Dear Members,
On behalf of the Board of Directors, I am pleased to present the Annual Report of
Gujarat Pipavav Port Limited for the Financial Year 2022-23. It comprises the Standalone
as well as the Consolidated financial statement for the year ended 31st March 2023.
During the financial year ended 31st March 2023, your Company has reported Standalone
Net Profit of Rs. 2,924.50 million, an increase of 51% over the previous year mainly
driven by the increase in Container, Liquid and RoRo business. The addition of a new
Container service, rail evacuation of LPG, commencement of costal movement of liquid cargo
and the addition of a new customer in RoRo have been the key contributing factors in this
strong performance reported by your Company. The initiatives in the Container business
have also led to improvement in the Company's market share amongst the west coast ports of
the country. The other contributing factor is the move by the Company to a lower tax
regime under the Income tax laws from the financial year ended 31st March 2023, after
absorbing the available Minimum Alternate Tax (MAT) credit until the financial year ended
31st March 2022.
The Board of Directors had approved the payment of an Interim Dividend of Rs. 2.70 per
share in November 2022 and are pleased to recommend a Final Dividend of Rs. 3.40 per share
for approval by the Members at the forthcoming Annual General Meeting (AGM). The Interim
and Final Dividend together would involve a cumulative Dividend Payout of Rs. 2,948.98
million, the highest ever payout by the Company for a financial year. This also
demonstrates the Company's stated policy of paying the entire distributable profits as
Dividend to its shareholders.
Your Company has been ranked as India's most efficient port for the second consecutive
year by the World Bank and S&P Global Market Intelligence on the Global Port
Performance Index (GPPI). This achievement is a strong testimony to the commitment and
character of our team and is a proud moment for putting India on the map of Top 30
efficient ports globally. The team shall continue to put its best efforts in serving the
trade.
As part of the Green Initiatives to make Pipavav "Gujarat's Green Gateway",
last year your Company had reached a milestone by commissioning of a 1,000 kWp capacity
rooftop solar power plant. Taking the next step, the Company has recently entered into a
Power Purchase agreement for the purchase of green power, and the power generating company
has commenced the supply of green power to the grid. With this about 45% of the Company's
power requirement will be met through green energy sources. Your Company is committed and
is on its course to achieve net zero greenhouse gas emissions by the Year 2040 in
accordance with the parent's commitment.
The frequency of cyclone on the West Coast of India has been increasing and is a matter
of concern. After the Cyclone Taukate in May 2021, the port very recently faced another
Cyclone Biparjoy. All employees of the Company and the equipment were safe and secure, and
the port facility did not suffer any significant damage. The port operations were
suspended for about seven days in view of the severe weather conditions and were commenced
immediately after the subsiding of the cyclone. The strong character and profound
resilience shown by the team at the port to restart the operations and the clearing of the
backlog within a week is truly commendable. On behalf of the Board of Directors I place on
record our sincere appreciation. While the Disaster Management Plans of the Company have
the procedures incorporated for mitigating the potential risks, the Management continues
to review the plans on a regular basis for ensuring effective measures.
Global trade witnessed major supply chain disruptions during the pandemic.
Ocean freight rates were at an all-time high. The availability of containers was a huge
challenge. The situation has changed, the shortage of Containers is not a challenge
anymore and freight rates have normalised. The average container freight in Europe markets
has fallen by about 68% compared to the price during the pandemic. A similar drop in the
price of container freight in the US is about 40%. This is a consequence of the headwinds
faced by the Western markets due to high inflationary pressures. European nations have
been adversely impacted by the Russia- Ukraine conflict and by the aftermath of the
pandemic. High inflation in the United States and in Europe has lowered the spending
capacity and has slowed down the growth. The European economies expect inflation to
decline in the latter part of the Year 2023 with a reduction in energy prices, easing of
supply chain bottlenecks leading to an improvement in the purchasing power of households.
The slowdown in the US and Europe markets is impacting China, the manufacturer for the
world. The ports in China have been witnessing a drop in exports to western geographies
and the lack of demand has led to layoffs and reduction in capex by manufacturing
companies in China.
Considering the geopolitical situation and after witnessing various supply chain
challenges during the pandemic, global manufacturers are looking beyond China and the
Government of India has been positioning itself as a suitable alternative considering the
dual advantage of the huge domestic market along with exports from India. The growing
middle class and a young working population is driving the consumption story of India and
its growth. The Government is incentivizing manufacturing under its ‘Make in India'
initiative and intends to demonstrate to the world India's manufacturing capabilities
along with its cutting edge technologies. In addition to these initiatives, the reduction
in inland logistics cost is critical to make Indian exports competitive. This can be
achieved by shifting cargo from road to rail and it will also substantially reduce carbon
emissions. Pipavav has been in the forefront amongst all Indian ports by handling more
than 70% of its cargo by rail and has a strong value proposition for its customers. The
Company is all set in making its contribution towards a competitive trade by providing
safe and efficient port operations and faster evacuation of cargo by rail.
Based on business requirements, the Board of Directors has approved capital expenditure
of USD 90 million for construction of a new liquid berth. The utilization of the current
berth is already at over 50% and considering the lead time involving necessary permissions
and actual construction, the Company would like to ensure that the tank farm operators
located inside the port are provided with an efficient waterfront facility. Meanwhile, the
capex to upgrade the existing Liquid Berth infrastructure on the waterfront to be able to
handle partially loaded Very Large Gas Carriers (VLGCs) has been completed. Upon receiving
the necessary permissions, the Company shall commence handling of partially loaded VLGCs
at the existing liquid berth. Both these measures will enhance the port's LPG handling
capacity and will also support Government of India's initiative of providing LPG
connection to every household under the Pradhan Mantri Ujwala Yojana.
The Company's current Concession Agreement is valid upto September 2028. The Company
continues to be engaged with the stakeholders for an early clarification in the matter.
On behalf of the Board of Directors, I take this opportunity to thank our Shareholders
for their support and faith in the Company.
The Board of Directors join me in expressing their sincere appreciation to the
Customers for their support and patience during the suspension of Port Operations due to
Cyclone Biparjoy. The Company's vendors and contractors continue to play an important role
by providing timely support for various requirements.
Efficient port operations can be possible only when the evacuation to and from the port
is also efficient. Our Associate Company Pipavav Railway Corporation Limited (PRCL)
continues to ensure an efficient rail connectivity to Pipavav Port. PRCL's freight train
operations have a product to provide end to end logistics to the shipping lines. The Board
of Directors thank PRCL and the Indian Railways for their strong and continued support to
the Port.
I reiterate my appreciation to our colleagues for their resilience, dedication and
commitment and for helping us obtain international recognition for the second consecutive
year. I along with my colleagues on the Board would like to thank them for their efforts.
I also thank Gujarat Maritime Board, the State Government and the Central
Government authorities for their assistance and support.
In the year of its G20 presidency, India is positioning itself as the next big growth
opportunity for the world and is inviting global companies to participate in the growth
story by setting up manufacturing facilities in the country. Pipavav Port is committed to
playing an important role in providing efficient port operations to the manufacturing
sector from Gujarat's Green Gateway.
With Best Wishes,
Tejpreet S Chopra Chairman