Adani Ports & Speci Director Report

Your Directors are pleased to present the 24^th Annual Report along with the Audited Financial Statements of your Company for the financial year ended 31^st March, 2023 (“FY 2022-23/ FY23”).

Financial Performance

The Audited Financial Statements of your Company as on 31^st March, 2023, are prepared in accordance with the relevant applicable Indian Accounting Standards (“Ind AS”) and Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”) and the provisions of the Companies Act, 2013 (“Act”).

The summarized financial highlight is depicted below:

(H In crore)
Particulars	Consolidated		Standalone
	2022-23	2021-22	2022-23	2021-22
Revenue from operations	20,851.91	17,118.79	5,237.15	4,206.22
Other Income	1,553.48	2,223.72	2,998.79	2,519.31
Total Income	22,405.39	19,342.51	8,235.94	6,725.53
Expenditure other than Depreciation and Finance cost	8,018.46	6,722.28	1,966.50	1653.28
Depreciation and Amortisation Expenses	3,423.24	3,099.30	612.98	599.61
Foreign Exchange (Gain) / Loss (net)	1,886.32	872.07	2,446.14	895.42
Finance Cost
- Interest and Bank Charges	2,593.62	2,559.61	2,769.50	2,509.36
- Derivative (Gain)/Loss (net)	(230.98)	(15.69)	(89.11)	(15.70)
Total Expenditure	15,690.66	13,237.57	7,706.01	5,641.97
Profit before share of Profit/ (Loss) from joint ventures, exceptional items and tax	6,714.73	6,104.94	529.93	1,083.56
Share of loss from joint ventures	47.78	17.39	-	-
Profit before exceptional items and tax	6,762.51	6,122.33	529.93	1,083.56
Add/(Less):- Exceptional Items	(1,273.38)	(405.19)	(1,558.16)	(611.83)
Total Tax Expense	96.38	763.96	(548.80)	324.17
Profit/loss for the year	5,392.75	4,953.18	(479.43)	147.56
Other Comprehensive income (net of tax)	(531.00)	(73.46)	6.57	7.78
Total Comprehensive Income for the year (net of tax)	4,861.75	4,879.72	(472.86)	155.34
Attributable to:
Equity holders of the parent	4,773.57	4,810.96	-	-
Non-controlling interests	88.18	68.76	-	-

1. There are no material changes and commitments affecting the financial position of your Company, which have occurred between the end of the financial year and the date of this report except for disinvestment in Coastal International Terminals Pte Limited.

2. Previous year figures have been regrouped/re-arranged wherever necessary.

3. There has been no change in nature of business of your Company.

Performance Highlights

Your Company handled record cargo throughput of

339 MMT in FY23 with 9% Y-o-Y growth. Mundra Port continues to be India''s largest seaport with 155 MMT of total cargo handled during the year under review.

The key aspects of your Company''s consolidated performance during the FY23 are as follows:

¦ The overall container volumes handled by your Company in India jumped to ~8.6 million TEUs ( 5% YoY), including ~6.6 million TEUs at Mundra Port alone.

¦ APSEZ''s following ports/terminals have handled all time highest cargo in FY23 - Mundra Port,

Tuna Terminal, Hazira Port, Mormugao Terminal, Kattupalli Port & Ennore Container Terminal.

¦ Operating ports portfolio expanded to 12 Indian Ports/Terminals, including the recently acquired

Karaikal Port.

¦ A fully loaded cape-size vessel, MV NS Hairun, with a maximum draft of 17.85 meters sailed out from the Krishnapatnam Port with 1,68,100 MT of iron ore. Gangavaram Port has berthed largest displacement vessel to date (in June 2022) - MV MARAN FIDELITY - with Displacement of 2,21,083 MT & Cargo Parcel of 1,85,000 MT.

¦ Progressively, non-Mundra ports volume share in APSEZ ports portfolio is growing. In FY23, Mundra port''s volume share in APSEZ''s total volumes (excluding Haifa) was 46%, vs 48% in FY22. This indicates volume diversification and reduction in concentration risk. Similar trends were also witnessed in APSEZ ports'' container volumes, Mundra Port''s share in APSEZ total container volumes (excluding Haifa) has come down to 77.3% in FY23 from 79.4% in FY22. Also, the cargo volume share of east coast ports has increased to 39% in FY23 from 38% last year.

¦ Expanded the operating ports portfolio footprint outside India with acquisition of Haifa Port

Company, the operator of Israel''s largest port.

¦ Consolidated revenue from operations stood at H20,851.91 crore in FY23.

¦ Consolidated profit after tax for FY23 stood at H5,392.75 crore.

Mundra Port:

¦ Handled the deepest container vessel - MSC

Washington with an arrival draft of 17 meters -largest ever handled by any Indian port and the largest vessel, MSC Fatma, with a vessel length of 366 meters and carrying capacity of 15,194 TEUs.

¦ The port also docked its first LNG-fueled vessel,

Aframax Crude Oil Tanker, at its SPM facility. The draft is 14 meters long with a total displacement

of 1,26,810 MT.

Logistics:

¦ Containers transported through rail during the year achieved a new milestone crossing 500,000 TEUs ( 24% Y-o-Y).

¦ Bulk cargo has witnessed strong growth with 63% Y-o-Y increase and bulk cargo transportation exceeded 14 MMT milestone.

¦ Terminal volumes crossed 350,000 TEUs

reflecting a 19% Y-o-Y growth.

¦ Acquired ICD Tumb” under logistics portfolio, one of the largest ICD in India with a capacity of 0.5

Mn TEUs.

¦ Added 18 rakes taking total rakes count to 93.

¦ Commissioned Taloja MMLP near Mumbai increasing our number of operational terminals

to 9.

¦ Operational silo capacity increased to ~1.1 MMT,

2 silos in project stage that are planned to be commissioned in FY24

The detailed operational performance of your

Company has been comprehensively discussed in the Management Discussion and Analysis Section which forms part of this Integrated Annual Report.

Credit Rating

The Company''s financial discipline and prudence is

reflected in the strong credit ratings ascribed by rating agencies. The details of credit rating are disclosed in the Corporate Governance Report, which forms part

of this Integrated Annual Report.

Dividend

Your Directors have recommended a dividend of H5 (250%) per Equity Share of H2 each and 0.01% dividend on 0.01% Non-Cumulative Redeemable Preference Shares of H10 each for FY23. The dividend is subject to approval of shareholders at the ensuing Annual General Meeting and shall be subject to deduction of tax at source. The dividend, if approved by the shareholders, would involve a cash outflow of ?1,080 crore.

The dividend recommended is in accordance with your Company''s Dividend Distribution and Shareholder Return Policy. The Dividend Distribution and Shareholder Return Policy, in terms of Regulation 43A of the SEBI Listing Regulations is available on your Company''s website on https://www.adaniports.com/-/ media/Project/Ports/Investor/corporate-governance/ Policies/Dividend-Distribution-and-Shareholder-Return-Policy.pdf.

Transfer to Reserves

There is no amount proposed to be transferred to the Reserves. The closing balance of the retained earnings of your Company for FY23, after all appropriations and adjustments was H27,057.02 crore.

Buyback of Senior Unsecured Notes (‘Senior Notes'') - Rule 144A/Regulation S

The Board approved the proposal to buy back 3.375% US$ 650 million Senior Unsecured Notes due in 2024

in one or more tranches. Your Company completed early settlement of Senior Notes tendered pursuant to the Tender Offer to purchase for cash up to US$130

million on 10^th May, 2023.

For the remaining outstanding Senior Notes, the Company may choose to either accelerate or defer this plan subject to its own liquidity position and the market conditions and further subject to the terms, including the pricing and market conditions.

Status of Scheme of Arrangement

During the year under review, Hon''ble National Company Law Tribunal, Ahmedabad Bench and Hyderabad Bench (NCLT”) vide their orders dated 21^st

September, 2022 and 10^th October, 2022, respectively, approved the Composite Scheme of Arrangement between Gangavaram Port Limited (GPL'') and Adani Ports and Special Economic Zone Limited (Company”)

and Adani Gangavaram Port Private Limited (AGPL'') and their respective shareholders and creditors

(Composite Scheme”) under sections 230 to 232 and other applicable provisions of the Act.

Pursuant to the orders of the NCLT, GPL merged

with the Company w.e.f. the appointed date 1 i.e. 1^st April, 2021 and subsequently, Divestment Business Undertaking (as defined in the Composite Scheme) of the Company was transferred to the AGPL as a going

concern on slump sale basis w.e.f. appointed date 2

i.e. 2^nd April, 2021.

Pursuant to the Composite Scheme, your Company has allotted 4,77,65,715 Equity Shares of the face value of H2 each fully paid up, to the shareholders of

GPL.

cargo originating industrial centres of Tamil Nadu and the upcoming 9 MMTPA CPCL refinery. Your

Company acquired KPPL at a total consideration of H1,485 crore.

C. Acquisition of Inland Container Depot cum Private freight terminal situated at Tumb

Adani Forwarding Agent Private Limited, a step-

down subsidiary of your Company, acquired ownership and operation rights of Inland Container Depot cum Private freight terminal situated at Tumb village from Navkar Corporation

Limited for a consideration of H835 crore on 16^th August, 2022.

D. Acquisition of Haifa Port Company Limited

Your Company incorporated a Joint Venture with Gadot Chemical Terminals (1985) Limited at Israel namely Mediterranean International Ports A.D.G.D Limited on 13^th November, 2022. Your Company holds 70% stake in Mediterranean International Ports A.D.G.D Limited (MIPAL''). MIPAL acquired Haifa Port Company Limited, Israel on 10^th January, 2023, from Government of Israel.

E. Divestment of Coastal International Terminals Pte Limited

Your Company had entered into Share Purchase Agreement for sale of its investment in Coastal International Terminals Pte Limited, Singapore in May, 2022 subject to certain conditions

precedents and approvals.

In view of continuous delay in the approval process and challenges in meeting certain conditions precedents, your Company has obtained an independent valuation on as is where is'' basis. Thereby the buyer and seller have renegotiated the sale consideration to USD 30 million. On receipt of the total transaction value, your Company shall transfer the equity to the buyer and its exit will stand concluded.

Fixed Deposits

There were no outstanding deposits within the meaning of Section 73 and 74 of the Act read with rules made thereunder at the end of FY23 or the previous financial years. Your Company did not accept

any deposit during the year under review.

Non-Convertible Debentures

Your Company has outstanding Listed, Secured Redeemable Non-Convertible Debentures (NCDs)

of face value of H10 lakh each aggregating to H8,352 crore. These NCDs are listed on the Wholesale Debt Market Segment of BSE Limited.

• Re-appointment of Director

In accordance with the provisions of Section 152 of the Act, read with rules made thereunder and Articles of Association of your Company, Dr. Malay Mahadevia (DIN: 00064110) is liable to retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offers himself for re-appointment.

The Board recommends the re-appointment of

Dr. Malay Mahadevia (DIN: 00064110) as Director for your approval. Brief details as required under Secretarial Standard-2 and Regulation 36 of SEBI Listing Regulations, are provided in the Notice of AGM.

• Declaration from Independent Directors

Your Company has received declarations from all the Independent Directors of your Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Act and Regulation 16(1)(b) of the SEBI Listing Regulations and there has been no change in the circumstances which may affect their status as an Independent Director.

• Change in Key Managerial Personnel

During the year under review, Mr. D. Muthukumaran was appointed as Chief Financial Officer and Key Managerial Personnel of your Company w.e.f. 25^th July, 2022.

Pursuant to provision of Section 203 of the Act, Mr. Gautam S. Adani, Chairman & Managing Director, Mr. Karan Adani, CEO & Whole-Time Director, Mr. D. Muthukumaran, Chief Financial

Officer and Mr. Kamlesh Bhagia, Company Secretary are Key Managerial Personnel of your Company as on 31^st March, 2023.

Committees of Board

Details of various committees constituted by the Board, including the committees mandated pursuant to the applicable provisions of the Act and SEBI Listing Regulations, are given in the Corporate Governance Report, which forms part of this Integrated Annual Report.

Number of meetings of the Board

The Board met 6 (six) times during the year under

review. The details of board meetings and the attendance of the Directors are provided in the Corporate Governance Report, which forms part of

this Integrated Annual Report.

Independent Directors'' Meeting

The Independent Directors met on 22^nd March, 2023, without the attendance of Non-Independent

Directors and members of the management. The Independent Directors reviewed the performance of Non-Independent Directors, the Committees and

the Board as a whole along with the performance of the Chairman of your Company, taking into account the views of Executive Directors and Non-Executive Directors and assessed the qu ality, qu antity and timeliness of flow of information between the management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

Board Evaluation and familiarization programme

The Nomination and Remuneration Committee engaged Talentonic HR Solutions Private Limited,

an external advisory company, to facilitate the evaluation and effectiveness process of the Board, its Committees and Individual Directors for the FY23.

A detailed Board effectiveness assessment questionnaire was developed by advisory company based on the criteria and framework adopted by the Board. Virtual meetings were organized with the Directors and discussions were held on three key themes i.e. strategic direction, fit-for-use and focus on Environment, Social and Governance.

The results of evaluation showed high level of commitment and engagement of Board, its various committees and senior leadership. The recommendations arising from the evaluation process were discussed at the Independent Directors'' meeting held on 22^nd March, 2023 and also at the Nomination and Remuneration Committee meeting and Board meeting held on 29^th May, 2023 and 30^th May, 2023, respectively. The same was considered by the Board to optimize the effectiveness and functioning of Board and its Committees.

During the year under review, the Company has also conducted various programmes/meetings for

familiarization of Directors on different aspects.

Policy on Directors'' appointment and remuneration

Your Company''s policy on Directors'' appointment and remuneration and other matters (Remuneration Policy”) pursuant to Section 178(3) of the Act is available on the website of your Company at https:// www.adaniports.com/-/media/Project/Ports/Investor/ corporate-governance/Policies/Remuneration-Policy. pdf.

The Remuneration Policy for selection of Directors

and determining Directors'' independence sets

out the guiding principles for the Nomination and Remuneration Committee for identifying the persons who are qualified to become the Directors. Your Company''s Remuneration Policy is directed

towards rewarding performance based on review of achievements. The Remuneration Policy is in consonance with existing industry practice.

We affirm that the remuneration paid to the Directors is as per the terms laid out in the Remuneration Policy.

Directors'' Responsibility Statement

Pursuant to Section 134(5) of the Act, the Board,

to the best of their knowledge and based on the information and explanations received from your

Company, confirm that:

a. in the preparation of the Annual Financial Statements, the applicable accounting standards have been followed and there are no material departures;

b. they have selected such accounting policies and applied them consistently and judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the loss of the Company for that period;

c. they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. they have prepared the Annual Financial Statements on a going concern basis;

e. they have laid down internal financial controls to

be followed by the Company and such internal financial control are adequate and operating effectively;

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

Internal Financial control system and their adequacy

The details in respect of internal financial control

and their adequacy are included in Management Discussion and Analysis Report, which forms part of this Integrated Annual Report.

Risk Management

The Company has a structured Risk Management Framework, designed to identify, assess and mitigate risks appropriately. The Board has formed a Risk

Business Responsibility & Sustainability Report

In accordance with the SEBI Listing Regulations, the Business Responsibility & Sustainability Report, describing the initiatives taken by your Company from an environment, social and governance perspective for FY23. Business Responsibility & Sustainability Report for FY23 forms part of this Integrated Annual Report.

Annual Return

Pursuant to Section 134(3)(a) of the Act, the draft

annual return as on 31^st March, 2023 prepared in accordance with Section 92(3) of the Act is made

available on the website of your Company and can be accessed using the https://www.adaniports.com/-/ media/Project/Ports/Investor/Investor-Downloads/ Annual-Return/Annual-Return-2023.pdf

Transactions with Related Parties

All transactions with related parties are placed before the Audit Committee for its approval. An omnibus approval from Audit Committee is obtained for the related party transactions which are repetitive in

nature.

All transactions with related parties entered into

during the financial year were at arm''s length basis and in the ordinary course of business and in accordance with the provisions of the Act and the rules made thereunder, the SEBI Listing Regulations and your

Company''s Policy on Related Party Transactions.

The Directors/ Members of the Audit Committee abstained from discussing and voting in the

transaction(s) in which they were interested.

Your Company has not entered into any transactions with related parties which could be considered material in terms of Section 188 of the Act. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Act, in Form AOC 2, is not applicable.

Your Company did not enter into any related party transactions during the year which could be prejudicial to the interest of minority shareholders.

The Policy on Related Party Transactions is available on your Company''s website and can be accessed

using the link https://www.adaniports.com/Investors/ Corporate-Governance.

Insurance

Your Company has taken appropriate insurance for all assets against foreseeable perils.

Statutory Auditors & Auditors'' Report

Pursuant to Section 139 of the Act read with rules made thereunder, as amended, M/s. Deloitte Haskins & Sells LLP, Chartered Accountants (Firm Registration

No 117366W/W-100018) were re-appointed as the Statutory Auditors of your Company for the second term of five years till the conclusion of 28^th Annual General Meeting (AGM) of your Company to be held

in the year 2027.

The Statutory Auditors have confirmed that they are not disqualified to continue as Statutory Auditors and are eligible to hold office as Statutory Auditors

of your Company.

Representative of the Statutory Auditors of your Company attended the previous AGM of your Company held on 26^th July, 2022.

The Notes to the financial statements referred in the Auditors'' Report are self-explanatory.

Secretarial Audit Report

Pursuant to the provisions of Section 204 of the Act, read with the rules made thereunder, the Board reappointed Mr. Ashwin Shah, Practicing Company Secretary, to undertake the Secretarial Audit of your Company for FY23. The Secretarial Audit Report for the year under review is provided as Annexure-B of this report.

Explanation to Statutory and Secretarial Auditors'' Modified Opinion

The Statutory and Secretarial Auditors'' modified opinion has been appropriately dealt with in Note No. 47 and 48 of the Standalone Financial Statements and Note No. 40(ii) and 58 of the Consolidated Financial Statements.

Secretarial Audit of Material Unlisted Indian Subsidiary

As on 31^st March, 2023 your Company had 5 material subsidiaries.

As per the requirements of SEBI Listing Regulations, the Practicing Company Secretaries re-appointed by respective material subsidiaries of the Company undertook secretarial audit of these subsidiaries for FY23. Each secretarial audit report confirms that the relevant material subsidiary has complied with the provisions of the Act, rules, regulations and guidelines and that there were no deviations or noncompliances. The secretarial audit reports of each material subsidiary forms part of this Integrated Annual Report.

Secretarial Standards

During the year under review, your Company has complied with all the applicable provisions of Secretarial Standard-1 and Secretarial Standard-2 issued by the Institute of Company Secretaries of India.

Investor Education and Protection Fund (IEPF)

During the year, your Company transferred the unclaimed and un-encashed dividends for the year 2014-15 (final) and 2015-16 (interim) to IEPF. Further, corresponding shares, on which dividends were unclaimed for seven consecutive years, were transferred to IEPF as per the requirements of the IEPF Rules.

Reporting of frauds by auditors

During the year under review, the statutory auditors and secretarial auditor of your Company have not reported any instances of fraud committed in your Company by its officers or employees, to the Audit Committee under section 143(12) of the Act.

Particulars of Employees

Your Company had 3,052 (consolidated basis)

employees as of 31^st March, 2023.

The percentage increase in remuneration, ratio of remuneration of each Director and Key Managerial Personnel (KMP) to the median of employees'' remuneration, as required under Section 197 of the Act, read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in Annexure-C of this report.

The statement containing particulars of employees, as required under Section 197 of the Act, read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. In terms of Section 136 of the Act, the Integrated Annual Report is being sent to the shareholders and others entitled thereto, excluding the said annexure, which is available for inspection by the shareholders at the Registered Office of your Company during business hours on working days of your Company. If any shareholder is interested in obtaining a copy thereof, such shareholder may write to the Company Secretary in this regard.

Prevention of Sexual Harassment at Workplace

As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition &

Redressal) Act, 2013 and rules made thereunder, your Company has constituted Internal Complaints Committees (ICs), at all relevant locations across India to consider and resolve the complaints related to sexual harassment. The ICs includes external members with relevant experience. The ICs, presided by senior women, conduct the investigations and make decisions at the respective locations. The ICs also work extensively on creating awareness on relevance of sexual harassment issues, including while working remotely.

During the year under review, your Company has not received any complaint pertaining to sexual harassment.

All new employees go through a detailed personal

orientation on anti-sexual harassment policy adopted by your Company.

Vigil Mechanism

Your Company has adopted a whistle blower policy and has established the necessary vigil mechanism for directors and employees in confirmation with Section 177 of the Act and Regulation 22 of SEBI Listing Regulations, to facilitate reporting of the genuine concerns about unethical or improper activity, without fear of retaliation.

The vigil mechanism of your Company provides for adequate safeguards against victimization of directors and employees who avail of the mechanism

and also provides for direct access to the Chairman of the Audit Committee in exceptional cases.

No person has been denied access to the Chairman of the Audit Committee. The said policy is uploaded

on the website of your Company at https://www. adaniports.com/-/media/Project/Ports/Investor/

corporate-governance/Policies/Whistle-Blower-

Policy.pdf

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with rule 8 of the Companies (Accounts) Rules, 2014,

as amended is provided as Annexure-D of this report.

General Disclosures

Neither the Executive Chairman nor the CEO of your Company received any remuneration or commission

from any of the subsidiary of your Company.

Your Directors state that no disclosure or reporting is required in respect of the following items, as there were no transactions/events of these nature during

the year under review:

1. Issue of equity shares with differential rights as to

dividend, voting or otherwise.

2. Issue of Shares (Including Sweat Equity Shares)

to employees of your Company under any scheme.

3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact

the going concern status and your Company''s operation in future.

4. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by your Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3)(c) of the Act).

5. Application made or any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

6. One time settlement of loan obtained from the Banks or Financial Institutions.

7. Revision of financial statements and Directors''

Report of your Company.

Acknowledgement

Your Directors are highly grateful for all the guidance, support and assistance received from the Government of India, Governments of various states in India, Maritime Boards, concerned Government Departments, Financial Institutions and Banks. Your Directors thank all the esteemed shareholders, customers, suppliers and business associates for their faith, trust and confidence reposed in your Company.

Your Directors wish to place on record their sincere

appreciation for the dedicated efforts and consistent contribution made by the employees at all levels, to ensure that your Company continues to grow and excel.