TO THE MEMBERS OF TRENT LIMITED
The Directors present their Sixty Sixth Annual Report together with the AuditedFinancial Statements for the year ended 31st March 2018.
1. Financial Results
| ||Standalone ||Consolidated |
| ||2017-2018 ||2016-2017 ||2017-2018 ||2016-2017 |
| ||Rs. Crores ||Rs. Crores ||Rs. Crores ||Rs. Crores |
|Revenue from operations ||2066.29 ||1716.58 ||2157.46 ||1812.44 |
|Other Income ||42.55 ||58.59 ||44.21 ||60.52 |
|Total Revenue ||2108.84 ||1775.57 ||2201.67 ||1872.96 |
|Total Expenses ||1937.20 ||1665.23 ||2032.37 ||1761.81 |
|Profit/(Loss) before exceptional items and tax ||171.64 ||110.34 ||169.30 ||111.15 |
|Exceptional Items ||- ||24.70 ||- ||(0.47) |
|Share in profit and loss of Associates/Joint venture as per Equity method ||- ||- ||(22.64) ||(8.97) |
|Profit/(Loss) before tax ||171.64 ||135.04 ||146.66 ||101.71 |
|Total Tax expenses ||54.91 ||28.17 ||59.62 ||43.05 |
|Pre-acquisition Profit/(Loss) ||- ||- ||- ||- |
|Profit/(Loss) for the period from continuing operations ||116.73 ||106.87 ||87.04 ||58.66 |
|Profit/(Loss) from discontinued operations (after tax) ||- ||- ||- ||26.29 |
|Profit/(Loss) for the period ||116.73 ||106.87 ||87.04 ||84.95 |
|Other Comprehensive Income || || || || |
|Items that will not be reclassified to profit and loss ||(1.16) ||0.68 ||(0.05) ||(2.77) |
|Income tax relating to items that will not be reclassified to profit or loss ||0.75 ||0.05 ||0.78 ||0.26 |
|Items that will be reclassified to profit and loss *[Full Figure (Rs. 806)] ||- ||- ||(0.00)* ||(0.02) |
|Income tax relating to items that will be reclassified to profit or loss ||- ||- ||- ||- |
|Other Comprehensive Income for the period net of tax ||(0.41) ||0.73 ||0.73 ||(2.53) |
|Total Comprehensive Income for the period ||116.32 ||107.60 ||87.77 ||82.42 |
|Profit/(Loss) attributable to Equity holders of the Company || || ||86.97 ||84.86 |
|Profit/(Loss) attributable to Non-Controlling interest || || ||0.07 ||0.09 |
|Total Comprehensive Income attributable to || || ||87.68 ||82.44 |
|Equity holders of the Company || || || || |
|Total Comprehensive Income attributable to Non-Controlling interest || || ||0.09 ||(0.02) |
|Retained earnings - Opening Balance ||298.94 ||192.07 ||66.65 ||(18.21) |
|Appropriations || || || || |
|Transfer to Debenture Redemption Reserve ||- ||- ||- ||- |
|Dividend on equity shares (excluding tax) ||33.23 ||- ||33.23 ||- |
|Tax on dividend ||6.77 ||- ||6.77 ||- |
|Closing balance of retained earnings ||375.67 ||298.94 ||113.62 ||66.65 |
Pursuant to the notification dated 16th February 2015 issued by the Ministryof Corporate Affairs the Company has adopted the Indian Accounting Standards ("IndAS") notified under the Companies (Indian Accounting Standards) Rules 2015 witheffect from 1st April 2016.
Considering the Company's financial performance the Board of Directors recommend adividend @ 115% i.e. Rs. 1.15/- per Equity Share of Rs. 1/- each (previous year @ 100%i.e. Rs. 1/- per Equity Share) on 332316730 Equity Shares for the Financial Year ended31st March 2018. The said dividend if approved by the Members alongwithdividend distribution tax represents a payout ratio of around 39% of the profit after tax.
3. Dividend Distribution Policy
Pursuant to the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 ("Listing Regulations") the Board ofthe Company has adopted a Dividend Distribution Policy which is annexed as Annexure A.The Policy is also uploaded on the website of the Company www.mywestside.com.
4. Share Capital
The paid up Equity Share Capital as on 31st March 2018 is Rs. 332316730/-comprising of 332316730 Equity Shares of Rs. 1/- each. During the year under reviewthe Company has not issued any shares. The Company has not issued shares with differentialvoting rights. The Company has neither issued employee stock options nor sweat equityshares and does not have any scheme to fund its employees to purchase the shares of theCompany.
5. Management Discussion and Analysis Report
A separate section on Management Discussion and Analysis Report ("MD&A")is included in the Annual Report as required under Regulation 34(2)(e) of the ListingRegulations. The MD&A includes discussion on the following matters within the limitsset by the Company's competitive position: industry prospects & developmentsopportunities & risks the performance of key retail formats & the outlook for thebusiness risks & concerns internal control systems & their adequacy anddiscussion on financial performance.
6. Business Excellence Initiative
The Company participates in the Tata Business Excellence Model ("TBEM")business maturity review and evaluation mechanism. TBEM emphasizes quality leadershipstrategic planning customer orientation & services process orientation humanrelations shareholder value and commitment to community development.
7. Board and Audit Committee Meetings
During the year Six Board Meetings and Seven Audit Committee Meetings were held.
The Audit Committee consists of Mr. A. Sen as the Chairman and Mr. N. N. Tata Mr. Z.S. Dubash and Mr. B. N. Vakil as Members. There have not been any instances during theyear when recommendations of the Audit Committee were not accepted by the Board.
At the Sixty Fifth Annual General Meeting ("AGM") of the Company held on 1stAugust 2017 the shareholders approved the re-appointment of Ms. S. Singh and Mr. A. Senas Independent Directors of the Company for the second term with effect from 3rdMarch 2017 to 2nd March 2022 and from 27th May 2017 to 17thNovember 2020 respectively. The shareholders also approved the terms and conditions ofre-appointment and revised remuneration of Mr. P. Auld as Managing Director of the Companywith effect from 1st May 2017 to 30th April 2020 at the said AGM.
At the Sixty Third AGM of the Company held on 7th August 2015 theshareholders had approved the terms and conditions of appointment and remuneration of Mr.P. Venkatesalu as Executive Director (Finance) and Chief Financial Officer of the Companyfor a term of three years with effect from 1st June 2015 to 31st May2018. On the recommendation of the Nomination and Remuneration Committee("NRC") the Board has approved the re-appointment of Mr. P. Venkatesalu asExecutive Director (Finance) and Chief Financial Officer of the Company for a term of fiveyears with effect from 1st June 2018 to 31st May 2023 subject toapproval of the shareholders and such other approvals if any.
All the Independent Directors have submitted declarations that each of them meets thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013("the Act") and Regulation 16(1)(b) of the Listing Regulations and there hasbeen no change in the circumstances which may affect their status as an independentdirector during the year.
In accordance with the provisions of the Act and in terms of the Articles ofAssociation of the Company Mr. P. Venkatesalu is liable to retire by rotation at theensuing AGM and is eligible for re-appointment.
9. Key Managerial Personnel
Mr. P. Auld - Managing Director Mr. P. Venkatesalu Executive Director (Finance)and Chief Financial Officer and Mr. M. M. Surti - Company Secretary are the Key ManagerialPersonnel of the Company as per the provisions of the Act.
10. Particulars of loans guarantees or investments
Particulars of loans given investments made guarantees given and securities providedare disclosed in the standalone financial statements.
11. Related Party Transactions
All related party transactions that were entered into during the financial year were inthe ordinary course of the business and on an arm's length basis. The Company has notentered into material contracts or arrangements or transactions with related parties inaccordance with Section 188 of the Act read with the Companies (Meetings of Board and itsPowers) Rules 2014. There were no materially significant Related Party Transactions madeby the Company during the year that would have required Shareholders approval under theListing Regulations. The Company has nothing to report in Form AOC-2 hence the same isnot annexed.
All Related Party Transactions are placed before the Audit Committee for priorapproval. Prior omnibus approval of the Audit Committee is also obtained for thetransactions which are repetitive in nature. A statement of all Related Party Transactionsis placed before the Audit Committee for its review on a quarterly basis specifying thenature and value of the transactions.
The Company has adopted a policy on Related Party Transactions. The policy as approvedby the Audit Committee and the Board of Directors is uploaded on the website of theCompany www.mywestside.com.
12. Business Responsibility Report
Pursuant to Regulation 34(2)(f) of the Listing Regulations the initiatives taken bythe Company from an environmental social and governance perspective are provided in theBusiness Responsibility Report which is included as a separate section in the AnnualReport.
13. Risk Management Policy
The Company has a Risk Management Policy consistent with the provisions of the Act andthe Listing Regulations.
The Internal Audit Department facilitates the execution of Risk Management Practices inthe Company in the areas of risk identification assessment monitoring mitigation andreporting. The Company has laid down procedures to inform the Audit Committee as well asthe Board of Directors about risk assessment and related procedures & status.
The major risks forming part of the Enterprise Risk Management process are also alignedwith the audit universe to the extent seen appropriate/relevant.
14. Subsidiaries associates and joint venture companies Key subsidiaries and jointventures of the Company:
a) Fiora Services Limited ("FSL") a subsidiary of the Company continuesto render various services in terms of sourcing activities warehousing distributionclearing and forwarding etc. FSL reported a total revenue of Rs. 32.13 crores (Rs. 45.22crores in FY 2016-17) for the period under review and total comprehensive income of Rs.2.93 crores (total comprehensive loss of Rs. 0.56 crores in FY 2016-17).
b) Fiora Business Support Services Limited ("FBSSL") [formerlyknown as "Westland Limited"] a subsidiary of the Company is engaged in thebusiness of providing business support and consultancy services relating to accountingmerchandising human resources payroll etc. FBSSL reported a total revenue of Rs. 13crores (Rs. 0.85 crores in FY 2016-17) for the period under review and total comprehensiveincome of Rs. 0.94 crores (Rs. 25.15 crores in FY 2016-17). During the previous yearFBSSL concluded a slump sale of its publishing business into Westland Publications Limited(An Amazon entity). The results of the current year are hence not comparable with theresults of the previous year.
c) Fiora Hypermarket Limited ("FHL") a subsidiary of the Company isengaged in retailing business. FHL operates hypermarket stores in the name of Star Bazaar.FHL reported a total revenue of Rs.93.82 crores (Rs. 95.73 crores in FY 2016-17) for theperiod under review and total comprehensive loss of Rs. 6.39 crores (Rs. 5.24 crores in FY2016-17).
d) Fiora Online Limited was incorporated on 28th December 2017 as asubsidiary of FHL for expansion of the grocery retailing business pursued by FHL.
e) Trent Hypermarket Private Limited ("THPL") a joint venture of theCompany operates the Star (including under the banners Star Market & Star Hyper)retail business. THPL reported a total revenue of Rs.962.23 crores (Rs. 890.73 crores inFY 2016-17) for the period under review and total comprehensive loss of Rs.90.32 crores(Rs. 52.39 crores in FY 2016-17).
f) Inditex Trent Retail India Private Limited ("Inditex") a jointventure of the Company is engaged in the retailing business. Inditex operates stores inthe name of Zara'. Inditex reported a total revenue of Rs. 1221.67 crores (Rs.1023.10 crores in FY 2016-17) for the period under review.
The Company has 7 subsidiaries and 3 joint ventures as on 31st March 2018.Pursuant to provisions of Section 129(3) of the Act a statement containing salientfeatures of the financial statements of the Company's subsidiaries and joint ventures inForm AOC-1 is attached to the financial statements of the Company.
Pursuant to the provisions of Section 136 of the Act the financial statements of theCompany consolidated financial statements along with relevant documents and separateaudited accounts in respect of subsidiaries are available on the website of the Companywww.mywestside.com. Any Member who is interested in obtaining a copy of the auditedaccounts in respect of subsidiaries may write to the Company Secretary.
During the year under review the Company has not accepted any deposits from thepublic. As on 31st March 2018 there were no deposits which were unclaimed anddue for repayment.
16. Significant and material orders passed by regulators or courts
No significant or material orders were passed by the regulators or courts or tribunalsimpacting the going concern status and Company's operations in future.
17. Material changes and commitments if any affecting the financial position of theCompany
Except as disclosed elsewhere in the Report no material changes and commitments whichcould affect the financial position of the Company have occurred between the end of thefinancial year of the Company to which the financial statements relate and the date ofthis Report.
18. Internal Financial Controls
The Company has laid down standards and processes which enable internal financialcontrol across the Company and ensure that the same are adequate and are operatingeffectively.
Details of the internal controls system are given in the Management Discussion andAnalysis Report.
19. Particulars of Employees
The information required under Section 197(12) of the Act read with Rule 5(1) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexedas Annexure B.
The information required under Rule 5(2) and (3) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 including amendment thereto isprovided in the Annexure forming part of the Report. In terms of the first proviso toSection 136(1) of the Act the Report and Accounts are being sent to the Shareholdersexcluding the aforesaid Annexure. The said Annexure is open for inspection at theRegistered Office of the Company. Any shareholder interested in obtaining a copy of thesame may write to the Company Secretary.
20. Annual evaluation made by the Board of its own performance and that of itscommittees and individual directors
The Board of Directors has carried out an annual evaluation of its own performanceBoard Committees and individual Directors pursuant to the provisions of the Act thecorporate governance requirements as prescribed by the Listing Regulations and theguidance note on Board evaluation issued by Securities and Exchange Board of India dated 5thJanuary 2017.
The NRC has defined the evaluation criteria for the performance evaluation ofindividual Directors and the Board/Committees.
The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of the criteria such as structure of the Board meetings andfunctions of the Board degree of fulfillment of key responsibilities establishment anddelineation of responsibilities to Committees effectiveness of Board processesinformation and functioning and quality of relationship between the Board and theManagement etc.
The performance of the Committees was evaluated by the Board after seeking inputs fromthe committee members on the basis of the criteria such as mandate and compositioneffectiveness of the Committee structure of the Committee and meetings independence ofthe Committee from the Board contribution to decisions of the Board effectiveness of themeetings and quality of relationship of the Committee with the Board and the Managementetc.
The Board and the NRC reviewed the performance of the individual Directors on the basisof the criteria such as knowledge and competency fulfillment of functions ability tofunction as a team initiatives taken availability and attendance at the meetingintegrity independence contribution at Board/ Committee Meetings and guidance/support tothe management outside Board/Committee Meetings etc. In addition the Chairman was alsoevaluated on key aspects of his role including effectiveness of leadership and ability tosteer the meetings impartiality ability to keep shareholders' interests in mind andmotivating and providing guidance to the Executive Directors etc.
In a separate meeting of Independent Directors performance of Non-IndependentDirectors performance of the Board as a whole and performance of the Chairman wasevaluated taking into account the views of Executive Directors and Non-ExecutiveDirectors. The same was discussed in the Board meeting that followed the meeting of theIndependent Directors at which the performance of the Board its Committees andindividual Directors was also discussed. Performance evaluation of Independent Directorswas done by the entire Board excluding the Independent Director being evaluated.
21. Company's Policy on Directors' appointment and remuneration etc.
Procedure for nomination and appointment of Directors
The NRC is responsible for developing competency requirements for the Board based onthe industry and strategy of the Company. Board composition analysis reflects in-depthunderstanding of the Company including its strategies environment operations financialcondition and compliance requirements.
The NRC conducts a gap analysis to refresh the Board on a periodic basis includingeach time a Director's appointment or re-appointment is required. The Committee is alsoresponsible for reviewing and vetting the CVs of potential candidates' vis--vis therequired competencies and meeting potential candidates prior to making recommendations oftheir nomination to the Board. At the time of appointment specific requirements for theposition including expert knowledge expected is communicated to the appointee.
Criteria for determining Qualifications Positive Attributes and Independence of aDirector
The NRC has formulated the criteria for determining qualifications positive attributesand independence of Directors in terms of provisions of Section 178(3) of the Act and theListing Regulations.
Independence: In accordance with the above criteria a Director will beconsidered as an Independent Director' if one meets with the criteria forIndependent Director' as laid down in the Act and Regulation 16(1)(b) of the ListingRegulations.
Qualifications: A transparent Board nomination process is in place that encouragesdiversity of thought experience knowledge perspective age and gender. It is alsoensured that the Board has an appropriate blend of functional and industry expertise.While recommending the appointment of a Director the NRC considers the manner in whichthe function and domain expertise of the individual will contribute to the overallskill-domain mix of the Board.
Positive Attributes: In addition to the duties as prescribed under the Act theDirectors on the Board of the Company are also expected to demonstrate high standards ofethical behavior strong interpersonal and communication skills and soundness of judgment.Independent Directors are also expected to abide by the Code for IndependentDirectors' as outlined in Schedule IV to the Act.
The Company has adopted a Remuneration Policy for the Directors Key ManagerialPersonnel and other employees pursuant to the provisions of the Act and the ListingRegulations.
The philosophy for remuneration of Directors Key Managerial Personnel and all otheremployees of the Company is based on the commitment of fostering a culture of leadershipwith trust. The Remuneration Policy of the Company is aligned to this philosophy.
The NRC has considered the following factors while formulating the Policy:
i. The level and composition of remuneration is reasonable and sufficient to attractretain and motivate Directors of the quality required to run the Company successfully;
ii. Relationship of remuneration to performance is clear and meets appropriateperformance benchmarks; and
iii. Remuneration to Directors Key Managerial Personnel and Senior Management involvesa balance between fixed and incentive pay reflecting short and long-term performanceobjectives appropriate to the working of the Company and its goals.
It is affirmed that the remuneration paid to Directors Key Managerial Personnel andall other employees is as per the Remuneration Policy of the Company. Details of theRemuneration Policy are given in the Corporate Governance Report.
22. Details of establishment of Vigil Mechanism/Whistle Blower Policy
The Board of Directors on the recommendations of the Audit Committee has approved andadopted a Whistle Blower Policy that provides a formal mechanism to the Directors and allemployees of the Company to approach the Chairman of the Audit Committee/Chief EthicsCounselor of the Company and make protective disclosure about the unethical behavioractual or suspected fraud or violation of the Company's Code of Conduct. The WhistleBlower Policy is available on the website of the Company www.mywestside.com.
23. Corporate Social Responsibility
Corporate Social Responsibility (CSR) is an integral part of our culture. The Companystrongly believes in the Tata ethos of "what comes from the community should go backmany times". One of the key features of our CSR projects is focus on participatoryand collaborative approach with the community. The Company continues to emphasize onimplementation of key areas denoted and chosen in its sustainability. The Company hasadopted a CSR Policy in compliance with the provisions of the Act.
Majority of our interventions are weaved around key CSR focus areas includingEmployability Education Entrepreneurship and Affirmative Action initiatives. UnderEducational interventions the Company's focus is English Communication skills along withsupport for infrastructure and capacity building. Under Employability focus is on skilldevelopment especially for youth & women. The Company under its Affirmative Actionprogramme focuses on empowering the backward community youth to earn a livelihood. UnderEntrepreneurship our focus is on skilling as well as empowering the rural women withentrepreneur skills along with an opportunity to contribute towards the family income. Theabove projects are in accordance with Schedule VII of the Act. The Company has spent Rs.106.92 lakhs towards the CSR projects during the current Financial Year 2017-18. Under theCompany's flagship Initiative of Star & Diya the Company has spent Rs. 43.58 lakhstowards the procurement cost of Christmas - stars and Diwali - diyas and earned a revenueof Rs. 112.74 lakhs from the sale of Christmas - stars and Diwali - diyas most of whichwas spent back towards the thrust areas of health education and malnutrition as communityaid.
The Annual Report on CSR activities is attached as Annexure C.
24. Secretarial Auditor's Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors of the Companyhad appointed M/s. Parikh & Associates Practicing Company Secretaries to undertakethe Secretarial Audit of the Company for the year ended 31st March 2018. TheSecretarial Audit Report is given as Annexure D. The Secretarial Auditor's Reportdoes not contain any qualification reservations or adverse remarks.
25. Extract of Annual Return
Pursuant to Section 134(3)(a) and Section 92(3) of the Act read with Rule 12(1) of theCompanies (Management and Administration) Rules 2014 the extracts of the Annual Returnin Form MGT-9 as at 31st March 2018 forms part of this report as Annexure E.
26. Corporate Governance
A separate section on Corporate Governance is included in the Annual Report along withthe certificate from M/s. Parikh & Associates Practicing Company Secretariesconfirming compliance with conditions on Corporate Governance as stipulated in the ListingRegulations.
27. Directors' Responsibility Statement
Based on the framework of internal financial controls and compliance systemsestablished and maintained by the Company work performed by the internal statutory andsecretarial auditors including audit of internal financial controls over financialreporting by the statutory auditors and the reviews performed by Management and therelevant Board Committees including the Audit Committee the Board is of the opinion thatthe Company's internal financial controls were adequate and effective during the financialyear 2017-18.
Accordingly pursuant to Section 134(3)(c) and 134(5) of the Act the Board ofDirectors to the best of their information and knowledge confirm that:
a. in the preparation of the annual accounts the applicable accounting standards hadbeen followed and that there were no material departures; b. the Directors had selectedsuch accounting policies and applied them consistently and made judgments and estimatesthat are reasonable and prudent so as to give a true and fair view of the state of affairsof the Company at the end of the financial year and of the profit of the Company for thatperiod;
c. the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
d. the Directors had prepared the annual accounts on a going concern basis; e. theDirectors had laid down internal financial controls to be followed by the Company and thatsuch internal financial controls are adequate and were operating effectively; and f. theDirectors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
The Shareholders of the Company at the Sixty Fifth AGM held on 1st August2017 have approved the appointment of Deloitte Haskins & Sells LLP CharteredAccountants (Firm Registration No. 117366W/W-100018) as the Statutory Auditors of theCompany to hold office till the conclusion of Seventieth AGM of the Company to be held inthe year 2022. The Auditor's reports do not contain any qualifications reservations oradverse remarks.
29. Policy on Prevention Prohibition and Redressal of Sexual Harassment at workplace
The Company has adopted a Policy on Prevention Prohibition and Redressal of SexualHarassment at the Workplace to provide protection to employees at the workplace and forprevention and redressal of complaints of sexual harassment and for matters connected orincidental thereto with the objective of providing a safe working environment whereemployees feel secure. The Company has also constituted an Internal Complaints Committeeto consider and to redress complaints of sexual harassment. During FY 2017-18 theCommittee has received 12 complaints pertaining to sexual harassment all of which wereresolved with appropriate action taken.
30. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo
A. Conservation of Energy: The Company consciously makes all efforts to conserve energyacross all its operations.
B. Technology Absorption: Nil
C. Foreign Exchange Earnings and Outgo: The Company incurred Rs. 130.68 crores inforeign currency for purchase of goods receipt of services and reimbursement of expenses.The Company earned Rs. 18.02 crores in foreign currency from retail sales throughInternational credit cards.
31. Compliance with Secretarial Standards
The Company has complied with the Secretarial Standards issued by The Institute ofCompany Secretaries of India on Meetings of the Board of Directors and General Meetings.
The Board wishes to place on record their sincere appreciation for the continuedsupport which the Company has received from its customers suppliers debenture holdersshareholders promoters bankers group companies and above all its employees.
| ||On behalf of the Board of Directors |
| ||Noel N. Tata |
|Mumbai 3rd May 2018 ||Chairman |