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Updated:12 Dec, 2019, 15:46 PM IST

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Updated:12 Dec, 2019, 16:01 PM IST

Disclosure in board of directors report explanatory

MAHINDRA LOGISTICS LIMITED 

DIRECTORS’ REPORT TO THE SHAREHOLDERS

Your Directors present their Seventh Report together with the audited accounts of your Company for the Financial Year ended 31stMarch, 2014.

Financial Results:

    (Rs. in Lakhs)
Particulars For the year ended      For the year ended
  31st March, 2014              31st March, 2013         
     
Operating Income                                                           1,75,033.67  1,53,202.15 
Other Income                                                                            627.42 346.54
Total Income                                                                   1,75,661.09  1,53,548.69 
Less Expense:    
Purchase of Stock in   Trade 270.48 – 
Change in Inventories of Stock in Trade (151.12) – 
Operating   Administrative & Other Expenses    1,60,965.48  1,42,678.94 
Personnel 8,820.09 6,876.72
Finance Cost 5.48 69.59
Depreciation and Amortisation 316.39 305.46
Total Expenses         1,70,226.80  1,49,930.71 
Profit / (Loss) before Tax           5,434.30 3,617.98
Less:     
Provision for Taxation    
– Current Tax 1,958.40 1,149.45
– Deferred Tax   Income       (188.49) 24.85
Profit / (Loss) After   Tax  3,664.38 2,443.68
Profit/(Loss) brought   forward from previous year    
Balance carried to Balance Sheet 2,824.66 380.98
  6,489.04 2,824.66

Operations

Although the economic environment remained sluggish during the year under review, your company made progress on all the parameters including acquiring new third party customers particularly under its Supply Chain vertical. The company continues to enjoy its leadership position in the automotive logistics domain in India. The company remains the largest corporate player in India in its People Transport Solutions business.

Your Company continues to operate in two broad business segments, namely Supply Chain Management (“SCM”) and People Transport Solutions (“PTS”). During the later part of the year, the company has also commenced product distribution services as a value added service to one of its newly acquired customer.

Your Company continues to maintain a strategic focus on improving operational efficiency as well as cost efficiency throughout the organization which has resulted in improved margins for both the business segments compared toearlier year. Information technology continues to remain key focus area to allow the company to maintain its strong competitive position. Your companyhas also diversified its industry vertical focus beyond automotive logistics to segments such as consumer goods, e–commerce, agri logistics and retail, amongst others. Your company has also been actively marketing its value proposition to a diverse mix of customers and developing service competence to meet such customers’ demands. Your company continues on the path to becoming India’s leading, most preferred, integrated logistics service provider. 

Awards and Recognition

Your Company’s commitment and efforts towards excellence in logistics are significantly reflected in the numerous accolades it has received. Some of the recent recognitions include prestigious awards such as the ‘Best 3PL Company of the Year 2013’ at the 7th Express Logistics and Supply Chain Awards, ‘Manufacturing 3PL Service Provider of the Year’ at the 3rd Asia Manufacturing Supply Chain Summit 2014, ‘Mint–IFC Strategy Award in Transportation, Logistics & Aviation’ at the Porter Prize Awards 2013, ‘Silver Edge award for MILES solution’ at the EDGE Awards 2013, ‘ABCI award for Corporate film’ at the 53rd Association of Business Communicators of India (ABCI), and the first international award ‘Brand Excellence in Supply Chain & Logistics’ at the 4th Annual CMO Asia Awards 2013.

Your Company has also been recognised for its efforts on the Corporate Social Responsibility front, winning two silver awards for Public Service Campaigns at the 8th Global Communication Conclave 2014. Company’s accolades within the Mahindra Group include a ‘Game Changer Award’ for its ‘Project Falcon’ in the Sustainability Awards category, at the Mahindra Rise Awards 2013.  

Key Financials

Your Company recorded gross income of Rs.1750.34 crores for the year under review as against gross income of Rs. 1532.02 crores in the previous year registering a growth of 14%.The Net Profit after tax (after accounting for deferred tax income of Rs.1.88 crores) is Rs.36.64 crores as compared 24.44 crores (after accounting of deferred tax expenses of Rs.0.25 crores) registering a growth of 50%.

Dividend

Your Directors have not considered recommendation of any dividend with a view to conserve resources for the future operations of your Company.

Investment Agreement

Your Company executed an Investment Agreement with Normandy Holdings Limited and Kedaara Capital Alternative Investment Fund – Kedaara Capital AIF 1. The proposed investments by the investors, as and when made in terms of the Investment Agreement, will enable the Company to achieve its growth objectives and your Company is sure to gain from this fruitful association.

Share Capital

During the year under review, the authorised share capital of the Company of Rs.75 crores consisting of 7,50,00,000 equity shares of the Company was reclassified as consisting of 6,40,00,000 equity shares of Rs.10 each and 22,00,000, 0.001 % Non–cumulative Compulsorily Convertible Preference Shares of Rs.50 each and subsequently increased to Rs.105 crores consisting of 6,40,00,000 Equity shares of Rs.10 and 82,00,000, 0.001 % Non–cumulative Compulsorily Convertible Preference Shares of Rs.50 each.

Your Company issued and allotted 31,42,383 equity shares of Rs. 10 each  during the year under review. Out of the above issued and allotted equity shares, 11,12,593 equity shares of Rs. 10 each are fully paid up, 4,48,517 equity shares of Rs. 10 each are paid up to the extent of Rs. 2 per share and 15,81,273 equity shares of Rs. 10 each are paid up to the extent of Rs. 1 each. As a consequence thereof, the issued, subscribed and paid up capital of the Company stood at Rs.59, 06, 04,237 as on the last day of the year under review.

Adoption of Fresh Set of Articles of Association 

Pursuant to execution of Investment Agreement and in terms thereof, the Articles of Association of the Company was substituted with fresh Set of Articles to contain some of the provisions of the Investment Agreement.

Audit Committee

The Audit Committee of your Company was reconstituted on 19thMarch, 2014 to include Mr. Sanjeev Aga as committee member and terms of reference as stipulated under Companies Act, 2013 were adopted thereat. The reconstituted Committee comprises of Mr. Anjanikumar Choudhari, Mr. K. Chandrasekar, Mr. Parag Shah and Mr. Sanjeev Aga. The Audit Committee met twice during the year under review.

Nomination and Remuneration Committee

The nomenclature of Remuneration Committee of your Company was changed to Nomination and Remuneration Committee, in accordance with the provisions of Companies Act, 2013, on 19thMarch, 2014 and the committee adopted terms of reference as stipulated under the Companies Act, 2013 and the Rules made thereunder.

The Nomination and Remuneration Committee comprises of Mr. Anjanikumar Choudhari, Mr. Zhooben Bhiwandiwala, Mr. Ruzbeh Irani and Mr. Sanjeev Aga. The Committee met twice during the year under review.

Constitution of Corporate Social Responsibility Committee (CSR Committee).

In terms of relevant provisions of Companies Act, 2013, Your Board constituted CSR Committee comprising of Mr. Anjanikumar Choudhari, Mr. Ruzbeh Irani and Mr. Sanjeev Aga. Mr. Anjanikumar Choudhari is Chairman of the Committee.

The Board has adopted the Corporate Social Responsibility Policy as recommended by the CSR Committee.

Directors

Pursuant to the execution of Investment agreement with the Investors, Mr. Sanjeev Aga and Mr. Sunish Sharma were appointed as Directors of the Company, not liable to retire by rotation, with the approval of the Shareholders at their general meeting held on 19thMarch, 2014. With the appointment of these two directors, the strength of the Board has increased to seven.

Mr. Anjanikumar Choudhari and Mr. K Chandrasekar retire by rotation, and being eligible, offer themselves for re–appointment at the forthcoming Annual General Meeting.

Directors' Responsibility Statement

Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors, based on the representation received from the Operating Management, and after due enquiry, confirm that:

(i) in the preparation of the annualaccounts, the applicable accounting standards have been followed;

(ii) they have, in the selection of the accounting policies, consultedthe Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31stMarch, 2014 and of the profit of the Company for the year ended on that date;

(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

Subsidiary Company

The audited statements of accounts of the Company’s subsidiary for the year ended 31stMarch, 2014, together with reports of Directors and Auditors thereon and the Statement pursuant to section 212 of the Companies Act, 1956 are attached to this report.

Employees Stock Option Scheme 2012

The shareholders of your Company, at their Extra Ordinary General Meeting held on 5thFebruary, 2014 approved amendment to MLL Key Executive Stock Option Scheme – 2012 which included, among other things, acceleration of vesting of options on the option grantees.

Pursuant to the exercise of options by the option grantees, 31,42,283 equity shares were allotted to them.

A summary of Stock Options granted and outstanding is given in the Notes to the Accounts.

MLL Employees Stock Option Scheme 2012 Committee

This Committee was constituted to formulate and implement MLL Key Executives Stock Option Scheme – 2012. The Committee was reconstituted on 19thMarch, 2014 to include Mr. Sanjeev Aga as a member of the Committee.

The reconstituted Committee comprises of Mr.  Zhooben Bhiwandiwala, Mr Parag Shah, Mr. Ruzbeh Irani and Mr. Sanjeev Aga. The Committee met four times during the year under review.

Auditors

M/s. B. K. Khare & Co., Chartered Accountants, (ICAI Registration Number 105102W) retire as Auditors of your Company at the forthcoming Annual General Meeting and have given their consent for re–appointment. The Members are requested to appoint Auditors from the conclusion of the ensuing Annual General Meeting until the conclusion of the next Annual General Meeting and fix their remuneration.

As required under the provisions of section 139 read with section 141 of Companies Act, 2013, your Company has obtained a written consent and certificate from the above Auditors to the effect that their reappointment, if made, would be in conformity with the conditions and criteria specified in the said sections.

Codes of Conduct

Your Company has in place Codes of Conduct for Corporate Governance ("the Codes") for its Directors and Senior Management Personnel and Employees.  These Codes enunciate the underlying principles governing the conduct of your Company's business and seek to reiterate the fundamental precept that good governance must and would always be an integral part of your Company's ethos.

Your Company has for the year under review, received declarations under the Codes from the Board of Directors and the Senior Management Personnel and Employees affirming compliance with the respective Codes.

Employee Engagement & Development

Employee development remains the key priority for your Company. Your Company continues to focus on competency development of its people through on the job training as well as by conducting development programmes internally as well as through outside agencies. Your Company has initiated various measures towards building a talent pool for the future through robust performance based reward mechanism schemes for its employees.

The annual Rewards & Recognition scheme had a considerable positive impact on employee morale. Town Hall Meetings, where the Senior Management of the Company addresses employees and informs them of the broad developments in and progress of the Company, followed by an interactive question and answer session have been conducted at increased number of locations during the year under review compared to previous year.  

The Management Trainee Program (Eklavaya) instituted so as to absorb and develop talent and Employee referral scheme (Shayog) both instituted during previous year assists in supporting ever expanding operations.

Safety, Health and Environmental Performance

The Company continues to strive to address matters related to Safety, Health and Environment through a variety of initiatives. The initiatives are driven by an absolute commitment to ensure zero harm to employees, contract workforce and Society at large and are integral to the way the business is carried out. The company continues to carry out on a regular basis safety and health awareness related training at its various locations of operation for the entire workforce including drivers and contract labour. Your company continues to track and improve its Green House Gas emission measured as the CO2e (Carbon dioxide equivalent) performance via the various operational information technology systems used in both the Supply Chain Management and People Transport Solutions segment.

Sustainable Development and Corporate Social Responsibility

Contribution to Society is one of the core Values of the Company. As a responsible corporate entity, your Company continues to serve communities where it operates through Employee Social Options Program (ESOP) activities. During the year under review, employees devoted their time, energy and talent in the service of the less privileged. The employees of the Company continue to contribute substantial man days for community development and in participating socially relevant programs. Such programs are co–ordinated separately and performed at virtually all operating locations of the Company across the country.

Your Company provides scholarships to enable students in under privileged families to overcome their financial challenges and fulfil their educational dreams. Some of the scholarships have provided students an opportunity to pursue their studies beyond school. Your Company carries out regular health check, eye and dental check up in collaboration with other partners. A significant number of programs are also centred on providing facilities and training to drivers.Focussed drive to engage the driver community and in conducting training for drivers’ Safety, Health, Finance and Soft skills, as well asproviding better amenities for drivers at various operating sites of the Company continues.

Policy on Sexual Harassment

Your Company has rolled out a Policy for prevention of sexual harassment in which it has formalized a free and fair enquiry process with clear timelines. The Company has also constituted an “Internal Complaints Committee” to which employees can write their complaints. During the year under review no complaints were received by the said Committee.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Information pursuant to Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the report of Board of Directors) Rules, 1988, relating to conservation of energy and technology absorption as also foreign exchange earnings and outgo is given by way of Annexure I to this report.

Particulars of Employees as required under section 217(2A) of the Companies Act, 1956 and Rules framed thereunder

As required under section 217(2A) of the Companies Act, 1956, and rules made thereunder, particulars of a Company’s employee who was employed throughout the financial year and was in receipt of remuneration of not less than Rs.60,00,000 per annum during the year ended March 31, 2014, or was employed for the part of the financial year and was in receipt of remuneration of not less than Rs.5,00,000 per month is given in Annexure II to this report.

Public Deposits and Loans / Advances

Your Company has not accepted any deposits from the public or its employees during the year under review.

Your Company has not made any loans/advances which are required to be disclosed in the annual accounts of the Company pursuant to Clause 32 of the Listing Agreement between the Parent Company, Mahindra and Mahindra Limited and the Stock Exchanges.

Acknowledgements

Your Directors wish to thank all the stakeholders for their co–operation extended by them to your Company.

For and on behalf of the Board

Anjanikumar Choudhari

Chairman

Mumbai, 5th May, 2014

ANNEXURE I TO THE DIRECTORS' REPORT

PARTICULARS AS PER THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF BOARD OF DIRECTORS) RULES, 1988 AND FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2014.

A. CONSERVATION OF ENERGY

(a) Energy Conservation measures taken:

The operations of your Company are not energy–intensive. However, adequate measures have been initiated to reduce energy consumption.

(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Nil

(c) Impact of the measures at (a) & (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: The above measures have resulted in reduction of Energy consumption.

(d) Total energy consumption and energy consumption per unit of production as per Form–A of the Annexure to the aforesaid Rules in respect of Industries specified in the Schedule: Not Applicable

B. TECHNOLOGY ABSORPTION

Research & Development (R & D)

1. Areas in which Research & Development is carried out: None

2. Benefits derived as a result of the above efforts: Not applicable

3. Future plan of action: None

4. Expenditure on R & D: Nil

5. Technology absorption, adaptation and innovation: None

6. Imported Technology for the last 5 years: None

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange Earnings & Outgo were as follows:

  For the year ended For the year ended
  31st March, 2014 31st March, 2013
  (Rs. In Lakhs) (Rs. In Lakhs)
Foreign Exchange Earnings                       35.98 47.29
Foreign Exchange Used 52.55 61.56

For and on Behalf of the Board

Anjanikumar Choudhari

Chairman

Mumbai, 5th May, 2014

ANNEXURE II TO THE DIRECTORS' REPORT 

INFORMATION AS PER SECTION 217 (2A) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES 1975, AND FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2014:

Sr.  No.

Name of Employee

Designation

Qualification

Age(Yrs)

Date of Joining

Experience(yrs)

Remuneration (Rs.) 

Previous Employment & Designation

1

Mr. Pirojshaw   Sarkari

Chief   Executive Officer

B.Com, ACA

48

2nd March,   2010 

21

1,24,58,867

Managing   Director, United Parcel Services, India.

2

Mr. Sushil   Rathi

VP– SCM

BE (Mech),   PGDIE

51

16th March,   2011

28

79,32,228 

Partner,   Anantara Solutions Pvt Ltd. 

3

Mr.   Nikhil Nayak

Chief Financial Officer 

C.A

53

21 October 2009

29

63,58,566

Chief   Financial Officer, International Business, Pidilite Industries Ltd 

4

Mr.   Dasaraj Selvan

VP   – PA & CSR

M.B.A

49

26 April 2010

29

63,20,216

Sr   Manager – National Operations, United Parcel Service, India 

5

Ms. Czyz   Ewa *

Leader –   Linefeed & Store (Auto)

Bachelor degree specialised in International Logistics Management

42

21 October 2013

16

31,95,553

Hager   Group, Luxembourg & Warehouse Project Operations

* Employed for part of the year

NOTES:

1. The Nature of employment is Contractual.

2. The above employees are not related to any other Director.

3. No employee holds by himself or along with his spouse and dependent children 2% or more of the equity shares of the Company.

4. Terms and conditions of employment are as per Company's Rules / Contract.

5. Gross remuneration received as shown in the statement includes salary, Commission, Bonus, House Rent Allowance or value of perquisites for accommodation, car perquisites value/allowances as applicable, employer's contribution to Provident Fund and Superannuation Scheme including group insurance premium, leave encashment, leave travel facility, reimbursement of medical expenses and all allowances/perquisites and terminal benefits, as applicable.

For and on behalf of the Board

Anjanikumar Choudhari

Chairman

Mumbai, 5th May, 2014

Statement pursuant to Section 212 of the Companies Act, 1956, relating to Subsidiary Companies

Name of the Subsidiary Companies Number of Shares in the Subsidiary Company held by Mahindra Logistics Limited at the financial year ending date   The net aggregate of profits/(losses) of the Subsidiary Companies so far as they concern the members of Mahindra Logistics Limited      
      For Current Financial Year   For Previous Financial Years  
  Equity Extent of holding Dealt with in the accounts of Mahindra Logistics Limited for the year ended 31st March 2014 Not dealt with in the accounts of Mahindra Logistics Limited for the year ended 31st March 2014 Dealt with in the accounts of Mahindra Logistics Limited for the year ended 31st March 2014 Not dealt with in the accounts of Mahindra Logistics Limited for the year ended 31st March 2014
  Nos % Rupees in Lacs Rupees in Lacs Rupees in Lacs Rupees in Lacs
2x2 Logistics Private Limited 10,000 100% Nil 0.88 Nil –0.18

For and on behalf of Board of Directors

Mahindra Logistics Limited

Anjanikumar Choudhari               

Chairman   

Chandrasekar   K

 Director

Parag Shah

Director

Sanjeev   Aga

Director

Sunish   Sharma

Director

Pirojshaw   Sarkari

Manager

 

Details regarding energy conservation

A. CONSERVATION OF ENERGY
(a) Energy Conservation measures taken: 
The operations of your Company are not energy–intensive. However, adequate measures have been initiated to reduce energy consumption.
(b) Additional investments and proposals, if any, being implemented for reduction of consumption of energy: Nil
(c) Impact of the measures at (a) & (b) above for reduction of energy consumption and consequent impact on the cost of production of goods: The above measures have resulted in reduction of Energy consumption.
(d) Total energy consumption and energy consumption per unit of production as per Form–A of the Annexure to the aforesaid Rules in respect of Industries specified in the Schedule: Not Applicable

Details regarding foreign exchange earnings and outgo

C. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange Earnings & Outgo were as follows:

  For the year ended     For the year ended
  31st March, 2014 31st March, 2013
  (Rs. In Lakhs) (Rs. In Lakhs)
Foreign Exchange Earnings                      35.98 47.29
Foreign Exchange Used 52.55 61.56

Particulars of employees as per provisions of section 217

INFORMATION AS PER SECTION 217 (2A) OF THE COMPANIES ACT, 1956, READ WITH THE COMPANIES (PARTICULARS OF EMPLOYEES) RULES 1975, AND FORMING PART OF THE DIRECTORS' REPORT FOR THE YEAR ENDED 31ST MARCH, 2014:
Sr.  No.

Name of Employee

Designation

Qualification

Age(Yrs)

Date of Joining

Experience(yrs)

Remuneration (Rs.)

Previous Employment & Designation

1

Mr. Pirojshaw   Sarkari

Chief   Executive Officer

B.Com, ACA

48

2nd March,   2010

21

1,24,58,867

Managing   Director, United Parcel Services, India.

2

Mr. Sushil   Rathi

VP– SCM

BE (Mech),   PGDIE

51

16th March,   2011

28

79,32,228

Partner,   Anantara Solutions Pvt Ltd.

3

Mr.   Nikhil Nayak

Chief Financial Officer

C.A

53

21 October 2009

29

63,58,566

Chief   Financial Officer, International Business, Pidilite Industries Ltd

4

Mr.   Dasaraj Selvan

VP   – PA & CSR

M.B.A

49

26 April 2010

29

63,20,216

Sr   Manager – National Operations, United Parcel Service, India

5

Ms. Czyz   Ewa *

Leader –   Linefeed & Store (Auto)

Bachelor degree specialised in International Logistics Management

42

21 October 2013

16

31,95,553

Hager   Group, Luxembourg & Warehouse Project Operations

* Employed for part of the year

NOTES:

1. The Nature of employment is Contractual.

2. The above employees are not related to any other Director.

3. No employee holds by himself or along with his spouse and dependent children 2% or more of the equity shares of the Company.

4. Terms and conditions of employment are as per Company's Rules / Contract.

5. Gross remuneration received as shown in the statement includes salary, Commission, Bonus, House Rent Allowance or value of perquisites for accommodation, car perquisites value/allowances as applicable, employer's contribution to Provident Fund and Superannuation Scheme including group insurance premium, leave encashment, leave travel facility, reimbursement of medical expenses and all allowances/perquisites and terminal benefits, as applicable.

Disclosures in director’s responsibility statement

Directors' Responsibility Statement
Pursuant to section 217(2AA) of the Companies Act, 1956, your Directors, based on the representation received from the Operating Management, and after due enquiry, confirm that:
(i) in the preparation of the annual accounts, the applicable accounting standards have been followed;
(ii) they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the profit of the Company for the year ended on that date;
(iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the annual accounts have been prepared on a going concern basis.

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