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.

Reliance Power, Mudra Port Sez, Rathi Bar - more grey market premiums

Reliance Power 48 to 50 ( keeps on increasing)

Mudra Port & Sez - 240 to 250 (price not issued)

Dhanus Tech 295 90 to 95

Supreme Infra 108 80 to 85

Saamya Biotech 10 11 to 12

MAYTAS Infra 370 150 to 160

Circuit Systems 35 7 to 8

Rathi Bars 35 3 to 4