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Services > Company Profile > Director's Reports
Adani Ports & Special Economic Zone Ltd Miscellaneous
BSE Code
532921
ISIN Demat
INE742F01042
Book Value
90.3624638
NSE Symbol
ADANIPORTS
Div & Yield %
0.58
Market Cap (Rs Cr.)
71789.54
P/E
29.43
EPS
11.78
Face Value
2

Dear Shareholders,

Your Directors are pleased to present the 19th Annual Report along with the audited financial statements of your Company for the financial year ended on March 31, 2018.

Financial Performance:

The audited financial statements of the Company as on March 31, 2018 are prepared in accordance with the relevant applicable IND AS and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”) and provisions of the Companies Act, 2013 (“Act”).

The summarized financial highlight is depicted below:

(` in crore)

Consolidated

Standalone

Particulars

2017-18

2016-17

2017-18

2016-17

Revenue from operations

11,322.96

8,439.35

6,533.82

4,878.86

Other Income

1,010.93

1,040.11

1,607.32

1,284.67

Total Income

12,333.89

9,479.46

8,141.14

6,163.53

Operating expenses

4,177.55

3,024.66

2,024.96

1,331.81

Depreciation and Amortisation Expenses

1,188.37

1,160.19

470.52

540.71

Foreign Exchange (Gain) / Loss (net)

83.29

(277.44)

62.22

(200.33)

Finance Cost
- Interest and Bank Charges

1,257.35

1,281.24

1,218.08

1,103.40

- Derivative (Gain)/Loss

238.02

111.94

238.80

95.00

Total Expenditure

6,944.58

5,300.59

4,014.58

2,870.59

Profit before share of profit from joint ventures, exceptional items and tax

5,389.31

4,178.87

4,126.56

3,292.94

Add/(Less):- Exceptional Items

(155.18)

-

(297.38)

-

Tax Expense (net) (Refer note below)

1,544.18

286.63

1,421.08

192.33

Profit after tax and before share of profit from joint ventures

3,689.95

3,892.24

2,408.10

3,100.61

Share of Profit from Joint Ventures

-

9.26

-

-

Net Profit for the year

3,689.95

3,901.50

2,408.10

3,100.61

Other Comprehensive income (net of tax)

9.85

6.67

8.61

12.33

Total Comprehensive Income for the period / year

3,699.80

3,908.17

2,416.71

3,112.94

Attributable to:
Equity holders of the parent

3,683.02

3,919.94

2,416.71

3,112.94

Non-controlling interests

16.78

(11.77)

-

-

Note: The Company was availing tax holiday under section 80IAB of Income Tax Act, 1961 till March 31, 2017 and w.e.f April 1, 2017, the Company is subject to normal tax regime.

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

Performance Highlights:

Your Company has created a milestone in Indian commercial ports history by handling 122 MMT of cargo. Mundra Port continues to rank 1st in terms of total cargo handling and 2nd in terms of container cargo handling during the year under review. The other ports developed and being operated by your Company at Dahej, Hazira, Kandla, Dhamra, Murmugao and Kattupalli have performed well.

The key aspects of your Company's consolidated performance during the financialyear 2017-18 are as follows:

Handled cargo of 180 MMT, a growth of 7% YOY surpassing all India cargo growth of 4%.

Container volumes cross 5 million TEUs an increase of 20% on YOY basis, surpassing all India container growth of 13%. Consolidated revenue from operations registered a growth of 34% from ` 8,439.35 crore in FY 2016-17 to ` 11,322.96 crore in FY 2017-18.

Revenue up by 34%, EBITDA up by 32% and PBT up by 25%.

Profit after tax for the FY 2017-18 stood at ` 3,689.95 crore. Signed long term contracts for 7.7 MMT.

The detailed operational performance of the Company has been comprehensively discussed in the Management Discussion and Analysis Report which forms part of this Report.

Dividend:

Your Directors have recommended a dividend of 100% (` 2 per equity share of ` 2 each) on the equity shares and 0.01% dividend on 0.01% Non-Cumulative Redeemable Preference Shares of ` 10 each for the financial year 2017-18. The said dividend, if approved by the shareholders, would involve a cash outflow of ` 499.33 crore including tax thereon.

The Board has also approved a Dividend Policy which is now linked with profit after tax. From financial year 2018-19, the Company would pay upto 15% of profit after tax as Dividend to Shareholders.

Transfer to Reserves:

The Company proposes to transfer ` 304.82 crore to Debenture Redemption Reserve out of the amount available for appropriation.

Status of Scheme of Arrangement:

During the year under review, the Hon'ble National Company Law Tribunal had, vide its order dated August 18, 2017 sanctioned the Scheme of Arrangement between Adani Ports and Special Economic Zone Limited (the “Company”) and The Adani Harbour Services Private Limited (the “Transferee Company”) and their respective shareholders and creditors (the “Scheme”).

The Scheme, with effect from April 1, 2016, inter alia, provided for transfer and vesting of Marine Business Undertaking of the Company to the Transferee Company as a going concern, on Slump Sale basis.

Fixed Deposits:

During the year under review, your Company has not accepted any fixed deposits within the meaning of Section 73 of the Act read with rules made there under.

Non-Convertible Debentures:

During the year under review, your Company has issued 16,000 Rated, Listed, Secured Redeemable Non-Convertible Debentures (NCDs) of face value of ` 10 lakh each aggregating to ` 1600 crore on a private placement basis listed on the Wholesale Debt Market Segment of BSE Limited.

Further, your Company has redeemed 3,667 NCDs of face value of ` 10 lakh each issued on private placement basis.

Particulars of loans, guarantees or investments:

The provisions of Section 186 of the Act, with respect to a loan, guarantee or security is not applicable to the Company as the Company is engaged in providing infrastructural facilities which is exempted under Section 186 of the Act. The details of investment made during the year under review are disclosed in the financial statements.

Subsidiaries, Joint Ventures and Associate Companies:

Your Company had 28 (direct and indirect) subsidiaries as on March 31, 2018.

During the year under review, the following changes have taken place: Mundra International Gateway Terminal Private Limited was incorporated as wholly owned subsidiary of the Company on May 17, 2017 with an object to develop, operate, maintain ports and related infrastructure facilities.

Adani International Terminals Pte Ltd., Singapore was incorporated as wholly owned subsidiary of the Company on June 30, 2017 with an object to develop, operate, maintain ports and related infrastructure facilities.

No Company has become/ceased to be a joint venture/ associate during the financialyear 2017-18.

Adani Logistics Limited, a wholly owned subsidiary of the Company has acquired 100% stake of Blue Star Realtors Private Limited on April 26, 2018.

Pursuant to the provisions of Section 129, 134 and 136 of the Act read with rules made thereunder and Regulation 33 of the Listing Regulations, the Company has prepared consolidated financial statements of the Company and its subsidiaries and a separate statement containing the salient features of financial statement of subsidiaries, joint ventures and associates in Form AOC-1 forms part of this Annual Report.

The annual financial statements and related detailed information of the subsidiary companies shall be made available to the shareholders of the holding and subsidiary companies seeking such information on all working days during business hours. The financial shall also be kept for inspection by any shareholder/s during working hours officeand that theCompany'sregistered of the respective subsidiary companies concerned. In accordance with Section 136 of the Act, the audited financial statements, including consolidated financial information of the Company and audited accounts of each of its subsidiaries, are available on website, www.adaniports.com. Details of developments of subsidiaries of the Company are covered in the Management Discussion and Analysis Report which forms part of this Report.

Directors and Key Managerial Personnel:

Pursuant to the requirements of the Act and Articles of Association of the Company, Dr. Malay Mahadevia (DIN: 00064110) is liable to retire by rotation and being eligible offers himself for re-appointment. The Board recommends the appointment of Dr. Malay Mahadevia as Director of the Company retiring by rotation.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed in Section 149(6) of the Act and Regulation 16(1)(b) of the Listing Regulations and there has been no change in the circumstances which may affect their status as independent director during the year.

During the year, Mr. B. Ravi had resigned as Chief Financial Officer of the Company with effect from close of business hours of February 12, 2018.

The Board has appointed Mr. Deepak Maheshwari as Chief Financial Officer and Key Managerial Personnel of the Company with effect from May 3, 2018.

Brief details of Dr. Malay Mahadevia as required under Regulation 36 of the Listing Regulations are provided in the Notice of the Annual General Meeting.

Directors' Responsibility Statement:

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, state the following:

a. that in the preparation of the annual financial statements, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. that such accounting policies have been selected and applied consistently and judgements and estimates have been made that 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 and of the profit of the Company for that period;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. that the annual financial statements have been prepared on a going concern basis;

e. that proper internal financial controls were in place and that the financial control were adequate and were operating effectively; f. that proper systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Number of Board Meetings:

The Board of Directors met 5 (five) times during the year under review. The details of board meetings and the attendance of the Directors are provided in the Corporate Governance Report which forms part of this Report.

Independent Directors' Meeting:

The Independent Directors met on March 13, 2018, without the attendance of Non-Independent Directors and members of the Management. The Independent Directors reviewed the performance of Non-Independent Directors and the Board as a whole; the performance of the Chairman of the Company, taking into account the views of Executive Directors and Non-Executive Directors and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Board Evaluation:

The Board adopted a formal mechanism for evaluating its performance as well as that of its Committees and individual Directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects of the Boards functioning such as composition of the Board & committees, experience & competencies, performance of specific duties & obligations, contribution at the meetings and otherwise, independent judgement, governance issues etc.

All Directors participated in the evaluation survey and review was carried out through a peer-evaluation excluding the Director being evaluated. The result of evaluation was discussed in the Independent Director's meeting held on March 13, 2018, Nomination and Remuneration Committee meeting and in the Board Meeting held on May 3, 2018.

Policy on directors' appointment and remuneration:

The Company's policy on directors' appointment and remuneration and other matters provided in Section 178(3) of the Act is available on the website of the Company at http:// www.adaniports.com/investor/investordownload

Internal Financial control system and their adequacy:

The details in respect of internal financial control and their adequacy are included in Management Discussion and Analysis Report which forms part of this report.

Risk Management:

The Board of the Company has formed a Risk Management Committee to frame, implement and monitor the risk management plan for the Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. The major risks identifiedby the businesses are systematically addressed through mitigation actions on a continual basis.

Committees of Board:

Details of various committees constituted by the Board of Directors as per the provisions of the Act and Listing Regulations are given in the Corporate Governance Report which forms part of this report.

Sustainability and Corporate Social Responsibility:

The Company has constituted a Sustainability and Corporate Social Responsibility Committee and has framed a Policy. The brief details of Committee are provided in the Corporate Governance Report. The Annual Report on CSR activities is annexed and forms part of this report. The policy is available on the website of the Company at http://www.adaniports.com/ sustainability/policies.

Corporate Governance and Management Discussion and Analysis Report:

A separate report on Corporate Governance compliance and a Management Discussion and Analysis Report as stipulated by Listing Regulations forms part of this Annual Report along with the required Certificate from a Practising Company Secretary regarding compliance of the conditions of Corporate Governance as stipulated.

In compliance with Corporate Governance requirements, your Company has formulated and implemented a Code of Business Conduct and Ethics for all Board members and senior management personnel of the Company, who have affirmed the compliance thereto.

Business Responsibility Report:

The Business Responsibility Report for the year ended March 31, 2018 as stipulated under Regulation 34 of Listing Regulations is annexed which forms part of this Annual Report.

Prevention of Sexual Harassment at Workplace:

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and rules made thereunder, your Company has constituted Internal Complaints Committee which is responsible for redressal of complaints related to sexual harassment. During the year under review, there were no complaints pertaining to sexual harassment.

Extract of Annual Return:

The details forming part of the extract of the Annual Return in Form MGT-9, is annexed to this report as Annexure-A.

Related Party Transactions:

All the related party transactions entered into during the financial year were on an arm's length basis and were in the ordinary course of business. Your Company had not entered into any transactions with related parties which could be considered material in terms of Section 188 of the Act.

During the year, your Company has entered into a transaction with Shanti Sagar International Dredging Private Limited, wholly owned subsidiary, to sell its Maintenance Dredging Undertaking. Details of the transaction are provided in Form AOC-2, is annexed to this report as Annexure-B.

Significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Company:

There are no significant and material Regulators or Courts or Tribunals which would impact the going concern status and the Company's future operations.

Insurance:

Your Company has taken appropriate insurance for all assets against foreseeable perils.

Quality, Health, Safety and Environment:

At Adani Ports and Special Economic Zone Limited (APSEZL), Quality, Health, Safety and Environmental (QHSE) responsibilities are integral to operations. Your Company has acquired International Standards ISO 9001:2015, ISO 14001:2004, OHSAS 18001:2007, ISO 28000:2007 certifications specifying the requirements for an Integrated Management System (IMS) as part of its objective to improve quality, health, safety and environment in the work place.

Apart from the ISO certification your company has adopted its own Safety Management System (SMS) which is based on the philosophy that safety is primarily line management's responsibility. The SMS is divided into 20 elements, with each element being owned by an element owner who is from the line management at Port. These element owners are accountable for implementation, monitoring and sustenance of their respective element.

Your company aspires to be globally admired Occupational, Health and Safety (OHS) leader in infrastructure space. The lifesaving safety rules are non-negotiable and sacrosanct.

The QHSE policy, OHS vision and mission and Life Saving Rules have been communicated to all the stakeholders. Further, to give impetus to organization's HSE & well-being, messages have been issued by the senior leadership team emphasizing the Safety First culture.

The Company has taken following major initiatives to advance the QHSE commitment:

Significant Safety Initiatives:

1. Successfully completed IMS surveillance audit for Adani Ports / Terminals at Dahej, Dhamra, Goa, Hazira and Tuna.

2. Business wide implementation of Adani Group Safety Management System (SMS). Till date total 4 Port Sites are certified as Level 1 and 3 Port Sites are Level 0 certified.

3. Have clocked more than 87 million man hours, inducted more than 50,000 workers and trained more than 36,000 workers and employees.

4. Have implemented online OHS ERP solution Adani Gensuite, through which any employee / worker can report a safety concern using his / her mobile phone. These concerns are reviewed and addressed by respective department leads.

5. Have implemented a Behaviour Based Safety tool called Suraksha Samwaad, wherein the leaders interact with the workforce regularly to engage them on safety.

Your Company released its maiden sustainability report for FY 2015-16 as per GRI-G4 guidelines and its second sustainability report for FY 2016-17 based on GRI standard. With this, the of their appointment at every AGM, if required Company has become the leader in port sector for disclosing its sustainability performance in the country.

Your Company believes stakeholder engagement finds its place at the core of business strategies which thrives for inclusive development therefore the Company has outlined its commitment in stakeholder engagement policy and developed the stakeholder engagement procedure.

Your Company ensures compliance to environment and related applicable regulations and continually improves its statements in this Annual Report. performance.

Your Company acknowledges its responsibility towards the environment and has initiated numerous initiatives to reduce impact on environment. The Company has developed a vision for “Zero Waste to landfill” and is working towards making APSEZ a Zero Waste Company. As part of vision for Zero Waste, your Company has taken several initiatives in the handling and management of hazardous and non-hazardous waste at all operating port locations by focusing on 5R principles of waste management i.e. Reduce, Reuse, Reprocess, Recycle and Recover. Major initiatives includes, Reuse of treated sewage, Recycling of paper, plastic, metal, E-waste, Used oil etc., Reprocess of food waste, STP & ETP sludge, Oily cotton waste etc.

Various initiatives are implemented for reduction in water and energy consumption footprint. Such initiatives have not only resulted in net environmental benefits but have also reduced the operational costs. To meet the fresh water demand, sea water is utilized through desalination plant at Mundra.

Cumulative installation of rooftop solar power generation at office buildings has reached to 3.3 MW at Mundra. Total cumulative terrestrial greenbelt development done till date is about 450 hectares across all port locations, cumulative mangrove afforestation is done in an area over 2,800 hectares across the coast of Gujarat and a unique pilot project of development of bio-shield for protection of coastal areas is in progress at Jambusar, Gujarat. APSEZ has conducted Greenhouse Gas (GHG) emission study for Scope 1 and Scope 2 emissions. During the reporting period, GHG emission of APSEZ, Mundra location for Scope 1 is 89,435.3 tCO2 and Scope 2 is 91,569.25 tCO2.

Auditors & Auditors' Report:

Pursuant to the provisions of Section 139 of the Act read with rules made thereunder, as amended from time to time, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration No 117366W/W-100018), were appointed as statutory auditors of the Company to hold office till the conclusion of the Annual General Meeting (AGM) of the Company to be held in the calendar year 2022, subject to ratification under law. Accordingly, the appointment of M/s. Deloitte Haskins & Sells LLP, Chartered Accountants as Statutory Auditors of the Company is placed for ratification by the Shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are re-appointed, it would be in accordance with the provisions of Section 141 of the Act.

Notes to the financial statements referred in the Auditors Report are self-explanatory and therefore do not call for any comments under Section 134 of the Act. The Auditors' Report is enclosed with the financial

Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Act read with the rules made thereunder, your Company had appointed Mr. Ashwin Shah, Practising Company Secretary to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for financialyear 2017-18 is annexed which forms part of this report as Annexure-C. There were no qualifications, reservation or adverse remarks in the Secretarial Audit Report of the Company.

Information Technology- an enabler for Growth:

In this digital era, technology is fundamentally changing our society and world of business. We strive to develop the ability to understand and make use of the power of information technology to our advantage. Our strategy is to use technology to improve our competitive position and support business transformation.

We at APSEZ have initiated to integrate the current business processes with the new age digital technologies to transform our business into a digital business. With the aim to delight our customers we strive to use the emerging technologies like Block chain and provide the complete visibility of their business interests through timely, accurate and exhaustive data services. This will help us improve our competitive advantage and exceed customer expectations.

With the increase of digitization and automation, we are becoming moreefficientin our service delivery and these will play a strategic role in the pursuit of sustenance and growth which can be characterized by the value drivers' viz., Improved Productivity, Increased Efficiency, Stability, Optimized Resources, Customer Enablement, Safety and Security, and Faster Decision. Our technological advancements will build capabilities to survive and win independent of future constraints and customer needs.

True power of technology can be leveraged only by establishing a robust cyber security. We are committed to reduce the business risk and our brand value by managing the cyber risk through data security, network security, platform security, access control and monitoring.

Particulars of Employees:

The information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in separate annexure forming part of this Report as Annexure-D.

The statement containing particulars of employees as required under Section 197 of the Act read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered Office of the Company during business hours on working days of the Company. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary in this regard.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with rule 8 of The Companies (Accounts) Rules, 2014, as amended from time to time is annexed to this Report as Annexure-E.

Acknowledgement:

Your Directors are highly grateful for all the guidance, support and assistance received from the Government of India, Government of Gujarat, Gujarat Maritime Board, Financial Institutions and Banks. Your Directors thank all shareholders, esteemed customers, suppliers and business associates for their faith, trust and confidence reposed in the Company.

Your Directors wish to place on record their sincere appreciation for the dedicated efforts and consistent contribution made by the employees at all levels, to ensure that the Company continues to grow and excel.

For and on behalf of the Board of Directors

Gautam S. Adani

Chairman and Managing Director (DIN: 00006273)

Place : Ahmedabad Date : May 3, 2018

   

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