The Company has one class of shares referred to as equity shares having a par value ofRs. 10 each. Each shareholder is entitled to one vote per share held. In the event of liquidation, the equity shareholders are eligible to receive the remaining assets of the Company after distribution of all preferential amounts, in proportion to their shareholding.

2. The Company has neither issued any Bonus Shares nor bought back any Shares during the last 5 years.

3. Unpaid calls

AS per records of the Company, no calls remain unpaid by the directors and officers of the Company as on 31st March, 2014

4. As per records of the Company, no shares have been forfeited by the Company during the period.

5. From Banks:

a. Rs. 24,386.94 Lacs (Previous Period Rs. 57,101.29 Lacs) secured by charge or. some of the Company's ships and receivable thereof.

b. Current Period Nil (Previous Period Rs. 4,534.99 Lacs) secured by charge on receivables of one of the Company's ships.

c. Rs. 6,900 Lacs (Previous Period Rs. 23,823.08 Lacs) secured by charge on some of the Company's ships and personal guarantee of a Director.

d. Rs. 5,583.74 Lacs (Previous Period Rs. 8,168.91 Lacs) secured by charge on one of the Company's ships, receivables thereof and personal guarantee of a Director.

e. Rs. 2,187.50 Lacs (Previous Period Rs. 15,111.80 Lacs) secured by charge on some of the Company's ships .

f. Current Period Nil (Previous Period Rs. 6,499.73 Lacs) secured by charge on one of the Company's ships, corporate guarantee of subsidiary and personal guarantee of a Director.

g. Rs. 12,570.00 Lacs (Previous Period Nil) secured by charge on some of the Company's ships, corporate guarantee of Company under common control of the promoter and personal guarantee of a Director and mortgage on property of Company under common control of promoter.

h. Rs. 8,264.67 lacs (Previous Period Nil) secured by a charge on some of the Company's ships, receivables thereof, personal guarantee from Promoter, Corporate guarantee of Subsidiary, Associate Companies.

i Rs. 10,997.00 Lacs (Previous Period Nil) secured by a charge on some of the Company's ships, receivables thereof, personal Guarantee of Promoter Cprporate guarantee of Associate Companies.

j. Rs. 5,000.00 Lacs (Previous Period Nil) secured by a charge on some of the Company's ships, personal guarantee from Promoter, Corporate guarantee of Associate Companies.

6. From Financial Institutions:

a. Rs. 4,36833 Lacs (Previous Period Rs. 4,368.33 Lacs) secured by charge on Company's property.

b. Rs. 15,957.66 Lacs (Previous Period Nil) secured by a charge on some of the Company's ships, receivables thereof, corporate guarantee of one of the Subsidiary Company, personal gurantee of a Director and pledge of preference shares of an Associate Company.

c. Rs. 3,268.24 Lacs (Previous Period Nil) secured by entire receivables of one of the Subsidiary Companies, personal guarantee of a Promoter, charge on one of the ships of the Company and pledge of preference shares of one of the . Subsidiary Companies.

In respect of Loans aggregating to Rs. 31,397.35 Lacs from certain Banks and a Financial Instituiton , the Company is in the process of creating security by way of mortgage over its vessels.

7. Details of Arrears:

The Company is in arrears in the repayment of its dues to various Banks/Finandal Institutions. An amount of Rs.6,818 .89 lacs ( Previous Period Rs. 10,997.00 lacs) on account Principal and Rs. 5,550.74 Lacs ( Previous Period Rs. 1,834.30 Lacs) on account of Interest aggregating toRs. 12,369.63 Lacs (Previous Period Rs. 12,831.30 Lacs) are overdue to various Banks/Finandal Institutions as on 31st March 2014. Subsequent to the date of the Balance Sheet, the Company has paid an aggregate amount ofRs. 1,166.63 Lacs.

8. Details of Security

a. .Overdraft facility with a Bank of Rs. 1,611.45 Lacs (Previous Period Rs. 2,022.55 Lacs) secured by charge on one of the Company's ships, personal guarantee of a Director and Corporate Guarantee of Subsidiary Company & Associate Company.

b. Overdraft facility with a Bank of Rs. 513.07 Lacs (Previous Period Rs.785.80 Lacs) secured by charge on one of the Company's ships.

c. overdraft facility with a Bank Current Period Nil (Previous Period Rs. 1,601.21 Lacs) secured by charge on receivables of some of the Company's ships & personal guarantee of a Director.

d. Overdraft facility with a Bank of Rs. 5,000.00 Lacs (Previous Period Rs. 5,440.05 Lacs) secured by charge on one of the Company's ships, personal guarantee of a Director and Corporate Guarantee of Associate Company. e. Overdraft facility with a Bank of Rs. 500.00 Lacs (Previous Period Nil) secured by charge on one of the Company's ships, personal guarantee of a Director and Corporate Guarantee of Associate Company.

e. Rate of Interest

Working Capital Loans from banks carry interest rates ranging from 13.00% to 16.00% per annum.

9. Contingent Liabilities

Particulars                                     31.03.2014    0.09.2012
                                             (Rs. in Lacs) (Rs. in Lacs)

b.  Claims against the Company not               3,368.73      1,825.65
    acknowledged as debts

d. Deputy Commissioner (CT) Chennai had 832.84 832.84 raised a demand 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.

10. The Company has not entered into any derivative transactions by way of currency and/or interest rate swap.

11 . Government of India, Ministry of Corporate Affairs vide Notification No. GSR 225(E) dated 29th December, 2011 issued Companies (Accounting Standards) Amendment Rule 2009. In terms of the said notification referred above, exchange differences arising on reporting of long term foreign currency loans, so far as they relate to acquisition of depreciable capital assets, was required to be added to or deducted from the cost of the asset and depreciated over the balance life of the asset and in other cases it was required to be accumulated in a "Foreign Currency Monetary Items Translation Difference Account" and amortized over balance period of such long term liability but not beyond 31st March, 2011. The Government of India vide its notification dated 29th December 2011, has extended the period upto 31st March, 2020. Accordingly, gain arising due to change in exchange rate on foreign currency loans relating to acquisition of depreciable Capital asset amounting to Rs. 4,839.28 lacs (Previous period Rs. 8,973,20 lacs) are adjusted to the cost of such Capital Assets and in respect of other long term loans, gain of Rs.1,057.25 lacs (Previous period Rs. 158.23 lacs) has been transferred to Foreign Currency Monetary Items Translation Difference Account.

12. The Company has not incurred an impairment loss during the period (Previous period Rs. Nil) in accordance with the Accounting Standard (AS 28). In the opinion of the management, the book value of these assets broadly reflect the earnings expectation from them.

13. The Company has made long term strategic investments which are carried "at cost" and has exposures in various subsidiaries and associates in which there has been a temporary reduction in revenues due to lack of working capital that has affected the operation of the vessels. While there is a degree of uncertainty as to the final outcome, the Management is in the process of raising resources to streamline the operations of the vessels in the future. Also the Composite Scheme of Arrangement and Amalgamation between Varun Shipping Company Limited, Varun Gas Infrastructure Limited, Tarun Shipping and Industries Ltd., Varun Global Limited, Varun Maritime Limited and Varun Resources Limited and their respective Shareholders under the Provisions of Sections 391 to 394, read with Sec. 100 to 103 of the Companies Act, 1956 has been sanctioned and approved by the Honorable High Court of Judicature at Mumbai on 9th May, 2014 (i.e. last working date of the High Court before vacation). However, to date, the written Order of the Court has not been received.

a. The Company holds Equity Shares costing Rs. 701.94 Lacs Preference Shares costing Rs. 11,037.11 Lacs and has other Exposures aggregating to Rs. 61,946.96 Lacs in Varun Cyprus Ltd., a wholly owned subsidiary of the Company. The temporary reduction in revenues is due to lack of working capital that has affected operations of the vessels. The Company has made a Provision of Rs. 14,000 Lacs as on 31 March 2014 against the Receivables from the subsidiary. The subsidiary is taking steps to fully operationalise its vessels to enable it to repay its liabilities to the Company. These being long term investments and considering the fair value of the subsidiary as at 31st March 2014, Management is of the view that diminution in the value of these investments is temporary in nature, the balance outstandings are good and recoverable and consequently no further provision has been made.

b. The Company holds Equity Shares costing Rs. 8.94 Lacs, Preference Shares costing Rs. 18,616.78 Lacs and has other Exposures aggregating to Rs. 39,051.82 Lacs in Varun Asia Pte. Ltd., an associate of the Company. The temporary reduction in revenues is due to lack of working capital that has affected operations of the vessels. The associate is taking steps to fully operationalise its vessels to enable it to repay its liabilities to the Company. These being long term investments and considering the fair value of the associate as at 31st March 2014, Management is of the view that diminution in the value of these investments is temporary in nature, the balance outstandings are good and recoverable and consequently no provision has been made.

c. The Company holds Equity Shares costing Rs. 840 Lacs and has other Exposures aggregating to Rs. 14,121.03 Lacs in Tarun Shipping & Industries Ltd., an associate of the Company. The temporary reduction in revenues is due to lack of working capital that has affected operations of the vessels. The associate is taking steps to fully operationalise its vessel to enable it to repay its liabilities to the Company. These being long term investments and considering the fair value of the associate as at 31 March 2014, Management is of the view that diminution in the value of these investments is temporary in nature, the balance outstandings are good and recoverable and consequently no provision has been made.

d. As per the latest audited accounts of VSC International Pte Ltd (the "Company") as at 31st March,2011, the statutory auditors of the Company have given a disclaimer in their report to the shareholders of the Company to the effect that they are unable to and do not express their opinion on whether the financial statements are properly drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards so as to give a true & fair view of the state of affairs of the Company as at 31st March,2011.

The Management is of the opinion that on account of this qualification there is no impact on the financial results of VSC International Pte. Ltd. and consequently there is no permanent diminution in the value of investments of Varun Shipping Company Limited in the shares of VSC International Pte. Ltd.

14. Disclosure requirements under Revised Accounting Standard 15 on Employee benefits:

a) Defined Contribution Plan:

Provision for defined contribution plan viz. Provident Fund and Super Annuation Fund

b) Defined Benefit Plans:

The Company offers to its employees defined benefits plans in the form of Gratuity and Leave encashment.

No fund is created for payment of gratuity and leave wages and the company would pay the same out of its own funds as and when the same becomes payable.

The details of the Gratuity Fund for its employees are given below which have been certified by an Actuary and relied upon by the Auditors.

15. TAXATION :

In terms of the provisions of the Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India, there is a net deferred tax asset on account of accumulated business losses and unabsorbed depreciation.

in compliance with provisions of Accounting Standard and based on general prudence, the Company has not recognised any deferred tax asset while preparing the accounts of the period under review.

Since the Company has incurred losses for the period of 18 months under audit and has carry forward losses under section 115.IB of Income Tax Act, 1961, no provision for taxation has been made.

16. Related party Disclosures (As identified and certified by the Management and relied upon by the Auditors)

Related Party disclosures as required by AS-18 are given below

A. Relationships

(a) Wholly Owned Subsidiaries :

a. Varun Cyprus Limited.

b. Varun Gas Infrastructure Limited.

c. Varun Resources Limited.

d. Varun Global Limited.

(b) Associate Company:-

a. VSC International Pte. Ltd.

b. Tarun Shipping & Industries Ltd.

c. Varun Asia Pte. Ltd.

d. Ocean Race Shipping Company Ltd.

e. Sea Fidelity Shipping Company Limited.

c) Companies under common control of the Promoters:-

a. Companies with which transactions have taken place during the period

i. Varun Corporation Ltd.

ii. Real point (Mauritius) Ltd.

iii. Varun Maritime Limited.

b. Companies with which no transactions have taken place during the period.

i. Sunbeam Talc Pvt. Ltd. ii. Yuka Plantations Pvt. Ltd,

iii. Azure Seas Logistics. .

(d) Key Management Personnel:

i. Mr. Y.D. Khatau

17. There are no Micro, Small and Medium Enterprises, as defined in the Micro, Small, Medium Enterprises Development Act, 2006, to whom the Company owes on account of principal amount together with the interest and accordingly no additional disclosures have been made.

The above information regarding Micro, Small and Medium Enterprises, has been determined to the extent such parties have been identified on the basis of information available with the Company. This has been relied upon by the auditors.

18. No amounts referred to in clauses (a) to (d) of Section 205C(2) of the Companies Act, 1956 have remained unclaimed for a period of seven years from the date they became due for payment.

19. The Company is engaged only in shipping business and there are no separate reportable segments as per Accounting Standard 17.

20. At the Annual General Meeting held on 4th February 2013, the Shareholders of the Company had approved payment of Dividend of Rs. 0.50 per Equity Share for the 18 months period ended 30th September 2012 aggregating to Rs. 750.03 Lacs. However due to paucity of funds and economic slowdown in shipping industry, this amount of Rs. 750.03 Lacs together with Dividend Distribution Tax of Rs. 121.67 Lacs has remained unpaid till date.

21. In the opinion of the Board, all assets other than fixed assets have a value on realisation in the ordinary course of business atleast equal to the amount at which they are stated except for reconciliation adjustments in respect of some of the payables and receivables.

22. Some of the balances in Trade Payables, Trade Receivables, Current Assets and Current Liabilities are subject to reconciliation, confirmation and consequential adjustments/provisions, the amounts whereof have not been determined.

23. The Company has been exempted from disclosing in the Statement of Profit and Loss Account the information required to be given under Para 4D(a), (b), (c) and (e) of Part II to Schedule VI of the Companies Act, 1956, vide notification dated 8th February 2011 of Government of India, Ministry of Corporate Affairs.

24. Previous period's figures have been re-grouped/ re-arranged to make them comparable to those of the current period of 18 months.