Sustainability

Message from the Managing DirectorMessage fromA R RamakrishnanManaging Director, Essar Shipping LimitedIt gives me great pleasure to present the first sustainabilityreport of Essar Shipping Limited.This is a step towards consolidating our sustainability effortsand communicating our economic, social and governanceperformance, strategy and outlook to our stakeholders on anannual basis.We have come a long way since the time we invested, overthe years, in a diverse shipping fleet and oilrigs, to being anintegrated logistics solution provider today with investmentsin logistics services, sea transportation and oilfield drillingservices.Last year the Board of Essar Shipping Ports & Logistics Limited(ESPLL) decided to demerge its shipping, oilfields andlogistics businesses into a separate entity viz. Essar ShippingLimited to enhance our capability in taking advantage of thehuge growth opportunities in these business segments. Postdemerger, Essar Shipping Ltd got listed in October, 2011. Weare continually investing in long term assets to ensureeconomic sustainability. In the next two years we will add 12new building vessels to our fleet which will be employed onlong term contracts for transportation of coal, iron ore andother raw materials for the steel and power sector. Ourcompany's exposure to the volatile spot market will reducewith a substantial part of our fleet under Contracts ofAffreightment or time charter. Oilfield Services business hastwo jack-up rigs on order that are expected to be delivered bythe next financial year. Our Logistics business, currentlyoperating a fleet of over 5,000 trucks for the movement ofpetroleum and steel products all across the country willacquire more assets in the future to augment its inter-modalcargo movement capabilities.Although the shipping sector moves more than 90% of theworld's trade and is considered to be the most environment -friendly, the sector is facing a lot of challenges and there ispressure for long term sustainability. Financial pressures areever building with the rising cost of fuel and thus the cost ofoperating ships. The regulatory scenario is changing to curtailshipping's emissions and move to a low carbon economy. Wesee climate change both as a challenge and as an opportunityfor future growth. We hope that the emerging changes in theregulatory environment will help in management of thisissue at a global level. Estimating Greenhouse Gas (GHG)emissions of our businesses and gap analysis in alignmentwith sectoral benchmarks will be one of our focus areas in thecoming year. In addition, we will ensure that each of our shipshas an energy efficiency management plan before theregulation comes into force.Modal shift in goods transport has been a focus area in ourefforts to reduce our Carbon footprint. It has also broughtsignificant gains in traffic avoidance given our presentinfrastructure constraints. Our assets in Logistics and Seatransportation have been moving greater volumes of cargoby sea that were once handled by trucks on the road.02