The Directors present herewith Twenty First Annual Report of the
Company together with the Audited Statement of Accounts for the year
ended 31st December 2012.
Particulars Year Ended 31st Year Ended 31st
December 2012 December 2011
(Rs. In Millions) (Rs. In Millions)
Operating Income 4,160.33 3,967.72
Less: Total Expenditure 2,341.62 2,141.88
Operating Profit 1,818.71 1,817.05
Add: Other Income 154.47 163.65
Profit before Interest,
Depreciation, tax and
exceptional items 1,973.18 1,980.70
Less: Interest 684.15 851.88
Less: Depreciation 549.42 557.82
Profit/(Loss) Before Tax 739.61 571.00
Less: Taxes (Fringe Benefit
Tax) - -
Profit/ (Loss) After Tax 739.61 571.00
Balance brought forward from
previous year (7,005.84) (7,745.45)
Your Company is pleased to report Net Profit of Rs. 739.61 Million. But
considering the forthcoming major expansion of the Port and the
accumulated losses of Rs. 7,005.84 Million, no dividend is recommended.
YEAR IN RETROSPECT & OTHER KEY DEVELOPMENTS
A brief statistical profile on port operations during the year ended
31st December 2012 comprising of ships calling at the Port and volume
of cargo handled is as under:
Particulars Year 2012 Year 2011
No. of vessel calls at the Port 1,117 1,315
Bulk Cargo Handled (In MT.) 3,118,168 3,793,881
Containers Handled (TEU) 570,480 610,243
The overall container market on West Coast has witnessed low single
digit growth during Calendar year 2012. The container volume at Pipavav
for year 2012 was lower by 6.5% compared to previous year. The
reduction was due to shift of one service to another port on West Coast
effective April 2012. It has been replaced with another service by the
same shipping line. Further, two new services have been added by other
shipping lines during last quarter of year 2012 and the Management''s
efforts continue to add more services. Meanwhile the Company introduced
dollar tariff effective August 2012 and it has been . accepted by all
our customers. This has resulted in improvement of our realization
which is offset by lower container volume.
Regarding the bulk cargo business which comprises coal and fertilizers
as main commodities, overall coal imports across the country for power
plants has reduced due to the pending decision on re-evaluation of
power tariff by Government and price parity between imported and
domestic coal. This is likely to improve with the Government''s approval
for pooling of prices. Specific to Pipavav, the challenge has been a
combination of upward revision of rail freight and realigning of
freight distance slabs rates which has made Pipavav logistically
disadvantageous in comparison to other ports on West Coast. With
respect to fertilizer imports, the overall imports of MOP/DAP has
fallen over 60% due to high international pricing and partial removal
of government subsidy on both these products. There was also a delayed
start to the import season. All of this has contributed to reduction in
the Company''s bulk cargo volume by 16% compared to last year. But the
team identified handling of Wheat Exports as an opportunity to offset
the lower coal and fertilizer volume. This has helped in getting two
way loaded train movement to and from the port. The management
continues its effort in exploring new opportunities for handling export
commodities in absence of anticipated large coal volumes for effective
Regarding the liquid cargo business, the Company has signed agreements
with three private parties. They have taken land on lease for setting
up tank farm facilities inside the port and have started construction
of their tank farms. These are likely to be operational in a phased
manner from Q4of Calendar Year 2013. This shall improve the capacity
utilization of our liquid berth.
The introduction of dollar tariff, favorable exchange rate and better
cargo mix has resulted in Revenue from Operations increase by 5%
compared to previous year. But these gains have been offset by lower
cargo volume handled during the year. This has impacted the EBDITA
margins. The Net Profit increased by 29.53% due to lower borrowing cost
and Income under Served for India Scheme (SFIS).
UPDATE ON PORT PROJECT EXPANSION
The Company is concluding the debt financing for its proposed expansion
with International Finance Corporation (IFC) which is part of World
Bank Group. Simultaneously, the contractors for Capital Dredging and
Civil Works are also being finalized. The construction activity shall
commence immediately on closure of the funding.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to the requirements under Clause 49 of the Listing Agreement
with the Stock Exchanges, a separate section on Management Discussion
and Analysis (MD&A) has been included as part of the Annual Report. The
MD&A includes review of industry prospects and developments,
opportunities and risks, business outlook, risks and concerns, internal
control systems and their adequacy and discussion on financial
The Company does not have any subsidiaries.
Pursuant to Clause 49 of the Listing Agreement, the Corporate
Governance Report is included in the Annual Report along with the
Statutory Auditor''s Certificate.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 217 (2AA) of the Companies Act, 1956, the Directors
(i) In preparation of the annual accounts, all applicable accounting
standards have been followed;
(ii) The accounting policies have been applied consistently and the
judgments and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of
the financial year as on 31st December 2012 and of the profit & loss
for that period;
(iii) Proper and sufficient care has been taken for maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) The annual accounts have been prepared on a going concern basis.
Mrs. Malini Bansal Lenders Nominee representing IDBI Bank Limited, Mr.
Shyam Sundar S. G. representing IDFC Private Equity Company Limited and
Mr. Christian Moller Laursen representing APM Terminals Mauritius
Limited have ceased to be Directors of the Company since September
The Board places on record its appreciation for their valuable
contribution as Directors of the Company.
In accordance with the provisions of the Companies Act, 1956, Mr.
Dinesh Lai, Mr. Pankaj Kumar, IAS and Mr. Martin Gaard Christiansen are
due to retire by rotation and being eligible, offer themselves for
Mr. Henrik Lundgaard Pedersen, Mr. Pradeep Mallick and Mr. Tejpreet
Singh Chopra were appointed as Additional Directors of the Company
effective September 2012. They cease to be Directors of the Company at
this Annual General Meeting and are proposed to be appointed as
Directors of the Company liable to retire by rotation.
Appropriate resolutions are being placed in the Notice convening the
Annual General Meeting for your approval. A brief resume of the
Directors and other information as per the requirement under Listing
Agreement has been detailed in the Notice forming part of this report.
The Directors recommend the resolutions for approval.
M/s BSR & Associates, Chartered Accountants, are the Statutory Auditors
of the Company and hold office until the ensuing Annual General
Meeting. Being eligible, it is proposed to re-appoint them.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION
Your Company is engaged in the business of port operations and does not
carry any manufacturing activity. Therefore the information required
under Section 217 (1)(e) of the Companies Act, 1956 read with the
Companies (Disclosure of Particulars in the Report of the Board of
Directors) Rules, 1988 as amended and forming part of the Directors''
Report for the year ended 31st December 2012 is not applicable.
However, the Company has been consciously taking regular steps for
energy conservation, technology absorption and reducing carbon
Taking the Company''s initiative of reducing dependency on diesel
equipments forward, the rail yard operations for handling containers
has been fully mechanized with Rail Mounted Gantry Cranes (RMGCs). The
3 cranes became operational during December 2012. These are operated on
electricity and have replaced the Reach stackers which operated on
diesel. Rail yard operations at the port have now become safer,
efficient and contributed to reduction of carbon footprint.
ENVIRONMENT PROTECTION & CORPORATE SOCIAL RESPONSIBILITY
As a good Corporate Citizen your Company considers protection of the
environment and contribution to the local community as important
obligations towards the people of the Region of its operations.
The Port Management and the middle level Managers regularly engage with
the local community, understand their requirements and work towards
their well being. Regular contribution of resources is made for the
village and local schools, based on their requirement.
Besides regular monitoring and analysis of Water quality including Sea
water at the Jetty area and the Air quality, the port has developed a
separate area for handling ferrous and non ferrous material, waste oil
and battery waste in an environment friendly manner as part of its
waste management initiative. 1500 saplings have been planted within the
port premises for increasing the green belt area during last quarter of
the calendar year. The port also took steps to create awareness amongst
the local residents for minimizing the usage of polythene bags.
FOREIGN EXCHANGE EARNINGS AND OUTGO
Details of expenditure and earnings in foreign currencies are mentioned
in Schedule 15 Note no. 39 to the financial statements.
The particulars as required under Section 217 (2A) of the Companies
Act, 1956 read with Companies (Particulars of Employees) Rules, 1975
are annexed to the Directors'' Report. However, as per the provisions of
Section 219 (1)(b)(iv) of the Companies Act, 1956, the Report and the
Accounts are being sent to all shareholders of the Company excluding
the aforesaid information. The aforesaid information is available for
inspection at the Registered Office of the Company. Any shareholder
interested in obtaining such particulars may write to the Company
The Company has not accepted any deposits within the meaning of Section
58A of the Companies Act, 1956 and the rules made there under.
The Board of Directors of your Company acknowledge and place on record
their sincere appreciation for the strong and dedicated contribution
made by the loyal employees at all levels. The Directors also wish to
place on record their appreciation for the continued valuable support,
co-operation and assistance of Government of India, Government of
Gujarat, Gujarat Maritime Board and various other Government Agencies,
Financial Institutions & Banks, Promoters and Group Companies.
For and on behalf of Board of Directors
Place : Mumbai Per Jergensen
Date : 21st February 2013 Chairman