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Avenue Supermarts Ltd.

BSE: 540376 Sector: Others
NSE: DMART ISIN Code: INE192R01011
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OPEN 2803.00
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VOLUME 20503
52-Week high 3328.00
52-Week low 1900.00
P/E 183.68
Mkt Cap.(Rs cr) 186,807
Buy Price 2883.80
Buy Qty 4.00
Sell Price 2886.40
Sell Qty 9.00
OPEN 2803.00
CLOSE 2834.55
VOLUME 20503
52-Week high 3328.00
52-Week low 1900.00
P/E 183.68
Mkt Cap.(Rs cr) 186,807
Buy Price 2883.80
Buy Qty 4.00
Sell Price 2886.40
Sell Qty 9.00

Avenue Supermarts Ltd. (DMART) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the Twentieth Annual Report of Avenue SupermartsLimited ("the Company") together with the audited financial statements of theCompany for the financial year ended 31st March 2020.

FINANCIAL PERFORMANCE

The Company's financial performance during the year ended 31st March 2020compared to the previous financial year is summarised below:

(Rs. in crore)

Particulars Standalone Consolidated
2019-20 2018-19 2019-20 2018-19
Income from operations 24675.01 19916.25 24870.20 20004.52
Other Income 63.33 51.41 59.99 48.35
Total Income 24738.34 19967.66 24930.19 20052.87
Expenses 22955.45 18520.02 23185.42 18630.93
Profit before tax 1782.89 1447.64 1744.77 1421.94
Less: Tax Expense 433.00 511.29 443.79 519.48
Profit after Tax 1349.89 936.35 1300.98 902.46
Other comprehensive Income (net of taxes) (3.79) (1.27) (4.08) (1.31)
Total Comprehensive income for the year 1346.10 935.08 1296.90 901.15

The financial statements for the year ended 31st March 2020 have beenprepared as per the Indian Accounting Standards (Ind AS).

BUSINESS AND OPERATIONS

During the year under review your Company recorded steady growth and opened maximumstores ever in its history by adding 38 new stores. We now have presence across 11 statesand 1_union territory with 214 stores as of March 2020. We continued to provide value toour customers with the existing approach of Everyday Low Cost/Everyday Low Priceprinciple.

On standalone basis the total income for FY 2020 was Rs. 24738.34 crore which is23.89 % higher over the previous year's income of Rs. 19967.66 crore. Our total income onconsolidated basis for FY 2020 was Rs. 24930.19 crore as against Rs. 20052.87 croreduring FY 2019.

On standalone basis the net profit after tax (PAT) for FY 2020 stood at Rs. 1349.89crore as against previous year's net profit of Rs. 936.35 crore thereby recording a growthof 44.17%. Our net profit after tax (PAT) on consolidated basis for FY 2020 amounted forRs. 1300.98 crore as compared to Rs. 902.46 crore in the previous year.

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

CREDIT RATING

Your Company has been rated by CRISIL Limited ("CRISIL") vide its letterdated 11th October 2019 for its debentures and long-term bank facilities/non-convertible debenture/ commercial paper programmes as follows:

Sr. No. Instruments Rating
1 Bank Loan Facilities of Rs. 750 crores CRISIL AA+/Stable (Reaffirmed)
2 Non-Convertible Debentures of Rs. 200 crores CRISIL AA+/Stable (Assigned)
3 Non-Convertible Debentures of Rs. 323 crores CRISIL AA+/Stable (Reaffirmed)
4 Commercial Paper of Rs. 500 crores CRISIL A1+ (Reaffirmed)

With the above rating affirmations the Company continues to enjoy high credit qualityrating for its debentures and long-term bank facilities/commercial paper programme.

On request of the Company CARE Ratings Limited has withdrawn its rating ("CAREA1+"(CARE A one plus)) assigned to Company's Commercial paper issue w.e.f. 12thMarch 2020 since the Company has not placed the Commercial Paper and there is nooutstanding issue as on date.

UTILISATION OF IPO PROCEEDS

The proceeds of funds raised under IPO by the Company are being fully utilised as perObjects of the Issue. The disclosure in compliance with the Regulation 32 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referredto as "the_Listing Regulations") is as under:

Sr. No. Particulars Projected utilisation of IPO proceeds as per the Objects of the Issue (Rs. in crore) Actual utilisation of IPO proceeds upto 31st March 2020 (Rs. in crore) Deviation (if any)
1. Repayment or Prepayment of a portion of loans and redemption or early redemption of NCDs availed by the Company 1080.00 1080.00 NIL
2. Construction and purchase of fit outs for new stores 366.60 366.60 NIL
3. General Corporate expenses (excluding IPO expenses) 394.02 394.02 NIL
Total 1840.62 1840.62

The Company had appointed HDFC Bank Limited as the Monitoring Agency in accordance withthe Regulation 41 of the Securities and Exchange Board of India (Issue of Capital andDisclosure Requirements) Regulations 2018 as amended for monitoring the use of proceedsof IPO of the Company.

There has been no deviation in the utilisation of IPO proceeds by the Company asmentioned in the Prospectus and actuals.

UTILISATION OF QIP PROCEEDS

The Company allotted 20000000 equity shares through Qualified Institutional Placement(QIP) at an issue price of Rs. 2049 per equity share (including a premium of Rs. 2039per equity share) aggregating to Rs. 4098 crore on 11th February 2020. Theissue was made in accordance with the SEBI (Issue of Capital and Disclosure Requirements)Regulations 2018 as amended and Sections 42 and 62 of the Companies Act 2013 asamended including the rules made thereunder.

The proceeds of funds raised under Qualified Institutional Placement of the Company areutilised as per Objects of the Issue.

The disclosure in compliance with the Regulation 32 (7A) of the Listing Regulations isas under:

Sr. No. Particulars Actual utilisation of QIP proceeds upto 31st March 2020 (Rs. in crore)
1. Repayment of Non-convertible Debentures 300.00
2. Repayment of WCDL/Commercial Paper 250.00
3. Repayment of Term Loan 158.00
4. WC/General Corporate expenses (Excluding QIP expenses) 302.00
Total 1010.00

Out of the total fund raised by the Company under Qualified Institutional Placement anamount of Rs. 3068 crore is unutilised as on 31st March 2020.

CHANGES IN SHARE CAPITAL

During the year the paid-up share capital of the Company increased as follows:

1. Pursuant to exercise of stock options under Avenue Supermarts Limited Employee StockOption Scheme 2016 by Employees of the Company and that of its subsidiary companies theCompany allotted 3690205 (Thirty Six Lakh Ninety Thousand Two Hundred and Five) EquityShares of Rs. 10/- (Rupees Ten) each at Rs. 299/- (Rupees Two Hundred and Ninty Nine) pershare {including a premium of Rs. 289/- (Rupees Two Hundred and Eighty Nine) per EquityShare} aggregating to Rs. 1103371295/- (Rupees One Hundred and Ten Crore Thirty ThreeLakh Seventy One Thousand Two Hundred and Ninety Five). Pursuant to the said allotmentthe equity share capital of the Company increased from Rs. 6240844860/- (Six Hundredand Twenty Four Crore Eight Lakh Forty Four Thousand Eight Hundred and Sixty) divided into624084486 (Sixty Two Crore Forty Lakh Eighty Four Thousand Four Hundred and Eighty Six)equity shares of Rs. 10/- (Rupees Ten) each to Rs. 6277746910 (Six Hundred and TwentySeven Crore Seventy Seven Lakh Forty Six Thousand Nine Hundred and Ten) divided into627774691 (Sixty Two Crore Seventy Seven Lakh Seventy Four Thousand Six Hundred andNinety One) equity shares of Rs. 10/- (Rupees Ten) each.

2. Allotment of 20000000 (Two Crore) Equity Shares of face value Rs. 10 (Rupees Ten)each to eligible Qualified Institutional Buyers at an issue price of Rs. 2049/- (TwoThousand and Forty Nine) per Equity Share {including a premium of Rs. 2039/- (TwoThousand and Thirty Nine) per Equity Share} aggregating to Rs. 40980000000/- (RupeesFour Thousand and Ninety Eight Crore). Pursuant to the said allotment the equity sharecapital of the Company increased from Rs. 6277746910 (Six Hundred and Twenty SevenCrore Seventy Seven Lakh Forty Six Thousand Nine Hundred and Ten) divided into 627774691(Sixty Two Crore Seventy Seven Lakh Seventy Four Thousand Six Hundred and Ninety One)equity shares of Rs. 10/- (Rupees Ten) each to Rs. 6477746910 (Six Hundred and FortySeven Crore Seventy Seven Lakh Forty Six Thousand Nine Hundred and Ten) divided into647774691 (Sixty Four Crore Seventy Seven Lakh Seventy Four Thousand Six Hundred andNinety One) Equity Shares.

During FY 2019-20 there was no change in the authorised share capital of the Company.

The Company has neither issued any shares with differential rights as to dividendvoting or otherwise nor issued any sweat equity shares during the year under review.

NON-CONVERTIBLE DEBENTURES

During the year the Company allotted Non-convertible Debentures (NCD) in the followingtranches:

Sr. No. Description of NCD Date of Issue Amount (Rs. in crore) Date of early redemption
1. Secured Rated Unlisted Redeemable NCD 18.09.2019 100 18.03.2020
2. Secured Rated Listed Redeemable NCD 27.09.2019 100 27.03.2020
3. Secured Rated Unlisted Redeemable NCD 17.10.2019 100 17.03.2020

As on 31st March 2020 the outstanding amount of NCD issued in previousfinancial years is Rs. 34 crore.

MINIMUM PUBLIC SHAREHOLDING COMPLIANCE

Mr. Radhakishan S. Damani Mr. Gopikishan S. Damani Mrs. Shrikantadevi R. Damani andMrs. Kirandevi G. Damani the individual promoters of the Company sold 14800000 equityshares of the Company constituting 2.28% of the total paid-up capital of the Company tothe public in accordance with the "Comprehensive Guidelines on Offer for Sale (OFS)of Shares by Promoters through the Stock Exchange Mechanism" issued by the Securitiesand Exchange Board of India on 14th February 2020 and 17thFebruary 2020 respectively.

Consequently the Company is now compliant with the Minimum Public Shareholdingrequirements as mandated under Rules 19(2)(b) and 19A of the Securities Contracts(Regulation) Rules 1957 read with Regulation 38 of the Listing Regulations.

The breakup of Promoter and Public Shareholding of the Company post aforesaid sale ofshares is provided below:

Category No. of equity shares % of total paid-up share capital
Promoter and Promoter 485747156 74.99%
Group
Public 162027535 25.01%
Non-Promoter Non-Public - -
Total 647774691 100%

DIVIDEND

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

DIVIDEND DISTRIBUTION POLICY

The Dividend Distribution Policy adopted by your Company is available on the Company'swebsite at https://www.dmartindia.com/investor-relationship. The said Policy is disclosedunder Annexure-I to this Report.

TRANSFER TO RESERVES

The Company has not transferred any amount of profit to the reserves during thefinancial year under review.

CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Financial Statements have been prepared as per the relevant IndianAccounting Standards (Ind AS) as issued by the Institute of Chartered Accountants of Indiaand notified under Section 133 of the Companies Act 2013 with the rules made thereunder.The said Consolidated Financial Statements form part of this Annual Report.

REPORT ON PERFORMANCE OF SUBSIDIARIES ASSOCIATES AND JOINT VENTURE COMPANIES

The Company has 5 subsidiaries as on 31st March 2020. The details of whichare appended hereunder:

ALIGN RETAIL TRADES PRIVATE LIMITED (ARTPL)

ARTPL a wholly-owned subsidiary Company incorporated on 22nd September2006 is engaged in the business of packing and selling of grocery products spices dryfruits etc. Its revenue from operations for FY 2020 stood at Rs. 1177.62 crore againstRs. 920.10 crore in the previous year and the Company posted net profit after tax of Rs.24.81 crore for FY 2020 against Rs. 10.10 crore for FY 2019.

AVENUE FOOD PLAZA PRIVATE LIMITED (AFPPL):

AFPPL is a wholly-owned subsidiary Company incorporated on 8th June 2004.It is engaged in the business of operating food stalls at DMart stores. The revenue fromoperations of the Company for FY 2020 stood at Rs. 32.41 crore as against Rs. 23.59 crorefor FY 2019. The Company reported net profit after tax of Rs. 6.29 crore against Rs. 5.67crore for previous year.

AVENUE E-COMMERCE LIMITED (AEL)

AEL a subsidiary Company incorporated on 11th November 2014 is engaged inthe business of online grocery retail under the brand name "DMart Ready". AELcurrently operates its business in selected areas of Mumbai region. AEL allows itscustomers to order abroad range of grocery and household products through its mobile appDMart online grocery shopping and through the website www.dmart.in. Customers can eitherself-pick up their online orders from any designated Dmart Ready Pick-Up Points or getthem delivered at their door step.

AEL's revenue from operations for FY 2020 stood at Rs. 354.03 crore vis--vis Rs.143.59 crore in the FY 2019. The Company registered a loss of Rs. 79.71 crore in FY 2020against the loss of Rs. 50.82 crore in FY 2019.

NAHAR SETH & JOGANI DEVELOPERS PRIVATE LIMITED (NSJDPL):

NSJDPL subsidiary Company was incorporated on 21st February 2014 withmain object of amongst others development of land and construction. Revenue fromoperations of the Company for FY 2020 and FY 2019 was Rs. 0.75 crore and the Companyearned net profit after tax of Rs. 0.54 crore for FY 2020 against Rs. 0.47 crore for FY2019.

REFLECT WHOLESALE AND RETAIL PRIVATE LIMITED (RWRPL)

RWRPL a wholly-owned subsidiary Company was incorporated on 28th May 2018to carry on the business of wholesale and retail of goods and products. It is yet tocommence its operations.

The Company does not have any Joint Venture or Associate Company within the meaning ofSection 2(6) of the Companies Act 2013. No material change has taken place in the natureof business of the subsidiaries.

Pursuant to the first proviso to Section 129(3) of the Companies Act 2013 read withRule 5 and 8 of the Companies (Accounts) Rules 2014 the salient features of thefinancial statements and performance of each subsidiary in Form AOC-1 is disclosed under Annexure-IIand forms part of this Report.

Pursuant to the provisions of Section 136 of the Companies Act 2013 the financialstatements of the Company consolidated financial statements and separate auditedfinancial statements in respect of subsidiaries are available on the website of theCompany under web link https://www.dmartindia.com/investor-relationship. The same shallalso be sent to Members electronically who request for the same by sending e-mail toCompany at investorrelations@dmartindia.com from their registered e-mail address.

The Company has formulated a Policy for determining material subsidiaries. The saidpolicy is available on the website of the Company athttps://www.dmartindia.com/investor-relationship.

RELATED PARTY TRANSACTIONS

In compliance with the requirements of the Listing Regulations the Company has inplace a Policy on Related Party Transactions which is available on the website of theCompany https://www.dmartindia.com/investor-relationship.

All the related party transactions are placed before the Audit Committee for the reviewand approval. Prior omnibus approval is obtained for related party transactions which arerepetitive in nature. All related party transactions entered into by the Company duringthe financial year under review were in the ordinary course of business and on arm'slength basis and the same were in compliance with the applicable provisions of theCompanies Act 2013 read with the relevant rules made thereunder and the ListingRegulations. The transactions entered by the Company during the financial year underreview were in conformity with the Company's Policy on Related Party Transactions.

During the year 2019-20 your Company did not enter into any material related partytransactions. Accordingly disclosure with respect to the same in the Form AOC-2 interms of Section 134 of the Companies Act 2013 is not applicable.

PARTICULARS OF LOANS GUARANTEES INVESTMENTS AND SECURITIES

Particulars of loans given investments made guarantees given and securities providedduring the year under review and as covered under the provisions of Section 186 of theCompanies

Act 2013 have been disclosed in the notes to the standalone financial statementsforming part of the Annual Report.

MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors of the Company comprises of seven Directors of which three areExecutive Directors one Non-Executive Woman Director and three Independent Directors(including Woman Independent Director). The constitution of the Board of Directors of theCompany is in accordance with Section 149 of the Companies Act 2013 and Regulation 17 ofthe Listing Regulations as amended from time to time.

APPOINTMENTS

Re-appointment of Mr. Ramesh Damani

The members of the Company re-appointed Mr. Ramesh Damani (DIN: 00304347) as anIndependent Director of the Company for a term of five years commencing from 1stApril 2019 through Postal Ballot on 6th March 2019.

Re-appointment of Mr. Ramakant Baheti

Mr. Ramakant Baheti (DIN: 00246480) was re-appointed as a Whole-time Director of theCompany designated as ‘Group Chief Financial Officer' for a term of five yearscommencing from 1st May 2019 by the members of the Company through PostalBallot on 6th March 2019.

Directors retiring by rotation

Pursuant to the provisions of Section 152 of the Companies Act 2013 read with therelevant rules made thereunder one-third of the Directors are liable to retire byrotation every year and if eligible offer themselves for re-appointment at the AGM.

Mr. Ramakant Baheti (DIN: 00246480) Director being longest in the office is liable toretire by rotation at the ensuing Annual General Meeting of the Company and he beingeligible has offered himself for re-appointment. The Board of Directors recommend hisre-appointment and the matter is being placed for seeking approval of members at theensuing Annual General Meeting of the Company.

Pursuant to Regulation 36 of the Listing Regulations read with Secretarial Standard-2on General Meetings brief details of Mr. Ramakant Baheti are provided as an Annexure tothe Notice of the Annual General Meeting.

Key Managerial Personnel

During the year under review there was no change in the Key Managerial Personnel ofthe Company.

Independent Directors

In accordance with Section 149 (7) of the Companies Act 2013 and Regulation 16(1)(b)of the Listing Regulations as amended each Independent Director of the Company hasprovided a written declaration confirming that he/she meets the criteria of independenceas stipulated under Section 149(6) of the Companies Act 2013.

In the opinion of the Board Independent Directors fulfill the conditions specified inCompanies Act 2013 read with the Schedules and Rules issued thereunder as well as ListingRegulations and are independent from Management.

All the Independent Directors of the Company have enrolled their names in the onlinedatabase of Independent Directors by Indian Institute of Corporate Affairs in terms of therecently introduced regulatory requirements. Also the online proficiency self-assessmenttest as mandated will be undertaken by those Independent Directors of the Company who arenot exempted within the prescribed timelines.

Familiarisation Programme

The Company has conducted familiarisation programmes for the Independent Directors ofthe Company covering the matters as specified in Regulation 25(7) of the ListingRegulations. The details of the training and familiarisation programme conducted by theCompany are hosted on the Company's website under the web linkhttps://www.dmartindia.com/investor-relationship.

DISCLOSURES RELATED TO BOARD COMMITTEES AND POLICIES

Board Meetings

The Board of Directors met Six (6) times during the financial year under review. Thedetails of the Board meetings and attendance of each Director there at are provided in theCorporate Governance Report forming part of the Annual Report.

Audit Committee

The Company's Audit Committee composition is in line with the requirements of Section177 of the Companies Act 2013 and Regulation 18 of the Listing Regulations.

The composition of the Audit Committee is as under:

Sr. No. Name Category Designation
1. Mr. Chandrashekhar Bhave Non-Executive and Independent Director Chairman
2. Mr. Ramesh Damani Non-Executive and Independent Director Member
3. Ms. Kalpana Unadkat Non-Executive and Independent Director Member
4. Mr. Ramakant Baheti Executive Director Member

The Members of the Audit Committee are financially literate and have requisiteaccounting and financial management expertise. The terms of reference of the AuditCommittee and the particulars of meetings held and attendance there at are mentioned inthe Corporate Governance Report forming part of the Annual Report. During the year underreview all the recommendations made by the Audit Committee were accepted by the Board.

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 Regulation 19 of the ListingRegulations.

The composition of the Nomination and Remuneration Committee is as under:

Sr. No. Name Category Designation
1. Mr. Chandrashekhar Bhave Non-Executive and Independent Director Chairman
2. Mr. Ramesh Damani Non-Executive and Independent Director Member
3. Mrs. Manjri Chandak Non-Executive Director Member

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

The Company has formulated Nomination and Remuneration Policy which sets standards fornomination remuneration and evaluation of the Directors Key Managerial Personnel SeniorManagement Personnel and other employees of the Company.

The Nomination and Remuneration Policy of the Company is hosted on the Company'swebsite under the web link https://www.dmartindia.com/investor-relationship. TheNomination and Remuneration Policy of the Company is disclosed under Annexure-IIIand forms part of this report.

Stakeholders Relationship Committee

Pursuant to Section 178 of the Companies Act 2013 and Regulation 20 of the ListingRegulations the Stakeholders' Relationship Committee was constituted by the Board ofDirectors.

The composition of the Stakeholders Relationship Committee is as under:

Sr. No. Name Category Designation
1. Mrs. Manjri Chandak Non-Executive Director Chairperson
2. Mr. Ramesh Damani Non-Executive and Independent Director Member
3. Mr. Ramakant Baheti Executive Director Member

The brief terms of reference of the Stakeholders' Relationship Committee and theparticulars of meetings held and attendance thereat are mentioned in the CorporateGovernance 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 (CSRPolicy) indicating the activities to be undertaken;

Monitoring the implementation of framework of the CSR Policy; and

Recommending the amount to be spent on CSR activities.

The brief outline of the Company's CSR initiatives undertaken during the year underreview is disclosed in Annexure – IV in the format as prescribed in theCompanies (Corporate Social Responsibility Policy) Rules 2014. The Company's CSR Policyis placed on the website of the Company www.dmartindia.com.

The composition of the CSR Committee is as under:

Sr. No. Name Category Designation
1. Mr. Chandrashekhar Bhave Non-Executive and Independent Director Chairman
2. Mr. Ramesh Damani Non-Executive and Independent Director Member
3. Mrs. Manjri Chandak Non-Executive Director Member
4. Mr. Ramakant Baheti Executive Director Member

The brief terms of reference particulars of meetings held and attendance thereat arementioned in the Corporate Governance Report forming part of the Annual Report

Risk Management Committee

Pursuant to Regulation 21 of the Listing Regulations the Board has constituted RiskManagement Committee to frame implement and monitor risk management plan of the Company.The Board has adopted the Risk Management Policy and guidelines to mitigate foreseeablerisks avoid events situations or circumstances which may lead to negative consequenceson the Company's businesses. The major risks identified are systematically approachedthrough mitigating actions on continual basis. Risk evaluation is an ongoing andcontinuous process within the Company and it is regularly updated to the Board of theCompany.

The Risk Management Committee has been entrusted with the responsibility to assist theBoard in overseeing and approving the Company's enterprise wide risk management framework.A detailed analysis of the business risks and opportunities is given under ManagementDiscussion and Analysis Report.

The composition of the Risk Management Committee is as under:

Sr. No. Name Category Designation
1. Mr. Ignatius Navil Noronha Executive Director Chairman
2. Mr. Ramakant Baheti Executive Director Member
3. Mrs. Manjri Chandak Non-Executive Director Member
4. Mr. Ashutosh Dhar VP – Risk Management Member
5. Mr. Vikram Bhatia VP – Information Technology Member

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 2020; theBoard of Directors hereby confirms that:

a) in the preparation of annual accounts the applicable accounting standards had beenfollowed along with proper explanation relating to material departures;

b) such accounting policies have been selected and applied consistently and theDirectors made judgements 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 March2020 and of the 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

Pursuant to the provisions of Section 177(9) of the Companies Act 2013 read with Rule7 of the Companies (Meetings of Board and its Powers) Rules 2014 and in accordance withRegulation 22 of the Listing Regulations the Company had adopted ‘Vigil MechanismPolicy' for Directors and Employees of the Company to report concerns about unethicalbehaviour. The policy provides a mechanism which ensures adequate safeguards to Employeesand Directors from any victimisation on raising concerns of any violations of legal orregulatory requirements incorrect or misrepresentation of any financial statements andreports and so on. The employees of the Company have the right/option to report theirconcern/grievance to the Chairman of the Audit Committee.

The Company is committed to adhere to the highest standards of ethical moral and legalconduct of business operations. The Vigil Mechanism Policy is hosted on the Company'swebsite www.dmartindia.com.

Annual Evaluation of Directors Committees and Board

Pursuant to the provisions of the Companies Act 2013 and as per the ListingRegulations the Board of Directors has carried out annual performance evaluation of itsown performance the directors individually as well as the working of its Committees.

The performance of the Board as a whole and of its Committees was evaluated by theBoard through structured questionnaire which covered various aspects such as thecomposition and quality meetings and procedures contribution to Board processeseffectiveness of the functions allocated relationship with management professionaldevelopment adequacy appropriateness and timeliness of information etc.

Taking into consideration the responses received from the Individual Directors to thequestionnaire performance of the Board and its Committees was evaluated. The Directorsexpressed their satisfaction with the evaluation process.

In terms of requirements of Schedule IV of the Companies Act 2013 a separate meetingof Independent Directors of the Company was held on Saturday11th January 2020to review:

The performance of non-independent directors and the Board as a whole and itsCommittees thereof;

The performance of the Chairperson of the company taking into account the views ofexecutive directors and non-executive directors;

To assess the quality quantity and timeliness of the flow of information between theManagement and the Board.

Performance evaluation of Independent Directors was done by the entire Board excludingthe Independent Director being evaluated.

PARTICULARS OF EMPLOYEES

The disclosure pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 is annexed to this Report as Annexure-V.

Details of employee remuneration as required under provisions of Section 197 of theCompanies Act 2013 and rule 5(2) and rule 5(3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are available and shall be sent toMembers electronically who request for the same by sending e-mail to Company atinvestorrelations@dmartindia.com from their registered e-mail address.

Employee Stock Options

The Members of the ESOP Committee vide circular resolution dated 14th March2017 approved grant of 13973325 options under the ESOP Scheme 2016 to 4747 eligibleemployees of the Company irrespective of their grade pursuant to the eligibilitycriteria stipulated under the ESOP Scheme 2016.

The Employee Stock Option Scheme 2016 is being administered and monitored by the ESOPCommittee of the Company. During the year under review 3691105 options were vestedagainst which 3690205 options were exercised by 3985 employees of the Company and itssubsidiaries and 900 unexercised options were lapsed.

The scheme is in compliance with the SEBI (Share Based Employee Benefits) Regulations2014.

In terms of the provisions of the SEBI (Share Based Employee Benefits) Regulations2014 the details of the Stock Options granted under the aforesaid ESOP Scheme areuploaded on the website of the Company www.dmartindia.com.

A certificate from S R B C & Co. LLP Statutory Auditors of the Company has beenobtained by the Company with respect to implementation of Employee Stock Option Scheme2016 and the same shall be available for inspection by Members who request for the same bysending e-mail to Company at investorrelations@dmartindia.com from their registered e-mailaddress.

Internal Financial Control Systems and their adequacy

The details of the internal financial control systems and their adequacy are includedin Management Discussions and Analysis Report which forms part of the Annual Report.

AUDITORS AND REPORTS

The matters related to Auditors and their Reports are as under:

Statutory Auditors

S R B C & Co. LLP Chartered Accountants (Firm Registration No.: 324982E/E300003)were appointed as Statutory Auditors of your Company at the 17th Annual GeneralMeeting held on 6th September 2017 for a term of five consecutive years fromthe conclusion of that Annual General Meeting until the conclusion of 22ndAnnual General Meeting subject to ratification of their appointment by members at everyAnnual General Meeting of the Company. The requirement for annual ratification ofAuditors' appointment at the AGM has been omitted pursuant to the Companies (Amendment)Act 2017 notified on 7th May 2018. Accordingly no resolution is beingproposed for ratification of appointment of Statutory Auditors at this AGM. The StatutoryAuditors have given a confirmation to the effect that they are eligible to continue withtheir appointment and that they have not been disqualified in any manner from continuingas Statutory Auditors.

Observations of Statutory Auditors on Accounts for the year ended 31stMarch 2020

The Auditors Report for the financial year ended 31st March 2020 does notcontain any qualification adverse remark or reservation and therefore do not call forany further explanation or comments from the Board under Section 134(3) of the CompaniesAct 2013.

The Auditors have not reported any matter to the Company required to be disclosed underSection 143(12) of the Companies Act 2013.

Secretarial Audit Report for the year ended 31st March 2020

The Secretarial Audit Report pursuant to the provisions of Section 204 read withSection 134(3) of the Companies Act 2013 was obtained from M/s. Rathi and AssociatesPracticing Company Secretaries in Form MR-3 for the financial year 2019-20. TheSecretarial Audit Report does not contain any qualifications reservations or adverseremarks.

The said Report is disclosed under Annexure-VI and forms part to this report.

Internal Audit and Control

The Company has robust internal audit system for assessment of audit findings and itsmitigation. The Internal Audit function covers all the stores inventory audit stocktakes audit for project related accounts corporate accounts etc. Mr. Rajan Arora wasappointed as an Internal Auditor of the Company by the Board at its meeting held onSaturday 11th May 2019 and the Internal Auditor directly reports to the AuditCommittee for functional matters. The Audit Committee in its quarterly meetings reviewsthe internal audit and controls reports. Company's internal controls are commensurate withthe size and operations of the business. Continuous internal monitoring mechanism ensurestimely identification and redressal of issues.

OTHER DISCLOSURES

Other disclosures as per the provisions of Section 134 of the Companies Act 2013 readwith Companies (Accounts) Rules 2014 are furnished as under:

Extract of Annual Return

TheextractofannualreturninFromMGT-9asrequiredunderSection 92(3) of the Companies Act2013 and Rule 12 of the Companies (Management and Administration) Rules 2014 is disclosedunder Annexure-VII and forms part to this report and is also available on thewebsite of the Company at www.dmartindia.com.

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars as required to be furnished as per the provisions of Section 134(3) ofthe Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 withrespect to conservation of energy technology absorption foreign exchange earnings andoutgo are disclosed under Annexure–VIII which forms part of this Report.

Report on Corporate Governance and Management

Discussion and Analysis

A separate report on Corporate Governance is provided together with the Certificatefrom the Practicing Company Secretaries confirming compliance of conditions of CorporateGovernance as stipulated under the Listing Regulations. Pursuant to the provisions ofRegulation 34 read with Schedule V of the Listing Regulations a report on ManagementDiscussion & Analysis is attached separately which forms part of this Annual Report.

Business Responsibility Report

The Company's sustainability initiatives as provided in the Business ResponsibilityReport are in line with the key principles enunciated in "National VoluntaryGuidelines on Social Environmental and Economic Responsibilities of Business" framedby the Ministry of Corporate Affairs. Pursuant to the provisions of Regulation 34 of theListing Regulations the said report is attached separately which forms part of thisAnnual Report.

Secretarial Standards Compliance

During the year under review the Company has complied with all the applicableSecretarial Standards issued by The Institute of Company Secretaries of India and approvedby the Central Government pursuant to Section 118 of the Companies Act 2013.

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 work place 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. The Company has complied with provisionsrelating to the constitution of Internal Complaints Committee under the Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

The details of complaints reported under Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013 during FY 2019-20 are as follows:

No. of Complaints received during the year 1
Complaints disposed off 1
No. of complaints pending as on 31.03.2020 0

COMPANY AFFIRMATION OF READINESS TOWARDS COVID-19

India is going through a tough phase of a global pandemic–Novel Coronavirusdisease (COVID-19). The Indian government is taking all possible measures to keep a checkon the spread of this disease within the country.

Accordingly as a responsible private establishment your Company also took part in themission of social distancing by:

- Putting in place Work from Home Policy (WFH) for the employees of the Company;

- Conduct of meetings through VC telephone computerised & other electronic means;

- Strictly adhering to_ the "Do's and Don'ts" advised by the Public HealthAuthorities;

- Only essential staff are being called on duty with staggered timings to be followedin order to minimise physical interaction in all the Offices DMart stores andDistribution Centres at various locations; and

- To follow other preventive measures prescribed by the local authorities from time totime.

Your Company has filed the web based form – Company Affirmation of Readinesstowards COVID-19 (CAR) and affirmed to its requirements.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions for the same during the year under review:

1. DepositscoveredunderChapterVoftheCompaniesAct2013;

2. Material changes and/or commitments that could affect the Company's financialposition which 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 Tribunalsimpacting 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 Companies Act 2013 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;

6. Revision of the financial statements pertaining to previous financial periods duringthe financial year under review;

7. Maintenance of cost records as per sub-section (1) of Section 148 of the CompaniesAct 2013;

8. Frauds reported as per Section 143(12) of the Companies Act 2013.

ACKNOWLEDGEMENTS AND APPRECIATION

Your Board takes this opportunity to thank Company's employees at all levels for theirhard work and commitment. Your Board also places on record its sincere appreciation forthe continued support received from the customers members suppliers bankers financialinstitutions and all other business partners/associates.

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