essar ports ltd Directors report


To the Members of Essar Ports Limited

Your Directors take pleasure in presenting the Forty Seventh Annual Report of your Company together with the Audited Financial

Statements for the year ended March 31, 2023.

1. FINANCIAL RESULTS

The summary of consolidated and standalone financial results of your Company for the

Consolidated

Standalone

Particulars

For the year ended March 31, 2023 For the year ended March 31, 2022 For the year ended March 31, 2023 For the year ended March 31, 2022
Total Revenue 5,111.27 17,744.99 5,111.27 3,014.06
Total Expenses 1,960.56 18,060.99 1,955.92 2,983.53
EBITDA 3,807.84 11,559.87 3,805.89 1,220.96
Profit / (Loss) for the year 10,901.89 (3,391.99) 3,137.00 25.13

2. DIVIDEND

Considering the funds requirement for meeting the operations, the Board has not recommended any dividend for the financial year ended March 31, 2023.

3. MANAGEMENT DISCUSSION & ANALYSIS

The discussion and analysis hereunder covers Companys & its Subsidiarys financial performance and business outlook for the year 2022 2023. This outlook is based on assessment of the current business environment and Government policies. The change in future economic and other developments are likely to cause variation in this outlook.

Economic Outlook:

Global growth has slowed to the extent that the global economy is perilously close to falling into recession defined as a contraction in annual global per capita income—only three years after emerging from the pandemic-induced recession of 2020. Very high inflation has triggered unexpectedly rapid and synchronous monetary policy tightening around the world to contain it, including across major advanced economies. Global growth is expected to go down from 2.9 percent in 2022 to 1.7 percent in 2023. Growth in emerging market and developing economies (EMDEs) this year has been downgraded to 3.4 percent, The downward revision results in large part from weaker external demand and tighter financing conditions. EMDE growth is anticipated to remain essentially unchanged in 2023 relative to last year, as a pickup in China offsets a decline in other EMDEs. Excluding China, growth is forecast to decelerate from 3.8 percent in 2022 to

2.7 percent in 2023 as significantly weaker external demand is compounded by high inflation, tighter financial conditions, and other domestic headwinds.

In India, growth expanded by 7.2 percent in fiscal year 2022-23, reflecting strong private consumption and fixed growth. For the 2023-24 financial projects GDP growth at 6.5%.Consumer inflation spent most of last year above the Reserve Banks upper tolerance limit of 6 percent, prompting the policy rate to be raised by 2.25 percentage points between May and December. Inflation is slowed down to 5.66% in March 2023.

The slowdown in the global economy and rising uncertainty will weigh on export and investment growth. Governments increased infrastructure spending and various business facilitation measures, however will crowd-in private investment and support the expansion of manufacturing capacity. India is expected to be the fastest growing economy of the seven largest Emerging Markets and Developing Economies (EMDEs).

Industry Outlook:

Ports

Indian Scenario:

Port Sector has performed exceptionally well in FY 2022-23.

Overall Cargo handled by Major and Non Major Ports is 1433

MT in FY 23 against 1319 MMT in FY 22 with growth of 8.6%. During FY 2022-23 Volumes at Major Ports have increased by

8.9% from around 720 MT in FY 22 to 784 MMT in FY 23 and in Non Major Ports increased by 8.5% from around 599 MT in FY 22 to 650 MMT.

Launch of "Sagarmala" has brought optimism and a new focuses to port-led area development. Under the Sagarmala

Program, the government has envisioned a total of 189 projects for modernization of ports involving an investment of Rs 1.42 trillion (US$ 22 billion) by the year 2035. The real impact of this project will take time to show, the steady progress on the port modernization and improvement in connectivity front are theinvestment initial signs. The amendments in the ports concession agreement are expected to make projects more investor friendly and make investment climate in the port sector more attractive.

Performance Overview:

The Companys Subsidiary Essar Vizag Terminals Limited ("EVTL") has successfully commissioned a fully modernized port & terminal at Vishakhapatnam Port. EVTL is a special purpose vehicle (SPV) handling iron ore at the Outer Harbour Complex of Vishakhapatnam Port Trust (VPT). EVTL has a fully mechanized ship loader arm with a rated capacity of 8000

TPH connected to iron ore stock yard with two reclaimers & stackers and a twin wagon trippler facility to handle iron ore from the surrounding mines via rail rakes.

Financial Highlights:

The Key Financials performance highlights for the year are as below:

Total Revenue contribution on consolidated basis was Rs 51.11

Cr

EBITDA for the year on 38.07 Cr Net Loss/Profit for the year 109.0 Cr

Awards:

Your Company has been awarded over the year by various institutions for best practices in Health, Safety, Environment and Quality related categories. Below is the list of awards and accolades won by your Company:

- Essar Ports Limited was conferred CII SCALE Award under Terminal Operator Category - 2016

- Essar Ports Limited was conferred second place at Indian Maritime Award for Dry Bulk Port - 2018.

- Essar Ports Limited was conferred Maritime & Logistics

Award for CSR Activities

- Essar Ports Limited was conferred Maritime Standard Award, Dubai for CSR Activities

- Essar Vizag Terminals Limited was conferred Construction Times Award for Best Executed Port & Harbour Project -

2017

4. RISk, OPPORTUNITY AND THREATS:

The outbreak of coronavirus provides a good opportunity for India to follow an export-driven model. The movement of companies away from China to other less-developed countries would trigger a new wave of industrialization. Consequently, the expansion of the manufacturing hub linked with global supply chains would increase demand for port industry.

On the front of cargo commodities like thermal coal, iron ore, fertilizers. POL and finished fertilizers shipments have seen an increasing trend enabled major ports to achieve growth of

8.9% in FY 23. Owing to lackluster volume growth in most of the commodities, major ports could manage to log meagre growth in overall cargo throughput.

The Company has a formal risk assessment and management system which periodically identifies risk areas, evaluates their consequences, and initiates risk mitigation strategies and implement corrective actions where ever required. The

Company has been making steady progress in addressing specific risks and threats through cargo diversification, strategic capacities at ports, long-term customer contracts, and enhancement in operational efficiencies, cost optimization and provision of integrated logistics services.

At Domestic level, new business opportunities are also being generated especially in natural gas sector and handling of container traffic. With increased vessel sizes, shipping liners prefer ports with deep draft, longer quays, high mechanization and ports infrastructure. The Company is keenly following these market trends and many of the Company projects are getting ready to capture value from such opportunities at right time.

Internal Control systems and their adequacy:

The Company has put in place strong internal control systems and process to commensurate with its size and scale of operations. Some of the key features of the Companys internal control systems are: Adequate documentation of Financials, Company Policies and Guidelines.

Preparation of Annual Budget plan through monthly review for all operating entities at Management level.

The Company has a management system which runs on a one-on-one monitoring activities with all entities whenever required.

The Company has a well-defined allocation of power with authority limits for approving revenue and Capex expenditure which is reviewed and suitably amended on an annual & monthly basis by the Senior Management.

5. HOLDING/ SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATES

As on March 31, 2023, the following were the Holding, subsidiaries and associates of your Company:

Name of the Companies

Holding/ Subsidiary/ Associate % of Equity Capital
1. Essar Ports & Terminals Limited Holding 97.77%
2. Essar Vizag Terminals Limited Subsidiary 99.99%

3. Essar Bulk Terminal (Salaya) Limited

Associates 19.96%*

* Percentage of holding calculated on diluted basis.

A statement containing the salient features of the financial statements of the subsidiary/ associate companies, in Form

AOC-1, has been enclosed as an annexure to this report.

6. RELATED PARTY TRANSACTIONS

All Related Party Transactions entered during the year were in ordinary course of the business and on an arms length basis. Details of material related party transaction entered during the financial year 2022-23 are provided in the prescribed form AOC-2 as an annexure to this report.

7. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the financial year to which this financial statements relate and the date of this Report.

8. DEPOSITS

The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the

Companies (Acceptance of Deposits) Rules, 2014, during the financial year.

9. DETAILS OF DIRECTORS AND KEY MANAGERIAL

PERSONNEL APPOINTED / RESIGNED DURING THE YEAR

Composition of Board of Directors as on March 31, 2023:

DIN Name of the Directors Designation
1. 00903635 Shri. Rajiv Agarwal Managing Director
2. 00009113 Shri. K. K. Sinha Non-Executive Director
3. 00007339 Shri. Dilip J. Thakkar Independent Director
4. 00284649 Capt. B. S. Kumar Independent Director
5. 00202779 Shri Nikhil Naik Nominee Director
6. 00008443 Shri Amit Bapna Whole-time Director

The following Directors and Key Managerial Personnel were appointed/ got resigned / Change in designation during the financial year:

Sl. No.

Name of the Directors DIN Designation Date of Appointment/ Resignation/ Change in Designation Remarks

1

Smt. Alice George 08898402 Non- Executive Director July 12, 2022 Resignation

2

Smt. Simran Ajmani - Company Secretary July 22, 2022 Appointment

3

Shri Amit Bapna 00008443 Whole-time Director August 30, 2022 Appointment

Your Board places on record its appreciation for the valuable contributions made by the Directors/ KMPs in the growth and progress of the Company during their tenure.

As on March 31, 2023, following are the Key Managerial

Personnel of your Company: Shri. Rajiv Agarwal -- Managing Director Shri. Amit Bapna -- Whole time Director & Chief Financial Officer Smt. Simran Ajmani --Company Secretary The following Directors and Key Managerial Personnel were appointed/ got resigned after closure of the financial year:

Sl. No.

Name of the Directors DIN Designation Date of Appointment/ Resignation Remarks

1.

Shri Kamla Kant Sinha 00009113 Non- Executive Director June 19, 2023. Resignation

Approval of the members is being sought at the ensuing Annual General Meeting of the Company for –

- Re-appointment of Shri. Rajiv Agarwal (DIN: 00008443), who retires at the ensuing Annual General Meeting of the

Company and offers himself for re-appointment;

10. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

AND ATTENDANCE OF THE DIRECTORS

The Board of Directors of the Company had met 6 times during the financial year on the below mentioned dates: - July 22, 2022; - August 25, 2022; - August 30, 2022; - November 14, 2022; - December 09, 2022; and - March 29, 2023;

Name of the

Category of

Number of Board Meetings held and attended during the year

Director

Director Held during the year Attended

Shri. Rajiv Agarwal

Managing Director 6 6

Shri. K. K. Sinha

Non- Executive Director 6 6

Shri. Dilip J. Thakkar

Independent Director 6 6

Capt B. S. Kumar

Independent Director 6 6

Shri Nikhil Naik

Nominee Director 6 6

*Shri. Amit Bapna

Whole-time Director 6 3

*Appointed on August 30, 2022.

The meetings of the Board have been held at regular intervals with a time gap of not more than 120 days between two consecutive meetings.

11. DECLARATION OF INDEPENDENCE

The Company has received Declarations of Independence as stipulated under Section 149(6) of the Companies Act, 2013 from Independent Directors.

12. COMPOSITION OF THE AUDIT COMMITTEE

As on March 31, 2023, the Audit Committee comprised of Shri.

Dilip J. Thakkar as the Chairman of the Committee, Capt B.S. Kumar (Independent Director) and Shri Nikhil Naik (Nominee Director) were the other members of the Committee.

As on the date of this report the Audit Committee of the Board comprised of 3 Non-Executive Directors, out of them 2 are Independent. Shri. Dilip J. Thakkar (Independent Director) acts as the Chairman of the Committee and Capt. B. S.

Kumar (Independent Director) and Shri Nikhil Naik (Nominee Director) are the other members of the Committee. All the recommendations of the Audit Committee have been accepted by the Board.

13. CORPORATE SOCIAL RESPONSIBILITY

As on March 31, 2023, the Corporate Social Responsibility Committee comprised of Shri. Rajiv Agarwal as the Chairman of the Committee, Capt B.S. Kumar (Independent Director), Shri Nikhil Naik (Nominee Director) and Shri Amit Bapna (Whole-time Director) were the other members of the Committee.

As on the date of this report the Corporate Social Responsibility Committee comprised of Shri. Rajiv Agarwal as the Chairman of the Committee, Capt B.S. Kumar (Independent Director) and Shri Nikhil Naik (Nominee Director) and Shri Amit Bapna (Wholetime Director) were the other members of the Committee. The composition and terms of reference of the Corporate

Social Responsibility Committee had been fixed by the Board of Directors of your Company. The Company statutorily is not required to incur CSR spend, as the Company does not fall under the threshold prescribed under the Companies Act, 2013 and the rules made thereunder. The CSR policy along with the Annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Annexure to this Report.

14. NOMINATION AND REMUNERATION COMMITTEE

As on March 31, 2023, the Nomination and Remuneration

Committee comprised of Capt B.S. Kumar (Independent Director) as the Chairman of the Committee and Shri. Dilip Thakkar (Independent Director) and Shri Nikhil Naik (Nominee Director) were the other members of the Committee.

As on the date of this report the Nomination and Remuneration

Committee comprised of Capt B.S. Kumar (Independent Director) as the Chairman of the Committee and Shri. Dilip Thakkar (Independent Director) and Shri Nikhil Naik (Nominee Director) were the other members of the Committee.

The Committee has formulated a policy on the Directors appointment and remuneration including recommendation of remuneration of the Key Managerial Personnel and other employees. The said policy has been enclosed as an Annexure to this Report.

15. STAKEHOLDERS RELATIONSHIP COMMITTEE

As on March 31, 2023 and as on the date of this Report, the

Stakeholders Relationship Committee of the Board comprised of 4 Directors. Shri. Rajiv Agarwal acts as the Chairman of the Committee and Shri Nikhil Naik (Nominee Director), and Capt. B. S. Kumar (Independent Director) are the other members of the Committee.

16. PERFORMANCE EVALUATION OF THE BOARD, ITS

COMMITTEES AND DIRECTORS

All Directors responded through a structured questionnaire giving feedback about the performance of the Board, its Committees, individual Directors and the Chairman. The questionnaire included inputs on composition, functioning, information availability, effectiveness, etc. The questionnaire also covered, in the case of individual directors, qualitative assessment and in the case of Chairman additional criteria like leadership qualities and other key aspects of his role.

The inputs received were circulated to the members of the

Nomination and Remuneration Committee of the Board.

17. ExTRACT OF ANNUAL RETURN

The extract of annual return in Form MGT-9 as required under

Section 92(3) and Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as an Annexure to this Report.

18. INTERNAL CONTROL FRAMEWORk

Your Company conducts its business with integrity and high standards of ethical behavior and in compliance with the laws and regulations that govern its business. Your Company has a well-established framework of internal controls in its operations, including suitable monitoring procedures. In addition to an external audit, the financial and operating controls of your Company at various locations are reviewed by Internal Auditors, who report their observations to the Audit Committee of the Board.

19. HUMAN RESOURCE

Human resources focuses on maximizing employee productivity. Your HR professionals manage the human capital of our organization and focus on implementing policies and processes. Our HR is specialised on recruiting, training, employee-relations or benefits, recruiting specialists and hire top talent. Your HR always ensures that employees are trained and have continuous development. This is done through training programs, performance evaluations and reward programs. Employee relations deal with concerns of employees when policies are broken, such as in cases involving harassment or discrimination.

Human resources have always been the key to success of your Companys business. A balance of internal and external talent was maintained to ensure right skills are available to initiate project activities. Your Company is known for developing future leaders and having the best people practices. This coupled with the ability to attract the best talent, provides a competitive edge to the organization.

20. CONSOLIDATED FINANCIAL STATEMENTS

Your Directors have pleasure in attaching the Consolidated

Financial Statements pursuant to Section 129(3) of the Companies Act, 2013 and prepared in accordance with the applicable Accounting Standards.

21. AUDITORS

Your Companys Auditors, Messrs. M S K A & Associates,

Chartered Accountants (ICAI Form Registration Number:

105047W), were appointed as the Statutory Auditors of the Company to hold office from the conclusion of 45th Annual General Meeting (AGM) till the conclusion of the 50th AGM of the Company to be held in the year 2026. There are no audit qualifications/adverse remarks in the Auditors

Report to the shareholders on the Accounts of the Company for the year ended March 31, 2023.

22. REPORTING OF FRAUD

There were no instances of fraud committed against the

Company by its officers or employees as specified

Section 143(12) of the Companies Act, 2013 and accordingly no such reporting was done by the Auditors of the Company.

23. INFORMATION TECHNOLOGY

The field of information technology (IT) covers the design, administration and support of computer and telecommunications systems. Some of the positions in this field include database and network administrators, computer support specialists, computer scientists, software programmers and system analysts. The majority of career tracks in IT entail design and operational tasks related to computer hardware components, networks and software applications. Professionals in the IT field work with businesses and organizations to set up and support viable computer networks that will keep systems efficient and reliable. IT encompasses all hardware and software used in the storing, creation and accessing of information. Examples of technologies that professionals work with are firewalls, databases, media storage devices, networks and the Internet. Your Company successfully implemented SAP in its financial and related systems. For dry bulk, systems have been implemented to capture end-to-end workflow covering all activities from pre-arrival intimations to actual departure of vessels. Expected berth occupancy is being plotted, thereby optimising the berth utilisation and increasing berth efficiency

Various dashboard reports have been implemented in the system for berth performance and resource monitoring.

24. VIGIL MECHANISM

Your Company has adopted a Whistle Blower Policy, as part of the vigil mechanism to provide appropriate avenues to the

Directors and employees to report their genuine concerns which is perceived to be in violation of or in conflict with fundamental business principles of the Company.

25. PROTECTION OF WOMEN AT WORKPLACE

The Company has formulated a policy on Prevention of Sexual

Harassment at workplace as per the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (‘Act) and Rules made thereunder. During the financial year no cases were reported under the above said

Act. The company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual

Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 [Rule 8(5)(x) of Rules]

26. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The particulars of loans, guarantees and investments have been disclosed in the notes to the financial statements of the Company for the financial year 2022-2023.

27. STATEMENT OF DIRECTORS RESPONSIBILITIES

Pursuant to the requirement of Section 134(5) of the

Companies Act, 2013 and based on the information provided by the management, your Directors state that: a) in the preparation of the Financial Statements, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) accounting policies selected were applied consistently and judgments and estimates were 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 or loss of the Company for that period; c) proper and sufficient 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) the Financial Statements of the Company have been prepared on a going concern basis; e) the Company has laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and f) proper systems are in place to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

28. AMOUNTS, IF ANY, PROPOSED TO BE CARRIED TO ANY RESERVES

Your Company has not transferred any amount to any reserves during the current financial year.

29. CONSERVATION OF ENERGY, TECHNOLOGY

ABSORPTION, FOREIGN ExCHANGE EARNINGS AND OUTGO

In view of the nature of activities that are being carried on by your Company, the particulars required under Section 134 of the Companies Act, 2013 and rules made thereunder regarding conservation of energy and technology absorption are not applicable to your Company.

The details of foreign exchange earnings and outgo as required under Section 134 and Rule 8(3) of Companies (Accounts) Rules, 2014 are mentioned below:

Foreign Exchange Earnings & Outgo

For the year ended

Particulars

31st March, 2023
Foreign Exchange earnings NIL
Foreign Exchange outgo* 1,715.12

30. QUALITY, SAFETY AND ENVIRONMENT

Your Company, in order to ensure highest standard of safety, has implemented and initiated various measures with respect to Quality, Safety and Environment Management Systems.

31. CORPORATE GOVERNANCE

Your Company is not listed on any Stock Exchanges and hence not covered under the listing regulations of SEBI.

However, as a good practice, your Company follows the

Corporate Governance practice in its business activities.

32. DISCLOSURES WITH RESPECT TO THE REMUNERATION

UNDER SECTION 197 OF THE COMPANIES ACT, 2013

Since your Company is not a listed company, the statement of

Disclosure of Remuneration under section 197 of Companies Act, 2013 and Rule 5(1) of Companies (Appointment and

Remuneration of Managerial Personnel) Rules, 2014 are not applicable.

33. AFFIRMATION AND DISCLOSURE

Your Company is not listed on any Stock Exchanges and hence not covered under the listing regulations of SEBI.

Since the reporting under the Corporate Governance is not mandatory for your Company, the declaration in relation to the compliance with the Code of Conduct is not attached with the Annual Report.

34. MAINTENANCE OF COST RECORDS AS SPECIFIED BY

THE CENTRAL GOVERNMENT UNDER SUB-SECTION (1)

OF SECTION 148 OF THE COMPANIES ACT, 2013

The provisions of Section 148(1) of the Companies Act, 2013 are not applicable to the Company as the Central Government of India has not specified the maintenance of cost records for any of the products of the Company.

35. THE DETAILS OF APPLICATION MADE OR ANY

PROCEEDING PENDING UNDER THE INSOLVENCY AND

BANKRUPTCY CODE, 2016 (31 OF 2016) DURING THE

YEAR ALONGWITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR

There is no application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year under review.

36. THE DETAILS OF DIFFERENCE BETWEEN AMOUNT

OF THE VALUATION DONE AT THE TIME OF ONE TIME SETTLEMENT AND THE VALUATION DONE WHILE TAkING LOAN FROM THE BANkS OR FINANCIAL INSTITUTIONS ALONG WITH THE REASONS THEREOF.

There is no One Time Settlement and Valuation done during the year under review, therefore this clause is not applicable to your Company.

37. GENERAL DISCLOSURES

Your Directors hereby state and confirm that for the year ended

March 31, 2023: ? The Executive Director(s) did not receive any remuneration from the holding and/or subsidiary companies. ? The Company has neither revised the financial statements nor the report of Board of Directors. ? The Company has not issued equity shares with differential rights as to dividend, voting, or otherwise or sweat equity shares. ? No significant or material orders were passed by the

Regulators or Courts or Tribunals, which impact the going concern status or Companys operations in future. ? There was no change in the nature of business of the Company.

38. APPRECIATION AND ACkNOWLEDGEMENTS

Your Directors express their sincere thanks and appreciation to all the employees for their commendable team work and contribution to the growth of the Company.

Your Directors also thank its bankers and other business associates for their continued support and co-operation during the year.

For and on behalf of the Board
Rajiv Agarwal Amit Bapna
Managing Director Wholetime Director
DIN: 00903635 DIN: 00008443
Mumbai
July 10, 2023