Your Directors are pleased to present the Thirty Fourth Annual Report of your Companytogether with the Audited Financial Statements for the financial year ended 31stMarch 2017.
1. SUMMARY OF FINANCIAL RESULTS
|Particulars ||Year Ended 31st March 2017 ||Year Ended 31st March 2016 |
|Total Income ||181238.33 ||173120.09 |
|Profit Before Finance Charges and Depreciation ||22748.13 ||27932.10 |
|Finance Charges ||2400.21 ||3162.79 |
|Provision for Depreciation ||9817.85 ||8969.54 |
|Net Profit Before Tax (incl. exceptional income) ||10530.07 ||15799.77 |
|Tax Expense ||3482.81 ||5375.68 |
|Net Profit After Tax ||7047.26 ||10424.09 |
|Other comprehensive income ||75.98 ||(301.58) |
|Interim Dividend on Equity Shares ||(3649.74) ||(4562.17) |
|Tax on Interim Dividend ||(743.00) ||(928.75) |
|Transfer to General Reserve ||(704.73) ||(1023.13) |
|Surplus carried to Balance Sheet ||2025.77 ||3608.46 |
2. OPERATING HIGHLIGHTS / STATE OF COMPANY'S AFFAIRS
The Company has prepared the Financial Statements under Indian Accounting Standards(Ind AS) for the first time. The details of various adjustments to the Financial Statementnecessitated from such implementation have been covered in the Notes to the FinancialStatements.
During the year under consideration your Company had a gross income of ' 181238.33lakhs as against previous year's gross income ' 173120.09 lakhs depicting a growth rateof 4.69%. The Company has earned a Profit Before Tax (PBT) of ' 10530.07 lakhs as againstthe Profit Before Tax of ' 15799.77 lakhs in the previous year.
The Company's Goods Transport Division achieved a turnover of ' 142615.26 lakhsthereby registering a growth rate of 5% as compared to the previous year. The growth inother verticals including bus operations was marginal. However the dip in Net profits ascompared to the previous year was mainly due to unhealthy competition in passengertransport marked increase in diesel cost and non availability of bio diesel whichresulted in erosion of margins. During the year the Company earned a net profit of'7047.26 lakhs. The Company has initiated cost cutting and other remedial measures toarrest this decline.
3. SHARE CAPITAL
The Paid Up Equity Share Capital as at 31st March 2017 stood at '9124.35Lakhs. During the year under review the Company has not issued shares with differentialvoting rights nor has granted any stock options or sweat equity. As on 31st March2017 none of the Directors of the Company hold instruments convertible into equity sharesof the Company.
4. CHANGE IN THE NATURE OF BUSINESS
There is no change in nature of business of the Company. Your Company continues to beone of the leading Logistics service providers in the country. The service offering of theCompany in the Logistics space are Goods transport Passenger transport and Courierservices apart from Transport of passengers by air and Wind Power Generation verticals.
5. CAPITAL EXPENDITURE
During the Financial Year 2016-17 the company has incurred a capital expenditure of'7856.14 lakhs. Out of the same an amount of '6157.01 lakhs was invested on fleetaddition. Other capex components included the cost incurred on additions to BuildingsPlant & Equipment Office Equipment Leasehold Improvements and Furniture &Fittings.
During the Financial year 2016-17 your directors declared Interim Dividend at the rateof 40% translating to '4.00 per equity share. The Board recommends no further dividend andproposes that the interim dividend so declared and paid be treated as the final dividendfor the financial year 2016-17.
7. TRANSFER OF UNPAID AND UNCLAIMED AMOUNT TO IEPF
During the year under consideration no amount was due for transfer to IEPF as persection 125 of the Companies Act 2013.
The details of unclaimed dividend and IPO share application money along with their duedates for transfer to IEPF is provided in the Corporate Governance Report which forms partof this Annual Report.
8. TRANSFER TO RESERVES
The Company has transferred an amount of ' 704.73 lakhs to the General Reserve out ofcurrent year's profits.
9. SUBSIDIARY COMPANIES
The Company does not have any subsidiary.
10. FIXED DEPOSITS
The Company has not accepted any deposits during the year within the meaning of Section73 of the Companies Act 2013 and the Rules made thereunder.
11. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The company has not given any loans or guarantees covered under the provisions ofSection 186 of the Companies Act 2013.
Details of investments made by the Company are given in the notes to the FinancialStatements.
12. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 (hereinafter called as SEBI Listing Regulations) read with Schedule V thereto ispresented in a separate section forming part of this Annual Report.
13. BUSINESS RESPONSIBILITY REPORT
Securities Exchange Board of India vide its notification no. SEBI/LAD-NRO/GN/2015-16/27dated 22nd December 2015 has amended the SEBI Listing Regulations mandating thetop five hundred listed companies to include a report on business responsibility. The sameforms part of this Annual Report.
14. CORPORATE GOVERNANCE
The Company is committed to maintain the steady standards of corporate governance andadhere to the corporate governance requirements set out under extant law. The report oncorporate governance as stipulated under Regulation 34 of the SEBI Listing Regulationsread with Schedule V thereto forms part of this Annual Report. The requisite certificatefrom the Auditors of the Company confirming compliance with the conditions of corporategovernance as stipulated under the aforesaid Regulations as also the related certificatefrom CEO/ CFO are attached to the report on corporate governance.
15. BOARD'S COMPOSITION AND INDEPENDENCE
The composition of the Board is in conformity with Section 149 of the Companies Act2013 and Regulation 17 of the SEBI Listing Regulations which stipulates that the Boardshould have optimum combination of executive and non-executive directors with at least onewoman director and at least 50% of the Board should consist of independent directors asthe Chairman of our Board is an executive director.
As on 31st March 2017 the Board comprised of twelve Directors. Out ofthese two are Executive Directors - Chairman & Managing Director and ManagingDirector who are also the Promoters of the Company.
Of the ten Non-Executive Directors six are Independent Directors including one WomanDirector who is an Independent Director. All the Directors possess the requisitequalifications expertise and experience in general corporate management financebanking laws and other allied fields enabling them to contribute effectively in theircapacity as Directors of the Company.
None of the Directors of the Company are related to each other except Dr. VijaySankeshwar Chairman & Managing Director (CMD) and Mr. Anand Sankeshwar ManagingDirector (MD).
All Independent Directors have given due declarations that they meet the criteria ofindependence as laid down under Section 149(7) of the Companies Act 2013 and under extantprovisions of the SEBI Listing Regulations.
16. NUMBER OF MEETINGS OF THE BOARD
During the year four board meetings were held details of which are provided in theCorporate Governance Report. The intervening gap between the meetings was in compliancewith the related provisions of the Companies Act 2013.
17. DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
There was no change in Directors during the year under consideration. During thecurrent year Mr. K N Umesh was appointed as an Additional Director who holds office uptothe date of Annual General Meeting (AGM). He was also appointed as a Whole Time Directorsubject to the approval of members. A Notice has been received from a member for hisappointment as a Director at the AGM. The Board recommends his appointment as a Whole TimeDirector at the AGM. The said appointment was made in compliance with Regulation 17 ofSEBI Listing Regulations with respect to composition of Board as Mr. S R Prabhu hasresigned from his office as a Director w.e.f. 19th May 2017.
The tenure of Dr. Vijay Sankeshwar Chairman & Managing Director concluded on 31stDecember 2016 and pursuant to recommendation by Nomination and Remuneration committee theBoard of Directors at their meeting held on 27th October 2016 re-appointed himas the Chairman and Managing Director of the Company w.e.f. 1st January 2017for a period of 5 years. The said re-appointment needs approval of Shareholders at the 34thAGM of the Company. Accordingly a resolution alongwith explanatory statement as requiredunder the extant provisions of the Companies Act 2013 is provided in Notice of the 34thAGM. Board recommends the re-appointment of Dr. Vijay Sankeshwar as the Chairman andManaging Director of the Company.
Dr. Ashok Shettar Non-Executive Director retires by rotation owing to his tenurebeing the longest amongst retiring directors and being eligible offers himself forre-appointment. The Board recommends his re-appointment.
Mr. Ramesh Shetty Non-Executive Director though being eligible has expressedunwillingness to continue as Director of the Company. Board is in receipt of a noticeunder Section 160 of the Companies Act 2013 alongwith the requisite deposit from a memberof the Company proposing the candidature of Mr. L R Bhat for the office of Director. Boardrecommends the appointment of Mr. L R Bhat as a Whole Time Director liable to retire byrotation.
None of the Independent Directors will retire at the ensuing AGM.
The Company was in receipt of resignation letter dated 04th May 2015 whereinMr. S R Prabhu Non-Executive Director of the Company had requested the Board to relievehim from duties as Director of the Company w.e.f. 19th May 2017. The Board atthe meeting held on 19th May 2017 accepted the resignation and placed on recordits appreciation for his support as well as his valuable contribution for the functioningof the Board.
18. STATUTORY DISCLOSURES
None of the Directors of your Company are disqualified as per provisions of Section164(2) of the Companies Act 2013. Your Directors have made necessary disclosures asrequired under various provisions of the Companies Act 2013 and SEBI Listing Regulations.
19. COMMITTEES OF THE BOARD
The Board has the following committees:
a. Audit Committee
b. Nomination and Remuneration Committee
c. Corporate Social Responsibility Committee
d. Stakeholders Relationship Committee
e. Risk Management Committee
f. Administration Committee
g. Share Transfer Committee
h. Finance Committee
Details such as terms of reference powers functions meetings membership ofcommittee attendance of Directors etc. are dealt with in Corporate Governance Reportforming part of this Annual Report.
Board has accepted all the recommendations made by the Audit Committee during the year.
20. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and SEBI Listing Regulations theBoard has carried out an evaluation of its own performance the Directors (includingIndependent Non Executive and Executive Directors) individually the performance of itsChairman as well as the evaluation of the working of its Committees. The manner in whichthe evaluation has been carried out has been explained in the Corporate Governance Reportwhich forms part of this Annual Report.
21. BOARD DIVERSITY
A diverse Board enables efficient functioning through differences in perspective andskill and also fosters differentiated thought processes at the back of varied industrialand management expertise gender and knowledge. The Board recognizes the importance of adiverse composition and has adopted a Board Diversity policy which sets out the approachto diversity.
The said policy can be accessed thru the following link.
22. DIRECTOR'S RESPONSIBILITY STATEMENT
In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that:
i) In the preparation of the annual accounts the applicable accounting standards(IndAS) have been followed along with proper explanation relating to material departures.
ii) The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the Financial Year and ofthe profit or loss of the Company for that period.
iii) The directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.
iv) The directors have prepared the annual accounts on a going concern basis.
v) The directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively.
vi) The directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such system were adequate and operating effectively.
Based on the framework of internal financial controls established and maintained by theCompany reviews performed by the Management in concurrence with the Audit Committee yourBoard is of the opinion that the Company's internal controls were adequate and effectiveas on 31st March 2017.
23. RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the Financial Year were onarm's length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the Company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the Company at large.
All related party transactions pre-cleared by the Audit Committee and these are placedbefore the Audit Committee as also to the Board for approval. Omnibus approval wasobtained semi annually for transactions which are of recurring nature. A statementcontaining details of all transactions entered into pursuant to omnibus approval areplaced before the Audit Committee and the Board for review and approval on a quarterlybasis.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board of Directors of the Company can be viewed on thewebsite of the Company thru the following link.
There were no material significant related party transactions entered between theCompany Directors Key Managerial Personnel or their relatives. All thecontracts/arrangements/transactions entered into by the Company with the related partiesduring the Financial Year 2016-17 were in the ordinary course of business and on an arm'slength basis. In our opinion there were no "material" transactions that warranta disclosure in this report.
Accordingly particulars of contracts or arrangements with related parties referred toin Section 188(1) along with the justification for entering into such contract orarrangement in Form AOC-2 does not form a part of this report.
24. NOMINATION AND REMUNERATION POLICY
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration including criteria for determining qualifications positive attributes andother matters provided under sub section (3) of section 178 of the Companies Act 2013.The Remuneration Policy is stated in the Corporate Governance Report and also annexed tothis report as Annexure A. The said policy alternatively can also be accessed on thewebsite of the Company at the following link:
25. CODE OF CONDUCT
The Board of Directors have approved a Code of Conduct which is applicable to themembers of the Board and specified employees in the course of day to day businessoperations of the Company. The Company believes in "Zero Tolerance" againstbribery corruption and unethical dealings / behavior in any form and the Board has laiddown directives to counter such acts. The code of conduct has also been placed on theCompany's website. The Code lays down the standard procedure of business conduct which isexpected to be followed by the Directors and the designated employees in their businessdealings and in particular on matters relating to integrity in the work place in businesspractices and in dealing with stakeholders. The Code gives guidance on the expectedbehaviour from an employee in a given situation and the reporting structure. All the BoardMembers and the Senior Management personnel have confirmed compliance with the Code.
26. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a Vigil Mechanism Policy to deal with instances of fraud andmismanagement if any. Staying true to our core values being committed to high standardsof Corporate Governance and stakeholder responsibility the said policy ensures thatstrict confidentiality is maintained in respect of whistle blowers whilst dealing withconcerns and also specified that no discrimination will be meted out to any person for agenuinely raised concern and also provides a direct access to the Chairman of the AuditCommittee. During the year under review none of the personnel have been denied access tothe Chairman of Audit Committee.
The Vigil Mechanism policy is available on the website of the Company and can beaccessed at the following link. http://vrlgroup.in/investor_download/vigil_Mechanism.pdf
27. PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Internal Procedures and Conduct for RegulatingMonitoring and Reporting of Trading by Insiders with a view to regulate trading insecurities by the Directors and certain designated employees of the Company. The Coderequires pre-clearance for dealing in the Company's shares and prohibits the purchase orsale of Company shares by the Directors and designated employees while in possession ofunpublished price sensitive information in relation to the Company and during the periodwhen the trading window is closed. The Board is responsible for implementation of theCode.
The said code is available on the website of the Company and can be accessed at thefollowing link. http://vrlgroup.in/vrl_investor_desk.aspx?display=policies
28. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an internal control system commensurate with the size scale andcomplexity of its operations. The Board of the Company had laid down policies guidelinesprocedures and structure to enable implementation of appropriate internal financialcontrols across the Company. These control processes enable and ensure the orderly andefficient conduct of Company's business including safeguarding of assets prevention anddetection of frauds and errors the accuracy and completeness of the Accounting recordsand timely preparation & disclosure of financial statements. These controls alsoidentify the risks and provides for means to minimize / mitigate the risks affecting thebusiness of the Company as a whole. Auditors as required under the Companies Act 2013have also certified that these internal financial controls are in order and effective inmitigating the risks.
The Company's internal audit department enables the management to mitigate the risksand prevent non-compliance of laws which would affect the financial position of theCompany. The scope and authority of the Internal Audit function is well defined and tomaintain its objectivity and independence the Internal Audit function reports to theChairman of the Audit Committee of the Board as well as directly to the Chairman &Managing Director. The internal audit department monitors and evaluates the efficacy andadequacy of internal control system in the Company its compliance with operating systemsaccounting procedures and policies at all locations of the Company. Based on the internalaudit report from time to time the management undertakes corrective actions in theirrespective areas and thereby strengthen the controls. Significant audit observations andrecommendations along with corrective actions thereon are presented to the AuditCommittee.
29. BUSINESS RISK MANAGEMENT:
Pursuant to section 134 (3) (n) of the Companies Act 2013 & Regulation 21 of theSEBI Listing Regulations the Company has constituted a risk management committee. Thedetails of the committee and its terms of reference are set out in the corporategovernance report forming part of this Annual Report. The material risks affecting Companyare identified along with related mitigation measures and elaborated in the riskmanagement policy of the Company which has also been hosted on the website of the Companyand can be accessed at the following link.
30. SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSUREREQUIREMENTS) REGULATIONS 2015
The Company's Equity Shares are listed on the BSE and NSE and has paid its annuallisting fees to these stock exchanges for the Financial Year 2017-2018. The Company hasformulated the following policies as required under SEBI Listing Regulations:
1. Policy for Preservation of Documents' under Regulation 9 of SEBI ListingRegulations. The said policy can be accessed at the following link:
http://vrlg roup. in/vrl_investor_desk.aspx?display=policies
2. Policy on Criteria for determining Materiality of Events/Information' underRegulation 30 of SEBI Listing Regulations. The said policy can be accessed thru thefollowing link:
http://vrlg roup. in/vrl_investor_desk.aspx?display=policies
3. Dividend distribution policy under Regulation 43A of SEBI Listing Regulations. Thesaid policy can be accessed at the following link:
http://vrlg roup. in/vrl_investor_desk.aspx?display=policies
31. AUDITORS & AUDIT REPORTS
a) Statutory Auditors & Audit Report:
In accordance with Section 139 of the Companies Act 2013 and Rules made thereundermembers at the 32nd AGM of the Company approved the appointment of StatutoryAuditors M/s Walker Chandiok and Co. Chartered Accountants LLP Mumbai for a period of 5years. The said appointment was subject to ratification by members every year.
M/s Walker Chandiok and Co Chartered Accountants LLP have expressed their eligibilityand willingness to continue as the Statutory Auditors of the Company. Board recommends theratification of their appointment as required under Section 139 of the Companies Act2013.
M/s. H. K. Veerbhaddrappa & Co Chartered Accountants Hubballi one of the jointstatutory auditors of the Company resigned during the year and subequently were appointedas the Internal Auditors of the Company.
There are no qualifications reservations or adverse remarks made by the StatutoryAuditors in their report for the financial year ended 31st March 2017. Pursuantto provisions of section 143 (12) of the Companies Act 2013 the Statutory Auditors havenot reported any incident of fraud to the Audit Committee during the year under review.
b) Cost Auditors & Cost Audit Report:
Section 148 of the Companies Act 2013 read with Rules made thereunder mandates everyCompany belonging to the category prescribed in the Rules to undertake a Cost Audit. Inour opinion Cost Records of Wind Power Division of the Company need to be audited as it iscovered in the category prescribed. In compliance with said provision Company hadappointed M/s S.K. Tikare & Co. Cost Accountants Dharwad to audit the cost recordsfor FY 2016-17. The Cost Auditor has submitted the Cost Audit report for FY 2016-17 andthe same is annexed as Annexure B to this report.
There are no qualifications reservations or adverse remarks made by the Cost Auditorsin their report for the financial year ended 31st March 2017.
Pursuant to the recommendation of the Audit Committee the Board of Directors havere-appointed M/s S K Tikare & Co. Cost Accountants Dharwad as the Cost Auditors forFY 2017-18 at a fixed remuneration of '60000/- subject to ratification by the members atthe ensuing AGM of the Company.
Board recommends the ratification of the said remuneration payable to the Cost Auditorin accordance with Section 148 of the Companies Act 2013 and the Rules made thereunder.
c) Secretarial Auditor & Secretarial Audit Report:
Pursuant to provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed Mr. R Parthasarathi Company Secretary in Practice to undertake the SecretarialAudit of the Company for FY 2016-17. The Secretarial Audit report is annexed herewith asAnnexure C.
There are no qualifications reservations or adverse remarks made by the SecretarialAuditor in his report for the financial year ended 31st March 2017. Response tothe comment made by the Secretarial Auditor in respect of the Company not fully expendingthe requisite quantum of CSR spend during the year as required under Section 135 of theCompanies Act 2013 is given in Annual Report on CSR activities - Annexure D
Pursuant to the recommendation of the Audit Committee the Board of Directors havere-appointed Mr. R Parthasarathi Company Secretary in Practice to conduct the SecretarialAudit for FY 2017-18 at its meeting held on 19th May 2017.
32. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
As required under the provisions of the Section 135 of the Companies Act 2013 theBoard has constituted the Corporate Social Responsibility Committee which monitors andoversees various CSR initiatives and activities of the Company. The CSR Committeecomprises of four Directors three of whom are Independent Directors. The CSR Committeemet two times during the year. Further details such as composition terms functionsmeetings and attendance of directors of the said committee are provided in the CorporateGovernance report forming part of this Annual Report.
The Company has set up a trust - VRL Foundation for implementing CSR activities with afocus on Healthcare and Education. A detailed report containing details of CSR activities& contents of CSR policy is annexed as Annexure D.
CSR policy of the Company is available on the Company's website and can be accessedthrough the following link.
33. EXTRACT OF ANNUAL RETURN:
Extract of the Annual Return in form MGT-9 is annexed herewith as Annexure E.
34. DETAILS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
The particulars regarding Conservation of Energy Technology Absorption and ForeignExchange Earnings and expenditure are annexed hereto as Annexure F and forms part of thisReport.
35. PARTICULARS OF EMPLOYEES:
The information required pursuant to Section 197 read with Rule 5 (1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company forms part of this report and is annexed herewith as Annexure G.
A statement containing remuneration details of the top ten employees and the names ofevery employee who is in employment of the Company throughout the year and is in receiptof annual remuneration of '102 Lakhs or more or employed for a part of year and in receiptof ' 8.5 lakhs or more per month needs to be disclosed in the Board's report. As such theinformation is included as a part of Annexure G to this report.
36. MATERIAL CHANGES AND COMMITMENTS
There were no material changes and commitments that occurred subsequent to the end ofthe financial year till the date of this report which affects the financial position ofthe Company.
37. INDUSTRIAL RELATIONS
During the year under review your Company experienced cordial relationship withworkers and employees at all levels throughout the year.
38. SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts ortribunals impacting going concern status and company's operations for a foreseeablefuture.
39. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place a Policy for Prevention Prohibition and Punishment of SexualHarassment of Women at Work place in line with the requirements of The Sexual Harassmentof Women at the Workplace (Prevention Prohibition & Redressal) Act 2013. InternalComplaints Committee has been set up to redress complaints received regarding sexualharassment. All employees are covered under this policy. During the year under reviewthere were no cases filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
40. ACKNOWLEDGMENTS AND APPRECIATION
Your Directors take this opportunity to thank the Company's Customers ShareholdersInvestors Suppliers Bankers Financial Institutions and Central & State Governmentsfor their consistent support to the Company. The Directors also wish to place on recordtheir appreciation to the employees at all levels for their hard work dedication andcommitment.
For and on behalf of the Board
Dr. Vijay Sankeshwar
Chairman & Managing Director
Date: 19th May 2017