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Pantaloons Fashion & Retail Directors Report, Pantaloons Fash Reports by Directors
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Pantaloons Fashion & Retail
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Download Annual Report PDF Format 2015 | 2014 | 2013
Directors Report Year End : Mar '15    Mar 14
Dear Members,
 
 The Company''s Directors, hereby present the Eighth Annual Report of
 the Company together with the Audited Financial statements of the
 Company for the Financial Year ended March 31, 2015.
 
 FINANCIAL PERFORMANCE
 
                                                         (Rs in Crore)
 Particulars                        As on             As on
                               March 31, 2015    March 31, 2014
 
 Revenue                                1,851             1,661
 
 EBITDA                                    75                39
 
 Finance Cost                             120               117
 
 EBDT                                      45                79
 
 Depreciation                             183               109
 
 Earnings Before Tax                     (228)             (188)
 
 Provision for Taxation                     -                 -
 
 Net Profit/ (Loss)                      (228)             (188)
 
 Revenue
 
 Your Company reported a revenue of Rs. 1851 Crore in the year 2014-15
 (year under review), recording a growth of 11.4% over 2013-14
 (previous year). During the year under review, Company opened 25
 new Pantaloons Stores and closed two stores. As at March 31,2015, the
 Company had 104 Pantaloons Stores and 30 Factory Outlet Stores.
 
 Operating Profit
 
 EBITDA excluding other income at 73 Crore grew by 118% over previous
 year. Focus on cost efficiencies, improved product mix and pricing has
 improved the EBITDA during the year under review.
 
 Net Interest
 
 Finance costs stood at Rs. 120 Crore with average borrowing cost of
 10.17% versus 10.40 % in the previous year.
 
 Depreciation
 
 The depreciation cost was higher mainly due to accelerated depreciation
 provided on account of refurbishment and closure of stores.
 
 Balance Sheet
 
 Particulars                               As on            As on
                                      March 31, 2015    March 31, 2014
 
 Net Fixed Assets                              422              496
 (Including Capital Advances and CWIP)
 
 Goodwill                                    1,168            1,168
 
 Net Working Capital                            67              (34)
 
 Capital Employed                            1,656            1,630
 
 Net Worth                                     346              579
 
 Debt                                        1,311            1,050
 
 The Goodwill recognised on transfer of Pantaloons business to the
 Company was subsequently tested for impairment in accordance with the
 Accounting Standard - 28 issued by the Institute of Chartered
 Accountants of India and continues to stand at Rs. 1,168 Crore as on
 March 31, 2015.
 
 Net Working Capital as on March 31, 2015, includes Inventory of Rs. 427
 Crore, Trade Receivables of Rs. 3 Crore, Cash and Bank Balance of Rs. 7
 Crore and Trade Payables of Rs 311 Crore.
 
 The detailed analysis of the performance is included in the section
 Management Discussion and Analysis.  DIVIDEND
 
 In view of the loss for the year under review, no amount is proposed to
 be transferred to the reserve(s) and your Directors have not
 recommended payment of any dividend for the year under review.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the provisions of Sections 134(3) (c) and 134(5) of the
 Companies Act, 2013, the Directors, to the best of their knowledge and
 ability, confirm that:-
 
 a) in the preparation of the annual accounts, the applicable accounting
 standards had been followed along with proper explanation relating to
 material departures;
 
 b) they have selected such accounting policies and applied them
 consistently and made judgments and estimates that are reasonable and
 prudent so as to give a true and fair view of the state of affairs of
 the company at the end of the financial year and of the profit and loss
 of the company for that period;
 
 c) they have taken proper and sufficient care for the maintenance of
 adequate accounting records in accordance with the provisions of the
 Companies Act, 2013 for safeguarding the assets of the company and for
 preventing and detecting fraud and other irregularities;
 
 d) they have prepared the annual accounts on a going concern basis;
 
 e) they have laid down internal financial controls to be followed by
 the company and that such internal financial controls are adequate and
 were operating effectively; and
 
 f) they have devised proper systems to ensure compliance with the
 provisions of all applicable laws and that such systems were adequate
 and operating effectively.
 
 Conservation of energy, technology absorption, foreign exchange
 earnings and outgo
 
 Company consciously makes all efforts to conserve energy across all its
 operations.
 
 a) Technology Absorption: Nil
 
 b) Foreign Exchange Earnings and Outgo has been disclosed as part of
 the Financial Statements of the Company for the year under review.
 
 c) The Company earned NIL (Previous Year: NIL) in foreign currency from
 Export of Goods and Foreign Exchange outgo was Rs. 16 Lakhs (Previous
 year: Rs.6 Lakhs).
 
 Details w.r.t. development and implementation of a Risk Management
 Policy
 
 Board has constituted a Risk Management Committee of the Board
 (RMC), to assist the Board with regard to the identification,
 evaluation and mitigation of operational, strategic and external risks.
 RMC has overall responsibility for monitoring and reviewing the Risk
 Management Plan and associated practices of your Company.
 
 Further, considering the susceptibility of the Company to inherent
 business risks, Board of your Company, on recommendation of RMC, has
 adopted a Risk Management Policy, to
 
 - develop and implement Risk Management procedure/ plan including
 identification therein of elements of risk, if any, which may threaten
 the existence of the company;
 
 - enable the Company to proactively manage the uncertainty, changes
 in the internal &external environment to limit negative impacts; and
 
 - capitalize on opportunities along with minimization of identifiable
 risks,
 
 - in compliance with the provisions of the Act and Clause 49 of the
 Listing Agreement which requires the Company to lay down procedure for
 risk assessment and procedure for risk minimization.
 
 More details on risks and threats have been disclosed above, in the
 section Management Discussion and Analysis.
 
 Further, in view of the technologically advanced operations, growing
 complexities of internal structures of the organizations, increasingly
 transient employees and such other reasons, all organisations,
 including the Company, are exposed to the risks emanating from
 fraud(s). Accordingly, the Board of your Company has, on recommendation
 of the Audit Committee, adopted an Anti-Fraud Policy, to put in place,
 a system for detecting and/or preventing and/or deterring and/or
 controlling the occurrence fraud(s).
 
 Details about the policy developed and implemented by the Company on
 Corporate Social Responsibility (CSR) initiatives taken during
 the year
 
 Board has, with a vision to actively contribute to the social and
 economic development of the communities and built a better sustainable
 way of life for weaker sections of society, adopted a CSR Policy and
 the same is available on your Company''s website viz.
 www.pantaloons.com.
 
 CSR Policy of your Company, enumerates the Vision of the Aditya Birla
 Group & the Company, as a responsible corporate citizen, and mentions
 the process to be implements w.r.t. Identification of projects and
 philosophy of the Company, alongwith key endeavors & goals viz.
 
 - In Education - to spark the desire for learning and knowledge;
 
 - In Health care - to render quality health care facilities to people
 living in the villages and elsewhere through our Hospitals;
 
 - In Sustainable Livelihood - to provide livelihood in a locally
 appropriate and environmentally sustainable manner;
 
 - In Infrastructure Development - to set up essential services that
 form the foundation of sustainable development; and
 
 - to bring about Social Change we advocate and support.
 
 In view of the losses for the year under review, your Company was not
 required to spend any amount towards the CSR activities, as per the
 applicable provisions of Section 135 of the Companies Act, 2013.
 Accordingly, the details of the CSR activities during the year under
 review are not provided in this Report.
 
 Manner of formal annual evaluation has been made by the Board of its
 own performance and that of its committees and individual directors
 
 Pursuant to the provisions of the Act and Listing Agreement, the Board
 has to evaluate its own performance and that of its committees and
 individual directors (Evaluation).
 
 To enable such evaluation, an evaluation framework has been adopted by
 all the companies of the Aditya Birla Group, which is devised with a
 view to provide a more structured approach for the evaluation and which
 lays down overall guidelines & processes to be adopted for the
 evaluation of performance.  NRC and the Board have, vide their
 respective Resolutions dated May 8, 2015 and May 13, 2015, approved the
 Evaluation Framework.
 
 Accordingly, the Board carried out the evaluation of its own
 performance and that of its committees and individual Directors w.r.t.
 the year under review. The exercise was carried out through a
 structured evaluation process covering various aspects of the
 functioning of the Board and its Committees. Individual Directors were
 evaluated separately on basis of their respective designations and
 roles. The manner in which the evaluation has been carried out has been
 enumerated in the Corporate Governance Report.  The Directors were
 satisfied with the evaluation results, which reflected the overall
 engagement of the Individual Directors, the Board as a whole and its
 Committees with the Company.
 
 Details of Directors and Key Managerial Personnel who were appointed or
 have resigned during the year
 
 During the year under review, Dr. Rakesh Jain, Non-executive Director
 (DIN: 00020425) and Mr. P. Murari, Independent Director (DIN:
 00020437), resigned from their respective Directorships of the Company
 w.e.f. December 15, 2014 and March 25, 2015 respectively.
 
 Also, pursuant to the Talent Development Policy of the Aditya Birla
 Group, Mr. Manoj Kedia, Chief Financial Officer of the Company was
 transferred as the Chief Financial Officer of the Textiles, Acrylic
 Fibre and Overseas Spinning Business of the Aditya Birla Group and
 accordingly, he ceased to be the Chief Financial Officer of the Company
 w.e.f. November 4, 2014.
 
 With a view to broaden the Board and pursuant to the provisions of the
 Act, following appointments were made, subject to the approval of the
 members of the Company at the ensuing Annual General Meeting-
 
 Name                 Designation                 Term & Tenure
 
 Ms. Sukanya Kripalu  Additional Director of the  For a period of 5 (five
                      Company, proposed to be     consecutive years w.e.f
                      appointed as an Independent October 13, 2014 
                      Woman Director  
 
 Mr. Arun Thiagarajan Additional Director of the  For a period of 5 (five
                      Company, proposed to be     consecutive years w.e.f.
                      appointed as an             May 11, 2015
                      Independent Director
 
 Resolutions for appointment of Ms. Kripalu and Mr. Thiagarajan, form
 part of the Notice for the ensuing Eighth Annual General Meeting of the
 Company, circulated to the members of the Company, separately.
 
 Mr. Pranab Barua, was appointed as the Managing Director of the Company
 vide a Special Resolution passed by the members of the Company at the
 Seventh Annual General Meeting of the Company held on August 27, 2014,
 w.e.f. October 25, 2013.
 
 Further, in accordance with the provisions of the Act and the Articles
 of Association of the Company, Mr. Sushil Agarwal, Non- executive
 Director of the Company, will retire by rotation at the ensuing Annual
 General Meeting and being eligible for re-appointment, he seeks
 re-appointment as such. Resolution for his appointment also forms part
 of the Notice for the ensuing Eighth Annual General Meeting of the
 Company, circulated to the members of the Company, separately.
 
 Also, on the recommendation of the Nomination and Remuneration
 Committee of the Board and pursuant to the Talent Development Policy of
 the Aditya Birla Group, Mr. S. Visvanathan was appointed as the Chief
 Financial Officer of the Company w.e.f. November 4, 2014.
 
 Names of companies which have become or ceased to be its Subsidiaries,
 joint ventures or associate companies during the year
 
 During the year, no Company became/ ceased to be a Subsidiary/
 Associate/ Joint Venture of your Company.
 
 As at the end of the year under review i.e. on March 31,2015 and also
 as on the date of this report, your Company does not have any
 subsidiary and/or Associate Company and the Company is also not a part
 of any Joint Venture(s).
 
 Details relating to deposits
 
 During the year under review, your Company has not accepted any fixed
 deposits from the public falling under Section 73 of the Act read with
 the Companies (Acceptance of Deposits) Rules, 2014. Thus, as on March
 31, 2015, there were no deposits which were unpaid or unclaimed and due
 for repayment.  Further, as the Company had not accepted any deposit
 under Section 58A of the Companies Act, 1956 read with Companies
 (Acceptance of Deposits) Rules, 1975, in the previous year(s) and as
 there were no deposits which were unclaimed and due for repayment, as
 on March 31, 2014, there has been no default in repayment of deposits
 or payment of interest thereon during the year under review.
 
 Details of significant and material orders passed by the regulators or
 courts or tribunals impacting the going concern status and company''s
 operations in future
 
 No significant or material orders were passed by the Regulators or
 Courts or Tribunals which impact the going concern status and
 Company''s operations in future.
 
 Details in respect of adequacy of internal financial controls with
 reference to the Financial Statements
 
 Company has established a system of internal controls and business
 processes, comprising of policies and procedures, with regards to
 efficiency of operations, financial reporting and compliance with
 applicable laws and regulations etc. commensurate with its size and
 nature of the business. Regular internal audit and checks are
 undertaken to ensure that systems and processes are followed
 effectively and systems & procedures are periodically reviewed to keep
 pace with the growing size and complexity of your Company''s
 operations. Your Company also has a well-defined process for an
 on-going management reporting and periodic review of operations to
 ensure effective decision-making. During the year under review, proper
 internal financial controls were in place and the financial controls
 were adequate and were operating effectively.
 
 Employee Stock Option Scheme and Share Based Employee Benefits
 
 The grant of share based benefits to employees is a mechanism to align
 the interest of employees with those of the Company, to provide them
 with an opportunity to share the growth of the Company and also to
 foster the long-term commitment.
 
 The Securities Exchange Board of India (SEBI) enacted SEBI (Share
 Based Employee Benefits) Regulations, 2014 (Regulations), thereby
 repealing the SEBI (Employees Stock Option Scheme and Employees Stock
 Purchase Scheme) Guidelines, 1999 (Guidelines). The regulations
 govern the grant of share based benefits to the employees of the
 Company, such as Employee Stock Options (ESOPs), Restricted Stock
 Units (RSUs), Stock Appreciation Rights (SARs) etc.
 
 During the year under review, the Board of Directors of the Company,
 merged its ESOP Compensation Committee with the Nomination and
 Remuneration Committee (NRC) and accordingly, the functions and
 the scope of the erstwhile ESOP Compensation Committee i.e. mainly to
 administer, implement and monitor the Schemes and plans thereby
 governing the grant of Share Based Employee Benefits to the employees
 of the Company, are now included in the overall scope of the NRC.
 Accordingly, administration and implementation of the Pantaloons
 Employee Stock Option Scheme 2013 (Scheme) and Pantaloons
 Stock Appreciation Rights 2013 (Plan), now comes under the
 scope of NRC.
 
 During the year under review, no ESOPs and/or RSUs and/or SARs were
 granted pursuant to the provisions of the Scheme and/or plan. Further,
 no ESOPs and/or RSUs and/or SARs have vested in the grantees pursuant
 to the provisions of the Scheme and/or plan.
 
 In terms of the provisions of the regulations, details of the ESOPs
 and/or RSUs and/or SARs already granted under the abovementioned Scheme
 and/or plan are available on your Company''s website viz.
 www.pantaloons.com. Further, the same have been disclosed as part of
 the Financial Statements of the Company for the year under.
 
 A certificate from the Statutory Auditor thereby confirming that the
 Scheme has been implemented in accordance with the Guidelines and the
 regulations will be placed at the ensuing Eighth Annual General Meeting
 for inspection by the Members.
 
 Composition of the Committees of the Board of Directors
 
 Name of the Committee   Composition of Committee
 
 Audit Committee         Mr. Bharat Patel, Independent Director 
                        (Chairperson)
 
                         Ms. Sukanya Kripalu, Independent Director 
 
                         Mr. Arun Thiagarajan, Independent Director 
 
                         Mr. Sushil Agarwal, Non-executive Director
 
                         Permanent Invitee- Mr. Pranab Barua, Managing 
 
 Stakeholders            Mr. Bharat Patel, Independent Director (Chairperson
 Relationship Committee 
                         Ms. Sukanya Kripalu, Independent Director
 
                         Mr. Sushil Agarwal, Non-executive Director 
 
 Nomination Remuneration Mr. Bharat Patel, Independent Director 
 Committee 
                         Ms. Sukanya Kripalu, Independent Director
 
                         Mr. Sushil Agarwal, Non-executive Director 
 
                         Mr. Pranab Barua, Managing Director 
 
 Corporate Social        Mr. Bharat Patel, Independent Director
 Responsibility Committee 
                         Mr. Sushil Agarwal, Non-executive Director
 
                         Mr. Pranab Barua, Managing Director
 
                         Permanent Invitee - Dr. Pragnya Ram, Group 
                         Executive President,
 
                         Corporate Communication & CSR, Aditya Birla Group
 
 Risk Management         Mr.Bharat Patel, Independent Director (Chairperson)
 Committee 
                         Mr. Sushil Agarwal, Non-executive Director
 
                         Mr. Pranab Barua, Managing Director
 
 Details of establishment of Vigil Mechanism Policy
 
 Board has, on recommendation of its Audit Committee, adopted a Policy
 thereby enumerating the Vigil/ Whistle Blower mechanism, for Directors
 and employees of the Company, to report concerns about unethical
 behaviour, actual or suspected fraud or violation of your Company''s
 Code of Conduct and to voice genuine concerns or grievances about
 unprofessional conduct without fear of reprisal. Adequate safeguards
 are provided against victimization to those who avail of the mechanism
 and direct access to the Chairman of the Audit Committee in exceptional
 cases is provided to them.
 
 Particulars of Employees as per Section 197(12) & Rule 5 of the
 Companies (Appointment & Remuneration of Managerial Personnel) Rules,
 2014
 
 Disclosures with respect to the remuneration of Directors and employees
 as required under Section 197 (12) of the Act and Rule 5(1) Companies
 (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are
 provided separately as Annexure V to this Report.
 
 Details of employee remuneration as required under provisions of
 Section 197 (12) of the Act and Rule 5(2) & 5(3) of Companies
 (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will
 be made available at the Registered Office of the Company during
 working hours before 21 days of the Annual General Meeting, pursuant to
 the provisions of the first proviso to Section 136(1) of the Act and
 any member interested in obtaining such information may write to the
 Company Secretary and the same will be made available to any such
 member on request.
 
 DISCLOSURES AS PER THE LISTING AGREEMENT LISTING AGREEMENT
 
 Corporate Governance
 
 Your Company is committed to follow the best practices of Corporate
 Governance, including the requirements under Clause 49 of the Listing
 Agreement and the Board is responsible to ensure the same, from time to
 time.
 
 Company has duly complied with the Corporate Governance requirements as
 set out under Clause 49 of the Listing Agreement, from time to time and
 the Statutory Auditors of the Company viz. M/s. S R B C & Co LLP,
 Chartered Accountants, have, vide their certificate dated May 13, 2015
 confirmed that the Company is and has been compliant with the
 conditions stipulated in the Clause 49 of the Listing Agreement. The
 said certificate is annexed to this report as Annexure VI.
 
 Further, a separate report on Corporate Governance forms part of this
 Annual Report.
 
 Familiarization programmes
 
 Independent Directors, on their appointment, are issued a Letter of
 Appointment setting out in detail, the terms of appointment, duties,
 responsibilities and expected time commitments. Interactive sessions
 with the members of Senior Management including Business and Functional
 Heads and KMPs of the Company are organised for the induction of the
 Independent Directors. Details of programmes for familiarisation of
 Independent Directors with the Company and related matters are put up
 on the website of your Company''s viz. www.pantaloons.com and have
 been briefly disclosed as part of the Corporate Governance Report.
 
 Material developments in Human Resources / Industrial Relations front,
 including number of people employed
 
 Company believes that its people are one of its most valuable assets
 and therefore the Human Resource philosophy and strategy of your
 Company is structured to attract and retain the best talent that
 encourages innovation and creates a work environment of inspiration,
 creativity and passion. To ensure employee development and growth, 
 training and development of the front end store staff, identifying 
 leadership and key talent across the organization and executing 
 individual development plans continue to be the key focus area of 
 your Company. The total number of employees on rolls of the Company 
 as on March 31,2015 was Rs.5,932.
 
 DISCLOSURES AS PER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
 (PREVENTION. PROHIBITION & REDRESSAL) ACT, 2013
 
 Your Company is committed to providing a work environment that is
 professional and mature, free from animosity and one that reinforces
 our value of integrity that includes respect for the individual and in
 pursuance to the same, the Company has a Policy on Prevention of Sexual
 Harassment at Workplace, which is applicable to all employees of the
 Company, as per the provisions of the Sexual Harassment of Women at
 Workplace (Prevention, Prohibition and Redressal) Act, 2013.
 
 During the year under review, no cases were filed pursuant to the
 Sexual Harassment of Women at Workplace (Prevention, Prohibition and
 Redressal) Act, 2013 and 16 complaints were received, out of which 16
 complaints have been disposed of after taking an appropriate action and
 none of the complaints remain pending as of March 31, 2015.
 
 AWARDS AND RECOGNITIONS
 
 Your Company has been proud recipient of the following
 Awards/Recognitions during the year One of the Most Trusted Retailer
 of India- across categories and formats.
 
 Nielsen, an independent agency which specialises in conducting
 nationwide surveys/ research projects, conducts an Independent survey
 for Economic Times'' Brand Equity on annual basis, which is
 among the largest research project of its kind in India. The intention
 of the survey is to identify the Most Trusted Brands and
 Retailers and the Company is proud to have been recognised as one of
 the Most Trusted Retailer , as per the results of the survey
 conducted during the year under review.
 
 Award for the Best Direct Marketing Campaign of the Year
 
 Pantaloons'' Greencard i.e. the loyalty program for the Customers of
 the Company, was awarded as the Best Direct Marketing Campaign of
 the Year at the 8th Loyalty awards presented by AIMIA, World''s
 leading loyalty management organization with over 70  years of
 consulting expertise.
 
 Award for the Best Store Design
 
 Pantaloons'' store located at the M. G. Road, Bangalore was awarded
 for the Best Store Design at the VMRD-Retail Design Awards, which
 are among the most coveted awards given in the Indian Retail Industry
 and which turn a spotlight on exceptionally innovative retail designs
 initiative and projects taken by Architects, Designers, Visual
 Merchandisers, Suppliers and other retail solution providers.
 
 OUTLOOK
 
 In the short term, we expect the consumer sentiment and spending to
 remain muted. However, with the inflation projected to stabilise at
 lower levels and an anticipated improvement in GDP growth, the consumer
 spending is likely to improve in the medium term.
 
 ACKNOWLEDGEMENT
 
 We place on record our sincere appreciation for the continued support
 which your Company has received from its customers, suppliers,
 investors, promoters, bankers, group companies and above all, its
 employees.
 
                            For and on behalf of the Board of Directors,
 
                                 Pranab Barua         Sushil Agarwal
                             Managing Director    Non-executive Director
 
 Place : Mumbai 
 Date : May 13, 2015
Source : Dion Global Solutions Limited
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