DIRECTORS' REPORT To The Members, V2 Retail Limited Your Directors are delighted to present their Report on Company's Business Operations along with the Audited Statement of Accounts for the Financial Year ended March 31, 2015. FINANCIAL HIGHLIGHTS Your Company's financial performance for the year under review has been encouraging. Key aspects of Consolidated Financial Performance for V2 Retail Limited and its Subsidiary Companies and Standalone Financial Results for V2 Retail Limited for the current financial year 2014 - 15 along with the previous financial year 2013-14 are tabulated below: FINANCIAL 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 Rs. 2,31,09,89,125 to Rs. 2,89,28,59,149 compared to previous year. The Company has significantly generates profits 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. Further, the company is planning to enter in to a new business segment i.e. e-commerce segment, to strengthen its operating revenue and business performance. DIVIDEND Keeping in view of the non profitability of the previous year, your directors do not propose to declare any dividend for this year. NAMES OF COMPANIES WHICH HAVE BECOME OR CEASED TO BE ITS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THEYEAR The Company had 3 subsidiaries during the financial year 2014-15. There are no associate companies within the meaning of Section 2(6) of the Companies Act, 2013 ("Act"). There has been no material change in the nature of the business of the subsidiaries. During the year, the process of closure of following 50% Share Holding, which were not in operation, has been initiated and the same were applied to the Registrar of Companies to strike-off their names from its Register as follows: 1. VRL Infrastructure Limited 2. VRL Movers Limited 3. VRL Retail Ventures Limited Pursuant to the provisions of section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company. TRANSFER TO RESERVES In view of the previous losses incurred in the Company no amount has been transferred to the Reserves of the Company. SHARE CAPITAL The paid up Equity Share Capital of the Company as on March 31, 2015 was Rs. 23.57 Crores. Further, an allotment of equity shares amounting to Rs. 1.17 Crores have been made during the year. TRANSFER TO INVESTOR EDUCATION & PROTECTION FUND Pursuant to the provisions of Section 205C of the Companies Act, 1956, your Company has not transferred any amount during the year 2014-15 to the Investor Education and Protection Fund. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of this Report. CHANGE IN THE NATURE OF BUSINESS, IF ANY There was no change in the nature of business of the Company during the financial year ended March 31, 2015. However, the Company is planning to broaden its operation by adding e-commerce as its new business segment for strengthening its product base and to reach amongst the larger consumer base to enhance its turnover and operating revenue. SEGMENT REPORTING The Board wish to inform you that Segment Reporting is not applicable to the Company. CASH FLOW ANALYSIS The Cash Flow Statement for the year, under reference in terms of Clause 32 of the Listing Agreement entered by the Company with the Stock Exchanges, is annexed with the Annual Accounts of the Company. SUBSIDIARY COMPANY Pursuant to Section 129(3) of the Companies Act, 2013 and Accounting Standard AS-21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company includes the Financial Statements of its Subsidiaries. CONSOLIDATED FINANCIAL STATEMENTS In compliance with the applicable provisions of Companies Act, 2013 and the Accounting Standard AS-21 on Consolidated Financial Statements, this Annual Report also includes Consolidated Financial Statements for the financial year 2014-15. BOARD OF DIRECTORS The Members of the Company at the 13th Annual General Meeting held on 29th September, 2014, had approved appointment of Mr. Ravinder Kumar Sharma and Mr. Rohit Singh Rautela, as an Independent Directors of the Company to hold office for five consecutive years with effect from the date of the Annual General Meeting upto September 29th, 2019 with an option to retire from the office at any time during the term of appointment. The Company has also issued letter of appointment to all the Independent Directors as per Schedule IV to the Companies Act, 2013. Mr. Ravinder Kumar Sharma and Mr. Rohit Singh Rautela were appointed as an additional Independent Director w.e.f. 14th April, 2014, in the meeting of Board of Directors held on 31st March, 2014. Pursuant to the provisions of Section 149(13) of the Companies Act, 2013 all directors except Independent Directors are liable to be retire by rotation. In accordance with the provisions of Section 152 of the Companies Act, 2013 and the proposed amended Articles of Association of the Company, Smt. Uma Agarwal, Director, retiring by rotation at the ensuing Annual General Meeting, is eligible for re-appointment. The brief resume of the Directors being reappointed, the nature of their expertise in specific functional areas, names of companies in which they have held Directorships, Committee Memberships/ Chairmanships, their shareholding etc., are furnished in the explanatory statement to the notice of the ensuing AGM. The Board recommends her re-appointment at the ensuing Annual General Meeting. KEY MANAGERIAL PERSONNEL The Key Managerial Personnel (KMP) in the Company as per Section 2(51) and 203 of the Companies Act, 2013 are as follows: 1. Ram Chandra Agarwal: Managing Director 2. UmaAgarwal: Whole-time Director 3. Manshu Tandon: Chief Executive Officer 4. Yatish Bhardwaj: Company Secretary* 5. Varun Kumar Singh: Chief Financial Officer Mr. Dinesh Kumar Malpani was appointed as CEO of the Company w. e. f. 14th April, 2014 whereas he resigned as CEO of the Company w.e.f. 04th August, 2014. Mr. Manshu Tandon was appointed as CEO of the Company w.e.f. 08th January, 2015. *Mr. Yatish Bhardwaj has resigned from the post of Company Secretary w. e. f. 03.08.2015. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION Pursuant to the requirement under Section 134(3)(e) and Section 178(3) of the Companies Act, 2013, the Nomination and Remuneration Policy of the Company which includes criteria for Appointment and Re-Appointment of Director, the Remuneration payable to Managing and Whole Time Director, the Remuneration payable to Non-Executive Directors and the evaluation of directors is attached as 'Annexure 1' which forms part of this report. NUMBER OF MEETINGS OF THE BOARD During the Financial Year 2014-15, 13 (Thirteen) number of Board meetings were held. For details thereof kindly refer to the section 'Board Meeting and Procedures - Details of Board Meetings held and attended by the directors during the financial year 2014-15, in the Corporate Governance Report. PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS As the ultimate responsibility for sound governance and prudential management of a company lies with its Board, it is imperative that the Board remains continually energized, proactive and effective. An important way to achieve this is through an objective stock taking by the Board of its own performance. The Companies Act, 2013, notified on April 1, 2014, not only mandates board and director evaluation, but also requires the evaluation to be formal, regular and transparent. Subsequently, through two circulars (dated April 17, 2014 and September 15, 2014), SEBI has also revised the Equity Listing Agreement, to bring the requirements on this subject in line with the Act. The Independent Directors had met separately without the presence of Non-Independent Directors and discussed, inter-alia, the performance of non-Independent Directors and Board as a whole and the performance of the Chairman of the Company after taking into consideration the views of executive and Non-Executive Directors. The Nomination and Remuneration Committee has also carried out evaluation of every Director's performance. The Directors expressed their satisfaction with the evaluation process. It was further acknowledged that every individual Member and Committee of the Board contribute its best in the overall growth of the organisation. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the provisions under Section 134(5) of the Companies Act, 2013, with respect to Directors' Responsibility Statement, the Directors confirm: 1. that in the preparation of the Annual Accounts for the year ended March 31, 2015, the applicable Accounting standards have been followed and that there are no material departures; 2. that appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the state of affairs as at March 31, 2015 and of the profit of the Company for the Financial year ended March 31, 2015; 3. that proper and sufficient care has been taken 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; and 4. That the annual accounts for the year ended March 31, 2015 have been prepared on a going concern basis. 5. That they had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and 6. That they had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. DECLARATION BY INDEPENDENT DIRECTOR(S) AND REAPPOINTMENT, IF ANY All the Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 read with Clause 49 of the Listing Agreement so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 read with Listing Agreement. OPERATIONS, PERFORMANCE AND FUTURE OUTLOOK OF THE COMPANY A detailed review of operations, performance and future outlook of the Company is given separately under the head "Management Discussion & Analysis" pursuant to Clause 49 of the Listing Agreement is annexed and forms part of this Annual Report. ENERGY CONSERVATION, RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANDOUTGO Pursuant to provisions of Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 the details of activities in the nature of Energy Conservation, Research and Development, Technology Absorption and Foreign Exchange Earnings and Outgo is attached as 'Annexure 2' which forms part of this report. PARTICULARS OF REMUNERATION OF DIRECTORS AND KMP'S A statement containing the details of the Remuneration of Directors and KMP's as required under Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as 'Annexure 3' which forms part of this Report. EXTRACT OF ANNUAL RETURN Pursuant to the provisions of Section 134 (3) (a) of the Companies Act, 2013, an extract of the Annual Return in Form MGT-9 is attached as 'Annexure 4' which forms part of this Report. AUDITORS AND AUDITORS' REPORT 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 confirmed that the said appointment would be in conformity with the provisions of Section 139(2) and 142(1) of the Companies Act, 2013. The Board recommends their appointment. The Auditor's have put certain qualifications to which the management has put forward the following below mentioned replies; Qualification and response to Auditor's Report 1. Attention is invited to note 4 of these financial statements, included in capital reserve amounting to Rs. 60,523.24/-lacs, is Rs. 42,942/-lacs arising out of transfer of asset and liabilities to the acquiring companies in earlier years for which necessary reconciliation/ information to the tune of Rs 372.24/-lacs is not available with the company. Accordingly in the absence of the same, we are unable to comment on the appropriateness of capital reserve including consequential impact, if any, arising out of the same on these financial statements. Management Response: The Company restructured its business in F.Y 2010-11 resulting a Capital Reserve of Rs. 60,523 Lacs. The amount of Capital Reserve has been reconciled except Rs. 372.24 Lacs for which the company is in process to reconcile and there is no impact on Profit & Loss account. 2. As stated in these quarterly financial results, the Company has outstanding short-term borrowings at the year-end due to a lender which include overdue principal and interest for which necessary supporting documents for balance confirmation at the year end and relevant information with relation to rate of interest is not available with the Company. In the absence of the same, we are unable to comment on appropriateness of the same. Management Response: The interest expense has been recognised in the Books of Account on the basis of the figure provided by the concerned lender in May 2012, in relation to balances as on 31st March 2012. The matter in respect of rate of interest is pending with DRT-II, Kolkata. Impact on Profit & Loss account cannot be quantified till the matter is disposed off by DRT-II, Kolkata. 3. As stated in these quarterly financial results, the Company has recognized Rs. 26,237.25/- lacs as deferred tax assets at the year-end for which it does not have virtual certainty supported by convincing evidence that sufficient future taxable income will be available against which such deferred tax assets can be realized in accordance with the principles of Accounting Standard 22 "Accounting for Taxes on Income" issued by the Institute of Chartered Accountants of India . Had the company not recognized such deferred tax asset, impact on profit and loss account would have been decrease in profit during the year by Rs. 26,237.25/-lacs and decrease in Reserves and Surplus by Rs. 26,237.25/-lacs. Management Response: The Company has started to earn profits, the Company has earned profits after tax of Rs. 975 Lacs during last year and Rs. 477.12 Lacs during quarter ending 30th June 2015 resulting in reversal of Deferred Tax Assets by a sum of Rs. 869 Lacs during last year and 340.38 Lacs during quarter ending 30th June 2015. The rest amount will be reversed in due course of business. 4. As stated in Note 6 of these quarterly financial results, the Company has disclosed contingent liabilities on account of appeals with various statutory authorities at different levels amounting to Rs.16,938.11/- lacs for which necessary information is not available with the Company to reliably ascertain estimated amount of such liabilities and consequential impact thereof on these quarterly financial results in accordance with Accounting Standard-29-'Provisions, Contingent Liabilities and Contingent Assets'issued by the Institute of Chartered Accountants of India. Hence, we are unable to comment on the same. Management Response: The Contingent Liabilities of Rs. 16,957.11 Lacs are under appeal with different authorities at different levels. The chances of these obligations are very remote even recently we have been awarded an order in our favour by Hon'ble Delhi High Court, quashing a demand of about 1,100 Lacs. Impact on Profit & Loss account cannot be ascertained till the matter is pending with different government authorities. 5. As stated in these quarterly financial results, the company has year-end inventory of traded goods amounting to Rs. 4,265.95lacs in its warehouse at Mubarikpur, Haryana for which the company does not have proper records for physical verification as at 31st March 2015. Further, this inventory was not physically verified by us at the year-end as the company was in process of shifting such goods to its new warehouse as mentioned above. Hence, we are unable to comment on the existence of the same. Management Response: The Company has shifted its warehouse from Manesar to Mubarikpur (Haryana) in the month of February 2015. Due to shifting process it was not possible for the company and auditors to physically verify the inventory. The Company has started stock taking process and process for reconciliation of such inventory internally which will be finalized in due course. SECRETARIAL AUDITORS Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s NSP & Associates, Company Secretaries, New Delhi to undertake the Secretarial Audit of the Company. The Secretarial Audit Report submitted by them in the prescribed form MR- 3 is attached as 'Annexure 5' which forms part of this report. CORPORATE GOVERNANCE V2 Retail Limited is 'Your Company' because it belongs to you - the stakeholders. The Chairman and Directors are 'Your' fiduciaries and trustees. Their objective is to take the business forward in such a way that it maximizes 'Your' long-term value. The new Companies Act, 2013 and amended Listing Agreement have strengthened the governance regime in the country. Your Company is in compliance with the governance requirements provided under the new law and had proactively adopted many provisions of the new law, ahead of time. Your Company is committed to embrace the new law in letter and spirit. In line with the requirements of new law, your Company has constituted new Board Committees. Your Company has in place all the statutory Committees required under the law. Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance Report. CORPORATE SOCIAL RESPONSIBILITY (CSR) Board inform you that provisions of Section 135 of the Companies Act, 2013 were not applicable on the Company for the Financial Year under review. However, the Board is committed towards its social responsibility and shall follow the provisions as and when it becomes applicable on the Company. INTERNAL FINANCIAL CONTROL SYSTEM According to Section 134(5)(e) of the Companies Act, 2013 the term Internal Financial Control (IFC) means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. The Company has a well placed, proper and adequate internal financial control system which ensures that all assets are safeguarded and protected and that the transactions are authorised, recorded and reported correctly. Your Company has appointed M/s. RHSN & Associates, Chartered Accountant, as the Internal Auditors of the Company to conduct the Internal Audit Functions w.e.f July 01, 2014. The Internal Auditors independently evaluate the adequacy of internal controls and concurrently audit the majority of the transactions in value terms. ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS The Companies Act, 2013 re-emphasizes the need for an effective Internal Financial Control system in the Company. The system should be designed and operated effectively. Rule 8(5)(viii) of Companies (Accounts) Rules, 2014 requires the information regarding adequacy of Internal Financial Controls with reference to the financial statements to be disclosed in the Board's report. Your Company's Internal Control Systems are commensurate with the nature, size and complexity of its business and ensure proper safeguarding of assets, maintaining proper accounting records and providing reliable financial information. An external independent firm carries out the internal audit of the Company operations and reports its findings to the Audit Committee on a regular basis. Internal Audit also evaluates the functioning and quality of internal controls and provides assurance of its adequacy and effectiveness through periodic reporting. The Audit Committee also reviews the risk management framework periodically and ensures it is updated and relevant. DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT The Board of the Company has formed a risk management policy to frame, implement and monitor the risk management plan for the Company. The Board is responsible for reviewing the risk management plan and ensuring its effectiveness. The audit committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the management discussion and analysis, which forms part of this report. PUBLIC DEPOSITS The Company has neither accepted nor renewed any deposits during the Financial Year 2014-15 in terms of Chapter V of the Companies Act, 2013. PERSONNEL During the year under review, no employees, whether employed for the whole or part of the year, was drawing remuneration exceeding the limits as laid down u/s Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. Hence the details required under Section 197(12) are not required to be given. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE The Company is committed to provide a protective environment at workplace for all its women employees. To ensure that every woman employee is treated with dignity and respect and as mandated under "The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013" the Company has in place a formal framework for prevention of sexual harassment of its women employees. During the year, no allegations of sexual harassment were filed with the Company. DEPOSITORY SYSTEMS As the members are aware, the Company's shares are compulsorily tradable in electronic form. As on March 31, 2015, 19753277 Equity Shares stand with the NSDL Account and 3665188 Equity Shares with the CDSL and 159284 Equity Shares stands in physical form. Your Company has established connectivity with both depositories - National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the numerous advantages offered by the depository system, member holding Shares in physical mode are requested to avail of the dematerialization facility with either of the depositories. Your Company has appointed M/s. Link Intime India Private Limited , a Category-I SEBI registered R&T Agent as its Registrar and Share Transfer Agent across physical and electronic alternative.. CHANGE IN CAPITAL STRUCTURE AND LISTING OF SHARES The Company's shares are listed and actively traded on the below mentioned Stock Exchanges:- I. National Stock Exchange of India Limited (NSE) "Exchange Plaza" C-1, Block G, Bandra-Kurla Complex, Bandra (East), Mumbai - 400051 II. BSE Limited (BSE) Phiroze Jeejeebhoy Towers, 25th Floor, Dalal Street, Mumbai - 400001 Further, there was change in the capital structure in the Company as an allotment of equity shares amounting to Rs. 1.17 Crores have been made during the year. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013 During the financial year ended March 31, 2015 the Company has neither made any investments nor given any loans or guarantees or provided any security. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES UNDER SECTION 188(1) OF THE COMPANIES ACT, 2013 The Company has formulated a Policy on dealing with Related Party Transactions. The Policy is disclosed on the website of the Company. Weblink: <http://www.v2retail.com/admins/pic/2015_05_18_10_38_52_Related%20Party%20Transaction%20Policy.pdf All Related Party Transactions that were entered into during the financial year were on an arm's length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 ('the Act') and the Listing Agreement. There were no materially significant Related Party Transactions made by the Company during the year that would have required Shareholder approval under Clause 49 of the Listing Agreement. DISCLOSURE ON VIGIL MECHANISM (Whistle Blower Policy) Your Company has established a mechanism called 'Vigil Mechanism (Whistle Blower Policy)' for directors and employees to report to the appropriate authorities of unethical behavior, actual or suspected, fraud or violation of the Company's code of conduct or ethics policy and provides safeguards against victimization of employees who avail the mechanism. The policy permits all the directors and employees to report their concerns directly to the Chairman of the Audit Committee of the Company. The Vigil Mechanism', as approved by the Board, is uploaded on the Company's website at the web link: <http://www.v2retail.com/admins/pic/2015> 05 18 10 39 12 WHISTLE%20 BLOWER%20 POLICY.pdf DISCLOSURE ON DEPOSIT UNDER CHAPTER V The Company has neither accepted nor renewed any deposits during the Financial Year 2014-15 in terms of Chapter V of the Companies Act, 2013. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERNS STATUS AND COMPANY'S OPERATIONS IN FUTURE The Company has not received any significant or material orders passed by any Regulatory Authority, Court or Tribunal which shall impact the going concern status and Company's operations in future. INDUSTRIAL RELATIONS The Company maintained healthy, cordial and harmonious industrial relations at all levels. The enthusiasm and unstinting efforts of Employees have enabled the Company to remain at the leadership position in the industry. It has taken various steps to improve productivity across organization. The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders On behalf of the Board of Directors V2 Retail Limited SdRam Chandra Agarwal Chairman and Managing Director DIN:-00491885 Place: New Delhi Date: 28.08.2015 ADDRESS: B1-801, Lagoon Apartment, Ambience Island, Gurgaon- 122002, Haryana |