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Avenue Supermarts Ltd.

BSE: 540376 Sector: Others
NSE: DMART ISIN Code: INE192R01011
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NSE 15:58 | 12 Dec 1115.75 -11.65
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OPEN 1131.10
PREVIOUS CLOSE 1127.50
VOLUME 36961
52-Week high 1289.00
52-Week low 558.75
P/E 113.34
Mkt Cap.(Rs cr) 69,601
Buy Price 0.00
Buy Qty 0.00
Sell Price 1115.25
Sell Qty 297.00
OPEN 1131.10
CLOSE 1127.50
VOLUME 36961
52-Week high 1289.00
52-Week low 558.75
P/E 113.34
Mkt Cap.(Rs cr) 69,601
Buy Price 0.00
Buy Qty 0.00
Sell Price 1115.25
Sell Qty 297.00

Avenue Supermarts Ltd. (DMART) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the Seventeenth Annual Report on thebusiness and operations of the Company together with the Audited Financial Statements forthe financial year ended 31st March 2017.

Financial Statements and Results

The Company's performance during the year ended 31st March 2017 compared to theprevious financial year is summarised below:

( Rs In Lakhs)
Standalone Consolidated
Particulars 2016-17 2015-16 2016-17 2015-16
Income from operations 1188111.90 857517.64 1189769.56 858375.92
Other Income 3128.86 2005.02 2855.93 1793.73
Total Income 1191240.76 859522.66 1192625.49 860169.65
Expenses 1116529.49 810687.49 1116625.02 810991.15
Share of net loss of associate - - (1292.05) (7.21)
Profit before tax 74711.27 48835.17 74708.42 49171.29
Less: Tax Expense 26447.42 17044.01 26828.61 17147.04
Profit after Tax 48263.85 31791.16 47879.81 32024.25
Other comprehensive income (net of taxes) 78.24 27.90 81.52 28.27
Transfer to Debenture Redemption Reserve 9640.00 2264.00 9640.00 2264.00
Balance carried forward to retained earnings 38702.09 29555.06 38316.75 29784.00

The financial statements for the year ended 31st March 2017 have been prepared underInd AS (Indian Accounting Standards).

The financial statements for the year ended 31st March 2016 have been restated inaccordance with Ind AS for comparative information.

Business and Operations

The Company has recorded another steady year of growth despite performing in a highlycompetitive environment in the Retail Sector. Your Company has opened 21 new stores duringthe year under review taking the total store count to 131 across the country.

The Company's total income on Standalone basis was Rs 1191240.76 Lakhscompared to previous year's Rs 859522.66 Lakhs registering a steady growth of 38.59% ona year over year basis. The Company has earned Standalone Net Profit of Rs48263.85 Lakhs.

There was no change in nature of the business of the Company during the year underreview.

Credit Rating

Your Company continues to enjoy high credit quality rating for its Debentures andlong-term bank facilities/commercial paper programme.

In April 2017 CRISIL has upgraded the Company's rating on the long-term bankfacilities and non-convertible debentures of Avenue Supermarts Ltd (ASL) to 'CRISILAA/Stable' from 'CRISIL AA-/Positive' and reaffirmed its rating on the commercial paperprogramme at 'CRISIL A1+'.

Instruments with this rating are considered to have high degree of safety regardingtimely servicing of financial obligations. Such instruments carry very low credit risk.

CARE A1+ (CARE A one plus) is assigned by CARE (Credit Analysis and Research Ltd) forthe Company's commercial paper / short-term debt programme. Instruments with this ratingare considered to have very strong degree of safety regarding timely payment of financialobligations. Such instruments carry lowest credit risk.

Initial Public Offering

The Directors are pleased to inform the Company's Initial Public Offering (IPO) of62541806 Equity Shares of face value of Rs 10/- (Rupees Ten only) by way of BookBuilding Process received an overwhelming response from the investors. The Issue wasopened on 8th March 2017 and closed on 10th March 2017. The issue wasoversubscribed by 104.41 times with QIB portion getting oversubscribed by 148.49 timesnon-institutional portion by 272.20 times and the retail portion by 7.32 times. Theallotment of 62541806 Equity Shares of Rs 10/- each for cash at a premium of Rs 289/-per share aggregating to Rs 187000 Lakhs under the said IPO was made on 18thMarch 2017. Subsequent to the completion of IPO the paid up equity share capital of theCompany got increased from Rs 56154.27 Lakhs to Rs 62408.45 Lakhs.

The trading of Equity Shares of the Company commenced on National Stock Exchange ofIndia Limited and BSE Limited on 21st March 2017. The success of IPO reflects the trustfaith and confidence that customers business partners and markets have reposed in yourCompany.

Utilisation of IPO Proceeds

The proceeds realised by the Company from the Issue shall be utilised as per theObjects of the Issue.

The proceeds of the issue are being utilised for repayment or pre-payment of term loansand redemption or early redemption of Non Convertible Debentures of the Company forConstruction and purchase of fit outs for new stores and General Corporate Purposes.

There has been no deviation in the utilisation of the IPO proceeds of the Company.

Share Capital

The paid up Equity Share Capital as on 31st March 2017 amounted to Rs 62408.45 Lakhs.

The Company has not issued any shares with differential rights as to dividend votingor otherwise.

Dividend

With a view to conserve resources and expansion of business your Directors havethought it prudent not to recommend any dividend for the financial year under review.

Dividend Distribution Policy

Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 ("Listing Regulations") mandates top 500 Listed Companiesbased on their market capitalisation to formulate Dividend Distribution Policy.Accordingly the policy was adopted to set out parameters and circumstances that will betaken into account by the Board in determining the distribution of dividend to theshareholders. The Policy is enclosed as Annexure I and is also available on theCompany's website under the web link http://www.dmartindia.com/investor-relationship

Transfer to Reserves

Pursuant to the Companies (Share Capital and Debentures) Rules 2014 (‘Rules')issued by the Ministry of Corporate Affairs an amount of Rs 9640.00 Lakhs has beentransferred to Debenture Redemption Reserve from the Profits of the year.

The Board of Directors has not recommended transfer of any amount of Profit to reservesduring the year under review other than as mentioned above. Hence the remaining amount ofProfit for the financial year under review has been carried forward to the Statement ofProfit and Loss.

Consolidated Financial Statements

In accordance with the provisions of Section 129(3) of the Companies Act 2013 andRegulation 34 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations2015 the Consolidated Financial Statements forms part of this Annual Report and shallalso be laid before the ensuing Annual General Meeting of the Company. The ConsolidatedFinancial Statements have been prepared in accordance with the Indian Accounting Standards(Ind AS) notified under Section 133 of the Companies Act 2013 read with Rule 7 of theCompanies (Accounts) Rules 2014. The Consolidated Financial Statements for the financialyear ended 31st March 2017 are the Company's first Ind-AS compliant annual ConsolidatedFinancial Statements with comparative figures for the year ended 31st March 2016 which isalso as per Ind-AS. The date of said transition is 1st April 2015.

Report on Performance of Subsidiaries Associates and Joint Venture Companies

A report on the performance and financial position of each of the subsidiaries andassociate companies as per the Companies Act 2013 is provided as Annexure II andforms part of this Report.

Particular of Contracts or Arrangement with Related Parties

All related party transactions entered into by the Company during the financial yearwere in the ordinary course of business and on arm's length basis and in compliance withthe applicable provisions of the Companies Act 2013 and the Listing Regulations. Duringthe financial year under review none of the transactions entered into with relatedparties were material as defined under the Act and Listing Regulations.

The Policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website at www.dmartindia.com. None of the Directors has any pecuniaryrelationships or transactions vis--vis the Company. There were no transactions duringthe year which would require to be reported in Form AOC-2.

Particulars of Loans Guarantees Investments and Securities

Particulars of loans given investments made guarantees given and securities providedforms part of the notes to the standalone financial statements.

MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL

Appointments

The constitution of the Board of Directors is in accordance with Section 149 of theCompanies Act and Listing Regulations.

Mr. Chandrashekhar Bhave (DIN: 00059856) was appointed as an Additional Director of theCompany (Independent Category) under Section 161 of the Companies Act 2013 w. e. f 17thMay 2016. Consequently the Shareholders of the Company at their 16th Annual GeneralMeeting (AGM) held on 16th September 2016 approved the appointment of Mr. ChandrashekharBhave as an Independent Director of the Company for a term of five years as per theprovisions of Section 149 of the Companies Act 2013 read with rules made thereunder.

Retire by rotation

Pursuant to the provisions of Section 152 of the Companies Act 2013 Mr. Elvin Machado(DIN: 07206710) director being longest in the Office is liable to retire by rotation atthe ensuing Annual General Meeting of the Company and being eligible has offered himselffor re-appointment. Necessary resolution for his re-appointment is included in the Noticeof AGM for seeking approval of Members. The Directors recommend his re-appointmentfor your approval.

A brief resume and particulars relating to him is given separately as an annexure tothe AGM Notice.

Key Managerial Personnel

There were no changes in the Key Managerial Personnel during the year.

Declarations by Independent Directors

The Company has received and taken on record the declarations received from theIndependent Directors of the Company in accordance with the Section 149(6) of theCompanies Act 2013 confirming their independence and Regulation 25 of the ListingRegulations.

Familiarisation Programme

In compliance with the requirements of the Listing Regulations the Company has put inplace a familiarisation programme for the Independent Directors to familiarise them withtheir roles rights and responsibilities as Independent Directorsthe working of theCompany nature of the industry in which the Company operates business model and so on.The same is also available on the Company website at www.dmartindia.com

DISCLOSURES RELATED TO BOARD COMMITTEES AND POLICIES

Board Meetings

The Board of Directors met five times during the financial year under review. Thedetails of the Board meetings and the attendance of Directors thereat are provided in theCorporate Governance Report forming part of the Annual Report.

In terms of requirements of Schedule IV of the Act a separate meeting of IndependentDirectors was also held on

11th February 2017 to review the performance of Non Independent Directors (includingthe Chairpersons) the entire Board and its Committees thereof quality quantity andtimelines of the flow of information between the Management and the Board.

Audit Committee

The composition of the Audit Committee is in conformity with the provisions of theSection 177 of the Companies Act 2013 and Listing Regulations. The Audit Committeecomprises:

Sr. No. Name Designation
1. Mr. Chandrashekhar Bhave Chairman
2. Mr. Ramesh Damani Member
3. Mr. Ramakant Baheti Member

Consequent upon the appointment of Mr. Chandrashekhar Bhave (DIN: 00059856) as anIndependent Director on the Board of the Company the Audit Committee was re-constitutedw.e.f. 17th May 2016 by inducting Mr. Chandrashekhar Bhave as the Member of the AuditCommittee and Mrs. Manjri Chandak ceased to be the member of Audit Committee w.e.f 17thMay 2016.

The terms of reference of the Audit Committee and the particulars of meetings held andattendance thereat are mentioned in the Corporate Governance Report forming part of theAnnual Report.

Nomination and Remuneration Committee

The composition of the Nomination and Remuneration Committee is in conformity with theprovisions of the Section 178 of the Companies Act 2013 and Listing Regulations. TheNomination and Remuneration Committee comprises :

Sr. No. Name Designation
1. Mr. Chandrashekhar Bhave Chairman
2. Mr. Ramesh Damani Member
3. Mrs. Manjri Chandak Member

Consequent upon the appointment of Mr. Chandrashekhar Bhave (DIN: 00059856) as anIndependent Director on the Company's Board the Nomination and Remuneration Committee wasreconstituted w.e.f. 17th May 2016 by inducting Mr. Chandrashekhar Bhave as the Member ofthe Nomination and Remuneration Committee and Mr. Ramakant Baheti ceased to be the memberof Nomination and Remuneration Committee from the same date.

The terms of reference of the Nomination and Remuneration Committee and the particularsof meetings held and attendance thereat are mentioned in the Corporate Governance Reportforming part of the Annual Report.

The Company has Nomination and Remuneration policy which provides the criteria fordetermining qualifications positive attributes independence of a Director and policyrelating to remuneration for Directors Key Managerial Personnel and other employees inaccordance with the provisions of Section 178 of the Companies Act 2013. The Nominationand Remuneration Policy of the Company is attached herewith as Annexure III.

Stakeholders Relationship Committee

The Stakeholders' Relationship Committee comprises Mrs. Manjri Chandak as Chairpersonand Mr. Ramakant Baheti as Member of the Committee. The Company Secretary acts asSecretary of the said Committee. The terms of reference of the Stakeholders' RelationshipCommittee and the particulars of meetings held and attendance thereat are mentioned in theCorporate Governance Report forming part of the Annual Report.

Corporate Social Responsibility Committee

In accordance with the provisions of Section 135 of the Companies Act 2013 read withCompanies (Corporate Social Responsibility Policy) Rules 2014 the Board of Directors ofthe Company has constituted Corporate Social Responsibility (CSR) Committee. The Committeeis entrusted with the responsibility of:

- Formulating and recommending to the Board Corporate Social Responsibility Policy(CSR Policy) indicating the activities to be undertaken

- monitoring the implementation of the framework of the CSR Policy and

- recommending the CSR amount to be spend on the CSR activities.

The details of the Company's CSR activities are attached in Annexure IV. The CSRPolicy is also placed on the website of the Company www.dmartindia.com

Consequent upon the appointment of Mr. Chandrashekhar Bhave (DIN: 00059856) the CSRCommittee of the Company was re- constituted to be effective from 8th November 2016 andcurrently comprises :

Name of the Member Category Designation
Mr. Chandrashekhar Bhave Non-Executive & Independent Director Chairman
Mr. Ramesh Damani Non-Executive and Independent Director Member
Mr. Ramakant Baheti Executive Director Member
Mrs. Manjri Chandak Non-Executive Director Member

The particulars of meetings held and attendance thereat are mentioned in the CorporateGovernance Report forming part of the Annual Report.

Director's Responsibility Statement

In terms of Section 134(5) of the Companies Act 2013 in relation to the auditedfinancial statements of the Company for the year ended 31st March 2017 the Board ofDirectors hereby confirms that:

a. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;

b. such accounting policies have been selected and applied consistently and theDirectors made judgments and estimates that are reasonable and prudent so as to give atrue and fair view of the state of affairs of the Company as at 31st March 2017 and ofthe Profit of the Company for that year;

c. proper and sufficient care was taken for the maintenance of adequate accountingrecords in accordance with the provisions of this Act for safeguarding the assets of theCompany and for preventing and detecting fraud and other irregularities;

d. the annual accounts of the Company have been prepared on a going concern basis;

e. they have laid down internal financial controls to be followed by the Company andsuch internal financial controls are adequate and operating effectively.

f. proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.

Vigil Mechanism Policy for the Directors and Employees

The Company's Board of Directors pursuant to the provisions of Section 177(9) of theCompanies Act 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers)Rules 2014 has framed ‘Vigil Mechanism Policy' for Directors and employees of theCompany. The policy is to provide a mechanism which ensures adequate safeguards toemployees and Directors from any victimisation on raising of concerns of any violations oflegal or regulatory requirements incorrect or misrepresentation of any financialstatements and reports and so on. The employees of the Company have the right/option toreport their concern/grievance to the Chairman of the Audit Committee. The Company iscommitted to adhere to the highest standards of ethical moral and legal conduct ofbusiness operations. The Vigil Mechanism Policy is hosted on the Company's website www.dmartindia.com

Risk Management Policy

A detailed review of business risks and the Company's plans to mitigate them isassessed and considered by the Company's Board of Directors. The Board has adopted theRisk Management Policy and Guidelines to mitigate foreseeable risks avoid eventssituations or circumstances which may lead to negative consequences on the Company'sbusinesses and define a structured approach to manage uncertainty and to make use ofthese in their decision making pertaining to all business divisions and corporatefunctions. Risk evaluation is an ongoing and continuous process within the Company and itis regularly updated to the Board of the Company.

A Risk Management Committee is constituted which has been entrusted with theresponsibility to assist the Board in overseeing and approving the Company's enterprisewide risk management framework.

The Risk Management Committee comprises :

Name Category Designation
Mr. Ignatius Navil Noronha Executive Director Chairman
Mr. Ramakant Baheti Executive Director Member
Mrs. Manjri Chandak Non-Executive Director Member
Mr. Ashutosh Dhar VP – Risk Management Member

Annual Evaluation of Directors Committees and Board

Pursuant to the captioned requirements an annual evaluation had been carried out andthe Board is pleased to report that the result thereof show that the Company iswell-equipped in the management as well as the governance aspects.

In a separate meeting of Independent Directors held on 11th February 2017 performanceof Non-independent Directors and performance of the Board as a whole was evaluated. TheIndependent Directors were satisfied with the overall functioning of the Board itsvarious committees and performance of other Non-Executive and Executive Directors.

PARTICULARS OF EMPLOYEES

Disclosure with respect to remuneration of Directors and employees as required underSection 197 of the Companies Act 2013 read with Rule 5 (1) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 forms part of the Board's Report (AnnexureV).

Details of employee remuneration as required under provisions of Section 197 of theCompanies Act 2013 and Rule 5(2) and 5(3) of Rules are available at the Registered Officeof the Company for inspection and shall be made available to any shareholder on request.

Employee Stock options

The Employee Stock Option Scheme (ESOP Scheme/Scheme) 2016 was approved by theshareholders at their 16th Annual General Meeting held on 16th September 2016. The Schemehas been formulated in accordance with the provisions of the Companies Act 2013 asamended and the Securities and Exchange Board of India (Share Based Employee Benefits)Regulation 2014. The disclosures in compliance with SEBI (Share Based Employee Benefits)Regulations 2014 are uploaded on the website of the Company; www.dmartindia.com

The objects of the Scheme are inter alia to provide an incentive to reward andmotivate employees and enable them to participate in the long-term financial growth of theCompany. The Company has granted stock options to the eligible employees. The options willbe exercisable into equity shares as per the terms and conditions as stipulated in ESOPScheme 2016.

The Employee Stock Option Scheme 2016 is being administered and monitored by the ESOPCommittee of the Company in accordance with the SEBI Guidelines. ESOP Committee at itsmeeting held on 14th March 2017 approved grant of 13973325 options under the ESOPScheme 2016 to the eligible employees.

Internal Control Systems

Adequate internal control systems commensurate with the nature of the Company'sbusiness its size and complexity of its operations are in place and have been operatingsatisfactorily. Internal control systems comprising policies and procedures are designedto ensure reliability of financial reporting timely feedback on achievement ofoperational and strategic goals compliance with policies procedure applicable laws andregulations and that all assets and resources are acquired economically used efficientlyand adequately protected.

AUDITORS AND REPORTS

The matters related to Auditors and their Reports are as under

Observations of Statutory Auditors on Accounts for the year ended 31st March 2017

The Auditors Report for the financial year ended 31st March 2017 does not contain anyqualification adverse remark or reservation and therefore do not call for any furtherexplanation or comments from the Board under Section 134(3) of the Companies Act 2013.

Secretarial Audit Report for the year ended 31st March 2017

Secretarial Audit Report pursuant to the provisions of Section 204 read with Section134(3) of the Companies Act 2013 was obtained from M/s. Rathi and Associates PracticingCompany Secretaries in Form MR-3 for the financial year 2016-17.The said Report isattached and forms part to this report.(Annexure VI)

Appointment of Statutory Auditors

Pursuant to the provisions of Section 139 of the Companies Act 2013 and the Companies(Audit and Auditors) Rules 2014 Dalal & Shah LLP Chartered Accountants (FirmRegistration No.: 102021W) the Statutory Auditors of the Company holds Office upto theconclusion of the ensuing Annual General Meeting.

The Board has considered and recommends appointment of S R B C & Co LLP CharteredAccountants (Firm Registration No.324982E/E300003) as Statutory Auditors of the Companyto hold Office from the conclusion of 17th Annual General Meeting until the conclusion of22nd Annual General Meeting of the Company. The Company has received the consent of the SR B C & Co LLP Chartered Accountants along with certificate under Section 139 of theAct to the effect that their appointment if made shall be in accordance with theprescribed conditions and that they are not disqualified to act as the Auditor of theCompany.

Necessary resolution for appointment of the said Auditor is included in the Notice ofAGM for seeking approval of the members.

Internal Audit and Control

Mr. Rajan Arora Internal Auditor of the Company has carried out audit of financialtransactions of the Company and inventory management. The findings of the Internal Auditorare discussed on an on-going basis in the meetings of the Audit Committee and varioussteps have been taken to implement the suggestions of the said Internal Auditor.

OTHER DISCLOSURES:

Other disclosures as per the provisions of Section 134 of the Act read with Companies(Accounts) Rules 2014 are furnished as under:

Extract of Annual Return

Pursuant to the provisions of Section 134(3)(a) of the Companies Act 2013 Extract ofthe Annual Return for the financial year ended 31st March 2017 made under the provisionsof Section 92(3) of the Act is attached as Annexure VII which forms part of thisReport.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as required under the provisions of Section 134(3) (m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 in respect ofconservation of energy technology absorption foreign exchange earnings and outgo etc.are furnished in Annexure VIII which forms part of this Report.

Report on Corporate Governance and Management Discussion and Analysis

The Company has complied with the Corporate Governance requirements under the CompaniesAct 2013 and as stipulated under the Listing Regulations. A separate section titled‘Corporate Governance Report' under the Listing Regulations along with a certificatefrom the Practising Company Secretary confirming the compliances and ‘ManagementDiscussion and Analysis' are annexed and form part of this Annual Report.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions on the following items during the year underreview:

1. Deposits covered under Chapter V of the Act;

2. Material changes and/ or commitments that could affect the Company's financialpositionwhich have occurred between the end of the financial year of the Company and thedate of this report;

3. Significant or material orders passed by the Regulators or Courts or Tribunalswhich would impact the going concern status and Company's operations in future;

4. Non-exercising of voting rights in respect of shares purchased directly by employeesunder a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies(Share Capital and Debentures) Rules 2014;

5. Receipt of any remuneration or commission from any of its subsidiary companies bythe Managing Director or the Whole-time Directors of the Company.

Disclosures as per the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace in linewith the provisions of the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013 and the rules thereunder for prevention and redressalof complaints of sexual harassment at workplace.

During the financial year 2016-17 the Company had not received any complaints onsexual harassment.

ACKNOWLEDGEMENTS AND APPRECIATION

Your Directors take this opportunity to thank the customers shareholders suppliersbankers business partners/associates financial institutions and regulatory bodies fortheir consistent support and encouragement to the Company.

For and on behalf of the Board of Directors of
Avenue Supermarts Limited
Ignatius Navil Noronha Ramakant Baheti
Place: Thane Managing Director Whole-time Director
Date: 22nd July 2017 DIN: 01787989 DIN: 00246480
Registered Office:
Anjaneya CHS Limited Orchard Avenue
Opp. Hiranandani Foundation School
Powai. Mumbai – 400 076
CIN: L51900MH2000PLC126473
Tel No.: 022-40496500
Fax No.: 022-40496503
Email Id: investorrelations@dmartindia.com
Website: www.dmartindia.com