snowman logistics ltd Management discussions

Operations

During the year the Company recorded sales of Rs.240.13 crores as compared to Rs.202.93 crores, a growth of 18%. EBITDA Rs.50.73 crores as against Rs.47.02 crores which is a growth of 8%. However due to higher incidences of interest & depreciation on account of expansion, PBT has dropped from Rs.14.73 crores to Rs.13.09 crores, and PAT from Rs.24.75 crores to Rs.20.61 crores.

Temperature controlled warehousing continued to be the core strength of the Company and the focus area of our business due to its huge potential. The second vertical of the Company viz transportation functioned as an enabler to provide a one stop solution to the temperature controlled logistics requirement of our clients.

During the year, warehousing capacities were added at Mumbai, Bangalore and Jaipur taking the total installed capacity from 85,500 pallets at the start of the year to 98,500 pallets which is a growth of 15%.

A majority of our temperature controlled warehouses are ISO 14001 (TUV-SUD), ISO 22000 (TUV-SUD) and Foods and Safety Standards Authority of India certified.

Outlook

The opportunities for the Cold chain industry in India continues to be on the rise. Being the largest producer of several agri commodities including fruits & vegetables, meat, poultry and seafood, India has become an attractive destination for food based businesses. Proactive Government policies and investor friendly incentives are one more reason for the bright outlook for cold chain in India. Our average occupancy of 74% during the year 2015-16 across all locations, confirms the sustainability of the business. Surveys conducted by National Horticulture Board indicate that a large unfulfilled gap exists in the sector and room for more growth for cold chain across all states. Further all major customers have projected robust growth figures for the coming year, which should translate into a healthy growth rate for our Company.

Competition

The Indian temperature controlled logistics business is highly fragmented and is largely catered to by regional service providers with only a small fraction being catered to by organised operators. Snowman is the only company with a pan India presence and offering the entire gamut of services in the cold chain. India is the second largest consumer market in the world and the changing preference of the Indian consumer for safe and healthy food, augurs well for Snowman. Further with the Governments drive against non-compliances on the food safety and hygiene front, has been forcing food companies to move away from the unorganised players to the organised players.

Cautionary Statement

Statements made in this report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws and regulations. Actual results might vary materially from those either expressed or implied.

Utilisation of the IPO Proceeds

The proceeds of the IPO successfully brought out by the company in 2014, have been used for setting up of temperature controlled and ambient warehouses, long term working capital and for General Corporate Purposes. The unutilised portion thereto has been invested into bank deposits. The summary of utilisation of net IPO proceeds are as follows:

Particulars	Amount (In Rs.)
Issue Proceeds	1,97,42,83,786
Less: Issue expenses	13,84,40,409
Net proceeds from IPO	1,83,58,43,377
Amount utilised 2014-15	1,20,38,98,171
Amount utilised 2015-16	61,09,44,247
Funds to be utilised (remain invested in bank current account and deposits)	2,10,00,959

Share Capital

The paid-up share capital of your Company increased from 16,66,76,495 equity shares of Rs.10 each to 16,70,87,995 equity shares of Rs.10/- each during the year due to the allotment of 4,11,500 equity shares on exercise of stock options by the eligible employees under Snowman ESOP Scheme 2012.

Dividend

Keeping in mind the Companys growth plans and hence the need to conserve cash, the Board of Directors have not recommended any dividend for the year.

Board of Directors

As on date, the Board of Directors of the Company comprises ten Directors of which six are Non Executive Independent Directors in terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013.

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 SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The information related to remuneration of director as required under Section 197(12) of the Act is given at the end of the report.

Nomination, Remuneration and Board Evaluation Policy

The Nomination, Remuneration and Board Evaluation Policy contains the criteria for determining qualifications, positive attributes and independence of a director and policy relating to the remuneration for the directors, key managerial personnel and other employees of the Company. The Nomination and Remuneration Policy forms part of this report as "Annexure C" and is also available on the website of the Company.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

Meetings

During the year 5 (Five) Board Meetings and 4 (Four) 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 stipulated under the Companies Act, 2013.

Directors Responsibility Statement

In terms of Section 134(3)(c) of the Companies Act, 2013, with respect to Directors Responsibility Statement it is hereby confirmed 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 profit and 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.