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V-Mart Retail Ltd.

BSE: 534976 Sector: Others
NSE: VMART ISIN Code: INE665J01013
BSE 00:00 | 20 Feb 2427.95 64.40
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NSE 00:00 | 20 Feb 2431.30 63.10
(2.66%)
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OPEN 2407.60
PREVIOUS CLOSE 2363.55
VOLUME 842
52-Week high 2867.00
52-Week low 1604.00
P/E 75.71
Mkt Cap.(Rs cr) 4,409
Buy Price 2427.95
Buy Qty 2.00
Sell Price 2490.00
Sell Qty 10.00
OPEN 2407.60
CLOSE 2363.55
VOLUME 842
52-Week high 2867.00
52-Week low 1604.00
P/E 75.71
Mkt Cap.(Rs cr) 4,409
Buy Price 2427.95
Buy Qty 2.00
Sell Price 2490.00
Sell Qty 10.00

V-Mart Retail Ltd. (VMART) - Director Report

Company director report

Dear Members

Your Company's Directors are pleased to present the 17th Annual Report ofthe Company along with Audited Accounts for the financial year ended 31 stMarch 2019.

FINANCIAL RESULTS

The operating results of the Company for the year under review are as follows:

(` in Lakhs)

Particulars For the year ended 31.3.2019 For the year ended 31.3.2018
Revenue 143967 122651
Profits/(Loss) 13724 13540
Less: Depreciation 2763 2293
Profit before exceptional item & tax 9981 11247
Exceptional Items 980 -
Less: Tax Expense 3818 3476
Prior period items-(income)/expenses - -
Net profit for the period 6163 7770
Less: Utilized for Dividend Issue 437 272
Other comprehensive income (36) 29
Balance carried forward to Balance Sheet 5690 7527

PERFORMANCE REVIEW

India is considered to be Asia's third-largest and the world's fourth-largest retailmarket after the US China and Japan. It is one of the fastest growing major economies inthe world in turn leading to high growth in consumer and retail markets. The retailsector contributes over 10% to India's GDP and employs around 8% of the total workforce.It is the world's fifth-largest global destination in the retail space.

The retail industry in India is projected to grow from USD 795 billion in 2017 to USD1200 billion by 2021. The sector has been experiencing solid growth with retaildevelopment taking place across the country but is more pronounced in Tier II & IIIcities

Resonating the trend the Net Sales of the Company increased by 17 % to ` 143217Lakhs in financial year 2018-19 from ` 122097 Lakhs in F.Y. 17-18. The Company hasposted Operating Profits (EBITDA) of ` 13293 Lakhs in F.Y. 18-19. The Company postedProfitafter Tax (PAT) of ` 6163 Lakhs in the current financial year as against a PATof`7770 Lakhs and EBITDA of `13279 Lakhs in the previous financial year.

A detailed analysis of Company's operations in terms of performance in marketsbusiness outlook risks and concerns forms part of the Management Discussion and Analysisa separate section of the Annual Report.

OPERATIONS REVIEW

During the year under review your Company continued to focus on enhancing theorganizational scalability across all dimensions including as Sourcing Supply ChainLogistics Technology Business Intelligence and People etc. to make it more robust andfuture-ready for supporting scalable growth. Towards the achievement of this goal yourCompany has been taking a number of initiatives such as:

Expansion to new markets

During the year your Company continued with its existing approach to endeavour toestablish its growth pattern in the Retail Industry with a chain of stores under the"V-Mart" brand in the north western and eastern parts of India. Marking a newmilestone your company has opened 44 new stores and closed one store in the previousyear. With this addition the cumulative count of the company's stores increased to 214spread over an area of 18 Lakhs sq.ft. V-Mart added three new states i.e. AssamMeghalaya and Himachal Pradesh to expand the footprint to 17 states. The value fashionmarkets are witnessing a new level of adoption wherein Tier IV towns are eagerly adoptingthe trend in Tier-II and III towns of seeking affordable & fashionable apparel andyour company aims to replicate success in exploring & harnessing opportunities in TierIV markets also.

Optimizing Supply Chain for enhancing Operational excellence

Improved the average inventory sales days from 86 to 81 days for faster replenishmentof merchandise with the latest trends Express delivery from the centralized distributioncentre to north-east for the sustenance of store freshness Capacity building at thewarehouse for catering to growth requirements the operations Launched an automated onlinerequirement portal and requests management system for enhancing efficiency and servinginternal customers

Revamping Sourcing & Product Assortment:

• Congruency in buying and planning processes with regional fashion tastes andpreferences for optimal procurement

• Sustaining growth through increasing share of private labels to 65%

• Launching new ranges of fresh products across all customer segments

• Identification & development of vendors for long term growth

Building robust and future-ready operations

• Built new pillars of leadership sustenance by on boarding a new IndependentDirector Chief Operating Officer (COO) Strategy Head and Head of Retail Operations atthe leadership level.

• Reinforcing cluster model for rapid scalability supply chain efficienciesprocurement flexibility cost savings and better implementation by placing new locationsstrategically within 50-150 km radius from existing cities

• Adding new team to launch and run omnichannel

• Revamped the visual merchandising team and quality team

• Capacity building in terms of adding new office space

• Instituting Zonal Business structures for driving higher ownership &regimental execution

• Made investments in the digital ecosystem by setting up an organization-widedata analytics platform and developing analytics that make the system more agile andresponsive

• Launched a unified people management software solution for managing ‘hireto retire' processes and mobility for providing an exceptional experience to all employees

• Augmented technical capabilities by adding a new data center re-innovatingreplenishment engine and launching Mobile POS machines at stores

• First-Time Marketing Initiatives - Localizing ATL through TVC of regionalfestivals engaging prominent Brand Ambassadors for brand awareness & positioning andenhancing store appeal through better visual merchandising

• Launched fully-integrated Customer Relationship Management & loyaltyplatform

Embracing Digital Channel - Launching Omnichannel

Your company is in the process of designing a 360 omnichannel experience seamlesslyintegrated across the entire customer lifecycle to deliver a digital experience at thestores as well as to online consumers. For responding to an intensifying competition thatis also witnessing the entry of global e-retailers your company aims to unlock and servethe aspirations of more ‘digitally aware' customers in all part of the country.

AWARDS & ACHIEVEMENTS

Your Company received several recognitions during the year under review. Your Company& development was recognised of invendors2018 asfor long The World's Best PerformingDepartment Store as per data compiled by Bloomberg. Mr. Lalit Agarwal the Chairman andManaging Director was also conferred the award of the ‘Retail Leader of theYear-2018' by Franchise India. Additionally the Company was the 2018 Winner of "BestPractice in Learning Transfer for Improving Business Bottom Line" at the World HRDCongress. The Company was also bestowed with the Retail Champion Award for apparel &lifestyle by Retail Association of India.

At the IMAGES Fashion Awards 2019 the Company was well recognized

• as the ‘IMAGES Most Admired Affordable Fashion Retailer of the Year

• with the ‘IMAGES Excellence Awards North India

• with the IMAGES Most Admired Retailer of the Year (Marketing and Promotion)North India.

In addition your Company won the 'Indian Retail Champions Awards at the RetailLeadership Summit 2019 and was also recognized as North India's Best Employer Brand atthe 13th Employer Branding Awards and was bestowed the "Value Retailer ofChoice" 2018" recognition by Progressive

OPERATING RESULTS AND BUSINESS

Your Company completes its seventeenth year in the field of fashion retailing. Theexisting business model of the Company with a focus on the consumption story based on thegrowing aspiration for fashion in the Tier-II and Tier-III cities continues to providemore promising results.

During the year under review your company opened 44 new stores across the focusregions. Same Store Sales growth for the year stood at 4% by value and 8.0% by volume.Other performance metrics also showed good traction. Footfalls improved by 15.1% wellassisted by the various promotions. The increase in footfalls has been accompanied by anincrease in bill size too which is an indication that our strategy is yielding the rightresults.

Total revenues increased to ` 143967 Lakhs compared to ` 122651 Lakhs in FY2017-18. Average inventory sales days improved to 81 days in FY 2018-19 against 86 days inFY 2017-18.

Sales per square foot is lower compared to the previous year primarily because of thesignificant opened in the year under review. These stores would understandably take sometime to ramp up.

DIVIDENDS

In terms of Dividend Distribution policy your Directors in its meeting held on 10thMay 2019 recommended a dividend of ` 1.70 per share @ 17% excluding the dividenddistribution tax for the financial year ended 31st March 2019. The proposalis subject to the approval of shareholders at the ensuing Annual General Meeting.

RESERVES

The Company during the year transferred ` 6163 Lakhs to the reserves. Post transferthe reserves stood at ` 29241 Lakhs for financial year 2018-19.

CREDIT RATING

Investment Information and Credit Rating Agency of India Limited (ICRA) has upgradedits long-term rating to [ICRA] AA- (pronounced ICRA double A minus) from [ICRA] A+(pronounced ICRA A plus) on the ` 110 crore cash credit limits of V-Mart Retail Limited(VMPL).ICRA has also reaffirmed its short-term rating at [ICRA] A1+ (pronounced ICRA A oneplus) on the `15 crore non-fund-based limits of the company. The outlook on the long-termrating is revised to Stable from Positive.

The rating upgrade factors in the improvement in Company's performance over the lastfew quarters with the company reporting a year-on-year (YOY) increase in turnover and netprofits by 22% and 77% respectively in FY2018. The top line and bottom line furtherregistered a YOY increase of 15% and 11% respectively in Q1 FY2019. The turnover of thecompany increased because of higher sales volumes in new as well as existing stores due tomore footfall. This indicates the growing popularity of the Company's retail chains. Theprofitability improved because of operational efficiencies including decline inshrinkages lesser discounts during the year and benefits on account of imposition of GST.The ratings continue to take into account the established track record of the promotersand the long presence of the Company in the value-retail industry. The revised creditrating of the Company is as under:

Facilities Earlier Rating Revised Rating
Long term bank limits [ICRA] A+ (ICRA A plus) [ICRA] AA- (ICRA double A minus) (with stable outlook)
Short term bank limits [ICRA] A1+ (ICRA A one plus) ICRA A1+ (ICRA A one plus)

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis for the period under review as required underSchedule V read with Regulation 34(2)(e) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 has been dealt with extensively in a separate sectionforming part of number of stores the Annual Report.

LISTING

The equity shares of your Company continue to be listed at BSE Ltd. (BSE) and theNational Stock Exchange of India Ltd. (NSE)

Exchange Scrip Code ISIN
NSE VMART INE665J01013
BSE 534976

The listing fees for fiscal 2019 have been paid for all of the above stock exchangeswhere the equity shares of the Company are listed.

EXTRACT OF ANNUAL RETURN

Pursuant to the provisions of Section 92(3) of the Companies Act 2013 read with Rule12 of the Companies (Management and Administration) Rules 2014 the extracts of AnnualReturn in prescribed form MGT – 9 is appended as Annexure-A to this Report.

CORPORATE GOVERNANCE

Pursuant to the provisions of the SEBI (Listing Obligations and DisclosuresRequirements) Regulations 2015 the detailed Report on Corporate Governance is appendedas Annexure to this Report.

NUMBER OF MEETINGS OF THE BOARD

The Board met four times (4) during the financialyear 18- 19 the details of which aregiven in Corporate Governance report Forming part of this report. The intervening gapbetween any two meetings was within the period prescribed by the Companies Act 2013 &SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015.

BOARD EVALUATION

The annual evaluation process of the Board of Directors ("Board") Committeesand individual Directors was carried out in the manner prescribed in the provisions of theCompanies Act 2013 and as per the Corporate Governance requirements prescribed by theSecurities and Exchange Board of India (Listing Obligations and Disclosures Requirements)Regulations 2015 ("SEBI Listing Regulations").

The Board and the Nomination & Remuneration committee reviewed the performance ofthe Board Committees and individual Directors on the basis of the criteria and frameworkadopted by the Board.

The evaluation criteria included various aspects such as functionality of Boardcompositions process & procedures including adequate & timely informationattendance delegation of responsibility decision making roles & responsibilityincluding monitoring benchmarking feedback relationship with the stakeholder's and asprovided by the Guidance Note on Board Evaluation issued by SEBI on 5thJanuary2017.

In a separate meeting of the Independent Directors performance of the Non-IndependentDirectors the Board as a whole and the chairman were also evaluated basis a set outcriterion.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board of Directors consists of six members of which four are IndependentDirectors. The Board also comprise of one Woman Independent Director.

In pursuance of section 203 of the Companies Act 2013 the key managerial personnel ofthe Company are – Mr. Lalit Agarwal Chairman & Managing Director Mr. AnandAgarwal Chief Financial Officer and Ms. Megha Tandon Company Secretary.

In accordance with the provisions of Section 152 of the Companies Act 2013 Mr. MadanGopal Agarwal (DIN: 02249947) is liable to retire by rotation at the ensuing AnnualGeneral Meeting and being eligible has offered himself for re-appointment. The Board ofDirectors recommends his reappointment and the matter is being placed for the approval ofmembers at the ensuing Annual General Meeting of the Company.

During the year Mr. Govind Shridhar Shrikhande (DIN: 00029419 ) was appointed to theBoard as Independent Director of the Company w.e.f. 2nd November 2018 for theperiod of five years subject to the approval of the members of the Company. The Companyhas received declaration from Mr. Shrikhande confirming that he meets with the criteria ofIndependence as prescribed under Section 149(6) of the Companies Act 2013 and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. The Board ofDirectors recommend his appointment and the matter is being placed for the approval ofmembers at the ensuing Annual General Meeting of the Company.

Mr. Aakash Moondhra (DIN 02654599) Independent Director whose current period of officeis expiring on 22nd September 2019. and who has submitted a declarationconfirming the criteria of Independence under Section 149 of the Companies Act 2013 readwith the Listing regulations as amended from time to time and who is eligible forreappointment for a second term under the provisions of the Companies Act 2013 Rulesmade thereunder and the Listing Regulations. The Board of Directors recommends hisre-appointment for a term of 5 years and the matter is being placed for the approval ofmembers at the ensuing Annual General Meeting of the Company.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary disclosures from each of its four IndependentDirectors under Section 149(7) of the Companies Act 2013 that he/she meets all thecriteria laid down in Section 149(6) of the Companies Act 2013 and Regulation 16 of theSEBI (Listing Obligation and Disclosures Requirement) Regulations 2015 and there has beenno change in the circumstances which may affect their status as Independent Directorduring the year.

During the year the Non-Executive Directors of the Company had no pecuniaryrelationship or transactions with the Company other than payments towards the sittingfees commission and reimbursement of expenses incurred by them for the purpose ofattending meetings of the Company.

POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION

The policy of the company aims to have a mix of Independent and Executive Directors onits Board and to separate out its functions of governance and management.

The policy of the Company on Director's appointment and remuneration including criteriafor determining qualifications positive attributes independence of a Director and othermatters provided under sub-section (3) of Section 178 is appended as Annexure-B to thisreport.

The appointment of Directors and remuneration paid during the financial year 2018-19 isas per the provisions of the Companies Act 2013 and as per the terms laid down in theNomination & Remuneration policy of the Company.

TRAINING OF INDEPENDENT DIRECTORS

Every new Independent Director of the Board attends an induction program. EverySenior-Management Personnel makes a presentation to inductees about the Company'sstrategy operations product and market finance risk management etc.

The details of familiarization programme have been provided under Corporate GovernanceReport forming part of this Report.

RETIREMENT BY ROTATION

In terms of the provisions of Section 152 of the Companies Act 2013 and Articles ofAssociations of the Company Mr. Madan Gopal Agarwal Director is liable to retire byrotation at the forthcoming Annual General Meeting and being eligible offers himself forre-appointment.

COMMITTEES OF THE BOARD

At present there are five Board committees namely: Audit Committee Nomination andRemuneration Committee Stakeholders Relationship Committee Corporate SocialResponsibility Committee and Risk Management Committee.

A detailed note on the Board and its Committees is provided under the CorporateGovernance report section which is forming part to this Annual Report.

DISCLOSURE REQUIREMENTS

As per SEBI Listing Regulations Corporate Governance Report with auditors' certificatethereon and Management Discussion and Analysis are attached which form part of thisreport.

The Company has also complied with disclosing the required details on the website ofthe company on www.vmart.co.in which are as follows: Details of its business Compositionof various Committees

PRACTISING COMPANY SECRETARY'S CERTIFICATE ON CORPORATE GOVERNANCE

As required under Schedule V Clause E read with Regulation 34(3) and of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the PracticingCompany Secretary's certificate on Corporate Governance is enclosed as Annexure to theBoard Report.

SHARE CAPITAL

a) Buy Back of Securities: The Company has not bought back any of its securitiesduring the year under review.

b) Issue of Sweat Equity: The Company has not issued any sweat equity sharesduring the year under review.

c) Issue of Bonus Shares: The Company has not issued any bonus shares during theyear under review.

d) Employees Stock Option / Restricted stock units: The Company has adopted ESOPScheme 2012 as per the applicable SEBI regulations and approved by the members at AnnualGeneral Meeting.

The Company has implemented an Employee Stock Option Scheme which was approved by theBoard of Directors and the shareholders vide resolution dated 2nd July 2012 and10th July 2012 respectively (‘the V-Mart ESOP Scheme 2012') consequent towhich 300000 equity shares of ` 10 each were to be granted upon exercise as stock options(ESOPs) to eligible employees. Subsequently the shareholders in its meeting held on 18thSeptember 2017 approved an amendment in the said ESOP scheme by increasing the totalnumber of stock option from 300000 to 600000 options. The exercise price of theseoptions will be determined by the Nomination & Remuneration Committee and the optionswill vest over a period of 12 months to 36 months of continued employment from the grantdate. The grant details under the scheme during the year are as follows:

Grants Vesting Time line
During the financial year 2018-19 3 30% of the Total Grant After 12 months from the date of grant
grants have been made comprising 30% of the Total Grant After 24 months from the date of grant
total 62717 options 40% of the Total Grant After 36 months from the date of grant

Details of equity shares allotted under ESOP during the year are as follows:

Sr. No. Date of Allotment No. of shares allotted
1 24th May 2018 26140
2 23rd July 2018 3708
3 5th February 2019 2790
Total 32638

Pursuant to the above allotment of shares the paid up capital of the Company standsincreased to ` 181299930 as on 31st March 2019.

The information required to be disclosed under SEBI (Share Based Employee Benefits)Regulations 2014 as on 31 st March 2019 are as follows:

Particulars Details
Date of Shareholders Approval 10th July 2012
Maximum Terms of options granted Options to be exercised within 8 years of vesting
Sources of Shares Primary Issuance
Variation of terms of options Nil
Number of options outstanding at the beginning of the year 97219
Number of options granted during the year 62717
Number of options forfeited / lapsed during the year 4192
Number of options vested during the year 29711
Number of options exercised during the year 32638
Number of shares arising as a result of exercise of options 32638
Money realized by exercise of options (` in Lakhs) 186.41
Number of options outstanding at the end of the year 123106
Number of options exercisable at the end of the year 25629
Pricing Formula The Nomination & Remuneration Committee is authorized to determine the exercise price of ESOPs.
Person-wise details of options granted during the Financial Year 2018-2019:
i) Senior managerial personnel/key managerial personnel Mr. Samir Misra
Mr. Snehal Shah
Mr. Dinesh Shrivastava
Mr. Ramesh K Agarwal
Ms. Anjali Goel
Mr. M. Srinivasan
Ms. Megha Tandon
Mr. Anand Agarwal
Mr. Syed Ali Athar
Mr. Rajan Sharma
Mr. Ranjan Kumar
ii) No of options granted and its exercise price Name Number of shares Exercise price per share
Mr. Samir Misra 11658 2047
Mr. Samir Misra 1698 2044
Mr. Snehal Shah 2585 2044
Mr. Dinesh Shrivastava 506 2044
Mr. Ramesh K Agarwal 3357 2044
Ms. Anjali Goel 2748 2044
Mr. M. Srinivasan 2069 2044
Ms. Megha Tandon 646 2044
Mr. Anand Agarwal 3648 2044
Mr. Syed Ali Athar 2419 2044
Mr. Rajan Sharma 4246 2044
Mr. Ranjan Kumar 3426 2286
Particulars Details
ii) Any other employee who received a grant in any one year of options amounting to 5% or more options granted during the year Nil
iii) Identified employees who are granted options during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant. Nil
Fully-diluted EPS pursuant to issue of shares on exercise of options in accordance with relevant Accounting Standards 33.9
Lock-in Nil
Impact of the difference on the profits of the Company and on the EPS Impact on profit:` 306.5 Lakhs Impact on EPS: 0.11
Difference if any between employee compensation cost (calculated according using the intrinsic value of stock options) and the employee compensation cost (calculated on the basis of fair value of stock options) 178.7 Lakhs
Weighted average exercise price of options whose exercise price either equals or exceeds or is less than the market price of the stock Exercise price exceeds market price : Not applicable
Exercise price equals market price : Not applicable
Exercise price is less than market price: As mentioned in below table
Weighted average fair values of options whose exercise price either equals or exceeds or is less than the market price of the stock Exercise price exceeds market price : Not applicable
Exercise price equals market price : Not applicable
Exercise price is less than market price : As mentioned in below table
Method and significant assumptions used to estimate the fair value of options granted during the year The fair market value has been calculated on the basis of the
‘Black Scholes model'.
Particulars ESOPs ESOPs ESOPs ESOPs ESOPs ESOPs ESOPs ESOPs ESOPs
Grant I Grant II Grant III Grant IV Grant V Grant VI Grant VII Grant VIII Grant IX
Price per option (In ` ) 150 450 573 470 900 1260 2047 2044 2286
Risk free return (In%) 8.42 8.32 8.16 7.93 7.80 7.64 7.45 7.42 7.37
Expected Life (In years) 4 4 4 4 4 4 3 3 3
Expected Volatility 25% 41% 38.74% 30.13% 42.48% 50.76% 40.30% 41.49% 22.23%
Dividend Yield 0.27% 0.20% 0.20% 0.24% 0.18% 0.10% 0.10% 0.10% 0.10%
Closing market price 210 539.30 615.40 511.30 1214.85 1413.80 2274.05 2270.95 2540.25
of share as on date of (IPO) (NSE) (NSE) (NSE) (NSE)
option grant (BSE) (BSE) (BSE) (BSE)
614 510 1220.45 1419.8
Weighted average exercise price (In `) 150 450 573 470 900 1260 2047 2044 2286
Weighted average fair value of stock option (In `) 50.9 263 248 211 673 727 902 913 792

EMPLOYEE STOCK OPTION DETAILS:

Grant Date Exercise price Options granted Options vested and exercisable Options unvested Options exercised Options forfeited Options out-standing
20th July 2012 150 153252 153252 - 123264 29988 -
5th January 2015 450 22350 22350 - 18700 3650 -
28th December 2015 573 13645 13645 - 8186 - 5459
30th January 2017 470 76225 44076 32149 16357 12919 46949
12th July 2017 900 6395 1918 4477 1918 - 4477
09th November 2017 1260 9300 2790 6510 2790 2772 3738
24th May 2018 2047 18527 - 18527 - - 18527
23rd July 2018 2044 40764 - 40764 - 234 40530
2nd November 2018 2286 3426 - 3426 - - 3426
Total 343884 238031 105853 171215 49563 123106

MOVEMENT OF STOCK OPTIONS DURING THE YEAR:

Total for all grants No. of options Weighted average exercise price (K) Weighted average remaining contractual life (Years)
Outstanding at the beginning of the year 97219 635 NIL
Granted during the year 62717 2058 6.56
Forfeited/ Cancelled during the year 4192 1080 6.56
Expired during the year NIL - NIL
Exercised during the year 32638 571 NIL
Outstanding at the end of the year 123106 1320 NIL
Exercisable at the end of the year 25629 491.94 NIL

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were onarm's length basis and were in the ordinary course of the business. There were nomaterially significant related party transactions made by the Company with the PromotersKey Management Personnel or other designated persons and have no potential conflict withinterest of the Company at large.

The Company has formulated a policy on Related Party Transaction which is available onthe website of the Company at the link http://www.vmart.co.in/corporate.html. The detailsof related party transactions entered during the year are provided in the accompanyingfinancial statements.

The particular of contract or arrangement with related parties referred in section188(1) of the Companies Act 2013 in the prescribed form AOC-2 is annexed as annexure-Gto this report.

DEPOSITS

During the FY 2018-19 your Company has not accepted any deposits within the meaning ofSection 73 and 76 of the Companies Act 2013 read with the Companies (Acceptance ofDeposits) Rules 2014 and other applicable laws and as such no amount of principal orinterest was outstanding as on date of the Balance Sheet.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013.

Loan guarantees & investment covered under the provisions of Section 186 of theCompanies Act 2013 if any form part of the notes to the financial statement provided inthis annual report

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY BETWEEN31ST MARCH 2019 AND THE DATE OF BOARD'S REPORT

There have been no such material changes and commitments affecting financial positionof the Company which have occurred between the end of the financial year of the Company towhich the financial statements relate and the date of the report.

SUBSIDIARY COMPANIES JOINT VENTURES & ASSOCIATE COMPANIES

The Company does not have any Subsidiary Joint Venture or Associate Company.

REGISTERED OFFICE

Registered Office of the company is situated at 610-611 Guru Ram Dass Nagar MainMarket Opp. SBI Bank Laxmi Nagar New Delhi – 110092.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company has constituted a Corporate Social Responsibility Committee of the Boardcomprising of five members namely Mr. Lalit Agarwal (Chairman) Mr. Madan Gopal AgarwalMr. Aakash Moondhra Ms. Sonal Mattoo (Members) and Mr. Govind Shridhar Shrikhande(Member). The Committee is responsible for formulating and monitoring the CSR policy ofthe Company. Details about the CSR policy of the Company and initiatives taken by theCompany on CSR during the year are available on the company's website.

As per the Companies Act 2013 every company having net worth of rupees five hundredcrores or more or turnover of rupees one thousand crores or more or a net profit ofrupees five crores or more during any financial year shall spend in every financial yearat least two percent of the average net profits of the company made during the threeimmediately preceding financial year in pursuance of its Corporate Social ResponsibilityPolicy. Accordingly our Company was requires to spend ` 148 Lakhs on CSR activities duringthe year. During the year under review your Company has spent amount ` 66 Lakhs towardsCorporate Social Responsibility.

The annual report on CSR Activities is appended as Annexure-C to this Board Report.

JUSTIFICATION FOR NOT SPENDING THE PRESCRIBED AMOUNT ON CSR ACTIVITIES

Our CSR vision is to enhance the quality of life indicators of the local communitieswhere we conduct our business. This is by way of various initiatives e.g. in educationsports coaching skill development and capacity building social infrastructure upkeep andmaintenance (school parks etc.) and livelihood programs.

In order to spend the average of 2% of Average Net profits of preceding three financialyears the CSR committee had a number of meetings. Many potential funding avenues andinitiatives were discussed and implemented while several more proposals are beingcurrently evaluated. Since much needed due diligence is involved in this process beforefinalizingthe real beneficiaries which consumes a lot of time due to which the Companycouldn't spent the prescribed full CSR amount under Companies Act 2013.

We are committed to spending the mandated CSR funds in line with our vision andobjectives and the project pipeline is being streamlined accordingly. We expect tofulfillour accumulated CSR spending commitments in this financial year on projects thatare in the impact areas related to our CSR vision.

CONSERVATION OF ENERGY

The operational activity of the Company does not involve large energy consumption. Inany case conservation of energy is considered to be a priority and therefore ensuringminimum consumption by way of better energy conservation programs training/ awareness ofthe employees layout of machines and prompt upkeep is a continuous exercise.

The Company has taken many energy initiatives such as:

• Installation of LED lights and power saving equipments at all stores to conserveelectricity usage

• Optimum use of air conditioner (AC) at the stores in order to reduce theelectricity consumption

• Automation of processes to reduce use of paper

• Installation of glass doors walls and windows at the stores to use daylight andreduce electricity consumption

• Plantation of trees for combating air pollution at warehouse

• Elimination of the use of plastic carry bags at the stores

The Company is in process of evaluating the usage of solar penal at the stores;fisability study to implement the same is in process.

TECHNOLOGY ABSORPTION

Your Company is taking care of latest development and advancements in technology andall steps are being taken to adopt the same. We believe that driven by our strategic roadmap sustained efforts to build internal capabilities and organizational structureimprove processes and systems through advanced technology and digitialisation investmentsin talent pipeline and increasing cost efficiencies will propel us on a faster growthpath. we are focusing on making our ‘hardware' i.e. the supply chain logistics andtechnology backbone more robust and future-ready to support scalable growth and expansioninto new markets and enhance data-driven decision-making During the year under reviewseveral technological changes have been implemented at the company's Headofficewarehouse as well as at the stores which includes: Installation of new businessintelligence tool Setting up an organization-wide data analytics platform Adding a newdata center Digitalisation of product catalogue Upgradation of network backbone Investmentfor launching omni enable retail Launching Mobile POS Machine Launched people managementsoftware solution Implementation of new design tools and platform Upgradation inreplenishment software and rule engine.

FOREIGN EXCHANGE EARNINGS AND OUTGO

Sr. No. Particulars Foreign Exchange Earning Foreign Exchange outgo
(Amount in `) (Amount in `)
1 Total Nil Nil

CODE OF CONDUCT

The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and all employees in the course of day to day business operations ofthe Company. The Company believes in "Zero Tolerance" against briberycorruption and unethical dealings / behaviors of any form and the Board has laid downdirectives to counter such acts. The Code has also been posted on the Company's website.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a Whistle Blower Policy/ Vigil Mechanism to deal with instances offraud and mismanagement if any. The purpose of this mechanism is to provide a frameworkto report concern about unethical behavior actual or suspected fraud or violation of theCompany's Code of Conduct or ethics policy and provide adequate safeguards againstvictimization of the person availing this mechanism. This Policy has been appropriatelycommunicated within the organization and is effectively operational. The policy providesmechanism whereby whistle blower may send protected disclosures directly to the Chairmanof Audit Committee or Vigilance Officer. The Policy is available on the website of theCompany i.e. www.vmart.co.in.

PREVENTION OF INSIDER TRADING

The Securities and Exchange Board of India (SEBI) has in exercise of powers conferredunder Securities and Exchange Board of India Act 1992 has made the Securities andExchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations 2018 toamend the Securities and Exchange Board of India (Prohibition of Insider Trading)Regulations 2015

In view of the above the code of conduct to regulate monitor & report trading byinsider has been approved by the Board of Directors at their duly convened meeting.

The Code requires pre-clearance for dealing in the Company's shares and prohibits thepurchase or sale of Company shares by the Directors and the designated persons while inpossession of unpublished price sensitive information in relation to the Company andduring the period when the Trading Window is closed. The Board is responsible forimplementation of the Code.

All Board Directors and the designated employees have confirmed compliance with thecode.

RISK MANAGEMENT

Your Company is working in an open environment and hence faces various types of risk.Company has analyzed all the possible types of risk and constituted a Risk ManagementCommittee of the Board comprising of four members namely Mr. Aakash Moondhra (Chairman)Mr. Murli Ramachandran (Member) Ms. Sonal Mattoo (Members) and *Mr. Govind ShridharShrikhande (Member).

 

* Mr. Govind Shridhar Shrikhande appointed Independent Director of the Company witheffect from Nov 2 2018.

The Committee is responsible for formulating and monitoring the Risk Management policyof the Company.

HUMAN RESOURCE MANAGEMENT

The focus for the year was on Capability Building Employee Engagement and Key TalentManagement. We are focused to attract and retain talented skills and make them motivatedthrough various skill-development programmes. We provide quality workplace to ouremployees and provide platform to develop and to grow.

The statement containing the names and other particulars of employees in accordancewith section 197 (12) of the Companies Act 2013 read with rules 5(1) & 5(2) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is appendedas Annexure-D to the Board Report.

The details of the employees of the Company employed throughout the financialremuneration of ` 1.02 Crores or more or employed for the part of the year and in receiptof ` 8.5 Lakhs or more a month under Rule 5(2) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are mentioned in Annexure D to thisreport.

STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act 2013 M/s S.R. Batliboi& Co. LLP Chartered Accountants (Firm Registration No. 301003E/E300005) wereappointed as Statutory Auditors of the Company for a term of five consecutive years tohold office from the conclusion of the 16th Annual General Meeting held on 29thJune 2018 until the conclusion of 21st Annual General Meeting of the Companyto be held in the calendar year 2023 subject to annual ratification by members at everyAnnual General Meeting on such remuneration as may be decided. However Vide notificationdated 7th May 2018 issued by Ministry of Corporate Affairs the requirement ofannual ratification has been omitted.

AUDITORS REPORT

There was no observation or qualification in the Auditors Report for the financial yearended 31 st March 2019. The Notes on Financial Statements referred to in theAuditors' report are self-explanatory and therefore do not require any further comments.

SECRETARIAL AUDITOR & REPORT

M/s. VKC & Associate Company Secretaries a partnership firm was appointed asSecretarial Auditors to conduct the Secretarial Audit of the Company for the FY 2018-19pursuant to the provisions of Section 204 of the Companies Act 2013 read with theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014. TheSecretarial Audit report in form MR- 3 is enclosed herewith as Annexure-E to the Board'sReport.

The Secretarial Audit Report does not contain any observation or adverse remark.

INTERNAL FINANCIAL CONTROL

The Board has adopted adequate policies and procedures for ensuring orderly andefficient conduct of its business including adherence to the Company's policiessafeguarding of its assets prevention and detection of frauds and errors the accuracyand completeness of the accounting records and the timely preparation of reliablefinancial disclosures.

SIGNIFICANT AND MATERIAL ORDERS

There was no such order passed by the regulators or courts or tribunals impacting thegoing concern status and Company's operations in future during the year under review. yearwas in receipt of a

DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION ANDREDRESSAL) ACT 2013

\Your Company laid down an Anti-Sexual Harassment Policy in compliance with therequirements of the Sexual Harassment of Woman at Workplace (Prevention Prohibition andRedressal) Act 2013. The Internal Complaints Committee (ICC) has been set up to redresscomplaints regarding sexual harassment if any.

The disclosures for the period under review as per the Anti-Sexual Harassment Policy ofthe Company and applicable Act thereof are as follows:

(a) Number of complaints of sexual harassment received during the year: 5

(b) Number of complaints disposed off during the year: 5

(c) Number of cases pending for more than ninety days: Nil

(d) Number of workshops on awareness program against sexual harassment carried out: 1

(e) Nature of action taken by the employer or district officer: Appropriate Actiontaken by the Company.

INCIDENT OF FRAUD

No fraud by the Company or on the Company by its officers or employees has been noticedor reported during the period covered by our audit

INVESTORS EDUCATION & PROTECTION FUND (IEPF)

Pursuant to the applicable provisions of the companies Act 2013 read with IEPFAuthority (Accounting Audit Transfer & Refund) Rules 2016 all unpaid or unclaimeddividend are required to be transferred by the Company to the IEPF established by CentralGovernment after completion of seven years. Further details of unpaid or unclaimeddividend are provided on our website at www.vmart.co.in.

BUSINESS RESPONSIBILITY REPORT

As stipulated in term of the provisions of Regulation 34 of SEBI (Listing Obligation& Disclosure Requirements) Regulations 2015 the Business Responsibility Reportdescribing the initiatives undertaken by the Company from environmental social andgovernance perspective is presented in a separate section forming part of this AnnualReport.

COST RECORDS AND COST AUDIT

Maintenance of cost records and requirement of cost audit as prescribed under theprovisions of section 148(1) of the Companies Act 2013 are not applicable for thebusiness activity carried out by the Company

DIVIDEND DISTRIBUTION POLICY

Pursuant to Regulation 43A of the SEBI (Listing obligations and DisclosuresRequirements) Regulations 2015 ("the listing regulations") the top 500 listedcompanies shall formulate a dividend distribution policy. Accordingly the policy wasadopted to set out the parameters that will be taken into consideration by the Board ofthe Company in determining the distribution of dividend to its shareholders and/orretaining profits is enclosed as Annexure-F to the Board's Report and is also available onthe Company's website at the link http://www.vmart.co.in/nimda/product_image/invester/Dividend_ Distribtion_Policy4.pdf

SECRETARIAL STANDARDS

During the year under review your Company has complied with all applicable secretarialstandards issued by The Institute of Company Secretaries of India and approved by theCentral Government pursuant to Section 118 (10) of the Companies Act 2013.

DIRECTOR'S RESPONSIBILITY STATEMENT

Pursuant to Section 134(3)(c) of the Companies Act 2013 the Directors hereby stateand confirm that :

a) In the preparation of the annual accounts the applicable accounting standards havebeen followed.

b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the company at the end of the financial year and ofthe profit or loss of the company for that period.

c) The Directors have 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 have prepared the annual accounts on a going concern basis.

e) The Directors have laid down Internal Financial Controls to be followed by theCompany and that such internal financial controls are adequate and operating effectively.

f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

ACKNOWLEDGEMENT

Your Directors take this opportunity to express their sincere appreciation for theexcellent support and co-ordination extended by the shareholders customers suppliersbankers and all other business associates. Your Directors gratefully acknowledges ongoingco-operation and support provided by Central Government and State Government and allregulatory authorities. Your Directors also place on records their appreciation for thecontribution made by employees at all levels.

By the order of Board
or and on behalf of Board of Directors
Lalit Agarwal
Place: Gurugram Chairman & Managing Director
Date: 10th May 2019 DIN: 00900900