Your directors are pleased to present the thirty seventh annual report of your Companytogether with the audited financial statements for the financial year ended March 312020.
1. SUMMARY OF FINANCIAL RESULTS (Rs in lakhs)
|Particulars ||Financial Year ended 31st March 2020 ||Financial Year ended 31st March 2019 |
|Total Income ||212885.65 ||211746.82 |
|Profit before Finance cost & Depreciation ||30858.48 ||25191.92 |
|Finance Costs ||3673.37 ||1086.37 |
|Depreciation& Amortization expense ||16753.43 ||10058.09 |
|Profit Before Tax ||10431.68 ||14047.46 |
|Tax Expense ||1420.19 ||4855.85 |
|Net Profit After Tax ||9011.49 ||9191.61 |
|Other comprehensive income ||(204.92) ||(288.34) |
|Total Comprehensive income ||8806.57 ||8903.27 |
|Basic& diluted Earnings per Share (Rs.) ||9.97 ||10.17 |
2. OPERATING HIGHLIGHTS / STATE OF COMPANY'S AFFAIRS
During the year under consideration your Company achieved a gross revenue of Rs.212885.65 lakhs as against Rs.211746.82 lakhs for the earlier fiscal depicting a growthof 0.54 %.The Profit before tax (PBT) was Rs. 10431.68 lakhs as against the Profit beforetax of Rs. 14047.46 lakhs in the previous year depicting a decline of 25.74%.
While the Company's Goods Transport Division achieved a turnover of Rs. 172469.20lakhs registering a growth rate of 2.29% as compared to the previous year Bus Operationsdivision achieved a turnover of Rs. 34371.06 lakhs registering a decline of 9.63%. Adetailed financial performance analysis is provided in the Management Discussion &Analysis Report which is part of this Annual Report.
3. SHARE CAPITAL
The paid up Equity Share Capital as at March 312020 stood at Rs.9034.35 lakhs. Therewas no change to the paid up share capital during the fiscal.
The company has not issued shares with differential voting rights nor has granted anystock options or sweat equity. As on March 312020 none of the Directors of the companyheld instruments convertible into equity shares of the Company.
4. CHANGE IN THE NATURE OF BUSINESS
There is no change in nature of business of the Company. Your Company continues to beone of the leading Logistics service providers in the country. The service offerings ofthe Company in the Logistics space are Goods transport and Passenger transport apart fromTransportation of Passengers by Air and Wind Power Generation business.
5. CAPITAL EXPENDITURE ON TANGIBLE ASSETS:
During the Financial year 2019-20 the company has incurred a capital expenditure ofRs. 16597.03 lakhs. Out of the same an amount of Rs.10988.82 lakhs was invested onpurchase of new fleet i.e. predominantly on lorries (Addition of 520 goods transportvehicles in FY20 Small Vehicles - 64 vehicles LCVs-22 Vehicles HGVs - 432 vehiclesTankers-2). An amount of Rs. 3673.95 Lakhs was spent on additional Buildings out of whichRs. 3135.28 was spent for Building in Surat and Rs.504.55 lakhs was spent on additionalBuilding in Ballari. A sum of Rs.1934.27 Lakhs was incurred towards addition of othercapex components which include the cost incurred on additions to Aircrafts Plant &Equipments Office Equipments Furnitures and Fixtures and Leasehold Improvements.
The Company has adopted the new accounting standard i.e. Ind AS 116- Leases which hasbecome effective from 1 April 2019 (transition date). The adoption of this new Standardhas resulted in the Company recognising a right-of-use of assets and related leaseliability in connection with all former operating leases except for those identified aslow-value or having a remaining lease term of less than 12 months from the date of initialapplication.
The Company has recognised lease liability on the date of initial application at thepresent value of the remaining lease payments discounted using the incremental borrowingrate at the date of initial application. The Company has recognised a right-of-use ofassets on the date of initial application at its carrying amount as if the Standard hadbeen applied since the commencement date of lease but discounted using the incrementalborrowing rate at the date of initial application.
The Company has discounted lease payments using the incremental borrowing rate as at1st April 2019 for measuring lease liabilities at '27047.16 lakhs and accordinglyrecognised right-of-use assets at '24623.53 lakhs by adjusting retained earnings by '1911.20 lakhs (net of tax) including adjustments for prepaid/accrued rent and leaseequalisation reserve as at the aforesaid date.
The impact of adopting Ind AS 116 on the financial statements for the year ended 31March 2020 is as follows:
|Particulars ||Year ended 31 March 2020 (Erstwhile basis) ||Year ended 31 March 2020 (As per Ind AS- 116) ||Increase/ (Decrease) in Profit |
|Freight handling and servicing cost ||149427.60 ||141034.07 ||8393.53 |
|Finance costs ||1152.13 ||3673.37 ||(2521.24) |
|Depreciation and amortisation expense ||10312.38 ||16753.43 ||(6441.05) |
|Profit before tax ||11000.44 ||10431.68 ||(568.76) |
|Profit after tax ||9437.10 ||9011.49 ||(425.61) |
The comparative details of dividend declared are as follows:-
| || |
Financial Year 2019-20
Financial Year 2018-19
| ||Dividend Per share (in Rs) ||Dividend Payout(Rs in lakhs) ||Dividend Per share (in Rs) ||Dividend Payout (in Rs lakhs) |
|Interim Dividend ||7.00 ||7623.97 ||3.50 ||3811.99 |
|Final Dividend ||- ||- ||2.00 ||2178.28 |
|Total Dividend ||7.00 ||7623.97 ||5.50 ||5990.27 |
|Payout ratio (Interim and Final Dividend) || |
# Dividend payout as disclosed above includes dividend distribution tax also.
Considering the developments arising out of Covid-19 pandemic and need to conserveresources the Board does not recommend further dividend for the year under considerationand recommends that the interim dividend paid be considered as the final dividend for theyear.
In compliance with the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirement) Regulations 2015 (SEBI Listing Regulations) theDividend policy of the Company is available on the Company's website at http://vrlgroup.in/vrl_investor_desk.aspxRsdisplay=policies. A copy of the same is annexed tothis Report as Annexure A.
8. TRANSFER OF UNPAID AND UNCLAIMED AMOUNT TO IEPF:
The Ministry of Corporate Affairs under Section 124 and 125 of the Companies Act 2013requires dividends that are not encashed/ claimed by the shareholders for a period ofseven consecutive years to be transferred to the Investor Education and Protection Fund(IEPF).
During the year under consideration no amount was due for transfer to IEPF inaccordance with Section 125 of the Companies Act 2013.
The details of unclaimed dividend and IPO share application money along with their duedates for transfer to IEPF is provided in the Corporate Governance Report which forms partof this Annual Report.
9. TRANSFER TO RESERVES:
The Company has transferred an amount of Rs.901.15 lakhs to the General Reserve out ofcurrent year's profits in line with its practice of earlier years.
10. SUBSIDIARY COMPANIES:
The Company does not have any subsidiary.
11. FIXED DEPOSITS
The Company has not accepted any deposits during the year within the meaning of Section73 of the Companies Act 2013 and the rules made there under.
12. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
The company has not given any loans or guarantees covered under the provisions ofsection 186 of the Companies Act 2013. Details of investments made by the company aregiven in the notes to the financial statements.
13. CREDIT RATING
During the year ICRA Limited has upgraded the Long term rating of the Company from[ICRA] A-(pronounced as ICRA A) to [ICRA] A+ (pronounced as ICRA A Plus). The outlook onthe long term rating is Stable.
14. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34 of SEBI Listing Regulations read with Schedule V thereto is presentedin a separate section forming part of this Annual Report.
15. BUSINESS RESPONSIBILITY REPORT
Securities Exchange Board of India vide recent notification mandated top 1000 listedcompanies to include a report on business responsibility. The said report forms part ofthis Annual Report.
16. CORPORATE GOVERNANCE
The Company is committed to maintain the steady standards of corporate governance andadhere to the corporate governance requirements set out under extant law. The Report oncorporate governance as stipulated under Regulation 34 of the SEBI Listing Regulationsread with Schedule V thereto forms part of this Annual Report. The requisite certificatefrom the Auditors of the Company confirming compliance with the conditions of corporategovernance as stipulated under the aforesaid Regulations as also the related certificatefrom CEO/CFO are attached to the Report on Corporate Governance.
The auditors' certificate does not contain any qualification reservation or adverseremarks.
17. BOARD COMPOSITION AND INDEPENDENCE
The composition of the Board is in conformity with Section 149 of the Companies Act2013 and Regulation 17 of the SEBI Listing Regulations which stipulates that the Boardshould have optimum combination of Executive and Non-executive Directors with at least oneIndependent Woman Director and at least 50% of the Board should consist of Independentdirectors as the Chairman of our Board is an Executive Director.
As on March 31 2020 the Board comprised of twelve Directors. Out of these two areManaging Directors who are also the Promoters of the Company and two are Whole TimeDirectors the other eight being Non-Executive Directors.
Of the eight Non-Executive Directors six are Independent Directors. These include twoIndependent Woman Directors. All the Directors possess the requisite qualificationsexpertise and experience in general corporate management finance banking laws and otherallied fields enabling them to contribute effectively in their capacity as Directors ofthe Company.
None of the Directors of the Company are related to each other except Dr. VijaySankeshwar Chairman & Managing Director (CMD) and Mr. Anand Sankeshwar ManagingDirector (MD) .
All Independent Directors have given due declarations that they meet the criteria ofindependence as laid down under section 149(7) of the Companies Act 2013 and under extantprovisions of the SEBI Listing Regulations.
18. NUMBER OF MEETINGS OF THE BOARD
During the year four Board Meetings were held details of which are provided in theCorporate Governance Report. The intervening gap between the Meetings was in compliancewith the requirements of the Companies Act 2013 and SEBI (LODR) Regulations 2015.
19. COMMITTEES OF THE BOARD
The Board has the following committees:
a. Audit Committee
b. Nomination and Remuneration Committee
c. CSR Committee
d. Stakeholders Relationship Committee
e. Risk Management Committee
f. Administration Committee
g. Finance Committee
Details such as terms of reference powers functions meetings membership ofcommittee attendance of directors etc. are dealt with in Corporate Governance Reportforming part of this Annual report.
Board has accepted all recommendations made by the Audit Committee during the year.
20. DETAILS OF DIRECTORS AND KEY MANAGERIAL PERSONNEL
There was no induction of any new director during the year under consideration.
Mr. K N Umesh Whole-time Director and Mr. Raghottam Akamanchi Non-Executive Directorof the Company retire by rotation owing to their tenure being the longest amongstretiring directors and being eligible offer themselves for reappointment. The Boardrecommends their re-appointment.
Mrs. Medha Pawar Independent Director was appointed w.e.f. December 12th 2014 and herterm concluded on December 11th 2019. Based on the recommendation of Nomination andRemuneration Committee Board at its meeting held on November 09th 2019 re-appointed herfor a second term of 5 years w.e.f. December 12th 2019 subject to approval ofshareholders by Special Resolution at the ensuing General Meeting.
Mr. Shankarasa Ladwa Independent Director was appointed w.e.f. February 19th 2015 andhis term concluded on February 18th 2020. Based on the recommendation of Nomination andRemuneration Committee Board at its meeting held on February 08th 2020 re-appointed hisfor a second term of 5 years w.e.f. February 19th 2020 subject to approval ofshareholders by Special Resolution at the ensuing General Meeting.
Dr. Anand Pandurangi Independent Director was appointed w.e.f. February 19th 2015 andhis term concluded on February 18th 2020. Based on the recommendation of Nomination andRemuneration Committee Board at its meeting held on February 08th 2020 re-appointed hisfor a second term of 5 years w.e.f. February 19th 2020 subject to approval ofshareholders by Special Resolution at the ensuing General Meeting.
During the year under review no directors resigned in the Company.
d) Passing of Special Resolutions
In terms of sections 196 197 & 198 read with Schedule V to the Companies Act2013 ("the Act") and the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 of the Companies Act 2013 (the Act) and in accordancewith the Regulations 17 (6)(e) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 Company needs to getshareholders approval by Special Resolution for payment of remuneration to Dr. VijaySankeshwar Chairman and Managing Director with effect from January 1st 2020 in view ofhis remuneration having being fixed for a three years period from 01st January 2017 to31st December 2019.
Dr. Vijay Sankeshwar has indicated that he does not seek any enhancement in theremuneration being paid to him. As such the management of the Company proposes thecontinuation of the same remuneration as was being paid to him earlier. Also in light ofthe COVID-19 impact on the financial performance of the company the managementanticipates a profit erosion / reduction from such pandemic. As such any payment ofremuneration to him for the current financial year in case of inadequacy of profit wouldrequire approval of the shareholders as per the provisions of the Companies Act 2013.Detailed reasons as required under the Companies Act 2013 have been set out in the Noticeof the Annual General Meeting.
In terms of sections 196 197 & 198 read with Schedule V to the Companies Act2013 (the Act) and the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 of the Companies Act 2013 (the Act) and in accordance with theRegulations 17 (6)(e) of the Securities and Exchange Board of India (Listing Obligationsand Disclosure Requirements) Regulations 2015 Company needs to get shareholders approvalby Special Resolution for remuneration paid/ payable to Mr.Anand Sankeshwar ManagingDirector Mr. K N Umesh Executive Director and Mr. L R Bhat Executive Director which isexpected to be in excess of the limits prescribed under Schedule V of the Companies Act2013 in view of the financial impact of Covid-19 pandemic. As it is contemplated tocontinue the existing remuneration to above said Executive Directors in case of inadequacyof profit approval from shareholders by way of special resolution would be required.
The requiste approval under Regulations 17(6) of SEBI (LODR) Regulations 2015 is alsobeing sought in respect of remuneration payable to the Managing Directors.
KEY MANAGERIAL PERSONNEL
Pursuant to Section 203 of the Companies Act 2013 the Key Managerial Personnel (KMP)of the Company are Dr. Vijay Sankeshwar Chairman and Managing Director Mr. AnandSankeshwar Managing Director Mr. K N Umesh Whole time Director Mr. L R Bhat wholetime Director Mr. Sunil Nalavadi Chief Financial Officer and Mr. Aniruddha PhadnavisCompany Secretary. There was no change in Key Managerial Personnel of the Company duringthe year.
21. STATUTORY DISCLOSURES
None of the Directors of your Company are disqualified as per provisions of Section164(2) of the Companies Act 2013. Your Directors have made necessary disclosures asrequired under various provisions of the Companies Act 2013 and SEBI Listing Regulations.A Certificate to that effect as mandated under Schedule V of the SEBI (LODR) Regulations2015 has been obtained from a Company Secretary in practice.
22. BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and SEBI Listing Regulations theannual performance of the Board its Committees Chairperson and Individual Directorsincluding Independent Directors was evaluated as per the criteria laid down by theNomination and Remuneration Committee. The manner in which the evaluation has been carriedout has been explained in the Corporate Governance Report which forms part of this AnnualReport.
23. BOARD DIVERSITY
A diverse Board enables efficient functioning through differences in perspective andskill and also fosters differentiated thought processes at the back of varied industrialand management expertise gender and knowledge. The Board recognizes the importance of adiverse composition and has adopted a Board Diversity policy which sets out the approachto diversity.
The said policy can be accessed thru the following link.http://vrlgroup.in/vrl_investor_desk.aspxRsdisplay=policies
24. DIRECTOR'S RESPONSIBILITY STATEMENT
In terms of Section 134 (5) of the Companies Act 2013 the directors would like tostate that:
i) In the preparation of the annual accounts the applicable accounting standards(IndAS) have been followed along with proper explanation relating to material departures.
ii) The directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that were 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.
iii) The directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of this Act for safeguardingthe assets of the Company and for preventing and detecting fraud and other irregularities.
iv) The directors have prepared the annual accounts on a going concern basis.
v) The directors had laid down internal financial controls to be followed by thecompany and that such internal financial controls are adequate and were operatingeffectively.
vi) The directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such system were adequate and operating effectively.
Based on the framework of internal financial controls established and maintained by theCompany work performed by the internal statutory auditors reviews performed by themanagement and the relevant Board Committees the Board in concurrence with the AuditCommittee is of the opinion that the Company's internal financial controls were adequateoperational and effective as on March 312020.
25. 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 are nomaterially significant related party transactions made by the company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the company at large.
All Related Party Transactions are placed before the Audit Committee as also to theBoard for prior approval. Omnibus approval was obtained every half year for transactionswhich are of repetitive nature. A statement containing details of all transactions enteredinto pursuant to omnibus approval are placed before the Audit Committee and the Board forreview and approval on a quarterly basis.
The Policy on materiality of related party transactions and dealing with related partytransactions as approved by the Board of Directors of the Company can be viewed on thewebsite of the Company through the following link.
There were no material related party transactions entered between the CompanyDirectors management or their relatives. All the contracts/arrangements/transactionsentered into by the Company with the related parties during the financial year 2019-20were in the ordinary course of business and on an arm's length basis. In our opinion therewere no material transactions that warrant a disclosure in this report.
Accordingly particulars of contracts or arrangements with related parties referred toin Section 188(1) along with the justification for entering into such contract orarrangement in Form AOC-2 does not form a part of this report.
26. NOMINATION AND REMUNERATION POLICY
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors Senior Management and theirremuneration including criteria for determining qualifications positive attributes andother matters provided under sub section (3) of section 178 of the Companies Act 2013. TheRemuneration Policy is annexed to this report as Annexure B. The said policy alternativelycan also be accessed on the website of the Company at the following link:
27. CODE OF CONDUCT
The Board of Directors has approved a Code of Conduct which is applicable to theMembers of the Board and specified employees in the course of day to day businessoperations of the company. The Company believes in Zero Tolerance againstbribery corruption and unethical dealings / behavior in any form and the Board has laiddown certain directives to counter such acts. Such code of conduct has also been placed onthe Company's website. The Code lays down the standard procedure of business conduct whichis expected to be followed by the Directors and the designated employees in their businessdealings and in particular on matters relating to integrity in the work place in businesspractices and in dealing with stakeholders. The Code gives guidance on the expectedbehavior from an employee in a given situation and the reporting structure. All the BoardMembers and the Senior Management personnel have confirmed compliance with the Code.
28. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a Vigil Mechanism Policy to deal with instances of fraud andmismanagement if any. Staying true to our core values being committed to high standardsof Corporate Governance and stakeholder responsibility the said policy ensures thatstrict confidentiality is maintained in respect of whistle blowers whilst dealing withconcerns and also specified that no discrimination will be meted out to any person for agenuinely raised concern and also provides a direct access to the Chairman of the AuditCommittee. During the year under review none of the personnel has been denied access tothe Chairman of Audit Committee.
The Vigil Mechanism policy is available on the website of the Company and can beaccessed at the following link. http://vrlgroup.in/investor_download/vigil_Mechanism.pdf
29. PREVENTION OF INSIDER TRADING
The Company has adopted a Code of Internal Procedures and Conduct for RegulatingMonitoring and Reporting of Trading by Insiders with a view to regulate trading insecurities by the Directors and certain designated employees of the Company. The Coderequires pre-clearance for dealing in the Company's shares and prohibits the purchase orsale of Company shares by the Directors and designated employees while in possession ofunpublished price sensitive information in relation to the Company and during the periodwhen the Trading Window is closed. The Board is responsible for implementation of theCode.
Board at its meeting held on May 18 2019 made changes to the policy in terms ofCirculars issued by the Stock Exchanges to ensure that trading window closure commencesimmediately after the closure of every quarter and concludes only after 48 hours from theBoard meeting wherein the financial results for the respective quarter are approved.
The said code is available on the website of the Company and can be accessed at thefollowing link.
30. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The Board of the Company had laid down policies guidelinesprocedures and structure to enable implementation of appropriate internal financialcontrols across the Company. These control processes enable and ensure the orderly andefficient conduct of Company's business including safeguarding of assets prevention anddetection of frauds and errors the accuracy and completeness of the Accounting recordsand timely preparation & disclosure of financial statements. These controls alsoidentify the risks and provides for means to minimize / mitigate the risks affecting thebusiness of the Company as a whole. Auditors as required under the Companies Act 2013have also reported the existence and operations of these controls in an effective manner.
The Company's internal audit department enables the Management to mitigate the risksand prevent non-compliance with laws which would affect the financial position of theCompany. The scope and authority of the Internal Audit function is well defined and tomaintain its objectivity and independence the Internal Audit function reports to theChairman of the Audit Committee of the Board as well as directly to the Chairman &Managing Director. The Internal Audit Department monitors and evaluates the efficacy andadequacy of internal control system in the Company its compliance with operating systemsaccounting procedures and policies at all locations of the Company. Based on the internalaudit report from time to time
the management undertakes corrective actions in the relevant areas and therebystrengthens the controls. Significant audit observations and recommendations along withcorrective actions thereon are presented to the Audit Committee.
31. BUSINESS RISK MANAGEMENT
The Company has in place a risk management architecture that provides a holisticapproach to the best of its capabilities. The Company identifies assesses and mitigatesrisks that could materially impact its performance in achieving the stated objectives.
The Risk Management Committee and Audit Committee on a regular basis reviews theCompany's portfolio of risks and examines it under the light of the Company's RiskAppetite.
The material risks affecting Company are identified along with related mitigationmeasures and elaborated in the Risk Management Policy of the Company which has also beenhosted on the website of the Company and can be accessed at the following link.
32. SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSUREREQUIREMENTS) REGULATIONS 2015
The Company's Equity Shares are listed on the BSE and NSE and has paid its Annuallisting fees to these stock exchanges for the Financial Year 2019-2020. The Company hasalso formulated the following Policies as required under Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015:
1. Policy for Preservation of Documents' under Regulation 9 of Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015.
The said policy can be accessed at the following link:
2. Policy on Criteria for determining Materiality of Events/Information' underRegulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015
The said policy can be accessed thru the following link:
33. AUDITORS and AUDIT REPORTS
a) Statutory Auditors and Audit Report:
In accordance with Section 139 and 142 of the Companies Act 2013 and Rules madethereunder read with the Companies (Audit and Auditors Rules 2014 (the Rules) and inaccordance with Regulation 36(5) of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 it is proposed that M/S.Kalyaniwalla & Mistry LLP Chartered Accountants Mumbai be appointed as the StatutoryAuditors of the Company in place of retiring Auditor M/s. Walker Chandiok & Co LLRChartered Accountants (Firm Registration No. 001076N / N500013) Mumbai whose tenureconcludes at the ensuing 37th Annual General Meeting. The new Statutory Auditors shallhold office from the Conclusion of the 37th Annual General Meeting (AGM) for a term of 5consecutive years till the conclusion of the 42nd Annual General Meeting.
With regard to the Statutory Audit Report for the Financial Year 2019-20 there are noqualifications reservations or adverse remarks made by the Auditors. Pursuant toprovisions of section 143 (12) of the Companies Act 2013 the Statutory Auditors have notreported any incident of fraud to the Audit Committee during the year under review.
b) Cost Auditors & Cost Audit Report
Section 148 of the Companies Act 2013 read with Rules made there under mandates everyCompany belonging to category prescribed in the Rules to undertake a Cost Audit. Incompliance with said provision Company had appointed M/s S.K. Tikare & Co. CostAccountants Belagavi to audit the cost records for FY 2019-20. Rertaning to its WindRower division the Cost Auditor has submitted the Cost Audit report for FY 2019-20 andthe same is annexed as Annexure C herewith.
There are no qualifications reservations or adverse remarks made by the Cost Auditorsin their report for the financial year ended March 31st 2020.
Pursuant to the recommendation of the Audit Committee the Board of Directors havere-appointed M/s S K Tikare & Co. Cost Accountants Belagavi as the Cost Auditorsfor FY 2020-21 at a remuneration of Rs. 70000/- excluding applicable taxes subject toapproval by the members at the ensuing Annual General Meeting of the Company.
c) Secretarial Auditor & Secretarial Audit Report
Pursuant to provisions of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the company hasappointed Mr. R Parthasarathi Company Secretary in practice to undertake the SecretarialAudit of the Company for FY 2019-20. The Secretarial Audit report is annexed herewith asAnnexure D.
There are no qualifications made by the Secretarial Auditor in his report for thefinancial year ended March 31st 2020. The Secretarial Auditor did mention that theChairman of the Audit Committee Chairman of the Nomination and Remuneration Committee andthe Chairman of the Stakeholders Relationship Committee did not attend the 36th AnnualGeneral Meeting which was held on 10th August 2019. The said meeting was conducted at theRegistered Office of the Company at Hubballi and the absence of certain Board membersthereat was owing to the rampant floods caused due to incessant rains rendering severalareas inundated in the State. The said individuals could not travel during such flood andhence their absence. Other members from the said Committee were however present to addressShareholder interactions on related matters.
Pursuant to the recommendation of the Audit Committee the Board of Directors havere-appointed Mr. R Parthasarathi Company Secretary to conduct the Secretarial Audit forFY 2020-21 at its meeting held on 20th June 2020.
34. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
As required under the provisions of the section 135 of the Companies Act 2013 theBoard has constituted the Corporate Social Responsibility Committee which monitors andoversees various CSR initiatives and activities of the Company. The CSR Committeecomprises of four directors out of which two are Independent Directors. The CSR Committeemet three times during the year. Further details such as composition terms functionsmeetings and attendance of directors of the said committee are provided in the CorporateGovernance report forming part of this Annual Report.
The Company has contributed to various projects identified by the otherTrusts/Educational Institutions for CSR related activities as approved by the CSRCommittee during the year mainly towards Education Healthcare Disaster Management (Floodrelief Activities) and Sports etc.
A detailed report containing details of CSR activities & contents of CSR policy isannexed as Annexure E.
CSR policy of the Company is available on the Company's website and can be accessedthrough the following link. http://vrlgroup.in/investor_download/CSR%20POLICYpdf
35. EXTRACT OF ANNUAL RETURN:
Extract of the Annual Return in form MGT-9 is annexed herewith as Annexure F. The samealso can be accessed at the Company's website at www.vrlgroup.in.
36. DETAILS OF CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
The particulars regarding Conservation of Energy Technology Absorption and ForeignExchange Earnings and expenditure are annexed hereto as Annexure G and forms part of thisReport.
37. PARTICULARS OF EMPLOYEES
The information required pursuant to Section 197 read with rule 5(1) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect of employeesof the Company forms of this report and annexed herewith as Annexure H.
A statement containing top ten employees in terms of remuneration and the names ofevery employee who was in employment of the Company throughout the year and was in receiptof the specified remuneration is also included therein.
38. COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is in compliance with applicable Secretarial Standards issued by theInstitute of Company Secretaries of India.
39. MATERIAL CHANGES AND COMMITMENTS
Barring the adverse financial impact arising out of the COVID-19 pandemic there wereno other material changes and commitments that occurred subsequent to the end of thefinancial year till the date of this report which affects the financial position of theCompany.
A note on the said matter was filed with the stock exchanges and same has beenreproduced below:
Covid-19 pandemic has spread across the Globe and in India it has created amassive void in the business operations that has affected one and all. Our Company'sbusiness operations too have been severely affected and has rendered this fiscal adifficult one on the business performance front. Our business is operational since 1976and never ever have we seen a situation where the Company's finances have been under suchextraordinary pressure.
Till date in the current fiscal we have seen negligible revenue generation whereby thefixed costs have been not been absorbed by operating revenues. The Company operates anasset heavy model and employs nearly 20000 individuals and this has put severepressure on the performance of the Company.
The lockdown commenced from the end of March 2020 and during these times there havebeen several notifications from the Ministry of Home Affairs (MHA) which initially allowedthe transportation of all essential goods within the country and later allowed even themovement of non-essential goods. These notifications also sought the free movement ofgoods vehicles across the country. The ground level reality however was different. We havelisted out below a few major hurdles faced by our Company during the Lockdown:
1. MHA gave leverage for transportation of essential goods but Company faced theproblem of scarcity in Drivers and labour for material handling. Initially there was masshysteria amongst the working class and several of our drivers deserted their posts in anattempt to reunite with their families at their respective home towns. We witnessedthereby a mass exodus of drivers which affected our operations adversely. Several of themcould never make it and were stopped by the authorities on their way back and werequarantined for a long period of time. This hinders their availability to us going aheadin the near short term. We overcame several driver related challenges and ensured that ourvehicles were safely parked at our respective offices and also ensured safety of materialsin transit.
2. During the initial three phases of lockdown the branch offices could not work fulltime. Even presently the branches coming under red zone are not allowed to function andremain closed. These include several key commercial branches at places like Mumbai DelhiPune Chennai Hyderabad etc. The initial lockdown was strict and our branch officeshardly functioned. Later once the relaxation was announced for the goods transportationsector gradually these were made operational albeit for only for a part of the day andnot full time as booking and delivery activities hardly got transacted. Customer factoriesand shops were also not functional and as such there was not business to transact.
3. The Company incurred substantial expense on ensuring that proper sanitation andhygiene was maintained across all its business premises. We ensured that all of ourdrivers and labours were provided with decent and hygienic accommodation at the respectiveplaces where they were upon commencement of lockdown. Proper food and other necessitieswere also duly provided for across the country. Sufficient number of masks Sanitizers andrelated equipment were made available across the country in a timely manner. We have alsosetup sufficient facilities for sanitizing our offices and vehicles too. Apart from theabove significant resource was mobilized for educating our staff and creating awarenessand taking precautions at each and every location to curb the entry of this pandemic.Suitable measures for social distancing at offices as also in Staff buses is maintained byus.
4. The commencement of migrant movement through the special trains organized by severalstate governments enabled the labour movement and our material handling labour acrosstransshipment hubs started moving to their respective home states. We are facing lot ofhurdles in organizing this category of manpower and presently have managed to sourceenough headcount of this category to ensure unhampered operations.
5. Business volumes are non-existent and at best negligible. The movement of migrantlabour is expected to aggravate this situation in the near short term and till businessfind alternative and competent manpower the freight volumes are expected to be lowthereby casting a shadow on capacity utilization at our end. We are however ensuring thatenquiries and business coming our way is dealt with in the best possible manner.
6. Maintenance costs need to be incurred on vehicles even when they remain idle toensure their good condition and service availability as need arises.
7. On the passenger travel front it is pertinent for us to state that the majority ofthe operational margin earnings from this segment accrue generally in the first quarter ofany given fiscal given that the schools are on vacation as also owing to the marriageseason during these days. This fiscal however none of our passenger buses were operationaland there has been a complete loss of revenue from this segment. The commencement ofoperation of our buses has just started with numerous restrictions. The requirement ofsocial distancing as also the absence of traveling populace is going to affect therevenues and performance of this segment. We are not sure when we would again see thebuses operating on a full seat capacity basis.
8. Our middle and senior level employees including our Executive Directors have takena pay cut on a graded basis. We have however ensured that employees drawing lowersalaries forming a bulk of our total employee base are paid in full irrespective oflockdown and lack of business. We have also ensured that the employee emoluments have beenpaid by us alongwith related statutory payments such as PF ESI etc.
9. Company has nearly 1000+ branches for transportation related activities. Majority ofthese remained closed during the month of April 2020. We have approached the Lessors ofthese premises to consider waiver of the rent for the said month to help us overcome thisdifficult period and many of them have supported us by consenting to such waiver. Many ofthe Lessors have agreed for partial waivers as well.
Ability to maintain operations including offices functioning and closed down &Schedule for restarting operations:
The Company's offices continue to remain operational. However there are certainrestrictions on the functioning of offices situated in the red zone. Several offices ofthe Company situated in red zones including those in Mumbai Pune Delhi Chennai etc.remain closed and would function only in compliance with the directives issued by theregulators. Even the offices and transshipments which earlier operated throughout the dayare operating only for the permitted part of the day and the Company is in compliance withthe 7 pm. To 7 am. restrictions as applicable.
Current Scenario & Steps taken to ensure smooth functioning of operations:
- We are focusing on ensuring the availability of sufficient number of drivers andlabour to ensure ground level operations. The availability of this category of manpower issufficient for the present business volume but we would need to be well prepared inadvance to have sufficient manpower as volumes go up gradually as expected.
- Our working capital limits are under strain and we have approached our lenders forincrease of these limits to which an inprincipal consent has been confirmed by the Banks.We are able to tide over the temporary liquidity problem and availability of funds for dayto day operations is not expected to be a big challenge.
- The availability of freight volumes is increasing day by day. Normal businessoperations with optimal capacity utilization however remains a far cry. Our management hashowever taken a cautious approach and we are trying to ensure that our vehicles getdeployed on routes that have sufficient load. Considering the incremental overhead costsnecessitated out of Covid-19 developments we have also enhanced our freight rates acrossall customer categories.
- In compliance with the guidelines we have ensured the availability of thermalscanners to monitor body temperature at branch offices. Availability of sanitizers / soapsto wash hands etc. is ensured. Employees have been educated on social distancing need andalso the need to maintain proper hygiene individually as also at the office premises.Guidance has also been repeatedly given by way of internal circulars to educate theemployees on immunity boosting food and health practices. The branch inspection team whichregularly visits the branch offices across the country have been specifically asked toinclude the verification of these aspects as a part of their routine audit visit once theinspection functions starts in a full-fledged manner.
"Historically the first quarter of the fiscal is marked with higher revenues asalso profit margins especially for the Passenger Transport segment. The same does nothold good for this year. The incremental revenues accruing owing to vacations and marriageseason etc. stands lost for the current year.
There was hardly any business for the month of April 2020. Even for the month of May2020 the business volume is very low. The same has presented a temporary liquidity issuein the Company that has necessitated the management to approach its working capitallenders for a higher limit. This is however temporary and the Management does not see anyliquidity problems as raising debt from the existing lenders poses no challenge.
The asset ownership model operated by the Company coupled with its nearly20000 employee base presents significant monthly Fixed costs which need to be absorbed bythe operating revenues. The revenues are meagre for the months of April and May and Juneis expected to be no different given that the Brick and Mortar businesses are labourdependent and the present mass labour movement poses production challenges for ourclients. Thereby the management of the Company expects the results for the first quarterof FY 2020-21 to be discouraging. We expect the Company to report significant financialloss for this period.
The inherent strength in our business model ensures that the Company is not dependenton any particular customer or industry for its revenues. In these difficult time theavailable drivers and vehicles are being selectively deployed for Full Truck Loads andParcels depending on return load and other ground level position as the situationwarrants. We are transacting freight business coming our way and our entire team hasexisting customers as also potential customers for getting business.
The Company has not availed the option to postpone the repayment of the principalamounts due on its outstanding loans. The Company has honoured its debt serviceobligations in a timely manner and would continue to do so in the days to come.
Going ahead we believe that we need to live through with the Corona virus and findways and means to overcome the challenges it presents. Historically man has overcomeevery such pandemic and the adverse economic effects of these are at best temporary. OurCompany is financially strong and well placed to overcome this temporary setback. From thesecond quarter onwards we expect the recoupment of losses. We expect the business volumesto start picking up significantly from August 2020 onwards and the restoration of freightvolume normalcy by the last quarter of this fiscal.
Any quantification of financial results as of now would be at best guesswork and we donot wish to quantify these as the ground realities are dynamic and would render anyestimation off-mark' in hindsight. Financial year 2020-21 is indeed an aberration inthe history of this Company and a one-off year of abnormality. We expect the resumption ofhealthy financial growth from the next fiscal onwards.
We would keep all our stakeholders updated on any significant happenings going aheadtoo. We seek the support of all our stakeholders during these difficult times and requestthe continuation of faith in the management of the Company which is trying its best tocome out with ways and means to mitigate the aftereffects of this unfortunatepandemic.
40. INDUSTRIAL RELATIONS
During the year under review your Company experienced cordial relationship withworkers and employees at all levels throughout the year.
41. SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts ortribunals impacting going concern status and company's operations for a foreseeablefuture.
42. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place a Policy for Prevention Prohibition and Punishment of SexualHarassment of Women at Work place in line with the requirements of The Sexual Harassmentof Women at the Workplace (Prevention Prohibition & Redressal) Act 2013. InternalComplaints Committee has been set up to redress complaints received regarding sexualharassment. All employees are covered under this policy. During the year under reviewthere were no cases filed pursuant to the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
|No. of complaints filed during the year ||No. of complaints disposed off during the year ||No. of complaints pending |
|Nil ||Nil ||Nil |
43. ACKNOWLEDGMENTS AND APPRECIATION
The Directors take this opportunity to thank the Company's customers shareholdersInvestors suppliers bankers financial institutions and Central & State Governmentsfor their consistent support and cooperation extended to the Company. The Directors alsowish to place on record their appreciation towards employees at all levels for their hardwork dedication and commitment.
|For and on behalf of the Board |
|Dr. Vijay Sankeshwar |
|Chairman & Managing Director |
|DIN: 00217714 |
|Place: Hubballi |
|Date: 20th June 2020 |