Annual Report 2007 - 2008archive.essar.com/upload/pdf/ESPLL_AR_07_08.pdf2. To appoint a Director in...
Transcript of Annual Report 2007 - 2008archive.essar.com/upload/pdf/ESPLL_AR_07_08.pdf2. To appoint a Director in...
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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
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32nd Annual Report 2007-2008 1
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
COMPANY SECRETARY
Manoj Contractor
AUDITORS
Deloitte Haskins & Sells
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: [email protected]
BOARD OF DIRECTORS
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2 32nd Annual Report 2007-2008
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
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:
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.
SPECIAL BUSINESS:
6. 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.”
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
NOTICE TO MEMBERS
candidature for the office of Director, be and is hereby
appointed as Director of the Company.”
8. To consider and if thought fit, to pass with or without
modification, the following resolution as an Ordinary
resolution:
“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 re-
appointed 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.”
“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 re-
enactment thereof, for the time being in force) or any
amendments made thereto.”
“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.”
“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,
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32nd Annual Report 2007-2008 3
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
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. 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, 4th
Cross Street,
Trustpuram, Kodambakkam, Chennai 600 024,
Tel : 91-44-2483 3738, Fax: 91-44-2483 4636.
5. Members who are holding shares in identical order of
names in more than one folio are requested to send to
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.
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.
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.
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4 32nd Annual Report 2007-2008
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
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.
ANNEXURE TO NOTICE:
EXPLANATORY STATEMENT PURSUANT TO SECTION 173(2) OF THE COMPANIES ACT, 1956.
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 re-
appointed 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
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32nd Annual Report 2007-2008 5
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.
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
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6 32nd Annual Report 2007-2008
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
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
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.
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.
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32nd Annual Report 2007-2008 7
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
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.
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8 32nd Annual Report 2007-2008
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 For the For the For the
Particulars year ended year ended year ended year ended
31-03-2008 31-03-2007 31-03-2008 31-03-2007
Total Income 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
Add : Share of Minority Interest — — 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
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
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-to-
end 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 9
Essar Bulk
Terminal Ltd.
(India)
Vadinar Oil
Terminal Ltd.
(India)
Essar Bulk
Terminal (Salaya) Ltd.
(India)
Energy Transportation
International Ltd.
(Bermuda)
Energy II Ltd.
(Bermuda)
100%100%100%100%74%***
Essar Port &
Terminals Ltd.
(Mauritius)
** Essar Oilfields
Services Ltd.
(Mauritius)
Essar Logistics Ltd.
(India)
Essar
International Ltd.
(Guernsey)
100% 100% 100% 100%
Essar Shipping Ports &
Logistics Ltd.
(India)
76.46%*
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.
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
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.
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
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)
* Alongwith other promoter group companies
** Upon merger of India Shipping
*** Balance 26% held by Essar Steel Limited
-
10 32nd Annual Report 2007-2008
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
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.
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 semi-
submersible 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.
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.
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.
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.
The Total Income for the year included:
i. Profit on Sale of Ships in the Sea Transportation
Business — Rs. 198.11 crore
ii. Profit on Sale of Investments — Rs. 107.56 crore and
iii. Notional Currency Exchange difference — Rs. 80.43
crore.
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.
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%.
0
500
1000
1500
2000
2500
FY 08FY 07
1,683
2,256
INR
Cro
re 34.1%
TOTAL INCOME
0100200300400500600700800900
FY 08FY 07
381
759
INR
Cro
re108.6%
EBITDA
0
50
100
150
200
250
300
FY 08FY 07
158
277
INR
Cro
re
75.9%
PROFIT AFTER TAX
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.
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.
Income and EBIDTA
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.
-
32nd Annual Report 2007-2008 11
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.
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.
SEA TRANSPORTATION BUSINESS:
Energy Transportation Group
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
thorough due diligence by BP of the Company’s systems
and procedures.
Integrated Bulk and Petroleum Product Transportation
Group
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.
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.
RISK MANAGEMENT:
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.
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.
0
200
400
600
800
1000
1200
Mar-08Mar-07Mar-06Mar-05Mar-04Mar-03Mar-020
50
100
150
200
250
300
Profitability
YearsRevenues
496
208
10978
62
262
195
269
141.15496
671
863
469 465
760
258
1045
326
1064
278200
INR
Cr
INR
Cr
Operating Profit PBT
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
2008200720062005200420032002
Debt:Equity Ratio
Years
0.62
0.54
0.69
0.51
0.55
0.51
0.68
Per
cen
tag
e
Debt:Equity Ratio
-
12 32nd Annual Report 2007-2008
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
• Capesize Dry Bulk Carrier, M.V. Govind Prasad (129,237
DWT).
• Newly Built Diving Support Vessel, Tug Perseverance.
• Capesize Dry Bulk Carrier, M.V. Kiran (175,048 DWT).
Vessels Sold
• Handysize Dry Bulk Carrier, M.V. Chennai Polivu (38,023
DWT).
• Handysize Dry Bulk Carrier, M.V. Chennai Valarchi
(38,019 DWT).
• Mini Bulk Carrier, M.V. Nand Bhavani (2,200 DWT).
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.
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
3. Essar Bulk Terminal Limited, India (subsidiary of EPTL)
4. Essar Bulk Terminal (Salaya) Limited, India (wholly
owned subsidiary of EPTL)
5. Essar Logistics Limited, India
6. Essar Sisco Ship Management Company Limited, India
7. Essar International Limited, Guernsey, Channel Islands
(EIL)
8. Energy Transportation International Limited, Bermuda
(wholly owned subsidiary of EIL)
9. Energy II Limited, Bermuda (wholly owned subsidiary
of EIL)
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-CL-
III 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 13
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.
CORPORATE GOVERNANCE:
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”.
PARTICULARS REQUIRED UNDER THE COMPANIES
(DISCLOSURE OF PARTICULARS IN THE REPORT OF
THE BOARD OF DIRECTORS) RULES, 1988:
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, : Rs. 716.58 crore
sale of ships, freight, charter
hire earnings, interest
income, etc.)
(2) Used (including cost of : Rs. 563.85 crore
acquisition of ships, loan
repayments, interest,
operating expenses, etc.)
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.
PARTICULARS OF EMPLOYEES:
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.
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;
(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;
(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;
(d) the Directors have prepared the annual accounts on a
going concern basis.
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 co-
operation during the year.
For and on behalf of the Board
Jamnagar Sanjay Mehta R. N. Bansal
July 29, 2008 Managing Director 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
1. Essar Investments Limited
2. Teletech Investments India Limited
3. Shubhangi Investments and Trading Limited
4. Essar Global Limited
5. India Shipping
6. Essar Shipping & Logistics Limited
-
14 32nd Annual Report 2007-2008
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 No. of Attendance No. of outside No. of *No. of Committee
Director Board at last Directorships Directorships Positions held in
Meetings AGM in other Indian in Indian other public limited
attended public limited private limited companies
companies companiesChairman Member
Mr. Shashi Ruia Promoter,
(Chairman) Non-Executive 4 N 8 1 - -
Mr. Ravi Ruia Promoter,
(Vice Chairman) Non-Executive 3 N 7 - - -
Mr. Anshuman Ruia Promoter,
Non-Executive 7 N 8 - - 3
**Mr. Rewant Ruia Promoter,
Non-Executive 5 N 5 - - -
Mr. R. N. Bansal Independent,
Non-Executive 7 Y 8 1 4 4
**Mr. S. K. Poddar Independent,
Non-Executive - N 12 3 3 3
Mr. N. Srinivasan Independent,
Non-Executive 7 Y 14 2 4 5
Mr. Sanjay Mehta Non-Promoter,
(Managing Director) Executive 2 N 4 - - -
Mr. A. R. Ramakrishnan Non-Promoter,
(Wholetime Director) Executive 7 Y 1 - - -
Mr. V. Ashok Non-Promoter,
(Wholetime Director) Executive 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. Date Board Strength No. of Directors present
1 May 29, 2007 10 5
2 June 29, 2007 10 6
3 July 30, 2007 10 7
4 October 11, 2007 10 6
5 October 31, 2007 10 7
6 January 22, 2008 10 9
7 January 31, 2008 10 9
3. 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.
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 15
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) 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.
Composition:
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.
Details of Audit Committee Meetings held during
the year:
Sr. No. Date Committee No. of
Strength Members
present
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 No. of
meetings held meetings
attended
Mr. R. N. Bansal
(Chairman) 5 5
Mr. Anshuman Ruia 5 5
Mr. N. Srinivasan 5 5
4. Remuneration to Directors
Details of Remuneration paid to the Managing Director
and Wholetime Directors during the year ended March
31, 2008 is as under:
(Rs.)
Name of Director Basic Allowances Perquisites Contribution Total
Salary and other to Provident
benefits & Superannu-
ation Fund
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 70,54,868
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 — 2,97,000 77,87,716
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:
Non-Executive Directors Sitting Fees paid for
Board/Committee meetings
Mr. Shashi Ruia Rs. 19,500
Mr. Ravi Ruia Rs. 15,500
Mr. R. N. Bansal Rs. 61,000
Mr. N. Srinivasan Rs. 61,000
Mr. Anshuman Ruia Rs. 57,500
Mr. Rewant Ruia Rs. 28,500
Number of shares or convertible instruments held
by non – executive directors:
Non-Executive Directors No. of shares held
Mr. Shashi Ruia Nil
Mr. Ravi Ruia Nil
Mr. Anshuman Ruia Nil
Mr. Rewant Ruia Nil
Mr. R. N. Bansal Nil
Mr. N. Srinivasan Nil
Mr. S. K. Poddar 254 shares
5. 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
-
16 32nd Annual Report 2007-2008
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
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.
6. General Body Meeting:
(a) Details of General Meetings held in last three years:
Financial Meeting Date Time Location
year
2004-05 AGM 29-09-05 10.15 AM
2005-06 AGM 22-09-06 10.15 AM
EGM 02-01-07 11.00 AM
AGM 25-09-07 11.00 AM
2006-07
EGM 23-02-08 11.00 AM
(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
7. 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.
9. 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
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)
B. Financial Calendar:
Financial year of 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: [email protected].
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 Highest Lowest
April 35.75 29.15
May 38.85 25.00
June 29.15 18.80
July 28.00 20.60
August 26.90 22.40
September 29.25 24.65
October 28.90 23.50
November 26.25 22.50
December 40.80 24.00
January 50.85 35.05
February 51.90 43.20
March 54.80 34.50
Scrip Code : 500630
Srinivasa Sagar Kalyana Mahal,
Chandrasagar Complex,
No.264/266, T. Mariappa Road,
2nd
Block, Jayanagar,
Bangalore 560011
Dayanandasagar Memorial Hall,
Chandrasagar Complex,
No.264/266,
T. Mariappa Road,
2nd
Block, Jayanagar,
Bangalore 560011
-
32nd Annual Report 2007-2008 17
G. Share Price performance in comparison to BSE
Sensex
H. Shareholding Pattern as on March 31, 2008:
Shareholding by No. of shares %
Essar and Associates 20,13,19,284 47.25
Financial Institutions/ 14,09,360 0.33
Mutual Funds/Banks/
Insurance Companies
Other Corporate Bodies 1,47,09,096 3.45
Non-Domestic Companies/
Foreign Banks 24,259 0.00
Foreign Institutional
Investors 4,81,41,363 11.30
Non-Resident Individuals 9,54,717 0.22
Public 3,50,63,128 8.24
GDRs/ADRs/ADSs
(Promoters) 12,44,56,000 29.21
Total 42,60,77,207 100.00
Distribution of Shareholding as on March 31,
2008:
No. of equity Number % of Total % of
shares held of share- share- number of holding
holders holders shares
Upto 1000 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
TOTAL 1,19,341 100.00 42,60,77,207 100.00
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: [email protected]
L. Status of Dematerialisation of shares as on
March 31, 2008:
Mode No. of shares No. of Folios Percentage
Physical 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
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.
0
25
50
75
100
125
150
175
200
225
250
275
14000
15000
16000
17000
18000
19000
20000
21000
22000
Mar-08
Feb-08
Jan-08
Dec-07
Nov-07
Oct-07
Sep-07
Aug-07
Jul-07
Jun-07
May-07
Apr-07
Share Price Movement versus BSE Sensex
BSE SensexShare price on BSE
Months
Sh
are
Pri
ce
BS
E S
ense
x
-
18 32nd Annual Report 2007-2008
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
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
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
-
32nd Annual Report 2007-2008 19
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 sub-
section 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
Khurshed Pastakia
Place: Mumbai Partner
Date : June 20, 2008 (Membership No. 31544)
AUDITORS’ REPORT ON ABRIDGED FINANCIAL STATEMENTS TO THE
MEMBERS OF ESSAR SHIPPING PORTS & LOGISTICS LIMITED
(formerly known as Essar Shipping Limited)
1. 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.
2. 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.
3. 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.
4. 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.
5. 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
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
Khurshed Pastakia
Place: Mumbai Partner
Date : June 20, 2008 (Membership No. 31544)
AUDITORS’ REPORT TO THE MEMBERS OF ESSAR SHIPPING PORTS &
LOGISTICS LIMITED
(formerly known as Essar Shipping Limited)
-
20 32nd Annual Report 2007-2008
Essar Shipping Ports & Logistics Limited
(formerly known as Essar Shipping Limited)
(Referred to in paragraph 3 of our report of even date)
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. There was no substantial disposal of fixed assets
during the year.
2. 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 inv