Allcargo Logistics Ltd

To,

The Members of Allcargo Global Logistics Limited

Your Directors take pleasure in presenting the Eighteenth Annual Report of the Companytogether with

Audited Statement of Accounts for the year ended December 31, 2010.

FINANCIAL HIGHLIGHTS

Your Company's performance during the year under review is summarized below:

REVIEW OF OPERATIONS

The year under review was challenging and opportunistic for your Company. After theunprecedented macro economic changes during last couple of years, there has beensignificant improvement in the economic situation and general outlook especially duringthe later part of the financial year under review.

Your Company has successfully overcome the challenges of the economic downturn throughseries of measures like focused management approach, efficient project execution, furthercapital infusion, aggressive marketing strategy, prudent financial and human resourcesmanagement and ensuring better control over cost. This can be seen from the improvedperformance in terms of higher turnover, efficient and effective capacity utilization,improved earning margins and cash flows.

Stand-alone Performance:

Your Company has earned total revenue of Rs 7,303.91 million and earned a net profit ofRs 1,211.26 million as compared to revenue of Rs 5,320.99 million and net profit of Rs978.05 million in preceding financial year, representing 37% & 24% growth in revenueand net profit respectively. Earnings before interest, tax and depreciation (EBITDA) is Rs1,984.33 million as compared to Rs 1,588.45 million in preceding financial year,representing 25% growth.

Consolidated Performance:

Your Company has earned total revenue of Rs 28,899.35 million and earned a net profitafter minority interest of Rs 1,659.21 million as compared to revenue of Rs 20,895.15million and net profit after minority interest of Rs 1,299.49 million in precedingfinancial year, representing 38% & 28% growth in revenue and net profit respectively,on consolidated basis. Earning before interest, tax and depreciation (EBITDA) is Rs2,983.46 million as compared to Rs 2,470.92 million in preceding financial year,representing 21% growth, on consolidated basis.

Overall, the company is on a strong growth path and its efforts to improve efficiency,productivity and profitability will improve overall returns.

For detailed segment wise performance, members are requested to refer ManagementDiscussion and Analysis Report annexed to this report.

APPROPRIATIONS

Considering the profitable performance of the Company during the year under review,your Directors are pleased to recommend:

a. Special Dividend @ 100% i.e. Rs 2 per equity share of Rs.2 each on account ofcompletion of five years of listing of the Company's equity shares on the Stock Exchanges;and

b. Final Dividend @ 25% i.e. Rs 0.50 per equity share of Rs 2 each.

The total dividend, including the interim dividend paid in November 2010, will be 150%i.e. Rs 3.00 per equity share of Rs 2 each. The Dividend, if approved by the members atthe ensuing Annual General Meeting, together with interim dividend @ 25% paid in November2010, will absorb a sum of Rs 458.67 million including dividend distribution tax.

SUBSIDIARY COMPANIES

During the year under review, your Company acquired 49% equity stake and managementcontrol in Comptech Solutions Pvt. Ltd. through its wholly owned subsidiary company viz.Contech Transport Services Pvt. Ltd.

In furtherance to the expansion plan of its Non Vessel Owning Common Carrier (NVOCC)business, your Company, through its step down wholly owned subsidiary company viz. EcuHold NV, has acquired business rights and controlling stake in China ConsolidationServices Shipping Ltd and Ningbo Star Express Shipping Co. Ltd, Hong Kong based companiesengaged in NVOCC business in China and other parts of eastern regions. Your company alsoacquired 51% stake in SHE Maritime Services Ltd and Translogistik International SpeditionGmbH.

During the year under review, your Company has, through its step down subsidiaries,formed Ecu Line Hungary Kft, Ecu Line Czeche s.r.o, PT Eka Consol Utama Line and Ecu LineLanka (Private) Limited as subsidiaries / wholly owned subsidiary companies under EcuGroup of companies. Your Company also increased its stake in ECU-Line Hong Kong Ltd. from60% to 100% through Ecu Hold NV.

The stand-alone audited financial statements of all subsidiaries operating in India andOverseas are not attached to this report in view of exemption u/s 212(8) of the CompaniesAct, 1956 granted by the Ministry of Corporate Affairs, Government of India. The statementpursuant to Section 212 of the Companies Act, 1956 relating to the subsidiary companiesalong with a statement of financial highlights of subsidiaries operations providingrelevant details are attached and form part of this Annual Report.

The Company will make available the Annual Accounts of the subsidiary companies andrelated information to any member of the Company and its subsidiaries who may beinterested in obtaining the same. The annual accounts of the subsidiary companies willalso be kept open for inspection by any investor at the registered office of the Companyand its subsidiary companies.

CONSOLIDATED FINANCIAL STATEMENTS

As per the Listing Agreement with the Stock Exchanges, the attached ConsolidatedFinancial Statements have been prepared in accordance with the Accounting StandardAS-21-Consolidated Financial Statements read with Accounting Standard AS 23-Accounting forInvestment in Associates and Accounting Standard AS 27-Financial Reporting of interest inJoint Ventures, which includes financial results of its subsidiaries, joint ventures andassociate companies and forms part of this Annual Report.

EMPLOYEES STOCK OPTION PLAN 2006

Disclosures pursuant to Clause 12 of the SEBI (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines, 1999, relating to the Company's ESOP Scheme ason December 31, 2010 are set out in Annexure II annexed to this report .

A certificate from the Statutory Auditors of the Company M/s Appan & LokhandwalaAssociates, Chartered Accountants, Mumbai, with respect to the implementation of Company'sESOP Scheme, will be placed before the Members at the ensuing Annual General Meeting and acopy of the same shall be available for inspection at the Registered Office of the Companyon all working days, except Saturday and Sunday, between 11.00 a.m. to 2.00 p.m., upto thedate of Annual General Meeting.

SHARE CAPITAL AND LISTING OF SHARES

During the year under review, your Company had issued and allotted 5,663,105 equityshares of Rs 2 each at a premium of Rs 182.80 per equity share aggregating Rs1,046,541,804 to Qualified Institutional Buyers (QIBs) in accordance with the provisionsof the Companies Act, 1956 and Chapter VIII of the SEBI (Issue of Capital and DisclosureRequirements) Regulations, 2009. Your Company further issued and allotted 42,598 equityshares of Rs 2 each to its employees against exercise of options granted to them under“Allcargo Employee Stock Option Plan 2006”.

The Equity Shares of the Company are listed and traded in compulsory dematerializedform on the Bombay Stock Exchange Limited and the National Stock Exchange of IndiaLimited. Your Company has paid the Annual Listing fee and Annual Custody fees to the StockExchanges and Depositories up-to-date.

AMALGAMATION

As the members are aware that with a view to consolidate logistic business under oneroof and for better administration, control and management, your Company had decided toamalgamate Sealand Terminals Pvt. Ltd., the wholly owned subsidiary of the Company, withitself with effect from April 1, 2009, pursuant to the Scheme of Arrangement made underSections 391 to 394 and other applicable provisions of the Companies Act, 1956.

The said Scheme of Arrangement was approved by the Members of the Company at theirmeeting held on May 20, 2010 and subsequently received assent from the Hon'ble Bombay HighCourt on September 30, 2010. Accordingly, Sealand Terminals Pvt. Ltd. has been amalgamatedwith your Company with effect from April 1, 2009. The financial statements presentedbefore the Members contains the financials of Sealand Terminals Pvt. Ltd.

AWARDS AND RECOGNITION

The year under review was very special for your Company as it has received many awardsand recognitions for the significant contribution made by your Company in development andgrowth of the logistic industry.

• Allcargo has been ranked at 2nd position in Logistics Segment and at 290thposition overall in the 'FORTUNE 500' companies in India by 'Fortune India'.

• 'The Best LCL Consolidator Award' for the year 2009-10, by the Southern Regionof Container Corporation of India (CONCOR).

• Allcargo has been ranked at No. 251 in the 'ET 500-2010' list by “TheEconomic Times”. Additionally, the company has been identified as one of the top 10companies which has a potential for growth and value addition based on consistentperformance in its section “SHOW STOPPERS-Spot the Winners”.

• 'Logistics Company of the Year' and the 'Freight Forwarder of the Year (Indian)'by the 'All- Maritime and Logistics Awards (MALA) 2010'.

• Mr. Shashi Kiran Shetty, the Chairman & Managing Director of the Company,was awarded the 'Face of the Year' by 'Express Logistics and Supply Chain (ELSC)'organized by the Economic Times & Future group in Mumbai.

• Mr. Shashi Kiran Shetty, the Chairman & Managing Director of the Company,was awarded "Entrepreneur of the Year Services Category" by 'Ernst &Young.

• Ms. Shantha Martin, CEO, NVOCC, Indian Subcontinent and Middle East, has beenadjudged as the 1st runner in the category “Leading Woman CEO” by 'iGroup'.

Your Company believes that winning of such recognitions was due to the hard work,passion and spirit of team work of the employees and thoughtful leaders, whose novelthinking and innovative approach have led them to attain excellence in their field. Theseawards are a testimony to the commitment to the stakeholders of the Company and seamlessintegrated logistics solutions.

DIRECTORS

Mr. Adarsh Hegde was appointed as Executive Director of the Company for a period of 5years commencing from August 21, 2006. In accordance with the terms of his appointment,his term of office will expire on closure of business hours on August 20, 2011.

Looking at the efforts put by Mr. Adarsh Hegde in developing and expanding the businessoperation of the Company, especially Inland Container Depot, Container Freight Station andProject Cargo business, and the growth and progress made by the Company under hisleadership on year on year, the Board has, subject to Members approval, at its meetingheld on April 05, 2011 re-appointed Mr. Adarsh Hegde as Executive Director of the Companyfor further period of five years effective from August 21, 2011 on the terms &conditions and remuneration recommended by the Compensation / Remuneration Committee ofthe Company.

In accordance with the provisions of Section 260 of the Companies Act, 1956, Mr.Mohinder Pal Bansal was co-opted as Additional Director of the Company w.e.f October 18,2010. The Company has received a notice under section 257 of the Companies Act, 1956,proposing the candidature of Mr. Mohinder Pal Bansal as Director of the Company at thisAnnual General Meeting.

In accordance with the provisions of the Companies Act, 1956 and that of Articles ofAssociation of the Company, Mrs. Arathi Shetty and Mr. Adarsh Hegde, Directors of theCompany, retire by rotation at this Annual General Meeting. Being eligible, they offerthemselves for re-appointment. The Board recommends their re-appointment.

Mr. Rajiv Sahney, Independent Non Executive Director, has resigned as director of theCompany w.e.f. August 09, 2010. Your Board places on record its deep appreciation for thevaluable services and guidance given by Mr. Sahney during his tenure as Director of theCompany.

Brief resume of Mrs. Arathi Shetty, Mr. Adarsh Hegde and Mr. Mohinder Pal Bansal asrequired in terms of Clause 49 of the Listing Agreement with the Stock Exchanges, isincluded in the Corporate Governance Report annexed to this Annual Report.

AUDITORS

M/s. Appan & Lokhandwala Associates, Chartered Accountants, Mumbai, the StatutoryAuditors of the Company, retire at the conclusion of this Annual General Meeting and areeligible for re-appointment. The Board recommends re-appointment of M/s. Appan &Lokhandwala Associates as Statutory Auditors of the Company for the current financial yearand to fix their remuneration.

PUBLIC DEPOSITS

During the year under review, your Company has not accepted any deposits within themeaning of Section 58A and Section 58AA of the Companies Act, 1956 and rules made thereunder.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 217(2AA) of the Companies Act, 1956, the Directors confirm that:

(a) in the preparation of the annual accounts, the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

(b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at December 31, 2010 and of the profitof the Company for the year ended on that date;

(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; and

(d) the Directors had prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

Your Company has been benchmarking itself with well established Corporate Governancepractices besides strictly complying with the requirements of Clause 49 of the ListingAgreement. Given the emerging pivotal role of Independent Directors in bringing about goodgovernance, your Company continues its efforts in utilizing their expertise and involvingthem in all critical decision making processes.

A separate report on Corporate Governance together with requisite certificate from M/s.Mehta & Mehta, Practising Company Secretaries, confirming compliances with theprovisions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement isannexed and forms a part of the Annual Report.

The declaration regarding compliance with the Code of Conduct prescribed by the Companyfor Directors and Management Personnel forms part of report on Corporate Governance.

PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO

Information as required under Section 217(1)(e) of the Companies Act, 1956 read withthe Companies (Disclosure of particulars in the report of Board of Directors) Rules,1988,are set out in Annexure I annexed to this report.

PARTICULARS OF EMPLOYEES

In terms of the provisions of Section 217(2A) of the Companies Act, 1956, read with theCompanies (Particulars of Employees) Rules, 1975 as amended, the names and otherparticulars of the employees are required to be set out in the Directors' Report. However,as per the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956 the AnnualReport excluding the aforesaid information is being sent to all the members of the Companyand others entitled thereto. A member, who is interested in obtaining such particulars,may write to the Company Secretary at the registered office of the Company.

ACKNOWLEDGEMENTS

Your Directors take this opportunity to place on record their gratitude for thevaluable support and co-operation extended during the year by the Government of India,Governments of various countries, the concerned State Governments and other GovernmentDepartments and Agencies, the Stakeholders, Business Associates including Bankers,Financial Institutions, Vendors and Service Providers.

Your Board also wishes to place on record their appreciation for the dedication andcommitment shown by the employees at all levels who have contributed to the success ofyour Company.

Conservation of Energy:

Even though operations of the Company are not energy intensive, your Company has alwaysstrived to optimize energy consumption.

Power and fuel consumption

Technology Absorption:

In 2010, your company successfully completed a system transformation program across itsbusiness verticals in India. This was a major exercise that touched upon each user in theorganization and the transition was achieved in a seamless manner.

The company has deployed a common financial accounting system for all divisions (exceptNVOCC) and this has resulted in improved visibility and enabled faster month endprocesses. All the operational systems for each business vertical have also beenintegrated with the financial system to capture information real time. The company is nowfocused on realizing benefits from the investments made in new systems and efforts are nowbeing driven to centralize and standardize processes.

Last year your company upgraded its hardware at its data centre in Mumbai and postdeployment of centralized systems, steps have been initiated to invest in an appropriateDR (Disaster Recovery) solution. This will ensure sustained availability of systems incase of a natural disaster. Data security is another focus area and plans have been drawnup to improve the company's security posture.

The IT initiatives undertaken across different business verticals are summarized below.

NVOCC

The NVOCC division has migrated to a new single instance application for all itsoffices in India. This is an integrated ERP system that now provides one version of truth.The system has increased automation, improved visibility, reduced cycle time and providesvarious self service options to the customer for information retrieval. The system nowcaptures KPI (Key Performance Indicators) by job role and location and this is beingextensively used by the offices to improve productivity.

Warehousing

The industry standard WMS (Warehouse Management System) from INFOR is now adding valueto our customers by providing better control and visibility for their vendor inventory.The system has also helped to improve efficiency and decrease inventory carrying cost.

Equipment

INFOR EAM system was deployed to manage core activities for Operations &Engineering division. The system has improved visibility and now provides early warningsignals and auto reminders to better manage day to day operations. A CRM (CustomerRelationship Management) module was also deployed to retain and enhance customerrelationships. The INFOR EAM system has also been tightly integrated with the financialaccounting system.

CFS

The capability of CFSMS application used by our CFS division was further enhanced andit now sends automated gate events reporting via EDI to our customers. Few operationalprocedures were further optimized to improve productivity and billing functionality wasmade more robust and flexible. The CFSMS application is tightly integrated with thefinancial accounting system and provides real time visibility and better controls.

Project Cargo

New customer centric functionalities were developed for better visibility and inventorycontrol. The operational system (PCMS) was integrated with the financial accounting systemand a CRM module was also deployed to capture customer profiles.

Foreign Exchange Earnings and Outgo:

Disclosures pursuant to Clause 12 of the SEBI (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines, 1999

Pursuant to the applicable requirements of the Securities and Exchange Board of India(Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999(“the SEBI guidelines”), your Company has framed and instituted 'AllcargoEmployee Stock Option Plan 2006' to attract, retain, motivate and reward its employees andto enable them to participate in the growth, development and success of the Company. YourCompany granted stock options to be adjusted for the subsequent bonus issue prior to itsInitial Public Offering of equity shares, to its permanent employees. The Company alsogranted stock options to few of the permanent employees of its foreign subsidiaries postInitial Public Offering at varying numbers depending upon their grades.

The following table sets forth the particulars of stock options granted (after givingeffect of sub-division) under Allcargo ESOP-2006 as on

December 31, 2010:

Person-wise details of options granted to senior managerial persons of the Company:

Person-wise details of options granted to senior managerial persons of foreignsubsidiaries of your Company:

* Resigned during the year

Pursuant to the SEBI guidelines, the excess of the market price of the underlyingequity shares as of the date of grant over the exercise price of the option, includingupfront payments, if any, is to be recognized and amortized on a straight line basis overthe vesting period. Accordingly, the Company has debited a sum of Rs 403,253 to the profitand loss account for the year ended December 31, 2010, as employee compensation cost.

The equity shares issued and allotted under the ESOP 2006 of the Company are pari-passuin all respects including dividend with the

existing equity shares of the Company.

Statement containing information u/s 212(5) of the Companies Act, 1956

COMPANIES AS ON AND FOR THE YEAR ENDED DECEMBER 31, 2010