GATEWAY DISTRIPACK LIMITED
ANNUAL REPORT 2010-2011
DIRECTOR`S REPORT
Your Directors have pleasure in presenting their report for the year ended
31st March 2011.
A. Financial Results
2010-11 2009-10
Particulars (Rs. Million) (Rs, Million)
1. Income from Operations 1,915.03 1.669.70
and Other Income
2. Profit before Interest,
Depreciation and taxes 1,013.68 831.63
3. Interest 14.37 13.43
4. Depreciation 142.19 149,32
5. Profit before Exceptional
items & taxation 857.12 713,43
6. Provision for taxes 878 (53.66)
7. Profit after tax 848.54 772,09
8. Profit brought forward from
previous year 1.815.67 1.560.34
9. Dividend 648.11 177.41
10. Tax on Dividend 107.64 64.14
11. Transfer to General Reserve 84.84 77.21
12. Profit carried to Balance Sheet 1,321.42 1,813.67
B. Dividend
The Company has paid three Interim dividends (including Special Interim
Dividend) totalling Rs. 5 per equity share amounting to Rs. 540.11 million
for the financial year 2010-11. Your Directors recommend Final Dividend of
Rs.1 per equity share, amounting to Rs. 108 million for the financial year
2010-11. The Dividend Distribution Tax borne by the Company on the Interim
and Final Dividends amounts to Rs. 107.64 million.
C. Management Discussion & Analysis:
a) Industry structure and developments
In the past decade, containerised movement of export import cargo grew by
14% per annum. Containerised cargo represents 30% of India`s Export Import
Trade, compared to the global average of over 70%. JNPT accounted for more
than 50% of the total containerised traffic handled out of India, by
handling around 4.3 million Teus. The country`s second biggest container
port at Chennai handled around 1.5 million TEUs.
b) Opportunities and threats
Growth of containerisation in both Export Import and domestic trade,
private sector participation in ports and movement of containers by
rail,Liberalisation of Government policies and increase in the country`s
foreign trade present the company with opportunities for expansion and
increase in profitability. During the past few years, the Company has taken
several initiatives for growth and expansion. The company has taken over
Punjab State Container and Warehousing CorporationLimited` s CFS at JNPT
under an Operations and management agreement for a period of 15 years from
February 2007. The CFS has been revitalised and renovated, adding to the
Company`s capacity at JNPT, which is India`s premier container port. The
Company continues to prune costs and augment its equipment for handling and
transporting containers, which are operated by contractors. The Company is
in the process of setting up a CFS at the fast growing port of Kochi in a
joint venture with Chakiat Agencies PrivateLtd. The Company`s rail
subsidiary, Gateway Rail FreightLimited (GRFl) has expanded its business
relating to operating container trains on the Indian railways network. GRFl
has put in place a fleet of railway rakes / trailers and ICDs to provide
end-to-end solution to customers across the country. The Company`s cold
chainLogistics subsidiary SnowmanLogistics Ltd. continues to be a premier
player in this emerging business.
Competition from existing and new entrants and managing the geographical/
capacity expansion present the company with new challenges.
c) Segment-wise/Product-wise performance
The Company`s entire business is from CFS. There are no other primary/
secondary segments in the Company`s business.
d) Outlook
Strong economic performance and growth in EXIM trade are expected to result
in an increase in traffic at major Indian ports during 2011-12. The growth
in port volumes & resultant increased throughput at our CFSs, increase in
the business of rail movement of containers and growth in the emerging cold
chain Logistics business are expected to have a positive impact on the
Company`s business and profitability.
e) Risks and concerns
Increase in fuel costs could result in increase in Company`s major costs of
transport and handling. Increase in container traffic vis-a-vis creation of
capacity at the ports could Lead to congestion at ports which would result
in decline / delay in the throughput handled by the Company. The revenues
of the Company are concentrated on the container volumes handled by major
shipping Lines and consolidators, who use its CFSs at various Locations.
f) Internal control systems and adequacy
The Company makes use of IT enabled solutions in its operations, accounting
and for communication within its facilities and with customers and vendors.
Financial and Operating guidelines are put in place to regulate the
internal management. The Company`s accounts and operations are subject to
internal audit and review by the Audit Committee of the Board of Directors.
g) Financial / Operational performance Operations:
Total income from operations & other income during 2010-11 was Rs. 1,915.03
million (2009-10: Rs. 1,669.70 million). The Profit after tax for 2010-11
was Rs. 848.34 million (2009-10: Rs. 772.09 million).
Finance:
During the year, the Company repaid term Loans availed from HDFC Bank
Limited. The Company has outstanding Loan for financing transport vehicles
Rs. 92.71 million with HDFC Bank Limited as on March 31, 2011. The Company
has been sanctioned cash credit / overdraft facilities of Rs.150 million
and non-funded facilities to the tune of Rs. 650 million by HDFC Bank
Limited. The Company has given guarantees in respect of outstanding Loans
of Rs.1,061.08 million of subsidiary company Gateway Rail Freight Ltd. as
on 31st March, 2011.
The income from interest on fixed deposits with banks and investments was
Rs. 29.63 million in the current year (2009-10: Rs. 10.54 million).
h) Human Resources
The Company continued to have cordial and harmonious relations with its
employees. Human relations policies were reviewed and upgraded in Line with
the Company`s plans for geographical expansion. Initiatives on training and
development of human resources were undertaken. The Company has a staff
strength of 153 employees as on March 31, 2011 ( March 31, 2010 : 153
employees).
i) Cautionary statement
Statements made in this report, particularly those which relate to
Management Discussion and Analysis, describing the Company`s objectives,
projections, estimates and expectations may constitute "forward Looking
statements" within the meaning of applicable Laws and regulations. Actual
results might vary materially from those either expressed or implied.
D. Subsidiaries:
Gateway East India Private Limited (GEIPL)
The Company has 100% equity shareholding in GEIPl, which is engaged in the
business of running a CFS at Visakhapatnam. GEIPl`s Income grew by 35% from
Rs. 94.76 million to Rs 128.26 million in 2010-11. Profit after tax for the
financial year 2010-11 was Rs.11.03 million as against profit of Rs. 20.86
million for 200910, due to higher taxes.
Gateway Distriparks (South) Private Limited (GDSPl)
The Company has 100% equity shareholding in GDSPl, which is engaged in the
business of running a CFS at Chennai. Income grew by 47% from Rs. 272.94
million to Rs. 401.79 million in 2010 -11. Profit after tax for the
financial year 2010-11 was Rs. 113.46 million as against Rs.104.60 million
for 2009-10.
Gateway Rail Freight Limited (GRFL)
The Company has 97.27% equity shareholding in GRFl, which is engaged in the
business of operating container trains and rail Linked ICDs in Northern
India. Income increased to Rs. 3,226.19 million in 2010-11 from Rs.
2,906.40 million in 2009-10. Loss for the financial year 2010-11 was Rs.
39.91 million as against Rs. 134.73 million in 2009-10. The Loss is after
providing for depreciation / amortisation Rs.300.25 million (2009-10: Rs.
254.67 million) on rakes, trailers and railway registration fees and
interest on Loans Rs. 174.95 million (2009-10: Rs. 181.10 million). During
the year, Blackstone GPV Capital Partners (Mauritius) V-H Limited invested
Rs. 3 billion by subscription to Compulsorily Convertible Preference shares
which, on conversion, will entitle Blackstone to acquire between 37.27% and
49.90% of the equity share capital of GRFl. GRFl has 51% equity
shareholding in Container Gateway Limited, which is yet to commence
operations.
Gateway Distriparks (Kerala) Limited (GDKL)
The Company has 60% equity shareholding in GDKl, which is in the process of
setting up a CFS at Kochi. Chakiat Agencies Pvt. Ltd. holds 40%
shareholding in this Joint Venture Company. Cochin Port Trust has allotted
2.58 hectares of Land at Vallarpadam on Lease for 30 years. The Company is
in the process of constructing a new CFS at Vallarpadam, where the
country`s first International Container Transshipment Terminal has been set
up. Loss for the financial year 2010-11 was Rs. 0.23 million as against
Rs.1.09 million in 2009-10.
Snowman Logistics Limited (SLL)
The Company has 52.19% equity shareholding in Sll (formerly known as
Snowman Frozen Foods Limited), which operates cold stores and fleet of
refrigerated trucks at the various major cities across the country. Sll has
a pan India presence and provides total cold chain Logistics solutions to
its customers for products Like seafood, dairy products, ice cream, fruits
& vegetables, retail and food services. In March 2010, International
Finance Corporation has invested Rs. 248.90 million in the equity capital
of the Company. Mitsubishi Corporation, Mitsubishi Logistics Corporation
and Nichirei Logistics Group Inc. are other shareholders in Sll.
SLL`s income grew by 29% from Rs. 369.02 million in 2009-10 to Rs 475.90
million in 2010-11. Profit after tax for 2010-11 was Rs. 64.45 million as
against Rs. 41.36 million for 2009-10. The Company is in the process of
expanding its cold store capacities and refrigerated transport network.
E. Employees Stock Option scheme (ESOP)
Particular* ESOP -1 (2005 - ESOP-II (2006 -
2006) 2007)
a. Options granted Options for Options for
(excluding 264,798 Equity 377,562 Equity
cancelled options`) shares shares
b. Pricing formula 20% discount on 20% discount
the closing on the closing
market price market price
prior to the date prior to the
of the meeting date of the
of the meeting of the
Remuneration Remuneration
and ESOP and ESOP
Committee Committee
Rs. 150.92 per Rs. 109.25 per
Equity Share Equity
(after Share (after
adjustment for adjustment for
issue of bonus issue of bonus
shares) shares)
c. Options vested (net 73,273 249,212
of Lapsed options)
d. Options exercised 55,800 161,992
e. Total number of 33,800 161,992
shares arising from
exercise of options
f. Options Lapsed 191,525 128.350
g. Variation of terms - -
of options
h. Amount realised by Rs. 5,04 million Rs. 17,70
exercise of options million
i. Total number of Options for Options for
options in force as 59,473 Equity 87,220 Equity
on 31-3-2011 Shares Shares
j. Employee-wise
details of options
granted (excluding
cancelled options)
i. Senior managerial
personnel
a) Mr.R. Kumar, Options for Options for
Deputy Chief 40,000 Equity 40.000 Equity
Executive Officer Shares Shares
and Chief Finance
Officer cum
Company Secretary
b) Mr. Jacob Options for Options for
Thomas. Vice - 16,000 Equity 16.000 Equity
President Shares Shares
[Operations)
c) Mr. A.K. - -
Bhattacharjee. Vice-
President
[Operations)
ii. Any other employee
who received a grant
in any one year of
option amounting to
5% or more of options
granted during that
year (excluding
cancelled options)
a) Mr. Kartik Aiyer, Options for Options for
General 16,000 Equity 16,000 Equity
Manager (Finance & Shares Shares
Accounts}
b) Mr. Subhash - -
Maim, Deputy
General Manager
(Operations)
c) Mr. Himangsu - -
Roy. Senior Manager
(Operations)
iii. Identified - -
employees who were
granted options
during any 1 year
equal to or
exceeding 1% of
issued Capital
(excluding
outstanding
warrants and
conversions) of
the Company at
the time of grant
Particular* ESOP-III ESOP-IV
(2007*2008) (2009-2010)
a. Options granted Options for Options for
(excluding 306.875 Equity 345.000 Equity
cancelled options`) shares shares
b. Pricing formula 20% discount 20% discount
on the closing on the closing
market price market price
prior to the prior to the
date af the date of the
meeting of the meeting of the
Remuneration Remuneration
and ESOP and ESOP
Committee Committee
Rs. 92,92 per Rs. 99,92 per
Equity Equity
Share Share
c. Options vested (net 267,064 134,800
of Lapsed options)
d. Options exercised 255,477 7,900
e. Total number of 255,477 7,900
shares arising from
exercise of options
f. Options Lapsed 39,311 8,000
g. Variation of terms
of options
h. Amount realised by Rs. 21,88 Rs. 0.79
exercise of options million million
i. Total number of Options for Options for
options in force as 31,587 Equity 529,100 Equity
on 31-3-2011 Shares Shares
j. Employee-wise
details of options
granted (excluding
cancelled options)
i. Senior managerial
personnel
a) Mr.R. Kumar, Options for Options for
Deputy Chief 50,000 Equity 50,000 Equity
Executive Officer Shares Shares
and Chief Finance
Officer cum
Company Secretary
b) Mr. Jacob Options for Options for
Thomas. Vice - 20,000 Equity 20,000 Equity
President Shares Shares
[Operations)
c) Mr. A.K. Options for Options for
Bhattacharjee. Vice- 20,000 Equity 20,000 Equity
President Shares Shares
[Operations)
ii. Any other employee
who received a grant
in any one year of
option amounting to
5% or more of options
granted during that
year (excluding
cancelled options)
a) Mr. Kartik Aiyer, Options for Options for
General 20,000 Equity 20,000 Equity
Manager (Finance & Shares Shares
Accounts}
b) Mr. Subhash Options for Options for
Maim, Deputy 20.000 Equity 20.000 Equity
General Manager Shares Shares
(Operations)
c) Mr. Himangsu Options for Options for
Roy. Senior Manager 20,000 Equity 20,000 Equity
(Operations) Shares Shares
iii. Identified - -
employees who were
granted options
during any 1 year
equal to or
exceeding 1% of
issued Capital
(excluding
outstanding
warrants and
conversions) of
the Company at
the time of grant
*******
Particular* ESOP-1 ESOP-II ESOP-III ESOP-IV
(2005-2006) (2006-2007) (2007*2008) (2009-2010)
k. Diluted Earnings per Rs. 7.B 5 per Equity Share
Share (EPS) pursuant to
issue of shares on
exercise of options
calculated in
accordance with
Accounting Standard
(AS) 20 "Earnings
per share"
I. Difference between Employee Compensation costs would
employed increase by Rs. 5.55 million
compensation cost
based on intrinsic
value & fair value
Impact on PAT Rs. Decrease in PAT by Rs. 2.67 million
million
Impact on EPS (Rs./ Basic/Diluted EPS would reduce to
Share) Rs. 7.83 per share from Rs. 7.86 &
Rs. 7,85 per Equity Share
respectively
m. Weighted Average Rs. 102.86 per aption for Equity
Share
{i) Exercise Price of
options
m. Weighted Average Rs. 26.67 per option for Equity
Share
(ii) Fair Value of
options
n. Assumptions used to
estimate fair value
using Black Scholes
option pricing model
(i) Risk free interest
rate 7.64%
(ii) Expected Life Upto 12 months
(iii) Expected
volatility 21.95%
(iv) Expected Rs. 4.97 per Equity share
dividend
ESOP-I ESOP-II ESOP-III ESOP-IV
(v) Market Price of (2005- (2006- (2007- (2009)
share at the time of 2006) 2007) 2008) 2010)
grant of option Rs. Rs. Rs. Rs.
204.55 170.70 116.15 124,90
F. Directors
Pursuant to the provisions of Section 256 of the Companies Act, 1956, Mr.
K.J.M. Shetty, Mr. Kirpa Ram Vij and Mr. Arun Agarwal, Directors of the
Company, retire by rotation at the ensuing Annual General Meeting of the
Company and being eligible, offer themselves for re-appointment. Your
Directors recommend their re-appointment.
G. Responsibility Statement
Pursuant to the requirements of Section 217 (2AA) of the Companies Act,
1956 with respect to Directors` Responsibility Statement, it is hereby
confirmed that:-
i. in the preparation of the annual accounts for the year ended 31st March,
2011, the applicable accounting standards have been followed along with
proper explanation relating to material departures.
ii. such accounting policies as mentioned in Note 1 of Schedule "Q" of the
Annual Accounts have been applied consistently and judgements and estimates
that are reasonable and prudent made, so as to give a true and fair view of
the state of affairs of the Company for the financial year ended 31st March
2011 and of the profit of the Company for that period.
iii. proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of this act
for safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities.
iv. the annual accounts for the year ended 31st March 2011 have been
prepared on an on-going concern basis.
H. Corporate Governance
As a Listed Company, necessary measures are taken to comply with the
Listing agreements with the Stock Exchanges. A report on corporate
governance and certificate of compliance from the Auditors is given as
Annexure A of this Report.
I. Listing of Equity Shares
The Company`s Equity shares are Listed on the Bombay Stock Exchange
Limited, Mumbai situated at Phiroze Jeejeebhoy Tower, Dalal Street, Mumbai
- 400 001 and the National Stock Exchange of India Ltd. situated at
Exchange Plaza, Bandra Kurla Complex, Mumbai - 400 051. The Company has
made up-to-date payment of the Listing fees.
J. Auditors
M/s. Price Waterhouse, Chartered Accountants, Mumbai, Statutory Auditors of
the Company retire at the ensuing Annual General Meeting of the Company and
being eligible have offered themselves for reappointment. The Company has
received Letter from M/s. Price Waterhouse, Chartered Accountants,
confirming that their appointment, if made, would be within the Limits
prescribed under Section 224(1B) of the Companies Act, 1956. Their comments
on the accounts and notes to the accounts are self-explanatory.
K. Statutory Information
Disclosure under Section 217 (1) (e)
Conservation of Energy
The Company continues to give the highest priority for conservation of
energy by using a mix of technology changes, process optimisation methods
and other conventional methods, on an on-going basis.
Technology Absorption
The Company continues to Lay emphasis on development and innovation of in-
house technological and technical skills to meet the specific customer
requirements. Efforts are also being made to upgrade the existing standards
and to keep pace with the advances in technological innovations.
Foreign Exchange Earnings and Outgo
i) Expenditure in foreign currency : Rs. 71.00 million
(including Capital items) (2009-10: Rs. 10.46 million)
ii) Earnings in foreign currency : Nil
Demat Suspense Account
No. of No. of
share Shares
holders
No. in Suspense Account at
beginning of the year 12 1,237
No. of shareholders who approached - -
for transfer from Suspense Account
during the year
No. of shares transferred from
Suspense Account during the year - -
No. in Suspense Account at end of
the year 12 1,237
Voting rights on above shares are frozen till claimed by rightful owner
Disclosure under Section 217 (2A)
Information in accordance with the provisions of Section 217(2A) of the
Companies Act 1956, read with the Companies (Particulars of employees)
Rules, 1975, as amended regarding employees forms part of this Report.
However, as per the provisions of Section 219 of the Companies Act, 1956,
the Report and Accounts are being sent to all shareholders of the Company,
excluding the aforesaid information. Any shareholder, interested in
obtaining such particulars may write to the Company Secretary at the
Registered Office of the Company.
Pursuant to Section 212 of the Companies Act, 1956, the annual accounts of
the subsidiary companies and the related detailed information shall be made
available to shareholders seeking such information at any point of time.
The annual accounts of the subsidiary companies are kept for inspection by
any shareholders in the registered offices of the company and its
subsidiary companies. A copy of the accounts of subsidiaries shall be made
available to shareholders on request,
For and on behalf of the Board of Directors
Place: New Delhi Gopinath Pillai
Date : June 14, 2011 Chairman |