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Essar Ports Ltd. Directors Report
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Year End :2015-03 
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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