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Future Supply Chain Solutions Ltd.

BSE: 540798 Sector: Others
NSE: FSC ISIN Code: INE935Q01015
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VOLUME 6512
52-Week high 71.95
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P/E
Mkt Cap.(Rs cr) 91
Buy Price 0.00
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OPEN 21.70
CLOSE 21.70
VOLUME 6512
52-Week high 71.95
52-Week low 20.65
P/E
Mkt Cap.(Rs cr) 91
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Future Supply Chain Solutions Ltd. (FSC) - Director Report

Company director report

To

The Members

Future Supply Chain Solutions Limited

The Directors of your Company are pleased to present the 16thAnnual Report of the Company for the financial year ended March 31 2021.

FINANCIALS HIGHLIGHTS

(Rs in Lakh)

Particulars For the year ended March 31 2021 For the year ended March 31 2020
Total Income 50027.89 116058.17
Profit Before Tax (18436.19) (6388.24)
Profit After Tax (18436.19) (6388.24)
Earnings Per Share-Basic & Diluted (Rs) (42.01) (15.51)

OPERATIONAL PERFORMANCE

A significant portion of the financial year under reporting was washedaway on account of COVID-19 situation and consequent lockdowns movement and otherrestrictions imposed by the Central/ State Governments from time to time. As of the March31 2021 FSC operations run through 65 distribution centres across India coveringapproximately 8.02 million square feet of warehouse space. The Company utilises a"hub-and-spoke" distribution model comprising 13 hubs and 123 operationalbranches and covering 11780 pin codes across the country. FSC operates 13temperature-controlled warehouses with total pallet capacity of 21303 pallets. During theyear 2020-21 the warehousing capacity was rationalized from 8.20 mn sq. ft. in 2019-20 to8.02 mn sq. ft. in 2020-21 while consolidating its number of warehouses from 74 in2019-20 to 65 in 2020-21. Led by a COVID-19 affected weak macro-economic environment andconsumption slowdown in India FSC undertook several initiatives to improve productivityand increase operational efficiencies which include warehousing network re-design &consolidation transport cost rationalisation and move to a complete variable modellabour productivity enhancement initiatives at the warehouse level fixed costs /overheads rationalisation and revisiting customer contracts where FSC's ROI wassub-optimal. Overall efficiency was increased but on account of low volume the operationswere resulted into losses.

FUTURE OUTLOOK

Although the COVID-19 pandemic impacted supply chain disruptions gave asignificant blow to the logistics sector in the country the industry is graduallyrecovering impressively. With the fear of COVID-19 pandemic still around thediscretionary consumption of non-essential goods is unlikely to pick up during the year2021-22 and hence it would affect revenue growth and profit margins. However from alonger period outlook perspective management believes that the Company would benefit fromsector tailwinds which will contribute to strong revenue growth. These mainly includebenefits of GST implementation increased outsourcing of non-core activities by productcompanies growth of consumption-led sectors and fast evolving consumer behaviour.Additionally FSC will benefit from its strategic partnership with Nippon Express whereinthe two companies will jointly sell the services to Nippon Express' customers globally.FSC would also expand its target market in the automotive and pharmaceutical sectors alongwith Nippon Express leveraging on the latter's domain expertise in these sectors.

COMPOSITE SCHEME OF ARRANGEMENT

During the year 2020-21 the Board has approved a Composite Scheme ofArrangement between various companies belonging to Future Group (Transferor Companies) andcompanies belonging to Reliance Group which in order to expand its retail and wholesalefootprint is desirous of acquiring the logistics & warehousing and retail &wholesale businesses of such Transferor Companies as a going concern on Slump Sale basisin the manner provided in the Scheme. Future Group as a first step would consolidate thelogistics & warehousing and retail & wholesale businesses of such TransferorCompanies in Future Enterprises Limited - the Transferee Company which shall subsequentlytransfer to Reliance Group on slump sale basis. The salient features of the said Schemeare as follows:

• Amalgamation of the Company along with other Transferor companies with FutureEnterprises Limited ("FEL");

• Transfer and vesting of the Logistics & Warehousing Undertaking from FEL asa going concern on a slump sale basis to Reliance Retail Ventures Limited ("RRVL");

• Transfer and vesting of the Retail & Wholesale Undertaking from FEL as agoing concern on a slump sale basis to Reliance Retail and Fashion Lifestyle Limited awholly owned subsidiary of RRVL ("RRVL WOS");

• Preferential allotment of equity shares and warrants of FEL to RRVL WOS.

Pursuant to the Scheme FEL will issue 131 (One Hundred Thirty One)fully paid up equity shares of Rs 2/- each to the equity shareholders of FSC as on theRecord Date (as may be determined in terms of the Scheme) for every 10 (Ten) fully paid upequity share of Rs 10/- each held in FSC. The said Scheme would be subject to requisiteapprovals of the National Company Law Tribunal BSE Limited National Stock Exchange ofIndia Limited Securities and Exchange Board of India Competition Commission of India andother statutory / regulatory authorities including those from the shareholders andcreditors of the Transferor Companies and Transferee Company and other applicablecontractual approvals.

As on the date of this report necessary directions from the H'bleNational Company Law Tribunal for convening the meetings of the shareholders and creditorsfor their approval remained awaited.

DIVIDEND

In view of losses your Directors are unable to declare any dividend.

Dividend Policy

A Dividend Policy adopted by the Company is given with this report asAnnexure A.

Unclaimed Dividend

Details of unclaimed dividends of earlier years have been provided inCorporate Governance report.

Investor Education and Protection Fund

It is confirmed that during the year 2020-21 there was no amount ofunclaimed dividends which was liable to be transferred to the Investor Education andProtection Fund as required under section 124 of the Companies Act 2013.

RESERVES

No amount is proposed to be transferred to the General Reserves or anyother Reserves.

holding subsidiary joint venture and associate company

The Company did not have any holding or subsidiary company during theyear 2020-21. Leanbox Logistics Solutions Private Limited ("Leanbox") is anAssociate entity of the Company. Leanbox acts as a General Trade Distribution Partner forCPG/Brand Companies and as Supply chain Partner for small store format retailers in Indiaby helping them improve sales and efficiency using its technology platform orderprocessing and delivery capabilities. Leanbox's tech platform is custom built to enablethe critical processes for in-city distribution supply chain. For the year 2020-21Leanbox registered total income of Rs 6884.75 Lakh and net loss of Rs 132.25 Lakh. Astatement in prescribed form AOC-1 in annexed to this report as an Annexure B.

particulars of loan guarantee and investment

The particulars of investments loans and guarantees covered under theprovisions of Section 186 of the Companies Act 2013 read with rules made thereunder aregiven in the Notes to the Standalone Financial Statements of the Company.

particulars of contracts or ARRANGEMENTS with related parties

Transactions entered into with related parties (as defined underSection 188(1) of the Companies Act 2013) during the year 2020-21 were in the ordinarycourse of business and on arm's length basis and based on omnibus approval accorded by theAudit Committee. Pursuant to section 134(3)(h) of the Companies Act 2013 particulars ofcontracts/ arrangements entered into by the Company with related parties referred to insub section (1) of section 188 of the Companies Act 2013 are given in Annexure C.

DIRECTORS & KEY MANAGEMENT PERSONNEL

During the year 2020-21 P V Sheshadri resigned as Chief ExecutiveOfficer of the Company effective from April 4 2020.

During the year 2020-21 Vimal K Dhruve - Company Secretary andCompliance Officer of the Company resigned effective from September 17 2020. The Boardappointed Rohan Gavas as a Company Secretary and Compliance Officer effective fromNovember 7 2020. However Rohan Gavas resigned on February 1 2021.

After close of the year 2020-21 Nippon Express (South Asia &Oceania) Pte Ltd. withdrew their nomination of Hiroyuki Tanaka and accordingly HiroyukiTanaka resigned on June 24 2021.

Pursuant to nomination by Nippon Express (South Asia & Oceania)Pte. Ltd. under the Shareholders Agreement the Board of Directors appointed ShinichiKaikyama as an Additional Director (termed as "Non-Executive Director") of theCompany effective from June 24 2021 who holds office as such till the date of ensuingannual general meeting. The Company has received a notice from a member of the Companyproposing the candidature of Shinichi Kakiyama for the appointment of Director.

After close of the year 2020-21 and subsequent to the recommendationsof the Nomination and Remuneration Committee the Board at its meeting held on June 242021 appointed Vimal K Dhruve as a Company Secretary and Compliance Officer of the Companyeffective from July 1 2021.

In terms of section 152 of the Companies Act 2013 Rakesh Biyaniretires at the ensuing annual general meeting and eligible for re-appointment.

Information as required pursuant to regulation 26(4) and 36 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and SecretarialStandard on General Meetings in respect of Directors seeking appointment/ re-appointmentis given under the notice of the ensuing annual general meeting.

The Company has received requisite declarations from all theIndependent Directors under Section 149(7) of the Companies Act 2013 confirming thecriteria of independence met by them as laid down in Section 149(6) of the Act andRegulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

MEETINGS OF THE BOARD & COMMITTEES

The Board met seven times during the year 2020-21 on July 312020August 29 2020 September 112020 November 7 2020 November 27 2020 February 10 2021and March 312021. Other details of the meetings of the Board of Directors and variousCommittees thereof including the details of composition meetings and attendance are givenin Corporate Governance Report.

PERFORMANCE EVALUATION OF DIRECTORS

Pursuant to section 134(3)(p) of the Companies Act 2013 and SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board ofDirectors has carried out an annual evaluation of its own performance its Committees andindividual Directors.

The performance were evaluated after seeking inputs from all theDirectors on the basis of criteria determined by the Nomination and Remuneration Committeesuch as the Board composition and structure effectiveness of processes information andfunctioning effectiveness and roles of committees etc.

In a separate meeting of Independent Directors performance ofNon-Independent Directors the Board as a whole and the Chairman of the Company wasevaluated after taking into account the views of Managing Director and other Non-ExecutiveDirectors. The Board and the NRC reviewed the performance of individual Directors on thebasis of criteria such as the level of participation meaningful discussion andconstructive inputs and other requisite matters. The performance of the Board itsCommittees and individual Directors was discussed at the meeting of the Board. TheIndependent Directors assessed the quality independence relevance and timeliness of theflow of the information to the Board of Directors.

Performance evaluation of Independent Directors was done by the entireBoard excluding the Independent Director being evaluated.

Based on evaluation it emerged that the Board has an optimum level ofcompetency experience qualifications and diversity. Each Board member contributed inhis/her own manner to the collective prudence of the Board keeping in mind his/her ownbackground and experience. There was active participation and adequate time was given forvarious matters brought before the Board. Overall the Board was functioning very well ina unanimous and interactive manner.

CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION ANALYSIS

Pursuant to regulation 34 of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and relevant sections of the Companies Act2013 a Management Discussion and Analysis Statement report on Corporate Governance andAuditors' Certificate thereon are included in this Annual Report.

BUSINESS RESPONSIBILITY REPORT

Pursuant to the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a Business Responsibility Report is appended hereto and forms part ofthis Annual Report.

DEPOSITS

During the year 2020-21 the Company has not accepted any depositswithin the meaning of section 73 of the Companies Act 2013.

AUDIT COMMITTEE

The Audit Committee wholly comprises Independent Directors. BalaDeshpande Chairs the Committee. Other members of the Committee are Malini Chopra and JanatShah. There were no instances where the Board did not accept the recommendations andsuggestions if any of the Audit Committee. Various details covering terms of referencepowers and roles meetings and attendance of the Audit Committee are disclosed inCorporate Governance Report.

RISK MANAGEMENT & ADEQUACY OF INTERNAL FINANCIAL CONTROLS

The Company has in place a mechanism to identify assess monitor andmitigate various risks to key business objectives. Internal control systems arecommensurate with the nature of the business size and complexity of the businessoperations. These controls are routinely tested by the auditors and are discussed atregular intervals. All locations are subject to regular audit on risk-based methodologyand are in sync with the business verticals operational design financial model systems& process and other relevant subjects. Risks if any are systematically addressedthrough mitigating actions. The audit reports detailing the efficacy of the internalcontrols are brought to the notice of the Audit Committee and the Board of Directors fortheir review. Suggestions and recommendations if any are also implemented as may berecommended by the Audit Committee. In the opinion of the Board there is no element ofrisk which threatens the existence of the Company.

VIGIL MECHANISM

The Company has established a vigil mechanism to provide a framework topromote whistle blowing and to provide for raising concerns about unethical behaviouractual or suspected fraud or violation of the code of conduct or policies of the Company.The mechanism provides for adequate safeguards against victimization of employees andDirectors to avail of the mechanism and also provide for direct access to the Chairpersonof the Audit Committee in exceptional cases. The Company has revised the Whistle blowerPolicy to include "reporting of incidents of leak or suspected leak of unpublishedprice sensitive information" in terms of amendments in SEBI (Prohibition of InsiderTrading) Regulations 2015.

AUDITORS

During the year 2020-21 GMJ & Co.; Chartered Accountants resignedas Statutory Auditors of the Company w.e.f. November 7 2020. The Board at its meetingheld on November 27 2020 had appointed DMKH & Co. as Statutory Auditors to fill thecasual vacancy caused by the resignation of GMJ & Co. The said appointment wasapproved by the members at the annual general meeting held on December 28 2020.

DMKH & Co. - Chartered Accountants Statutory Auditors of theCompany are eligible to hold office as such for the financial year 2021-22 and haveissued a certificate to that effect.

The Statutory Auditors included a qualification in their report on theFinancial Statements for the year 2020-21. The Audit Committee and Board of Directors attheir respective meetings while approving the said Financial Statements reviewed suchqualification and agreed appropriate explanations therefor. As required under section134(3)(f) of the Companies Act 2013 and regulation 34(2) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a statement containing the details ofqualification explanation by the Board and impact of the qualifications is annexed to theFinancial Statements.

During the year 2020-21 there was no instance of fraud committedagainst the Company by its officers or employees as reported by Statutory Auditors orSecretarial Auditor to the Audit Committee under Section 143(12) of the Companies Act2013.

SECRETARIAL STANDARDS

The Company has devised a system to ensure compliance with theprovisions of applicable Secretarial Standards. SECRETARIAL AUDIT

As required under section 204 of the Act and 24A of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 a Secretarial Audit Report forthe year 2020-21 issued by K Bindu & Associates Company Secretaries in wholetimePractise is appended hereto as Annexure D.

COST AUDIT

Maintenance of cost records as specified by the Central Governmentunder section 148(1) of the Companies Act 2013 is not applicable to the Company andhence such accounts and records are not required to be maintained by the Company.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREX EARNINGS ANDOUTGO

The particulars required under Section 134(3)(m) of the Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 relating to energyconservation technology absorption and foreign exchange earnings and outgo are given inAnnexure E appended hereto.

policy ON DIRECTORS' APPOINTMENT AND REMUNERATION

Pursuant to section 178 of the Companies Act 2013 and regulation 19(4)of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 andconsequent to the recommendations of the Nomination and Remuneration Committee("NRC") the Board has framed a policy on board diversity governing the criteriafor appointment of Executive Non-Executive and Independent Directors. The appointment ofDirectors are made based on merit apart from compliance of legal and contractualrequirements that complements and expands the skills experience and expertise of theBoard as a whole taking into account knowledge professional experience andqualifications gender age cultural and educational background and any other factorsthat the NRC might consider relevant for the Board to function effectively. Whileappointing any person as an Independent Director utmost care is to be taken as to theindependence of such person.

The Board has also approved a policy on remuneration payable to theDirectors of the Company. In determining the remuneration of the Directors the NRCevaluates the remuneration paid by comparable organisation and thereafter makes itsrecommendation to the Board. Details of availability of Policy on Board Diversity andRemuneration Policy on the website of the Company are given in the Corporate GovernanceReport.

disclosures ON POLICIES & OTHER STATUTORY DOCUMENTS

Information on codes and policies adopted by the Company pursuant tothe Companies Act 2013 and/ or SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is given in Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY

The Board of Directors of the Company based on recommendation made byCSR Committee has formulated and approved a CSR Policy in line with the requirements ofthe provisions of the Companies Act 2013. The disclosures according to the Companies(Corporate Social Responsibility Policy) Rules 2014 is given in prescribed form which isappended hereto as Annexure F.

SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the regulatorsor courts or tribunals impacting the going concern status and the Company's operations infuture.

ONE TIME DEBT RESTRUCTURING

The COVID-19 has deeply impacted the long-term business viability andled to significant financial stress across the industries. The debt burden had becomedisproportionate relative to the cash flow during this pandemic period posing significantfinancial stability risks. In view of this and to facilitate revival of business andmitigate the impact of COVID-19 the Reserve Bank of India ("RBI") had provideda window under the Prudential Framework to enable the lenders to implement a resolutionplan in respect of corporate exposures without change in ownership subject to specifiedconditions. The Company opted to avail the relaxations so proposed by the RBI byrestructuring its financial debt so as to manage the cash flow and ensure the businesscontinuity.

After the close of the year 2020-21 the Company and its financiallenders had agreed to a resolution plan to restructure the financial debt of the Companyas permitted under the Resolution Framework for COVID 19-related Stress announced by theRBI. The Resolution Plan provided for inter alia extension in repayment of all termloans and complete waiver of all penal interest and charges default premiums processingfees etc.

Further as part of the Resolution Plan the debt raised through thenon-convertible debentures issued by the Company under Series - I and Series - II("NCDs") were also proposed to be restructured. The Company also receivedconsent of the holder(s) of the NCDs and the Debenture Trustee inter alia to extend thematurity date of the said NCDs subject to the approval of the Stock Exchange.

PARTICULARS OF EMPLOYEES

Disclosures with respect to the remuneration of Directors and employeesas required under Section 197(12) of the Companies Act 2013 read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are given inAnnexure G appended hereto.

In terms of the provisions of 134 of the Companies Act 2013 read withRule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 a statement containing the names and other particulars of employees drawingremuneration in excess of the limits set out in the said rules are provided in AnnualReport. However in terms of the first proviso to Section 136(1) of the Companies Act2013 information pursuant to Section 197 of the Companies Act 2013 read with Rule 5(2)and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is excluded from the Annual Report in physical form but available for inspection bythe members at the Registered Office of the Company during business hours on all workingdays up to the date of the ensuing Annual General Meeting. Any member interested inobtaining a copy thereof may write to the Company Secretary and the same will befurnished on request. The complete Annual Report including aforesaid information is beingsent electronically to all those members who have registered their e-mail addresses and isalso available on the websites of the Company and Stock Exchanges.

EMPLOYEE STOCK OPTION PLAN

The Company has implemented a Stock Option Plan - "Future SupplyChain Solutions Limited Employees Stock Options Plan -2017" with a view toappropriately reward and retain its valuable human resources as may be proposed by themanagement and approved by the Nomination and Remuneration Committee. Details as requiredto be provided under Section 62 of the Companies Act 2013 and Rule 12(9) of Companies(Share Capital and Debenture) Rules 2014 and SEBI (Share Based Employee Benefits)Regulations 2014 are given in Annexure H appended hereto.

ANNUAL RETURN

In terms of section 134(3)(a) and 92(3) of the Companies Act 2013 aform of annual return for the year ended March 31 2021 is available on the website of theCompany at https://www.futuresupplychains.com/annual-reports.php.

PENALTIES / PUNISHMENT/ COMPOUNDING OF OFFENCES

There were no penalties/ punishments/ compounding of offenses forbreach of any section of Companies Act 2013 against the Company or its Directors or otherofficers in default if any during the year 2020-21.

DIRECTORS' RESPONSIBILITY STATEMENT

The Directors of the Company state that -

• in the preparation of the annual accounts for the year 2020-21 the applicableaccounting standards have been followed along with proper explanation relating to materialdepartures;

• they have selected such accounting policies and applied them consistently andmade judgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the year 2020-21 and of the lossof the Company for that year;

• they have taken proper and sufficient care 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;

• they have prepared the annual accounts for the financial year ended March 312021 on a going concern basis;

• they have laid down internal financial controls to be followed by the Companyand such financial controls are adequate and operating effectively; and

• they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

PREVENTION OF SEXUAL HARASSMENT

The Company is committed to foster a healthy working environment thatenables employees to work without fear of prejudice gender bias and sexual harassment.The Company seeks to ensure that every gender should have equal opportunity and nopreferential or discriminatory treatment is meted out to anyone on grounds of sex alone.The Company has in place a strong policy on prevention of sexual harassment at workplacewhich aims at prevention of harassment of employees and lays down the guidelines foridentification reporting and prevention of sexual harassment. The Company conductsprograms to spread awareness prevent gender related harassment or discrimination and inthe event of such an occurrence provides recourse to the concerned individual. Thispolicy extends to all employees and is incorporated in the service conditions of code ofconduct for all employees. This policy is consistent and designed to comply with theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.

The Company has formed an Internal Complaints Committees (ICC) acrossall zones in India which are responsible for redressal of complaints related to sexualharassment and follow the guidelines provided in the policy. The ICC are chaired by seniorfemale employees of the Company at each of the zones and has representation of an externalsubject matter expert Ms. Sheetal Niwalkar who is empanelled with other renownedcorporates as well. The ICC work towards creating an atmosphere that promotes equalitynon-discrimination and gender justice. They facilitate measures to ensure there is nohostile environment towards employees at the workplace. ICC regularly monitors and reviewsthe implementation and effectiveness of sexual harassment policy acting as highest pointof escalation in the Company in case of complaint.

MATERIAL CHANGES AND COMMITMENTS

Except as disclosed in this report there are no material changescommitments or events affecting the financial position of the Company which have occurredafter the closure of the year 2020-21 till the date of this report.

acknowledgement

Your Directors desire to place on record their appreciation to allemployees at all levels who during the year 2020-21 with dedicated effort enabled theCompany to deliver a satisfactory performance during the year which was largely affectedby COVID pandemic.

Your Directors also wish to place on record their appreciation andacknowledge with gratitude for the support and co-operation extended by the Governmentclients bankers investors and other government agencies and look forward to theircontinued patronage in future.

For and on behalf of the Board of Directors of
Future Supply Chain Solutions Limited
Rakesh Biyani
Chairman
Mumbai June 24 2021

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