DIRECTOR'S REPORT We are pleased to present the 13th annual report of the Company for the year ended 31st March, 2015. V-MART IPO Your Company has successfully concluded the pubic issue of equity shares during the year 2012-13 aggregating to Rs.36,435 million. The initial public offer of the Company was subscribed 1.19 times. While the Qualified Institutional Buyer's portion in the offer was subscribed 1.52 times, the Non-Institutional Investors and Retail Investors segments were subscribed 1.39 and 0.79 times, respectively, your Directors wish to express their sincere appreciation for your support in this regard. The means of finance for the objects of IPO and status of utilization of proceeds raised through the IPO by the Company as on 31st March, 2015 as referred above are as follows: PERFORMANCE REVIEW The Indian retail industry is one of the fastest growing markets in the world due to sound fundamentals such as stable economic growth, favourable demographic profile and rising per capita income. Retail industry in India is expected to grow to US$ 950 billion by 2018, registering a compound annual growth rate (CAGR) of 8.9 percent during 2000-2018. The online retail market is expected to grow from US$ 3.1 billion to US$ 22 billion (from 10 percent to more than 15 percent of the organized retail market) during FY13-FY18. During the year, the Net Sales of the Company increased by 25% to Rs.718.98 crores in FY14-15 from Rs.574.95 crores in FY13-14. The Operating Profits (EBITDA) has been increased by25% to Rs.66.02 crores in FY14-15 from Rs.52.96 crores in FY13- 14. The Company posted Profit after Tax (PAT) of Rs.37.37 crores in the current FY14-15 as against the Profit after Tax of Rs.25.16 crores in the previous financial year. A detailed analysis of Company's operations in terms of performance in markets, business outlook, risks and concerns forms part of the Management Discussion and Analysis, a separate section of this Annual Report. OPERATIONS REVIEW During the year the Company continued with its existing approach to endeavour to establish its growth pattern in the Retail Industry with a chain of stores under the "V-Mart" brand in the Retail Industry. During the year, the Company opened 19 (Nineteen) new stores under the brand V-Mart with spread over an area of 1.71 lacs During the year, the Company has also completed the transition to a new warehouse and corporate office keeping into account the existing and future growth. The year under review has been one where the focus of the Company has been on enhancing the capability of the organization and towards the achievement of this goal the Company has been taking a number of initiatives around the three pillars of People, Process and Technology. AWARDS & ACHIEVEMENTS During the year, following awards/recognitions were received by the Company: "Most Admired Retailer of the Year 2014" for the category of concept store OPERATING RESULTS AND BUSINESS Your Company completes its thirteenth year in the field of fashion retailing. The existing business model of the Company with a focus on the consumption story based on the growing aspiration for fashion in the Tier-II and Tier-III cities continues to give good results based on which your Company has posted healthy results. The Board in its meeting held on 4th May, 2015, recommended dividend of Rs.1.50/- per share (@15%) excluding the dividend distribution tax, which is to be paid out of the profit of the Company for the financial year ended 31st March, 2015 on equity shares of the Company, subject to approval of shareholders at the ensuing Annual General Meeting. RESERVES We have transferred Rs.9.74/- crores to our general reserves and our general reserves stood at Rs.186.92/- crores which makes the Company even more financial stronger. MANAGEMENT DISCUSSION AND ANALYSIS The Management Discussion and Analysis as required under Clause 49 of the Listing Agreement has been dealt with extensively as part of this Annual Report. LISTING The equity shares of your Company continue to be listed at the BSE Ltd. (BSE) and the National Stock Exchange of India Ltd. (NSE). The Company has paid the requisite listing fee to the Stock Exchanges for the financial year 2015-16. EXTRACT OF ANNUAL RETURN Pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of Annual Return in prescribed format are appended as Annexure - A to this Report. CORPORATE GOVERNANCE It describes our shared long-term values, principles and goals. It reflects our corporate culture and identity. It guides us in our daily work and shows how we want to address opportunities and risks today and in the future. It defines the way in which we assume our corporate responsibilities. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, a separate section titled Report on Corporate Governance has been included in this Report. NUMBER OF MEETINGS OF THE BOARD The Board met five times during the FY14-15, the details of which are given in Corporate Governance report that forms part of this Annual report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 & Listing Agreement. BOARD EVALUATION The Clause 49 of the Listing Agreement states that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal evaluation needs to be made by the board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of Independent Directors shall be done by its Board of Directors, excluding the director being evaluated. The Board has carried out the annual evaluation of its own performance and that of its Directors individually. The evaluation criteria as laid down by the Nomination & Remuneration Committee includes various aspects of functionality of Board such as compositions, process & procedures including adequate & timely information, attendance, delegation of responsibilities, decision-making, roles & responsibilities including monitoring, benchmarking, feedback, stakeholders relationship and committees. DECLARATION BY INDEPENDENT DIRECTORS The Company has received necessary disclosures from each of its Independent Directors under Section 149(7) of the Companies Act, 2013, that he/she meets all the criteria laid down in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The details of the familiarization programme for the Independent Directors have been uploaded on the website of the Company and may be accessed through the link: <http://www.vmart.co.in/> corporate.html. POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION The current policy aims to have a mix of independent and executive directors on Board and separate its functions of governance and management. The policy of the Company on director's appointment and remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of Section 178 is appended as Annexure-B. All the appointment and remuneration paid during the FY14-15 is as per the provisions of the Companies Act, 2013 and as per the terms laid down in policy of Nomination and Remuneration policy of the Company. TRAINING OF INDEPENDENT DIRECTORS Every new Independent Director of the Board attends an induction program. Every HOD, KMP, Senior-Executives makes presentation to inductees about the Company's strategy, operations, product and market, finance, risk management. Further, at the time of the appointment of Independent Directors, the Company issues a formal letter of appointment outlining his/her role, functions, duties and responsibilities as a director. NEW TO THE BOARD On recommendations of the Nomination and Remuneration Committee, the Board appointed Mr. Murli Ramachandran and Ms. Sonal Mattoo as Additional Directors in the capacity of Independent Directors effective from 22nd January, 2015, subject to the approval of shareholders at the ensuing Annual General Meeting. On recommendations of the Nomination and Remuneration Committee, the Board appointed Mr. Hemant Agarwal as an Additional Director, in the capacity of Non-Executive Director, effective from 22nd January, 2015, subject to the approval/ ratification of shareholders at the ensuing Annual General Meeting. Mr. Hemant Agarwal has been stepped down from the position of Whole-time Director of the Company and was appointed as Additional Director in the capacity of Non-Executive Director of the Company w.e.f. 22nd January, 2015. RETIREMENT BY ROTATION In terms of the provisions of Section 152 of the Companies Act, 2013 and Articles of Associations of the Company, Mr. Madan Gopal Agarwal (DIN 02249947), Director is liable to retire by rotation at the forthcoming Annual General Meeting and being eligible, offer himself for re-appointment. The necessary resolution for obtaining approval of Members has been incorporated in the notice of the ensuing Annual General Meeting. The requisite disclosures regarding appointment/ re-appointment of Directors have been made in the explanatory statement to the notice of the ensuing Annual General Meeting. The Company has received requisite disclosures and undertakings from all the Directors in compliance with the provisions of the Companies Act. RESIGNATIONS During FY14-15, Mr. Krishan Kumar Gupta and Mr. Kamal Kumar Gupta have resigned as Independent Directors w.e.f. 22nd January, 2015. The Board appreciated their efforts in delivering excellence and invaluable contribution for the Company. COMMITTEES OF THE BOARD A detailed note on the Board and its Committees is provided under the Corporate Governance report section in this Annual Report. Currently, there are four committees: Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee. PRACTISING COMPANY SECRETARY'S CERTIFICATE ON CORPORATE GOVERNANCE As required by Clause 49 of the Listing Agreement, the Practising Company Secretary certificate on Corporate Governance is enclosed as Annexure to the Board Report. SHARE CAPITAL a) Buy Back of Securities: The Company has not bought back any of its securities during the year under review. b) Issue of Sweat Equity: The Company has not issued any sweat equity shares during the year under review. c) Issue of Bonus Shares: The Company has not issued any bonus shares during the year under review. d) Employees Stock Option / Restricted stock units: The Company has adopted ESOP Scheme, 2012 as per the applicable SEBI regulations and approved by the members at Annual General Meeting. The details of shares allotted under ESOP and ESOPs granted /exercised during the year are as follows: 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 were no materially significant related party transactions made by the Company with the Promoters, Key Management Personnel or other designated persons which may have potential conflict with interest of the Company at large. The Company has formulated a policy on Related Party Transaction which is available on the website of the Company at the link <http://www.vmart.co.in/corporate>. html. The details of related party transactions entered during the year are provided in the accompanying financial statements. DEPOSITS During the FY14-15, your Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 and other applicable laws and as such no amount of principal or interest was outstanding as on date of the Balance Sheet. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013. The Company has not given any loan or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY BETWEEN 31ST MARCH, 201 5 AND THE DATE OF BOARD'S REPORT. There are no such material changes and commitments affecting 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. SUBSIDIARY COMPANIES, JOINT VENTURES & ASSOCIATE COMPANIES The Company does not have any Subsidiary, Joint Venture and Associate Company. CORPORATE SOCIAL RESPONSIBILITY (CSR) Our Company has constituted a Corporate Social Responsibility Committee of the Board and of which Mr. Lalit Agarwal is the Chairman, and Mr. Madan Gopal Agarwal, Mr. Aakash Moondhra and Ms. Sonal Mattoo are the members. The Committee is responsible for formulating and monitoring the CSR policy of the Company. Details about the CSR policy of the Company and initiatives taken by the Company on CSR during the year are available on our website. As per the Companies Act, 2013 Every company having net worth of rupees five hundred crore or more, or turnover of rupees one thousand crore or more or a net profit of rupees five crore or more during any financial year shall spend in every financial year, at least two percent of the average net profits of the company made during the three immediately preceding financial year, in pursuance of its Corporate Social Responsibility Policy. Accordingly, our Company requires to spend Rs.53,72,487 on CSR activities during the year. The annual report on CSR Activities is appended in Annexure-C to this Board Report. JUSTIFICATION FOR NOT SPENDING THE PRESCRIBED AMOUNT ON CSR ACTIVITIES As per the requirements of Section 135 of Companies Act, 2013, V- Mart has contributed an amount of Rs.21,00,000/- (Rupees Twenty One Lac Only) for the benefit of the Society out of Rs.53,72,487/- (Rupees Fifty Three Lac Seventy Two Thousand Four Hundred And Eighty Seven Only) which is required to be spent as per the provisions. The Shortfall of Rs.32,72,487/- (Thirty Two Lac Seventy Two Thousand Four Hundred and Eighty Seven Only) is due to unavailability of adequate proposals. The Company is evaluating various proposals to spend the required amount and serve the society at its best. CONSERVATION OF ENERGY The operational activity of the Company does not involve large energy consumption. In any case, conservation of energy is considered to be a priority and therefore ensuring minimum consumption by way of better energy conservation programs, training/ awareness of the employees, layout of machines and prompt upkeep is a continuous exercise. TECHNOLOGY ABSORPTION The Company is taking care of latest development and advancements in technology and all steps are being taken to adopt the same. CODE OF CONDUCT The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the Company. The Company believes in "Zero Tolerance" against bribery, corruption and unethical dealings / behaviors of any form and the Board has laid down the directives to counter such acts. The code laid down by the Board is known as "Code of Business Conduct" which forms an Appendix to the Code. The Code has been posted on the Company's website. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has a Whistle Blower Policy / Vigil Mechanism to deal with instances of fraud and mismanagement, if any. The purpose of this mechanism is to provide a framework to report concern about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy and provide adequate safeguards against victimization of the person availing this mechanism. This Policy has been appropriately communicated within the organization and is effectively operational. The policy provides mechanism whereby whistle blower may send protected disclosures directly to the Chairman of Audit Committee or Vigilance Officer. PREVENTION OF INSIDER TRADING The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate dealing in securities by the Directors and 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 the 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 of Directors and the designated employees have confirmed compliance with the code. RISK MANAGEMENT Your Company is working in an open environment and hence faces various types of risk. Company has analyzed all the possible types of risk and has taken steps to cover as much as possible if the tools of risk management are reasonably priced and available .Company has a clear policy and management to cover the various risks. H UMAN RESOURCE MANAGEMENT We are focused to attract and retain talented skills and make them motivated through various skill-development programmes. We provide quality workplace to our employees and provide platform to develop and to grow. The statement containing the names and other particulars of employees in accordance with Section 197 (12) of the Companies Act, 2013, read with Rules 5(1) & 5(2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure-D to the Board Report. No employee of the Company employed throughout the financial year was in receipt of remuneration of Rs.60 Lac or more, or employed for the part of the year and in receipt of Rs.5 lac or more a month under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, except Mr. Lalit Agarwal, Chairman & Managing Director of the Company. AUDITORS At the Annual General Meeting held on 23rd September, 2014, M/s Walker Chandiok & Co. LLP, Chartered Accountants, were appointed as statutory auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of first proviso to Section 139 of the Companies Act, 2013 the appointment of the auditors shall be placed for ratification at every AGM, accordingly the appointment of M/s Walker Chandiok & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Sections 141 of the Companies Act, 2013. SECRETARIAL AUDITOR VKC & CO., Practicing Company Secretaries, was appointed as Secretarial Auditors to conduct the Secretarial Audit of the Company for the FY14-15, as required under Section 204 of the Companies Act, 2013 and rules there under. The Secretarial Audit report forms part as Annexure-E to the Board's report. AUDITORS REPORT There was no observation or qualification in the Auditors Report for the financial year ended 31st March, 2015, it is self explanatory in nature. INTERNAL FINANCIAL CONTROL The Board has adopted adequate policies and procedures for ensuring orderly and efficient conduct of its business, including adherence to the Company's policies, the safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures. SIGNIFICANT AND MATERIAL ORDERS There was no such order passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future during the year under review. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 201 3 The disclosures as per the Anti-Sexual Harassment Policy of the Company and applicable Act, thereof are as follows : (a) Number of complaints of sexual harassment received in the year: NIL (b) Number of complaints disposed off during the year: NIL (c) Number of cases pending for more than ninety days: NIL (d) Number of workshops on awareness programme against sexual harassment carried out:1 (e) Nature of action taken by the employer or district officer: NIL DIRECTOR'S RESPONSIBILITY STATEMENT Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors hereby state and confirm that : a) in the preparation of the annual accounts, the applicable accounting standards have been followed. b) the Directors 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 or loss of the Company for that period. c) 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. d) the Directors have prepared the annual accounts on a going concern basis. e) the Directors had laid down Internal Financial Controls to be followed by the Company and that such internal financial controls are adequate and operating effectively. f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. ACKNOWLEDGEMENT Your Directors take this opportunity to express their sincere appreciation for the excellent support and co-ordination extend by the shareholders, customers, suppliers, bankers and other business associates. Your Directors gratefully acknowledges ongoing co-operation and support provided by Central Government and State Government and all regulatory authorities. Your Directors also place on records their appreciation for the contribution made by employees at all levels. By the order of Board For and on behalf of Board of Directors Lalit Agarwal Chairman & Managing Director DIN: 00900900 Place: Gurgaon Date: 30th July, 2015 |