Gujarat Pipavav Port Ltd - Annual Report 2023-24 Analysis

Overview #

Detailed Analysis #

This analysis looks into the Gujarat Pipavav Port Limited (GPPL) Annual Report for the year ended March 31, 2024, examining its financial performance, business segments, identified risks, and ESG (Environmental, Social, and Governance) initiatives.

I. Financial Performance:

GPPL reported a healthy financial performance in FY2023-24, demonstrating significant growth in key areas.

• Standalone Financial Results (INR Million):

• Consolidated Financial Results (INR Million) (Note: Includes unaudited figures for associate company PRCL):

• Key Financial Ratios (Standalone): Significant changes compared to the previous year are highlighted. Note that some ratios are not applicable (N/A) due to the nature of GPPL’s business (debt-free, no inventory for sale).

The significant increase in profitability is primarily driven by higher container volumes and lower operating expenses. The decrease in the current ratio reflects a reduction in current assets, partially offset by the decrease in current liabilities.

II. Business Segments:

GPPL operates a single business segment: Port Development and Operations. However, within this segment, they have four key cargo types:

• Containers: Experienced a 6% growth in TEUs (Twenty-foot Equivalent Units) in FY2023-24, driven by increased trade with the Far East and Middle East, despite disruptions from the Red Sea crisis. Rail evacuation accounts for 65-70% of container volume.

• Dry Bulk: Showed a significant decrease (over 30%) in volume, primarily due to reduced fertilizer imports and temporary suspension of coal handling.

• Liquid: Recorded a substantial 24% increase, driven by higher LPG imports and the successful upgrade of the liquid berth to handle VLGCs (Very Large Gas Carriers). Efficient rail evacuation is a major factor in this growth.

• RORO (Roll-on/Roll-off): Experienced explosive 140% growth in the number of cars handled, attributable to improved road and rail connectivity, supporting increased car exports.

The port’s efficient rail operations are a key differentiator, extending to LPG and car exports beyond containers.

III. Risks:

GPPL highlights many key risk areas:

• Geopolitical Risks: Escalation of conflicts (e.g., Red Sea, Gaza-Israel) impacting global supply chains, energy costs, and price volatility. The war in Ukraine further complicates cross-border trade.

• Climate Change: The need for greater investment in green initiatives to mitigate the effects of global warming and climate change.

• Government Policy: Uncertainty around the Gujarat government’s port policy and the renewal of GPPL’s concession (due in September 2028) pose a significant risk to future investment planning.

• Global Economic Slowdown: While India’s economy is expected to remain resilient, global headwinds could still impact demand and trade.

IV. ESG Initiatives:

GPPL demonstrates a commitment to ESG through various initiatives:

• Environmental:

  • Green Energy: Currently meets 45% of energy needs through renewable sources (solar power and green power purchase agreements). Aims to increase this percentage as government policies allow.
  • Waste Management: Employs various strategies for waste reduction and responsible disposal, including recycling and composting.
  • Water Management: Implements a zero-liquid discharge mechanism.

• Social:

  • Community Engagement: Actively participates in community development through various CSR projects (education, healthcare, skill development, etc.).
  • Employee Well-being: Provides health insurance, accident insurance, and various other employee benefit programs. Maintains a strong safety culture with 320 LTI-free days in FY2023-24.
  • Diversity and Inclusion: While progress is noted (two women directors on the board), further initiatives are needed for greater inclusivity.

• Governance:

  • Corporate Governance: Adheres to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, with a robust audit committee, nomination and remuneration committee, and stakeholders’ relationship committee in place. A code of conduct and whistleblower policy are also implemented.
  • Risk Management: Has established a risk management committee and framework to identify, assess, and mitigate potential risks.

V. Overall Assessment:

GPPL demonstrates strong financial performance in FY2023-24, with growth across various cargo segments driven by strategic investments in infrastructure and efficient rail operations. The company recognizes significant risks related to global geopolitical instability, climate change, and government policy uncertainties. While its ESG initiatives are noteworthy, especially in environmental sustainability, there’s room for improvement in social inclusivity and in expanding its reporting and commitment beyond the essential aspects. The unaudited figures for the associate company PRCL create some uncertainty in the consolidated financials. The company’s future success depends on effective mitigation of these risks and the continued expansion of its operations and commitment to ESG principles.

Detailed Analysis #

Balance Sheet #

Asset Analysis #

Based on the provided standalone financial statements:

• Total Assets: ₹26,983.99 million (INR)
• Current Assets: ₹11,295.68 million (INR)
• Cash and Cash Equivalents: ₹236.58 million (INR)
• Accounts Receivable (Trade Receivables): ₹576.66 million (INR)
• Inventory: ₹89.63 million (INR)

Note that these figures are from the standalone financial statements. The consolidated statements, which include the associate company, would show different values. Also, the “Other Financial Assets” category contains many components, including security deposits which could arguably be considered part of the overall receivables picture if you were doing a broader analysis of working capital.

Liability Analysis #

Based on the provided standalone financial statements:

• Total Liabilities: ₹6,056.96 million (INR)

• Current Liabilities: ₹3,714.29 million (INR)

• Long-Term Debt: The company reports being debt-free, so the value is ₹0 million (INR). However, long-term lease liabilities are included under non-current liabilities. These totaled ₹567.28 million. There are also other financial liabilities (₹106.21 million) and deferred tax liabilities (₹1,262.10 million) in the long-term category.

• Accounts Payable (Trade Payables): ₹603.99 million (INR)

Important Note: These are the figures from the standalone financial statements. The consolidated financial statements would reflect different numbers, especially for liabilities as they would incorporate the associate company’s figures. Also note that, while there is no long-term debt in the traditional sense, many items are listed under long-term liabilities, as noted above. These should be considered when analyzing the company’s overall financial structure.

Equity Analysis #

Based on the provided standalone financial statements:

• Shareholders’ Equity: ₹20,927.03 million (INR)
• Retained Earnings: ₹1,803.76 million (INR)
• Share Capital: ₹4,834.40 million (INR)

Remember that these figures are from the standalone financial statements. The consolidated financial statements would have different values for these line items, due to the inclusion of the associate company’s equity.

Income Statement #

Operating Performance #

The provided annual report does not explicitly break down the financial statements into “Cost of Revenue” and “Gross Profit” in the traditional sense. This is because GPPL is a service company (port operations), not a manufacturing company. They don’t have the same cost structure with direct materials and manufacturing overhead.

Here’s what the report does provide:

• Revenue: ₹9,884.29 million (INR) This is revenue from operations.
• Operating Expenses: ₹1,746.80 million (INR)
• Operating Income (Operating Profit): ₹5,730.53 million (INR) This is calculated as Revenue less Operating Expenses.

There’s no direct equivalent to cost of revenue or gross profit. The operating expenses provided represent the costs directly related to the business of running the port. To get a similar metric to gross profit, one would likely need to consider the difference between Revenue and all expenses, including employee benefits, finance costs, depreciation, and other expenses (not just operating expenses). However, that wouldn’t be a true “gross profit” in the accounting sense.

Bottom Line Metrics #

Based on the standalone financial statements:

• Net Income (Profit After Tax): ₹3,537.98 million (INR)
• EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): The annual report does not explicitly state the EBITDA figure. To calculate it, you would need to take the Profit Before Tax (₹4,738.01 million) and add back Depreciation and Amortization expense (₹1,156.01 million) and Finance costs (₹93.20 million). Therefore, the EBITDA would be approximately ₹6,000 million.
• Basic EPS: ₹7.32
• Diluted EPS: ₹7.32

Important Note: These values are from the standalone financial statements. The consolidated figures (which include the associate company) will be different. The consolidated net income is ₹3,420.00 million, and basic and diluted EPS is ₹7.07.

Cash Flow #

Cash Flow Components #

The following cash flow figures are from the standalone statement of cash flows:

• Cash Flow from Operating Activities: ₹4,850.04 million (INR)
• Cash Flow from Investing Activities: ₹(1,074.13) million (INR) (Negative signifies a net outflow)
• Cash Flow from Financing Activities: ₹(3,697.04) million (INR) (Negative signifies a net outflow)

Important Note: These numbers are from the standalone statement of cash flows. The consolidated statement of cash flows, incorporating the associate company, will show different figures.

Cash Flow Metrics #

The provided annual report doesn’t directly provide a “free cash flow” figure. Free cash flow is calculated differently depending on the specific definition used, but a common calculation is:

Free Cash Flow = Operating Cash Flow - Capital Expenditures

Using the standalone numbers:

• Operating Cash Flow: ₹4,850.04 million (INR)
• Capital Expenditure (CAPEX): The report doesn’t give a single, readily available CAPEX number. It mentions capital expenditures within the notes to the financial statements, related to various projects. A precise number must be calculated from those individual project costs.
• Dividends Paid: ₹3,384.08 million (INR) This is from the standalone statement of changes in equity.

To determine the free cash flow, you would need to identify and sum up all capital expenditures from the notes to the financial statements and then subtract that total from the operating cash flow. The resulting number would be the free cash flow (Standalone). The same would need to be done using the consolidated numbers for a consolidated free cash flow.

Profitability Ratios #

As previously noted, GPPL’s annual report does not present a traditional gross profit margin because it’s a service company, not a manufacturing one. Therefore, there’s no explicit cost of goods sold (COGS) figure to calculate a gross margin.

Here’s what we can calculate from the standalone financial statements:

• Operating Margin: (Operating Profit / Revenue) * 100 = (₹5,730.53 million / ₹9,884.29 million) * 100 = 57.98%

• Net Profit Margin: (Net Income / Revenue) * 100 = (₹3,537.98 million / ₹9,884.29 million) * 100 = 35.79%

• Return on Equity (ROE): (Net Income / Average Shareholders’ Equity) * 100. To calculate average shareholders’ equity, you need the beginning and ending balances from consecutive years, which is not provided in this extract. However the report does provide this calculation as 16.96%

• Return on Assets (ROA): (Net Income / Average Total Assets) * 100. Similar to ROE, the average total assets are needed which is not given in this extract. The report does however give this calculation as 18.11%.

Important Considerations:

• These profitability ratios are based on the standalone financial statements. The consolidated figures would likely be different.
• The absence of a gross profit margin is typical for service companies like GPPL. The operating margin provides a more relevant measure of profitability in this context. A “gross profit” might be approximated from the report, but it would not be a true gross profit.

Liquidity Ratios #

Using the standalone financial statement data:

• Current Ratio: Current Assets / Current Liabilities = ₹11,295.68 million / ₹3,714.29 million = 3.04

• Quick Ratio (Acid-Test Ratio): (Current Assets - Inventories) / Current Liabilities = (₹11,295.68 million - ₹89.63 million) / ₹3,714.29 million = 3.00

• Cash Ratio: (Cash and Cash Equivalents) / Current Liabilities = ₹236.58 million / ₹3,714.29 million = 0.06

Important Note: These liquidity ratios are calculated using data from the standalone financial statements. The consolidated figures would differ due to the inclusion of the associate company’s assets and liabilities. The current ratio specifically is affected by the composition of current assets and would therefore vary.

Efficiency Ratios #

Again, we must emphasize that these calculations are based on the standalone financial statements provided and that the consolidated figures would differ. Also, certain ratios are not directly calculable due to missing data within the provided extract.

• Asset Turnover: Revenue / Average Total Assets. To calculate the average total assets, you would need the total assets from the beginning and end of the fiscal year. This is not fully provided in the extract.

• Inventory Turnover: Cost of Goods Sold (COGS) / Average Inventory. COGS is not explicitly stated in the standalone financial statements of this extract. Therefore, this ratio cannot be calculated.

• Receivables Turnover: Revenue / Average Accounts Receivable. Similar to asset turnover, calculating the average accounts receivable requires data (beginning and ending balances) not fully provided within this extract.

In short, while the report gives some turnover ratios, the necessary data points to fully calculate others from the standalone statements provided are missing. To fully calculate these ratios, you would need the complete annual report with beginning-of-year balance sheet figures.

Leverage Ratios #

Gujarat Pipavav Port Limited reports being debt-free in its standalone financial statements. Therefore, use ratios that use debt as a numerator will be zero or undefined:

• Debt-to-Equity Ratio: 0 (Since there is no long-term debt.)

• Debt-to-Assets Ratio: 0 (Since there is no long-term debt.)

• Interest Coverage Ratio: The interest coverage ratio is typically calculated as Earnings Before Interest and Taxes (EBIT) / Interest Expense. Since there is no long-term debt and the interest expense is minimal, this ratio is not meaningful in this context.

Important Note: This analysis is based on the standalone financial statements. The consolidated financial statements might present a different picture if the associate company has any debt. However, the text does indicate that the company is debt free.

Market Analysis #

Market Metrics #

The provided text gives some, but not all, of the information needed to calculate these market-based ratios. The calculations will be based on the data provided and may not be completely accurate without the full context of the market information at the time of reporting.

• Market Cap: The report does not explicitly state the market capitalization at the end of the fiscal year. It only mentions a percentage increase compared to the previous year.

• P/E Ratio (Price-to-Earnings Ratio): This requires the market price per share and the earnings per share (EPS). The report has EPS values, but not a closing share price to use for the calculation.

• P/B Ratio (Price-to-Book Ratio): This also needs a market price per share and the book value per share (which is calculated from total shareholders’ equity divided by the number of shares). Similar to the P/E ratio, the necessary market price is not provided.

• Dividend Yield: This requires the annual dividend per share and the market price per share. Again, the necessary market price information is missing.

• Dividend Payout Ratio: Dividends Paid / Net Income = ₹3,529.11 million / ₹3,537.98 million = 99.75% (standalone) This is based on the Chairman’s statement; the numbers are very close to the reported standalone net income. This indicates virtually all distributable profits were paid as dividends.

In summary: Without the market price per share at the end of the fiscal year, the P/E ratio, P/B ratio, and dividend yield cannot be precisely calculated. The dividend payout ratio is provided with a high degree of accuracy. You would need the complete annual report, including the current market data to completely answer this question.

Business Analysis #

Segment Analysis #

Gujarat Pipavav Port Limited operates within a single business segment: Port Development and Operations. The annual report doesn’t break down this segment into separate reporting segments, but rather describes its activity in terms of cargo types handled. Therefore, a precise breakdown as requested is not directly possible from the provided information. However, we can infer some details based on the data available in the report.

Important notes:

• Revenue Estimates: The total revenue is provided, but a precise breakdown by cargo type isn’t provided. The revenue figures above represent educated estimates based on the relative volumes and importance mentioned in the annual report.
• Operating Margin Estimates: Operating margins are very high in container and liquid cargo businesses, and moderate in the dry bulk segment, because of the successful development of infrastructure, but precise figures can’t be calculated without more granular expense data segregated by cargo type.
• Market Share: The report does not provide market share data for GPPL.
• Geographic Presence: GPPL operates solely within India, specifically in Gujarat.

To obtain precise figures for revenue, operating margin, and market share by cargo type, access to the full and detailed financial statements from the annual report is necessary.

Risk Assessment #

The Gujarat Pipavav Port Limited annual report identifies many key risk factors. Categorizing them precisely and assigning numerical likelihood and impact severity scores is challenging due to the qualitative nature of the report’s risk discussion. However, we can summarize the key risks, their descriptions, and the mitigation strategies mentioned:

I. Geopolitical and Macroeconomic Risks:

II. Regulatory and Legal Risks:

III. Operational Risks:

IV. Financial Risks:

Mitigation Strategy Trends: GPPL’s mitigation strategies emphasize proactive risk management, robust contingency planning, technological solutions (e.g., IT security measures, green energy), and strong relationships with stakeholders. However, the report highlights the need for ongoing vigilance and adaptability to address the evolving risk landscape.

Note: The risk assessment in the annual report is qualitative. A more detailed analysis would benefit from quantitative data on likelihood and impact severity to better understand the relative importance of each risk.

Strategic Overview #

Management Assessment #

Gujarat Pipavav Port Limited’s management highlights many key strategic elements in their discussion and analysis. Here’s a summary of their key strategies, competitive advantages, market conditions, challenges, and opportunities:

I. Key Strategies:

• Efficient Rail Connectivity: GPPL emphasizes its unique selling proposition (USP) of efficient rail evacuation of cargo. This is a key strategy, extending to containers, LPG, and car exports. Significant investments are made in rail infrastructure to maintain this advantage.

• Focus on High-Growth Cargo Segments: The company is strategically focusing its efforts and investments on high-growth cargo segments like containers and liquid cargo (LPG), where significant growth opportunities are present.

• Green Initiatives: A commitment to environmentally sustainable practices, including increased reliance on green energy, is central to GPPL’s long-term strategy. This helps attract environmentally conscious customers and improve their public image.

• Capacity Expansion: GPPL is actively pursuing necessary approvals for the construction of a new liquid berth to cater to growing LPG imports. This signifies a strategic move towards capacity enhancement.

• Strong Stakeholder Relationships: Maintaining positive and collaborative relationships with customers, the government, and local communities is identified as essential for the company’s success. This includes proactive engagement regarding the concession renewal.

II. Competitive Advantages:

• Efficient Rail Operations: The ability to efficiently handle significant cargo volumes through rail transport provides a major competitive edge over other ports, enabling faster and potentially cheaper cargo evacuation.

• Strategic Location: GPPL’s location on a key international maritime trade route provides access to significant trade flows.

• Modern Infrastructure: Investments in modern infrastructure and equipment enable the port to handle a various range of cargo efficiently and effectively.

• Strong Safety Record: GPPL’s consistently strong safety record is viewed as a key differentiator, enhancing its reputation and attractiveness to customers.

• Green Initiatives: A clear commitment to sustainability enhances competitiveness in a world increasingly focused on responsible business practices.

III. Market Conditions:

• Strong Domestic Demand: India’s robust domestic demand, especially for consumer goods, fuels substantial import volumes, creating favorable market conditions for GPPL.

• Growing LPG Imports: The Pradhan Mantri Ujwala Yojana (PMUY) scheme drives considerable growth in LPG imports, providing a significant opportunity for GPPL’s liquid cargo handling business.

• Increased Automobile Exports: Government initiatives supporting the automobile sector are creating opportunities for increased car exports through GPPL.

• West Coast Container Growth: Container volume on India’s west coast is exhibiting strong growth, benefiting GPPL’s container handling business.

• Global Supply Chain Disruptions: Geopolitical instability and the Red Sea crisis are impacting shipping schedules and increasing freight rates, representing a significant challenge.

IV. Challenges:

• Geopolitical Instability: Regional conflicts and global uncertainty pose substantial risks to GPPL’s operations and outlook.

• Concession Renewal: Securing favorable terms for the renewal of its concession agreement with the Gujarat government is essential but presents a major challenge.

• Competition: Competition from other ports for cargo handling requires maintaining operational efficiency and a strong value proposition.

• Global Economic Slowdown: Any global economic downturn would impact trade volumes and negatively affect the company’s performance.

• Regulatory Changes: Adapting to evolving environmental regulations and other government policies is essential for long-term success.

V. Opportunities:

• Growth in Container and Liquid Cargo: Continued growth in these segments presents substantial opportunities for expansion and revenue generation.

• Increased Car Exports: The rising car export market from India offers significant growth potential for GPPL’s RORO business.

• Government Infrastructure Projects: Government investments in infrastructure development could generate additional cargo volume and improve GPPL’s business prospects.

• Expansion of Rail Network: Further expansion of India’s rail network could further improve the company’s competitive advantage.

• Sustainability Initiatives: The global move towards sustainable business practices presents opportunities for GPPL to highlight its commitment to green energy and environmental stewardship.

In summary, GPPL’s strategy is built on its core competitive advantage of efficient rail connectivity and a focus on growth in key cargo segments. However, the company must effectively manage various challenges including geopolitical uncertainty, concession renewal negotiations, and global economic volatility to capitalize on the many opportunities available in the Indian port sector.

ESG Ratings #

The provided annual report does not include ESG ratings from any external rating agencies. While the report details various ESG initiatives undertaken by Gujarat Pipavav Port Limited, it does not provide any scores or rankings from organizations that specialize in ESG assessments (e.g., MSCI, Sustainalytics, Refinitiv). To find such ratings, you would need to consult independent ESG rating providers directly.

ESG Initiatives #

Gujarat Pipavav Port Limited (GPPL) details many environmental, social, and governance (ESG) initiatives in its annual report. While specific quantitative targets for some areas are not always explicitly stated, the report provides a qualitative overview of their approach and some key achievements.

I. Environmental Initiatives:

• Green Energy Transition: GPPL has installed a 1000 KWp rooftop solar power plant and has signed power purchase agreements for additional green energy. Currently, approximately 45% of its energy needs are met through renewable sources. The goal is to further increase this percentage, subject to Gujarat government policies.

• Waste Management: The port actively manages various types of waste (plastic, e-waste, hazardous waste, etc.) by sending hazardous waste to authorized recyclers and using organic waste for compost. They aim for responsible disposal and recycling practices.

• Water Management: GPPL employs a zero-liquid discharge (ZLD) mechanism, aiming to reuse treated wastewater for green belt development and dust suppression.

II. Carbon Footprint:

The annual report does not provide a quantified carbon footprint for GPPL. This information is a critical missing aspect for a detailed understanding of their environmental performance. The report mentions efforts towards reducing greenhouse gas emissions (GHGs) through the use of green energy, but doesn’t quantify the overall footprint.

III. Social Initiatives:

GPPL’s social initiatives primarily focus on community development around the port. These activities fall under their Corporate Social Responsibility (CSR) program and include:

• Education: Support for education in nearby villages, including providing science and math labs and educational equipment.
• Healthcare: Medical support through ambulances, mobile health units, and eye care camps.
• Skill Development: Programs aimed at enhancing the skills of local residents, especially women, to improve their livelihoods.
• Infrastructure Development: Construction of community infrastructure like check dams, toilets, and street lights.
• Livelihood Support: Initiatives supporting fishing and farming activities.

IV. Governance Practices:

GPPL demonstrates a commitment to good governance through:

• Board Composition: The board comprises a mix of executive, non-executive, and independent directors, including women directors.

• Board Committees: The establishment of key committees (audit committee, nomination & remuneration committee, stakeholders’ relationship committee, and risk management committee) ensures oversight and decision-making related to financial reporting, risk management, and stakeholder engagement.

• Code of Conduct: GPPL has a code of conduct for employees and directors that emphasizes ethical behavior and compliance.

• Whistleblower Policy: A formal mechanism for employees to report suspected fraud or unethical behavior.

• Risk Management: A structured approach to identify, assess, and mitigate potential risks through a dedicated Risk Management Committee.

V. Sustainability Goals:

The annual report doesn’t explicitly lay out specific, measurable, achievable, relevant, and time-bound (SMART) sustainability goals. While a commitment to sustainability is evident through various initiatives and a focus on reducing its environmental impact, more quantitative targets (e.g., carbon reduction targets, waste reduction goals, water consumption targets) are needed for a more detailed assessment of GPPL’s sustainability strategy. The company mentions aligning with its parent company’s goal of carbon neutrality by 2040, but specific plans to reach this goal are not outlined.

In summary: GPPL is undertaking many significant environmental and social initiatives, but essential quantitative data, such as a carbon footprint and clearly defined sustainability goals with targets and timelines, is lacking in the provided annual report. This makes a full evaluation of its long-term sustainability performance challenging. Strengthening its quantitative ESG reporting would substantially improve transparency and accountability.

Additional Information #

Operational Metrics #

The annual report states that GPPL does not have any R&D expenditure. This is likely because the company is primarily engaged in port operations, not research and development of new technologies or products.

The total employee count (permanent and non-permanent combined) for GPPL is 463 at the end of FY2023-24, as stated in the Directors’ Report section. The report also breaks this down by permanent vs. non-permanent employees and by gender.

Key Events #

Several significant events are mentioned in the Gujarat Pipavav Port Limited annual report for FY2023-24:

• Strong Operational Performance: The port achieved robust growth in container volume (6%), a significant increase in liquid cargo (24% primarily due to LPG), and an impressive surge in RORO cargo (140% due to increased car exports). These positive trends are highlighted as significant accomplishments.

• Cyclone Tauktae Aftermath: Although the port infrastructure was largely unaffected by Cyclone Tauktae in May 2021, the report mentions ongoing work related to replacing jetty fenders (expected to be completed by end of May 2024) and the financial implications of cyclone-related repairs and recovery, as well as insurance claims being processed.

• New Liquid Berth Project: GPPL initiated the process of securing necessary approvals for constructing a new liquid berth. This project is considered vital for handling future LPG import growth.

• Rail Infrastructure Development: Continued investments in rail infrastructure, including completion of phases in open stackyards for car exports and the commissioning of the LPG rail siding, are significant achievements in supporting their rail-centric strategy.

• Interim and Proposed Final Dividend: The declaration of an interim dividend (₹3.60 per share) and the recommendation of a final dividend (₹3.70 per share) represent significant financial events for shareholders. The report indicates a policy of returning essentially all distributable profits to shareholders.

• Changes in Board of Directors: The report details changes in the composition of the Board of Directors, including the departure of some directors and the appointment of new ones. The departure of Mrs. Hina Shah and Mr. Tejpreet Singh Chopra (as chairman) were especially significant.

• Legal Disputes: The report mentions ongoing legal proceedings and arbitration related to a bank guarantee and contract disputes. These have significant financial implications. The details of the dispute with Gujarat Maritime Board and a customer are described in the notes to the financial statements.

These events demonstrate GPPL’s progress in expanding operations, adapting to challenges (like the cyclone aftermath), and pursuing growth opportunities while navigating complex legal and regulatory environments. The success of the new liquid berth project and favorable government policies will be essential for its continued growth in the coming years.

Audit Information #

Auditor’s Opinion:

The independent auditor, Price Waterhouse Chartered Accountants LLP, issued an unmodified (clean) opinion on the standalone financial statements. However, for the consolidated financial statements, they issued a qualified opinion due to the unavailability of audited financial statements for the associate company, Pipavav Railway Corporation Limited (PRCL), at the time of the audit. The auditor’s report on the consolidated financial statements clearly states that their opinion is based solely on the unaudited figures provided by the management for PRCL and that additional adjustments or disclosures might be needed once the audited statements are available. The auditor also issued a qualified opinion on the effectiveness of the company’s internal financial controls with reference to consolidated financial statements due to a material weakness in the controls over the financial information of PRCL.

Key Accounting Policies:

The annual report outlines many key accounting policies used in preparing the financial statements, reflecting compliance with Indian Accounting Standards (Ind AS). These include:

• Basis of Preparation: The financial statements are prepared in accordance with Ind AS and comply with the Companies Act, 2013. They are presented on a historical cost basis, except for certain financial assets and liabilities measured at fair value and defined benefit plans.

• Revenue Recognition: Revenue from port services is generally recognized at a point in time, upon completion of services, except for storage revenue, which is recognized on a time proportion basis. Revenue is measured net of variable consideration (discounts and schemes). A contract liability is recognized for services rendered but not yet billed. Rebates are recognized as refund liabilities.

• Government Grants: Government grants are recognized as deferred income and amortized over the useful lives of related assets.

• Income Taxes: Both current and deferred tax liabilities are recognized using the liability method, based on tax rates enacted at the balance sheet date. Tax assets are recognized when it’s probable future taxable amounts will be available to use the assets.

• Leases: Leases are accounted for according to Ind AS 17, recognizing right-of-use assets and corresponding lease liabilities.

• Investments: Investments in the associate company (PRCL) are accounted for using the equity method.

• Trade Receivables: Expected credit losses for trade receivables are recognized using the simplified approach under Ind AS 109.

• Inventories: Inventories are valued at the lower of cost (weighted average method) and net realizable value.

• Employee Benefits: Short-term employee benefits are recognized as liabilities. Post-employment benefits, including gratuity, are recognized based on actuarial valuations.

• Property, Plant, and Equipment: These are carried at cost less accumulated depreciation and impairment losses. Depreciation is calculated using the straight-line method, with individual useful lives specified for different asset classes. The report mentions that contracted assets will be transferred to GMB at the end of the concession period for a DRV (Depreciated Replacement Value), and assets are depreciated taking into account the likely extension of the agreement.

• Intangible Assets: Acquired intangible assets are amortized over their useful lives, while internally generated intangible assets are recognized only under specific conditions.

These policies are applied consistently across the years presented in the financial statements, unless otherwise stated. The report also explicitly mentions the use of estimates and judgments in applying these policies and identifies key areas of estimation (e.g., tax expense, useful lives of assets, defined benefit obligations).