Your Directors are pleased to present the 17th Annual Report along with the audited financial statements of your Company for the financial year ended on March 31, 2016.
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.
Your Company has created a milestone in Indian commercial ports history by handling more than 151.51 MMT of cargo. This achievement is indeed a fulfilling one. This is notwithstanding the general economic climate and slowdown experienced by various industrial sectors.
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 Vizag have performed well.
The audited consolidated financial statements of the Company as on March 31, 2016, prepared in accordance with the relevant applicable Accounting Standards and Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and provisions of the Companies Act, 2013, forms part of this Annual Report.
The key aspects of your Company's consolidated performance during the financial year 2015-16 are as follows:
Cargo volume increased by 5% from 144.25 MMT in 2014-15 to 151.51 MMT in 2015-16.
Total Income increased by 16% from Rs.6,837.62 crores in 2014-15 to Rs.7,940.55 crores in 2015-16.
Profit after Tax increased by 24% from Rs.2,314.33 crores in 2014-15 to Rs.2,867.36 crores in 2015-16.
Earning per Share (EPS) for the year increased by 24% from Rs.11.18 in 2014-15 to Rs.13.85 in 2015-16.
The detailed operational performance of the Company has been comprehensively discussed in the Management Discussion and Analysis Report which forms part of this Report.
During the year under review, the Company had distributed an interim dividend of 55% (H1.10 per equity share of H2 each) on the equity shares.
Your Directors wish to conserve resources for future expansion and growth of the Company. Hence, your Directors have decided not to declare any further final dividend for the year under review.
Your Directors have recommended 0.01% dividend on 0.01% Non-Cumulative Redeemable Preference Shares of H10 each for the financial year 2015-16.
The total outgo on account of dividend is Rs.274.18 crores including tax thereon.
Transfer to Reserves:
The Company proposes to transfer H0.14 crores and H515.38 crores to the Capital Redemption Reserve and Debenture Redemption Reserve respectively out of the amount available for appropriation.
Status of Composite Scheme of Arrangement:
During the year under review, the Hon'ble High Court of Gujarat had, vide its order dated May 7, 2015 sanctioned the Composite Scheme of Arrangement between Adani Enterprises Limited ('AEL') and Adani Ports and Special Economic Zone Limited ('the Company or APSEZ') and Adani Power Limited ('APL') and Adani Transmission Limited ('ATL') and Adani Mining Private Limited ('AMPL') and their respective shareholders and creditors ('the Scheme').
The Scheme, with effect from April 1, 2015, inter alia, provided for Demerger of the Port Undertaking of AEL comprising the undertaking, businesses, activities, operations, assets (moveable and immoveable) and liabilities pertaining to the Belekeri port and the shareholding of AEL in the Company.
Upon the Scheme coming into effect and in consideration of the transfer and vesting of the Port Undertaking of AEL into the Company, in terms of the Scheme, the equity shareholders of AEL whose names appeared in the Register of Members of AEL as on the Record Date i.e. June 4, 2015 ("Eligible Shareholders of AEL') were entitled for allotment of 14,123 equity share of APSEZ of Rs.2/- each credited as fully paid-up for every 10,000 equity share of Rs.1/- each fully paid-up held by such equity shareholder in AEL.
Accordingly, 155,32,61,781 equity shares of Rs.2/- each of the Company were issued and allotted to the eligible shareholders of AEL on June 8, 2015. Further, pursuant to the scheme existing holding of 155,23,61,640 equity shares of Rs.2/- each of AEL in the Company was extinguished and cancelled.
The equity shares of the Company so issued pursuant to the Scheme were listed and admitted for trading on BSE Limited and National Stock Exchange of India Limited with effect from June 16, 2015.
US Bond Issuance - Rule 144A/Regulation S Offerings:
During the year under review, your Company priced rule 144A/Regulation S offering of USD 650 million 3.50% Senior Unsecured Notes due 2020. This was the first investment grade issuance and the largest USD bond offering by an infrastructure company in India and first private sector issuance from an Indian Debut IG issuer in international bond markets, since 2013. These Notes are rated Baa3 (Moody's),BBB- (S&P) and BBB- (Fitch). Fixed Deposits:
During the year under review, your Company has not accepted any fixed deposits within the meaning of Section 73 of the Companies Act, 2013 read with rules made there under.
During the year under review, your Company has issued 14,000 Rated, Listed, Secured Redeemable Non-Convertible Debentures of face value of Rs.10 lacs each aggregating to Rs.1400 crores on a private placement basis listed on the Wholesale Debt Market Segment of BSE Limited.
Further, your Company has redeemed 4,950 Secured Redeemable Non-Convertible Debentures of face value of Rs.10 lacs each aggregating to Rs.495 crores issued on private placement basis.
Particulars of loans, guarantees or investments:
The provisions of Section 186 of the Companies Act, 2013, 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 Companies Act, 2013. 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 23 (direct and indirect) subsidiaries as on March 31, 2016.
During the year under review, the following changes have taken place:
• Adani Food and Agro-Processing Park Private Limited was incorporated as wholly owned subsidiary for the development of Mega Food Park as per the guidelines of Mega Food Parks Scheme of Ministry of Food Processing Industries.
•Abbot Point Operations Pty Limited was incorporated as wholly owned subsidiary with an object to carry on business of port operator.
• Adani Vizhinjam Port Private Limited was incorporated as wholly owned subsidiary for the development of a multipurpose international deepwater seaport at Vizhinjam.
• Adani Kattupalli Port Private Limited was incorporated as wholly owned subsidiary with an object to develop, operate, maintain port and related infrastructure facilities at Kattupalli.
• Adani LPG Terminal Private Limited was incorporated as wholly owned subsidiary with an object to develop, operate, maintain LPG terminal at Mundra.
• Your Company has divested its part stake in Mundra Solar Technopark Private Limited (MSTPL) and accordingly, MSTPL ceased to be subsidiary.
No Company has become/ceased to be a Joint venture/ associate during the financial year 2015-16.
Adani Petroleum Terminal Private Limited was incorporated as wholly owned subsidiary of the company on April 26, 2016 with an object to promote, invest and to develop, operate, maintain hydro-carbons terminal.
Pursuant to the provisions of Section 129, 134 and 136 of the Companies Act, 2013 read with rules made thereunder and pursuant to Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company had 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 statements of the subsidiary companies shall also be kept for inspection by any shareholder/s during working hours at the Company's registered office and that of the respective subsidiary companies concerned. In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including consolidated financial statements and related 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:
During the year under review, Mr. Sarthak Behuria (DIN: 03290288) was appointed as an Additional Director of the Company w.e.f November 2, 2015 to hold office upto the ensuing Annual General Meeting. He has tendered his resignation as an Independent Director w.e.f March 31, 2016.
Mr. Arun Duggal (DIN: 00024262) and Mr. D. T. Joseph (DIN: 01716572) had resigned as an Independent Directors of the Company w.e.f June 30, 2015 and October 1, 2015 respectively upon completion of term.
Mr. Sudipta Bhattacharya (DIN: 06817333), WholeTime Director of the Company has resigned w.e.f. December 31, 2015.
Board places on record the deep appreciation for valuable services and guidance provided by outgoing Directors during the tenure of their Directorships.
Pursuant to the provisions of Section 149 of the Companies Act, 2013, Mrs. Radhika Haribhakti was appointed as an Independent Director at the Annual General Meeting of the Company held on August 11, 2015. The terms and conditions of appointment of Independent Directors are as per Schedule IV of the Companies Act, 2013. Your Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and there has been no change in the circumstances which may affect their status as Independent Director during the year.
Pursuant to the requirements of the Companies Act, 2013 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.
Brief details of Dr. Malay Mahadevia as required under Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is provided in the Notice of the Annual General Meeting.
Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Company has appointed Mr. Karan Adanias Chief Executive Officer w.e.f January 1, 2016 as key managerial personnel of the Company.
Directors' Responsibility Statement:
Pursuant to Section 134(5) of the Companies Act, 2013, 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 except which has been mentioned in the notes and judgement 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 as at March 31, 2016 and of the profit of the Company for the year ended on that date;
c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 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 6 (six) 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 29, 2016, 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 Chairperson 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 judgment, governance issues etc.
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 Companies Act, 2013 is available on the website of the Company at http://www.adaniports.com/investor/investor-download.
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.
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.
Committees of Board:
Details of various committees constituted by the Board of Directors as per the provision of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Companies Act, 2013 are given in the Corporate Governance Report which forms part of this report.
Corporate Social Responsibility:
The Company has constituted Corporate Social Responsibility (CSR) Committee and has framed a CSR Policy. The brief details of CSR Committee and contents of CSR policy is provided in the Corporate Governance Report. The Annual Report on CSR activities is annexed and forms part of this report. The CSR 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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 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, 2016 as stipulated under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 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 (ICC) 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 Companies Act, 2013. Accordingly, the disclosure of related party transactions as required under Section 134(3) (h) of the Companies Act, 2013 in Form AOC 2 is not applicable.
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 orders passed by the Regulators or Courts or Tribunals which would impact the going concern status and the Company's future operations.
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 9001:2008, 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.
The organization has revisited its OHS Vision, Mission statements and Life Saving Rules (LSR's) which are non-negotiable. These have been communicated to all the employees. Further, to give impetus to organizations HSE & well-being, messages have been issued by the senior leadership team re-emphasizing the Safety First culture.
Further, your Company believes in Goal Zero, which is a strong, simple and memorable aim that has helped to achieve significantly enhanced safety performance. Besides, the Company has taken following major initiatives to advance the QHSE commitment:
• Celebrated 45th National Safety Day/Week (4th to 10th March, 2016) with programs spread over a week.
• Celebration of 27th Road Safety Week from 10th to 16th January, 2016 at sites.
• Celebration of World Environment day June 5, 2015.
• Regular Safety walk by CEO, COO and site heads.
• More than 200 Employees from various Ports underwent the 3 day Safety Orientation Course from Larsen and Toubro Limited Safety Training Centre (Safety Innovation School) at Hazira.
• All meetings including business review meeting commence with Safety Performance review thereby ensuring that focus on safety is maintained and it is sacrosanct.
• Regular walk the talk by senior management to enhance safety.
• Monthly OHS Bulletin SPARSH shared with all APSEZL users to engage them about the various activities carried out in enhancing Safety and Occupational Health.
• The Company has developed a vision for Zero Waste and accordingly taken various initiatives at Mundra by focusing on 5R principles of waste management i.e. Reduce, Reuse, Reprocess, Recycle and Recover.
• Entire treated sewage is reused for horticulture purpose.
• Municipal Solid Waste is sent for recovery of valuable materials. Remaining material is decomposed through waste destruction machine and thereby reducing the burden on MSW landfills.
• Used Oil / Spent Oil is recycled through oil recovery.
• Oil is recovered from pigging activities through compression and thereby reduces the volume of pigging to be treated.
• Oily cotton waste is reused as a fuel in co-processing at cement kiln.
• Kitchen / Food waste is converted to manure which is used for horticulture requirements.
• Oil Water Separator is installed for recovery of oil.
These initiatives are already under consideration at other port locations to achieve the goal of making APSEZL - a zero waste company.
The Company has started process for sustainability reporting as per GRI-G4 guidelines.
Auditors & Auditors' Report:
Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with rules made thereunder, M/s. S R B C &CO LLP, Chartered Accountants (Firm Registration No.: 324982E/E300003), 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 2017, subject to ratification of their appointment at every AGM. Accordingly, the appointment of M/s. S R B C & CO 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 Companies Act, 2013.
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 Companies Act, 2013. The Auditors' Report is enclosed with the financial statements in this Annual Report.
Secretarial Audit Report:
Pursuant to the provisions of Section 204 of the Companies Act, 2013 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 financial year 2015-16 is annexed which forms part of this report as Annexure-B.
There were no qualifications, reservation or adverse remarks in the Secretarial Audit Report of the Company.
Information Technology- an enabler for Growth:
Your Company had embarked on a journey to standardize and optimize the critical business processes as part of the business transformation initiative two years back. The Business Process Transformation as planned is complete and has yielded results beyond expectations. Your Company can boast of standardized business processes across all ports for a consistent customer experience. This again was a stepping stone for enablement of productivity and efficiency to help the organization not just to achieve the business objectives but to surpass the competition and set new standards of service deliveries and customer delight. As part of the phase II of transformation, the company has embarked on the digital journey, a journey which all progressive and mature organizations globally have chosen to improve their efficiency, productivity, predictability and take the business closer to the partner eco-system.
Understanding emerging & disruptive technologies like Social, Mobility, Analytics & Cloud, coupled with connected devices, Machine to Machine IOT framework and consuming the same on an integrated command control centre with the best of class terminal operating solutions is the journey which has just begun and this, the management is very confident, will take your company to newer heights.
Awards, Certifications and Accreditations:
"Private Port of the Year 2014-15" at the India Sea Trade Award (Costal Shipping).
"Non-Major Port of the Year" at the 6th All India Maritime and Logistics Awards 2015 (MALA award).
• Container Terminal Operator of the Year - Maritime and Logistics Awards 2015 (MALA award).
• Sea Port of the Year (For Northern India) – Conquest 2016.
• "Port / Terminal of the Year - Containerized Cargo" at the Gujarat Junction 2016.
• "Port / Terminal Operator of the Year - Health, Safety and Environment" at Gujarat Junction 2016.
"Sea Port of the Year (For Northern India)" award at North India Multimodal Logistics awards 2016.
"Best Port of the year Award" at the Gujarat Star Awards 2015.
• "Non-Major Port of the year" at 3rd Samudra Manthan Awards 2015.
• Sea Port of the Year at the Economic Times Logistics Awards 2016.
• ALL - Leading ICD Operator, North India, Conquest 2016.
Particulars of Employees:
The information required under Section 197 of the Companies Act, 2013 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-C.
The statement containing particulars of employees as required under Section 197 of the Companies Act, 2013 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 Companies Act, 2013, 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 Companies Act, 2013 read with rule 8 of The Companies (Accounts) Rules, 2014, as amended from time to time is annexed to this Report as Annexure-D.
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 & Managing Director
Date: May 3, 2016