1.17 Provisions, Contingent Liabilities and Contingent Assets
Provisions
Provisions are recognised when the Company has a present legal or constructive obligation as a result of
past events; it is probable that an outflow of resources will be required to settle the obligation; and the
amount has been reliably estimated.
Contingent liabilities
Contingent liabilities are disclosed when there is a possible obligation arising from past events, the existence
of which will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events
not wholly within the control of the Company. A present obligation that arises from past events where it is
either not probable that an outflow of resources will be required to settle or reliable estimate of the amount
cannot be made is treated as contingent liability.
Contingent Assets
A contingent assets are not recognised but disclosed, where an inflow of economic benefits is probable.
1.18 Revenue Recognition
Revenue Income is recognised in the Statement of Profit and Loss when:
• The income generating activities have been carried out on the basis of a binding agreement
• The income can be measured reliably
• It is probable that the economic benefits associated with the transaction will flow to the Company
• Costs relating to the transaction can be measured reliably
Revenue for all businesses is recognised when the performance obligation has been satisfied, which
happens upon the transfer of control to the customer at an amount that reflects the consideration to which
the Company expects to be entitled in exchange for the goods and services.
Revenue is recognised when or as performance obligations are satisfied by transferring the promised goods
or services to the customer, i.e. at a point in time or over time provided that the stage of completion can be
measured reliably.
Revenue is recognized at the transaction price Viz. the amount of consideration to which company expects to
be entitled in exchange for transferring promised goods or services to a customer, excluding amounts
collected on behalf of third parties (for example, some sales taxes).
Revenue mainly comprises freight, charter hire and demurrage revenues from the vessels.
Freight - The Company generates revenue from shipping activities. Revenues from vessels are mainly
derived from a combination of time charters and voyage charters. Revenue from a voyage charter is
recognised over time, which is determined on a percentage of voyage completion method.
Charter-hire - Revenue from a time charter is recognised on a straight-line basis over the period of the
charter.
Demurrage revenue - Freight contracts contain conditions regarding the amount of time available for
loading and discharging of the vessel. If these conditions are breached, the Company is compensated for the
additional time incurred in the form of demurrage revenue. Demurrage revenue is recognised upon delivery
of services in accordance with the terms and conditions of the contract. Upon completion of the voyage, the
Company assesses the time spent in port, and a demurrage claim based on the relevant contractual
conditions is submitted to the charterers. (Further, refer Note No 2 (g) - Demurrage).
Profit from sale of vessels - Revenue from the sale of vessel is recognised upon the transfer of control to the
buyer.
O&M contracts - The Company has entered into contracts with its customers for Operation & Management
of vessels owned by them. These are cost plus contracts and the Company is entitled for reimbursement of all
costs incurred on these vessels plus a fixed percentage of remuneration on these costs. The Company
accounts for the remuneration earned as and when the costs are incurred and booked in the accounts. The
reimbursement of costs is netted off against the relevant expense head to which the cost was originally
debited.
Interest income - Interest income from debt instruments is recognised using the effective interest rate
method. The effective interest rate is the rate that exactly discounts estimated future cash flows through the
expected life of the financial asset to the gross carrying amount of a financial asset. When calculating the
effective interest rate, the company estimates the expected cash flows by considering all the contractual
terms of the financial instrument (for example, prepayment, extension, call and similar options) but does not
consider the expected credit losses.
Dividends - Dividends are recognised in profit or loss only when the right to receive payment is established, it
is probable that the economic benefits associated with the dividend will flow to the company, and the
amount of the dividend can be measured reliably.
Cost of services rendered includes port expenses, bunkers (Fuel Oil), commissions, hire of chartered
steamers, stores, spares, repair and maintenance expenses, Insurance expenses etc.
Employee Benefit Expenses - Operating expenses, which comprise of shore staff & floating staff expenses.
Financial expenses - Financial expenses comprise interest expenses.
Other expenses - Other expenses which comprise office expenses, provisions, managements cost and other
expenses relating to administration.
1.19 Insurance, P&I and Other Claims
(a) Provision in respect of claims against the Company is made as under:-
i. In respect of collision claims and P & I claims (other than crew & cargo claims), to the extent of
deductible limit based on the assessment provided by the surveyors.
ii. In case of Cargo claims, actual claims registered and/or paid pertaining to the relevant year's
voyages as ascertained at the period end or the P&I deductible limit whichever is lower.
(b) No provision is made in respect of claims by the Company covered under Hull & Machinery insurance
and treatment of such claims is as under:-
i. Expenses on account of particular and general average claims/ damages to ships are charged off in
the period in which they are incurred.
ii. Claims against the underwriters are initially accounted for based on the admission of the claims
liability by the underwriters. The final adjustment in the recoverable amount is done on submission of
the Adjuster's report to the underwriters which reflect the recoverable claim amount from the
underwriters
(c) Claims made by the Company against other parties not covered under insurance including ship repair
yards, ship-owners, ship charterers, customs and others, etc. are recognised on realisation, due to
uncertainty in the amounts of their ultimate recovery.
1.20 Leases
A contract or parts of contracts that conveys the right to control the use of an identified asset for a period of
time in exchange for payments to be made to the owners (lessors) are accounted for as leases. Contracts are
assessed to determine whether a contract is, or contains, a lease at the inception of a contract or when the
terms and conditions of a contract are significantly changed.
Where the Company is the lessee in a lease arrangement at inception, the lease contracts are recognized as
rights-of use assets and lease liabilities are measured at present value of lease payments at initial
recognition except for short-term leases and leases of low value. The rights of use assets are depreciated on
a straight line basis over a lease term. Lease payments are discounted using the interest rate implicit in the
lease. If that rate is not readily available, the incremental borrowing rate is applied. The incremental
borrowing rate reflects the rate of interest that the lessee would have to pay to borrow over a similar term,
with a similar security, the funds necessary to obtain an asset of a similar nature and value to the right-of-use
asset in a similar economic environment. Payments associated with short-term leases and leases of low
value assets are recognised as an expense in profit & loss Account.
Where the Company is the lessor in a lease arrangement at inception, the lease arrangement will be classified
as a finance lease or an operating lease. Classification is based on the extent to which the risks and rewards
incidental to ownership of the underlying asset lie with the lessor or the lessee. Under operating lease, where
the Company is the lessor, the assets are included in the balance sheet and, where applicable, are depreciated
in accordance with the Company's depreciation policies as set out in Note 1.3 Property, plant and equipment.
Revenue arising from assets leased out under operating leases is recognised on overtime basis.
1.21 Segment Reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the Chief
Operating Decision-Maker (CODM). The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been identified as the Board of
Directors that makes strategic decisions.
1.22 Earnings Per Share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to the equity
shareholders by the weighted average number of equity shares outstanding during the period. For the
purpose of calculating Diluted Earnings per share, the net profit or loss for the period attributable to the equity
shareholders and the weighted average number of shares outstanding during the period is adjusted for the
effects of all dilutive potential equity shares.
1.23 Cash Flow Statement
Cash flows are reported using the indirect method, whereby profit before tax is adjusted for the effects of
transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments.
The cash flows from operating, investing and financing activities of the Company are segregated based on
the available information.
1.24 Government Grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that
the grant will be received and the Company will comply with all attached conditions. Government grants
relating to duty scrips on export of services (Served from India Scheme) are related to income and are
recognised in the profit or loss over the period necessary to match them with the costs that they are intended
to compensate and presented within other income.
Government grants are recognised in profit or loss on a systematic basis over the periods in which the entity
recognises as expenses the related costs for which the grants are intended to compensate.
Note 2: Critical Accounting Estimates and Judgements
Preparing the Standalone Financial Statements under Ind AS requires management to take decisions and
make estimates and assumptions that may impact the value of revenues, costs, assets and liabilities and the
related disclosures concerning the items involved as well as contingent assets and liabilities at the balance
sheet date. Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates
will, by definition, seldom equal the related actual results. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below:
a) Useful Lives of Vessels
' Management of the Company decided the estimated useful lives of vessels and respective depreciation. The
accounting estimate is based on the expected wears and tears. Wears and tears can be significantly
different following renovation each time. When the useful lives differ from the original estimated useful lives,
management will adjust the estimated useful lives accordingly. It is possible that the estimates made based
on existing experience are different to the actual outcomes within the next financial period and could cause a
material adjustment to the carrying amount of fixed assets.
b) Residual Value
Residual value is considered as 5% of original cost of Vessel. In case of other assets, the residual value, being
negligible, has been considered as nil. The residual value of vessels is reviewed every year on 31st March.
c) Impairment of Assets
The recoverable amount of an asset or a cash-generating unit is determined based on value-in-use
calculations prepared on the basis of management's assumptions and estimates
An impairment loss is recognised for the amount by which the asset's or cash generating unit's carrying
amount exceeds its recoverable amount and is recognised in the Statement of Profit and Loss. Recoverable
amount is higher of an asset's net selling price and its value in use. Value in use is the present value of
estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the
end of its useful life.
d) Defined Benefit Obligations
The present value of the defined benefit obligations depends on a number of factors that are determined on
an actuarial basis using a number of assumptions. The assumptions used in determining the net cost
(income) for post employments plans include the discount rate. Any changes in these assumptions will
impact the carrying amount of such obligations.
Discount Rate for the valuation is determined by reference to market yields at the balance sheet date on
Government Bonds. This is the rate that is used to determine the present value of estimated future cash
outflows expected to be required to settle the defined benefit obligations.
e) Provision
Estimates of the amounts of provisions recognised are based on current legal and constructive
requirements, technology and price levels. Because actual outflows can differ from estimates due to
changes in laws, regulations, public expectations, technology, prices and conditions, and can take place
many years in the future, the carrying amounts of provisions are regularly reviewed and adjusted to take
account of such changes.
f) Impairment of Trade Receivable
The methodology followed by the Company is the use of a provision matrix as a practical expedient to
measure expected credit losses on its portfolio of trade receivables. The model uses historical credit loss
experience for trade receivables i.e. this model uses ageing analysis of trade receivables as at the reporting
date.
Considering the different services provided by the company, provisioning is done segment wise basis
analysis and computation of expected credit loss for trade receivables of different segments.
Impairment loss allowance on trade receivables during the year is recognised in the Statement of Profit and
Loss.
g) Demurrage
Vessel Demurrage income due as per contractual terms is recognized. A provision on estimated basis is
made towards deduction from demurrage based on past experience of settlements.
h) Income Tax
Due to Tonnage tax regime applicable on the main part of the company's activities, resulting in a lower
income tax payable in the future, the amount of deferred tax to be recognised is limited. Considering the
tonnage tax regime applicable to shipping activities, difference between taxable and book values of assets
and liabilities are generally of permanent nature. This is due to the fact that the taxable result for tonnage tax
eligible activities has no correlation with either carrying value or the generally applicable tax value of assets
and liabilities. As a consequence, temporary differences are limited to those arising from other activities
which are subject to normal Income tax provisions.
l) Leases
Lease contracts contain extension or termination options. Assessment of the exercise or non-exercise of
such options impacts the value of right-of-use asset recognised. Such assessments are reviewed whenever
a significant event or change in circumstances occurs.
For the purpose of calculating the present value, the interest rate implicit in the lease or an incremental
borrowing rate is used as discount factor. Where the rate implicit in the lease is not readily available, an
incremental borrowing rate is applied. This incremental borrowing rate reflects the rate of interest that the
lessee would have to pay to borrow over a similar term, with a similar security, the funds necessary to obtain
an asset of a similar nature and value to the right-of-use asset. Determination of the incremental borrowing
rate requires estimation.
Management has applied judgement and formed assumptions in relation to assessment of incremental
borrowing rate, service components and extension options of leasing arrangements. Management has
formed its judgements and assumptions based on historical experience, internal and external information
and data available.
(b) India LNG Transport Companies No. 1 & 2 Ltd. are two joint venture companies promoted by the Corporation and
three Japanese companies Viz. M/S Mitsui O.S.K.lines Ltd. (mol), m/S Nippon Yusen Kabushiki Kaisha Ltd (NYK Lines)
and M/S Kawasaki Kisen Kaisha Ltd (k Line) along with M/S Qatar Shipping Company ( Q Ship), Qatar. SCI and MOL are
the largest shareholders, each holding 29.08% shares while NYK Line 17.89%, K Line 8.95% & Q Ship holds 15%
respectively. The Shares held by the Corporation and other partners in the two joint venture Companies have been
pledged against loans provided by lender banks to these companies. India LNG Transport Company No.1 Ltd owns
and operates one LNG Carrier Disha and India LNG Transport Company No. 2 Ltd owns and operates one LNG Carrier
Raahi (Refer Note -34).
(c) India LNG Transport Company No. 3 Ltd. is the 3rd joint venture company which owns and operates one LNG
Carrier Aseem. The company is promoted by the Corporation and three Japanese partners viz. MOL, NYK Lines, K Line
along with M/S Qatar Gas Transport Company (QGTC), Qatar and M/s Petronet LNG Limited (pll), India who are the
other partners. SCI and MOL are the largest shareholders with 26% share each, while NYK, K Line, QGTC and PLL hold
16.67%, 8.33%, 20% and 3% respectively. The Shares held by the Corporation and other partners in the joint venture
company have been pledged against loans provided by lender banks to this company (Refer Note -34).
(d) India LNG Transport Company (No. 4) Pvt. Ltd. is the 4th Joint Venture Company is promoted by the Corporation
and three Japanese partners viz NYK, MOL and K Line along with PLL, India. SCI, NYK and PLL are the largest
shareholders with 26% share each, while MOL and Kline hold 15.67% and 6.33% respectively. The Shares held by the
Corporation and other partners in the joint venture company have been pledged against loans provided by lender
banks to this company. India LNG Transport Company (No. 4) Pvt. Ltd owns and operates one LNG Carrier Prachi
(Refer Note -34).
(e) Inland & Coastal Shipping Ltd is 100 percent Subsidiary.
(f) SCI Bharat IFSC Limited is 100 percent Subsidiary.
Nature and Purpose of other reserves
Capital Reserve: The amount of sales proceeds in excess of original cost of ships sold by the Company. This is not available
for distribution of dividend but can be utilised for issuing bonus shares.
Securities Premium: The amount received in excess of face value of the equity shares is recognised in Share Premium
Reserve. This is not available for distribution of dividend but can be utilised for issuing bonus shares.
General Reserve: General Reserve represents appropriation of retained earnings and are available for distribution to
shareholders.
Tonnage Tax Reserve/Tonnage Tax Reserve (Utilised): This reserve is a statutory reserve as per requirement of section
115VT of the Income Tax Act, 1961 for the purpose of complying with the conditions for applicability of tonnage tax scheme
Retained Earnings: Retained Earnings represents surplus/accumulated earnings of the Corporation and are available for
distribution to shareholders.
Other Comprehensive Income (oci): OCI comprises items of income and expenses (including reclassification
adjustments) that are not recognised in profit or loss as required or permitted by Indian Accounting Standards. The
components of OCI include: re-measurements of defined benefit plans.
(a) The Company's pending litigations comprise claims against the Company and proceedings pending with
Tax / Statutory/ Government Authorities. After review of all its pending litigations and proceedings, the
Company has made adequate provisions, wherever required and disclosed the contingent liabilities,
wherever applicable, in its financial statements. The Company does not expect the outcome of these
proceedings to have a material impact on its financial position. Future cash outflows in respect of the above
are determinable only on receipt of judgments/ decisions pending with various forums/ authorities.
(b) A contingent asset is a possible asset that arises from past events and whose existence will be confirmed
only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the
control of the entity. During the normal course of business, several unresolved claims are currently
outstanding. The inflow of economic benefits, in respect of such claims cannot be measured due to
uncertainties that surround the related events and circumstances.
(c) The company issued bonds of ' 63,064 lakhs to custom authorities [a(IV)] is mainly for duty free movement
of Import/Export containers.
None of the financial assets of SCI have been considered in the fair value of plan assets.
The expected rate of return on plan assets has been estimated on the basis of actual returns of the trust in the
past years. The securities of trust have an effect on the fair value of plan assets as the value of the securities
vary with the changes in the market interest rates.
Actual Return on plan assets '1,469 lakhs (Prev. period '1,753 lakhs).
Through its defined benefit plans, the group is exposed to a number of risks, the most significant of which are
detailed below:
Asset volatility :
The plan liabilities are calculated using a discount rate set with reference to bond yields if plan assets
underperform this yield, this will create a deficit. Most of the plan asset investments are in fixed income
securities with high grades and in government securities. The Company intends to maintain the above
investment mix in the continuing years.
Changes in bond yields :
A decrease in bond yields will increase plan liabilities, although this will be partially offset by an increase in the
value of the plans' bond holdings.
Life expectancy :
The gratuity plan obligations are to provide benefits for the life of the member, so increases in life expectancy
will result in an increase in the plans' liabilities. This is particularly significant where inflationary increases result
in higher sensitivity to changes in life expectancy.
Contribution expected to be paid in the next year is '10 Lakhs.
The weighted average duration of the defined benefit obligation is 11.08 years (2025 - 9.67 years).
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the
same method (present value of the defined benefit obligation calculated with the projected unit credit
method at the end of the reporting period) has been applied as when calculating the defined benefit liability
recognised in the balance sheet.
The above sensitivity analyses are based on a change in an assumption while holding all other assumptions
constant. In practice, this is unlikely to occur, and changes in some of the assumptions may be correlated.
When calculating the sensitivity of the defined benefit obligation to significant actuarial assumptions the
same method (present value of the defined benefit obligation calculated with the projected unit credit
method at the end of the reporting period) has been applied as when calculating the defined benefit liability
recognised in the balance sheet.
Note 31: Segment Information
(a) Business Segments
The Company is managed by the Board which is the Chief Operating Decision-Maker (CODM). The Board has
determined the operating segments based on the pattern of vessels deployed by the Company, for the
purposes of allocating resources and assessing performance. With effect from 1st April 2024, the passenger
and research vessels managed under the T&OS Division has been transferred to L&PS Division.
(I) Liner
Liner segment includes break-bulk, container transport and managed vessels (passenger vessels and
research vessels) on behalf of other organisations.
(II) Bulk
Bulk Carriers include dry bulk carriers.
(III) Tanker
Tankers segment includes both crude and product carriers, gas carriers.
(iv) t&os
Technical & Offshore services segment includes company owned offshore vessels, offshore vessels managed
on behalf of other organisations and income from technical consultancy.
(v) Unallocated
Unallocable items and interest income/expenses are disclosed separately.
Expense and Revenue items are allocated vessel wise wherever possible. Expenses and Revenue items that cannot
be allocated vessel wise are allocated on the basis of age of the vessel i.e. (Cu rrent year - Built year) 1.
(b) Geographical Segments
Presently, the Company's operations are predominantly confined in India.
(c) Adjusted Earnings Before Interest & Tax (EBIT)
Adjusted EBIT excludes discontinued operations and the effects of significant items of income and
expenditure which may have an impact on the quality of earnings such as restructuring costs, impairments
when the impairment is the result of an isolated, non-recurring event. It also excludes the effects of gains or
losses on financial instruments.
Interest income is not allocated to segments, as this type of activity is driven by the central treasury function,
which manages the cash position of the Company.
The nature of services and its disclosure of timing of satisfaction of performance obligation is mentioned in
para 1.18 of Note No. 1.
Contract Assets in the balance sheet constitutes unbilled amounts to customers representing the Company's
right to consideration for the services transferred to date. Any amount previously recognised as Contract
Assets is reclassified to trade receivables at the time it is invoiced to the customer.
Contract Liabilities in the balance sheet constitutes advance payments and billings in excess of revenue
recognised. The Company expects to recognise such revenue in the subsequent financial years.
There were no significant changes in contract assets and contract liabilities during the reporting period
except amount as mentioned in the table and explanation given above.
Trade receivables as disclosed in note no 7(e). Impairment losses as disclosed in Note 37 includes receivables
arising from contracts with customers.
Under the payment terms generally applicable to the Company's revenue generating activities,
prepayments are received only to a limited extent. Typically, payment is due upon or after completion of the
services.
The Company generates revenue from shipping activities.Revenue from a voyage charter is recognised over
time, which is determined on a percentage of voyage completion method. The Company has recognised
revenue over a period of time basis following output method. Since, the Company can tracks the progress
toward completion of the contract by measuring days to date relative to total estimated days needed to
satisfy the performance obligation, the percentage of voyage completion method / straightline basis over the
period of the charter i.e. output method provide a faithful depiction of transfer of goods or services.
Note 33: Lease
The Company as lessee has agreements/contracts relating to charter in of vessel on time basis, Land,
Building, Cars, Photocopier machine etc. The Company as lessor has entered into agreements/contracts of
out charter of vessel on time, etc. The right of use and lease liability are disclosed in the financial statements at
note no 5 & 14 (b) respectively. The Payments associated with short term leases and leases of low value assets
are recognised on a straightline basis as an expense in profit or loss.
Level 1 : Level 1 hierarchy includes financial instruments measured using quoted prices. This includes mutual
funds that have a quoted price. The mutual funds are valued using the closing NAV.
Level 2: The fair value of financial instruments that are not traded in an active market is determined using
valuation techniques which maximise the use of observable market data and rely as little as possible on entity
specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is
included in level 2.
Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is
included in level 3. This is the case for unlisted equity securities which are included in level.
There were no transfers between any levels during the year.
(ii) Valuation technique used to determine fair value
Specific valuation techniques used to value financial instruments include:
• the use of closing NAV for investment in mutual funds
• the use of book values for investment in unlisted equity securities
• the fair value of the remaining financial instruments is determined using discounted cash flow analysis.
All of the resulting fair value estimates are included in level 1 and 2 except for unlisted equity securities, where
the fair values have been determined based on present values and the discount rates used were adjusted for
counterparty or own credit risk.
"The finance department of the Company includes a team that along with treasury function performs the
valuations of financial assets and liabilities required for financial reporting purposes, including level 3 fair
values. This team reports directly to the Director(Finance).
For unlisted equity securities, their fair values are estimated based on the book values of the investee
companies.
The carrying amounts of trade receivables, trade payables, short term security deposits, bank deposits with
more than 12 months maturity, cash and cash equivalents including other bank balances and other current
financial assets and liabilities are considered to be the same as their fair values. Hence the current financial
assets & liabilities have not been considered for Fair value hierarchy above.
The fair values of non current borrowings (with floating rate of interest) is not impacted due to interest rate
changes and will not be significantly different from their carrying amount as there is no significant change in
the underlying credit risk of the Company's borrowings.
The fair values of non current borrowings (with fixed rate of interest) are based on discounted cash flows using
a current borrowing rate. They are classified as level 2 fair values in the fair value hierarchy due to the use of
observable inputs.
For financial assets and liabilities that are measured at fair value, the carrying amounts are equal to the
fair values.
Note 37: Financial Risk Management
The Company has exposure to the Credit risk, Liquidity risk and Market risk.
The Company's Board of Directors has overall responsibility for the establishment and supervision of the
Company's risk management framework. The Board of Directors has established the Risk Management
Committee (RMC), which is responsible for developing and monitoring the Company's risk management
policies. The Audit Committee oversees how management monitors compliance with the Company's risk
management policies and procedures, and reviews the adequacy of the risk management framework in
relation to the risks faced by the Company.
(i) Credit risk is the risk of financial loss to the Company if a customer to a financial instrument fails to meet its
contractual obligations. Company's exposure to credit risk primarily arises on account of its Trade
receivables. Trade receivables consist of a large number of customers spread across diverse geographical
areas. A default on a Trade receivable is considered when the customer fails to make contractual payments
within the credit period. This credit period has been determined by considering the business environment in
which the Company operates.
The Company considers dealing with creditworthy customers and obtaining sufficient collateral, where
appropriate, as a means of mitigating the risk of financial loss from defaults. The credit risk due to above is
periodically monitored. Based on the periodical analyses, the credit risk is managed by continuous review and
follow up.
(ii) Provision for Expected Credit Losses (ecl):
The Company provides for expected credit loss on Trade receivables based on a provision matrix. This matrix
is a simplified basis of recognition of expected credit losses in case of Trade receivables. The model uses
historical credit loss experience for trade receivables i.e. this model uses aging analysis of trade receivables
as at the reporting date and is based on the number of days that a Trade receivables is past due. The aging
has been done for bracket of 90 days over a period of last 3 years. Receivables that are more than 3 years old
are considered uncollectible. Further, customers declaring bankruptcy or failing to engage in repayment plan
with the Company, provisioning is made on case to case basis i.e. such customers do not form part of this
impairment exercise and provided for separately. Expected credit loss on unbilled revenue is also provided
based on provision matrix of Trade receivables.
(i) Prudent liquidity risk management refers to the management of the Company's short term and long term
funding and liquidity management requirements. The Company's treasury maintains flexibility in funding by
maintaining availability of funds under committed credit lines.
Company manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing
facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of
financial assets and liabilities.
(ii) Maturities of financial liabilities
The tables below analyse the Company's non derivative financial liabilities into relevant maturity groupings
based on their contractual maturities.
The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the
earliest date on which the Company can be required to pay. In the table below, borrowings include both
interest and principal cash flows. To the extent that interest rates are floating rate, the undiscounted amount is
derived from interest rate curves at the end of the reporting period.
Market risk is the risk that changes in market indicators such foreign exchange rates, interest rates and commodity
prices will affect the Company's income or the value of its financial instruments. The Company's activities mainly
expose it to risks arising from changes in foreign exchange rate and interest rate and freight/charter hire rates.
(i) Foreign Currency Risk
The Company operates vessels in foreign waters, earns revenues and incurs expenditure in foreign
currencies, primarily with respect to USD, EURO and certain other foreign currencies. Foreign currency risk
arises from future commercial transactions and recognised assets and liabilities denominated in a currency
that is not the Company's functional currency (').
Considering the business environment in which Company operates, exposure to foreign exchange rate risk is
largely managed by collection of income in foreign currencies in bank accounts abroad.
(a) Foreign Currency Risk Exposure:
The Company's exposure to foreign currency risk at the end of the reporting period expressed in ', are as
follows :
"Interest rate risk is the risk that the future cash flows of floating interest bearing borrowings will fluctuate
because of fluctuations in the interest rates. The Company's main interest rate risk arises from long-term
borrowings with variable rates, which expose the Company to cash flow interest rate risk.
The Company's fixed rate borrowings are carried at amortised cost. They are therefore not subject to interest
rate risk as defined in Ind AS 107, since neither the carrying amount nor the future cash flows will fluctuate
because of a change in market interest rates.
The Company manages its interest rate risk by regularly monitoring the interest rate movement and deciding
on type of interest rate i.e. fixed or fluctuating.
(a) Interest Rate Risk Exposure
The exposure of the Company's borrowing to interest rate changes at the end of the reporting period are as
follows:
(iii) Freight/Charter Hire Risk
Shipping industry is governed by various national and international economic and geopolitical
developments. Local and international demand and supply determine freight and charter hire rates. Since
Company's vessels ply in international waters, it is affected by such developments. Also, bunker cost is major
component of Company's cost structure and bunker prices are highly volatile. Informatively, as per GST return
filed during FY 2025-26, Export Revenue of the group is t 169,780 lakhs (previous year t 178,151 lakhs).
Note 38: Capital Management
(a) Risk Management
The Company's objectives when managing capital are to safeguard the company's ability to continue as a
going concern in order to provide returns for shareholders and benefits for other stakeholders and to
maintain an optimal capital structure to reduce the cost of capital.
(b) Loan Covenants
The company has ECB and FCNR loan agreements with 2 banks and these banks have covenants of DSCR,
interest coverage ratio, total liabilities to shareholders equity and total debt to EBITDA. The Company is
comfortably meeting all the financial covenants of both the banks during FY 2025-26.
Note 39
As per the guidelines dated 27.5.2016 issued by Department of Investment and Public Asset Management
(DIPAM), MOF, GOI in respect of dividend, bonus shares, etc. the Company has an obligation to comply with
these guidelines. However, the company shall take into consideration and be guided by the provisions of the
Companies Act 2013, Companies (Declaration and Payment of Dividend) Rules, 2014, Guidance Note on
Dividend & Secretarial Standard 3 (SS3) and company's future plans and cash position for taking necessary
action appropriate and deemed fit in the circumstances.
The Dividend per equity share, recognised as distribution to shareholders , in accordance with companies Act,
2013 is as follows:
During the year ended 31 March 2026, the company has incurred cash outflow of f 60,879 lakhs towards final
dividend for FY 2024-25 and interim dividend for FY 2025-26
The Board of Directors has recommended a final dividend of f 1 per equity share of face value of f 10 each. The
total outgo on this account would be approximately f 4658 lakhs , subject to approval of members at the
ensuing Annual General Meeting.
Note 40
Following geopolitical escalation in the Middle East during February 2026, maritime movement through the
Strait of Hormuz has been severely disrupted due to heightened military activity, security risks, and restrictions
imposed by regional authorities. Due to this situation,4 vessels of SCI , namely Desh Garima, Desh Suraksha,
Desh Vibhor and Desh Vaibhav were stuck in the west of Strait of Hormuz as on 31.03.2026. One of the vessel MT
Desh Garima sailed out of Strait of Hormuz and reached Mumbai on 22.04.2026. Rest of the vessels are still
awaiting clearance for SOH transit. Freight of the above vessels has been recognized in SCI's books of
accounts as per percentage of voyage completion method (ind AS 115) based on distance covered vis a vis
total voyage distance. Based on the current assessment, the aforesaid disruption does not have a material
impact on the financial statements.
Note 41
Based on the opinion of the ICAI's Expert Advisory Committee, the Company has reclassified the lease from
short term to long term for accounting purposes in accordance with Ind AS 116 Leases. Consequently, the
Company has recognised the impact of such reclassification in the Statement of Profit and Loss, resulting in a
reduction in rent expense, with a corresponding impact in finance cost and depreciation. The Lease term is
considered from March 2023 to March 2026.
Note 42
The proposed strategic disinvestment of SCI is being handled by Department of Investment and Public Asset
Management (DIPAM) with the engagement of Transaction Advisor. In this regard, Preliminary Information
Memorandum (pim) for inviting expression of interest was released on 22.12.2020. The Virtual Data Room is
open and is being managed by the Transaction Advisor for the process of due diligence by the Qualified
Interested Parties.
Note 43
a) The Company has the practice of seeking confirmations of balances from all the parties in respect of the
Trade Receivables, Trade Payables and Deposits. While the reconciliation is an on going process, the
management does not expect any material difference affecting the financial results due to the same.
b) Reconciliation of agent/vendor/customer balances is an ongoing process. Management is of the view that
effect of changes in the balances on account of above reconciliation and subsequent impact of foreign
exchange gain / loss will not be material.
Note 44
The Company has outstanding receivables in respect of on going income tax litigation which is shown as tax
asset in the balance sheet. The Company is in the process of reconciling these outstanding receivables with
corresponding assessment orders, orders giving effect (OGEs), and other relevant documentation. Based on
its current assessment, the Company does not expect any material impact on its financial results arising from
these matters.
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