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Directors Report of Gujarat Pipavav Port Ltd.

Mar 31, 2017

The Directors of Gujarat Pipavav Port Limited (''the Company'') have pleasure in submitting their 25th Annual Report to the Members of the Company together with the Audited Standalone and Consolidated Statement of Accounts for the year ended 31st March, 2017. The Company has for the first time presented the Ind AS compliant financial statements as per the requirement under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Accordingly, the previous year''s figures have been re-grouped wherever applicable.

1. FINANCIAL STATEMENTS & RESULTS:

a. FINANCIAL RESULTS:

(Rs. In Million)

Particulars

For the year ended 31st March 2017

For the year ended 31st March 2016

Operating Income

6,831.04

6,599.54

Less: Total Expenditure

2,645.14

2,838.91

Operating Profit

4,185.90

3,760.63

Add: Other Income

353.59

303.69

Profit before Interest, Depreciation, Tax and Exceptional Item

4,539.49

4,064.32

Less: Interest

4.03

1.59

Less: Depreciation

1,065.15

973.39

Profit Before Tax

3,470.31

3,089.34

Less: Taxes *

971.19

1,177.50

Profit after Tax

2,499.12

1,911.84

Balance carried forward to Balance sheet

2,498.41

1,907.36

*The Company was on a Tax Holiday under Section 80 (IA) of the Income tax Act and has Nil tax liability until 31st March 2017. However, the Company is required to pay Minimum Alternate Tax (MAT) which has been appropriately reflected in the financial statements in accordance with the Accounting Principles.

b. OPERATIONS:

The Company is engaged in the business of Port Development and Operations at Pipavav Port, Gujarat under the 30 year Concession vide Agreement dated 30th September 1998 from Gujarat Maritime Board. The Port located in Southwest Region of Gujarat handles Dry Bulk, Containers, Liquid, and RORO vessels. The performance details are as follows:

Particulars

For the year ended 31st March 2017

For the year ended 31st March 2016

Bulk Cargo Handled (In MT)

2,112,078

2,478,743

Containers Handled (In TEUs)

663,380

694,614

Liquid Handled (In MT)

685,960

706,877

RORO (No. of Cars)*

83,607

19,644*

*The Company commenced handling of RORO vessels effective August 2015

c. REPORT ON PERFORMANCE OF SUBSIDIARIES, ASSOCIATES AND JOINT VENTURE COMPANIES:

The Company holds 38.8% shares in Pipavav Railway Corporation Limited (PRCL) and 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, its accounts are to be consolidated with the Company''s accounts. More than 50% of PRCL''s shareholding is held by Government/ Public Sector Undertakings so PRCL is required to accomplish Statutory Audit followed with the CAG Audit. As on the date of this Report PRCL''s Audited Financial Statements are not available, therefore the Company has prepared its Consolidated Financial Statement based on Unaudited financial statements provided by the PRCL Management.

d. DIVIDEND:

The Board of Directors in the Meeting held on 4th November 2016 declared and paid an Interim Dividend of Rs. 2.00 per share. The Board is pleased to recommend a Final Dividend of Rs. 1.80 per share on the Company''s outstanding Equity Share Capital.

The Dividend is subject to the approval of the Members at the Annual General Meeting on 10th August 2017 and will be paid on or after 11th August 2017, within the stipulated time limit to all Members whose name appears in the Register of Members, as on the date of book closure ie. from Friday 4th August 2017 to Thursday 10th August 2017 (both days inclusive). The total dividend payout of Rs. 1.80 per equity share will aggregate to Rs. 1,047.34 Million including the Dividend Distribution Tax of Rs. 177.15 Million which will be borne by the Company.

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, supported by underlying earnings growth and subject to i) availability of profits and funding requirements, ii) future funding needs as per the Company''s growth plans, iii) applicable laws and in accordance with the recommendation of the Board of Directors and approval of Shareholders.

e. TRANSFER TO RESERVES:

The Board of Directors have not recommended any transfer of profit to reserves during the period 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 the 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 period 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. During the year under review, no material or serious observation has been made by the Statutory Auditors and the Internal Auditors of the Company for inefficiency or inadequacy of such controls. Wherever suggested by the Auditors, the improved control measures have been implemented and their functioning is reviewed from time to time.

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 Going Concern status and on the Company''s operations in future.

k. PARTICULAR OF CONTRACTS 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 ordinary course of business and at arms'' length. Therefore they do not come within the purview of the provisions of Section 188 of the Companies Act, 2013.

All the transactions have prior approval of the Audit Committee as per the requirement under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The related party transaction with Maersk Line A/S in connection with Income from Port Operations is a material transaction. The Contract with Maersk Line A/S has been renewed for three years from 1st April 2017 to 31st March 2020. Pursuant to Regulation 23(4) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to obtain Shareholders approval. A resolution to that effect is included in the Notice convening the meeting.

l. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES:

The Company has not provided any loans, guarantees and securities. The Company does not have any investments except its shareholding in the 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 furnished.

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 no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

o. DISCLOSURE UNDER SECTION 62(1)(b) OF THE COMPANIES ACT, 2013:

The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no information as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

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:

As per the estimates released by the WTO, the world GDP is likely to be at 2.7% this year and 2.8% in the next year. The Container shipping industry is expecting the global container trade to grow by 2%. In view of subdued growth in global trade, the shipping lines are expected to reduce/ rationalize the capacity in various trades to align with global supply and demand requirements.

The Container market on the West coast in India has increased by about 6% largely driven by strong imports. India is amongst the very few global markets reporting the growth numbers. The growth trend in imports is expected to continue during the current year while the exports remain under pressure.

The dry bulk cargo comprises import of Coal and Fertilizer. Coal imports have been witnessing consistent decrease in volumes due to better availability of domestic coal and also because of the Government''s focus on promoting clean renewable energy through wind and solar power. The Fertilizer imports remain volatile depending upon the monsoon and the availability of the fertilizer stock in the domestic market. Moreover the compulsory Neem coating is also likely to reduce the imports.

Liquid cargo mainly LPG and RORO are the two promising areas. The Government''s initiative of providing LPG connection in the rural areas is likely to increase the LPG imports. With Gujarat developing into an Auto Hub, the car exports from Gujarat has been doing well.

3. RISKS AND AREAS OF CONCERN:

The global trade is faced with two main areas of uncertainties, one the policy changes that the US Administration might implement in the near future and two the impact of UK''s exit from the European Union. Any adverse movement in any of these two events is likely to impact the growth in the trade and impact the shipping lines. In India, the imports have been strong and are likely to maintain the trend. In case of below normal monsoon in the coming season, it could have an adverse impact on the consumption pattern in the rural areas.

4. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL:

a. BOARD OF DIRECTORS & KEY MANAGERIAL PERSONNEL:

Mr. Tejpreet Singh Chopra (DIN: 00317683), Ms. Hina Shah (DIN: 06664927), Mr. Pradeep Mallick (DIN: 00061256) and Mr. Pravin Laheri, IAS (Retd.)(DIN:00499080) are the Company''s Independent Directors for a period of five consecutive years from the date of the Company''s Annual General Meeting (AGM) held on 30th July 2015.

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.

Gujarat Maritime Board (GMB) the port regulator has one seat on the Company''s board. Due to the organizational changes their Nominee is yet to be advised by GMB.

The Promoter APM Terminals Mauritius Limited had nominated Mr. Ahmed Hassan (DIN: 07588595) on the Company''s Board and he was appointed as Additional Director on 10th October 2016. He was appointed in place of Mr. Jan Damgaard Sorensen (DIN: 06408939) who ceased to be the Director of the Company from 16th September 2016. There has been further change in nomination by the Promoter. Mr. Hassan has resigned as the Company''s Director with effect from 5th April 2017 and Mr. Sorensen is appointed as Additional Director with effect from 11th May 2017. Mr. Sorensen is seeking appointment as Director of the Company. Your Board of Directors recommend the appointment of Mr. Jan Damgaard Sorensen (DIN: 06408939) as Director of the Company.

Mr. Rizwan Soomar (DIN: 02398970) has resigned as the Company''s Director with effect from 5th April 2017. The Promoter has nominated Mr. David Skov (DIN:07810539) who is appointed as Additional Director of the Company with effect from 11th May 2017. Mr. Skov is seeking appointment as Director of the Company. Your Board of Directors recommend the appointment of Mr. David Skov (DIN:07810539) as Director of the Company.

Pursuant to the provisions of Section 152 of the Companies Act, 2013, Mr. Julian Bevis (DIN:00146000) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. Your Directors recommend the re-appointment.

Your Directors thank Mr. Rizwan Soomar and Mr. Ahmed Hassan for their valuable contribution during their tenure as Directors of the Company.

b. DECLARATIONS BY INDEPENDENT DIRECTORS:

The Company has received declarations from all the Independent Directors under Section 149(6) of the Companies Act, 2013 confirming their independence vis-a-vis the Company.

The Independent Directors were appointed in the AGM held on 30th July 2015 for a period of five years.

The Company has been regularly conducting Familiarization Programme for its Independent Directors and has posted the details on its website http://pipavav.com/independent_director.php

5. DISCLOSURES RELATED TO BOARD, COMMITTEES AND POLICIES:

a. BOARD MEETINGS:

The Board of Directors met four times during the year ended 31st March 2017 in accordance with the provisions of the Companies Act, 2013 and rules made there under.

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 31st March, 2017, the Board of Directors hereby confirms that:

a. in the preparation of the annual accounts, the applicable accounting standards had 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 31st March, 2017 and of the profit of the Company for that period;

c. proper and sufficient care was taken for the 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 were operating effectively;

f. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;

c. NOMINATION AND REMUNERATION COMMITTEE:

The Nomination and Remuneration Committee of Directors was constituted by the Board of Directors of the Company in accordance with the requirements of Section 178 of the Act.

The composition of the Committee is as under:

1. Mr. Pradeep Mallick Chairman, Independent Director

2. Mr. Pravin Laheri, IAS (Retd.) Independent Director

3. Mr. Tejpreet Singh Chopra, Independent Director; and

4. Mr. David Skov, 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 remuneration for Directors, Key Managerial Personnel and other employees.

Major criteria defined in the policy framed for appointment of and payment of remuneration to the Directors of the Company, are 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 open mind.

e) While determining the remuneration of Executive Directors and Key Managerial Personnel, 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 Commission and value of the perquisites, shall not exceed the permissible limits as are 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/ salary from the Company. However, they 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.

d. AUDIT COMMITTEE:

The Audit Committee of Directors was constituted 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. Pravin Laheri, IAS (Retd.) Chairman, Independent Director

2. Mr. Pradeep Mallick, Independent Director

3. Ms. Hina Shah, Independent Director

4. Mr. Jan Damgaard Sorensen, Non Independent Director

The scope and terms of reference of the Audit Committee is in accordance with the Act and it reviews the information as required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

During the year under review, there were no instances of recommendation of the 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 Board of Directors of the Company constituted the Stakeholders Relationship Committee, comprising:

1. Mr. Pradeep Mallick, Chairman, Independent Director,

2. Mr. Tejpreet Singh Chopra, Independent Director and

3. Mr. Keld Pedersen, Managing Director

The Company Secretary acts as the 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.

The Policy provides a formal mechanism for all employees of the Company to make disclosure at the designated email id about suspected fraud or unethical behavior. It also 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 or fraud or any unethical behavior. 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 also report to the Compliance Officer of the parent Company APM Terminals.

The policy also provides direct access to the Chairman of Audit Committee through his personal email id.

The Company has also constituted an Internal Complaints Committee as per the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and the Rules made there under for reporting the instances related to Sexual Harassment and deal with them in a timely manner.

As part of APM Terminals the Company shares the distinctive set of the Group''s 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, 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, and define a structured approach to manage uncertainty and to make use of these in their decision making pertaining to all business divisions and corporate functions. Key business risks and their mitigation are considered in the annual/ strategic business plans and in periodic management reviews.

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 as under:

1. Ms. Hina Shah, Chairperson, Independent Director

2. Mr. Pravin Laheri, IAS (Retd.), Independent Director and

3. Mr. Keld Pedersen, 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, the details of which have been prescribed in Annexure A attached.

The CSR Policy of the Company is available on the Company''s web-site and can be accessed in the link provided http://pipavav. com/csr.php

During the year ended 31st March 2017 the Company was required to spend Rs. 63.9 Million towards the CSR activities out of which Rs. 40.4 Million has been spent in the areas of Education, Health, Safety & Environment, Women Empowerment and Skill Development and the Rural Development Projects. Certain projects that have been identified are ongoing and in progress as of 31st March 2017 for which the unspent amount of Rs. 23.5 Million will get utilized. The Company is also committed to use the unspent amount from previous years of Rs. 25.6 Million and has been carried forward.

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. The Board also carried out the evaluation of Directors and the various Board Committees did their respective evaluation.

The Board also evaluated the manner in which the information flows between the Board and the Management and the manner in which the board papers and other documents are prepared and furnished.

j. INTERNAL CONTROL SYSTEMS:

Adequate internal control systems commensurate to the size of the Company''s business and its nature of business and its complexities, are in place and have been operating satisfactorily. The adequacy and their functioning is reviewed by the Internal Auditors from time to time and wherever necessary the corrective measures are taken.

Internal control systems consisting of policies and procedures are designed to ensure reliability of financial reporting, timely feedback on 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 adequately protected.

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. 371,179 and the Managing Director''s remuneration is Rs. 33,592,559.

The percentage increase in remuneration of the Key Managerial Personnel (KMPs) i.e. Managing Director, Chief Financial Officer and Company Secretary is 8.50% , 6.00% and 10.00% respectively. The average increase for KMPs works out to approximately 8%.

The percentage increase in the median remuneration of employees in the financial year is 11.31%.

The Company has a total of 503 permanent employees on its rolls.

The Company follows the global practice of its parent wherein the Company''s Objectives and the individual employee''s objectives are set against which their actual performance is appraised which in turn determines the percentage increase in their remuneration. The Company follows the Bell Curve for the performance rating of all its employees. The remuneration of KMPs has also been determined based on their performance against their respective objectives vis-a-vis the Company''s objectives.

The Company''s Market Capitalization has reduced by 5.8% based on the closing price as of 31st March 2017 compared to 31st March 2016. The Net Worth as per the audited accounts is Rs. 20,101.75 Million as of 31st March 2017 compared to Rs. 19,716.16 Million as of the previous year.

The copies of Annual Report as per Section 136 of the Companies Act, 2013 are 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. 15 Million to all the four Independent Directors pursuant to the shareholder''s approval in the previous AGM.

l. PAYMENT OF REMUNERATION / COMMISSION TO DIRECTORS FROM HOLDING OR SUBSIDIARY COMPANIES:

None of the managerial personnel of the Company are in receipt of remuneration/commission from the Holding or Subsidiary Company of the Company.

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 31st MARCH 2017:

There are no Audit Observations on the Standalone Financial Statements of the Company for the year ended 31st March 2017.

The Statutory Auditors have made an observation in their Audit Report for the Consolidated Financial Statements of the Company for the year ended 31st March 2017 in Clause 7(a) and (b) of their Report as follows:

Basis for Qualified Opinion

6(a) The consolidated Ind AS financial statements include the Company''s share of net profit of Rs. 361.19 million, based on unaudited Ind AS financial statements as at and for the year ended 31 March 2017 in respect of its associate company not audited by us. Further the comparative consolidated Ind AS financial information for the year ended 31 March 2016 included in these consolidated Ind AS financial statements include Ind AS financial information of the associate company not audited by us. The Ind AS financial statement as at and for the year ended 31 March 2017 and the comparative Ind AS financial information as at and for the year ended 31 March 2016 in respect of the associate company is pending audit by their auditors. Our opinion on the consolidated Ind AS financial statements insofar as it relates to the amounts and disclosures included for the year ended on 31 March 2017 in respect of this associate company is based solely on such Ind AS financial information of the associate company for the year ended on 31 March 2017, as furnished to us by the Management of the Company.

(b) Further, pending the audit of the associate company for the year ended on 31 March 2017 by their auditors, we are unable to report on the adequacy of the internal financial controls over financial reporting and operating effectiveness of such controls of the associate company incorporated in India as required to be reported by us. In this connection the Board of Directors would like to state that the Company holds 38.8% shares in Pipavav Railway Corporation Limited (PRCL) and in view of the provisions of Section 2(6) of the Companies Act, 2013, PRCL is an Associate Company. PRCL''s more than 50% shareholding is held by Government/ Public Sector Undertakings. So PRCL is required to accomplish Statutory Audit followed with the CAG Audit. As on the date of this Report PRCL''s audit is currently in progress and the Audited Ind AS Financial Statements are yet to be released. Therefore the Company has prepared its Consolidated Ind AS Financial Statement based on Unaudited Ind AS financial statements provided by the PRCL Management.

b. SECRETARIAL AUDIT REPORT FOR THE YEAR ENDED 31st MARCH 2017:

Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates to obtain Secretarial Audit Report from Practicing Company Secretary. Accordingly M/s Rathi and Associates, Company Secretaries have issued the Secretarial Audit Report for the year ended 31st March 2017.

The Secretarial Audit Report issued in Form MR-3 forms part of this report. The said report does not contain any observation or qualification requiring explanation or comments from the Board under Section 134(3) of the Companies Act, 2013.

c. RATIFICATION OF APPOINTMENT OF 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 have been appointed as the Statutory Auditors of the Company for a period of five years in the Annual General Meeting held on 30th July 2015 subject to ratification of their appointment by the Members at every Annual General Meeting.

The matter for ratification of appointment of the said Auditors is included in the Notice of AGM.

d. COST AUDITORS:

The Company is engaged in providing Port Services and as per Notification dated 31st 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.

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. EXTRACT OF ANNUAL RETURN:

Pursuant to the provisions of Section 134(3)(a) of the Companies Act, 2013, Extract of the Annual Return for the year ended 31st March 2017 made under the provisions of Section 92(3) of the Act is attached as Annexure B to this Report.

b. 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.

c. REMUNERATION PAYABLE BY COMPANIES HAVING NO PROFIT OR INADEQUATE PROFIT (in terms of Section II of Schedule V):

The Company has adequate profits and therefore the provision of Section II in Schedule V regarding remuneration payable by Companies having no profit or inadequate profit without Central Government approval, is not applicable.

d. CHANGE IN SHARE CAPITAL:

The Company has not made any issue of shares during the year and its Share Capital for the year ended 31st March 2017 remains unchanged.

8. ACKNOWLEDGEMENTS AND APPRECIATION:

Your Directors thank Customers, Shareholders, Suppliers, Bankers, Business Partners/Associates and the Central and State Government and Gujarat Maritime Board for their continued support and encouragement to the Company. Your Directors also wish to place on record their sincere appreciation of the commitment and enthusiasm of all employees for their significant role in the Company''s performance.

For and on behalf of the Board

CHAIRMAN

Date: 11th May 2017 DIN: 00317683

Place: Mumbai

Registered Office

Pipavav Port,

At Post Rampara-2 via Rajula

District Amreli 365560

CIN L63010GJ1992PLC018106

Tel. No. : 02794 302400 Fax No. 02794 302413

Email : investorrelationinppv@apmterminals.com

Website : www.pipavav.com


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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