DIRECTORS' REPORT To, The Members of Patel Integrated Logistics Limited. Your Directors have pleasure in presenting their 53rd Annual Report for the year ended 31st March 2015. FINANCIAL PERFORMANCE REVIEW: The highlights of Company's performance are as under: • Revenue from operations increased by 8.25% to Rs.587.98 cr. • EBITDA increased by 25.73% to Rs.19.94 cr. • Profit before Tax increased by 158.57% to Rs.7.99 cr. • Net Profit increased by 155% to Rs.5.99 cr. • Net Worth stood at Rs.90.53 cr., Fixed Asset base was Rs.42.66 cr. and the EPS was Rs.3.94. The financial year 2014-15 has been a successful year for the Company in terms of financial performance of the Company during the year due to increase in sales. During the year the Company focused on Retail (Express delivery) segment of business, which has the better margins of profit. The lower input cost and cost reduction measures also leads to better performance during the year. There is no change in the nature of business during the year under review. DIVIDEND: For the year under consideration, the Board of Directors recommended a dividend of Re.0.5/- per share i.e. 5% on the equity share capital of the Company for the financial year ended March 31, 2015. The dividend payout is subject to approval of members at the ensuing Annual General Meeting. The dividend payout for the year under review has been formulated after consideration of Company's long term growth objectives to be met by internal accruals. FUTURE PLANS AND OUTLOOK: In 2015 the Global economic outlook and that of India is expected to improve significantly as India begins to tackle the economic downturn. With a new government set in place and with GST going to be implemented in 2016, and with many policies are expected to be implemented which will give a fresh impetus to India's growth engine particularly in the corporate and SME sector which in turn will expand demand for the logistics sector. The biggest boost to the growth of the industry is coming from the increasing consumer demand, particularly in the Tier 2 and 3 sections of the country. This is being further fueled by the revolutionary growth being seen in e-commerce which is leading to logistics companies responding with new innovations in service since logistics is the most critical ingredient in the success of an online business. To cater the growth in e-commerce business, your Company in the coming years, aiming to increase the portion of revenue generated from e-commerce companies by providing them fast-track delivery of their products to their customers across the country. Sensing the boom for logistic industry, the Company is planning to focus on top e-commerce players for volumes and revenue generation. Your Company is also pursuing and studying expansion into warehousing. Your Company already has a Custom bonded Warehouse in Chennai for the last seven years. The company is exploring options to serve its e-commerce customers in a much more inclusive way. With GST and faster development of road projects like the NS-EW corridor highway and National waterways Sagarmala project, your Company is hopeful that the coming years will be rocking for logistic sector. FINANCE: A) Bank Finance: The Company enjoys fund based and non fund based credit facilities from the Banks to meet its working capital requirements. The Company also enjoys a credit line for buying the trucks on deferred payment guarantee basis. The Company is regular in payments of installments and there are no over dues as on the date of reporting. B) Fixed Deposits: The Company is accepting unsecured fixed deposits from the public in accordance with the requirements prescribed under Chapter V of the Companies Act 2013 and Companies (Acceptance of Deposits) Rules, 2014. Accordingly, Fixed Deposits accepted by the Company stood at Rs.1234.62 lacs as on 31st March 2015. There were no unpaid or overdue deposits as on 31st March 2015, other than unclaimed Deposits and interest accrued thereon aggregating Rs.7.32 lacs. There has been no default in repayment of deposits or payment of interest thereon during the year under consideration. The Company has not accepted any deposits which are not in compliance with the requirement of Chapter V of the Companies Act, 2013. Ministry of Corporate Affairs (MCA) vide its Notification No. G.S.R. 241(E), dated 31st March 2015 allowed Companies to accept deposits without deposit insurance contract till 31st March 2016 or till the availability of a deposit insurance product, whichever is earlier. C) Credit Rating: India Ratings & Research Private Ltd (India Ratings), a Fitch group Company has affirmed National long term credit rating 'IND BBB-' [outlook positive] for Company's fund based borrowings & finance lease and 'IND A3' [outlook positive] rating for its non fund based borrowings from the banks for 2015-16 India Ratings has also assigned credit rating 'IND tA-' (adequate safety) for its Fixed Deposit Programme for 2015-16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS: The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are given in the notes to the Financial Statements. TRANSFER TO RESERVES: Your Company has transferred Rs.2.00 crore to the general reserve and Rs.1.20 crore to contingency reserve. An amount of Rs.3.36 crore is retained in the Statement of Profit and Loss. CORPORATE SOCIAL RESPONSIBILITY: Section 135 of the Companies Act, 2013 concerning Corporate Social Responsibility alongwith the Rules thereunder and revised Schedule VII were notified on 27 February 2014 to come into effect from 01 April 2014. Your Company welcomes the initiative taken by the MCA with an aim to embrace responsibility for the corporate actions and encourage a positive impact through its activities on the environment, consumers, employees, communities and all other members of the public sphere who may also be considered stakeholders. The provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014 are become applicable to the company only at the end ofthe financial year i.e. on 31st March 2015 upon meeting the threshold criteria of net profit of Rs.5.00 crore or more and hence the Company had not spend any amount towards the CSR activities in the financial year 2014-15. The Company, being covered under the provisions of the said Section, has formed a Committee of Directors, titled "Corporate Social Responsibility Committee" on 28th May 2015. The purpose of the Committee is to formulate and monitor the CSR Policy of the Company. The Committee will formulate a CSR Policy for consideration of the Board. The Company has initiated necessary steps to implement CSR activities in current financial year. The Annual Report on CSR activities in prescribed format under Companies (Corporate Social Responsibility Policy) Rules, 2014 is not applicableforthefinancial year2014-15. RISK MANAGEMENT: Pursuant to the requirement of Clause 49 of the Listing Agreement, the Company has constituted a Risk Management Committee. The details of Committee and its terms of reference are set out in the Corporate Governance Report forming part of the Board's Report. The Company has a Business Risk Management framework to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. There are no risks which in the opinion of the operating management threaten the existence of your Company. However, some of the risks which may pose challenges are set out in the Management Discussion and Analysis which forms part of this Report. AUDIT COMMITTEE: The Company has Audit Committee of Board of Directors constituted in accordance with section 177 of the Companies Act, 2013. The details of the Audit Committee are explained in the Corporate Governance Report. INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUECY: The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The Company is constantly thinking about improvement in internal financial controls. The Internal Audit Department monitors and evaluates operating systems, accounting procedures and policies at all locations of the Company. Based on the report of internal audit function, the Audit Committee/ Board initiate corrective action in respective areas and thereby strengthen the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. VIGIL MECHANISM / WHISTLE BLOWER POLICY: The Company has a vigil mechanism named Whistle Blower Policy which is in compliance with the provisions of Section 177(10) of the Companies Act, 2013 and Clause 49 of the Listing Agreement The policy deals with instance of fraud and mismanagement, if any, The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company. SUBSIDIARY, ASSOCIATES AND JOINT VENTURE: The Company does not have any Subsidiary or Associate or Joint Venture Company as on date of this report. Therefore separate section for report on the performance and financial position of subsidiaries, associates and joint venture companies is not required to present. DIRECTORS: Appointments: Mr. Syed K. Husain, Non Executive Director of the Company, retires by rotation at the ensuing Annual General Meeting pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company and, being eligible, has offered himself for re-appointment as the Director. Ms. Bhumika Batra was appointed as an Additional Independent woman Director of the Company with effect from 30th March 2015. Ms. Bhumika Batra vacates office of Director, at the ensuing Annual General Meeting. The Company has received a Notice alongwith the necessary deposit u/s 160 of the Companies Act, 2013, proposing the candidature of Ms. Bhumika Batra as the Independent Director of the Company under the Companies Act, 2013 for the period of 5 years with effect from 15th September 2015. At the last Annual General Meeting held on 21st August 2014, the members had appointed Mr. P.S.G. Nair, Mr. Sandeep Parikh and Mr. Farukh Wadia as Independent Directors under the Companies Act, 2013, each for a term of 5 years with effect from 21st August 2014. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. Subject to approval of members in the General Meeting, the Board of Directors had on the recommendation of the Nomination & Remuneration Committee reappointed in their meeting held on 30th March 2015, Mr. Areef A. Patel as the Whole-time Director designated as "Executive Vice-Chairman", who is Key Managerial Personnel under Section 203 of the Companies Act, 2013 for a period of three years commencing from 1st April 2015. The approval of members is sought for the reappointment of Mr. Areef A. Patel as the Whole-time Director at the ensuing Annual General Meeting. There is no Key Managerial Personnel resigned during the year under review. Board Evaluation: The Nomination and Remuneration Committee at its meeting held on 3rd July 2014 and the Board of Directors at its meeting held on 4th July 2014 respectively, had laid down criteria for performance evaluation of Directors, Committees of the Board and Board as a whole and also the evaluation process for the same. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. In pursuance to the above, Independent Directors in their separate meeting held on 30th March 2015 have reviewed and evaluated the performance of Board as a whole, Chairman and Executive Vice Chairman. Remuneration Policy: The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. Meetings: During the year nine Board Meetings and five Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. RELATED PARTY TRANSACTIONS: All related party transactions referred to in section 188(1) of the Companies Act 2013 that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons which may have a potential conflict with the interest of the Company at large. Hence there is no information to be provided as required in Form No. AOC-2 under Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014. All Related Party Transactions are placed before the Audit Committee as also the Board for approval. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. Apart from receiving remuneration by executive directors and sitting fees by Non executive directors, none of the Directors has any pecuniary relationships or transactions vis-a-vis the Company. Your Directors draw attention of the members to Note 36 to the financial statement which sets out related party disclosures. The ICD taken from related party was prior to commencement of section 188 of Companies Act 2013 and hence no separate report is given. AUDITORS AND AUDITORS' REPORT: At the 52nd AGM of your Company, M/s. MSP & Co., Chartered Accountants (Firm Registration No. 107565W) was appointed as the Auditors to hold office till the conclusion of the 55th AGM of your Company. The Board of Directors at its meeting held on 28th May, 2015, on the recommendations of the Audit Committee, in accordance with the provisions of Section 139(8) of the Companies Act, 2013 ratified the appointment of M/s. MSP & Co., Chartered Accountants, to continue to act as the Auditor of your Company till the conclusion of the 55th AGM. M/s. MSP & Co. Chartered Accountants, who retire at the ensuing AGM of your Company, are eligible for re-appointment. Your Company has received written consent and a certificate stating that they satisfy the criteria provided under Section 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 and that the appointment, if made, shall be in accordance with the applicable provisions of the Companies Act, 2013 and rules issued thereunder. The Auditors' Reportfor the financial year 2014-15, does not contain any qualification, reservation or adverse remark. CORPORATE GOVERNANCE: To comply with conditions of Corporate Governance, pursuant to clause 49 of the Listing Agreements with the Stock Exchanges, a Management Discussion and Analysis Report, Corporate Governance Report and Auditors' Certificate on the compliance of conditions of Corporate Governance, are included in this Annual Report. SECRETARIAL AUDIT REPORT: 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 Mr. Dinesh Kumar Deora, Practicing Company Secretary, to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is set out as "Annexure [I]" to this Report. The Secretarial Audit Report contained one observation about non appointment of CFO as required under Section 203 of the Companies Act, 2013. The Company is under process of appointment of right candidate for the post of CFO of the Company. However Vice President-Finance & Accounts, being a competent person is discharging the functions of CFO. EXTRACT OF ANNUAL RETURN: The details forming part of the extract of the Annual Return in Form MGT- 9 in accordance with Section 92(3) of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, are set out herewith as "Annexure [II]" to this Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO As stipulated under Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014. (A) CONSERVATION OF ENERGY: (i) The steps taken or impact on conservation of energy : Energy conservation continues to receive priority attention at all levels. All efforts are made to conserve and optimize use of energy with continuous monitoring, improvement in Maintenance systems and through improved operational techniques. The steps taken by the Company for utilizing alternate sources of energy The Company continues its in-house programme of enlightening and educating its commercial vehicle drivers for greater fuel efficiencies. All the vehicles owned by the Company undergo an intensive Planned Preventive Maintenance (PPM) drill to keep the vehicles in top running condition with special emphasis on fuel conservation. Also planning to use Bio-fuel for enhancing more efficiency of vehicles. (iii) The capital investment on energy conservation equipments The Company has on going process to conserve the energy by replacement of old electronic devices and installation of new efficient power saving devices whenever required. No material capital investment incurred by the Company during the year 2014-15. (B) TECHNOLOGY ABSORPTION: (i) The efforts made towards technology absorption: Updating of Technology is a Continuous process; appropriate technology is implemented and adapted by the Company for innovation. Efforts are continuously made to develop new products required in the Transport and Logistics Industry. (ii) The benefits derived: The Company has developed in house web- based application for complete logistics operation's requirements which helping order processing and tracking the shipments with the entire operation cycle of the GCNs and improving dispatch and delivery efficiency. (iii) Imported Technology: There is no imported technology imported during the last three years. (iv) The expenditure incurred on Research and Development: (C) FOREIGN EXCHANGE EARNINGS AND OUTGO: No expenditure is incurred on Research and Development by the Company during the year 2014-15.’ PARTICULARS OF EMPLOYEES: The Directors sincerely appreciate efforts put in by employees of the Company at all levels and thank them for their contribution in achieving the overall results during the year. The information required pursuant to Section 197 read with Rule, 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013: The Company has in place Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The internal committee has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy. DIRECTORS' RESPONSIBILITY STATEMENT: The Directors would like to inform the Members that the Audited Accounts for the financial year ended 31st March 2015 are in full conformity with the requirement of the Companies Act, 2013. In terms of Section 134(3)(c) of the Companies Act, 2013, the Directors, based on the representation received from the Operating Management, confirm that: 1) in the preparation of the annual accounts, for the year ended March 31, 2015, the applicable accounting standards and Schedule III of the Companies Act, 2013 have been followed and there are no material departures from the same; 2) the Directors have selected such accounting policies and applied them consistently and made judgment 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 31st March 2015 and ofthe profits ofthe Company for the financial year ended 31st March 2015; 3) the 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; 4) the Directors have prepared the Annual Accounts of the Company on a 'going concern' basis; 5) the Company has proper internal financial controls in place. However the Company is developing better controls for implementation in current financial year; 6) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. GENERAL: Your Directors state that no disclosure or reporting is required in respect of following items as either there were no transactions on these items or these items are not applicable to the Company during the year under review: 1) No material changes and commitments, if any, affecting the financial position ofthe Company occurred between the end ofthe financial year ofthe Company i.e. 31st March 2015 and the date ofthis report. 2) No Company have become or ceased to be Subsidiary, Associate or joint venture of the Company during the year under review. 3) No significant and material orders were passed by the regulators or courts or tribunals which impact the going concern status and Company's operations in future. ACKNOWLEDGEMENTS: The Directors place on record their appreciation of the continued assistance and support received from the Bankers, Clients, Stakeholders and Fixed Deposit Holders in the endeavors of the Company. For and on behalf ofthe Board of Directors AREEF A. PATEL Executive Vice Chairman P. S. G. NAIR Director Santacruz (West), Mumbai - 400 054. Mumbai, dated 29th July, 2015 Registered Office: Patel House, 5th Floor, Plot No. 48, Gazdarbandh, North Avenue Road, |