Essar Shipping Ports & Logistics Limited
Annual Report 2007 - 2008
Dear Members,
As you are aware, the Registered Office of the Company has been shifted. The new address is
as under:
Essar Shipping Ports & Logistics Limited,
Administrative Building,
Essar Refinery Complex,
Okha Highway (SH – 25),
Taluka Khambalia,
District Jamnagar,
Pin Code: 361 305,
Gujarat State.
Members are requested to take note of the said change. All correspondence to the Company
should henceforth be sent to the above address only.
Manoj Contractor
Company Secretary
BOARD OF DIRECTORS
Shashi Ruia
Chairman
Ravi Ruia
Vice Chairman
Anshuman Ruia
Director
Sanjay Mehta
Managing Director
A. R. Ramakrishnan
Wholetime Director
V. Ashok
Wholetime Director
R. N. Bansal
Independent Director
N. Srinivasan
Independent Director
K. V. Krishnamurthy
Independent Director
Dilip J. Thakkar
Independent Director
AUDIT COMMITTEE
R. N. Bansal
N. Srinivasan
Anshuman Ruia
COMPENSATION COMMITTEE
Ravi Ruia
Anshuman Ruia
Sanjay Mehta
SHARE TRANSFER & SHAREHOLDERS’
GRIEVANCE COMMITTEE
Ravi Ruia
Sanjay Mehta
A. R. Ramakrishnan
V. Ashok
REGISTERED OFFICE
Administrative Building, Essar Refinery Complex
Okha Highway (SH - 25), Taluka Khambhalia
Distt. - Jamnagar
Gujarat 361305
CORPORATE OFFICE
Essar House
11, Keshavrao Khadye Marg
Mahalaxmi, Mumbai 400 034
REGISTRARS & SHARE TRANSFER AGENTS
Data Software Research Company Private Limited
“Sree Sovereign Complex”
22, 4th Cross Street, Trustpuram, Kodambakkam
Chennai 600 024
e-mail: dsrcmd@vsnl.com
COMPANY SECRETARY
Manoj Contractor
AUDITORS
Deloitte Haskins & Sells
32nd Annual Report 2007-2008
1
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
NOTICE TO MEMBERS
Notice is hereby given that the Thirty-second Annual General
Meeting of Essar Shipping Ports & Logistics Limited will be
held at the Registered Office of the Company at
Administrative Building, Essar Refinery Complex, Okha
Highway (SH - 25), Taluka Khambhalia, Distt. Jamnagar,
Gujarat 361305 at 3.30 p.m. on Saturday, September 27,
2008, to transact the following business:
candidature for the office of Director, be and is hereby
appointed as Director of the Company.”
8.
“RESOLVED THAT pursuant to the provisions of Section
198, 269, 309, 311 read with Schedule XIII and other
applicable provisions, if any, of the Companies Act,
1956 and subject to the approval of the Central
Government, Mr. Sanjay Mehta be and is hereby reappointed as Managing Director of the Company for a
period of three years with effect from September 18,
2008 on the terms and conditions as set out in the
Explanatory Statement annexed hereto.”
ORDINARY BUSINESS:
1.
To receive, consider and adopt the Profit and Loss
Account for the year ended March 31, 2008 and the
Audited Balance Sheet as on that date and the Reports
of the Board of Directors and Auditors thereon.
2.
To appoint a Director in place of Mr. N. Srinivasan, who
retires by rotation and being eligible, offers himself for
re-appointment.
3.
To appoint a Director in place of Mr. Sanjay Mehta,
who retires by rotation and being eligible, offers himself
for re-appointment.
4.
To appoint a Director in place of Mr. Ravi Ruia, who
retires by rotation and being eligible, offers himself for
re-appointment.
5.
To re-appoint Messrs. Deloitte Haskins & Sells,
Chartered Accountants as Auditors of the Company to
hold office from the conclusion of this Annual General
Meeting until the conclusion of the next Annual General
Meeting and to fix their remuneration.
“RESOLVED FURTHER THAT in the event of loss or
inadequacy of profits in any financial year, the Managing
Director shall be paid remuneration by way of salary,
perquisites and allowances as specified above or as
may be decided by the Board of Directors.”
“RESOLVED FURTHER THAT the terms and conditions
set out for appointment and payment of remuneration
herein, may be altered and varied from time to time by
the Board of Directors of the Company as it may, in its
discretion deem fit so as not to exceed the limits
specified under Schedule XIII to the Companies Act,
1956 (including any statutory modification or reenactment thereof, for the time being in force) or any
amendments made thereto.”
SPECIAL BUSINESS:
6.
7.
To consider and if thought fit, to pass with or without
modification, the following resolution as an Ordinary
resolution:
“RESOLVED THAT Mr. Dilip J. Thakkar, who was
appointed as an Additional Director by the Board of
Directors pursuant to Section 260 of the Companies
Act, 1956 and who holds office upto the date of this
Annual General Meeting and in respect of whom the
Company has received a notice in writing under Section
257 of the Companies Act, 1956, proposing his
2
“RESOLVED FURTHER THAT the Agreement may be
terminated by either party (Company or the Managing
Director) by giving the other three months prior notice
of termination in writing.”
To consider and if thought fit, to pass with or without
modification, the following resolution as an Ordinary
resolution:
“RESOLVED THAT Mr. K. V. Krishnamurthy, who was
appointed as an Additional Director by the Board of
Directors pursuant to Section 260 of the Companies
Act, 1956 and who holds office upto the date of this
Annual General Meeting and in respect of whom the
Company has received a notice in writing under Section
257 of the Companies Act, 1956, proposing his
candidature for the office of Director, be and is hereby
appointed as Director of the Company.”
To consider and if thought fit, to pass with or without
modification, the following resolution as an Ordinary
resolution:
“RESOLVED FURTHER THAT the Board of Directors
be and is hereby authorised to take all necessary steps
including filing of necessary applications, forms, letters,
etc., with the Government and other authorities to give
effect to the above resolution.”
9.
To consider and if thought fit, to pass with or without
modification, the following resolution as an Ordinary
resolution:
“RESOLVED THAT in partial modification of the
resolution passed by the members at the Thirty-first
Annual General Meeting of the Company held on
September 25, 2007, approving the appointment and
terms of remuneration of Mr. V. Ashok, Wholetime
Director and in accordance with the provisions of
Sections 198, 269, 309, 311 read with Schedule XIII
and other applicable provisions, if any, of the Companies
Act, 1956, the Company hereby approves the variation
in the terms of remuneration of Mr. V. Ashok, Wholetime
Director for the remaining period of his tenure in office,
32nd Annual Report 2007-2008
the Company the details of such folios together with the
Share Certificates for consolidating their holdings in one
folio. Members are further advised to hold the shares in
dematerialised form, as the trading of the shares on
Bombay Stock Exchange and National Stock Exchange
where the shares of your Company are listed is in
compulsory demat mode.
with effect from April 1, 2008, as set out in the
Explanatory Statement annexed hereto.”
“RESOLVED FURTHER THAT all other terms and
conditions of appointment of Mr. V. Ashok, Wholetime
Director as approved earlier by the members, shall
remain unchanged.”
“RESOLVED FURTHER THAT the Board of Directors
be and is hereby authorised to take all necessary steps
as may be necessary to give effect to the above
resolution.”
By Order of the Board
6.
Members are informed that in case of joint holders
attending the meeting, only such joint holder who is
higher in the order of names will be entitled to vote.
7.
In terms of Section 109A of the Companies Act, 1956,
members are entitled to make nomination in respect of
shares held by them in physical form. Members desirous
of making nominations are requested to send their
requests in Form 2B, in duplicate, to the Secretarial
Department at the Registered Office of the Company or
to the Registrars and Share Transfer Agents - Data
Software Research Company Private Limited.
8.
Members desiring any information regarding the
accounts are requested to write to the Company at
Essar House, 11, Keshavrao Khadye Marg, Mahalaxmi,
Mumbai 400 034 atleast 7 days before the date of the
Meeting to enable the Company keep the information
ready.
9.
The Chairman of the Audit Committee of Directors shall
be present at the Annual General Meeting to reply to
the queries of members on the Annual Accounts of the
Company.
MANOJ CONTRACTOR
Company Secretary
Jamnagar
July 29, 2008
Notes:
1.
A member entitled to attend and vote at the meeting is
entitled to appoint one or more proxies to attend and
vote instead of himself on a poll. The proxy need not be
a member of the Company. Proxy forms in order to be
effective should be deposited at the Registered Office
of the Company not later than 48 hours before the time
fixed for the meeting.
2.
Members / Proxies should bring the attendance slip
duly filled in for attending the meeting.
3.
The Register of Members and Share Transfer Books of
the Company will remain closed from Monday,
September 22, 2008 to Saturday, September 27, 2008,
both days inclusive.
4.
5.
The members are requested to immediately notify, in
their own interest, the change in their mailing address
to the Company’s Registrars and Share Transfer Agents,
Data Software Research Company Private Limited,
“Sree Sovereign Complex”, 22, 4 th Cross Street,
Trustpuram, Kodambakkam, Chennai 600 024,
Tel : 91-44-2483 3738, Fax: 91-44-2483 4636.
Members who are holding shares in identical order of
names in more than one folio are requested to send to
32nd Annual Report 2007-2008
10. Appointment / Re-appointment of Directors:
At the ensuing Annual General Meeting, Mr. N.
Srinivasan, Mr. Sanjay Mehta and Mr. Ravi Ruia retire
by rotation and being eligible offer themselves for
reappointment. Mr. K. V. Krishnamurthy and Mr. Dilip J.
Thakkar are proposed to be appointed as Directors.
The information pertaining to the aforesaid Directors in
terms of Clause 49 of the Listing Agreement with the
Stock Exchanges is annexed hereto.
11. The Explanatory Statement pursuant to Section 173(2)
of the Companies Act, 1956 in respect of the special
business at item Nos. 6 to 9 hereinabove, is annexed
hereto.
3
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
ANNEXURE TO NOTICE:
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.
Item No. 6
Mr. K. V. Krishnamurthy was appointed as an Additional
Director of the Company with effect from June 20, 2008. In
terms of Section 260 of the Companies Act, 1956 and in
accordance with Article 73 of the Articles of Association of
the Company, Mr. Krishnamurthy holds office upto the date
of ensuing Annual General Meeting.
Accordingly, the resolution at item No. 6 of the notice is
being proposed for his appointment as Director of the
Company.
The Company has received a notice from a member under
Section 257 of the Companies Act, 1956, with requisite
deposit, proposing the name of Mr. Krishnamurthy as a
candidate for the office of Director of the Company.
Mr. K. V. Krishnamurthy, a Chartered Accountant by
profession is a fellow member of the Indian Institute of
Bankers and was a member of its Governing Board. He has
over thirty-three years of experience in Public Sector
Banking. His areas of specialisation include both domestic
and international banking, treasury management, risk
management, foreign exchange management and human
resource management.
He is credited with the remarkable turnaround of both Bank
of India and Syndicate Bank, leading nationalised banks.
He has been the Chairman/Director of nationalised banks
like Bank of India, Bank of Baroda, Syndicate Bank and
other financial institutions like Indo Hong Kong International
Finance Company Limited, Export Credit Guarantee
Corporation of India and Agricultural Finance Corporation of
India Limited.
Mr. Krishnamurthy is also a Director on the Board of various
Indian public limited companies. Your Board is of the opinion
that the vast experience of Mr. Krishnamurthy would be
beneficial for the future growth of the Company. Your
Directors accordingly recommend the resolution at Item No.
6 of the Notice for your approval.
None of the Directors, except Mr. Krishnamurthy, is
concerned or interested in this resolution.
Item No. 7
Mr. Dilip J. Thakkar was appointed as an Additional Director
of the Company with effect from June 20, 2008. In terms of
Section 260 of the Companies Act, 1956 and in accordance
with Article 73 of the Articles of Association of the Company,
Mr. Thakkar holds office upto the date of ensuing Annual
General Meeting.
Accordingly, the resolution at item No. 7 of the notice is
being proposed for his appointment as Director of the
Company.
4
The Company has received a notice from a member under
Section 257 of the Companies Act, 1956, with requisite
deposit, proposing the name of Mr. Thakkar as a candidate
for the office of Director of the Company.
Mr. Thakkar, a practicing Chartered Accountant by profession
since last forty-six years is a Partner of M/s. Jayantilal
Thakkar & Co., and Jayantilal Thakkar Associates, Chartered
Accountants, Mumbai. Mr. Thakkar has vast experience in
the fields of Accounts, Finance, Taxation, FEMA, etc.
He is also a Director on the Board of various Indian public
limited companies. Your board is of the opnion that the vast
experience of Mr. Thakkar would be beneficial for the future
growth of the Company. Your Directors accordingly
recommend the resolution at Item No. 7 of the Notice for
your approval.
None of the Directors, except Mr. Thakkar, is concerned or
interested in this resolution.
Item No. 8
Mr. Sanjay Mehta was appointed as the Managing Director
of the Company with effect from September 18, 2005 for a
period of three years. The term of appointment of Mr. Mehta
as the Managing Director expires on September 17, 2008.
Considering his vast experience and management skills,
the Board at its meeting held on July 29, 2008, has reappointed him as the Managing Director with effect from
September 18, 2008 for a further period of three years.
Mr. Mehta has an Honors Degree from London School of
Economics and a Masters Degree from London Business
School. Prior to joining Essar in June 2000, Mr. Mehta was
head of the South East Asia Investment Banking Desk at
American Marine Advisors Inc., New York; Simpson, Spence
& Young; Hambros Bank and Goldman Sachs. Mr. Mehta
has experience in raising capital in the US financial markets.
Mr. Mehta also has vast experience of ports & terminals,
logistics and the shipping industry.
After considering various factors, the Remuneration
Committee recommended the remuneration for Mr. Mehta.
The Board of Directors, accepting the recommendation of
the Remuneration Committee, have approved the following
remuneration to be paid to Mr. Mehta with effect from
September 18, 2008:
1.
Remuneration :
Basic salary in the range of Rs. 1,00,000/- to
Rs. 3,50,000/- per month, as may be determined by the
Board of Directors or such other authority as may be
delegated by the Board of Directors.
2.
In addition to the Basic Salary, Mr. Mehta shall be
entitled to perquisites and allowances like
accommodation (furnished or otherwise) or house rent
32nd Annual Report 2007-2008
allowance in lieu thereof; house maintenance allowance
together with reimbursement of expenses/allowances
for utilisation of gas, electricity, water, furnishing and
repairs; medical reimbursement; education allowance;
leave travel concession for self and his family including
dependents; club fees; premium for medical insurance;
commission and all other payments in the nature of
perquisites and allowances as agreed by the Board of
Directors or such other authority as may be delegated
by the Board of Directors from time to time upto the
limit of Rs. 10,00,000/- per month. As per the rules of
the Company, Mr. Mehta is eligible for Provident Fund,
Gratuity and Superannuation, which payments shall not
be included for the purpose of calculation of the
managerial remuneration.
The appointment of Mr. Mehta as Managing Director is
subject to the approval of the Central Government.
Mr. Sanjay Mehta has been associated with the
Company for past eight years and under his leadership,
the Company has made significant progress to transform
itself into an integrated logistics solutions provider.
The Board is of the opinion that his appointment as the
Managing Director of the Company would be in the
best interest of the Company and accordingly the
resolution at Item No. 8 of the Notice is recommended
for Members approval.
None of the Directors, except Mr. Mehta is concerned
or interested in this resolution.
This explanation together with the accompanying Notice
is and should be treated as an abstract under Section
302 of the Companies Act, 1956.
Item No. 9
The members had, at the Annual General Meeting of the
Company held on September 25, 2007, approved the
appointment of Mr. V. Ashok as Wholetime Director of the
Company for a period of five years commencing from
December 7, 2006 on the terms and conditions as contained
in the resolution appointing Mr. Ashok as Wholetime Director.
Mr. Ashok is presently responsible for the Finance,
Administration and other functions of the Company. He has
also been entrusted with the responsibility of overseeing the
finance and business functions of the subsidiaries of the
Company.
The Remuneration Committee reviewed the remuneration
package of the Wholetime Director with a view to align the
package with the best corporate practices prevailing in the
industry. After considering various factors, the Remuneration
Committee recommended an increase in the remuneration
payable to Mr. Ashok.
32nd Annual Report 2007-2008
The Board of Directors, accepting the recommendation of
the Remuneration Committee has revised the remuneration
payable to Mr. Ashok with effect from April 1, 2008 as per
particulars given hereinbelow:
1.
Remuneration :
Basic salary in the range of Rs. 2,00,000/- to
Rs. 5,00,000/- per month, as may be determined by the
Board of Directors or such other authority as may be
delegated by the Board of Directors.
2.
In addition to the Basic Salary, Mr. Ashok shall be
entitled to perquisites and allowances like
accommodation (furnished or otherwise) or house rent
allowance in lieu thereof; house maintenance allowance
together with reimbursement of expenses/allowances
for utilisation of gas, electricity, water, furnishing and
repairs; medical reimbursement; education allowance;
leave travel concession for self and his family including
dependents; club fees; premium for medical insurance;
commission and all other payments in the nature of
perquisites and allowances as agreed by the Board of
Directors or such other authority as may be delegated
by the Board of Directors from time to time up to the
limit of Rs. 10,00,000/- per month. As per the rules of
the Company, Mr. Ashok is eligible for Provident Fund,
Gratuity and Superannuation, which payments shall not
be included for the purpose of calculation of the
managerial remuneration.
All other terms and conditions of his appointment in
terms of the resolution passed by the members on
September 25, 2007 remain unchanged.
The Board is of the opinion that the increase in the
remuneration would be in the interest of the Company
and accordingly the resolution at Item No. 9 of the
Notice is recommended for members approval.
None of the Directors, except Mr. Ashok is concerned
or interested in this resolution.
This explanation together with the accompanying Notice
is and should be treated as an abstract under Section
302 of the Companies Act, 1956.
By Order of the Board
MANOJ CONTRACTOR
Company Secretary
Jamnagar
July 29, 2008
5
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
Annexure to Notice:
Details of Directors seeking re-appointment / appointment at the Thirty-second Annual General Meeting in pursuance
of Clause 49 of the Listing Agreement.
Mr. N. Srinivasan
Mr. N. Srinivasan is a Commerce Graduate and a member
of the Institute of Chartered Accountants of India since 1955
and was a senior partner in Fraser & Ross / Deloitte Haskins
& Sells until 1997. He has been closely associated with the
development of the profession of Accounting and Auditing
in India. He was Chairman of the Southern India Regional
Council and also a Central Council Member of the Institute
of Chartered Accountants of India.
Mr. Srinivasan has been associated with various Business
Organisations and has served as Deputy President of the
Associated Chamber of Commerce and Industry of India
(ASSOCHAM), New Delhi, Chairman of The Madras
Chamber of Commerce and Industry and President of The
Indo-American Chamber of Commerce among others. He
has also served as a Director on the Board of The Institute
of Internal Auditors Inc., Florida – USA, Director of Indian
Bank, Chennai, Senate Member of the Annamalai University
and Honorary Professor, Institute of Financial Management
and Research, Chennai.
Mr. Srinivasan is also a Director on the Board of various
Indian public limited companies viz. United Breweries
(Holdings) Ltd., Best & Crompton Engineering Ltd., McDowell
Holdings Ltd., Tractors & Farm Equipments Ltd., The Andhra
Pradesh Paper Mills Ltd., India Cements Ltd., India Cements
Capital Ltd., Ador Multiproducts Ltd., Amco Batteries Ltd.,
The United Nilgiri Tea Estates Company Ltd., GATI Ltd.,
Ador Fontech Ltd., Tafe Motors and Tractors Ltd., and U. B.
Engineering Ltd.
Mr. Srinivasan is also a member of the Audit Committees of
India Cement Ltd., Amco Batteries Ltd., The Andhra Pradesh
Paper Mills Ltd. and India Cement Capital Ltd. He is the
Chairman of the Audit Committee of GATI Ltd., Tractors &
Farm Equipments Ltd. and U.B. Engineering Ltd. He is also
the Chairman of the Investors Grievance Committee of United
Breweries (Holdings) Ltd.
Mr. Srinivasan does not hold any shares in the Company.
Mr. Sanjay Mehta
Mr. Sanjay Mehta, has a Honors Degree from London School
of Economics and a Master’s Degree from London Business
School. Mr. Mehta has been with the shipping industry for
the last fifteen years. His area of specialisation is shipping
and project finance. Prior to joining Essar, Mr. Mehta was
head of the South East Asia and Asia Pacific Maritime
Financing Desk of American Marine Advisors Inc., New York.
Prior to this he was associated with Simpson, Spence &
Young, Hambros Bank and Goldman Sachs.
Mr. Mehta is also a Director on the Board of following Indian
public limited companies viz. Vadinar Oil Terminal Ltd., Essar
6
Logistics Ltd., Essar Bulk Terminal Ltd. and Essar Bulk
Terminal (Salaya) Ltd.
Mr. Mehta does not hold any shares in the Company.
Mr. Ravi Ruia
Mr. Ravi Ruia, is an Engineer by training. His rare business
and entrepreneurial abilities with an eye for details has
enabled the Essar Group to be ranked among the top
industrial houses in the Country. Essar has emerged as the
fourth largest industrial house in India in terms of assets.
Mr. Ruia, commenced his business career in the family
business way back in 1969. He ably assisted his elder brother
Mr. Shashi Ruia in steering the Essar Group to its current
pre-eminent position. The Essar Group has diversified
business interests in specific areas such as Shipping Ports
& Logistics, Steel, Power, Telecom, Oil & Gas, Construction
and Financial Services. The Essar Group has emerged as a
leading business conglomerate in India.
Mr. Ruia is a widely travelled industrialist. He is connected
with several industry and trade associations both at the
national and bilateral level. Mr. Ruia has provided the
foresight and vision to mastermind Essar Group’s strategy
so as to consolidate Essar’s activities through backward
and forward integration. In this process the created synergy
has been utilised to propel Essar’s rapid growth.
Mr. Ruia is also a Director on the Board of various Indian
public limited companies viz. Vodafone Essar Ltd., Essar Oil
Ltd., Essar Steel Ltd., Essar Investments Ltd., Essar Power
Ltd., India Securities Ltd., and Essar Steel (Hazira) Ltd.
Mr. Ruia does not hold any shares in the Company.
Mr. K. V. Krishnamurthy
Mr. K. V. Krishnamurthy, a Chartered Accountant by
profession is a fellow member of the Indian Institute of
Bankers and was a member of its Governing Board. He has
over thirty-three years of experience in Public Sector
Banking. His areas of specialisation include both domestic
and international banking, treasury management, risk
management, foreign exchange management and human
resource management.
He is credited with the remarkable turnaround of Bank of
India and Syndicate Bank, leading nationalised banks. He
has been the Chairman/Director of nationalised banks like
Bank of India, Bank of Baroda, Syndicate Bank and other
financial institutions like Indo Hong Kong International
Finance Company Limited, Export Credit Guarantee
Corporation of India and Agricultural Finance Corporation of
India Limited.
32nd Annual Report 2007-2008
Mr. Krishnamurthy is also a Director on the Board of various
Indian public limited companies, viz., Asset Reconstruction
Co. (India) Ltd., Sundaram BNP Paribas Fund Trustee Co.
Ltd., Rap Media Ltd., Centrum Capital Ltd., Centrum Direct
Ltd., Essel Propack Ltd., Borosil Glass Works Ltd., Essar
Steel Ltd., Thirumalai Chemicals Ltd., V.V.F. Industries Ltd.
and KPIT Cummins Ltd.
Mr. Krishnamurthy is the Chairman of the Audit Committee
of Borosil Glass Works Ltd., VVF Industries Ltd. and Centrum
Capital Limited. He is also a member of the Audit Committee
of Asset Reconstruction Company (India) Limited, Sundaram
BNP Paribas Trustees Co. Ltd., Essel Propack Limited, Essar
Steel Ltd., Thirumalai Chemicals Ltd. and KPIT Cummins
Ltd.
Mr. Krishnamurthy does not hold any shares in the Company.
Mr. Dilip J. Thakkar
Mr. Thakkar, a practicing Chartered Accountant by profession
since last forty-six years and is a Partner of
M/s. Jayantilal Thakkar & Co., and Jayantilal Thakkar
32nd Annual Report 2007-2008
Associates, Chartered Accountants, Mumbai. Mr. Thakkar
has vast experience in the fields of Accounts, Finance,
Taxation, FEMA, etc.
He is also a Director on the Board of various Indian public
limited companies viz., Omega Management Services Ltd.,
Poddar Developers Ltd., Panasonic Battery India Co. Ltd.,
Essar Oil Ltd., Thirumalai Chemicals Ltd., The Ruby Mills
Ltd., PAE Ltd., Himatsingka Seide Ltd., Indo Count Industries
Ltd., Walchandnagar Industries Ltd., Garware Offshore
Services Ltd. and Garware Polyester Ltd.
Mr. Thakkar is the Chairman of the Audit Committee of
Essar Oil Ltd., Thirumalai Chemicals Ltd., PAE Ltd. and
Himatsingka Seide Ltd. He is also a member of the Audit
Committee of Panasonic Battery India Co. Ltd., and
Walchangnagar Industries Ltd. He is the Chairman of the
Investors Grievances Committee of Panasonic Battery India
Co. Ltd. and a member of the Investors Relations Committee
of Essar Oil Ltd. and Share Transfer Committee of Thirumalai
Chemicals Ltd.
Mr. Thakkar does not hold any shares in the Company.
7
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
DIRECTORS’ REPORT
To the Members of Essar Shipping Ports & Logistics Limited
Your Directors take pleasure in presenting the Thirty-second Annual Report of your Company together with Audited Accounts
for the year ended March 31, 2008. Pursuant to the provisions of section 219 of the Companies Act, 1956 and as permitted
by the Securities and Exchange Board of India (SEBI), abridged accounts are enclosed. Any member interested in obtaining
a copy of unabridged accounts may write to the Company Secretary at the Registered Office.
FINANCIAL ANALYSIS:
A summary of the standalone and consolidated financial results of your Company for the year ended March 31, 2008 are
furnished below:
(Rs. in crore)
Standalone
Consolidated
For the
year ended
31-03-2008
For the
year ended
31-03-2007
For the
year ended
31-03-2008
For the
year ended
31-03-2007
1,063.93
1,045.13
2,255.67
1,682.70
Total Expenditure
598.73
719.00
1,460.36
1,301.41
EBITDA
465.20
326.13
795.31
381.28
Less: Interest & Finance charges
89.19
94.48
266.55
104.25
Less: Provision for Depreciation
106.64
90.51
221.48
112.03
Profit before tax
269.37
141.14
307.28
165.01
Less: Provision for Tax
(27.70)
(7.16)
(43.68)
(7.26)
Profit before Share of Minority Interest
241.67
133.98
263.60
157.75
—
—
13.81
—
Profit after tax
241.67
133.98
277.41
157.75
Add: Balance in Profit and Loss Account as per
last Balance Sheet
589.93
490.45
1,010.83
887.58
Less: Transfer to Tonnage Tax Reserve
(30.00)
(34.50)
(30.00)
(34.50)
Balance carried forward to Balance Sheet
801.60
589.93
1,258.24
1,010.83
Particulars
Total Income
Add : Share of Minority Interest
DIVIDEND:
During the year, your Company has consolidated the ports
and terminals businesses into its fold and also proposes to
bring in the oilfields & drilling services business through a
merger. These businesses are highly capital intensive and
nurturing these new businesses to their optimum value would
require significant capital commitments. These investments
will add value in the coming years. In order to plough back
earnings into the growth of these businesses, no dividend
for the current year has been recommended.
MANAGEMENT DISCUSSION & ANALYSIS:
RE-ORGANISATION OF THE SHIPPING, PORTS AND
LOGISTICS BUSINESS:
Your Company has re-organised its business with certain
other businesses of the Essar Group to become a one-of-a-kind
8
integrated logistics company. As part of this re-organisation
exercise, your Company has brought the ports and terminal
assets under its fold. In order to become a fully integrated
logistics solutions provider, it is proposed to also bring the
oilfields & drilling services business carried on by Essar
Oilfields Services Limited in its fold. With investments in dry
bulk ports and oil terminals, crude and dry bulk carriers,
port to plant logistics and interests in oil field services, this
re-organisation will enable your Company to provide end-toend logistics solutions to its customers. The business model
adopted by your Company is unique in nature with no peer
group having advantage of this model. The business model
is driven on the intrinsic demand for transportation services
and logistics & cargo handling infrastructure required by the
growing steel, power generation and refining industry in India
and worldwide. In order to reflect the new identity, the name
of your Company has also been changed to Essar Shipping
Ports & Logistics Limited.
32nd Annual Report 2007-2008
Holding Structure:
The holding structure upon completion of the re-organisation will be as under:
Essar Global Ltd.
(Cayman Islands)
Essar Shipping &
Logistics Ltd.
(Cyprus)
76.46%*
Essar Shipping Ports &
Logistics Ltd.
(India)
100%
100%
Essar Port &
Terminals Ltd.
(Mauritius)
74%***
Essar Bulk
Terminal Ltd.
(India)
100%
** Essar Oilfields
Services Ltd.
(Mauritius)
100%
Vadinar Oil
Terminal Ltd.
(India)
Essar Logistics Ltd.
(India)
100%
100%
Essar
International Ltd.
(Guernsey)
100%
Essar Bulk
Terminal (Salaya) Ltd.
(India)
Energy Transportation
International Ltd.
(Bermuda)
100%
Energy II Ltd.
(Bermuda)
* Alongwith other promoter group companies
** Upon merger of India Shipping
*** Balance 26% held by Essar Steel Limited
Essar Ports & Terminals Limited:
As a part of the re-organisation, your Company has
incorporated a new subsidiary Essar Ports & Terminals
Limited (EPTL) in Mauritius. EPTL will be the holding
company for the ports and terminals business of the group.
During the year under review, EPTL acquired 74%
shareholding of Essar Bulk Terminal Limited (EBTL), 90.50%
shareholding of Vadinar Oil Terminal Limited (VOTL) and
100% shareholding of Essar Bulk Terminal (Salaya) Limited.
Subsequently, EPTL has acquired the balance 9.50%
shareholding of VOTL, as a result of which VOTL has
become a wholly owned subsidiary of EPTL.
Depreciation for the year was Rs. 161.84 crore and
Rs. 88.28 crore respectively.
VOTL is currently expanding its capacity to support
EOL’s refinery capacity of upto 34 mmtpa from the
existing 10.5 mmtpa.
b.
Essar Bulk Terminal Limited (EBTL) – EBTL is setting
up an all weather deep draft dry bulk port at Hazira in
Gujarat located on the West Coast of India for import of
iron ore, pellets, limestone, steel products and other
dry bulk cargoes and export of finished steel and other
dry bulk products. The facilities would include a
dedicated all weather channel, 550 metres long jetty,
ship unloaders, storage facilities for finished products,
conveyors for transportation of raw materials to the stack
house, a rail network, dredgers, tugs and mooring boats.
The port facility is currently under construction and is
expected to start commercial operations during the
calendar year 2009.
c.
Essar Bulk Terminal (Salaya) Limited (EBTL Salaya)
– EBTL Salaya is setting up a dry bulk port facility at
Salaya in Gujarat. The port will handle import of coal
and export of pet coke and other bulk cargoes.
The principal activities covered by its subsidiaries are as
follows:
a.
Vadinar Oil Terminal Limited (VOTL) – VOTL is in the
business of providing crude oil and petroleum products
storage, handling and terminalling facilities. VOTL has
invested in port and terminal facilities to support a 10.5
million metric tonnes per annum (mmtpa) refinery
capacity at Vadinar in Gujarat on the West Coast of
India set up by Essar Oil Limited (EOL). The facilities of
VOTL include a product port, crude oil and petroleum
product tankages, single point mooring, cross country
and sub sea pipelines, rail and road gantry.
The terminal commissioned operations in July 2007 and
hence the financial results reflect nine months of
operations. During the year under review, VOTL
registered a Total Income of Rs. 150.36 crore. EBITDA
for the year under review, stood at Rs. 104.53 crore,
registering an operating margin of 69%. Interest and
32nd Annual Report 2007-2008
Essar Oilfields Services Limited (EOSL):
As part of the re-organisation process, EOSL will become a
wholly owned subsidiary of your Company through a merger
of India Shipping (holding 100% shares of EOSL) with the
Company. Your Company is in the process of filing
applications with the relevant Courts for the merger.
Through the process of merger as mentioned above, based
on a swap ratio of 32 shares at a valuation of Rs. 220/- per
9
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
EOSL is in the business of providing onshore and offshore
contract drilling services to leading oil and gas producers
worldwide. EOSL operates a fleet of a third generation semisubmersible offshore rig and twelve land rigs. The clientele
of EOSL includes, Gujarat State Petroleum Corporation
Limited, India (GSPCL), Petrobras, Brazil (through
intermediaries) and Essar Oil Limited, India.
The semisubmersible offshore rig has been contracted with
GSPCL on long term charter basis. Five land rigs are
contracted with Petrobras (through intermediaries) and four
land rigs are contracted with Essar Oil Limited. Out of the
thirteen rigs, seven rigs are already operational and
remaining land rigs are being refurbished and should be
employed thereafter.
Interest and Finance charges for the year increased to
Rs. 266.55 crore as compared to Rs. 104.25 crore for the
previous year mainly due to interest expenses for VOTL
which was Rs. 161.84 crore for the year. The increase in
Depreciation for the year to Rs. 221.48 crore is largely due
to commencement of operations by VOTL.
Net Profit after Tax for the year increased to Rs. 277.44
crore compared to Rs. 157.75 crore in the previous year
thereby registering an increase of 76%.
TOTAL INCOME
2500
2000
INR Crore
share of your Company for every 100 shares of India
Shipping, 18.96 crore fresh shares of your Company will be
issued to Essar Shipping & Logistics Limited (Cyprus) (being
the only shareholder of India Shipping), as a consideration
for the merger.
2,256
1,683
1500
1000
500
0
FY 07
Interest during the year under review was Rs. 15.30 crore
as compared to Rs. 9.71 crore in the previous year. The
increase in interest was on account of increase in total debt
from Rs. 3.16 crore during the previous year to Rs. 151.51
crore during the year under review, due to acquisition of
certain shipping assets.
Net Profit after Tax for the year under review increased by
27% and stood at Rs. 28.80 crore as compared to
Rs. 22.60 crore during the previous year.
CONSOLIDATED FINANCIAL RESULTS:
As a result of the integration of the above-mentioned
businesses, the Total Income of your Company increased
from Rs. 1,682.70 crore during the previous year to
Rs. 2,255.67 crore in the current year. The increase in
revenues was on account of increased earnings in the
logistics business being operated by ELL and
commencement of operations of the crude oil and petroleum
product terminal being operated by VOTL.
900
800
700
600
500
400
300
200
100
0
FY 08
EBITDA
759
381
108.6%
FY 07
300
FY 08
PROFIT AFTER TAX
277
250
INR Crore
The Total Income of ELL for the year under review was
Rs. 874.28 crore as compared to Rs. 644.40 crore during
the previous year. The increase in the revenues was on
account of increased cargo handled during the year under
review as compared to the previous year.
INR Crore
Essar Logistics Limited (ELL):
ELL is in the business of providing transhipment, lighterage
and trucking services. Going forward, ELL is exploring
opportunities in logistics handling of large project cargoes.
34.1%
200
158
75.9%
150
100
50
0
FY 07
FY 08
STANDALONE RESULTS (SEA TRANSPORTATION
BUSINESS):
During the year under review, your Company achieved a
Total Income of Rs. 1,063.93 crore as compared to
Rs. 1,045.13 crore during the previous year.
i.
Profit on Sale of Ships in the Sea Transportation
Business — Rs. 198.11 crore
The Net Profit for the year increased from Rs. 133.98 crore
during the previous year to Rs. 241.67 crore in the current
year. This is largely due to Profit on Sale of Ships of
Rs. 197.10 crore as compared to Rs. 12.47 crore during the
previous year. The Net Profit for the year under review also
includes a notional currency exchange difference of Rs. 75.65
crore.
ii.
Profit on Sale of Investments — Rs. 107.56 crore and
Income and EBIDTA
iii.
Notional Currency Exchange difference — Rs. 80.43
crore.
The Income during the year under review of this segment
marginally increased to Rs. 1,063.93 crore from Rs. 1,045.13
crore as compared to the previous year. The EBITDA
increased by 42% from Rs. 326.12 crore in the previous
year to Rs. 465.20 crore during the year under review.
The Total Income for the year included:
The Gross Profit for the year increased by 109% and stood
at Rs. 795.31 crore as compared to Rs. 381.29 crore during
the previous year.
10
32nd Annual Report 2007-2008
thorough due diligence by BP of the Company’s systems
and procedures.
Profitability
1200
269
1045 1064
262
300
Integrated Bulk and Petroleum Product Transportation
Group
250
1000
863
760
671
600
400
200
0
496
150
496
109
469
78
208
200
195
200
465
141.15
100
326
278
INR Cr
INR Cr
800
258
50
62
Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07 Mar-08
0
Years
Revenues
Operating Profit
PBT
Debt-Equity Ratio
The Debt Equity Ratio of your Company stood at 0.68:1 as
on March 31, 2008, as compared to 0.51:1 as on March 31,
2007. The increase in the ratio was on account of increased
leverage due to acquisition of one capsize bulk carrier, M.V.
Kiran on a Bareboat Cum Demise Charter basis. Your
Company, has over the years, maintained a Debt Equity
ratio within acceptable norms, which will enable it to raise
debt for growth in future.
Debt:Equity Ratio
This group provides integrated bulk transportation and
petroleum products transportation services to various
refineries, steel mills and power generation plants along the
Asian and South East Asian coast through various
employment contracts including Contracts of Affreightment
(COA’s). This segment contributed Rs. 500.43 crore to the
total income during the financial year as compared to
Rs. 666.15 crore during the previous year.
This group operates of a fleet of five Capesizes, ten Mini
Bulk carriers, four Tugs and two Diving Support Vessels.
These vessels are employed on COA’s with major steel
mills in India and South East Asia to provide supply chain
logistics services along the Indian Coast and for global
movement of commodities like iron ore, coal, etc. The Diving
Support Vessels have been chartered to assist mid sea
terminalling facilities along the west coast of India.
INDUSTRY REVIEW AND PROSPECTS:
Crude Oil Transportation:
•
Average spot earnings for the year under review were
lower as compared to the previous year.
•
Average five year old tanker values rose by almost 7%
as compared to the previous year.
•
The crude tanker fleet grew by 5.7% during the year
with the VLCC segment growing by 4% and the
Suezmax segment grew by 3.7%.
•
The order book for crude oil tankers stood at 43% of
the total crude oil trading fleet. The average annual
gross fleet growth in 2008-2010 is expected at about
10%. The increased tonnage would be partially offset
against the phase out of old tankers in line with the
IMO guidelines and the projected increase in worldwide
refining capacity.
0.80
0.70
Percentage
0.60
0.50
0.69
0.68
0.62
0.55
0.54
0.51
0.51
0.40
0.30
0.20
0.10
0.00
2002 2003 2004 2005 2006 2007 2008
Years
Debt:Equity Ratio
Interest
The interest outgo of your Company reduced to Rs. 89.19
crore during the year under review from Rs. 94.48 crore in
the previous year.
The freight rates for a modern VLCC averaged at USD 57,200
per day during the year under review as compared to USD
63,100 during the previous year.
SEA TRANSPORTATION BUSINESS:
RISK MANAGEMENT:
Energy Transportation Group
Economic Risks: Shipping is a global industry and the
performance of the shipping industry is closely linked to the
world economic growth, global demand and supply trends
and the commodity markets. Your Company has managed
to mitigate this risk by having a global focus rather than
region / country specific focus and has helped diversify risks.
This group provides crude oil transportation and crude oil
transportation management services to global and domestic
crude oil refiners. It contributed Rs. 267.57 crore to the total
income during the financial year as compared to Rs. 358.15
crore in the previous year. The drop in the earnings was on
account of lower freight earnings as compared to the previous
year and dry docking of the Suezmax tanker, M.T. Ishwari.
During the year under review, your Company entered into a
two-year time charter for one of its Very Large Crude Carrier
(VLCC), M.T. Smiti, with British Petroleum Limited (BP).
The time charter was awarded to the Company after a
32nd Annual Report 2007-2008
Freight Risks: Shipping industry is prune to high volatility
in freight rates thereby making the cashflows highly
unpredictable. An optimum mix of voyage charters, time
charters and COAs has enabled your Company to take
advantage of the freight rates and also maintain consistency
of earnings.
11
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
Forex Risk: A majority of the revenues of your Company
are in foreign currency which creates a natural hedge against
foreign exchange exposures. Apart from this, the Essar
Group’s specialised forex team provides efficient advice to
mitigate the exchange risk of your Company.
Interest Rate Risk: Your Company has been undertaking
suitable hedging strategies to overcome any adverse interest
rate risks. It has formulated internal target rates at which
any open interest rate risk can be hedged. At present 64%
of the total loans are completely hedged with interest rates
being fixed during the tenure of the facility.
SALE AND ACQUISITION OF VESSELS:
During the year under review your Company bought and
sold the following vessels:
Vessels Bought
Given the high economic growth globally and more so in
India, the demand for skilled and competitive personnel is
ever increasing. Your Company is taking suitable measures
for talent retention and reducing attrition at all levels.
INFORMATION TECHNOLOGY INITIATIVES:
Your Company strongly believes that Information Technology
is very vital for increasing efficiencies and better customer
service. Towards this, your Company has implemented SAP
in its financial management. Your Company is also in the
process of implementing fleet management, logistics and
maintenance management systems.
SUBSIDIARIES:
Your Company has the following Subsidiaries as on March
31, 2008:
1.
Essar Ports & Terminals Limited, Mauritius (EPTL)
2.
Vadinar Oil Terminal Limited, India
Newly Built Diving Support Vessel, Tug Perseverance.
3.
Essar Bulk Terminal Limited, India (subsidiary of EPTL)
Capesize Dry Bulk Carrier, M.V. Kiran (175,048 DWT).
4.
Essar Bulk Terminal (Salaya) Limited, India (wholly
owned subsidiary of EPTL)
•
Capesize Dry Bulk Carrier, M.V. Govind Prasad (129,237
DWT).
•
•
Vessels Sold
•
Handysize Dry Bulk Carrier, M.V. Chennai Polivu (38,023
DWT).
5.
Essar Logistics Limited, India
6.
Essar Sisco Ship Management Company Limited, India
•
Handysize Dry Bulk Carrier, M.V. Chennai Valarchi
(38,019 DWT).
7.
Essar International Limited, Guernsey, Channel Islands
(EIL)
•
Mini Bulk Carrier, M.V. Nand Bhavani (2,200 DWT).
8.
Energy Transportation International Limited, Bermuda
(wholly owned subsidiary of EIL)
9.
Energy II Limited, Bermuda (wholly owned subsidiary
of EIL)
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
Your Company has instituted internal control systems which
are adequate for the nature of its business and the size of
its operations. In the beginning of the year, the scope of the
internal audit exercise and the key business processes and
selected risk areas to be audited are decided in consultation
with the Audit Committee. All significant audit observations
and follow up actions thereon are reported to the Audit
Committee. The Audit Committee comprises of three
Directors with the Chairman being a person well qualified
and conversant with matters pertaining to Accounts, Finance,
Budgeting, Systems, etc. The Audit Committee met five times
during the year.
HUMAN RESOURCES:
The operational efficiency of any company is dependent a lot
upon the quality of personnel. Your Company believes in
imparting the required training to its personnel at various
levels. Your Company is managed by highly skilled
professionals in all its operations, ashore and afloat, thereby
achieving organisational efficiencies. Operations are managed
professionally, ensuring high productivity levels which
increases operational efficiency and utilisation, thereby
increasing the revenues. Regular onboard and offshore
training activities are undertaken by your Company to improve
the performance of its employees. Skilled and efficient
personnel also managed the ports and terminal business.
Adequate systems have been put in place for mapping the
competencies of personnel across the ranks. The
competencies are then mapped against the desired
competencies taking into consideration the business and
quality objectives of your Company.
12
Essar Ports & Terminals Limited became a subsidiary of the
Company on March 4, 2008. Essar Bulk Terminal Limited
and Essar Bulk Terminal (Salaya) Limited became
subsidiaries of the Company on March 29, 2008 and March
27, 2008 respectively.
Your Company has obtained exemption from the Central
Government under Section 212(8) of the Companies Act,
1956 from attaching the Balance Sheets, Profit & Loss
Account, report of the Board of Directors and the report of
the Auditors of the subsidiary companies with the Annual
Report of the Company, as required under Section 212 of
the Companies Act, 1956, vide Order no. 47/435/2007-CLIII dated January 16, 2008 and June 19, 2008. The Company
will make available the annual accounts of the subsidiary
companies to members seeking such information at any
point of time.
In accordance with Accounting Standard AS-21 on
Consolidated Financial Statements read with Accounting
Standard AS-23 on Accounting for Investments in Associates,
your Directors have pleasure in attaching the Consolidated
Financial Statements, which forms part of the Annual Report.
DIRECTORS:
In accordance with the provisions of the Companies Act,
1956 and the Articles of Association of the Company,
Mr. N. Srinivasan, Mr. Sanjay Mehta and Mr. Ravi Ruia,
retire at the ensuing Annual General Meeting of the Company
and being eligible, offer themselves for re-appointment.
32nd Annual Report 2007-2008
Mr. K. V. Krishnamurthy and Mr. Dilip J. Thakker were
appointed as Additional Directors on your Company’s Board
with effect from June 20, 2008. They cease to be Directors
on the date of the Thirty-second Annual General Meeting.
Notice has been received from members proposing their
appointment as Directors on the Board.
Mr. S. K. Poddar and Mr. Rewant Ruia have resigned from
the Board of Directors of your Company with effect from
June 20, 2008. Your Board places on record its appreciation
for the valuable guidance provided by them during their
tenure as Directors.
AUDITORS:
Your Company’s Auditors, M/s. Deloitte Haskins & Sells,
Chartered Accountants, retire at the ensuing Annual General
Meeting. It is proposed to re-appoint M/s. Deloitte Haskins
& Sells, Chartered Accountants as the Auditors of the
Company from the conclusion of this Annual General Meeting
until the conclusion of the next Annual General Meeting.
TRANSFER TO THE INVESTOR EDUCATION AND
PROTECTION FUND:
In terms of Section 205C of the Companies Act, 1956, an
amount of Rs. 0.44 crore being unclaimed Debenture
redemption amount and Interest thereon was transferred
during the year to the Investor Education and Protection
Fund established by the Central Government.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES:
Pursuant to the requirement of Section 217(2AA) of the
Companies Act, 1956 the Board of Directors hereby state that:
(a) in the preparation of the annual accounts, the applicable
accounting standards have been followed and there have
been no material departures;
CORPORATE GOVERNANCE:
(b) the Directors have selected such accounting policies
and applied them 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;
The Company has complied with the requirements under
the Corporate Governance reporting system. The disclosures
as required therein have been furnished in the Annexure to
the Directors’ Report under the head “Corporate
Governance”.
(c) the Directors have taken proper and sufficient care for
the maintenance of adequate accounting records in
accordance with the provisions of this Act for
safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
PARTICULARS REQUIRED UNDER THE COMPANIES
(DISCLOSURE OF PARTICULARS IN THE REPORT OF
THE BOARD OF DIRECTORS) RULES, 1988:
(d) the Directors have prepared the annual accounts on a
going concern basis.
This does not apply to your Company as the shipping industry
is not included in the Schedule to the relevant rules.
Foreign exchange earnings and outgo are summarised
below:
Total Foreign Exchange:
(1) Earned (including loan receipts, :
sale of ships, freight, charter
hire earnings, interest
income, etc.)
(2) Used (including cost of
acquisition of ships, loan
repayments, interest,
operating expenses, etc.)
:
Rs. 716.58 crore
Rs. 563.85 crore
Your Company has obtained exemption from the Central
Government under Section 211(4) of the Companies Act,
1956 from giving information required under clauses (a),
(b), (c) and (e) of Paragraph 4-D of Part II of Schedule VI to
the Companies Act, 1956 vide Order no. 46/203/2007-CL-III
dated January 29, 2008.
APPRECIATION AND ACKNOWLEDGEMENTS:
Your Directors would like to express their sincere
appreciation to all the employees for their commendable
teamwork and contribution to the growth of the Company.
Your Directors also thank its bankers, charterers and other
business associates for their continued support and cooperation during the year.
For and on behalf of the Board
Jamnagar
July 29, 2008
Sanjay Mehta
Managing Director
R. N. Bansal
Director
“Persons constituting ‘group’ coming within the definition of
group as defined in the Monopolies and Restrictive Trade
Practices Act, 1969 for the purpose of interse transfer of
shares of the Company under regulation 3(1)(e)(i) of SEBI
(Substantial Acquisition of Shares and Takeovers)
Regulations, 1997”
Sr. No.
Name of the Company
PARTICULARS OF EMPLOYEES:
1.
Essar Investments Limited
Information in accordance with the provisions of Section
217(2A) of the Companies Act, 1956, read with the
Companies (Particulars of Employees) Rules, 1975, as
amended, is given in Annexure to this report. Pursuant to
the provisions of section 219 of the Companies Act, 1956
members are provided with abridged accounts. Any member
interested in obtaining a copy of this statement may write to
the Company Secretary at the Registered Office.
2.
Teletech Investments India Limited
3.
Shubhangi Investments and Trading Limited
4.
Essar Global Limited
5.
India Shipping
6.
Essar Shipping & Logistics Limited
32nd Annual Report 2007-2008
13
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
CORPORATE GOVERNANCE REPORT
1. Statement on Company’s philosophy on Code of Corporate Governance
Your Company believes that adhering to global standards of Corporate Governance is essential to enhance shareholders
value and achieve long term corporate goals. The Company’s philosophy on Corporate Governance stresses the importance
of transparency, accountability and protection of shareholder interests. The Board conducts periodic review of business
plans, monitors performance and compliance with regulatory requirements.
2. Board of Directors
The Company has a Non-Executive Chairman and has one-third of the total number of Directors as Independent Directors.
The number of Non-Executive Directors is more than 50% of the total number of Directors.
A. Composition, category, attendance and number of other directorships of the Directors are furnished below:
As at March 31, 2008 the Board consisted of ten members. The composition, category of directors and directorships
held in other companies was as under:
Name of Director
Category of
Director
Mr. Shashi Ruia
(Chairman)
Mr. Ravi Ruia
(Vice Chairman)
Mr. Anshuman Ruia
Promoter,
Non-Executive
Promoter,
Non-Executive
Promoter,
Non-Executive
**Mr. Rewant Ruia
Promoter,
Non-Executive
Mr. R. N. Bansal
Independent,
Non-Executive
**Mr. S. K. Poddar
Independent,
Non-Executive
Mr. N. Srinivasan
Independent,
Non-Executive
Mr. Sanjay Mehta
Non-Promoter,
(Managing Director)
Executive
Mr. A. R. Ramakrishnan Non-Promoter,
(Wholetime Director)
Executive
Mr. V. Ashok
Non-Promoter,
(Wholetime Director)
Executive
No. of
Attendance No. of outside
Board
at last
Directorships
Meetings
AGM
in other Indian
attended
public limited
companies
No. of
*No. of Committee
Directorships
Positions held in
in Indian
other public limited
private limited
companies
companies
Chairman Member
4
N
8
1
-
-
3
N
7
-
-
-
7
N
8
-
-
3
5
N
5
-
-
-
7
Y
8
1
4
4
-
N
12
3
3
3
7
Y
14
2
4
5
2
N
4
-
-
-
7
Y
1
-
-
-
7
Y
4
-
-
-
Note:
The number of Independent Non-Executive Directors is determined as per Section 256 of the Companies Act, 1956.
* includes membership of Audit and Share Transfer & Shareholders’ Grievance Committee only.
**have resigned with effect from June 20, 2008.
Mr. K. V. Krishnamurthy and Mr. Dilip J. Thakkar have been appointed as Independent Directors with effect from June 20, 2008.
B. Details of Board Meetings held during the year:
Sr. No.
1
2
3
4
5
6
7
3.
Date
May 29, 2007
June 29, 2007
July 30, 2007
October 11, 2007
October 31, 2007
January 22, 2008
January 31, 2008
Audit Committee
The Audit Committee of the Company performs the
following functions:
a) overseeing the Company’s financial process and
disclosure of financial information to ensure that
the financial statement is correct.
14
Board Strength
No. of Directors present
10
5
10
6
10
7
10
6
10
7
10
9
10
9
b) recommending the appointment and removal of
statutory auditor, fixation of audit fees and approval
for payment of any services.
c) approving payment to statutory auditors for any
other services rendered by the statutory auditors.
d) reviewing with the management annual financial
statements before submission to the Board.
32nd Annual Report 2007-2008
e)
reviewing with the management, the quarterly
financial statements before submission to the Board
for approval.
f)
reviewing with the management performance of
statutory and internal auditors and adequacy of
internal control systems.
g)
reviewing the adequacy of internal audit function.
h)
discussing with internal auditors any significant
findings and follow up on such issues.
i)
4.
(Rs.)
Name of Director
reviewing the findings of any internal investigations
by the internal auditors into matters where there is
suspected fraud or irregularity or a failure of internal
control systems of a material nature and reporting
the matter to the Board.
j)
discussing with statutory auditors before the audit
commences on the nature and scope of audit, as
well as having post-audit discussion to ascertain
any area of concern.
k)
reviewing the Company’s financial and risk
management policies; and
l)
examining reasons for substantial default in the
payment to depositors, debenture holders,
shareholders and creditors, if any.
1
May 29, 2007
3
3
2
June 29, 2007
3
3
3
July 30, 2007
3
3
4
October 31, 2007
3
3
5
January 31, 2008
3
3
Attendance at Audit Committee Meetings:
Director
No. of
meetings held
No. of
meetings
attended
Mr. R. N. Bansal
(Chairman)
5
5
Mr. Anshuman Ruia
5
5
Mr. N. Srinivasan
5
5
32nd Annual Report 2007-2008
Total
Mr. Sanjay Mehta,
Managing Director
(w.e.f. 18.9.2005 for
a period of 3 years)
12,00,000
50,60,868
6,50,000
1,44,000
Mr.A.R.Ramakrishnan,
Wholetime Director
(w.e.f. 31.7.2006 for
a period of 5 years)
16,20,000
86,17,416
1,20,000
1,94,400 1,05,51,816
Mr. V. Ashok,
Wholetime Director
(w.e.f. 7.12.2006 for
a period of 5 years)
24,75,000
50,15,716
—
Mr.
Mr.
Mr.
Mr.
Mr.
Mr.
2,97,000
70,54,868
77,87,716
Shashi Ruia
Ravi Ruia
R. N. Bansal
N. Srinivasan
Anshuman Ruia
Rewant Ruia
Sitting Fees paid for
Board/Committee meetings
Rs. 19,500
Rs. 15,500
Rs. 61,000
Rs. 61,000
Rs. 57,500
Rs. 28,500
Number of shares or convertible instruments held
by non – executive directors:
Non-Executive Directors
Mr. Shashi Ruia
Mr. Ravi Ruia
Mr. Anshuman Ruia
Mr. Rewant Ruia
Mr. R. N. Bansal
Mr. N. Srinivasan
Mr. S. K. Poddar
Details of Audit Committee Meetings held during
the year:
No. of
Members
present
Allowances Perquisites
Contribution
and other
to Provident
benefits
& Superannuation Fund
Non-Executive Directors
The Committee comprises of three Directors of which
two are Independent Directors. All the members of the
Committee are financially literate and have relevant
financial management and/or audit exposure. The
Managing Director, Wholetime Directors, General
Manager - Accounts, Statutory Auditors and Internal
Auditors attend the meetings. The Company Secretary
is the Secretary to the Committee.
Committee
Strength
Basic
Salary
No Employee Stock Option Schemes have been
provided by the Company till date. Services of the
aforesaid Executive Directors can be mutually terminated
by giving three months notice or three months salary in
lieu thereof.
Details of sitting fees paid to Non-Executive Directors
for the meetings held during the year ended March 31,
2008:
Composition:
Sr. No. Date
Remuneration to Directors
Details of Remuneration paid to the Managing Director
and Wholetime Directors during the year ended March
31, 2008 is as under:
5.
No. of shares held
Nil
Nil
Nil
Nil
Nil
Nil
254 shares
Share Transfer & Shareholders’ Grievance
Committee:
Terms of reference:
To approve transfer, transmission, sub-division and issue
of duplicate shares/debentures and for redressal of
investor complaints on all matters.
Composition:
The Committee members comprise of Mr. Ravi Ruia,
Vice Chairman, Mr. Sanjay Mehta, Managing Director,
Mr. A. R. Ramakrishnan, Wholetime Director and
Mr. V. Ashok, Wholetime Director. The Executive
Directors and Company Secretary, are authorised to
approve the Share Transfer and other related
transactions on a day to day basis under the supervision
of the Committee.
Details of shareholders complaints received, solved
and pending share transfers:
There were no complaints pending at the beginning of
the year. A total of 393 complaints were received during
15
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
6.
the year ended March 31, 2008, most of which being
non-receipt of dividend/debenture warrants, non-receipt
of share certificates. All the complaints were redressed
under the supervision of the Committee and no
complaints were outstanding as on March 31, 2008.
All the valid share transfer requests received during the
year were duly attended to and processed in time. There
were no valid requests pending for share transfers as
on March 31, 2008.
General Body Meeting:
(a) Details of General Meetings held in last three years:
Financial Meeting Date
year
Time
2004-05
AGM
29-09-05
10.15 AM
2005-06
AGM
EGM
22-09-06
02-01-07
10.15 AM
11.00 AM
AGM
25-09-07
11.00 AM
EGM
23-02-08
11.00 AM
9.
16
B. Financial Calendar:
Financial year of Company
2006-07
7.
Location
10. General Shareholders information:
A. Annual General Meeting details:
Date
September 27, 2008
Venue
Administrative Building,
Essar Refinery Complex,
Okha Highway (SH - 25),
Taluka Khambhalia,
Distt. Jamnagar, Gujarat 361305
Time
3.30 p.m.
Book Closure 22-09-2008 to 27-09-2008
Dates
(both days inclusive)
Dayanandasagar Memorial Hall,
Chandrasagar Complex,
No.264/266,
T. Mariappa Road,
nd
2 Block, Jayanagar,
Bangalore 560011
Srinivasa Sagar Kalyana Mahal,
Chandrasagar Complex,
No.264/266, T. Mariappa Road,
2nd Block, Jayanagar,
Bangalore 560011
(b) Whether any special resolutions passed in the
previous three Annual General Meetings?
No special resolutions were passed in the previous
three Annual General Meetings.
(c) Whether any special resolution was passed last
year through postal ballot?
No special resolution was passed during the
financial year 2007 – 08 through postal ballot.
(d) Whether any special resolution is proposed to be
conducted through postal ballot?
No
Disclosures:
1 There are no materially significant related party
transactions made by the Company with its
Promoters, Directors or Management, their relatives,
its subsidiaries, etc. that may have potential conflict
with the interest of the Company at large.
2 Transactions with related parties during the year
are disclosed in Note No. B-12 of Schedule 13 to
the accounts in the Annual Report.
3 During the last three years no penalty or stricture
has been imposed on the Company by Stock
Exchanges/SEBI/Statutory Authorities on matters
related to Capital Markets.
Means of Communication:
Financial results and
The quarterly and annual
other information about financial results are
the Company
displayed on the
Company’s website:
www.essar.com
Publication of financial
Published in major
results
newspapers such as
Business Standard,
Udayavani, etc.
Presentation to
Press releases and
Institutional Investors
presentations made to
and to the Analysts
Institutional Investors and
Analysts are displayed on
the Company’s website :
www.essar.com
Management Discussion Forms part of the Annual
& Analysis
Report, which is mailed to
the shareholders of the
Company
April 1, 2008 to March 31, 2009
First Quarter results
On or before July 31, 2008
Second Quarter results
On or before October 31, 2008
Third Quarter results
On or before January 31, 2009
Annual results for the year
On or before June 30, 2009
C. Registrars and Share Transfer Agents:
Data Software Research Company Private Limited
“Sree Sovereign Complex”, 22, 4th Cross Street
Trustpuram, Kodambakkam, Chennai 600 024
Tel: (044) 2483 3738, Fax: (044) 2483 4636
e-mail: dsrcmd@vsnl.com.
D. Share Transfer System:
To expedite the process of share transfers,
transmissions, etc., the Board of your Company
has delegated these powers to the Executive
Directors and the Company Secretary.
All valid share transfer requests received by the
Company in physical form are registered within an
average period of 15 days. Presently the Company
dematerialises the shares after getting the
dematerialisation requests being generated by the
Depository Participant.
E. Listing on Stock Exchanges:
The Company’s securities are listed on the following
Stock Exchanges:
Bombay Stock Exchange Ltd. * National Stock Exchange
Phiroze Jeejeebhoy Towers,
of India Ltd.
Dalal Street, Mumbai 400 023 Exchange Plaza,
Bandra Kurla Complex
Bandra East, Mumbai 500051
Code : 500630
Code : ESSARSHIP
* w.e.f. March 11, 2008
Annual Listing fee for the year 2008-09 has been
paid to both the exchanges.
F.
Market price data (High/Low) during each month
in the year 2007-2008 on the Bombay Stock
Exchange Limited:
Month
April
May
June
July
August
September
October
November
December
January
February
March
Highest
35.75
38.85
29.15
28.00
26.90
29.25
28.90
26.25
40.80
50.85
51.90
54.80
Lowest
29.15
25.00
18.80
20.60
22.40
24.65
23.50
22.50
24.00
35.05
43.20
34.50
Scrip Code : 500630
32nd Annual Report 2007-2008
G. Share Price performance in comparison to BSE
Sensex
Share Price Movement versus BSE Sensex
250
175
19000
150
18000
125
100
17000
75
16000
BSE Sensex
Share Price
225
20000
50
15000
25
0
Apr- May- Jun07
07
07
Jul- Aug- Sep- Oct- Nov- Dec- Jan- Feb- Mar07
07
07
07
07
07
08
08
08
14000
Months
Share price on BSE
BSE Sensex
H. Shareholding Pattern as on March 31, 2008:
Shareholding by
Essar and Associates
Financial Institutions/
Mutual Funds/Banks/
Insurance Companies
Other Corporate Bodies
Non-Domestic Companies/
Foreign Banks
Foreign Institutional
Investors
Non-Resident Individuals
Public
GDRs/ADRs/ADSs
(Promoters)
Total
No. of shares
20,13,19,284
14,09,360
%
47.25
0.33
1,47,09,096
3.45
24,259
0.00
4,81,41,363
9,54,717
3,50,63,128
11.30
0.22
8.24
12,44,56,000
42,60,77,207
29.21
100.00
Distribution of Shareholding as on March 31,
2008:
No. of equity
shares held
Upto 1000
Number
% of
of share- shareholders holders
Total
% of
number of holding
shares
1,15,573
96.84
1,84,65,847
4.33
1001 to 2000
2,145
1.80
31,36,540
0.74
2001 to 3000
583
0.49
14,87,874
0.35
3001 to 4000
245
0.21
8,84,471
0.21
4001 to 5000
194
0.16
9,20,319
0.22
5001 to 10000
300
0.25
22,79,446
0.53
10001 and above
301
0.25
398,902,710
93.62
100.00 42,60,77,207
100.00
TOTAL
1,19,341
I. Compliance Officer : Mr. Manoj Contractor
Company Secretary
J. Registered Office : Administrative Building
Essar Refinery Complex
Okha Highway (SH - 25)
Taluka Khambhalia
Distt. Jamnagar
Gujarat 361305
K. Corporate Office
: Essar House
11, Keshavrao Khadye Marg
Mahalaxmi, Mumbai 400 034
Tel : (022) 6660 1100
Fax: (022) 2354 4312
e-mail: espll.secretarial@essar.com
32nd Annual Report 2007-2008
No. of shares
No. of Folios
Percentage
1,17,40,149
70,798
2.75
Demat
41,43,37,058
48,543
97.25
TOTAL
42,60,77,207
1,19,341
100.00
Physical
21000
200
Status of Dematerialisation of shares as on
March 31, 2008:
Mode
22000
275
L.
11. Nomination Facility:
Shareholders holding shares in physical form and
desirous of making a nomination in respect of their
shareholding in the Company, as permitted under
Section 109A of the Companies Act, 1956 are requested
to submit to the R&T Agent of the Company the
prescribed nomination form.
12. Outstanding GDRs/ADRs/Warrants or any
convertible instruments, conversion date and likely
impact on equity:
3,76,000 GDRs representing 12,44,56,000 equity shares
are outstanding as on March 31, 2008.
13. Secretarial Audit:
A qualified practicing Company Secretary carries out
secretarial audit to reconcile the total admitted capital
with National Securities Depository Limited (NSDL) and
Central Depository Services (India) Limited (CDSL) and
the total issued and listed capital. The audit confirms
that the total issued/paid up capital is in agreement
with the total number of shares in physical form and the
total number of dematerialised shares held with NSDL
and CDSL.
14. Non-mandatory requirements:
1. The Board :
(a) The expenses incurred by Non-Executive
Chairman are reimbursed by the Company.
(b) At present there is no policy fixing the tenure
of Independent Directors.
2. Remuneration Committee:
The Committee comprises of three Non-Executive
Directors and the Company Secretary is the
Secretary of the Committee. The Committee is
empowered to formulate and recommend to the
Board from time to time, the compensation structure
for Managing/Executive/Wholetime Directors and to
administer and supervise the Employee Stock
Option Schemes, whenever applicable.
3. Shareholders right:
Half yearly financial results including summary of
the significant events in last six months are available
on the website of the Company i.e. www.essar.com.
No separate financials are sent to shareholders of
the Company.
4. Audit qualifications:
There are no audit qualifications in the Auditor’s
report on the financial statements to the
Shareholders of the Company.
5. Training of Board members:
A Presentation about the Company and the industry
in which it operates is made to new Directors.
6. Mechanism for evaluating performance of
Non-Executive Board Members:
There is no formal mechanism for performance
evaluation of Non-Executive directors.
7. Whistle Blower policy:
The Company has not established any formal
whistle blower policy.
17
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
AUDITOR’S CERTIFICATE ON CORPORATE GOVERNANCE
To the Members
Essar Shipping Ports & Logistics Limited
(formerly Essar Shipping Limited)
We have examined the compliance of conditions of corporate governance by Essar Shipping Ports & Logistics Limited
(formerly Essar Shipping Limited) (the Company) for the year ended March 31, 2008, as stipulated in Clause 49 of the Listing
Agreement of the said Company with the Stock Exchanges.
The compliance of conditions of Corporate Governance is the responsibility of the Management. Our examination was limited
to review of procedures and implementation thereof, adopted by the Company for ensuring the compliance of the conditions
of the Corporate Governance. It is neither an audit nor an expression of opinion on the financial statements of the Company.
In our opinion and to the best of our information and according to the explanations given to us, we certify that the Company
has complied with the conditions of Corporate Governance as stipulated in the abovementioned Listing Agreement.
We further state that such compliance is neither an assurance as to the future viability of the Company nor the efficiency or
effectiveness with which the management has conducted the affairs of the Company.
For Deloitte Haskins & Sells
Chartered Accountants
Khurshed Pastakia
Partner
(Membership No. 31544)
Place : Mumbai
Date : July 29, 2008
Declaration on Compliance of the Company’s Code of Conduct
To the members of Essar Shipping Ports & Logistics Limited
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 of the Company have affirmed due observance of the said
code of conduct in so far as it is applicable to them and there is no non compliance thereof during the year ended March 31,
2008.
Sanjay Mehta
Managing Director
Place : Jamnagar
Date : July 29, 2008
18
32nd Annual Report 2007-2008
AUDITORS’ REPORT ON ABRIDGED FINANCIAL STATEMENTS TO THE
MEMBERS OF ESSAR SHIPPING PORTS & LOGISTICS LIMITED
(formerly known as Essar Shipping Limited)
We have examined the abridged Balance Sheet of Essar
Shipping Ports & Logistics Limited (formerly known as Essar
Shipping Limited) (the Company), as at March 31, 2008 and
also the abridged Statement of Profit and Loss and the
Cash Flow Statement for the year ended on that date
annexed thereto, together with significant notes thereon.
These abridged financial statements have been prepared
by the Company pursuant to Rule 7A of the Companies
(Central Government’s) General Rules and Forms, 1956 and
are based on the audited financial statements of the
Company for the year ended March 31, 2008 prepared by
the management in accordance with the provisions of subsection 3(C) of Section 211 of the Companies Act, 1956
and covered by our report of even date to the members of
the Company, which is attached hereto.
For Deloitte Haskins & Sells
Chartered Accountants
Place: Mumbai
Date : June 20, 2008
Khurshed Pastakia
Partner
(Membership No. 31544)
AUDITORS’ REPORT TO THE MEMBERS OF ESSAR SHIPPING PORTS &
LOGISTICS LIMITED
(formerly known as Essar Shipping Limited)
1.
2.
3.
4.
5.
We have audited the attached Balance Sheet of Essar
Shipping Ports & Logistics Limited (formerly known as
Essar Shipping Limited) (the Company), as at March
31, 2008, the Statement of Profit and Loss and Cash
Flow Statement for the year ended on that date annexed
thereto. These financial statements are the responsibility
of the Company’s management. Our responsibility is to
express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with auditing
standards generally accepted in India. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
As required by the Companies (Auditors’ Report) Order,
2003, (the Order) issued by the Central Government of
India in terms of sub-section (4A) of section 227 of the
Companies Act, 1956, we enclose, in the Annexure, a
statement on the matters specified in paragraphs 4 and
5 of the said Order.
On the basis of written representations received from
directors, as on March 31, 2008 and taken on record by
the board of directors, we report that none of the
directors is disqualified as on March 31, 2008 from
being appointed as a director in terms of clause (g) of
sub-section (1) of Section 274 of the Companies Act,
1956.
and belief, were necessary for the purposes of our
audit;
(ii) In our opinion, proper books of account as required
by law have been kept by the Company, so far as
appears from our examination of those books;
(iii) The Balance Sheet, the Statement of Profit and
Loss and the Cash Flow Statement dealt with by
this report are in agreement with the books of
account;
(iv) In our opinion, the Balance Sheet, the Statement
of Profit and Loss and the Cash Flow Statement
dealt with by this report comply with the accounting
standards referred to in sub-section (3C) of Section
211 of the Companies Act, 1956;
(v) In our opinion and to the best of our information
and according to the explanations given to us, the
said financial statements, read together with the
notes thereon, give the information required by the
Companies Act, 1956, in the manner so required
and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state
of affairs of the Company as at March 31, 2008;
(b) in the case of the Statement of Profit and Loss,
of the profit of the Company for the year ended
on that date; and
(c) in the case of the Cash Flow Statement, of the
cash flows of the Company for the year ended
on that date.
For Deloitte Haskins & Sells
Chartered Accountants
Further to our comments in the Annexure referred to in
paragraph 3 above, we report that:
(i)
We have obtained all the information and
explanations which, to the best of our knowledge
32nd Annual Report 2007-2008
Place: Mumbai
Date : June 20, 2008
Khurshed Pastakia
Partner
(Membership No. 31544)
19
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
ANNEXURE TO THE AUDITORS’ REPORT
(Referred to in paragraph 3 of our report of even date)
4.
In our opinion and according to the information and
explanations given to us, there is adequate internal
control system commensurate with the size of the
Company and the nature of its business for the purchase
of inventory and fixed assets and for the sale of services.
We have not observed any continuing failure to correct
major weaknesses in such internal controls. The nature
of the Company’s business does not involve sale of
goods.
5.
In our opinion and according to the information and
explanations give to us, there are no contracts or
arrangements that need to be entered into the register
maintained under section 301 of the Companies Act
1956.
6.
In our opinion, the internal audit system is commensurate
with the size of the Company and the nature of its
business.
7.
According to the information and explanations given to
us in respect of statutory dues:
In our opinion and according to the information and
explanations given to us, the nature of the Company’s
business/activities during the year are such that clauses
(vi), (viii), (xii), (xiii), (xiv), (xviii), (xix) and (xx) of para 4 of
the Order are not applicable to the Company.
1.
In respect of its fixed assets:
a.
The Company has maintained proper records
showing full particulars including quantitative details
and situation of its fixed assets.
b.
The fixed assets were physically verified during the
year by the management in accordance with a
programme of verification, which in our opinion
provides for physical verification of all the fixed
assets over a period of three years, having regards
to the size of the Company and nature of its
business. According to the information and
explanations given to us, no material discrepancies
were noticed on such verification.
c.
2.
20
a.
The Company has been generally regular in
depositing undisputed statutory dues, including
provident fund, investor education and protection
fund, employees’ state insurance , income-tax,
sales-tax, wealth tax, service tax, value added tax,
customs duty, excise duty, cess and any other
material statutory dues as applicable with the
appropriate authorities during the year. As informed
to us employees state insurance scheme is not
applicable to the Company.
b.
No undisputed amounts payable in respect of
provident fund, investor education and protection
fund, employees’ state insurance, income-tax,
wealth-tax, service tax, sales-tax, customs duty,
excise duty, cess and other material undisputed
statutory dues were outstanding, at the year end,
for a period of more than six months from the date
they became payable.
c.
The details of disputed income-tax and sales tax
dues which have not been deposited as at March
31, 2008 on account of disputes pending, are given
below:
In respect of its inventories:
a.
As explained to us, inventories were physically
verified during the year by the management at
reasonable intervals.
b.
In our opinion and according to the information and
explanations given to us, the procedures of physical
verification of inventories followed by the
management were generally reasonable and
adequate in relation to the size of the Company
and the nature of its business.
c.
3.
There was no substantial disposal of fixed assets
during the year.
According to the information and explanations given
to us, the Company’s inventories comprise fuel oil
and lube oil on board the ships. Having regard to
the nature of the Company’s business and scale of
operations, quantities are determined by physical
count and it is not considered feasible to maintain
records of movements of inventories of such items
by the vessel in which they are carried. As quantities
are determined by physical count and records of
movements are not maintained on board the ships,
the question of discrepancies on physical verification
thereof does not arise.
In our opinion and according to the information and
explanations given to us, there are no companies, firms
or parties required to be entered into the register
maintained under section 301 of the Companies Act,
1956. Accordingly, paragraphs 4(iii) (a) to (g) of the
Order are not applicable to the Company.
Name of
the statute
Nature of
the disputed
dues
Income tax
Act, 1961
Income Tax
Tamil Nadu
Sales Tax
Act, 1959
Sales Tax
and penalty
thereon
Amount
(Rs. in
crore)
Period to
which the
amount
relates
Forum where
dispute is
pending
110.76
(advance tax
payment
Rs. 47.27)
Assessment
Year from
1988-1989 to
2001-2002
Appellate
Authority –
Tribunal
Level
58.10
Assessment
Year 1997-98
Madras
High Court.
32nd Annual Report 2007-2008
According to the information and explanation given
to us, there are no dues of wealth tax, service tax,
customs duty, excise duty and cess which have
not been deposited on account of any dispute.
opinion, term loans availed by the Company were, prima
facie, applied by the Company during the year for the
purposes for which the loans were obtained, other than
temporary deployment pending application.
8.
The Company does not have accumulated losses as at
March 31, 2008. The Company has not incurred cash
losses during the financial year covered by our audit
and the immediately preceding financial year.
9.
In our opinion, on the basis of audit procedures and
according to the information and explanations given to
us, the Company has not defaulted in repayment of
dues to banks. The Company has not borrowed any
sums from financial institutions or through debentures.
12. According to the information and explanations given to
us, and on an overall examination of the Balance sheet
of the Company, we report that the funds raised on
short-term basis have, prima facie, not been used during
the year for long-term investment.
13. To the best of our knowledge and belief and according
to the information and explanations given to us, no
fraud on or by the Company was noticed or reported
during the year.
10. In our opinion and according to the information and
explanations given to us, the terms and conditions of
the guarantees given by the Company for the loans
taken by others from banks and financial institutions,
are not prima facie prejudicial to the interests of the
Company.
11. To the best of our knowledge and belief and according
to the information and explanations given to us, in our
32nd Annual Report 2007-2008
For Deloitte Haskins & Sells
Chartered Accountants
Place: Mumbai
Date : June 20, 2008
Khurshed Pastakia
Partner
(Membership No. 31544)
21
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
ABRIDGED BALANCE SHEET AS AT 31ST MARCH, 2008
(Statement containing the salient features of Balance Sheet as per Section 219 (1) (b) (iv) of the Companies Act, 1956.)
As at 31.03.2008
(Rs. in crore)
I.
SOURCES OF FUNDS
Shareholders’ funds:
a) Capital
i) Equity
b) Reserves and surplus
i) Capital reserve
ii) Revenue reserve
iii) Revaluation reserve
iv) Tonnage tax reserve
v) Surplus in Statement of Profit and Loss
Loan funds:
a) Secured loans
b) Finance lease obligations
c) Unsecured loans
426.21
307.09
835.89
538.01
162.50
801.60
559.36
778.09
373.00
Total
II.
APPLICATION OF FUNDS
Fixed assets:
a) Net block
(Original cost Rs. 2680.86 (previous year
Rs.1919.10) crore
less depreciation Rs. 557.15 (previous year
Rs. 672.84) crore) (Refer Note no.B.1)
b) Capital work in progress (including capital advances)
Investments
a) Investments in subsidiary companies
Unquoted
b) Others
i) Quoted*
ii) Unquoted
* (Aggregate market value of quoted investments is
Rs. 78.32 (previous year Rs. 19.86) crore)
Current assets, loans and advances:
a) Inventories
b) Sundry debtors
c) Cash and bank balances
d) Other current assets
e) Loans and advances to:
i) subsidiary companies
ii) others
Less: Current liabilities and provisions:
a) Liabilities
b) Provisions
As at 31.03.2007
(Rs. in crore)
426.21
2,645.09
307.09
836.18
112.27
132.50
589.93
1,977.97
1,710.45
606.44
393.34
160.00
1,159.78
4,781.75
2,123.71
—
1,246.26
2,123.71
3,107.35
2.27
15.00
3,563.96
6.19
1,545.15
3,124.62
2.27
399.96
21.03
105.94
134.84
1.07
25.67
233.20
64.05
0.70
0.05
252.35
3.29
97.10
515.28
424.01
975.36
6.50
52.50
7.38
981.86
Net current (liabilities)/ assets
Khurshed Pastakia
Partner
Place: Mumbai
Date : June 20, 2008
22
1,947.38
59.88
(466.58)
364.13
Total
4,781.75
Refer accounting policies and notes to abridged financial statements
Compiled from the audited annual accounts of the Company referred to in our report dated 20th June, 2008.
As per our report of even date
For Deloitte Haskins & Sells
Chartered Accountants
1,252.45
3,563.96
For and on behalf of the Board
Sanjay Mehta
Managing Director
N. Srinivasan
Director
V. Ashok
Wholetime Director
Manoj Contractor
Company Secretary
Place: Mumbai
Date : June 20, 2008
32nd Annual Report 2007-2008
ABRIDGED STATEMENT OF PROFIT AND LOSS FOR THE YEAR ENDED 31ST MARCH 2008
(Statement containing the salient features of Statement of Profit and Loss as per Section 219 (1) (b) (iv) of the Companies Act, 1956.)
For the year ended
31.03.2008
(Rs. in crore)
INCOME
a) Fleet operating and chartering earnings
b) Dividend on non trade current Investments
c) Interest income
d) Other income
i) Profit on sale of fleet
ii) Exchange gain
iii) Miscellneous income
776.24
1.33
5.21
197.10
75.65
8.40
Total
EXPENDITURE
a) Fleet operating expenses
i) Direct voyage expenses
ii) Employee expenses (off shore staff)
iii) Other fleet operating expenses
b) Establishment and other expenses
i) Employee expenses (office staff)
ii) Managerial remuneration
iii) Auditors’ remuneration
iv) Bad debts / provision for doubtful debts
v) Other expenses
c)
d)
Interest and finance expenses
Depreciation
Total
For the year ended
31.03.2007
(Rs. in crore)
1,024.30
1.08
5.41
12.47
0.51
1.36
281.15
1,063.93
423.35
43.47
54.14
16.99
2.54
0.66
—
57.58
14.34
1,045.13
520.96
505.70
52.97
55.75
614.42
77.77
15.91
1.51
0.70
23.67
62.80
104.59
89.19
106.64
94.48
90.50
794.56
903.99
PROFIT BEFORE TAX
Less: Provision for taxation
- Current tax including tonnage tax
- Fringe benefit tax
- Tax adjustment for earlier years
269.37
141.14
(23.60)
(3.45)
(0.65)
(4.81)
(2.29)
(0.06)
PROFIT AFTER TAX
Balance brought forward from previous year
241.67
589.93
133.98
490.45
AMOUNT AVAILABLE FOR APPROPRIATION
831.60
624.43
APPROPRIATIONS:
Transferred to tonnage tax reserve
Balance carried forward to balance sheet
30.00
801.60
34.50
589.93
831.60
624.43
Earnings per share - basic and diluted (Rs.) (face value of Rs. 10/- per share)
5.67
Refer accounting policies and notes to abridged financial statements
Compiled from the audited annual accounts of the Company referred to in our report dated 20th June, 2008.
As per our report of even date
For Deloitte Haskins & Sells
Chartered Accountants
Khurshed Pastakia
Partner
Place: Mumbai
Date : June 20, 2008
32nd Annual Report 2007-2008
3.14
For and on behalf of the Board
Sanjay Mehta
Managing Director
N. Srinivasan
Director
V. Ashok
Wholetime Director
Manoj Contractor
Company Secretary
Place: Mumbai
Date : June 20, 2008
23
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008
Year ended
31.3.2008
(Rs. in crore)
Year ended
31.3.2007
(Rs. in crore)
269.37
141.14
106.64
90.50
89.19
94.48
A. CASH FLOW FROM OPERATING ACTIVITIES
Net Profit before taxes
Adjustments for :
Depreciation
Interest and finance expenses
Interest Income
Profit on sale of assets
Balances written off
Profit on sale of investments
Provision for bad / doubtful debts
Dividend on current investments
Foreign exchange loss / (gain)
Operating profit before working capital changes
(5.21)
(5.41)
(196.99)
(12.42)
—
0.01
(7.85)
(0.25)
—
23.69
(1.33)
(1.08)
(75.89)
0.76
177.93
331.42
115.25
(156.58)
Adjustments for:
Trade and other receivables
Inventories
4.64
(3.39)
Trade payables
4.11
(10.21)
301.93
161.24
(18.19)
(12.18)
(5.29)
(2.41)
278.45
146.65
(560.54)
(120.55)
205.36
15.80
—
2.10
Cash generated from operations
Income taxes paid (net of refund)
Fringe benefit tax paid
Net cash flow from operating activities
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets including capital work in progress / advance
Sale of fixed assets
Insurance claim received on fixed asset
Advance received against sale of fixed asset
22.06
—
Advance received against sale of investments
911.92
13.13
Advance received against sale of investment repaid
(13.13)
—
Proceeds from sale of current investments
585.37
426.98
Investment in shares of subsidiaries
Other investments purchased
Fixed deposits placed for a period of more than three months
Refund to / advance from subsidiary
(0.15)
(344.56)
(796.98)
23.92
(45.63)
3.25
(1.58)
Dividend on current investment
1.33
1.08
Interest received
4.84
4.87
(722.37)
(500.93)
Net cash flow from investing activities
24
(1,562.19)
32nd Annual Report 2007-2008
CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008
Year ended
31.3.2008
(Rs. in crore)
Year ended
31.3.2007
(Rs. in crore)
Interest and finance expenses paid
(88.53)
(93.61)
Proceeds from term loans
162.59
18.40
Additional lease obligations
445.28
86.36
C. CASH FLOW FROM FINANCING ACTIVITIES
Proceeds from unsecured loans
Repayment of term loans
513.00
320.00
(169.42)
(82.68)
Repayment of finance lease obligation
Repayment of unsecured loans
(23.84)
(23.40)
(300.00)
(320.00)
(0.45)
(0.63)
—
20.00
538.63
(75.56)
94.72
15.04
(429.84)
444.88
109.76
15.04
—
—
72.95
4.84
49.61
58.17
1.98
109.76
25.08
9.40
4.78
0.86
15.04
49.01
134.84
64.05
Payment of unclaimed debentures and interest thereon
Refund of Inter corporate deposit given
Net Cash flow from financing activities
INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents as at the beginning of the year
Cash and cash equivalents as at the end of the year
Non cash investing and financing transactions
Conversion of share application money into shares
Investment in shares against advance
Notes :
1 Cash and cash equivalents include :
Cash and bank balances
Balances in fixed deposits (maturity period of less than 3 months)
Unrealised (gain)/ loss on foreign currency on cash and cash equivalents
Total cash and cash equivalents
Balances in fixed deposits (maturity period of more than 3 months)
CASH AND BANK BALANCES
2
Cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3
‘Cash Flow Statement’ as notified under the Companies (Accounting Standards) Rules, 2006.
As per our report of even date
For Deloitte Haskins & Sells
Chartered Accountants
Khurshed Pastakia
Partner
Place: Mumbai
Date : June 20, 2008
32nd Annual Report 2007-2008
For and on behalf of the Board
Sanjay Mehta
Managing Director
N. Srinivasan
Director
V. Ashok
Wholetime Director
Manoj Contractor
Company Secretary
Place: Mumbai
Date : June 20, 2008
25
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
NOTES TO ABRIDGED FINANCIAL STATEMENTS FOR
THE YEAR ENDED 31st MARCH 2008
1) Fixed assets
a) In order to reflect the fair value of the Company’s
fleet, the Company revalued its fleet on 1st April
2004 and on 31st March 2008. The valuations were
done by accredited valuers on the basis of expected
market value in an arm’s length transaction and
free of encumbrances on the valuation date. The
enhancement in the value of fleet amounting to
Rs.669.52 crore and Rs.452.69 crore respectively
were credited to fixed asset revaluation reserve.
Gross block as on 31 st March, 2008 includes
Rs. 651.60 crore being amount added on
revaluation of fleet. Incremental depreciation on
account of the revaluation amounting to Rs.26.95
(previous year Rs.34.90) crore has been recouped
from the fixed assets revaluation reserve.
b) Secured Loans amounting to Rs. 1,336.45 (previous
year Rs. 998.78) crore is secured by first charge
on fleet.
c) The Company has taken two vessels and an aircraft
on finance lease.
d) Gross block of plant and machinery includes
Rs. 38.84 (previous year Rs. 38.84) crore leased
out; W.D.V. as on March 31, 2008 is Nil (previous
year Nil).
2) Investments
The Company has pledged its investments in equity
shares of Essar Oil Limited amounting to Rs. 2.27
(previous year Rs. 2.27) crore in favour of lendors for
loans availed by Essar Oil Limited and in equity shares
of Vodafone Essar Mobile Services Limited amounting
to Rs.1 (previous year Rs.1) crore against loan availed
for acquisition of shares.
3) (Note no. B (2) of schedule 13 of annual accounts)
a)
Contingent liabilities:
Particulars
(Rs. in crore)
As on
As on
31.03.2008 31.03.2007
Claims against the Company
pending arbitration proceedings
0.39
ii) Guarantees given by banks*
15.38
14.80
iii) Letter of credit (capital commitment)
24.56
iv) Corporate guarantees on behalf of
a subsidiary – Vadinar Oil Terminal
Limited
250.00
250.00
v) Corporate guarantees on behalf of
Essar Shipping & Logistics
Limited **
1346.44
730.45
vi) Disputed sales tax demand
under appeal in the Honorable
High Court of Madras
58.10
58.10
vii) Income tax appeals before ITAT
110.76
109.20
* includes guarantee of Rs. 13.74 crore issued by bank in favour of
ETIL which is backed by counter guarantee of the Company.
** Corporate guarantee on behalf of Essar Shipping & Logistics
Limited has been backed by a counter guarantee from Essar Global
Limited.
b)
4)
Estimated amount of contract remaining to be
executed on capital account and not provided for is
Rs. Nil (previous year Rs. 24.75) crore.
Sundry debtors
(Note no. B (3) of schedule 13 of annual accounts)
Sundry debtors (unsecured and considered good)
outstanding for more than six months include Rs.3.70
(previous year Rs.3.70) crore awarded on arbitration in
the year 2002-03. The concerned debtor went into
appeal and the matter is pending before the Honorable
High Court of Madras. As the arbitration tribunal award
is in favour of the Company, the debt is considered
good.
5)
The details of provision made by the Company for
present obligations arising out of past events are as
below:
(Note no. B (4) of schedule 13 of annual accounts)
(Rs. in crore)
Particulars
Claims against the
Company pending
arbitration proceedings
6)
Additions Reversed/
during paid during
the year
the year
0.82
-
As on
31.03.2008
0.82
-
Leases
(Note no. B (5) of schedule 13 of annual accounts)
a)
Finance leases
The minimum lease rentals outstanding at year end
are as under:
(Rs. in crore)
As on 31.03.2008
Particulars
As on 31.03.2007
Minimum Interest Present Minimum Interest Present
lease
value of
lease
value of
payments
minimum payments
minimum
lease
lease
payments
payments
i)
26
As on
01.04.2007
Future lease rental
obligation payable:
- Not later than one year
48.57
36.47
- Later than one year
but not later than
five years
787.74 202.73
- Later than five years
182.65
TOTAL
b)
85.04
54.55
28.83
25.72
585.01
254.68 113.00
141.68
26.04
156.61
270.14
44.20
225.94
1055.43 277.34
778.09
579.37 186.03
393.34
Operating leases
Outstanding commitments by the lessee on account
of assets leased out by the Company under noncancelable leases: Rs. Nil (previous year Rs. 20.32)
crore.
32nd Annual Report 2007-2008
7)
9)
Earnings per share
(Note no. B (10) of schedule 13 of annual accounts)
The outstanding foreign currency exposures that have
not been hedged by a derivative instrument or otherwise
are given below:
(Note no. B (7) of schedule 13 of annual accounts)
The calculation of the basic and diluted earnings per
share is based on the following data:
a)
Year ended
Basic and diluted
Earnings for the purpose of
basic earnings per share (net
profit for the year) (Rs. in crore)
Equity shares at the beginning/
end of the year (Nos.)
Weighted average number of
equity shares for the purpose
of calculating basic and
diluted earnings per share
(Nos.)
Earnings per share - basic and
diluted (face value of
Rs.10/- each) (Rs.)
8)
31.03.2008
31.03.2007
Particulars
i)
241.67
133.98
426,077,207 426,077,207
426,077,207 426,077,207
5.67
3.14
Export of
goods and
services
ii) Advance to
vendors
iii) Bank
balances
and fixed
deposits
including
interest
accrued
there on
b)
(Note no. B (6) of schedule 13 of annual accounts)
Particulars
i)
Import of
goods and
services
USD
9.84
5.55
2.29
1.24
USD
0.58
0.29
93.41
14.76
USD
23.71
3.41
Rs. in crore
Currency
696.50
China
90.08
20.63
U.S.A
57.10
60.52
U.K.
77.38
139.70
U.A.E
77.26
2.65
Rest of the world
22.78
104.30
776.24
1024.30
The main operating assets represent floating fleet, which is
not identifiable to any geographical location.
2007-08 2006-07
3.34
0.30
0.11
0.08
GBP
0.01
-
0.03
0.01
DKK
0.03
-
-
0.04
DHS
-
-
0.62
0.03
EUR
0.10
-
0.21
0.13
JY
5.23
0.34
0.30
0.23
SGD
0.10
0.01
-
0.15
HKD
-
0.02
0.02
-
AED
0.01
-
14.66
14.06
8.82
0.67
ii) Secured
loans
payable
(including
interest
accrued)
558.36
495.56
USD
139.21
113.19
iii) Lease
loans
obligation
778.09
394.34
USD
193.99
89.86
31.03.2008 31.03.2007
451.64
In million
USD
Year ended
32nd Annual Report 2007-2008
23.98
13.39
(Rs. in crore)
TOTAL
38.90
13.38
The Company’s fleet operations are managed on a
worldwide basis from India. Fleet operating and
chartering earnings based on the geographical
location of customers:
India
In million
2007-08 2006-07
2007-08 2006-07
Geographical segment
Fleet Operating &
Chartering Earnings
Currency
Amount payable in foreign currency of the following:
Business segment
The Company has one primary business segment
of fleet operations and chartering.
b)
Rs. in crore
2007-08 2006-07
Business segment and geographical segment
a)
Amount receivable in foreign currency of the
following:
Note: Since the majority of the revenue of the Company is
in foreign currency therefore it has a natural hedge against
foreign exchange exposures.
27
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
10) Auditor’s remuneration (Note no. B (8) of schedule
13 of annual accounts)
b)
(Rs. in crore)
Particulars
Year ended
31.03.2008 31.03.2007
Audit fees
0.25
0.25
Other matters
0.34
0.37
Out of pocket expenses*
0.00
0.00
Service tax on above
0.07
0.08
TOTAL
0.66
0.70
c)
Teletech Investments (India) Limited
ii)
India Shipping, Mauritius
Individuals owning directly or indirectly an
interest in the voting power that gives them
control or significant influence
i)
Mr. Shashi Ruia, Chairman
ii)
Mr. Ravi Ruia, Vice Chairman
iv) Mr. Rewant Ruia, Director
11) Employee benefits:
d)
Key management personnel
i)
Mr. Sanjay Mehta, Managing Director
ii)
Mr. A. R. Ramakrishnan, Wholetime Director
iii) Mr. V. Ashok, Wholetime Director
e)
Other related parties where there have been
transactions:
(note no. B (12) of schedule 13 of annual accounts)
Enterprises commonly controlled or influenced by
major shareholders / directors / relatives of directors
of the Company:
a)
(i)
12) Related party transactions:
Subsidiaries
i)
Vadinar Oil Terminal Limited
ii)
Essar Sisco Ship Management Company
Limited
Essar Information Technology Limited
(ii) Essar Shipping & Logistics Limited, Cyprus
(iii) Essar Agrotech Limited
iii) Essar Logistics Limited
(iv) Essar House Limited
iv) Essar International Limited, Guernsey, Channel
Islands
(v) Essar House Services Limited
v)
(vi) Essar Steel Limited
Energy Transportation International Limited,
Bermuda
vi) Energy II Limited, Bermuda
vii) Essar Ports & Terminals Limited, Mauritius
(w.e.f. 4th March 2008)
viii) Essar Bulk Terminal Limited (w.e.f. 29th March
2008)
ix) Essar Bulk Terminal (Salaya) Limited
(w.e.f. 27th March 2008)
28
i)
iii) Mr. Anshuman Ruia, Director
*Amount is less than Rs. 1 lakh
The Company has adopted Accounting Standard (AS)
15 (Revised) ‘Employee Benefits’ with effect from 1st
April, 2007. In accordance with the above standard, the
additional obligation of the Company on account of
employee benefits, based on independent actuarial
valuation, amounting to Rs. 0.29 crore has been
accounted for by debiting the opening balance of general
reserve as on 1st April, 2007 as per transitional provision
of AS-15.
Investing company in respect of which the
Company is an associate
(vii) Futura Travels Limited
(viii) India Securities Limited
(ix) Essar Oil Limited
(x) Essar Steel Hazira Limited
(xi) Essar Oilfields Services Limited, Mauritius
(xii) Aegis BPO Services Limited
32nd Annual Report 2007-2008
The details of transactions with related parties during the year are as under:
(Rs. in crore)
Nature of Transactions
Subsidiaries
Other Related
Parties
Key Management
Personnel
Total
2007-08 2006-07 2007-08 2006-07 2007-08 2006-07 2007-08 2006-07
Fleet operating income
Essar Steel Limited
Essar Steel Hazira Limited
Essar Logistics Limited
Vadinar Oil Terminal Limited
Others
11.37
9.16
-
26.97
0.97
-
400.48
1.89
2.36
433.91
72.17
3.52
-
-
400.48
1.89
11.37
9.16
2.36
433.91
72.17
26.97
0.97
3.52
Total
20.53
27.94
404.73
509.60
-
-
425.26
537.54
Equipment lease rental / hire income
Essar Logistics Limited
Essar Steel Limited
-
0.78
-
0.19
0.19
-
-
0.19
0.78
0.19
Total
-
0.78
0.19
0.19
-
-
0.19
0.97
-
-
0.35
-
-
-
0.35
-
-
-
-
-
0.71
1.05
0.78
0.74
0.60
0.17
0.71
1.05
0.78
0.74
0.60
0.78
-
-
-
-
2.54
1.51
2.54
1.51
Fuel oil
Essar Logistics Limited
Essar Oil Limited
0.01
-
-
0.87
3.22
-
-
0.01
0.87
3.22
Total
0.01
-
0.87
3.22
-
-
0.88
3.22
0.11
-
-
-
-
-
0.11
-
-
4.52
-
-
-
-
-
4.52
-
-
13.56
20.19
-
-
13.56
20.19
-
-
4.20
0.24
4.80
-
-
-
4.20
0.24
4.80
-
Total
-
-
4.44
4.80
-
-
4.44
4.80
Repair & maintenance
Essar Agrotech Limited
Essar Constructions (India) Limited
-
-
0.30
-
0.30
0.23
-
-
0.30
-
0.30
0.23
Total
-
-
0.30
0.53
-
-
0.30
0.53
Agency and management fees
Essar Shipping & Logistics Limited
Remuneration
Sanjay Mehta
A. R. Ramakrishnan
V. Ashok
Total
Direct voyage expenses
Essar Logistics Limited
Spares & stores purchased
Essar Logistics Limited
Business center fees
Essar House Services Limited
Rent
Essar House Limited
Essar House Services Limited
Traveling expenses
Futura Travels Limited
Reimbursement of expenses
Futura Travels Limited
Others
-
-
4.23
4.21
-
-
4.23
4.21
-
-
19.53
1.14
16.11
0.78
-
-
19.53
1.14
16.11
0.78
Total
-
-
20.67
16.89
-
-
20.67
16.89
32nd Annual Report 2007-2008
29
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
(Rs. in crore)
Nature of Transactions
Subsidiaries
Other Related
Parties
Key Management
Personnel
Total
2007-08 2006-07 2007-08 2006-07 2007-08 2006-07 2007-08 2006-07
Professional /advisory / agency fees
Essar Information Technology Limited
Essar Steel Limited
India Securities Limited
Aegis BPO Services Limited
Essar Logistics Limited
0.10
-
0.37
0.05
0.22
0.22
-
0.38
0.11
0.22
0.45
-
-
-
0.37
0.05
0.22
0.22
0.10
0.38
0.11
0.22
0.45
-
Total
0.10
-
0.86
1.16
-
-
0.96
1.16
Interest on loan
Essar Sisco Ship Management Co. Limited
Essar Shipping & Logistics Limited
1.49
-
-
0.28
-
-
-
1.49
0.28
-
Total
1.49
-
0.28
-
-
-
1.77
-
-
2.42
-
-
-
-
-
2.42
-
-
5.38
-
-
-
5.38
-
-
2.42
5.38
-
-
-
5.38
2.42
-
-
-
1.14
-
-
-
1.14
Fixed assets sold
Essar Logistics Limited
Essar Shipping & Logistics
(Panama) Inc.
Total
Fixed assets (including capital
advances)
Essar Constructions (India) Limited
Fixed assets under finance lease
Essar Shipping & Logistics Limited
Investments in shares
Essar Ports & Terminals Limited
Vadinar Oil Terminal Limited
Essar Logistics Limited
-
-
445.28
-
-
-
445.28
-
1,562.19
-
4.94
72.95
-
-
-
- 1,562.19
-
4.94
72.95
Total
1,562.19
77.89
-
-
-
- 1,562.19
77.89
Loans & advances including
deposit given
Essar Sisco Ship Management Co. Limited
Essar Logistics Limited
Essar International Limited
Energy Transportation International Limited
Essar Ports & Terminals Limited
Essar House Limited
Essar House Services Limited
Essar Oil Limited
Essar Information Technology Limited
Essar Oilfields Services Limited
Essar Bulk Terminal Limited
Essar Investments Limited
0.04
0.02
-
0.14
10.48
18.72
24.92
0.17
-
2.45
1.41
0.71
0.42
-
3.50
12.00
0.15
0.58
-
-
-
-
-
-
0.04
2.45
1.41
0.71
0.42
0.02
-
0.14
10.48
18.72
24.92
3.50
12.00
0.15
0.17
0.58
Total
0.06
54.43
4.99
16.23
-
-
5.05
70.66
213.00
-
-
-
-
-
213.00
-
911.92
-
9.90
-
13.13
-
-
-
9.90
911.92
13.13
-
Total
911.92
-
9.90
13.13
-
-
921.82
13.13
Guarantee on behalf of others
Essar Shipping & Logistics Limited
615.99
730.45
615.99
730.45
-
-
615.99
730.45
Loans and advances received
Essar Sisco Ship Management
Company Limited
Advance received against sale
of investments
Essar Shipping & Logistics Limited
Essar Ports & Terminals Limited
30
32nd Annual Report 2007-2008
Outstanding balance as on 31/03/2008
Balances
Subsidiaries
Other Related
Parties
Key Management
Personnel
Total
2007-08 2006-07 2007-08 2006-07 2007-08 2006-07 2007-08 2006-07
Sundry debtors
Essar Steel Limited
Essar Logistics Limited
Essar Steel Hazira Limited
Essar Shipping & Logistics
(Panama) Inc.
Vadinar Oil Terminal Limited
21.46
-
28.01
-
36.94
-
73.24
102.39
-
-
36.94
21.46
-
73.24
28.01
102.39
4.38
1.21
5.34
-
-
-
-
5.34
4.38
1.21
25.84
29.22
42.28
175.63
-
-
68.12
204.85
Loans and advances including
deposit given
Essar Logistics Limited
Essar House Limited
Futura Travels Limited
Essar Oil Limited
Others
0.01
-
3.29
-
31.45
6.25
12.00
3.07
29.00
6.25
12.00
0.26
-
-
0.01
31.45
6.25
12.00
3.07
3.29
29.00
6.25
12.00
0.26
Total
0.01
3.29
52.77
47.51
-
-
52.78
50.80
213.00
-
-
-
-
-
213.00
-
-
-
441.21
-
-
-
441.21
-
911.92
-
-
13.13
-
-
-
911.92
13.13
-
Total
Unsecured loan
Essar Sisco Ship Management
Company Limited
Lease loan obligation
Essar Shipping & Logistics Limited
Advance received against sale
of investments
Essar Shipping & Logistics Limited
Essar Ports & Terminals Limited
Total
911.92
-
-
13.13
-
-
911.92
13.13
Sundry creditors
Essar Oil Limited
Futura Travels Limited
Essar Shipping & Logistics Limited
Essar Constructions (India) Limited
Essar House Services Limited
Aegis BPO Services Limited
Sanjay Mehta
A. R. Ramakrishnan
V. Ashok
Others
-
-
3.84
2.38
-
0.53
6.18
1.14
1.09
0.17
0.03
0.03
-
0.03
0.12
0.06
-
3.84
2.38
0.03
-
0.53
6.18
1.14
1.09
0.17
0.03
0.12
0.06
0.03
Total
-
-
6.22
9.14
0.03
0.21
6.25
9.35
Security deposit received
Essar Steel Limited
Interest accrued but not due on loans
Essar Sisco Ship Management Co. Limited
Essar Shipping & Logistics Limited
-
-
0.04
0.04
-
-
0.04
0.04
1.15
-
-
0.28
-
-
-
1.15
0.28
-
Total
1.15
-
0.28
-
-
-
1.43
-
Guarantee given on behalf of others
Essar Shipping & Logistics Limited
Energy Transportation International Limited
Vadinar Oil Terminal Limited
13.74
250.00
- 1,346.44
13.74
250.00
-
730.45
-
-
- 1,346.44
13.74
250.00
730.45
13.74
250.00
Total
263.74
263.74 1,346.44
730.45
-
- 1,610.18
994.19
Note: The names of related parties are disclosed under each class of transaction during the year where the transaction with
a single related party is 10% or more of the aggregate transactions of a class.
32nd Annual Report 2007-2008
31
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
13) (Note no. B (13) of schedule 13 of annual accounts)
c)
The Company’s entire shareholding in Vadinar Oil
Terminal Limited, has since been transferred to
Essar Ports & Terminals Ltd., its wholly owned
subsidiary.
d)
The Scheme of merger approved by the Board of
Directors on 13th February 2008 provides for:
The Company’s name has been changed to “Essar
Shipping Ports & Logistics Limited” with effect from 24th
March 2008.
14) (Note no. B (14) of schedule 13 of annual accounts)
Pursuant to the notification on AS 11 (Revised 2003)
issued by the Ministry of Corporate Affairs, requiring
foreign exchange fluctuations on repayment of foreign
currency loans and year end translation of foreign
currency liabilities relating to assets acquired from a
country outside India to be credited to the Statement of
Profit and Loss as against the earlier practice of
adjusting against the carrying cost of the assets. The
Company has from the current year taken such
exchange gain / loss to Statement of Profit and Loss.
Accordingly the profit for the year and corresponding
reserves are higher by Rs. 76.94 crore.
a)
Merger of India Shipping, a company registered
in Mauritius, which is the holding company of
Essar Oilfields Services Ltd., Mauritius with the
Company. Upon merger 18,96,06,113 equity
shares of Rs. 10/- each at a premium of
Rs. 210/- will be issued by the Company.
b)
Merger of Essar Sisco Ship Management
Company Limited, a wholly owned subsidiary
with the Company.
The above scheme has been approved by both
Bombay Stock Exchange Ltd. and National
Stock Exchange of India Ltd.
15) (Note no. B (15) of schedule 13 of annual accounts)
Significant events occurring after the balance sheet date
(not requiring adjustments to assets and liabilities as at
balance sheet date)
a)
The Company has entered into a Memorandum of
Agreement (MOA) for acquisition of two 53,500
DWT and 55,000 DWT Supramax dry bulk carriers,
with delivery of the vessels scheduled by end of
July 2008.
b)
The Company has entered into Memorandum of
Agreement for sale of one 1,28,000 DWT suezmax
Tanker and one 6290 DWT Product Carrier.
As per our report of even date
For Deloitte Haskins & Sells
Chartered Accountants
Khurshed Pastakia
Partner
Place: Mumbai
Date : June 20, 2008
32
e)
The consent of the members through postal
ballot has been obtained for the shifting of the
registered office to the State of Gujarat which
will be given effect to upon receipt of approval
from Central Law Board.
16) (Note no. B (18) of schedule 13 of annual accounts)
Previous year’s figures have been regrouped/reclassified
wherever necessary.
For and on behalf of the Board
Sanjay Mehta
Managing Director
N. Srinivasan
Director
V. Ashok
Wholetime Director
Manoj Contractor
Company Secretary
Place: Mumbai
Date : June 20, 2008
32nd Annual Report 2007-2008
BALANCE SHEET ABSTRACT AND COMPANY’S GENERAL BUSINESS PROFILE
(As per Schedule VI, part (iv) of the Companies Act, 1956)
I
Registration Details
Registration No.
2 7 7 1
State Code
0 8
Balance Sheet Date
3 1
0 3
2 0 0 8
II Capital Raised During the year (Amounts Rs. in Thousands)
Public Issue
Right Isuue
N I L
N I L
Bonus Issue
Private Placement
N I L
N I L
III Position of Mobilisation and Deployment of Funds (Amount Rs. in Thousands))
Total Liabilities
Total Asset
4 7 8 1 7 5 7 5
4 7 8 1 7 5 7 5
Source of Funds
Paid- up Capital
Reserves & Surplus
4 2 6 2 0 7 7
2 6 4 5 0 9 8 8
Secured Loans
Unsecured loans
5 5 9 3 6 0 2
1 1 5 1 0 9 0 8
Application of Funds
Net Fixed Assets
Investments
2 1 2 3 7 3 3 1
3 1 2 4 6 1 7 9
Net Current Assets
Misc. Expenditure
( 4 6 6 5 9 3 5 )
N I L
Accumulated Losses
N I L
IV Performance of Company (Amount Rs. in Thousands)
Turnover
Total Expenditure
1 0 6 3 9 3 0 3
7 9 4 5 6 1 0
+ Profit/Loss Before Tax
+ Profit /Loss After Tax
+
2 6 9 3 6 9 3
+
2 4 1 6 7 3 2
Earning Per Share in Rs.
Dividend Rate %
5 . 6 4
N I L
V Generic Names of Three Principal Products/services of Company (as per monetary terms)_Not applicable being
Shipping Company
Item code No
Product
(ITC Code)
N A
Description
Ship Operation and Chartering
Item code No
Product
(ITC Code)
N A
Description
N A
Item code No
Product
(ITC Code)
N A
Description
N A
Item code No
Product
(ITC Code)
N A
Description
N A
Note: for ITC code of Products please refer to the publication “Indian Trade Classfication “ based on harmonized Commodity
description and coding system by Ministry of Commerce, Directorate General of Commercial Intelligence & Statistics
Calcutta-700 001.
For and on behalf of the Board
Sanjay Mehta
Managing Director
N. Srinivasan
Director
V. Ashok
Wholetime Director
Manoj Contractor
Company Secretary
Place: Mumbai
Date : June 20, 2008
32nd Annual Report 2007-2008
33
34
Jamnagar
Vadinar Oil
Terminal
Limited
Essar Sisco
Ship
Management
Company
Limited
Chennai
Mumbai
Essar
Logistics
Limited
The relevant financial year of the subsidiary
ended on
31.03.08
31.03.08
31.03.08
No. of shares in the Subsidiaries held by the
Company as on 31.03.08
854,661,500
46,387,940
73,000,000
Extent of holding by the Company as at the end of
the financial period
100%
100%
100%
The net aggregate amount of the Subsidiaries
Profit/(Loss) so far as it concerns the members of
the Company.
a) Not dealt with in the Company’s Accounts :
i) For the financial year ended
31st March, 2008
(Rs.1,458,458,597)
Rs.9,108,631 Rs.287,922,719
ii) For the previous Financial years of the
Subsidiary since they became the
Company’s subsidiaries
NIL (Rs.17,282,630) Rs.226,090,492
b) Dealt with in the Company’s Accounts:
i) For the financial year ended
31st March, 2008
NIL
NIL
NIL
ii) For the previous financial years of the
Subsidiary since they became the
Company’s subsidiaries
NIL
NIL
NIL
Change of interest of the Company in the Subsidiary
between the end of the financial year of Subsidiary
and that of the Company
NIL
NIL
NIL
Material changes between the end of the financial
year of the Subsidiary and the end of the financial
year of the Company in respect of Subsidiary’s
fixed assets, investments, monies lent and borrowed
a) Fixed Assets
NIL
NIL
NIL
b) Investments
NIL
NIL
NIL
c) Money lent by the subsidiary
NIL
NIL
NIL
d) Money borrowed by the Subsidiary other than
for meeting current Liabilities (Net)
NIL
NIL
NIL
Place: Mumbai
Date : June 20, 2008
6
5
4
3
2
1
PARTICULARS
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
($. 306,474)
100%
387,105,532
31.03.08
Mauritius
Essar
Ports &
Terminals
Limited
V. Ashok
Wholetime Diractor
Sanjay Mehta
Managing Director
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
74%
37,005
31.03.08
Hazira
Essar
Bulk
Terminal
Limited
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
100%
50,000
31.03.08
Mumbai
Essar
Bulk
Terminal
(Salaya)
Limited
Manoj Contractor
Company Secretary
N. Srinivasan
Director
For and on behalf of the Board
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
$ 4,661/-
$ 6,872,324/- ( $ 412,025/- )
100%
12,000
31.03.08
Bermuda
Energy II
Limited
($. 941)
100%
1,952,000
31.03.08
Bermuda
Energy
Transportation
International
Limited
$.327,296
$.34,408,891
100%
125,840,000
31.03.08
Guernsey
Essar
International
Limited
STATEMENT PURSUANT TO SECTION 212 OF THE COMPANIES ACT, 1956 RELATING TO SUBSIDIARY COMPANIES
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
32nd Annual Report 2007-2008
Details of Subsidiary Companies pursuant to approval obtained U/S.212 ( 8 )
(Rs. in crore)
Name of Subsidiary
Companies
Year ending
Vadinar Oil
Terminal
Limited
Jamnagar
Essar
Sisco
Ship
Manag
ment
Company
Limited
Chennai
Essar
Logistics
Limited
Essar
International
Limited
Mumbai
Guernsey
31-Mar-08
31-Mar-08 31-Mar-08
31-Mar-08
Energy
Transportation
International
Limited
Energy II
Limited
Bermuda
Bermuda
31-Mar-08 31-Mar-08
Essar
Ports &
Terminals
Limited
Essar
Bulk
Terminal
Limited
Essar
Bulk
terminal
(Salaya)
Limited
Mauritius
Hazira
Mumbai
31-Mar-08 31-Mar-08 31-Mar-08
Sr.
No. Particulars
1
Capital
944.39
46.39
73.00
501.09
7.77
0.05
1,541.45
126.57
0.05
2
Reserves
-
167.93
42.61
350.60
20.69
0.04
(1.20)
(0.02)
-
3
Total Assets
3,131.82
214.32
286.02
999.02
28.46
0.09
2,494.45
213.54
0.85
4
Total Liabilities
3,131.82
214.32
286.02
999.02
28.46
0.09
2,494.45
213.54
0.85
5
Details of investments
(including investments
in subsidiaries)
-
-
-
7.82
-
-
1,544.88
-
-
6
Turnover
150.36
1.49
874.27
185.40
1.40
0.02
0.29
-
7
Profit before taxation
(145.59)
1.41
44.00
138.15
1.31
-
(1.21)
-
-
8
Provision for taxation
0.25
0.50
15.21
-
-
-
-
-
-
(1.21)
-
-
9
Profit after taxation
(145.84)
0.91
28.79
138.15
1.31
-
10
Proposed dividend
-
-
-
-
-
-
For and on behalf of the Board
Place: Mumbai
Date : June 20, 2008
32nd Annual Report 2007-2008
Sanjay Mehta
Managing Director
N. Srinivasan
Director
V. Ashok
Wholetime Diractor
Manoj Contractor
Company Secretary
35
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
AUDITORS’ REPORT ON ABRIDGED CONSOLIDATED FINANCIAL
STATEMENTS TO THE BOARD OF DIRECTORS OF ESSAR SHIPPING PORTS
& LOGISTICS LIMITED
(formerly known as Essar Shipping Limited)
We have examined the attached abridged consolidated
Balance Sheet of Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited) (the Company),
and its subsidiaries (together the Group) as at March 31,
2008 and also the abridged consolidated Statement of Profit
and Loss and the Cash Flow Statement for the year ended
on that date annexed thereto, together with significant notes
thereon. These abridged financial statements have been
prepared by the Company pursuant to Rule 7A of the
Companies (Central Government’s) General Rules and
Forms, 1956 and are based on the audited consolidated
financial statements of the Group for the year ended March
31, 2008 prepared by the management in accordance with
the requirements of Accounting Standard (AS) 21,
36
Consolidated Financial Statements, as notified under the
Companies (Accounting Standards) Rules, 2006 and covered
by our report of even date to the members of the Company,
which is attached hereto.
For Deloitte Haskins & Sells
Chartered Accountants
Place: Mumbai
Date : June 20, 2008
Khurshed Pastakia
Partner
(Membership No. 31544)
32nd Annual Report 2007-2008
AUDITORS’ REPORT ON CONSOLIDATED FINANCIAL STATEMENTS TO THE
BOARD OF DIRECTORS OF ESSAR SHIPPING PORTS & LOGISTICS LIMITED
(formerly known as Essar Shipping Limited)
1.
2.
3.
We have audited the attached Consolidated Balance
Sheet of Essar Shipping Ports & Logistics Limited
(formerly Essar Shipping Limited) (the Company) and
its subsidiaries (together the Group) as at March 31,
2008, the Consolidated Statement of Profit and Loss
and the Consolidated Cash flow Statement for the year
ended on that date annexed thereto. These consolidated
financial statements are the responsibility of the
Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements
based on our audit.
We conducted our audit in accordance with the auditing
standards generally accepted in India. Those standards
require that we plan and perform the audit to obtain
reasonable assurance about whether the financial
statements are free of material misstatements. An audit
includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting
principles used and significant estimates made by
management, as well as evaluating the overall financial
statement presentation. We believe that our audit
provides a reasonable basis for our opinion.
We report that the consolidated financial statements
have been prepared by the Company in accordance
with the requirements of Accounting Standard (AS) 21,
Consolidated Financial Statements, as notified under
the Companies (Accounting Standards) Rules, 2006.
32nd Annual Report 2007-2008
4.
Based on our audit, and to the best of our information
and according to the explanations given to us, we are
of the opinion that the said consolidated financial
statements give a true and fair view in conformity with
the accounting principles generally accepted in India:
(i)
In the case of the Consolidated Balance Sheet, of the
state of affairs of the Group as at March 31, 2008;
(ii) In the case of Consolidated Statement of Profit and
Loss, of the consolidated results of operations of the
Group for year ended on that date; and
(iii) In the case of the Consolidated Cash Flow Statement,
of the consolidated cash flows of the Group for the year
ended on that date.
For Deloitte Haskins & Sells
Chartered Accountants
Place: Mumbai
Date : June 20, 2008
Khurshed Pastakia
Partner
(Membership No. 31544)
37
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
ABRIDGED CONSOLIDATED BALANCE SHEET AS AT 31ST MARCH, 2008
(Statement containing the salient features of Consolidated Balance Sheet as per Section 219 (1) (b) (iv) of the Companies Act, 1956)
As at 31.03.2008
(Rs. in crore)
I.
SOURCES OF FUNDS
Shareholders’ funds:
a) Capital
i) Equity
ii) Advance against allotment of shares
b) Reserves and surplus
i) Capital reserve
ii) Revenue reserve
iii) Revaluation reserve
iv) Tonnage tax reserve
v) Surplus in Statement of Profit and Loss
Minority interest
Loan funds:
a) Secured loans
b) Finance lease obligations
c) Unsecured loans
426.21
47.14
307.10
728.58
538.01
162.50
1,258.24
307.10
805.16
112.27
132.50
1,010.83
3,084.63
778.09
307.33
Total
APPLICATION OF FUNDS
Fixed assets:
a) Net block
(Original cost Rs. 5931.22 (previous year Rs.2171.48) crore
less depreciation Rs. 701.69 (previous year
Rs. 698.11) crore) (Refer Note no.2)
b) Capital work in progress (including capital advances)
4,170.05
18.90
3,297.57
7.89
7,689.33
6,189.26
5,229.53
1,473.37
181.68
1,863.28
c)
Expenditure during construction
d)
Goodwill on consolidation
1,387.62
* (Aggregate market value of quoted investments is
Rs. 78.32 ( previous year Rs. 19.86) crore)
Current assets, loans and advances:
a) Inventories
b) Sundry debtors
c) Cash and bank balances
d) Other current assets
e) Loans and advances
Less: Current liabilities and provisions:
a) Liabilities
b) Provisions
Net current assets
Total
2,367.86
2,744.23
393.34
160.00
5,411.21
94.25
Investments
a) Quoted*
b) Unquoted
426.21
89.73
2,994.43
32.60
Deferred tax liability (net)
II.
As at 31.03.2007
(Rs. in crore)
2.27
15.00
3,336.65
1,039.07
9.65
2.27
1,363.15
17.27
1,365.42
35.61
199.79
308.91
1.77
482.83
1,028.91
32.61
422.72
159.56
1.06
307.28
923.23
238.02
11.91
475.09
9.67
249.93
484.76
778.98
438.47
7,689.33
6,189.26
Refer notes to abridged consolidated financial statements
Compiled from the audited annual accounts of the Company referred to in our report dated 20th June, 2008.
As per our report of even date
For and on behalf of the Board
For Deloitte Haskins & Sells
Chartered Accountants
Sanjay Mehta
N. Srinivasan
Khurshed Pastakia
Managing Director
Director
Partner
V. Ashok
Manoj Contractor
Wholetime Director
Company Secretary
Place: Mumbai
Date : June 20, 2008
38
Place: Mumbai
Date : June 20, 2008
32nd Annual Report 2007-2008
ABRIDGED CONSOLIDATED STATEMENT OF PROFIT AND LOSS FOR THE
YEAR ENDED 31ST MARCH 2008
Particulars
For the year ended
31.03.2008
(Rs. in crore)
INCOME
a) Fleet operating and chartering earnings
b) Port and terminal service income
c) Dividend on non trade current Investments
d) Interest income
e) Other income
i) Profit on sale of fleet
ii) Exchange gain
iii) Profit on sale of units
iv) Miscellaneous income
Total
EXPENDITURE
a) Fleet operating expenses
i) Direct voyage expenses
ii) Salaries, wages and other employee benefits - floating staff
iii) Other fleet operating expenses
For the year ended
31.03.2007
(Rs. in crore)
1,701.98
140.44
1.58
18.54
1,658.76
1.23
6.59
198.11
80.43
107.56
7.03
13.48
1.22
0.25
1.17
2,255.67
1,682.70
962.94
77.40
312.63
843.34
65.15
277.25
1,352.97
b)
Establishment and other expenses
i) Salaries, wages and other employee benefits - office staff
ii) Managerial remuneration
iii) Auditors’ remuneration
iv) Bad debts / provision for doubtful debts
v) Other expenses
1,185.74
34.91
4.79
1.13
66.56
19.88
2.63
0.90
24.25
68.01
107.39
266.55
221.48
115.67
104.25
112.03
1,948.39
1,517.69
PROFIT BEFORE TAX
Less: Provision for taxation
307.28
(43.68)
165.01
(7.26)
PROFIT BEFORE SHARE OF MINORITY INTEREST
Add: Share of minority’s interest (loss)
263.60
13.81
157.75
-
PROFIT FOR THE YEAR
Balance brought forward from previous year
277.41
1,010.83
157.75
887.58
AMOUNT AVAILABLE FOR APPROPRIATION
1,288.24
1,045.33
APPROPRIATIONS:
Transferred to tonnage tax reserve
Balance carried forward to balance sheet
30.00
1,258.24
34.50
1,010.83
1,288.24
1,045.33
c)
d)
Interest and finance expenses
Depreciation
Total
Earnings per share - basic and diluted (Rs.)
(face value of Rs. 10/- per share)
6.51
Refer notes to abridged consolidated financial statements
Compiled from the audited annual accounts of the Company referred to in our report dated 20th June, 2008.
As per our report of even date
For Deloitte Haskins & Sells
Chartered Accountants
Khurshed Pastakia
Partner
Place: Mumbai
Date : June 20, 2008
32nd Annual Report 2007-2008
3.70
For and on behalf of the Board
Sanjay Mehta
Managing Director
N. Srinivasan
Director
V. Ashok
Wholetime Director
Place: Mumbai
Date : June 20, 2008
Manoj Contractor
Company Secretary
39
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008
Year ended
31.3.2008
(Rs. in crore)
Year ended
31.3.2007
(Rs. in crore)
307.28
165.01
A. CASH FLOW FROM OPERATING ACTIVITIES
Net profit before tax
Adjustments for :
Depreciation
221.48
112.03
Interest and finance expenses
266.55
104.25
(18.54)
(6.59)
(Profit) / loss on sale of assets (net)
Interest Income
(198.00)
(13.44)
(Profit)/ loss on sale of investments
(107.56)
1.61
-
24.25
Provision for bad / doubtful debts
(1.58)
(1.23)
Foreign exchange loss / (gain)
Dividend on current investments
(79.12)
(9.63)
Currency alignment on conversion of non - integral foreign
subsidiaries and translation adjustments (net)
(72.95)
(22.06)
317.56
354.20
243.12
(265.58)
Operating profit before working capital changes
Adjustments for:
Trade and other receivables
Inventories
Trade payables
Cash generated from operations
Income taxes paid (net of refund)
Fringe benefit tax paid
Net cash from operating activities
(3.00)
(10.31)
(206.57)
316.31
351.11
394.62
(38.16)
(20.30)
(3.79)
(2.44)
309.16
371.88
(493.26)
(390.90)
206.38
15.81
1.00
2.10
(61.77)
(337.57)
-
7.86
B. CASH FLOW FROM INVESTING ACTIVITIES
Purchase of fixed assets including capital work in progress/ advances
Sale of fixed assets
Insurance claim received on fixed asset
Capital work in progress, expenditure during construction
and capital advances
Interest on loans given
Advance received against sale of fixed asset
Advance (repaid)/ received against sale of investments
Proceeds from sale of current investments
Investment in shares of subsidiaries
Other investments purchased
Fixed deposits matured / (placed)
Dividend on current investments
Interest received
Net cash flow from investing activities
40
22.06
-
(13.13)
13.13
1,635.57
710.42
(1,516.36)
-
(331.86)
(922.52)
(32.85)
(45.63)
1.58
1.23
17.83
8.11
(564.81)
(937.96)
32nd Annual Report 2007-2008
CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31ST MARCH 2008
Year ended
31.3.2008
(Rs. in crore)
Year ended
31.3.2007
(Rs. in crore)
(174.36)
(94.27)
Proceeds from term loans
233.71
256.26
Additional lease obligations
445.27
86.36
C. CASH FLOW FROM FINANCING ACTIVITIES
Interest and finance expenses paid
Proceeds from unsecured loans
447.33
320.00
(103.88)
(82.68)
Interest free advances given to Essar Oil Limited
-
(301.09)
Interest free advances received from Essar Oil Limited
-
301.09
Repayment of term loans
Repayment of finance lease obligation
Repayment of unsecured loans
(24.49)
(23.40)
(300.00)
(320.00)
(0.45)
(0.63)
Payment/ refund of Inter corporate deposits
Payment of unclaimed debentures and interest thereon
(36.58)
20.00
Advance towards allottment of shares
(42.59)
89.73
Net Cash flow from financing activities
443.96
251.37
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
188.31
(314.71)
72.04
386.75
260.35
72.04
Cash and cash equivalents as at beginning of the year
Cash and cash equivalents as at end of year
Non cash investing and financing transactions
Conversion of share application money into shares
89.73
-
-
96.00
Cash and bank balances
147.65
29.59
Balances in fixed deposits (maturity period of less than 3 months)
112.70
42.45
1.98
0.87
262.33
72.91
46.58
86.64
308.91
159.55
Conversion of advance to loan
Notes :
Cash and cash equivalents include :
Unrealised (gain)/ loss on foreign currency on cash and cash equivalents
Total cash and cash equivalents
Balances in fixed deposits (maturity period of more than 3 months)
CASH AND BANK BALANCES
Consolidated Cash flow statement has been prepared under the indirect method as set out in Accounting Standard - 3 ‘Cash
Flow Statement’ as notified under the Companies (Accounting Standards) Rules, 2006.
As per our report of even date
For and on behalf of the Board
For Deloitte Haskins & Sells
Chartered Accountants
Khurshed Pastakia
Sanjay Mehta
Managing Director
N. Srinivasan
Director
V. Ashok
Wholetime Director
Manoj Contractor
Company Secretary
Partner
Place: Mumbai
Date : June 20, 2008
32nd Annual Report 2007-2008
Place: Mumbai
Date : June 20, 2008
41
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
NOTES TO ABRIDGED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE YEAR ENDED 31ST MARCH 2008.
1)
The reporting date of all the subsidiaries is 31st March
2008. The list of the subsidiaries of the Company which
are included in the consolidation and the Group’s holding
therein are as under:
Name of subsidiary
Place of
incorporation
Proportion of
ownership
interest and
voting power
Vadinar Oil Terminal Limited*
India
100%
Essar Sisco Ship Management
Company Limited
India
100%
Essar Logistics Limited
India
100%
Essar International Limited
Guernsey
100%
Energy Transportation
International Limited @
Bermuda
100%
Energy II Limited @
Bermuda
100%
Essar Ports & Terminals
Limited (w.e.f. 4th March, 2008)
Mauritius
100%
Essar Bulk Terminal Limited #
(w.e.f. 29th March, 2008)
India
74%
Essar Bulk Terminal (Salaya)
Limited # (w.e.f. 27th March, 2008)
India
100%
@
Subsidiary of Essar International Limited.
#
Subsidiary of Essar Ports & Terminals Limited
*
During the year, Vadinar Oil Terminal Limited had issued
additional 9.5% share capital to a Company outside the Group.
These shares were subsequently acquired by Essar Ports &
Terminals Limited on 27th March, 2008.
Fixed assets
a)
42
Vehicles with the net book value of Rs. 3.16
(previous year 3.16) crore have been taken under
Hire Purchase agreement from India Securities
Limited and hypothecated to it.
e)
Gross block of plant and machinery includes
Rs. 38.84 (previous year Rs. 38.84) crore leased
out; W.D.V. as on March 31, 2008 is Rs. Nil
(previous year Rs. Nil).
Subsidiaries
(Note no. B (1) of schedule 14 of annual accounts)
2)
d)
In order to reflect the fair value of the Company’s
fleet, the Company had revalued it on 1st April,
2004 resulting in an enhancement from its then
carrying value by Rs. 669.52 crore. The Company
again revalued its fleet on 31st March, 2008 resulting
in an enhancement of Rs. 452.69 crore. These
enhancements have been credited to the fixed
assets revaluation reserve. Incremental depreciation
for the year on the enhanced value of Rs.26.95
(previous year Rs. 34.90) crore has been recouped
from the fixed assets revaluation reserve.
b)
Loans amounting to Rs.794.37 (previous year
Rs.605.44) crore is secured by first charge on fleet,
barge unloader and two dredgers.
c)
The Company has taken two vessels and an aircraft
on finance lease.
3)
The Company has pledged its investments in equity
shares of Essar Oil Limited (EOL) amounting to Rs.
2.27 crore in favour of lenders for loans availed by EOL
and in equity shares of Vodafone Essar Mobile Services
Limited amounting to Rs.1 crore against loan availed
for acquisition of shares.
4)
a)
The Vadinar Oil Terminal Project (which was under
construction and trial operations) (“the Project”)
together with the corresponding loans from financial
institutions and banks were taken over by Vadinar
Oil Terminal Limited (VOTL) from its holding
company, Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited) on
October 1, 2000. The construction activities at the
project site were disrupted due to a cyclonic storm
which hit the Gujarat coast in June 1998. The said
disruption resulted in increase in the project cost
requiring reappraisal of the funding requirements.
The lenders to the Project had approved in August
2003, under RBI’s Corporate Debt Restructuring
Scheme, a debt restructuring package (“the
Package”), which was further modified in December,
2003 and November, 2004. The Package provided
for substantial relief in interest and in the time for
repayment of loans, waiver of liquidated damages,
disbursement of further loans, etc. The Package
was formalised and a Master Restructuring
Agreement (MRA) was entered into on 17th
December, 2004.
VOTL complied with all the relevant conditions as
on January 31, 2005 as required under MRA
entailing restructuring of the existing loans / interest
dues and disbursement of new loans.
The interest of Rs.869.08 crore for the period
October, 1998 to December, 2003 in respect of the
loans covered by MRA was converted into funded
interest facilities. The MRA gave an option to VOTL
to repay the said funded interest facilities at any
point in time during its term at a reduced amount
computed in accordance with the mechanism
provided in the MRA or in full by one bullet payment
in March, 2026. Under the said mechanism provided
in the MRA, the funded interest facilities of
Rs. 869.08 crore would stand fully discharged if
Rs. 133.06 crore is paid on or before April 24,
2007. Should VOTL opt to discharge the funded
interest facilities, subsequent to April 24, 2007, then
32nd Annual Report 2007-2008
VOTL commenced the operation of all facilities
except the rail gantries on 1st July, 2007 and
operation of rail gantries on 1st February, 2008.
Accordingly, Single point mooring buoy (SPM), Jetty
dispatch facilities, road dispatch gantries, pipelines
and tankages amounting to Rs.2,378.08 crore, being
the cost of construction of these facilities, are
capitalised on 1st July, 2007 and Rs.505.65crore,
being cost of rail gantries, are capitalised on 1st
February, 2008.
the expected economic outflow of Rs.133.06 crore
being the present value of the obligation under the
mechanism would gradually increase at a rate and
as per the mechanism provided in the MRA. VOTL
has plans to discharge earlier the loan liabilities
covered by MRA by getting the same refinanced.
In order to give accounting effect to reflect the
substance of the transaction on the date of MRA,
VOTL has followed the principles laid down in IAS
39 (revised) - Financial Instruments – Recognition
and Measurement and FAS 15 - Accounting by
Debtors and Creditors for Troubled Debt
Restructurings in the absence of specific guidance
under Indian GAAP to cover the above-mentioned
situation.
Accordingly, the net amount of Rs. 736.02 crore,
being the difference between the obligation and
the present value of the funded interest facilities if
the same is paid on or before 24th April, 2007, has
been shown as deduction from funded interest
facilities from banks and financial institutions with a
corresponding deduction from “Expenditure during
construction”. The amount deducted from funded
interest facilities from banks and financial institutions
has been adjusted by Rs.13.81crore being the
differential present value of the obligation from 24th
April 2007 to 31st March 2008, computed as per
the mechanism provided in MRA, and included in
Interest and finance cost.
The loan balances (including funded interest
facilities) covered by MRA (hereinafter referred to
as ‘the loan balances’) have been considered in
the books of account in accordance with the bilateral
agreements, wherever signed. Where the same are
yet to be signed, the loan balances and interest
accrued and payable up to 31st March, 2008 have
been considered based on the confirmation of
balances as at 31st March, 2008 wherever received
and agreed by VOTL, or as per MRA, where the
confirmations have not been received or have not
been agreed pending reconciliation with the lenders.
b)
c)
“Capital work-in-progress” (CWIP) and “Expenditure
during construction” (EDC) includes an amount of
Rs.8.33 (previous year Rs.29.08) crore and Rs.8.00
(previous year Rs. 24.24) crore respectively
apportioned / allocated by Essar Oil Limited (EOL)
during the year in respect of composite contracts /
common expenditure. The expenditure has been
accounted for based on debit note(s) raised by EOL
and accepted by VOTL. Amount included in CWIP
has been capitalised on 1st July 2007 and amount
included in EDC has been proportionately
capitalised and charged to Statement of Profit and
Loss.
After successful completion of trial and testing runs
of marine, road facilities, tankages and pipelines,
32nd Annual Report 2007-2008
5)
d)
Term loans and funded interest facilities amounting
to Rs. 2,286.75 (previous year Rs. 2,134.63) crore
from banks and financial institutions (other than (e)
below) are secured / to be secured by first ranking
security interests on all movable and immovable
assets, present and future, pledge of shares of
VOTL held by the promoters and persons
associated with the promoters / VOTL, security
interest on rights, titles and interests under each of
the project documents, trust and retention accounts/
sub-accounts, insurance policies related to the
terminal project, immovable properties of EOL
pertaining to terminal project, guarantee by the
promoters and guarantee of the Company for
Rs. 250 crore.
e)
The facilities provided by a financial institutions upto
Rs. 200 crore and interest and other charges
thereon are secured by a guarantee of EOL for
Rs. 200 crore. To secure obligation of EOL pursuant
to the said guarantee, security is created by first
mortgage and charge on immovable and movable
properties pertaining to the EOL refinery project,
pledge over shares of EOL and an assignment
of the project contracts relating to EOL refinery
project, the trust and retention accounts pertaining
thereto.
f)
During the year, Essar Bulk Terminal Limited (EBTL)
has undertaken a project for providing Dry Bulk
Terminal Services. To provide such services, EBTL
has entered into various arrangements for the
construction of Jetty terminal, dredging of the
channel and procurement of equipments. Estimated
project cost of construction is Rs. 738 crore.
Sundry debtors
(Note no. B (4) of schedule 14 of annual accounts)
Sundry debtors (unsecured and considered good)
outstanding for more than six months include Rs.3.70
(previous year Rs.3.70) crore awarded on arbitration in
year 2002-03. The concerned debtor went into appeal
and the matter is pending before the Honorable High
Court of Madras. As the arbitration tribunal award is in
favour of the Group, the debt is considered good.
43
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
6)
(Note no. B (5) of schedule 14 of annual accounts)
a)
8)
Contingent liabilities
(Note no. B (7) of schedule 14 of annual accounts)
(Rs. in crore)
Particulars
As on
31.03.2008
As on
31.03.2007
i)
Claims against the Group not
acknowledged as debt
17.27
12.53
ii)
Guarantees given by banks*
15.98
14.80
iii)
Letter of credit (capital
commitment)
iv)
Corporate guarantees on
behalf of Essar Shipping &
Logistics Limited **
v)
vi)
(a) Finance leases:
The minimum lease rentals outstanding at the year
end are as under:
(Rs. in crore)
As on 31.03.2008
-
24.56
1,346.44
730.45
Dividend on optionally
convertible cumulative
redeemable preference share
0.01
-
Guarantee on behalf of others
104.00
104.00
Particulars
58.10
viii) Income tax appeals
before ITAT
58.10
110.76
109.20
ix)
Bills discounted with banks
80.00
49.86
x)
Letter of credit discounted
with bank
22.44
76.95
Interest on facility E on
principal amount of facility
stoppage as per MRA
41.43
-
b)
Estimated amount of contracts remaining to be
executed on capital account and not provided for is
Rs. 2,580.79 (previous year Rs. 56.42) crore.
c)
Guarantee given by others on behalf of VOTL in
respect of loan liability already existing in the books
of account Rs. 200 (previous year Rs. 200) crore.
(Note no. B (6) of schedule 14 of annual accounts)
The details for provision made by the Company for
present obligations arising out of past events are as
under:
(Rs. in crore)
Particulars
Claims against
the Company
pending arbitration
proceedings
As on Additions Reversed/
As on
01.04.2007 during the
Paid 31.03.2008
period during the
period
0.82
- Not later than one year
- Later than one year but
not later than five years
- Later than five years
Total
-
0.82
-
minimum
lease
Minimum Interest
lease
payments
Present
value of
minimum
lease
payments
86.09
48.87
37.22
789.76 202.99
182.65
55.60
29.23
26.37
586.77
257.75 113.56
144.19
26.04
156.61
270.14
44.20
225.94
1058.50 277.90
780.60
583.49 186.99
396.50
(b) Operating leases:
As at the balance sheet date the outstanding
commitments by the lessee on account of assets
leased out by the Group under non-cancelable
leases entered are Nil (previous year Rs.20.32
crore). However VOTL has a committed liability of
Rs.6.95 (previous year Rs. 7.21) crore for future
lease rental charges in respect of land taken on
lease which is owned by EOL.
9)
Business segment and geographical segment:
(Note no. B (8) of schedule 14 of annual accounts)
a)
Business segment
Year ended
31.03.2008
Year ended
31.03.2007
Rs. in crore Rs. in crore
Segment revenue
Sea transport
Surface transport
Port and terminal services
Unallocated
Total
Less : Inter segment
revenue
Net income from
operations
Segment results
Sea transport
Surface transport
Port and terminal services
Unallocated
Total
44
Present
value of
Future lease rental
obligation payable :
* Includes guarantee of Rs. 13.74 crore issued by bank in favour of
ETIL which is backed by counter guarantee of the Company
** Corporate guarantee on behalf of Essar Shipping & Logistics
Limited has been backed by a counter guarantee from Essar Global
Limited.
As on 31.03.2007
payments
Note:
7)
Minimum Interest
lease
payments
vii) Disputed sales tax demand
under appeal in the honorable
High Court of Madras.
xi)
Leases
1,433.34
493.23
140.44
210.76
1,391.55
303.25
16.97
2,277.77
1,711.77
(22.10)
(29.07)
2,255.67
1,682.70
338.90
19.60
6.33
190.46
147.50
19.59
95.58
555.29
262.67
32nd Annual Report 2007-2008
Year ended
31.03.2008
Year ended
31.03.2007
Rs. in crore Rs. in crore
Less:
Unallocable interest and
finance charges (net)
Profit before tax
Less: Income tax
Profit after tax, before
share of minority interest
Add: Share of loss
transferred to minority
Profit for the year
Segment assets
Sea transport
Surface transport
Port & terminal services
Unallocated
Total assets
Segment liabilities
Sea transport
Surface transport
Port & terminal services
Unallocated
Total liabilities
Fixed assets acquired during
the year
Sea transport
Surface transport
Port & terminal services
Total
Depreciation*
Sea transport
Surface transport
Port & terminal services
Total
Non cash expense other
than depreciation
Bad debts / provision for
doubtful debts
Sea transport
Surface transport
Port & terminal services
Total
Geographical segment
The Group’s fleet operations are managed on a
worldwide basis from India. Fleet operating and
chartering earnings are based on the geographical
location of customers.
(248.01)
(97.66)
307.28
(43.68)
165.01
(7.26)
Segment revenue
263.60
157.75
India
13.81
-
277.41
157.75
2,695.22
93.40
4,664.38
486.65
2,050.93
52.00
4,571.09
7,939.65
6,674.02
(1,031.54)
(43.75)
(102.21)
(3,294.38)
(265.54)
(123.54)
(86.11)
(3,315.03)
(4,471.88)
(3,790.22)
568.83
3.92
2,991.96
117.02
8.96
-
3,564.71
125.98
131.54
1.66
88.28
111.69
0.34
-
221.48
112.03
(Rs. in crore)
Year ended
31.03.2008
Year ended
31.03.2007
1,664.88
1,261.27
China
90.08
20.63
U.S.A
70.56
60.52
U.K.
86.08
157.69
UAE
77.26
37.23
Rest of the world
57.54
128.39
209.27
16.97
2,255.67
1,682.70
Unallocated
Total
The main operating assets represent floating fleet, which
is not identifiable to any geographical location.
10) Earnings per share:
(Note no. B (9) of schedule 14 of annual accounts)
The calculation of the basic and diluted earnings per
share is based on the following data:
Year ended
-
23.67
0.58
24.25
* excludes depreciation of Rs. 4.43 (previous year
Rs.3.33) crore transferred to expenditure during
construction and Rs. 26.95 (previous year Rs.34.90)
crore recouped from fixed assets revaluation reserve.
32nd Annual Report 2007-2008
b)
Earnings for the purpose
of basic earnings per share
(net profit for the year after
share of minority interest) Rs. in Crore
Equity shares at the beginning
and end of the year (Nos.)
31.03.2008
31.03.2007
277.41
157.75
426,077,207 426,077,207
Weighted average number of
equity shares for the purpose
of calculating basic and
diluted earnings per share
(Nos.)
426,077,207 426,077,207
Basic and diluted earnings
per share of face value of
Rs.10/- each (Rs.)
6.51
3.70
11) (Note no. B (10) of schedule 14 of annual accounts)
The year-end foreign currency exposures that have not
been hedged by a derivative instrument or otherwise
are given below:
45
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
a)
Amount receivable in foreign currency on
account of the following:
Particulars
Rs. in crore
Currency
As on As on
31.03.08 31.03.07
Export of
goods and
services
ii) Advance to
vendors
In million
As on As on
31.03.08 31.03.07
b)
38.92
23.98
USD
9.84
5.55
2.89
0.11
3.00
1.69
0.79
2.48
USD
EUR
0.60
0.60
0.30
0.01
0.31
Import of
goods and
services
31 March
2008
31 March
2007
19.72
15.17
19.72
15.17
-
6.94
0.82
0.37
(B)
0.82
7.31
Net deferred tax liability (A-B)
18.90
7.86
Deferred tax liability
Depreciation on fixed assets
(A)
Unabsorbed depreciation
Other disallowance
93.41
14.76
USD
23.71
3.41
Rs. in crore
Currency
21.42
0.17
0.03
0.62
0.29
0.37
0.05
22.95
54.62
0.21
0.01
0.04
0.03
0.28
0.23
0.15
55.57
In million
As on As on
31.03.08 31.03.07
USD
GBP
DKK
DHS
EUR
JY
SGD
HKD
AED
3.36
0.01
0.03
0.10
5.25
0.12
0.01
8.88
9.13
0.02
0.00
0.00
0.00
0.38
0.01
0.02
9.56
ii) Advance
from
customer
0.09
USD
iii) Outstanding
liabilities
0.45
USD
0.09
iv) Lease
obligation
778.09 393.34 USD
193.99
89.86
v) Secured
loans
payable
(including
interest
accrued)
558.36 495.56 USD
139.21 113.19
vi) Letter of
credit for
supply
14.79 USD
3.38
vii) Liability on
account of
Essar
Shipping &
Logistics
Limited
48.13
- USD
12.00
Note: Since the majority of the revenue of the Group is in
foreign currency there is a natural hedge against foreign
exchange exposures.
46
As at
st
Deferred tax assets
As on As on
31.03.08 31.03.07
i)
As at
st
Amount payable in foreign currency on account
of the following:
Particulars
(Rs. in crore)
Particulars
i)
iii) Bank
balance
and fixed
deposits
including
interest
accrued
thereon
12) Deferred tax liability
(Note no. B (12) of schedule 14 of annual accounts)
The components of net deferred tax liability are as
follows:
13) (Note no. B (13) of schedule 14 of annual accounts)
Essar Logistics Limited (subsidiary) has changed its
method of depreciation on fixed assets with retrospective
effect from straight line method to written down value
method in respect of furniture and fixtures, office
equipments, motor cars and two wheelers. The
additional depreciation due to change in the method
amounting to Rs.0.08 crore has been charged to the
Statement of Profit and Loss.
14) Employee benefits:
(Note no. B (14) of schedule 14 of annual accounts)
Accounting Standard (AS) 15 ‘Employee benefits’ has
been adopted by the Group effective from 1st April 2007.
In accordance with the standard, the additional obligation
of the Group on account of employee benefits, based
on independent actuarial valuation amounting to Rs 2.66
crore (net of deferred tax adjustment of Rs.0.32 crore)
has been accounted by debiting the opening balance of
revenue reserve / Statement of Profit and Loss, as
appropriate, as on 1st April 2007.
15) Related party transactions:
(Note no. B (15) of schedule 14 of annual accounts)
(a) Investing company in respect of which the
Company is an associate:
i)
Teletech Investments (India) Limited
ii)
India Shipping
(b) Individuals owning directly or indirectly an
interest in the voting power that gives them
control or significant influence:
i)
Mr. Shashi Ruia, Chairman
ii)
Mr. Ravi Ruia, Vice Chairman
iii) Mr. Anshuman Ruia, Director
iv) Mr. Rewant Ruia, Director
32nd Annual Report 2007-2008
(c) Key Management Personnel:
i)
ii)
iii)
iv)
v)
vi)
vii)
Mr. Sanjay Mehta, Managing Director
(Essar Shipping Ports & Logistics Limited)
Mr. A. R. Ramakrishnan, Wholetime Director
(Essar Shipping Ports & Logistics Limited)
Mr. V. Ashok, Wholetime Director
(Essar Shipping Ports & Logistics Limited)
Mr. K. K. Sinha, Wholetime Director
(Vadinar Oil Terminal Limited)
Mr. Rajen Sachar, Manager
(Vadinar Oil Terminal Limited)
Mr. A. K. Musaddy, Wholetime Director
(Essar Logistics Limited)
Admiral Sampath Gopal, Wholetime Director
(Essar Bulk Terminal Limited)
(v)
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
Essar House Services Limited
Essar Steel Limited
Futura Travels Limited
India Securities Limited
Essar Oil Limited
Bhander Power Limited
Essar Steel Hazira Limited
(xii)
Essar Power Limited
(xiii) Clickforsteel Services Limited
(xiv) Essar Shipping & Logistics Limited
(xv) Essar Investments Limited
(xvi) Essar Teleholdings Limited
(xvii) Essar Oilfields Services Limited
(xviii) Aegis BPO Services Limited
(xix) Essar Steel Limited (SEZ unit )
(d) Other related parties where there have been
transactions:
(xx) Essar Properties Limited
(xxi) Imperial Consultants and Securities Private
Limited
Enterprises commonly controlled or influenced by
major shareholders / directors / relatives of directors
of the Group:
(i)
Essar Information Technology Limited
(ii)
Essar Agrotech Limited
(iii) Essar Constructions (India) Limited
(iv) Essar House Limited
(xxii) Essar Project Management Consultancy
Limited
(xxiii) Essar Engineering Services Limited
(xxiv) Vadinar Power Company Limited
Transactions with related parties are as under:
(Rs. in crore)
Other related
parties
Key management
personnel
Total
2007-08
2006-07
2007-08
2006-07
2007-08
2006-07
1,130.49
1,013.31
-
-
1,130.49
1,013.31
3.90
77.66
-
-
3.90
77.66
35.62
14.97
-
-
35.62
14.97
Fleet operating income
Essar Steel Limited
Essar Steel Hazira Limited
Essar Oil Limited
Essar Constructions (India) Limited
5.21
-
-
-
5.21
-
Others
0.36
1.16
-
-
0.36
1.16
1,175.58
1,107.10
-
-
1,175.58
1,107.10
202.29
56.84
-
-
202.29
56.84
-
11.84
-
-
-
11.84
0.19
0.19
-
-
0.19
0.19
1.00
-
-
-
1.00
-
0.35
-
-
-
0.35
-
Total
Port, terminal and technical service
Essar Oil Limited
Sale of materials
Essar Oil Limited
Equipment lease rental / hire income
Essar Steel Limited
Interest receipts
Essar Shipping & Logistics Limited
Agency and management fees
Essar Shipping & Logistics Limited
32nd Annual Report 2007-2008
47
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
(Rs. in crore)
Other related
parties
Remuneration
Sanjay Mehta
A. R.Ramkrishnan
V. Ashok
A. K. Musaddy
K. K. Sinha
Rajen Sachar
Sampat Gopal
Total
Fuel oil
Essar Oil Limited
Stores and spares
Essar Constructions (India) Limited
Essar Steel Limited
Total
Business center fees
Essar House Services Limited
Rent
Essar House Limited
Essar House Services Limited
Total
Repair and maintenance
Essar Agrotech Limited
Essar Constructions (India) Limited
Total
Travelling / lodging expenses
Futura Travels Limited
Essar Properties Limited
Total
Freight / lease hire charges
Essar Constructions (India) Limited
Essar Oil Limited
Total
Jetty constructions and PMC
Essar Constructions (India) Limited
Essar Project Management Consultants Limited
Total
Steel procurement
Essar Steel Limited
Reimbursement of expenses
Essar House Limited
Essar House Services Limited
Essar Constructions (India) Limited
Essar Steel Limited
Futura Travels Limited
Total
48
Key management
personnel
Total
2007-08
2006-07
2007-08
2006-07
2007-08
2006-07
-
-
0.64
1.04
0.78
0.78
0.98
0.30
0.27
4.79
0.62
0.90
0.52
0.33
0.26
2.63
0.64
1.04
0.78
0.78
0.98
0.30
0.27
4.79
0.62
0.90
0.52
0.33
0.26
2.63
0.87
3.22
-
-
0.87
3.22
0.05
5.31
5.36
1.61
1.61
-
-
0.05
5.31
5.36
1.61
1.61
13.56
20.19
-
-
13.56
20.19
4.20
0.24
4.44
4.80
4.80
-
-
4.20
0.24
4.44
4.80
4.80
0.30
1.91
2.21
0.30
1.78
2.08
-
-
0.30
1.91
2.21
0.30
1.78
2.08
4.97
0.01
4.98
4.24
4.24
-
-
4.97
0.01
4.98
4.24
4.24
7.80
0.25
8.05
5.46
0.25
5.71
-
-
7.80
0.25
8.05
5.46
0.25
5.71
3.80
0.23
4.03
-
-
-
3.80
0.23
4.03
-
0.68
-
-
-
0.68
-
1.14
0.12
0.01
19.53
20.80
0.03
0.75
16.11
16.89
-
-
1.14
0.12
0.01
19.53
20.80
0.03
0.75
16.11
16.89
32nd Annual Report 2007-2008
(Rs. in crore)
Other related
parties
Professional / advisory / agency fees
Essar Information Technology Limited
Essar Steel Limited
India Securities Limited
Aegis BPO Services Limited
Essar Oil Limited
Total
Purchase of materials
Essar Constructions (India) Limited
Cenvat receivable
Essar Oil Limited
Cenvat payable
Essar Constructions (India) Limited
Interest on loan
Essar Shipping & Logistics Limited
Essar Steel Limited
India Securities Limited
Total
Loan arrangement expenses
India Securities Limited
Sale of fixed assets
Essar Shipping & Logistics (Panama) Inc.
Purchase of fixed assets
Essar Constructions (India) Limited
Fixed asset on finance lease
Essar Shipping & Logistics Limited
Loans and advances including
deposits given
Essar House Limited
Essar House Services Limited
Essar Oil Limited
Essar Information Technology Limited
Essar Oilfields Services Limited
Essar Investments Limited
Essar Steel Limited
Essar Constructions (India) Limited
Essar Steel Hazira Limited
Essar Shipping & Logistics Limited
Essar Bulk Terminal Limited
Total
CWIP capitalised during the year
Essar Constructions (India) Limited
CWIP- expansion
Essar Engineering Services Limited
32nd Annual Report 2007-2008
Key management
personnel
Total
2007-08
2006-07
2007-08
2006-07
2007-08
2006-07
0.43
0.05
0.22
0.22
3.17
4.09
0.40
0.11
0.22
0.45
1.18
-
-
0.43
0.05
0.22
0.22
3.17
4.09
0.40
0.11
0.22
0.45
1.18
0.54
-
-
-
0.54
-
7.63
19.39
-
-
7.63
19.39
14.65
19.39
-
-
14.65
19.39
0.47
0.40
0.87
9.11
9.11
-
-
0.47
0.40
0.87
9.11
9.11
-
0.02
-
-
-
0.02
5.38
-
-
-
5.38
-
0.89
1.14
-
-
0.89
1.14
445.28
-
-
-
445.28
-
2.45
1.41
112.37
0.71
0.42
25.08
0.07
0.02
28.27
170.80
3.50
416.96
0.15
0.58
0.17
421.36
-
-
2.45
1.41
112.37
0.71
0.42
25.08
0.07
0.02
28.27
170.80
3.50
416.96
0.15
0.58
0.17
421.36
31.33
-
-
-
31.33
-
13.62
177.26
-
-
13.62
177.26
49
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
(Rs. in crore)
Other related
parties
Key management
personnel
Total
2007-08
2006-07
2007-08
2006-07
2007-08
2006-07
135.72
89.50
-
-
135.72
89.50
-
42.40
-
-
-
42.40
159.28
-
-
-
159.28
-
12.00
-
-
-
12.00
-
Advances for expansion project
Essar Constructions (India) Limited
Loans and advances received
Essar Steel Limited
Essar Shipping & Logistics Limited
Essar Investments Limited
India Securities Limited
-
3.16
-
-
-
3.16
42.03
56.02
-
-
42.03
56.02
213.31
101.58
-
-
213.31
101.58
57.04
102.86
-
-
57.04
102.86
89.73
-
-
-
89.73
-
82.02
-
-
-
82.02
-
615.99
730.45
-
-
615.99
730.45
111.60
202.73
-
-
111.60
202.73
Essar Steel Hazira Limited
0.34
109.35
-
-
0.34
109.35
Essar Shipping & Logistics (Panama) Inc.
5.34
-
-
-
5.34
-
37.65
71.06
-
-
37.65
71.06
1.47
0.55
-
-
1.47
0.55
156.40
383.69
-
-
156.40
383.69
31.45
29.00
-
-
31.45
29.00
Essar Oil Limited
Total
Advance received against sale of
investments/allotment of shares
Essar Shipping & Logistics Limited
Issue of equity shares
Essar Shipping & Logistics Limited
Allotment of preference shares
Essar Shipping & Logistics Limited
Guarantee on behalf of others
Essar Shipping & Logistics Limited
Outstanding as on 31/03/2008
Sundry debtors
Essar Steel Limited
Essar Oil Limited
Others
Total
Loans and advances including
deposits given
Essar House Limited
Futura Travels Limited
Essar Oil Limited
Essar Infrastructure Holding Company Limited
6.25
6.25
-
-
6.25
6.25
161.39
151.18
-
-
161.39
151.18
0.19
0.20
-
-
0.19
0.20
Essar Information Technology Limited
0.71
-
-
-
0.71
-
Essar House Services Limited
1.41
-
-
-
1.41
-
Essar Steel Limited
-
0.16
-
-
-
0.16
Essar Oilfields Services Limited
-
0.10
-
-
-
0.10
Essar Steel Limited
-
1.15
-
-
-
1.15
Essar Constructions (India) Limited
89.50
88.42
-
-
89.50
88.42
Essar Shipping & Logistics Limited
28.07
-
-
-
28.07
-
319.92
276.46
-
-
319.92
276.46
Total
50
32nd Annual Report 2007-2008
(Rs. in crore)
Other related
parties
Key management
personnel
Total
2007-08
2006-07
2007-08
2006-07
2007-08
2006-07
47.14
102.86
-
-
47.14
102.86
147.33
-
-
-
147.33
-
441.21
-
-
-
441.21
-
Advance received against allotment
of shares
Essar Shipping & Logistics Limited
Unsecured loan
Essar Shipping & Logistics Limited
Lease loan obligation
Essar Shipping & Logistics Limited
Sundry creditors
Essar Oil Limited
17.60
0.53
-
-
17.60
0.53
-
0.03
-
-
-
0.03
Futura Travels Limited
3.90
6.25
-
-
3.90
6.25
Essar Shipping & Logistics Limited
2.38
-
-
-
2.38
-
Essar Constructions (India) Limited
12.72
20.53
-
-
12.72
20.53
Essar Engineering Services Limited
13.11
-
-
-
13.11
-
-
1.09
-
-
-
1.09
0.35
187.30
-
-
0.35
187.30
12.00
-
-
-
12.00
-
Essar Agrotech Limited
Essar House Services Limited
Essar Steel Limited
Essar Investments Limited
Essar Project Management Consultants Limited
0.10
-
-
-
0.10
-
Aegis BPO Services Limited
-
0.17
-
-
-
0.17
Sanjay Mehta
-
-
0.03
0.03
0.03
0.03
A. R. Ramakrishnan
-
-
-
0.12
-
0.12
V. Ashok
-
-
-
0.06
-
0.06
K. K. Sinha
-
-
-
0.09
-
0.09
Rajen Sachar
-
-
-
0.04
-
0.04
62.16
215.90
0.03
0.34
62.19
216.24
0.04
0.04
-
-
0.04
0.04
Total
Security deposit received
Essar Steel Limited
Interest accrued but not due on loan
Essar Shipping & Logistics Limited
Essar Steel Limited
Total
0.47
-
-
-
0.47
-
-
7.06
-
-
-
7.06
0.47
7.06
-
-
0.47
7.06
Guarantee on behalf of others
Essar Shipping & Logistics Limited
Essar Oil Limited
Total
1,346.44
730.45
-
-
1,346.44
730.45
104.00
104.00
-
-
104.00
104.00
1,450.44
834.45
-
-
1,450.44
834.45
200.00
200.00
-
-
200.00
200.00
Guarantee availed for loan taken
Essar Oil Limited
Note: 1) The names of related parties are disclosed under each class of transaction during the year where the transaction
with a single related party is 10% or more of the aggregate transactions of a class.
2) The Company has paid sitting fees to group of individuals having significant influence: Rs.0.01 (previous year
Rs.0.01) crore.
32nd Annual Report 2007-2008
51
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
16) (Note no. B (16) of schedule 14 of annual accounts)
Pursuant to the notification on AS 11 issued by the
Ministry of Corporate Affairs, requiring foreign exchange
fluctuations on repayment of foreign currency loans and
year end translation of foreign currency liabilities relating
to assets acquired from a country outside India to be
credited to the Statement of Profit and Loss as against
the earlier practice of adjusting against the carrying
cost of the assets. The Company has from the current
year taken such exchange gain / loss to Statement of
Profit and Loss. Accordingly the profit for the year and
corresponding reserves are higher by Rs. 76.94 crore.
c)
The Company’s entire shareholding in Vadinar Oil
Terminal Limited has since been transferred to
Essar Ports & Terminals Limited, its wholly owned
subsidiary.
d)
The Scheme of merger approved by the Board of
Directors on 13th February 2008 provides for:
i)
Merger of India Shipping, a company registered
in Mauritius, which is the holding company of
Essar Oilfields Services Ltd., Mauritius with the
Company. Upon merger 18,96,06,113 equity
shares of Rs. 10/- each at a premium of
Rs. 210/- will be issued by the Company.
ii)
Merger of Essar Sisco Ship Management
Company Limited, a wholly owned subsidiary
with the Company.
17) (Note no. B (17) of schedule 14 of annual accounts)
The Company’s name has been changed to “Essar
Shipping Ports & Logistics Limited” with effect from 24th
March, 2008.
18) (Note no. B (18) of schedule 14 of annual accounts)
The above scheme has been approved by both
Bombay Stock Exchange and National Stock
Exchange of India Limited.
Significant events occurring after the balance-sheet date
(not requiring adjustments to assets and liabilities as at
balance sheet date):
e)
a)
The Company has entered into a Memorandum of
Agreement (MOA) for acquisition of two 53,500
DWT and 55,000 DWT Supramax dry bulk carriers,
with delivery of the vessels scheduled beyond July
2008.
b)
The Company has entered into Memorandum of
Agreement for sale of one 1, 28,000 DWT Suezmax
Tanker and one 6,290 DWT Product Carrier.
As per our report of even date
The consent of the members through postal ballot
has been obtained for the shifting of the registered
office to the State of Gujarat which will be given
effect to upon receipt of approval from Company
Law Board.
19) (Note no. B (19) of schedule 14 of annual accounts)
Previous year’s figures have been regrouped /
reclassified wherever necessary.
For and on behalf of the Board
For Deloitte Haskins & Sells
Chartered Accountants
Khurshed Pastakia
Sanjay Mehta
Managing Director
N. Srinivasan
Director
V. Ashok
Wholetime Director
Manoj Contractor
Company Secretary
Partner
Place: Mumbai
Date : June 20, 2008
52
Place: Mumbai
Date : June 20, 2008
32nd Annual Report 2007-2008
ESSAR SHIPPING PORTS & LOGISTICS LIMITED
REGD. OFFICE: Administrative Building, Essar Refinery Complex, Okha Highway (SH – 25),
Taluka Khambhalia, District Jamnagar, Gujarat 361 305
PROXY FORM
Member’s Folio No.
: _________________________
and/or
DPID No./Client ID No.* :
I/We.....................................................................................................................................................................................................of
................................................................................in the district of............................................................being a member of
ESSAR SHIPPING PORTS & LOGISTICS LIMITED, hereby appoint......................................................................of
..................................................or failing him.....................................................of.................................................as my/our proxy
to vote for me/us and on my/our behalf at the THIRTY-SECOND ANNUAL GENERAL MEETING of the Company to be held
on Saturday, September 27, 2008 at 3.30 P.M. at the Registered Office of the Company at Administrative Building, Essar
Refinery Complex, Okha Highway (SH – 25), Taluka Khambhalia, District Jamnagar, Gujarat 361 305 and at every adjournment
thereof.
Signed this.........................................day of.................................................2008.
PROXY FORM MUST REACH THE COMPANY’S REGD. OFFICE, AT
ADMINISTRATIVE BUILDING, ESSAR REFINERY COMPLEX, OKHA
HIGHWAY (SH – 25), TALUKA KHAMBHALIA, DISTRICT
JAMNAGAR, GUJARAT 361 305, NOT LESS THAN 48 HOURS
BEFORE THE COMMENCEMENT OF THE MEETING.
Affix Re.1
Revenue
Stamp
SIGNATURE
* Applicable only in case of Investors holding shares in electronic form.
ESSAR SHIPPING PORTS & LOGISTICS LIMITED
REGD. OFFICE: Administrative Building, Essar Refinery Complex, Okha Highway (SH – 25),
Taluka Khambhalia, District Jamnagar, Gujarat 361 305
ATTENDANCE SLIP
Member’s Folio No.
: _________________________
and/or
DPID No./Client ID No.* :
32nd ANNUAL GENERAL MEETING
TIME
: 3.30 P.M.
DATE : SEPTEMBER 27, 2008
VENUE : ADMINISTRATIVE BUILDING
ESSAR REFINERY COMPLEX
OKHA HIGHWAY (SH-25)
TALUKA KHAMBHALIA
DISTRICT JAMNAGAR
GUJARAT 361 305
MEMBER
PROXY
[Name in Capital letters]
I hereby record my presence at the 32nd AGM of the Company
Signature of Member/Proxy
NOTE:
1. Admission restricted to Members/Proxies only.
2. Please avoid bringing children/non-members with you.
* Applicable only in case of Investors holding shares in electronic form.
Book Post
If undelivered, please return to :
Data Software Research Company Private Limited
Unit : Essar Shipping Ports & Logistics Limited
“Sree Sovereign Complex”
No. 22, 4th Cross Street, Trustpuram
Kodambakkam, Chennai - 600 024