Annual Report 2007 - 2008archive.essar.com/upload/pdf/ESPLL_AR_07_08.pdf2. To appoint a Director in...

Dear Members,

As you are aware, the Registered Office of the Company has been shifted. The new address is

as under:

Essar Shipping Ports & Logistics Limited,

Administrative Building,

Essar Refinery Complex,

Okha Highway (SH – 25),

Taluka Khambalia,

District Jamnagar,

Pin Code: 361 305,

Gujarat State.

Members are requested to take note of the said change. All correspondence to the Company

should henceforth be sent to the above address only.

Manoj Contractor

Company Secretary

32nd Annual Report 2007-2008 1

Shashi Ruia

Chairman

Ravi Ruia

Vice Chairman

Anshuman Ruia

Director

Sanjay Mehta

Managing Director

A. R. Ramakrishnan

Wholetime Director

V. Ashok

Wholetime Director

R. N. Bansal

Independent Director

N. Srinivasan


K. V. Krishnamurthy


Dilip J. Thakkar


COMPANY SECRETARY

Manoj Contractor

AUDITORS

Deloitte Haskins & Sells

AUDIT COMMITTEE

R. N. Bansal

N. Srinivasan

Anshuman Ruia

COMPENSATION COMMITTEE

Ravi Ruia

Anshuman Ruia

Sanjay Mehta

SHARE TRANSFER & SHAREHOLDERS’

GRIEVANCE COMMITTEE

Ravi Ruia

Sanjay Mehta

A. R. Ramakrishnan

V. Ashok

REGISTERED OFFICE

Administrative Building, Essar Refinery Complex

Okha Highway (SH - 25), Taluka Khambhalia

Distt. - Jamnagar

Gujarat 361305

CORPORATE OFFICE

Essar House

11, Keshavrao Khadye Marg

Mahalaxmi, Mumbai 400 034

REGISTRARS & SHARE TRANSFER AGENTS

Data Software Research Company Private Limited

“Sree Sovereign Complex”

22, 4th Cross Street, Trustpuram, Kodambakkam

Chennai 600 024

e-mail: [email protected]

BOARD OF DIRECTORS

2 32nd Annual Report 2007-2008

Essar Shipping Ports & Logistics Limited

(formerly known as Essar Shipping Limited)

Notice is hereby given that the Thirty-second Annual General

Meeting of Essar Shipping Ports & Logistics Limited will be

held at the Registered Office of the Company at

Administrative Building, Essar Refinery Complex, Okha

Highway (SH - 25), Taluka Khambhalia, Distt. Jamnagar,

Gujarat 361305 at 3.30 p.m. on Saturday, September 27,

2008, to transact the following business:

ORDINARY BUSINESS:

1. To receive, consider and adopt the Profit and Loss

Account for the year ended March 31, 2008 and the

Audited Balance Sheet as on that date and the Reports

of the Board of Directors and Auditors thereon.

2. To appoint a Director in place of Mr. N. Srinivasan, who

retires by rotation and being eligible, offers himself for

re-appointment.

3. To appoint a Director in place of Mr. Sanjay Mehta,

who retires by rotation and being eligible, offers himself

for re-appointment.

4. To appoint a Director in place of Mr. Ravi Ruia, who

retires by rotation and being eligible, offers himself for

re-appointment.

5. To re-appoint Messrs. Deloitte Haskins & Sells,

Chartered Accountants as Auditors of the Company to

hold office from the conclusion of this Annual General

Meeting until the conclusion of the next Annual General

Meeting and to fix their remuneration.

SPECIAL BUSINESS:

6. To consider and if thought fit, to pass with or without

modification, the following resolution as an Ordinary

resolution:

“RESOLVED THAT Mr. K. V. Krishnamurthy, who was

appointed as an Additional Director by the Board of

Directors pursuant to Section 260 of the Companies

Act, 1956 and who holds office upto the date of this

Annual General Meeting and in respect of whom the

Company has received a notice in writing under Section

257 of the Companies Act, 1956, proposing his

candidature for the office of Director, be and is hereby

appointed as Director of the Company.”



resolution:

“RESOLVED THAT Mr. Dilip J. Thakkar, who was

appointed as an Additional Director by the Board of

Directors pursuant to Section 260 of the Companies

Act, 1956 and who holds office upto the date of this

Annual General Meeting and in respect of whom the

Company has received a notice in writing under Section

257 of the Companies Act, 1956, proposing his

NOTICE TO MEMBERS

candidature for the office of Director, be and is hereby

appointed as Director of the Company.”



resolution:

“RESOLVED THAT pursuant to the provisions of Section

198, 269, 309, 311 read with Schedule XIII and other

applicable provisions, if any, of the Companies Act,

1956 and subject to the approval of the Central

Government, Mr. Sanjay Mehta be and is hereby re-

appointed as Managing Director of the Company for a

period of three years with effect from September 18,

2008 on the terms and conditions as set out in the

Explanatory Statement annexed hereto.”

“RESOLVED FURTHER THAT in the event of loss or

inadequacy of profits in any financial year, the Managing

Director shall be paid remuneration by way of salary,

perquisites and allowances as specified above or as

may be decided by the Board of Directors.”

“RESOLVED FURTHER THAT the terms and conditions

set out for appointment and payment of remuneration

herein, may be altered and varied from time to time by

the Board of Directors of the Company as it may, in its

discretion deem fit so as not to exceed the limits

specified under Schedule XIII to the Companies Act,

1956 (including any statutory modification or re-

enactment thereof, for the time being in force) or any

amendments made thereto.”

“RESOLVED FURTHER THAT the Agreement may be

terminated by either party (Company or the Managing

Director) by giving the other three months prior notice

of termination in writing.”

“RESOLVED FURTHER THAT the Board of Directors

be and is hereby authorised to take all necessary steps

including filing of necessary applications, forms, letters,

etc., with the Government and other authorities to give

effect to the above resolution.”



resolution:

“RESOLVED THAT in partial modification of the

resolution passed by the members at the Thirty-first

Annual General Meeting of the Company held on

September 25, 2007, approving the appointment and

terms of remuneration of Mr. V. Ashok, Wholetime

Director and in accordance with the provisions of

Sections 198, 269, 309, 311 read with Schedule XIII

and other applicable provisions, if any, of the Companies

Act, 1956, the Company hereby approves the variation

in the terms of remuneration of Mr. V. Ashok, Wholetime

Director for the remaining period of his tenure in office,


with effect from April 1, 2008, as set out in the

Explanatory Statement annexed hereto.”

“RESOLVED FURTHER THAT all other terms and

conditions of appointment of Mr. V. Ashok, Wholetime

Director as approved earlier by the members, shall

remain unchanged.”

“RESOLVED FURTHER THAT the Board of Directors

be and is hereby authorised to take all necessary steps

as may be necessary to give effect to the above

resolution.”

By Order of the Board

MANOJ CONTRACTOR

Company Secretary

Jamnagar

July 29, 2008

Notes:

1. A member entitled to attend and vote at the meeting is

entitled to appoint one or more proxies to attend and

vote instead of himself on a poll. The proxy need not be

a member of the Company. Proxy forms in order to be

effective should be deposited at the Registered Office

of the Company not later than 48 hours before the time

fixed for the meeting.

2. Members / Proxies should bring the attendance slip

duly filled in for attending the meeting.

3. The Register of Members and Share Transfer Books of

the Company will remain closed from Monday,

September 22, 2008 to Saturday, September 27, 2008,

both days inclusive.

4. The members are requested to immediately notify, in

their own interest, the change in their mailing address

to the Company’s Registrars and Share Transfer Agents,

Data Software Research Company Private Limited,

“Sree Sovereign Complex”, 22, 4th

Cross Street,

Trustpuram, Kodambakkam, Chennai 600 024,

Tel : 91-44-2483 3738, Fax: 91-44-2483 4636.

5. Members who are holding shares in identical order of

names in more than one folio are requested to send to

the Company the details of such folios together with the

Share Certificates for consolidating their holdings in one

folio. Members are further advised to hold the shares in

dematerialised form, as the trading of the shares on

Bombay Stock Exchange and National Stock Exchange

where the shares of your Company are listed is in

compulsory demat mode.

6. Members are informed that in case of joint holders

attending the meeting, only such joint holder who is

higher in the order of names will be entitled to vote.

7. In terms of Section 109A of the Companies Act, 1956,

members are entitled to make nomination in respect of

shares held by them in physical form. Members desirous

of making nominations are requested to send their

requests in Form 2B, in duplicate, to the Secretarial

Department at the Registered Office of the Company or

to the Registrars and Share Transfer Agents - Data

Software Research Company Private Limited.

8. Members desiring any information regarding the

accounts are requested to write to the Company at

Essar House, 11, Keshavrao Khadye Marg, Mahalaxmi,

Mumbai 400 034 atleast 7 days before the date of the

Meeting to enable the Company keep the information

ready.

9. The Chairman of the Audit Committee of Directors shall

be present at the Annual General Meeting to reply to

the queries of members on the Annual Accounts of the

Company.

10. Appointment / Re-appointment of Directors:

At the ensuing Annual General Meeting, Mr. N.

Srinivasan, Mr. Sanjay Mehta and Mr. Ravi Ruia retire

by rotation and being eligible offer themselves for

reappointment. Mr. K. V. Krishnamurthy and Mr. Dilip J.

Thakkar are proposed to be appointed as Directors.

The information pertaining to the aforesaid Directors in

terms of Clause 49 of the Listing Agreement with the

Stock Exchanges is annexed hereto.

11. The Explanatory Statement pursuant to Section 173(2)

of the Companies Act, 1956 in respect of the special

business at item Nos. 6 to 9 hereinabove, is annexed

hereto.




Item No. 6

Mr. K. V. Krishnamurthy was appointed as an Additional

Director of the Company with effect from June 20, 2008. In

terms of Section 260 of the Companies Act, 1956 and in

accordance with Article 73 of the Articles of Association of

the Company, Mr. Krishnamurthy holds office upto the date

of ensuing Annual General Meeting.

Accordingly, the resolution at item No. 6 of the notice is

being proposed for his appointment as Director of the

Company.

The Company has received a notice from a member under

Section 257 of the Companies Act, 1956, with requisite

deposit, proposing the name of Mr. Krishnamurthy as a

candidate for the office of Director of the Company.

Mr. K. V. Krishnamurthy, a Chartered Accountant by

profession is a fellow member of the Indian Institute of

Bankers and was a member of its Governing Board. He has

over thirty-three years of experience in Public Sector

Banking. His areas of specialisation include both domestic

and international banking, treasury management, risk

management, foreign exchange management and human

resource management.

He is credited with the remarkable turnaround of both Bank

of India and Syndicate Bank, leading nationalised banks.

He has been the Chairman/Director of nationalised banks

like Bank of India, Bank of Baroda, Syndicate Bank and

other financial institutions like Indo Hong Kong International

Finance Company Limited, Export Credit Guarantee

Corporation of India and Agricultural Finance Corporation of

India Limited.

Mr. Krishnamurthy is also a Director on the Board of various

Indian public limited companies. Your Board is of the opinion

that the vast experience of Mr. Krishnamurthy would be

beneficial for the future growth of the Company. Your

Directors accordingly recommend the resolution at Item No.

6 of the Notice for your approval.

None of the Directors, except Mr. Krishnamurthy, is

concerned or interested in this resolution.

Item No. 7

Mr. Dilip J. Thakkar was appointed as an Additional Director

of the Company with effect from June 20, 2008. In terms of

Section 260 of the Companies Act, 1956 and in accordance

with Article 73 of the Articles of Association of the Company,

Mr. Thakkar holds office upto the date of ensuing Annual

General Meeting.

Accordingly, the resolution at item No. 7 of the notice is

being proposed for his appointment as Director of the

Company.

ANNEXURE TO NOTICE:

EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.

The Company has received a notice from a member under

Section 257 of the Companies Act, 1956, with requisite

deposit, proposing the name of Mr. Thakkar as a candidate

for the office of Director of the Company.

Mr. Thakkar, a practicing Chartered Accountant by profession

since last forty-six years is a Partner of M/s. Jayantilal

Thakkar & Co., and Jayantilal Thakkar Associates, Chartered

Accountants, Mumbai. Mr. Thakkar has vast experience in

the fields of Accounts, Finance, Taxation, FEMA, etc.

He is also a Director on the Board of various Indian public

limited companies. Your board is of the opnion that the vast

experience of Mr. Thakkar would be beneficial for the future

growth of the Company. Your Directors accordingly

recommend the resolution at Item No. 7 of the Notice for

your approval.

None of the Directors, except Mr. Thakkar, is concerned or

interested in this resolution.

Item No. 8

Mr. Sanjay Mehta was appointed as the Managing Director

of the Company with effect from September 18, 2005 for a

period of three years. The term of appointment of Mr. Mehta

as the Managing Director expires on September 17, 2008.

Considering his vast experience and management skills,

the Board at its meeting held on July 29, 2008, has re-

appointed him as the Managing Director with effect from

September 18, 2008 for a further period of three years.

Mr. Mehta has an Honors Degree from London School of

Economics and a Masters Degree from London Business

School. Prior to joining Essar in June 2000, Mr. Mehta was

head of the South East Asia Investment Banking Desk at

American Marine Advisors Inc., New York; Simpson, Spence

& Young; Hambros Bank and Goldman Sachs. Mr. Mehta

has experience in raising capital in the US financial markets.

Mr. Mehta also has vast experience of ports & terminals,

logistics and the shipping industry.

After considering various factors, the Remuneration

Committee recommended the remuneration for Mr. Mehta.

The Board of Directors, accepting the recommendation of

the Remuneration Committee, have approved the following

remuneration to be paid to Mr. Mehta with effect from

September 18, 2008:

1. Remuneration :

Basic salary in the range of Rs. 1,00,000/- to

Rs. 3,50,000/- per month, as may be determined by the

Board of Directors or such other authority as may be

delegated by the Board of Directors.

2. In addition to the Basic Salary, Mr. Mehta shall be

entitled to perquisites and allowances like

accommodation (furnished or otherwise) or house rent


allowance in lieu thereof; house maintenance allowance

together with reimbursement of expenses/allowances

for utilisation of gas, electricity, water, furnishing and

repairs; medical reimbursement; education allowance;

leave travel concession for self and his family including

dependents; club fees; premium for medical insurance;

commission and all other payments in the nature of

perquisites and allowances as agreed by the Board of

Directors or such other authority as may be delegated

by the Board of Directors from time to time upto the

limit of Rs. 10,00,000/- per month. As per the rules of

the Company, Mr. Mehta is eligible for Provident Fund,

Gratuity and Superannuation, which payments shall not

be included for the purpose of calculation of the

managerial remuneration.

The appointment of Mr. Mehta as Managing Director is

subject to the approval of the Central Government.

Mr. Sanjay Mehta has been associated with the

Company for past eight years and under his leadership,

the Company has made significant progress to transform

itself into an integrated logistics solutions provider.

The Board is of the opinion that his appointment as the

Managing Director of the Company would be in the

best interest of the Company and accordingly the

resolution at Item No. 8 of the Notice is recommended

for Members approval.

None of the Directors, except Mr. Mehta is concerned

or interested in this resolution.

This explanation together with the accompanying Notice

is and should be treated as an abstract under Section

302 of the Companies Act, 1956.

Item No. 9

The members had, at the Annual General Meeting of the

Company held on September 25, 2007, approved the

appointment of Mr. V. Ashok as Wholetime Director of the

Company for a period of five years commencing from

December 7, 2006 on the terms and conditions as contained

in the resolution appointing Mr. Ashok as Wholetime Director.

Mr. Ashok is presently responsible for the Finance,

Administration and other functions of the Company. He has

also been entrusted with the responsibility of overseeing the

finance and business functions of the subsidiaries of the

Company.

The Remuneration Committee reviewed the remuneration

package of the Wholetime Director with a view to align the

package with the best corporate practices prevailing in the

industry. After considering various factors, the Remuneration

Committee recommended an increase in the remuneration

payable to Mr. Ashok.

The Board of Directors, accepting the recommendation of

the Remuneration Committee has revised the remuneration

payable to Mr. Ashok with effect from April 1, 2008 as per

particulars given hereinbelow:

1. Remuneration :

Basic salary in the range of Rs. 2,00,000/- to

Rs. 5,00,000/- per month, as may be determined by the

Board of Directors or such other authority as may be

delegated by the Board of Directors.

2. In addition to the Basic Salary, Mr. Ashok shall be

entitled to perquisites and allowances like

accommodation (furnished or otherwise) or house rent

allowance in lieu thereof; house maintenance allowance

together with reimbursement of expenses/allowances

for utilisation of gas, electricity, water, furnishing and

repairs; medical reimbursement; education allowance;

leave travel concession for self and his family including

dependents; club fees; premium for medical insurance;

commission and all other payments in the nature of

perquisites and allowances as agreed by the Board of

Directors or such other authority as may be delegated

by the Board of Directors from time to time up to the

limit of Rs. 10,00,000/- per month. As per the rules of

the Company, Mr. Ashok is eligible for Provident Fund,

Gratuity and Superannuation, which payments shall not

be included for the purpose of calculation of the

managerial remuneration.

All other terms and conditions of his appointment in

terms of the resolution passed by the members on

September 25, 2007 remain unchanged.

The Board is of the opinion that the increase in the

remuneration would be in the interest of the Company

and accordingly the resolution at Item No. 9 of the

Notice is recommended for members approval.

None of the Directors, except Mr. Ashok is concerned

or interested in this resolution.

This explanation together with the accompanying Notice

is and should be treated as an abstract under Section

302 of the Companies Act, 1956.

By Order of the Board

MANOJ CONTRACTOR

Company Secretary

Jamnagar

July 29, 2008




Mr. N. Srinivasan

Mr. N. Srinivasan is a Commerce Graduate and a member

of the Institute of Chartered Accountants of India since 1955

and was a senior partner in Fraser & Ross / Deloitte Haskins

& Sells until 1997. He has been closely associated with the

development of the profession of Accounting and Auditing

in India. He was Chairman of the Southern India Regional

Council and also a Central Council Member of the Institute

of Chartered Accountants of India.

Mr. Srinivasan has been associated with various Business

Organisations and has served as Deputy President of the

Associated Chamber of Commerce and Industry of India

(ASSOCHAM), New Delhi, Chairman of The Madras

Chamber of Commerce and Industry and President of The

Indo-American Chamber of Commerce among others. He

has also served as a Director on the Board of The Institute

of Internal Auditors Inc., Florida – USA, Director of Indian

Bank, Chennai, Senate Member of the Annamalai University

and Honorary Professor, Institute of Financial Management

and Research, Chennai.

Mr. Srinivasan is also a Director on the Board of various

Indian public limited companies viz. United Breweries

(Holdings) Ltd., Best & Crompton Engineering Ltd., McDowell

Holdings Ltd., Tractors & Farm Equipments Ltd., The Andhra

Pradesh Paper Mills Ltd., India Cements Ltd., India Cements

Capital Ltd., Ador Multiproducts Ltd., Amco Batteries Ltd.,

The United Nilgiri Tea Estates Company Ltd., GATI Ltd.,

Ador Fontech Ltd., Tafe Motors and Tractors Ltd., and U. B.

Engineering Ltd.

Mr. Srinivasan is also a member of the Audit Committees of

India Cement Ltd., Amco Batteries Ltd., The Andhra Pradesh

Paper Mills Ltd. and India Cement Capital Ltd. He is the

Chairman of the Audit Committee of GATI Ltd., Tractors &

Farm Equipments Ltd. and U.B. Engineering Ltd. He is also

the Chairman of the Investors Grievance Committee of United

Breweries (Holdings) Ltd.

Mr. Srinivasan does not hold any shares in the Company.

Mr. Sanjay Mehta

Mr. Sanjay Mehta, has a Honors Degree from London School

of Economics and a Master’s Degree from London Business

School. Mr. Mehta has been with the shipping industry for

the last fifteen years. His area of specialisation is shipping

and project finance. Prior to joining Essar, Mr. Mehta was

head of the South East Asia and Asia Pacific Maritime

Financing Desk of American Marine Advisors Inc., New York.

Prior to this he was associated with Simpson, Spence &

Young, Hambros Bank and Goldman Sachs.

Mr. Mehta is also a Director on the Board of following Indian

public limited companies viz. Vadinar Oil Terminal Ltd., Essar

Logistics Ltd., Essar Bulk Terminal Ltd. and Essar Bulk

Terminal (Salaya) Ltd.

Mr. Mehta does not hold any shares in the Company.

Mr. Ravi Ruia

Mr. Ravi Ruia, is an Engineer by training. His rare business

and entrepreneurial abilities with an eye for details has

enabled the Essar Group to be ranked among the top

industrial houses in the Country. Essar has emerged as the

fourth largest industrial house in India in terms of assets.

Mr. Ruia, commenced his business career in the family

business way back in 1969. He ably assisted his elder brother

Mr. Shashi Ruia in steering the Essar Group to its current

pre-eminent position. The Essar Group has diversified

business interests in specific areas such as Shipping Ports

& Logistics, Steel, Power, Telecom, Oil & Gas, Construction

and Financial Services. The Essar Group has emerged as a

leading business conglomerate in India.

Mr. Ruia is a widely travelled industrialist. He is connected

with several industry and trade associations both at the

national and bilateral level. Mr. Ruia has provided the

foresight and vision to mastermind Essar Group’s strategy

so as to consolidate Essar’s activities through backward

and forward integration. In this process the created synergy

has been utilised to propel Essar’s rapid growth.

Mr. Ruia is also a Director on the Board of various Indian

public limited companies viz. Vodafone Essar Ltd., Essar Oil

Ltd., Essar Steel Ltd., Essar Investments Ltd., Essar Power

Ltd., India Securities Ltd., and Essar Steel (Hazira) Ltd.

Mr. Ruia does not hold any shares in the Company.

Mr. K. V. Krishnamurthy

Mr. K. V. Krishnamurthy, a Chartered Accountant by

profession is a fellow member of the Indian Institute of

Bankers and was a member of its Governing Board. He has

over thirty-three years of experience in Public Sector

Banking. His areas of specialisation include both domestic

and international banking, treasury management, risk

management, foreign exchange management and human

resource management.

He is credited with the remarkable turnaround of Bank of

India and Syndicate Bank, leading nationalised banks. He

has been the Chairman/Director of nationalised banks like

Bank of India, Bank of Baroda, Syndicate Bank and other

financial institutions like Indo Hong Kong International

Finance Company Limited, Export Credit Guarantee

Corporation of India and Agricultural Finance Corporation of

India Limited.

Annexure to Notice:

Details of Directors seeking re-appointment / appointment at the Thirty-second Annual General Meeting in pursuance

of Clause 49 of the Listing Agreement.


Mr. Krishnamurthy is also a Director on the Board of various

Indian public limited companies, viz., Asset Reconstruction

Co. (India) Ltd., Sundaram BNP Paribas Fund Trustee Co.

Ltd., Rap Media Ltd., Centrum Capital Ltd., Centrum Direct

Ltd., Essel Propack Ltd., Borosil Glass Works Ltd., Essar

Steel Ltd., Thirumalai Chemicals Ltd., V.V.F. Industries Ltd.

and KPIT Cummins Ltd.

Mr. Krishnamurthy is the Chairman of the Audit Committee

of Borosil Glass Works Ltd., VVF Industries Ltd. and Centrum

Capital Limited. He is also a member of the Audit Committee

of Asset Reconstruction Company (India) Limited, Sundaram

BNP Paribas Trustees Co. Ltd., Essel Propack Limited, Essar

Steel Ltd., Thirumalai Chemicals Ltd. and KPIT Cummins

Ltd.

Mr. Krishnamurthy does not hold any shares in the Company.

Mr. Dilip J. Thakkar

Mr. Thakkar, a practicing Chartered Accountant by profession

since last forty-six years and is a Partner of

M/s. Jayantilal Thakkar & Co., and Jayantilal Thakkar

Associates, Chartered Accountants, Mumbai. Mr. Thakkar

has vast experience in the fields of Accounts, Finance,

Taxation, FEMA, etc.

He is also a Director on the Board of various Indian public

limited companies viz., Omega Management Services Ltd.,

Poddar Developers Ltd., Panasonic Battery India Co. Ltd.,

Essar Oil Ltd., Thirumalai Chemicals Ltd., The Ruby Mills

Ltd., PAE Ltd., Himatsingka Seide Ltd., Indo Count Industries

Ltd., Walchandnagar Industries Ltd., Garware Offshore

Services Ltd. and Garware Polyester Ltd.

Mr. Thakkar is the Chairman of the Audit Committee of

Essar Oil Ltd., Thirumalai Chemicals Ltd., PAE Ltd. and

Himatsingka Seide Ltd. He is also a member of the Audit

Committee of Panasonic Battery India Co. Ltd., and

Walchangnagar Industries Ltd. He is the Chairman of the

Investors Grievances Committee of Panasonic Battery India

Co. Ltd. and a member of the Investors Relations Committee

of Essar Oil Ltd. and Share Transfer Committee of Thirumalai

Chemicals Ltd.

Mr. Thakkar does not hold any shares in the Company.




DIRECTORS’ REPORT

To the Members of Essar Shipping Ports & Logistics Limited

Your Directors take pleasure in presenting the Thirty-second Annual Report of your Company together with Audited Accounts

for the year ended March 31, 2008. Pursuant to the provisions of section 219 of the Companies Act, 1956 and as permitted

by the Securities and Exchange Board of India (SEBI), abridged accounts are enclosed. Any member interested in obtaining

a copy of unabridged accounts may write to the Company Secretary at the Registered Office.

FINANCIAL ANALYSIS:

A summary of the standalone and consolidated financial results of your Company for the year ended March 31, 2008 are

furnished below:

(Rs. in crore)

Standalone Consolidated

For the For the For the For the

Particulars year ended year ended year ended year ended

31-03-2008 31-03-2007 31-03-2008 31-03-2007

Total Income 1,063.93 1,045.13 2,255.67 1,682.70

Total Expenditure 598.73 719.00 1,460.36 1,301.41

EBITDA 465.20 326.13 795.31 381.28

Less: Interest & Finance charges 89.19 94.48 266.55 104.25

Less: Provision for Depreciation 106.64 90.51 221.48 112.03

Profit before tax 269.37 141.14 307.28 165.01

Less: Provision for Tax (27.70) (7.16) (43.68) (7.26)

Profit before Share of Minority Interest 241.67 133.98 263.60 157.75

Add : Share of Minority Interest — — 13.81 —

Profit after tax 241.67 133.98 277.41 157.75

Add: Balance in Profit and Loss Account as per

last Balance Sheet 589.93 490.45 1,010.83 887.58

Less: Transfer to Tonnage Tax Reserve (30.00) (34.50) (30.00) (34.50)

Balance carried forward to Balance Sheet 801.60 589.93 1,258.24 1,010.83

DIVIDEND:

During the year, your Company has consolidated the ports

and terminals businesses into its fold and also proposes to

bring in the oilfields & drilling services business through a

merger. These businesses are highly capital intensive and

nurturing these new businesses to their optimum value would

require significant capital commitments. These investments

will add value in the coming years. In order to plough back

earnings into the growth of these businesses, no dividend

for the current year has been recommended.

MANAGEMENT DISCUSSION & ANALYSIS:

RE-ORGANISATION OF THE SHIPPING, PORTS AND

LOGISTICS BUSINESS:

Your Company has re-organised its business with certain

other businesses of the Essar Group to become a one-of-a-kind

integrated logistics company. As part of this re-organisation

exercise, your Company has brought the ports and terminal

assets under its fold. In order to become a fully integrated

logistics solutions provider, it is proposed to also bring the

oilfields & drilling services business carried on by Essar

Oilfields Services Limited in its fold. With investments in dry

bulk ports and oil terminals, crude and dry bulk carriers,

port to plant logistics and interests in oil field services, this

re-organisation will enable your Company to provide end-to-

end logistics solutions to its customers. The business model

adopted by your Company is unique in nature with no peer

group having advantage of this model. The business model

is driven on the intrinsic demand for transportation services

and logistics & cargo handling infrastructure required by the

growing steel, power generation and refining industry in India

and worldwide. In order to reflect the new identity, the name

of your Company has also been changed to Essar Shipping

Ports & Logistics Limited.


Essar Bulk

Terminal Ltd.

(India)

Vadinar Oil

Terminal Ltd.

(India)

Essar Bulk

Terminal (Salaya) Ltd.

(India)

Energy Transportation

International Ltd.

(Bermuda)

Energy II Ltd.

(Bermuda)

100%100%100%100%74%***

Essar Port &

Terminals Ltd.

(Mauritius)

** Essar Oilfields

Services Ltd.

(Mauritius)

Essar Logistics Ltd.

(India)

Essar

International Ltd.

(Guernsey)

100% 100% 100% 100%

Essar Shipping Ports &

Logistics Ltd.

(India)

76.46%*

Essar Ports & Terminals Limited:

As a part of the re-organisation, your Company has

incorporated a new subsidiary Essar Ports & Terminals

Limited (EPTL) in Mauritius. EPTL will be the holding

company for the ports and terminals business of the group.

During the year under review, EPTL acquired 74%

shareholding of Essar Bulk Terminal Limited (EBTL), 90.50%

shareholding of Vadinar Oil Terminal Limited (VOTL) and

100% shareholding of Essar Bulk Terminal (Salaya) Limited.

Subsequently, EPTL has acquired the balance 9.50%

shareholding of VOTL, as a result of which VOTL has

become a wholly owned subsidiary of EPTL.

The principal activities covered by its subsidiaries are as

follows:

a. Vadinar Oil Terminal Limited (VOTL) – VOTL is in the

business of providing crude oil and petroleum products

storage, handling and terminalling facilities. VOTL has

invested in port and terminal facilities to support a 10.5

million metric tonnes per annum (mmtpa) refinery

capacity at Vadinar in Gujarat on the West Coast of

India set up by Essar Oil Limited (EOL). The facilities of

VOTL include a product port, crude oil and petroleum

product tankages, single point mooring, cross country

and sub sea pipelines, rail and road gantry.

The terminal commissioned operations in July 2007 and

hence the financial results reflect nine months of

operations. During the year under review, VOTL

registered a Total Income of Rs. 150.36 crore. EBITDA

for the year under review, stood at Rs. 104.53 crore,

registering an operating margin of 69%. Interest and

Depreciation for the year was Rs. 161.84 crore and

Rs. 88.28 crore respectively.

VOTL is currently expanding its capacity to support

EOL’s refinery capacity of upto 34 mmtpa from the

existing 10.5 mmtpa.

b. Essar Bulk Terminal Limited (EBTL) – EBTL is setting

up an all weather deep draft dry bulk port at Hazira in

Gujarat located on the West Coast of India for import of

iron ore, pellets, limestone, steel products and other

dry bulk cargoes and export of finished steel and other

dry bulk products. The facilities would include a

dedicated all weather channel, 550 metres long jetty,

ship unloaders, storage facilities for finished products,

conveyors for transportation of raw materials to the stack

house, a rail network, dredgers, tugs and mooring boats.

The port facility is currently under construction and is

expected to start commercial operations during the

calendar year 2009.

c. Essar Bulk Terminal (Salaya) Limited (EBTL Salaya)

– EBTL Salaya is setting up a dry bulk port facility at

Salaya in Gujarat. The port will handle import of coal

and export of pet coke and other bulk cargoes.

Essar Oilfields Services Limited (EOSL):

As part of the re-organisation process, EOSL will become a

wholly owned subsidiary of your Company through a merger

of India Shipping (holding 100% shares of EOSL) with the

Company. Your Company is in the process of filing

applications with the relevant Courts for the merger.

Through the process of merger as mentioned above, based

on a swap ratio of 32 shares at a valuation of Rs. 220/- per

Holding Structure:

The holding structure upon completion of the re-organisation will be as under:

Essar Global Ltd.

(Cayman Islands)

Essar Shipping &

Logistics Ltd.

(Cyprus)

* Alongwith other promoter group companies

** Upon merger of India Shipping

*** Balance 26% held by Essar Steel Limited




share of your Company for every 100 shares of India

Shipping, 18.96 crore fresh shares of your Company will be

issued to Essar Shipping & Logistics Limited (Cyprus) (being

the only shareholder of India Shipping), as a consideration

for the merger.

EOSL is in the business of providing onshore and offshore

contract drilling services to leading oil and gas producers

worldwide. EOSL operates a fleet of a third generation semi-

submersible offshore rig and twelve land rigs. The clientele

of EOSL includes, Gujarat State Petroleum Corporation

Limited, India (GSPCL), Petrobras, Brazil (through

intermediaries) and Essar Oil Limited, India.

The semisubmersible offshore rig has been contracted with

GSPCL on long term charter basis. Five land rigs are

contracted with Petrobras (through intermediaries) and four

land rigs are contracted with Essar Oil Limited. Out of the

thirteen rigs, seven rigs are already operational and

remaining land rigs are being refurbished and should be

employed thereafter.

Essar Logistics Limited (ELL):

ELL is in the business of providing transhipment, lighterage

and trucking services. Going forward, ELL is exploring

opportunities in logistics handling of large project cargoes.

The Total Income of ELL for the year under review was

Rs. 874.28 crore as compared to Rs. 644.40 crore during

the previous year. The increase in the revenues was on

account of increased cargo handled during the year under

review as compared to the previous year.

Interest during the year under review was Rs. 15.30 crore

as compared to Rs. 9.71 crore in the previous year. The

increase in interest was on account of increase in total debt

from Rs. 3.16 crore during the previous year to Rs. 151.51

crore during the year under review, due to acquisition of

certain shipping assets.

Net Profit after Tax for the year under review increased by

27% and stood at Rs. 28.80 crore as compared to

Rs. 22.60 crore during the previous year.

CONSOLIDATED FINANCIAL RESULTS:

As a result of the integration of the above-mentioned

businesses, the Total Income of your Company increased

from Rs. 1,682.70 crore during the previous year to

Rs. 2,255.67 crore in the current year. The increase in

revenues was on account of increased earnings in the

logistics business being operated by ELL and

commencement of operations of the crude oil and petroleum

product terminal being operated by VOTL.

The Total Income for the year included:

i. Profit on Sale of Ships in the Sea Transportation

Business — Rs. 198.11 crore

ii. Profit on Sale of Investments — Rs. 107.56 crore and

iii. Notional Currency Exchange difference — Rs. 80.43

crore.

The Gross Profit for the year increased by 109% and stood

at Rs. 795.31 crore as compared to Rs. 381.29 crore during

the previous year.

Interest and Finance charges for the year increased to

Rs. 266.55 crore as compared to Rs. 104.25 crore for the

previous year mainly due to interest expenses for VOTL

which was Rs. 161.84 crore for the year. The increase in

Depreciation for the year to Rs. 221.48 crore is largely due

to commencement of operations by VOTL.

Net Profit after Tax for the year increased to Rs. 277.44

crore compared to Rs. 157.75 crore in the previous year

thereby registering an increase of 76%.

0

500

1000

1500

2000

2500

FY 08FY 07

1,683

2,256

INR

Cro

re 34.1%

TOTAL INCOME

0100200300400500600700800900

FY 08FY 07

381

759

INR

Cro

re108.6%

EBITDA

0

50

100

150

200

250

300

FY 08FY 07

158

277

INR

Cro

re

75.9%

PROFIT AFTER TAX

STANDALONE RESULTS (SEA TRANSPORTATION

BUSINESS):

During the year under review, your Company achieved a

Total Income of Rs. 1,063.93 crore as compared to

Rs. 1,045.13 crore during the previous year.

The Net Profit for the year increased from Rs. 133.98 crore

during the previous year to Rs. 241.67 crore in the current

year. This is largely due to Profit on Sale of Ships of

Rs. 197.10 crore as compared to Rs. 12.47 crore during the

previous year. The Net Profit for the year under review also

includes a notional currency exchange difference of Rs. 75.65

crore.

Income and EBIDTA

The Income during the year under review of this segment

marginally increased to Rs. 1,063.93 crore from Rs. 1,045.13

crore as compared to the previous year. The EBITDA

increased by 42% from Rs. 326.12 crore in the previous

year to Rs. 465.20 crore during the year under review.


Debt-Equity Ratio

The Debt Equity Ratio of your Company stood at 0.68:1 as

on March 31, 2008, as compared to 0.51:1 as on March 31,

2007. The increase in the ratio was on account of increased

leverage due to acquisition of one capsize bulk carrier, M.V.

Kiran on a Bareboat Cum Demise Charter basis. Your

Company, has over the years, maintained a Debt Equity

ratio within acceptable norms, which will enable it to raise

debt for growth in future.

Interest

The interest outgo of your Company reduced to Rs. 89.19

crore during the year under review from Rs. 94.48 crore in

the previous year.

SEA TRANSPORTATION BUSINESS:

Energy Transportation Group

This group provides crude oil transportation and crude oil

transportation management services to global and domestic

crude oil refiners. It contributed Rs. 267.57 crore to the total

income during the financial year as compared to Rs. 358.15

crore in the previous year. The drop in the earnings was on

account of lower freight earnings as compared to the previous

year and dry docking of the Suezmax tanker, M.T. Ishwari.

During the year under review, your Company entered into a

two-year time charter for one of its Very Large Crude Carrier

(VLCC), M.T. Smiti, with British Petroleum Limited (BP).

The time charter was awarded to the Company after a

thorough due diligence by BP of the Company’s systems

and procedures.

Integrated Bulk and Petroleum Product Transportation

Group

This group provides integrated bulk transportation and

petroleum products transportation services to various

refineries, steel mills and power generation plants along the

Asian and South East Asian coast through various

employment contracts including Contracts of Affreightment

(COA’s). This segment contributed Rs. 500.43 crore to the

total income during the financial year as compared to

Rs. 666.15 crore during the previous year.

This group operates of a fleet of five Capesizes, ten Mini

Bulk carriers, four Tugs and two Diving Support Vessels.

These vessels are employed on COA’s with major steel

mills in India and South East Asia to provide supply chain

logistics services along the Indian Coast and for global

movement of commodities like iron ore, coal, etc. The Diving

Support Vessels have been chartered to assist mid sea

terminalling facilities along the west coast of India.

INDUSTRY REVIEW AND PROSPECTS:

Crude Oil Transportation:

• Average spot earnings for the year under review were

lower as compared to the previous year.

• Average five year old tanker values rose by almost 7%

as compared to the previous year.

• The crude tanker fleet grew by 5.7% during the year

with the VLCC segment growing by 4% and the

Suezmax segment grew by 3.7%.

• The order book for crude oil tankers stood at 43% of

the total crude oil trading fleet. The average annual

gross fleet growth in 2008-2010 is expected at about

10%. The increased tonnage would be partially offset

against the phase out of old tankers in line with the

IMO guidelines and the projected increase in worldwide

refining capacity.

The freight rates for a modern VLCC averaged at USD 57,200

per day during the year under review as compared to USD

63,100 during the previous year.

RISK MANAGEMENT:

Economic Risks: Shipping is a global industry and the

performance of the shipping industry is closely linked to the

world economic growth, global demand and supply trends

and the commodity markets. Your Company has managed

to mitigate this risk by having a global focus rather than

region / country specific focus and has helped diversify risks.

Freight Risks: Shipping industry is prune to high volatility

in freight rates thereby making the cashflows highly

unpredictable. An optimum mix of voyage charters, time

charters and COAs has enabled your Company to take

advantage of the freight rates and also maintain consistency

of earnings.

0

200

400

600

800

1000

1200

Mar-08Mar-07Mar-06Mar-05Mar-04Mar-03Mar-020

50

100

150

200

250

300

Profitability

YearsRevenues

496

208

10978

62

262

195

269

141.15496

671

863

469 465

760

258

1045

326

1064

278200

INR

Cr

INR

Cr

Operating Profit PBT

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

2008200720062005200420032002

Debt:Equity Ratio

Years

0.62

0.54

0.69

0.51

0.55

0.51

0.68

Per

cen

tag

e

Debt:Equity Ratio




Forex Risk: A majority of the revenues of your Company

are in foreign currency which creates a natural hedge against

foreign exchange exposures. Apart from this, the Essar

Group’s specialised forex team provides efficient advice to

mitigate the exchange risk of your Company.

Interest Rate Risk: Your Company has been undertaking

suitable hedging strategies to overcome any adverse interest

rate risks. It has formulated internal target rates at which

any open interest rate risk can be hedged. At present 64%

of the total loans are completely hedged with interest rates

being fixed during the tenure of the facility.

SALE AND ACQUISITION OF VESSELS:

During the year under review your Company bought and

sold the following vessels:

Vessels Bought

• Capesize Dry Bulk Carrier, M.V. Govind Prasad (129,237

DWT).

• Newly Built Diving Support Vessel, Tug Perseverance.

• Capesize Dry Bulk Carrier, M.V. Kiran (175,048 DWT).

Vessels Sold

• Handysize Dry Bulk Carrier, M.V. Chennai Polivu (38,023

DWT).

• Handysize Dry Bulk Carrier, M.V. Chennai Valarchi

(38,019 DWT).

• Mini Bulk Carrier, M.V. Nand Bhavani (2,200 DWT).

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:

Your Company has instituted internal control systems which

are adequate for the nature of its business and the size of

its operations. In the beginning of the year, the scope of the

internal audit exercise and the key business processes and

selected risk areas to be audited are decided in consultation

with the Audit Committee. All significant audit observations

and follow up actions thereon are reported to the Audit

Committee. The Audit Committee comprises of three

Directors with the Chairman being a person well qualified

and conversant with matters pertaining to Accounts, Finance,

Budgeting, Systems, etc. The Audit Committee met five times

during the year.

HUMAN RESOURCES:

The operational efficiency of any company is dependent a lot

upon the quality of personnel. Your Company believes in

imparting the required training to its personnel at various

levels. Your Company is managed by highly skilled

professionals in all its operations, ashore and afloat, thereby

achieving organisational efficiencies. Operations are managed

professionally, ensuring high productivity levels which

increases operational efficiency and utilisation, thereby

increasing the revenues. Regular onboard and offshore

training activities are undertaken by your Company to improve

the performance of its employees. Skilled and efficient

personnel also managed the ports and terminal business.

Adequate systems have been put in place for mapping the

competencies of personnel across the ranks. The

competencies are then mapped against the desired

competencies taking into consideration the business and

quality objectives of your Company.

Given the high economic growth globally and more so in

India, the demand for skilled and competitive personnel is

ever increasing. Your Company is taking suitable measures

for talent retention and reducing attrition at all levels.

INFORMATION TECHNOLOGY INITIATIVES:

Your Company strongly believes that Information Technology

is very vital for increasing efficiencies and better customer

service. Towards this, your Company has implemented SAP

in its financial management. Your Company is also in the

process of implementing fleet management, logistics and

maintenance management systems.

SUBSIDIARIES:

Your Company has the following Subsidiaries as on March

31, 2008:

1. Essar Ports & Terminals Limited, Mauritius (EPTL)

2. Vadinar Oil Terminal Limited, India

3. Essar Bulk Terminal Limited, India (subsidiary of EPTL)

4. Essar Bulk Terminal (Salaya) Limited, India (wholly

owned subsidiary of EPTL)

5. Essar Logistics Limited, India

6. Essar Sisco Ship Management Company Limited, India

7. Essar International Limited, Guernsey, Channel Islands

(EIL)

8. Energy Transportation International Limited, Bermuda

(wholly owned subsidiary of EIL)

9. Energy II Limited, Bermuda (wholly owned subsidiary

of EIL)

Essar Ports & Terminals Limited became a subsidiary of the

Company on March 4, 2008. Essar Bulk Terminal Limited

and Essar Bulk Terminal (Salaya) Limited became

subsidiaries of the Company on March 29, 2008 and March

27, 2008 respectively.

Your Company has obtained exemption from the Central

Government under Section 212(8) of the Companies Act,

1956 from attaching the Balance Sheets, Profit & Loss

Account, report of the Board of Directors and the report of

the Auditors of the subsidiary companies with the Annual

Report of the Company, as required under Section 212 of

the Companies Act, 1956, vide Order no. 47/435/2007-CL-

III dated January 16, 2008 and June 19, 2008. The Company

will make available the annual accounts of the subsidiary

companies to members seeking such information at any

point of time.

In accordance with Accounting Standard AS-21 on

Consolidated Financial Statements read with Accounting

Standard AS-23 on Accounting for Investments in Associates,

your Directors have pleasure in attaching the Consolidated

Financial Statements, which forms part of the Annual Report.

DIRECTORS:

In accordance with the provisions of the Companies Act,

1956 and the Articles of Association of the Company,

Mr. N. Srinivasan, Mr. Sanjay Mehta and Mr. Ravi Ruia,

retire at the ensuing Annual General Meeting of the Company

and being eligible, offer themselves for re-appointment.


Mr. K. V. Krishnamurthy and Mr. Dilip J. Thakker were

appointed as Additional Directors on your Company’s Board

with effect from June 20, 2008. They cease to be Directors

on the date of the Thirty-second Annual General Meeting.

Notice has been received from members proposing their

appointment as Directors on the Board.

Mr. S. K. Poddar and Mr. Rewant Ruia have resigned from

the Board of Directors of your Company with effect from

June 20, 2008. Your Board places on record its appreciation

for the valuable guidance provided by them during their

tenure as Directors.

AUDITORS:

Your Company’s Auditors, M/s. Deloitte Haskins & Sells,

Chartered Accountants, retire at the ensuing Annual General

Meeting. It is proposed to re-appoint M/s. Deloitte Haskins

& Sells, Chartered Accountants as the Auditors of the

Company from the conclusion of this Annual General Meeting

until the conclusion of the next Annual General Meeting.

CORPORATE GOVERNANCE:

The Company has complied with the requirements under

the Corporate Governance reporting system. The disclosures

as required therein have been furnished in the Annexure to

the Directors’ Report under the head “Corporate

Governance”.

PARTICULARS REQUIRED UNDER THE COMPANIES

(DISCLOSURE OF PARTICULARS IN THE REPORT OF

THE BOARD OF DIRECTORS) RULES, 1988:

This does not apply to your Company as the shipping industry

is not included in the Schedule to the relevant rules.

Foreign exchange earnings and outgo are summarised

below:

Total Foreign Exchange:

(1) Earned (including loan receipts, : Rs. 716.58 crore

sale of ships, freight, charter

hire earnings, interest

income, etc.)

(2) Used (including cost of : Rs. 563.85 crore

acquisition of ships, loan

repayments, interest,

operating expenses, etc.)

Your Company has obtained exemption from the Central

Government under Section 211(4) of the Companies Act,

1956 from giving information required under clauses (a),

(b), (c) and (e) of Paragraph 4-D of Part II of Schedule VI to

the Companies Act, 1956 vide Order no. 46/203/2007-CL-III

dated January 29, 2008.

PARTICULARS OF EMPLOYEES:

Information in accordance with the provisions of Section

217(2A) of the Companies Act, 1956, read with the

Companies (Particulars of Employees) Rules, 1975, as

amended, is given in Annexure to this report. Pursuant to

the provisions of section 219 of the Companies Act, 1956

members are provided with abridged accounts. Any member

interested in obtaining a copy of this statement may write to

the Company Secretary at the Registered Office.

TRANSFER TO THE INVESTOR EDUCATION AND

PROTECTION FUND:

In terms of Section 205C of the Companies Act, 1956, an

amount of Rs. 0.44 crore being unclaimed Debenture

redemption amount and Interest thereon was transferred

during the year to the Investor Education and Protection

Fund established by the Central Government.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES:

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

Companies Act, 1956 the Board of Directors hereby state that:

(a) in the preparation of the annual accounts, the applicable

accounting standards have been followed and there have

been no material departures;

(b) the Directors have selected such accounting policies

and applied them consistently and made judgments and

estimates that are reasonable and prudent so as to

give a true and fair view of the state of affairs of the

Company at the end of the financial year and of the

profit or loss of the Company for that period;

(c) the Directors have taken proper and sufficient care for

the maintenance of adequate accounting records in

accordance with the provisions of this Act for

safeguarding the assets of the Company and for

preventing and detecting fraud and other irregularities;

(d) the Directors have prepared the annual accounts on a

going concern basis.

APPRECIATION AND ACKNOWLEDGEMENTS:

Your Directors would like to express their sincere

appreciation to all the employees for their commendable

teamwork and contribution to the growth of the Company.

Your Directors also thank its bankers, charterers and other

business associates for their continued support and co-

operation during the year.

For and on behalf of the Board

Jamnagar Sanjay Mehta R. N. Bansal

July 29, 2008 Managing Director Director

“Persons constituting ‘group’ coming within the definition of

group as defined in the Monopolies and Restrictive Trade

Practices Act, 1969 for the purpose of interse transfer of

shares of the Company under regulation 3(1)(e)(i) of SEBI

(Substantial Acquisition of Shares and Takeovers)

Regulations, 1997”

Sr. No. Name of the Company

1. Essar Investments Limited

2. Teletech Investments India Limited

3. Shubhangi Investments and Trading Limited

4. Essar Global Limited

5. India Shipping

6. Essar Shipping & Logistics Limited




CORPORATE GOVERNANCE REPORT

1. Statement on Company’s philosophy on Code of Corporate Governance

Your Company believes that adhering to global standards of Corporate Governance is essential to enhance shareholders

value and achieve long term corporate goals. The Company’s philosophy on Corporate Governance stresses the importance

of transparency, accountability and protection of shareholder interests. The Board conducts periodic review of business

plans, monitors performance and compliance with regulatory requirements.

2. Board of Directors

The Company has a Non-Executive Chairman and has one-third of the total number of Directors as Independent Directors.

The number of Non-Executive Directors is more than 50% of the total number of Directors.

A. Composition, category, attendance and number of other directorships of the Directors are furnished below:

As at March 31, 2008 the Board consisted of ten members. The composition, category of directors and directorships

held in other companies was as under:

Name of Director Category of No. of Attendance No. of outside No. of *No. of Committee

Director Board at last Directorships Directorships Positions held in

Meetings AGM in other Indian in Indian other public limited

attended public limited private limited companies

companies companiesChairman Member

Mr. Shashi Ruia Promoter,

(Chairman) Non-Executive 4 N 8 1 - -

Mr. Ravi Ruia Promoter,

(Vice Chairman) Non-Executive 3 N 7 - - -

Mr. Anshuman Ruia Promoter,

Non-Executive 7 N 8 - - 3

**Mr. Rewant Ruia Promoter,

Non-Executive 5 N 5 - - -

Mr. R. N. Bansal Independent,

Non-Executive 7 Y 8 1 4 4

**Mr. S. K. Poddar Independent,

Non-Executive - N 12 3 3 3

Mr. N. Srinivasan Independent,

Non-Executive 7 Y 14 2 4 5

Mr. Sanjay Mehta Non-Promoter,

(Managing Director) Executive 2 N 4 - - -

Mr. A. R. Ramakrishnan Non-Promoter,

(Wholetime Director) Executive 7 Y 1 - - -

Mr. V. Ashok Non-Promoter,

(Wholetime Director) Executive 7 Y 4 - - -

Note:

The number of Independent Non-Executive Directors is determined as per Section 256 of the Companies Act, 1956.

* includes membership of Audit and Share Transfer & Shareholders’ Grievance Committee only.

**have resigned with effect from June 20, 2008.

Mr. K. V. Krishnamurthy and Mr. Dilip J. Thakkar have been appointed as Independent Directors with effect from June 20, 2008.

B. Details of Board Meetings held during the year:

Sr. No. Date Board Strength No. of Directors present

1 May 29, 2007 10 5

2 June 29, 2007 10 6

3 July 30, 2007 10 7

4 October 11, 2007 10 6

5 October 31, 2007 10 7

6 January 22, 2008 10 9

7 January 31, 2008 10 9

3. Audit Committee

The Audit Committee of the Company performs the

following functions:

a) overseeing the Company’s financial process and

disclosure of financial information to ensure that

the financial statement is correct.

b) recommending the appointment and removal of

statutory auditor, fixation of audit fees and approval

for payment of any services.

c) approving payment to statutory auditors for any

other services rendered by the statutory auditors.

d) reviewing with the management annual financial

statements before submission to the Board.


e) reviewing with the management, the quarterly

financial statements before submission to the Board

for approval.

f) reviewing with the management performance of

statutory and internal auditors and adequacy of

internal control systems.

g) reviewing the adequacy of internal audit function.

h) discussing with internal auditors any significant

findings and follow up on such issues.

i) reviewing the findings of any internal investigations

by the internal auditors into matters where there is

suspected fraud or irregularity or a failure of internal

control systems of a material nature and reporting

the matter to the Board.

j) discussing with statutory auditors before the audit

commences on the nature and scope of audit, as

well as having post-audit discussion to ascertain

any area of concern.

k) reviewing the Company’s financial and risk

management policies; and

l) examining reasons for substantial default in the

payment to depositors, debenture holders,

shareholders and creditors, if any.

Composition:

The Committee comprises of three Directors of which

two are Independent Directors. All the members of the

Committee are financially literate and have relevant

financial management and/or audit exposure. The

Managing Director, Wholetime Directors, General

Manager - Accounts, Statutory Auditors and Internal

Auditors attend the meetings. The Company Secretary

is the Secretary to the Committee.

Details of Audit Committee Meetings held during

the year:

Sr. No. Date Committee No. of

Strength Members

present

1 May 29, 2007 3 3

2 June 29, 2007 3 3

3 July 30, 2007 3 3

4 October 31, 2007 3 3

5 January 31, 2008 3 3

Attendance at Audit Committee Meetings:

Director No. of No. of

meetings held meetings

attended

Mr. R. N. Bansal

(Chairman) 5 5

Mr. Anshuman Ruia 5 5

Mr. N. Srinivasan 5 5

4. Remuneration to Directors

Details of Remuneration paid to the Managing Director

and Wholetime Directors during the year ended March

31, 2008 is as under:

(Rs.)

Name of Director Basic Allowances Perquisites Contribution Total

Salary and other to Provident

benefits & Superannu-

ation Fund

Mr. Sanjay Mehta,

Managing Director

(w.e.f. 18.9.2005 for

a period of 3 years) 12,00,000 50,60,868 6,50,000 1,44,000 70,54,868

Mr.A.R.Ramakrishnan,

Wholetime Director

(w.e.f. 31.7.2006 for

a period of 5 years) 16,20,000 86,17,416 1,20,000 1,94,400 1,05,51,816

Mr. V. Ashok,

Wholetime Director

(w.e.f. 7.12.2006 for

a period of 5 years) 24,75,000 50,15,716 — 2,97,000 77,87,716

No Employee Stock Option Schemes have been

provided by the Company till date. Services of the

aforesaid Executive Directors can be mutually terminated

by giving three months notice or three months salary in

lieu thereof.

Details of sitting fees paid to Non-Executive Directors

for the meetings held during the year ended March 31,

2008:

Non-Executive Directors Sitting Fees paid for

Board/Committee meetings

Mr. Shashi Ruia Rs. 19,500

Mr. Ravi Ruia Rs. 15,500

Mr. R. N. Bansal Rs. 61,000

Mr. N. Srinivasan Rs. 61,000

Mr. Anshuman Ruia Rs. 57,500

Mr. Rewant Ruia Rs. 28,500

Number of shares or convertible instruments held

by non – executive directors:

Non-Executive Directors No. of shares held

Mr. Shashi Ruia Nil

Mr. Ravi Ruia Nil

Mr. Anshuman Ruia Nil

Mr. Rewant Ruia Nil

Mr. R. N. Bansal Nil

Mr. N. Srinivasan Nil

Mr. S. K. Poddar 254 shares

5. Share Transfer & Shareholders’ Grievance

Committee:

Terms of reference:

To approve transfer, transmission, sub-division and issue

of duplicate shares/debentures and for redressal of

investor complaints on all matters.

Composition:

The Committee members comprise of Mr. Ravi Ruia,

Vice Chairman, Mr. Sanjay Mehta, Managing Director,

Mr. A. R. Ramakrishnan, Wholetime Director and

Mr. V. Ashok, Wholetime Director. The Executive

Directors and Company Secretary, are authorised to

approve the Share Transfer and other related

transactions on a day to day basis under the supervision

of the Committee.

Details of shareholders complaints received, solved

and pending share transfers:

There were no complaints pending at the beginning of

the year. A total of 393 complaints were received during




the year ended March 31, 2008, most of which being

non-receipt of dividend/debenture warrants, non-receipt

of share certificates. All the complaints were redressed

under the supervision of the Committee and no

complaints were outstanding as on March 31, 2008.

All the valid share transfer requests received during the

year were duly attended to and processed in time. There

were no valid requests pending for share transfers as

on March 31, 2008.

6. General Body Meeting:

(a) Details of General Meetings held in last three years:

Financial Meeting Date Time Location

year

2004-05 AGM 29-09-05 10.15 AM

2005-06 AGM 22-09-06 10.15 AM

EGM 02-01-07 11.00 AM

AGM 25-09-07 11.00 AM

2006-07

EGM 23-02-08 11.00 AM

(b) Whether any special resolutions passed in the

previous three Annual General Meetings?

No special resolutions were passed in the previous

three Annual General Meetings.

(c) Whether any special resolution was passed last

year through postal ballot?

No special resolution was passed during the

financial year 2007 – 08 through postal ballot.

(d) Whether any special resolution is proposed to be

conducted through postal ballot?

No

7. Disclosures:

1 There are no materially significant related party

transactions made by the Company with its

Promoters, Directors or Management, their relatives,

its subsidiaries, etc. that may have potential conflict

with the interest of the Company at large.

2 Transactions with related parties during the year

are disclosed in Note No. B-12 of Schedule 13 to

the accounts in the Annual Report.

3 During the last three years no penalty or stricture

has been imposed on the Company by Stock

Exchanges/SEBI/Statutory Authorities on matters

related to Capital Markets.

9. Means of Communication:

Financial results and The quarterly and annual

other information about financial results are

the Company displayed on the

Company’s website:

www.essar.com

Publication of financial Published in major

results newspapers such as

Business Standard,

Udayavani, etc.

Presentation to Press releases and

Institutional Investors presentations made to

and to the Analysts Institutional Investors and

Analysts are displayed on

the Company’s website :

www.essar.com

Management Discussion Forms part of the Annual

& Analysis Report, which is mailed to

the shareholders of the

Company

10. General Shareholders information:

A. Annual General Meeting details:

Date September 27, 2008

Venue Administrative Building,

Essar Refinery Complex,

Okha Highway (SH - 25),

Taluka Khambhalia,

Distt. Jamnagar, Gujarat 361305

Time 3.30 p.m.

Book Closure 22-09-2008 to 27-09-2008

Dates (both days inclusive)

B. Financial Calendar:

Financial year of Company April 1, 2008 to March 31, 2009

First Quarter results On or before July 31, 2008

Second Quarter results On or before October 31, 2008

Third Quarter results On or before January 31, 2009

Annual results for the year On or before June 30, 2009

C. Registrars and Share Transfer Agents:

Data Software Research Company Private Limited

“Sree Sovereign Complex”, 22, 4th

Cross Street

Trustpuram, Kodambakkam, Chennai 600 024

Tel: (044) 2483 3738, Fax: (044) 2483 4636

e-mail: [email protected].

D. Share Transfer System:

To expedite the process of share transfers,

transmissions, etc., the Board of your Company

has delegated these powers to the Executive

Directors and the Company Secretary.

All valid share transfer requests received by the

Company in physical form are registered within an

average period of 15 days. Presently the Company

dematerialises the shares after getting the

dematerialisation requests being generated by the

Depository Participant.

E. Listing on Stock Exchanges:

The Company’s securities are listed on the following

Stock Exchanges:

Bombay Stock Exchange Ltd. * National Stock Exchange

Phiroze Jeejeebhoy Towers, of India Ltd.

Dalal Street, Mumbai 400 023 Exchange Plaza,

Bandra Kurla Complex

Bandra East, Mumbai 500051

Code : 500630 Code : ESSARSHIP

* w.e.f. March 11, 2008

Annual Listing fee for the year 2008-09 has been

paid to both the exchanges.

F. Market price data (High/Low) during each month

in the year 2007-2008 on the Bombay Stock

Exchange Limited:

Month Highest Lowest

April 35.75 29.15

May 38.85 25.00

June 29.15 18.80

July 28.00 20.60

August 26.90 22.40

September 29.25 24.65

October 28.90 23.50

November 26.25 22.50

December 40.80 24.00

January 50.85 35.05

February 51.90 43.20

March 54.80 34.50

Scrip Code : 500630

Srinivasa Sagar Kalyana Mahal,

Chandrasagar Complex,

No.264/266, T. Mariappa Road,

2nd

Block, Jayanagar,

Bangalore 560011

Dayanandasagar Memorial Hall,

Chandrasagar Complex,

No.264/266,

T. Mariappa Road,

2nd

Block, Jayanagar,

Bangalore 560011


G. Share Price performance in comparison to BSE

Sensex

H. Shareholding Pattern as on March 31, 2008:

Shareholding by No. of shares %

Essar and Associates 20,13,19,284 47.25

Financial Institutions/ 14,09,360 0.33

Mutual Funds/Banks/

Insurance Companies

Other Corporate Bodies 1,47,09,096 3.45

Non-Domestic Companies/

Foreign Banks 24,259 0.00

Foreign Institutional

Investors 4,81,41,363 11.30

Non-Resident Individuals 9,54,717 0.22

Public 3,50,63,128 8.24

GDRs/ADRs/ADSs

(Promoters) 12,44,56,000 29.21

Total 42,60,77,207 100.00

Distribution of Shareholding as on March 31,

2008:

No. of equity Number % of Total % of

shares held of share- share- number of holding

holders holders shares

Upto 1000 1,15,573 96.84 1,84,65,847 4.33

1001 to 2000 2,145 1.80 31,36,540 0.74

2001 to 3000 583 0.49 14,87,874 0.35

3001 to 4000 245 0.21 8,84,471 0.21

4001 to 5000 194 0.16 9,20,319 0.22

5001 to 10000 300 0.25 22,79,446 0.53

10001 and above 301 0.25 398,902,710 93.62

TOTAL 1,19,341 100.00 42,60,77,207 100.00

I. Compliance Officer : Mr. Manoj Contractor

Company Secretary

J. Registered Office : Administrative Building

Essar Refinery Complex

Okha Highway (SH - 25)

Taluka Khambhalia

Distt. Jamnagar

Gujarat 361305

K. Corporate Office : Essar House

11, Keshavrao Khadye Marg

Mahalaxmi, Mumbai 400 034

Tel : (022) 6660 1100

Fax: (022) 2354 4312

e-mail: [email protected]

L. Status of Dematerialisation of shares as on

March 31, 2008:

Mode No. of shares No. of Folios Percentage

Physical 1,17,40,149 70,798 2.75

Demat 41,43,37,058 48,543 97.25

TOTAL 42,60,77,207 1,19,341 100.00

11. Nomination Facility:

Shareholders holding shares in physical form and

desirous of making a nomination in respect of their

shareholding in the Company, as permitted under

Section 109A of the Companies Act, 1956 are requested

to submit to the R&T Agent of the Company the

prescribed nomination form.

12. Outstanding GDRs/ADRs/Warrants or any

convertible instruments, conversion date and likely

impact on equity:

3,76,000 GDRs representing 12,44,56,000 equity shares

are outstanding as on March 31, 2008.

13. Secretarial Audit:

A qualified practicing Company Secretary carries out

secretarial audit to reconcile the total admitted capital

with National Securities Depository Limited (NSDL) and

Central Depository Services (India) Limited (CDSL) and

the total issued and listed capital. The audit confirms

that the total issued/paid up capital is in agreement

with the total number of shares in physical form and the

total number of dematerialised shares held with NSDL

and CDSL.

14. Non-mandatory requirements:

1. The Board :

(a) The expenses incurred by Non-Executive

Chairman are reimbursed by the Company.

(b) At present there is no policy fixing the tenure

of Independent Directors.

2. Remuneration Committee:

The Committee comprises of three Non-Executive

Directors and the Company Secretary is the

Secretary of the Committee. The Committee is

empowered to formulate and recommend to the

Board from time to time, the compensation structure

for Managing/Executive/Wholetime Directors and to

administer and supervise the Employee Stock

Option Schemes, whenever applicable.

3. Shareholders right:

Half yearly financial results including summary of

the significant events in last six months are available

on the website of the Company i.e. www.essar.com.

No separate financials are sent to shareholders of

the Company.

4. Audit qualifications:

There are no audit qualifications in the Auditor’s

report on the financial statements to the

Shareholders of the Company.

5. Training of Board members:

A Presentation about the Company and the industry

in which it operates is made to new Directors.

6. Mechanism for evaluating performance of

Non-Executive Board Members:

There is no formal mechanism for performance

evaluation of Non-Executive directors.

7. Whistle Blower policy:

The Company has not established any formal

whistle blower policy.

0

25

50

75

100

125

150

175

200

225

250

275

14000

15000

16000

17000

18000

19000

20000

21000

22000

Mar-08

Feb-08

Jan-08

Dec-07

Nov-07

Oct-07

Sep-07

Aug-07

Jul-07

Jun-07

May-07

Apr-07

Share Price Movement versus BSE Sensex

BSE SensexShare price on BSE

Months

Sh

are

Pri

ce

BS

E S

ense

x




Declaration on Compliance of the Company’s Code of Conduct

To the members of Essar Shipping Ports & Logistics Limited

The Company has framed a specific code of conduct for the members of the Board and the Senior Management Personnel of

the Company pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges to further strengthen corporate

governance practices in the Company.

All the members of the Board and Senior Management Personnel of the Company have affirmed due observance of the said

code of conduct in so far as it is applicable to them and there is no non compliance thereof during the year ended March 31,

2008.

Sanjay Mehta

Managing Director

Place : Jamnagar

Date : July 29, 2008

AUDITOR’S CERTIFICATE ON CORPORATE GOVERNANCE

To the Members


(formerly Essar Shipping Limited)

We have examined the compliance of conditions of corporate governance by Essar Shipping Ports & Logistics Limited

(formerly Essar Shipping Limited) (the Company) for the year ended March 31, 2008, as stipulated in Clause 49 of the Listing

Agreement of the said Company with the Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited

to review of procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions

of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.

In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company

has complied with the conditions of Corporate Governance as stipulated in the abovementioned Listing Agreement.

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

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

For Deloitte Haskins & Sells

Chartered Accountants

Khurshed Pastakia

Partner

(Membership No. 31544)

Place : Mumbai

Date : July 29, 2008


We have examined the abridged Balance Sheet of Essar

Shipping Ports & Logistics Limited (formerly known as Essar

Shipping Limited) (the Company), as at March 31, 2008 and

also the abridged Statement of Profit and Loss and the

Cash Flow Statement for the year ended on that date

annexed thereto, together with significant notes thereon.

These abridged financial statements have been prepared

by the Company pursuant to Rule 7A of the Companies

(Central Government’s) General Rules and Forms, 1956 and

are based on the audited financial statements of the

Company for the year ended March 31, 2008 prepared by

the management in accordance with the provisions of sub-

section 3(C) of Section 211 of the Companies Act, 1956

and covered by our report of even date to the members of

the Company, which is attached hereto.



Khurshed Pastakia

Place: Mumbai Partner

Date : June 20, 2008 (Membership No. 31544)

AUDITORS’ REPORT ON ABRIDGED FINANCIAL STATEMENTS TO THE

MEMBERS OF ESSAR SHIPPING PORTS & LOGISTICS LIMITED


1. We have audited the attached Balance Sheet of Essar

Shipping Ports & Logistics Limited (formerly known as

Essar Shipping Limited) (the Company), as at March

31, 2008, the Statement of Profit and Loss and Cash

Flow Statement for the year ended on that date annexed

thereto. These financial statements are the responsibility

of the Company’s management. Our responsibility is to

express an opinion on these financial statements based

on our audit.

2. We conducted our audit in accordance with auditing

standards generally accepted in India. Those standards

require that we plan and perform the audit to obtain

reasonable assurance about whether the financial

statements are free of material misstatement. An audit

includes examining, on a test basis, evidence supporting

the amounts and disclosures in the financial statements.

An audit also includes assessing the accounting

principles used and significant estimates made by

management, as well as evaluating the overall financial

statement presentation. We believe that our audit

provides a reasonable basis for our opinion.

3. As required by the Companies (Auditors’ Report) Order,

2003, (the Order) issued by the Central Government of

India in terms of sub-section (4A) of section 227 of the

Companies Act, 1956, we enclose, in the Annexure, a

statement on the matters specified in paragraphs 4 and

5 of the said Order.

4. On the basis of written representations received from

directors, as on March 31, 2008 and taken on record by

the board of directors, we report that none of the

directors is disqualified as on March 31, 2008 from

being appointed as a director in terms of clause (g) of

sub-section (1) of Section 274 of the Companies Act,

1956.

5. Further to our comments in the Annexure referred to in

paragraph 3 above, we report that:

(i) We have obtained all the information and

explanations which, to the best of our knowledge

and belief, were necessary for the purposes of our

audit;

(ii) In our opinion, proper books of account as required

by law have been kept by the Company, so far as

appears from our examination of those books;

(iii) The Balance Sheet, the Statement of Profit and

Loss and the Cash Flow Statement dealt with by

this report are in agreement with the books of

account;

(iv) In our opinion, the Balance Sheet, the Statement

of Profit and Loss and the Cash Flow Statement

dealt with by this report comply with the accounting

standards referred to in sub-section (3C) of Section

211 of the Companies Act, 1956;

(v) In our opinion and to the best of our information

and according to the explanations given to us, the

said financial statements, read together with the

notes thereon, give the information required by the

Companies Act, 1956, in the manner so required

and give a true and fair view in conformity with the

accounting principles generally accepted in India:

(a) in the case of the Balance Sheet, of the state

of affairs of the Company as at March 31, 2008;

(b) in the case of the Statement of Profit and Loss,

of the profit of the Company for the year ended

on that date; and

(c) in the case of the Cash Flow Statement, of the

cash flows of the Company for the year ended

on that date.



Khurshed Pastakia

Place: Mumbai Partner

Date : June 20, 2008 (Membership No. 31544)

AUDITORS’ REPORT TO THE MEMBERS OF ESSAR SHIPPING PORTS &

LOGISTICS LIMITED





(Referred to in paragraph 3 of our report of even date)

In our opinion and according to the information and

explanations given to us, the nature of the Company’s

business/activities during the year are such that clauses

(vi), (viii), (xii), (xiii), (xiv), (xviii), (xix) and (xx) of para 4 of

the Order are not applicable to the Company.

1. In respect of its fixed assets:

a. The Company has maintained proper records

showing full particulars including quantitative details

and situation of its fixed assets.

b. The fixed assets were physically verified during the

year by the management in accordance with a

programme of verification, which in our opinion

provides for physical verification of all the fixed

assets over a period of three years, having regards

to the size of the Company and nature of its

business. According to the information and

explanations given to us, no material discrepancies

were noticed on such verification.

c. There was no substantial disposal of fixed assets

during the year.

2. In respect of its inventories:

a. As explained to us, inventories were physically

verified during the year by the management at

reasonable intervals.

b. In our opinion and according to the information and

explanations given to us, the procedures of physical

verification of inv

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