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Download Annual Report PDF Format 2013 | 2012 | 2011
Directors Report Year End : Mar '13    Mar 12
The Directors have great pleasure in presenting the Twelfth Directors''
 Report of the company with the audited statements of accounts for the
 year ended March 31, 2013.
 
 Financial Highlights
 
                                               (Rs. in Million)
 
 PARTICULARS                                  Year ended   Year ended
                                              31.03.2013   31.03.2012
 
 Income from Operations (1)                     1056.71     401.64
 
 Other Income (2)                                 20.99      37.40
 
 Total Income (3)                               1077.70     439.05
 
 Total Expenditure except interest cost (4)     1072.07     510.35
 
 Interest (5)                                     65.21      81.50
 
 Proft( ) & Loss(-) before tax (3)-(4 5) (6)     (59.57)   (152.81)
 
 Provision for Taxation (7)                         Nil        Nil
 
 Tax Adjustments (8)                              18.84    (155.31)
 
 Net Proft ( ) & Loss (-) after tax(6-(7 8))     (40.73)   (308.12)
 
 Brought forward from Previous year            (5268.52)  (4920.72)
 
 Extra Ordinary Item & Prior Period              (12.02)    (39.69)
 
 Adjustment
 
 Amount available for appropriation                 Nil        Nil
 
 Less: Provision for Preference Dividend            Nil        Nil
 
 Less: Provision for Dividend Distribution Tax      Nil        Nil
 
 Balance carried to Balance Sheet              (5321.27)  (5268.52)
 
 EPS
 
 (In Rs for Equity Shares of par value of
 Rs.10/- each)
 
 Basic (before extraordinary & prior              (1.82)    (13.76)
 period items)
 
 Basic (after extraordinary & prior period        (2.35)    (15.53)
 items)
 
 Diluted (before extraordinary & prior            (1.82)    (13.76)
 period items)
 
 Diluted (after extraordinary & prior period      (2.35)    (15.53)
 items)
 
 PERFORMANCE REVIEW
 
 The Indian retail industry has experienced high growth over the last
 decade with a noticeable shift towards organized retailing formats.
 During the year the company has increased its turnover from 401.64
 Million to 1056.71 Million by 2.5 times compared to previous year. The
 Company has signifcantly reduced its accumulated loss as compared to
 its last year. It is expected in future the company will generate
 profts for its stakeholders. The overall retail market continues to
 grow and consumer aspiration for a better service environment still
 remains intact. Your company continues to endeavor to reinstate its
 growth pattern in the retail industry with a chain of stores under the
 ''V2'' brand in the Retail Industry.
 
 OPERATIONS REVIEW
 
 During the year, Company opened in its 8 new stores under the brand
 V2 at different places across nation and added approx 2 Lac square
 feet.
 
 Relocation of Warehouse from Delhi to Manesar, Gurgaon.
 
 INDUSTRIAL RELATIONS
 
 The relations between the Company and its employees continued to be
 cordial, and harmonious throughout the year under review.
 
 MATERIAL CHANGES AFTER BALANCE SHEET DATE
 
 The Company opened new store admeasuring approx 20000 sq. ft. at Hubli,
 Karnataka.
 
 Four Stores of the Company become operational in the month of April and
 May 2013
 
 MANAGEMENT DISCUSSION AND ANALYSIS
 
 The Management Discussion and Analysis has been dealt extensively in
 the Annexure I to this Report.
 
 DIVIDEND
 
 In view of the loss for the current fnancial year, your directors do
 not propose to declare any dividend for this year.
 
 PUBLIC DEPOSIT
 
 During the year, the Company has not accepted any deposit under Section
 58A of the Companies Act, 1956.
 
 DIRECTORS
 
 Mr. Sourabh Kumar, Non Executive Independent Director of the Company
 retires by rotation and being eligible offer himself for reappointment
 at the ensuing Annual General Meeting.
 
 SUBSIDIARY COMPANIES
 
 The Company has 3 subsidiary Companies as on date namely, VRL Movers
 Limited, VRL Infrastructure Limited, VRL Retail Ventures Limited.
 
 VRL Movers Limited, VRL Infrastructure Limited, VRL Retail Ventures
 Limited are subsidiaries by virtue of control over composition of the
 Board of Directors. None of the companies have commenced business
 operations during the year.
 
 As per General Circular No: 2 /2011 issued by the Ministry of Corporate
 Affairs, Government of India, a general exemption has been provided to
 Companies for attaching the Directors'' Report, Balance Sheet and Proft
 and Loss Account of all subsidiaries to its balance sheet, subject to
 fulflling certain conditions as stipulated in the circular. Your
 Company complies with those conditions and, therefore, has been
 generally exempted by the Central Government from attaching detailed
 accounts of the subsidiaries, and accordingly, the fnancial statements
 of the subsidiaries are not attached in the Annual Report. For
 providing information to Shareholders, the annual accounts of these
 subsidiary Companies along with related information are available for
 inspection during business hours at the Company''s registered offce and
 at the registered offce of the subsidiary companies concerned.
 
 AUDITORS
 
 M/s. AKGVG & Associates, Chartered Accountants, Statutory Auditors of
 the Company, retire at the conclusion of the ensuing Annual General
 Meeting and being eligible, offer themselves for re-appointment. They
 have expressed their willingness to act as Auditors of the Company, if
 appointed, and have further confrmed that the said appointment would be
 in conformity with the provisions of Section 224 (1B) of the Companies
 Act, 1956. The Board recommends their appointment.
 
 The Auditor''s have put certain qualifcations to which the management
 has put forward the following below mentioned replies;
 
 Qualifcation and response to Auditor''s Report
 
 a) Attention is invited to note 4 of fnancial statements explaining the
 reserves and surplus in the head capital reserve amounting to Rs.
 60,523.24/-Lacs., necessary supporting documents and relevant
 information is not available with the Company and provided to us, so In
 the absence of the same, we are unable to comment on the
 appropriateness of the same including consequential impact, if any,
 arising out of the same on these fnancial statements. This was also the
 subject matter of qualifcation by us in previous year as well.
 
 The Company has restructured its business during Financial Year 2010-
 11 by way of sale of its Wholesale and Retail Business to TPG Wholesale
 Private Limited and Airplaza Retail Holdings Private Limited (referred
 to as Acquiring Companies) respectively. The Master Restructuring
 Agreement and other settlement agreements were entered into the
 
 Company with Acquiring Companies and its Lenders to effect the said
 restructuring and CDR proposal of the Company. The Company had
 trifurcated its Assets and Liabilities as on appointed date between the
 
 Acquiring Companies and selling Company as per agreement entered into
 between them and the difference between Assets and Liabilities
 transferred has been shown as Capital Reserve. As a result of the said
 agreement the liabilities to the extent of Rs. 823.20 Crores and assets
 of Rs. 393.78 Crores were taken over by the Acquiring Companies against
 a consideration of Rs. 70 Crores. This transaction resulted in a
 Capital Reserve of Rs. 499.42 Crores. As a part of the said
 restructuring process some unsecured lenders of the company also waived
 off their claims to the extent of Rs. 105.81 Crores which has also been
 transferred to Capital Reserve Account.
 
 b) Attention is invited to note 4 of fnancial statements explaining the
 reserves and surplus, company has accumulated losses more than 50% of
 its net worth. However, having regard to improvement in the economic
 sentiment, rationalization measures adopted by the Company, opening of
 new stores, these fnancial statements have been prepared on the basis
 that the company is a going concern and that no adjustments are
 required to the carrying value of assets and liabilities. The
 accumulated losses is Rs. 5,32,12,72,927 (Rupees Five hundred Thirty
 twocrores twelve lacs seventy twothousand nine hundred twenty seven
 only) as at 31st March, 2013 which exceed the net worth of the company.
 
 The Company has started its new retail venture under the brand & style
 V2. The Company is successfully running 15 stores, and one warehouse.
 From the above, management do not see any event which may lead to a
 reason wherein company should not be considered as going concern. Based
 on the same assessment, accounts have been drawn on going concern
 assumption. Further the company has earned huge increase in turnover in
 frst quarter of fnancial year 2013-2014.  The Board is confdent that
 because of such positive signs and growth in the business and industry,
 the company will improve its performance and net worth will not be
 eroded further.
 
 c) As stated in Note 29 to the fnancial statement, the Company has
 debited Rs 5,99,80,407/- on account of interest expense in the
 statement of Proft and Loss , however, necessary supporting documents
 and relevant information in relation to rate of interest is not
 available with the Company. In the absence of the same, we are unable
 to comment whether such charge to the statement of proft and loss is
 appropriate in accordance with Accounting Standard 16 on Borrowing
 Costs issued by the Institute of Chartered Accountants of India
 
 The interested expense of Rs. 5,99,80,407/- has been recognised in the
 Books of Account on the basis of the fgure provided by the concern
 lender, which is disputed by the Company, as interest rate has been
 charged in excess of the prescribed under Master Restructuring
 Agreement dated 11.11.2010.The company is in the process of obtaining
 relevant documents and information from lender for basis of such charge
 and trying to resolve the dispute.
 
 d) As stated in Note 38 to the fnancial statement, the Company has
 contingent liability on account of appeal with different authorities at
 different levels amounting to Rs. 64,13,54,011/- , however, At the
 moment Company is not able to reliably ascertain estimated amount of
 such liability so the provision as required in accordance to the
 Accounting Standard-29 has not been made in books of accounts.
 
 The Contingent Liabilities to the tune of Rs. 64,13,54,011/- are under
 appeal with different authorities at different levels. The provision of
 these liabilities could not be made due to various reasons such as no
 possible obligation on the Company, outfow for the Company is very
 remote and the estimate for the contingent liabilities could not be
 ascertained. In such position, the company is not in a position to
 provide for certain fxed amount as liabilities in the books of
 accounts, which will be done as and when the management will be in a
 position to estimate the same.  The company has made provision in the
 books of account in the current year with respect to amount payable to
 labour welfare fund. The liability on account of same was not provided
 for in the earlier year as the same cannot be ascertained.
 
 e) The company has maintained proper records showing full particulars,
 including situation of fxed Assets except quantitative details.
 
 The Company was in the process of updating its records regarding the
 quantity of the fxed assets and the same has been updated in the
 register of fxed assets now.
 
 f) Fixed assets have not been physically verifed by the management
 during the year. As explained by the management company has a policy of
 physical verifcation once in a period of three year, in our opinion, is
 unreasonable having regard to the size of the company and the nature of
 its assets.
 
 The Company has policy for physical verifcation of its Fixed Assets
 over a period of Three years. All fxed assets except Land, Building and
 Computer Software are acquired during the year and its previous year.
 The verifcation is in process and all assets will be verifed in FY
 2013- 14. The Management is also considering to review the policy of
 physical verifcation of fxed assets from once in 3 years to every year,
 which will be implemented very soon.
 
 g) In our opinion and according to the information and explanations
 given to us, there is inadequate internal control system commensurate
 with the size of the company and the nature of its business, for the
 recording of accounting transactions of purchase of inventory and
 expenses, which need to be strengthen. During the course of our audit,
 however we observed that management is in process of improvising the
 Internal Control.
 
 After restructuring of the Business, the business of the Company has
 been substantially reduced, and accordingly Purchase and Inventory also
 go down. Any purchase involving substantial amount is directly
 supervised by the Management and accordingly accounting transactions
 are made. The management is committed to bring strong internal system
 in the company with the increase in operations for the beneft of all
 stakeholders.
 
 h) In our opinion and according to the information and explanations
 given to us, the company does not have internal audit system
 commensurate with its size and nature of business.
 
 After restructuring of the Business, the turnover of the Company falls
 substantially. Therefore in order to save the cost, internal audit
 system is performed by the employees independent of Finance & Accounts
 Department. The management is committed to bring strong internal audit
 system in the company with the increase in operations for the beneft of
 all stakeholders. The management is also considering appointing
 independent frm of professionals to carry on the internal audit work in
 the company.
 
 i) The company is irregular in depositing with appropriate authorities
 undisputed statutory dues including provident fund, investor education
 and protection fund, employees'' state insurance, income-tax, sales-
 tax, wealth-tax, service tax, customs duty, excise duty, cess and other
 material statutory dues applicable to it, however such dues have been
 paid with interest and penalties as applicable.
 
 The Company has always tried to regularly deposit the applicable
 statutory dues with the appropriate authorities, however due to high
 attrition rate and lot of structural changes in the company; sometimes
 it is not deposited on time but has been paid with the Interest and
 Penalty as applicable. The Board by implementing strong internal
 control and internal audit system in the company will improve the
 system of depositing the statutory dues with statutory authorities.
 Further with the growth in business, the board is expecting that there
 will be improvement in the liquidity position of company.
 
 j) According to the records of the company, the dues outstanding of
 income-tax, sales-tax, wealth-tax, service tax, customs duty, excise
 duty and cess on account of any dispute which are Rs. 43,51,44,514 .
 
 The total due of Rs. 43,51,44,514 (Rupees Forty Three Crore Fifty One
 Lacs Forty Four Thousand Five Hundred Fourteen) is under dispute at
 various forums, the fnal due will be settled on account of fnal
 decision by the respective authorities. The Board has initiated
 appropriate representations before such forums to settle the dues and
 issue the fnal orders.
 
 k) The company has accumulated losses at the end of the fnancial year
 which exceed ffty percent of its net worth. Further, company incurred
 cash losses in the current and immediately preceding fnancial year.
 
 Excess of accumulated losses over net worth of the Company will have no
 negative impact on the operations and running of the Company as the
 loss pertains to the earlier venture, which the Company has already
 restructured through Slump Sale, further the Company has reduced its
 indebtedness considerably and started its new retail venture and in the
 process of bringing fnancial stability within the Company.
 
 l) Based on our audit procedures and as per the information and
 explanations given by the management, we are of the opinion that the
 company has defaulted in repayment of dues to a fnancial institution/
 bank.
 
 Pursuant to Master Restructuring Agreement, the payment to the
 Financial Institution was to be made by sale of Land and Building. The
 Financial Institution did not take effective steps to sell the Land and
 Building of the Company, therefore the payment could not be made.  The
 Board is continuously doing efforts to sell the land & building of
 company and will pay off the requisite dues of fnancial
 institution/bank after realization of consideration.
 
 AUDIT COMMITTEE
 
 The Constitution of the Audit Committee as on 31st March 2013 was as
 follows:
 
 Mr. Yatish Bhardwaj NEID^ Chairman
 
 Mr. Ram Chandra Agarwal Promoter & Member
 
 Executive Director
 
 Mr. Saurabh Kumar NEID^ Member
 
 ^ NEID- Non Executive Independent Director
 
 Mr. Sourabh Kumar has been designated as Chairman w.e.f 10 April 2013.
 
 DIRECTORS'' RESPONSIBILITY STATEMENT
 
 Pursuant to the requirements of Section 217(2AA) of the Companies Act,
 1956, the Directors of the Company hereby confrm:
 
 Subject to and except to the extent of the Auditor''s qualifcation in
 the Auditor''s Report which have been adequately responded to above, in
 the preparation of the annual accounts, the applicable accounting
 standards have been followed along with proper explanation relating to
 material departures;
 
 That the Directors had selected such accounting policies and applied
 them consistently and made judgments and estimated 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 fnancial year and of the proft or loss
 of the company for the period under review;
 
 That the Directors had taken proper and suffcient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of the Companies Act for safeguarding the assets of the
 company and for preventing and detecting fraud and other
 irregularities;
 
 That the Directors had prepared the annual accounts for the year ended
 31st March 2013 on a ''going concern'' basis.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
 EARNINGS AND OUTGO
 
 A Statement giving details of Conservation of energy, technology
 absorption and foreign exchange earnings and outgo as required u/s
 217(1)(e) of the Companies Act 1956 read with the Companies (Disclosure
 of particulars in the Report of Directors) Rules 1988, has been
 enclosed as Annexure- II to this report
 
 OTHER INFORMATION
 
 None of the Director or Employee of the Company was in receipt of
 remuneration exceeding the limits prescribed under Section 217(2A) of
 the Companies Act 1956.
 
 REPORT ON CORPORATE GOVERNANCE
 
 The Report on Corporate Governance along with Auditors Certifcate on
 the same has been enclosed as an Annexure III to this Report.
 
 ACKNOWLEDGEMENT
 
 The Directors wish to thank and deeply acknowledge the co-operation,
 assistance and support extended by the Central Government, the State
 Governments, the Company''s Bankers, the Shareholders, the dealers,
 vendors of the company in the success and growth of the Company. The
 Directors also wish to place on record appreciation for the
 co-operation and contribution made by the employees at all levels.
 
                             By the Order of the Board of Directors
 
                             Sd/-
 
                             Ram Chandra Agarwal
 
 Date : 04.09.2013           Chairman
 
 Place : New Delhi           DIN 00491885
Source : Dion Global Solutions Limited
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