To the Members of Essar Ports Limited
Your Directors take pleasure in presenting the Forty Second Annual Report of yourCompany together with the Audited Financial Statements for the year ended March 31 2018.
1. FINANCIAL RESULTS
The summary of consolidated and standalone financial results of your Company for theyear ended March 31 2018 are furnished below:
| || || || ||(Rs. in lakhs) |
| ||Consolidated ||Standalone |
|Particulars ||For the year ended March 31 2018 ||For the year ended March 31 2017 ||For the year ended March 31 2018 ||For the year ended March 31 2017 |
|Total Revenue ||42299.17 ||75004.60 ||2343.10 ||3524.58 |
|Total Expenses ||38639.27 ||64599.99 ||2742.82 ||8169.79 |
|EBITDA ||6758.51 ||47985.39 ||225.52 ||(1409.27) |
|Profit / (Loss) for the year ||2372.02 ||1322.66 ||(141.35) ||(4106.30) |
Considering the funds requirement for meeting the operations the Board has notrecommended any dividend for the financial year ended March 31 2018.
3. MANAGEMENT DISCUSSION & ANALYSIS
The discussion and analysis hereunder covers Company's & and business outlook foritsSubsidiary'sfinancial the year 2017 2018. This outlook is based on assessment ofthe current business environment and Government policies. The change in future economicand other developments are likely to cause variation in this outlook.
Global economic activity during the year 2017 2018 have furthered momentum bothin advance and emerging economies. Global economic growth during 2017 is estimated to be3.8%. IMF estimates global growth to be around 4% for 2018 and 2019 respectively. As perthe IMF estimates trade volume in goods and service growth will be nearly 4.7% in 2018.While World Trade Organization foresees trade as a driver in this global growth. Americanand European economic activity continued to make growth in robust manner with some weaknote appearing in Q1 FY 2018. In US risks of reflationary policies remain withanticipation of rate hike moves by the US Fed. While in Europe consumer spending andfactory activity slowed down due to strengthening of Euro. Also during the year 2017Japan registered straight eight quarters of growth and China grew above the officialtarget of 2017.
Business cycle in India is at its peak phase with GDP (Gross Domestic Product) growingaround 7.6% in 2017 -2018. The growth was largely impacted due to acceleration in serviceand software sector throughput. Growth outlook ahead remains even better on account ofreforms like GST FDI Regulation etc. and formalization of economy aided by lower rates.
Industry Outlook - Ports Sector- Indian Scenario
In contrast to the world India has not seen the noticeable recovery in cargo handlingand services. During the year 2017 2018 Major and Non-Major Ports in India haveaccomplished a total cargo throughput of around 1182 MMT translating into a growth of 4.4%over a 1132 MMT of cargo handled during FY 2016 - 2017. In FY 2017 2018 cargotraffic in containers petroleum-oil-lubricants witnessed a modest growth; while growth incommodities like iron ore coal and fertilizers remained stable. The volume of traffichandled at Major and Non-Major Ports was nearly 648 MMT & 534 MMT respectively in FY2017 - 2018.
Launch of "Sagarmala" has brought optimism and a new focuses to port-led areadevelopment. The real impact of this project will take time to show the steady progresson the port modernization and improvement in connectivity front are the initial signs. Theamendments in the ports concession agreement are expected to make projects more investorfriendly and make investment climate in the port sector more attractive.
During the year under review the performance of your Company has achieved asignificant progress and is encouraging. The Company is now well poised for next level ofgrowth. The Company's Subsidiary Essar Vizag Terminals Limited ("EVTL") hassuccessfully commissioned a fully modernized port & terminal at Vishakhapatnam Port.EVTL is a special purpose vehicle (SPV) handling iron ore at the Outer Harbour Complex ofVishakhapatnam Port Trust (VPT). EVTL has a fully mechanized ship loader arm with a ratedcapacity of 8000 TPH connected to iron ore stock yard with two reclaimers & stackersand a twin wagon trippler facility to handle iron ore from the surrounding mines via railrakes.
Your Company has delivered another year of consistent financial performance. Theemphasis continues to be on development of world class facilities and to complete theprojects under implementation in time.
Key Financial Performance highlights for the year are as below: Total Revenuecontribution on consolidated basis was Rs. 42299.17 Lakhs;
EBITDA for the year on consolidated basis was Rs. 6758.51 Lakhs;
Net Profit for the year on consolidated basis was Rs. 2372.02 Lakhs.
Awards and Accolades
Your Company has been awarded over the year by various institutions for best practicesin Health Safety Environment and Quality related categories. Below is the list of awardsand accolades won by your Company: Essar Ports Limited was conferred CII SCALEAward under Terminal Operator Category 2016; Essar Ports Limited wasconferred second place at Indian Maritime Award for Dry Bulk Port 2018; EssarPorts Limited was conferred Maritime & Logistics Award for CSR Activities; EssarPorts Limited was conferred Maritime Standard Award Dubai for CSR Activities; EssarVizag Terminals Limited was conferred Construction Times Award for Best Executed Port& Harbour Project 2017.
4. RISK MANAGEMENT & INTERNAL CONTROL
Risk Opportunities and Threats
On the front of cargo commodities like thermal coal iron ore fertilizers. Coalimports are seeing an increase trend for FY 2018. However long term import of thermalcoal might witness a decreasing trend due to Government focus on enhancing domesticproduction and availability of thermal coal blocks.
Connectivity and operational efficiency improvements at Major Ports is also likely topose a challenge to Non-Major Ports and marketing efforts. The Company has a formal riskassessment and management system which periodically identifies risk areas evaluates theirconsequences and initiates risk mitigation strategies and implement corrective actionswhere ever required. The Company has been making steady progress in addressing specificrisks and threats through cargo diversification strategic capacities at ports long-termcustomer contracts and enhancement in operational efficiencies cost optimization andprovision of integrated logistics services.
At Domestic level new business opportunities are also being generated especially innatural gas sector and handling of container traffic. With increased vessel sizesshipping liners prefer ports with deep draft longer quays high mechanization and portsinfrastructure. The Company is keenly following these market trends and many of theCompany 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 tocommensurate with its size and scale of operations. Some of the key features of theCompany's internal control systems are: Adequate documentation of FinancialsCompany Policies and Guidelines.
Preparation of Annual Budget plan through monthly review for all operating entitiesat Management level. The Company has a management system which runs on a one-on-onemonitoring activities with all entities whenever required.
The Company has a well-defined allocation of power with authority limits forapproving revenue and Capex expenditure which is reviewed and suitably amended on anannual & monthly basis by the Senior Management.
5. SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATES
During the financial year Essar Dredging Limited has ceased to be a subsidiary of theCompany and Ultra LNG Haldia Limited has become an associate of the Company. Essar PortsNetherlands Cooperatief U. A. step down subsidiary of the Company ceased to be asubsidiary of the Company during the year.
As on March 31 2018 the following were the subsidiaries and associates of yourCompany:
|Sl. No. ||Name of the Companies ||Subsidiary/ Associate ||% of Equity Capital |
|1. ||Essar Vizag Terminals Limited ||Subsidiary ||100% |
|2. ||Essar Paradip Terminals Limited ||Subsidiary ||90% |
|3. ||Vadinar Liquid Terminals Limited ||Associate ||49% |
|4. ||Essar Bulk Terminal (Salaya) Limited ||Associate ||26.10% |
A statement containing the salient features of the financial statements of thesubsidiary/ associate companies in Form AOC-1 has been enclosed as an annexure to thisreport.
6. RELATED PARTY TRANSACTIONS
All Related Party Transactions entered during the year were in ordinary course of thebusiness and on an arm's length basis. Details of material related party transactionentered during the financial year 2017-18 are provided in the prescribed form AOC-2 as anannexure to this report.
7. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THECOMPANY
There were no material changes and commitments affecting the financial position of theCompany which occurred between the end of the financial year to which this financialstatements relate and the date of this Report.
The Company has not accepted any deposits within the meaning of Section 73 of theCompanies Act 2013 and the Companies (Acceptance of Deposits) Rules 2014 during thefinancial year.
9. DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL APPOINTED / RESIGNED DURINGTHE YEAR
Composition of Board of Directors as on March 31 2018:
|Sl. No. ||DIN ||Name of the Directors ||Designation |
|1. ||00903635 ||Shri. Rajiv Agarwal ||Managing Director & CEO |
|2. ||00009113 ||Shri. K. K. Sinha ||Wholetime Director |
|3. ||00843258 ||Shri. P. K. Srivastava ||Independent Director |
|4. ||00007339 ||Shri. Dilip J. Thakkar ||Independent Director |
|5. ||00008683 ||Shri. V. G. Raghavan ||Independent Director |
The following Directors and Key Managerial Personnel were appointed/ got resignedduring the financial year:
|Sl. No. ||Name of the Directors ||DIN ||Designation ||Date of Appointment/ Resignation ||Remarks |
|1. ||S. Gayathri ||07115908 ||Director ||August 21 2017 ||Resignation |
|2. ||Shri. Manoj Contractor ||- ||Company Secretary ||September 28 2017 ||Resignation |
|3. ||Smt. Neelam Jagdish Thanvi ||- ||Company Secretary ||October 6 2017 ||Appointment |
Post closure of the financial year Shri. V. G. Raghavan (DIN00008683) had tendered hisresignation with effect from April 26 2018 and Capt. B. S. Kumar (DIN 00284649) wasappointed as Additional Independent Director of the Company with effect from May 14 2018.Your Board places on record its appreciation for the valuable contributions made by Shri.Raghavan in the growth and progress of the Company during his tenure as an IndependentDirector.
Approval of the members is being sought at the ensuing Annual General Meeting of theCompany for
- Re-appointment of Shri. Rajiv Agarwal (DIN 00903635) as Managing Director & CEOfor a further period of 3 years.
- Re-appointment of Shri. K. K. Sinha (DIN 00009113) who retires at the ensuing AnnualGeneral Meeting of the Company and his appointment is recommended by the Nomination andRemuneration Committee;
- Appointment of Capt. B. S. Kumar (DIN 00284649) and Shri. P. K. Srivastava (DIN00843258) as Independent Directors of the Company for a period of five years;
10. NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS AND ATTENDANCE OF THE DIRECTORS
The Board of Directors of the Company had met 4 times during the financial year on thebelow mentioned dates:
- June 29 2017;
- October 6 2017;
- November 15 2017; and
- February 28 2018
|Name of the Director ||Category of Director || |
Number of Board Meetings held and attended during the year
| || ||Held during the year ||Attended |
|Shri. Rajiv Agarwal ||Managing Director ||4 ||4 |
|Shri. K. K. Sinha ||Whole time Director ||4 ||2 |
|Shri. P. K. Srivastava ||Independent Director ||4 ||4 |
|Shri. Dilip J. Thakkar ||Independent Director ||4 ||4 |
|Shri. V. G. Raghavan ||Independent Director ||4 ||3 |
|Smt. S. Gayathri* ||Non-Executive Director ||4 ||1 |
* Resigned with effect from August 21 2017.
The meetings of the Board have been held at regular intervals with a time gap of notmore than 120 days between two consecutive meetings.
11. DECLARATION OF INDEPENDENCE
The Company has received Declarations of Independence as stipulated under Section149(6) of the Companies Act 2013 from Independent Directors.
12. COMPOSITION OF THE AUDIT COMMITTEE
As on March 31 2018 the Audit Committee comprised of Shri. Dilip J. Thakkar as theChairman of the Committee and Shri. P. K. Srivastava (Independent Director) and Shri. V.G. Raghavan (Independent Director) were the other members of the Committee.
Post closure of the stepped down as the member of the Committee with effect from April26 2018 and Capt. B.S. Kumar was elected as a member in place of him with effect from May14 2018.
As on the date of this report the Audit Committee of the Board comprised of 3Non-Executive Directors all of them are Independent. Shri. Dilip J. Thakkar acts as theChairman of the Committee and Capt. B. S. Kumar and Shri. P. K. Srivastava are the othermembers of the Committee. All the recommendations of the Audit Committee have beenaccepted by the Board.
13. CORPORATE SOCIAL RESPONSIBILITY
As on March 31 2018 the Corporate Social Responsibility Committee comprised of Shri.Rajiv Agarwal as the Chairman of the Committee and Shri. P. K. Srivastava (IndependentDirector) and Shri. V. G. Raghavan (Independent Director) were the other members of theCommittee.
However post closure of the financial year Shri B. S. Kumar was elected as a memberof the CSR Committee on May 14 2018 in place of Shri. V. G. Raghavan who had steppeddown as the member of the Committee with effect from April 26 2018.
The composition and terms of reference of the Corporate Social Responsibility Committeehad been fixed of Directors of your Company. The Company statutorily is not required toincur CSR spend as the Company has negative profits. However the Company has initiatedCSR activities through its subsidiary company. The CSR policy along with the Annual reporton 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 2018 the Nomination and Remuneration Committee comprised of Shri.Dilip Thakkar as the Chairman of the Committee and Shri. P. K. Srivastava (IndependentDirector) and Shri. V. G. Raghavan (Independent Director) were the other members of theCommittee.
Post closure of the financial year Capt. B. S. Kumar was elected as a member of theCommittee on May 14 2018 in place of Shri. V. G. Raghavan who had stepped down as themember of the Committee with effect from April 26 2018. The Committee has formulated apolicy on the Directors' appointment and remuneration including recommendation ofremuneration of the Key Managerial Personnel and other employees. The said policy has beenenclosed as an Annexure to this Report.
15. PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND DIRECTORS
All Directors responded through a structured questionnaire giving feedback about theperformance of the Board its Committees individual Directors and the Chairman. Thequestionnaire included inputs on composition functioning information availabilityeffectiveness etc. The questionnaire also covered in the case of individual directorsqualitative assessment and in the case of Chairman additional criteria like leadershipqualities and other key aspects of his role. The inputs received were circulated to themembers of the Nomination and Remuneration Committee of the Board and was also discussedat the subsequent meeting of the Board.
16. EXTRACT OF ANNUAL RETURN
The extract of annual return in Form MGT-9 as required under Section 92(3) and Rule 12of the Companies (Management and Administration) Rules 2014 is appended as an Annexure tothis Report.
17. INTERNAL CONTROL FRAMEWORK
Your Company conducts its business with integrity and high standards of ethicalbehavior and in compliance with the laws and regulations that govern its business. YourCompany has a well-established framework of internal controls in its operations includingsuitable monitoring procedures. In addition to an external audit the financial andoperating controls of your Company at various locations are reviewed by Internal Auditorswho report their observations to the Audit Committee of the Board.
18. HUMAN RESOURCE
Human resources focuses on maximizing employee productivity.by the BoardYour HRprofessionals manage the human capital of our organization and focus on implementingpolicies and processes. Our HR is specialised on recruiting training employee-relationsor benefits recruiting specialists and hire top talent. Your HR always ensures thatemployees are trained and have continuous development. This is done through trainingprograms performance evaluations and reward programs. Employee relations deal withconcerns of employees when policies are broken such as in cases involving harassment ordiscrimination.
Human resources have always been the key to success of your Company's business. Abalance of internal and external talent was maintained to ensure right skills areavailable to initiate project activities. Your Company is known for developing futureleaders and having the best people practices. This coupled with the ability to attract thebest talent provides a competitive edge to the organisation.
19. CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the Consolidated Financial Statementspursuant to Section 129(3) of the Companies Act 2013 and prepared in accordance with theapplicable Accounting Standards.
Your Company's Auditors Messrs. MSKA & Associates Chartered Accountants (ICAIForm Registration Number: 105047W) were appointed as the Statutory Auditors of theCompany to hold office from the conclusion of the 41st Annual General Meeting of theCompany till the conclusion of the 45th Annual General Meeting of the Company to be heldin the year 2021. The Auditors have confirmed their eligibility under the provisions ofSection 141 of the Companies Act 2013 and the rules framed thereunder for theirre-appointment as Auditors of the Company.
There are no audit qualifications/adverse remarks in the Auditors Report to theshareholders on the Accounts of the Company for the year ended March 31 2018.
21. REPORTING OF FRAUD
There were no instances of fraud committed against the Company by its officers oremployees as specified under Section 143(12) of the Companies Act 2013 and accordingly nosuch reporting was done by the Auditors of the Company.
22. INFORMATION TECHNOLOGY
The field of information technology (IT) covers the design administration and supportof computer and telecommunications systems. Some of the positions in this field includedatabase and network administrators computer support specialists computer scientistssoftware programmers and system analysts. The majority of career tracks in IT entaildesign and operational tasks related to computer hardware components networks andsoftware applications.
Professionals in the IT field work with businesses and organizations to set up andsupport viable computer networks that will keep systems efficient and reliable. ITencompasses all hardware and software used in the storing creation and accessing ofinformation. Examples of technologies that professionals work with are firewallsdatabases media storage devices networks and the Internet.
Your Company successfully implemented SAP in its financial and related systems. For drybulk systems have been implemented to capture end-to-end workflow covering all activitiesfrom pre-arrival intimations to actual departure of vessels. Expected berth occupancy isbeing plotted thereby optimising the berth utilisation and increasing berth efficiency.
Various dashboard reports have been implemented in the system for berth performance andresource monitoring.
23. VIGIL MECHANISM
Your Company has adopted a Whistle Blower Policy as part of the vigil mechanism toprovide appropriate avenues to the Directors and employees to report their genuineconcerns which is perceived to be in violation of or in conflict with the fundamentalbusiness principles of the Company.
24. PROTECTION OF WOMEN AT WORKPLACE
The Company has formulated a policy on Prevention of Sexual Harassment at workplace asper 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.
25. PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIESACT 2013
The particulars of loans guarantees and investments have been disclosed in the notesto the financial statements of the Company for the financial year 2017-2018.
26. STATEMENT OF DIRECTORS RESPONSIBILITIES
Pursuant to the requirement of Section 134(5) of the Companies Act 2013 and based onthe information provided by the management your Directors state that: a) in thepreparation of the Financial Statements the applicable accounting standards had beenfollowed along with proper explanation relating to material departures; b) accountingpolicies selected were applied consistently and judgments and estimates were made that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the profit or loss of the Company for thatperiod; c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; d) the Financial Statements of the Company have been prepared on a goingconcern basis; e) the Company has laid down internal financial controls to be followed bythe Company and that such internal financial controls are adequate and were operatingeffectively; and f) proper systems are in place to ensure compliance with the provisionsof all applicable laws and such systems are adequate and operating effectively.
27. AMOUNTS IF ANY PROPOSED TO BE CARRIED TO ANY RESERVES
Your Company has not transferred any amount to any reserves during the currentfinancial year.
28. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTIONFOREIGN EXCHANGE EARNINGS AND OUTGO
In view of the nature of activities that are being carried on by your Company theparticulars required under Section 134 of the Companies Act 2013 and rules madethereunder regarding conservation of energy and technology absorption are not applicableto your Company.
The details of foreign exchange earnings and outgo as required under Section 134 andRule 8(3) of Companies (Accounts) Rules 2014 are mentioned below:
Foreign Exchange Earnings & Outgo
| ||(Rs. Lakhs) |
|Particulars ||For the year ended 31st March 2018 |
|Foreign Exchange earnings ||Nil |
|Foreign Exchange outgo ||48.97 |
29. QUALITY SAFETY AND ENVIRONMENT
Your Company in order to ensure highest standard of safety has implemented andinitiated various measures with respect to Quality Safety and Environment ManagementSystems.
30. CORPORATE GOVERNANCE
The Company had delisted its shares from all the Stock Exchanges and presently notcovered under the listing regulations of SEBI. However as a good practice your Companyfollows the Corporate Governance practice in its business activities.
31. DISCLOSURES WITH RESPECT TO THE REMUNERATION UNDER SECTION 197 OF THE COMPANIESACT 2013
Since your Company is not a listed company the statement of Disclosure of Remunerationunder section 197 of Companies Act 2013 and Rule 5(1) of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are not applicable.
32. AFFIRMATION AND DISCLOSURE
The Company had delisted its shares from the Stock Exchanges and presently not coveredunder the listing regulations of SEBI. Since the reporting under the Corporate Governanceis not mandatory for your Company the declaration in relation to the compliance with theCode of Conduct is not attached with the Annual Report.
33. MAINTENANCE OF COST RECORDS AS SPECIFIED BYTHE 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 theCompany as the Central Government of India has not specified the maintenance of costrecords for any of the products of the Company.
34. GENERAL DISCLOSURES
Your Directors hereby state and confirm that for the year ended March 31 2018:
The Executive Director(s) did not receive any remuneration from the holding and/orsubsidiary companies.
The Company has neither revised the financial statements nor the report of Board ofDirectors.
The Company has not issued equity shares with differential rights as to dividendvoting or otherwise or sweat equity shares.
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status or Company's operations in future.
There was no change in the nature of business of the Company.
35. APPRECIATION AND ACKNOWLEDGEMENTS
Your Directors express their sincere thanks and appreciation to all the employees fortheir commendable team work and contribution to the growth of the Company.
Your Directors also thank its bankers and other business associates for their continuedsupport and co-operation during the year.
| ||For and on behalf of the Board |
|Mumbai ||Rajiv Agarwal ||K. K. Sinha |
|August 29 2018 ||Managing Director ||Wholetime Director |
| ||DIN: 00903635 ||DIN: 00009113 |
Form No. AOC 1
(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 ofCompanies (Accounts) Rules 2014 Statement containing salient features of the financialstatement of Subsidiaries / Associate Companies / Joint Ventures
PART "A": SUBSIDIARIES
| || || ||(Rs. in lakhs) |
| || ||1 ||2 |
|Sr. No. ||Name of the Subsidiary ||Essar Paradip Terminals Limited ||Essar Vizag Terminals Limited |
|1 ||Reporting period for the subsidiary concerned if different from the holding company's reporting period ||March 31 2018 ||March 31 2018 |
|2 ||Reporting currency and Exchange rate as on the last date of the relevant financial year in the case of foreign Subsidiaries ||Not Applicable ||Not Applicable |
|3 ||Share capital ||5.00 ||5.00 |
|4 ||Reserves & surplus ||3064.00 ||12100.52 |
| ||* Includes Equity component of 0.01% Compulsorily Convertible Cumulative Participating Preference Shares || || |
|5 ||Total assets ||3122.00 ||84081.00 |
|6 ||Total Liabilities ||53.00 ||71975.48 |
|7 ||Investments || || |
|8 ||Turnover || ||35504.03 |
|9 ||Profit / (Loss) before taxation ||(6.36) ||(1692.90) |
|10 ||Provision for taxation || || |
|11 ||Profit / (Loss) after taxation ||(6.36) ||(1692.90) |
|12 ||Proposed Dividend || || |
|13 ||% of shareholding ||90% ||100% |
Notes: The following information shall be furnished at the end of the statement:
|1 ||Names of subsidiaries which are yet to commence operations ||i) Essar Paradip Terminals Limited |
|2 ||Names of subsidiaries which have been liquidated or sold during the year. ||i) Essar Dredging Limited |
| || ||ii) Essar Ports Netherlands Cooperatief U. A. |
PART "B": ASSOCIATES
Statement pursuant to Section 129 (3) of the Companies Act 2013 related to AssociateCompanies
| || || ||(Rs. in lakhs) |
|Sr. No. ||Name of Associates ||Vadinar Liquid Terminals Limited ||Ultra LNG Haldia Limited |
|1 ||Latest audited Balance Sheet Date ||31-03-18 ||31-03-18 |
|2 ||Date on which the Associate or Joint Venture was associated or acquired ||02-07-16 ||17-06-17 |
|3 ||Shares of Associate or Joint Ventures held by the company on the year end || || |
| ||No. ||24500 ||24000 |
| ||Amount of Investment in Associates ||2.45 ||2.40 |
| ||Extent of Holding (in percentage) ||49% ||48% |
|4 ||Description of how there is significant influence ||Based upon percentage holding ||Based upon percentage holding |
|5 ||Reason why the associate is not consolidated ||It is not a subsidiary ||It is not a subsidiary |
|6 ||Net worth attributable to shareholding as per latest audited Balance Sheet || || |
|7 ||Profit or Loss for the year || || |
|i. ||Considered in Consolidation || ||(2.40) |
|ii. ||Not Considered in Consolidation || || |
|8 ||Names of associates or joint ventures which are yet to commence operations. ||Not Applicable ||Not Applicable |
|9 ||Names of associates or joint ventures which have been liquidated or sold during the year. ||Not Applicable ||Not Applicable |
Nomination and Remuneration Committee Policy
POLICY FOR BOARD DIVERSITY APPOINTMENT REMUNERATION TRAINING AND EVALUATION OFDIRECTORS AND EMPLOYEES
1.1 The Companies Act 2013 requires the Company to formulate the criteria fordetermining qualifications positive attributes and independence of directors. The Companyis also required to adopt a policy relating to the remuneration for the directors keymanagerial personnel and other employees.
1.2 In addition Listing Agreement requires listed companies to develop a policy onBoard diversity remuneration and evaluation criteria.
1.3 To meet these objectives the Policy on Board Diversity Appointment RemunerationTraining and Evaluation of Directors has been adopted by the Board of Directors.
2. Board diversity
2.1 The Company recognizes that a truly diverse Board will include and make good use ofdifferences in the skills regional and industry experience background race gender andother distinctions between Directors. These differences will be considered in determiningthe optimum composition of the Board. All Board appointments are made on merit in thecontext of the skills experience independence and knowledge which the Board as a wholerequires to be effective.
2.2 The Articles of Association of the Company provide that the Board shall comprise ofa minimum of three directors and a maximum of fifteen directors. Within these parametersthe Board has to determine the size and composition of the Board.
2.3 The Board of Directors of the Company shall have an optimum combination ofexecutive and non-executive directors and not less than fifty percent of the Board ofDirectors will comprise of non-executive directors. 2.4 Where the Chairman of the Board isa non-executive director at least one-third of the Board should comprise of independentdirectors and in case the company does not have a regular non-executive Chairman at leasthalf of the Board should comprise independent directors.
Provided that where the regular non-executive Chairman is a promoter of the company oris related to any promoter or person occupying management positions at the Board level orat one level below the Board at least one-half of the Board of the company shall consistof independent directors. The term related to any promoter' shall have the samemeaning as contained in clause 49 of the Indian Listing agreement as amended from time totime.
Any intermittent vacancy in office of an Independent Director shall be filled up by theBoard in the immediate next Board meeting or 3 months from the date of vacancy whicheveris later.
2.5 The Board shall have at least one woman director. This provision shall beapplicable as per the provision of the Companies Act 2013.
2.6 The Company at all times shall have atleast one director who has stayed in Indiafor a total period of not less than one hundred and eighty two days in the previouscalendar year.
2.7 The Board shall have one or more Managing Directors. In addition the Board willhave power to appoint from time to time one or more Wholetime Director or Directors uponsuch terms and conditions and for such term not exceeding five years at a time.
2.8 In compliance with the provisions of section 151 of the Companies Act 2013 theCompany may have one director elected by small shareholders on conditions specified in TheCompanies (Appointment and Qualification of Directors) Rules 2014.
2.9 The Lenders will have right to appoint one or more nominees on the Board in termsof Articles of Association of the Company and the loan agreements entered into between theCompany and the lenders.
The lenders nominees shall hold office so long as they have right to appoint nomineesso long as any monies/liabilities in relation to Facilities remain owning by the Companyto these Lenders.
2.10 The Nomination & Remuneration Committee of the Board (the Committee')reviews and assesses Board composition on behalf of the Board and recommends theappointment of new Directors.
2.10.1 In reviewing Board composition the
Committee will consider the benefits of all aspects of diversity including but notlimited to those described above in order to enable it to discharge its duties andresponsibilities effectively.
2.10.2 In identifying suitable candidates for appointment to the Board the Committeewill consider candidates on merit against objective criteria and with due regard for thebenefits of diversity on the Board.
2.11 The Committee will discuss and agree on all measurable objectives for achievingdiversity on the Board and recommend them to the Board for adoption. At any given time theBoard may seek to improve one or more aspects of its diversity and measure progressaccordingly.
2.12 The criteria for maintaining diversity of the Board may among others include thefollowing : 2.12.1 Age of individual directors and average age of the Board.
2.12.2 Ports & Terminal Industry representation adequately covering experience ofprofessionals in public and private sector ports.
2.12.3 Experts from various fields including but not limited to finance and taxationbanking corporate governance administration corporate social responsibility riskmanagement and human resources.
2.12.4 Diversity based on geographical background. 2.12.5 The needs of the Company'sbusiness currently and going forward.
2.13 The Committees of the Board will be constituted ensuring that diversity ismaintained as per requirements of the Act and the Listing Agreement with stock exchanges.
3. Selection identification and appointment of Directors
3.1 The Nomination and Remuneration Committee is responsible for evaluating thequalifications of each director candidate and of those directors who are to be nominatedfor election by shareholders at each Annual General Meeting of shareholders and forrecommending duly qualified director nominees to the full Board for election. Thequalification criteria set forth herein are designed to describe the qualities andcharacteristics desired for the Board as a whole and for Board members individually. 3.2Director Selection Procedures
3.2.1 Corporate Human Resources (CHR) department shall facilitate the selectionprocedure by identifying prospective candidates for election to the Board based ondirectors qualification criteria. Candidates so identified for directorship shall beevaluated by the Nomination and Remuneration Committee which will then make a suitablerecommendation to the Board.
3.2.2 To aid in the shortlisting and screening process the Nomination and RemunerationCommittee may take the support of professional agencies conduct interviews or have apersonality check undertaken or take any other steps to ensure that the right candidatesare identified.
3.2.3 A determination of a director's qualifications to serve on the Board shall bemade by the Board upon the recommendation of the Committee prior to nominating saiddirector for election at the Company's next Annual General Meeting.
3.2.4 Appointment of all Directors other than directors appointed pursuant tonomination by Financial Institutions under section 161(3) of the Act will be approved byshareholders at a general meeting or through postal ballot. 3.2.5 The Company shall issuea formal letter of appointment to independent directors in the manner as provided inParagraph IV(4) of Schedule VI the Act.
3.3 Director qualification criteria
3.3.1 The director candidates should have completed the age of 21 years. The maximumage of executive directors shall not be more than 70 years at the time of appointment /re-appointment. However a candidate who has attained the age of 70 years may be appointedif approved by shareholders by passing of special resolution.
3.3.2 The Board has not established specific education years of business experience orspecific types of skills for Board members but in general expects qualified directorsto have ample experience and a proven record of professional success leadership and thehighest level of personal and professional ethics integrity and values.
3.3.3 The candidate to be appointed as Director shall have a Director IdentificationNumber allotted under section 154 of the Companies Act 2013 (Act).
3.3.4 A person shall not be eligible for appointment as director of the Company if:
184.108.40.206 He is disqualified for being appointed under section 164 of the Act.
220.127.116.11 The number of directorships post appointment as Director in the Company exceedsthe total number of directorships permitted under section 165 of the Act and clause49(II)(B)(2) of the listing agreement with Indian Stock Exchanges.
3.3.5 In addition any person to be appointed as a Managing Director or WholetimeDirector in the Company (hereinafter referred to as Executive Directors') shall haveto meet the following requirements for being eligible for appointment as set out in Part Iof Schedule V of the Act and the limits of directorships set out in listing agreement withstock exchanges. 3.3.6 Further while selecting Independent Directors: 18.104.22.168 the Companymay select the candidate from data bank(s) containing names address qualification ofpersons who are eligible and willing to act as Independent Directors maintained byanybody institute or association as may be notified by the Central
Government having expertise in creation and maintenance of such data bank.
22.214.171.124 The prospective candidates for appointment as Independent Directors shall haveto meet the criteria of Independence laid down in sub-section (6) of section 149 of theAct and clause 49(II)(B)(1) of the listing agreement. 126.96.36.199 The number of Independentdirectorships in listed companies post appointment as Director in the Company and theCommittee positions held by them would be within the limits prescribed in clause 49 of thelisting agreement.
3.3.7 In the process of short listing Independent Directors the Board shall ensurethat there is appropriate balance of skills experience and knowledge in the Board so asto enable the Board to discharge its functions and duties effectively.
3.4 Tenure in office
3.4.1 The appointment of all directors by the Board except for directors appointedunder section 161(3) of the Act shall be upto the date of the next Annual General Meetingand shall be subject to approval of shareholders at the Annual General Meeting unlessapproved by the shareholders earlier.
3.4.2 The Executive Directors shall be appointed for a term of upto 5 years.
3.4.3 Independent Directors shall hold office for a term upto
5 consecutive years on the Board of the Company and shall be eligible for reappointmentfor a second term.
3.4.4 Independent Directors shall not hold office for more than 2 consecutive terms.Each such term may be of 5 years or less.
3.4.5 After expiry of the 2 terms the Independent Director would be eligible forappointment only after expiry of 3 years from ceasing to being an Independent Director.
4. Criteria for appointment of Key Managerial
4.1 The Nomination and Remuneration Committee is responsible for the appointment of KeyManagerial Personnel in accordance with the laid down criteria. 4.2 The criteria laid downfor the appointment of Executive Directors including the Key Managerial Personnel is setout below.
4.3 The Key Managerial Personnel are sourced from Internal and external sources. Theseresumes are shortlisted by the hiring manager and the shortlisted candidates are scheduledfor Interviews to be managed by Human Resources department.
4.4 An Interview Committee is formed which comprises of the following members: 4.4.1The Managing Director; 4.4.2 Head- HR; and 4.4.3 such persons as may be deemed appropriatehaving regard to domain knowledge and expertise.
4.5 The Interview Committee is responsible for leading the talent acquisition processand to ensure timely fulfilment of this vacancy. The HR Team will provide requisitesupport in the timely fulfilment of each step of the talent acquisition process.
5.1 All remuneration / fees / compensation payable to directors shall be fixed by the
Board of Directors and payment of such remuneration fees / compensation shall requireapproval of shareholders in general meeting except for sitting fee payable to NonExecutive Directors for attending Board / Committee.
5.2 The Board shall decide on the remuneration / fees / compensation payable todirectors based on the recommendations of the Nomination and Remuneration Committee. 5.3The total managerial remuneration payable to its directors including managing directorand whole-time director (and its manager) in respect of any financial year shall notexceed eleven per cent. of the net profits of the Company for that financial year computedin the manner laid down in section 198 of the Act. Provided that the Company in generalmeeting may with the approval of the Central Government authorise the payment ofremuneration exceeding eleven per cent. of the net profits of the Company subject to theprovisions of Schedule V of the Act: 5.4 The Nomination and Remuneration Committee shallensure the following while recommending the remuneration / fee / compensation payable toDirectors: 5.4.1 Executive Directors 188.8.131.52 The remuneration payable to any one managingdirector; or whole-time director or manager shall not exceed five per cent. of the netprofits of the company and if there is more than one such director remuneration shall notexceed ten per cent. of the net profits to all such directors and manager taken together.Else the remuneration will be subject to approval of Central Government as may berequired.
184.108.40.206 In case of inadequacy of profits mentioned in 5.3 and 5.4.1 above theCommittee while approving the remuneration for executive directors shall:
220.127.116.11.1 take into account financial position of the company trend in the industryappointee's qualification experience past performance past remuneration etc.
18.104.22.168.2 be in a position to bring about objectivity in determining the remunerationpackage while striking a balance between the interest of the company and the shareholders.
5.4.2 While considering payment of remuneration / increase in remuneration payable toexecutive directors key managerial personnel and other executives the Nomination andRemuneration Committee may among other factors consider the following: 22.214.171.124 the leveland composition of remuneration is reasonable and sufficient to attract retain andmotivate directors of the quality required to run the company successfully.
126.96.36.199 relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and 188.8.131.52.1 remuneration to directors key managerial personneland senior management involves a balance between fixed and incentive pay reflecting shortand long-term performance objectives appropriate to the working of the company and itsgoals.
184.108.40.206.2 the factors mentioned in The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 may be considered which are required to be disclosed inthe Directors Report.
5.4.3 Non executive Directors including Independent Directors:
220.127.116.11 The remuneration payable to Non Executive Directors shall not exceed 1% of thenet profits of the Company.
18.104.22.168 A Non-Executive director may be paid remuneration by way of fee for attendingmeetings of the Board or Committee thereof or for any other purpose whatsoever. The amountof such fee shall not exceed Rs. 100000/- for attending each meeting of the Board orCommittee thereof or such higher amount as may be prescribed by the Central Government.
22.214.171.124 An independent Director shall not be entitled to any stock option.
6.1 The Company shall provide suitable training to Independent Directors to familiarizethem with the Company their roles rights responsibilities in the Company nature of theindustry in which the Company operates business model of the Company etc.
6.2 Every new Director on appointment:
6.2.1 Will be provided with an Induction Manual 6.2.2 Will undertake an inductionprogramme. It will provide an opportunity to the inductee to interact with the seniormanagement team and help understand the strategy operations products marketsorganization structure finance human resources and risk management among others.
6.2.3 will be taken to visit the Company's key ports & terminals to familiarizethem with the Company's operations.
6.2.4 Will be guided by the Company Secretary on the role and responsibilities ofdirectors the constitution and role of the Board and its Committees the frequency ofmeetings and time commitment expected from them decision making process being followedand compliance monitoring and reporting processes.
6.3 On an ongoing basis training will be provided to directors to update ondevelopments in industry technology and statutory regulatory economic environment newaccounting policies corporate governance developments etc. Specific trainingrequirements of directors will also be met depending on the role and responsibilities theyhave to take up in the Company and the performance evaluation. Training will be impartedto directors through participation in conferences seminars and workshops. The Company mayalso organize for training programmes conducted by internal / external faculty.
6.4 Details of such trainings provided shall be disclosed in the Annual Report.
7. Performance evaluation and re-appointment
7.1 The Board will annually evaluate its performance through a self-evaluation process.The evaluation identifies enhancements to director skill sets and ensures that boardmembers are performing to expectations.
7.2 Evaluation review process
7.2.1 The Nomination & Remuneration Committee will annually oversee a review of theBoard's performance which shall include a self-evaluation by the Board and will discussthe results of this review with the full Board following the end of each fiscal year.
7.2.2 Evaluation of the Board and Committees thereof formal annual evaluationhas to be made by the Board of its own performance and that of its Committees.
7.2.3 Evaluation of Chairman - A separate meeting of Independent Directors will reviewthe performance of the Chairperson of the Company taking into account the views ofexecutive directors and non-executive directors. They will forward their recommendationsto the Nomination and Remuneration Committee.
7.2.4 Other Non-Independent Directors - The Independent Directors will also review theperformance of non-independent directors and the Board as a whole and submit theirrecommendations to the Nomination and Remuneration Committee.
7.2.5 Executive Directors - The Nomination and Remuneration Committee conducts anannual review of the performance of the Managing Director & CEO and other WholetimeDirectors against the Company's goals and objectives.
7.2.6 Independent Directors - The performance evaluation of independent directors shallbe done by the entire Board of Directors (excluding the director being evaluated). 7.2.7 Astatement indicating the manner of formal annual evaluation of the Board its Committeesand individual directors will be included in the Report of the Board of Directors eachyear.
7.3 Criteria for evaluation
7.3.1 Evaluation of Board as a whole
The Independent Directors and the Nomination and Remuneration Committee whileundertaking board evaluation will decide on the criteria of evaluation of the Board andits Committees which among others may include:
126.96.36.199 the extent to which the Board and its
Committees are successful in fulfilling their key roles and responsibilities.
188.8.131.52 the extent to which individual directors contribute to the achievement of theseobjectives.
184.108.40.206 the extent to which the Board and its Committees adhere to best practices instructure and procedure.
220.127.116.11 the Committee will consider the balance of skills experience independence andknowledge requirements at Essar Ports Ltd. including gender diversity and how the Boardworks together as a unit and other factors relevant to its effectiveness.
7.4 Non Executive Directors
7.5 The criteria for evaluation shall be determined by the Nomination and RemunerationCommittee and disclosed in the Company's Annual Report. However the actual evaluationprocess shall remain confidential and shall be a constructive mechanism to improve theeffectiveness of the Board / Committees. An indicative list of factors that may beevaluated as part of this exercise is : 7.5.1 Participation in meetings and contributionby director.
7.5.2 Commitment including guidance provided to senior management executives outside ofBoard / Committee meetings.
7.5.3 Effective deployment of expertise and knowledge.
7.5.4 Effective management of relationship with stakeholders.
7.5.5 Integrity and maintenance of confidentiality.
7.5.6 Independence of behavior and judgement.
7.5.7 Impact and influence.
7.6 Executive Directors
7.6.1 The compensation will be finalized by the
Nomination and Remuneration Committee based on evaluation of the individual directorand the performance of the Company.
7.7 Structure of evaluation process
7.7.1 The structure of the evaluation process will be finalized by the Nomination and
Remuneration Committee either on its own in consultation with Corporate Human ResourcesDepartment or by engaging the services of external consultants.
7.7.2 Each board evaluation may have slight differences in focus priority and outcomesbut will broadly follow a similar approach.
7.7.3 Board evaluation to be finalized by the Nomination and Remuneration Committee maycover the following areas :
18.104.22.168 Briefing of the Board.
22.214.171.124 Gathering of evidence using a questionnaire.
126.96.36.199 Drafting of Board evaluation report.
188.8.131.52 Discussion of the Board evolution report by the entire Board.
184.108.40.206 Meetings between the Chairman and individual directors to discuss individualdirector evaluation. 220.127.116.11 Determination of Board development strategy.
7.8 Reappointment of Directors
7.9 The reappointment of directors will not be automatic.
7.10 Before the expiry of term in office on account of retirement by rotation of NonExecutive Non Independent Directors or the completion of term in office of the ExecutiveDirectors or
Independent Directors the Nomination and Remuneration Committee will makerecommendations to the Board.
7.11 In determining whether the directors should be submitted to reappointment theNomination and Remuneration Committee should: 7.11.1 Consider extending or continue theterm of appointment of the Directors on the basis of performance evaluation; 7.11.2 Assessthe current Board's skills and qualities; 7.11.3 The needs of the Company's businesscurrently and going forward; 7.11.4 Measure the retiring directors' skills against theselection criteria set by the Nomination and Remuneration Committee.
7.12 The directors eligible to retire by rotation shall be determined based on theprovisions of section 152 of the Act.
7.13 Shareholders approval for reappointment of Executive Directors shall not be takenmore than 1 year before expiry of their present term.
Summary of results of performance evaluation shall be disclosed in the Annual Report /Corporate Governance report and re-appointment of Independent directors shall be basis theoutcome of such evaluation.
8. Mechanism for evaluation of Board Chairman and Directors
8.1 The Nomination & Remuneration Committee has formulated the following mechanismfor evaluation of the entire Board & Committees.
8.1.1 The evaluation of the Board as a whole shall be done by all the directors.
8.1.2 The evaluation of the Independent Directors shall be done by the entire Boardexcluding the director being evaluated.
8.1.3 The evaluation of the Non-Independent Directors shall be done by the IndependentDirectors.
8.1.4 The evaluation of performance of the Chairman shall be done by the IndependentDirectors.
8.2 The performance evaluation shall be undertaken based on the feedback provided byBoard members and the guidelines formulated from time to time. 8.3 The report shall besubmitted as under: 8.3.1 Evaluation report of the performance of the Board shall besubmitted to the Chairman of the Nomination & Remuneration Committee who shallpresent it to the Board.
8.3.2 Evaluation report of Individual Directors (excluding the Chairman of theNomination
& Remuneration Committee) shall be submitted to the Chairman of the Nomination& Remuneration Committee who will have it submitted to the Committee. The evaluationreport of the Chairman of the Committee will be forwarded to the Chairman of the Board whowill have it submitted to the Board or Committee.
8.3.3 Evaluation report of the Chairman shall be submitted to the Chairman of theNomination & Remuneration Committee who will discuss the same with the Chairman andthereafter submit it to the Board
| || |
For and on behalf of the Board of
| ||Essar Ports Ltd. || |
|Mumbai ||Rajiv Agarwal ||K.K. Sinha |
|August 29 2018 ||Director ||Director |
| ||DIN : 00903635 ||DIN: 00009113 |