To
The Members,
Gujarat Pipavav Port Limited
The Directors of Gujarat Pipavav Port Limited (the Company') have pleasure in
submitting their 31st Annual Report to the Members of the Company together with the
Audited Standalone and Consolidated Statement of Accounts for the financial year ended 31
March 2023.
1. FINANCIAL STATEMENTS & RESULTS: a. STANDALONE FINANCIAL RESULTS:
(INR Million)
Particulars |
For the year ended 31 March 2023 |
For the year ended 31 March 2022 |
Operating Income |
9,169.50 |
7,413.65 |
Less: Total Operating Expenditure |
4,148.09 |
3,309.78 |
Operating Profit |
5,021.41 |
4,103.87 |
Add: Other Income |
510.00 |
307.60 |
Profit before Interest, Depreciation, Tax and Exceptional Item |
5,531.41 |
4,411.47 |
Less: Interest |
79.55 |
47.66 |
Less: Depreciation |
1,161.54 |
1,292.71 |
Profit before exceptional items and tax |
4,290.32 |
3,071.10 |
Less: Exceptional items |
371.67 |
46.09 |
Profit Before Tax |
3,918.65 |
3,025.01 |
Less: Taxes |
1,000.85 |
1,092.64 |
Profit for the year after Tax |
2,917.80 |
1,932.37 |
Total comprehensive income for the year |
2,924.50 |
1,935.97 |
b. OPERATIONS:
The Company is engaged in Port Development and Operations at Pipavav Port,
in Saurashtra Region of Gujarat State. It has a 30-year Concession vide Agreement dated 30
September 1998 from Gujarat Maritime Board (GMB). The Port located in Southwest of Gujarat
handles Containers, Dry Bulk, Liquid, and RORO vessels. The performance details are as
follows:
Particulars |
For the year ended 31 March 2023 |
For the year ended 31 March 2022 |
Dry Bulk Cargo (Mn MT) |
3.91 |
4.19 |
Liquid Cargo (Mn MT) |
1.03 |
0.81 |
Containers (In TEUs) |
764,034 |
627,747 |
RORO (No. of Cars) |
40,237 |
23,874 |
The improvement in Container volume is primarily driven by addition of new service to
the Middle East, during the year. The Liquid Cargo volume is seeing good traction with
rail evacuation of LPG working well economically for the customers. The Company has added
new customer in RoRo for car exports, resulting into improvement in the volume. In the
case of Dry Bulk cargo, with the captive jetty in the neighbourhood getting operational,
the volume is back to the pre-covid and pre-cyclone levels.
c. REPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES:
The Company holds 38.8% shares in Pipavav Railway Corporation Limited (PRCL) and the
salient features in Form AOC-1 are mentioned in Annexure B. In view of the provisions of
Section 2(6) of the Companies Act, 2013 (the Act'), PRCL is an Associate Company and
pursuant to the provisions of Section 129 of the Act, the Company is required to
consolidate PRCL's annual accounts with its own accounts. The
Company's share of Net Profit in PRCL is based on Management representation numbers in
view of pending finalisation of accounts and completion of PRCL's statutory audit. A
snapshot of the Consolidated Accounts is as follows: (INR Million)
Particulars |
For the year ended 31 March 2023 |
For the year ended 31 March 2022 |
Operating Income |
9,169.50 |
7,413.65 |
Less: Total Operating Expenditure |
4,148.09 |
3,309.78 |
Operating Profit |
5,021.41 |
4,103.87 |
Add: Other Income |
510.00 |
307.60 |
Profit before Interest, Depreciation, Tax and Exceptional Item |
5,531.41 |
4,411.47 |
Less: Interest |
79.55 |
47.66 |
Less: Depreciation |
1,161.54 |
1,292.71 |
Profit before share of net profits of investments |
4,290.32 |
3,071.10 |
Add: Share of Net Profit of Associate Company accounted for using the
Equity Method |
213.62 |
40.92 |
Profit before exceptional items and tax |
4,503.94 |
3,112.02 |
Less: Exceptional items |
371.67 |
46.09 |
Profit before tax |
4,132.27 |
3,065.93 |
Less: Taxes |
1,000.85 |
1,092.64 |
Profit for the year after Tax |
3,131.42 |
1,973.29 |
Total comprehensive income for the year |
3,138.15 |
1,976.85 |
d. DIVIDEND:
The Board of Directors in their Meeting held on 9th November 2022 declared Interim
Dividend of Rs. 2.70 per share and it has been paid. The Board is pleased to recommend a
Final Dividend of Rs. 3.40 per share on the Company's outstanding Equity Share Capital.
The Dividend is subject to the approval by the Members at the Annual General Meeting to
be held on 4 August 2023 and will be paid on 10 August 2023, within the stipulated time
limit to all Members whose Names appear in the Register of Members, as of the close of
business hours on 26 July 2023. The final dividend if approved by the Members would
involve a cash outflow of Rs. 1,643.69 million. The Dividend Distribution Tax, if
applicable, would be borne by the Member.
The Company has a Dividend Distribution Policy, which is available on the website
https://www.apmterminals.com/en/pipavav/investors/governance
e. TRANSFER TO RESERVES:
The Board of Directors have not recommended any transfer of profit to reserves during
the year under review. Hence, the entire amount of profit has been carried forward to the
Statement of Profit and Loss.
f. REVISION OF FINANCIAL STATEMENT:
The Company has not carried out any revision in its financial statements in any of the
three preceding financial years as per the requirement under Section 131 of the Act.
g. DEPOSITS:
The Company has not accepted or renewed any amount falling within the purview of
provisions of Section 73 of the Companies Act 2013 ("the Act") read with the
Companies (Acceptance of Deposit) Rules, 2014 during the year under review. Hence, the
requirement for furnishing of details of deposits which are not in compliance with Chapter
V of the Act is not applicable.
h. DISCLOSURES UNDER SECTION 134(3)(l) OF THE COMPANIES ACT, 2013:
Except as disclosed elsewhere in this report, no material changes and commitments which
could affect the Company's financial position, have occurred between the end of the
financial year of the Company and date of this report.
i. DISCLOSURE OF INTERNAL FINANCIAL CONTROLS:
The Internal Financial Controls with reference to financial statements as designed and
implemented by the Company are adequate considering the nature of its business and the
scale of operations. During the year under review, no material or serious observation has
been made by the Statutory Auditors and the Internal Auditors of the Company regarding
inefficiency or inadequacy of such controls. Wherever suggested by the auditors, the
control measures have been further strengthened and implemented.
j. DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL:
No adverse orders have been passed by any Regulator or Court or Tribunal which can have
impact on the Company's status as a Going Concern and on its future operations.
k. PARTICULARS OF CONTRACT OR ARRANGEMENT WITH RELATED PARTIES:
The transactions/contracts/arrangements entered by the Company with
related party(ies) as defined under the provisions of Section 2(76) of the Companies Act,
2013, during the financial year under review, are in the ordinary course of business and
at arms' length. Therefore, they are exempt from the provisions of Section 188 of the
Companies Act, 2013. But all such transactions have prior approval of the Audit Committee
as per the requirement under SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015. The related party transaction with Maersk A/S regarding Income from
Port Operations is a material transaction as per SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015. The Contract with Maersk A/S has been approved by the
shareholders by way of Postal Ballot on 16th March 2020, pursuant to Regulation 23(4) of
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The details of
Related Party Transactions are mentioned in Note 34(b) of the financial statements. The
link for the Policy on Related Party Transactions is
https://www.apmterminals.com/en/pipavav/investors/governance
l. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES:
The Company has neither provided nor accepted any loans, guarantees and securities. The
Company does not have any investments except 38.8% shareholding in its Associate Company
PRCL.
Further, the Company is engaged in the business of providing infrastructural facilities
and is therefore exempt from the provisions of Section 186 of the Companies Act, 2013.
m. DISCLOSURE UNDER SECTION 43(a)(ii) OF THE COMPANIES ACT, 2013:
The Company has not issued any shares with differential rights and hence no information
as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies
(Share Capital and Debenture) Rules, 2014 is included in the report.
n. DISCLOSURE UNDER SECTION 54(1)(d) OF THE COMPANIES ACT, 2013:
The Company has not issued any sweat equity shares during the year under review and
hence the provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies
(Share Capital and Debenture) Rules, 2014 are not applicable.
o. DISCLOSURE UNDER SECTION 62(1)(b) OF THE COMPANIES ACT, 2013:
The Company does not have any Employees Stock Option Scheme and hence the provisions of
Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and
Debenture) Rules, 2014 are not applicable.
p. DISCLOSURE UNDER SECTION 67(3) OF THE COMPANIES ACT, 2013:
During the year under review, there were no instances of non-exercising of voting
rights in respect of shares purchased directly by employees under a scheme pursuant to
Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures)
Rules, 2014.
2. OUTLOOK:
The World Health Organisation has declared Covid-19 is no longer a global health
emergency. Though it also mentions that the virus is evolving and remains a global health
threat but at a lower level of concern. This is good news and a much needed relief for the
global trade considering the challenges the vessels and its crew had to face during the
pandemic and should also help the shipping lines bring reliability to their sailing
schedules.
Considering the potential fall out of the continuing Russia- Ukraine conflict on the
inflationary pressures in Europe, the EU provided large budgetary support measures to help
the households weather the energy crisis. But the non-Russian LNG deliveries and a mild
winter led to oil and gas prices trending downwards from their peak in mid- 2022. Also,
India one of the largest importers of crude oil in the international crude market, has
been fulfilling its crude oil requirement through much cheaper crude oil imports from
Russia post the economic sanctions imposed by the Western countries. India's imports from
Saudi Arabia and Iraq reduced substantially thus leading to reduction in the crude oil
prices in the international markets.
The interest rate hike by the advanced economies succeeded in cooling the
demand towards the end of Year 2022 but the failure of a few banks in the US triggered a
sharp decline in global banking stocks. In order to prevent impacting other banks, several
Central Banks intervened to provide extraordinary liquidity and to calm the situation, the
Governments sent a message to depositors about safety of their deposits. The central banks
of the advanced economies are trying to balance between taming inflation, sustaining
economic growth and maintain financial stability. All these events have resulted into a
somewhat rocky and turbulent recovery for some of the economies around the world.
The Commodity prices have moderated since last year, the debt levels of the countries
remain high but the recent financial turmoil has caused uncertainty in the growth outlook.
The IMF estimates the global output growth to be at 2.8% for the Year 2023, down from 3.4%
during the Year 2022. Within that the advanced economies are slated for a strong decline
at 1.3% from 2.6% and the growth is likely to be driven by the emerging economies.
India recorded 6.6% GDP growth in FY 2022-23 and is likely to be impacted by the
decline in Exports to the advanced economies. Hence the GDP for FY 2023-24 is likely to
drop to 5.7% and then is likely to sharply increase to 7% in FY 2024-25 as per the OECD
estimates. Government of India has been expanding the infrastructure spend in the country
by constructing highways and dedicated rail freight corridors. The gross direct tax
collections for the FY 2022-23 have reported a strong increase of 20.33% year on year. The
net direct tax collections (after paying refunds) increased by 17.63% year on year. As per
the reports, this buoyancy in tax collections is the highest ever in last 15 years mainly
driven by higher profitability of companies, more number of companies opting for the
standard tax rates after completing their tax holidays and improved overall tax
compliance. Also, increased digitisation has brought a bigger share of the economy under
the tax administration. With China opening up and inflation impacting the western
economies, the situation of port congestion has eased, and global supply chain has
stabilised. The availability of containers has changed from shortage to excess supply. The
ocean freight rates for the shipping lines have been on a downward trend as compared to
last two years but they remain high as compared to the pre-covid days. As per the
estimates of World Trade Organisation, the global trade is likely to be at 1.7% in the
year 2023 lower than its 12-year average of 2.7% due to high inflation, monetary
tightening and financial uncertainty but it is likely to sharply improve in the year 2024
to 3.2%.
The Container volume on the West Coast of India saw an increase of 4% during the year
at 14.56 million TEUs as compared to 13.95 million TEUs in the previous year. The increase
is driven mainly by the imports into the country while the Export volume to the Western
countries have been impacted. As for the Company, with the shipping line calls
stabilising, the container volume has shown an increase of about 21% compared to previous
year. Considering the economic situation in the western countries, the Exports from India
to the US and Europe are likely to remain under pressure in short term. But the Exports to
the Middle East and to the Far East are likely to remain steady. The Imports into India
are likely to see improvement with the consumption economy continuing to do well.
As far as the Dry Bulk volume is concerned, during last year the Company commissioned
additional warehouse of 10,000 sq. mtrs. for storage of fertiliser. In order to increase
the rake loading capacity and to enable faster evacuation of fertiliser cargo, the Company
has now commissioned two additional wagon loading equipment on the rail line. It will also
provide operational flexibility in simultaneously handling different types of fertiliser
cargo for loading on rakes.
As far as the Liquid Cargo business is concerned, the Company has upgraded its existing
Liquid berth for handling partially loaded Very Large Gas Carriers (VLGCs). The work has
been completed and necessary application has been submitted to the government authorities
seeking approval for handling partially loaded VLGCs.
The Company has been consistently investing in Port infrastructure and for development
on the waterfront as well as on the land side, as per the requirement of the trade from
time to time. Based on the discussions with the business partners and considering the
potential growth opportunities for handling higher liquid cargo volume, the Company
proposes to construct an additional Liquid Berth at an estimated cost of USD 90 million
subject to regulatory approvals. Once completed, it will increase the Liquid cargo
handling capacity at Pipavav from 2 million MT to 5.2 million MT.
The Car exports from Pipavav have shown consistent improvement with
addition of new customer automobile companies. The Company along with its business partner
continues to explore new opportunities in RoRo.
In an endeavour to improve the local ecosystem around the port, the Company has entered
into an agreement for hiring of a warehouse on a long-term lease at the Multi Modal
Logistics Park being developed outside the port. It will help in providing warehousing
solutions to the local cargo customers from immediate hinterland.
3. RISKS AND AREAS OF CONCERN:
While the macro indicators for India are positive, the consumption story of the country
is holding strong, the Exports from India into the Western economies need to grow. The
sectors like textiles, apparels, handicrafts, leather goods are high employment generating
sectors and the increase in their share of exports into the global trade will have a
multiplier effect on India's growth. The western economies are under pressure due to the
prevailing inflation. If India has to increase its share in global trade, then the
country's exports need to become competitive in the fiercely competitive international
market. In that context, along with the Government of India, the respective State
Governments have an equally important role in providing necessary support to industries,
facilitate seamless end to end logistics and remove inefficiencies in the system.
4. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL:
a. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL:
Mrs. Hina Shah (DIN: 06664927) has her second consecutive tenure as an Independent
Director upto 29 July 2023. Mr. Tejpreet Singh Chopra (DIN: 00317683) has his second
consecutive tenure as an Independent Director upto 29 July 2025. Mr. Samir Chaturvedi
(DIN: 08911552) has been appointed as an Independent Director upto 11 November 2025. Ms.
Monica Widhani (DIN: 07674403) has been appointed as an Independent Director upto 11
August 2026. Ms. Matangi Gowrishankar (DIN: 01518137) has been appointed as an Independent
Director upto 2 August 2027. The Company has obtained Shareholder's approval by way of
Remote E-voting for her appointment.
In accordance with the provisions of the Act, none of the Independent Directors is
liable to retire by rotation. The Managing Director of the Company is also not liable to
retire by rotation.
Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Keld Pedersen
(DIN: 07144184) and Mr. Jonathan Richard Goldner (DIN: 09311803) are liable to retire by
rotation at the ensuing Annual General Meeting and being eligible, offer themselves for
re-appointment. Your Directors recommend their re-appointment.
b. DECLARATION BY INDEPENDENT DIRECTORS:
The Company has received declaration from all Independent Directors under Section
149(6) of the Companies Act, 2013 confirming that they continue to fulfil the criteria of
independence as required under Section 149 of the Companies Act, 2013 and Regulation 16 of
the Listing Regulations. There has been no change in the circumstances affecting their
status as Independent Director of the Company. The details regarding the appointment of
Independent Directors and their tenure have been mentioned hereinabove.
The Company has been regularly conducting Familiarisation Programmes for its
Independent Directors and has posted its details on the website
https://www.apmterminals.com/en/pipavav/investors/independent-directors In the opinion of
the Board, the Independent Directors possess integrity, requisite expertise and experience
for acting as an Independent Director of the Company.
The Independent Directors of the Company are exempt from undertaking the online
proficiency test as required under Rule 6(4) of the Companies (Appointment and
Qualification of Directors) Rules, 2014.
5. DISCLOSURES RELATED TO BOARD, COMMITTEES AND POLICIES:
a. BOARD MEETINGS:
The Board of Directors met four times during the year ended 31 March 2023
in accordance with the provisions of the Companies Act, 2013 and rules made thereunder.
The particulars of the meetings held and attended by each Director during the financial
year 2023 are given in the Corporate Governance Report which forms part of this Annual
Report.
b. DIRECTOR'S RESPONSIBILITY STATEMENT:
In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited
financial statements of the Company for the year ended 31 March 2023, the Board of
Directors hereby confirm that: a. in preparation of the annual accounts, the applicable
accounting standards have been followed along with proper explanation relating to material
departures; b. such accounting policies have been selected and applied consistently and
the Directors made judgments and estimates that are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company as at 31 March 2023 and of the
profit of the Company for that period; c. proper and sufficient care was taken for
maintenance of adequate accounting records in accordance with the provisions of this Act
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities; d. the annual accounts of the Company have been prepared on a Going
Concern basis; e. internal financial controls have been laid down by the Company and that
such internal financial controls are adequate and operating effectively; f. proper systems
have been devised to ensure compliance with the provisions of all applicable laws and that
such systems are adequate and operating effectively.
c. NOMINATION AND REMUNERATION COMMITTEE:
The Nomination and Remuneration Committee, a Sub-committee of Directors has been
constituted by the Board in accordance with the requirements of Section 178 of the Act.
The composition of the Committee is as follows:
1. Mr. Samir Chaturvedi, Chairman, Independent Director
2. Mr. Tejpreet Singh Chopra, Independent Director;
3. Ms. Matangi Gowrishankar, Independent Director; and
4. Mr. Jonathan Richard Goldner, Non-Executive Non- Independent Director
The Board has in accordance with the provisions of sub-section (3) of Section 178 of
the Companies Act, 2013, formulated the policy setting out the criteria for determining
qualifications, positive attributes, independence of a Director and policy relating to the
remuneration for Directors, Key Managerial Personnel and other members of Senior
Management.
Major criteria defined in the policy framed for appointment of and payment of
remuneration to the Directors of the Company, is as under:
a) While appointing a Director, it shall always be ensured that the candidate possesses
appropriate skills, experience and knowledge in one or more fields of finance, law,
management, sales, marketing, administration, research, corporate governance, technical,
operations or other disciplines related to the Company's business.
b) In case of appointment as an Executive Director, the candidate must have the
relevant technical or professional qualification and experience as considered necessary
based on the job description of the position. In case no specific qualification or
experience is prescribed or thought necessary for the position then, while recommending
the appointment, the HR Department shall provide the job description to the Committee and
justify that the qualification, experience and expertise of the recommended candidate is
satisfactory for the relevant position. The Committee may also call for an expert opinion
on the appropriateness of the qualification and experience of the candidate for the
position of the Executive Director.
c) In case of appointment as a Non-Executive Director, the candidate must have a post
graduate degree, diploma or a professional qualification in the field of his practice/
profession/ service and shall have not less than five years of working experience in such
field as a professional in practice, advisor, consultant or as an employee. Provided that
the Board may waive the requirement of qualification and/ or experience under this
paragraph for a deserving candidate.
d) The Board, while making the appointment of a Director, shall also try
to assess from the information available and from the interaction with the candidate that
he is a fair achiever in his chosen field and that he is a person with integrity,
diligence and an open mind.
e) While determining the remuneration of Executive Directors, Key Managerial Personnel
and members of Senior Management, the Board shall consider following factors:
i) Criteria/ norms for determining the remuneration of such employees prescribed in the
HR Policy.
ii) Existing remuneration drawn.
iii) Industry standards, if the data in this regard is available.
iv) The job description.
v) Qualifications and experience levels of the candidate.
vi) Remuneration drawn by the outgoing employee, in case the appointment is to fill a
vacancy on the death, resignation, removal etc. of an existing employee.
vii) The remuneration drawn by other employees in the grade with matching
qualifications and seniority, if applicable.
f) The remuneration payable to the Executive Directors, including the Performance Bonus
and value of the perquisites, shall not exceed the permissible limits as mentioned within
the provisions of the Companies Act, 2013. They shall not be eligible for any sitting fees
for attending any meetings.
g) The Non-Executive Directors shall not be eligible to receive any remuneration from
the Company. However, Non-Executive Independent Directors shall be paid sitting fees for
attending the meeting of the Board or committees thereof and commission, as may be decided
by the Board/ Shareholders from time to time. They shall also be eligible for
reimbursement of out of pocket expenses for attending Board/ Committee Meetings. The
Non-Executive Non-Independent Director representing Gujarat Maritime Board shall be
eligible for sitting fee for attending the Board Meeting and for reimbursement of out of
pocket expenses for attending the Meeting.
d. AUDIT COMMITTEE:
The Audit Committee, a Sub-committee of Directors was constituted by the Board pursuant
to the provisions of Section 177 of the Companies Act, 2013. The composition of the Audit
Committee is in conformity with the provisions of the said section. The Audit Committee
comprises:
1. Mr. Samir Chaturvedi, Chairman, Independent Director
2. Mrs. Hina Shah, Independent Director
3. Ms. Monica Widhani, Independent Director
4. Mr. Maarten Degryse, Non-Executive Non- Independent Director
The scope and terms of reference of the Audit Committee is in accordance with the
Companies Act, 2013 and it reviews the information as required under SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015.
During the year under review, there were no instances of recommendation by the Audit
Committee not being accepted by the Board of Directors of the Company.
The Company Secretary acts as Secretary of the Committee.
e. STAKEHOLDERS RELATIONSHIP COMMITTEE:
During the year under review, pursuant to Section 178 of the Companies Act, 2013, the
Stakeholders Relationship Committee comprised the following Directors:
1. Mr. Tejpreet Singh Chopra, Chairman, Independent Director
2. Mrs. Hina Shah, Independent Director
3. Mr. Girish Aggarwal, Managing Director
The Company Secretary acts as Secretary of the Stakeholders Relationship Committee.
f. VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES:
The Board of Directors of the Company has, as per the requirements under Section 178(9)
of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its
Powers) Rules, 2014, framed the Whistle Blower Policy of the Company and the link of the
policy on the website is https://www.apmterminals.com/en/pipavav/investors/governance The
Policy provides a formal mechanism for all employees of the Company to make disclosure
about suspected fraud. It provides a designated phone number to directly report an
instance. The Policy encourages its employees to immediately raise his/her concern to the
respective Manager or to Head of HR whenever they notice any contravention with the
Company's Code of Conduct, the Code for Prevention of Insider Trading or fraud or any
unethical behaviour. In case the concerned person is not comfortable in reporting the
matter to his/her Manager or to the Manager's Manager or to the Head of HR, he/she can
report to the Chief Compliance Officer of the parent Company. The policy also provides
direct access to the Chairman of Audit Committee through his personal email id. During the
year under review, no complaints have been reported for any fraud.
As part of APM Terminals, the Company shares the distinctive set of the Group's Purpose
and Core Values that drive the way we do business. The Company is committed to adhere to
the highest standards of ethical, moral and legal conduct of business operations, to the
Group's commitment to the UN Global Compact and our commitment to our people, customers
and communities.
g. RISK MANAGEMENT POLICY:
The Board of Directors of the Company has designed Risk Management Policy and
Guidelines to avoid events, situations or circumstances which may lead to negative
consequences on the Company's businesses. It defines a structured approach to manage
uncertainty and to make use of these in decision making pertaining to the business and
corporate functions. Key business risks and their mitigation is considered in the
annual/strategic business plans and in periodic management reviews. The Company has Risk
Management Committee, a sub-committee of Directors comprising:
1. Mr. Julian Bevis, Chairman, Non-Executive Non- Independent Director
2. Mr. Soren Brandt, Non-Executive Non- Independent Director
3. Mr. Samir Chaturvedi, Independent Director
4. Mr. Girish Aggarwal, Managing Director
h. CORPORATE SOCIAL RESPONSIBILITY POLICY:
As per the provisions of Section 135 of the Act read with Companies (Corporate Social
Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate
Social Responsibility (CSR) Committee, a sub-committee of Directors comprising:
1. Mrs. Hina Shah, Chairperson, Independent Director
2. Mr. Soren Brandt, Non-Executive Non- Independent Director
3. Mr. Julian Bevis, Non-Executive Non- Independent Director
4. Mr. Girish Aggarwal, Managing Director
The Board of Directors of the Company has approved CSR Policy based on the
recommendation of the CSR Committee. The Company has initiated activities in accordance
with the said Policy and the details are presented in Annexure A.
The CSR Policy of the Company is available on the web-site
https://www.apmterminals.com/en/pipavav/investors/governance
During the year ended 31 March 2023 the Company was required to spend Rs. 67.21 million
towards the CSR activities and the Company has spent the entire budget amount. The
Company's focus area of CSR activities are Education, Health, Safety & Environment,
Women Empowerment, Skill Development and Rural Development Projects.
i. ANNUAL EVALUATION OF DIRECTORS, COMMITTEE AND BOARD:
The Independent Directors held their meeting to evaluate the performance of each Non-
Independent Director and also of the entire Board as a whole. Each Board member's
attendance, participation and contribution of his expertise was evaluated. All Independent
Directors were present for the Meeting. The Board also carried out the evaluation of each
individual Director and various Board Committees did their respective Committee
evaluation.
The Board also evaluated the quality, content and timeliness of the information flow
between the Board and the Management including the board papers and other documents.
j. INTERNAL CONTROL SYSTEMS:
The Company has adequate internal control systems commensurate to the size of its
business, the nature of business and its complexities and these controls are operating
satisfactorily. The adequacy and functioning of these internal controls is reviewed by the
Internal Auditors from time to time and wherever necessary the corrective measures are
taken. The Internal Auditors report directly to the Audit Committee of the Company.
Internal control systems consisting of policies and procedures are designed to ensure
reliability of financial reporting, timely feedback of achievement of operational and
strategic goals, compliance with policies, procedure, applicable laws and regulations and
that all assets and resources are acquired economically, used efficiently and protected
adequately.
k. DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS
PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES, 2014:
In terms of the requirement under Section 197(12) of the Act, the Median Employee's
Remuneration of the Company is Rs. 2.48 million. The Managing Director's remuneration was
Rs. 56.66 million. The ratio of Managing Director's remuneration to Median Remuneration of
employees is 22.85 The percentage increase in remuneration of the Key Managerial Personnel
(KMPs) i.e. Managing Director, Chief Financial Officer and Company Secretary is 0.3%, 8%
and 8% respectively. The average increase for KMPs works out to approximately 5%.
The percentage increase in the median remuneration of employees in the financial year
is 10.1%. The Company has a total of 460 permanent employees on its rolls.
The Company follows the global practice of its parent regarding the Performance
Appraisal System. The Group's HR has introduced a tool of constant engagement with our
colleagues. It is mainly focused on Team conversation between the colleagues and People
Leaders. The Company is shifting from Performance Ratings to Performance Conversations and
from merit matrices and percentage increase guidance to a holistic people centred approach
based around the Group's Rewards Principles.
The Company's Market Capitalization increased by ~52% based on the closing price as of
31 March 2023 compared to 31 March 2022. The Net Worth is Rs. 20,783 million compared to
Rs. 20,324.20 million as of the previous year.
The Annual Report as per Section 136 of the Companies Act, 2013 is being sent to the
Members excluding the information on employees' particulars under Rule 5 of the Companies
(Appointment & Remuneration) Rules, 2014. Any Member who is interested in a copy of
the employees' particulars may write to the Company Secretary. The details will also be
available for inspection by the Members at the Registered Office of the Company during the
business hours on working days upto the date of the Company's forthcoming Annual General
Meeting.
The Company has paid Commission of Rs. 4.13 million to its Independent
Directors pursuant to the shareholder's approval obtained in the Annual General Meeting
held on 13 August 2021.
l. PAYMENT OF REMUNERATION / COMMISSION TO DIRECTORS FROM HOLDING OR SUBSIDIARY
COMPANIES:
The Directors are not paid remuneration/commission from any other Company.
m. DIVIDED DISTRIBUTION POLICY:
Dividend is the Company's primary distribution of profits to its Shareholders. The
Company's objective is to sustain a steady and consistent distribution of profits, by way
of Dividend, to its Shareholders while considering the following:
(a) The circumstances under which the shareholders can or cannot expect dividend
The Company shall endeavour to pay Dividend to its shareholders in a steady and
consistent manner except the following circumstances:
(i) During no growth or weak growth in the trade requiring the Company to retain its
earnings to be able to absorb unfavourable market conditions and for meeting the business
requirements;
(ii) To meet its funding requirements for expansion and growth;
(iii) The Company's Joint Venture with Indian Railways, Pipavav Railway Corporation
Limited requires equity infusion from its shareholders.
During such times the Company may decide to retain the earnings instead of distributing
to the shareholders. The distribution of Dividend can be by way of Interim Dividend and/or
by way of Final Dividend.
(b) The financial parameters that will be considered while declaring dividend
The Company shall consider the following parameters while declaring dividend: a.
Current year's profit:
i. after setting off carried over previous losses, if any;
ii. after providing for depreciation in accordance with the provisions of Schedule II
of the Act;
iii. after transferring to reserves such amount as may be prescribed or as may be
otherwise considered appropriate by the Board at its discretion. b. The profits for any
previous financial year(s):
i. after providing for depreciation in accordance with law;
ii. remaining undistributed; or c. out of (i) or (ii) or both.
In computing the above, the Board may at its discretion, subject to provisions of the
law, exclude any or all of
(i) extraordinary and exceptional income, generated from activities other than regular
business
(ii) extraordinary charges
(iii) exceptional charges
(iv) one off charges on account of change in law or rules or accounting policies or
accounting standards
(v) provisions or write offs on account of impairment in investments (long term or
short term)
(vi) noncash charges pertaining to amortization or ESOP or resulting from change in
accounting policies or accounting standards.
(c) Internal and External factors that would be considered for declaration of dividend
The Company's Board shall always consider various Internal and External
factors while considering the quantum for declaration of dividend such as the overall
Economic scenario of the country, the Export Import trade of the country, the statutory
and regulatory provisions, the Company's own performance, its profitability, its growth
plans, the performance and funding requirements of its joint venture Rail Company and such
other factors as may be deemed fit by the Board.
(d) Policy as to how the retained earnings will be utilised
The retained earnings would mainly be utilised for the purpose of the Company's growth
plans, the funding requirements of its joint venture Rail Company and for all such
activities that in the Board's opinion shall enhance the shareholder's value.
(e) Provisions with regard to various classes of shares
The Company currently has only one class of shares namely Equity shares. In case the
Company issues any other class of shares, this Policy shall be modified suitably for
stipulating the parameters for distribution of dividend to all classes of shares.
The link for the Dividend Policy on the Company website is
https://www.apmterminals.com/en/pipavav/investors/governance
6. AUDITORS AND REPORTS
The matters related to Auditors and their Reports are as under:
a. OBSERVATIONS OF STATUTORY AUDITORS ON ACCOUNTS FOR THE YEAR ENDED 31 MARCH 2023:
There are no Audit Observations on the Standalone Financial Statements of the Company
for the year ended 31 March 2023. But the Consolidated Financial Statements carry an Audit
Observation as follows: In our opinion and to the best of our information and according to
the explanations given to us, except for the indeterminate effect of the matter described
in the Basis of Qualified section, the aforesaid consolidated financial statements give
the information required by the Companies Act, 2013 (the Act') in the manner so
required and give a true and fair view in conformity with the accounting principles
generally accepted in India, of the consolidated state of affairs of the Company and its
associate as at March 31, 2023, and consolidated total comprehensive income (comprising of
profit and other comprehensive income), consolidated changes in equity and its
consolidated cash flows for the year then ended.
The Basis for qualified opinion:
The consolidated financial statements include the Company's share of total
comprehensive income (comprising of profit and other comprehensive income) of INR 213.66
million, based on unaudited financial statements as at and for the year ended March 31,
2023, in respect of its associate company. Our opinion on the consolidated financial
statements in so far as it relates to the amounts and disclosures included for the year
ended on March 31, 2023, in respect of this associate company is based solely on such
unaudited financial statements of the associate company for the year ended on March 31,
2023, as furnished to us by the Management of the Company. In absence of availability of
audited financial statements we are unable to comment on additional adjustments
and/disclosures that are required to be made to these consolidated financial statements.
We conducted our audit in accordance with the Standards on Auditing (SAs) specified
under Section 143(10) of the Act. Our responsibilities under those Standards are further
described in the "Auditor's Responsibilities for the Audit of the Consolidated
Financial Statements" section of our report. We are independent of the Company and
its associate in accordance with the ethical requirements that are relevant to our audit
of the consolidated financial statements in India in terms of the Code of Ethics issued by
the Institute of Chartered Accountants of India and the relevant provisions of the Act,
and we have fulfilled our other ethical responsibilities in accordance with these
requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our qualified opinion.
Report on IFCFR
Basis for Qualified Opinion
1. According to the information and explanations given to us and based on our audit,
material weakness has been identified in the operating effectiveness of the Company's
internal financial controls with reference to consolidated financial statements as at
March 31, 2023 as the Company's period end financial controls related to ensuring that the
financial information of the associate company i.e., Pipavav Railway Corporation Limited
(PRCL), included in the consolidated financial statements of the Company, is in accordance
with the audited consolidated financial statements of the associate company, did not
operate effectively. This could result in material misstatement in the consolidated
financial statements.
2. A material weakness' is a deficiency, or a combination of deficiencies, in
internal financial control over financial reporting, such that there is a reasonable
possibility that a material misstatement of the company's annual or interim financial
statements will not be prevented or detected on a timely basis.
Qualified Opinion
In our opinion, the Company and its associate company have, in all material respects,
an adequate internal financial controls system with reference to consolidated financial
statements based on the internal control over financial reporting criteria established by
the Company considering the essential components of internal control stated in the
Guidance Note issued by the ICAI, and except for the possible effects of the material
weakness described in the Basis for Qualified Opinion' section above on the
achievement of the objectives of the control criteria, the Company's internal financial
controls with reference to consolidated financial statements were operating effectively as
of March 31, 2023.
We have considered the material weakness identified and reported above in determining
the nature, timing, and extent of audit tests applied in our audit of the consolidated
financial statements of the Company for the year ended March 31, 2023, and the material
weakness affects our opinion on the consolidated financial statements of the Company and
we have issued a qualified audit opinion on the consolidated financial statements. [Refer
paragraph 3 of our audit report on consolidated financial statements] The response of the
Board of Directors to the audit observation is that the financial statements of the
Associate Company Pipavav Railway Corporation Limited (PRCL), are Management
representation numbers in view of pending finalisation of accounts and completion of
PRCL's statutory audit.
b. SECRETARIAL AUDIT REPORT FOR THE YEAR ENDED 31 MARCH 2023:
Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates
to obtain Secretarial Audit Report from a Practicing Company Secretary. Accordingly, M/s
Rathi and Associates, Company Secretaries have issued the Secretarial Audit Report for the
year ended 31 March 2023.
c. STATUTORY AUDITORS:
Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Companies
(Audit and Auditors) Rules, 2014, M/s Price Waterhouse Chartered Accountants LLP (Firm
Regn. No. 012754N/N-500016) are Re-appointed as Statutory Auditors of the Company for a
period of five years in the Annual General Meeting held on 6 August 2020.
d. COST AUDITORS:
The Company is engaged in providing Port Services and as per Notification dated 31
December 2014 issued by the Ministry of Corporate Affairs pursuant to Section 148 of the
Companies Act, 2013, the Company is not required to appoint Cost Auditors.
e. DISCLOSURES UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,
PROHIBITION AND REDRESSAL) ACT, 2013:
The Company has adopted a policy on prevention, prohibition and redressal
of sexual harassment at workplace and has also established an Internal Complaints
Committee, as stipulated by The Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013 and Rules thereunder. During the year under review,
one complaint in relation to sexual harassment at workplace was reported. It has been
addressed suitably and closed.
f. FRAUD REPORTING:
During the year under review, there were no instances of material or serious fraud
falling under Rule 13(1) of the Companies (Audit and Auditors) Rules, 2014, by officers or
employees reported by the Statutory Auditors of the Company during the course of the
audit.
7. OTHER DISCLOSURES:
Other disclosures as per provisions of Section 134 of the Act read with Companies
(Accounts) Rules, 2014 are furnished as under:
a. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND
OUTGO:
The Company is engaged in the business of developing and operating a Port, Cargo
handling incidental to Water Transport. Considering the nature of business activity, the
particulars regarding conservation of energy and technology absorption as required under
the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the
Companies (Accounts) Rules, 2014 are not applicable and have not been included.
As mentioned in the Annual Report of previous year, the Company as part of its Green
Initiative has installed solar panels over its new warehouse of 10,000 sq. mtrs. The
facility is commissioned. Additionally, the Company is in discussion with a Renewable
Energy supplier for entering into a Power Purchase Agreement for purchase of green power.
After the signing of the Power Purchase Agreement and the supply commences, the Company
will be sourcing about 45% of its Power requirement through Green Energy.
The foreign exchange earning was Rs. 2,227.58 million and outgo was Rs. 319.03 million
during the period under review.
b. CHANGE IN SHARE CAPITAL:
The Company has not made any issue of shares during the year and its Share Capital for
the year ended 31 March 2023 remains unchanged.
c. ABSTRACT OF ANNUAL RETURN ON THE WEBSITE:
Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, the Annual
Return for the year ended 31st March 2023 is available on
https://www.apmterminals.com/en/pipavav/investors/financial-results
d. SERVICE OF DOCUMENTS THROUGH ELECTRONIC MEANS
Subject to the applicable provisions of the Companies Act, 2013, all documents,
including the Notice and Annual Report shall be sent through electronic transmission in
respect of members whose email IDs are registered in their demat account or have been
provided by the members. The physical copy of annual report will be dispatched only to
shareholders with a specific request for the physical copy of the report.
e. COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is in compliance with the mandatory Secretarial Standards.
f. UNCLAIMED AND UNPAID DIVIDENDS, AND TRANSFER OF SHARES TO INVESTOR EDUCATION AND
PROTECTION FUND (IEPF)
The Members who have not yet received/claimed their dividend entitlements are requested
to contact the Company's Registrar and Transfer Agents KFin Technologies Limited.
Pursuant to Section 124 of the Companies Act, 2013 read with the Investor
Education Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016
("Rules"), all dividends remaining unpaid or unclaimed for a period of seven
years and also the shares in respect of which the dividend has not been claimed by the
shareholders for seven consecutive years or more are required to be transferred to
Investor Education Protection Fund in accordance with the procedure prescribed in the
Rules. The Company had declared dividend for the financial year 2015-16 in the Annual
General Meeting held on 11th August 2016. The unclaimed amount of dividend is due for
transfer to IEPF during the financial year ending 31st March 2024 and the amount will be
transferred within the stipulated timelines. Meanwhile, the concerned shareholders are
being sent an intimation on their last known address regarding the proposed transfer of
unpaid/ unclaimed dividend and the shares pertaining to those amounts into IEPF.
g. CORPORATE GOVERNANCE
The report on Corporate Governance along with the report by the Statutory Auditors
regarding compliance with the conditions of Corporate Governance has been furnished and
forms part of the Annual Report.
h. MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Management Discussion and Analysis report has been separately furnished and forms
part of the Annual Report.
i. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORTING
In compliance with the Regulation 34(2)(f) of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015, the Business Responsibility and Sustainability
Report for the financial year ended 31st March, 2023 forms part of the Annual Report. j.
The provisions of Insolvency and Bankruptcy Code, 2016 are not applicable. The
provisions of one time settlement are not applicable.
8. ACKNOWLEDGEMENT AND APPRECIATION:
The Board of Directors of the Company thank the Customers, the Shareholders, the
Vendors, the Company's Bankers, Business Partners/ Associates for their continued support
and the Central Government, State Government and Gujarat Maritime Board for their
encouragement to the Company. Your Directors wish to place on record their sincere
appreciation of the strong commitment and enthusiasm of all employees and for their
invaluable contribution.
For and on behalf of the Board
TEJPREET SINGH CHOPRA CHAIRMAN
DIN: 00317683
Date: 24 May 2023
Place: Mumbai
Registered Office Pipavav Port,
At Post Rampara-2 via Rajula
District Amreli 365560
CIN L63010GJ1992PLC018106
Tel No. 02794 242400
Fax No. 02794 242413
Email investorrelationinppv@apmterminals.com
Website www.pipavav.com
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