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Directors Report of Gujarat Pipavav Port Ltd.

Dec 31, 2013

The Directors present herewith their Twenty Second Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st December 2013.

FINANCIAL RESULTS

Particulars Year Ended 31st Year Ended 31st December 2013 December 2012 (Rs. In Million) (Rs. In Million)

Operating Income 5,179.35 4,160.33

Less: Total Expenditure 2,611.07 2,341.62

Operating Profit 2,568.28 1,818.71

Add: Other Income 167.61 154.47

Profit before Interest, Depreciation, tax and exceptional items 2,735.89 1,973.18

Less: Interest 374.25 684.15

Less: Depreciation 607.81 549.42

Profit/(Loss) for the year before Exceptional Item 1,753.83 739.61

Add: Exceptional Item (Prior period adjustment) 163.82

Profit/(Loss) Before Tax 1,917.65 739.61

Less: Taxes - -

Profit/(Loss) After Tax 1,917.65 739.61

Balance brought forward from previous year (5,088.19) (7,005.84)

* Taxes include Minimum Alternate Tax paid Rs. /, 760 Million for which Credit has been taken. Therefore the net impact is Nil

DIVIDEND

Your Company is pleased to report Net Profit of Rs. 1,917.65 Million. But considering the forthcoming major expansion of the Port and the accumulated losses ofRs. 5,088.19 Million, no dividend is recommended.

YEAR IN RETROSPECT & OTHER KEY DEVELOPMENTS

A brief statistical profile on port operations during the year ended 31st December 2013 is as under:

Particulars Year 2013 Year 2012

No. of vessel calls at the Port 1,035 1,117

Bulk Cargo Handled (In MT) 3,167,586 3,118,168

Containers Handled (TEU) 661,865 570,480

Given the economic slowdown in India the last two years, container trade of the country and the West Coast in particular, has not shown the same pace of growth as it had in the previous years.

The total operating revenue was Rs. 5,179.35 Million representing an increase of 24.5% as against Rs. 4,160.33 Million in the previous year. During the year under review, the Company handled container throughput of 661,865 TEUs, a growth in excess of 16% as compared to last year. Bulk cargo volumes remained steady at 3.1 million tons. Despite tepid market growth, the container business has been growing rapidly. This is due to a combination of organic growth of existing services, and the addition of 2 new services.

The total expenditure amounted to Rs. 2,611.07 Million, representing an increase of 11.5% over last year. This includes operating expenses, staff costs, administrative and other expenses. Operating expenses were Rs. 1,320.31 Million, an increase of 11.8% over the previous year, primarily due to a change in the commodity mix for bulk cargo and higher container volume. Staff Costs amounted to Rs. 420.54 Million, representing an increase of 16.5% over last year. Administrative and other expenses for the year increased by 8.7% to Rs. 870.22 Million. Power & Fuel and Repairs & Maintenance form the key components of other expenses. I

Other income was Rs. 167.61 Million for the year under review mainly on account of interest income received from banks, favorable exchange rate gain and write back of certain sundry balances. Interest expense decreased by 45.3% during the year to Rs. 374.25 Million after reduction of Indian Rupee debt since July 2012. The current debt outstanding is Rs. 3,038.75 Million.

Exceptional items include favorable write back on impairment of Rs. 163.82 Million consequent to partial write-back of impairment and write-off of certain non-operational assets.

The net profit for the year was Rs. 1, 917.65 Million, a two and half fold increase over Rs.739.61 Million in the previous year.

UPDATE ON PORT PROJECT EXPANSION

Your Company received Environmental Approval during June 2012 from the Ministry of Environment and Forest (MoEF) for the expansion and modernization of the port. Thereafter the Company raised Equity of Rs. 3,500 Million by way of Qualified Institutional Placement (QIP) to Institutional Investors and Preferential Allotment to the Promoters. The Company also tied up External Commercial Borrowing (ECB) debt of USD 152 Million from International Finance Corporation (IFC) a part of World Bank Group. Consequent to a complaint by a NGO, the National Green Tribunal directed MoEF in August 2013 to reassess the project approval and ordered that the EC approval be kept under abeyance for a period of six months. In view of this delay, the Company has also been continuously reviewing the expansion plans to keep it aligned to changing market conditions. As per the minutes of the meeting held in November 2013, the Expert Appraisal Committee (EAC) has again recommended the expansion plan to MoEF for clearance. The final order by MoEF is awaited. The Company has not drawn any funds out of the ECB debt of USD 152 Million.

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, risks and concerns, business outlook, internal control systems and their adequacy and discussion on financial performance.

SUBSIDIARY COMPANY

The Company does not have any subsidiaries.

CORPORATE GOVERNANCE

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 confirm that:

(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 2013 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.

DIRECTORS

Mr. Per J0rgensen, Independent Director stepped down as Director and Chairman of the Company in June 2013. Mr. Pankaj Kumar, IAS, Nominee representing Gujarat Maritime Board and Mr. Martin Gaard Christiansen representing APM Terminals Mauritius Limited also ceased to be Directors of the Company from May and June 2013 respectively.

The Board thanks and places on record its appreciation for the valuable guidance and support received from Mr. Jorgensen as Chairman of the Company. The Board also thanks Mr. Kumar and Mr. Christiansen for their valuable contribution as Directors of the Company.

In accordance with the provisions of the Companies Act, 1956, Mr. Pravin Laheri, IAS (Retd.), Mr. Henrik Lundgaard Pedersen and Mr. Pradeep Mallick are due to retire by rotation and being eligible, offer themselves for reappointment.

Ms. Hina Shah and Mr. Jan Damgaard Sorensen were appointed as Additional Directors of the Company effective July 2013. Mr. A. K. Rakesh, IAS was appointed as Additional Director from October 2013. They all 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.

AUDITORS

M/s B S R & Associates LLP, 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 2013 is not applicable.

However, the Company has been consciously taking regular steps towards energy conservation, technology absorption and reducing carbon footprint.

The Company enhanced its Rail Yard infrastructure by installing 3 Rail Mounted Gantry Cranes (RMGCs). These cranes optimize the turnaround of incoming and outgoing container cargo at the rail yard and significantly reduce the terminal''s operational footprint. By eliminating diesel powered Reach Stackers, these electrically powered RMGCs have increased the efficiency of operations, reduced overall energy consumption, improved air quality, safety and security at the port.

ENVIRONMENT PROTECTION & CORPORATE SOCIAL RESPONSIBILITY

The Company is constantly working towards integrating social and environmental concerns in its business operations through interactions with the various stakeholders involved.

The Company maintained its focus while adopting a more holistic approach in implementing environmentally friendly practices and measures at the port. Strategies ranging from rain water harvesting system of 15 million liters , monitoring ambient air and decibel levels to developing a separate waste management system for handling ferrous and non-ferrous material, waste oil and battery waste in an environment friendly manner are being carried out.

During the year the Company started a new Medical Centre inside the port premises which apart from catering to the port employees and their families is open for all the nearby villagers for free medical treatment and medicines. The Company also conducted a Medical Health Check-up Camp for the villagers wherein 780 children and 540 ladies were examined by the Doctors and appropriate treatment provided. These initiatives by your Company have been well received by the villagers and much appreciated.

The Company''s commitment to Corporate Social Responsibility has been recognized by trade fraternity. The company was awarded the best Terminal/ Port operation in India for Health, Safety and Quality for 2013 by the Maritime and Logistics Association (MALA)

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.

PERSONNEL RESOURCES

The Directors acknowledge the fact that it''s associates and the team are the most important asset and are committed to upgrading their skills and abilities. Your Company takes the necessary steps on a continuous basis to improve living conditions of the employees and their families at the Port.

The particulars as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, as amended, form part of this 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 Secretary.

FIXED DEPOSITS

The Company has not accepted any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under.

ACKNOWLEDGEMENTS

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 the Government of India, Government of Gujarat, Gujarat Maritime Board and various other Government Agencies, Financial Institutions & Banks, Promoters and Group Companies, Vendors and Associates and our esteemed Customers.

For and on behalf of Board of Directors

Place : Mumbai Tejpreet Singh Chopra

Date : 18th February 2014 Chairman


Dec 31, 2012

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.

FINANCIAL RESULTS

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)

DIVIDEND

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 waterfront utilisation.

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 performance.

SUBSIDIARY COMPANY

The Company does not have any subsidiaries.

CORPORATE GOVERNANCE

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 confirm that:

(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.

DIRECTORS

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 2012.

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 reappointment.

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.

AUDITORS

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 footprint.

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.

PERSONNEL RESOURCES

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 Secretary.

FIXED DEPOSITS

The Company has not accepted any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under.

ACKNOWLEDGEMENTS

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


Dec 31, 2011

The Directors present herewith Twentieth Annual Report of the Company together with the Audited Statement of Accounts for the year ended 31st December 2011.

FINANCIAL RESULTS

Particulars Year Ended 31st Year Ended 31st December 2011 December 2010 (Rs. In Million) (Rs. In Million)

Operating Income 3,967.72 2,839.29

Less: Total Expenditure 2,139.55 1,695.16

Operating Profit 1,828.17 1,144.13

Add: Other Income 152.53 111.11

Profit before Interest, Deprec iation, tax and exceptional items 1,980.70 1,255.24

Less: Interest 851.88 1,271.44

Less: Depreciation 557.82 492.67

Profit/(Loss) for the year before Exceptional Item 571.00 (508.87)

Exceptional Item (Prior period adjustment) - (38.85)

Profit/ (Loss) Before Tax 571.00 (547.22)

Less: Taxes (Fringe Benefit Tax) -- ---

Profit/ (Loss) After Tax 571.00 (547.22)

Balance brought forward from previous year (7,745.45) [8,316.45)

DIVIDEND

Your company is pleased to report for first time ever full year Net Profit of Rs. 571.00 Million. However considering the accumulated losses of Rs. 7,745.45 Million, no dividend is recommended.

YEAR IN RETROSPECT & OTHER KEY DEVELOPMENTS

A brief statistical profile on port operations during the year ended 31st December 2011 comprising of ships calling at the Port and volume of cargo handled is as under:

Particulars Year 2011 Year 2010

No. of vessel calls at the Port 1,315 1,076

Bulk Cargo Handled (In MT.) 3,793,881 3,383,588

Containers Handled (TEU) 610,243 466,138

Bulk cargo handled during the year increased by 10% compared to previous year while Containers handled during the year increased by 31%. This can be attributed to addition of new services by the container shipping lines and improved business opportunities from the hinterland area.

MANAGEMENT DISCUSSION AND ANALYSIS

A separate section on Management Discussion and Analysis (MD&A) forms part of the Annual Report as required under Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited. The MD&A includes the review of industry prospects and developments, opportunities and risks, outlook for business, risks and concerns, internal control systems and their adequacy and discussion on financial performance.

SUBSIDIARY COMPANY

The Company does not have any subsidiaries.

CORPORATE GOVERNANCE

A separate section on Corporate Governance is included in the Annual Report along with the Certificate from the Company's Auditors confirming compliance with the conditions stipulated under Clause 49 of the Listing Agreement with the Bombay Stock Exchange Limited and the National Stock Exchange of India Limited.

DIRECTORS RESPONSIBILITY STATEMENT

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

(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 2011 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.

DIRECTORS

Mrs. Malini Bansal Lenders Nominee representing IDBI Bank Limited was appointed as Director of the Company on 11th July, 2011 replacing Mr. A. L. Bongirwar who was on the company's Board since February 2009.

The Board places on record its appreciation for Mr. Bongirwar's valuable contribution as Director of the Company.

In accordance with the provisions of the Companies Act, 1956, Mr. Per Jørgensen, Mr. Pravin Laheri, IAS (Retd.) and Mr. Shyam Sundar S. G. are due to retire by rotation and being eligible, offer themselves for re-appointment.

Appropriate resolutions are being placed in the ensuing Annual General Meeting for your approval. A brief resume of the Directors and other information has been detailed in the Notice forming part of this report. The Board recommends their re- appointment as Directors of the company.

AUDITORS

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 not engaged in 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 2011 is not applicable.

However, the company has been taking regular steps for energy conservation and technology absorption in order to save energy, reduce cost and reduce carbon footprint.

The port has been actively engaged in reducing dependency on diesel and encouraging innovation amongst its employees to develop low carbon solutions. These initiatives include Goutweed Crane that operated on diesel has been electrified by in- house engineers. 10 Rubber Tyre Gantry Cranes (RTGs) have been installed with hybrid engines which consume lesser fuel in comparison with conventional RTGs. The Engineering Team has developed in house cleaning equipment which is used for removing contaminants from Lube Oil used in the cranes. After completing the entire cleaning process the oil is recycled. Special electric connections have been created on shore for tugs which are used for charging during its idle time so that marine activities could be carried out on various systems instead of diesel. Solar Powered lights have been installed on the approach bridges to the jetty.

ENVIRONMENT PROTECTION & CORPORATE SOCIAL RESPONSIBILITY

Your company considers protection of Environment and contribution to the local community in the Region it operates into, as an important responsibility as good corporate citizen.

The Port Management is directly engaged with the citizens of nearby villages to understand their requirements and contribute for their well being. A team comprising of managers regularly visits various schools in the area to understand their requirements and fulfill them by providing them computers, scientific instruments, installing water coolers, carrying out school repairs, donating school bags, books etc.

Your company has completed Mangrove plantation in an area of 500 Hectares as per the requirement of Environment authorities and has received a Certificate to this effect from Gujarat Ecology Commission. The port has planted 11,000 saplings inside the premises and has nurtured 7000 saplings in an in-house nursery. The treated water from the Sewage treatment plant inside the port is re-used for gardening and the residue is used for plants. The awareness on Solid Waste Management is spread in the villages and is being implemented by the port team. Rain water harvesting is carried out during the monsoon season.

The Water quality including the Sea water at the Jetty area is monitored and analyzed regularly and so is the Air quality.

FOREGIN EXCHANGE EARNINGS AND OUTGO

Details of expenditure and earnings in foreign currencies are mentioned in Schedule 15 Note no. 16 to the financial statements.

PERSONNEL RESOURCES

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 Secretary.

FIXED DEPOSITS

The Company has not accepted any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under.

ACKNOWLEDGEMENTS

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 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 Jorgensen

Date : 22nd February 2012 Chairman


Dec 31, 2009

The Directors present herewith Eighteenth Annual Report of the Board of Directors of the Company together with the Audited Accounts for the year ended 31st December 2009.

FINANCIAL RESULTS

Particulars Year Ended 31st Year Ended 31st December 2009 December 2008 (Rs. In Million) (Rs. In Million)

Operating Income 2207.09 1724.09

Total Expenditure 3428.96 2877.31

Operating Profit/ (Loss) (1221.87) (1153.22)

Add: Other Income 116.85 310.86

Profit / (Loss) before Taxes (1105.02) (842.36)

Exceptional Item (58.00) -

Less: Provision for 0.91 3.63 Current Taxation

Profit/(Loss) After Tax (1163.92) (845.99)

Add: Balance Brought Forward form previous year (6605.30) (5759.31)

Balance loss carried forward to Balance Sheet (7769.22) (6605.30)

DIVIDEND

As per the financial statements presented, the company has incurred a loss of Rs. 1163.92 Million during the year ended 31s1 December 2009 and the total accumulated losses of the company amounting are Rs. 7769.22 Million. The Directors therefore do not recommend any dividend for the year ended 31st December 2009.

UPDATE ON PROJECT IMPLEMENTATION

As reported during last year the company has been engaged in implementing project expansion plan for setting up container terminal at the Port. The Board of Directors have pleasure in informing that all critical capital expenditure for the business is complete.

The construction of new container berth is complete and total contiguous quay length is 1075 meters. Additionally the port has 65 meter of LPG berth. 2 nos. Ship to Shore Cranes were delivered and are operational. The port now has total 8 Cranes. The Capital Dredging is complete and the port has depth of 14.5 meters. Two rail sidings were developed during the year and the port now has total six sidings. The container yard Area 6 is complete. The area for total container yard is 102,700 sq. mtrs. The software for container handling and yard planning is installed.

The total amount of capital expenditure incurred upto 31st December 2009 is Rs. 3235.46 Million and capital commitments under implementation as on that date are Rs. 202.11 Million.

The expenditure currently under implementation is Housing Colony for employees and Customs House.

YEAR IN RETROSPECT & OTHER KEY DEVELOPMENTS

A brief statistical profile on port operations during the year ended 31st December 2009 comprising of ships calling at the Port and volume of cargo handled is as under:

Particulars 1st January- 1st January- 31" December 31st December 2009 2008

No. of vessel calls at the Port 1037 967

Bulk Cargo Handled (In MT.) 3371114 2071991

Containers Handled (TEU) 321400 195546



In spite of the global down turn and decrease in international trade during the year your company has been able to increase its cargo handling compared to last year. While the bulk cargo handled during the year increased by 62.7%, the containers handled during the year increased by 64.4% compared to previous year. This can be attributed to availability of cost effective and efficient facility for the shipping lines.

INITIAL PUBLIC OFFER OF THE COMPANY

As you are aware the company filed the draft Red Herring Prospectus with the Securities & Exchange Board of India (SEBI) on 30th September 2008 for its Initial Public Offer but later withdrew it due to adverse market conditions prevailing globally.

The company re-filed the document with SEBI on 22nd December 2009 for its Initial Public Offer of Rs. 5000 Million and Offer for Sale by an existing shareholder for 11,707,369 equity shares.

The company awaits for SEBI approval.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors pursuant to the amended Section 217 (2AA) of the Companies (Amendment) Act, 2000 state as under:

(i) The Annual Accounts of the Company have been prepared in conformity with the Companies Act, 1956 and all applicable Accounting Standards issued by the Institute of Chartered Accountants of India from time to time along with proper explanation wherever necessary on a Going Concern Basis;

(ii) The Accounting Policies are being followed consistently by the Company and the judgments and estimates made by the Company 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 2009;

(iii) The company has established sufficient internal control systems commensurate to its size and operations and is maintaining 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 accounts have been prepared on Going Concern Basis.

AUDITORS OBSERVATIONS TO THE ACCOUNTS

The company has filed an application to Central Government seeking approval for appointment and payment of managerial remuneration to its ex- Managing Director Mr. Philip Little john and for the current Managing Director Mr. Prakash Tulsiani as per the provisions of the Companies Act, 1956 and the approval is awaited.

SUBSIDIARY COMPANY

The Company does not have any subsidiaries.

DIRECTORS

Mr. Sethurathnam Ravi- Nominee IDBI, Mr. Atanu Chakraborty, IAS representing Gujarat Maritime Board and Mr. Jorgen Hammelsvang Madsen representing APM Terminals Mauritius Limited have ceased to be Directors of the company. Further, Mr. Anoop Seth representing The Infrastructure Fund of India, Mr. Sunil Chawla representing New York Life and Mr. Pradeep Mallick representing APM Terminals Mauritius Limited were appointed during the year and then ceased to be Directors of the company for compliance under Clause 49 of the Listing Agreement prior to filing of the draft Red Herring Prospectus. The company places on record its appreciation for valuable contribution by them during their association.

Mr. Dinesh Kumar Lai retires by rotation and being eligible offers himself for re-appointment.

Mr. Per Jorgensen retires by rotation and being eligible offers himself for re-appointment.

Mr. Pravin Laheri, IAS (Retd.) retires by rotation and being eligible offers himself for re-appointment.

Mr. Charles Menkhorst representing APM Terminals Mauritius Limited and Mr. Pankaj Kumar, IAS representing Gujarat Maritime Board were appointed as Additional Directors of the Company. They cease to be Directors of the company at this Annual General Meeting and are seeking appointment as Director of the company liable to retire by rotation.

The company would benefit from their appointment considering their knowledge and experience.

AUDITORS

The auditors M/s BSR & Associates, Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

FIXED DEPOSITS

The Company has not accepted any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION

Your company has been taking regular steps for energy conservation and technology absorption in order to save energy, reduce cost and reduce C02 emissions. To that extent following initiatives have been/ are being carried out:

The bulk cargo handling Gottwald crane is converted from diesel to electric. It is a hybrid which runs on electric power and can also move on diesel if required.

* Use of energy saving lamps in High mast, saving power.

* Use of batteries to run VHF on Rubber Tyre Gantry Cranes thus saving fuel when the cranes are not in use.

* Use of Online filters in Rubber Tyre Gantry Crane engines for lower fuel consumption and reduce downtime of engine.

FOREGIN EXCHANGE EARNINGS AND OUTGO

The foreign exchange earnings and outgo during the year is as under:

(In Million) Earnings Rs. 1760.94 (Including Deemed foreign currency receipts)

Outgo Rs. 1769.20

PERSONNEL RESOURCES

Your company realises its responsibility towards contributing to the society and to that extent has been recruiting locally for appropriate positions and provides training to them.

The Directors of your Company acknowledge the fact that manpower is most important asset and are committed to upgrading their skills and abilities.

The particulars as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 are enclosed herewith.

ACKNOWLEDGEMENT

The Board of Directors of your company deeply acknowledge the valuable support, co-operation and assistance of Government of India, Government of Gujarat, Gujarat Maritime Board and various other Government Agencies, Financial Institutions & Banks. The Board of Directors also thanks the employees for their good performance.

For and on behalf of Board of Directors

Place : Mumbai

Date : 3rd March 2010 Per Jorgensen Chairman






Dec 31, 2008

The Directors present herewith Seventeenth Annual Report of the Board of Directors of the Company together with the Audited Accounts for the year ended 31st December 2008.

FINANCIAL RESULTS

Particulars Year Ended 31st Year Ended 31st December 2008 December 2007 (Rs. In Millions> (Rs. In Millions)

Operating Income 1724.09 1516.04

Total Expenditure 2877.31 2415.42

Operating Profit/ (Loss) (1153.22) (899.38)

Add: Other Income 310.86 141.41

Profit/ (Loss) before Taxes (842.36) (757.97)

Exceptional Item - 38.55

Less: Provision for Current Taxation 3.63 2.84

Profit/(Loss) After Tax (845.99) (799.36)

Add: Balance Brought Forward form previous year (5759.31) (4960.25)

Less: Reversal of Gratuity transitional liability - 0.29

Balance loss carried forward to Balance Sheet (6605.30) (5759.31)

DIVIDEND

As per the financial statements presented, the company has incurred a loss of Rs. 845.99 Million during the year ended 31" December 2008 and the total accumulated losses of the company amounting are Rs. 6605.30 Million. The Directors therefore do not recommend any dividend for the year ended 31* December 2008.

UPDATE ON PROJECT IMPLEMENTATION

As you are aware chat the company has been implementing project expansion pie i for setting up container terminal and In that connection the new berth is complete and operational. The port has t ;ia! iuay length of 1075 meter for handling container and bulk cargo.

The port had placed orders for 2 Nos. Ship to Shore Cranes for containers, likely z be delivered in March 2009. The port will have total 8 Nos. Ship to Shore Cranes which will ensure improved berth prod jctivity with quick turnaround time for vessels. The Operations team continues its endeavor to improve crane produc iiivity which is currently one of the best in the industry.

Your company realizes its responsibility towards protecting the environment and has set up an environment friendly coal yard which is one of its kind in the country. The companys efforts were recognized and it was conferred the Achievement of Environment Protection Award In the Annual Indian Maritime Gateway Award Program for 2008.

In its continued endeavor to Improve infrastructure facilities at the port, the company has awarded the contract for Phase II of Capital Dredging to increase the depth from existing 12.5 meters to 14.5 meters and it is likely to be complete by May 2009.

The total amount of capital expenditure incurred upto 31" December 2008 Is Rs. 8607.85 Million and capital commitments under implementation as on that date are Rs. 3420.23 Million.

YEAR IN RETROSPECT & OTHER KEY DEVELOPMENTS

A brief statistical profile on port operations during the year ended 31* December 2008 comprising of ships calling at the Port and volume of cargo handled is as under:

Particulars 1st January to 31st 1st January to 31st December 2008 December 2007

No. of vessel calls at the Port 967 912

Bulk Cargo Handled (In MT.) 2071991 1665418

Containers Handled (TEU) 195546 192015

During the year 2008, the container traffic increased marginally by over 1.83% but bulk cargo has shown a strong increase of about 24.41%. Due to the onset of global melt down the container shipping business has been severely affected and that has in turn affected the ports growth in volume. However the bulk cargo has helped the company improve its revenue from operations. The company believes that the Indian economy will recover quickly from the meltdown and the capacity utilization being currently created by the port in container business will improve.

INITIAL PU BLIC OFFER OF THE COMPANY

The company has filed a draft Red Herring Prospectus with the Securities & Exchange Board of India (SEBI) on 30th September 2008 for its Initial Public Offer for aggregate amount of Rs. 5000 Million through book building process. However, considering the conditions prevailing in capital markets the company proposes to withdraw the IPO.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors pursuant to the amended Section 217 (2AA) of the Companies (Amendment) Act, 2000 state as under:

(i) The Annual Accounts of the Company have been prepared in conformity with the Companies Act, 1956 and all applicable Accounting Standards issued by the Institute of Chartered Accountants of India from time to time along with proper c planation wherever necessary on a Going Concern Basis;

(ii) The Accounting Policies are being followed consistently by the Company and the ju( gments and estimates made by the Comrany are reasonable and prudent so as to give a true and fair view r the state of affairs of the Company at th.i end of the financial year as on 31st December 2008;

(hi) The company has established sufficient internal control systems commensurate to its ;ze < nd operations and is maintaining adequate accounting records in accordance with the provisions of the C jtnp >.nies Act, 1956 for safeguarding the assets of the company and for preventing and detecting fraud and other ir egularities;

(iv) The accounts have been prepared on Going Concern Basis.

AUDITORS OBSERVATIONS TO THE ACCOUNTS

The company has filed an application to Central Government seeking approval for appointment and payment of managerial remuneration to Mr. Philip Littlejohn as per the provisions of the Companies Act, 1956 and the approval is awaited.

SUBSIDIARY COMPANY

The Company does not have any subsidiaries.

DIRECTORS

Mr. H. K. Dash, IAS Vice-chairman & CEO of Gujarat Maritime Board, Mr. AnoopSeth representing The Infrastructure Fund of India and Mr. Sunil Chawla representing New York Ufe, Mr. Hans-Ole Madsen and Mr. Johan Herman Van Kerkhof representing APM Terminals Mauritius Limited ceased to be Directors of the company. Further, Mr. Philip Littlejohn- Managing Director of the company has stepped down from his position as he had to return back to his home country Denmark for medical treatment due to his ill-health. The company places on record its appreciation for valuable contribution by them during their association.

Mr. Christian Moller Laursen retires by rotation and being eligible offers himself for re-appointment.

Mr. Jorgen Hammelsvang Madsen retires by rotation and being eligible offers himself for re-appointment.

Mr. Luis Miranda retires by rotation and being eligible offers himself for re-appointment.

Mr. Atanu Chakraborty, IAS representing Gujarat Maritime Board, Mr. Per Jflrgensen and Mr. Pravln Laheri, IAS (Retd.) Inde -endent Director were appointed as Additional Directors of the Company. They cease to be Directors of the company at this Annual.General Meeting and are seeking appointment as Director of the company liable to retire by rotation.

Further, Mr. Prakash Tulsiani was appointed ac "3naging Director of the company on 28* January 2009 in place of Mr. Philip Littlejohn.

The company would benefit from their appointment considering their knowledge and experience.

AUDITORS

The auditors M/s BSR & Associates, Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appolntment.

FIXED DEPOSITS

The Company has not accepted any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules r ade there under.

ENERGY & CONSERVATTON

The following steps have been taken to conserve energy: -

(a) Commi sioning of 220 KV and 11KV Ring Main to various locations In the port has ensured stable power supply In the port an J has helped in doing away with small electrical connections and deploying dlesel generator sets. Similarly the commissioning of containerized sub-station for reefer operations has reduced usage of the generators.

(b) Deployment of Eco friendly Rubber Tyre Gantry Cranes (RTGs) instead of the conventional ones and hybrid conversion of multi-purpose Gottwald crane has reduced fuel consumption. Also use of electrical spreaders at the container yard on the RTGs has resulted into energy savings instead of the hydraulic spreaders.

TECHNOLOGY ABSORPTION

The data monitoring and updating of equipments Is done through GPRS for timely predictive and preventive maintenance.

FOREGIN EXCHANGE EARNINGS AND OUTGO

The foreign exchange earnings and outgo during the year is as under:

(In Millions)

Earnings Rs. 962.86 (Including Deemed foreign currency receipts)

Outgo Rs. 143.36

PERSONNEL RESOURCES

The Directors of your Company acknowledge the fact that manpower is most important asset and are committed to upgrading their skills and abilities. The company while realising its responsibilities has laid special emphasis on appointing local residents for appropriate positions at port.

The total employee strength of the company is about 502 and in order to attract competent people, it is increasing the capacity of the hou ing colony by adding new blocks and related facilities.

The particulars as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 are enclosed herewith.

ACKNOWLEDGEMENT

The Board of Directors of your company deeply acknowledge the valuable support, co-operation and assistance of Government of India, Government of Gujarat, Gujarat Maritime Board and various other Government Agencies, Financial Institutions & Banks. The Board of Directors also thanks the employees for their good performance.

For and on behalf of Board of Directors

Place: Pipavav

Date : 26a February 2O09 Per Jorgensen

Chairman


Dec 31, 2007

The Directors present herewith the Sixteenth Annual Report of the Board of Directors of the Company together with the Audited Accounts for the year ended 31 st December 2007.

FINANCIAL RESULTS

Year Ended Year Ended

Particulars 31st December 2007 31st December 2006

(Rs. In Million) (Rs. In Million)

Total Revenue 1516.04 1349.63

Total Expenditure 2415.35 1973.90

Operating Profit/(Loss) (899.31) (624.27)

Add: Other Income 141.41 66.63

Profit / (Loss) before Taxes (757.90) (557.64)

Exceptional Item 38.55 83.58

Less: Provision for Current Taxation 2.91 2.52

Profit/(Loss) After Tax (799.36) (643.74)

Add: Balance Brought Forward for m previous year (4960.24) (4316.50)

Less: Reversal of Gratuity transitional liability 0.29 -

Balance loss carried forward to Balance Sheet (5759.31) (4960.24)

DIVIDEND

As per the financial statements presented, the company has incurred a loss of Rs. 799.36 Million during the year ended 31 st December 2007 and the total accumulated losses of the company amounting are Rs. 5759.31 Million. The Directors therefore do not recommend any dividend for the year ended 31 st December 2007.

UPDATE ON PROJECT IMPLEMENTATION

As part of project implementation, out of the total length of 385 meters of new container berth, 207 meters is operational and balance 178 meters is likely to be ready by mid-May 2008. On completion, the port will have a total container quay of 735 meters.

The container yard of approximately 104,000 sq. meters is ready for operations.

The 3 Ship to Shore (STS) Cranes and 10 Rubber Tyre Gantry (RTG) Cranes are commissioned. The port now has 6 STS and 18 RTG Cranes. Orders have also been placed for 2 Nos. Ship to Shore Cranes and 6 Nos. Rubber Tyre Gantry Cranes.

The capital expenditure on Environment Management Plan is likely to be completed by end of March 2008.

Phase two of Electrical Distribution awarded to Siemens for grid power supply to the entire port area is under implementation.

The bids for Phase II of Capital Dredging have been invited in order to increase the depth from existing 12.5 meters to 14.5 meters.

The total amount of capital expenditure incurred upto 31sl December 2007 is Rs. 7010.26 Million and capital commitments under implementation as on that date are Rs. 730.61 Million.

YEAR IN RETROSPECT & OTHER KEY DEVELOPMENTS

A brief statistical profile on port operations during the year ended 31 st December 2007 comprising of ships calling at Pipavav and volume of cargo handled is as under:

Particulars 1st January - 31st December 2007 1st January - 31st December 2006

No. of vessel calls at Pipavav 912 628

Bulk Cargo Handled (In MT) 1665418 2149813

Containers Handled (TEU) 192015 135167

During the year 2007, the container traffic has increased significantly by over 40% but bulk cargo has reduced by about 22.5%. The decrease in bulk cargo is due to handling of large quantity of fertiliser cargo with lower discharge rate.

Our Major customers in container cargo are Maersk Line, Hyundai Merchant Marine and UASC. The bulk cargo customers are IFFCO, Essarand Ultratech.

RIGHTS ISSUE

During the year, the Rights Issue of shares of Rs. 4180 Million was successfully completed with support of most of the existing shareholders. Asmall gap in the issue was subscribed by the promoters.

PIPAVAV RAILWAY CORPORATION LIMITED (PRCL)

The Company has been asked by the Ministry of Railways to pay the claim under Transportation and Traffic Guarantee Agreement of about Rs. 1050 Million excluding interest, if any. The mechanism of payment is being finalised.

DIRECTORS RESPONSIBILITY STATEMENT

The Directors pursuant to the amended Section 217 (2AA) of the Companies (Amendment) Act, 2000 state as under:

(i) The annual accounts of the company have been prepared in conformity with the Companies Act, 1956 and all applicable Accounting Standards issued by the Institute of Chartered Accountants of India from time to time along with proper explanation wherever necessary on a going concern basis;

(ii) The accounting policies are being followed consistently by the company and the judgments and estimates made by the company 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 31 st December 2007;

(iii) The company has established sufficient internal control systems commensurate to its size and operations and is maintaining 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 accounts have been prepared on going concern basis.

AUDITORS OBSERVATIONS TO THE ACCOUNTS

The company has made an application to Central Government seeking approval for appointment and payment of remuneration to Mr. Philip Littlejohn, Managing Director as per the provisions of the Companies Act, 1956 and the approval is awaited.

SUBSIDIARY COMPANY

The Company does not have any subsidiaries.

DIRECTORS

Mr. Tiemen Meester, Mr. Rajeeva Sinha representing APM Terminals Mauritius Limited and Mr. Philip Garling representing AMP Capital Investors have ceased to be Directors of the company. The company places on record its appreciation for their valuable contribution during theirassociation.

Mr. Luis Miranda retires by rotation and being eligible offers himself for re-appointment.

Mr. Sunil Chawla retires by rotation and being eligible offers himself for re-appointment.

Mr. Dinesh Kumar Lai retires by rotation and being eligible offers himself for re-appointment.

Mr. Jorgen Madsen representing APM Terminals Mauritius Limited and Mr. Anoop Seth representing AMP Capital Investors were appointed as Additional Directors of the Company. They cease to be Directors at this Annual General Meeting and are seeking appointment as Director of the company liable to retire by rotation. The company would benefit from their appointment as Director considering their experience.

AUDITORS

The auditors M/s BSR & Associates, Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

FIXED DEPOSITS

The Company has not accepted any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under.

ENERGY CONSERVATION

The following steps have been taken to conserve energy:-

(a) Commissioning of 220 KV Sub-Station: This is a big step as the port was earlier using captive power plant running on diesel.

(b) Commissioning of Containerised Sub-Station: Earlier the Reefers operation was running on hired DG sets which will not be required with commissioning of 04 Containerised Sub Stations of 1000 KVAeach.

TECHNOLOGY ABSORPTION

(a) Rubber Tyre Gantry Cranes (RTGs): The port has procured 10 Eco- RTGs and ordered additional 6 Eco-RTGs instead of the standard RTGs, which saves 50% fuel.

(b) Electric Spreaders: The port has ordered 12 all electric lightweight spreaders for the Eco-RTGs instead of the hydraulic spreader. This is also a new technology and will save fuel.

FOREGIN EXCHANGE EARNINGS AND OUTGO

The foreign exchange earnings and outgo during the year is as under:

(In Millions)

Earnings (Including Deemed foreign currency receipts) 1070.83

Outgo 1384.37

PERSONNEL RESOURCES

The Directors of your Company acknowledge the fact that manpower is most important asset and are committed to upgrading their skills and abilities. The company while realising its responsibilities has laid special emphasis on appointing local residents for appropriate positions at port. Also, the employees are selected and sent for various training programmes abroad.

The total employee strength of the company is about 469 and in order to attract competent people, it is developing a new housing colony and related facilities.

The particulars as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 are enclosed herewith.

ACKNOWLEDGEMENT

The Board of Directors of your company deeply acknowledge the valuable support, co-operation and assistance of Government of India, Government of Gujarat, Gujarat Maritime Board, Customs and various other Government Agencies, Financial Institutions & Banks. The Board of Directors also thank the employees for their good performance.

For and on behalf of Board of Directors

Place: Pipavav

Hans-Ole Madsen

Date : 17th March 2008 Chairman




Dec 31, 2005

The Directors present herewith the Fourteenth Annual Report of the Board of Directors of the Company together with the Audited Accounts for the nine months period as at 31st December 2005.

FINANCIAL RESULTS

Particulars Period Ended Year Ended 31st December 2005 31st March 2005 (Rs. In Millions) (Rs. In Million)

Total Revenue 676.23 762.09

Total Expenditure 982.85 1167.10

Operating Profit/(Loss) (306.62) (405.01)

Add: Other Income 29.92 21.69

Profit / (Loss) before Taxes (276.70) (383.32)

Exceptional Item -- 130.00

Profit/ (Loss) After Exceptional Item and before Taxes (276.70) (513.32)

Less: Provision for Current Taxation 1.72 0.90

Profit/(Loss) After Tax (278.42) (514.22)

Add: Balance Brought Forward from previous year (4038.08) (3523.86)

Balance loss carried forward to Balance Sheet (4316.50) (4038.08)

CHANGE IN FINANCIAL YEAR

As reported earlier, the company has changed its financial year from April - March to calendar basis and accordingly this Annual Report covers a period of 9 months from April to December 2005.

DIVIDEND

During the nine months period ending 31st December 2005 your company incurred a loss of Rs. 278.42 Million and has a total accumulated losses of Rs. 4316.50 Million. The Directors therefore do not recommend any dividend.

PROJECT IMPLEMENTATION INITIATIVES

The project implementation has gained momentum during the year with achieving financial closure. The works relating to widening of existing jetty to facilitate use of quay cranes, augmentation of power supply from 220 KV power line & internal power distribution works, are under way. Capital dredging to facilitate berthing of vessels calling the port at a draught of 12.5 Meters has commenced in January 2006. Further new contracts have been awarded for construction of post Panamax Container Berth, development of container yard, and orders have been placed for purchase of 8 Nos. Rubber Tired Gantry Cranes. Negotiations for purchase of new post Panamax Quay Cranes are progressing and the orders would be placed shortly. The company has also initiated implementation of Environment Management Plan. The total amount of capital expenditure incurred till February 2006 is Rs. 627.69 Million and capital commitments under implementation as on that date are Rs. 1315.027 Million.

All efforts are being taken to complete the project quickly and to recoup the time lost due to delay in change of shareholding and restructuring of the company.

Upon completion of dredging expected mid 2006, the port expects to improve its cargo throughput significantly.

YEAR IN RETROSPECT & OTHER KEY DEVELOPMENTS

A brief statistical profile on port operations during the nine months period ended 31s December 2005 comprising of ships calling at Pipavav and volume of cargo handled is as under:

Particulars April - December 2005 April 2004 - March 05

No. of vessel calls at Pipavav 501 747

Bulk Cargo Handled (In MT) 1,679,778 2,007,590

Containers Handled (TEU) 62,488 68,885

With continued emphasis on improving performance & productivity levels, the company has been able to report better financial performance.

PIPAVAV RAILWAY CORPORATION LIMITED (PRCL)

With the opening of container train operations to the private sector, PRCL has obtained permission from Ministry of Railways to operate container trains.

In addition, Railways recently flagged off the inaugural double stack container train for the first time in the country, from Jaipur to Pipavav, which on regular operations, is expected to improve volumes at reduced costs.

DIRECTORS RESPONSIBILITY STATEMENT

The directors pursuant to the amended Section 217 (2AA) of the Companies (Amendment) Act, 2000 state as under:

(i) The annual accounts of the company have been prepared in conformity with the Companies Act, 1956 and all applicable Accounting Standards issued by the Institute of Chartered Accountants of India from time to time along with proper explanation wherever necessary on a going concern basis;

(ii) The accounting policies are being followed consistently by the company and the judgments and estimates made by the company 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 period as on 31st December 2005;

(iii) The company has established sufficient internal control systems commensurate to its size and operations and is maintaining 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 accounts have been prepared on going concern basis.

AUDITORS OBSERVATIONS TO THE ACCOUNTS

In the matter of remuneration being paid to the Managing Director in excess of the limits specified in the Schedule XIII of Companies Act, 1956, the company has submitted application to Central Government within the stipulated time limit for approval, which is awaited.

SUBSIDIARY COMPANY

The Company does not have any subsidiaries.

DIRECTORS

Mr. Darius Pandole representing IDFC Private Equity Company Limited has ceased to be Director of the company. The company places on record its appreciation for his valuable contribution during his association.

Mr. Krishan Sehgal retires by rotation and being eligible offers himself for re-appointment.

Mr. H. K. Dash, I. A. S. retires by rotation and being eligible offers himself for re-appointment.

Mr. Dinesh Kumar Lai retires by rotation and being eligible offers himself for re-appointment.

Mr. Johan Herman Van Kerkhof representing APM Terminals Mauritius Limited and Mr. Luis Miranda representing IDFC Private Equity Company Limited were appointed as Additional Directors of the company during the period ended 31sl December 2005. They cease to be directors at the ensuing Annual General Meeting and seek appointment. The company would benefit from their appointment as Directors considering their experience.

Mr. Rajeeva Sinha was appointed as Managing Director of the company by the Board of Directors in the meeting held on 10th November 2005. His appointment and terms are being placed for approval before the shareholders at the ensuing Annual General Meeting.

AUDITORS

The auditors M/s BSR & Associates, (formerly BSR & Co.) Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

FIXED DEPOSITS

The Company has not accepted any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under.

ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

With respect to the provisions of conservation of energy and absorption of technology the Directors believe that considering the nature of industry and low key operations, the energy consumption is very negligible.

The foreign exchange earnings and outgo during the year is as under:

(Rs. In Millions)

Earnings (deemed foreign currency) 409.25

Outgo 22.47

PERSONNEL RESOURCES

The Directors of your Company acknowledge the fact that manpower is most important asset and are committed to upgrading their skills and abilities. The company while realising its responsibilities has laid special emphasis on appointing local residents for appropriate positions at port.

The particulars as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 are enclosed herewith.

ACKNOWLEDGEMENT

The Board of Directors of your company deeply acknowledge the valuable support, co-operation and assistance of Government of India, Government of Gujarat, Gujarat Maritime Board and various other Government Agencies, Financial Institutions & banks and shareholder groups in the restructuring of the company. The Board of Directors also thank the employees for their good performance.

For and on behalf of Board of Directors

Place: Mumbai Date: 24th March 2006 Hans-Ole Madsen Chairman




Mar 31, 2005

The Directors present herewith the Thirteenth Annual Report of the Board of Directors of the Company together with the Audited Accounts as at 31st March 2005.

FINANCIAL RESULTS

Particulars Year Ended 31st March Year Ended 31st March 2005 2004 (Rs. In Million) (Rs. In Million)

Total Revenue 762.09 492.85

Total Expenditure 1167.10 3350.85

Impairment Loss on Fixed Assets -- 2164.13

Operating Profit/ (Loss) (405.01) (2864.70)

Add: Other Income 21.69 26.91

Profit / (Loss) before Taxes (383.32) (2837.79)

Exceptional Item 130.00 --

Profit/ (Loss) After Exceptional Item and before Taxes (513.32) (2837.79)

Less: Provision for Current Taxation 0.90 0.30

Less: Provision for Deferred Taxation -- (24.47)

Profit/ (Loss) After Tax (514.22) (2813.63)

Add: Balance Brought Forward form previous year (3523.86) (710.24)

Balance loss carried forward to Balance Sheet (4038.08) (3523.86)

DIVIDEND

Your company incurred a loss of Rs. 514.22 Million for the year and with an accumulated loss of Rs. 4038.08 Million the Directors do not recommend any dividend for the year ended 31st March 2005.

RESTRUCTURING OF THE COMPANY

The Government of Gujarat approved the investment by A. P. Moller- Maersk Group in the company and transfer of shares from SKIL Group to A. P. Moller- Maersk Group and other financial investors. SKIL Group, PSA India Pte. Limited and CDC Financial Services Mauritius Limited have exit.

In furtherance thereto, your company executed the Shareholders Agreement with A. P. Moller- Maersk Group and other financial investors and with this, A. P. Moller- Maersk Group, being the largest shareholder, acquired the management control of the Company.

The Audit Committee and Board of Directors have been reconstituted reflecting the change in shareholding of the company.

Your company has achieved financial closure with a fresh equity infusion of Rs. 2000 Million and tie up of debt amounting to Rs. 5962.58 Million, for the expansion plan for Port Pipavav. The fresh equity of Rs. 1450 Million has been received in the current year and balance Rs. 550 Million would be subscribed on receipt of approval from Gujarat Maritime Board.

PROJECT IMPLEMENTATION INITIATIVES

During the year your company has acquired 3 second hand quay cranes from Japan which are functioning well and have also undertaken widening of jetty no. 2. for movement of the Quay Cranes over the 400 meters of wharf. /our company also has taken steps to commence dredging in the port to receive and handle vessels calling the port at 12.5 mtrs draught.

YEAR IN RETROSPECT & OTHER KEY DEVELOPMENTS

With Maersk Sealand and Safmarine vessels calling the port regularly the container throughput substantially increased during the year and a brief statistical profile on port operations during the financial year ended 31st March 2005 comprising of ships calling at Pipavav and volume of cargo handled is as under:

Particulars 2004-05 2003-04

No. of vessel calls at Pipavav 747 754

Bulk Cargo Handled (In MT.) 2007590 1908047

"l%ntainers Handled (TEU> 68885 24538

Your company achieved its highest ever productivity levels by handling 25050 tones of coal in a day and achieving 46.5 moves per hour in container handling. With proper cost control and efficient management of resources, the company was able to report improved earnings for the year.

INVESTMENT IN PIPAVAV RAILWAY CORPORATION LIMITED (PRCL)

As a part of shareholder restructure, your company acquired the shareholdings held by SKIL group in Pipavav Railway Corporation Limited and in addition have also subscribed to new shares in the ensuing year.

RESTRUCTURE OF EXISTING DEBT

As reported in the last report, the existing debt of the company was restructured under the Corporate Debt Restructuring scheme (CDR) with the consent of all lenders. The material terms and conditions of restructure of existing debt have been fulfilled by the company.

In compliance to the CDR terms the company has issued 8.4 % Optionally Convertible Cumulative Redeemable Prefer- ence Shares aggregating to Rs. 518 Mio and have also issued 10.5 % Non convertible debentures aggregating to Rs. 570 Mio to the lenders of the company.

CHANGE IN FINANCIAL YEAR

With the acquisition of management control by AP Moller Maersk, with a view to align the companys financial year with that of APMM your company has changed the financial year to calendar year. The financial statements for the ensuing year would therefore cover 9 months period from 1st April 2005 to 31st December 2005.

DIRECTORS RESPONSIBILITY STATEMENT

The directors pursuant to the amended Section 217 (2AA) of the Companies (Amendment) Act, 2000 state as under:

(i) The annual accounts of the company have been prepared in conformity with the Companies Act, 1956 and all applicable Accounting Standards issued by the Institute of Chartered Accountants of India from time to time along with proper explanation wherever necessary on a going concern basis;

(ii) The accounting policies are being followed consistently by the company and the judgments and estimates made by the company 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 March 2005;

(iii) The company has established sufficient internal control systems commensurate to its size and operations and is maintaining adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safe- guarding the assets of the company and for preventing and detecting fraud and other irregularities;

(iv) The accounts have been prepared on going concern basis.

AUDITORS OBSERVATIONS TO THE ACCOUNTS

The Auditors in their report to members have qualified non-provision of compensation claim of Rs. 293.64 Million under the Traffic Guarantee Agreement entered into with Pipavav Railway Corporation Limited. Your company believes that the shortfall in traffic guarantee was due to reasons beyond the control of the company and has taken up the matter with PRCL for waiver.

SUBSIDIARY COMPANY

The Company does not have any subsidiaries.

DIRECTORS/ COMPANY SECRETARY

Ms. Karen Brade, Mr. Nikhil Gandhi, Mr. Bhavesh Gandhi, Cmde. V. G. Honnavar, Mr. J. N. Godbole, Mr. Snehal Shah, Mr. Vincent Lim Chooi Hin, Mr. Yap Min Choy, Mr. David Yang Antonius and Mr. Yuvraj Narayan have ceased to be Directors of the company. The company places on record its appreciation for their valuable contribution during their association with the company.

Mr. Krishan Sehgal retires by rotation and being eligible offers himself for re-appointment.

Mr. H. K. Dash, I. A. S. retires by rotation and being eligible offers himself for re-appointment.

Mr. Dinesh Kumar Lai retires by rotation and being eligible offers himself for re-appointment.

Mr. Jack D. Helton and Mr. Christian M. Laursen, representing APM Terminals Mauritius Limited, Mr. Darius Pandole representing IDFC Asset Management Company Limited and Mr. Rajeev Thakore representing New York Life International India Fund Mauritius LLC were appointed as Additional Directors of the company during the year. They have ceased to be Directors at this Annual General Meeting and are seeking appointment. The company would benefit from their appointment as Directors considering their experience.

Mr Paresh Davey resigned as Company Secretary on 13th May 2005 and Mr. ManishAgnihotri was appointed as Company Secretary on 13th May 2005.

AUDITORS

The auditors M/s BSR & Associates, (formerly 0SR & Co.) Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible offer themselves for re-appointment.

FIXED DEPOSITS

The Company has not accepted any deposits within the meaning of Section 58A of the Companies Act, 1956 and the rules made there under.

ENERGY, TECHNOLOGY & FOREIGN EXCHANGE

With respect to the provisions of conservation of energy and absorption of technology the Directors believe that considering the nature of industry, the energy consumption is very negligible.

The foreign exchange earnings and outgo during the year is as under:

(In Millions)

Earnings 0.472

Outgo 0.254

PERSONNEL RESOURCES

The Directors of your Company acknowledge the fact that manpower is most important asset and are committed to upgrad- ing their skills and abilities. The particulars as required under Section 217 (2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 are enclosed herewith.

ACKNOWLEDGEMENT

The Board of Directors of your company deeply acknowledge the valuable support, co-operation and assistance of Gov- ernment of India, Government of Gujarat, Gujarat Maritime Board and various other Government Agencies, Financial Institutions & banks in the restructure of the company. The Board of directors also thank the employees for their good performance.

For and on behalf of Board of Directors

Place: Mumbai

Date: 19 August 2005 Hans-Ole Madsen

Chairman and Managing Director



 
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