Future Supply Chain Solutions Limited
The Directors of your Company are pleased to present the 14th Annual Report of theCompany for the financial year ended March 31 2019.
STANDALONE FINANCIALS HIGHLIGHTS
| || ||( Rs. in Lakh) |
| ||For the year ended March 31 2019 ||For the year ended March 31 2018 |
|Total Income ||111838.44 ||84334.62 |
|Profit before tax ||6515.72 ||3059.48 |
|Profit after tax ||6515.72 ||3059.48 |
|Earnings Per Share-Basic (Rs.) ||16.27 ||7.75 |
|Earnings Per Share-Diluted (Rs.) ||16.24 ||7.75 |
During the financial year under review your Companys revenue increased 33.8% ascompared to previous year primarily on account of higher volumes supported by warehouseexpansion increase in throughput led by existing clients and addition of new clientele.Net profit of the Company increased 113% as compared to previous year led by increasedrevenues operational efficiencies reduction in losses from last mile delivery operationsand several initiatives taken by the management to improve the overall service deliveryand internal consistency. During the year 2018-19 the Company continued to increase itswarehousing infrastructure to cater to the strong demand driven by GST implementation andincreased outsourcing of supply chain activities by product companies. During the yearthe Company added 3.08 million square feet of warehousing space. As of March 31 2019 FSCoperations are run through 96 distribution centres across India covering approximately7.66 million square feet of warehouse space. The Company also utilises a"hub-and-spoke" distribution model comprising 14 hubs and 134 operationalbranches across India covering 12345 pin codes across the country. The Company operatedfour temperature controlled warehouses with total pallet capacity of 8439. During March2019 the Company operated approximately 768 containerised vehicles and 101 company-ownedrefrigerated trucks.
The business outlook for third party logistics companies continues to be strong drivenby product companies increasing focus on their core competencies leading to outsourcing ofthe non-core activities such as supply chain management. The needs of the end consumerare evolving thus requiring the product companies to focus on enhancing supply chainefficiencies increase reliability of supply chain ensure product availability at alltimes attain faster speed and time to market all of which requires specific supply chaindomain expertise. Product companies are re-thinking their supply chain strategy and arelikely to consolidate their warehousing operations which all together triggered postimplementation of GST. This will create a need for managing large scale and technologydriven warehouses to optimise the cost of overall supply chains. Your directors are veryconfident to achieve higher growth in future - both in terms of revenues and margins dueto your Companys proven abilities to manage supply chain in cost effective and mostefficient manner supported by automation gradual inclination of product companies towardscost effective supply chain activities for their products and further simplification ofGST structure.
SCHEME OF ARRANGEMENT
During the year under review a Scheme of Arrangement with wholly owned subsidiary ofthe Company Vulcan Express Private Limited ("Vulcan") was completed and giveneffect on December 14 2018 pursuant to the provisions of the Companies Act 2013.Pursuant to the said Scheme the Fulfilment Business and Last Mile Delivery BusinessUndertakings of Vulcan vested into the Company.
DIVIDEND & RESERVES
Your Directors are pleased to recommend a dividend of Rs. 1.25 per equity share (12.50%of face value of Rs. 10/-) out of the profits of the financial year ended March 31 2019subject to approval by the shareholders in the ensuing Annual General Meeting. The totaldividend outflow would be Rs. 603.01 Lakh inclusive of applicable taxes. No amount isproposed to be transferred to the General Reserves. As required under the provisions ofSection 71(4) of the Companies Act 2013 read with Rule 18(7) of Companies (Share Capitaland Debentures) Rules 2014 the Company has created requisite Debenture RedemptionReserves out of the Profits for the financial year ended March 31 2019.
During the year under review the Company allotted 24875 equity shares of Rs. 10/- ata premium of Rs. 340/- per equity share upon exercise of stock options granted to theemployees of the Company. After such allotment the paid-up share capital increased to Rs.400811130/- as at March 31 2019.
During the year under review the Company issued and allotted 19900 secured ratedredeemable and non convertible debentures of Rs. 1 Lakh each on private placement basisaggregating to Rs. 19900 Lakh (NCDs). The said NCDs are listed on Wholesale Debt Marketsegment of BSE Limited.
HOLDING SUBSIDIARY JOINT VENTURE AND ASSOCIATE COMPANY
During the year under review Future Enterprises Limited the ultimate holdingcompany ("FEL") transferred majority of its holding to Ritvika Trading PrivateLimited ("Ritvika") a wholly owned subsidiary of FEL. Subsequent to suchtransfer Ritvika became the holding company of your Company.
Vulcan Express Private Limited ("Vulcan") is a wholly owned subsidiary of theCompany. In accordance with the provisions of Section 129(3) of the Companies Act 2013read with the Companies (Accounts) Rules 2014 a statement in Form AOC-1 containing thesalient features of the financial statements of the subsidiary company is appended heretoas Annexure 1. After close of the financial year under review the Board has approved andauthorised to divest the entire stake held by the Company in the said subsidiary. The saleof investment is expected to be completed in the current financial year.
Leanbox Logistics Solutions Private Limited ("Leanbox") is an associate ofthe Company which uses technology to improve delivery capabilities for general trade andsmall retail stores. During the financial year under review the Board approved thetransfer of last mile delivery (LMD) business to Leanbox with a view to consolidate theLMD business to increase focus and simplify structure along with higher operationalefficiencies. Pursuant to such transfer the Company shall be issued new equity shares inLeanbox thereby making it a subsidiary of the Company. The transfer of said business isexpected to be completed in the current financial year.
PARTICULARS OF LOAN GUARANTEE AND INVESTMENT
The particulars of investments loans and guarantees covered under the provisions ofSection 186 of the Companies Act 2013 read with rules made thereunder are given in theNotes to the Standalone Financial Statements of the Company.
The Investment and loans made by the Company were to be utilised by the investee/loanee to meet their fund requirements in their respective business.
PARTICULARS OF CONTRACTS OR ARRANGMENTS WITH RELATED PARTIES
Transactions entered into with related parties (as defined under Section 188 (1) of theCompanies Act 2013) during the financial year under review were in the ordinary course ofbusiness and on arms length basis. The Audit Committee also reviews andauthenticates / approves wherever applicable transactions with the related parties.Further requisite information in Form AOC-2 are given in Annexure 2 as required under theprovisions of Section 188 (2) read with Section 188(1) of the Companies Act 2013.
DISCLOSURES OF TRANSACTIONS WITH ANY PERSON OR ENTITY BELONGING TO THE PROMOTER/PROMOTER GROUP WHICH HOLD(S) 10% OR MORE SHAREHOLDING IN THE COMPANY
During the year under review Future Enterprises Limited holding company andPromoter of the Company held more than 10% of paid up share capital of the Company.Requisite details of transactions with the said related party is given under Note 32 tothe Financial Statements for the financial year ended March 31 2019. There were no othertransactions with any entity forming part of Promoter Group and holding more than 10% ofthe shareholding in the Company.
DIRECTORS & KEY MANAGEMENT PERSONNEL
In terms of Section 152 of the Companies Act 2013 Rakesh Biyani - Director of theCompany would retire at the ensuing Annual General Meeting and being eligible hasoffered himself for re-appointment.
Changes amongst Directors & KMPs during the year under review
Pursuant to Section 149 of the Companies Act 2013 the Board appointed Malini Chopraas an Additional Director (termed as an Independent Director) with effect from February 72019 subject to the approval of the shareholders. A resolution proposing her for theappointment as an Independent Director is embodied in the Notice convening the ensuingAnnual General Meeting.
Additional information on appointment / re-appointment of Directors as required underRegulation 36 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is given in the Notice convening the Annual General Meeting.
The Company has received requisite declarations from all the Independent Directorsunder Section 149(7) of the Companies Act 2013 confirming the criteria of independencemet by them as laid down in Section 149(6) of the Act and Regulation 25 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
During the year under review Shyam Maheshwari Non-Executive Director and RahulGarg Independent Director of the Company resigned on November 2 2018 and February7 2019 respectively. The Board places on record its sincere appreciation for thecontribution made by them during their tenure.
During the year under review P V Sheshadri was appointed as a Chief Executive Officerof the Company w.e.f. April 25 2018.
MEETINGS OF THE BOARD
The Board meets at regular intervals to discuss and decide on Companys businesspolicies and strategies. The Board met five times during the year details of which aregiven in the report on Corporate Governance forming part of this Annual Report.
COMMITTEES OF THE BOARD
The following Committees have been constituted by the Board:
1. Audit Committee
2. Nomination and Remuneration Committee (NRC)
3. Stakeholders Relationship Committee (SRC)
4. Corporate Social Responsibility Committee (CSR)
5. Risk Management Committee 1
6. Committee of Directors
The details of the Committees along with the composition number of meetings andattendance at the meetings are provided in the report on the Corporate Governance whichforms part of this Annual Report.
PERFORMANCE EVALUATION OF DIRECTORS
Pursuant to Section 134(3)(p) of the Companies Act 2013 and SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 evaluation of performance of individualDirectors Board and Committees thereof were carried out in following manner:
|Performer(s) ||Evaluator |
|Non-Executive Directors ||NRC except a Director being evaluated; Independent Directors |
|Executive Director ||Members of NRC; All Independent Directors |
|Independent Directors ||All Directors except a Director being evaluated; NRC |
|Board as a whole ||Independent Directors |
|Committees of the Board ||All Directors |
|Chairman of the Board ||Independent Directors |
The NRC has laid down various criteria for evaluating the performance of ExecutiveNon-Executive Independent Directors Committees and the Board as a whole and approvedspecific evaluation templates. These templates were circulated to each Director to providefeedback and further submission to the Chairman of the Board and meeting of IndependentDirectors.
Apart from various parameters such as composition profile meetings detailsparticipation/ attendance etc. the said templates also contained inter alia pre-definedquestionnaire with respect to role and functioning of the Director/ Committee underevaluation various dynamics for each of the Directors evaluating the performance and theevaluator was required to provide feedback and suggestions on the overall functioning ofthe Board its Committees and various Board members. The evaluator was also requested toprovide any suggestion on areas of improvement if any required for the Board and anymember or Committee thereof.
At the respective meetings of Independent Directors and NRC held on May 13 2019performance was reviewed and evaluated on various parameters such as level of engagementduring the discussions analysis of any matters and any consensus thereon interactionsintegrity responsibility towards stakeholders attendance quality and effectiveness ofany suggestions/ recommendations etc.
Further the Independent Directors also assessed the quality independence relevanceand timeliness of the flow of the information to the Board of Directors and were satisfiedwith the overall functioning of the Board its Chairman members and Committees. All theDirectors expressed their satisfaction with the evaluation process. Suggestions ofIndependent Directors were also received and considered for their implementation whereverfeasible.
A report on Corporate Governance as required under Regulation 34(3) read with ScheduleV of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015together with a certificate from Statutory Auditors of the Company regarding thecompliance with the conditions of Corporate Governance are enclosed herewith and formspart of this Annual Report.
MANAGEMENT DISCUSSION AND ANALYSIS
In terms of the provisions of Regulation 34 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a report on the Managements Discussion and Analysisis appended hereto and forms part of this Annual Report.
BUSINESS RESPONSIBILITY REPORT
In terms of Regulation 34(f) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a Business Responsibility Report is appended hereto and forms part ofthis Annual Report.
During the year under review your Company has not accepted any deposit within themeaning of section 73 of the Companies Act 2013.
RISK MANAGEMENT & ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Company has in place a mechanism to identify assess monitor and mitigate variousrisks to key business objectives. Internal control systems are commensurate with thenature of the business size and complexity of the business operations. These controls areroutinely tested by the auditors and are discussed at regular intervals. All locations aresubject to regular audit on risk-based methodology and are in sync with the businessverticals operational design financial model systems & process and other relevantsubjects. Risks if any are systematically addressed through mitigating actions. Theaudit reports detailing the efficacy of the internal controls are brought to the notice ofthe members of the Audit Committee and the Board of Directors for their review.Suggestions and recommendations if any are also implemented as may be recommended by theAudit Committee. In the opinion of the Board there is no element of risk which threatensthe existence of the Company.
The Audit Committee of the Company comprises Independent Directors only. Bala Despandeis the Chairperson Malini Chopra and Janat Shah are the other members of the AuditCommittee. There were no instances where the Board did not accept the recommendations andsuggestions if any of the Audit Committee. The terms of reference powers and roles ofthe Audit Committee are disclosed in the report of Corporate Governance forming part ofthis Annual Report.
The Company has established a vigil mechanism to provide a framework to promote whistleblowing and to provide a channel to the employee(s) and Directors to report to themanagement concerns about unethical behaviour actual or suspected fraud or violation ofthe code of conduct or policies of the Company as adopted / framed from time to time. Themechanism provides for adequate safeguards against victimisation of employees andDirectors to avail of the mechanism and also provide for direct access to the Chairpersonof the Audit Committee in exceptional cases.
AUDITORS & AUDITORS REPORT
GMJ & Co. Statutory Auditors of the Company are eligible to hold office as suchfor the financial year 2019-20 and have issued a certificate to that effect. TheAuditors have issued their report on the Financial Statements for the financial year endedMarch 31 2019 with an unmodified opinion and does not contain any qualificationobservation or adverse remarks.
K Bindu & Associates Company Secretaries in Wholetime Practise has carried outSecretarial Audit of the Company for the financial year 2018-19 in terms of provisions ofsection 204 of the Companies Act 2013 read with Rule 9 of Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 and Regulation 24A of SEBI (ListingObligations an Disclosure Requirements) Regulations 2015. The Secretarial Audit Reportfor the financial year under review is appended hereto as Annexure 3.
The Company has devised a system to ensure compliance with the provisions of applicableSecretarial Standards.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION & FOREX EARNINGS AND OUTGO
The particulars required under Section 134(3)(m) of the Companies Act 2013 read withRule 8(3) of the Companies (Accounts) Rules 2014 relating to energy conservationtechnology absorption and foreign exchange earnings and outgo are provided in Annexure 4appended hereto. The Company being focused on operations within the country and does notrender any services outside India hence there are no particulars that need to be givenon export initiative.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The Companys policy on appointment of and payment of remuneration to Directorsand other matters provided in Section 178(3) of the Companies Act 2013 is given in thereport of Corporate Governance.
DISCLOSURES ON POLICIES & OTHER STATUTORY DOCUMENTS
Details of programs for familiarisation of Independent Directors are available on thewebsite of the Company at http://www.futuresupplychains.com/code-policies.html Policy fordetermining material subsidiaries of the Company is available on the website of theCompany at http://www.futuresupplychains.com/code-policies.html Policy for determiningMateriality of Events and the Information is available on the website of the Company athttp://www.futuresupplychains.com/code-policies. html Archival policy of the Company isavailable on the website of the Company at http://www.futuresupplychains.com/code-policies.html Code of Conduct of Board of Directors and Senior Management Personnelof the Company is available on the website of the Company at http://www.futuresupplychains.com/code-policies.html Policy for dealing with related partytransactions is available on the website of the Company at http://www.futuresupplychains.com/code-policies.html
The Dividend Distribution Policy is given as Annexure 5 to this report. The same isalso available on the website of the Company at http://www.futuresupplychains.com/code-policies.html Remuneration Policy of the Company is available on the website of theCompany at http://www. futuresupplychains.com/code-policies.html The Company hasformulated and disseminated a Whistle Blower Policy to provide vigil mechanism foremployees and Directors of the Company to report genuine concerns that could have seriousimpact on the operations and performance of the business of the Company. This Policy is incompliance with the provisions of the Companies Act 2013 and the regulations of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The same is availableon the website of the Company at http://www.futuresupplychains.com/ code-policies.html Adraft of the Annual Return as specified under Section 92 of the Companies Act 2013 forthe financial year ended March 31 2019 is hosted on the website of the Company athttp://www.futuresupplychains.com/ annual-reports.html
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors of the Company based on recommendation made by CSR Committeehas formulated and approved a CSR Policy for the Company. The CSR Committee is chaired byC P Toshniwal - Non-Executive Director. Amar Sapra - Independent Director and RakeshBiyani Non-Executive Director are other members of the CSR Committee. At itsmeeting held on November 2 2018 CSR Committee identified the program(s) to be undertakenfor spending the CSR amount and recommended to the Board. The disclosures according to theCompanies (Corporate Social Responsibility Policy) Rules 2014 is given in prescribed formwhich is appended hereto as Annexure 6.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status and the Companys operations in future.
MATERIAL CHANGES AND COMMITMENTS
Except as disclosed in this report there are no material changes commitments orevents affecting the financial position of the Company which have occurred after theclosure of financial year under review till the date of this report.
PARTICULARS OF EMPLOYEES
Disclosures with respect to the remuneration of Directors and employees as requiredunder Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided inAnnexure 7 appended hereto.
In terms of the provisions of 134 of the Companies Act 2013 read with Rule 5(2) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 astatement containing the names and other particulars of employees drawing remuneration inexcess of the limits set out in the said rules are provided in Annual Report. However interms of the first proviso to Section 136(1) of the Companies Act 2013 informationpursuant to Section 197 of the Companies Act 2013 read with Rule 5(2) and 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is excludedfrom the Annual Report being sent to the members of the Company but available forinspection by the members at the Registered Office of the Company during business hours onall working days up to the date of the ensuing Annual General Meeting. Any memberinterested in obtaining a copy thereof may write to the Company Secretary and the samewill be furnished on request. The complete Annual Report including aforesaid informationis being sent electronically to all those members who have registered their e-mailaddresses and is also available on the websites of the Company and Stock Exchanges.
EMPLOYEE STOCK OPTION PLAN
Details required to be provided under Section 62 of the Companies Act 2013 and Rule12(9) of Companies (Share Capital and Debenture Rules 2014) and SEBI (Share BasedEmployee Benefits) Regulations 2014 are given in Annexure 8 appended hereto.
EXTRACT OF ANNUAL RETURN
In terms of the provisions of Section 92 (3) of the Companies Act 2013 read with theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return ofyour Company for the financial year ended March 31 2019 is given in Annexure 9appended hereto.
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements prepared in accordance with the Indian AccountingStandards prescribed by the Institute of Chartered Accountants of India are given in thisAnnual Report. In accordance with the provisions of Section 136(1) of the Companies Act2013 the Annual Report of the Company containing therein Standalone and ConsolidatedFinancial Statements of the Company and the Audited Financial Statements of the subsidiarycompany have been placed on the website of the Company www.futuresupplychains.com.The Audited Financial Statements of the subsidiary company shall also be kept open forinspection at the Registered Office of the Company during working hours for a period of 21days before the date of ensuing Annual General Meeting. The aforesaid documents relatingto subsidiary company can be made available to any member interested in obtaining the sameupon a request in that regard made to the Company.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(3)(c) of the Companies Act 2013Directors of the Company state that in the preparation of the annual accounts theapplicable accounting standards had been followed along with proper explanation relatingto material departures; they had selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profits of the Company for that year; they had taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of the Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; they had prepared the annualaccounts for the financial year ended March 31 2019 on a going concern basis; they hadlaid down internal financial controls to be followed by the Company and such financialcontrols are adequate were operating effectively; and they had devised proper systems toensure compliance with the provisions of all applicable laws and that such systems wereadequate and operating effectively.
AWARDS AND RECOGNITION
During the year under review your Company was awarded with the following recognitions:
Brand of the Decade - Logistics Supply Chain & Warehousing;
Best Cold chain 3PL Service Provider at Global Award for Excellence in Logistics& Supply Chain;
Overall Excellence in Logistics and Supply Chain at Global Award for Excellence inLogistics & Supply Chain;
Best 3PL company of the year at ELSC 2018; and
Supply Chain Excellence in Apparel Distribution at Global Logistics show.
SEXUAL HARASSMENT POLICY
The Company is committed to foster a healthy working environment that enables theemployees to work without fear of prejudice gender bias and sexual harassment. TheCompany 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 to prevent gender related harassment or discrimination andin the event of such an occurrence provides recourse to the concerned individual.
This policy extends to all employees and is incorporated in the service conditions codeof conduct of all employees. This policy is consistent and designed to comply with theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.TheCompanyhasformedInternalComplaintsCommittee (ICC) across all zones in India which isresponsible for redressal of complaints related to sexual harassment and follows theguidelines provided in the policy. The ICC is chaired by Nupur Singh and hasrepresentation from Sheetal Niwalkar who is empanelled with other renowned corporates andis a subject matter expert.
The Committee works towards creating an atmosphere that promotes equalitynon-discrimination and gender justice. It facilitates measures to ensure there is nohostile environment towards employees at the workplace. It also monitors and reviews theimplementation and effectiveness of sexual harassment policy acting as highest point ofescalation in case of complaint in the Company.
YourDirectorsdesiretoplaceonrecordtheirappreciation to all employees at all levelswho during the year under review with sustained dedicated effort enabled the Company todeliver a remarkable performance. Your Directors also wish to place on record theirappreciation and acknowledge with gratitude for the support and co-operation extended bythe Government clients bankers investors and other government agencies and look forwardto their continued patronage in future.
For and on behalf of the Board of Directors of
Future Supply Chain Solutions Limited
|Mayur Toshniwal ||C P Toshniwal |
|Managing Director ||Director |
|Mumbai May 13 2019 || |