The Members of Allcargo Logistics Limited
Your Directors take pleasure in presenting the Twenty Third Annual Report on thebusiness and operations of the Company both on standalone and consolidated basistogether with Audited Financial Statements of the Company for the year ended March312016.
STATE OF THE COMPANY'S AFFAIRS
Your Company has projected to achieve USD 2 billion revenue by the year 2020. Duringthe year under review your Company successfully achieved the goals and targets set forthe financial year 2015-16 though it was challenging year as factors like rough marketconditions fall in export and import volumes low inflationary pressures and very lowinvestments both by private and public sector affected the performance of the Company.Your Company's performance for the financial year 2015-16 was mainly attributable to therobust measures undertaken by your Company at all levels such as focus on pricing andaggressive marketing strategy disciplined project executions focused managementapproach prudent financial and human resources management and better control over costconsistent follow-up for receivables lower depreciation of assets and reduced interestcosts on account of restructuring/repayment of outstanding loans.
Major highlights of the state of your Company's affairs during the year under revieware given as under:
To increase market share in Container Freight Station business and for bettermanagement optimum utilisation of resources and cost control your Board of Directors hasat its meeting held on February 13 2016 approved acquisition of the Container FreightStation business undertaking of Transindia Logistic Park Private Limited (wholly ownedsubsidiary of the Company) situated at Uran Raigad as a going concern on slump salebasis subject to determination of valuation by an independent valuer and receipt ofnecessary statutory and regulatory approvals.
With a view to achieve significant presence in the Contract LogisticsE-commerce Logistics businesses and to consolidate Freight Forwarding business your Boardof Directors has at its meeting held on May 20 2016 approved sale of Contract Logisticsbusiness of the Company and Freight Forwarding and Custom Clearance businesses of itswholly owned subsidiary Hindustan Cargo Limited as a going concern on slump sale basis toAvvashya CCI Logistics Pvt. Ltd ("ACCI") for consideration other than cash inthe form of equity shares of ACCI equivalent to the fair value of the aforesaid businessesas determined by the Independent Valuer. Further the Company has also acquired additionalcontrolling stake in ACCI for consideration of approximately Rs. 130 Crore. ACCI is ajoint venture between Hindustan Cargo Ltd. CCI Logistics Ltd. and your Company. Theultimate aim of bringing these businesses under one Company is to synergise and expand theWarehousing Freight Forwarding Custom Clearance and other logistics services therebyproviding a one stop and state of the art Integrated Logistics solutions to our valuedcustomers. This new milestone will help us in not only achieving our vision to become USD2 billion entity by 2020 but also channelize the fragmented logistics market in India.
Your Board of Directors has at its meeting held on March 14 2016 in principallyapproved setting up of rail linked Logistics Park in the Jhajjar district of Haryana. Thefacility is expected to be operational by 2018 subject to receipt of necessary statutoryand regulatory approvals and rail connectivity. The move is in line with the Company'sbusiness expansion plan. The project will comprise of rail linked private freight terminalcatering to railway cargo movement free trade warehousing zone domestic tariff area andother related activities over approximately 200 acres of freehold agricultural land whichis in close proximity to Dedicated Freight Corridor at Jhajjar Haryana. The Jhajjarproject will enable the Company to cater needs of providing end to end logistics solutionsto customers in Northern belt.
Your Company proposes to raise funds up to INR 300 Crore by issue of SecuredNon-Convertible Redeemable Debentures on private placement basis in one or more tranchespursuant to the approval of the shareholders through postal ballot voting dated May 92016 for the purpose of expansion and development of its existing businesses futureacquisitions capital expenditure working capital and other general businessrequirements.
Your Company's overseas subsidiaries namely ECU Line Econocaribe and ChinaConsolidation Services have changed their identity to "ECU Worldwide" toconsolidate various brands across the world under one powerful global brand. The objectiveis to reassure re-energize and bring modernity. It provides the Company with the impetusto deliver more to fulfill clients' needs even more create new products and proactivelypropose solutions to surpass their expectations and help achieve our ambitious growthtargets.
Detailed information on the business overview and outlook and state of the affairs ofthe Company is provided in the Management Discussion & Analysis Report as requiredunder Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 forming part of this Report.
Your Company's financial performance during the year under review is summarized below:
(Rs. in Lakh)
|Particulars || |
Consolidated Results for financial year
Standalone Results for financial year
| ||2015-16 ||2014-15 ||2015-16 ||2014-15 |
|Sales & Other Income ||571424 ||568141 ||124617 ||117921 |
|Profit before Interest Depreciation/ Amortization and Taxes ||54832 ||52798 ||27556 ||27434 |
|Interest ||4249 ||5347 ||2548 ||3800 |
|Depreciation and other Amortization ||15286 ||15737 ||10031 ||11086 |
|Profit Before Tax ||35297 ||31714 ||14977 ||12548 |
|Provision for Tax ||6998 ||6996 ||2562 ||2799 |
|Profit After Tax ||28299 ||24718 ||12415 ||9749 |
|Profit attributable to Minority Interest ||(862) ||(923) ||- ||- |
|Share of Profit of Associates ||389 ||194 ||- ||- |
|Profit after minority interest ||27826 ||23989 ||12415 ||9749 |
|Profit brought forward from previous year ||114146 ||93615 ||63551 ||57113 |
|Profit Available for Appropriations ||141972 ||117197 ||75966 ||66560 |
|Appropriations : || || || || |
|Proposed Final Dividend ||- ||1765 ||- ||1765 |
|Tax on Final Dividend ||- ||359 ||- ||359 |
|Interim Dividend ||3781 ||756 ||3781 ||756 |
|Tax on Interim Dividend ||489 ||129 ||489 ||129 |
|Transfer to General Reserve ||- ||- ||- ||- |
|Transfer to Tonnage Tax Reserve ||- ||42 ||- ||- |
|Transfer to Capital Redemption Reserve ||- ||- ||- ||- |
|Profit Carried to Balance Sheet ||137702 ||114146 ||71696 ||63551 |
Your Company earned total revenue of Rs. 571424 Lakh during the year under reviewagainst a total revenue of Rs. 568141 Lakh in the previous year representing marginalgrowth of 1% on year-on-year basis.
The Earnings before Interest Depreciation Tax and Appropriations (EBIDTA) recorded atRs. 54832 Lakh as at March 31 2016 as compared to Rs. 52798 Lakh in the previous yearwith nominal growth of 4% on year to year basis.
The Net Profit after taxes and minority interest was higher by 16% and stood at Rs.27826 Lakh as at March 31 2016 as compared to Rs. 23989 Lakh in the previous year.
Your Company achieved total revenue of Rs. 124617 Lakh as compared to Rs. 117921 Lakhin the previous year representing a year-on-year growth of 6% supported by increase involumes and revenue across all business segment.
The Earnings before Interest Depreciation Tax and Appropriations (EBITDA) remainsflat and stood at Rs. 27556 Lakh in the current year as compared to Rs. 27434 Lakhduring the previous year.
During the year under review the Company registered growth of 28% in the Net Profitafter Tax which stood at Rs. 12415 Lakh as compared to Rs. 9749 Lakh in the previousyear.
For detailed segment wise performance Members are requested to refer to the ManagementDiscussion and Analysis Report annexed to this Report.
CHANGES IN THE NATURE OF BUSINESS IF ANY
Your Company continues to provide Integrated Logistics Solutions to its customers andhence there was no change in the nature of business or operation of the Company whichimpacted the financial position of the Company during the year under review.
TRANSFER TO RESERVES
Your Company does not propose to transfer any amount to its Reserves out of the profitsof the Company for the year ended March 312016.
With the primary objective to enrich and maximize shareholders value your Company hasbeen regularly paying dividend to its shareholders including interim dividend based onthe profits of the Company.
Your Company has declared and paid two interim dividends during the year under reviewfirst interim dividend of Re.1/- per equity share representing 50% on the total paid upcapital of the Company in the month of November 2015 and second interim dividend ofRe.1/- per equity share representing 50% on the expanded paid-up capital in the month ofMarch 2016 aggregating to a total dividend of Rs. 2/- per equity share of Rs. 2/- eachfully paid up representing 100% on the total paid up capital of your Company. The totaldividend payout during the year under review was Rs. 3781 Lakh excluding dividenddistribution tax.
In view of interim dividend declared on March 14 2016 your Directors do not recommendany final dividend for the year under review.
Your Company has not accepted invited and/or received any deposits from the publicwithin the meaning of Section 73 and 76 of the Companies Act 2013 and the Companies(Acceptance of Deposits) Rules 2014 as amended from time to time during the year underreview.
SHARE CAPITAL AND LISTING OF SHARES
To encourage the participation of small investors by making equity shares of theCompany more affordable to the retail investors enjoy the rewards of the growth of theCompany and increase liquidity of the equity shares your Board of Directors at itsmeeting held on November 5 2015 recommended Bonus issue of Equity Shares of the Companyin the ratio of 1:1 and the same was approved by the shareholders of the Company throughpostal ballot voting dated December 23 2015.
With a view to accommodate the issue and allotment of Bonus Equity Shares theAuthorised Share Capital of your Company has been increased from Rs. 355000000/- (RupeesThirty Five Crore Fifty Lakh only) divided into 177475000 (Seventeen Crore Seventy FourLakh Seventy Five Thousand) Equity Shares of Rs. 2/- each (Rupees Two only) and 500 (FiveHundred) 4% Cumulative Redeemable Preference Shares of Rs. 100/- each (Rupees OneHundred only) to Rs. 550000000/- (Rupees Fifty Five Crore only) divided into 274975000(Twenty Seven Crore Forty Nine Lakh Seventy Five Thousand) Equity Shares of Rs. 2/- each(Rupees Two only) and 500 (Five Hundred) 4% Cumulative Redeemable Preference Shares ofRs. 100/- each (Rupees One Hundred Only).
Accordingly your Company has issued and allotted 126047762 Equity Shares of Rs. 2/-each fully paid as Bonus Shares in the ratio 1:1 on January 12016 to the shareholdersholding equity shares as on record date December 31 2015. Consequently the issuedsubscribed and paid-up share capital of the Company increased and stood at Rs.504191048/- (Rupees Fifty Crore Forty One Lakh Ninety One Thousand Forty Eight only)consisting of 252095524 (Twenty Five Crore Twenty Lakh Ninety Five Thousand FiveHundered Twenty Four) Equity Shares of Rs. 2/- each fully paid. The said Bonus Shares arelisted and traded on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE)w.e.f January 5 2016.
Your Company's Equity Shares are listed and traded in compulsory dematerialized form onBSE and NSE. The Company has regularly paid the Annual Listing fees to the respectiveStock Exchanges. Annual Custody/Issuer fee for the financial year 2016-17 has been paid bythe Company to National Securities Depositories Limited and Central Depository Services(India) Limited.
BOARD OF DIRECTORS
a) Number of Meetings of the Board of Directors
Your Board of Directors ("Board") meets at regular intervals at least fourtimes in a year with a maximum time gap of not more than 120 days between two consecutiveMeetings. The Board also meets in every calendar quarter. Date of the Board Meetings aredecided and communicated to the Directors well in advance. In case of exigencies orurgency of matters resolutions are passed by circulation for such matters as permitted bylaw. The Board takes note of the resolutions passed by circulation at its subsequentMeeting. Additional Meetings of the Board are held as and when deemed necessary by theBoard. Board Meetings are generally held at the Registered Office of the Company.
The agenda of the Meetings along with the explanatory notes and relevant papers thereofare generally sent 7 (seven) days in advance to the Directors to enable them to takeinformed decisions pursuant to the provisions of Companies Act 2013 SecretarialStatndard-1 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 as amended from time to time.
During the year under review the Board of your Company met 7 (seven) times on May 212015 June 15 2015 August 10 2015 November 5 2015 January 1 2016 February 13 2016and March 14 2016 respectively. The details of attendance of each Director at the BoardMeetings are given in the 'Report on the Corporate Governance' which forms part of thisReport.
b) Director Retiring by Rotation
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Mrs. Arathi Shetty (DIN:00088374) Director of the Companyretires by rotation at ensuing Annual General Meeting and being eligible offers herselffor reappointment. The Board recommends her reappointment as Director liable to retire byrotation at the ensuing Annual General Meeting.
c) Appointment of Joint Managing Director
Pursuant to applicable provisions of the Companies Act 2013 and rules made thereunderand the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 asamended from time to time based on the performance evaluation of Mr. Adarsh Hegde(DIN:00035040) carried out as per the criteria set by the Nomination and RemunerationCommittee and based on its recommendation the Board of Directors of your Companyappointed Mr. Adarsh Hegde (DIN:00035040) as the Joint Managing Director of the Companyfor a period of 5 (five) years w.e.f. July 12016 subject to approval of the shareholdersat the ensuing Annual General Meeting.
As per Regulation 36 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and Secretarial Standard-2 issued by the Institute of CompanySecretaries of India the brief profile and other relevant details of Mr. Adarsh Hegde(DIN:00035040) and Mrs. Arathi Shetty (DIN:00088374) are given in the ExplanatoryStatement to the Notice and Report on Corporate Governance which forms part of thisReport. The shareholders are requested to refer the same.
d) Appointment of Independent Directors
Pursuant to the provisions of Section 149 of the Companies Act 2013 and Regulation 17of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 asamended from time to time your Company has requisite number of Independent Directors onits Board. Thus the Company has complied with the requirements of the said provisions forappointment of Independent Directors during the year under review.
e) Statement on declaration given by Independent Directors u/s 149 (6) of the CompaniesAct 2013.
The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet with the criteria of independence as prescribed underSub-Section (6) of Section 149 of the Companies Act 2013 and under Regulation 16 of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 as amended fromtime to time.
f) Directors/Key Managerial Personnel appointed/ resigned during the year
During the year under review the Blackstone GPV Capital Partners (Mauritius) V-K LtdBlackstone GPV Capital Partners (Mauritius) V-L Ltd Blackstone GPV Capital Partners(Mauritius) V-M Ltd and Blackstone GPV Capital Partners (Mauritius) V-N Ltd existingInvestors of the Company withdrew their nomination of Mr. Akhilesh Gupta (DIN: 00359325)as Nominee Director from the Board of the Company with effect from February 10 2016. YourDirectors would like to place on record their deep appreciation for the valuablecontribution of Mr. Akhilesh Gupta (DIN: 00359325) during his association with theCompany.
During the year under review your Company has Key Managerial Personnel comprising ofMr. Shashi Kiran Shetty Chairman & Managing Director Mr. Adarsh Hegde Whole-timeDirector Mr. Jatin Chokshi Chief Financial Officer and Mr. Shailesh Dholakia CompanySecretary.
COMMITTEES OF THE BOARD
Your Company has 8 (eight) Committees of the Board of Directors as given below incompliance with the Corporate Governance practices followed by the Company and therequirements of the relevant provisions of the Companies Act 2013 and rules madethereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulation2015 as amended from time to time;
i. Audit Committee;
ii. Nomination and Remuneration Committee;
iii. Stakeholders' Relationship Committee;
iv. Corporate Social Responsibility Committee;
v. Strategy Committee;
vi. Finance Risk and Legal Committee;
vii. Executive Committee; and
viii. Resource Raising Committee (Special Purpose Committee)
Details of compositions meetings terms of reference of the Committees and attendanceof the Committee Members at each of the Meetings are given in the 'Report on CorporateGovernance'. of the Company which forms part of this Report.
RECOMMENDATION OF AUDIT COMMITTEE
During the year under review there were no instances of nonacceptance of anyrecommendation of the Audit Committee by the Board of Directors.
The Nomination and Remuneration Committee of the Board has framed a policy onDirectors Key Managerial Personnel and other Senior Management Personnel appointment andremuneration including criteria for determining qualifications positive attributesindependence of a Director and other related matters in accordance with Section 178 of theCompanies Act 2013 read with the applicable Rules made there under and which is in linewith Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 as amended from time to time.
Extract of the Remuneration Policy on Directors Key Managerial Personnel and otherSenior Management Personnel appointment and their remuneration is given as below:
Remuneration of Executive Members of the Board:
Executive Members of the Board shall be paid remuneration which shall comprise of fixedmonthly basic salary perquisites such as furnished/unfurnished housing accommodation carwith or without chauffeur telephone for office as well as personal use reimbursement ofmedical expenses leave travel concession club membership personal accident insurancehealth insurance stock options statutory and nonstatutory allowances such as educationallowances personal allowances travel allowances subscription allowances etc. as may berecommended by the Nomination and Remuneration Committee/Board of Directors and approvedby the Members of the Company from time to time. Executive Members of the Board shall alsobe eligible for commission out of net profit depending upon the adequacy of profit of theCompany in a particular year and such commission shall be linked to the Executive Membersof the Board's achievement of its budgeted performance as well as overall Company'sachievement of budgeted performance of that particular year.
However the overall remuneration of Executive Members of the Board where there aremore than one shall not exceed 10% of the net profit calculated in the manner as providedunder the provisions of the Companies Act 2013 and Rules framed thereunder and shall notexceed 5% in case there is 1 (one) Executive Members of the Board. In the event of loss orinadequacy of profit in any financial year during the currency of tenure of services ofthe Executive Members of the Board the payment of remuneration shall be governed by theapplicable limits prescribed under the provisions of the Companies Act 2013 and Rulesframed thereunder as amended from time to time.
Executive Members of the Board be employed under service contracts on the terms andconditions and remuneration as recommended by the Nomination and Remuneration Committeeand the Board and approved by the Members of the Company at the General Meeting. Noseverance fees or compensation for loss of office shall be paid to Executive Members ofthe Board in case of voluntary or non-voluntary termination of their services. ExecutiveMembers of the Board shall not be eligible to receive any sitting fees for attending anymeeting of the Board of Members or Committee thereof.
Remuneration of Non-Executive Members of the Board:
The remuneration payable to the Non-Executive Members of the Board shall be asdetermined and approved by the Board based on the time devoted contribution made in theprogress and guiding the Company for future growth. Aggregate of such sum shall not exceed1% of net profit of the year or such sum as may be prescribed by the Government from timeto time calculated in accordance with the provisions of the Companies Act 2013 andrelevant Rules framed thereunder. The remuneration in the form of profit commissionpayable to Non-Executive Members of the Board shall be in addition to the sitting feespayable to them for attending meetings of the Board and/or Committees thereof andreimbursement of expenses for participation in the Board and other meetings. AnIndependent Director shall not be entitled to any stock option issued or proposed to beissued by the Company. The performance of the Non-Executive Members shall be reviewed bythe Board on an annual basis.
Remuneration of Senior Management Personnel:
The Company believes that a combination of fixed and performance-linked pay to theSenior Management Personnel ensure that the Company can attract and retain key employees.At the same time the Senior Management Personnel are given an incentive to createshareholder value through partly incentive-based pay. The Board of Directors sets theterms within the frames of the contracts based on the recommendation of the Nomination& Remuneration Committee for Senior Management Personnel.
The Nomination & Remuneration Committee shall submit proposals concerning theappointment and remuneration of the Senior Management Personnel and ensures that theremuneration is in line with industry standard in comparable companies. Such proposalsthen shall be submitted to the Board for approval. The remuneration of the members of theExecutive Management may consist of the following components:
Performance linked incentive/bonus;
Personal benefits e.g. Company provided accommodation Company car telephonebroadband newspapers etc.
There shall be no agreed redundancy pay/compensation for voluntary or non-voluntarytermination of services except as specially agreed in writing by the Company and theconcerned Senior Management Personnel. Senior Management Personnel shall not be eligibleto receive any remuneration for directorships held in Avvashya Group of Companies.
The criteria for determining qualifications positive attributes and independence of aDirector is given in the 'Report on Corporate Governance' of the Company which forms partof this Report.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
Your Company has constituted Corporate Social Responsibility Committee and formulatedCorporate Social Responsibility (CSR) Policy in compliance with the provisions of Section135 of the Companies Act 2013 read with the Companies (Corporate Social ResponsibilityPolicy) Rules 2014 and Schedule VII of the Companies Act 2013 as amended from time totime. The statutory disclosures with respect to the composition of CSR Committee CSRPolicy CSR initiatives and programs and amount spent on CSR activities are given in the'Annual Report on Corporate Social Responsibility of the Company' as Annexure 1 whichforms part of this Report. The CSR Policy can be accessed on the website of the Companywww.allcaraoloaistics.com/ investors#investor-corporate-policies).
WHISTLE BLOWER POLICY/ VIGIL MECHANISM
Your Company has adopted a Whistle Blower Policy pursuant to which the Whistle Blowercan raise concerns relating to Reportable Matters fas defined in the policy) such asunethical behaviour breach of Code of Conduct actual or suspected fraud ethics policyany other malpractice impropriety or wrongdoings illegality non-compliance of any lawand retaliation against the Directors and employees etc. Further the mechanism adoptedby your Company encourages the Whistle Blower to report genuine concerns or grievancesprovides adequate safeguards against victimization of Whistle Blower who avail of suchmechanism and also provides for direct access to the Chairman of the Audit Committee inexceptional circumstances. The functioning of the Vigil Mechanism is reviewed by the AuditCommittee from time to time.
During the year under review the Company has not received any complaint through VigilMechanism. None of the Whistle Blowers have been denied access to the Audit Committee ofthe Board. The Whistle Blower Policy is available in the section of Investor Relations onthe website of the Company(www.allcargologistics.com/investors#investor-corporate-policies).
RISK MANAGEMENT POLICY
Your Company is engaged in the business of providing Integrated Logistics businesssolutions for National and International Trade Warehousing Transportation and handlingof all kinds of Cargo running Inland Container Depots Container Freight Stations andShipping Agents. Thus your Company is prone to inherent business risks like any otherorganisation. With the objective to identify evaluate monitor control manage minimizeand mitigate identifiable business risks your Board of Directors have formulated andimplemented a Risk Management Policy.
The Company has adopted ISO 31000 frame work for risk management. Under the guidance ofthe Board the Chief Assurance and Risk Executive facilitate dedicated risk workshops foreach business vertical and key support functions wherein risks are identified assessedanalysed and accepted / mitigated to an acceptable level within the risk appetite of theorganization. The risk registers are also maintained and reviewed from time to time forrisk mitigation plans and changes in risk weightage if any. Audit Committee monitors riskmanagement activities of each business vertical and key support functions. Fraud RiskAssessment is also part of overall risk assessment. In Audit Committee meeting ChiefAssurance and Risk Executive make presentation on risk assessment and minimizationprocedures.
The purpose of risk management is to achieve sustainable business growth protectCompany assets safeguard shareholder investments ensure compliance with applicable lawsand regulations and avoid major surprises of risks. The Policy is intended to ensure thatan effective risk management framework is established and implemented within the Company.
PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES INDIVIDUAL DIRECTORS AND CHAIRMAN
As required under the Companies Act 2013 and SEBI (Listing Obligations and DisclosureRequirements) Regulation 2015 the Nomination and Remuneration Committee of the Board hadset criteria for performance evaluation of the Board its Committees Individual Directorsand Chairman of the Company. Based on the criteria set by the Nomination and RemunerationCommittee questionnaire relating to performance evaluation of the Board its CommitteesIndividual Directors and Chairman of the Company for the financial year 2015-16 wascirculated to concerned Directors of the Company to provide their frank and unbiasedcomments/rating. Further to eliminate biasness and to protect the confidentiality ofcomments/rating given during the performance evaluation process an outside consultingfirm was appointed to provide a report on the response received from Directors. The reportof the expert was forwarded to the Chairman of the Nomination and Remuneration Committeefor review and further evaluation.
Similarly formal evaluation of performance of Non-Independent Directors the entireBoard and the Chairman of the Company taking into consideration views of Executive andNon-Executive Directors of the Company for the financial year 2015-16 was carried by theIndependent Directors at their separate Meeting by using questionnaire method and theoutcome of such evaluation was sent to the Chairman of the Nomination and RemunerationCommittee. Final outcome of formal evaluation carried by the Nomination and RemunerationCommittee and Independent Directors was placed before the Board for its review and furtheractions.
Based on the outcome of performance evaluation for the financial year 2015-16 furthermeasures/actions have been suggested to improve and strengthen the effectiveness of theBoard its Committees and contribution and participation by the Individual Directors.
The criteria of formal annual evaluation of the Board its Committees IndividualDirectors and Chairman is given in the 'Report on Corporate Governance' of the Companywhich forms part of this Report.
Your Company has been benchmarking itself with well- established Corporate Governancepractices besides strictly complying with the requirements of Regulations 17 to 27 and anyother applicable Regulation of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 as amended from time to time. Given the emerging pivotal role ofIndependent Directors in bringing about good governance your Company continued itsefforts in utilizing their expertise and involving them in all critical decision makingprocesses.
A separate 'Report on Corporate Governance' together with requisite certificateobtained from M/s. Mehta & Mehta Practicing Company Secretaries confirmingcompliance with the provisions of Corporate Governance as per the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 annexed to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report on the business outlook and performancereview for the year ended March 31 2016 as stipulated Regulation 34 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 is presented in a separatereport which forms part of this Report.
SUBSIDIARIES ASSOCIATES & JOINT VENTURE COMPANIES
During the year under review the following Companies have become or ceased to beSubsidiaries Wholly Owned
Subsidiaries Joint Ventures and/or Associates of the Company:
|Sr. No. ||Name of Company ||Subsidiaries/ Wholly Owned Subsidiaries / Associates/Joint Ventures |
|1 ||ACEx Logistics Limited ||Wholly Owned Subsidiary |
|2 ||Eculine Worldwide Logistics Co. Ltd. ||Wholly Owned Subsidiary |
|3 ||FMA-LINE Nigeria Ltd. ||Wholly Owned Subsidiary |
|4 ||Ecu Worldwide (Uganda) ||Wholly Owned Subsidiary |
|5 ||Love All Sports Holdings FZE* ||Associate |
|6 ||Credo Shipping Indian Agencies Pvt. Ltd. (Strike- off)* ||Wholly Owned Subsidiary |
*ceased to be the Wholly Owned Subsidiaries/Associates of the Company during the yearunder review.
The Policy for determining Material Subsidiary as approved by the Board of Directors isuploaded on the website of the Company (www.allcargologistics.com/investors#investor-corporate-policies).
A Statement containing the salient features of the financial statements including theperformance and financial position of each Subsidiaries Joint Venture and AssociatesCompanies as per the provisions of the Companies Act 2013 and rules made there under asamended from time to time is provided in the prescribed Form AOC -1 as Annexure 2 whichforms part of this Report.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to Section 129 of the Companies Act 2013 and Regulation 33 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the attachedConsolidated Financial Statements of the Company and all its Subsidiaries Joint Venturesand Associates have been prepared in accordance with the Accounting Standard AS21-Consolidated Financial Statements read with Accounting Standard AS 23-Accounting forInvestment in Associates and Accounting Standard AS 27-Financial Reporting of interest inJoint Ventures which includes financial results of its Subsidiaries Joint Ventures andAssociate Companies.
PARTICULARS OF LOANS GUARANTEES SECURITIES AND INVESTMENTS
Your Company is engaged in the business of providing Integrated Logistics Solutionswhich falls under the Infrastructural Facilities categorized under Schedule VI of theCompanies Act 2013. Hence the provisions of Section 186 of the Companies Act 2013 arenot applicable to your Company to the extent of loans given or guarantees/securitiesprovided. However in terms of the Corporate Governance practices followed by the Companythe particulars of loans given guarantees securities provided and investments made bythe Company during the year under review are provided as Annexure 3 which forms part ofthis Report.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES WITH JUSTIFICATION FORSUCH CONTRACTS
Pursuant to the provisions of Section 188 of the Companies Act 2013 and rules madethereunder all the related party transactions entered into by the Company with itsrelated parties during the financial year 2015-16 were on an arm's length basis and in theordinary course of business except the acquisition of Container Freight Station (CFS)business undertaking from Transindia Logistic Park Pvt. Ltd. ("TLPPL") thewholly owned subsidiary of the Company as a going concern on a slump sale basis. Therewere no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or Senior Managment Personnel that had anypotential conflict with the interest of the Company at large during the year under review.
All related party transactions were placed before the Audit Committee and if requiredalso before the Board for approval. Prior omnibus approval of the Audit Committee wasobtained for the transactions which are of a foreseen and repetitive nature. Thetransactions entered into pursuant to the omnibus approval so granted are certified by theManagement and the Consultant and a statement giving details of all related partytransactions entered is placed before the Audit Committee for its review on a quarterlybasis.
A policy on materiality of related party transactions and also on dealing with relatedparty transactions as approved by the Audit Committee and the Board of Directors isuploaded on the website of the Company (www.allcargologistics.com/investors#investor-corporate-policies).
The related party transactions that were entered during the financial year 2015-16 aregiven in the notes to financial statements as per Accounting Standard 18 (AS 18) whichform part of the Annual Report.
The purchase of CFS business undertaking from TLPPL a wholly owned subsidiary of theCompany falls within the ambit of related party transaction as defined under Section 188(1)(b) of the Companies Act 2013. Accordingly the Audit Committee and Board have attheir meeting dated February 13 2016 approved the acquisition of CFS business fromTLPPL. As per the provision of Section 188 of the Companies Act 2013 read with rules madethereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 as amended from time to time the requirement of obtaining approval of shareholdersis not applicable for transactions entered into between holding Company and its whollyowned subsidiary Company whose accounts are consolidated with such holding Company andplaced before the shareholders at the general meeting for approval. Hence your Companywas not required to obtain shareholders approval for the said transaction.
The particulars of contract or arrangements related to acquisition of CFS business fromTLPPL is given in Form AOC -2 as Annexure 4 which forms part of this Report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Board has laid down Internal Financial Controls (IFC) and believes that the sameare commensurate with the nature and size of its business. Based on the framework ofinternal financial controls work performed by the internal statutory and externalconsultants including audit of internal financial controls over financial reporting bythe Statutory Auditors and the reviews performed by the Management and Audit Committeeyour Board is of the opinion that the Company's internal financial controls were adequateand effective during financial year 2015-16 for ensuring the orderly and efficient conductof its business including adherence to the Company's policies the safeguarding of itsassets the prevention and detection of frauds and errors the accuracy and completenessof accounting records and timely preparation of reliable financial disclosures.
STATUTORY AUDITORS AND AUDIT REPORT
M/s. Appan & Lokhandwala Associates Chartered Accountants (Firm Registration No.117040W) the Joint Statutory Auditors of the Company hold office until the conclusion ofensuing Annual General Meeting. In view of adoption of auditors rotational policy asrequired under the provisions of the Companies Act 2013 and rules made thereunder andsubject to approval of shareholders of the Company at ensuing Annual General Meeting theAudit Committee and the Board have recommended the appointment of M/s. Shaparia Mehta& Associates LLP Chartered Accountants (Firm Registration No. 112350W/ W-100015) asJoint Statutory Auditors of the Company in place of the retiring Joint Statutory AuditorsM/s. Appan & Lokhandwala Associates Chartered Accountants to hold office from theconclusion of 23rd Annual General Meeting till the conclusion of 28thAnnual General Meeting and fix their remuneration.
Your Company has received a consent cum eligibility letter from M/s. Shaparia Mehta& Associates LLP Chartered Accountants expressing their willingness to be appointedas Joint Statutory Auditors of the Company and to the effect that their appointment ifmade would be within the prescribed limits under Section 141(3)(g) of the Companies Act2013 and that they are not disqualified for appointment.
The Board place on record its appreciation for the services rendered and valuablecontribution made by M/s. Appan & Lokhandwala Associates while discharging theirduties as Joint Statutory Auditors of the Company and further strengthening and developingaudit processes procedures and controls during their tenure as Joint Statutory Auditorsof the Company.
M/s. S. R. Batliboi & Associates LLP Chartered Accountants (Firm Registration No.101049W/E300004) were appointed as Joint Statutory Auditors of the Company at the 22ndAnnual General Meeting to hold office from the conclusion of 22nd AnnualGeneral Meeting of the Company up to the conclusion 27th Annual General Meetingsubject to ratification of their appointment by shareholders at every Annual GeneralMeeting.
Your Company has received consent cum eligibility letter from M/s. S. R. Batliboi &Associates LLP Chartered Accountants to the effect that their appointment if ratifiedwould be within the prescribed limits under Section 141(3)(g) of the Companies Act 2013and that they are not disqualified for appointment. Accordingly the Audit Committee andBoard have recommended ratification of their appointment as Joint Statutory Auditors ofthe Company to hold office from the conclusion of the ensuing Annual General Meeting tillthe conclusion of 24th Annual General Meeting and to fix their remuneration.
The Notes on Financial Statements referred to in the Auditors' Report areself-explanatory and do not call for any further comments.
There are no audit qualifications reservations adverse remarks or disclaimers made bythe Statutory Auditors in their Report.
There was no such incident of fraud required to be reported by the Statutory Auditorsto the Audit Committee and Board during the year under review.
SECRETARIAL AUDITORS AND SECRETARIAL AUDIT REPORT
Pursuant to Section 204 of the Companies Act 2013 and rules made thereunder yourCompany had appointed M/s. Mehta & Mehta Practicing Company Secretaries Mumbai asits Secretarial Auditors to conduct the Secretarial Audit of the Company for the financialyear 2015-16. The Company provided all assistance and facilities to the SecretarialAuditor for conducting their audit. The Report of Secretarial Auditor for the financialyear 2015-16 in terms of Section 204 of the Companies Act 2013 is annexed to this Reportas Annexure 5.
The Secretarial Audit Report does not contain any audit qualifications reservationsadverse remarks or disclaimers.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION WHICH HAVE OCCURREDBETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTSRELATE AND THE DATE OF THE REPORT
There are no material changes and commitments affecting the financial position of theCompany that have occurred during the end of the financial year of the Company i.e. March31 2016 and the date of the Directors' report i.e. June 30 2016.
PARTICULARS OF EMPLOYEES
Details of employee's remuneration as required pursuant to Section 197(12) of theCompanies Act 2013 read with Rule 5 of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is provided in Annexure 6 which forms part of thisReport.
None of the employees who are posted and working in a country outside India not beingDirectors or their relatives draw remuneration more than Rs. 6000000/- (Rupees SixtyLakh only) per annum or Rs. 500000/- (Rupees Five Lakh only) per month.
During the year under review none of Directors of the Company or their relatives havereceived any remuneration from overseas Subsidiary Companies.
In terms of Section 136 of the Companies Act 2013 the Annual Report and AuditedFinancial Statements are being sent to the Members and others entitled thereto excludingthe information on employees' particulars which is available for inspection by the Membersat the Registered Office of the Company during business hours on working days of theCompany up to the date of the ensuing Annual General Meeting. If any Member is interestedin obtaining a copy thereof such Member may write to the Company Secretary in thisregard.
The Nomination and Remuneration Committee of the Company has affirmed at its Meetingheld on May 20 2016 that the remuneration paid to Executive Directors NonExecutiveDirectors and other Senior Management Employee is as per the remuneration policy of theCompany.
EMPLOYEES STOCK OPTION PLAN
The Company's Employee Stock Option Plan 2006 (ESOP) expired on January 11 2013. Thusdisclosures relating to the ESOP of the Company pursuant to Rule 12(9) of the Companies(Accounts) Rules 2014 and Clause 12 of the SEBI (Employee Stock Option Scheme andEmployee Stock Purchase Scheme) Guidelines 1999 are not required.
Your Company continues to have credit rating which denotes high degree of safetyregarding timely servicing of financial obligation. Your Company has received followingcredit rating for its long term and short term credit facilities Commercial Paper andproposed Non-Convertible Debentures from various credit rating agencies:
|Name of Credit Rating Agency(ies) ||Instrument / Facility ||Rating |
|ICRA Limited || ||ICRA AA (Stable) |
|Credit Analysis & Research Limited ||Non-Convertible Debentures ||CARE AA |
|CRISIL Limited ||(Proposed) ||CRISIL AA-/ Positive |
|Credit Analysis & Research Limited ||Commercial Paper ||CARE A1 + |
|CRISIL Limited ||Long Term Debt ||CRISIL AA-/ Positive |
| ||Short Term Debt ||CRISIL A1 + |
SAFETY HEALTH AND ENVIORNMENT
Your Company is inclined towards bringing safety and environment awareness among itssafety measures. It also believes in safety and health enrichment of its employees and iscommitted to provide a healthy and safe workplace for all its employees. Successfullymanaging Health & Safety risks is an essential component of our business strategy. TheCompany has identified Health & Safety risk arising from its activities and has putproper systems processes and controls mechanism to mitigate them.
The Company has been taking various initiatives and participating in programs of safetyand welfare measures to protect its employees equipment's and other assets from anypossible loss and/or damages. To implement such safety and welfare measures the Companyhas formulated various policies such as Drug & Alcohol Policy Occupational HealthPolicy Driver & Vehicle Safety Policy Bussiness Continuity and Disaster RecoveryPlan (Fire Safety Policy) Mobile Telephone Policy Smoking Policy etc.
The Project & Equipments division of your Company has successfully renewed itsOHSAS 18001:2007 Standards Certification as well as Lifting Equipment EngineersAssociation (LEEA) Certification. It is a testimony that the Company is maintaining veryhigh safety standards as well as ensures the use of quality equipment's and followed thebest Health & Safety practices as per LEEA standards.
The following safety measures are being taken at various locations:
Fire and Safety drills are conducted for all employees and Security personnel.
All Fire hydrants are monitored strictly as the preparedness for emergency.
All equipment's are tested periodically to verify its safe load workingcondition. Fitness certificates are issued based on the compliance of the safety norms.
Safety Awareness Campaign Safety week Environment day are being held /celebrated at each location to improve the awareness of employee.
Regular training/skills to staff and contractors to inculcate importance ofsafety among them.
Created checks and awareness among drivers about negatives of alcohol and drugconsumptions and impact of families.
Accident prone routes identified and supervisors allocated have control over thevehicle movement.
OHSAS audits and Fire and Safety audits are conducted by competent agencies atregular intervals.
Fortnightly visit by Doctors to office for medical counseling to employees.
HazMat training is provided to all CFS employees.
Terrorist Threat Awareness Training is provided to CFS employees.
Medical Health check-up of all employees are conducted at regular intervals.
CCTV and Safety alarms are installed at each locations.
All equipment's are mandatory ensured with PUC.
Each equipment is put through comprehensive Quality Audit and Testing to ensurestrong compliance to Maintenance Safety and Reliability aspects as per specifications byvarious OEMs.
Green initiatives are taken at various locations to protect the environment.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALSIMPACTING THE GOING CONCERN STATUS AND Company's OPERATION IN FUTURE
During the year under review no significant and material orders have been passedagainst the Company by any Regulators or Courts or Tribunals impacting the Company's goingconcern status and operations in future.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo as stipulated under Section 134(3)(m) of the Companies Act 2013 readwith Rule 8 of the Companies (Accounts) Rules 2014 is provided as Annexure 7 which formspart of this Report.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
Your Company has adopted an Anti-Sexual Harassment Policy in line with the requirementsof The Sexual Harassment of Women at the Workplace (Prevention Prohibition &Redressal) Act 2013 ('Act'). A Complaints Committee has been set up to redress complaintsreceived regarding sexual harassment of women at workplace. All employees (permanentcontractual temporary trainees) are covered under this policy.
|Sr. No. ||Particulars ||Events |
|1 ||No. of Complaints of Sexual Harassment pending at the beginning of the year ||NIL |
|2 ||No. of Complaints of Sexual Harassment received during the year ||NIL |
|3 ||No. of Complaints of Sexual Harassment disposed off during the year ||NIL |
|4 ||No. of Complaints of Sexual Harassment pending for more than 90 days ||NIL |
|5 ||No. of Awareness Program about Sexual Harassment Policy conducted and held at workplace ||2 |
|6 ||Nature of Action taken by the Employer or District Officer ||NIL |
No action was required to be taken by the Company as there were no complaints relatingto sexual harassment received during the year under review.
During the year under review your Company has submitted its Annual Report on the casesof sexual harassment at workplace to District Officer Mumbai pursuant to Section 21 ofthe aforesaid Act and rules made there under.
EXTRACT OF ANNUAL RETURN
In accordance with the provisions of Section 134(3)(a) of the Companies Act 2013 andRule 12 of the Companies (Management and Administration) Rules 2014 as amended from timeto time an extract of the Annual Return of the Company for the year ended March 312016is provided in the prescribed Form MGT - 9 as Annexure 8 which forms part of this Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to Section 134(3)(c) read with Section 134(5) of the Companies Act 2013 theBoard of Directors to the best of their knowledge and ability confirm that -
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures if any;
b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 312016 and of the profit ofthe Company for the year ended on that date;
c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors had prepared the annual accounts on a going concern basis;
e) the Directors had laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and
f) the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems are adequate and operating effectively.
Your Directors take this opportunity to thank the Government of India Governments ofvarious countries concerned State Governments other Government Authorities Departmentsand Agencies the Stakeholders Business Associates Banks Financial InstitutionsCustomers Vendors and Service
Providers for the valuable support and co-operation extended by them during the year.
Your Directors would also like to place on record their sincere thanks and appreciationfor the contribution consistent hard work dedication and commitment of our employees atall levels.
For and on behalf of the Board of Directors of Allcargo Logistics Limited
| ||Shashi Kiran Shetty |
| ||Chairman & Managing Director |
|Place: Mumbai ||(DIN: 00012754) |
|Date: June 30 2016 || |