Disclaimer: This document is prepared by Fullerton Securities & Wealth Advisors Ltd (FSWA). This document is not for public distribution and has been furnished to you solely for your information and you are notified that you should not further copy, modify, use or distribute the information in any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change depending on several factors, including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person or entity associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The document is prepared only for your information and is not sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising from the use of this document or due to any inadvertent error in the information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to making any investment decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of an investment or fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for investment results or losses arising out of investment decisions made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or discontinue, temporarily or permanently, the information and services provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension,

modification, or termination of the information and services provided herein. www.fullertonsecurities.co.in Page | 1

FPO Note – Shipping Corporation of India

November 30, 2010

Employees and Retail investors to get a 5% discount on the final FPO price

Investment Rationale SUBSCRIBE Fleet Expansion: As one of India’s oldest, largest and reputable shipping companies,

Shipping Corporation of India (SCI) is well-positioned to take advantage of expected future growth in the Indian economy. Since 1961, it has grown its fleet from 19 vessels of 0.19mn DWT to 77 vessels of 5.37mn DWT. Apart from the existing vessels on order, SCI currently has plans to order an additional 20 vessels in FY 2011 with total

DWT of 1.19mn. The company’s ability to grow its fleet size positions it well to take advantage of attractive asset prices and anticipated growth in the shipping industry as

the Indian economy and its ties to international markets grows. Due to its fleet size, it has the ability to service all major ports on the east and west coast of India.

Diversification: SCI owns a variety of modern and technologically-advanced vessels

including bulk carriers, VLCCs, crude oil tankers, product tankers, container vessels,

etc. This fleet diversification allows it to enter into chartering arrangements of varying

duration with different types of customers. The existing fleet as well as next generation

of fleet will have better functional capabilities and operate more efficiently than

equivalent older vessels thereby allowing the company to provide improved services to

its customers. SCI is also planning to diversify geographically, extending its route to

Southeast Asia, Southern Africa, and North America.

Strategic Joint Ventures (JVs): SCI has entered into a JV with three Japanese

shipping companies to own and operate three LNG tankers as well as operate and manage two additional ones, making them the first Indian shipping company to operate

in the transportation of LNG. Its joint venture with the Steel Authority of India Limited (SAIL) will pay on a cost plus basis and provides certainty of cash flows on a long-term basis and provides a benefit in difficult economic conditions.

Strong Balance Sheet: SCI has a cash balance of Rs. 23,103.38mn on its balance sheet

with a debt to equity ratio of only 0.55, despite the capital intensive nature of its business. Its strong balance sheet and cash on hand provides it with greater working capital and the flexibility to sustain business during difficult economic times. Furthermore, it has a current ratio of 2.96 which will enable it to service its interest and debt payments in a timely fashion.

Outlook and Valuation: The stock is being offered a reasonable valuation at 14.8xFY10 and 15.3xFY10 earnings at the lower and higher end of the price band respectively. At the upper band, the stock is trading at a discount to its book value per share (Rs.160). Retail investors will additionally get a 5% discount to the issue price.

Issue Size Rs. 11.5-11.9bn

No. of Shares 85mn

Face Value Rs. 10

Price Band Rs. 135-140 per share

Lot Size 50 shares

Issue Opens 30-Nov-10

Issue Closes 3-Dec-10

Issue Details

Pre-issue Post-issue

Promoters 80.12 63.75

Others 15.5 14.09

Public 4.38 22.16

Shareholding (%)

Investor Type Quota

Employees 0.5%

QIB 49.7%

Non-Institutional 14.9%

Retail 34.8%

Issue Quota

Pre-issue Post-issue

No. of shares (in mn) 423.5 465.5

No. of Shares

Objects Amount

Acquisition of certain vessels 5870

Objects of the Issue (Rs. mn.)

Period

ended

Gross

Income

(Rs. Mn.)

EBITDA

(Rs. Mn.)

EBITDA

Margin (%)

Adj. Net

Profit

(Rs. Mn.)

Adj. Net

Profit

Margin (%)

Diluted

EPS (Rs)RONW (%)

31-Mar-08 37,390 12,219 32.7 7,546 20.2 17.8 13.5

31-Mar-09 41,668 14,917 35.8 9,626 23.1 22.7 15.5

31-Mar-10 34,604 9,197 26.6 3,867 11.2 9.1 6.1

Financial Summary

Disclaimer: This document is prepared by Fullerton Securities & Wealth Advisors Ltd (FSWA). This document is not for public distribution and has been furnished to you solely for your information and you are notified that you should not further copy, modify, use or distribute the information in any way unless you obtain written consent from FSWA. The information provided in the document is on the "best effort" basis and is subject to change depending on several factors, including general market conditions. While reasonable care to compile the document but the accuracy and completeness cannot be guaranteed either by FSWA or any other person or entity associated with it. The returns shown are merely estimates and forecasts and are not necessarily indicative of future performance and can change without notice. The document is prepared only for your information and is not sufficient for making an investment decision. You should rely on your own investigations and seek professional advice for investment decision. Neither FSWA nor any person connected with it, accepts any liability either arising from the use of this document or due to any inadvertent error in the information contained in this document. Financial investments carry risks including principal risk and therefore you should seek professional advice prior to making any investment decision. The risk of any losses occurring by use of this report or document will be entirely yours. The investments covered in this report are not guaranteed. Also past performance of an investment or fund is not an indication of future performance. FSWA, its affiliates, or associates, or any regulatory or other body or entity assumes no liability or responsibility for investment results or losses arising out of investment decisions made by you. This document is not to be considered as an offer to sell or a solicitation to buy any security or financial product. FSWA reserves the right to modify or alter the terms and conditions of the use of this service or discontinue, temporarily or permanently, the information and services provided (or any part thereof) at any time, with or without prior notice and FSWA shall not be liable to you for any suspension,

modification, or termination of the information and services provided herein. www.fullertonsecurities.co.in Page | 2

FPO Note – Shipping Corporation of India

November 30, 2010

Industry Overview

The shipping industry is fundamental to international trade, being the only practicable and cost effective means of

transporting large volumes of many essential commodities and finished goods. In 2008, total annual world seaborne trade

amounted to 8.7 billion tonnes of goods (loaded). Dry cargo, including bulk, break bulk and containerized cargo, accounted

for the largest share of goods loaded (66.3%) while oil and related products made up the balance. The United Nations

Conference on Trade and Development (UNCTAD) estimates that the operation of merchant ships contributes about US$380

billion (Rs. 17,069.60 billion) in freight rates within the global economy, equivalent to about 5% of total world trade.

Significant opportunities exist in the domestic markets for diversified shipping players like SCI. The economy is growing at a

healthy pace with Indian exports and imports having grown 21.4% and 23.2% over the previous year. Furthermore, the

domestic Cabotage Law gives preference to Indian flagged vessels over foreign players in coastal trade, opening several

opportunities for SCI. Demand for shipping has also advanced on account of the increased imports of crude oil and growing

demand for coal from the power sector. Approximately, 9.5% of India’s overseas trade is carried by the Indian merchant

fleet.

Business Overview

SCI was incorporated as the Eastern Shipping Corporation Limited on March 24, 1950 under the Companies Act, 1913 in

Mumbai. It is one of India’s largest shipping companies in terms of Indian flagged tonnage, with approximately a 35.0%

share of Indian flagged tonnage as of June 30, 2010. Its existing business operations are divided into the following three

divisions: (1) Bulk carrier and tanker, (2) Liner and passenger services, and (3) Technical and offshore services. As of

October 31, 2010, SCI owned a fleet of 77 vessels of 5.37 million dead weight tonnage (DWT). Its fleet includes dry bulk

carriers, very large crude carrier (VLCC) tankers, crude oil tankers, product tankers, container vessels, passenger-cum-

cargo vessels, phosphoric acid and chemical carriers, LPG and ammonia carriers, and offshore supply vessels.

SCI caters primarily to Government agencies, large industrial concerns, international oil companies and public sector

undertakings. It has entered into six strategic joint ventures which is likely to provide it with various advantages and

access to markets it would have otherwise not enjoyed. According to the International Monetary Fund, since general

economic conditions have improved, the world trade volume is expected to grow at 9.0% and 6.3% in 2010 and 2011,

respectively.

SCI has worldwide operations supported by offices in the four metros of India, namely Mumbai, Delhi, Chennai and

Kolkata as well as an office in London. In 1990, SCI signed its first Memorandum of Understanding (MoU) with the

Government specifying performance and operational targets. The Government bestowed the status of “Navratna” on the

company in August 2008 leading to enhanced delegation of powers to the Board, including, but not limited to, the areas

of capital investment, formation of joint venture, and opening of new offices.