Annual Report - Mundra Port and SEZ - 2008-2009

MUNDRA PORT AND SPECIAL ECONOMIC ZONE LIMITED

ANNUAL REPORT 2008-2009

DIRECTOR'S REPORT

Dear Shareholders,

Your Directors have pleasure in presenting the Tenth Annual Report and the
Audited Statement of Accounts for the financial year ended 31st March,
2009.

Financial Highlights:

The bird eye view of the summarized financial highlights is depicted below:

(Rs. in Lacs)
Particulars For the For the
year ended year ended
31/03/2009 31/03/2008

Income from operations 1,13,512.25 81,820.67
Other Income 4,432.41 2,790.35
Total Income 1,17,944.66 84,611.02
Operating & Administrative Expenses 37,348.06 28,279.79
Operating Profit before Interest, 80,596.60 56,331.23
Depreciation and Tax
Interest and Financial Charges 13,295.02 10,621.89
Depreciation/Amortization 13,723.50 10,063.84
Profit Before Tax and Prior Period Adjustment 53,578.08 35,645.50
Less: Prior Period Adjustments (2,174.98) (129.51)
Add: Extraordinary Items - 1,166.13
Provision for tax (including deferred tax) 5,294.58 15,340.94
Profit after tax 46,108.52 21,341.18
Surplus brought forward from previous year 23,753.54 9,503.65
Balance available for appropriation 69,862.06 30,844.83
Appropriations:
Interim Dividend on Equity Shares 8,015.69 -
Dividend on Preference Shares 0.03 0.03
Proposed Final Dividend on Equity Shares 4,006.79 6,010.18
Transfer to Capital Redemption Reserve 14.06 14.02
Transfer to General Reserve 4,610.85 1,067.06
Balance carried to Balance Sheet 53,214.64 23,753.54

Operational Highlights:

Your Company has scaled new heights during the financial year 2008-09 and
has turned out with highly promising results in all segments despite the on
going turbulence in the world economy.

The key aspects of your Company's performance during the financial year
2008-09 are as follows:

* There is significant growth in Cargo volumes. Cargo volume increased by
24.03% from 28.80 million tons in 2007-08 to 35.72 million tons in 2008-09.

* Total number of vessels handled at Mundra Port increased by 33.68% from
1624 vessels in 2007-08 to 2171 in 2008-09.

* Turnover increase by 38.73% from Rs. 81,820.67 Lacs in 2007-08 to
Rs.1,13,512.25 Lacs in 2008-09.

* Standalone Profit Before Tax increased by 40.13% from Rs.36,682.12 Lacs
in 2007-08 to Rs. 51,403.10 Lacs in 2008-09.

* Standalone Profit After Tax increased by 116.05% from Rs. 21,341.18 Lacs
in 2007-08 to Rs. 46,108.52 Lacs in 2008-09.

* Earning Per Share (EPS) for the year increased by 102.28% from Rs.5.69 in
2007-08 to Rs.11.51 in 2008-09.

The detailed Operational Performance of the Company has been
comprehensively discussed in the Management Discussion and Analysis Report
which forms part of Directors' Report.

Dividend:

During the year under review your Company had declared and paid Interim
Dividend of Rs. 2 per share (20%) on 400,678,820 Equity shares of Rs. 10
each and 0.01% Dividend on 0.01% Non-cumulative Redeemable Preference
shares of Rs.10 each for the Financial Year 2008-09 in the month of
February, 2009. The Board of Directors are pleased to recommend a Final
Dividend of Re. 1 per share (10%) on 400,678,820 Equity shares of Rs.10/-
each for the Financial Year 2008-09. The total outgo on dividend would be
Rs. 12,022.51 Lacs.

Utilization of Proceeds of IPO:

The statement of proposed utilization of the IPO proceeds & its actual
utilization as on 31st March, 2009 is as follows:

(Rs. in Lacs)
Objects of the Issue Proposed utilization Actual Utilization
to be made out of as on 31st March,
the IPO proceeds 2009


a) SEZ Project 50,000.00 19,128.47

b) Coal Terminal Project 45,000.00 31,770.08

c) Investment in Adani Petronet 20,946.00 4,147.00
(Dahej) Port Pvt. Ltd.

d) Investment in Adani 4,800.00 2,468.00
Logistics Ltd.

e) Investment in Inland Conware 10,878.00 4,508.00
Pvt. Ltd.

f) General Corporate Purpose 40,476.00 32,319.18

g) Issue Expense 5,000.00 4,154.84

Sub-Total 1,77,100.00 98,495.57

h) Interim usage of funds - 78,604.43

Total 1,77,100.00 1,77,100.00

Holding Company:

During the year under review, Adani Port Infrastructure Pvt. Ltd. has been
merged with Adani Infrastructure Services Pvt. Ltd. (AISPL). Pursuant to
merger the shareholding of AISPL in the Company had increased to 55.94%.
Accordingly, by virtue of Section 4 of Companies Act, 1956; AISPL had
become the Holding Company.

Consolidated Financial Statements:

Consolidated Financial Statements pursuant to Clause 41 of the Listing
Agreement entered into with the Stock Exchanges and prepared in accordance
with the Accounting Standards prescribed by the Institute of Chartered
Accountants of India, in this regard is attached herewith.

Subsidiary Companies:

Your Company had 8 Subsidiaries at the beginning of the year which are as
follows:

1. Mundra SEZ Textile and Apparel Park Pvt. Ltd.

2. MPSEZ Utilities Pvt. Ltd.

3. Karnavati Aviation Pvt. Ltd. (Formerly, Gujarat Adani Aviation Pvt.
Ltd.)

4. Rajasthan SEZ Pvt. Ltd.

5. Adani Logistics Ltd.

6. Inland Conware Pvt. Ltd.

7. Inland Conware (Ludhiana) Pvt. Ltd.

8. Mundra Aviation Ltd.

During the year under review in order to consolidate logistics business
under common roof the Subsidiary Companies; Adani Logistics Ltd. (ALL),
Inland Conware (Ludhiana) Pvt. Ltd. (ICLPL) and Inland Conware Pvt. Ltd.
(ICPL) has filed petition for Merger before the High Court of Gujarat. The
merger between these three Companies has several benefits such as Common
administrative control, Up-scaling of the Planning Activities, Synergies in
Activities, Marketing / Operations, Taxation, Statutory and Accounting.

During the year under review, Mundra Aviation Ltd., a wholly owned
subsidiary of company in Cayman Islands has been dissolved.

During the year under review Gujarat Adani Aviation Pvt. Ltd., a wholly
owned subsidiary company carrying on Aviation business had changed its name
to Karnavati Aviation Pvt. Ltd.

The Statement pursuant to Section 212(1)(e) of the Companies Act, 1956,
containing details of subsidiaries of the Company, forms part of the Annual
Report.

In terms of approval granted by the Central Government vide letter no.
47/344/2009-CL-III dated 13th May, 2009 under Section 212(8) of the
Companies Act, 1956, copies of the Balance Sheet, Profit & Loss Account,
report of the Board of Directors and report of the auditors of each of the
Subsidiary Companies have not been attached to the accounts of the Company
for the year ended 31st March, 2009. The annual accounts of the
subsidiaries and the related detailed information will be made available to
any Member of the Company/its subsidiaries seeking such information at any
point of time and are also available for inspection by the Member of the
Company/its subsidiaries at the Registered Office of the Company on any
working day during business hours.

Fixed Deposits:

During the year under review, your Company has not accepted any deposits
from Public under Section 58A of Companies Act, 1956.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings
& Outgo:

The particulars relating to energy conservation, technology absorption,
foreign exchange earnings and outgo, as required to be disclosed under
Section 217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosure of Particulars in the Report of Board of Directors) Rules, 1988
are appended herewith as Annexure-I and forms part of this Annual Report.

'Group' For Inter-Se Transfer of Shares:

As required under Clause 3(1)(e) of the Securities and Exchange Board of
India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997,
persons constituting 'Group' (within the meaning as defined in the
Monopolies and Restrictive Trade Practices Act,1969) for the purpose of
availing exemption from applicability of the provisions of Regulations 10
to 12 of the aforesaid SEBI Regulations are given in Annexure II attached
herewith and forms part of this Annual Report.

Quality, Health, Safety and Environment:

Quality, Health, Safety and Environment policies involve implementing
benchmark standards such as ISO 9001-2007 & 14000-2008, identifying hazards
in daily activities of the Company and mitigate their impact on personnel
and environment. Your Company's management approach to Quality, Health,
Safety and Environment involves proactive approach to create safe working
environment, continuous safety education and training, periodic review of
programs and evaluation of incidents. Your company has already received ISO
9001-2007 certification and is in the process of applying for ISO 14000-
2008.

In the year 2008-09 your company has addressed environmental issues by
investing in technologies such as 'Bulk Material Handling Systems such as
conveyors with ground hoppers' replacing highly polluting Diesel fueled
Dumpers, Pay loaders, Excavators.

Your company also invested in Environmental Research studies with support
of 'Center for Environment Education -Ahmedabad' and identified the
following technologies / processes which support the 'Green Port' & 'Clean
Development Mechanism' initiative for Pilot studies.

a) Illumination:

Replacing inefficient luminaries such as Sodium Vapor Lamps, Mercury Vapor
Lamps & Halogens with Light Emitting Diodes which are extremely energy
efficient. Pilot programs are ongoing.

b) Agro Forestry, Reforestation, Afforestation Project:

Our horticulture department has been successful in growing/Planting various
types of fruit and flower bearing plants and ready trees by maintaining
biodiversity in the highly saline sandy desert soil of Mundra by utilizing
the latest Hi-Tech technology in Plantation and in Mechanized-geldar-
Israel Irrigation System by utilizing treated STP/CETP water.

By sustained effort, your Company is working towards achieving the status
of becoming the Greenest Port in South Asia.

c) Regenerative Cranes:

Cranes used for transferring material (dry cargo as well as containers)
onto/off the docks from/to the ships have built in capability of generating
power during the downward motion, a study is in progress to identify
processes and methods of utilising the Regenerated Power for other port
applications whereby reducing consumption of expensive power as well as
assuring a cleaner environment.



Corporate Social Responsibility:

The Adani Group is very conscience about its values. Our commitment to
achieving goals as well as our value driven processes are our core
strengths. The group always acts as a responsible Corporate Citizen. The
Adani Foundation plays a pivotal role in bringing about Sustainable
Development in and around its area of operations.

We have three areas of investment - social investment (comprises of health,
education and livelihood), bio - investment (which focuses on water
conservation & harvesting, and animal husbandry) and the third being
infrastructure development.

The Foundation aims to enhance the quality of life of the surrounding
Communities by reaching out to more than 15,000 young minds through various
programmes to improve the Quality of Education, Girls Education, promoting
Child's rights and gender equality, empowering Village Education Committee
through innovative use of local Education Volunteers. Further, the
Foundation covered 29 villages in and around the Mundra region, rendering
free treatment to more than 4000 patients per month.

Under our Rural Infrastructure Development activities, we have initiated
the process for rural underground drainage system for 12 villages with
partial financial support from WASMO. This will lead to better sanitation
and improved health in the villages.

Our Cluster based approach invites full participation and cooperation of
our stake holders.

Corporate Governance and Management Discussion and Analysis Report:

Your Company has been proactive in following the principles and practices
of good Corporate Governance as an important step towards building investor
confidence, improve investor's protection and maximize long-term
shareholder value. A separate report on Corporate Governance compliance and
a Management Discussion and Analysis Report as stipulated by the Clause 49
of the Listing Agreement forms part of the Annual Report along with the
required Certificate from the Practicing Company Secretary regarding
compliance of the conditions of Corporate Governance as stipulated by
Clause 49 of the Listing Agreement.

In compliance with Corporate Governance requirements as per Clause 49 of
the Listing Agreement, your Company has formulated and implemented a Code
of Conduct for all Board members and senior management personnel of the
Company, who have affirmed the compliance thereto.

Directors:

During the year under review, Mr. Atanu Chakraborty, IAS Vice Chairman and
CEO, GMB was appointed as an Additional Director on the Board of the
Company. Dr. Malay Mahadevia was appointed as an Additional Director and
Whole Time Director of the Company w.e.f 20th May, 2009. Pursuant to
Section 260 of Companies Act, 1956 both these Directors hold office upto
the date of ensuing Annual General Meeting and being eligible offer
themselves for appointment. Board welcomes them and looks forward to their
valued contribution in meeting the long-term objectives of your company.
Board recommends appointment of the directors of the company.

As per Section 256 of the Companies Act, 1956 and Article 152 of the
Articles of Association of the Company, Mr. Rajesh S. Adani, Mr. Ameet H.
Desai and Mr. Arun Duggal are liable to retire by rotation and being
eligible offer themselves for re-appointment. Board recommends
reappointment of the directors of the company.

Directors Responsibility Statement:

Pursuant to the requirement under Section 217(2AA) of the Companies Act,
1956, with respect to Directors' Responsibility Statement, the Directors
confirm:

* The applicable accounting standards have been followed and that no
material departures have been made from the same.

* Reasonable and Prudent Accounting Policies have been adopted in
Preparation of the Financial Statements. The Accounting Policies have been
consistently applied except for the changes mentioned in Notes forming part
of Accounts.

* Proper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act,
1956, for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities.

* The annual accounts have been prepared on a going concern basis.

Insurance:

Assets of your Company are adequately insured against various perils.

Personnel:

In terms of the provisions of Section 217(2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees) Rules, 1975 as amended,
the names and other particulars of the employees forms part of this report
as Annexure. However, as permitted by section 219 (1)(b) (iv) of the
companies Act, 1956 this Annual Report is being sent to all shareholders
excluding aforesaid information. Any member interested in obtaining such
particulars may write to company Secretary at the Registered office of the
Company.

Auditors:

Your Company's Auditors M/s. S.R. Batliboi &Associates, Chartered
Accountants, Mumbai, hold office until the conclusion of the ensuing Annual
General Meeting. The Company has received a written certificate from the
Auditors to the effect that their re-appointment, if made, would be within
the prescribed limit under Section 224(1B) of the Companies Act, 1956.

Auditors' Report:

Notes to the accounts, as referred in the Auditors Report, are self-
explanatory and practice consistently followed and therefore do not call
for any further comments and explanations.

IT System:

To cater to the fast growing IT Infrastructural requirements of the
business, the following technological solutions/systems have been
implemented:

* Implemented Car Terminal Management System (KARTOS), Integrated Port
Management System (IPMS) and Navis Applications for Terminal Operations
JOS), which are seamlessly integrated with SAP system.

* Optimization SAP ERP system for Procurement, Enterprise Asset Management
& Financial processes for better manageability of data & port operations.

* Development of Management Information and Decision Support Systems using
SAP BI functionality.

* Development of user friendly Enterprise Portal with Employee Self
Services (ESS).

In order to enhance the existing IT Infrastructure for competitive
advantage; the following IT initiatives have been undertaken:

* Enhancement of IP Based Telecom Infrastructure with Siemens Hipath-8000
for unified messaging

* Comprehensive Security & Video Surveillance for entire MPSEZ area.

* Automation of Port operations which includes Gate & Jetty area.

Awards and Accreditations:

During the year under review, some of the awards and recognitions received
by your Company are:

* Winner of 'Infrastructure Developer of the Year : 2008' award, India
Shipping Summit 2008.

* Winner of 'Private Port of Year : 2008' award, CNBC TV18.

* Selected as a member of the prestigious : 'C-40 World Ports' at C40 World
Ports Climate Conference, Rotterdam, 2008.

* 'Private Port of the Year' at the Samudra Manthan Awards 2009, organized
by the Govt. of India's India Trade Promotion Organization (ITPO).

Acknowledgement:

In consonance with established maxim that the company is only as good as
its people, your Company has put together a team of highly qualified and
experienced professionals. Our shareholders have been our partners in
progress. They have continued to repose their trust and confidence in the
Company. The Company is committed to work for augmenting shareholder value.

The success achieved by your Company and the progress made by it are due to
co-operation, efforts and commitment of all concerned with its affairs,
including the Government of India, Government of Gujarat, Gujarat Maritime
Board, Financial Institutions, Banks, shareholders, directors, executives,
officers and other employees of your Company. The management expresses
gratitude to all for their co-operation especially to the employees for
their dedicated services without which the good results would not have been
possible.

For and on behalf of the Board of Directors

Place: Ahmedabad Gautam S. Adani
Date : 20th May, 2009 Chairman & Managing Director

Annexure-I to the Directors' Report

Particulars pursuant to Section 217(1)(e) of the Companies Act, 1956:

Information as required under Section 217(1)(e) of the Companies Act, 1956
read with the Companies (Disclosure of Particulars in the Report of Board
of Directors) Rules, 1988 are set out as under:

A. CONSERVATION OF ENERGY:

a) The following energy conservation measures have been taken:

1. In continuation to the last year's efforts, stabilizers have now been
installed in Substationl in addition to other substations for electricity
supply to some Godowns and lighting towers.

2. Lighting control switches have been installed in all godowns and Open
storage yards to reduce the lighting (lux level) when no operation is in
progress.

3. Power factor has been maintained at the level of 0.991 to 0.996 as
compared to the last year's 0.98 to 0.992. This has been achieved by close
monitoring and repairs and calibration of Automatic Power Factor Correction
panels.

4. Optimization of transformers has been done by transferring load from
Terminal 2 Transformer to underutilized 1500 KVA transformer.

5. Additional conveyor has been installed to feed the fertilizer to the
unutilized 1.5 km length of conveyor. This has reduced the distance for
transporting the fertilizer with the dumper trucks by 1.6 km from 2.7 km
and reduced fuel consumption by 33%.

6. Electrically driven Goliath cranes being installed which would replace
inefficient diesel engine operated cranes.

7. Additional hoppers have been installed at the jetties to improve the
efficiency of bulk cargo handling and reducing the crane engine idling.

b) Additional investments and proposals, if any, being implemented for
reduction of consumption of energy:

1. Rs.47 crores is being invested to build a fully automated complex for
conveyorised transportation, bagging and wagon loading of the fertilizer.
This will eliminate road transportation of bagged cargo from storage areas
to the railway siding and also use of diesel operated loaders for feeding
of fertilizer to bagging machines.

2. Over capacity motors in the Liquid Terminal being planned to be replaced
with motors of optimum capacity.

3. Energy Management System being evaluated for implementation for remote
monitoring and tracking of electricity consumption.

c) Impact of measures at (a) and (b) above for reduction of energy
consumption and consequent impact on the cost of production of goods.

Amount of energy saved is approximately 4,60,472 KWH/year (Rs. 35 lacs/year
@Rs.7.75KWH).

d) Total energy consumption and energy consumption per unit of production
as per Form A in respect of industries specified in the schedule thereto:

Not applicable to the Company.

B. Technology Absorption:

1. Latest material handling technology and automation systems being
implemented.

2. Vacuum Lift technology for handling steel pipe being used.

3. Latest techniques such as Laser alignment and Thermography being used in
maintenance.

4. Latest corrosion protection technology by using quartz blasting,
application of fast curing (5 seconds) and moisture cured polyurethane
application with plural gun system being used for protection of steel piles
of jetties.

5. NACE and SSPC (USA) standards being conformed to in all protective
coating technologies being implemented in the port.

6. SAP reports being customized for MIS and decision support for the
management.

7. Document Management System (DMS) of SAP being used for storage and
management for all documents including drawings.

8. Geographic Information System (GIS) being used for mapping of all assets
and utilities like power lines, water and fire pipelines etc. This system
could also be utilized for monitoring of assets.

9. State-of-the-art Security System being installed which uses latest
technologies in CCTV, Access Control, RFID, Network Topology and Remote
Access.

C. FOREIGN EXCHANGE EARNINGS AND OUTGO:

Details of Foreign Exchange Earnings and Outgo are set out in Note 24 of

Schedule 23 of Notes to Accounts.

Annexure-II to the Directors' Report

The following is the list of Persons Constitution 'Group' (within the
meaning as defined in the Monopolistic and Restrictive Trade Practices Act,
1969) for the purpose of availing exemption from applicability of the
provisions of Regulations 10 to 12 of Securities and Exchange Board of
India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997
('the said Regulations') as provided in Clause 3(1)(e) of the said
Regulations:

1. Mr. Gautam S. Adani
2. Mr. Rajesh S. Adani
3. Mr. Vasant S. Adani
4. Mr. Mahasukh S. Adani
5. Mr. Vinod S. Adani
6. Ms. Priti G. Adani
7. Ms. Shilin R. Adani
8. Ms. Pushpa V. Adani
9. Ms. Suvarna M. Adani
10. Ms. Ranjan V. Adani
11. Ms. Shantaben S. Adani
12. Mr. Bhavik Shah
13. Mr. Rakesh Shah
14. Mr. Vinod Sanghavi
15. Ms. Surekha Shah
16. Ms. Priti Shah
17. Ms. Sharmishta Sanghavi
18. Mr. Karan G. Adani
19. Mr. Jeet G. Adani
20. Mr. Sagar R. Adani
21. Ms. Rah i R. Adani
22. Ms. Vanshi R. Adani
23. Ms. Riddhi V. Adani
24. Mr. Pranav V. Adani
25. Ms. Namarta P. Adani
26. Mr. Param P. Adani
27. Ms. Krupa Adani
28. Adani Enterprises Ltd.
29. Adani Agro Pvt. Ltd.
30. Adani Properties Pvt. Ltd.
31. Adani Shipyard Pvt. Ltd.
32. B2B India Pvt. Ltd.
33. MPSEZ Utilities Pvt. Ltd.
34. Rajasthan SEZ Pvt. Ltd.
35. Adani Logistics Ltd.
36. Inland Conware Pvt. Ltd.
37. Karnavati Aviation Pvt. Ltd.
38. Adani Retail Pvt. Ltd.
39. Mundra SEZ Textile and Apparel Park Pvt. Ltd.
40. Adani Petronet (Dahej) Port Pvt. Ltd.
41. Adani Infrastructure Services Pvt. Ltd.
42. Shantikrupa Services Pvt. Ltd.
43. Shantikrupa Estates Pvt. Ltd.
44. Ventura Trade and Investment Pvt. Ltd.
45. Pride Trade and Investment Pvt. Ltd.
46. Radiant Trade and Investment Pvt. Ltd.
47. Trident Trade and Investment Pvt. Ltd.
48. Assets Trade and Investments Pvt. Ltd.
49. Concord Trade and Investments Pvt. Ltd.
50. Baramati Power Pvt. Ltd.
51. Shankheshwar Buildwell Pvt. Ltd.
52. Shantigram Utility Services Pvt. Ltd.
53. Shantikrupa Infrastructure Pvt. Ltd.
54. Adani Trade and Investments Ltd.
55. Ventura Power Investment Pvt. Ltd.
56. Adani Venture Ltd.
57. Adani Commodities (formerly known as Adani Investments)
58. Shanti Builders
59. Advance Investment
60. Crown International
61. Shantilal Bhudarmal Adani Family Trust
62. Gautambhai S. Adani Family Trust
63. Rajeshbhai S. Adani Family Trust
64. Vinodbhai S. Adani Family Trust
65. Mahasukhbhai S. Adani Family Trust
66. Vasantbhai S. Adani Family Trust
67. Gautambhai S. Adani HUF
68. Rajeshbhai S. Adani HUF
69. Vinodbhai S. Adani HUF
70. Mahasukhbhai S. Adani HUF
71. Vasantbhai S. Adani HUF

Management Discussion and Analysis:

The discussion hereunder covers the financial results and other group
developments of the Mundra Port And Special Economic Zone Limited (MPSEZL)
for the financial year 2008-09 and its outlook for the future. This outlook
is based on assessment of the current business environment and Government
policies. The change in future economic and other developments are likely
to cause variation in this outlook.

World Economy:

After a healthy pace of growth of world economy for the past 3 years at the
rate 4.5%-5%, the pace of economic growth stunted significantly in 2008
struck by the subprime crisis and the instability in international
financial markets, which even necessitated the IMF to make a marked
downward revision of its estimate for global growth to 0.5% in January,
2009 & thereby officially making for a global recession next year. This
crisis has not left even the emerging economies untouched, though the
impact is on a lesser scale than in developed economies. Unlike the earlier
recessionary periods, the Governments and central banks have been proactive
this time and have announced financial stimulus packages, ushering in an
expectation of early recovery from the second half of this year. Amidst all
the gloomy scenario, the silver lining is that world trade is still
expected to achieve a positive growth of 5% and 4% in these two years as
per World Economic Outlook's forecast.

Indian Economy:

India's Economy has grown by more than 9% for three years running, and has
seen a decade of 7%+ growth until now. Like most of the world, however,
India has faced testing economic times in 2008 inspite of not having direct
exposure to the sub-prime mortgage assets or to the failed institutions.
The RBI projects growth of just 6% for the Indian economy in 2009-10 which
would be lower than the 6.5%-7% growth estimate for 2008-09. This is mainly
because of India's integration with world economy by two way trade and
financial integration with the world. However, it is expected that the
impact of the global crisis would be less severe in India as compared to
developed countries.

Industry Structure:

Ports:

Indian Scenario:

India's 95% external trade by volume and 70% by value moves by sea. Cargo
handling volume in 12 major ports in India was at 530 million tonnes, while
non-major ports contributed another 210 million tonnes (based on
provisional data) during 2008-09, aggregating to 740 million tonnes
implying a growth of 2.8% from last year.

With a market share of zero - few years back, the non-major ports have
garnered about 30% of India's port traffic as per FY09 traffic, indicating
a growing importance of non-major ports.

The non-major ports of Gujarat handled 152 million tonnes in 2008-09.
Mundra port, the largest private sector non-major port, with a cargo of
around 36 million tonnes in FY09 is among the top 10 ports in the country.

As per Govt. estimates, India needs to double port capacity to 1,500
million tonnes by 2011-12 and would require investments worth Rs 550
billion in that period indicating significant growth potential for the
sector.

Special Economic Zone:

The Government of India (GoI) had announced a Special Economic Zone Scheme
in April, 2000 with a view to provide an internationally competitive
environment for exports. The objectives of Special Economic Zones (SEZs)
include making available goods and services free of taxes and duties
supported by integrated infrastructure for export projection, expeditious
and single window approval mechanism and a package of incentives to attract
foreign and domestic investments for promoting export-led growth.

Leveraging the advantage of the port, your Company envisages development of
Multi product SEZ over an area of 130 sq. km. Your Company's SEZ, which is
largest notified multi-product SEZ having notified area of 5920 hectares
subsequent to the integration of 3 SEZs, would offer world-class
infrastructure for those who want to establish an industry in this SEZ.

Performance at glance:

Your company achieved superior productivity across all segments.

Highlights of Overall Performance:

* Total number of vessels handled at Mundra Port : 2171 (1624 vessels in
07-08 i.e., a growth of 33.68% year on year).

* Cargo volumes have improved across all segments (cargo handled in 07-08
was 28.80 million tons and 08-09 was 35.72 million tons which shows a
growth of 24.03% year on year).

Railway:

* Total number of rakes handled in 2008-09 is close to 4500.

* Highest rakes handled in single Month: 459 Rakes in the month of
December, 2008.

* Dispatched highest quantity of coal in a single day, 57179 MT of coal on
March 31, 2009, in 15 rakes in a 24 hours cycle.

* Purchase of new locomotive engine with 3100 HP capacity.

* Started container train operation from Northern India to Mundra, we own
six container rakes.

Dry Cargo:

* Delhi Metro Coaches handling at Mundra Port - March, 2009.

* 1st Boiler Export from Mundra Port - Heaviest Cargo 585 220 MT (Thermax
Ltd.) - February, 2009 (First Export from Mundra SEZ Unit).

* Loading and Releasing a rail rake (59 Wagons) for coal in 1 hour 35
minutes in January, 2009.

* Highest Gross Discharge rate from single vessel-33917 MT, Vessel: MV Elbe
Max (January, 2009) and highest discharge in a single day 4108 MT Vessel:
MV Elbe Max (January, 2009).

* Discharge from the ship and evacuated by rail and road 100152 MT Coal in
a single day (31st March, 2009).

Marine:

* Handled Largest Container Vessel - MV CMA CGM BAUDELAIRE (300.40 mtrs) at
MUNDRA PORT on 2nd February, 2009. The Port now regularly handles the 6500-
7000 Teu vessels and is capable of handling the larger UPPX vessels.

* Port has acquired the 1st in the new fleet of 70 tons bollard pull tugs
to cater to the UPPX container vessels. 5 more tugs of 70 tons bollard pull
are on order.

Adani Container Terminal:

* Total number of vessels handled in 2008-09 is nearly 10 times higher than
2007-08.

* Total container throughput increased by over 500%.

* Number of container liner services increased to 11 in 2008-09 as compared
to 1 in 2007-08.

* Achieved Highest Gross Crane Productivity of 55.24 Moves Per Hour (MPH)
on M.V. Taban1 berthed Container Terminal on 14th March, 2009.

* Offering Average Crane productivity of 33 Moves Per Hour for our
customers which is highest in the country.

* Adani Container Terminal received its ISO Certification.

Adani Automobile terminal:

* Commenced operations in January 2009 within a record time of 9 months
after signing of agreement with Maruti Suzuki for car exports.

* Total 18,911 cars exported in the last 3 months of 2008 - 09.

* In house Automobile Terminal Operating System JOS) has been developed and
implemented successfully.

Liquid:

* Highest single month volume handled : 2.2 lacs Metric Tonnes of Liquid
Cargo in February, 2009.

* Simultaneously handled 6 tanker vessels on 1st February, 2009.

* Successfully commenced operations of Liquid loading facility by Rail.

CSR related initiatives:

* Recognitions in World Ports for a Better Climate and selection as a
member of C40 World Ports.

* Rain water conservation efforts upped, constructed two Check-dams in
Mundra Taluka and agreement signed for ten additional checkdams.

* Attended more than 45000 patients through mobile dispensaries services in
more than 30 villages of Mundra Taluka.

Business/Operation Results:

Port Related:

Mundra Port has shown impressive growth in all segments during the year
under review. Mundra Port has handled 2171 vessels in financial year 2008-
09 as against 1624 vessels handled during the previous financial year. The
port witnessed an increase of 33.68% in Cargo handling during the year
against the 2% growth registered by the 12 major ports of the country.
Mundra Port handled 35.72 million tones of Cargo which is 6.73% of a total

of 530 million tones of Cargo handled by the Major Ports and much higher
than the Cargo handled by Ports such as Ennore, Tuticorin and Cochin.

About 4,500 railway rake movements were undertaken in FY 09 for evacuation
of cargo to and from the port. We have started train operation from
Northern India to Mundra and we also own six Container rakes.

The comparative analysis of the cargo mix with respect to cargo handled by
the port is depicted as follows:

2008-09

Wheat 2%
Minerals & Clay, Scraps & Others 3%
Steel 8%
Fertilizer 7%
Crude 28%
Coal 21%
Vegetable Oil, Chemicals & POL 4%
Containers 27%

2007-08

Crude 18%
Wheat 13%
Minerals & Clay, Scraps & Others 4%
Steel 7%
Fertilizer 7%
Coal 15%
Vegetable Oil, Chemicals & POL 4%
Containers 32%

Special Economic Zone:

Your Company's SEZ, being India's largest port based SEZ, positioned on the
West coast of India is ideally situated for exports to African, Middle East
and Western countries besides being conveniently located to service the
huge hinterland of northern India.

GoI had issued notification in respect of your Company's SEZ on 23rd June
2006. Subsequently, based on availability of additional contiguous land,
GoI had issued further notifications for additional area from time to time.
Consequently, the total area already notified by GoI in respect of your
Company's SEZs is 5920 hectares (i.e. SEZ-I: 4846 Ha. and SEZ-11: 1074
Ha.).

During the year, your Company approached GoI for clubbing of two notified
multi-product SEZs as above and the Sector Specific SEZ for Power being
developed by Adani Power Ltd. (A Group Company) in Mundra Taluka, adjacent
to your Company's SEZ and relaxing the cap of 5000 hectares applicable for
such SEZs. The proposal has been considered and GoI has since approved the
clubbing of the three SEZs in Mundra as one Multi-product SEZ with your
Company as the Developer. Consequently, Adani Power Ltd. has also been
approved as Co-developer of the clubbed SEZ.

During the year, GoI has also given approval to some parties as Co-
developers of MPSEZ for developing, operating and maintaining various
social infrastructure facilities such as Housing, Hospital, School, Hotels
& Service Apartments and related facilities in the SEZ. During the year,
GoI has also accorded approval to MPSEZ Utilities Pvt. Ltd. (MUPL), a 100%
subsidiary of your Company as a Co-developer of the SEZ for providing
various utilities and related infrastructure facilities.

The Development Commissioner's office has become functional within the SEZ
and the SEZ units are also obtaining required approvals within the Zone
itself. The Development Commissioner has already issued Letter of Approvals
to several units for setting up of their manufacturing and service
facilities in the Zone. Some of the approved Units have already started
export activities in the Zone.

Port Related Developments:

a) West Port Development:

Mega Thermal Power Plants Tata Power, Adani Power, Raj West Power, are
being constructed in Mundra Region due to the related facilities available.
The plants require very high volumes of imported coal, up to 40 million
Tons Per Annum (MTPA). In addition other dry volumes such as Iron ore, etc.
are also to be imported for the industries planned in the vicinity of Power
Plants. In order to import these requirements, the proposed Coal Terminal
comprising of 3 deep water offshore berths with elaborate stockyard and
comprehensive mechanization is under development. The state of the art
facility will be able to turn around a Cape Size Bulk Carrier (200,000 tons
of cargo) in 60 hours, thus benefiting the trade.

b) Car Exports:

During the year Mundra Port had signed a Memorandum of Understanding (MOU)
for setting up a world class dedicated Automobile Terminal with Nippon
Yusen Kaisha (NYK) of Japan, named as Adani Automobile Terminal and has
commenced its operations in January 2009. Automobile Terminal Operating
System JOS) has also been developed and implemented successfully for the
same. The Company has already exported 18,911 units of Maruti Suzuki Cars
in 2008-09. Mundra Port is set to become a hub for handling of automobiles
because of its proximity to the major auto manufacturers in North and West
India.

c) Enhancing the connectivity infrastructure:

The newly established Adani Container Terminal (ACT) which has commenced
operations in 2007-08 has shown immense growth, rail coaches for Delhi
Metro were also imported from Mundra Port. Considering the growth of cargo
at port, the connectivity infrastructure to and from the port and within
the port and SEZ area is being enhanced. The railway network capacity is
being doubled in a phased manner, which will increase the evacuation
capacity of Mundra Port from the present 45 rakes per day to 125 rakes per
day.

Competition:

Competition within the port industry is primarily driven by the
characteristics and location of the ports, such as the ability to berth
large vessels, proximity and connectivity to inland cargo centres. Other
key competitive factors include, among others, the number of berths, the
size and quantity of port facilities and equipment, and the efficiency of
cargo handling and transportation. We compete primarily against Non-Major
Ports and Major Ports located on the northwest coastline of India, such as
Pipavav Port, Kandla Port, Mumbai Port, JNPT and GMB-managed ports.

We compete against these entities through our integrated port
infrastructure facilities, domain expertise in the port services industry,
established customer relationships, available land resources and ability to
facilitate port-based development, consistent high-quality service and our
ability to flexibly meet our customers' requirements including flexibility
in tariffs.

Risks and concerns:

There are certain factors which may cause our actual results to differ
materially from our expectations. Among them are:

i) our ability to respond to regulatory and policy changes pertaining to
our business;

ii) our ability to successfully implement our strategy, our growth and
expansion plans;

iii) the changes in various economic parameters including growth, inflation
and interest rate; and

iv) the developments in the political scenario and its impact on ongoing
economic, trade and policy initiatives.

Management control Internal control and Internal audit systems and their
adequacy:

Internal audit program is designed based on Port/SEZ operation and nature
of business activities taking into consideration the major risk factors
related to business and port operation, after being duly approved by the
Audit Committee and the Statutory Auditors. For smooth execution of audit
program it is segregated quarter wise.

The Internal Audit function consisting of professionally qualified
accountants, engineers and SAP experienced executives, also reviews the
quality of planning and execution of all ongoing projects involving
significant expenditure to ensure that project management controls are
adequate to yield 'value for money'.

The Internal control system comprises a well designed and duly approved
structural Delegation of Authority (DOA) coupled with laid down Standard
Operating Procedures (SOPs) for all operation and servicing departments.
The implementation/modification of DOA and SOPs on need basis is monitored
through Pre audit (expenses), post audit (incomes and expenses) and
management audit. Further, audit of Port and other major operations are
carried out on periodic basis. The Internal Controls procedures are
periodically reviewed and amendments are made, if required.

The Company also has an exhaustive budgetary control system to monitor all
incomes including cargo volume and expenditures against approved budgets on
an ongoing basis. Recognizing the important role of internal scrutiny, the
company has an internal audit function 12 which is empowered to examine the
adequacy and the compliance with policies, plan and statutory requirements.
Continuous audit and verification of the system enables the various
Strategic Business Units (SBU) and servicing groups to plug any
shortcomings sooner rather than later. It also evaluates the Company's
strategic risk management system and suggests risk mitigation measures for
all key operations. In addition, the top management (Director/
Representative of Chairman/Chairman) and the Audit Committee of the Board
review the findings and recommendations.

Some significant features of the internal control systems are:

* Corporate policies on accounting and major processes;

* Well-defined process for formulating and reviewing annual and long term
business plans;

* Customers Relations Management connecting with its valued customers
spread at different locations for seamless information exchange;

* Monthly meeting of the management committee(Business Review Meeting) at
apex level to review operations and plans in key business areas;

* A well established multi-disciplinary Internal Audit team, which reviews
and reports to management and the Audit Committee about the compliance with
internal controls and efficiency and effectiveness of operations and the
key process risks;

* Audit Committee of the Board of Directors, comprising independent
directors, which is functional and regularly reviews the audit plans,
significant audit findings, adequacy of internal control, compliance with
Accounting Standards as well as reasons for changes in accounting policies
and practices, if any.

Human Resource Development:

Employees are a key resource of competitive advantage of MPSEZL aiding its
continued high growth and ability to compete with the Government owned and
upcoming private ports in the country. Human Capital enables MPSEZL to
innovate in all spheres of business operations to sustain its
competitiveness through reaching new customer segments, new geographies,
broadening the cargo mix and establishing new benchmarks of port efficiency
and productivity.

MPSEZL is supported by 826 employees to manage the operations of the port.
As part of continuous investment in human capital, management conducted pay
parity study in the port sector and made appropriate positive revision in
the compensation of employees. Training and skill upgradation has been a
focus area. MPSEZL has imparted 3.36 man-days training per employee during
2008-09 which includes both technical and behavioral training. Some of the
key behavioral training programmes are aimed at developing managerial and
leadership competencies of employees.

In order to streamline the operations and strengthen the organisational
capability, your management has restructured the organization structure by
creating the SBUs for Dry Cargo, Liquid Terminal and Marine operations
which has made the organization leaner and closely knit unit focused on
results with constant attention to costs. In third quarter, your
organization has undertaken manpower optimization exercise to cope with the
ongoing slowdown in the trade due to recession in global and domestic
markets.

MPSEZL has conducted productivity improvement study through National
Institute Training and Industrial Engineering (NITIE) which established
productivity benchmarks for the port and charted out a road map to improve
operational efficiency. Your management is actively implementing NITIE
report to improve port operations effectiveness especially in Dry cargo
SBU.

Based on productivity benchmarks developed by NITIE, MPSEZL has implemented
Productivity Linked Incentive Scheme to the employees in direct operations
of Dry Cargo SBU based on performance improvements in cargo handling rate,
cargo handling cost and safety.

As an effort to bring out the inner talent and creativity of employees,
your organization has implemented Innovation/Suggestion scheme during the

year. We have put in place reward mechanism to suitably recognize employees
for their contributions towards service quality, safety, operational
execution, inventory reduction, process simplification and employee
motivation. As a result of the scheme, we have received 39
suggestions/innovations out of which 35 were implemented during the year
which led to saving of Rs.3 Crores(approx.) per annum to the organization.

MPSEZL has realized substantial improvement in productivity as a result of
all these initiatives taken during the year. Cargo handling rate for steam
coal has increased from 21064 MT per day to 25,300 MT per ship day during
the year. Similar gains were made during the year for other cargo such as
Fertilizer, Steel etc.

MPSEZL has taken several measures to improve organizational capabilities to
achieve short term and long term objectives. It is managing and reviewing
operations performance through Balanced Scorecard' initiative. Your
organization has taken further steps to deploy SAP R3 ERP package
encompassing various key functions & business operations viz. Materials
Management, Finance & Accounts, HR and Port operations leading to greater
authenticity, seamlessness and streamlining of overall operations.

MPSEZL enjoys excellent industrial relations with its employees. There has
been no record of employee unrest in industrial relations in the last 6
years.

Standalone Financial Performance with respect to operational performance:

Your Company has recorded total Income to the tune of Rs. 1,17,944.66 Lacs
in 2008-09 with an increase of 39.39% in comparison to the corresponding
period in the previous year.

Net Block of the Company as on 31st March, 2009 is Rs. 3,25,142.11 Lacs as
compared with Rs. 2,84,182.90 Lacs as on 31st March, 2008 an increase of
14.41% in comparison to the corresponding period in the previous year.

During the year, your Company generated Earnings Before Interest,
Depreciation, Tax and Appropriation (EBIDTA) of Rs. 80,596.60 Lacs as
compared to Rs. 56,331.23 Lacs in the previous year, showing growth of
43.08%.

Net profit margin was higher by 116.05%. Earning per share increased by
102.28% on an annualized basis to Rs. 11.51 on face value of Rs.10/- each.

Profit Before Tax of your Company has increased to Rs. 51,403.10 Lacs for
the year ended 31st March, 2009 compared to Rs. 36,682.12 Lacs for the year
ended 31st March, 2008 reflecting a handsome growth of 40.13%.

Consolidated Financial Performance of the Company:

Your Company has recorded total income to the tune of Rs.1,23,952.43 Lacs
during the year 2008-09 compared to Rs. 84,492.65 Lacs in the corresponding
previous financial year with an increase of 46.70%.

During the year, your Company generated Earnings Before Interest,
Depreciation, Tax and Appropriation (EBIDTA) of Rs. 80,025.18 Lacs compared
to Rs. 56,362.94 Lacs in the previous year an annualized growth of 41.98%.

Net profit of Rs. 43,252.44 Lacs also grew by 105.55% on a yearly basis.
Earnings per share increased by 92.33% on an annualized basis to Rs.10.79
on face value of Rs.10/- each.

Cautionary Statement:

Statements made in the report describing the Company's plan, projections
and expectations may constitute 'forward looking statement' within the
meaning of applicable laws and regulations. Actual results may differ
materially from those either expressed or implied.