It reported an operating loss of Rs 6.44 crore for the year to March 31, 1998, against a loss of Rs 5.63 crore last year. But it brought down the loss before tax to Rs 95.03 lakh by netting a profit of Rs 9.77 crore from the sale of the ships and by showing Rs 4.28 crore as deferred revenue expenditure. It has an accumulated loss of Rs 188.65 crore, against Rs 187.78 crore last year.

Managing director LMS Rajwar told shareholders at the company's 70th annual general meeting (AGM) in Calcutta on Monday that "... the net worth of the company is very much negative". But, since India Steamship is not a manufacturing company, the Sick Industrial Companies (Special Provisions) Act, 1985, does not apply toit.

A section of the minority shareholders left the AGM venue after SK Singh Roy, the chairman of the meeting, refused to answer their questions and said the managing director would do so.

Out of the 12 directors, only three were present at the AGM -- SK Singh Roy, executive director D Madhok and Rajwar.

Some shareholders questioned how the board could seek a vote on the reappointment of three directors -- SK Poddar, RK Choudhury and Shobhana Bhartia. The three are seeking re-appointment. The three resolutions were eventually passed when Singh Roy said that this was an extra-ordinary situation where the directors could not make it to the meeting because of other pre-occupations.

The company said that earnings were hit because four of its five ships were undergoing five special surveys spanning over 124 days. The fifth was dry-docked for 30 days. The repairs and surveys, meanwhile, led to heavy expenditure.

Income for the year to March 31, 1998, was Rs 584.40 crore, against Rs 554.10 crore theprevious year. However, the other income component which was included in the total turnover of Rs 584.40 crore in 1997-98 was Rs 11.54 crore against last year's Rs 3.68 crore.

Expenditure was Rs 558.02 crore, against Rs 511.63 crore in 1996-97. The company has skipped dividend.

The total loan component on March 31, 1998, was Rs 221.19 crore. The paid-up share capital is Rs 18.78 crore.

Singhi & Co, the statutory auditors, have passed the accounts subject to several qualifications. The issues are:

* Interest of Rs 3.87 crore claimed by the government, which the company contends is not in line with the rehabilitation package sanctioned;

* Loan outstanding from Shipping Development Fund Committee;

* Interest calculation on SAFAUNS loan;

* Calculation of leave encashment liability which has been carried not in line with the guidelines set by the Institute of Chartered Accountants of India;

* Cumulative expenses of Rs 3.12 crore on laid-up ships instead of being charged to revenue has been shownunder miscellaneous expenditure to the extent of Rs 2.03 crore;

* Treatment of deferred revenue expenditure of earlier years.

The company's miscellaneous expenditure mainly on account of deferred revenue expenditure to the extent not written off was Rs 12.68 crore as on March 31, 1998, against Rs 10.81 crore in the previous year.

The other expenses which includes provisions for doubtful debts, exchange fluctuations and also deferred revenue expenditure was Rs 1.89 crore as on March 31, 1998.

India Steamship closed down its offices at London and Mumbai during the year. It has applied to the Company Law Board to issue redeemable preference shares and the existing 25,000, five per cent tax free cumulative redeemable preference shares of Rs 100 each issued in 1944 will be deemed to be redeemed.