The Members of
Patel Integrated Logistics Limited.
Your Directors have pleasure in presenting their 55th Annual Report for theyear ended 31st March 2017.
The standalone and consolidated financial highlights of your Company are as under:
(' in lakhs)
| || |
| ||2016-17 ||2015-16 ||2016-17 |
|Total Revenue ||45873.42 ||51401.45 ||45873.42 |
|Profit before Finance cost Depreciation & Tax ||2159.66 ||2437.03 ||2159.42 |
|Finance cost ||816.90 ||902.22 ||816.91 |
|Depreciation ||420.55 ||428.12 ||421.74 |
|Profit before Tax ||922.21 ||1106.69 ||920.77 |
|Provision for Tax Current Tax ||181.00 ||326.00 ||181.00 |
|Deferred Tax ||38.54 ||(42.97) ||38.54 |
|(Excess) / Short Provision of Income Tax for earlier years ||- ||(13.76) ||- |
|Net Profit after Tax ||702.67 ||837.42 ||701.23 |
|Less: Minority Interest ||- ||- ||- |
|Net Profit for the year ||702.67 ||837.42 ||701.23 |
|Balance of Profit from previous year ||630.80 ||335.67 ||630.80 |
|TOTAL ... ||1333.47 ||1173.09 ||1332.03 |
|79.43 ||76.68 ||79.43 |
|Tax on Dividend ||16.18 ||15.61 ||16.18 |
|Transfer to General Reserve ||200.00 ||200.00 ||200.00 |
|Transfer to Contingency Reserve ||250.00 ||250.00 ||250.00 |
|Balance carried to Balance Sheet ||787.86 ||630.80 ||786.42 |
|TOTAL ... ||1333.47 ||1173.09 ||1332.03 |
FINANCIAL PERFORMANCE REVIEW:
The Indian economy witnessed slow growth during the current year. GDP growth in FY2016-17 has come down to 7.1%. The financial year 2016-17 has witnessed muted growth ofthe Company in terms of financial performance of the Company. In the first two quartersthe Company reported growth in the turnover and profitability. With the demonetisationeffective November 8 2016 the Company has observed short term impact on growth. TheCompany observed a drop in revenue in surface Transport and cargo consolidation businesswhich impacted Net Sales/income from operations as well as profit for the last few months.
In such a challenging scenario your Company posted a profit after tax of ' 7.03 cr.for the year ended March 31 2017 as compared to ' 8.37 cr. for the year ended March 312016. Income from operations for the year ended March 31 2017 was ' 458.73 cr. ascompared to ' 514.01cr. for the year ended March 31 2016. Net Worth stood at '112.55 cr.Fixed Asset base was ' 53.75 cr. and the Basic EPS was ' 4.42 and Diluted EPS (afterconsidering conversion of warrants) was ' 4.18.
In spite of demonetisation which affected the logistic industry the Company hasgenerated profit due to diligent decision making cost reduction measures and continuousfocus on value business only.
The Company's consolidated results shown marginal drop in profitability as its whollyowned subsidiary DelivrEx India Limited has not yet started its operation for e-comlogistic set up.
There is no change in the nature of business during the year under review.
CONSOLIDATED FINANCIAL STATEMENTS:
As per Regulation 33 of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 (hereinafter referred to as "ListingRegulations") and applicable provisions of the Companies Act 2013 read with theRules issued thereunder the Consolidated Financial Statements of the Company for thefinancial year 2016-17 have been prepared in compliance with applicable AccountingStandards and on the basis of audited financial statements of the Company and itssubsidiary Company as approved by the respective Board of Directors. The ConsolidatedFinancial Statements together with the Auditors' Report form part of this Annual Report.
INDIAN ACCOUNTING STANDARDS (IND AS):
The Ministry of Corporate Affairs vide notification dated February 16 2015 notifiedthe Companies (Indian Accounting Standard Rules) 2015. The Company shall adopt IND ASwith effect from April 1 2017 as the IND AS is applicable to the Company for theaccounting periods beginning on or after April 1 2017.
SUBSIDIARY ASSOCIATES AND JOINT VENTURE:
The Company has one wholly owned subsidiary 'DelivrEx India Limited' as on 31stMarch 2017 having business akin and germane to the business of holding Company and therehas been no change in the nature of business of wholly owned subsidiary during the year.The Company does not have any Associate or Joint Venture Company as on 31stMarch 2017.
A separate statement containing the salient features of financial statements ofsubsidiary of the Company forms a part of consolidated financial statements in compliancewith Section 129 and other applicable provisions if any of the Companies Act 2013. Inaccordance with Section 136 of the Companies Act 2013 the financial statements of thesubsidiary are available for inspection by the members at the Registered Office of theCompany during business hours on all days except Saturdays Sundays and public holidaysupto the date of the Annual General Meeting ('AGM'). Any member desirous of obtaining acopy of the said financial statements may write to the Company Secretary at the RegisteredOffice of the Company. The financial statements including the consolidated financialstatements financial statements of subsidiary and all other documents required to beattached to this report have been uploaded on the website of the Company
TRANSFER TO RESERVES:
Your Company has transferred ' 2.00 crore to the general reserve and ' 2.50 crore tocontingency reserve. An amount of ' 7.88 crore is carried forward in Profit and Loss.
For the year under consideration the Board of Directors recommended a dividend of '0.5 per share i.e. 5% on the equity share capital of the Company for the financial yearended March 31 2017. The dividend payout is subject to approval of members at the ensuingAnnual General Meeting. The dividend payout for the year under review has been formulatedafter consideration of Company's long term objectives of growth and also for conservationof resources for diversification.
The introduction of much awaited Goods and Services Tax (GST) leading corporates toconsolidate their warehouses. New policies could be brought in to facilitate this and setup base infrastructure for strategic transport and warehousing hubs in India. Your Companyhas significant plans to expand its warehousing foot prints in the years to come on a panIndia basis. During the year under review your Company has acquired 2.20 acre of landallotted by Karnataka Industrial Areas Development Board at Bangalore on 99 years termlease for expanding warehousing business. Your Company will be looking to expand itswarehousing business in Gujarat Chennai and other locations in India.
After rollout of GST reduction of around 30% is expected in Truck Travel time due toend of check post. As a result logistic cost will go down by 10-12% which will help inincreasing the profitability.
The strategic plan has been drawn to consolidate e-commerce players like Amazon andflipkart in the market. This will benefit us to concentrate on top players in the Industryfor achievement of faster business growth.
The Company enjoys fund based and non fund based credit facilities from the Banks tomeet its working capital requirements. The Company also enjoys a credit line for buyingthe trucks on deferred payment guarantee basis. The Company is regular in payments ofinstallments and there are no over dues as on the date of reporting. The Company couldbring down interest cost by proper mix of utilization of finance from various banks andclosely pursuing with the Bank to reduce the Interest cost.
The Company is accepting unsecured fixed deposits from the public in accordance withthe requirements prescribed under Chapter V of the Companies Act 2013 and Companies(Acceptance of Deposits) Rules 2014.
Accordingly Fixed Deposits accepted by the Company stood at '1493.28 lacs as on 31stMarch 2017. There were no unpaid or overdue deposits as on 31st March 2017other than unclaimed Deposits and interest accrued thereon aggregating '4.57 lacs. Interms of Section 73(2) of the Companies Act 2013 the Company has maintained liquidassets by depositing sum of ' 1.44 cr. in a schedule bank under deposit repayment reserveaccount.
There has been no default in repayment of deposits or payment of interest thereonduring the year under consideration. The Company has not accepted any deposits which arenot in compliance with the requirement of Chapter V of the Companies Act 2013.
The Companies (Acceptance of Deposits) Amendment Rules 2017 dated 11th May2017 allowed Companies to accept deposits without deposit insurance contract till 31stMarch 2018 or till the availability of a deposit insurance product whichever is earlier.
Credit Analysis & Research Ltd (CARE) has assigned credit rating CARE BBB[moderate degree of safety] for Company's fund based borrowings & finance lease andCARE A3+ [moderate degree of safety] rating for its non fund based borrowings from thebanks.
India Ratings & Research Private Ltd (India Ratings) a Fitch group Company hasaffirmed credit rating for Company's fund based borrowings & finance lease to 'INDBBB' [outlook stable] and rating for its non fund based borrowings from the banks upgradedto 'IND A3+ [outlook stable]
India Ratings has also assigned credit rating 'IND tA-' (stable) for its Fixed DepositProgramme.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The details of loans guarantees and investments under Section 186 of the CompaniesAct 2013 read with the Companies (Meetings of Board and its Powers) Rules 2014 are givenin the notes to the Financial Statements.
CORPORATE SOCIAL RESPONSIBILITY:
The CSR expenditure incurred by your Company during the financial year 2016-17 was '1681700/- against the statutory requirement of ' 1476535/- i.e. 2% of the averageprofit before tax for the last three financial years. The CSR initiatives of your Companywere under the identified thrust areas as provided under the CSR Policy of the Company.Your Company's CSR Policy statement and annual report on the CSR activities undertakenduring the financial year ended 31st March 2017 in accordance with Section 135 of theCompanies Act 2013 and Companies (Corporate Social Responsibility Policy) Rules 2014 isannexed to this report as Annexure [I].
The requirement of Risk Management Committee under Regulation 21 of SEBI (ListingObligations and Disclosures Requirements) Regulation 2015 is not applicable to theCompany as the same is applicable to top 100 listed entities.
However the Company has constituted a Risk Management Committee. The details ofCommittee and its terms of reference are set out in the Corporate Governance Reportforming part of the Board's Report.
The Company has a Business Risk Management framework to identify evaluate businessrisks and opportunities. This framework seeks to create transparency minimize adverseimpact on the business objectives and enhance the Company's competitive advantage.
There are no risks which in the opinion of the operating management threaten theexistence of your Company. However some of the risks which may pose challenges are setout in the Management Discussion and Analysis which forms part of this Report.
The Company has Audit Committee of Board of Directors constituted in accordance withsection 177 of the Companies Act 2013. The details of the Audit Committee are explainedin the Corporate Governance Report.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUECY:
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. However this requires upgradation and improvement under newbusiness environment. The Company is constantly improving the quality and implementingmore internal financial controls.
The Internal Audit Department monitors and evaluates operating systems accountingprocedures and policies at all locations of the Company. Based on the report of internalaudit function the Audit Committee/ Board initiate corrective action in respective areasand advise the operating people about the action taken on such report and therebystrengthen the controls. Significant audit observations and corrective actions thereon arepresented to the Audit Committee of the Board.
VIGIL MECHANISM / WHISTLE BLOWER POLICY:
The Company has a vigil mechanism named Whistle Blower Policy which is in compliancewith the provisions of Section 177 (10) of the Companies Act 2013 and Regulation 22 ofSEBI (Listing Obligations and Disclosures Requirements) Regulation 2015. The policy dealswith instance of fraud and mismanagement if any. The details of the Whistle Blower Policyis explained in the Corporate Governance Report and also posted on the website of theCompany.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Mr. Syed K. Husain Non Executive Director of the Company retires by rotation at theensuing Annual General Meeting pursuant to the provisions of Section 152 of the CompaniesAct 2013 read with the Companies (Appointment and Qualification of Directors) Rules 2014and the Articles of Association of your Company and being eligible has offered himselffor re-appointment as the Director.
All Independent Directors have given declarations that they meet the criteria ofindependence as laid down under Section 149(6) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosures Requirements) Regulation 2015.
There is no Key Managerial Personnel appointed and resigned during the year underreview.
Pursuant to the provisions of the Companies Act 2013 read with the Rules issuedthereunder and the Listing Regulations (including any statutory modification(s) orre-enactment(s) for the time being in force) the process for evaluation of the annualperformance of the Directors/ Board/ Committees was carried out. The manner in which theevaluation has been carried out has been explained in the Corporate Governance Report. Inpursuance to the above Independent Directors in their separate meeting held on 25thFebruary 2017 have reviewed and evaluated the performance of Board as a whole Chairmanand Executive Vice Chairman.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration. The Remuneration Policy is stated in the Corporate Governance Report.
During the year six Board Meetings and four Audit Committee Meetings were convened andheld. The details of which are given in the Corporate Governance Report. The interveninggap between the Meetings was within the period prescribed under the Companies Act 2013.
RELATED PARTY TRANSACTIONS:
All related party transactions referred to in section 188(1) of the Companies Act 2013that were entered into during the financial year were on an arm's length basis and were inthe ordinary course of business. There are no materially significant related partytransactions made by the Company with Promoters Directors Key Managerial Personnel orother designated persons which may have a potential conflict with the interest of theCompany at large.
The Form AOC - 2 pursuant to Section 134(3)(h) of the Companies Act 2013 read withRule 8(2) of the Companies (Accounts) Rules 2014 is set out as Annexure [II].
All Related Party Transactions are placed before the Audit Committee as also the Boardfor approval. The policy on Related Party Transactions as approved by the Board isuploaded on the Company's website.
Apart from receiving remuneration by executive directors and sitting fees by Nonexecutive directors none of the Directors has any pecuniary relationships or transactionsvis-a-vis the Company.
Your Directors draw attention of the members to Note 38 to the financial statementwhich sets out related party disclosure.
STATUTORY AUDITORS AND AUDITORS' REPORT:
In terms of the provisions of Section 139 of the Companies Act 2013 read with theCompanies (Audit and Auditors) Rules 2014 the period of office of MSP & Co.Chartered Accountants (Firm Registration No. 107565W) as the Statutory Auditors of theCompany expires with the conclusion of this ensuing Annual General Meeting (AGM). TheBoard places on record its appreciation for the contribution of M/s. MSP & Co.Chartered Accountants during their tenure as the Statutory Auditors of the Company.
Accordingly as per the provisions of Section 139(2) Companies Act 2013 it ismandatory to rotate the Statutory Auditors at the ensuing AGM. Upon the recommendation ofAudit Committee the Board of Directors has at its Meeting held on 10th August2017 recommended appointment of M/s. Hitesh Shah & Associates Chartered Accountants(Firm Registration No. 103716W) as the new Statutory Auditors of the Company to holdoffice for one term of 5 years commencing from conclusion of the ensuing 55thAnnual General Meeting upto the 60th Annual General Meeting of the Company tobe held in calendar year 2022.
The Company has received a certificate from the proposed Statutory Auditors to theeffect that their appointment if made shall be in compliance with the provisions ofSection 139 and 141 of the Companies Act 2013. Accordingly the Board proposesappointment of M/s. Hitesh Shah & Associates Chartered Accountants as the StatutoryAuditors of the Company in place of M/s. MSP & Co. to hold office from the conclusionof this AGM until the conclusion of the 60th AGM of your Company. Necessary resolutionseeking approval of the members for appointment of new Statutory Auditors has beenincorporated in the Notice convening the Annual General Meeting forming part of thisAnnual Report.
The Auditors' Report for the financial year 2016-17 on the financial statements of theCompany which is a part of this Annual Report does not contain any qualificationreservation or adverse remark.
To comply with conditions of Corporate Governance pursuant to regulation 34 read withschedule V of SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 aManagement Discussion and Analysis Report Corporate Governance Report and Auditors'Certificate on the compliance of conditions of Corporate Governance are included in thisAnnual Report.
A Business Responsibility Report as required under Regulation 34 of SEBI (ListingObligations and Disclosures Requirements) Regulations 2015 is not applicable to theCompany as the same is applicable for top 100 listed entities based on marketcapitalization.
Dividend Distribution Policy as required under Regulation 43A of SEBI (ListingObligations and Disclosures Requirements) Regulations 2015 is not applicable to theCompany as the same is applicable for top 500 listed entities based on marketcapitalization.
SECRETARIAL AUDIT REPORT:
Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. Dinesh Kumar Deora Practicing Company Secretary to undertake theSecretarial Audit of the Company. The Report of the Secretarial Audit Report for thefinancial year ended 31st March 2017 is set out as "Annexure [III]"to this Report.
EXTRACT OF ANNUAL RETURN:
The details forming part of the extract of the Annual Return in Form MGT- 9 inaccordance with Section 92(3) of the Companies Act 2013 read with the Companies(Management and Administration) Rules 2014 are set out herewith as "Annexure[IV]" to this Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
As stipulated under Section 134 of the Companies Act 2013 read with the Companies(Accounts) Rules 2014.
|(A) CONSERVATION OF ENERGY: |
(i) The steps taken or impact on conservation of energy
|: Energy conservation continues to receive priority attention at all levels. All efforts are made to conserve and optimize use of energy with continuous monitoring improvement in Maintenance systems and through improved operational techniques. |
|(ii) The steps taken by the Company for utilizing alternate sources of energy ||: The Company continues its in-house programme of enlightening and educating its commercial vehicle drivers for greater fuel efficiencies. All the vehicles owned by the Company undergo an intensive Planned Preventive Maintenance (PPM) drill to keep the vehicles in top running condition with special emphasis on fuel conservation. Also planning to use Bio-fuel for enhancing more efficiency of vehicles. |
|(iii) The capital investment on energy conservation equipments ||: The Company has on going process to conserve the energy by replacement of old electronic devices and installation of new efficient power saving devices whenever required. |
No material capital investment incurred by the Company during the year 2016-17.
|(B) TECHNOLOGY ABSORPTION: || |
|(i) The efforts made towards technology absorption ||: Updating of technology is a continuous process; appropriate technology is implemented and adapted by the Company for innovation. Efforts are continuously made to develop new products required in the Transport and Logistics Industry. |
|(ii) The benefits derived ||: The Company has developed in house web- based application for complete logistics operation's requirements which helping order processing and tracking the shipments with the entire operation cycle of the GCNs and improving dispatch and delivery efficiency. |
|(iii) Imported Technology |
(iv) The expenditure incurred on Research and Development
|: There is no imported technology imported during the last three years. |
: No expenditure is incurred on Research and Development by the Company during the year 2016-17.
(C) FOREIGN EXCHANGE EARNINGS AND OUTGO:
|( ' in lakhs) |
| ||Year ended ||Year ended |
| ||31s1 March 2017 ||31st March 2016 |
|Earnings in Foreign Exchange || || |
|Air Freight Billing and other expenses (Net) ||Nil ||1.62 |
|TOTAL ... ||Nil ||1.62 |
|Expenditure in Foreign Currency || || |
|Membership and Subscription Fees ||0.42 ||0.41 |
|Travelling (excluding air fare) ||1.01 ||3.06 |
|TOTAL ... ||1.43 ||3.47 |
PARTICULARS OF EMPLOYEES:
The Directors sincerely appreciate efforts put in by employees of the Company at alllevels and thank them for their contribution in achieving the overall results during theyear.
Disclosure pertaining to the remuneration and other details as required under Section197(2) of the Companies Act 2013 and Rule 5(1) of The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is enclosed as "Annexure [V]"to this report.
The information required pursuant to Section 197 read with Rule 5(2) of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company will be provided upon request. In terms of Section 136 of the Act theReport and Accounts are being sent to the Members and others entitled thereto excludingthis information which is available for inspection by the Members at the Registered Officeof the Company during business hours on working days of the Company up to the date of theensuing Annual General Meeting. If any Member is interested in obtaining a copy thereofsuch Member may write to the Company Secretary in this regard.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
The Company has in place Sexual Harassment Policy in line with the requirements of TheSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.The internal committee has been set up to redress complaints received regarding sexualharassment. All employees are covered under this policy.
The following is the summary of sexual harassment complaints received and disposed offduring the financial year 2016-17:
|No of Complaints received No of Complaints disposed off ||: Nil : Nil |
DIRECTORS' RESPONSIBILITY STATEMENT:
The Directors would like to inform the members that the Audited Accounts for thefinancial year ended 31st March 2017 are in
full conformity with the requirement of the Companies Act 2013.
In terms of Section 134(3)(c) of the Companies Act 2013 the Directors based on therepresentation received from the
Operating Management confirm that:
1) in the preparation of the annual accounts for the year ended March 31 2017 theapplicable accounting standards and Schedule III of the Companies Act 2013 have beenfollowed and there are no material departures from the same;
2) the Directors have selected such accounting policies and applied them consistentlyand made judgment and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at 31st March 2017 and of theprofits of the Company for the financial year ended 31st March 2017;
3) the proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;
4) the Directors have prepared the Annual Accounts of the Company on a 'going concern'basis;
5) the Company has proper internal financial controls in place. However the Companycontinues to develop better controls for implementation in current financial year;
6) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
MATERIAL CHANGES AND COMMITMENTS IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY:
1) During the period between the end of the financial year of the Company i.e. 31stMarch 2017 and the date of this report the Company on 12th July 2017 hasallotted 649311 equity shares of '10/- each against the conversion of equity warrants toStrategic Investor Frontline Strategy Limited a company registered in Mauritius notforming part of the Promoter Group of the Company upon its exercise of option forconversion of same number of convertible equity warrants fully paid up at an issue pricefor ' 115/- (including premium of '105/-) issued by the Company on preferential basis interms of SEBI (ICDR) Regulations 2009 and as per special resolution passed by the membersat their Extra Ordinary General Meeting held on 28th December 2015.
Consequent to such allotment the Paid-up Equity Share Capital of the Company hasincreased from '158866120/- consisting of 15886612 equity shares of '10/- each to '165359230/- consisting of 16535923 equity shares of '10/- each.
The Company on 14th July 2017 has cancelled 279689 number of equitywarrants allotted to Frontline Strategy Limited as the warrant holder did not exercise theright to convert the equity warrants into equity shares within the due date of 18 monthsfrom the date of allotment of equity warrants which was 13th July 2017.Accordingly the 25% of the consideration amount received at the time of allotment of theabove equity warrants in terms of Regulation 77 SEBI (ICDR) Regulations 2009 is forfeitedand will be transferred to Capital Reserve.
2) No significant and material orders were passed by the regulators or courts ortribunals which impact the going concern status and Company's operations in future.
The Directors place on record their appreciation of the continued assistance andsupport received from the Bankers Clients Stakeholders and Fixed Deposit Holders in theendeavors of the Company.
|Registered Office : |
Patel House 5th Floor Plot No. 48 Gazdarbandh North Avenue Road Santacruz (West)
Mumbai - 400 054.
|For and on behall |
AREEF A. PATEL
|F of the Board of Directors |
- Executive Vice Chairman
|Mumbai dated 10th August 2017 ||P. S. G. NAIR |
|- Director |