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VRL Logistics Ltd.

BSE: 539118 | NSE: VRLLOG |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE366I01010 | SECTOR: Transport & Logistics

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Annual Report

For Year :
2018 2017 2016 2015 2014

Director’s Report

Dear Members, The Directors are pleased to present the thirty third annual report of your Company together with the audited financial statements for the financial year ended 31st March 2016. SUMMARY FINANCIAL RESULTS (Rs. in Lakhs) Year Ended Year Ended Particulars 31st March, 2016 31st March, 2015 Total Income 172942.98 167886.10 EBITDA 27462.91 28044.59 Finance Costs 3069.32 5859.98 Depreciation and amortisation expense 8995.04 8766.03 Net Profit Before Tax (incl. exceptional income item) 15398.55 13790.21 Tax Expense 5167.20 4667.87 Net Profit After Tax 10231.35 9122.34 Balance of Profit brought forward 11484.12 7416.58 Balance available for appropriation Interim Dividend on Equity Shares 4562.17 3421.45 Tax on Interim Dividend 928.75 614.82 Transfer to General Reserve 1023.13 912.23 Transitional Adjustment on account of change in Depreciation method - 106.30 Surplus carried to Balance Sheet 15201.42 11484.12 OPERATING HIGHLIGHTS: During the last year your Company earned revenues of Rs. 172942.98 lakhs as against previous year''s revenues of Rs. 167886.10 lakhs depicting a growth rate of 3.01 ACU- and earned Profit before tax (PBT) of Rs. 15398.55 lakhs. The corresponding PBT for the earlier year was Rs. 13790.21 Lakhs. Profit after Tax (PAT) for the year was Rs.10231.35 lakhs as against Rs.9122.34 of the previous year. The Company''s Goods Transport Division achieved revenues of Rs.135626.19 lakhs registering a growth rate of 5.08 ACU- as compared to previous year. The Company earned revenues of Rs.31760.97 lakhs from bus division and Rs. 2139.42 lakhs from the sale of power generated through the windmills owned by the Company. CHANGE IN NATURE OF BUSINESS OF THE COMPANY: There is no change in nature of business of the Company. Your Company continues to be one of the leading Logistics service providers in the country. The service offering of the Company in the Logistics space are Goods transport, Passenger transport and Courier services apart from Air Chartering and Wind Power Generation business. MATERIAL CHANGES AND COMMITMENTS There were no material changes and commitments that occurred subsequent to the end of the financial year till the date of this report, which affects the financial position of the Company. CAPITAL EXPENDITURE: During the Financial year 2015-16, the company has undertaken a capital expenditure of Rs.10,127.75 lakhs. Out of the same, a sum of Rs.7754.75 lakhs was invested for fleet addition. Other capex components included a sum of Rs.1382.38 lakhs towards Plant ACY- Office Equipments and Furniture / Fittings, Rs.524 lakhs towards freehold land and Rs.202.26 lakhs towards Building improvement costs,. The said capex also included a sum of Rs.264.36 lakhs expended on leasehold improvements. DIVIDEND: During the Financial year 2015-16, your directors declared an Interim Dividend at the rate of 50 ACU- amounting to Rs. 5.00 per equity share. The Board recommends no further dividend and proposes that the interim dividend so declared and paid be treated and declared as the final dividend for the financial year 2015-16. FIXED DEPOSITS The Company has not accepted any deposits during the year, within the meaning of Section 73 of the Companies Act 2013 and the rules made thereunder. SUCCESSFUL INITIAL PUBLIC ISSUE The Company has successfully completed initial public offering (IPO) during the year 2015-16 pursuant to applicable SEBI rules and Regulations. The IPO of the Company received an overwhelming response from the investors and was oversubscribed by more than 74 times thereby making this IPO a historical one. Shares of the Company have been listed with both BSE and NSE w.e.f 30th April 2015. Consequently, the Company''s paid up capital increased from Rs.85,53,61,620/- to Rs.91,24,34,950/- and Share premium increased from Rs.10,889.32 lakhs to Rs.21313.09 lakhs. Fresh 5,707,333 equity shares of Rs.10/- each were issued at a premium of Rs. 195/- per share. Apart from the aforementioned fresh issue of shares, NSR PE Mauritius LLC, a private equity investor offloaded 1.45.50.000 equity shares and the promoters offered 25.66.000 equity shares held by them as a part of the said public offering. The company has utilised the issue proceeds as per the objects stated in the prospectus and as of March 31, 2016 a sum of Rs. 2922.19 lakhs remain unutilised which is expected to be fully utilised in the coming year. CLOSURE OF NEPAL BRANCH: Company had extended its business operations to Kathmandu, Nepal by incorporating a branch under the extant provisions of the Laws prevailing in Nepal with a view to provide quality logistics services to the customers. However, owing to the disturbances and uncertain conditions prevalent in Nepal, Management has decided to close its operations in the said country. Requisite legal formalities to close the branch office have been initiated and are expected to be completed soon. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: The company has not given any loans or guarantees covered under the provisions of section 186 of the Companies Act, 2013. Details of investments made by the company are given in the notes to the financial statements. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Board of the Company had laid down policies, guidelines, procedures and structure to enable implementation of appropriate internal financial controls across the Company. These control processes enable and ensure the orderly and efficient conduct of Company''s business, including safeguarding of assets, prevention and detection of frauds and errors, the accuracy and completeness of the Accounting records and timely preparation ACY- disclosure of financial statements. These controls also identify the risks and provides for means to minimize / mitigate the risks affecting the business of the Company as a whole. Auditors, as required under the Companies Act 2013, have also certified that these internal financial controls are in order and efficient in mitigating the risks. The Company''s internal audit department enables the Management to mitigate the risks or prevent the non compliances of laws which would affect the financial position of the Company. The scope and authority of the Internal Audit function is well defined and to maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board as well as directly to the Chairman ACY- Managing Director. The Internal Audit Department monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES As required under the provisions of the section 135 of the Companies Act 2013, the Company has constituted the Corporate Social Responsibility Committee which monitors and oversees various CSR initiatives and activities of the Company. Composition, terms and functions of the said committee are provided in the Corporate Governance report forming part of this Annual Report. The Company has set up a trust - VRL Foundation under the aegis of which the Company conducts its CSR activities. Amongst others Health and Education are the focus areas for the trust. A detailed report of CSR activities including the amount spent / unspent for CSR activities is annexed to this report as Annexure A to this report. CSR policy of the Company is available on the Company''s website and can be accessed thru the following link. http://vrlgroup.in/investor AF8-download/CSR ACU-20POLICY.pdf TRANSFER TO RESERVES: The Company has transferred an amount of Rs.1023.13 lakhs to the General Reserve out of current year''s profits. TRANSFER OF UNPAID AND UNCLAIMED AMOUNT TO IEPF: Pursuant to section 125 of the Companies Act 2013, dividend and refund of Share Application Money due for refund which remains unpaid for seven years from the date of its transfer to unpaid dividend / unclaimed account is required to be transferred by the Company to Investor Education and Protection Fund (IEPF) established by the Government. During the year, no amount was due for transfer to IEPF. INDUSTRIAL RELATIONS: During the year under review, your Company experienced cordial relationship with employees at all levels, throughout the year. SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 During the year, your Company executed the Uniform Listing Agreement in accordance with the requirements of SEBI Circular DCS/ COMP/12/2015-16 dated October 13, 2015, with BSE Limited and National Stock Exchange of India Limited (NSE). The Company''s Equity Shares are listed on the BSE and NSE and it has paid its Annual listing fee to these stock exchanges for the Financial Year 2016- 2017. The Company has formulated the following Policies as required under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015: 1. ''Policy for Preservation of Documents'' under Regulation 9 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The said policy can be accessed at the following link: http://vrlgroup.in/vrl AF8-investor AF8-desk.aspx7display policies 2. ''Policy on Criteria for determining Materiality of Events/Information'' under Regulation 30 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 The said policy can be accessed thru the following link: http://vrlgroup.in/vrl AF8-investor AF8-desk.aspx?display AD0- policies DIRECTORS AND KEY MANAGERIAL PERSONNEL Number of Meetings of the Board: During the year five Board Meetings were convened and held, details of which are provided in the Corporate Governance Report. The intervening gap between the Meetings was in compliance with the provisions contained in the Companies Act, 2013. Nomination and Remuneration Policy The Board has, on the recommendation of the Nomination ACY- Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management and their remuneration including criteria for determining qualifications, positive attributes and other matters provided under sub section (3) of section 178 of the Companies Act 2013. The Remuneration Policy is stated in the Corporate Governance Report and also annexed to this report as Annexure B. The said policy alternatively can be accessed on the website of the Company at the following link: http://vrlgroup.in/investor AF8-download/Nomination AF8- Remuneration ACU-20Policy.pdf Declaration by Independent Directors All independent directors have given due declarations that they meet the criteria of independence as laid down under section 149(7) of the Companies Act, 2013 and under extant provisions of the SEBI (Listing Obligations and Disclosure) Requirements) Regulations 2015. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure) Requirements) Regulations 2015, the Board has carried out an evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Board Diversity A diverse Board enables efficient functioning through differences in perspective and skill and also fosters differentiated thought processes at the back of varied industrial and management expertise, gender and knowledge. The Board recognizes the importance of a diverse composition and has adopted a Board Diversity policy which sets out the approach to diversity. The said policy can be accessed thru the following link. http://vrlgroup.in/vrl AF8-investor AF8-desk.aspx?display AD0-policies Inductions Dr. Ashok Shettar, was appointed as Non-Executive Director in the AGM held on 8th August, 2015, in the place of Retiring Director, Mr. Darius Pandole (the representive of NSR) who had not sought reappointment from the Board. The Board wishes to place on record, the immense contribution made by Mr. Darius Pandole in his capacity as a Director. Retirement/Re-appointment Mr. S R Prabhu, Non-Executive Director and Mr. Raghottam Akamanchi, Non-Executive Director, retire by rotation and being eligible, offer themselves for reappointment. DIRECTOR''S RESPONSIBILITY STATEMENT: In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that: i) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures. ii) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 or loss of the Company for that period. iii) The directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the 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 the company and that such internal financial controls are adequate and were operating effectively. vi) The directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively. Based on the framework of internal financial controls established and maintained by the Company, reviews performed by the Management in concurrence with the Audit Committee, your Board is of the opinion that the Company''s internal controls were adequate and effective as on March 31, 2016. RELATED PARTY TRANSACTIONS: All related party transactions that were entered into during the financial year were on arm''s length basis and were in the ordinary course of the business. There are no materially significant related party transactions made by the company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the company at large. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board of Directors of the Company can be viewed on the website of the Company thru the following link. http://vrlgroup.in/investor AF8-download/RPT ACU-20Policy.pdf There were no material significan trelated party transactions entered between the Company, Directors, management, or their relatives except for those disclosed in the financial statements. All the contracts/arrangements/transactions entered into by the Company with the related parties during the financial year 2015-16 were in the ordinary course of business and on an arm''s length basis. In our opinion there were no ACI-material ACI- transactions that warrant a disclosure in this report. Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such contract or arrangement in Form AOC-2 does not form a part of this report. SUBSIDIARY COMPANIES: The Company does not have any subsidiary. CODE OF CONDUCT: The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and specified employees in the course of day to day business operations of the company. The Company believes in ACI-Zero Tolerance ACI- against bribery, corruption and unethical dealings / behaviour in any form and the Board has laid down certain directives to counter such acts. Such code of conduct has also been placed on the Company''s website. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place, in business practices and in dealing with stakeholders. The Code gives guidance on the expected behaviour from an employee in a given situation and the reporting structure. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. VIGIL MECHANISM / WHISTLE BLOWER POLICY: The Company has a Vigil Mechanism Policy to deal with instances of fraud and mismanagement, if any. Staying true to our core values being committed to high standards of Corporate Governance and stakeholder responsibility, the said policy ensures that strict confidentiality is maintained in respect of whistle blowers whilst dealing with concerns and also specified that no discrimination will be meted out to any person for a genuinely raised concern and also provides a direct access to the Chairman of the Audit Committee. During the year under review none of the personnel has been denied access to the Chairman of Audit Committee. The Vigil Mechanism policy is available on the website of the Company and can be accessed at the following link. http://vrlgroup.in/investor AF8-download/vigil AF8-Mechanism. pdf PREVENTION OF INSIDER TRADING: The Company has adopted a Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Insiders with a view to regulate trading in securities by the Directors and certain designated employees of the Company. The Code requires pre- clearance for dealing in the Company''s shares and prohibits the purchase or sale of Company shares by the Directors and designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board Directors and the designated employees have confirmed compliance with the Code. The said code is available on the website of the Company and can be accessed at the following link. http://vrlgroup.in/vrl AF8-investor AF8-desk.aspx?display AD0-policies BUSINESS RISK MANAGEMENT: Pursuant to section 134 (3) (n) of the Companies Act, 2013 ACY- Regulation 21 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the company has constituted a risk management committee. The details of the committee and its terms of reference are set out in the corporate governance report forming part of the Boards report. The identification of material risks affecting Company along with related mitigation measures are elaborated in the Risk Management Policy of the Company which has been hosted on the website of the Company and can be accessed at the following link. http://vrlgroup.in/investor AF8-download/Risk ACU-20 Management ACU-20Policy.pdf AUDIT COMMITTEE: The Audit Committee comprises of 4 directors and all of them are Independent Directors. The Audit Committee met five times during the year. Further details such as terms of reference, powers, functions, meetings, attendance of directors etc are dealt with in Corporate Governance Report forming part of this Annual report. Board has accepted all recommendations made by the Audit Committee during the year. AUDITORS Statutory Auditors: In accordance with Section 139 of the Companies Act, 2013 and Rules made thereunder, Members at the 32nd Annual General Meeting of the Company approved the appointment of Joint Statutory Auditors, M/s Walker Chandiok ACY- Co LLP, Chartered Accountants, Mumbai and M/s H K Veerbhaddrappa ACY- Co., Chartered Accountants, Hubballi for a period of 5 years and 2 years respectively. The said appointment was subject to ratification by members every year. The Company has received a resignation letter from M/s H K Veerbhaddrappa ACY- Co, Chartered Accountants, Hubballi, one of the Joint Statutory Auditors of the Company. The Board at the meeting held on August 01, 2016, on the recommendation of the Audit Committee, approved the same. As the said firm is associated with your Company as Statutory Auditors since inception and considering their long association as also their in-depth knowledge and expertise w.r.t. the business operations of your Company, the Board is considering their appointment as Internal Auditors of the Company to strengthen the Internal Audit functions of the Company in the days to come. As such, M/s Walker Chandiok ACY- Co LLP, Chartered Accountants, Mumbai, the other Joint Statutory Auditor of the Company would continue as the sole Statutory Auditor till the conclusion of their tenure. Board recommends the ratification of their appointment as required under Section 139 of the Companies Act 2013, for approval by the members. Cost Auditors: Section 148 of the Companies Act 2013 read with Rules made thereunder mandates every Company belonging to category prescribed in the Rules to undertake a Cost Audit. Cost Records of Wind Power Division of the Company need to be audited as it is covered in the category prescribed. In compliance with said provision, Company had appointed M/s S.K. Tikare ACY- Co., Cost Accountants, Dharwad to audit the cost records for FY 2015-16. The Cost Auditor has submitted the Cost Audit report for FY 2015-16 and the same is annexed as Annexure C to this report. Pursuant to the recommendation of the Audit Committee, the Board of Directors have re-appointed M/s S K Tikare ACY- Co., Cost Accountants, Dharwad as the Cost Auditors for FY 2016-17 at a fixed remuneration of Rs.50,000/-, the latter subject to approval by the members at the ensuing Annual General Meeting of the Company. Board recommends the approval of the said remuneration payable to the Cost Auditor in accordance with Section 148 of the Companies Act 2013 and the Rules made thereunder. Secretarial Auditor: Pursuant to provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the company has appointed Mr. R Parthasarathi, Company Secretary in practice to undertake the Secretarial Audit of the Company for FY 2015-16. The Secretarial Audit report is annexed herewith as Annexure D. Pursuant to the recommendation of the Audit Committee, the Board of Directors have re-appointed Mr. R Parthasarathi, Company Secretary in Practice to conduct the Secretarial Audit for FY 2016-17 at its meeting held on May 23, 2016. BOARD''S RESPONSE ON THE REMARKS MADE BY STATUTORY AUDITORS, COST AUDITORS AND SECRETARIAL AUDITORS There were no qualifications, reservations and adverse remarks made by the statutory auditors in their Audit Report and by the Cost Auditors in their Cost Audit Report. Response to the comment made by the secretarial auditor that the company has not fully spent the CSR expenditure as per section 135 of the Companies Act 2013 is given in Annual Report on CSR activities - Annexure A. EXTRACT OF ANNUAL RETURN: Extract of the Annual Return in form MGT-9 is annexed herewith as Annexure E. DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The particulars regarding Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Expenditure are annexed hereto as Annexure F and forms part of this Report. 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 employees of the Company, forms of this report and annexed herewith as Annexure G. A statement containing the names of every employee who is in employment of the Company throughout the year and is in receipt of annual remuneration of Rs. 60 lakhs or more or employed for a part of year and in receipt of Rs.5 lakh or more per month needs to be disclosed in the Board''s report. As such the information is annexed as Annexure G to this report. CORPORATE GOVERNANCE The Company is committed to maintain high standards of corporate governance and adhere to the corporate governance requirements set out under extant law. The Report on corporate governance as stipulated under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 read with Schedule V thereto forms part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under the aforesaid Regulations, as also the related certificate from CEO/ CFO are attached to the Report on corporate governance. MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT Management''s Discussion and Analysis Report for the year under review, as stipulated under Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 read with Schedule V thereto, is presented in a separate section forming part of the Annual Report. SIGNIFICANT AND MATERIAL ORDERS There are no significant and material orders passed by the regulators or courts or tribunals impacting going concern status and company''s operations for a foreseeable future. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT 2013 During the year under review, there were no cases reported pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. STATUTORY DISCLOSURES None of the Directors of your Company are disqualified as per provisions of Section 164(2) of the Companies Act, 2013. Your Directors have made necessary disclosures, as required under various provisions of the Companies Act, 2013 and Listing Regulations. FRAUDS REPORTED BY AUDITORS There were no frauds reported by the auditors under Section.143(12) of the Companies Act, 2013 ACKNOWLEDGMENTS AND APPRECIATION The Directors take this opportunity to thank the Company''s customers, shareholders, Investors, suppliers, bankers, financial institutions and Central ACY- State Governments for their consistent support to the Company. The Directors also wish to place on record their appreciation to employees at all levels for their hard work, dedication and commitment. For and on behalf of the Board Dr. Vijay Sankeshwar Chairman ACY- Managing Director DIN:00217714 Place: Hubballi Date: August 01, 2016

Director’s Report