Future Supply Chain Solutions Limited
The Directors of your Company are pleased to present the 13th annual report for thefinancial year ended March 31 2018.
STANDALONE FINANCIALS HIGHLIGHTS
(Rs in Lakh)
|Particulars ||For the year ended March 31 2018 ||For the year ended March 31 2017 |
|Revenue from operations ||77498.63 ||56118.34 |
|Other income ||942.12 ||1580.90 |
|Total Income ||78440.75 ||57699.24 |
|Depreciation & amortisation ||2324.19 ||1914.02 |
|Total expenditure ||68572.65 ||51880.06 |
|Profit before tax ||9868.10 ||5819.18 |
|Tax and provisions including deferred tax ||3133.55 ||1243.76 |
|Profit after tax ||6734.55 ||4575.42 |
|Other Comprehensive Income ||(4.96) ||18.50 |
|Earnings Per Share-Basic (Rs) ||17.06 ||11.64 |
|Earnings Per Share-Diluted (Rs) ||17.05 ||11.19 |
During the financial year under review your Company's revenues increased by 38.1% ascompared to the previous year on account of better operational efficiencies throughoptimum use of the automation and technologies increased velocity in deliverablesaddition of new clientele supported by the increased volume from anchor customers. Netprofits of the Company during the year also jumped by 47.2% compared to the previous yearsupported by increased revenue controlled operational costs redesigning of operationalverticals lower finance costs and other measures taken by the management to improve theoverall service delivery and increased internal consistency.
The business outlook for third party logistics companies such as FSC continues to bestrong driven by GST implementation and increased outsourcing of non-core activities byproduct companies. Various consumption led sectors continue to grow at a faster pace thanraw material centric industries in value terms indicating premiumisation in theseindustries. This is likely to result in increased need for organised tech-enabledlogistics and increased adoption of value-added logistics services. With theimplementation of indirect tax reforms in the country i.e. Goods and services tax yourDirectors are very optimistic about the growth of the overall business and higherefficiency in the operations which all together would enhance the stakeholders' value.
DIVIDEND & RESERVES
Your Directors are pleased to recommend the maiden dividend of Rs 1 (Rupee One only)per equity share of face value of Rs 10/- i.e.10% out of the profits for the financialyear 2017-18 subject to approval by the members in the ensuing Annual GeneralMeeting. The total dividend outflow would be Rs 482.90 Lakh inclusive of applicable taxes.No amount is proposed to be transferred to the General Reserves.
During the year under review the following alterations were made to the share capitalstructure of the Company:
- Increased the authorised share capital of the Company from Rs 40 crore to Rs 50crore;
- Allotted 917955 equity shares of Rs 10/- at a premium of Rs 589.16 per equity shareon conversion of compulsory convertible debentures. Post such conversion the paid-upshare capital increased to Rs 400562380/-.
PUBLIC OFFER (OFFER FOR SALE)
During the year under review the existing shareholders in the Company had divested9784570 equity shares of Rs 10/- each through offer for sale at an offer price of
Rs 664/- per equity share in compliance with the provisions of the Companies Act 2013and SEBI (Issue of Capital and Disclosure Requirements) Regulations 2009 as amended (Offer').Pursuant to the said Offer the equity shares of the Company were listed on the BSELimited and the National Stock Exchange of India Limited on December 18 2017. YourDirectors place their appreciation for the impressive response received to the Offer fromthe various categories of investors.
HOLDING SUBSIDIARY JOINT VENTURE AND ASSOCIATE COMPANY
During the financial year under review the holding company Future Enterprises Limitedhad divested a part of its shareholding in the Company. However the Company continues tobe a subsidiary of Future Enterprises Limited.
During the year under review the Company acquired the entire share capital of VulcanExpress Private Limited thereby making it as wholly owned subsidiary of the Company. Theacquisition would help the Company to venture into last mile delivery' logisticsbusiness for various online retailers. The management believes that the integration of thebusiness of Vulcan will help the Company to boost its revenues optimise total operationalcosts and improve operational efficiencies. For the financial year 2017-18 Vulcanregistered a total income of Rs 16281.87 Lakh and net loss of Rs 6763.82 Lakh.
During the year under review the Company has made strategic investments in LeanboxLogistics Solutions Private Limited (Leanbox') which uses technology to improvedelivery capabilities for general trade / small retail stores. The technology platform ofLeanbox would support an asset light delivery platform through efficient order processingand fulfilment in a seamless manner. In accordance with the provisions of Section 129(3)of the Companies Act 2013 read with the Companies (Accounts) Rules 2014 a statement inForm AOC-1 containing the salient features of the financial statements of the saidSubsidiary company and Associate company is appended hereto as Annexure 1.
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.
PARTICULARS OF CONTRACTS OR ARRANGMENTS WITH RELATED PARTIES
All transactions entered into with related parties (as defined under Section 188 of theCompanies Act 2013) during the financial year under review were in the ordinary course ofbusiness and on arm's length pricing basis. The Audit Committee also reviews andauthenticates/ approves wherever applicable transactions with the related parties. Asthere were no transactions during the financial year under review attracting theprovisions of section 188(1) hence information in Form AOC-2 is not applicable.
DIRECTORS & KEY MANAGEMENT PERSONNEL
In terms of section 152 of the Companies Act 2013 C P Toshniwal and ShyamMaheshwari Directors of the Company would retire at the ensuing annual general meetingof the Company and being eligible have offered themselves for re-appointment. The Companyhas received necessary disclosure and confirmation from the concerned Directors withrespect to their re-appointment. Additional information on re-appointment of Directors asrequired under Regulation 36 of the Listing Regulations is given in the Notice conveningthe annual general meeting.
CHANGES AMONGST DIRECTORS & KMPS DURING THE YEAR UNDER REVIEW
The Board appointed Mayur Toshniwal as Managing Director & CEO of the Company for aperiod of 3 years with effect from August 5 2017. The said appointment was furtherapproved by the members at the previous annual general meeting.
Pursuant to section 149 of the Companies Act 2013 Bala Deshpande Amar Sapra andRahul Garg were appointed as non-executive and Independent Directors with effect from May10 2017 August 5 2017 and August 5 2017 respectively. Their appointments were furtherapproved by the shareholders in previous annual general meeting. Further the Company hasreceived requisite declarations from all the Independent Directors under Section 149(7) ofthe Companies Act 2013 confirming the criteria of independence met by them as laid downin Section 149(6) of the Companies Act 2013 and Regulation 25 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.
Dinesh Goel and Vivek Biyani Directors of the Company resigned with effect from August5 2017. The Board places on record its sincere appreciation for the contribution made bythem during their tenure.
During the year under review P V Sheshadri acted as a Chief Executive Officer for abrief period from May 10 2017 till August 5 2017. However he was re-appointed as CEO ofthe Company after close of the financial year under review. Kailash Chand Sharma ceased tobe Chief Financial Officer of the Company with effect from March 1 2018. The Boardsubsequent to the recommendation of Nomination and Remuneration Committee and AuditCommittee appointed Samir Kedia as Chief Financial Officer of the Company with effectfrom March 1 2018.
MEETINGS OF THE BOARD
The Board meets at regular intervals to discuss and decide on Company's businesspolicies and strategy apart from other businesses. The Board met five times during theyear details of which are given in the Corporate Governance report forming part of thisannual report.
COMMITTEES OF THE BOARD
The Board of Directors has the following Committees:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders Relationship Committee
4. Corporate Social Responsibility Committee
5. 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 the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board has carried out an annual evaluationof performance of its own the Committees thereof and the Directors individually. At themeeting of the Board all the relevant factors that are material for evaluating theperformance of the Committees and of the Board were discussed. A separate exercise wasalso carried out to evaluate the performance of individual Directors including theChairman of the Board who were evaluated on parameters such as level of engagement andcontribution independence of judgment safeguarding the interest of the Company and itsminority shareholders etc. The performance evaluation of the Independent Directors wascarried out by the entire Board except the Independent Director under evaluation. Theperformance evaluation of the Chairman and Non-Independent Directors was carried out bythe Independent Directors. The Directors have expressed their satisfaction with theevaluation process.
As per Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a separate report on Corporate Governancetogether with a certificate from Statutory Auditors of the Company regarding thecompliance with the conditions of Corporate Governance is 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 Management's Discussion and Analysis isappended hereto and forms part of this 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. The Company's internal control systems are commensuratewith the nature of its business and the size and complexity of its operations and areroutinely tested by the Auditors. All locations across the country are subject tocontinued audit on risk based methodology appropriately in sync with the businessverticals operational design financial model systems & process and other relevantsubjects. Your Directors believe that such audit process add values to the business inaddition to the statutory compliance. Major risks if any identified by the businessesand functions are systematically addressed through mitigating actions on a continuingbasis. Further the internal controls at each location are discussed at regular intervalengaging the respective zonal auditor internal auditor top management team including thedirectors and chief financial officer. The audit reports detailing the efficacy of theinternal controls are brought to the notice of the members of the Audit Committee andsubsequently the Board of Directors for their review discussion suggestions andrecommendations. Necessary changes and modifications are also carried out 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.
The Audit Committee of the Company comprises of Bala Deshpande - Independent Directoras Chairperson Rahul Garg and Janat Shah - Independent Directors as members. There are noinstances where the Board did not accept the recommendations and suggestions of the AuditCommittee. The terms of reference powers and roles of the Audit Committee are disclosedin the Corporate Governance report forming part of this annual report.
The Company has established a vigil mechanism to provide a framework to promoteresponsible and secure whistle blowing and to provide a channel to the employees andDirectors to report to the management concerns about unethical behaviour actual orsuspected fraud or violation of the code of conduct or policy/ies of the Company asadopted / framed from time to time. The mechanism provides for adequate safeguards againstvictimisation of employees and Directors to avail of the mechanism and also provide fordirect access to the Chairperson of the Audit Committee in exceptional cases.
NGS & Co. LLP; Chartered Accountants statutory auditors of the Company shall holdoffice as such till the conclusion of the ensuing annual general meeting. Howeverpursuant to the provisions of the Companies Act 2013 they shall not be eligible to beappointed/ reappointed in view of their expiration of term permissible under the CompaniesAct 2013.
The Board proposes to appoint GMJ & Co. Chartered Accountants as the auditors ofthe Company in place of the retiring auditors for a period of 5 years subject to approvalof members at the ensuing annual general meeting.
The Company appointed K. Bindu & Associates Company Secretaries in wholetimePractise to conduct secretarial audit of the Company for the financial year 2017-18 interms of provisions of section 204 of the Companies Act 2013 read with Rule 9 ofCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014. Thesecretarial audit report for the financial year under review is appended hereto asAnnexure 2.
The Company has devised a system to ensure compliance with the provisions ofSecretarial Standards on Meetings of the Board of Directors and General Meetings.
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 3appended hereto. The Company being focused on operations within the country and does notrender any services outside India hence there are no particulars be given on exportinitiative.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Company's policy on Directors appointment and remuneration and other mattersprovided in Section 178(3) of the Companies Act 2013 are given in the CorporateGovernance report which forms part of this annual report.
DISCLOSURES ON POLICIES
Details of programs for familiarisation of Independent Directors with the Company areavailable on the website of the Company at http://www.futuresupplychains.com/pdf/independent-director-familiarization-program.pdf. Policy for determining materialsubsidiaries of the Company is available on the website of the Company athttp://www.futuresupplychains.com/pdf/materiality-for-subsidiary-policy.pdf.
Policy for determining Materiality of Events and the Information is available onwebsite of the Company athttp://futuresupplychains.com/pdf/FSC_Policyfor_determination_of_materiality_of_events_and information.pdf.
Archival policy of the Company is available on the website of the Company athttp://www.futuresupplychains.com/ pdf/archival-policy.pdf.
Code of conduct of Board of Directors and senior management personnel of the Company isavailable on the website of the Company at http://www.futuresupplychains.com/pdf/code-of-conduct-for-key-mangaerial-persons.pdf.
Policy on dealing with related party is available on the website of the Company athttp://www.futuresupplychains.com/pdf/policy-for-dealing-with-related-party-transactions.pdf.
The Dividend Distribution Policy is given as Annexure 4 to this report. The same isalso available on the website of the Company at http://www.futuresupplychains.com/pdf/dividend-policy.pdf.
The Remuneration Policy of the Company is available on the website of the Company athttp://www. futuresupplychains.com/pdf/remuneration-policy.pdf. The Company has formulatedand disseminated a Whistle Blower Policy to provide vigil mechanism for employees andDirectors of the Company to report genuine concerns that could have serious impact on theoperations and performance of the business of the Company. This Policy is in compliancewith the provisions of the Act and the regulations of the Listing Regulations.
CORPORATE SOCIAL RESPONSIBILITY
The Board of Directors of the Company has based on recommendations made by CSRCommittee formulated and approved CSR Policy for the Company. A Foundation atGroup level has been created to undertake CSR initiatives. The CSR Committee is chaired byC P Toshniwal Non - Executive Director. Other members of the CSR Committee are AmarSapra - Independent Director and Rakesh Biyani - Non-Executive Director. The CSR Committeeat its meeting held on August 5 2017 had identified the programs to be undertakenfor spending the CSR amount and recommend to the Board. Accordingly the Company hasutilised and spent on such CSR programs all the amount accrued till the end of thefinancial year under review. The disclosures as per Companies (Corporate SocialResponsibility Policy) Rules 2014 is given in prescribed form which is appended hereto asAnnexure 5.
SCHEME OF ARRANGEMENT
After closure of the year under review the Board of Directors has approved the Schemeof Arrangement amongst the Company and its wholly owned subsidiary
- Vulcan Express Private Limited ("Vulcan") and their respectiveshareholders and creditors under section 230-232 read with section 66 of the CompaniesAct 2013 ("Scheme"). The arrangements involve inter alia the demergerof Fulfilment Business and Last Mile Delivery Business Undertakings of Vulcan and vestinto the Company. Further Vulcan being the wholly owned subsidiary of the Company noconsideration is proposed to be paid/ discharged for the arrangements embodied in theScheme. The Scheme is subject to approval of the requisite authorities.
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 Company's 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 underAnnexure 6 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 Act read with Rule 5(2) and 5(3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is excluded from theannual report being sent to the members of the Company but available for inspection by themembers at registered office of the Company during business hours on all working days upto the date of the ensuing annual general meeting. Any member interested in obtaining acopy thereof may write to the Company Secretary and the same will be furnished onrequest. The complete annual report including aforesaid information is being sentelectronically to all those members who have registered their e-mail addresses and is alsoavailable on the website of the Company.
EMPLOYEE STOCK OPTION PLAN
Pursuant to the approval of the Nomination and Remuneration Committee the Board ofDirectors and shareholders the Company has instituted Employee Stock Option Plan (FSCESOP 2017) for issue of up to 400000 options to eligible employees. Further theNomination and Remuneration Committee has made 283763 grants to the employees anddirectors of the Company. Details required to be provided under section 62 of theCompanies Act 2013 and Rule 12(9) of Companies (Share Capital and Debenture Rules 2014)and SEBI (Share Based Employee Benefits) Regulations 2014 are appended hereto as Annexure7.
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 2018 is given in Annexure 8.
CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Financial Statements prepared in accordance with the Indian AccountingStandards prescribed by the Institute of Chartered Accountants of India are appended tothis annual report. Pursuant to the provisions of Section 136(1) of the Companies Act2013 the annual report of the Company containing therein Standalone and the 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 in respect of Subsidiary company shall also be kept openfor inspection at the registered office of the Company during working hours for a periodof 21 days before the date of ensuing annual general meeting. The aforesaid documentsrelating to Subsidiary company can be made available to any member interested in obtainingthe same upon a request in that regards made to the Company.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under section 134(3)(c) of the Companies Act 2013 withrespect to Directors' Responsibility Statement the Directors of the Company state that in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitsof the Company for that year; they have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of theCompanies Act 2013 for safeguarding the assets of the Company and for preventing anddetecting fraud and other irregularities;
they have prepared the annual accounts for the financial year ended March 31 2018 on agoing concern basis; and they have laid down internal financial controls to be followed bythe Company and such financial controls are adequate and were operating effectively; theyhave devised proper systems to ensure compliance with the provisions of all applicablelaws and that such systems were adequate and operating effectively.
AWARDS AND RECOGNITION
During the year under review your Company was awarded with the following recognitions:
Best Cold Chain 3PL Service Provider at Cold Chain Strategy Summit 2017;
Best 3PL Company of the Year at The Goa State Logistics Supply Chain &Warehousing Leadership Awards 2017;
Best 3PL Company of the Year at ELSC 2017 held by Kamikaze B2B Media;
Industry Excellence in Supply Chain FMCG at ELSC 2017 held by Kamikaze B2B Media;
Excellence Award Position under Industrial / Retail Warehousing at SCALE Awards byCII Institute of Logistics;
Best 3PL Solutions Award at World Innovation Congress held by World InnovationCongress & Awards;
Most innovation Supply Chain Provider of the year held by World InnovationCongress & Awards;
Digital transformation & Supply Chain Excellence in Warehousing Management atGlobal Logistics Excellence Awards;
Indian 3PL of the year at Global Logistics Excellence Awards;
Operational Excellence in Safety Initiative at the 8th edition of ManufacturingSupply Chain Summit & Awards;
Quality Excellence in Reverse Logistics at the 8th edition of ManufacturingSupply Chain Summit & Awards;
Financial Express CFO Award 2018 Medium Enterprise by Financial Express
SEXUAL HARASSMENT POLICY
Your Company believes in providing a safe and harassment free workplace to everyindividual working in the Company through various means including training awareness andpractices. The Company always endeavours to create and provide an environment that is freefrom discrimination and harassment including sexual harassment. The Company has in place apolicy on prevention of sexual harassment at workplace which aims at prevention ofharassment of employees and lays down the guidelines for identification reporting andprevention of sexual harassment. The Company has an Internal Complaints Committee (ICC)which is responsible for redressal of complaints related to sexual harassment and followsthe guidelines provided in the policy. ICC conducts training workshop mainly focusing oninvestigation skills basic counselling skills such as listening paraphrasing and dealingwith biases through various kind of case studies role plays activities based on real lifeexamples role of ICC critical attitudes of an
ICC member and investigation process & report writing etc. Your Directors furtherstate that during the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
Your Directors desire to place on record their appreciation to all employees at alllevels who during the year under review with sustained dedicated effort enabled theCompany to deliver a good 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 shareholders and other Government agencies and lookforward to their continued patronage in future.
|For and on behalf of the Board of Directors of |
|Future Supply Chain Solutions Limited |
|Rakesh Biyani |
|Place: Mumbai |
|Date: April 25 2018 |