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Disclosure in board of directors report explanatory

BOARDS REPORT

Dear Members,

Your Directors have pleasure in presenting the 8th Boards Report on the Companys business and operations, together with audited financial statements and accounts of Bharti Retail Limited for the financial year ended March 31, 2015.

Company Overview and Performance

Your Company has consolidated its presence by rolling out another 12 easyday small format storesin the various States and has closed total 18 stores which were non–profitable in managements view. Your Company is now operating total 201 easyday stores in various states of the country and the Company is planning to launch almost 45 more stores in the coming year.

The Current year figures of statement of profit & loss are not comparable to corresponding previous period since the current year figures are for the period  of 12 months i.e. 1st April 2014 to 31st  March 2015 vis a vis 15 months in the previous period i.e. 1st  January 2013 to 31st March 2014.

During the year the Company has made a total income of Rs. 18,494.54 mn. against expenditure of Rs. 22,286.66 mn. as compared to last year total income of Rs. 27,503.54 mn. against expenditure of Rs. 30,649.65 mn. The total accumulated loss carried to the Balance Sheet as at 31st March 2015 is Rs. (18,202.60)mn. 

Financial Highlights

The following are the key financial highlights of the Company for the financial year ending on March 31, 2015:

 (Rupees in Mn.)                      

Particulars

Period ended March 31, 2015

Period ended March 31, 2014

Income

18,494.54

27,503.54

Total Expenditure

22,286.66

30,649.65

Profit/(Loss) before tax

(3,792.11)

(3,146.11)

Net Profit/(Loss) after Tax

(3,792.11)

(3,146.11)

Share Capital

The Authorised Share Capital of the Company is Rs. 25,000,000,000/– (Rupees TwentyFive Hundred Crores) divided into 2,500,000,000/–(Two Hundred Fifty Crore)equity shares of Rs. 10/– (Ten) each and the paid up Share Capital of the Company is Rs. 13,986,600,000/–divided into 1,398,660,000/–equity shares of Rs. 10/– (Ten) each as on 31st March 2015.

During the year, the Company has allotted 133,000,000 (Thirteen Crore Thirty Lac) equity shares of INR 10/– each on 27th April 2015 and 188,090,000 (Thirteen Crore Thirty Lac) equity shares of INR 10/– on 25th May 2015 to its existing shareholder i.e. Cedar Support Services Limited.

Holding, Subsidiaries and Associates Company

Your Company continues to be the 100% Subsidiary of Cedar Support Services Limited.

Transfer to Reserve

The Company has not transferred any amount to the General Reserve for the  financial year ended March 31, 2015.

Dividend

In view of losses during the period under review, the Board of Directors of the Company are unable to recommend any dividend for the financial year.

Fixed Deposits

The Company has not accepted any fixed deposits and, as such, no amount of principal or interest was outstanding, as on the balance sheet closure date.

Directors and Key Managerial Personnel         

Pursuant to the provisions of the Companies Act, 2013, Mr. Inderjit Walia (DIN: 01812849) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. The Board recommends his reappointment for your approval.

Mr.Rajendra Kumar Chopra (DIN:06942295) was appointed as AdditionalDirector in the Company on 01.12.2014 who shall hold office up to the date of the upcoming annual general meeting or the last date on which the annual general meeting should have been held, whichever is earlier.

Mr. Raj Kumar Jain (DIN–01741527) was appointed as Managing Director& CEO for a period of 3 years with effect from 01st April, 2014 to 31st March, 2017. Mr. Raj Kumar Jain (DIN–01741527) has resigned from the Company as a Managing Director& CEO with effect from 30th November, 2014.Mr.Craig Wadsworth Wimsattwas appointed as CEO of the Company with effect from December 01, 2014.

Mr. Pankaj Madan was appointed as Chief Financial Officer (CFO) of the Company and he has resigned from the position of CFO with effect from 30th November, 2014.Mr. Anupam Goyal was appointed as CFO of the Company with effect from December 01, 2014.

In compliance with the provisions of Section 149 (4) & (6) of the Companies Act, 2013, Mr. Sridhar Natarajan (DIN: 07143571) and Ms. Veenu Mittal (DIN: 07143571) were appointed as Independent Directors of the Company on March 31, 2015 for a period of three years. The said appointment is subject to ratification by the members at the ensuing Annual General Meeting. 

Board Committees

The Company has three committees which have been established as a part of the best corporate governance practices and are in compliance with the requirements of the relevant provisions of applicable laws and statutes. During the period under review, the Committees of the Board were reconstituted and presently comprises of the following members:

Audit Committee:

1.     Mr. Sridhar Natarajan– Chairman

2.     Mr. Devendra Khanna         

3.     Ms. Veenu Mittal

Nomination and Remuneration Committee:

1.     Mr. Rajendra Kumar Chopra– Chairman

2.     Mr. Sridhar Natarajan

3.     Ms. Veenu Mittal

Corporate Social Responsibility (CSR) Committee      

1.     Mr. Devendra Khanna– Chairman

2.     Mr. Sridhar Natarajan

3.     Ms. Veenu Mittal

The current constitution and terms of reference of the above mentioned Committees fully conforms to the provisions of Companies Act, 2013.

Number of Board Meetings

During the year, the Directors of the Company met 8(Eight) times on 07th May 2014, 19th June 2014, 21st July 2014, 26th September 2014, 14th November 2014, 01st December 2014, 23rd March 2015 and 31st March 2015. The period between any two consecutive meetings of the Board of Directors of the Company was not more than 120 days.

Audit Committee Meetings

During the financial year 2014–15, members of the Audit Committee met 4 (Four) times i.e.  19th June2014, 26th September 2014, 14th November 2014 and 7th March 2015.

Nomination and Remuneration Committee Meetings

During the financial year 2014–15, members of the Nomination and Remuneration Committee met2 (two) times i.e.1st December 2014 and 31st March 2015.

Requisite information, as per the requirements of Secretarial Standard 1 issued by ICSI is provided in the following table:

Name of Director

Director Identification Number

(DIN)

Category

No. of Board Meetings attended (total held)

No. of Audit Committee Meetings attended (total held)

No. of Nomination and Remuneration Committee Meetings attended (total held)

No. of Corporate Social Responsibility Committee Meetings attended (total held)

Inderjit Walia

01812849

Non–Executive

8(8)

4(4)

2(2)

Devendra  Khanna

01996768

Non–Executive

7(8)

4(4)

2(2)

Manoj Kumar Kohli

00162071

Non–Executive Director

2(8)

1(4)

Raj Kumar Jain1

01741527

Managing Director

5(8)

3(4)

Rajendra Chopra2

06942295

Non–Executive

2(6)

1(4))

2(2)

Veenu Mittal3

07143818

Independent Director

Sridhar Natarajan3

07143571

Independent Director

1.   Mr.  Raj Kumar Jain resigned from the Board w.e.f. the close of business hours of November 30, 2014.

2.   Mr. Rajendra Kumar Chopra was appointed as additional Director w.e.f. .December 1, 2014.

3.   Ms. Veenu Mittal and Mr. Sridhar Natarajan were appointed as Independent Directors w.e.f. March 31, 2015.

Risk Management Policy

In compliance with the provisions of the Companies Act, 2013 the Board of Directors on the recommendation of Audit Committee has approved and adopted the Risk Management Policy in its Board Meeting held on March 31,2015.

This Risk Management Policy outlines the framework and procedures to assess and mitigate the impact of risks, and to update the Board and the senior management on a periodical basis on the risk assessed, actions taken for mitigation and efficacy of mitigation measures.

Corporate Social Responsibility (CSR) Policy

During the year, the Company has constituted a CSR Committee and formulated a CSR policy in accordance with the requirements of Section 135 and Schedule VII of the Companies Act, 2013.

During the FY 2014–15, the Company did not incur any expenditure towards CSR since the Company has incurred losses, therefore, the Company is not required to spend any amount required under the provisions of section 135 of Companies act 2013 and rules made thereunder.

Nomination & Remuneration Policy

 In compliance with the provisions of Section 178 of the Companies Act, 2013 and rules made thereunder, the Board of Directors on the recommendation of Nomination & Remuneration Committee has approved and adopted the Nomination and Remuneration Policy in its Board Meeting held on March31, 2014. The Policy includes the following:

          To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become directors (executive and non–executive including Independent directors), Key Managerial Personnel (KMP) and persons who may be appointed in senior management positions.

         To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage for the Company.

         To determine remuneration of directors and KMPs.

         To provide for rewards linked directly to their effort, performance, dedication and achievement of Companys targets.

Board Evaluation

 In compliance with the provisions of the Companies Act, 2013, Nomination and Remuneration Committee has approved the process, format, attributes and criteria for the performance evaluation of the Board, Board Committees and Individual Directors.

 The process provides that the performance evaluation shall be carried out on an annual basis. During the year, the evaluation process was completed by the Company which included evaluation of the Board as a whole, Board Committees and individual directors including the Managing Director.

 A structured questionnaire formed key part of the evaluation process for reviewing the functioning and effectiveness of the Board. The evaluation process focused on various aspects of the Board and Committees functioning such as structure, composition, quality, board meeting practices and overall Board effectiveness.

 Performance of individual directors was evaluated on parameters such as attendance at the meetings, participation and contribution, responsibility towards stakeholders and independent judgment.

Internal Financial Controls

The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business of the Company.

 Disclosure under the Sexual Harassment Act, 2013

 No. of Complaints received NIL

No. of Complaints disposed off – NA

Statutory Auditors

 In terms of the provisions of Section 139 of the Companies Act, 2013, M/s S.R. Batliboi & Co. LLP, were appointed as the Statutory Auditors of the Company by the shareholders in the Seventh Annual General Meeting held on September 26, 2014 for a period of three years i.e. up to Tenth Annual General Meeting of the Company.

 The said appointment is subject to ratification by the members at every Annual General Meeting. The Company has received a certificate from M/s S.R. Batliboi & Co. LLP, Chartered Accountants, to the effect that ratification of their appointment, if made shall be in accordance with the provisions of Section 141 of the Companies Act, 2013. The Board has recommended ratification of appointment of M/s S.R. Batliboi & Co. LLP, Chartered Accountants, by the shareholders at the forthcoming annual general meeting.

Auditors Report

The Board has duly examined the Statutory Auditors Report to the accounts, which is self–explanatory. Clarifications, wherever necessary, have been included in the Notes to Accounts section of the Annual Report.

Secretarial Auditors Report

M/s. Chandrasekaran Associates, Company Secretaries have conducted the Secretarial Audit of the Company for the financial year 2014–15. The secretarial audit report is provided as Annexure A to this report. The report does not contain any qualification or adverse remark.

Extract of Annual Return

In terms of provisions of Section 92 of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, the extracts of Annual Return of the Company in form MGT–9 is provided as AnnexureB to this Report.

Particulars of loans, guarantees or investments

The Company has not made any investment and guarantees during the period and has not granted any loan during the period.

Related Party transactions

All arrangements/transactions entered by the Company with its related parties during the year were in ordinary course of business and on an arms length basis. During the year, the Company had not entered into any arrangement/transaction with related parties which could be considered material and accordingly, the disclosure of Related Party Transactions in Form AOC 2 is not applicable. However, names of related parties and details of transactions with them have been included in Note no. 30 of standalone financial statements in accordance with provisions of Accounting Standard – 18.

Energy Conservation, Technology Absorption, andForeign Exchange Earnings and Outgo

Being as Service providing organisation most of the information of the Company, as required under Section 134(3) of the Companies Act, 2013, read with the Rule 8 of Companies (Accounts of Companies) Rules, 2014, is not applicable. However, the information, as applicable, has been given in Annexure C to this report.

Directors Responsibility Statement

Pursuant to Section 134 of the Companies Act, 2013, the Directors, to the best of their knowledge and belief, confirm that:

a)      in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

b)      the directors had 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 loss of the Company for that period;

c)      the directors had 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 had prepared the annual accounts on a going concern basis; and

e)      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.

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.

Material Changes and Commitment

Subsequent to the year end, the Company in its board meeting dated May 4, 2015, has approved a composite scheme of arrangement under the provisions of Sections 391–394 read with Sections 100–104 of the Companies Act, 1956 and other applicable provisions of the Companies Act, 1956/ Companies Act, 2013 for demerger of the Retail Infrastructure Business Undertaking of the Company into Future Retail Limited and demerger of Retail Business Undertaking of Future Retail Limited and vesting in the Company with effect from the “the Appointed Date” as defined in the Scheme subject to appropriate approvals.

Further, subject to appropriate approvals it has also been resolved that the paid up share capital of the Company be reduced from INR 13,98,66,00,000 consisting of 1,39,86,60,000 equity shares of INR 10 each fully paid up to INR 8,69,56,522 divided into 4,34,78,261 equity shares of INR 2 (Rupees Two only) each, fully paid–up.

In view of the proposed arrangement, the Company has applied to the Company Law Board for shifting of its registered office from Bharti Crescent, 1 Nelson Mandela Road, Vasant Kunj, Phase–II, New Delhi–110070 to 6th& 7th Floor, Interface Building No. 7, Mindspace, Malad Link Road, Malad(W), Mumbai–400064, Maharashtra.

 Acknowledgements

The Directors wish to place on record their appreciation for the assistance and co–operation extended by customers, bankers, vendors, business partners, various agencies and departments of Government of India and state governments where Company’s operations are existing, supporting the Company’s various projects.

The Directors also extend their appreciation to the employees for their continuing support and unstinting efforts in ensuring an excellent all–round operational performance.

Date: 20th June 2015

Place: New Delhi

For and on Behalf of the Board

Bharti Retail Limited

 Devendra Khanna                               Inderjit Walia

 Director                                                Director

DIN: 01996768                                       DIN:01812849

Description of state of companies affair

Company Overview and Performance ; Your Company has consolidated its presence by rolling out another 12 easyday small format storesin the various States and has closed total 18 stores which were non–profitable in managements view. Your Company is now operating total 201 easyday stores in various states of the country and the Company is planning to launch almost 45more stores in the coming year. The Current year figures of statement of profit & loss are not comparable to corresponding previous period since the current year figures are for the period of 12 months i.e. 1st April 2014 to 31st March 2015 vis a vis 15 months in the previous period i.e. 1st January 2013 to 31st March 2014. During the year the Company has made a total income of Rs. 18,494.54 mn. against expenditure of Rs. 22,286.66 mn. as compared to last year total income of Rs. 27,503.54 mn. against expenditure of Rs. 30,649.65 mn. The total accumulated loss carried to the Balance Sheet as at 31st March 2015 is Rs. (18,202.60)mn.; Financial Highlights; The following are the key financial highlights of the Company for the financial year ending on March 31, 2015: (Rupees in Mn.) Particulars Period ended March 31, 2015Period ended March 31, 2014 Income 18,494.54;27,503.54; Total Expenditure22,286.66;30,649.65; Profit/(Loss) before tax(3,792.11);(3,146.11); Net Profit/(Loss) after Tax(3,792.11);(3,146.11);

Details regarding energy conservation

Energy Conservation, Being as Service providing organisation most of the information of the Company, as required under Section 134(3) of the Companies Act, 2013, read with the Rule 8 of Companies (Accounts of Companies) Rules, 2014, is not applicable. However, the information, as applicable, has been given in Annexure C to this report. ANNEXURE C INFORMATION RELATING TO CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, RESEARCH AND DEVELOPMENT AND FOREIGN EXCHANGE EARNING AND OUTGO FORMING PART OF DIRECTORS REPORT IN TERMS OF SECTION 134(3) OF THE COMPANIES ACT, 2013 READ WITH THE COMPANIES (ACCOUNTS) RULES 2014. (A) Conservation of Energy a) Steps taken or impact on conservation of energy: NA Your Company takes appropriate measures to reduce energy consumption by using energy efficient equipment, computers and processes. As an ongoing process your Company continuously evaluates new technologies and techniques to make infrastructure more energy efficient. Continuous study is being made on measures to conserve energy. The results wherever found suitable are implemented from time to time. The implementation of the measures adopted for energy conservation has resulted in savings in energy and cost. b) Steps taken by the Company for utilising alternate sources of energy: We are not utilising alternate sources of energy. c) Capital Investment on energy conservation equipments: Company has not made any capital investment in energy conservation equipments.

Details regarding technology absorption

Technology Absorption, Being as Service providing organisation most of the information of the Company, as required under Section 134(3) of the Companies Act, 2013, read with the Rule 8 of Companies (Accounts of Companies) Rules, 2014, is not applicable. However, the information, as applicable, has been given in Annexure Cto this report. (B) Technology Absorption a) Efforts made towards technology absorption: Your Company continues to use the latest technology for innovation and improving the quality of its services. b) the benefits derived like product improvement, cost reduction, product development or import substitution: Company is getting benefits by using the latest technology for innovation and improving the quality of its services. c) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year): (i) the details of technology imported: (ii) the year of import: (iii) whether technology been fully absorbed: (iv) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof: During current year your company has not imported any technology d) the expenditure incurred on Research and Development The Company does not carry out any research and development activities and hence, does not incur any expenditure on R & D.

Details regarding foreign exchange earnings and outgo

Foreign Exchange Earnings and Outgo Being as Service providing organisation most of the information of the Company, as required under Section 134(3) of the Companies Act, 2013, read with the Rule 8 of Companies (Accounts of Companies) Rules, 2014, is not applicable. However, the information, as applicable, has been given in Annexure Cto this report. (C) Foreign Exchange Earnings and Outgo. (a) Activities Relating to Exports, initiatives taken to increase Exports, and Export Plans: The company is currently focusing on the opportunities in Indian & overseas market. (b) Foreign Exchange Earnings and Outgo: (In Rupees Mn.) For Jan 01, 2014– March 31, 2015 For 2014–15 Foreign Exchange EarningsNIL NIL Foreign Exchange Used85.10 64.43

Disclosures in director’s responsibility statement

Directors’ Responsibility Statement Pursuant to Section 134 of the Companies Act, 2013, the Directors, to the best of their knowledge and belief, confirm that: a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; b) the directors had 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 loss of the Company for that period; c) the directors had 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 had prepared the annual accounts on a going concern basis; and e) 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. 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.

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