Gujarat Pipavav Port Ltd Management Discussions

For the year ended 31 March 2024

Introduction

The Company is presenting financial statements as per the requirement under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended from time to time.

The following discussion and analysis of the financial and operational performance of Gujarat Pipavav Port Limited is intended to provide an analysis of the business and the financial statements for the year under review, with selected comparative information for the year ended 31 March 2023. This section has been prepared by the Management of Gujarat Pipavav Port Limited (referred to as "APM Terminals Pipavav" or "the Port" or "the Company") and should be read in conjunction with the financial statements and the notes thereon, which follow the section.

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. Pursuant to the provisions of Section 129 of the Act, PRCLs accounts have been consolidated with the Companys accounts. PRCLs accounts are the Management represented numbers in view of pending finalisation of accounts and completion of PRCLs statutory audit for the financial year ended 31st March 2024.

The Companys financial statements have been prepared on Going Concern basis and on Accrual basis of Accounting under the Historical Cost Convention and in accordance with Indian Accounting Standards.

Background

APM Terminals Pipavav, Indias first private sector port, operates an all-weather port located on the Southwest coast of Gujarat at around 152 nautical miles North-west of Mumbai. The port lies on a strategic international maritime trade route connecting India to various geographies. The Ports Container handling capacity is 1.35 million TEUs. The Bulk Cargo capacity is approximately 4 to 5 million MT depending on cargo mix and Liquid Cargo capacity is approximately 2 million MT. The RoRo vessels for car exports are handled on the Container berth.

APM Terminals is the Lead Promoter and holds 44.01% of the total shareholding of the Company. APM Terminals operates 65 terminals globally and is one of the worlds most comprehensive port network operator. It is uniquely positioned to help both shipping line and landside customers grow their business and achieve better supply chain efficiency, flexibility and dependability. APM Terminals has a team of over 20,000 industry professionals focused on delivering the operational excellence and solutions, businesses require to reach their potential.

Economy & Port Sector

Global Economic Outlook

Post Covid the global economic activity has been quite resilient despite various headwinds involving geo-political tensions, supply chain disruptions and significant interest rate hikes by the central banks aimed at restoring price stability. The global growth estimated at 3.2% in the Year 2023 is likely to be 3.3% in the Year 2024. The growth rate though remains lower than the historical annual average of 3.8%

The advanced economies are likely to see increase in growth rate from 1.6% in the Year 2023 to 1.7% in the Year 2024 and to 1.8% in the Year 2025, to be mainly driven by the US economy and the Euro economy increasing from a lower base. With the energy price subsided and fall in inflation, the growth in real income is expected to drive the recovery through stronger household consumption. The emerging economies are likely to experience stable growth at 4.2% in the years 2024 and 2025 to be driven by India, Middle East and the Sub Saharan Africa Region. Within the emerging economies, China is projected to slowdown from 5.2% in the Year 2023 to 4.6% in the Year 2024 and to 4.1% in the Year 2025 due to the persisting weakness in the real estate sector and easing of the fiscal stimulus and consumption boost post pandemic. The Middle East Region is likely to grow from 2% in the Year 2023 to 2.8% in the Year 2024 and 4.2% in the Year 2025. The Sub Saharan Africa region is likely to grow from 3.4% in the Year 2023 to 3.8% in the Year 2024 and 4% in the Year 2025. India is likely to be the main driver of growth amongst the emerging economies.

India Economic Outlook

The Indian economy is projected for a strong growth of 6.8% in the Year 2024 and 6.5% in the Year 2025 with the rising working-age population and robust domestic demand. The rising income in urban areas has improved the consumer confidence and is expected to increase the consumption. The manufacturing and service sector has also reported strong growth in India. This in turn has led to the growth in bank credit. The structural measures have led to reduction in non performing loans and has improved capability to service debt. As a result the asset quality has improved and the gross non performing assets are at a 10 year low of 3.2% as on September 2023. The Income tax receipts have increased by 17.7% year on year to nearly USD 235 billion for the financial year 2023-24. This strong increase in the Income tax collections is likely to improve Indias fiscal deficit as a percentage to the countrys GDP though the figures are yet to be released by the Government. The Government has been extensively driving the capital expenditure for infrastructure development and its initiative to support urban housing for middle income group is expected to continue the growth in real estate. An improved fiscal deficit, strong tax collections, continued capital expenditure for infrastructure development by the Government, robust banking sector and growing working-age population is an ideal combination of factors for the countrys future growth.

The Government of India has set an aggressive target of USD 2 trillion in exports of goods and services by the Year 2030. The countrys total exports in the financial year ended 31st March 2023 were USD 770 billion. India needs to grow at a substantive pace and the countrys manufacturing sector needs to integrate itself in the Global Value Chain by first playing on its areas of strength. The service sector export makes strong 10% contribution to the countrys GDP as per the data for the financial year ended 2023. Considering a large talent pool that is making a mark for itself in the global IT industry, this sector certainly has an important role to play in reaching the ambitious target of USD 2 trillion exports by the Year 2030. But the manufacturing sector also has a much larger role to play by increasing the goods exports. It will also help in job creation that matches to the education levels of the countrys labour force. The Performance Linked Incentive (PLI) scheme amounting to USD 28 billion introduced by the Government of India for 13 identified sectors, incentivises on incremental sales from the manufacturing done within the country. The objective of the scheme is twofold, one to incentivise the foreign manufacturers to start production in India and cater to the vast domestic market as well as export from the country and two is to incentivise the domestic manufacturers to expand their production and exports. Apart from the initiatives under the PLI scheme for the manufacturing sector, the other critical area requiring Governments intervention is reduction in the inland logistics cost to make the Indian manufacturing competitive. Without addressing this major concern, the success of manufacturing sector will be a job half done.

With commissioning of the Western Dedicated Freight Corridor the transit time of the freight trains between National Capital Region and West coast ports has reduced to less then 36 hours from over 70 hours. The initiative definitely helps in faster movement of cargo and brings efficiency in planning the cargo movement from the manufacturing facility to the port and vice-a-versa. But the challenge regarding cost competitiveness for moving the cargo by rail still remains, due to cheaper road transport compared to rail. Consequently, railways have not seen any major shift in cargo from road to rail even after the Dedicated Freight Corridor became operational and the capacity utilisation levels on the route remains below 40%. The rail tariff needs to be rationalised to decrease the unit cost and make Indian products competitive in the international markets.

Business Outlook

The Container volume on the West Coast of India increased 9% from 14.56 million TEUs in the financial year ended March 2023 to 15.92 million TEUs in the financial year ended March 2024. A large part of increase can be attributed to higher imports into the country with the India consumption story holding strong in the urban parts. The exports though continue to remain under pressure due to higher product cost and geopolitical situation.

The container volume at Pipavav grew about 6% compared to the previous financial year. The Red Sea crisis has led to disruption in the scheduled vessel calls. The detour by the vessels around the Cape of Goodhope has led to increase in freight rates and extra sailing days ranging from 10 days to 14 days depending upon the destination in Europe and the US. The delayed vessel calls to the Indian ports is impacting the port operations as well as the rail evacuation because with the reduced transit time and increased speed, the freight trains have to remain idle at the ports waiting for the vessels to unload the import containers and to evacuate them to the northern hinterland.

For Dry bulk cargo, the Fertiliser imports have recently seen reduction on the West coast ports of the country. With the Government of India focusing on increased domestic production of Urea and carrying out a strong drive for usage of Nano-urea, the Urea import into the country is likely to reduce going forward. The import of other fertilisers namely, DAP, MOP etc is likely to continue in the near term. The Company has temporarily suspended Coal handling at the port due to operational reasons.

For Liquid cargo, the LPG import into the country is growing strong under the Pradhan Mantri Ujwala Yojana (PMUY) scheme. The rural India continues to purchase LPG for cooking under the PMUY scheme, after experiencing the convenience and the health benefits of using LPG over the other means. The West coast ports are seeing consistent increase of over 8-10% over last few years. With upgradation of the existing Liquid berth for handling partially loaded Very Large Gas Carriers (VLGCs) coupled with the LPG rail siding inside the port for cargo evacuation, Pipavav provides a strong overall value proposition for the Oil Marketing companies for wider distribution to the LPG bottling plants spread across the country. The Company is in process of seeking the necessary statutory and regulatory approvals for proposed new Liquid berth. The Company is hopeful of getting all the approvals in timely manner and complete the construction of the new berth by December 2025.

One of the success story of Governments PLI scheme is the automobile sector reporting strong car exports from India. Pipavav has been serving the automobile companies located in the North and North-West hinterland of the country. The improved road connectivity to the port and movement of cars by rail has helped in increasing cars exports from Pipavav port. In a testimony to the countrys manufacturing capabilities in automobile sector, Honda cars exported their first batch of cars from India to Japan through Pipavav Port. In order to cater to the increased volume of car exports, Pipavav has recently completed development of first phase of open stackyard covering the area of 42,000 sq. mtrs. and has been put to use. The construction of the second phase covering an additional area of 20,000 sq. mtrs. is in progress and is likely to be completed by September 2024.

The Company has always been a strong proponent of cargo evacuation by rail. It has been making substantial investments over a period of time for safe, efficient and cost-effective movement of cargo by rail. The Company pioneered double stack container train operations in the country and has been handling double stack container trains since the year 2006. To provide the perspective about the ports rail handling capabilities, approximately 65-70% of the Ports container volume moves by rail.

In the case of Liquid cargo, after commissioning the LPG rail siding inside the port, the number of LPG rakes handled from Pipavav has been consistently increasing. Within a short time span from the commissioning of the siding, the port on an average handles about 51 LPG rakes per month.

In RoRo the automobile companies commenced the movement of cars by rail from December 2023 and the port is handling about 25 rakes per month.

On an overall basis all rakes put together, the port handles about 330 rakes per month for Containers, Fertiliser, LPG and Cars averaging about 11 rakes per day or one rake every two hours. Pipavav Port is in the forefront amongst all Indian ports in driving the Government of Indias initiative of increasing the market share of railways in freight handling. The Company shall continue building on its unique selling proposition of efficient rail evacuation of cargo to and from Pipavav Port.

Operations Review

The Container volume for the year under review at 808,464 TEUs is higher by 6% compared to 764,034 TEUs. The imports into the country and exports to the Middle East have been doing well and the increase in the volume can be attributed to the Far East and Middle East trade lanes. The Red Sea headwinds though have been impacting the sailing schedule of the vessels to the US. As mentioned above the detour around the Cape of Goodhope has resulted into additional 14 days sailing to the US. The port has seen some skip calls recently due to the delay in the sailing schedule of the services to the Europe and to the US.

The Dry Bulk cargo volume at West Coast Ports including Pipavav mainly comprise Coal and Fertilizer Imports. The Port handled 2.71 million MT of Dry Bulk Cargo during the year under review compared to 3.91 million MT handled during the previous year. The decrease of over 30% is mainly due to reduced fertiliser imports. The West coast ports have recently seen over 50% decrease in fertiliser imports. Considering the prediction of normal monsoon the imports could increase in the short term. The Company has temporarily suspended coal handling due to operational reasons. That is also one of the factors for reduction in dry bulk cargo volume.

On Liquid cargo front, the Port handled about 1.28 million MT during the year under review as compared to 1.03 Million MT in the previous year. The increase of over 24% is due to higher LPG imports. The upgradation of existing Liquid berth for handling partially loaded Very Large Gas Carriers (VLGCs) coupled with rail evacuation from inside the port is a strong value proposition for the LPG customers. The rail evacuation is cost competitive and also helps the customers cater to the LPG bottling plants located in the extended hinterland. The LPG imports are likely to remain strong and in order to cater to higher imports into the country, the Company is currently seeking statutory and regulatory approvals for construction of a new Liquid berth.

The Car exports were 97,120 units as against 40,237 units in the previous year. The strong increase of over 140% is due to better inland transport options. Apart from receiving cars in trucks, the company started receiving cars by rail and that has played major role in the increase in car exports. The Companys USP of efficient rail evacuation started with Containers then LPG and now it is extended to car exports as well. The Company believes more and more usage of rail as mode of freight transport will bring cost and time efficiencies and will make Indias product cost competitive in the international markets.

Status on Cyclone restoration work

The members may recall the Saurashtra region of Gujarat was hit by Cyclone Tauktae on 17th May 2021. The cyclone had a landfall in the vicinity of Pipavav Port but thanks to the extraordinary efforts by the employees in taking extensive precautionary measures, the port infrastructure facility did not suffer any major damage. The main grid power supply and the communication links were completely disrupted due to the cyclone. Except the replacement of the Jetty fenders all other restoration work has been completed. The fenders replacement is likely to be completed by end of May 2024 and with that all the cyclone related restoration work will get concluded.

Financial Review

Dividend declared/ recommended and the Dividend Policy

During the year under review, the Board of Directors had declared an Interim Dividend of Rs. 3.60 per share in their Meeting held on 8 November 2023 and it has been paid. The Board now recommends a Final Dividend of Rs. 3.70 per share subject to the approval by the Members in the Companys Annual General Meeting proposed for 22 August 2024.

The Companys Dividend Policy states as follows:

Dividend is the Companys primary distribution of profits to its Shareholders. The Companys objective is to sustain a steady and consistent distribution of profits, by way of Dividend, to its Shareholders while considering the following:

(a) The circumstances under which the shareholders can or cannot expect dividend

The Company shall endeavour to pay Dividend to its shareholders in a steady and consistent manner except the following circumstances:

(i) During no growth or weak growth in the trade requiring the Company to retain its earnings to be able to absorb unfavourable market conditions and for meeting the business requirements;

(ii) To meet its funding requirements for expansion and growth;

(iii) The Companys Joint Venture with Indian Railways, Pipavav Railway Corporation Limited requires equity infusion from its shareholders.

During such times the Company may decide to retain the earnings instead of distributing to the shareholders. The distribution of Dividend can be by way of Interim Dividend and/or by way of Final Dividend.

(b) The financial parameters that will be considered while declaring dividend

The Company shall consider the following parameters while declaring dividend:

i) Current years profit:

i. after setting off carried over previous losses, if any;

ii. after providing for depreciation in accordance with the provisions of Schedule II of the Act;

iii. after transferring to reserves such amount as may be prescribed or as may be otherwise considered appropriate by the Board at its discretion.

ii) The profits for any previous financial year(s):

a) after providing for depreciation in accordance with law;

b) remaining undistributed; or

iii) out of (i) or (ii) or both.

In computing the above, the Board may at its discretion, subject to provisions of the law, exclude any or all of (i) extraordinary and exceptional income, generated from activities other than regular business (ii) extraordinary charges (iii) exceptional charges (iv) one off charges on account of change in law or rules or accounting policies or accounting standards (v) provisions or write offs on account of impairment in investments (long term or short term) (vi) noncash charges pertaining to amortization or ESOP or resulting from change in accounting policies or accounting standards.

(c) Internal and External factors that would be considered for declaration of dividend

The Companys Board shall always consider various Internal and External factors while considering the quantum for declaration of dividend such as the overall Economic scenario of the country, the Export Import trade of the country, the statutory and regulatory provisions, the Companys own performance, its profitability, its growth plans, the performance and funding requirements of its joint venture Rail Company and such other factors as may be deemed fit by the Board.

(d) Policy as to how the retained earnings will be utilised

The retained earnings would mainly be utilised for the purpose of the Companys growth plans, the funding requirements of its joint venture Rail Company and for all such activities that in the Boards opinion shall enhance the shareholders value.

(e) Provisions with regard to various classes of shares

The Company currently has only one class of shares namely Equity shares. In case the Company issues any other class of shares, this Policy shall be modified suitably for stipulating the parameters for distribution of dividend to all classes of shares.

Financial Results

The Companys Revenue from Operations consists of Income from Port Services and other Operating Income. Total Revenue from Operations for the year ended 31 March 2024 of Rs. 9,884.29 million is higher by about 8% against Rs. 9,169.50 million during the previous year.

Income from Port Services consists of Income from Marine Services, Container & Cargo Handling, Storage services as well as value-added Port Services. Income from Port Services at Rs. 9,206.79 million during the year under review was higher by about 9% against Rs. 8,462.54 million for the year ended 31 March 2023.

Other Operating Income comprises incidental Income from Operations and lease rentals from sub-leasing of land to various Port users. Other Operating Income for the year ended 31 March 2024 at Rs. 677.50 million was lower by over 4% as against Rs. 706.96 million in the previous year.

Total Expenditure consists of Operating expenses, Employee benefits, Finance Cost, Depreciation and Other expenses. The Company incurred a Total Expenditure of Rs. 5,915.19 million during the year under review as against Rs. 5,389.18 million during the previous year. The increase is mainly on account of higher Repairs and Maintenance and other Administrative expenses.

Operating Expenses primarily include Equipment Hire charges, Handling expenses, Waterfront Royalty and Other direct costs. Operating expenses were lower by about 9% at Rs. 1,746.79 million during the year under review as against Rs. 1,922.00 million for 31 March 2023. The reduction is due to lower handling expenses arising from reduction in Dry Bulk cargo volume.

Operating Profit amounted to Rs. 5,730.53 million during the year under review as against Rs. 5,021.41 million for year ended 31 March 2023, an increase of over 14%.

Other Income

Other Income consists of Interest on short-term bank deposits, Gain or Loss from foreign exchange and other Miscellaneous Income. The Other Income was Rs. 786.97 million during the year under review as against Rs. 510.00 million for the year ended 31 March 2023.

Debt

The Company does not have any fund based facility outstanding and it continues to be debt free.

Net Profit

The Companys Net Profit Rs. 3,527.96 million during the year under review increased by over 21% as against Rs. 2,924.50 million for the year ended 31 March 2023. The increase can be attributed mainly to the increase in container volume.

Risk Management and Internal Control

Risk Management and Internal Control are two key aspects of the control framework. The Companys Risk Management Committee is a Subcommittee of the Board of Directors. The Committee is responsible for advising to the Board on high-level risk related matters. The Committee oversees the identification, mitigation and monitoring of the Companys material risks and exposures including the risk pertaining to IT security. Wherever necessary it deep-dives to examine the preparedness of the Company Management in dealing with those Risks. The Risk Management Committee Meetings provide a thorough insight to the Committee as well as to the Management in analysing the identified areas for effective mitigation measures. The Risk Register provides a consistent and measurable management assurance metric on the broad risks involved and its impact on Companys objectives. The Risk Register is reviewed by the Audit Committee and the Minutes of the Risk Committee Meeting are presented to the Audit Committee and to the Board of Directors.

The Audit Committee of the Company has the overall responsibility to provide assurance to the Board about a sound and effective internal control environment in the Company. The Audit Committee reviews the adequacy and integrity of the Companys internal control system. The Company has put in place an internal control framework commensurate to the size of its business and it encompasses both robust internal controls and an efficient, effective internal control monitoring and reporting system. Mukesh M Shah & Co. Chartered Accountants are the Companys Internal Auditors. The Internal Auditors report directly to the Audit Committee of the Company, and they carry out regular review of the effectiveness of the internal control measures and recommend the areas that require improvement in controls.

The Statutory Auditors have reviewed the adequacy of Internal Financial Controls and have found them in order. The Internal Auditors review on an ongoing basis the Business and Operational Control measures and their adequacy from time to time. Wherever suggested by the Auditors, the improved control measures have been implemented and their functioning is reviewed from time to time.

Health, Safety, Security and Environment (HSSE)

Safety is our most important license to operate. This continues to be a fundamental principle of all ports and terminals with the portfolio of APM Terminals. In accordance with that fundamental principle, the Company is committed to improve Safety performance at its Port on an ongoing basis for its employees and for its business partners functioning inside the port premises. APM Terminals has implemented Global Operational Standards for Safety, a set of Minimum Controls developed to manage the Top five risks identified to be related to 90% of the most serious incidents and fatalities namely, Transportation, Suspended loads & lifting, Working at height, Stored energy, and Control of Contractors.

At APM Terminals, Safety of our Employees and of our Business Partners is of utmost importance. Ensuring that after completion of work everyone returns home safely to be with their families, is of utmost importance. APM Terminals Pipavav has completed 320 days of Safe Operations with Zero fatality and Lost Time Incident (LTI) as of 31st March 2024. This achievement is a testament to the Safety culture prevalent with support and close cooperation amongst the employees of the Company and its business partners. A consistent and constant endevour to improvise upon the safety measures with the responsibility starting from the Top to Bottom by conducting Safety Gemba ensures Constant Care and sends a strong signal to all stakeholders about the Companys commitment towards Safety. The Company is committed to ensure Safe and Efficient Operations at Pipavav Port.

Corporate Social Responsibility (CSR)

The Company believes in closely working with the communities in the vicinity to determine their requirements and is accordingly implementing the CSR projects that are acceptable to the community and become self-sustainable over a period of time. That is possible only when a need assessment is carried out before commencement of the CSR project.

The Company has formulated policies for social development that are based on the following guiding principles:

• Adopt an approach that aims at achieving a greater balance between social development and economic development;

• Adopt new measures to accelerate and ensure the basic needs of all people including health and sanitation and working towards elimination of barriers for social inclusion of disadvantaged groups;

• Focus on educating the girl child and the underprivileged by providing appropriate infrastructure, and groom them as future value creators;

• Assist in skill development by providing direction and technical expertise to the vulnerable with special focus on women thereby empowering them towards a dignified and better quality life;

• Promote an inclusive work culture;

• Work towards generating awareness for creating public infrastructure that is barrier free, inclusive and enabling for all including the elderly and the disabled;

• Employee participation is an important part of developing responsible citizenship. Our company encourages and motivates employees to spend time volunteering on issues pertaining to CSR;

• At the time of local or national crisis, to respond to emergency situations & disasters by providing timely help to affected victims and their families.

Our Core Focus Areas are:

• Education

• Health & Environment Sustainability

• Socio Economic Development and Social Business Projects

• Women Empowerment

During the year ended 31 March 2024 some of the key CSR Projects carried out were:

• Mobile Science and Maths lab, supply of educational equipment, teaching learning support, extension activities, adult literacy, up gradation of school infrastructure online and distance education, digital education, activity-based teaching, and learning, covid prevention and vaccination awareness etc.

• Medical support to the surrounding villages through advance life support ambulance, mobile health unit, port medical centre, Bimonthly eye check-up camp and cataract surgery, construction of check dams, pond deepening, community tree plantation, kitchen garden, safety & environment, and mental health awareness activities

• Skill & entrepreneurship development followed by placement and formation of Women Self Help Groups followed by income generation activities

• Integrated livestock development, mobile vet clinic, maintenance of RO enabled water vending machines, fisheries as a livelihood, sustainable agriculture development programme, and farmers producer company, RO plant at Rampara High School, Drinking Water Tank at Bherai High School, Construction of Learning Resource Centre at Padar and furniture for the Learning resource centre at Thavi

• Supporting district police and villagers of Shiyalbet with life jacket, buoy ring, installation of solar streetlights at Shiyalbet and Divalo, street lights at Rampara and Bherai etc, Urinal at Shiyalbet main land side boat landing point

Outlook

The advanced economies are expected to perform well with the growth expected to be driven mainly by the US. The European economy is also expected to grow from a lower base. Amongst the emerging economies China is expected to slowdown due to the persisting weakness in the real estate sector and easing of the fiscal stimulus and consumption boost post pandemic. India, Middle East and the Sub Saharan Africa region are likely to experience stable growth. The world is expecting India to be the torch bearer of growth that could positively impact the global economy. The increasing working class population has resulted into strong increase in the Income tax collections for the Government of India. The Government of India has set an aggressive target of USD 2 trillion in exports of goods and services by the Year 2030. While India has been a global leader in the IT services sector, the manufacturing sector also has a much larger role to play by increasing the goods exports. In that context, Government of India needs to rationalize the rail tariff in order to witness a major shift in freight transport from road to rail. The reduction in rail tariff is not to substitute road by rail but to complement each other. The road transport can do multiple short haul last mile connectivity from Inland Container Depots (ICDs) to the manufacturing facility while the rail takes care of the long haul evacuation to and from the West coast ports. Only then Indian products will be cost competitive in the global markets.

Human Resources/ Industrial Relations

Globally, all entities of AP Moller Maersk Group have to undergo an Employee Engagement Survey and all the Employees are encouraged to participate in the Survey. The survey is conducted in complete confidence by an external agency. The findings from those survey are shared with

the concerned Manager for discussing those with their respective teams. The idea is to encourage the employees to speak out their mind and try and make each of the entity a better place to work. APM Terminals Pipavav continues to achieve high scores and has maintained its position amongst the Top Quartile. This also is a testimony to a high level of engagement amongst the team members.

The Company has been certified as Great Place to Work for the sixth consecutive year by the Trust Index Employee Survey.

Changes in Key Financial Ratios compared to immediately previous financial year

Pursuant to the requirements under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements)(Amendment) Regulations, 2018, the Company is required to provide details of significant changes i.e. change of over 25% or more compared to the previous year, in key financial ratios along with an explanation. The details are as follows:

(i) Debtors Turnover: Except the storage charges for dry bulk cargo, the Company receives its entire billing before the departure of the vessel. The storage income for dry bulk cargo is paid by the customer at the time of evacuation of the cargo, depending upon the number of days cargo has been stored at the Port. The Turnover is around 13.80 days for the year under review, a variance of less than -4%.

(ii) Inventory Turnover: The Company is engaged in the business of port services. The inventory maintained is for the Companys own consumption such as crane spares, fuel etc. The Company does not maintain any inventory for sale therefore, the Inventory Turnover ratio is not applicable

(iii) Interest Coverage Ratio: The Company is debt free and does not have any obligations towards interest payment. Therefore, the Interest Coverage Ratio is not applicable

(iv) Current Ratio: As mentioned in point no (i) above, the Company receives all its dues before the departure of vessel. The Company does not maintain any inventory for sale since it is engaged into providing port service. The Company does not have any outstanding debt so there is no current portion of long-term debt. Considering these points, the current ratio is about 3.04 for the period under review, a variance of about -16%

(v) Debt Equity Ratio: As mentioned in point no (iii) above, the Company is debt free. Therefore, the debt equity ratio is not applicable

(vi) Operating Profit Margin: The Operating Profit Margin for the year ended 31st March 2024 is at 57.98% as against 54.76% compared to the previous year. The increase in Margin of about 6% is mainly on account of lower operating expenses.

(vii) Net Profit Margin: The Net Profit Margin for the year ended 31st March 2024 is at 35.79% as compared to 31.82% for the previous year. The increase in the Margin is mainly due to the company handling higher volume.

(viii) Return on Net Worth: The Return on Net Worth for the year ended 31st March 2024 at 16.96% is higher by about 20% compared to the previous year due to the reasons mentioned hereinabove.

Cautionary Statement

Certain statements found in the Management Discussion and Analysis may constitute "forward-looking statements" within the meaning of applicable Securities Laws and Regulations. These forward-looking statements involve known and unknown risks, uncertainties and other factors that are difficult to predict, and which may cause our actual results, performance or achievements to be different from any future results, performance and achievements expressed or implied by these statements.