Dear Members,
The Directors take pleasure in presenting the Thirty-Ninth Annual
Report of your Company together with the Audited Accounts for the year
ended March 31,2015.
1. FINANCIAL RESULTS
The summary of consolidated and standalone financial results of your
Company for the year ended March 31, 2015 are furnished below:
(Rs. in crore)
Consolidated
Particulars For the year For the year
ended March 31 ended March 31
2015 2014
Total Revenue 1,776.94 2,214.88
Total Expenses 361.15 887.76
EBITDA 1,415.79 1,327.12
Profit / (Loss) for the year 391.20 383.74
Standalone
Particulars For the year For the year
ended March 31 ended March 31
2015 2014
Total Revenue 88.40 84.26
Total Expenses 52.14 52.22
EBITDA 36.26 32.05
Profit / (Loss) for the year 0.60 (25.75)
2. DIVIDEND
Since your Company have committed capital expenditure which
necessitates the operating profits to be ploughed back towards CAPEX,
your Directors have not recommended any dividend for the year ended
March 31, 2015.
4. RISK MANAGEMENT & INTERNAL CONTROL
Implementation and operation of port and terminal facilities are
dependent on various regulatory approvals and government policies.
Changes in macro economic factors like inflation, interest rate, world
trade and natural catastrophies also play an important role in the
trade of goods and cargo.
Any adverse change in the above may affect the performance of your
Company. Your Company periodically reviews the risks associated with
the business and takes steps to mitigate and minimise the impact of
risks.
Your Company has a Risk Assessment and Mitigation procedure in place.
Major risks identified by the businesses and functions if any are
systematically addressed through mitigating actions on a continuing
basis.
The Company's internal control systems are commensurate with the nature
of its business and the size and complexity of operations. These
systems are routinely tested by the Internal Auditor and cover all key
business areas. Significant audit observations and follow up actions
thereon are reported to the Audit Committee. The Audit Committee
reviews adequacy and effectiveness of the Company's internal control
environment and monitors the implementation of audit recommendations,
including those relating to strengthening of the Company's risk
management policies and systems.
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
(Rs. crore)
For the year ended
Particulars
31st March, 2015
Foreign Exchange earnings 2.29
Foreign Exchange outgo 18.53
5. CORPORATE SOCIAL RESPONSIBILITY
In accordance with the requirements of Section 135 of Companies Act,
2013, your Company has constituted a Corporate Social Responsibility
Committee. The composition and terms of reference of the Corporate
Social Responsibility Committee is provided in the Corporate Governance
Report.
Your Company has also formulated a Corporate Social Responsibility
Policy which is available on the websites of the Company at
www.essar.com and www.essarports.com. The Company statutorily is not
required to incur CSR spend, as the Company has negative profits. The
Company has initiated CSR activities through its subsidiaries. Annual
report on CSR activities as required under the Companies (Corporate
Social Responsibility Policy) Rules, 2014 has been appended as Annexure
to this Report.
6. BOARD INDEPENDENCE
Based on the confirmation / disclosures received from the Directors and
on evaluation of the relationships disclosed, all Independent Directors
comply with the Independence criteria in terms of Clause 49 of the
Listing Agreement and Section 149(6) of the Companies Act, 2013.
7. DIRECTORS, APPOINTMENT AND TENURE
The Directors of the Company are appointed by Members at the General
Meetings. In accordance with the Articles of Association of the Company
two-third of the Directors of the Board are liable to retire by
rotation. Out of this, one-third of the eligible Directors retire every
year. The appointment and tenure of Independent Directors are
consistent with the Companies Act, 2013 and the Listing Agreement.
Shri. P K. Srivastava (DIN 00843258) retires at the ensuing Annual
General Meeting of the Company and being eligible, offer himself for
re-appointment.
Smt. S. Gayathri (DIN 07115908) has been appointed as an Additional
Director on March 30, 2015. The Company has received notice from a
member proposing the appointment of Smt. Gayathri as a Director of your
Company.
It is propsed to appoint Shri. Dilip J. Thakkar (DIN 00007339), Shri. T
S. Narayanasami (DIN 01786981), Shri. Deepak Kumar Varma (DIN
00213394), Shri. N. C. Singhal (DIN 00004916), Shri. Michael Pinto (DIN
00021565), Dr. Jose Paul (DIN 01256347) and Shri. Jesper Kjaedegaard
(DIN 00529039) as Independent Directors for a consecutive period of
three years from the date of the ensuing Annual General Meeting.
Shri. Jan Adam has resigned from the directorship of your Company with
effect from December 19, 2014. Your Board places on record its
appreciation for the valuable contributions made by Shri. Adam in the
growth and progress of the Company during his tenure as Director.
8. HUMAN RESOURCE
Human resources have always been the key to success of your Company's
business. A balance of internal and external talent was maintained to
ensure right skills are available to initiate project activities. A
large number of fresh talent comprising engineers and management
graduates were deployed to nurture future ports facilities of the
Company being implemented by subsidiaries. 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 organisation.
9. INFORMATION TECHNOLOGY
Your Company successfully implemented SAP in its financial and related
systems. For dry bulk as well as oil terminals, 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.
10. SUBSIDIARIES
As on March 31, 2015, the following were the subsidiaries of your
Company:
1. Vadinar Oil Terminal Limited
2. Vadinar Ports & Terminals Limited
3. Essar Vizag Terminals Limited
4. Essar Bulk Terminal Limited
5. Essar Bulk Terminal Paradip Limited
6. Essar Bulk Terminal (Salaya) Limited
7. Essar Paradip Terminals Limited
8. Petro Tankages India Limited
9. Essar Dredging Limited
10. Vadinar Liquid Terminals Limited
11. AUDITORS
Your Company's Auditors, Messrs. Deloitte Haskins & Sells, Chartered
Accountants, Ahmedabad, the Statutory Auditors of the Company hold
office until the conclusion of the ensuing Annual General Meeting and
are eligible for re-appointment. Since Messrs. Deloitte Haskins &
Sells have been functioning as Auditors of your Company for more than
ten years, as per Section 139 of the Companies Act, 2013, they can be
appointed for a maximum period of further two years.
Suitable resolution for their re-appointment has been included in the
Notice convening the ensuing Annual General Meeting.
The Report given by the Auditors on the financial statements of the
Company forms part of the Annual Report. There has been no
qualification, reservation, adverse remark or disclaimer given by the
Auditors in their Report.
12. CORPORATE GOVERNANCE
During the year, your Company has adopted new policies and amended
existing policies such as Policy on Related Party Transactions, CSR
Policy, Whistle Blower Policy, Policy on Material Subsidiaries and
Prevention of Sexual Harassment Policy in line with new governance
requirements. These policies are available on the websites of the
Company at www.essar.com and www.essarports.com.
A separate report on Corporate Governance is provided together with a
Certificate from the Statutory Auditors of the Company regarding
compliance of conditions of Corporate Governance as stipulated under
Clause 49 of the Equity Listing Agreement with the Stock Exchange(s).
13. DISCOLSURES WITH RESPECT TO THE REMUNEATION UNDER SECTION 197 OF
THE COMPANIES ACT, 2013
A 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 is attached and forms
part of this Report.
The details of Sitting Fees paid to the Independent Directors for
attending the Meetings of the Board and its Committees and the
remuneration paid to the Managing Director and the Wholetime Directors
are furnished in the Corporate Governance Section of this report.
14. SECRETARIAL AUDIT REPORT
During the year, your Company has undertaken the Secretarial Audit for
the year 2014-15, which, inter alia, includes audit of compliance with
the Companies Act, 2013, and the Rules made under the Act, Listing
Agreement and Regulations and Guidelines prescribed by the Securities
and Exchange Board of India and Foreign Exchange Management Act, 1999.
The Secretarial Audit was carried out by CS. Martino Ferrao of M/s.
Martinho Ferrao Associates, Company Secretaries, the Secretarial
Auditor of the Company for the financial year 2014- 15. The detailed
report on Secretarial Audit is appended as an Annexure to this Report.
15. 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.
16. AFFIRMATION AND DISCLOSURE
The Company has framed a specific Code of Conduct for the members of
the Board and the Senior Management personnel of the Company pursuant
to Clause 49 of the Listing Agreement with the Stock Exchanges to
further strengthen corporate governance practices in the Company.
All the members of the Board and Senior Management Personnel have
affirmed their compliance with the Code of Conduct as on March 31, 2015
and a declaration to that effect, signed by the Managing Director &
CEO, is attached and forms part of this Report.
17. BOARD EVALUATION
The Nomination and Remuneration Committee of the Company has approved
an evaluation policy, which was adopted by the Board of Directors. The
policy provides for evaluation of the Board,the Committees of the Board
and individual Directors, including the Chairman of the Board. The
Policy provides that evaluation of the performance of the Board, Board
Committees and Directors shall be carried out on an annual basis. Your
Company has initiated the process of Board evaluation which is underway
The results of the evaluation will be shared with the Board, post which
action plan will be drawn to improve the identified parameters.
18. RELATED PARTY TRANSACTIONS
In line with the requirements of the Companies Act, 2013 and Listing
Agreement, your Company has formulated a Policy on Related Party
Transactions which is also available on Company's websites at
www.essar.com and www.essarports.com. The Policy intends to ensure that
proper reporting, approval and disclosure processes are in place for
all transactions between the Company and Related Parties.
This Policy specifically deals with the review and approval of Material
Related Party Transactions keeping in mind the potential or actual
conflicts of interest that may arise because of entering into these
transactions. All Related Party Transactions are placed before the
Audit Committee for review and approval.
All Related Party Transactions entered during the year were in Ordinary
Course of the Business and on Arm's Length basis. The disclosure of
Related Party Transactions as required under Section 134(3) (h) of the
Companies Act, 2013 in Form AOC 2 is annexed to this report.
19. DISCLOSURES PURSUANT TO CLAUSE 32 OF THE LISTING AGREEMENT AND
SECTION 186 OF THE COMPANIES ACT, 2013
Details of loans, guarantee or investments made by your Company under
Section 186 of the Companies Act, 2013 during the financial year
2014-15 are appended as Annexure to this Report.
20. 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.
21. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
As per the requirement of The Sexual Harassment of Women at Workplace
(Prevention, Prohibition & Redressal) Act, 2013 ('Act') and Rules made
thereunder, your Company has framed the Policy for Prevention of Sexual
Harassment.
22. 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 annual accounts, the applicable accounting
standards had been followed along with proper explanation relating to
material departures;
b) accounting policies selected were applied consistently and made
judgments and estimates that are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of
the financial year and of the profit or loss of the Company for that
period;
c) 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) the annual accounts of the Company have been prepared on a going
concern basis;
e) the Company had laid down internal financial controls to be followed
by the companies 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.
23. 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
Mumbai Rajiv Agarwal A. S. Bali
August 13, 2015 Managing Director Director Finance
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