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TO THE MEMBERS OF
The Directors present their Sixty Fourth Annual Report together with the Audited Financial Statements for the year ended 31st March 2016.
On 12th March 2016, the Board of Directors declared an interim dividend of 90% i.e. Rs. 9/– per Equity Share (previous year 100% which included a one time special dividend of 25%) on 3,32,31,673 Equity Shares of Rs. 10/– each for the year ended 31st March 2016, which was paid on 29th March 2016. The Directors did not consider a final dividend for the year ended 31st March 2016.
3. Share Capital
The paid up Equity Share Capital as on 31st March 2016 was Rs. 33,23,16,730. During the year under review, the Company had issued and allotted in aggregate 129 equity shares which were held in abeyance for the rights issue made by the Company in the years 2007 and 2010. The Company has not issued shares with differential voting rights. The Company has neither issued employee stock options nor sweat equity shares and does not have any scheme to fund its employees to purchase the shares of the Company.
4. Management Discussion and Analysis Report
A separate section on Management Discussion and Analysis Report (MD&A) is included in the Annual Report as required under Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The MD&A includes discussion on the following matters within the limits set by the Company's competitive position: industry prospects & developments, opportunities & risks, the performance of key retail formats & the outlook for the business, risks & concerns, internal control systems & their adequacy and discussion on financial performance.
5. Business Excellence Initiative
The Company participates in the Tata Business Excellence Model (TBEM) business maturity review and evaluation mechanism. TBEM emphasizes quality, leadership, strategic planning, customer orientation & services, process orientation, human relations, shareholder value and commitment to community development.
6. Board and Committee Meetings
The Board met 5 times during the FY 2015–16.
The Audit Committee consists of Mr. A. Sen as the Chairman and Mr. N. N. Tata, Mr. Z. S. Dubash and Mr. B. N. Vakil as members. There have not been any instances during the year when recommendations of the Audit Committee were not accepted by the Board.
Details of the composition of the Board and its Committees and of the Meetings held and attendance of the Directors at such meetings, are provided in the Corporate Governance Report.
Mr. A. D. Cooper who had been the Director of the Company since 1984 stepped down from the Board of Directors w.e.f. closing hours of 23rd August 2015 in accordance with Tata Policy on retirement of Non–Executive Directors. The Board places on record its sincere appreciation for the significant contribution made by Mr. Cooper to the Company, as a Director and also as the Chairman of several
committees viz., Audit, Nomination & Remuneration and Stakeholders Relationship, in providing advice and counsel with regard to the Company's business which significantly contributed to the Company's growth and stature in the retail industry.
Mr. P. Auld was appointed as an Additional Director of the Company (designated as Managing Director) with effect from 4th November 2014. He held the office as Director upto the date of 63rd Annual General Meeting (AGM) held on 7th August 2015. Shareholder at the said AGM approved his appointment as Director whose office shall be liable to retirement by rotation. Further, Shareholders had also approved his appointment as the Managing Director for a period of three years w.e.f. 4th November 2014 by way of a Postal Ballot.
Mr. P. Venkatesalu was appointed as an Additional Director of the Company (designated as Executive Director (Finance) & CFO) with effect from 1st June 2015. He held office as Director upto the date of the 63rd AGM held on 7th August 2015. He was appointed as a Director of the Company at the said AGM. His appointment as Executive Director designated as Executive Director (Finance) and CFO of the Company for a period of three years w.e.f. 1st June 2015 was also approved at the said AGM.
At the AGM held on 7th August 2015, the members have approved the appointment of Ms. S. Singh and Mr. A. Sen as an Independent Directors for a term of 2 years w.e.f. 3rd March 2015 and 27th May 2015 respectively.
All the Independent Directors have submitted declarations that each of them meets the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 (the Act) and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and there has been no change in the circumstances which may affect their status as an independent director during the year.
In accordance with the provisions of the Act and in terms of the Articles of Association of the Company, Mr. B. Bhat is liable to retire by rotation at the ensuing AGM and is eligible for re–appointment.
8. Key Managerial Personnel
Mr. P. Auld – Managing Director, Mr. P. Venkatesalu – Executive Director (Finance) and CFO and Mr. M. M. Surti – Company Secretary are the Key Managerial Personnel as per the provisions of the Act.
9. Particulars of loans, guarantees or investments
Particulars of loans given, investments made, guarantees given and securities provided are disclosed in the standalone financial statements.
10. Related Party Transactions
All related party transactions that were entered into during the financial year were in the ordinary course of the business and on an arm's length basis. The Company has not entered into material contracts or arrangements or transactions with related parties in accordance with Section 188 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014. There were no material Related Party Transactions made by the Company during the year that would have required Shareholder's approval under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has nothing to report in Form AOC–2, hence, the same is not annexed.
All Related Party Transactions are placed before the Audit Committee for prior approval. Prior omnibus approval of the Audit Committee is also obtained for the transactions which are repetitive in nature. A statement of all Related Party Transactions is placed before the Audit Committee for its review on a quarterly basis, specifying the nature and value of the transactions.
The Company has adopted a policy on Related Party Transactions. The policy as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Company and the link for the same is <http://www.mywestside.com/WebPages/InnerPages/Policies–information.aspx>
11. Risk Management Policy
The Company has a Risk Management Policy consistent with the provisions of the Act and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Internal Audit Department facilitates the execution of Risk Management Practices in the Company, in the areas of risk identification, assessment, monitoring, mitigation and reporting. The Company has laid down procedures to inform the Audit Committee as well as the Board of Directors about risk assessment and related procedures & status.
The major risks forming part of the Enterprise Risk Management process are also aligned with the audit universe, to the extent seen appropriate/relevant.
12. Subsidiaries, associates and joint venture companies Key subsidiaries/joint ventures of the Company :
a) Fiora Hypermarket Limited (FHL), a subsidiary of the Company, is engaged in the retailing business. FHL operates hypermarket stores in the name of Star Bazaar. FHL reported a total revenue of Rs. 93.66 crores 144.96 crores in FY 2014–15) for the period under review and loss before tax of Rs. 4.67 crores 17.81 crores in FY 2014–15).
b) Fiora Services Limited (FSL), a subsidiary of the Company, continues to render various services in terms of sourcing activities, warehousing, distribution, clearing and forwarding. FSL reported a total revenue of Rs. 48.10 crores 42.83 crores in FY 2014–15) for the period under review and profit before tax of Rs. 3.35 crores 2.39 crores in FY 2014–15).
c) Westland Limited (WL), a subsidiary of the Company is engaged in the business of publication of books. WL reported a total revenue of Rs. 21.01 crores 15.19 crores in FY 2014–15) for the period under review and loss before tax of Rs. 3.85 crores 4.88 crores in FY 2014–15). During the year, Amazon.com NV Investment Holdings LLC acquired on a fully diluted basis 26.03% stake in WL by subscribing to its Equity and Compulsorily Convertible Preference Shares.
d) Landmark Etail Limited was a wholly owned subsidiary of the Company. During the year, Tata Unistore Limited, subsidiary of Tata Industries Limited, acquired the entire share capital of the Company with effect from 11th June 2015 and thus Landmark Etail ceased to be the subsidiary of the Company. Tata Unistore Limited has launched an e–commerce platform that seeks to realize the synergies of bringing together online several strong retail banners operated by Tata entities including Westside.
e) Trent Hypermarket Private Limited (THPL), a joint venture of the Company, operates the Star (including under the banners Star Bazaar, Star Market & Star Daily) retail business. THPL reported a total revenue of Rs. 849.42 crores 790.13 crores in FY 2014–15) for the period under review and loss before tax of Rs. 44.77 crores 65.37 crores in FY 2014–15). During the year under review, the
Scheme of amalgamation of Tesco Hindustan Wholesaling Private Limited and Virtuous Shopping Centres Limited with Trent Hypermarket was effective w.e.f. 9th December 2015 (Appointed date : 1st February 2015).
f) Inditex Trent Retail India Private Limited (Inditex), a joint venture of the Company, is engaged in the retailing business. Inditex operates stores in the name of 'Zara. Inditex reported a total revenue of Rs. 842.57crores 720.63 crores in FY 2014–15) for the period under review.
The Company has 7 subsidiaries and 3 joint ventures as on 31st March 2016. Pursuant to provisions of Section 129(3) of the Act, a statement containing salient features of the financial statements of the Company's subsidiaries and joint ventures in Form AOC–1 is attached to the financial statements of the Company.
Westland Publications Limited was incorporated on 30th March 2016 as a subsidiary of Westland Limited and accordingly its first financial year would end on 31st March 2017.
Pursuant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of subsidiaries, are available on the website of the Company. Any Member, who is interested in obtaining a copy of the audited accounts in respect of subsidiaries, may write to the Company Secretary.
During the year under review, the Company has not accepted any deposits from the Public. As on 31st March 2016, there were no deposits which were unclaimed and due for repayment.
14. Significant and material orders passed by regulators or courts
No significant or material orders were passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.
15. Material changes and commitments, if any, affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements related and the date of the report
Except as disclosed elsewhere in the Report, no material changes and commitments which could affect the financial position of the Company have occurred between the end of the financial year of the Company to which the financial statements relate and the date of this Report.
16. Internal Financial Controls
Your Company has laid down standards and processes which enable internal financial control across the Company and ensured that the same are adequate and are operating effectively.
Details of the internal controls system are given in the Management Discussion and Analysis Report, which forms part of this report.
17. Particulars of Employees
The information required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure A.
The information required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report. In terms of the first proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the Shareholders excluding the aforesaid Annexure. The said Annexure is open for inspection at the Registered Office of the Company. Any Shareholder interested in obtaining the same may write to the Company Secretary.
18. Annual evaluation made by the Board of its own performance and that of its committees and individual directors
The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning etc.
The performance of the committees was evaluated by the Board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings etc.
The Board and the Nomination and Remuneration Committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc. In addition, the Chairman was also evaluated on the key aspects of his role.
In a separate meeting of independent directors, performance of non–independent directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non–executive directors. The same was discussed in the Board meeting that followed the meeting of the independent directors, at which the performance of the Board, its Committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire Board, excluding the independent director being evaluated.
19. Company's Policy on Directors' appointment and remuneration, etc. Procedure for Nomination and Appointment of Directors
The Nomination and Remuneration Committee is responsible for developing competency requirements for the Board, based on the industry and strategy of the Company. Board composition analysis reflects in–depth understanding of the Company, including its strategies, environment, operations, financial condition and compliance requirements.
The Nomination and Remuneration Committee conducts a gap analysis to refresh the Board on a periodic basis, including each time a Director's appointment or re–appointment is required. The Committee is also responsible for reviewing and vetting the CVs of potential candidates' vis–a–vis the required competencies and meeting potential candidates, prior to making recommendations of their nomination to the Board. At the time of appointment, specific requirements for the position, including expert knowledge expected, is communicated to the appointee
Criteria for determining Qualifications, Positive Attributes and Independence of a Director
The Nomination and Remuneration Committee has formulated the criteria for determining qualifications, positive attributes and independence of Directors in terms of provisions of Section 178(3) of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Independence: In accordance with the above criteria, a Director will be considered as an 'Independent Director' if he/ she meets with the criteria for 'Independent Director' as laid down in the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Qualifications: A transparent Board nomination process is in place that encourages diversity of thought, experience, knowledge, perspective, age and gender. It is also ensured that the Board has an appropriate blend of functional and industry expertise. While recommending the appointment of a Director, the Nomination and Remuneration Committee considers the manner in which the function and domain expertise of the individual will contribute to the overall skill–domain mix of the Board.
Positive Attributes: In addition to the duties as prescribed under the Act, the Directors on the Board of the Company are also expected to demonstrate high standards of ethical behavior, strong interpersonal and communication skills and soundness of judgment. Independent Directors are also expected to abide by the 'Code for Independent Directors' as outlined in Schedule IV to the Act.
The Company has adopted a Remuneration Policy for the Directors, Key Managerial Personnel and other employees, pursuant to the provisions of the Act and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Clause 49 of the erstwhile Listing Agreement entered with the Stock Exchange).
The philosophy for remuneration of Directors, Key Managerial Personnel and all other employees of the Company is based on the commitment of fostering a culture of leadership with trust. The Remuneration Policy of the Company is aligned to this philosophy.
The Nomination and Remuneration Committee has considered the following factors while formulating the Policy:
i. The level and composition of remuneration is reasonable and sufficient to attract, retain and motivate Directors of the quality required to run the Company successfully;
ii. Relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and
iii. Remuneration to Directors, Key Managerial Personnel and Senior Management involves a balance between fixed and incentive pay reflecting short and long–term performance objectives appropriate to the working of the Company and its goals.
It is affirmed that the remuneration paid to Directors, Key Managerial Personnel and all other employees is as per the Remuneration Policy of the Company. Details of the Remuneration Policy are given in the Corporate Governance Report.
20. Details of establishment of Vigil Mechanism / Whistle Blower Policy
The Board of Directors on the recommendations of the Audit Committee has approved and adopted a Whistle Blower Policy that provides a formal mechanism to the Directors and all employees of the Company to approach the Chairman of the Audit Committee/ Chief Ethics Counselor of the Company and make protective disclosure about the unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct. The details of the Whistle Blower Policy is available on the website of the Company (www.mywestside.com
21. Corporate Social Responsibility (CSR)
The Company is guided by Tata group philosophy of improving the quality of lives of the communities we serve through value creation. Our practice of returning to society what we earn evokes trust among consumers, employees, shareholders and the community at large. The Company's continuing commitment to societal responsibilities and support is linked and integrated with its business strategy, core competence, values and need of the communities.
The organization approaches all such initiatives with an intent to contribute to sustainable economic development and beneficial actions that are environmentally sustainable and socially responsible for the communities.
The Board has constituted the Corporate Social Responsibility Committee headed by Mr. A. Sen as Chairman and Mr. N. N. Tata, Mr. B. Bhat & Ms. S. Singh as its members. The Company, in line with its CSR policy has undertaken projects in the areas of enhancing employability, education through its initiative called Saksham. Around 27% of the Company's workforce is from Affirmative Action communities.
The Company not only embarks on contributing towards local community in long run but also focuses on promoting quality education and realizing their full potential through the partnership with Room to Read India Trust by setting up 13 school libraries across Mumbai and Delhi to improve the literacy skills and reading habits of primary school children.
The Company encourages the underprivileged to aspire and seek a better future for themselves and well–being of their families by bridging the skills gap through various education and skill based programs. The Company believes in supplementing educational needs for meritorious and deserving students from economically disadvantaged society and thus sponsoring students from NIFT, Mumbai to provide equal learning opportunities for their growth and success. Recognizing the challenges faced by the children of municipal schools on their inability to communicate in English, the Company has partnered to enhance their English fluency & hence expand their employment opportunities.
In order to support NGO projects in areas of 'Child Education & Nutrition'across Westside and Landmark stores, "Star & Diya" initiative is carried out during Christmas & Diwali festival promotions in various cities. The revenue generated, supports children hailing from disadvantaged communities by providing educational scholarships, midday meals, infrastructure development. For the FY 2015–16, the stores collectively raised an amount of Rs. 70.49 lakhs that benefited nearly 4000 children across locations. Around 800 Trent volunteers across locations, conducted sessions on 'Personality Development' and 'Career Building' at various government/municipal schools and other training institutes run by local NGO's for youth within the age group of 14–16 years.
An Annual report on the CSR Activities forms part of this report as Annexure B.
22. Secretarial Auditor's Report
Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed M/s. Parikh & Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for the year ended 31st March 2016. The Secretarial Audit Report is annexed as Annexure
23. Extract of Annual Return
Pursuant to Section 134(3)(a) and Section 92(3) of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, the extracts of the Annual Return in Form MGT–9 as at 31st March 2016, forms part of this report as Annexure D.
24. Corporate Governance
A separate section on Corporate Governance is included in the Annual Report along with the certificate from the Company's Auditors confirming compliance with conditions on Corporate Governance as stipulated in SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015.
25. Directors' Responsibility Statement
Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, and secretarial auditors including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the financial year 2015–16.
Accordingly, pursuant to Section 134(3)(c) and 134(5) of the Act, the Board of Directors, to the best of their knowledge and ability, confirm that:
a. in the preparation of the annual accounts, the applicable accounting standards had been followed and that there were no 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 profit 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 the 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;
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; and
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.
M/s. N.M. Raiji & Co., Chartered Accountants, were reappointed as the Statutory Auditors of the Company at the Sixty Second Annual General Meeting (AGM) held on 14th August 2014, to hold office from the conclusion of that AGM till the conclusion of Sixty Fifth AGM of the Company to be held in the year 2017. In terms of the provisions of Section 139 of the Act, the appointment of the auditors has to be placed for ratification at every AGM. Accordingly, the appointment of M/s. N.M. Raiji & Co., Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders.
27. Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace
The Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, to provide protection to employees at the workplace and for prevention and redressal of complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee to consider and to redress complaints of sexual harassment. During FY 2015–16, the Committee has received 3 complaints all of which were resolved with appropriate action taken. However, only 1 of the aforesaid complaint pertained to sexual harassment.
28. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
A. Conservation of Energy: The Company consciously makes all efforts to conserve energy across all its operations.
B. Technology Absorption : Nil
C. Foreign Exchange Earnings and Outgo: Foreign Exchange earnings and outgo are stated on page117 in the notes to the Balance Sheet and Profit and Loss Account. The Company earned Rs. 26.23 crores in foreign currency from retail sales through International Credit Cards.
The Board wishes to place on record their sincere appreciation for the continued support which the Company has received from its customers, suppliers, debenture holders, shareholders, promoters, bankers, group companies and above all, its employees.
On behalf of the Board of Directors
Noel N. Tata Chairman
PLACE : Mumbai,
DATE : 26th May 2016