL is in the process of establishing scheduled services in NW1 (Haldia / Kolkata to Varanasi) and NW2 (Kolkata to Dhubri / Pandu).

ICSL and IWAI (Inland Waterways Authority of India) executed MOU on 11.03.2022 for taking over 2 RO-RO vessels owned by the IWAI to promote RO-RO transportation aimed at decongesting roads. Informatively, one RO-RO vessel m.v. Gopinath Bordoi was taken over by ICSL and out chartered to M/s Ziria Corporation on 29.08.2023 and second vessel m.v. Sankar Dev, would be taken over by ICSL shortly.

SCI Bharat IFSC Limited

The Strategy Committee and the Board of Directors of the Company in their respective meetings held on 08.02.2024 and 09.02.2024 accorded in-principle approval for the formation of a wholly owned subsidiary ("WOS") of the Company at GIFT City subject to the approval of Competent Authorites.

On approval of MoPSW, NITI Aayog and DIPAM, the Board of Directors of SCI in their meeting dated 24.07.2024, subject to approval of MoPSW accorded approval for various decisions which are required for the formation a wholly owned subsidiary in GIFT City. Subsequently, The Ministry of Ports, Shipping and Waterways vide Letter no. SS-11027/1/2024-SU dated 01.08.2024 have communicated the approval of Competent Authority for the following decisions taken by Board of SCI in the Board Meeting held on 24.07.2024:

A) Formation of a Wholly-Owned Subsidiary in the nature of Public Company Limited by Shares

B) Name of the proposed Subsidiary

C) First Subscribers of the Subsidiary Company

D) First Directors of the Subsidiary Company

E) Paid up Share Capital and Authorised Share Capital

Consequently, wholly-owned subsidiary of Shipping Corporation of India Limited, has been incorporated effective August 12, 2024 with the name Rs.SCI Bharat IFSC LimitedRs. bearing CIN of U64990GJ2024GOI154335.Your Company is undertaking further expeditious actions in this regard.

B. JOINTVENTURES

(i) India LNG Transport Co. (No.1), (No.2) and (No.3) Ltd

SCI has entered into three JVCs, registered in Malta, with three Japanese Companies viz. Mitsui O.S.K.Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha Ltd (K Line) along with Qatar Shipping Company (Q Ship) in case of ILT No. 1 & 2 and Qatar Gas Transport Company (QGTC) in case of ILT No. 3, each owning and operating an LNG tanker deployed in the import of a total of 7.5 million metric ton per annum of LNG for the Dahej Terminal of M/s Petronet LNG Ltd (PLL). SCI is the first and only Indian company to enter into the high-technology oriented & sunrise sector of LNG. SCI is the manager for these three companies, managing the techno-commercial operations of 3 LNG tankers.

(ii) India LNG Transport Co. No. 4 Pvt Ltd

SCI has entered into 4^th JV registered in Singapore, with the same three Japanese companies viz. Mitsui O.S.K. Lines (MOL), Nippon Yusen Kabushiki Kaisha (NYK) and Kawasaki Kisen Kaisha Ltd (K Line) and Petronet LNG Ltd to own and operate one 173,000 CBM LNG Tanker for transporting LNG primarily from Gorgon, Australia to India and Far East region for charterers Exxon Mobil LNG Services B.V. SCI is the manager for this company and is managing the techno-commercial operations of the tanker.

Fleet position during the year:

During the year under report, there were NIL additions to the SCI fleet. However two Product tankers viz. M.T. Suvarna Swarajya and M T Sampurna Swarajya were disposed-off. Thus, the overall feet position of SCI stood at 57 vessels of 5.245 million DWT at the end of the year.

During the end of the year, the Company had no new built vessels on order.

Particulars of Loans, Guarantees and Investments.

Details of Loans, Guarantees and Investments are given in the notes to financial statements.

Annual Return

The Annual Return referred to in Section 134(3)(a) of the Companies Act, 2013 is available on the website of the Company: www.shipindia.com.

Particulars of contracts/arrangements with related parties

Particulars of contracts/arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013, in the prescribed form AOC-2 is appended to the DirectorRs.s Report. The details are also available in Note 29 under Rs.Notes to Financial statementsRs.

Particulars of Employees

Your Company, being a Govt. Company, is exempted to furnish information under Section 197c of Companies Act, 2013 vide Ministry of Corporate Affairs (MCA) Notification dated 05.06.2015.

Employees Stock Option Scheme

The Company does not have any Employee Stock Option Scheme.

CompanyRs.s Policy on Directors appointment and remuneration

The terms of Directors appointment and remuneration are fixed by the Government of India.

Receipt of Remuneration by Managing Director from Subsidiary Companies.

Capt. B.K. Tyagi, CMD has not received any remuneration from the Subsidiary Companies.

Risk Management.

SCI considers Risk Management to be a core component of the Management of the Company and its ability to identify and address risks is central to achieving Corporate objectives. Accordingly, SCI has developed a detailed Risk Management Policy in line with the requirements of SEBI (LODR) Regulations, 2015, and other allied laws, rules and regulations which includes framework for identification of risks, measures for risk mitigation and Business Continuity Plan. The Policy has been approved by the Risk Management Committee and the Board. Other details in this regard are provided in the Report of Directors on Corporate Governance, which forms part of this Annual Report.

The company has identified entity level Risks which includes:

i) Strategic Risk

ii) Operational Risk

iii) Financial Risk

iv) Compliance Risk

Some of the risks identified by SCI include market volatility, increasing bunkering cost, cyber security risk, geo-political risks, decarbonisation challenges, Piracy, Foreign exchange fluctuation, regulatory compliances among others. All efforts are made for mitigating and controlling the risks through well-defined mitigation measures and coordination with all stakeholders.

SCI has formulated a three line of Risk Reporting viz. Corporate Risk Committee, Risk Management Committee and Audit Committee.

A corporate level Risk Register is maintained and reviewed quarterly by the Corporate Risk Committee. At each meeting of RMC, the Corporate Risk Committee reports all the risks including the High risks and their mitigation plans. Further, in the area of Rs.Risk ManagementRs., the Audit Committee and Board continued to function in accordance with the applicable laws, rules and regulations.

Conservation of Energy, Technology Absorption

The information pertaining to conservation of energy, technology absorption is forming a part of the Management Discussion and Analysis Report.

Foreign exchange earnings and outgo (Rs. in Crores)

*includes deemed foreign exchange earnings and outgo.

Public Deposit

During the financial year 2023-24, your Company has not accepted any deposit within the meaning of Section 73 and 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and as such no amount of principal or interest was outstanding as on the date of the Balance Sheet.

Proposed Strategic Disinvestment and Demerger of SCI

The proposed strategic disinvestment of SCI is being handled by Department of Investment and Public Asset Management (DIPAM) with the engagement of Transaction Advisor. In this regard, Preliminary Information Memorandum (PIM) for inviting expression of interest was released on 22.12.2020. The Virtual Data Room is open and is being managed by the Transaction Advisor for the process of due diligence by the Qualified Interested Parties.

UPDATES ON TRANSFER OF NON-CORE ASSETS FROM SHIPPING CORPORATION OF INDIA LIMITED

In accordance with the MCA Order dated 22.02.2023, during the Financial Year 2023-2024, titles of all Fixed Deposits eligible to be transferred to Shipping Corporation of India Land and Assets Limited (SCILAL) have been transferred into their name.

All other Non-Core assets of SCI as mentioned in the Demerger Scheme were transferred to SCILAL, by Rs.de-factoRs.; however the same is also required to be carried out Rs.de-jureRs.. Brief details are as under

a) Subsequent to issue of stamp duty exemption order by Govt. of West Bengal, the Registration of all Kolkata free-hold properties for transfer from SCI to SCILAL is completed on 22.03.2024. Receipt of original transfer deeds and Mutation entry (change of name) formalities at Municipal Corporation are due and same will be completed soon.

b) To facilitate transfer of properties in Maharashtra from SCI to SCILAL, follow-up is being done with the concerned authorities for seeking NOC towards transfer of Shipping House and MTI to SCILAL. Concurrently, adjudication of free-hold properties (residential) is being initiated to execute transfer deeds at respective sub-registrar offices.

c) The Company is taking necessary and appropriate actions for the legal transfer of Irano Hind Shipping Company, PJ.S (IHSC) from SCI to SCILAL.

MANAGEMENT DISCUSSION AND ANALYSIS

The following remaining information w.r.t. to addition of new sub clause (i) under clause 1 in Part B (Rs.Management Discussion and Analysis) of schedule V of SEBI (LODR) Regulations, 2015.

* Ratios of comparative period i.e., 2022-23 are based on previous year figures which have been regrouped and rearranged wherever necessary to confirm to current year presentation of the financial statements as per Schedule III (Division II) to the Companies Act 2013.

Ratio - Details of Significant changes and explanation thereto:

1) Return on Net Worth- Return on Net worth has reduced to 9.18 for F.Y 2023-24 as compared to Return on Net worth of 13.39 for F.Y 2022-23 due to reduction in profit.

2) Operating Profit Margin- Reduction in operating profit from Rs. 620 crores in 2022-23 to Rs. 363 crores in 2023-24 has resulted in decrease in Operating profit margin.

3) Current Ratio- Current ratio has improved due to increase in current assets.

4) Debtors Turnover ratio- Debtor turnover ratio has reduced due to increase in Trade receivable

A. INDUSTRY STRUCTURE AND DEVELOPMENTS

The overall scenario under which the Shipping industry operated and which impacted the various segments is discussed below.

i] WORLD SCENARIO

The world GDP grew by an average of 3.2% in 2023, which was quite healthy. However, global merchandise trade volume contracted by 1.2 per cent in 2023 from an expansion of 3.0 per cent in 2022, dragged down by rising trade restrictions and a rotation of demand away from goods to services. Amid a favourable outlook for the US economy, receding inflation in the EU and continual fiscal support in China, the Global economic growth projections have improved. Although the absolute growth percentage projected for 2024 might be lower than that of 2023, the outlook for 2024 is more promising since the surge in 2023 was largely attributed to the rebound from the contraction in 2022. The baseline forecast is for the world economy to continue growing at 3.2 percent during 2024 and 2025. Thus, with growth holding steady and core inflation seemingly under control, global economy appears to remain resilient.

ii] GLOBAL TRADE

According to IMF, global trade volume (both goods and services) growth has been low at 0.3 % in 2023. After attacks on commercial shipping in the Red Sea—through which 11 percent of global trade flows—global transportation costs increased, refecting the rerouting of cargo from the Suez Canal to the Cape of Good Hope and continued trade disruptions from climate extremes in the Panama Canal. Global trade volume is, however, expected to improve with world trade growth being projected to grow at 3.0 percent in 2024 and 3.3 percent in 2025. Advanced economies are expected to see growth rise slightly, with the increase mainly refecting a recovery in the euro area from low growth in 2023, whereas emerging market and developing economies are expected to experience stable growth through 2024 and 2025, with regional differences. The global GDP growth and corresponding economic activity directly represents the international trade (export and imports) and in turn provides useful pointers to the shipping industry as about 80% of the international trade by volume is carried out by shipping.

iii] SEABORNE TRADE. FLEET & MARKET

On the dry bulk trade front, the start to 2023 was sluggish. However the segment improved in the second half of the year and in 2024 dry bulk market is poised to cater to the rising import demand. The trade for most of the dry bulk commodities looks promising and the volume of trade shall likely convert into positive tonne-miles due to geo-political uncertainties leading vessels to divert and, thus, haul longer. On the feet supply front, dry bulk feet is expected to expand a mere 1.6% in 2024 owing to high demolitions against weaker deliveries this year. The effective expansion in supply is expected to be further subdued at 1.4%, as more vessels will curtail their annual average speed to comply with the IMO regulations. With the modest expansion in supply growth in 2024 amid buoyant demand, the dry bulk market in 2024-25 is expected to be healthy in all segments, provided that the geo-political situation does not change much.

With respect to prospects for crude tankers, global oil demand after rising by 2.3% in 2023, is expected to grow by a moderate 1.2% in 2024 because of a slowdown in demand in the West, hurting the growth in global crude trade. However, in view of the changes in trade patterns, it is expected that tonne-mile demand for crude tankers is likely to increase by 3% in 2024, significantly higher than corresponding 1% growth in trade. Global crude oil trade patterns changed dramatically in 2022-23 afterthe Russia-Ukraine war, and are expected to evolve further in 2024 because of significant midstream and downstream infrastructure developments. Additionally, rerouting of trade because of the disruptions to the Suez Canal traffic will again stretch the voyages in 2024. With respect to feet growth, continued weakness is expected to be 0.1% and 0.5% respectively for 2024 and 2025. This weak growth in feet will support tonnage utilization, capping any major decline in rates. Product tanker owners would continue to see healthy earnings in 2024 as high tonnage utilization due to stretched voyages will keep freight markets firm. However, the feet growth is expected to match the growth in trade in 2025 which may lead to rates to recede after 2024.

iv] INDIAN SCENARIO

Growth in India is projected to remain strong at 6.8 percent in 2024 and 6.5 percent in 2025. With a robust economic expansion combined with increasing population, urbanization and industrialization, in the years ahead, India shall see strong domestic demand.

Navrortna Company

IndiaRs.s National Steel Policy envisages the countryRs.s production capacity to reach 300 million tonnes by 2030 from the current 161 million tonnes and this is likely to spearhead the trade growth in dry bulk cargoes. India is increasing its production of coking coal under IndiaRs.s Rs.Mission Coking CoalRs.. The Government of India aims to increase coal production to 140 million tonnes by FY30, which could moderate imports towards the end of the forecast period. However, the demand will continue to outpace the supply. With regards to non-coking coal, although there is thrust to increase output from captive mines and increase domestic production, the CountryRs.s dependence on imports will persist in order to meet the robust power demand. Overall, the India centric trade for bulk carriers looks to be firm and robust in the near future.

IndiaRs.s rising economic activity, supporting oil demand will ensure healthy India centric demand for crude oil. IndiaRs.s demand for crude oil is expected to outpace ChinaRs.s demand by 2027. IndiaRs.s product exports are also set to rise during the upcoming years as domestic refinery capacity expansion will outpace demand. India is expected to remain a key supplier of refined products to Asia and the Atlantic Basin. Following the 2022 Russian sanctions, IndiaRs.s middle distillate exports from East to West have increased, supporting the tonne- mile demand.

V] STRENGTHS

SCI has had decades of experience in the industry with diversified fleet across all major segments. Having a diversified fleet allows the company to better hedge against the market volatility across various segments and also provides the Company with a unique ability and flexibility to exploit demand growth in any given sector with a quick-mover advantage.

The relatively young feet of vessels with an average age about 15.2 years is widely accepted and the CompanyRs.s feet is deployed in IndiaRs.s EXIM and Coastal trade as well as international cross trades. Moreover, the Company also enjoys a unique distinction of being the only Indian shipping company operating LNG carriers, which are owned by its joint venture companies. The depth and vastness in expertise of your company makes it a front runner in the industry.

Your company also has longstanding relationships with major Indian cargo interests such as Indian oil industry, steel companies, etc. The strong local and international clientele base offers cargo security and employment assurance for sizeable part of the CompanyRs.s feet. Vi] OUTLOOK

In the dry bulk market, the outlook for 2024 and early 2025 is generally seen to be positive. Charter rates across all segments are expected to remain healthy.

While all shipping segments are likely going to be benefitted due to strong demand and tight effective supply as vessels have been slow steaming to maintain a good rating under IMORs.s CII regulations, some are likely to be benefitted due to increased tonne-mile demand as a result of geo-political uncertainty. Further the demand is also likely to hold well due to absolute volume of trade also being healthy, with major economies seen to be reviving. However, freight rates are expected to recede post-2025 on account of the strong order book increasing effective supply. It is, however, important to note that the outlook can swing if there are major changes in the current geo-political scenario.

While 2024 has been good so far for tankers, itRs.s not entirely due to trade volume growth; but, rather due to trade pattern shift. In terms of absolute volume the prospects of crude oil trade are not bright for the next couple of years because of a slowdown in oil demand growth and expansion in refinery capacity in oil production hubs. The ongoing production curbs by OPEC+ will keep oil supply tight, further curbing trade growth. Nonetheless, despite a significant deceleration in oil trade, tonne-mile demand will increase briskly in 2024 due to the changes in trade patterns and the rerouting of trade because of the ongoing geopolitical tensions. The prospects oil demand will rise 1.1% in 2024 due to a weak economic outlook, efficiency improvement and high EV feet. The growth is skewed towards non-OECD countries, with the largest increase coming from Asia Pacific, especially India, whose demand is expected to outpace ChinaRs.s demand by 2027.

Vii] OPPORTUNITIES

Production rise and rebound of major global economy bodes well for the dry bulk carrier market and presents the opportunity for shipowners to cater to the growing demand. The demand for dry bulk commodities is projected to increase and is likely to improve in tandem with the growth in the global economic outlook which is primarily expected to be driven by AsiaRs.s robust coal demand, rebound in global grain exports and stable Iron ore demand in 2024.

With grain trade season looking to be better than 2023, shipowners shall have the opportunity to deploy their tonnage in these high yielding voyages of longer duration. From the point of view of India centric trade, the coastal movement of cargo is expected to be healthy. Moreover, with Asian Pacific countries like China, Indonesia, Vietnam, etc. expected to have healthy trade requirement, it will provide improved opportunity for triangulation from India.

With OPEC tightening supply it is expected that Asian imports of American crude shall increase in 2024-25, helping increase in tonne- mile demand. Also, amid the ongoing disruption in the Red Sea and rising transportation costs, EuropeRs.s imports from India have been replaced by those in the US.

ItRs.s likely that EuropeRs.s diesel imports from the US are not sustainable in the long run, and the continent will have to turn to either India orthe Middle East, increasing the tonne-miles of large-sized vessels.

Viii] RISKS AND CONCERNS

Most of the risk and concerns are likely to be a direct or indirect result of the changes in current geo-political situations.

The supply side equation is unlikely to be impacted by fleet addition in 2024. However a key factor in aiding or limiting supply will be the ongoing Red Sea crisis and Panama Canal drought.

For dry bulk carriers, ChinaRs.s appetite for Iron Ore and coal will also be major factor in driving demand and if requirement from China falls or remains subdued, it will adversely impact the demand drive.

The economic uncertainties and the on-going geopolitical tensions over the conflicts in the Middle East can significantly change the outlook for crude tankers. The crisis in the Red Sea has forced many tankers employed on the Middle East-Europe trade to avoid Suez Canal and transit via the Cape of Good Hope, squeezing supply. However, any easing in tensions will normalize the trade through Suez Canal, increasing tonnage supply.

B. BULK CARRIERS & TANKERS

a) Crude Oil & Product Tankers

In the year 2023 the global demand for crude oil registered a decent rebound of 2.30% over the previous year. It is expected that the crude tanker earnings will continue to be decent in view of tight tonnage supply and healthy demand. The start of new refineries in Nigeria and Mexico and the expansion in refineries of the Middle East will affect the overall growth in crude oil trade. Further the ongoing Red Sea crisis has changed the trade patterns as the Owners need to transit via the Cape of Good Hope, thus, increasing the cost of transportation. On the other hand, the expected start of the Trans Mountain Pipeline (expansion) in Canada will increase CanandaRs.s seaborne crude exports, boosting the global seaborne trade. After surging by 4% in 2023, it is expected that the global seaborne crude trade to increase by 1.1% in 2024.The expected decline in crude exports from West Africa and North America after the start of NigeriaRs.s Dangote refinery and MexicoRs.s Olmeca refinery will also lead to a shift in trade patterns as buyers will have to find alternative sources. EuropeRs.s imports from the US and Latin America will increase at the expense of African and Middle Eastern crude and at the same time, US imports of Latin American crude will also replace Middle Eastern and Nigerian crude. Sanctions on Iran, Venezuela and Russia will keep the grey trade active. Mid-size crude tankers will continue to benefit from the new crude oil trade patterns as Russian crude exports to Asia will remain stable and European imports of the US will increase.

It is expected that the demand growth will ease in 2024 and it may align with the pre-pandemic trend. An acceleration in the adoption of alternative fuels and a brisk expansion in the EV market will squeeze oil demand in OECD countries in coming years. Nonetheless, oil demand will remain high in developing countries driven by healthy economic growth and rising population. Asia will remain the main growth hub for oil demand.

Meanwhile, reimposition of sanctions on Venezuela by the US government will affect the Suezmax demand as Venezuelan crude trade will again shift back to the dark fleet. However, any possible permanent removal of the sanctions after US elections will gradually expand Venezuelan production, increasing long-haul trade on the Latin America to Asia route, boosting VLCC demand. A likely rise in Venezuelan exports to the US will also support demand for mid-size tankers. Overall, the volatile action in the oil trade will hurt the growth in crude oil trade but it will lead to an increase in the average haul length of the crude tanker, boosting the tonne-mile demand.

It is expected that sharp decline in newbuilding deliveries will keep fleet growth subdued over the next two years. The small orderbook will restrain tonnage deliveries during 2024-25. Although tonnage ordering increased in 2023, most deliveries are scheduled for 2026-27. On the other hand, the ongoing firm freight rates and absence of any substantial penalties for lower CII ratings will cap the overall tonnage scraping in 2024. Nonetheless, demolitions will start increasing in 2025 before surging in 2026. Furthermore, the tonnage ordering is expected to remain strong in 2024-25 as owners will need replacementtonnage for their old vessels. Among the segments, Suezmaxtankers new orders were high in 2023 and it can change trade patterns slowly. However, it is expected that the VLCC ordering will catch momentum in 2024-25 as a positive outlook for the long-haul Asia-bound trade from the Atlantic and the Middle East will also keep tonnage demand for VLCCs growing in the foreseeable future.The ongoing economic uncertainties, geopolitical tensions in the Middle East, uncertain Venezuelan crude exports can change the outlook for crude tankers significantly. Meanwhile, OPEC countries and their non-OPEC allies (collectively known as OPEC+) are doing production cuts which will keepthe OPEC+ output almost flat in 2024, ifthe extra voluntary cuts will continue.

There were deliveries of 9.8 million dwt of crude oil tanker tonnage and 2.41 million dwt of (IMO Class) product tankers tonnage in 2023. Going forward, the expected deliveries of crude oil tankers in 2024 and 2025 are 2.2 million dwt and 5.8 million dwt respectively. For product tankers 2.3 million dwt delivery is expected towards the end of 2024. Furthermore, the demand for replacement tonnage is also robust as owners seek to renew their fleets in response to the decarbonisation regulations.

The average spot rate yield of AG/China route (TD3C) for VLCC was US$ 35,700 per day in 2023. As crude oil exports from the Middle East is likely to shrink further in 2024-25, there will be no major respite for VLCC demand in the Arabian Gulf. Similarly, reduced Nigerian crude exports after the start of the Dangote refinery will hamper VLCC demand on the West Africa-India route. However, most Middle Eastern crude will continue to move to Asia on VLCCs. Furthermore, VLCCs shall find employment in rising long-haul crude exports from Latin America and US to Asia. The Suezmax rate yield on West Africa - North West Europe route (TD20) was about US$ 40,500 per day in 2023, which is expected to have downward trend in 2024. For Aframax segment, the average spot rate on AG/Far East route (TD8) was US$ 45,600 per day.

Although these freight levels are expected to exhibit downward trend in 2024, overall Aframax earnings will remain attractive on account of continued strong demand growth and tepid tonnage supply growth.

For product tankers, LR2 and LR1 Spot rates on AG/East routes, (TC1 and TC5) were US$ 32,200 and US$ 27,100 per day respectively in 2023. LR tankersRs. earnings are expected to be attractive in the remainder of 2024 as buoyant demand and sluggish supply growth will keep tonnage utilisation strong. LR tankers will continue to benefit from the stretched voyages due to the Red Sea crisis and EuropeRs.s dependence on the Middle East and Asia for diesel and jet due to the ongoing sanctions on Russia. However, tonnage demand in the LR market will soften once the trade through the Suez Canal normalizes. It is expected that rates shall start cooling off from 2025 as tonnage supply will improve. In case of MR tankers, spot earnings on WCI/Japan route (TC12) was at lower levels of US$17,900 per day in 2023. MR tanker earnings are expected to remain robust in 2024; however, rates will moderate from 2025 amid improving fleet growth.

Your companyRs.s five VLCCs were gainfully employed during the financial year under review; mainly on spot voyage charters with Indian charterers both in public and private sector. The segment earnings were in line with the prevailing market and brought good margins over vesselsRs. indirect operating costs. Your CompanyRs.s Suezmax tankers were deployed in a mix of Indian as well as foreign charterers mainly on voyage charter basis. Older Suezmax vessels, however, had lesser employment opportunities owing to theirtrading limitations. Aframax tankers were deployed in a mix of COA, spot voyages and time charter for carriage of Indian import cargoes as well as cross trade cargoes. Through judicious deployment of some of the modern tankers in international cross trade and by triangulation of voyages, your Company maximized earnings of these tankers. Out of five LR1 tankers trading in DPR four tankers were employed on Indian coast in a mix of COAs and spot voyages, catering to coastal crude movement for the Indian oil industry. One DPP LR1 tanker was employed on time charter business with foreign charterer ensuring steady earnings at healthy levels.

LR2 and LR1 product carriers of your Company were deployed in the East of Suez market and maintained a healthy level of revenue as compared to the prevailing market. The LR2 product tankers were employed with foreign charterers on voyage charters, achieving good returns. The CPP LR1 tanker was also deployed fortransporting international cross trade cargoes. Three MR producttankers were gainfully employed on the Indian coast supporting coastal movement of Indian oil industryRs.s product cargoes.

Opportunities

According to the IEA, global oil and products demand will expand by 1.1 and 1.2 mbpd in 2024 and 2025 respectively. Nearly 40% of this expansion is expected to be driven by increasing demand for petrochemicals. Tonne-mile demand will increase briskly in 2024 due to the changes in trade patterns and the rerouting of trade because of the ongoing geopolitical tensions. Crude tanker demand is forecast to outpace supply in 2024 but grow slower than supply in 2025 as ships may return to the Suez canal and sailing distances shorten. Driven by increasing sailing distances product tanker demand is also expected to grow faster than supply in 2024 but slower in 2025.

Global crude oil trade patterns changed dramatically after the Russia-Ukraine conflict, and are expected to evolve further in 2024 because of significant midstream and downstream infrastructure developments. The expected start of the Trans Mountain Pipeline expansion (TMX) in Canada will increase seaborne export capacity in the Pacific. An increase in refinery throughput in NigeriaRs.s Dangote refinery will require Nigerian crude buyers such as India and Europe to look for alternative supply of light crude from the US, boosting tonne-mile demand for tankers. Similarly, a possible start of MexicoRs.s Olmeca refinery (most likely in 2025) will induce US refiners to increase heavy crude imports from Latin America, which again will be positive for the tonne-mile demand for mid-size tankers.

Product tanker cargo volumes are forecast to grow by 1.0-2.0% in both 2024 and 2025. Product tanker tonne miles demand is also forecast to be impacted by changes in sailing distances, which are predicted to increase in 2024. With high newbuilding prices, tonnage ordering has reduced in 2023 after moderate ordering in 2022. Reduction in charter hire rates and corresponding improvement in the bottomlines of product shipping companies over the last two years will improve the credit rating and it will assist them in getting financing for new acquisitions at attractive terms. Also, the tightening environmental regulations also call for feet renewal, as these regulations will make the employability of old and inefficient vessels difficult in the coming years. In view of this, tonnage ordering will be healthy over the next two to three years.

Risks and Concerns

The production cuts by OPEC+ will keep oil supply tight; however, will hamper the growth in trade since the tight oil supply might lead to a drawdown in oil inventories. The economic uncertainties and geopolitical tensions over the conflicts in the Middle East can significantly change the outlook for crude tankers. The crisis in the Red Sea has forced tankers employed on the Middle East-Europe trade to avoid Suez Canal and transit via the Cape of Good Hope, which has squeezed the tonnage supply. However, any easing in tensions will normalize the trade through Suez Canal, increasing tonnage supply. On the contrary, any possible disruption to the Strait of Hormuz traffic will be a disaster for the oil tanker market as it will significantly squeeze the global oil supply and thereby its trade. Moreover, economic outlook is still highly uncertain. Any weakness in the global economy, especially in China, will hurt the oil demand and thereby the demand for crude tankers.

b) Dry Bulk

The overall dry bulk segment earnings for the year FY 23-24 was weaker as compared to FY 22-23. While the average Baltic Dry Index (BDI) remained more or less similar in FY 23-24 when compared to FY 22-23, the tCy earning were lower. In contrast to FY 22-23, the first 2 quarters of FY 23-24 were subdued. It was only in the second half of FY 23-24 that the segment defied the seasonal trend and recovered. When compared to 2023, dry bulk trade is set to exhibit a growth of 3.9% in 2024, with tonne-mile demand increasing by an estimated 4.2%. Also the dry bulk global trade is expected to grow at an average of 2.2% - 3.0% forthe subsequent 3 years.

In the first quarter of 2024, dry bulk markets have defied seasonal weakness and are expected to remain reasonably buoyant in the near future. Dry bulk demand is expected to improve in tandem with the growth in the global economic outlook, with AsiaRs.s robust coal demand, rebound in global grain exports and stable iron ore demand in 2024. With geopolitical disruptions influencing the market and highertrade of bauxite, grain and steel products on long-haul routes continuing, dry bulk shipping demand is projected to expand in 2024. In addition to the ongoing geopolitical disruption, the tonne-mile demand is also aided by Panama canal drought.

The buoyant dry bulk demand is juxtaposed with a modest expansion in effective supply in 2024. The dry bulk feet is expected to expand a mere 1.6% in 2024 owing to high demolitions against weaker deliveries this year. The effective expansion in supply is expected to be subdued at 1.4% as more vessels will curtail their annual average speed to comply with the IMO regulations. The average vessel speed has been treading downwards, indicating ship-ownersRs. preference for reducing speed to maintain the required CII rating. The existing squeeze in supply amid buoyant demand will continue to help vessel utilization, which has been trending upwards in 1Q24, aiding charter rates in 2024-25. Your companyRs.s dry bulk feet comprises of eight modern Supramax vessels of around 57,000 dwt each and seven modern Panamax / Kamsarmax dry bulk carriers of around 80-82,000 dwt. The dry bulk carrier feet is relatively young with an average age of about 12.1 years. The CompanyRs.s dry bulk carriers have been engaged over a spread of various trades and deployment patterns such as spot voyages, period time charters including index linked time charter, COARs.s, etc. In addition to import, export and cross trade voyages, your dry bulk carriers were also employed on Indian coast, performing a few coastal time charters and voyage charters, whose earnings compare well with markets. The diverse trade and deployment patterns ensured that the market volatility and geo political uncertainties were well covered. Opportunities

Rebounding of major global economies from relatively lower levels of 2023 will be a key driver in dry bulk demand. Trade requirement for most of the major dry bulk cargoes like Iron Ore, Coal, Grain etc look positive for 2024.

Global steel output is expected to rise by 2.8% in 2024 as production in advanced economies rebounds. While ChinaRs.s GDP growth will play a key role in driving the demand, India too is expected to spearhead the growth in Steel output. Chinese steel output is projected to improve 1.8% in 2024 as there will be ample demand for competitive Chinese steel products in the rest of the world despite the sluggish demand from the countryRs.s real estate sector. Iron ore imports will strengthen amid an expected revival in demand, as the inventory was 1.4% down in 1Q24 despite a 4.5% jump YTD.

The demand for non-coking coal import from India, China, Vietnam and Thailand is also expected to be healthy. ChinaRs.s power demand is projected to increase another 6% in 2024 and their continued reliance on coal in the shortterm would imply necessitating coal imports to ensure energy security. Meanwhile, IndiaRs.s thermal coal imports are projected to expand 4.6% in 2024 amid its robust power demand. The Indian government has set a target to produce 170 million tonnes of coal from captive and commercial coal blocks during the 2024-25 financial year. This target is 26% higher than 116 million tonnes in 2023- 24. The target for coal output for Coal India Limited (OIL) in 2024-25 is one billion tonnes from CIL mines. NTPC has also set a target of 40 million tonnes of production capacity from its captive mines in the fiscal year 2025. However, the countryRs.s dependence on imports will persist to meet the robust power demand as the countryRs.s coal-powered generation will increase by 16% by 2030 compared to 2022.

Grain trade is also expected to rebound and this is likely to provide additional support to the shipping demand. ArgentinaRs.s grain exports are recovering after the severe drought last year. With grain exports from US and Brazil also looking promising, the overall demand for grain trade is set to expand in 2024 in comparison to 2023.

Trade requirements apart, the demand side is likely to be impacted by geopolitical uncertainty. Ongoing crisis in the Red Sea and transit restrictions in the Panama Canal have aided in tonne-mile demand. Amid the geopolitical tensions in the Red Sea, a significant share of vessels heading from West to East have rerouted through the COGH, increasing shipping demand and raising the share of dry bulk vessels passing through the COGH from 55% at end April 2023 to 77% at end April 2024. This is at the expense of the Panama and Suez Canal vessel transits. As a result, Panamax tonne-miles have soared since the majority of grain and soybean trade on the USG-Asia route is carried out on these vessels.

Risks & Concerns

Dry bulk trade demand is generally driven by the global economic outlook. However, geopolitical tensions and economic uncertainties also impact the trade. Although, currently, geopolitical tensions and economic uncertainties have worked in favor of the freight market, any shift or

change may impact the freight rates adversely. For example, if worsening of the Red Sea crisis leads to further increase in freight rates, it may lead Chinese importers to import a higher share of grain from Brazil instead of the US. This may limit the additional tonne-mile demand that is presently being generated due to the rerouting of vessels. With respect to geo-political tensions in the Black Sea, any adverse development with respect to the grain corridor will also pose a risk.

Additionally, if the Iran-lsrael crisis escalates to a full-hedged war in the Middle East, engulfing the major economies, the demand for dry bulk commodities might contract in the short term due to an increase in commodity prices and a surge in vessel operating expenses with a spike in bunker costs.

Even though the impact of El Nino has started waning, the expected La Nina in 2H24 could disrupt mining and port activities. The resulting hoods could affect iron ore and coal mining, particularly in Australia, where portactivities could be hampered.

Lastly, since ChinaRs.s appetite for Iron Ore and Coal plays a major role in dry bulk demand, any sluggishness or production cap in China might change the otherwise positive demand outlook.

c) LNG Transportation

Year 2023 brought the much needed normalization for LNG market after a chaotic 2022 that witnessed the Russian invasion of Ukraine and EuropeRs.s consequent switch to pipeline LNG from Russia. In 2022, the significant change in trade patterns with Europe facing a potential energy crisis saw LNG prices spiral to record highs, leading to a surge in vessel chartering and shipping rates. European demand was more stable in 2023 than it was in 2022 as the continent had successfully secured storage well ahead of winter, overcoming the fears of supply shortage. By February 2023 nearly 63% of storage level was still available with Europe. Some LNG cargoes were diverted to Brazil from Europe owing to the high inventory created by Europe and Brazil experiencing heat waves, accentuating LNG demand for power generation. Factors such as robust Norwegian supply and mild winters due to El Nino effect dissuaded LNG cargo imports during the peak winter season in Europe.

Going forward, global LNG trade and projects are expected to grow at a compound annual growth rate of 9.5% from 2024 to 2029. The factors that may play vital roles are the continued and growing relevance of LNG globally, improving supply, long-lasting demand, advancing geo-economics and changing weather conditions. While Asian economies continued moving towards LNG mainly on account of fuel switching (coal to gas), more countries became LNG importers, with some countries having higher economic growth prospects. In long run it is expected that Asia will lead the LNG trade. The Asian countries are likely to increase the share of LNG in their energy mix as it will play a crucial role in decarbonizing the developing Asian economies, such as China, India and Bangladesh, which still largely depend on coal for power generation.

The LNG shipping rates continued to fall in tandem with seasonality despite LNGCs avoiding the Suez Canal due to the ongoing attacks in the Red Sea. The expected effect of the supply dynamics due to volatility in the LNG market, with growing Panama Canal restrictions and Australian strikes buoying the fears of global supply disruptions was not significant.

Lower price is incentivized LNG buying in Asia with countries such as China and India increasing their imports. Despite ChinaRs.s gradual rebound, Japan and South Korea were less active in securing LNG amid the revival of their nuclear plants. Asian prices are expected to be at a premium with Europe, creating significant change in trade patterns.

Due to the addition of liquefaction capacities despite the ongoing scrutiny by the US over LNG expansion plans and growing LNG demand in advanced and emerging economies. Geopolitical disturbances, high LNG demand in emerging economies and erratic weather conditions will further boost the global LNG trade. However, downward risks such as the Panama and Suez Canal disruptions, low industrial growth in Europe, sporadic investment and inflationary pressure in the West pose concerns to the LNG market. The upward trajectory in the trade is expected to continue until 2027 as Europe continues to increase its imports and China remains the top importer. Despite EuropeRs.s robust appetite for LNG, Asia will remain the top LNG importer. On the supply side, the US will retain its position as the top exporter, followed by Qatar, Australia and Russia.

The new projects will alter the trading patterns for both Asia and Europe due to the shorter trade distances. It is expected that additions in capacity from 2025 will ease the market constraints as prices stabilise. Egypt has also resumed their LNG exports. Africa is expected to be next in line (after the US, Qatar and Australia) to becoming a major LNG exporter with high-profile LNG projects planned in countries such as Mozambique, Gabon, Congo, Senegal and Tanzania. Growing liquefaction capacity will complement increasing regasification build-up, which is expected to expand at a compound annual growth rate of 2.4% between 2024 and 2029, reaching 1,418 mtpa by the end of 2029. Europe and China will be the growth drivers in the short term, while South and Southeast Asia will be the frontrunners in the long run.

Meanwhile, the boost in liquefaction projects has bought investments in the shipping sector. The LNGC feet grew more than 6% in 2023. The feet expansion is forecast to increase further at 9% and 11% in 2024 and 2025, respectively, with 74 and 86 carriers expected to be delivered. Qatar aims to increase its LNG production capacity to 142 mtps by 2030 from the current plan of 126 mtpa. The countryRs.s ambition would impact process, contracts and shipping, especially post 2028, when a surplus production capacity becomes operational.

Vessel demand is further supported by the EEXI regulations, which encourage reduced vessel speeds, and Cll regulations, which will boost vessel scrapping. Higher newbuild prices and tight shipbuilding capacity has restrained the new orders. It is projected that supply will outpace demand over 2024-25 which could depress the charter rates. Virtually all delivery slots till 1st half of 2027 are booked with major LNGC shipyards triggering re-jigs in the order book. Shipyards are also facing inflation and shortage of labour and raw material, potentially delaying scheduled deliveries. However, with slippages in 2023-24, major capacities being added from 2025 and older steam turbine vessels being phased out, the market is likely to re-establish equilibrium.

IndiaRs.s LNG imports were marginally up by 6% QoQ to 27% YoYto 6 million tonnes in 1Q24, supported by low prices and improved domestic demand. IndiaRs.s LNG imports are expected to rise at a CAGR of 12% between 2024 and 2029, aided by the rise in City Gas Distribution (CGD) demand, increasing regasification capacities and improving global LNG supply. The fall in LNG prices (around $8-10 MMBtu) is boosting demand from IndiaRs.s fertiliser, refinery, petchem sectors, with major LNG buyers - IOCL, GAIL, GSPC, Torrent Gas and BPCL buying spot cargoes. Several Asian governments are targeting to increase the share of natural gas in their energy mix and plan to develop more gas-fired power plants to support power generation. It is planned to increase IndiaRs.s share of gas to 15% by 2030 from the current 5%. IndiaRs.s LNG imports are projected to jump by 18% in 2024, with consumption recovering across sectors due to the lower LNG prices. The Country is ramping up its regasification capabilities and it is expected to add 65.7 mtpa by 2029.

Strategic alliances and partnerships will also become increasingly essential in supporting the FSRU development. More collaboration in the future is anticipated, strengthening regional energy security, which will further support the demand for FSRUs.

Your company jointly owns and operates 3 LNG carriers under long term charters with charterers Petronet LNG Limited, Indiafortransportation of LNG predominantly from Qatar. The fourth LNG carrier jointly owned by your Company is deployed under long term charter to Exxon Mobil LNG Services B.V, Netherlands. In order to ensure its presence in the new areas of the LNG market, your company is exploring further growth opportunities in LNG shipping. Your company has built up a pool of trained LNG officers and has acquired substantial experience of independenttechnical and commercial operation of LNG tankers.

d) LPG Transportation

The global LPG trade reached 124.8 million tonnes in 2023, rising by 7.2% YoY Asian LPG imports increased by 6.5% in 2023, spearheaded by ChinaRs.s 22% YoY growth, negating the contraction in imports by Japan and South Korea. IndiaRs.s LPG imports dropped slightly to 18.2 million tonnes in 2023 from 18.6 million tonnes in 2022. Though country imported 5.1 million tonnes in 4Q23, up by 17% QoQ, yet down by 8% YoY The rise in IndiaRs.s LPG imports in 4Q23 is attributed to the manufacturing sector switching back to propane from LNG amid firm gas prices over the winter season. An increase in the demand for Liquefied Petroleum Gas from residential, industrial, and transportation sector is the major driver for IndiaRs.s LPG demand. The growing demand for clean cooking fuels in rural, as well as urban households is expected to give a boostto the CountryRs.s LPG market.

IndiaRs.s LPG imports are expected to reach 19.9 million tonnes in 2024 and 21.1 million tonnes in 2025 on robust residential demand, which currently accounts for about 90% of the countryRs.s LPG demand. While residential demand will remain firm, industrial demand for propane is also likely to pick up following the governmentRs.s recent reduction in customs duty to 5% from 15% on LPG imports. Meanwhile, policy support will boost LPG imports in the Country. The Government of India aims to provide new LPG connections to 7.5 million households (low-income) under Pradhan Mantri Ujjwala Yojana (PMUY), starting from FY24-25.

While some short-term incentives will support LPG demand in India this year, the countryRs.s infrastructure development will strengthen its capabilities to accommodate the growing appetite for LPG in the long run. The Kandla-Gorakhpur LPG pipeline from Gujarat to Uttar Pradesh is scheduled to come online in 2024, while Indian Oil Corporation (IOC) is also due to commence operations at the import terminal in Kochi, with capacity of 15.4 kt of LPG. India is also attracting foreign investment in its LPG sector, which will provide further impetus for the countryRs.s infrastructure, strengthening its LPG import capabilities.

The charter hire rates for VLGCs surged in 2023 because of increased long-haul trade, supported by a wide US-Asia arbitrage, recovery in Asian petchem production and supply inefficiencies created due to the Panama Canal restrictions and Red Sea tensions. The Panama Canal restrictions due to drought conditions since August 2023 supported the sector as VLGCs are compelled to take longer routes, squeezing vessel supply. However, the attacks in the Red Sea also forced VLGCs to take even longer route via the Cape of Good Hope.

Your companyRs.s VLGC carrier - VLGC Nanda Devi, was gainfully employed under time charter with Indian energy PSU during this financial year. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance of the tanker segment has been largely influenced by healthy earnings on all segments. Your company operates a diversified feet, including five VLCCs, which were primarily employed on spot voyage charters with Indian charterers. However, due to dry-dock activities, revenue-earning days were lower compared to the previous year. Suezmax tankers were deployed in a mix of Indian as well as foreign charterers mainly in spot market. The older Suezmax vessels faced reduced employment opportunities owing to technical and age related limitations. Your companyRs.s Aframax COA earnings remained at decent level throughout the year. Four LR-I crude tankers were

Navratno Company

employed on the Indian coast, engaging in a mix of COAs, spot voyages, and other operations like lighterage and boating storage duties; whereas one unit was deployed on time charter with a foreign charterer. The LR product tankers were employed with foreign charterers on voyage charters, achieving stable returns. MR tankers were employed on the Indian coast.

The earning of the dry bulk segment was subdued for the first half of the year owing to low demand. ChinaRs.s appetite was low and grain trade was also muted. However several factors resulted in the segment picking up in the second half of FY 23-24. ChinaRs.s import of iron ore surged, likely to replenish low inventories. This along with Panama canal drought and Red Sea crisis escalation that led to vesselRs.s rerouting, resulted in demand supply gap that drove the markets up. This ended up defying the seasonal cycle. And although the recovery in the second half of the year did help ship owners, the overall earnings for the full financial year were lower than that of FY 22-23, as the levels seen for dry bulk market in the first few months of FY 22-23 were much higher, thereby driving earnings. Also, some of the dry bulk vessels of your Company were scheduled for dry-dock. However your companyRs.s diversified strategic deployment of tonnages, including COA, produced profitable financial results in dry bulk segment.

C. LINER AND PASSENGER SERVICES Industry Structure & Developments

i) World Scenario:

A.1 Global shipping industry found itself at epicentre of unprecedented challenges in 2023. It navigated through substantial economic hurdles, escalating inflation, significant shifts in consumer behaviour, increased geopolitical uncertainties, and a pronounced move towards diversifying global supply chains. Conflict in Ukraine, resulted in closure of Black Sea ports, causing congestion and delays in goods transportation and had a particularly significant impact. Moreover, notable decrease in UkraineRs.s exports, especially grains & food products, contributed to global price hikes. Recent conflicts in Middle East have also exerted substantial pressure on shipping industry, prompting international Companies to issue advisories and make adjustments to their networks / operations etc. Challenges posed to key shipping routes, including Suez Canal and Strait of Hormuz, added further uncertainty to industry in 2024. Expansion of BRICS, now including UAE, Saudi Arabia, Iran, Ethiopia, Egypt, and Argentina, is expected to bring about major shifts in international trade routes, introduce new alternative payment systems, and support infrastructure development across regions. However, outcome depends on how BRICS leverage its expanded influence in evolving global landscape, presenting both opportunities and challenges for global and regional shipping & maritime sector. This collaboration, combined with other recent developments in region, such as inception of India-Middle East-Europe Economic Corridor (IMEC), is poised to reshape dynamics, scope & reach of global shipping.

A.2 In response to ongoing trade tensions between US & China, escalating labour costs, and concerns about potential manufacturing disruptions akin to those witnessed during COVID-19 pandemic, Companies, especially in technology sector are increasingly exploring strategies to diversify their global supply chain operations away from China. While completely severing ties with China poses challenges due to robust electronic supply chains, established over past three decades, Companies are strategically relocating their final manufacturing and assembly processes outside of China while maintaining reliance on Chinese suppliers for essential raw materials. Establishing a manufacturing presence in a new location is a gradual process, typically taking more than two to three years. Anticipated growth in production in alternative regions is expected to gain momentum in 2024, with significant transitions occurring after 2025.

A.3 In 2024, pivotal shipping & maritime trends mentioned above are poised to shape global shipping landscape. Persistent consumer spending caution will influence container shipping demand and imbalanced inventory availability, potentially leading to an increase in blank sailings in certain regions. Simultaneously, oversupply is expected to drive intense competition and reduced profitability, paving wayfor possibly more consolidation, mergers and acquisitions in 2024.

A.4 Geopolitical uncertainties are anticipated to cast shadows on established trade routes, and expanding influence of BRICS countries is set to introduce new market dynamics, further impacting shipping & maritime landscape. Additionally, gradual shift in supply chains away from China emerges as a key trend with significant implications for market. Future of whole shipping & maritime industry is unpredictable, yet interconnected economic trends and geopolitical events mentioned above are set to guide course & destiny of global shipping ecosystem in 2024 and beyond.

A.5 As per UNCTAD, in 2023, global economy grew by 2.7%, but international trade in goods decreased by 1%. Although there has been some recovery in 2024, itRs.s unlikely that merchandise trade will be a significant driver of growth this year. Global maritime trade routes, crucial to worldRs.s trade & commerce, are facing increasing challenges. Most recently, escalating attacks on ships in Red Sea since November 2023 have been compounding already existing disruptions in Black Sea caused by war in Ukraine. Additionally, climate- induced droughts are affecting trade through Panama Canal.

A.6 In 2023, global container market grew 0.2% year-on-year to 173.8 million TEUs, which is 1.5% more than in 2019 before COVID-19 pandemic. However, this is 3.9% lowerthan in 2021, with cargo volumes declining by almost 7 Million TEUs due to regional and East/ West trade decreases. According to BIMCO, global container volumes are expected to grow between 3% and 4% in 2024 and 2025. In

2023, worldRs.s top 20 ports generated 387.5 million TEUs in cumulative traffic, which is 1.24% more than previous year. Asia was main driver of growth, with 15 of top 20 ports in 2023, including Beibu Gulf, a new entrant. AfricaRs.s leading port, Tangier Med, also entered ranking in 2023.

A. 7 As 2023 saw a relatively low level of container ship recycling, new ships entering fleet caused an 8% increase in capacity of container

fleet, fastest growth registered since 2011. In 2023, shipyards delivered 350 new container ships with a total capacity of 2.2 Million TEUs, beating previous record from 2015 when 1.7 Million TEUs was delivered. Ships larger than 15,000 TEUs continued to dominate deliveries, and segment grew 28% after 1.3 million TEUs were delivered in 2023.

B) Indian Scenario:

B. 1 IndiaRs.s 12 Major Ports handled 819.23 Million Tonnes (MT) of cargo in FY24, some 4.45 % more than 784.30 MT handled during last

year on back of strong growth in Iron Ore, Raw Fertiliser, Coking Coal and Container shipments, as per IPA. Mormugao saw highest increase in traffic in percentage terms, by nearly 19% to 21 MT in FY24. It was 17 MT in FY23. Rise came on back of increased Iron Ore exports to 5 MT, up 117% y-o-y. Traffic across all other categories, like Petroleum, Coking Coal & Thermal Coal saw a decline.

B.2 IndiaRs.s maritime sector is set to undertake a transformative journey with a comprehensive roadmap launched during Global Maritime India Summit, involving an investment of Rs. 80,000 lakh crores. Amrit Kaal Vision 2047, formulated by Ministry of Ports, Shipping & Waterways (MoPSW), builds on Maritime India Vision 2030 and aims to develop world class ports and promote inland water transport, coastal shipping, and a sustainable maritime sector. It encompasses aspirations in Logistics, Infrastructure, and Shipping, supporting IndiaRs.s Rs.Blue EconomyRs.. Vision, shaped through over 150 consultations with various stakeholders and analysis of 50 international benchmarks, outlines more than 300 actionable initiatives for enhancing ports, shipping, and waterways by 2047.

B.3 GMIS 2023, organized by MoPSW, was largest summit ever conducted in Mumbai. HonRs.ble Prime Minister inaugurated summit and launched Rs.Maritime Amrit Kaal Vision 2047Rs.. Ministers from 10 foreign countries, official delegations, business delegates, and exhibitors from 42 countries participated. Event witnessed signing of 360 MOUs worth Rs. 8.35 lakh crores, and additional investible projects worth Rs. 1.68 lakh crore were announced. Summit facilitated 2,460 B2B meetings and more than 500 G2B / G2G meetings. HonRs.ble Prime Minister also laid foundation stone for eleven projects, totalling Rs. 14,440 crores, and eleven projects valued at Rs. 8,924 crores were dedicated to the Nation.

B.4 To meet larger vision of achieving Zero Carbon Emission Goal, Government launched Rs.HaritSagarRs. Green Port Guidelines on 10.05.2023. Four major ports viz. Deendayal Port, Visakhapatnam Port, New Mangalore Port and VOC Port are already generating renewable energy more than their demand. On 27.09.2023, Green Hydrogen NGEL signed an agreement with SMP Kolkata to develop a Green Hydrogen Hub in Kolkata. SMP Kolkata and Saif Powertec Ltd., Bangladesh signed a MOU on 25.09.2023, to establish a new multimodal transport route for container movement between India and Bangladesh for fostering trade & shipment between two countries through Mongla and Chattogram Sea Ports, as well as Pangaon River Port.

B.5 On 03.11.2023, Costa Serena, first international cruise liner in India, was launched from Mumbai by HonRs.ble Union Minister of MoPSW. This is a significant milestone in history of cruising and tourism in India and was made possible by "Dekho Apna Desh" campaign of HonRs.ble Prime Minister. From April to November 2023, 86.47 MMT of cargo was moved through Waterways as compared to 80.44 MMT moved during April to November 2022, i.e. an increase of 7.49%.

II) Business Sector & Outlook

(i) Shipping industry is considered a crucial barometer refecting trends of global economy, and particularly container shipping sector, dealing with consumer goods, is known to react sensitively to economic and political changes. In 2024, container shipping is expected to be influenced by complex changes in shipping industry environment, global economic conditions, and political situations, which will likely have a significant impact on cargo volumes & freight rates. Consequently, 2024 is anticipated to be a challenging year for predicting container freight rates.

(ii) Global container cargo volumes is directly influenced by worldwide economic situation, and this impact has been pronounced in recent years. Due to pandemic, there was a 1.5% decrease in 2020 compared to previous year. Subsequently, in 2021, with launching of economic stimulus measures by various governments including interest rate cuts, consumption increased, leading to a 6.6% rise in cargo volumes. However, in 2022, Russia-Ukraine war resulted in inflation & interest rate hikes, leading to a decrease in consumption and a 3.7% decline in cargo volumes. In 2023, as inflation moderated, there has been a slight 0.5% increase in cargo volumes. Examining cargo volume by routes, in 2023, routes in Asian region experienced a 1.4% decrease, while European routes saw a 7.2% increase, and North American routes decreased by 4%.

(iii) According to ClarksonRs.s forecast, global container cargo volume outlook for 2024 is approximately 208.54 Million TEUs, representing an increase of about 3.7% compared to 2023. Maritime Strategies International (MSI) provides a more optimistic projection, anticipating a growth rate of 4.5% for 2024. This upward trend is primarily associated with cessation of interest rate hikes in US, EU etc., interpreted as refecting expectations for recovery in consumer spending and corporate demand. Breaking it down by routes, forecast suggests

that route within Asia will experience a 3.4% increase to 89.42 Million TEUs, Europe route will see a 1.5% rise to 16.75 Million TEUs, and North American routes is expected to increase by 6.5% to 22.49 Million TEUs.

(iv) On supply side, starting from 2023, delivery of large container ships has gained momentum. Looking at data for 2023, delivery of container ships with a capacity of over 8,000 TEUs was 130,000 TEUs in May, 230,000 TEUs in June, 170,000 TEUs in July, and 120,000 TEUs in August. In December, 150,000 TEUs were delivered. These figures represent increases of 458%, 99%, 169%, 406%, and 191% compared to same months in previous year, indicating substantial influx of container ship capacity into shipping market. As of end 2023, global container ship capacity reached 27.83 Million TEUs, signalling significant change in shipping industry. This figure represents an increase of approximately 8.3% as compared to 25.7 Million TEUs in 2022, marking highest growth rate in past decade.

(v) Delivery of a large number of container ships can contribute to stabilization of freight rates, simultaneously, it can also lead to intensified market competition and sustained pressure for reduction of freight rates due to oversupply. Container shipping industry needs to respond flexibly and strategically to these challenging market changes. To achieve this, a focus on analysing market trends, improving operational efficiency, developing long-term business plans (such as diversification of business) etc. is considered crucial. Through such an approach, container shipping industry can effectively cope with market volatility and strive for long-term stability and sustainable growth.

(vi) According to predictions from ClarksonRs.s and MSI, growth rates for cargo volume in 2024 are forecasted to be approximately 3.7% and 4.5%, respectively. In contrast, growth rate for container ship capacity, according to ClarksonRs.s, is expected to reach 7.0%. It appears that demand growth rate may not keep pace with increase in supply, indicating a less favourable freight rate, profit & profitability outlook as compared to previous year.

Ill) Future Trends in Shipping Industry

(a) Low Carbon Fuels: Adoption of low carbon fuels, such as Liquefied Natural Gas (LNG) & Biofuels, represents a significant step towards reducing greenhouse gas emissions in shipping industry. As environmental regulations become stricter and sustainability concerns grow, ship-owners are increasingly investing in alternative fuels to power their vessels. This shift towards low carbon fuels not only helps reduce emissions but also positions Companies favourably in a market increasingly focused on environmental responsibility and compliance with emissions targets.

(b) Streamlined Hulls: Advancements in hull design, including development of more streamlined shapes & structures, aim to improve hydrodynamics of vessels and reduce drag. By minimizing resistance encountered by ships moving through water, streamlined hulls can enhance fuel efficiency and reduce operational costs. As fuel expenses constitute a significant portion of operating expenses for shipping companies, investments in streamlined hulls offer potential for substantial long-term savings and increased competitiveness in market.

(c) Efficient Propeller Design: Innovations in propeller design focus on optimizing blade geometry, materials, & propulsion systems to maximize propulsion efficiency and minimize energy consumption. Efficient propeller designs help vessels achieve higher speeds with lower fuel consumption, leading to improved performance and reduced environmental impact. By investing in more efficient propeller technologies, shipping companies can enhance their operational efficiency; lower operating costs, and comply with regulatory requirements aimed at reducing emissions and improving sustainability.

(d) Improved Voyage Planning & Fuels Savings: Enhanced voyage planning techniques leverage advanced weather forecasting, AI route optimization algorithms, and real-time data analytics to optimize vessel routes and minimize fuel consumption. By identifying most fuel-efficient routes and adjusting speed and course accordingly, shipping companies can achieve significant fuel savings and reduce environmental emissions. Improved voyage planning not only contributes to cost savings but also enhances operational efficiency, reliability, and safety, positioning companies for success in an increasingly competitive and environmentally conscious industry.

(e) Hull Coatings: Development of advanced hull coatings aims to reduce friction between ships & water, thereby, improving fuel efficiency and reducing emissions. Innovative coatings, such as silicone-based or non-toxic foul-release coatings, prevent marine growth and reduce drag, allowing vessels to maintain optimal performance over extended periods. Investing in better hull coatings not only helps shipping companies reduce fuel consumption and operating costs but also prolongs lifespan of vessels and minimizes environmental impact by reducing use of biocidal antifouling paints.

(f) Air Cushions: Air lubrication systems, also known as air cushions or air bubbles, create a thin layer of air bubbles along hull of a vessel, reducing frictional resistance and improving fuel efficiency. By injecting compressed air or micro-bubbles beneath hull, air cushion systems enable ships to glide more smoothly through water, requiring less propulsion power and fuel consumption. Adopting air cushion technology offers significant fuel savings and environmental benefits, making it an attractive option for shipping companies seeking to enhance efficiency and sustainability in their operations.

(g) Sails: Modern sail-powered cargo ships are incorporating innovative technologies to enhance efficiency and sustainability. Rigid sails, made from durable materials like carbon fibre, and kite sails, which capture high-altitude winds, are among latest trends. Rotor sails, using Magnus effect, are gaining popularity for their effectiveness in various wind conditions. Hybrid propulsion systems combine traditional engines with sail power to reduce fuel consumption and emissions. Automated sailing systems optimize sail adjustments

in real-time, minimizing human intervention. Additionally, some ships integrate solar panels with sails to harness both solar and wind energy. Wind-Assisted Ship Propulsion (WASP) technology leverages multiple wind propulsion methods for maximum energy savings. New ship designs focus on aerodynamics and hull efficiency to complement sail power. Maritime industry is also seeing increasing regulatory support and incentives for sustainable shipping practices, further driving innovation in sail-powered technologies.

IV) SWOT Analysis - L&PS Division

A) Strength & Weaknesses

A.1 Liner Division of SCI has vast experience in liner trade, which is most formidable force instilling confidence in cargo interests / owners who continue to lend their invaluable support to SCI.

A.2 Customerfriendly approach at all levels and SCIRs.s customized services puts SCI ahead in league.

A.3 Wide network of agents, world over, provides and facilitates for localized contacts in markets to offer bespoke, customised, end-to-end total logistics solutions.

A.4 Operating partnerships have been forged with internationally recognized container carriers in select consortia, to enhance coverage and frequency on major trading routes.

A.5 Break-bulk operations are largely profitable and provide stable source of revenue.

A. 6 Though SCI started predominantly as a liner shipping company but currently has only 2 liner vessels with a meagre share of global liner

capacity.

B) Opportunities & Threats:

B. 1 Substantial growth of Indian EXIM container trade facilitated by enabling GOI policies viz. Maritime Amrit Kaal Vision 2047, Maritime

Vision 2030, Sagarmala, Gati Shakti, National Logistics Policy, Foreign Trade Policy 2023 etc.

B.2 Substantial potential for enhancing presence on Indian coast in coastal shipping sector, feeder operations, IWT etc.

B.3 Capitalise on substantial movement of project cargoes, heavy lift shipments; tapping more PSU / GOI / Defence cargoes.

B.4 India-Maldives service to serve as template for expansion into Indian Ocean Region (IOR) & near Coastal Regions.

B.5 Provide Technical, Operational & Commercial Management, of IWAI Vessels through ICSL.

B.6 Break-bulk sector affords inherent potential for carriage of ODC/Project/ Heavy Lift cargoes of Government Organizations/ Departments / PSUs etc.

B.7 Supply / demand overhang with huge box-ship order book dominated by larger ships (ULCS / VLCS) placing considerable stress on already depressed freight markets.

B.8 Declining merchandise / EXIM trade owing to emerging geopolitical risks, global infiationary trends, slowing consumer demand, high inventory overhang etc. depressing fill factor/capacity utilization etc.

B.9 Trade-wars, protectionism etc. & its impact on emerging markets pose serious headwinds.

B.10 On-going industry consolidation, capacity management & network optimisation forcing cascading of bigger vessels into niche segments stressing outfreight rates, capacity utilisation, revenues and profitability.

B.11 Extreme volatility in inputcosts viz. especially bunker prices, port/terminal/depottariffs etc. severely impacting bottom line.

V) Liner Shipping Services 2023-24

A) Segment-Wise Performance

A.1 Liner Vessels: Table below shows profile of your CompanyRs.s liner fleet having a total container carrying capacity of 8,800 TEU (nominal capacity).

A.2 SCI owned container vessels viz. m.v. SCI Chennai and m.v. SCI Mumbai are 14 years old. As on 31.03.2024, 4 vessels including 2 in-chartered containervessels having combined DWT of about154,873 MT was operated by your Company.

In addition to above owned and in-chartered vessel, your Company also has loading rights on 18 vessels of its partners in various consortia arrangements that your Company has with leading Shipping Lines such as Mediterranean Shipping Company (MSC), Sima Marine / Simatech etc. to name a few. Your Company continued to be present in following sectors.

B) Container Services

B.1 India Europe Service / Himalaya Service / IPAK Service: UK-Continent Cellular Container Service was commenced by SCI in 1994, as a single operator, deploying three vessels of 1,800 TEU capacity. Service was subsequently upgraded to a fixed day weekly service with two partners deploying a total of seven vessels of similar capacity. During economic downturn of 2008-09, service was rationalised by forming a consortium with MSC in May 2009, to operate a weekly service with a total of eight vessels, out of which two vessels of 4,400 TEU capacity were contributed by SCI. A slot swap arrangement between SCI & MSC was agreed, under which SCI was allotted 150 TEUs on India Pakistan Europe Service (IPAK service) operated by MSC, against allotment of 150 TEUs from SCIRs.s allocation on India Europe Service. Thereafter, in early 2016, service was upgraded to nine vessels of 8,500 - 10,000 TEU capacity with SCI contributing one in-chartered vessel of about 8,500 TEU capacity. Since re-delivery of in-chartered vessel in August 2021, SCI has been maintaining its presence in India-Europe sector through purchase of slots from MSC. In meantime, owing to on-going Red Sea crisis and attacks on commercial ships, Shipping Lines started to route their vessels via Cape of Good Hope as transiting through Suez Canal became unsafe. In view of above, round voyage duration of Asia Europe Services viz. IPAK service & Himalaya Service operated by MSC increased from 63 days to 84 days and number of vessels deployed in services also increased from nine to twelve vessels. Accordingly, MSC re-organized Himalaya Service to cover Mediterranean ports and IPAK service for catering to European / North Continent Ports. Hence, SCI is now operating India-Europe service through slot purchase on IPAK Service operated by MSC. During January 2024, SCI finalized in-chartering of an 8,000 TEU vessel, which is expected to be delivered to SCI during lastweek of August 2024 & is planned for deployment in IPAK Service.

B.2 SCI Middle East India Liner Express (SMILE) Service & Chennai Colombo Gulf Service (CCG) of Partner: SMILE & CCG services seamlessly link up with East Coast of India and West Coast of India, thereby, strengthening and expanding SCIRs.s presence in Coastal Shipping Sector. Joint operation on this route is a force multiplier for SCI, which provides high quality Coastal Services on fixed day, fixed window basis with potential for even bigger expansion in Coastal and near Coastal trades with special emphasis on East Coast of India ports. These two services viz. SMILE and CCG, with their service rotations makes it feasible to connect pan-Indian ports with improved transit time. SCI seeks to cooperate with other Indian Companies to work out besttransportation solutions fortrading community visa-vis commercially viable and environmentally feasible options. SCI connects West Coast of India to Southern & Eastern ports of India viz. Vizag, Katupalli & Krishnapatnam offering Pan India service since thereby promoting GOI initiative Rs.SagarmalaRs., increased coastal shipping and effecting modal shift.

B.3 India—Maldives Shipping Services (IMSS): India-Maldives Cargo Shipping Service between India and Maldives, was jointly launched through a virtual ceremony on 21.09.2020, adding a new chapter in connectivity initiatives taken by both countries in Indian Ocean Region (IOR), connecting Indian Ports of Cochin and Tuticorin with Kulhuduffushi and Male. Majority shipments are of bulk/break-bulk nature, whereas, thrust is to fill-up vessel with containerized cargo for better profitability. Informatively, service was briefly discontinued in September 2022, due to off hiring of inchartererd vessel. However, Service was continued through interim arrangement with other carriers. On 05.05.2023, direct shipping service recommenced between India and Maldives, through induction of m.v. MSS Galena, from VO Chidambarnar Port. m.v. MSS Galena, since her inaugural sailing on 05.05.2023, gave much needed connectivity between both Nations. On completion of charter of m.v. MSS Galena and for maintaining continuity of IMS Service, SCI has taken m.v. MSM Douro, a 220 TEU (nominal capacity) vessel, for induction in IMS Service.

B.4 Inland Waterways Services: "Inland & Coastal Shipping Ltd" (ICSL), a wholly owned subsidiary of SCI, was incorporated on 29.09.2016 for undertaking / providing transportation services through inland waterways, coastal shipping and end to end logistics. A MOU was executed between ICSL and Inland Waterways Authority of India (IWAI) on 22.01.2021 for Operations & Management of three cargo vessels on bareboat charter basis. Vessels would navigate on National Waterways and serve hinterlands of India. Two cargo vessels were taken over by ICSL in January and February 2021 respectively and third vessel would be taken over by ICSL after completion of formalities by IWAI. ICSL is in process of establishing scheduled services in NW1 (Kolkatato Patna/Varanasi) and NW2 (Kolkatato Dhubri/ Pandu) in collaboration with IWAI. Subsequently, ICSL and IWAI executed a MOU on 11.03.2022 for taking over two RO-RO vessels owned by IWAI to promote RO-RO transportation aimed at decongesting roads. Informatively, one of the RO-RO vessels viz. m.v. Gopinath Bordoloi, was taken over by ICSL and out-chartered on 29.08.2023 and second vessel m.v. Sankar Dev, would be taken over by ICSL shortly.

B.5 Feeder Operations: SCI enters feeder arrangements with "Common Carriers" between various destinations/ port-pairs on Indian Subcontinent for providing seamless connectivity for EXIM & Coastal trade fraternity.

B.6 Slot Swap Arrangements: SCI enters into slot-swap arrangements with service providers depending upon trade requirements.

B.7 Break-Bulk Services: SCI arranges carriage of break-bulk cargoes on space charter basis from various regions across globe including USA, Europe, Far-East etc. for imports of Government Departments / PSUs and other GOI Organisations, which includes ODC / Project / Heavy Lift / IMO Class-I Cargoes etc. and also containers.

VI) Marketing: SCIRs.s marketing team continues to make regular customer calls through its own Offices and also through Agents appointed at various ports in India and abroad in order to market its container and break-bulk services. Both physical & Virtual Meetings with Agents, Customers, Shippers, Cargo Consolidators etc. are held periodically, and SCI representatives also participate in various trade meets at important locations in India.

VII) Outlook:

a) IMF projects a GDP growth of 6.8% for FY 2024-25, citing strong domestic demand, whereas, ADB has a more optimistic outlook, forecasting a growth of 7% GDP growth for FY 2024-25, based on expectations of robust investments and a strong service sector. Further, Budget 2023-24 has emphasised significant increase in capital expenditure outlay, with a focus on infrastructure development, including investments in ports, waterways, and related logistics infrastructure, which would directly & indirectly benefit shipping sector by augmenting capacity & improving efficiency and connectivity.

b) On international side, according to predictions from ClarksonRs.s and MSI, growth rates for cargo volume in 2024 are forecasted to be approximately 3.7% and 4.5%, respectively. In contrast, growth rate for container ship capacity, according to ClarksonRs.s, is expected to reach 7.0%. It appears that demand growth rate may not keep pace with increase in supply, indicating a less favourable freight rate outlook during 2024-25. Further, uncertainty arising from prolonged geo-political conflicts such as Russia-Ukraine war, attacks on commercial vessels in Red Sea region forcing diversion of vessels via longer & riskier route of Cape of Good Hope has had a debilitating impact on shipping services. Longer sailing distances & transit times, higher bunker consumption, increased insurance premiums, risk allowances for crew, etc., have caused a spike in freight rates. As complex macroeconomic and geopolitical factors are beyond control of shipping lines & there is considerable uncertainty regarding their impact on shipping services during 2024. In view of above, India Sub-continent Europe Sector would remain extremely volatile in terms of both cargo volumes and freight rates in coming months.

c) SCIRs.s weekly Coastal service (SMILE) with owned vessels viz. m.v. SCI Chennai & m.v. SCI Mumbai (115,598 DWT each) is operated in partnership with Chennai-Colombo-Gulf Service (CCG) operated by partner. Informatively, m.v. SCI Chennai & m.v. SCI Mumbai are largest vessels ever deployed in coastal services. In addition, vessel m.v. Alexandria has been in-chartered & inducted in SCIRs.s Coastal feet to maintain continuity and expand SCIRs.s Coastal services. With presence of m.v. Alexandria and two owned vessels, SCI is ideally poised to expand presence on Indian coastal trade & post favourable results in 2024-25. However, due to influx of excess tonnage by competing lines, reduction in cargo volumes, downward trend in freight rates etc. is expected to continue at least till mid of FY 2024-25.

d) As regards Inland Waterways, though navigable waterways of India continue to be underutilized, governmentRs.s focus on development and promotion of Inland Waterways as a supplementary mode of transport through initiatives like Amritkaal 2047, MIV 2030, Gati Shakti Plan and Sagarmala for development of Multimodal Transport, would give necessary impetus to further development & usage of Inland Waterways making it next sunrise sector. SCI is already operating in inland waterways and is looking for further opportunities forexpansion through its subsidiary, Inland & Coastal Shipping Limited, located at Kolkata.

VIII) Risks & Concerns: As container freight rates in last two years touched record high levels, it is unlikely that such rates will continue to maintain at same levels this year. This can taper down SCIRs.s Liner services profitability depending on degree of reduction in box rates. SCI needs more partners for market expansion for its EXIM as well as coastal services. However, in absence of suitable partners / alliance with other EXIM / coastal operators, SCIRs.s EXIM / coastal services growth may remain stagnant.

IX) Discussion on Financial Performance w.r.t. To Operational Performance: Your CompanyRs.s liner segment registered a net loss ofRs. 187.15 crores in FY 2023-24 as against Rs. 31.19 crores in 2022-23. Operating Income decreased to Rs. 460.99 crores in 2023-24 from Rs. 1,128.59 crores in preceding year due to lower volumes and sub-optimal freight levels. You may like to note that your Company is adopting various cost saving measures accruing to liner services viz. considerable saving on feeder & trans-shipment costs by reducing carrying cargoes to non-base ports, better inventory management, control on repair costs of vessels & containers. On time schedule reliability of our services, especially, in Europe sector, continues to be very good and comparable or better than global players.

X) Measures Taken To Improve Services & Operations: Liner Division is ensuring that General Rate Increases (GRI) are being strictly implemented from time to time keeping in mind market sentiments and demand-supply gap dynamics. Performance of each service is being reviewed monthly from point of view of profitability. Ultra slow steaming is planned and achieved on container ships. Liner Division has already expanded its Coastal and Feeder Services and is trying for further expansion. Further, ports like Kandla and newly emerging container ports in East Coast of India like Kattupalli, Krishnapatnam and Vizag are offering substantial discounts on transhipment costs and storage charges, and by using these ports optimally, substantial system costs reductions are being achieved. Our focus is to maintain right sized leased equipment inventory to optimum levels to make services sustainable and undertaking firm negotiations with Leasing Companies and Vendors for achieving desired results. Aging vessel is being replaced by younger feet at betterterms. Division is scouting forsecond hand vessel(s) if itfits operational, technical and commercial requirements.

Navrortno Company

XI) Information Technology: SCI has a robust ERP system in place. These systems are hosted at SCIRs.s Data center located at Powai. To ensure Business Continuity, SCI also has a Disaster Recovery Site at Kolkata office. There is an E-tendering platform which is being extensively being used for procurements, thus enabling transparency and efficiency in the procurement process. SCI has implemented a Vendor Invoice Management system which facilitates registration of invoices centrally by the vendors which then goes through a work how mechanism for approvals till settlement. Vendor has a facility to track and understand the status of their invoices.

As part of the Cyber Suraksha initiative, SCI has been making employees aware on various topics like cyber security awareness, whatsapp scams, phishing, desktop, laptop and mobile security, precautions against fraudulent transactions and Courier Frauds through articles, emails and talks by eminent personalities.

D. Technical and Offshore Services Division

Information relating to the year under review viz 01.04.2023 to 31.03.2024:

The T&OS Division of SCI operates fleet of 10 owned offshore vessels. In addition to the above, it has also been managing vessels of various organizations/Government departments. As on 31.03.2024, this comprised of 02 vessels of ONGC, 27 vessels of A&N Administration, 3 vessels of Geological Survey of India and 01 vessel of UTL Administration.

Offshore vessels:

SCI owned Offshore vessels:

Your CompanyRs.s owned offshore fleet comprises of 10 vessels i.e. 02 nos. 80T Anchor Handling, Towing & Supply Vessels (AHTSVs), 04 nos. 120T AHTSVs, 02 nos. Platform SupplyVessels (PSVs) and 02 nos. Multi-Purpose SupportVessels (MPSV).

During the year under review, five (5) vessels (one PSV and four 120T BP AHTSVs) continued to be on long term charter with ONGC. Further, two vessels were under deployment with DRDO (one MPSV and one 80T BP AHTSV); and two vessels were under deployment with Indian Navy (one MPSV and one PSV). Vessels deployed with DRDO and Indian Navy were providing assistance in national missions of strategic importance.

While at the beginning of the year, two (2) 80T BP AHTSVs were operating in the spot market and were deployed with various Government and private clients; subsequently, during the year one 80T BP AHTSV has been deployed with DRDO on long term basis. O&M of ONGC owned vessels

i. Specialized vessels of ONGC:

During the year 2023-24, your company continued the Operation & Maintenance (O&M) of ONGCRs.s one Geotechnical vessel (GTV Samudra Sarvekshak)

Also your company continued to provide O&M to ONGC owned Well Stimulation vessel (WSV Samudra Nidhi), since the vesselRs.s delivery in the year 1986.

ii. Mobile Offshore Drilling Unit (MODU):

Your Company had been providing Marine Man Management services to one MODU of ONGC viz; Rs.Sagar BhushanRs., since last 6 years. As perthe directions from ONGC, the vessel has been handed over back in MarRs.2024.

O&M of other organizations:

i. O&M of A&NA owned vessels:

In addition to Offshore operations, your Company operates domestic passenger and cargo transportation services between the Mainland and the A&N group of islands and inter-islands by managing vessels owned by the Andaman and Nicobar Administration(A&NA). Presently a total of 27 vessels of A&N Administration are being managed by SCI. These comprise of 17 nos. Foreshore Passenger vessels, 8 inter-island vessels, 01 Mainland-island vessel and 01 cargo vessel.

ii. O&M of UTLA owned vessels:

Your company, on 02.02.2022, had executed an agreement with Union Territory of Lakshadweep Administration (UTLA) towards Operation and Management (O&M) of their entire fleet of vessels.

Subsequently, your company received letter dated 21.02.2023 from the UTL Administration informing about signing of MoU with Cochin Port Authority, Cochin Shipyard Limited and Lakshadweep Development Corporation Limited (LDCL) for Port Infrastructure development projects and Shipping operations and maintenance of UTLA vessels. As per the letter, your company was requested to take necessary action for handing over operation and management of UTL vessels to LDCL. Accordingly, suitable arrangements were made by your company for smooth handing over. During the year 2023-24, 22 vessels of UTL Administration were handed overto M/s. LDCL in a phased mannerand remaining 01 vessel was handed over in AprilRs.2024.

iii. O&M of other organizations:

During the year, your company continued operation and management of Oceanographic and Coastal Research vessels on behalf of Government agencies / departments viz; three vessels owned by Geological Survey of India (GSI) under Ministry of Mines.

iv. Manned and Managed vessels:

The following table shows the profile of Passenger vessels, cargo vessels and other vessels of various Government departments managed by your company:

DRDO Project:

Your Company continued to deploy its one Multi-Purpose Support vessel (MPSV) "SCI Saraswati" with the Defence Research & Development Organisation (DRDO) during the entire FY 2023-24. Further to this, your company has also provided one more Offshore vessel to DRDO to cater to their requirements. These vessels are being utilized to meet support requirements towards DRDORs.s strategic missions of national importance.

Indian Navy Projects:

Similar to previous year, during the current year also, the Indian Navy has continued to avail services of your companyRs.s one MPSV "SCI Sabarmati" and one PSV "SCI Yamuna". Your company is proud to have been associated and assisting the Indian Navy in their critical missions of national importance.

India-SriLanka Passenger ferry service:

As per directions of Government of India, your company rendered necessary assistance for commencement of International Passenger Ferry service between Nagapattinam, India and Kankesanthurai, Sri Lanka, which was flagged off on 14.10.2023 from Nagapattinam.

SCI took over the High Speed Craft (HSC) Rs.CheriyapaniRs. owned by the UTL Administration, completed mandatory audits & certification and obtained permissions from D.G. Shipping and vessel was made ready to be deployed for the ferry service. The vessel HSC Rs.CheriyapaniRs. successfully completed four round voyages between Nagapattinam and Kankesanthurai on 14^th, 16^th, 18^th & 20^th Oct 2023 and has catered to the requirements of passengers of both countries.

Thereafter, as weather conditions started deteriorating at Nagapattinam and Kankesanthurai, passenger service had to be suspended beyond 20^th Oct 2023. Accordingly HSC Cheriyapani sailed from Nagapattinam on 24.10.2023 for Kochi and the vessel was handed over to LDCL (UTLA) on 28.10.2023.

Strengths and Weaknesses:

Your company has a diversified fleet of offshore vessels with 02 nos.80T AHTSVs, 04 nos. 120T AHTSVs, 02 nos. PSVs and 02 nos. MPSVs, thus enabling it to cater to requirements of various clients in the offshore market. Your company is also in the process of tonnage acquisition in the required segments.

Further to keep the vessels technologically up-to-date your company is in the process of upgrading four (4) 120T BP AHTSVs from DP1 to DP2, in line with the market requirements of E&P operators.

During the period under review, your Company has successfully deployed majority vessels on long term charter thus ensuring steady revenues for long term period.

ONGC being the biggest E&P company in India, your company has been employing majority of its vessels with them on long term basis. However to mitigate the risk of dependence on one client, your company has been in constant discussions with various other public/private operators to deploy our vessels for their offshore activities.

While SCI has diversified Offshore fleet, it is comparatively small to cater/fulfill to the needs of E&P companies in India, which is being capitalized by the private & small players by adding low cost assets.

Opportunities and Threats:

The offshore vessel market in India presents several opportunities, driven by the countryRs.s expanding energy sector, regulatory initiatives and increasing demand for maritime infrastructure. Here are some key opportunities:

i. Oil and Gas Exploration:

> Increased Exploration Activities: The Indian Government has been encouraging exploration and production activities in its offshore oil and gas fields. This creates demand for offshore assets like Offshore Support Vessels (OSVs), Platform Supply Vessels (PSVs), Anchor Handling Tug SupplyVessels (AHTSVs) and Multi-Purpose SupportVessels (MPSVs).

> Deepwater and Ultra-Deepwater Projects: As exploration moves to deeper waters, there is a growing need for specialized vessels capable of operating in challenging environments.

ii. Renewable Energy:

> Offshore Wind Farms: India is exploring the potential of offshore wind energy. The development of offshore wind farms will require various types of support vessels for installation, maintenance and operations.

iii. Subsea Operations:

> Pipeline and Cable Laving: With the expansion of offshore oil and gas fields and the development of renewable energy projects, there is a need for vessels specializing in laying subsea pipelines and cables.

> Inspection. Maintenance, and Repair (IMR): Regular IMR activities for existing offshore infrastructure present ongoing opportunities for offshore vessels.

iv. Maritime Security:

> Coastal Surveillance: Enhancing coastal security and monitoring activities requires specialized vessels equipped with advanced surveillance and monitoring systems.

> Search and Rescue Operations: The need for efficient search and rescue operations in IndiaRs.s vast maritime domain creates demand forwell-equipped and versatile offshore vessels.

Investmentin Technology: Investing in modern, technologically advanced vessels can enhance efficiency and safety in offshore operations. By capitalizing on these opportunities, companies in the offshore vessel market can play a crucial role in supporting IndiaRs.s maritime infrastructure and energy ambitions.

With steady growth in the demand for crude oil, the E&P activities are expected to rise, thereby creating shipping demand for offshore assets in the Indian coast. Substantial potential is foreseen for growth in offshore services on the Indian coast as well as in the neighboring areas. Informatively, during the second half of the year, ONGC floated tender for chartering of various offshore vessels for a long term period of 3 years, wherein SCI was successful in getting contract for three vessels for 3 years period. Further, ONGC has also declared that they have made 11 discoveries during the last one year, which includes 5 discoveries Offshore and 6 onshore. Also your Company is being approached by various Government organizations as well as private operators for requirement of Offshore vessels. Thus various opportunities exist in the market for deployment of Offshore vessels of your Company.

While opportunities exist in the Indian market, there is lot of competition from the private players as well as foreign assets that are being diverted to Indian waters. This was observed in the last ONGC tender, wherein the participation was 60 vessel offers as against the tender requirement of 17 vessels, thus highlighting the stiff competition in the Indian market with Indian private shipping companies as well as from foreign shipping companies.

Industry Structure and Developments:

i) World scenario:

The offshore support vessels industry is dependent on utilization of rigs, E&P activities and other activities in oil fields, which in turn depends upon strategic decisions of energy security by oil and gas producers, shifts in Government policies and long term crude oil price trends.

Global headwinds, economic turmoil, recessionary trends in many developed economies, impact of Russia-Ukraine war, etc. played / will be playing the critical role in deciding future course for the off-shore market.

ii) Indian scenario:

With ONGC already floated tender for chartering of 17 vessels on long term basis of 3 years, the Indian market was upbeat, with opportunities to deploy vessels on long term basis. ONGC is in the process of floating few more tenders for requirement of Offshore vessels in the next year also. Opportunities also existed during the year for deployment of vessels on short term basis, thus indicating that the Indian market was comparatively less impacted by the global geo-political tensions.

iii) Outlook:

> Reserves and Exploration: India has significant offshore oil reserves, particularly in the western offshore region of the Arabian Sea and the eastern offshore region of the Bay of Bengal. Exploration efforts continue to identify new reserves, including deepwater and ultradeepwater prospects.

> Production Growth: The Indian offshore oil industry has experienced steady production growth over the years, driven by projects operated by state-owned companies like Oil and Natural Gas Corporation (ONGC) and Oil India Limited (OIL), as well as private players like Reliance Industries Limited (RIL). However, ageing fields and declining production rates in some areas pose challenges to sustaining growth.

> Technological Advancements: Advancements in exploration and production technologies, including seismic imaging, drilling techniques and enhanced oil recovery methods, are enhancing the viability of offshore oil projects in deeper waters and challenging environments. These technologies contribute to unlocking new reserves and improving production efficiency.

> Renewable Energy Transition: The global transition towards renewable energy sources, including solar, wind and hydroelectric power, presents both challenges and opportunities for the offshore oil industry. While there is increasing pressure to reduce reliance on fossil fuels and mitigate climate change, oil will likely remain a significant part of the energy mix for the foreseeable future, especially for industries like transportation and petrochemicals.

In summary, the outlook for the Indian offshore oil industry is influenced by a complex interplay of factors, including technological advancements, regulatory frameworks, market dynamics and the transition towards renewable energy. Despite challenges, the industry is expected to continue playing a significant role in IndiaRs.s energy security and economic development. Furthermore, ONGC is also expected to come up with more tenders with long term requirements for its offshore assets. Also, more requirements, albeit shortterm, are emanating from private operators / contractors in the Indian offshore market.

Risks and Concerns:

Entry of new players in the Indian market with low Capex is another concern and challenge for your company. Many small private players acquiring vintage secondhand vessels at low cost and competition with these players is a big challenge for sCi. To counter the same, your company has been taking all efforts to deploy vessels on long term basis, so as to avoid the impact of fluctuations in charter hire rates in market.

Technical Services:

Technical Consultancy Services

Tonnage Acquisition Programme

During the year under report, your company had envisaged acquisition of secondhand vessels in various segments viz., Container, Gas, Product Carrier, Offshore vessels, etc.

Necessary steps were taken in this regard and accordingly during the month of March to May 2024, tenders were floated for acquisition of various vessels as stated above. As per the response received for the tender and technical evaluations of the offers, next course of action would be pursued as per the laid down procedures for acquisition of vessels.

Additionally, your company had also floated tender for acquisition of one secondhand High Speed Craft (HSC) of 15 to 20 years old having capacity to carry about l5o passengers to support the Government of IndiaRs.s vision for starting the international ferry services between Nagapattinam - India and Kakensanthurai - Sri Lanka.

Informatively, your company has been continuously scanning the market for right assets in the market in relation to the available employment opportunities and is optimistic about acquisition of vessels atthe opportune time.

Eco-Friendly and Conservation of Energy

As a policy, your Company remained committed to environmental protection as per International Convention for the Prevention of Pollution from Ships (MARPOL). Necessary steps have been taken to minimize air pollution and oil pollution from ships.

Under the National Green Hydrogen Mission (NGHM), your company has identified 2 vessels to be retrofitted to run on Green Methanol by 2027. The retrofit would be carried out in line with the Scheme Guidelines for Implementation of Pilot Projects for use of Green Hydrogen in Shipping Sector underthe NGHM. Detailed feasibility study and discussions with Engine OEM is in progress.

Prevention of use of Single Use Plastics (SUP) onboard vessels in compliance with DGS orders, regular hull cleaning, propeller cleaning / polishing / periodic hull coating during drydock, use of tin free and cybutryne free Anti-fouling paints, using environmental friendly refrigerants, use of asbestos free products onboard, installation of Ballast Water Treatment plants in a phased manner on existing vessels depending on their dry dock schedule (completed on 33 out of 42 vessels required to be fitted with BWTS), etc are some of the measures showing your companyRs.s commitment to Eco-friendly policies and conservation of energy.

Your company has geared itself to comply with latest emission reduction targets set for shipping by IMO. The IMO has introduced Energy Efficiency Existing Ship Index (EEXI) and Carbon Intensity Indicator (CII) regulations as part of its interim measure underthe Green House Gas strategy. Ship Energy Efficiency Management plan developed for all ships which includes SEEMP Part III (w.e.f 01.01.2023 - CII rating based on the annual fuel consumption of each ship) has been completed.

Your company has embarked on various Technical & Operational measures to improve energy efficiency with options to use bio-fuels.

As far as Carbon Intensity Indicator (CII) is concerned, SCI is exploring various types of Energy Saving Devices (ESDs)/technology such as propeller boss cap fins, low resistance (high performance) anti-fouling paints, trim optimization, time & speed monitoring, etc with an objective to achieve continuous improvement in shipRs.s operational CII.

Technology Absorption, Adoption and Innovation

The technological advancement in Maritime sector is focused towards optimizing ship operations, building cost efficiencies, developing sustainable and environment friendly maritime business.

The 2023 IMO GHG Strategy is particularly focusing on reduction in carbon intensity of international shipping (to reduce CO2 emissions per transport work), as an average across international shipping, by at least 40% by 2030. The 2023 IMO GHG Strategy also includes a new level of ambition relating to the uptake of zero or near-zero GHG emission technologies, fuels and/or energy sources which are to represent at least 5%, striving for 10%, of the energy used by international shipping by 2030.Your company is committed to align with IMORs.s 2023 revised GHG Emissions strategy.

Your company is continuously trying to identify and implement emission reduction technologies and best practices. The technology for retrofit of existing 4-stroke diesel engines to run on Green Methanol is now available with OEM. Your company has identified 2 such vessels feasible for conversion of main propulsion engines to run on Green Methanol by 2027.

Your Company has also completed preparation and approval of EEXI technical files and plan to fully comply with the new MARPOL regulation effective from 01.01.2023 through a combination of Engine Power Limitation (EPL) and other energy savings devices and using zero/low carbon fuels eventually. The Company is also exploring other fuel optimization technologies in order to support compliance with the EEXI requirements. All vessels of your company built after 2013 have Energy Efficiency Design Index (EEDI) certificates.

The Company has estimated the Carbon Intensity Indicator (CII) ratings for its fleet, which is helping to monitor vesselRs.s CII rating and appropriate action plan can be formulated accordingly to improve CII (2% improvement in CII annually from 2023 to 2026).

Your company has taken initiative to install Ballast Water Treatment Plants on all those vessels which are not fitted with the treatment plants. This exercise is being carried out in a phased manner in order to comply with the IMO regulations.

To take of the Cyber related risk, SCI has developed "Cyber Risk Management Policy" in line with the IMO regulations, so as to build capabilities to prevent, mitigate and respond to cyber risks, to reduce vulnerabilities and minimize damage from cyber incidents and protect information systems of SCI.

For the (2 firm + 1 optional) 2000 Domestic LPG Carriers for UTL Administration which are under construction at M/s Goa Shipyard Limited, your company as the technical consultant has recommended various optional features such as installation of sewage treatment plant, double hull protection to fuel oil tanks, etc. over and above rule requirement for such size of vessels which reflects your companyRs.s commitment environment protection and technology absorption.

Situation in Coastal operation and Offshore areas:

The E&P activities are expected to continue steadily in the Indian offshore region, with new discoveries being made by the E&P companies. ONGC has recently concluded tender for chartering of 17 offshore vessels and it is expected that few more tenders are likely to be floated shortly.

Shortage of availability of competent/suitable manpower onboard vessels and limited availability of yards on the Indian coast for dry-docking/ repairs of offshore vessels has been a matter of concern.

Measures taken to improve services and operations

To keep the vessels technologically up-to-date your company is in the process of upgrading four (4) 120T BP AHTSVs from DPI to DP2, in line with the market requirements of E&P operators.

Further your company also endeavours to augment its offshore fleet by acquisition of vessels and deploy on the Indian coast.

Purchase & Services department:

Procurement of Goods and Services:

Your company enters into rate contract on periodical basis for procurement and supply of high value and safety items like Marine Lubes, Marine Paints, Charts, Wire ropes, LSA/FFA, Life Rafts etc. both at Indian ports and major foreign ports, like Singapore and Fujairah. This ensures timely supply of right quality goods / services to the vessels at reasonable price.

During the financial year 2023-24, your Company continues to support the Micro and Small scale Enterprises (MSEs) by procuring 49.21% of its applicable supplies of goods and services from MSEs as against the set target of 25% in line with the revised Public Procurement Policy. The Procurement from Women MSE vendors during the year is 2.49% of total eligible procurement, while from SC/ST owned MSE Vendors there is 0.001% procurement. The shortfall in sub-target has been metfrom other MSE vendors.

Further, your company actively participates in the programs organized by the Ministry so as to make MSEs aware of the SCIRs.s requirements. The Vendor Development Programme (VDP) was conducted by your company on 12^th & 13^th June 2023 for the SC/ST owned MSEs and also forthe Women owned MSEs in the financial year 2023-24.

In line with GovernmentRs.s vision for procurement through Government e-marketplace (GeM), your Company has adopted the GeM system of procurement for items which are available on GeM Portal. Target for procurement through GeM portal was set atRs. 230 crore forthe financial year 2023-24. With consistent efforts, your Company was able to achieve 100% target set for the procurement through GeM portal. Protection & Indemnity (P&l) Insurance:

Protection and Indemnity (P&I) Insurance cover entered with three International Group P&I Clubs for your companyRs.s fleet for the policy year 2023-24 commencing from 20.02.2023 has been negotiated by your Company. There was an increase of 8.85% in the renewal premium over the expiring premium for policy year 2022-23 due to hardening of insurance and reinsurance markets globally.

Developments, if any, of material nature affecting the financial position of the Company subsequent to the close of the said year viz; after 01.04.2024 till the preparation of the report.

Your Company had participated in the tender floated by M/s.ONGC last year and has emerged successful in the global competitive bidding process. Your Company has been successful in obtaining long term contracts of 3 years for three of its Offshore vessels, which includes two 120T BP AHTSVs and one PSV.

Your company has conducted Vendor Development Programmes (VDP) on 3^rd May 2024.

Your company has floated tenders from March to May 2024 for acquisition of secondhand/ resale vessels of various types and sizes, which includes Tankers, Containers, Offshore vessels, etc. These tenders are now in various stages of evaluation and processing.

E. International Safety Management Cell

SCI has introduced the Safety Management System by setting up a dedicated International Safety Management (ISM) Cell, which has developed, structured and documented procedures in compliance with the International Management Code for Safe Operation of Ships and for Pollution Prevention (ISM Code), in accordance with the resolution A.788(9) of the International Maritime Organization (IMO) and SOLAS, Chapter IX.

SCI has laid the foundation of the Safety Management System (SMS) by recognising that the cornerstone of good Safety Management is a commitment from the top management, coupled with the competence, attitude and motivation of individuals at all levels, that determines the expectations of a good Safety Management System.

SCI has complied with all the functional requirements of the ISM Code, which includes the Safety, Occupational Health & Environment Protection Policy, Drug & Alcohol Policy and Cyber Security Policy.

As regards, Safety Management Certificate (SMC) for SCI fleet, all ships are put up for periodical / renewal SMC audits within time frame and respective SMCs are accordingly endorsed.

The requirements of various amendments to ISM Code and Statutory regulations from IMO / Flag are also complied with.

Towards addressing all emergency related issues officers with dedicated single point contact numbers remain manned 24 hours in the operating divisions.

The achievement of time-bound certifications was the result of the SCIRs.s strength of professional experience, planning, training, execution, systematic analysis and quality expertise, which enables SCI to remain world-class ship operator / owner. The SCI is also in a position to provide such management expertise to other national/ international ship operators.

ISPS Cell

SCI has successfully implemented the ISPS Code on all vessels on international voyages and coastal trade vessel as perthe Administration requirement.

SCI is committed to the following objectives to fulfil the requirements of its security policy:

• Security of its ships and their crew, passengers and cargo

• Supportto its ships in implementing and maintaining the Ship Security Plan.

Integrated Management System (IMS)

SCI is nowin compliance with IMS (ISO 9001:2015-Quality Management System, IS014001:2015-Environmental Management System and ISO 45001:2018 - Occupational Health and Safety Management System) on board all vessels and shore establishments.

The scope of IMS certification includes Owning, Managing and Chartering of ships for transportation of Goods and Passengers, Offshore and Marine Advisory Services, Maritime Training Services The Certificate is valid till 20^th December 2024.

E) PERSONNELANDADMINISTRATION

A. FLEET PERSONNEL

To meet the demand for seafarers it is vital that the SCI promotes careers at sea and enhances maritime education and training, with a focus on the diverse skills needed for a greener and more digitally connected industry. Fleet Personnel Department in keeping with the vision of SCI is committed to maintain its status as a leading Indian Shipping Company in building skills, knowledge and attitude and significantly contribute to the capacity building in the sector.

As predicted by BIMCO Seafarer Workforce Report 2021, the shortage in the supply of seafarer officers continues through FY 2023-24. The demand has outpaced the supply. The shortage is being felt in all the ranks across the different types of vessels ranging from Bulk Carriers to Special Trade Passenger Ships. The shortage is also being feltfor Near Costal Vessel (NCV) certified officers to sail on coastal vessel. The Fleet Personnel Department has attempted to address the shortage by taking various steps which includes the enhancement of wages as market correction factors, promotion of officers on direct contract with parallel sailing in senior ranks, family carrying permission and rejoining bonus for senior officers; as applicable.

All the vacancies related to the fleet personnel are advertised on our website regularly. The engagement on social media platform is being encouraged to build our online presence. To further mitigate the shortage, officers are also being recruited on contract directly and through manning agents.

2^nd Mate and MEO Class IV are being presently accepted from the open market to address the deficit. Deck/Engine Cadets and Trainee Electrical Officers are being inducted as regular officers as part of the Roster upon completion of their shipboard training, after receiving the certificate of competency (CoC) and are offered employment under the terms of the InSa-MUI Agreement. This is being done to ensure an uninterrupted supply of officers.

The Collective Bargaining Agreements (CBA) viz. NMB Agreement applicable to ratings / petty officers and the INSA-MUI Agreement applicable to officers was valid up to December 31, 2023. The new agreements have now been signed between INSA & the Union representatives and will be effective till December 31,2027.

SCI has implemented online system for crew (rating) selection and same is being used successfully. The selection process is being reviewed regularly in order to keep up with the changing scenario.

The Fleet Excellence Award 2022 Ceremony was held in phygital mode on March 14^th, 2024, at SCI HO Auditorium. Senior Management, Seafarers on board vessels as well as those ashore on leave, Cadets and Shore Personnel were present to acknowledge the outstanding contribution of Seafarers with regard to safety, adherenceto ISM norms, efficiency, and incident-free sailing.

SCI has been a pioneer in employing women seafarers onboard its vessels and has implemented various initiatives including age relaxations and fee concessions to aspiring female cadets. There were 23 Women Officers and l0 trainees employed by SCI in calendar year 2023.

B. MARITIME TRAINING INSTITUTE (Rs.De-factoRs. transferred to SCILAL by virtue of Demerger Order dated 22.02.2022)

Maritime Training Institute of India is located at Powai, Mumbai in an area of 45 acre of land and aims to provide the service to the Indian

Maritime Training Institute (MTI) conducts three pre-sea training courses, namely, Diploma in Nautical Science (DNS), leading to B,Sc, (Nautical Science), Graduate Marine Engineering (GME) and Electro-Technical Officer (ETO) course, MTI also conducts various competency courses, such as Second Mate (F.G,) Functions course, revalidation courses for Deck Officers (i,e, Master, Mates and 2^nd Mates).

a, DNS (TNOCs), pre-sea training residential course leading to 77 nos, Navigating Officers;

b, GMEs (TMEs) pre-sea training residential course leading to 40 nos, Marine Engineer Officers;

c, ETOs, pre-sea training residential course leading to 80 nos, Electrical / Electro-Technical Officers; and,

c) MTI has also conducted "Certificate of Competency" examinations for engineers (i,e, Class I, Class II, Class IV and ETOs) in March

ii, The Institute of Marine Engineers of India (IMEI) for practical training of Basic IGF Course, Basic Training for Oil & Chemical Tanker Cargo Operation and Basic Training for Liquefied Gas Tanker Cargo Operations,

iii, The Loyalty Marine Education Trust (LMET) for practical training of Basic Training for Oil & Chemical Tanker Cargo Operation and Basic Training for Liquefied Gas Tanker Cargo Operations,

a. to transform the maritime sector in India and South Asia into a technologically advanced, environmentally sustainable, and digitally proficient industry; the National Centre of Excellence

b. with a regional dimension, to focus on the latest technologies and practices for reducing greenhouse gas emissions, fostering technical cooperation, capacity building, and the digital transition of the maritime sector in India specifically and South Asia broadly,

SHORE PERSONNEL

Material developments in Human Resource / Industrial Relations front, including number of people employed:

The total Manpower as on 01,04,2024 is 466 (excluding Board Level members), out of which 426 are officers and 40 are staff members, With a view to meet the present and future challenges and be a globally competitive Corporation, various capacity development initiatives and employee engagement activities were carried out in the year 2023-24.

Training and Employee Engagement Activities of 2023-24:

Training

SCI ensures that its employees are upto date to tackle the ever changing landscape of the shipping industry. During FY 2023-24, SCI employees benefitted from over 50 in-house and external training programmes. Training man-days per employee stood at 4.1 days. Employees were sent for a plethora of trainings ranging from Skill development, Specialized courses in Domain, compliance related trainings, New Labour codes, CSO, DPA, Infrastructure Financing, Public procurement with special focus Public Procurement policy for Micro & Small Enterprises(MSEs) and Project Management. Middle Management officers attended a Training programme for building infrastructure for a Viksit Bharat. To improve knowledge with practical Orientation on Marine Hull business, a training session was conducted on Marine Hull and energy Insurance.

In an attempt to enhance soft skills, employees were nominated for trainings like Building Competencies for Personal Excellence, Gender Equality and Women Empowerment. Sessions for Wellness, Stress Management & well-being were also organized.

Training of TrainerRs.s Program for IO/PO Training, Preventive Vigilance, Public Procurement, Cyber Hygiene and Security, Ethics and Governance training programs were organized under 3-Month Capacity building campaign during Vigilance Awareness week-2023-24.

As a part of Orientation Programme, ship visits were organized for new joinees. A Management Development Programme for young Managers was also organized. Training on IT systems like DANAOS, SAP HCM, SRM, MM and FI was imparted by the IT department. Phygital trainings were conducted to ensure knowledge dissemination to all our offices pan India.

Some of the key conferences attended by employees are Bunkering India, Navigating the changes through the lens of Materiality - SEBI (LODR) Regulations amendment, Women in Energy Sector (WIES) and Asia Dry Bulk Cargo summit.

Employee engagement

Concerted efforts of the leadership team of SCI to Rs.invest in peopleRs. have led to tremendous progress in employee engagement initiatives across the organization. Numerous in-house events was carried out for employees both ashore as well as onboard.

Besides celebrating International Mother Language Day, International Day of Yoga, World Environment Day, Constitution day, Communal Harmony week and Flag Day, a series of activities were organized such as employees and family welfare programs on Career Guidance, Nutrition & Exercise and Self Defense Techniques. SCI also implemented the Har Ghar Tiranga and Har Ghar Dhyan Campaign. Various initiatives & programs were also implemented under Azadi ka Amrit Mohostav (AKAM).

For the wellness of employees, health check-up camps were organized at the Head Office & Regional Offices. The International Day of Yoga 2023 was celebrated under the theme of "Yoga Sagarmala". Various activities including physical yoga and sessions on benefits of yoga by eminent yoga teachers / faculty was conducted for employees, ship staff & all stakeholders.

Various Events including plantation, seminar on millets, etc were conducted on Mission Lifestyle for Awareness on "World Environment Day". SCI sponsored its employees to take part in the Maritime 10K Challange-Run together for cleaner Oceans. SCI employees also participated in the Energy Literacy Training during the National Energy Literacy week. Public Sector Week was celebrated by organizing various activities like Health Check-up Camp, essay Writing Competition, Speech Competition from 10^th April to 16^th April 2024.

SCI Management, other employees and cadets attended and actively participated in the Global Maritime India Summit 2023 event at BKC ground from 17^th to 19^th October, 2023.

Reservation Policy

SCI is complying with all the guidelines issued by the Government regarding Reservation from time to time in Recruitments and Promotions. SC/ST/OBC Report

Annual Statement showing the representation of SCs, STs and OBCs as on 1^st January 2024 and number of appointments made during the preceding calendar year.

Mote:

1. In calendar year 2022, recruitment process of 44 Assistant Managers on Contract was carried out, of which 41 Assistant Managers on Contract joined in calendar year 2023. As on 01.01.2024, 36 AM on Contract were present.

2. In 2023, recruitment process for Senior Managers was carried out. 17 Senior Managers were given offer of appointment. As on August 07, 2024 12 Senior Managers have joined.

Women Representation

Company is committed to the principle of equal employment opportunity and strives to provide employees with a workplace free from discrimination. All HR activities of recruitment, placement, promotion, transfer, separation, compensation, benefits and training ensure equal opportunities for skill enhancement and career progression. CompanyRs.s efforts are reflected in the representation of women across various hierarchical grades. Women constitute around 20% of total workforce at shore establishments of SCI.

SCI was conferred with "First Place" for "Best Enterprise Award", a tribute to Excellence in Public Enterprise Management under Rs.Navratna CategoryRs. in recognition of the commendable work done for the development of women in the organization, at WIPS 34^th National Meet at Bangalore on 12^th February 2024.

Policy to prevent sexual harassment in workplace.

SCI promotes gender equality and has been taking proactive measures to prevent any Sexual Harassment at workplace. SCI has been complying with the requirements of the "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013". SCI has prepared a Prevention of Sexual Harassment policy in line with the Act. SCI has constituted a committee comprising of senior women executives and a woman representative from the NGO Pratham to enquire into complaints of Sexual Harassment at the workplace. No complaints were received in the year 2023-24 related to Sexual Harassment.

The Corporate Social Responsibility vision of SCI articulates its aim to be a corporate with its strategies, policies and actions aligned with wider social concerns, through initiatives in education, public health, women empowerment, environment sustainability, skill development and other areas of social upliftment.

SCI has framed its CSR policy in line with the guidelines contained in the Companies Act 2013 and Companies (CSR Policy) Rules, 2021 & 2022 notified therein" and constituted a CSR committee as perthe actto coordinate and oversee the implementation of CSR initiatives. The budget available for CSR initiatives in the year 2023-24, as per applicable provisions was Rs. 14.70 Crores which was allocated against the following initiatives in the year 2023-24:

CSR Activities for the Year 2023-24 A. Health & Nutrition

1. Supplementary Nutrition Kits for 65 children infected & affected with HIV / AIDS in Mumbai.

2. Elimination of Disability from Clubfoot in 600 Children in Rajasthan Karnataka, Kerala & Andhra Pradesh.

3. Organizing Health checkup cum awareness camps with focus on menstrual / maternal health, infant health and general health in Khandwa, Vidisha, Guna and Rajgarh (aspirational districts in Madhya Pradesh).

4. Distribution of 75 nos. of Motorized Tricycle, done in two tranches of 25 nos. and 50 nos. respectively, to the needy divyangjans in Deoria, Uttar Pradesh.

5. Health Awareness and capacity building programe - Project Naritva (Socio-economic empowerment of 1000 women under Integrated Village Development Programme) in Bahraich, Aspirational district in Uttar Pradesh.

6. Installation of 20 nos of Submersible Pumps for making available safe drinking water at Dakshin Dinajpur, West Bengal.

7. Rural Mobile Medical Unit (one advanced Life Support Mobile Medical Van) in Jhargham, West Bengal.

8. Improving Nutrition & Health of Government School Children through Gift milk Programme for 2000 children in Gadchiroli, aspirational district of Maharashtra & Muzzafarpur, aspirational district in Bihar.

9. Procurement of 2 nos of T.B. Handheld X-ray Machines to strengthen the National TB Programme in Andhra Pradesh.

10. Swasthya Project- Improving Healthcare facilities by supporting with Critical Medical EquipmentRs.s and Instruments to Rishikul Govt. PG.Ayurvedic College & Hospital, Haridwar, Uttrakhand.

11. Construction of Deep Bore Well for Drinking Water in Dimapur, Nagaland.

12. Construction and Maintenance of 2 nos of deluxe Sulabh Public Toilets at Ramagundama and Mahbubabad, Railway Stations of Telangana.

13. Medical Equipment Support to Govt Civil Hospital, Roorkee, Uttrakhand.

14. Providing free meals to vulnerable families of patients hospitalized in public hospitals of Mumbai, Maharashtra.

15. Medical Research Equipments for IIT Madras.

16. Distribution of 200 wheelchairs to needy divyangjans in urban slums of New Delhi

17. Livelihood Enhancement and increasing the nutritional status of 1000 tribal women farmers through pro-organic vegetable cultivation in Vallabhnagar block of Udaipur, Rajasthan Navrortna Company

18. Provision of mid-day meals for 2428 tribal children in Ghatshila, East Singhbhum and Jharkhand.

19. Upgrading the medical infrastructure of Punjab Kesari Charitable Hospital, Vashi by providing One Shaver System & Arthroscopy machine with Ortho Drill System.

B. Environment Sustainability

20. Distributing solar led tube lights to 370 families in tribal Village in Mayurbhanj, Odisha.

21. Supply and Installation of 500 solar street lights in North Goa.

22. Installation of 75 KW Solar Power Generating Systems at Children Village of SOS, Latur, Maharashtra.

C. Promotion of Education

23. Maritime Education at Indian Maritime Universities across nation and Maritime Training Institute - Powai, Mumbai as Annual Grants for 30 SC/ST Students.

24. Construction and Establishment of Amenities Building comprising of Indoor Shooting Range and Library with reading room at Netaji Subhash Chandra Bose Military Academy, Silvassa and Dadra & Nagar Haveli.

25. Setting up 23 Smart Class rooms at government schools of Vijayapur / Yadagari / Bagalkot, Karnataka.

26. Creating a sports ground and science Lab at Zila Prishad High School, Majeru Andhra Pradesh.

27. Residential care Centre forthe deprived children with one School Bus in Mumbai, Maharashtra.

28. Construction of Classrooms and Admin Block at a Primary School in Noida, Uttar Pradesh

D. Skill Development & Women Environment

29. Skill Development Training as per protocols of National Skill Development Corporation for 150 candidates in the area in General Duty Assistantin Delhi and National Capital Region.

30. Skill Development Training for 360 underprivileged women in various trades in Ferozpur & Moga (aspirational district), Punjab.

31. Support for 18 Sewing Machines and One Ironing set for creating employment for underprivileged women in Habra, West Bengal.

32. Hand embroidery training and distribution of tailoring machine to 100 nos of women in Bhadohi, Uttar Pradesh.

E. Promotion of Sports

33. 100 youths for 3 years for sports training programmes for preparing them for local / state & national level events in Jammu & Kashmir.

34. Contribution to National Sports Development Fund for promotion and development of sports

Against the allocation of Rs. 14.70 crores, Rs. 5.45 Crores have already been disbursed and balance will be disbursed on achievement/ completion of project specific timelines.

Material Orders of Judicial Bodies/Regulators

Details of significant and material orders passed by any Regulator, Court, Tribunal, Statutory and quasi-judicial body, impacting the going concern status of the company and its future operations - Nil.

Implementation of Official Language Policy.

In accordance with the Official Language policy of the Union Government, SCI continued its persistent efforts towards the progressive use of Hindi in its day-to-day affairs during the year under report. As per annual programme, sCi conducted Hindi activities and competitions at regular intervals and awarded prizes to the employees. Apart from this, SCI also arranged in-house Hindi typing and translation training programme.

Under the Hindi Incentive Scheme, employeesRs. children were encouraged by giving incentive prizes for scoring 70% and above marks in Hindi subject in SSC / HSC level exams held in the academic year 2022-23.

With a view to creating a sense of competition amongst all Divisions/Departments and individual officers for increasing the use of Hindi in daily correspondence and activities, the Annual Rajbhasha Shield (at Divisional Level) and Annual Rajbhasha Gaurav Sammaan (at Individual Level) schemes were continued for 2023-24 after necessary modifications. For the year 2022-23, the "Annual Rajbhasha Shield" was awarded to CMD Division, and "Annual Rajbhasha Gaurav Sammaan" was awarded to eligible officers on the basis of their Hindi performance. All these initiatives have proved to be a boosterfor progressive use of Hindi in daily office routine work During Hindi Pakhwara in September 2023, an appeal made by CMD was emailed to all employees to enhance the usage of Hindi in official noting and correspondence. SCI also attended meetings of Town Official Language Implementation Committee (TOLIC) during the year under report and participated in their activities.

It is a matter of great honour that SCIRs.s Head Office at Mumbai has been awarded Rajbhasha Shields by the Ministry of Ports, Shipping & Waterways in July 2023 for having attained 2^nd place twice for excellence of Rajbhasha implementation in Rs.BRs. region during the year 2017-18 and 2018-19.

Appointment and Remuneration policy

The appointments in our company are done in accordance with Government of India guidelines. The remuneration to the senior management and other shore employees of SCI is governed by the Presidential Directives issued by the Ministry of Ports, Shipping and Waterways (MoPSW) and Department of Public Enterprises (DPE), from time to time, which forms the remuneration policy of our company.

SPECIAL PURPOSE VEHICLE:

Sethusamudram Corporation LIMITED

The Government of India had constituted Sethusamudram Corporation Limited (SCL) to raise finance and to undertake activities to facilitate operation of a navigable channel from Gulf of Mannar to Bay of Bengal through Palk Bay (Sethusamudram Ship Channel Project). As per the Government directive, this project is to be funded by way of equity contributions from various PSUs including the SCI. As on FY 2016-17, SCI had invested Rs. 50 crore in the project. Work suspended since 17.09.2007 consequent to an interim stay by the HonRs.ble Supreme Court for carrying out dredging operations in AdamRs.s bridge area. Pending a final decision on alternative alignment, all the dredgers were withdrawn since 27.7.2009. Supreme CourtRs.s final hearing on the matter was scheduled on 06.04.2018, however, the hearing was withheld indefinitely. SCL Board during its Board meeting held on 18.03.2021 accepted the resignation of Smt. Sangeeta Sharma, Director (L&PS), SCI, as Director, SCL from the Company. Further, SCL requested SCI to nominate new Director on SCL Board, in place of Smt Sangeeta Sharma who has been superannuated.

The board of Directors of SCI in their meeting dated 09.08.2024, approved the nomination of Director (L&PS) on the Board of Sethusamudram Corporation Ltd subjectto approval of MoPSW to representthe interest of SCI.

Memorandum of Understanding (MOU) with the Ministry of Ports, Shipping & Waterways

The MOU for the financial year 2023-24 is under progress. The MOU is being processed as per the consolidated guidelines issued by Department of Public Enterprise (DPE) vide circular dated 12^th October 2022. Under the new guidelines, entering, signing, monitoring and evaluation of MOU will be done through online dashboard. SCI rating for 2021-22 & 2022-23 is Very Good.

MOU performance evaluation data for financial year 2023-24 on the basis of Audited accounts will be submitted to DPE through online dashboard after the approval of the Board and through the Administrative Ministry by 31^st October 2024.

a) Ship Availability as a percentage of Total Ships:

The Planned Ship Availability (Total days of the year less quoted days for planned repair and dry dock) for 59 ships for 2023-24 was 20530 days. The Ships were available (Total days of the year less Actual repair and dry dock days) for 19358 days which is 94.29% to the Planned Ship Available days.

b) Revenue from Exports:

Earnings of SCI from Export Revenue as perthe GST Returns filed forthe FY 2023-24 amountsto INR 1,54,472 Lakhs (previousyear INR 1,71,809 Lakhs). Basis the above, export earnings as a percentage of Revenue from Operations for the FY 2023-24 stands at 30.62% (previous year 29.65%).

c) Compliance parameters not verifiable from any outside sources:

(i) DPE guidelines issued from time to time on CSR expenditure by CPSEs has been complied with.

(ii) Target as given by DIPAM / NITI Aayog on Assets Monetization Milestones has been complied with.

(iii) Parameters w.r.t. steps and initiative taken for Health & Safety improvement of Human Resources in CPSEs has been complied with. Utilization of Proceeds from public issues, right issues, preferential issues etc.

During the year 2010-11, your Company had floated a "Follow-on Public Offer", (FPO), comprising of a Rs.fresh issueRs. of 42,345,365 equity shares in your company and an Rs.offer for saleRs. of 42,345,365 equity shares by the President of India. The FPO proceeds ofRs. 582.45 crores were fully utilized in the financial year 2011-12 as per object of the issue for part financing of capital expenditure on nine shipbuilding projects. However, due to delays in the projects resulting in default by the shipyards, during the period January 2014 to May 2014, your Company rescinded contracts for four shipbuilding projects and also, re-negotiated the payments for two projects. The investment in the rescinded contracts out of the FPO Proceeds was Rs. 330.65 crores.

Your Company has received back entire sum ofRs. 330.65 crores from the shipyards. The shareholders vide the resolution passed through postal ballot on 11.02.2017 approved the proposal to re-deploy the said sum of Rs. 330.65 crores received as refund from Shipyards, towards various shipbuilding projects including offshore assets and liquid petroleum gas (LPG) vessels and also for acquisition of the any other such vessels, on such terms and conditions as the Board would deem fit from time to time as mentioned in the approval of the postal ballot. Further based on the approval granted by the shareholders, the Company can also utilize the sum towards the balance payments remaining due for the tonnage acquisition made by it.

Out of the said amount of Rs. 330.65 crs, an amount of Rs. 196.80 crs has been utilised till date as follows -

The un-utilised FPO proceeds amount of Rs. 133.85 crores are kept in fixed deposit.

As Per SEBI circular no SEBI/HO/DDHS-RACPOD1/P/CIR/2023/172 dated 19.10.2023 on "Ease of doing business and development of corporate bond market- revision in framework for fund raising by issuance of debt securities by Large Corporates", all Large Corporates shall endeavor to comply with the requirement of raising 25% of their incremental borrowings done in FY2022, FY 2023 and FY2024 respectively by issuance of debt securities till March 31,2024, failing which the large corporate shall provide a onetime explanation in their Annual report for FY 2024.

SCI is a "Large Corporate" fulfilling the criteria specified in para 3.2 of the circular. There was no "incremental borrowings" by SCI in FY 2022 and FY 2023. The outstanding Qualified borrowings as at the start of financial year 2024 was Rs. 1860 crores and the outstanding Qualified borrowings as at the end of the financial year 2024 was Rs. 2267 crores resulting in incremental borrowings of Rs. 407 crores. The outstanding qualified borrowings as on 31.03.2024 includes a disbursement of RS. 500 crores from State Bank of India for refinancing of outstanding loan from EXIM Bank. The disbursement was done by State Bank of India on the last working day for forex transactions in FY 2024 ie, 28.03.2024 but the repayment to EXIM was done on 03.04.2024 as EXIM required 5 days prepayment notice. Thus, the incremental borrowing was technically on account of pending refinancing transaction which was ultimately completed on 03.04.2024.The company will endeavor to comply with the requirements of this circular as and when required.

i. Disclosure on materially related party transactions that may have potential conflict with the interest of the company at large.

To the best of our knowledge and from the data gathered from all the departments, transactions with all related parties have been entered at armRs.s length or in accordance with Provisions of relevant Act.

ii. Items of expenditure debited in books of accounts, which are not for the purposes of the business:-

To the best of our knowledge there is no item of expenditure debited in books of accounts which are not for the purposes of the business

iii. Expenses incurred which are personal in nature and incurred forthe Board of Directors and Top Management-NIL

iv. The office and administration expenses as a percentage of total expenses are 4.88% in FY 2023-24 as against 4.89% in FY 2022-23.

v. The finance expenses as a percentage of total expenses is 3.66% in FY 2023-24 as against 3.56% in FY 2022-23.

Segment-wise Performance

Report on performance of the various operating segments of the Company (audited) is included at Note No. 31 of the Notes on Financial Statements (Standalone) for the year ended 31st March 2024, which is forming part of the Annual Accounts.

Internal Control System:

The Company has an internal control system that is adequate and commensurate with the size, scale and complexity of its operations. Internal financial controls framework and Risk Control Matrix (RCM) for various business processes is in place. The internal control systems (including Internal Financial Controls over Financial Reporting) are reviewed on an ongoing basis and necessary changes are carried out to align with the changing business/statutory requirements.

Internal audit is carried out by an independent firm of Chartered Accountants / Cost and Management Accountants on concurrent basis. The scope and authority of the Internal Audit function is defined in the Internal Audit Plan, which is approved by the Audit Committee. To maintain its objectivity and independence, the Internal Audit function submits quarterly reports to the Audit Committee of the Board. The Internal Audit examine, evaluate and report on the adequacy and effectiveness of the internal control systems in the company, its compliance with the laid down policies and procedures and ensure compliance with applicable laws and regulations. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are reviewed, deliberated and presented to the Audit Committee of the Board.

Dividend Distribution Policy:

As per the guidelines dated 27.5.2016 issued by Department of Investment and Public Asset Management (DIPAM), MOF, GOI in respect of dividend, bonus shares, etc. the Company has an obligation to comply with these guidelines. However, the company shall take into

consideration and be guided by the provisions of the Companies Act 2013, Companies (Declaration and Payment of Dividend) Rules, 2014 and Guidance Note on Dividend & Secretarial Standard 3 (SS3) and companyRs.s future plan and cash position for taking necessary action appropriate and deemed fit in the circumstances.

The link to access SCI Dividend Distribution Policy is https://www.shipindia.com/ -> About SCI -> Policies OR https://www.shipindia.com/upload/policies/SCI_Dividend_Distribution_Policy2.pdf Transfer of Equity Shares / Unclaimed Dividend to IEPF:

May kindly refer report of Directors on Corporate Governance for information in this regard.

Role of Vigilance Division in SCI:

SCI has a full-fledged Vigilance Division headed by Chief Vigilance Officer. The Division operates as per the guidelines of the Central Vigilance Commission for Vigilance management in Public Sector Enterprises and is guided further by the instructions issued by the Ministry of Ports, Shipping and Waterways. During the year under review, the Chief Vigilance Officer put in place preventive vigilance initiatives in the business processes thereby striving towards greater transparency and improved ethical & corporate governance standards. There was concerted effort to achieve greater transparency and eliminate systemic weaknesses through use of technology in business processes such as e-payments, Supplier Relationship Management, bill tracking, greater use of GeM portal and online dissemination of important circulars/ guidelines. Vigilance Division interacted with various employees of SCI as well as various stake holders which has helped in understanding the issues from their perspective as well.

Activities of the Vigilance Division carried out in 2023-24

During the year under review, the Vigilance Division carried out the activities under Preventive, Punitive and Participative Vigilance. The important activities carried out in 2023-24 bythe Vigilance Division were as follows:

A. Complaints were handled as per complaint handling policies stipulated in Vigilance Manual issued by the Central Vigilance Commission. Investigations into complaints of corruption/ malpractice were conducted.

B. In adherence to the CVC guidelines, random scrutiny of APRs of SCI employees was carried out.

C. Active monitoring of the implementation of Integrity Pact in SCI has been done.

D. Vigilance Division has acted as a catalyst in the implementation of preventive vigilance measures such as e-payments, bill tracking systems, transfers of employees posted in sensitive areas in a phased manner etc.

E. As part of preventive vigilance activities, four Chief Technical Examiner Type inspections were carried out and recommendations for systemic improvements were issued on basis of their findings. A surprise inspection at the SCIRs.s regional office at Delhi was carried out by the CVO. Another surprise inspection by a Vigilance officer was carried out at SCIRs.s regional office in Kolkata/ Haldia.

F. In view of the many common mistakes being made by the employees while filling up the online APRs, an interactive session on Rs.Common Errors in filing of Online Annual Property ReturnRs. was conducted on 26/05/2023 at SCI HO, which was also made available to the employees at regional offices through webcast.

G. Selective scrutiny of Voyage Repairs Bills, dry-docking bills, various accounts have been done during the year.

H. For the annual Vigilance Awareness Week, in - house programmes were held to spread Vigilance Awareness among employees and their families.

I. As part of Vigilance Awareness Week, SCI organized various outreach activities, such as Poster making competition, Slogan writing competition, Quiz competition, Essay - writing competition among youths in schools and colleges in Mumbai and other cities where SCI has regional offices, including Port Blair.

J. In order to spread the awareness about Vigilance machinery among people, an awareness campaign was organized via FM Radio, wherein jingles related to the Vigilance functions and VAW-2023 theme were aired throughoutthe Vigilance Awareness Week.

K. Awareness campaign was conducted on-board SCI ships for generating awareness about Vigilance amongst seafarers. The Integrity pledge was also administered onboard the ships and banners were displayed.

L. A number of training sessions in various thematic areas for Capacity Building as a part of precursor campaign period of the Vigilance Awareness Week were conducted for SCI officers.

During the FY 2023-24, 3 nos. registered complaints brought forward from previous FY 2022 - 23 and 19 nos. newly registered complaints were processed by the Vigilance Division. As on 31/03/2024, all of these 22 registered complaints have been disposed off as per prescribed procedure.

Vigilance Study Circle Mumbai Chapter:

The Vigilance Study Circle Mumbai Chapter, started on the initiative of SCI Vigilance Division in 2010, is today a thriving forum for knowledge - sharing with active participation from CVOs of various member organizations from varied sectors in the Western zone. It continues to spread Vigilance awareness and develop the knowledge and skills of Vigilance Professionals and provides an ideal platform for the Chief

Vigilance Officers of Mumbai based PSUs, Banks etc. to meet and exchange their views/ experiences, etc. During the FY 2023 - 24, a two daysRs. training program for current and potential IOs/ POs of the member organizations of VSC, Mumbai was conducted by the faculty associated with the training module of HPCL.

Cautionary Statement

The statements made in the Management Discussion and Analysis report describing CompanyRs.s objectives, projections, estimates and expectations may be "forward looking statements" within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied.

Key Managerial Personnel

Details of Key Managerial Personnel as on 31.03.2024 are as follows:

*Shri Atu Ubale, Director (B&T), SCI is also holding the additional charge of Director (Finance) w.e.f. 07.03.2024.

**Shri C.I. Acharya who was holding post of Director (Finance), SCI is currently under suspension w.e.f 07.03.2024.

***Shri Manjit Singh Saini, SCI was appointed on the Board of SCI as Director (P&A) w.e.f 05.07.2023.

****Rear Admiral Jaswinder Singh was appointed on the Board of SCI as Director (L&PS) w.e.f 29.12.2023.

Declaration of Independence

The Company has received Declaration from Independent Directors conforming that they meet the criteria of Independence and have complied with the Code for Independent Directors as prescribed under Companies Act 2013, the SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 and DPE guidelines.

Composition and Meeting of the Board and its Committee

1. Board Composition - As on 31.03.2024, the Company is non-compliant with the Regulation 17(1) (b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, regarding the requirement of having at least half of the Board of Directors as Independent Directors. To this extent, the Company is non-compliant with the relevant provisions of DPE Guidelines on Corporate Governance, 2010.

2. Committees of the Board - The Company has constituted Audit Committee, Corporate Social Responsibility Committee, Nomination and Remuneration Committee, StakeholdersRs. Relationship Committee, Risk Management Committee and other Committees for operational convenience in terms of requirements of the Companies Act, 2013 read with rules made thereunder, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and DPE Guidelines on Corporate Governance, 2010. The composition and scope ofthe Board level Committees are provided in the Report on Corporate Governance, which forms part of this report.

3. Number of Meetings of the Board and Committees thereof- The details in respect of the number of Board Meeting and Committee meetings of the Company are set out in the Corporate Governance Report which forms part of the Annual Report.

In accordance with applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the evaluation of the Board as a whole, Committees and the Directors was conducted, as per the internally designed evaluation process approved by the Board.

The Company complied with all the applicable Secretarial Standards.

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Board had appointed M/s Mehta & Mehta, Practicing Company Secretary firm to conduct Secretarial Audit for the Financial Years 2023-2024 and 2024-2025. The Annual Secretarial Compliance Report in compliance to Regulation 24A of SEBI LODR Regulations 2015 and Secretarial Audit Report in Form MR-3 as per Companies Act, 2013 for the financial year 2023-24 is appended to the DirectorRs.s report. The Secretarial Auditor in this report for the year ended 31^st March, 2024 has brought out that:

The Management views on the above observation are as follows:

Cost auditors and cost audit report

The provisions of Section 148 of Companies Act 2013 are not applicable to the Company, hence cost accounts and records are not required to be maintained by the Company.

Auditors Report

The Statutory Auditors have given an unqualified report on the Financial Statement of the Company for the Financial Year 2023-24. Further, there are NIL comment made by Controller and Auditor General of India on the Statement of Standalone and Consolidated Financial for year ended 31.03.2024.

150^th Report of the Committee of Papers Laid on the Table (COPLOT) presented in Rajya Sabha on 31 March 2017 - Para 24 of the COPLOT recommendations

Please find the following information with respectto Pending Audit Para:

Name of Audit Para: Para No. 9.2 of CAG Report No. 13of 2019 Brief of the Para

Payment of Performance Related Pay in violation of DPE guidelines.

SCI paid an amount ofRs. 11.03 crore as Performance Related Pay to employees for the financial year 2014-15. C&AG however raised an observation that payment of Performance Related Pay of Rs. 11.03 crore for the year 2014 -15 was made in violation of DPE guidelines and thatthe non-core profits had not been deducted forcalculation of PRP

PRP of year 2014-15 was paid after approval of Nomination and Remuneration Committee. However, matter was again put up to Nomination and Remuneration Committee held on 04.02.2020 specifcallyto reviewthe position with respectto C&AG observation.

SCI stand on C&AG observation is reiterated below:-

a) Profit on sale of Vessels: Scrapping of vessels is a normal activity in shipping and SCI follows a policy of scrapping at the end of the useful life of the vessel after a techno economic study is done on possible further extension of the life of the vessel. All activities starting from placing of an order building a ship till the end point of scrapping of the ship at the end of its useful life fall within the ambit of core business activity of a shipping company.

b) Income (Compensation) received from rescindment of Contract: Possibility of contract rescindment termination in any business is normal and cannot be ruled out. Hence, rescindment of contract needs to be considered within the purview of normal business activity. In our case compensation/ income received for rescindment of contract is nothing but is in nature of liquidated damaged given by shipyard fortheir subpar performance and not completing the contract on time. Had the vessel been delivered in time SCI would have earned normal income from freight/charter hire.

c) Interest on loans given to Joint Ventures: Formation of Joint venture is a normal business activity. Loans given to Joint Venture Companies is part of well deliberated strategic planning by all JV partners and in line with the MOA.

The Nomination & Remuneration Committee deliberated the matter in detail and concluded that all the above mentioned items are core activities of SCI.

RESOLVED FURTHER THAT the Company may communicate the above decision of the Committee to the Ministry of Ports, Shipping and Waterways (MoPSW) forfurther action.

In view of instructions of the Nomination and Remuneration Committee, matter was put to The Ministry of Ports, Shipping and Waterways (MoPSW) on 27.07.2020 seeking guidance on the way forward considering the above resolution of the Nomination & Remuneration committee.

Thereafter, on 02.12.2021, letterwas sentto MoPSW stating that considering the Strategic Disinvestment of SCI being in advanced stages, DIPAM had opined that the Administrative ministry should take necessary action to get all employee related liabilities pertaining to the period that the company is a CPSE cleared before the companyRs.s management control is transferred so as to safeguard the interest of the employees.

Reporting Status:

A communication was sent by Under Secretary, MoPSW to refer this matter to Committee on Public Undertakings for final decision. Corporate Governance:

A report on Corporate Governance pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to this report and forms part of it.

Business Responsibility and Sustainability Report.

The Shipping Corporation of IndiaRs.s Business Responsibility and Sustainability Report (BRSR) for the fiscal year 2023-24 emphasizes its unwavering commitment to Environmental, Social, and Governance (ESG) principles and the strides we have made in addressing sustainability challenges. We see our responsibility to take the lead in sustainable development not only as a duty to the society but also as an opportunity to do well by doing good.

ESG Related Challenges:

Over the past year, we have encountered a range of ESG challenges that have guided our focus on responsible business practices. We acknowledge our responsibility in mitigating the impact of shipping operations on the environment and communities. Additionally, ensuring the safety, well-being, and growth of our workforce while fostering transparency, diversity and inclusion both within and outside our organisation continues to be a priority for us.

Processes:

In response to these challenges, we have set ESG processes that align with our commitment to sustainable shipping and fostering a culture of diversity and inclusion within our organization.

1. Environmental protection: The Company is compliant with International Maritime Organization (IMO) - MARPOL Convention and has taken appropriate actions impacting Emissions, Ballast Water Treatment, Domestic discharges and Oil Pollution enabling us to contribute to global efforts to combat climate change and promote cleaner oceans.

2. Waste Management: Waste generated on board during normal operation of the ship is managed as per the vessel-specific garbage management plan and landed ashore at approved reception facilities for further processing. Also, the discharge of oil, solid waste & sewage etc. from its ships is prohibited under MARPOL (International Convention for the Prevention of Pollution from Ships). Most of our vessels comply with Green Passport or equivalent notation. In addition, the Company diligently adheres to the compliance requirements specified in the administration circular concerning the Transport and Handling of hazardous and noxious liquid substances in bulkon Indian-flagged offshore supportvessels.

3. Workforce Development: Multiple training programs with a core focus on the principles of varied topics such as Leadership, Soft Skills, Health & Wellness, Industrial skills and Building Infrastructure for a Viksit Bharat were conducted for the workforce ensuring their professional growth and well-being while fostering a diverse and inclusive work culture.

4. CSR Initiatives: Our community engagement initiatives positively impacted the lives of multiple individuals and many families, focusing on education, healthcare and livelihood opportunities across diverse communities.

5. Vendor Selection: The Company sources vendors who are maintaining registration under local/ regional laws, are complying with National and International applicable legislations, and are maintaining management systems under ISO 9001 and 14001 or any other equivalent systems wherever applicable. Additionally, suppliers are requested to be in accordance with SOLAS Chapter 11-1/ Reg 3-5. Furthermore, the sellers should guarantee that no hazardous material identified under MEPC269 (68) and EUSRR has been used in the supplies, no use of plastic for packing material and whenever possible assist the vessel in collecting back the packing material if the vessel so requests.

Flexibility in Placement:

As an organization that values transparency and accountability, we have exercised our flexibility in placing this disclosure within the Annual Report. This ensures that stakeholders have easy access to crucial information about our sustainability efforts and responsible business practices.

Conclusion:

At The Shipping Corporation of India Limited, sustainability is ingrained in our corporate ethos. We view ESG as a foundation for creating long-term value and positively impacting the world around us. Through collaboration and unwavering commitment, we remain steadfast in our pursuit of sustainable shipping solutions.

DirectorsRs. Responsibility Statement:

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, with respect to DirectorsRs. Responsibility Statement, it is hereby confirmed:

(a) That in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors had prepared the annual accounts on a going concern basis; and

(e) the directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are

adequate and were operating effectively.

Explanation - For the purposes of this clause, the term "internal financial controls" means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to companyRs.s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information;

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

General Disclosures Your directors state that:

(1) There was no change in the nature of business of the company during the financial year ended 31^st March 2024.

(2) During the year, the details of application made or any proceeding pending under the Insolvency and Bankruptcy Code 2016, along with

theirstatuswas Rs.NIL¹.

Acknowledgements

Your Directors express their gratitude to the Government of India for its support to your Company and thank sincerely Shri Sarbananda Sonowal, HonRs.ble Minister of Ports, Shipping and Waterways, HonRs.ble Minister of State for Ministry of Ports, Shipping and Waterways Shri Shripad Naik and Shri Shantanu Thakur for their support and guidance in managing the affairs of the Company. Your Directors also extend their gratitude to Secretary (Shipping), Ministry of Port, Shipping and Waterways for guidance.

Your Directors also wish to express their thanks to the officials in the Ministry of Ports, Shipping and Waterways for the unstinted support given by them in various matters concerning the Company. Your Directors would also like to convey their thanks to other Ministries and Departments of the Government of India, Trade Organizations, and ShippersRs. Councils, who have played a vital role in the continued success of your Company. The Directors thank the shareholders, other stakeholders and valued customers for the continued patronage extended by themto yourCompany.

Last but not the least, your Directors wish to record their deep appreciation for the dedicated and loyal service of your CompanyRs.s employees, both afloat and ashore, without whose co-operation and efforts the achievements made by your Company would not have been possible.