MIRA INFORM REPORT

Report Date :

09.05.2011

IDENTIFICATION DETAILS

Name :	VARUN SHIPPING COMPANY LIMITED

Registered Office :	Laxmi Building, 6, Shoorji Vallabhdas Marg, Ballard Estate, Mumbai - 400 001, Maharashtra

Country :	India

Financials (as on) :	31.03.2010

Date of Incorporation :	29.01.1971

Com. Reg. No.:	11-14985

Capital Investment / Paid-up Capital :	Rs. 1500.078 Millions

CIN No.: [Company Identification No.]	L61100MH1971PLC014985

TAN No.: [Tax Deduction & Collection Account No.]	MUMV00108D

PAN No.: [Permanent Account No.]	AAACV1658C

Legal Form :	Public limited liability company. Company’s shares ar listed on the stock Exchange.

Line of Business :	Subject is engaged in the business as Owning and Operating Ships.

No. of Employees :	750 [Approximately]

RATING & COMMENTS

	MIRA’s Rating :			Ba (51)
RATING			STATUS		PROPOSED CREDIT LINE
41-55		Ba	Overall operation is considered normal. Capable to meet normal commitments.		Satisfactory

Maximum Credit Limit :	USD 32400000

Status :	Satisfactory

Payment Behaviour :	Usually correct

Litigation :	Clear

Comments :	Subject is a well-established company having satisfactory track. Directors are reported to be a experienced and respectable businessmen. Trade relations are reported as fair. Business is active. Payment are usually correct and as per commitments. The company can be considered normal for business dealings at usual trade terms and conditions

NOTES :

Any query related to this report can be made on e-mail : infodept@mirainform.com while quoting report number, name and date.

INFORMATION DECLINED BY

Management Non Cooperative

LOCATIONS

Registered Office :	Laxmi Building, 6, Shoorji Vallabhdas Marg, Ballard Estate, Mumbai - 400 001, Maharashtra, India
Tel. No.:	91-22-66350100-109
Fax No.:	91-22-66350274 / 280
	secretarial@varunship.com investors@varunship.com
Web site:	http://www.varunship.com

Branches:	5, Shenton Way, #25-03 and 25-04, UIC Building, Singapore 068808
Tel. No.:	65-62211290
Fax No.:	65-62213915

DIRECTORS

As On 04.08.2010

Name :	Mr. Charles Cayzer
Designation :	Director

Name :	Mr. Arun Mehta
Designation :	Chairman and Managing Director

Name :	Mr. Yudhishthir D. Khatau
Designation :	Vice Chairman and Managing Director

Name :	Mr. Khurshed M. Thanawalla
Designation :	Director

Name :	Mr. C. M. Maniar
Designation :	Director

Name :	Mr. Praveen Singh
Designation :	Director

Name :	Dr. A. K. Bhattacharya
Designation :	Director

KEY EXECUTIVES

Name :	Ms. Manali Parekh
Designation :	Vice President – Corporate affairs and company secretary.

MAJOR SHAREHOLDERS / SHAREHOLDING PATTERN

As on 31.03.2011

Names of Shareholders	No. of Shares	Percentage of Holding
(A) Shareholding of Promoter and Promoter Group
(1) Indian
Bodies Corporate	26557423	17.70
Sub Total	26557423	17.70
(2) Foreign
Bodies Corporate	33350000	22.23
Sub Total	33350000	22.23
Total shareholding of Promoter and Promoter Group (A)	59907423	39.94
(B) Public Shareholding
(1) Institutions
Mutual Funds / UTI	11,010	0.01
Financial Institutions / Banks	212060	0.14
Venture Capital Funds	1500000	1.00
Insurance Companies	10050528	6.70
Foreign Institutional Investors	13858436	9.24
Sub Total	25632034	17.09
(2) Non-Institutions
Bodies Corporate	8067760	5.38
Individuals
Individual shareholders holding nominal share capital up to Rs. 0.100 million	36395663	24.26
Individual shareholders holding nominal share capital in excess of Rs. 0.100 million	14717967	9.81
Any Others (Specify)
Non Resident Indians	5286926	3.52
Sub Total	64468316	42.98
Total Public shareholding (B)	90100350	60.06
Total (A)+(B)	150007773	100.00
(C) Shares held by Custodians and against which Depository Receipts have been issued	-	-
(1) Promoter and Promoter Group	-	-
(2) Public	-	-
Sub Total	-	-
Total (A)+(B)+(C)	150,007,773	100.00

BUSINESS DETAILS

Line of Business :	Subject is engaged in the business as Owning and Operating Ships.

Product Description:	Operation of Ships

GENERAL INFORMATION

No. of Employees :

750 [Approximately]

Bankers :

· State Bank of India

Address: Madame Cama Road, Mumbai -400 001, Maharashtra, India

· Bank of India

· Bank of Baroda

· Axis Bank Limited

· ICICI Bank Limited

Facilities :

Secured Loans
Term Loans from Financial Institutions :	31.03.2010 (Rs. in millions)	31.03.209 (Rs. in millions)
Secured by a charge on one of the Company’s ships	200.000	21.283
Term Loans from Banks :
Secured by a charge on some of the Company’s ships and receivables thereof	18604.626	24278.139
Secured by a charge on receivables of one of the Company’s ships	747.742	0.000
Secured by a charge on some of the Company’s ships and a Director’s Guarantee	1600.000	0.000
Secured by a charge on one of the Company’s ships, receivables thereof and a Director’s guarantee (since released)	1141.233	0.000
Secured by a charge on some of the Company’s ships	4692.182	4168.967
Overdraft facility with bank secured by a charge on one of the Company’s ships and personal guarantee of a Director.	25.302	0.000
Overdraft facility with bank to be secured by a charge on one of the Company’s ships	7.368	0.000
Total:	27018.453	28468.389

Unsecured Loans	31.03.2010 (Rs. in millions)	31.03.209 (Rs. in millions)
From others	375.000	0.000
Total	375.000	0.000

Banking Relations :

Good

Auditors :

Name :

Messrs Sorab S. Engineer and Company

Chartered Accountant

Address :

Ismail Building, 381, Dr. D. Naoroji Road, Mumbai - 400 001, Maharashtra

Wholly Owned Subsidiary :

VSC International Pte. Limited (ceased to be wholly owned subsidiary on 30.03.2010)

Associates :

Tarun Shipping and Industries Limited

Companies under common control of the promoters :

Varun Corporation Limited
Realpoint (Mauritius) Limited

Companies with which no transactions have taken place during the period :

Sunbeam Taic Private Limited
Yuka Plantations Private Limited

CAPITAL STRUCTURE

As On 31.03.2010

Authorised Capital :

No. of Shares	Type	Value	Amount
300,000,000	Equity Share	Rs.10/- each	Rs.3000.000 Millions
2,000,000	Preference Shares	Rs.100/- each	Rs.200.000 Millions
		Total	Rs. 3200.000 Millions

Issued Capital, Subscribed & Paid-up Capital :


150,007,773	Equity Share	Rs.10/- each	Rs. 1500.078 Millions

Out of the above:-

720000 Equity Shares of Rs.10 each were issued as fully paid-up Bonus Shares by Capitalization of Reserves in earlier years.

FINANCIAL DATA

[all figures are in Rupees Millions]

ABRIDGED BALANCE SHEET

SOURCES OF FUNDS		31.03.2010	31.03.2009	31.03.2008
SHAREHOLDERS FUNDS
1] Share Capital		1500.078	1500.078	1499.997
2] Share Application Money		0.000	0.000	0.000
3] Reserves & Surplus		6619.506	6633.921	7648.365
4] (Accumulated Losses)		0.000	0.000	0.000
NETWORTH		8119.584	8133.999	9148.362
LOAN FUNDS
1] Secured Loans		27018.454	28468.389	22008.203
2] Unsecured Loans		375.000	0.000	0.000
TOTAL BORROWING		27393.454	28468.389	22008.203
DEFERRED TAX LIABILITIES		0.000	0.000	0.000
FINANCE LEASE OBLIGATION		20.473	0.000	0.000
FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE		52.614	0.000	0.000
TOTAL		35586.125	36602.388	31156.565

APPLICATION OF FUNDS

FIXED ASSETS [Net Block]		29469.043	35361.552	31298.043
Capital work-in-progress		0.000	0.000	0.000

FOREIGN CURRENCY MONETARY ITEM TRANSLATION DIFFERENCE		0.000	16.529	0.000
INVESTMENT		422.293	207.491	207.490
DEFERREX TAX ASSETS		0.000	0.000	0.000

CURRENT ASSETS, LOANS & ADVANCES
	Inventories	0.000	0.000	0.000
	Sundry Debtors	3319.240	617.334	561.499
	Cash & Bank Balances	340.609	931.276	374.552
	Other Current Assets	160.993	132.667	125.789
	Loans & Advances	3571.171	1158.655	154.612
Total Current Assets		7392.013	2839.932	1216.452
Less : CURRENT LIABILITIES & PROVISIONS
	Sundry Creditors	871.266	1231.255	524.565
	Other Current Liabilities	196.132	184.085	86.875
	Provisions	629.826	407.776	953.980
Total Current Liabilities		1697.224	1823.116	1565.420
Net Current Assets		5694.789	1016.816	(348.968)

MISCELLANEOUS EXPENSES		0.000	0.000	0.000
TOTAL		35586.125	36602.388	31156.565

PROFIT & LOSS ACCOUNT

	PARTICULARS		31.03.2010	31.03.2009	31.03.2008
	SALES
		Income	6662.227	9146.591	9451.900
		Profit / loss on sale of ships and other assets	2304.240	280.155	19.170
		Other Income	59.478	12.771	25.575
		TOTAL (A)	9025.945	9439.517	9496.645

Less	EXPENSES
		Operating costs	3672.894	3692.321	2999.683
		Administration costs	587.368	716.015	577.462
		Impairment on certain ships	0.000	93.822	126.229
		Exceptional Item	(70.106)	(500.000)	0.000
		TOTAL (B)	4190.156	4002.158	3703.374

Less	PROFIT BEFORE INTEREST, TAX, DEPRECIATION AND AMORTISATION (A-B) (C)		4835.789	5437.359	5793.271

Less	FINANCIAL EXPENSES (D)		1931.994	1454.801	1395.104

	PROFIT BEFORE TAX, DEPRECIATION AND AMORTISATION (C-D) (E)		2903.795	3982.558	4398.167

Less/ Add	DEPRECIATION/ AMORTISATION (F)		2364.933	2711.404	2119.173

	PROFIT BEFORE TAX (E-F) (G)		538.862	1271.154	2278.994

Less	TAX (I)		413.333	43.099	21.200

	PROFIT AFTER TAX (G-I) (J)		125.529	1228.055	2257.794

Add	PREVIOUS YEARS’ BALANCE BROUGHT FORWARD		949.334	921.626	813.362

Less	TRANSFER TO TONNAGE TAX RESERVE UNDER SECTION 115 VT OF THE INCOME TAX ACT 1961		0.000	200.000	460.000

Less	APPROPRIATIONS
		Dividend and tax on distributed profits of previous year	0.007	0.000	12.185
		Transfer to General Reserve	0.000	122.830	800.000
		Interim dividends paid on equity shares	0.000	525.033	449.994
		Tax on interim dividends paid on equity shares	0.000	89.231	76.458
		Proposed final dividend equity shares	120.006	225.012	300.015
		Tax on proposed final equity dividend	19.932	38.241	50.988
	BALANCE CARRIED TO THE B/S		934.918	949.334	921.626

	Earnings Per Share (Rs.)		0.84	8.19	15.19

QUARTERLY RESULTS

Particulars	30.06.2010 1^st Quarter	30.09.2010 2^ndQuarter	31.12.2010 3^rd Quarter
Net Sales	2405.700	2431.270	2201.540
Total Expenditure	1152.360	1492.380	1194.050
PBIDT (Excl OI)	1253.340	938.890	1007.490
Other Income	50.660	57.180	107.650
Operating Profit	1304.000	996.070	1115.140
Interest	535.750	516.210	523.500
Exceptional Items	0.000	0.000	0.000
PBDT	768.250	479.860	591.640
Depreciation	514.280	463.810	434.490
Profit Before Tax	253.970	16.050	157.160
Tax	18.480	10.290	38.970
Provisions and contingencies	0.000	0.000	0.000
Profit After Tax	235.490	5.760	118.190
Extraordinary Items	0.000	0.000	0.000
Prior Period Expenses	0.000	0.000	0.000
Other Adjustments	0.000	0.000	0.000
Net Profit	235.490	5.760	118.190

KEY RATIOS

PARTICULARS		31.03.2010	31.03.2009	31.03.2008
PAT / Total Income	(%)	1.39	13.01	23.77

Net Profit Margin (PBT/Sales)	(%)	8.09	13.89	24.11

Return on Total Assets (PBT/Total Assets}	(%)	1.46	3.33	7.01

Return on Investment (ROI) (PBT/Networth)		0.07	0.16	0.25

Debt Equity Ratio (Total Liability/Networth)		3.58	3.85	2.58

Current Ratio (Current Asset/Current Liability)		4.36	1.56	0.78

LOCAL AGENCY FURTHER INFORMATION

SUNDRY CREDITORS DETAILS

(Rs. In Millions )

Particulars

31.03.2010

31.03.2009

Sundry Creditor

871.266 1231.255

Contingent Liabilities

The following are considered as contingent liabilities by the company and disclosed by way of Notes to the accounts:-

i) Guarantees executed by the company's bankers.

ii) Demands received from statutory authorities but not accepted by the company.

iii) Claims against the company not acknowledged as debts.

iv) Estimated amount of contracts remaining to be executed on capital account and not provided for.

v) Corporate guarantee issued by the company on behalf of erstwhile subsidiary.

Particulars	31.03.2010	31.03.2009
a) On account of guarantees executed by the Company’s bankers secured by charge on some of the Company’s vessels and fixed deposits of Rs 246.24 lacs (Previous year Rs 41.00 lacs)	65.357	37.800
Claims against the Company not acknowledged as debts	100.312	87.735
Corporate guarantees to the banks on behalf of VSC International Pte Ltd – erstwhile wholly owned subsidiary company in respect of loans taken for acquisition of ships.	1714.940	0.000
Deputy Commissioner (CT) Chennai had raised a demand for Rs. 83,284,324 for earlier years on account of levy of Commercial tax on Charter-hire in respect of some of our ships. The Company was in appeal against the same and the Appellate authority has given the ruling in favour of the Company. However the Deputy Commissioner (CT) Chennai had preferred an appeal against the same with Sales Tax Appellate Tribunal, Chennai. The Appellate Tribunal vide its Order dated 10th November, 2008, has allowed the Appeal filed by the Revenue and has given the ruling in favour of the department. Company has been advised that this demand is not sustainable and accordingly Company has filed an Appeal against the said Order in the Madras High Court. Hence no provision has been made in the accounts.
Outstanding commitment on capital account Rs. NIL (previous year – Rs. 3,901,615,000) against which an advance payment of Rs NIL (previous year - Rs. 541,768,750 ) has been made during the year.

HISTORY AND DEVELOPMENT

On 29.01.1971, they were incorporated in India as a private company limited by shares under the name of Varun Shipping Company Private Limited under the Companies Act, 1956 with registration number 14985 of 1970-71. They changed their name to Varun Shipping Company Limited on 18.02.1972 when they converted into a public limited company.

They commenced their shipping business in March 1973 with the acquisition of one product tanker and presently own/operate a diversified fleet of 19 vessels.

In 1986, they became a publicly held company with their initial public equity offering in India and listing on Bombay Stock Exchange Limited, Ahmedabad Stock Exchange Limited and the Delhi Stock Exchange Association Limited. In 1988, they were listed on The Calcutta Stock Exchange Association Limited. They are committed to quality assurance and safety at sea. They received and have maintained their ISO 9001:2000 certification since 1995 for shore-based ship management services. They voluntarily participated in the United States of America Coast Guard sponsored Automated Mutual-assistance Vessel Rescue (AMVER) System and one of their previously-owned vessels was awarded the Certificate of Merit by AMVER 9 times.

In July 1995, they incorporated VSC International Pte Limited, as a wholly-owned subsidiary, in Singapore to avail ourselves of international finance and tax benefits available to Singapore-based shipping companies.

In 2003, they were listed on National Stock Exchange of India Limited. With this listing, their Company was listed on 5 stock exchanges in India.

As at 30.09.2006, they were the largest owner of LPG tonnage in India and they believe they continue to own the largest LPG fleet in India with 79% of the total LPG tonnage (in dwt terms) operating under the Indian flag. In November 2005, they completed the purchase of a modern mid-size LPG carrier, the Maharshi Bhavatreya under their Singapore subsidiary, which is their Group’s 11th LPG carrier.

On 07.07.2005, they registered their branch office in Singapore. The initial business activity of the branch is to provide the technical management services to some of the vessels of their Company.

Their Group owns a diversified fleet of 19 vessels comprising 12 LPG carriers, 3 crude oil tankers, 1 product tankers, and 3 AHTSs. They provide transportation of diversified cargoes globally as well as along the Indian coast and provide support services to the oil exploration industry. In April, 2006, their Company was given the award of “Fastest Expanding Indian Shipping Company” by the National Maritime Day Celebrations Committee (Central) formed by the Directorate General of Shipping, The Government of India, Ministry of Shipping, Road Transport and Highways.

They have been profitable and able to distribute dividends uninterruptedly to their shareholders for the last 23 years.

OPERATIONS:

The Directors have recommended payment of dividend of Rs. 0.80 per equity share for the year ended 31.03. 2010, which will absorb Rs.120.01 million. Additional amount of Rs.19.930 million will be absorbed towards dividend tax. After the above appropriations, the Directors propose to carry forward a balance of Rs. 934.920 million in the Profit and Loss Account.

Freight and charter hire income was Rs. 6662.230 million compared to Rs. 9146.590 million for the year ended 31.03. 2009. Profit before tax was Rs. 538.860 million for the year ended 31.03.2010 as against Rs.1271.150 million during the preceding year. Net profit after tax was Rs.125.530 million for the year ended 31.03. 2010 as against Rs.1228.050 million during the preceding year.

During the financial year, the Company subscribed to and was allotted additional 6,376,750 ordinary shares of Rs. 1 each of VSC International Private Limited, Singapore (VSCI) when it was a wholly owned subsidiary of the Company.

VSCI, the erstwhile wholly owned subsidiary of the Company has become an associate in March, 2010 consequent upon the sale of 51 percent of the paid-up share capital held in it by the Company. The Company continues to hold 49 per cent of the paid-up share capital of VSCI.

During the financial year ended 31.03.2010, Company acquired one newly built, large modern and sophisticated Anchor Handling Towing and Supply (AHTS) vessel, Suchandra in April, 2009.

During the financial year ended 31.03.2010, Company sold five of its vessels, namely, Maharshi, Shivatreya, Maharshi Labhatreya, Maharshi Dattatreya, Maharshi Bhavatreya and Maharshi Devatreya to the associate Company, out of which three vessels have been taken back on Bareboat Charter (BBC) and/ or Bareboat Charter cum Demise (BBCD) basis. The Company also phased out its 1976 built gas carrier, namely, Maharshi Vasishth during the financial year.

The Company presently owns and/or operates a well diversified fleet of 20 vessels. The LPG carrier fleet presently owned by the Company is the largest in India in terms of both fleet size and cargo carrying capacity of 187,978 dwt (248,638 cbm) and forms approximately 78 per cent of total LPG tonnage under Indian flag. The Company has transported approximately 63 per cent of all LPG cargoes imported into the country by public sector undertakings marketing LPG in India during the year ended 31.03.2010.

In October, 2009 the Company received “The Tanker Operator Award” at the Seatrade Middle East and Indian Subcontinent Awards 2009 ceremony held at Dubai.

In October, 2009 the Company received “Training and Crewing Award” at the 11th Lloyds List Asia Awards 2009 ceremony held at Singapore.

In November, 2009 the Company received “The Energy Award” at the Llyods List Middle East and Indian Subcontinent Awards-2009 ceremony held at Dubai.

In June, 2009, Mr. Yudhishthir D. Khatau, Vice Chairman and Managing Director was elected as “President Designate” of the Baltic and International Maritime Council (BIMCO).

In March, 2010 Mr. Yudhishthir D. Khatau, Vice Chairman and Managing Director received “Young Entrepreneur of the Year" award at the Shipping, Marine and Ports 2010 Leadership and Excellence Awards ceremony held at Mumbai.

UNAUDITED FINANCIAL RESULTS FOR THE QUARTER ENDED 31.12.2010

Particulars	For the Quarter ended 31.12.2010	9 months ended 31.12.2010
Income
a) Freight and Charter Hire	1222.537	4085.175
b) Profit on sale of Ship and other assets [net]	979.000	2953.335
Total Operating Income	2201.537	7038.510
Expenditure
Bunker cost	132.865	579.533
Port Expenses	39.979	126.824
Stores Lubes and Victualing	61.209	225.669
Repairs And Maintenance Including cost of spares and survey	139.224	626.550
Hire of inchartered Ships	435.272	996.121
Employees Cost	273.489	852.192
Depreciation	434.486	1412.579
Other Expenditure	112.014	431.904
Total Expenditure	1628.538	5251.372
Profit / (Loss) From Operations before other Income Interest & Exceptional Items	572.999	1787.138
Other Income	107.651	238.038
Profit/(Loss) before Interest and Exceptional items	680.650	2025.176
Interest	523.495	1598.006
Profit / (Loss) after interest before Exceptional items	157.155	427.170
Exceptional Items	0.000	0.000
Profit / (Loss) From Ordinary activities before Tax	157.155	427.170
Tax Expenses	38.968	67.741
Net Profit/(Loss) From Ordinary activities after Tax	118.187	359.429
Extraordinary Items	0.000	0.000
Net Profit/(Loss) for the period	118.187	359.429
Paid Up Equity Share Capital ( Face Value of the share Rs.10/- each )	1500.078	1500.078
Reserves (Excluding Revaluation Reserves)
Public Share Holding
Before Extraordinary Items
-Basic	0.79	2.40
-Diluted	--	--
After Extraordinary Items
-Basic	0.79	2.40
-Diluted	--	--
Average of Public Share Holding
- Number of Shares	89293350	89293350
- Percentage of shareholding	59.53	59.53
Promoters and Promoter group share holding
a) Pledged / Encumbered
- Number of Shares	22086605	22086605
- Percentage of share (as a % of the total shareholding of promoter and promoter group)	36.38	36.38
- Percentage of shares(as a % of the total share capital of the company)
b) Non-encumbered
- Number of Shares	38627818	38627818
- Percentage of Share (as a % of the total shareholding of promoter and promoter group)	63.62	63.62
- Percentage of Share (as a % of the total share capital of the company)	25.75	25.75

Notes :

During the quarter ended 31.12.2010, company has:

A] sold 2 anchor handling towing and supply vessels

B] made investment in a new joint venture shipping enterprise Viz varun Cyprus Limited, Cyprus.

Subsequent to the quarter ended 31.12.2010

A] the company has entered in to a memorandum of Agreement for acquiring a very large gas carries [VLGC]

B] made investment in a new joint venture shipping enterprise Viz Sea Fidelity Shipping Company Limited, Cyprus

The company has registered under the tonnage tax system under chapter XIIG of the income tax Act, 1981 an d its tax liability is determined under that chapter. Accordingly, the board considered it prudent to make the tax provision on tonnage tax basis. The provision for tax also includes tax liability of Rs.42.283 million on other income. However, incremental liability of minimum alternate tax, for the quarter estimated at Rs.178.774 millions arising on account of sale of ship will be monitored closely and appropriate tax provision will be made in the subsequent quarter.

There was 1 investor complaint pending as on September 30, 2010, 28 investor complaints were received during the quarter and 27 complaints were disclosed off during the quarter. Hence 2 complaints unresolved on 31.12.2010

The company has engaged primarily in shipping business and there are no separate reportable segment as per accounting standard 17.

Figures for the previous accounting period have been regrouped wherever necessary.

The above results have been reviewed by the statutory auditor and the audit committee and have been taken on record at the meeting of the board of directors held on 11.02.2011

MANAGEMENT DISCUSSION AND ANALYSIS:

Industry Structure and Development:

About 90 per cent of the world trade by volume is carried through sea transportation. Marine transportation of energy creates vital link between remote energy supplies and markets.

The international shipping industry transports hydrocarbons and bulk commodities in wet bulk, dry bulk, liquefied gas, bulk chemicals and container sectors. Further, specialized vessels such as ferries, cruise ships, car carriers and heavy lift ships are deployed to transport passengers, automobiles and project cargoes the world over. In addition thereto, offshore support vessels are used to provide services to offshore oil and gas exploration and production industry. The Company owns/operates a well diversified fleet of 20 vessels in the oil, gas and offshore support services sectors.

According to Platou Report-2010, late in 2008, there was a widespread fear that the global economy could go into a depression like the one they had in the 1930s. Fortunately, the global economy is expanding again after the steepest drop in economic activity and trade since World War II. The triggers for this recovery are wide-ranging public interventions across advanced and emerging economies.

According to Platou Report–2010, the sustained strong growth trend in the world economy from 2003 to the summer of 2008 was driving tonnage demand for the world merchant fleet by 8 per cent per year, on average. Despite an accelerating fleet growth the capacity utilization rate was persistently above 90 per cent, which they define as full capacity utilization. Parallel to the steep fall in economic activity tonnage demand dropped. Their preliminary estimates indicate a fall of 3.3 per cent, which they must characterize as moderate compared with IMF’s estimate for world trade of -11.9 per cent. The large gap in these numbers is caused by the fact that their estimate for tonnage demand is based on seaborne trade in volume terms, transport distances and productivity of the world merchant fleet, while IMF’s estimate for world trade is based on the sum of exports and imports in value terms deflated by a detailed price deflator system.

According to Platou Report-2010, world shipping is much more dominated by raw materials than the total world trade and the trade of raw materials was well maintained, driven by emerging economies, China in particular. These countries managed much better in this financial crisis than advanced countries. While OECD countries experienced a decline in GDP of 3.5 per cent in 2009, developing Asia had a growth of 6.2 per cent and China 8.7 per cent. In addition, there has been a building of raw material inventories that has required more tonnage than running consumption should indicate. There was a fall in utilization rate for the world total fleet from 90 per cent in 2008 to 81 per cent in 2009.

According to Platou Report-2010, demand for new tonnage in 2009 continued its falling trend since the financial crisis of the previous year. From a peak in new orders in 2007, the level of contracting was down by 85 per cent in 2009.

According to Platou Report-2010, the bulk carrier market in 2009 turned out better than expected even if freight rates were 60 per cent lower than in 2008.

According to Platou Report-2010, in the tanker market, a 7 per cent fleet growth combined with a 5 per cent decline in seaborne oil trade and, in addition to, reduced transport distances, should apparently have resulted in a huge overcapacity. This did not happen due to a persistent overproduction of oil that required the use of 5 per cent of the tanker fleet for floating oil storage. The dramatic drop in oil consumption as a consequence of the deep recession in the global economy enforced a large cutback in OPEC output, which fell by 8 per cent from 2008 to 2009. The utilization rate for the tanker fleet fell from 91 per cent in 2008 to 84 per cent in 2009.

The container market continued to be in dire straits. It is observed that sectors transporting raw materials (bulkers and tankers) have been more favourably positioned than sectors transporting manufactured goods (container and car carriers).

LPG markets began a transition period in 2008. The year 2009 was the end of this beginning and start of a new era of sharply rising seaborne LPG supplies.

According to Platou Report-2010, after a rally that began in autumn 2004, the term chartering market started to decline in January, 2009 in the offshore sector. Term charter rates have declined on average 40-50 per cent for contracts with about a one-year firm period. At the same time, spot rates in the North Sea were on average 65 per cent lower than the previous year. The main factors for the decrease in rates are fewer requirements issued by oil companies, drilling rig operators that have been canceling and delaying offshore development programs and an oversupply of ships due to the tidal wave of new building deliveries. Overall, ship owners have been vigorously competing to keep their vessels on charter in the short term and this has contributed to pushing rates down. As per the said Report, despite last year’s dip, demand for supply vessels in 2010 is expected to increase.

OUTLOOK:

According to Platou Report-2010, the global economic recovery is not as synchronized as the downturn was. The upturn in the major emerging economies, especially in Asia and particularly in China is now well established and supporting the OECD economies. The US economy is recovering on the back of policy stimulus and strong net exports and is expected to reach a growth rate of close to 3 per cent in 2010. Also, in Japan, the economy has recovered and an output growth of 1.7 per cent is now expected. Forecasters are predicting a 10 per cent growth in China in 2010. Activity in India is gaining momentum, driven by increased exports and business investments and growth is predicted to reach a level of between 7 and 8 per cent in 2010. In Brazil, supportive policy measures are predicted to steam up private consumption and bring economic growth upto the 4 to 5 per cent level in the coming years. Russia was harder hit than any other large emerging economy in 2009 with a GDP decline of 8 per cent. Growth has now resumed, driven by a rebound in commodity prices, policy stimulus and stronger external demand and predictions point to 3 to 4 per cent growth in 2010. Global economic growth will, according to these forecasts, be close to 4 per cent in 2010 and strengthen further to between 4.5 and 5 per cent in the next two years.

The world GDP is expected to return to positive growth in 2010 and should thereby help push tonnage demand for the world merchant fleet into growth again. However, huge order books and difficulties in financing new buildings are likely to dampen demand for new tonnage.

According to Platou Report-2010, for tanker markets, prospects are again very uncertain, not only on the demand side but now also on the supply side. Tanker markets are at a utilization rate level that could generate a lot of fluctuations in the freight market. World economy, oil consumption, floating storage and deliveries of new buildings are all important ingredients which, headed in the right direction, have the potential to generate an interesting tanker market in 2010.

Preliminary figures for LPG consumption in 2009 in major consuming nations have shown a mixed trend. While consumption in emerging Asian economies was expected to rise, mature economies’ appetite for LPG appeared to be slowing. While South Korea, China, India, Indonesia and Vietnam increased their LPG intake, Japan was looking for alternative sources of energy, from both economic and environmental perspective. Interestingly, though not surprisingly, Saudi Arabia emerged as a major LPG consuming destination in 2009.

It is envisaged that the year 2010 will see better utilization of LPG vessels. Due to large expansion of Qatar Gas and Ras Gas LNG plants and establishment of new LNG export/import terminals, more LPG production and transportation is expected to take place during the times to come.

Seaborne LPG supply is forecast to rise 47 per cent to 83 mm t/year between 2008 and 2016. The growth – a difference of 27 mm t/year of exports in 2016 v/s 2008 – will alter the way LPG markets trade, changing existing trade dynamics and forcing product to new buyers. Government of India in October, 2009 announced the Rajiv Gandhi Gramin LPG Vitrak Scheme. This scheme aims to enhance LPG usage in India with the number of connections increasing from almost 110 million to 165 million by 2015. This is likely to generate additional demand for import of LPG into India.

According to Platou Report-2010, the last few years depletion of existing offshore oil production has on an average been 1.5 m bbls/day. This is the exact number of new barrels that is yearly coming on stream offshore. The oil companies are expected to increase their exploration and production budgets by 5 to 10 per cent in 2010 and with compelling economics and cashflow, their future ambitions are to significantly add more oil production offshore.

According to Platou Report-2010, world will most likely see strongly differentiated market conditions between segments. They believe trade of raw materials will continue on its more favourable trend than trade of manufactured goods.

Fixed Assets

· Fleet

· Premises

· Office Equipment

· Furniture and Fixtures

· Vehicles

· Land

WEBSITE DETAILS:

CORPORATE PROFILE:

Subject is a leading Indian private sector shipping company owning and operating vessels in the hydrocarbon sector. Varun is a global player in energy transportation and offshore exploration and production (E and P) support services.

Varun’s freight and charter hire income for the year ended 31.03.2010 was Rs. 6,662.23 million (US$ 139.76 million) and its net profit was Rs. 125.53 million (US$ 2.63 million).

Varun has a track record of being profitable and distributing dividends uninterruptedly to its shareholders for the past 26 years.

Varun owns/operates a fleet of 20 vessels, comprising 10 LPG carriers, 3 crude oil tankers and 7 anchor handling towing and supply (AHTS) vessels. With its well diversified fleet, Varun is able to offer comprehensive transportation and support solutions to its valued customers, across the entire hydrocarbon value chain.

Varun is the largest owner of LPG tonnage in India with around 68% of the total tonnage (in dwt terms) presently operating under the Indian flag. Varun also owns the largest LPG carrier under the Indian flag. Varun transported approximately 63 per cent of all Public Sector Undertaking (PSU) cargoes brought into India during the period from April, 2008 to March,2009.

Varun is the second largest owner of tonnage in the global mid- size fully refrigerated (20,000-50,000cu.m) LPG carrier fleet category and owns 12.70 per cent of the total tonnage in that category. Globally, in the fully refrigerated LPG carriers category, Varun is also the fourth largest owner in terms of number of vessels and sixth largest in terms of cargo carrying capacity.

Varun owns five large, modern and powerful AHTS vessels with the highest bollard pull under Indian flag. It has established a leadership position in the large AHTS sector in the Asian region. Varun is the first Indian company to operate large AHTS vessel in the North Sea.

Varun has a highly professional and well qualified team of management in the areas of technical and commercial operations, finance, secretarial, legal, information technology and human resources.

Varun’s corporate headquarters and registered office are in Mumbai. Varun has also established a branch office in Singapore in 2005.

In April 2006, Varun was honoured with the prestigious award of “The Fastest Expanding Indian Shipping Company” and Mr Arun Mehta, its Chairman and Managing Director was awarded the “Varuna Award”, by the National Maritime Day Celebrations Committee formed by The Directorate General of Shipping, Government of India.

In October, 2008, Varun was awarded the prestigious “The Marine and Offshore Services Award” at the Seatrade Middle East and Indian Subcontinent Awards, 2008 held in Dubai, UAE.

Further, in December, 2008 Varun was selected for the “Best Managed Company, India- Small Cap” award in the Corporate Governance Poll, 2008 conducted by Asiamoney.

In November 2006, Mr. Yudhishthir D. Khatau, Vice Chairman and Managing Director was awarded the 'Personality of the Year’ award at the Lloyds List Middle East/Indian Subcontinent Awards 2006 ceremony, held at Dubai.

Further, In October 2007 he was presented with 'Policy Maker of the Year' award at the awards presentation ceremony of the Seatrade India Shipping Summit-2007, held in Mumbai.

Further, in September, 2008 he received “Entrepreneur of the Year” award at the India Shipping Summit-2008 awards ceremony, held in Mumbai.

In April, 2008 one of Varun’s vessels, LPG/C Maharshi Krishnatreya received “Certificate of Excellence” and “Ship of the Year (Indian Flag in Foreign Trade)” award by National Maritime Day Celebrations (Central) Committee, Mumbai. This award is given to those ships which come out successfully through various inspections, surveys and audits for PSC, FSI, ISM, ISPS and MARPOL, thereby depicting their clean image and efficiency of the Master and the crew . This vessel had also undertaken search and rescue operations in July, 2007 when a Korean vessel M.V. Orchid Sun, had sunk in the sea of Oman and was successful in saving the lives of two crew members.

PRESS RELEASE

VARUN SHIPPING’S Q3 PROFIT BEFORE TAX IS Rs.15.72 CRORES

Varun Shipping’s profit before tax for the quarter ended 31st December, 2010 was Rs.157.200 Millions and for nine months period ended 31st December, 2010 was Rs.427.200 Millions.

Earnings Per Share (EPS) (basic) for the quarter ended 31st December, 2010 was Rs.07.900 and for nine months period ended 31st December, 2010 was Rs.24.000. Company’s freight and charter hire income for the quarter ended 30th September, 2008 increased by 275.100 per cent to Rs.2568.500 Millions as compared to Rs.2014.300 Millions for the corresponding quarter in the previous year.

The company presently owns and/or operates a well diversified fleet of 20 vessels comprising of 10 LPG carriers, 3 double hull aframax crude tankers and 7 Anchor Handling Towing Supply (AHTS) vessels.

In November, 2010 company received “Safety at Sea” award at the Lloyd’s List Middle East & Indian Sub-continent Awards - 2010 ceremony, held at Dubai.

In January, 2011, company signed a Memorandum of Agreement for purchase of a Very Large Gas Carrier and the vessel is expected to be delivered in March-April, 2011.

Date : 11th February, 2011

CMT REPORT (Corruption, Money Laundering & Terrorism]

The Public Notice information has been collected from various sources including but not limited to: The Courts, India Prisons Service, Interpol, etc.

1] INFORMATION ON DESIGNATED PARTY

No records exist designating subject or any of its beneficial owners, controlling shareholders or senior officers as terrorist or terrorist organization or whom notice had been received that all financial transactions involving their assets have been blocked or convicted, found guilty or against whom a judgement or order had been entered in a proceedings for violating money-laundering, anti-corruption or bribery or international economic or anti-terrorism sanction laws or whose assets were seized, blocked, frozen or ordered forfeited for violation of money laundering or international anti-terrorism laws.

2] Court Declaration :

No records exist to suggest that subject is or was the subject of any formal or informal allegations, prosecutions or other official proceeding for making any prohibited payments or other improper payments to government officials for engaging in prohibited transactions or with designated parties.

3] Asset Declaration :

No records exist to suggest that the property or assets of the subject are derived from criminal conduct or a prohibited transaction.

4] Record on Financial Crime :

Charges or conviction registered against subject: None

5] Records on Violation of Anti-Corruption Laws :

Charges or investigation registered against subject: None

6] Records on Int’l Anti-Money Laundering Laws/Standards :

Charges or investigation registered against subject: None

7] Criminal Records

No available information exist that suggest that subject or any of its principals have been formally charged or convicted by a competent governmental authority for any financial crime or under any formal investigation by a competent government authority for any violation of anti-corruption laws or international anti-money laundering laws or standard.

8] Affiliation with Government :

No record exists to suggest that any director or indirect owners, controlling shareholders, director, officer or employee of the company is a government official or a family member or close business associate of a Government official.

9] Compensation Package :

Our market survey revealed that the amount of compensation sought by the subject is fair and reasonable and comparable to compensation paid to others for similar services.

10] Press Report :

No press reports / filings exists on the subject.

CORPORATE GOVERNANCE

MIRA INFORM as part of its Due Diligence do provide comments on Corporate Governance to identify management and governance. These factors often have been predictive and in some cases have created vulnerabilities to credit deterioration.

Our Governance Assessment focuses principally on the interactions between a company’s management, its Board of Directors, Shareholders and other financial stakeholders.

CONTRAVENTION

Subject is not known to have contravened any existing local laws, regulations or policies that prohibit, restrict or otherwise affect the terms and conditions that could be included in the agreement with the subject.

FOREIGN EXCHANGE RATES

Currency	Unit	Indian Rupees
US Dollar	1	Rs.44.78
UK Pound	1	Rs.73.42
Euro	1	Rs.65.27

SCORE & RATING EXPLANATIONS

SCORE FACTORS	RANGE	POINTS
HISTORY	1~10	6
PAID-UP CAPITAL	1~10	5
OPERATING SCALE	1~10	6
FINANCIAL CONDITION
--BUSINESS SCALE	1~10	6
--PROFITABILIRY	1~10	5
--LIQUIDITY	1~10	6
--LEVERAGE	1~10	6
--RESERVES	1~10	6
--CREDIT LINES	1~10	5
--MARGINS	-5~5	-
DEMERIT POINTS
--BANK CHARGES	YES/NO	YES
--LITIGATION	YES/NO	NO
--OTHER ADVERSE INFORMATION	YES/NO	NO
MERIT POINTS
--SOLE DISTRIBUTORSHIP	YES/NO	NO
--EXPORT ACTIVITIES	YES/NO	YES
--AFFILIATION	YES/NO	YES
--LISTED	YES/NO	YES
--OTHER MERIT FACTORS	YES/NO	YES
TOTAL		51

This score serves as a reference to assess SC’s credit risk and to set the amount of credit to be extended. It is calculated from a composite of weighted scores obtained from each of the major sections of this report. The assessed factors and their relative weights (as indicated through %) are as follows:

Financial condition (40%) Ownership background (20%) Payment record (10%)

Credit history (10%) Market trend (10%) Operational size (10%)

RATING EXPLANATIONS

RATING		STATUS	PROPOSED CREDIT LINE
>86	Aaa	Possesses an extremely sound financial base with the strongest capability for timely payment of interest and principal sums	Unlimited
71-85	Aa	Possesses adequate working capital. No caution needed for credit transaction. It has above average (strong) capability for payment of interest and principal sums	Large
56-70	A	Financial & operational base are regarded healthy. General unfavourable factors will not cause fatal effect. Satisfactory capability for payment of interest and principal sums	Fairly Large
41-55	Ba	Overall operation is considered normal. Capable to meet normal commitments.	Satisfactory
26-40	B	Capability to overcome financial difficulties seems comparatively below average.	Small
11-25	Ca	Adverse factors are apparent. Repayment of interest and principal sums in default or expected to be in default upon maturity	Limited with full security
<10	C	Absolute credit risk exists. Caution needed to be exercised	Credit not recommended
-	NB	New Business	-

PRIVATE & CONFIDENTIAL : This information is provided to you at your request, you having employed MIPL for such purpose. You will use the information as aid only in determining the propriety of giving credit and generally as an aid to your business and for no other purpose. You will hold the information in strict confidence, and shall not reveal it or make it known to the subject persons, firms or corporations or to any other. MIPL does not warrant the correctness of the information as you hold it free of any liability whatsoever. You will be liable to and indemnify MIPL for any loss, damage or expense, occasioned by your breach or non observance of any one, or more of these conditions

This report is issued at your request without any risk and responsibility on the part of MIRA INFORM PRIVATE LIMITED (MIPL) or its officials.

MIRA INFORM REPORT

7392.013

1697.224

5694.789

871.266

1231.255

Unit